COURT FILE NO.: C-403-13

DATE: 2021-03-25

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Manish Gupta, 2357939 Ontario Inc., and EB Investments Inc.

Plaintiffs

– and –

2075750 Ontario Inc. and

Re/Max Realty Inc.

Defendants

Michael A. van Bodegom & Thomas E. Sanderson - Counsel for the Plaintiffs, Gupta and 2357939 Ontario Inc.

Michael B. Lesage – Counsel for EB Investments and non-party,

Ashywn Singh

John J. Adair and Chris Grisdale - Counsel for the Defendant 2075750 Ontario Inc.

HEARD: March 15, 2021

The Honourable Justice James W. Sloan

REASONS FOR JUDGMENT

[1] This action arises out of a failed real estate transaction.

[2] The plaintiffs’ action was dismissed by the court on April 30, 2019, for what I might term litigation misfeasance. It was not dismissed based on the merits of the case.

[3] The issues before me are:

(a) Who is entitled to the $200,000 deposit currently held in trust by Re/Max?

(b) Should Mr. Singh be held personally liable for the costs awarded against EB Investments?

(c) Should the plaintiffs and Mr. Singh be ordered to attend judgment debtor examinations?

[4] At the commencement of the hearing I numbered all the volumes of documents that were filed by the parties from V1 to V14.

[5] Briefly, the original real estate transaction failed to close in July 2012. Gupta then partnered with EB Investments (Singh) and the transaction was resurrected with the closing set for January 17, 2013.

[6] There is a difference of opinion between the parties as to whether or not the closing date was extended from January 17 to January 31, 2013, however, no matter which date is the correct one, the transaction never closed.

[7] Neither party tendered on the other.

[8] The plaintiffs paid a deposit of $200,000 to be held in trust by Re/Max, on the condition that the deposit was to be returned to the plaintiffs if the transaction did not close, unless the failure to close was the plaintiffs’ fault.

[9] The plaintiffs commenced an action for specific performance which action was dismissed by the court on April 30, 2019, when the court found that the plaintiffs intentionally withheld documents and breached their obligations under the Rules. The court ordered the plaintiffs to pay costs of $135,221.56 which have not been paid.

[10] The plaintiff EB commenced an appeal of the April 30, 2019 order, which was later administratively dismissed by the Court of Appeal.

[11] The plaintiffs have not paid the $4,250 of costs ordered by the Court of Appeal, nor have they paid any interest on the cost awards.

[12] The central issue before the court, with respect to the $200,000 deposit, is whether the plaintiffs were ready, willing and able to close in January 2013 or whether they were unable to close on that date because of a dispute between themselves or for other reasons. There is also an issue of whether or not 207 was ready, willing and able to close.

[13] The plaintiffs refused to attend for a judgment debtor examination on the basis that the cost order could be paid from the $200,000 deposit.

[14] This litigation has spawned further litigation by the plaintiffs against at least one, if not more, lawyers. Two counsel attended this hearing with watching briefs.

The Defendant’s Position (2075750)

[15] The defendant 207 seeks:

(a) Forfeiture of the $200,000 deposit to itself,

(b) Variation of the original cost order such that the costs would be payable by the plaintiffs and Mr. Singh (the non-party principal of EB investments) jointly and severally,

(c) An order for Gupta and Singh to attend at a judgment debtor examination, and

(d) Costs of this motion.

[16] In addition to the unfortunate facts found by the Court on April 30, 2019, it was later revealed that:

(a) EB Investments had sued Mr. Gupta in February 2013,

(b) Mr. Singh, the principal and controlling mind of EB Investments, swore that the transaction failed in part because Mr. Gupta refused to cooperate with him,

(c) Mr. Singh further deposed that the 50% beneficial interest in the agreement of purchase and sale that EB Investments maintained belong to it, had in fact been assigned to Mr. Singh

(d) Singh further deposed, that Gupta changed the plaintiffs’ real estate lawyer without telling him, and

(e) Singh also alleged that Gupta breached the trust agreement between them.

[17] At no time did the plaintiffs or their counsel in this action disclose the above facts, notwithstanding that the sworn evidence of Mr. Singh in the Trustee Act action, was directly contrary to the position he took in this action.

[18] The appeal to the Court of Appeal was administratively dismissed. This is similar behaviour to the two motions previously brought by the plaintiffs in this action, which were never proceeded with. It is part of their modus operandi and shows that their litigation misconduct was continuing.

Deposit

[19] 207 would be entitled to the deposit if the transaction failed to close as a result of the purchasers’ (plaintiffs) conduct, however, the plaintiffs made it impossible for the court to adjudicate the question of who was responsible for the failure to close, by breaching their production and discovery obligations so egregiously.

[20] Therefore, the court should infer that the evidence lost would have been unfavourable to the defendants and that the transaction failed to close due to their misconduct.

[21] The result of that finding would be that 207 is entitled to retain the deposit.

[22] In answer to the submissions by the plaintiffs that the current requests for the deposit, and seeking to hold Mr. Singh personally liable, should have been done at the hearing in April 2019, 207 submits:

(a) Initially there was no evidence of whether or not the plaintiffs were ready, willing and able to close, and it was only by the dogged persistence of 207 that some of the evidence came to light,

(b) In April 2019, 207 did not have any knowledge of the court action (Trustee Action) commenced in Guelph, Ontario by EB Investments against Gupta on February 14, 2013, (V1, T3-H) and

(c) In its prayer for relief, EB Investments pleads that the transaction failed because of Gupta’s actions and that Gupta would not cooperate with EB Investments and essentially “went rogue”. (V1, T3-H, P102, para. 2-l &m)

[23] The allegations by EB Investments were never disclosed to 207 up to and including April 30, 2019, the date of the court judgment.

[24] All plaintiffs were aware of the above facts when 207’s motion to dismiss their action was served in September 2018. Despite 5 to 6 years of litigation with one of the central themes being, whether or not the parties were ready, willing and able to close the real estate transaction, the fact that the Trustee Action was commenced, was never disclosed prior to April 30, 2019.

[25] This action was made public when it was filed in the court and could not, under any circumstances, be thought of as a privileged document. Therefore, it should have been disclosed by all of the plaintiffs.

