A. Shady Background of Funds as supported the Certified Cheques
A decision of the Ontario Court of Appeal, released September 24, 2008 (Esses v. Bank of Montreal), allowed BMO's appeal overturning a summary judgment motion relating to a payee's rights to certain certified cheques. The genesis of the funds that seeded the series of transactions at issue was intertwined with an underlying mortgage fraud, transactions with imposters, and a bag full of cash. These transactions culminated in the preparation of three USD cheques drawn by one party on their BMO account and at the direction of a second party, to be made payable to a third. The cheques were then certified by BMO, held by the payee for 4 months and then negotiated by the payee for deposit to their bank (Bank Leumi as collecting bank) in T.O. for transfer of funds to Luxembourg. After negotiation, BMO instructed that payment on the cheques be stopped, and the credit at Bank Leumi was reversed. The payee then sued BMO. As he was payee of the cheques and as payee of certified cheques, he asserted that he was a holder in due course.

type Fraud Law Alert - September 2008 - Stopping Payment on a Certified Cheque? - Maybe