In Wescom Solutions Inc. v Minetto, the Ontario Court of Appeal confirmed that the test for wilful blindness has the same standard in criminal and civil proceedings, which means asking whether a defendant was in fact suspicious and chose to ignore those suspicious, rather than whether defendant objectively should have been suspicious.
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Supreme Court Confirms that Lawyer is Liable for Advising Clients to Invest in Fraudulent Scheme
Lawyers must act with care and uphold their professional obligations when making referrals. The Supreme Court of Canada recently addressed the professional liability of a lawyer who advised his client to purchase specific offshore investments from an advisor where that advisor turned out to be a fraudster. In Salomon v Matte‑Thompson, 2019 SCC 14, the Supreme Court upheld the decision of the Quebec Court of Appeal holding the lawyer liable for his client’s investment losses.
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Tangled Weeds: Fiduciary Status in a Criminal Fraud Not Determinative in Employment Litigation?
Surprisingly, evidently not. Briefly the facts in Plate v. Atlas Copco Canada Inc., 2019 ONCA 196: an Executive in the role of Vice President Global Strategic Customers was terminated for just cause grounded in a decades-long defrauding of the company and its benefits provider in conspiracy with the latter’s consultant, to the extent of over $20,000,000, over a million of which resulted to the Executive personally. His argument that he was a bystander incidentally enriched to the knowledge of the employer failed, conviction entered, no appeal pursued.
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Bank allowed to allege fraud in second ‘Kick at the Can’
When a plaintiff obtains a judgment from the court, that party is normally precluded from starting another lawsuit seeking the same judgment debt from the defendant. However, in Royal Bank of Canada v Kim, 2019 ONSC 798, Justice Broad of the Ontario Superior Court made an exception because the bank had discovered evidence of fraud after it obtained summary judgment against the defendant. The bank sought to pursue a second action for a judgment in fraud so that the judgment would survive and be enforceable after the bankruptcy of the defendant who, in turn, vigorously resisted the second action arguing that the plaintiff had already obtained judgment against him and could not reconstitute the judgment after the fact.
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EVENT ALERT: DEFERRED PROSECUTION AGREEMENTS IN CANADA DISCUSSION
Event Details: Tuesday, March 5, 2019, 12:30pm – 1:30pm (EST)
To RSVP, please click here. Dial-in details will be provided after signing up for the event.
Following our DPA roundtable in June and
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Same Facts, Different Badges – Sham Trusts and Fraudulent Conveyances
In McGoey (Re), 2019 ONSC 80, Justice Penny of the Ontario Superior Court of Justice found trusts over two properties held by a bankrupt were void as shams. In his decision, Justice Penny noted that had he not found the trusts to be sham trusts, he would still have set them aside as fraudulent conveyances, making us ask: “what is the difference between a sham trust and a fraudulent conveyance?”
A sham trust occurs where documents or acts give the appearance of creating legal rights that the parties have no intention of actually creating. In contrast, the documents and acts for a fraudulent conveyance accurately reflect the intentions of the parties and the legal rights that they want to create. The issue with a fraudulent conveyance is not that the transfer of rights is a sham, but that the transfer is being done for fraudulent purpose. With the evidence in front of him, Justice Penny was satisfied that, even if the McGoeys intended to transfer the properties, it was for a fraudulent purpose.
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Supreme Court to Rule on Conflicting Rights of Investors in Fraudulent Schemes
On November 15, 2018, the Supreme Court of Canada granted Christine DeJong Medicine Professional Corporation’s (“DeJong”) application for leave to appeal from the decision in DBDC Spadina Ltd. v. Walton, 2018 ONCA 60. By granting leave, Canada’s highest court will weigh in on the liability of “victims” of fraud as against one another.
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Piercing the Corporate Veil – the Need for Clear Fraudulent or Improper Conduct
Piercing the corporate veil remains a difficult feat in Ontario. Recently, in Cornerstone Properties v Southside Construction, Justice Hockin of the Ontario Superior Court of Justice refused to pierce the corporate veil to hold a corporation liable for a costs award against its subsidiary. This decision reaffirms that courts will only pierce the veil where a corporation is being abused to the point where it is not functioning as a bona fide corporate entity, and instead is being used as a vehicle to facilitate fraudulent or improper conduct.
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Consent judgment survives bankruptcy
In Water Matrix Inc. v Carnevale, Justice Sanfilippo found that a consent judgment may survive bankruptcy if it arises from a claim that is based in fraud. This allowed a company that was defrauded by a former employee to continue to enforce the company’s judgment after bankruptcy.
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Bank’s Duty of Care to victims of Ponzi Scheme
In 1169822 Ontario Ltd. v. Toronto-Dominion Bank 2018 ONSC 1631 Justice Dunphy of the Ontario Superior Court decided a case where investors in a failed Ponzi scheme sought recovery from the financial institution used by
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