CITATION: Sawah v. Warren, 2015 ONSC 5373

COURT FILE NO.: 309/13 Brampton

DATE: 2015-08-26

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

JOHN SAWAH

Plaintiff

– and –

TYLER DAVID WARREN and SHEETAL JHUTI c.o.b. as SBJ CONSULTING SERVICES

Defendants

Ben Hahn and Ethan M. Rogers, for the Plaintiff

Brian A. Pickard, for Tyler David Warren

David S. Lipkus, for Sheetal Jhuti

HEARD: August 17, 2015

REASONS FOR JUDGMENT

gray J.

[1] This is a motion for summary judgment by the plaintiff, primarily seeking punitive damages against the defendants arising out of alleged fraud. The actual damages suffered by the plaintiff, even on the plaintiff’s best case, are relatively modest. However, the plaintiff claims $30,000 in punitive damages against each defendant.

[2] Fundamentally, the plaintiff claims that the defendants settled an Accident Benefits claim and a tort claim arising from a motor vehicle accident, and represented to him that the settlements were for lower amounts than they actually were. By doing so, they hoped to pocket the actual higher amounts of the settlements. The plaintiff says he discovered the deception. He says the conduct of the defendants justifies punitive damages.

[3] The defendants are both members of the Law Society of Upper Canada. Mr. Warren resides in Manitoba, but is licenced to practice law in Ontario. Ms. Jhuti is a paralegal, licenced by the Law Society.

[4] The Supreme Court of Canada has definitively determined that there is only one standard of proof in a civil case, namely, proof on a balance of probabilities, even in cases where grave allegations are made: see F.H. v. McDougall, 2008 SCC 53, [2008] 3 S.C.R. 41. However, in a case where allegations of fraud are made against a solicitor and a licenced paralegal, I think it is important that the trier of fact be meticulous in examining the evidence and being certain that a finding of fraud is warranted. As stated by Rothstein J. in McDougall, at para. 40, “Of course, context is all important and a judge should not be unmindful, where appropriate, of inherent probabilities or improbabilities or the seriousness of the allegations or consequences.”

[5] In this case, complaints were made by the plaintiff to the Law Society of Upper Canada. The Law Society has deferred consideration of the complaints until this case has been concluded. It is even more important, therefore, that I should be mindful of the seriousness of the allegations and their potential consequences. However, as stated by Rothstein J., at para. 40 of McDougall, these considerations do not change the standard of proof.

Background

[6] I will review the affidavit evidence filed on behalf of each party.

[7] The plaintiff, John Sawah, was involved in a motor vehicle accident on November 18, 2008. On January 7, 2009, he met with the defendant Jhuti. On that date, he signed a retainer agreement authorizing her to represent his interests with respect to his claim for Statutory Accident Benefits. The retainer agreement says she is being retained to pursue a claim for Statutory Accident Benefits. It also states that she is being retained for “and others if any and as applicable”. It is uncertain as to what the latter term might include, but it clearly cannot include a tort claim, as that is something she is not able to pursue as a paralegal. While the wording is not overly clear, both parties have confirmed that the retainer agreement was for a contingency fee of 25 per cent on any award or settlement.

[8] There is a dispute as to how the defendant Warren was retained to pursue Mr. Sawah’s tort claim. Mr. Sawah claims that he never met with Mr. Warren nor was he provided with any separate retainer agreement. Mr. Warren disputes this. He says he met with Mr. Sawah and a retainer agreement was signed, although he has not produced one. His counsel says he cannot find it.

[9] Mr. Sawah says he met Mr. Warren once in passing in Ms. Jhuti’s waiting area. He says, however, that all of his communications regarding his claims were with Ms. Jhuti.

[10] A statement of claim in connection with Mr. Sawah’s tort claim was issued on November 10, 2010. Mr. Warren was listed as the lawyer of record. Mr. Warren’s address was stated to be his address in Winnipeg, and the business address of Ms. Jhuti’s business, SBJ Consulting Services, in Mississauga.

[11] On May 13, 2011, Ms. Jhuti advised Mr. Sawah that there was an offer to settle the tort claim in the all-inclusive amount of $18,000. He signed what he identifies as a full and final release, dated May 13, 2011, which purports to settle the action for $18,000, all-inclusive.

