Court File and Parties

CITATION: Painter v. Richardson, 2017 ONSC 5603

COURT FILE NO.: 6242/94 (Hamilton)

DATE: 2017/09/21

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Ernest W. Painter

Plaintiff

– and –

Ronald Richardson, Michael Lewicki, Joyce Lennon, Al Barber, Brantford Police Services Board, Her Majesty the Queen in the Right of Ontario, John Ayre, Lois Aitken, Keith Swanson, Robert Thompson and the Corporation of the City of Brantford

Defendants

COUNSEL:

Bruce Hillyer and Stephen Abraham, for the Plaintiff

Devon Ryerse and Richard MacGregor, for the Defendants, Ronald Richardson, Joyce Lennon, Al Barber, Brantford Police Services Board and the Corporation of the City of Brantford

HEARD: October 3, 4, 5, 6, 7, 11, 12, 13, 14, 17, 18, 19, 20, 24, 25, 26, 27, 31, November 10, 18, 2016 and May 15, 2017

Corrected Decision: The correction was made on November 29, 2017. The “HEARD” DATES MISSING ARE oCTOBER 21 AND NOVEMBER 1, 2, 3, 7, 8, 9.

THE HONOURABLE MR. JUSTICE G.E. TAYLOR

REASONS FOR JUDGMENT

Introduction

[1] Ernest Painter was called to the bar in 1975. He began practicing law in his hometown of Brantford, Ontario in partnership with his brother. He was ambitious and hard-working. In addition to practicing law he engaged in a number of business ventures with clients and friends. Unfortunately, most of these business ventures were unsuccessful.

[2] During the 1980s, Ernest Painter became involved in a business venture with a client by the name of Michael Lewicki. This business venture went badly. The relationship between Ernest Painter and Michael Lewicki soured. Michael Lewicki made a complaint to the Law Society about Ernest Painter and also alleged that he had committed a number of criminal offences. Ronald Richardson, an officer with the Brantford Police Service, was assigned to investigate Michael Lewicki’s complaint about Ernest Painter committing criminal offences.

[3] On November 30, 1992, Ronald Richardson caused Ernest Painter to be charged with one count of fraud, one count of obtaining credit by fraud, two counts of perjury and two counts of obstructing justice. These charges proceeded to a preliminary inquiry on November 1 and 2, 1993. At the end of the second day of the preliminary inquiry, it was discovered that the Information charging Ernest Painter had never been sworn and accordingly the proceedings were a nullity.

[4] Following the laying of the criminal charges, Ernest Painter’s law practice suffered significantly. On July 31, 1994, Ernest Painter permanently closed his law practice. He has not practiced law or, except for brief periods, been gainfully employed since then.

[5] Ernest Painter claims that Ronald Richardson’s investigation was negligent and that the cause of his economic demise was the laying of the criminal charges which he says were without merit.

[6] Michael Lewicki failed to defend the action and was noted in default. He died in 2006.

[7] The action against her Majesty the Queen in the Right of Ontario, John Ayre, Lois Aicken, Keith Swanson and Robert Thompson was dismissed well in advance of the trial.

Liability

Evidence at Trial

Testimony of Ernest Painter

[8] Ernest Painter was born on August 6, 1949. He was raised in Brantford, Ontario. He obtained a bachelor of arts degree at the University of Western Ontario and a bachelor of laws degree from Dalhousie University. When he was called to the bar in 1975, he began practicing law in Brantford in partnership with his brother William who had been called to the bar the previous year.

[9] The law firm of Painter and Painter opened an office in the north end of Brantford. Their’s was the only law firm whose office was outside of the downtown core. As such they were viewed as nonconformist. William Painter did not refer any files to Ernest Painter when he joined the law partnership. Therefore, Ernest Painter was required to work very hard to build his law practice. His practice concentrated on corporate and commercial law and real estate.

[10] In 1978, Ernest Painter married Katherine (Kathy). In May, 1979 their daughter, Crystal was born.

[11] In the mid-1970s, Ernest Painter was approached by Doug Lillico, a senior real estate broker in Brantford, to become a partner in a 43 lot residential real estate development. Doug Lillico represented that with his connections to builders he would have no difficulty pre-selling half of the lots before the purchase of the property closed. The purchase of the property was completed in August or September, 1977. At that time the economy went into a downturn. Doug Lillico did not fulfill his commitment to find builders to purchase lots in the proposed subdivision. Shortly before Christmas, 1977, Doug Lillico advised Ernest Painter that he was leaving Brantford because he was in serious financial difficulty. He signed over his interest in the development property. This left Ernest Painter as the sole owner of the project. In 1983, Ernest Painter declared bankruptcy because of the real estate development which had been turned over to him by Doug Lillico.

[12] In late 1978 Ernest Painter and Kathy took a two week vacation. When they returned to Brantford he learned that his brother had dissolved the law partnership. He began practicing as a sole practitioner. His practice was thriving. He had six major real estate brokers and 15 real estate agents referring work to him. The branch of the Toronto-Dominion Bank was a client.

[13] In approximately 1982, Ernest Painter hired an associate lawyer primarily to handle litigation. That lawyer was not successful in building a practice. Accordingly, in 1986, he left to practice law somewhere other than Brantford.

[14] By the late 1980s, Ernest Painter was working very long hours. He worked 60 hours a week from Monday to Friday and another 15 to 20 hours on the weekend.

[15] As of 1985, Ernest Painter was becoming tired and stressed as result of the pressures of the practice of law. Although his law practice was successful he was looking for other ways to earn money. He thought that the retirement home business looked like a possible successful investment opportunity. Accordingly, he approached two clients, Ralph Rodgers and Earl Campbell who were in the business of developing and selling properties for retirement homes. In 1986, he incorporated Uni-Care Retirement Centres Incorporated for the purpose of owning and operating retirement homes. The three equal shareholders were Ralph Rodgers, Earl Campbell and himself. They acquired property in Brantford to build a retirement home and began the preliminary work to do so. Unexpectedly, and contrary to their original agreement, he was approached by Ralph Rodgers and Earl Campbell who said they had received an offer to purchase the property which they wanted to accept. Accordingly, if he wanted to continue with the construction of the retirement home, Ernest Painter was required to purchase the interest of the other shareholders of Uni-Care at a cost of $500,000.

[16] In order to fund the purchase, he approached Ken Smith and Dev Mundi who each put up $250,000 to purchase the interests of Ralph Rodgers and Earl Campbell. Ernest Painter’s investment was $5,000. It was agreed that Dev Mundi would be paid $3,000 per month for one year to oversee the construction of the retirement home which became known as Amber Lea Place. At the end of the one-year, Dev Mundi refused to agree to the termination of the $3,000 monthly payments.

[17] The opening of Amber Lea took place in December, 1989. Dev Mundi was responsible for the day-to-day operation of Amber Lea. Ernest Painter thought the business was running smoothly until they received an application for union certification. When the application for certification was received the monthly payments to Dev Mundi were terminated. There were numerous complaints from staff about the way Dev Mundi was running the business. The contract with the union was signed in the spring of 1993.

[18] When Dev Mundi returned from a vacation in early 1993 he was unhappy to learn that that the payments of $3,000 per month would not continue. Dev Mundi asked that the other shareholders to purchase his shares in Amber Lea. They refused.

[19] Dev Mundi commenced an application pursuant to the Ontario Business Corporations Act seeking the imposition of a shotgun buy-sell arrangement between the shareholders. In February, 1994 a shotgun buy-sell arrangement was ordered by the court. Dev Mundi offered to purchase Ernest Painter’s shares in Amber Lea for $260,000. Ernest Painter did not have $260,000 available at that time to purchase Dev Mundi’s shares. Pursuant to an agreement dated July 26, 1994 Ernest Painter agreed to sell his shares in Amber Lea to Dev Mundi.

[20] An affidavit sworn by Dev Mundi dated October 18, 1993 was made an exhibit as was the agreement dated July 26, 1994. These documents tell a somewhat different story.

[21] According to Dev Mundi, he agreed to become a one third shareholder in Amber Lea on the basis that he would be the project coordinator and then the manager of the retirement home to be paid a salary of $800 per week. Ernest Painter also promised to prepare a unanimous shareholders’ agreement which would contain a fair exit mechanism for any shareholder who wanted to sell his shares. No shareholders’ agreement was ever prepared.

[22] Dev Mundi and Ken Smith each agreed to pay $150,000 for one third of the shares in Amber Lea and to make a shareholder’s loan of $20,000 to the corporation. At the time of closing, it was agreed that each of Dev Mundi and Ken Smith would pay $86,023.77 for a one third interest in Amber Lea and that each would loan $83,976.23 to the corporation.

[23] In June, 1990 Ernest Painter requested Dev Mundi to reduce his weekly salary to $600. Dev Mundi agreed to this request and continued to be paid $600 weekly until the end of December, 1992. When Dev Mundi returned from a vacation in late January, 1993 he learned that he had been excluded from any further involvement in the management of Amber Lea.

[24] According to the terms of the agreement between Ernest Painter and Dev Mundi for the purchase and sale of Ernest Painter’s shares in Amber Lea, the selling price for the shares and the outstanding shareholder’s loan was $260,000.

[25] Financial statements for Amber Lea for the fiscal years ending February 28, 1992, 1993, and 1994 were made exhibits. The net income for 1992 was a loss of slightly in excess of $94,000. The net income for 1993 was a net loss of slightly in excess of $77,000 and the net income for 1994 was just over $34,000. By the end of the fiscal year February 28, 1994 the accumulated deficit of Amber Lea was in excess of $500,000.

[26] During the 1980s Ernest Painter acquired tax shelters in Go Vacations Houseboats and Go Vacations Motorhomes. It was his intention to build a fleet of rental recreational vehicles.

[27] When his daughter Crystal was approximately seven years old, Ernest Painter bought her a horse as a tax shelter. He had a client who owned a horse farm. He had the idea to breed horses as a hobby and as an investment. At one point he owned 34 horses. By 1992 he could no longer maintain the horse breeding business so he began selling horses. Overall he lost approximately $800,000 on the horse breeding venture.

