Easy Loan Corporation v Base Mortgage & Investments Ltd, 2022 ABKB 803

Court of King’s Bench of Alberta Citation: Easy Loan Corporation v Base Mortgage & Investments Ltd, 2022 ABKB 803 Date: 20221201 Docket: 1501 11817 Registry: Calgary Between: Easy Loan Corporation and Mike Terrigno Plaintiffs - and - Base Mortgage & Investments Ltd., Base Finance Ltd., Arnold Breitkreutz, Susan Breitkreutz, Susan Way and GP Energy Inc. Defendants _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice R.A. Neufeld _______________________________________________________ I.

Background [ 1 ] Since at least 2006, Base Mortgage & Investments Ltd., Base Financial Ltd. (“Base”), and their sole director/shareholder Arnold Breitkreutz operated a Ponzi scheme. Investors were lured with promises of high returns (ranging from 14 to 20%), secured by mortgages against residential properties. There were no such properties, and as new investments were received they were used to pay old investors. [ 2 ] In October 2015, Mike Terrigno (on behalf of his company Easy Loan Corporation) began to suspect that Base was acting fraudulently. So too did the Alberta Securities Commission (“the ASC”).

On application by Mr. Terrigno, Base was ordered into

receivership by Justice Yamauchi of this Court on October 15, 2015. [ 3 ] As a result of that receivership, several properties identified in the Receivership Order as being owned by Arnold Breitkreutz and/or his wife Susan Breitkreutz were seized and sold. [ 4 ] One property owned by Mrs. Breitkreutz was not identified in the Receivership Order. It is located at 69 th Ave SW in Calgary (“the 69 th Ave property”).

It was purchased in 2002 by Arnold and Susan Breitkreutz as joint tenants; and was transferred into Susan Breitkreutz’s name alone in 2011 for nominal consideration. [ 5 ] On November 27, 2015, as Base was in the midst of receivership and active investigation by the ASC (including raids on its office and widespread media coverage) the 69 th Ave property was transferred by Susan Breitkreutz to her son Quinn Breitkreutz.

No written agreement was executed, but according to Susan Breitkreutz and Quinn Breitkreutz, the terms of the purchase were that Quinn would assume responsibility for the mortgage on title ($250,000). He also executed a Promissory Note in the amount of $250,000. The latter was registered against title by way of caveat through the family’s lawyer. The estimated market value of the property was approximately $500,000 to $550,000. [ 6 ] As the receivership progressed, the existence of the 69 th Avenue property eventually came to the attention of the Receiver.

By that time, however, the Promissory Note had been assigned by Susan Breitkreutz as security for payment of Mr. Breitkreutz’s legal fees. On July 13, 2018, the Receiver filed with an application for seizure and sale of the 69 th Avenue property. It subsequently chose not to pursue the application as the Receiver considered it to be uneconomic to do so given the limited equity available in the property. [ 7 ] The Receiver was discharged in June 2020. Mr. Terrigno and Mr.

Pisano (his cousin and another Base investor) were both interested in purchasing an assignment of the remaining assets of the estate, including a potential claim against the 69 th Ave property. Prior to the Receiver’s discharge, Mr. Pisano purchased the assignment for $15,000. He subsequently assigned it to Mr. Terrigno for nominal consideration. [ 8 ] Since the discharge of the Receiver, Mr. Terrigno has aggressively pursued his action against Mr. Breitkreutz and Susan Breitkreutz (Action No. 1501 11817).

Among other things, he has also conducted questioning in that action, as well as a separate action against other defendants, including Quinn Breitkreutz. (Action No. 1601 102294). [ 9 ]

Summary judgment has been granted against Mr. Breitkreutz, with Mr. Terrigno’ s damages assessed at $129,000, and Easy Loan’s damages assessed at $2,497,332: Easy Loan Corporation v Base Mortgage & Investments Ltd , 2022 ABQB 315 . [ 10 ] A

summary judgment application is pending against Susan Breitkreutz. The Application [ 11 ] Mr. Terrigno now applies for an order authorizing seizure and sale of the 69 th Ave property, pursuant to the assignment of the Receiver’s rights. Mr. Pisano was added as a co-applicant, as an abundance of caution, by order of Master Prowse. The application was set down for hearing by Master Prowse, who also directed that determination of the issues between Mr. Terrigno and Davis LLP (assignee of the Promissory Note) would be deferred pending this application. II. The Issues [ 12 ] Mr.

