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Elder Financial Fraud Results in Long-lasting Consequences: Dunn v. TD Waterhouse & Ridley Estate v. Eagan

Dunn v. TD Waterhouse[1] 2018 ONSC 2776 (CanLII), http://canlii.ca/t/hrvsr

Ridley Estate v. Eagan[2] 2018 ONSC 2777 (CanLII), http://canlii.ca/t/hrvss

These matters arise from the wrongdoings of Conrad Eagan, a former financial advisor, who managed to defraud his elderly clients of over $3 million.  Eagan’s activities led to an investigation and disciplinary hearing by the Mutual Fund Dealers Association of Canada (“MFDA”) as well as various criminal charges.  He pled guilty to fraud charges related to a number of victims and was sentenced to 4.5 years of penitentiary time and a series of “free-standing restitution orders” pursuant to section 738 of the Criminal Code, R.S.C. 1985, c. C-46.[3]

Background:

Two related decisions were recently released dealing with the fallout of Eagan’s fraud. The subject application and motion were brought by the estates of two of Eagan’s victims, Joan Kidd (“Dunn” action) and Joan Ridley (“Simpson” action).

Joan Kidd:

The MFDA’s investigations found that Eagan misappropriated approximately $610,000 from the bank account of Joan Kidd, and at least $235,000 of the proceeds from the sale of the deceased’s residence.  They were also able to trace some of the funds ($353,676.85) to Eagan’s TD Waterhouse trading account.

On the basis of this finding, the applicants commenced this proceeding in June 2015. They requested a single term of substantive relief: an order that TD Waterhouse pay to the applicants the sum of $137,397.87. There was also a restitution order in favour of the Kidd Estate in the amount of $130,643.15.

However, achieving finality proved difficult given the number of victims and the number of proceedings commenced on the victims’ behalf. What was the best way to provide restitution to all of the victims?

In August 2015, Justice Sheard made an Order with respect to the monies remaining in Eagan’s TD Waterhouse trading account (the “Order”). TD Waterhouse was ordered to liquidate the securities in that account and pay the sum realized into court. At the time, it was anticipated that the sum to be paid into court would be $451,355.29.

The Order further provided that from the sum realized, the applicants would be paid $353,676.85. Payment, however, was contingent upon complying with the following provision which sought to protect other victims who may seek recourse as against the funds:

This Court orders that the monies paid into court shall be held pending further order of the Court, to be paid out upon notice to the parties and without prejudice to the claims of any non-parties who may be entitled to assert a claim against these monies. [emphasis added]

Joan Ridley: 

Joan Ridley was another one of Eagan’s victims.  The MFDA panel made a finding that Eagan misappropriated approximately $1,632,200 from Joan Ridley prior to her death. Eagan’s criminal convictions also led to a restitution order made in favour of the Ridley Estate for the sum of $1,632,200. The executor for the Ridley Estate sought payment of $314,157.42 plus interest.

The parties in the two matters (the Kidd Estate and Ridley Estate) reached an agreement that the Ridley Estate receive the sum of $314,157.42, plus any interest earned on the monies paid into court. Before payment could be made the Court had to be satisfied, as per the Order, that there were no non-parties who may be entitled to assert a claim against the funds.

More Victims…

The parties’ further efforts revealed the existence of two other applications to the Court for payment of funds. The Plaintiffs in these actions were represented by the same counsel. Final orders with respect to their applications were made in 2013 and 2014.  Their counsel was notified of the within matters but neither party made any attempt to participate.

The only other non-party action identified was one commenced in 2016, under the Class Proceedings Act[4] by “Rodney Sabourin, through his Litigation Guardian David Sabourin”.  This action named Eagan and various other Defendants but not TD Waterhouse.

The plaintiff in the Sabourin action was served with copies of the relevant materials in these proceedings.   In response, the Plaintiff filed materials and attended to make submissions.

The Court ultimately found that there were no non-parties entitled to payment out of Court based on three factors:

  1. TD Waterhouse was not named as a Defendant in the Sabourin action and any claim as against TD Waterhouse, at this time, would be faced with potential limitation period defences. There was also no evidence before the Court of any intention on the part of the nominal Plaintiff or potential class members to initiate a claim against TD Waterhouse.

Furthermore, there is no evidence that the nominal Plaintiff or class members have a claim against TD Waterhouse.  The MFDA had not identified Sabourin as one of the five individuals whose funds were transferred by Eagan into his TD Waterhouse account.  The individuals identified were Joan Ridley, Joan Kidd, the two other claimants who had failed to respond to this motion and an individual named “PL” who purportedly died in 1998.

  1. The focus of the nominal plaintiff in the Sabourin action was the restitution order made against Eagan at the time of sentencing in the criminal proceeding. The existence of the restitution orders, made only against Eagan personally, was found to be irrelevant to the entitlement of the applicants to monies paid into court pursuant to the Order. The monies paid into court had never been Eagan’s personally.   There was no evidence before the Court of the nominal Plaintiff or the potential members of the class having taken any steps to make the restitution order(s) a judgment in this court. Section 738 of the Criminal Code provides for such steps to be taken.
  2. As a matter of fairness to the applicants who had now complied with the provisions of Justice Sheard’s Order as well as the endorsements made by this Court.

Justice Corthorn went on to acknowledge the significant losses suffered by both the Ridley and Kidd Estates and the fact that the end result here was not a full recovery but a move towards closure.

Conclusion 

These cases are clear examples of the extensive negative impact fraudsters can have on elderly victims. Enormous efforts, extensive legal fees, and years of litigation that exceeded the lives of the victims themselves was a result of one individual’s criminal actions.

[1] Dunn v. TD Waterhouse, 2018 ONSC 2776,  (CanLII), http://canlii.ca/t/hrvsr

[2] Ridley Estate v. Eagan, 2018 ONSC 2777  http://canlii.ca/t/hrvss

[3] Dunn at para. 3

[4] Class Proceedings Act, 1992, S.O. 1992, c. 6

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