REASONS FOR decision

[1] A motion for judgment was heard by me on 17 June 2021. The defendants having been noted in default on 7 June 2021.

[2] Following the hearing of the motion, I granted judgment, with reasons to follow, requiring:

The defendants to pay to the plaintiffs damages in the amount of $345,071.45;
The defendants to pay to the plaintiffs punitive damages in the amount of $100,000;
The defendants to prepare and provide the plaintiffs within 30 days of the date of service of the judgment, a sworn statement describing the nature, value and location of their assets, whether in their own name or not, and whether solely or jointly owned;
The defendants to submit to examinations under oath within 30 days of the delivery by the defendants of their sworn statements;
Any financial institution to forthwith disclose and deliver up to the plaintiffs all records held by them concerning the defendants’ assets and accounts, including the existence, nature, value and location of any monies or assets or credit, wherever situated, held on behalf of the defendants by such financial institution;
Any financial or other institution at which the defendants may hold accounts or assets to forthwith freeze and prevent any removal or transfer of monies or assets of the defendants held in any account or on any credit on behalf of the defendants, until further order of the court;
The Mareva injunction and other relief granted by order of the court on 12 May 2021 to be continued and extended for six months from the date of the judgment, without prejudice to the plaintiffs applying at any time before the expiry of the six month period for an order further extending the post-judgment Mareva injunction and other relief in aid of execution; and
The defendants to pay the plaintiffs’ costs of the action on a substantial indemnity basis, fixed in the amount of $23,677.15.

[3] These are my reasons for so ordering.

Background

[4] Elizabeth Flynn is a registered nurse and the sole director and principal of Camlibra Consulting Inc. Through Camlibra, Ms. Flynn is engaged in the business of providing clinical research consulting services.

[5] The defendant, Mulville & Company Inc., is a federally incorporated business with its head office in Westport, Ontario. Its sole officer and principal is Raymond Ronald Howard Mulville. Mr. Mulville, at all material times, held himself out as a bookkeeper and financial and investment advisor, operating various accounting, advisory and investment management businesses, including Taurus Analytics Inc. and Mulville & Company.

[6] In 2019, Ms. Flynn was referred to Mr. Mulville by Mr. Mulville’s mother, who is also a nurse and was a former work colleague of Ms. Flynn’s. Mr. Mulville represented to Ms. Flynn that he had a qualified team at Mulville & Company that could assist her with bookkeeping and accounting services. Ms. Flynn subsequently engaged Mr. Mulville to assist her with the preparation of financial returns and accounting for herself and Camlibra.

[7] Due to a catastrophic drop in the plaintiffs’ business as a result of the COVID-19 pandemic, Ms. Flynn consulted Mr. Mulville in order to invest funds held by her in Camlibra so as to provide her with an income.

[8] On Mr. Mulville’s recommendation, Ms. Flynn invested $325,000, representing the majority of Camlibra’s assets, in a mutual fund managed by IA Clarington Investments Inc., a reputable group fund management company. Ms. Flynn assumed that these instructions were complied with. Towards the end of October 2020, however, Ms. Flynn became concerned about the volatility of markets following the then pending U.S. presidential election and asked Mr. Mulville to take the money out of the IA Clarington funds and place them in a more secure money market fund. Mr. Mulville assured Ms. Flynn that her funds had been taken out of the IA Clarington fund and recommended opening an investment account with Taurus Analytics, which he represented as a fund in which he was involved, consisting of various blue chip stock holdings with an excellent record of returns, stability and dividends. Ms. Flynn accordingly authorised the transfer by the defendants of Camlibra’s assets from IA Clarington into the Taurus Analytics fund.

[9] In January 2021, Ms. Flynn met with Mr. Mulville for the purpose of reviewing the statement of her investment funds with Taurus Analytics. She was presented with a statement purporting to show another client’s account with Taurus Analytics. She was not provided with a statement detailing the particulars of Camlibra’s account with Taurus Analytics. Because of this, and a general paucity of information about her holdings and the performance and status of the funds held with Taurus Analytics, Ms. Flynn became concerned, and began to repeatedly ask for updates, information and statements. Instead of responding, the defendants evaded or brushed Ms. Flynn off with excuses and rescheduled calls, meetings and promises to follow up.

[10] After a number of increasingly insistent demands, the defendants provided the plaintiffs with three documents titled “Portfolio Reports” which purported to show a breakdown of the holdings in the Taurus Analytics fund. These reports were dated 31 October 2020, 31 December 2020 and 2 March 2021 respectively. The 2 March 2021 portfolio report purported to show that Camlibra’s total holdings with Taurus Analytics was valued at $345,071.45.

