Canadian Fraud Law

Canadian Fraud Law

Commentary, News and Updates

Constructive Trust as a Remedy for Breach of Fiduciary Duty: Court of Appeal Clarifies Test for Granting Proprietary Remedies

John PirieGlenn Gibson By John Pirie and Glenn Gibson on Posted in Fraud Recovery

This is our second of three posts on the Ontario Court of Appeal’s recent decision in DBDC Spadina Ltd. v. Walton 2018 ONCA 60 arising out of a complex fraud scheme perpetrated by Norma and Ronauld Walton. This post discusses the finding by the Court of Appeal that it was inappropriate for the application judge to have granted a constructive trust as a remedy for breach of fiduciary duty. The Court of Appeal set aside the constructive trust because a fiduciary’s wrongful acts must give rise to an identifiable asset (there was no such asset), and it was inequitable to “leapfrog” one class of victims over other victims of the fraud in the circumstances of the case. Continue Reading

Stranger Danger: When Companies associated with a Fraudster should be Liable for the Fraudster’s Breach of Fiduciary Duty

Glenn GibsonJohn Pirie By Glenn Gibson and John Pirie on Posted in Fraud Recovery

The decision in DBDC Spadina Ltd. v. Walton, 2018 ONCA 60 provides insight on when corporations that are de facto under control of a fraudster can be held liable for claims of knowing assistance in the breach of fiduciary duty and knowing receipt of trust property. This is the first of three posts in which we will report on recent decisions by the Ontario Court of Appeal arising out of a fraud that was found to have been perpetrated by Norma and Ronauld Walton. Both the appellants and the respondents in this appeal were victims of the Waltons who had convinced numerous people to invest in commercial real estate properties. The Waltons then moved the invested funds through various shell corporations to further their personal interests. Our previous post on these long-running proceedings can be found here. Continue Reading

Double Jeopardy Argument fails for the Magic Lady

Glenn GibsonMichael Nowina By Glenn Gibson and Michael Nowina on Posted in Investment Fraud

Dubbed the ‘Magic Lady’ by the media for perpetrating a $100 million Ponzi scheme, Rashida Samji faced administrative proceeding brought by the BC Securities Commission (“Commission”) as well as criminal charges. The Commission found in 2014 that she perpetrated a fraud, imposing a disgorgement order of almost $11 million and a $33 million administrative monetary penalty (“AMP”) to serve as “a specific deterrent to [Samji] and as a general deterrent to others who would engage in similar fraudulent schemes.” On December 1, 2017, the British Columbia Court of Appeal affirmed the lower court decision refusing to stay the criminal charges against Rashida Samji on the basis that the AMP was a “true penal consequence.” After refusing to stay the charges, the trial judge found her guilty of theft and fraud under the Criminal Code. Continue Reading

Supreme Court of Canada Shifts the Risks of Cheque Fraud

Ahmed Shafey By Ahmed Shafey on Posted in Fraud Prevention, Fraud Recovery

In a narrow 5-4 decision, the Supreme Court of Canada has laid out a new formulation of the “fictitious or non-existing payee” defence under section 20(5) of the Bills of Exchange Act (BEA). The underlying dispute involved an employee who took advantage of weak internal compliance mechanisms to draft a number of fraudulent cheques. The employee made the cheques payable to entities the employer dealt with, as well as two non-existent entities with names similar to those of real suppliers. The cheques were then deposited into a number of bank accounts, set up by the employee in the names of these entities. The fraud was not discovered until after the employee had deposited $5,483,249 into the various accounts. The employer ultimately sued the banks in conversion in an attempt to recover the stolen funds. Continue Reading

Documents Prove Fraud in Summary Judgment Decision

Brendan O'Grady By Brendan O'Grady on Posted in Fraud Prevention, Fraud Recovery

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