The Attorney General (Canada) v. Al-Zawati, 2015 ONSC 3676
CITATION: The Attorney General (Canada) v. Al-Zawati, 2015 ONSC 3676
COURT FILE NO.: 04 CV-268666 CM1
DATE: 20150608
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N :
THE ATTORNEY GENERAL OF CANADA
Plaintiff
– and –
RIMA’A AL-ZAWATI and THE ESTATE OF ABBAS AL-ZAWATI, DECEASED
Defendants
Liz Tinker
for the Plaintiff
Shahzad Siddiqui
for the Defendants
HEARD: May 19, 2015
CHAPNIK J.:
[1] This is a straightforward case of mistake of fact based on a cheque in the sum of $194,000 USD erroneously sent by or on behalf of the plaintiff the Attorney General of Canada, to the defendant, Rima’a Al-Zawati, on February 15, 2004.
[2] The defendant, Abbas Al-Zawati passed away in April 2012 and the court has made an Order to Continue the action with the title, as stipulated above. Nevertheless, in the interests of efficiency, this judgment shall refer to the defendants by their first names, Rima’a and Abbas.
background
[3] The defendants, who were husband and wife, emigrated to Canada from Kuwait in 1989.
[4] In 1991, the United Nations and Iraq created the United Nations Corporation Commission (“UNCC”) with oil monies from Iraq. The monies were to provide compensation to individuals who sustained losses and damage as a direct result of Iraq’s invasion and occupation of Kuwait in 1990.
[5] The Department of Foreign Affairs and International Trade (“DFAIT”)[^1] is the department in Canada that works with the United Nations to help disperse compensation to claimants pursuant to the UNCC program (the “Program”).
[6] There are different categories of claims in the Program. Category “C” claims are individual claims for damages up to $100,000 USD. Category “D” claims comprise individual claims for damages over $100,000 USD.
[7] In the late 1990’s, Rima’a made a category “C” claim under the Program, and she was awarded the sum of $29,276.86 USD by the UNCC. Abbas asserted both category “C” and “D” claims and was awarded $66,517.03 USD and $23,436.85 USD respectively by the UNCC, pursuant to the Program.
[8] The above amounts were paid to the claimants by instalments and the claims were fully paid to both Rima’a and Abbas in late 2000 and early 2001.
[9] The evidence indicated that Abbas did the paperwork and prepared the applications for Rima’a, himself and his brother Adnan Al-Zawati (Adnan), who made a claim under category “D” and was awarded the amount of 3.5 million USD by the UNCC.
[10] DFAIT assigned numbers to each of the claimants which were clearly set out in their correspondence to them. Abbas’ number was 1124, Adnan’s was 1125 and Rima’a’s was 1127.
[11] The problem occurred in February 2004 when a cheque in the sum of $194,000 USD documented as part of Adnan’s claim number 1125 was made payable to Rima’a as a result of it being mistakenly sent to claim number 1127.
[12] On March 9, 2004 DFAIT discovered the error and called Rima’a asking her to return the monies to the plaintiff. This was followed by written correspondence to that effect sent to Rima’a. Rima’a maintains that she had made a category “D” claim that was “lost” and she believed the cheque was partial payment for that claim. She takes the position that, since the government was negligent, they are estopped from retrieving the monies, some of which were spent on various items such as “food and school supplies for her daughters”.
[13] The plaintiff made several requests to the defendants for the return of the funds, but to no avail. Accordingly, in October 2004, the government of Canada paid the $194,000 USD to Adnan pursuant to his approved claim.
[14] In February 2005, the defendants, through counsel, sent a cheque in the sum of $110,000 USD to the Attorney General “on a without prejudice basis, and as part settlement of this matter.”
analysis
[15] This action is brought by the Attorney General under the legal principle of unjust enrichment. Unjust enrichment requires an enrichment of the defendants, a corresponding deprivation of the plaintiff and the absence of a juristic reason for the enrichment.
[16] Clearly the first two criteria are satisfied in this case – a tangible benefit has been conferred on the defendants in the form of a cheque in the amount of $194,000 USD, which was cashed and utilized to their joint benefit. The payment made by the plaintiff to Adnan in 2004 provides tangible evidence of deprivation on the part of the Attorney General and ultimately, the public purse.
[17] Is there a juristic reason to deny recovery to the plaintiff? In the circumstances of this case, I can find no juristic reason from an established category to deny recovery – no contract, disposition of law, donative intent or other equitable, common law or statutory obligations on the part of the defendants. Accordingly, the plaintiff has made out a prima facie case under the juristic reason component of the analysis: see Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629 at para. 44.
[18] Has the defendant shown another reason to deny the plaintiff recovery considering the reasonable expectation of the parties and public policy considerations?
[19] In general, the cases have held that where the payee has done nothing more than to expend the money on his or her own purposes, as the defendants did here, this does not afford a defence to a claim under a mistake of fact, even if the monies have been spent “beyond recall,” which is not the case here.