[12] Some aspects of this document will be reviewed later. At this point, it is noteworthy that the release document directs that the settlement funds be paid to ICAN INC in trust. ICAN INC is a company owned by Ms. Jhuti. Also noteworthy is the fact that the document, in addition to being signed by Mr. Sawah, is also signed by Ms. Jhuti as a witness.

[13] Mr. Sawah swears that he did not receive any settlement funds until August 4, 2011, approximately three months after the release was signed. He swears that he did not know at the time that the insurer, State Farm, had advanced settlement funds of $22,500 on May 17, 2011. In fact, the settlement funds of $22,500 were forwarded to “Mr. Warren and/or Sheetal Jhuti” under cover of a letter dated May 17, 2011, which was addressed to Mr. Warren at Ms. Jhuti’s Mississauga address. Another copy of the same letter, produced by Ms. Jhuti, contains a handwritten note “cheque given to Balbir on 19^th May by Sheetal”. Balbir is Ms. Jhuti’s husband.

[14] On June 9, 2011, Mr. Sawah emailed Ms. Jhuti and stated “Pursuant to our last meeting on May 13, 2011, I had signed the full and final release in consideration of the payment of $18,000. You mentioned that payment would shortly follow, however it has been nearly a month. Please provide me with an update as to when the funds will be available.” Ms. Jhuti responded “The cheque has been processed from the insurance company and looks like two weeks more.”

[15] Mr. Sawah swears that it was not until August 4, 2011 that he ultimately received the proceeds on account of the tort claim. He says Ms. Jhuti provided him with a cheque dated July 4, 2011, which was written on a Winnipeg bank account held in Mr. Warren’s name. It was for the sum of $12,784.03. He was told that this was the amount left owing after fees and disbursements were removed.

[16] Mr. Sawah swears that while he was waiting to receive the tort settlement funds, Ms. Jhuti contacted him to advise of a potential settlement of his Accident Benefits claim. He received an email from Ms. Jhuti dated July 21, 2011 asking him to drop by because there may be a settlement release to sign.

[17] Mr. Sawah swears that he met with Ms. Jhuti at her office on July 28, 2011. He says he secretly recorded the conversation through his cellphone.

[18] Mr. Sawah swears that Ms. Jhuti told him an offer to settle the Accident Benefits claim had been put forward in the amount of $6,000. He says she produced a full and final release document in the amount of $6,000. He says he was concerned about the offer and was not prepared to accept it. He left the office without having signed the release.

[19] Subsequent to his meeting with Ms. Jhuti on July 28, 2011, he contacted the insurer directly and was told that the offer to settle was, in fact, for $15,000. A representative of Allstate Insurance provided him with copies of the documentation in that respect. Attached to the email from the insurer’s representative are copies of the communication between the insurer and Ms. Jhuti, and enclosing a full and final release in the amount of $15,000. It also provides for the payment of additional amounts for past and future housekeeping benefits in the amount of $1,200; past and future caregiving benefits in the amount of $3,000; and past and future medical benefits in the amount of $10,800. Mr. Sawah settled the claim directly with the insurer for $15,000. He subsequently received payment of approximately $3,100 for past and future caregiving benefits.

[20] It is noteworthy that the purported release for $6,000 contained no mention of past and future caregiving benefits. It provided for a payment for past and future housekeeping benefits in the amount of $1,200, and past and future medical benefits in the amount of $4,800. It is also noteworthy that Ms. Jhuti’s email to Mr. Sawah advising him of a potential settlement of his Accident Benefits claim was dated July 21, 2011, which is the same date that the settlement documents, including the $15,000 release, was sent to Ms. Jhuti by the insurer.

[21] Mr. Sawah has included in his material what purports to be an audio recording of his meeting with Ms. Jhuti on July 28, 2011. There is no doubt whatsoever that what was being discussed in the recorded conversation was an offer of settlement in the amount of $6,000. I note at this point that Ms. Jhuti claims that that discussion did not occur on July 28, 2011. Rather, she claims that it related to an earlier offer of settlement that had been rejected. However, it is clear that during the recorded conversation there was discussion of an amount payable for Focus Rehabilitation in the amount of $3,180. It is also clear that during the discussion Ms. Jhuti wrote something on the document in relation to the payment for Focus Rehabilitation. On the third page of the purported $6,000 release, there is a specific typed statement, beside which there is a box marked with an “X”: “this offer does not include all expenses incurred for goods and services as previously approved”, after which there appears a handwritten note, “Especially Outstandings for Focus Physiotherapy.”

