REGINA — The Saskatchewan Court of Appeal has overturned a lower court decision that split liability for a $200,000 cryptocurrency fraud, ruling instead that a Swift Current man must bear the full loss after he actively enabled fraudsters to access his computer and email accounts.
In a unanimous decision released March 13, a three-judge panel found that HoneyBadger Enterprises Ltd., a cryptocurrency broker, is entitled to the entire $240,000 at the centre of the dispute. The Court of Appeal overturned a lower court ruling that had awarded $100,000 of that amount to the customer, Norman Bue, while giving HoneyBadger $140,000.
“There can be no doubt in these circumstances that Mr. Bue’s naivete and ignorance is at the heart of this fraud,” ruled Justice Neal W. Caldwell, with Justices Jeffery D. Kalmakoff and Naheed Bardai agreeing.
“He was duped several times but nonetheless co-operated fully with fraudsters purporting to be the ‘FBI.’ Mr. Bue not only made purchases and deposited those purchases to a wallet willingly, he opened his computer and allowed the ‘FBI’ free access. Had Mr. Bue made mention of any of what was transpiring to HoneyBadger, the fraudulent scheme would have come to an abrupt end. Unfortunately, he kept his silence and thereby permitted the fraudsters to acquire $200,000 in cryptocurrency over and above the amounts he had already purchased on their behalf.”
Frauds spanned two years
The case stems from a series of frauds spanning 2022 and 2023 where Bue was repeatedly duped by individuals posing as various government and law enforcement agencies, including the “FBI” and a fictitious “Ministry of Justice at the United Kingdom.”
According to court documents, Bue first invested $53,873 in a fake company called “Main Bit Ltd.” after seeing an internet advertisement. When he tried to withdraw his investment, the company stopped responding.
A short time later, someone claiming to represent the “Ministry of Justice at the United Kingdom” contacted Bue, claiming the “ministry” had seized assets from the fraudulent company and would compensate investors, but Bue had to first transfer cryptocurrency. He sent $190,000 but received nothing in return.
The pattern continued when a supposed “Cybercrime agency” named “Funds Recall” offered to help recover his losses. Bue declined to make the requested payments.
Then individuals posing as the cybersecurity division of the “FBI” reached out, offering to recover all of his lost funds in exchange for an $80,000 fee payable in cryptocurrency.
Between April and June 2023, Bue contacted HoneyBadger, a cryptocurrency broker he had never previously dealt with, to facilitate Bitcoin purchases. He provided the company with two email addresses, his personal account and another that the “FBI” imposters had created and given to him.
Bue then granted the fraudsters remote access to his computer and gave them the password to his personal email account and gave them “unsupervised full control over them,” read court documents. He then instructed HoneyBadger to deposit all purchased Bitcoin directly into the fraudsters’ cryptocurrency wallet.
Bue personally authorized transactions totalling $40,000.
But the fraudsters, using the access Bue had given them, sent instructions from his email account for two additional purchases of $100,000 each on May 31 and June 1, 2023. HoneyBadger processed both, debiting Bue’s credit union account under a pre-authorized debit (PAD) agreement Bue had signed.
When Bue objected five days later, his credit union reversed the debits, prompting HoneyBadger to sue. The $240,000 was ultimately paid into court pending the outcome of litigation.
Lower court decision
In a judgment issued in 2025, a Swift Current Court of King’s Bench judge found that both parties bore responsibility for the loss. The judge ruled that Bue’s naivete and ignorance” was “at the heart of this fraud,” saying he had “co-operated fully with fraudsters” and “opened his computer and allowed the ‘FBI’ free access.”
But the judge also concluded that HoneyBadger had failed to comply with the PAD agreement by not issuing a password or security code or signature equivalent to verify transaction instructions. She said that had HoneyBadger complied, “the fraud would have been stopped before HoneyBadger parted with the cryptocurrency.”
The judge awarded HoneyBadger $140,000 of the funds held by the court and Bue $100,000, concluding that both shared responsibility for the $200,000 loss from the unauthorized transactions.
Sask. Court of Appeal reversal
Writing for the unanimous Saskatchewan Court of Appeal decision, Justice Caldwell, rejected this reasoning on multiple grounds.
He first dismissed Bue’s cross-appeal challenging the validity of the contracts for the $100,000 transactions, finding that Bue had voluntarily granted the fraudsters access to his email and computer, and “nothing in the parties’ contractual agreement prevented Bue from delegating specific tasks or responsibilities to another person while maintaining overall accountability.”
Justice Caldwell found that the lower court judge had made a fundamental legal error in analysis by relying on a Quebec case, Alfagomma Inc. v HSBC Bank Canada, which applied the Civil Code of Quebec.
“That principle is grounded in a civil law duty of care that banks [and everyone else] in Quebec owe under Article 1457 of the Civil Code of Quebec,” wrote Justice Caldwell. “Article 1457 of the Civil Code of Quebec does not apply in Saskatchewan.”
The appeal court instead applied the common law principle from Isaacs v Royal Bank of Canada, an Ontario Court of Appeal decision that distinguishes between carelessness and active participation in fraud.
“The principle in Isaacs does not call for a relational approach to liability for a fraud loss based on each innocent party’s relative inattentiveness or recklessness,” said Justice Caldwell. “The issue under the Isaacs principle is whether the carelessness of an innocent party actively enabled the fraud to occur.”
Applying this principle, the court found Bue’s conduct amounted to active participation. He had been defrauded multiple times, kept his dealings with the fraudsters secret from HoneyBadger, gave them unsupervised access to his computer and email accounts, and instructed HoneyBadger to deposit purchased Bitcoin directly into their wallet.
Justice Caldwell, quoting the lower court judge’s own findings, said, “But for Mr. Bue’s carelessness in allowing the ‘FBI’ to access his computer which they utilized to request purchases, HoneyBadger would not have drawn on the PAD or released the cryptocurrency.”
PAD agreement misinterpreted
The Saskatchewan Court of Appeal also found the Court of King’s Bench had misinterpreted the PAD agreement’s clause requiring a “password or security code or other signature equivalent.”
Justice Caldwell said the clause required Bue, not HoneyBadger, to create or adopt a signature equivalent to authorize debits from his account. The credit union, as a third-party beneficiary of the agreement, was entitled to rely on that authorization without further verification.
Justice Caldwell also said there was “no foundation” in the lower courts findings to conclude that the fraud loss could have been avoided.
Since Bue had already given the fraudsters unfettered access to his computer and email accounts, “there is, respectfully, no reason to hope that he might not have given the ‘FBI’ the password or security code or other signature equivalent that was necessary to pay for those purchases.”
Cross-appeal dismissed
The Saskatchewan Court of Appeal allowed HoneyBadger’s appeal, dismissed Bue’s cross-appeal, and set aside the Court of King’s Bench judgment. HoneyBadger is entitled to the full $200,000 currently held by the Court of King’s Bench in Swift Current.
The $40,000 previously released to HoneyBadger following the lower court decision, is unaffected by the appeal. In total, HoneyBadger will receive the full $240,000. Bue will receive nothing.
The $200,000 held by the court will be released to HoneyBadger 60 days after the decision, unless Bue files an application for leave to appeal to the Supreme Court of Canada.
HoneyBadger was awarded costs for both the summary judgment application in the lower court and the appeal.
Report suspected fraud
To report fraud in Saskatcheawn, call the Canadian Anti-Fraud Centre at 1-888-495-8501 or report online through their reporting system. If you believe you are a victim or suspect someone is trying to defraud you, contact police immediately. Please call 911 if it is an emergency.
