COURT FILE NO.: CV-20-4082
DATE: 20210511
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Deborah Adeline McGee
Alexander Wilkes, for the Plaintiff
Plaintiff
- and -
Jaskarn Samra and John Doe a.k.a. “Sam”
No one appearing, for the Defendant
Defendants
HEARD: March 29, 2021
REASONS FOR JUDGMENT
TZIMAS J.
INTRODUCTION
[1] The plaintiff, Ms. McGee, seeks judgment against the defendants in the total sum of $104,616 on account of monies owing to her. She also claims aggravated and punitive damages and costs.
[2] Ms. McGee claims that the monies she advanced to the defendants were short term investments for which she expected substantial returns. She submits that the defendants fraudulently induced her to advance funds on the understanding that she would receive interest at a rate of approximately 15 percent, or $18,000.
[3] The defendant, Jaskarn Samra, was served personally with the claim on December 2, 2020. An anonymous individual, purporting to be a lawyer, served a deficient statement of defence which was rejected by the Court. The plaintiff’s counsel wrote to the individual who served the deficient document, he identified the deficiencies, and invited the individual to make the corrections. When the corrections were not forthcoming, counsel for the plaintiff asked the Court to note Mr. Samra in default. That occurred on January 21, 2021.
[4] In December 2020, counsel for Ms. McGee also delivered the claim on John Doe, a.k.a. “Sam” by email at all of the email addresses that Ms. McGee used for her ordinary communications with “Sam”. He now asks this Court to validate service, note “Sam” in default, and issue judgment against him.
[5] For the reasons that follow, I am satisfied that the plaintiff is entitled to judgment in the sum of $104,616 and costs of $18,000 against both defendants. Service on “Sam” is validated and he, like Mr. Samra, is noted in default.
[6] I also find that the defendants’ conduct amounted to fraud and that the “investment opportunity” was anchored on fraudulent misrepresentations. Although the plaintiff only ever communicated with “Sam”, I am satisfied that Mr. Samra was equally implicated in the investment schemes.
[7] The claim for aggravated and punitive damages is dismissed. Although on balance the defendants’ conduct is reprehensible, such damages are awarded in rare occasions. I do not find this to be an appropriate case for such an award.
FINDINGS OF FACT
[8] On the evidence before me, I find the following facts. Ms. McGee met “Sam” seven or eight years prior to engaging with him on the various “investment opportunities” that are the subject of this claim. She met him at Prudent Financial Services Inc. where she worked as a Loan Officer/Underwriter. When she met “Sam”, he was known to her colleagues by the names “Sam” and “Siri”. Ms. McGee never knew “Sam” by any other name and she also did not know his last name. Even when she began to advance substantial funds, she did not make any inquiries in relation to “Sam’s” full name or identity.
[9] Although Ms. McGee had not seen “Sam” in some years, he contacted her in the summer of 2019 about a client who needed a loan. He used the opportunity to advise Ms. McGee that he had started to act as a private lender for individuals who were self-employed and who could not qualify for a mortgage from financial institutions. In response, Ms. McGee referred some potential clients, most of whom “Sam” declined for being too risky. Ms. McGee admitted that she took “Sam’s” selection process as a reflection of a “legitimate business person”. She made no other inquiries to determine if “Sam” had registered as a mortgage broker, or was otherwise credible.
[10] From September 2019 until March 28, 2020, a period of approximately six months, Ms. McGee engaged with “Sam” in a few different ways. First, she continued to introduce potential borrowers to “Sam”. In two instances, these interactions resulted in substantial lending agreements between “Sam” and Ms. McGee’s acquaintances. Second, “Sam” encouraged Ms. McGee to invest her own funds into short-term investments that he said would yield a 15 percent return within the month.
