Wire fraud, a trust account, and a bank's fine print - now headed to trial
New Brunswick's Court of Appeal has revived a lawyer's fraud claim against Bank of Nova Scotia, finding a lower court dismissed it too soon.
The ruling was handed down July 16, 2026, overturning a summary judgment that had thrown out the case without a trial.
The appellant, a sole-practitioner lawyer in Saint Andrews, New Brunswick, held business banking accounts with the bank, including a trust account, governed by a Business Banking Services Agreement. In December 2021, he was targeted by fraudsters posing as a client seeking help recovering a divorce settlement. He received what appeared to be a legitimate bank draft for $265,900 and, believing it had cleared, wired $100,000 from his trust account to an account in Hong Kong.
The draft turned out to be counterfeit. The bank charged back the full $265,900 to his trust account, along with fees, leaving it more than $84,000 in the negative before he replenished the funds.
The lawyer alleged a bank employee assured him the draft was legitimate and safe to act on before he wired the money. Bank staff denied giving any such assurance. A motion judge sided with the bank, ruling the banking agreement was a complete answer to the claim regardless of what was said at the counter, and dismissed the case on summary judgment.
The Court of Appeal disagreed. It found the motion judge never resolved the conflicting accounts of what bank staff told the lawyer, yet relied on that unresolved evidence to conclude there was no negligence and that a liability exclusion clause fully protected the bank. That gap, the court said, amounted to an error of law.
"The conflicting evidence raised a genuine issue for trial," the court held, ordering the matter back for a full hearing. The bank was also ordered to pay $2,500 in costs to the appellant.
For wealth managers and firms handling client trust accounts, the decision is a reminder that banking agreements limiting institutional liability are not automatically bulletproof. Where front-line staff allegedly offer verbal assurances that conflict with a bank's written contractual terms, courts may require a trial to sort out whose version controls, rather than letting an exclusion clause end the case at the summary judgment stage.
The ruling also underscores a live tension for compliance teams: the case originated with the appellant's own admitted failure to follow know-your-client identification steps before acting for the fraudulent "client," a reminder that even seasoned professionals remain exposed to sophisticated fraud schemes involving fabricated documents, overseas contacts, and rushed international wires.
The Court of Appeal was careful to note it was not ruling on who should ultimately win. The case now returns to trial, where a judge will need to weigh the competing evidence and decide whether bank staff gave the assurances alleged, and if so, what that means for the exclusion clause's enforceability.
