Fraud: Where To Begin ' Part I

• Published date: 25 May 2023
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Criminal Law, Arbitration & Dispute Resolution, Real Estate, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: DMG Advocates
• Author: Corey Groper and Ryder Gilliland

Introduction

This is the first in a series of bulletins which will discuss relevant considerations for practitioners faced with the prosecution and defence of civil fraud actions.

This introductory bulletin addresses considerations at play when commencing a fraud action, including the various relevant causes of action available.

Future bulletins will address, among other topics, the following:

• advantages and disadvantages surrounding the pleading of fraud;
• practical tips when considering who to name as defendants;
• strategies for piercing the corporate veil;
• interim relief measures including Mareva, Norwich and Anton Pillar orders; and
• jurisdictional considerations which frequently arise in the context of cross-border fraud cases.

We will also aim to provide timely commentary on noteworthy fraud cases.

What to Plead

Fraud embraces a wide range of actionable wrongs and can take a variety of different forms. Depending on the factual circumstances of a particular case, different causes of action may be available to an aggrieved party including, among others, deceit, conversion, fraudulent misrepresentation, breach of fiduciary duty, conspiracy, bribery, breach of trust, inducing breach of contract, unjust enrichment, knowing receipt, and unlawful means. The common thread is deliberate action on the part of the wrongdoer, often premised on reckless and/or dishonest conduct. The more serious the alleged misconduct, the more cogent the evidence required to establish the fraud and meet the civil onus of proof.¹

Civil Fraud, Fraudulent Misrepresentation and Deceit

Courts have long used the same test for civil fraud as they have for the torts of deceit and fraudulent misrepresentation.² As Justice Perrell noted in Holley v. Northern Trust Co. Canada, "at the fundamental core of fraud, deceit, or fraudulent misrepresentation is the moral turpitude of the defendant".³ In this regard, "while the notion of fraud may elude precise definition, it necessarily involves some aspect of impropriety, deceit, or dishonesty".⁴

The core requirements of a civil fraud claim were set out by the Supreme Court of Canada in Bruno Appliance and Furniture Inc. v. Hryniak. They include: (1) a false representation made by the defendant; (2) some level of knowledge of the falsehood on the part of the defendant (whether through knowledge or recklessness); (3) the false representation caused the plaintiff to act; and (4) the plaintiff's actions resulted in a loss.⁵ All four of these elements must be satisfied in order to make out a claim for civil fraud.⁶

Civil fraud must be established on a balance of probabilities.⁷ The onus of proof rests upon the party alleging the fraud.⁸ The evidence must be clear and convincing to satisfy the balance of probabilities test.⁹ The totality of the evidence must be...