COURT FILE NO.: 08-CL-7349
DATE: 20180307
SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)
RE: Atlas copco canada inc., Plaintiff/Moving Party
AND:
David hillier, dirk johannes plate, leo caron, jeannette bourque, maria van noorden plate, paul armand caron, p.a. caron courtier d’assurance inc. AND 3870901 canada inc., Defendants/Responding Parties
BEFORE: S.F. Dunphy J.
COUNSEL: James D. Patterson and Amanda C. McLachlan, for the Plaintiff/Moving Party
Douglas M. Cunningham, for the Defendant/Responding Party Dirk Johannes Plate
HEARD at Toronto: March 5, 2018
REASONS FOR JUDGMENT
[1] Mr. Plate was convicted of defrauding the plaintiff and his former employer by a jury on June 29, 2016. He was sentenced to five years in prison on October 25, 2016.
[2] The plaintiff seeks to obtain summary judgment against him relying upon that jury verdict as well as a number of findings of fact made by the sentencing judge based upon the trial evidence. The main issue before me is the extent to which those findings of fact are able to be relied upon by the plaintiff in making its claim and whether Mr. Plate may re-litigate some or all of them. For the reasons that follow, I have found that Mr. Plate is precluded by the doctrine of abuse of process from re-litigating these issues and the plaintiff is entitled to the judgment on its claim to the extent it can be supported by facts that the sentencing judge validly determined in that proceeding.
Background facts
[3] This legal proceeding was commenced by way of Statement of Claim issued January 14, 2008. Mr. Plate delivered his Statement of Defence, Crossclaim and Counterclaim on January 11, 2010.
[4] The Statement of Claim (as amended April 11, 2011) advances a number of claims seeking damages in the amount of $20,000,000 arising from a fraudulent scheme described therein, a declaration under s. 178(1)(d) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, a declaration that Mr. Plate breached his duties under s. 122 of the Canada Business Corporations Act, R.S.C. 1985, c.-44; an accounting, a declaration of entitlement to trace, costs and interest.
[5] The Claim pleads that Mr. Plate was General Manager of the Construction and Mining Canada division of the plaintiff Atlas Copco from 2002 until 2005 and that his employment was suspended and then terminated in 2007. The CMT division was one of four divisions Atlas operated in Ontario. Mr. Plate’s own affidavit confirms these facts. It also adds that Mr. Plate was promoted in December 2005 to Vice President Global Strategic Customers at the plaintiff.
[6] The “fraudulent scheme” Mr. Plate is alleged to have been involved with (along with other now-former employees of the plaintiff) misappropriated funds from CMT and other business units of the plaintiff employing (i) false advances and bonuses; (ii) approvals of illegitimate expense reimbursements; and (iii) inflated and/or false invoices. The former employees were alleged to have conspired with one another to perpetrate this scheme which involved the knowing submission of invoices and claims for payment that were fraudulent misrepresentations that caused damage.
[7] The Plate was alleged to have breached his fiduciary duties to the plaintiff to act in and demonstrate good faith towards the plaintiff and that by his involvement in the fraudulent scheme, Mr. Plate is alleged to have breached his fiduciary duties to the plaintiff and thereby caused the plaintiff damages.
[8] The damages pleaded included $3,000,000 in “unauthorized advances, unauthorized bonuses and expense reimbursement” that would not have been paid but for the acts or omissions of the former employees (including Mr. Plate) and $17,000,000 in “kickbacks and the payment of invoices for services not provided” paid as a result of the acts or omissions of the defendants including Mr. Plate.
[9] Mr. Plate was arrested in October 2012 and initially charged with theft, fraud and two counts of conspiracy. Only the fraud charge was pursued when the matter came to trial in April, 2016. The other charges were withdrawn. The trial was heard by a jury and lasted approximately ten weeks. The jury delivered its verdict of guilty on June 29, 2016.
[10] On October 25, 2016, Poupore J. who had presided over the jury trial delivered his Decision on Sentencing.
[11] Mr. Plate was sentenced to five years in jail. In addition, a restitution order in favour of the plaintiff was made in respect of (i) $77,930; and (ii) certain annuities purchased at a cost of $1,440,000 (whose value had since increased). Neither of those two amounts is contested by Mr. Plate at this point.
