Enbridge Gas Distribution Inc. v. Marinaccio et al., (2012) 298 O.A.C. 189 (CA)

• Jurisdiction: Ontario
• Judge: Blair,Brown,Laskin
• Neutral Citation: 2012 ONCA 650
• Citation: (2012), 298 O.A.C. 189 (CA),2012 ONCA 650,298 OAC 189,(2012), 298 OAC 189 (CA),298 O.A.C. 189
• Date: 15 February 2012
• Court: Court of Appeal (Ontario)

Enbridge Gas v. Marinaccio (2012), 298 O.A.C. 189 (CA)

MLB headnote and full text

Temp. Cite: [2012] O.A.C. TBEd. OC.002

Enbridge Gas Distribution Inc. (plaintiff/respondent) v. Michael Marinaccio, also known as Mike Marinaccio, also known as Miguel Marinaccio, also known as Michael Marinaccio, Maria Lettizia Marinaccio, also known as Maria Marinaccio, also known as Maria Messina, Angelo Piro , Angelica Piro, Italo Tony Montaldi, also known as Tony Montaldi, also known as Italo Montaldi, Nancy Nunziatina Montaldi , also known as Nancy Montaldi, also known as Nunziatina Montaldi, 1639374 Ontario Ltd., 1316679 Ontario Limited, Maverick & Associates (1991) Limited, also known as Maverick & Associates, 2132329 Ontario Ltd., 2132264 Ontario Ltd., Tera X Technologies Inc., Tarrco Construction, also known as Tarrco, Tek-Con, Mike Marinaccio Services, Tekka-Ent, Provac and 2138337 Ontario Inc. (defendants/appellants)

(C53671; C53759; 2012 ONCA 650)

Indexed As: Enbridge Gas Distribution Inc. v. Marinaccio et al.

Ontario Court of Appeal

Laskin and Blair, JJ.A. and Brown, R.S.J.(ad hoc)

October 1, 2012.

Summary:

Enbridge Gas sued Marinaccio (an Enbridge operations supervisor), Montaldi (accountant) and Piro (a labourer), for fraud. Marinaccio settled with Enbridge. Enbridge then moved for summary judgment against Piro and Montaldi.

The Ontario Superior Court, in a decision reported [2011] O.T.C. Uned. 2313, found that Marinaccio owed a fiduciary duty to Enbridge and that he breached his fiduciary duty by secretly profiting at the expense of his employer. The court granted summary judgment against Piro and Montaldi on three separate bases: knowing assistance to Marinaccio in breaching his fiduciary duty; bribery; and unjust enrichment. Piro and Montaldi appealed.

The Ontario Court of Appeal dismissed the appeals.

Agency - Topic 3226

Relations between principal and agent - Acceptance of secret profits and bribes by an agent - General - The Ontario Court of Appeal stated that the civil tort of bribery was the payment of a secret commission - The court referred to a discussion of the three elements of a cause of action in bribery - The court stated that once all the elements of bribery were established, the court would presume in favour of the principal and against the briber and the agent bribed, that the agent was influenced by the bribe - The presumption was unrebuttable - Moreover, the motive of the person making the bribe was irrelevant - See paragraphs 32 to 34.

Agency - Topic 3227

Relations between principal and agent - Acceptance of secret profits and bribes by an agent - Bribery - What constitutes - Enbridge Gas sued Marinaccio (an Enbridge operations supervisor and long term employee), Montaldi (an accountant) and Piro (a labourer) for fraud - Marinaccio settled - Enbridge moved for summary judgment against Piro and Montaldi - A motions judge held that Marinaccio owed a fiduciary duty to Enbridge which he breached by secretly profiting at his employer's expense - Piro and Montaldi were held liable for bribery because of the payments they made to Marinaccio out of the money received from Enbridge - The judge found that Enbridge established the three elements for bribery - Piro and Montaldi appealed, arguing that the motions judge erred in finding them liable for bribery - The Ontario Court of Appeal rejected this ground of appeal - See paragraphs 32 to 43.

Damage Awards - Topic 764

Torts - Fraud and misrepresentation - Fraud - Enbridge Gas sued Marinaccio (an Enbridge operations supervisor and long term employee), Montaldi (an accountant) and Piro (a labourer), claiming that it was defrauded ($6,542,928.63) - Marinaccio settled for $1,948,727 - The cost of collecting the settlement was $1,129,138 - Thus the net recovery on the settlement was $819,589 ($1,948,727 minus $1,129,138) - The motions judge granted judgment against Montaldi and Piro for $5,723,339.60 ($6,542,928.63 minus $819,589 (the net settlement amount)) - Montaldi appealed, arguing that the motions judge ought to have granted judgment for $4,594,201.63 ($6,542,928.63 minus $1,948,727 (the gross settlement amount)) - The Ontario Court of Appeal disagreed with Montaldi's submission - The court agreed with the motions judge that Enbridge was entitled to be compensated for its loss, which included the costs of recovery on the settlement - See paragraphs 44 to 54.

Equity - Topic 3606

Fiduciary or confidential relationships - General principles - What constitutes a fiduciary relationship - [See Equity - Topic 3721 ].

