1007374 Alberta Ltd. Plaintiff - v. -, 2013 ABQB 278

Court of Queen ’ s Bench of Alberta Citation: 1007374 Alberta Ltd. v Ruggieri, 2013 ABQB 278 Date: 20130507 Docket: 1201 15655 Registry: Calgary Between: 1007374 Alberta Ltd. Plaintiff - and - Antonio Ruggieri, A. Ruggieri Engineering Ltd., 856508 Alberta Ltd., Alberta Engineering Ltd., and GMR Management Corp. Defendants _______________________________________________________ Memorandum of Judgment of the Honourable Mr. Justice G.C.

Hawco _______________________________________________________ [ 1 ] The Plaintiff, 1007374 Alberta Ltd. ( “ 1007 ” ), seeks an attachment order / Mareva injunction against the Defendants. This matter was argued over 2 half days, on Thursday, April 18, 2013 from 2:00 p.m. to 4:30 p.m. and again on Thursday, April 25, 2013 from 10:00 a.m. to 12:30 p.m. At the first application, Mr. Smith appeared for the Defendants, 857805 Alberta Ltd. ( “ 857 ” ), and Antonio Ruggieri ( “ Ruggieri ” ). At that time, he took issue with the legitimacy of the service upon Mr.

Ruggieri and the other Defendants, Alberta Engineering Ltd. and GMR Management Corp. On April 25, Mr. Oppenheim appeared for the Defendants, Alberta Engineering Ltd. ( “ Alta Engineering ” ) and GMR Management Corp. ( “ GMR ” ). Without admitting the legitimacy of service, the argument proceeded. For the record, I am satisfied that all necessary Defendants have been properly served.

[ 2 ] In September of 2004, the Plaintiff commenced an action against A. Ruggieri Engineering Ltd. ( “ Ruggieri Engineering ” ) for breach of a consulting agreement. The trial of the action took place from May 9 to 16, 2011. On March 19, 2012, Justice Bensler awarded judgment against Ruggieri Engineering in the amount of $337,130.00 plus interest of $56,956.87, plus costs in the amount of $82,411.99, for a total of $476,498.86. [ 3 ] Unbeknownst to the Plaintiff, on May 6, 2011, Ruggieri Engineering changed its name to 857508 Alberta Ltd. ( “ 857 ” ). Mr. Ruggieri was the sole director of Ruggieri Engineering.

The sole voting shareholder of Ruggieri Engineering was 1576813 Alberta Limited in its capacity as trustee of A. Ruggieri Investment Trust. [ 4 ] Within 15 days of the conclusion of the trial, Mr. Ruggieri and GMR registered general security agreements against all of Ruggieri Engineering assets in the personal property registry in favour of each of their own interests. [ 5 ] Within 16 days of the conclusion of the trial, Ruggieri Engineering granted promissory notes payable on demand to Mr. Ruggieri personally and GMR totalling approximately $300,000. [ 6 ] Mr.

Ruggieri was the sole director of Ruggieri Engineering. He is the sole director of 857 as well as sole director of Alberta Engineering and GMR. The address of all of these corporations is 59, 4511 Glenmore Trail, Calgary. Alberta Engineering carries on an engineering business, almost identical to the engineering business previously carried on by Ruggieri Engineering Ltd. from the same premises as did Ruggieri Engineering. [ 7 ] The Plaintiff claims that Ruggieri Engineering and its successor in name, 857, have engaged in a scheme to divest themselves of all exible assets in order to make 857 judgment proof.

It seeks an attachment order or some other relief that will prevent the Defendants, acting on the direction of Mr. Ruggieri, from disposing of all of their assets until such time as it may determine, through litigation, that it is entitled to judgment against all Defendants. [ 8 ] The Defendants have raised a number of issues. They had claimed that service had not been properly effected. I have dealt with that.

More importantly, they claim that neither the granting of a general security agreement, nor the issuance of two promissory notes constitutes a conveyance and that they therefore cannot be found to have conveyed any assets in order to prevent judgment being rendered against them, nor have they participated in a scheme to dissipate assets which were previously held by the original Defendant. [ 9 ] The Defendants further claim that the original Defendant, Ruggieri Engineering, did not have any assets to convey in any event when judgment was obtained and as neither the general security agreement nor the promissory notes constituted a conveyance, no assets have been “ conveyed ” . [ 10 ] The Defendants also argue that there is no evidence before the Court to indicate either any dissipation of assets or an attempt to render any of the Defendants judgment proof.

