Court File and Parties

COURT FILE NO.: CV-18-00604127 DATE: 20190715 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

AMPHENOL CANADA CORP. Plaintiff – and – NANDAKUMAR SUNDARAM a.k.a. KUMAR SUNDARAM, CHANDRA DEVAPPA, SUNDEV TECHNOLOGIES INC., MTECH LTD., JOHN DOE, JANE DOE, and other persons unknown who have conspired with the named Defendants Defendants

Counsel: Brendan Wong, for the Plaintiff Nikolay Y. Chsherbinin, for Defendants Nandakumar Sundaram, Chandra Devappa & Sundev Technologies Inc.

HEARD: April 5, 2019

M. D. FAIETA j.

Reasons for Decision

[1] The Plaintiff, Amphenol Canada Corp., obtained an ex parte Order on January 15, 2019, against the Defendants that was comprised of a Mareva injunction, a Certificate of Pending Litigation and the continuation of certain Norwich Orders (the “Initial Order”).

[2] On January 28, 2019, I heard Amphenol’s motion to continue the Initial Order as against all the Defendants (“Continuation Motion”). The Defendants Chandra Devappa and MTech Ltd. asked that the Initial Order be set aside as against them. Sundaram and Sundev Technologies Inc. did not oppose the motion. For reasons given on February 4, 2019, I set aside the Initial Order as against MTech but not as against Devappa. See Amphenol Canada Corp. v. Sundaram, 2019 ONSC 849 (“Continuation Order”).

[3] On February 15, 2019, Devappa, Sundaram and Sundev (the “Sundev Defendants”) brought a motion to set aside:

(1) the Initial Order as it pertains to the freezing of the accounts of Sundaram and Sundev, without prejudice to Amphenol’s right to pursue its claims;

(2) the Continuation Order as it pertains to the freezing of the accounts that belong to and/or are controlled by Devappa, without prejudice to Amphenol’s right to pursue its claims;

(3) the Norwich Order provisions of the Initial Order; and

(4) the Initial Order as it pertains to the certificates of pending litigation in respect of properties municipally known as Unit 110, 10 Muirhead Road, Toronto and 2327 Wildwood Crescent, Pickering. (the “Set Aside Motion”)

[4] Amphenol brings a motion for an Order quashing the Set Aside Motion or alternatively staying the Set Aside Motion on the grounds that: (1) it raises the same issues that were, or could have been, raised at the Continuation Motion; and (2) it requires the filing of multiple further affidavits and examination of ten individuals before the Set Aside Motion is heard. Amphenol also seeks leave to amend its Statement of Claim to add Radiant Tools Ltd. as a defendant to this action in the form of the Amended Amended Statement of Claim appended to its notice of motion.

Issue #1: Should Radiant Tools Inc. be Added as a Defendant?

[5] A court shall grant leave to amend a pleading under Rule 26 of the Rules of Civil Procedure unless: (1) a tenable cause of action or defence is not disclosed; or (2) prejudice would result that could not be compensated for by costs or an adjournment: Fram Elgin Mills 90 Inc. v. Romandale Farms Ltd., 2016 ONCA 404, para. 31.

[6] The proposed Amended Amended Statement of Defence alleges that Devappa is the President and sole director and officer of Radiant Tools Inc. It also alleges that the defendants transferred funds over which Amphenol has claimed a constructive trust to Radiant Tools. It further alleges that Radiant Tools knew or ought to have known that it received proceeds of the fraudulent scheme alleged by Amphenol and described in my decision dated February 4, 2019. Although not required, Amphenol delivered a corporation profile report which shows that Radiant Tools was incorporated on September 12, 2018, and that Devappa is the sole officer and director of the Radiant Tools. Amphenol also provided evidence from various bank accounts which shows that Radiant Tools received at least $14,000.00 from Sundev Technologies Inc. in the period September 2018-January 2019 and that it received at least $6,000 from Sundaram in that same period.

[7] Although Mr. Chsherbinin was served with Amphenol’s motion, and despite the fact that Devappa is his client, Radiant Tools did not respond to this motion. In the circumstances, I find that there is no prejudice to Radiant Tools in having this motion proceed and I grant Amphenol’s motion.

Issue #2: Should the Set Aside Motion be Stayed or Dismissed?

[8] Amphenol submits that Sundaram and Sundev had the opportunity to challenge the Mareva injunction at the time that the Continuation Motion was heard. Rather than file any evidence and be subject to cross-examination, they chose to file no evidence. Instead, only Sundaram’s wife, Devappa, chose to oppose the Initial Order and to file evidence on the Continuation Motion.

