In Breen v Foremost Industries Ltd, 2023 ABKB 552, Justice Yamauchi found that the former President of a mutual fund company committed many breaches of his fiduciary and other duties.
In addition to ordering the Plaintiff to repay $480,000 USD that he wrongfully had paid to him by third parties, the Judge also awarded the Defendant $50,000 in punitive damages.
This is what the Judge said :
[546] Mr. Breen held the highest management position in the Foremost Group, being its President and Chief Executive Officer. All employees were answerable to him, and he had significant power to manage and control the Foremost Group’s operations. He authorized, approved, and directed expenditures. He was aware of all projects being undertaken by the Foremost Group. He was answerable only to the Fund Board, and he was to keep JP and Mr. May advised of the goings-on of various projects. The Foremost Group was vulnerable in the sense that Mr. Breen was in control of day-to-day operations, and the Fund Board could not possibly keep track of those operations, except as may be reported by Mr. Breen.
[547] In this capacity, Mr. Breen arranged for payments to himself and others of monies to which they were not entitled. This Court found that he received the various gifts from Mr. Chernyk through embezzlement, misappropriation, or defalcation while he was acting in a fiduciary capacity in relation to the Foremost Group. It also found that he was aware of or was reckless concerning certain payments that found their way into the pockets of Mr. Chernyk or Mr. Varianos through the fraudulent agent fees.
[548] This Court has awarded compensatory damages in respect of those amounts. However, that is not sufficient to express this Court’s disapprobation for the breaches of Mr. Breen’s statutory, contractual, and fiduciary duties. His actions offend this Court’s sense of decency. To meet the objectives of general and specific deterrence, as well as this Court’s denunciation of Mr. Breen’s shameful conduct, it awards punitive damages in the Foremost Group’s favour.
[549] Were this case based only on the currency hedge issue, this Court likely would not have awarded punitive damages. However, the most offensive aspect of this case involves Mr. Breen’s taking of funds from the Foremost Group through his arrangements with Mr. Chernyk in the form of the commissions. As well, he knew, or ought to have known, that the agent payments to Mr. Chernyk’s alter egos were fraudulent. These payments were not “accidents.” They were planned and deliberate. Mr. Breen knew that what he was doing was wrong, yet he persisted. He also used his best efforts to cover-up what he had done by resisting the Foremost Group’s efforts to obtain documentation to prove the unlawful takings through the refusal to comply with undertakings and resisting the Cyprus action.
[550] The Foremost Group seeks punitive damages in the amount of $50,000. Given the position that Mr. Breen held and the way in which he conducted himself,this Court might have been inclined to award a much higher amount, had the Foremost Group asked for it. However, the amount it claims certainly falls within the range of amounts that this Court can award. It makes such an award.
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