Court of Appeal for Ontario

Date: 2019-03-11

Docket: M50127 (C66070)

Nordheimer J.A. (In Chambers)

Between

Caja Paraguaya De Jubilaciones y Pensiones Del Personal De Itaipu Binacional

Respondent (Respondent)

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 Tsimids, Genesis Land Development Corporation, Limited Partnership Land Pool (2007), and GP LPLP 2007 Inc.

Applicants (Appellants)

Counsel

David Milosevic, for the applicants

Jacqueline King, for the respondent

Christopher Feeman, for Union Securities Limited

Heard: March 8, 2019

Endorsement

[1] The applicants seek an order permitting them access to certain funds for the purpose of "funding past and future legal fees". The respondent opposes the request on the basis, in essence, that any monies used by the applicants to fund their legal fees are monies that will not be available to the respondent to satisfy the judgment that it has against the applicants. Union Securities joins in the respondent's opposition to this motion.

[2] The applicants are appealing the trial judgment of Dunphy J. He found that the applicants had engaged in fraudulent conduct and ordered them to pay just over $20 million to the respondent. Union Securities also obtained judgment on a crossclaim but for a much smaller amount. No appeal has been taken from the Union Securities judgment.

[3] In addition to awarding judgment in favour of the respondent, the trial judge also made an order that restrained the applicants from "selling, removing, dissipating, alienating, transferring, assigning, encumbering or dealing with any assets, whether solely or jointed owned, wherever situated in the world …". This order would, consequently, deny the applicants access to any and all of their funds or assets that could be used to fund their appeal.

[4] The applicants first brought this motion before the trial judge. He dismissed the motion: see Caja Paraguaya De Jubilaciones Y Del Personal De Itaipu Binacional v. Garcia, 2018 ONSC 6569. In doing so, the trial judge applied the four-part test outlined in Canadian Imperial Bank of Commerce v. Credit Valley Institute of Business & Technology, [2003] O.J. No. 40 (S.C.J.), at para. 26, namely:

(i) Has the defendant established on the evidence that he has no other assets available to pay his expenses other than those frozen by the injunction?

(ii) If so, has the defendant shown on the evidence that there are assets caught by the injunction that are from a source other than the plaintiff, i.e. assets that are subject to a Mareva injunction, but not a proprietary claim?

(iii) The defendant is entitled to the use of non-proprietary assets frozen by the Mareva injunction to pay his reasonable living expenses, debts and legal costs. Those assets must be exhausted before the defendant is entitled to look to the assets subject to the proprietary claim.

(iv) If the defendant has met the previous three tests and still requires funds for legitimate living expenses and to fund his defence, the court must balance the competing interests of the plaintiff in not permitting the defendant to use the plaintiff's money for his own purposes and of the defendant in ensuring that he has a proper opportunity to present his defence before assets in his name are removed from him without a trial. In weighing the interests of the parties, it is relevant for the court to consider the strength of the plaintiff's case, as well as the extent to which the defendant has put forward an arguable case to rebut the plaintiff's claim.

[5] The trial judge ultimately dismissed the applicants' motion, but did so without prejudice to the applicants bringing a motion for similar relief before this court. He found, on the first test, that the applicants had access to other sources of funds that were not subject to his non-dissipation order. On the fourth test, the trial judge concluded that he would not exercise his discretion to permit the applicants to have access to any funds.

[6] Before me, the respondent submits that the Credit Valley test does not apply because it concerned a variation to a pre-trial Mareva injunction whereas, in this case, the relevant order is a post-trial non-dissipation order. That distinction does not accord with this court's decision in Waxman v. Waxman, 2007 ONCA 326, 223 O.A.C. 375 which adopted essentially the same test in considering a similar request in the context of an appeal from a post-judgment order.

[7] In my view, the first test is met. I reach that conclusion based on the plain wording of the non-dissipation order that the trial judge made. It is about as broad an order as could be envisaged. It covers all of the applicants' assets with the result that even if, as the respondent contends, there are other assets under the ownership or control of the applicants (e.g. a house in Guatemala), those assets would also be subject to the order.

[8] In terms of the second test, there was an express finding by the trial judge that $143,000 of the down payment made on the family home in Kitchener were monies to which the respondent "has not established a proprietary claim".

[9] In terms of the third test, because of the broadly worded non-dissipation order, the applicants do not have access to the $143,000. It is these monies to which the applicants seek access precisely because the respondent has no proprietary claim to them.

[10] In terms of the fourth test, I do not intend to embark on a detailed analysis of the merits of the applicants' appeal. It is sufficient to say that I do not agree with the respondent that the appeal is devoid of merit. It is generally recognized that the test for the merits of an appeal, on this form of preliminary pre-appeal motion, establishes a very low bar. As Doherty J.A. said, albeit in a different context, in R. v. Bernardo (1997), 105 O.A.C. 244, 121 C.C.C. (3d) 123 (C.A.), at para. 22:

The merits inquiry should not, however, go any further than a determination of whether the appeal is an arguable one.

[11] I am satisfied that, in this case, there are arguable grounds of appeal. I would add that any suggestion that Mr. Garcia could argue this case, on his own, fails to recognize the complexity of this case and the nature of some of the arguments to be made, including corporate identity and limitations issues. A party has the right to meaningfully participate in their appeal. In this case, meaningful participation cannot be achieved with the applicants unrepresented.

[12] In the end result, the applicants have a right to appeal the trial judgment. The applicants need access to some monies to pay counsel for that purpose. As the trial judge found, the respondent has no proprietary claim to the monies from the down payment on the home (which is in the process of being sold). The respondent's only claim to those monies is as a judgment creditor. The same is true with respect to any claim by Union Securities, as a judgment creditor, to those monies. In my view, those claims must take second place to the need of the applicants to fund their reasonable legal expenses relating to their right of appeal.

[13] All of that said, I am not satisfied that the applicants need access to the entire $143,000. That is an amount that would exceed what would be reasonable fees to be incurred for this appeal. I would add that the applicants are not entitled to access to these funds to pay for past legal fees. In terms of past legal fees, the lawyers stand in the same position as the respondent and Union Securities. The lawyers would be, at most, execution creditors if they pursued their clients for the payment of those fees.

[14] In the end, I grant an order permitting the applicants to have access to $100,000 of the proceeds of the sale of the house in order to fund their reasonable legal fees for the appeal. These monies are to be paid directly to the applicants' lawyers, Milosevic Fiske LLP, and are to be held by those lawyers in trust. These monies are only to be used to fund the reasonable costs of the applicants' appeal, including the costs of obtaining the trial transcripts. The applicants' lawyers are to account for the expenditure of these funds by providing to counsel for the respondent, and counsel for Union Securities, accounts for the fees charged, including details of the work done in support of those fees, summarized in a fashion that does not reveal any privileged material.

[15] I should note, before concluding, that the applicants have given a clear and unequivocal undertaking that they will not seek any further monies for the purposes of their appeal.

[16] There will be no order as to the costs of this motion.

"I.V.B. Nordheimer J.A."