David Milosevic

The plaintiff sought costs on a substantial indemnity basis following a trial judgment in its favour for fraudulent misrepresentation.

The defendants argued for partial indemnity costs.

The court found that while the defendants engaged in fraudulent misrepresentation, it was not the egregious conduct that typically warrants substantial indemnity costs.

Exercising its discretion under section 131 of the Courts of Justice Act, the court awarded costs to the plaintiff at a mid-point between partial and substantial indemnity, fixed at $100,000 all-inclusive.

The applicants sought an order directing the substituted buyer to transfer title of a pre-construction property to them.

The respondent had assigned his Agreement of Purchase and Sale to the applicants but failed to seek the builder's consent or pay the required fees.

Instead, as the property value rose, the respondent amended the agreement to substitute his realtor's wife as the buyer.

The court found that the respondent breached his duty of good faith by failing to take reasonable steps to complete the assignment.

The court ordered the substituted buyer, who held title in trust, to transfer the property to the applicants upon payment of the originally agreed purchase price.

This case concerns a claim for fraudulent misrepresentation and breach of contract related to the purchase of personal protective equipment (PPE).

Following a prior summary judgment against one defendant for breach of contract, the court proceeded to trial to determine fraud claims against the corporate principals and a related company.

The court found that the individual defendants, as directing minds of the primary corporate defendant, made knowing false representations about a "factory direct" relationship with the PPE manufacturer and the direct transfer of funds, thereby inducing the plaintiff to enter the agreement and suffer financial loss from undelivered goods.

The court pierced the corporate veil, holding the individual defendants and a sister company jointly and severally liable for the fraudulent misrepresentation.

The appellant appealed a decision refusing to certify her class proceeding for breach of fiduciary duty against her investment advisors.

The appellant argued that the advisors' professional rules and codes of ethics established a fiduciary relationship on a class-wide basis.

The Divisional Court dismissed the appeal, holding that an ad hoc fiduciary duty between a financial advisor and a client requires a multi-factor, case-by-case analysis, and cannot be established solely based on professional rules and ethical codes.

The parties entered into a talent acquisition agreement where the defendant agreed to hire a team of employees from the plaintiff.

The plaintiff brought an action for breach of contract, claiming the defendant failed to make two subsequent payments and incurred termination expenses after the defendant terminated several of the hired employees without cause.

Both parties moved for summary judgment.

The court granted the defendant's motion and dismissed the action, finding that the plain wording of the agreement conditioned the subsequent payments on the retention of the employees.

The court also rejected the plaintiff's argument that the defendant breached its duty of good faith, noting the terminations were a result of the COVID-19 pandemic.

The plaintiffs brought a motion to strike the defendants' statement of defence, alleging a failure to answer undertakings from earlier court orders regarding the production of financial statements, tax returns, and bank records.

The court found that the defendants had either answered or used best efforts to answer the undertakings, such as requesting documents from the CRA, accountants, and banks.

The motion was dismissed, and the plaintiffs were ordered to pay $20,000 in costs due to the disproportionate expense incurred on the motion.

The plaintiff brought a motion to discontinue a proposed class action against Olympia Trust Company regarding a syndicated mortgage loan investment.

The plaintiff had subsequently commenced an Omnibus Action against the same defendant on behalf of investors in 54 projects, which included the claims from the immediate action.

The court granted the motion to discontinue the action without costs and without requiring notice to putative class members, finding that the immediate action was redundant and the class members' interests were protected by the Omnibus Action.

The appellants appealed two orders made by a case management judge authorizing the sale of an estate property and setting the terms of the sale.

The respondent Estate Trustee During Litigation brought a motion to quash the appeal on the basis that the orders were interlocutory and leave to appeal had not been obtained.

The Divisional Court held that the orders were interlocutory because they did not finally determine the substantive rights of the parties to the net proceeds of the sale.

The court further held that leave to appeal is required for interlocutory orders under s. 10(1) of the Estates Act.

As the appellants did not seek leave, the appeal was quashed.

The court also noted that the appeal would have been dismissed on the merits in any event.

This was a costs decision following the plaintiff's unsuccessful motion to certify a proposed class proceeding alleging breach of fiduciary duty, knowing assistance, knowing receipt, breach of contract, and oppression.

The court reviewed the general costs principles under s. 131 of the Courts of Justice Act, rule 57.01(1) of the Rules of Civil Procedure, and the specific principles governing class proceedings costs, emphasizing fairness, reasonableness, and access to justice.

Although the successful defendants sought substantial indemnity costs based on serious unproven allegations and the continued pursuit of non-certifiable claims, the court held the action was not frivolous or vexatious and declined punitive costs.

Partial indemnity costs were awarded in the amounts claimed by the successful defendants.

In the context of a complex family law and related debt action, the parties brought cross-motions to compel answers to undertakings and refusals from questioning.

