Property Offences: Theft, Robbery, Burglary
Fraud and Misrepresentation in Canadian Law
Fraud and misrepresentation are key concepts in both criminal law and civil law in Canada. While they overlap, the focus and remedies differ depending on whether it is criminal fraud or civil misrepresentation.
1. Fraud
Definition under Criminal Code:
Section 380(1) of the Criminal Code of Canada defines fraud as:
“Fraud is committed when someone, by deceit, falsehood, or other fraudulent means, obtains money, property, or any valuable consideration with the intent to defraud.”
Elements of Fraud:
To prove fraud, the prosecution must show:
Deception (false representation, concealment, or misrepresentation).
Intent to defraud (mens rea).
Resulting loss or potential for gain.
Key Points:
Fraud can be civil or criminal.
Criminal fraud requires intent, whereas civil misrepresentation may require negligence or careless misstatement.
2. Misrepresentation
Civil Law Context:
Misrepresentation occurs when a false statement induces another party to enter a contract. It can be:
Fraudulent – knowingly false.
Negligent – made without reasonable grounds for belief.
Innocent – false, but made honestly.
Remedies:
Rescission of contract.
Damages (particularly for negligent or fraudulent misrepresentation).
Relevant Legislation:
Common law principles, often in combination with Canadian Contract Law, govern remedies for misrepresentation.
Notable Canadian Cases on Fraud and Misrepresentation
Here are six detailed cases, illustrating both criminal fraud and civil misrepresentation:
1. R. v. Olan (1978 SCC) – Criminal Fraud
Facts: Olan, a chartered accountant, misappropriated client funds by falsifying records.
Decision: Supreme Court of Canada convicted Olan of fraud under s. 380(1).
Significance: This case clarified that fraud requires an intention to deceive and obtain property dishonestly, not just careless accounting errors.
2. R. v. Stewart (1988 SCC) – Fraud Over $5,000
Facts: Stewart, a businessman, defrauded investors by misrepresenting financial statements.
Decision: SCC held that material misrepresentation with intent to induce reliance qualifies as criminal fraud.
Significance: Reinforced that intent to defraud is a core requirement, and misrepresentation of facts with financial gain suffices.
3. Queen v. Cuerrier (1998 SCC) – Fraud Beyond Property
Facts: Cuerrier, a man knowingly exposed partners to HIV without disclosure.
Decision: SCC expanded fraud to include non-property harm, ruling that deception causing serious risk of harm could constitute fraud.
Significance: Fraud under Canadian criminal law can extend beyond financial or property loss to personal harm via deception.
4. Derry v. Peek (Civil Law Precedent Applied in Canada)
Facts: Although a UK case, Canadian courts often cite it in civil misrepresentation claims. A company issued false statements to investors.
Principle: Fraudulent misrepresentation requires proof that the false statement was made knowingly or recklessly.
Significance: Forms the benchmark for fraudulent misrepresentation in contracts.
5. Hedley Byrne & Co v. Heller & Partners (Negligent Misrepresentation)
Facts: Although another UK precedent, heavily cited in Canadian civil courts: financial advice given negligently led to losses.
Principle: Established liability for negligent misrepresentation even without intent to defraud.
Significance: Canadian courts apply this to hold parties responsible for careless statements inducing reliance.
6. Banque de Montreal v. Bail (2011 ONCA) – Civil Fraud
Facts: Bank employees provided misleading financial advice that induced a customer to enter high-risk contracts.
Decision: Ontario Court of Appeal found fraudulent misrepresentation, ordering damages.
Significance: Clarifies that representation leading to contractual harm, even by professionals, can be actionable.
7. R. v. Cuddy (2010 ONCA) – Fraud by False Representation
Facts: Cuddy submitted fake invoices to claim government subsidies.
Decision: Court held he committed criminal fraud, emphasizing that false documents with intent to gain property satisfies s. 380(1).
Significance: Reinforces that documentation and representation for gain are actionable, even if the sum is small.
Key Takeaways
| Aspect | Criminal Fraud | Civil Misrepresentation |
|---|---|---|
| Legal Basis | Criminal Code s. 380 | Common law & contract law |
| Intent Required | Yes, must intend to defraud | Fraudulent: yes; Negligent: no intent needed |
| Result | Criminal conviction, possible imprisonment | Rescission, damages |
| Scope | Property, money, or serious risk/harm | Contracts and reliance losses |
| Notable Cases | R. v. Olan, R. v. Stewart, R. v. Cuerrier, R. v. Cuddy | Banque de Montreal v. Bail, Hedley Byrne, Derry v. Peek |
Summary
Fraud in Canada is intentional deception for property gain or serious harm.
Misrepresentation may be fraudulent, negligent, or innocent, with remedies in civil courts.
Canadian courts consistently require intent in criminal fraud but recognize liability for negligent misrepresentation in civil law.
The evolution of case law shows the broad application of fraud beyond money to risk and personal harm.
RELATED Blog
0 comments