COURT FILE NO.: CV-19-00000419

DATE: 2020 Jan 31

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Philip William Crawford and Hailey Brooke Crawford, Plaintiffs

AND:

Standard Building Contractors Limited (Federal Corporation 1115109-6), Standard Paving Limited (Nova Scotia Registry ID #3223128) and Shane Ross, Defendants

BEFORE: Honourable Madam Justice Helen MacLeod-Beliveau

COUNSEL: Mr. David M. Adams for the Plaintiffs

Ms. Christina J. Wallis for the Defendants

HEARD: January 23, 2020

ENDORSEMENT

[1] On December 20, 2019, the plaintiffs obtained a Mareva injunction order after a hearing before me. The defendants were served with the motion materials on December 17, 2019. Mr. Shane Ross for the defendants appeared by telephone at the hearing of the motion on December 20, 2019. The motion on that day was, in essence, a motion without notice and was treated by the court as such.

[2] There are now two motions before the court arising out of the order made on December 20, 2019 as follows:

1. The defendants’ motion to discharge the Mareva injunction order made December 20, 2019 in its entirety; or alternatively that the said order be varied; and

2. The plaintiffs’ motion that the defendants be found in contempt of court for non-compliance with the terms of the Mareva injunction order made on December 20, 2019.

The Issue:

[3] The issues for determination today are firstly, whether or not the defendants have established sufficient grounds for the Mareva injunction order to be set aside or rescinded, or, alternatively to be varied, and secondly, whether or not the defendants are in contempt of the Mareva injunction order made on December 20, 2019.

Result:

[4] On January 23, 2020, the defendants’ motion to discharge the Mareva injunction order made by me on December 20, 2019 was dismissed with reasons to follow. These are those reasons. The order of December 20, 2019 is hereby confirmed save and except as varied as outlined herein as to the defendants’ banking and the posting of security. The motion is adjourned to be heard on the merits after cross-examinations of the parties, on a date to be set by the trial coordinator (1 day estimated), such hearing date not to be before March 20, 2020.

[5] The plaintiffs’ motion that the defendants be found in contempt of court for non-compliance with the terms of the Mareva injunction order made on December 20, 2019 is adjourned to be heard at the same time as the defendants’ motion after the cross-examinations have been held.

[6] Costs of today, on both matters, shall be the subject of separate orders, and are reserved. Counsel are to file their brief submissions and cost outlines as later specified herein. Costs to and including December 20, 2019 and any and all other outstanding costs are reserved to the Justice hearing this matter on the merits after the cross-examinations have been held.

Background Facts and Analysis:

[7] The plaintiff Mr. Crawford is the owner of a residential home in Clarendon Station, Ontario that he shares with his wife Mrs. Crawford as their matrimonial home. In July of 2019, the plaintiffs’ home was destroyed by fire. The plaintiffs were forced to move into a trailer on the property together with their infant child. The plaintiffs’ insurance company responded to their claim and allowed the plaintiffs to rebuild their home with approved total rebuild funds in the amount of $411,000.00 plus HST. The insurance company initially approved approximately $26,000.00 for the demolition and $113,000.00 as the first instalment for the rebuild for a total of $139,000.00 which are the disputed funds in this case.

[8] The plaintiffs entered into arrangements with the defendants to rebuild their home for them. The $139,000.00 was forwarded to the defendants from proceeds received by the plaintiffs from their insurance company. The demolition work was ultimately done by a friend of the plaintiffs, Gemmill, at a reduced cost of approximately $12,447.41, according to the plaintiffs or $11,300.00 according to the defendants. The plaintiffs submit that whatever the amount, the sum owing has not been paid to Gemmill, whereas the defendants submit that they paid Gemmill directly. There has not yet been solid reliable evidence filed to establish that the invoiced sum was in fact paid by the defendants to Gemmill. The balance of the amount for demolition was kept by the defendants to put towards the balance of the contract work to be done by the defendants with agreement at the time from the plaintiffs.

[9] The second advance of $113,000.00 was made to the defendants with the understanding that it was to be used for labour and materials necessary to secure the necessary permits and approvals of construction drawings and plans to allow construction of the home to begin. This included the drawing up of complete construction plans for review by the Township, and in particular, for review and approval by the Chief Building Inspector. The plaintiffs became very concerned that the plans had very little detail and in spite of a number of requests, that their inquiries were not being responded to by Mr. Ross of the defendants. The project was not moving forward.

[10] After much delay, the plaintiffs contacted the Chief Building Inspector, Mr. Dillon, directly and were advised that no building plans or request for permits had been received by the Township. In mid-October of 2019, a permit application was received by the Township from Mr. Ross for the plaintiffs’ home. Mr. Dillon had serious concerns about the plans submitted which had significant missing information and lacked required detail on the design plans. Mr. Dillon refused to issue a building permit based on the application that Mr. Ross filed. To date, no building permit has ever been issued for the rebuild of the home.

