6071376 Canada Inc. v. 3966305 Canada Inc. et al.

[Indexed as: 6071376 Canada Inc. v. 3966305 Canada Inc.]

Ontario Reports Ontario Superior Court of Justice Tausendfreund J. June 25, 2019 147 O.R. (3d) 564 | 2019 ONSC 3947

Case Summary

Corporations — Directors — Personal liability — Plaintiff and defendants entering into agreement under which plaintiff contributed 40 per cent of closing funds for purchase of commercial property in exchange for 40 per cent of net income of project and 40 per cent of its net value upon sale — Defendant 396 taking title to property — Defendant M sole shareholder and director of 396 — M selling project without plaintiff's knowledge and using proceeds to purchase another property — Defendants owing fiduciary duties to plaintiff — Plaintiffs entitled to 40 per cent of revenue and sale profits of project — Piercing of corporate veil appropriate — M personally liable to plaintiff — M lying to plaintiff on regular basis for more than six years and using their funds to enrich himself — M's behaviour calling for strong denunciation — M ordered to pay plaintiff punitive damages in amount of $200,000.

Damages — Punitive damages — Plaintiff and defendants entering into agreement under which plaintiff contributed 40 per cent of closing funds for purchase of commercial property in exchange for 40 per cent of net income of project and 40 per cent of its net value upon sale — Defendant 396 taking title to property — Defendant M sole shareholder and director of 396 — M selling project without plaintiff's knowledge and using proceeds to purchase another property — Defendants owing fiduciary duties to plaintiff — Plaintiffs entitled to 40 per cent of revenue and sale profits of project — Piercing of corporate veil appropriate — M personally liable to plaintiff — M lying to plaintiff on regular basis for more than six years and using their funds to enrich himself — M's behaviour calling for strong denunciation — M ordered to pay plaintiff punitive damages in amount of $200,000.

Fiduciaries — Fiduciary relationship — Plaintiff and defendants entering into agreement under which plaintiff contributed 40 per cent of closing funds for purchase of commercial property in exchange for 40 per cent of net income of project and 40 per cent of its net value upon sale — Defendant 396 taking title to property — Defendant M sole shareholder and director of 396 — M selling project without plaintiff's knowledge and using proceeds to purchase another property — Defendants owing fiduciary duties to plaintiff — Plaintiffs entitled to 40 per cent of revenue and sale profits of project — Piercing of corporate veil appropriate — M personally liable to plaintiff — M lying to plaintiff on regular basis for more than six years and using their funds to enrich himself — M's behaviour calling for strong denunciation — M ordered to pay plaintiff punitive damages in amount of $200,000.

The plaintiff, through its three principals, entered into an agreement with the defendant M in 2003 under which the plaintiff contributed 40 per cent of the closing funds for the purchase of a commercial property (the "project") in exchange for 40 per cent of the net income of the project and 40 per cent of its net value upon sale. Title to the property was taken by the defendant 396, a company of which M was the sole director and shareholder. M sold the property in 2006 without the plaintiff's knowledge and used the proceeds to purchase another property. The plaintiff brought an action claiming 40 per cent of the revenue and sale profits of the project and other related relief.

Held, the action should be allowed.

When M accepted the plaintiff's funds, he knew or should have known that the plaintiff's principals relied on him and trusted him with the stewardship of their investment. There were no regular reports or consultations. The defendants were trustees who owed the plaintiff a fiduciary duty as it related to the plaintiff's investment in the project. This was an appropriate case in which to pierce the corporate veil. M used 396 as his alter ego. He directed and caused the misappropriation of the plaintiff's trust funds for his own purposes. M was personally liable to the plaintiff for funds the plaintiff contributed to the project. M lied to the plaintiff's principals on a regular basis for more than six years and used their funds to enrich himself. His behaviour was outrageous and reprehensible and called for strong denunciation. M was ordered to pay the plaintiff punitive damages in the amount of $200,000.

Cases referred to

• Advanced Interiors Inc. v. Prestige Steel Buildings Ltd., 2019 ONSC 524
• Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24
• Boroni v. Polidoro, 2018 ONSC 6631
• Malitza v. Iclanzan, 2011 ONSC 4202
• Shoppers Drug Mart Inc. v. 6470360 Canada Inc., 2014 ONCA 85
• Whiten v. Pilot Insurance Co., 2002 SCC 18

Rules and Regulations

• Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 49

ACTION for a share of revenue and sale profits of project and for other relief.