[12] Both such amounts were held to be “fraudulently received funds” when Mr. Plate was ordered to return or pay them to the plaintiff in the criminal proceedings.
[13] The plaintiff’s motion for summary judgment is based upon a litigation assistant’s affidavit claiming no personal information of any of the facts underlying the claim. Its only value lies in the probative value of the exhibits attached to it. These are:
a. The transcript of the guilty plea of Mr. Leo Caron;
b. The Restitution Order made against Mr. Leo Caron dated April 5, 2013 ($23,977,263.15);
c. The Decision on Sentencing of Poupore J. dated October 25, 2016;
d. The Restitution Order made against Mr. Paul Armand Caron dated October 25, 2016 ($10,000,000); and
e. The Restitution Order made against Mr. Plate dated October 25, 2016 ($77,930).
[14] The guilty plea of Mr. Caron consists of a lengthy transcript of proceedings. Mr. Plate was not a party to that guilty plea and the transcript consists almost entirely of allegations of fact made by either Crown counsel or counsel for Mr. Caron. I attach no weight to any of this beyond the fact of Mr. Caron’s plea and the fact of the Restitution Order made against him.
[15] The Decision on Sentencing indicates that the sentencing judge was satisfied that the jury relied on the facts set forth below in reaching its verdicts:
a. From 1997-2002 Mr. Plate was General Manager of the CMT division of Atlas[^1];
b. After January 1, 2001, Mr. Plate “became involved” in the “overbilling/kickback scheme”;
c. The “scheme” took two forms. Firstly, Paul Caron inflated bills to the company in respect of regular Manulife benefit payments. Second, he submitted entirely fake invoices;
d. Forensic evidence for the years 2004-2007 determined a net overbilling of $22,336,335.38;
e. The overbilling “was facilitated” by three insiders who “were aware of the scheme, aided in its execution, and received material benefits – kickbacks – in return at various times”. Mr. Plate was one of those insiders;
f. Mr. Plate “became aware of the scheme and involved in it”;
g. Paul Caron’s company purchased 15 annuities for Mr. Plate in the years 2003 – 2006 in the total amount of $1,440,000 and his company’s ledgers revealed five other payments to Mr. Plate in the years 2001 and 2003;
h. Mr. Plate’s explanation that these payments were legitimate and authorized by Atlas was not accepted by the jury;
[16] For the purposes of sentencing, Poupore J. made additional findings. In relation to Mr. Plate’s involvement in the offence (a fact relevant to determining the degree of responsibility of the offender pursuant to s. 718.1 of the Criminal Code or the aggravating fact of abusing a trust pursuant to s. 718.2(a)(iii) of the Criminal Code), the sentencing judge found:
a. The fraudulent scheme proved at trial commenced some time in the 1990’s. Mr. Plate jointed the scheme later as a result of his growing dissatisfaction with his pension plan;
b. The fraud continued after Mr. Plate ceased to be at CMT in 2005 and, even as the odds of detection increased, so did the amount of the fraud;
c. Mr. Plate “was not as central” in the scheme as Mr. Leo Caron and Mr. Paul Caron. He joined it while it was already in place. While his participation was a great assist to the scheme and helped prevent it from being detected, the fraud was capable of being carried on without him;
d. Mr. Plate was highly trusted by the plaintiff and was in charge of its Canadian CMT operations and then promoted to a global vice-presidency;
e. Mr. Plate “grossly betrayed that trust by his involvement in the scheme. He was in the best position to stop the scheme if he wished to do so and was aware of the means employed by Mr. Hillier to conceal fake invoices;
f. Mr. Plate acknowledged receipt of two cheques totaling $77,930 and “it was open to the jury to come to the conclusion that this amount, more likely than not, came from Paul Caron’s fraudulently obtained funds;
g. Mr. Plate became involved in the scheme to defraud Atlas Copco early on in the time period covered by the indictment and remained involved until he left Sudbury in late 2005;
h. Even if Mr. Plate did not receive funds for the whole period of time, “his passive acquiescence allowed the fraud to continue”;
i. While Mr. Plate was not a “central or integral member of the scheme”, given his positions with Atlas Copco, “his involvement was a gross breach of his fiduciary duty to Atlas Copco. It does not get much worse in the Canadian corporate field”;
j. It was uncontested that Mr. Plate had received the $1,440,000 in annuities and “I am satisfied that the $77,930 Mr. Plate admitted receiving was proven to the jury to be fraudulently received funds”; and
k. “A Restitution Order and a Forfeiture Order shall also issue against Dirk Plate in an amount equal to the value of the annuities at the time the Orders are executed”.
