COURT FILE AND PARTIES

COURT FILE NO.: CV-10-9014-CL
DATE: 20120525
SUPERIOR COURT OF JUSTICE – ONTARIO
(COMMERCIAL LIST)

RE: CHRISTINE MARIE HAUNERT-FAGA, Applicant

AND:

STEPHEN LEONARDO GLEN FAGA, Respondent

BEFORE: CUMMING J.

COUNSEL:
Chris Reed and Bruce Smith, for the Receiver
M. Susan Balz, for Stephen Faga
Maurice J. Neirinck, for G. Capara & Faga Group Construction Limited
Samuel J. Robinson, for Cordiano/Crignano Group
Jonathan Cooperman, for the Receiver, A. Farbar & Partners Inc.

HEARD: MAY 11 and 17, 2012

ENDORSEMENT

[ 1 ] The Receiver brings a motion on a multitude of matters, setting forth in its Second Report dated May 3, 2012 the history and submissions in support of the motion.

[ 2 ] Christine Marie Haunert-Faga (“Christine”) and Steven Leonardo Faga (“Steven”) were divorced on June 9, 2007. Judgment was given in favour of Christine for some $4 million including substantial lump sum payments for child support of $1,299,822 and spousal support of $1,512,844 and for the equalization payment.

[ 3 ] It is alleged her husband Steven concealed his assets. This resulted in a Preservation and Receivership Order by Campbell J. on December 8, 2010 in aid of execution to overcome the alleged asset concealment and realize upon the judgment. A. Farber & Partners was appointed Receiver.

[ 4 ] The Receiver has pursued the matter. This has not been an easy task given the complexity of related family companies and the alleged willingness of family members to assist Steven in defeating Christine’s efforts to realize upon her judgment. The Receiver retained Froese Forensic Partners Inc. (“Froese”) as forensic investigators.

[ 5 ] The Receiver and Froese had some success which includes: the so-called Absolute settlement of $1 million ($500,000 in escrow with the Receiver and $500,000 to be paid on September 15, 2012); the so-called Dominus settlement of $150,000; a net of approximately $400,000 from the sale of the Westbury property and a settlement of some $350,000 through the agreed-to liquidation of Manulife accounts. This means there will be about $1.8 million in September 2012 provided the $500,000 September 15 payment is received.

[ 6 ] To date Christine has received $61,000 on account of her promised equalization payment. Christine’s equalization payment was to be paid in part by the receipt of 50% of the shares in Delzap Corp. with a putative market value of $686,000. The corporation is a holding company for a parcel of real property; however, the sale has been held up by reason of environmental concerns by prospective purchasers.

[ 7 ] The Receiver has received accounts to date from its second counsel, Mr. Chris Reed, totalling some $ 97,000 which accounts have already been paid. The forensic investigator has submitted accounts to the Receiver totalling $412,226.32, as yet unpaid. The first counsel to the Trustee, Gowlings, has submitted accounts, as yet unpaid, totalling $746,608.61 but reduced voluntarily to $681,058.61 by counsel. The Receiver’s fees to date total $252,073.24 and have not been paid.

[ 8 ] Hence, the Receiver seeks approval for a total of $1,345,358.17 in outstanding professional fees.

[ 9 ] The motion of the Receiver seeks approval of these fees and the authority to pay these fees “in the Receiver’s discretion” once funds are available, subject to making an immediate payment (with the approval of the professionals) to Christine of $50,000.

[ 10 ] There are further properties to be dealt with and the Receiver intends to continue with further investigations. The Receiver may be able to recover more assets. The holding in abeyance of any ruling and approval in respect of professional fees must not impede such further investigations and actions as the Receiver considers advisable. The Receiver notes his concern about limitations of actions deadlines and may seek further directions if the Receiver is of the view that the possible benefits through further investigations are outweighed by further costs.

[ 11 ] The Receiver seeks court approval for the Absolute settlement and the Dominus settlement. Christine has consented to both.

[ 12 ] There is a concern as to the extent of the professional fees to date. It seems probable that Christine may well have a very significant shortfall in recovery after the payment of professional fees.

[ 13 ] There shall be an immediate distribution in all events of $50,000 to Christine; however, it is important to determine whether this amount may be allocated against the outstanding equalization payment and not against the outstanding amount in respect of support, recognizing that a judgment for support will survive any future bankruptcy proceeding. The issue of allocation will be argued on July 5, 2012.

[ 14 ] Christine advised the Receiver she was unable to attend the hearing on May 11, 2012. It is important that she be present. Apart from the limited matters dealt with in today’s hearing all other matters for which the Receiver seeks approval are adjourned to be dealt with at the continuation of the hearing to be held September 20 and 21, 2012. The Court directs that Christine appear at the July and September hearings. In the interim the Receiver is not to make any distributions in payment of any professional fees.

[ 15 ] An order will issue approving the Absolute and Dominus settlements. As well, an order will issue dealing with the liquidation of the Manulife assets.

[ 16 ] I shall remain seized of this matter.

CUMMING J.
Date: May 25, 2012