[11] On 2 March 2021, the plaintiffs provided the defendants with written instructions for the immediate withdrawal of all of Camlibra’s assets from Taurus Analytics and requested that a cheque be provided returning these funds to them. On 5 March, Ms. Flynn followed up with Mr. Mulville asking him when that cheque could be picked up. Mr. Mulville responded that the funds were “still being processed”. A meeting set for the return of the funds was cancelled by Mr. Mulville.

[12] Further requests as to the whereabouts of and return of the investment funds have been deflected and/or ignored by Mr. Mulville. According to Ms. Flynn, there was always an excuse or an explanation for the delay in returning these funds. Her requests increased in urgency and became demands, expressing the seriousness and urgency of the situation.

[13] The defendants provided numerous excuses on the status of the funds and, on more than one occasion, indicated that they were “already in the mail”. However, Mr. Mulville was not able to provide any tracking information or shipping details associated with delivery of the cheques. Excuses ranged from head office issues and miscommunications between staff, including a “Cooper Miller” who was identified by Mr. Mulville as the Financial Director at Taurus Analytics Inc.

[14] Indeed, as the record demonstrates, “Cooper Miller” has been repeatedly blamed by Mr. Mulville as a reason for the delay in returning the plaintiffs’ funds. Throughout the dialogue between the parties, the defendants have continued to represent that there is no issue with the plaintiffs’ monies, that “everything is insured and insurance backed” and that Taurus Analytics is a legitimate investment fund which is part of an “incubator program” associated with Nipissing University.

[15] Ms. Flynn provided a transcript of a recorded telephone conversation which she had with Mr. Mulville on 6 May 2021. By this time, Ms. Flynn had already retained lawyers, but was hoping to avoid legal proceedings. In part of that conversation, Mr. Mulville was recorded as saying the following:

… I just-just got your email here. Uh, I’m just trying to get a hold of Cooper. I mean I’m getting the same thing with the – I’m trying his personal cell as well, and I haven’t been able to get a hold of him. I’m trying to move some stuff around, so I can get out there and get some boots on the ground to see what the hell is gone on with. I mean it’s the same update still from UPS, so I mean, I will do everything I can to – I mean I might be able to get away tonight, but I mean it’s likely going to be tomorrow or first thing Saturday, but I can get up to North Bay to see what the hell is going on. Um, that’s kind of the update I have. I’ll forward ya Cooper’s personal cell too if you could just pester the hell out of that, cause I haven’t been able to get an answer out of him today, but uh, I am going to do everything I can to get some kind of answer and get your funds back to you as quick as I can right now because I mean that’s - that’s a little disturbing so that’s kind of where I’m at.

I apologize for this Liz, I mean I’m just passing on information that I’ve been receiving so I mean it’s kind of putting me in a spot here, but I’m going to do whatever I can to get a hold of that because I mean its – it shouldn’t – it should’ve been back to you by now and at least from a UPS standpoint, there should have been at least an update from that too, but by the looks of it, it looks like it hasn’t been received so that’s – I’m going to do the best I can here to get you an answer.

[16] The evasiveness conveyed in this message speaks for itself.

[17] Despite the plaintiffs’ efforts, their funds have not been returned.

Procedural History

[18] On 12 May 2021, the plaintiffs sought an ex parte order for, inter alia, an interim Mareva injunction and a Certificate of Pending Litigation against a property owned by Mr. Mulville. In granting the order, I made reference to the “apparently fraudulent conduct of the defendants” based on the evidence presented which painted a “concerning picture of obstruction, delay, evasion and obfuscation” by Mr. Mulville.

[19] Despite being served with a copy of my interim order, and a notice of motion returnable 25 May 2021 for the continuation of the interim relief granted by me, the defendants have not responded to the litigation. They have failed to deliver a statement of defence or any other response to the allegations and evidence put forward against them.

[20] On 25 May 2021, Justice Hurley extended the interim relief set out in my 12 May 2021 order and adjourned the matter to 17 June 2021.

[21] Under cover of a letter of 27 May 2021, sent by email and by courier, Mr. Mulville was provided with a copy of Justice Hurley’s order, another copy of my order of 12 May and a copy of the motion record that had been filed in connection with the obtaining of those orders. The covering letter continued:

This matter is returning again before the Court on June 17, 2021, at 10:00 am. At that time, we anticipate seeking judgment against you on the full amount of the claims set out in the Plaintiffs’ Statement of Claim along side recovery of the Plaintiffs legal costs incurred on a substantial indemnity basis.

We strongly recommend you retain a lawyer and forward these materials to their attention, so that they may assist in advising you on your legal rights and obligations in this matter. We have instructions to seek all available civil remedies to recover the Plaintiffs’ funds entrusted to you plus additional damages and costs incurred.