The corporate respondent was petitioned into bankruptcy shortly before the hearing, triggering an automatic stay.

The court ordered the individual respondents to produce relevant corporate and personal records in their possession, control, or power, finding that the bankruptcy stay did not relieve them of their personal discovery obligations.

The court also ruled on various claims of solicitor-client and litigation privilege, ordering the disclosure of legal fee amounts but protecting the identity of counsel and legal advice.

The plaintiff brought a motion to certify a class action against her investment advisors and related corporations, alleging breach of fiduciary duty, knowing assistance, knowing receipt, breach of contract, and oppression in relation to the sale of promissory notes.

The court dismissed the certification motion, finding that the claims did not satisfy the cause of action, common issues, and preferable procedure criteria under the Class Proceedings Act, 1992.

The court held that the existence of a fiduciary duty and any breach thereof would require individualized assessments, and that the secondary claims for knowing assistance and knowing receipt were similarly flawed and lacked a basis in fact.

M & P Tool Products Inc. sought summary judgment against David Lawson for civil fraud and breach of fiduciary duty, and dismissal of Lawson's counterclaim for intentional infliction of mental injury and harassment.

Lawson resisted, arguing that M & P condoned the fraud and that his counterclaim required a trial.

The court found that M & P's knowledge of Lawson's fraudulent activities was central to both the main action and Lawson's defence of condonation, raising significant credibility issues that could not be resolved on a written record.

The motion for summary judgment was dismissed in its entirety, requiring a full trial.

The plaintiff claimed beneficial ownership of two residential properties legally owned by the defendant, relying on alleged express trust documents or, alternatively, an equitable trust.

The court found the express trust documents were forgeries.

However, based on the parties' joint venture to flip the properties and their respective financial contributions to acquisition, maintenance, and improvements, the court imposed constructive trusts.

The plaintiff was awarded an 81 percent beneficial interest in one property and a 32 percent beneficial interest in the other to remedy unjust enrichment.

The Applicant, Lovedeep Kang, withdrew her action against the Third Party, Jagjit Kaur Bhullar.

Ms. Bhullar then sought full or substantial indemnity costs against the Applicant, alleging bad faith.

The Applicant argued for no costs, citing a bona fide claim and financial hardship.

The court found no bad faith, assessed costs on a partial indemnity basis, and considered the Applicant's financial circumstances but found insufficient evidence of hardship.

The court ultimately awarded Ms. Bhullar $6,000.00 in costs, inclusive of HST and disbursements, payable at the conclusion of the main action, finding the claimed costs disproportionate to the stage of the action when it was abandoned.

This appeal concerned a massive fraud perpetrated against a Paraguayan pension fund (Cajubi) by the appellants.

The trial judge found the appellants liable for fraudulent misrepresentation and breach of fiduciary duty, awarding over $20 million in damages and punitive damages.

On appeal, the appellants raised numerous grounds, including the corporate identification doctrine, limitation periods, unpleaded conspiracy, lack of reliance, and apprehension of bias.

The Court of Appeal dismissed all grounds, affirming the trial judge's findings, particularly regarding the inapplicability of corporate attribution where it would undermine the integrity of the legal system and allow fraudsters to benefit.

The plaintiff brought a motion to certify a class action against the defendants regarding the alleged misclassification of non-managerial sales representatives as independent contractors rather than employees.

The parties consented to certification but disputed whether the class should be divided into two subclasses (lead generators and appointment bookers) and whether a second representative plaintiff was required.

The court certified the class action, divided the class into two subclasses for efficiency, and held that the single plaintiff could represent both subclasses as there was no actual conflict of interest.

The moving defendants sought partial summary judgment to dismiss the plaintiff's action to recover an unpaid loan and lease payments, arguing they had no knowledge of the loan and that the claim was statute-barred.

The court dismissed the motion, finding that conflicting evidence regarding the parties' business relationships and an alleged payment that could extend the limitation period raised genuine issues requiring a trial.

The court declined to use its fact-finding powers, concluding that a trial was necessary to properly assess credibility and avoid the risk of duplicative proceedings or inconsistent findings.

Appellants sought an order permitting access to frozen funds to pay legal fees for their appeal from a trial judgment finding fraudulent conduct and ordering payment of over $20 million to the respondent.

The trial judge had imposed a broad non-dissipation order restraining the appellants from dealing with any assets.

The respondent opposed the motion, arguing that funds used for legal fees would be unavailable to satisfy the judgment.

The Court of Appeal granted partial relief, permitting access to $100,000 from the proceeds of a home sale to fund reasonable legal fees for the appeal, finding that the appellants had a right to meaningful participation in their appeal and that the respondent's claim as a judgment creditor was subordinate to the appellants' need to fund their legal representation.

