Court File and Parties
COURT FILE NO.: CV-21-791-00 DATE: 2022 04 29 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: MEHTAB MANN, AJAY SHARMA, GURJIT SINGH, JAGRAJ SINGH SOOR, SARBJIT NIJJAR, KAMAL PRIT MAKH, MUHAMMED NUJOOM, SAKINDER JAWANDA, SATVIR SAHDEV, TSITSI CHIZINGA, SARBJIT BASATIA, BIKRAM SINGH SAINI, Plaintiffs
AND:
HARTAJ SINGH, MAJOR SINGH NAGRA, MANPREET KAUR GANDA, MANJIT KAUR GREWAL, ONTARIO HOME CARE SERVICES INC., GOLDEN GROWTH INVESTMENT INC., MCQUERY INNOVATIONS INC., JOHN DOE CORPORATION 1, JOHN DOE CORPORATION 2, JOHN DOE CORPORATION 3, JOHN DOE CORPORATION 4, JOHN DOE CORPORATION 5, Defendants
BEFORE: Justice Irving André
COUNSEL: J. MacDonald and R. Anmol, counsel for the Plaintiffs H. Shankman, counsel for the Defendants, Hartaj Singh and Manpreet Kaur Ganda M. Tahir, counsel for the Defendants, Major Singh Nagra, Manjit Kaur Grewal and McQuery Innovations Inc.
HEARD: April 6, 2022, via video conference
Endorsement
[1] The Plaintiffs bring a motion to extend an interim injunction ordered on May 4, 2021, and continued on June 25, 2021. They maintain that they have presented a strong prima facie case that they were defrauded of $880,000 by the Defendants Hartaj Singh and Major Singh Nagra, who used the money the Plaintiffs invested in the Defendants two companies for their personal use and benefit.
[2] The Defendants’ counsels submit that there is no evidence that the Plaintiffs have been defrauded and that, even if they had adduced such evidence, they patently failed to present any evidence that there is any risk that the Defendants would dissipate their assets or had any intention of doing so.
Background Facts
[3] The Defendants Hartaj Singh (“Hartaj”) and Major Singh Nagra (“Nagra”) are business partners. Hartaj is a home renovation contractor. Nagra is a real estate broker, a TV and radio personality, and an entrepreneur.
[4] The Defendants Manpreet Kaur Ganda (“Manpreet”) and Manjit Kaur Grewal (“Manjit”) are the spouses of Hartaj and Nagra. Manpreet is the spouse or partner of the Defendant Hartaj. Manjit is the spouse or partner of the Defendant Nagra.
[5] The Defendants Ontario Home Care Services Inc. (“OHCS”) and Golden Growth Investments Inc. (“Golden Growth”) are corporations incorporated pursuant to the laws of the province of Ontario. The Defendant Nagra is the director of OHCS. The Defendant Manpreet was a director of OHCS. The Defendant Hartaj is the director of Golden Growth.
[6] Ontario Home Care Services Inc. (“OHCS”) was incorporated in the province of Ontario on April 27, 2015. Initially, it operated from an office located at 781 Bovaird Drive West, Unit C-4, in Brampton. In 2017, Hartaj and Nagra began advertising, promoting, and soliciting for investments in OHCS. In 2018, OHCS was relocated to 12 Hansen Rd. S. in Brampton.
[7] Hartaj and Nagra initially marketed OHCS as a subscription-based membership service. Under this business model, OHCS purported to connect homeowners with tradespeople. Tradespeople and businesses would affiliate themselves with OHCS to gain access to clients. Homeowners would pay $30-$40 per month to OHCS to have access to a host of tradespeople and businesses affiliated with OHCS. These affiliated tradespeople and businesses performed contract work for OHCS on residential and commercial properties at a discounted rate to the homeowner. The tradespeople and businesses would remit a percentage of their contract price back to OHCS for the referral.
[8] Sometime in 2017 or 2018, Hartaj and Nagra purported to expand their business model. Under the alleged new business model. OHCS would renovate, and sell homes in Ontario at a profit (the “Investment Scheme”). Hartaj and Nagra began soliciting and investments in OHCS. They promised, for monthly or periodic returns, partnership, shares in the company. In 2017, Hartaj and Nagra’s spouses, Manpreet and Manjit, also began promoting OHCS and actively recruiting investors for OHCS.
