Superior Court of Justice - Ontario

COURT FILE NO.: CV-17-578601

DATE: 2019-06-24

RE: SUNWING AIRLINES INC, Plaintiff

AND:

AMILCAR MORA and SONYA SEKULIC, Defendants

BEFORE: Sossin J.

COUNSEL: Jordan Goldblatt, for the Plaintiff

Efstathios Balopoulos, for the Defendant, Amilcar Mora

HEARD: March 27, 2019

ENDORSEMENT

OVERVIEW

[1] The plaintiff, Sunwing Airlines Inc. (“Sunwing”), brings this motion for a Mareva injunction freezing the assets of the defendant, Amilcar Mora (“Mora”).

[2] Sunwing issued a statement of claim against Mora on July 10, 2017, for damages for civil fraud, breach of contract, breach of fiduciary duty, breach of trust, conversion, or unjust enrichment in the amount of $535,180.00, punitive damages of $250,000.00 and related remedies.

[3] On that same day, July 10, 2017, Mora issued a notice to Sunwing indicating his intent to pursue an action for wrongful dismissal.

[4] On July 11, 2017, Sunwing obtained an interim order signed by Justice Corbett, permitting it to register a charge against Mora’s property in Brampton, Ontario, and directing Mora not to dissipate his assets or move his assets out of Ontario (the “Corbett Mareva Order”). The interim order was heard on the basis of Sunwing’s materials, which were served on short notice. The hearing of the full motion was adjourned until August 3, 2017.

[5] The parties agreed to adjourn the August 3, 2017 hearing, without prejudice. The parties engaged in other procedural steps in the litigation, including adding another defendant, Sonya Sekulic (“Sekulic”).

[6] On April 4, 2018, Mora delivered his statement of defence and crossclaim.

[7] The motion on the Mareva injunction was adjourned without prejudice to October 1, 2018, and then finally to this hearing, held on March 27, 2019.

[8] In the interim, unsuccessful mediation took place, and between December 13, 2018 and February 6, 2019, trial records were delivered by the parties.

BACKGROUND

[9] Mora was hired as an employee of Sunwing in 2007 as a ramp supervisor, and eventually became Regional Airport Manager, Latin America, and served in that capacity during the period at issue in this litigation.

[10] Sekulic served as Director, Airport Procurement, and Mora reported to her during a portion of the period at issue in this litigation.

[11] Another individual who is not a party, but appears to have played a central role in the transactions in dispute, is Sylvie Leduc (“Leduc”) Leduc is the federally appointed Canadian Consul in Varadero, Cuba. She is a contractor of Sunwing.

[12] The dispute in this litigation concerns cash payments made to various service providers in Cuba, and whether LeDuc and Mora had an arrangement with respect to excess funds from these payments. This has been referred to by Mora as a “Cuba kickback scheme” and by Sunwing as a “Cuba incentive plan” though the role of the participants and beneficiaries of this scheme are in dispute.

[13] Mora submits that all cash provided to him to make payments to specific employees at various companies in Cuba were accounted for through Sunwing’s head office in Toronto.

[14] Sunwing submits that Mora himself was receiving excess funds as part of these payments and that this amount now totals $535,180.00.

[15] In May, 2017, Sunwing confronted Mora with its allegations of fraud and theft. Following this meeting, Mora was terminated by Sunwing. The circumstance of the termination, and the status of certain information provided by Mora about the scheme at that time, are in dispute.

[16] The issue before this Court is whether to extend, lift or modify the Corbett Mareva Order.

ANALYSIS

Applying the Test for the Mareva Injunction

[17] Sunwing takes the position that it was justified in obtaining the Corbett Mareva Order and that there is no basis in law or equity to lift that Order now.

[18] Sunwing submits that Mora has no actual defence on liability given his admission that he accepted money that was not disclosed to Sunwing. Sunwing asserts that the dispute lies in the quantum of such funds.

[19] Sunwing further submits that this motion was brought nineteen months after the Corbett Mareva Order due to Mora’s own delay, and in the interim, Mora has defended the allegations against him and commenced his own claim against Sunwing.

[20] Finally, Sunwing argues that Mora has suffered and will continue to suffer little or no prejudice as a result of the Corbett Mareva Order while the risk to Sunwing was and continues to be significant.

[21] Mora argues that the Corbett Mareva Order was brought on short notice, and based on insufficient disclosure. Mora submits that the Order was unjustified and sought as a tactic to gain leverage over him in the litigation. Mora seeks to have the Order lifted and costs against Sunwing on a substantial indemnity basis.

[22] This Court’s jurisdiction over Mareva injunctions is found in section 101 of the Courts of Justice Act.

