ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-13-480049
DATE: 20150929
BETWEEN:
RIMA YOUNANE KHOSROABADI
Plaintiff
– and –
TD CANADA TRUST BRANCH 241
Defendant
- and -
TD CANADA TRUST BRANCH 324
Defendant
Plaintiff, in person
Shane C. D’Souza, for the Defendants, TD Canada Trust Branch 241 and TD Canada Trust Branch 324
HEARD: September 21, 2015
LEDERER J.:
[1] In this action, the plaintiff, Rima Younane Khosroabadi, seeks damages from the Toronto-Dominion Bank she says were caused by the bank having negotiated a cheque made out jointly to her and another party, Consilium Property Management Inc. The funds were deposited in the account of that party when they properly belonged to her.
[2] I begin by observing that the named defendants are two branches of TD Canada Trust. The proper defendant is the Toronto-Dominion Bank. Counsel for the bank takes no issue with this error.
[3] There was a fire in the home of the plaintiff. There was smoke damage. She contacted her insurance company which accepted the claim and its obligation to pay for at least some of that damage. The plaintiff concluded that there was more work that should be done. Her nieces had allergies to smoke and, as a result, the plaintiff determined to re-do parts of her home, in particular the bedrooms.
[4] Because the work was more extensive than the repairs which were the responsibility of the insurance company, the plaintiff determined to use a contractor of her own. Some of the work was completed and the contractor paid. This included the work to which the insurance company was prepared to respond. As described by the plaintiff, there was a problem in realizing on her insurance claim. The insurance company refused to direct the money to her and insisted that any cheque include, as a payee, the contractor who had completed the work for which it was prepared to pay. The plaintiff was concerned that if she proceeded in this way, the contractor would simply take the money as further payment and refuse to reimburse her.
[5] As it happened, she had been introduced to Vasken Yeretsian, evidently a contractor. He had taken some interest in the project and had taken to stopping at the home of the plaintiff to examine what was being done and provide her with advice. She trusted him. He was of a similar heritage. He indicated a willingness to help her obtain the money she was owed by the insurance company. The idea was that Vasken Yeretsian would represent that he or his company had done the work for which the insurance company was to pay. The insurance company would make out a cheque payable to him or his company and he would turn it over to the plaintiff. While the plaintiff indicated that, at least at the time, she did not understand this to be a “scheme” directed to obtaining payment from the insurance company, it seems clear that that is exactly what it was. She was insistent that neither Vasken Yeretsian nor his company, or anyone acting on his behalf, had done any work for her. The money was hers.
[6] As they had planned, the insurance company delivered a cheque in the amount of $35,518.95. It was made out to the plaintiff and to Consilium Property Management Inc., evidently the business of Vasken Yeretsian. The plaintiff took the cheque to her bank, TD Canada Trust Branch 241. The plaintiff testified that, on May 18, 2011, she presented the cheque to a teller who asked that it be endorsed and then went to review it with someone else at the bank. When she returned, the teller indicated it was not possible to negotiate the cheque or deposit the funds in the account of the plaintiff. The cheque was made out to two parties. On the cheque, the names of the two parties were joined by the conjunction “and”. The plaintiff testified that, in response to questions she asked, the teller advised that the plaintiff need not to be concerned with the fact that she had endorsed the cheque because both parties would be required to attend at the bank for it to be negotiated. The plaintiff says she relied on this statement.
[7] The plaintiff was in touch with Vasken Yeretsian. As she understood it, they agreed that they would attend together at the bank. In the meantime, she gave the cheque to Vasken Yeretsian. She explained that she was not sure when he would be available and was not sure that the cheque would be readily at hand whenever that moment arrived. She was surprised a few days later to discover that the cheque had been negotiated on May 24, 2011 and deposited in a new bank account opened at TD Canada Trust in the name of Consilium Property Management Inc. She did not telephone the bank to ascertain why, given the assurance provided by the teller, the cheque had been negotiated. She did not contact the insurance company or the bank and ask that payment of the cheque be stopped. Rather, she sent a series of e-mails to Vasken Yeretsian asking for payment of at least some of the funds represented by the cheque. On June 6, 2011, she asked for $15,000 and the same day for $5,000. Vasken Yeretsian responded, “I will see, cheque or cash”. She received nothing.
