SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: Alex Komarnycky, Mark Komarnycky, Andrew Komarnycky, Fred Baggie, Lara Babbie, Marika Babbie, Michael Babbie, Dennis Wickie, Irene Wickie, Zenon Stachiw, Larysa Stachiw, James Loewen, Ryan Schwerdtner, Katisha Rasheed, Omar Rasheed, Mohamed Rasheed, Ryan Purchase, Parminderpal (Sonia) Bains, Dharampal Brar, Amritpal Brar, Michael Holowka, Robert Holowka, Ilda Neves, Duarte Neves and Jon Olynick, Plaintiffs

AND:

Jason Robert Laramee, RBL Capital Inc., RBL Capital Corporation, Monster Realty Corporation, c.o.b. as Brekland Realty Group, Anthony Ramsaroop, BTI Bluetooth Technologies Inc., Renata Dawn Schumaker Laramee and Breqlynn Hera Developments Inc., Defendants

BEFORE: D. M. Brown J.

COUNSEL: J. Adair and G. McGuire, for the Plaintiffs

HEARD: November 13 and 16, 2012

REASONS FOR DECISION

I. Whether a motion for Mareva and Norwich orders should be heard ex parte

[ 1 ] The plaintiffs, investors in a now-bankrupt company, RBL Capital Corp., sue the company’s principal, Jason Laramee, his wife, Renata Laramee, and others for damages for fraud, knowing receipt and unjust enrichment. This past Wednesday the plaintiffs brought before me a motion seeking an ex parte Mareva injunction against Laramee, his wife, a business associate, Anthony Ramsaroop, and a related company, BTI Bluetooth Technologies Inc. Alternatively, the plaintiffs sought Norwich orders in respect of any financial institution in Ontario in which those defendants maintained bank or other accounts.

[ 2 ] I heard the argument, took the matter under reserve, and then re-opened the motion, as explained in my Reasons of November 14, 2012: [1]

3/ In the course of preparing my Reasons I reviewed the court’s Case History Report for this action. It recorded that on September 26, 2012 the defendant, RBL Capital Inc., filed a statement of defence. I could not find a copy of that statement of defence in the motion record.

4/ Although on this motion no relief was sought against RBL Capital Inc., the evidence linked Jason Laramee to that corporation. The affidavit of Damian Wickie suggested that he and Jason Laramee were co-owners of RBL Capital Inc. In addition, the list of RBL Corp. receivables, to which counsel referred me in argument, listed receivables due from RBL Capital Inc. Michael Babbie referred to those receivables in paragraph 13 of his affidavit. Mr. Wickie, in paragraph 21 of his affidavit, deposed that he knew of no legitimate business reason for Laramee to have transferred funds from RBL Capital Inc. to RBL Corp.

5/ Moreover, Mr. McGuire, one of the plaintiffs’ counsel, filed an affidavit sworn November 9, 2012 in which he deposed, in paragraph 8, that all defendants had advised his firm that they intended to defend the action, and “some have served our office with a Notice of Intent to Defend”. His affidavit did not mention a filed statement of defence.

6/ The standard of disclosure on an ex parte motion is very high. The moving party must present, to the best of its knowledge, the points that could be fairly made against it by the defendant. I do not know whether the information recorded on the court’s Case History Report is accurate or not. However, if RBL Capital Inc. in fact filed a statement of defence, that pleading should have been placed before me on the motion.

7/ Accordingly, I am re-opening the motion which was argued yesterday, and I require the moving parties to file a supplementary motion record containing the RBL Capital Inc. pleading, if one was delivered. If that statement of defence was delivered, then I will wish to hear why it was not disclosed by the plaintiffs. I will then consider the motion following those further submissions.

[ 3 ] The plaintiffs then filed a Supplementary Motion Record which contained an affidavit from a legal secretary setting out the state of the pleadings in this action. On November 16, 2012, I heard further submissions from counsel for the plaintiffs.

[ 4 ] Upon reviewing the additional materials and considering counsel’s submissions, I decline to consider this motion on an ex parte basis, and I require the plaintiffs to give notice of this motion to the responding parties. Let me first briefly describe the allegations in this action, and then explain why I have concluded that notice must be given.

II. Factual overview

[ 5 ] The evidence disclosed that Jason Laramee owned an investment business, RBL Capital Corp., together with a real estate agency, Monster Realty Corporation, which operated as Brekland Realty Group. As well, Laramee was a 50% shareholder in RBL Capital Inc., a licensed mortgage brokerage, with Damian Wickie.

[ 6 ] On January 3, 2012, the Real Estate Council of Ontario (“RECO”) contacted Monster Realty to arrange a routine inspection of its books and records. Prior to the inspection Monster Realty staff advised RECO of shortages in the brokerage’s trust accounts dating back to the previous September, and RECO received a January 18, 2012 email, purportedly from Laramee, stating:

Please accept this letter as formal notice that funds are missing from the deposit account. This is all my fault due to improper accounting on my part. I will not be at the audit tomorrow. I am sorry to have done this.