Motion for Judgment

[22] The plaintiffs framed their motion as one for judgment for a liquidated amount of $345,071.45 plus punitive damages to be assessed by the court plus costs on a full indemnity basis.

[23] I indicated that I would be prepared to grant judgment for a liquidated sum of $325,000, which was the amount that the plaintiffs placed with the defendants on 27 July 2020, plus accumulated prejudgment interest on that amount. However, if the plaintiffs wish to obtain judgment for a greater sum, they would have to prove such damages.

[24] The plaintiffs proceeded to do so, arguing that damages for an amount greater than the sum invested by them would be warranted by virtue of the defendants’ representation, in the portfolio report provided by him bearing the date of 2 March 2021, that the portfolio value of the funds invested by the plaintiffs was $345,071.45 as of that date. The report purports to show a steady increase in the value of the portfolio from an initial value, on 29 October 2020, of $329,345.60, to a value on 31 December 2020, of $341,340.63, to the balance of $345,071.45 on 2 March 2021. The portfolio report represents an allocation of holdings by market sector, on a percentage basis, including identification of the ten largest holdings in companies such as Apple, Microsoft, Visa and Mastercard.

[25] I am satisfied that the defendants represented to the plaintiffs that the present value of the funds invested by them was $345,071.45 as of 2 March 2021. A fiduciary relationship existed between the plaintiffs and the defendants. The plaintiffs had a right to expect the defendants, as their investment advisor and as fiduciaries, to carefully, honestly and in good faith, exercise their responsibilities to the plaintiffs in respect of the funds entrusted to them.

[26] I find that the plaintiffs were entitled to rely on the representations made by the defendants as to the present value of their investment as of 2 March 2021, and that the plaintiffs should have judgment for that sum.

Punitive Damages

[27] The plaintiffs claim punitive damages in the amount of $100,000 against the defendants on the basis that their acts and omissions constituted callous and deceitful conduct and flagrant disregard for their rights. The plaintiffs portrayed themselves as being in a position of vulnerability, relying on the legitimacy of the credentials and the information conveyed by Mr. Mulville on behalf of the defendants.

[28] The court’s discretion to award punitive damages is now well established. It is not blunted as a result of a defendant’s failure to defend the action: Canadian Premier Life Insurance Company v. Ho, 2016 ONSC 496, at para. 29; Elekta Ltd. v. Rodkin, 2012 ONSC 2062; TD Meloche v. 32234101 Ontario Inc., 2015 ONSC 8135, at para. 18.

[29] In Midwest Amusement Park, LLC v. Cameron Motor Sports Inc., 2018 ONSC 4549, at para. 103, Perell J. summarised the analysis of punitive damages, in light of the factors set out by Mr. Justice Binnie in Whiten v. Pilot Insurance, 2002 SCC 18:

It follows from Justice Binnie’s remarks that an assessment of punitive damages requires an appreciation of: (a) the degree of misconduct; (b) the amount of harm caused; (c) the availability of other remedies; (d) the quantification of compensatory damages; and (e) the adequacy of compensatory damages to achieve the objectives or [sic] retribution, deterrence, and denunciation. These factors must be known to ensure that punitive damages are rational and to ensure that the amount of punitive damages is not greater than necessary to accomplish their purposes.

[30] Having due regard to these principles and, in particular, to the principle of proportionality, I am satisfied that the requested amount of $100,000 by way of punitive damages is both reasonable and proportionate.

Costs

[31] The plaintiffs sought costs on a full indemnity basis. This was the measure of costs awarded by Mr. Justice Dunphy in Canadian Premier Life Insurance Company v. Ho, which also involved a misuse and abuse of position of trust amounting to “theft pure and simple”.

[32] While there is certainly good reason in the present case to suggest dishonesty on Mr. Mulville’s part, I expressed some discomfort in awarding full indemnity costs rather than the substantial indemnity costs which the plaintiffs advised Mr. Mulville that they would be seeking when they wrote to him on 27 May 2021.

[33] Having reviewed the bill of costs provided by the plaintiffs, I was satisfied with the appropriateness of their costs, on a substantial indemnity basis, in the amount of $23,677.15.

Mew J.

Released: 25 June 2021

COURT FILE NO.: CV-21-00000149-0000

DATE: 20210625

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

CAMLIBRA CONSULTING INC. and ELIZABETH FLYNN

Plaintiffs

– and –

RAYMOND RONALD HOWARD MULVILLE and MULVILLE & COMPANY INC.

Defendants

REASONS FOR decision

Mew J.

Released: 25 June 2021

Camlibra Consulting Inc. v. Mulville, 2021 ONSC 4570

Case Summary

REASONS FOR decision

Background

Procedural History

Motion for Judgment

Punitive Damages

Costs

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Legal Tests 1