[17] The annuities to which the Sentencing Decision makes reference had been expensed to the plaintiff - a fact that is implicit in the decision of Poupore J. to require Mr. Plate to forfeit them to his former employer and which is specifically evidenced in Mr. Plate’s affidavit. The annuities had been seized pursuant to a Mareva order and have either been paid over to Atlas Copco already or are in the process of being paid over pursuant to the Forfeiture Order.
Issues to be decided
[18] On any summary judgment motion, the issue before the court is whether there is a genuine issue requiring a trial: Rule 20.04(2)(a) of the Rules of Civil Procedure. In determining whether there is such an issue requiring a trial, I may consider the evidence submitted by the parties and, unless it is in the interests of justice to do so only at trial, I may weigh the evidence, evaluate credibility or draw reasonable inferences from the evidence. As well, this being a summary judgment motion, the oft-cited principle that the parties are required to put their best foot forward applies.
[19] In the present case, the plaintiff takes the position that there is no genuine issue requiring a trial and claims to be able to make virtually its entire case based upon the criminal verdict itself, the sentence (in particular the Restitution Order) and the findings of fact made by Poupore J. in arriving at the sentence. The only aspect of the “tool box” of Rule 20.04(2.1) of the Rules of Civil Procedure that I am required to look to from the plaintiff’s perspective is the power to draw inferences from other facts or to determine what weight should attach to the findings emerging from the criminal proceeding.
[20] The defendant Mr. Plate submits that there are genuine issues for trial but has nevertheless put forward such evidence that he presently has for consideration, while highlighting the very large number of areas where discoveries are incomplete or the plaintiff has refused to answer questions.
[21] Answering the question of whether there is a genuine issue for trial in the circumstances of this case requires me to evaluate the two questions listed below:
a. What weight ought to attach to the findings made in the criminal proceedings on this motion?
b. Are the findings made in the prior criminal proceeding sufficient to entitle the plaintiff to summary judgment?
Analysis and discussion
(i) What weight ought to attach to the findings made in the criminal proceedings on this motion?
[22] The defendant Mr. Plate takes the position that I can attribute no weight to any of the findings in the Decision on Sentencing. He takes no issue with the finding of fraud in relation to the annuities or the $77,930 but these are already fully dealt with in the Restitution and Forfeiture orders already made. In particular he denies that the jury has ever made any findings attributing causation to him of any part of the $22.3 million in losses from the fraud scheme found by Poupore J. beyond those two items.
[23] When a jury returns its verdict in a criminal trial, it does not deliver reasons. The task of determining what the jury determined falls upon the sentencing judge who must do his or her best to determine the facts necessary for sentencing from the jury’s verdict. In so doing, the judge is bound by the express and implied factual foundation of the verdict and, where these are ambiguous or absent, the judge (who heard the same evidence as the jury) is entitled to make his or her findings of any other relevant facts from the evidence at trial (but only those facts necessary to permit a proper sentence to be imposed in the case at hand): R. v. Ferguson, 2008 SCC 6 at paras. 17-18.
[24] The proceedings before Poupore J. were criminal proceedings. Mr. Plate was present, represented and vitally interested. His liberty was at stake. The issues before the court in that proceeding included whether Mr. Plate was guilty of the fraud charged and, once he was found guilty and what relevant aggravating and mitigating circumstances were present. Further, because the Crown in that case sought a Restitution Order, the facts relevant to that order were also live issues before Poupore J.
