Court File and Parties

COURT FILE NO.: CV-16-166 DATE: 2022-03-03 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Ora Trustees Limited, as Trustee for Dorey Capital Family Trust, Dorey Capital Family Trust and Scott Dorey, Plaintiffs AND: Marc Wade and Wade & Company Inc., Defendants

RE: Marc Wade, Plaintiff by Counterclaim AND: Scott Dorey, DCFT Holdings Limited and Dorey Capital Family Trust, Defendants to the Counterclaim

BEFORE: Justice V. Christie

COUNSEL: Colin Pendrith and Jessica L. Kuredjian, Counsel for the Plaintiffs (Defendants to the Counterclaim) Robert Rueter and Shannon Bennett, Counsel for the Defendants (Plaintiffs to the Counterclaim)

HEARD: February 23, 2022

Rule 21.01(3)(b) – motion to have action dismissed for want of capacity

Endorsement

Overview

[1] This motion was brought by the Defendants as a cross-motion when the Plaintiffs moved to extend the time to have the matter set down for trial. The motion to extend was adjourned to allow this motion to proceed, and is tentatively scheduled for March 18, 2022, if necessary. Specifically, in part, the Defendants state that this motion is for an Order dismissing the action against the Defendants, Marc Wade and Wade & Company Inc., on the grounds that the Plaintiffs are without legal capacity to commence or continue the action. In the notice of cross-motion, the Defendants set out three bases upon which they argue that the Plaintiffs lack legal capacity, which are as follows:

1. The funds were advanced directly from the Bahamian Trust, Dorey Capital Family Trust (“DCFT”), to Wade & Company Inc., were not advanced by Scott Dorey, and no cause of action exists in the hands of Scott Dorey;
2. DCFT conveyed any rights to the funds to Dorey Capital Family Trust Holdings Limited (“DCFT Holdings”), which, in turn, conveyed away any rights to the funds, for consideration, to other entities; and
3. Despite requests from the Wade Parties, the Plaintiffs have failed to produce documents for inspection that show Ora as a trustee for DCFT, the Bahamian Trust that advanced the funds to Wade & Company.

The notice of cross-motion made specific reference to Rule 21.01 as a ground for the motion.

[2] At the hearing of this motion, the Defendants focused mainly on the second ground listed above, however, the Plaintiffs’ response in relation to these three grounds was as follows:

1. Regardless of whether the loan funds are recoverable by Scott Dorey, he is a proper and necessary party;
2. There was never a valid transfer of the loan receivables from DCFT to DCFT Holdings, or, in the alternative, to the extent that the loan receivable was transferred, it was transferred back to DCFT; and
3. While there is no pre-discovery obligation to provide any evidence concerning the change of trustees, that ample evidence has been tendered on this motion to demonstrate that the Trustee for DCFT is, indeed, the Trustee for DCFT.

[3] The evidence relied upon at this hearing included:

1. Affidavit of Laurence Ezer (November 3, 2021) – accountant with Wade & Co. from April 2015 onward; director of Wade & Co. from December 29, 2017 onward; provided accounting services to BHP International Markets Limited (“BHP”) and related entities in 2015 and 2016, including during its sale to Progressive Arbitrage Group Ltd. (“Progressive”) in 2016; assisted with accounting services for Scott Dorey, DCFT and DCFT Holdings in relation to the years 2014-2016.
2. Affidavit of Laurence Ezer (January 18, 2022)
3. Affidavit of Laurence Ezer (February 1, 2022)
4. Affidavit of Terai Boaza (December 10, 2021) – client services manager of Ora Trustees Limited
5. Affidavit of Jeffrey Verdon (January 31, 2022), lawyer and managing partner of Jeffrey M. Verdon Law Group LLP. The Plaintiff, DCFT, is a client of his law firm.