[22] Also, during the same conversation, it is clear that Ms. Jhuti typed an email to Mr. Sawah which she read aloud during the recorded conversation as follows:

Further to my confirmation with the insurance company, the full and final settlement does not include any outstanding incurred on your file. Therefore, the accrued treatment plan of Focus Physiotherapy of three one eight zero is being paid directly by the insurance company and does not form part of this settlement. There is no other outstanding from anyone else including Remedial.

[23] Mr. Sawah, in fact, received an email from Ms. Jhuti dated July 28, 2011, at 3:30 p.m. that reads as follows:

Dear Mr. Sawah.

Further to my confirmation with the insurance company, the full and final settlement does not include any outstandings incurred on your file. Therefore, the approved treatment plan of Focus Physiotherapy of $3,180 is being paid directly by the insurance company and does not form part of this settlement.

There is no other outstanding from anyone else including Remedial or any other service providers.

In substance, this email is identical to the one dictated during the recorded conversation.

[24] I pause at this point to mention that Ms. Jhuti challenges the validity of the audio recording. However, a forensic copy of the recording has been furnished, or at least offered, to both Ms. Jhuti and Mr. Warren. Furthermore, Ms. Jhuti has not challenged the date or contents of the email dated July 28, 2011. There is no doubt, in my view, that the recorded conversation took place on July 28, 2011.

[25] Later, during the conversation, Mr. Sawah asked Ms. Jhuti “Can you get $15,000?” She responded “I doubt it.”

[26] Mr. Sawah deposes that he met with Ms. Jhuti on August 4, 2011, in order to get the settlement funds for the tort claim. He says asked Ms. Jhuti to clarify the terms of the settlement and to clarify what portion of the settlement was being retained on account of fees. He says Ms. Jhuti provided him with a cheque in the amount $12,789.03 dated July 4, 2011. He says Ms. Jhuti could not provide him with documentation detailing the fees as they were “with the lawyer”. However, he says she tried to do a calculation by hand, which was confused and incoherent. He has produced a handwritten note made by Ms. Jhuti on August 4, 2011 where she attempts do a calculation based on a settlement amount of $18,000. The mathematics reflected in the calculation are questionable to say the least.

[27] Ms. Jhuti has produced what is purported to be the actual release involving the tort claim, which is said to be in the amount of $22,500. There are differences between that release and the one that purports to be in the amount of $18,000.

[28] The second pages of both releases are identical, including the signature of Ms. Jhuti as a witness. However, the first page of each release is slightly different. The spacing between some of the paragraphs is quite different. Most significantly, the last line of the first page of the $22,500 release does not marry up with the second page.

[29] The last line of the first page on the $18,000 release concludes with the words “by reason of any such claim for indemnity or”, which continue on the second page to read “contribution arising out of any legal proceeding”. On the $22,500 release, the last line of the first page concludes with the words “by reason of any such claim for indemnity or contribution arising out of any”, which continues on the second page with the words “contribution arising out of any legal proceeding”.

[30] It is quite clear, in my view, that someone has taken the $18,000 release and retyped the first page so that it appears as if the release is for $22,500. However, whoever did this was not careful to ensure that the two pages of the $22,500 were married up appropriately.

[31] The $22,500 release was purportedly sent to State Farm under cover of a letter dated May 16, 2011, on the letterhead of Mr. Warren. The letterhead contains the Ontario address of Mr. Warren, which as noted earlier, is the same address as Ms. Jhuti’s business. The letter itself is clearly not signed by Mr. Warren. Rather, the signature bears a distinct similarity to the initials of Ms. Jhuti, which appear on many other documents.

[32] In September, 2011, Mr. Sawah’s counsel wrote to Mr. Warren alleging fraud. By letter dated September 28, 2011, Mr. Warren denied the allegations. He said, however, that he had mistakenly calculated his contingency fee at 30 per cent rather than 25 per cent. He said he would forward a cheque in the amount of $1,271.25 to make up the difference.

[33] Mr. Sawah’s solicitors received a cheque dated October 3, 2011, in the amount of $1,271.07 made out to Mr. Sawah’s solicitors. The cheque was from SBJ Consulting Services, which is Ms. Jhuti’s consulting business. Mr. Sawah says the cheque has never been cashed.