[26] This would have been very valuable information for 207 to have in its motion to dismiss the claim. 207 relies on this nondisclosure in its request for an order that Singh be personally responsible for the costs.

[27] 207 relies on the case of Benedetto v. 2453912 Ontario Inc., 2018 ONSC 4524 with respect to the applicable law on deposits. The trial/court decision was upheld by the Ontario Court of Appeal. The court stated the following at paragraphs 25, 28, 31 & 32:

[25] In H.W. Liebig & Co. v. Leading Investments Ltd., 1986 45 (SCC), [1986] 1 S.C.R. 70 (“Liebig”), La Forest held that a deposit in an agreement of purchase and sale is a “recompense” to [the vendor] for the fact that his property was taken off the market for a time as well as for his loss of bargaining power resulting from the revelation of an amount that he would be prepared to accept.

[28] Echlin J. relied on the settled law that money is paid on a deposit as an “earnest”, with its own implied or expressed term that it is to remain the property of the payee if the contract is not performed by the payer. Echlin J. adopted the following passage from Howe v. Smith (1844), 27 Ch. D. 89 (C.A.) at 101:

Money paid as a deposit must, I conceive, be paid on some terms implied or expressed. In this case no terms are expressed and we must therefore inquire what terms are to be implied. The terms most naturally to be implied appear to me in the case of money paid on the signing of a contract to be that in the event of the contract being performed it shall be brought into account, but if the contract is not performed by the payer it shall remain the property of the payee. It is not merely a part payment, but is then also an earnest to bind the bargain so entered into, and creates by the fear of its forfeiture a motive in the payer to perform the rest of the contract.

[31] In Iyer v. Pleasant Developments Inc., 2006 10223 (ON SCDC), 2006 CarswellOnt 2050 (Div. Ct.), M.F. Brown J. set out the following principles covering the laws of deposit (at paras. 8-9):

(i) The use of the word “deposit” implies that the payment is intended for forfeiture upon the purchasers breach; and

(ii) Unless an agreement indicates an intention that the deposit is not to be forfeited, the vendor has an implied right to retain it upon default by the purchaser.

[32] A party who breaches an agreement cannot take advantage of his or her own wrong to recover the deposit …

[28] The plaintiffs allege that 207 was not ready to close and that if no one was ready to close, the deposit should be returned to the purchasers (plaintiffs).

[29] However, where neither party is ready to close, 207 relies on the case of 1179 Hunt Club Inc. v Ottawa Medical Square Inc. 2019 ONCA 700, where the Ontario Court of Appeal at para. 14, stated the following, in relation to whether the purchasers’ repudiation excused the vendor from its obligation to be ready, willing and able to close the transaction on the closing date:

14 This issue requires consideration of the judgment of this court in Domicile Developments Inc. v. MacTavish (1995), 1999 3738 (ON CA), 45 O.R. (3rd) 302 (Ont. C.A.) At pp. 306-307 (paras. 10-12) Laskin J.A. said:

Because Domicile’s rejection of MacTavish’s anticipatory repudiation kept the agreement alive, time remained of the essence. A time is of the essence provision means, that on the closing date an innocent party may treat the contract as ended and sue the defaulting party for damages or it may keep the contract alive and sue for specific performance or damages. In order to take advantage of, a time of the essence provision the innocent party must itself be “ready, desirous, prompt and eager” to carry out the agreement. Domicile could not satisfy this requirement on the closing date. Because it had not yet substantially completed construction of the house it could not carry out the agreement. Equally, MacTavish could not rely on, the time of the essence provision to end the agreement. A time of the essence provision can be raised as a defence only by the party who is ready, willing and able to close on the agreed date and MacTavish was not ready, willing and able to close on September 15, 1995. Therefore, on the closing date neither Domicile nor MacTavish was entitled to enforce or end of the agreement. A similar situation arose in King v. Urban v. Country Transport Ltd. … A decision of this court relied on by Binks J. In King v. Urban, the purchaser was not in a position to close on the closing date; but the vendor was also in default and not entitled to rely on the time of the essence provision in the contract. Arnup J.A. resolved the stalemate by applying two propositions (at pp. 454 – 56):

1. When time is of the essence and neither party is ready to close on the agreed date the agreement remains in effect.

2. Either party may reinstate time of the essence by setting a new date for closing and providing reasonable notice to the other party.

An important corollary of Arnup J.A.’s second proposition is that a party who is not ready to close on the agreed date and who subsequently terminates the transaction without having set a new closing date and without having reinstated time of the essence will itself breach or repudiate the agreement.

[30] Therefore, based on the above paragraph, particularly the section in italics, the issue is, who was responsible for the transaction ultimately failing.

[31] The problem in this case, is that the court cannot decide the issue on a full evidentiary record because the plaintiffs have rendered that task impossible.

[32] As set forth at paras. 17 to 20 of 207’s factum which quotes from paras. 119, 125, 126, 127, 128, 129, 131 and 132 of the Court’s April 30, 2019 decision:

(a) Emails and texts were not produced and have gone missing.

(b) The plaintiffs deliberately and wholly ignored the Rules of Court with respect to production.

(c) The plaintiffs were untruthful in answers to some of their discovery questions.

[33] Based on the findings of the court in its April 30, 2019 decision, the plaintiffs had and have made it impossible for 207 and this court to make a finding based on a complete documentary record of exactly what transpired between mid January and mid February 2013. This fact is the total responsibility of the plaintiffs.

[34] 207 submits that the court should draw an adverse inference of what that evidence would have shown and conclude that the evidence would be helpful to 207 and not to the plaintiffs. That is, that the plaintiffs were not ready, willing and able to close the transaction on either of the January 2013 dates.

[35] 207’s summation with respect to the deposit issue, is that they want the court to make the following findings which are:

1. The purpose of the deposit is to “force” the parties to complete the performance of the contract and this favours in 207 retaining the deposit, entitlement to the deposit turns on who was responsible for the transaction failing,

2. If neither party was ready willing and able to close the transaction, the analysis continues to find out who was ultimately responsible for the transaction not closing,

3. If the court cannot properly adjudicate on who was responsible, because of lost or concealed evidence, the court should infer by way of negative inference that the plaintiffs were ultimately responsible for the failure of the transaction to close, and

4. It is fair and just in this “impossible” situation, that the party who caused the problem of the court not being able to properly adjudicate an issue should bear the consequences.

