Court File and Parties

COURT FILE NO.: CV-15-552379

MOTION HEARD: 20211029

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: KULWANT CHUHAN and JUNG BAHADUR CHUHAN, Plaintiffs

AND:

PONNIAH SOUNDRARAJAN, MANGALAHOWRY SOUNDRARAJAN, THIVYA SOUNDRARAJAN, THILUXAN SOUNDRARAJAN, SANDWICH BOX INC., THE SANDWICH BOX (388 RICHMOND STREET WEST) INC. and SANDWICH BOX (1200 BAY ST.) INC., Defendants

BEFORE: Associate Justice Jolley

COUNSEL: Paul Starkman and Calvin Zhang, counsel for the moving party plaintiffs David Milosevic, counsel for the responding party defendants

HEARD: 29 October 2021

REASONS FOR DECISION

[1] The plaintiffs seek an order striking the defendants’ statement of defence as a result of their alleged failure to answer undertakings as required by a series of earlier court orders.

[2] The plaintiffs also sought an order compelling the non-party Scotiabank to deliver up documents relating to the defendants. The plaintiffs did not Scotiabank with the motion materials as required by Rule 30.10 so I decline to make any order against it.

[3] The plaintiffs attached a number of schedules to their amended motion record including a schedule of undertakings from the cross examination of the defendant Thiluxan Soundrarajan (“Thiluxan”) and undertakings and refusals given by the legal assistant during her cross examination of the affidavit she swore in support of the defendants’ position on the motion. The plaintiffs confirmed that they were not seeking any order with respect to these particular undertakings or refusals but relied on the fact that they had not been answered as evidence of the defendants’ continued obfuscation and delay.

[4] Lastly, the plaintiffs seek to strike portions of two affidavits filed by the legal assistant in the employ of the defendant’s law firm.

[5] For the reasons set out below, the motion is dismissed. I am satisfied that the defendants have either answered or used best efforts to answer the undertakings. Where certain undertakings have not been answered, the default would not warrant an order striking the defendants’ defence.

[6] There is one undertaking at issue with respect to the defendant Pooniah Soundrarajan (“Ponniah”) and five with respect to his son, the defendant Thiluxan.

[7] On 22 January 2018 Master Wiebe ordered the defendants, on their consent, to answer the undertakings set out in the chart attached to his order.

[8] On 7 December 2018, the matter came before Master Short who ordered that the defendants shall fully comply with the order of Master Wiebe. The matter came back before Master Short on 11 February 2019 and he ordered, on consent, that Pooniah “comply with undertaking 7 on the plaintiffs’ chart within 30 days”. He ordered Thiluxan to “use reasonable efforts to produce bank statements and/or credit card statements to comply with undertakings 3, 4, 5, 6 and 7 on the plaintiffs’ chart within 30 days”.

Pooniah

[9] Undertaking 7 required Pooniah to provide the financial statements and tax returns of the defendant Sandwich Box Inc. from 2003 to date.

[10] While the parties agree that Pooniah signed a direction to Yogi & Associate (“Yogi”), the preparer of the financial statements on 15 September 2020, the plaintiffs argue that this is “too little, too late”. They argue his conduct was intended to hide the financial statements and income tax returns and only when the plaintiffs determined from an independent source that Yogi existed and prepared the returns did Pooniah send the direction.

[11] To date, no financial statements have been produced. Income tax returns have been produced for 2003 – 2008 but none for 2009 onward.

[12] On 24 January 2019, in between Master Short’s two orders, Pooniah signed a direction to Canada Revenue Agency to obtain the tax returns. In June 2019 CRA provided returns for 2003-2008. Pooniah’s counsel sent a follow up letter to CRA in October 2019 requesting the missing returns, i.e. 2009-2018. In response, CRA advised in February 2020 that Sandwich Box did not file returns for those years.

[13] In addition to these requests through his counsel, Pooniah stated that he had made earlier efforts on his own to obtain the documents from CRA but he had no notes of when he called or to whom he spoke and could provide no relevant details.

