



COURT 
    OF APPEAL FOR BRITISH COLUMBIA




Citation:


Lombardo 
          v. Lombardo,







2008 
          BCCA 21



Date: 20080118

Dockets: CA034889, CA034888, CA035365

CA034890, CA035364

Docket: CA034889

Between:

Lombardos 
    Ristorante & Pizzeria Ltd.

Respondent

(
Plaintiff
)

And

Marcello 
    Lombardo

Express 
    Realty Ltd.

581787 
    B.C. Ltd.

Appellants

(
Defendants)

-and-

Docket: CA034890

Between:

Marcello 
    Lombardo

Appellant

(
Plaintiff
)

And

Patricia 
    Anne Lombardo

Respondent

(
Defendant)

-and-

Docket: CA035365

Between:

Lombardos 
    Ristorante & Pizzeria Ltd.

Respondent

(
Plaintiff
)

And

Marcello 
    Lombardo

Express 
    Realty Ltd.

581787 
    B.C. Ltd.

Appellants

(
Defendants)

-and-

Docket: CA034888

Between:

Patricia 
    Anne Lombardo

Respondent

(
Plaintiff
)

And

Marcello 
    Lombardo

Appellant

(
Defendant)

-and-

Docket: CA035364

Between:

Patricia 
    Anne Lombardo

Respondent

(
Plaintiff
)

And

Marcello 
    Lombardo

Respondent

(
Plaintiff)




Before:


The 
          Honourable Madam Justice Prowse




(In 
          Chambers)








J. 
          Grieve

V. 
          Stewart


Counsel for M. Lombardo, Express Realty Ltd. and 581787 
          B.C. Ltd.




F.G. 
          Potts

T. 
          Goepel


Counsel for P.A. Lombardo and

Lombardos Ristorante & Pizzeria Ltd.




Place 
          and Date of Hearing:


Vancouver, British Columbia




January 11, 2008




Place 
          and Date of Judgment:


Vancouver, British Columbia




January 18, 2008



Reasons 
    for Judgment of the Honourable Madam Justice Prowse:

Nature of Applications

[1]

Ms. Lombardo is applying for an order requiring Mr. Lombardo to post 
    security for costs of the appeal, security for costs of the trial and security 
    for the judgment at trial, including costs of a subsequent reconsideration 
    hearing.  The total amount of security sought at the outset of the hearing 
    was in the range of two million dollars.  (It is difficult to be more precise 
    as to the amount since the orders have not been settled and costs have not 
    been assessed.)

Background

[2]

These applications have their genesis in three actions in the Supreme 
    Court which were ordered to be heard at the same time.  All three actions 
    arose from the breakdown of the marriage between Mr. and Ms. Lombardo.  The 
    family action included issues of child support (Ms. Lombardo had custody 
    of the three children of the marriage), imputation of income to Mr. Lombardo 
    and financial non-disclosure; the corporate action involved financial issues 
    between companies controlled by Mr. and Ms. Lombardo, respectively; and the 
    defamation action involved allegations by Mr. Lombardo that Ms. Lombardo 
    had defamed him by placing posters in the area of their restaurant businesses 
    stating that he was a deadbeat dad.

Decisions of the Trial Judge

[3]

After a 55 day trial that extended over 18 months, the trial judge 
    issued lengthy  reasons for judgment (192 pages, excluding attachments) on 
    February 28, 2007.  These reasons may be found at 2007 BCSC 284.  In those 
    reasons, the trial judge granted leave to Mr. Lombardo to make further submissions 
    with respect to his income and the quantum of child support for 2006 and 2007.  
    At the ensuing hearing, Mr. Lombardo sought a reconsideration of many of the 
    issues at trial, with particular emphasis on the determination of his income 
    for the purposes of child support.  The trial judge dismissed Mr. Lombardos 
    application for reconsideration and, effectively, reaffirmed his earlier decision.  
    His reasons for judgment on the reconsideration hearing were issued on July 
    31, 2007, and may be found at 2007 BCSC 1167.

[4]

The trial judges conclusions in the three actions, including the reconsideration 
    hearing, may be summarized as follows:

(1)        
    Mr. Lombardos defamation action was dismissed on the basis that he had not 
    established that Ms. Lombardo had put up the posters and that, in any event, 
    the defence that the statement was true, or substantially true, applied as 
    Mr. Lombardo could fairly be described as a deadbeat dad.

