Court File and Parties

COURT FILE NO.: CV-20-999 DATE: 20200717 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Total Traffic Services Inc., Plaintiff (Moving Party) AND: Tami Kone AKA Tami Hore AKA Tami Hore-Kone AND Michael Kone, Defendants (Responding Parties)

BEFORE: Justice V. Christie

COUNSEL: Andrew M. Mae, Counsel, for the Plaintiff (Moving Party)

HEARD: Ex Parte, in writing (with brief oral submissions by teleconference on July 17, 2020)

Endorsement

[1] The Plaintiff requests a Mareva Injunction and other associated injunctive relief in this urgent motion, brought ex parte. The original Notice of Motion received by the Court listed only Tami Kone (aka Tami Hore aka Tami Hore-Kone) as the Defendant, however, the statement of the claim listed both Tami Kone and Michael Kone as the Defendants. It was also clear to this Court, from the written materials, that it was the intention of the Plaintiff to include both parties as Defendants. This issue was raised with counsel for the Plaintiff during the teleconference call and, subsequently, amended motion materials were provided that listed both Defendants.

[2] A brief recitation of the facts will provide context to this motion. The Plaintiff is a family owned pavement marking contractor company. Peter Brousseau is the president of the company. Meghan Brousseau is the wife of Peter and the vice-president of sales for the company. The Defendant, Tami Kone, was employed by the Plaintiff from October 15, 2016 to July 13, 2020 as a bookkeeper / administrator. Initially, Ms. Kone assisted the Plaintiff’s former vice president, Janet Brousseau, with the company’s accounting. However, when Janet Brousseau became ill in the fall of 2018, and her hours of work were reduced, Ms. Kone began to work more independently. By January 2019, Janet Brousseau was not involved with the business at all and in fact passed away in April 2019.

[3] Based upon some investigations that the Plaintiff has commenced, it is alleged that from October 2018 to June 2020, Tami Kone issued numerous cheques to herself from the Plaintiff’s business account, without any authority for doing so, which were deposited in her bank accounts at Scotiabank and CIBC. The cheques totalled $312,076.02, however, Ms. Kone recently made a partial repayment of $64,112.05, leaving a balance owing of $247,963.97. It must be noted that at paragraph 54 of Peter Brousseau’s affidavit, it states that the total amount of loss is $252,313,05, after taking into account the repayment. During the conference call, counsel for the Plaintiff pointed this out to the court as a clerical error and that, in fact, the correct remaining loss is as reflected in the spreadsheet attached at Exhibit B to that affidavit, which confirms the remaining loss to be $247,963.97.

[4] Based on the Plaintiff’s review of the accounting records to date, it would appear that Ms. Kone may have taken steps to hide her activity by inputting incorrect information into the company’s accounting records and changing or manipulating the information on cheques and cheque stubs.

[5] This all came to light when, on or around June 23, 2020, Meghan Brousseau noticed that two company cheques, in the amount of $79,648.01 and $14,464.00, had been written out to Tami Kone and cashed by her. Ms. Kone was questioned about this by Meghan and Peter Brousseau, at which time she advised that she had mistakenly written cheques to herself, as the cheques looked identical to her husband’s business cheques, and offered to repay the amounts immediately. She continued to work for the company. Over the next two weeks, Ms. Kone made various promises to repay the money, however, there were a number of excuses given for the delay in doing so.

[6] Finally, on July 10, 2020, Ms. Kone deposited $64,112.05 into the Plaintiff’s bank account, although she advised that she deposited the full amount owing. When later questioned about the shortfall on July 13, 2020, she suggested that the amount may have been written down incorrectly. Further, on the same day, Ms. Kone was confronted by Peter Brousseau, Meghan Brousseau and the company’s account, Rob Neahr, with other cheques that were written to her from the company. She acknowledged that the bank deposit details on the back of the cheques were for her bank accounts. However, she suggested that the cheques may have been written by her in error or in some cases simply had no explanation. She absolutely denied that she had “embezzled” any funds and said she would need to attend at her bank to look into this matter. It must also be noted that in oral submissions during the teleconference, counsel for the Plaintiff noted that in summarizing the meeting of July 13, 2020, the affidavit failed to mention that, during that meeting, Ms. Kone had referred to her inheritance from a family member which was in excess of $200,000. This reference was captured in the notes taken by Rob Neahr, attached as Exhibit “O” to the affidavit (page 198 of the Motion Record).

