Court File and Parties

Citation: Seegmiller Limited v. 2132483 Ontario Inc., 2017 ONSC 7695 Court File No.: C-909-13 Date: 2017-12-22 Superior Court of Justice - Ontario

Re: E. & E. Seegmiller Limited, Plaintiff And: 2132483 Ontario Inc., operating as Isle of Innisfree Designs, 2308164 Ontario Ltd., operating as CHYM Company, Complete Survey Solutions Inc., Chau, Pulver, Smith & Associates Inc., 1471872 Ontario Inc., operating as Downsview Group, 1471871 Ontario Inc., operating as Downsview Group, 2062338 Ontario Inc., operating as Downsview Group, 2050491 Ontario Inc., operating as Downsview Group, Lee Charpentier, Andrea Yates, Ka Leung Chau, also known as Buddy Chau, Gerald Perger, also known as Jerry Perger and Margaret Perger, Defendants

Before: The Honourable Mr. Justice P.J. Flynn

Counsel: J. Gregory Murdoch, Counsel for the Plaintiff David J. Thrasher, Counsel for the Defendant, Charpentier

Heard: November 28, 2017

Endorsement

[1] Two motions were brought before me this day: the Plaintiff’s long motion for Summary Judgment and the Defendant Charpentier’s motion for an Order requiring the Plaintiff to produce for inspection … all financial records referred to in the Affidavit of Robert Fowlie sworn January 29, 2014.

[2] By agreement, only the Defendant’s motion proceeded, though, by necessity, there was some cross play. For example, the Affidavit of Robert Fowlie, targeted by the Defendant, is found in the Plaintiff’s Summary Judgment Motion Record.

[3] And the Plaintiff’s counsel resorted to much of his argument for Summary Judgment in responding to the Defendant’s motion.

[4] Having read the material on both motions before the hearing, I became clearly aware of the parties’ positions.

[5] And, in spite of the fact that the Summary Judgment motion itself was not fully argued, I have concluded that there be judgment for the Plaintiff, in an amount yet to be determined (ranging from zero upwards) in a hearing before me.

[6] I make this determination on the basis of Mr. Charpentier’s own admission that he participated with Buddy Chau in a scheme to defraud the Plaintiff by having the Plaintiff award surveying contracts to Chau’s corporation, CHYM, then overbill the Plaintiff’s customers for that survey work and split the excess payments with Chau.

[7] Chau confessed to the fraud and has provided a detailed accounting showing proceeds of $6,617,391 was obtained and thus split.

[8] Charpentier also admitted the scheme under oath but not the amount.

[9] It is Chaprentier’s position that the Plaintiff can’t prove any loss because of this fraudulent scheme, because Charpentier says he orchestrated other over-inflated fraudulent invoices to cover the Charpentier - Chau losses.

[10] During the hearing, counsel for Charpentier, as much as conceded that the case was about quantum, not entitlement to judgment.

[11] And, because it is about quantum, the documents to which Charpentier seeks access are all the more important.

[12] To prove its case on the quantum of the fraud, the Plaintiff relies upon the Affidavit and report of Robert Fowlie, a Chartered Accountant and partner in the Forensic Sciences branch of Deloitte. He has spent more than 20 years doing investigative and forensic accounting.

[13] Mr. Fowlie conducted the investigation referred to in his report of December 19, 2013, which formed the basis of the Plaintiff’s claim. He reviewed copious documents, more specifically described in Article 3.1 of his report.

[14] Charpentier’s motion seeks an Order requiring the Plaintiff to produce for inspection by Charpentier “all financial records referred to in the Affidavit of Robert Fowlie, sworn January 29, 2014”, and requiring Tim Seegmiller to re-attend for a continuation of his cross-examination.

[15] Charpentier’s counsel argues that it is these specific records upon which the Plaintiff relies to prove its claim. And without access to these documents Charpentier says he cannot establish his defence: that the Plaintiff never did suffer any loss or damages. And, he argues, it follows that, if the Plaintiff relies upon these documents, Charpentier is entitled to see them.

[16] In spite of Mr. Murdoch’s very forceful argument to the contrary, I agree with Charpentier’s position on this score.

[17] Mr. Murdoch argues that Charpentier’s shield issue – that he hid the Plaintiff’s loss by overbilling others – is “negated” when Charpentier admits, as he does, that the Plaintiff was not aware of this part of the scheme.

[18] The Plaintiff argues that Charpentier negates his own defence and is being disingenuous in claiming that there ought to be other Plaintiffs. Moreover, he says that there are no complaints by others of overbilling. Mr. Murdoch calls Charpentier’s an audacious defence – not viable in law, offending both public policy and rules of equity.

[19] Mr. Thrasher, for Charpentier, acknowledges his client can’t keep the money that he, in effect, stole. But he argues that he is entitled to full answer and defence which he can’t make without viewing the documents sought.

[20] He says this: Fowlie’s Affidavit and Report refers to specific projects – those are the records to which I want access.

[21] It is highly doubtful that Charpentier’s larcenous approach to life and business will be rewarded in the end, but he ought to be able to try making a case that judgment be in some lesser amount than that claimed by the Plaintiff.

[22] And just as the Fowlie documents are relevant to the quantum claimed by the Plaintiff, they must be equally relevant to Charpentier’s attempt to reduce the quantum. And, I so find.

[23] Pursuant to Subrule 30.02(2) the “Fowlie documents” must be produced for inspection, as provided in Rules 30.03 to 30.10. I order that to be done before January 31, 2018 at a place selected by Plaintiff’s counsel and in circumstances as to the security of those documents as set down by Plaintiff’s counsel.

[24] Before February 28, 2018, at a time and place agreed by counsel, Tim Seegmiller shall re-attend at his own expense for a continuation of his cross-examination, which cross-examination shall not exceed two hours.

[25] The Defendant, Charpentier, may deliver a further Affidavit within 30 days following the continued cross-examination of Tim Seegmiller, which Affidavit shall deal with the question of the quantum of the fraud.

[26] If it deems necessary, the Plaintiff shall be able to further cross examine Mr. Charpentier, within 30 days of the delivery of his new Affidavit, again for a period not exceeding two hours.

[27] I shall remain seized of this matter. When counsel are ready to proceed to hearing in whatever form, I may be spoken to about process.

Costs

[28] The Defendant, Charpentier, was successful on his motion to view documents. That should entitle him to his claimed partial indemnity costs.

[29] He claims $6,656.94, all inclusive. On the basis of the Boucher test when compared to the reasonable expectation of the losing Plaintiff, as manifest by its own Costs Outline, I would say that the Charpentier costs claim was fair and reasonable.

[30] However, as I indicated earlier, even though the Summary Judgment was not formally argued, I did grant Judgment to the Plaintiff in an amount yet to be determined and have remained seized of the matter to determine that amount.

[31] In my view, that significantly puts another colour to the Defendant’s victory flag on the motion. Accordingly, I award costs of $4,000, all inclusive, to the Defendant Charpentier, to be paid within 30 days.

Date: December 22, 2017

P.J. Flynn J.