[34] Mr. Sawah notes that two statements of account have been produced by Mr. Warren, one dated May 20, 2011, purporting to show the calculation of a 30 per cent contingency fee upon a settlement of $22,500, and the other dated September 20, 2011, purporting to show a corrected account reflecting a 25 per cent contingency fee. Mr. Sawah swears that he never received either account, and he first saw them when they were produced in this litigation. He says he has never been provided with any invoices to substantiate the charges ostensibly incurred.

[35] The account dated May 20, 2011 purports to show a fee of $6,750, being 30 per cent of $22,500. In addition, there is a “settlement fee” of $750; charges of $615 for “mailing, photocopying, faxing, telephone, etc.” GST and RST of $405.75 and $649.20 respectively are charged, for total fees of $9,169.95. Disbursements not subject to GST are charged in the amount of $546.02. Total fees and disbursements are set out in the amount of $9,715.97, for a balance owing of $12,784.03.

[36] Attached to the account is what appears to be a spreadsheet that contains the same information reflected on the account. It is undated.

[37] The account dated September 20, 2011 reflects a fee in the amount of $5,625, being 25 per cent of $22,500. There is a “settlement fee” of $750. Charged is $615 for “mailing, photocopying, faxing, telephone, etc.”. GST and RST in the amounts of $349.50 and $559.20 respectively are set out. Total fees in the amount of $7,898.70 are claimed. Disbursements not subject to GST in the amount of $546.02 are claimed, for total fees and disbursements of $8,444.72. The balance owing to the client is said to be $14,055.28. Attached to the account is an apparent spreadsheet that contains the same information. The spreadsheet is undated.

[38] The defendant Jhuti swears that she has been a licenced paralegal since 2008. She says she has assisted approximately 400 clients in collecting Statutory Accident Benefits. She says that prior to being retained with respect to Mr. Sawah’s accident, he had attended at her offices many times unannounced to discuss various matters.

[39] Ms. Jhuti confirms that a retainer agreement was signed by Mr. Sawah. It is dated January 7, 2009. She agrees that she normally charges a 30 per cent contingency fee, but lowered the fee to 25 per cent.

[40] Ms. Jhuti says she explained to Mr. Sawah that she could only represent him with respect to his Statutory Accident Benefits claim. Because she is not a lawyer she could not represent him with respect to any potential tort claim. She said she would be happy to refer him at the appropriate time to Mr. Warren.

[41] Ms. Jhuti swears that during the course of representing Mr. Sawah, she received more than one settlement offer. She says she recalls receiving offers in the approximate amounts of $3,000 to $4,000; $6,000; and $10,000. She says that each time an offer was advanced by Allstate, she contacted Mr. Sawah asking him to attend. Each and every time, Mr. Sawah rejected the settlement amount.

[42] Ms. Jhuti swears that on or about July 21, 2011, she received an offer from Allstate in the amount of $15,000. She asked that Mr. Sawah attend to review the offer. She says he showed up unannounced on July 28, 2011 to review the offer.

[43] Ms. Jhuti says Mr. Sawah was displeased with the amount of the offer but Ms. Jhuti explained that it was a fair offer and she did not believe she could negotiate for more. She says she provided him with a copy of the offer to take home. She says it was the same offer that had been provided to her by Allstate.

[44] Ms. Jhuti swears that after the meeting, Mr. Sawah told her that he wanted to ensure that his rehabilitation clinic outstanding invoice be included in the settlement on top of the $15,000 offer. Ms. Jhuti says she was able to negotiate with Allstate that the clinic’s invoice be paid over and above the $15,000 offer. She says that Mr. Sawah then terminated her retainer and settled the file for the exact amount of $15,000, plus payment of the rehabilitation clinic’s outstanding invoice in the amount of $3,163.62. She says this was done in order that Mr. Sawah could avoid paying her fees.

[45] Ms. Jhuti swears that she was not the author of the $6,000 settlement document. She says that copies of standard form settlement documents are publicly available on the website of FSCO. She says that her standard practice is that any settlement amount, once the claim is settled, is sent from the insurance company in the name of the client, and not in the name of her business or herself.

[46] Ms. Jhuti denies that she placed the handwritten note on the alleged $6,000 release.

