Rouge Valley Health System v. TD Canada Trust

• Jurisdiction: Ontario
• Court: Court of Appeal (Ontario)
• Judge: Laskin, Goudge and Gillese, JJ.A.
• Citation: 2012 ONCA 17,(2012), 287 O.A.C. 241 (CA)
• Date: 31 May 2011

Rouge Valley Health v. TD Can. Trust (2012), 287 O.A.C. 241 (CA)

MLB headnote and full text

Temp. Cite: [2012] O.A.C. TBEd. JA.004

Rouge Valley Health System (plaintiff/appellant) v. TD Canada Trust (defendant/respondent)

(C53104; 2012 ONCA 17)

Indexed As: Rouge Valley Health System v. TD Canada Trust

Ontario Court of Appeal

Laskin, Goudge and Gillese, JJ.A.

January 12, 2012.

Summary:

The defrauded drawer of cheques brought an action in conversion against the bank in which the cheques were deposited. The parties agreed to have the matter resolved by summary judgment.

The Ontario Superior Court, in a decision reported [2010] O.T.C. Uned. 4717, dismissed the action. The drawer appealed.

The Ontario Court of Appeal dismissed the appeal.

Banks and Banking - Topic 3515

Cheques and orders drawn on deposits - Payment of cheques - General - To nonexistent payee - Marshner, a manager at Rouge Valley, caused his employer to pay nearly $700,000 worth of invoices rendered by "Scarborough-York Mobile Rehabilitation", a made-up entity, for services that were never provided - Rouge Valley issued cheques payable to "S.M.R.", also a made-up entity - These cheques were deposited by Marshner's associate, Reinsilber, at TD Canada Trust - Reinsilber put the cheques in an account for "SMR and Associates", which was his sole proprietorship - When the fraud was discovered, Rouge Valley sued TD Canada Trust for conversion - In defence, TD Canada Trust invoked s. 20(5) of the Bills of Exchange Act (Can.), which provided that "[where] the payee is a fictitious or non-existing person, the bill may be treated as payable to bearer" - "Scarborough-York Mobile Rehabilitation" and "S.M.R." did not exist - The trial judge found that these two entities were "a non-existing person" under s. 20(5) and dismissed the action - The Ontario Court of Appeal upheld the decision, adding that the two entities were not plausibly real - Firstly, their name bore no resemblance to "Delisle", the name of an existing entity, with whom Rouge Valley had never dealt with, but which had been used previously as a "façade" by Marshner and Reinsilber to defraud Rouge Valley - Secondly, no one at Rouge Valley could say that the cheques were issued to a known entity with whom it had previous legitimate business dealings - See paragraphs 1 to 42.

Cases Noticed:

Boma Manufacturing Ltd. et al. v. Canadian Imperial Bank of Commerce, [1996] 3 S.C.R. 727; 203 N.R. 321; 82 B.C.A.C. 161; 133 W.A.C. 161, consd. [para. 10].

Bank of Nova Scotia v. Toronto-Dominion Bank (2001), 145 O.A.C. 106 (C.A.), refd to. [para. 11].

Westboro Flooring and Décor Inc. v. Bank of Nova Scotia et al. (2004), 187 O.A.C. 357; 71 O.R.(3d) 723 (C.A.), consd. [para. 36].

Statutes Noticed:

Bills of Exchange Act, R.S.C. 1985, c. B-4, sect. 20(5) [para. 3].

Authors and Works Noticed:

Crawford, Bradley, The Law of Banking and Payment in Canada (2008), p. 22-34 [para. 30].

Falconbridge, John D., Banking and Bills of Exchange (6th ed. 1956), pp. 468 to 469 [para. 22].

Counsel:

Lincoln Caylor and Ranjan Agarwal, for the plaintiff/appellant;

Martin Greenglass, for the defendant/respondent.

This appeal was heard on May 31, 2011, by Laskin, Goudge and Gillese, JJ.A., of the Ontario Court of Appeal. The following decision of the Court of Appeal was delivered by Laskin, J.A., and released on January 12, 2012.