Gennett Lumber Company v. John Doe a.k.a. Milton Harvey et al.
[Indexed as: Gennett Lumber Co. v. John Doe]
Ontario Reports Ontario Superior Court of Justice Sossin J. February 26, 2019 145 O.R. (3d) 61 | 2019 ONSC 1345
Case Summary
Damages — Punitive damages — Defendant participating in complex fraudulent scheme that resulted in losses to plaintiff of almost $170,000 — Defendant convicted of possession of property obtained by fraud and receiving conditional sentence — Plaintiff obtaining default judgment against defendant for civil conspiracy — Plaintiff awarded punitive damages in amount of $100,000 — Defendant's criminal conviction not being bar to award of punitive damages as criminal sanction addressed only part of his involvement in fraudulent scheme — Goals of retribution, deterrence and denunciation justifying award of punitive damages.
The defendant was a participant in a complex fraudulent scheme that resulted in losses to the plaintiff, a family-owned lumber company, of almost USD$170,000. He was convicted of possession of property obtained by fraud and received a conditional sentence. The plaintiff sued the defendant for damages for civil conspiracy. It brought a motion for default judgment. The main issue on the motion was the plaintiff's claim for punitive damages.
Held, the motion should be granted.
The plaintiff was entitled to punitive damages. The fraud met the standard of "high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour". Simply returning the funds fraudulently acquired would not be sufficient, particularly with the goal of deterrence in mind. The defendant's criminal conviction was not a bar to an award of punitive damages. The criminal sanction imposed on the defendant dealt with only a portion of his involvement in the fraudulent scheme. The goals of retribution, deterrence and denunciation justified an award of punitive damages in the amount of $100,000.
Cases referred to
- Agribrands Purina Canada Inc. v. Kasamekas (2011), 106 O.R. (3d) 427, [2011] O.J. No. 2786, 2011 ONCA 460, 334 D.L.R. (4th) 714, 278 O.A.C. 363, 87 B.L.R. (4th) 1, 86 C.C.L.T. (3d) 179, 203 A.C.W.S. (3d) 753
- Branco v. American Home Assurance Co., [2015] S.J. No. 286, 2015 SKCA 71, [2015] 10 W.W.R. 246, 460 Sask. R. 176, 24 C.C.E.L. (4th) 173, 51 C.C.L.I. (5th) 1, [2015] I.L.R. I-5760, 256 A.C.W.S. (3d) 596, varg [2013] S.J. No. 151, 2013 SKQB 98, [2013] I.L.R. I-5416, 416 Sask. R. 77, 20 C.C.L.I. (5th) 22, [2013] 6 W.W.R. 746, 6 C.C.E.L. (4th) 175, 228 A.C.W.S. (3d) 426 [Leave to appeal to S.C.C. refused [2015] S.C.C.A. No. 439]
- Cobb v. Long Estate, [2017] O.J. No. 4830, 2017 ONCA 717, 72 C.C.L.I. (5th) 173, 416 D.L.R. (4th) 222, 283 A.C.W.S. (3d) 402
- Elekta Ltd. v. Rodkin, [2012] O.J. No. 1439, 2012 ONSC 2062 (S.C.J.)
- McIntyre v. Grigg (2006), 83 O.R. (3d) 161, [2006] O.J. No. 4420, 274 D.L.R. (4th) 28, 217 O.A.C. 217, 43 C.C.L.T. (3d) 209, 39 M.V.R. (5th) 39, 152 A.C.W.S. (3d) 624 (C.A.)
- Midwest Amusement Park, LLC v. Cameron Motorsports Inc., [2018] O.J. No. 4024, 2018 ONSC 4549 (S.C.J.)
- R. v. Pavao, [2018] O.J. No. 4361, 2018 ONSC 4889 (S.C.J.)
- Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595, [2002] S.C.J. No. 19, 2002 SCC 18, 209 D.L.R. (4th) 257, 283 N.R. 1, J.E. 2002-405, 156 O.A.C. 201, 20 B.L.R. (3d) 165, 35 C.C.L.I. (3d) 1, [2002] I.L.R. I-4048, 111 A.C.W.S. (3d) 935, REJB 2002-28036
Statutes referred to
- Bank Act, S.C. 1991, c. 46 [as am.]
Rules and regulations referred to
- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 19.02(1)
MOTION by the plaintiff for default judgment.
Counsel: Norman Groote, for plaintiff.
SOSSIN J.: —
Overview
[1] The plaintiff, Gennett Lumber Company ("Gennett"), brings a motion for default judgment against one of the defendants, Samuel Oluwaremilekum, a.k.a. Sam Samuel, a.k.a. John Aremu ("Aremu"), who was a participant in a complex fraudulent scheme. Gennett seeks a default judgment for damages of US$168,442.30, converted into Canadian dollars, plus $200,000 in punitive damages. The major issue on this motion is Gennett's claim for punitive damages for Aremu's participation in a conspiracy to defraud. For the reasons that follow, and as set out in the orders below, I award Gennett default judgment for damages of US$168,442.30, converted into Canadian dollars, plus $100,000 in punitive damages.
Factual and Procedural Background
[2] Gennett brings a motion for default judgment against the defendant, Aremu, for his participation in a complex fraudulent scheme. Gennett has judgments in separate proceedings involving other participants in the alleged conspiracy, namely, Vincent Dogbatse ("Dogbatse"), Eric Hodgi ("Hodgi") and Tashanna Mullings ("Mullings").
[3] As set out in the statement of claim, this litigation involves a fraudulent scheme by which five orders for hardwood flooring were placed by an individual purporting to be Milton Harvey with Gennett, which is a family-owned lumber company. The flooring was paid for with stolen credit cards.
[4] Three of the fraudulent orders were shipped and the losses to Gennett for the goods totalled US$158,930.85. An additional two orders were cancelled during the course of delivery after Gennett became aware of the fraud, and the cost of returning those shipments to its warehouse was US$8,000. Finally, Gennett paid a fee in order to refund the funds obtained by fraud of $1,511.45. Gennett's total losses as a result of the fraud were thus US$168,442.30.
[5] The fraud prompted police investigations and criminal proceedings and parallel civil proceedings against the co-conspirators. Dogbatse, Hodgi, Aremu and Mullings were all charged with criminal offences relating to the fraud.
[6] Dogbatse and Hodgi were alleged to have posed as "Milton Harvey" in order to make the five fraudulent orders from Gennett with stolen credit cards, and were linked to Aremu through phone records and other evidence.
[7] The criminal charges against Dogbatse were stayed. The criminal charges against Hodgi were withdrawn. The criminal charges against Mullings are ongoing with a March 2019 trial date.
[8] Aremu was charged with possession of property obtained by the fraud perpetrated by Dogbatse and Hodgi, and he was found guilty in September 2018. On November 30, 2018, Aremu was sentenced to a conditional discharge, a term of probation for two years and 150 hours of community service.
[9] The statement of claim in this matter was issued on December 4, 2015, and it was served personally on Aremu on January 21, 2016. He was noted in default on April 28, 2016.
[10] On November 30, 2018, immediately before his sentencing, Aremu was served personally with the plaintiff's motion for default judgment, with a return date of January 25, 2019. Aremu made no effort to set aside the noting in default.
[11] Statements of claim in the related civil actions involving the fraud were issued on February 22, 2017, and served on Hodgi personally on March 22, 2017, and on Dogbatse personally on March 31, 2017. On April 21, 2017, Dogbatse and Hodgi were also noted in default. Default judgment was granted by Lederer J. against Dogbatse and Hodgi for fraud on October 30, 2017.
[12] The October 30, 2017 endorsement of Lederer J. also held that Mullings, who was an employee with TD Bank at the material time the credit cards were used to defraud Gennett, was liable for conspiracy in the fraud.
[13] The damages assessed by Lederer J. amounted to US$168,442.30.