[47] With respect to the audio recording, Ms. Jhuti deposes that she believes this recording was made in the context of a previously advanced offer to settle, which was rejected.

[48] Ms. Jhuti swears that on August 19, 2010, she met with Mr. Sawah and advised him that Mr. Warren was ready to meet with him as the limitation period in connection with his tort action was approaching. She says Mr. Sawah asked for a copy of Mr. Warren’s retainer agreement. She deposes that she provided him with a copy of Mr. Warren’s retainer agreement.

[49] Ms. Jhuti swears that she never gave any advice to Mr. Sawah with respect to the tort file. If Mr. Sawah sought any advice, she referred him to Mr. Warren.

[50] Ms. Jhuti swears that she never presented Mr. Sawah with an explanation of the tort settlement. She says Mr. Sawah asked her how much money he would receive if the matter settled in the hypothetical amount of $18,000. She says her notes now make sense because Mr. Sawah was looking to advance a theory of an alleged fraud. Alternatively, the $18,000 amount might reference a proposed accident benefits settlement because the $15,000 offer was exclusive of the approximately $3,000 payment for physiotherapy treatment.

[51] Ms. Jhuti swears that she was not the author of the allegedly fraudulent full and final release for the tort claim. She says she did not settle the file on behalf of Mr. Sawah.

[52] Ms. Jhuti swears that while she was assisting Mr. Warren, SBJ Consulting Services paid some disbursements on Mr. Sawah’s behalf. She has produced a purported SBJ Consulting client ledger confirming disbursements, which happen to correspond to the disbursements claimed on Mr. Warren’s invoices. It is noted that the purported client ledger is apparently dated August 4, 2011, but no supporting documentation to support the apparent disbursements have been produced.

[53] Mr. Warren deposes that he is licenced to practice law in Ontario and Manitoba. He says he moved to Manitoba to be close to his children after his divorce.

[54] Mr. Warren deposes that he has had a professional working relationship with SBJ Consulting Services. He has used SBJ for paralegal and law clerk type work, especially after he moved his practice to Winnipeg. He has used SBJ’s offices to meet with clients when he travels to Ontario. He says he is not a principal in SBJ Consulting, and he has no ownership interest in it. His trust account is for his practice alone, and is not related to SBJ Consulting, and they have no signing authority on his account. He says he has no signing authority on any of SBJ Consulting’s accounts.

[55] Mr. Warren deposes that Ms. Jhuti gave the tort defendant notice of the plaintiff’s claim on April 16, 2010. He says the limitation period was going to expire on November 18, 2010, and he was asked by Ms. Jhuti if he would represent the plaintiff on the tort claim. He says that he met Mr. Sawah at SBJ’s offices on or about November 3, 2010, when he was retained by Mr. Sawah to pursue a lawsuit against the driver who caused the accident.

[56] No copy of any retainer agreement has been produced by Mr. Warren. It should be noted that while Ms. Jhuti swore that she gave Mr. Sawah a copy of Mr. Warren’s retainer agreement, she did not produce the agreement either. Mr. Warren says his fee was to be 25 per cent of the recovery, plus disbursements. His usual contingency fee is 33 per cent. Mr. Warren says he issued the Statement of Claim on November 15, 2010. I note that the Information for Court Use, attached to the Statement of Claim, is signed on behalf of Mr. Warren. The signature appears similar to the signature of Ms. Jhuti, that appears on a number of other documents.

[57] Mr. Warren and State Farm Insurance exchanged correspondence in connection with the Statement of Claim and a Waiver of Defence. For the most part, Mr. Warren did not personally sign the correspondence, and as noted, it appears to have been signed by Ms. Jhuti. Correspondence from State Farm is addressed to SBJ Consulting Services with a copy to Mr. Warren. It is sent to Ms. Jhuti’s address.

[58] Mr. Warren deposes that on March 18, 2011, he had a conversation with the insurance adjuster during which she made an offer of $22,500, all-inclusive, net of the $30,000 statutory deductible. While he says a letter was sent to him by the adjuster confirming the offer, I note that the adjuster’s letter is styled “Dear Sheetal Jhuti”.

[59] Mr. Warren swears that Mr. Sawah agreed to settle the tort claim for the sum of $22,500. He says he never advised Mr. Sawah that his claim was settled for the all-inclusive sum of $18,000.

