Court File and Parties

COURT FILE NOS.: CV-17-568933 CV-17-587853 DATE: 2020/03/05

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: MARIA PAVAO, Plaintiff AND: FERREIRA et al., Defendants AND VICTOR PAVAO, ESTATE TRUSTEE OF THE ESTATE OF LUIS PAVAO AND: ZENAIDE FERREIRA et al., Defendants

BEFORE: MASTER RONNA M. BROTT

COUNSEL: Denise Sayer, for the Plaintiff Maria Pavao Fax: 647-931-4718 Andreas G. Seibert, for the Plaintiff Victor Pavao, Estate Trustee of the Estate of Luis Pavao Fax: 416-535-1824 Michael Katzman, for the Defendant Zenaide Ferreira Fax: 416-628-2224 Daniel Naymark, for the Defendant Jose Ferreira Fax: 647-660-5060

HEARD: December 4 and 5, 2019

Endorsement

[1] The main motion seeks an order for production of documents. Leading up to that motion, there was a preliminary motion to strike affidavit evidence. Paragraphs [2] – [12] below are the Reasons delivered orally to all counsel on December 5, on the day following the hearing of the preliminary motion and immediately prior to the commencement of the hearing of the main motion, in relation to the motion to strike.

The Motion to Strike Affidavit Evidence

[2] The plaintiffs in these two actions, Maria Pavao and Victor Pavao, Estate Trustee of the Estate of Luis Correia Pavao (“the plaintiffs’) bring motions for production of banking, income tax and municipal records in the context of two civil actions seeking to trace millions of dollars of allegedly converted assets belonging to the late Luis C. Pavao (“Mr. Pavao”) and his widow Maria Pavao (“Mrs. Pavao”).

[3] The plaintiffs claim that since the early 1980s the defendant Zenaide Ferreira (“Mrs. Ferreira”) and her husband, the defendant Jose Ferreira (“Mr. Ferreira”) (“the defendants”) have been receiving and managing cash and other assets belonging to the plaintiffs. Mrs. Ferreira had complete control over the deceased’s financial affairs and as the deceased’s health deteriorated, she allegedly retained those assets. The plaintiffs allege that Mrs. Ferreira hid her actions by loaning out the deceased’s cash under Mr. and Mrs. Ferreira’s names, and co-mingling the plaintiffs’ money in accounts controlled by the Ferreira defendants.

[4] The plaintiff Mrs. Pavao, first commenced matrimonial proceedings in September 2015, when Mr. Pavao was admitted into palliative care. Estate proceedings were commenced in December 2015, shortly after his death and almost immediately upon the plaintiff being made aware of Mrs. Ferreira’s transfer of $50,000.00 into her own account from Mr. Pavao’s account as well as an additional $100,000.00 bank draft. Through those proceedings, the court ordered production of numerous records from Mrs. Ferreira as well as from non-parties.

[5] The defendants attempted to put off the productions motions in these actions recommending that the actions first proceed to examinations for discovery. Both at a case conference with me and a further attempt to revisit the proposal with the Case Management Judge, it was ordered that the motions for production would be heard in advance of examinations for discovery.

[6] In support of the production motions, the plaintiffs delivered four affidavits consisting of over 550 paragraphs of evidence. In response, the defendants brought a preliminary motion to strike in their entirety the three affidavits of Maria, Victor and John Pavao as well as 542 of the 568 paragraphs of the affidavit of Ms. Bettencourt who is Mrs. Pavao’s family law lawyer.

[7] The preponderance of the defendants’ submissions asserted that the affidavits filed in support of the productions motions are argumentative, irrelevant and/or have been inserted for colour and they are therefore scandalous. They argue that the facts given in evidence are there simply to impugn the character of Mr. and Mrs. Ferreira. In summary, the defendants assert that the plaintiffs’ pleadings do not disclose allegations on which they now seek discovery and accordingly all of or the majority of their evidence is irrelevant. The defendants submit that the affidavits are frivolous, vexatious, scandalous and irrelevant to the plaintiffs’ motions for production.

