Parjot Benipal

The applicants, shareholders in Golden Ocean Investment Corporation, brought a motion challenging the validity of second and third mortgages registered against a property owned by the corporation.

They alleged the sole director executed the mortgages without authority as part of a fraud, and that the mortgagees were willfully blind to badges of fraud.

The court dismissed the motion, finding the mortgagees were bona fide purchasers for value who conducted proper legal due diligence.

The court held that taking a financial or underwriting risk does not constitute willful blindness to fraud, and the mortgagees were entitled to rely on the director's actual and ostensible authority.

The court determined costs for four motions previously heard in the proceeding.

The plaintiff was ordered to pay costs to the defendant Jain on a partial indemnity basis for a motion to admit further evidence, and on a substantial indemnity basis for motions regarding a Mareva injunction and Norwich order due to the plaintiff's reprehensible conduct, including making and withdrawing unfounded allegations of fraud.

The plaintiff was also ordered to pay full indemnity costs to the defendant Wang for a mortgage validity motion, pursuant to the standard charge terms of the mortgage.