(2)        
    In the family action, Mr. Lombardo was ordered to pay child support arrears 
    of $702,804, plus interest, to the end of 2005 and $178,404 from January 1, 
    2006 to February 2007.  He was also ordered to pay $14,368 per month from 
    March 1, 2007 until further order, based on an imputed income to Mr. Lombardo 
    of $900,087.51.  As a result of the reconsideration hearing, the total amount 
    of the arrears and interest as of February 28, 2007 was $980,570.18.

(3)        
    In the corporate action, Mr. Lombardo was ordered to pay $290,000 to Ms. Lombardos 
    company.  Mr. Lombardo and one of his companies were held jointly and severally 
    liable to Ms. Lombardos company to the extent of $200,000 of that amount, 
    plus interest.  The total amount owing by Mr. Lombardo, inclusive of interest, 
    was approximately $370,539.55.

(4)        
    Mr. Lombardo was ordered to pay special costs of the entire proceedings.

(5)        
    The trial judge seized himself of any consequential applications, including 
    Ms. Lombardos applications for security for child support.

[5]

The total pecuniary award against Mr. Lombardo and his companies, exclusive 
    of special costs, was approximately $1,171.208.  Counsel for Ms. Lombardo 
    has estimated special costs at approximately $805,000.  As earlier noted, 
    those costs have not yet been assessed.

[6]

In March 2007, the trial judge heard Ms. Lombardos applications for 
    security for retroactive child support.  By order dated March 16, 2007, he 
    provided that two properties in which Mr. Lombardo had an interest on Commercial 
    Drive in Vancouver stand as security for the full amount of retroactive child 
    support and for prospective child support and that Ms. Lombardo be at liberty 
    to file the order against title to those properties.  He also made an order 
    precluding Mr. Lombardo from dealing with shares or securities in four named 
    companies in which he held an interest absent written agreement of the parties 
    or order of the court.  Ms. Lombardo subsequently registered the order against 
    the Commercial Drive properties.

[7]

Mr. Lombardos counsel advised during the hearing of the applications 
    for security that the combined equity in the two Commercial Drive properties 
    is not less than $1.2 million dollars.

The Appeals

[8]

Mr. Lombardo issued five notices of appeal with respect to the decisions 
    of the trial judge; one for each of the family, corporate and defamation actions, 
    and one each for the dismissal of his applications in the reconsideration 
    hearing relating to the family and corporate actions.  There is no appeal 
    from the order of March 16, 2007 providing that the two Commercial Drive properties 
    stand as security.  The orders in these actions have not been settled, but 
    I was advised that none of the disagreements between counsel in that regard 
    have any bearing on these applications for security for costs.

[9]

During the course of the hearing before me, I took the liberty of advising 
    counsel that, in my view, there should be only three orders entered in these 
    matters (one for each of the family, corporate and defamation actions) and 
    that the results of the decision on the reconsideration hearing should be 
    incorporated in those orders.  Thus, I treated the applications for security 
    for appeal costs as relating to three appeals, rather than five, with a consequent 
    reduction in the amount sought as security for costs of the appeals.  Counsel 
    indicated that they were in agreement with this view and that they would take 
    steps to settle the orders and regularize the notices of appeal accordingly.

[10]

At the time of this hearing, the Appeal Record and Transcripts had 
    been filed, the Appeal Books were in the process of being prepared for filing, 
    and the only step which remained was the preparation and filing of the factums.  
    Assuming that Mr. Lombardo would comply with any order for security fixed 
    by this Court, three dates were reserved for the hearing of this appeal, June 
    16, 17 and 18, 2008.  Counsel for Mr. Lombardo also agreed that Mr. Lombardo 
    would be in a position to file his factum by mid-March.

