In a decision released March 31, 2021, the BC Supreme Court found a currency exchange company liable for the tort of conversion, which concerns the wrongful interference with another person’s chattels, including money or funds, arising out of a telephone scam.
In this case, the plaintiff was an elderly woman who was directed by fraudsters to transfer her entire life savings to an intermediary, who was also being scammed by the same fraudsters. The intermediary then wired the plaintiff’s funds to the fraudsters in China through the defendant currency exchange company. The Court held that as between the two victims of the fraud, the plaintiff and the currency exchange company, it is the company that must bear the loss under the law of conversion.
This case serves as an important reminder for financial institutions like currency exchange companies that, as beneficiaries of the global financial system who are in an important position to prevent fraud, they must exercise the utmost due diligence to prevent their institutions being used for fraud or money laundering.
David Wu of Arvay Finlay acted for the successful plaintiff. The reasons for decision are indexed as Pang v Zhang, 2021 BCSC 591