Court File and Parties

COURT FILE NO.: CV-17-2760-00 DATE: 2019 02 22

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

PARAMJIT SINGH GILL and AMARJEET GILL Mark Fahmy, for the Applicants Applicants

- and -

HARSHDEEP GILL, AMRITA RANDHAWA GILL, and MALHI LAW PROFESSIONAL CORPORATION Lydia Jackson-Lawrence, for Harshdeep Gill James S. G. Macdonald, for Amrita Randhawa Gill No one appearing for Malhi Law Professional Corporation Respondents

HEARD: October 4, 2018

Reasons for Judgment

Kumaranayake J.

[1] On October 4, 2018, I heard a motion to strike and the Application and reserved my decision. For the reasons that follow, I dismiss the motion to strike and convert the Application into an Action.

Nature of the Application and Motion

[2] By a Notice of Application, issued June 26, 2017, the Applicants seek the following:

1. A direction provided to Malhi Law Professional Corporation to provide the Applicants the amount of $208,495.94 from the funds held in trust by Malhi Law from the sale of 3304 Hunters Glen, Mississauga, Ontario, L5N 8M3;

2. As against the Respondent, Amrita Randhawa Gill, the costs of this proceeding plus all applicable taxes; and

3. Such further and other relief as this Honourable Court deems just.

[3] The Respondent, Amrita Randhawa Gill, brought a Motion originally returnable the week of March 5, 2018 seeking the following:

a) An Order striking out paragraph 30 of the Affidavit of Amarjeet Gill, sworn June 13, 2017;

b) An Order striking out paragraphs 8 and 9 of the Reply Affidavit of Amarjeet Gill, sworn September 25, 2017;

c) An Order striking out paragraph 13 of the Affidavit of Harshdeep Gill, sworn October 23, 2017; and

d) An Order striking out paragraph 31 of the Affidavit of Harshdeep Gill, sworn January 22, 2018.

[4] The basis of the Motion to strike was the Respondent Amrita Randhawa Gill’s assertion that the identified paragraphs (and exhibits referred to in those paragraphs) disclose information for which she claims settlement privilege.

Parties’ Positions

[5] For the hearing of the Application and Motion to strike, the following materials were filed by the parties:

1. The Applicants: Application Record, dated June 16, 2017, containing the Affidavit of Amarjeet Gill, sworn June 13, 2017; Reply Affidavit of Amarjeet Gill, sworn September 25, 2017; Affidavit of Amanda Richards, sworn on February 28, 2018 in response to the Motion to strike; Factum, dated February 27, 2018; Book of Authorities and Supplementary Book of Authorities. There was no affidavit filed by the Applicant Paramjit Singh Gill.

2. The Respondent Harshdeep Gill: Reply Affidavit of Harshdeep Gill, sworn October 23, 2017; Responding Affidavit of Harshdeep Gill, sworn January 22, 2018; Affidavit of Harshdeep Gill, sworn on February 28, 2018 in response to the Motion to strike; and factum, dated February 28, 2018. Counsel for the Respondent Harshdeep Gill relied on the Applicants’ Book of Authorities and Supplementary Book of Authorities;

3. The Respondent Amrita Randhawa Gill: Responding Application Record containing the Affidavit of Amrita Randhawa Gill, sworn August 25, 2017; Supplementary Affidavit of Amrita Randhawa Gill, sworn January 2, 2018; Motion Record containing the Affidavit of Melisa Rupoli, sworn February 9, 2018; Transcript of the Cross-examination of Paramjit Gill, held on December 21, 2017; Transcript of the Cross-examination of Amarjeet Gill, held on December 21, 2017; Revised Factum, dated September 14, 2018; Book of Authorities and Supplementary Case Book; and two additional cases which were submitted at the hearing of the Application and Motion.

4. The Respondent Malhi Law Professional Corporation: there were no materials filed by this Respondent nor did anyone appear on its behalf. It was served with the Application Record on June 30, 2017. Counsel for the Applicants advised that it was not expected that this Respondent would be participating in the hearing of the Application and the Motion.

[6] At the outset of the hearing, the Applicants raised a preliminary issue about the motion to strike. The Applicants’ position was that the motion to strike was not brought in accordance with the timetable which was ordered by Van Melle J. on July 14, 2017, which was made on consent of the Applicants and the Respondent Amrita Randhawa Gill:

(a) Responding materials to the Application to be served and filed by August 28, 2017;

(b) Reply materials to be served and filed by September 25, 2017;

(c) Cross-examinations to be completed by the end of December 2017;

(d) All motions to be heard by February 15, 2018; and

(e) The Application to be heard by March 15, 2018.

[7] The Motion to strike was served on by overnight courier and the documents were given to the courier on February 14, 2018. The Applicants and the Respondent Harshdeep Gill both filed responding material for the motion. I permitted the motion to proceed.

