Court revives lawyer’s fraud claim against Bank of Nova Scotia
The draft turned out to be counterfeit. The bank charged back the full $265,900 to his trust account, along with fees, leaving it more than $84,000 in the negative before he replenished the funds.
The lawyer alleged a bank employee assured him the draft was legitimate and safe to act on before he wired the money. Bank staff denied giving any such assurance. A motion judge sided with the bank, ruling the banking agreement was a complete answer to the claim regardless of what was said at the counter, and dismissed the case on summary judgment.
The Court of Appeal disagreed. It found the motion judge never resolved the conflicting accounts of what bank staff told the lawyer, yet relied on that unresolved evidence to conclude there was no negligence and that a liability exclusion clause fully protected the bank. That gap, the court said, amounted to an error of law.
“The conflicting evidence raised a genuine issue for trial,” the court held, ordering the matter back for a full hearing. The bank was also ordered to pay $2,500 in costs to the appellant.
For wealth managers and firms handling client trust accounts, the decision is a reminder that banking agreements limiting institutional liability are not automatically bulletproof. Where front-line staff allegedly offer verbal assurances that conflict with a bank’s written contractual terms, courts may require a trial to sort out whose version controls, rather than letting an exclusion clause end the case at the summary judgment stage.
