COURT FILE NO.: 31-1594606

DATE: 20120413

SUPERIOR COURT OF JUSTICE – ONTARIO
(BANKRUPTCY)

RE: IN THE MATTER OF THE PROPOSAL OF CAROL-ANNE BANDIERA, AN INDIVIDUAL OF THE CITY OF BARRIE IN THE PROVINCE OF ONTARIO

BEFORE: MORAWETZ J.

COUNSEL:
I. Katchin, for the Plaintiff, St. Clair Pharmacy Ltd. et al

Carol-Anne Bandiera, In Person

HEARD: April 5, 2012

RELEASED: April 13, 2012

ENDORSEMENT

[ 1 ] St. Clair Pharmacy Ltd., Felice Battista Inc., Evans’ Drug Store Limited, 1069878 Ontario Ltd., 1402266 Ontario Ltd., 904584 Ontario Limited, 976307 Ontario Inc., 709640 Ontario, 1342132 Ontario Limited, 1354981 Ontario Ltd., Felice Battista, and Silvana Battista (collectively, the “Plaintiffs) in Court File No. CV-11-436798 (the “Action”), bring this motion pursuant to s. 69.4 of the Bankruptcy and Insolvency Act (“BIA”) for a declaration that the stay of proceedings in effect as a result of s. 69.2 of the BIA no longer operates in respect of the Action as against, the defendant in the Action, Ms. Bandiera.

[ 2 ] The affidavit of Silvana Battista sets out the basis of the Action as against Ms. Bandiera. The relief claimed is summarized at paragraph 53 of the affidavit.

[ 3 ] Under s. 69.4 of the BIA , the court may make the requested the declaration if it is satisfied:

(a) that the creditor or person is likely to be materially prejudiced by the continued operation of the stay; or

(b) that it is equitable on other grounds to make such a declaration.

[ 4 ] The controlling authority is Ma, (Re) 2001 24076 (ON CA) , 24 C.B.R. (4 th ) 68 (C.A.). “In considering an application for leave, the function of a bankruptcy court is not to inquire into the merits of the action sought to be commenced or continued. Instead, the role is one of ensuring that sound reasons, consistent with the scheme of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3, exist for relieving against the otherwise automatic stay of proceedings”.

[ 5 ] Ma went on to note that the onus in on the applicant to establish a basis for the order within the meaning of s. 69.4.

[ 6 ] In this case, the Plaintiffs take the position that they will be materially prejudiced by the continued operation of the stay and that it is equitable that the relief sought be granted as, among other things:

(a) the action against Ms. Bandiera is based in fraud, deceit, conspiracy and conversion, to which a discharge from bankruptcy would not be a defence;

(b) Ms. Bandiera is a necessary party to the within action for the complete adjudication of the matters in issue involving the other defendants;

(c) the proposal was filed the day after Ms. Bandiera was served with the Mareva injunction materials suggesting that the proposal is an attempt to defeat any claims of the Plaintiffs or their efforts to preserve Ms. Bandiera’s assets;

(d) the proposal was filed four days after the Mareva injunction was granted, rendering the Mareva injunction a nullity;

(e) the Plaintiffs are very concerned under the circumstances that, unless an order confirming the Mareva injunction nunc pro tunc is granted, and a stay of proceedings is lifted or otherwise set aside, funds will be transferred out of the jurisdiction, or will be otherwise dissipated and the Plaintiffs will never recover the funds owed to them;

(f) Lederer J. stated in his endorsement that Ms. Bandiera diverted large sums of the Plaintiffs’ money to her own use and that the fraud amounted to a total of at least $400,000; and

(g) given the extent of the misappropriation and the impending closing of the sale of the property, the failure to make proper recovery of these funds (which will occur if the relief sought herein is not granted) could be devastating and will materially prejudice the Plaintiffs.

[ 7 ] I agree with the position put forth by the Plaintiffs. In my view, the Plaintiffs have demonstrated that, if successful in this action, the debt will likely survive any discharge from bankruptcy obtained by Ms. Bandiera. Given the presence of other defendants, some of whom are related to Ms. Bandiera, there is no benefit to be gained by waiting for Ms. Bandiera to be discharged from bankruptcy before proceeding with the Action.

[ 8 ] Further, it seems to me that the actions taken by Ms. Bandiera immediately after being served with the Mareva injunction materials, gives rise to an inference that she is taking steps to deliberately delay the Plaintiffs.

[ 9 ] Based on the foregoing, I have concluded that the Plaintiffs have met both parts of the s. 69.4 test. I am satisfied that this is a case where it is appropriate to grant the requested declaration under s. 69.4 such that the stay of proceedings is no longer in effect with respect to the Action against Ms. Bandiera.

[ 10 ] I have also determined that it is appropriate to confirm the Mareva injunction on an nunc pro tunc basis. Lederer J. stated in his endorsement that Ms. Bandiera diverted large sums of the Plaintiffs’ money to her own use and that the fraud amounted to a total of at least $400,000. Ms. Bandiera acknowledged that she has been found guilty in criminal proceedings relating to this matter. Given the extent of the misappropriation and the impending closing of the sale of the property, I am satisfied that this is an appropriate case to recognize and confirm the Mareva injunction on a nunc pro tunc basis.

[ 11 ] In the result, the motion is granted.

[ 12 ] The Plaintiffs also requested costs on a partial-indemnity basis in the amount of $5,159.63. I am satisfied that costs should follow the event. However, I am also of the view that the requested amount of costs is excessive for two reasons. First, the original assessment of the file did not require the services of three senior practitioners. Second, the amount of time expended would appear to be somewhat excessive. Costs are awarded on a partial-indemnity basis in the amount of $3,600, inclusive of HST and disbursements.

[ 13 ] An order shall issue in the form presented, save for the provision relating to any breach of this order or previous orders would entitle the Plaintiffs to move for contempt proceedings against Ms. Bandiera (paragraph 4). In my view, such a provision is somewhat anticipatory in nature and should not form part of the formal order.

MORAWETZ J.

Date: April 13, 2012