Court File and Parties

COURT FILE NO.: CV-21-00662052

MOTION HEARD: 20211014

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Kirpal Singh Dhaliwal, Plaintiff

AND:

2581576 Ontario Inc. and Ping Zhang also known as Mary Ping Zhang and Yihong Zhang also known as Charlie Yihong Zhang, 2813000 Ontario Inc., Alexandra Zhang Denkovski and Christina Zhang Denkovski, Defendants

BEFORE: Associate Justice L. La Horey

COUNSEL: Stephen Schwartz and Emily Quail, Counsel for the Moving Party Defendants

Sim Chahal, Counsel for the Responding Party Plaintiff

HEARD: October 14, 2021 by videoconference and supplementary written submissions

REASONS FOR DECISION

OVERVIEW

[1] The defendants bring this motion to discharge a certificate of pending litigation (“CPL”) registered against title to property municipally known as 5881 Thorold Stone Road, Niagara Falls (the “Property”), obtained by the plaintiff on May 18, 2021 on a motion without notice.

[2] The defendants bring this motion on a number of grounds, including on the basis that the plaintiff does not have a reasonable interest in the Property, the Property is an investment property and is not unique, damages are an appropriate remedy, the registration of the CPL is prejudicing the defendants’ ability to refinance the Property, and the plaintiff failed to disclose material facts to the court on his motion without notice.

[3] For the reasons that follow, I order that the CPL be discharged without security.

BACKGROUND

[4] The Property is a large commercial and industrial property of approximately 18 acres located in Niagara Falls, Ontario. A 325,000 square foot building is situated on the Property comprised of warehouse space and office units.

[5] On June 8, 2017, the plaintiff and his then business associate, Harpal Panesar, incorporated the defendant 2581576 Ontario Inc. (the “Company”) for the purpose of acquiring the Property as an investment property. The Company entered into an agreement of purchase and sale on August 25, 2017 to purchase the Property from Muller Properties Inc. for a purchase price of $3,100,000.

[6] Mr. Panesar and the plaintiff had a falling out in contested circumstances. Mr. Panesar ultimately issued a statement of claim against the plaintiff and the Company on October 21, 2019.[^1] He obtained a CPL against the Property. The litigation was settled and the CPL deleted from title.

[7] The defendant Ping Zhang, also known as Mary Ping Zhang, replaced Mr. Panesar in the business venture prior to the closing of the purchase of the Property by the Company. Both sides concur that the plaintiff and Ms. Zhang agreed that they would each be 50% shareholders in the Company.

[8] It is not disputed that Ms. Zhang contributed funds to the Company for the acquisition of the Property, although the quantum is disputed. Ms. Zhang states that she contributed $890,690. The plaintiff disputes this, but acknowledges that she advanced at least $460,000. The plaintiff’s financial contribution is also very much contested.

[9] Muller Properties Inc. transferred the Property to the Company on October 25, 2017 for $3,100,000. The vendor took back a mortgage in the sum of $2,438,000.

[10] Both sides agree that after closing it was determined that the Property would need extensive repairs before it could be leased to full capacity. The defendants say that Ms. Zhang ran out of money and that the plaintiff did not have any money. An influx of cash was necessary to finance the necessary repairs to the Property. The defendant’s evidence is that in November 2017, Ms. Zhang’s brother, the defendant Yihong Zhang, also known as Charlie Yihong Zhang, agreed to invest $500,000 in the Company to finance the repairs and become a one-third shareholder. The plaintiff says that he did not agree to Mr. Zhang becoming a shareholder. In his affidavit, the plaintiff says that he has no knowledge of what monies Mr. Zhang invested, although on cross-examination he admitted to receiving money from Mr. Zhang for the repairs. However, he insists that the money for repairs was rent collected at the Property.

[11] The defendants say that the parties formalized their shareholdings in a shareholders’ agreement prepared by Ms. Zhang’s solicitor that was executed by the parties on December 12, 2017 at Ms. Zhang’s office. Ms. Zhang’s evidence is that the plaintiff refused to retain a lawyer to provide him with advice on the shareholders’ agreement. In his affidavit the plaintiff says that “I do not recall seeing, reviewing and/or executing” the shareholders’ agreement.

