Court File and Parties

COURT FILE NO.: CV-11-424029; CV-17-584050

DATE: 2021-12-31

ONTARIO SUPERIOR COURT OF JUSTICE

RE: Ann Buik, Sandra Buik and Catherine Buik, Trustees of the Estate of William Buik, Deceased, Plaintiffs/Respondents on Appeal

AND:

Canasia Power Corp., Defendant/Appellants

AND RE: Ann Buik, Sandra Buik and Catherine Buik, Trustees of the Estate of William Buik, Deceased, Plaintiffs/Respondents on Appeal

AND:

Canasia Power Corp., Tarun Channa, Ashok Dhillon, Canasia Power Services PVT Ltd., Canasia Solar Corp., Tawfif Ahmad Al-Kusayer, B. Lamba, R. Brearly, B. Dhardwar, J. Verlezza, E. Sugar, W. Pearson, D. Phillips, S. Rana, R. Notay, D. Gill, H. Rana, H. Chagger, G. Soomal, S. Chopra, V. Merapala, J. Bangaru, S. Mawji, M. Badalian, B. Banerjee, K. Mahal, G. Burgess and G. Matthew, Defendants/Appellants

BEFORE: Justice Mohan D. Sharma

COUNSEL: P. Askew, for the Appellants

I. McKellar, for the Respondents

HEARD: October 21, 2021

ENDORSEMENT

[1] This is an appeal of three motions in two related actions determined by Associate Judge Abrams on May 14, 2021 (Buik v Canasia Power Corp., 2021 ONSC 3403).

I. Background

[2] On May 16, 2014, judgment in the first action (CV-11-424029) was obtained following a trial in which the defendant, Canasia Power Corp. (“Canasia”), was ordered to pay more than $2.3 million to the trustees of the Estate of William Buik. An appeal of that decision was dismissed by the Ontario Court of Appeal.

[3] The plaintiffs / respondents on this appeal, are the trustees of the Estate of William Buik, a creditor of Canasia.

[4] Canasia ceased to operate in India in 2011 and in Canada around February of 2012. It was subsequently involuntarily dissolved.

[5] The plaintiffs’ efforts to collect on this judgment were undertaken by a lawyer, Mr. Michael Katzman. He conducted examinations in aid of execution on a director of Canasia, Mr. Ashok Dhillon, in October of 2015, and then of another director, Ms. Tarun Channa, in August of 2017.

[6] There was a dispute about the sufficiency of the answers provided at Ms. Channa’s judgment-debtor examination. This resulted in the first of the three motions that were heard together by Associate Justice Abrams.

[7] From these examinations, Mr Katzman had reason to suspect that Canasia, its officers and directors, related entities and various individuals received improper payments or transfers intended to defeat the plaintiff’s loan collection efforts, contrary to the Fraudulent Conveyances Act and/or the Assignments and Preferences Act.

[8] Because a court might conclude the causes of action related to a fraudulent conveyance were discovered on October 9, 2015 when Mr. Dhillon was examined, Mr. Katzman issued a Notice of Action in the second action (CV-17-584050) on October 6, 2017. A Statement of Claim was issued on November 3, 2017 by the same plaintiffs as in the first action.

[9] The defendants in the second action are Canasia, its principals, related entities, and individuals identified by their first initial and last name. The names of the individuals had been listed in documents provided by Mr. Dhillon at or following his judgment-debtor examination. However, the respondents say Mr. Katzman was unable to serve the claim on most of the defendants without getting answers to undertakings that would have provided the full names and contact information of these defendants.

[10] Around this time, Mr. Katzman had health issues. He did not pursue this matter on behalf of the plaintiffs for most of 2018. In early 2019, he brought a motion to extend the time for service of the second action (“Extension Motion”) and to compel answers to undertakings and refusals in the first action (“Undertakings Motion”). Ms. Channa and Mr. Dhillon argued the plaintiffs’ motions should be dismissed. They brought their own motion to have the statement of claim in the second action struck for lack of particularity, or that it be dismissed for delay (“Motion to Dismiss”).

[11] Associate Judge Abrams granted the plaintiffs’ Extension Motion and Undertakings Motion. She dismissed the defendants’ Motion to Dismiss, without prejudice to it being renewed in the future.

[12] The appellants, Ms. Channa and Mr. Dhillon, appeal the Associate Judge’s decision. They argue:

(a) In dismissing the Motion to Dismiss, the Associate Judge erred in law:

(i) By not applying the correct legal test to dismiss an action for delay under rule 24.01, and

(ii) In the application of the legal principles for a motion to strike a pleading under rule 25.06.

(b) With respect to the Undertakings Motion, the Associate Judge erred in law and made palpable and overriding errors of fact in finding the appellants’ answers to undertakings were insufficient and requiring them to provide authorizations/directions to the respondents.

