Wolinsky et. al. v. Assiniboine Credit Union Limited

Citation: Wolinsky et al v Assiniboine Credit Union,
2016 MBCA 15
OURT OF
EAL
Date: 2016020t
Docket: AIl5-30-08405
F
Mr. Justice Michel A. Monnin
Mr. Justice Alan D. Maclnnes
Madam Justice Janice L. leMaistre
Coram:
BETWEEN:
KAREN WOLINSKY, JON PESOCHIN,
LEE PESOCHIN, JOYCE ROTHMAN,
und CATHERINE DYCK
(þplicants) Respondents
)
)
)
)
)
)
. 8. J. Bløke
and
P. Loewen
þr the Appellant
nA.
D, G. H¡II
þr
the Respondents
)
-andASSINIBOINE CREDIT UNION LIMITED
(Re
spondent) Appe I lant
)
)
)
Appeal heard:
December 7,2015
)
Judgment delivered:
Februøry I, 2016
)
MONNIN JA
tll
This is an appeal from an order, granting the applicants leave to
commence an action in tort against the respondent pursuant to the provision
of section 14(1) of The Limitation of Actions Act, CCSM c Ll50 (the Act).
l2l
The applicants sought leave to commence an action in negligence
seeking $245,000 in damages as well as punitive damages. Their cause of
action relates to conduct in 2005 which they allege they only became aware
of on April 30,2013, as a result of an article published in the Winnipeg Free
Press.
t3l
The applicants were creditors of Protos Intemational Inc. (Protos),
Page: 2
a holding company for Maple Leaf Distillers Inc. (Maple Leaf), and a
number of other corporations. The action for which the applicants obtained
leave is but another chapter in the myriad of court proceedings that have
Leaf. The
the respondent is based on a cause of action
found their genesis in the bankruptcy of Protos and Maple
applicants' action against
similar to that which another group of Protos and Maple Leaf creditors
brought in September of 2006. See Mirage Consulting
Ltd v Astra
Credit
Union Ltd,2008 MBQB 31, 55 CPC (6th) 236,leave to appeal to CA varied,
2008
t4l
MBCA 105,231 ManR (2d)269.
In or around 2000, the applicants lent Protos the combined sum of
$245,000. In return, Protos gave them signed promissory notes. In January
2006, Protos and Maple Leaf went into receivership. The applicants never
received any repayment of their loans.
t5l
Astra Credit Union (Astra) handled the financial affairs of Protos
and Maple
Leaf. In January of
2007, Astra amalgamated with the
Assiniboine Credit Union Limited (Assiniboine).
t6l
In 20LI, four individuals with ties to Protos, Maple Leaf or
Assiniboine were charged with fraud in what was described as a cheque-
kiting scheme. Following
a
preliminary inquiry, the charges against the four
individuals were dismissed on April 25,2013. Garfinkle PJ found that there
was insufflrcient evidence against the four individuals to
justi$ a trial on the
fraud charges.
l7l
In addition to his finding that there was insufficient evidence to
warrant atrial, Garfinkle PJ stated in his reasons:
Page:
3
Mollins and Milne signed cheques. Those cheques were
honoured. Signing a cheque in that circumstance is not a
dishonest act. Moreover, each could believe, in the
circumstances of this case, that this was authorized by Astra.
Astra was deprived, it lost a lot of money; but that loss occurred
because of business decisions to keep Maple Leaf afloat so a
potential sale could go through. Astra, in my assessment of the
facts and the documents, acted with full knowledge of the
situation. There was clear reporting of the status of the Protos
companies. The fact that those reports even went to Credit
Union Central and red flags were raised, but no one shot it down.