[28] Ernest Painter had a client by the name of Casimir (Cash) Banas. Cash Banas introduced Ernest Painter to Michael Lewicki. He became one of Michael Lewicki’s lawyers. Michael Lewicki worked hard but he was always in financial difficulty.

[29] In early 1987, Michael Lewicki and Cash Banas were interested in purchasing a business known as Cagemaster which was involved in the manufacture of cages for laying hens. They approached Ernest Painter and asked if he would be interested in investing as a partner in the business. Ernest Painter was interested and said he would draft a memorandum of partnership, which he did and sent to the others. In the fall of that year, Cash Banas then advised Ernest Painter that Michael Lewicki was not interested in a partnership arrangement.

[30] Cash Banas then bought Cagemaster. He entered into an arrangement with Michael Lewicki to manufacture the cages. The plan was that Michael Lewicki would eventually purchase a 50 percent interest in the Cagemaster business. In November 1988, Cash Banas agreed to sell a 90 percent interest in Cagemaster to Michael Lewicki for $260,000. Ernest Painter was asked to prepare the necessary paperwork. Michael Lewicki personally and on behalf of his corporations executed a promissory note dated December 1, 1988 pursuant to which he agreed to pay the sum of $260,000 to Cash Banas on April 29, 1989. The promissory note provided for an interest rate of 15 percent per annum. Cash Banas retained a 10 percent interest in Cagemaster.

[31] As of December, 1988, Cash Banas was experiencing some financial difficulties. He wanted to sell the promissory note from Michael Lewicki in order to generate some cash. Ernest Painter offered to purchase the Lewicki note. Ernest Painter contacted Michael Lewicki who raised no objection to him purchasing the promissory note from Cash Banas.

[32] On December 16, 1998 Cash Banas assigned the Lewicki note to Ernest Painter, in trust. He explained that the reason for taking the assignment “in trust” was to facilitate the possibility of selling some of the Lewicki note to other investors. The cash consideration paid by Ernest Painter for the assignment was $190,000. He also transferred to Cash Banas three motorhomes and a 10 percent interest in Victoria Die Cast Limited.

[33] Michael Lewicki failed to make the interest payments on the promissory note which were due on January 1, February 1 and March 1, 1989. Towards the end of March, 1989 Cash Banas and Michael Lewicki attended at Ernest Painter’s office and advised that Michael Lewicki needed to borrow more money in order to fulfill two contracts for the sale of Cagemaster cages, one for $140,000 and one for $70,000. It was Ernest Painter’s understanding that if he failed to loan additional funds to Michael Lewicki his entire investment in the $260,000 promissory note would be lost.

[34] Ernest Painter reluctantly agreed to loan Michael Lewicki additional funds and also to do an exchange of vehicles and equipment. Ernest Painter said that the condition on which he agreed to loan money to Michael Lewicki was that the loan proceeds be paid directly to suppliers in order that the two Cagemaster contracts could be completed. However, when Ernest Painter began to contact suppliers he learned that they were owed more than had been represented by Michael Lewicki.

[35] Michael Lewicki signed a promissory note dated April 14, 1989 in the amount of $90,000 payable to Ernest Painter, in trust, on or before June 14, 1989 without interest up to that date but with interest payable thereafter at the rate of 21 percent monthly. It immediately became apparent that Michael Lewicki required further funds. As a result, Michael Lewicki signed a further promissory note dated April 18, 1989 in the amount of $27,000 payable to Ernest Painter, in trust, on or before May 2, 1989 with interest after that date payable at the rate of 21 percent monthly. Ernest Painter explained that the interest rate was intended to be 21 percent per annum but that the notes were erroneously prepared with the interest stated to be calculated monthly.

[36] As part of the April 14, 1989 loan arrangement, there was an exchange of motor vehicles. Ernest Painter prepared a Bill of Sale dated April 13, 1989 which was executed on April 14, 1989 pursuant to which Kathy Painter transferred to Donna Lewicki a 1978 Winnebago and a 1981 Cadillac Deville and Donna Lewicki transferred to Kathy Painter a 1986 Cadillac Fleetwood and a 1976 Mercedes-Benz.

[37] According to documentation from the Ontario Ministry of Transportation, Ernest Painter became the owner of a 1986 Cadillac on April 28, 1989 which had previously been owned by Donna Lewicki from December 5, 1988. Ministry of Transportation documentation also showed that Ernest Painter became the owner of a 1978 Winnebago on July 30, 1986 and the licence plate for that vehicle was removed on December 20, 1989 when the ownership registration was transferred into the name of Sidney Seraphim. Ernest Painter explained that he made a mistake when preparing the Bill of Sale for the transfer of the vehicles to show Kathy Painter as the owner of the 1978 Winnebago. He also explained that at the time of preparing the Bill of Sale he might have intended for the 1986 Cadillac to be transferred into his wife’s name but he subsequently could have changed his mind and registered the vehicle in his name.

[38] The actual amount advanced on the $90,000 note was $75,000 and the actual amount advanced on the $27,000 note was $20,000. The differences between the amounts advanced and the face amounts of the notes involved other charges and the exchange of chattels. On April 26, 1989, an Agreement Amending Charge/Mortgage was registered. Pursuant to this document the two promissory notes for $90,000 and $27,000 respectively were added to the security for the $260,000 promissory note.

[39] On October 5, 1992, Ernest Painter sent a document entitled Reconciliation of Loan Advances to Paul Stillman, a lawyer who was then acting for him. Ernest Painter identified the document as having been prepared in his office but he could not remember the date on which it was prepared. The Reconciliation explains the difference between the actual funds advanced and the face amounts of the two promissory notes dated April 14 and 18, 1989 respectively.

[40] Michael Lewicki failed to pay the amounts owing on the three promissory notes when they came due. On September 19, 1989 Ernest Painter issued a Statement of Claim against Michael Lewicki and his corporations for payment of the amounts owing on the promissory notes as well as seeking to enforce security for the repayment of those debts. The Statement of Claim seeks interest of 21 percent with respect to the promissory notes dated April 14 and 18, 1989. Although the Statement of Claim does not specify the interest rate to be per annum, it is apparent from the stated per diem amount of interest that the calculation was on an annual basis.

[41] The litigation between Ernest Painter and Michael Lewicki became very acrimonious.

[42] On October 3, 1989 Ernest Painter obtained a consent judgment against Michael Lewicki and his corporations for $409,751 plus costs and a judgment for possession of property owned by Michael Lewicki at 20 Morrell Street, Brantford. He agreed to give Michael Lewicki until March, 1990 to satisfy the judgment.

[43] Michael Lewicki did not satisfy the judgment. On March 13, 1990, Ernest Painter took possession of 20 Morrell Street. Ed Mantha acted on behalf of Ernest Painter to take physical possession of the property. Shortly after taking possession of 20 Morrell Street, during a meeting between Ernest Painter and Ed Mantha, Michael Lewicki interrupted the meeting and made a threat that he was going to report Ernest Painter to the Law Society and file a complaint with the police.

[44] In April, 1990 the judgment of October, 1989 was set aside but in August 1990 the order for possession of 20 Morrell Street was reinstated. In November, 1990 the Court of Appeal granted a temporary stay of the judgment for possession of 20 Morrell Street. In June, 1991 the Court of Appeal set aside the judgment for possession and ordered that the matter proceed to trial.

[45] In March, 1992, Ernest Painter and Michael Lewicki engaged in discussions with a view to settling the outstanding lawsuit. These discussions proceeded to the point of drafting Minutes of Settlement. A pretrial conference was scheduled for April 2, 1992 with the trial on a list for later that month. A few days prior to the scheduled pretrial conference, Ernest Painter and Michael Lewicki met to discuss the Minutes of Settlement. At the end of the meeting Ernest Painter believed that a settlement was imminent.

[46] The day following the meeting with Michael Lewicki, Ernest Painter, who was representing himself at the time, dictated an affidavit for the purpose of obtaining an adjournment of the pretrial conference and the trial. After the Notice of Motion for adjournment and the supporting affidavit had been dictated, Michael Lewicki telephoned Ernest Painter and advised that he had changed his mind and wanted to proceed to trial. Ernest Painter was then faced with a situation of originally thinking that the adjournment of the pretrial conference and the trial would be on consent to the adjournment request being opposed. He began to panic. He proceeded to finalize the affidavit which he swore on April 1, 1992. The affidavit was served on Michael Lewicki but it was never filed with the court. The affidavit asserted that Michael Lewicki did not object to an adjournment of the pretrial conference and the trial and that the case was very close to settlement. The affidavit made no mention of Michael Lewicki asserting that he wanted the matter to proceed to trial. Ernest Painter explained that he was not thinking clearly when he swore the affidavit and arranged for it to be served on Michael Lewicki.

[47] The lawsuit eventually went to trial in October and November, 1993 and judgment was issued in January, 1994. Judgment was granted in favour of Ernest Painter for the amount of cash actually advanced plus interest at the rate of five percent per annum on the promissory notes dated April 14 and 18, 1989. The trial judge made a specific finding that a criminal rate of interest was charged on these two loans.

[48] On April 20, 1989, Ernest Painter attended at the TD Bank in order to arrange a loan. He was the branch solicitor and was well known by the manager, Bob Smith. He had arranged a number of previous loans through that branch and Bob Smith. One or two days before going to the branch, he telephoned Bob Smith and advised that he needed a loan of between $7,000 and $8,000 to purchase a Cadillac automobile. The loan was approved over the phone. When he arrived at the bank, Bob Smith advised Ernest Painter that he would increase an existing loan which had been paid down from $20,000 to $12,000, back to $20,000, which would provide the necessary funds.

[49] While at the TD Bank branch, Ernest Painter signed a loan application indicating that the purpose for the loan was to purchase a 1986 Cadillac. Bob Smith was busy with other customers when he arrived. Bob Smith produced a previous net worth statement that had been completed by Ernest Painter and said he would transfer the information to the new loan application form. Ernest Painter reviewed the previous net worth statement and pointed out that he no longer owned the Southwind RV or Go Vacations. As of the date of signing the loan application he owned a 1976 Cadillac motor vehicle and a 1978 Winnebago RV although these were included in the chattels being transferred to Michael Lewicki/Donna Lewicki. Ernest Painter then signed the application in blank.

