Ontario Superior Court of Justice

Court File No.: 07-CV-37099
Date: 2012/04/02

Between:
Gilmour Stewart Drummond Plaintiff – and – Debra Drummond, A.K.A. Debra McFadyen, Mildred McFadyen and Raymond Duncan McFadyen Defendants

Counsel:
William R. Hunter and J.F. Lalonde, for the Plaintiff
John E. Johnson, for the Defendants

Heard: January 16, 17, 18, 19 and 20, 2012

Reasons for Judgment

McLEAN, J.

[1] Sometimes the line between another person’s property and one’s own can be blurred to the extent that disaster results.

[2] The Plaintiff and Debra McFadyen are married. The other Defendants are Debra McFadyen’s mother and father.

[3] The marriage took place in 1992. The Plaintiff thought that the marriage should be what he termed a traditional one. Debra McFadyen Drummond would manage the household and he would earn the money. At that time, he had a house moving business and was also a volunteer firefighter. Mrs. Drummond worked part-time as a care aide in a local nursing home in Almonte. His salary went into a joint bank account at the Royal Bank of Canada branch in Almonte. She paid the bills and made all the deposits. She had complete control of the family finances. This continued throughout the time they lived together. As she had children, they soon bought a new house. Their life and relationship seemed very good to them.

[4] On the 6th of December, 1997, there was a fire in Almonte which killed two people; the fire was the result of arson. Mr. Drummond went as a volunteer fireman to assist fighting it. As a result of not wearing a safety belt, he fell from a ladder and was severely injured. His injuries included a break to his right arm, and he also suffered a painful condition known as reflex sympathetic dystrophy. This latter condition required surgery to relieve the pain which it caused. He could no longer work nor fight fires. He said he was depressed and had to take a lot of medication. He stated that he had to essentially depend on his wife for everything. However, it appears that, aside from the injuries and their resulting effects, he seemed content with the situation. In his words, the money was now “rolling in.” This was as a result of an insurance claim that he had made through his firefighting occupation and also a claim with the Workplace Safety and Insurance Board (“WSIB”). As said, he depended on his wife and had to take numerous medications. He could, however, go with his wife to borrow money for various things for himself. Indeed, he bought many things for himself. This went along with the fact that, as well as house moving, he had great skill as a heavy equipment operator and also seemed to be in the situation whereby he made further money buying and selling various pieces of heavy equipment. With the insurance money he bought a truck, a computer, a car, a machine float “trailer”, and many truck accessories. Indeed, when the Court considers the evidence at this point after the injury, it does not seem that there was any overreaching pattern of benefit to Mrs. Drummond. When we consider the evidence having to do with this joint account, it would indeed seem that essentially all things continued in the same manner both before and after the accident. The money went into the account, and Mrs. Drummond looked after the bills and the running of the household.

[5] According to Mr. Drummond, because he was not satisfied with the way the Court dealt with the persons charged with the arson at the building where he had his accident, he, through some perverse logic, decided he would start an arson spree himself. I can really find no rational connection between his testimony about why he started this arson spree and the fire at which he was injured; however, that is what he testified to. As said, Mr. Drummond began setting fires himself. He burnt down several barns in the Almonte area over a lengthy period. He was eventually caught and arrested at his home. Apparently the Tactical Unit of the police were involved in his arrest. As a result of these arsons, he was sentenced to three years in the penitentiary. Throughout this trial, the Court notes, he testified that he was a vulnerable individual after the accident and was subject to victimization by his wife. However, the Court finds it difficult to see him as a vulnerable individual especially in the sense that he could and did go out after the injuries and set numerous fires. Obviously somebody who was involved in an arson spree of such a length as Mr. Drummond’s cannot be seen to be vulnerable in any sense. Indeed, when one considers the planning required to commit his crimes undetected for so long, he clearly could plan effectively. There is no suggestion that Mrs. Drummond in any way encouraged this or was even aware of his criminal activities. Overall it seems that this kind of behaviour is in direct contradiction to the manner in which he seemed to portray himself at the trial.