[8] The plaintiffs’ affidavit evidence is unquestionably lengthy, wordy, opinionated, duplicative, disorganized and much of it is irrelevant. For a court to be saddled with this type of evidence on a productions motion, and to have to rule on each and every paragraph would certainly be contrary to Rule 1.04. It would literally take weeks or months to review each paragraph to determine if it should be struck. However, considering the evidence as a whole, and even in parts, I do not find it all to be scandalous, frivolous and/or vexatious.

[9] The chronology of the proceedings and the prior court orders will be taken into account in relation to the productions motion. There are two diametrically opposed narratives. Credibility is a critical component in this litigation. The plaintiffs suggest that the defendants were taking the deceased’s assets for decades, and that Mrs. Ferreira invested them in her own name. The defendants allege that the plaintiffs were the borrowers – in need of funds - and were borrowing from Mr. and Mrs. Ferreira who were wealthy people. Although the affidavit evidence goes on ad nauseum on the issue of credibility and some paragraphs should be struck, in the overall context, there is much evidence that is relevant.

[10] What is critical in these proceedings is time and money. There has been enough delay and it is time to move these actions forward in an effort that they may be heard on their merits. The parties are aging and frail.

[11] The motion for production shall be heard as scheduled. While some of the affidavit material should rightly be struck, to go through the exercise will serve no purpose other than to force an adjournment of the main motion to permit the plaintiffs to re-serve and file fresh evidence in a more proper form, while disclosing some of what has already been filed and has been found to be relevant.

[12] ORDER TO GO: that while there has been some success on the defendants’ motion to strike, this court shall ignore the irrelevant evidence and will proceed with the hearing of the productions motion.

[13] On January 19, 2017 Justice Charney presided at a motion in the matrimonial proceeding wherein the plaintiffs sought interim Mareva/Norwich orders and further disclosure respecting Mrs. Ferreira.

[14] Justice Charney noted at paras 20 and 24:

The evidence presented by the applicant on this motion presents a strong prima facie case that Ms. Ferreira has converted funds from the applicant’s joint account. Now that Ms. Ferreira’s activities regarding these funds have been detected, the funds are at risk.

In my opinion the prima facie evidence of fraud in this case is sufficiently strong that it gives rise to the inference that there is a real risk that Ms. Ferreira will attempt to dissipate or hide the $235,567.90 that can be traced directly from the Pavao’s assets. Ms. Ferreira’s failure to reveal the bank drafts and money orders traceable to the Pavao’s account or proceeds of sale in her Answer to the FLA Application is damning in this regard.

[15] Within the confines of that motion Mrs. Pavao was directed to commence a separate civil action against the Ferreira defendants. Mrs. Ferreira was ordered to produce “all papers and property in their possession, power, or control, which the Respondent obtained by withdrawing, transferring or converting cash from any of the Applicant’s and/or Respondent, the late Luis Pavao’s bank accounts….and all papers and property in their possession, power or control belonging to the Applicant and the deceased Luis C. Pavao and the Estate of Luis C. Pavao including but not limited to all banking, investment, estate planning, business, tax, insurance and legal files and documents and …”. Mrs. Ferreira failed to produce much of the documentation ordered to be produced by Justice Charney.

[16] Pursuant to the Order of Justice Charney, Mrs. Pavao commenced the within civil action. The Statements of Claim of Mrs. Pavao and the Estate Trustee were issued on February 2, 2017 and December 5, 2017 respectively. Mrs. Pavao served her sworn Affidavit of Documents on February 23, 2018. Plaintiffs Victor and Michael Pavao on behalf of the Estate of Luis Pavao served their sworn Affidavits of Documents on April 11, 2018 and their sworn Supplemental Affidavits of Documents on December 3, 2018.

