COURT FILE NO.: CV-21-00655402 DATE: 20210910

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: YMCA OF GREATER TORONTO, Applicant

AND:

ROYAL BANK OF CANADA, CANADIAN IMPERIAL BANK OF COMMERCE, TORONTO-DOMINION BANK o/a TD CANADA TRUST, BANK OF MONTREAL and BANK OF NOVA SCOTIA O/A SCOTIABANK, Respondents

COURT FILE NO.: CV-21-00657101 DATE: 20210910

AND RE: YMCA OF GREATER TORONTO, Plaintiff

AND:

CHRISTINE RUTH BURNS, also known as CHRISTINE RUTH GRZESKOWIAK, JOHN DOE NO. 1, JOHN DOE NO. 2, JANE DOE NO. 1, JANE DOE NO. 2, JOHN DOE COMPANY NO. 1, and JOHN DOE COMPANY NO. 2, Defendants

BEFORE: Mr. Justice Chalmers

COUNSEL: R. Lester for the Applicant

HEARD: August 30, 2021, by videoconference

ENDORSEMENT

Overview

[1] The YMCA of Greater Toronto (YMCA) seeks an order to extend paragraphs 1, 2, 3, and 4 of the Norwich Order granted in Court File No.: CV-21-00655402-0000 (the Application) by Myers, J., dated April 6, 2021 (the Order). YMCA seeks an extension of the Order to November 30, 2021. YMCA also seeks an order extending the time for service of the Statement of Claim in Court File No.: CV-21-00657101-0000 (the Action) to February 28, 2022.

[2] YMCA states that it is the victim of a fraud arising out of its administration of a government training program; the Canada-Ontario Job Grant (COJG). The COJG program ran between 2015-2018. YMCA alleges that various individuals submitted fraudulent claims and applications to the YMCA through its employee, Christine Ruth Bruns. After the claims were paid, Ms. Burns received payments/kickbacks from the individuals who had received payments from the COJG program. YMCA alleges that it suffered a loss of $2,200,000.

[3] On April 6, 2021, Myers, J. granted a Norwich Order to the YMCA. The Respondent Banks delivered voluminous materials to YMCA consisting of many thousands of pages. Counsel for YMCA submitted follow-up requests for additional material. YMCA has not yet received the follow-up responses from RBC, TD Bank and CIBC.

[4] Paragraphs 1, 2, 3 and 4 of the Order expired on July 6, 2021. YMCA seeks an extension of the Order to allow for the delivery of follow-up material. In addition, YMCA seeks additional documents identified by its forensic accountant. The Respondent Banks do not oppose the relief sought.

[5] The Statement of Claim in the Action was issued on February 17, 2021 to preserve the limitation period against the Defendant Burns. The time for service of the Statement of Claim expired on August 17, 2021. YMCA states that the Statement of Claim should not be served before the investigation is completed. The motion to extend the time for service of the Statement of Claim is made without notice to the Defendants.

Issues

[6] The following issues are addressed in this endorsement:

(i) Should the Norwich Order granted by Myers, J. be extended to November 30, 2021? and

(ii) Should the time to serve the Statement of Claim be extended to February 15, 2022?

Analysis

i) Extension the Norwich Order of Myers, J.

[7] YMCA alleges that it was the victim of a fraud involving the administration of the COJG program. It alleges that grants were made to fictious companies, or companies that would not have qualified for the grants. Several of the recipients shared the same bank accounts and addresses. When YMCA contacted the companies, there were no employees who had been identified as trainees on the applications.

[8] YMCA learned that Ms. Burns was the president and principal of Event Renew Corporation. Event Renew had six accounts with Scotiabank, including a US dollar account. Event Renew received payments of hundreds of thousands of dollars from parties who received grants through the COJG program. At some point, payments were made to Corporate Training Management Inc., a company incorporated in the State of Nevada. Payments were then made from Corporate Training to Event Renew.

[9] After receiving the payments, Event Renew paid out various amounts to Thomas Burns (Christine’s husband) and Mackenzie Burns (Christine’s daughter).

[10] On April 6, 2021, Myers, J. granted the Plaintiff’s motion for a Norwich Order. He ordered the Respondent Banks to produce to YMCA the bank accounts of Christine Burns, and the other accounts listed in Schedule B of the Order (collectively the Accounts), for the period from January 1, 2015 to the present date. Paragraphs 1, 2, 3 and 4 of the Order expired on July 6, 2021.

Test for a Norwich Order

[11] A Norwich Order compels a third party to provide the plaintiff with information where the plaintiff believes it has been wronged and requires the third-party’s assistance to determine the circumstances of the wrongdoing: Isofoton S.A. v. Toronto Dominion Bank, (2007) 2007 CanLII 14626 (ON SC), 85 O.R. (3d) 780, at para. 28.

[12] In exercising its discretion on a Norwich application, the court is to consider the following:

(a) Does the applicant have a bona fide claim?

(b) Was the third party from whom the information is sought involved in the events giving rise to the claim?

(c) Is the third party the only practicable source for the information?

(d) Can the third party be indemnified for the cost of complying with the order and any potential damages that might flow from compliance? and

(e) Do the interests of justice favour granting the relief sought? Isofoton S.A. v. Toronto Dominion Bank, at para. 40.