[12] In October 2019, Mr. Panesar brought an action against the plaintiff and the Company seeking an interest in the Property and claiming monies owed. He claimed that the plaintiff had deceitfully removed him as shareholder of the Company and failed to repay him the $200,000 he had loaned to the Company for deposits on the Property. The litigation was settled and the CPL removed. Ms. Zhang’s evidence is that she paid $164,000 plus legal fees to settle the dispute. The CPL that Mr. Panesar had obtained and registered against the Property was discharged.

[13] The defendants assert that the plaintiff defaulted in his obligations under the shareholders’ agreement to repay Ms. Zhang for the contributions to the purchase of the Property that she made on his behalf and that the plaintiff has defaulted in failing to contribute to mortgage payments on an ongoing basis.

[14] On August 19, 2020, the lawyer who prepared the shareholders’ agreement sent an email to the plaintiff’s lawyer informing him that the plaintiff had been removed as a shareholder, director and officer of the Company, and attached the relevant corporate documents. The plaintiff denies receiving these documents.

[15] The Company transferred the Property to 2813000 Ontario Inc. (“2813000”) on April 28, 2021, for the stated consideration of $3,980,000. The land transfer tax statement indicates that the consideration consisted of monies paid in cash in the sum of $1,980,000 and an assumed mortgage of $2,000,000. Land transfer tax of $85,975.00 was paid. The shareholders of 2813000 are the defendants Alexandra Zhang Denkovski and Christina Zhang Denkovski, who are Ms. Zhang’s daughters. The plaintiff alleges that this is a fraudulent conveyance and that the consideration was well below fair market value. The defendants contend that there is no evidence that shows that the intent of the transfer, nine months after the plaintiff was removed as a shareholder, was to defeat the plaintiff’s claim. Ms. Zhang’s evidence is that the transfer took place to facilitate a new business arrangement with a proposed partner regarding the development of the Property.

[16] The statement of claim in this action was issued on May 11, 2021. The plaintiff obtained an order for leave to issue a CPL from Master McAfee (as her title then was) on May 18, 2021 pursuant to a motion in writing, made without notice.

APPLICABLE LAW

General principles

[17] Section 103 of the Courts of Justice Act authorizes the registration of a CPL. Subsection 103(6) sets out when an order discharging a CPL may be granted. It reads as follows:

Order discharging certificate

(6) The court may make an order discharging a certificate,

(a) where the party at whose instance it was issued,

(i) claims a sum of money in place of or as an alternative to the interest in the land claimed,

(ii) does not have a reasonable claim to the interest in the land claimed, or

(iii) does not prosecute the proceeding with reasonable diligence;

(b) where the interests of the party at whose instance it was issued can be adequately protected by another form of security; or

(c) on any other ground that is considered just,

and the court may, in making the order, impose such terms as to the giving of security or otherwise as the court considers just.

[18] In Perruzza v Spatone, Master Glustein (as he then was) summarized the applicable principles on a motion to discharge a CPL as follows:[^2]

(i) The test on a motion for leave to issue a CPL made on notice to the defendants is the same as the test on a motion to discharge a CPL (Homebuilder Inc. v. Man-Sonic Industries Inc., 1987 CarswellOnt 499 (S.C. - Mast.) ("Homebuilder") at para. 1);

(ii) The threshold in respect of the "interest in land" issue in a motion respecting a CPL (as that factor is set out at section 103(6) of the Courts of Justice Act, R.S.O. 1990, c. C.43) is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed (1152939 Ontario Ltd. v. 2055835 Ontario Ltd., 2007 CarswellOnt 756 (S.C.J.), as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Gen. Div. - Comm. List) at para. 62);

(iii) The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has "a reasonable claim to the interest in the land claimed" (G.P.I. Greenfield Pioneer Inc. v. Moore, 2002 6832 (ON CA), 2002 CarswellOnt 219 (C.A.) at para. 20);

(iv) Factors the court can consider on a motion to discharge a CPL include (i) whether the plaintiff is a shell corporation, (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (viii) the harm to each party if the CPL is or is not removed with or without security (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (S.C. - Mast.) at paras. 10-18); and

(v) The governing test is that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL should be granted or vacated (931473 Ontario Ltd. v. Coldwell Banker Canada Inc., 1991 CarswellOnt 460 (Gen. Div.); Clock Investments Ltd. v. Hardwood Estates Ltd., 1977 1414 (ON SC), 1977 CarswellOnt 1026 (Div. Ct.) at para. 9).

