ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-09-380880
DATE: 20120917
IN THE MATTER OF THE ESTATE OF CHARLES CSAK, DECEASED
BETWEEN:
KAROLY PETER CSAK, and ELZBIETA CSASK, also known as ELIZABETH CSAK
Plaintiffs
– and –
MARIA CSAK, also known as KRYSTYNA CSASK, also known as CHRISTINA CSAK, in her capacity as THE TRUSTEE OF THE ESTATE OF CHARLES CSAK, DECEASED, and personally, and THE TORONTO-DOMINION BANK
Defendants
Marek Z. Tufman, for the Plaintiffs
Robert P. Marcantonio, for the defendant/moving party, Toronto-Dominion Bank
Mark Adilman, for the defendant, Maria Csak
HEARD: June 8, 2012
LEDERER J.:
Reasons for Decision
[ 1 ] This is a motion for summary judgment. Among other things, the plaintiffs claim $50,000 from the individual defendant, which the Statement of Claim alleges she converted to her own use. At the same time, the plaintiffs seek the same amount from the defendant bank. It is alleged that the bank was required to, and failed to, preserve the funds which the plaintiffs say the bank held in trust to the benefit of the plaintiff, Karoly Peter Csak, and that the bank was negligent in the discharge of its obligation to the plaintiffs. The motion is brought on behalf of the bank which says that, in the circumstances, there was no trust and that no issue of negligence can arise.
[ 2 ] Given the value at stake and the generally accepted idea that litigation is expensive, it would be a good thing if an appropriate and expeditious route to resolution could be found. Unhappily, it appears that, in this case, the bank, is trying to make a quick escape from the action when one is not justified.
[ 3 ] The money was held in an account opened by Charles Csak, pursuant to a judgment of Madam Justice Heather Smith (now the Chief Justice of this Court). It was made on consent and is dated June 1, 1994. It was an order for support. It concerned the end of the marriage of the plaintiff, Elzbieta Csak, and Charles Csak and dealt with the support to be provided to their son, the plaintiff, Karoly Peter Csak. By the judgment, Charles Csak was required to make monthly payments to support his son so long as he remained “a child of the marriage” within the meaning of s. 2 of the Divorce Act and resided with his mother. As security for these payments, Charles Csak was ordered to deposit $50,000 into a savings account in his name at a branch of the Toronto-Dominion Bank that was identified in the order. The money was to remain in the account until the obligations of Charles Csak had expired or until a further order of the court. The judgment was explicit. Charles Csak, his personal representative or anyone on his behalf, were restrained from dealing with the account without a further order of the court. During the time the funds were being held in the account, the interest earned was to be paid to Charles Csak or his estate if he had died. In the event that Charles Csak, or his estate, was in default of the obligation, the money in the account was to be used to comply with the commitments that had been made and were included in the judgment.
[ 4 ] Charles Csak died on March 9, 2002. While he was alive, Charles Csak did not default in respect of the support payments he was required to make. The support payments stopped shortly after he died. At the time of his death, the estate of Charles Csak was insolvent. One of the reasons for the insolvency was a debt owed by Charles Csak to the Canada Revenue Agency (“CRA”).
[ 5 ] In early February 2008, the bank was served with a “Requirement to Pay” issued by the CRA. It demanded payment of the funds held by the bank in respect of the outstanding tax liability of Charles Csak. In making this demand, the CRA was relying on the Income Act 1985, c. 1 s. 224(1), (1.1) and (4). They say:
- (1) Where the Minister has knowledge or suspects that a person is, or will be within one year, liable to make a payment to another person who is liable to make a payment under this Act (in this subsection and subsections 224(1.1) and 224(3) referred to as the “tax debtor”), the Minister may in writing require the person to pay forthwith, where the moneys are immediately payable, and in any other case as and when the moneys become payable, the moneys otherwise payable to the tax debtor in whole or in part to the Receiver General on account of the tax debtor’s liability under this Act.
(1.1) Without limiting the generality of subsection 224(1), where the Minister has knowledge or suspects that within 90 days
(a) a bank, credit union, trust company or other similar person (in this section referred to as the ‘institution’) will lend or advance moneys to, or make a payment on behalf of, or make a payment in respect of a negotiable instrument issued by, a tax debtor who is indebted to the institution and who has granted security in respect of the indebtedness, or
(b) a person, other than an institution, will lend or advance moneys to, or make a payment on behalf of, a tax debtor who the Minister knows or suspects
(i) is employed by, or is engaged in providing services or property to, that person or was or will be, within 90 days, so employed or engaged, or
(ii) where that person is a corporation, is not dealing at arm’s length with that person,
the Minister may in writing require the institution or person, as the case may be, to pay in whole or in part to the Receiver General on account of the tax debtor’s liability under this Act the moneys that would otherwise be so lent, advanced or paid and any moneys so paid to the Receiver General shall be deemed to have been lent, advanced or paid, as the case may be, to the tax debtor.
