Court File No. CV-21-2040-0000
SUPERIOR COURT OF JUSTICE
B E T W E E N:
CANADIAN IMPERIAL BANK OF COMMERCE
Applicant
- and -
WENIDFREDO CANETE, RUBY ANG AND FCANETE ICU NURSING INC.
Respondents
R E A S O N S F O R J U D G M E N T
BEFORE THE HONOURABLE JUSTICE MCSWEENEY
on August 9, 2023, at Brampton, Ontario
APPEARANCES:
M. Romeo Counsel for the Applicant
T. Shin Counsel for the Respondents
SUPERIOR COURT OF JUSTICE
T A B L E O F C O N T E N T S
Transcript Ordered: August 15, 2023
Transcript Completed: August 17, 2023
Transcript Revised: October 12, 2023
Notified Ordering Party: October 12, 2023
Legend
[sic] –Indicates preceding word has been reproduced verbatim and is not a transcription error.
(ph)-Indicates preceding word has been spelled phonetically.
[indiscernible] Replaces an inaudible or impossible to understand spoken word/phrase.
WEDNESDAY, AUGUST 9, 2023
CLERK REGISTRAR: Court is now resumed. Please be seated.
THE COURT: Thank you Madam Registrar. Thank you for your patience counsel.
I’ve had the benefit and privilege of hearing a very well-argued long motion today on a topic that’s important to both parties. There’s been some history in the sense that the transactions spoken of were back in 2020, and we’re now here in the middle of 2023.
So counsel, I propose to give you my reasons for decision on this long motion now, and to do so orally on the record. In doing so, what that means is, my reasons on the record and then you ultimately had in your hand, probably not today, probably tomorrow morning, my written endorsement reflecting what the bottom line is, and I will have by then, have made my costs decision based on your brief submissions following my reasons. And you may have the draft order amended and signed by me and likewise to issue. So, you end up with an endorsement and a draft order signed and to issue, however you don’t wait months and deal with calls from your clients as to what went on with that matter or what have you.
Should a transcript of my reasons for decision be ordered, I reserve the right, prior to release of those reasons, to review and edit them for clarity, punctation and spelling, and to add full case citations as needed. Such editing will not change my decision nor the reasons for it.
Do I have your agreement to proceed in that manner, counsel?
MR. ROMEO: Yes, Your Honour.
MR. SHIN: Yes, Your Honour.
THE COURT: Thank you.
R E A S O N S F O R J U D G M E N T
MCSWEENEY, J. (Orally):
In the matter of the Canadian Imperial Bank of Commerce and Canete, Ang and the Corporate defendant, the FCanete ICU Nursing Inc. CIBC moves by application to recover funds it paid in relation to a mistake into a bank account. It tried to remedy the mistake at that time, was not able to do so, and ended up expending funds out of its pocket which it claims constitute an unjust enrichment to the Respondents. It is unfair to describe the matter quite that briefly in terms of its genesis. I, therefore, commend and include by reference the core facts in this matter that are not in dispute, they are recounted at paragraphs 8 through 30 of the Applicant’s factum.
I wish to state at the outset, by way of context, that part of the undertone of the Respondents’ resistance to the application may have related to the pleading by CIBC, of allegations of fraud and conspiracy in the original application. Today during argument, counsel for CIBC confirmed that the Applicant CIBC is not pursuing those allegations, is not asserting them in its submissions. Those arguments are abandoned.
So, I start with that, with what’s not in issue. Many of the Respondent’s submissions, I emphasize their assertion that when Mr. Canete went to pre-pay the mortgage, he was doing so with his money, from his pension, and he was entitled to make prepayment on the mortgage with those funds in the manner he did.
That is not a finding that I need to make, nor that’s a brick in the wall of the analysis leading to the decision I must make. But I think it’s helpful to state that that’s not in dispute. To the extent that part of what needed to be asserted for the Respondents was that particular point. I simply wanted to acknowledge that at the beginning.