The Court dismissed the appeal and upheld the order for a new Tax Court hearing before a different judge after multiple violations of official language rights of witnesses and counsel, and the related interpretation right of the unilingual party.

The court heard two motions: a contempt motion by the plaintiff against the Duscio Defendants and a motion by the Garcia Defendants to vary a non-dissipation order to access funds for an appeal.

The court found Mr. Duscio in apparent contempt, issuing a bench warrant, and adjourned Mrs. Duscio's contempt motion with strict disclosure terms.

Regarding the Garcia Defendants' motion, the court applied the four-part Credit Valley test, distinguishing the post-judgment non-dissipation order from a pre-trial Mareva injunction.

While acknowledging some "clean" funds, the court found the Garcia Defendants had other potential funding sources and that the balance of convenience heavily favoured the creditors given the magnitude of the fraud judgment.

The Garcia Defendants were granted only $5,000 for initial appeal costs, with further relief to be sought from the Court of Appeal.

The sale of their Kitchener home was authorized, with proceeds to be paid into court. interesting_citations_summary: > This decision applies the Credit Valley four-part test for varying Mareva-like injunctions, adapting it for a post-judgment non-dissipation order following findings of fraud.

It highlights the distinction between pre-trial asset preservation and post-judgment enforcement, emphasizing that the balance of convenience shifts heavily towards creditors once fraud is established and a judgment issued.

The court's analysis of "clean" funds and alternative funding sources for impecunious debtors seeking to appeal provides guidance on the stringent conditions for releasing frozen assets in such circumstances. final_judgement: > The contempt motion against Mrs. Duscio was adjourned with strict disclosure terms.

A bench warrant was issued for Mr. Duscio.

The Garcia Defendants' motion to vary the non-dissipation order was largely dismissed, with only $5,000 granted for initial appeal costs and the sale of their Kitchener home authorized with proceeds to be paid into court.

The plaintiff was granted leave to bring a motion to vary living expenses for the Garcia Defendants. winning_degree_applicant: 1 winning_degree_respondent: 5 judge_bias_applicant: 0 judge_bias_respondent: 0 year: 2018 decision_number: 6569 file_number: "CV-11-9210-00CL" source: "https://www.canlii.org/en/on/onsc/doc/2018/2018onsc6569/2018onsc6569.html" cited_cases: legislation: [] case_law: - title: "Canadian Imperial Bank of Commerce v. Credit Valley Institute of Business and Technology" url: "https://www.canlii.org/en/on/onsc/doc/2003/2003canlii12916/2003canlii12916.html" keywords: - Contempt of court - Non-dissipation order - Mareva injunction - Fraud - Asset freezing - Motion to vary - Appeal funding - Balance of convenience - Credit Valley test - Disclosure of assets areas_of_law: - Civil Procedure - Commercial Law - Equity - Enforcement of Judgments --- # Court File and Parties **COURT FILE NO.:** CV-11-9210-00CL **DATE:** 20181101 **SUPERIOR COURT OF JUSTICE – ONTARIO** (COMMERCIAL LIST) **RE:** CAJA PARAGUAYA DE JUBILACIONES Y PENSIONES DEL PERSONAL DE ITAIPU BINACIONAL, Plaintiff **AND:** EDUARDO GARCIA OBREGON a.k.a.

EDUARDO GARCIA a.k.a.

EDDIE OBREGON, CLAUDIA PATRICIA GARCIA a.k.a.

PATRICIA GARCIA a.k.a.

CLAUDIA PATRICIA DE GARCIA a.k.a.

CLAUDIA SANTISTEBAN, LIGIA PONCIANO, MANAGED (PORTFOLIO), CORP., GENESIS (LA), CORP. (ONTARIO CORPORATION NUMBER 1653094, GENESIS (LA), CORP. (Alberta CORPORATE ACCESS NUMBER 2013145921), FC INT, CORP., FIRST CANADIAN INT, CORP., UNION SECURITIES LIMITED, SCOTT COLWELL, MARTY HIBBS, HIBBS ENTERPRISES LTD., COLUMBUS CAPITAL CORPORATION, ANTONIO DUSCIO, LEANNE DUSCIO, LEANNE DUSCIO carrying on business as THE QUEEN ST.

