Cho v. Twin Cities Power-Canada U.L.C. et al.,

• Judge: C,Paperny,Sulatycky
• Neutral Citation: 2012 ABCA 47
• Citation: (2012), 522 A.R. 154,2012 ABCA 47,522 AR 154,(2012), 522 AR 154,522 A.R. 154
• Date: 07 February 2012
• Court: Court of Appeal (Alberta)

Cho v. Twin Cities Power-Can. U.L.C. (2012), 522 A.R. 154; 544 W.A.C. 154 (CA)

MLB headnote and full text

Temp. Cite: [2012] A.R. TBEd. FE.085

Allan Cho (appellant/plaintiff) v. Twin Cities Power-Canada, U.L.C., Twin Cities Power, L.L.C., Twin Cities Power Holdings, L.L.C., Twin Cities Power Services, L.L.C. and Twin Cities Energy, L.L.C. (respondents/defendants)

(1101-0306-AC; 2012 ABCA 47)

Indexed As: Cho v. Twin Cities Power-Canada U.L.C. et al.

Alberta Court of Appeal

Côté and Paperny, JJ.A., and Sulatycky, J.(ad hoc)

February 7, 2012.

Summary:

The plaintiff sued for wrongful dismissal. The defendants were a family of companies. One of the defendants obtained an ex parte Mareva injunction which directed that $1.8 million that the plaintiff had withdrawn from their bank accounts was to be deposited into the trust account of the plaintiff's counsel. The parties consented to the injunction being vacated and the money being moved from the trust account of the plaintiff's lawyer to the trust account of the defendants' solicitors. It was further agreed that the money would not be disbursed without the consent of counsel or further order of the court. The defendants moved to have the $1.8 million released to them. The plaintiff moved for a new Mareva injunction or, alternatively, an attachment order.

The Alberta Court of Queen's Bench, in a decision reported at (2012), 528 A.R. 154, dismissed the plaintiff's motion. The plaintiff appealed.

The Alberta Court of Appeal dismissed the appeal.

Injunctions - Topic 1612

Interlocutory or interim injunctions - General principles - Mareva injunctions - Preservation of property pending or after judgment - The Alberta Court of Appeal stated that "The tests for a Mareva injunction are not new. There are a number of procedural requirements, and the usual tripartite test for ordinary injunctions probably also must be satisfied. On the merits, the plaintiff must show a strong prima facie case for his suit, and also that there is a real risk that the respondent will remove assets from the jurisdiction, or dissipate them, in order to avoid execution (enforcement) under a judgment." - See paragraph 5.

Injunctions - Topic 1612

Interlocutory or interim injunctions - General principles - Mareva injunctions - Preservation of property pending or after judgment - The defendants in a wrongful dismissal action were a family of companies - One defendant obtained an ex parte Mareva injunction which directed that $1.8 million that the plaintiff had withdrawn from their bank accounts was to be deposited into the trust account of the plaintiff's counsel - The injunction was vacated by consent - The defendants moved to have the $1.8 million released to them - The plaintiff moved for a new Mareva injunction - The defendants moved all of their profits to their American counterpart and they maintained no investments in Canada - A chambers judge denied the plaintiff's request - The plaintiff appealed, asking the court to exercise its discretion to grant the injunction - The Alberta Court of Appeal dismissed the appeal - Technically, there might be a prima facie case of wrongful dismissal in that the plaintiff only had to prove employment and dismissal, thereby putting the onus on the defendants of showing a ground to dismiss - However, the evidence did not establish a strong prima facie case - In any event, the evidence did not show that the defendants were removing, hiding or dissipating assets to avoid execution, or that they planned to do so - Some cases held that if clear evidence of dishonesty in the cause of action was proven, it made it easier to find that assets would be removed or hidden - There was no such evidence here - There was some evidence that the defendants did not keep large sums unnecessarily sitting idle in Canada and that they often paid profits to their parent company or at the direction of the parent - There was nothing wrong with that - It was a comparatively common business practice - The plaintiff overlooked two elements of the test: acting out of the ordinary course of honest business and an intent to evade legitimate execution - The defendants had not changed, and did not intend to change, their basic methods of running their business or moving assets about - They also gave sworn evidence that they intended to honour any Canadian judgment pronounced against them - There was no evidence to dispute that - The business was active and continuing - Hiding assets and not paying a judgment made little sense in the long run - The judge's refusal to draw such an inference was reasonable - Given the circumstances, including how the sums in trust got into the plaintiff's hand, the court declined to exercise its jurisdiction - See paragraphs 1 to 15.

