Brent Pearce

A cheque‑cashing company sought to recover losses arising from a fraudulent mortgage scheme and the negotiation of a bank draft bearing a forged endorsement.

The plaintiff alleged negligence and fraud against multiple parties involved in the mortgage transaction, including the property owner, a lawyer, a lender, and a relative of the homeowners.

The court found that the homeowners were not involved in the fraud and dismissed claims against them and other defendants, including the lawyer and lender.

The court declined to recognize a novel duty of care owed by the drawer of a bank draft to a subsequent negotiator and held that the plaintiff’s loss arose from the strict liability tort of conversion when the draft with a forged endorsement was negotiated.

Liability was established only against the relative who participated in the mortgage fraud.

The plaintiff sought indemnification for deposit refunds paid to purchasers after a registered home builder entered agreements to construct homes despite lacking a valid registration under the Ontario New Home Warranties Plan Act.

The court found the builder fundamentally breached twenty-two Agreements of Purchase and Sale by contracting without legal capacity to construct the homes.

As a result, purchasers were entitled to statutory deposit refunds under s. 14 of the Act.

The court rejected arguments that certain payments were loans rather than deposits and held that the indemnitor’s personal indemnity obligation was not reduced by a separate surety bond.

Judgment was granted for the refunded deposits, administrative fees, and statutory interest.