[14] Gennett explains that punitive damages against Dogbatse, Hodgi and Mullings were not sought before Lederer J. because criminal proceedings against all three were then pending.
[15] In his endorsement, Lederer J. adjourned Gennett's action against Aremu sine die.
[16] In addition now to seeking default judgment against Aremu for its losses of US$168,442.30 (converted into Canadian funds), Gennett seeks punitive damages in the amount of $200,000. There is no issue as to the quantum of Gennett's loss.
[17] The primary issue in this case is determining if punitive damages are warranted, and if so, the appropriate quantum of punitive damages.
Analysis
Default judgment
[18] Under rule 19.02(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, a defendant who has been noted in default is deemed to admit the truth of the allegations made in the statement of claim. It is well settled that on a default judgment motion, the court will undertake an inquiry into
(a) what deemed admissions of fact flow from the statement of claim;
(b) whether the deemed admissions in fact entitle the plaintiff, as a matter of law, to judgment; and
(c) if not, has the plaintiff adduced admissible evidence which, when combined with the deemed admissions, entitles the plaintiff to judgment.
[19] In this case, the statement of claim alleges the tort of conspiracy against Aremu in the fraud committed against Gennett. Gennett seeks a finding that Aremu was involved in the tort of conspiracy with Dogbatse and Hodgi.
[20] In Agribrands Purina Canada Inc. v. Kasamekas, 2011 ONCA 460, the Ontario Court of Appeal sets out the test for conspiracy as follows:
(a) the conspirators acted in concert, by agreement or with a common design;
(b) their conduct is unlawful;
(c) their conduct is directed towards the plaintiff;
(d) they knew or ought to have known that injury was likely to result to the plaintiff; and
(e) their conduct causes injury to the plaintiff.
[21] In this case, Dogbatse and Hodgi are alleged to be the operating minds of the criminal organization that defrauded the plaintiff. They acted with Aremu, a close friend of Hodgi, who was a self-employed freelance transport service provider. Aremu is identified as the courier for the group who transported the flooring material. The shared purpose of the group was to defraud Gennett. Aremu was arrested on September 14, 2015, for his role in the scheme, and as indicated above, was convicted on September 13, 2018.
[22] On November 30, 2018, Kelly J. issued Aremu a conditional discharge. In her reasons for decision (unreported), at para. 88, she concluded that,
- Mr. Aremu admitted that the hardwood had been obtained through a complex scheme of criminal dishonesty that involved the participation of . . . Vincent Dogbatse and Eric Hodgi . . . During that time period, Mr. Aremu's cell phone was in regular contact with the phone numbers of Vincent Dogbatse and Eric Hodgi. The contact stopped around the same time as the police started looking into the frauds . . . I am satisfied beyond a reasonable doubt that the only inference that can be reasonably be drawn is that when Mr. Aremu possessed the hardwood, he had the requisite knowledge that it had been obtained by the commission of a criminal offence.
[23] Subsequently, in her reasons for sentencing, made on December 3, 2018 (unreported), Kelly J. stated,
On September 13, 2018, I released written reasons for judgment in which I found Mr. Aremu guilty of a single charge of possessing property obtained by crime. The offence stemmed from the three-month period from May 8 to August 8, 2015. The heart of the offence was Mr. Aremu's delivery ten times over three months of very large loads of hardwood flooring while he was willfully blind to the fact that the product had been obtained by the commission of an indictable offence, namely, through of scheme of dishonesty involving Vincent Dogbaste [sic], Eric Hodgi, and perhaps others.
[24] Subsequently, Kelly J. characterized the sentence she imposed on Aremu as "extremely lenient".
[25] In the context of the pleadings and record before me, I am satisfied that the elements of the test for civil conspiracy are satisfied. Aremu acted in concert with Dogbatse and Hodgi to defraud Gennett and his role was to provide the transportation of the flooring products that were stolen from Gennett. There is no question that the actions of the conspirators were directed toward the goal of defrauding Gennett, and causing the losses which in fact ensued. Therefore, Gennett's claim against Aremu, as pleaded, is made out.
