Court File and Parties

Court File No.: CV-21-00001073-0000 Date: 2022 02 18

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

A.J. LANZAROTTA WHOLESALE FRUITS & VEGETABLES LTD. Plaintiff

- and -

UNITED FARMERS, 2773125 ONTARIO INC., 2773125 ONTARIO INC. o/a UNITED FARMERS, JANET MICHELLE BRUNTON and WAYNE D. KING Defendants

Counsel: Tyler H. McLean, for the Plaintiff Christopher Steinburg, for the Defendants

Heard: November 24, 2021

Reasons for Judgment

Fowler Byrne J.

[1] The Plaintiff, A.J. Lanzarotta Wholesale Fruits & Vegetables Ltd. (“A.J. Lanzarotta”), brought an urgent motion, without notice, seeking a Mareva injunction and a Norwich Order. On March 30, 2021, Justice Beilby granted the relief on a temporary basis, ordered that the motion and order be served, and that the matter return to court on April 8, 2021.

[2] On April 8, 2021, the matter was before Justice Doi, who ordered that the injunction continue, ordered disclosure, and made the application returnable on April 23, 2021, so that the Defendants could apply for an allowance for living expenses. The Application was otherwise adjourned to a hearing de novo with respect to the Mareva injunction on September 20, 2021. The motion on April 23, 2021, was dealt with on consent.

[3] The matter appeared before Justice Mandhane on September 20, 2021. On that day, the matter was adjourned to November 24, 2021. A further order was made that the orders of Justice Doi, of April 8, 2021, and April 23, 2021, remain in full force and effect.

I. Issues

[4] The Defendants do not object to the continuation of the Norwich Order and the issue of interim living expenses has been decided. Accordingly, the issues to be decided by me are as follows:

a) Is the Plaintiff entitled to an interim and interlocutory injunction against the Defendants, restraining them from selling or otherwise disposing of its assets, including those listed in the Notice of Motion?

b) Should this injunction include property that the Defendants may not have an ownership interest in, but have power over, directly or indirectly?

II. Materials Relied on

[5] Between the parties, approximately 4,000 pages of evidence were filed. The parties’ original facta exceeded the page limit – one by almost twice, and the other by almost three times. In her wisdom, Justice Mandhane ordered that the parties file factums that comply with the Notice to the Profession, which capped the factum at 20 pages.

[6] For this motion, the following documents were referred to:

a) The original motion record served by the Plaintiff, dated March 23, 2021;

b) The Responding Motion Record of the Defendants, dated June 7, 2021;

c) The Reply Motion Record, dated June 25, 2021;

d) The Affidavit of Jessica DiLeo, sworn June 24, 2021;

e) The Supplementary Motion Record of the Defendants, dated July 12, 2021;

f) The Second Supplementary Motion Record of the Defendants, dated August 12, 2021;

g) The Factum of the Plaintiff, dated October 19, 2021; and

h) The Factum and Book of Authorities of the Defendants, dated October 15, 2021.

[7] In addition, counsel made available the transcripts from the cross-examinations on all the affidavits.

[8] Finally, the parties relied on the motion record of the Defendants, dated April 21, 2021, wherein the Defendants sought living expenses, as well as the Plaintiff’s responding affidavit, sworn April 22, 2021.

III. Background

[9] The Plaintiff, A.J. Lanzarotta Wholesale Fruits & Vegetables Ltd., ("A.J. Lanzarotta'), is a full-service fruit and vegetable ("Produce") distribution end processing company located in Mississauga, Ontario, which concentrates on wholesale distributing.

[10] The Defendants, Janet Michelle Brunton (“Brunton”) and Wayne D. King (“King”), first met with the Plaintiff in August 2020, and indicated that they operated a business called United Farmers, and that they wished to purchase Produce to deliver it to clients in Northern Ontario and Canada. While the Defendants first paid for the Produce “cash on delivery”, the terms of payment were soon extended to 15 days. Business picked up considerably and within months, the Plaintiff’s receivable account climbed to $1,766,349.00.

