Monteiro v. Toronto Dominion Bank, and Monteiro et al., Third Parties [Indexed as: Monteiro v. Toronto Dominion Bank]
89 O.R. (3d) 565
Court of Appeal for Ontario,
Winkler C.J.O., Cronk and Lang JJ.A.
February 28, 2008
Judgments and orders -- Issue estoppel -- Deceased leaving all of her property, including bank accounts, to her daughter -- Deceased's sons attacking validity of will in litigation in Kuwait -- Before resolution of estate litigation, bank transferring moneys held in deceased's account to Swiss bank account owned by her son -- Daughter suing bank in Ontario -- Kuwait's highest court upholding findings of lower courts that deceased's bank account belonged to daughter -- Daughter successfully moving for summary judgment in action against bank -- Bank's appeal allowed -- Bank having no fundamental right to be involved in Kuwait litigation such that it would be unfair to enforce result in that litigation without bank having been party to litigation -- Bank privy to Kuwait proceedings -- Doctrine of issue estoppel applying to prevent bank from relitigating issue of ownership of account.
In her 1989 will, D specified that all properties owned by her at the time of her death, including her bank accounts, be transferred to her daughter, JM. Following D's death in 1993, her two sons sought to invalidate the terms of the will in estate litigation in Kuwait. Shortly after D's death, and years before the estate litigation was resolved, Toronto Dominion Bank ("TD") transferred the moneys held in D's account to a Swiss bank account owned by D's son J, pursuant to instructions from lawyers acting for J. TD did not follow its own internal procedures for dealing with the account of a deceased customer, and did not notify JM of its proposed actions despite knowing of her involvement in the management of D's account and knowing that she held a power of attorney in respect of that account. JM brought an action against TD claiming that she had a contractual entitlement to the funds or, alternatively, that TD had been negligent in the manner in which it released the funds to J. The Kuwait courts resolved the issue of the ownership of the TD account in favour of JM. JM brought a motion for summary judgment in her action against TD. The motion [page566] judge found that all parties who could have a proprietary interest in the TD account were before the Kuwait court, that in view of the findings of the Kuwait court, the two brothers had no entitlement to the funds, and that the position of TD could be no higher than that of the brothers. He rejected TD's submissions that its defence had not been heard, noting that TD had no independent defence. He found that TD was privy to the Kuwait proceedings and that the Kuwait judgment was capable of raising issue estoppel against TD on the question of ownership of the money in the account. The motion for summary judgment was granted. TD appealed.
Held, the appeal should be dismissed.
TD's argument that its fundamental rights to be heard had been wrongly denied was based on the erroneous assumption that it had some fundamental right to be involved in the Kuwait estate litigation. The central issue decided in the estate litigation was the identity of the rightful owner of the contract of debt in relation to the TD bank account. TD had no interest in that dispute. Rather, it was no more than a bystander who should have been prepared to honour the obligation to the litigant who was found to be the rightful owner of its contract of debt. In effect, TD was looking to turn its misconduct in the handling of the money in the account into an interest in the estate litigation that was sufficient to give it an opportunity to relitigate the effect of the will in the faint hope of avoiding liability to J.M. Even if a simple interest in the outcome of the estate litigation was sufficient to entitle TD to participate in the Kuwait litigation, the doctrine of issue estoppel applied to prevent it from relitigating the issue of ownership. There was a real and substantial connection between Kuwait and the competing claims to D's estate. TD was a privy in interest to J. There was no substance to TD's assertion that the dispute in the Ontario action was as to the contractual rights between the debtor and the alleged creditor and that this dispute could not be determined in the absence of one of the contracting parties, namely itself as the debtor. The question of the use of the money on deposit was not at issue in this proceeding. TD conceded in its factum on the motion for summary judgment that it would be liable to the rightful owner of the funds regardless of how careful and diligent it was in making the payment to the person not entitled. With the due diligence defence conceded, there was no triable issue. The motion judge did not err by failing to consider the appropriateness of exercising his discretion not to apply the doctrine of issue estoppel. It would be fundamentally unfair to JM to fail to recognize the judgment of the Kuwait court in her favour and to compel her to relitigate her case in Ontario.
APPEAL by the defendant from the order of Morawetz J., [2007] O.J. No. 1185, 156 A.C.W.S. (3d) 718 (S.C.J.), granting summary judgment against it.
