Civil fraud claims in Ontario

Civil fraud claims are more common than ever before. Fairly recent changes to the law have made proof of fraud easier -- although it is still not easy -- and the general inclination to pursue all reasonably available claims has increased the number of claims sounding in fraud.

Until fairly recently the general consensus was that civil fraud claims (and other allegations of moral turpitude) had to be proven to a higher level than the usual civil balance of probabilities. While the burden was not so high as to be beyond reasonable doubt the sense that fraud had to be strictly proven was widespread.

That view was dispelled in F.H. v. McDougall, 2008 SCC 53. The Court held the civil standard of proof applies to all civil claims. That said, the Court also suggested the trier of fact must be mindful of the mysterious "inherent" probabilities or improbabilities. What that actually means is unclear except to suggest that proof of fraud still remains difficult.

One way civil fraud is more easily proven is where there is a criminal conviction for fraud. If there is a finding after trial that finding will bind the civil court. If there is a guilty plea that plea will normally be dispositive unless good reason is set out to explain why it should be ignored. Of course, the verdict or plea only goes so far as the facts proven or admitted. If there is a plea to a fraud for $5,000 that will not support (except to a limited degree) a civil claim for $500,000.

One principle that has not changed is costs in a fraud case. In general costs where fraud is alleged are on a full indemnity basis. If fraud is proven the costs are full indemnity to the plaintiff and if fraud fails the defendant gets full indemnity costs.