[17] Mrs. Ferreira served a sworn Affidavits of Documents on July 4, 2018. Mr. Ferreira’s Affidavit of Documents is identical to his wife’s and was served on October 25, 2018. The defendants’ Affidavits of Documents are comprised, for the most part, of documents which they obtained from the plaintiffs, which the plaintiffs had obtained pursuant to the Norwich and other court orders in the matrimonial and estate proceedings.

[18] The defendants were cross-examined on their Affidavits of Documents for 3 days. Mrs. Ferreira’s evidence is that “every seven years I destroy everything”. She also stated inter alia, that she in an independently wealthy businesswoman from a rich Portugese family and her earnings come from a variety of sources which enabled her to make loans to others. She denies that her investment activities were made with funds belonging to anyone but her and her husband. She claims she had worked for almost 38 years and earned a successful income. Mr. Ferreira’s evidence is that when they left Portugal they moved to Toronto with little money. Mr. Ferreira contradicted Mrs. Ferreira’s work history and her education and he acknowledged that documentary evidence produced appears to show that they received significant funds from the Pavaos to purchase properties and to make loans to others.

The Motion for Productions

[19] The plaintiffs submit that the defendants’ Affidavits of Documents are deficient. On this motion for productions the plaintiffs seek the following documentation in advance of examinations for discovery:

1. From Mr. and Mrs. Ferreira - Tax records of the defendants from the time Mrs. Ferreira took complete control of the deceased’s financial affairs to the time of his death (1975-2016) (“Tax records”);
2. From the non-party CIBC - All banking documentation in relation to CIBC account numbers 1994 and 5030 as well as all current and closed accounts controlled by the Ferreiras (“CIBC banking records”);
3. Municipal and county records.

[20] Immediately prior to the hearing, the defendants advised the moving parties that they were unopposed to production of the municipal and county records.

[21] Rules 30.02(1) and (2) require the parties to disclose and to produce for inspection if requested every document relevant to any matter in issue in the actions that is or has been in the possession, control or power of the parties. The issue of relevance is to be determined by the pleadings.

[22] While the pleadings are to be considered as a whole, the following paragraphs of the pleadings are particularly significant to the relief sought:

From the Amended Statement of Claim of Mrs. Pavao (in Court File CV-17-568933)

• Paragraph 1(a) Damages for breach of fiduciary and/or equitable duties, misrepresentation, dishonest assistance and knowing receipt, deceit, negligence, breach of contract, breach of trust, conversion…
• Paragraph 46. Mr. Pavao conspired with Ms. Ferreira to keep property in the Ferreiras’ name so that Ms. Pavao would remain ignorant of the Pavao family wealth and, in the event of separation, Ms. Pavao would be deprived of her share of the Pavao family assets.
• Paragraph 47. From having had to borrow $13,000.00 from the Pavao’s in 1981, the Ferreiras now have more than $10 million in assets in their name, including but not limited to over $4 million in cash deposited at the CIBC alone, and seven mortgage free properties in Toronto.
• Paragraph 51 – Both Mr. and Ms. Ferreira have been retired for years and receive only modest pensions. Ms. Ferreira earns about $2000.00 in pension income from the CIBC and Mr. Ferreira earns about $30,000.00 per year in pension income from OMERS.

Paragraphs 75-85 – Breach of Fiduciary Duty allegations including

• Paragraph 75 – As further particularized herein at all material times the respondent, Ms. Ferreira, acted as financial advisor providing financial management and advice to Mr. Pavao, and acted as the tax advisor to Ms. Pavao, managing all property and assets belonging to the Pavao family enterprise.
• Paragraph 81 – Ms. Ferreira breached her fiduciary duties by failing to act solely in the interests of Mr. Pavao and/or Ms. Pavao, and instead pursued her own financial interests. Such breaches include, but are not limited to:
  • Opportunistically retaining, transferring or converting assets belonging to Mr. Pavao, including bank account funds, real property sale proceeds, private lending capital and interest.
• Paragraph 88 -Pursuant to the duty of care owed by Ms. Ferreira to Mr. Pavao and Ms. Pavao, Ms. Ferreira was required to exercise the reasonable degree of care, skill, diligence and competence expected of a competent and prudent financial advisor (including but not limited to the skills of a competent bookkeeper) including:
  • To act with reasonable care diligence and judgment in advising and managing the Pavao’s family property;
  • To provide and maintain accurate and complete records relating to investments including the lending out of money on behalf of the Pavaos;
  • Not to co-mingle assets of the client with her own and her husband’s assets;

