Court File and Parties

Court File No.: CV-14-516561 Date: 20160711 Superior Court of Justice - Ontario

Re: Continental Casualty Company, Plaintiff – AND – Robert Symons, as successor in interest to G. Gordon Symons also known as Gerald Gordon Symons and as Trustee of the Estate of Gerald Gordon Symons, Alan G. Symons, The Estate of Gerald Gordon Symons, Symons International Group, Inc., IGF Holdings, Inc., Granite Reinsurance Company, Ltd. and Goran Capital Inc., Defendants

Before: Justice E.M. Morgan

Counsel: Lou Brzezinski and Varoujan Arman, for the Plaintiff Sean Zeitz, for the Defendants

Heard: June 27, 2016

Endorsement

[1] This is a motion to lift a stay of execution of an Ontario judgment that the Plaintiff obtained on October 21, 2015. The Plaintiff also moves to appoint an investigative receiver in order to assist it in locating the Defendants’ assets and in enforcing its judgment.

[2] The Plaintiff is a judgment creditor of the Defendants pursuant to a judgment for USD $44,231,536 (including pre-judgment interest) issued by the U.S. District Court for the Southern District of Indiana on July 14, 2014. The judgment accumulates post-judgment interest at the rate of USD $139 per day.

[3] At time of the transactions in issue, Gerald Gordon Symons (“GG Symons”) was the chairman of the board of the corporate Defendants. GG Symons is now deceased and his son, the Defendant Robert Symons, is the executor of his father’s estate and has been deemed GG Symons’ legal successor in interest in this matter by the U.S. court. Robert Symons resides in Caledon, Ontario.

[4] The late Gerald Gordon Symons was a fraudster. The U.S. court found that, together with his other sons, Alan Symons and Douglas Symons, GG Symons had engaged in a series of fraudulent transfers of funds from the Symons family-owned corporations for their own personal gain. This led the U.S. court to pierce the corporate veil and issue a joint and several judgment against Alan Symons, the estate of GG Symons, and the family-owned corporations. The U.S. court’s fact finding goes on for 135 pages; it is detailed in terms of the specific transactions and quantum of the fraud.

[5] The GG Symons Estate and other judgment debtors filed an appeal of the U.S. trial judgment in the U.S. Court of Appeals for the Seventh Circuit. The Appeal was argued on February 9, 2015.

[6] On October 13 2015, the Plaintiff moved for summary judgment for recognition and enforcement of the U.S judgment in Ontario. Summary judgment to that effect was granted by Glustein J. on October 21, 2015: Continental Casualty Co. v Symons et al., 2015 ONSC 6394. The judgment of Glustein J. contained an interim interim stay of enforcement based on the fact that the Seventh Circuit court had not yet released its decision in the Defendants’ appeal of the trial judgment. The stay was fashioned to remain in place until “the date the Indiana appellate Court releases its decision and the defendants’ rights of appeal have either expired or been exhausted…”

[7] On March 22, 2016, the Seventh Circuit court released its decision denying the appeal by the GG Symons Estate and affirming the trial judgment. In response, the GG Symons Estate filed a Petition for Rehearing En Banc before the Seventh Circuit. That petition was denied by the Seventh Circuit on May 17, 2016. The only route of appeal left to the GG Symons Estate in the U.S. court system is a petition for certiorari to the U.S Supreme Court. As of the date of the hearing before this court, no such petition had been filed. However, counsel for the Defendants has advised that his clients have instructed U.S. counsel to prepare such a petition. They have 90 days from May 17, 2016 in order to file their petition with the U.S. Supreme Court.

[8] As of the date of the hearing, the Plaintiff had recovered only USD $11,000,000 of the USD $44,231,536 it is owed. Counsel for the Plaintiff advises that the Plaintiff expects to be able to recover an additional USD $10,500,000 from funds held by the trial court in the United States. That leaves the balance of the judgment to be realized by locating and seizing assets belonging to the Defendant (or which have been fraudulently conveyed away).