With respect to mistake of fact: I listened carefully to the submissions which were very well done from both parties. I did not, in so doing, find any dispute as to what the test and law is to do with mistake of fact, nor that to do with payments. The law is set out in a decision of the Supreme Court of Canada, summarized well in the decision of my colleague, Jennifer Woollcombe, in the decision of CIBC v. Desrochers, 2020 ONSC 7629. The Supreme Court of Canada’s decision, BMP Global Distribution v. Bank of Nova Scotia, 2009 SCC 15, starting at paragraph 20 recognizes briefly and helpfully that banks make payments by mistake for a variety of reasons – simple error, either by human or computer, and so forth.
Therefore, prima facie in these situations, the bank is liable to re-imburse the customer’s account because it’s in breach of its contract with the customer, but the bank’s also permitted to look to the recipient of the mistaken payment for restitution of the sum paid under their mistake of fact. That’s the general proposition of law.
We have in this situation, not so much two different people but two different legal entities: an individual, Canete, and his corporation, FCanete ICU Nursing Inc., but the gist of the settled law is that banks make mistakes, and banks are permitted to look to the people who received the money paid by mistake, to get the money back.
The test for recovery under a mistake of fact payment is still accepted to be that set out in the English case of Barclays Bank Ltd. v. W. J. Simms Son & Cooke (Southern) Ltd., [1979] 3 All E.R. 522, [1980] Q.B. 677 at page 535.
Number one, if a person pays money under a mistake of fact, that person’s prima facie entitled to recover it as money paid under a mistake of fact. There are exceptions, there are defences – no you don’t get the money back – in other words, where the olden days wording sounded like “the payor intends the payee shall have the money at all events or is deemed to intend that or where the payments made for good consideration and does for example discharge a debt owed or where the person receiving the funds by mistake has changed their position in good faith or has deemed in law to have done so.”
More plainly stated by this Court, Justice Chapnik, in a decision called Oblak, 2013 ONSC 4376 and in her paragraph 7, recovery of funds paid because of a mistake in fact is rooted in the principles of unjust enrichment. It therefore requires showing of a benefit to the defendant, and a corresponding deprivation to the plaintiff in the absence of a juristic reason. And the way she puts the defences in plain English is, the applicant/plaintiff shouldn’t get the money back if they intended the recipient to keep the mistaken payment or if they made the payment for good consideration or where the payment caused a change in the recipient’s position in good faith to the detriment of that recipient.
And as I look at the case law and consider the submissions of the Respondent, I accept it isn’t significantly in dispute, that there was a mistake. The payment, made by the bank, was made in circumstances where the bank came to recognize, after it was subject to a garnishment order after being put on notice that had garnishee responsibilities, it came to understand that the character of monies that it had previously held off from garnishing were not in fact pension monies beyond the reach of a garnishment order. Upon so recognizing, the facts indicate that the bank took steps to reverse a payment of the sum of approximately $96,000 dollars paid with the pension-derived monies by the Defendant, Canete to the bank as a pre-payment of his CIBC mortgage.
That is, the bank realized that he had made that payment with funds which it had not identified as garnishable funds, and that it had mistakenly not identified that. The bank then moved promptly to reverse the transaction. Issue was taken by the Respondent with the bank doing that. The Respondent did not provide authority for its general proposition that lenders shouldn’t be able to reverse transactions such as in this case, to pay down the mortgage.
In this fact situation CIBC wore “two hats”. That is, there were two roles from which knowledge flowed to the bank: one was in its role as the first mortgagee on the home owned by the individual Respondents. The other was, the bank holding the accounts of the Respondents. Once the bank was fixed with knowledge that it had accepted as mortgagee, for its own benefit, funds that had been paid at a time when such funds, it thought, were not available for garnishment, it realized that it had accepted a payment, unwittingly preferring its own interest to that of the garnishee to whom it was under legal obligations to garnish and then return the funds.
Upon realizing its error, the bank took steps to reverse the transaction and put the money back where it came from, into the personal account of Mr. Canete. That is where it made its mistake. I do not find supporting authority or evidence from Respondent counsel’s submissions that the bank was not entitled to or should not have done that. If anything, the chronology leads me to observe that when the bank first knew it had to garnish, it wasn’t “asleep at the switch”. It had a garnishment order, it then took a look at what accounts were in the name of the person being garnished, and then it reported back in a timely manner to the judgment creditor that the only funds it had were ones that were from a pension. And the bank was correct in that regard, they were from a pension because the bank had seen pension documentation between an individual and a pension regarding monies. So there was a basis, that turned out to be wrong in law, for the bank to say that. As a matter of presumption, I think it is a fair presumption for a bank to take when dealing with customers who trust their bank with their pension monies, or their liquidated pension assets, that the bank take that presumption and not go garnishing people’s pensions without being certain of their authority to do so.
