Fraud Prevention

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On October 28, 2020, the Ontario Court of Appeal overturned a respected Commercial Court judge’s decision on a motion affecting a range of important legal issues, including the fraud exception to the autonomy principle regarding letters of credit. In 7636156 Canada Inc. (Re), 2020 ONCA 681, Ontario’s highest court clarified the law regarding a landlord’s right to call on a letter of credit (“LC”) when its tenant becomes bankrupt. The Court of Appeal confirmed that, under the autonomy principle, a bank’s obligation under an LC is independent of a tenant’s obligations under the lease, and clarified the fraud exception that allows a bank to refuse to pay on an LC. The case also holds implications for Canadian bankruptcy law.…
Continue Reading Fraud exception to letter of credit autonomy principle requires “impropriety, dishonesty or deceit”. Court of Appeal overturns ruling that had denied commercial landlord of bankrupt tenant full amount of credit.

In an unreported judgment Pallotta v. Cengarle, Court file CV-16-56337 released on February 27, 2020, Faieta J. found real estate lawyer Licio Cengarle vicariously liable for his clerk’s mortgage fraud scheme as well as for breach of trust. This case is a cautionary tale for professionals and employers about the need for internal controls.…
Continue Reading Ignorance of Fraud is No Defence: Employer Vicariously Liable for Rogue Employee

David Holden was recently convicted of defrauding Canadian investors in Seaquest Corporation and Seaquest Capital Corporation of more than $54-million in a complex ponzi-scheme. In related civil proceedings our team acted to obtain significant recoveries for some of Holden’s victims. Sadly, this was not the first time that Holden had defrauded investors.…
Continue Reading Ponzi Mastermind Sentenced to 12 Years – $54 Million Payment Ordered

Ontario has established a new agency to combat fraud. The Serious Fraud Office (the “SFO”), modelled on the UK’s anti-fraud agency of the same name, will place police investigators and fraud prosecutors under one umbrella to ensure the proper expertise and enforcement coordination is applied to cases of high-value fraud in Ontario.…
Continue Reading Fraudsters Beware: Ontario Launches Serious Fraud Office

On May 14, 2019, in Christine DeJong Medicine Professional Corp. v. DBDC Spadina Ltd., 2019 SCC 30 the Supreme Court of Canada granted Christine DeJong Medicine Professional Corporation’s appeal and unanimously adopted Justice van Rensburg’s dissenting reasons as their own. In reversing the earlier decision of the Ontario Court of Appeal, the Supreme Court has provided guidance on when a party will be found to have participated in a breach of trust.…
Continue Reading Refrain is the Name of the Game: Supreme Court rules on Breach of Trust

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.…
Continue Reading Supreme Court Confirms that Lawyer is Liable for Advising Clients to Invest in Fraudulent Scheme

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.…
Continue Reading Tangled Weeds: Fiduciary Status in a Criminal Fraud Not Determinative in Employment Litigation?

Summary judgment of an action may only be granted when there is no genuine issue requiring a trial and this can be difficult to prove in fraud cases where credibility is often an important factor. In the recent Ontario Superior Court decision in MacNamara v. 2087850 Ontario Ltd. (Strathcona Construction), 2017 ONSC 499, Justice Akbarali granted summary judgment finding both fraud and grounds to pierce the corporate veil of a corporate defendant. This case demonstrates how liability for even the most serious causes of action can be established by way of summary judgment where a full evidentiary record allows the Court to find the necessary facts, apply the law, and determine that there is no genuine issue for trial.…
Continue Reading Documents Prove Fraud in Summary Judgment Decision