1007374 Alberta Ltd. v. Ruggieri et al.,

• Judge: Eidsvik,Paperny,Rowbotham
• Neutral Citation: 2015 ABCA 205
• Citation: (2015), 602 A.R. 117,2015 ABCA 205,602 AR 117,(2015), 602 AR 117,602 A.R. 117
• Date: 10 June 2015
• Court: Court of Appeal (Alberta)

1007374 Alta. Ltd. v. Ruggieri (2015), 602 A.R. 117; 647 W.A.C. 117 (CA)

MLB headnote and full text

Temp. Cite: [2015] A.R. TBEd. JN.078

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

(1401-0285-AC; 2015 ABCA 205)

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

Alberta Court of Appeal

Paperny and Rowbotham, JJ.A., and Eidsvik, J.(ad hoc)

June 15, 2015.

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 (see [2011] A.R. Uned. 836). 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, in a decision reported at (2013), 565 A.R. 329, allowed both applications.

The Alberta Court of Queen's Bench, in a decision reported at (2014), 598 A.R. 96, allowed the plaintiff's action, granting judgment in the amount of the original judgment against Engineering of $476,498.86, plus punitive damages in the amount of $100,000. The defendants appealed.

The Alberta Court of Appeal dismissed the appeal.

Company Law - Topic 4181

Directors - Liability of directors - General - The plaintiff obtained a judgment against A. Ruggieri Engineering Ltd. (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 - Wilson, J., having found that the plaintiff had established a fraudulent conveyance under the Statute of Elizabeth and the Fraudulent Preferences Act, also held that the plaintiff had proven oppressive conduct under the Business Corporations Act (BCA) and granted judgment in the amount of the original judgment against Engineering of $476,498.86, plus punitive damages in the amount of $100,000 - The Alberta Court of Appeal dismissed the defendants' appeal - There was no reviewable error in Wilson, J.'s direction that there should be a remedy under the BCA against Ruggieri personally - When a director exercised power in a manner that was unfairly prejudicial or unfairly disregarded a complainant's interests, liability could lie with the director - Ruggieri personally benefited from the oppressive conduct - See paragraph 10.

Company Law - Topic 9785

Actions against corporations and directors - Action for oppressive conduct - Oppression, prejudice or disregard of interests - The plaintiff obtained a judgment against A. Ruggieri Engineering Ltd. (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 - Wilson, J., having found that the plaintiff had established a fraudulent conveyance under the Statute of Elizabeth and the Fraudulent Preferences Act, also held that the plaintiff had proven oppressive conduct under the Business Corporations Act and granted judgment in the amount of the original judgment against Engineering of $476,498.86, plus punitive damages in the amount of $100,000 - The Alberta Court of Appeal dismissed the defendants' appeal - The court rejected the defendants' argument that the failure to pay or appeal the first judgment (without more) was not a basis for finding oppression - The defendants' conduct was considerably more than the mere failure to pay or appeal the judgment - They "set out on a deliberate course of conduct to strip Ruggieri Engineering of its exigible assets" and encumbered it with general security and promissory notes - They paid other creditors and moved Engineering's assets - These actions were unfairly prejudicial to the plaintiff - See paragraphs 6 to 9.

Company Law - Topic 9797

Actions against corporations and directors - Action for oppressive conduct - Remedies (incl. compensation) - [See Company Law - Topic 4181 , Company Law - Topic 9785 , Damage Awards - Topic 2027 and Fraud and Misrepresentation - Topic 1505 ].

Damage Awards - Topic 2027

Exemplary or punitive damages - Fraud - The plaintiff obtained a judgment against A. Ruggieri Engineering Ltd. (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 - Wilson, J., having found that the plaintiff had established a fraudulent conveyance under the Statute of Elizabeth and the Fraudulent Preferences Act, an unlawful conduct conspiracy among the defendants, oppressive conduct and unjust enrichment, granted the plaintiff's request for punitive damages in the amount of $100,000, in addition to the damage award in the amount of the original judgment ($476,498.76) - The defendants' conduct was "so oppressive, calculating and unremitting and has carried on for so many years, that nothing short of punitive damages will serve to properly condemn and punish this misconduct" - The Alberta Court of Appeal dismissed the defendants' appeal, stating, "Although we recognize that punitive damages are 'very much the exception' rather than the rule and imposed only if there has been 'high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour', we find no basis to interfere with the award of punitive damages in this case" - See paragraphs 12 and 13.

Damages - Topic 1316

Exemplary or punitive damages - Fraud - [See Damage Awards - Topic 2027 ].

Fraud and Misrepresentation - Topic 1505

Fraudulent conveyances and preferences - Sale or transfer by debtor to third parties - Liability of third parties - The plaintiff obtained a judgment against A. Ruggieri Engineering Ltd. (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 - Ruggieri formed a new company called Alberta Engineering and operated through it - The plaintiff commenced a new action - Wilson, J., having found that the plaintiff had established a fraudulent conveyance under the Statute of Elizabeth and the Fraudulent Preferences Act, also held that the plaintiff had proven oppressive conduct under the Business Corporations Act (BCA) and granted judgment in the amount of the original judgment against Engineering of $476,498.86, plus punitive damages in the amount of $100,000 - In his reasons for judgment, Wilson, J., declined to impose liability against GMR and Alberta Engineering because the plaintiff had no direct dealings with those entities - However, the judgment roll imposed liability jointly and severally against Engineering, Ruggieri, GMR and Alberta Engineering - The Alberta Court of Appeal, in dismissing the defendants' appeal stated, "An appeal is from the judgment, not the reasons for judgment.... Moreover, there is authority for the imposition of liability against the companies to which assets were transferred" - See paragraph 11.

Cases Noticed:

Builders' Floor Centre Ltd. v. Thiessen et al. (2013), 554 A.R. 152; 2013 ABQB 23, refd to. [para. 7].

Sidaplex-Plastic Suppliers Inc. v. Elta Group Inc. et al. (1998), 111 O.A.C. 106; 40 O.R.(3d) 563 (C.A.), refd to. [para. 10].

Canadian Pacific Railway Co. v. Blain (1905), 36 S.C.R. 159, refd to. [para. 11].

Bull HN Informations Systems Ltd. v. L.I. Business Solutions Inc. et al. (1994), 161 A.R. 268; 23 Alta. L.R.(3d) 186 (Q.B.), refd to. [para. 11].

T. Films S.A. v. Cinemavault Releasing Inc., 2015 ONSC 6608, refd to. [para. 11].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201; 2002 SCC 18, refd to. [para. 13].

Authors and Works Noticed:

Springman, M.A. et al., Frauds on Creditors: Fraudulent Conveyances and Preferences (2009), pp. 24-13, 24-16 [para. 7].

Counsel:

J.G. Oppenheim, for the appellants;

M.D. Mysak and J. Proctor, for the respondent.

This appeal was heard on June 10, 2015, by Paperny and Rowbotham, JJ.A., and Eidsvik, J.(ad hoc), of the Alberta Court of Appeal. On June 15, 2015, the court's memorandum of judgment was delivered from the bench by Rowbotham, J.A. (see paragraphs 1 to 14) and Paperny, J.A. (see paragraph 15).