In DBDC Spadina Ltd et al v Norma Walton et al, Justice Newbould of the Ontario Superior Court recently granted a motion for summary judgment on the basis that there was sufficient evidence to justify a finding of fraud. The decision reflects the guidance set out in the landmark Supreme Court Canada decision Hyrniak v. Mauldin, 2014 SCC 7, which recognized that the adjudicative process can be fair and just without requiring the expense and delay of a trial.
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Court’s contempt power not to be used to coerce payment
In a recent 2016 decision in Greenberg v. Nowack, Justice Perell of the Ontario Superior Court of Justice dismissed a contempt motion against a stubborn and non-compliant debtor in a judgment debtor examination gone awry. Although sympathetic to the Plaintiffs’ frustration at being unable to recover monies on their judgement, the Court ruled that imprisoning the debtor would be harsh and ineffectual. Justice Perell made this observation about the contempt motion:
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Using the tort of civil conspiracy
Ponzi schemes and other fraudulent arrangements that operate on a large scale often involve complex networks of activities, actors, and funds transfers. Given the number of players that may be required to bring about such a scheme, the tort of civil conspiracy provides a potential means for recovery for fraud victims.
The elements of civil conspiracy: Simple motive or unlawful means?
As outlined in the Supreme Court of Canada’ decision in Canada Cement LaFarge Ltd. v. British Columbia Lightweight Aggregate Ltd. civil conspiracy in Canada is comprised of two related but distinct categories. The first category is the “lawful means” or “simple motive” conspiracy, and the second is the “unlawful means” or “unlawful conduct” conspiracy.
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Class action certified in alleged fraudulent investment scheme
On May 4, 2015, Justice A.D. Macleod of the Alberta Court of Queen’s Bench certified an omnibus class action in Starratt v. Mamdani, 2015 ABQB 280. The class action involves claims of investment fraud and misrepresentation by the defendants brought on behalf of class members in 21 subclasses. Certification was granted despite the case’s complexity, and the varying alleged harms to class members arising from the alleged fraud and misrepresentations of the defendants.
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Disgorgement Remedy: Recent Developments in the Province of Ontario
On May 5, 2014, Ontario’s Divisional Court dismissed the appeal of Otto Spork, Konstantinos Ekonomidis, and Natalie Spork from the decision of the Ontario Securities Commission (“OSC”) that they had breached Ontario’s securities law and engaged in conduct contrary to the public interest. Otto Spork, Konstantinos Ekonomidis, and Natalie Spork were ordered to disgorge $6.75 million, $325,000 and $165,000, respectively, out of a total $23 million that had been obtained from investors. Virtually all of the $23 million was lost.
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The evolution of fraudulent conveyance – Indcondo v. Sloan
On July 31, 2014, the Honourable Mr. Justice Penny of the Ontario Superior Court of Justice ruled in favour of the plaintiff in Indcondo Building Corporation v. Sloan (S.C.J.). For the plaintiff, Indcondo Building Corp (“Indcondo“), the ruling represents the culmination of more than two decades of litigation, which witnessed an intervening bankruptcy and subsequent orders under the Bankruptcy and Insolvency Act (the “BIA“) as well as two separate dismissal motions brought by the defendants on limitation period and abuse of process/issue estoppel defences. Each were initially successful, but both were reversed by the Ontario Court of Appeal [See Indcondo Building Corporation v. Sloan (C.A.) – Abuse of Process & Issue Estoppel & Indcondo Building Corporation v. Sloan (C.A) – Limitations].
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OSC engages in its first no-contest settlements
In a recent post, we explained that the Ontario Securities Commission (“OSC”) had declared its intention to move forward with “no-contest settlements.” These agreements would permit the settlement of enforcement proceedings without requiring the respondent to admit to any misconduct.
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Imprisonment for Ponzi Schemes: How long is long enough?
Under section 380.1(1) and (1.1) of the Criminal Code, courts are required to consider the following non-exhaustive list of factors as being aggravating circumstances in the context of fraud:
- significant magnitude, complexity, duration or degree of planning of the fraud;
- an actual or potential adverse effect on the Canadian economy or financial system, or on investor confidence;
- large numbers of victims, particularly if the fraud had a significant impact due to the victims’ personal circumstances;
- failure to comply with applicable professional standards;
- concealment or destruction of documents related to the fraud; and
- whether the total value of fraud exceeds one million dollars.
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Sino-Forest OSC hearing opens
On September 2, 2014, the Ontario Securities Commission commenced its high-profile hearing in the case of the Sino-Forest Corporation (“SFC“). SFC is alleged to have engaged in widespread fraud relating to its public financial disclosure. The specific allegations involve the fabrication or overestimation of revenue and assets, falsified evidence of ownership, backdated contracts, and undisclosed control over particular customers and suppliers.
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The OSC’s introduction of no-contest settlement proceedings
In October 2011, the Ontario Securities Commission (“OSC“) raised the concept of offering no-contest settlements of the sort commonly employed by the US Securities and Exchange Commission (“SEC“). On March 11th of this year, after receiving some sharply divided feedback in months of public hearings, the OSC announced that it was moving forward with the introduction of a policy that would permit settlement of enforcement proceedings without requiring an admission by the respondent of misconduct (no-contest settlements). The OSC has emphasized that the deployment of this policy will only be available in a narrow set of circumstances. In the meantime, the debate over whether such a policy can achieve its objectives of expedience and efficient resource allocation while at the same time avoiding the risk of letting wrongdoers off the hook, has yet to be resolved.