Inquiry Regarding Misconduct Report and Legal Proceedings

 

 

Action following the report of misconduct involving Mr. Karpishka, who previously served as our TC representative.

After securing a favorable court ruling against him and his organization in January, we believe that appropriate charges should have been pursued against the individual for repeatedly providing misleading information to Transport Canada. 

For your reference, I have attached the findings of Judge Schabas. Please see the attached documents for details.

 

Para  8      in May 2022, TTI unilaterally changed the ownership registration to it alone and accused the plaintiffs of operating illegally on social media. After the plaintiffs learned of this, Transport Canada reversed the change, which allowed the plaintiffs to operate the boats.

 

Para 10    In 2024, the defendants again took unilateral steps, without notifying the plaintiffs, to change the registration of the boats by causing TTI to be removed as the “authorized representative”, which caused Transport Canada to cancel the registration. After the plaintiffs were made aware of this, they were forced to shut down their business on June 7, 2024, and were required to bring a court application to restore their right to use the boats. On July 17, 2024, Parghi J. ordered, on consent, that Charrier be the interim authorized representative and the use of the boats was restored.

 

Para 22   I also find that the defendants defamed the plaintiffs in 2022 and acted in breach of their fiduciary duty to the plaintiffs in 2024 in cancelling the registration for the boats, for which the plaintiffs are entitled to damages including punitive damages.

 

Para 76   Karpishka’s conduct May – August 2022  After the parties terminated their relationship, without notice to the plaintiffs Karpishka took steps in early May 2022 to change the registration with Transport Canada to list only TTI as the owner of the boats. This change was effected on May 18, 2022. The defendants did not notify the plaintiffs of this change  

 

Para 80    Karpishka’s conduct April – July 2024 

 In 2024, Karpishka took further unilateral steps to prevent the use of the boats by the plaintiffs. On April 22, 2024, again without informing the plaintiffs, Karpishka wrote to Transport Canada asking for himself and/or TTI to be removed as the authorized representative for the two boats. Although TTI was listed as the authorized representative, Karpishka referred to himself as the authorized representative. He stated that he was unable to ensure that the vessels were operating in compliance with the regulations. Karpishka did not copy the plaintiffs on this letter, nor did he take any steps to investigate whether the boats were being operated in compliance, or not, with Transport Canada regulations.

 

[81]   Karpishka’s motive in writing this letter was to cause Transport Canada to shut down the plaintiffs’ business. As he stated in the final paragraph of his letter to Transport Canada, purporting to speak on behalf of the plaintiffs: We [both owners] will jointly assume the responsibility of selecting a new authorized representative at the conclusion of a legal dispute. It is also understood that until such time that a new representative is appointed that the vessels are not allowed to be in operation. If possible, please advise both corporations of the laws and consequences of operating without an Authorized Representative so that they have it in their records. 

 

[82]     After being informed by Transport Canada that both owners must agree to any change in the authorized representative, Karpishka spoke to Krista Kendall, Chief Registrar, Vessel Registry at Transport Canada. He then sent an email to Ms. Kendall on May 1, 2022, referring to the “ongoing legal dispute” and asserted that neither he nor his company could  “fulfill the obligations” of an authorized representative. Karpishka stated that “the appointment of a representative will likely remain elusive until the matter is adjudicated by the court.” Despite Justice Koehnen’s Order, which Karpishka did not include in his correspondence, Karpishka ended his email to Transport Canada with the following: I propose that the vessels remain out of service until such time as the legal dispute is conclusively resolved. This precautionary measure aims to safeguard against any further complications that may arise from the unresolved legal matters.

 

 [83]    Ms. Kendall responded to Karpishka the following day, May 2, 2024, refusing to change the authorized representative without consent of both owners listed on the registration. She noted that there was no basis to suspend or cancel the registration of the boats. 

 

[84]     Undeterred, Karpishka wrote back a few hours later, citing s. 58(1) of the CSA, which states that the authorized representative must notify the Chief Registrar if a vessel is “removed from service.” Karpishka then stated: “I am not comfortable having the vessels in service whilst being prohibited from performing my duties.” Ms. Kendall responded by email on June 6, 2024. She interpreted Karpishka’s statement to be notice under s. 58(1)(a) that “both vessels have been removed from service” and advised Karpishka that the registration of both boats had therefore been cancelled. 

 

[85]     Karpishka did not inform the plaintiffs of any of this correspondence with Transport Canada, or of the cancellation of the registration of the boats. Nor did he respond to Ms. Kendall’s email to correct her statement that the vessels “have been removed from service.”