Amended Statement of Claim of the Estate of Luis Pavao (CV-17-587853)

• Paragraph 6 – Cash was taken every day by Mr. Pavao to his trusted bookkeeper, accountant, financial and tax advisor, Ms. Ferreira for safekeeping, processing, bank deposits, and investing.
• Paragraph 11 –Ms. Ferreira received, managed and reinvested all of Mr. Pavao’s wholesale, retail and rental income, and proceeds from real property sales….
• Paragraph 12 – …beginning in the 1980s, the Ferreira Defendants, or one of them, undertook to lend out Mr. Pavao’s money posing as the mortgagee(s), ostensibly to shield Mr. Pavao’s true income and/or wealth from potential creditors. The Ferreira Defendants or one of them accomplished this sham by registering mortgages under their own names, including a $92,000 mortgage at 7% interest first registered in 1993, supra, but subsequently renewed under the Ferreiras Defendants’ names.
• Paragraph 19 – Ms. Ferreira stopped working for the CIBC in approximately 2000, after receiving disability benefits for a number of years. Immediately prior to retiring she was only earning an annual salary of about $26000.
• Paragraph 20 – Since at least 2009, and likely much earlier than that, Ms. Ferreira was receiving a fixed CIBC pension of only $122.75/month. Since retiring, Ms. Ferreira has continued to work as a casual interpreter for a local school board earning $12.00 per hour for a maximum of five hours per day. The forgoing employment and odd jobs, together with some casual bookkeeping for a small travel agency, effectively sum up all of Ms. Ferreira’s total sources of employment-type income between 1965 and present.
• Paragraph 22 – Despite the Ferreira Defendants’ combined net income between 1965 and 2015 from all sources having been very low to modest, and largely consumed by their living expenses, high interest borrowing, and related expenses, as of January 2017, the Ferreiras controlled over $4.1 million in cash in fifteen CIBC bank accounts held under their own names…..
• Paragraph 36 – Ms. Ferreira utilized Mr. Pavao’s loan principal for private lending, and in order to purchase, and pay down large portions of Ms. Ferreira and her husband’s own outstanding mortgages on, their highly leveraged properties. The Ferreira Defendants did not earn sufficient excess rental income from their properties, or sufficient excess employment-type income, or even income from the sale of properties to pay down all of their high interest mortgages on their current properties and accumulate many millions of dollars in cash by the time of Mr. Pavao’s death. Rather, their ability to pay down these mortgages and control many millions of dollars can only be traced to money obtained and wrongfully retained from Mr. Pavao between 1980 and present.
• Paragraph 39 – In approximately the mid-70s Mr. Pavao…. agreed to engage Ms. Ferreira to exclusively carry out all of his bookkeeping, accounting, tax preparation and investing in connection with the Family Enterprise, including the structuring of real estate holdings, managing rental properties, and managing his private lending and other investments.
• Paragraph 41 – Mrs. Ferreira also began carrying out all of his banking
• Paragraph 42 – Ms. Ferreira opened up a number of accounts, known to Ms. Ferreira, to manage Mr. Pavao’s money under her own name alone and under Mr. Pavao’s name and her own name as joint account holders…
• Paragraph 43 – She counselled the deceased to keep the accounts secret from his family so as to protect his wealth from his wife and other potential creditors.
• Paragraph 47 – Rental and other income from the Pavaos’ properties flowed through Account 5235 into other Ferreira Controlled Accounts to be loaned out on behalf of Mr. Pavao, including Fererira Controlled Account 78-1994, which for example, received $90.000 diverted from the Pavaos in 2011.
• Paragraph 48 – Account 1994 was used by Ms. Ferreira to receive excess funds sitting in Pavao Account 5235 and loan repayments paid to Mr. Pavao, to be loaned out again to others.
• Paragraph 49 – From time to time Ms. Ferreira would transfer interest income from Mr. Pavao’s outstanding loans (made under Ms. Ferreira’s name as his secret trustee) back into Account 5235 by means of small transfers, typically in the $5000 range, so as not to raise the interest or scrutiny of CIBC, CRA, or the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”)./. These $5000 transfers would be made from Account 78-1994 or other Ferreira Controlled Accounts.
• Paragraph 50 – Funds were co-mingled between Pavao and Ferreira accounts to avoid detection.
• Paragraph 51. H. Failing to report interest income from Mr. Pavao on his annual tax returns despite knowing that he was owed interest income and such income was accumulating in Ferreira Controlled Accounts. Instead, Ms. Ferreira reported no interest income, or underreported such income, and/or falsely reported interest income on her or her family member’s tax returns due to their low employment income.