Cases referred to Banque Nationale de Paris (Canada) v. Canadian Imperial Bank of Commerce (2001), 2001 CanLII 24099 (ON CA), 52 O.R. (3d) 161, [2001] O.J. No. 53, 195 D.L.R. (4th) 308, 145 O.A.C. 349, 2 C.P.C. (5th) 1, 102 A.C.W.S. (3d) 302 (C.A.) [Leave to appeal to S.C.C. refused [2001] S.C.C.A. No. 184, 158 O.A.C. 198]; Beals v. Saldanha, [2003] 3 S.C.R. 416, [2003] S.C.J. No. 77, 2003 SCC 72, 234 D.L.R. (4th) 1, 314 N.R. 209, J.E. 2004-127, 182 O.A.C. 201, 39 B.L.R. (3d) 1, 39 C.P.C. (5th) 1, 113 C.R.R. (2d) 189, 127 A.C.W.S. (3d) 648; Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2), [1967] 1 A.C. 853 (H.L.); Danyluk v. Ainsworth Technologies Inc., [2001] 2 S.C.R. 460, [2001] S.C.J. No. 46, 2001 SCC 44, 201 D.L.R. (4th) 193, 272 N.R. 1, J.E. 2001-1439, 149 O.A.C. 1, 34 Admin. L.R. (3d) 163, 10 C.C.E.L. (3d) 1, 7 C.P.C. (5th) 199, 106 A.C.W.S. (3d) 460; Foley v. Hill (1848), [1843-60] All E.R. Rep. 16 (H.L.); Gleeson v. J. Wippell & Co. Ltd., [1977] 3 All E.R. 54, [1977] 1 W.L.R. 510 (Ch.); [page567] Monteiro (Re), 2006 CanLII 124 (ON SCDC), [2006] O.J. No. 48, 206 O.A.C. 281, 20 E.T.R. (3d) 305, 144 A.C.W.S. (3d) 1021 (Div. Ct.), affg [2004] O.J. No. 4051, 12 E.T.R. (3d) 50, 134 A.C.W.S. (3d) 403 (S.C.J.); Morguard Investments Ltd. v. De Savoye, 1990 CanLII 29 (SCC), [1990] 3 S.C.R. 1077, [1990] S.C.J. No. 135, 76 D.L.R. (4th) 256, 122 N.R. 81, [1991] 2 W.W.R. 217, J.E. 91-123, 52 B.C.L.R. (2d) 160, 46 C.P.C. (2d) 1, 15 R.P.R. (2d) 1, 24 A.C.W.S. (3d) 478 Authorities referred to Ogilvie, M., Canadian Banking Law, 2nd ed. (Scarborough: Carswell, 1998)
Benjamin Zarnett and Monica Creery, for appellant. Gregory M. Sidlofsky, for respondent.
The judgment of the court was delivered by
WINKLER C.J.O.: -- Introduction
1The Toronto Dominion Bank ("TD") appeals from the order of Morawetz J. of the Superior Court of Justice granting summary judgment to the respondent, Juanita Monteiro, in the amount of US$712,879.42, plus prejudgment interest and costs.
2Juanita Monteiro is the daughter of Daisy and Sales Monteiro. Both of her parents were residents of the State of Kuwait and are now deceased. The amount awarded by the motion judge to Juanita -- US$712,879.42 -- represents moneys held in a TD bank account in Daisy's name (referred to here as the "funds"). Daisy's will, executed in 1989, specified that all properties owned by her at the time of her death, including her bank accounts, be transferred to Juanita.
3Following Daisy's death in 1993, her sons, Joseph and Frank Monteiro, pursued lengthy estate litigation in the Kuwait courts in which they sought to invalidate the terms of their mother's will. They took the position, inter alia, that their mother held only a life interest in the funds according to the terms of the will of their father, Sales, who had predeceased Daisy. TD was not a party to the estate litigation in Kuwait and did not participate in the proceedings.
4The Kuwait courts resolved the issue of the ownership of the TD account in favour of Juanita. However, shortly after Daisy's death and years before the estate litigation in Kuwait was resolved, TD transferred the moneys held in Daisy's account to a Swiss bank account owned by Joseph. TD completed this transfer pursuant to instructions it received from lawyers acting [page568] for Joseph. In so doing, TD did not follow its own internal procedures for dealing with the account of a deceased customer.