[9] Between 2017 – 2019, Hartaj, Nagra, Manpreet, and Manjit promoted and advertised the OHCS investment scheme to friends, family members, business acquaintances, and the general public. Hartaj, Nagra, Manpreet, and Manjit made claims, promises, and representations about OHCS at private events held at OHCS offices, public seminars, and the Plaintiffs’ residences and places of business. Hartaj and Nagra promoted and advertised investment opportunities with OHCS through TV segments and charity events, such as an annual car rally held by the Guru Nanak Community Services Foundation of Canada. In June 2019, Hartaj and Nagra also held an investment seminar at the Marriott Hotel at 90 Biscayne Crescent in Brampton.
[10] Nagra hosted a popular TV program called “Hello Canada”, a production of the Hamdard Media Group. In 2017 and 2018, Hello Canada had a segment hosted jointly by Nagra and Hartaj. This was a promotional segment, simultaneously providing advice on investing in real estate in Canada while promoting their purported services. The TV program served as a platform for the promotion of the Investment Scheme with OHCS.
[11] By virtue of his popular TV program, charitable work, and other community involvement Nagra held himself out to be a “trustworthy and popular” public figure in the community.
[12] Hartaj and Nagra used Nagra’s trustworthiness and popularity, TV programs, and other events to make claims and promises, for the Investment Scheme. For example, during the investment seminars and at meetings in their office at 12 Hansen Rd., Hartaj and Nagra represented themselves as experts in the real estate field and presented images of projects and data, including stats and figures about their corporations and about the real estate landscape in Ontario. At investment seminars, Hartaj and Nagra presented diagrams of the Investment Scheme. The data, figures, and diagrams were used to illustrate the success of the business plan.
[13] Hartaj and Nagra also promised a “guaranteed investment” to prospective investors. The Plaintiffs’ advances were allegedly to be guaranteed by way of a promise that if the purpose for which the monies were advanced (i.e., the Investment Scheme) was not accomplished, or if the individual who advanced the funds requested the funds back in full for any reason, OHCS would return the funds. The Plaintiffs believed on account of this guarantee, that their advances were secure and that should the Investment Scheme not be profitable, OHCS would return the advances in full.
[14] These promissory notes, receipts, and documents promising a “guaranteed investment” were signed by Nagra. When asked about the documents, Nagra claimed that he signed the documents “on [the] instructions from Hartaj Singh” as part of his administrative work.
[15] Between 2017 and early 2019, the Plaintiffs Tsitsi Chizinga, Satvir Sahdev, Sarbjit Kaur Nijjar, Sakinder Jawanda, Muhammed Nujoom Ashraf, Bikram Singh, Jagraj Singh Soor, and Mehtab Mann advanced funds to OHCS for the purposes of the Investment Scheme. These amounted to approximately $880,000.
[16] OHCS’s membership subscription service was a failure. In late 2017, Hartaj and Nagra represented that OHCS had bought, renovated, and sold a property near Sheridan College under the OHCS Investment Scheme with the funds advanced by the Plaintiffs. However, no real estate was ever purchased with the funds. In February 2018, Hartaj and Nagra represented to the Plaintiffs that they re-invested the proceeds of the sale from the Sheridan College property and bought another property in Ancaster, Ontario, under the OHCS Investment Scheme. In 2019, Hartaj and Nagra told the Plaintiffs that they had ongoing projects in various locations across Ontario, such as Wasaga Ontario. Similarly, in 2019 and 2020, Hartaj and Nagra claimed that they had invested funds advanced to OHCS, in properties in the United States, mainly in New York. None of this was true and no real estate was ever purchased by OHCS.
[17] Between 2018 – 2019, some of the Plaintiffs asked Hartaj and Nagra for the return of the funds they advanced to OHCS. Hartaj and Nagra offered excuses, telling the Plaintiffs that the profits from OHCS’s Investment Scheme were being reinvested in the real estate market.