[14] Earlier, on 19 January 2018, Pooniah signed a direction to Uthaya Tax Services, whom he advised he believed prepared the financial statements, requesting that they send copies of the statements for 2003-2016 to his lawyers. Uthaya did not respond to defence counsel who sent the direction. The law firm sent Uthaya a series of follow up emails in February 2018. In one of the emails dated 16 February 2018, the lawyer stated that she had spoken to someone at Uthaya’s office approximately three times and was told that they did not have the records. She asked again for that to be confirmed and received no response.

[15] Pooniah stated during his cross-examination in February 2020 that before the authorization was sent, he had spoken to Uthaya, who advised that he did not have any documents. The plaintiffs argue that I should put no weight on either this statement or the lawyer’s reference to her conversations with Uthaya’s office as neither of them had notes of when these calls took place or, for counsel, to whom she spoke. I reject this argument. Even if neither took notes, it would not place doubt on the truth Pooniah’s statement or on the contents of the lawyer’s email. It would, importantly, not undermine the fact that the direction was sent, as a good faith effort to obtain the documents, and no response received.

[16] On or about 3 August 2020, the plaintiffs filed an affidavit of Abdi Ghotb (“Ghotb”), Pooniah’s former business partner. In it, he deposed that Uthaya had prepared the financial statements and tax returns for Sandwich Box for 2003 to 2015, under the direction of Pooniah. However, Uthaya was not qualified to do all the work required, so Pooniah hired Yogi to prepare the financial statements (or, more likely, the notice to reader on the financial statements) for the years that Uthaya prepared the tax returns. He attached as an exhibit a notice to reader signed by Yogi.

[17] Upon receipt of that affidavit and a supplementary affidavit sworn 2 September 2020 that was critical of Pooniah for not contacting Yogi, Pooniah signed the direction to Yogi and his counsel emailed it to Yogi, the next day, 16 September 2020. Pooniah’s factum suggests that he only learned about Yogi’s involvement when he read Ghotb’s affidavit but there is no evidence in the record from him confirming this to be so. When he was cross examined in February 2020, he stated that Uthaya was the person he dealt with for preparation of the financial statements. He understood that Uthaya had some tax qualifications and was able to prepare the financial statements and tax returns and did so for 2003 to 2013. Despite Ghotb’s affidavit stating that Pooniah had retained Yogi to prepare the financial statements, Pooniah has not explained what he knew about Yogi or why he only contacted Uthaya for work that he allegedly knew only Yogi could and had prepared. While the plaintiffs may wish to ask the trial judge to draw some inference on this point, the evidence before me is that Pooniah has sent the direction to Yogi and, to date, has not received a response.

[18] I am not prepared to accept the plaintiffs’ suggestion that the direction was not sent simply because it is undated or because the legal assistant does not know the name of the recipient of the email. The direction is attached to a dated email from the Pooniah’s counsel’s firm to Yogi and the legal assistant swore an affidavit of service that indicates that she emailed it to Yogi on 16 September 2020.

[19] The plaintiffs also argue that sending a direction is insufficient and there is no evidence that Pooniah tried to call Yogi to request the documents. In short, they have not made reasonable efforts and this is part of a concerted plan to mislead the plaintiffs and avoid their debt.

[20] I find that a signed direction from Pooniah sent by his lawyer to Yogi requesting financial statements and tax returns, along with the earlier requests to CRA and to Uthaya to be sufficient to constitute reasonable efforts. It is open to the plaintiffs to bring a 30.10 motion to compel Yogi to produce the documents should he not comply with the direction. Assuming there is evidence at trial that Pooniah was aware that Yogi was the preparer of the documents in question and or that Pooniah was the one who had retained Yogi, as the plaintiffs allege, they may also argue whatever inferences they wish at trial about the late delivery of the direction to Yogi. But on this motion, there are no grounds with respect to this undertaking that would warrant an order striking Pooniah’s defence.

[21] To the extent there was impermissible hearsay or other issues with the legal assistant’s affidavit, it did not impact any of the evidence set out above or my conclusion on this point.

Thiluxan

[22] By the consent order made by Master Wiebe, Thiluxan was required to answer five outstanding undertakings, referenced as undertakings 3, 4, 5, 6 and 7.