Terrigno advances two primary arguments in support of his application. [ 13 ] First, he says that the 2015 transfer of the 69 th Ave property from Susan Breitkreutz to her son was a fraudulent conveyance, and should be declared void pursuant to the Statute of Elizabeth and the Fraudulent Preferences Act , RSA 1980 c F-18 . So too should the 2011 transfer from Arnold Breitkreutz to Susan Breitkreutz. [ 14 ] Second, he says the 69 th Ave property is impressed with a constructive trust in favour of the Base investors, having been purchased with Ponzi scheme proceeds in 2002.

Consequently, the 69 th Ave property was beneficially owned by the Base investors, and now by Mr. Terrigno as assignee of the Receiver’s rights and entitlements. III. Fraudulent Conveyance (The 2015 Transfer) [ 15 ] The applicants seek a declaration that the November 27, 2015 conveyance from Susan Breitkreutz to her son Quinn was fraudulent, as that term is used in the Statute of Elizabeth and associated case law, and therefore void.

The criteria for such a declaration are: i. there is a conveyance of real property; ii. for nominal or no consideration; iii. with intent to defraud, delay, or hinder creditors; iv. the party challenging the conveyance must be someone who was a creditor at the time of the conveyance or someone with a legal or equitable right to claim the transferor; and

v. the conveyance must have had the intended effect. [emphasis added] [ 16 ] The respondents do not dispute the first, fourth or fifth criteria. [ 17 ] However, they contend that Susan Breitkreutz received consideration from her son in the form of his assumption of responsibility for the existing mortgage (by which his Certificate of Title remains encumbered) and by executing a Promissory Note in Mrs. Breitkreutz’s favour, in the amount of $250,000. [ 18 ] They also contend that the conveyance did not, and was not, intended to defraud, delay or hinder creditors. Mrs.

Breitkreutz simply exchanged her equity in the home for a Promissory Note, and later used that note to secure a debt owed to one of the family’s creditors – Davis LLP. [ 19 ] I agree with Mr. Terrigno that numerous badges of fraud were present when the 2015 transfer was made.

These include: 1) Base Financial was in receivership; 2) Arnold and Susan Breitkreutz did not disclose the existence of the 69 th Ave property to the Receiver, as required by the Receivership Order; 3) The ASC investigation was underway, including raids on Base Financial offices; 4) The collapse of Base Financial was the subject of media coverage; 5) Arnold and Susan Breitkreutz withdrew all of their joint personal bank account funds ($200,000) on the eve of the appointment of a Receiver, and after receiving notice that the ASC was freezing certain bank accounts; 6) No formal agreement of purchase and sale was entered into between Susan Breitkreutz and Quinn Breitkreutz; 7) No formal assignment of mortgage was made, and the mortgagor was not advised of the transfer; 8) The transfer was between related parties, both of whom were aware of the collapse of Base Financial. [ 20 ] In the circumstances, it is clear that the purpose of the transfer was to prevent the Receiver from seizing and selling the 69 th Ave property, along with others owned by Arnold and/or Susan Breitkreutz.

It is also clear that Quinn Breitkreutz was, at minimum, wilfully blind to the intentions of his parents. The only real issue is whether the conveyance was made for nominal or no consideration. [ 21 ] Quinn Breitkreutz argues that consideration was paid in the form of his assumption of responsibility for mortgage payments and the execution of a $250,000 Promissory Note in favour of his mother. [ 22 ] There is, however, no evidence that Quinn Breitkreutz actually assumed liability for the mortgage granted to RBC by his parents many years earlier.

