Desjardins Credit Union Inc. v. Grenville-Wood, (2011) 283 O.A.C. 188 (CA)

• Judge: O'Connor, A.C.J.O., Cronk and Rouleau, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: July 05, 2011
• Jurisdiction: Ontario
• Citations: (2011), 283 O.A.C. 188 (CA);2011 ONCA 512

Desjardins Credit v. Grenville-Wood (2011), 283 O.A.C. 188 (CA)

MLB headnote and full text

Temp. Cite: [2011] O.A.C. TBEd. JL.023

Meridian Credit Union Limited (plaintiff/respondent) v. (The Estate of) Geoffrey Grenville-Wood (defendant/appellant)

(C51739; 2011 ONCA 512)

Indexed As: Desjardins Credit Union Inc. v. Grenville-Wood

Ontario Court of Appeal

O'Connor, A.C.J.O., Cronk and Rouleau, JJ.A.

July 12, 2011.

Summary:

The Ontario Superior Court, in a decision reported at [2010] O.T.C. Uned. 485, found the appellant liable for a loss sustained by his bank (the respondent) when the appellant unknowingly deposited a materially altered cheque that was then dishonoured by the payor. The appellant appealed. The appellant argued that the credit to his account had become final because payment on the cheque had been made to the respondent (the collecting bank) by the drawee bank. He submitted that once a drawee bank had made the payment and the collecting bank had received the funds, the collecting bank's right of charge-back was extinguished. The appellant also argued that the trial judge erred in law by failing to allow his counterclaim in negligence against the respondent.

The Ontario Court of Appeal dismissed the appeal.

Editors Note: The judgment contained the following note: The style of cause in the proceeding below was Desjardins Credit Union Inc. v. (The Estate of) Geoffrey Grenville-Wood. By order of the Deputy Registrar of the Court of Appeal dated June 28, 2011, the style of cause has been changed to Meridian Credit Union Limited v. (The Estate of) Geoffrey Grenville-Wood by virtue of a recent amalgamation agreement between Desjardins Credit Union Inc. and Meridian Credit Union Limited.

Banks and Banking - Topic 1446

Liability of banks to customers - Duties of bank - Duty to inform or warn - [See Banks and Banking - Topic 1502 ].

Banks and Banking - Topic 1502

Liability of banks to customers - Negligence - In clearing of cheques - The trial judge found the appellant liable for a loss sustained by his bank (the respondent) when the appellant unknowingly deposited a materially altered cheque that was then dishonoured by the payor - The trial judge found that the respondent had the right of charge-back with respect to the materially altered cheque - As a result, the respondent was entitled to reverse the "provisional credit" given to the appellant upon deposit of the fraudulent cheque, debit all the appellant's accounts for the full amount of the fraudulent cheque, and bring an action for the unrecovered balance - The appellant appealed - The appellant argued that once payment on the cheque had been made to the respondent (the collecting bank) by the drawee bank, the collecting bank's right of charge-back was extinguished - The appellant also argued that the trial judge erred in failing to allow his counterclaim in negligence against the respondent - The Ontario Court of Appeal dismissed the appeal - The fact that a collecting bank had received payment on a cheque from the drawee bank did not mean that the credit made to the payee's account became final in the sense that the collecting bank lost its right of charge-back - The collecting bank, in acting as the payee's agent, assumed no liability with respect to the validity of the bill of exchange - The collecting bank did not become a guarantor of the cheque by virtue of receiving the funds from the drawee bank and removing the hold on the payee's account - With respect to the appellant's negligence claim, the respondent had no duty to warn the appellant - At the appellant's request, the respondent advised him as to whether there were sufficient funds in the payor's account - The respondent could not have given further assurances with respect to the validity of the cheque nor could it reasonably have known that the cheque would be later dishonoured - There was no breach of a duty of care by the respondent.

Banks and Banking - Topic 3521

Cheques and orders drawn on deposits - Forged drawing of cheques - General - [See Banks and Banking - Topic 1502 ].

Negotiable Instruments - Topic 4187

Cheques - Forged endorsements or drawing of cheques - Payor's remedies - [See Banks and Banking - Topic 1502 ].

Cases Noticed:

B.M.P. Global Distribution Inc. et al. v. Bank of Nova Scotia et al., [2009] 1 S.C.R. 504; 386 N.R. 296; 268 B.C.A.C. 1; 452 W.A.C. 1; 2009 SCC 15, dist. [para. 7].

Owens v. Quebec Bank (1870), 30 U.C.R. 382 (Q.B.), refd to. [para. 10].

Bank of Nova Scotia v. Sharp (1975), 57 D.L.R.(3d) 260 (B.C.C.A.), refd to. [para. 11].

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. 12].

Royal Bank of Canada v. Malfara Importing & Exporting Inc. et al., [2005] O.T.C. Uned. 267 (Sup. Ct.), refd to. [para. 12].

Authors and Works Noticed:

Halsbury's Laws of England (3rd Ed.), vol. 2, pp. 176 to 178 [para. 11].

Ogilvie, M.H., Bank and Customer Law in Canada (2007), p. 291 [para. 13].

Counsel:

Paul Champ, for the appellant;

Kelly Charlebois, for the respondent.

This appeal was heard on July 5, 2011, before O'Connor, A.C.J.O., Cronk and Rouleau, JJ.A., of the Ontario Court of Appeal. The Court of Appeal delivered the following judgment, which was released on July 12, 2011.