[8] The Applicants oppose the motion to strike. Their position is that the identified paragraphs are not subject to settlement privilege and if they are, then they fall within an exception to settlement privilege. They assert that the Respondent Amrita Randhawa Gill seeks strike her acknowledgement that the Applicants are owed the amount of $125,000. The Applicants acknowledge that there are facts in dispute and that all or part of the Application needs to be converted to an action. However, the Applicants take the position that had the Motion to strike been brought according to the timeline, the entire Application could have been determined in this hearing.

[9] The Applicants request that the Motion to strike be dismissed. The Applicants assert that even though there are facts in dispute, the Application can proceed with respect to the amount of $125,000 and the Applicants request an Order that this amount, which is currently being held in trust by the Respondent Malhi Law Professional Corporation, be released to the Applicants. The Applicants request that the remaining portion of the Application be adjourned or converted to an action with a new timetable. The Applicants seek costs as against the Respondent Amrita Randhawa Gill on a substantial indemnity basis.

[10] The Respondent Harshdeep Gill adopts the same position as the Applicants.

[11] The Respondent Amrita Randhawa Gill asserts that the sum of $125,000 is not owed to the Applicants as that sum was a gift to Harshdeep Gill and her and was not a loan or an investment. Further, she disputes knowing that the Applicants were to be given an interest in the property which she and the Respondent Harshdeep Gill purchased during their marriage. She asserts that the lawyer who she and the Respondent Harshdeep Gill jointly retained with respect to the purchase of the property did not explain the full nature of the documents that were signed and that she signed the documents not knowing that this lawyer was also taking instructions from the Applicants. The Respondent Amrita Randhawa Gill asserts that she signed the Real Property Trust Agreement based on misrepresentations and undue influence.

[12] She also asserts that there was an inequality of bargaining power as between herself on one side and the Applicants, the Respondent Harshdeep Gill, and the lawyer retained for the purchase of the property on the other side. The Respondent Amrita Randhawa Gill asserts that the agreement with respect to the purchase of the property was unconscionable and should be void and set aside.

[13] The Respondent Amrita Randhawa Gill claims settlement privilege with respect to two emails which she sent on March 13 and 14, 2017 in relation to the subsequent sale of that property. Therefore, she requests that these emails and references made to these emails in the affidavits of the Applicant Amarjeet Gill and the Respondent Harshdeep Gill be struck.

[14] The Respondent Amrita Randhawa Gill opposes severing the issues within the Application. She requests that the Application be dismissed in its entirety and seeks costs on a full indemnity basis.

Background/Facts

[15] The Applicants are married to each other. I shall refer to them jointly as the Applicants, or individually as Paramjit and Amarjeet. The Applicants are the parents of the Respondent Harshdeep Gill. I shall refer to him as Harshdeep. The Respondent Amrita Randhawa Gill is the former wife of Harshdeep/former daughter-in-law of the Applicants and I shall refer to her as Amrita.

[16] I shall outline the basic facts, which are not disputed. Amrita and Harshdeep were married on May 3, 2014. They lived with the Applicants for a short period of time after the marriage. Amrita and Harshdeep located a property, 3304 Hunters Glen, Mississauga (“the property”), which they wished to buy. The purchase price of the property was $660,000. The Applicants provided Harshdeep and Amrita with $125,000 towards the purchase price.

[17] Amrita and Harshdeep jointly retained John Sedrak (“Mr. Sedrak”), a real estate lawyer, to represent them for the purchase of the property. On May 3, 2016, the Applicants, Harshdeep and Amrita attended at Mr. Sedrak’s office. The closing of the purchase of the property took place on May 5, 2016.

[18] On May 3, 2016, several documents were signed at Mr. Sedrak’s relating to purchase of the property. Included in these documents was a Real Property Trust Agreement (“RPTA”) which provided that Amarjeet and Paramjit had 50% ownership of the property.

[19] The purchase of the property took place as scheduled.

[20] Amrita and Harshdeep took possession of the property. However, there was a breakdown in their marriage. They separated on or about June 30, 2016. They each retained family law lawyers in relation to resolving their matrimonial issues. Amrita and Harshdeep also each retained separate real estate lawyers and real estate agents. They also jointly retained Josh Malhi (“Mr. Malhi”) of Malhi Law Professional Corporation to represent them for the sale of the property.

[21] Amrita and Harshdeep entered into an agreement of purchase and sale on February 3, 2017 to sell the property for $856,000 with a closing date of March 15, 2017.

[22] The Applicants instructed Mr. Sedrak to register a charge in their favour in the amount $330,000 on the property and this charge was registered on February 6, 2017.

[23] On March 13, 2017, Amrita sent an email to her real estate lawyer, copying her family law lawyer and Mr. Malhi. On March 14, 2017, she also sent Mr. Malhi an email, copying her real estate lawyer and her family law lawyer.

