336239 Alberta Ltd. v. Mella et al., 2016 ABQB 190

• Judge: Shelley, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: January 19, 2016
• Citations: 2016 ABQB 190;[2016] A.R. TBEd. AP.010

336239 Alta. v. Mella, [2016] A.R. TBEd. AP.010

MLB being edited

Currently being edited for A.R. - judgment temporarily in rough form.

Temp. Cite: [2016] A.R. TBEd. AP.010

336239 Alberta Ltd. carrying on business as Dave's Diesel Repair (plaintiff) v. Francis Emanuel Mella, Matrix Consulting Ltd., M2 Systems Inc., ABC Corp., and Mella Fitness Consulting Ltd. (defendants)

(1403 15969; 2016 ABQB 190)

Indexed As: 336239 Alberta Ltd. v. Mella et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Shelley, J.

March 31, 2016.

Summary:

One or more of the defendants provided accounting and management services to the plaintiff, until the plaintiff discovered that they had fraudulently misappropriated funds from it. The plaintiff commenced an action against the defendants for fraud, breach of fiduciary duty, breach of trust, and wrongful conversion. The plaintiff obtained an attachment order directing the defendants to limit their monthly expenditures. The plaintiff obtained a consent judgment against the defendants in the amount of $2,269,757. The plaintiff sought judgment against the wife of the individual defendant (Mella). Mella's wife was not a party to the action. Mella admitted, inter alia, that he instructed his tenants to pay the rent to his wife to avoid the plaintiff's garnishments. At issue was whether the court, under either the Fraudulent Preferences Act, R.S.A. 2000, c. F-24 or the Fraudulent Conveyances Statute, 13 Eliz. I, c. C-5 (U.K.) (Statute of Elizabeth), could grant judgment against a non-party recipient of assets, who no longer had possession of the assets, and who received little or no benefit from them.

The Alberta Court of Queen's Bench dismissed the motion. The court concluded that it could not grant judgment against a non-party and could not order her to pay damages or compensation. Rule 9.24 of the Alberta Rules of Court, in conjunction with the Fraudulent Preferences Act and the Statute of Elizabeth, was limited to striking down the alleged fraudulent conveyance or ordering the sale of the property wrongfully conveyed. There court held that a fraudulent conveyance had occurred.

Fraud and Misrepresentation - Topic 1270

Fraudulent conveyances and preferences - Conveyances and preferences impeachable by creditors or others - General - See paragraphs 1 to 22.

Fraud and Misrepresentation - Topic 1271

Fraudulent conveyances and preferences impeachable by creditors - Fraudulent preference - What constitutes - See paragraphs 23 to 33.

Fraud and Misrepresentation - Topic 1281

Fraudulent conveyances and preferences - Conveyances and preferences impeachable by creditors or others - Conveyances between relatives or near relatives - See paragraphs 14 to 22.

Fraud and Misrepresentation - Topic 1406

Fraudulent conveyances and preferences - Impeachable conveyances and preferences under Statute of Elizabeth (1571) - Conditions precedent to setting aside conveyance - See paragraphs 1 to 34.

Fraud and Misrepresentation - Topic 1451

Fraudulent conveyances and preferences - Impeachable conveyances and preferences under modern statutes - General - See paragraphs 1 to 34.

Counsel:

Walter J. Pavlic, Q.C., and Sharon Au (MacPherson Leslie & Tyerman LLP), for the plaintiff;

Alexander Mosaico (Mosaico Law), for Olena Afonska.

This application was heard on January 19, 2016, by Shelley, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following decision on March 31, 2016.