In its recent decision in Teva Canada Limited v. Bank of Montreal, the Ontario Court of Appeal revisited defences available to banks under the Bills of Exchange Act in cases of employee cheque fraud. Finding in favour of the appellant banks, the Court of Appeal found that companies that fail to put in place and follow cheque approval policies may be deprived of their strict liability recourse against the banks. Teva has now filed an application for leave to appeal to the Supreme Court of Canada, whose decision is pending. Where a fraudulent employee misappropriates cheques from its employer, an innocent party, be it the employer or the banks that dealt with the cheques, must typically bear the loss.

By Karen M. Rogers, Danielle Ferron, Daniel Baum and Anne-Marie Hébert
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