[11] The debt is not disputed. The issue on this motion is whether the Plaintiff is entitled to a Mareva injunction. In essence, the Plaintiff claims that Brunton and King defrauded them, lied to them about their end client in order to obtain the Produce on credit, and has hidden away or dissipated the proceeds of sale of almost $2 million of Produce. The Defendants claim that they have done nothing wrong, are simply behind in their payments, and hope to pay this receivable in full when they are paid by their own clients.

IV. Issue 1: Is the Plaintiff Entitled to a Mareva Injunction?

A. Law

[12] The overriding consideration in determining the Plaintiff’s entitlement to a Mareva injunction is whether the Defendants threaten to, or so arrange their assets, as to defeat the Plaintiff in any attempt to recover from the Defendants, in the event the Plaintiff prevails and obtains judgment: See Aetna Financial Services v. Feigelman, [1985] 1 S.C.R. 2, at page 24.

[13] To obtain a Mareva injunction, the moving party must:

a) Provide full and frank disclosure of all matters in his or her knowledge, which are material for the judge to know;

b) Show a strong prima facie case, providing particulars of the claim against the Defendants, stating the grounds of their claim and the amount thereof, and fairly stating the points made against it by the Defendants;

c) Provide grounds for believing that the Defendants have assets in the jurisdiction;

d) Provide grounds for believing that there is real risk of the assets being removed from the jurisdiction, or disposed of within the jurisdiction, or otherwise be dealt so that they will be unable to satisfy a judgment awarded to them; and

e) Provide an undertaking as to damages.

See Chitel et al. v Rothbart et al. (1983), 39 O.R. (2d) 513 (C.A.), at para. 44.

[14] As with all motions which seek injunctive relief, the court must consider whether the moving party will suffer irreparable harm and whether the balance of convenience favours granting the injunction.

1. Full and Frank Disclosure

[15] The Defendants argue that the Plaintiff did not make full and frank disclosure in their motion.

[16] As stated in Chitel at para. 18, if there is less than full and accurate disclosure in a material way or if the moving party misleads the court on a material facts in the original application, the court will not exercise its discretion in favour of the plaintiff and will not continue the injunction.

[17] The moving party on an injunction must not only present its case in the best possible light, as if arguing a contested matter, but it is also incumbent on the moving party to make a balanced presentation of the facts, including advising the court of facts or law that may favour the opposing party: Stans Energy Corp. v. Krgyz Republic, 2015 ONSC 3236 (Div. Crt.), at paras. 37-39.

[18] A material fact is one that would have been weighted or considered by the motions judge in deciding whether it would have changed the outcome: Stans Energy, at para. 39 and 41.

[19] A court has the discretion to continue an interlocutory injunction if the undisclosed facts are not material or the non-disclosure was unintentional. In deciding whether to exercise its discretion to continue an injunction in the face of non-disclosure, the court should consider the following:

a) the practical realities that there is often urgency or an emergency that explains why the motion is made without notice;

b) whether facts were intentionally suppressed or whether simple carelessness or ignorance was the cause of the non-disclosure;

c) the pervasiveness of the non-disclosure;

d) the difficulty of determining what is a material or an immaterial non-disclosure; and

e) the significance to the outcome of the motion of the matters that were not disclosed to the court.

O2 Electronics Inc. v. Sualim, 2014 ONSC 5050, at para. 75.

[20] The Defendants rely on a few examples of the Plaintiff’s failure to disclose all material facts.

[21] First, the Plaintiff states that they first met King and Brunton in August 2020, while the Defendants point out that King first attended at the offices of the Plaintiff in January 2020 to make inquiries. Nothing transpired as a result of that earlier attendance. I do not find that is a material fact. This is not a fact that I would weigh in considering the appropriateness of the injunction.