[18] By the fall of 2019, creditors began attending at OHCS’s corporate office at 12 Hansen Rd. S. To avoid creditors, and in a further effort to avoid refunding individual Plaintiffs’ their advances, Hartaj and Nagra began telling the Plaintiffs in the fall of 2019 that OHCS was “dissolved.”
[19] Between 2019 – 2020, the Plaintiffs Mehtab Mann, Gurjit Singh, Kamal Prit Makh, and Ajay Sharma were induced into advancing funds to Golden Growth for the purposes of the Investment Scheme.
[20] Of the Plaintiffs who advanced funds to Golden Growth between 2019 to 2020, a number of them had been offered “full-time” jobs or contract-based projects by Hartaj and Nagra in affiliation with Golden Growth and the Investment Scheme at the corporate office, located on 12 Hansen Rd. S. These Plaintiffs were told by Hartaj and Nagra that they would be compensated in exchange for their labour, services, and time. These individuals were not compensated by Hartaj, Nagra, or Golden Growth.
[21] Throughout 2017 – 2020, Manpreet and Manjit actively helped recruit, promote, solicit, and advertise the Investment Scheme, under both OHCS and Golden Growth. Manpreet and Manjit actively attended at the personal and business residences of the Plaintiffs and facilitated the deception by inviting the Plaintiffs to their homes for the purposes of the Investment Scheme.
[22] The combined efforts of Hartaj, Nagra, Manpreet, and Manjit led to the Plaintiffs being defrauded of their monies, labour, time, and services in connection with the Investment Scheme.
[23] Hartaj, Nagra, Manpreet, and Manjit induced the Plaintiffs to advance funds for the purposes of the Investment Scheme. The Plaintiffs claim that the Defendants were misappropriating the funds to their personal accounts, to their other business ventures both in Ontario and abroad, to their charity endeavours, and to their other corporate entities. Hartaj and Nagra would routinely transfer funds advanced under the Investment Scheme from corporate accounts to their personal accounts, other business accounts, and to their other corporate entities. Hartaj, Nagra, Manpreet, and Manjit allegedly misappropriated the funds advanced under the Investment Scheme to fund their own lifestyle, including to renovate their residential properties, for leisure travel, and to sponsor relatives.
[24] Hartaj’s transferred large sums of money from the corporate bank accounts into his joint account with Manpreet. Under cross-examination, Hartaj denied fraudulently transferring money to his joint account held with Manpreet. He maintains that the money transfers were payment for his renovation services, all of which he has records for. When asked to provide records of renovation jobs he carried out during the material time, by way of an undertaking, Hartaj asked the Plaintiffs to pay him $4,000 to copy the records to provide them.
[25] Plaintiffs Mehtab Mann, Sakinder Jawanda, and Defendant Major Singh Nagra deposed in their affidavits dated April 1, 2021, April 6, 2021, and June 10, 2021, respectively, that Hartaj Singh operates businesses in Kerala, Morinda, and Chandigarh, India, and, according to the affidavit of Major Singh Nagra, Hartaj Singh has investments in “a home building and investment business named Darpan Enclave in Morinda, Punjab.”
Position of the Parties
The Plaintiffs
[26] The Plaintiffs submit, through their counsel, that the monies solicited by the Defendants as investments in their companies were fraudulently diverted by the Defendants for their own use. They contend, based on voluminous bank records, that almost immediately after funds advanced by the Plaintiffs were deposited into the Defendants’ corporate accounts, the Defendants transferred the amounts into their own accounts which they spent on groceries, alcohol, payment of utilities, and clothing among other expenses. The records also show that the Defendants made numerous cash withdrawals from the companies’ accounts. Furthermore, contrary to their sales pitch to the Plaintiffs, the Defendants never purchased any real estate. Rather, Hartaj Singh testified during cross-examinations that Major Nagra Singh renovated his home in an amount between $65,000 and $80,000, which were from money invested by the Plaintiffs.
[27] The Plaintiffs submit that they have presented a strong prima facie case of fraud perpetrated by the Defendants. They also submit that all the circumstances, including those related to the fraud, demonstrate a serious risk that the Defendants will attempt to dissipate assets or place them beyond the reach of the court. Notably, in 2012, Major Singh Nagra transferred his interest in a house to his wife while in November 2020, Hartaj Singh and his wife sold a home which they owned in Brampton, Ontario.
