Scrap metal company must pay for buying stolen nickel worth millions, Manitoba judge rules

A Manitoba metal recycling company is on the hook after buying hundreds of thousands of pounds of stolen nickel worth millions of dollars, a judge ruled.

Court of Queen's Bench Justice Shauna McCarthy awarded mining company Vale Canada Ltd. a summary judgment against Urbanmine, Inc., which purchased and resold 483,396 pounds of nickel stolen from a compound in Thompson, Man., over the course of nearly 10 monthsbetween July 2012 and May 2013.

In her decision on Aug. 27,2020, McCarthy also awarded Vale a default judgmentagainst the Schwartz Bros. construction company anda numberof its employees, all but one of whom pled guilty to criminal charges related to the thefts and were ordered to pay restitution.

"The defendant, Michael James Schwartz, has admitted that over the course of several months and on his instruction, the Schwartz defendants stole and sold the plaintiff's nickel to Urbanmine for the total sum of $2,474,991.90," McCarthy wrote.

Urbanmine then resold the nickel to ELG Metals Inc. and EOS Metals for more than $3.4 million.

Urbanminesaid it didn't know at the time that the nickel had been stolen. It wanted to take the case to trial in order to argue that it shouldn't be held liableor that its liability should be reducedbecause Vale didn't take enough precautions to prevent or discover the thefts.

Company had access to site

The Schwartz Bros. company had a contract with Vale that gave it access to the compound, and three of the Schwartz defendants were either former or current employees of Vale.

Urbanmineargued that Vale "did not have the nickel stored on its business premises properly secured, that access to the property and equipment, such as a forklift, was not properly controlled, and that they did not properlymonitor the security on the premises and their inventory."

McCarthy rejected those arguments, because under the law, buying and sellingsomeone else's property interferes with the rightful owner's possession, regardless of whether the person buying knew that it was stolen property.

She also wrote that the legal principle of failure to mitigate did not apply in a case involving "conversion" the wrongful taking of property in violation of the rights of the owner because the duty to mitigate could only apply after the victim learned about it.

"The plaintiff reported the thefts to the police as soon as they became known to them. By then, the nickel was gone and there was nothing further the plaintiff could have done to mitigate their loss," she wrote.

Default defendants took no further steps

The judge adjourned the issue of determining the amount of damages the defendants would have to payin order to allow the two companies to either come to an agreement, or to submit further oral and written arguments.

Six of theSchwartz defendants, none of whom submitted statements of defence, had been noted in default on Oct. 1, 2014. Since then, they have taken no further steps, although each has paid some amount of restitution, McCarthy wrote.

Because they had already been found in default and had taken no action, the court was under no obligation to provide them further notice of any proceedings against them, McCarthy wrote. She ruled that each of them would be held jointlyand individually liable for whatever damages the court determined.

Assessment of those damages was adjourned, pending further submissions from Vale.