Man Financial Canada Co. v. Keuroghlian et al., 2008 ONCA 592

• Judge: Rosenberg, Feldman and Lang, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: December 17, 2008
• Jurisdiction: Ontario
• Citations: 2008 ONCA 592;(2008), 240 O.A.C. 300 (CA)

Man Financial v. Keuroghlian (2008), 240 O.A.C. 300 (CA)

MLB headnote and full text

Temp. Cite: [2008] O.A.C. TBEd. AU.028

Man Financial Canada Co. (plaintiff/respondent) v. Hadji Sarkis Keuroghlian and Al-Mustashar Investments Inc. (defendants/appellants)

Hadji Sarkis Keuroghlian and Al-Mustashar Investments Inc. (plaintiffs by counterclaim/appellants and Man Financial Canada Co., Refco Global Holdings Inc., LLC., Refco Group Ltd. LLC. And Pierre Gloutney (defendants by counterclaim/respondents)

(C46082; 2008 ONCA 592)

Indexed As: Man Financial Canada Co. v. Keuroghlian et al.

Ontario Court of Appeal

Rosenberg, Feldman and Lang, JJ.A.

August 19, 2008.

Summary:

The individual defendant (Sarkis) was a foreign exchange trader with the plaintiff. Between 1997 and 2000, Sarkis executed multiple foreign exchange trades on behalf of certain clients, but never received funds from the clients to pay for the trades or to cover the approximately $5.4 M in losses suffered by the plaintiff on the trades. The plaintiff sued Sarkis and his personal holding company (the defendants), claiming damages of $5,498,355, plus interest, for conversion, fraud or deceit and breach of contract. The defendants counterclaimed for wrongful dismissal, injurious falsehood, malicious prosecution, infliction of mental suffering and damages flowing from a Mareva injunction. They sought damages, including punitive damages, in the amount of $3M.

The Ontario Superior Court, in a decision reported at [2006] O.T.C. Uned. A26, found the defendants liable for damages for fraud and breach of contract. The defendants' counterclaim was dismissed. The defendants appealed.

The Ontario Court of Appeal dismissed the appeal.

Courts - Topic 583

Judges - Duties - Re reasons for decisions - The individual defendant (Sarkis) was a foreign exchange trader with the plaintiff - Between 1997 and 2000, Sarkis executed multiple foreign exchange trades on behalf of certain clients, but never received funds from the clients to pay for the trades or to cover the approximately $5.4 M in losses suffered by the plaintiff on the trades - The plaintiff successfully sued Sarkis and his personal holding company (the defendants) for damages for fraud and breach of contract - The defendants appealed, arguing that the trial judge's reasons for judgment, although lengthy, were inadequate and did not allow them to know the basis on which they were found liable, or to discern whether the higher standard of proof for fraud was applied - Therefore, the reasons were insufficient to allow for meaningful appellate review - The Ontario Court of Appeal rejected the argument - There were many ways to structure reasons for judgment - The task was more difficult in a complex case - The trial judge's reasons were sufficient for the defendants to understand why they were found liable and to permit effective appellate review - See paragraphs 22 to 40.

Evidence - Topic 121

Degree, standard or burden of proof - Burden of proof - Civil actions - Proof of act of criminal nature - [See Fraud and Misrepresentation - Topic 4044 ].

Fraud and Misrepresentation - Topic 303

Fraudulent misrepresentation (deceit) - Actions - Defences - Carelessness or stupidity - The individual defendant (Sarkis) was a foreign exchange trader with the plaintiff - Between 1997 and 2000, Sarkis executed multiple foreign exchange trades on behalf of certain clients, but never received funds from the clients to pay for the trades or to cover the approximately $5.4 M in losses suffered by the plaintiff on the trades - The plaintiff successfully sued Sarkis and his personal holding company (the defendants) for damages for fraud and breach of contract - The defendants appealed, arguing that the trial judge erred in either failing to consider whether, or in wrongly deciding that, the plaintiff's senior employees were entitled to rely on Sarkis' alleged misrepresentations - They argued that the senior employees' reckless disregard of their statutory duties of care and internal compliance obligations was so egregious that the plaintiff lost the right to hold Sarkis responsible, even if he did engage in misrepresentation - The Ontario Court of Appeal rejected the argument - There was no basis in law for this submission - The senior employees' duties were owed to the plaintiff and the public, not to Sarkis, their own foreign exchange manager, to prevent him from defrauding them and the company - See paragraphs 44 to 48.

Fraud and Misrepresentation - Topic 4044

Practice - Evidence and proof - Burden of proof - A trial judge found the defendants liable for fraud and breach of contract - The defendants appealed, arguing that the trial judge did not use the more rigorous standard of proof that was required when allegations of fraud were made - They pointed to the conclusory nature of the findings portion of the reasons and the alleged failure of the trial judge to reconcile conflicting evidence or to state specifically why he accepted the evidence of the plaintiff's witnesses and not that of the defendants - The Ontario Court of Appeal rejected the argument - The trial judge referred specifically to the burden of proof he was applying to findings of fraud in the opening portion of his reasons (findings made on clear and cogent evidence commensurate with the gravity of the allegations) - The trial judge did not simply prefer the evidence of the plaintiff's witnesses - He stated that the evidence of two main witnesses for the plaintiff was "far more believable" than the evidence of the individual defendant - In the context of the two burdens of proof that the trial judge said he was applying, the court understood this to be a reference to the higher standard - See paragraphs 41 to 43.

Practice - Topic 9228

Appeals - New trials - Grounds - Reasons for judgment insufficient - [See Courts - Topic 583 ].

Cases Noticed:

Stetler et al. v. Agriculture, Food and Rural Affairs Appeal Tribunal (Ont.) et al. (2005), 200 O.A.C. 209; 76 O.R.(3d) 321 (C.A.), refd to. [para. 43].

United Service Funds (Trustees) v. Richardson Greenshields of Canada Ltd. (1988), 22 B.C.L.R.(2d) 322 (S.C.), refd to. [para. 45].

1018202 Ontario Ltd. v. Hamilton Township Farmers' Mutual Fire Insurance Co. (2006), 209 O.A.C. 127; 267 D.L.R.(4th) 690 (C.A.), refd to. [para. 47].

Pereira v. Hamilton Township Farmers' Mutual Insurance Co. - see 1018202 Ontario Ltd. v. Hamilton Township Farmers' Mutual Fire Insurance Co.

Counsel:

Susan M. Chapman and John J. Adair, for the appellants;

Paul Le Vay and Johanna Braden, for the respondent.

This appeal was heard on December 17, 2008, before Rosenberg, Feldman and Lang, JJ.A., of the Ontario Court of Appeal. Feldman, J.A., released the following judgment for the court on August 19, 2008.