ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 07-CV-343589PD3

DATE: 20140815

BETWEEN:

LAWYERS' PROFESSIONAL INDEMNITY COMPANY

Creditor

– and –

LISA DANIELLE NICOL also known as LISA D. NICHOL also known as LISA NICHOL

Debtor

– and –

AMPERSAND GROUP

Garnishee

Ian K. Latimer, for the Creditor

Chris Argiropoulos, for the Garnishee

HEARD: August 11, 2014

PERELL, J.

REASONS FOR DECISION

A. INTRODUCTION

[1] In a garnishment hearing, the Creditor, Lawyers’ Professional Indemnity Company (“LawPro”), seeks a judgment that the Ampersand Group and its principal, Sean Baird, pay $142,156.64 plus prejudgment and postjudgment interest.

[2] LawPro alleges that Mr. Baird and Ampersand Group are jointly liable for contravening Notices of Garnishment by making salary payments to Lisa Nicol, a judgment debtor (and now a bankrupt), notwithstanding that Ampersand Group had been served with two Notices of Garnishment.

[3] The core allegation is that Mr. Baird knowingly had the various entities that comprise the Ampersand Group pay Ms. Nicol for her services notwithstanding the Notices of Garnishment.

[4] LawPro also wishes to pierce the corporate veil to make Mr. Baird personally liable for the wrongful payments made by the various Ampersand Group entities.

[5] For the reasons that follow, I order that the Ampersand Group and Mr. Baird are jointly and severally liable to pay LawPro $42,000 plus pre and postjudgment interest plus costs on a substantial indemnity basis.

B. FACTUAL AND PROCEDURAL BACKGROUND

[6] Ms. Nicol is the estranged wife of Mr. Baird.

[7] Mr. Baird, through the agency of an entity known as Ampersand Group, manages and controls the operation of a group of restaurants.

[8] Because Mr. Baird has not answered all his undertakings, refused to answer numerous questions on his cross-examination, and did not comply with the March 28, 2014 Order of Master Hawkins to answer questions, it is not clear whether he or Ampersand Group, which is the registered business name of 1233724 Ontario Inc., and which may have at some time been his sole proprietorship, owns the various restaurant businesses, but it is clear that Ampersand Group manages and controls these businesses.

[9] It is also clear that the restaurants that comprised the Ampersand Group were indebted to pay salary to Ms. Nicol.

[10] Colloquially speaking, Ampersand Group cut the cheques for the entities comprising the Ampersand Group, which entities included several restaurants in or around Burlington, Ontario. The restaurants included the Pita Pit, SB Prime, The Dickens, Eatalia, Rude Native Bistro, and Urban Tavern.

[11] Because Mr. Baird did provide an authorization and direction to the Canadian Imperial Bank of Commerce (“CIBC”) to disclose banking records to LawPro, some information about payments to Ms. Nicol was revealed.

[12] The CIBC produced numerous cheques payable to Ms. Nicol. The cheques were signed by Mr. Baird and drawn on the accounts of the Ampersand Group and on the accounts of the various restaurant businesses Ampersand Group managed, controlled, and perhaps owned.

[13] It was disclosed that Ampersand Group, Ampersand Hospitality, Ampersand Group AI, Ampersand Group PC, Allapa Enterprises Inc., Dickens Burlington Inc., The Charles Dickens, Rude Native, Rude Native Bistro & Lounge, 2353008 Ontario Inc., Brinner Enterprises Inc., and 2384160 Ontario Inc., all made payments to Ms. Nicol by cheques cut by Mr. Baird personally.

[14] The evidence established that Ms. Nicol has been an employee and perhaps occasionally an independent contractor through a sole proprietorship known as “I Manage.” She has been providing services to the Ampersand Group since at least 2002 and continues to do so.

[15] The evidence established that on January 25, 2008, Scotia Mortgage Corporation obtained a judgment against Ms. Nicol for $129,586.71.

[16] On February 26, 2008, Scotia Mortgage Corporation issued a Notice of Garnishment for $130,603.43 to Ampersand Group for payment of its indebtedness to Ms. Nicol and the Notice was served on the Ampersand Group.

[17] On July 15, 2008, Ampersand Group, in a Garnishee’s Statement signed by Mr. Baird, stated that:

Ampersand Group has no financial relationship with the debtor; no monies are owed to Lisa Nicol by virtue of contract, or in any other respect. Lisa Nicol is not an employee; no contracts are pending or anticipated at this time.

[18] It is now known that this statement was untrue.