The decision was made to keep Maple Leaf afloat. It is easy to
assess that decision with hindsight, but at the time the
anticipation was that there was no problem to the sale going
through. Any falsehood that arose came about, if there was any
falsehood, came about with full knowledge of the staff and
executive and bqard of Astra. When questions were asked, the
answer was, no recourse was lost. This was true. There was
never recourse. It was all to the same flrnancial institution. The
cheques were all from accounts held by Astra. This was a form
of a loan and a fee was assessed, and up until the end, it was
paid. There was no fraud.
tSl
On October 2,20t3, the applicants filed their application seeking
leave to commence their action against the respondent alleging that no more
than 12 months had passed since they first knew of all material facts of a
decisive character upon which their proposed action was based. In affrdavits
in support of their application, the applicants swore to the fact that they frrst
learned
of the respondent's
involvement
in this
so-called cheque-kiting
scheme upon reading the above-referenced newspaper article
of April
30,
2013, which referred to the decision of Garfinkle PJ.
t9l
The applicants have taken the position that the respondent, by
participating in an ongoing cheque-kiting scheme, was negligent and that
such negligence caused their
loss. As stated above, the applicants submit
Page: 4
that their cause of action is similar to that brought in the Mirage action
which was described by Schulman J as follows (at paras2-4):
The plaintiffs are unsecured creditors of Maple Leaf Distillers
Inc. ("Maple Leaf') and Protos International Ltd. ("Protos").
They seek to recover from the defendant, Astra Credit Union Ltd.
('oAstra"), the credit union with which Maple Leaf and Protos
banked and borrowed money, the amounts of the loans that they
have been unable to collect and punitive damages. The claim is
founded.in lorl.
Ordinarily, a financial institution owes no duty of careo whether
frduciary or otherwise, to its client, the relationship between them
being one of debtor and creditor, or to its client's creditors who
are at least one step removed. In order to establish aî
enforceable duty, the first of three elements required to establish
a cause of action, the plaintiff must plead facts that give rise to
special circumstances that comprise a recognized tort basis or, in
the alternative, bring the claim within the two-step analysis of
Anns v. Merton London Borough Council, l|977l2 W.L.R.
1024 (H.L.).
The amended statement of claim alleges that the duty of care
arose as follows:
"20. The Plaintiffs say that the Defendant knew, or ought to
have known, that creditors such as the Plaintiffs and others
had extended credit to, and therefore were owed significant
sums of money by, Protos and Maple Leaf at the time that
Protos and Maple Leaf were clients of the Defendant, and the
Plaintiffs therefore say that there was the suff,rcient proximity
of relationship between the Plaintiffs and the Defendant to
create a duty of care owed by the Defendant to the Plaintifß."
If
that were the whole story, it would be difficult to sustain the
pleading. However, the amended statement of claim goes on to
allege, in 122-40, under the heading of "Breaches of Duty of
Care", a number of acts on the part of Astra, acting in concert
with Maple Leaf and Protos, in which senior employees of Astra
knowingly participated in cheque kiting and, in return for
personal favours permitted Maple Leaf and Protos to borrow
money far beyond the credit limits established by Astra. The
Page:
5
pleading characterizes Astra's conduct as knowing (fl27),
improper practice (fl29), totally complicit in the abuse that was
being perpetrated (T33), breach of trust (T36), and complicity in
the fraud that was allowed to be perpetrated on the creditors
('1140). It alleges that this conduct gave rise to duties to take
action as described in fl21(a) to (Ð. According to plaintiffs'
counsel, Astra got into bed with Maple Leaf and, instead of this
being a simple case of three independent parties: hrstly, Maple
Leaf; secondly, its lender; and thirdly, other creditors, here we
have two independent parties: firstly, Maple Leaf and Astra; and
secondly, other creditors.
[10]
In arriving at his decision to grant leave, the motion judge relied on
the decision of Schulman
I
in Mírage, which was later upheld by this Court.
In referringto Mírage, the motion judge stated in his endorsement:
Two conclusions arise from Schulman J.'s decision. The first is
that at this stage, the existence of a viable cause of action should
not be denied. The second conclusion is that without the alleged
participation of executives of the defendant, there would be no
duty of care.