[25] Given the range of factors a sentencing judge is required to consider under the Criminal Code and in particular s. 718, s. 718.1 and s. 718.2(a)(iii) thereof, the latitude of a sentencing judge to make findings of fact arising from the jury verdict or from the evidence presented at trial is necessarily wide. The sentencing judge must consider the degree of severity of the offence, the offender’s degree of responsibility and the degree to which the offence resulted from an abuse of a position of trust, among other factors to be considered.
[26] Both parties cited the Supreme Court of Canada decision in Toronto (City) v. C.U.P.E., Local 79, [2003] 3 SCR 77, 2003 SCC 63 as a leading authority to be examined on the application of the doctrine abuse of process in these circumstances.
[27] There is a strong public interest in favour of the finality of judicial determinations and avoiding the re-litigation of issues and the attendant risk of inconsistent decisions. In C.U.P.E., Local 79, Arbour J. found the doctrine of abuse of process can be applied flexibly to advance those interests even where the strict requirements of issue estoppel or res judicata cannot be met. In C.U.P.E., Local 79, the strict requirement of identity of parties for issue estoppel and res judicata did not preclude a finding that the doctrine of abuse of process could be applied to avoid the re-litigation of a criminal conviction in the context of a labour arbitration to which such conviction was relevant.
[28] The doctrine of abuse of process permits the court the flexibility to pursue the policy goals of issue estoppel and res judicata unencumbered by the specific technical requirements of those doctrines, using discretion to prevent unnecessary re-litigation while preserving the integrity of the court’s process: C.U.P.E. Local 79 at para. 42.
[29] While it is clear that the findings of Poupore J. are admissible in the context of this motion for summary judgment, the weight to be attached to those findings will depend on such factors as the issues to be decided, the identity of the parties, and the nature of the proceedings: Deposit Insurance Corp. of Ontario v. Malette, 2014 ONSC 2845 at para. 21; British Columbia (Attorney General) v. Malik, [2011] 1 SCR 657, 2011 SCC 18 at para. 42.
[30] The fraudulent scheme pleaded in the statement of claim is the same fraudulent scheme described by Poupore J. in the Decision on Sentencing. The fiduciary duty of Mr. Plate towards the plaintiff pleaded in the statement of claim arises out of the same relationship as the fiduciary duty about which Poupore J. made findings of fact. There is clearly a very large overlap of issues between the civil and criminal proceedings even if all the issues in the one were not present in the other and vice versa.
[31] Mr. Plate was of course a party to both proceedings and was, as I have indicated, vitally concerned in the criminal proceedings. While Atlas Copco was not a party to the criminal proceedings per se, Atlas Copco was the victim of the crimes being tried.
[32] Findings made in criminal proceedings attract the doctrine of abuse of process more strongly: Malik at para. 42.
[33] In my view, the similarity of issues, the identity of the parties and the criminal nature of the prior proceeding all suggest that the findings of Poupore J. are not only admissible but entitled to very considerable weight in this civil proceeding. Implicit in that determination – which is itself a result of weighing evidence under Rule 20.04(2.1) of the Rules of Civil Procedure - is a finding on my part that a trial is not required in order for me to undertake that weighing exercise. I so find.
[34] This finding does not relieve me of the responsibility to be cautious when determining which findings of fact made by the sentencing judge were necessarily implied by the jury verdict or otherwise required for the purpose of sentencing. All such findings need to be passed through the Ferguson filter before determining what weight they can bear.
[35] Determining that the findings of Poupore J. are entitled to considerable weight does not amount to a finding that they are beyond question. The doctrine of abuse of process is a flexible doctrine. Arbour J. in C.U.P.E . Local 79 recognized that application of the doctrine may, in some circumstances, create unfairness: C.U.P.E . Local 79 at para. 53. This might be so if the stakes in the original proceeding were minor, insufficiently incenting a robust response. Other circumstances of unfairness might include the availability of fresh evidence or similar matters.
[36] The inquiry into whether there are circumstances of unfairness sufficient to preclude the application of the doctrine of abuse of process is not to be mistaken for an invitation to re-litigate the issues determined at the original hearing since that would undermine the entire object of the doctrine of abuse of process.
[37] The plaintiff is relying upon findings of fact found by Poupore J. found to be the very foundation of the jury’s verdict. Others findings made were required for the purpose of sentencing. Impugning those findings in a subsequent proceeding would be a very serious thing as this would tend to undermine the integrity of a criminal verdict or sentence.