[7] After attending at the bank, also on July 13, 2020, Ms. Kone advised Peter and Meghan Brousseau that she had $285,000 in an RRSP which she could use to start repaying the Plaintiff, however, her husband would need to sign something at the bank to release the funds. Without any prior mention of the involvement of police, Ms. Kone asked if she could have a few days to go through the records before the police were called. On that day, July 13, 2020, Ms. Kone was terminated for cause.

[8] Having reviewed the company’s accounting records, a review which is continuing, the Plaintiff claims that since October 2018, Tami Kone has issued numerous cheques to herself in the amount of $312,076.02. The Plaintiff claims that Ms. Kone was able to do this in a number of ways:

a. Peter Brousseau, and perhaps Janet Brousseau, would sign blank cheques to allow Ms. Kone to pay legitimate expenses for the business, not for payment to herself; b. The Plaintiff alleges that some of the signatures appear to be forgeries; c. The Plaintiff alleges that Ms. Kone concealed her activities by falsifying the plaintiff’s financial records, to which she had full access.

[9] On July 14, 2020, when Peter Brousseau followed up with Ms. Kone by text about her plans for repayment with the use of her investment, she said that the investment was in an RRSP and it would take a couple of days. She advised that her husband was angry with her and asked her to leave the house. She stated that “this is all my fault” and that she did not know whether to go to the bank or to the police to “come clean”.

[10] While Michael Kone is not alleged to have been directly involved in removing funds from the company, the Plaintiff claims that the fraudulently obtained funds were provided by Ms. Kone to her husband, Michael Kone, either directly or through gifts. The Defendants own two relatively new vehicles, a mobile home trailer and a new speedboat. The new boat was paid for largely with cash and a bank draft. Ms. Kone’s taxable income from the company in 2019 was $59,190.00. Her husband is self-employed as a carpenter / deck builder. The Defendants live with Mr. Kone’s mother. The Plaintiff asserts that the purchases were made with the money taken from the company.

[11] This matter has been reported to police and is under investigation. No criminal charges have been laid.

[12] In order for an interlocutory injunction to be granted, the moving party must meet the test in RJR-MacDonald Inc. v. Canada, [1994] 1 S.C.R. 311, which is as follows:

a. The Plaintiff must put forward a claim which is not frivolous or vexatious, but which raises a serious question to be tried, or in some circumstances, a strong prima facie case; b. The Plaintiff must establish irreparable harm, in other words, that damages would be an inadequate remedy if the Plaintiff succeeds; and c. The Court must consider the balance of convenience, in other words, must consider which party will suffer the greater harm from the granting or refusing of the injunction.

[13] In this case, requesting a Mareva Injunction, the Plaintiff is required to demonstrate more than a serious question to be tried. The Plaintiff must demonstrate a strong prima facie case. See: Aetna Financial Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2.

[14] It is the view of this court that the Plaintiff has met the threshold for the Mareva Injunction that they seek. As for the strength of the case:

a. The documentary evidence shows numerous and sometimes very large cheques written to and deposited by Tami Kone. When some of these cheques are compared to the company accounting records, the entries, inaccurately, suggest that these payments went to others, demonstrating deceit. b. When asked to repay the amount from the two cheques that were initially discovered, Ms. Kone delayed the repayment, made excuses for the delay, did not pay the promised amount, and made excuses for the shortfall. c. Ms. Kone admitted that the deposits were made to her account. d. On July 14, 2020, Ms. Kone made some inculpatory statements about her behaviour.