Position of Hartaj Singh and Manpreet Kaur Ganda
[28] Mr. Shankman submits, on behalf of his clients, that there is no evidence of fraudulent behaviour. Mr. Singh performed renovation services on behalf of OHCS and Golden Growth. He withdrew money from the companies for renovation services he performed on their behalf. His client is in possession of invoices that confirm the work he performed. Mr. Hartaj Singh does not have $4,000 to pay to copy these invoices and has invited the Plaintiff to attend at his counsel’s office to review them. All the amounts of money transferred from OHCS and Golden Growth to his clients’ personal accounts were for legitimate work done on behalf of the companies.
[29] Mr. Shankman also points to a bank draft in the amount of $10,000 dated July 16, 2020, as nothing more than payment for work done by a third party. The Plaintiffs regard this bank draft as evidence of misappropriation.
[30] He submits further that there is no evidence that: a) his clients have businesses in foreign jurisdictions; b) that they enjoy a lavish lifestyle; c) that they intend to sell their matrimonial home.
[31] Furthermore, he also submits that Manpreet Ganda has no involvement in either company and, in fact, was removed as a director of OHCS in January 2017.
[32] Mr. Shankman submits that the applicable caselaw requires: a) overwhelming evidence of fraud and b) strong evidence of the risk of dissipation of assets or of an intention to do so before an injunction will be imposed. These preconditions, he submits, are patently absent in this case and, accordingly, the Plaintiffs’ motion should be denied.
Position of Major Singh Nagra and Manjit Kaur Grewal
[33] Mr. Tahir, on behalf of Nagra and Grewal, submits that there is no evidence that Manjit Kaur Grewal had any dealings with the transfer of funds from OHCS and Golden Growth to her personal accounts. Furthermore, Mr. Tahir takes the position that the bank records relied on by the Plaintiffs as proof of fraud indicate that in three years, Major Singh Nagra received a mere pittance of $15,000 from the money invested in the two companies and that there is no evidence that he induced anyone to invest in the companies. The money Major Nagra received from the company, Mr. Tahir contends, is payment for the “rightful referrals he made”.
[34] Mr. Tahir also submits that the Plaintiffs did not disclose relevant information in their ex parte application about their relationship with Hartaj Singh. They did not disclose the fact that virtually all of them were close friends or relatives of Hartaj Singh and that some had withdrawn up to $3,500 monthly from OHCS and Golden Growth.
[35] Mr. Tahir also submits that Major Singh Nagra, according to a report of an accountant which was submitted as part of the motion record, owned 10% of OHCS which was “unbeknownst to him”. This Defendant, Mr. Tahir asserts, made no investment in OHCS and was merely a “referral partner”.
Analysis
[36] This motion raises the following issues: a) What is the legal test for the granting of an injunction in a case based on alleged fraudulent activity? b) Should the Certificate of Pending Litigation be extended in this case?
What is the Legal Test for the Granting of an Injunction in Cases of Alleged Fraudulent Activity?
The Law
[37] In HZC Capital Inc. v. Lee, 2019 ONSC 4622, the court set out the following five preconditions for the imposition of a Mareva injunction at para. 45:
- A strong prima facie case against the defendants;
- The subject against whom the injunctive relief is sought must have assets in the jurisdiction;
- There must be a risk of dissipation or removal of assets from the jurisdiction, such that the plaintiff would be unable to realize on a judgment;
- Failure to grant injunctive relief would cause irreparable harm to the party seeking such relief; and,
- The balance of convenience favours the granting of the order.
[38] In Sibley & Associates LP v. Ross, 2011 ONSC 2951, Strathy J. (as he was then) listed the following as requirements for a successful ex parte Mareva injunction:
(a) the plaintiff must make full and frank disclosure of all material matters within his or her knowledge; (b) the plaintiff must give particulars of the claim against the defendant, stating the grounds of the claim and the amount thereof, and the points that could be fairly made against it by the defendant; (c) the plaintiff must give grounds for believing that the defendant has assets in the jurisdiction; (d) the plaintiff must give grounds for believing that there is a real risk of the assets being removed out of the jurisdiction, or disposed of within the jurisdiction or otherwise dealt with so that the plaintiff will be unable to satisfy a judgment awarded to him or her; and (e) the plaintiff must give an undertaking as to damages.