What is the threshold test in this case and whether it has been met

[19] In his statement of claim, the plaintiff seeks various relief, including a declaration that he is a 50% shareholder of the Company, relief regarding his claim that he was wrongfully removed as an officer and director of the Company, a declaration that the plaintiff “has and /or had an interest” in the Property, a declaration that the conveyance of the Property from the Company to 2813000 is void as a fraudulent conveyance, an order setting aside the transfer of the Property from the Company to 2813000, an order for leave to issue a certificate of pending litigation against the title to the Property, injunctive relief, tracing orders and damages for breach of contract, breach of trust, breach of fiduciary duty, bad faith, misrepresentation and unjust enrichment.

[20] The defendants argue that the plaintiff cannot meet the threshold requirement of a reasonable claim to an “interest in land” because the plaintiff’s interest is in the Company, not the land that was owned by the Company. In cross-examination the plaintiff agreed that the Company was created to buy and own the Property and that it was always intended that the owner of the Property would be the Company.

[21] The defendants submit that this case is on all fours with John v Millar,[^3] a case in which Morawetz J. (as he then was) refused to grant a order for a CPL over property owned by a corporation at the behest of a shareholder of the corporation. In that case Morawetz J. held:

22 … as noted by Potts J. in Davidson v. Horwat (1984), 45 C.P.C. 203, if the plaintiff could obtain leave to register a CPL on land owned by 142 simply because he is a shareholder of 142, then virtually any shareholder of a public company would be entitled to such relief in any dispute where the company in question owns land.

23 Mr. John has an interest in the corporation that owns the Property, not in the Property itself. Essentially, counsel to Mr. Millar submits that Mr. John is asking to pierce the corporate veil to give him a remedy that the law does not allow him as a shareholder.

24 It seems to me Mr. John has no right to interfere in the management of 142. A CPL registered on the Property would indirectly give him that right. In this case, Mr. John has provided no compelling reason why the corporate veil should be pierced. In the absence of any reason to pierce the corporate veil, it seems to me that the CPL cannot be granted. See Sagres Development Corp. v. Continental Equities Limited [1997] M.J. No. 628 (Manitoba Q.B.) at paras. 25-41 and Davidson, supra, at para. 204.

[22] John is distinguishable from the case at bar as in that case the corporation was the owner of the property whereas here, the Company has transferred the Property to a company in which the plaintiff has no shareholding, i.e. 2813000.

[23] The plaintiff relies on Goyal v Asghar.[^4] Like the case at bar, the plaintiff was a shareholder in a company which had held title to investment property in respect of which a CPL was sought. As in the present instance, title to the property was transferred to another company in which the plaintiff had no interest. The plaintiff alleged that the transfer of the property was fraudulent. Master Abrams (as her title then was) refused to discharge the CPL. She accepted that an interest in land was in issue. She wrote:[^5]

19 I agree with the plaintiff when he says that an interest in land is here in issue. The plaintiff Goseeks to rescind the agreement by which 242 transferred the Thorndale property to 262, set aside the transfer and obtain a declaration that 262 is holding title for 242. He says that the transfer of the Thorndale property was a fraudulent sale, intended to cause him to suffer damages and to deny him his interest in the property to which he claims to be solely entitled.

20 While 262 urges a narrow construction of s. 103 of the CJA, there is case law that suggests that a more liberal approach--the approach urged upon me by the plaintiff--is here appropriate. In Chilian v. Augdome, 1991 7335 (ON CA), 1991 CarswellOnt 422 (C.A.), at para. 55, the Court of Appeal held that it is sufficient that the claim asserted, if successful, would adversely affect the defendant's interest in the land, whether or not the claim was not made by the plaintiff in his personal capacity. The court in Municipality of Middlesex v. McRobert et al., 2017 CarswellOnt 11528 (S.C.J.), relying on Chilian, concluded that a plaintiff need not personally claim an interest in property for itself/himself to be entitled to a certificate of pending litigation. It is sufficient, as is the case here, that "the responding party's interest in the land would be adversely affected if the claim succeeded".