[6] After the sentence in the penitentiary was served, the Plaintiff moved with his wife to Buckhorn, Ontario. His wife at that point was living with her parents, the other two Defendants. While he was in prison, his wife had sold their home in Almonte. To facilitate the sale, the Plaintiff signed a power of attorney to release his spousal interest in the real estate. The house had previously been transferred to his wife’s name. He testified that most of his business dealings and holdings of property were managed in such a way as to escape the notice of the Family Responsibility Office (“FRO”). He owed a substantial amount of arrears of support to his former wife. It is the Court’s view that he did all he could to insulate himself from any claims from his former wife or from FRO. Part of this was to transfer his matrimonial home into only his wife’s name. Indeed, Mr. Drummond himself said that he liked cash and carried generally about $500 in cash with him at all times. He, also, put a large quantity of insurance money in cash in a safety deposit box. This was after the accident and indeed could hardly be termed the actions of vulnerable person.

[7] To return to the narrative, when he was released from prison, he required continued medical treatment. He was treated by his general practitioner in Mississauga who is apparently a doctor that his wife went to. This general practitioner in turn referred him to Dr. Sumner, a psychiatrist. Dr. Sumner augmented his medication, and this seems to have worsened his condition. The Plaintiff stated that Dr. Sumner was in difficulty with the Ontario College of Physicians and Surgeons for his drug prescription practices. Mr. Drummond seems to feel he was taken to Dr. Sumner by his wife with a view to keeping him heavily medicated and hence to facilitate his wife’s control of the finances. We find no merit in this position taken by Mr. Drummond. All his medical treatments were monitored by the WSIB which was responsible for paying for his prescription drugs and further monitoring his condition. Indeed, he seems to have been referred to Dr. Sumner by his general practitioner, and, if he was overmedicated, there is no apparent connection between this and anything his wife did. Rather, it seems his wife followed the treatment suggestions she received. There is no indication that she in any way tried to contradict the plan of the WSIB or any of the physicians or even made any suggestions regarding treatment. The Plaintiff’s testimony about his continuing activities while living at Buckhorn, Ontario seems, also, to contradict these allegations. He stated he built trails on common property, helped his father-in-law, Mr. McFadyen, and apparently repaired machinery. Indeed, throughout part of this time he was monitored by a parole officer until his parole was terminated. Certainly in hindsight it appears that the medication may have hindered his abilities; however, it does not seem he was rendered in any way generally vulnerable as a result of this medication, and, indeed, if his abilities were in any way diminished, as we have said, there is no seeming connection between this and any activities of his wife.

[8] After a time, he enunciated his wish to return to the Almonte area. It is certain that for a period of time this was a problem. He seems to indicate in his evidence that aside from any probation order there would be no problem with him moving back to Almonte. Certainly the Court’s view is that it is more likely that there was a great deal of ill will in that small community due to his arsons, as his wife testified to. His evidence that he had no problems in Almonte is doubtful at best. His wife’s statement that she had to sell the house seems entirely logical in the circumstances. Indeed his statement about his parole conditions also indicates the degree of ill will against him. However, to return to the narrative, he wished to return to Almonte but due to his circumstances he needed a place to stay. He obviously needed some retirement care. Indeed it is a fact that he still does, despite what seems to be an improvement in his condition and a substantial reduction in his medication.

[9] Before he moved to the Almonte area he underwent a WSIB assessment of case care costs. He and his wife were interviewed. As a result, his wife received at the Buckhorn location a cheque made out to the Plaintiff in the amount of $271,502.92. On its receipt she cashed the cheque at a bank in Mississauga, Ontario. The bank account was opened in her mother’s name. Mr. Drummond had no knowledge of the receipt of the cheque nor what had happened to it. Before cashing of cheque, his wife had arranged a placement for two weeks at the Royal Ottawa Place. This was to be followed by two weeks with his son in the Almonte/Carleton Place area. During this six-month period at the Royal Ottawa, he made out a new power of attorney to his son. The son also stopped Mr. Drummond’s medication, fortunately without any ill effects as the son did this on his own without any medical consultation beforehand. At this point, with the change of power of attorney, the $271,502.92 cheque from WSIB was discovered. It should be noted that no notice was given to his wife of the change in power of attorney. At this point the litigation commenced.

[10] There are two claims advanced in the litigation, firstly the misuse of the Royal Bank of Canada (“RBC”) joint account and, secondly, the misappropriation of the $271,502.92 cheque.