II. Standard of Review

[13] The standard of review on an appeal of a decision of an Associate Judge (previously Master) is set out comprehensively by Justice Perell in Bee Vectoring Technology Inc. v. Chitiz Pathak LLP, 2019 ONSC 1714 (footnotes omitted):

[23] A Master's decision will be interfered with on appeal, if the Master made an error of law or exercised his or her discretion on the wrong principles or misapprehended the evidence such that there is a palpable and overriding error; where the Master has erred in law, the proper standard of review is correctness.

[24] Zeitoun v. Economical Insurance Group establishes that the standard of appellate review from a master’s order is in accordance with the standards of appellate review set out by the Supreme Court of Canada in Housen v. Nikolaisen, which established that there are different standards of appellate review for issues of law, issues of fact, and issues of mixed fact and law.

[25] Issues of law are about what is the correct legal test. The standard of appellate review for errors of law is correctness. The application of an incorrect legal standard, a failure to consider a required element of a legal test, or an error in principle is an error in law. It is an error in law for a judge or tribunal member to fail to provide an explanation of his or her decision that is sufficiently intelligible to permit appellate review.

[26] Issues of fact are about what events took place between the parties. The standard of review for findings of fact is that factual findings ought not to be reversed unless it is established that the trial judge made a palpable and overriding error. The palpable and overriding error test is met if the findings are clearly wrong or can properly be characterized as unreasonable and unsupported by the evidence. A "palpable" error is one that is obvious, plain to see or clear. An "overriding" error is an error that goes to the root of the finding of fact such that the fact cannot safely stand in the face of that error.

[27] Questions of mixed fact and law are questions about whether the facts satisfy the legal tests. Where the legal principle is not readily extricable, then the matter is one of mixed law and fact. If fact-finding is integral to the ultimate determination of the question, the question is an issue of mixed fact and law. The standard of review for findings of mixed fact and law is on a spectrum between correctness and palpable and overriding error.

III. Analysis

Issue 1: Did the Associate Judge err in law by failing to apply the test to dismiss an action for delay under Rule 24.01?

[14] An order dismissing an action for delay will be justified where the delay is inordinate, inexcusable, and prejudicial to the defendants in that it gives rise to a substantial risk that a fair trial of the issues will not be possible: Ticchiarelli v. Ticchiarelli, 2017 ONCA 1 at para 12.

[15] The Associate Judge did not expressly reference rule 24.01 in her reasons, nor did she cite caselaw articulating the test for dismissal for delay.

[16] However, it is evident to me that she did consider the factors set out in Ticchiarelli. Namely, the period of delay (para 15), any reasons for the delay (para 13), and prejudice to the defendants (paras 14 – 20) in the context of a motion to extend the time for service.

[17] Unsurprisingly, factors relevant on a motion to dismiss for delay are like those on a motion to extend the time for service. In both motions, the court must concern itself with whether, notwithstanding the delay, the proceeding can proceed to a fair and just determination at trial. As with a motion to dismiss for delay, a key factor on a motion to extend time for service is whether the defendant would suffer prejudice: Chiarelli v. Wiens, 2000 CanLII 3904 (ON CA) at para 11. The Associate Judge turned her mind to “whether the proceeding can be advanced to a just determination on the merits, without prejudice to the defendants” (paras 11, 16), and she spent a considerable portion of her reasons addressing prejudice.

[18] Therefore, I am not persuaded that the Associate Judge erred in law in failing to apply the correct test to dismiss an action for delay.

[19] The appellants further argue that the Associate Judge disregarded important evidence of actual prejudice because she limited her assessment to the period from when the claim was issued to the motion for delay, which constitutes an error of law. For example, the fact that four of the five key witnesses died before 2017 was not given any weight. The Associate Judge reasoned that this prejudice existed before the commencement of the action (para 19). The appellants cite Ticchiarelli, where a witness died prior to the commencement of an action, and a second witness died after the motion judge’s decision dismissing the action for delay.

[20] However, Ticchiarelli can be distinguished. In that case, the motion to dismiss was brought 11 years after the action was commenced and where there were limited steps taken to move the case forward. The delay in this case is much shorter. In Ticchiarelli, the motions judge and Court of Appeal found that the plaintiff’s delay was inexcusable. In this case, the Associate Judge accepted the reason for delay as inadvertence by the respondents’ counsel, “an unfortunate confluence of health and practice issues” that the respondents’ counsel suffered, and notably “Ms. Channa’s failure to fulfill her undertakings in a timely fashion” (para 13).

