CITATION: Irani v. Cheung, 2015 ONSC 1916
COURT FILE NO.: CV-13-494071
DATE: 20150324
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: FRENY F. IRANI
Plaintiff
- and -
WINSON (VINCENT) CHEUNG, ICON INTERNATIONAL HOLDINGS PTY LTD. and ENERGYONE SOLUTIONS CORPORATION
Defendants
BEFORE: STEWART, J.
COUNSEL: Aaron Kreaden for the Plaintiff
Robert W. Baldwin, for the Defendants
HEARD: January 13, 2015
ENDORSEMENT
[1] The Plaintiff, Freny F. Irani (“Irani”), moves for summary judgment pursuant to Rule 20 of the Rules of Civil Procedure as against the Defendant, Winson (Vincent) Cheung (“Cheung”), on the basis that there is no issue raised in the action that requires a trial.
[2] Default judgment as against the two other Defendants, Icon International Holdings PTY Ltd. (“Icon”) and EnergyOne Solutions Corporation (“EnergyOne”) has been obtained by Irani. The allegations made by Irani as against them are deemed to have been admitted by them by virtue of their default. No funds from either of these Defendants have been recovered through enforcement of these default judgments.
[3] Irani’s claim against Cheung is for repayment of a debt in the amount of USD$1 million, plus interest of over $400,000.00 said to be owed by him personally to her. This liability is said to arise from Cheung’s alleged agreement to repay the debt or, alternatively, by piercing the corporate veil between Cheung and Icon which received funds from Irani, has not accounted for them and has thereby been unjustly enriched.
[4] Cheung takes the position that genuine issues have been raised that require a full trial to determine.
Background
[5] Irani is a businesswoman who resides in Oman. She invests funds in projects primarily having to do with real estate and energy in various places around the world.
[6] Cheung resides in Mississauga, Ontario and carries on business promoting projects that relate to renewable energy.
[7] Icon is a company incorporated under the laws of Australia and is owned and controlled by Cheung. The incorporation of Icon was carried out by Austin Day, an Australian lawyer, who stayed on as a director of Icon.
[8] Irani’s investments in Canada are managed by her son, Sheroy Irani (“Sheroy”). Sheroy is a chartered accountant, qualified in Canada, who acted on Irani’s behalf with relation to the particular investment made by her which is in issue in this action.
[9] By means of representations made by Cheung and others to Sheroy, Irani was approached to provide financing to be used by EnergyOne for the completion of a project in the state of Massachusetts, U.S.A.
[10] The project to be financed envisaged that a company called Energy Co-Invest Mass I LLC (“Mass I LLC”) would be used to acquire property and various assets from another company that originated the project. EnergyOne then would act as a contractor for Mass I LLC to complete the technical work of installing solar panels on commercial rooftops to be acquired. Cheung and Jordan Oxley, an investment banker, were then to facilitate the sale of Mass I LLC to an end buyer.
[11] In December 2012, Irani confirmed that she would be willing to contribute USD$1 million to help finance the project. This injection of funds would be made in the form of a loan, with the funds and 30% interest thereon.
[12] The loan was structured in the form of a USD$1 million convertible debenture, the term of which was nine months. By making the debenture convertible upon maturity, Irani was given the option either to have the loan repaid with the agreed 30% interest or to convert her investment into shares in the entity that was to be sold to the end buyer.
[13] Cheung directed that Irani’s USD$1 million advance be wired to an account in Australia controlled by Icon. This was done. There is no dispute that Icon received USD$1 million from Irani in early January, 2013.
[14] Cheung has described Icon as a shell company. By his own admission, Cheung was personally able to totally control the manner and amounts in which the funds advanced to Icon were to be disbursed.
[15] Between January and June 2013, Sheroy attended at EnergyOne’s office on multiple occasions and was repeatedly assured by Cheung that the project would be completed and sold as planned, at which point Irani would be repaid the funds invested by her.
[16] As the maturity date was approaching, Cheung advised Sheroy that there were some issues with securing an end buyer for the project. As a result, Cheung proposed an extension of one month to the maturity date of the debenture. In exchange, the interest rate on the loan would be increased from 30% to 40% and Irani therefore would be repaid $1.4 million. Sheroy discussed Cheung’s proposal with Irani and then communicated her agreement to these terms to Cheung shortly thereafter.