Background Facts Known and To Be Determined

[4] DCFT is a trust that was established on April 8, 2011 for the benefit of its beneficiary, the Plaintiff and Defendant by counterclaim, Scott Dorey. A copy of a Trust Deed, dated April 8, 2011, shows the original Trustee of DCFT as Euro-Dutch Trust Company (Bahamas) Limited, a company incorporated and existing under the laws of The Commonwealth of the Bahamas. According to Mr. Ezer, the managing director of Euro-Dutch was Anthony Inder-Rieden who currently resides in the Bahamas. [The Defendants point out several differences between two versions of this document, including that the signature pages are different. Jeffrey Verdon states that based on common practice of signing trust deeds in duplicate, it is not surprising that the signatures are not identical.]. At paragraph 3(c), the Deed states, “The rights of the Beneficiaries and the rights powers and duties of the Trustees under this Settlement and the construction and effect of every provision of this Deed shall be determined according to the said law of the Jurisdiction…” At Schedule 2, paragraph 10, of the Trust Deed, it states, “On every change in the trusteeship a memorandum shall be endorsed on or permanently annexed to this Deed stating the names of the Trustees for the time being and shall be signed by the persons so named and any person dealing with the trust shall be entitled to rely upon any such memorandum (or the latest of such memoranda if more than one) as sufficient evidence that the persons named therein are the duly constituted trustees for the time being of this Settlement.”

[5] Mr. Verdon claims that there are several memoranda affixed to the electronic Trust Deed maintained by his office and that there is no requirement in the Trust Deed that the memoranda be affixed to a hard copy.

[6] On December 3, 2014, Wade & Co. received a transfer from Miller Thomson LLP Toronto (“Miller Thomson”) in the amount of $3,975,967.49 USD ($4,500,000.00 CAD) from funds held in trust for DCFT. The parties disagree about whether this was a loan to be repaid or an advance to be included in later reconciliation of accounts. A copy of the Miller Thomson trust account statement for DCFT dated February 24, 2015 shows the transfer on December 3, 2014 with the notation “FURTHER REAL ESTATE TRANSACTION FOR M. WADE AND S. DOREY” with the payee noted as “Wade and Company Inc.”.

[7] There is great disagreement about what happened after this point. The Defendants claim that this advance was assigned by DCFT to DCFT Holdings. The Plaintiffs deny this assignment took place.

[8] As referenced in Mr. Ezer’s affidavit at para 4, 11 and 12, the Defendants rely upon tax filings and a balance sheet to support their contention that this assignment occurred. Specifically, the Defendants refer to a T1134 Canada Revenue Agency form (Information Return Relating to Controlled and Not-Controlled Foreign Affiliates) purported to be filed by DCFT with the CRA for the year 2014. Anthony Inder Rieden is listed at the Trustee for DCFT. In a T1134 Supplement to this form, the total assets of DCFT Holdings in 2014 are listed as $31,723,192.73 CAD. An undated balance sheet for DCFT Holdings claimed to be attached to an email dated June 20, 2016 from Victoria Rodrigues, associate with Miller Thomson, to Scott Dorey, Jacqueline Huang, and Kevin Yu, shows the total assets, including a $4,500,000 CDN advance to “Wade & Co” in the year 2014, is included in the $31,723,192.73 as assets of DCFT Holdings as at December 31, 2014. Mr. Ezer claims that he prepared the financial statements for DCFT and DCFT Holdings under the professional advice of MNP LLP and Miller Thomson, both of which were retained by DCFT and DCFT Holdings for this purpose. Mr. Ezer states that the 2014 T1134 Form tax filing for DCFT was prepared and filed by MNP.

[9] Mr. Ezer also relies on conversations that he claims occurred between himself and Scott Dorey, in which Mr. Dorey purportedly advised Mr. Ezer that DCFT Holdings, in turn, transferred the advance to the benefit of BHP International Markets Limited (a company equally owned by DCFT Holdings and Wade Capital Family Trust Holdings Limited) to be applied in the repayment of shareholder loans owed by DCFT Holdings to BHP.

