Silverman Jewellers Consultants Canada Inc. v. Royal Bank of Canada, (2001) 143 O.A.C. 375 (CA)

• Judge: Doherty, Moldaver and MacPherson, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: March 09, 2001
• Jurisdiction: Ontario
• Citations: (2001), 143 O.A.C. 375 (CA)

Silverman Jewellers v. Royal Bk. (2001), 143 O.A.C. 375 (CA)

MLB headnote and full text

Temp. Cite: [2001] O.A.C. TBEd. MR.037

A & A Jewellers Limited (applicant/appellant/respondent to cross-appeal) v. Royal Bank of Canada (respondent/respondent/appellant by cross-appeal)

(C31253)

Indexed As: Silverman Jewellers Consultants Canada Inc. v. Royal Bank of Canada

Ontario Court of Appeal

Doherty, Moldaver and MacPherson, JJ.A.

March 9, 2001.

Key to names:

- Silverman Jewellers Consultants (now A and A Jewellers), retailing consultant, provided financial assistance to retail jewellers;

- W.G. Young and Heinrichs , two operators of retail jewellery stores;

- Royal Bank of Canada , banker for W.G. Young and Heinrichs.

Summary:

In 1994 Silverman consigned jewellery to retailers W.G. Young and Heinrichs. Silverman retained title to the consigned jewellery. The two retailers agreed to open a separate trust account for deposit of the proceeds of the sale of the consigned jewellery. Approval of transfers from the trust account at the Royal Bank required two signatures, one being an officer of the retailer and another from named representatives of Silverman. The bank, without the approval of Silverman, transferred money from the trust account to pay down loan obligations to the bank of the retailers. Silverman claimed that it was the beneficial owner of the funds in the trust account.

The Ontario Court (General Division) dismissed Silverman's claim - See 85 O.T.C. 161. Silverman appealed.

The Ontario Court of Appeal allowed the appeal and held that the trust account was impressed with a trust in favour of Silverman and that the bank wrongly appropriated the funds. In the Court of Appeal the main issues were whether the account in question was a trust account and whether the bank had constructive knowledge of the true nature of the account.

Banks and Banking - Topic 2783

Bank accounts - Trust accounts - What constitutes a trust account - Silverman consigned jewellery to two retailers - Silverman retained title to the consigned jewellery - The two retailers agreed to open a separate trust account for deposit of the proceeds of the sale of the consigned jewellery - Approval of transfers from the trust account at the Royal Bank required two signatures, one being an officer of the retailer and another from named representatives of Silverman - The Ontario Court of Appeal held that the account opened by the retailers was impressed with a trust in favour of Silverman - See paragraphs 36 to 41.

Banks and Banking - Topic 3124

Bank deposits - Duties of bank respecting deposits - Duty of inquiry - Silverman consigned jewellery to two retailers - Silverman retained title to the consigned jewellery - The two retailers agreed to open a separate trust account for deposit of the proceeds of the sale of the consigned jewellery - Approval of transfers from the trust account at the Royal Bank required two signatures, one being an officer of the retailer and another from named representatives of Silverman - The bank without the approval of Silverman transferred money from the trust account to pay down loans of the retailers - The Ontario Court of Appeal held that in the circumstances the bank should have made inquiries of the representatives of Silverman before making the transfers - See paragraphs 42 to 47.

Evidence - Topic 2401.3

Special modes of proof - Presumptions - Specific presumptions - Inference of knowledge from possession of documents - Silverman consigned jewellery to two retailers - Silverman retained title to the jewellery - The two retailers agreed to open a separate trust account for deposit of the proceeds of the sale of the consigned jewellery - Approval of transfers from the trust account at the Royal Bank required two signatures, one being an officer of the retailer and another from named representatives of Silverman - The Ontario Court of Appeal held in the circumstances the bank had constructive knowledge of the true nature of the trust account - See paragraphs 42 to 47.

Cases Noticed:

Stephens Travel Service International Pty. Ltd. v. Quantas Airways Ltd. (1988), 13 N.S.W.L.R. 331 (C.A.), refd to. [para. 37].

Air Canada v. M. & L. Travel Ltd., Martin and Valliant, [1993] 3 S.C.R. 787; 159 N.R. 1; 67 O.A.C. 1, refd to. [para. 37].

Citadel General Assurance Co. v. Lloyds Bank Canada, [1997] 3 S.C.R. 805; 219 N.R. 323; 206 A.R. 321; 156 W.A.C. 321, refd to. [para. 38].

Gold v. Rosenberg et al., [1997] 3 S.C.R. 767; 219 N.R. 93; 104 O.A.C. 1; 152 D.L.R.(4th) 385, refd to. [para. 43].

Counsel:

Peter J. Osborne, for the appellant;

Thomas M. Conway, for the respondent.

This appeal was heard on December 13 and 14, 2000, by Doherty, Moldaver and MacPherson, JJ.A., of the Ontario Court of Appeal. The decision of Moldaver, J.A., with Doherty and MacPherson, JJ.A., concurring, was released on March 9, 2001.