Ridley Estate v. Eagan, Desjardins Financial Security et al., 2017 ONSC 5663

CITATION: Ridley Estate v. Eagan, Desjardins Financial Security et al., 2017 ONSC 5663

COURT FILE NO.: 16-70006

DATE: 2017/09/29

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Geoffrey Simpson, in his capacity as Estate Trustee of the Estate of Joan Ridley

Plaintiff/Moving Party

– and –

Conrad Thomas Eagan, Desjardins Financial Security Investments Inc., Worldsource Financial Management Inc., The Toronto-Dominion Bank, TD Waterhouse Canada Inc. and Eagan Financial Corporation

Defendants/Responding Parties

Christopher Morris, for the Plaintiff/Moving Party

No one appearing for the Defendant/Respondent, TD Waterhouse Canada Inc.

HEARD: September 19, 2017

endorsement

COrthorn J.

[1] The plaintiff is the Estate Trustee of the Estate of Joan Ridley. This motion is brought in the context of an action in which the plaintiff claims damages arising from the misappropriation of funds by the defendant Eagan and the alleged acts and omissions of the other defendants.

[2] The plaintiff requests an order for payment to the Estate of Joan Ridley of monies currently held by the Accountant of the Superior Court of Justice. The plaintiff seeks payment out of court of the sum of $314,157.42, plus interest accrued on that amount.

The 2015 Order of Justice Sheard – Payment into Court

[3] The monies were paid by TD Waterhouse Canada Inc. to the Accountant in compliance with the August 2015 order of Justice Sheard in another proceeding (the “Order” and the “Dunn Application”, (Ont. S.C.J. Court File No. 15-64760, Ottawa)). In the Dunn Application, the beneficiaries of the Estate of Joan Kidd sought relief with respect to monies they allege were misappropriated by Eagan from the estate. Simpson was not a party to that application nor did anyone appear on his behalf on the return of the application in August 2015.

[4] I note that a copy of the Order was not included as an exhibit to the supporting materials in the motion before me in this action. However, the Order was an exhibit to the supporting materials filed in the related motion in the Dunn matter. The two motions were heard one after the other. I therefore treated the Order as if it were included in the record on the motion in this action.

[5] Pursuant to the Order, TD Waterhouse was required to liquidate all securities in Direct Investment Account #397816E (the “DIA”) and pay the monies from the liquidation into court by way of interpleader. TD Waterhouse complied with the Order in that regard.

[6] As a result of that liquidation, funds traceable to the Estate of Joan Kidd were paid into court. Payment out of court, to the beneficiaries of that Estate, of the sum $137,397.87, is the subject of the motion in the Dunn Application. The decision on that motion is under reserve, subject to the moving parties filing additional documents.

[7] As of January 2017, the total amount paid into court was $451,355.29. Interest has continued to accrue on that amount since the beginning of the calendar year.

[8] The beneficiaries in the Dunn Application reached an agreement with Simpson that the Estate of Joan Ridley receive the sum of $314,157.42, plus any interest earned on the monies paid into court. The amount agreed upon is less than the $358,800 (approximate figure) traceable to the Ridley Estate. Simpson did not press for a pro-rata share of the $451,355.29. He recognized that costs incurred by the beneficiaries of the Kidd Estate in pursuing the matter initially represent a cost-saving to the Ridley Estate.

Motion Made Without Notice

[9] Paragraph 5 of the Order provides as follows, “This Court orders that the monies paid into court shall be held pending further order of the Court, to be paid out upon notice to the parties and without prejudice to the claims of any non-parties who may be entitled to assert a claim against these monies.”

[10] The motion before me for payment out of Court, of the sum of $314,157.42, was brought without notice to any of the defendants in this action, including TD Waterhouse and Eagan. The motion is described by counsel for the plaintiff as an effort on behalf of the plaintiff to mitigate the damages suffered by the Ridley Estate.

[11] Two matters need to be addressed before consideration can be given to the relief requested. The first matter arises from the fact that none of the defendants (TD Waterhouse and Eagan in particular) was not served with the motion record. The Order specifically requires that TD Waterhouse and Eagan be served.

[12] I note that Eagan is alleged to have misappropriated approximately $1,600,000 in funds from the Estate of Joan Ridley. Counsel for the applicants in the Dunn Application informed the Court that Eagan was recently sentenced to five years imprisonment. The sentence follows a finding of guilt on charges arising from the misappropriation of funds from the Estate of Joan Ridley and from other individuals (or estates).

[13] I appreciate that the request for the payment out of court of the $314,160 (rounded figure) is described as part of Simpson’s efforts to mitigate damages suffered. There is, however, no evidence before the court to support an order dispensing with the requirement to serve the remaining defendants in the action with the motion record. The motion record filed and the order, if made, would form part of the plaintiff’s Schedule ‘A’ documents in the documentary discovery process; this is so regardless of whether the motion proceeds with or without notice. In addition, the order, if made, forms part of the record in the action.

[14] After further reflection upon the issue of service, I find that the defendants in the action are entitled to service of the motion record. Unless Simpson wishes to bring the matter back before me, with additional materials filed, to request an order dispensing with service of the motion record on the defendants who are not in default, then the motion record is to be served on TD Waterhouse and on all defendants who are not in default.

[15] Assuming that the plaintiff does not seek an order dispensing with the requirement to serve the motion record, then the affidavit(s) of service is(are) to be filed with the civil counter and directed to my attention.