[10] Terai Boaza, client services manager of Ora Trustees Limited, disputes the suggestion that DCFT conveyed the receivable associated with the funds to DCFT Holdings, and points out that there is no agreement or other conveyancing document on file confirming that the transfer occurred. Ms. Boaza claims that the receivable could not have been transferred unless specifically authorized by the then Trustee of DCFT. Ms. Boaza states that to the extent that the balance sheet reflects the receivable as an asset of DCFT Holdings rather than DCFT, that would be an error or a deliberate misstatement by Mr. Ezer. It would appear, however, that neither Ms. Boaza nor Ora were involved in these affairs or transactions at the relevant time in 2014.

[11] A Conveyance Agreement between DCFT Holdings and Miradorinvest S.A. (“Miradorinvest”), a corporation incorporated under the laws of the Bahamas, dated March 18, 2016, provides for the transfer and assignment by DCFT Holdings to Miradorinvest, of DCFT Holdings’ undertaking, property, assets, and rights as set out in Schedule A. Schedule A stated the following assets, among others, were included in the assets transferred to Miradorinvest:

1. All cash on hand and in any bank held by the Corporation;
2. All shares or other equity or debt securities of any and all entities registered in the name of or held for the benefit of the Corporation [DCFTH] (other than securities of BHP International Markets Limited and StarClub, Inc. that have been transferred to Overseas Travel Inc. pursuant to a General Conveyance Agreement dated March 18, 2016);
3. All loans receivable;
4. All of the Corporation’s choses in action, claims and intangible property rights or rights to recovery or offset of any kind or character; and
5. All other rights, properties and assets of the Corporation of whatsoever nature or kind and wherever situated.

This Agreement was signed by Anthony L.M. Inder Rieden, listed as the Director for DCFT Holdings Limited, indicating, “I have the authority to bind the corporation”, and for Miradorinvest, there was the signature of a director for Magellan Directors Ltd. and a director of Cotswold Group Ltd.

[12] In March 2016, BHP was sold to a company called Progressive Arbitage Group. [On July 25, 2016, an Official Liquidator was appointed for BHP by the Supreme Court of the Commonwealth of the Bahamas.] The Defendants claim that the records of BHP are, therefore, no longer available to them.

[13] By appointment of Successor Protector dated April 26, 2016, CITP, Limited was appointed as Protector of DCFT. By Appointment of Additional Trustee, dated April 26, 2016, Southpac Trust International, Inc. was appointed as an additional trustee.

[14] By Dissolution and Asset Transfer Agreement dated August 9, 2016, the assets of Miradorinvest, including all loan receivables, were transferred to BK 2012, LLC. BK 2012 is not a party to these proceedings. According to the Plaintiffs, BK 2012 is in good standing and is a wholly-owned asset of DCFT.

[15] By letter dated August 10, 2016 from CITP, Euro-Dutch was removed as trustee of DCFT with immediate effect, leaving only Southpac as trustee.

[16] A corporate search for Miradorinvest, from the Government of the Bahamas Registrar General’s Department, shows that Miradorinvest was dissolved on October 20, 2016.

[17] According to a Certificate of Dissolution, DCFT Holdings was dissolved on November 7, 2016.

[18] This action was commenced on December 1, 2016. The original Plaintiffs were Southpac Trust International, Inc. as trustee for DCFT and Scott Dorey. The Plaintiffs claim included damages in the amount of the advanced funds, punitive, exemplary and/or aggravated damages in the amount of $500,000, an equitable mortgage in favour of the Plaintiffs, and a CPL.

[19] In their Statement of Defence and Counterclaim dated May 5, 2017, the Defendants pleadings included as follows:

1. In December 2014, Euro-Dutch was the trustee of DCFT and Scott Dorey had no authority to bind DCFT to any transactions;
2. Although DCFT Holdings and WCFT Holdings owned BHP equally, the distributions and shareholder loans to them or DCFT and WCFT were not always made in equal amounts, and on the agreement between the principals that they would reconcile or “true up” the amounts later.

