A gravel pit operator in Uxbridge, Ont., has failed in its attempt to recoup some of the more than $2.1 million it believed was stolen by a former pit manager.
The company, Sase Aggregate, did not seek reparations directly from the pit manager, instead choosing to aim its lawsuit at his wife, ML.
It believed the stolen funds were used to buy and renovate a property in Uxbridge, known as the Wagg Rd. Property, which is owned by ML.
However, in the courtroom, ML refuted these claims, stating she was unaware of her husband’s illicit activities. She did, however, acknowledge that banking records showed payments totaling more than $177,000 from Sase’s funds made by her husband. Despite this revelation, the bulk of her property’s finances, she maintained, came from legitimate sources.
In September 2022, the Ontario Superior Court of Justice sided with ML, highlighting that the company was unable to provide adequate evidence tracing its funds directly to the property or proving that she had any knowledge of the fraud. Except for the acknowledged sum, the judge ruled that the sale proceeds from the Wagg Rd. Property belong to ML.
Unsatisfied with the verdict, Sase Aggregate Ltd. appealed, stating various errors they believe were made by the application judge. The company stressed that the pit manager undoubtedly defrauded them and the pattern of money flow hinted at potential money laundering.
But the Court of Appeal for Ontario dismissed the ruling — despite some concerns. It noted that there was “no question” that the pit manager defrauded the company and that the movement of money has a number of indicators consistent with money laundering.
It also found fault with the application procedure, noting it was “ill-suited” to the determination of the issue between the parties because there were disputed facts and questions of credibility.
It also noted that the documentary record provided an incomplete and unsatisfactory account of what happened to the stolen funds, so it was impossible to know whether they may have indirectly made their way into improvements of the Wagg Rd. property.
“That said, the result in the court below was driven by the specific remedies sought by Sase, the application process that Sase initiated and pursued, and Sase’s willingness to proceed without oral evidence and on a written record that was not fully developed,” the appeal court said.
“Against that backdrop, I see no error of law, nor any palpable and overriding error of fact, in the application judge’s decision.”
The appeal was dismissed and costs were awarded to ML.
For more information, see Sase Aggregate Ltd. v. Langdon, 2023 ONCA 554 (CanLII)