5In seeking to overturn the motion judge's decision in this case, TD submits that it should not be bound by the decision of the Kuwait courts on the issue of the ownership of the funds. TD's underlying argument is that it was not afforded an opportunity to participate in the Kuwait proceedings and consequently, it was denied its fundamental right to be heard. TD argues that it was not "privy" to those proceedings such that it can be estopped from re-litigating the issues here.
6I cannot accede to TD's submissions and would dismiss the appeal for the reasons that follow. The Facts
7Daisy died in February 1993. Her will, dated August 24, 1989, bequeathed all her properties, including her bank accounts, to Juanita.
8In August 1993, TD transferred the funds in Daisy's TD account to her son Joseph, who is since deceased. The funds were wired into a bank account in Switzerland in Joseph's name. TD performed this transfer based on directions it received from Joseph's legal counsel in Toronto.
9Before transferring the funds to Joseph, TD did not request and was not provided with a copy of Daisy's will. Nor did TD make any inquiries concerning Daisy's will.
10In acting on the transfer request of Joseph's counsel, TD did not follow its own internal written procedures for dealing with the account of a deceased customer. These procedures required that the bank obtain information concerning the deceased, including the existence of a will or letters of administration. TD's internal written procedures included the following requirement:
A Notarial copy of the will should be retained on file to ensure the proper identity of the executor(s).
11Moreover, TD did not notify Juanita of its proposed actions despite knowing of her involvement in the management of her mother's account and knowing that she held a power of attorney in respect of that account. Juanita did not learn that the funds from her mother's TD account had been transferred to Joseph until 1997.
Legal proceedings in Kuwait
12In August 1994, Juanita commenced an action in Kuwait against her brothers in which she sought to confirm the validity of her mother's will. The brothers took the position that Daisy's [page569] 1989 will was not properly executed and that a will she executed in 1985 was the valid one. The brothers also claimed that the property identified in Daisy's 1989 will did not belong to her and that she was only entitled to a life estate in the assets in question pursuant to the terms of their father's will. The brothers asserted that, upon their mother's death, any assets that she held flowed to them by operation of their father's will.
13In a judgment dated March 25, 1995, the Kuwait Court of First Instance, Personal Matters Division, found Daisy's 1989 will to be valid and enforceable and declared that Juanita was entitled to "all the properties provided for". The brothers appealed this decision.
14On June 14, 1999, the Kuwait Court of Appeal, First Circuit Personal Status Court, determined that Daisy's will effected a grant to Juanita of the property identified in the will. [See Note 1 below] The court referred the question of what assets were owned by Daisy and granted to Juanita to the Experts Department of the Kuwait Ministry of Justice.
15On October 15, 2000, the Experts Department reported back to the Kuwait Court of Appeal and concluded that the TD bank account was in Daisy's name and that no evidence had been provided that the funds in the account were not held by her.
16On April 27, 2003, the Kuwait Court of Appeal rendered a judgment accepting the Experts Department's determination and found that the funds in the TD bank account now belonged to Juanita. The brothers appealed this decision to Kuwait's highest court, the Kuwait Court of Cassation, Civil Status Division.
17The Court of Cassation remitted the case to the Experts Department to consider further evidence as to the ownership of bank accounts in Daisy's name in order to determine whether they passed to Juanita under the terms of the 1989 will or if they were the property of Sales, and thus passed to the brothers.
18The Experts Department found once again that no evidence had been provided that the funds in Daisy's TD bank account were held by Sales and not Daisy.
19On December 11, 2005, the Kuwait Court of Cassation dismissed the brothers' appeal and declared that Daisy's will was valid and that the respondent was entitled to the bank accounts referred to therein. No further appeals lie from this decision. [page570]
Legal proceedings in Ontario
20In September 1998, some four years after the commencement of the Kuwait proceedings and a year after she learned of the transfer of the funds to Joseph, Juanita initiated an action against TD claiming that she had a contractual entitlement against TD to the funds. Alternatively, she claimed that TD had been negligent in the manner in which it released the funds to Joseph. In her statement of claim, she did not plead or rely on the ongoing Kuwait proceedings.
21TD issued a third party claim against Joseph, Frank and Evelyn, Joseph's spouse. TD subsequently amended its statement of defence to reflect the position of the third parties that the funds in the TD account were not the property of Daisy at the time of her death.
