Dear Clients, Colleagues and Confreres:

In this, our last blog for the year, we pass on a smorgasbord of items.

Serious Fraud Office

The Ontario government recently announced the formation of the Serious Fraud Office (“SFO”) to investigate and prosecute complex white collar crime.  The SFO is to work with existing law enforcement agencies to help combat serious or complex fraud claims of all types in Ontario (unlike the IMET division of the RCMP which focuses on capital markets fraud).  The SFO will include investigators and prosecutors to combine their expertise in pursuing financial fraud crimes.  Further details and guidelines are to be published in the future.

Mareva Injunction

In a recent Ontario decision, the test for granting a Mareva injunction was considered in the fraud context. Notwithstanding evidence of potentially fraudulent transactions (which were disputed by the defendants), Justice Pattillo denied a request for a Mareva injunction on the basis that there was no evidence to demonstrate a serious risk that the defendants would dissipate or dispose of assets.  The decision demonstrates that a Mareva injunction will not be granted automatically.  Rather, the court will take a contextual approach and look at all the surrounding circumstances in deciding whether to grant a Mareva injunction as extraordinary relief.  The case is available here.

Direct Loss

The recent decision in Principle Solutions Group, LLC vs. Ironshore Indemnity, Inc., the Court of Appeals for the Eleventh Circuit in Georgia, reflects the divergent stream of cases in the United States when interpreting the direct loss provision in a commercial crime policy.  The majority in this case interpreted the words “loss resulting directly from” to mean the proximate cause between a covered event, and a loss, rather than an immediate link between the two events (as underwriters generally intend).  There are divergent streams of authority on this provision in the United States.  It is not clear at this time whether the decision will be appealed.

All Risk Policy Decision

In an interesting twist, a recent Ontario case awarded the insured recovery of a fraud loss under an all-risks commercial insurance policy.  The insured sold defibrillators to a fraudster posing as a doctor affiliated with a hospital.  The defibrillators were shipped.  The invoices were not paid by the “doctor.” The court found that the insured had not “voluntarily surrendered” the units given the fraudulent intent of the perpetrator.  The insured was awarded the value of the units on this basis.  The decision is available here.

Closing Remarks

Thank you to all our readers.

We wish you and yours the best for the upcoming holiday season, and for a happy, healthy and prosperous 2020.