Equity - Topic 3652

Fiduciary or confidential relationships - Breach of fiduciary relationship - Liability of third parties or accessories (incl. doctrines of knowing receipt or assistance) - Enbridge Gas sued Marinaccio (an Enbridge operations supervisor and long term employee), Montaldi (an accountant) and Piro (a labourer) for fraud - Marinaccio settled - Enbridge moved for summary judgment against Piro and Montaldi - A motions judge held that Marinaccio owed a fiduciary duty to Enbridge which he breached by secretly profiting at his employer's expense - Piro and Montaldi were held liable for knowingly assisting Marinaccio in breaching his fiduciary duty - Piro and Montaldi appealed, arguing that to be liable for knowing assistance, they had to know that the conduct was dishonest and that the scheme was a fraud - They contended that whether they knew at the time it was a fraud raised a genuine issue for trial - The Ontario Court of Appeal rejected this ground of appeal - See paragraphs 21 to 31.

Equity - Topic 3652

Fiduciary or confidential relationships - Breach of fiduciary relationship - Liability of third parties or accessories (incl. doctrines of knowing receipt or assistance) - The Ontario Court of Appeal referred to a discussion of the components of a claim for knowingly assisting a breach of fiduciary duty - See paragraph 23.

Equity - Topic 3721

Fiduciary or confidential relationships - The employer-employee relationship - General - Enbridge Gas sued Marinaccio (an Enbridge operations supervisor and long term employee), Montaldi (an accountant) and Piro (a labourer) for fraud - Marinaccio settled - Enbridge moved for summary judgment against Piro and Montaldi - A motions judge held that Marinaccio owed a fiduciary duty to Enbridge which he breached by secretly profiting at his employer's expense - Piro and Montaldi were liable on three separate bases: knowing assistance to Marinaccio in breaching his fiduciary duty; bribery; and unjust enrichment - Piro appealed, arguing that the motions judge erred in finding that Marinaccio owed Enbridge a fiduciary duty - Piro argued that Marinaccio was not a key employee, but a mid-level manager with limited authority - The Ontario Court of Appeal rejected Piro's argument, holding that a motion judge's finding of a fiduciary duty was entitled to significant deference from an appeal court - See paragraphs 12 to 20.

Restitution - Topic 62

Unjust enrichment - General - What constitutes - Enbridge Gas sued Marinaccio (an Enbridge operations supervisor and long term employee), Montaldi (an accountant) and Piro (a labourer) for fraud - Marinaccio settled - Enbridge moved for summary judgment against Piro and Montaldi - A motions judge held that Marinaccio owed a fiduciary duty to Enbridge which he breached by secretly profiting at his employer's expense - Piro and Montaldi were held liable for unjust enrichment, Enbridge having established the three requisite elements - Piro and Montaldi appealed, arguing that the motions judge erred in finding them liable for unjust enrichment - The Ontario Court of Appeal rejected this ground of appeal - See paragraphs 44 to 49.

Cases Noticed:

Hodgkinson v. Simms et al., [1994] 3 S.C.R. 377; 171 N.R. 245; 49 B.C.A.C. 1; 80 W.A.C. 1, refd to. [para. 15].

KRG Insurance Brokers (Western) Inc. v. Shafron et al., [2009] 1 S.C.R. 157; 383 N.R. 217; 265 B.C.A.C. 1; 446 W.A.C. 1; 2009 SCC 6, refd to. [para. 15].

GasTOPS Ltd. v. Forsyth et al. (2012), 288 O.A.C. 201; 2012 ONCA 134, refd to. [para. 15].

Perez v. Galambos et al., [2009] 3 S.C.R. 247; 394 N.R. 209; 276 B.C.A.C. 272; 468 W.A.C. 272; 2009 SCC 48, refd to. [para. 16].

Elder Advocates of Alberta Society et al. v. Alberta et al., [2011] 2 S.C.R. 261; 416 N.R. 198; 499 A.R. 345; 514 W.A.C. 345; 2011 SCC 24, refd to. [para. 16].

Hunt v. TD Securities Inc. et al. (2003), 175 O.A.C. 19; 66 O.R.(3d) 481 (C.A.), leave to appeal dismissed (2004), 330 N.R. 198; 196 O.A.C. 399 (S.C.C.), refd to. [para. 18].

Harris et al. v. Leikin Group Inc. et al., [2011] O.A.C. Uned. 693; 2011 ONCA 790, refd to. [para. 23].

Belmont Finance Corp. v. Williams Furniture Ltd. (No. 1), [1979] 1 All E.R. 118 (C.A.), refd to. [para. 27].

Ruiter Engineering & Construction Ltd. v. 430216 Ontario Ltd. et al. (1989), 35 O.A.C. 230; 67 O.R.(2d) 587 (C.A.), refd to. [para. 33].

Optech Inc. v. Sharma et al., [2011] O.T.C. Uned. 680; 2011 ONSC 680, refd to. [para. 34].

Garland v. Consumers' Gas Co., [2004] 1 S.C.R. 629; 319 N.R. 38; 186 O.A.C. 128; 2004 SCC 25, refd to. [para. 44].

Citadel General Assurance Co. et al. v. Lloyds Bank of Canada et al., [1997] 3 S.C.R. 805; 219 N.R. 323; 206 A.R. 321; 156 W.A.C. 321, refd to. [para. 49].

Authors and Works Noticed:

Perell, Paul M., Remedies for the Victims of a Bribe (1999-2000), 22 Advocates Quarterly 198, para. 198 [para. 41].

Counsel:

Ross Morrison and Natalie Schernitzki, for the appellant, Italo Tony Montaldi;

Bryan Fromstein, for the appellant, Angelo Piro;

Reid Lester and Matthew Morden, for the respondent.

These appeals were heard on February 15, 2012, before Laskin and Blair, JJ.A., and Brown, R.S.J.(ad hoc), of the Ontario Court of Appeal. The following decision was released for the court by Laskin, J.A., on October 1, 2012.