The Misuse of the Royal Bank of Canada Joint Account

[11] The allegation is that Mrs. Drummond was a trustee for her husband who was a vulnerable individual and hence must be liable for her use of this account. As said in the narrative, Mr. Drummond had certain grave health problems. Notwithstanding these health problems, the Court does not find him to be particularly vulnerable. After his injury, he was obviously capable of planning, carrying out and covering up several arsons. His success in covering up his activities was such that he could commit further arsons over a long period of time. The Court finds that the RBC bank account was operated in the same manner both before and after the accident. Mr. Drummond was capable of buying vehicles and repairing them, but he had good and bad days. It would seem from his testimony that he was not particularly vulnerable even with these swings. In hindsight, he may have been overly medicated. However, there is simply no evidence that this was caused by his wife. His treatment and medication were approved by the WSIB, which indeed had to purchase the medication. His treatment was supervised by a nurse appointed by the WSIB. His care and activities were also supervised by a parole officer for at least a year after his release from prison. There is no evidence that they found any vulnerability or victimization. Essentially it would seem that the Drummonds carried on with the bank account in the same way both before and after the accident. We consider on the evidence that is before the Court that there is simply no basis for any substantial misuse of the RBC funds. Indeed the case of R. v. Bishop , [1965] ChD 450, stands for the proposition that in equity, a court is not required to examine in detail expenditures from a joint account held by both spouses when it was the general intention of the spouses that the account be so utilized. Similarly s. 14 of the Family Law Act, R.S.O. 1990, c. F.3, states:

14. The rule of law applying to a presumption of resulting trust shall be applied in questions of the ownership of property between spouses, as if they were not married, except that,

(a) the fact that property is held in the name of spouses as joint tenants is proof, in the absence of evidence to the contrary, that the spouses are intended to own the property as joint tenants; and

(b) money on deposit in the name of both spouses shall be deemed to be in the name of the spouses as joint tenants for the purposes of clause (a).

[12] This was applied in the case of Belgiorgio v. Belgiorgio , a decision of Beaulieu J., (2000), 2000 (ON SC) , 10 R.F.L. (5th) 239 (Ont. S.C.), at para. 34 :

While it is certainly clear from Mr. Belgiorgio’s testimony that he regrets having placed these funds in the joint bank account, the court cannot concern itself with how Mr. Belgiorgio now feels about his actions. Instead, the court must determine Mr. Belgiorgio’s intention at the time he deposited the funds to the joint account.

[13] This view is in accordance with the decision of the Ontario Court of Appeal delivered by Galligan, J.A. in Berdette v. Berdette (1991), (ON CA) , 3 O.R. (3d) 513 (C.A.) at p. 518:

However, the task of the court was not to correct a possible mistake of judgment on the appellant’s part, but to ascertain the appellant’s intention at the time of the transactions with which we are concerned.

[14] Where we consider the activities of both Mr. Drummond and his wife it appears clear that he intended that Mrs. Drummond manage the account. This she did to the best of her ability. It would seem on this evidence that there is no indication that he constituted Mrs. Drummond his trustee for the use of the account. Rather, if there is any relationship, it is one of agency. He constituted her his agent to use the funds as she saw fit to manage the household and their lives together. It is clear from the evidence that this is what she did or attempted to do, and for these reasons the Court finds nothing inappropriate in her actions regarding the bank account. It may well be that Mr. Drummond may have been mistaken to do what he did; however, it appears, when we consider all the evidence including the wish Mr. Drummond had to shield himself from the FRO and any claims his former wife had, that Mrs. Drummond’s use of that bank account in the payment of bills was entirely consistent with his wishes throughout their relationship.

The Claim as to the WSIB Care Cheque

[15] It is plain that Mrs. Drummond received the $271,502.92 cheque and that she concealed its receipt. The question whether her power of attorney was valid or not is not really relevant since it was used as part of this deception. Conversion is classically defined as follows:

17-09 Intention to exercise dominion Anyone who without authority receives or takes possession of another’s goods with the intention of asserting some right or dominion over them, or deals with them in a manner inconsistent with the right of the true owner is prima facie guilty of conversion; provided there is an intention on the part of the person so dealing with them to negative the right of the true owner or to assert a right inconsistent therewith. A thief, therefore, commits conversion, as does a person purporting to exercise a lien he does not have; not to mention a person who buys goods which turn out not to have belonged to the seller and a seller of goods who, having dispatched them, wrongfully retakes them from the carrier (even temporarily). (Michael A. Jones and Anthony A. Dugdale, eds., Clerk & Lindsell On Torts , 20 th ed. (London: Sweet & Maxwell, 2010), at para. 17-09)