[38] The defendant has failed to place before me evidence from which I might conclude that there would be an unfairness worked by the application of the doctrine of abuse of process here.
[39] It is not necessary for me in this case to find that the findings made in the Sentencing Decision cannot be contradicted in a subsequent proceeding. Plainly that is not the case.
[40] The word “never” is very seldom found in the context of anything as discretionary as the doctrine of abuse of process. I need only find – and I do – that the plaintiff has failed in its burden on this motion for summary judgment to place before me sufficient evidence to persuade me that the interests of justice require a trial of these issues. Rule 20.04(2.1) of the Rules of Civil Procedure authorizes me to weigh evidence. Having determined to exercise my jurisdiction to weigh the evidence, I find the weight of the prior determinations made in these circumstances to be very high and the defendant has failed to adduce sufficient affirmative evidence to persuade me to find otherwise.
(ii) Are the findings made in the prior criminal proceeding sufficient to entitle the plaintiff to summary judgment
[41] The Statement of Claim names a number of defendants and advances several theories of liability. The plaintiff has been clear that it is not seeking partial summary judgment – it is not seeking to divide its case and continue with any aspects of the case that it has failed to prove adequately before me. It is only seeking judgment against the Mr. Plate at this time but seeks a complete judgment of all of its claims against him.
[42] The plaintiff is held to have put before me in some form evidence of all of the matters it seeks to prove at trial. In short, in electing to bring this motion, the plaintiff was held to lead trump or fail. I must therefore assess which of the claims advanced against Mr. Plate have been proved based on the record the plaintiff has put before me.
[43] The reason for this approach to summary judgment is implicit in the new approach to summary judgment called for by the Supreme Court of Canada in Hryniak v. Mauldin 2014 SCC 7. Our court system has an access to justice deficit. Those with the means are able to pursue claims in civil courts or by taking their business to private courts of arbitration, the latter course depriving the common law of the oxygen it needs to evolve and develop dynamically. Systemic delays in our justice system detract from our competitiveness as a destination for investment internationally. The time and expense of prosecuting or defending civil claims often leaves ordinary citizens with the Hobson’s choice of ruin or abandonment of their rights. The judicial resources our system can bring to bear on these problems are limited and the calls on them are great. While we are seeking to reform our approach to civil justice, other calls on our judicial resources are also pressing. Delays in the criminal justice system that threaten Charter rights must be addressed, family law courts too have urgent needs that often involve the rights of our most vulnerable citizens, our children.
[44] Summary judgment motions require enormous preparation time from judges. Whether at the end of a two-week “traditional” trial or of a one-day summary judgment motion, the process of considering and preparing reasons is very much the same, even if the time available in the judge’s calendar is not. Motions for summary judgment are fast evolving to become the de facto primary means of civil dispute resolution. All of these developments consume judicial resources that might be used to address other urgent needs in the system.
[45] For these reasons, a party seeking summary judgment should expect that one way or another, a decision will be made that will dispose of the question placed before the court subject only to appeal. The diversion of resources required to hear these motions cannot be justified otherwise. Were this not so, instead of helping to cure the access to justice problem, Hryniak would only be making things worse by increasing both the time and expense required to complete a case by adding an expensive and potentially inconclusive summary judgment process. The goals of efficiency and access to justice are to be allies not enemies. Every step in a judicial proceeding entails cost and each such step should be designed to bring a matter materially closer to its final resolution on the merits.
[46] With these principles in mind, I shall now examine each of the claims advanced by the plaintiff, asking in respect of each whether the plaintiff has discharged the burden upon it of proving its claim.
Civil Conspiracy
[47] The requirements of civil conspiracy are that (i) the defendants acted in combination, that is, in concert, by agreement or with a common design; (ii) their conduct was unlawful; (iii) their conduct was directed towards Atlas Copco; (iv) the defendants should have known that, in the circumstances, injury to Atlas Copco was likely to result; and (v) their conduct caused harm to Atlas Copco: Agribrands Purina Canada Inc. v. Kasamekas, 2011 ONCA 460 at para. 26.
