Transactions & Cases Detail



Transaction/Case Details

Ontario Court of Appeal struck claim against The Toronto-Dominion Bank

DATE CLOSED

July 20, 2010

BUSINESS SECTOR

Financial Services

LEAD OFFICE

Toronto

VALUE

17 Million CAD


OVERVIEW

On July 20, 2010, the Ontario Court of Appeal affirmed a decision to strike significant parts of a claim by Dynasty Furniture Manufacturing Ltd. and several other plaintiffs against The Toronto-Dominion Bank.  The plaintiffs were not customers of the bank but claimed to have lost money as a result of conduct of a customer of the bank.  The claim, for more than $17 million, alleged that the bank owed to a duty of care to ensure that its customer’s account was not used for an unlawful purpose, and alleged that the bank owed a duty to investigate its customer’s activities because it ought to have known that the activities were suspicious, unusual or fraudulent in nature.  The court rejected these duties and concluded that a bank can only owe a duty to a non-customer in such circumstances if it has actual knowledge of fraudulent conduct by its customer, striking the allegations that went beyond that narrow scope.  The result was a significant defeat for the plaintiffs' efforts to expand the liability of a financial institution for conduct of the institution's customers.

McCarthy Tétrault LLP represented the Toronto-Dominion Bank, with a team led by Geoff Hall.

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