CANADA Law and Practice Contributed by: John Pirie, Matthew Latella, Michael Nowina and Bryan Hsu, Baker McKenzie
Baker McKenzie 181 Bay Street, Suite 2100 Toronto ON M5J 2T3 Canada
Tel: +1 416 863 1221 Fax: +1 416 863 6275
Email: ask@bakermckenzie.com Web: www.bakermckenzie.com
1. Fraud Claims 1.1 General Characteristics of Fraud Claims Overview of Fraud Claims in Canada Fraud claims can arise under both criminal and civil law. They are governed by a combination of federal and provincial statutes, as well as case law. The legal framework includes Canada’s Criminal Code, which establishes a range of criminal offences, as well as other federal and provincial laws addressing areas including competition law, consumer protection and the regulation of securities. Civil claims for fraud can also arise under common law torts such as fraudulent misrepresentation, deceit and conspiracy, typically requiring proof of intentional or reckless deception, reliance and resulting harm. False Statements A false statement occurs when a person knowingly or recklessly misrepresents a material fact with the intent to mislead another. To establish liability under either statutory or common law principles, the claimant must show that the statement was false, was made with knowledge or disregard for the truth, was relied upon by the victim and resulted in measurable harm. Corrupt Payments (Bribery) Bribery involves the exchange of money, gifts or other benefits to improperly influence someone in a position of authority or trust. It is a criminal offence under the Criminal Code and the Corruption of Foreign Public Officials Act (CFPOA). In the civil context, such con - duct may also give rise to actionable claims.
Conspiracy Fraudulent conspiracy refers to an agreement between two or more individuals to commit an unlawful act or to use unlawful means to achieve a lawful goal. It requires proof of the agreement, intent to cause harm or to use unlawful means and measurable harm. This is both a criminal offence and a civil claim in Canada. Misappropriation Misappropriation involves the unauthorised use or diversion of funds or property. It is both a criminal offence and a civil claim referred to as conversion. 1.2 Causes of Action After Receipt of a Bribe There is potential liability in both tort and contract for accepting a bribe. A common claim against an agent accepting a bribe is typically for breach of fiduciary duty, since agents must act loyally and in good faith. In the right circumstances the principal can recover ill-gotten profits from the bribe and compensation for any losses. Courts may also impose a constructive trust, treating the proceeds as belonging to the principal. If the agent or another party was unjustly enriched, the principal can claim restitution. Other possible claims include civil conspiracy (if there was collusion), fraud (if the bribe was concealed) and tortious interference (if a third party encouraged the breach). Bribery is also a criminal offence. Section 426 of the Criminal Code bans secret commissions, and the CFPOA makes it illegal to bribe foreign officials for business advantages.
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