[48] Of these five requirements, the first is the one that is most problematic.
[49] The Sentencing Judge made findings about the duration and scope of the scheme and what its objects were. He made findings that Mr. Plate “became involved” with it. The indictment before the jury did not require such findings applying the Ferguson test. The Crown withdrew the criminal conspiracy charges before trial and the findings of fraud in relation to the $77,930 and the annuities were more than sufficient to ground the jury’s finding of guilt of Mr. Plate on the charge of fraud over $5,000.
[50] The severity of the crime and Mr. Plate’s degree of involvement in it were relevant questions to the matter of sentencing. However, the weight of the findings in the Decision on Sentencing about Mr. Plate becoming “involved” in the scheme is significantly attenuated by the other findings in the Decision on Sentencing that refer to his participation as unnecessary, not central or in terms of passive knowledge only. Those findings are also impacted by the very limited nature of the Restitution Order made relative to the claim advanced by the Crown.
[51] The defendant has filed affirmative evidence of his lack of active involvement in the processing of the invoices that I am prepared to give a very small amount of weight to, but only to the extent not inconsistent with the findings made in the decision on Sentencing. I am not prepared to attribute any weight to his other evidence regarding lack of knowledge of the fact of the existence of the scheme or its nature (as this would directly contradict specific findings made, in particular in relation to fiduciary duty).
[52] Overall, I find that the Decision on Sentencing paints an equivocal picture of Mr. Plate’s role when applied to the first element of the tort of conspiracy. When the additional element of the Mr. Plate’s evidence regarding his indirect role in relation to processing of the invoices by which the fraud was perpetrated is factored in, I am persuaded that the plaintiff has failed to prove the first of the five requirements of this tort.
[53] Passing the findings in the Decision on Sentencing through the Ferguson filter, I am not satisfied I can find as proved more than mere passive knowledge of the existence of the scheme of fraud on the part of Mr. Plate, even if that passive knowledge was accompanied by receipt of payments that were found to be fraudulent[^2] and which I am entitled to infer were made in whole or in part to secure his silence. I cannot find that this limited finding amounts to the sort of agreement or common design required to sustain a finding of civil conspiracy sufficient to attribute to Mr. Plate responsibility for all of the acts of all of the alleged co-conspirators.
[54] The civil conspiracy claim has thus not been proved and this aspect of the plaintiff’s case must fail. The plaintiff was held to put its best foot forward in this motion and has failed to prevail. I am not required to speculate about what other evidence that plaintiff might have led.
Civil Fraud
[55] The requirements to prove civil fraud are: (i) a false statement of fact; (ii) the statement was made with knowledge of its falsity; (iii) the statement was made with the intention that it be acted upon; (iv) it was relied upon by the plaintiff; and (vi) damage resulted: Deposit Insurance Corp. of Ontario v. Malette, 2014 ONSC 2845 at para. 19.; Bruno Appliance and Furniture, Inc. v. Hryniak, [2014] 1 SCR 126, 2014 SCC 8 at para. 21.
[56] There is no dispute in this case that each of those six elements has been proved in respect of the annuities and the $77,930. Mr. Plate’s liability for those amounts are not at issue here.
[57] There is no evidence and no finding that Mr. Plate made any statements whatsoever in relation to all of the remaining payments that make up the $22.3 million loss of Atlas Copco from the entire scheme as found by the Sentencing Judge. The statements made by one or the other of the co-defendants cannot be attributed to Mr. Plate absent a finding of conspiracy. The fraud that is necessarily implicit in the jury’s verdict in relation to Mr. Plate (being the annuities and the $77,930) has not been shown to have contributed to or caused any other loss.
[58] As with the claim of civil conspiracy, applying the Ferguson filter to the facts determined in the Decision on Sentencing, I must find that the civil fraud claim has not been made out and must be rejected[^3].
Breach of fiduciary duty
[59] The two elements needed to establish liability for breach of fiduciary duty are (i) proof of the existence of a fiduciary relationship; and (ii) an act of the fiduciary that betrays the beneficiary’s trust, whether or not the fiduciary gains a benefit: Varcoe v. Sterling, 1992 CanLII 7478 (ON SC); affirmed 1992 CanLII 7730 (ON CA), leave to appeal refused [1992] SCCA No. 440.
