COURT FILE NO.: CV-21-00672181
DATE: 20211202
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: G.F. and a.f, Plaintiff
AND:
C.F., JOHN KIMORTAKAND, JOHN DOE, JANE DOE, DOE CORPORATIONS, Defendants
BEFORE: S.F. Dunphy J.
COUNSEL: Norman Groot and Erin Stoik, for the plaintiff
HEARD at Toronto: December 2, 2021
REASONS FOR DECISION
[1] The plaintiffs are heart-broken parents of a young woman who by all appearances is acting contrary to her own best interests. However, as sympathetic as I am to the parents in my capacity as a father, my hands are entirely tied in my capacity as a judge. I cannot grant the Mareva injunction that has been sought here. The evidence does not satisfy me that the plaintiffs have any proprietary interest in the funds in question nor that they would suffer any material damages from the undoubted breach of the agreement they have pleaded. None of the tests for the granting of an injunction are satisfied.
[2] I should state at the outset that the facts as I recite them are derived entirely from the evidence filed by the plaintiffs including the affidavits of the two plaintiffs who are the parents of the first defendant. I have no reason to doubt their good faith or sincerity but of course I have not heard from the defendant C.F. (the daughter) nor have I heard from any of the other defendants and my review of the facts must of course be tempered by the ex parte nature of the application I am dealing with.
Background facts
[3] The plaintiffs transferred a significant sum of money to their daughter when she was ten years old. They did not seek legal advice when they did this and intended it as a form of advance estate planning. In the parents’ mind at least, the intention was that the money would be invested and could be used later to help defray post-secondary education expenses, health care or possibly the purchase of a house after she turned 25. The funds were deposited into a bank account in her name and then used to purchase a term deposit in her name. That term deposit was renewed in 2018 after five years and put into another term deposit that would have matured in September 2021.
[4] What followed next is undoubtedly the stuff of a waking nightmare for two loving parents seeking only to provide for their child to the best of their ability. A diligent daughter achieving good marks in school and having won a scholarship t University falls under the spell of a boy she met in high school with a very different set of influences and values. Illicit drugs are alleged to have played a role.
[5] Graduation from high school and starting University did not end the relationship with the boy. The daughter’s academic career as well as her relationship with her family began to fray. The parents became convinced that the abrupt change in their daughter’s behaviour and outlook was due to the negative influence of her boyfriend. Studying from home remotely, the relationship with her parents became more and more tense and the daughter spent more and more time with her boyfriend. Days before her 18^th^ birthday, she ran away from home.
[6] There followed a number of troubling incidents that I shall not recount here. I have recounted the story in as high level and general a way as I can, supplying only such details as may explain the issues raised by this application and the reasons for my decision.
[7] On March 2, 2021 the father’s affidavit alleges that his daughter agreed to allow him to manage the GIC investment and to decide how to reinvest those funds when they matured (scheduled to occur in September 2021) and only to use the funds for the purposes agreed (education, healthcare or a home) after she turned 25. However, the daughter would not agree to allow her parents any other access to her financial affairs including other savings that she had accumulated from birthdays etc. On March 4, 2021, the daughter signed a power of attorney authorizing her father to act in her name in relation to all of her accounts at the bank.
[8] The truce in the fraying relationship between parents and daughter did not last long. She left home and moved in with her boyfriend approximately two weeks later. On May 10, 2021 the GIC investment was collapsed by the daughter and the funds transferred away to other accounts controlled by her or, possibly, her boyfriend. On May 18, 2021 the daughter revoked the power of attorney she had given her father.
[9] None of these most recent facts were known to the parents at the time. Their daughter had cut off most contact with them and they only learned of the collapsed GIC and the revoked power of attorney after the fact. There was intermittent contact with the family for the next few months but little to no contact since about June 2021. The last information the family has is that their daughter is residing outside of Ontario but still in Canada.
[10] Information obtained from the bank involved pursuant to a Norwich order has unfortunately also confirmed that the daughter has been going through the withdrawn funds at a relatively rapid clip. Nevertheless, the intended nest-egg does not appear to be entirely dissipated just yet.
Issue to be decided
[11] The issue to be decided is whether the plaintiffs meet the test for obtaining the Mareva injunction that is sought here.
Analysis and discussion
[12] The well-known requirements to obtain injunctive relief are (i) establishing the existence of a serious issue to be tried; (ii) demonstrating the existence of irreparable harm; and (iii) an assessment of the balance of convenience. In the present case, the application for an injunction fails both of the first two branches of the test rendering the third moot.
