1007374 Alberta Ltd. v. Ruggieri et al., 2013 ABQB 420

• Judge: Yamauchi, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: July 17, 2013
• Citations: 2013 ABQB 420;(2013), 565 A.R. 329 (QB)

1007374 Alta. Ltd. v. Ruggieri (2013), 565 A.R. 329 (QB)

MLB headnote and full text

Temp. Cite: [2013] A.R. TBEd. AU.019

1007374 Alberta Ltd. (plaintiff) v. Antonio Ruggieri, A. Ruggieri Engineering Ltd., 857508 Alberta Ltd., Alberta Engineering Ltd., and GMR Management Corp. (defendants)

(1201 15655; 2013 ABQB 420)

Indexed As: 1007374 Alberta Ltd. v. Ruggieri et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Yamauchi, J.

July 23, 2013.

Summary:

The plaintiff agreed to transfer its clients to the defendant A. Ruggieri Engineering Ltd. (Engineering) in exchange for certain payments. The payments were not made. The plaintiff obtained a judgment against Engineering. The judgment was not paid. When the plaintiff attempted to enforce its judgment, it learned that Engineering had changed its name and had granted general security agreements and issued promissory notes in favour of the defendants Ruggieri and GMR. The plaintiff commenced a new action, alleging, inter alia, a fraudulent conveyance of Engineering's assets to the defendant Alberta Engineering, orchestrated by Ruggieri and the other defendants. The plaintiff sought an interlocutory attachment order/Mareva injunction to secure the judgment amount plus the anticipated costs of the action.

The Alberta Court of Queen's Bench, in a decision reported at [2013] A.R. Uned. 343, allowed the application, granting the requested relief. The plaintiff applied to extend the order. The defendants applied for security for costs.

The Alberta Court of Queen's Bench allowed both applications.

Injunctions - Topic 1612

Interlocutory or interim injunctions - General principles - Mareva injunctions - Preservation of property pending or after judgment - The plaintiff agreed to transfer its clients to the defendant A. Ruggieri Engineering Ltd. (Engineering) in exchange for certain payments - The payments were not made - The plaintiff obtained a judgment against Engineering - The judgment was not paid - When the plaintiff attempted to enforce its judgment, it learned that Engineering had changed its name and had granted general security agreements and issued promissory notes in favour of the defendants Ruggieri and GMR - The plaintiff commenced a new action, alleging, inter alia, a fraudulent conveyance of Engineering's assets to the defendant Alberta Engineering, orchestrated by Ruggieri and the other defendants - The plaintiff sought an interlocutory attachment order/Mareva injunction to secure the judgment amount plus the anticipated costs of the action - Hawco, J., finding "a deliberate attempt by Mr. Ruggieri to render his former company judgment proof", allowed the application, granting the requested relief (the Hawco order) - The plaintiff applied to extend the Hawco order - The Alberta Court of Queen's Bench allowed the application - Although it was arguable that Engineering owed no debt to the plaintiff at the time of the impugned conveyance, there was a prima facie case that Engineering had a fraudulent intent to protect its assets "from the possible or probable claims of future creditors" - The plaintiff had met the tests for granting an attachment order and a Mareva injunction - The court confirmed paragraph 2 of the Hawco order which prohibited the defendants from granting any credit that might have the effect of diminishing the plaintiff's unsecured claim - However, paragraph 1 of the order, which prohibited "dealing with any exigible property" other than "in the normal and ordinary course of business and for ordinary personal outlays or dispositions", was overly broad and, perhaps, vague - Instead, the court ordered the defendants to provide regular, detailed financial statements and to make no "capital expenditures or distributions of their current assets, other than in the ordinary course of business" - See paragraphs 18 to 57.

Injunctions - Topic 1681

Interlocutory or interim injunctions - Continuation of interim injunction - General - [See Injunctions - Topic 1612 ].

Practice - Topic 3371.9

Interim proceedings - Preservation of property - Attachment order - General - [See Injunctions - Topic 1612 ].

Practice - Topic 3378

Interim proceedings - Preservation of property - Mareva injunction - [See Injunctions - Topic 1612 ].