[50] Ernest Painter repaid the loan to the TD Bank in full on June 21, 1991.

[51] Ernest Painter first met Ronald Richardson in about March, 1991 when Ronald Richardson came to the office to discuss Michael Lewicki’s complaint that he had been charged a criminal rate of interest. He described Ronald Richardson as arrogant and egotistical. Ernest Painter explained that the reference to interest at 21 percent per month was a typographical error. He told Ronald Richardson that he was involved in litigation with Michael Lewicki. He told Ronald Richardson about the threat which had been made to him by Michael Lewicki in 1990, in the presence of Ed Mantha, that he would destroy Ernest Painter by making complaints to the police and the Law Society. He answered all of Ronald Richardson’s questions.

[52] On April 17, 1991 a search warrant was executed at Ernest Painter’s law office. Ernest Painter described Ronald Richardson’s attitude to be curt, rude and gruff. He instructed his office manager, Wendy Andrews, to provide Ronald Richardson with all the files in relation to loans to Michael Lewicki. Ronald Richardson left with photocopies of documents.

[53] Ronald Richardson returned to Ernest Painter’s law office on October 2, 1991 and executed a second search warrant in relation to a client by the name of Mae Perry.

[54] On November 30, 1992 Ernest Painter received a phone call at his office from Ronald Richardson. Ronald Richardson demanded that Ernest Painter attend at the police station immediately. He described Ronald Richardson’s tone to be demanding, belligerent and arrogant. Ronald Richardson said that if Ernest Painter did not arrange to be at the police station at 2 p.m. he would send two uniformed officers to the office to arrest him. Ernest Painter immediately contacted his lawyer, Paul Stillman and they went to the police station to meet Ronald Richardson.

[55] At the police station they were escorted to an interview room. Ronald Richardson said he wanted to video record the meeting. He became very upset when Ernest Painter declined to consent to the interview being videotaped. Ronald Richardson advised Ernest Painter that he was being charged with a number of offences and proceeded to read the charges. Ernest Painter declined to answer any questions. He was then photographed and fingerprinted, following which he was released.

[56] After leaving the police station, Ernest Painter drove to his office to retrieve some files and then proceeded to drive to his parents’ home. He wanted to inform them about the criminal charges. While driving to his parents’ home he heard on the car radio that he had been charged with six counts of fraud, perjury and obstructing justice. When he arrived at his parent’s home, they indicated that they had already heard about him being charged. The local newspaper also printed a story about him being charged criminally in its December 3, 1992 edition.

[57] On December 7, 1992, Ernest Painter was told by his lawyer that he was required to return to the police station because some kind of mistake had been made. He went to the police station and had to sign something.

[58] The impact of the criminal charges on the law practice was immediate. Clients began taking their legal work elsewhere.

[59] The preliminary inquiry in relation to the criminal charges began in November, 1993. After two days, the presiding judge became aware that the Information had not been properly sworn. Ernest Painter declined the suggestion that he consent to a new Information being sworn so that the preliminary inquiry could continue. When the preliminary inquiry judge ruled that there was no proper Information before him, Ronald Richardson became livid. He threw a tantrum in the courtroom. He declared that it had been a travesty of justice and he was going to go to Toronto to meet with the Attorney General in order to have the charges reinstated. Ronald Richardson stormed out of the courtroom. Everyone who was present in the courtroom observed the outburst.

[60] Ernest Painter observed Ronald Richardson meeting with Michael Lewicki on approximately six occasions at the courthouse in Brantford when motions and pretrial proceedings relating to the civil lawsuit with Michael Lewicki were scheduled. Ernest Painter also observed Ronald Richardson attending at the courthouse during the civil trial. He was there on 10 or 12 days. Ernest Painter observed Ronald Richardson and Michael Lewicki huddling in conversation and going over papers together.

[61] Ernest Painter testified that subsequent to his bankruptcy in 1984 his practice was thriving and he was earning a significant income. His fiscal year end was March 31. For the 1986 fiscal year Ernest Painter’s net professional income was $70,567 plus management fees of $32,000 were paid to a corporation owned by his wife. In fiscal 1987 Ernest Painter’s professional income was $56,220 with management fees of $18,568. In fiscal 1988, Ernest Painter’s net professional income was $97,491 and $5,501 was paid to the management company. In fiscal 1989, Ernest Painter’s net professional income was $207,620 with payments to the management company of $851. In fiscal 1990, net professional income was $239,495. In fiscal 1991 net professional income was $19,798. Ernest Painter explained that by a this time he was devoting a great deal of time to the lawsuit with Michael Lewicki and he was heavily involved in building and operating Amber Lea, the retirement home. In fiscal 1992 Ernest Painter’s net professional income was $21,676. In this year he continued to spend a significant amount of time with the Michael Lewicki litigation and with Amber Lea including the application for union certification. In fiscal 1993 Ernest Painter’s net professional income was $14,505. In fiscal 1994, Ernest Painter earned $13,599 in net professional income. On July 31, 1994 Ernest Painter permanently closed his law office.

[62] In 1990 Ernest Painter purchased a commercial building at 58 Brant Avenue in Brantford. The purchase price was $120,000. Extensive renovations were required. He began operating his law practice from that location. He fell into arrears on the mortgage. In August or September 1993, the mortgagee commenced power of sale proceedings and in February, 1994 issued a Statement of Claim for repayment of the amount owing plus possession. Upon being served with the Statement of Claim, Ernest Painter contacted the solicitor for the mortgagee and agreed to consent to judgment and vacate the property by July 31, 1994. That was the same date on which he closed his law practice.

[63] Ernest Painter’s intention was to retire from the practice of law by age 55. He was on the verge of being able to accomplish his goal when the criminal charges were laid.

[64] In cross-examination, Ernest Painter said that Michael Lewicki signed a document listing all of the chattels which were exchanged as part of the transaction which resulted in the $90,000 promissory note. This document also contained the agreed-upon values for all of the chattels. That document was no longer in Ernest Painter’s possession.

[65] With respect to renegotiating the loan with the TD Bank, Ernest Painter was cross examined about answers which he had provided at an examination for discovery in another lawsuit. At that time he testified that in order to generate funds to loan to Michael Lewicki, he needed to borrow money which required him to shift some assets to improve his balance sheet to make it look better for borrowing purposes. He agreed that the answers were true.

[66] With respect to the Reconciliation of Loan Advances which had been sent to Paul Stillman in October 1992, Ernest Painter was asked about a letter which he had sent to the Law Society in March, 1992 in which he referred to a detailed analysis and breakdown of the loans to Michael Lewicki which had been reconstructed by him. He agreed that the Reconciliation of Loan Advances which was sent to Paul Stillman was likely what he had referred to in his letter to the Law Society. He agreed that the Reconciliation was likely prepared in March, 1992 but it was based on other documents then in his possession.

[67] Ernest Painter was asked about a Direction signed by Michael Lewicki regarding the distribution of funds in relation to the $90,000 loan. The Direction does not show that the loan proceeds were paid to trade creditors. The sum of $40,000 was to be paid to Cash Banas, $7,575.33 was to be paid to Ernest Painter for interest and late charges owing on the $260,000 promissory note plus legal fees, $3,288 was to be paid on account of mortgage arrears, $9,000 was to be paid to Kathy Painter, $500 was to be paid to an insurance broker and $14,636.67 was to be paid to Carl-View Investments, a company owned by Cash Banas, on account of an outstanding loan.

[68] Ernest Painter was also asked about the Direction signed by Michael Lewicki regarding the disbursement of the funds advanced on the promissory note dated April 18, 1989. The Direction indicated that $5,000 was to be paid to Union Gas, $8,000 was to be paid to Extrusion Plastics Inc., $2,000 of which was to pay an outstanding account with the remainder to be disbursed to three trade creditors.

[69] Ernest Painter was cross examined about the Statement of Trust Account prepared by his office regarding the funds advanced pursuant to the two promissory notes and the disbursement of those funds. The Statement of Trust Account coincides generally with the Direction in relation to the $90,000 note although the Statement refers to the payment of $9,000 to Kathy Painter to be payment for an outstanding loan as opposed to for the purchase of goods. Ernest Painter explained that this was a typographical error on the Statement. There were some additional discrepancies in relation to the $27,000 note. The Direction shows two payments to be made to Extrusion Plastics, one of $2,000 and one of $6,000. The Statement of Trust Account however shows 2 payments of $2,000 to Extrusion Plastics but it also shows payments of $2,000 to each of Cambridge Lift Truck and Dynamic Steel. The Statement does not indicate an overpayment to Michael Lewicki as set out in the Reconciliation of Loan Advances sent to Paul Stillman. Based on the Statement of Trust Account, the total amount advanced to trade creditors from the total amount advanced of $95,000 on the two loans was $15,000 plus another $5,000 was paid to Union Gas on account of an outstanding account.

[70] Ernest Painter was cross examined about a Client Transaction Register from his law firm relating to the loans to Michael Lewicki. The Register shows the advances of $75,000 and $20,000 and how those funds were disbursed. The Register does not show any overpayment although Ernest Painter asserted that the disbursements made on April 14, 1989 should total $79,000 rather than $75,000.

[71] Ernest Painter said that before he took the assignment of the $260,000 promissory note from Cash Banas he spoke to Michael Lewicki and advised that he was contemplating acquiring the note from Cash Banas but he would not do so if Michael Lewicki objected. Ernest Painter was shown a letter from him to Michael Lewicki dated January 9, 1989 in which he stated:

… the writer has now participated and completed the syndication of lenders to take a complete assignment from Mr. Casimir Banas of the Promissory Note executed by 745100 Ontario Limited dated December 1st, 1988 …

Ernest Painter agreed that the reference to a “syndication of lenders” could be interpreted that more than one person purchased the note from Cash Banas. He also said the finding of the trial judge in the case between he and Michael Lewicki that he had bought the note from Cash Banas without disclosure to Michael Lewicki, was an error.