Fresh as Amended Statement of Defence and Crossclaim of Mrs. Ferreira (in the Maria Pavao action (Court File No. CV-17-568933)

• Paragraph 8 – Re: Pavao tax returns – the defendant did so gratuitously to assist the Pavao family, as she does with many members of the Portuguese community in Toronto.
• Paragraph 11 -Mrs. Ferreira admits that she assisted Mr. Pavao and his family with respect to their taxes and the general management of their business, however strongly denies that Mr. Pavao would take significant amount of cash to her home. She strongly denies that she ever took control of the Pavao family’s financial and legal affairs…
• Paragraph 14 -Mrs. Ferreira …states that all transaction in respect of which she acquired property which had previously been held by Mr. Pavao were made for proper consideration.
• Paragraph 15 – Mrs. Ferreira was a registered owner of the property by virtue of agreements for the transfer of that interest from the Pavao’s to her for consideration.
• Paragraph 22 – Mrs. Ferreira strongly denies acting in a deceitful or dishonest way, and strongly denies making any misrepresentations to Mr. Pavao or the Plaintiff.

Statement of Defence of Mrs. Ferreira (in the Estate of Luis Pavao action (Court File No. CV-17-587853)

• Paragraph 7 – Denies she ever received any income to which Mr. Pavao was entitled.
• Paragraph 21 – Denies any of her investments were made with funds belonging to Mr. Pavao.
• Paragraph 22 – Denies she took any steps to “thwart” the Estate from tracing assets.
• Paragraph 27 – Denies that any funds directed into her accounts belonged to Mr. Pavao.
• Paragraph 30 – Denies she used funds belonging to Mr. Pavao to make mortgage investments for her own benefit
• Paragraph 35 – Denies she was enriched to Mr. Pavao’s corresponding deprivation.

Tax Records

[23] These actions involve events that date back to 1975 and it is alleged, include the lending of the deceased’s funds under the defendants’ names. There are a number of allegations of suspicious transfers of numerous properties. The plaintiffs allege that Mrs. Ferreira breached her fiduciary duty over a number of years while she oversaw Mr. Pavao’s finances. As well, given Mrs. Ferreira’s role as power of attorney the plaintiffs assert that they are entitled to know where the deceased’s money flowed – where did it go – where did it end up? Did Mrs. Ferreira really have enough income simply from her pension to be making loans to the Pavaos and others in the Portuguese community?

[24] The defendants submit that the pleadings are vague and unparticularized and therefore do not support production. They seek to limit the scope of discovery to particularized allegations of fraud. They assert that the plaintiffs are on a major fishing expedition. Further, they submit that the tax returns disclose income – not assets – so their production would not assist in determining whether there has been a breach of trust. The defendants submit over and above being irrelevant, that production of the tax records would result in an invasion of their privacy rights.