Counsel: G. James Thorlakson and James Wishart, for plaintiff. Charles Gibson and Ian Houle, for defendants.

TAUSENDFREUND J.: —

Overview

[1] On or about February 25, 2003, three residents of California (the "plaintiff principals"), Mike Shakeri ("Mike"), Hamid Ghazvini ("Hamid") and Kamran Pourshams ("Kamran"), decided to invest in a commercial property in the City of Gatineau, Quebec (the "Hull Project").

[2] The plaintiff principals had been introduced that day to the defendant Mahmood Khedmatgozar ("Mahmood"). All were of Iranian descent. That was their connection.

[3] About three months earlier, Mahmood, in trust for a company to be incorporated, had submitted an offer to purchase the Hull Project for $2,640,000. It was conditional on financing. He then obtained financing for the amount of the purchase price, less $515,015. The financing condition was waived on January 30, 2003. The closing date was March 3, 2003.

[4] Mahmood told the plaintiff principals that a mortgage had been secured and that a further investment of $233,600 was needed for the balance of the required down payment. This amount would entitle them to 40 per cent of the net income of the Hull Project and to 40 per cent of its net value upon sale. Based on that representation, the plaintiff principals proceeded with the investment proposal and returned to California. The purchase was completed on the agreed upon date of March 3, 2003 when the defendant 3966305 ("396") obtained title to the Hull Project.

[5] Mahmood sold the Hull Project in 2006 without the knowledge of the plaintiff principals. He then used the net sale proceeds to purchase another property.

[6] The plaintiff principals at all times acted through the plaintiff corporation, which they had arranged to incorporate following their decision to invest in the Hull Project.

[7] The plaintiff brings this action for a claim of 40 per cent of the revenue and sale profits of the Hull Project and other related relief.

[8] The issues in this action include:

(a) Did the parties reach an agreement in February 2003 as to the particulars of the participation of the plaintiff in the Hull Project venture? (b) If so, what were the particulars of this agreement and the obligations of the defendants to the plaintiff? (c) Was the plaintiff and or its principals obligated under the arrangement to guarantee the mortgage obligation? (d) Were the principal plaintiffs obligated to offer the defendants the option to participate in a similar investment opportunity in California?

Evidence

The parties

[9] The plaintiff, 6071376 Canada Inc. ("607"), was incorporated on March 2, 2003 on instructions from the plaintiff principals. They are its only shareholders. The sole purpose for incorporating the plaintiff was for 607 to hold a 40 per cent interest in the Hull Project. 396 is a company controlled by Mahmood. He owns all of its shares. 396 at all times held title to the Hull Project, on the understanding that the defendants were to manage this property as bare nominees on behalf of the investors.

[10] Ramin Khedmatgozar ("Ramin") is the brother of Mahmood.

[11] The plaintiff principal, Shakeri, was acquainted in California with the Khedmatgozar family, including Ramin who spoke to him about the Hull Project, as a possible investment in Canada for Shakeri and others. With the encouragement of Ramin, the plaintiff principals, who had never visited Canada, decided to view the property as a possible investment. They arrived February 25, 2003 to visit the Khedmatgozar family, including Mahmood and to view the Hull Project.

The Hull Project

[12] In or about November 2002, Mahmood had submitted an offer to purchase the Hull Project. He did so in trust for a company to be incorporated. The purchase price was $2,640,000. The offer was conditional on financing.

[13] Mahmood obtained a financing offer from Caisse Desjardins on January 9, 2003. The amount of the mortgage was $2,124,984. An additional sum of $584,000 was needed as a down payment to close the transaction. The financing offer was accepted by Mahmood on January 16, 2003. It included his personal guarantee, and that of three other investors, Kimberly Stacey-Fournier, William James and Pablo Sierra. These three investors participated in the project to the extent of 5 per cent each. Mahmood removed the condition on the offer to purchase on January 30, 2003.