[22] Second, the Defendants state that the Plaintiff omitted the fact that it was desperate for the Defendants’ business. This is the reason for the extended credit, not the alleged misrepresentations. I do not agree that the record substantiates that the Plaintiff was desperate for business. Yes, I agree that they wanted the business, perhaps even really wanted this business, but the Plaintiff is an established wholesaler, with sales managers, credit managers, and has multiple other clients. They have been able to continue in business despite this rather large receivable. There is no evidence of “dire” financial circumstances or desperation when the business was first obtained. The only mention of desperation on the part of the Plaintiff was when the account remained outstanding for so long.

[23] Thirdly, the Defendants claim that the Plaintiff failed to disclose that they wanted to poach the Defendants’ clients and squeeze them out. Again, there is no evidence to support this allegation.

[24] Fourthly, the Defendants state that the Plaintiff failed to disclose that the Plaintiff did not advise the Defendants of the debt until late October 2020. It was not until then that the Defendants stopped purchasing despite the Plaintiff’s invitations to keep buying. I disagree that this is a material omission. Whether or not the Plaintiff failed to notify the Defendants of the debt is of no consequence. The Defendants received the invoices and can calculate the running payables themselves. It is not the Plaintiff’s duty to constantly remind them of how much they owe. The fact that the Plaintiff continued to offer to sell the Produce to the Defendants after this debt accumulated is material, but only to support to the Plaintiff’s argument that they believed the Defendants were able to pay, due to the representations made.

[25] Lastly, it is argued that the Plaintiff did not disclose that the principles Tina Lanzarotta (“Tina”) and Gus Lanzarotta (“Gus”) were not concerned about the Defendants dissipating their assets if the injunction is lifted. This is a mischaracterization of the evidence given by Tina, who specifically stated that she was concerned that the assets have already been dissipated.

[26] Accordingly, I find that the Plaintiff made the proper disclosure upon bringing this motion for injunctive relief.

2. Strong Prima Facie Case

[27] The Plaintiff’s claim is for damages the sum of $1,786,349, based on fraudulent misrepresentation. In the alternative, the Plaintiff claims breach of contract, unjust enrichment, breach of trust or constructive trust, and oppression.

[28] The Mareva injunction covers the assets of Brunton and of King, if any are ever located. Accordingly, to find them personally liable, the Plaintiff must show that Brunton and/or King made fraudulent misrepresentations. For the purposes of this injunction, the Plaintiff must show a strong prima facie case of fraudulent misrepresentation on the part of Brunton and King.

[29] Fraudulent misrepresentation is established if a Plaintiff can show, on the balance of probabilities that:

a) The defendant made a false representation of fact to the plaintiff;

b) The defendant knew the representation was false, did not believe it was true, or was reckless as to its truth;

c) The defendant intended that the plaintiff rely on the representation;

d) The plaintiff acts on the representation; and

e) The plaintiff suffers a loss in relying on the representation.

See Midland Resources Holding Ltd. v. Shtaif, 2017 ONCA 320, at para. 162, leave to appeal to S.C.C. refused, [2017] S.C.C.A. No. 246; McGee v. Samra, 2021 ONSC 2540, at para. 53-54.

[30] A great deal of the affidavit evidence presented is contradictory and cannot be decided without a full trial. That being said, there is sufficient uncontradicted evidence before me, in the way of texts or admissions, to show that false statements were being made to the Plaintiff, with the full knowledge that they were false, or at least with reckless disregard as to their truth.

[31] It is not disputed that King and Brunton represented that they purchased Produce and that the Produce was flown by plane to the northern indigenous communities. What is disputed is that King or Brunton represented that United Farmers, or 2773125 Ontario Inc., had a contract with the government to supply the Produce and that King personally flew the Produce to the north or that he owned the plane that did so.

[32] These representations were critical to the Plaintiff because the existence of a government contract virtually guaranteed payment and thus would allow them to extend their line of credit with their bank and weather the storm until which time payment came through. The fact that the Defendants had their own plane to do the deliveries. gave them confidence that United Farmers was a legitimate business with assets behind it.