22On October 23, 2003 -- prior to the decision by Kuwait's Court of Cassation -- Juanita brought a motion for summary judgment before H. Spiegel J. for the amount of the funds plus prejudgment interest. She relied in argument on the decision of the Kuwait Court of Appeal to establish her entitlement to the funds held in the TD bank account.
23In reasons reported at Monteiro (Re), [2004] O.J. No. 4051, 12 E.T.R. (3d) 50 (S.C.J.), the motion judge dismissed the motion on the basis that a genuine issue for trial existed with respect to the ownership of the TD bank account. In particular, the motion judge held that the bank account in issue was not within the control of the State of Kuwait and therefore, the decision of the Kuwait Court of Appeal was not a judgment in rem that was binding on TD. Juanita successfully applied for leave to appeal this decision to the Divisional Court.
24In reasons reported at 2006 CanLII 124 (ON SCDC), [2006] O.J. No. 48, 20 E.T.R. (3d) 305 (Div. Ct.), the Divisional Court upheld the motion judge's decision to refuse to grant summary judgment. However, that court gave very different reasons for refusing summary judgment than had the motion judge.
25In reasons on behalf of the court, Lane J. would have allowed the appeal and granted summary judgment if the only outstanding issue in the litigation was the issue of the ownership of the funds. Lane J. was of the view that TD and the brothers had the same interest regarding the ownership of the funds, and hence, TD and the brothers were "privies" in the sense necessary to bind TD to the decision reached by the Kuwait Court of Appeal by way of the doctrine of issue estoppel.
26However, Lane J. refused to grant summary judgment on the state of the record, noting that there were "open issues", [page571] including formal proof of the foreign judgment and the need to amend the pleadings to specifically plead that the plaintiff was proceeding on the basis of the foreign judgment. Lane J. commented that once the pleadings were amended, the genuine issue for trial found to exist by the motion judge would "disappear as irrelevant" and that "[i]t would not be open to the TD to go behind the Kuwait judgment" (at para. 42).
27Following the release of the Divisional Court's decision, the Kuwait Court of Cassation dismissed the final appeal by the brothers. In due course, Juanita amended her statement of claim to expressly plead the final Kuwait judgment and plead that TD was bound by this judgment. She also filed true copies of the Kuwait judgments, along with proper translations.
28Juanita then brought a fresh motion for summary judgment in October 2006. The motion was heard and granted by Morawetz J., whose judgment is the subject of the present appeal.
Reasons of the motion judge
29The motion judge identified the "fundamental issue" as whether TD is bound by the final decision of the Kuwait court -- the same issue that the Divisional Court had considered -- albeit by the time of the second motion for summary judgment, the highest court of Kuwait had also decided the ownership issue in favour of Juanita.
[30] The motion judge set out at para. 21 of his reasons the following factors in support of the view that TD is bound by the final decision of the Kuwait Court: (i) Ms. Daisy Monteiro was a resident of Kuwait. Her Will was executed in Kuwait. She died a resident of Kuwait. Her Estate was administered in Kuwait. (ii) Issues relating to property entitlement flow from Ms. Daisy Monteiro. This includes ownership of the TD Account, which has been determined in proceedings in the State of Kuwait. (iii) The outcome of the Kuwait proceedings is clear. It has been determined that Ms. Juanita Monteiro is the owner of the TD Account. (iv) All parties who could have a proprietary interest in the TD Account were before the court in Kuwait. Mr. Joseph Monteiro, his Estate represented by Evelyn Monteiro, Executrix and Mr. Frank Monteiro, who had represented to TD that they had ownership rights in the TD Account were before the court in Kuwait. Their claims were rejected in favour of the claim of Ms. Monteiro. (v) In view of the findings in Kuwait, the two brothers, Joseph and Frank, had no entitlement to the funds. The position of TD can be no higher than that of the brothers. TD has no independent right to the funds. [page572] (vi) TD had knowledge of the Power of Attorney that had previously been granted by Ms. Daisy Monteiro to Ms. Juanita Monteiro. TD had knowledge of the death of Ms. Daisy Monteiro. TD did not obtain a copy of Ms. Daisy Monteiro's will before it paid the money to Mr. Joseph Monteiro. TD paid out the funds in the TD Account prematurely. TD released the funds prior to the determination of property rights in the funds. (vii) TD has no ownership rights in the TD Account and consequently has no right to the funds that had previously been on deposit.