The Personal Liability of Mr. Singh For Costs

[36] Rule 59.06(2) gives the court power to vary an order based on information discovered after the order was made.

[37] The court has inherent jurisdiction to make a cost order against a director/officer/shareholder of a corporation where that party has engaged in abusive litigation conduct, as the directing mind of a Corporation.

[38] The court found that EB Investments engaged in abusive litigation conduct in April 2019. What came to light after this action was dismissed and the appeal abandoned, was the litigation between the plaintiffs.

[39] In the related litigation, Mr. Singh (the directing mind of EB Investments) gave sworn evidence that contradicted EB Investments’ position in this litigation.

[40] The court has the authority to vary the May 14, 2019 cost order, to make Mr. Singh personally liable for the costs, because his abusive conduct was not known and could not have been discovered in the course of litigating this action and it was an abuse of the court.

[41] 207 relies in part on the case of OZ Merchandising Inc. v. Canadian Professional Soccer League, 2020 ONSC 109 and the Ontario Court of Appeal’s decision in 1318847 Ontario Limited v. Laval Tool & Mould Ltd., 2017 ONCA 184. In the 1318847 case the court stated the following at paras. 65 and 66:

[65] Superior courts of record have inherent jurisdiction to control their own processes and protect them from abuse. This was recently described by the Supreme Court in Endean v. British Columbia, 2016 SCC 42 at para. 23:

Inherent jurisdiction derives from the very nature of the court as a superior court of law and may be defined as the ”reserve or fund of powers” or a ”residual source of powers”, which the superior court “may draw upon as necessary whenever it is just or equitable to do so and in particular to ensure the observance of the due process of law, to prevent improper vexation or oppression, to do justice between the parties and to secure a fair trial between them.

[66] In particular, apart from statutory jurisdiction, superior courts have inherent jurisdiction to order non-party costs, on a discretionary basis, in situations where the non-party has initiated or conducted litigation in such a manner as to amount to an abuse of process.

[42] In the OZ case, the court stated the following at paras. 52 and 53:

[52] The remaining issue is whether Mr. Sezerman should be jointly and severally liable with OZ Merchandising for some or all of these defendants’ costs. For the following reasons I have concluded that Mr. Sezerman should be jointly and severally liable with the plaintiff for the costs of the trial.

[53] Superior courts have the inherent jurisdiction to order non-party costs in situations where the non-party has initiated or conducted litigation in a manner that amounts to an abuse of process: [s]ituations of gross misconduct, vexatious conduct or conduct that undermines a fair administration of justice … can be envisioned. … Strathy C.J.O. described the policy rationale for such an award as follows:

[S]afeguarding public confidence in the fair administration of justice depends on preserving the availability of court facilities for justifiable proceedings and not permitting the cost of proceedings to be endlessly inflated, particularly at a time when delays and costs of litigation are so concerning from the perspective of access to justice…

[43] The modus operandi of both plaintiffs as found on April 30, 2019 and the outrageous later abuse of nondisclosure of the inter-plaintiff lawsuit (Trustee Act action) deserves a strong condemnation by the court.

[44] Notice could only have been given to Singh after 207 concluded that it had sufficient evidence (i.e. the hidden Trustee Act action). On top of the other abuses, the withholding of the production of the Trustee Act action came to light after the Court’s April 30, 2019 decision.

[45] Therefore, the first time notice could have been given was after the Trustee Act action came to light.

[46] The abuses of the legal system by Mr. Singh, not including his failure to produce documents concerning the Trustee Act litigation, are chronicled in part in the April 30, 2019 decision and include the following:

(a) Swearing a false affidavit in November 2013 which fails entirely to list any of the critical correspondence between him and Gupta from January 2013,

(b) Bringing a summary judgment motion in May 2014, which was later abandoned but which was brought without disclosure of the 2013 emails,

(c) Bringing a similar summary judgment motion in May 2016, which was also abandoned and was also brought without disclosure of the 2013 emails,

(d) 207 being forced to compel production of the emails by motion in September 2016,

(e) The plaintiffs seeking leave in November 2016 to appeal the production order which motion was dismissed,

(f) In January 2013, rather than producing the emails as ordered, Mr. Singh claimed common interest privilege but did not provide a particularized Schedule “B”, and

(g) 207 was forced to examine Mr. Singh in January 2017, more than four years after the failed real estate action, without the benefit of production of the January 2013 emails.

[47] Since Singh is the controlling mind of EB Investments, he was the only person who would make the strategic decisions not to produce, producible documents.

[48] The emails marked Exhibit 16 to Singh’s affidavit dated February 24, 2021, leave no doubt about Singh’s involvement in the planning and strategic decision-making when it came to producible documents. (V5, T7)

[49] There is no prejudice to Singh, whether the claim for costs against him personally is made now or whether it was made in April 2019. Singh has now had notice and has filed robust responding material.

[50] Although he was obligated to, it is highly unlikely that he would have produced any documents about the Trustee Act action in April 2019, if costs against him personally had been requested at that time.

[51] Pursuant to Rule 59(06), the evidence of the Trustee Act action between the plaintiffs could not have been discovered with the reasonable diligence. Notwithstanding that the evidence of the lawsuit was producible, it was not produced in flagrant contravention of the rules, rules that are specifically designed to keep the administration of justice running smoothly and fairly.

[52] Therefore, to maintain the integrity of the court and to protect the administration of justice from falling into disrepute, the court should exercise its discretion by holding those responsible for their transgressions to account. In this case that means forfeiture of the deposit and Mr. Singh being held jointly and severally liable for the costs of this action with the other plaintiffs.

Attendance at the Judgment Debtor Examinations

[53] The court acknowledges that both Mr. Gupta and Mr. Singh have conceded that they will attend any judgment debtor examination that becomes necessary.

The Position of the Plaintiffs Gupta and 2357939 Ontario Inc.