Damages claims
Liquidated damages claim
[26] Gennett has calculated its losses as US$168,442.30. This amount includes the loss of hardwood flooring products on three of the five fraudulent shipments, and other related losses, including the cost of returning the remaining two shipments, which were stopped once Gennett became aware of the fraud.
[27] Gennett's entitlement to recover what it actually lost is not contentious in light of the facts pleaded, and the liability of Aremu in relation to the conspiracy to defraud the plaintiff which led directly to those losses.
The punitive damages claim
[28] In addition to seeking recovery for its actual losses, Gennett seeks punitive damages of $200,000. The main issue in this case is determining the appropriate quantum of punitive damages in this context.
[29] In advancing a claim for punitive damages against Aremu, the plaintiff emphasizes that Dogbatse and Hodgi were also found civilly liable for fraud in separate default judgment proceedings. No finding in relation to conspiracy or punitive damages was made in the proceedings against Hodgi and Dogbatse, as they were still before the criminal courts at the time of the default judgment against them. While the nature and scope of the conspiracy as a whole may be relevant to the determination of punitive damages, this claim concerns the liability of Aremu for his part in the conspiracy.
[30] The Supreme Court of Canada stated in Whiten v. Pilot Insurance Co., 2002 SCC 18 ("Whiten") that the purposes of punitive damages relate to retribution, denunciation and deterrence (para. 111). Writing for the majority of the court, Binnie J. described punitive damages in the following terms (at para. 36):
Punitive damages are awarded against a defendant in exceptional cases for "malicious, oppressive and high-handed" misconduct that "offends the court's sense of decency": Hill v. Church of Scientology of Toronto, , at para. 196. The test thus limits the award to misconduct that represents a marked departure from ordinary standards of decent behaviour. Because their objective is to punish the defendant rather than compensate a plaintiff (whose just compensation will already have been assessed), punitive damages straddle the frontier between civil law (compensation) and criminal law (punishment).
[31] In Whiten, Binnie J. outlined the factors which should accompany a trial judge's jury charge where punitive damages are claimed. These factors underlie any determination of punitive damages, including one, as here, in the context of a default judgment. Justice Binnie stated (at para. 94):
To this end, not only should the pleadings of punitive damages be more rigorous in the future than in the past . . . but it would be helpful if the trial judge's charge to the jury included words to convey an understanding of the following points, even at the risk of some repetition for emphasis.
(1) Punitive damages are very much the exception rather than the rule,
(2) imposed only if there has been high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour.
(3) Where they are awarded, punitive damages should be assessed in an amount reasonably proportionate to such factors as the harm caused, the degree of the misconduct, the relative vulnerability of the plaintiff and any advantage or profit gained by the defendant,
(4) having regard to any other fines or penalties suffered by the defendant for the misconduct in question.
(5) Punitive damages are generally given only where the misconduct would otherwise be unpunished or where other penalties are or are likely to be inadequate to achieve the objectives of retribution, deterrence and denunciation.
(6) Their purpose is not to compensate the plaintiff, but
(7) to give a defendant his or her just desert (retribution), to deter the defendant and others from similar misconduct in the future (deterrence), and to mark the community's collective condemnation (denunciation) of what has happened.
(8) Punitive damages are awarded only where compensatory damages, which to some extent are punitive, are insufficient to accomplish these objectives, and
(9) they are given in an amount that is no greater than necessary to rationally accomplish their purpose.
(10) While normally the state would be the recipient of any fine or penalty for misconduct, the plaintiff will keep punitive damages as a "windfall" in addition to compensatory damages.
(11) Judges and juries in our system have usually found that moderate awards of punitive damages, which inevitably carry a stigma in the broader community, are generally sufficient.