[24] These emails were forwarded to Harshdeep by Mr. Malhi. Harshdeep subsequently forwarded these emails to the Applicants.

[25] The sale of the property closed on March 15, 2017 and according to the Applicants, there is $351,344.14 that was kept in the trust account of the Respondent Malhi Law Corporation. This figure is the amount left from the purchase price of $856,000 after the following was deducted: RBC mortgage ($467,411.44); RBC discharge fees ($1820.00); outstanding property tax ($1,755.20); and real estate commission fees ($33,854.80)

[26] Of the monies held in trust, the Applicants claim that they are entitled to $208,495.94 as repayment for the $125,000 loan/investment which they say they made; $80,672.07 which they say is their half of the equity in the home; $1,695.00 which they say they paid to Mr. Sedrak to register the second charge; and $1,128.87 which they say they paid to Mr. Sedrak to remove that charge.

Analysis and Discussion

[27] Before determining the appropriate disposition for the Application, I shall address the motion to strike.

(A) Motion to Strike – Settlement Privilege

[28] Rule 25.11 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 governs motions to strike:

Rule 25.11

The court may strike out or expunge all or part of a pleading or other document, with or without leave to amend, on the ground that the pleading or other document,

(a) May prejudice or delay the fair trial of the action;

(b) is scandalous, frivolous or vexatious; or

(c) is an abuse of the process of the court.

[29] There was no dispute as to law with respect to settlement privilege. As set out in Temex Resources Corp. v Walker, Walker, Burda and Stubbs, 2014 ONSC 3170, at para. 52 (citing Bryant, Lederman and Fuerst’s The Law of Evidence in Canada), the person claiming settlement privilege has the onus to show that:

1. A litigious dispute must be in existence or within contemplation. It is not necessary that the proceedings have commenced.

2. The communication must be made with the express or implied intention that it would not be disclosed to the court even if the negotiations failed, without consent. The use of the phrase “without prejudice” is not conclusive of intention, but its absence does not negate the intention of confidentiality. Where parties are clearly involved in settlement negotiations, the intention should be inferred unless something suggest otherwise.

3. The purpose of the communication must be to attempt to effect settlement…where a communication does not contain an actual settlement offer, it must be part of correspondence which the parties intend to lead to settlement or compromise to attract the privilege.

[30] If I find that Amrita has established that settlement privilege applies to her emails of March 13 and 14, 2017, then I must decide if either the Applicants or Harshdeep had met their onus to establish that there is an exception to the settlement privilege. If an exception is established, then the emails are admissible.

[31] With respect to exceptions to settlement privilege, in Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, [2013] 2 SCR 623, at paras. 12 and 19, the Supreme Court of Canada provides guidance:

As with other class privileges, while there is a prima facie presumption of inadmissibility, exceptions will be found “when the justice of the case requires it”

There are, inevitably, exceptions to the privilege. To come within those exceptions, a defendant must show that, on a balance, “a competing public interest outweighs the public interest in encouraging settlement”…These countervailing interest have been found to include allegations of misrepresentation, fraud or undue influence

Litigious dispute

[32] In order to determine whether there was a litigious dispute in existence or within contemplation, I find that it is necessary to review the exchange of correspondence and emails between February 24, 2017 and March 15, 2017, which relate to the subsequent sale of the property in March 2017.

[33] Amrita outlines from her perspective the events which lead to the sale of the property (see paragraphs 63 to 102 of her Affidavit sworn on August 25, 2017).

[34] In October 2016, she learned that the Applicants and Harshdeep attempted to rent the property and this was done without her consent. There were messages between Harshdeep and Amrita’s father which related to this and to how much Amrita would accept in order to buy out her interest – $50,000, exclusive of mortgage, utility bills, repairs and maintenance, and property tax.

[35] The property was listed for sale in December 2016. Amrita and Harshdeep each retained their own real estate lawyers and agents. Further, they jointly retained Mr. Malhi to represent them in the sale of the property. An Agreement of Purchase and Sale was signed on February 6, 2017 and the sale was to close on March 15, 2017.

[36] Amrita states that on February 23, 2017, she learned from Mr. Malhi that there was an additional charge on the property. The additional charge was in the amount of $330,000 and had been registered on February 6, 2017 by Mr. Sedrak in favour of the Applicants.

[37] The next day, Amrita sent an email to Mr. Sedrak asking for an explanation as to how this second charge had been registered without her knowledge or signature. She also asserted that in her view, he had made her sign the RPTA without her having knowledge of the details of the RPTA or the opportunity to have independent legal advice. She conveyed to him that he had compromised her interests in favour of the Applicants. She stated that she was “dismayed to find out that I have to pay $125,000 plus the 50% interest of the property which is not what you advised me earlier.” Amrita is not claiming settlement privilege for this email.