[16] Without a doubt the actions of Mrs. Drummond are within this definition, and conversion is made out. On the pleadings, it seems that the only defence that is put forward is justification or perhaps equitable set-off, though this is not clear. The justification argument is that the funds were provided to Mr. Drummond on condition that they were to pay caregivers and if there was any conversion the funds were only converted to pay those caregivers. The argument is that Ms. Drummond and her family were caregivers and that the funds were to pay them as caregivers, so they could take the money. It is to be noted that the purported payment to caregivers was done without informing Mr. Drummond as to the money’s existence. The argument perhaps is based on some contract between these caregivers and Mr. Drummond; however, if it was based on some sort of implied contract there is a consideration problem. Since the care had already been given for many years on what might be a voluntary basis, any consideration for the funds now would be past. (See S.M. Waddams, The Law of Contracts , 5 th ed. (Toronto: Canada Law Book Inc., 2005), para. 177.) Surely the family were acting as volunteers and never demanded any payment from Mr. Drummond, and indeed when we consider the use of the RBC bank account he had contributed to the joint expenses of the Buckhorn property, putting money into the property and the day-to-day living expenses of all those living there. As these claims may be equitable as well as contractual, they likewise would be met with the doctrine that equity will not assist a volunteer. (See Donovan W.M. Waters, ed., Waters’ Law of Trusts in Canada , 3 rd ed. (Toronto: Thomson Carswell, 2005) at page 170.) Moreover, if there is some equitable request as seems to be for set-off or otherwise, we have the problem of the Defendants coming to the property with clean hands. One who seeks the aid of an equitable remedy must show that “his past record in the transaction is clean.” (John McGhee, ed., Snell’s Equity , 31 st ed. (London: Sweet and Maxwell, 2005) at para. 5-15.) Clearly in this particular situation the transaction was concealed. The receipt of the cheque was concealed and the conversion was wholly concealed. The persons converting the cheque had no clean hands particularly indeed when we consider the fact that the cheque was deposited in a bank account owned by Mrs. Drummond’s mother. There can be no other explanation than this was a scheme to steal the funds from Mr. Drummond. Indeed with the cheque came a letter giving an explanation to Mr. Drummond such that he could pay caregivers (Exhibit 1, Volume 5, Tab 425) and that if he did pay caregivers he would have to register with Revenue Canada because certain tax deductions would have to be made.

[17] One must also consider who were parties to this conversion, indeed who were joint tortfeasors. It is without question on the balance of probabilities that the mother was. She opened the account and accepted the deposit of the funds into her account. On Mrs. Drummond’s evidence it is clear the scheme was discussed with her father, and the mother and the father both received funds from the account knowing full well that those were deposited into their account from a cheque made payable by the WSIB to Mr. Drummond. It is clear that all three persons benefited from the conversion. Considering the matter as a whole, there is simply no defence to this conversion. Mr. Drummond did not consent to any payment; in fact he was never asked and had no prior knowledge of these Defendants’ action.

Damages

[18] The Court now turns to the damages. Clearly a judgement will go to Mr. Drummond for the return of the $271,502.92. This judgment will be against all three Defendants. The further question is whether punitive damages should be imposed. It is clear that punitive damages are available for conversion (see G.H.L. Fridman, The Law of Torts in Canada , 3 rd ed. (Toronto: Carswell, 2010) at para. (D) on p. 136). Certainly in this case substantial punitive damages are requested. It is certain also that the behaviour of the Defendants was such that they should attract punitive damages. It exceeds the norm and demonstrates highhandedness. When we consider the matter as a whole, the defendants may well have been entitled to some of these funds; however, any equitable entitlement was indeed vitiated by their behaviour in cashing the cheque and concealing it from Mr. Drummond. Therefore, it is the Court’s view that punitive damages should be modest. The Court fixes the amount of punitive or aggravated damages in the amount of $10,000.00. Therefore in sum, the judgment will go against the Defendants in the amount of $281,502.92.

Costs

[19] Costs will be dealt with by the parties by either requesting a date for a hearing of costs or providing written submissions within 30 days of the release of these reasons.

Mr. Justice Hugh R. McLean

Released: April 2, 2012