The action was brought by a fraudster who was cheated by her
co-conspirator. There was a fire in the plaintiff's home. Her
insurer indicated it would cover some of the repair work, but not
certain other renovations the plaintiff wanted to have done. The
insurer would only make the cheque payable to the contractor who
completed the covered repairs. The plaintiff was concerned that the
contractor had completed the covered repairs for less than the
amount of the insurance payment and so the contractor would keep
the excess insurance funds and apply them to the outstanding
balance related to the renovations that were not covered by the
insurer. To avoid this, the plaintiff devised a scheme with one
Yeretsian, the owner of Consilium, a contractor. The plaintiff told
her insurer that Consilium completed the covered repairs, and the
insurer made out the cheque to the plaintiff and Consilium jointly.
The plan was that the plaintiff would merely deposit the cheque
with Consilium and she would keep the money.
When she received the cheque, the plaintiff attended at the bank
to deposit it. She claimed that the teller represented to her that
a cheque to joint payees could only be negotiated if they both
attended at the bank at the same time. The plaintiff then endorsed
the cheque and gave it to Yeretsian. One year later the plaintiff
learned that Yeretsian had negotiated the endorsed cheque and had
kept all the money.
The plaintiff claimed that the bank should be held to the
teller's representation that a cheque to joint payees could
only be negotiated with both payees present. In any case, the
plaintiff alleged the bank was negligent and owed the plaintiff a
duty of care.
The Court of Appeal upheld the trial judge's finding that
the teller did not make such a representation, but even if there
was a representation, that did not change the requirement under the
Bills of Exchange Act that a cheque could be negotiated under the
endorsement of joint payees, and that their presence was not
necessary. Furthermore, the Court of Appeal upheld the trial
judge's finding that the bank did not owe a duty of care in the
While this case involves very unique factual circumstances, it
is notable that the Court of Appeal continues to uphold a strict
interpretation of the Bills of Exchange Act, which promotes
certainty and predictability with respect to the functioning of the
In late October 2016, the federal government introduced Bill C-29, Budget Implementation Act, 2016, No. 2, which addresses a wide variety of topics, including proposed changes to the Bank Act (Canada).
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