Bank Improperly Refuses to Answer Questions Regarding Lawsuit Alleging Banks Owe a Duty of Care to Customers to Prevent Elder Financial Abuse
An interesting lawsuit has been commenced in Alberta, where the plaintiff, an elderly woman, argues that the defendant bank owes a duty of care to its customers to help prevent fraud, particularly fraud against elderly customers. While the ultimate question of whether a bank owes such a duty of care has not been tried yet, this preliminary decision regarding a refusals and undertaking motion, Franiel v Toronto-Dominion Bank, 2020 ABQB 66, may be helpful in providing guidance on what are considered to be proper discovery questions in an elder financial abuse situation where a bank is named as a defendant.
Background
The plaintiff is an 81-year-old customer of the Bank. Over a ten-month period in 2018, she was a victim of 26 fraudulent scams. On some occasions she believed she won the lottery, on other occasions she believed she owed money to the Canada Revenue Agency. None of these things were true; they were all scams perpetrated by fraudsters. After several bank drafts had been issued, the plaintiff’s son visited a Bank branch, alerting the teller to the fact that he believed his mother may have been a victim of fraud. An electronic note was placed on the plaintiff’s account. Despite this note, 12 more bank drafts were issued. Eventually, the plaintiff went to the Bank 26 times to obtain bank drafts, each just under $10,000.00 but in all totalled $241,730.00. The Bank was able to recover only $8,000.00 of her money.
The plaintiff sued the Bank arguing that an elderly customer, attending regularly for bank drafts for significant amounts of money, mostly just under $10,000.00, dealing face-to-face with bank tellers, should have raised “red flags” to the Bank and the Bank should have stepped in to stop her.
The Bank defends the claim on the basis that no such duty of care exists and even if there was, the Bank exercised reasonable oversight in the circumstances.
A questioning (called examinations for discovery in Ontario) was stopped early by the plaintiff’s counsel on the basis that the questioning was “substantially frustrated by the number of improper objections and refusals to provide undertakings” by the Bank’s counsel. The plaintiff brought a motion to have the Bank answer the questions.
Questions Posed to the Bank Were Proper
Ultimately, Master Robertson concluded that most of the Bank’s objections were not valid and most of the undertaking requests were proper requests. The plaintiff was entitled to re-commence questioning of the Bank’s corporate representative.
What is interesting for the purposes of elder law considerations, and in the context of elder financial abuse, are the questions that were asked and deemed appropriate. Master Robertson noted:
The nature of the claim requires establishing that there actually is a duty of care owed by the Bank in these circumstances. That requires the plaintiff to demonstrate, or at least explore, such things as the Bank’s knowledge of the sorts of fraudulent activities of which its customers generally are being victimized; when the Bank became aware (or should have become aware) of those sorts of fraudulent activities being perpetrated on [the plaintiff]; whether the fraudulent activity here appeared to the Bank’s tellers to be frequent; whether the Bank adopted any practices, policies, practices [sic], or procedures in order to protect its customers against those fraudulent activities; what those policies, practices, or procedures were; whether they were being followed; and whether those policies, practices or procedures were actually communicated to the tellers on the “front line” of the Bank’s interaction with its customers by formal training or otherwise.
Master Robertson observed that the Bank’s unstated position seemed to be that since it was confident it did not owe a duty of care at all “to see why a customer is withdrawing or investing her money and no duty to decline to act on the customer’s instructions,” it was not obliged to provide candid answers to questions as to the Bank’s level of knowledge of these sorts of frauds generally, or its specific level of knowledge of the plaintiff’s behaviour. This was an error. There was no application to strike the claim or dismiss the claim. Importantly, the scope of questions which a party is entitled to ask is determined by the pleadings.
An example of one of the questions refused, but later ordered to be answered, was “Do you have knowledge as to why you hadn’t seen a document produced by the Bank entitled “Protecting the Elderly from Fraud and Financial Abuse” published March 13, 2017, online?” The document in question was a Bank blog post, and it specifically described “red flags” when dealing with elderly customers and specifically discussed “frequent large withdrawals of money in a short period of time, or unexplained liquidation of investments” and “conversations reveal unexpected lottery win, a new fiancé, or other life changes.”
Master Robertson found that the question about the document was appropriate and should be answered by the Bank representative, a Branch Manager. The document produced by the Bank seemed to have a significance to the claim and the Bank’s defence, and the plaintiff’s counsel was entitled to explore why it was that she, as a bank manager of a branch where some of the frauds were partly carried out, was not aware of it and why she, as the witness for the Bank, was unable to answer questions about it.
Takeaway
While the question of whether a bank owes a duty of care claimed by the plaintiff will have to be answered on another day, this case is interesting since it provides potential precedent for constructing proper questions to be asked in cases of elder financial abuse perpetrated through bank drafts or other bank instruments. It also raises some interesting questions about whether our financial institutions have a role or responsibility in stopping or preventing financial abuse of older adult customers, and what that role or responsibility looks like.