[72] Ernest Painter said he received a phone call from his lawyer, Paul Stillman shortly after his attendance at the police station on November 30, 1992 advising that there had been a mistake and he needed to re-attend at the police station. However, he did not agree that it was possible he heard on the radio about being charged after leaving the police station on that subsequent occasion.

[73] Ernest Painter was very close to his father. His father passed away in January, 1993. He said that he found it very difficult to deal with his father’s death.

[74] In re-examination, Ernest Painter explained that the loans to Michael Lewicki in April, 1989 were completed in escrow. Therefore, although the Bill of Sale for the transfer of the vehicles was dated April 14, the actual exchange of ownership documentation and keys did not occur until April 26, when the security was registered. This meant that on April 20 when he went to the TD Bank to re-negotiate the loan, he did not yet own the 1986 Cadillac. He went on to explain that he advanced funds to bring the mortgage into good standing and to pay insurance arrears before the escrow was completed. He also made payments to Cash Banas based on the assurance that he would continue to fund Michael Lewicki’s immediate needs. He was not asked to explain why $6,500 was advanced to him and $9,000 was paid to Kathy Painter on April 14 as well.

Letter from William Johnson, Q.C. dated April 6, 1994

[75] Following the termination of the preliminary inquiry, William Johnson Q.C., a Crown Attorney from Kitchener was requested to review the case and decide whether the charges against Ernest Painter should be reinstated. William Johnson wrote a letter dated April 6, 1994 which set out his review of the case and his decision that the charges would not be relayed. In his letter, he stated that he did not believe there to be a reasonable probability of conviction with respect to the fraud and false pretense charges and that the probability of conviction on the perjury and obstruct justice charges was not particularly high.

[76] William Johnson had available, and reviewed, transcripts from the preliminary inquiry and the civil trial between Ernest Painter and Michael Lewicki. He referred to the prosecution of Ernest Painter as having “come off the rails by reason of a bureaucratic error”.

[77] William Johnson relied significantly on the testimony given by Robert Smith, the manager at the TD Bank branch, from the preliminary inquiry. It is apparent that William Johnson focused on the issue about whether Ernest Painter owned the Winnebago at the time he applied for the loan. He did not address the issue about whether the purpose for the loan was to purchase a Cadillac or to fund a loan to Michael Lewicki. William Johnson stated that he agreed with Ronald Richardson that the mere fact of repayment of the loan would not preclude a successful prosecution for fraud.

[78] With respect to the charges of perjury and obstructing justice, William Johnson concluded that it would be difficult to refute Ernest Painter’s contention that as a busy lawyer, he may have inadvertently signed a factually incorrect affidavit in the course of a busy day. He also relied on the fact that the affidavits were not presented to the court and were not a factor in the adjournment of the pretrial conference. William Johnson also concluded that even if Ernest Painter swore faults affidavits they “presumably remained in his briefcase” and therefore the actions of Ernest Painter were mere preparation to commit an offence and did not reach the stage of an actual attempt to obstruct justice.

Testimony of Paul Stillman

[79] Paul Stillman acted for Ernest Painter in relation to the proposed usury charge. He wrote two letters to the Attorney General on behalf of Ernest Painter. In both letters he raised the issue about Michael Lewicki attempting to utilize the criminal process for an improper purpose, namely to obtain an advantage in a civil lawsuit in which he was engaged with Ernest Painter. He was eventually advised that the Attorney General had decided against proceeding with a usury charge.

[80] Paul Stillman was aware that Ernest Painter was going to be charged with criminal offences. He accompanied Ernest Painter to the police station. They went into a small room where Ronald Richardson asked Ernest Painter if he wanted to make a statement. He took some exception to the warning given by Ronald Richardson because he indicated that anything said by Ernest Painter would be used against him as opposed to it could be used against him.

[81] The media reported about Ernest Painter being charged. It was well known in the legal community. Ernest Painter became a different person after the charges were laid. He became depressed.

[82] In cross-examination, Paul Stillman advised that the focus of his concern regarding the possible charge of usury was the interest rate of 21 percent per month. He was unable to recall if there was an issue about money which was unaccounted for in the amounts advanced under the promissory notes.

Testimony of Neil Jones

[83] Neil Jones represented Ernest Painter at the preliminary inquiry for the criminal charges. There were two groups of charges. The first group was in relation to an alleged fraud against the bank and the second group related to an allegedly false affidavit. It was his view that both groups of charges were weak. The bank loan was for $7,000. There was no loss suffered by the bank and the bank was never at risk. The allegedly false affidavit was never filed with the court.

[84] During the course of the preliminary inquiry it was discovered that the Information had not been properly sworn. That ended the preliminary inquiry. He tried to convince the Crown that the case was very weak and it should not continue. The case was referred to William Johnson, a Crown Attorney from Kitchener, who eventually decided not to proceed with any charges.

[85] Neil Jones was not asked about Ronald Richardson becoming irate in the courtroom after it was learned that the Information had not been sworn and the preliminary inquiry was at an end.

Testimony of Wendy Andrews

[86] Wendy Andrews was employed as a bookkeeper at Ernest Painter’s law office from 1985 until 1993.

[87] She was present in the office on April 17, 1991 when Ronald Richardson arrived with a search warrant. Someone came to her in her office and said a detective was present with a search warrant. Ernest Painter was not in the office at the time. Either she or Ernest Painter’s mother telephoned him at home and he arrived at the office shortly thereafter.

[88] She was unable to recall what Ronald Richardson was searching for. She could not remember his general demeanor. Ronald Richardson said he had to do the search of the office even if Ernest Painter was not present. She was unable to recall if other police officers were also present.

[89] Ernest Painter appeared somewhat depressed after the search warrant had been executed.

[90] Wendy Andrews could not recall a second search warrant being executed at Ernest Painter’s office.

[91] Wendy Andrews first learned about Ernest Painter being charged when she read an article in the Brantford Expositor. She did not hear any reports on the radio about Ernest Painter being charged. She was unable to recall if she was present in the office when Ernest Painter was called down to the police station. When she heard about Ernest Painter being charged she did not believe he had committed any criminal offences.

[92] Ernest Painter’s practice slowly died after it became public knowledge that he had been charged. Ernest Painter did not spend as much time at the office after the charges were laid as compared to previously.

Testimony of Cash Banas

[93] Cash Banas met Ernest Painter in the early 1980s. He met Michael Lewicki in the mid-1980s. Ernest Painter acted as his lawyer for real estate transactions and business deals. He and Michael Lewicki did a number of business deals together. He introduced Ernest Painter and Michael Lewicki.

[94] Michael Lewicki made him aware of the business known as Cagemaster. He said he purchased Cagemaster in late 1989. Michael Lewicki agreed to purchase Cagemaster from him. Michael Lewicki owed him $260,000 for the purchase of Cagemaster. When he needed some funds Cash Banas asked Michael Lewicki if he would have any objection to the note being assigned. Cash Banas assigned the $260,000 promissory note to Ernest Painter.

[95] He was present with Michael Lewicki in Ernest Painter’s office in April, 1989 when the two promissory notes were negotiated. Michael Lewicki was in need of additional money. Eventually the relationship between Michael Lewicki and Ernest Painter changed. He was aware of the lawsuit between the two. Michael Lewicki told him that he intended to ruin Ernest Painter.

[96] Cash Banas met Ronald Richardson on one occasion at 20 Morrell Street. He observed Ronald Richardson at the Morrell Street property on three or four occasions. He cautioned Ronald Richardson to confirm everything he was told by Michael Lewicki because everything Michael Lewicki said was not always true.

Testimony of Kent Laidlaw

[97] Kent Laidlaw was qualified as an expert in the field of policing and policing standards.

[98] He said that, based on his review of the materials, there appeared to be at best minimal inquiries made by Ronald Richardson about whether Michael Lewicki was attempting to use his complaint about being charged a criminal rate of interest as a means to avoid paying a civil debt. Because of the interconnection between the civil lawsuit between Ernest Painter and Michael Lewicki and Michael Lewicki’s complaints about fraud and perjury on the part Ernest Painter, he would not have undertaken the investigation. In his opinion, the frequency with which Michael Lewicki was in contact with Ronald Richardson was abnormal.

[99] Kent Laidlaw said he had some concern about the complaint from Michael Lewicki about being offered a bribe being investigated by Ronald Richardson, a member of the fraud investigation unit.

[100] The majority of Ronald Richardson’s occurrence reports did not appear to have been initialed by a supervisor. That indicates an absence of supervision.

[101] Kent Laidlaw thought it significant that of the six charges for fraud, perjury and obstruct justice, there were no convictions. He concluded that that brought into question the quality and integrity of the investigation.

[102] Kent Laidlaw concluded that the Brantford Police media relations policy had been circumvented because it was reported on the radio that Ernest Painter had been charged with a number of criminal offences within a very few hours of his release from the police station. The Brantford Police policy was to issue media releases at 8 or 9 o’clock in the morning. He concluded that the information about Ernest Painter being charged had been released to the media in the afternoon shortly after he left the police station.

[103] Kent Laidlaw concluded that there were several instances of Ronald Richardson engaging in conduct which amounted to inappropriate behavior pursuant to the Police Services Act. He based his conclusion on allegations contained in Statements of Claim issued by Ernest Painter. One of the allegations was that Ronald Richardson demanded Ernest Painter “get his tiny ass” down to the police station or he would arrest him and handcuff him at his office. Another allegation was that Ronald Richardson announced to everyone at the bank when he was executing a search warrant that he was investigating a criminal offence committed by Ernest Painter. Finally, he thought it was significant that Ronald Richardson proceeded with charges against Ernest Painter in the face of a clear direction from the Attorney General not to proceed.