[20] The defendants through counsel (in particular the defendant Rima’a) also claim that they so altered their position as a result of the payment that it would be inequitable to require them to repay the monies. As well, they rely on the defence of estoppel, arguing that the plaintiff is estopped from reclaiming the funds erroneously sent to Rima’a due to its own negligence.
[21] In the case of Mobile Oil Canada Ltd. v. Storthoaks (Rural Municipality), 1975 CanLII 156 (SCC), [1976] 2 S.C.R. 147, royalty payments were paid in error to the municipality under a mistake of fact. The Supreme Court allowed the plaintiff’s appeal, holding that the municipality failed to establish it so altered its position after the receipt of the payments that it would be inequitable to require it to repay the monies. The municipality’s submission based on the law of estoppel also failed.
[22] The jurisprudence in general, rejects the contention of estoppel as a result of one’s own negligence as being a sustainable defence for a claim of unjust enrichment: see Central Guarantee Trust Co. v. Dixdale Mortgage Investment Corp. (1994), 1994 CanLII 1429 (ON CA), 24 O.R. (3d) 506 (C.A.); and Baxter v. Constellation Assurance Co. (1997) 31 O.T.C. 114 (Gen. Div.).
[23] In Chase Paymentech Solutions v. 1191540 Alberta Inc., 2013 ONSC 4833, [2013] O.J. No. 3521, the court assessed the questions of equity and fairness in a similar context. In that case, the defendant used the mistaken monies in circumstances where neither parties were aware of the mistake for a period of almost three years. As well, the plaintiff was faulted for not keeping proper watch over its financial records. As there were serious issues to be tried, the court dismissed the plaintiff’s motion for summary judgment.
[24] The defendants here were informed of the plaintiff’s mistake within three weeks of their receipt of the mistaken cheque. On the evidence, I find that they knew or ought to have known the funds were misdirected and not rightfully theirs, based on the following:
Previous payments made to the defendants were preceded by a letter naming them, the full amount of the approved claim, their claim number, when they could expect payment and in what amount. This was standard procedure at DFAIT. Further, a letter sent prior to the final payment with respect to each of their claims advised the claimant that upon receipt of the final cheque, they “will have received the total amount awarded by the UNCC” for the particular claim.
The impugned cheque was mailed to Rima’a on February 15, 2004 and was negotiated by her on or about February 21, 2004. Upon discovery of the error, on March 9, 2004, approximately three weeks later, the defendants were advised that the cheque was mistakenly sent to them and that the money belonged to another claimant. At that time, Rima’a, was reminded in correspondence, that the balance of her category “C” award sent to her on October 13, 2000, had been accompanied by a letter indicating that this amount constituted “final payment” by the UNCC.
On the face of the stub of the mistaken cheque were the words “Temporary Phase Payment – 1125” and, as noted, Rima’a’s claim number was 1127.
[25] In the circumstances, I find that both defendants knew or ought to have known that the funds were not rightfully theirs.
[26] Moreover, I do not accept Rima’s evidence that she believed the impugned cheque was partial payment for a category “D” claim. She states that all copies of her claim documents have been “lost” but gives no details as to how, where or when this may have occurred.
[27] Ms. Claire Chartrand, an employee of DFAIT, and the program coordinator at the time, dealt with both defendants regarding their claims. When asked whether there was any notification of a category “D” claim by Rima’a, she said there was not. Indeed, she stated that Rima’a’s claim was marked “paid in full” on DFAIT’s database as of October 13, 2000.
[28] Rima’a’s testimony was both evasive and contradictory throughout this matter. She claimed that she utilized the funds partially, for a trip to Jordan to visit her mother in 2004 or 2005 but could not recall whether this occurred before or after she learned of the error on March 9, 2004. Her daughter testified however, that the trip likely took place in the summer when school ended, which would have clearly been after the discovery of the error. Rima’a later changed her story to say that the booking was made prior to the discovery of the error. However, no details or documentation were provided regarding the alleged trip.
[29] In her examination for discovery, Rima’a could not recall any details of her alleged category “D” claim. However, at trial, she vaguely referred to a claim for “jewelry” and “lost income,” still without giving any details of these items. When asked whether she signed the category “D” claim, Rima’a responded, “I think I did … I remember I claimed things but I don’t remember if it was D or C.”
[30] It is inconceivable that she would have forgotten the details of a category “D” claim which would have been a claim for losses over $100,000 in USD. Her numerous responses to questions stating “I don’t remember” are telling. Rima’a was not a credible witness and I reject her testimony in all respects.
