Court File and Parties
COURT FILE NO.: CV-19-00079327-0000
DATE: 20200604
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ATTORNEY GENERAL OF ONTARIO, Applicant
And
947014 ONTARIO INC., Respondent
And
MICHAEL NORWOOD (ESTATE OF), Respondent
BEFORE: The Honourable Justice C.T. Hackland.
COUNSEL: James McKeachie for the Attorney General of Ontario, Applicant (moving party)
Erica Tanny and Alan Brass for the Respondent, the Estate of Michael Norwood.
Robert Meagher, for Ms. Rosa Norwood
HEARD: May 20, 2020 (by Teleconference)
ENDORSEMENT (Motion to Approve a Settlement)
Overview
[1] The moving party, the applicant Attorney General of Ontario, seeks the court’s approval under section 18 of the Civil Remedies Act, 2001 (“Civil Remedies Act”), for a settlement entered into with Ms. Rosa Norwood. Ms. Norwood has filed an appearance and is a party to this forfeiture proceeding brought by the Attorney General under the Civil Remedies Act relating to the assets of the estate of Ms. Norwood’s late son, Michael Norwood, who died in October of 2017, prior to his trial on drug trafficking charges.
[2] The proceeds of Michael Norwood’s residence and of his business premises are sought to be forfeited to the Crown on the basis, as the Attorney General alleges, that they are proceeds of crime. These proceeds, in the approximate amount of $900,000 are in the possession of the Accountant of the Superior Court of Justice pursuant to a without prejudice consent preservation order made by this court, dated October 22, 2019.
[3] Previously, this court authorized the payment of a court judgement in the amount of $125,000 out of the preserved funds to a claimant who had been wounded in a shooting incident at a nightclub known as the Silver Dollar, where the late Mr. Norwood carried on business, see: Attorney General of Ontario v. 947014 Ontario Inc. Michael Norwood (Estate), 2020 ONSC 2945.
[4] The application record of the Attorney General has not yet been served and accordingly I will say as little as possible about the evidentiary basis for the forfeiture application. The estate trustee for the late Mr. Norwood’s estate advises that the estate intends to vigorously contest the forfeiture proceedings on the basis that Mr Norwood’s former residence and business premises, the net sale proceeds of which are paid into court, were not proceeds of crime within the Civil Remedies Act.
[5] I agreed to hear this motion on the basis of urgency. Ms. Norwood, age 85, currently resides in a senior citizens residence in Bathurst, New Brunswick. In the coronavirus pandemic she is at some risk for her health and safety. It is also not realistic to expect her to participate in this motion. She is however represented by counsel, Mr. Meagher, who has assured the court that he is acting with his client’s instructions and that his client is aware of the proceedings, and of this motion specifically.
[6] The estate trustee of the late Mr. Norwood opposes the settlement and payment of Rosa Norwood’s claim because, as explained in more detail below, he claims it is likely not a bona fide or legitimate claim and, in any event, should only be considered as part of the administration of Mr. Norwood’s estate, if and when the forfeiture proceeding fails and the amounts in court are returned to the estate.
Ms. Norwood’s Claim
[7] When the settlement was reached, the Attorney General accepted as fact the written representations of Ms. Norwood’s counsel as to the circumstances and the amount of her son’s indebtedness to her, summarized as follows:
a) Ms. Rosa Norwood became a widow in 1990.
b) Ms. Rosa Norwood liquidated her life’s savings.
c) Ms. Norwood gave those life savings to her son Michael Norwood in the mid-1990’s, so that he could renovate his house at 11 Cassone to make a separate unit for his mother to live in.
d) The arrangement between the son, Michael Norwood, and the mother, Ms. Norwood was that she could live in the renovated part of the residential property for the balance of her life.
e) The arrangement included an agreement that if the property was sold Michael Norwood would pay his mother, Ms. Norwood, back the money she gave with interest.
f) The life interest in the property and the arrangement were not in writing.
g) Ms. Norwood spoke to her lawyer and he realized the arrangement between Ms. Norwood and Michael Norwood should be formalized. To this end a lien was prepared to encumber the property in favour of Ms. Norwood and signed by her son Michael Norwood on 20 October 2015.