[Emphasis added]
[32] In Midwest Amusement Park, LLC v. Cameron Motorsports Inc., 2018 ONSC 4549 (S.C.J.), Perell J. summarized the analysis of punitive damages, in light of these factors (at para. 103):
It follows from Justice Binnie's remarks that an assessment of punitive damages requires an appreciation of: (a) the degree of misconduct; (b) the amount of harm caused; (c) the availability of other remedies; (d) the quantification of compensatory damages; and (e) the adequacy of compensatory damages to achieve the objectives or retribution, deterrence, and denunciation. These factors must be known to ensure that punitive damages are rational and to ensure that the amount of punitive damages is not greater than necessary to accomplish their purposes.
[33] Applying these principles to the case at bar, Gennett's entitlement to punitive damages appears well justified. The fraud perpetrated against Gennett meets the standard of "high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour". Additionally, it is hard to see how simply returning the funds fraudulently acquired would be sufficient, particularly with the goal of deterrence in mind.
[34] Given the findings in the criminal proceedings against Aremu, Gennet argues that there is a clear basis for an award of punitive damages to meet the goals of retribution, denunciation and deterrence in relation to Aremu's misconduct.
[35] In this context, Gennett seeks to have an additional consideration accepted as a factor in the determination of punitive damages, where parallel civil and criminal proceedings take place in relation to the same incident or transaction, or as is alleged in this case, conspiracy. In its factum, Gennett presents its argument for the civil system of justice to perform the role that the criminal justice system has not in the following terms:
Some jurists believe that legal remedies belong in separate jurisdictional fields (criminal versus civil). Other jurists are offended by the quantums of punitive damages, as substantial numbers appear to be plucked out of the air, and the usual procedural protections enjoyed by a criminal accused are not available in the civil courts. Other jurist [sic] are offended by private enforcement of punitive measures.
Our submission is that these views are outdated. Where the criminal system fails to obtain an adjudication on the merits, punishment through the civil system for financial misconduct should be reflected in heightened punitive orders against offenders if our Courts are serious about sending a message to the offenders that financial crime does not pay.
[36] Gennett submits, in other words, that punitive damages be viewed as an alternative venue to achieve the social policy objectives of punishment, at least where criminal cases were not tried on their merits in the matters at issue, and that the quantum of punitive damages reflect this goal. Aremu's case, however, was tried on its merits, and Aremu is subject to a criminal sentence.
[37] In Whiten, Binnie J. stated that the punitive damage awards should be granted only where and if other penalties do not adequately accomplish the objectives of retribution, deterrence and denunciation (at para. 123):
Compensatory damages also punish. In many cases they will be all the "punishment" required. To the extent a defendant has suffered other retribution, denunciation or deterrence, either civil or criminal, for the misconduct in question, the need for additional punishment in the case before the court is lessened and may be eliminated. In Canada, unlike some other common law jurisdictions, such "other" punishment is relevant but it is not necessarily a bar to the award of punitive damages. The prescribed fine, for example, may be disproportionately small to the level of outrage the jury wishes to express. The misconduct in question may be broader than the misconduct proven in evidence in the criminal or regulatory proceeding. The legislative judgment fixing the amount of the potential fine may be based on policy considerations other than pure punishment. The key point is that punitive damages are awarded "if, but only if" all other penalties have been taken into account and found to be inadequate to accomplish the objectives of retribution, deterrence, and denunciation.
[Emphasis added]
[38] The relationship between punitive damages and criminal sanctions was addressed in greater detail by the Saskatchewan Court of Appeal in Branco v. American Home Insurance Co., 2015 SKCA 71, leave to appeal to S.C.C. refused [2015] S.C.C.A. No. 439. In that case, the trial judge awarded significant punitive damages of $3 million against an insurance company (see Branco v. American Home Insurance Co., 2013 SKQB 98). The Court of Appeal ultimately substituted a lower award of punitive damages of $500,000. In the course of its analysis, the Court of Appeal considered the link between punitive damages and criminal sanctions. Writing for the court, Richards C.J.S. stated (at para. 175):
The narrower remedial role of punitive damages is reflected in the fact that they "straddle the frontier" between civil and criminal law. If the actions of a civil defendant are so outrageous, malicious, oppressive or high-handed that a court has no choice but to conclude that the actions are deserving of punishment, a remedy must be available. Accordingly, when criminal sanctions are not available, punitive damages can be used to address the relevant wrongdoing. Few cases require both remedies of this sort. However, their rarity should not be confused with their importance -- punitive damages serve a vital function in sanctioning conduct that cries out for punishment where no other punitive remedy is available.