[60] Mr. Warren says that on May 13, 2011, Mr. Sawah attended SBJ Consulting Services in Mississauga and signed a release.

[61] Mr. Warren says that on July 11, 2011, he sent State Farm a copy of the Notice of Discontinuance and filed it with the court. He says the settlement cheque in the amount of $22,500 was deposited into his trust account. No copy of the cheque has been produced. He says the settlement cheque was deposited in the trust account on July 4, 2011. He says that he used an account from another file as a precedent. As a result, the May 20, 2011 date on the account is from the template that he used. The account itself was generated on July 4, 2011. He says Mr. Sawah cashed the settlement cheque on or about August 8, 2011.

[62] Mr. Warren says that once he had notice of Mr. Sawah’s allegations, he spoke to Ms. Jhuti about the contingent fee percentage and she advised that her retainer was for 25 per cent. Under the circumstances, Mr. Warren agreed that his contingent fee should be 25 per cent. Thus, on September 20, 2011, he started preparation of a revised account in order to refund five per cent of his fee to Mr. Sawah. He completed the accounting on September 27, 2011 and sent Mr. Sawah a cheque for $1,271.25. The cheque itself is drawn on an account for SBJ Consulting Services.

[63] Mr. Warren says that if the settlement had actually been in the amount of $18,000, Mr. Sawah would have received $9,809.52 based on a contingent fee of 30 per cent, or $10,826.53, based on a contingent fee of 25 per cent. I note that that is based on the assumption that the “settlement fee” of $750 and the disbursements are legitimate. If the settlement had been for $18,000 and there was no settlement fee, no disbursements and no HST, Mr. Sawah would have received $12,600 based on a contingency fee of 30 per cent, and $13,500 based on a contingency fee of 25 per cent.

[64] At his counsel’s request, Mr. Warren took two of his hard drives and sent them in an envelope to his counsel’s office. He says he did not copy, print or edit the contents. He says that in early 2013, before a request to send the drives was made, he transferred his files to a second drive. He did not over-write anything on the first drive.

[65] Mr. Warren says the spreadsheets that formed the basis of his two accounts were created on July 4, 2011 and September 27, 2011 respectively.

[66] Mr. Warren swears that he did not draft the full and final release in the sum of either $18,000 or $25,000.

[67] Counsel for Mr. Warren retained Steven J. Ellwood, a certified digital forensic investigator. He analysed the hard drives provided by Mr. Warren to his counsel. Among other things, as a result of his investigation, Mr. Ellwood swears that the spreadsheet in connection with the account dated May 20, 2011 was created on or before July 4, 2011. He swears that the spreadsheet in connection with the account dated September 20, 2011 was last created on September 27, 2011.

Submissions

[68] Mr. Hahn, counsel for the plaintiff, submits that his client should be awarded a small amount of actual damages in connection with the settlement of his tort claim, and he should be awarded punitive damages in the amount of $30,000 against each of Ms. Jhuti and Mr. Warren. He submits that the evidence leads inexorably to the conclusion that both defendants have engaged in fraud. Mr. Hahn acknowledges that there was no actual loss to the plaintiff on account of the Accident Benefits claim, because Mr. Sawah settled the matter directly with the insurer for the amount of $15,000. However, Mr. Hahn asserts that the conduct of the defendants, or either of them, was so egregious that punitive damages should nevertheless be awarded.

[69] Mr. Hahn submits that the defendants were obliged to put their best foot forward. He submits that they have not done so. Many documents that are or should be in their possession were not produced.

[70] Mr. Hahn submits that many of the explanations offered by Ms. Jhuti for her conduct make no sense. For example, her assertion that the recorded meeting during which a $6,000 settlement offer was clearly discussed, was, in fact, part of an earlier discussion is clearly false. During the conversation Ms. Jhuti is heard recording and typing the very email that she subsequently sent to Mr. Sawah that was dated July 28, 2011, the date of the meeting. Quite clearly, on July 28, 2011, she and Mr. Sawah discussed a settlement offer purportedly in the amount of $6,000. In fact, the insurer had made a $15,000 offer sometime earlier.

[71] Ms. Jhuti’s purported explanation of her handwritten notes of the meeting on August 4, 2011 similarly make no sense. Quite clearly, her intent was to try to explain how the actual cheque made out Mr. Sawah could possibly result from a settlement of $18,000. It simply could not be calculated to result in the amount of the cheque.

