COURT FILE NO.: 52820/11
DATE: 2012/01/24
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
KALIMUDDIN PIRBHAI
Bruce A. Macdonald, for the Plaintiff (Responding Party)
Plaintiff (Responding Party)
- and -
SUNITA RANI and GURNEK SINGH
Gurpreet S. Jassal, for the Defendants (Moving Parties)
Defendants (Moving Parties)
HEARD: December 22, 2011
The Honourable Mr. Justice D.J. Taliano
[1] This is a motion to set aside a default, summary judgment which set aside two transfers of property from the defendant, Gurnek Singh, to his wife, the defendant, Sunita Rani, that were found by the court to be fraudulent conveyances. However, the principal actor in this proceeding is Gurnek Singh, who apparently speaks on behalf of his wife because she has not filed independent materials. Therefore, although there are two defendants in this proceeding, when I refer in these reasons to the defendant or to Singh, I mean the defendant Gurnek Singh and conclusions I arrive at will bind both defendants.
[2] The evidence indicates that between 1994 and 1996, Singh masterminded an insurance fraud that led to losses that police investigators estimated at approximately $250,000. Singh, who was in the business of repairing and selling damaged automobiles, acted with employees and associates, to stage motor vehicle accidents. The scheme enabled them to present fraudulent claims to various insurance companies for lost income and compensation for personal injuries, property damage and accident benefits. The victims of these protracted, fraudulent activities were Royal Insurance, Kingsway Insurance, Progressive Insurance, Halifax Insurance and General Insurance.
[3] These fraudulent activities led to the laying of 21 criminal charges against Singh in October 26, 1996. Within one month of the laying of the charges, that is, on November 18, 1996, Singh transferred his interest in his matrimonial home for “natural love and affection” to his wife.
[4] He pled guilty to two of the 21 counts of fraud and was convicted of the offences on January 12, 1998 at which time he was fined $15,000. The remaining charges were withdrawn. On May 12, 1999, he transferred his business property without valuable consideration to his wife.
[5] In August, 1999, Singh met the plaintiff and entered into a contract to supply him with a 1998 Lexus. Singh’s dealings with the plaintiff were so dishonest that following a trial of 31 days, Quinn J. awarded the plaintiff damages of $33,465.77 for breach of contract, deceit and misrepresentation, $50,000 for punitive damages and full indemnity costs of $133,211.74 plus HST.
[6] Details of the defendant’s behaviour were reviewed with care by Quinn J. in damming language. Justice Quinn found Singh to be “unblinkingly dishonest” with “no aptitude for the truth”, “without a conscience” and “incorrigible”; a person who “should not be permitted to conduct any commercial business in the Province of Ontario that brings him into contact with members of the public”. Only a portion of the judgment is under appeal. The remaining portion remains unpaid.
[7] A short time after entering into the contract with the plaintiff, Singh’s motor vehicle dealer’s license was revoked by the License Appeal Tribunal on November 19, 2001 on the grounds of Singh’s “repeated disregard of the necessity to be honest and ethical”. Notwithstanding the loss of his dealer’s license, it is alleged that Singh continues to operate his business.
[8] As a result of the foregoing transfers, the plaintiff launched an action to set aside the conveyances under s. 2 of the Fraudulent Conveyances Act. This action led to a default, summary judgment setting aside the conveyances. It is this judgment that the defendant seeks to set aside.
[9] However, the defendant has failed to satisfy well-established preconditions for such relief. First, Singh’s explanation for his failure to respond to the plaintiff’s action was that it was as a result of a “misunderstanding” between counsel. However, his explanation is not supported by the correspondence between counsel that is exhibited in the briefs before the court. Singh claims that a critically important letter from counsel for the plaintiff, dated May 17, 2011, which required the defendant’s Statement of Defence “forthwith”, was not received. However, that allegation is difficult to believe since all the other communications between counsel, sent both before and after the letter in question, were admittedly received without incident. It was only this determinative letter that was allegedly not received, which on its face and even without all of the other factors surrounding Singh’s credibility, is difficult to believe. In addition, the allegation is not supported by any independent evidence. It is reminiscent of Singh’s behaviour during the trial which prompted Quinn J. to observe at para. 84 of his judgment that he “did not regard it as an innocent coincidence that all of his bank and telephone records were missing for the relevant period in this trial”. Given all of the circumstances, Singh’s explanation for his default is not plausible and is not supported by independent sources.
[10] Second, Singh did not move as soon as possible to set aside the judgment once it was learned that he had been noted in default. His counsel knew and therefore Singh knew in June that he had been noted in default, yet he did not seek relief until November. The delay in taking remedial steps was not reasonable. Although Singh blames his former lawyer for the delay, no evidence from the former lawyer was filed to support his contention.
[11] Finally, the defendant has not presented a defence to the action on the merits. The draft Statement of Defence consists almost entirely of blanket denials of the plaintiff’s allegations as opposed to setting forth facts to support the conclusion that there is at least an arguable defence to present on its merits. The defendant has not raised an issue that requires a trial to resolve.
[12] During the course of argument, counsel for the defendants vigorously argued that the plaintiff was not a creditor at the time of the transfers and therefore had no right to attack the transfers. By so arguing, counsel for the defendants is challenging the correctness of the default judgment. However, that submission is answered by the reasoning of the Court of Appeal of British Columbia in Canadian Imperial Bank of Commerce v. Boukalis, [1997] B.C.J. No. 86. In Boukalis, the court adopted the reasoning of Vice-Chancellor Blake in Reid v. Kennedy (1874), 21 Fe. 86 (at pp. 90-1) which held that it does not matter that the creditor attacking the deed did not exist at the time of its execution. The court went on to conclude that the use of the term “creditors and others” in s. 2 of the Act was intended to protect both past and future victims of fraud. The key to the section, the court said, was the intent of the debtor at the time of the transfer.
[13] In the circumstances of this case, the summary judgment court determined that the intent of this debtor was to put his assets out of the reach of past and future victims of his fraudulent activities. That finding was entirely justified on the evidence. Accordingly, I find no merit in the submission that the summary judgment was incorrectly granted. For all of these reasons, the defendants’ motion must be and is hereby dismissed.
[14] In view of this result, I should think that costs of this motion would follow the event and would not require further submissions, but if counsel are unable to agree, I will entertain submissions in writing. Counsel for the plaintiff shall have 30 days to serve and file his submissions. Counsel for the defendants shall respond within 15 days of receiving the plaintiff’s submissions. Any reply submissions to follow shall be served and filed within 7 days of receiving the responding materials.
Taliano J.
Released: January 24, 2012
COURT FILE NO.: 52820/11
DATE: 2012/01/24
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
KALIMUDDIN PIRBHAI
Plaintiff (Responding Party)
- and -
SUNITA RANI and GURNEK SINGH
Defendants (Moving Parties)
REASONS FOR JUDGMENT
Taliano J.
Released: January 24, 2012