Eisenberg v, 2013 ABQB 580

Court of Queen ’ s Bench of Alberta Citation: Eisenberg v 910234 Alberta Ltd., 2013 ABQB 580 Date: 20131003 Docket: 1201 15430 Registry: Calgary Between: Stanley Eisenberg, Brenda Eisenberg, Jack Eisenberg, Lynn Eisenberg and Eisenberg's Properties Ltd.

Plaintiffs - and - 910234 Alberta Ltd., Randy Calmusky, Theresa Calmusky, Kyle Calmusky, Cale Humenuik and Jordan Rintoul Defendants Corrected judgment: A corrigendum was issued on October 10, 2013; the corrections have been made to the text and the corrigendum is appended to this judgment. _ ________________________________________ ______________ Memorandum of Judgment of the Honourable Mr. Justice G.C. Hawco _________________________________________ ______________

[ 1 ] 910234 Alberta Ltd. (“910”) is a corporation incorporated pursuant to the laws of the Province of Alberta. Randy Calmusky is the sole director and the sole shareholder of 910. [ 2 ] 910 was in the business of raising funds from investors for the purpose of investing in residential mortgages. Investors provided funds in the form of loans to 910, and those loans were to be documented through a series of mortgage sale and servicing agreements. [ 3 ] On December 6, 2012, the Plaintiffs applied for and were granted an Attachment Order against 910.

On December 10, 2012, the Plaintiffs applied for a Receiving Order against 910 and other parties. On December 12, 2012, a Receivership was granted by Justice S.J. LoVecchio appointing Grant Thornton Limited as the Receiver of all the assets of 910. [ 4 ] This is an application by the Receiver for an order to have the proceeds of monies payable by Trickle Creek Custom Homes (“Trickle Creek”) pursuant to a loan agreement between 910 and Trickle Creek dated June 20, 2012 to the Receiver for its distribution. [ 5 ] There was another Borrowing Agreement purportedly made between Theresa Calmusky and Trickle Creek.

On June 30, 2012, Ms. Calmusky is and was Randy Calmusky’s wife. It is admitted that that agreement was not made by Theresa Calmusky and that her signature was in fact forged by her husband. She was not even aware of it until sometime later. [ 6 ] The Plaintiffs in this action were investors who put money into 910 through loans made by 910 to developers or builders. The Respondents in this application, Theresa Calmusky was, as stated, Randy Calmusky’s wife.

Mary Calmusky is his mother and Gary Calmusky is his brother. [ 7 ] Theresa Calmusky claims that she lent $800,000 to Trickle Creek through the use of the joint line of credit which she held with her husband and that as such, should be repaid that money. Mary and Gary Calmusky claim that they gave Randy Calmusky $200,000 each (actually somewhat less by Gary Calmusky) to invest on their behalf in Trickle Creek.

They seek to be repaid those monies. [ 8 ] Randy Calmusky claimed that he did in fact advance all $1.2 million to Trickle Creek for and on behalf of his wife, mother and brother. [ 9 ] It seems clear that the $800,000 purportedly advanced by Theresa Calmusky was transferred by way of transfer of funds from the line of credit to the law firm of Masuch Albert LLP. They were counsel for 910 and for Randy Calmusky as well. [ 10 ] The two separate advances of $200,000 each (approximately) were, Randy Calmusky claims, paid by him to Trickle Creek on Mary and Gary’s behalf.

In fact, no documentation exists other than to establish that any monies advanced by either of these two individuals were paid into 910’s account, and thereafter to Trickle Creek. [ 11 ] Indeed, there is no record of money being paid to Trickle Creek except through the 910 Administrative Account or the 910 Trust Account. That was the normal way monies were transferred to mortgagors such as Trickle Creek. [ 12 ] No evidence was given by Masuch Albert LLP.

However, there is correspondence and records which were examined by the Receiver relating to monies in and out. [ 13 ] It is accepted that following execution of the 910 Trickle Creek Borrowing Agreement, Masuch Albert LLP reported to 910 as lender that the matter had been substantially completed. Three mortgage disbursement statements issued by Masuch Albert LLP continued to describe 910 as the lender and the source of the three advances under the mortgage.

There is no evidence of any objection taken by Randy Calmusky to Masuch Albert LLP’s actions. [ 14 ] After the final advance on August 24, 2012, Randy Calmusky contacted Masuch Albert LLP and asked that the mortgage be assigned to Theresa Calmusky. On August 30, 2012, a Transfer of Mortgage was signed by Randy Calmusky and registered at the Land Titles Office in favour of Theresa Calmusky. [ 15 ] The Trickle Creek mortgage was funded in three advances. Each of them was recorded by Masuch Albert LLP as coming from 910.