He may well have serviced that mortgage following transfer of title, but he was not obliged to do so. [ 23 ] As for the Promissory Note, there is no evidence that any payments were ever made by Quinn Breitkreutz to his mother, or to Davis LLP after she assigned the instrument to that law firm in 2017. The Promissory Note has no defined term, and does not stipulate how, or when, the 3% interest provided in the instrument is to be paid. [ 24 ] In the circumstances, it is difficult to ascribe any value to the Promissory Note when it was granted. IV.

Was the 2011 Transfer of Land a Fraudulent Conveyance? [ 25 ] In their written argument, the Applicant’s brief addressed the $1.00, 2011 transfer of the 69 th Ave property from Arnold Breitkreutz to Susan Breitkreutz in her sole name. The “badges of fraud” suggested are: • Mr. Breitkreutz remained principally liable on the mortgage; • Mr. Breitkreutz did not report the gain on sale in his tax return; and • At the time of the transfer, Mr.

Breitkreutz was the operator of a Ponzi scheme. [ 26 ] They argue that under the Statute of Elizabeth and the Fraudulent Preferences Act , the transfer was tainted and can be unwound so as to have ownership revert to Mr. Breitkreutz and Susan Breitkreutz as joint tenants, thus allowing creditors to pursue judgment against it. [ 27 ] The 2011 Transfer of Land was for nominal consideration, and from husband to wife with the husband being the directing mind of an active Ponzi scheme. [ 28 ] Mrs.

Breitkreutz contends that the purpose of the transfer of title into her sole name was “in case something happened” to her husband. At the time, she was a joint tenant. She was, therefore, protected in the event that her husband was to die. There was also no tax reason to undertake the transfer, as no gain or loss was reported by Mr. Breitkreutz.

[29] The real contingency against which protection was required was discovery of Mr. Breitkreutz’ misdeeds. As a Ponzi scheme,Base Financial was functionally insolvent in 2011. As its directing mind, Mr. Breitkreutz could at any moment have also been insolvent. [30] It can therefore be readily inferred that the purpose of the transfer was to hinder, delay or defeat creditors of Mr. Breitkreutz. [31] The Transfer of Land dated June 2011 is declared to be a fraudulent conveyance, and is void. V. Is the 69th Ave Property Subject to a ConstructiveTrust in Favour of Mr.

Terrigno, as Sub-Assignee of theReceiver’s Rights? [32] An express trust arises out of the intention of the settlor. A constructive trust comes into existence when the law imposes anobligation on a party to hold a specific property for the benefit of another: Waters Law of Trusts in Canada, 4th Ed, at p 478. [33] Canadian courts have imposed constructive trusts in a variety of contexts.

Most notably, constructive trusts were imposed as aremedy for unjust enrichment: for example, in matrimonial property disputes or breach of fiduciary duty: Pettkus v Becker, (SCC), [1980] 2 SCR 834; Lac Minerals Ltd v International Corona Resources Ltd, (SCC), [1989] 2 SCR 574. [34] More recently, the Supreme Court of Canada has expanded the use of constructive trusts beyond the realm of unjustenrichment: Soulos v Korkontzilas, (SCC), [1997] 2 SCR 217. Mr.

Terrigno asks that the Court apply the Soulosprinciples to declare a constructive trust. [35] In Soulos, the defendant realtor wrongfully acquired a property that he had shown to the plaintiff (his client). The defendantdid not make a financial gain, as the property was worth less at trial than he paid for it.

The plaintiff nonetheless wanted the property forhimself and was prepared to pay the original asking price. [36] The Supreme Court held that constructive trust was available as redress for the realtor’s misconduct: [34] It thus emerges that a constructive trust may be imposed where good conscience so requires. The inquiry into good conscience isinformed by the situations where constructive trusts have been recognized in the past.

It is also informed by the dual reasons for whichconstructive trusts have trusts have traditionally been imposed: to do justice between the parties and to maintain the integrity ofinstitutions dependent on trust-like relationships. Finally, it is informed by the absence of an indication that a constructive trust wouldhave an unfair or unjust effect on the defendant or third parties, matters which equity has always taken into account.