The Defendants did not plead a lack of capacity on the part of the Plaintiffs.

[20] By Appointment of Successor Protector dated June 24, 2017, Guardian Protectors, LLC was appointed as protector of DCFT and CITP was removed.

[21] By Simultaneous Appointment of Successor Trustee dated October 31, 2017, Southpac was removed as trustee of DCFT and replaced by NTL Wealth Advisors, S.A.

[22] By Appointment of Successor Protector, dated March 25, 2019, CITP was again appointed as protector of DCFT and Guardian was removed.

[23] By Simultaneous Appointment of Successor Trustee, dated March 27, 2019, Ora was appointed as trustee. According to Mr. Verdon, annexed to the Trust Deed in Mr. Verdon’s possession are memoranda setting out changes to the trustees. The most recent memorandum notes the appointment of Ora on March 27, 2019.

[24] By Removal of Trustee dated March 28, 2019, NTL was removed as trustee of DCFT, leaving Ora as the sole Trustee.

[25] Pursuant to a resolution of the trustee of DCFT dated March 28, 2019, the administration of DCFT was moved to the Cook Islands and the law of the forum of administration was changed to the Cook Islands. The Protector of DCFT provided its consent to these changes in writing.

[26] On September 25, 2019, a Fresh as Amended Statement of Defence and Counterclaim was filed. The additions included a basis for Mr. Wade’s belief that there would be a reconciliation and changes to the set off pleadings.

[27] On November 4, 2019, the Plaintiffs provided a Reply and Defence to Counterclaim, denying the existence of a “true up” / reconciliation agreement.

[28] On February 18, 2021, the Defendants provided a Fresh As Amended Statement of Defence. The additional pleadings included that Ora, as Trustee for DCFT, has no standing to sue, and that to the extent that a cause of action exists, it does not exist in the hands of Ora, who does not have capacity to maintain the action.

[29] A further Reply and Defence to Counterclaim was prepared on April 8, 2021.

[30] By transfer dated December 3, 2021, the receivable at issue was transferred from BK 2012, LLC to DCFT. This was of course after this cross-motion was brought by the Defendants.

Analysis

[31] Rule 21 of the Rules of Civil Procedure allows for the early determination of an issue before trial. This can save time and cost for all parties and the justice system. In this case, it is the Defendants who have brought the motion under Rule 21.01(3)(b) which states as follows:

21.01(3) A defendant may move before a judge to have an action stayed or dismissed on the ground that… (b) the plaintiff is without legal capacity to commence or continue the action or the defendant does not have the legal capacity to be sued….

This subsection is distinct from Rule 21.01(1) which relates to any party bringing a motion on a question of law or to strike a pleading as it discloses no reasonable cause of action, in which circumstances no evidence is admissible, or in the case of (1)(a), at least without leave of the judge or on consent of the parties. Unlike motions brought under Rule 21.01(1), evidence is permitted under Rule 21.01(3)(b).

[32] Given the result that can be achieved through a Rule 21 motion, the Supreme Court of Canada has said that this tool of civil procedure is to be exercised with caution, balancing the need for people to have their day in court with the need to weed out meritless claims. In R. v. Imperial Tobacco Ltd., 2011 SCC 42, the court stated:

[19] The power to strike out claims that have no reasonable prospect of success is a valuable housekeeping measure essential to effective and fair litigation. It unclutters the proceedings, weeding out the hopeless claims and ensuring that those that have some chance of success go on to trial.