Mahmood's discussion with plaintiff principals

[14] The plaintiff principals state that during their meeting with Mahmood at his parents' home, he told them the following about the Hull Project:

-- Mahmood had already made the offer on the project. -- That the mortgage was in place. They did not have to concern themselves about it. -- There was another party with a 40 per cent proposed interest in the project who had changed his mind at the last minute. For that reason, Mahmood needed somebody else as an investor. The amount he was looking for from an additional proposed investor was 40 per cent of the required down payment of $584,000, or $233,600. -- The plaintiff principals were not asked by Mahmood to provide personal guarantees for the mortgage nor did he raise this issue with them.

[15] Mahmood conceded that the Desjardins financing offer listed none of the plaintiff principals or that the financing offer was ever amended to name them as guarantors. He also confirmed that Desjardins had not raised with him the requirement of personal guarantees from any of the investors who had not signed the Desjardins financing agreement.

[16] During their discussions about the Hull Project, Mahmood said to Shakiri: "The loan is already in place. You are to become a 40% interest owner. Can you do the same favour for me in California, if you find such an opportunity there?" Shakiri responded that if they should ever find a similar project in California, they would include him as an investor. Shakiri did not view his response as a condition of this agreement.

[17] Once they had decided to invest in the Hull Project, the plaintiff Principals retained an Ottawa lawyer to incorporate 607 to hold title and interest for them in this project. They arranged for Ramin to be "their eyes and ears on the ground in Ottawa". They named him as the only director of 607 and requested that he report to them periodically. They also provided their share of the participation in this project. That amount was $233,600. Their visit to Ottawa had lasted three to four days.

[18] Following their return to California, Ramin raised the issue with them that the investors in the Hull Project were to sign a co-tenancy agreement to formalize their arrangement. Ramin sent them a draft in June 2003. There were certain issues in the draft that Mike then raised with Ramin. These included the fact that Mahmood was named as their representative, in place of Ramin and that the document required them to give a loan guarantee, something which had not previously been discussed or raised with them as an issue. Mike advised Ramin of his concerns in that regard. He heard nothing further of it until 2012. No such co-tenancy agreement was ever signed by any of the plaintiff principals.

[19] Mahmood and the other three 5 per cent investors were said to have signed a co-tenancy agreement. However, no such signed agreement was ever produced in this trial.

Sale of the Hull Project

[20] Without consulting the plaintiff principals and without their knowledge, Mahmood sold the Hull Project on June 6, 2006. The three 5 per cent investors received their expected share of the net proceeds. 396 retained the balance. Mahmood neither advised the plaintiff Principals of this sale, nor did he send any of the sale proceeds to them.

[21] The balance of the net proceeds which 396 retained was $508,776. In addition, 396 held a "Vendor Take Back" mortgage of $635,246 with interest at 7 per cent. On December 1, 2006, this mortgage was paid out to 396 in full with interest. During the three-year term that 396 was the registered entity of the Hull Project, the principal of the Desjardins mortgage was reduced by $126,451.

[22] The plaintiff did not receive any part of the sale proceeds of the Hull Project.

[23] Mahmood directed these net proceeds to fund the purchase of another commercial property in Ottawa. The purchase price of that property was $3.2 million dollars. In this trial, this property was referred to as the "Wellington property". Mahmood stated that only half of the $516,661 required to close the purchase of the Wellington property came from the sale of the Hull Project. No documents, nor any evidence was produced to support this representation.

[24] Mahmood sold the Wellington property six years later for $4,670,000. Mahmood stated that he and/or 396 had incurred various construction costs with respect to the Wellington property. However, he did not produce any documentation, nor any evidence to support that position. Mahmood admitted that he collected commercial and residential rents generated by the Wellington property between June 2006 and December 2012.

[25] Mahmood was asked why he had not advised the plaintiff principals of the sale of the Hull Project:

Q: All right, between 2006 and 2012, you dealt with Mr. Shakeri? A: Yes Q: Did you ever tell him that the buildings had been sold? A: No I did not. Q: Why would that be? A: The reason why is that they were family connections to my brother. He was the conduit to them. I told my brother to talk -- to tell me how he wants this to be treated, because he was the director, he was their friend. I go, how do I make this fair? And he could never come up with an answer. I go, how do I deal with this problem?

[26] Mahmood admitted that he hid from Mike Shakeri the fact that he had sold the Hull Project. Mahmood told Mike on March 5, 2008 that he would be ready to transfer money "as soon as the accountant advises [him] about the tax withholdings". He further told Mike that he expected to be "putting up the building for sale" in the summer. Mahmood admitted that these representations were not true and that he had lied in that regard. He admitted that he did not want Mike to know that the Hull Project had been sold.