Equitable remediesare flexible; their award is based on what is just in all the circumstances of the case. [35] Good conscience as a common concept unifying the various instances in which a constructive trust may be found has thedisadvantage of being very general. But any concept capable of embracing the diverse circumstances in which a constructive trust may beimposed must, of necessity, be general.

Particularity is found in the situations in which judges in the past have found constructive trusts.A judge faced with a claim for a constructive trust will have regard not merely to what might see “fair” in a general sense, but to othersituations where courts have found a constructive trust.

The goal is but a reasoned, incremental development of the law on a case-by-casebasis. […] [43] I conclude that in Canada, under the broad umbrella of good conscience, constructive trusts are recognized both for wrongful actslike fraud and breach of duty of loyalty, as well as to remedy unjust enrichment and corresponding deprivation.

While cases ofteninvolve both a wrongful act and unjust enrichment, constructive trusts may be imposed on either ground: where there is a wrongful actbut no unjust enrichment and corresponding deprivation; or where there is an unconscionable unjust enrichment in the absence of awrongful act, as in Pettkus v. Becker, supra.

Within these two broad categories, there is room for the law of constructive trust to developand for greater precision to be attained, as time and experience may dictate. [37] In order to obtain the constructive trust remedy, the following conditions must generally be satisfied: 1) The defendant must have been under an equitable obligation, that is, an obligation of the type that courts of equity have enforced,in relation to the activities giving rise to the assets in his hands; 2) The assets in the hands of the defendant must be shown to have resulted from deemed or actual agency activities of the defendant inbreach of his equitable obligation to the plaintiff; 3) The plaintiff must show a legitimate reason for seeking a proprietary remedy, either personal or related to the need to ensure thatothers like the defendant remain faithful to their duties and; 4) There must be no factors which would render imposition of a constructive trust unjust in all the circumstances of the case: e.g., theinterests of intervening creditors must be protected. [38] Mr.

Terrigno says that the property is impressed with a constructive trust in favour of the Base investors, as it was purchasedby Arnold and Susan Breitkreutz with money obtained from investors via Base Financial on or before 2002. Having obtained a sub- assignment of the Receiver’s rights in law and equity in 2019, Mr. Terrigno argues that beneficial ownership of the 69th Ave propertyshould now belong to him, in priority to any judgment creditors of Arnold and Susan Breitkreutz.

[ 39 ] For the purpose of this decision, I accept Mr. Terrigno’s position that Arnold Breitkreutz was under an equitable obligation in soliciting investment funds from Base Financial investors and that the money in the joint bank account used by Arnold and Susan Breitkreutz for a down payment on the 69 th Ave property came from those investors. [ 40 ] Therefore, the first two Soulos conditions are met. [ 41 ] I do not agree with Mr. Terrigno that the third and fourth conditions are met. I turn to those next. A.

Is There a Legitimate Reason to Seek a Proprietary Remedy, Either Personal, or Related to the Need to Ensure Others Like the Defendant Remain Faithful to Their Duties? [ 42 ] I am not satisfied that the proprietary remedy of a constructive trust is necessary in this case. [ 43 ] The 69 th Ave property has no personal value to Mr. Terrigno, such as was present for the plaintiff in Soulos . It is an asset to be liquidated, nothing more. [ 44 ] A constructive trust is also not needed to ensure that others like Arnold and Susan Breitkreutz remain faithful to their duties.