[23] The test for a Mareva injunction was summarized by Justice Strathy (as he then was) in Sibley & Associates LP v. Ross 2011 ONSC 2951 (“Sibley”) (at para. 11):

[11] There are five requirements for a Mareva injunction: (a) the plaintiff must make full and frank disclosure of all material matters within his or her knowledge; (b) the plaintiff must give particulars of the claim against the defendant, stating the grounds of the claim and the amount thereof, and the points that could be fairly made against it by the defendant; (c) the plaintiff must give grounds for believing that the defendant has assets in the jurisdiction; (d) the plaintiff must give grounds for believing that there is a real risk of the assets being removed out of the jurisdiction, or disposed of within the jurisdiction or otherwise dealt with so that the plaintiff will be unable to satisfy a judgment awarded to him or her; and (e) the plaintiff must give an undertaking as to damages. See Chitel v. Rothbart (1982), 1982 CanLII 1956 (ON CA), 39 O.R. (2d) 513, [1982] O.J. No. 3540, 141 D.L.R. (3d) 268 (C.A.), referred to C.A. by Andersen J. in (1982), 1982 CanLII 2031 (ON SC), 36 O.R. (2d) 124, [1982] O.J. No. 3197 (H.C.J.); Third Chandris Shipping Corp. v. Unimarine S.A., [1979] 1 Q.B. 645, [1979] 2 All E.R. 972 (C.A.).

[24] In addition to this five-part test, the plaintiff must also establish a prima facie case against the defendant in order to obtain or continue a Mareva injunction.

[25] Each of these considerations is addressed in the context of this case below.

(1) Disclosure

[26] With respect to disclosure, Mora argues that Sunwing failed to meet this standard, and that the non-disclosure was significant and not “mere inadvertence.”

[27] Mora raises a number of areas of non-disclosure to Justice Corbett, including,

a. Failure to disclose Mora’s action against Sunwing for wrongful dismissal (the Notice of which was delivered to Sunwing on July 10, 2017);

b. Failure to disclose that Mora signed the promissory notes to Sunwing with no lawyers present and under the threat of criminal action;

c. Failure to disclose that Mora was not involved in key aspects of the alleged transactions, including those between Sunwing and Sylvie Leduc; and,

d. Failure to disclose the relationship between Sunwing and Sylvie Leduc and its relevance to the alleged fraud and theft with which Mora had been accused.

[28] While Justice Corbett may not have had as full a rendition of the particulars and defences as could be given now, I do not see a basis for a finding of material non-disclosure in light of the expanded record before this Court, including the responding materials from Mora.

[29] Justice Corbett was aware, at a minimum, that Mora challenged the admissions at the termination meeting and the promissory note on the basis of duress and absence of independent legal advice.

[30] The fact of Mora’s wrongful dismissal claim, and allegations with respect to entrapment and LeDuc and Sunwing’s responsibility for the alleged scheme in Cuba, all now form part of the record, and so there is no question that the obligation to provide full and frank disclosure has now been met with respect to the continuance of the Mareva injunction.

(2) Particulars of the Plaintiff’s Case

[31] With respect to the obligation on Sunwing to set out its claim against the defendant with sufficient particulars, Sunwing submits that it relies on evidence that, beginning in May, 2012, Mora received over $500,000.00 from a contractor to Sunwing, LeDuc, further to a scheme by which LeDuc overcharged Sunwing and directed excess funds to Mora.

[32] LeDuc is alleged to have disclosed the scheme to Sunwing in May, 2017.

[33] Sunwing subsequently recorded Mora receiving $50,000.00 in cash which it alleges was part of this scheme.

[34] At his termination meeting, Sunwing alleges that Mora admitted that he had been receiving funds from Leduc. Mora signed a promissory note for $535,180.00 after returning $57,000.00. Mora vigorously denies Sunwing’s allegations, and alleges that his admissions at the termination meeting as well as the signed promissory note resulted from entrapment and duress in circumstances where he was denied legal counsel.

[35] Without addressing the merits of the allegations as to what transpired at the termination meeting, Sunwing has met its obligation to provide sufficient particulars to enable Mora to defend the claim, as reflected in Mora’s statement of defence and crossclaim.

(3) The Defendant’s Assets

[36] With respect to the grounds for the belief that the defendant has assets in Ontario, Justice Corbett’s Order has permitted Sunwing to register a charge against Mora’s property in Brampton in the amount of $550,000.00.

(4) The Risk of Removal or Dissipation of Assets

[37] With respect to the risk of removal or dissipation of assets, Sunwing asserts that there is a real risk Mora may dissipate assets because, in part,

a. Mora indicated some of his assets have been transferred to Cuba;

b. Mora has a Cuban as well as a Canadian passport; and

c. Mora’s family does not live in Canada.

[38] In his factum, Mora states in response (at para. 76):

In this instance, there is no evidence that the Respondent had arranged his affairs in an attempt to avoid legal obligations. Quite the opposite is true, and this was absolutely known to the Plaintiff, and their counsel, as outlines in the pre-litigation correspondence provided in the Supplementary Affidavit of Mr. Mora. Mr. Mora’s desire to live in Ontario and his strong ties to the community were well known to the Applicant, given that he was an employee of their company for 10 years. However, the Applicant, in a strategic attempt to justify the Mareva Injunction, did not present these facts to the Court in order that the Court could properly exercise its discretion.

