The appellant's employee forged signatures on cheques drawn on the appellant's account at the respondent bank.
The bank honoured the cheques and debited the appellant's account.
The appellant sued the bank to recover the funds.
The bank argued the appellant was precluded from setting up the forgeries because it breached a duty to examine its bank statements and maintain adequate internal controls.
The Supreme Court of Canada held that, in the absence of an express verification agreement, a customer does not owe a duty to the bank to examine bank statements with reasonable care and report discrepancies, nor does it owe a duty to maintain an adequate system of internal accounting controls.
The appeal was allowed and judgment entered for the appellant.