As it pertains to the first issue, I am satisfied that at this stage, the
applicants are satisfied of the requirement to show a viable cause
of action. I appreciate that the evidence arising from
Garfînkel P.J.'s conclusion may be hearsay, although it is a
conclusion made by a judicial officer in the course of criminal
proceedings. I am also satisfied that the participation of Astra
offrcials was not known to the applicants until April 30, 2013,
and is very much a material fact. In fact, Schulman J. explicitly
indicated that without this information, there would be no duty of
care as a possibility and there would be no cause of action.
[11]
And finally went on to say:
To recapitulate. It is true that in a motion to dismiss the facts
alleged in the statement of claim are taken to be true, In this
motion the applicant[s] [have] to show with evidence that there is
a cause of action that has a reasonable chance of success. At this
Page: 6
stage, taking all the information into account, including
Garfinkel P.J.'s findings, there is enough evidence to conclude
that the defendant acted in full knowledge of what was going on.
This brings this case within the cause of action discussed by
Schulman J. The fact that the defendant knew and participated
constitutes a material fact which the applicants found out
April 30,2013.
ll2l
The respondent raises nine points of appeal. They are as follows:
1. that the motion judge applied the wrong test by enquiring
whether the applicants had shown a viable cause of action;
2. that the motion judge erred in holding that
hearsay evidence
was sufficient to satis$ the requirements of section l5(2) of the
Act;
3. that the motion judge erred in finding that a decision of
a
preliminary inquiry judge amounted to conclusions and findings
that satisfied the evidentiary burden on the applicants;
4. that the motion judge erred in holding that the decision of
Garfinkle PJ constituted findings of fact sufficient to discharge
the applicants' onus to show a reasonable chance of success and
that he made a palpable and overriding effor in finding that the
applicants had established that the respondent knew and
participated in the cheque-kiting scheme;
Page: 7
5.
that the motion judge erred in failing to require the applicants to
adduce evidence of standard of care and of causation to satis$
the requirements of section I5(2) of the Act;
6. that the motion judge erred in finding that that evidence
sufficient to justi$ a claim
in
negligence
was
with respect to
specific allegations in the statement of claim;
7. that the motion judge erred
in finding that the applicants
learned a material fact in a newspaper article dated April 30,
2013;
8. that the motion judge erred in failing to consider whether the
applicants had shown that the material fact was not one which
the applicants knew or ought to have known more than
12
months prior to filing their application for leave;
9. that the motion judge erred in failing to provide reasons for his
finding that the applicants did not know the material fact prior
to the 12-month period before filing the application for leave.
[13]
To all of those grounds, the applicants basically reply that
the
decision of the motion judge is a discretionary one and, given the high
degree
of deference it is owed, his decision should be upheld. They argue
that the first time they became aware that the respondent had "full
knowledge of the situation", i.e., the cheque-kiting scheme, was when that
Page:
8
finding of the preliminary inquiry judge was made public in the April 30,
2013 newspaper article and, therefore, the motion judge was correct in
granting them leave to commence their action.
[14]
The sections
of the Act that are relevant to this appeal
follows:
PART II
EXTENSION OF LIMITATION PERIOD
Extension of time in certain cases
14(1) Notwithstanding any provision of this Act or of any
other Act of the Legislature limiting the time for beginning an
action, the court, on application, may grant leave to the applicant
to begin or continue an action if it is satisfied on evidence
adduced by or on behalf of the applicant that not more than 12
months have elapsed between
(a) the date on which the applicant first knew, or, in all the
circumstances of the case, ought to have known, of all
material facts of a decisive character upon which the
action is based; and
(b) the date on which the application was made to the court
for leave.
Effect of leave
l4(2)
Subject to subsections (3) and (4), no provision of this
Act or of any other Act of the Legislature limiting the time for
beginning an action affords a defence to an action if the court
either before or after the beginning of the action grants leave
under this section to begin or to continue the action.
Other defences not affected
14(3) Nothing in this section excludes or otherwise affects
(a) any defence that in any action to which this section applies
may be available by virtue of
(i)
any provision of an Act of the Legislature other than
one limiting the time for beginning an action, or
are as
Page: 9
(ii)
a rule of law or equity; or
(b) the operation of any Act of the Legislature or rule of law
or equity that, apart from this sectiono would enable such
an action to be brought after the end of a limitation period
fixed in this Act or any other Act of the Legislature in
respect of the cause of action on which that action is
founded.