[17] On September 6, 2013, Sheroy sent an e-mail to Cheung which confirmed the terms of the revised agreement and timetable for repayment as follows:
Vincent,
As per our discussion today (September 6, 2013), I am noting below the schedule of payments to me I expect from you pertaining to my payout of USD$1.4 Million for my investment in Mass 1 Solar Project.
September 21, 2013 – USD$200,000 (two hundred thousand US dollars)
October 1, 2013 – USD$1,200,000 (one million two hundred thousand US dollars)
If you disagree with the above, please respond back to this e-mail stating valid reasons, otherwise, a non-response or a positive response will be considered as your acknowledgement and agreement to the above payouts.
[18] Cheung read this e-mail at the time and chose not to reply with any denial or correction.
[19] In the period between September and October 2013, Sheroy was in frequent contact with Cheung to obtain repayment of the amount owing to Irani. Over twenty e-mails were sent which set out Cheung’s obligation to repay the debt. None of these were contradicted or disputed by Cheung in reply. Various e-mails were sent in which Sheroy recounts telephone conversations and meetings he had with Cheung where Cheung acknowledged his obligation to repay the debt.
[20] In particular:
(a) On September 18, 2013, Sheroy e-mailed Cheung reminding him of his obligation to pay USD$1.4 million and again confirming that “a non-response is essentially an agreement”;
(b) On September 20, 2013 Sheroy e-mailed Cheung the wire transfer information for Cheung to repay the USD$1.4 million;
(c) On September 23, 2013, Sheroy e-mailed Cheung requesting him to respond and/or start paying out the USD$1.4 million;
(d) On September 24, 2013, Sheroy e-mailed Cheung to memorialize a phone call they had in which Cheung agreed to send the entire USD$1.4 million by next week. Irani also indicated that he was willing to receive the funds in Euros as per Cheung’s request;
(e) On September 25, 2013, Sheroy e-mailed Cheung his banking details for repayment to be made in Euros. Irani also requests “an e-mail response confirming this as [he is] truly getting frustrated with just phone calls and no actions”;
(f) On October 1, 2013, Sheroy e-mailed Cheung again requesting the USD$1.4 million and, among other things, indicated that he may be forced to take legal action;
(g) On October 7, 2013, Sheroy e-mailed Cheung to thank him for meeting with him on October 1, 2013. Sheroy also indicates that Cheung had mentioned that he would be getting some cash soon and Irani references an “agreed timeline of the end of the month for the full USD$1.4 million payout”; and
(h) On October 9, 2013, Sheroy e-mailed Cheung asking to be advised as to the status of the funds Cheung mentioned he was expecting to receive.
[21] On October 10, 2013 Cheung sent a text message to Sheroy on October 10, 2013 acknowledging that he would be making a partial payment to Irani in the amount of $700,000. He further admits that this amount tied in to Sheroy’s e-mail of October 15, 2013 in which Sheroy asked if Cheung was “still on track for me to receive USD$700,000 this week and the remaining USD$700,000 by the end of this month?”
[22] On November 1, 2013, Irani sent a letter to Cheung and others demanding repayment. This letter was ignored.
[23] Despite Cheung’s repeated assurances that payment would be forthcoming, he has not repaid the debt owing or any portion of it. He now denies that he owes any money to Irani.
Is there any genuine issue requiring a trial?
[24] In response to this motion for summary judgment, Cheung must put his best foot forward with respect to evidence of the existence of a genuine issue requiring a trial.
[25] In determining whether there is a genuine issue requiring a trial, the Court is required to take a good hard look at the evidence submitted by the parties. In doing so, the Court may weigh the evidence, evaluate the credibility of a deponent, and draw any reasonable inference from the evidence. The Supreme Court of Canada has confirmed that these fact-finding powers may be exercised by the motions judge unless it is in the interest of justice for them only to be exercised at trial (see: Hryniak v. Mauldin, [2014] S.C.C. No. 7, para. 66).