[38] In his reply, Mr. Sedrak disputed that the RPTA had not been explained to Amrita and disputed that she had not been informed that she could seek independent legal advice. He reiterated that she had signed an Acknowledgement and Direction. Mr. Sedrak copied his reply to Paramjit and Mr. Malhi. Amrita took exception to Mr. Sedrak copying Paramjit on his reply and asserted that Mr. Sedrak had breached confidentiality. Further, she stated that she had never signed an Acknowledgement and Direction for the charge of $330,000. She again questioned how this charge could have been registered on February 6, 2017 when she had not attended at his office since May 2016.

[39] On March 7, 2017, Amrita’s family law lawyer sent an email to Mr. Sedrak. The email is reproduced as Exhibit P of Amrita’s August 25, 2017 affidavit and there appears to be one sentence which has been redacted. The email includes:

The parties signed an Agreement of Purchase and Sale on February 6, 2017. [Redaction]. However, we have been advised of an encumbrance that you recently (February 6, 2017) registered against title to the property in the amount of $330,000, in favour of the husband’s parents, without any notice to my client. Please provide us with a) your authority to do so; b) your calculations for this amount, as Ms. Bekah and my firm have always use $125,000 as the amount owing.

My client disputes this amount, and we are not prepared to have these funds paid to the husband’s parents until this issue is resolved. The funds may be held in trust until this issue is resolved, or there is a Court Order addressing same. You are hereby notified of this dispute.

The closing for the sale of the property is March 15, 2017. While the closing may proceed, no funds should be paid without prior written consent by both the parties and their family law counsel.

[emphasis in the original]

[40] Mr. Sedrak provided a very curt reply on March 7, 2017:

Please do not contact me regarding this matter. I am only responsible for the discharge of the Charge requested by the sellers lawyer, as such I do not answer to you. I will not hold funds in Trust.

[41] Both of these emails were copied to Harshdeep’s family law lawyer. I note that Amrita states in her Affidavit that the redacted portion of the email from her family law lawyer is subject to privilege, but does not identify the nature of the privilege she is claiming. I note that she is not asserting settlement privilege regarding the reference to “as Ms. Bekah [Harshdeep’s family law lawyer] and my firm have always used $125,000 as the amount owing.” Further, the email from her family law lawyer is not clear on what amount is being disputed: the charge of $330,000; whether the $125,000 is a debt or not; or both.

[42] On March 7, 2017, Amrita’s family law lawyer also sent correspondence to Mr. Malhi indicating that attempts had been made to obtain information from Mr. Sedrak with respect to the charge of $330,000; that Amrita was disputing this charge; and requesting that funds be held in trust pending resolution of the matter or a court order. This correspondence was also copied to Harshdeep’s family law lawyer.

[43] Amrita sent an email on March 13, 2017 to her real estate lawyer, Mr. Subedi, copying to Mr. Malhi and her family law lawyer. This is one of the emails for which Amrita is claiming settlement privilege. An unredacted copy of the email is Exhibit I to Amarjeet’s Affidavit of June 13, 2017 and Exhibit F to Harshdeep’s Affidavit of January 22, 2018. Amrita is claiming settlement privilege for the entire email. That email reads as follows:

Hello Atul, Gabrielle, and Josh,

I understand that in terms of the agreement, the net proceeds of home after paying off the existing mortgage from RBC which is approx. $460,000, the real estate commission of approximately $30,000, and the payment of debt of $125,000 to Mr Paramjit Gill and Mrs. Amarjeet Gill, the balance of the funds will be distributed equally between me and Harshdeep Gill.

It appears that Mr. Harshdeep Gill in collaboration with his parent [sic] Mr. Paramjit Gill and Mrs. Amarjeet Gill have registered a new charge without my consent and signature on Feb 06, 2017 which I am not responsible for and if it is required to be paid should be paid from the share of Harshdeep Gill only.

In no case I am agreeable to the payment of $330,000 by the way of new charge which was registered by Mr. John Sedrak on Feb 06, 2017 without my knowledge.

I once again reiterate that I am willing to sign the closing documents to facilitate the scheduled closing on 15 March 2017. However, I am not responsible for the payment of $330,000 charge registered by John Sedrak, the lawyer, on behalf of Mr. Paramjit Gill and Mrs. Amarjeet Gill.

Also, I have to state that I never signed any acknowledgement or direction for registering this charge or ever received any funds. The second charge was registered subsequent to my agreeing to sell the house as proposed by Mr. Harshdeep Gill’s family lawyer, to Ms. Nandishi Bekah, to my family lawyer, Ms. Gabrielle Pop-Lazic.

I addition, all damages by purchasers will be borne by Mr. Harshdeep Gill only.

Thank you.

