COURT OF APPEAL FOR ONTARIO

CITATION: Dynasty Furniture Manufacturing Ltd. v. Toronto-Dominion Bank, 2015 ONCA 137

DATE: 20150302

DOCKET: M44316 (C59401)

Laskin, Rouleau and Huscroft JJ.A.

BETWEEN

Dynasty Furniture Manufacturing Ltd., Shafiq Hirani, Hanif Asaria, Dinmohamed Sunderji and 2645-1252 Québec Inc.

Respondents

(Moving Parties)

and

The Toronto-Dominion Bank

Appellant

(Responding Party)

Lincoln Caylor and Nathan J. Shaheen, for the moving parties Dynasty Furniture Manufacturing Ltd. et al.

Geoff R. Hall and Junior Sirivar, for the respondent the Toronto-Dominion Bank

Heard and released orally: February 23, 2015

On appeal from the order of Justice Michael A. Penny of the Superior Court of Justice, dated August 26, 2014.

ENDORSEMENT

[1] The Toronto-Dominion Bank (“TD”) appeals from the order of Penny J. granting the respondent, Dynasty Furniture Manufacturing Ltd. (“Dynasty”), leave to amend its statement of claim. The respondent brings a motion to quash TD’s appeal on the basis that the motion judge’s order is interlocutory, not final.

[2] The respondent sued the appellant in negligence, alleging that the appellant had actual and constructive knowledge of fraudulent dealings by a third party (Stanford International Bank Limited) that caused the respondent to lose roughly $17 million. Justice Wilton-Siegel struck those portions of the respondent’s statement of claim that alleged negligence as result of constructive knowledge on the basis that “the circumstances of this case are not capable of establishing a relationship of sufficient proximity to found a duty of care”: 2010 ONSC 436, 74 C.C.L.T. (3d) 286, at para. 71. Justice Wilton-Siegel’s order was upheld by this court (2010 ONCA 514, 321 D.L.R (4th) 334 (“Dynasty One”)), which endorsed the record as follows:

[5] We are of the view that the facts, as pleaded, do not give arise [sic] to the duties relied upon in the struck portions of the statement of claim. Although in some cases trial courts have, on motion to strike, allowed claims alleging a duty to ensure that a bank’s customers did not use their accounts for fraudulent purposes to proceed to trial, we were not referred to any trial or appellate decision in Canada holding that a bank has those duties to a non-customer. Thus the impugned claims do not fall within a category of cases that has been recognized by the courts.

[6] Moreover, we do not consider this to be a case where this court should recognize a new duty of care under the Anns/Kamloops principles. We agree generally with the motion judge’s analysis of those principles. Based on that analysis, we are of the view that the facts, as pleaded in this case, are not sufficient to warrant recognizing a new duty of care by a bank to a non-customer.

[9] In these circumstances, we do 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. We leave the question of whether such a duty exists and, if so, in what circumstances, to another day.

[3] In 2014 the respondent moved to amend its statement of claim to reintroduce allegations grounded in constructive knowledge. The motion judge allowed the motion under Rule 26 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, concluding that the amended pleading particularized the allegation based on information that was neither known nor reasonably knowable in 2009/2010. The motion judge considered this court’s decision in Dynasty One to be controlling of the motion, noting that the court left open the possibility that a duty could be owed to a non-customer but that sufficient facts had not been pleaded to establish the basis for the duty. The motion judge considered and rejected the argument that the motion was an abuse of process or unfair.

[4] The question raised by this motion to quash is whether the motion judge’s order is interlocutory or final in nature. If the order is interlocutory the appeal lies to the Divisional Court, whereas if it is final, the appeal lies to this court.

[5] Decisions permitting amendments to pleadings are normally understood to be interlocutory in nature: see Merling v. Southam Inc. (2000), 2000 CanLII 5621 (ON CA), 183 D.L.R. (4th) 748 (Ont. C.A.), at para. 2. However, the appellant argues that the motion judge’s decision is properly characterized as final because it deprives the appellant of its defence to that part of the action based on constructive knowledge.

[6] The appellant misconceives the nature of the motion judge’s decision. As this court noted recently in Waldman v. Thomson Reuters Canada Ltd., 2015 ONCA 53, at para. 22, the issue is not whether the matter before the motion judge has been disposed of finally by an order but, instead, whether an order brings an end to an action or resolves a substantive claim or defence.

[7] The motion judge’s decision simply allows the matter to proceed to trial. The decision did not have the effect of depriving the appellant of a substantive defence. It remains open to the appellant to advance a substantive defence to the argument that a duty to a non-customer can be created based on constructive knowledge and that constructive knowledge can be made out on the facts of this case. Thus, the decision of the motion judge is interlocutory in nature and it follows that the appeal lies to the Divisional Court.

[8] Accordingly, the appeal is quashed.

[9] Costs to the respondent of the motion and the appeal are set in the agreed amount of $20,000, inclusive of disbursements and relevant taxes.

“John Laskin J.A.”

“Paul Rouleau J.A.”

“Grant Huscroft J.A.”