That’s what the bank chose to do here: it held off initially. Then when it realized the funds were not a locked-in portion of a pension payout, it then went to reverse the transaction. So, I do not find support for the Respondents’ defence to the overall application in the manner or timing in which the bank made efforts to reverse the transaction and put the money back.
In the facts of this case, it turns out that the bank actually didn’t do that: it ended up putting the money somewhere else: in a corporate account owned by Canete. Then after the bank made this mistake, Canete transferred the money out of his corporate account by bank draft very quickly to his wife. She then put it into her account at a different bank and refused to give it back to CIBC.
So, we have a mistake by the bank, and we have facts which support a finding that the Canete Defendants were aware that they were being garnished, that the was a garnishment order, they were judgment debtors. The facts do not support a finding that they took issue directly with that garnishment nor the default judgment that gave rise to it, whether by way of challenging or seeking a hearing to deal with the garnishment or a setting aside of the default judgment or otherwise.
From the brief evidence regarding their financial woes, Canete and Ang, a couple, appear to have tried to take what monies they still had and moved them about, in order that they didn’t get taken or garnished. A difficult situation to be in certainly.
Nonetheless, I find that at the time that Canete found $96,000 dollars suddenly in his solely-owned corporate account (which he opened relating to his job as a nurse), I find on all the evidence that he was aware it was not money that belonged to him. It was not from his nursing activities. The steps he took immediately thereafter support that inference, because he didn’t just do an e-transfer or whatever might be simple, he took steps to consolidate the funds into a negotiable instrument – a bank draft, which was itself, funds made it out to his wife. He then had her go and put it somewhere else, at a different bank, beyond the reach of the CIBC and beyond the reach of the garnishment, and there it sits today.
As a matter of application of the test in Simms for recovering money paid under mistake of fact, I’m satisfied and have explained, I hope, how I came to my finding that there was a mistake of fact. Having made that finding on the evidence, the law says CIBC is entitled to recover it. In this case, however, well, CIBC didn’t have the money garnished but they paid it back to the business account of the person who had it. So, was CIBC out of pocket? Well, if nothing further had happened, we might not be here.
However, thereafter, CIBC did two things to take responsibility for its mistake. The first thing was to try to reverse the transaction into the garnished account. It failed to do that because it made a mistake, it payed it back to a different account controlled by the same person who didn’t want to honour the garnishment order. That person, Canete, then took steps with Ang to put the money out of its reach. CIBC then, on a timeline I wasn’t able to identify with precision in the record, paid the sum of – not the $96,000 that was put by Ms. Ang in her account, but $90,000 dollars, it paid that amount, I find on the record, to counsel for the garnisher, Mr. Nunes. The facts support a finding that CIBC did pay $90,000 dollars to Nunes as funds that it had failed to garnish when it had the opportunity and obligation in law to do so.
I pause at this point because, although it wasn’t quite clear to me in the argument why it was 90 not 96, there’s no question it was $90,000 dollars, which is a lower number, some reference was made to it being negotiated. In any event, I find that CIBC, as of the date of the trust ledger referenced in the lawyer’s letter of July 15, 2021, had paid the sum of $90,000.
Its payment was acknowledged in the evidence by Mr. Canete. I find, on these facts, that the Canete Defendants were enriched - the individuals, Canete and Ang, were enriched by the $90,000 paid by CIBC on their behalf. The record is clear that part of the accounting of the discharging of the indebtedness of Canete and Ang, was the $90,000 dollars put in by CIBC. There is no juristic reason for that enrichment – they were not entitled to have their first mortgagee, or their personal bank itself, pay $90,000 dollars to their judgment creditor.
Accordingly, I find that the sum of $90,000 dollars as at July 15th, 2021, was paid by CIBC and constituted an unjust enrichment of Canete and Ang.