[39] In Aetna Financial Services v. Feigelman, [1985] 1 S.C.R. 2, the Supreme Court of Canada noted at page 25 that “unless there is a genuine risk of disappearance of assets, either inside or outside the jurisdiction, the injunction will not issue.” Furthermore, in Chitel v. Rothbart (1983), 39 O.R. (2d) 513 (C.A.), the Court of Appeal noted in a case alleging fraudulent behaviour that there “is no evidence that the individual defendant intends to leave the county or is dissipating his assets.”
[40] Similarly, in HZC Capital Inc. at para. 75, the Court noted that the “plaintiffs have provided no evidence that there is a real risk of the Responding Defendants’ assets being removed from the jurisdiction or disposed of in the jurisdiction or otherwise put out of reach”. Additionally, in United States of America v. Yemec (2005), 75 O.R. (3d) 52 (Div. Crt.), at para. 22, the Divisional Court, citing Aetna Financial Services, noted that:
In order to obtain a Mareva injunction, the moving party must show that there is a real risk that the defendant is about to remove his assets from the jurisdiction to avoid a judgment, or that the defendant is dealing with his assets in a manner outside the ordinary course of business or living, in order to avoid a judgment.
[41] A court can infer a sufficient risk of the dissipation of assets or their removal from the jurisdiction from a defendant’s fraudulent conduct: See 663309 Ontario Inc. v. Bauman (2000), 190 D.L.R. (4th) 491 (Ont. S.C.), at para. 41. The court noted further that such an inference may be appropriate where there was a strong prima facie case of fraudulent misappropriation.
[42] In Sibley & Associates LP, Strathy J. noted at para. 63 that:
Rather than carve out an "exception" for fraud, however, it seems to me that in cases of fraud, as in any case, the Mareva requirement that there be risk of removal or dissipation can be established by inference, as opposed to direct evidence, and that inference can arise from the circumstances of the fraud itself, taken in the context of all the surrounding circumstances. It is not necessary to show that the defendant has bought an air ticket to Switzerland, has sold his house and has cleared out his bank accounts. It should be sufficient to show that all the circumstances, including the circumstances of the fraud itself, demonstrate a serious risk that the defendant will attempt to dissipate assets or put them beyond the reach of the plaintiff. [emphasis added]
[43] Finally in 2092280 Ont. Inc. v. Voralto Group Inc., 2018 ONSC 2305, the court noted at para. 23 that, “the Plaintiffs are not required to adduce direct evidence showing that the Remaining Defendants are actively dissipating their assets. A serious risk of dissipation is sufficient and the risk may be inferred in appropriate cases by the surrounding circumstances of the fraud.”
Application of the Law to the Facts
[44] The five conditions in HZC Capital Inc. for granting injunctive relief can be transformed into the following questions:
A. Have the Plaintiffs established a strong prima facie case against the Defendants? B. Do the Defendants have assets in the jurisdiction? C. Is there a strong risk of dissipation or removal of assets from the jurisdiction? D. Would the failure to grant injunctive risk cause irreparable harm to the Plaintiffs? E. Does the balance of convenience favour the granting of the order sought?
A. Have the Plaintiffs established a strong prima facie case against the Defendants?
[45] In an article entitled “Interlocutory Injunctions: The Post American Cyanamid Position”, in Studies in Civil Procedure, (E. Gertner, ed. 1979) 185 R.J. Sharpe defined a prima facie case as having been met where, on the basis of the evidence of the Plaintiff and Defendant, the former has shown a violation of a right on a balance of probabilities: See also Shercliff v. Engadine Acceptance Corp. [1978], 1 NSWLR 729, at 736 (Australia, C.A.).