[9] Amphenol submits that in order to succeed on the Set Aside Motion, the Sundev Defendants would require this court to re-visit the Continuation Order and re-open a final order that was not appealed.

[10] Amphenol submits that the Set Aside Motion should be stayed or dismissed on the following grounds:

• Issue estoppel;
• Collateral attack; and/or
• Abuse of process.

Issue Estoppel

[11] The Supreme Court of Canada in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, provided the following guidance regarding the doctrine of issue estoppel:

• “The law rightly seeks a finality to litigation. To advance that objective, it requires litigants to put their best foot forward to establish the truth of their allegations when first called upon to do so. A litigant, to use the vernacular, is only entitled to one bite at the cherry. … An issue, once decided, should not generally be re-litigated to the benefit of the losing party and the harassment of the winner. A person should only be vexed once in the same cause. Duplicative litigation, potential inconsistent results, undue costs, and inconclusive proceedings are to be avoided. Finality is thus a compelling consideration and judicial decisions should generally be conclusive of the issues decided unless and until reversed on appeal. However, estoppel is a doctrine of public policy that is designed to advance the interests of justice”; [paras. 18-19]

• “The objective is to ensure that issue estoppel promotes the orderly administration of justice but not at the cost of real injustice in the particular case”; [para. 67]

• “The preconditions to the operation of issue estoppel were set out by Dickson J. in Angle, supra, at p. 254: . . . (1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies . . . .” [para. 25]

[12] In O2 Electronics Inc. v. Sualim, 2014 ONSC 5050, where a Mareva injunction had been continued against an alleged fraudster and his wife on notice to them, and where a Mareva injunction had once again been obtained about both husband and wife in another proceeding related to same fraud, Justice Perell held that the wife was precluded by issue estoppel from challenging the Mareva injunction in the second proceeding because the same questions had been decided on the continuation motion in the first proceeding and because the parties were privy in interest.

[13] Turning to the facts of this case, on the Continuation Motion Amphenol relied upon several volumes of motion records and extensive affidavit evidence regarding the alleged fraudulent scheme perpetrated, or participated in, by each of the defendants.

[14] Sundev and Sundaram did not file evidence nor did they oppose the continuation of the Initial Order.

[15] Nevertheless, Devappa’s position at the Continuation Motion was not only to deny her participation in the fraud allegedly perpetrated by Sundaram but also to deny that there was a strong prima facie case of fraud against Sundaram and Sundev. Her factum, at paragraph 2, on the Continuation Motion states:

The Mareva Order was obtained without notice to the Defendants. Based on the evidence that is now before this Honourable Court it is clear that Amphenol cannot establish a strong prima facie case of fraud nor Devappa’s participation in it. [Emphasis added]

[16] Devappa’s submission at the Continuation Motion was that Amphenol encouraged Sundaram to work outside his employment and that any monies which were earned through Sundev were the result of this corporately approved moonlighting.

[17] As a result, on the Continuation Motion, the issue of whether there was a strong prima facie case of fraud against the Sundev Defendants was addressed and I found that there was a strong prima facie case that Sundaram and Sundev “… undertook the Fraudulent Scheme as outlined in the Fishbein affidavits” and that “Devappa was actively involved in its fraudulent business activities” [Reasons for Decision, February 4, 2019, paras. 38, 39].

[18] In my view, all of the conditions for establishing issue estoppel have been satisfied. The same question raised by the Set Aside Motion, namely whether there is a strong prima facie case against Sundaram and Sundev and thus whether the Initial Order should continue against them, was determined at the Continuation Motion. The Continuation Order is final. The parties to the Continuation Motion are the same persons to the Set Aside Motion. Further, Devappa is the privy of Sundaram and Sundev.

[19] The orderly administration of justice dictates that none of the Sundev defendants should have put into issue whether there was a strong prima facie case against any of one of them if it was their intention to eventually bring the Set Aside Motion. Given that Devappa did so, the Set Aside Motion constitutes a second “bite at the cherry”.

[20] I now turn to consider whether a finding of issue estoppel would create a real injustice.

[21] The Sundev Defendants submit that Amphenol’s position is contrary to the terms of the Initial Order which states that anyone served with the Order may apply to the Court at any time to vary or discharge the Initial Order on four days’ notice to Amphenol. The Sundev Defendants’ view that this provision authorizes litigation that would otherwise trigger issue estoppel or amount to an abuse of process reads too much into that provision.