[11] Mr. Dillon was so concerned about the application and plans submitted by Mr. Ross that he followed up with the engineer who had certified the plans submitted. Mr. Dillon discovered that the engineering approval and certification stamp signature of the named engineer, Mr. Anrep, were indeed forged, which evidence I find and accept as being both reliable and credible. Mr. Anrep confirmed that the stamp and signature were not his and that they were forged. Mr. Anrep had never met the plaintiffs or had anything to do with drawing up the plans for their home. The alleged forgery background on the part of the defendants involved an elaborate trail of emails and voicemails to make the drawings appear more credible.

[12] The engineer’s evidence is that he had done previous work for the defendants and worked with Mr. Ross. I am satisfied that the plaintiffs had no participation in the falsification and forgery of the certification of the house plans. I am amply satisfied on a prima facie basis, based on the evidentiary record before me, that the defendants, in spite of their denials to the contrary and their recent third party claim against the alleged designer, Mr. Misner, who they say committed the forgery, did have some direct involvement with the forged engineering documents forwarded to the Township for approval by the Chief Building Inspector for the plans for the home of the plaintiffs. Mr. Ross’ after the fact conduct and contact with Mr. Antep on December 10, 2019 is additional prima facie evidence of Mr. Ross’ direct participation in this fraudulent scheme.

[13] To date, the defendants have refused to return any of the funds advanced. The property as it sits now is a leveled lot with surrounding dirt and vegetation debris, the home having been demolished, including the foundation, with a depressed area of where the house once was. To date, the defendants say they are owed $147,493.92 for “work done” on behalf of the plaintiffs. The defendants have just recently registered a construction lien against the plaintiffs’ property in the amount of $34,493.92. The difference between the amount the defendants say they are owed of $147,493.92 and the lien amount of $34,493.92 is $113,000.00 that the defendants have received from the plaintiffs. The outstanding amount of $26,000.00 is unaccounted for by the defendants who, according to the defendants, paid the sum of $11,300.00 to Gemmill for the demolition costs, which I am not yet satisfied that the defendants actually paid. To date, there is no reliable evidence of any work done at all by the defendants on behalf of the plaintiffs.

[14] The plaintiffs claim fraudulent misrepresentation by the defendants going to the root of the contract allowing rescission of the contract. The plaintiffs claim breach of the duty of good faith and honest performance. There are serious issues to be tried. The plaintiffs have a very strong prima facie case on the merits. There are assets of the defendants in this jurisdiction. The defendants carry on business in Ontario and Nova Scotia. Their business dealings in Ontario include complicated corporate entities and significant construction equipment.

[15] The plaintiffs have, I find, established a very strong prima facie as to the fraud committed on them by the defendants and it is the clear inference that I draw from the evidentiary record filed before me supporting the dissipation of assets by the defendants. Nothing in the defendants’ materials, which are now fully before the court, persuades me otherwise. The defendants make nothing more that bald generalizations of denial in their materials unsupported by other evidence which would be in their possession in the ordinary course of business. There are valid concerns raised, as expressed by the plaintiffs, that the third-party claim is part of the fraudulent scheme to deflect attention away from the defendants as perpetrators of the fraud on the plaintiffs. The plaintiffs are innocent victims of the defendants. The courts must provide an enforceable remedy in such situations of alleged misconduct until a determination on the merits has been made.

[16] The defendants state that the dispute with the plaintiffs arose as a result of the breakup of a romantic relationship between the plaintiff Mr. Crawford’s sister and Mr. Ross. Based on the evidentiary record before me, the ending of that relationship had nothing at all to do with what happened here as between the plaintiffs and Mr. Ross over the rebuilding of their home and the fraudulent engineering drawings submitted to the Township building inspector by Mr. Ross. The plaintiffs have legitimate concerns that the defendants have taken and spent their money and that the defendants will do whatever it takes to prevent the return of the $139,000.00 to the plaintiffs and dissipate their funds. The plaintiffs have been left homeless and without the means to rebuild their home.

[17] I found the plaintiffs on December 20, 2019 had met the test for granting interlocutory injunctive relief. The plaintiffs had made out a strong prima facie case of fraud; they will suffer irreparable harm if these funds are not preserved and/or returned; and there is no real inconvenience or prejudice, I find, to the defendants in the granting of the order made.

