Ron Barlas asks court to release more frozen funds

Ron Barlas is asking the NWT Supreme Court to release more frozen funds so he can pay for living expenses and legal fees as he fights a court ruling.

Barlas and his wife’s assets have been frozen since April 2023, as legal proceedings in a lawsuit launched by the Łútsël K’é Dene First Nation began. At the time, the frozen assets were valued around $5.5 million.

The lawsuit alleged that Barlas, as chief executive officer of Denesoline Corporation, had misappropriated between $10 million and $14 million from the First Nation through self-dealing.

In July 2024, NWT Supreme Court Justice Karan Shaner ruled in favour of the First Nation. She ordered a trial to determine the financial losses the First Nation had suffered.

Barlas is appealing the ruling. The appeal is currently set to be heard on April 15.

Barlas asks court to release around $1M

In NWT Supreme Court on Thursday, lawyers for Barlas asked the court to release approximately $1 million from the frozen assets to allow Barlas and his wife to pay for living expenses, approximately $675,000 in unpaid legal fees, and future legal fees to pursue the appeal.

Lawyer James Thorlakson said while his client has been able to borrow some money, those lenders cannot help with the amount needed for legal fees.

He also claimed Barlas has been unable to find work due to the notoriety of the lawsuit. He quipped that his client cannot pay for his legal defence by working at the grocery store.

Matthew Sammon, one of the lawyers representing the Łútsël K’é Dene First Nation, argued releasing further frozen assets would be unfairly dipping into funds that rightfully belong to the First Nation. He noted $1.4 million was already released to Barlas for legal and living expenses.

Sammon alleged the stated spending needs of Barlas and his wife are not credible. He pointed to several of the couple’s monthly expense claims, such as $4,000 for groceries and toiletries, $450 for cell phones and $700 for gas, saying the numbers appeared to be “plucked out of thin air.” He added that a court-appointed receiver has been paying the mortgage on their home.

Barlas should pay for appeal, First Nation says

Sammon further claimed that while Barlas is entitled to a defence, he has been spending without restraint on legal services “on the Cadillac end” with money misappropriated from the First Nation.

“This attack on the judgement, we say, he should fund himself,” Sammon said, referring to the appeal costs.

Sammon argued that Barlas has not proven he does not have access to more funds. He highlighted Barlas’ refusal to reveal where he got one sum of $16,000 as an example.

Thorlakson countered that living in Yellowknife is not cheap and said what Barlas has spent on legal fees is not dissimilar to what the First Nation has spent.

Thorlakson also disputed that Barlas has further assets and said Barlas did not want to disclose who loaned him the $16,000 – which he equated to a month’s living expenses for the couple – due to “negative media attention” around the case.

“Everything has been disclosed, no stone has been unturned,” he said.

Justice Nicholas Devlin has yet to make a decision on the matter.

Receiver wants to sell, lease properties under trust

Also in NWT Supreme Court on Thursday, Toby Kruger – the lawyer for B Riley Farber Inc, the receiver currently in charge of the Łútsël K’é Dene First Nation’s companies – asked the court to transfer the title to three properties to Denesoline Corporation.

In her July ruling, Shaner placed a constructive trust over those properties – the Barlas’ family home in Yellowknife, a property on Curry Drive, and a cabin – for the benefit of the First Nation’s companies.

The receiver is planning to sell or lease those properties, valued at around $2.3 million, to earn a profit for the First Nation.

The cabin was transferred to the receiver without dispute on Thursday. Kruger said Riley Farber plans to list it for sale in the spring and the revenue from that sale will be held in a trust until the appeal is decided.

Barlas’ lawyers raised concerns, however, about transferring the Curry Drive property and the Barlas home to the receiver.

The Bank of Montreal said it considers the mortgages for those properties to be in default due to the court ruling and it is coming to collect. About $763,000 is outstanding.

Disputes over mortgages, rent

Kruger argued money should be taken from the frozen assets to pay off those mortgages, but Thorlakson claimed that will leave little cash to pay for living expenses and legal fees. He said while the frozen assets are worth millions of dollars, not all of those assets are liquid.

Kruger countered that paying the mortgages takes precedence over legal fees, as the bank is a secured creditor, and there would still be plenty of money left in the frozen assets.

While the receiver wants to lease the Curry Drive property to a third party and hold the revenue in a trust until the appeal is decided, Thorlakson said it would be better to sell the property and use the funds to pay off the mortgage.

Thorlakson also said his clients are concerned they will have nowhere to live if the title to their home is transferred to Denesoline.

Kruger said the receiver plans to allow the Barlas family to stay in the home until a decision is made in the appeal, but the family will be required to pay rent.

While the Barlas family has agreed to that proposal, there is a dispute over how much they should pay. While the receiver wants them to pay market rent, estimated at $5,000 a month plus utilities, the family wants to pay the equivalent of mortgage payments, around $3,300 a month.

On Thursday, Justice Devlin agreed to transfer the Curry Drive property to Denesoline without the title to allow them access to and management of the property until he makes a final decision. He said he will decide on the Barlas home at a later date.