(4) Every person who fails to comply with a requirement under subsection 224(1), 224(1.2) or 224(3) is liable to pay to Her Majesty an amount equal to the amount that the person was required under subsection 224(1), 224(1.2) or 224(3), as the case may be, to pay to the Receiver General.
[ 6 ] On February 19, 2008, the bank delivered a draft representing all the funds in the account to the CRA. The CRA is not a party to the action. It is not being asked to return the money it has received. Counsel for the bank submitted that, once served with the Requirement to Pay, it was, as a matter of law, required to pay the Receiver General forthwith, any money it held that was payable to Charles Csak or his estate. The bank says that, if it had failed to comply with the statutory requirement, it would have become directly liable to pay an amount, equal to the required payment, to the Receiver General.
[ 7 ] To my mind, the question this raises is whether the money was “payable to Charles Csak” or, rather, whether it is so clear that it was payable, that this does not raise a genuine issue requiring a trial (see: Rule 20.04(1)(a) of the Rules of Civil Procedure).
[ 8 ] The bank was aware that there were others who might claim an interest in the money.
[ 9 ] The bank says that, at the time the account was opened, it “appears” to have received a copy of the judgment. On behalf of the plaintiff, it is said that, on June 3, 1994, full information about the judgment was delivered to the bank. This was followed by a copy of the judgment.
[ 10 ] Following the death of Charles Csak and the accumulation of arrears in the support payments that were to be made, on June 23, 2003, counsel, on behalf of Elzbieta Csak, wrote to the bank seeking release of “the funds or parts of the funds” to his client. In the absence of a response, counsel delivered a second copy of the letter to the bank on August 21, 2003. The bank chose not to reply. On September 18, 2003, a third letter was sent to the bank, this time indicating that if no answer was provided, or explanation given, a court application would be brought. The bank says that it heard nothing further about this account until it received a letter, dated January 30, 2007, from the office of the Public Guardian and Trustee.
[ 11 ] If, as counsel for the plaintiffs submitted, the money was held in trust for Karoly Peter Csak, the money would not have been “payable to Charles Csak”. It would have belonged to his son. Money in an account with a bank does not make the bank a trustee of the person who deposited the money or anyone else. The relationship between a bank and its customer is simply that of debtor to creditor. Money in a deposit account is a loan to the bank (see: Sutcliffe & Sons Ltd., [1993] O.R. 120 (C.A.) at paras. 2, 3, 11, 12 and 13). It is not a sum held in a fiduciary capacity.
[ 12 ] Did the judgment create a trust?
[ 13 ] On its face, it did not. The principal amount in the account was security for the support payments Charles Csak had agreed to pay and by the judgment was ordered to pay. If there was a default, the money was to be used to make good the commitment of Charles Cask to pay. In any event, counsel for the bank submitted that, in the circumstances, the bank cannot be a trustee. Under the Bank Act, S.C. 1991 c. 46, s. 437(3) and (4), a bank is not bound to see to the execution of any trust, regardless of whether the trust is express or arises by the operation of law:
437(3) A bank is not bound to see to the execution of any trust to which any deposit made under the authority of this Act is subject.
437(4) Subsection (3) applies regardless of whether the trust is express or arises by the operation of law, and it applies even when the bank has notice of the trust if it acts on the order of or under the authority of the holder or holders of the account into which the deposit is made.
[ 14 ] On this basis, there can be no trust.
[ 15 ] Could it be that the question runs deeper?
[ 16 ] I have not, as yet, made reference to the defendant, Maria Csak. After his divorce from the plaintiff, Elzbieta Csak, Charles Csak re-married. Maria Csak became his wife and is the trustee of his estate. On February 1, 2007, the Office of the Children's Lawyer wrote to Maria Csak advising that it represented Karoly Peter Csak in respect of his interest in the estate of his father. This letter was dated two days after correspondence from the Public Guardian and Trustee (January 30, 2007) was sent to the bank alluding to the responsibilities of the Public Guardian and Trustee under s. 2.1 of the Crown Administration of Estates Act, R.S.O. 1990 c. C. 47 and expressing interest in the account and noting that the balance was to be maintained until further order of the court. This was followed by a letter, dated April 18, 2007, to the bank, from the Office of the Children's Lawyer seeking to obtain money from the account on behalf of Karoly Peter Csak. It notes: “As we [the Children's Lawyer] do not act as the estate administrator, we will likely need to proceed by way of a Court Order”.