[11]

The grounds of appeal which Mr. Lombardo proposes to pursue on appeal 
    are set out in the affidavit of one of Mr. Lombardos counsel as follows:

(a)        
    The learned trial judge erred in failing to reasonably impute income to  
    Mr. Lombardo on both the evidence that was before him at trial and the evidence 
    tendered during Mr. Lombardos subsequent application including the report 
    of Mr. Michael Bowie of KPMG;

(b)        
    The learned trial judge was unduly influenced by his views of the behaviour 
    of Mr. Lombardo which affected the way in which the learned trial judge imputed 
    income and his refusal to consider evidence and documents tendered during 
    Mr. Lombardos subsequent application which demonstrated that the initial 
    judgment was flawed;

(c)        
    The learned trial judge erred in imputing income to Mr. Lombardo at the level 
    he did as a result of his [a] misapprehension of the Squirrel records system;

(d)        
    The learned trial judge erred in punishing Mr. Lombardo by way of special 
    costs and by unreasonably imputing income, and by refusing to reconsider the 
    evidence and/or admit evidence to demonstrate that the trial reasoning was 
    flawed;

(e)        
    There are obvious errors relating to amortization and double counting of the 
    loan payments in the judgment that were brought to the attention of the learned 
    trial judge that he refused to consider;

(f)         
    The lengthy delay in the first reasons, together with the learned trial judges 
    refusal to hear and appropriately consider current evidence as to the circumstances 
    of the children, has taken away from Mr. Lombardo any ability to adjust child 
    support in accordance with his current income and to seek a variation based 
    on a material change such as a change in income or one or more children ceasing 
    to be a child of the marriage.

(g)        
    The learned trial judge erred in law in failing to properly apply the law 
    relating to child support for adult children and the law relating to incomes 
    over $150,000 and erred in fact in failing [to] apply the law to the facts 
    and circumstances before him including failing to take into account the monies 
    earned by the adult child and her actual expenses.

(h)        
    The learned trial judge erred in failing to vary, reconsider or in the alternative 
    reopen the trial to adjust child support, Mr. Lombardos income including 
    current income and to determine the amount due to the Plaintiff in action 
    S032754, including to admit new evidence.

(i)         
    The learned trial judge erred in law in failing to consider the changed circumstances 
    of the parties and their children with respect to ongoing child support following 
    the trial.

Applications for Security

1)
Security for 
    Costs of the Appeals

[12]

The principles governing applications for security for costs of an 
    appeal are set forth by Mr. Justice Lowry in
Creative Salmon Company 
    Ltd. v. Staniford
, 2007 BCCA 285, at para. 9, as follows:

The jurisdiction to order security for costs of an appeal 
    is found in s. 24 of the
Court of Appeal Act
, R.S.B.C. 1996, c. 77.  
    The appellant against which such an order is sought bears the onus of showing 
    why security should not be required:
Kedia v. Shandro Dixon Edgson
, 
    2007 BCCA 57 at para. 4 (C.A. Chambers), Smith J.A.  Generally, the considerations 
    are the appellants ability to post security and the likelihood of costs awarded 
    being recovered from it, as well as the merits and the timeliness of the application:  
    [citations omitted].

[13]

Mr. Lombardo does not oppose an order that he post security for costs 
    of the appeals.  He suggests an amount of $31,000, while counsel for Ms. Lombardo 
    suggests $45,000.  After adjusting Ms. Lombardos proposed figures to reflect 
    my view that there will be only three appeals and a 2-3 day hearing, and adjusting 
    further for overlap in some of the amounts claimed, I would order that Mr. 
    Lombardo post $40,000 as security for costs of the appeals.  (I suggest that 
    there be only one factum to deal with all three appeals, with each party having 
    liberty to apply to file a factum in excess of 30 pages.  At this point, I 
    see no need for each factum to exceed 45 pages.)

2)
Security for 
    the Judgment and for Trial Costs

[14]

The principles governing applications for security for a judgment and 
    for costs awarded at trial are set out in
Creative Salmon
,
supra
, 
    at paras. 10-12, as follows:

The jurisdiction to order security for a judgment and 
    for the costs awarded by the trial court, as recognized in
Cadinha v. Chemar 
    Corporation Inc.
(1995), 17 B.C.L.R. [(3d)] 347 (C.A. Chambers), Lambert 
    J.A., and
Paz v. Hardouin (c.o.b. Fiesta Travel and Fiesta Wayfarer)
(1995), 10 B.C.L.R. (3d) 232 (C.A. Chambers), Lambert J.A., respectively, 
    can be found under s. 10 of the
Act
:

10(2) In 
    an appeal or other matter before the court, a justice may do one or more of 
    the following:

***

(b) make 
    an interim order to prevent prejudice to any person; ...

