CITATION: Leisure and Corp. Travel Services v.Khan el al, 2017 ONSC 7718
COURT FILE NO.: 188-13
DATE: 2017 12 22
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: LEISURE AND CORPORATE TRAVEL SERVICES INCORPORATED, Plaintiff
SHARINA IMRAN-KHAN aka SHARINA IMRAN KHAN aka SHARINA KHAN, BARNABUS KHAN, SHIRLEY JOYCE VIRGINIA HENRY, and AMRAL HOSEIN aka DANNY HOSEIN, Defendants
BEFORE: EMERY J.
COUNSEL: Lawrence Hansen, for the Plaintiff
HEARD: In Writing
ENDORSEMENT
[1] The plaintiff, Leisure and Corporate Travel Services Incorporated (“Leisure”) brings this motion, without notice, for default judgment against the Defendants Sharina Imran-Khan, also known as Sharina Khan, Barnabus Khan, and Amral Hosein aka Danny Hosein. Those defendants have been noted in default for not delivering a statement of defence within the time prescribed by the Rules of Civil Procedure.
[2] As those defendants have been noted in default, the following consequences apply under Rule 19.02(1):
a) They are deemed to admit the truth of all allegations of fact made in the statement of claim; and
b) They shall not deliver a statement of defence or take any other step in the action, other than a motion to set aside the noting of default or any judgement obtained by reason of the default, except with leave of the court or the consent of the plaintiff.
[3] Under Rule 19.02(3), those defendants are not entitled to notice of any step in the action and need not be served with any document in the action except where the court orders otherwise, subject to the exceptions provided. None of those exceptions would appear to apply here.
[4] Leisure is not entitled to judgment merely because the facts alleged in the statement of claim are deemed to be admitted, unless the facts entitle Leisure to judgment: Rule 19.06. The question on this motion is whether those facts entitle Leisure to the judgment claimed.
[5] Leisure is a mortgagee that loaned $350,000.00 to an individual purporting to be Iqbal Hosein in a private mortgage transaction. Iqbal Hosein purportedly granted a first charge against title to a property registered in his name as security for that loan. That property is located at 1096 Bathurst Street in Toronto.
[6] The mortgage was arranged through Sharina Imran-Khan and her husband, Barnabus Khan, who held themselves out to be, or were acting as mortgage brokers.
[7] Leisure advanced $323,805.05 under this charge on or about August 9, 2012. This advance represented the amount payable under the loan, after deducting the lender fee and the broker fee from the face value of $350,000.00 on the charge.
[8] The funds were advanced for the stated purpose of making renovations to 1096 Bathurst Street. Leisure advanced the net funds payable under the charge to Shirley Joyce Henry, a lawyer purportedly acting for Iqbal Hosein. The funds were advanced to Ms. Henry on the condition that she withhold $123,733.75 (the “holdback”) pending confirmation that the initial funds released had been used to commence renovations to the property.
[9] As it turns out, the Khan’s had introduced Danny Hosein, who is Iqbal Hosein’s brother, to Leisure, representing him to be Iqbal Hosein. Once Iqbal Hosein learned that Danny had impersonated him to obtain a loan from Leisure in exchange for granting a charge against title to 1096 Bathurst Street, Leisure reported the fraud to the police.
[10] The loss claimed by Leisure totals $330,805.05, made up of the $323,733.75 advanced to Ms. Henry, and a separate payment of approximately $7,000.00 Leisure paid to Ms. Khan as a broker fee.
[11] The affidavit of Clifford J. Rajkumar, a shareholder and the sole officer and director of Leisure, sets out the allegations of fact that are deemed to be admitted by these defendants. The affidavit provides the chronology of the fraud and the consequences of the loss.
[12] The affidavit contains further evidence that Ms. Henry released the holdback from the funds advanced on the charge, contrary to the undertaking she had given to hold those funds in trust pending confirmation of renovations made to the property. Ms. Henry was initially made a defendant to the action, and joined Bank of Montreal as a third party. Ms. Henry subsequently settled with Leisure. The plaintiff’s action as against her, and her third party claim against Bank of Montreal, have been discontinued. Leisure received $90,000.00 from the settlement with Ms. Henry, on the basis that there is no admission of liability.