21 And though 262 suggests that Kafouf v. Kafouf et al., 2017 ONSC 5093, is authority better followed here--with the court in Kafouf indicating that Chilian is an anomaly to the prevailing jurisprudence that shareholders of a company do not have an "interest in property" so as to allow them to obtain a certificate of pending litigation in the case of a shareholders' oppression case--I do not agree. Counsel for the plaintiff points out, and I accept, that at issue in Kafouf, unlike here, was a claim to an interest in property owned by the very company in which the plaintiff held shares. That is not the case here. At issue here is an interest in property owned by 262, a company in which the plaintiff has no interest. And (as in Chilian and Municipality of Middlesex), 262's interest in the Thorndale property will be adversely affected if the plaintiff's claim succeeds.

[24] The defendants submit that Goyal is distinguishable. They seek to distinguish Goyal on the basis that in the present case, there is a “serious issue” as to whether the plaintiff was a shareholder of the Company when the Property was transferred, whereas in Goyal, there was no dispute that the plaintiff was a shareholder.

[25] In determining the threshold issue of whether there is a triable issue in respect of the plaintiff’s claim to an interest in land, I must critically assess the whole of the evidence without deciding disputed issues of fact or credibility.[^6] I cannot resolve on this motion the issue of whether or not the plaintiff was a shareholder of the Company at the time of transfer.

[26] The defendants submit that correct test for the threshold issue on this motion is the more stringent test where a fraudulent conveyance has been alleged, as set out in Grefford v Fielding, where the court held:[^7]

26 I have reviewed the relevant cases provided by counsel, and I find that in order to obtain a CPL in an action claiming to set aside an alleged fraudulent transfer pursuant to the Fraudulent Conveyances Act, (i) before obtaining judgment in the main action, and (ii) where the claim in the main action does not concern an interest in the land allegedly fraudulently transferred, the following legal tests should be met:

(i) The claimant must satisfy the court that there is high probability that they would successfully recover judgment in the main action; and

(ii) The claimant must introduce evidence demonstrating that the transfer was made with the intent to defeat or delay creditors; evidence that the transfer was for less than fair market value lightens the burden; and

(iii) The claimant must demonstrate that the balance of convenience favours issuing a CPL in the circumstances of the particular case.

[27] Grefford is distinguishable in that it applies where the plaintiff is not claiming an interest in the land “in the main action”. In the typical example, the plaintiff has brought an action for damages unrelated to the property. While that litigation is pending, the defendant transfers assets to put them out of the reach of creditors, including the plaintiff. The plaintiff then brings a fraudulent conveyance action seeking a certificate of pending litigation. Here, the plaintiff claims an interest in this particular Property. His claimed interest in the Property is not simply as an asset available to satisfy a potential judgment against the defendants.

[28] The defendants also submit that neither Master Abrams nor Justice Dow on appeal were referred to the test in Grefford.[^8] As result, they argue that Goyal should be restricted to its facts and the more stringent test in Grefford should be applied.

[29] In taking the position that Goyal should be restricted to its facts, the defendants are, by implication, suggesting that this court should also restrict the Court of Appeal’s decision in Chilian v Augdome Corp.[^9] to its facts.

[30] In Chilian, shareholders brought an action seeking to set aside the grant of options on mining claims held by the corporation. The shareholders alleged that the options were illegally transferred. One of the issues was whether a CPL obtained by the plaintiffs should be discharged because the shareholders had no direct interest in the land or in the options conveyed. The court held that a direct interest in land was not required. Morden A.C.J.O. writing for the Court of Appeal, held as follows:[^10]

There are difficult questions arising from both the applicable law and the nature of this particular proceeding. In resolving the particular question before us (whether or not the certificate should be discharged) I wish to avoid being taken to have decided issues which may arise later in the action on a much more complete factual basis than is before us.

I do not think that the entitlement to a certificate of pending litigation necessarily requires that the interest in land in question be claimed directly by the plaintiff for itself. This was the conclusion in Bank of Montreal v. Ewing, supra. What is required is that "an interest in land" be "in question" in the proceeding. Almost invariably, I would think, this would be in the form of a claim of some kind, which, if substantiated, would adversely affect the defendant's interest in the land. We have such a claim in this case -- that the respondent's option is of no force or effect.

It may appear that this view of the legislation is not consistent with the implications in s. 116(4) and (6) that the claim asserted must be one belonging directly to the party at whose instance the certificate was issued. I think, however, that, in the context of s. 116 as a whole, the better interpretation of these provisions is that they refer to the claim to the interest in land asserted in the proceeding -- which is the plaintiff's or applicant's claim in the sense that it has commenced and maintained the proceeding in which the claim is made.

