COURT FILE NO.: 31-1228005

DATE: 2012-05-03

ONTARIO
SUPERIOR COURT OF JUSTICE

IN THE MATTER OF THE BANKRUPTCY OF 684804 ONTARIO LIMITED OF THE CITY OF MISSISSAUGA IN THE REGIONAL MUNICIPALITY OF PEEL

CITY PEEL TAXI Plaintiff/Applicant – and – VICTORYA HANNA, DANNY FREEMAN and KOBRA HANNA Defendants/Respondents

M. Katzman , for the Plaintiff/Applicant

N.C. Bader , for the Defendants/Respondents Victorya Hanna and Danny Freeman
Kobra Hanna , Self-Represented Defendant/Respondent

HEARD: March 22, 23, 29 and 30, 2010; July 19, 20 and 21, 2010; September 23, 2010, December 23, 2010 and November 9, 2011

REASONS FOR JUDGMENT

Wilton-Siegel J.

[ 1 ] The issue in this trial is whether the actions of 684804 Ontario Limited (“684”), Kobra Hanna (“Kobra”), Victorya Hanna (“Victorya”) and Danny Freeman (“Danny”) with respect to six telephone numbers of 684, that were associated with taxi services in the community of Mississauga (referred to herein as the “Telephone Numbers”), offended the provisions of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 (the “BIA”), the Fraudulent Conveyances Act , R.S.O. 1990, c. F.29 (the “FCA”) or the Assignments and Preferences Act , R.S.O. 1990, c. A.33 (the “APA”) and, if so, whether any of Kobra, Danny or Victorya are liable for any damages flowing from any such infringement.

Procedural Background

[ 2 ] 684 filed an assignment in bankruptcy on July 9, 2009 and BDO Dunwoody Limited (the “Trustee”) was appointed trustee of the estate of 684.

[ 3 ] The List of Creditors (Form 78) sent to creditors of 684 by the Trustee together with the Notice of Bankruptcy and First Meeting of Creditors (Form 67) included an amount for the applicant Ghassan El Garib (the “applicant”) in the amount of $171,856.80 as an unsecured claim. The applicant subsequently filed a proof of claim as an unsecured creditor in the amount of approximately $193,000. There is no evidence that the Trustee disallowed this claim.

[ 4 ] The present proceeding was authorized by an order dated October 19, 2009 of Registrar Nettie. The operative paragraph of that order is paragraph 1, which authorizes the applicant:

…to commence and prosecute proceedings in his own name and at his own expense and risk for the purpose of claiming an Order setting aside certain alleged preferential payments and fraudulent conveyances of the property of the Bankrupt including the telephone numbers of the bankrupt referred to in Schedule “A” attached to this Order made by the bankrupt to “The Cab Company” and its principals Victorya Hanna and Danny Freeman, Kobra Hanna and the company that is thought to be intending to operate under the name “The Black Cab” or some variation thereof as well as its principals … and to enforce as against the said proposed defendants the trustee’s right to recover any property of the bankrupt or proceeds of the disposition of the property of the bankrupt in its possession.

[ 5 ] The applicant initially proposed to amend the statement of claim in his earlier Action (as defined below) to incorporate the claim authorized by Registrar Nettie. Ultimately, however, the parties agreed to an order of C. Campbell J. dated November 16, 2009 directing a trial of the following issue:

…whether any transaction on the part of 684804 Ontario Limited, Danny Freeman and Victorya Hanna with respect to the assets of 684804 Ontario Limited offended the provisions of Ontario’s Fraudulent Conveyances Act, Assignments and Preferences Act or the Federal Bankruptcy and Insolvency Act , and, if so are Kobra Hanna, Danny Freeman and/or Victorya Hanna liable for any damages flowing therefrom.

Preliminary Comments Regarding the Factual Determinations in these Reasons

[ 6 ] Before proceeding, I wish to identify certain features of the evidence in this trial that made the process of factual determinations unusually difficult.