Practice - Topic 8105

Costs - Security for costs - General principles - Considerations - The plaintiff agreed to transfer its clients to the defendant A. Ruggieri Engineering Ltd. (Engineering) in exchange for certain payments - The payments were not made - The plaintiff obtained a judgment against Engineering - The judgment was not paid - When the plaintiff attempted to enforce its judgment, it learned that Engineering had changed its name and had granted general security agreements and issued promissory notes in favour of the defendants Ruggieri and GMR - The plaintiff commenced a new action, alleging, inter alia, a fraudulent conveyance of Engineering's assets to the defendant Alberta Engineering, orchestrated by Ruggieri and the other defendants, and obtained an interlocutory attachment order/Mareva injunction to secure the judgment amount plus the anticipated costs of the action - On the plaintiff's application to extend the attachment order/Mareva injunction, the defendants sought security for costs - The Alberta Court of Queen's Bench allowed the defendants' application - The plaintiff had provided no evidence to counter the defendants' assertions that the plaintiff's directors were not resident in Alberta and that the plaintiff and its directors had no assets in Alberta - The plaintiff's only asset was the amount of the judgment that it had been unable to enforce - Where the defendants' alleged misconduct had resulted in a plaintiff's impecuniosity, this was a significant fact to consider in either reducing the amount of security for costs or denying the application entirely - However, the plaintiff had been able to provide an undertaking to cover damages that the defendants might suffer as a result of the attachment order/Mareva injunction - Balancing the factors set forth in rule 4.22, the court found that it was just and reasonable to grant the defendants' application - See paragraphs 58 to 70.

Practice - Topic 8107

Costs - Security for costs - General principles - Where plaintiff is corporation or association - [See Practice - Topic 8105 ].

Cases Noticed:

1007374 Alberta Ltd. v. Ruggieri (A.) Engineering Ltd., [2011] A.R. Uned. 836; 2011 ABQB 804, refd to. [para. 6].

Two-Tyme Recycling Inc. v. Woods, [2010] O.T.C. Uned. 5672; 2010 ONSC 5672, refd to. [para. 18].

Boczkiewicz et al. v. Creative Capital Connection Inc. et al., [2006] A.R. Uned. 928; 2006 ABQB 732, refd to. [para. 24].

Cho v. Twin Cities Power-Canada U.L.C. et al. (2012), 522 A.R. 154; 544 W.A.C. 154 (C.A.), refd to. [para. 25].

SLMsoft.com Inc. v. Rampart Securities Inc. (Bankrupt) (2004), 4 C.B.R.(5th) 105 (Ont. Sup. Ct.), refd to. [para. 25].

Feigelman et al. v. Aetna Financial Services Ltd., Lax and Burke (1985), 56 N.R. 241; 32 Man.R.(2d) 241; 15 D.L.R.(4th) 161 (S.C.C.), refd to. [para. 25].

Osman Auction Inc. v. Belland et al. (1998), 235 A.R. 180; 1998 ABQB 964, refd to. [para. 26].

Lyons et al. v. Creason et al., [2008] A.R. Uned. 591; 2008 ABQB 550, refd to. [para. 26].

Bank of Montreal v. Cochrane et al., [2010] A.R. Uned. 503; 2010 ABQB 476, refd to. [para. 28].

Osman Auction Inc. v. Belland, 1998 ABQB 1095, refd to. [para. 28].

Proulx v. Proulx (2002), 316 A.R. 150; 25 R.F.L.(5th) 370; 2002 ABQB 151, refd to. [para. 29].

Taylor & Associates Ltd. v. Louis Bull Tribe No. 439 et al. (2011), 525 A.R. 141; 2011 ABQB 213, refd to. [para. 29].

Palechuk v. Fahrlander et al. (2006), 397 A.R. 151; 384 W.A.C. 151; 2006 ABCA 242, leave to appeal denied (2007), 367 N.R. 394 (S.C.C.), refd to. [para. 29].

Freeman v. Pope (1870), L.R. 5 Ch. App. 538 (C.A.), refd to. [para. 30].

Wise, Re; Ex parte Mercer (1886), 17 Q.B.D. 290 (C.A.), refd to. [para. 32].

Moody v. Ashton et al. (2004), 258 Sask.R. 1; 6 C.B.R.(5th) 219; 2004 SKQB 488, refd to. [para. 32].

Titan Investments Limited Partnership, Re (2005), 383 A.R. 323; 2005 ABQB 637, refd to. [para. 32].

Krumm v. McKay et al. (2003), 342 A.R. 169; 2003 ABQB 437, refd to. [para. 33].

Dwyer v. Fox et al. (1996), 190 A.R. 114; 43 Alta. L.R.(3d) 63 (Q.B.), refd to. [para. 33].

Royal Bank of Canada v. North American Life Assurance Co. - see Ramgotra (Bankrupt), Re.

