Court of Appeal for Ontario

Date: 2026-02-06 Docket: COA-25-CV-0300

Lauwers, Miller and Sossin JJ.A.

Between

Syed Bahauddin Plaintiff/Creditor (Respondent)

and

New Lahore Tikka House Inc. o/a Lahore Tikka House and 2294671 Ontario Incorporated Defendants/Debtors

and

1436318 Ontario Ltd. Garnishee (Appellant)

Micheal Simaan, for the appellant

Shane Greaves and Alex Nogalo, for the respondent

Heard: November 24, 2025

On appeal from the order of Justice Paul B. Schabas of the Superior Court of Justice, dated January 29, 2025, with reasons reported at 2025 ONSC 637.

Reasons for Decision

Introduction

[1] The motion judge ordered the appellant 1436318 Ontario Ltd. ("143 Ltd.") to pay the respondent Syed Bahauddin $154,257.05, being the amount owing on a consent judgment Bahauddin had obtained against the defendants New Lahore Tikka House ("NLTH") and 2294671 Ontario Incorporated ("229 Inc.").

[2] Bahauddin worked as a chef in the defendants' restaurant, New Lahore Tikka House, for more than 20 years. He was dismissed without cause in 2016 and given eight weeks' pay in lieu of notice. Bahauddin sued the defendants for wrongful dismissal. The parties settled on March 4, 2022. The defendants paid Bahauddin $25,000 and consented to a judgment requiring them to pay him a further $150,000. They never paid the judgment.

[3] The restaurant is located at 1365 Gerrard Street East in Toronto ("the Property"). 143 Ltd. owns the Property. Gulshan Allibhai is the sole director and officer of 143 Ltd. She also owned and operated NLTH and 229 Inc. In 2015, 143 Ltd. mortgaged the Property to the defendant NLTH, the restaurant tenant, for $754,988.37. The mortgage provides for monthly payments of $4,718.68.

[4] On July 13, 2023, a Notice of Garnishment was issued directing 143 Ltd. to pay the Sheriff of the City of Toronto all debts owed to NLTH up to $154,257.05, reflecting the outstanding judgment plus post-judgment interest to that date. Despite being properly served, 143 Ltd. made no payments to the Sheriff. 143 Ltd. belatedly offered a garnishee's statement, after Bahauddin brought a motion seeking to hold it liable for the amount in the Notice of Garnishment. In the garnishee's statement, 143 Ltd. denied owing any money to NLTH.

[5] The motion judge granted Bahauddin's motion for an order that 143 Ltd. immediately pay the full amount contained in the Notice of Garnishment pursuant to r. 60.08(17) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. He found the mortgage was evidence of a legitimate debt owing from 143 Ltd. to NLTH and further that the equities favoured granting the relief sought.

[6] For the following reasons, we dismiss the appeal.

Discussion

[7] This appeal brings into question two civil procedure sub-rules: r. 60.08(16) and r. 60.08(17). They provide:

(16) On motion by a creditor, debtor, garnishee, co-owner of the debt or any other interested person, the court may,

(a) where it is alleged that the debt of the garnishee to the debtor has been assigned or encumbered, order the assignee or encumbrancer to appear and state the nature and particulars of the claim;

(b) determine the rights and liabilities of the garnishee, the debtor, any co-owner of the debt and any assignee or encumbrancer;

(c) vary or suspend periodic payments under a notice of garnishment; or

(d) determine any other matter in relation to a notice of garnishment, and the court may proceed in a summary manner, but where the motion is made to an associate judge and raises a genuine issue of fact or of law, it shall be adjourned to be heard by a judge.

(17) Where the garnishee does not pay to the sheriff the amount set out in the notice of garnishment as owing by the garnishee to the debtor and does not serve and file a garnishee's statement, the creditor is entitled on motion to the court, on notice to the garnishee, to an order against the garnishee for payment of the amount that the court finds is payable to the debtor by the garnishee, or the amount set out in the notice, whichever is less.