CONSERVATORY, CATAN CANADA INC., VIJAY PAUL, GREG BAKER, BRADLEY F. BREEN, LOU MARAJ, 2138003 ONTARIO INC., MACKIE RESEARCH CAPITAL CORPORATION, FIRST CANADIAN CAPITAL MARKETS LTD., FIRST CANADIAN CAPITAL CORP., FC FINANCIAL PRIVATE WEALTH GROUP INC., JASON C. MONACO, DANIEL BOASE, PAOLO ABATE, NIKOLAOS SYLIANOS TSIMIDIS, GENESIS LAND DEVELOPMENT CORPORATION, LIMITED PARTNERSHIP LAND POOL (2007), and GP LPLP 2007 INC., Defendants **AND RE:** EDUARDO GARCIA, FC INT, CORP., GENESIS (LA), CORP. (ONTARIO CORPORATION NUMBER 1653094), and PATRICIA GARCIA **AND:** UPPER CANADA EXPLORATIONS LIMITED, PARKSIDE RESOURCES CORPORATION, GLOBAL SPORT TECHNOLOGIES CORP., and CAJA PARAGUAYA DE JUBILACIONES Y PENSIONES DEL PERSONAL DE ITAIPU BINACIONAL **BEFORE:** S.F. Dunphy J. **COUNSEL:** Jacqueline L. King and John De Vellis, for the Plaintiff David Milosevic and David Cassin, for the defendants Eduardo Garcia, Patricia Garcia, Managed (Portfolio), Corp., Genesis (LA), Corp. (Ontario Corporation Number 1653094), Genesis (LA), Corp. (Alberta Corporate Access Number 2013145921), FC Int, Corp., and First Canadian Int, Corp. Christopher H. Freeman, for the defendant Union Securities Ltd. Jeremy Sacks, for Leanne Duscio No one appearing for Anthony Duscio **HEARD at Toronto:** October 31, 2018 --- # REASONS FOR DECISION [1] I have two motions before me this morning: (i) a motion for contempt and other relief dated October 2, 2018 (originally returnable October 10, 2018) brought by the plaintiff; and (ii) a motion to vary my order of May 23, 2018 brought by the Garcia Defendants (in response to which motion the plaintiff has also filed a responding motion record). [2] While the material filed before me is voluminous, the issues are not particularly complex. ## Factual background [3] At the conclusion of the trial in this matter, I indicated that there would be findings of fraud made against both the Garcia Defendants and the Duscio Defendants and ordered an immediate freezing of the assets of both groups of defendants to prevent the dissipation of assets.

All of the affected individual defendants were in the courtroom when that order was made (Mrs. Duscio may or may not have been present – Mr. Duscio definitely was and addressed me directly after my order was made).

At the time, I indicated that the evidence before me satisfied me both as to the findings of fraud that would be detailed in my reasons to follow and of the fact that all or substantially all of the assets of both groups of defendants were proceeds of the fraud that would be subject to a constructive trust with the exception of the modest employment income then being earned by Mr. and Mrs. Duscio (which income I excluded from my order).

A further “come-back” date to settle the details of the budget to be allowed the defendants for living expenses and the like was set for May 23, 2018. [4] The parties returned before me on May 23, 2018.

The Duscio defendants chose not to appear and caused a message to be conveyed alleging that they had used up their entire vacation entitlement attending trial and could not take further time off work. [5] In the case of Mr. Duscio, at least, it is clear that that explanation – albeit delivered second hand via an unwitting pro bono lawyer and not under oath – was a deliberate lie conveyed to the court with the intention to mislead the court.

His employment was of a casual nature, arranged through a temp agency that allowed him to take time off as required.

Further, his time records from that agency show no work that week at all. [6] I confirmed my non-dissipation order at that time and made further incidental orders including an order for the seizure of records relating to assets on computers and other devices.

An order was also made requiring the Garcia Defendants and the Duscio Defendants to make full disclosure of their assets and the destination of all funds transferred by them of proceeds of the Cajubi’s funds. [7] I released my reasons for judgment on October 12, 2018 and made extensive findings of fraud as against the Garcia Defendants and the Duscio Defendants. [8] I shall refer to the evidence of compliance and non-compliance with my May 23, 2018 order in the context of examining the relief sought on the motions before me. ### (a) Plaintiff’s contempt motion against Duscio Defendants [9] The plaintiff has not proceeded with its contempt motion as against the Garcia Defendants as a result of a settlement that was reached.

I shall refer to this further in the context of the Garcia Defendants’ motion. [10] The plaintiff was required to obtain an order for substituted service of the motion record on Mr. and Mrs. Duscio after their efforts at personal service of the motion record were thwarted by what can only be characterized as evasive actions by the both individuals. [11] Mrs. Duscio retained counsel the night before the scheduled return of the motion and such counsel appeared in court to request an adjournment.

Mr. Duscio has not surfaced. [12] I granted Mrs. Duscio’s request for an adjournment but on strict terms.

I explained in great detail to her counsel what would be required of Mrs. Duscio prior to the return of the contempt motion which I adjourned to November 14, 2018.

Thus far, Mrs. Duscio has allowed herself to be used as a front for her husband’s dishonest schemes in circumstances I found amounted to willful blindness in my judgment.

I am expecting a full accounting of all assets worldwide, including assets held by or for another, assets over which she has or had signing authority, assets held in the name of her children or assets held by relatives on her behalf and a full accounting of all transfers of property other than at arm’s length.