[11] Ms. McGee had some savings that she and her husband intended to use to renovate their home. She found “Sam’s” proposal very attractive and advanced approximately $35,750 on October 1, 2019. She did so without any formal or even informal documentation or written agreement on the terms of the said investment. She merely followed “Sam’s” direction that she transfer funds to certain numbered companies. Ms. McGee found out at a much later date that Mr. Samra was the President of at least one of those numbered companies, the Circa Life Sciences Inc.
[12] Some weeks later, “Sam” asked Ms. McGee to “re-invest” another $35,750 because the original advance got caught up in his lawyer’s account, which was frozen as a result of a Law Society of Ontario audit. The name provided for that lawyer was Mike Samuel. Ms. McGee agreed to the request and drew down on a line of credit to advance these additional funds.
[13] Ms. McGee then transferred additional funds at “Sam’s” direction, such that by December 2019, she had advanced over $90,000. When Ms. McGee complained to “Sam” about not receiving any returns and that her financial situation had become dangerously precarious, “Sam” followed through with a reimbursement of a fraction of the funds that were owing. Although this reimbursement was far from anything that was promised, Ms. McGee believed “Sam” when he referenced his own financial woes to explain the delay on Ms. McGee’s investment return. Ms. McGee said that the nominal reimbursement was sufficient to restore her faith in “Sam”, so much so that shortly afterwards she advanced more funds.
[14] With the benefit of hindsight, and on the totality of the evidence before the court, I find that a pattern developed between October 2019 and March 2020 whereby at “Sam’s” direction, Ms. McGee would advance funds to various numbered companies. “Sam” would then advise her of some emergency to explain his failure to comply with their original agreement that would yield the intended return. When Ms. McGee complained about her exposure and “Sam’s” continued failure to act on his promised returns, “Sam” would reimburse her some nominal funds, just to appease her. Within days however, he would come up with new reasons to require Ms. McGee to re-invest those reimbursed funds.
[15] Ms. McGee also had to step up and advance funds in connection with the two clients she referred to “Sam” when those agreements ran into difficulties and “Sam” could not meet his obligations. She did so to save face with her own referrals, as they were also personal friends.
[16] Mr. Samra was also implicated in these lending agreements in. First, even though Ms. McGee understood the lending agreements to be between “Sam” and her referrals, they were actually between Ms. McGee’s referrals and numbered companies that Mr. Samra owned. Second, when “Sam” could not meet his obligations under the lending agreements, Circa Life Sciences Inc. appeared to step up to the plate to satisfy the terms of the specific lending agreements. In effect, funds that Ms. McGee deposited to Circa Life Sciences Inc., were then used to satisfy the terms of at least one of the two lending agreements.
[17] All told, Ms. McGee advanced a total of approximately $150,000 of her own money and was reimbursed approximately $60,000. By March 28, 2020, Ms. McGee was owed $89,616 plus $15,000 in interest that she expected to earn against the said loans.
[18] Although at some point Ms. McGee came to question whether she would ever receive the money she was owed, rather than resist further requests for funds, she thought that if she was patient and acceded gently to Sam’s requests, she would eventually receive the money she was owed.
[19] At all times during these transactions, Ms. McGee believed that “Sam” was Jaskarn Samra and that the name Sam was short for “Samra”. She also believed that “Sam” owned the various numbered companies to which he directed her funds. It was not until she retained her lawyer and put into motion efforts to collect on the debt that her lawyer’s investigations revealed “Sam” and Mr. Samra to be two separate individuals. These investigations also revealed that Mr. Samra was connected to the various numbered companies to which Ms. McGee transferred her funds.
[20] Ms. McGee’s legal action was preceded by the delivery of a Demand Letter for payment, addressed to “Jaskarn Samra a.k.a. Sam”. This was before Ms. McGee and her lawyer discovered that Sam and Jaskarn Samra were different people. “Sam” responded immediately and acknowledged the debt. He proposed a reimbursement plan in two instalments of $45,308, each, for a total of $90,616, inclusive of the $15,000 in interest, to be deposited in the lawyer’s trust account.