[33] Brunton claims that she took care of the administration and financial part of the business, and that King was in charge of the actual delivery. Brunton claims to completely rely on what King has told her with respect to their client or clients and claims to have never met the key individual in their business, who is identified as John Dentt. As will be seen, I am satisfied on the evidence that King and Brunton knowingly misled the Plaintiff, and at a minimum, Brunton recklessly disregarded the truth of what she told the Plaintiff.

i. Existence of Government Contracts

[34] In their evidence, King and Brunton have admitted to making misleading statements.

[35] King admitted that he allowed himself to be identified as the “V.P.” of United Farmers on the credit application to the Plaintiff, while the company had not yet been incorporated. He also stated that his business of providing Produce existed before meeting Brunton, but he allowed her to identify herself as the president of United Farmers as a sign of the role he wanted her to play.

[36] In text communication on September 17, 2020, with Philip Corino, a sales representative with the Plaintiff, Brunton referred to the requirements of the government for billing:

Brunton: Phil, I have some questions: How many Crown broccoli per pallet? How many super Colossal onions per pallet? How many Yukon gold jumbo potatoes per skid? How many canola oil per skid? How many vegetable oil per skid? Sorry to ask such dumb questions, but I have to break down everything and divide per reserve, hence the need to know the numbers per each skid and/or pallet. Thank you!

Corino: Jan, these are excellent questions and until yourself band [sic] Wayne came along even I didn’t know the answer to these.

Brunton: it’s the way the government is asking me to do these P.O.’s…

[37] On September 18, 2020, Brunton sent an email to the Plaintiff which states:

After discussions with our clients in the Ontario region, our Federal account would like us to furnish with them the following products (emphasis mine):

[38] In an email dated September 24, 2020, Brunton sent an email to the Plaintiff which started off with:

Hi everyone,

After meeting with the Chiefs of the Reserves for Northern Ontario and Alberta, we have simplified our Standard Orders to reflect skid lots instead of individual products broken down into ten.

[39] Brunton now admits that she never met with the Chiefs. She states this is written as it was told to her by King.

[40] King has indicated that he may have mentioned that he had a contract to sell to First Nations in Northern Ontario, but he actually was referring to a verbal agreement with his cousin, John Dentt, and not to a contract with the federal government. Brunton states that she understood that when King said “we” verbally, he was referring to her, King and Dentt together. The Defendants have identified John Dentt as a “trustee” who had a contract or agreement to supply Produce to the indigenous communities of the north. They sold to Dentt, who in turn sold to these communities. The Defendants provided little or no independent evidence that this arrangement was disclosed to the Plaintiff until after a sizeable debt had amassed.

[41] The evidence is clear that Tina Lanzarotta (“Tina”) was asking for proof of government contracts when the receivable grew so extensive and payments slowed down considerably. At some point after a sizeable debt was incurred, the Plaintiff was advised of the existence of the “trustee” who obtained payment from the indigenous communities, who then remitted it to King.

[42] Once the Plaintiff was made aware of the “trustee”, it still required proof that there was a government contract at the centre of it all. On February 5, 2021, after numerous requests for proof of the government contracts, Brunton emailed Tina with the subject line “List of Billed Accounts for Reserves re United Farmers”. It contained a list of accounts, but no contracts. Brunton wrote:

List of Billed Accounts for Reserves re United Fanners

1. Department of Indian Affairs
2. Department of Indian Affairs - Northwest Territories
3. Department of Indian Affairs -Sault Ste. Marie North
4. Department of Indian Affairs-Yellowknife
5. Northern Affairs
6. Northern Affairs- Byng Inlet
7. Northern Affairs- Frobisher Bay
8. Northern Affairs- Hudson Bay
9. Northern Affairs-Inlet Lake
10. Northern Affairs-Sioux Lookout
11. Northern Affairs -Six Nations
12. Northern Affairs -Thunder Bay
13. Northern Affairs – Wawa

[43] As the account receivable had grown so considerably, the Plaintiff was seeking to extend their line of credit with their bank so that they could continue to operate until payment was received. While the Plaintiff received a list of clients, it was not what was required. Tina has provided the following text exchange between her and Brunton in or around February 24, 2021:

Tina: Hi Jan, we are still trying to increase our line of credit. Our bank manager has asked my father again to confirm that the 1.7 million is related to a government contract. Can you please provide back up so we qualify. We really need your help/cooperation.