[54] The above plaintiffs (Gupta plaintiffs) seek an order:

(a) Releasing the deposit to Gupta, and

(b) For costs.

[55] While admitting that Gupta failed to produce, producible documents during the court action, he alleges numerous facts in paras. 6 through 17 of the Gupta factum, (V9) including:

(a) 207 failed to provide the required closing documentation for January 17, 2013, and the closing date was extended to January 31, 2013.

(b) Gupta arranged for his own financing and his own real estate counsel.

(c) 207’s solicitor, McKenzie, asserted on January 29, 2013, that 207 would not be completing the transaction because the purchaser (Gupta) was not in a position to close.

(d) Gupta’s lawyer wrote to 207’s lawyer, pointing out that it was 207 that was neglecting to take action to close the transaction and explaining why Gupta did not need to tender.

[56] He submits that 207 did not provide the numerous documents referred to at page 5 of the Agreement of Purchase and Sale. (V7A, TF)

[57] He drew the court’s attention to an email dated January 17, 2013 from Bruce Robertson (Robertson) who was then 207’s real estate lawyer, to Jacqueline Knowles (Knowles), who at that time was Singh and Gupta’s real estate lawyer. It reads:

“Further to our telephone conversation of earlier today, we agreed that neither party would be in a position to close today. We confirm that we agreed that the closing date would be extended to January 31, 2013 on consent and that all other terms of the most recent agreement of purchase and sale would remain in force and that time shall remain of the essence.” (V7A, TJ)

[58] After January 17, 2013, Robertson was replaced by Jerald McKenzie (McKenzie) and by about January 20, 2013, Gupta was using James Clarke (Clarke) from Kay Law as his real estate lawyer.

[59] The court was referred to a letter dated January 29, 2013, concerning a paragraph 5, which Gupta submits the parties had agreed to remove a few days earlier. (V7A, TQ)

[60] The court was also referred to a letter dated January 30, 2013 from Clarke (Gupta’s lawyer) to McKenzie (207’s lawyer) (V7A, TR). This letter blames 207 for the various problems plaguing the closing of the transaction on that date and states in part:

Given your clients lack of any bona fide actions towards closing, we must conclude that your clients actions (or lack thereof) represent a clear and unequivocal anticipatory breach of the agreement and, therefore, there is no need for our client to tender upon your client tomorrow.

[61] McKenzie (207’s lawyer) responded by letter dated February 1, 2013 which reads in part: (V7A, TS)

With respect, your client has not been ready and willing and able to complete the transaction, as scheduled. Your client has requested an extension to January 31, 2013 and there has been no agreement with respect to that requested date for closing …

With respect, there has been no anticipatory breach of the agreement by our client. There is no agreement at this time. Your client failed to complete the transaction as scheduled. Your client was not ready, willing and able to complete the transaction on the closing date.

[62] Gupta submits that where neither side is prepared to close, the deposit must be returned to the purchaser. He relies in part on para. 33 of the Ontario Court of Appeal case in Azzarello v. Shawqi, 2019 ONCA 820 which states:

[33] Since the appeal was argued Hunt Club has been affirmed by this court: 2019 ONCA 700. However, Hunt Club does not assist the appellant. In Hunt Club, the vendor insisted on a certain closing date, and then neither party was able to close on that date. As a result, the agreement was at an end and the purchaser was entitled to the return of the deposit. In this case the vendor was ready, willing and able to close. It was the purchaser’s lawyer who advised that the purchaser did not have the funds to close.

[63] There is nothing in the record to show that 207 was ready, willing and able to close the transaction.

[64] Gupta suggested that 207 did not want to close because it had received an appraisal of its property for approximately $1,000,000 more than the subject Agreement of Purchase and Sale. For this submission Gupta relies on para. 7 and ex. 23 of Singh’s affidavit commissioned March 9, 2021. (V13)

[65] Gupta submits that the court must decide:

(a) Whether the court has decided which party is entitled to the deposit, such that issue estoppel can apply.

(b) If issue (a) is answered in the negative, then which party is entitled to the deposit? In particular, does the available evidence indicate that 207 was unable or unwilling to close the transaction?

(c) Should Singh be made personally liable for amounts owing by EB investments to 207?

Issue and Cause of Action Estoppel

[66] The doctrine of issue estoppel will only render the matter res judicata where there has been an adjudication on the merits. It does not apply here, since the action was dismissed on grounds of procedural fairness, without a substantive hearing.

[67] If the case meets all three preconditions for issue estoppel (identity of issue, finality of decision and identity of parties), the operation of the equitable doctrine becomes a matter of discretion aimed at achieving fairness “in the unique circumstances of each case” requiring the court considered the “entirety of the circumstances”.

[68] An adjudication of a cause of action on its merits can preclude re-litigation later.

[69] When seeking a dismissal of the action, 207 elected not to pursue the deposit.

[70] In the alternative, even if the decision had involved a determination of the plaintiff’s entire cause of action (which Gupta denies), that does not prevent the return of the deposit to Gupta, on the basis that the amended agreement ended with neither side prepared to close.

Res Judicata

[71] Gupta relies on several cases including, Caldwell v. Caldwell 207 CarswellOnt 433, Vancouver Island Helicopters v. Borg Warner Corp. 1980 CarswellOnt 411, Danyluk v. Ainsworth Technologies 2001 SCC 44, [2001] 2 S.C.R. 460, and Angle v. Minister of National Revenue 1974 168 (SCC), 1974 CarswellNat 375.

[72] In the Caldwell case the court stated the following at para. 58:

[58] I could expend a considerable amount of time and space examining the doctrines of res judicata and issue estoppel. Simply put, to render an issue res judicata, there must have been a prior adjudication of the specific matter on its merits. If the case was only adjudicated on a narrow procedural point; for example, because the court found that it had no jurisdiction to hear the matter, then the case may still be adjudicated on its merits. Both parties seemed to agree upon that and have relied upon the case of Khirkhanan v. Khirkhanan. Unfortunately, as I have said above due to the sparsity of its reasons, it is difficult to tell what exactly the Court of Appeal did consider.