Evidence required on application
15(2) Where an application is made under section 14 to begin
or to continue an action, the court shall not grant leave in respect
of the action unless, on evidence adduced by or on behalf of the
claimant, it appears to the court that, if the action were brought
forthwith or were continued, that evidence would, in the absence
of any evidence to the contrary, be sufficient to establish the
cause of action on which the action is to be or was founded apart
from any defence based on a provision of this Act or of any other
Act of the Legislature limiting the time for beginning the action.
Additional requirement for leave after action begun
15(3) 'Where an application is made by a plaintiff under
section 14 to continue an action already begun by him, the court
shall not grant leave unless, on evidence adduced by the plaintiff,
it appears to the court that, only after the date the action was
begun, the plaintiff first knew or, in all the circumstances of the
case, ought to have known, that the matters constituting the cause
of action had occurred at a time which, apart from section 14,
afforded a defence based on a provision of this Act or of any
other Act of the Legislature limiting the time for beginning the
action.
Reference to material facts
20(2) In this Part any reference to a material fact relating to a
cause of action is a reference to any one or more of the
following, that is to say:
(a) The fact that injuries or damages
resulted from an act or
omlsslon.
(b) The nature or extent of any injuries or damages resulting
from an act or omission.
Page:
10
(c) The fact that injuries or
damages so resulting were
attributable to an act or omission or the extent to which
the injuries or damages were attributable to the act or
omission.
(d) The identity of a person performing
an act or omitting to
perform any act, duty, function or obligation.
(e) The fact that a person performed an act or omitted
to
perform an act, duty, function or obligation as a result of
which a person suffered injury or damage or a right
accrued to a person.
Nature of material facts
20(3) For the pu{poses of this Part, any of the material facts
relating to a cause of action shall be taken, at any particular time,
to have been facts of a decisive character if they were facts which
a person of his intelligence, education and experience, knowing
those facts and having obtained appropriate advice in respect of
them, would have regarded at that time as determining, in
relation to that cause of action, that, apart from any defence
based on a provision of this Act or any other Act of the
Legislature timiting the time for bringing an action, an action
would have a reasonable prospect of succeeding and resulting in
an award of damages or remedy sufficient to justiff the bringing
of the actions.
Where facts deemed to be outside knowledge
20(4) Subject to subsection (5), for the pu{poses of this Part,
a fact shall, at any time, be taken not to have been known by a
person, actually or constructively if
(a) he did not then know that fact;
(b) in so far as that fact was capable of being ascertained by
him, he had taken all actions that a person of
his
intelligence, education and experience would reasonably
have taken before that time for the purpose of ascertaining
the fact; and
(c)
and were known to him,
circumstances from which, with appropriate advice, the
in so far as there existed,
Page:
11
fact might have been ascertained or inferred, he had taken
all actions that a person of his intelligence, education and
experience would reasonably have taken before that time
for the purpose of obtaining appropriate advice with
respect to the circumstances.
t15l
In his endorsement reasons, the motion judge properly set out the
test the applicants had to meet in order to be granted leave by referring to the
decision of Edmond J in Cahill v Mustapha Designs Inc et al,2014 MBQB
217,311 ManR (2d) 138, which states (atparc27):
The requirements on an application for leave were summarized
by this court in Sochasky v. Winnipeg (City), [2013] M.J. No.
291;296 Man.R. (2$ Ia3;2013 MBQB 204, as follows:
122]Taken together, these sections provide that in order to be
successful on an application for leave under sections 14(1)
and 15(2) of the Limitation of Actions Act, the moving party
must:
(a) prove by evidence that he or she has a cause of action
which, subject to any defence that may be raised, has a
reasonable chance of success;
(b) prove, at the very least, that he or she first learned of a
fact material to his or her cause of action within the 12
months next before the application was filed;
(c) establish that the fact, first learned within that period, is
'omaterial" within the sense defined in section 20(2); it must
be of "a decisive character'o as that phrase is defined in
section 20(3);
(d) establish that the fact must not be one which the applicant
ought to have known about earlier.