[25] Mrs. Ferreira for many years held the power of attorney for property for Mr. Pavao. She had a fiduciary duty. There is evidence of the co-mingling of the accounts. Clearly her tax records are not only relevant to the issue of the alleged breach of fiduciary duty, but it would be grossly unfair for the defendants to be denied the opportunity to inspect them and ask questions of Mr. and Mrs. Ferreira about the contents of them at their examinations for discovery.

[26] As stated by Justice Campbell in MAN Aktiengesellschaft v Valentini, [2006] 81 O.R. (3d) 680, at para.28, “where fraud is alleged, both confirmation of other information and credibility will be important issues.” If the defendants’ income tax records show decades of low earnings and an absence of material capital gains, interest income, net rental income, etc. the plaintiffs will have persuasive circumstantial evidence to support their allegations that much of the Ferreira’s wealth was obtained with the Pavao monies. In my view, the allegations in the pleadings render the tax records relevant and producible.

[27] In Gallagher Holdings Ltd. V Unison Resources Inc., 2017 NSSC 248, 2017 CarswellNS 689, Justice Gabriel stated at paragraphs 38 and 39:

38. …up until now, has not filed anything with CRA itself. This may be the Applicants’ only means by which to correlate what is being said in discovery with what is being told to Revenue Canada, and thereby either lead to the discovery of further evidence as to the true nature of the payments themselves or, at the very least, shed further light upon the credibility of the Respondent Ms. Paquin, and that of Mr. Sousanna under these particular circumstances.

39. Moreover, if the true nature or source of the funds was not disclosed to CRA, or if the funds were not disclosed at all, it may tend to be supportive of an inference (which the Court may or may not draw) that Ms. Paquin and/or Mr. Soussana were conscious of a reason to want to keep the true source and/or reason for the payment hidden or at least obscure.

[28] Similarly here, credibility is in issue. Productions from the defendants have been minimal. Disclosure of their income tax returns may well provide additional information relevant to the pleadings. Could the Ferreiras afford to make the investments in numerous properties? Could they afford to make loans to others? The tax records are not collateral. They will assist in determining where the Pavao money ended up. Relevance on discovery is wider than at trial and is not synonymous with admissibility.

[29] Once determined to be relevant, the courts must weigh relevance against the privacy issue. While taxpayers must be protected from disclosure to the world at large, the courts have held that if there is a very good reason for production, then the order must be made.

[30] As Justice Charney stated in the matrimonial proceedings at paragraph 35:

“the fact that Mrs. Ferreira had a fiduciary duty to the applicant for many years and the length of time that she could exercise control over the Pavao’s finances, it is my view that the applicant’s need for this information overrides Ferreiras’ interests in privacy and confidentiality and it is in the interest of justice that the applicant obtain this information.”

[31] I concur. On proportionality, the requested tax information does go back four decades but there are numerous property transfers in issue and there is very clearly a credibility issue. The defendants rely on Javitz v BMO Nesbitt Burns Inc., 2011 ONSC 1332, 2011 CarswellOnt 1244, [2011] O.J. No. 877, 105 O.R. (3d) 279 and submit that what the plaintiffs are seeking will not assist the court to determine if a breach of trust as pleaded, actually occurred. As Justice Pepall stated in that case at para.29:

The principle of proportionality should inform the balancing of the added complexity and potential prejudice against the potential probative value of the alleged facts.

Given the amounts in dispute, the importance of the information and the complexity, the documents must be produced. The defendants have failed to put forth evidence about why these requests offend the principle of proportionality. For the reasons above, the defendants shall forthwith produce all of the requested tax records.

