Aubin v Petrone, 2023 ABKB 60

Court of King’s Bench of Alberta Citation: Aubin v Petrone, 2023 ABKB 60 Date: 20230131 Docket: 4803 168361 Registry: Edmonton Between: Renee Lyne Aubin Applicant - and - Sabino Steven Anthony Petrone Respondent - and - Quantiam Technologies Inc., Consolidated Civil Enforcement Inc. Interested Non-Parties Corrected judgment: A corrigendum was issued on February 14, 2023; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________

Endorsement of the Honourable Justice J.S. Little _______________________________________________________ [ 1 ] At a case management meeting held by WebEx on December 12, 2022, Ms. Aubin, through counsel, sought a number of different applications in her continued effort to enforce the money judgment in her favour. Counsel for Dr. Petrone and Quantiam resisted those applications. [ 2 ] I was not prepared to deal with the merits of the applications in a one hour case management slot. I accepted Mr. Kinash’s argument that the two main issues were: 1.

Closing of the transfer of the Summerland Property by redemption of seized shares, and 2. Sale of the Building. [ 3 ] Rather than attempt to find the time that might be required to hear oral argument from all parties on those issues, I ordered the parties to provide me with their written submissions, which they have now done. I. Summerland [ 4 ] In my December 23, 2021 endorsement, I ordered that sufficient seized shares be purchased by Quantiam to satisfy the Summerland mortgage ( 2021 ABQB 1021 at para 22 ). [ 5 ] Notwithstanding the passage of over a year, that has not occurred.

The reason given by counsel for Dr. Petrone is that it creates a personal tax bill for Dr. Petrone in the region of $150,000. Understandably, counsel for Ms. Aubin shrugs, arguing that tax consequences to this recalcitrant judgment debtor ought to be irrelevant. [ 6 ] Given the obvious lack of any visible efforts of Dr. Petrone to satisfy his obligation to satisfy the judgment, there is merit in that argument. But the flip side is that creating another debt for Dr. Petrone to bear may ultimately prejudice Ms.

Aubin as well, if it drives him closer to personal bankruptcy, recognizing that that course is available to him only subject to the restrictions contained in 2020 ABQB 708 . [ 7 ] Counsel for Dr. Petrone in his written submissions includes a tax opinion which satisfies me that permitting an amendment to the articles of incorporation of Quantiam to create two new classes of shares, having identical rights to the existing common shares, and then permitting Dr. Petrone to exchange all of his common shares for some combination of the new shares, does not prejudice Ms.

Aubin but will alleviate what would otherwise be his tax burden resulting from my earlier decision. [ 8 ] I therefore grant the substance of the draft Order attached to Mr. Tumbach’s submissions. [ 9 ] I further order that: 1. Ms. Aubin shall have the same right to exchange any of her common shares for some combination of the new shares. 2. Any new shares taken by Dr. Petrone in exchange shall be deemed to be seized on the same terms as his existing common shares. 3. Not later than February 28, 2023, Dr. Petrone and/or Quantiam shall deliver to counsel for Consolidated Civil Enforcement Inc. or Ms.

Aubin the duly executed original documents in registrable form referred to in paragraph 2(

a) of Mr. Curtis’s draft Order attached as

Schedule A to his January 13, 2023 written submissions. 4. For greater certainty, unless agreed by counsel for Ms. Aubin, the number of shares and the value therefor remains as set out in my December 23, 2021 Order, and there shall be no further adjustments required respecting the Summerland mortgage, ie. any claimed deficiency shall be borne solely by Quantiam. I make this decision for the reason that there has been a delay of over a year in closing this transaction, and there is no juridical reason that Ms. Aubin should bear that cost by having the interest continue to accrue on

the mortgage during that time. 5. Following closing of the transaction as set out in the third point above, Mr. Curtis is entitled to make submissions on any costs incurred by Ms. Aubin that are directly attributable to the delay from December 21, 2021 until this transaction closes as set out in the third point above. II. Sale of Building and Property [ 10 ] It is common ground that the building from which Quantiam operates its business, and which, together with the land on which it sits, is the subject of a charge by this Court for enforcement of the judgment, must be sold or otherwise monetized.

It is a substantial hard asset of Quantiam, and while Quantiam as a technology company would still retain its other intellectual property and expertise and might be able to operate its business from other premises, that is speculative. How any funds raised from the building’s disposition find their way to Dr. Petrone gives rise to questions of corporate law, but with cash in hand, there will be answers to those questions. Mr. Kinash, in fact, asserts in his written submissions that Quantiam will permit the sale proceeds to flow to Ms. Aubin, and he will be held to that assertion. [ 11 ] Mr.

Curtis seeks to have the property listed by way of judicial sale, which Mr. Kinash resists on the basis that that would amount to a “firesale” and would prejudice Quantiam’s reputation in the business community. [ 12 ] Mr. Kinash’s solution is to have the property listed for private sale with provision for a lease back. His argument for that solution is that the trial judge, in granting judgment to Ms.

Aubin, valued Quantiam as a going concern, so logically a solution involving sale of the building should also involve Quantiam remaining in the building as a going concern. [ 13 ] Both counsel have chosen reputable commercial real estate enterprises to conduct their respective sales. In this case, I am persuaded that Mr. Kinash’s solution, involving a six month listing agreement with Colliers, during which time a lease back might be negotiated, is the more reasonable.

