UNDERSTANDING YOUR RIGHTS

Tahir Khorasanee, LL.M. Senior Associate, Steinbergs LLP Financial institutions are often accused of using fraud investigations as a guise to oust “troublesome” mortgage advisors. A case in point is a mortgage advisor who was wrongfully accused of fraud by the Bank of Nova Scotia and was subsequently awarded $919,268. Mortgage advisors frequently inquire if they can take legal action against their employers for damaging their reputation and hindering their chances of employment with other prominent financial institutions. The response is affirmative; they can file a lawsuit for defamation. The criteria for defamation, as outlined in Grant v. Torstar Corp., 2009 SCC 61, [2009] 3 SCR 640, at paras. 28ff, include the dissemination of a statement that (a) refers to the plaintiff, (b) is communicated to a third party, and (c) carries a defamatory connotation or insinuation that diminishes the plaintiff’s reputation in the eyes of reasonable individuals. The determination of whether the statement is defamatory is objective, i.e., an average person would perceive the statement as damaging to the plaintiff’s reputation. However, the ultimate determinant is the mortgage advisors’ willingness to engage in litigation. Gary Curtis, a former Mortgage Development Manager at the Bank of Nova Scotia (BNS), found himself in the midst of a legal dispute that lasted over ten years. The case, which originated as a wrongful termination and defamation lawsuit, transformed into a concentrated defamation claim following several amendments. Gary was a top-performing Mortgage Development Manager at The Bank of Nova Scotia. There was a disagreement over whether he ranked #5 or #4 in overall performance. He argued that the bank inaccurately calculated his sales below his group leader’s to exclude him from an exclusive group entitled to special benefits. After a 12-year tenure, The Bank of Nova Scotia suspended him under the pretext of a covert fraud investigation, compelling him to resign. The bank accepted his resignation and marked his employment file as “ineligible for rehire.” On May 3, 2012, an investigator initiated a “SIFT” alert on the Bank Crime Prevention and Investigation Office (BCPIO) of the Canadian Bankers Association (CBA) database, citing the following reasons in the SIFT Database Input Request Form: Substantial evidence was discovered indicating that Curtis intentionally submitted fraudulent documents on multiple applications. These documents included falsified Notices of Assessment (NOA’s), employment letters, pay stubs, and financial statements, as well as bank documents bearing forged customer signatures. These actions, in isolation, constitute a prima facie case concerning the alleged fraud. Curtis resigned during the investigation. Gary received job offers from the mortgage departments of two other major banks. However, due to the SIFT alert, each offer was promptly rescinded after the prospective employers contacted BNS and were informed that Gary had submitted fraudulent documentation in support of mortgage applications. A third bank rejected his application after receiving this information from BNS. BNS maintained the SIFT alert for seven years, effectively preventing Gary from securing employment with a major financial services institution at the peak of his career. Gary’s professional trajectory took a drastic turn when he was accused of submitting fraudulent mortgage applications. Despite his stellar performance, the bank’s investigation resulted in a “SIFT” alert that effectively barred him from employment in major financial institutions. The Ontario Superior Court of Justice held the bank accountable for defamation, as it failed to substantiate the veracity of its statements or the defense of qualified privilege. Gary was awarded $919,268. Ultimately the case turned on BNS’ inability to prove from the evidence that it had a basis to conclude Gary was involved in fraudulent activity. This case underscores the intricacies of defamation law and the delicate balance between safeguarding reputation and upholding freedom of expression.