(Emphasis added)
[39] In McIntyre v. Grigg, , the Ontario Court of Appeal considered whether punitive damages should be awarded against a defendant who also had pleaded guilty to a crime for the same conduct. The court cautioned against an award of punitive damages to accomplish the same goal as the criminal conviction, and set out when such an award should be made (at paras. 79-81):
While the driver Grigg pleaded guilty to, and received a fine for, careless driving, the evidence in the civil trial established that he was significantly impaired and that his conduct should normally warrant a serious punishment. Where a wrongdoer has already been punished for an offence and the same conduct is in question at a civil trial, punitive damages generally will not serve a rational purpose as the sentence imposed in the criminal or regulatory environment will have already met the necessary objectives of retribution, deterrence and denunciation. In our view, there are sound policy reasons for generally not attempting to re-try those proceedings in a civil action. As this court held in Fleury v. Fleury, supra, at para. 11:
Where tortious acts have already been sanctioned by the imposition of a criminal sentence, it is inappropriate to award punitive damages in a civil lawsuit. To do so is to punish twice for the same offence. Where, however, the civil proceedings establish that . . . the sentence does not fully sanction the tortfeasor's behaviour . . . punitive damages may be awarded [footnotes omitted].
In our view, a court in a civil proceeding should generally demonstrate deference to the decision of the other court. Otherwise, the review of the appropriateness of a penalty administered in a criminal court, for example, could be viewed as a collateral attack on that decision. In our opinion, the "disproportionality" test enunciated by Binnie J. in Whiten in relation to the wrongful conduct and the penalty imposed is one that should be approached with considerable caution.
We believe that the facts in the present case present one of those rare instances where the disproportionality test applies. It was rational for the jury to conclude that punitive damages would denounce Andrew Grigg's conduct and signal the need for general deterrence of impaired driving. Given Andrew Grigg's fine of $500, punitive damages would not amount to double punishment and indeed would be more appropriate punishment.
[40] With this caution in mind, other courts have found punitive damages are not available in contexts where a defendant has been subject of a criminal conviction for the same conduct (see, for example, Cobb v. Long Estate, 2017 ONCA 717).
[41] In this case, there is no indication in the record as to why the criminal proceedings against Dogbatse and Hodgi were stayed and withdrawn, respectively. Additionally, I do not find a basis to conclude that the criminal sentence given to Aremu for his part in the fraud was insufficient with respect to punishment, though the allegations in this civil action go beyond the issue of possessing stolen property, which was the sole matter dealt with by the criminal proceedings against Aremu.
[42] While the presence and outcome of parallel criminal proceedings may be a relevant consideration in the determination of punitive damages, this must be seen within the overall framework of proportionality and rationality.
[43] I am also guided by the following comments from Binnie J. in Whiten (at para. 74):
[T]he governing rule for quantum is proportionality. The overall award, that is to say compensatory damages plus punitive damages plus any other punishment related to the same misconduct, should be rationally related to the objectives for which the punitive damages are awarded (retribution, deterrence and denunciation).
[Emphasis in original]
[44] I turn now to the factors set out in Whiten which are to be weighed in the assessment of proportionality.
Proportionate to the blameworthiness of the defendant's conduct
[45] The role of Aremu within the conspiracy was not as significant as Dogbatse and Hodgi. Aremu was alleged to have coordinated and provided the transportation for fraudulently acquired flooring materials.
Proportionate to the degree of vulnerability of the plaintiff
[46] Gennett is a corporate entity and there is no indication that its commercial viability was jeopardized by this fraud. There is no indication of vulnerability in the record in relation to Gennett.