[60] On this claim, I find the plaintiff to stand on much more solid ground.
[61] The findings in the Decision on Sentencing relative to fiduciary duty specific to Mr. Plate were well within the range of findings that it was open to the Sentencing Judge to make in connection with sentencing. In addition to being required to consider the gravity of the offence and the degree of responsibility of the offender under s. 718.1 of the Criminal Code, the Sentencing Judge was also entitled to consider the degree to which the offender abused a position of trust relative to the victim (s. 718.2(a)(iii) of the Criminal Code). All such findings based upon the evidence at trial were open to the Sentencing Judge to consider and make applying the Ferguson filter to the Decision on Sentencing.
[62] The Decision on Sentencing made specific findings that Mr. Plate was a fiduciary. The finding is one amply supported by Mr. Plate’s title during the relevant time frame (General Manager of CMT and then vice-president) and by such description as the Decision on Sentencing contains regarding his duties and the vulnerability of Atlas Copco to him. Mr. Plate has provided me with no evidence to negative that finding.
[63] I find that Mr. Plate was a fiduciary of Atlas Copco from 2002 until 2007.
[64] The Decision on Sentencing found that Mr. Plate had specific knowledge of the existence of the fraud scheme and of how it worked. It found that he was in the best position to put a stop to it. It found that his passive acquiescence allowed the fraud to continue. However attenuated Mr. Plate’s degree of involvement in the fraud scheme may have been, the Decision on Sentencing found that Mr. Plate was involved to some degree. I attach no weight to Mr. Plate’s denial of such knowledge and conclude that the interest of justice do not require him to be given an opportunity at trial to persuade a different judge to reach a conclusion inconsistent with the one already reached by the Sentencing Judge after an adversarial criminal hearing.
[65] I therefore find that Mr. Plate breached his fiduciary duty to his employer Atlas Copco. A fiduciary does not have the option of remaining mute in the presence of an identified, known scheme that is actively harming his employer. Still less is he entitled to accept benefits and payments that I have inferred were in whole or in part made in return for his silence.
[66] What damages flow from that breach? Answering this question requires me to make a determination of the start and end date of Mr. Plate’s liability for breach of fiduciary duty and to determine whether the evidence before me permits a quantification of the damages arising.
[67] The Decision on Sentencing was not required to be precise on the date Mr. Plate acquired knowledge of the scheme and did not do so. However, it is clear from the findings that were made that he had knowledge of the scheme and had received some payments arising from it by 2003 at the latest. I find that Mr. Plate’s breach of fiduciary duty occurred no later than December 31, 2003.
[68] What of the end date? Mr. Plate was promoted in December 2005 and became a Vice President of Atlas. He ceased to be at the CMT division. While he may thereafter have played no role in actively shielding the scheme from detection or in receiving payments in consideration of his silence, his fiduciary duty to his employer had not yet been discharged and was a continuing one. The damages continued to accrue and he continued to do nothing to stop the scheme despite having the knowledge and the duty to do so.
[69] I find that Mr. Plate’s liability for the consequences of his breach of fiduciary duty extended up until November 2007 when the fraud scheme was stopped by the termination of the employment of all of the active participants in it.
[70] The amount of the damages attributed to the breach of fiduciary duty is, in my view, all of the damages arising from the fraudulent scheme that he failed in his duty to put an end to. Those damages began no later than 2004 and continued through to 2007 when the fraud was stopped. The net overbilling for that time frame has been found by Decision on Sentencing to be $22,336,335.38.
[71] The damages arising from the breach of fiduciary duty by Mr. Plate may well be more than that sum as there is no evidence before me of losses from years prior to 2004 nor sufficient evidence to pin-point the start date of his liability more precisely. However, I am confident that I can find on this record that the damages are not less than this number subject to the adjustments that I shall effect below.
