Court File and Parties

COURT FILE NO.: CV-22-00683300 DATE: 2022-08-04 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: RICO ENTERPRISES PTY LTD, Applicant – and – TD CANADA TRUST, Respondent

BEFORE: E.M. Morgan, J.

COUNSEL: Norman Groot, for the Applicant

HEARD: Motion in writing

MOTION FOR NORWICH ORDER

[1] This motion is brought on an urgent basis. The Applicant states that it has been the victim of a fraudulent scheme executed by Peter David Mulvany (“Mulvany”) and Martha Elizabeth MacKay (“MacKay”), through the use of a fraudulent corporate entity, Recycling Equipment Company of Canada Inc. (“REC”).

[2] The Application Record sets out that Mulvany and MacKay represented to the Applicant that REC was the authorized distributor for a novel waste management solution known as the Dryclone Drying System. The Applicant contends that Mulvany and MacKay represented that REC had the ability and authority to market and sell the Applicant a Dryclone Drying System machine, and transport the machine to Australia for use in the Applicant’s waste management business.

[3] Evidence in the record shows that the Applicant entered into an agreement to purchase a Dryclone Drying System machine and the corresponding equipment and licenses for the system’s operation. In furtherance of the agreement, the Applicant transferred a total of USD $5,000,000.00 into a bank account held by REC at TD Bank under Account No. 7304569 (“Account No. 569”).

[4] Despite repeated demands, the Applicant has not received the Dryclone Drying System, nor a return of the funds that it paid. The Applicant brings this application for Norwich Pharmacal relief in order to trace and account for the funds that it has now concluded were fraudulently obtained and that passed into and out of Account No. 569. It also seeks information about transactions in this account that will identify wrongdoers with respect to the funds sent by the Applicant. It also seeks to more generally to gather information necessary to commence an action for recovery of the allegedly defrauded funds, whether in Canada or another jurisdiction where the funds have been transferred.

[5] The purpose of a Norwich order is to assist a person who has been wronged with accessing information and/or documentation from a third party who, through no fault of their own, has become mixed up in the unlawful acts of others so as to facilitate the wrong doing. The third party is generally in a position to provide assistance to the person who is alleged to have been wronged by giving information and documentation for the purpose of disclosing identities of wrongdoers, and by tracing and freezing assets pending resolutions of the action.

[6] Norwich orders have been traditionally granted to assist applicants in circumstances where:

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

(b) evidence is to be found and preserved that may substantiate or support an action against either known or unknown wrongdoers, or even determine whether an action exists; and

(c) it is necessary to trace and preserve assets.

[7] The legal test that an applicant must meet for the Court to grant a Norwich order is:

(a) proof of a bona fide or reasonable claim;

(b) evidence that the third party from whom the documentation is sought is somehow involved in the acts complained of and beyond being a mere witness;

(c) evidence that the third party from whom the information and documentation is sought is the only practicable source of the information;

(d) whether the third party can be indemnified for costs; and

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

[8] In addition, to obtain a Norwich order the Applicant must show that the balance of convenience favours them obtaining the Court ordered disclosure from the Respondent.

[9] Under the circumstances, there appears to me to be no prejudice to the Respondent in complying with the Orders sought. It will be indemnified by the Applicant for the costs of production, if any.

[10] On the other hand, there is prejudice to the Applicant if the Orders sought are not granted, as the Applicant will be required to issue a claim without the available information with which to plead the particulars of fraud, breach of fiduciary duty, conversion and unjust enrichment, and will not have sufficient information to trace and preserve the funds of which it alleges to have been defrauded.

[11] The record shows that the Applicant has conducted relevant and publicly available investigations into REC, Mulvany and MacKay. According to the Applicant’s investigations, Mulvany and MacKay operate REC from a strip plaza, utilizing a P.O. box located in a UPS store. REC does not appear to have a legitimate business in Ontario. Mulvany has no visible assets to his name and MacKay’s known assets are limited.

[12] The Applicant’s investigations of Mulvany and MacKay do not show that REC as a business is operated in a manner commensurate with the receipt of USD $5 million from the Applicant, or any businesses that charges millions of dollars for purportedly highly sophisticated waste management systems.

[13] Mulvany and MacKay are directors and officers of a UK company, which was incorporated shortly after the receipt of USD $5 million from the Applicant. The Applicant is unable to determine to what extent its funds have been transferred outside of Canada, either to the UK or elsewhere.

[14] The Respondent is the only practicable source of information regarding what has happened to the USD $5 million transferred to Account No. 569 by the Applicant. The Orders sought will allow the Applicant to:

(a) determine the identification of the holder(s) of Account No. 569;

(b) investigate who is the controlling mind of Account No. 569, according to the Respondent’s internal records;

(c) determine whether any or all of the Applicant’s funds remain in Account No. 569;

(d) trace, account for, and, if possible, move to preserve the funds;

(e) preserve evidence in the possession of the Respondent with respect to the receipt and disbursement of the Applicant’s funds; and

(f) investigate and determine additional wrongdoers, including subsequent recipients of the funds, and to preserve the funds or any assets that resulted from those funds, and to identify and prosecute the wrongdoings of the alleged fraudster(s).

[15] The information and documents sought through this Application appear to me to be necessary to allow the Applicant to commence an action to seek to recover whatever remains from the USD $5 million, whether in Canada or elsewhere.

[16] Further, the Applicant requests a non-disclosure order prohibiting the Respondent from disclosing the existence of the Application or any resulting Order to the account holder(s) of Account No. 569, or to any other person or entity except for the purpose of seeking legal advice or complying with the terms of any resulting Order.

[17] This non-disclosure Order is sought to enhance the prospect of preserving the funds or any proceeds thereof from dissipation or further dissipation. The concern of the Applicant is that providing notice to the account holder(s), REC, Mulvany and MacKay, may cause the funds to be further dissipated, converted and/or removed from the jurisdiction. There are good grounds for the non-disclosure Order.

[18] The relief sought by the Applicant is granted for 90 days. If the Applicant seeks to renew it or extend it beyond the 90 day period, it is at liberty to seek a new return date for the Application in order to have the matter considered at that time. I am not seized.

[19] There will be an Order to go as submitted by the Applicant.

Date: August 4, 2022 Morgan J.