CIBC Banking Records (Accounts 1994 and 5030)

[32] The April 28, 2016 Norwich Order granted by Justice Swinton in the estate proceeding led to the disclosure of CIBC account 5235. The account was opened on October 16, 2001 in Mr. and Mrs. Pavao’s names. The first statement produced is dated December 2007 and Ms. Pavao’s family lawyer surmises that any records from October 16, 2001 to December 2007 are no longer available from CIBC.

[33] Mrs. Ferreira’s evidence was that she had no knowledge of account 5235. However, there are numerous transactions which evidence her involvement with the account. For example, on August 10, 2015 a $50,000.00 cheque payable to her and signed by her was drawn from the account and deposited into her own CIBC account (0832); on November 23, 2005 a $10,000 cheque payable to her was drawn from the account and deposited into her account 55735 (an account in the name of Mr. and Mrs. Ferreira); on December 14, 2015 (the day following Mr. Pavao’s death) a $50,000 bank draft payable to Mrs. Ferreira and apparently signed by her was drawn from account 5235; a $100,000 bank draft dated December 14, 2015 payable to Mrs. Ferreira was cashed on December 9, 2016; on December 14, 2015 a $5000 international money order payable to Mrs. Ferreira and signed by her was drawn from account 5235 and deposited into account 1994 almost one year later. Further the 5235 CIBC statements were addressed to Mr. and Mrs. Pavao and Mrs. Ferreira at the Ferreira’s home address. Significantly, once the matrimonial proceedings were commenced, the CIBC 5235 statements dropped Mrs. Pavao’s name and in 2016 CIBC commenced an investigation into how Mrs. Pavao’s name was removed from account 5235.

[34] In an effort to immediately freeze some of the larger sums allegedly removed from account 5235 by Mrs. Ferreira during the deceased’s hospitalization, Mrs. Pavao sought an urgent Norwich order within the matrimonial proceedings. On January 19, 2017 Justice Charney ordered CIBC to produce any and all records relating to specific Ferreira accounts as well as requiring CIBC to disclose current balances of all CIBC accounts held under the Ferreira defendants’ names and to turn over any and all Pavao documents and property in their possession, power and control. Pursuant to the January 19, 2017 Norwich Order CIBC disclosed, inter alia, that in addition to three specific bank accounts, there were 12 other active accounts under the Ferreira defendants’ names as of January 25, 2017. CIBC indicated that these 15 accounts held in excess of $4.1 million. The plaintiffs now seek documentation in relation to two of those accounts (1994 and 5030).

[35] Despite the estate and matrimonial proceedings court orders and the production of some documents, the defendants have failed to disgorge all Pavao property and documentation in their power, possession and control, and the defendants have produced virtually nothing. Mrs. Ferreira has not attempted to obtain any further documents from the bank. As the defendants have refused production of the bank records requested, plaintiffs seek an Order pursuant to Rule 30.10 requiring the non-party CIBC to produce and deliver to the plaintiffs all banking information in relation to accounts 1994 and 5030. CIBC does not oppose the motion and it did not attend at the hearing.

[36] Rule 30.10 provides that the Court may, on motion by a party, order production for inspection of a document that is in the possession, power or control of a non-party where the court is satisfied that:

a) The document is relevant to a material issue in the action; and b) It would be unfair to require the moving party to proceed to trial without having discovery of the document.

[37] The leading case in Ontario is Ontario (Attorney General) v Stavro, 1995CanLII 3509 (ONCA) in which Justice Ground held that “it is in the public interest to ensure that all relevant evidence is available to the court. This is essential if justice is to be done between the parties”.

[38] The moving parties on a Rule 30.10 motion “bear the burden of showing that it would be unfair to make them proceed to trial without production of the documents” ( Stavro, at 49). In my view, there is no question that the plaintiffs have satisfactorily demonstrated that the CIBC banking documents are relevant to the issues of liability in these actions.