[104] In cross-examination, Kent Laidlaw testified that having reviewed the promissory notes for $90,000 and $27,000, it was his understanding that initially the notes provided for a criminal rate of interest but that was because a decimal point had been placed in the wrong location. When that was corrected, it changed from a weekly into an annual interest rate which made it no longer a criminal rate of interest. Kent Laidlaw was not aware that the trial judge in the civil lawsuit had made a finding that the two promissory notes did include a criminal rate of interest. Although he had not read the trial judgment, he said he understood it was an incorrect finding which was subsequently corrected.

[105] Kent Laidlaw agreed that Ronald Richardson had an obligation to investigate complaints made to him by Michael Lewicki. He also agreed that probability of conviction is not a standard to be applied by a police officer when determining whether to lay charges.

[106] In coming to the conclusion that Ronald Richardson acted in an unprofessional manner, Kent Laidlaw relied on information from Ernest Painter. He also said he relied on an allegation in a Statement of Claim to the effect that Ronald Richardson acted inappropriately when conducting a search warrant at Ernest Painter’s office.

[107] Kent Laidlaw agreed he based his decision that the Brantford Police media policy had been breached on information from Ernest Painter. He had no information about when the media release went out.

[108] Kent Laidlaw agreed that consulting with a Crown Attorney prior to commencing an investigation would be an appropriate way to address a concern about the complaint being an attempt to avoid paying a civil debt. He was not aware that Ronald Richardson had received an actuarial report before beginning his investigation about the allegation of Ernest Painter charging a criminal rate of interest.

Testimony of Ronald Richardson

[109] Ronald Richardson joined the Brantford Police Service in April, 1967. In May, 1988 he was assigned on a full-time basis to the fraud investigation unit. He remained there for approximately 9½ years. He retired in September, 1997.

[110] Prior to March, 1991 Ronald Richardson was aware that Ernest Painter was a lawyer practicing in Brantford. He did not know Michael Lewicki before March, 1991.

[111] On March 8, 1991 he met Michael Lewicki. Michael Lewicki showed him the promissory note dated April 18, 1989 payable to Ernest Painter. He understood that although $20,000 was advanced, Michael Lewicki was required to repay $27,000. Michael Lewicki provided a letter from A.W. Dilkes and Associates Actuaries indicating that the annual rate of interest on the $27,000 promissory note was 913 percent per annum. Ronald Richardson completed an occurrence report about his initial meeting with Michael Lewicki which was reviewed by Staff Sergeant Dargie, who was his superior officer.

[112] On March 26, 1991, Ronald Richardson and Michael Lewicki met with Keith Swanson who was the Crown Attorney in Brantford at the time. Michael Lewicki explained his version of events to Keith Swanson. They showed him the $27,000 promissory note and the report from the actuary. Keith Swanson directed that because Ernest Painter was a lawyer practicing in Brantford it would be appropriate for John Ayre, a Crown Attorney from Simcoe, to become involved.

[113] On the advice of Keith Swanson, Ronald Richardson sought and obtained a warrant to search Ernest Painter’s law office. On April 17, 1991 that search warrant was executed. Ronald Richardson completed an occurrence report after executing the search warrant which was reviewed by Staff Sergeant Dargie. He also completed a Report to a Justice with respect to the documents seized.

[114] Ronald Richardson completed an occurrence report dated May 24, 1991. In it he mentioned another actuarial report from A.W. Dilkes and Associates suggesting that the $90,000 promissory note also contained a criminal rate of interest. Ronald Richardson stated in the occurrence report that he intended to interview Ernest Painter and then seek direction from the Crown Attorney.

[115] Michael Lewicki also provided Ronald Richardson with copies of transcripts of under oath testimony of Ernest Painter in two civil lawsuits.

[116] In June, 1991 he sent a package of documents to John Ayre. He understood that John Ayre submitted a package to the Attorney General in July, 1991 for the purpose of obtaining permission under section 347 of the Criminal Code to initiate a charge of usury. Thereafter he was in regular communication with Bryan Manulak of the Attorney General’s office who was assigned to the case.

[117] On March 12, 1992 Michael Lewicki reported that a person by the name of Moe Kowall had offered him a bribe to withdraw his complaint about Ernest Painter. He reported this development to John Ayre who suggested a wiretap Authorization be sought in order to obtain evidence regarding the alleged bribe. Ronald Richardson then prepared a synopsis of the information he had obtained which he submitted to Sergeant William McDonald of the Intelligence Unit of the Brantford Police Service responsible for wiretaps. Sergeant McDonald initiated Project Rich which was the name of the wiretap investigation. He then attended with Keith Swanson and Sergeant McDonald before a justice of the Ontario Court General Division who after asking a few questions granted the Authorization. Ronald Richardson completed an occurrence report regarding the granting of the wiretap Authorization.

[118] As a result of the wiretap Authorization, conversations between Michael Lewicki and Ernest Painter were intercepted on March 31 and April 2, 1992. In the first of the two conversations Michael Lewicki told Ernest Painter that he was not interested in a settlement of the civil case and wanted to proceed to trial. On April 2, Ernest Painter said that he had dictated the affidavit which he swore on April 1, 1992 before the March 31 conversation but at the time he swore the affidavit he knew that Michael Lewicki wanted the case to proceed to trial. Ronald Richardson provided that information to John Ayre.

[119] The interception of private communications pursuant to the wiretap Authorization did not produce any evidence of a bribe.

[120] On April 13, 1992 Ronald Richardson sought and obtained a warrant to search the TD Bank branch located on Fairview Drive in Brantford. The warrant was executed the same day. Ronald Richardson completed an occurrence report with respect to the execution of the search warrant and submitted a Report to Justice regarding the documents seized.

[121] After reviewing the TD Bank documents Ronald Richardson thought that the documents did not coincide with what he understood to be the details of the loan transaction. He understood that Ernest Painter borrowed the money to loan to Michael Lewicki. However, the loan application said the purpose was to purchase a 1986 Cadillac. Ronald Richardson was aware from a Bill of Sale that Kathy Painter had become the owner of the 1986 Cadillac before the date of the loan application. He concluded that Ernest Painter had listed assets on the loan application which he did not own and that the reason given for the loan was not true. He was also aware that the loan had been paid off by the time the search warrant was executed. In his opinion, the bank had been at risk when the loan was made and that was the test to be applied in determining whether a fraud had been committed.

[122] On May 2, 1992, Ronald Richardson obtained a statement from Robert Smith, the manager of the TD Bank branch. In that statement, Robert Smith said that he would have required more security if he had been advised that the purpose of the loan was for an investment as opposed to purchasing a 1986 Cadillac.

[123] Between March and June, 1992 Michael Lewicki brought him various documents which were forwarded to John Ayre. After he had completed his investigation, in November, 1992, he met with John Ayre and reviewed with him the evidence available and possible charges to be laid against Ernest Painter. John Ayre recommended the charges to be included in the Information. Those were the charges that were laid.

[124] On November 30, 1992, Ronald Richardson met with Ernest Painter and Paul Stillman at the police station. During the meeting he showed Ernest Painter the documents from the TD Bank. Ernest Painter advised him that the loan application form had been signed in blank. Ernest Painter was issued an appearance notice. Arrangements were made for Ernest Painter to return to the police station for fingerprinting. The date for fingerprinting was arranged to suit Ernest Painter’s convenience after he had telephoned his office.

[125] The next day, Ronald Richardson spoke to Robert Smith, the manager at the TD Bank branch who advised that the loan application form had been completed before it was signed by Ernest Painter.

[126] Ronald Richardson learned that the court date on the appearance notice issued to Ernest Painter was incorrect. Accordingly he arranged for a new appearance notice to be issued. He arranged through Paul Stillman for Ernest Painter to return to the police station on December 7, 1992 at which time Ernest Painter was given the new appearance notice with the correct court date.

[127] In July, 1993, John Ayre requested Ronald Richardson to investigate a complaint by Michael Lewicki about an allegation of a criminal breach of trust by Ernest Painter. He completed the investigation as directed and John Ayre declined to authorize the laying of a charge. Michael Lewicki then proceeded to swear a private information alleging a criminal breach of trust on the part of Ernest Painter.

[128] In the summer of 1993 responsibility for prosecution of the case was transferred to Lois Aicken because John Ayre was assigned another time-consuming matter. In September, 1993 Lois Aicken reported with respect to comments made by a pretrial conference judge that the Crown’s case was weak. She decided to proceed with the preliminary inquiry.

[129] Ronald Richardson explained the procedure for swearing an Information was that he would prepare the document and deliver it to the court office. A court officer would then take the draft Information to a Justice of the Peace and swear the Information. On November 2, 1993 during the second day of the preliminary inquiry and just before he was to begin his testimony, the judge noticed that the Information was unsworn. As a result, the preliminary inquiry was terminated.

[130] Following the termination of the preliminary inquiry, William Johnson, the Crown who had been assigned to review the case wrote to Ronald Richardson requesting his input. William Johnson expressed his tentative views in the letter. Ronald Richardson prepared a response which was directed to inspector Farnsworth and which was incorporated into a letter forwarded by Ronald Richardson to William Johnson on January 31, 1994. In the letter to William Johnson he urged that the charges of fraud, perjury and obstruct justice be re-laid.

[131] Ronald Richardson reported to Staff Sergeant Dargie throughout the investigation of Ernest Painter. He submitted a number of occurrence reports. Frequently his reports were oral. During the course of the investigation Ronald Richardson received several telephone calls from Michael Lewicki inquiring about whether a decision had been made by the Attorney General regarding the usury charge. Ronald Richardson said that he did not provide Michael Lewicki with any details of the investigation. He simply told him that they were awaiting a response from the Attorney General.

[132] Ronald Richardson completed the Crown Counsel Brief which he submitted to John Ayre.

[133] In cross-examination, Ronald Richardson said he was not aware about a threat made by Michael Lewicki to report Ernest Painter’s activities to the police and the Law Society. He said he had been taught during a fraud course to be vigilant for someone using a criminal investigation to further a civil complaint.

[134] Ronald Richardson said that he attended at 20 Morrell Street on three or four occasions during the course of his investigation. Once while he was there he met Cash Banas. Cash Banas did not caution him to be careful about believing anything Michael Lewicki said to him.

