Bank of Montreal v. Butt, (2015) 367 Nfld. & P.E.I.R. 323 (NLTD(G))

JudgeHurley, J.
CourtSupreme Court of Newfoundland and Labrador (Canada)
Case DateMay 14, 2015
JurisdictionNewfoundland and Labrador
Citations(2015), 367 Nfld. & P.E.I.R. 323 (NLTD(G))

Bk. of Mtrl. v. Butt (2015), 367 Nfld. & P.E.I.R. 323 (NLTD(G));

    1147 A.P.R. 323

MLB headnote and full text

Temp. Cite: [2015] Nfld. & P.E.I.R. TBEd. MY.043

Bank of Montreal (plaintiff) v. William Butt (defendant)

(201004G0384; 2015 NLTD(G) 67)

Indexed As: Bank of Montreal v. Butt

Newfoundland and Labrador Supreme Court

Trial Division (General)

Hurley, J.

May 14, 2015.

Summary:

Butt met a woman online. She asked for his assistance to have money transferred from the U.S. to Ghana to help an ailing uncle. Butt received a cheque for $71,301.62 made payable to him from a Toronto real estate investment firm. Butt deposited the cheque into his account with the plaintiff bank. After the cheque cleared, Butt wired the funds to an account in China as directed by his contacts. Approximately three weeks later, the bank informed Butt that the cheque was fraudulent and would be returned. Butt's account was "charged back" the amount of the cheque and went into overdraft. The bank sued for the amount outstanding, $132,224.28.

The Newfoundland and Labrador Supreme Court, Trial Division (General), granted judgment for the bank.

Banks and Banking - Topic 1446

Liability of banks to customers - Duties of bank - Duty to inform or warn - Butt met a woman online - She asked for his assistance to have money transferred from the U.S. to Ghana to help an ailing uncle - Butt received a cheque for $71,301.62 made payable to him from a Toronto real estate investment firm - Butt deposited the cheque into his account with the plaintiff bank - After the cheque cleared, Butt wired the funds to an account in China as directed by his contacts - Approximately three weeks later, the bank informed Butt that the cheque was fraudulent and would be returned - The cheque had been altered to change the true payee to Butt - Butt's account was "charged back" the amount of the cheque and went into overdraft - The bank sued for the amount outstanding, $132,224.28 - The Newfoundland and Labrador Supreme Court, Trial Division (General), granted judgment for the bank - The court rejected Butt's assertion that the bank had been negligent in not properly "validating" the transaction - Butt's initial decision to facilitate the transfer of funds was "done without due consideration or thought" - There were a number of factors in the transaction that he should have questioned - His most blameworthy conduct was his silence when dealing with the bank - He failed to disclose that he was a mere facilitator for persons known to him only through the internet - The bank was not negligent - See paragraphs 32 to 40.

Banks and Banking - Topic 1502

Liability of banks to customers - Negligence - In clearing of cheques - [See Banks and Banking - Topic 1446 ].

Banks and Banking - Topic 2806

Bank accounts - Agreements respecting - Butt met a woman online - She asked for his assistance to have money transferred from the U.S. to Ghana to help an ailing uncle - Butt received a cheque for $71,301.62 made payable to him from a Toronto real estate investment firm - Butt deposited the cheque into his account with the plaintiff bank - After the cheque cleared, Butt wired the funds to an account in China as directed by his contacts - Approximately three weeks later, the bank informed Butt that the cheque was fraudulent and would be returned - Butt's account was "charged back" the amount of the cheque and went into overdraft - The bank sued for the amount outstanding, $132,224.28 - The Newfoundland and Labrador Supreme Court, Trial Division (General), granted judgment for the bank - The court rejected Butt's argument that the provision in the banking agreement allowing for the charge back after a cheque had cleared was onerous and unusual and should have been brought to his attention - The agreement was binding on the bank's customers - The bank was entitled to rely on it - Even in the absence of such a provision, courts had found that banks retained a right to charge back - See paragraphs 23 to 31.

Banks and Banking - Topic 3532

Cheques and orders drawn on deposits - Forged drawing of cheques - Liability of bank - [See Banks and Banking - Topic 1446 ].

Cases Noticed:

Arrow Transfer Co. v. Royal Bank of Canada et al. (1971), 19 D.L.R.(3d) 420 (B.C.C.A.), affd. [1972] S.C.R. 845, refd to. [para. 24].

National Slag v. Canadian Imperial Bank of Commerce et al. (1982), 140 D.L.R.(3d) 473 (Ont. H.C.), affd. (1985), 19 D.L.R.(4th) 383 (Ont. C.A.), refd to. [para. 24].

Tilden Rent-A-Car Co. v. Clendenning (1978), 18 O.R.(2d) 601; 83 D.L.R.(3d) 400 (C.A.), refd to. [para. 25].

Envision Credit Union v. Mattu et al., [2006] B.C.T.C. Uned. 564; 2006 BCSC 1106, refd to. [para. 26].

Royal Bank of Canada v. Malfara Importing & Exporting Inc. et al., [2005] O.T.C. Uned. 267 (Sup. Ct.), refd to. [para. 26].

Bank of Nova Scotia v. Regent Enterprises Ltd. et al. (1997), 157 Nfld. & P.E.I.R. 102; 486 A.P.R. 102 (Nfld. C.A.), refd to. [para. 27].

Desjardins Credit Union Inc. v. Grenville-Wood (2011), 283 O.A.C. 188; 2011 ONCA 512, refd to. [para. 28].

Meridian Credit Union Ltd. v. Grenville-Wood - see Desjardins Credit Union Inc. v. Grenville-Wood.

Owens v. Quebec Bank (1870), 30 U.C.R. 382 (Q.B.), refd to. [para. 29].

Bank of Nova Scotia v. Sharp (1975), 57 D.L.R.(3d) 260 (B.C.C.A.), refd to. [para. 30].

Counsel:

Robert M. Matthews, Q.C., for the plaintiff;

James Goodwin, for the defendant.

This action was heard at Corner Brook, N.L., by Hurley, J., of the Newfoundland and Labrador Supreme Court, Trial Division (General), who delivered the following reasons for judgment on May 14, 2015.

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