|Matthew Milne-Smith said in a submission to court that a ‘trial judge made a number of serious, erroneous and unnecessary findings of fraud against the defendants.’|
The Court of Appeal is scheduled to hear arguments April 5 over a ruling issued by McIsaac in 2015, in which he ordered Gardiner and his co-defendants to pay $2.2 million in damages to Lance Todd, an investor in Barefoot Technologies. McIsaac, who retired at the end of 2015, concluded that Gardiner and his wife engaged in a “financial fleecing” of Todd through acts of “fraud, false pretences and forgery,” in his ruling in Todd Family Holdings et al v. Gardiner et al.
The legal action was commenced in 2009. It stemmed from the failure of Gardiner to repay a $1-million loan advanced in 2005 by Todd, which was to be repaid with $500,000 interest by 2015.
In addition to the damages award, McIsaac issued a number of declarations.
They included orders that any new insole patents developed by Gardiner were for the exclusive benefit of Todd and his company Future Edge, until the damages were paid in full.
As well, he required the defendants to pay more than $960,000 in full indemnity legal costs to Todd’s trial lawyers, who McIsaac previously denied a request to be removed as counsel.
The lawyers acting for Gardiner in his appeal state that what was a simple “debt recovery” case appears to be something much more complicated in the ruling issued by McIsaac after a 23-day-long trial in Oshawa.
“The trial judge made a number of serious, erroneous and unnecessary findings of fraud against the defendants,” argue lawyers Matthew Milne-Smith and Bryan McLeese in written submissions filed with the Court of Appeal.
McIsaac found that the defendants at trial engaged in the tort of deceit, without requiring the plaintiffs to prove the elements of the tort, argues Milne-Smith, a partner at Davies Ward Phillips & Vineberg LLP and McLeese, counsel at Chernos Flaherty Svonkin LLP.
The appellants also argue that McIsaac’s findings that two business documents were forged by Gardiner was contradicted by three witnesses in one case and never alleged by the plaintiff in the other.
McIsaac served on the Superior Court for several years, presiding primarily in Barrie, Ont. On occasion, his courtroom decisions attracted broader public attention.
The Ontario Court of Appeal concluded in 2012 that the judge raised a reasonable apprehension of bias and should have complied with a request to recuse himself in a civil proceeding over a property dispute in a township where McIsaac’s wife was a real estate agent and they owned a cottage.
On another occasion, in 2003, the Court of Appeal reduced the $375-per-hour rate that McIsaac had granted a lawyer to prosecute a contempt proceeding that the Superior Court judge had launched against the province’s public safety minister and two other public officials.
McIsaac initiated the contempt case because of repeated delays in bringing accused in a murder trial from jail to court each day.
In the current case before the appellate court, the lawyer acting for Todd and his company dispute the claims by Gardiner’s lawyers that there were errors made by the trial judge.
“Justice McIsaac conducted a thorough review of the evidence, made correct findings of fact and properly outlined and applied the law,” writes David MacKenzie, a partner at Szemenyei MacKenzie Group LLP in London, Ont.
The conclusion that Todd was deceived when investing in Gardiner’s company is “carefully, clearly and correctly described” by the trial judge, states MacKenzie in written submissions filed with the appeal court.
As well, one of the documents found to be a forgery fits the legal definition of that act, because Gardiner admitted he tried to recreate the original record, states Todd’s lawyer.
Among the issues that remain unclear in the legal action is whether Todd and his company made any profit after it was granted a court order in 2009 to exploit the insole patent.
At trial, an accounting expert for Gardiner estimated that Todd’s company earned a gross profit of at least US$4.3 million between 2009 and 2014 from the use of the patent.
McIsaac stated in his ruling that Gardiner’s expert presented “impressive analysis and calculations” and was very professional. However, the judge explained that he preferred the testimony of Todd, despite his having been “soundly chastised” by other judges presiding over earlier motions in the case for failing to provide adequate financial disclosure.
“Having excavated the relationship of these parties far deeper than my associates,” McIsaac explained that he had a different conclusion about Todd’s finances and was satisfied the businessman was a “virtual pauper.”
Todd was represented at trial by lawyers David Taub and Robert Choi at Robins Appleby LLP in Toronto. The lawyers for both sides in the appeal declined comment.
Taub also declined comment as the case is before the Court of Appeal.