February 2012 meeting in Ottawa

[27] As repeated requests to Mahmood for financial information about the Hull Project went unanswered or were deflected by him, Mike and Hamid came to Canada in February 2012 to speak with Mahmood directly. The meeting was held at the Khedmatgozar family home. They met Mahmood's parents and stayed at their family home. Mahmood told Mike and Hamid that he intended to give them their share of the net rental income from the Hull Project, but that they needed to revive the plaintiff corporation, which in the meantime had lapsed.

[28] Mike and Hamid asked about financial details of the Hull Project. Mahmood replied that he did not have them, as he had lost these documents some years ago, due to a flood at his house. He did not tell them that the project had been sold six years earlier. At this meeting, Mahmood, Ramin and the two plaintiff principals drafted a set of action items pertaining to the Hull Project (the "action list"). One of the action items assigned to Mahmood was to provide financial details on the Hull Project for 2009, 2010 and 2011. Mahmood agreed to provide these documents. In fact, there were no such financial details for those years, as the project had been sold by then.

[29] After their return to California, Hamid followed up with Mahmood by e-mail. He asked for an update on the cost/revenue summary for 2008 to 2012. Mahmood's response on April 20, 2012 was that he would forward these documents shortly.

[30] The principal plaintiffs arranged for 607 to be revived.

[31] Mahmood admitted in cross-examination that he did not want to tell Mike and Hamid the truth about the sale of the Hull Project and that he, for that reason, lied to them.

[32] During their meeting, not knowing that the Hull Project had been sold six years earlier and as an incentive to Mahmood, Mike and Hamid offered to reduce their share of the rental income from 40 per cent to 30 per cent. That was subject to Mahmood providing them with all of the financial information they had requested. To date, Mahmood has sent them neither money nor financial information.

Analysis

Credibility

[33] As already noted, Mahmood admitted under oath in this trial that he, over a number of years, had lied to Mike Shakiri directly and to the other two plaintiff Principals indirectly about the Hull Project. Mahmood is an admitted liar. I find that Mahmood's lies to the plaintiff Principals were cloaked in a series of misrepresentations calculated to make it appear to the plaintiff principals that the Hull Project was still operating when, in fact, he had already sold it.

[34] For those reasons, I prefer and accept the evidence of the plaintiff principals on any credibility issues that may arise.

The agreement

[35] Mahmood had submitted a conditional offer in November 2002 to purchase the Hull Project. The agreement was in his name for a company to be incorporated. That company was 396, which Mahmood, as its sole shareholder, had already incorporated in May 2002.

[36] Mahmood had arranged mortgage financing and removed the conditions by January 30, 2003. The scheduled closing date was March 3, 2003.

[37] In addition to the mortgage funds, Mahmood needed $584,000 to close the purchase. He had arranged for three investors to participate in this project, to the extent of 5 per cent each and a fourth investor to the extent of 40 per cent. However, that 40 per cent investor withdrew his participation. That left the closing funds short by $233,600. Mahmood then had a problem.

[38] That was the situation for Mahmood in February 2003 when his brother Ramin on behalf of Mahmood arranged a visit to Ottawa of the three plaintiff principals, as possible additional investors for the needed shortfall of $233,600.

[39] I find that Mahmood was desperate to make this work. He had everything arranged, but for the missing $233,600. His sales pitch to the putative investors was likely driven by that sense of urgency.

[40] I accept the evidence of Mike Shakiri that:

The deal was that I was to put down a certain amount of investment to get a 40% share of the ownership of this property. There was a discussion regarding the loan being already in place and I do not have to worry about the loan. Mahmood had mentioned that he had done some loan guarantees and [that] I do not have to worry about the loan. He was asking, on a regular favour to favour basis, if I find some similar operation, similar projects in California, I would do a similar favour for him.

[41] The plaintiff principals on behalf of 607 paid the defendants $233,600 in return for a 40 per cent participation in the Hull Project.

[42] Neither Desjardins nor Mahmood requested the personal guarantees of the plaintiff principals.

