Executive Summary: Key Legal and Evidentiary Issues

• The appeal concerned whether a motion judge erred in granting summary judgment against a lawyer who was defrauded through a counterfeit bank draft.
   
• Conflicting affidavit evidence existed regarding whether a bank teller assured the appellant that the draft was legitimate and safe to rely on.
   
• Interpretation of exclusion and limitation of liability clauses in a Business Banking Services Agreement (BBSA) was central to the analysis.
   
• Neither the appellant nor the bank employees were cross-examined on their affidavits, leaving credibility unresolved on the record.
   
• Proper application of the two-step summary judgment framework, and of the Tercon test for exclusion clauses, required clear findings on what evidence the motion judge accepted.
   
• Ultimately, the Court of Appeal found that unresolved factual disputes about negligence and duty of care necessitated a trial rather than summary disposition.
   

Facts of the case

Barry Robert Morrison, a lawyer practising in Saint Andrews, New Brunswick since 1974, held accounts with the Bank of Nova Scotia governed by a Business Banking Services Agreement (BBSA), including a trust account. In December 2021, Morrison was contacted by an individual purporting to be a prospective client, "Maria Tochi," seeking help recovering funds from a divorce settlement. Communications followed, including a call originating from Nigeria, and Morrison later acknowledged he had not complied with the New Brunswick Law Society's client identification rules. He subsequently received what appeared to be a CIBC bank draft for $265,900, post-dated to December 24, 2021. On December 24, 2021, Morrison attended the bank and dealt with teller Kathleen Shannon, asking that the draft be deposited without a hold; because the amount exceeded her authority, she obtained approval from bank manager Aimee Savoie, who approved the deposit. Morrison then requested an international wire of $100,000 from his trust account to a bank in Hong Kong. The wire was completed on December 29, 2021, and on December 31, 2021, the bank learned the draft was counterfeit. As a result, $265,900 was charged back to Morrison's trust account, leaving a negative balance of $84,777.96 after the withdrawn wire funds and pre-existing balance were also deducted; Morrison replenished the account and the freeze was lifted. Morrison's account of events conflicted with that of Shannon and Savoie: he claimed Shannon left the counter and returned to assure him the draft was legitimate, while Shannon and Savoie denied giving any such assurance and stated they were never told the draft was post-dated. None of the three affiants were cross-examined, and the bank did not file evidence from another employee, Kathleen Yoganathan, whom Morrison said had told him she would have immediately recognized the draft as fraudulent.

Policy and legislative provisions at issue

The motion judge's analysis turned on several provisions of the BBSA. Sections 3.1 and 4.1 required Morrison to ensure his accounts held sufficient cleared funds to cover payment instructions when made. Sections 6.1 and 14.4 gave the bank the right to freeze accounts, charge back items, and recover outstanding balances. Section 16.2 excluded the bank's liability for losses arising from forged or fraudulent instruments or instructions, or from breaches of applicable laws and rules. On appeal, Justice LeBlanc also noted that section 16.1 limited the bank's liability to actual proven damages arising directly from the bank's gross negligence or wilful misconduct, and that section 17.1 required Morrison to indemnify the bank except where losses were caused directly by the bank's gross negligence or wilful misconduct. Rule 22 of the Rules of Court, governing preliminary applications to dismiss claims lacking merit, and the two-step summary judgment framework from Russell et al. v. Northumberland Co-Operative Ltd., 2019 NBCA 70, were also engaged, along with the three-part test from Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, for assessing exclusion clauses.

Reasoning and analysis

Justice LeBlanc, writing for the Court, held that the standard of review on appeal from summary judgment mirrors that of an appeal from a trial judgment, permitting intervention only for material errors of law or palpable and overriding errors in assessing the evidence, citing Girouard v. Girouard, 2025 NBCA 80, and Goyetche et al. v. International Union of Operating Engineers et al., 2019 NBCA 16. The Court found that the motion judge cited relevant authorities—including Bank of Montreal v. Butt, 2015 NLTD(G) 67, and Zheng v. Bank of China (Canada) Vancouver Richmond Branch, 2023 BCCA 43—but failed to explain how their fact-specific holdings applied to Morrison's circumstances, or what evidence she accepted or rejected. Although the motion judge stated she found it difficult to reconcile parts of Morrison's evidence, she neither rejected nor explicitly accepted it, instead concluding that "even if" she accepted his evidence, she could still fairly adjudicate the dispute on the record. Justice LeBlanc found this approach flawed: without clear findings on what version of events was accepted, it was impossible to properly assess whether the bank owed a duty of care, whether it had been negligent, or how the exclusion clause in section 16.2 applied under the Tercon framework. The Court noted that the motion judge's emphasis on Morrison's failure to disclose that the draft was post-dated assumed facts not established in evidence, and that a cursory review of the draft's origin should have raised questions independent of any post-dating issue. The Court concluded that the conflicting evidence regarding assurances allegedly given by Shannon raised a genuine issue for trial, and that the motion judge could have resolved the matter through the "mini-trial" fact-finding powers under Rules 22.04(2) and (3) rather than granting summary dismissal.

Ruling and overall outcome

The Court of Appeal allowed the appeal, holding that the motion judge's failure to resolve the conflicting evidence or clearly identify the factual basis for her decision amounted to an error of law. The order granting summary judgment was set aside and replaced with an order dismissing the bank's application for summary judgment, meaning Morrison's underlying claim against the Bank of Nova Scotia will proceed to trial. The appellant, Morrison, was the successful party on the appeal, and the Court ordered costs of $2,500 in his favour.