Amrita

[44] Amrita sent another email to Mr. Malhi on March 14, 2017 for which she also claims settlement privilege. This email was in response to an email from Mr. Malhi which he only sent to Amrita on March 14, 2017. A copy Mr. Malhi’s email to Amrita is found at Exhibit A to the Reply Affidavit of Amarjeet Gill, sworn September 25, 2017 and as Exhibit S to Amrita’s Affidavit of August 25, 2017. In this email, Mr. Malhi writes:

Amrita,

I had a discussion with John Sedrak yesterday. He said he was open to the possibility of providing a discharge upon receipt of the $125,000 plus interest to date and I would have to undertake to holdback the balance of the funds (the 50.00% purportedly claimed by Harsh’s parents) in my trust account until a global settlement and/or agreement could be reached between the parties.

He did not agree to this yet, but he did propose it. If you are possibly open to this idea, please let me know and I will write a letter to Mr. Sedrak to get an agreement to this effect.

On a separate yet related note, please be advised that Harsh has asked me to request an extension. I am required to obtain your consent prior to making a request for an extension to Friday March 17th, 2017.

I look forward to your response on the above two issues.

Yours Truly,

Josh Malhi

Lawyer – Malhi Law Professional Corporation

[45] It should be noted that Amrita’s claim of settlement privilege does not include Mr. Malhi’s email of March 14, 2017, but only claims settlement privilege for her reply email, dated March 14, 2017. She copied her family law lawyer and her personal real estate lawyer on her reply email, an unredacted copy of which is located in Amarjeet Gill’s Reply Affidavit of September 25, 2017 at Exhibit A. Amrita’s unredacted email is as follows:

Dear Josh,

I acknowledge receipt of your email and advice as follows:

1. I am not agreeable to the discharge of the unauthorized charge registered by John Sedrak on behalf of Mr. Paramjit and Mrs. Amarjeet Gill. Therefore, there is no question of hold back of balance of funds (50.00% purportedly claimed by Harsh’s parents). However, I am willing to pay $125,000 loaned by Mr. and Mrs. Paramjit and Amarjeet Gill without any interest as agreed upon by the family lawyers.

2. With respect to the extension of the closing date, I am ready to close on the scheduled date of March 15, 2017 and I reiterate that the charge of $330,000 has to be removed from the property. However, if Harsh Gill wants to extend the closing date, he can do it but if there are any costs associated with the extension of the closing date, he is solely responsible for bearing those costs.

I have discussed this with Mr. Atul Subedi and he is agreeable to the above.

Thank you,

Amrita

[46] Amrita included a redacted version of her reply as Exhibit T to her Affidavit of August 25, 2017. She redacted the following sentence: “However, I am willing to pay $125,000 loaned by Mr. and Mrs. Paramjit and Amarjeet Gill without any interest as agreed upon by the family lawyers.”

[47] Mr. Malhi forwarded the email string of March 14, 2017 (comprising of his email to Amrita and her reply) to Harshdeep and Harshdeep’s family law lawyers. This email string is Exhibit A of the Reply Affidavit of Amarjeet Gill, sworn September 25, 2017 and Exhibit F of Harshdeep’s Affidavit of January 22, 2018.

[48] I find that that there was a litigious dispute. However, I find that this litigious dispute contemplated by the emails was only with respect to the terms of the sale of the property. I also find that based on the evidence before me, the desired outcome of Amrita, Harshdeep, and the Applicants was to have the sale of the property close on March 15, 2017. The sale of the property took precedence over determining the validity of the amounts claimed by the Applicants. At paragraph 31 of Amarjeet’s Affidavit of June 13, 2017, she states “Given that the sale of the property was in peril, my husband and I agreed to a resolution to allow the sale to proceed.”

[49] I find that the litigious dispute that was the subject of these emails did not include the Applicants’ claim for monies owed to them or their claim that they had an ownership interest in the property.

[50] Mr. Malhi is a recipient of Amrita’s emails of March 13 and 14, 2017 for which she claims settlement privilege. She describes these as private emails. As he jointly represents Amrita and Harshdeep, Mr. Malhi was obliged to share these emails with Harshdeep. Amrita cannot and is not asserting solicitor-client privilege over this email.

Intention that communication would not be disclosed to the court

[51] Had Amrita met the first criterion of the test, I would have then determined if she met the second one. It is not expressly stated in the correspondence or emails that were sent between February 24, 2017 and March 15, 2017 that the communications were “without prejudice.” From a review of the correspondence and emails, I find that it is clear that there were settlement negotiations with respect to the terms of the sale of the property. This would have supported making an inference that it was intended that these communications (with respect to the terms of the sale of the property) would not be disclosed to the court. However, Amrita is not asserting settlement privilege over all of the correspondence and emails, but only for two emails.