[43] During their discussion on February 26, 2003 about participating in the Hull Project, I find that Mike Shakiri mentioned that if he were to come across a similar project in California, he would offer Mahmood the opportunity to participate. There is no evidence that such a project ever materialized for the principal plaintiffs in California. I find that the parties' discussion of such a possibility did not affect nor impact the principal plaintiffs' participation in the Hull Project nor the defendants' obligation to the plaintiff based on that participation.

[44] I find that the parties reached an agreement in February 2003 regarding the Hull Project. The plaintiff's payment to the defendants of $233,600 entitled the plaintiff to a 40 per cent participation in this project, including the net income and the net sale proceeds upon disposition.

[45] Mahmood states that during their visit to Ottawa in February 2003, he raised with the plaintiff Principals that they would be asked to sign a "co-tenancy agreement" relating to their participation in the Hull Project. It may be that Mahmood and the 5 per cent investors signed such an agreement. However, the plaintiff Principals did not. No such signed agreement was produced at trial. The evidence as to what was said by whom on this issue is unclear. Even if there were such an agreement signed by the plaintiff principals, there is no evidence how such document would affect the agreement between the parties, if at all.

[46] As noted above, I accept Mike Shakiri's evidence that Ramin had sent him a draft co-tenancy agreement, to sign and return. Mike Shakiri then asked Ramin that changes be made to the draft. Mike heard nothing further on this issue until 2012.

[47] I find that the plaintiff principals did not enter into or sign a co-tenancy agreement, either in Ottawa or in California.

Defendants as Fiduciaries?

[48] Although the plaintiff principals did not sign a co-tenancy agreement, Mahmood testified that other parties did, namely 396 and the three 5 per cent investors. A draft copy of this document refers to 396 as the registered owner of the Hull Project and that 396 would hold this property in trust for the co-tenants as their interest may appear. Mahmood acknowledged that this document had been produced by his lawyer. He signed it on behalf of 396. He also agreed that he then knew that 396 would operate the Hull Project on behalf of the co-tenants.

[49] The plaintiff's contribution to the Hull Project in the amount of $233,600 was payable to 396. Mahmood at all times was the directing mind of 396.

[50] I find that by accepting the plaintiff's funds, Mahmood personally, as the directing mind of 396, agreed to act in the best interests of all the participants in the Hull Project, including the plaintiff which had not signed the co-tenancy agreement.

[51] Mahmood, through 396, had possession of the plaintiff's funds which he invested in the Hull Project. Based on his family connections with the plaintiff Principals who had never invested in Canadian real estate and resided in California, I must consider whether these facts, separate and apart from the co-tenancy agreement, would support a finding that Mahmood owed fiduciary duties to the plaintiff.

[52] Relationships in which a fiduciary obligation has been found typically have the following characteristics:

(a) There must be an undertaking by the fiduciary, express or implied, to act in accordance with the duty of loyalty imposed on him or her. That undertaking may be found in the relationship between the parties. (b) The duty must be owed to a defined person or class of persons who must be vulnerable to the fiduciary in the sense that the fiduciary has a discretionary power over them. (c) The claimant must show that the alleged fiduciary's power may affect the legal or substantial practical interests of the beneficiary.

See Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24, at paras. 30-36.

[53] Mahmood had possession of the plaintiff's funds. He knew or should have known that the plaintiff Principals relied or trusted him with the stewardship of their investment. There were no regular reports or consultations. Based on the reasoning in Malitza v. Iclanzan, 2011 ONSC 4202 (S.C.J.), at paras. 92-102, I find that 396 and Mahmood were trustees who owed the plaintiff a fiduciary duty, as it relates to the plaintiff's investment in the Hull Project.

Mahmood's personal liability?

[54] 396 was the registered owner of the Hull Project and Mahmood at all times was the controlling mind of 396 and its sole shareholder.

[55] Although the starting presumption is that a corporation is a separate entity, the corporate veil can be pierced if those in control expressly direct a wrongful act to be done: see Advanced Interiors Inc. v. Prestige Steel Buildings Ltd., 2019 ONSC 524 (S.C.J.), paras. 21-22; and Shoppers Drug Mart Inc. v. 6470360 Canada Inc., 2014 ONCA 85, at paras. 43-47.

[56] Mahmood used 396 as his alter ego. He directed and caused the misappropriation of the plaintiff's trust funds for his own purposes. I find Mahmood to be personally liable to the plaintiff for funds the plaintiff contributed to the Hull Project.