[9] The affidavit evidence filed in this motion indicates that in GG Symons’ Will dated January 19, 2006 – some five years after commencement of the underlying litigation leading to the U.S. judgment in issue here – GG Symons’s assets included:

a) a safety deposit box in Toronto; b) a penthouse condominium in Toronto; c) works of art; d) a Jaguar automobile; e) a home in Florida; f) a collection of gold coins; g) a cash gift of $1,000,000 to a friend, Susannah Daugharty; h) a trust in Barbados; i) cash gifts of $10,000 to each of GG Symons’ grandchild and great-grandchildren; and j) miscellaneous cash gifts totaling $31,000.

[10] In addition, in separate litigation in London, Ontario, GG Symons’ employee and paramour Susannah Daugharty, deposed that she maintained a detailed index of financial records on GG Symons’ behalf. She has produced a list of accounts held by GG Symons. It is evident from all of this that during his lifetime GG Symons had amassed substantial wealth.

[11] Despite all appearances, Robert Symons, on behalf of the GG Symons Estate, delivered an estate inventory that indicates that the GG Symons Estate’s net value is USD $14,103.21.

[12] Evidence filed in this court summarizes evidence filed in the U.S. court that suggests that the GG Symons Estate and other family members continue to engage in the fraudulent transfer of assets away from the judgment debtors. Among other things, GG Symons swore an affidavit in the Susannah Daugharty litigation in which he expressly stated that he had discharged a mortgage he held over a London, Ontario property in an effort to avoid creditors – specifically, the Plaintiff. This maneuver was confirmed by Robert Symons, who deposed that he conferred with his father’s former legal counsel and was told that, “the principal reasons for the discharge of my father’s mortgage related to creditor protection. All of the planning in late 2009 and 2010 was focused on securing my father’s position in the face of potential judgment creditors executing in Ontario.”

[13] In addition, Ms. Daugharty swore an affidavit dated November 22, 2011 which stated:

I was very meticulous in my accounting and bookkeeping of Gordon’s accounts. I had all of the financial documents, including but not limited to his banking and investments organized by year in boxes. All of the relevant documents from 2004 and onwards were removed from the 14 Tynedale Avenue property while I was away on respite. I believe that Gordon or Gordon’s children removed the financial documents as they were the only ones that had access to the property, apart from the staff who would have been supervised by the Symons family.

[14] On December 5, 2014, the U.S. trial court granted the Plaintiff a wide array of post-judgment discovery rights for enforcement purposes against all of the judgment debtors in issue, including Robert Symons in his capacity as successor in interest to GG Symons. Upon receiving this Order, the Plaintiff served on Robert Symons a Document Request seeking a large number of financial information and specific documents. Robert Symons has to date failed to answer this Document Request, despite the expiry of the prescribed 30-day deadline. The documents in issue are matters of which Robert Symons is well aware; his sworn affidavit in the Daugharty litigation makes this clear.

[15] On January 26, 2015, Robert Symons brought a motion in the U.S. court for a protective order allowing him not to respond to the Plaintiff’s documentary request. He contended that responding to the Plaintiff’s request would impose an undue burden on him. In making this response, he deposed that there are “many volumes” of documents and computers in Ontario that would be subject to inspection by the Plaintiff if the protective order is not granted. On March 20, 2015, Robert Symons’ motion for a protective order was dismissed by the U.S. court. Robert Symons was ordered to respond to the Plaintiff’s discovery request within 14 days.

[16] Robert Symons failed to adequately respond to the discovery request served by the Plaintiff. As a consequence, on June 3, 2016, the U.S. court found him to be in contempt of court and ordered sanctions against him. The June 3, 2016 Order requires:

a) that Robert Symons pay sanctions of USD $1,000 within 14 days; b) that Robert Symons completely and unequivocally respond to the Plaintiff’s outstanding discovery requests within 30 days; c) that Robert Symons file a Notice of Compliance including an affidavit that lists in detail all of the documents produced in response to the Contempt Order; d) that should Robert Symons fail to comply with the Contempt Order, he will be subject to an additional contempt sanction of USD $100 per day until full compliance is reached; and e) that Robert Symons pay the Plaintiff USD $6,247.50 in costs.