[135] Ronald Richardson said when he first met Michael Lewicki he was shown the promissory note for $27,000. He told Michael Lewicki that he would need to obtain a report from an actuary. At the time of the first meeting Michael Lewicki made him aware of the lawsuit involving Ernest Painter. He agreed that Michael Lewicki complained about the interest rate of 21 percent per month as stated in the promissory note and the $7,000 difference between the face amount of the loan and the money actually advanced. Ronald Richardson did not review the interest calculation in the Statement of Claim which was provided to him by Michael Lewicki to determine whether interest was being claimed at 21 percent per annum.

[136] Shortly after the first meeting Michael Lewicki provided a copy of the promissory note for $90,000 and said he had only received an advance of $60,000. Subsequently he learned, as a result of the search of Ernest Painter’s office, that $75,000 had been advanced.

[137] At the time of executing the search warrant, Ronald Richardson was aware of the exchange of chattels between Michael Lewicki and Ernest Painter and that the loans and the exchange of chattels were the subject of a civil lawsuit that had been going on for some time.

[138] Ronald Richardson was familiar with the letter sent by Paul Stillman to Bryan Manulak in January, 1992. He acknowledged discussions with Paul Stillman about the rate of interest which was intended to be 21 percent per annum rather than 21 percent monthly. He disagreed with the suggestion made by Paul Stillman that Michael Lewicki’s complaint about being charged a criminal rate of interest was to gain an advantage in a civil dispute. He believed that John Ayre was also aware of letter.

[139] Ronald Richardson said he was not aware at the time of Paul Stillman sending a letter to the office of the Attorney General in October, 1992.

[140] Ronald Richardson acknowledged receipt of a letter from John Ayre dated October 28, 1992 advising that approval would not be forthcoming from the Attorney General to a charge in relation to the criminal interest investigation. He took the reference in the letter to “serious inquiries concerning abuse of process” to be in reference to any criminal interest rate charge. Ronald Richardson said he discussed the letter with Staff Sergeant Dargie. After receipt of the letter and before the charges were laid, he discussed the matter with John Ayre. John Ayre reviewed the evidence which had been gathered and recommended the charges that were laid.

[141] Ronald Richardson acknowledged that in light of subsequent events, and in particular the judgment in the civil lawsuit, he should have been more careful about some of the things Michael Lewicki said. He did not have a signed statement from Michael Lewicki. He acknowledged that he should have obtained a signed statement from Michael Lewicki.

[142] Ronald Richardson said he did not consider it his responsibility to decide on Michael Lewicki’s truthfulness. It was his responsibility to receive the information and if it seemed to have some validity then to forward it to the Crown Attorney.

[143] Ronald Richardson was not asked about how he spoke to Ernest Painter or his manner of dealing with Ernest Painter when he executed the search warrant in April, 1991. He was not asked about what he said to Ernest Painter during the telephone conversation of November 30, 1992 when he advised Ernest Painter that he would be charged and requested his attendance at the police station. Ronald Richardson was not asked about his manner of dealing with Ernest Painter at the police station. Ronald Richardson was not asked about the execution of the search warrant at the TD Bank. Ronald Richardson was not asked about an outburst by him upon learning that the preliminary inquiry had been terminated because the Information had not been properly sworn.

Testimony of John Ayre

[144] John Ayre was the Crown Attorney for Norfolk County from 1990 until about 1997. He recalled dealing with Ronald Richardson about the Ernest Painter case in the early 1990s. He was asked to assume carriage of the case by Keith Swanson, the Crown Attorney for Brant County. He was not sure why he later assigned the Ernest Painter case to Lois Aicken but he believed it was because of his caseload.

[145] John Ayre sent a letter to his Regional Director requesting the Attorney General’s consent to proceed with a prosecution for a charge of a criminal rate of interest. Before sending the letter he would have vetted the material with which he was provided to satisfy himself that, if consent was given it was a case worthy of prosecution. Before sending the letter he would have applied a standard akin to whether he thought there was a reasonable prospect of conviction. He could not recall precisely what the Crown standard was at the time.

[146] He forwarded a letter to Ronald Richardson dated October 28, 1992 advising that the Attorney General would not consent to the proposed prosecution of Ernest Painter for the alleged violation of section 347 of the Criminal Code. In that letter he quoted excerpts from a letter from the Assistant Deputy Attorney General expressing four reasons for the refusal to consent to the prosecution. Those four reasons were: 1) the likelihood of a conviction; 2) a concern about possible abuse of process; 3) the delay in responding to the request for consent; and, 4) that the matter was the subject of a Law Society investigation.

[147] John Ayre sent a letter to Ronald Richardson dated June 27, 1993 advising that he could see no basis for laying a charge of obstructing justice against Ernest Painter arising out of pleadings in a civil proceeding.

[148] John Ayre explained that it is the individual responsibility of every Crown counsel to independently assess the merits of each case.

[149] John Ayre said he had prosecuted at least one fraud case where the money had been returned before the fraud was discovered. He said it is important to protect the sanctity of affidavits.

[150] In cross-examination, John Ayre said that while he did not remember the letter from the Assistant Deputy Attorney General, parts of which were quoted in his letter of October 28, 1992, he considered the reference to a concern about abuse of process to be specifically in relation to the potential criminal interest rate charge.

Testimony of Randy Rosiak

[151] Randy Rosiak was qualified as an expert in the field of police procedure and administration and standards of police practice with an emphasis on criminal investigations.

[152] Randy Rosiak testified that in order to obtain a search warrant a police officer is required to prepare an Information to Obtain in which details of the location to be searched, the offence under investigation, the officer’s reasonable and probable grounds for believing that the offence had occurred and that evidence in relation to the offence existed at the location to be searched. The Information to Obtain would be presented to a Judge or a Justice of the Peace depending on the type of search warrant who would decide if the warrant should be issued.

[153] Randy Rosiak testified as to the proper procedure to be followed when executing a search warrant. He said that a police officer is required to attend at the search location, identify himself as a police officer, advise those present that the purpose of the attendance was to execute a search warrant, provide a copy of the search warrant to a person present, take control of the location and search for the evidence listed in the search warrant. In relation to a search at a law office, he said it should be done in a businesslike manner.

[154] Randy Rosiak also said that in relation to executing a search warrant at a bank it is usual to contact the bank, in advance, to advise that a warrant would be executed and provide a list of documents to be seized. That would afford the bank an opportunity to prepare the documents which would be turned over to the police officer when he or she attended at the bank location to execute the warrant.

[155] Randy Rosiak explained that the procedure for obtaining a wiretap Authorization. Firstly, other means of investigation need to be exhausted. Then an officer trained in preparation of an affidavit for a wiretap Authorization would be engaged. Because wiretap investigations are expensive they are not undertaken lightly.

[156] Randy Rosiak testified that when an officer is satisfied that there is a prima facie case and reasonable grounds to believe that an individual has committed an offence, the officer prepares an Information. Typically, the investigating officer officer would prepare the Information which would go to a court officer who would appear before a Justice of the Peace and swear the Information in bulk, along with several other Informations.

[157] It was the opinion of Randy Rosiak that Ronald Richardson had sufficient evidence to justify the laying of the fraud, false pretense, perjury and obstruct justice charges. He also concluded that it was appropriate to request Ernest Painter to attend that the police station with his lawyer to be advised of the charges to be instituted. Ernest Painter was never arrested. Rather he was issued an appearance notice.

[158] Randy Rosiak testified that Ronald Richardson conducted an appropriate investigation. He consulted with three Crown Attorneys at various points in time to review the evidence and all agreed to continue prosecution. Ronald Richardson prepared Informations to Obtain Search Warrants which were presented to a Judge or a Justice of the Peace who issued the warrants. That means that the Judge or Justice of the Peace concluded that sufficient grounds existed to permit the issuance of the warrants.

[159] In Randy Rosiak’s opinion, when Michael Lewicki presented Ronald Richardson with information that he had been offered a bribe, Ronald Richardson had an obligation to investigate that complaint. Ronald Richardson consulted with Crown Attorney, John Ayre who recommended seeking a wiretap authorization. Based on that recommendation, Ronald Richardson met with his superior officers and a decision was made to proceed with an investigation. That investigation resulted in an attendance before a Judge of the Ontario Court General Division who granted the Authorization. Because of the cost involved in a wiretap investigation the decision to proceed would have gone up through the chain of command.

[160] Randy Rosiak concluded that the investigation conducted by Ronald Richardson was not perfect but it was fair and reasonably complete. In his opinion the investigation met the appropriate standard applicable at the time. He described it as a good investigation. He also concluded that the supervision of Ronald Richardson by ranking officers in the Brantford Police Service met the requisite standard at the time.

[161] In cross-examination Randy Rosiak agreed that the role of an investigator is to gather all of the evidence both pro and con. He also agreed that Ronald Richardson should have obtained a signed statement from Michael Lewicki.

[162] Randy Rosiak acknowledged, based on the evidence given by Michael Lewicki at the preliminary inquiry, that the threat to report Ernest Painter to the Law Society and make a complaint to the police was an abuse of process. He said he would expect in an investigation such as the one involving Ernest Painter that the investigating officer would consider the issue of abuse of process from the outset and on an ongoing basis.

Discussion and Analysis

[163] In Hill v. Hamilton-Wentworth Regional Police Services Board, 2007 SCC 41, [2007] 3 S.C.R. 129, Supreme Court of Canada stated at paragraph 3:

The tort of negligent investigation exists in Canada, and the trial court and Court of Appeal were correct to consider the appellant's action on this basis. The law of negligence does not demand a perfect investigation. It requires only that police conducting an investigation act reasonably. When police fail to meet the standard of reasonableness, they may be accountable through negligence law for harm resulting to a suspect.

