Hamel v. Banque de Montréal, J.E. 2008-1672 (C.S.) (on appeal)

The Superior Court of Québec rejected a claim of over $5M by a Bank of Montreal (the "Bank") client, who alleged that a bank transfer to Switzerland had never been received by the designated beneficiary recalling the fact that with respect to bank transfers, the bank has an obligation of means only and not of result and that the mere proof that the funds did not arrive at the destination is not sufficient for the Bank to be held liable.

In this decision, a client had asked the Bank to carry out a bank transfer to Switzerland. A few days later, the Bank informed the client that the transfer had been completed and gave her a confirmation number. However, according to the client, the beneficiary of the transfer in question alleged that the funds had not been transferred to its account. The Bank then sent a Swift message to the Swiss bank which confirmed that the funds had been credited to the beneficiary’s account. The client sued the Bank for the amount of the bank transfer, as well as for punitive damages.

In its judgment, the Superior Court of Québec initially concluded that the claim for punitive damages was unfounded considering the absence of proof demonstrating that the Bank had made an intentional and unlawful interference with the rights of its client. Respecting the claim for the amount of the bank transfer, the Court recalled that a bank transfer is an indication of payment, an operation pursuant to which the initial debtor asks a second party to pay a third party. Thus, when a client requests that its bank transmit payment to a beneficiary, the bank does not have a personal obligation to pay the amount, but rather acts solely as an agent. In addition, given that a bank has only an obligation of means towards a client when it issues a bank transfer, the proof that the funds did not arrive at the destination is not sufficient for a bank to be held liable. Thus the client had to demonstrate that the Bank had not acted prudently and diligently toward the client and that it had not acted in accordance with commercial practices. Moreover, the Court emphasized that the extent of the Bank’s duty to inform its client would depend on the circumstances of the contract between the client and the Bank. In this case, the client had already made a number of high-risk transactions in the past despite warnings received from the Bank. In the end, evidence revealed that the funds did arrive at the Swiss bank and there was no evidence given by the beneficiary advising that the funds were not received. In light of the foregoing, the Court dismissed the client’s action.