[15] As for the harm that will result if the relief is not granted, the court has considered the following:

a. If the claim is true, Ms. Kone has shown an ability to conceal and mislead her employer over a prolonged period of time. She may apply the same ingenuity to conceal or dispose of these improperly obtained funds. b. If assets are disposed of or bank accounts are hidden, there would appear to be no other way for the Plaintiff to recoup their losses.

[16] As for the balance of convenience, this court must determine which of the parties will suffer greater harm. On the one hand, the Defendants will have most, if not all, of their assets tied up. Having said that, however, the Defendants will have the ability to request funds for certain uses. On the other hand, if the assets are disposed of, the Plaintiff may have permanently lost any ability to regain what they have lost through completely dishonest means by a trusted employee. It must also be noted that the Plaintiff has provided an undertaking as to damages if any are incurred by the Defendant.

[17] In addition to the above, in the case of a Mareva injunction, the Plaintiff must meet the Chitel test. See Chitel et al. v. Rothbart et al., 1982 CarswellOnt 508. The Plaintiff must make full and frank disclosure of all material matters, as well as give particulars of the claim. This court has no reason to believe that the Plaintiff has misstated the factual basis for the claim. The claims have been substantially backed up by documentary evidence. Clarifications were also made during oral submissions.

[18] The Plaintiff must also show the existence of assets and a genuine risk of dissipation or removal of assets: SFC Litigation Trust v. Chan, [2017] O.J. No. 1540 (Div. Ct.). The granting of a Mareva Injunction is more readily justified where the Plaintiff’s right is specifically related to the asset in question.

[19] The documentary evidence supports that cheques from the company were deposited into the accounts of the Defendants. The documentary evidence supports that in recent times the Defendants were able to make large purchases with cash and bank drafts. The documentary evidence also supports that there was an attempt to conceal the fact that these cheques were written to Ms. Kone as inaccurate information was written the company’s records. Ms. Kone has shown a willingness to deceive and mislead, leading to a risk that the assets may be hidden or concealed in an attempt to defeat the Plaintiff’s claim. The Defendant has delayed and made excuses in making the repayment that was made. As stated in Sibley & Associates v. Ross, 2011 ONSC 2951 para 63 “It should be sufficient to show that all the circumstances, including the circumstances of the fraud itself, demonstrate a serious risk that the defendant will attempt to dissipate assets or put them beyond the reach of the plaintiff”. There is strong evidence that Ms. Kone misled and concealed her removal of money from this company for more than a year and a half. It would appear that she was able to dissipate the assets from this company quite successfully.

[20] In all of the circumstances, the Plaintiff has fully established the basis for a Mareva Injunction in this case.

[21] In addition to the Mareva Injunction, this court has inherent jurisdiction to make an ancillary order that is necessary to give effect to a Mareva injunction and may grant any other ancillary order that is appropriate in the circumstances. The Plaintiff requests that this court make some ancillary orders, including

a. Ordering that the Plaintiff may register purchase money security interest (PMSI) liens against the defendants and the “moveable” assets (as set out in Schedule 1) under the PPSA; and b. Ordering that the Plaintiff may retain possession of Ms. Kone’s laptop and take an image of the data on the hard drive.

[22] It is the view of this court that this further relief should not be granted on this ex parte motion. Other than the Court’s inherent jurisdiction, there would appear to be no authority, or at least none provided, to support a PMSI lien in this case. I would also note that the evidence suggests that it is quite possible that Ms. Kone obtained her vehicle by using her inheritance. With respect to the personal laptop computer, there is no evidence that there is anything on this computer related to the claims made. At this point, that would simply be speculation. Further, allowing the Plaintiff’s to retain the laptop, copy the laptop, and, perhaps to share that information with the police, could raise serious privacy concerns and Charter concerns. It is the view of this court that it would be inappropriate for the Court to use its inherent jurisdiction to make such an order on this ex parte motion.