The next day RECO learned that Laramee had attempted to commit suicide. He survived.

[ 7 ] On January 24, 2012, RECO inspected the books and records of Monster Realty. It discovered a shortfall of just over $700,000 in the company’s trust accounts.

[ 8 ] On February 1, 2012, RECO issued a freeze order directing a branch of the Bank of Montreal to hold any assets of Monster Realty. RECO discovered that Laramee and his wife owned at house at 351 Lakeshore Road West, Oakville, and a cottage at 1183 Elgin House Road in Port Carling. RECO promptly registered the Freeze Order against title to the Oakville and Elgin House Properties.

[ 9 ] The Oakville Property was subject to a Home Trust first mortgage ($1.725 million) and a collateral second mortgage to Howard Sokolowski ($350,000). The Elgin House Property, bought by Laramee and his wife in October, 2011 for $3.7 million, was subject to a vendor take-back mortgage ($2.9 million), as well as the collateral second mortgage registered against the Oakville Property. In late June, 2012, the Elgin House Property was sold under power of sale; there was no surplus. Home Trust is attempting to sell the Oakville Property under power of sale.

[ 10 ] RBL Corp. made an assignment in bankruptcy in early February, 2012. The Statement of Affairs sworn by Laramee listed liabilities to unsecured creditors of $8.229 million and to secured creditors of $605,000. (The plaintiffs were listed as unsecured creditors on the Statement of Affairs.) Assets were listed at $608,000. Although Laramee identified $5.063 million in accounts receivable owing to RBL Corp., his statement described them as “doubtful”. While the moving parties placed in evidence the minutes of the first meeting of creditors and the first inspectors’ meeting, the record contained little additional information about what has transpired in the administration of the bankruptcy. Counsel understood that no BIA s. 163 examinations had been conducted to date.

[ 11 ] Many individuals had invested money through RBL Corp. Some of those investors commenced an action in this court this past April against Laramee, his wife and others claiming $3.5 million in damages for fraud. The pleadings in that proceeding were not placed in evidence. Counsel stated that he was not aware of the plaintiffs in that other action having sought a Mareva injunction.

[ 12 ] The plaintiffs in this proceeding also invested in RBL Corp. They commenced this action on August 21, 2012, seeking damages, and Laramee, his wife and BTI Bluetooth Technologies Inc. were served with the statement of claim at that time.

III. Analysis

[ 13 ] A Mareva injunction is an extraordinary remedy. On a motion seeking a Mareva injunction a moving party must make full and frank disclosure of all material matters within his or her knowledge. As well, it must:

(i) give particulars of the claim against the defendant, stating the grounds of the claim and the amount thereof, and the points that could be fairly made against it by the defendant, and demonstrate that it has a strong prima facie case;

(ii) provide grounds for believing that the defendant has assets in the jurisdiction;

(iii) establish grounds for believing that there is a real risk of the assets being removed out of the jurisdiction, or disposed of within the jurisdiction or otherwise dealt with so that the defendant would be unable to satisfy a judgment made against him or her; and,

(iv) give an undertaking as to damages. [2]

[ 14 ] In the present case there are two reasons why I am not prepared to consider and determine this motion on an ex parte basis.

[ 15 ] First, my review of the record has raised concerns as to whether the plaintiffs have made full and frank disclosure of materials facts, so I am not prepared to adjudicate the rights of the responding parties without an opportunity to hear from them.

[ 16 ] As mentioned, when I reviewed the court’s Case History Report for this action it recorded that defendant, RBL Capital Inc., had filed a statement of defence. A copy had not been included in the initial motion record. One was filed with the supplementary motion record. Counsel submitted that the omission of the RBL statement of defence from the initial motion record resulted from a judgment call by him that it did not contain any material information. I accept that what transpired resulted from a good faith exercise of judgment by counsel but, with respect, the omission of the only defence filed to date in this action from the initial motion record raises the inevitable question, at least in my mind, as to whether any other material facts or information was not included in the record as a result of other judgment calls.

[ 17 ] In addition, co-counsel for the plaintiff filed an affidavit [3] in the initial motion record in which he deposed to the state of the pleadings:

The defendants to this action have all advised Adair Morse LLP that they intend to defend the action. Some have served our office with a Notice of Intent to Defend. All except the defendant Laramee are represented by counsel.

That evidence was not accurate. Disclosure was not made of the filed statement of defence. Further, the plaintiffs noted Jason Laramee in default on October 16, 2012. Mr. Laramee, in a September 20 letter to counsel for the plaintiffs, had served a notice of intent to defend, and had written: “I will be seeking to retain legal counsel and representation.” Evidently no further communication passed between Mr. Laramee and counsel for the plaintiffs before the noting in default occurred. Finally, although Renata Laramee has filed a notice of intent to defend, she did so after the plaintiffs had noted her in default.

[ 18 ] These inaccuracies in counsel’s affidavit may appear to be small things to the plaintiffs. Mr. Adair stated that he bore any responsibility for the too general, and inaccurate, nature of that portion of his colleague’s affidavit. I appreciate his candor on that point. But the difficulty remains, in the context of an ex parte motion, that if errors were made on matters where I happened to have the ability to check their accuracy because of access to the Case History Report, how can I assure myself, to the degree necessary on an ex parte motion, that other mis-statements of fact are not present in the materials?