She will be cross-examined on her affidavit disclosing this information and that information will be before me on November 14 to respond both to the allegations of contempt and the steps if any she has taken to purge that alleged contempt. [13] Mr. Duscio is another matter.

He has neither appeared nor retained counsel.

His whereabouts are unknown.

The evidence of his alleged contempt that he has not yet responded to is weighty.

The evidence includes Mr. Duscio’s failure to provide any of the information required by my May 23, 2018 order as regards transfers of assets I have found belong to the plaintiff, the non-disclosure of recently-opened bank accounts and the recent sale of a property in Florida that was itself not disclosed in this sworn affidavit.

This is by no means an exhaustive list of the ways in which Mr. Duscio is alleged to have engaged in very material breaches of my orders. [14] I issued a bench warrant requiring Mr. Duscio be apprehended and brought before me to answer the charges made by the plaintiff.

Mr. Duscio has some explaining to do regarding his apparent failure to comply with my direct orders, including orders that I explained to him face-to-face in court.

Avoiding that day of reckoning by trying to avoid service, causing false and misleading excuses to be conveyed to the court on his behalf and failing to appear in court when validly summoned is not the best way to start making things right.

The window for him to appear voluntarily instead of at the side of an officer of the law following apprehension and detention is rapidly closing. ### (b) Garcia Defendants’ Motion [15] The Garcia Defendants seek an order granting them access to $150,000 from among the assets subject to my non-dissipation order for the purpose of funding their intended appeal of my judgment.

These funds are proposed to be raised from one of two sources: the cashing of a GIC (subject to the proceeds in excess of $150,000 being paid into court to the credit of this action) or the sale of their Kitchener home (with proceeds in excess similarly being deposited into court).

At all events, they seek leave to sell the Kitchener home with the proceeds being paid into court. [16] The Garcia Defendants submit that all of their funds are now subject to the non-dissipation order and that the limited budget for legal expenses allowed them by my May 23 order ($45,000) has long since been exhausted.

They intend to appeal my judgment and the balance of convenience favours affording them reasonable access to funds for this purpose.

They further submit that there are substantial assets subject to my freezing order that were paid for in part at least with funds that are not subject to my tracing order.

In particular, they submit that the family home in Kitchener (with equity far in excess of the $150,000 they now seek) was purchased with funds that are not subject to the proprietary remedy that has been granted to the plaintiff in my judgment.

In support of this allegation, the Garcia Defendants have tendered evidence that they had earnings from commissions derived from the sale of viaticals for Keystone and USI exceeding $150,000 at the time of the house purchase and that these funds were deployed to make the down payment for the Kitchener home. [17] The plaintiff takes no issue with the sale of the Garcia’s Kitchener home and the payment of the net proceeds of sale thereof into court to the credit of this action.

My order of May 23, 2018 specifically granted the Garcia Defendants access to funds for the purpose of repairing the home and preparing it for sale. [18] An order shall issue authorizing the sale of the Garcia’s Kitchener home and requiring the proceeds thereof to be paid into court.

The plaintiff’s counsel is to be consulted regarding the sales process in terms of selection of agent, listing price, process for accepting an offer if below the listing price, assurances regarding arm’s length sale and similar matters.

My intention is that the property be sold at arm’s length for the highest price reasonably obtainable with only normal and usual deductions being made from the sale proceeds before net proceeds are deposited into court to the credit of this action. [19] The Garcia Defendants submit that the proper test to be applied to their motion to vary is the four part test described by Molloy J. in [Canadian Imperial Bank of Commerce v. Credit Valley Institute of Business and Technology](https://www.canlii.org/en/on/onsc/doc/2003/2003canlii12916/2003canlii12916.html). [20] While *Credit Valley* concerned a motion to vary a Mareva injunction, my non-dissipation order was quite consciously patterned after a Mareva order but with this distinction.

There is of course an important distinction between the non-dissipation order made by me and a Mareva injunction.

A Mareva injunction is an order made to preserve assets pending trial and a final determination of the rights of the parties.

My order was made after trial and after a positive finding of fraud was made.

Judgment was deferred only for the purpose of preparing detailed reasons and for the purpose of delimiting the full extent of the damages and of the constructive trust remedy that would apply.

Subject to that distinction, I find the *Credit Valley* test to provide an appropriate template for considering the manner in which my discretion ought to be applied. [21] The four-part *Credit Valley* test examines the following questions (as simplified by me): a.

Has the moving party established on the evidence that he or she has no other assets available to pay expenses other than those frozen by the injunction? b.

Has the moving party shown on the evidence that there are assets caught by the injunction that are from a source other than the plaintiff and thus not subject to the plaintiff’s proprietary claims? c.

Has the moving party exhausted any non-proprietary assets before looking to assets subject to a proprietary claim? d.