The Defendants argument on this point is that there had been nothing resembling any attempt to dispose of assets or hide any assets. What the Plaintiff purports to rely upon is an affidavit of Mr. James Mossman which is really nothing more than an opinion. It was, they claim, certainly not evidence. [ 11 ] Mr. Ruggieri has been examined in aid of execution in the original action.

The transcript of that examination was, the Defendants argued, more beneficial to the Defendants than it was harmful and so ought to be available as evidence for them in this application. [ 12 ] Finally, the Defendants argue that the Plaintiff was required to satisfy the tripartite test for obtaining injunctive relief and has failed to do so. Issue

[13] Has the Plaintiff satisfied this Court, as it must under s. 17(2) of the Civil Enforcement Act, RSA, c. C-15, that there is areasonable likelihood that it will establish its claim against the Defendants and that there are reasonable grounds for believing that theDefendants are dealing with their exigible property, otherwise than for the purpose of meeting their reasonable and ordinary businessand living expenses, and in a manner that would be likely to seriously hinder the Plaintiff in the enforcement of its judgment?

Decision [14] I am satisfied that there is a reasonable likelihood that the Plaintiff’s claim against the Defendants will be established and thatthere are reasonable grounds for believing that the Defendants have been dealing with their exigible property in a manner otherwise thanfor the purpose meeting the Defendants’ reasonable and ordinary business and in a manner that is likely to seriously hinder the Plaintiffin enforcement of this judgment against the Defendants. Reasoning [15] I am quite satisfied that Mr.

Ruggieri has attempted to hide or dissipate any assets which were originally held by RuggieriEngineering. His efforts began just before the trial by a simple change of name and continued after the trial but before judgment wasrendered by conveying assets by means of the promissory notes and the general security agreement. [16] I agree with Mr.

Smith that the simple change of name is not evidence of any nefarious intention, particularly when thatcompany, 857 Alberta was not intending to carry on the engineering business and therefore could not continue to use the word“engineering” in its corporate name. [17] However, I do not agree that Ruggieri Engineering simply ceased to carry on business as it had no assets and was essentiallybroke. [18] Ruggieri Engineering had apparently paid some $192,000 for a book of business or accounts receivable or simply a list ofclients.

That list must have had some value to Ruggieri Engineering given what they paid for it. Mr. Ruggieri continued and continues toargue that there is no such list and that it is valueless. In my respectful opinion, Mr. Ruggieri seems to be avoiding, if not evading, directanswers. Alberta Engineering appears to have risen from the ashes of Ruggieri Engineering Ltd. and is quite comfortably, apparently,carrying on the same business as did Ruggieri Engineering. It surely cannot be coincidental that Mr. Ruggieri continues to be the guidingforce. It surely cannot be coincidental that at least one of the clients, by Mr.

Ruggieri’s own admission, of Ruggieri Engineering, is nowan Alberta Engineering’s client. [19] Indeed, Alberta Engineering is clearly carrying on the same business as did Ruggieri Engineering, out of the same place ofbusiness, using the same facilities, personnel, contacts, and so on. It is only the name which has changed, nothing more. [20] We then come back to the steps taken by Mr. Ruggieri immediately after the trial, but before judgment. Carrying on businessin the same premises as a prior engineering firm is really not much different than a new restaurant opening up in an old restaurant’s placeof business.

However, there is more to it than that. In my view, there has been a deliberate attempt by Mr. Ruggieri to render his formercompany judgment proof and to render himself and his associated companies either judgment proof or simply trying to hide the assetsthrough his actions. The granting of the general security agreement purporting to encumber whatever assets Ruggieri Engineering hadwas, with respect, a clumsy attempt to protect those assets.