[ 17 ] In the meantime, in light of the fact that the account had been dormant for more than nine years, in January 2007, the bank was preparing to remit the funds in the account to the Bank of Canada in accordance with the requirements of the Bank Act. At the request of the Public Guardian and Trustee and the Office of the Children's Lawyer, the bank agreed not to remit the funds until November 2007.
[ 18 ] Over the course of the summer of 2007, Maria Csak worked with the Office of the Children's Lawyer to have the arrears paid to Karoly Peter Csak. By letter, dated August 16, 2007, Maria Csak provided her understanding of the amount of the support arrears. The Office of the Children's Lawyer responded by letter, dated August 24, 2007, agreeing that the sum due to Karoly Peter Csak was $27,385.47 and explaining the best way to arrange for the money to be delivered. On September 17, 2007, the Office of the Children's Lawyer wrote again to Maria Csak. This letter expresses a measure of frustration, but looks forward to her continued co-operation and to receipt of a cheque in the sum of $27,385.47 made payable to the Account of the Superior Court of Ontario.
[ 19 ] It is not as if the bank was unaware of these efforts. In the affidavit sworn on its behalf, the branch manager of the branch at which the account is located states that Maria Csak “attempted to” verbally instruct the bank to pay out the support arrears to the Office of the Children's Lawyer. This is confirmed in letters written by the Office of the Children's Lawyer to Maria Csak and to the bank on December 3, 2007. These letters outline other concerns with the administration of the estate, but continue to propose that the support arrears owing to Karoly Peter Csak be “paid out” and that the balance in the account should be held by the Accountant for the Superior Court of Ontario.
[ 20 ] The question this raises is whether, at the time the bank received the Requirement to Pay, all the money continued to belong to Charles Csak or, more accurately, his estate. Given the involvement of the Office of the Children's Lawyer, the agreement as to the value of the arrears and the possible instruction of the trustee of the estate that the arrears be paid, did at least the value of the arrears ($27,385.47) belong to Karoly Peter Csak?
[ 21 ] The question is not so much whether the money was held in trust for him, but whether the security had been realized. It is a question of timing. Should the bank have accepted instructions and made the payment? If it had, the money would not have been available when, several months later, the Requirement to Pay arrived. Was the bank negligent when it failed to pay?
[ 22 ] None of the history to which I have referred considers the actions undertaken by the bank itself. On the motion, it was submitted that Maria Csak was without authority to instruct the bank and yet, during the spring, summer and into the fall of 2007, she met, on a number of occasions, with the individual who was, at the time, the manager of the branch of the bank where the account was located. The manager understood that there was some urgency that the support arrears should be paid to Karoly Peter Csak, prior to his eighteenth birthday which fell on November 13, 2007. On October 24, 2007, a notarial copy of the will was provided to the bank. The bank manager had advised that this was required in order to process the payment. A problem had developed. The bank manager explained that, because the account had been inactive, the money had been transferred to the Bank of Canada. Arrangements could be made for the money to be returned, but this would take up to six weeks in order to deliver the funds to Karoly Peter Csak before his eighteenth birthday and an agreement was made that would allow the payment to be made to him immediately with the bank being reimbursed through the money to be transferred back from the Bank of Canada. A week or so later (which I take to be around November 1, 2007), the manager of the bank telephoned Maria Csak. The release allowing for the money to be paid in advance of the transfer back from the Bank of Canada had to be signed immediately. Maria Csak was instructed and did attend at a branch of the bank near her home in order that the release could be faxed to the branch at which the account was located. This was done. On October 27, 2007, Maria Csak attended at the branch which held the account and, while there, sent a letter to the Office of the Children's Lawyer explaining that the bank had been asked to rush and be sure that Karoly Peter Csak would “get his money before his 18th birthday”. This was followed by the letters of December 3, 2007 to which I have already referred. The letter sent to Maria Csak by the Office of the Children's Lawyer says: “As you know, TD Canada Trust is in a position to pay out the amount of Support Arrears to Karoly Peter Csak in the sum of $27,385.47”. The letter to the bank of the same date notes: “You [a bank employee] had advised me that your instructions are to pay out the amount of Support Arrears owing to the child of the late Charles Csak and for the balance to be paid to Maria Csak. I confirm that I advised you that the amount outstanding in child support arrears was the sum of $27,305.27 [ sic ]”. This letter was copied to Maria Csak, who deposed in the first of two affidavits she swore that she “… believed that by this point I had taken all steps to make arrangements for the payment of the Support Arrears from the TD Account to the Children's Lawyer on behalf of Karoly”. In other words, given its interaction with the plaintiffs, the Office of the Children's Lawyer and from its own actions, there is evidence that the plaintiffs had reason to believe the bank would make the payment. This is not consistent with the submission that the Maria Csak could not instruct the bank.