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This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
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Written by: Kimberly A. Whaley
Posted on: April 9, 2020
Categories: Commentary, WEL Newsletter
An interesting lawsuit has been commenced in Alberta, where the plaintiff, an elderly woman, argues that the defendant bank owes a duty of care to its customers to help prevent fraud, particularly fraud against elderly customers. While the ultimate question of whether a bank owes such a duty of care has not been tried yet, this preliminary decision regarding a refusals and undertaking motion, Franiel v Toronto-Dominion Bank, 2020 ABQB 66, may be helpful in providing guidance on what are considered to be proper discovery questions in an elder financial abuse situation where a bank is named as a defendant.
Background
The plaintiff is an 81-year-old customer of the Bank. Over a ten-month period in 2018, she was a victim of 26 fraudulent scams. On some occasions she believed she won the lottery, on other occasions she believed she owed money to the Canada Revenue Agency. None of these things were true; they were all scams perpetrated by fraudsters. After several bank drafts had been issued, the plaintiff’s son visited a Bank branch, alerting the teller to the fact that he believed his mother may have been a victim of fraud. An electronic note was placed on the plaintiff’s account. Despite this note, 12 more bank drafts were issued. Eventually, the plaintiff went to the Bank 26 times to obtain bank drafts, each just under $10,000.00 but in all totalled $241,730.00. The Bank was able to recover only $8,000.00 of her money.
The plaintiff sued the Bank arguing that an elderly customer, attending regularly for bank drafts for significant amounts of money, mostly just under $10,000.00, dealing face-to-face with bank tellers, should have raised “red flags” to the Bank and the Bank should have stepped in to stop her.
The Bank defends the claim on the basis that no such duty of care exists and even if there was, the Bank exercised reasonable oversight in the circumstances.
A questioning (called examinations for discovery in Ontario) was stopped early by the plaintiff’s counsel on the basis that the questioning was “substantially frustrated by the number of improper objections and refusals to provide undertakings” by the Bank’s counsel. The plaintiff brought a motion to have the Bank answer the questions.
Questions Posed to the Bank Were Proper
Ultimately, Master Robertson concluded that most of the Bank’s objections were not valid and most of the undertaking requests were proper requests. The plaintiff was entitled to re-commence questioning of the Bank’s corporate representative.
What is interesting for the purposes of elder law considerations, and in the context of elder financial abuse, are the questions that were asked and deemed appropriate. Master Robertson noted:
The nature of the claim requires establishing that there actually is a duty of care owed by the Bank in these circumstances. That requires the plaintiff to demonstrate, or at least explore, such things as the Bank’s knowledge of the sorts of fraudulent activities of which its customers generally are being victimized; when the Bank became aware (or should have become aware) of those sorts of fraudulent activities being perpetrated on [the plaintiff]; whether the fraudulent activity here appeared to the Bank’s tellers to be frequent; whether the Bank adopted any practices, policies, practices [sic], or procedures in order to protect its customers against those fraudulent activities; what those policies, practices, or procedures were; whether they were being followed; and whether those policies, practices or procedures were actually communicated to the tellers on the “front line” of the Bank’s interaction with its customers by formal training or otherwise.
Master Robertson observed that the Bank’s unstated position seemed to be that since it was confident it did not owe a duty of care at all “to see why a customer is withdrawing or investing her money and no duty to decline to act on the customer’s instructions,” it was not obliged to provide candid answers to questions as to the Bank’s level of knowledge of these sorts of frauds generally, or its specific level of knowledge of the plaintiff’s behaviour. This was an error. There was no application to strike the claim or dismiss the claim. Importantly, the scope of questions which a party is entitled to ask is determined by the pleadings.
An example of one of the questions refused, but later ordered to be answered, was “Do you have knowledge as to why you hadn’t seen a document produced by the Bank entitled “Protecting the Elderly from Fraud and Financial Abuse” published March 13, 2017, online?” The document in question was a Bank blog post, and it specifically described “red flags” when dealing with elderly customers and specifically discussed “frequent large withdrawals of money in a short period of time, or unexplained liquidation of investments” and “conversations reveal unexpected lottery win, a new fiancé, or other life changes.”
Master Robertson found that the question about the document was appropriate and should be answered by the Bank representative, a Branch Manager. The document produced by the Bank seemed to have a significance to the claim and the Bank’s defence, and the plaintiff’s counsel was entitled to explore why it was that she, as a bank manager of a branch where some of the frauds were partly carried out, was not aware of it and why she, as the witness for the Bank, was unable to answer questions about it.
Takeaway
While the question of whether a bank owes a duty of care claimed by the plaintiff will have to be answered on another day, this case is interesting since it provides potential precedent for constructing proper questions to be asked in cases of elder financial abuse perpetrated through bank drafts or other bank instruments. It also raises some interesting questions about whether our financial institutions have a role or responsibility in stopping or preventing financial abuse of older adult customers, and what that role or responsibility looks like.
—
This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
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