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Section 8 of the Interest Act, R.S.C. 1985, c. I-15, prohibits any "fine, penalty or rate of interest . . . that has the effect of increasing the charge on the arrears beyond the rate of interest payable on principal money not in arrears." Relying on this provision, borrowers often challenge fees and charges that borrowers levy when seeking to enforce a secured debt that has gone ...

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Posted in Banking

Guarantees are a very common form of security.  Lenders often ask for guarantees from the principals behind a business to whom they are going to extend credit.  Landlords will seek them from the principals of a corporate tenant.  Suppliers often make them part of a credit application.  Typically, guarantees are one of several documents signed as part of a new credit arrangement.  ...

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Posted in Banking, Fraud

You just met a nice foreign gentleman.  He asks you to assist him in facilitating a transfer of funds overseas.  You agree because he offers a 5% commission.  He produces a cheque payable to you, for a large sum, and asks you to deposit it into your bank account.  After retaining your commission, you wire the rest overseas as instructed.  Easy money!  Now, several weeks later, your bank ...

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Posted in Banking, Fraud

A common fraud perpetrated on financial institutions is the deposit of counterfeit cheques.  The account holder distances themselves from the fraud by portraying the payment as one they thought was part of a legitimate transaction.  The funds are often withdrawn or transferred before the cheque is returned as counterfeit, usually within a matter of days.  After the ...

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Tags: Fraud
Posted in Banking, Fraud

There is a card in Monopoly that reads “Bank error in your favour” and which entitles you to keep the $200 wrongly credited to your account.   Banks can make errors.  Banks are also frequently the victims of fraud.  The result of this is often that a lucky customer’s account suddenly has a much larger balance.  However, unlike Monopoly, when this occurs, the bank will do all it ...

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In April 2006, B.C.’s Civil Forfeiture Act (“CFA”) came into force.  Seven Canadian provinces now have similar legislation. 

The CFA provides a mechanism for the government, through the Director of the Civil Forfeiture Office, to seek the forfeiture of the “proceeds of unlawful activity”.  Forfeiture is ordered by the Court when it is proven that property is ...

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Posted in Banking, Commercial

At my in-laws recently, a rather overbearing friend of theirs was expounding to the gathered on the evils of banks and their obligations to provide anyone who wants one with a bank account.  Among other erroneous information, he opined that the right to have a bank account was inalienable and could not be denied by any financial institution.

Though it was not worth saying so at ...

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Posted in Banking, Fraud

Almost the only member of the press to notice, Julius Melnitzer recently reported an Ontario Court of Appeal decision that held the Royal Bank of Canada had no right to freeze accounts belonging to one of its customers by simply starting a lawsuit.  The case turned on the application of a little known (but much loved by litigators) section of the Bank Act: section 437(2).  This ...

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Posted in Banking

In a pair of companion cases, the Supreme Court of Canada unanimously turned down an opportunity to patch over a priority lacuna in the federal Bank Act, S.C. 1991, c. 46 and, instead, held such security could rank after unregistered security granted under Saskatchewan’s Personal Property Security Act, S.S. 1993, c. P-6.2.  In doing so, the Court (quite rightly) rejected a ...

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This blog is authored by members of the Litigation and Dispute Resolution Department. We follow new and interesting issues emerging in the legal and business communities. The wide range of experience among the members of our litigation group will provide a diverse and insightful examination of current legal trends and topics. Our goal is to provide a source of valuable information and insight on a wide variety of matters for our readers.

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