[72] The damages determined by the forensic evidence and accepted as proved by the Sentencing Judge was for the entire scheme of overbilling or fraudulent billing over those years (2004-2007). This includes, obviously, amounts received by other co-defendants whose fraud remained unhindered and undiscovered due to Mr. Plate’s breach of fiduciary duty. In my view, Mr. Plate is entitled to a credit against the $22,336,335.38 figure for:
a. The amount of all of the annuities now seized or in the process of being seized by the plaintiff (Mr. Caron’s, Mr. Hillier’s and Mr. Plate’s). That figure is not before me with precision but is just under $2 million;
b. The $77,930 ordered repaid by the criminal court; and
c. Any amounts recovered or to be recovered from other co-defendants in the future.
[73] The Statement of Claim seeks only $20 million in damages and there is no pending request to amend. After crediting the first two of the above sums against the $22.3 million figure, the remaining damages figure is very close to the claimed $20 million figure but is certainly slightly higher if calculated with precision. I may thus confidently determine that the plaintiff has proved its damages for breach of fiduciary duty to the full extent of the $20 million amount claimed (subject to an obligation to account for any recoveries from other co-defendants in future).
Conclusion re claims
[74] The plaintiff chose to proceed to summary judgment and chose to place all of its eggs in the Decision on Sentencing basket without additional evidence. In so doing, it must take the good with the bad and abide the outcome. I have found that evidence to be wanting as regards the claim of civil conspiracy and fraud in terms of the damages the plaintiff seeks to collect. Those claims must be accordingly dismissed as against Mr. Plate.
[75] I have found that evidence sufficient to warrant a verdict in the plaintiff’s favour for breach of fiduciary duty and that the defendant has failed to place before me sufficient evidence to persuade me that it would be unfair to apply the doctrine of abuse of process here.
[76] There are a number of other claims in the Statement of Claim that were not pursued on the motion or that were not pursued in oral argument after a brief discussion. For the sake of completeness, I shall refer to them here as it is my intention that this judgment shall fully and finally dispose of the claim as against Mr. Plate:
a. The plaintiff sought an advance declaration pursuant to s. 178(1)(d) of the BIA that any judgment would survive bankruptcy. There is no evidence that Mr. Plate has filed or is in the process of filing for bankruptcy. In my view, such matters ought to be left to a future trustee to consider on the full record when there is an actual question to be determined; and
b. The plaintiff sought an accounting and a tracing order. There is no evidence of any property that is or may be proceeds of the fraud coming into the defendant’s hands beyond the annuities and the $77,930 both of which have already been fully dealt with in other orders made in the criminal context. The plaintiff has failed to satisfy me that it is entitled to any such order.
Disposition
[77] The plaintiff is entitled to judgment for $20,000,000 as claimed for breach of fiduciary duty. The plaintiff shall be required to account to Mr. Plate and credit against this sum future net recoveries from other co-defendants or participants in the same fraud (excluding for clarilty the annuities already seized or in the process of being seized).
[78] The plaintiff is entitled to pre-judgment and post-judgment interest.
[79] The plaintiff is also entitled to its costs. The plaintiff shall have sixty days to present an Outline of Costs and not more than ten pages of written submission to the defendant for consideration. The defendant shall have thirty days to respond with the same page limit. He may, if he so chooses, attach his own Outline of Costs to the extent this is judged relevant or helpful. The submissions of both parties should be delivered to my assistant electronically.
[80] All other claims of the plaintiff against the defendant are dismissed.
[81] The parties are STRONGLY encouraged to be pragmatic here and to use some of that initial 60 day period to agree on simple numbers for costs and interest instead of trying to shave each other to the nearest penny. Thick pencils will be much more cost-effective than sharp ones. I suspect both sides by now have a very realistic view of how little or much of any judgment will ever likely be able to be satisfied and can calibrate the utility of their future efforts accordingly.
S.F. Dunphy J.
Date: March 7, 2018
[^1]: The 1997 date appears in Poupore J.’s Decision on Sentencing but based on the pleading and Mr. Plate’s affidavit, I am satisfied that the correct start date was in fact 2002. As shall be seen from the balance of the chronology, nothing turns on that date because all of the findings regarding damages relate to a later period in any event.
[^2]: I refer here to the annuities and the $77,930.
[^3]: The civil fraud claim would be made out in respect of the annuities and the $77,930, but both of these claims have already been reduced to judgment in favour of the plaintiff in the criminal proceedings.