There are a number of reasons for this. [ 45 ] First, they have already had their other residential properties seized and sold by the Receiver. The 69 th Ave property is, apparently, all that remains. [ 46 ] Second, Mr. Terrigno is already a judgment creditor of Mr. Breitkreutz (in his own right and as assignee from his company Easy Loan). I was advised in argument that he has a

summary judgment application pending against Mrs. Breitkreutz as well. As the 69 th Ave property will revert to the joint ownership of Mr. and Mrs. Breitkreutz, it will be open for Mr. Terrigno to enforce those judgments in the ordinary course. Unless the judgments are satisfied, the 69 th Ave property will be seized and sold. [ 47 ] Third, Mr. Breitkreutz has been convicted of fraud in respect of the Base Finance Ponzi scheme. In R v Breitkreutz , 2022 ABQB 559 , he was sentenced to 10 years in prison as well as to make restitution to victims in the amount of $3,100,568.

Justice Feasby highlighted the importance of restitution to the victims as a whole, declaring that the victim surcharge requested by the Crown would be payable only after restitution had been satisfied in full, at para 53. [ 48 ] In the circumstances, a declaration of constructive trust would not provide a meaningful incremental level of deterrence for those who might consider similar schemes. All that would be accomplished would be to give Mr. Terrigno a priority interest in the 69 th Ave property that would rank above other civil judgment creditors and the victims of Mr.

Breitkreutz’ fraud to whom restitution is owed. B. There Must Be No Factors Which Would Render Imposition of a Constructive Trust Unjust in All of the Circumstances e.g. The Interests of Intervening Creditors Must Be Protected [ 49 ] In argument, it was suggested by Mr. Terrigno that “this Court has already identified a constructive trust as an appropriate remedy for the Base Companies Ponzi scheme.” [Applicant’s brief: para 164]. He then referred to findings of this Court that are “helpful,” stating: a.

On October 15, 2015, this Court granted the “Receivership Order” appointing the Receiver as the receiver of all the current and future assets, undertakings and properties of every nature and kind of Base Finance and Base Mortgage & Finance ltd. On February 8, 2016 this Court imposes a constructive trust over funds in the Base Finance Bank Account at the RBC for the investors who were defrauded by Base Finance, through AB’s various fraudulent misrepresentations in the running of the subject Ponzi Scheme.

The Applicants simply ask that this constructive trust be extended to include money from the Ponzi Scheme used by AB and his wife SB to buy real estate. [Applicants’ Emphasis Added] b. AB perpetrated a fraud on investors, including (

a) deceiving investors into thinking that they were investing in mortgages held by Base Finance rather than in a loan to an undisclosed entrepreneur involved in oil and gas developments in the US, and (

b) operating a Ponzi Scheme that recirculated investors’ funds to pay purported returns to existing investors. SB, the wife of AB received approximately $869,431 from Base Finance, for no apparent legitimate business reasons. AB, his wife, or both acquired several houses using Base Finance funds. [Applicants’ Emphasis Added] [ 50 ] The constructive trust finding made by Yamauchi J. in Easy Loan v Base Mortgage & Investments Ltd , 2016 ABQB 77 is not of assistance to Mr. Terrigno.

The matter before Justice Yamauchi was an application by a number of Base investors to freeze a Base Financial bank account into which their investment money had just been deposited. The Court found that there was no reason why imposition of a constructive trust would be unjust, as the whereabouts of those investments were contained in the bank account, and their recent deposits could be readily identified. Therefore, condition 4 of the Soulos test was met. [ 51 ] The constructive trust was imposed for the primary benefit of those investors.

Notably, this was over the opposition of the Receiver, who argued that the funds should be held by the Receiver for the benefit of the estate as a whole; including covering costs of the Receiver and counsel. The effect of the constructive trust finding was therefore to effectively remove those funds from the receivership, in favour of those investors whose money had just gone into the Base Financial bank account. This is quite different from Mr. Terrigno’s request: to have a constructive trust declared so that as sub-assignee of the Receiver’s rights he can obtain beneficial

ownership over a home that was purchased using funds provided by a different vintage of investors who may have long ago been paid out. [ 52 ] More importantly, I am not satisfied on the evidence before me that there are no intervening creditors who would be adversely affected by a declaration of constructive trust. In fact, it appears that the purpose of obtaining a declaration of constructive trust is to give Mr.

