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Background and facts of the case
Hong Guo was the sole practitioner and principal of Guo Law Corporation ("GLC"), a law firm with an office in Richmond, British Columbia. GLC maintained its trust account at the Canadian Imperial Bank of Commerce ("CIBC"), No. 3 Road, Richmond Branch, with Ms. Guo holding sole signing authority. Zixin Li (aka Jeff Li) worked as a senior bookkeeper at GLC from early 2014 to April 2016, while Qian Pan (aka Danica Pan) worked as a receptionist/assistant for several months until August 2015. Ms. Pan maintained a personal bank account at the Bank of Montreal ("BMO") and had a gaming account at the Starlight Casino ("Starlight") in New Westminster, which was operated by Gateway Casinos & Entertainment Limited ("Gateway").
In April 2016, upon her return from vacation, Ms. Guo discovered that approximately $7.4 million had been stolen from GLC's trust account by Mr. Li and Ms. Pan. The theft involved 15 withdrawals from the CIBC Trust Account between approximately February 25 and March 31, 2016. Mr. Li provided the stolen trust funds to Ms. Pan using GLC trust cheques and CIBC bank drafts, which were made payable to Ms. Pan. She deposited these at BMO, which then issued BMO bank drafts payable to Gateway. Ms. Pan deposited those drafts into her Gateway account and used the funds to gamble at Starlight. On the 15th withdrawal, BMO paid out $887,562 to Ms. Pan, but CIBC reversed payment on that cheque (Cheque 1117). The total amount lost from the CIBC Trust Account was approximately $6.6 million, and Ms. Pan gambled and lost approximately $5.7 million at Starlight. Ms. Guo admitted in disciplinary proceedings before the Law Society of British Columbia ("LSBC") that she had signed blank trust cheques and left them with Mr. Li for trust transactions while she was away, although she disputes the number of pre-signed blank cheques provided and alleges some signatures on cheques used in the scheme were forged. The LSBC found Ms. Guo had improperly left 125 pre-signed, blank cheques with Mr. Li in mid-March 2016 and failed to properly supervise her staff. Ms. Guo was disbarred three times: on November 17, 2023; February 23, 2024; and September 16, 2024.
Ms. Guo started an action in July 2016 against Mr. Li, Ms. Pan, and three other individuals alleged to have assisted in the theft (the "NW Action"). In early 2018, she filed a separate action against CIBC. In July 2018, Gateway and BMO consented to being added as defendants to the NW Action, and in December 2018 the parties consented to consolidating both actions. In December 2018, a new notice of civil claim ("NOCC") was filed under Vancouver Registry No. S188703. The plaintiffs pleaded conversion, constructive trust, knowing assistance and/or participation in breach of trust, knowingly dealing with trust property, knowing receipt, and negligence (the negligence claims were later abandoned), and additionally pleaded unjust enrichment against Gateway.
The 2024 BCSC 1121 decision: summary judgment on BMO's counterclaim
BMO filed a counterclaim against the plaintiffs seeking payment of $887,562 in respect of Cheque 1117 pursuant to the Bills of Exchange Act, R.S.C., 1985, c. B-4 ("BEA"). The plaintiffs applied for summary judgment to dismiss this portion of BMO's counterclaim, arguing that Cheque 1117 bore a forged signature and that BMO was not a "holder in due course" of the cheque. The application was heard by Justice Sharma on February 15–16, 2024, with reasons released on June 27, 2024.
Legal framework and issues
The two issues before the Court were: (a) whether the matter was suitable for summary judgment under Rule 9-6 of the Supreme Court Civil Rules; and (b) if so, whether BMO was a "holder in due course" of Cheque 1117 under s. 55 of the BEA. Justice Sharma noted that the onus is on the applicant to prove beyond a reasonable doubt that there is no triable issue or that the other party is bound to lose, which is a very high bar. The Court reviewed s. 48 of the BEA (forged signatures are wholly inoperative unless the party against whom payment is sought is precluded from setting up the forgery), s. 55 (defining a "holder in due course"), s. 57 (presumption that every holder of a bill is a holder in due course, displaceable by evidence to the contrary), and s. 165(3) (a bank that credits a customer's account upon deposit of a cheque acquires the rights of a holder in due course).
