In Teva Canada Ltd. v. TD Canada Trust, Teva Canada Ltd. (“Teva”), a pharmaceutical company, “was the victim of a fraudulent cheque scheme implemented by one of its employees”, (para 1). Teva claimed the collecting banks were liable for the tort of conversion. Teva Canada Ltd. v. TD Canada Trust provides insight into the Bills of Exchange Act‘s (“BEA”) section 20(5) defence to the tort of conversion, by clarifying the approach used to determining whether a payee is “fictitious or non-existing”. In the event that a payee is deemed fictitious or non-existing within the meaning of section 20(5) of the BEA, the bill may be treated as payable to the bearer, and thus can be negotiated by simple “delivery” to the bank meaning endorsement is not required, and the defence will succeed (para 5). Justice Abella, writing for the majority, outlined the two-step framework a bank must satisfy to demonstrate that a payee is fictitious or … Read More
Gilbertson Davis LLP Enforces Liquidated Damages Clause in Settlement Agreement by Summary Judgment
In Haas v. Viscardi, 2018 ONSC 2883 (CanLII) the plaintiff settled a claim of $200,000 based on fraudulent misrepresentation with three defendants. The settlement agreement provided for various payments by the defendants on specified dates. The settlement agreement required Viscardi to make payments of $30,000 in three installments. If Viscardi failed to make the payments on the dates provided, the settlement agreement provided that Viscardi would consent to judgment for $60,000 (the “Consent Judgment Clause”). Viscardi made one payment of $10,000, but failed to make the remaining two payments, in breach of the settlement agreement. He then refused to consent to judgment. The plaintiff commenced a claim to enforce the settlement agreement, and brought a motion for summary judgment. The motion judge rejected Viscardi’s argument that the Consent Judgment Clause was an unenforceable penalty clause. The judge considered the test for whether a liquidated damages clause is an unenforceable penalty: … Read More
Insurance Coverage For Cyber Crime: The Brick v. Chubb
In the recent case of The Brick v. Chubb Insurance, the Alberta Court of Queens Bench held that the plaintiff’s commercial crime policy did not cover the money lost by the plaintiff as a result of a social engineering fraud. The plaintiff had been contacted by unknown persons pretending to be one of the plaintiff’s service providers, and requested banking information from their accounts payable department, which ultimately led to the plaintiff changing their internal records and sending of payments to the fraudsters’ own account instead of their service provider. The plaintiff sought coverage for the losses, and the insurer denied coverage. The court noted that the policy only applied to fund transfers made “without the insured’s knowledge or consent”. The plaintiff argued that they did not consent, since their actions were induced by the fraudulent correspondence. The insurer argued that the policy did not require consent to be “informed” or otherwise … Read More
Court of Appeal Reiterates Importance of Pleading Particulars of Fraud
In Midland Resources Holding Limited v. Shtaif, 2017 ONCA 320, the trial judge found the appellants liable to a company’s shareholders for fraudulent misrepresentations before and after an initial public offering (IPO). On appeal, the appellants argued that the trial judge erred in finding liability based on the IPO-related statements because the respondents did not plead or argue at trial that such statements amounted to fraudulent misrepresentations. The Court of Appeal stated that a pleading of fraud or misrepresentation must set out with careful particularity the elements of the misrepresentation relied upon, including: the alleged misrepresentation itself; when, where, how, by whom and to whom it was made; its falsity; the inducement; the intention that the plaintiff should rely upon it; the alteration by the plaintiff of his or her position relying on the misrepresentation; the resulting loss or damage to the plaintiff; and if deceit is alleged, an allegation … Read More
Toronto Lawyers for Victims of Investment Fraud: When Investing in a Toronto Business Goes Bad
A bad investment may not be the result of market fluctuations. A false representation inducing and leading to an investment loss may be actionable at law. Often there is a promised high-yield on an investment in a company, project or property. Sometimes a loss occurs from a scheme where there is no intention by those entrusted with an investment to make the promised purchase or transfer. In Ontario, civil lawsuits for the victims of investment fraud have often been framed as claims for deceit, fraudulent misrepresentation, civil conspiracy, breach of contract, unjust enrichment and restitution. Increasingly though, plaintiffs in lawsuits simply claim damages for losses arising directly from the tort of civil fraud. The leading case on civil fraud in Canada is the Supreme Court of Canada decision in 2014 in Hryniak v. Mauldin, 2014 SCC 7, and in that case civil fraud is defined this way “… the tort of … Read More