The granting of two promissory notes with the aggregated value of some$300,000 is yet another clumsy attempt to protect whatever assets may have been available to the Plaintiff. Indeed, it may have the effectof making assets which were previously not touchable to now be within the Plaintiff’s reach. That remains to be seen. [21] The argument that 857 Alberta and Mr. Ruggieri made that these actions, the granting of a general security agreement and theissuance of promissory notes, are not conveyances fails to take into consideration s. 16(

c) of the Civil Enforcement Act: “dealing” in reference to property, includes transferring, mortgaging, charging, using, disposing of, creating an interest in or doinganything to the property. [22] As said by my colleague, Burrows J. in Osman Auction Inc. v. Belland, 1998 ABQB 1095 , [1998] AJ No 1443, atpara 28:

I am satisfied that where the cause of action is in fraud and the plaintiff has shown a reasonable likelihood that the cause of action will be established, the court may conclude, on that basis alone, that there are reasonable grounds for believing the defendant is likely to deal with his exigible property to the plaintiff's prejudice. [ 23 ] In this situation, the factual scenario would attract either an attachment order under the Civil Enforcement Act , as was the case in Osman or a Mareva injunction as was the case in Lyons v Creason , [2008] AJ No 990 , a decision of my then colleague, Hart J.

In that case, Justice Hart said this, at para 9-10: This Court also has inherent equitable jurisdiction to grant relief in the form of a Mareva injunction. The test for a Mareva injunction also has two parts: 1. The Plaintiff must establish that there is a strong prima facie case by the Plaintiff against the Defendant; and 2. The Plaintiff must establish that there is a real and substantial risk that the defendant will dispose of the Defendant's assets, so that the Plaintiff would be hindered or delayed in the recovery of any judgment. The Attachment Order requires a lower test.

The parties agree that the “ reasonable likelihood of success ” standard is lower than the “ strong prima facie case ” standard, and that the test for an Attachment Order requires only that there be “ reasonable grounds for belief ” that assets will be dissipated, as opposed to establishing a real and substantial risk, which is required under the Mareva test. [ 24 ] The Defendants have argued that the recent decision of our Court of Appeal in Cho v Twin Cities Power - Canada U.L.C. , [2001] 2 CarsewellAlta 193 , 2012 ABCA 47 , requires the Plaintiff to satisfy the tripartite test as set forth at para 5 of the Court ’ s decision.

There, the Court said this: The tests for a Mareva injunction are not new. There are a number of procedural requirements, and the usual tripartite test for ordinary injunctions probably also must be satisfied. On the merits, the plaintiff must show a strong prima facie case for his suit, and also that there is a real risk that the respondent will remove assets from the jurisdiction, or dissipate them, in order to avoid execution (enforcement) under a judgment. [ 25 ] I do not take this as requiring a higher test than that which I have used in this case. In fact, I take it as reinforcing what I have said above.

The requirement for a Mareva may be somewhat higher in that the Plaintiff must show a strong prima facie suit in a Mareva application. This is more of an attachment order than a Mareva injunction. If the Plaintiff were required to show a strong prima facie case, based upon what I have said, I would have been satisfied that it had done so. Relief [ 26 ] The Plaintiff has asked for an order which would protect whatever assets the Defendant have. To that end, it requests that Mr.

Ruggieri attend at an examination to give sworn evidence to identify assets for preservation and, if necessary, to deliver up identified assets for preservation. I direct that Mr. Ruggieri attend such examination procedure within two weeks of the date of this memorandum. [ 27 ] I further direct that this order will remain in place until 5:00 p.m., Friday, June 28, 2013, unless otherwise extended by this Court. [ 28 ] This Court has no wish to prevent Mr. Ruggieri or Alberta Engineering from carrying on the usual business.

However, they are prohibited from dealing with any exigible property which they own, or that any of the other Defendants hold other than in the normal and ordinary course of business. Because of the granting of the general security agreement and the issuance of the promissory notes, Mr. Ruggieri and Alberta Engineering are prohibited from dealing with or using in any manner any secured credit, including any credit card,

loan or line of credit, for which payment is secured against any person or real property in which the Defendants have any real interest, pending further order. [ 29 ] The Plaintiff is entitled to its costs. Heard on the 18 th and the 25 th day of April, 2013. Dated at the City of Calgary, Alberta this 6 th day of May, 2013. G.C. Hawco J.C.Q.B.A. Appearances: Michael D. Mysak Sheena L. Owens BENNETT JONES for the Plaintiff C. Michael Smith SMITH MACK LAMARSH for the Defendant 857805 Alberta Ltd. and A. Ruggieri Joseph G. Oppenheim STONES CARBERT WAITE LLP for the Defendant Alberta Engineering Ltd. and GMR Management Corp.