Special costs, punitive damages ordered against former Penticton mayor who stole from family business

In this file photo, former Penticton mayor John Vassilaki holds up a binder of documents that the B.C. city provided during an ombudsperson's investigation into a 2018 tax sale.

John Vassilaki, the former Penticton mayor who misappropriated more than $814,000 from his family business over more than a decade of deception, has been ordered to pay even more damages to those he wronged.

Last week, B.C. Supreme Court Justice Gary P. Weatherill awarded $100,000 in punitive damages and more than $137,000 in pre-judgment interest in the case, bringing the total amount Vassilaki owes to more than $1 million.

The penalties stem from a claim Vassilaki initiated after he was fired from Vassilaki & Sons Investments Ltd.—which he co-owned with his brother Nick Vassilakakis (who spells his name differently)—in October 2023.

The company, referred to throughout Weatherill’s decision as VSI, has operated Last Call Liquor Mart in Penticton since 2004.

In response to his firing, Vassilaki sued for wrongful dismissal, but ended up withdrawing most of his claim when the matter went to trial. VSI, which is now controlled by Nick and Nick’s son Florio, countersued over Vassilaki’s misappropriation of funds and was awarded $814,681.99 in damages earlier this year.

• Read more: B.C. court orders former mayor to pay back $814K he misappropriated from the family business

After winning the counterclaim, VSI sought punitive damages and special costs against Vassilaki. Weatherill was tasked with determining whether to award additional compensation to VSI, and how much.

Punitive damages

Punitive damages are an “exceptional remedy” that is awarded “where conduct is malicious, oppressive and high-handed such that it offends the court’s sense of decency, and where compensatory damages are insufficient to achieve the objectives of retribution, deterrence and denunciation,” according to the judge’s decision.

Vassilaki argued that he had “already suffered significant penalties” as a result of his conduct, including the publication of the court’s $814,000 judgment against him, the loss of his employment and the loss of control of VSI, among other factors.

“He is no longer involved in VSI or other family businesses and has no continuing involvement in municipal politics,” Weatherill’s decision reads.

“He says he is in no position to repeat his conduct.”

The judge rejected Vassilaki’s arguments, noting the severity of the misconduct and the positions of power and trust Vassilaki held.

Now 80 years old, Vassilaki served as mayor of Penticton from 2018 through 2022.

“The plaintiff admits he owed VSI fiduciary and statutory duties, which Justice Ball found he breached,” the decision reads.

“Simply put, Justice Ball found that he stole money from VSI to pay his personal expenses, make undisclosed loans to himself, pay himself and his family unearned wages, and pay himself and his family members excessive salaries, all without VSI’s knowledge or consent. He then attempted to conceal his misconduct by falsifying documents and/or allowing his family members to prepare and submit inaccurate payroll records.”

Weatherill concluded that $100,000 was the appropriate amount for punitive damages, citing previous cases involving “concealment and persistent misconduct” that yielded similar awards.

“Directors and officers of corporations must be deterred from acting like the plaintiff and the court must send a message that such conduct will not be tolerated,” the decision reads.

“The plaintiff’s misconduct was reprehensible. He misused his authority as VSI’s president to, in effect, steal VSI’s money and took active steps to conceal his conduct. His breach of trust lasted over 14 years.”

Special costs

According to Weatherill’s decision, special costs are “reserved for exceptional cases” involving “litigation conduct deserving of rebuke and censure.”

The judge concluded that Vassilaki’s litigation strategy merited such an award.

“The plaintiff proceeded with his wrongful dismissal claim knowing that it was meritless,” Weatherill’s decision reads.

“Indeed, he admitted his misconduct in a workplace investigation, at his examination for discovery, and in answers to a notice to admit. It should have been obvious to him that his claim was doomed to fail. To his knowledge, VSI had clear grounds to terminate his employment for cause, yet he pursued it until key parts of the claim were abandoned during the second day of trial.”

Vassilaki ultimately only pursued the argument that VSI had condoned his misconduct, but never provided any evidence of such condonation, according to Weatherill.

The judge awarded special costs in relation to Vassilaki’s wrongful termination claim, but declined to do so regarding his defence of the counterclaim.

Weatherill ordered Vassilaki to pay one-third of VSI’s court costs at the “special costs” rate, and the rest at the regular rate.

He also ordered Vassilaki to pay $137,067.43 in pre-judgment interest, an amount on which the plaintiff and the defendant agreed.