Practice - Topic 3371.9

Payment of money into court - Preservation of property - Attachment order - General - The defendants in a wrongful dismissal action were a family of companies - One defendant obtained an ex parte Mareva injunction which directed that $1.8 million that the plaintiff had withdrawn from their bank accounts was to be deposited into the trust account of the plaintiff's counsel - The injunction was vacated by consent - The defendants moved to have the $1.8 million released to them - The plaintiff moved, in the alternative, for an attachment order under s. 17 of the Civil Enforcement Act - A chambers judge denied the motion - The Alberta Court of Appeal dismissed an appeal - The first part of the test for an attachment order was fairly easy to meet: a reasonable likelihood that the plaintiff would establish the claim in the statement of claim - However, a mere suspicion was not enough - The second part of the test was tougher - It required reasonable grounds for believing that the defendant was dealing with (or likely intended to deal with) their property in both of two ways: (1) otherwise than for the purpose of meeting their reasonable business or living expenses and (2) in a manner that would was likely to seriously hinder the plaintiff in enforcing a judgment against the defendants - The plaintiff could not meet that test because the defendants' dealings and intent plainly conformed to the usual course of business - Any spending of money potentially created some hindrance to later execution - The hindrance here was not a serious one, which was what the Act required - Further, "expenses" had to be read broadly, not technically - Legitimate investments, dividends, deposits, security or loans were not strictly "expenses", but were typically useful and even necessary in most businesses - Further, s. 17 was not limited to the blunt remedy of an across-the-board freeze - It allowed for a narrow or conditional order and s. 17(6) expressly prohibited attaching more property than was necessary - That showed that the attachment was not to go beyond what was needed and, therefore, it could not be given on mere technical grounds - The plaintiff had not established need - See paragraphs 16 to 19.

Practice - Topic 3378

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

Cases Noticed:

Feigelman et al. v. Aetna Financial Services Ltd., Lax and Burke, [1985] 1 S.C.R. 2; 56 N.R. 241; 32 Man.R.(2d) 241, refd to. [para. 5].

Clark et al. v. Nucare plc (2006), 208 Man.R.(2d) 102; 383 W.A.C. 102; 2006 MBCA 101, refd to. [para. 5].

Eli Lilly Canada Inc. et al. v. Novopharm Ltd. (2010), 364 F.T.R. 265; 82 C.P.R.(4th) 401; 2010 FC 241, refd to. [para. 5].

Rea v. Patmore et al. (1999), 253 A.R. 363; 1999 ABQB 759, refd to. [para. 6].

International Association of Science and Technology for Development et al. v. Hamza (1997), 200 A.R. 342; 146 W.A.C. 342 (C.A.), dist. [para. 7].

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

Osman Auction Inc. v. Belland et al. (1998), 235 A.R. 180; 1998 ABQB 964, refd to. [para. 16].

Statutes Noticed:

Civil Enforcement Act, R.S.A. 2000, c. C-15, sect. 17 [paras. 16, 18].

Authors and Works Noticed:

Sharpe, R.J., Injunctions and Specific Performance (Dec. 2011 Looseleaf Ed.), para. 2.880 [para. 5].

Counsel:

Z. Verjee and M. Klein, for the appellant/plaintiff;

D.R. Beeman and K. Noonan, for the respondents/defendants.

This appeal was heard on February 7, 2012, by Côté and Paperny, JJ.A., and Sulatycky, J.(ad hoc), of the Alberta Court of Appeal. Côté, J.A., delivered the following memorandum of judgment orally for the court on the same date.