Brunton: What back up? Do you mean the contract itself?

Tina: I need something in writing from you or the trustee stating the amount owed/Contract and or government program funding. We have asked numerous times but no one has forwarded info. My dad does not want to confirm something to the bank without back up., We are very desperate to get this approved.

Brunton: Okay, I will talk to Wayne about this.

Tina: Appreciated.

[44] Later that day, Tina followed up with Brunton to see the documentation was forthcoming.

Brunton: I spoke again with the parties involved from our meeting two weeks ago. Our vendors are starting to pay us. Due to COVID they are behind. We receive the money from our vendors we will direct it to you right away. More vendors will be paying us as directed in our meeting two weeks ago. We will be forwarding funds by courier in a certified cheque.

Tina: Understood but our bank manager wants my dad to confirm that the 1.7 is under a government contract. We will not get the extra funding if we can not confirm. Jan we have asked for this info for months. My dad needs something – the money is coming does not cut it with the bank.

Brunton: I have been in contact with Wayne and the other parties of the meeting, and Wayne is consulting with his lawyer to supply the proper paperwork.

Tina: You’re the best! Talk tomorrow.

[45] When nothing was forthcoming, the texts show that Tina asked for a copy of the statements that Brunton sent out for payment so that she could at least verify that money was owed to the Defendants, that could eventually be used to pay the Plaintiff. Brunton responded that she could not do that without King’s consent, which she could not get.

[46] What is compelling in this text exchange is that no where does Brunton try to clarify any misunderstanding or misconception of the nature of their business. No where does she try to clarify that she does not have a government contract, or that the government contract is with Dentt. She simply states that the matter is with King and that he is working with the lawyers.

[47] Janet now claims that she was not aware of the exact nature of the contract between Wayne, Dentt, and the First Nations communities and was not even sure there was a contract. She now realizes there was an oral agreement between Wayne and Dentt for the company to supply fresh product to Dentt, who would then deliver it to First Nations customers.

[48] What is also telling is the Defendants’ argument that the party who has the contract, or some relationship with the Indigenous communities, is John Dentt. Brunton has never met Dentt. No representative of the Plaintiff has met Dentt, who King identifies as his cousin. It is alleged that Dentt visited the Plaintiff’s place of business in September 2020 but inexplicably, never went into the office to meet anyone. In his examination, King was asked to bring all correspondence with Dentt. He indicated that there was none. The handwritten invoices by United Farmers from September 2020, indicate that customer is Department of Northern Affairs, with various locations, not “John Dentt”. The accounting documents of 2773125 Ontario Inc. shows the customer as “Northern Affairs” with various locations, or “Department of Indian Affairs”. There is no mention of Mr. Dentt being their actual customer.

[49] King has indicated that he started working with Dentt in 2019. No where does he provide any documentary evidence of this previous employment relationship.

[50] Investigations on the part of the Plaintiff show that Dentt is more than likely fictious. Surprisingly, the Defendants did not provide any independent evidence that John Dentt actually exists or was involved in any way.

ii. Ownership of a Plane

[51] The Plaintiff also relied on representations made by King that he owned a plane and flew the Produce to the north. King denies owning a plane or that he ever told anyone he was a pilot. In fact, the Plaintiff’s investigations reveal he neither owns a plane nor is he a pilot.

[52] King’s communications do not attempt to dispel the idea that he is a pilot. In text communication with Corino on October 4, 2020, he stated:

King: Just finished meeting at Jan’s moms every thing is on the right track to finally streamline receivables have started to flow Tina will receive lots of payments this week every day starting Monday and the planes will be in the air starting 2am Tuesday morning hold to your pants its going to be busy for thanks giving

Corino: Great news. Let’s get this thing going like a well oiled machine.

King: Or a well oiled out of date cargo with a lot of rust and that’s just the pilot.

