Executive Summary: Key Legal and Evidentiary Issues

• Reasonableness of RBC’s termination of an indeterminate-term banking relationship and whether “without cause” termination still required reasonable notice, particularly for the credit facility.
• Adequacy of the notice actually given: 60 days for the overall relationship on paper versus only two days before blocking AGI’s credit line, and short-term disruption of online and FX platform access.
• Existence of bank fault in cutting access to the credit facility without sufficient notice in light of AGI’s compliant history, recent credit increase, and reliance on monthly margin calculations.
• Causation and proof of lost profits for specific cancelled contracts (Trust Link and Enso) versus insufficient evidence of causal link and quantum for the Evro-Meat contract and overall decrease in sales.
• Distinction between AGI’s contractual claim for commercial loss and Mr. Gutin’s personal, extracontractual claim for stress and inconvenience, including the limits of reputational damages.
• Evidentiary weight of expert accounting reports prepared by the company’s own accountant, and the court’s scrutiny of methodology, assumptions, and double-counting of alleged losses.

Factual background and the banking relationship

AGI International (7141564 Canada Inc.) is an import–export business specializing in frozen food products, particularly frozen meats. Its operations involve buying product from suppliers and reselling it at a profit, as well as acting as a broker for customers in exchange for commission on the contract price. The business is international in scope, with customers and suppliers across Africa, Europe, South America and North America, and depends heavily on personal relationships and reputation in the frozen meat trade. The company was built by Anatoli and Irena Gutin, immigrants from Belarus and Latvia who studied international trade and logistics in Montreal and devoted substantial effort to developing AGI into their family’s livelihood.
AGI’s business model made it reliant on a relatively sophisticated banking set-up: Canadian-dollar and U.S.-dollar accounts to deal with predominantly U.S.-dollar transactions; access to an FX (foreign exchange) platform to manage currency risk and cost; a Cash Against Documents (CAD) platform to manage documentary flows; and constant account monitoring to track significant incoming and outgoing payments. Critically, AGI also needed ready access to credit because it frequently had to pay suppliers up front before receiving payment from customers.
AGI opened its first Canadian-dollar account with the Royal Bank of Canada (RBC) in September 2013, at which time it signed RBC’s standard-form Master Client Agreement. This was not a negotiated document and governed termination of banking services and the master relationship. Over time, RBC granted and then increased AGI’s line of credit. In June 2016, AGI obtained a $200,000 credit facility, increased to $500,000 in August 2017 and to $750,000 on April 3, 2019. The facility was structured as a “revolver”: on a daily basis, RBC swept the CAD and USD accounts, funding deficits from the line of credit in $5,000 increments and paying down the line from surplus balances. The facility was secured by a movable hypothec over all AGI’s assets, a $250,000 personal guarantee from Mr. Gutin, and a 50% guarantee from Export Development Canada.
From 2017 to 2019, RBC account manager Louis Millette oversaw AGI’s file. He testified that AGI’s financial health was consistently good: he visited quarterly, reviewed receivables, inventory and annual financial statements, and observed steady growth. Monthly, RBC ran margin calculations on receivables and inventory to set AGI’s borrowing capacity, and AGI never failed to meet margin requirements or defaulted on any term or payment. On this basis, Millette himself recommended the credit limit increases, including the April 2019 increase to $750,000.

Termination of the banking relationship and immediate disruption

Despite the recent increase, AGI received an unexpected termination letter dated May 29, 2019, which it only saw on June 3, 2019. The letter stated that “recent activity” in AGI’s accounts fell outside RBC’s risk appetite and that RBC would therefore terminate the banking relationship. While the letter appeared to grant AGI 60 days to move its business, an attached Appendix set out that access to the credit facility would end five days from the letter’s date. In practice, the line of credit was blocked at $1 as of June 5, 2019.
Mr. and Mrs. Gutin also testified that they suddenly lost online access to their virtual banking platform and to the FX platform, and could not log into their CAD and USD accounts or monitor transactions. RBC challenged this in argument but produced no contrary contemporaneous records. Millette himself was blindsided; he had only been told in vague terms about “fraudulent” or “unauthorized” transactions and had never seen anything like this in over two decades in banking. When the Gutins rushed to his office on June 3, he could only refer them to an RBC 1-800 number in Toronto.
In the days that followed, Mr. Gutin repeatedly contacted RBC, sending demand letters and stressing that freezing access to the credit facility had effectively put AGI “out of business” and contradicted the apparent 60-day window in the termination notice. After a call on June 10, RBC agreed to restore access to the credit line until July 29, 2019. However, RBC refused a further extension requested by AGI, and even during the notice period the Gutins described delays in incoming funds, difficulties using some platforms (including FX), and time-consuming contacts with RBC staff that they attributed to internal flags on their accounts.
By December 2019, RBC had transferred the residual management of AGI’s accounts to insolvency firm Raymond Chabot Grant Thornton and demanded repayment of the credit facility. AGI, through counsel, asserted that its damages should be offset against the debt. With the COVID-19 pandemic disrupting a planned resolution meeting, AGI ultimately repaid the credit in full by the end of 2020.

