Editor''s note: On May 9, 2012, the Ontario Court of Appeal issued an order setting aside some aspects of the decision reported in the story below. First, the appeal court set aside the judgment against Terry Piersanti and companies controlled by her and her husband after concluding the trial judge didn''t make any findings that would link her actions to the bankruptcy of Osler Paving Ltd. Second, the appeal court reduced the damages against Christian Piersanti to $12,521,555.81 from $20 million. The appeal court also set aside an order to pay $2.5 million into court. In its ruling, the appeal court concluded the trial judge, in her reasons, hadn''t found the Piersantis had breached the Mareva injunction. With the appeal court''s decision, the damages award was against Christian only.
Members of a Toronto-area family are relieved after a judge blasted their lawyer for faking a document he claimed had entitled him to sole ownership of their paving company.
“They are ecstatic,” says Kevin Sherkin, who represented the plaintiffs, the Alfano family. “They feel that justice has been served as a result of the decision.”
In a decision issued Sept. 3, Ontario Superior Court Justice Ellen Macdonald ordered lawyer Christian Piersanti, his wife, and companies controlled by the pair to pay $20 million in damages to members of the Alfano family, which owned Osler Paving Ltd. until it entered bankruptcy in 2002.
The case hinged on two versions of a shareholders’ agreement made between Piersanti and four Alfano brothers, Ulti, Italo, Carmen, and Frank, when the company emerged from the ashes of a previous bankruptcy in the early 1990s.
Piersanti drafted the agreement himself. Frank would later ask to be bought out, while Carmen was murdered in an execution-style killing at Osler’s Concord, Ont., headquarters in 1996.
One agreement produced by the Alfanos apportioned almost all of the company to them, while the second version gave Piersanti alone a 100-per-cent interest in Osler.
In the judgment, however, Macdonald found that Ulti, Italo, and Carmen’s widow Bertina Alfano together owned 87 per cent of the company, while Piersanti held the remaining portion. She also ruled Piersanti had concocted the second agreement later in his office.
“I find it shocking that a barrister and solicitor of the sophistication and expertise of Mr. Piersanti would engage in such a fraud,” Macdonald wrote.
The dispute dates back to 2002, when Piersanti told the Alfanos Osler was suffering financial difficulties. Ulti and Italo, who believed the company was doing well, challenged their lawyer.
Eventually, Piersanti told them they need not worry because they didn’t have an interest in Osler and locked them out of the property.
When the Alfanos took the matter to court, Piersanti’s defence essentially amounted to the fake agreement, according to Sherkin.
“There were two agreements put before the court with the same signatory page,” Sherkin says. “You can’t have two agreements with the same signatory page, and that was the basis on which he resisted the original motions.”
Piersanti told the court he had found the fake agreement in his office while preparing an affidavit for the case.
But Macdonald ruled that was actually a ploy to force the remaining brothers out of the business after the death of Carmen, whom she said was the driving force behind the company. Piersanti’s hope, according to the judge, was that they wouldn’t have the means to engage in lengthy litigation.
“Mr. Piersanti created the second version of the USA [unanimous shareholders’ agreement] to gain control of the Osler company when he knew that, particularly after Carmen’s death, the remaining brothers had little or no interest in the details of legal documentations such as the USA,” Macdonald wrote.
Within days of a court injunction against Osler and other Piersanti business interests in June 2002, Piersanti “walked the company into bankruptcy” without the consent of the Alfanos, says Sherkin.
Macdonald ruled that Piersanti, who was in charge of Osler’s finances, had misappropriated more than $1 million from the business.
She also found he had asked a controller at Osler to doctor its 2002 financial records to show a loss when the company had actually made a profit as part of his objective to “ensure the demise of Osler and get rid of the Alfanos.”
Piersanti could not be reached for comment, and his lawyer Samantha Chapman said she wouldn’t discuss the case.
The Alfanos first got involved in paving shortly after the family moved to Canada from Italy in the 1950s. Carmen eventually took over the business, originally called Ontario Paving Co. Ltd.,
following the death of his father Giuseppe Alfano in 1988. While it was doing more than $50 million in business by the early 1990s, the real estate slump hit the company hard, causing it to cease operations as all four brothers declared personal bankruptcy.
Osler Paving emerged in 1993 as a way to make a fresh start in the business. But Carmen was killed in his office three years later before he could be discharged from bankruptcy. The crime remains unsolved as police have brought no charges in the case.
Although Piersanti denied acting for the Alfano family after 1990, Macdonald found there was “overwhelming evidence that he was their trusted solicitor” after that time.
He had met Carmen in the late 1970s while articling at Toronto firm Gambin & Bratty. When the paving business first experienced difficulties in 1990, Piersanti recommended he get in touch with Osler Hoskin & Harcourt LLP for its insolvency expertise. The relationship was short-lived, however, because Carmen couldn’t afford the fees.
Macdonald characterized Piersanti and his wife as “devious” and “evasive” during the nine-month trial and condemned their selective disclosure and delaying tactics before eventually concluding she couldn’t trust their testimony.
“As the trial progressed, I became increasingly aware that the Piersanti defendants were on a path to deliberately confuse the court on the relevant issues in this case,” she wrote.
“The defendants are clever and experienced litigants. The record at this trial demonstrates the temerity of Mr. Piersanti and Ms. Piersanti in these
actions.”
Macdonald noted almost 200 evasive answers made by Piersanti’s wife Terry, who manages three malls both families claimed an interest in.
According to the ruling, she was dismissive of the guilty plea she had previously entered on charges related to goods and services tax fraud, which resulted in a $500,000 fine for failing to remit GST payments by tenants at her malls.
Her husband, meanwhile, denied in court a suggestion that he had allowed her to take the fall for the tax offences because he would likely have been disbarred.
Macdonald ordered $2.5 million of the damages to be paid into court within 30 days for breaches of the 2002 injunction that barred all company dealings outside of the ordinary course of business. Still, she acknowledged the Alfanos “will most likely encounter great difficulty enforcing” her judgment for damages.
She also ordered the Piersantis to pay $250,000 in punitive damages and ruled they had no interest in the Concord property where Osler had its offices. After Giuseppe left the land to his family, the four brothers took out a mortgage on it in 1993 to buy equipment for their new company, Osler.
According to the ruling, Piersanti handled the discharge in 1997 but transferred the property to a numbered company and later listed it for sale. He then shut the family out of the site when the dispute broke out in 2002.
The Alfanos have since formed a new paving company called Southview Asphalt & Aggregates Inc. The size of the damages award partly reflects the significant debt they incurred to keep the business going and buy back assets and security from Osler’s creditors after it went into
receivership.