[39] In light of his ongoing ties to Ontario, Mora submits that Sunwing’s allegations that he is a flight risk are not credible.

[40] Mora has both a Canadian and a Cuban passport. He appears to have ties both to Cuba and Canada.

[41] Sunwing alleges that the property that is the subject of the Corbett Mareva Order is part of the proceeds of the alleged scheme, as Mora discharged a $262,000.00 mortgage in just three years on the property.

[42] Sunwing refers to an exchange at the meeting after which Mora was terminated in which Mora stated that whatever funds he took, “most of it is in Cuba.”

[43] As the Divisional Court held in DiMenza v. Richardson Greenshields of Canada Ltd. (Div. Ct.), 1989 CanLII 4138 (ON SC), the question is whether there is a basis to conclude that assets have or are being transferred in a manner clearly distinct from the usual or ordinary course of business. Unless there is a genuine risk of disappearance of assets, either inside or outside the jurisdiction, the injunction will not issue.

[44] In this case, Sunwing is not relying on evidence that Mora has taken steps to dissipate his real estate asset to avoid judgment in this matter.

[45] Sunwing relies instead on its allegations of a pattern or prior fraudulent conduct by Mora as supporting a reasonable inference that similar conduct will continue, as accepted in Sibley (at para. 64); see also AstraZeneca Canada Inc. v. Sadek et al. 2018 ONSC 7429.

[46] In Sibley, one of the factors Strathy J. (as he then was) considered was the liquidity of the assets at issue in that case, which consisted of funds in bank accounts, as opposed to real estate.

[47] Based on the particulars of its allegations of fraud against Mora and his admission of moving some proceeds of the scheme to Cuba (even if many aspects of Mora’s involvement in the scheme remain in dispute, and even though there are reasons to treat all admissions made by Mora over the course of the termination meeting with caution), I find that the circumstances of this case are sufficient to fit broadly within the principle set out by Strathy J. (as he then was) in Sibley. While the liquidity of the asset may be relevant, it is not determinative, as the extent to which real estate as a practical matter may be easily dissipated depends on a range of factors.

(5) The Undertaking for Damages

[48] Finally, with respect to the undertaking for damages, Patrick Heinke, on behalf of Sunwing, has provided an undertaking in relation to this motion. While acknowledging that Mr. Heinke is no longer with Sunwing, Sunwing argues that this undertaking remains binding.

[49] Mora argues that as Mr. Heinke is no longer an employee or contractor for Sunwing, he may no longer bind it with respect to this undertaking.

[50] The undertaking was given on behalf of the company. It is not a personal commitment by Mr. Heinke. Further, part of the Corbett Mareva Order requires that Sunwing be bound by its undertaking as to damages. I am unaware of any basis on which Sunwing could resile from this commitment unless it could be shown Mr. Heinke had no authority to issue it, which is not the case here based on the record before the Court.

[51] I find this aspect of the Sibley test is met.

Is there a Strong Prima Facie Case?

[52] As Strathy J. (as he then was) held in Sibley (at para. 12), “It is a condition-precedent to the order that the plaintiff demonstrate a strong prima facie case…”

[53] I find that Sunwing meets this standard in light of the documentary evidence as a result of its investigation, evidence from LeDuc and Mora’s admissions.

[54] Stating that a plaintiff has a strong prima facie case does not suggest that a defendant does not have a strong defence. Mora may well be able to establish that the admission was a result of entrapment, or that the quantum involved in this case if far less than claimed by Sunwing. Indeed, in this case, Mora also is pursuing an action for wrongful dismissal against Sunwing, which may be successful. It is not possible on the record on this motion to determine who is likely to prevail at trial, nor is such a determination necessary for purposes of the injunction.

CONCLUSION

[55] Sunwing refers to its argument to retain a charge on Mora’s residential property as a “soft Mareva,” as it relates only to Mora’s property and does not interfere with his other assets or financial affairs.

[56] With respect to the balance of convenience, each side views the long delay between June, 2017 and this motion as a factor weighing in their favour. As Mora did not take action to have the Corbett Mareva Order lifted over the 19 months in which it has been in place, Sunwing argues it is not an oppressive condition. By the same token, Mora argues the fact that he has not moved to Cuba or dissipated assets over this period demonstrates that the Mareva Injunction was never necessary, and is not necessary now. In my view, the balance of convenience does not strongly favour either party.

[57] I find that there are sufficient grounds to continue the Corbett Mareva Order, as Sunwing has met the test as set out by this Court in Sibley.

COSTS

[58] Sunwing is entitled to its costs, on a partial indemnity basis, fixed at $25,000.00, all inclusive, and payable within 30 days of this judgment.

Sossin J.

Released: June 24, 2019