Teva Canada Limited v. Bank of Montreal

Teva Canada Limited v. Bank of Montreal

Following Boma, estoppel by negligence is not a tenable defence to a conversion claim involving bills of exchange; recognizing such a defence or a new duty of care would undermine the strict liability regime and the required certainty in banking transactions, so leave to amend to plead estoppel by negligence was denied, but leave to plead defences based on the drawer's actual knowledge was permitted.

Citation
2012 ONCA 486
Parties
Plaintiff (respondent): Teva Canada Limited; Defendant (appellant): Bank of Montreal; Defendant (appellant): Canadian Imperial Bank of Commerce; Defendant (appellant): TD Canada Trust; Defendant (appellant): Bank of Nova Scotia; Plaintiff by Counterclaim: Bank of Nova Scotia; Defendant by Counterclaim: Teva Canada Limited; Defendant by Counterclaim: Neil Kennedy McConachie; Defendant by Counterclaim: Renzo G. Tittarelli; Defendant by Counterclaim: Florindo Costanzo
Court
Court of Appeal for Ontario
Jurisdiction
Canada
Judgment Date
9 July 2012
Procedural Posture
Civil / Appeal to Court of Appeal From Superior Court Decision Refusing Leave to Amend Statement of Defence to Plead Estoppel (motion to Amend)
Outcome
Appeal allowed in part and dismissed in part
Legal Topics
Conversion, Estoppel by Negligence, Contributory Negligence, Duty of Care, Bills of Exchange, Amendment of Pleadings, Allocation of Risk in Banking
Source Language
English
Banking Law Tort Law Equity Civil Procedure Commercial Law Conversion Estoppel by Negligence Contributory Negligence +4 more

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Parties

Teva Canada Limited

Plaintiff (respondent)

Bank of Montreal

Defendant (appellant)

Canadian Imperial Bank of Commerce

Defendant (appellant)

TD Canada Trust

Defendant (appellant)

Bank of Nova Scotia

Defendant (appellant)

Bank of Nova Scotia

Plaintiff by Counterclaim

Teva Canada Limited

Defendant by Counterclaim

Neil Kennedy McConachie

Defendant by Counterclaim

Renzo G. Tittarelli

Defendant by Counterclaim

Florindo Costanzo

Defendant by Counterclaim

Procedural Posture

Civil / Appeal to Court of Appeal From Superior Court Decision Refusing Leave to Amend Statement of Defence to Plead Estoppel (motion to Amend)

Legal Issues

  1. 1 Whether estoppel by negligence is available as a defence to a conversion claim against a bank in the processing of cheques
  2. 2 Whether a duty of care should be recognized between a drawer of a cheque and a collecting bank
  3. 3 Whether the motion judge erred in refusing leave to amend to plead estoppel by negligence

Ratio Decidendi

Following Boma, estoppel by negligence is not a tenable defence to a conversion claim involving bills of exchange; recognizing such a defence or a new duty of care would undermine the strict liability regime and the required certainty in banking transactions, so leave to amend to plead estoppel by negligence was denied, but leave to plead defences based on the drawer's actual knowledge was permitted.

Court Disposition

Appeal allowed in part and dismissed in part

Orders

  • Leave granted to Bank of Nova Scotia to amend its statement of defence to plead defences arising from Teva's actual knowledge of the fraudulent conduct
  • Leave to amend to plead estoppel by negligence denied