[8] Bahauddin sought an order under r. 60.08(17). If a garnishee statement proves to be false, the court may treat the garnishee as though it had not filed the required statement at all: Turchiaro v. Liorti, [2004] O.J. No. 6289 (S.C.) ("Turchiaro ONSC"), at paras. 16-17, aff'd ("Turchiaro ONCA").

[9] The test applicable to this case is set out in this court's decision in Turchiaro ONCA, at para. 2. A registered mortgage provides some evidence of the alleged debt. From there, the judge is entitled to look at the rest of the evidence to determine if the garnishee's claim that no debt was owing is made out.

[10] 143 Ltd. argues the motion judge erred in finding the mortgage was legitimate and represented a debt owed by 143 Ltd. to NLTH. First, 143 Ltd. submits that the uncontested evidence in the case established that the mortgage was not legitimate so that, on the evidence, it was not open to the motion judge to find the mortgage was a valid debt. Second, 143 Ltd. argues that the motion judge erred by considering evidence about the sale of 229 Inc.'s assets in 2022 to another company, 1000217532 Ontario Inc. ("1000 Inc."); the suggestion that this sale was an attempt to thwart payment of the judgment debt was not relevant to the issue on the motion, which was whether there was sufficient evidence to rebut the presumed existence of a debt owed by 143 Ltd. to NLTH.

[11] Bahauddin argues that 143 Ltd. has not identified any palpable and overriding error in the motion judge's reasons. The motion judge was entitled to rely on the documentary evidence that supported the existence of the mortgage and to reject evidence led by Allibhai for lack of credibility. Whether the funds to discharge prior mortgages on the Property came from NLTH or some other source is irrelevant to the validity of the mortgage. Bahauddin also argues that evidence about the asset sale and the motion judge's conclusion that Allibhai was trying to avoid the judgment debt were relevant because garnishment is an equitable remedy, and the motion judge was entitled to decide the case on the basis of the equities as a distinct ground.

Analysis

[12] Allibhai's evidence was that the mortgage was registered to protect the Property from fraud on title, and that there was never an intention to make or collect payments between 143 Ltd. and NLTH. Her evidence was that no actual payments were made by 143 Ltd. to NLTH under the mortgage because no money was owing on it. There was no evidence to the contrary, no evidence that funds were advanced to 143 Ltd. by NLTH under the mortgage, and evidence that none of the money to discharge the previous mortgages registered on the Property came from NLTH.

[13] The motion judge rejected Allibhai's assertions. He concluded, at para. 18, that "there is good reason to doubt the veracity of Allibhai's evidence," which appears to be based on his finding that she retained control over the restaurant despite claiming to have sold it in 2022. He found, at para. 21, that Allibhai "has been ordering her affairs in a manner to avoid the payment of the judgment to the plaintiff". The implication appears to be that, because Allibhai engaged in transactions to avoid paying Bahauddin the judgment debt, the motion judge rejected her evidence about the mortgage as not credible since he saw it as simply a further attempt to avoid paying the judgment debt.

[14] We see no basis to intervene in the motion judge's credibility finding. The motion judge found contradictions between Allibhai's assertions and the documentary evidence, namely the registered mortgage and corporate profile report for 1000 Inc. In light of these discrepancies and Allibhai's ongoing attempts to avoid the judgment debt, the motion judge found her evidence insisting the mortgage was a sham to be suspect. This was his determination to make in weighing the evidence, and 143 Ltd. has not established a palpable and overriding error that would justify setting aside that finding.

[15] This case resembles the circumstances in Turchiaro. There, the court did not accept that any of the witnesses who testified were credible, in part because they held out that the debt did or did not exist as it suited their purposes: Turchiaro ONSC, at para. 13. Accordingly, the witness testimony did not displace the presumed existence of a debt based on the registered mortgage: Turchiaro ONSC, at para. 14. It was open to the motion judge to similarly find that Allibhai's evidence was self-serving and not credible, and to place more weight on the documentary evidence of a registered mortgage supporting the existence of a debt.

