Rayman Motor Freight Systems Inc. v. R.M. Logistics Inc., 2015 ONSC 3139

COURT FILE NO.: 2120/15

DATE: 2015-05-15

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: RAYMAN MOTOR FREIGHT SYSTEMS INC., R M LOGISTICS INC. and R M LOGISITQUE INC./ R M LOGISTICS INC., Applicants

AND:

R.M. LOGISTICS INC., SARTAJ SINGH JOHAL and KIRAN DHALIWAL also known as KIRANDEEP DHALIWAL, Respondents

BEFORE: Gray J.

COUNSEL: Cameron D. Neil, Counsel for the Applicants

HEARD: May 15, 2015

ENDORSEMENT

[1] The applicants have commenced this proceeding by application for extensive relief, on account of some allegedly dishonest behaviour on the part of the respondents. Without going into detail, the dishonest behaviour was quite extensive and has allegedly caused serious damage to the applicants.

[2] The dishonesty was discovered only very recently, and the applicants are concerned that if the respondents become aware of this application before some relief is granted, any enforceable relief will likely become academic.

[3] The applicants have commenced this proceeding by application because they assert that the facts are unlikely to be in dispute. That remains to be seen.

[4] This matter has come on before me for ex parte relief. Having reviewed the material, I am prepared to grant some relief ex parte, but not everything sought by the applicants. What I am prepared to grant is what I think is essential at this point, subject, of course, to extension, variation or even termination as proceedings develop.

[5] Without going into detail, what is alleged is extraordinarily surreptitious, dishonest behaviour on the part of the individual respondents that included the incorporation of a company with a name remarkably similar to the name of the one of the applicants. Through that corporation, the applicants allege, the respondents impersonated one or more of the applicants and effectively stole some of their business. This was done both at the time one of the respondents was employed by the applicants, and afterwards. It is also alleged that during that person’s employment with the applicants, significant amounts of money were stolen from the applicants. It is alleged that funds belonging to the applicants were dishonestly diverted to bank accounts owned by one or more of the respondents.

[6] The applicants assert that if the respondents become aware of these proceedings before some relief is granted, it is likely that they will take steps to ensure that any assets they have are moved or hidden, so that any judgment the applicants obtain will be effectively worthless.

[7] In large part, what the applicants seek is a Mareva injunction, which is traditionally granted on narrow grounds to prevent a defendant from moving assets out of the jurisdiction before a judgment can be obtained: see Chitel v. Rothbart (1983), 1982 1956 (ON CA), 39 O.R. (2d) 513 (C.A.); and Aetna Financial Services Ltd. v. Feigelman, 1985 55 (SCC), [1985] 1 S.C.R. 2.

[8] In the case before me, it does not appear that there is any real likelihood, based on the material before me, that the respondents will move assets out of the jurisdiction. However, it does appear that they have done certain things in the United States, and there is at least a possibility that any funds in Ontario could be diverted there.

[9] The applicants rely on the so-called “Mills” extension or exception to the normal requirement that the plaintiff or applicant show that the defendant or respondent is likely to move assets out of the jurisdiction: see Mills and Mills v. Petrovic (1980), 1980 1871 (ON SC), 30 O.R. (2d) 238 (H.C.J.). It is said that the otherwise strict requirements for obtaining a Mareva injunction can be relaxed where there is a strong prima facie case of fraud.

[10] Since the Mills case was decided by Galligan J. in 1980, there has been a mixture of cases in which it has been debated as to whether Mills was correctly decided. I am content to rely on the approach taken by Strathy J. (as he then was) in Sibley & Associates LP v. Ross (2011), 2011 ONSC 2951, 106 O.R. (3d) 494 (S.C.J.). In that case, Strathy J. decided that it was not necessary to determine whether Mills represents a real extension or exception to the underlying principles relating to Mareva injunctions. Rather, he held that in an appropriate case it would be appropriate to draw an inference that there is a real risk that the defendants will attempt to dissipate or hide their assets or remove them from the jurisdiction where there is strong and compelling evidence of fraud.

[11] In the case before me, there is strong and compelling evidence of fraud on the part of the respondents. I say this, of course, based only on the evidence filed by the applicants. However, if that evidence is unchallenged, it is clear that the respondents have engaged in extraordinarily dishonest behaviour, and have taken steps to hide their activities to the point that they were undetectable while the dishonesty was being perpetrated. In that respect, the evidence is even stronger than the evidence that was before Strathy J. in Sibley. If the respondents were able to take steps to cover their tracks and make their dishonest behaviour undetectable, there is a clear inference that they could take similar steps to cover their tracks and dissipate or hide assets or remove them from the jurisdiction.

[12] For these reasons, I will grant certain relief ex parte to the applicants, but I will make the matter returnable before a judge of this court within a very few days so that this litigation can be put on track to be resolved quickly. On the return date, the judge will have the opportunity to decide whether any of the relief I have granted should be extended, terminated or varied on an interim basis, and will be able to canvass an appropriate timetable for moving the litigation forward.

[13] For the foregoing reasons, I have signed a formal order that incorporates the following interim relief:

a) a Mareva injunction;

b) freezing of bank accounts;

c) prohibiting any insurer from paying insurance proceeds to the respondents;

d) requiring that certain actions commenced against the applicants be stayed;

e) granting a CPL against real property owned by the respondent Johal.

[14] In the order, I have also provided for service and a return date.

Gray J.

Date: May 15, 2015