Key contractual and legal framework

The Master Client Agreement provided that either the Bank or the customer could terminate specific services on 30 days’ written notice and the Master Agreement itself on 60 days’ written notice, unless otherwise agreed. The separate Facilities Agreement for the credit line stipulated that the Bank could cancel or restrict the availability of any unused portion “at any time and from time to time without notice,” and that borrowings under the facility were “repayable upon demand.”
Under Quebec civil law, these banking contracts were treated as contracts of indeterminate duration. For such contracts, the Court reaffirmed that a party may generally terminate on reasonable notice, or terminate without notice if there is a sufficiently serious default, but must choose one regime or the other. If the bank opts for without-cause termination, it must provide reasonable notice and cannot later invoke cause unless it proves a serious default. The bank also bears an implied duty to act with prudence, diligence and good faith throughout the relationship, including at termination.

RBC’s shifting position on cause and the applicable regime

RBC maintained for years, in correspondence and pleadings, that there was cause to terminate based on AGI’s account activity, alleging a breach of confidence and “defaults” under the credit and security documents. It resisted disclosure of internal communications on this basis and obtained an adjournment of trial to secure testimony about AGI’s financial health and the reasons for termination. However, at trial, RBC offered no probative evidence of the alleged “fraudulent” or “unauthorized” transactions or any actual contractual default and finally conceded in closing submissions that it was not invoking cause and that its prior allegations of default should have been withdrawn.
Given this concession, the Court held that the dispute had to be assessed under the regime for termination without cause. The question therefore became whether RBC had provided reasonable notice in the circumstances, particularly in relation to the suddenly blocked credit facility that it knew was central to AGI’s operations.

Reasonable notice and the treatment of the credit facility

AGI essentially accepted that, for the overall banking relationship, a 60-day notice period is generally reasonable under case law. The controversy lay in what AGI actually experienced: from the Gutins’ perspective, account access was immediately restricted, the credit facility was frozen at $1 within two days, online access to CAD/USD accounts and the FX platform was cut, and even after official “restoration” of the line of credit there were ongoing operational issues.
RBC argued it had honored the 60-day notice, characterizing the blockage of the credit facility as a temporary restriction lasting only six days (four business days). Its witness, Hugo Vozak, testified that Appendix A of the termination letter contained generic language not applicable to every client and that one must consult the “Summary of Accounts” section to see which accounts are actually restricted. On that reading, AGI’s CAD and USD deposit accounts were not designated as restricted, and post-letter transactional evidence suggested those accounts continued to operate even if the Gutins could not access them online.
The Court found a nuanced middle ground. It concluded that while AGI’s deposit accounts themselves remained operational, the Gutins did lose online access for several days and, more importantly, RBC indisputably blocked the credit facility on June 5 and only restored it on June 11. As AGI did not challenge the general sufficiency of 60 days for moving its overall banking relationship, the Court held that roughly 56 days’ effective notice was adequate for all services except the credit facility. For the line of credit, however, the de facto two-day notice was “flagrantly inadequate.”
Despite “without notice” and “on demand” wording in the Facilities Agreement, the Court applied the long-standing principle from Houle v. Canadian National Bank that lenders must nonetheless act reasonably and in good faith, especially when they know a credit line is essential to the client’s business. RBC tried to justify the short notice as “standard practice” to prevent a client from drawing down the facility after receiving termination notice and then defaulting. The Court rejected this, finding the evidentiary support for a uniform practice weak, inconsistent and insufficient to displace the general contractual and good-faith standards. In any event, the Court held that RBC could not invoke a generalized risk to justify almost immediate blockage of a credit facility under a without-cause termination scenario and then also benefit from the notice regime: the bank “cannot have it both ways.”
Notably, the Court emphasized that RBC itself had just increased AGI’s line of credit to $750,000 two months earlier, after detailed due diligence and in the context of monthly margin monitoring with no compliance issues. Given its full knowledge of AGI’s reliance on that facility to prepay suppliers and sustain trade deals, an abrupt blockage on two days’ notice was not the conduct of a prudent, diligent bank.

