Duped lawyer, not bank, ruled liable for losses in money transfer scam
The estate of a prominent Ottawa lawyer, who inadvertently got caught up in a scam familiar to most email users, will have to pay the tens of thousands of dollars his bank lost in the scheme, Ontario’s top court ruled Tuesday.
In its decision, the Ontario Court of Appeal rejected the idea that Geoffrey Grenville-Wood’s bank should have to swallow the loss because it didn’t act properly in handling what turned out to be a forged cheque.
“The appellant was the person best situated to prevent the loss and to make inquiries as to the validity of the cheque purportedly issued to him,” the court ruled.
The case arose in 2005 when Grenville-Wood agreed to help transfer money for an apparent businessman in Taiwan – someone he didn’t know.
In exchange for his services, the lawyer was to collect a commission worth five per cent.
He later received a $57,000 cheque payable to him which he deposited into a new account at the Desjardins credit union, less the $2,850 commission he put into an existing account.
What Grenville-Wood didn’t realize was the cheque – drawn on a construction company in Brampton, Ont., that banked with the Royal Bank – had been carefully doctored to show him as payee. The amount had also been altered.
Initially, neither Desjardins nor the Royal Bank noticed the problem and the funds were released.
The forgery was only discovered months later when the Royal Bank dishonoured the cheque – and only after Grenville-Wood had already ordered Desjardins to transfer almost US$42,000 to a company in Tokyo as the purported businessman in Taiwan had instructed him to do.
Desjardins, which recently merged with Meridian Credit Union, sought to recover the money by taking $12,000 from Grenville-Wood’s account and suing him for the remaining $44,000.
At trial, Grenville-Wood argued he was a victim of fraud and Desjardins should have taken more care to ensure the cheque would be honoured before releasing the money to him.
He also said Desjardins had lifted the hold on the cheque, and so the transaction should have been considered final as far as he was concerned.
The trial judge sided with the bank.
Grenville-Wood died in late 2009, but his estate pursued the appeal of the judge’s decision.
The Appeal Court rejected arguments that the lower court judge had made mistakes.
The court said in its ruling Tuesday that Desjardins did not become a guarantor of the cheque just because it had received the money from the Royal Bank and removed the hold on Grenville-Wood’s cheque deposit.
Scams in which people are promised a cut for helping transferring funds are ubiquitous on the Internet but it was not immediately clear how or why Grenville-Wood got ensnared.