[26] In taking a good hard look at the merits of the action, the Court may consider the behaviour of the responding party and the sufficiency of the respondent’s evidence. Self-serving affidavits that merely assert facts or defences without providing some detail or supporting evidence are not sufficient to create a genuine issue for trial. The motions judge may consider gaps, inconsistencies and implausible elements in the responding party’s evidence and his failure to provide any support for his defence in determining the motion (see: Pulte v. Rokicki (2009), 2009 22568 (ON SC), 97 O.R. (3d) 32 (S.C.J.)).
[27] Cheung alleges in his affidavit that portions of Irani’s affidavit are fabrications and half-truths, but offers no credible attempt to address them. No attempt is made by him to provide any support, explanation or justification for most of the statements made by him in his affidavit, including his denial of any relationship to EnergyOne, his denial of any basis for Irani’s understanding that she was entitled to repayment of the debt, his assertion of the theory that Irani’s evidence of a loan relates to some other transaction involving a Middle Eastern royal family, and his accusation that Irani attempted to evade Canadian tax authorities.
[28] For example, Cheung’s unsupported assertion that he incorporated Icon at the request of Irani to shield assets from the Canada Revenue Agency is contradicted by the fact that Icon was incorporated before Cheung ever had any contact with Irani.
[29] Cheung’s denial of the existence of a conversation relating to the increase of the interest rate to 40% is directly contradicted by his own admission on cross-examination that he received and read the confirmatory e-mail which clarified that Cheung would cause the USD$1.4 million to be repaid in two tranches, with the last to be received by October 1, 2013.
[30] Another gap in Cheung’s evidence is his claim that the e-mail exchange relates only to repayment of $500,000, an amount which Cheung alleges is being held in an account in Via Bank Inc. Via Bank is said to be controlled by Oxley, and is purportedly holding a $500,000 debenture in favour of Icon. Oxley is not a party to this action. However, Cheung’s text message clearly refers to a $700,000 payment.
[31] Cheung also claims that he used the funds advanced by Irani to pay various bills relating to the project, to make a $50,000 payment to Oxley’s wife at Oxley’s request, to acquire plane tickets for the investigation of other investment opportunities and to pay himself $50,000 for compensation for his time. He provides no documentary evidence that any of these payments were ever made, nor does he advance any evidence to explain what happened to the balance of the funds received by him through Icon.
[32] In summary, I consider that Cheung’s evidence in response to these allegations is very thin and, where it exists, is incapable of belief.
[33] In addition to claiming damages for breach of contract, Irani has claimed damages against Cheung for unjust enrichment and conversion. Although it is evident that the loan agreement and debenture were not entered into with Cheung personally and that he did not execute any guarantee of repayment, the evidence on this motion establishes on a balance of probabilities that the loan proceeds of USD$1 million were transferred to a company controlled by him. These funds have disappeared. No credible explanation for the whereabouts of the money has been provided by Cheung.
[34] Adopting the approach set forth in Hyrniak v. Mauldin, I find that there is no genuine issue requiring a trial insofar as it relates to Cheung’s liability to Irani to account for and repay the USD$1 million received by Icon over which he had control.
[35] However, because Cheung was not a party or signatory to the debenture, I find that the evidence on the motion falls short of establishing with necessary clarity that he agreed to be responsible for repayment of the loan at the interest rate provided for in that agreement or at the rate as amended by subsequent discussion. This issue of Cheung’s personal liability to repay to Irani contractually-determined interest on the funds advanced will require a trial to determine. In large part, the issue is whether Cheung’s promises to pay were on behalf of the parties or corporate entities involved, or were intended to attach his personal obligation of a guarantee of repayment. If counsel wish to make further submissions with respect to the moot proportionate manner in which this issue may be dealt with, arrangements can be made to attend before me.
Conclusion
[36] Irani shall have partial summary judgment against Cheung in the amount of the Canadian equivalent of USD$1 million, plus interest in accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43.
[37] The balance of Irani’s motion, insofar as it relates to the liability of Cheung to pay interest on the loan proceeds at the rate provided for in the debenture, is dismissed.
Costs
[38] If the parties cannot agree on the subject of costs, written submissions may be delivered by Irani within 20 days of the date of this decision, and by Cheung within 15 days thereafter.
Stewart J.
Date: March 24, 2015