[73] In the Vancouver Island Helicopters case, under the heading res judicata. the court stated the following at paragraph 16:

[16] The British Columbia action was dismissed against Standard Aero because of the expiry of a limitation period. The action was not dismissed on its merits. This dismissal does not render all the issues between the plaintiff and the defendant, Standard Aero, res judicata: instead, the only issue estoppel by the doctrine of res judicata is whether the action could be pursued in British Columbia.

[74] The Supreme Court of Canada stated the following at paragraph 24 of the Danyluk case:

[24] Issue estoppel was more particularly defined by Middleton J.A. on the Ontario Court of Appeal in McIntosh v. Parent, 1924 401 (ON CA), [1924] 4 D.L.R. 420, at p. 472:

Where the question is litigated, the judgment of the Court is a final determination as between the parties and their privies. Any right, question, or fact distinctly put in issue and directly determined by a court of competent jurisdiction as a ground of recovery, or as an answer to a claim set up, cannot be retried in the subsequent suit between the same parties or their privies, though for a different cause of action. The right, question, or fact, once determined, must, as between them, be taken to be conclusively established so long as the judgment remains. [Emphasis added]

This statement was adopted by Laskin J. (later C.J.), dissenting in Angle, supra. at pp. 267 – 68. This description of the issues subject to estoppel (“[a]ny right, question or fact distinctly put in issue and directly determined”) is more stringent than the formulation in some of the older cases for cause of action estoppel (e.g., “all matters which were, or might properly have been, brought in the litigation”, Farwell supra at p. 558) Dickson J. (later C.J.) speaking for the majority in Angle supra. at p. 255, subscribed to the more stringent definition for the purpose of issue estoppel. “It will not suffice” he said, “if the question arose collaterally or incidentally in the earlier proceeding or is one which must be inferred by argument from the judgment.” The question out of which the estoppel is said to arise must have been “fundamental to the decision arrived at” in the earlier proceeding. In other words, as discussed below, the estoppel extends to the material facts and the conclusions of law are of mixed fact and law (“the questions”) that were necessarily (even if not explicitly) determined in the earlier proceedings.

[75] On page 375 of the Angle case the court stated:

… The question out of which the estoppel is said to arise must have been “fundamental to the decision arrived at” in the earlier proceeding: per Lord Shaw in Hoystead v. Commissioner of Taxation. The authors of Spencer Bower and Turner, Doctrine of Res Judicata, 2nd. ed. pp. 181, 182, quoted by Megarry J. In Spens v. I.R.C., at p. 301, set forth in these words the nature of the inquiry which must be made:

… Whether the determination on which it is sought to found the estoppel is “so fundamental” to the substantive decision that the latter cannot stand without the former. Nothing less than this will do.

207s Not Ready to Close

[76] Where neither party is able to close on the closing date, the agreement comes to an end.

[77] Therefore, even if the court concludes that the plaintiffs were not in a position to close, 207 would still have to prove to the court its own readiness to close before it could be entitled to the deposit. 207 did not tender, nor has it produced for this hearing, the documents they would have used to tender in 2013.

The Position of the Plaintiff EB Investments & Ashywn Singh

[78] Singh is not contesting entitlement to the deposit and has agreed in his factum to appear at a judgment debtor examination.

[79] Singh contests the imposition of any personal liability on him, other than perhaps a de minimis amount resulting from his failure to appear at the judgment debtor examination.

[80] With respect to the findings of the court set out in its judgment on April 30, 2019, Singh unequivocally states that he was at all times following his lawyer’s advice with respect to productions.

[81] Singh points out that some emails were produced as set out at paragraph 121-xvi of the April 30, 2019 judgment.

[82] He also points out that Magdy Takawy (Takawy), the president of 207, refused to answer questions about the state of litigation between 207 and its former real estate lawyer Robertson, at his examination held on January 13, 2021.

[83] Singh points out in his affidavit dated January 3, 2020, that if he had ever been advised of any potential for his personal liability he would have likely handled the matter differently, including seeking a second legal opinion and putting other facts before the court in April 2019.

[84] At V11, T13 he has attached a June 18, 2018 email from his lawyer, Greenspoon, to the effect that his previous lawyer had given him poor advice with respect to the production of documents.

[85] The court’s adverse findings, all of which were known to 207, and in particular the finding at paras. 122, 126, 128 and 131, of the April 30, 2013 judgment, would have allowed 207 to ask the court to impose personal liability on Singh at the original hearing. They did not do so.

[86] Singh drew the court’s attention to a supplementary affidavit of documents which appears to be dated in June 2017. It is not signed either by Singh or his then litigation lawyer, Romesh Hettiarachchi (Hettiarachchi). (V11, T11) It does not mention the Trustee Act action.

[87] Singh also drew the court’s attention to the application record in the Trustee Act action. It is apparent that Singh’s lawyer, Hettiarachchi, had knowledge of the court action since he is the one who appears to have drafted the application record. Therefore, Singh submits he was acting with legal advice. (V1, TH) Singh also submits that his affidavits of documents were drafted by Hettiarachchi.

[88] In short, Singh submits he got the wrong legal advice from his lawyers. He submits there was no intentional wrongdoing on his part and that he was simply following the legal advice he was given.

[89] Singh submits that 207 (Takawy) was being obstreperous and essentially refusing to answer questions on his examination on the 26th of November 2013. (V13, T20, Qs. 70-90)

[90] On January 17, 2013, Robertson, 207’s real estate lawyer, sent an email to Knowles, Gupta and Singh’s real estate lawyer, confirming that both parties had agreed to extend the closing to January 31, 2013.

[91] It is Singh’s position that the closing was pushed back to January 31, 2013, and that was agreed to by Robertson, 207’s real estate lawyer at that time, while 207 takes the position that the original closing date was not extended to January 31, 2013.

[92] 207 also takes the position that the plaintiffs did not have the financing to close the transaction on January 31, 2013, however that is not the case. They had funds to close the transaction from First National.

[93] EB and Singh acknowledge that they were involved in a dispute with Gupta leading up to the subject closing and that an Application (Trustee Act action) was commenced, alleging that Gupta had breached their Trust Agreement.

[94] They blame their lawyer, Hettiarachchi, for advising them that emails and texts did not need to be produced, contrary to the findings of this Court on April 30, 2019.