[17] It is Plaintiff’s counsel’s position that, “once a fraud always a fraud”. The judgment debtors here have a track record of disposing of assets and conveying them away to avoid creditors. They have been found to have done so by a U.S. court, and they continue to hide assets and financial records even in the face of a substantial judgment and outstanding court orders for production.

[18] In Sibley & Assoc. v. Ross, 2011 ONSC 2951, at para 64, Strathy J (as he then was) indicated that, “The risk of removal or alienation [of assets] can be inferred by evidence suggestive of the defendant’s fraudulent criminal activity… It seems to me, however, that in some cases a pattern of prior fraudulent conduct may support a reasonable inference that there is a real risk that the conduct will continue.” [citations omitted] In these circumstances, appointment of an investigative receiver with the power to assist the judgment creditor is an appropriate remedial tool.

[19] As the Court of Appeal observed in Akagi v Synergy Group (2000) Inc., 2015 ONCA 368, at para 66, “Clearly there are situations where the appointment of a receiver to investigate the affairs of a debtor or to review certain transactions – including even, in proper circumstances, the affairs of and transactions concerning related non-parties – will be a proper exercise of the court’s ‘just and convenient’ authority under s. 101 of the Courts of Justice Act.”

[20] Counsel for the Defendants submits that the motion to appoint an investigative, or equitable receiver is premature. Citing the judgment of Penny J. in Haunert-Faga v Caprara, 2015 ONSC 6438, at para 50, he contends that, “The law is clear that the appointment of an equitable receiver in aid of execution is only available where special circumstances exist which would render the normal methods of execution ineffective or impractical. The appointment of a receiver by way of equitable execution assumes that all ordinary remedies to collect have been exhausted.” Here, the Defendants submit, the ordinary execution remedies have been exhausted, as there has been a stay of execution in place for Ontario. Since the litigation has not proceeded in Ontario after the initial judgment by Glustein J., the Defendants state that no “special circumstances” exist to take this case outside of the ordinary route for enforcing a judgment.

[21] The need for special circumstances was best described by Brown J. (as he then was) in Aly v Tohamy, 2013 ONSC 7738. He indicated that execution of judgments under the methods set out in the Rules of Civil Procedure often prove cumbersome and can entail significant delay and cost. Accordingly, at paras 8-9, Brown J explained:

…courts have countenanced the appointment of an equitable receiver, or a receiver in aid of execution, where (i) some legal impediment would prevent the seizure and sale of the debtor’s property under general execution procedures or (ii) where special circumstances existed which would render the normal methods of execution ineffective or impractical… [P]ractical reality requires courts to take a very pragmatic view of what the jurisprudence historically has termed ‘special circumstances’.

[22] The present one entails enforcement of a U.S. judgment where the Defendants are already found by the U.S. court to have engaged in a pattern of fraud on their creditors and, in addition, have been held in contempt for failure to comply with financial disclosure orders. When this is combined with the evidence in the record of ongoing financial misdeeds in Ontario, it makes for an ideal case for an investigative receiver. The Plaintiff does not have to “exhaust” remedies by engaging in the same kind of futile discovery process that has led the U.S. court to hold the Defendants in contempt of court. The court’s discretionary jurisdiction to act under section 101 of the Courts of Justice Act is not limited to ensuring that costly and fruitless procedural steps are followed for no substantive purpose.