[13] It would appear that the facts, both those deemed to be true as consequence of the noting in default of those defendants to whom those facts apply and those facts proven in Mr. Rajkumar’s affidavit, support the claim that a fraud was perpetrated against Leisure that has caused it a loss of $323,733.75. The evidence of the fraud is based on the fact that Danny Hosein masqueraded as his brother Iqbal Hosein to obtain the charge. Then there is the affidavit of Megan Fraser, investigation counsel within the Investigations Department of the Law Society of Upper Canada filed in the matter of solicitor Roger Joseph Smith. Numerous references are made in Ms. Fraser’s affidavit to Ms. Khan and Mr. Khan as parties to various fraudulent activities related to Mr. Smith’s involvement. The fraud against Leisure is not one of the frauds described in the Smith investigation.
[14] Finally, there are the two bank drafts representing the payment of the first amount released, and then the release of the holdback from Ms. Henry’s trust account. Each of those bank drafts, for $198,217.00 and $123,733.00 respectively, were made payable to Iqbal Hosein.
[15] There is no evidence that Iqbal Hosein received this money. On the other hand, there is no evidence that he did not.
[16] Iqbal Hosein did not swear an affidavit in support of this motion. However, he gave a handwritten statement to Ms. Mercer, an investigator at Crawford and Company Adjustors. This statement is attached as an exhibit to Mr. Rajkumar’s affidavit. Nowhere in the recital of facts given in Mr. Rajkumar’s affidavit drawn from this handwritten statement does Mr. Rajkumar state that Iqbal Hosein never received funds from one or both bank drafts.
[17] There is also no evidence in the statement of claim or in Mr. Rajkumar’s affidavit that the charge purportedly granted by Iqbal Hosein against title to 1096 Bathurst Street has ever been discharged.
[18] Danny Hosein pleaded guilty to this fraud, and has advanced a payment of $3,000 on June 10, 2014. There is no evidence in the motion material whether this amount was paid as a restitution order, or voluntarily. There is no evidence whether a larger amount has been ordered by a court, or has been agreed upon for Danny Hosein to pay. Further, no copy or summary of facts read in or admitted on his plea is contained in the affidavit, or attached as an exhibit.
[19] The elements of the fraud alleged in the action may have arisen from Danny Hosein’s impersonation of Iqbal Hosein as the true owner of the property, facilitated by, and with the knowledge of Mr. Khan and her husband. However, the damages from that fraud occurred if and when Ms. Henry paid out the initial amount and the holdback amount to someone other than Iqbal Hosein. That is where the evidence ends on the record before me.
[20] As I have said, there is no affidavit from Iqbal Hosein. There is no affidavit or transcript from a Rule 39.03 examination of Ms. Henry or Danny Hosein. There is no evidence about who negotiated the bank drafts from Ms. Henry’s trust account made out to Iqbal Hosein.
[21] The facts that are deemed to be admitted from the statement of claim, summarized in paragraph 8 of Mr. Rajkumar’s affidavit, are bald allegations of fact that do not prove the necessary connection between the proceeds of the fraud, and the defendants who have been noted in default. In my view, the materials filed on the motion do not show that the facts entitle Leisure to judgment under Rule 19.06.
[22] For these reasons, I am dismissing the motion, without prejudice to the plaintiff Leisure and Corporate Travel Services Incorporated to set the action down for an uncontested trial.
[23] As the motion is dismissed, I do not consider myself seized with hearing the trial or any subsequent motion in this action.
Emery J.
DATE: December 22, 2017
CITATION: Leisure and Corp. Travel Services v.Khan et al, 2017 ONSC 7718
COURT FILE NO.: -188-13
DATE: 2017 12 22
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: LEISURE AND CORPORATE TRAVEL SERVICES INCORPORATED, Plaintiff
- AND -
SHARINA IMRAN-KHAN aka SHARINA IMRAN KHAN aka SHARINA KHAN, BARNABUS KHAN, SHIRLEY JOYCE VIRGINIA HENRY, and AMRAL HOSEIN aka DANNY HOSEIN, Defendants
BEFORE: EMERY J.
COUNSEL: Lawrence Hansen, for the Plaintiff,
ENDORSEMENT
EMERY J.
DATE: December 22, 2017