Terrigno priority over other judgment creditors in respect of the 69 th Ave property. [ 53 ] I find, therefore, that this criterion has also not been met. [ 54 ] The application for declaration of a constructive trust in favour of the Applicants is therefore denied. VI. Defences A. Limitations [ 55 ] In opposing the application, Quinn Breitkreutz argues that the relief sought in respect of the 2011 transaction is barred by limitations. The operative date for the tolling of the limitations period is the date of which the facts supporting the claim were known or reasonably discoverable. [ 56 ] As of 2011, Mr.

Breitkreutz was in the midst of operating an extensive Ponzi scheme, with hundreds of investors, no doubt having varying degrees of sophistication. It was not until 2015 that the scheme was discovered, and it was not until approximately three years later that the existence of the 69 th Ave property came to light, as part of the receivership process. That delay was in part due to Arnold and Susan Breitkreutz not disclosing the existence of the 69 th Ave property as required under the Receivership Order, but instead transferring it to their son.

There is no evidence before me that would show that either the Ponzi scheme or the existence of the 69 th Ave property ought to have been discovered earlier. [ 57 ] The Statement of Claim issued by Mr. Terrigno in October 2015 sought relief in the form of return of properties acquired by the Defendants (including Arnold and Susan Breitkreutz), through the Ponzi scheme.

It identified known properties, and made it clear that relief would be sought in respect of other properties as yet unidentified. [ 58 ] Therefore, I find that the claim against the 69 th Ave property is encompassed within the 2015 Statement of Claim, that was commenced almost immediately after the Ponzi scheme was discovered, and reasonably discoverable. The specific claim for relief against the 69 th Ave property was also advanced (by way of application) by Mr. Terrigno shortly after the Receiver was discharged. [ 59 ] Accordingly, the relief sought is not barred by the Limitations Act . B.

Delay [ 60 ] Aside from the Limitations Act , the Respondent Quinn Breitkreutz requests that the Application be dismissed for delay, under rule 4.31. That rule states: 4.31(1) If delay occurs in an action, on application the Court may

a) dismiss all or any part of a claim if the Court determines that the delay has resulted in significant prejudice to a party, or

b) make a procedural order or any other order provided for by these rules.

(2) Where, in determining an application under this rule, the Court finds that the delay in an action is inordinate and inexcusable, that delay is presumed to have resulted in significant prejudice to the party that brought the application.

(3) In determining whether to dismiss all or any part of a claim under this rule, or whether the delay is inordinate or inexcusable, the Court must consider whether the party that brought the application participated in or contributed to the delay. [ 61 ] Quinn Breitkreutz argues that if the Receiver wanted to pursue this application, it could and should have done so when the application was originally filed in July 2018. Instead, it was not pursued until the receivership came to a close and the Receiver’s rights were sold to Mr. Pisano, and then given to Mr. Terrigno, some 11 months later.

Quinn Breitkreutz argues that as a result of the delay, he has suffered prejudice. He has been unable to refinance the home, sell or take financial management of the property for over five years. He says that Mr. Terrigno’s threat to seize and sell the duplex has cast a cloud over his ownership. [ 62 ] I do not accept that the time taken for this application to be brought before the Court has significantly prejudiced Quinn Breitkreutz. He may have been servicing the mortgage debt on the property, as well as taxes and insurance during this period of uncertainty.

However, he and his family have continued to have use of the duplex. There is no reliable evidence before the Court concerning any payments made in respect of the Promissory Note; nor of any attempts made to refinance or otherwise deal with the property in the face of litigation. C. Champerty and Maintenance [ 63 ] Quinn Breitkreutz argues that the application should be denied on the basis that the sub-assignment of the Receiver’s rights and entitlement from Mr. Pisano to Mr. Terrigno was champertous. He says that the assignment was made with the intent of allowing

Mr. Terrigno to undertake abusive litigation in order to exact revenge upon Arnold Breitkreutz. [ 64 ] Quinn Breitkreutz argues that by virtue of the Receivership Order, Mr. Terrigno no longer had any personal financial interest in the 69 th Ave property. Consequently, to pursue a remedy against the property itself, Mr. Terrigno obtained a sub-assignment of the rights assigned to Mr. Pisano by the Receiver at discharge. He says that at this point Mr. Terrigno was a stranger to the action, making the sub-assignment champertous. [ 65 ] I do not agree that the sub-assignment was champertous.

