Evans v. Reid, 2016 ONSC 7578

CITATION: Evans v. Reid, 2016 ONSC 7578

COURT FILE NO.: ES-1117-15

DATE: 2016 December 6

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Robert W. Evans

Plaintiff

– and –

Randy Reid, Nancy Reid, Jeffery Evans and Blake Evans

Defendants

COUNSEL:

Paul Morrissey, for the Plaintiff

Karen A. Scherl, for the Defendants

HEARD: May 19, 2016

Justice R. J. HarPER

ISSUES

[1] This is a motion for directions with respect to:

(a) disclosure by the appointed Estate Trustee of the identity of the person or persons to whom monies on deposit in bank accounts on the date of death of Francis Freda Mather passed by proportionate survivorship;

(b) A provision by the Estate Trustee of copies of all documents in their possession relating to the bank accounts of the deceased including documents establishing the bank accounts, establishing as or converting the accounts into joint accounts, and statements disclosing balances in and transactions relating to the said accounts from September 1, 2015 to the present date.

BACKGROUND

[2] The Parties and their relationships are:

Robert W. Evans (Robert) is the moving party. He is the grandson of Francis Freda Mather and Alternate Trustee under Francis’ will.

Francis Mather (Francis) died on April 7, 2014.

Jeffery Evans (Jeffery) is a responding party. He is Robert’s brother.

Blake Evans (Blake) (now 18) is Jeffery’s son.

Randy Reid (Randy) is also a grandson of the deceased Francis Mather and cousin of Robert.

Nancy Reid (Nancy) is Randy’s wife.

[3] Nancy and Randy are the Executors and Trustees of Francis’ estate.

CIRCUMSTANCES LEADING TO THIS MOTION

[4] Randy advised Robert that the estate was valued at approximately $300,000. Robert was not given a copy of the Last Will of Francis nor was he given a time line for the administration of the estate nor a list of estate assets or liabilities. Robert retained a lawyer in order to get details of the estate. His lawyer, Paul Morrissey sent approximately 9 letters to Randy between July 21, 2014 and June of 2015 requesting details on the administration of the estate. Mr. Morrissey was eventually able to get a copy of the will. However, he was not given any report on the status of estate administration or details of the estate assets.

[5] On January 13, 2016 Justice Reilly heard Robert’s motion for directions. At that time an Order was made requiring Randy and Nancy to apply for a certificate of appointment within 30 days and to provide counsel for Robert with particulars of the value of the estate.

[6] On February 12, 2016 Karen Scherl, the lawyer for Nancy and Randy sent to Mr. Morrissey a copy of the certificate and a statement of assets and liabilities of the estate.

[7] Robert was surprised to see that the value of the estate was only listed at $10,000. Robert was surprised because his grandmother Francis owned a home at 480 River Road, Cambridge, Ontario. That home was sold on December 12, 2013, approximately 3 months prior to Francis’ death. In addition, approximately 6 months before she died, according to Robert, Francis told him that she had $50,000 in her bank account.

[8] Robert’s evidence is that Francis’ home sold for $325,000, before real estate commissions. At the time of sale the home had no mortgage.

POWER OF ATTORNEY

[9] In October 2013, Francis had a fall and she required hospitalization. Subsequently she went to live in a nursing home from November 2013 until her death 5 months later. Randy and Nancy had been managing Francis’ financial affairs pursuant to a Power of Attorney given to them by Francis on November 10, 2009.

[10] On December 20, 2013 it would have been Randy and Nancy who transferred Francis’ property pursuant to the Power of Attorney. It appears that Randy deposited the proceeds of the sale of Francis’ home into a bank account that was held jointly with a third party.

[11] Randy has confirmed that, at the time of Francis’ death, Francis had two bank accounts. The two accounts were held jointly with an unidentified third party. This unidentified third party has received the bulk of proceeds of sale of the property owned by Francis as the bank accounts were joint with the right of survivorship.

[12] Randy has refused to disclose the name of the person who is the owner of the bank account. His lawyer claims such disclosure would infringe privacy rights.

[13] Robert claims that, without the information as to who received the bulk of the estate by survivorship, it is difficult to determine whether or not the estate trustees are in a position of conflict in administering the estate. If one of the estate trustees received the bulk of the funds through a scheme that diverted most of the funds, it would be proper to challenge the administration of the estate and potentially bring other causes of actions forward.

