Fred Curreri was induced to participate in a fraudulent scheme by his friend and advisor, Tito DiVincenzo.  Curreri impersonated his father, Fred Curreri Sr., in order to obtain mortgages on a number of his father’s properties.  DiVincenzo promised to invest the funds overseas, but no investments were made and the money disappeared. 

The lenders sued Curreri and obtained a Mareva injunction which required Curreri to pay a $250,000 lottery win into court.  Curreri did not defend the action, and the lenders obtained default judgment against him for approximately $2 million. 

Curreri then moved for payment out of court so that he could use the lottery winnings to pay his lawyers to defend the action and related criminal proceedings.  He also sought reasonable living expenses.  Evidence filed on the motion established that he was impecunious. 

Curreri did not move to set aside the default judgment, nor did he provide a draft statement of defence.  The judge hearing the motion refused to permit him to draw on the funds in court to pay his legal and living expenses.  This decision was upheld by the Ontario Court of Appeal. 

In Canadian Imperial Bank of Commerce v. Credit Valley Institute of Business and Technology, [2003] 0. J. No. 40 (S.C.), Molloy, J. outlined a four-part test for a motion in which the defendant seeks to use money held under a Mareva injunction to pay legal and living expenses: 

1. Has the defendant established that he has no assets available to pay his expenses apart from those held pursuant to the injunction? 
2. Has the defendant shown that assets held pursuant to the injunction are “non-proprietary” in that they come from a source other than the plaintiff? 
3. The defendant can draw on non-proprietary assets to pay reasonable living expenses, debts, and legal costs. The non-proprietary assets must be exhausted before the defendant can access money that is subject to the plaintiff’s proprietary claim. 
4. If the previous three tests are met, and the defendant still requires funds, the court must balance the competing interests of the parties.  The strength of the plaintiff’s case is an important factor for the court to weigh in this balancing process. 

The Court of Appeal agreed with the motion judge that the four-part test from Credit Valley is based on the premise that litigation is ongoing, and that there has been no final adjudication on the merits.  Since there was judgment against the defendant Curreri, and there had been no motion to set that judgment aside, the premise of the Credit Valley case was inapplicable: 

…there is no principled reason for the appellant to be able to deplete the funds in court which are subject to the judgment and available to judgment creditors.  As the motion judge explained, before judgment, or on a motion to set aside default judgment where potential merit is demonstrated, there is a principled basis to allow the defendant to use his own money for the defence of the action.  But once default judgment has been ordered, the findings are the other way on the merits.  Without more, the judgment will stand and there is no basis to allow the defendant to deplete the funds that are in court “to the credit of the action.”

The Court of Appeal concluded that Curreri had no defence on the merits.  Even if he was the dupe of DiVincenzo, the funds were advanced to him under the mortgages and had not been repaid.

The motion judge observed that Curreri would normally have the right to use the funds paid into court to defend criminal proceedings.  Nevertheless, since he was insolvent, he should qualify for legal aid and would not be denied counsel because of his finances.  The Court of Appeal agreed, and dismissed the appeal.

Link: B & M Handelman Investments Ltd. v. Curreri, 2011 ONCA 395

Richard Hayles, B.A., J.D.

Brief informational summaries about commercial litigation matters in the courts of Ontario and other developments are periodically published on this website. They are intended to be a general comment or general discussion, not legal advice and should not be relied upon as legal advice. Should you require legal advice, please contact info@heydary.com or 416 972 9001.