[23] Undertaking 3 required Thiluxan to advise if a deposit of $4,300 made 16 January 2014 was made by cash or cheque.

[24] Thiluxan answered that undertaking in December 2017 and again after the order in February 2018 stating that he did not know if the funds were cash or cheque but that they came from his Scotiabank account to pay the mortgage at 89 Beckett, one of the properties in issue in this action. The plaintiffs argue that Thiluxan’s statement that he does not know the source of the funds is not credible. That is an issue to be argued at trial; it does not mean he has not answered the undertaking.

[25] In answer to undertaking 4, Thiluxan advised that $3,000 of a $4,250 deposit made 1 March 2014 came from the RBC credit card of his mother, the defendant Mangalahowry and the remainder came from his own personal TD account.

[26] In answer to undertaking 5, Thiluxan advised that the $2,900 deposit came from his mother’s BNS visa card and the $1,400 deposit came from his personal TD account.

[27] In answer to undertaking 6, Thiluxan advised that the $2,900 of the $4,000 deposit came from his mother’s BNS visa card and the remaining $1,100 came from her RBC credit card.

[28] In answer to undertaking 7, Thiluxan advised that he did not know the source of the June 30 deposit but that, of the July 2 deposit, $1,300 came from his mother’s BNS visa card and $710 came from his personal funds.

[29] These answers each gave rise to further questions and a further undertaking to use reasonable efforts to obtain the bank statements or credit card statements, as memorialized in the consent order of Master Short.

[30] The plaintiffs argue that Thiluxan has not made reasonable efforts to do so. I disagree. At issue are account statements and visa statements from Scotiabank, visa statements from RBC and Scotiabank and bank statements from TD.

[31] With respect to Scotiabank, Thiluxan made the request of Scotiabank and received a letter in response dated 8 November 2019 that stated:

Mr. Thiluxan Soundrarajan had a saving [sic] and a checking [sic] account here with us at Scotiabank, we were unable to provide the statements for the checking account since it has passed the retention period, however I have attached the statements for the savings account from September 2013 to December 2014. Please note that the savings account did not have much activity so therefore some of the months did not generate any statements.

[32] The plaintiffs were not satisfied with this answer or production of the savings account that were provided. They insisted that Thiluxan find out the position and title of the letter writer, have Scotiabank provide evidence of that position and how long she had been with the bank. They wanted Thiluxan to ask the Scotiabank representative what she meant by the last sentence of her letter. They asked Thiluxan to go to the bank, speak to the bank manager and obtain a statement on letterhead indicating that the bank cannot access any of the monthly statements for the chequing account and that he produce the bank’s retention policy.

[33] Thiluxan did obtain a further letter from Scotiabank dated 27 March 2020 that set out the opening and closing dates of the savings account and that advised that the chequing account statements were not available as it had passed the seven year retention period. The bank advised that it not produce its policies but provided the name of a supervisor with whom they could speak. The letter also confirmed the title and contact information for the original letter writer.

[34] Specifically for undertaking 3, while he advised he did not know the source of funds into his account, he provided the TD bank account statement showing the $4,300 withdrawal. The plaintiffs argue that this is not a statement but must have been manoeuvred by Thiluxan so that no credits were listed. A review of the statement shows that it does list credits. There is no evidence that this is not what a statement would look like when requested after an account is closed or after the passage of some five years of inactivity. In any event, this production shows the $4,300 transfer from this TD account on 16 January 2014 and Thiluxan’s own statements show the deposit of that same amount on that same day in answer to undertaking 3.

[35] For undertaking 4, Thiluxan produced an RBC credit card statement of his mother showing the cash advance of $3,000 on 24 February 2014. His counsel advised that he was unable to track down Thiluxan’s TD account statements showing the remaining $1,250 withdrawal which he said was the second source of the funds referenced in undertaking 4. Counsel shall advise the plaintiffs when that request was made of TD and, if they cannot do so, they are to make a further written request for the statement within 14 days of the date of this decision.