[16] It is true that in Turchiaro the court found there was additional documentary evidence that funds were advanced under the mortgage in issue: Turchiaro ONSC, at para. 15. 143 Ltd. argues that in this case, there was uncontradicted evidence that none of the money to discharge the prior mortgages came from NLTH, and there was no evidence of money being advanced or payments being made under the mortgage in issue. But the discharge of a prior mortgage would not prevent 143 Ltd. from registering a subsequent mortgage and creating a debt with a different lender. The motion judge did not draw the inferences 143 Ltd. suggests he should have drawn, but on this record, his credibility assessment and factual findings disclose no reversible error.

[17] We will briefly address the motion judge's alternative conclusion that he would have exercised his equitable discretion to grant the relief in any event. The motion judge relied on Lawyers' Professional Indemnity Company v. Nicol, 2014 ONSC 4748, at para. 38, for the principle that garnishment is "an equitable and discretionary remedy, and the court may make any order it deems just in the particular circumstances of any given case."

[18] This is where the difference between rr. 60.08(16) and (17) comes to the fore. The cases cited by Perell J. in Nicol locate this equitable discretion in r. 60.08(16), which states in part that "the court may ...(b) determine the rights and liabilities of the garnishee, the debtor, any co-owner of the debt and any assignee or encumbrancer" (emphasis added): see e.g., 20 Toronto Street Holdings Ltd. v. Coffee, Tea or Me Bakeries Inc. (2001), 53 O.R. (3d) 360 (S.C.), at paras. 4-5, cited with approval in International Union of Painters and Allied Trades, Local 200 v. S & S Glass and Aluminum (1993) Ltd. (2004), 185 O.A.C. 38 (C.A.), at paras. 19-20.

[19] However, Bahauddin sought relief under r. 60.08(17), which does not contain the same broad discretionary language as subrule (16). Indeed, the court has no discretion to do other than as subrule (17) dictates: Benzacar v. Terk, 2023 ONCA 773, 489 D.L.R. (4th) 540, at para. 37, leave to appeal refused, 6990371 Canada Inc. v. Benzacar, [2024] S.C.C.A. No. 17. The first inquiry under r. 60.08(17), which is in issue on this appeal, is whether a garnishee's statement has been served and filed, including whether the statement that was filed is to be treated as no statement because it is false: Benzacar, at para. 37. As we have explained, we are not setting aside the motion judge's finding that the garnishee's statement was false because there was a valid debt owed by 143 Ltd. to NLTH. However, if the garnishee's statement were true, and there was no valid debt, then Bahauddin would not be entitled to the relief provided by r. 60.08(17).

[20] Even if relief was sought on the basis of r. 60.08(16), that subrule does not afford the motion judge independent equitable jurisdiction to make the order sought in the absence of a valid debt. The cases cited in Nicol do not contemplate an equitable power to treat as valid a debt which does not in fact exist. Rather, they recognize the court's discretion to decline to enforce a garnishment where it would be inequitable, to hold a principal liable for a corporate garnishee's failure to make payments, or to consider the realities of the relationship between related companies and hold a garnishee liable for making payments to an entity it knew to be the debtor operating under a different name than in the notice of garnishment. In each case, the debt's existence was proven before the court could exercise its equitable jurisdiction. The equitable, discretionary nature of garnishment does not constitute an independent basis to find a debt to which garnishment could attach. In this case the motion judge did not accept, on credibility grounds, Allibhai's testimony that no debt existed between 143 Ltd. and NLTH.

Disposition

[21] The appeal is dismissed with costs in the amount of $5,800 payable by the appellant to the respondent.

"P. Lauwers J.A."

"B.W. Miller J.A."

"L. Sossin J.A."