court of appeal for ontario - academicfreedom.ca
court of appeal for ontario - academicfreedom.ca
court of appeal for ontario - academicfreedom.ca
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defendants Snelcrest Gardens Inc., Mellow Gardens Development Inc., 797820<br />
Ontario Limited)…”<br />
(b) Frank Katana is an owner in Valleywood through his company the defendant<br />
M.A.K. Shoes Inc.. The plaintiff states that the said defendant may also own and<br />
control Valleywood through his co-defendant Ljubi<strong>ca</strong> Katana or through trust<br />
arrangements involving other members <strong>of</strong> his family. The plaintiffs state that if<br />
ownership in the Valleywood companies (through M.A.K. Shoes Inc.) is held in<br />
the name <strong>of</strong> the Katana Family Trust, (the “Trust”), the plaintiffs state that they<br />
are entitled to reach the assets <strong>of</strong> the said Trust on the basis <strong>of</strong> principles <strong>of</strong><br />
subrogation and also on the basis that the Trust is illegal and/or it is a sham, and<br />
that Frank Katana is the beneficial owner <strong>of</strong> any and all assets owned by this<br />
“Trust”.<br />
[13] In its Amended Statement <strong>of</strong> Claim in the Second Action, Hilltop also alleged Katana had<br />
acted as Valleywood’s agent, and there<strong>for</strong>e they should be held jointly and severally liable <strong>for</strong><br />
the damages Katana had been ordered to pay Hilltop in the First Action. In addition, it sought a<br />
declaration that Katana was the beneficial owner <strong>of</strong> the assets held in the Katana Family Trust.<br />
[14] The Second Action took approximately 5 years to come to trial and approximately 40<br />
days to try in the spring and fall <strong>of</strong> 2001. The evidence was completed on June 22, 2001. When<br />
the trial re-commenced on September 4, 2001, Hilltop sought injunctive relief against<br />
Valleywood on the basis that the evidence at trial had established that Hilltop had a strong prima<br />
facie <strong>ca</strong>se, representatives <strong>of</strong> Valleywood had given false and misleading evidence on<br />
interlocutory motions and there was good reason to conclude that if the order was not made, the<br />
assets <strong>of</strong> Valleywood would be dissipated pending final disposition <strong>of</strong> the action.<br />
[15] After hearing the motion <strong>for</strong> three days in September 2001, Greer J. granted Hilltop<br />
injunctive relief.<br />
[16] Subject to payment out <strong>of</strong> operating funds, she ordered monies owing to Valleywood to<br />
be held in trust pending final disposition <strong>of</strong> the Second Action.<br />
[17] In her Reasons respecting the motion <strong>for</strong> injunctive relief, Greer J. noted the following:<br />
(a) in the First Action, Hilltop had obtained judgment against Katana (the President <strong>of</strong><br />
Valleywood) in the amount <strong>of</strong> $2 million (which, with interest and costs,<br />
approximated $4 million);<br />
(b) after Hilltop obtained that judgment, Katana took steps to make himself judgmentpro<strong>of</strong><br />
through fraudulent conveyances, which gave rise to the Second Action<br />
(commenced in June 1996);<br />
(c) weakness, contradictions and inconsistencies in Katana’s evidence at trial;<br />
(d) evidence at trial showing Katana’s failure to disclose.<br />
[18] Valleywood’s and the Katana Family Trust’s appli<strong>ca</strong>tion <strong>for</strong> Leave to Appeal to the<br />
Divisional Court was dismissed on November 5, 2001.<br />
3<br />
2003 CanLII 45839 (ON SC)