Causation, lost contracts, and dismissed business-loss claims

Having found fault in the manner the line of credit was cut, the Court turned to whether that fault caused the specific financial losses alleged. Under Quebec contract law, recoverable loss must be an immediate, direct and foreseeable consequence of the contractual fault, proven on a balance of probabilities. AGI claimed: (1) lost profits on three specific contracts; and (2) lost profits attributable to an alleged overall 58% decline in sales for June–August 2019.
The first group of contracts involved two Ghanaian customers, Trust Link Ventures Ltd. and Enso Nyame Ye Cold Store Ltd., both supplied by Russian producer Bryansk Meat Company LLC (“Miratorg”). In March 2019, AGI contracted to sell specific frozen meat shipments to Trust Link (US$259,480) and Enso (US$247,040), while separately contracting with Miratorg for a combined order of US$334,400 covering both customers’ goods. The Miratorg pro forma invoice required 100% prepayment five days before loading, with loading scheduled for June 13, 2019, making June 8 the payment deadline. AGI also bore transportation costs of nine containers per customer at about US$2,500 per container.
When the credit facility was blocked on June 5, AGI no longer had access to the liquidity it needed to prepay Miratorg by June 8. RBC had not told AGI that the blockage might be temporary or short-lived, so AGI could not credibly assure Miratorg of when, if ever, payment could be made. Miratorg cancelled the supply contract on June 10 due to non-payment, forcing AGI to cancel both customer contracts. RBC argued that a separate master contract with Miratorg contained looser payment terms (30% within 10 days of signing, 70% within 50 days after loading plus a five-day grace period), implying that the brief credit interruption could not have caused the default. The Court preferred the more specific pro forma invoice terms, supported by the Gutins’ explanation that AGI negotiated lower prices in exchange for full prepayment—precisely the type of transaction that depended on a functioning line of credit. RBC’s speculative argument that AGI might have found another arrangement with Miratorg if it had tried harder was rejected, as evidence showed the Gutins worked intensely to salvage as many deals as possible.
On this record, the Court found a direct and foreseeable causal link between RBC’s short-notice credit blockage and the loss of the Trust Link and Enso contracts. AGI’s inability to make the agreed Miratorg prepayment on or before June 8, and the resulting cancellation, flowed immediately from the loss of its credit facility at a critical moment. The court accepted the quantum calculations in AGI’s expert report for these two contracts, which the defence expert did not dispute: net profits of US$60,780 for Trust Link and US$66,340 for Enso, converted at an uncontested exchange rate to C$81,871 and C$89,360 respectively, for a total of C$171,231 in lost profit.
The third alleged contract loss, with Russian buyer OOO Evro-Meat, was of a different nature. Here AGI acted as a broker for Evro-Meat, sourcing product from Seara Meats b.v. for a fixed margin of US$100 per ton, expecting a gross profit of US$43,200 (C$58,190.40). The Evro-Meat contract required a US$100,000 partial payment to AGI by June 4, 2019. On receiving the termination letter on June 3, Mr. Gutin instructed Evro-Meat not to send this payment. He initially explained that this decision was tied to AGI’s inability to pay Seara without that money, but the evidence around Seara’s payment terms, amounts and timing was thin and at times inconsistent.
The Seara terms were set out in an email specifying quantities, prices and a shipment window of June–August, with a prepayment “not later than three weeks” before loading. AGI had committed to buy US$672,300 in product, raising real questions as to whether its credit capacity would have sufficed for full prepayment. While AGI’s counsel later suggested that the Evro-Meat contract operated as a simple pass-through of the customer’s funds, Mr. Gutin contradicted that framing, acknowledging AGI would have needed to use its credit facility and expected about C$400,000 in June receivables to support payment. In the end, it appeared that AGI could have accepted Evro-Meat’s US$100,000 payment into its deposit account despite the credit blockage, and that the instruction not to pay was driven more by generalized uncertainty than by an immediate inability to perform a defined obligation to Seara on a clear due date. The Court therefore found no direct, proven causal link between RBC’s fault and the cancellation of the Evro-Meat deal and dismissed this head of loss.
As to the alleged overall decline in sales for June–August 2019, AGI relied on a report by its accountant, Aviv Razon, showing that sales for those months dropped by about 58% between 2018 and 2019, and attributing this entirely to the lack of access to the credit facility and accounts. The Court identified multiple flaws in this analysis. First, Razon wrongly assumed that AGI lacked access to both the line of credit and its bank accounts throughout June–August, ignoring that online issues and credit blockage lasted only days and that the facility was restored on June 11. Second, his attempt to explain the losses as a function of “time spent finding a new bank” overshot RBC’s fault: the bank was entitled to terminate the relationship on reasonable notice, and the Court had found the notice adequate for all services except the brief credit blockage. Time spent transitioning over the broader notice period was thus not compensable.
Third, the report’s methodology was weak, relying heavily on comparing only one prior year, and it risked double-counting by including in the general sales decline the same periods in which the cancelled contracts would have generated revenue, even as those contracts were already the subject of distinct lost-profit claims. When pressed, Razon answered that sales typically show up in financials a few months after contracts are signed—an answer that undermined his own theory: if contracts lost in June–August affect sales later in the year, then they cannot be responsible for the decline in June–August itself, which would instead reflect deals concluded months earlier. These internal inconsistencies, combined with the mischaracterization of RBC’s actual fault and the unaudited nature of the underlying financial statements (which Razon had prepared himself), led the Court to give little weight to the report and to dismiss AGI’s claim for general lost sales over June–August 2019.

