2017 QCCQ 7087, 2017 QCCQ 7087

9069-0934 Québec inc. c. Royal Bank of Canada 2017 QCCQ 7087 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-32-147001-152 DATE: June 20, 2017 ______________________________________________________________________ BY THE HONOURABLE ELIANA MARENGO, J.C.Q. ______________________________________________________________________ 9069-0934 QUEBEC INC. Plaintiff v.

ROYAL BANK OF CANADA and ELLERY ALLICE Defendants ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Plaintiff company is suing defendant bank and defendant Ellery Allice (“Ellery”), in damages, for having cashed 2 cheques, one fraudulently (“cheque A”) and the other without right (“cheque B”). [ 2 ] As appears from banking and security resolution P-3, only plaintiff’s president Marlowe Allice (“Marlowe”) signing alone or Ellery and Marlowe together, were authorized to withdraw funds from plaintiff’s account. [ 3 ] Ellery admits that he forged Marlowe’s signature on cheque A (exhibit P-2), in the amount of $2,448.00, and cashed it at plaintiff’s bank on January 25, 2013. [ 4 ] Marlowe became aware of this in January, 2013, and advised defendant bank’s “Saleh” immediately. [ 5 ] On April 16, 2013, Ellery signed cheque B (exhibit P-1), in the amount of $4,386.00, which defendant bank cashed, although Ellery was not authorized to do so (resolution, exhibit P-3). [ 6 ] Defendant bank’s contestation reads as follows: “La

partie défenderesse nie être endettée envers la

partie demanderesse pour les motifs qui seront plus amplement exposés lors de l’audition de la présente cause. La présente contestation est bien fondée en faits et en droit.” and Ellery’s reads : “For the cheque dated April 16, 2013, there is no fault on the part of Ellery Allice. For the cheque dated January 25, 2013 the signature was done with the full knowledge of Marlowe and consistent with the common practice between the brothers including Marlowe’s wife, Sarita Ann Bross.” [ 7 ] Marlowe denies that

a) he was aware or consented to Ellery forging his signature on cheque A, and

b) that he authorized Ellery to sign and present cheque B to defendant bank on plaintiff’s behalf. [ 8 ] Given paragraph 20 of the Financial Services Agreement which intervened between the parties, on May 14, 1999 (exhibit D-1), which paragraph reads as follows: “20. Bank’s Responsibility The Bank will not be responsible for any loss or damage suffered or incurred by the Customer except in a case where there has been negligence on the part of the Bank, and in any such case the Bank will not be liable for any indirect, consequential or exemplary damages (including but not limited to loss of profits), regardless of the cause of action.

In no event will the Bank be liable for any loss or damage suffered by the Customer that is caused by:

a) the actions of, or any failure to act by, any third party (and no third party will be considered to be acting as an agent for the Bank);

b) inaccuracies in or inadequacies of any information furnished by the Customer to the Bank;

c) a forged or unauthorized signature or a material alteration on any Instrument, unless (

A) it was made by a person who was at no time the Customer’s employee, officer, director or agent and (

B) its occurrence was beyond the Customer's control;

d) or failure by the Bank to perform or fulfill any of its obligations to the Customer due to any cause beyond the Bank's control.” [ 9 ] Whereas, therefore, defendant bank is not liable for reimbursement of the amount of cheque A ($2,448.00). [ 10 ] However, given his fraudulent signature on said cheque, Ellery is liable for payment of the said amount. [ 11 ] With respect to cheque B, both defendants are jointly and severally liable for the reimbursement of the amount of $4,386.00. [ 12 ] Defendant bank was negligent in cashing a cheque which was not signed in accordance with the terms and conditions of banking resolution P-3; and, furthermore, it did so knowing fully well that Ellery had already made unlawful banking transactions involving plaintiff, its client. [ 13 ] As for Ellery, the Court does not believe that Marlowe had knowledge of cheque B or authorized it.

WHEREFORE THE COURT HEREBY: GRANTS plaintiff's application, in part; CONDEMNS Royal Bank of Canada and Ellery Allice jointly and severally to pay plaintiff the sum of $4,386.00, plus interest at the legal annual rate of 5% and the additional indemnity provided for in

article 1619 of the Civil Code of Quebec , from April 29, 2015, the whole with legal costs; CONDEMNS Ellery Allice to pay plaintiff a further amount of $2,448.00, plus interest at the legal annual rate of 5% and the additional indemnity provided for in

article 1619 of the Civil Code of Quebec , from April 29, 2015, with legal costs. __________________________________ ELIANA MARENGO, J.C.Q. Dates of hearings: March 21, 2016 and May 23, 2017