The Ontario Court of Appeal, in Toronto, on April 8, 2019.Colin Perkel/The Canadian Press
The Ontario Court of Appeal has granted a reprieve to two purported land developers who were ordered to pay $9-million to aggrieved investors as a penalty for their contempt of court.
Citing a misstep by the lower court judge who made the ruling, a panel of appeal judges has ordered a new hearing to determine a punishment for Michael Hyman and Giuseppe Anastasio – two businessmen who allegedly diverted millions of dollars that were supposed to be used for two housing developments.
Earlier this year, Ontario Superior Court Justice Markus Koehnen took the rare step of ordering the men to pay the full amount sought by investors, even though the case had not gone to trial. Justice Koehnen said such a sanction was appropriate because they had so flagrantly breached preliminary court orders to account for the missing money and their own assets. The judge said the men had treated his orders like “meaningless scraps of paper.”
The appeal judges said Justice Koehnen’s frustration with the businessmen was well founded. Justice Gladys Pardu, writing on behalf of the panel, described the behaviour of Mr. Anastasio and Mr. Hyman as “outrageous conduct” and said their disregard for Justice Koehnen’s rulings required a strong response from the court.
However, Justice Koehnen erred during the contempt sentencing hearing, the appeal judges found, when he barred the businessmen from arguing the merits, or their defence, to the case’s main allegation: that they were not entitled to use investors’ money the way they did.
The appeal judges ordered a new hearing to determine the appropriate penalty and said it should be decided by a new judge.
Despite the case going back to court, Brian Radnoff, a lawyer for Thrive Capital Management Ltd., the real estate investment company suing Mr. Hyman and Mr. Anastasio, said his client is pleased that the appeal judges confirmed that a full judgment could still be an appropriate sanction when the case is reargued.
Thrive “will continue to pursue this matter, including sanctions for the defendants’ contempt,” said Mr. Radnoff, a commercial litigator at Dickinson Wright LLP.
Justin Necpal, one of the lawyers for Mr. Anastasio and Mr. Hyman, said: “We look forward to telling our side of the story.”
Mr. Hyman, a former CFL football player, and Mr. Anastasio, who has previously listed his professional expertise as performing “odd jobs,” were the principals behind Noble Developments Corp., a housing company that partnered with Thrive, which is based in Brampton, Ont.
In 2019, Noble was supposed to purchase land in Brampton and Richmond Hill, Ont., slated for a total of 82 homes. In return for Thrive’s $9-million investment, it was to become a 50 per cent shareholder in the companies that owned the properties.
Instead, the Richmond Hill property sale never closed, and a $2-million deposit was lost, court records show. As for the Brampton land, Thrive alleges the developers bought it through a different company and placed several mortgages on the property, leaving Thrive with no security for its investment.
In earlier rulings, Justice Koehnen found that most of the investor funds were used to pay Mr. Anastasio, Mr. Hyman and their associates large sums of money. In one instance, the judge found that Mr. Hyman made a $171,000 down payment on a 2019 Lamborghini Aventador the same day $200,000 was removed from a bank account that held investor funds.
In the meantime, Thrive has amended its statement of claim to include a number of people and companies who allegedly received the funds, including Mr. Hyman’s brother and father, as well as Mr. Anastasio’s son and former wife.
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Greg McArthur