July 2, 2022

Building hoarding exterior Union Station bearing the title of Bondfield Building Firm on Jan. 14, 2020.Fred Lum/The Globe and Mail

Collectors to the Bondfield Building group have received a serious victory on the Ontario Court docket of Attraction, which upheld a ruling that Bondfield’s former president and his associates should pay again greater than $33-million they siphoned from the businesses via a false bill scheme.

John Aquino, former president of Bondfield Building Co. Ltd., and the opposite defendants within the case sought to overturn a 2021 resolution that discovered them liable, beneath a provision of the Chapter and Insolvency Act, to pay again tens of tens of millions of {dollars} they secretly extracted from Bondfield. On Thursday, the Ontario Court docket of Attraction launched a choice upholding the ruling, declaring that the funds have to be returned to the court-appointed officers overseeing Bondfield’s belongings.

Bondfield was one in all Ontario’s largest builders of public infrastructure, together with hospitals, colleges and transit stations, till its collapse in 2019. The chapter, which the Surety Affiliation of Canada has known as essentially the most damaging development insolvency in Canada’s historical past, has had ripple results throughout the economic system. Quite a few subcontractors haven’t been paid for work already carried out, and essential public initiatives, such because the redevelopments of Toronto’s St. Michael’s Hospital and Cambridge Memorial Hospital in southwestern Ontario, stay incomplete.

When Bondfield entered chapter safety in 2019, the monitor, Ernst & Younger Inc. (E&Y), launched an investigation and found what it has alleged was a fraud. Greater than a dozen firms that appeared to don’t have any actual operations and even bodily workplace area have been paid tens of tens of millions of {dollars} by Bondfield over about seven years for work that was by no means carried out. Forensic investigators alleged that a few of these funds flowed again to Mr. Aquino, who E&Y has alleged was the directing thoughts of the scheme. Auditors decided that the businesses have been linked to Mr. Aquino’s associates.

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In 2021, Ontario Superior Court docket Justice Bernadette Dietrich discovered that about $22-million value of these funds from Bondfield have been “transfers at undervalue” – funds that happen inside 5 years of an insolvency that have been made, not for an actual industrial function, however slightly to place belongings out of collectors’ attain. Equally, Justice Dietrich discovered one other $11-million in funds made by a Bondfield affiliate, Forma-Con Building, have been additionally transfers at undervalue.

Mr. Aquino and his associates appealed the choice. Mr. Aquino didn’t dispute the truth that the invoices have been false and that Bondfield and Forma-Con obtained nothing in return for the funds. Nonetheless, he contended that Justice Dietrich erred in her interpretation of chapter legislation. He argued that she had incorrectly declared him and his associates to be personally liable for the funds, when the debtor was truly Bondfield and Forma-Con.

The panel of judges rejected that argument.

Writing on behalf of the panel, Justice Peter Lauwers mentioned the core purpose of the part of the Chapter and Insolvency Act that offers with transfers at undervalue is to permit collectors a chance to recuperate belongings which were improperly faraway from an bancrupt firm.

The way in which to realize that on this case, he wrote, is to ascribe “the fraudulent intentions of John Aquino to Bondfield and Forma-Con,” which is in step with the aim of “offering correct redress to collectors.”

The judges additionally dismissed the argument that the legislation didn’t apply to Mr. Aquino and his associates as a result of, as they contended, Bondfield and Forma-Con weren’t in a financially precarious place when most of the suspicious funds have been made. Justice Lauwers wrote that, in reality, there was proof that the Bondfield group was “experiencing mounting monetary difficulties” all through the five-year interval coated by the legislation. And regardless that the 2 firms have been paying a few of their payments throughout the time the scheme was being executed, that didn’t imply there was no intent to evade obligations to collectors, Justice Lauwers mentioned.

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One of many defendants, Giuseppe Anastasio, was linked to 2 firms that obtained greater than $4-million via the scheme. He didn’t deny that these firms carried out no work and that Bondfield obtained no worth for the funds.

Nonetheless, he contended that Bondfield owed him a US$3.75-million charge as a result of, because it was teetering on chapter, he launched the corporate to Deutsche Financial institution, which thought-about offering a mortgage of $150-million. That unpaid charge, Mr. Anastasio argued, ought to be offset in opposition to the $4-million his firms obtained.

The panel upheld Justice Dietrich’s discovering that this alleged debt shouldn’t be utilized in opposition to the cash the businesses took: “Anastasio has not pointed to any palpable and overriding error, nor error of legislation, with respect to those findings.”

Attorneys for Mr. Aquino and Mr. Anastasio and one of many different defendants mentioned they’ve been instructed to hunt depart to enchantment to the Supreme Court docket of Canada.

“The Court docket of Attraction’s resolution raises a number of novel and essential points that may considerably profit from overview by the Supreme Court docket so that every one Canadians might have the court docket’s steerage,” Michael Citak, Mr. Aquino’s lawyer, mentioned in an e-mailed assertion.

The monitor overseeing Bondfield and the chapter trustee overseeing Forma-Con have launched separate lawsuits in opposition to Mr. Aquino, each in search of to recuperate funds that have been made exterior the five-year limitation interval outlined within the Chapter and Insolvency Act.

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