[23] For all of the foregoing reasons, and having considered the totality of the circumstances, there will be an Order as follows:

Mareva Injunction

1. THIS COURT ORDERS that the defendants, and their servants, employees, agents, assigns, officers, directors and anyone else acting on their behalf or in conjunction with any of them, and any and all persons with notice of this injunction, are restrained from directly or indirectly, by any means whatsoever:

a. selling, removing, dissipating, alienating, transferring, assigning, encumbering, or similarly dealing with any assets of the defendants, wherever situate, including but not limited to the assets and accounts listed in Schedule “A” hereto; b. instructing, requesting, counselling, demanding, or encouraging any other person to do so; and c. facilitating, assisting in, aiding, abetting, or participating in any acts the effect of which is to do so.

2. THIS COURT ORDERS that paragraph 1 applies to all of the defendants’ assets whether or not they are in their own names and whether they are solely or jointly owned. For the purpose of this order, the defendants’ assets include any asset which they have the power, directly or indirectly, to dispose of or deal with as if it were their own. The defendants are to be regarded as having such power if a third party holds or controls the assets in accordance with her direct or indirect instructions.

Ordinary Living Expenses

3. THIS COURT ORDERS that the defendants may apply for an order, on at least twenty-four (24) hours notice to the plaintiff, specifying the amount of funds which the defendants are entitled to spend on ordinary living expenses and legal advice and representation.

Disclosure of Information

4. THIS COURT ORDERS that the defendants prepare and provide to the plaintiff within seven (7) days of the date of service of this order, a sworn statement describing the nature, value, and location of their assets worldwide, whether in their own names or not and whether solely or jointly owned.

5. THIS COURT ORDERS that the defendants submit to examinations under oath within seven (7) days of the delivery by the defendants of the aforementioned sworn statements.

6. THIS COURT ORDERS that if the provision of any of this information is likely to incriminate the defendant, they may be entitled to refuse to provide it, but is recommended to take legal advice before refusing to provide the information. Wrongful refusal to provide the information referred to in paragraph 8 herein is contempt of court and may render the defendants liable to be imprisoned, fined, or have their assets seized.

Third Parties

7. THIS COURT ORDERS that the Bank of Nova Scotia and the Canadian Imperial Bank of Commerce (Laurentian Bank of Canada) (the “Banks”) to forthwith freeze and prevent any removal or transfer of monies or assets of the defendants held in any account or on credit on behalf of the defendants, with the Banks, until further Order of the Court, including but not limited to the accounts listed in Schedule “A” hereto.

8. THIS COURT ORDERS that the Banks forthwith disclose and deliver up to the Plaintiff any and all records held by the Banks concerning the defendants’ assets and accounts, including the existence, nature, value and location of any monies or assets or credit, wherever situate, held on behalf of the defendants by the Banks.

Alternative Payment of Security into Court

9. THIS COURT ORDERS that this order will cease to have effect if the defendants provide security by paying the sum of $300,000 into Court, and the Accountant of the Superior Court of Justice is hereby directed to accept such payment.

Variation, Discharge or Extension of Order

10. THIS COURT ORDERS that anyone served with or notified of this order may apply to the court at any time to vary or discharge this order, on providing four (4) day’s notice to the plaintiff.

11. THIS COURT ORDERS that the hearing to extend this order be heard by the court on July 24, 2020 at 9:30 am, or such other suitable date and time to be arranged by the parties, and which shall take place by teleconference or Zoom, as the parties request. The parties must confirm and coordinate this extension hearing with the court office. If the Plaintiff does not apply for an extension of this Order within ten (10) days hereof, this Order will terminate.

12. THIS COURT ORDERS that the costs of this motion be reserved to be determined by the court at a later date.

Justice V. Christie Date: July 17, 2020