COURT FILE NO.: CV-13-00002155-00 DATE: 2023 10 27

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: THE ESTATE OF SULOCHANA SHANTHAKUMAR by her estate trustee, SANTHA KUMAR MYLABATHULA, Plaintiff

AND: ROYAL BANK OF CANADA, GURRAPPADI, Siva, SYKES, William, RADHAKRISHAN, Usha, WILSON, Sheila, ATTORNEY GENERAL OF CANADA, CARVER, Phillip, YANG, Albert, and THE ATTORNEY GENERAL FOR THE PROVINCE OF ONTARIO, Defendants

BEFORE: Regional Superior Justice L. Ricchetti

COUNSEL: CALLAHAN, Peter M., for the Plaintiff BOWDEN, Gregory W., for the Defendants (ROYAL BANK OF CANADA; GURRAPPADI, Siva; SYKES, William; RADHAKRISHAN, Usha and WILSON, Sheila) WATT, Karen for the Defendants (ATTORNEY GENERAL OF CANADA, CARVER, Phillip and YANG, Albert)

HEARD: October 11, 2023; In-person.

ENDORSEMENT (On Motion to Strike and Summary Judgment Motion)

Contents

• THE MOTIONS
• RULE 21 - THE AMENDED STATEMENT OF CLAIM
  • Facts as Alleged in the Amended Statement of Claim
  • The Limitations Defence
  • Defamation
  • Breach of Charter Rights
  • Negligent Investigation
  • Negligence
  • Conclusion on R. 21 Motion
• RULE 20 MOTION FOR SUMMARY JUDGMENT
  • Evidence on the Rule 20 motion
  • Rule 20 Analysis
  • Conclusion on the Rule 20 motion
• CONCLUSION

THE MOTIONS

[1] The Royal Bank of Canada (RBC), Siva Gurrappadi, William Sykes, Usha Radhakrishan, and Sheila Wilson (these Defendants) bring this motion under R. 21 to strike out the Plaintiff’s claims (except malicious prosecution claim) and, a motion for summary judgment under R. 20 as it relates to the malicious prosecution claim.

RULE 21 - THE AMENDED STATEMENT OF CLAIM

[2] The relevant claims are for negligence, negligent investigation, malicious prosecution, defamation, breach of statutory duty, conspiracy to breach statutory duty, breach of Charter rights, and interference with economic relations.

[3] At the commencement of the motion, counsel for the Plaintiff conceded that the claim for breach of statutory duty and conspiracy to breach a statutory duty are to be struck out. Further, counsel for the Plaintiff conceded that the claim for interference with economic relations also be struck out.

[4] These Defendants raise a Limitations defence.

[5] The remaining claims to be dealt with under the R. 21 motion are:

a) Negligent investigation, b) Defamation, and c) Breach of Charter Rights.

[6] Ms. Shanthakumar died in August 2021. Mr. Mylabathula, her husband, is the estate trustee.

Facts as Alleged in the Amended Statement of Claim

[7] In 2010, Ms. Shanthakumar and her husband, Mr. Mylabathula decided to establish a family business. They would incorporate a business to do so, 1823730 Ontario Ltd (182 Ont.) under the name of United Plastics (paras.14 and 15).

[8] Mr. Mylabathula sought out equipment for the new business. He obtained commitments to purchase certain equipment (para. 18). Once the agreements with the suppliers were in place, Mr. Mylabathula “drafted an invoice” listing various pieces of equipment he had agreed to purchase and sell to 182 Ont.

[9] Mr. Mylabathula sought a location for his business. He presented to the RBC an offer to lease premises on Torbram Road.

[10] Mr. Mylabathula drafted a comprehensive business plan for 182 Ont. The business plan required funding of $244,800.

[11] On September 29, 2010, Mr. Mylabathula attended at an RBC branch and met with Mr. Gurrappadi. They discussed Mr. Mylabathula’s intention to and his business plan to establish a business. Mr. Mylabathula sought advice from Mr. Gurrappadi regarding his business plan. Mr. Mylabathula advised Mr. Gurrappadi that Ms. Shanthakumar would own the business, but he would operate it.

[12] Mr. Mylabathula advised Mr. Gurrappadi that he hoped to operate the business from the Torbram Road property. A copy of an Offer to Lease was included with the business plan.

