B.C. woman who lost $69K to fraudster wins right to sue bank on appeal

A B.C. woman who lost $69,000 to a fraudster has won the right to sue the Canadian branch of the Bank of China after she appealed the ruling denying her claim.

In 2018, Li Zheng sent $69,000 to an unknown individual in Hong Kong, according to court documents filed in support of her lawsuit.

Li Zheng maintained she had received a call from someone claiming to be with the Chinese Consulate and was told she was accused of being involved in a money laundering case and was being sought internationally.

The fraudster told Zheng that she had two choices: fly back to China where she would be held in jail during the investigation or transfer the funds to Hong Kong and the money would be returned to her after the investigation.

Zheng chose to transfer the money and says she did so with the help of a teller at the Bank of China in Richmond.

In her original lawsuit, Zheng claimed that the bank knew about a prevailing fraud of this type targeting people like her and failed to warn her — an allegation that has not been proven in court.

The bank applied for a summary dismissal claiming there was no genuine issue to be tried and won. The decision was appealed to the B.C. Supreme Court.

The B.C. Supreme Court ruled that if the bank did have knowledge of a prevailing fraud and didn't tell Zheng, the omission could form a genuine basis for trial but upheld the dismissal, saying the claim was still bound to fail because of the bank's "exclusion of liability" clause. 

Is the bank excluded from liability?

In October 2022, the case made its way to the B.C. Court of Appeal, where it was heard by a panel of three judges. 

In a decision released Monday, Justice Susan Griffin agreed that whether the bank knew of such a fraud and failed to warn Zheng represented a genuine issue to be tried.

Griffin found the Bank of China did not provide evidence proving it didn't know of a similar fraud affecting other people like Zheng or that it warned her.

"Had it done so, Ms. Zheng may well have realized she was being duped and halted the transaction," wrote Griffin.

The real question before the appeal court was whether the bank's exclusion clause released it from liability.

The B.C. Supreme Court found that it did.

But Zheng argued, and the Court of Appeal agreed, that the judge erred because the bank's alleged failure to warn her occurred before she signed it.

Wrote Griffin: "Had the bank fulfilled this duty, none of the other steps in effecting the transfer would have occurred, including filling out and signing the Application for Remittance containing the Exclusion Clause.

"The claim, seen this way, is not based on an error in processing the transfer ... but rather, it is based on the bank not warning Ms. Zheng about the fraud when it first learned she wished to make such a transfer."

Zheng is now able to proceed with her claim.