It permits Quantiam to retain some modicum of control over its destiny during a period of time roughly equivalent to what a judicial sale might ultimately take. [ 14 ] For that reason, I accept his proposal summarized on page 15 of his written submissions and more fully detailed in Exhibit K to Dr. Petrone’s affidavit sworn December 11, 2022. [ 15 ] I intentionally have not made a determination on the voting rights of the seized shares, which was an issue raised by Mr. Curtis.

The only ruling I will make on that issue is that Consolidated shall be entitled to vote all seized shares on all matters relating to the property sale including the required exercise of the option to purchase in connection with the property sale and the acceptance or rejection of any offers received in connection with the Colliers listing. [ 16 ] Mr. Kinash is to prepare and circulate for approval a court order incorporating that proposal, excluding, if any, those portions which should not form part of the court record, by February 28, 2023.

In addition to the terms of the listing proposal, any offer accepted by Quantiam shall be subject to final approval of this Court. Further, Colliers is to provide to Mr. Curtis any interim reports provided to Quantiam or Dr. Petrone. III. Further Applications and Costs [ 17 ] I intend to defer the issue of costs and the other applications raised at our recent case management meeting until we know more about the progress of the building sale. Mr. Kinash is to set up a case management meeting for a time after May 31, 2023 at which meeting he will advise as to that progress, and we can discuss Mr.

Curtis’s remaining applications, to the extent that they are not subsumed in this Endorsement. [ 18 ] In the interim, I understood Mr. Curtis in his correspondence to be satisfied if I make further determinations respecting his applications in reliance on the material he submitted in support of his applications. I understood Mr. Kinash to say that he responded only to the two issues decided herein. If all of that is correct, I will not address those further applications until after the next case management meeting, but Mr. Kinash and Mr. Tumbach are free to respond to Mr.

Curtis’s written submissions before that date. Written submissions received January 24, 2023. Dated at the City of Edmonton, Alberta this 31 st day of January, 2023. J.S. Little J.C.K.B.A. Submissions:

Robert M. Curtis for Renee L. Aubin Michael R. Kinash for Quantiam Technologies Inc. Dale Tumbach for Sabino S. A. Petrone Brian S. Sussman for Consolidated Civil Enforcement Inc . (no submissions) _______________________________________________________ Corrigendum of the Endorsement of The Honourable Justice J.S. Little _______________________________________________________ Changes reflected to indicate proper Counsel for Quantiam Technologies Inc. and to remove additional Counsel listed for Renee L Aubin Appendix 1

Summary of reported decisions: Aubin v Petrone , 2018 ABQB 163 – BC Injunction – Summerland Mortgage March 5, 2018 Aubin and Petrone each own 50% of 159Co. Petrone owns 85% of Quantiam and Aubin owns 4%. Quantiam lent 159Co $2.1M to purchase a property in BC, secured by mortgage, with the loan since paid down by $300,000. Quantiam sought to foreclose on the property. Aubin was granted an injunction preventing foreclosure for 30 days after the decision on the matrimonial property. Aubin v Petrone , 2018 ABQB 536 July 13, 2018 Merits Decision This is the trial decision.

Quantiam valued at $15M 159Co valued at $360,000 – all shares transferred to Ms. Aubin. Petrone ordered to make an equalization payment of $5,570,000. Aubin v Petrone , 2018 ABQB 973 Remedies Decision Aubin granted a security interest against Mr. Petrone’s shares in Quantiam to secure her $5.57M judgment. Petrone enjoined from bankruptcy/proposal until documentation complete. Aubin granted a security interest in the building leased by Quantiam and appraised at $5.2M- $6.5M. Quantiam enjoined from declaring bankruptcy/proposal or disposing/charging the building until documentation complete.

Aubin awarded costs of $369,000. Aubin v Petrone , 2020 ABCA 13 Appeal Jan, 2020 Appeal against Merits and Remedies decisions dismissed. Aubin v Petrone , 2020 ABQB 163 – Post Appeal Clarification of Security , March, 2020 Requirement for formal security documentation removed, since the parties cannot agree on form. Mr. Petrone to pay entire judgment in four years. Mr. Petrone to pay 25% of the judgment in each of the next four years. If he does not, Aubin may apply to enforce the charges under s. 9(3)(

c) of the MPA (now FPA). Prohibitions against bankruptcy still apply. Aubin v Petrone , 2020 ABQB 708 - Clarification of Clarification , Nov, 2020 Four year payment

schedule to include first payment of at least $2M, ie. the current amount outstanding on the mortgage from 159Co to Quantiam on the BC property. The temporary injunction on foreclosure is lifted. Restriction on Quantiam declaring bankruptcy is lifted. Restriction on Mr. Petrone declaring bankruptcy is maintained until he sells the matrimonial home and discharges secured lines of credit for which Ms. Aubin may be jointly liable. Aubin v Petrone , SCC 39038, leave to appeal 2020 ABCA confirmation of Merits and Remedies decision dismissed, 2020-06-25. Aubin v Petrone , 2021 ABQB 1021 .

Case Management order confirming charge on land. Aubin v Petrone , 2022 ABQB 219 . Application to strike pleadings. Aubin v Petrone , 2022 ABQB 530 . Case Management order authorizing sale of seized shares. Aubin v Quantiam , 2022 ABCA 125 . Stay granted of 2021 ABQB 1021 .

Aubin v Quantiam , 2022 ABCA 288 . Appeal of 2021 ABQB 1021 dismissed. Aubin v Quantiam , 2022 ABCA 355 . Costs appeal dismissed.