[13] Mr. Gurrappadi required two pieces of identification from Ms. Shanthakumar before he could proceed any further.

[14] Mr. Gurrappadi retained the business plan.

[15] Mr. Mylabathula returned the next day with Ms. Shanthakumar’s identification.

[16] Mr. Gurrappadi said he would need to meet Ms. Shanthakumar before he could review the business plan as she was going to be the owner of the business.

[17] Later, Mr. Gurrappadi drove by the proposed Torbram location for the business and saw that another plastics company was already operating there. Mr. Gurrappadi told Mr. Mylabathula what he saw. Mr. Mylabathula advised that he had only made an offer to lease the Torbram Road property and did not have an actual lease.

[18] Mr. Mylabathula produced to Mr. Gurrappadi a bank draft in the amount of $20,000 to the RBC. The bank draft was for the purchase of equipment from a supplier.

[19] The bank draft was subsequently redeemed the same day. Ms. Shanthakumar explained that there was because of a mistake on the bank draft.

[20] On October 1, 2010, Mr. Gurrappadi contacted Mr. Mylabathula and asked Mr. Mylabathula and Ms. Shanthakumar to meet him on October 4, 2010.

[21] Para. 30 provides as follows:

The Plaintiff has also come to learn that Gurrappadi communicated certain false information to RBC Investigations, cause the Defendant Radhakrishan, an analyst with RBC Investigation, to publish a Syfact to the RBC computer network which purported to “demarket” Mylabathula. This publication effectively branded Mylabathula the Plaintiff as “fraudsters” and ended any hopes they might have had of ever securing financing from the RBC at any time in the future. This publication occurred on or about October 1, 2010. Gurrappadi, Radhakrishan, and the RBC are therefore liable for damages sustained by the Plaintiff as a result of their publication of these defamatory statements.

[22] RBC informed the police that RBC believed Ms. Shanthakumar and Mr. Mylabathula were attempting to obtain a small business loan through fraudulent means.

[23] When Ms. Shanthakumar and Mr. Mylabathula attended on October 4, 2010 at the RBC, the police and RBC Investigations were present. After discussions with Ms. Shanthakumar and Mr. Mylabathula, the police arrested Ms. Shanthakumar and Mr. Mylabathula.

[24] Ms. Shanthakumar and Mr. Mylabathula were charged with deceit, fraud or other fraudulent means to attempt to defraud RBC.

[25] For the purpose of these motions, I only focus on the allegations of Ms. Shanthakumar. It appears that Mr. Mylabathula has a separate legal proceeding with respect to the same facts and same legal claims which action has been stayed years ago.

[26] On May 15, 2012, for unknown reasons, the Crown stayed the charges.

The Limitations Defence

[27] RBC submits that the torts alleged, except malicious prosecution, were completed and known to Ms. Shanthakumar by October 4, 2010, when Ms. Shanthakumar was arrested at the RBC branch. It was clear the arrest related to the proposed business that she and Mr. Mylabathula were proposing to commence as set out in their business plan. Further, the section in the Amended Statement of Claim setting out the police interview, would have made it clear that the documentation and information came from the RBC and related to the events between September 27, 2010, to October 4, 2010.

[28] Accordingly, these Defendants allege that the limitation period would have expired two years later on October 4, 2012. This action was commenced on May 21, 2013 – more than two years after the arrest.

[29] I agree that there is no discoverability issue at play. And it was obvious that the charges related to allegations of attempting to obtain a loan from the RBC for their proposed plastics business. It certainly would have been obvious from their subsequent interview with the RCMP. See para. 36 and following of the Amended Statement of Claim.

[30] At para. 29 of the Amended Statement of Claim, Ms. Shanthakumar learned that Mr. Gurrappadi spoke to the owners of the plastic factory at the Torbram Road to learn that Mr. Mylabathula had been dismissed from that company. I am not persuaded this adds anything to the causes of action pleaded in this case under a R. 21 analysis. However, it does add to the R. 20 analysis below as it gives these Defendants some grounds for their suspicion that Ms. Shanthakumar and Mr. Mylabathula were attempting to obtain a loan under false pretenses.

