Law360 Canada ( July 9, 2025, 11:35 AM EDT) -- Appeal by appellant Surefire Dividend Capture, LP (SDC) against the decision involving its attempt to recover losses under a fidelity bond issued by the Defendant National Liability & Fire Insurance Company (“Berkshire”). The appellant sought to recover over US$30 million lost in investments made in Broad Reach Capital, LP (BRC), a hedge fund managed by Smith, who was later found to be operating a Ponzi scheme. SDC claimed under a fidelity bond issued by Berkshire, which provided coverage for losses due to dishonest or fraudulent acts by an “Employee” and for losses resulting from “Theft of Customer Property by a Registered Representative.” The trial judge found that Smith was not the appellant’s “Employee” as defined in the bond, nor had she stolen “Customer Property” as defined. Despite the appellant’s intention to secure coverage for risks of theft and fraud by sub-advisors like BRC, the bond’s wording did not support the appellant’s claims. The appellant argued that the trial judge erred by considering a defence not pleaded by Berkshire, specifically that Insuring Agreement A(1) did not cover losses from fraud committed by Smith, who was not the appellant’s employee but an officer of BRC. The appellant also contended that the trial judge failed to interpret the bond, particularly regarding the reference to BRC as a “Subsidiary.” The appellant maintained that the bond should cover fraud by an employee of BRC that caused the appellant a loss, and that the trial judge’s conclusion regarding Insuring Agreement A(4) was erroneous....