[21] Although Ms. McGee accepted this proposal, “Sam” never followed through. Instead, on the eve of the date when the first instalment was due, and in keeping with his pattern of raising some emergency for his inability to meet his commitments, “Sam” advised Ms. McGee’s lawyer that he could only come up with a payment of $15,000. Although this was not satisfactory, Ms. McGee agreed to this arrangement with the additional term that “Sam” would pay a penalty of $100 per day for every day that he failed to satisfy the terms of his settlement proposal. “Sam” agreed with the proposed penalty.
[22] What followed were three anonymous deposits totalling $6,100 and one cash payment for $8,900 into Ms. McGee’s lawyer’s trust account. When Ms. McGee’s lawyer asked “Sam” to confirm the identities of the various payors, “Sam” ignored the request. His silence left the lawyer with no choice but to ask his bank to reverse the payments from the three individuals. For the anonymous cash payment, the bank’s fraud department was called in and the funds were removed from the lawyer’s account.
[23] Negotiations for the settlement of the debt continued through the course of the summer, this time with the involvement of a lawyer who purported to represent Sam. Although promises to pay continued to be advanced, “Sam’s” lawyer ultimately reported that he could not receive instructions to make any payment. Eventually, he advised Ms. McGee’s lawyer that he was no longer representing “Sam”. This lawyer also refused to disclose “Sam’s” full name or address.
[24] Following these various failed efforts at a settlement, Ms. McGee commenced her action against both Jaskarn Samra and John Doe, a.k.a “Sam”. The statement of claim was issued on November 2, 2020 and served on Mr. Jaskarn Samra at his place of residence on December 2, 2020. On the same date, Ms. McGee’s lawyer served the Statement of Claim on “Sam” by sending the claim to all of the email addresses associated with him and to two lawyers who purported to act for “Sam” in the period between October 2019 and July 2020.
[25] On December 4, 2020, both Ms. McGee’s lawyer and the Brampton trial office received an email from “Law Lawyer” with the email address being canadianlawyer1967@gmail.com. Attached to the email was a document identified as Mr. Jaskarn Samra’s statement of defence. The email did not have a signature line and the Statement of Defence failed to include a back page with the necessary contact information for Mr. Samra’s lawyer. The statement of defence included some information that enabled Ms. McGee’s lawyer to connect Mr. Samra to the numbered companies associated with the transfer of Ms. McGee’s funds.
[26] Ms. McGee’s lawyer responded immediately to the email communication and identified the deficiencies. He asked the sender to correct them and to identify him or herself. There was no response.
[27] On December 7, 2020 the Court advised the sender of the defence document that the email sent to BramptonSCJCourt@ontario.ca was rejected and that the defence had to be resubmitted on the Court’s online portal as required by the applicable Practice Direction. Once again, there was no response.
[28] On December 29 and 31, Ms. McGee’s counsel sent additional communications to “Law Lawyer” and to Mr. Samra to confirm that the original attempt at filing a defence was deficient, that it was rejected by the Court, and that if the deficiencies were not cured, Ms. McGee would proceed with default proceedings. As there was no response to this communication, Mr. Samra was noted in default on January 21, 2021 and counsel proceeded to seek default judgment.
[29] With respect to “Sam”, counsel for Ms. McGee did not receive any response to the emails he sent. In his submissions to this Court, Ms. McGee’s lawyer advised the Court of the multiple emails he sent to “Sam” attaching the statement of claim. He therefore asked this Court to validate service, note “Sam” in default, and pronounce judgment against him as well as Mr. Samra. Counsel provided the Court with legal authority for the proposition that the Court could issue judgment against “John Doe, a.k.a., “Sam”.
[30] In addition to seeking damages for breach of contract, counsel asked this Court to issue a declaration that the defendants committed fraud on Ms. McGee. In the alternative, counsel asked the Court to award damages for fraudulent misrepresentations, fraudulent conveyances, civil conspiracy, and negligence.