[20] This promotes two goods — efficiency in the conduct of the litigation and correct results. Striking out claims that have no reasonable prospect of success promotes litigation efficiency, reducing time and cost. The litigants can focus on serious claims, without devoting days and sometimes weeks of evidence and argument to claims that are in any event hopeless. The same applies to judges and juries, whose attention is focused where it should be — on claims that have a reasonable chance of success. The efficiency gained by weeding out unmeritorious claims in turn contributes to better justice. The more the evidence and arguments are trained on the real issues, the more likely it is that the trial process will successfully come to grips with the parties’ respective positions on those issues and the merits of the case.

[21] Valuable as it is, the motion to strike is a tool that must be used with care. The law is not static and unchanging. Actions that yesterday were deemed hopeless may tomorrow succeed… The history of our law reveals that often new developments in the law first surface on motions to strike or similar preliminary motions, like the one at issue in Donoghue v. Stevenson. Therefore, on a motion to strike, it is not determinative that the law has not yet recognized the particular claim. The court must rather ask whether, assuming the facts pleaded are true, there is a reasonable prospect that the claim will succeed. The approach must be generous and err on the side of permitting a novel but arguable claim to proceed to trial.

While these comments are more directly applicable to a Rule 21.01(1) motion, the caution and care with which Rule 21 motions, generally, must be approached is applicable here.

[33] Ontario courts have read into the rule a “plain and obvious” threshold. See MacDonald v. Ontario Hydro, affirmed by the Divisional Court at . This threshold has been repeatedly affirmed by Ontario courts.

[34] The “plain and obvious” threshold has also been accepted in the context of Rule 21.01(3)(b) capacity motions. To succeed, the defendant must satisfy the court that it is “plain and obvious” that the plaintiff lacks legal capacity to proceed with the action. In Zuppinger v. Toronto Standard Condominium Corp., 2019 ONSC 5117 at para 9, the court stated:

[9] Under rule 21.01(3)(b), the test is that the Defendants must demonstrate that it is plain and obvious that the Plaintiffs do not have the legal capacity to bring their claim: Grant v. Collingwood (Town), 2013 ONSC 1720 affirmed 2013 ONCA 568. Under this rule, unlike rule 21.01(1)(b), I am permitted to consider evidence and not just the pleadings.

[35] The concept of “legal capacity” in this context was discussed in Jackson v. Toronto Police Association, at para 18:

[18] In my view, it is clear that the question of the legal status of LAP is not one with respect to which the Respondents established any semblance of relevance. As the cases cited by the Appellants indicate, the question of whether a party has the capacity to be sued requires the court to consider the narrow issue of whether a party is a natural person, a corporation or a body which has been given that capacity by legislation: see, for example, S. (J.R.) v. Glendinning (2000), 191 D.L.R. (4th) 750, [2000] O.J. No. 2695 (S.C.J.); McNamara v. North Bay Psychiatric Hospital (1994), 16 O.R. (3d) 633 (C.A.); Re Indian Residential Schools, 2001 ABCA 216, 286 A.R. 307. The Respondents rely on two cases in support of its suggestion that the test is broader than this: see Warkentin v. Sault Ste. Marie Board of Education, [1985] O.J. No. 1616, 49 C.P.C.31 (Dist. Ct); Ontario Federation of Labour. v. Ontario (1996), 31 O.R. (3d) 302 (Ct. Gen. Div.), but neither case involves a motion to strike pursuant to Rule 21.01(3)(b) or its counterpart legislation in other provinces. Having reviewed the materials, and particularly the Court of Appeal authority relied on by the Appellants, I am satisfied that the determination of the Rule 21.01(3)(b) motion will be made on the basis of LAP’s actual status. I agree with the Appellants that, on the basis of the authorities I have reviewed, it is difficult to imagine what relevance either of Messrs. Froude’s or Zayack’s evidence could have in relation to this.

[36] Further, a Plaintiff may not have legal capacity to bring an action if they do not have a personal claim against the Defendant, similar to private interest standing.