[72] Mr. Warren has sworn that he did not prepare the $18,000 release or the $22,500 release. That being the case, they could only have been prepared by Ms. Jhuti. Indeed, the release instructs that the settlement funds be made payable to Ms. Jhuti’s company, and her signature appears on the document as a witness. The only logical conclusion is that Ms. Jhuti later prepared a new first page of the release in order make it appear that the settlement was for $22,500, notwithstanding that Mr. Sawah had been told it was for $18,000. Mr. Sawah clearly had been told the settlement was for $18,000. Ms. Jhuti did not deny receiving an email from Mr. Sawah in which be referred to a settlement figure of $18,000. Had that not been the figure communicated to Mr. Sawah, Ms. Jhuti would surely have corrected him. She did not.

[73] Mr. Hahn submits that the explanations given by Mr. Warren for what occurred are also deficient. His retainer agreement was not produced. There is no explanation for the $750 settlement fee. No supporting documentation has been produced for the alleged disbursements. In the absence of any supporting documentation, it can only be concluded that the figures inserted on the alleged accounts (which were not received by Mr. Sawah) have been manufactured in order to justify the cheques that were produced.

[74] Mr. Hahn submits that in addition to fraud, both defendants have breached their fiduciary obligations to the plaintiff. As a solicitor, Mr. Warren owed fiduciary duties to the plaintiff, as did Ms. Jhuti as a paralegal.

[75] Among other cases, Mr. Hahn relies on Hyrniak v. Mauldin, 2014 SCC 7; Bruno Appliance and Furniture Inc. v. Hyrniak, 2014 SCC 8; Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200; Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24; Whiten v. Pilot Insurance Co. 2002 SCC 18; Mady Development Corp. v. Rossetto, 2012 ONCA 31; and Two-Tyme Recycling Inc. v. Woods, 2010 ONSC 5672.

[76] Counsel for both of the defendants submit that the motion for summary judgment should be dismissed.

[77] Mr. Lipkus, counsel for Ms. Jhuti, submits that in the circumstances summary judgment is not a fair method of adjudication. Mr. Lipkus points out that this action was pursued pursuant to Rule 76, and there are evidentiary restrictions that prevent the court from having access to all of the evidence that would be relevant. This is particularly problematic when the claim involves fraud as this one does.

[78] Mr. Lipkus submits that there is no evidence that the plaintiff suffered any loss. Without damages, there can be no finding of civil fraud. That being the case, the plaintiff cannot sustain a claim for punitive damages.

[79] Mr. Pickard, counsel for Mr. Warren, submits that the evidence filed by the plaintiff is insufficient to prove any fraud committed by Mr. Warren. There is no evidence that Mr. Warren ever advised the plaintiff that the tort claim settled for $18,000. There is no evidence that Mr. Warren drafted the alleged fraudulent release, or that Mr. Warren ever presented the release to the plaintiff. Mr. Warren had no involvement in Mr. Sawah’s Accident Benefits claim.

[80] Mr. Pickard submits that in a case such as this, in order for the court to be satisfied that Mr. Warren was aware of the alleged fraud and benefited from it, it would be necessary to have a trial.

[81] Mr. Warren has filed evidence that shows that he understood the settlement to be for $22,500; that he prepared an account based on his understanding that the settlement was for $22,500; that he calculated the amount owing to Mr. Sawah on that basis; and that when he varied his contingency fee from 30 per cent to 25 per cent, he prepared a new account on that basis. He has filed expert evidence that shows that the spreadsheets from which the accounts were prepared were themselves prepared at or around the times when the accounts were prepared.

[82] Thus, Mr. Pickard submits that the motion for summary judgment should be dismissed.

Analysis

[83] As I noted earlier, while there is now only one standard of proof, that is, proof on a balance of probabilities, I think it is incumbent on a judge to examine the evidence carefully where there are allegations of fraud. In this case, that is particularly important because the Law Society has deferred its investigation until the court has ruled on the matter. The reputations, and indeed livelihoods, of the defendants are subject to jeopardy depending on the findings I make.

[84] Since this a motion for summary judgment, I must be satisfied that I can fairly and justly deal with the issues before me without the advantage of a trial. At the end of the day, I am not so satisfied.