[ 7 ] First, there is a significant lack of documentary evidence. In particular, there are practically no financial records of 684 in evidence. To the extent such records exist, they remain with the Trustee who did not participate in this proceeding. Similarly, there is very little documentation pertaining to the relationship between 684 and The Cab Company (defined below). As a result, there are large gaps in the evidence and conflicting oral evidence on a number of matters for which there is no easy basis of resolution.

[ 8 ] Second, the evidence of the parties consists of affidavit evidence supplemented by oral evidence at trial without any prior discovery or cross-examination. In certain cases, the evidence of the parties at trial conflicted with the evidence set out in their respective affidavits or with earlier oral testimony at trial. In large measure, I think this was due to the lapse of time between the relevant events and the date of the trial. However, in the absence of documentary evidence to refer to, it is difficult to resolve such inconsistencies.

[ 9 ] Third, the action was characterized by strong animosity between the applicant and the defendants as a result of the breakdown in negotiations over the sale of 684, and the consequences to 684 of the applicant’s departure from 684 in the autumn of 2008. As a result, Kobra, and to a lesser extent Victorya and Danny, sought to use the action to assert claims against the applicant to offset any award that might be made by the court. They also sought to challenge the amount of the applicant’s claim in the bankruptcy. For the reasons set out below, the court is not in a position to address these issues.

[ 10 ] Fourth, each of the parties approached the litigation as, in part, a trial regarding the responsibility for the demise of 684 and an opportunity to fix moral if not legal blame on the other parties. This issue is not directly relevant to the applicant’s claim. However, this backdrop to the proceeding had the effect not only of lengthening the proceeding but also distorting the focus of oral testimony of the parties from time to time.

[ 11 ] Fifth, Kobra’s husband, Maroun Hanna (“Maroun”), had a significant involvement in the relevant events but was not a witness in this proceeding. Maroun died during this trial. However, none of the parties had indicated an intention to call him as a witness prior to his death for unexplained reasons.

[ 12 ] Sixth, as a result of the foregoing matters, it is difficult to assess the credibility of the witnesses. I have dealt with particular instances of apparently contradictory testimony of two witnesses below. However, I am unable to conclude that any one of the parties was, as a general matter, more credible than the others. Instead, I have made credibility findings on specific issues based on the presence or absence of documentary evidence except where indicated.

Factual Background

The Parties

[ 13 ] 684 carried on business as City Peel Taxi in Mississauga, Ontario. All of the shares of 684 were owned by Maroun and Kobra. They had been estranged since 1993.

[ 14 ] City Taxi was one of the oldest and most recognized taxi cab companies in Mississauga. Maroun and Kobra did not start the business. However, they acquired City Taxi many years earlier and ran it successfully for many years before the events giving rise to this litigation. More recently, they also acquired Peel Taxi and merged its business with that of City Taxi within 684.

[ 15 ] Victorya is the daughter of Maroun and Kobra. She has been married to Danny since 1996. Victorya worked for her parents in the business, commencing part-time when she was in high school and then becoming full-time shortly after she graduated from high school. Danny worked for the business on a part-time and a full-time basis commencing in the mid-1990’s.

[ 16 ] The applicant has been owner of a limousine service in Mississauga since 1993. During 2008, as described below, the applicant negotiated to purchase the business of 684. In the course of these negotiations, the applicant made certain loans to 684 which gave rise to his unsecured claim in the bankruptcy of 684.

(Continues verbatim…)

Wilton-Siegel J.

Released: May 3, 2012

City Peel Taxi v. Victory Hanna, 2012 ONSC 2450

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

CITY PEEL TAXI Plaintiff/Applicant – and – VICTORYA HANNA, DANNY FREEMAN and KOBRA HANNA Defendants/Respondents

REASONS FOR JUDGMENT

WILTON-SIEGEL J.

Released: May 3, 2012