In reasons released July 20, 2010, the Ontario Court of Appeal upheld the motion judge’s order striking out the claim by a non-customer, that the bank, in opening a customers account, owed a duty to non-customers of the bank (such as the appellant): “to ensure that the accounts would not be used for an unlawful purpose” and “to enquire into its customer’s activities because it ought to have known that those activities were suspicious, unusual, or fraudulent in nature”.

The court did not find it necessary to decide whether a bank may ever be found to have a duty to a non-customer in circumstances where it does not have actual knowledge (wilful blindness or recklessness) of the fraudulent activities being conducted through an account of its customer.

The court distinguished the case from Semac Industries Ltd. V 1131426 Ontario Ltd. (2001) 16 B.L.R. (3d) 88 (Ont S.C.) where allegations by a non-customer that the bank had already raised concerns internally about suspicious conduct on the part of its customer, and that the non-customer had subsequently alerted the bank to its allegation of fraud, were allowed to go to trial.

Citation: Dynasty Furniture Manufacturing Ltd. V Toronto-Dominion Bank, 2010 ONCA 514

David Keith Alderson LL.B, LL.M

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