[ 19 ] As is well known, judges are reluctant to make ex parte orders affecting the legal rights and interests of a person not before them for a very simple reason, one well summarized by Meehan J. in M. (S.) v. C. (J.R.) where he wrote:

It may be that an injunction is necessary and it might not unduly prejudice the rights of the defendant, but at this time such a belief is mere conjecture. Both sides of the story are necessary for a proper determination. For this reason I do not believe that the injunction should be given on an ex parte basis. The courts simply cannot conduct a proper balancing of the parties' rights on an ex parte basis. [4]

[ 20 ] The absence of a party from the courtroom when a request is made for an order affecting his or her rights places a very high duty and burden on the party seeking the order. That duty is to make full and frank disclosure of all material facts – i.e. facts which might make the decision doubtful or might affect the outcome of the motion. The burden on the moving party to make full disclosure is a high one, and rightly so in a court system which operates on principles of openness, transparency and the adversarial presentation of cases. In Sparkle Ventures v. At My Accounting Department [5] I reviewed, at length the meaning and practical application of the obligation on a party to make full and frank disclosure of material facts on an ex parte motion.

[ 21 ] In the present case, the errors which I discovered in the evidence filed by the plaintiffs have led me to question whether the high burden of disclosure has been met and to conclude that the interests of justice require me to exercise my discretion and decline to consider this motion on an ex parte basis.

[ 22 ] Second, as Corbett J. explained in Robert Half Canada Inc. v. Jeewan, ex parte orders usually are granted only in cases where there exists some element of “extraordinary urgency” in the sense that (i) there is good reason to believe that the defendants, if given notice, will act to frustrate the process of justice before the motion can be decided or (ii) where there is simply not the time or means to provide notice. [6]

[ 23 ] Neither condition exists in the present case. Obviously there was ample time and means to give notice – from the affidavits of served filed it appears that the Statement of Claim was served on the defendants shortly after it was issued on August 21, 2012. Some defendants have since filed a statement of defence or notices of intent to defend, and two have been noted in default.

[ 24 ] As to whether there is good reason to believe that if the defendants were given notice they would act to frustrate the process of justice before the motion could be decided, the evidence gives little basis to so think. News of the difficulties with Laramee’s business broke last February. RECO issued Freezing Orders against the Oakville and Elgin House Properties at that time. Some investors sued Laramee and his wife this past April. That lawsuit made the pages of the Toronto Star.

[ 25 ] Moreover, the plaintiff investors served Laramee, his wife and Ramsaroop in August with their statement of claim, paragraph 1(g) of which contained a request for “an interim, interlocutory and permanent injunction restraining the Defendants from disposing of or encumbering any of their assets”. In sum, for the better part of this year Laramee and his wife have known that investors were coming after them in lawsuits, and since late August they have known that these plaintiffs would be seeking a Mareva -type injunction.

[ 26 ] In light of the ample notice the plaintiffs already have given the respondents about their intention to freeze their assets, and the absence of any specific evidence in the record suggesting that, if given notice of this motion, the respondents would act to frustrate the order sought, I am not persuaded that the plaintiffs have demonstrated the need to hear their motion on an ex parte basis.

IV. Conclusion

[ 27 ] For these reasons I decline to consider this motion on an ex parte basis. I require the plaintiffs to give notice of this motion to the responding parties. Although Ramsaroop, BTI Bluetooth Technologies, Renata Laramee and Breqlynn Hera Developments were noted in default, shortly thereafter they served notices of intent to defend specifying that they were represented by counsel. The evidence disclosed that the plaintiffs are prepared to consent to the setting aside the noting in default of Ramsaroop and BTI Bluetooth Technologies. Although Jason Laramee has been noted in default, he did file a notice of intent to defend which provided an address for service and, in the circumstances of this case, I find that he is entitled to notice.

[ 28 ] In order to facilitate the scheduling of the motion on notice, the plaintiffs may return the motion before any judge on the Commercial List; I will not seize myself of the case.

____________ (original signed by) ______________

D. M. Brown J.

Date : November 17, 2012

[1] 2012 ONSC 6435

[2] See Aetna Financial Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2 and the cases cited in Sibley & Associates LP v. Ross (2011), 106 O.R. (3d) 494 (S.C.J.), para. 11.

[3] I would note that counsel who swore the affidavit appeared gowned at the hearings of the motion. That is not permitted. If counsel chooses to give evidence through an affidavit, as a general rule that counsel may not appear as advocate on the hearing which considers his evidence: Law Society of Upper Canada, Rules of Professional Conduct, Rule 4.02(1).

[4] (1993), 13 O.R. (3d) 148 (Gen. Div.), para. 27.

[5] 2011 ONSC 1972.

[6] (2004), 71 O.R. (3d) 650 (S.C.J.), paras. 31, 36 and 38.