[23] In evaluating the Plaintiff’s request, I can do no better than to again quote the Court of Appeal in Akagi, at para 90, where the type of situation here – i.e. a party already found to be a fraudster posing a risk to a plaintiff’s recovery – was specifically addressed:

The appointment of the investigative receiver is necessary to alleviate a risk posed to the plaintiff’s right to recovery… The primary objective of investigative receivers is to gather information and ‘ascertain the true state of affairs’ concerning the financial dealings and assets of a debtor…Generally, the investigative receiver does not control the debtor’s assets or operate its business, leaving the debtor to continue to carry on its business in a manner consistent with the preservation of its business and property…

[24] It is common ground between the parties that, statistically, very few cases are granted certiorari to the U.S. Supreme Court each year. Nevertheless, both counsel also agree that it is not for this court to engage in conjecture as to whether the present case will on the merits be one of those case. That is for the U.S. court alone to decide.

[25] That said, there is no reason under the circumstances to wait until the 90 days expires to see if the Defendants apply for certiorari, or to wait however long it takes for the court to rule on that petition if it is filed. The Defendants have used every procedure available to them to defer enforcement of the judgment, and the Plaintiff’s rights have thereby been put at risk. Glustein J. envisioned that the interim interim stay of execution would be revisited if too much time passes without the Plaintiff being able to start enforcement procedures. The time has come to lift the stay so that the Plaintiff can proceed with enforcing its rights.

[26] The stay imposed by Glustein J. in his Order of October 21, 2015 is hereby vacated. In the event that the U.S. Supreme Court grants certiorari to hear the case at some point down the road, the Defendants shall be at liberty to move to re-impose the stay pending the outcome of that appeal.

[27] Further, the Plaintiff has met the threshold for appointment of a receiver with powers to investigate the Defendant’s assets in aid of the Plaintiff’s execution of judgment. The appointment of a receiver to seize, freeze, and otherwise preserve assets would require strong evidence that the Plaintiff’s right to recovery has been seriously jeopardized. Although in the present case there is indeed such strong evidence, what the Plaintiff seeks is the more benign remedy of an investigative receiver. The threshold for a receiver with powers of investigation only is lower than the usual receiver who takes over the debtor’s affairs: General Electric Canada Real Estate Financing Holding Co. v Liberty Assisted Living, 2011 ONSC 4136, at para 88.

[28] The Plaintiff has certainly met the burden of establishing the need for an investigative receiver. This mechanism is designed to counteract the “informational imbalance” between creditors such as the Plaintiff, who are very much in the dark due to the manipulations engaged in by the Defendants, and debtors such as the Defendants, who are in possession of detailed knowledge and documents which the Plaintiff requires in order to enforce its rights.

[29] The Plaintiff shall have an Order substantially in the form provided by counsel for the Plaintiff at Schedule C of their factum.

[30] Paragraph 9 of the Order must provide that the Plaintiffs will only have access to the business and residential premises of Robert Symons after providing reasonable notice to him through his counsel.

[31] In addition, paragraph 10 of the Order will extend the time in which Robert Symons must provide the Receiver with a statement of assets, liabilities, and transactions to 60 days (instead of 21 days, as in Plaintiff’s counsel’s draft). Further, the transactions to be listed by Robert Symons will be all transactions in excess of $10,000 (instead of $5,000, as in Plaintiff’s counsel’s draft).

[32] I understand that Glustein J reserved costs of the summary judgment motion of October 2015 to the judge hearing the present motion. Plaintiff’s counsel has submitted Costs Outlines seeking costs in the total amount of over $29,000 for this motion and just over $30,000 for the summary judgment motion, all on a partial indemnity basis. Defendants’ counsel has submitted Costs Outlines seeking costs in the total amount of just over $24,000 for this motion and just over $29,000 for the summary judgment motion, also on a partial indemnity basis. Both are within the range of what one would expect for motions of this complexity in a case of this value, and which entailed an evidentiary record as well as substantial legal research.

[33] Under Rule 57.01(1)(0.b), I am authorized to take into account, inter alia, “the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed.” Given their proximity in range, neither side would be surprised at the cost requests of the other.

[34] The Defendants shall pay the Plaintiff costs in respect of this motion as well as the summary judgment motion in the total amount of $60,000, inclusive of all fees, disbursements, and tax.

Morgan J. Date: July 11, 2016