From the several authorities of this Court cited, which 
    include [citations omitted], the principles that govern the exercise of discretion 
    in ordering that security be posted under s. 10(2)(b) can be said to be as 
    recently stated in
Kedia v. Shandro Dixon Edgson, supra,
at para. 
    14, quoting from
Aikenhead v. Jenkins
, 2002 BCCA 234, 166 B.C.A.C. 
    293 at para. 30 (Chambers) Ryan J.A.:

1.  The onus is on the applicant to show that it is in 
    the interest of justice to order posting for security of a trial judgment 
    and/or of trial costs.

2.  The applicant must show prejudice if the order is 
    not made.

3.  In determining the interests of justice the chambers 
    judge should consider the merits of the appeal and the effect of such an order 
    on the ability of the appellant to continue the appeal.

An appellant which is without the financial ability to 
    post security will not for that reason alone be precluded from pursuing a 
    meritorious appeal.  But adverse financial circumstances will generally not 
    defeat an application for security where an appeal is virtually without any 
    merit.  A successful plaintiff should not be required to respond to an unmeritorious 
    appeal when there is  no real prospect of recovery:
Richland Construction 
    Inc. v. Manningwa Developments Inc.
(1996), 71 B.C.A.C. 311 at paras. 
    12-13 (C.A. Chambers), Finch J.A. (as he then was).

[15]

The amount sought as security for the judgment is approximately $1,426,747.73.  
    In addition, counsel for Ms. Lombardo submits that the estimate of special 
    costs of the trial is $805,000.

[16]

In determining whether it is in the interests of justice to order posting 
    security for the trial judgment and/or trial costs, and whether Ms. Lombardo 
    would be prejudiced if an order is not made, some of the factors I have considered 
    are as follows:

(1)        
    Mr. Lombardo has not applied for a stay of the trial judgment and Ms. Lombardo 
    has taken no steps in execution of her judgment.  It is open to her to take 
    execution proceedings should she choose to do so.

(2)        
    Ms. Lombardo already has an order for partial security for the judgment registered 
    against the Commercial Drive properties in which Mr. Lombardo has an interest 
    by virtue of the trial judges order of March 16, 2007.

(3)        
    There is $100,000 held in the Supreme Court as security for costs of the trial 
    and counsel for Mr. Lombardo has stated that Mr. Lombardo has consented to 
    an unconditional payment out of that amount to Ms. Lombardo.

(4)        
    Mr. Lombardo has agreed to take a mortgage on one of his Commercial Drive 
    properties in the amount of $300,000 and to use the proceeds in partial payment 
    of the trial judgment, subject to Ms. Lombardo agreeing to lift her security 
    on that property to the extent necessary to permit him to do so.   Counsel 
    are satisfied they can make arrangements for that to occur within the next 
    couple of weeks.

(5)        
    Ms. Lombardo has already realized approximately $90,000 on the trial judgment 
    from monies garnished into court during trial.

(6)        
    Mr. Lombardo is current in making child support payments since the trial in 
    the amount of $14,368 per month, and has paid $158,048 in that regard.

(7)        
    Ms. Lombardo has not sought to have her special costs at trial assessed.  
    Her counsel advises she has chosen not to do so to avoid having to waive confidentiality 
    over her file pending the determination of these appeals.

(8)        
    Mr. Lombardo continues to operate a restaurant out of one of the Commercial 
    Drive properties where he is earning a good living.  During the reconsideration 
    hearing, he admitted to income in 2006 of approximately $470,000 (as compared 
    with the income of almost $900,000 imputed to him by the trial judge).

(9)        
    There is no evidence that Mr. Lombardo owns other properties.

(10)      
    The appeals can be heard in mid-June.

[17]

Another relevant factor on an application for security for the trial 
    judgment and for costs of the trial is the merits of the appeals.  Mr. Lombardo 
    faces significant hurdles in that regard.  He has substantial findings of 
    fact against him in all three appeals and, more importantly, he is the subject 
    of the most negative comments concerning credibility that I have ever seen 
    in a judgment.  An example of those comments can be found at paras. 29-30 
    of the trial judges reasons on the reconsideration hearing:

... 
    It must be clearly borne in mind that Mr. Lombardo was no mild or occasional 
    prevaricator.  He was not someone who occasionally lied out of fear or desperation.  
    His entire approach to the case was an assault upon the trial process itself.  
    Its fundamental premises, that witnesses who are sworn to tell the truth will 
    do so; that documents put before the court are what they purport to be; and 
    that orders intended to preserve evidence will be obeyed, among others, were 
    assiduously undermined by Mr. Lombardo.  He is in a position where he has 
    so often and so brazenly lied that
nothing
he says can be taken at 
    face value by this court.