See Einarsson et al. v. Adi's Video Shop et al. (1992),76 Man.R.(2d)
218; 10 W.A.C. 218 (C.4.) at paras. 10-13.
Page:
t16l
12
The respondent acknowledges that the standard of review from a
discretionary order of a motion judge is one of deference and that such
a
decision should not be overturned unless it is so clearly wrong as to amount
to an injustice.
However,
it
also argues that
if
demonstrated, this Court may intervene on a standard
an enor in law
is
of correctness. The
respondent further argues that the motion judge erred with respect
to
the
fourth criterion of the test set out in Cahill, and that such an effor was an
effor in law and is, therefore, to be reviewed on a standard of correctness. It
relies on what is set oul Housen v Nikolaisen,2002 SCC 33,12002] 2 SCR
235 (atpara?7):
it
has been determined that a matter being reviewed
involves the application of a legal standard to a set of facts, and
is thus a question of mixed fact and law, then the appropriate
standard of review must be determined and applied. Given the
different standards of review applicable to questions of law and
questions of fact, it is often difficult to determine what the
applicable standard of review is. In Southam, lll997l 1 SCR
7481atpara.39, this Court illustrated how an effor on a question
of mixed fact and law can amount to a pure error of law subject
Once
to the correctness standard:
. . . if a decision-maker says that the correct test requires him
or her to consider A, B, C, and D, but in fact the decisionmaker considers only A, B, and C, then the outcome is as if
he or she had applied a law that required consideration of
only A, B, and C. If the correct test requires him or her to
consider D as well, then the decision-maker has in effect
applied the wrong law, and so has made an error of law.
Therefore, what appears to be a question of mixed fact and law,
upon further reflection, can actually be an effor of pure law.
t17l
The respondent argues that, although the motion judge correctly
stated the test that had to be met by the applicants, he erred in law in finding
Page:
13
that the applicants had in fact met the fourth criterion of the test in that they
failed to establish that they did not know any sooner than April 30,2013, of
the respondent's involvement in the cheque-kiting scheme. For the reasons
that follow, I accept this argument.
tlSl
I note initially that the motion judge makes no mention whatsoever
in his reasons as to whether this criteria has been met or not.
t19l
In dealing with this issue, I am guided by what Helper JA stated in
Johnsonv Johnson,z}}I MBCA 203,163 ManR (2d) 46 (at para 14):
Section 20 fleshes out the important terms found in s. 14(1). The
term "material fact" is explained in s. 20(2). Section 20(3) sets
out what are to be considered material facts of a decisive nature.
They are facts which an applicant, given her personal
circumstances, and having made reasonable consultations with
others, would have recognized as grounding a claim with a
reasonable prospect of success. Section 20(4) places a positive
obligation upon an applicant to demonstrate that she took all
reasonable steps under the circumstances, including the taking of
appropriate advice, to ascertain the facts necessary to ground the
cause of action.
l20l
It is also instructive to read what Dewar J wrote in Green Brier Inn
(wpÐ Inc v coca-cola Bottling co et a\,2013 MBQB 53, 289 ManR (2d)
155 (at para 40):
Under the circumstanceso although the facts which were
disclosed by Coca-Cola and Habco could be construed as
material facts of a decisive nature, some further inquiry could
easily have been made respecting them before the limitation
period expired. I do not say that the plaintiff would necessarily
have learned of these additional expert reports by that time, but I
am not prepared to conclude that it would have been ignorant
well before June 30, 2010 of the existence of the previous fires or
Page:
14
the positions now being advanced by Coca-Cola that the fault lay
with Habco. If the plaintiff felt that the only source of the
answer to the questions as to what knowledge Habco had and
when it acquired it, there was sufficient information available to
it at the time to justify the issuance of the statement of claim in
order to obtain discovery from Habco before the limitation period
expired. Absent any explanation in the affidavit material filed in
support of the application regarding any inability to pursue the
inquiry, there was plenty of time to issue the claim and secure
discovery before the limitation period expired. In my view, the
allegations now sought to be made against Habco ought to have
been made before the expiry of the limitation period.
