Bank's claim too remote and speculative

National Bank of Canada v Precision Livestock Diagnostics Ltd, 2026 ABKB 64
When is a contingent claim too remote or speculative?

Summary: In this case, the Alberta Court of King’s Bench refused to recognize National Bank of Canada’s proposed contingent indemnity claim against the Sunterra entities in their CCAA proceedings, finding it too remote and speculative to be provable. The alleged contingency depended on a hypothetical lawsuit by Compeer against National Bank, which had not been commenced, articulated, or supported by evidence, and where Compeer retained multiple alternative recovery paths and had not identified any wrongdoing by the bank. Given the absence of a concrete underlying claim, the Court held that National Bank’s potential claim over against Sunterra lacked sufficient certainty and could not be valued or admitted in the restructuring process.

The Sunterra entities, who obtained protection under the Companies’ Creditors Arrangement Act, were found to have fraudulently misrepresented that various cheques issued to or for the benefit of certain U.S. Sunterra entities would be honoured (i.e. were backed by sufficient funds on deposit), causing losses of approximately $35 million USD to Compeer after Compeer had advanced funds to or for the benefit of the U.S. entities on the apparent strength of those cheques.

Compeer advised that it may sue National Bank in connection with those losses. National Bank asserted no wrongdoing by it against Compeer. It argued that, if it is liable to Compeer in connection with those losses, the Canadian Sunterra entities would be obliged to contribute to and indemnify National Bank for its exposure to Compeer. National Bank argued that this contingent claim against Sunterra was sufficiently certain (i.e. is not too remote or speculative) to be accepted as a claim, and then valued, in the CCAA proceedings.

Sunterra saw the possible Compeer claim against National Bank as too uncertain. It also denied having any contribution or indemnity obligation to National Bank. Overall, it saw National Bank’s contingent claim against it as too remote and speculative to be recognized as a claim and, in any case, impossible to value.

A contingent claim is “a claim which may or may not ever ripen into a debt, according as some future event does or does not happen”. Here, the parties agreed that NBC’s possible claim against Sunterra was a contingent claim, with the contingency being Compeer pursuing and recovering a judgment against NBC, with NBC then (i.e. if the contingent event occurs) claiming indemnity from Sunterra. The test for accepting a contingent claim for BIA or CCAA purposes is whether the claim is not “so remote or speculative” or, alternatively, is “sufficiently certain.”

In gauging whether NBC’s contingent claim is “not too remote or speculative” or is “sufficiently certain”, the Court noted the following key factors, among others:

1. Compeer had not brought an action against NBC, and had not said that it would do so;

2. Compeer had not fully considered whether it had a claim against NBC, nor identified the basis for any such claim;

3. Compeer did not point to any evidence as the basis for any such action e.g. that NBC had or could have had a different and better window into the cheque kiting here and done something different or at least earlier to stop it;

4. Compeer did not indicate the losses or the range of losses which it might seek to recover from NBC;

5. Compeer did not advise whether any such action would depend on whether it first exhausted its recovery options against Sunterra directly and experienced a shortfall, versus seeking recoveries against Sunterra and NBC simultaneously;

6. Compeer did not provide any estimates of its anticipated recoveries on other fronts to permit an assessment of the likelihood of Compeer experiencing a shortfall; and

7. NBC was not a surety, guarantor, or indemnifier to or of Compeer pursuant to any agreements between them. NBC argued that it followed orthodox banking rules and practices, honoured its obligations to Sunterra, had no reason to suspect (until the cheque-kiting was exposed) that Sunterra was kiting cheques and working largely, when “covering” them, from conditional credit, and acted reasonably in the aftermath of that revelation, exercising its recovery rights within the law and without causing any harm to Compeer.

Given the above-described uncertainties surrounding Compeer’s possible claim against NBC, the Court found that it can only be characterized as remote and speculative. Compeer had not concluded it has a claim, and had not asserted any cause(s) of action or identified any evidence of NBC wrongdoing or breaches. NBC’s self-assessment of exposure does not illuminate how NBC could have any actual exposure to Compeer, and Compeer has other recovery options available to it (which it may decide to exhaust before pursuing NBC, if at all). NBC’s potential claim-over against Sunterra is, by definition, equally remote, speculative, and insufficiently certain to qualify as a provable contingent claim in Sunterra’s CCAA proceedings.

Where the core proceeding (Compeer v NBC) is remote and speculative, the Court found it unnecessary to explore potential further uncertainties in the claim-over link. The core-claim uncertainties on their own make the potential claim-over equally uncertain and thus unprovable as a contingent claim here.

The NBC-Sunterra claim-over was held to be remote, speculative, and insufficiently certain to prove in the CCAA proceedings.

.Judge: The Honourable Justice Michael J. Lema

Professionals involved:

• Scott Chimuk and Charlotte Pittman of Blue Rock Law for Sunterra Food Corporation

• Sean Collins, KC and Sean Smyth, KC of McCarthy Tétrault for National Bank of Canada