Communication to attempt to effect settlement

[52] Had Amrita met the first two parts of the test, I would have then determined if she had met the third criterion. As stated above, I find that the purpose of the correspondence and emails exchanged between February 24, 2017 and March 15, 2017 were sent to reach an agreement as to the terms of the sale of the property so that the sale would close on March 15, 2017.

Exception to settlement privilege

[53] Had I found that the litigious dispute had included an attempt to determine the validity of the Applicants’ claims to $125,000 and an equitable ownership interest in the home, and the validity of the second charge, I would have found that Amrita had met her onus and established her claim for settlement privilege. I then would have decided if the Applicants and Harshdeep had established that there is an exception thus making the disputed emails admissible.

[54] In this case, it is argued by the Applicants that Amrita is using settlement privilege “as a cloak for perjury.” Further, Amrita has maintained that she signed the RPTA based on misrepresentations and undue influence. She has maintained that the second charge was registered improperly. One of Harshdeep’s family law lawyers referred to it as an “illegal charge” which Harshdeep disputed. Amrita maintains that she did not authorize that charge and it was registered without her consent and that there was some sort of fraud or improper conduct.

[55] Given this, there would have been sufficient cause to find an exception to settlement privilege. In order to properly and justly adjudicate this matter, the public interest in determining whether there had been any fraud, misrepresentation or perjury would outweigh the public interest in encouraging settlement. Had Amrita established her claim for settlement privilege with respect to the emails, I would have found that there was an exception to settlement privilege and therefore the emails of March 13, 2017 and March 14, 2017 would be admissible.

(B) The Application

[56] Applications are governed by Rules 14.05, 38, and 39 of the Rules of Civil Procedure. Rule 14.05(3) governs when an application may be brought:

Rule 14.05(3) Application under rules – A proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is,

(a) the opinion, advice or direction of the court on a question affecting the rights of a person in respect of the administration of the estate of a deceased person or the execution of a trust;

(b) the order directing executors, administrators or trustees to do or abstain from doing any particular act in respect of an estate or trust for which they are responsible;

(c) the removal or replacement of one or more executors, administrators or trustees, or the fixing of their compensation;

(d) the determination of rights that depend on the interpretation of a deed, will, contract or other instrument, or on the interpretation of a statute, order in council, regulation or municipal by-law or resolution;

(e) the declaration of an interest in or charge on land, including the nature and extent of the interest or charge or the boundaries of the land, or the settling of the priority of interest or charges;

(f) the approval of an arrangement or compromise or the approval of a purchase, sale, mortgage, lease or variation of trust;

(g) an injunction, mandatory order or declaration or the appointment of a receiver or other consequential relief when ancillary to relief claimed in a proceeding properly commenced by a notice or application;

(g.1) for a remedy under the Canadian Charter of Rights and Freedoms; or

(h) in respect of any matter where it is unlikely that there will be any material facts in dispute.

[57] Rule 38.10 governs the possible dispositions available upon the hearing of an application:

(1) On the hearing of an application the presiding judge may

(a) grant the relief sought or dismiss or adjourn the application in whole or in part and with or without terms; or

(b) order that the whole application or any issue proceed to trial and give such directions as are just.

(2) Where a trial of the whole application is directed, the proceeding shall thereafter be treated as an action, subject to the directions in the order directing the trial.

(3) Where a trial of an issue in the application is directed, the order directing the trial may provide that the proceeding be treated as an action in respect of the issue to be tried, subject to any directions in the order, and shall provide that the application be adjourned to be disposed of by the trial judge

(4) Exception, applications in estate matters – Clause 1(b) and subrules (2) and (3) do not apply to applications under Rule 74, other than applications under rule 74.18 and Rule 75.

[58] Rule 39 governs evidence for a motion or application and the relevant portions of Rule 39.01 are:

Rule 39.01

(1) Generally – Evidence on a motion or application may be given by affidavit unless a statue or these rules provide otherwise.

(2) Service and filing – Where a motion or application is made on notice, the affidavits on which the motion or application is founded shall be served with the notice of motion or notice of application and shall be filed with proof of service in the court office where the application is to be heard at least seven days before the hearing.

(3) All affidavits to be used at the hearing in opposition to a motion or application or in reply shall be served and filed with proof of service in the court office where the motion or application is to be heard at least four days before the hearing

(4) Contents – Motions – An affidavit for use on a motion may contain statements of the deponent’s information and belief, if the source of the information and the fact of the belief are specified in the affidavit.

(5) Contents – Applications – An affidavit for use on an application may contain statements of the deponent’s information and belief with respect to facts that are not contentious, if the source of the information and the fact of the belief are specified in the affidavit.

(6) Full and fair disclosure on motion or application without notice – Where a motion or application is made without notice, the moving party of applicant shall make full and fair disclosure of all material facts, and failure to do so in in itself sufficient ground for setting aside any order obtained on the motion or application.