The assignment of the Receiver’s rights to Mr. Pisano contemplates that he might in turn re-assign those rights to another person. Mr. Terrigno had previously tried to obtain an assignment from the Receiver directly, and has also continued to pursue remedies in his own right in Action No.’s 1501 11817 and 1601 102294, which had been subject to a stay during the receivership. This is a sufficient pre-existing commercial interest to satisfy the rule against champerty and maintenance. VII. Costs [ 66 ] Mr.

Terrigno seeks triple Column 5 costs, to reflect what would ordinarily be paid as reimbursement for solicitor-client costs. He considers that to be fair, and necessary to sanction the Defendants for their gross misconduct in opposing the application, as well as Arnold Breitkreutz’ fraud. He also seeks recovery, as a disbursement, of costs incurred to retain two legal counsel to advise on and co- author portions of Mr. Terrigno’s brief. He describes these as expert reports.

The Respondent, Quinn Breitkreutz, opposes the granting of any costs. [ 67 ] The availability and quantum of costs is in the discretion of the Court. The Court may consider factors such as: • the degree of success achieved, • the conduct of the parties, • complexity of the case, and • the amount at stake. A. Success [ 68 ] Mr. Terrigno has been partially successful in this application.

Declarations will be made that the conveyances of the 69 th Ave property in 2011 and 2015 were fraudulent, as per the Statutes of Elizabeth. [ 69 ] The property will therefore revert to the ownership of Arnold and Susan Breitkreutz, as joint tenants, and will be available to their judgment creditors, subject to prior encumbrances. [ 70 ] Mr. Terrigno was, however, unsuccessful in seeking a beneficial ownership in the 69 th Ave property (subject to the existing mortgage), in priority over other judgment creditors.

This aspect of the application was the central focus of argument. [ 71 ] Accordingly, there was mixed success. B. Conduct [ 72 ] The fraudulent conduct of Arnold Breitkreutz has been acknowledged and sanctioned on many previous occasions during the lengthy receivership; subsequent litigation by the Alberta Securities Commission and in a conviction for fraud, with a lengthy prison sentence and substantial restitution ordered. [ 73 ] Susan and Quinn Breitkreutz did not participate in that fraud, but were beneficiaries of it and turned a blind eye to Mr. Breitkreutz’ misdeeds.

In the context of this litigation, they have at times been slow to disclose relevant evidence and fulfill undertakings. [ 74 ] Mr. Terrigno is to be credited for being the first to discover the Base Financial Ponzi scheme and for moving quickly to commence an action, and secure appointment of a Receiver. However, his conduct within the receivership was described by the Court as having unnecessarily complicated the proceedings to the detriment of those involved.

Romaine J. commented that: [28] The Terrigno stakeholders have complicated and prolonged this receivership with numerous applications, appeals and attacks on the current and former receivers. The expected return to any creditor has been adversely affected by the very litigious history of this receivership, arising primarily from applications by Mr. Terrigno and Base Mortgage. […] ( Easy Loan Corporation v Base Mortgage and Investments Ltd , 2020 ABQB 109 ) [ 75 ] Mr.

Terrigno also displayed rude and abusive behaviour toward the Receiver and counsel, for failing to be sufficiently aggressive in pursuing actions against persons who had involvement in the affairs of Base Finance and the Breitkreutz family. In its Eighth Report to the Court, the Receiver advised: “As detailed in previous reports, Mr. Mike Terrigno’s behaviour and language continues to be abusive, insulting and threatening. Following the filing of the First Supplement to the Eighth Report, Mr.

