B.M.P. Global Distribution Inc. et al. v. Bank of Nova Scotia et al., (2007) 235 B.C.A.C. 252 (CA)

• Judge: Huddart, Saunders and Low, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: January 29, 2007
• Jurisdiction: British Columbia
• Citations: (2007), 235 B.C.A.C. 252 (CA);2007 BCCA 52

BMP Global Distr. v. BNS (2007), 235 B.C.A.C. 252 (CA);

    388 W.A.C. 252

MLB headnote and full text

Temp. Cite: [2007] B.C.A.C. TBEd. JA.052

B.M.P. Global Distribution Inc., 636651 B.C. Ltd., Audie Hashka and Paul Backman (respondents/appellants on cross-appeal/plaintiffs) v. Bank of Nova Scotia doing business as the Scotiabank and the said Scotiabank (appellant/respondent on cross-appeal/defendant)

(CA033265; 2007 BCCA 52)

Indexed As: B.M.P. Global Distribution Inc. et al. v. Bank of Nova Scotia et al.

British Columbia Court of Appeal

Huddart, Saunders and Low, JJ.A.

January 29, 2007.

Summary:

Money was deposited into the plaintiffs' bank account on account of a cheque from a third party. That cheque was later found to be counterfeit. The plaintiffs' account was subsequently debited by the bank. The plaintiffs sued the bank, claiming repayment.

The British Columbia Supreme Court, in a decision reported at [2005] B.C.T.C. 1091, allowed the action and ordered the bank to pay the plaintiffs $777,349.54. The court also ordered payments of modest sums for improper disclosure of private information and for defamation. The bank appealed. The plaintiffs cross-appealed the denial of punitive damages.

The British Columbia Court of Appeal allowed the appeal and dismissed the cross-appeal.

Banks and Banking - Topic 3521

Cheques and orders drawn on deposits - Forged drawing of cheques - General - Money was deposited into the plaintiffs' bank account on account of a cheque from a third party - That cheque was later found to be counterfeit - The plaintiffs' account was subsequently debited by the bank - The plaintiffs sued the bank, claiming repayment - The trial judge allowed the action - The British Columbia Court of Appeal allowed an appeal - The court agreed with the trial judge that the bank had breached its banking agreements with the plaintiffs when it reversed the credit in the plaintiffs' account over its opposition - However, this did not compel an award of substance - On a plain reading of s. 48 of the Bills of Exchange Act, the counterfeit cheque, because of the forged signatures on it, was wholly inoperative - This was a fraudulent transaction in which the bank itself played an unwitting role through the use of its accounts and banking clearing system - The bank's assertion that the cheque was counterfeit and the signatures forged did not invite an enquiry as to the true ownership of the asset because there was no underlying asset - Rather, it invited a rectification of the fraud - See paragraphs 24 to 48.

Negotiable Instruments - Topic 4181

Cheques - Forged endorsements or drawing of cheques - General - [See Banks and Banking - Topic 3521 ].

Cases Noticed:

Gray v. Johnston (1868), L.R. 3 H.L. 1, refd to. [para. 22].

Bank of Montreal v. R. (1907), 38 S.C.R. 258, refd to. [para. 23].

622 West 113th St. Corp. v. Chemical Bank N.Y. Tr. Co. (1966), 276 N.Y.S.2d 85 (Civ. Ct.), refd to. [para. 23].

Bhogal v. Punjab National Bank, [1988] 2 All E.R. 296 (C.A.), refd to. [para. 23].

Clansmen Resources Ltd. v. Toronto-Dominion Bank, [1990] 4 W.W.R. 73; 43 B.C.L.R.(2d) 273 (C.A.), refd to. [para. 23].

White v. Royal Bank of Canada, [1923] 4 D.L.R. 1206; 53 O.L.R. 543 (C.A.), refd to. [para. 23].

Arrow Transfer Co. v. Royal Bank of Canada et al., [1972] S.C.R. 845; 27 D.L.R.(3d) 81, refd to. [para. 23].

Becker v. Pettkus, [1980] 2 S.C.R. 834; 34 N.R. 384; 19 R.F.L.(2d) 165; 117 D.L.R.(3d) 257; 8 E.T.R. 143, dist. [para. 39].

Soulos v. Korkontzilas et al., [1997] 2 S.C.R. 217; 212 N.R. 1; 100 O.A.C. 241; 146 D.L.R.(4th) 214, dist. [para. 39].

Insurance Corp. of British Columbia v. Dragon Driving School of Canada Ltd. et al. (2007), 234 B.C.A.C. 115; 387 W.A.C. 115; 2006 BCCA 584, refd to. [para. 39].

Insurance Corp. of British Columbia v. Lo - see Insurance Corp. of British Columbia v. Dragon Driving School of Canada Ltd. et al.

Bridgman v. Green (1755), 28 E.R. 399; 2 Ves. Sen. 627; Wilm 58 (L.C.), refd to. [para. 42].

Bridgman v. Green (1757), 97 E.R. 22, refd to. [para. 42].

Hugenin v. Baseley, [1803-13] All E.R. Rep. 1; 14 Ves. 273; 33 E.R. 526 (L.C.), refd to. [para. 42].

Scholefield v. Templer (1859), 4 De G. & J. 429; 45 E.R. 166 (Ch.), refd to. [para. 43].

National Slag v. Canadian Imperial Bank of Commerce (1982), 140 D.L.R.(3d) 473 (Ont. H.C.), affd. (1985), 19 D.L.R.(4th) 383 (Ont. C.A.), refd to. [para. 45].

Ship Mediana, Re, [1900] A.C. 113 (H.L.), refd to. [para. 51].

Bank of Nova Scotia v. Sharp, [1975] 6 W.W.R. 97; 57 D.L.R.(3d) 260 (B.C.C.A.), refd to. [para. 51].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201; 2002 SCC 18, refd to. [para. 59].

Statutes Noticed:

Bills of Exchange Act, R.S.C. 1985, c. B-4, sect. 48(1) [para. 32].

Authors and Works Noticed:

Waddams, Stephen M., The Law of Damages (2006 Looseleaf Ed.), generally [para. 51].

Counsel:

D.G.S. Rae, Q.C., and B. Greenberg, for the appellant;

P. Jaffe, for the respondents.

This appeal and cross-appeal were heard on May 4 and 5, 2006, at Vancouver, B.C., by Huddart, Saunders and Low, JJ.A., of the British Columbia Court of Appeal. The following judgment of the Court of Appeal was delivered by Saunders, J.A., on January 29, 2007.