I’d like to make reference briefly to the Respondents’ objections. Every case is slightly different on its facts. In this case, one of the facts to which the Respondent took objection was the bank’s initial step of having returned the funds by mistake to the wrong account, which funds then disappeared. The Respondents take issue with the fact that CIBC paid $90,000 dollars to the garnisher by way of its counsel after it realized the mistake. And instead, it should have sought, the Respondents suggest, a garnishment hearing or should have joined in an action which may not have existed at that time but what which was started subsequent to - started by the Respondents as plaintiffs in another matter.
It does not, I find, lie with the Respondents to argue that after they, as acknowledged by their counsel, took steps specifically to take the money out of their corporate account and away from Canete’s control, and put it into his wife’s account in a bank draft, to then say, well, CIBC shouldn’t have paid the money to their garnisher, Nunes.
It is Canete and Ang, who should have given the money back, it wasn’t supposed to be in that corporate account, and I have found that they knew it. Had they returned the funds to CIBC or to the correct account, the money would have been provided by whatever channel to the garnisher, Nunes. That consequence, which was contemplated by the garnishment order and would have been done if the bank hadn’t made its mistake, was frustrated by Canete and Ang taking the money out of the reach of the bank and thus, necessitating this whole application.
Respondent’s counsel also submits that as a matter of common sense, we really should not have an application, we should simply have this claim for $90,000 dollars moved over into a subsequent action which has many more parties and complexities that relate, as I have heard it described to me, to the overall contention of Ang and Canete that the mortgages they took on after the CIBC mortgage, were improperly assigned onto to higher interest mortgages.
I do not find that it is common sense or useful to consider what might have been done if the Respondents had filed a cross or counter-application seeking joinder of another action or so forth. They didn’t do that.
It’s not sufficient to come to court responding to an application with no effective pleading and say, well, we shouldn’t be here, we should be over there. Years have passed by this point, it’s 2023, if we should have/could have been over there, there was opportunity to pursue that and obtain a ruling in law prior to now. An allegation in the air does not assist. On this point, the Respondents’ offered no caselaw on point to support their alternate theories of what the bank might have done rather than trying to fix its mistake, dropping the ball and not garnishing sooner, and then returning the money to the wrong place, and then finally putting the money where it should have been directly with the garnishor.
In conclusion: applying the law to the evidence, I find that there is no defence established to rebut the prima facie entitlement of CIBC to recover the money that it has paid that unjustly enriched the Respondents. However, the money it paid by mistake was over $96,000 dollars. I have found as fact that the money that unjustly enriched the Respondents, is the lesser sum of $90,000 dollars. So, that is the amount which I order must be directed paid back to CIBC.
The decision I have made is in accordance with the law respecting mistake of fact and the principles of unjust enrichment. In that respect, to the extent the application speaks to money which has unjustly enriched the Respondents without juristic reason, that amount is $90,000 dollars not 96. But the amount of $90,000 dollars is funds that the CIBC, on my ruling, is entitled to recover with such interest as it may have accrued while in the possession of TD Bank in Ang’s account since July 15th, 2021, which is the first day on which I can find as fact, based on the record I have, that the money had left the control of CIBC and was paid out to the Nunes for the purpose of addressing CIBC’s failure to garnish earlier.
Further, I say with respect to the importance of this matter to the Respondents, Canete and Ang, that as I looked at the ledger document relating to the mortgage, it was apparent that with respect to a pre-payment of the CIBC mortgage and $90,000 dollars paid – these Respondents wanted to put $96,000 dollars and give it to CIBC presumably to place it beyond the reach of Nunes. Instead that money had to be paid back and then it went to Nunes. Had the funds remained as prepayment and reduced the CIBC mortgage, accordingly there would have been different mathematics about it, but at the end of the day, the CIBC mortgage was in fact discharged. The amount that could not be garnished initially, and I find that it couldn’t – once CIBC knew that they were not pension funds, it was not entitled to keep the pre-payment and it was appropriate for the bank to return it.
Accordingly, you have my decision counsel, in accordance with the law respecting mistake of fact and the principles of unjust enrichment on the facts of this case.