[37] In Collins Safety Inc. v. ACT Safety Inc., [1998] O.J. No. 5532 (Gen. Div.), the court heard a motion by the Defendants to dismiss the action of the Plaintiffs on the grounds that Collins did not have the legal capacity to bring the action. Collins had previously sold several businesses to Safety and took a promissory note in partial satisfaction of the purchase price. Shortly thereafter, Collins sold its assets to two numbered companies, who in turn assigned their accounts to other entities to secure cash advances. The Defendant was not made aware of these assignments until later. On the motion, the principal of the Plaintiff company swore that the promissory note from Safety was not meant to be included in the transfer and, by virtue of the affidavit on the motion, was being assigned back to the Plaintiff company. The Defendants motion was granted, and the court stated in part as follows:

[9] I am not unmindful of counsel's argument that it is not clear which numbered company became the owner of the note since the note is not specifically referred to in the sale agreements between Collins and the numbered companies. However, it is clear that the cumulative effect of the two contracts is that Collins effectively transferred all of its assets to the numbered companies and therefore does not have the status to assert itself as the owner of the asset that has since been pledged as security without the stake holder's concurrence, which has not been produced.

[10] Accordingly, this motion cannot be characterized as raising credibility issues. Rather it is a simple case of status and the conclusion I have reached is that under Rule 21.01(3)(b), the plaintiff does not have the legal capacity to prosecute this action, insofar as the note is concerned. Accordingly, that portion of the claim is dismissed.

In this case, the court held that it was clear that a transfer of the asset had taken place and that there were no credibility determinations to be made.

[38] In Dolgonos v. Scotia Capital Inc., the court was adjudicating on a summary judgment motion, wherein the Defendant was seeking to dismiss the claim of a Plaintiff on the basis that the Plaintiff had not suffered any damage and had no standing to bring the action. In the ruling, the court referred to both Rule 20 and 21. The Court stated in part as follows:

[38] Rule 21 deals with when and how the court can deal with a question of law before trial. Like Rule 20, it has a high threshold (Stoneham v. Gladman, supra). Generally, pursuant to Rule 21, the defendant must show that it is plain and obvious and beyond doubt that the plaintiff cannot succeed (Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959). A motion under this rule is not used to resolve a factual dispute. The facts are to be uncontroversial or easily determined (Stoneham v. Gladman, supra; Goudie v. Ottawa (City), 2003 SCC 14, [2003] 1 S.C.R. 141; Dawson v. Rexcraft Storage & Warehouse Inc. (1988), 164 D.L.R. (4th) 257 (Ont. C.A.). The question is whether the claim can be dismissed on a point of law (Dickinson v. Toronto and Region Conservation Authority, supra).

[40] The submission that Alex Dolgonos does not have the capacity to sue because he does not own the shares cannot stand. The applicable rule is Rule 21.01(3)(b). It has been stated that:

The notion of legal capacity referred to in Rule 21.01(3)(b) is a relatively narrow and technical one relating to the plaintiff's legal ability to commence the litigation. (Western Delta Lands Inc. v. Zurich Indemnity Co. of Canada, [1999] O.J. No. 2984, 90 A.C.W.S. (3d) 200)

[41] I find that Alex Dolgonos has the capacity to sue. He is a person claiming to have suffered a loss due to the breach of a contract. He is a party to the contract. There may or may not be an issue at trial as to whether he lost the right to sue as a result of the disposition of the shares to the Trust. It is, however, not "plain and obvious" that he did so. It appears that as a result of the reassessment, undertaken by the Canada Revenue Agency, there was an agreement that Alex Dolgonos is considered "to have always held the shares". Moreover, in the event that he did give up ownership, I see no reason to conclude that the ability to sue to the benefit of a third party as discussed in McAlpine Construction v. Panatown, supra, should not be available in appropriate circumstances.