[18] I have treated the defendants’ motion to end or vary the Mareva injunction order as an original substantive application and must determine not only whether the order ought or ought not to have been made but also whether, having been made, it should be terminated, rescinded or varied. The order made froze the assets of the defendants with the alternative of paying the $139,000.00 into court. The plaintiffs I find, have: (1) made full disclosure of all material facts within their knowledge; (2) provided particulars of their claim against the defendants and the grounds relied upon including points that could fairly be made against them by the defendants; (3) given valid grounds for believing that the defendants have assets in Ontario; (4) given valid grounds for believing that there is a real risk of the defendants assets being removed from the Province of Ontario and the dissipation of funds by the defendants as a reasonable inference drawn from the fraudulent circumstances in this case; and (5) have given a signed undertaking as to damages now filed with the court. The plaintiffs continue as of January 23, 2020, I find, to meet all five requirements of the test for the granting of a Mareva injunction order. (See Sibley & Associates LP v. Ross, 2011 ONSC 2951), Chitel et al v. Rothbart et al, 1982 1956 (On C.A.), RJR-McDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311). As a result, the Mareva injunction order made December 20, 2019 shall not be set aside, discharged or rescinded.

[19] I am satisfied on the full evidentiary record now before me, which includes the defendants’ responding materials, that the order made for the Mareva injunction should however be varied. Counsel for the defendants have asked as alternative relief that the injunction order be varied to allow the defendants to require its bank institutions to accept deposits into any of the defendants’ bank accounts whether by cheque, electronic transfer, wire, or direct deposit, and to require the bank, on request, to provide to the defendants paper copies of any banking information requested by the defendants in relation to the defendants’ bank accounts. A further variation is sought that in addition to payment into court of the $139,000.00, that the defendants have the option of posting valid security for the $139,000.00. These variations of the order, I find, are reasonable and are granted as later specified herein.

Orders to Issue dated January 23, 2020:

The Defendants’ Motion to Discharge or Vary the Mareva Injunction Order

[20] Order to issue dated January 23, 2020 as follows:

1. The relief sought in Paragraph 1(a) of the Motion Record for an order discharging the Mareva injunction order dated December 20, 2019, is dismissed. The order of December 20, 2019 is hereby confirmed, save and accept as provided in paragraphs 2 and 3 herein.

2. The relief sought in paragraph 1(b) of the Motion Record, in the alternative, for an order to vary the terms of the Mareva injunction order dated December 20, 2019 is allowed in part as follows:

Paragraph 7 of the order of Justice MacLeod-Beliveau dated December 20, 2019 is hereby varied to read as follows:

7. THIS COURT ORDERS that the Bank of Montreal…(add text as in order)…Schedule “A” hereto, add :

(a) the banking institutions of the defendants (add names) shall accept deposits into any of the defendants’ (add names) bank accounts whether by cheque, electronic transfer, wire or direct deposit; and

(b) the banking institutions of the defendants (add names) shall provide to the defendants (add names) on request, paper copies of any banking information requested by the defendants (add names) in relation to the defendants’ (add names) bank accounts.

3. Paragraph 9 of the Mareva injunction order dated December 20, 2019 is hereby varied to read as follows:

4. THIS COURT ORDERS that this Order will cease to have effect if the defendants either pay the sum of $139,000.00 into Court and to the Accountant for the Superior Court of Justice, who is hereby directed to accept such payment, or to post valid security in the amount of $139,000.00 on terms acceptable to the Court (or such other wording as counsel agree upon).

5. This motion is adjourned to be heard after cross-examinations of the parties on a date to be set by the trial coordinator (1 day estimated), such hearing date not to be before March 20, 2020.

6. MacLeod-Beliveau, J to sign this order directly after approval by counsel.

7. Costs of today shall be the subject of a separate order and are reserved. Counsel are to file brief submissions and a cost outline as follows: plaintiffs by January 28, 2020; defendants by February 4, 2020; reply if any by February 6, 2020 after which date costs of today will be determined based on the material filed.

8. Costs to and including December 20, 2019 and any and all other outstanding costs are reserved to the Justice hearing this matter on the merits after the cross-examinations have been held.

The Plaintiffs’ Motion that the Defendants be Found in Contempt of Court:

[21] Order to issue dated January 23, 2020 as follows:

1. This matter is adjourned pending cross-examinations of the parties and is to be heard in conjunction with Ms. Wallis’ motion also returnable today. The hearing date shall be set be the trial coordinator (1 day estimated), such hearing date not to be before March 20, 2020.

2. MacLeod-Beliveau, J to sign this Order directly after approval by counsel.

3. Costs of today shall be the subject of a separate order and are reserved. Counsel are to file brief submissions and a cost outline as follows: plaintiffs by January 28, 2020; defendants by February 4, 2020; reply if any by February 6, 2020 after which date costs of today will be determined based on the material filed.

4. Any other outstanding costs are reserved to the Justice hearing this matter on the merits after the cross-examinations have been held.

MacLeod-Beliveau J.

Date: January 31, 2020