Mr. Lombardo now seeks to reopen the case he attempted 
    to frustrate because he is unhappy with the outcome.  His new solicitors have 
    repeatedly insinuated that part of what has happened is that somehow the court 
    has taken such a dim view of Mr. Lombardos conduct that it has in various 
    ways lost sight of its responsibilities, and is punishing Mr. Lombardo.  
    Although this was a sustained theme of the submissions, I will deal with it 
    once, and once only.  It is a serious misreading of my reasons to equate attempts 
    to
describe
manifestly outrageous conduct as expressions of judicial 
    outrage.  My task, as I made clear in my reasons, was to attempt to do justice 
    to both parties despite behaviour, which ranged, on Mr. Lombardos part, from 
    lack of assistance, to active resistance.  [Emphasis in original.]

[18]

Counsel for Mr. Lombardo concedes that the adverse findings of fact 
    and credibility present formidable obstacles to a successful appeal or appeals.  
    He submits, however, that even in the face of these findings, he has a basis 
    for establishing that the trial judge erred in several respects, including 
    the manner in which he imputed income to Mr. Lombardo and in his application 
    of the child support guidelines.

[19]

Given the length of this trial and the number of issues raised, it 
    is not possible (or useful) to comment to any significant extent on the merits 
    except to say that Mr. Lombardos challenges to the trial judges findings 
    in the defamation action and the order with respect to special costs appear 
    weak, at best, but that he appears to have tenable arguments worthy of hearing 
    with respect to the issue of his income and the application of the child support 
    guidelines.  In other words, I do not agree with counsel for Ms. Lombardo 
    that Mr. Lombardos appeals should be classified as hopeless.

[20]

After taking into account all of these factors, and the submissions 
    of counsel, I am satisfied that it is appropriate to make a further order 
    for security for the judgment and for trial costs in the amount of $260,000.  
    Thus, the total amount of security to be posted, inclusive of security for 
    costs of the appeal, is $300,000.  (This amount is in addition to the payments 
    totalling $400,000 to be made to Ms. Lombardo as set forth at paras. 16(3) 
    and (4) of these reasons.)  In making this order, I contemplate that Ms. Lombardo 
    may be required to lift her security on one of the Commercial Drive properties 
    in order to permit Mr. Lombardo to use the equity in the property to secure 
    part of this order.  I appreciate that the effect of allowing him to do so 
    is, to some extent, to allow Mr. Lombardo to substitute one form of security 
    for another, but given the indications that execution on the judgment will 
    prove difficult, expensive and time-consuming, I am satisfied that such an 
    order is appropriate.

Conclusion

[21]

I would order Mr. Lombardo to post security for costs of the appeals 
    in the amount of $40,000 and security for the trial judgment and costs of 
    the trial in the amount of $260,000, for a total of $300,000.  This order 
    contemplates that Ms. Lombardo will cooperate in lifting her security on one 
    of the Commercial Drive properties for the sole purpose of enabling Mr. Lombardo 
    to use no more than $200,000 of the equity therein (in addition to the $300,000 
    he has already agreed to pay) to enable him to post security pursuant to this 
    order.  I leave the details of how that is to be accomplished to counsel.  
    Mr. Lombardo will have to raise the other $100,000 required as security through 
    other means at his disposal.

[22]

I would also order that Mr. Lombardo post security on or before February 
    15, 2008 and that his appeals be stayed until such time as security is posted.  
    Since his properties are tied up in the meantime, and since he is paying child 
    support based on an imputed income which he suggests is almost twice as much 
    as his actual income, he has an incentive both to post security and to get 
    on with his appeals.

[23]

Assuming Mr. Lombardo posts the security in a timely fashion, counsel 
    should agree on a schedule for filing factums and any other materials necessary 
    to ensure that the appeals can be heard on the dates reserved.  Counsel may 
    request a pre-hearing conference if they require assistance in that regard.

The Honourable Madam Justice Prowse