The references include Masuch Albert LLP’s own ledger statement as well as its reports on disbursements issued to 910. [ 16 ] The first advance of $800,000 was obtained from an advance under the line of credit already referred to. Randy Calmusky testified that the line of credit was generally used for the business of 910. Funds relating to loans by 910 were paid into and out of the line of credit. [ 17 ] There were two additional advances to Trickle Creek in the amount of $200,000 each.

On July 26, 2012, a bank draft was received by Masuch Albert LLP for the second advance to Trickle Creek in the amount of $200,000. On August 24, 2012, a bank draft was received by Masuch Albert LLP for the third advance to Trickle Creek. [ 18 ] Gary Calmusky maintains that his advance of funds to his brother was a demand loan. No record exists of such. Mary Calmusky maintains that her advance was a loan and was to go directly to Trickle Creek. That does not appear to have happened.

Issue [ 19 ] The issue in this application is simply whether Theresa, Mary and Gary Calmusky are entitled to receive their monies back, all $1.2 million of it, or whether the Receiver should be paid the monies, to be applied for and on behalf of 910. Decision [ 20 ] In my view, the $1.2 million from Trickle Creek should be paid to the Receiver on behalf of 910.

Reasoning [ 21 ] Theresa Calmusky was not aware of the Borrowing Agreement purportedly made between herself and 910. She was not aware of the line of credit advance of $800,000 to 910 for Trickle Creek. She purports to ratify the Borrowing Agreement. However, I am satisfied that the document, being a forgery, is a nullity. She cannot rely upon it. See 713860 Ontario Ltd. v. Royal Trust Corp. of Canada [1996] Can LII 7956 (Ont.SC) and Can. Commercial Bank v.

Island Realty Investments Ltd. [1996] Can LII 1024 (BCSC) [ 22 ] That being the case, we are left with the original Borrowing Agreement between 910 and Trickle Creek. [ 23 ] There is no doubt but that the $800,000 was placed into a Trust Account for 910 by Masuch Albert LLP. It is argued that this was a mistake by the lawyers, or an assumption made by them. [ 24 ] The same argument is made with respect to the $200,000 advances by Mary and Gary Calmusky.

It should not, it is argued, have been put into the 910 account by Randy or into a trust account by Masuch Albert LLP for 910. [ 25 ] 910 was used as a vehicle to receive and transfer investment funds. There were, as far as I am aware, no records within 910 to show that any of the funds being received by it were being received by them as agent for Theresa, Mary or Gary Calmusky. [ 26 ] Randy Calmusky admits that the funds were blended. [ 27 ] Masuch Albert LLP treated 910 as the principal. They were the mortgagee. They were the lender.

Masuch Albert LLP duly recorded the transactions showing them to be the lender. Reports were made on a regular basis to Randy Calmusky. He took no exception to any of them nor raised any issue at all about this. [ 28 ] I am satisfied that the efforts made to attempt to show Theresa Calmusky as being the lender was an attempt to mislead the actual nature of the transactions which had occurred.

Unfortunately, it appears that the trust placed in Randy Calmusky by his family was seriously misplaced. [ 29 ] The efforts made to indicate that Mary and Gary Calmusky were investors by directing Trickle Creek to pay them interest were further attempts to obfuscate what was going on. Interest payments to both should be returned. Costs [ 30 ] The Receiver is entitled to its costs. Heard on the 2 nd day of October, 2013. Dated at the City of Calgary, Alberta this 3 rd day of October, 2013. G.C. Hawco J.C.Q.B.A. Appearances: Douglas S.

Nishimura Field LLP for Grant Thornton Limited, in its capacity as Receiver for 910234 Alberta Ltd. Rinus de Waal/Luke Rasmussen De Waal Law for the Defendants Gary Calmusky, Mary Calmusky and Theresa Calmusky Michael A. Loberg

Michael A. Loberg Professional for the Defendant Randy Calmusky James G. Hanley MacDonald Hanley for Interested Parties Chupick and Lundquist _______________________________________________________ Corrigendum of the Memorandum of Judgment of The Honourable Mr. Justice G.C. Hawco _______________________________________________________ The Appearances has been corrected to show that Douglas S. Nishimura appeared for Grant Thornton Limited, in its capacity as Receiver for 910234 Alberta Ltd.