Personal claims for reputation and stress

In addition to AGI’s contractual claims, Mr. Gutin sought personal damages for harm to his reputation and for stress and inconvenience. The Court treated these under Quebec’s general extracontractual liability rule in article 1457 CCQ, recognizing that the same conduct by RBC could give rise to contractual liability toward AGI and separate delictual liability toward a third party—in this case, the company’s principal—if a distinct personal injury was proven.
On reputation, the Court found no sufficient evidence of lasting harm. Although a Seara representative expressed frustration when the June 5 cancellation email was sent, there was no persuasive proof that Mr. Gutin’s standing in the market had been permanently damaged. To the contrary, evidence suggested that AGI’s business had recovered and was growing. Without concrete manifestations of reputational loss, that claim failed.
On stress and inconvenience, the Court reached a different conclusion. It placed weight on several factors: RBC’s unreasonable handling of the credit facility; the fact that the company was the Gutins’ “life’s work” and primary livelihood; and the added anxiety stemming from RBC’s continued insistence, until trial, that there had been serious cause rooted in a “breach of confidence in the management of the company,” a position it never substantiated. The Court rejected RBC’s portrayal of this as normal executive stress. It accepted that the acute uncertainty, fear of losing everything, and the need for medical consultation (albeit evidenced only by a pharmacy receipt) went beyond ordinary business pressures. Importantly, the Court noted that the claim was for non-pecuniary stress and inconvenience, not a medically certified psychological injury, and that requiring expert medical evidence in this context would be disproportionate.
Assessing quantum for such moral damages is necessarily imprecise and grounded in judicial discretion. The Court referred to a Court of Appeal case in which $25,000 was awarded where a bank abruptly terminated a wire service, shut down accounts, and accelerated a loan. Here, the Court recognized that RBC’s treatment of Mr. Gutin was harsh and that the bank’s conduct—especially maintaining unproven insinuations of improper activity—exacerbated his distress, but also underlined that the period of acute disruption to the credit facility was shorter and that AGI ultimately survived. Balancing these elements, it awarded Mr. Gutin $10,000 for stress and inconvenience.

Outcome, monetary awards and costs

In its conclusions, the Court granted AGI and Mr. Gutin partial success. It held that RBC acted unreasonably and without sufficient notice in restricting access to the credit facility on June 5, 2019, in breach of its duties of prudence, diligence and good faith, and that this fault directly caused the loss of the Trust Link and Enso contracts and personally inflicted compensable stress on Mr. Gutin. It rejected AGI’s broader claims for three months of lost sales and dismissed the Evro-Meat-related loss, and it found no actionable reputational damage.
For AGI, the Court ordered RBC to pay C$171,231 in lost profits for the cancelled Trust Link and Enso contracts, together with legal interest and the additional indemnity under article 1619 CCQ from June 6, 2019 (the date of Mr. Gutin’s first demand letter). For Mr. Gutin personally, it ordered an additional C$10,000 in non-pecuniary damages for stress and inconvenience, also with legal interest and the same additional indemnity from June 6, 2019. On costs, the Court departed from the usual rule only to require each side to bear its own expert fees, but otherwise awarded judicial costs in favor of the plaintiffs. The total principal sum awarded to the successful parties—AGI and Mr. Gutin together—was therefore C$181,231, plus interest, additional indemnity and taxable costs, with the precise monetary value of those interest and cost components not determined in the judgment.