(7) Expert Witness Evidence – Opinion evidence provided by an expert witness for the purposes of a motion or application shall include the information listed in subrule 53.03 (2.1).

[59] The law is clear that issues of credibility cannot be determined by an Application. In Maurice v. Alles, 2016 ONCA 287, 130 O.R. (3d) 452, at para. 32, the Ontario Court of Appeal states, at para. 32:

An application is also a summary process. Its use is restricted, pursuant to r. 14.05(3), to situations where an application is permitted under the Rules or in cases where certain enumerated relief is claimed. Evidence is generally supplied through affidavits and cross-examinations conducted out of court. Where there is conflicting evidence that requires credibility determination on central issues, the application must be converted to an action: see Baker v. Chrysler Canada Ltd. (1998), 38 O.R. (3d) 729 (S.C)

[60] As G. P. Smith J. stated in Fort William Indian Band v. Canada (Attorney General), 76 O.R. (3d) 228, at paras. 28 to 31:

As a general principle, it is well established that an application should be used when there is no mater in dispute and when the issues to be determined do not go beyond the interpretation of a document [citation omitted].

An application proceeding will not be converted into an action unless there is a good reason to do so such as when the judge who will hear the matter cannot make a proper determination of the issues on the Application record.

When issues of credibility are involved or when viva voce evidence is required, a matter should proceed as an action [citation omitted].

When a factual dispute simpliciter is involved, this by itself is not sufficient to convert an application into an action. The fact(s) in dispute must be material to the issues before the court [citation omitted].

[61] There are several facts which are in dispute and I find these to be material facts. Further, in order to determine the facts, the issue of credibility arises. As outlined above, credibility on central issues cannot be determined within an Application.

[62] The Applicants and Harshdeep maintain that the issue of the $125,000 can be adjudicated by way of this Application. They maintain that there are no disputed facts or conflicting evidence that require a determination of credibility with respect to the Applicants providing $125,000 towards the purchase price. I cannot accept this assertion and I find that there are material facts in dispute with respect to the $125,000 provided by the Applicants and that credibility is very much an issue. With respect to the RPTA, I also find that there are also material facts in dispute and also issues of credibility.

[63] According to the Applicants and Harshdeep, Amrita knew that the $125,000 provided by the Applicants was not a gift to Amrita and Harshdeep. The Applicants and Harshdeep maintain that all parties knew and understood the nature of the RPTA and that Mr. Sedrak explained it clearly to Amrita. Further, the Applicants and Harshdeep maintain that Amrita had the opportunity to ask questions before signing the RPTA and closing documents and that she did ask questions. They also maintain that she was offered independent legal advice. Harshdeep also maintains that he and Amrita had several discussions about the RPTA.

[64] The Applicants and Harshdeep also dispute abuse which Amrita has alleged occurred during her marriage to Harshdeep. She alleges that Harshdeep was physically and emotionally abusive to her. She alleges that the Applicants were emotionally abusive to her. She further alleges that the Applicants, in particular, Amarjeet, was very controlling. Amrita relies on this assertion as a basis of her claim of undue influence and inequality of bargaining power.

[65] According to Amrita, it was Amarjeet who introduced Amrita and Harshdeep to two real estate agents. These real estate agents were Amarjeet’s clients. Amarjeet is a financial advisor at the RBC.

[66] Amrita maintains that it was Amarjeet and Paramjit who approached her and Harshdeep with an offer of assistance in the amount of $125,000 (not the other way around). Amrita maintains that she believed that the $125,000 was a gift without any expectation of repayment.

[67] When Amrita, Harshdeep and the Applicants attended at Mr. Sedrak’s office on May 3, 2016, there were several documents which were reviewed. One document included a gift letter which the Applicants had signed on April 21, 2016 for the bank (RBC) which was granting a mortgage to Harshdeep and Amrita. Amrita maintains that the gift letter clearly indicated that the $125,000 was a gift to Harshdeep with no expectation of it being repaid.

[68] The gift letter is signed by both Amarjeet and Paramjit. It includes the following: “The undersigned hereby confirm that a financial gift in the amount of $125,000 is being provided to Harshdeep Gill. … to be used as all or part of the down payment for the purchase of the property located at 3304 Hunters Glen, Mississauga Ont.” It should be noted that the form provided that a second person could have been named as a recipient of the gift, but a line was put through this. The gift letter also includes the following provision:

The Person(s) receiving the gift (Recipient) and the Person(s) giving the gift (Donor) certify the following

o The funds are a genuine gift from the donor(s) and a non-repayable

o No part of the gift is being provided by any third party having an interests in the sale of the subject property

o The donor(s) is an immediate family member

[69] Harshdeep asserts that he had discussions with the RBC mortgage specialist, Chester Yu, who was assisting Harshdeep and Amrita with their mortgage application. Harshdeep maintains that the RBC, through its representative, had acknowledged that the funds being advanced by the Applicants was not a gift and that this document was being used for “internal purposes” in order to complete the mortgage transaction. In support of this, Harshdeep relies on emails that he sent to Mr. Yu on April 5, 2016.