[31] Counsel also sought punitive and aggravated damages of one million dollars. In support of these particular claims, Ms. McGee said that her experience with “Sam” caused her significant stress and depression. She said that her health deteriorated very significantly and even required hospitalization. She said that her doctor had been unable to diagnose the nature of her health difficulties. She also said that she felt profoundly humiliated before her own family and her community for having believed “Sam”.
ANALYSIS
[32] The claim before the Court raises the following legal issues for my consideration and determination:
a) Can judgment be issued against one or both of the defendants?
b) Did Ms. McGee suffer damages? If so, what is the sum owing?
c) Do the alleged interactions between the defendants and Ms. McGee amount to fraud, fraudulent misrepresentations, or civil conspiracy?
d) Is Ms. McGee entitled to aggravated and punitive damages?
a) Can judgment be issued against one or both defendants?
[33] I will deal with the two defendants separately. In Mr. Samra’s case, he was duly noted in default on January 21, 2021. By virtue of Rule 19.02(1) (a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Mr. Samra is deemed to admit the truth of the allegations of fact made in the statement of claim. In accordance with subrules 19.05(1), (2), and (3), the court may still require the plaintiff to prove her claim and the damages that she seeks.
[34] In “Sam’s” case, the lack of personal service is not an impediment to noting him in default and proceeding to judgment. The circumstances related to him engage two questions: i. Was “Sam” served in accordance with the Rules of Civil Procedure; and ii. Can judgment be granted against a defendant who is identified only by a username?
[35] Beginning with service of the claim, Rule 16 of the Rules of Civil Procedure addresses the ways in which a court may deal with difficulties associated with the personal service of an originating process or any other document that must be served personally. In advance of any attempted service, where it appears that personal service of an originating process is impractical, the court may make an order for substituted service or where necessary in the interest of justice, may dispense with service. Alternatively, where the court is satisfied that the originating process, which was served in a manner authorized by the rules, would have come to the notice of the person to be served, then the court may validate that alternate mode of service.
[36] I have no difficulty finding that “Sam” received the email with the statement of claim attached to it, either through any one of his four email addresses to which the said email was sent or through the email sent to two lawyers who were in contact with him in the period between October 2019 and July 2020. On the evidence before the Court, up until the settlement discussions stopped, “Sam” had no difficulty using the four email addresses to give Ms. McGee instructions on where and when to transfer various funds. He also used one of those addresses in his communications with Ms. McGee’s counsel. As long as he could string along Ms. McGee and her lawyer into believing that a payment would be forthcoming, “Sam” used those email addresses without any difficulty. There was also no evidence to suggest that the email sent by Ms. McGee’s counsel attaching the claim failed to be delivered or was otherwise rejected. Had Ms. McGee obtained an order for substituted service using “Sam’s” email address, I could see no reason to deny her that relief. I therefore find it reasonable to conclude that the email with the claim came to “Sam’s” attention and that, most significantly, Ms. McGee’s claim came to “Sam’s” attention.
[37] As a secondary proposition, there is a very strong likelihood that the email with the attached claim that was sent to the two lawyers associated with “Sam” would have also come to “Sam’s” attention. While the lawyers may not have had an obligation to forward the subject communication to “Sam”, especially if his association with them had ended, there was also no evidence before the Court of any responding communication to Ms. McGee’s counsel from either of these lawyers that expressly rejected the delivery of the claim or that advised of their inability to deliver the communication to “Sam”. I infer from their silence that one or both counsel would have forwarded the pleading to “Sam’s” attention.
[38] On either scenario, I am satisfied that the email communications sent by Ms. McGee’s counsel to “Sam’s” four email addresses and to the two lawyers associated would have come to “Sam’s” attention and I therefore validate the service of Ms. McGee’s statement of claim.