31The motion judge rejected TD's submissions that its defence had not been heard, noting at para. 22 that the flaw in the bank's argument is that "TD has no independent defence." He went on to note at para. 24 that TD has "no independent proprietary right to the funds" distinct from that of the brothers.
32In its factum submitted on the motion before Morawetz J., TD conceded that if it paid the funds to a person not entitled to them, then it is liable to the rightful owner regardless of how careful and diligent it was in making the payment to the person not entitled. Based on TD's concession that it had no available due diligence defence, the motion judge observed at para. 26 that TD's arguments amount to "nothing more than a request to re-litigate property rights that have already been determined in Kuwait in favour of Ms. Monteiro. TD's major complaint is that it does not like the result."
33The motion judge adopted the Divisional Court's analysis on issue estoppel, agreeing that TD was "privy" to the Kuwait proceedings, and therefore, the Kuwait judgment was capable of raising issue estoppel against TD on the question of ownership of the money in the account. Since the "open issues" referred to by the Divisional Court had been addressed, the motion judge concluded that it was not open to TD to go behind the Kuwait judgment. He accordingly granted summary judgment in the amount of the claim, plus costs and prejudgment interest. Issues and Analysis
[34] TD raises the following issues in its factum: (1) Have TD's fundamental rights to be heard and to a trial been wrongly denied? (2) Does issue estoppel apply? (3) Even if issue estoppel would otherwise apply, did the motion judge err by failing to exercise his discretion not to apply the doctrine? [page573] (4) Did the motion judge err in relying on the obiter comments of the Divisional Court concerning issue estoppel?
35The enumeration of several issues makes this case appear more complicated than it is. All the arguments raised by TD are based on the underlying assumption that TD has some fundamental right to be involved in the estate litigation regarding the effect of the will of Daisy Monteiro. In my view, this assumption is invalid.
36The parties to the estate litigation chose the Kuwait courts as the forum for the determination of the dispute surrounding the validity of Daisy's will and to whom the assets referred to in it, including her bank accounts, were to be distributed. As noted by the motion judge, there is no sustainable argument that Kuwait was not a proper forum: it had a real and substantial connection to the dispute, not the least of which is the fact that Daisy was a resident of Kuwait.
37The litigation was hotly contested and all routes of appeal were exhausted. In the end result, the highest court in Kuwait declared the transfer of Daisy's assets to Juanita as valid and determined that Juanita was entitled to the funds in question. On these facts, no one other than Juanita and her brothers could have an interest in the Kuwait litigation, save and except for some other person who might be claiming an ownership interest in some or all the assets of the estate.
38On a superficial analysis, this possibility might appear to ground an argument that TD had an ownership interest in one of the assets of the estate. However, this argument cannot bear scrutiny. The nature of the relationship between a depositor and a bank has long been recognized as one of contract: see M.H. Ogilvie, Canadian Banking Law, 2nd ed. (Scarborough: Carswell, 1998), at p. 498. The bank is a contract debtor to the depositor. The ownership of the money in the account rests with the bank once a deposit is made. The asset of the depositor on the other hand, is the contract for the debt, or in other words, the obligation of the bank to repay.
39The central issue decided in the estate litigation was the identity of the rightful owner of the contract of debt in relation to the TD bank account. TD has no interest in that dispute. Rather, in my view, TD is properly no more than a bystander who ought to be prepared to honour the obligation to the litigant who is found to be the rightful holder of its contract of debt.
40My view is reinforced by the manner in which the summary judgment motion was defended by TD. TD does not point to any material evidence that was alleged to have not been before [page574] the courts in Kuwait. TD's argument in the court below and in this court is essentially that it might have adduced the evidence in a different manner or argued the case differently. In my opinion, TD's position does not get it past the hurdle of establishing an interest in the estate litigation that is sufficient to ground an argument that it would be unfair to enforce the result in the Kuwait estate litigation to which TD was not a party.
41The reality, as recognized by both the Divisional Court on the first motion and the motion judge on the subsequent summary judgment motion, is that TD's only interest in this case arises from its payment of the money from the account to the order of Joseph Monteiro without having properly verified the authority to give such direction. In following the direction of Joseph Monteiro, TD also ignored the power of attorney held by Juanita Monteiro in respect of the account. I agree with the motion judge that, in effect, TD is looking to turn its misconduct in the handling of the money in the account into an interest in the estate litigation that is sufficient to give it an opportunity to re-litigate the effect of the will in the faint hope of avoiding liability to Juanita Monteiro.