[ 23 ] Through the first of the two affidavits she swore in respect of this motion, Maria Csak advised the court that, following the letters of December 3, 2007, she did not hear anything from the bank for several weeks. She left “…a week-long series of phone messages”. When these calls were “finally returned…late one evening”, Maria Csak asked what the status of the bank's payment to the Office of the Children's Lawyer was. She was told that the bank employee who returned the call “could not talk about it”. She heard nothing further from the bank and was not advised of the Requirement to Pay or about the bank's delivery of the funds to the CRA.
[ 24 ] Counsel for Maria Csak submitted that, by its clear and consistent dealings with her and the Office of the Children's Lawyer during 2007, the bank is estopped from arguing that Maria Csak did not have authority to deal with the account. There is no evidence that this position was ever raised by the bank at any relevant time. To the contrary, the bank gave every indication that it intended to pay the arrears.
[ 25 ] On the motion, it was submitted, on behalf of the bank, that, as it was not a party to the judgment, it cannot be bound by its terms. In making this submission, the bank relies on McMillan Bloedel Ltd. v. Simpson, 1996 165 (SCC), [1996] 2 S.C.R. 1048 (S.C.C.). The case reflects a very different set of circumstances. The company was given permission to cut logs in a particular area. Protesters opposed to the logging blocked public roads to prevent the logging trucks from sending out cut logs. An interim injunction was obtained prohibiting the parties, including “John Doe, Jane Doe and Persons Unknown” and persons having notice of the order from blocking the road. The police arrested over eight hundred individuals for violating the order. Among the issues considered by the Supreme Court of Canada was whether the court has jurisdiction to make orders that are binding on non-parties. The court observed that the case concerned the conflict “… between the right to express public’s dissent on the one hand, and the exercise of property and contractual rights on the other” (see: McMillan Bloedel Ltd. v. Simpson, supra, at para. 13). In such circumstances, “… [a]n order going merely against named parties… would be ineffective because new people were arriving daily to participate in the blockades” (see: McMillan Bloedel Ltd. v. Simpson, supra, at para. 15). The court considered the authorities in both England and Canada and concluded that in both countries “… non-parties who violate injunctions may be found in contempt of court. Hence, non-parties may be seen as being, if not technically bound by the order, bound to obey the order ” (see: McMillan Bloedel Ltd. v. Simpson, supra, at para. 23).
[ 26 ] The problem in the present case is that there is no question of public dissent, just a private dispute between two parties which does not directly involve the bank.
[ 27 ] The proposition appears to be that the bank, having received the judgment and the money, is free to ignore the judgment, subject only to a determination that it was in contempt of court. Contempt of court recognizes an affront to the court and, generally, proposes sanctions such as fines or jail terms. One wonders how the bank would respond to a request that some senior official be jailed as a result of its failure to abide by the terms of the judgment.
[ 28 ] The problem was acknowledged in McMillan Bloedel Ltd. v. Simpson where the court said:
I find it a little difficult to understand why, if it is true – and it is, of course, quite true that persons who, with knowledge of an order, take any steps to assist in contravening it, may be proceeded against for contempt of court – why the order should not provide that it covers somebody who, having knowledge of the order, disobeys it.
( McMillan Bloedel Ltd. v. Simpson, supra, at para. 30 )
[ 29 ] On a motion for summary judgment, the court must ask if a full appreciation of the evidence and issue can be achieved on a motion without a trial (see: Combined Air Mechanical Services Inc. v. Flesch (2011) 75 ONCA 764 (C.A.), at para. 50). The Court of Appeal went on to explain what it meant by the full appreciation test it was enunciating:
We wish to emphasize the very important distinction between ‘full appreciation’ in the sense we intend here, and achieving familiarity with the total body of evidence in the motion record. Simply being knowledgeable about the entire content of the motion record is not the same as fully appreciating the evidence and issues in a way that permits a fair and just adjudication of the dispute. The full appreciation test requires motion judges to do more than simply assess if they are capable of reading and interpreting all of the evidence that has been put before them.