[22] The Sundev Defendants also submit that the question on the Continuation Motion was “expressly limited to whether relief pertaining only to [Devappa] was appropriate; Sundev and Sundaram were not in a position to seek relief on the initial return of the Mareva motion and did not do so”. As already explained, the relief sought by Devappa at the Continuation Motion also included the position that Sundaram and Sundev had not participated in the fraudulent scheme described by Amphenol but rather such activities and resulting income were the result of corporately approved moonlighting.

[23] The Sundev Defendants further submit that “the court has not made a final or interlocutory determination on whether Sundev and Sundaram are entitled to relief from the Mareva Order”. However, the issue of whether there was a strong prima facie case against the Sundev and Sundaram was determined at the Continuation Motion.

[24] I find that the application of the doctrine of issue estoppel will not create a real injustice in this case.

Collateral Attack

[25] The doctrine of collateral attack was described by the Supreme Court of Canada in Garland v. Consumers' Gas Co., 2004 SCC 25, para. 71, as follows:

The doctrine of collateral attack prevents a party from undermining previous orders issued by a court … . Generally, it is invoked where the party is attempting to challenge the validity of a binding order in the wrong forum, in the sense that the validity of the order comes into question in separate proceedings when that party has not used the direct attack procedures that were open to it …

[26] Amphenol submits that the Sundev Defendants could have appealed the Continuation Order if they felt that it was wrongly decided. As a result the Set Aside Motion is a collateral attack on the Continuation Order.

[27] The Sundev Defendants submit that it does not seek to interfere with the Continuation Order but rather seeks to have this court consider the merits of discharging the Mareva Order based on a full evidentiary record going to the merits with cross-examination.

[28] I do not find that the doctrine of collateral attack is engaged by the Set Aside Motion. On its face, the Set Aside Motion does not challenge the validity of the Initial Order or the Continuation Order but rather seeks to adduce additional evidence to vary the Orders in respect of “unfreezing” the Sundev Defendants’ assets.

Abuse of Process

[29] The doctrine of abuse of process was described by the Supreme Court of Canada in Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, para. 51, as follows:

Rather than focus on the motive or status of the parties, the doctrine of abuse of process concentrates on the integrity of the adjudicative process. Three preliminary observations are useful in that respect. First, there can be no assumption that relitigation will yield a more accurate result than the original proceeding. Second, if the same result is reached in the subsequent proceeding, the relitigation will prove to have been a waste of judicial resources as well as an unnecessary expense for the parties and possibly an additional hardship for some witnesses. Finally, if the result in the subsequent proceeding is different from the conclusion reached in the first on the very same issue, the inconsistency, in and of itself, will undermine the credibility of the entire judicial process, thereby diminishing its authority, its credibility and its aim of finality.

[30] The Supreme Court of Canada, at paras. 52-53, stated that the following factors should be considered in deciding whether it would be unfair to apply the doctrines of issue estoppel or abuse of process:

• Were the stakes in the original proceeding too minor to generate a full and robust response?
• Was there an inadequate incentive to defend the original proceeding?
• Has a party discovered fresh, new evidence that was previously unavailable, which conclusively impeaches the original results?
• Was the first proceeding tainted by fraud or dishonesty?

[31] Amphenol submits that there was significant financial incentive for the Sundev Defendants to respond on the Continuation Motion. It also submits that the additional evidence offered by the Sundev Defendants on the Set Aside Motion was evidence that was available to them. There is no evidence to dispute this assertion. There is no suggestion in the Set Aside Motion that the Initial Order or the Continuation Order were tainted by fraud or dishonesty.

[32] The Sundev Defendants submit that they do not seek to re-litigate any issue that was previously decided and that they seek to have their case decided on its merits.

[33] In my view, the Sundev Defendants, by design or otherwise, split their case and seek to re-litigate the issues that were determined on the Continuation Motion. The Continuation Motion resulted in specific findings regarding the strength of Amphenol’s case and the risk of dissipation of assets. In these circumstances, the approach taken by the Sundev Defendants undermines the “orderly administration of justice” nor does it, to use the words of Rule 1.04(1) of the Rules of Civil Procedure, “secure the just, most expeditious and least expensive determination of every civil proceeding on its merits”.

Conclusions

[34] Amphenol’s motions are granted.

[35] I ask that counsel make every effort to resolve the issue of costs failing which Amphenol shall deliver their costs submissions by July 25, 2019, the Sundev Defendants shall deliver their responding submissions by July 31, 2019 and Amphenol shall deliver any reply submissions by August 5, 2019. Submissions shall be no more than three pages in length exclusive of their outline of costs and any offers to settle. No case books shall be filed.

Mr. Justice M. D. Faieta Released: July 15, 2019