B & M Handelman Investments Ltd. et al. v. Curreri, 2011 ONCA 395

• Judge: Feldman, Juriansz and LaForme, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: November 08, 2010
• Jurisdiction: Ontario
• Citations: 2011 ONCA 395;(2011), 278 O.A.C. 199 (CA)

B&M Handelman Inv. Ltd. v. Curreri (2011), 278 O.A.C. 199 (CA)

MLB headnote and full text

Temp. Cite: [2011] O.A.C. TBEd. MY.029

B & M Handelman Investments Ltd., M. Himel Holdings Inc., Brenkids Inc., Sulax Holdings Ltd., Ledmar Investments Limited, Sharjod Holdings Inc., Canadian Jonomi Corp. Ltd., Rabardo Corporation, David Herbert, Flordale Holdings Limited, and Orbach Investments Ltd. (plaintiffs/respondents) v. Fred Salvatore Curreri a.k.a. Fred Anthony Curreri a.k.a. Fred Curreri (defendant/appellant)

(C51994; 2011 ONCA 395)

Indexed As: B & M Handelman Investments Ltd. et al. v. Curreri

Ontario Court of Appeal

Feldman, Juriansz and LaForme, JJ.A.

May 20, 2011.

Summary:

The defendant was induced to impersonate his father in order to raise significant amounts of money by mortgaging a number of his father's properties. The defendant had understood that the funds were to be invested overseas. The funds disappeared. The lenders sued the defendant and obtained a Mareva injunction. The defendant won $250,000 in a lottery and the money was paid into court. The defendant did not defend the action and allowed default judgment for almost $2,000,000 to be entered against him. The lenders moved to have the monies in court paid to the sheriff pursuant to s. 23 of the Creditors' Relief Act. Without moving to set aside the default judgment, the defendant moved to have $134,500 of the monies paid out to his current lawyers to be held in trust and used to pay for future legal expenses to defend the action and criminal proceedings that had been brought against him, reasonable living expenses and an invoice for legal services for an unrelated matter.

The Ontario Superior Court allowed the lenders' motion and dismissed the defendant's motion. The defendant appealed.

The Ontario Court of Appeal dismissed the appeal.

Practice - Topic 3381

Interim proceedings - Preservation of property - Property under preservation order - Use of - The defendant was induced to impersonate his father in order to raise significant amounts of money by mortgaging a number of his father's properties - The defendant had understood that the funds were to be invested overseas - The funds disappeared - The lenders sued the defendant and obtained a Mareva injunction - The defendant won $250,000 in a lottery and the money was paid into court - The defendant allowed default judgment for almost $2,000,000 to be entered against him - The lenders moved to have the monies in court paid to the sheriff pursuant to s. 23 of the Creditors' Relief Act - Without moving to set aside the default judgment, the defendant moved to have $134,500 paid out of court to his lawyers to be held in trust and used to pay for legal and living expenses - A motion judge allowed the lenders' motion and dismissed the defendant's motion - In dismissing the defendant's appeal, the Ontario Court of Appeal stated that the four part test to apply on a defendant's motion for payment out of monies held under a Mareva injunction for legal and living expenses and the rationale behind the test were based on the underlying premise that the litigation was ongoing and that final adjudication of the merits had yet to occur - Although the defendant claimed that he intended to move to set aside the default judgment, no motion had been brought nor had any statement of defence been delivered - There appeared to be no defence available on the merits - There was no principled reason for the defendant to be able to deplete the funds which were subject to the judgment and available to judgment creditors - Before judgment or on a motion to set aside default judgment where potential merit was demonstrated, there was a principled basis to allow the defendant to use his own money for the defence of the action - After default judgment, the findings were the other way on the merits - Without more, the judgment stood and there was no basis to allow the defendant to deplete the funds that were in court "to the credit of the action" - The court considered that it appeared that the defendant had personal limitations that might have contributed to his situation, including the default judgment - He now had counsel (without a litigation guardian) who took the position that, as the funds were not proprietary, they did not have to show any merit to a proposed defence - They could have moved to set aside the default judgment with a record to disclose the merit of the proposed defence - Their decision not to do so was strategic and properly formed the basis of the court's decision - See paragraphs 17 to 27.