[14] On April 18, 2016, Robert brought an action against Jane Doe, John Doe, Randy Reid and Nancy Reid personally and in their capacity as estate trustees. The Statement of Claim seeks the following relief:

(a) for a declaration that funds on deposit in joint bank accounts in respect of which Francis Freda Mather was an account holder on the date of her death do not pass by beneficial survivorship to the other account holder or holders;

(b) an order that insofar as funds in deposit in joint bank accounts in respect of which Francis Freda Mather was an account holder on the date of her death may have been paid out to other account are payable to the Estate of Francis Freda Mather;

(c) an accounting of funds received from the said joint bank accounts together with all profits that have been derived by the recipient of such funds as a result of the recipients of such funds as a result of the receipt and use of those funds;

(d) an order requiring payment to the Estate of Francis Freda Mather of the funds that were in the joint bank account of Francis Freda Mather on the date of death, together with all profits derived therefrom;

(e) An accounting by Randy Reid of his dealing with the assets of Francis Freda Mather during her life time in his capacity as attorney for property and in particular, between September 1, 2013 and April 7, 2014;

(f) As against Randy Reid, for damages in the amount of $400,000 for negligence, mismanagement or wrongful appropriation of assets belonging to Francis Freda Mather;

[15] Robert claims that Randy sold Francis’ home pursuant to the power of sale. He placed the money in one of the joint bank accounts held with Francis. Randy stated in his examinations that he took out $137,000 out of the joint bank account and placed it in his own account. According to Randy, Francis wanted him to have that money. Other than Randy’s own evidence there is no other corroboration of this alleged gift.

[16] The balance of the sale proceeds of the home were placed in a joint bank account with an undisclosed person.

[17] This motion for disclosure and directions is set within the above factual context.

[18] The relief sought is a form of discovery that is referred to as “equitable discovery” known as a Norwich Order. Justice Strathy, as he then was, reviewed the considerations a court must look at when considering such an order in York University v. Bell Canada Enterprises, 2009 CanLII 46447 (ON SC), commencing at paragraph 12 he stated:

[12] A plaintiff or potential plaintiff may seek pre-action discovery in order to identify a defendant by way of an equitable bill of discovery known as a "Norwich order". In Norwich Pharmacal Co. v. Commissioners of Customs & Excise, above, the case that gave its name to the order, Norwich Pharmacal was the owner of a patent that it claimed was being infringed by the illicit import of a product manufactured abroad. It brought an action against the Customs and Excise Commissioners seeking disclosure of the names and addresses of the importers. The House of Lords held that where a person becomes involved in the tortious acts of others, even innocently, that person has a duty to give full information to the injured party, by way of discovery, to disclose the identity of the wrongdoer.

[13] On August 21, 2009, the Court of Appeal for Ontario released its decision in GEA Group AG v. Ventra Group Co., [2009] O.J. No. 3457, 2009 ONCA 619 ("GEA Group"), which conducted an extensive review of the Canadian cases in which Norwich orders have been granted and discussed "the circumstances in which this extraordinary discretionary relief may be obtained in Ontario" (at para. 1). The Court of Appeal agreed with earlier authorities that the following factors govern the determination of whether to grant a Norwich order [at para. 51]:

(i) Whether the applicant has provided evidence sufficient to raise a valid, bona fide or reasonable claim;

(ii) Whether the applicant has established a relationship with the third party from whom the information is sought, such that it establishes that the third party is somehow involved in the acts complained of;

(iii) Whether the third party is the only practicable source of the information available;

iv) Whether the third party can be indemnified for costs to which the third party may be exposed because of the disclosure . . .; and

(v) Whether the interests of justice favour obtaining the disclosure. See Glaxo Wellcome Plc v. M.N.R., 1998 CanLII 9071 (FCA), [1998] F.C.J. No. 874, [1998] 4 F.C. 439 (C.A.), leave to appeal to S.C.C. refused [1998] S.C.C.A. No. 422; [page700] Alberta (Treasury Branches) v. Leahy, 2000 ABQB 575, [2000] A.J. No. 993, 270 A.R. 1 (Q.B.), affd 2002 ABCA 101, [2002] A.J. No. 524, 303 A.R. 63 (C.A.), leave to appeal to S.C.C. refused [2002] S.C.C.A. No. 235; Straka v. Humber River Regional Hospital (2000), 2000 CanLII 16979 (ON CA), 51 O.R. (3d) 1, [2000] O.J. No. 4212 (C.A.); Meuwissen (Litigation guardian of) v. Strathroy Middlesex General Hospital, [2006] O.J. No. 5082, 40 C.P.C. (6th) 6 (C.A.); Isofoton S.A. v. Toronto Dominion Bank (2007), 2007 CanLII 14626 (ON SC), 85 O.R. (3d) 780, [2007] O.J. No. 1701 (S.C.J.).

[14] The Court of Appeal considered the further question of whether an applicant for a Norwich order must demonstrate that the disclosure of the information sought was a "necessary" measure in all the circumstances. While the Court of Appeal considered that in the circumstances before it the motion judge should have addressed the issue, and that an applicant for a Norwich order must demonstrate that pre-action discovery is "necessary", it is not a requirement that stands on its own. Nor, said the court in GEA Group, is it restricted to the necessity to plead a cause of action. Cronk J.A., with whom Blair and Weiler JJ.A. concurred, stated, at paras. 84 and 85:

On my reading of the authorities in Canada and England, it is unclear whether the requirement of a showing of necessity for pre-action discovery properly forms part of the court's inquiry as to whether the third party from whom discovery is sought is the only practicable source of the information available (as held in Mitsui at para. 24) or as to whether the interests of justice favour disclosure or non-disclosure (as argued by FNG before this court). However, there is no suggestion in the established jurisprudence that it is a stand-alone requirement for the granting of a Norwich order. Nor do I regard it as such.