42Even if a simple interest in the outcome of the estate litigation was sufficient to entitle TD to participate in that litigation, I would nevertheless find that, on the facts of this case, the doctrine of issue estoppel applies to prevent it from re-litigating the issue of ownership.
43Issue estoppel has been held to apply where the same question has been decided in a final decision of a court of competent jurisdiction in a proceeding between the same parties or their privies: see Banque Nationale de Paris (Canada) v. Canadian Imperial Bank of Commerce (2001), 2001 CanLII 24099 (ON CA), 52 O.R. (3d) 161, [2001] O.J. No. 53 (C.A.), at para. 16. In my view, the motion judge, by adopting the reasoning of the Divisional Court on this issue, properly applied the doctrine of issue estoppel in the circumstances of this case.
44It is clear that the validity and effect of Daisy's will has already been decided in the Kuwait litigation. The Supreme Court of Canada has held that for a foreign judgment to be given effect, there must be a real and substantial connection between the matter decided and the foreign court: see Morguard Investments Ltd. v. De Savoye, 1990 CanLII 29 (SCC), [1990] 3 S.C.R. 1077, [1990] S.C.J. No. 135 and Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416, [2003] S.C.J. No. 77. Since Daisy was a resident of Kuwait, and in the other circumstances of this case, the Kuwait courts were in the best position to assess the estate and the competing claims of Juanita and her brothers, all of whom had attorned to the jurisdiction of the [page575] Kuwait courts. Accordingly, the motion judge was correct in finding a real and substantial connection between Kuwait and the competing claims to Daisy's estate.
45The motion judge was also correct in concluding that TD was a privy in interest to Joseph. A person may be a privy of another by blood, title or interest: see Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2), [1967] 1 A.C. 853 (H.L.), at p. 910. As there is no question of blood or title in this case, only privity of interest need be considered. The concept of privity of interest is explained by Megarry V.C. in the seminal case of Gleeson v. J. Wippell & Co. Ltd., [1977] 3 All E.R. 54, [1977] 1 W.L.R. 510 (Ch.), at pp. 59-60 E.R.:
[T]he doctrine of privity for these purposes is somewhat narrow, and has to be considered in relation to the fundamental principle nemo debet bis vexari pro eadem causa. [See Note 2 below] . . . . .
I do not say that one must be the alter ego of the other: but it does seem to me that, having due regard to the subject- matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party. It is in that sense that I would regard the phrase 'privity of interest'.
46At para. 35 of his reasons, the motion judge agreed with and adopted the finding of the Divisional Court on this issue, at para. 32:
The TD is bound to deliver the funds to the true owner and the only persons with a claim to them have become bound by the Kuwait decision. The TD gave the funds to Joseph and its interest is entirely identical to his. It is a "privy" of the brothers and so bound even though not a party. I agree with the assessment that there was a total identification between the interests of the brothers and TD on the ownership issue.
47I also see no error in the motion judge's treatment of the Divisional Court's comments on issue estoppel. Contrary to TD's submission, the motion judge's adoption of the Divisional Court's comments does not signify that the motion judge failed to independently assess the application of issue estoppel to the facts of this case. Indeed, in my opinion, it indicates precisely the opposite -- that the motion judge expressly considered and agreed with the Divisional Court's reasoning on this issue. This approach is entirely unobjectionable. [page576]
48TD further asserts that the dispute in this action is as to the contractual rights between the debtor and the alleged creditor and that this dispute cannot be determined in the absence of one of the contracting parties, namely itself as the debtor. In making this assertion, TD attempts to cast the ownership issue as a banking issue by relying on the decision in Foley v. Hill (1848), [1843-60] All E.R. Rep. 16 (H.L.), at p. 19, in an effort to distance itself from the discrete issues in the litigation as between the siblings. Foley stands for the proposition that the money on deposit is the bank's money which it can deal with as its own and make a profit on if it can, subject only to the requirement that it honour the obligation to repay the debt.
49However, the question of the use of the money on deposit is not an issue in the present proceeding. The respondent raises no issue relating to TD's handling of the money while it was in the TD account. The dispute over which of two alleged creditors holds the contract for repayment has been resolved by the Kuwait courts. The only issue is honouring the outstanding debt by TD as debtor: see M.H. Ogilvie, Canadian Banking Law, 2nd ed., supra. TD conceded in its factum on the motion for summary judgment that it would be liable to the rightful owner of the funds "regardless of how careful and diligent TD was in making the payment to the person not entitled". With the due diligence defence conceded, no triable issue exists in this case.
