Colleagues:
Some of you might find the
following case interesting, it appears to raise issues of tracing,
wrongs and the "well-established doctrine of mistake of fact"
(according to the court). (It appears that Garland was not
cited at all nor the concept of unjust enrichment):
BANKS -
RESTITUTION -
MISTAKE OF FACT
B.M.P. Global Distribution Inc. v.
Bank of Nova Scotia (B.C.C.A. September 30, 2003) (31930)
" H and B owned
interests in
BMP, a company operating in British
Columbia that distributed non-stick bakeware.
They reached an agreement to sell the right to distribute the bakeware
in the United States
with a person they had recently met there. They subsequently received
an
unendorsed cheque of C$904,563 payable to BMP. The cheque was drawn on
the account of a company at the Royal Bank ("RBC"). Neither
this company nor the name of the sender of the envelope containing the
cheque
was known to H or B or was apparently linked to the business purchasing
the
right to distribute the bakeware. H went to a branch of the Bank of
Nova
Scotia ("BNS") where BMP held an account to deposit the cheque.
BNS did not provide BMP with immediate access to the funds, but
eventually
received the funds from RBC in the ordinary course of business and
released
them to BMP. On that day and over the next 10 days, BMP made numerous
transfers to other BNS accounts related to H, B, and H's holding
company.
RBC subsequently notified BNS that the cheque for $904,563 was
counterfeit, as
the drawer's signatures were forged and asked for BNS's assistance.
BNS
interrupted all transactions in BMP's account and in all related
accounts and
asked BMP for assistance in recovering the proceeds of the forged
cheque.
BMP insisted on retaining the amount it still held. BNS then
restrained
the funds in accounts under its control that it linked to the forged
cheque. RBC and BNS entered into an agreement by which BNS was, at
RBC's
request, to transfer the restrained funds to RBC and RBC was to
indemnify BNS
for any losses related to the restraint and transfer. BNS transferred
$777,336 to RBC.
BMP, H, B, and H's holding
company sued BNS and claimed
damages equivalent to the restrained amount, as well as non-pecuniary,
aggravated and punitive damages. The trial judge ordered BNS to pay
$777,336 in total pecuniary damages and also awarded damages for
wrongful
disclosure of information and defamation. In his view, BNS had violated
the
service agreement as well as the law applicable to banker/customer
relations by
charging back amounts credited to BMP's and the related accounts. The
Court of Appeal allowed BNS's appeal against BMP by reducing the
latter's
damages to $101. As to the funds traced in the related accounts, the
court found that BMP's transfers were proper and that the cheques were
actual
bills of exchange and dismissed the appeals against H, B, and H's
holding
company. In this Court, BMP appealed the Court of Appeal's reversal of
the trial judge's conclusion on damages and also asked for punitive
damages.
BNS cross-appealed on the issue of tracing in the related accounts. It
seeks the reversal of the Court of Appeal's decision and of the trial
judge's
damage award in favour of the holders of the related accounts."
The SCC dismissed the appeal and
allowed the cross-appeal.
The decision can be found at: http://scc.lexum.umontreal.ca/en/2009/2009scc15/2009scc15.html.
--
Jason Neyers
Associate Professor of Law &
Cassels Brock LLP Faculty Fellow in Contract Law
Faculty of Law
University of Western Ontario
N6A 3K7
(519) 661-2111 x. 88435