Case information

Trusts — Constructive trusts — Breach — Knowing assistance — Courts — Jurisdiction — Statutory jurisdiction — Ordering new trial — Limiting new trial to single issue — When judicial reasons disclose “actual knowledge” within knowing assistance in breach of constructive trust — Standard of review for a finding of knowledge — Whether principal of single person corporation can be considered “stranger” to corporate operations and activities — Whether omission from trial reasons “critical” to upholding finding — Whether new trial was warranted — Whether appellate court exceeded its jurisdiction by limiting new trial to single issue.

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

With the assistance of insider officers and others, a former business partner of Leanne Duscio’s husband defrauded a Paraguayan pension fund, Caja Paraguay de Jubilaciones y Pensiones del Personal de Itaipu Binacional (“Cajubi”) of $12,460,930. Mrs. Duscio’s husband, an undischarged bankrupt who had formerly been a business associate of Mr. Garcia, filtered approximately $3 million of this money through Catan Canada Inc. (“Catan”). Mrs. Duscio was the sole director, officer and shareholder of Catan. Cajubi brought an action against multiple defendants in Canada, including Mrs. Duscio. Despite Mrs. Duscio’s roles and responsibilities in relation to Catan, and although she had signed cheques and authorisations when asked to do so by her husband, Mr. Duscio was found to have been the de facto controlling mind and will of Catan at all relevant times. He also had control over the funds of Columbus Capital Corp., another part of the financial chain. Over the nine months following Columbus Capital’s incorporation, Catan made wire transfers of more than $2.5 million in for Columbus Capital’s purposes, and at least $400,000 of Cajubi’s funds were transferred to Columbus Capital without any attempt at justification.

The trial judge made numerous findings of liability. Among them, he found Mrs. Duscio jointly and severally liable to Cajubi for $3 million for knowingly assisting in the breach of trust orchestrated by the former business associate and Mr. Duscio. Only Mrs. Duscio appealed. The Court of Appeal granted her appeal, set aside the disposition as against her, and ordered new trial concerning the issue of knowing receipt of trust funds as against her.