



COURT OF APPEAL FOR ONTARIO

CITATION: Popa v. Popa, 2018 ONCA 972

DATE: 20181130

DOCKET: M49814 (C66028)

Lauwers J.A. (Motions Judge)

BETWEEN

Lucia Tiberia Popa,
    Vincent Petrescu, Sherban Apostolina, Ramona Cean and Raul Turcu

Respondents in Appeal (Applicants)

and

Daniel Popa, NECC Telecom Inc. (Canada), NECC
    Telecom Inc., Pulse Telecom Inc., (Canada), Pulse Telecom, LLC, Pulse Telecom
    PTY, LTD (Australia), SRVR, LLC, Quickcall.com, LLC d/b/a Bluetone, LLC, and
    Bluetone Connect, PTY LTD (Australia)

Appellants in Appeal (Respondents)

Ryder Gilliland and Corey Groper, for the moving parties

Sahar Cadili, for the responding parties

Heard: November 29, 2018

On appeal from the judgment
    of Justice V. Chiappetta of the Superior Court of Justice, dated October 12,
    2018.

REASONS FOR DECISION

[1]

The moving party seeks an order under rule 63.01 of the Rules of Civil
    Procedure, lifting the automatic stay resulting from the appeal launched by the
    responding parties from the judgment of Chiappetta J. of the Superior Court of
    Justice on October 12, 2018.

[2]

The context of this case is well-explained in the decision of Chiappetta
    J. In the motion before her, the moving parties, led by Lucia Popa, sought an
    order recognizing and enforcing the order and judgment of the Jefferson Circuit
    Court of the Kentucky Court of Justice against the responding parties, led by
    Daniel Popa, issued on May 3, 2018.

[3]

The application judge found that in accordance with the ordinary
    principles of Ontario law, which she accurately recited, the Kentucky judgment
    should be recognized and enforced.

[4]

In the course of her reasons, the application judge set out at length
    the basis for the decision of the Kentucky court, and added several of her own
    observations. I have reviewed the record and the Kentucky judgment and find
    that the application judge accurately recited the facts, as conceded by the
    responding parties, who have taken no issue with them.

[5]

The application judge stated:

The reasons further demonstrate the impact of Mr. Popas
    testimony on the judges decision to render judgment on the action on a second
    hearing date of a motion. The court found:

1. Mr. Popas
    ongoing failure to pay taxes or to attempt to negotiate his resolution of
    outstanding liabilities bars his equitable claim for unjust enrichment,
    rescission and promissory estoppel.

2.
The
Uniform Voidable Transactions
    Act,
KRS 378A.005 et seq authorizes the
    order made as Mr. Popa, as a potential judgment debtor, has been transferring
    assets in an apparent effort to frustrate the judiciarys ability to grant
    relief to prospective judgment creditors.

3. The dismissal of
    Mr. Popas claim is consistent with the courts inherent power to determine
    that its judgments reflect the truth.

4.

Mr Popas testimony corroborated the applicants allegations
    and demonstrated that his second amended complaint was designed to perpetuate a
    fraud on the applicants and the court such that the court must sanction such
    conduct.

5. The appropriate remedy is to reinstate
    Mr. Popas obligations under the Settlement Agreement.

The respondents concede the facts on
    which the findings were made. The facts largely arise as a result of the testimony
    of Mr. Popa. His admissions to breaching the settlement agreement and depleting
    the value of the companies was sufficient for the reasons given on May 3, 2018,
    for the judge to dismiss his action.
The respondents complaint seems to
    be more with the merits of the judgment. I see no violation of the principles
    of natural justice. Mr. Popa was heard and the judge felt, based on that he
    heard, that he had cause and jurisdiction to render judgment. The order and
    judgment is not a summary judgment and was not borne of a process for summary
    judgment as is submitted by the respondents. The judge explained in his reasons
    of May 3, 2018 why the testimony of Mr. Popa resulted in an adjudication of the
    action. The court concluded Mr. Popa had used his amended second complaint as a
    means to perpetuate the respondents fraudulent scheme, drain the companies of
    whatever assets remained and frustrate the applicants ability to enforce a
    settlement agreement.

Finally, I do not accept the respondents submission that the
    judge was not impartial.
The testimony of Mr. Popa on
    January 29, 2018 was such that he admitted to fraudulent conduct.
The
    judge received that evidence and made decisions with respect to the action as a
    result of that testimony, not as a result of any other reason, despite
    statements attributed to him well before Mr. Popas testimony on January 29,
    2018.

For these reasons, the applicants motion is granted. An order
    shall issue it in accordance with that as set out at para. 83(a)-(f) of the
    applicants factum, dated October 8, 2018.

