Canada

Canada does not have a single cause of action for a fraud claim; rather, there are a range of distinct torts responsive to fraudulent conduct, each with their own legal tests and elements. The primary causes of action in fraud include:

• the tort of deceit, also known as civil fraud;
• civil conspiracy;
• breach of fiduciary duty;
• knowing assistance in breach of fiduciary duty;
• knowing receipt of assets obtained by breach of trust;
• civil bribery;
• fraudulent conveyance; and
• conversion.

Fraud, dishonesty and financial crimes are addressed by Canada’s Criminal Code. Securities legislation and Canada’s Competition Act address aspects of misrepresentation and deceptive marketing. There are no standalone civil causes of action for breach of a statutory duty, however, the existence of a statutory duty may satisfy the “unlawful act” element of various torts, particularly civil conspiracy. Fraudulent conveyances of assets may be set aside pursuant to provincial statutes, the Statute of Elizabeth, and Bankruptcy and Insolvency Act prohibitions against undervalue transfers.

For a court to have adjudicative jurisdiction to hear a matter, it must have both territorial jurisdiction and subject-matter jurisdiction: Sharp v. Autorité des marchés financiers, 2023 SCC 29 at paragraph 162. Territorial jurisdiction can exist in three circumstances:

• based on the presence of the defendant in the jurisdiction (presence-based jurisdiction);
• based on the parties’ consent or attornment to the court’s jurisdiction (consent-based jurisdiction); or
• based on the court’s assumption of jurisdiction due to a real and substantial connection to the dispute (assumed jurisdiction): Chevron Corp v. Yaiguaje, 2015 SCC 42 at paragraph 82.

Subject-matter jurisdiction is concerned with the court’s legal authority to adjudicate the subject matter of the dispute. The fact that a court may have territorial jurisdiction over a particular party in relation to a particular cause of action cannot give it jurisdiction over a matter that is outside its subject-matter jurisdiction: Gould v. Western Coal Corporation, 2012 ONSC 5184 at paragraph 327.

There are numerous connecting factors, and the list of presumptive connecting factors is not closed. The most important presumptive connecting factors are:

• the defendant is domiciled or resident in the province;
• the defendant carries on business in the province;
• the tort was committed in the province; and
• a contract connected with the dispute was made in the province: Van Breda v. Village Resorts Ltd., 2012 SCC 17 at paragraph 90.

Key factors in fraud cases will include where the damage was suffered as a result of the fraud, which may be outside Canada, but if a constructive trust is alleged that can only be enforced in Canada, that factor will favour Canadian courts retaining jurisdiction: Atom Holdings (Re), 2025 BCSC 2271 at paragraphs 77 and 87.

Generally, assets that can be traced include cash, funds held in bank accounts, real property, shares and other securities, dividends, digital assets, and substitute assets purchased with fraudulently obtained funds. Examples include defalcated funds, proceeds of bribery or corruption, and shares or other investments acquired using misappropriated funds.

Tracing allows a victim to follow funds even if they are commingled with other funds; the right to trace into a mingled fund has long been part of the law of equity: Graphicshoppe Ltd., Re, 2005 CanLII 45183 at 39. Tracing is permitted at common law if it is possible to identify the funds, and mixing by the recipient is not a bar to recovery: B.M.P. Global Distribution Inc. v. Bank of Nova Scotia, 2009 SCC 15 at paragraphs 75 and 85.

Proprietary claims are recognised in fraud cases through the imposition of the remedy of constructive trusts under the broad umbrella of good conscience. Constructive trusts are imposed to remedy unjust enrichment and prevent persons from retaining property which in “good conscience” should not be permitted to retain. The goal is to hold the person holding the property as a trustee of it for the wronged person’s benefit, even though there was no true trust created by intention: Soulos v. Korkontzilas, 1997 CanLII 346 (SCC) at paragraphs 17 and 43.

Proprietary claims may not be recognised if the constructive trust would have an unfair or unjust effect on third parties (Soulos at paragraph 34) or if the asset is acquired by a bona fide purchaser for value without notice of the fraud: i Trade Finance Inc. v. Bank of Montreal, 2011 SCC 26 at paragraph 19.

Tracing is an identification process that allows to follow assets and assert proprietary claims: Tracy v. Instaloans Financial Solutions Centres (B.C.) Ltd., 2010 BCCA 357 at paragraph 41. Courts have moved away from a “first in, first out” approach, and have moved towards a pro rata or proportionate approach considering each contributor’s interest in the intermixture of assets. Consideration may be given to the proportion of a claimant’s contribution throughout the lifetime of the intermixture, or through a “lowest intermediate balance” rule: Mills v. O’Connor, 2025 BCCA 34, at 81 and 83.

A Mareva injunction (freezing of assets) and Anton Piller order (a form of civil search warrant) are highly intrusive and exceptional remedies granted where the plaintiff has a strong prima facie case and there is strong evidence that assets are being dissipated or where there is a real possibility that the defendant may destroy evidence prior to the discovery process. Mareva injunctions are usually sought without notice to the alleged wrongdoer (ex parte). The plaintiff must establish a strong prima facie case and demonstrate that there is a real risk that the respondent will remove assets from the jurisdiction, or dissipate them,

An Anton Piller order allows court authorised persons to enter upon the defendant’s premises in order to search for and seize materials and documents which could serve as evidence in the case. An Anton Piller order will only be granted on clear and convincing evidence that the defendant possesses incriminating documents or items and there is a real possibility that the defendant may destroy such material before the discovery process can take place.