[19] On September 24, 2009, Scotia Mortgage Corporation assigned its judgment to LawPro, in settlement of a solicitor’s negligence claim against the lawyer who had acted in the transaction that led to the court proceedings and the judgment against Ms. Nicol.

[20] On November 25, 2011, LawPro issued a Notice of Garnishment for $142,156.64 to Ampersand Group for payment of its indebtedness to Ms. Nicol.

[21] On March 25, 2012, Ampersand Group, in a Garnishee’s Statement signed by Mr. Baird, stated that:

Lisa Nicol is not an employee. No contracts are pending or anticipated at this time.

[22] Once again, it is now known that this statement was untrue.

[23] On April 19, 2012, Ms. Nicol made an assignment into bankruptcy.

[24] Information about Ms. Nicol’s relationship with Ampersand Group and about payments made by the Ampersand Group to her was disclosed by her at her meeting with creditors and at her examination under oath on August 22, 2012.

[25] It was revealed that: (a) Ms. Nicol has worked for the Ampersand Group since 2002; (b) after her 2010 separation from Mr. Baird, she began some work as an independent contractor, invoicing on a per project-monthly basis; (c) she had worked for many of the restaurants; (d) she was currently working for the Ampersand Group and since 2005, she had only worked for the Ampersand Group; (f) between 2005 and 2008, she had a management position with a salary of $45,000 to $50,000 per year.

[26] With this information, it became clear that the Ampersand Group, under the direction of Mr. Baird, had delivered false Garnishee Statements.

[27] The garnishment motion was served on December 4, 2012 and it was originally returnable on March 14, 2013. LawPro sought payment from both the entities of the Ampersand Group and from Mr. Baird.

[28] The garnishment motion was adjourned for cross-examinations. At his cross-examination, Mr. Baird admitted that he had posted a document on the Internet that refers to Ampersand Hospitality Group and the various restaurants. He, nevertheless, denied that Ampersand Group was a group of restaurants, and he claimed that there is no business or entity called Ampersand Hospitality Group.

[29] Mr. Baird persisted in his patently false statements that Ms. Nicol had never worked at the restaurants and that Ampersand Group had not made any payments to the Debtor.

[30] As a result of the direction to the CIBC, it was disclosed that between February 26, 2008 (the date of the first Notice of Garnishment) and April 19, 2012 (the date of Ms. Nicol’s assignment into bankruptcy):

• Ampersand Group paid Ms. Nicol $30,000.00
• Ampersand Group-A1 paid Ms. Nicol $4,000.00
• Ampersand Group-PC paid Ms. Nicol $2,203.65
• Allapa Enterprises Inc. paid Ms. Nicol $2,634.32
• Dickens Burlington Inc. paid Ms. Nicol $200.00
• The Charles Dickens paid Ms. Nicol $8,048.24
• Rude Native paid Ms. Nicol $4,250.00
• Rude Native Bistro & Bar paid Ms. Nicol $8,541.87
• Brinner Enterprises Inc. (Rude Native) paid Ms. Nicol $125

[31] Thus, there is evidence that at least $60,003.08 was paid to Ms. Nicol by the Ampersand Group in the 50 months from February 2008 to April 2012 or as much as approximately $210,000 based on an annual salary of $50,000.

C. DISCUSSION AND ANALYSIS

[32] Garnishment is a means to enforce a judgment for the payment of money. Under rule 60.08(1), “a creditor under an order for the payment or recovery of money may enforce it by garnishment of debts payable to the debtor by other persons.”

[33] The garnishee is liable to pay to the sheriff any debt of the garnishee to the debtor, up to the amount shown in the notice of garnishment or supplementary notice of garnishment, less $10 for the cost of making each payment, within 10 days after service on the garnishee or 10 days after the debt becomes payable, whichever is later: rule 60.08(11).

[34] The notice of garnishment is binding on associated business carrying on business under a group name even though they are not individually named in the Notice of Garnishment. See Cina v. Ultratech Tool & Gauge Inc. (2001), 2001 28011 (ON SC), 56 O.R. (3d) 338 (S.C.J.).

[35] Section 7 of the Wages Act, R.S.O. 1990, c. W.1 imposes a limit on the amount of a garnishment of wages. Eighty percent of an employee’s net wages are exempt from execution unless the debt claimed is for family support or maintenance, in which case the exemption is reduced to 50 per cent.