Corino: Haha…well rusted machine

King: Shipper Gus.

[53] There is no mention was made of another individual being the pilot or that the Produce was being flown by Dentt.

[54] In King’s affidavit, sworn July 12, 2021, he states:

4. However, I did say on several occasions that “we” delivered the supplies by plane or that “we” flew the supplies up north to the reserves. I may have said “we” when planes or flying north came up in conversation as well. When I said “we” I was referring to the trustee, John Dentt, as well. Dentt and I are cousins and had been working together for over a year prior to starting business with the plaintiff. I viewed us as a team along with Jan and 277. Dentt’s business leases the planes that fly the supplies up north.

5. I never intended to mislead anyone when I said these words. It was just easier to say “we” in casual conversation rather than always referring to the trustee and trustee’s planes.

6. I believe this is what some of the plaintiff’s affiants are referring to when they describe my comments about flying or owning planes.

[55] Originally, King took the position that the plane or King Air was owned by Dentt. He then changed that evidence in his affidavit sworn July 12, 2021:

7. I would like to make a correction to my first affidavit, sworn June 7, 2021. In that affidavit, at paragraph 73, I stated that King Air is a company owned by Dentt and that the plaintiff’s invoice to King Air was a result of Dentt buying a load of avocados that I did not want. This is not correct and is the result of a miscommunication between me and my lawyer.

8. Dentt does not own any company known officially or unofficially as King Air. Rather, at the time, Dentt said he would ask a competitor air transport company, known as King Air, if they wanted the plaintiff’s produce that I did not want. Dentt called me back and said King Air would take it.

9. I believe that this may be the same King Air that the plaintiff located through a corporate record search contained in Tina’s first affidavit. I believe the owners of King Air that I was dealing with were south asian and of Indian descent

iii. Reliance by Plaintiff and the Consequences Thereof

[56] Upon viewing the written communication between the parties, it is clear that Brunton and King were representing that they had a contract with the government and that they were flying the Produce up north. Given that King has admitted that he may have said “we” went he did not mean to, and that Brunton now states that she really had no first-hand information of any of this, I have no difficulty in finding that King and Brunton purposively misrepresented these facts or were reckless with regards to the truth of the facts. I also find that it was the intention of the Defendants that the Plaintiff relied on these misrepresentations so that the Produce would continue to be supplied without payment.

[57] I also find that the Plaintiff continued to supply Produce in reliance of these misrepresentations. As indicated in the texts from Tina, she has been asking for months for the government contracts, to show to their bank. The existence of the government contract was key to them. They relied on the misrepresentation that the federal government was a party to the business in some way and agreed to provide Produce valued close to $2 million. As a result, the Plaintiff is out of pocket $1.7 million.

3. Assets in the Jurisdiction

[58] While no assets belonging to King have been discovered in Ontario, Brunton has bank accounts and real property.

4. Risk of Assets Being Removed

[59] The Plaintiff points to the fact that they have sold over $1.7 million dollars in Produce but the Defendants cannot account for the proceeds of their sale. The Produce sold is perishable. The Defendants would have had to dispose of it in short order. The Defendants’ evidence is that they did dispose of the Produce and that it mostly was sold to Dentt in late 2020.

[60] The Mareva requirement that there be risk of removal or dissipation of assets, can be established by inference, as well as by direct evidence. Inference can arise from the circumstances of the fraud itself, taken in the context of all the surrounding circumstances: Sibley & Associates LP v. Ross, 2011 ONSC 2951, at para. 63; 2092280 Ontario Inc. v. Voralto Group Inc., 2018 ONSC 2305 (Div. Crt.), at para. 22.

[61] The facts as presented allow me to draw an inference that the Defendants will attempt to hide any monies that they may have to satisfy this debt. Their conduct between August 2020 and March 2021, show an active effort to mislead the Plaintiff as to who their real clients were and to provide any real accounting of when they expect to be able to satisfy the debt. They have provided no evidence as to the likelihood of Dentt getting paid, and then paying them. They have taken no steps to collect on their debt from Dentt or start enforcement proceedings. They have provided no evidence that the debt will actually be paid, and provided no evidence that Dentt even exists, let alone that Dentt acknowledges his debt to the Defendants. The books and records of United Farms and 2773125 Ontario Inc., such as they are, do not even show Dentt as a customer.