h) The lien was supposed to be registered on the residential property on 23 October 2015, but the order of the Public Prosecution Service of Canada preceded it by four days on the Register. The order was registered by the PPSC on 19 October 2015.
i) Ms. Norwood had to move out of the residential property, that was her home and the property was sold according to a court order.
j) Ms. Norwood had nowhere to live so she moved to a retirement home in Bathurst, New Brunswick to be closer to family.
k) Upon sale of the properties, the Toronto – Dominion Bank had their mortgage paid out on the property, so that clear title to 11 Cassone was passed.
l) At judicial pre-trials before Justice Ratushny in the criminal matters there were dealings with many issues including the issue of Ms. Norwood’s interest in the residential property.
m) Mr. Michael Norwood died. As a result of his death, the criminal proceedings came to an end.
n) As of February 2019, when Mr. Meagher wrote to then Crown Counsel Ms. Will, Ms. Rosa Norwood was 84 years old. She might now be 85 years old.
[8] The day prior to the argument of this motion, the applicant, or Ms. Norwood’s counsel, filed an affidavit with the court from Ms. Norwood’s former solicitor, Mr. Hiscock, who advised Ms. Norwood at the material times and documented the above described transaction on behalf of Ms. Norwood and her son. In fairness to the estate trustee, prior to receiving Mr. Hiscock’s affidavit, there was some basis for questioning the accuracy of the verbal representations about the arrangement between Ms. Norwood and her late son Michael, at least in the absence of admissible affidavit evidence.
[9] Mr. Hiscock’s affidavit explains the family and business arrangement between Ms. Norwood and her son, as described below. This is the best evidence available to the court, or likely to be available , and seems to be credible on its face. I accept this evidence.
[10] Mr. Hiscock deposes that that he met his client Ms. Norwood in September 2015 in order to take instructions concerning her will. She was 81 years of age at that time and explained to her solicitor that she occupied an apartment that had been constructed for her at her son Michael’s premises, above the garage. She indicated that she had advanced Michael $100,000 to assist with this construction, $3000 to assist with the installation of a pool on the premises and $35,000 to help her son out with some other financial matters that she did not specify. On the lawyer’s advice, Ms. Norwood and her son Michael entered into a promissory note in the sum of $138,000, as well as a lien to be registered on the property as collateral security. As matters transpired, the lien could not be registered because the residence had been subject to seizure several days previously. As noted, I accept Mr. Hiscock’s affidavit evidence as to the circumstances of this family arrangement between Ms. Norwood and her son, as it was related to him, and as to the amounts involved and the valid execution of the promissory note and the lien, which he oversaw. I would add that there is no dispute that the promissory note and the lien document bears the late Michael Norwood’s signature.
[11] The courts power to approve a settlement, such as the proposed settlement here, is found in paragraph 18.1(1) of the Civil Remedies Act which provides:
18.1 (1) Despite anything to the contrary in this Act, the court may approve a settlement in relation to a proceeding under this Act, on the motion or application of the Attorney General or of any other party to the proceeding with the Attorney General’s consent. (emphasis added)
[12] Section 18.1 of the Civil Remedies Act provides a broad power to the court to approve settlements. Notably, it is not required that any amount to be paid out of the preserved funds be first established to be proceeds of crime.
[13] The Civil Remedies Act speaks of a “legitimate owner” and a “responsible owner” as being defences against forfeiture.
[14] Where a party establishes that they are a legitimate owner a Court may decide not to grant the party the protection afforded by being a legitimate owner by finding it would clearly not be in the interests of justice to give the protection.
- (3) If the court finds that property is proceeds of unlawful activity and a party to the proceeding proves that he, she or it is a legitimate owner of the property, the court, except where it would clearly not be in the interests of justice, shall make such order as it considers necessary to protect the legitimate owner’s interest in the property.
[15] The same holds true where the Court finds that the party is a responsible owner, protection can be denied where it would clearly not be in the interests of justice.
8 (3) If the court finds that property is an instrument of unlawful activity and a party to the proceeding proves that he, she or it is a responsible owner of the property, the court, except where it would clearly not be in the interests of justice, shall make such order as it considers necessary to protect the responsible owner’s interest in the property.