[31] At para. 30 of the Amended Statement of Claim, Ms. Shanthakumar learned that Mr. Gurrappadi communicated false information to RBC Investigations, specifically that Ms. Shanthakumar was attempting to obtain a small business loan through fraudulent means. From reading the Amended Statement of Claim, it is obvious, that Ms. Shanthakumar and Mr. Mylabathula were there to discuss their business plan. Mr. Shanthakumar denies she ever sought a business loan from the RBC. While I highly doubt this given the circumstances, for the purpose of this R. 21 motion I will accept that allegation for this part of the analysis.

[32] Ms. Shanthakumar would have known of the allegations that she had attempted to obtain a loan from RBC by fraudulent means. That was the charge. And it is clear from the section in the Amended Statement of Claim regarding the police interview.

[33] There are no allegations that RBC, nor its employees, did anything subsequent to October 4, 2010 to further the police charges or investigation.

[34] I am satisfied that the two-year limitation period began to run on October 4, 2010 at the latest when Ms. Shanthakumar was charged with attempting to obtain a loan from the RBC by fraudulent means.

[35] Accordingly, I dismiss the Plaintiff’s claims, except malicious prosecution, as having expired due to the Limitations Act.

[36] However, let me go further to discuss additional grounds for dismissal of the individual torts alleged (except those conceded by the Plaintiff).

Defamation

[37] At common law, a person’s claim in tort expires upon that person dying. See Canadian Encyclopedic Digest para. 132.

[38] This rule has been modified by statute. Section 38 of the Trustee Act provides:

s. 38 (1) Except in cases of libel and slander, the executor or administrator of any deceased person may maintain an action for all torts or injuries to the person or to the property of the deceased in the same manner and with the same rights and remedies as the deceased would, if living, have been entitled to do, and the damages when recovered shall form part of the personal estate of the deceased; but, if death results from such injuries, no damages shall be allowed for the death or for the loss of the expectation of life, but this proviso is not in derogation of any rights conferred by Part V of the Family Law Act.

(Emphasis added).

[39] I note that the common law regarding defamation was not changed as it relates to an executor or an administrator having the ability to maintain a defamation action.

[40] I am satisfied that Mr. Mylabathula, as estate trustee cannot maintain this action against the Defendants for defamation.

[41] The defamation claim is dismissed.

Breach of Charter Rights

[42] This is a bald allegation with no specific allegation of what Charter rights were breached nor materials facts to support such a claim.

[43] Further, Charter rights cannot be applied to litigation between private citizens, as alleged here against these Defendants.

[44] As a result, to the extent this claim was intended to be applied to these Defendants, the Charter claim is dismissed.

Negligent Investigation

[45] It is unclear whether this claim relates to these Defendants. To date, negligent investigation has only been applied to police investigations – not private individuals or private corporations.

[46] There is no basis nor grounds pleaded nor made during submissions as to why this tort should be extended to private individuals such as these Defendants.

[47] In fact, to extend negligent investigation to private persons would be inconsistent with the legal requirements to establish malicious prosecution. A person who reports suspicious and/or potentially criminal activity to the police enjoys a qualified privilege. That privilege can be defeated if the person did so, in a manner which includes, that the person report was done intentionally with mala fides. To require that private individuals have a duty to investigate before reporting matters to the police would be inconsistent with the existing law of malicious prosecution and would cause a serious reluctance due to liability absent an investigation by the private person (which would not be in the public interest). It is not necessary to expand the law to create a tort of negligent investigation against individuals in these circumstances.

[48] This claim is dismissed.

Negligence

[49] This claim is pleaded.

[50] However, there are no specific material facts pled against RBC or its employees specifying a duty, alleging a breach (and how) of that duty, and what damages arising from that duty.

[51] The bald allegation is that these Defendants gave the police “false and misleading information” (para. 36).

[52] The difficulty with this is that statements given to the police enjoy qualified privilege UNLESS the defendants made the statements intentionally with mala fides. Even untrue statements enjoy this privilege unless the statements were made to the police with mala fides. No material facts have been pleaded to support such a finding of actual malice/ mala fides.

[53] This claim is dismissed.

Conclusion on R. 21 Motion

[54] Except for the claim for malicious prosecution, all claims are dismissed as having expired due to the limitation period and additionally for failing to disclose a cause of action.

