Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/1511709
www.lexpert.ca 23 THIS CASE originated in a fraud involving the Caribbean-based Stanford International Bank. e bank's primary business was selling high-yield certificates of deposit to high-net-worth clients. e Toronto Dominion Bank had a relationship with Stanford International. TD was responsible for receiving and disbursing funds from and to purchasers of the certificates of deposit until Stanford International collapsed and was liquidated. Stanford International's joint liquidators sued TD, alleging it was liable for knowing assistance in breach of fiduciary duty and was negligent in providing services. e trial judge dismissed the action, finding TD lacked knowledge of the fraud and was not reckless or wilfully blind. e judge ruled there was insufficient proximity for a novel duty of care. e liquidators challenged the negligence claim's dismissal, and the Ontario Court of Appeal dismissed their appeal, of their customers. He adds that McDonald v. Toronto- Dominion Bank also stood out for the "sheer size of the claim." "e claim of US$5 billion put this case in a different category. It was clearly going to be a high-stakes case, no matter how it turned out." MCDONALD V. TORONTO-DOMINION BANK, 2022 ONCA 788 • Mark McDonald of Grant Thornton (Brit- ish Virgin Islands) Ltd. and Hugh Dickson of Grant Thornton Specialist Services (Cayman) Ltd., acting together herein in their capacities as Joint Liquidators of Stanford International Bank Ltd. > Bennett Jones LLP > Lincoln Caylor, Maureen M. Ward, Nathan J. Shaheen, Alexander C. Payne, Shaan P. Tolani, Thomas Feore • Toronto-Dominion Bank > McCarthy Tétrault LLP > Geoff R. Hall, Junior Siri- var, Christine Wadsworth, Alison Bond, Erin Chesney, Jacob Klugsberg CLIENTS > FIRMS > LAWYERS agreeing that TD and Stanford International did not fall within an established or analogous proximity category. According to Geoff Hall, a partner at McCarthy Tétrault LLP who acted on the case, the ruling raises two key issues. One concerns the scope of the duty of care banks owe their customers. "e Court of Appeal decision made clear that the mere existence of a banking relation- ship isn't enough. You have to look at it at a more granular level," he says. Hall says it is the type of relationship that matters. He says that opening a chequing account with a bank does not give the bank a duty of care concerning all that customer's investments, nor does having a safety deposit box with the bank obligate that bank to ensure that the customer is not the victim of fraud. Secondly, Hall says the ruling clarifies that deep-pocketed defendants and banks are not the insurers, auditors, or regulators