I must say that the nature of the appellants' action is an unusual one and I have some reservations about the standing of the appellants to assert for the corporation the claim made in this proceeding. The respondent, however, has not attacked the action on this particular basis, so I do not take these reservations into account in considering whether the certificate should be discharged.

[31] In Snook v Royal Stone Interlocking Concrete,[^11] the party resisting the CPL made the same argument that the defendants are making here; namely, that the plaintiff shareholder had no standing to advance a claim in relation to the land owned by the corporation. In rejecting this argument, Justice Dunphy in Snook held:[^12]

41 The answer to this objection is two-fold. First, the claim to shares in the corporations who own the land is only one of the claims advanced by the plaintiff. Direct claims to trace profits of the partnership into the land in question are advanced in the statement of claim for which the remedy sought is a constructive or resulting trust.

42 Second, even the plaintiff's alternative claims to cause the lands in question to be transferred from the title holder to another corporate defendant (in which he also claims an equity interest) is sufficient to satisfy the requirements of s. 103(1). Morden J.A. in Chilian v. Augdome Corp., 1991 7335 (ON CA), 2 O.R. (3d) 696 (C.A.) at para 55 held:

I do not think that the entitlement to a certificate of pending litigation necessarily requires that the interest in land in question be claimed directly by the plaintiff for itself. This was the conclusion in Bank of Montreal v. Ewing, supra. What is required is that "an interest in land [be] in question" in the proceeding. Almost invariably, I would think, this would be in the form of a claim of some kind, which, if substantiated, would adversely affect the defendant's interest in the land. We have such a claim in this case -- that the respondent's option is of no force or effect.

43 The defendants sought to persuade me that the decision of the Court of Appeal was per incuriam or so suspect as to warrant being confined to its "particular facts". I shall leave such bravery to others situated at a different level of our courts than I. At all events, there is nothing in the logic of the decision that suggests to me the need for any such hostile reception of it.

[32] Given the foregoing, I conclude that the plaintiff has met the threshold test of an interest in land based on the authority of Chilian and Goyal.

[33] Given my conclusion, I need not consider whether the plaintiff meets the more stringent test in Grefford. If I had concluded that the Grefford test applied, it would not change the overall result on the motion. I would have concluded that the CPL ought to be discharged, given my findings on the equities (which are considered in the third part of the Grefford test) and as a result of the plaintiff’s failure to fully and fairly disclose the material facts as set out below.

Whether there was full and fair disclosure on the motion

[34] The plaintiff moved for leave to issue the CPL without notice. The defendants submit that the plaintiff failed to make full and fair disclosure of material facts on the motion and that this is a sufficient ground to set aside the CPL.

[35] Rule 39.01(6) provides:

Where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on the motion or application.

[36] The moving party on a motion without notice has an obligation to make disclosure of all material facts. This has been interpreted to mean “all facts that might reasonably affect the outcome of the motion.”[^13] The test for materiality is an objective one.[^14]

[37] The rationale for this rule has been canvassed in some detail by Justice Myers in Moses v Metro Hardware Maintenance, Inc.,[^15] a case involving a CPL obtained without notice. In that decision Justice Myers wrote:[^16]

28 The duties to make full and fair disclosure replace the checks and balances of the adversarial system. The court has no choice but to trust the moving party when he or she says they are fully disclosing and fairly presenting all material facts and the applicable law. It is the need to trust an otherwise zealously adversarial party that makes the situation so fraught with risk and renders justice so vulnerable to abuse.

[38] Even if I conclude that the CPL was obtained without full and fair disclosure, the CPL may still be maintained. The court has a continuing discretion to act in the interests of justice having regard to the totality of the evidence.[^17]

[39] In Moses, Justice Myers held:[^18]

76 … on a finding being made that a plaintiff has breached the duties of full disclosure and fair disclosure, the presumptive remedy should be to set aside the order. The plaintiff should have to bear a real burden to show why it is just and equitable for the court to exercise its discretion to maintain or reissue the order on all the facts. I agree with Sharpe J. that were it otherwise, the duties would be empty and the law would be powerless to protect the absent party.

[40] The defendants contend that the failure to disclose the Panesar litigation and settlement was a material fact that should have been disclosed to the court.

[41] The plaintiff tendered his affidavit sworn May 17, 2021 on the original motion. In that affidavit he references Mr. Panesar with whom he formed the Company for the purpose of completing the purchase of the Property. In his affidavit at paragraph 18 he says:

After discussions and negotiations, my partners agreed to transfer their interest in the Property to Ping Zhang and me and therefore, Ping Zhang and I became partners, each holding a 50% interest in the Property through 258.