 

[86]    Ms. Kendall followed up with Karpishka on June 11, 2024 to confirm the vessels had been removed from service. Again, rather than correcting her, Karpishka responded the following day asserting that “as the authorized representative representing the joint owners, I have ensured that all necessary procedures have been followed in accordance with Transport Canada regulations.” He also asserted that the boats “had been removed from service and will remain out of service until further notice.” He said that he would be “visiting Wasaga next week to ensure that the vessels have been removed out of the water.” 

 

[87]    Ms. Kendall’s email of June 11, 2024 was likely provoked by inquiries from the plaintiffs, who had learned from their insurer on June 7, 2024 that the vessels were no longer registered with Transport Canada. Mazzotta called Transport Canada immediately and was told that an application respecting the boats was pending. Mazzotta then sent an email to Transport Canada referring to the “court order that there are to be no changes to our vessels” pending the outcome of the lawsuit. 

 

[88]    Mazzotta’s email came to Ms. Kendall’s attention, as on June 10, 2024 she responded to the plaintiffs asking for a copy of the court order. The plaintiffs promptly sent her the Order of Koehnen J. of October 19, 2022. 

 

[89]    Ms. Kendall then called the plaintiffs and told them that, as the authorized representative, TTI “has the authority to have the Vessels removed from service.” As the Transport Canada file notes, the plaintiffs informed Transport Canada that the boats had not been removed from service and were in the water ready to be operated. Nevertheless, on June 12, 2024, Karpishka again asserted to Transport Canada that the vessels “had been removed from service.” 

 

[90]    On June 13, 2024, Ms. Kendall sent an email to both parties confirming that registration of both vessels was cancelled on June 6, 2024. However, she noted that the cancellation had occurred prior to Transport Canada being provided with the Order of Koehnen J. Ms. Kendall questioned whether the cancellation was “consistent with the spirit of the decision” which “seems to indicate that the operation of the vessels by 12563789 Canada should not be restrained.” Ms. Kendall requested the owners to advise Transport Canada whether this was the case, and stated that Transport Canada would comply with a further court order. 

 

[91]    Karpishka responded the same day with a long letter, doubling down on his earlier assertion that “both vessels had been removed from service.” He then made various legal assertions over several pages including complaining that the plaintiffs were operating the boats without the consent of TTI.

 

[92]    On June 20, 2024, Ms. Kendall wrote to the parties that, in the absence of agreement between them, Transport Canada would do nothing further without a court order.

 

[93]    As a result, the plaintiffs were forced to cease operations, just as the tourist season was starting. The plaintiffs then brought an urgent motion which came before Parghi J. on July 15, 2024. The motion was adjourned on consent to July 17, 2024, at which time the court ordered, on consent, that Charrier be the interim authorized representative, that the parties were to cooperate to have the registration of the boats reinstated as soon as possible, and that the boats could resume operation. 

 

[94]    Karpishka swore an affidavit on the motion in which he stated that he had received a call from Transport Canada in mid-April requesting to carry out a safety and compliance inspection of the boats. He stated that he informed Transport Canada that he did not have control over the vessels, which then informed him that he must report this fact to Transport Canada. Karpishka stated that this was the reason for his letter of April 22, 2024. However, Karpishka made no reference to the proposed inspection in his letter or in any of the other correspondence. Further, in an email to Charrier on November 28, 2024, Transport Canada confirmed that it had not selected the boats for inspection at any time in 2023 or 2024.

 

 Findings on breach of fiduciary duty 

[95]   In my view, despite the ongoing lawsuit, the defendants owed a fiduciary duty to the plaintiffs arising from TTI’s role as the authorized representative.

 

[100]    Karpishka’s email of May 1, 2024 is even blunter, making vague reference to the “ongoing legal dispute” and proposing “that the vessels remain out of service until such time as the legal dispute is conclusively resolved.” This was an end-run around Koehnen J.’s Order. 

 

[101]     When Ms. Kendall said the registration of the vessels was cancelled because she understood they were “out of service”, Karpishka took no steps to correct her, and when 17 Ms. Kendall followed up he asserted, without any basis, that the boats “had been removed from service and will remain out of service until further notice.” 

 

[102]     Karpishka’s communications with Transport Canada were dishonest and intended to harm the plaintiffs. There is no direct evidence that Saucedo was also involved in these particular communications. However, in light of her close relationship with Karpishka and their co ownership of TTI, on whose behalf Karpishka was acting, and the history of Saucedo and Karpishka speaking on one another’s behalf, it is reasonable to conclude that she was aware of and approved Karpishka’s actions, including his false statements to Transport Canada. 

 

[103]     Accordingly, I have no difficulty finding that defendants breached their fiduciary duty to the plaintiffs. They made false statements to Transport Canada to have TTI removed as authorized representative, and to have the boats’ registration cancelled. The did this unilaterally and without notice. The defendants succeeded in their objective which caused harm to the plaintiffs.

 

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