[85] I should note that as it relates to the fraud allegations, what is actually asserted by the plaintiff is an action in deceit, or, as it is sometimes called, the tort of civil fraud. The elements of the tort were summarized by Karakatsanis J. in Bruno Appliance and Furniture, supra, at para. 21, as follows:

From this jurisprudential history, I summarize the following four elements of the tort of civil fraud: (1) a false representation made by the defendant; (2) some level of knowledge of the falsehood of the representation on the part of the defendant (whether through knowledge or recklessness); (3) the false representation caused the plaintiff to act; and (4) the plaintiff’s actions resulted in a loss.

[86] The fourth element mentioned by Karakatsanis J. was referred to in Bruno Appliance in paragraph 20 where she stated “as Taschereau C.J. held in Angers v. Mutual Reserve Fund Life Assn (1904), 1904 CanLII 44 (SCC), 35 S.C.R. 330 “fraud without damage gives…no cause of action” (p.340).”

[87] Since proof of loss is an essential element of the cause of action, failure to provide evidence of actual loss means that there is no cause of action in civil fraud. If there is no cause of action, there is simply no basis on which punitive damages can be awarded. Indeed, that was the conclusion of Goldstein J. in Danos v. BMW Group Financial Services Canada, 2014 ONSC 2060, at paras. 54-55.

[88] As far as the claim based on breach of fiduciary duty is concerned, the Supreme Court of Canada has confirmed that punitive damages are available in breach of fiduciary duty cases: see Whiten, supra, at para. 67. However, damages for breach of fiduciary duty are restitutionary in nature, designed to restore the claimants to the position they would have been in but for the breach: see Hodgkinson v. Simms, 1994 CanLII 70 (SCC), [1994] 3 S.C.R. 377, at p.383. Thus, if a claimant is no worse off as a result of the breach of a fiduciary duty than he or she would have been had the breach not occurred, similarly there is no scope for punitive damages.

[89] In the case before me, it is clear that there was no loss arising out of the settlement of the Accident Benefits claim. Had there been no fraud or alleged fraud, the plaintiff would have received $15,000, and in fact he received $15,000. He is actually better off, because he did not pay any fees to Ms. Jhuti.

[90] With respect to the tort claim, it is not clear as to whether the plaintiff has suffered any actual loss. If Mr. Warren’s evidence is accepted, he implemented the settlement on the basis of a payment of $22,500. While some of the documentation produced in support of his position is lacking, I am not prepared to find on this record that fraud is the only explanation for the deficiency. In my view, a trial is necessary in order to resolve the conflicting material.

[91] The different releases prepared, or apparently prepared, in connection with the tort settlement are certainly suspicious. However, I am not convinced that there is sufficient evidence on this record that Mr. Warren was responsible for or even aware of them. A trial will be necessary to determine his culpability.

[92] The evidence against Ms. Jhuti is compelling. Even on the basis of a paper record, it seems quite clear that she falsely represented to Mr. Sawah the settlement amounts of both the Accident Benefits claim and the tort claim. Her explanations for her actions are riddled with improbabilities. However, since this matter must proceed to trial in any event, I will refrain from making any actual finding of fraud against her. Her culpability will be determined at trial.

[93] While the fraud or attempted fraud as it relates to the Accident Benefits claim gave rise to no loss to Mr. Sawah, nevertheless in connection with that matter Ms. Jhuti’s conduct will be relevant to the issues arising in connection with the tort claim. Evidence of fraud on the part of Ms. Jhuti may be relevant to whether she was likely to have attempted to mislead Mr. Sawah on the settlement of the tort claim.

Disposition

[94] For the foregoing reasons, the motion for summary judgment is dismissed. The matter must proceed to trial.

[95] I will invite written submissions with respect to costs from each party, not to exceed three pages, together with a costs outline. Counsel for the defendants shall have five days to file submissions at my chambers in Milton, and counsel for the plaintiff shall have five days to respond. Counsel for the defendants shall have three days to reply.

Gray J.

Released: August 26, 2015

CITATION: Sawah v. Warren, 2015 ONSC 5373

COURT FILE NO.: 309/13 Brampton

DATE: 2015-08-26

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

JOHN SAWAH

Plaintiff

– and –

TYLER DAVID WARREN and SHEETAL JHUTI c.o.b. as SBJ CONSULTING SERVICES

Defendants

REASONS FOR JUDGMENT

Gray J.

Released: August 26, 2015