Plaintiffs may apply for a Norwich order for discovery of third parties even where a lawsuit has not been started. Norwich orders allow the proposed plaintiff to trace and preserve assets, to find and preserve evidence, to obtain the identity of a wrongdoer. Courts may also grant an order ancillary to the Mareva injunction for the defendant to provide a sworn statement of their assets and to attend for questioning under oath as to the nature, location and value of their assets and disclosure of the defendant’s dealings with them.

Courts may also grant “letters of request” or “letters rogatory” to gather evidence from foreign jurisdictions.

A Norwich order may be granted prior to suing a defendant, in order to identify who might have been involved in the fraud.

Plaintiffs from outside Canada may bring a “freestanding” application for a Mareva injunction ancillary to an actual or prospective foreign judgment in a proceeding asserting foreign law, even if no substantive relief is sought in Canada and the claim will be adjudicated by the foreign court: United States Securities and Exchange Commission v. Sharp, 2023 BCSC 425; and Herdson v. Fortin, 2024 BCSC 1767.

Canadian courts recognise principles of comity and the need to encourage cooperation among courts of various jurisdictions.

Service of originating pleadings outside Canada will rely on the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (“Hague Convention”). Canada is a signatory to the Hague Convention. For criminal cases, reliance will be placed on Mutual Legal Assistance Treaty requests pursuant to the Mutual Legal Assistance in Criminal Matters Act, R.S.C. 1985, c. 30 (4th Supp.).

Canadian courts will enforce foreign judgments where the foreign court properly claimed jurisdiction over the subject matter of the litigation, provided that it is a final judgment for an ascertainable sum.

Enforcement of an interim foreign freezing order is problematic, because it is not a final judgment: Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52 (CanLII). Canadian courts show increased willingness to enforce Mareva orders from other provinces: Paquet et al v. Lévesque et al, 2026 ONSC 2098. Absent a final judgment, the better approach is to apply for a freestanding Mareva order, per Sharp.

Receivership and bankruptcy proceedings provide additional tools to investigate and recover losses from fraud. Losses arising from fraud may also be exempt from discharge during bankruptcy.

A trustee in bankruptcy may bring proceedings for the benefit of creditors to recover losses arising from fraud.

Transfers of assets at significantly less than their market value can be reversed under the Bankruptcy and Insolvency Act.

Criminal and civil proceedings may run in parallel. Evidence gathered from defendants in civil proceedings is generally subject to an implied undertaking of confidentiality that it not be used in other proceedings without leave of the court.

Most of Canada’s provinces have enacted legislation that seeks to remove the proceeds and instruments of unlawful activity through a civil process.

Their purpose is not to determine criminal liability or to punish offenders, but rather to prevent criminally tainted property from being returned to those connected with criminal activity. Returning such property would undermine the public interest, bring the administration of justice into disrepute, and conflict with the principle that crime should not be profitable. Forfeiture regimes seek to balance society’s interest in ensuring that crime does not pay with considerations of fairness to individuals, including the protection of the property and privacy interests of innocent third parties: R. v. Nguyen, 2026 SCC 10 at paragraph 51.

Under the Criminal Code, R.S.C. 1985, c. C-46, section 462.49, restitution to victims takes statutory priority over forfeiture of an offender’s property.

A sentencing judge may order an offender to pay restitution for losses suffered as a result of the crime: Criminal Code, R.S.C. 1985, c. C-46, section 738.1.

Claims for fraud should be brought within two to six years after discovering the fraud. Most provinces have enacted “ultimate” limitation periods limiting recovery to the 10–20 years prior to discovery of the fraud.

Fraudulent concealment of a cause of action will extend the tolling of limitation periods until the fraud is discovered and may also extend ultimate limitations.

Limitations defences are commonly raised in fraud actions. On the issue of substantive liability, defendants will often argue that they lacked any fraudulent intent in their statements or actions.

Courts may order an award of damages, tracing, accounting/disgorgement of profits.

Courts may declare a constructive trust over assets, which may be registered against lands.

Enforcement of judgments is conducted pursuant to provincial civil enforcement statutes, generally by way of pro rata distribution among judgment creditors.

Courts may award prejudgment interest and legal costs. Costs are generally awarded under tariff scales under Provincial Rules of Court, although enhanced costs may be awarded for litigation misconduct.

Canadian courts are very claimant friendly in their treatment of fraud claims. However, delays in the court process present challenges in all jurisdictions.

Mareva, Norwich and Anton Piller orders are available on a without-notice emergency basis within a matter of days in appropriate circumstances.

Litigation funding is increasingly available despite a historic reluctance to allow outside parties to become involved in others’ disputes.

Baseless fraud allegations may attract severe costs consequences. Great care should be taken to ensure that there is a reasonable basis for the fraud allegations. For Mareva and Anton Piller relief obtained without notice, there is a duty of candour to the court to raise with the court all defences that might be raised by the defendant.

Under the corporate attribution doctrine, a person’s fraudulent actions may be attributed to a corporation if they were the corporation’s directing mind and the wrongful actions were performed within their sector of corporate responsibility: Aquino v. Bondfield Construction Co., 2024 SCC 31.

Canadian courts are expanding the use of freestanding Mareva injunctions in support of foreign proceedings and are more inclined to grant Norwich orders for production of banking information where such production would assist in identifying wrongdoers.

Canadian courts recognise that interjurisdictional fraud is a growing problem and the public interest weighs in favour of courts taking measures to protect the economic interests of victims of fraud: Labrador Marine Inc. v. Canadian Imperial Bank of Commerce, 2026 NLSC 43 at paragraph 35.