COURT FILE AND PARTIES

COURT FILE NO.: CV-13-480703

DATE: 20140325

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Zulfiqur Al Tanveer Haider, Plaintiff

AND:

Syed Aftab Hussain Rizvi, Defendant

BEFORE: W. Matheson J.

COUNSEL:
Ronald Flom, for the Plaintiff

Charles Wagman, for the Defendant

HEARD: March 19, 2014

ENDORSEMENT

[1] This is a motion for partial summary judgment brought by the plaintiff. The plaintiff lives in Dubai and had a business relationship with the defendant through which a number of real estate transactions were completed. The defendant was the plaintiff’s real estate agent among other things. The plaintiff has sued the defendant for various relief arising from alleged financial improprieties.

[2] In the underlying action it is alleged that after the plaintiff confronted the defendant with financial improprieties they negotiated and settled their financial affairs, culminating in a settlement agreement dated October 2, 2012. It is alleged that the defendant is in breach of that agreement, for which the plaintiff seeks damages of $1,050,000. In addition, the plaintiff seeks return of the sum of $40,000 based upon a specific alleged fraud. This motion for partial summary judgment is focused on that alleged fraud.

[3] The plaintiff seeks judgment for the relief set out in sub-paragraphs 1(b)(c) and (e) of the statement of claim, which include payment of the sum of $40,000, tracing of all amounts wrongfully retained by the defendant, disgorgement of benefits received by the defendant in connection with the $40,000 and compensation for related expenses incurred by the plaintiff.

[4] The defendant’s position on this motion is that even if the alleged fraud were proved, the plaintiff has not proved that any damages flowed from it. The defendant further submits that the question of damage is subsumed in other relief sought in action that is not the subject of this motion, and cannot be decided separately. In addition, the defendant submits that the defendant has paid the money at issue in any event.

Background to motion

[5] The alleged fraud arose in the context of three specific real estate transactions. With the defendant’s assistance, the plaintiff purchased three condominiums at 35 Balmuto Place in Toronto. The plaintiff gave the defendant a power of attorney to assist with these and other transactions. The condominium transactions at issue closed in January/February of 2012.

[6] Among other duties, the defendant was responsible to retain real estate counsel for these transactions. By email dated May 10, 2012, the defendant provided the plaintiff with what he described as “final accounts” from real estate counsel. Attached were three trust ledger statements, one for each property. At a later stage, the plaintiff received the trust ledger statements directly from the real estate counsel and noticed that they were not the same. Specifically, the amount shown as due for land transfer tax (LTT) was different.

[7] For example, for Unit 3606, the Ontario LTT on the document provided by the defendant showed the amount $26,530.24 where the document from counsel showed $16,530.24. Altogether, there is a $40,000 difference between the LTT amounts on the two versions of the trust ledger statements.

[8] The evidence on this motion demonstrates that the version from counsel shows the correct LTT figures, not the version provided by the defendant. The plaintiff concluded that he was effectively paying $40,000 more for LTT than was actually required and the defendant was keeping those funds.

[9] Further, the defendant’s accountant has sworn an affidavit on this motion in which he recounts a conversation with the defendant about the three trust ledger statements. When asked whether he altered them, the defendant said “it happened” and changed the subject.

[10] Criminal charges were laid against the defendant. Defendant’s counsel advised at the hearing of this motion that at a judicial pre-trial of the criminal charges last month, the Crown agreed to withdraw the charges if the defendant paid the defendant $40,000. A certified cheque dated March 10, 2014, has since been provided to the plaintiff.

[11] The defendant swore two affidavits in response to this motion, in which he says nothing about the two versions of the trust ledger statements. Similarly, on cross-examination, his counsel refused to permit him to answer any questions about the statements. Defendant’s counsel submits that it was reasonable to proceed in this way given the outstanding criminal proceedings. I disagree. If the defendant had a good explanation, he would have provided it. I draw an adverse inference from his failure to do so. The defendant was obliged to answer the questions on cross-examination if he wanted his evidence to be taken into account. The Evidence Act, R.S.O. 1990, c. E-23 provides, in s. 9, that a witness shall not be excused from answering any question upon the ground that the answer may tend to criminate the witness. That section further provides protections where the witness objects on that basis. There is a parallel provision in the Canada Evidence Act, R.S.C. 1985, c. C-5. There is also protection under s. 13 of the Canadian Charter of Rights and Freedoms. The defendant could have invoked these protections if the concern was that his answers would tend to incriminate him. Yet that was not given as the basis for the objections.