l2ll
The affidavit evidence of Allan Godfrey, who is the Executive
Vice President and Chief Financial & Risk Officer of the respondent, has
attached as exhibits numerous articles published in the Winnipeg Free Press
dating as far back as September 13,2006, that make reference to the cheque-
kiting scheme that the applicants allege they only discovered in April of
2013. That same affidavit also references lhe Mirage lawsuit, initiated in
December 2008, on which the applicants' present suit is patterned.
l22l
Furthermore, the motion judge had before him transcripts from the
cross-examination of the applicants in which most of them depose to the fact
that they \Mere aware of the numerous newspaper articles published relating
to the Protos and Maple Leaf failures and the allegations of the relationship
and allegations of cheque kiting and what other creditors were either doing
or alleging.
l23l
A review of some of those transcripts provide the following:
Transcript of cross-examination of Catherine Dyck:
a
Okay. Now, there were allegations in the articles, and we'll
look at them in a minute, but there were many allegations written
Page:
15
about in the articles that some of the creditors were alleging that
Astra was involved in this cheque-kiting scheme. Do you recall
reading that?
A
Yes, I remember reading that
a
Now, after you read an article like this did you discuss the
content of this article at all with any of your co-applicants?
A
Yes, we would have.
a
-- but the knowledge that was conveyed to you by the articles
was that there were allegations made by other creditors --
A
M-hmm.
a
-- that Astra was somehow implicated in the cheque-kiting
scheme?
A I canot say that for sure. The part I remember is this group
that you had talked about initially, the Mirage with Thomas Steen
and everyone there, that they were suing David fWolinsky,
chairman of Protos]. I remember hearing about that.
a Right.
A I don't remember hearing specifically about them suing the
credit union as well.
a
Okay. But you were aware about allegations that were made
during this time against Astra that they were somehow involved
with the cheque-kiting scheme?
A Yes.
a
But there are -- besides this one article there are other articles
about the cheque kiting that you did read and that were brought
to your attention?
A From
as
I
was saying, what
I'm aware of is
same
Page:
16
information being repeated in all of these articles from what I'm
reading here. They're mentioning the same group of people,
they're mentioning the term cheque-kiting scheme, they're
mentioning Astra Credit Union. So I would say that, you know, I
was aware of maybe some of these articles. I don't recall reading
specific ones.
a
That's fine.
A I mean, I have to be honest, after a point there's another
article in the paper, okay, is it going to tell us anything different,
I don't know.
a
And what was the understanding that you had about Clarke
Culbertson's involvement with this cheque'kiting scheme?
A I understood that perhaps he was being blamed for everything
as sort
of an official and executive at Astra Credit Union.
a
Okay. Blamed by who? \Mhat was your understanding?
A
I would say sort of the general public. Just from the articles I
got the feeling that perhaps he was being fîngered as the one who
was involved in things at Astra Credit Union.
And yet in this article Clarke Culbertson is indicating there's a reference to a Statement of Defence that he had filed,
that the cheques written by David fWolinsky] and Costas
[Ataliotis, Wolinsky's partner] were reviewed by employees of
a
Astra and its officers, senior management team and auditors were
aware of its overdraft situation.
So do you recall reading, not necessarily this article, but other
articles that conveyed the view from Clarke [Culbertson] that
others at Astra knew about this cheque-kiting situation?
A It does sound familiar that I read just that, that he had said
that.
Page:
17
Transcript of cross-examination of Joyce Rothman:
a
So you may not recall the specific article, but you agree that
there were other articles that you might have read where Astra
was identifred as Protos's banker?
A
Correct.
ç
And those articles would predate the 2013 article that you
A
Right.
reference in paragraph 6?
a
And, similarly, in paragraph 6 you say you learned for the
first time that Assiniboine Credit Union was involved in the
Protos cheque-kiting scheme and you say that you learned that
from the April 3Oth, 2013 article.