[164] The Court went on to went on to articulate the standard of care expected of police officers in the following terms at paragraph 73:

I conclude that the appropriate standard of care is the overarching standard of a reasonable police officer in similar circumstances. This standard should be applied in a manner that gives due recognition to the discretion inherent in police investigation. Like other professionals, police officers are entitled to exercise their discretion as they see fit, provided that they stay within the bounds of reasonableness. The standard of care is not breached because a police officer exercises his or her discretion in a manner other than that deemed optimal by the reviewing court. A number of choices may be open to a police officer investigating a crime, all of which may fall within the range of reasonableness. So long as discretion is exercised within this range, the standard of care is not breached. The standard is not perfection, or even the optimum, judged from the vantage of hindsight. It is that of a reasonable officer, judged in the circumstances prevailing at the time the decision was made -- circumstances that may include urgency and deficiencies of information. The law of negligence does not require perfection of professionals; nor does it guarantee desired results. Rather, it accepts that police officers, like other professionals, may make minor errors or errors in judgment which cause unfortunate results, without breaching the standard of care. The law distinguishes between unreasonable mistakes breaching the standard of care and mere "errors in judgment" which any reasonable professional might have made and therefore, which do not breach the standard of care. [Authorities omitted]

[165] In 495793 Ontario Ltd. (c.o.b. Central Auto Parts) v. Barclay, 2016 ONCA 656, 2016 O.J. No. 4615, the Ontario Court of Appeal stated that the standard to be applied regarding laying of charges is the requirement of reasonable and probable grounds to believe the person charged is guilty. At paragraph 50, the court adopted the following passage from Wong v. Kyriacou, 2009 CanLII 66385 (ON SC), [2009] O.J. No. 5067, a decision of the Ontario Superior Court:

The determination as to whether reasonable grounds exist is based upon an analysis of the circumstances apparent to the officer at the time of the arrest and not based upon what the officer or anyone else learned later. Reasonable grounds still exist where the information relied upon changes at a future date or otherwise turns out to be inaccurate. The requirement is that the information be reliable at the time the decision was made to arrest the accused.

[166] It follows from the passages quoted above that civil liability does not flow simply from charges being laid which do not result in conviction.

[167] In many aspects of his life, Ernest Painter sees himself as not responsible or a victim when things turn out differently than what he had hoped or expected. The law partnership of Painter and Painter did not last because his brother dissolved the partnership without consultation while Ernest Painter and his wife were away on vacation. Also, his brother did not refer work to him, as expected, when they began to practice together. The 43 lot residential subdivision development failed because Doug Lillico did not deliver on his promise to presell lots to his builder contacts and his departure from Brantford shortly after the purchase of the property closed. Ralph Rodgers and Earl Campbell did not fulfill their commitment to develop, build and operate retirement homes. This resulted in Ernest Painter having to seek new investors. This led him to Dev Mundi. Although the retirement home, Amber Lea, began as a successful business venture, it foundered because of poor management on the part of Dev Mundi. Ernest Painter lost his investment in Amber Lea because Dev Mundi took advantage of him. Ernest Painter’s investment in horse breeding was unsuccessful because he did not have the time to devote to the business.

[168] It is also apparent that Ernest Painter was continuously on the lookout for investment opportunities which would result in significant profit for him. One example of this was the investment in Go Vacations. This was also the motivation behind Ernest Painter becoming involved with Cash Banas and Michael Lewicki. Ernest Painter thought that Cagemaster had a superior product and would be a successful business venture. He was anxious to become an investor or partner with Cash Banas and Michael Lewicki. These individuals were not reputable and honest businessmen.

[169] Ernest Painter has the ability to view his world through his own prism. For example, he saw his law practice as being extremely successful. From the financial statements which were made exhibits, it is my conclusion that, aside from the fiscal years 1989 and 1990, the law practice was, at best, modestly successful. By the fiscal year 1991 it was clear that the law practice was failing badly. Ernest Painter saw Amber Lea as being very successful but again, the financial statements which were made exhibits tell a different story.

[170] It is these personality traits which led Ernest Painter to blame the demise of his law practice and health on the conduct of Ronald Richardson. Ernest Painter complained about the way he was treated by Ronald Richardson. No one other than he observed similar conduct on the part of Ronald Richardson. Wendy Anderson did not see any improper conduct on the part of Ronald Richardson when he attended to execute the search warrant in April, 1991. Paul Stillman did not testify about Ronald Richardson acting inappropriately when advising Ernest Painter about the charges which were about to be laid when they were at the police station on November 30, 1992. Neil Jones did not testify about an inappropriate outburst in the courtroom after the preliminary inquiry judge declared the proceedings to be a nullity. Indeed Ronald Richardson was not asked about any of these alleged incidents when cross examined. He also was not cross examined about the allegation that he used inappropriate language when he telephoned Ernest Painter to summon him to the police station on November 30, 1992. He was not asked about the allegation that he improperly announced to people at the TD Bank when he attended to execute the search warrant that he was investigating criminal activity on the part of Ernest Painter.

[171] Ronald Richardson received a complaint from Michael Lewicki about being charged a criminal rate of interest on two promissory notes which he executed in April, 1989 with Ernest Painter being the payee. That allegation was supported by the opinion of an actuary. After completing an investigation, Ronald Richardson submitted his findings to Crown Counsel, John Ayre. John Ayre submitted a request, as required, to the Attorney General for approval to proceed with a charge pursuant to section 347 of the Criminal Code. The Attorney General’s representative declined to authorize the prosecution. That does not however, mean that the investigation was negligent. To the contrary, I am satisfied that investigation was appropriate based on the available evidence.

[172] It is also significant, in my view, that no charge or charges arose out of the usury investigation. I therefore fail to see how any damages could flow from an investigation which was terminated before any charge was laid.

[173] With respect to the charges of fraud and false pretenses involving the TD Bank, it is my conclusion that the charges were appropriate based on the available evidence. The loan was stated to be for the purpose of purchasing a 1986 Cadillac. There was evidence however that the loan was for the purpose of advancing funds to Michael Lewicki for the purpose of his business. The loan application, on its face, showed assets which were not owned by Ernest Painter at the date on which the application was signed. I do not accept Ernest Painter’s testimony that he signed the loan application form in blank. Whether it would have ultimately been found that he was careless when signing the loan application form is not the test. Similarly, whether a trier of fact would ultimately conclude that the Bill of Sale for the vehicle exchange was not effective on the date it was signed and accordingly Ernest Painter continued to own those vehicles at the time of the loan application does not mean that the charges should not have been laid. I find that the loan transactions and the alleged exchange of chattels were sufficiently complicated and obtuse that Ernest Painter should not be allowed, after the fact, to say that Ronald Richardson should have done more to ferret out what Ernest Painter says was the true nature of those transactions.

[174] With respect to the charges of perjury and obstruct justice, in my view, the charges were appropriately laid. Ernest Painter swore affidavits containing statements that Michael Lewicki was in agreement that the pretrial conference and trial be adjourned and that the case was close to settlement. Those affidavits were sworn after Michael Lewicki told Ernest Painter that he was not interested in pursuing a settlement of the civil lawsuit and was anxious to proceed with the pretrial conference and the trial. Ernest Painter acknowledged in his testimony that those statements in the affidavits were not correct but he gave as his explanation that he panicked when he found out that Michael Lewicki had changed his mind about the possibility of settling the case. His explanation for swearing the affidavits in their original form was not convincing. It may have been that a trier of fact would have found that his explanation was sufficient to raise a reasonable doubt, but that is not the test.

[175] It is significant that John Ayre reviewed and approved the charges contained in the Information which proceeded to the preliminary inquiry. Crown Attorney, Lois Aicken also was of the view that the charges merited proceeding to a preliminary inquiry. Other persons may have had a different view but that does not mean that Ronald Richardson’s investigation was negligent.

[176] The decision made by William Johnson not to proceed with relaying the charges following the aborted preliminary inquiry does not mean that the original investigation was flawed. There were several reasons given why William Johnson made the decision to terminate the prosecution. Those reasons included evidence which came out during the course of the preliminary inquiry. That is one of the purposes of a preliminary inquiry. William Johnson also took into consideration the public interest in continuing with the prosecution and concluded that the public interest did not justify proceeding. He also applied a standard of “reasonable probability” of conviction which is not the police standard of “reasonable and probable grounds”. As Crown counsel that was an appropriate decision for him to make but it does not amount to a finding that the investigation itself was negligent. William Johnson did not state that the Ernest Painter was innocent of any criminal offence or that the charges should never have been laid. Rather his decision was simply that the charges should not be relayed.

[177] Throughout the course of this trial, it was apparent that Ernest Painter viewed himself as the victim. He did not see that he had done anything wrong, let alone committed criminal offences. He acted as though he was innocent of any wrongdoing. No such finding was ever made. Ernest Painter was not found not guilty after a trial. The preliminary inquiry was terminated because the charging Information had not been properly sworn and a decision was made to not lay a new Information. In my view, that is very different than a finding that Ernest Painter committed no criminal offences and was completely innocent of the charges which were brought against him.

[178] There was no evidence that Ronald Richardson fabricated or withheld evidence in order to convince Crown Attorneys John Ayre and Lois Aicken to authorize the laying of charges or continue with the prosecution to the stage of the preliminary inquiry.

[179] Ernest Painter complains that Ronald Richardson or someone else at the Brantford Police Service breached the media release policy by disclosing to the media that he had been charged criminally within a few hours of his departure from the police station on November 30, 1992. This allegation was not put to Ronald Richardson in cross examination. Furthermore, I am satisfied that there was no breach of the Brantford Police Service media policy. Ernest Painter was required to re-attend at the police station on December 7, 1992 because of an error in the court date in the Appearance Notice which he was given on November 30, 1992. I find it more likely that Ernest Painter heard the radio report about being charged on December 7, 1992 as opposed to the earlier date. Ernest Painter testified that it was following his departure from the police station after being photographed and fingerprinted when he heard the report on the radio. I conclude he was not photographed and fingerprinted on November 30, 1992 as this occurred on a subsequent date. Paul Stillman testified about arranging a future date for photographing and fingerprinting that suited the convenience of Ernest Painter and his law practice. Finally, I note that the article in the Brantford Expositor was published in the December 3, 1992 edition of the newspaper which would be consistent with a media release being distributed on December 1 or 2, 1992 in accordance with the policy.