Does the balance of convenience favour the moving party’s claim? #### (i) Availability of other assets [22] The Garcia Defendants submit with some justification that they have no assets that are not subject to my order.

I have frozen all of their bank accounts and assets worldwide and provided them with access to a particular account, and limited in amount, to pay their living and legal expenses since my order May 14, 2018 as expanded on May 23, 2018.

While the plaintiff and Union Securities both strongly suspect the existence of other assets that have not been disclosed, suspicion of such assets and evidence of them are not the same thing.

Further, any such assets, were they to exist would also be subject to my order and thus be unavailable to fund appeal or living expenses at all events. [23] In my view, the Garcia Defendants are applying an approach to this question that is considerably narrower than what I consider appropriate. [24] The proprietary remedies that I have found Cajubi is entitled to account for almost all assets that the Garcia Defendants have identified and indeed any assets that the plaintiff and Union Securities suspect – justifiably or no – that they have failed to identify.

The money claims over and above the proprietary claim far exceed any amount of money the Garcia Defendants have or are speculated to have hidden away somewhere. [25] I see no reason to speculate about what I don’t know.

The facts in this case are damning enough without asking the Garcia Defendants to shadow box to avoid conclusions premised on speculation as well.

My findings against them are harsh enough.

Absent a startling change in their fortunes, there is virtually no prospect of these claims being paid in full – ever.

Every penny that is released by me is a penny the plaintiff will never see again. [26] In such circumstances, it is reasonable in my view to ask the Garcia Defendants to fund an eventual appeal from sources other than those I have found belong to the plaintiff. [27] There are sources that the evidence before me suggests are or ought reasonably to be potentially open to the Garcia Defendants. [28] Mr. Garcia admits to having purchased a house for his mother with proceeds of Cajubi’s funds some years ago.

Cajubi has a proprietary claim to that house – or would have one were it to enforce my judgment in Guatemala if those facts can be established.

The financial capacity of Mr. Garcia’s mother and family has not been developed before me in a meaningful way and I cannot assume that it is nil given the funds he is known to have provided to her. [29] The evidence from the trial also established that Mr. Garcia caused significantly more than US$1 million to be sent to his uncle Nicolas de Leon Morales in transactions I found to be a sham.

All of the funds sent to Mr. de Leon Morales have been found by me to be subject to Cajubi’s proprietary claim.

The evidence on this motion establishes that Mr. Garcia has maintained a degree of active involvement with his uncle in recent times, allegedly opening bank accounts in Canada to “hold” money for his uncle for undisclosed purposes (although over $400,000 of such funds allegedly held for Mr. de Leon Morales were transferred to the Garcia’s in the weeks before the trial).

Mr. Garcia’s affidavit alleges that Mr. de Leon Morales had offered to help him pay his legal expenses with a loan, but Mr. Garcia did not pursue the matter. [30] I am satisfied that the Garcia Defendants have access to sources of funds to fund a possible appeal that are not subject to my non-dissipation order. #### (ii) Frozen assets not subject to plaintiff’s proprietary claims [31] Mr. and Mrs. Garcia purchased their Kitchener home in 2007.

They purchased the home for $601,000 under an Agreement of Purchase and Sale accepted September 25, 2007.

The purchase was funded with a deposit of $25,000 and payments of $226,701.36 from Mr. and Mrs. Garcia plus a mortgage.

The transaction was completed on October 22, 2007. [32] The Garcia Defendants allege that the $25,000 deposit and at least $125,000 of the $226,701.36 paid at closing to purchase the home came from funds that are not subject to the proprietary remedy that I have granted Cajubi. [33] The Garcia Defendants were receiving commission funds from Keystone in that time frame.

While such payments also derived from transactions with Cajubi and transactions where similar payments to the same Swiss bank account of the Panamanian nominee corporation that I have found to be kickbacks in this case were also made, no such claim is made before me. [34] The commission payments in question were deposited to a US dollar account with a relatively nominal balance prior to such deposits and Mr. Milosevic has been able to track the transfer of such funds to a Canadian dollar account from which a $25,000 withdrawal was made on the same day as the deposit on the real estate transaction was made in the same amount.

The actual cheque has not been produced, but I am prepared to draw the necessary inference based on the chronology and the fact that the amounts match. [35] On October 17, 2007, a transfer of $181,701.36 was made from the same Canadian dollar account of Mr. and Mrs. Garcia to an unknown destination.

Mr. Garcia’s affidavit alleges that the funds were transferred to his solicitor for the purposes of closing along with a further $45,000 from one of the other Garcia Defendants (Genesis LA).

The figures add up to the amount the solicitor reports upon in his reporting letter and is in the correct time frame.

I do not have copies of all of the cheques to verify that Mr. Garcia has not cherry picked transactions (there are many in the same time frame) to reach a desired conclusion.

I am mindful that I have found him to lack credibility and have found that he has been a party to fraud.

