Lincoln Caylor

The defendant bank brought a summary judgment motion seeking dismissal of a $5.5 billion negligence and knowing assistance claim arising from an international Ponzi scheme, arguing the action was barred by the two‑year limitation period under the Limitations Act, 2002.

The claim was brought by joint liquidators of an offshore bank alleging the defendant bank failed to exercise appropriate due diligence and facilitated the scheme by continuing correspondent banking services.

The court held that the discoverability of the claim before the critical limitation date involved complex factual inquiries regarding what the liquidators’ predecessors knew or ought to have known about the bank’s role in the fraud.

Given the extensive evidence, overlapping merits issues, and disputed factual questions about knowledge and investigation during the liquidation process, the court found a genuine issue requiring a trial.

Summary judgment was therefore inappropriate.

Investors who lost $17 million in a fraudulent certificate of deposit scheme brought a motion for leave to amend their statement of claim against a bank that had acted as a correspondent bank for the fraudster.

Earlier pleadings alleging a general duty on banks to monitor customers for fraud had been struck for failing to disclose a reasonable cause of action.

The proposed amendments added detailed allegations based on documents obtained by liquidators showing internal concerns within the bank about suspicious activities and regulatory issues surrounding the customer.

The court held that the amended pleading alleged a more specific duty arising from particular knowledge and circumstances rather than a broad duty to investigate customers generally.

Because the new allegations relied on information not reasonably available earlier and could potentially support a tenable claim, leave to amend was granted.