[16] The position of the Attorney General is that it recognizes Ms. Norwood as a legitimate owner and a responsible owner in regard to the proceeds of the residence of her late son Michael., to the extent of her claim. Moreover, there has been no suggestion that Rosa Norwood was aware of or participated in her son’s alleged criminal activities.
[17] The Estate Trustee fairly conceded in their factum and in oral argument, that the late Mr. Norwood’s funeral expenses are properly to be paid out of the preserved funds, and an order will issue accordingly.
Position of the Estate Trustee
[18] The Estate Trustee, notwithstanding the family transaction detailed in Mr. Hiscock’s affidavit, and previously summarized by her counsel, says that several circumstances in reference to Ms. Norwood’s claim suggest that it is questionable, or not legitimate and ought not to be recognized. The trustee points out:
i. There is no sworn evidence from Rosa Norwood before the court;
ii. There is no information before the court detailing Ms. Norwood’s financial circumstances when she made these advances to her son;
iii. There is no evidence Ms. Norwood liquidated assets to advance the sum of $138,000 to her son;
iv. Land registry documents indicate that Ms. Norwood, during the period 1995 to 2007, held a lien against her son’s residence securing the sum of $150,000. The estate trustee suggests this requires explanation and may bear on the present claim;
v. There are some discrepancies between the description of the family arrangements originally offered by Ms. Norwood’s counsel and the description of the transaction outlined in Mr. Hiscock’s affidavit;
vi. The loan Ms. Norwood made to her son may not have been supported by valid consideration;
vii. Ms. Norwood has never asserted the present claim with the estate trustee, rather she has filed her claim against the preserved funds only;
viii. This settlement, if approved, may create a preference in Rosa Norwood’s favour over other creditors of the estate and indirectly influence the outcome of the forfeiture proceeding.
[19] In my view there is no merit in these objections to the settlement. Ms. Norwood’s financial situation when she made these arrangements with her son, and when she once held a lien on the property years ago, are irrelevant. The suggestion there is no consideration supporting this transaction is groundless. I accept, as did the Attorney General in agreeing to the settlement, that this family transaction was one in which a son provided a promissory note, secured by a lien to his elderly mother after she had lent him funds to improve his residence, with the intention that she could reside there hopefully for the balance of her life.
[20] The estate trustee does not suggest that it has any direct evidence that Ms. Norwood’s claim is not bona fide and instead relies on speculation and unwarranted suspicion. No other creditors of the estate are opposing this settlement. The estate assets which include the net sale proceeds of both the late Mr. Norwood’s residence and his business (which he held through his personal holding company 957014 Ontario Inc.), are more than adequate to cover Ms. Norwood’s claim without impairing the estate’s ability to pay its other creditors.
[21] In conclusion I find that the Attorney General was acting reasonably in accepting that Ms. Norwood is a legitimate owner or responsible owner within the meaning of the Civil Remedies Act and her ownership interest would be recognized in equity as such and that the amounts validly claimed by her are not legitimately subject to forfeiture and should be paid out to her. The amount of the required payout in the settlement between Rosa Norwood and the Attorney General is $120,000 (payable to her counsel Robert Meagher in trust) plus the funeral expenses, in an amount counsel may agree upon.
[22] As Mr. Hiscock’s affidavit was filed on the applicant’s behalf the day prior to argument, thereby depriving the estate trustee of a fair opportunity to reconsider his position, I exercise my discretion to order that there be no costs of this motion.
Date: June 04, 2020
COURT FILE NO.: CV-19-00079327-0000
DATE: 20200604
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: ATTORNEY GENERAL OF ONTARIO, Applicant
And
947014 ONTARIO INC., Respondent
And
MICHAEL NORWOOD (ESTATE OF), Respondent
COUNSEL: James McKeachie for the Attorney General of Ontario, Applicant (moving party)
Erica Tanny for the Respondent, the Estate of Michael Norwood.
Robert Meagher, for Ms. Rosa Norwood
ENDORSEMENT
(motion to approve a settlement)
Justice Charles T. Hackland
Released: June 04, 2020