Practice - Topic 3381

Interim proceedings - Preservation of property - Property under preservation order - Use of - The defendant was induced to impersonate his father in order to raise significant amounts of money by mortgaging a number of his father's properties - The defendant had understood that the funds were to be invested overseas - The funds disappeared - The lenders sued the defendant and obtained a Mareva injunction - The defendant won $250,000 in a lottery and the money was paid into court - The defendant allowed default judgment for almost $2,000,000 to be entered against him - The lenders moved to have the monies in court paid to the sheriff pursuant to s. 23 of the Creditors' Relief Act - Without moving to set aside the default judgment, the defendant moved to have $134,500 paid out of court to his lawyers to be held in trust and used to pay for legal and living expenses - The legal expenses included the costs of paying counsel to defend legal proceedings that had been brought against him - The motion judge observed that if the defendant were not insolvent, he would have had the right to use his own funds to defend criminal proceedings - However, because he was insolvent, he would be eligible for legal aid and therefore he would not be denied counsel because of his financial situation - He concluded that, balancing of the parties' interests, the lenders' interests had to prevail unless and until the defendant established a meritorious defence to a standard of a serious issue to be tried - The defendant appealed - The Ontario Court of Appeal stated that it was unnecessary to establish a bright line test for how much merit had to be shown in the context of the balancing process, in order to justify an order to access funds for criminal proceedings in cases where there was a motion outstanding to set aside the default judgment - Here, the court would not interfere with the motion judge's decision as there was nothing in the record to suggest merit - Because the defendant was insolvent, he should qualify for legal aid and as the motion judge said, it was unknown whether he might still be able to be represented by his current counsel - See paragraphs 28 to 30.

Practice - Topic 5729

Judgments and orders - Final judgments and orders - What constitute - Plaintiffs obtained a Mareva injunction - The defendant won $250,000 in a lottery and the money was paid into court - The defendant did not defend the action and allowed default judgment for almost $2,000,000 to be entered against him - The plaintiffs moved to have the monies in court paid to the sheriff pursuant to s. 23 of the Creditors' Relief Act - Without moving to set aside the default judgment, the defendant moved to have $134,500 of the monies paid out to his current lawyers to be held in trust and used to pay for legal expenses and reasonable living expenses - A motion judge allowed the plaintiffs' motion and dismissed the defendant's motion - The defendant appealed - The plaintiffs asserted that the defendant should have sought leave to appeal to the Divisional Court - They asserted that the impugned order went to the issue of their ability to execute on their judgment, which was a procedural matter and was therefore interlocutory - The Ontario Court of Appeal stated that the proper procedure for challenging its jurisdiction was a motion to quash before the appeal was set down to be heard - In any event, as default judgment was granted and the issue to be decided arose out of that judgment and finally determined the defendant's entitlement to access the funds that were paid into court to the credit of this action and were now governed by that judgment - The order was final and the appeal was properly before the court - See paragraphs 15 and 16.

Practice - Topic 5779

Judgments and orders - Interlocutory or interim orders or judgments - What constitutes - [See Practice - Topic 5729 ].

Cases Noticed:

Canadian Imperial Bank of Commerce v. Credit Valley Institute of Business and Technology et al., [2003] O.T.C. 7 (Sup. Ct.), refd to. [para. 13].

Waxman v. Waxman (2007), 223 O.A.C. 375; 42 C.P.C.(6th) 37 (C.A.), refd to. [para. 13].

Counsel:

P. James Zibarras and Kevin D. Toyne, for the appellant;

Lisa La Horey, for the respondents.

This appeal was heard on November 8, 2010, by Feldman, Juriansz and LaForme, JJ.A., of the Ontario Court of Appeal. Feldman, J.A., released the following judgment for the court on May 20, 2011.