[36] Where the garnishee does not pay to the sheriff the amount set out in the notice of garnishment as owing by the garnishee to the debtor and does not serve and file a garnishee’s statement, the creditor is entitled, on motion to the court and on notice to the garnishee, to an order against the garnishee for payment of the amount that the court finds is payable to the debtor by the garnishee, or the amount set out in the notice, whichever is less: rule 60.08(17).

[37] Disputes that arise in a garnishment proceeding are resolved by a garnishment hearing. Rule 60.08(16) provides a motion procedure to resolve disputes between a creditor and a garnishee. The rule for a garnishment hearing states:

Garnishment Hearing

(16) On motion by a creditor, debtor, garnishee, co-owner of the debt or any other interested person, the court may,

(a) where it is alleged that the debt of the garnishee to the debtor has been assigned or encumbered, order the assignee or encumbrancer to appear and state the nature and particulars of the claim;

(b) determine the rights and liabilities of the garnishee, the debtor, any co-owner of the debt and any assignee or encumbrancer;

(c) vary or suspend periodic payments under a notice of garnishment; or

(d) determine any other matter in relation to a notice of garnishment,

and the court may proceed in a summary manner, but where the motion is made to a master and raises a genuine issue of fact or of law, it shall be adjourned to be heard by a judge.

[38] Garnishment is an equitable and discretionary remedy, and the court may make any order it deems just in the particular circumstances of any given case: I.U.P.A.T. Local 200 v. S & S Glass & Aluminum (1993) Ltd., 2004 12611 (ON CA), [2004] O.J. No. 1284 (C.A.); 20 Toronto Street Holdings Ltd. v. Coffee, Tea or Me Bakeries Inc. (2001), 2001 28048 (ON SC), 53 O.R. (3d) 360 (S.C.J.) at para. 5; Mullin v. R - M & E Pharmacy (2005), 2005 1073 (ON SC), 74 O.R. (3d) 378 (S.C.J.); Parker v. Parker, 2014 ONSC 3398.

[39] If a garnishee makes payments to other than the sheriff after service of a notice of garnishment, then the creditor may obtain judgment against the garnishee for the monies that the garnishee ought to have paid to the sheriff. See: I.U.P.A.T. Local 200 v. S & S Glass & Aluminum (1993) Ltd., 2004 12611 (ON CA), [2004] O.J. No. 1284 (C.A.); Turchiaro v. Liorti, 2004 CarswellOnt 8212 (S.C.J.), affd. 2006 8872 (ON CA), [2006] O.J. No. 1113 (C.A.).

[40] In the immediate case, I am satisfied that LawPro has proven that the collective that is the Ampersand Group made payments to Ms. Nicol because they were contractually bound to do so pursuant to employment contracts with her.

[41] LawPro has proven that Ms. Nicol was employed by Ampersand Group as a manager at a salary of $45,000.00 to $50,000.00 per year since 2005.

[42] I find as a fact that Mr. Baird knew that Ms. Nicol was a judgment debtor and his statements in response to the Notices of Garnishment were untrue. He knew that a garnishment to Ampersand Group and 1233724 Ontario Inc. was intended to garnish the employment income that Ms. Nicol was receiving from Ampersand Group and the restaurants.

[43] I find as a fact that the Ampersand Group and the entities that comprise it ought to have paid 20 percent of Ms. Nicol’s salary pursuant to the garnishment of her wages; i.e. it ought to have paid the sheriff $42,000.

[44] I find further that in the circumstances of this case it is just and equitable to pierce the corporate veil and make Mr. Baird personally liable for the garnishment of wages.

D. CONCLUSION

[45] Accordingly, I grant judgment for $42,000 plus prejudgment and postjudgment interest to be determined if the parties cannot agree by motion in writing to be brought within 20 days of the release of these Reasons for Decision.

[46] Given the knowingly false statements made in the Garnishee’s Statements, I order that the entities of the Ampersand Group and Mr. Baird pay costs on a substantial indemnity basis.

[47] If the parties cannot agree on the amount of the costs, they may make submissions in writing as part of the motion to determine the prejudgment and postjudgment interest.

Perell, J.

Released: August 15, 2014

COURT FILE NO.: 07-CV-343589PD3

DATE: 20140815

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

LAWYERS' PROFESSIONAL INDEMNITY COMPANY

Creditor

– and –

LISA DANIELLE NICOL also known as LISA D. NICHOL also known as LISA NICHOL

Debtor

– and –

AMPERSAND GROUP

Garnishee

REASONS FOR DECISION

PERELL J.

Released: August 15, 2014