[39] Having failed to respond to the email communications and to defend the claim, I exercise my inherent jurisdiction to note “Sam” in default and to proceed with judgment. I am also prepared to note him in default, given his failure to respond to Ms. McGee’s statement of claim.
[40] Turning to the issue of judgment against “Sam”, I rely on Theralase Technologies Inc. v. Lanter, 2020 ONSC 205, at para. 23, and Manson v. John Doe, 2013 ONSC 628, 114 O.R. (3d) 592, to conclude that judgment can issue against somebody who is identifiable and deliberately chooses to conceal their identity. There is no question that “Sam” did everything he could both directly and indirectly to conceal his identity.
[41] I agree with Myers J. that there is nothing in the Rules of Civil Procedure which anticipates final judgment being granted against an unidentified defendant. However, I also note that in the limited case law that exists on this issue, the overall concern rests with the identifiability of a defendant and the overriding concern that the defendant be afforded the minimum requirement of natural justice with the notification of the claim. Where the defendant is identifiable and actively conceals their identity, but where service of the originating process is likely to come to that person’s attention, there is nothing in the Rules that prohibits judgment against that individual. With the validation of service on that person, the court can assume in personam jurisdiction and by extension, issue judgment.
[42] In this instance, apart from not knowing “Sam’s” legal name, “Sam” is identifiable; he is not a fictional person. Ms. McGee met him, she engaged with him via email and texts, and she could identify him in pictures connected to Circa Life Sciences Inc., and differentiate between him and Mr. Samra. Provided that Ms. McGee is able to prove her entitlement to judgment, to which I will turn to next, there is no reason not to issue judgment against “Sam”.
[43] As in Theralase Technologies, I note that Ms. McGee will eventually have to obtain “Sam’s” legal name so that she may amend the title of proceedings and proceed with the enforcement of her judgment. How she will go about that task will be a future challenge. That issue is not before me, and I make no comments or findings about how any judgment against “Sam” may be enforced.
b) Did Ms. McGee suffer damages? If so, what is the sum owing?
[44] Separate and apart from the operation of Rule 19 of the Rules, a plaintiff must still prove their unliquidated damages: see, for example Halupa v. Sagemedica Inc., 2019 ONSC 7411, at para. 4.
[45] As an overriding finding, in her testimony before the Court, I found Ms. McGee to be credible. While at times I was in disbelief over the extent of her gullibility and the magnitude of the trust she placed in somebody whom she only knew as “Sam”, I also concluded that Ms. McGee reflected the very characteristics that made her vulnerable to “Sam’s” posturing and investment schemes.
[46] Admittedly, I wondered about Ms. McGee’s own possible collaboration with “Sam” in relation to the agreements between her referrals to “Sam”, particularly given her willingness to advance some of her own funds to salvage those agreements. However, on the totality of the evidence before the court, I ultimately accepted Ms. McGee’s explanation that where she did intervene, she did so to save face with her own friends.
[47] Specifically, Ms. McGee’s narrative to the Court was corroborated by her various bank statements which showed the movement of funds from her personal account to the accounts of numbered companies associated with “Sam” and with Mr. Samra. Ms. McGee also provided evidence of her payments to lawyers who represented Ms. McGee’s referrals to Sam.
[48] Ms. McGee also produced copies of the text messages from “Sam” and from a lawyer named “Mike Samuel” that gave her instructions on where to advance her funds. Although the text messages on their own could not be admitted for the truth of their contents, I agreed to admit them as context for Ms. McGee’s understanding and frame of mind that led her to advance her funds. Insofar as the instructions contained in them mirrored Ms. McGee’s actions and verified the transfer of funds, I have no difficulty concluding that I could rely on them to find that Ms. McGee acted on the instructions she received from “Sam” and advanced funds periodically in accordance with the instructions she received.