[55] Given that these matters go back thirteen years and there has already been an amendment AND Mr. Mylabathula’s claim essentially on the same factual basis and legal claims has and remains stayed, no amendments will be permitted.

RULE 20 MOTION FOR SUMMARY JUDGMENT

[56] These Defendants move under Rule 20 in respect of the Plaintiff’s claim for malicious prosecution.

Evidence on the Rule 20 motion

[57] There is evidence filed by Ms. S. Wilson, Mr. W. Sykes and Mr. S. Gurrappadi on this motion.

[58] Essentially, the evidence from these Defendants on this motion is as follows:

a) On September 29, 2010, Mr. Mylabathula went to the RBC branch and introduced himself as Mr. Shanta Kumar to Mr. Gurrappadi as someone going to start a plastics business through a numbered company. Ms. Shanthakumar was going to be the 100% owner of the new business as he had “some issues with Credit Bureau”. Mr. Mylabathula advised he had approached RBC in June 2010, so RCB had processed his application but couldn’t proceed because of a change in the machinery for the business. Mr. Mylabathula gave Mr. Gurrappadi:

• coloured IDs for himself and Ms. Shanthakumar (copy of citizenship card, Canadian passport and SIN card);
• photocopy of invoice for the equipment he ordered with a downpayment of $45,000;
• photocopies of drafts from CIBC and RBC as downpayment to the equipment supplier;
• projected financial statements for 3 years;
• executive summary of Mr. Mylabathula’s experience,
• reference letters and a list of prospective clients;
• Offer to lease the Torbram premises.

b) Mr. Gurrappadi required the original ID’s (not just the copies) and that Mr. Mylabathula had to come into the RBC with Ms. Shanthakumar on October 1, 2010.

c) On September 30, 2010, Mr. Gurrappadi visited the proposed business site in the Offer to Lease, and found that it was already in business by another party and was given information that Mr. Mylabathula had previously operated from that site but had defaulted on loans and evacuated the premises. The new owners had been in business for approximately 3 months.

d) Mr. Gurrappadi conducted further due diligence and discovered:

• The supplier did not exist. The supplier couldn’t be contacted at the alleged address by phone. When answered Mr. Gurrappadi hung up, but it appeared to be the same person as Mr. Mylabathula.
• The RBC bank draft payable to the supplier was redeemed by Ms. Shanthakumar later on the same day.
• There was a government guaranteed small business loan application for $244,800 filed by Mr. Mylabathula for Ms. Shanthakumar.

e) The false information regarding the lease raised concerns.

f) As did the false supplier and bank draft as evidence of equipment purchase when it had been redeemed later that day by Ms. Shanthakumar.

g) Ms. Wilson reviewed the client credit application and all documents submitted.

h) Ms. Wilson met with Mr. Mylabathula and Ms. Shanthakumar to determine whether Ms. Shanthakumar was aware of the loan documentation filed by Mr. Mylabathula. Mr. Mylabathula kept answering her questions. Eventually, Ms. Shanthakumar confirmed she was aware of the loan application and new business.

i) Mr. Mylabathula attempted to retrieve the Torbram Offer to Lease and replace it with a new one. Despite efforts to prevent him, he did so (but the Torbram Offer to Lease was later recovered by the police).

j) Ms. Wilson and Ms. Gurrappadi concluded that the loan application was likely false.

k) RBC and its employees provide the loan application documentation and information Mr. Gurrappadi had acquired to the police.

l) After Ms. Wilson’s interview with Ms. Mylabathula and Ms. Shanthakumar, the police arrested Mr. Mylabathula and Ms. Shanthakumar.

[59] Essentially, in Mr. Mylabathula’s responding affidavit, he refers to the allegations in the Amended Statement of Claim, his productions and his examination. However, he did not provide any specific denials and his version of events to support his factual allegations.

[60] It is important to note that Mr. Mylabathula’s “centerpiece” of his defence to these motions was that there was “never” a loan application to RBC. Mr. Mylabathula’s counsel virtually dared counsel for these Defendants to produce one. When counsel for these Defendants indicated it was in their Affidavit of Documents and they were prepared to produce the entire loan application file, Mr. Mylabathula’s counsel retracted an earlier agreement to permit the loan application as part of the evidence.