By way of cross-motion, the
    respondents seek an order staying the enforcement and recognition of the order
    and judgment pending the outcome of their current appeal in the Kentucky order.
    The respondents motion is denied. In my view, if it were granted, the
    applicants would suffer irreparable harm, as
the
    respondents have continued to engage in conduct, the result of which is
    dissipating funds and impeding the applicants from collecting the amounts
    awarded. On August 21, 2018, the respondents transferred US$230,000 from bank
    accounts in Ontario to bank accounts in Michigan.
At his
    cross-examination on August 30, 2018, Mr. Popa admitted to directing the
    companies to open bank accounts with many and all possible banks, the more the
    better. On August 23, 2018, this court issued a Mareva injunction with respect
    to the funds contained in the accounts belonging to NECC Telecom Inc., Pulse
    Telecom Inc. and Quickcall.com. The injunction was lifted on September 4, 2018,
    in exchange for the respondents agreement to transfer a percentage of the
    funds held in deposits in the accounts to an escrow account. The funds from the
    NECC accounts have been frozen by the Canada Revenue Agency as of September 5,
    2018, considering the $218,013.95 in outstanding taxes.
As
    recent as September 25, 2018, the Kentucky court held that the respondents
    continue to engage in conduct to avoid placing funds in accounts subject to
    potential garnishment. Mr. Popa admitted to such conduct in his
    cross-examination
(742, 748, 1185-1189, 1292, 1077, 1588). (Emphasis
    added.)

[6]

There have been some developments since the judgment of Chiappetta J.
    was issued. The chief financial officer of NECC Telecom, John F. Hatfield III,
    was deposed on November 20, 2018. Mr. Hatfield admitted that he did not know
    what Mr. Popa was doing. He claimed he was unaware of the number of bank
    accounts that Mr. Popa had established for diverting funds. The companies were
    obliged to use authorized accounts but were not doing so; Mr. Hatfield admitted
    that he did not know why.

[7]

The legal test for lifting a stay include the following factors: the
    financial hardship to the respondent if the stay is not lifted; the ability of
    the respondent to repay any amounts it receives as a result of the lift of the
    stay or its ability to provide security for the amount; and the merits of the
    appeal:
S.A. Horeca Financial Services v. Light
, 2014, ONCA 811, 123
    O.R. (3d) 542, at para. 13.

[8]

I am satisfied based on the evidence that the responding parties are
    utterly untrustworthy. If the stay is not lifted there is a serious risk that
    the funds in question will be siphoned off and the interests of the moving
    parties will be defeated. As to the ability of the moving parties to repay any
    amounts they receive, the moving parties proposed that third parties affected
    by the order be obliged to hold funds covered by the order until further order
    of this court.

[9]

I now turn to the merits of the appeal. The appellants put forward four
    grounds on which they assert that the application judge erred: (1) In finding
    that there was sufficient evidence before the Kentucky court to grant summary
    judgment when the motion before the Kentucky court was for an interlocutory
    order and no record of the evidence was available; (2) in finding that there
    was an opportunity for the appellants to file fresh evidence in light of the
    Kentucky courts warning that no affidavit materials be filed unless it offered
    proof of payment of taxes; (3) in failing to find that they had no opportunity
    to be heard by the Kentucky court; and, (4) in finding that the appellants were
    not denied natural justice in the Kentucky proceedings.

[10]

The
    application judges reasons expressly and fully address each of these proposed
    grounds of appeal. On a relative scale, the appeal is plausible but weak in
    light of the evidence.

[11]

In
    my view, the factors in the applicable test favour the moving parties, and I
    lift the stay. I now consider the terms.

[12]

During
    submissions, I expressed a concern about the ability of the affected companies
    to function, since it is clear that they are operating businesses.

[13]

The
    moving parties put forward four different variations of an order lifting the
    stay. They pressed for the first, which was effectively the re-imposition of a
    full Mareva injunction. It would end the ability of the companies to carry on
    business.

[14]

The
    responding parties said they would prefer the reinstatement of the order made
    by Hainey J., which provided:

4. This court orders that the respondent shall pay eleven
    percent (11%) of the aggregate amounts held by them in the Bank of Montreal,
    which accounts are listed at Schedule A hereto (the BMO accounts), into the
    escrow account.

5. This court orders that until further order of the court, the
    respondents shall each day deposit eleven percent (11%) of the aggregate
    amounts deposited into BMO accounts the day prior into the escrow account.

6. This court orders that the accumulating amounts of the
    escrow account shall remain in the escrow account until further order of the
    court.

7. This court orders that all monies received from the respondents
    businesses operating in Canada shall be deposited into the BMO accounts.

[15]

The
    moving parties take the position that the order of Hainey J. produced little
    return during its short currency, in part because the Canada Revenue Agency
    pounced. They add that the figures chosen by Hainey J. were his own and were
    not rooted in any evidence. They point out that the responding parties have
    provided no evidence related to their operating needs or margins to assist me
    in crafting terms for lifting the stay. I agree.

[16]

In
    the circumstances, an order in the form of Schedule A to these reasons
    including the initialed figures will be issued.

P Lauwers J.A.


