Khosla v. Korea Exchange Bank of Canada

Khosla v. Korea Exchange Bank of Canada

The Court upheld summary judgment: the collecting bank converted the cheque by paying out on a forged endorsement and is strictly liable to the drawer under Boma; statutory defenses (holder in due course s.165(3) and fictitious payee s.20(5)) and the preclusion defence do not apply, so the bank must repay the amount and the appeal is dismissed.

Citation
2009 ONCA 467
Parties
Plaintiff (respondent): Satwant Singh Khosla; Defendant (appellant): Korea Exchange Bank of Canada
Court
Court of Appeal for Ontario
Jurisdiction
Canada
Judgment Date
10 June 2009
Procedural Posture
Civil Appeal / Appeal From Summary Judgment of the Superior Court of Justice
Outcome
Appeal dismissed; summary judgment for the respondent affirmed.
Legal Topics
Conversion, Bills of Exchange Act, Holder in Due Course, Fictitious Payee, Preclusion, Summary Judgment
Source Language
English
Banking Law Commercial Law Tort Law Real Property Civil Procedure Conversion Bills of Exchange Act Holder in Due Course +3 more

Case Brief

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Parties

Satwant Singh Khosla

Plaintiff (respondent)

Korea Exchange Bank of Canada

Defendant (appellant)

Procedural Posture

Civil Appeal / Appeal From Summary Judgment of the Superior Court of Justice

Legal Issues

  1. 1 Whether a collecting bank that pays out on a cheque with a forged endorsement is liable to the drawer for conversion
  2. 2 Whether the drawer's relative ability to detect fraud or contributory negligence can defeat conversion liability
  3. 3 Whether the bank can claim holder in due course status under s.165(3) of the Bills of Exchange Act

Ratio Decidendi

The Court upheld summary judgment: the collecting bank converted the cheque by paying out on a forged endorsement and is strictly liable to the drawer under Boma; statutory defenses (holder in due course s.165(3) and fictitious payee s.20(5)) and the preclusion defence do not apply, so the bank must repay the amount and the appeal is dismissed.

Court Disposition

Appeal dismissed; summary judgment for the respondent affirmed.

Orders

  • Appeal dismissed
  • Costs to the respondent fixed at $10,000 inclusive of disbursements and GST