Terrigno sent a number of emails to Receiver’s Counsel, including the following two emails on the evening of March 30, 2019:

At 5:51 p.m.: You fukung retard. I questioned john Manolescu on Dec 13 & 14.. the receiver used MY questioning to targe john Manolescu. It was MY questioning not Billington.. Get your facts straight. Also you are wrong about the other questioning dates.. . why don’t you and your team of losers just go away. You are all too incompetent to deal with this file... Leave it to me and my team, the people who actually know how to get this done. You are wasting everyone’s time...

And at 6:31 p.m.: Randal go fuk urself.. play ur games ... we’ll see who’s laughing in the end..” [ 76 ] A similar tone, with less colourful language, was used in emails dated March 4, 2019 regarding the Receiver’s inclusion of an indemnification clause in an assignment of the Receiver’s rights in respect of the 69 th Ave property, referenced in the Receiver’s Eighth Report: “I crossed out the indemnification because you have got to be out of your mind if you think for a $10k transaction (that is otherwise a blessing because the assignment is worth $0) that I would be susceptible to indemnifying the receiver.

Even having put that provision in the agreement is an insult to my intelligence given my courtesy paying for this assignment when I can get it for $0 under a ss.38... let me know if you accept my change what otherwise I will simply add the assignment my application relief.” [ 77 ] When the Receiver refused to proceed without the proposed indemnity, Mr. Terrigno proceeded to describe the 69 th Ave claim as worthless: “Randal, you are crazy – no one who is going to pay you a nickel for that claim.

I am going to add this as part of my dissipation lawsuit because your position is inane and you could have had $10k instead of $0 plus the expenses associated to dealing with my ss.38 application get it for $0.. good job!” C. Amount At Stake [ 78 ] The amount of equity potentially available is uncertain. In argument Mr. Terrigno asserted that the value of the 69 th Ave property is over $600,000. There is an existing mortgage of approximately $250,000, and a Promissory Note payable to Davis LLP with a full value of $250,000. As noted earlier, the actual value of that instrument is a matter of considerable doubt.

Nonetheless it remains to be determined. D. Complexity [ 79 ] The application before the Court was somewhat complex. A voluminous litigation record was produced, and an extensive brief was submitted by Mr. Terrigno, focussing on the constructive trust issue. E. Finding [ 80 ] In the circumstances, I am not prepared to award enhanced costs based on a multiple of Column 3. Only a modest award is warranted. Mr. Terrigno will have costs in the amount of $5000 payable on a joint and several bases by Arnold, Susan and Quinn Breitkreutz, inclusive of disbursements. VIII. Conclusion [ 81 ] In

summary, the application for a declaration that the transfer of the 69 th Ave property to Quinn Breitkreutz was a fraudulent conveyance is granted. [ 82 ] So too is the application for a declaration that the transfer of the interest of Arnold Breitkreutz to Susan Breitkreutz in June 2011 was a fraudulent conveyance.

Title to the 69 th Ave property shall therefore be issued by the Registrar of Land Titles in the name of Arnold Breitkreutz and Susan Breitkreutz as joint tenants, subject to existing encumbrances. [ 83 ] The application for a declaration of constructive trust over the 69 th Ave property in favour of Mr. Terrigno (or in the alternative, Mr. Pisano) is denied. [ 84 ] Having already obtained judgment and against Arnold Breitkreutz (and following receipt of judgment and adjudication of damages against Susan Breitkreutz), Mr. Terrigno may proceed with enforcement of such judgment(

s) as a judgment creditor, including pursuing remedies as against the 69 th Ave Property, in the ordinary course. [ 85 ] The application for seizure and sale in this proceeding is denied as premature. Heard on the 13 th day of May and the 2 nd and 3 rd days of June, 2022 Dated at the City of Calgary, Alberta this 1 st day of December, 2022

R.A. Neufeld J.C.K.B.A. Appearances: Cale Ellis-Toddington for Quinn Breitkreutz Christopher Souster for Luigi Pisano Mike Terrigno Self-Represented Litigant Arnold Breitkruetz and Susan Breitkruetz Self-Represented Litigants