Analysis and findings on forgery and holder in due course
The plaintiffs relied on Ms. Guo's affidavit stating she did not sign Cheque 1117, did not authorize anyone to sign it, and that the signature was a forgery. Justice Sharma found Ms. Guo's statements were bald assertions with no details or explanations, and noted that in August 2016 Ms. Guo had sworn an affidavit asserting forgery on numerous cheques, but later admitted to the LSBC that she had left Mr. Li with a number of blank pre-signed cheques, including cheques she had previously sworn bore her forged signature. The Court further found that the plaintiffs' purported expert evidence on forgery had not been served in compliance with the Rules and was equivocal, pointing only to the possibility that the signatures were fraudulent. The Court held that whether Ms. Guo's signature on Cheque 1117 was forged was clearly a genuine issue for trial.
On the holder in due course issue, the Court found that BMO's evidence — particularly that of Ivan Lee, a financial service manager at the BMO Branch — raised genuine triable issues. Mr. Lee deposed that he verified each cheque by contacting GLC, that GLC staff (including Mr. Li) confirmed the cheques' authenticity and legitimacy, and that he made direct inquiries of Ms. Pan about the source of funds. Although Mr. Lee filed an Unusual Activity Report ("UAR") on March 29, 2016, due to concerns about possible money laundering, he had no suspicions related to fraud. Justice Sharma accepted the evidence of Lauren Rutherford, senior manager of BMO's Anti Money Laundering Financial Intelligence Unit, that a UAR merely flags transactions for further investigation and is not determinative of fraud. The Court rejected the plaintiffs' reliance on Canadian Pacific Hotels Ltd. v. Bank of Montreal, [1987] 1 S.C.R. 711, distinguishing that case as concerning duties owed to a customer's own bank rather than to a collecting bank.
Litigating in slices
The Court also held that summary judgment would be prejudicial to the other Defendants, finding that the application would amount to "litigating in slices." Determinations about Cheque 1117 carried a risk of embarrassing future presiders given the extensive overlap of facts and legal issues, including allegations that Mr. Li forged signatures on other cheques, and could prejudice Gateway's defence to unjust enrichment claims and CIBC's defences based on its account agreement with the plaintiffs.
Alternative relief and disposition
The plaintiffs also sought, in the alternative, an order that approximately $817,813 paid into court in the bankruptcy and insolvency proceedings relating to GLC (pursuant to orders of Justice Funt on August 29, 2022, and Justice Crossin in May 2023) be paid to plaintiffs' counsel. Justice Sharma declined to grant the order, finding it would essentially give the plaintiffs the same benefit as if they had succeeded on the summary judgment application and that Ms. Guo's evidence of financial hardship was wholly inadequate. The plaintiffs' application was dismissed, and BMO, CIBC, and Gateway were awarded their costs of the application.
The 2026 BCSC 795 decision: application to add defendants and security for costs
Two applications came before Justice Chan, heard on March 9–11 and 13, 2026, with reasons released on May 1, 2026. The plaintiffs sought to add British Columbia Lottery Corporation ("BCLC") and His Majesty the King in right of the Province of British Columbia (the "Province") as defendants pursuant to Rule 6-2(7)(c) of the Supreme Court Civil Rules. The defendants Gateway, BMO, and CIBC sought orders that the plaintiffs post security for costs.