Is it fair to say that in one of these prior articles that you read,
even though you can't recall which one, you would have been
aware of allegations involving cheque kiting and Astra or Protos?
A
Right.
a
Sorry?
A
Right, correct.
You just don't know when, but it would have been prior to
April 2013?
a
A
Right.
Transcript of cross-examination of Karen Wolinsky
a
When did you learn that Astra was involved as Protos's
banker?
A I don't recall
a
But it would be through some of the articles that you read in
the Free Press that you came to that knowledge?
Page: l8
A Yes
a
And there would be more than one article that you read about
that?
A
I don't recall that.
a Well, your Affidavit says through articles, it's plural
A Well, then, I had.
a So you recall that now?
A Yes.
a
And those articles that you read would you have read those
A
Well, yeah, I would assume
a
Okay. That would make
shortly after the receivership?
so.
sense to you that once the business
goes into receivership there was likely some articles about --
A About Assiniboine Credit Union.
a
And you would have read those articles and learned that
Assiniboine or Astra was the banker?
A Yes.
And at the same time that you read about Astra or
Assiniboine being the banker, did you also read about the
a
allegations of cheque kiting?
A
What period are you talking about?
a
Taking about sometime shortly after the receivership when
you read these articles and learned that Astra was the banker?
A Yes, I believe that they were, that was mentioned.
a
And did the name Clarke Culbertson also come up at that
time?
Page:
19
A I remember seeing his name somewhere.
a
Okay. And when you said you remember seeing his name,
A
In one of the articles.
a
Okay. And did you learn from that that Culbertson was
was that in one of the articles?
an
employee of Astra?
A I believe so.
a
Okay, so you knew that?
A
That's him.
a
Okay. And were you aware that there were allegations at that
A
Yes, I remember that
time that he was involved in the cheque kiting?
a
Exhibit R, this is an article in the Free Press, dated March
14th,2009, title is "Empire Built on Kiting Chequesoo' and this
one talks about that David Wolinsky and others have been
charged with fraud.
A Yes.
a Do you recall reading this article?
A Ido
a
And this article talks about the cheque-kiting scheme.
Correct?
A Yes.
And on the left side under the heading "The Lawsuit," it says:
(As read in)
a
Page: 20
ooAstra
is facing a multimillion dollar lawsuit from a group
investors that lost money."
So it mentions Astra as
of
well. Correct?
A
It mentions Astra.
a
So this is one article that you recall receiving and reading?
A
I don't remember this, the lawsuit part.
a
So you recall seeing the article, you recall the portion under
the heading "Businessman Charged With Fraud" --
A
Yes.
a
-- but you're not so sure about the part on the left-hand side of
the page which says "Anatomy of Alleged Fraud"?
A
I don't recall that.
a
Do you recall if this was an article or the link was sent to you
by Joyce [Rothman]?
A lt's probably I
don't recall, but it's probably what
happened. I never went online.
a
Right. So the only way that you would have been alerted to
A
Somebody sent me a link, yes
a
And the somebody would typically be Joyce fRothman]?
A
Yes.
this article would be probably by Joyce [Rothman]?
l24l
The above evidence demonstrates that the applicants were aware
of
the possible involvement of the respondent in a cheque-kiting scheme with
the principals of Protos andlor Maple Leaf long before a period of 12 months
prior to April 30, 2013. Their failure to act on any of that information at the
Page: 2I
time they became aware of it is, in my view, fatal to their application for
leave under section 14(1) of the Act
lZ5l
Based on this clear and unrefuted evidence, the motion judge either
erred in law in finding that the applicants had met the burden of the fourth
criterion
in Cahill or so misapprehended the facts before him that he
committed a palpable and overriding error or arrived at a conclusion that
was unjust and not supported by the facts.
126) In any event, the motion judge's decision cannot be allowed to
stand. The appeal is allowed, and the order granting leave to commence an
action is set aside, with costs to the respondent.
JA
I agree:
I agree:
lht
T
Cn
ll t-
JA
^
JA