[42] The plaintiff did not refer in his affidavit to the litigation commenced by Mr. Panesar. At paragraph 18 of his statement of claim, Mr. Panesar pleads:

The defendant, Dhaliwal, deceitfully removed plaintiff, Panesar, from the corporation 2581576 Ontario Inc. and succeeded in paying the pending payment of $600,000 for the closing with the help of a new partner, Ping Zhang, who also became the new director of the defendant, 2581576 Ontario Inc.

[43] The suggestion in the Panesar claim that the plaintiff acted deceitfully in removing Mr. Panesar from the corporation is at odds with the plaintiff’s evidence in his affidavit that the partners “agreed” to transfer their interest. I do not have to determine the veracity of Mr. Panesar’s version of events. The issue is whether Mr. Panesar’s claim and settlement ought to have been disclosed on the original motion.

[44] The plaintiff’s position is that he made full disclosure of the relationship with Mr. Panesar and the matters relating to the acquisition of the Property. He says that Mr. Panesar’s claim “years later”, which was settled before this action, is not material to the plaintiff’s claim to interest in the Company and the Property. I do not accept this position. The Panesar litigation and settlement was material and should have been disclosed to the court because it relates to the acquisition of the Property and the funding of the purchase price. These are material facts that might reasonably have influenced Master McAfee’s decision on the motion and may have caused her to require the plaintiff to give notice to the defendants.

[45] The defendants also contend that the plaintiff did not disclose the existence of the shareholders’ agreement and acknowledgements the plaintiff signed recording the amounts that Ms. Zhang paid towards the purchase of the Property and that this was material. However, the plaintiff denies signing these documents. The defendants also say that the plaintiff failed to include in his affidavit the position he knew the defendants would take with respect to the termination of his role in the Company. However, the evidence about what the plaintiff knew about the defendants’ position is not straightforward. My role on this motion is not to make credibility findings and therefore I cannot conclude that there was material non-disclosure of documents the plaintiff says he did not sign and was not aware of when he swore his affidavit. In any event, I have already concluded there is material non-disclosure in respect of the Panesar claim and settlement.

[46] In the original motion record for the certificate of pending litigation, the parcel register for the Property was attached as an exhibit to the plaintiff’s affidavit. The paragraph that introduced the exhibit says that after the breakdown in the relationship between the plaintiff and the defendants, a parcel search was done of the Property on May 5, 2021 which revealed that the Property had been transferred to 2813000. One of the many instruments shown on the parcel register is the CPL obtained by Mr. Panesar that was then deleted. The plaintiff’s affidavit did not refer to the CPL appearing on the parcel register attached as an exhibit. Neither party made reference to this fact in their submissions on the motion before me. Counsel for the plaintiff quite properly did not suggest that including the parcel register as an exhibit was sufficient to alert Master McAfee to Mr. Panesar’s claim. It is insufficient for a plaintiff to simply append a document as an exhibit without highlighting in the body of the affidavit any important clauses or portions of the exhibits.[^19] Therefore, even if plaintiff’s counsel on the motion before me had pointed out the reference to the Panesar CPL on an exhibit to the plaintiff’s affidavit on the original motion, it would not have changed my conclusion that the plaintiff did not make full and fair disclosure of the Panesar claim and settlement.

[47] In sum, I find that the plaintiff did not fully and fairly disclose all the materials facts on the motion for the issuance of the CPL.

Consideration of the Equities

[48] It is at this stage that I must consider what are commonly called the Dhunna factors.[^20] These factors are not intended to be exhaustive nor is any one determinative.[^21] Rather, the court must exercise its discretion in equity and look at all relevant matters between the parties.

[49] The plaintiff is not a shell corporation and this is a factor that weighs in favour of maintaining the CPL. In addition, the plaintiff has provided an undertaking as to damages.

[50] The plaintiff says that the Property was “of interest” to him as he is a licensed mechanic by trade and the Property has sufficient space and features to operate a repair shop for cars and large commercial vehicles. However, the Property was purchased as an investment by the Company, not as repair shop. Moreover, there is no evidence that the plaintiff ever used the facility as a repair shop. I cannot conclude that the Property is unique. This factor weighs against maintaining the CPL.