[39] In Grant v. Town of Collingwood, 2013 ONSC 1720, Collingwood sought an order pursuant to Rule 21.01(3)(b) dismissing the action on the grounds that the Plaintiff was without legal capacity to maintain the action, as they argued that Mr. Grant did not have a personal cause of action, rather the cause of action was a corporate one. Even though Mr. Grant disagreed, alternatively, he asserted that if the company in which he was involved was required to be added to the litigation, then he sought an order adding that company as a party plaintiff. The Court found that Mr. Grant was not, and never had been, the owner of the site at issue. Mr. Grant entered into a purchase and sale agreement in his capacity as a purchaser “in Trust” for the Company, giving him beneficial title to the property, but not legal title. Once the Company was incorporated, legal title to the site passed to the Company. As trustee, Mr. Grant was only bound by the purchase and sale agreement prior to incorporation. Mr. Grant was seeking to have the Site Plan Agreement declared void and an award of damages against the Town be paid to him personally. The Court held that when Mr. Grant commenced his action against the Town, he did not possess any personal rights, nor was he burdened with any obligations, both of which belonged to the Company. The Court struck Mr. Grant’s Amended Statement of Claim and dismissed the action.

[40] In Goldentuler v. Simmons Dasilva LLP, 2021 ONCA 219, the Court of Appeal was dealing with the Defendant’s appeal from the order of the motion judge that dismissed their motion, pursuant to Rule 21.01(3)(b), to dismiss the action on the basis that the plaintiff was without legal capacity to commence or continue the action. The appeal was allowed. The court held that the motion judge made an error in not addressing the question of who had retained the Appellants. The Respondent’s late brother was a lawyer in private practice. Before his death, he commenced an action against a group of former employees. The Respondent, also a lawyer, obtained an order to continue the action in the name of the estate, and the claim proceeded to an uncontested judgment and damages. Thereafter, in his capacity as Estate Trustee, the Respondent retained the Appellants to pursue an appeal in the Court of Appeal. The appeal was successful, and damages increased. A dispute then arose concerning the Appellant’s fees for the appeal, and the Respondent commenced a solicitor’s negligence action in his own name and in his personal capacity. It was clear that the estate had retained the Appellants, and the court found that the Respondent did not have a personal claim arising from the retainer of the Appellants given the party on whose behalf the appeal was brought and on whose behalf the Appellants were retained. The Respondent did not have capacity to bring the solicitor’s negligence claim.

[41] The Defendants state that the Plaintiffs have adduced no evidence on this motion that contradicts the evidence of Laurence Ezer and that Mr. Ezer’s evidence shows the transfer of the loan asset from DCFT to DCFT Holdings, and the further conveyance from DCFT Holdings to Miradorinvest. According to Mr. Ezer, he was advised by Scott Dorey, Plaintiff, that the loan asset had been applied to set-off shareholder advances from BHP in March 2016. The Defendants submit that Mr. Dorey has provided no evidence on this motion whatsoever and does not contradict the evidence of Mr. Ezer. Therefore, the only admissible evidence on this motion shows the loan asset was conveyed by DCFT to DCFT Holdings, who in turn conveyed it to Miradorinvest, prior to the commencement of this action. The Plaintiffs are therefore, according to the Defendants, without capacity to bring or maintain this action. According to the Defendants, the Plaintiffs rely on Ms. Boaza on this motion, who admits to having no knowledge of DCFT prior to March 27, 2019, the date of Ora’s purported appointment as Trustee. Therefore, the Defendant states that her evidence is inadmissible argument and opinion in circumstances where she acknowledges having no direct knowledge.

[42] As for the recent purported assignment of the receivable back to DCFT, the Defendants state that the Plaintiffs have produced no evidence as to the legitimacy of the assignment and, despite alleging that the document was executed only two months ago, the original has not been produced.

[43] The Defendants also question the documents showing transmission of the Protector and Trustees of DCFT, calling it a “convoluted path”. The Defendants suggest that the only tenable evidence is that the true and valid Trustee of DCFT remains the original trustee under the DCFT Deed of Settlement, Euro-Dutch Trust Company (Bahamas) Limited.