Nevertheless, the evidence is plausible and adds up.

I am prepared to accept that the $181,701.36 withdrawn from his joint account on October 17, 2007 was used to fund the purchase of the family home on October 22, 2007. [36] While I am prepared to make that finding, I cannot find that as much as $125,000 of such amount was derived from funds that are demonstrably not subject to the plaintiff’s tracing claim.

The relevant account had just over $10,000 in deposit in September 2007 before the house was purchased and the proceeds of Keystone commission payments were transferred in.

On October 15, 2007, it had very nearly the same amount of money on hand ($12,582).

It received $45,000 from a source subject to the plaintiff’s claim on October 16, 2007 and then a further $125,000 from the allegedly “clean” commission account on October 17, 2007.

A further $15,000 from another source was also deposited that same day before the transfer of $181,701.36 was made (and a further payment to Rogers Cable was made). [37] Mathematical precision is neither necessary nor desirable here.

By my quick math, $191,982.78 was in the joint account at the time the bank draft of $181,701.36 was drawn.

Of this total, I am prepared to accept that $125,000 originated from sources not subject to the constructive trusts that I have ordered.

That would mean that about 65% of the account from which the draft was drawn was not subject to the plaintiff’s proprietary claim.

Applying the same ratio (65%), I would conclude that approximately $118,000 of the second down payment came from sources free of the plaintiff’s proprietary claim.

This amount plus the $25,000 is very close to the $150,000 claimed to be “clear” by the Garcia Defendants on this motion. [38] I am satisfied that the moving parties have shown that at least $143,000 of the down payment for their home derived from sources that the plaintiff has not established a proprietary claim to. #### (iii) Have the moving parties exhausted non-proprietary sources first? [39] The position of the Garcia Defendants – at this point at least – is limited to a request for access to funds for the purposes of the appeal that are not subject to a proprietary claim.

I have found that at least $143,000 of the funds used to purchase the family home in Kitchener are not subject to the plaintiff’s proprietary claim. #### (iv) Balance of convenience [40] There is a lot that could go into the balance of convenience consideration.

For the reasons that follow, I do not propose to go into all of them here in any detail. [41] The plaintiff and Union ask me to consider the merits of the proposed appeal.

I don’t propose to do so.

While I certainly have the jurisdiction to do so, this is the sort of question that is, in my view, best addressed at the stage of seeking a stay – in whole or in part – of my judgment pending appeal.

I have made the findings I have made in my judgment.

They speak for themselves.

Our system contemplates appeals and vests in other hands the jurisdiction to consider whether a stay of my judgment is appropriate and, if so, on what terms.

I have no desire to tie the hands of the judge or judges who may be asked to examine that question or to duplicate the task they will have to perform. [42] The responding parties (Cajubi and Union) urge me to bear in mind that a judgment having been issued, the balance of convenience shifts towards protecting the interest of the creditors. [43] There is considerable merit to that submission.

The judgment – in both its proprietary and monetary claims – far exceeds any reasonable estimate of what is likely or probable to be collected.

An impecunious debtor so-found after trial does not have a call on the creditor’s funds to fund living or legal expenses.

Given the magnitude of this judgment, the claims of the creditors have a particular weight that might not be present in a “normal” judgment that is subject to appeal.

Any dollar spent from this point is a dollar that the creditors will almost certainly never see again. [44] The plaintiff notes that the Garcia Defendants have spent an amount approaching $1 million (more precise figures are not needed for present purposes) in this proceeding (claims and counterclaims included) to date.

This money was almost entirely proceeds of the schemes I have found to be fraudulent and of which Cajubi was the victim.

Cajubi submits that they have already funded the Garcia Defendants living expenses for years and provided the war chest used to fight them with.

They are understandably not in the mood to “give” any more after having had to expend as much as they have to obtain justice. [45] Further, while the Garcia Defendants have demonstrated that there are some assets that are at least nominally “clean” (if only because not the subject of this law suit), they have been given access to a considerable amount of money post-judgment (approximately $80,000) to pay legal and living expenses.

Such funds ought to be charged to any non-proprietary funds before being charged to the proprietary claim assets. [46] There is also the matter of the black box which is the transfers to Guatemala over the years (well over $1 million) and the unexplored, but I find solid prospects of securing some funding from one or more sources located in that country. [47] Finally, I was urged to consider that only a portion of the $150,000 sought on this motion would be destined for the appeal, a large portion apparently being earmarked to pay accrued but unpaid legal fees. [48] All of these factors lean heavily against exercising any discretion to permit the Garcia Defendants to dig their debt hole any deeper with money over which the responding parties have a strong equitable claim. [49] Against this, the Garcia Defendants urge me to consider that they have met the challenge of demonstrating the existence of assets not subject to a proprietary claim.

They assure me that they have a serious appeal that they wish to pursue.