Application to add BCLC and the Province
The plaintiffs argued that BCLC documents first disclosed on June 5, 2024 (after a confidentiality order was obtained) revealed that BCLC had conducted an open-source report on Ms. Pan on February 23, 2016, which showed two debt claims against her totalling more than $50,000 and a pending foreclosure on her Richmond condo for $61,000 in default. Ms. Pan was placed under "BCLC status: WATCH." On February 25, 2016, BCLC issued a directive stopping further gambling by Ms. Pan and classified her matter as "Red Category." On February 26, 2016, BCLC investigators interviewed Ms. Pan, who stated her source of income was her parents (in the construction business in China). The directive was lifted that same day, and 14 of the 15 wrongful withdrawals from the CIBC Trust Account occurred after February 26, 2016. On April 4, 2016, BCLC's director for Anti-Money Laundering, Investigations and Intelligence, Ross Alderson, was contacted by a BMO investigator advising that Ms. Pan was under investigation for fraud, and Ms. Pan was then suspended from further play.
BCLC is a provincial Crown corporation and an agent of the government under s. 3 of the Gaming Control Act, S.B.C. 2002, c. 14 ("GCA"). Pursuant to ss. 13–14 of the GCA, BCLC's net income is paid into the Province's consolidated revenue fund. Gateway operated Starlight pursuant to the Gateway/BCLC Agreement, under which the revenue generated at the casino is the sole property of BCLC and Gateway holds the revenue in trust for BCLC's sole benefit.
Legal framework for joinder
Justice Chan applied Rule 6-2(7)(c) and the two-stage test from Madadi v. Nichols, 2021 BCCA 10, and Letvad v. Fenwick, 2000 BCCA 630. First, the plaintiff must establish a real, non-frivolous issue between the parties connected to the existing action; second, the Court must determine whether it would be just and convenient to add the proposed defendants, considering the extent of delay, reasons for delay, expiry of any limitation period, degree of prejudice, and the extent of connection between the existing claims and the proposed new parties.
Causes of action against BCLC and the Province
The plaintiffs pleaded unjust enrichment, knowing receipt, constructive trust, and restitution. On unjust enrichment, the Court applied the elements from Garland v. Consumers' Gas Co., 2004 SCC 25, and the two-stage juristic reason analysis from Moore v. Sweet, 2018 SCC 52. While BCLC and the Province relied on Ms. Pan's wagering contract with Gateway, the Gateway Agreement, and s. 14 of the GCA as juristic reasons (citing Ross v. British Columbia Lottery Corporation, 2014 BCSC 320, and Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19), Justice Chan found that the plaintiffs had a possible cause of action that was not frivolous, noting that none of the cited cases concerned circumstances where stolen trust funds were lost at a casino after the lottery corporation had its suspicions raised. The Court also noted that in Moore legislation did not preclude a finding of unjust enrichment.
On knowing receipt, the Court applied the elements from Gold v. Rosenberg, [1997] 3 S.C.R. 767, and Citadel General Assurance Co. v. Lloyds Bank Canada, [1997] 3 S.C.R. 805, noting that constructive knowledge suffices. Justice Chan found that the case closest on the facts was Paton Estate v. Ontario Lottery and Gaming Corporation, 2016 ONCA 458, in which the Court of Appeal for Ontario reversed a striking decision and allowed claims for knowing receipt and unjust enrichment to proceed against a Crown gaming agency. The Court held that constructive trust and restitution were possible remedies based on knowing receipt or unjust enrichment. The Court also allowed the plaintiffs to include allegations under the Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2, to argue that the contracts were unconscionable, relying on Sherry v. CIBC Mortgage Inc., 2020 BCCA 139, and Live Nation Entertainment, Inc. v. Gomel, 2023 BCCA 274.
Just and convenient analysis
Justice Chan acknowledged the delay was extensive (almost 10 years) but found it was not strategic and was likely caused by Ms. Guo's difficult personal and professional circumstances. On the limitation period dispute under ss. 8 and 12 of the Limitation Act, S.B.C. 2012, c. 13, the Court held that the issue could not be determined summarily and could be preserved for trial, consistent with The Owners, Strata Plan No. VIS3578 v. John A. Neilson Architects Inc., 2010 BCCA 329. The Court found that prejudice to BCLC from the unavailability of Mr. Alderson as a witness was limited (he did not conduct the interview himself), and that prejudice to the Province from the distribution of the consolidated revenue fund would have existed even with an earlier claim. The action had not progressed beyond document discovery and trial dates had been set for June 2027. The Court concluded it was just and convenient to add BCLC and the Province as defendants, with the limitation defence and the defence of laches preserved for trial.