In my opinion, the precise placement of the necessity requirement in the inventory of factors to be considered on a Norwich application is of little moment. The important point is that a Norwich order is an equitable, discretionary and flexible remedy. It is also an intrusive and extraordinary remedy that must be exercised with caution. It is therefore incumbent on the applicant for a Norwich order to demonstrate that the discovery sought is required to permit a prospective action to proceed, although the firm commitment to commence proceedings is not itself a condition precedent to this form of equitable relief.

[15] Cronk J.A. stated, at para. 91, that the limits of the "necessity criterion" must be established "in the context and on the facts of each particular case . . . to justify the invocation of what is intended to be an exceptional, though flexible, equitable remedy".

[19] Applying the factors to the case before me, I find that Randy has established that he has a bona fide and reasonable claim. Randy and Nancy are Trustees of the Estate of Francis Mather. In the fall of 2011, Ms. Mather set up two joint bank accounts. One account was at the Bank of Montreal and the other was at Scotia Bank

[20] The Scotia Bank account was established in May 2011. Randy knew about the bank accounts because he was Ms. Mather’s accountant and he did her taxes. The Bank of Montreal account was established in June 2011. Ms. Mather signed a banking document on June 9, 2011 at the bank of Montreal that created a joint account with a right of survivorship. Randy stated in his affidavit that the “surviving co-owner of the account has indicated to him that he or she fears harassment from Freda’s family”. No basis for this fear was placed into the evidence before me. The only reference by Randy is that Francis’ family has a lot of shady characters that he assumed had criminal records.

[21] Randy gave evidence that both he and his wife Nancy would help Francis quite a bit. They would assist with doing her laundry, buying groceries, going to various appointments.

[22] Randy testified that he placed the proceeds of the sale of Francis’s home into one of the joint bank accounts that Francis had. As her Power of Attorney he was acting in a fiduciary capacity to Francis. That requirement compelled Randy to act with the upmost faith and for the good of Francis and no one else. Randy testified that when he received the proceeds of sale of the home he gave Francis the option that he would invest the money for her or he could put it into one of her bank accounts. According to Randy, Francis: “just told me to put it in the bank”.

[23] According to Randy, Francis told him, after the house was sold, to put the money into the bank account in Hespler (the BMO Joint account). According to Randy no one else was present when this alleged discussion took place. Randy was vague about what discussions his wife Nancy was present at when Francis discussed her bank accounts.

[24] The only evidence placed before me concerning the proceeds of sale of Francis’s home in the fall of 2011 was the following:

a. that Randy placed the money into the joint account in Hespler with an unnamed joint survivor. That Francis told Randy he could take $137,000 out of the proceeds for a gift to himself.

b. that the balance of the funds may have remained in the Hespler joint account that went to this unnamed person after Francis’s death.

[25] Under the above circumstances I find that it is necessary for Robert to pursue his claims, the respondents, Randy and Nancy must disclose the name of the co-owner of the surviving joint tenant of the aforementioned Scotiabank and Bank of Montreal accounts.

[26] It is necessary in the interest of justice that the disclosure takes place forthwith. The strong inference on the evidence before me is that substantial money may have been diverted away from Francis while she was alive for the personal benefit of persons who were in a fiduciary capacity to Francis and eventually away from the estate to which Randy and Nancy are executors and trustees.

[27] There shall be an order that Randy immediately disclose the name of the person who was the co-owner of the joint bank account that Randy placed the sale proceeds of Francis’ home into at BMO in Hespler.

[28] With respect to Robert’s request for the disclosure by the Estate Trustees of copies of all documents in their possession relating to the bank accounts of the deceased including documents establishing the bank accounts, establishing as or converting the accounts into joint accounts, and the statements disclosing balances in and transactions relating to the said accounts from September 1, 2015, I find that such an order appropriate. It is relevant to the claims and the material issues set out in Randy’s claims.

[29] The Respondents shall produce the documents referred to above within 30 days of this order.

[30] If the parties are not able to agree on costs, they shall submit an outline of costs submissions along with a bill of costs within 30 days.

R. J. Harper, J.

Released: December 6, 2016

CITATION: Evans v. Reid, 2016 ONSC 7578

COURT FILE NO.: ES-1117-15

DATE: 2016 December 5

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Robert W. Evans

Plaintiff

– and –

Randy Reid, Nancy Reid, Jeffery Evans and Blake Evans

Defendants

REASONS FOR JUDGMENT

R. J. Harper

Released: December 6, 2016