[16] Counsel for the plaintiff shall seek confirmation from counsel for the defendants who are not in default as to whether their respective clients intend to take any position on the motion:

• If any of the defendants served with the motion record intend to take a position on the motion, then counsel for the plaintiff shall arrange for the motion to be brought back on before me and argued on a contested basis;

• If none of the defendants served with the motion record intend to take a position on the motion, counsel for the plaintiff shall file with the court an affidavit confirming same or, if secured from any of those defendants, consent(s) to the relief requested; and

• When filing the additional materials, counsel shall identify which of the defendants, if any, have been noted in default.

Other Potential Claimants

[17] The second matter is the potential for other individuals, like the beneficiaries of the Estate of Joan Kidd, to be entitled to share in the funds paid into Court.

[18] The endorsement in the motion brought in the context of the Dunn application is being released separately.

[19] An investigation of Eagan’s conduct was carried out by the Mutual Fund Dealer’s Association of Canada (“MFDA”). The investigation led to a hearing before the Central Regional Council of the MFDA. In February 2016 the Council released its Decision and Reasons. The Council found that Eagan “committed a gross misappropriation of money that did not belong to him”.

[20] Based on the contents of the MFDA investigation report, it appears that Eagan misappropriated funds from at least six individuals or estates. The six individuals or estates include the Estate of Joan Kidd and the Estate of Joan Ridley.

a) Judith Girling

[21] The six individuals or estates also include Judith Girling. In 2013, by way of application, Ms. Girling obtained an order requiring TD Waterhouse to liquidate certain assets and pay to her the sum of $160,000 (the “2013 Order”). Ms. Girling was represented by counsel on the application.

[22] Counsel for the applicants in the Dunn Application (a) informed the Court that TD Waterhouse complied with the 2013 Order, (b) understands that no further steps were taken on behalf of Ms. Girling for the payment of additional funds, and (c) also understands that the Girling matter is at an end because Ms. Girling recovered all of the funds misappropriated by Eagan and traceable to her.

[23] The 2013 Order provides that upon payment to Ms. Girling of the $160,000 the application on her behalf is dismissed without costs.

[24] For me to make a finding that Ms. Girling no longer has any interest in funds paid into Court by TD Waterhouse, evidence is required that (a) she was paid the $160,000, and (b) her application was dismissed without costs.

b) Linda Allen

[25] The six individuals or estates also include Linda Allen. Counsel who represented Ms. Girling also represented Ms. Allen. An order was obtained in 2014 on behalf of Ms. Allen (the “2014 Order”). The terms of that order include that (a) Eagan owes Ms. Allen at least $120,657.69, (b) TD Waterhouse is to liquidate funds from the DIA, and (c) TD Waterhouse is to pay Ms. Allen the aforementioned sum directly.

[26] The 2014 Order also requires TD Waterhouse to pay to Ms. Allen’s counsel in trust the sum of $50,000, “without prejudice to the amount found due at the trial of the issue, and not to be disbursed by McMillan LLP without a further Order of the Court, or on the written consent of Mr. Eagan and the Applicant.” The 2014 Order provides that upon fulfilment of the aforementioned terms, all claims against TD Waterhouse are dismissed without costs.

[27] For me to make a finding that Ms. Allen no longer has any interest in funds paid into Court by TD Waterhouse, evidence is required that (a) the terms of the 2014 Order were complied with, and (b) Ms. Allen’s application was dismissed without costs as against TD Waterhouse.

c) Other Potential Claimants

[28] Two other individuals or estates whose funds were misappropriated are identified, by initials only, in the MFDA investigation report. They are “the estate of PL” and “the estate of YC”. Counsel for the applicants in the Dunn Application, advised that his office conducted a search of the court records in an effort to identify any other actions or applications in which Eagan was named as a defendant or respondent, respectively. The search is said to have revealed no actions or applications, other than those for Ms. Girling and Ms. Allen.

[29] Either as part of that search or subsequently, counsel for the plaintiff in this matter became aware of the related Dunn Application.

[30] For me to conclude that the plaintiff in the matter before me and in the related Dunn Application are the only individuals entitled to payment from the funds remaining in court, I require evidence that a search of the court records was conducted and evidence as to the results of the search.

Summary

[31] My decision on the plaintiff’s motion is reserved pending the following:

a) The plaintiff bringing this matter back before me for an order dispensing with service of the motion record on TD Waterhouse and the defendants in this action who have not been noted in default; or

b) The plaintiff filing the following documents with the court:

i) The affidavit or affidavits of service with respect to service of the motion record on all defendants not in default;

ii) An affidavit confirming that none of the defendants served with the motion record, other than TD Waterhouse, take a position on the motion and/or the consent of the defendants not in default to the relief requested;

iii) An affidavit from counsel for Ms. Girling and Ms. Allen:

With respect to the status of the applications on behalf of those two individuals; and
Confirming that neither of those individuals has any further interest in the monies currently held by the Accountant pursuant to the Order;

iv) A consent signed on behalf of TD Waterhouse Canada Inc. to the relief requested; and

v) An affidavit attesting to the search conducted of the Court records and the outcome of the search.

[32] In the event the plaintiff is unable to provide the affidavit referred to in paragraph (b)(ii) above and/or the consent referred to in paragraph (b)(iv) above, then the motion is to be brought back on before me to be determined on a contested basis.

Madam Justice Sylvia Corthorn

Released: September 29, 2017