[46] Have the Plaintiffs met this evidentiary burden in this case? They have presented bank records of OHCS and Golden Growth and that of the Defendants Singh and Major Singh Nagra and their spouses. The records show cheques from the Plaintiffs having been deposited into the accounts of the two companies. For example, a cheque of $12,000 from a Plaintiff was deposited into the OHCS account. The same day, one of the Defendants purchased a suit and made a series of cash withdrawals. In another example, a sum of $20,000 was deposited into OHCS. The identical amount was then transferred into the joint account of Hartaj Singh and his wife. This amount was used to pay expenses incurred from LCBO, grocery stores, and an institution called the Indian Bazaar.
[47] Plaintiff Mr. Sharma gave a number of bank drafts between October 2019 and January 2020 amounting to approximately $100,000. The sum of $25,000 was deposited into the Golden Growth account in January 2020. This money was then transferred on the same day and deposited into the personal account of Hartaj Singh and his wife. The money was then spent on personal items. This pattern of transfer from the corporate accounts to the personal accounts of the Defendants Mr. Hartaj Singh and Major Singh Nagra and their spouses is visible throughout the records relied on by the Plaintiffs. There were no records that any of the invested monies was used to either purchase houses for resale or evidence of any work done for people.
[48] Mr. Hartaj Singh’s counsel submits that the monies received by his client was on account of renovation services he provided. He advised the court that he is in possession of invoices confirming this but that the Plaintiff’s counsel has refused his request to attend at his office to view the invoices.
[49] I do not accept Mr. Singh’s explanation for the transfer of funds from OHCS and Golden Growth for the following reasons. First, his claim that he could not afford the $4,000 cost of copying the documents to provide to the Plaintiffs, is self-serving, to say the least. One would have assumed that, because of the case against him, he would have met this cost given the importance of the invoices to his case. Second, the transfer of the amounts deposited into the accounts of OHCS and Golden Growth occurred very shortly after they were deposited into the companies’ accounts. Third, the items purchased with the monies from the companies’ accounts did not relate in any way, shape or form to acquiring materials for renovation projects. Fourth, the Defendants provided no evidence as to the houses that he renovated on behalf of the companies.
[50] Mr. Shankman also submits that there is no evidence that Mr. Singh and his wife led a luxurious lifestyle, thereby negating any suggestion that he, along with the other Defendants, defrauded the Plaintiffs of the sum of $880,000. This assertion, however, must be viewed within the context of the affidavit evidence of Mehtab Mann, Sakinder Jawanda and Major Singh Nagra that Hartaj Singh operates businesses in Kerala, Morinda, and Chandigarh, India. Major Singh Nagra, a close business associate of Hartaj Singh for many years, deposed that Mr. Singh has investments in “a home building and investment business named Darpan Enclave in Morinda, Punjab”.
[51] On behalf of Major Singh Nagra, Mr. Tahir submits that his client was merely a “referral partner”, that he had no ownership rights over either company, and that, in over three years, the bank records relied on by the Plaintiffs reveal that he only received $15,000 out of the $880,000 which was allegedly defrauded by the Defendants.
[52] These submissions are not borne out by the evidence on this motion. First, Hartaj Singh testified during cross-examinations that the two companies spent $65,000 to $80,000 to renovate Major Singh Nagra’s home between January and March 2018. He also testified that neither Major Nagra nor his wife paid back this money. Second, Hartaj Singh also testified that Major Nagra was a signing authority on the account of OHCS. As to the money that Mr. Tahir submitted that Major Singh Nagra received from the companies, Major Nagra deposed in his affidavit at para. 35 that Hartaj Singh sometimes paid him cash for “referrals”. In his cross-examination, he testified that he did not have a record of the cash he received from OHCS. It is clear, therefore, that Major Nagra financially benefitted from OHCS and Golden Growth much more than Mr. Tahir claims.
[53] Based on the above, I conclude that this requirement has been met.
B. Do the Defendants have Assets in the Jurisdiction?
[54] There is no dispute that they do. Major Nagra and his wife own a home in Shelbourne, Ontario, while Mr. Singh and his wife own a home in Brampton. This requirement has, therefore, been met.
