A restaurant burned down, a bank broke its promise - and still won in court.
TD Bank breached a small business loan agreement, but Ontario's Superior Court ruled the breach caused none of the borrower's $8.8 million damages claim.
The Ontario Superior Court of Justice released its decision on August 12, 2026, in TD Bank v. 1633092 Ontario Ltd., closing out a decade-long dispute that began when a fire destroyed the Tosh Steakhouse restaurant in Arnprior, Ontario, in April 2014.
Owners Matthew and Haley Rooney, through their company 1633092 Ontario Ltd. ("163"), sought a $350,000 Canada Small Business Financing Act loan from TD to help rebuild the restaurant at a new location. TD gave conditional approval in April 2015 and final approval that November, but a dispute followed over how much of the loan TD had to advance. TD ultimately funded only 55.11 percent of submitted leasehold-improvement receipts, in line with the federal program's terms, rather than the full $350,000 the Rooneys expected.
An earlier summary judgment ruling, upheld on appeal, already found that TD had negligently breached its loan contract with 163 by failing to advance the full amount. That left one question for trial: what damages, if any, flowed from that breach. The Rooneys and their companies sought a combined $8,833,776, covering losses to 163, a related company, 2362378 Ontario Inc. ("236"), personal claims by Matthew and Haley Rooney, and debts owed to other creditors.
Justice Robert Smith found the answer was nothing. The court preferred the evidence of TD's business valuation expert over the Rooneys', finding their own expert's damages estimate relied on an unrealistic 16 percent future profit margin, well above the 2 to 6 percent range the court found typical for restaurants of that kind, and failed to deduct a roughly $500,000 loan 163 had made to a related Kanata restaurant venture called Skirt Steak, which failed within six months and became uncollectible. Once those adjustments were made, the estimated value of 163's business at the relevant date fell to nil.
The court found that TD's funding shortfall was not the "effective cause" of the restaurant's failure to reopen. Instead, it pointed to the fire, the money tied up in the failed Kanata expansion, and insufficient fire insurance proceeds once other creditors were paid. As the decision put it, "163's damages caused by TD's breach of contract was nil."
The judge also dismissed claims that TD committed the tort of deceit over a separate interest-rate reduction on Haley Rooney's home equity line of credit, and rejected a bid for punitive and exemplary damages, finding no dishonest or high-handed conduct by TD staff. Personal guarantees signed by Matthew Rooney, Haley Rooney, and 236 in support of the loan were upheld and were not discharged by TD's breach.
TD Bank's original claim against the defendants succeeded. The court ordered the defendants to repay the outstanding loan balance, the home equity line of credit, and related credit card debts, and granted TD possession of the mortgaged property with the right to sell it under power of sale. The counterclaim against TD was dismissed.
For lenders, the ruling is a reminder that a proven breach doesn't hand a borrower an automatic damages award. The burden still falls on the borrower to show that the breach, not their own business decisions, actually caused the loss.