[49] Finally, the email communications from “Sam” to Ms. McGee’s lawyer, purporting to admit to the debt being claimed by Ms. McGee, are also hearsay and on their own could not be admitted for the truth of their contents and specifically could not be relied on as “Sam’s” admission of his debt to Ms. McGee. But as with the instructions to Ms. McGee, these exchanges form part of the narrative. The contents of those exchanges also line up with the attempted payment of funds into the trust account of Ms. McGee’s counsel, thus serving to corroborate “Sam’s” attempts to reimburse Ms. McGee.
[50] In sum, on the evidence that I do admit, I am satisfied that Ms. McGee is owed $104,616, inclusive of the principal debt of $89,616 and a promised interest payment of $15,000. In addition to any deemed admissions by operation of Rule 19.01(2)(1)(a) for both Mr. Samra and “Sam”, given that the transfers were made into the accounts of companies connected to Mr. Samra at “Sam’s” direction, it is appropriate that judgment should issue against both defendants.
c) Do the alleged interactions between the defendants and Ms. McGee amount to fraud, fraudulent misrepresentations, or civil conspiracy?
[51] In my review of the evidence, I am satisfied on a balance of probabilities that the defendants engaged in fraud and fraudulent misrepresentations. On the evidence before me I am unable to go further to find civil conspiracy as alleged.
[52] To begin with, there are four elements that must be satisfied to allow for a finding of the tort of civil fraud. They are set out by the Supreme Court of Canada in Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8, [2014] 1 S.C.R. 126, at para. 21: (1) a false representation made by the defendant; (2) some level of knowledge of the falsehood of the representation on the part of the defendant (whether through knowledge or recklessness); (3) the false representation caused the plaintiff to act; and (4) the plaintiff’s actions resulted in a loss.
[53] For a finding of fraudulent misrepresentation, the Court of Appeal for Ontario set out the test to be met in Midland Resources Holding Ltd. v. Shtaif, 2017 ONCA 320, 135 O.R. (3d) 481, at para. 162, leave to appeal refused, 2017 86178 (S.C.C.):
Fraudulent misrepresentation is established where there are the following five elements: (i) a false representation of fact by the defendant to the plaintiff; (ii) knowledge the representation was false, absence of belief in its truth, or recklessness as to its truth; (iii) an intention the plaintiff act in reliance on the representation; (iv) the plaintiff acts on the representation; and (v) the plaintiff suffers a loss in doing so. [Citations omitted.]
[54] The standard of proof for civil fraud is proof on a balance of probabilities. In accordance with F.H. v. McDougall, 2008 SCC 53, [2008] 3 S.C.R. 41, at para. 49, a “trial judge must scrutinize the relevant evidence with care to determine whether it is more likely than not that an alleged event occurred.”
[55] Finally, a party pleading fraud in a civil action must comply with r. 25.06(8) of the Rules, which states the following:
Nature of Act or Condition of Mind
(8) Where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars, but knowledge may be alleged as a fact without pleading the circumstances from which it is to be inferred.
[56] The Court of Appeal for Ontario underscored the significance of this requirement in Midland Resources Holding Ltd., at para. 198:
First, precision and particularity are necessary when pleading fraud. Rule 25.06(8) of the Rules of Civil Procedure requires any pleading of fraud or misrepresentation to contain "full particulars". In Hamilton v. 1214125 Ontario Ltd., this court identified, at para. 35, the necessary elements for a plea of deceit:
The pleading, even of innocent misrepresentation, must set out with careful particularity the elements of the misrepresentation relied upon, that is:
the alleged misrepresentation itself,
when, where, how, by whom and to whom it was made,
its falsity,
the inducement,
the intention that the plaintiff should rely upon it,
the alteration by the plaintiff of his or her position relying on the misrepresentation,
the resulting loss or damage to the plaintiff.
Of course, if deceit is alleged, then there must also be an allegation that the defendant knew of the falsity of his statement.... Each of the defendants must know the case that it has to meet.
[Citations omitted.]