[95] Since Singh was not put on notice that he could face personal liability, and since EB effectively has no assets, he did not lead evidence as to why the emails/texts had not been produced in a timely fashion.

[96] Singh’s reason for not appearing at the scheduled judgment debtor examination is that he was self represented and incorrectly believed that the cost order could be paid from the deposit. He has now agreed to appear at a judgment debtor examination.

207’s Motion is Barred by The Doctrine of Res Judicata

[97] The issues between the parties have already been litigated. At that time no personal liability was sought against Singh.

[98] 207 now seeks to rely on numerous paragraphs from the April 30, 2019 judgment, including paras. 109, 121, 125 – 129, 131 and 132, which Singh reproduced at para. 28 of his factum. Singh submits this is not new evidence which could support the varying of the April 30, 2019 judgment, within the meaning of Rule 59.06(2).

[99] Based on the paragraphs of the judgment set out above, 207 could have sought to hold Singh personally liable at the time it moved to strike EB’s pleadings, but it chose not to. EB’s failure to disclose the Trustee Act action is conduct of the same type the court condemned in its ruling.

[100] The test under Rule 59.06(2)(a) to set aside or vary an order based on newly discovered evidence or facts is as follows:

(a) that the evidence “might” probably have altered the judgment; and

(b) that the evidence “could not with the reasonable diligence have been discovered sooner”.

[101] In this case the new evidence is of the same type as that which resulted in the striking of the plaintiffs’ claims, namely further evidence of deception, breaches of rules and ethics, deliberately ignoring of the Rules of Court with respect to production and refusal to answer questions as to whether there were any disagreements between the plaintiffs in the lead up to the January closing.

[102] None of the above-noted production shortcomings would change the judgment, but would simply have lent further support for it. 207 could have moved for personal liability against Singh but chose not to.

[103] In the alternative, Singh submits that the only new evidence that may support the imposition of personal liability is his allegation in the Trustee Act application which states:

[T]he transaction failed to close on January 31, 2013 partially due to the Trustee unilaterally changing the real estate solicitor representing the Purchasers interest a week before the scheduled closing without authorization, consent and direction of the Beneficial Owners. The unilateral change in solicitors without the authorization, consent and direction of the Beneficial Owners was a breach of the Trust Agreement”

[104] Singh relies on the case of Klurfeld v. Nova Quest Logistic Inc., 2018 ONSC 1559, where the court quoted from the Ontario Court of Appeal case of Bayer Island Foundation v. Ontario 1999 9307 (ON CA), [1999] O.J. No. 4290, stating the following at paragraph [10]–30:

[10]-30 Two aspects of res judicata are relevant to this appeal. The first aspect, relied on by Ontario, is that res judicata prevents a party from relitigating a claim that was decided or that could have been raised in an earlier proceeding. As our court said in Parna v. G.&S. Properties Ltd.: “The rule of res judicata embraces not only those things which are proven in the earlier action but those which might have been proven in that action.” Cartwright J. invoked this aspect of res judicata in Maynard v. Maynard, in a passage that is particularly germane to this appeal:

Parties are not permitted to begin fresh litigation because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the Court of the legal result either of the construction of the documents or the weight of certain circumstances.

If this were permitted litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted, and there is abundant authority reiterating that principle…

Prejudice

[105] Since Singh was not put on notice of his possibly being personally liable, prior to the April 2019 hearing, he did not adduce evidence that could have been helpful to him on that issue.

[106] Such evidence would include the erroneous advice from his then lawyer about his production obligations concerning emails, texts and the lawsuits EB commenced against Gupta and his lawyer.

[107] If there had been any allegation that Singh might be held personally liable, he would have:

(a) Invested more time on the motion,

(b) Advanced additional evidence to the court of his efforts to comply with EB’s obligations,

(c) Likely obtained a second legal opinion,

(d) Referred to the wrongful conduct of 207’s principal,

[108] Singh submits he should not “irrevocably be placed into the position of jeopardy because of the negligence of his lawyer”. (Estate of Goldentuler v. Crosbie, 2014 ONSC 6441 para.46)

The Test to Set Aside or Vary an Order

[109] The onus to set aside or vary an order remains on the moving party.

[110] Singh contests that the Trustee Act action constitutes newly discovered evidence or that it would have altered the judgment.

Reply by 207

[111] Gupta’s submission that the court can make a clear finding that 207 caused the transaction to fail on February 1, 2013 is incorrect.

[112] That finding could only be made on a complete record and the record before the court is not, and cannot, be complete. The important evidence contained in the emails and texts between Gupta, Singh and others, in the week or two before February 1, 2013, have been irretrievably lost. A loss that is 100% attributable to Gupta and Singh.

[113] In Singh’s affidavit sworn October 26, 2020, he attaches an affidavit sworn February 8, 2013 in the Trustee Act action between himself and Gupta. In the February 8, 2013 affidavit, Singh swore that his real estate lawyer Knowles (representing EB Investments only), wrote a letter to the real estate lawyer Clarke (representing a Gupta only), dated January 28, 2013, three days before closing stating: (V7-B, TBB, Para. 21)

Pursuant to the terms of the Trust Agreement executed by the parties, Mr. Gupta is not entitled to unilaterally close the transaction on his own behalf as both parties have contributed time and effort to the closing as well as an equal share of the deposit funds …

It would seem ill advised to have new legal counsel attempt to get up to speed on a file that has been ongoing since May 2012 with the closing date just three days away and a Vendor that would happily have the purchasers default so that the transaction could be terminated and the $200,000 in deposits forfeited to the Vendor.

[114] If the record was complete, 207 would argue that the dispute between Singh and Gupta was the cause of the transaction not closing.

[115] At para. 22 of Singh’s February 8, 2013 affidavit, the plaintiffs do not seem to agree on who their lawyer is. All this, within three days of a moderately complicated $3,000,000 real estate closing.