[21] I am not persuaded that the Associate Judge erred in law in disregarding the appellant’s evidence of actual prejudice. She turned her mind to the four of five witnesses of the appellants who died. She weighed this fact and concluded it had little or no relevance because they died before the action was commenced. I was not provided with caselaw which supports the conclusion that this fact alone presents a prima facie case of dismissal. As noted in MDM Plastics Ltd. v. Vincor International Inc., 2015 ONCA 28 at para 32, when evaluating prejudice, the Associate Judge or Judge “must consider all of the circumstances, including the defendant’s conduct in the litigation.”

[22] The Associate Judge considered other evidence of the appellants with respect to prejudice, as well as the conduct of the appellants. She noted that one witness died after the statement of claim was issued, and that his connection to this action is not known and difficult to surmise (para 19). She also considered Ms. Channa’s evidence about difficulty in contacting other named defendants, which she found wanting (para 20). Overall, the Associate Judge found the appellants’ evidence with respect to prejudice “generalized, weak and speculative” (para 16). She also found that the appellants do not “allege with any degree of specificity prejudice in their ability to defend the proceeding” which would “permit the plaintiffs to test those concerns and for the court to have a good look at the merits of those concerns” (para 17).

[23] For these reasons, I am not satisfied that the Associate Judge erred by disregarding the appellant’s evidence of actual prejudice.

[24] A motion to dismiss for delay is a discretionary order, and is entitled to deference: Ticchiarelli, at para 14. I can find no error in law, and I am not persuaded that she made a palpable and overriding error in her assessment or application of the facts to the law.

Issue 2: Did the Associate Judge err in law in the application of the legal principles for a motion to strike a pleading under rule 25.06?

[25] The appellants argue the Associate Judge erred in law by failing to assess the sufficiency of the respondents’ pleading according to the applicable legal principles.

[26] They rely on well-settled principles of law that (a) pleadings should not include baldly pleaded conclusions without supporting material facts (Balanyk v. University of Toronto, 1999 CanLII 14918 (ON SC), [1999] O.J. No. 2162 (SCJ) at paras 28-29); (b) that with respect to allegations of fraud, misrepresentation, breach of trust, or where malice or intent is alleged, there is a heightened pleading standard: full particulars of the alleged wrongful conduct must be plead including the when, what, by whom and to whom (rule 25.06(8); Cerqueira v Ontario, 2010, ONSC 3954 at para 11; Balanyk at para 28); and (c) a claimant is not entitled to rely on the possibility that new facts may be discovered as the case progresses; a claimant may not be in a position to prove the facts pleaded but they must plead them (R v. Imperial Tobacco Canada Ltd., 2011 SCC 42 at para 22).

[27] The appellants argue that the Associate Judge, rather than hold the respondents to this heightened standard and strike the claim, ordered that the appellants should first provide further answers to undertakings and deliver a demand for particulars.

[28] After review of the Statement of Claim and the Associate Judge’s reasons, and with regard to the circumstances of this case, I am not persuaded that the Associate Judge erred in law.

[29] First, the Associate Judge concluded that the respondents’ pleas “are not so devoid of particularity to merit striking them, without more” and that the pleadings “define[d] the controversy among the parties and gives notice of the case that needs to be met.” I would agree with this conclusion.

[30] Second, the context in which the motions were brought was relevant to an assessment of the sufficiency of the pleadings, which the Associate Judge discussed at paras 3 to 6. This included the respondent’s view, following the examinations in aid of execution, that some of Canasia’s transfers were intended to defeat the respondents’ collection efforts resulting in the second action being commenced. The Associate Judge identified areas where she found the appellants responses to undertakings inadequate or misleading. At para 21, she specifically addressed the lack of particularity of the pleadings, which she attributed to be “owing to the nature of the claims and the fact that the plaintiffs continue to await answers to undertakings to permit them to expand upon their allegations” [emphasis added].

[31] It is not uncommon, when enforcing judgment, that a judgment creditor may form the view that the judgment debtor has taken steps to thwart enforcement. The judgment creditor will have information from examinations in aid of execution that will inform what further steps it may wish to take, including commencing a new action. Pleadings alleging fraud must be particularized, but in these circumstances, the appellants cannot justly argue the pleadings are insufficient when their lack of answers from examinations in aid of execution are the cause of that insufficiency. As stated by the respondents in their factum, “[i]t does not lie with Ms. Channa and Mr. Dhillon to complain about particularization of the claim when further relevant particulars are within the knowledge of Ms. Channa and Mr. Dhillon, and where the documentation that would facilitate further particularization by the plaintiffs is within the power, possession or control of Ms. Channa and Mr. Dhillon and has been improperly withheld.” I agree.

[32] To hold otherwise would provide an unjust opportunity and incentive for judgment debtors to transfer assets following judgment, provide incomplete answers at examinations in aid of execution, and then challenge the sufficiency of pleadings alleging fraudulent conveyances. This is the concern that I read from the Associate Judge’s decision.