[36] For undertaking 5, Thiluxan provided his mother’s Scotiabank visa statement for 1 April 2014 confirming it to be the source of the $2,900 by way of cash advance. Thiluxan has provided his Scotiabank statements showing that deposit as well as his own deposit of $1,400. He has not provided the TD statement showing it to be the source of that $1,400 deposit. That shall be treated in the same way as the TD statement, set out above.

[37] For undertaking 6, Thiluxan provided the documentary support for the $2,900 that came from his mother’s Scotiabank visa and for the $1,100 from his mother’s RBC statement. While counsel could not locate the latter statement during the hearing, he shall advise counsel for the plaintiffs of its location or produce a further copy.

[38] Lastly, for undertaking 7, Thiluxan produced the visa statement for the $1,300. There is no information about the $3,000 as he has stated that he does not know the source of that deposit.

[39] The plaintiffs argue that these efforts only demonstrate continued foot-dragging by the defendants. They are particularly critical of a response from Thiluxan that suggested he was waiting for productions from Scotiabank. This characterization is not borne out by the evidence as both counsel seemed to be unaware during Thiluxan’s discovery that he had already provided the statements in question in 2017 as part of his affidavit of documents. The plaintiffs suggest that Thiluxan’s misleading position that he had to request the information from the bank was only intended to stall the process. I do not accept this inference as the statements were available to both parties but neither turned their mind to the fact that they had already been produced.

[40] The plaintiffs also argue that it was not the statements that were required but the supporting documents. This is answered by a reading of the consent order which provides:

The Defendant Thilaxan [sp] Soundrarajan shall use reasonable efforts to produce bank statements and/or credit card statements to comply with undertakings #3, 4, 5, 6, + 7 on the Plaintiffs’ Chart (pages 18, 19, 20 + 21) within 30 days.” (emphasis added.)

[41] There is no reference to any other supporting documentation.

Conclusion

[42] Pooniah made the request of CRA and of Uthaya for the income tax returns and financial statements. Once the name Yogi surfaced, he requested the documents from him as well. It is open to the plaintiffs to argue at trial that Pooniah knew of Yogi all along and that they have suffered in some way as a result of the late request. But Pooniah has made best efforts to comply with the order of Master Short.

[43] Thiluxan requested and had already produced, in fact, his savings account statements. He requested the chequing statements from Scotiabank and was advised they are not available. That is sufficient to constitute a reasonable effort to obtain them. He produced the RBC and Scotiabank credit card statements of his mother. He could not confirm whether he had produced the TD statements. The amount in issue with respect to the TD statements is $2,650. As set out above, he will either advise the plaintiffs when and how they were produced or will make the request within 14 days. If the statements are not produced, it is open to the plaintiffs to argue that Thiluxan did not personally provide the funds he said he did for the property and ask the court to whatever inference they feel is appropriate.

Costs

[44] The defendants were successful on the motion. There were no grounds on which the court would have struck their defence.

[45] Both sides incurred an enormous amount of expense on this motion. The plaintiffs filed a motion record, factum, supplementary motion record, second supplementary motion record, third supplementary motion record and fourth supplementary motion record. They also cross-examined Pooniah and Thiluxan and the legal assistant in the defendants’ firm who swore an affidavit. The defendants filed a responding record, factum, supplementary responding motion record, amended supplementary responding motion record and updated second supplementary responding motion record. I am advised this generated 3,775 pages of material for this motion concerning on six undertakings. Each side spent over $45,000.

[46] The plaintiffs’ costs pursuing these six undertakings are disproportionate and the defendants had no option but to respond, up to and including demanding an internal bank policy from Scotiabank. While the plaintiffs are entitled to pursue the litigation strategy of their choosing, there are costs consequences for that, both in terms of their own costs and exposure to the other side’s costs if they are unsuccessful.

[47] The plaintiffs seek partial indemnity costs of $35,000 in any event of the cause. I find there is no reason to depart from the usual rule that costs follow the event. The defendants seek $28,946 in partial indemnity costs.

[48] The defendants shall have their costs set at $20,000 payable within 30 days.

Associate Justice Jolley

Date: 4 November 2021