An Alberta man who was allegedly defrauded by a former business partner — but didn’t discover the fraud until a Canada Revenue Agency (CRA) audit years later — can’t sue the bank that processed the fraudulent transaction because he didn’t file his action fast enough, allowing the limitation period to expire.
The Court of Appeal of Alberta upheld a lower court decision, which ruled that Sylwester Walczak — who was allegedly defrauded in 2012 by a former business partner when he tried to purchase a GIC — can’t sue CIBC, which processed the transaction, because the ultimate 10-year limitation period expired before he filed his lawsuit.
In 2024, a judge of the Court of King’s Bench ruled that Walczak’s legal action against the bank came too late.
According to the court’s decision, in 2012, Walczak wrote a cheque for $232,000 that was to be used to buy a five-year GIC. However, the cheque was allegedly altered by his partner, and the proceeds were instead deposited into a different bank account that was controlled by the partner.
Yet, Walczak didn’t discover the fraud until 2021, when he received certain financial records from the CRA, including the cancelled cheque from 2012. Eventually, in November 2022, he filed an attempted legal action against CIBC over the fraudulent transaction.
However, the lower court ruled that the lawsuit couldn’t go ahead because it exceeded the 10-year limitation period — which, the court said, started when the fraud was originally committed, on July 27, 2012, not when the fraud was discovered.
“There is no doubt that the operation of the limitation period is unforgiving and harsh,” the lower court said, noting that it doesn’t allow for legal action in cases where the fraud isn’t discovered for many years — or in cases where a victim takes time to try and address a problem directly, instead of immediately filing a lawsuit.
“… quite reasonably, he tried to deal with the bank on the issue before filing a claim in hopes the bank would address his concerns,” the court said. “If Mr. Walczak had immediately filed a claim when he realized the money was fraudulently taken, there would be no limitation period problem. But he didn’t. By not doing so, Mr. Walczak allowed the limitation clock to run.”
As a result, the court ruled that the claim came a month too late. The limitation period expired Oct. 20, 2022, it said, after adding the 75-day pause on limitation periods that was adopted in 2020 due to the pandemic.
Now, the appeal court has upheld that conclusion, finding that “the chambers judge correctly interpreted and applied” the limitation period in Alberta.
“The Alberta [10-year] ultimate limitation period, rather than the Ontario [15-year] ultimate limitation period, applies as the cheque was written, altered and deposited in Alberta and the action commenced in Alberta,” it said in rejecting various arguments raised in the appeal.