[33] I see no error in law in her reasons. She turned her mind to the sufficiency of the particulars in the pleadings. Nor can I conclude that she made a palpable and overriding error in her consideration of the facts to the appropriate legal principles.

[34] In any event, the Associate Judge expressly reserved the right of the appellants to renew their pleadings motion in the future (para 21) if the pleadings remain insufficient after the appellants provide proper answers to the undertakings and refusals.

[35] Finally, if the Associate Judge or I are wrong in our analysis, it is well established that leave to amend should only be denied in the clearest of cases (Tran v. University of Western Ontario, 2015 ONCA 295 at para 26, citing South Holly Holdings Ltd. v. The Toronto-Dominion Bank, 2007 ONCA 456 at para 6). Had the Associate Judge struck the pleadings, or had I granted this appeal, it would seem more likely than not that leave to amend would have been granted, with an Amended Statement of Claim following production of complete answers from the examination in aid of execution. Therefore, the result would, more likely than not, have been the same.

Issue 3: Did the Associate Judge err in law and make palpable and overriding errors of fact in finding Canasia’s answers to undertakings were insufficient and requiring them to provide unqualified authorizations/directions?

[36] I address a procedural objection raised by the respondents with respect to this issue.

[37] The Notice of Appeal indicates it is in relation to the second action commenced in 2017 and which bears the court file number of the second action. The Undertakings Motion was in relation to the first action, and the Associate Judge’s Order with respect to the Undertakings Motion bears the court file number from the first action. The prayer for relief in the Notice of Appeal only asks that the Order in relation to the appellants’ Motion to Dismiss be set aside and that the second action be dismissed without leave to amend.

[38] The respondents rely on rule 61.04(3) of the Rules of Civil Procedure which provides that the “notice of appeal shall state …the relief sought” and rule 61.08(3) which provides that “no relief other than that sought in the notice of appeal” may be sought except with leave of the Court. They also rely on Markowski v. Verhey, 2020 ONCA 472 at para 20-25, and Vallières v. Samson, 2009 CanLII 92132 (ON SCDC), 97 OR (3d) 761 at para 20 where these rules were applied.

[39] In fairness, I note the grounds of appeal in the Notice of Appeal challenge the Associate Judge’s conclusions with respect to the Undertakings Motion (paras 23, 24(h), 24(i) and 25). Therefore, there was notice to the respondents that this issue would be argued on the appeal. For this reason, I would have granted leave to Canasia to have its appeal of the Undertakings Motion determined. However, I decline to do so for the following reason.

[40] Canasia would be the only appellant with respect to an appeal of the Undertakings Motion. That motion arose in the first action and Canasia is the only defendant in the first action. Canasia, a corporation, was not represented on this appeal. The appellants’ counsel confirmed in his reply arguments that he did not represent Canasia – he only represented Ms. Channa and Mr. Dhillon. The Notice of Appeal states that only Ms. Channa and Mr. Dhillon were bringing this appeal. The appellants’ Factum also makes clear that the only appellants are Ms. Channa and Mr. Dhillon.

[41] Therefore, Canasia is not an appellant. Without Canasia as an appellant, it cannot ask for the remedy that Ms. Channa and Mr. Dhillon seek. Without anyone representing Canasia, no leave could be sought on its behalf to appeal the Undertakings Motion, and in any event, no leave was requested on behalf of Canasia.

[42] Appellant’s counsel argued that the appeal with respect to the Undertakings Motion is intertwined with the appeal with respect to the Motion to Dismiss.

[43] Even if this were so, for this Court to make rulings about Canasia, without Canasia being represented, and without Canasia being an appellant, would result in a procedural abnormality inconsistent with rule 61 and rule 15.01 which requires that a corporation be represented by a lawyer, unless leave is granted. I note that Canasia is involuntarily dissolved, which may present challenges for it to be represented. But this does not cure the procedural fault of Canasia not being an appellant on this appeal. For these reasons, this aspect of the appeal is not properly before the Court. I decline to consider it.

IV. Conclusion

[44] For the reasons given, I dismiss this appeal.

V. Costs

[45] The parties have uploaded Costs Outlines to CaseLines. The plaintiffs/respondents seek $4,754.47 in partial indemnity costs reflecting $7,924.12 in actual costs.

[46] The appeal record constituted 1500 pages. As I found, one of the issues on the appeal was not properly before the court.

[47] Having considered the factors in rule 57.01(1), the overall objective of fixing costs that are fair and reasonable for an unsuccessful party to pay, and the fact that one of the issues on the appeal was not properly before the court but still required a response from the respondents, I order the appellants, Ms. Channa and Mr. Dhillon, to pay the respondents’ costs of this appeal fixed at $5,000 inclusive of HST and disbursements.

Justice Mohan D. Sharma

Date: December 31, 2021