They submit that even a “bare bones” budget for an appeal will likely entail a budget of $50,000 -$60,000 given the costs of transcripts.

They will simply not be able to proceed without access to adequate funding for legal costs and their right to appeal would be denied. [50] I have decided that this is a debate that I should have as little to do with as possible.

As I noted above, I have made my decision and it stands or falls on its own merits.

The Garcia Defendants have a substantive right to seek appellate review.

They are also entitled to ask the Court of Appeal to stay my order as regards constructive trust, tracing and non-dissipation of assets pending that appeal. [51] Mr. Milosevic objects that absent secure funding he cannot go on the record for an appeal.

I have sympathy for that position, but it is not one without an answer.

The Garcia Defendants can appeal without counsel; Mr. Milosevic can provide assistance without appearing on the record; Mr. Milosevic can appear on a lift-stay motion with a limited retainer.

Even these limited steps will require some funding however. [52] I am ordering that the Garcia Defendants shall have access to a further $5,000 to fund legal costs of filing a Notice of Appeal and bringing a lift stay or related application to the Court of Appeal.

I am of the view that that is the preferable forum to deal with this sort of question.

I am otherwise dismissing their motion without prejudice to seeking similar relief in that forum should they be so advised.

I am advised that the account from which legal expenses were previously paid has approximately $5,000 remaining in it. ## Disposition [53] I ordered the adjournment of the contempt motion as regards Mrs. Duscio until November 14, 2018 (at 8:30 a.m.) where she will appear before me represented by counsel.

I dictated the terms of that adjournment in oral reasons.

The gist of those terms was that Mrs. Duscio is to make a full report of assets and dispositions of assets in accordance with my May 23 order by November 5, 2018 and submit to cross-examination on her affidavit on November 6, 2018.

I further extended my May 23 order – for the avoidance of any doubt as to its intent – to include any and all accounts over which she had or has signing authority and required her to account for any material (over $5,000) transfers made to non-arm’s length parties including Mr. Torchia, any company associated with him, any of her children, any parents, in-laws or other family members including cousins. [54] Mr. Duscio did not appear at the motion although validly served in accordance with the order of substitute service made.

He cannot be convicted in absentia.

However, the evidence assembled by the plaintiff – coupled with the fact that the May 14, 2018 non-dissipation of assets order was made by me when he was physically present in court and was explained to him in very direct terms by me – all persuade me that there is a strong case for contempt that has been made out for him to answer. [55] I issued a bench warrant to have Mr. Duscio brought before me and invited Mrs. Duscio’s counsel to communicate to him through Mrs. Duscio how advisable it would be for Mr. Duscio to come to court voluntarily before being apprehended on the warrant I have issued to explain himself. [56] As regards the Garcia Defendants, I am making the following orders: a.

An order shall go authorizing the sale of the Kitchener home and the payment of proceeds into court on the terms described in my reasons above; b.

For greater certainty, my order of May 23, 2018 (as confirmed in my judgment of October 12, 2018) extends to any accounts over which the Garcia Defendants have signing authority and to require an accounting for any transfers of funds over $5,000 to a non-arm’s length person including children, in-laws, cousins, aunts and uncles or entities controlled by or holding funds in trust for any of these; c.

The Garcia Defendants shall have access to $5,000 of the funds currently frozen to fund legal expenses to prepare a Notice of Appeal and to bring an application for a stay of all or any part of my judgment to the Court of Appeal (I do not require Mr. Milosevic to go on the record for such appeal without knowing the outcome of the stay motion he intends to bring); d.

The plaintiff shall be entitled to bring a motion to vary my May 23 order as regards living expenses granted to the Mr. & Mrs. Garcia under my order now that the judgment has issued which motion shall be heard (if not settled by agreement) on November 14, 2018; and e.

The Motion to Vary of the Garcia Defendants is otherwise dismissed without prejudice to seeking similar relief in the context of a stay application before the Court of Appeal. [57] I am not proposing to make any further costs awards as regards the Garcia Defendants.

It is beyond doubt that the cumulative impact of the judgments and costs awards made against them to this point is well beyond anything they have any reasonable prospect of paying in their lifetimes absent a truly startling change of circumstances.

A net recovery of 10 or 20 cents on the dollar is very likely on the optimistic side.

All sides should begin to temper their future steps in this proceeding with a cold-eyed assessment of costs and benefits.

The universe of assets available to make restitution is limited – a large portion of the damages suffered has undoubtedly been lost beyond recall whatever dark suspicions may be harboured by the victims of this fraud. [58] Orders accordingly.

If counsel are unable to agree on the form of any order I have made, I am directing the parties to provide me (via my assistant) with their competing versions and indicate in a short (one page) description the nature of any disagreements between them.

I will provide any necessary directions to finalize the order and sign it myself. --- S.F. Dunphy J. Date: November 1, 2018