What is the test for making unfounded allegations of fraud?
British Columbia, Canada
The following excerpt is from Chan v. Stanwood et al., 2002 BCSC 734 (CanLII):
Unfounded allegations of fraud may be the basis of an award of special costs. In Ip v. Insurance Corp. of British Columbia (1994), 89 B.C.L.R. (2d) 251 (S.C.), McKinnon J. stated, at para. 8: An allegation of fraud, wilful misstatements, or other such claims made against a person casts a serious pall over his or her reputation in the community. Very careful consideration must be given by the defendant before making such serious allegations. At the very least, a prima facie case must exist and if it does not then special costs by way of “chastisement” is a reminder to the defendant to exercise better care in the future.
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