[62] I also find that there is a risk that Brunton’s real property assets may be transferred but for this injunction. The evidence of Brunton and her mother is that Brunton has no beneficial interest in the real property and that the property really belongs to Marilyn Brunton. It can just as easily be transferred back to Marilyn Brunton if this injunction is lifted, thereby frustrating any attempt by the Plaintiff to realize on their judgment.

[63] I also infer the Defendants’ intention to avoid payment of any judgment from the method in which they conduct business. They have no formal contracts and rely on oral agreements. As indicated in Brunton’s email of February 5, 2021, invoices for the Produce are given to Dentt. When Dentt paid, he would give payment to King (which could be in cash, cheque, or money order) who would then put it in his bank and withdraw cash to give to Brunton. She would deposit the cash and pay the bills. It is unnecessarily complicated and makes the tracing of proceeds of sale very difficult.

[64] The Defendants argue that there is no intent to defeat its creditors. They point to Brunton’s efforts to continually communicate with the Plaintiff and let them know the status of matters. I do not accept this. The communications were misleading and Brunton either knew or was recklessly blind to their truth.

[65] Accordingly, I find that the Defendants have arranged their business affairs in such as way as to defeat any effort by the Plaintiff to collect on their debt.

5. Undertaking

[66] The Plaintiff has provided the requisite undertaking.

6. Irreparable Harm and Balance of Convenience

[67] Irreparable harm, is harm that cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. The probability of irreparable harm increases as the probability of receiving damages decreases: RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, at page 341; Christian-Philip v. Rajalingam, 2020 ONSC 1925, at para. 33-34.

[68] This is not a situation where the Plaintiff can retake possession of the Produce and try to mitigate their losses. The Produce is gone. The only recourse they have is payment. King is basically judgment proof. Dentt is no better than a ghost. The only recourse the Plaintiff has, is Brunton who claims to not own anything beneficially.

[69] In this case, I find that the Plaintiff will suffer irreparable harm if the injunction is lifted. The likelihood of payment is more unlikely now, than it was when the relationship began. If, in fact, Dentt does exist, it has now been more than 2 years since they gave him the Produce and they have commenced no action against him. It is also telling that no third-party action was ever started against Dentt.

[70] The balance of convenience favours keeping the injunction in place. If payments of any kind are forthcoming, the Defendants can arrange for a partial or temporary release of the injunction to facilitate payment to the Plaintiff. Arrangements have already been made for Marilyn to open her own accounts and have access to her ongoing income. In the event Marilyn has an urgent need to have access to her real property, she can bring the matter back before the court and seek interim relief.

7. Conclusion

[71] I am satisfied that the Plaintiff has proven all the elements necessary to support a Mareva injunction as against the assets of King and Brunton. Accordingly, the Mareva injunction shall remain in place.

V. Issue 2: What can be Frozen?

[72] The Defendants argue that Brunton’s assets that are own jointly with her mother, Marilyn Brunton, are actually only owned beneficially by Marilyn Brunton, and should not be subject of this injunction.

[73] It is clear that Brunton is on title to three properties, which title was assumed prior to her going into business with King. We know that Brunton actually lives in one of the properties, pays the expense associated with it, and used its address as the business address for United Farmers and/or 2773125 Ontario Inc.

[74] Originally, the real property that Brunton owns, was owned by her parents James Brunton and Marilyn Brunton. In September 2016 and October 2017, all properties were transferred to her parents and herself as joint tenants. These properties were so transferred before Brunton’s business dealing with King. As evidenced by the will of her late father, her mother was the primary beneficiary of his estate, but had her mother not survived, the estate would go entirely to Brunton. Brunton produced the reporting letters associated with these transfers, and no where is it mentioned that this was done for estate planning purposes. No trust agreement was produced.