[61] I am not persuaded that much turns on having the actual loan application before this court on this motion. The evidence on this motion, filed by these Defendants, includes reference to there being a loan application, references to the typical documents that would have to be supplied to the bank (for identification, business plan, and other such documentation) all consistent with Mr. Mylabathula and Ms. Shanthakumar seeking a loan from RBC. Besides, if necessary, the RBC productions were marked as an exhibit to Mr. Mylabathula’s examination, to which he relies on for these motions.

[62] Mr. Mylabathula didn’t deny specific facts or the sworn evidence of the RBC employees in his sworn affidavit. However, there is considerable evidence supporting the evidence of the RBC employees. A few examples:

• During his examination, there were “word games” regarding this “loan” such as saying if Mr. Gurrappadi “could explain to him properly” and if Mr. Gurrappadi “said he could do something”, he might have applied for a loan. See Q 186 and following of Mr. Mylabathula examination.
• At several times Mr. Mylabathula said: “Your Royal Bank manager never let me open it” – referring to the plastic’s business he proposed to open with a needed loan. See Q354 of Mr. Mylabathula’s examination.
• And later admitted that he had his wife, Ms. Shanthakumar, signed the blank loan application. See Q 414 and following of Mr. Mylabathula’s examination.

[63] Mr. Mylabathula’s explanation that he simply went to the RBC to get advice on his business plan makes no sense. His explanation falls apart when the uncontradicted evidence is that he provided and left a business plan, copies of passports, copies of SIN, business forecasts, an Offer to Lease, proof of a proposed payments to equipment suppliers and later brought in original identifications for him and his wife.

[64] And some of the evidence that he gave during the examination adds to the suspicious nature of his loan application. A few examples:

• He stated he told the bank that he placed plastics equipment, from a prior business, into the name of a former employee and tenant. See Q 271 of Mr. Mylabathula’s examination.
• Invoice 186 was just an invoice number that Mr. Mylabathula picked – there were no invoices before and none after. AND this invoice from Delta Machinery Sales (the alleged supplier) was prepared by Mr. Mylabathula himself. See Q 276-277 of Mr. Mylabathula’s examination.
• Mr. Mylabathula goes on to state that Delta Machinery Sales (the equipment supplier) was his own company. See Q 291 of Mr. Mylabathula’s examination.
• The supplier’s telephone number was his phone number and he was billing himself as the supplier. See Q312 to 316 of Mr. Mylabathula’s examination.
• The supplier bank draft for $25,000 presented to RBC was payable to his own company (this is different from the draft redeemed by Ms. Shanthakumar the same day). Q 318-329 of Mr. Mylabathula’s examination.

[65] Relying on my powers under R. 20.04 (2.1) I am satisfied that an attempt was made to obtain a bank loan from RBC. More importantly, I am also satisfied that RBC and its employees had reasonable grounds to believe this may have been an attempt to obtain a loan under false pretences. I come to this conclusion based on the following information which the RBC and its employees had at the time the reported their concerns to the police:

a) Mr. Mylabathula went to speak to a loans officer at RBC, someone he had never met before. b) While Ms. Shanthakumar was to be the real borrower, she did not attend the meeting. c) Mr. Mylabathula produced and left with RBC a business plan. d) Mr. Mylabathula produced evidence of an offer to lease or lease (it matters not), which was clearly false based on the due diligence of the bank employee. e) Mr. Mylabathula produced a bank draft as proof of equipment order, but that bank draft was later redeemed the same day not by a supplier but by Ms. Shanthakumar. f) Mr. Mylabathula produced the type of identification documents one would expect to be given to the bank for a loan application. g) When confronted with the “fake” Torbram lease document, Mr. Mylabathula despite resistance by the RBC employee replaced it with another document. h) Before he knew that the police were involved, Mr. Mylabathula had his wife, Ms. Shanthakumar - the intended borrower, sign a loan application.

Rule 20 Analysis

[66] Having struck out all claims except for the malicious prosecution claim, let me deal with that remaining claim.

[67] There are four necessary elements that a plaintiff must prove in a claim for malicious prosecution:

a) the proceedings must have been initiated by the Defendant(s); b) the proceedings must have terminated in favour of the Plaintiff(s); c) absence of reasonable and probable cause; and d) malice, or other primary purpose other than that of carrying the law into effect.

