Intact Insurance Company v Leung, 2012 ABQB 608

Court of Queen ’ s Bench of Alberta Citation: Intact Insurance Company v Leung, 2012 ABQB 608 Date: 20121003 Docket: 1103 01585 Registry: Edmonton Between: Intact Insurance Company Plaintiff - and - O ’ Onna Leung, also known as O ’ Onna nee Gee and Yan Leung Defendants _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice R. Paul Belzil _______________________________________________________ The Applications [ 1 ] The Plaintiff Intact Insurance Company seeks

summary judgment against the Defendant O ’ Onna Leung, also known as O ’ Onna nee Gee. The Defendant Yan Leung seeks

summary dismissal of Intact ’ s claim against him. Factual Background [ 2 ] On January 31, 2011 Intact issued a Statement of Claim against O ’ Onna Leung, also known as O ’ Onna nee Gee and Yan Leung, who are married. The Statement of Claim alleges that they jointly defrauded Intact of $1,394,674.21 while they were employed by the company.

[ 3 ] Respecting Yan Leung, it is alleged that he was aware of and participated in the fraud perpetrated by his wife or, alternatively, was wilfully blind to her fraudulent conduct.

It is further alleged that he received the benefit of the funds misappropriated by his wife and thus was unjustly enriched. [ 4 ] On January 31, 2011, I granted ex parte attachment orders and Mareva injunctions against both Defendants. [ 5 ] Subsequently O ’ Onna Leung admitted to defrauding Intact but denied that Yan Leung was involved or had any knowledge of her fraudulent conduct. [ 6 ] Yan Leung has filed two affidavits wherein he expressly denies participating in the fraud perpetrated by his wife or that he had any knowledge or her conduct and on this basis seeks to have the claim against his summarily dismissed. [ 7 ] Intact argues that the his credibility is of critical importance and thus this is not a suitable case for a

summary dismissal. [ 8 ] The application for

summary judgment against O ’ Onna Leung was consented to. [ 9 ] It is common ground between the parties that Rule 7.3(1) governs applications for

summary judgment. Rule 7.3(1)(

b) permits a court to grant

summary judgment if “ there was not merit to a claim or part of it ” . [ 10 ] The Alberta Court of Appeal in Murphy Oil at paragraph 25 held that generally the test in a

summary judgment application is whether there is a genuine issue for trial. [ 11 ] In Tottrup v Clearwater Municipal District No. 99 , 2006 ABCA 380 , the Court at paragraph 10 held that generally

summary judgment cannot be granted if the record raises genuine factual or credibility issues. [ 12 ] In Spurrell (next friend) v Bradford , 2004 ABCA 288 , the Alberta Court of Appeal in paragraph 5 held that the mere possibility of a credibility issue is not enough to prevent

summary judgment. Discussion [ 13 ] The Statement of Claim is broadly drafted and casts a wide net in the claims advanced against the Defendants. It contains causes of action in conspiracy, fraud, breach of constructive trust, breach of contract, conversion and alleges that the Defendant Yan Leung was wilfully blind and unjustly enriched by the fraudulent conduct of his wife. [ 14 ] Intact concedes that it has no direct evidence that Yan Leung was involved in fraudulent misappropriations of its funds.

It submits that its claims against Yan Leung are based on circumstantial evidence and that his credibility is at the core of the claims against him. [ 15 ] Intact concedes, on the basis or the Spurrell decision, that the mere possibility of a credibility issue involving Yan Leung is not sufficient to successfully oppose his application for

summary dismissal but submits that there is significant evidence in the factual record which does justify dismissing his application.

[ 16 ] It is uncontroverted that both Defendants worked in the underwriting department of Intact and that their salaries were deposited into one bank account at the TD Bank which account was in her name only. This account was used for household expenses including mortgage payments on the house they jointly resided in. [ 17 ] Yan Leung was the joint holder of a Capital One MasterCard, the balances on which were paid out of the TD account.

O ’ Onna Leung was not a cardholder. [ 18 ] Between November, 2006 when the fraud commenced and January, 2011, at least $245,960 was withdrawn from the TD account and MasterCard to pay expenses including mortgage payments. [ 19 ] Yan Leung admitted that some of these payments were made for his own hobbies and his personal expenses including clothing. [ 20 ] It is also conceded that they took a number of vacations and travelled to Vancouver and Las Vegas on multiple occasions as well as to Kananaskis, Hawaii, New York, Washington and Florida. [ 21 ] Yan Leung deposed on questioning that between June, 2006 and June, 2011, every purchase he made for clothing, gasoline, entertainment and gifts was paid by cash as his credit card had become demagnetized and he did not arrange for a replacement card to be issued. [ 22 ] It was also conceded that prior to the commencement of the fraud, the Capital One MasterCard was paid off in monthly installments of approximately $500 but commencing in November, 2006, there is a payment of $2,500, a $2,000 payment in December, 2006 and a payment in February, 2007 of $5,251.89. [ 23 ] As noted Yan Leung ’ s position is that he was completely unaware of his wife ’ s fraudulent conduct. [ 24 ] Intact argues that at the very core of the claims against him it is what knowledge he had and whether he was wilfully blind to his wife ’ s fraudulent conduct.

Moreover, completely independent of his knowledge of his wife ’ s conduct, the issue remains as to whether or not he was unjustly enriched by amounts that she misappropriated from Intact. [ 25 ] Tottrup is clear authority for the proposition that

summary disposition is not available where credibility is genuinely in issue. [ 26 ] The evidentiary issues noted above cannot be resolved without findings of credibility as to what Yan Leung knew and what he ought to have known. [ 27 ] Moreover, it cannot be argued that credibility issues involving Yan Leung constitute mere unsubstantiated speculation. By his own admission, he was using funds from the TD account which, at a minimum, raises the issue of whether he was unjustly enriched from Intact funds which were put into the TD account by his wife. [ 28 ] It necessarily follows that the application for

summary dismissal must be dismissed. The ex parte Attachment Order and Mareva injunctions I granted on January 31, 2011, remain in place pending further Court applications. [ 29 ] Intact is entitled to recover costs of this application from Yan Leung.

Heard on the 26 th day of September, 2012. Dated at the City of Edmonton, Alberta this 2 nd day of October, 2012. R. Paul Belzil J.C.Q.B.A. Appearances: Daniel L. Morrow Bennett Jones LLP for the Plaintiff David D. Risling McLennan Ross LLP for the Defendant