Business Dirty Tricks: Unfair Competition: Intentional Interference, Inducing Breach of Contract, Conspiracy and Defamation
Sometimes businesses and their stakeholders act wrongfully in seeking to advance their interests and / or harm competitors. There are often reports of the “dirty tricks” used by those in business to seek to destroy, defeat or diminish the effectiveness of a competitor. These are often unethical tactics, but sometimes such conduct is also wrongful and has been recognized by the common law as actionable in the courts for damages or injunctive or other urgent equitable relief, or prohibited by a statute which provides for a civil monetary remedy or grounds for an injunction. These causes of action have been recognized and provide the basis of lawsuits for harm, loss and damage, and in suitable circumstances, grounds for an immediate injunction or mandatory order prohibiting the further commission of the wrongful acts. In short, wrongful intentional acts causing harm, loss or damage to businesses or their stakeholders may give rise to a cause of action in common law business torts (the so-called … Read More
Court Confirms Inference of Dissipation in Mareva Motions Based on Fraud
In the recent case of Electromart (Ontario) Inc. v Fabianiak et al., the Ontario Superior Court considered the level of evidence required to prove that there is a real risk of the dissipation of assets, one of the elements necessary to obtain a Mareva injunction freezing a defendant’s assets. Normally, a court will not freeze a defendant’s assets just because the plaintiff is concerned that they will not be able to recover any money on their judgment at the end of litigation. However, where the court is convinced that the defendant is improperly dissipating his or her assets to make recovery more difficult or impossible, the court will freeze a defendant’s assets to prevent that from happening. In addition to proving a strong prima facie case, a moving plaintiff must also show why the freeze is necessary – that is, some reason to believe that assets will be dissipated if the order is not granted. The … Read More
Civil Fraud Lawsuit Dismissed on Summary Judgment Motion
In Danos v. BMW Group Financial Services Canada, 2014 ONSC 2060, the Ontario Superior Court of Justice dealt with a summary judgment motion brought by the defendants to dismiss the plaintiffs’ claims that it forged their signatures on car leasing documents. The plaintiffs had leased a luxury car from the defendants but failed to keep up with the lease payments. The defendants took steps to repossess the car and commenced an action to recover its losses. After receiving the defendants’ productions, the plaintiffs’ allegedly discovered that their signatures were forged on a number of leasing documents, and commenced a fresh action claiming damages arising from the alleged fraud. The defendants brought a summary judgment motion to dismiss the action. The Supreme Court of Canada in Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8, recently summarized the elements of the tort of civil fraud as follows: (1) a false representation made by the defendants; (2) some level of knowledge of the falsehood of the … Read More
Insurance Fraud: See No Evil & Pay The Piper
With Thompson’s World Insurance News reporting (May 5, 2014) that Aviva detected over C$202.84m in insurance fraud in 2013–a 19% increase over 2012–over 45 claims a day (C$553,370) it is clear that one of the world’s oldest professions must be taken increasingly seriously by insurance claims executives. Fraudsters have historically viewed insurance fraud as a relatively low risk way of building a career in criminality. Fearful of investigation and defense costs, and of punitive damages verdicts where a defense does not succeed, many insurers have often paid claims they believe to be fraudulent. It is hard to scope out the true cost of fraud unless adequate resources are devoted to the task: you don’t find what you do not actively and aggressively pursue. With Insurance Bureau of Canada estimates of insurance fraud in Canada north of $500 million a year, the cost of inaction is clear. Cost/Benefit analyses solely focused on a case by … Read More
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