50In affirming the application of the doctrine of issue estoppel in the present circumstances, I would add that this is not a case where the party found to be a privy is an innocent third party, without notice or knowledge of the proceeding, the outcome of which is said to be binding on it. While it is true that TD was not a party to the Kuwait proceedings, the evidence is clear that it took no active steps to seek standing or to participate in those proceedings even though it had notice and knowledge of the Kuwait proceedings from an early stage.
51TD points to a letter received from Juanita's counsel in Kuwait dated November 21, 1999, in which it was stated that "the Experts Department will not interfere in properties situated outside of Kuwait, particularly if such properties are subject of a lawsuit being considered by a court outside Kuwait." TD contends that in light of this letter, it would not have been allowed to participate in the Kuwait proceedings.
52However, this letter did not emanate from the Kuwait courts and did not represent a decision of the court. Moreover, this letter demonstrates that TD was made aware of the proceedings and would be able to follow the progress. TD appears [page577] to have been content to allow the brothers to take full carriage of the Kuwait litigation. Indeed, TD adopted the position of the brothers, whom it added as third parties in the Ontario litigation, by supporting the brothers' attempt to stay the Ontario proceedings pending the outcome of the Kuwait proceedings.
53Finally, TD argues that even if issue estoppel would otherwise apply, the motion judge erred in principle by failing to consider the appropriateness of exercising his discretion not to apply the doctrine: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, [2001] S.C.J. No. 46, at para. 66. TD contends that the exercise of discretion ought to have resulted in issue estoppel not being applied in the interests of justice and fairness. I cannot accede to this submission. In my view, there was no basis upon which such discretion could be exercised in this case.
54The overriding consideration in the exercise of discretion is fairness, but fairness involves a balancing of the interests of both sides. If TD were to prevail in its argument that issue estoppel should not apply, and if a trial were directed in Ontario on the ownership issue, the respondent would be required to go through another lengthy and costly proceeding, having already done so in Kuwait. This trial would be entirely duplicative of the proceedings -- including previous multiple appeals -- in which she has already participated to obtain the judgment that she now holds and to which she seeks to bind TD. In my view, it would be fundamentally unfair to the respondent to fail to recognize the judgment of the Kuwait Court in her favour and to compel her to re-litigate her case in Ontario. Putting all the arguments on the merits aside, this is not a proper case in which the court ought to exercise its discretion in favour of TD so as to permit it to re-litigate the ownership issue. Conclusion
55The underlying basis for TD's appeal is its complaint as expressed in its factum that "[t]he result of the motion judge's judgment is that TD, having paid to one member of the Monteiro family the amount of the TD Account, must now pay the same amount to a second member of the Monteiro family without TD ever having had an opportunity to itself put forward evidence and obtain a ruling from a court based on the evidence it saw fit to present." This submission is only accurate from the flawed perspective on the estate litigation that TD would have this court adopt. It wrongly presumes that TD had an underlying interest in the ownership of the assets of the estate, when in fact the situation TD finds itself in is the product of it having ignored its own [page578] internal procedures and thereby having paid the wrong party. In that regard, TD was the author of its own misfortune. Its internal procedures were designed to prevent this exact situation from occurring, but having chosen to ignore these procedures, TD now finds itself liable to Juanita for the funds in the account. I see no injustice in this result.
56The only manner in which TD could have escaped liability to Juanita was if her siblings had been found to be the rightful owners of the funds in the account. Even if TD's position that it had a right to participate in the estate litigation were to be accepted, it had no interest in that litigation distinct from that of its privies, Juanita's siblings. Accordingly, the doctrine of issue estoppel was properly applied by the motion judge, with the result that TD must now live with the consequences of its own actions.
57The reasons of the motion judge reveal no error in law. I would thus dismiss the appeal with costs to the respondent. If the parties are unable to agree on quantum of costs, they may file brief written submissions on costs with the Registrar of this court within 15 days.
Appeal dismissed.
Notes
Note 1: The Kuwait Court of Appeal held that the 1989 will was a "grant contract" rather than a will, but the court nonetheless concluded that the 1989 document effected teh transfer of the properties held by Daisy to Juanita.
Note 2: In translation: "No one ought to be twice troubled or harassed for one and the same cause."