Consideration of the Factors

[13] The moving party must establish that its claim is not frivolous or vexatious: Isofoton, at para. 46. I am satisfied on the basis of the evidence filed on the motion that the claim against the Ms. Burns and the other Defendants in the Action, is not frivolous or vexatious.

[14] YMCA cheques were deposited into the Accounts with the Respondent Banks and funds were transferred from the Accounts. I am satisfied that the Banks were innocently involved in the alleged fraud. A bank in receipt of funds allegedly procured by a fraud is a typical third party against which a Norwich Order will be sought: Isofoton, at paras. 50 and 51.

[15] YMCA states that it is not reasonable at this stage of the proceeding to seek the information from the COJG employees, including Ms. Burns. YMCA is concerned that if it is required to obtain the documents through the usual discovery process, that the individuals allegedly involved in the fraud may dissipate the funds. YMCA also states that it requires this information to ensure it only brings action against individuals who were involved in the alleged fraud.

[16] YMCA states that it will indemnify the Banks for any reasonable costs associated with complying with the order sought. I am satisfied that the Banks will not be prejudiced if the Norwich Order is extended.

[17] The Norwich Order is necessary for YMCA to obtain documentary evidence with respect to the alleged fraud. The information provided in compliance with the order may set out how the funds were dissipated. I am satisfied that the interests of justice favour granting the relief sought.

[18] I grant the order sought to extend paragraphs 1, 2, 3 and 4 of the Order of Myers, J. to November 30, 2021.

[19] YMCA also seeks an amendment of paragraph 4 of the order of Myers, J. to allow for the production of those accounts which, during the applicable period, received transfers of funds from the Accounts and/or transferred funds into the Accounts. In addition, YMCA seeks an amendment of paragraph 4 to include all accounts maintained by additional parties that allegedly received grants through the COJG program.

[20] I am satisfied that the YMCA has established that the banking records for the accounts which received funds from the Accounts or transferred funds into the Accounts, are relevant and ought to be produced pursuant to the Norwich Order. I order that the paragraph 4 of the Order is amended to include all identifiable numeric accounts which have received transfers of the funds from the Accounts or which have transferred funds into the Accounts.

[21] Based on the evidence before me on this motion, I have some concerns with respect to amending the Order to include the accounts of additional parties. If those parties did not have accounts which received funds from the Accounts or transferred funds into the Accounts, there may not be a sufficient connection to order production of those banking records. Although I am not prepared to amend the Order to include the accounts of the additional parties at this time, this is without prejudice to the Plaintiff providing additional material to establish that the accounts of the additional parties are relevant and necessary.

ii) Extension of the Time to Serve the Statement of Claim

[22] The Statement of Claim was issued on February 17, 2021. The Statement of Claim has not been served the Defendants. The time for service expired on August 17, 2021. On August 10, 2021, counsel for the Plaintiff attended in Civil Practice Court before Dow, J. At that time the motion to extend the time for service of the Statement of Claim was scheduled for August 30, 2021.

[23] The Plaintiff argues that this is a large fraud matter and YMCA intends to seek a Mareva injunction to freeze the assets of the Defendants at the time the claim is served. The Plaintiff argues that it may be detrimental to its chances of recovery if the claim is served before the investigation is complete. The Plaintiff argues that the Defendants will not be prejudiced by an extension of the time to serve the Claim.

[24] Rule 3.02(2) provides that an order extending time may be made before or after the expiration of the time prescribed.

[25] The court has discretion to grant the order to extend the time to serve the Statement of Claim even after the expiry of the limitation period. In exercising its discretion, the court is to consider whether the extension of time for service will advance the just resolution of the dispute without prejudice to the parties. The court is to consider the equities of the matter and should make every effort to ensure that justice is done in the circumstances: Kuner v. Nguyen et al., 2015 ONSC 730, paras. 34-35.

[26] I am satisfied that it is in the interests of justice to extend the time for service of the Statement of Claim, nunc pro tunc. The extension of time is without prejudice to the Defendants raising the limitation period as a defence: Samuel Son & Co. v. Tonolli Canada Ltd. (1994), 1994 CanLII 7275 (ON SC), 18 O.R. (3d) 81 (Gen. Div.).

Disposition

[27] I make the following Order in the Application:

(a) Paragraphs 1, 2, 3 and 4 of the order of Myers, J. dated April 6, 2021, are extended to November 30, 2021;

(b) Paragraph 4 of Myers, J.’s order is amended to provide that the Order applies to all identifiable accounts which have received transfers of funds from the Accounts and/or have transferred funds into the Accounts; and

(c) I do not amend Paragraph 4 of Myers, J.’s order to provide that it applies to all accounts maintained by parties (persons, companies and other entities) listed in Schedule 3 to the draft order. This is without prejudice to the Plaintiff providing additional material to establish that the accounts of the additional parties are relevant and necessary. I remain seized with respect to this issue.

[28] The Order to amend the Norwich Order will go in accordance with the draft Order filed in the Application as amended and signed by me.

[29] I make the following Order in the Action:

(a) The time for service of the Statement of Claim is extended to February 28, 2022, nunc pro trunc.

[30] The Order to extend the time for service of the Statement of Claim will go in accordance with the draft Order filed in the Action and signed by me.

DATE: September 10, 2021