[44] Having carefully considered all of the evidence and arguments put forward, it is the view of this court that this Rule 21 motion must fail. The reasons for this conclusion are as follows:

1. This motion has been brought by the Defendants five years after the Dorey parties commenced this action against them for the repayment of an unpaid loan totalling close to $5 million.
2. Scott Dorey has been a party to this litigation since it commenced in 2016. To the knowledge of this court, there has been no attempt to remove him from this litigation at any time. Further, it would appear that if Scott Dorey were not a party to the action, the court would be unable to adjudicate on the matters in dispute effectively and completely (see Rule 5.03(1)). Scott Dorey would seem to be directly involved in this matter from the perspective of both the Plaintiffs and the Defendants when considering the pleadings.
3. There are many credibility determinations that will need to be made in this case as both sides of this litigation suggest that the other is being less than forthright.
4. The Defendants suggest that there is no admissible evidence before the Court that contradicts the transfer of the loan asset from DCFT to DCFT Holdings and from DCFT Holdings to Miradorinvest. The reality is that there is no direct evidence of the transfer from DCFT to DCFT Holdings. The evidence put forward by the Defendants is circumstantial evidence which is open to interpretation, leaving a serious factual dispute that cannot be resolved on a Rule 21 motion.
5. This court accepts that Ms. Boaza’s denial of this transfer is of little value given that she was not involved with these entities until many years later. Rule 4.06(2) provides that “an affidavit shall be confined to the statement of facts within the personal knowledge of the deponent or to other evidence that the deponent could give if testifying as a witness in court….” Rule 39.01(5) states that “an affidavit for use on a motion may contain statements of the deponent’s information and belief with respect to facts that are not contentious, if the source of the information and the fact of the belief are specified in the affidavit”. While this court does have some concerns with the Boaza affidavit, it is something to be weighed. There would appear to be no transfer agreement or other conveyancing document in existence demonstrating this initial transfer occurred, or any evidence from the trustee directing the transfer to occur.
6. The Defendants suggest that there is no reliable evidence that the Bahamian DCFT is vested in Ora as Trustee. This is simply not the case. The Plaintiffs have put forward a great deal of evidence in an attempt to show the path leading to Ora. While the Defendants question this documentation, documentation still exists. Again, this is a matter of credibility and reliability that would need to be weighed and considered by the trier of fact. This is not something to be determined on a Rule 21 motion.
7. The Defendants suggest that the recent transfer of the loan receivable from BK 2012 back to DCFT is suspect. For example, The Defendants point to the signatures on the August 9, 2016 Dissolution and Asset Transfer Agreement between Miradorinvest and BK 2012. Again, this is a reliability or credibility issue to be determined, but not one that should be settled on a Rule 21 motion.

[45] It is the view of this court that the discretion to strike a claim on a Rule 21.01(3)(b) motion must be reserved for a plain and obvious case where the salient facts are not in dispute or subject to credibility or reliability assessments. It is the view of this court that there are many salient facts disputed and subject to credibility and reliability determinations in this case, including a crucial determination of whether DCFT validly conveyed the loan receivable / advance to DCFT Holdings, and whether it has now been validly conveyed back. This is a serious factual dispute which is not narrow or technical and goes to the very heart of the case.

[46] For all of the foregoing reasons, the Defendants Rule 21 motion is dismissed. Given this court’s involvement in the issues to date, and the views taken, the motion to extend time scheduled for March 18, 2022 should be heard by another jurist.

[47] If the parties are unable to agree as to costs of this motion, the court will accept written submissions on costs, which shall be no more than three pages in length, excluding supporting documentation, and which shall be provided to the court office electronically, and to Bev.Taylor@ontario.ca, no later than 4:30 p.m. on March 10, 2022.

Justice V. Christie Date: March 3, 2022