[57] In this instance, I am satisfied that Ms. McGee pleaded in sufficient particularity that: (i) “Sam” misrepresented the investment opportunity to her and knowingly misled her into believing that he was facing his own financial difficulties as a means of inducing her to advance more monies, (ii) she relied on his representations, (iii) she acted in accordance with those misrepresentations; and (iv) she suffered a loss.
[58] On the evidence before me, I find specifically that “Sam” misrepresented to Ms. McGee the initial investment deal that had her invest $35,750 with the commitment to obtain a return on that investment within a month that would result in a 15 percent gain. I also find that “Sam” then drew Ms. McGee into a cycle of advancing funds, receiving a partial reimbursement, only to then be asked to reinvest more funds. In other words, “Sam” kept up his mythology and maintained his inducement by reimbursing Ms. McGee with just enough monies to keep her engaged and to raise her hopes that she would eventually hit a jackpot of returns. In the result, though her original intention was to invest some family savings in the range of $35,000, Ms. McGee found herself in over her head with an outlay of almost $90,000 within just a few months.
[59] As much as I have significant difficulty with Ms. McGee’s failure to ask any questions and to exercise any due diligence, I give her the benefit of the doubt and believe her when she says that she was hooked into believing that if she responded to “Sam’s” desperate requests for funds, she would eventually be reimbursed. I also have little difficulty concluding that “Sam” recognized Ms. McGee’s vulnerability and took advantage of her. His audacity extended to his interactions with Ms. McGee’s lawyer, up to the point when it became evident that, unlike his client, Ms. McGee’s lawyer did not suffer fools gladly and would not be drawn into any similar cycle of dubious reimbursements.
[60] The analysis is a little trickier in relation to Jaskarn Samra because Ms. McGee did not have any direct contact with him. More dramatically, she did not even know of his existence until much later when she obtained legal advice. Separate and apart from any deemed admissions by virtue of being noted in default, at first blush, there is no evidence that Mr. Samra did or said anything directly to cause Ms. McGee to rely on his reassurances to advance her funds.
[61] However, on closer scrutiny, I cannot ignore the fact that Mr. Samra was hiding behind the companies that received Ms. McGee’s funds. Funds were also used from those companies to bail out Ms. McGee’s referrals, when those lending agreements ran into difficulties. Ms. McGee considered the bail outs as credible indicia of a company trying to meet its obligations. Little did she know that Mr. Samra was behind those companies and that he and “Sam” were using some of her funds to meet their lending obligations. In effect, Ms. McGee was advancing her funds to Mr. Samra, through his companies, at “Sam’s” direction. Ms. McGee pleaded these facts with sufficient particularity to allow for Mr. Samra to defend himself. In the face of my findings concerning the movement of Ms. McGee’s funds, I conclude that Mr. Samra engaged in conduct that perpetuated “Sam’s” mythology and contributed to the confidence that Ms. McGee placed in the overall “investment opportunities” to her detriment.
[62] I will add that I might have been more reticent about coming to such a conclusion, were it not for the fact that in attempting to advance a defence, Mr. Samra actively concealed his and / or his lawyer’s identity and followed tactics that had all the hallmarks of “Sam’s” behaviour and a deliberate attempt to continue to behave dishonestly. The serving of a statement of defence with the name “Law Lawyer” with the email address being canadianlawyer1967@gmail.com, and the failure to address that shortcoming merely underscored Mr. Samra’s connection to “Sam’s” activities and was nothing more than an audacious attempt to mislead the court. The only plausible explanation for such behaviour is that Mr. Samra was deeply involved and part of implication in “Sam’s” “investment opportunities”.
[63] In the result, I find that both defendants engaged in fraudulent activities and fraudulent misrepresentations.
d) Aggravated and punitive damages
[64] The claim for such damages is dismissed. Beginning with aggravated damages, while I appreciate that Ms. McGee’s experience caused her significant stress, the claim that she suffered significant health problems was not supported by any evidence. The doctor’s note she produced did very little to suggest that she encountered any serious medical problems. To the extent that aggravated damages are intended to be compensatory in nature, there was simply insufficient evidence to support such an award.