[68] All four elements must be satisfied in order for the plaintiff to succeed. The burden is on the plaintiff, and it is a heavy one. As Lamer J. stated in Nelles v. Ontario, 1989 2 SCR 170 (at 194):

[A] plaintiff bringing a claim for malicious prosecution has no easy task. Not only does the plaintiff have the notoriously difficult task of establishing a negative, that is the absence of reasonable and probable cause, but he is held to a very high standard of proof to avoid a non-suit or directed verdict.

[69] Where such claims are alleged against individuals, rather than against the police, the claimant must establish that the individuals “actually procured the use of the power of the State to hurt the plaintiff by initiating a criminal proceeding.” In other words, they knew the information given to the police was false and that the information was deliberately given male fides – to harm the claimant.

[70] As for the prosecution, by supplying the police with false information or withholding information, the claimant must demonstrate that the police did not have an opportunity to conduct their own independent investigation and exercise their own independent discretion. (See Mirra v. TD Bank paras. 35-38)

[71] In this case, the Plaintiff falls well short on establishing this tort.

[72] Based on the above, these Defendants had reasonable grounds to believe that that Mr. Mylabathula and Ms. Shanthakumar were attempting to obtain a loan through fraudulent means. There were indicia of false and misleading information. Not only can the Plaintiff not establish mala fides, but the evidence also clearly and strongly establishes a reasonable basis for the RBC and its employees to report the matter to the police.

[73] These Defendants had nothing to gain or lose by reporting this to the police. This is a far cry from rebutting the presumption that, when reasonable grounds to believe a crime has or is about to committed, reporting it to the police is a qualified privilege unless the reporting was done in mala fides.

[74] The fact the police arrested Mr. Mylabathula and Ms. Shanthakumar and were later charged by the Crown’s office further strengthens the lack of mala fides by these Defendants.

[75] There is not genuine issue requiring a trial on the Plaintiff’s claim for malicious prosecution as the Plaintiff cannot succeed to establish that these Defendants did not have a reasonable and probable cause to report this to the police AND that the Plaintiff cannot succeed to establish that these Defendants acted with mala fides.

[76] I note, solely for information but not relied on for the decision on these motions, that Mr. Mylabathula commenced a strikingly similar action based on the same fact situation and similar claims, with himself as the Plaintiff against these same Defendants. That claim was struck out by J. Tzimas on October 14, 2013. Although the Statement of Claim was subsequently amended, that action was stayed on September 19, 2014. That action continues to be stayed.

Conclusion on the Rule 20 motion

[77] I am not persuaded, given the serious and fundamental deficiencies described above and the historical timeline (including the limitation period having expired more than a decade ago), leave to amend should be permitted.

[78] The malicious prosecution claim is dismissed without leave to amend.

CONCLUSION

[79] The action is dismissed in its entirety with costs of the action.

[80] These Defendants can file written submissions (max 5 pages) together with any offers, and authorities AND a Bill of Costs of the action within 2 weeks of the release of this decision.

[81] The Plaintiff can file responding written submissions (max 5 pages) together with any offers and authorities within 2 weeks of receiving the submissions of these Defendants.

[82] No reply submissions.

Released: October 27, 2023 RSJ L. Ricchetti

COURT FILE NO.: CV-13-00002155-00 DATE: 2023 10 27 SUPERIOR COURT OF JUSTICE - ONTARIO RE: THE ESTATE OF SULOCHANA SHANTHAKUMAR by her estate trustee, SANTHA KUMAR MYLABATHULA -and- ROYAL BANK OF CANADA, Siva GURRAPPADI, William SYKES, Usha RADHAKRISHAN, Sheila WILSON, ATTORNEY GENERAL OF CANADA, Phillip Carver, Albert Yang, and THE ATTORNEY GENERAL FOR THE PROVINCE OF ONTARIO COUNSEL: P. Callahan, for the Plaintiff G.W. Bowden, for the Defendants, Royal Bank of Canada, Siva Gurrappadi, William Sykes, Usha Radhakrishan and Sheila Wilson K. Watt, for the Defendants, Attorney General of Canada, Phillip Carver and Albert Yang ENDORSEMENT (On Motion to Strike and Summary Judgment Motion) RSJ L. RICCHETTI Released: October 27, 2023