Fok Cheong Shing Investments Co. Ltd. v. Bank of Nova Scotia

Fok Cheong Shing Investments Co. Ltd. v. Bank of Nova Scotia

Because the drawer deliberately inserted the payee's name by pretence and intended that the payee not receive payment, the payee was a fictitious person under s.21(5) and the bank was entitled to treat the cheque as payable to bearer and charge the drawer's account; the forged endorsement did not bar the bank and no negligence by the bank was established.

Citation
[1982] 2 SCR 488
Parties
Plaintiff Appellant: Fok Cheong Shing Investments Co. Ltd.; Defendant Respondent: The Bank of Nova Scotia
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
28 September 1982
Procedural Posture
Collection / Appeal to Supreme Court of Canada (on Appeal From the Court of Appeal for Ontario)
Outcome
Appeal dismissed
Legal Topics
Fictitious Payee, Forged Endorsement, Payable to Bearer, Bank Liability, Negligence, Bills of Exchange Act Ss.21(5), 49(1)
Source Language
English
Bills of Exchange Banking Law Commercial Law Fraud Fictitious Payee Forged Endorsement Payable to Bearer Bank Liability +2 more

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Parties

Fok Cheong Shing Investments Co. Ltd.

Plaintiff Appellant

The Bank of Nova Scotia

Defendant Respondent

Procedural Posture

Collection / Appeal to Supreme Court of Canada (on Appeal From the Court of Appeal for Ontario)

Legal Issues

  1. 1 Whether a payee who is a real person can be treated as a 'fictitious or non‑existing person' under s.21(5) where the drawer never intended the payee to receive payment
  2. 2 Whether a forged endorsement renders the cheque wholly inoperative under s.49(1) so the bank cannot charge the drawer's account
  3. 3 Whether negligence by the bank precludes reliance on s.21(5)

Ratio Decidendi

Because the drawer deliberately inserted the payee's name by pretence and intended that the payee not receive payment, the payee was a fictitious person under s.21(5) and the bank was entitled to treat the cheque as payable to bearer and charge the drawer's account; the forged endorsement did not bar the bank and no negligence by the bank was established.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed with costs