[8] There was more work to be done on the house. According to the plaintiff, there had been an informal understanding that this would be undertaken by Consilium Property Management Inc. Vasken Yeretsian did not respond to her requests for receipt of the money. She looked to others. In February 2012, she says she received an estimate that the work could be undertaken for $60,000. No document demonstrative of this estimate was produced. No other witness was called to confirm it. The price was lower than might have been anticipated. The reason was that the contractor was looking for a way to keep his people busy during a slow period. At the time, she did not have the necessary funds. He cautioned her that the offer to do the work for the stated price could not last. It did not. Within weeks, the plaintiff, with the assistance of members of her family, had acquired the money required and more. The contractor had other jobs and his men were busy with better-paying work. The plaintiff obtained other quotes. One was for $170,000. A copy of what purports to be that quotation was provided to the court. It is on letterhead, but there was no additional evidence explaining or confirming what it represents. No one from the company that seemingly prepared it was called. There was also a list of costs associated with the work as it was apparently performed. I say “apparently” because the list was prepared by the plaintiff. There are 27 items on it. Only three were supported by invoices. The total cost shown was $139,607. The plaintiff took the position that the failure to negotiate the cheque in her favour and the error of allowing Vasken Yeretsian to deposit the funds to the credit of Consilium Property Management Inc. meant that she did not have funds available at the time the lower of the estimates was received. As a result, the plaintiff seeks not only the value of the cheque, but an additional $50,000 on account of the increase in costs of the work occasioned by the delay in her ability to accumulate the necessary funds. If the money had been deposited to her account, she would have had it and been able to instruct the first contractor to do the work at the lower price.
[9] The action of the plaintiff cannot succeed.
[10] The plaintiff advised the court that, initially, she blamed herself for the loss of the funds. She trusted Vasken Yeretsian when she should not have. After a time, she came to the realization that the real fault rested with the bank. She relied on what she had been told by the teller. The cheque could not be negotiated without both payees being present and at the bank. If the bank had governed itself according to that direction, the cheque would not have been negotiated. She would have been present when it was and could have insisted that the funds be deposited in her account.
[11] A more careful review suggests something different. When the cheque was received, the plaintiff accepted that there were joint payees. No concern was raised with the insurer or the bank. To the contrary, it was what the plaintiff expected. This was the means by which she was to obtain payment of the proceeds of her insurance. Accordingly, the bank was free to accept the cheque as it had been prepared. Moreover, no complaint was forthcoming immediately after the cheque was negotiated. This was not because the plaintiff blamed herself but because negotiating the cheque was part of the “scheme” entered into between the plaintiff and Vaskem Yeretsian. It should not be forgotten that the whole point of arranging payment in this way was to mislead the insurer as to who had done the work in furtherance of repairing the damage it acknowledged was subject to the insurance policy it held. Rather than complain to the bank, the plaintiff acted to complete the scheme. She went to Vaskem Yeretsian and asked for the money that was hers. In time, she needed the money to finish the work on her home. He did not and, it would seem, was not going to pay. Only then did she turn her attention to the bank as another possible source for the funds she had lost. The bank did nothing other than what the plaintiff and Vaskem Yeretsian intended which is that the cheque be negotiated. Any problems that occurred thereafter were between the plaintiff and her confederate, Vaskem Yeretsian. It was not until a year after the teller refused to negotiate the cheque and a year after the plaintiff knew the cheque had been negotiated that she approached the bank to complain. What follows from this is that I do not accept that the plaintiff relied on the statement she says was made by the teller to the effect that both payees would have to be present in order for the cheque to be negotiated and the funds deposited in her account. I shall return to this idea later in these reasons.
[12] I should say that Vaskem Yeretsian was not called to give evidence at this trial. It is only the evidence of the plaintiff which advised the court as to his actions and participation in the events that led to this trial. A representative of the bank was called. Colin D’Silva is the Branch Manager at TD Canada Trust Branch 241. He has held that position since shortly after the plaintiff’s failed attempt to negotiate the cheque (May 18, 2011) and was the manager and spoke to the plaintiff a year later when she attended at the bank to complain that the cheque had been negotiated, in her absence, contrary to the advice she had been given by the teller. Colin D’Silva explained the policy of the bank in respect of cheques that are payable jointly to two parties. If such a cheque is presented, the bank does not require that both payees be present. Rather, it requires that, where only one of two payees appears, the cheque will not be negotiated unless it has been endorsed by the payee who is not present and only if the funds are to be credited to the account of the payee who is. It will be readily apparent that that is precisely what happened in this case. Vasken Yeretsian attended at the bank. The cheque had been endorsed by the plaintiff. It was deposited in the account of the second payee, Consilium Property Management Inc., the company of Vasken Yeretsian.
[13] Counsel for the bank drew the court’s attention to the Bills of Exchange Act, R.S.C. 1985, c. B-4. Its terms make clear that there is no legal requirement that both of two payees be present when a cheque is negotiated. A signature on the back is sufficient to transfer the intent the cheque represents.^1
[14] Moreover, once the bank is the holder of the cheque, that is to say, once the cheque has been negotiated, it is held free of any defects between the parties to it.^2
[15] I return to the question of whether the plaintiff relied on any statement made by the teller on the day the plaintiff sought to negotiate the cheque. I find that, on the balance of probabilities, the teller did not advise the plaintiff that both payees must be present before a jointly-payable cheque can be negotiated. Such a statement would be inconsistent with the requirements of the law and the policy of the bank. Most importantly, it would be inconsistent with the actions of the plaintiff who waited a year before raising the issue with the bank and did so only after she was unable to obtain the funds from Vasken Yeretsian consistent with the arrangement she says they had made. Even if I am wrong in this, it does not matter. The bank did nothing other than what that arrangement between the plaintiff and Vaskem Yeretsian called for. Where the funds were to go (i.e., to the account of the plaintiff) was an issue between the plaintiff and Vaskem Yeretsian. The plaintiff did not rely on what the bank teller said. She relied on Vaskem Yeretsian. To put it another way, when the plaintiff approached the bank to negotiate the cheque it was not reasonable for the bank to foresee that this was in furtherance of an improper scheme to mislead the insurer as to who had performed the work or that one party to the scheme would resile from the arrangement they had made.