Application for security for costs
The defendants applied for security for costs under s. 236 of the Business Corporations Act, S.B.C. 2002, c. 57, and the Court's inherent jurisdiction, applying the four-part test from Citizens for Foreign Aid Reform Inc. v. Canadian Jewish Congress, 1999 CanLII 5860 (B.C.S.C.), and the principles from Kropp v. Swaneset Bay Golf Course Ltd., 1997 CanLII 4037 (C.A.). For an individual plaintiff, egregious circumstances are required: Kim v. Choi, 2016 BCCA 375.
The evidence showed that Ms. Guo had numerous outstanding costs awards, including: $47,329.44 to the LSBC; $45,497.95 to the LSBC; $13,015 to the LSBC; special costs in contempt proceedings in Yu v. Xu, 2024 BCSC 936; and $74,475.24 to the LSBC. Ms. Guo's Linfield Property was encumbered by mortgages, judgments, and a lien, with foreclosure proceedings commenced by TD Bank in August 2025 for approximately $510,000 owing. GLC was no longer in good standing as a corporation or with the LSBC. The LSBC had made findings of professional misconduct against Ms. Guo across multiple proceedings, and a 40-day custodial sentence for contempt had been imposed by Weatherill J. in Yu v. Xu on October 14, 2022, with an arrest warrant issued on May 21, 2024, later set aside by consent on December 5, 2025.
The defendants sought security in the following amounts: Gateway sought $202,881 against each of Ms. Guo and GLC ($405,762 total); CIBC sought $186,366 against each of Ms. Guo and GLC ($372,732 total); BMO sought $186,366 against each of Ms. Guo and GLC ($372,732 total); the Province and BCLC each sought $129,767 against both plaintiffs.
Court's analysis on security for costs
Justice Chan found that the defendants had shown a prima facie case that the plaintiffs would be unable or unwilling to pay an award of costs. The plaintiffs' evidence of impecuniosity was too general, lacking bank statements, explanations for the transfer of beneficial title of the No. 3 Road Property, or evidence of Ms. Guo's law practice and assets in China. The Court found egregious circumstances justifying security against Ms. Guo as an individual plaintiff, citing her history of non-compliance with court orders, the LSBC's findings that she was "ungovernable," her three disbarments, and Weatherill J.'s findings regarding her affidavits being "rife with untruths and outright falsehoods." The Court found the delay in bringing the application had not caused prejudice and that circumstances changed when the arrest warrant was issued in May 2024.
Outcome and disposition
The Province and BCLC were added as defendants, subject to preservation of the limitation defence and the defence of laches for trial. The plaintiffs were granted leave to file a further amended NOCC. The Court found that seeking security against both Ms. Guo and GLC was unreasonable given the overlap, and that costs savings would arise among the defendants. The plaintiffs were ordered to post $150,000 as security for costs within 30 days (calculated at $30,000 for each of the five defendants), with the action stayed until the amount was posted. If security was not posted within 30 days, the defendants were at liberty to seek dismissal. CIBC, BMO, and Gateway's application for a stay due to Ms. Guo's contempt proceeding was adjourned generally. Costs of the applications were ordered to be in the cause.
Across both decisions, the defendants (BMO, CIBC, and Gateway in the 2024 decision; and BMO, CIBC, Gateway, the Province, and BCLC in the 2026 decision) were the successful parties on the applications heard. In the 2024 decision, BMO, CIBC, and Gateway were awarded costs of the application, with the specific monetary amount not determined in the decision. In the 2026 decision, the plaintiffs were ordered to post $150,000 as security for costs, costs of the applications were ordered in the cause (with the monetary amount not determined), and the plaintiffs' application to add BCLC and the Province was granted (subject to preservation of limitation and laches defences for trial).
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