Ramgotra (Bankrupt), Re, [1996] 1 S.C.R. 325; 193 N.R. 186; 141 Sask.R. 88; 114 W.A.C. 88, refd to. [para. 35].

Forsey et al. v. Hydro Kleen Systems Inc. et al., [2011] A.R. Uned. 78; 2011 ABQB 14, refd to. [para. 35].

Nicholson v. Milne and Davis et al. (1989), 96 A.R. 114; 74 C.B.R.(N.S.) 263 (Q.B.), refd to. [para. 35].

Kostiuk (Bankrupt), Re, [1998] B.C.T.C. Uned. E17; 6 C.B.R.(4th) 46 (S.C.), refd to. [para. 38].

Silver Standard Resources Inc. v. Joint Stock Co. Geolog et al., [1999] 7 W.W.R. 289; 115 B.C.A.C. 262; 189 W.A.C. 262; 59 B.C.L.R.(3d) 196 (C.A.), refd to. [para. 40].

Hamza v. Hamza - see International Association of Science and Technology for Development et al. v. Hamza.

International Association of Science and Technology for Development et al. v. Hamza, [1997] 9 W.W.R. 592; 200 A.R. 342; 146 W.A.C. 342; 53 Alta. L.R.(3d) 80 (C.A.), refd to. [para. 41].

Canadian Aero Service Ltd. v. O'Malley, [1974] S.C.R. 592; 40 D.L.R.(3d) 371; 11 C.P.R.(2d) 206, refd to. [para. 42].

Anderson, Smyth & Kelly Customs Brokers Ltd. v. World Wide Customs Brokers Ltd. et al. (1996), 184 A.R. 81; 122 W.A.C. 81; 39 Alta. L.R.(3d) 411(C.A.), refd to. [para. 42].

Amhil Enterprises v. Select Inc. et al., [2005] O.T.C. Uned. 28; 2005 CarswellOnt 195 (Sup. Ct.), refd to. [para. 46].

Equustek Solutions Inc. et al. v. Jack et al., [2012] B.C.T.C. Uned. 1490; 2012 BCSC 1490, refd to. [para. 46].

Grep Properties (II) Ltd. v. 371154 Alberta Inc. et al. (1995), 175 A.R. 361 (Q.B.), refd to. [para. 48].

Toronto-Dominion Bank v. Suitel Canada Executive Suites Corp. et al. (2011), 527 A.R. 97; 2011 ABQB 519, refd to. [para. 59].

Attila Dogan Construction and Installation Co. v. AMEC Americas Ltd. et al. (2011), 504 A.R. 295; 2011 CarswellAlta 407; 2011 ABQB 175, refd to. [para. 60].

Autoweld Systems Ltd. v. CRC-Evans Pipeline International Inc. et al. (2011), 504 A.R. 288; 2011 CarswellAlta 679; 2011 ABQB 265, leave to appeal refused (2011), 515 A.R. 6; 532 W.A.C. 6; 2011 CarswellAlta 1355; 2011 ABCA 243, refd to. [para. 60].

Calmont Leasing Ltd. v. 32262 B.C. Ltd. (2002), 317 A.R. 331; 284 W.A.C. 331 (C.A.), refd to. [para. 60].

Spectrum Centre for Physical Therapy et al. v. Filipenko et al. (2011), 523 A.R. 101; 2011 ABQB 340 (Master), refd to. [para. 64].

Authors and Works Noticed:

Alberta, Institute of Law Research and Reform, Prejudgment Remedies for Unsecured Claimants, Report No. 50 (1988), p. 245 [para. 24].

Maddaugh, Peter D. and McCamus, John D., The Law of Restitution (2013) (Looseleaf), vol. 1, pp. 6-16, 6-17 [para. 18].

Springman, Melvin A., Stewart, George R., Morrison, J.J., and MacNaughton, Michael J., Fraudulent Conveyances and Preferences (2009) (Looseleaf), pp. 12-18, 12-19 [para. 36].

Counsel:

Michael D. Mysak and Sheena L. Owens (Bennett Jones LLP), for the plaintiff;

C. Michael Smith (Smith Mack Lamarsh), for the defendants, Antonio Ruggieri and A. Ruggieri Engineering Ltd.;

Joseph G. Oppenheim (Stones Carbert Waite LLP), for the defendants, Alberta Engineering Ltd. and GMR Management Corp.

These applications were heard on July 17, 2013, by Yamauchi, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following memorandum of decision on July 23, 2013.