[39] In regards to the second requirement of Rule 30.10, to decide whether it would be unfair to require the plaintiffs to proceed without having discovery of the CIBC banking records, the Court of Appeal in Stavro set out the following factors to consider on a Rule 30.10 motion:

(i) The importance of the documents in the litigation; (ii) Whether production at the discovery stage of the process as opposed to production at trial is necessary to avoid unfairness to the applicant; (iii) Whether the discovery of the defendants with respect to the issues to which the documents are relevant is adequate and if not, whether responsibility for that inadequacy rests with the defendants; (iv) The position of the non-parties with respect to production; (v) The availability of the documents or their informational equivalent from some other source which is accessible to the moving parties. (vi) The relationship of the non-parties from whom production is sought, to the litigation and the parties to the litigation. Non-parties who have an interest in the subject-matter of the litigation and whose interests are allied with the party opposing production should be more susceptible to a production order than a true “stranger” to the litigation.

Importance

[40] The pleadings are replete with specific references to CIBC accounts 1994 and 5030 and to CIBC accounts generally. (See paragraph 22 above). The productions reveal that rental income payable to the deceased appears to have been transferred between accounts 5235 and 5030. There is evidence that more than $105,000 in known Estate traceable funds were diverted into Accounts 1994 and 5030 between 2010 and 2016. As well, there is evidence that thousands of dollars flowed between the deceased bank account (CIBC 5235) and accounts 5030 and 1994.

[41] The defendants deny most of the allegations. The CIBC documents already produced have informed the plaintiffs of the interrelationships between the plaintiffs and the defendants’ finances, real estate transactions and loans. Additional evidence from these additional accounts is critical to further examining these interrelationships.

Production at the discovery stage rather than trial

[42] Production of the CIBC documents prior to trial is necessary to avoid unfairness.

Whether discovery of the defendants on the issues is adequate

[43] The defendants have failed to comply with previous court orders requiring production of numerous documents including the information and documentation now being sought. While the defendants have tried to force discoveries prior to more complete production, in my view, discovery would be inadequate without these records and would ultimately result in multiple attendances.

The position of the non-parties

[44] CIBC does not oppose the motion.

The availability of the documents or their informational equivalent from some other source which is accessible to the moving parties.

[45] The plaintiffs have no access to the CIBC documents and the defendants have failed to produce them. Mrs. Ferreira has said that she does not retaun any documents for more than seven years. They cannot get the evidence of Mr. Pavao as he is deceased.

The relationship of the non-parties from whom production is sought, to the litigation and the parties to the litigation

[46] In Popov v Jones 2011 ONSC 665 at para. 103, Master Glustein (as he then was) held that “if a bank receives funds allegedly procured by fraud, or if funds may have been transferred out of that bank, the bank is “involved in the events” in the litigation and is not a “true stranger”. Consequently, this is an additional factor supporting production from the bank, as its involvement makes it a proper non-party from whom to procure documents or information requested by the plaintiffs who are the alleged victims of crime.”

[47] As stated by Justice Charney in the matrimonial proceedings, “the bank, as is often the case, is likely the only practical source of information that would enable the applicant to locate fraudulently transferred assets or funds.”

[48] Here, the plaintiffs allege they are victims of fraud. There is unquestionably prima facie evidence of Mrs. Ferreira transferring Pavao funds from one account to another and of the co-mingling of Mr. Pavao’s and Mrs. Ferreira’s funds. The evidence and the pleadings demonstrate that the Stavro factors support production of CIBC accounts 1994 and 5030 and disclosure of the bank balances for all Ferreira controlled accounts.

Order and Costs

[49] The motion is granted and production of the tax records and the requested CIBC banking records are ordered to be produced within 45 days. On an unopposed basis, the defendant shall produce the municipal and county records. The parties shall within thirty days attempt to agree on the issue of costs. If they are unable to do so, the parties shall by April 30, 2020 deliver to the Assistant Trial Coordinator, Christine Meditskos, costs outlines. The court will then set a date for a court appearance of thirty minutes to argue the issue of costs.

MASTER RONNA M. BROTT Date: March 5, 2020