[12] In any event, it is the defendant’s position that the $40,000 at issue has already been paid – twice. In his affidavit evidence, he claims that a group of payments covered the amount. However, other witnesses including the defendant’s own accountant have attested that those payments related to other matters. I do not accept the defendant’s evidence that those payments related to the $40,000 at issue.

[13] As well, the defendant relies on the recent cheque provided to the plaintiff as part of the defendant’s agreement with the Crown to withdraw the criminal charges. However, the defendant’s confirmation form for this motion refers to a cover letter that attempts to attach qualifications to that payment as follows: “the payment would be taken into account on the accounting to be done in respect to the balance of the plaintiff’s claim, which is not the subject matter of the motion for partial summary judgment.” As a result, the plaintiff submits that the defendant is attempting to attach qualifications to this payment.

Analysis

[14] The tort of civil fraud has the following elements, which must be proved on a balance of probabilities, as set out Hryniak v. Maudlin 2014 SCC 7 at para. 87:

(i) a false representation by the defendant;

(ii) some level of knowledge of the falsehood of the representation on the part of the defendant (whether knowledge or recklessness);

(iii) the false representation caused the plaintiff to act; and,

(iv) the plaintiff’s actions resulted in a loss.

[15] I readily conclude on the evidence before me that there was a false representation by the defendant, and the defendant knew it was false. The plaintiff must also prove that he acted on the false representation and suffered damage.

[16] The false trust ledger statements were not provided to get funds for closing. They were given to the plaintiff several months after the real estate transactions in question had closed. In cross-examination, the plaintiff agreed that he did not pay additional funds at that point because in his view the defendant owed him $920,000. However, his accountant did prepare a reconciliation based upon the false trust ledger statements and the reconciliation was used to determine the amount owing by the defendant. The plaintiff further attests that he signed the settlement agreement with the defendant based upon the false trust ledger statements. I am therefore satisfied that the plaintiff has demonstrated that he acted on the false statements.

[17] The final requirement, that the plaintiff suffered damage, is the main area of dispute on this motion. The defendant says it is all tied to the accounting between the parties on the larger issues in this action and, in any event, he has already paid this money twice.

[18] As set out above, I have rejected the defendant’s evidence with respect to the first group of payments that the defendant suggests show he paid the $40,000. I do so based on the evidence including the defendant’s own accountant, who attested that those payments were in respect of other matters.

[19] There is then the recent payment of $40,000 made pursuant to the defendant’s agreement with the Crown to drop the criminal charges. The defendant expressly submits to this court that this payment means that there has been no damage suffered by the plaintiff and this motion is moot. In those circumstances, I see no reason why the plaintiff should not accept that cheque in satisfaction of the claim in subparagraph 1(b) of the statement of claim. To do so would not be an admission or agreement to the qualifications asserted by the defendant in the cover letter referred to in the confirmation form. I therefore find that the $40,000 has been repaid upon the certified cheque being cashed, which I expect has or can now be done.

[20] The requirement that the plaintiff show he has suffered a loss has therefore not been met.

Decision

[21] I find that because of the very recent payment of $40,000, the plaintiff is no longer entitled to claim that amount as a result of the defendant’s fraud. Given my finding that the $40,000 has been repaid, there is no need to trace those particular funds as relief on this motion. Lastly, there is the claim under subparagraph (e) of the statement of claim for disgorgement of benefits and other relief. This claim was not the central focus of this motion. It is minor in comparison to the other issues on this motion and in the action. Using the roadmap in Hyrniak at para. 66, I conclude that as of now that claim for relief requires a trial. It can easily be addressed within the trial of the balance of the action. The new powers under Rule 20 of the Rules of Civil Procedure do not provide an efficient alternative process as of now. That may change as the action progresses through discovery or as a result of expert evidence, for example, but as of now I am dismissing this motion and seizing myself of the trial of this action.

[22] If the parties are unable to agree on costs, they may provide me with brief written submissions together with a costs outline, to be delivered by April 14, 2014. Any brief written response to the opposite parties’ submissions shall be delivered within 20 days after service of those submissions.

W. Matheson J.

Date: March 25, 2014