[65] Turning to punitive damages, while there can be little doubt that the defendants’ activities, including the refusal by both of them to identify themselves, are very problematic, I decline to make such an award for a number of reasons.
[66] A thorough and enduring review of the guiding principles for the award of punitive damages is contained in Jefflin Investments Limited v. Charendoff, 2009 69795 (Ont. S.C.). The specific considerations that are relevant to this case include the recognition that punitive damages are the exception rather than the rule, they do not exist at large but must meet the test of rationality, and they will be awarded if and only if compensatory damages do not adequately achieve the objectives of retribution, deterrence, and denunciation: Jefflin, at para. 21.
[67] In cases involving fraud, although such conduct is generally reprehensible and offends the court’s sense of decency, it is only in exceptional circumstances that punitive damages will be awarded: see Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, [2002] 1 S.C.R. 678, for a useful outline of the guiding principles for such an award.
[68] In this instance, the first problem with the claim is Ms. McGee’s open-ended claim for punitive damages, without any specificity or rational quantum identified in the pleadings. The claim for one million dollars in damages lacked any credibility or foundation. Even these defendants should be afforded notice of the magnitude of the jeopardy.
[69] The claim for such damages must also reflect some proportionality relative to the compensatory damages being claimed. An open-ended request fails to address that requirement. This concern ties into Ms. McGee’s agency, which I discuss below.
[70] Although punitive damages are intended to denounce and deter the defendants’ behaviour, in this instance, I doubt that such an objective can be achieved or that any award would have any effect on these defendants. If Ms. McGee is able to collect on the judgment, together with her entitlement to pre- and post-judgment interest, she will be adequately compensated. Her greatest challenge is likely to rest with her ability to enforce her judgment against the defendants.
[71] Finally, though on its own it is neither determinative nor dispositive, Ms. McGee’s failure to exercise any due diligence is a relevant element to my overall consideration of what occurred: see Murano v. Bank of Montreal (1998), 1998 5633 (ON CA), 41 O.R. (3d) 222 (C.A.). Given Ms. McGee’s professional acquaintance with financial and investment activities as a loans officer, she had sufficient knowledge to exercise better judgment and due diligence. Neither of the defendants would have been able to get very far had Ms. McGee insisted on obtaining some basic information about “Sam”, or sought to reduce the investment proposal into a basic agreement.
[72] In sum, the lack of specificity in the punitive damages claimed, the adequacy of the compensation to Ms. McGee, if she can collect, the unlikelihood of effecting any deterrence by such an award on these defendants, and Ms. McGee’s own carelessness in all the circumstances are the primary reasons for which I decline to order punitive damages.
COSTS
[73] Having regard for counsel’s Bill of Costs submitted and the guiding principles of Rule 57, I fix costs at $18,000, inclusive of disbursements and applicable taxes.
CONCLUSION
[74] Judgment in the sum of $104,616 and costs of $18,000 is to issue in accordance with this judgment. I make the further declaration that the defendants’ actions were fraudulent and that their fraudulent misrepresentations, both directly by “Sam” and indirectly by Mr. Samra, induced Ms. McGee to advance very substantial funds. Pre-judgment interest is awarded at 2 percent. Post-judgment interest shall be in accordance with the Rules.
[75] The claims for aggravated and punitive damages are dismissed.
[76] The plaintiff shall prepare the judgment for issuing in accordance with this decision. Approval as to form and content by the defendants is hereby waived.
Tzimas J.
Released: May 11, 2021
COURT FILE NO.: CV-20-4082
DATE: 20210511
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Deborah Adeline McGee
Plaintiff
- and –
Jaskarn Samra and John Doe a.k.a. “Sam”
Defendants
REASONS FOR JUDGMENT
Tzimas J.
Released: May 11, 2021