[70] In these emails, Harshdeep states that the $125,000 is not a gift from the Applicants and asks if different language can be used (other than the language of a gift). Harshdeep maintains that Mr. Yu provided a verbal response acknowledging that the funds from the Applicants was an investment and that this was the only form that could be used and that it was for “internal purposes.” These emails from Harshdeep do not appear to have been copied to Amrita. There is no direct evidence from the bank or Mr. Yu to support Harshdeep’s position. I find that this is a material fact and that findings of credibility need to be made.

[71] Amrita states that she had never met Mr. Sedrak prior to May 3, 2016. She was unaware that the Applicants had, prior to May 3, 2016, retained Mr. Sedrak and this retainer was not disclosed to her by Mr. Sedrak or the Applicants.

[72] Amrita asserts that she was told that prior to signing the documents for the purchase of the property, she was told that she had to sign a specific document first and that the document was for income tax purposes for the Applicants. The document was the RPTA.

[73] She maintains that she was not offered independent legal advice; not informed that Mr. Sedrak was also acting for the Applicants; not informed that the Applicants would have a 50% ownership in the property; and not informed that the Applicants expected to share in the profits of sale if the property were to be sold.

[74] The Applicants deny that any document was signed for “tax purposes” as asserted by Amrita.

[75] Whether the funds advanced by the Applicants was a gift or not; whether the documents signed by Amrita on May 3, 2016 were signed with full knowledge or not; whether the Applicants had an ownership interest in the property and whether Amrita knew this or not; and whether or not the second charge was properly registered or not are all material facts. I find none of these can be resolved on the basis of the evidentiary record before me. Credibility of all the parties is very much an issue which needs to be determined, but not on an Application.

[76] In light of my finding that there are material facts in dispute and credibility which must be determined, I find that the Application, in its entirety, must be converted to an action.

[77] In argument, none of the parties made submissions on what the timetable should be if the Application was converted, either in whole or in part, to an action. Counsel for the Applicants and counsel for Amrita each outlined their version of events as to why all the cross-examinations were not completed in accordance to the schedule ordered by Van Melle J.

Disposition

[78] After carefully reviewing the materials filed by the parties, considering the submissions of counsel and for the reasons outlined above, I order that:

1. The Motion to strike brought by the Respondent Amrita Randhawa Gill is dismissed.

2. The Application, in its entirety, shall be converted to an action on the following terms:

i) The style of cause shall reflect that the Plaintiffs are: Paramjit Singh Gill and Amarjeet Gill; and that the Respondents are: Harshdeep Gill, Amrita Randhawa Gill, and Malhi Law Corporation.

ii) Paramjit Singh Gill and Amarjeet Gill shall serve a Statement of Claim by March 11, 2019.

iii) Any defendant who wishes to defend the action shall serve a Statement of Defence within 20 days of being served with the Statement of Claim.

iv) The Cross-examinations of Paramjit Singh Gill and Amarjeet Singh held on December 21, 2017 shall form part of their Examinations for discovery.

v) Any further Examination for discovery of Paramjit Singh Gill and Amarjeet Singh and the Examinations for discovery of Harshdeep Gill and Amrita Randhawa Gill shall be completed by May 31, 2019.

vi) Any motions with respect to undertakings/refusals of any of the parties shall be brought by July 12, 2019.

vii) If any party wishes to vary this timetable, then that party shall bring a motion within 30 days of the date of these reasons. If I am sitting, the motion may come before me, but does not have to be before me. I am not seized of the matter.

3. If the parties cannot agree upon costs, then:

i) any party who is seeking costs shall, on or before March 15, 2019, serve and file written costs submissions. The written costs submissions shall be double spaced, in size 12 font and shall not be longer than three pages. In addition, the party seeking costs shall also serve and file a bill of costs and file any offers to settle that may have been served;

ii) any party who is served with the written costs submissions of the another party and who wishes to oppose the other party’s request for costs shall serve responding written costs submissions on or before March 29, 2019. The responding written submissions shall be double spaced, in size 12 font and shall not be longer than three pages. In addition, the responding party to the request for costs shall file any offers to settle that may have been served;

iii) any reply written submissions shall be served and filed on or before April 4, 2019 and shall be double spaced, in size 12 font and shall not be longer than two pages.

iv) if there are no written submissions filed on or before March 15, 2019, then I shall make an Order that there are no costs awarded as no party sought costs.

Kumaranayake J. Released: February 22, 2019