The Notion Of Gross Fault Unpacked By Quebec Courts

The Quebec Court of Appeal (the "Court") recently allowed an appeal touching on a facet of banking law that is infrequently unpacked by the courts: the liability of a bank when a client is the victim of fraud. In Djamad v. Royal Bank of Canada ("Djamad"), the Court dealt with the impossibility for a bank to invoke and rely upon a verification clause (a common exclusion of liability clause found in retail banking contracts) in the context of wire fraud. This marks a rare occasion that the Court reckoned with Article 1474 of the Civil Code of Quebec (the " CCQ"), which disallows a party from relying upon an exclusion of liability, within the context of retail banking.

In Djamad, the appellant sought to reverse the decision of the lower court which did not find the bank liable for damages caused by two fraudulent wire payments totaling $105,000 that were transferred out of his account with said institution. These funds were successfully wired by the malicious