C. Is there a Risk of Dissipation or Removal of Assets or Evidence of an Intention to do so?
[55] There are two lines of authority regarding this requirement. Counsel for the Defendants rely on a line of cases including Chitel, USA v. Yemec, and HZC Capital for the proposition that to satisfy this requirement, the Plaintiffs must present evidence that the Defendants intend to leave the country or are in the process of dissipating their assets.
[56] The Plaintiffs, on the other hand, rely on Sibley, at para. 63, and 663309 Ontario Inc., at para. 41, for the proposition that where there is a strong prima facie case of fraudulent misappropriation, a court can infer a sufficient risk of the dissipation of assets or removal from the jurisdiction. This inference, however, as noted in the latter case, must be one which can reasonably be drawn from the facts. Significantly, the court also noted in Sibley, that: “It is not necessary to show that the defendant has bought an air ticket to Switzerland, has sold his house and has cleared out his bank accounts” (at para. 63). Finally, in 2092280 Ontario Inc. v. Voralto Group Inc., 2018 ONSC 2305, the court noted at para. 23:
Thus, the Plaintiffs are not required to adduce direct evidence showing that the Remaining Defendants are actively dissipating their assets. A serious risk of dissipation is sufficient and the risk may be inferred in appropriate cases by the surrounding circumstances of the fraud.
[57] In my view, the latter line of cases reflect the law as it relates to the third requirement set out in HZC Capital Inc. at para. 45. As a result, an assessment of this requirement involves a consideration of the following questions:
a) Is there a serious risk of dissipation of the assets of the Defendants; and, b) If there is, can this risk be inferred by the surrounding circumstances of fraud?
a) Is there a serious risk of dissipation of the assets of the Defendants?
[58] These two questions cannot be considered in isolation. The first question must be considered within the context of the facts presented in this motion.
[59] The Plaintiffs are claiming that they were fraudulently induced to invest in OHCS and Golden Growth by Hartaj Singh and Major Nagra. They contend, based on the bank records of the two companies and the personal accounts of Hartaj Singh and Major Nagra and their spouses, that their investments were diverted by the Defendants and spent on personal items rather than on investments. The affidavit evidence establishes that Hartaj Singh has investments in India. Mr. Singh has also given evidence, corroborated by Major Nagra, that he gave Major Nagra a number of cash payments from OHCS. Major Nagra had no record of the amount of cash payments he received or withdrew from the companies. Hartaj Singh also deposed that Major received $65,000 to $80,000 from one of the companies which was never repaid. No properties were ever purchased by the Defendants and there is a dearth of evidence regarding what happened to a significant portion of the money which was withdrawn from the accounts of OHCS and Golden Growth. Additionally, the fact that there is no evidence that neither Major Nagra and his wife nor Hartaj Singh and his wife are trying to sell their house is not fatal to this requirement of the test for a Mareva injunction.
[60] In my view, a reasonable inference can be drawn from the constellation of facts noted about that there is a serious risk that the Defendants will dissipate their assets prior to a judgment. To that extent, this requirement has been met.
D. Would the Failure to Grant Injunctive Relief cause Irreparable Harm to the Plaintiffs?
[61] In my view, it would. Much of the invested funds are still unaccounted for. Mr. Hartaj Singh and Major Nagra have pointed fingers at each other as having knowledge of the companies’ records and activities. Failure to grant injunctive relief, in these circumstances, would cause irreparable financial harm to the Plaintiffs.
E. Does the Balance of Convenience Favour the Granting of the Order?
[62] This question can be answered in the affirmative. It is better to preserve the assets of Hartaj Singh and Major Nagra than for the Plaintiffs to seek to recover the invested funds if they are successful.
Failure to Disclose
[63] Counsel for the Defendants submit that some of the Plaintiffs failed to make full and frank disclosure of their relationship with Hartaj Singh and Major Nagra in their ex parte application and that, consequently, I should not exercise my discretion to order continuance of the injunction until the trial of the action. They rely on the following passage in Chitel for this proposition:
There is no necessity for citation of any authority to state the obvious that the plaintiff must, in securing ex parte interim injunction, make full and frank disclosure of the relevant facts, including facts which may explain the defendant's position if known to the plaintiff. If there is less than this full and accurate disclosure in a material way or if there is a misleading of the court on material facts in the original application, the court will not exercise its discretion in favour of the plaintiff and continue the injunction.