[116] At paras. 27, 31 and 35 of the February 8, 2013 affidavit, Singh states: (V7B, TBB)

[27] Since breaching the Trust Agreement, Gupta and Kay Law have failed to respond to either my or my litigation lawyers requests for information about the status of the sale …:

[31] Further, EB Investments seeks to commence legal action against 207 Ontario, demanding specific performance of the Purchase Agreement in its capacity as Beneficial Owner. However it has been unable to do so as Gupta has given no indication that he would consent to any action being taken against 207 Ontario on his behalf. Further, Gupta has not given any evidence that he has all the funds to close this transaction which is another issue of concern.

[35] As a result of Gupta’s actions there has been a breach in the relationship between Gupta and I. I would ask that the Court appoint JMK to act as Trustee for the Beneficial Owners with respect to the Purchase Agreement …

[117] Nowhere in this affidavit does Singh state that 207 repudiated the transaction on February 1, 2013.

[118] Gupta’s reply affidavit in the Trustee Act action, sworn March 6, 2013, is reproduced at V7-B, TCC. In that affidavit at paras. 36 and 37, Gupta states that he advised the lawyer Knowles not to take any further action on his behalf and that he and Singh continued to disagree about the transfer documentation and damages claim in the Amended Agreement. At paras. 39 and 40, Gupta confirms that he was getting his own legal counsel at Kay Law and that Knowles knew about it.

[119] He goes on to swear at paragraph 43:

[43] On or about January 28, 2013, Singh, Knowles and I have met to try again and resolve issues arising from the Amended Agreement, Addendum and APS. We were unable to reach an agreement as I was not prepared to have Knowles act on my behalf…

[120] Therefore, just three short days before the closing, Gupta and Singh, even with the assistance of lawyers, could not resolve their internal fight.

[121] At para. 46, Gupta swears that on January 29, 2013, two days before the closing, Singh took issue with him having retained Kay Law and that Singh had threatened to take legal action against him.

[122] It is not until para. 47 of his affidavit referencing the date of January 30, 2013, that for the first time Gupta alleges that since 207 did not take any positive steps to complete the amended agreement and that its actions were an anticipatory breach.

[123] In paragraph 48 of the same affidavit Gupta swears:

[48] On about February 1, 2013, 207 Ontario advised that if it had agreed to the Addendum as drafted by Knowles on Singh’s instructions, then it would be committing a mortgage fraud, denied the changes to the addendum had been agreed to, and further denied that the extension to January 31, 2013 had been agreed to and that there had been no anticipatory breach…

[124] In paragraph 49, Gupta states that he will be commencing an action against 207 for an anticipatory breach. He does not say that it is for repudiation of the contract.

[125] What is clear, is that there was a huge significant fight between Singh and Gupta in January 2013, but the emails and texts that would confirm exactly what was going on, are lost.

[126] There is a very strong argument to be made that the transaction failed to close because of the fighting and the break down in the relationship between Singh and Gupta.

[127] The plaintiffs have not produced any case to this court, where the court could not determine who was responsible for the breach, because of lost evidence.

[128] The emails with respect to Hettiarachchi, are only disclosed now, so Singh can submit that he got bad legal advice. They should not have been produced earlier because they contain solicitor client privilege.

[129] A large part of Singh’s argument, is the bad legal advice he claims to have received, however Singh had five lawyers before Lasage, but the one constant was Singh. The chance that all five lawyers gave bad or improper advice to Singh is essentially zero.

[130] Singh does not detail the advice that he got from all five lawyers. He cherry picks one or two lawyers, but even then, he does not attach all or the pertinent emails and texts etc.

[131] The lawyer, Greenspoon, told him the advice he got prior to meeting with her, was bad advice. However, even after receiving this advice he failed to disclose the Trustee Act action, which is even more pertinent to the issues and in no way would involve any type of privilege.

[132] In closing, Singh’s modus operandi is not to follow rules. He fails to disclose extremely pertinent documents, files an appeal which gets administratively dismissed, files motions which get withdrawn and fails to attend at his judgment debtor examination. In addition, on this motion, after his cross examination and in contravention of the rules he filed two further affidavits.

Findings

[133] In my findings, where I refer to the failings of the parties’ counsel, I am not referring to the counsel who appeared before me on March 15, 2021.

[134] Just when one might think that there could not be more egregious flaunting of the production rules, along comes the nondisclosure of the Trustee Act action between Singh and Gupta. This nondisclosure is beyond outrageous, and it seems unlikely in the extreme that such blatant nondisclosure could have been perpetrated without the assistance of Singh and Gupta’s litigation legal counsels. Their suspected lack of ethics appears worthy of investigation by the Law Society of Ontario.

[135] It appears to the court that Singh, Gupta and Takawy are all, at least moderately, wealthy, sophisticated businesspeople. It is unlikely that this is their “first rodeo” in the world of real estate or the civil justice system.

[136] While much has been said about the behaviour and ethics of Singh and Gupta, it certainly appears that the behaviour of Takawy and perhaps more so his lawyer, during Takawy’s examination on January 13, 2014, did not comply with the Rules.

[137] Takawy, with what appears to be the improper aid of his counsel, refused to answer proper questions and his counsel essentially interfered to the point that parts of the examination were improperly frustrated. Was Takawy trying to hide something?

[138] Another very surprising factor in this matter, is that it appears the subject property may have been undervalued by $1,000,000 and there is a $200,000 deposit. Despite these large monetary incentives to one side or the other, neither party thought it was necessary to tender on the other.

[139] Surprisingly, the closest the parties came to tendering, are a couple of emails spouting “anticipatory breach” rhetoric with very little substance.

[140] Even at this late stage, neither party has produced all the documents that would have been required to close the transaction, in other words, the documents that would have been required for a proper tender.

[141] No material has been placed before the court by the parties’ real estate lawyers (other than some emails) to explain why their client was, or the other party, was not ready to close. It appears each party had more than one real estate lawyer and there is little evidence as to why any of the parties changed their real estate lawyer. This appears particularly important, when the changes in representation in this moderately complicated transaction, were done within a few days of the scheduled closing.

[142] The court agrees with 207, that under rule 59.06(2) the court has the power to vary its order of April 30, 2019 based on the nondisclosure of the Trustee Act action. This was, and is, a significant piece of evidence, and arguably a more blatant disregard for the rules than the previous nondisclosure comments made by the court. It would have essentially removed all doubt about the modus operandi of Singh and Gupta in the litigation. It is significantly more damning evidence against Singh and Gupta, rather than simply more evidence of the same type, the court has already admonished.