[13] The Notice of Action names the daughter, her boyfriend and persons unknown as defendants and seeks damages for conversion and fraud in the amount of the collapsed GIC together with an order freezing the assets of the defendants and tracing of proceeds. It alleges that the GIC was part of a “trust investment” agreed with the daughter and that the collapse of the GIC amounted to a breach of that trust relationship.
[14] Despite the bare allegation of the existence of a “trust” in the pleading and in the supporting affidavit, the facts do not bear out the existence of any kind of trust relationship in respect of the GIC from and after the daughter attaining the age of majority in late 2020.
[15] The funds were placed in a bank account in the name of the daughter when she was ten years of age. Although her parents undoubtedly exercised some rights of control over the bank account when she was a minor, there is no allegation in the pleading or in any affidavit that the funds were ever in a joint account of any kind. At all events, the GIC that was purchased was in the daughter’s name and the daughter’s name only. What legal control the parents had over the funds evaporated on the daughter’s 18^th^ birthday. The inescapable conclusion was that she was the legal owner of the funds at all material times after she turned 18 at least.
[16] The parents’ evidence is also unequivocal in demonstrating that the daughter was always and everywhere the only beneficial owner of the funds. Although the parents certainly contemplated strings being attached to the funds and remaining attached to them until the daughter turned 25 and even afterwards, the only stated purpose of the funds was to provide for the daughter’s sole benefit after she turned 25. She was at all times the sole intended beneficiary of the funds.
[17] From and after the daughter’s 18^th^ birthday, legal and beneficial ownership of the funds was united in one person: the daughter. Neither parent can be described as a “trustee” of the funds nor was there any kind of “trust” that satisfies the legal definition of a trust. Neither parent ever had power, possession or control over the alleged trust funds from and after the daughter’s 18^th^ birthday. There can be no trust where the trustee and sole beneficiary are one and the same person. Even if such a thing could validly exist, the sole beneficiary of a trust is entitled to terminate a trust pursuant to the rule in Saunders v. Vautier, (1841), Cr. & Ph. 240, 41 E.R. 482 (H.L.). There are no other pleaded beneficiaries of the alleged trust besides the daughter.
[18] I can find no triable issue as to whether the GIC was held by the daughter pursuant to a trust where the pleaded trust is one where the daughter alone is the beneficiary. After she attained the age of majority, both legal and beneficial ownership of the GIC was fully vested in her.
[19] The pleading and affidavit evidence also allege a fresh agreement arising on March 2, 2021 when the daughter, now having attained the age of majority, agreed to permit her father to handle the investment and re-investment of the funds in the GIC and to use them only in the manner intended by her parents (for education, health care or housing after she attained the age of 25 years). That agreement was alleged to have been underscored by the granting of a power of attorney permitting the father to deal with her accounts at the bank two days later.
[20] I cannot find that this subsequent fact changes the landscape. The power of attorney was on a bank standard form. It contained no language making it irrevocable. In fact, the daughter revoked it a relatively short while later. The daughter was at that time the sole legal and beneficial owner of the funds. An “agreement” to use the funds in a certain way but entirely for her own benefit does not confer any proprietary rights in those same funds upon the father with whom the agreement was said to have been made. Leaving aside the difficulties associated with finding consideration sufficient to raise a triable issue as to the binding nature of such an informal, family agreement, damages are clearly an adequate remedy for its alleged breach.
[21] There are agreements binding in honour only and there are agreements binding in law. The pleaded agreement is of the former kind.
[22] At all events, any “damages” claimable by the parents arising from a breach of the described agreement would appear to be nominal at best. The person harmed by the misuse of the funds is not the plaintiff but the defendant daughter - the very person alleged to have misused the funds. Thus, even if a contractual rather than trust interest could be established, damages appear likely to be found to be nominal and – from the perspective of the test for an injunction – damages are certainly an adequate remedy.
[23] This is not a case like in Re Campeau Family Trust, 1984 CanLII 1977 (ON CA). There, the adult beneficiary of an inter vivos family trust was held ineligible to collapse the trust and access the funds prior to his 35^th^ birthday. This was because the terms of the trust that made him its beneficiary also established contingent beneficiaries who would receive the funds if the beneficiary failed to live to attain 35 years of age.
[24] In the circumstances, I am compelled to dismiss the application for a Mareva injunction.
S.F. Dunphy J.
Date: December 2, 2021```