[75] Brunton’s mother, Marilyn Brunton, swore an affidavit indicating that she is the beneficial owner of all real properties and that Brunton was added for estate planning purposes. Marilyn Brunton’s affidavit indicated that she added Janet to her bank accounts in May 2020, after the death of her husband and as an estate planning measure. She indicated that she is the only one that uses those accounts. She maintains two of the real properties and allows Brunton to live in one, as long as she covers the expenses associated with it.

[76] One-half of the bank accounts have already been released to Marilyn. It is not possible to secure only one-half of a property held as a joint tenants. Whether or not Marilyn intended to gift these assets to Brunton, is very much dependant on her intention at the time of the transfer. This is a triable issue. While Marilyn Brunton and Brunton agree on her intention, this evidence has not been tested by an adversarial party on cross-examination. It is premature at this stage of the proceedings, to make a final determination of beneficial ownership of Marilyn Brunton and Brunton’s jointly owned property.

[77] Accordingly, the injunction will remain in place with respect to all property, whether solely or jointly held by Brunton, pending trial.

VI. Conclusion

[78] For the foregoing reasons, I make the following orders:

a) On an interim and interlocutory injunction basis, the Defendants, and their servants, employees, agents, assigns, officers, directors and anyone else acting on their behalf or in conjunction with any of them, and any and all persons with notice of this injunction, are restrained from directly, or indirectly, by any means whatsoever:

1. selling, removing, dissipating, alienating, transferring, assigning, encumbering, or similarly dealing with any assets of the Defendants, wherever situate, including but not limited to the assets and accounts listed in Schedule “A” hereto;

2. instructing, requesting, counselling, demanding, or encouraging any other person to do so; and

3. facilitating, assisting in, aiding, abetting, or participating in any acts the effect of which is to do so.

b) The said restriction applies to all of the Defendants’ assets, whether or not they are in their own name and whether they are solely or jointly owned. For the purpose of this order, the Defendants’ assets include any asset which they have the power, directly or indirectly, to dispose of or deal with as if it were their own. The Defendants are to be regarded as having such power if a third party holds or controls the assets in accordance with his direct or indirect instructions;

c) This order may be registered against those properties listed in Schedule “A” to the Notice of Motion;

d) The Defendants may re-apply for an order, varying the existing April 23rd, 2021, Order of Justice Doi on FOURTEEN days’ notice to the Plaintiff, specifying the amount of funds which the Defendants are entitled to spend on ordinary living expenses and legal advice and representation;

e) The Toronto Dominion Bank, located at 2472 Lakeshore Boulevard West, Toronto, Ontario (the “Bank”) to forthwith freeze and prevent any removal or transfer of monies or assets of the Defendants held in any account or on credit on behalf of the Defendants, with the Bank, until further order of the Court;

f) All institutions and third parties forthwith disclose and deliver up to the Plaintiff any and all records held by them concerning the Defendants’ assets, accounts and business records including the existence, nature, value and location of any monies or assets or credit, wherever situate;

g) An order that this Order will cease to have effect if any of the Defendants provide security by paying the sum of $1,766,349.71 into Court, and the Accountant of the Superior Court of Justice is hereby directed to accept such payment;

h) Anyone served with, or notified of, this Order may apply to the Court at any time to vary or discharge this Order, on fourteen (14) days notice to the Plaintiff;

i) This injunction shall continue until this matter is disposed with via Trial, or by further order of this Court;

j) The parties are encouraged to resolve the issue of costs as between them. If they are unable, the Plaintiff shall serve and file written costs submissions, limited to two pages, double space and single-sided, exclusive of Costs Outline, on or before March 11, 2022; the Defendants shall serve and file their responding submissions, with the same size restrictions, which submissions shall include a Costs Outline, no later than March 25, 2022; the Plaintiff may serve and file Reply submissions, limited to 2 pages, on or before April 1, 2022; and

k) The remainder of the motion is dismissed.

Fowler Byrne J.

Released: February 18, 2022