Proportionate to the harm directed specifically at the plaintiff
[47] In this case, the pleadings and the record lead to the conclusion Aremu was willfully blind as to the fact that the hardwood flooring he transported was stolen, and that he coordinated transportation of the stolen material with other participants in order to carry out the fraud against Gennett.
Proportionate to the need for deterrence
[48] This factor militates for a higher award of punitive damages in the context of financial fraud.
[49] Gennett argues that deterrence is particularly important in the context of financial crimes and fraud where the persons committing the offences usually do so after careful planning and coordination, and where the decision to commit the crimes may be subject to a cost-benefit analysis on the part of those involved. See R. v. Pavao, 2018 ONSC 4889 (S.C.J.), at paras. 23-24.
[50] Additionally, other courts already have recognized the need to increase the range of punitive awards in relation to fraud in order to better reflect the goals of deterrence. In Elekta Ltd. v. Rodkin, 2012 ONSC 2062 (S.C.J.), for example, Brown J. (as he then was) noted in relation to previous large awards in the contexts of fraud (at para. 31) "the message . . . does not seem to be sinking in to the consciousness of the Ontario public . . . I think it is time to raise the range of possible awards of punitive damages made in cases involving serious, protracted fraud by an employee who works in a position of trust handling the funds of his employer."
Proportionate after taking into account other penalties
[51] As discussed above, I do not find that the criminal sanction imposed on Aremu was insufficient, but it dealt with only a portion of his involvement in the scheme, and did not reflect the overall justification for punitive damages flowing from the fraud as a whole. It is not possible to draw inferences from the stay and withdrawal of criminal charges against other participants in the conspiracy. All it is possible to conclude is that some aspects of this conspiracy have been dealt with by the criminal court, while other aspects have not been.
Conclusion
[52] In addition to compensatory damages, I am satisfied that the goals of retribution, deterrence and denunciation in the case of this organized fraud justify punitive damages.
[53] The plaintiffs seek punitive damages of $200,000. Applying the factors set out above, I find the sum of $100,000 is justified. With adjustments for the difference in currency, this award of punitive damages is roughly 50 per cent of the actual losses suffered by Gennett, which reflects the governing rule of proportionality. An award of punitive damages that is equal to or higher than the actual losses suffered by Gennett would not be rational given the criminal sentence already imposed on Aremu and the absence of vulnerability on the part of Gennett in this case. At the same time, an award of punitive damages that is a minor fraction of the actual losses of Gennett, or could be factored in as a modest risk in participating in an organized fraud, would not reflect sufficiently the goals of retribution, denunciation and deterrence in this context.
Orders
[54] As a result of the analysis above, this court issues the following declaration and orders:
(a) this court declares that the defendant Samuel Oluwaremilekum Aremu is liable for the conspiracy for the fraud, as alleged as against the defendants Vincent Dogbatse and Eric Hodgi of Court File No: CV-17-570182;
(b) this court orders that the defendant Samuel Oluwaremilekum Aremu pay the plaintiff's damages in the amount of US$168,442.30, jointly and severally, with the defendants Vincent Dogbatse and Eric Hodgi of Court File No: CV-17-570182, and the defendant Tashanna Mullings of Court File No.: CV-16-558714;
(c) this court orders that the judgment is in the amount of the Canadian currency necessary to purchase US$168,442.30 in a Schedule A Canadian bank as listed in Schedule 1 to Canada's Bank Act (S.C. 1991, c. 46) on the first day before payment is received by the plaintiff, and that such bank quotes a Canadian dollar rate for their purchase of U.S. currency;
(d) this court orders that the defendant Samuel Oluwaremilekum Aremu pay to the plaintiff $100,000 in punitive damages;
(e) this court orders that the defendant Samuel Oluwaremilekum Aremu pay to the plaintiff prejudgment interest in the amount of $5,502.25 and that this order bears post-judgment interest at the rate of 2 per cent per annum.
Costs
[55] Costs of this motion are fixed at $10,000, all inclusive, payable by the defendant Aremu to Gennett within 30 days.
Motion granted.