[64] This submission does not accord with the evidence. In his affidavit, Satvir Sahdev deposed that he was a partner of Hartaj Singh and Major Nagra and was a signing authority for OHCS. Furthermore, in his April 2021 affidavit, Mehtab Mann deposed at para. 29 that he had a share certificate from Golden Growth. Finally, Exhibit C of Mr. Mann’s affidavit shows a picture of Major Nagra in the company of the Plaintiff Sarbjit Basatia. For the above reasons, I cannot justify discontinuance of the injunction on this ground.
Certificate of Pending Litigation (“CPL”)
[65] The Plaintiffs claim a constructive interest over the home of Major Nagra and his wife on account of the $65,000 to $80,000 Magra received from OHCS and, according to Hartaj Singh, which he never repaid.
[66] What is the test for granting a CPL? In Steenburg v. Wennekes, 2022 ONSC 2198, the court noted at para. 21 that:
[21] The onus is upon the party moving for the certificate to establish that she has a claim to the interest in the land claimed. That claim must be a reasonable one.
[67] It further noted at paras. 22 and 23:
[22] 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. Where there is insufficient evidence to support the plaintiff’s claim to an interest in land, the CPL should be set aside
[23] The following are the well-established non-exhaustive factors a Court should consider when determining whether to grant a CPL: (a) whether there is a triable issue in respect of the moving party’s claim to an interest in the land; (b) whether the land in question is unique; (c) whether there is an alternative claim for damages and whether damages would be a satisfactory remedy; (d) the balance of convenience, or potential harm to each party, if the CPL is or is not granted; (e) whether the CPL appears to be for an improper purpose; (f) whether the interests of the party seeking the CPL can be adequately protected by another form of security; and, (g) whether the moving party has prosecuted the proceeding with reasonable diligence.
Application of the Law to the Facts
[68] As stated earlier, the Plaintiffs claim a constructive trust over the Shelbourne home of Major Nagra and his wife on account of the $65,000 to $80,000 which Nagra, according to Hartaj Singh, improperly received from OHCS.
[69] In my view, the Plaintiffs have established that they have a claim to the Brampton property owned by Hartaj Singh and his wife and the Shelbourne property owned by Major Nagra and his wife. These properties may not be unique, but the imposition of a CPL may be the only remedy available to the Plaintiffs to seek to recover what is owed to them. The balance of convenience favours the imposition of the CPL given that if it is not granted, the Defendants could seek to dispose of their property with little difficulty. The request for a CPL is not being made for an improper purpose. The interests of the Plaintiffs cannot be adequately protected by any form of property, given that the Defendants claim that they have no other assets and have given no indication that they can or are willing to provide security by paying $880,000 into the Court. Finally, there is no evidence before me that the Plaintiffs have not prosecuted the proceeding with reasonable diligence.
Conclusion
[70] For the above reasons, the Plaintiffs’ motion is granted.
Costs
[71] The Plaintiffs seek costs of $50,000 and $38,000 inclusive on a full indemnity and partial indemnity basis respectively. The Defendants Hartaj Singh and Manpreet Kaur Ganda seek $98,271 inclusive and $64,696.46 inclusive on a full indemnity and partial indemnity basis respectively.
[72] In determining the amount of costs that are fair and reasonable in this case, I take into consideration the following factors: a) The Plaintiffs were substantially successful in this matter. However, the successful party is not entitled to recover all costs claimed. b) This motion required a significant degree of preparation including the cross-examination of Defendants Hartaj Singh and Major Singh Nagra. c) The matter also required a moderate degree of research and the preparation of a factum and supplementary factum. d) The matter required approximately half a day of court time with all three counsel making extensive submissions on behalf of their respective clients. e) While the issues in this case required a significant amount of research and preparation time, they cannot be construed as complex.
[73] In light of the above factors, I conclude that costs in the amount of $30,000 inclusive, are fair and reasonable in this matter.
Order
[74] Order to go in accordance with the amended draft order filed by the Plaintiffs.
André J. Date: April 29, 2022