Res Judicata

[143] My judgment on April 30, 2019 was not rendered on the merits of the case. Therefore, the principal of res judicata does not apply to this hearing.

[144] Although 207 could have requested forfeiture of the deposit in April 2019, the evidence for 207 to make that request, based on the plaintiff’s modus operandi, was significantly strengthened once it was revealed that the plaintiffs purposely withheld the fact of the Trustee Act action, the allegations in which go to the very heart of whether the plaintiffs were ready, willing and able to close the real estate transaction.

[145] It would have been much easier for 207 to make the decision to claim forfeiture of the deposit if the fact of the Trustee Act action had been known in April 2019.

[146] Pursuant to 59.06(2)(a), the evidence with respect to the Trustee Act action could not, with the reasonable diligence, have been discovered sooner.

[147] Therefore, while 207 could have claimed the deposit in April 2019, they are not precluded from doing so now, based on the new evidence which came to light after April 30, 2019 and which was deceitfully hidden from it.

Prejudice to Singh

[148] There does not appear to be any prejudice to Singh, based on the fact that personal liability was not claimed against him in April 2019.

[149] He has been put on notice now that the claim has been made, and has had the opportunity to seek as much legal advice as he wishes and to refer the court to whatever evidence he has, including his complaints about the legal advice he received.

[150] In addition, 207’s request to have Singh held personally responsible for court costs, was significantly bolstered by the discovery of the Trustee Act action, after their April 2019 motion.

[151] Whatever prejudice there may be to Singh, based on the legal advice he claims to have received, can be dealt with in another forum, which it appears is already under way.

Was the Closing Date Extended to January 31, 2013?

[152] The court was not advised of any communication from Robertson or his successor disputing the above email, until the February 1, 2013 email from McKenzie (207’s new real estate lawyer).

[153] Based on the evidence before the court, and in particular Robertson’s email to Knowles dated January 17, 2013, the court finds that the original closing date for the transaction was extended to January 31, 2013.

Balance of Probabilities – Negative Inference

[154] Because of the nonproduction of, and destruction of, emails and texts between the plaintiffs and third parties in January and February 2013, it may very well be impossible for 207 to conclusively prove that the plaintiffs were not ready willing and able to close the transaction on January 31, 2013.

[155] Because of the destruction of this evidence, the court has no difficulty in drawing a negative inference against the plaintiffs and concluding that production of the lost emails and texts would not have been helpful to them. It is more likely than not that the lost emails and texts would have shown the plaintiffs were not in a position to close on January 31, 2013.

[156] There does not appear to be any evidence from the lawyers for the plaintiffs with respect to the plaintiffs’ ability to close.

Can the Court Determine Who Was at Fault for the Transaction Not Closing?

[157] Unlike the Hunt Club case, where the construction of the house had not been completed, the facts in this case are not as clear.

[158] In this case, as stated before, neither party tendered.

[159] Based on my findings, I find on a balance of probabilities that it was the plaintiffs who were not ready, willing and able to close the transaction. To summarize my reasons on this issue I find:

(a) The plaintiffs struck a good deal which was approximately $1,000,000 less than the value of the property. They would have closed or tendered if they were in a position to.

(b) The plaintiffs paid a $200,000 deposit, which they knew they would forfeit if they were unable to close the transaction. They would have closed or tendered if they were in a position to.

(c) The cost of tendering would be insignificant in comparison to either the $200,000 or $1,000,000 items set out above.

(d) The plaintiffs were responsible for the destruction/nonproduction of emails and texts and the court has drawn a negative inference that they would not have assisted the plaintiffs in showing that they were ready, willing and able to close the transaction.

(e) The plaintiffs were not only, not getting along, they were suing each other in a public court.

(f) They changed their real estate lawyers two or three days before the scheduled closing of this moderately complex real estate deal and essentially gave no explanation for doing so.

(g) In Singh’s February 8, 2013 affidavit, he swears that Gupta “has not given any evidence that he has all the funds to close the transaction”.

(h) The court does not recall any evidence that the plaintiffs demanded the return of “their” deposit.

Singh’s Personal Liability

[160] The courts have jurisdiction to award costs against the non-party for abusive litigation conduct. In this case Mr. Singh is the controlling mind of EB Investments. The chronology of what I will refer to collectively as litigation abuses are set out in the court’s judgment on April 30, 2019.

[161] As has been said many times before in this judgment, Mr. Singh’s continued his abuse of Ontario’s civil justice system, culminating with his concealment of the Trustee Act action. Not only does his abuse bring the administration of civil justice into disrepute, but it was responsible for inflating the costs of this litigation and increasing the costs to the taxpayers of Ontario, who publicly fund our civil justice system.

[162] Singh’s abuse of the civil justice system must be denounced in the strongest terms.

[163] I therefore find him jointly and severally liable along with the other plaintiffs for the costs of this entire action.

COURT ORDER

[164] The deposit, including any and all accumulated interest, currently held by Re/Max capital Inc., shall be released to Adair Goldblatt Bieber LLP in trust for 2075750 Ontario Inc.

[165] The plaintiffs and Ashwyn Singh shall be jointly and severally liable for all cost awards made by this Honourable court and the Court of Appeal.

[166] Ashwin Singh and Manish Gupta shall submit to judgment debtor examinations within 30 days of the release of this court’s reasons, or such later date as counsel for 2075750 Ontario Inc. may agree.

[167] 2075750 Ontario Inc. is entitled to its costs of this motion.

COSTS

[168] If the parties are unable to agree on costs, Mr. Adair shall forward his brief submissions on costs to me by March 31, 2021. Mr. van Bodegom and Mr. Lesage shall forward their brief responses to me by April 6, 2021. Mr Adair shall then forward his reply, if any, to me by April 9, 2021. Cost submissions may be sent to my attention by email, care of Kitchener.SCJJA@ontario.ca. Cost submissions, excluding bills of costs, shall be limited to 5 pages using spacing of 1.5 and 12 pitch font.

Justice James W. Sloan

Released: March 25, 2021