Bank of Montreal v. M.N.R.
T-2126-90
McGillis J.
7/2/94
11 pp.
Bank of Montreal employee made large personal profits by using Bank funds to speculate in foreign currencies-Employee assessed by MNR as owing $350,000 income tax-Employee's assets seized and Bank failed in litigation in Superior Court and in Court of Appeal to obtain payment and declaration Bank owner of certificate of deposit by reason employee not subject to fiduciary duty-Employee obtained injunction from Superior Court to compel Bank to pay monies represented by certificate of deposit to MNR on account of income taxes-Bank appealed to Supreme Court of Canada which held transactions by former employee of Bank fraudulent and employee indebted to Bank-MNR refused to reimburse Bank for monies which it paid on account of income taxes of former employee-Whether Bank entitled to return of monies paid on account of income tax debt of former employee-Action instituted by Bank premised on principle in Civil Code of Quebec, art. 1140, every payment presupposes debt and what has been paid in absence of debt may be recovered-Bank paid under protest to MNR monies from certificate of deposit on account of income tax debt of employee and Supreme Court of Canada held Bank to be owner of these funds; Bank entitled to recovery of its monies: The Queen v. Premier Mouton Products Inc., [1961] S.C.R. 361-No error of fact or law committed by Bank in making payment to MNR-In refusing to return monies to lawful owner, MNR sought to force victim of fraud to pay income taxes owed by perpetrator of crime; to say this is manifestly unjust is only to state patently obvious-Failure of MNR to return monies following unanimous decision of Supreme Court Bank owner of funds, constituting bad faith-MNR shall pay to Bank sum of $293,869.58 with interest and additional indemnity-Civil Code of Quebec, art. 1140.