Bankrupt Canada Contractor Execs Ordered to Repay $26 Million
John Aquino, the former president of a major and now bankrupt Ontario construction contractor, plans to appeal a provincial court ruling that puts him and his associates on the hook for $26.2 million drained from the company, according to his attorney.
The Ontario Court of Appeal upheld on March 10 a previous court decision that ordered Aquino, former president of Bondfield Construction Co. Ltd. and other defendants, to repay tens of millions extracted from the company through what the bankruptcy court monitor has alleged was a fraudulent invoicing scheme involving shell companies with no offices and no operations.
The investigation by Ernst & Young uncovered payments from Bondfield to several of these shell companies for work that was never done, with some of the money eventually ending up with Aquino.
In its ruling, the appeals court rejected an argument by the defendants, which cited the complexities of bankruptcy law.
Aquino did not challenge the assertion the invoices were bogus. However, his attorney argued that the lower court was mistaken in declaring him and the associates responsible for payments to the shell companies, when Bondfield and an affiliated firm, Forma-Con Construction, were in fact the ultimate debtors.
According to an article by lawyers at Torys LLP, who represent the trustee in the bankruptcy case, the decision by the appeals court came down to a key question posed by Justice Peter Lauwers that “reframed” the case.
“Who should bear responsibility for the fraudulent acts of a company's directing mind that are done within the scope of his or her authority – the fraudsters or the creditors?," Lauwers wrote.
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S. Michael Citak, a partner at Gardiner Roberts in Toronto and Aquino’s lawyer, said his client plans to appeal to the Supreme Court of Canada.
“The Court of Appeal’s decision raises several novel and important issues that would significantly benefit from review by the Supreme Court,” Citak said in an email. He did not respond to a request for additional details.
Bondfield, once one of Ontario's largest infrastructure contractors, left in the wake of its bankruptcy a trail of disrupted and delayed projects and unpaid subcontractors. The firm, which had been in business for four decades and had 330 employees before filing for bankruptcy in 2019, took on a large amount of new work before its demise, including three major hospital projects.
In a court affidavit that year, Aquino, at that time still president of Bondfield, said more than 200 lawsuits had been filed against the firm or its board of directors, related to unpaid subcontractors or breaches of contract, the Canada Globe and Mail had reported at the time.
