Gaastra v Tri-Link Consultants Inc., 2012 ABQB 350

Court of Queen ’ s Bench of Alberta Citation: Gaastra v Tri-Link Consultants Inc., 2012 ABQB 350 Date: 20120525 Docket: 0901 12399 Registry: Calgary Between: Hans Gaastra, 605687 Saskatchewan Ltd. and 625252 Saskatchewan Ltd.

Plaintiffs - and - Tri-Link Consultants Inc., 4040392 Manitoba Ltd., Klaus Link, Debbie Standon, Glenn Watts, 973632 Alberta Ltd., 963989 Alberta Ltd., 1251748 Alberta Ltd. (carrying on business under the trade name of Canadian Achievers Financial), Oliver Forest & Carrington Ltd., Evanworth Mortgage Investment Corporation and Sherbrook Mortgage Investment Corporation Defendants _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice R. J.

Hall _______________________________________________________ [ 1 ] In action 0501 11594 between MCAP Service Corporation, (Plaintiff) and 973632 Alberta Ltd., (Defendant), an application was made on the beneficial behalf of Hans Gaastra for an order paying funds out of court, which funds were in court following upon the sale of certain property, pursuant to a sale order granted to a first mortgagee. After the first mortgagee was paid out $59,719.65 remained and was in court.

[ 2 ] The learned Master considered whether those monies should be paid out to the second mortgagees or to the party holding the third charge, 973632 Alberta Ltd. The learned Master determined that the claim of the second mortgagee, made beneficially on behalf of Hans Gaastra, was barred by the Limitations Act .

The Master stayed any order as to payment out to 973632 Alberta Ltd. until the appeal of his decision could be heard. [ 3 ] I heard and dismissed that appeal in that Actino on May 11, 2012. [ 4 ] Following my decision, alternative applications were brought by the Plaintiffs in this action, wherein they sought an injunction, or alternatively an attachment order pursuant to the Civil Enforcement Act , R.S.A. 2000 c. C-15 as amended.

In my view, since the legislature has enacted specific provisions in the Civil Enforcement Act , dealing with the availability of an attachment order, the Court should decide whether a remedy is provided therein. If no such remedy has been established thereunder, then the Court should be wary of granting an injunction. [ 5 ] The Civil Enforcement Act provides in s. 17(1) that a claimant may apply to the Court for an attachment order where the Plaintiff has commenced or is about to commence proceedings in Alberta to establish the claim.

On hearing the application for the attachment order the Court may grant the order if the Court is satisfied that: (

a) there is a reasonable likelihood that the claimant’s claim against the defendant will be established, and (

b) there are reasonable grounds for believing that the defendant is dealing with the defendant’s exigible property, or is likely to deal with that property, (

i) otherwise than for the purpose of meeting the defendant’s reasonable and ordinary business or living expenses, and (ii) in a manner that would be likely to seriously injure the claimant in the enforcement of a judgment against the defendant. [ 6 ] In this Action the Plaintiffs claim fraud against all of the Defendants in using money obtained from the Plaintiffs to make various mortgage investments, but not accounting to the Plaintiffs for those funds.

The Plaintiffs have lost approximately 1.8 million dollars and have never received an appropriate explanation or accounting for the use of their funds and the losses sustained. The Plaintiffs point to the interrelation of many, if not all of the Defendants, and their directing mind, Mr. David Watts, in respect to dealings with the Plaintiffs’ funds in those interrelated companies. [ 7 ] The action has had a considerable history, and has been reviewed extensively in various applications by Masters of this Court.

Master Laycock in a decision of February 11, 2011, at page 4 line 30 stated that: “defences to the plaintiffs claim for an accounting of the assets appears to be weak”. [ 8 ] Master Hanebury, in a decision of May 28, 2011 at paragraph 35 stated: “the known facts and lack of accounting raise a spectrum of a classic shell game . . . the claim has sufficient gravitas to proceed”. [ 9 ] The Respondent argued that the Applicant has not provided any evidence that his action is likely to succeed. I do not accept that position.

There has been much affidavit evidence provided in this action and there has been a lack of accounting by the Defendants to the Plaintiffs. I accept and adopt the quoted words of Masters Laycock and Hanebury with respect to the prospects of success in this action.

I am satisfied that there is a likelihood that the Plaintiffs’ claim against the Defendants will be established. [ 10 ] It must also be established that there are reasonable grounds for believing that the Defendant is dealing with the subject property, or is likely to deal with that property for a purpose other than meeting its reasonable and ordinary business or living expenses, and in a manner that would be likely to seriously hinder the Plaintiff in the enforcement of a judgment against the Defendant.

[ 11 ] In this case, the Defendant was revived in the Corporate Registry for the purpose of making this claim. Evidence before me indicates that the Defendant carries on no other business. It has no “ordinary business” and therefore it has no “ordinary business expenses”. If the monies are not attached, and are released to the Defendant, there is no doubt in my mind that those monies will be disbursed.

The Defendant will then again be bereft of funds, and unable to pay funds to the Plaintiff in the event the Plaintiff succeeds in this action. [ 12 ] I am further convinced in this matter than an attachment order is appropriate, because the second mortgage of the Plaintiff in respect of the property to which these funds relate was apparently managed by the Defendants or some of them, supposedly on behalf of the Plaintiff, but with no return to the Plaintiff at the end of the day. It is one of the properties about which the Plaintiff makes claim that he has been fraudulently deprived of his funds.

The Plaintiff may be entitled to a declaration of a constructive trust. In my view there is a likelihood that, if a constructive trust is found, the tracing remedy would apply to the subject funds. [ 13 ] The Applicant indicates in submissions before the Court that Mr. Gaastra, as one of the Plaintiffs, has given the undertaking required by the s. 17(4) of the Civil Enforcement Act . The Respondent argues in its written brief that no such undertaking has been provided to the Respondent.

If the Applicant has not done so, he is to file the undertaking as to damages with the Court and provide a filed copy to the Respondent. [ 14 ] The Respondent maintains that the Applicant’s undertaking means nothing, particularly where the Applicant resides outside of the Province and has no assets in the Province.

To that I would respond that an order attaching particular funds, such as the order granted herein, does not subject the Respondent to any significant damages, since, if the Applicant’s claim is not made out, the funds will then be repaid to the Respondent, and will not be lost as a result of this attachment order.

Nor is there any likelihood that opportunities will be lost to the Respondent, or that it will be put out of business by such an attachment order, since the evidence before me shows that the Respondent 973632 Alberta Ltd. does not carry on any business. [ 15 ] Accordingly, I order, pursuant to s. 17 of the Civil Enforcement Act , that the subject funds are attached. [ 16 ] I am informed that the funds are presently in the trust account of the Respondent’s solicitor.

Those funds must be paid into Court to the credit of action 0901 12399, unless counsel for the Plaintiffs and the Defendant 973632 Alberta Ltd. agree that those funds be held in the solicitor’s trust account as if paid into Court. [ 17 ] There has been divided success in these Applications. The Applicants were unsuccessful in their Appeal, but successful in obtaining an Attachment Order. Neither party will have costs of these applications. Heard on the 11th day of May, 2012. Dated at the City of Calgary, Alberta this 25th day of May, 2012. R. J. Hall J.C.Q.B.A.

Appearances: Kari L. Sejr of Bishop & McKenzie LLP for the Plaintiffs Peter R. S. Leveque of Brownlee LLP for the Defendants, 973632 Alberta Ltd., Evanworth Mortgage Investment Corporation and Sherbrook Mortgage Investment Corporation