( Combined Air Mechanical Services Inc. v. Flesch (2011) 75 ONCA 764 (C.A.), at para. 53)
[ 30 ] I take this to mean that it is necessary to have a complete and comprehensive understanding of the evidence and the issues.
[ 31 ] Ultimately, the question is whether the processes of a trial are necessary to arrive at the required “full appreciation”:
The point we are making is that a motion judge is required to assess whether the attributes of the trial process are necessary to enable him or her to fully appreciate the evidence and the issues posed by the case. In making this determination, the motion judge is to consider, for example, whether he or she can accurately weigh and draw inferences from the evidence without the benefit of the trial narrative, without the ability to hear the witnesses speak in their own words, and without the assistance of counsel as the judge examines the record in chambers.
( Combined Air Mechanical Services Inc. v. Flesch (2011) 75 ONCA 764 (C.A.), at para. 54)
[ 32 ] These paragraphs are fundamental to our understanding of what is required for a motion for summary judgment. What they seek is not present in this case. To my mind, it is not possible to fully appreciate what took place. This is underscored by the fact that the only affidavit provided on behalf of the bank was sworn by an individual who had no direct knowledge of any of the matters related to Maria Csak, the Office of the Children’s Lawyer or the steps taken in furtherance of paying the arrears from the account. The witness only became manager of the applicable branch on March 18, 2008, after all the events material to the action had taken place.
[ 33 ] At the core of this case is the question of whether the bank was obliged to or should have delivered the funds to the credit of Karoly Peter Csak during the months prior to receiving the Requirement to Pay. Without a trial, it is not possible to fully appreciate the evidence such that this case can be determined in favour of the bank.
[ 34 ] The motion is dismissed.
[ 35 ] Before concluding, I wish to return to the observation, made at the outset of these reasons, that it would be a good thing if an appropriate and expeditious route resolution could have been found. I am constrained to observe that all of this could have been avoided if the bank, whether it is required to by law or not, had followed the direction in the judgment of Madam Justice Smith and obtained an order of the court before delivering the funds to the CRA. In the same vein, the notice of motion suggests that, if necessary, the court exercise its discretion under Rule 20 of the Rules of Civil Procedure and order that evidence be called for the motion. No submissions were made with respect to this proposition and I am in no position to make such an order. As matters stand, after the time that has passed, if the parties are intent on proceeding, it would be best to proceed quickly to a trial.
[ 36 ] Finally, I should say that the bank also sought summary judgment with respect to the cross-claim made against it by Maria Csak. She sought contribution and indemnity from the bank and damages. As to the latter, these dealt with her personal claim to the funds in the account. During the course of the submissions, counsel, on her behalf, withdrew this claim. As I understood it, this reflected an understanding that any funds remaining to the credit of the account after the claim of the plaintiffs was resolved would stand to the credit of the estate of Charles Csak and, presumably, contribute to whatever it owed. As for the former, it stands to reason that, if the bank may bear a direct liability to the plaintiffs, it may also be liable for contribution and indemnity.
Costs
[ 37 ] If the parties are unable to agree as to costs, I will consider written submissions on the following terms:
On behalf of the plaintiff and the defendant, Maria Csak, no later than fifteen days after receipt of these reasons. Such submissions are to be no longer than four typed pages, double-spaced, excluding any Bill of Costs, Costs Outline or case law.
On behalf of the bank, no later than ten days thereafter. Such submissions are to be no longer than four typed pages, double-spaced, excluding any Bill of Costs, Costs Outline or case law.
On behalf of the plaintiff and the defendant, Maria Csak, in reply, no later than five days thereafter. Such submissions are to be no longer than one typed page, double-spaced.
LEDERER J.
Released: 20120917
COURT FILE NO.: CV-09-380880
DATE: 20120917
ONTARIO SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE ESTATE OF CHARLES CSAK, DECEASED
BETWEEN:
KAROLY PETER CSAK, and ELZBIETA CSASK, also known as ELIZABETH CSAK
Plaintiffs
– and –
MARIA CSAK, also known as KRYSTTNA CSASK, also known as CHRISTINA CSAK, in her personal capacity as THE TRUSTEE OF THE ESTATE OF CHARLES CSAK, DECEASED, and personally, and THE TORONTO-DOMINION BANK
Defendants
JUDGMENT
LEDERER J.
Released: 20120917