Court File and Parties

COURT FILE NO.: CV-21-00670800-0000 DATE: 20211101

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: GAETANO FRANCO and ANGELA FRANCO, Applicants – and – TD CANADA TRUST, Respondent

BEFORE: EM Morgan J.

COUNSEL: Norman Groot, for the Applicants

HEARD: November 1, 2021

Application for norwich order

Endorsement

[1] Counsel for the Applicants appeared before me today on an ex parte basis, seeking a Norwich Order in respect of banking records for an account they established for their daughter, Celeste Anna Franco (“Celeste”).

[2] The Applicants allege that they transferred $625,000 to Celeste when she was a minor, on the undocumented understanding that she would hold these funds in an informal trust until she was 25 years old. According to the affidavits filed with this Application, Celeste agreed that her father, the Applicant, Gaetano Franco (“Gaetano”), was to manage the funds.

[3] To Celeste’s knowledge and with her approval, Gaetano negotiated a GIC with the Respondent, TD Canada Trust (“TD Bank”), to hold the $625,000 in her name. In order to facilitate his management of this investment, Celeste issued a power of attorney to Gaetano so that he could implement the investment decisions and deal with the funds in her name.

[4] The Applicants depose that beginning at the age of 17, Celeste was psychologically manipulated by her boyfriend, John Kimortakand. Gaetano’s affidavit and other evidence filed by the Applicants describe Mr. Kimortakand as a difficult and troubled young man. Shae Luster, a mental health counsellor who has provided family counselling services to the Franco family, has deposed in an affidavit that Celeste has over the past several years exhibited a somewhat confused state of mind and is potentially vulnerable to being manipulated by her boyfriend.

[5] In May 2021, when Celeste was 18 years old, and without notice to the Applicants liquidated the $625,000 GIC held at TD Bank. In July 2021, Celeste ceased communicating with the Applicants. The Applicants have learned through investigation that during that month a new Toyota was purchased in Celeste’s name. Telephone records indicate that Celeste has attempted a to travel to the United States but was unable to enter that country. She has left home and is apparently travelling in Canada. The Applicants state that her last known whereabouts are in Alberta and that they believe her to be in the company and under the psychological influence of Mr. Kimortakand.

[6] The Applicants seek an Order that TD Bank produce any documentation generated in 2021 related to the GIC and the personal bank statements of Celeste for the period of March 1, 2021, to present, along with transaction documentation to trace funds transferred out of Celeste’s personal TD Bank account. They wish to determine the means by which the GIC was liquidated and to verify their suspicion that the proceeds of the GIC were transferred to Celeste’s account.

[7] Counsel for the Applicants submits that given that the Applicants funded the GIC and given the trust agreement with Celeste that she has breached, they assert title to the missing funds. They now seek to trace their funds to determine if any can be preserved. They bring this Application in an effort to acquire evidence to this end. The evidence is required by the Applicants if they are to rebut the presumption of advancement which would otherwise apply to the transfer of the funds to Celeste: Pecore v. Pecore, 2007 SCC 17, [2007] 1 SCR 795. If this evidence of contrary intention is obtained, the presumption will be rebutted and the funds will in that case revert to the donors – i.e. to the Applicants: Donaldson v. Braybrook, 2020 ONCA 66, at paras. 27-28.

[8] At the time the GIC was liquidated it had a value of $632,847.74. Contrary to their verbal agreement with her, Celeste never requested permission from the Applicants to cash in the GIC. The Applicants state in their supporting affidavit that they have grounds to believe that Celeste would not have liquidated the GIC but for the psychological manipulation of Mr. Kimortakand.

[9] The principle underlying the granting of a Norwich Order is that a non-party to the underlying dispute, having become innocently involved in a wrongful act, has an equitable duty to assist the victim: Isofoton S.A. v. Toronto Dominion Bank, 2007 14626, at para 30 (SCJ). As a form of equitable relief, the Court has jurisdiction to grant such an order pursuant to section 96(1) of the Courts of Justice Act, RSO 1990, c. C.43. Most typically, applications for this type of pre-action discovery are brought before an action is commenced and where there are no material facts in dispute: Straka v. Humber River Regional Hospital (2000), 2000 16979 (ON CA), 51 OR (3d) 1, at para 32 (Ont CA).

[10] A Norwich Order is designed to be a flexible remedy that can be fashioned to meet the circumstances of the given case: Alberta Treasury Branches v. Leahy, 2000 ABQB 575, at paras 108-109, citing Canson Enterprises Ltd. v. Boughton & Co., 1991 52 (SCC), [1991] 3 SCR 534. In GEA Group AG v. Ventra Group Co., 2009 ONCA 619, at para 51, the Court of Appeal set out the circumstances in which the type of relief sought here can be granted, including:

a) where the information sought is necessary to identify wrongdoers;

b) to find and preserve evidence that may substantiate or support an action against either known or unknown wrongdoers, or even determine whether an action exists; and

c) to trace and preserve assets.

[11] The Court in GEA Group, at para 51, also set out the test for granting a Norwich Order:

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

b) 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;

c) whether the third party is the only practicable source of the information available;

d) whether the third party can be indemnified for costs to which the third party may be exposed because of the disclosure; and

e) whether the interests of justice favour the obtaining of the disclosure.

[12] The materials filed in this ex parte Application establish that the Order sought will allow the Applicants to trace funds in order to support their claim for a resulting trust. It may also assist them in identifying and prosecuting the wrongdoing that they allege has taken place in respect of those funds. On the basis of the material filed, the matter falls within the parameters for which Norwich relief is recognized as needed.

[13] There appears to be no prejudice to TD Bank in granting the Order sought. The Applicants have included in their Application Record the usual undertaking for damages in support of the Order.

[14] The Order as sought is hereby granted until the return of this Application. It is returnable on March 3, 2022 for two hours. I am not seized.

[15] There will be a formal Order to go as submitted by counsel.

Morgan J.

Date: November 1, 2021