[51] The plaintiff has made an alternative claim for damages and damages are relatively easy to calculate. Damages are a satisfactory remedy for the plaintiff as his interest was in making a profit. These are factors which militate in favour of an order discharging the CPL.

[52] The defendants allege that the CPL is prejudicing the Company’s ability to re-finance the vender take-back mortgage which matured on October 25, 2021. However, the defendants refused to produce documentation related to the refinancing on the basis that the plaintiff is no longer a shareholder of the Company and the details of the re-financing are confidential. The defendants cannot ask the court to consider the alleged urgent prejudice arising respecting a re-financing and refuse to provide details.

[53] The plaintiff says that the harm he will suffer if the CPL is discharged outweighs any harm to the defendants. He says that he personally attended the Property from its acquisition to December 2020 to oversee and carry out repairs, renovations and maintenance for no monetary compensation. However, if appropriate, the court can put a value on these services and compensate the plaintiff in damages.

CONCLUSION

[54] Given the plaintiff’s breach of his obligation to fully and fairly disclose all material facts, the plaintiff bears a significant burden to demonstrate why the court ought nevertheless exercise its discretion in equity to maintain the CPL.[^22]

[55] Having considered and balanced the equities, including the fact that the moving party did not fully and fairly disclose all the materials facts on the motion without notice, I conclude that it is just and equitable to discharge the CPL.

DISPOSITION AND COSTS

[56] The defendants’ motion is granted and an order shall go vacating the CPL registered against the Property without security.

[57] The parties have already filed costs outlines. If the parties cannot agree on the costs of this motion, they may file written costs submissions not to exceed three pages (double-spaced). The defendants shall deliver their costs submissions by January 10, 2022, and the plaintiff shall deliver his two weeks thereafter.

Associate Justice L. La Horey

Date: December 14, 2021

[^1]: Harpal Singh Panesar v Kirpal Singh Dhaliwal also known as Devinder and 2581576 Ontario Inc., Court File No. 19-00004312. [^2]: 2010 ONSC 841(Master) at para 20 [^3]: 2011 ONSC 3861 at paras 22 - 24 [^4]: 2018 ONSC 6658 (Master), affirmed 2019 ONSC 1182. The plaintiff did not refer to the Goyal decision in his factum but referred to it during the course of oral argument. In reply submissions, arising out of the plaintiff’s reliance on Goyal, the defendants referred to cases not in their factum. Given the circumstances, I permitted the parties to file additional written submissions subsequent to the hearing of the motion. The further written submissions were delivered by November 15, 2021. [^5]: Goyal v Asghar, 2018 ONSC 6658 at paras 19 - 21 [^6]: RJM Holdings Inc. v Treemart Farms Inc., 2021 ONSC 422 (Master) at para 13 [^7]: 2004 8709 (ON SC), [2004] OJ No 1210 at para 26 [^8]: This submission is made in the defendants’ additional written submissions. The factums before Master Abrams and Justice Dow on appeal are available on Quicklaw (2018 LNONFA 1267, 2018 LNONFA 1268, 2019 LNONFA 370, 2019 LNONFA 371). They do not refer to Grefford. [^9]: Chilian v Augdome Corp., 1991 7335 (ON CA), 1991 CarswellOnt 422, 2 OR (3d) 696 [^10]: Chilian, at paras 54 – 57, 60 [^11]: 2021 ONSC 3476 [^12]: Ibid at para 41 - 43 [^13]: Fox v Fox, 2014 ONSC 1135 (Div Ct) at para 12 [^14]: Moses v Metro Hardware Maintenance Inc., 2020 ONSC 6684 at para 30, motion for leave to appeal refused, 2021 ONSC 877; Heinen v Alala, 2021 ONSC 5871 at para 43 [^15]: 2020 ONSC 6684 [^16]: Moses, at para 28 [^17]: Moses at para 72 [^18]: Moses at para 76 referring to the decision of Justice Sharpe in United States v Friedland, [1996] O.J. No. 4399 (Gen Div). [^19]: Zhao v 8657181 Canada Inc., 2020 ONSC 2864, para 24(f) [^20]: These are described in the quotation from Perruzza in paragraph 18(iv) above. [^21]: Snook at para 38 [^22]: Moses at para 76, Cangate Homes Inc. v 1728222 Ontario Inc., 2021 ONSC 2113 at para 127