Facts:
Troy Lillico and Horizon Infrastructure Ltd. alleged that Horizon Mechanical Ltd. committed fraud against them. They claimed the Royal Bank of Canada (RBC), as a secured creditor of Horizon Mechanical, owed a duty of care that should have prevented RBC from registering its security interest in the Saskatchewan Personal Property Registry (PPR).

Legal Issues:
The key issues were:

1. Whether RBC owed a duty of care to the plaintiffs.
2. If so, whether RBC breached that duty by registering its security interest.
3. Whether the plaintiffs suffered damages as a result of RBC’s actions.
4. Whether the case was appropriate for summary judgment.

Court Findings:
The court held that RBC owed no duty of care to the plaintiffs because:

• RBC had no knowledge of Horizon Mechanical’s fraud at the time it registered its security interest.
• The alleged fraud was unrelated to RBC’s actions, and its accounts were not used to facilitate the fraud.
• Extending a duty of care to prohibit the bank from registering its security interest would conflict with the Personal Property Security Act (PPSA) framework.

The court found the case suitable for summary judgment and dismissed the plaintiffs’ claims.

Costs:
RBC was awarded costs of $2,000 under Column 2 of the Tariff of Costs.

Conclusion:
The court reinforced that banks do not owe a duty of care to third parties without knowledge or willful blindness to fraudulent activity by their clients. The plaintiffs were advised to seek remedies under the PPSA.