The application is granted with respect to the sum being $90,000 dollars. I am dismissing, if not otherwise, the Applicant’s claims for fraud or conspiracy. I believe they were appropriately withdrawn: if they hadn’t been, they would have been dismissed by me.
And that brings us to the matter of two things, costs, what is being sought, what’s appropriate, and also, to the terms of the draft order provided. I have no concern with the draft order. However, counsel, I found $90,000 thousand is owing not 96, so the question is, specifically about that, that you ask that a bank draft, improperly drawn, it’s declared null and void but then if I do that, I can say that the parties are prohibited from accessing the funds, I’ll have to say in excess of $90,000 dollars represented by the draft because I’m then going to say, that the Canete Respondents were enriched by $90,000. So, my question is really whether we need paragraphs one or two, do you want two, is the relationship such that you want to take out an order? I want you to consider that briefly but I don’t want to create more process but I don’t really know about declaring bank drafts null and void when it’s only $90,000 that I’m having paid back. What do you suggest?
MR. ROMEO: So, Your Honour, two things first thing, my friend and I did reach an agreement on costs...
THE COURT: M'hm.
MR. ROMEO: ...and we agreed that $20,000 dollars was the appropriate quantum.
THE COURT: Thank you. That’s inclusive?
MR. ROMEO: Yes.
THE COURT: Fixed and payable. It’s the Canete Respondents, jointly and severely, isn’t it not?
MR. ROMEO: Yes, Your Honour.
THE COURT: All right.
MR. ROMEO: And in respect of the order, Your Honour, if...
THE COURT: Yep.
MR. ROMEO: ...based on your – based on your finding the amount of the unjust enrichment was $90,000 dollars.
THE COURT: Could I just get rid of the first two paragraphs? I mean I can find, I can find, I can direct, I can declare that the Canete Respondents have been unjustly enriched by $90,000 dollars due to a mistake of fact by CIBC. That is pretty much the point.
MR. ROMEO: I think it’s the $90,000 dollars plus interest, as appropriate. But yes, that works for CIBC.
THE COURT: ...but then it follows $90,000.
MR. ROMEO: Yes.
THE COURT: All right. Then, I’m going to collapse paragraph one and two, and name the defendants. I don’t think there’s a meaning to rendering bank drafts that have been used already - null and void. Thank you.
And regarding costs of $20,000, thank you for that cooperation counsel, it’s in my view in the best traditions of the bar when that can happen. I shall amend that draft order accordingly.
You will have an endorsement and you will have a draft – or I will sign a draft order, if not today, then tomorrow and it will be signed and to issue. Is there something further?
MR. SHIN: Your Honour, just so I understand clearly, will number, paragraph five on the draft order also be edited?
THE COURT: Let us have a look.
MR. SHIN: $90,000.
MR. SHIN: Yes, it will say $90,000 plus interest at the Courts of Justice Act rate and will say July 15th, 2021, to the date of payment less any amounts CIBC received from TD Bank. So that may be a full offset and if it’s not, it won’t be a whole bunch, I would think.
MR. SHIN: Thank you.
THE COURT: All right. I thank you. This is the end of my reasons.
FORM 3
ELECTRONIC CERTIFICATE OF TRANSCRIPT (SUBSECTION 5(2))
Evidence Act
I, Patricia MacLeod, certify that this document is a true and accurate transcript of the recording of CIBC v. Canete et al, in the Superior Court of Justice, held at BRAMPTON, Ontario, on August 9, 2023, taken from Recording No. 3199_310_20230809_143155__30_MCSWEEL.dcr, which has been certified in Form 1.
August 17, 2023
Date (Electronic signature of authorized person)
Patricia MacLeod
Authorized Court Transcriptionist
905-650-9707
4161754059_____________________
(Authorized court transcriptionist’s identification number – if applicable)
Ontario, Canada______________
(Province of signing)
A certificate in Form 3 is admissible in evidence and is proof, in the absence of evidence to the contrary, that the transcript is a transcript of the certified recording of evidence and proceedings in the proceeding that is identified in the certificate.
Form 3 – Electronic Certificate of Transcript – September 1, 2022