Calculation of Profits from Sale of the Hull Project

[57] The sale proceeds from the Hull Project totalled $508,776. There was a mortgage principal reduction of $126,451. On December 1, 2006, the purchaser either assumed or paid off the $635,246 vendor take-back mortgage with interest of $18,528 from date of sale. I calculate that total to be $1,289,001. 40 per cent of that sum I calculate to be $515,600.

[58] I find that the plaintiff is entitled to receive from the defendants, on a joint and several basis, the sum of $515,600 with prejudgment interest ("PJI") calculated as follows:

(a) on 40 per cent of the sale proceeds of $508,776, PJI calculated as of June 6, 2006; (b) on 40 per cent of the mortgage principal reduction of $126,451, PJI calculated as of June 6, 2006; (c) on 40 per cent of the vendor take-back mortgage payout of $635,246 and on 40 per cent of interest on that mortgage in the amount of $18,528, PJI calculated as of December 1, 2006.

[59] The plaintiff is also entitled to receive from the defendants, on a joint and several basis, 40 per cent of the net rental profits of the Hull Project, calculated from the date of purchase to the date of sale. If the parties are unable to agree on the amount, they may apply to the court for terms and directions.

[60] Following the sale of the Hull Project, Mahmood funneled the net sale proceeds of that sale into the purchase of the Wellington property. The purchase price of the Wellington property was $3,200,000. Mahmood re-sold that property six years later in 2012 for $4,670,000, realizing a profit of $1,470,000. The plaintiff seeks to participate in the net profit of that property to the extent of 40 per cent. However, I find that the agreement the plaintiff principals had with Mahmood did not reach beyond their participation as a 40 per cent owner in the Hull Project. I find that the plaintiff's claim as against the defendants is limited to the Hull Project which includes payment to them of 40 per cent of the net sale proceeds, 40 per cent of the net rental profits and PJI.

Limitations Defence

[61] The defendants raise a limitation defence.

[62] This action was issued September 2, 2014. At the time the plaintiff principals made their second trip to Canada in February 2012 to meet with Mahmood directly, there were no plans to sue Mahmood. He promised that information would be forthcoming. He had repeatedly lied to them and continued to do so during the course of that meeting, leading the plaintiff principals to believe that the Hull Project was an ongoing business.

[63] During the course of their meeting in 2012, the parties developed an action list to address various outstanding issues based on the assumption that the Hull Project was still an ongoing matter. The plaintiff principals state that as of the date the action was filed on September 2, 2014, they did not know that the Hull Project had been sold. I accept that representation.

[64] I find that the limitation defence has no merit and I reject it.

Punitive Damages

[65] As the Supreme Court of Canada made clear in Whiten v. Pilot Insurance Co., 2002 SCC 18, punitive damage awards are imposed only if there has been at para. 94 "high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour". General objectives of punitive damages are punishment, deterrence of the wrong doer and others and denunciation, namely at para. 68 "the means by which the Jury or Judge expresses its outrage at the egregious conduct". Such punitive damages are given in an amount that is no greater than necessary to rationally accomplish their purpose: Boroni v. Polidoro, 2018 ONSC 6631 (S.C.J.), at paras. 79-81.

[66] In Whiten, supra, at para. 94, Binnie J. emphasized that a key consideration in assessing punitive damages is proportionality, considered in several dimensions, including

(i) the blame worthiness of the defendant's conduct; (ii) the degree of vulnerability of the plaintiffs; (iii) the need for deterrence; and (iv) the advantage wrongfully gained by the defendant from the misconduct.

[67] On the evidence, I find that Mahmood lied to the plaintiff principals, not once, but on a regular and recurring basis for more than six years. He used their funds to enrich himself. I find that his behaviour in that regard was outrageous, reprehensible and not be countenanced. It calls for a strong denunciation by this court.

[68] I award punitive damages to the plaintiff as against the defendant Mahmood in the amount of $200,000.

Costs

[69] Based on the reprehensible conduct Mahmood visited on the plaintiff principals, but subject to the effect any Rule 49 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 offers may have on the question of costs, I find that the plaintiff is entitled to its costs on a substantial indemnity basis. If the parties are unable to resolve the issue of costs within 45 days, I invite counsel to provide me with written submissions on the issue of costs.

Action allowed.

End of Document