The lawyer for the former head of the Łútsël K’é Dene First Nation’s business arm says a court decision on whether he misappropriated millions of dollars should have been determined through a trial.
James Thorlakson, who represents Ron Barlas, made that argument to a three-judge panel from the Court of Appeal for the NWT in Yellowknife on Tuesday.
In July 2024, NWT Supreme Court Justice Karan Shaner ruled that Barlas “engaged in egregious conduct and abused his position” as the chief executive officer of Denesoline Corporation.
She found Barlas funnelled millions of dollars that should have gone to the First Nation into companies controlled by him and his wife, misled members of Denesoline’s board of directors, and actively worked to conceal his gains.
Rather than making that decision following a trial, Shaner relied on an extensive paper record and arguments by lawyers. She found there was “overwhelming evidence” that Barlas breached his fiduciary duties and harmed the interests of the First Nation’s members “while gaining significant financial benefit for himself and his family.”
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Shaner did order that a more limited trial be held to determine the extent of the First Nation’s financial losses.
Barlas and his legal team are basing their appeal in part on the judge’s decision to proceed in that manner.
Barlas ‘brought a huge benefit,’ lawyer argues
In appeal court on Tuesday, Thorlakson argued it was not appropriate for Shaner to make her ruling without a trial.
Barlas’ lawyers had argued in their initial defence that the allegations should go to trial, an argument with which Shaner ultimately disagreed.
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Thorlakson argued there was evidence, in the form of meeting minutes, that supported Barlas’ claim that board members were suitably informed about an agreement they ratified granting him profit-sharing.
He claimed Barlas “brought a huge benefit” to Denesoline that could not be captured by his salary and bonuses alone, and that board members “understood the larger picture.”
Thorlakson also raised the issue that two board members did not give evidence during the earlier proceedings, and argued there could be prejudice arising from Shaner’s decision on related lawsuits against an accountancy firm and law firm alleged to have knowingly assisted Barlas in wrongdoing. (The firms deny those claims.)
‘Textbook oppression’
Jessica Kras and Larry Innes, lawyers for the First Nation and Chief James Marlowe, argued the appeal court should not interfere with Shaner’s decision.
Kras said Shaner “conducted a complete and thorough examination” of the record and there were “countless examples” of oppressive conduct.
She argued Barlas’ conduct was “at the most egregious end of wrongdoing,” was not subtle or ambiguous, and was “textbook oppression.”
Kras added that Barlas was “given every opportunity to explain his conduct,” was cross-examined and filed several affidavits. She said his lawyers chose not to adduce evidence from the other directors of Denesoline’s board.
She further argued Thorlakson had not pointed to any evidence that would change the outcome of the case if a trial were held.
Regarding the lawsuits against accountants KPMG and law firm Reynolds Mirth Richards & Farmer, Innes argued that even if the firms were exonerated, it would not help Barlas. He said it was “blatant and obvious” that Barlas breached his fiduciary duty and there was no need for a trial.
The appeal court has reserved decision in the case, meaning the judges will consider the lawyers’ arguments and make a decision at a future unspecified date.