[31] I have found no unconscionability or lack of fairness in the position taken by the plaintiff - if it wanted the monies returned to it, the Attorney General had no alternative but to bring this matter to court. The plaintiff has satisfied its onus to prove its cause of action against the defendants on a balance of probabilities. There is no juristic reason to deny its claim for the return of monies mistakenly sent to the defendant, Rima’a.
conclusion
[32] I am satisfied that the plaintiff is entitled to judgment in the sum of $194,000 USD plus interest and costs against both defendants. If the $110,000 USD paid to the plaintiff in February 2005 is taken as partial payment, the sum of $84,000 USD remains outstanding which would amount to $117,784 in Canadian funds.
[33] Abbas, in his pleading claims that he did not negotiate the cheque nor did he use the funds for any purpose. However, the evidence was to the contrary. Both Rima’a and her daughter explained to the court the essential role of Abbas in paying bills and preparing and submitting paperwork on behalf of the others. When Ms. Chartrand called the home on March 9, 2004 to advise the defendants about the error, Rima’a gave the phone over to Abbas who told her the funds were deposited into their joint bank account. In her evidence, Rima’a stated that Abbas only benefitted by eating the food she purchased. At another time, she admitted that some of the monies were used by Abbas “to pay bills for the family and his taxi company.” Clearly, Abbas also benefitted from the receipt of the funds to the detriment of the plaintiff.
[34] I will now deal with the matters of interest and costs.
[35] The defendants ask the court to use its discretionary powers pursuant to s. 130(1) and (2) of the Courts of Justice Act, R.S.O. 1990, c. C.43 to disallow interest. Without doubt, the underpinnings of this case are not happy ones – the defendants suffered damage in the past and Rima’a is now a widow.
[36] It is noted, however, that in written correspondence commencing in March 2004 requesting payment, the plaintiff clearly stated that the disputed amount would attract interest at the “Bank of Canada rate plus three percent.” It should come as no surprise to Rima’a that interest was accumulating on the amount owed. I see no reason in law or equity to reduce the amount of interest payable on the outstanding debt. Thus, the judgment shall include the sum of $85,055.85 CAD in interest (which excludes interest for the $110,000 payment from March 5, 2005). The total amount of the judgment would then be $202,839.85 CAD.
[37] Regarding the matter of costs, the plaintiff in its Cost Outline claims costs on a partial or substantial indemnity scale in the amounts of $44,402.83 and $51,895.51 respectively. In support of its claim for costs on a substantial indemnity scale, the Attorney General asks the court to consider unreflected changes in counsel’s rates since 2004, the exclusion of any time related to motions in this matter, and offers to settle, including an offer to settle for the amount of $88,183.20 CAD that remained open until just prior to the pretrial held on March 27, 2015.
[38] The plaintiff also contends that the case was “made more difficult by the unreasonable position” taken by the defendants and their “lack of cooperation in moving the action forward.” I have already discussed the evasive nature of Rima’a’s testimony. Another troubling matter raised by the plaintiff pertains to the letter dated February 18, 2005 from the defendants’ then counsel, enclosing the cheque for $110,000 USD and indicating that it was sent on a “without prejudice” basis. Right to the end of the trial, the defendants’ position with regard to those monies remained equivocal, despite several requests by the plaintiff for clarification. Indeed, an agreed statement of fact described the payment as being “without prejudice to the defendants’ position at trial.” The defendants’ counsel at trial was still unsure whether the only issue before the court was the $84,000 difference in principal owing or the entire claim for $194,000 USD. In this regard, the defence seems to “suck and blow” at the same time. On the one hand, it seeks to look good by making a payment “in good faith;” on the other hand, it says the payment is not really a payment at all.
[39] It is noted that s. 36 of the Solicitors Act, R.S.O. 1990, c. S.15 provides,
costs awarded to a party in a proceeding shall not be disallowed or reduced on assessment merely because they relate to a solicitor or counsel who is a salaried employee of the party.
See also Fong v. Chan (1999), 1999 CanLII 2052 (ON CA), 46 O.R. (3d) 330 (C.A.) at paras. 5-6.
[40] I have considered all of the above within the context of the factors set out in rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and the principles established in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.). In my view, the amount of $50,000 for costs in the circumstances of this case, would be just, fair and within the reasonable expectation of the parties.
[41] Accordingly, judgment shall issue against both Rima’a Al-Zawati and the Estate of Abbas Al-Zawati, Deceased, jointly and severally, in the amount of $202,839.85 plus costs in the all-inclusive sum of $50,000.
CHAPNIK J.
RELEASED: June 8, 2015
CITATION: The Attorney General (Canada) v. Al-Zawati, 2015 ONSC 3676
COURT FILE NO.: 04 CV-268666 CM1
DATE: 20150608
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N :
THE ATTORNEY GENERAL OF CANADA
Plaintiff
– and –
RIMA’A AL-ZAWATI and THE ESTATE OF ABBAS AL-ZAWATI, DECEASED
Defendants
REASONS FOR JUDGMENT
CHAPNIK J.
RELEASED: June 8, 2015
[^1]: Department of Foreign Affairs and International Trade is now known as Department of Foreign Affairs, Trade and Development Canada (DFATD).