[16] The plaintiff had another complaint. She said that when the money was deposited, Consilium Property Management Inc. was no longer operating nor had it been since 2006. This comes from a Corporation Profile Report produced as an exhibit in the trial. It is her view that it was wrong for the bank to have opened the account to which the money was deposited. If it had not done so, it would have remained available for her. Colin D’Silva went through how corporate accounts are opened and the documents that are gathered and reviewed. Among other things, it looks to the documents to identify or confirm the name of the business, the fact of its incorporation as demonstrated by the identity of the incorporators and the directors. In this case, the review revealed that there had been a change in the ownership of the business from Vasken Yeretsian to Anne Yeretsian. The bank does not look to Corporate Profile Reports. The proposition behind this complaint is that the bank has a duty to ensure that the corporation opening the account is in good standing and that that duty extends to protect parties such as the plaintiff. In this case, the plaintiff made an arrangement with Vasken Yeretsian. The bank acted in a fashion consistent with that agreement. It is not only that the plaintiff says there is a duty to her. The substance of her argument is that the duty extends to protect her from an agreement she made and should not have. There is no such duty. The plaintiff, had she undertaken any due diligence, could have discovered these problems for herself. It is not for the bank to do it for her. It should not be forgotten that the arrangement she had made was directed to misleading her insurer. The bank has no duty to protect the plaintiff from herself.
[17] Finally, it follows that if there was nothing improper in the negotiating of the cheque, there can be no attribution to the bank of any delay in the plaintiff acquiring the funds necessary to undertake the remaining work on her home. Even if this were not so, I would not award anything to the plaintiff on account of this delay. The fact remains that damages are to be proved. Damages of this sort are not proved by a bald assertion, in the absence of any supporting material or independent evidence, that this work could have been done for $60,000 had the money been available in February 2012. The fact of a higher cost is not proved by the production of a document said to be an estimate demonstrating that the work would cost $170,000 in the absence of any explanation, presumably by a representative of whoever produced the estimate, as to what it represented. The actual cost is not proved by a list of costs prepared by the plaintiff without sufficient supporting invoices: three of twenty-seven is not enough. The supposed delay cannot be laid at the feet of the bank.
[18] For the reasons reviewed herein, the action is dismissed.
[19] If the parties are unable to agree as to costs, I will consider written submissions on the following basis:
On behalf of the defendant (the bank), no later than 15 days after the receipt of these reasons. Such submissions are to be no longer than 4 pages, double-spaced, not including any Bill of Costs or Costs Outline and case law that may be produced.
On behalf of the plaintiff (Rima Younane Khosroabadi), no later than 10 days thereafter. Such submissions are to be no longer than 4 pages, double-spaced, not including any Bill of Costs or Costs Outline and case law that may be produced.
On behalf of the defendant (the bank), no later than 5 days thereafter. Such submissions are to be no longer than 2 pages, double-spaced.
LEDERER J.
Released: 20150929
COURT FILE NO.: CV-13-480049
DATE: 20150929
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
RIMA YOUNANE KHOSROABADI
Plaintiff
– and –
TD CANADA TRUST BRANCH 241
Defendant
- and -
TD CANADA TRUST BRANCH 324
Defendant
JUDGMENT
LEDERER J.
Released: 20150929
- (1) An endorsement in order to operate as a negotiation must be
(a) written on the bill itself and be signed by the endorser; and
(b) an endorsement of the entire bill.
Signature Sufficient
- (1) The simple signature of the endorser on a bill, without additional words, is a sufficient endorsement.
Endorsement
- (1) An endorsement may be made in blank or special.
In blank
(2) An endorsement in blank specifies no endorsee, and a bill so endorsed becomes payable to bearer.
Cheque for deposit to account
(3) Where a cheque is delivered to a bank for deposit to the credit of a person and the bank credits him with the amount of the cheque, the bank acquires all the rights and powers of a holder in due course of the cheque.
[Emphasis added]
Rights and powers of holder
- The rights and powers of the holder of a bill are as follows:
(b) where he is a holder in due course, he holds the bill free from any defect of title of prior parties, as well as from mere personal defences available to prior parties among themselves, and may enforce payment against all parties liable on the bill;