[180] Cash Banas testified that he warned Ronald Richardson about accepting at face value everything Michael Lewicki said. Ronald Richardson denied receiving any such admonition from Cash Banas. I accept Ronald Richardson’s evidence on this point.

[181] Kent Laidlaw testified as an expert witness with respect to police standards. His evidence was less than compelling. He expressed his personal opinion about the investigation rather than testifying about standard practice. He relied on the fact that there were no convictions for the charges of fraud, perjury and obstruct justice as indicating a deficiency in the investigation. He appeared not to take into consideration that at least one of the reasons why there were no convictions was because the Information had not been properly sworn. The conclusion that Ronald Richardson was guilty of inappropriate behavior which was in breach of the Police Services Act was based on a reading of allegations contained in Statements of Claim. Kent Laidlaw appeared not to appreciate that the investigation into the usury allegation was at least, in part, based on the difference between the funds advanced and the amount required to be repaid. When confronted with the finding of the trial judge in the civil lawsuit that there was in fact a criminal rate of interest charged in the promissory notes he testified that it was his understanding that that finding was in error and was subsequently corrected.

[182] I do not find there to be any evidence from Kent Laidlaw from which a conclusion could be drawn that Ronald Richardson’s investigation fell below the standard required of a reasonably competent police officer in the period 1991 to 1993.

[183] Randy Rosiak came to the conclusion that while the investigation by Ronald Richardson was not perfect it was adequate. I accept this evidence.

[184] Randy Rosiak acknowledged that Ronald Richardson should have been concerned about the possibility that Michael Lewicki was attempting to use the criminal process to secure an advantage in a civil dispute. Ronald Richardson did not think that he was dealing with an abuse of process. Assuming Ronald Richardson was wrong in that conclusion, in my view it was a judgement call which he was entitled to make. Another police officer might have come to a different conclusion, but that does not mean Ronald Richardson did not meet the standard of a reasonably competent police officer.

[185] I therefore find that Ronald Richardson’s investigation of Ernest Painter and the laying of the Information did not fall below the standard of a reasonable police officer in similar circumstances.

[186] Having found no negligence on the part of Ronald Richardson, it follows that there was no actionable lack of supervision on the part of his supervisors at the Brantford Police Service.

Causation and Damages

[187] In Hill, the Supreme Court of Canada stated at paragraph 94:

Recovery for negligence requires a causal connection between the breach of the standard of care and the compensable damage suffered. Negligent police investigation may cause or contribute to wrongful conviction and imprisonment, fulfilling the legal requirement of causal connection on a balance of probabilities. The starting point is the usual "but for" test. If, on a balance of probabilities, the compensable damage would not have occurred but for the negligence on the part of the police, then the causation requirement is met.

[188] Ernest Painter claims damages in three areas. Firstly, he claims damages for the loss of income earning capacity from his law practice in the amount of $3,860,000. Secondly he claims a loss in relation to his investment in Amber Lea of $1,286,000. Finally he claims loss of his equity in the building at 58 Brant Avenue of $275,000.

[189] I am not satisfied that any of the claimed damages result from the investigation conducted by Ronald Richardson or the laying of charges arising out of that investigation. Put somewhat differently, I am not satisfied on a balance of probabilities that “but for” the conduct of Ronald Richardson Ernest Painter would not have suffered the losses which he claims.

[190] It is significant, in my view that Ernest Painter was dealing with significant stressors in his life aside from the criminal charges. Those stressors included excessive alcohol consumption, psychiatric issues, the death of his father and a failing marriage. Those other factors, in my view played a more significant role in the failure of the law practice than the impact of the criminal charges.

[191] Dr. Reiner Scholten was Ernest Painter’s family physician from the mid 1980s. His clinical notes and records were made an exhibit. Contained in those notes was an application for disability benefits to Westbury Canadian Life in which it was stated that Ernest Painter became unable to work as of the spring of 1992 and that he had worked part time from the spring of 1992. In a note dated April 22, 1991, Dr. Scholten diagnosed Ernest Painter with chronic fatigue syndrome. In September, 1993, Dr. Scholten referred Ernest Painter to Dr. Sunny Luthra, a psychiatrist regarding depression.

[192] Dr. Luthra’s note of his initial assessment of Ernest Painter references a series of very significant psychosocial stressors including the death of his father, difficulties in his marriage, alcohol consumption and “some criminal problems related to his Practice”. In a note dated October 12, 1993, Dr. Luthra reported that most of the session with Ernest Painter was spent exploring his marital relationship. In a note dated November 11, 1993, Dr. Luthra indicated that the past three weeks had been very difficult for Ernest Painter because of the trial “to defend himself against civil and many criminal charges”. There is no mention in this note about the criminal charges having been terminated. In a note from December 13, 1993, Dr. Luthra mentioned dealing with the marriage relationship and the death of Ernest Painter’s father. No mention is made about the criminal charges. In a note dated August 12, 1994, Dr. Luthra makes reference to the “family functioning” but there is no mention of the closure of Ernest Painter’s law practice.

[193] Based on all of the evidence, it is my conclusion that Ernest Painter’s law practice was in shambles by 1991. He was devoting enormous amounts of time to the civil lawsuit with Michael Lewicki, the union certification application at Amber Lea and the litigation with Dev Mundi. The complete failure of his law practice was not caused by the laying of the criminal charges. I accept that a lawyer who is charged criminally will face some adverse consequences affecting his professional reputation. However, once the prosecution was terminated, Ernest Painter could have continued practicing and explained to former and future clients that although he had been charged he had never been convicted. He could also have chosen to relocate his law practice.

[194] Ernest Painter’s claim for loss of income is based on the average net income from the law practice for the fiscal years 1986 to 1992. Ernest Painter’s average net income for that period was calculated by Richard Joyce, an expert in the field of economic loss calculation, to be slightly in excess of $110,000. The loss of income calculation is then based on the assumption that Ernest Painter was unable to continue to practice law or earn income from any other source for the period from 1993 until his anticipated date of retirement at age 68, which was August 31, 2016.

[195] I am unable to accept this calculation. I do not accept that Ernest Painter would have earned an average net income from the practice of law of $110,000 a year for 22 years from 1994 to 2016. His net income from the practice of law exceeded $110,000 in only two fiscal years, 1989 when he earned slightly less than $210,000 and 1990 when he earned almost $240,000. I do not accept that Ernest Painter would have continued to practice law until he reached 68 years of age. By his own admission, he was looking for other sources of income. He stated that it was his intention to retire from the practice of law at age 55.

[196] If I had come to the conclusion that Ernest Painter had suffered a loss of income as a result of the negligence of Ronald Richardson, I would have preferred the calculation of loss of income of Michael Iantomasi, who was also qualified as an expert in economic loss calculation. Using the same average annual income calculation, he calculated Ernest Painter’s loss of income to 1995 when he began receiving a disability pension through the Canada Pension Plan to be $342,000.

[197] With respect to Amber Lea, in my view, there can be no loss because Ernest Painter had the opportunity pursuant to the shotgun buy-sell imposed by the court to purchase Dev Mundi’s interest for $260,000. He chose not to do so and now should not be permitted to complain that he suffered a loss as result of that decision. Presumably, he made the decision, at the time, that $260,000 was a fair price for the purchase of his investment. Had he been of a different view he would have, and should have, exercised the option available to him to purchase will Dev Mundi’s share for the same price.

[198] Ernest Painter testified that when the mortgagor on 58 Brant Avenue commenced power of sale proceedings in early 1994 he negotiated a settlement which resulted in him remaining in possession of the property until he closed his law practice and then he delivered vacant possession to the mortgagor. As with the loss claimed with respect to Amber Lea, I find that any loss suffered by Ernest Painter arising out of the loss of his investment in 58 Brant Avenue was as a result of his own decision and not as a result of anything done or not done by Ronald Richardson.

[199] If I had come to a different conclusion, I would have calculated Ernest Painter’s loss in relation to 58 Brant Avenue as the loss of his equity in the property at the time possession was given to the mortgagor. Ernest Painter purchased the property in December 1991 for $120,000. There was evidence of an appraisal for the property in February, 1991 which concluded that the value was $210,000. The book value shown on the financial statements for 58 Brant Avenue as at December 31, 1993 was $216,000. There was no evidence as to the value of the property in November, 1992 when the criminal charges were laid or in July, 1994 when Ernest Painter vacated the property. Using the book value of $216,000, Richard Joyce then calculated the loss of equity to be $18,500. In my view this is the maximum amount of loss suffered by Ernest Painter resulting from the mortgage sale of 58 Brant Avenue.

Conclusion

[200] For these reasons, the action is dismissed against Ronald Richardson, Joyce Lennon, Al Barber, Brantford Police Services Board and the Corporation of the City of Brantford.

[201] If counsel are unable to agree on the appropriate disposition as to costs they may make written submissions. The written submissions on behalf of the defendants are to be delivered to my office by October 5, 2017 and not to exceed three pages in length exclusive of a Bill of Costs and Costs Outline. Responding submissions are to be delivered to my office by October 12, 2017 and not to exceed three pages in length. Counsel are directed to file electronic copies of their cost submissions at Kitchener.Superior.Court@ontario.ca to my attention. If costs submissions have not been received within the dates set out in these Reasons, costs will be considered as having been resolved and the file will be closed.

“G. E. Taylor”

G.E. Taylor, J.

Released: September 21, 2017

CITATION: Painter v. Richardson, 2017 ONSC 5603

COURT FILE NO.: 6242/94 (Hamilton)

DATE: 2017/09/21

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Ernest W. Painter

– and –

Ronald Richardson, Michael Lewicki, Joyce Lennon, Al Barber, Brantford Police Services Board, Her Majesty the Queen in the Right of Ontario, John Ayre, Lois Aitken, Keith Swanson, Robert Thompson and the Corporation of the City of Brantford

REASONS FOR JUDGMENT

G.E. Taylor, J.

Released: September 21, 2017