Court File and Parties

COURT FILE NO.: CV-21-00664105

DATE: 20220621

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: MELODY WAI and YONG GANG LIANG (A.K.A. JONG GANG LIANG), Plaintiffs

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STREAMLINE MORTGAGES LTD. (O/A DOMINION LENDING CENTRES STREAMLINE MORTGAGES), RAYMOND ARMAN ISKIN, ROBERT A. OTTO, ZCP HOLDINGS LTD. (A.K.A. ZCP HOLDINGS INC.), BRUCE GATES, 2800413 ONTARIO INC., MOHAMMAD SHABANI SAMGHABADI, TIMOTHY KINNAIRD, JANE DOE, JOHN DOE, Defendants

BEFORE: Justice E.M. Morgan

COUNSEL: Dominique Michaud and Joseph Jamil, for the Plaintiffs

HEARD: In writing

DEFAULT JUDGMENT

[1] The Plaintiffs move for default judgment against the Defendants, Timothy Kinnaird (“Kinnaird”), 2800413 Ontario Inc. (“280”), and Mohammad Shabani Samghabadi (“Samghabadi”) (collectively, the “Default Defendants”)

[2] The Plaintiffs provided a private mortgage loan in the principal amount of $467,500 (the “Loan”) to an individual (the “Fraudulent Borrower”) impersonating the identity of Jacobus Carrega (“Carrega”), the true registered owner of 644 Brimley Road, Toronto, Ontario, M1J 1B9 (the “Property”). Carrega is a 95 year-old man. The mortgage loan was secured by a registered first charge (the “Mortgage”) on the Property. In connection with the Mortgage, the Chicago Title Insurance Company (“CTIC”) issued the Plaintiffs a Loan Policy of Title Insurance No.: RL-934383-ED25C (the “Policy”).

[3] Kinnaird was the lawyer for the Fraudulent Borrower on the mortgage financing transaction. As part of the transaction, the Plaintiffs’ real estate lawyer, Robert Micheli (“Micheli”), transferred the net proceeds of the mortgage loan to Kinnaird, in trust.

[4] Kinnaird provided an undertaking to the Plaintiffs to deliver the Loan to the Fraudulent Borrower, who at the time, was holding himself out to be Carrega. In breach of his undertaking, Kinnaird delivered the funds to, among other parties, 280, and the Mortgage funds were fraudulently dissipated out of the Trust Account to or for the benefit of 280.

[5] The Plaintiffs commenced this action and obtained a Mareva injunction as against 280 and certain other Defendants.

[6] At the same time, Carrega commenced an application for a Caution Hearing before the Director of Titles for a determination that the Mortgage was a fraudulent instrument pursuant to the Land Titles Act. Pursuant to the Decision and Order of Rebecca Hockridge, Deputy Director of Titles, dated December 16, 2021, the Mortgage was found to be a fraudulent instrument and was deleted from title to the Property.

[7] There is an ongoing investigation of this matter by the Toronto Police Service and a private investigator retained by CTIC. The investigation concluded that Kinnaird has left Canada and now resides in Ecuador.

[8] The Law Society of Ontario (“LSO”) has also commenced an investigation on the basis that there are reasonable grounds to suspect that Kinnaird participated in or facilitated mortgage fraud. On June 16, 2021, Kinnaird’s license to practice law in Ontario was suspended.

[9] The Plaintiffs have recovered $65,635.72 of the loan funds. Further, to satisfy its obligations under the Policy, CTIC delivered $401,991.78 representing the balance of the Policy limits to the Plaintiffs.

[10] Then Plaintiffs issued the Statement of Claim on June 16, 2021, against, inter alia, the Default Defendants as follows: (a) 280 and Samghabadi for fraud, fraudulent misrepresentation, knowing receipt, knowing assistance, conspiracy, conversion and unjust enrichment; and (b) Kinnaird for negligence and breach of undertaking.

[11] Kinnaird is liable for damages in the amount of $349,796.47, plus pre-judgment and postjudgment interest as a result of his breach of undertaking and negligence.

[12] Samghabadi used 280 to carry out illegal fraud and as a shield for fraudulent conduct. As a result, it is appropriate to pierce the corporate veil and to disregard the separate legal personalities of 280 and Samghabadi. Accordingly, 280 and Samghabadi are liable for damages in the amount of $256,537.59, plus pre-judgment and post-judgment interest as a result of, inter alia, fraud.

[13] The Default Defendants failed to deliver a Statement of Defence within the time prescribed by the Rules of Civil Procedure. They were noted in default on September 22, 2021 and February 1, 2022, respectively.

[14] The Plaintiffs are hereby granted judgment against the Default Defendants. There will be an Order to go as submitted by Plaintiffs’ counsel.

[15] Plaintiffs’ counsel seeks costs in the amount of $9,676.75 on a partial indemnity scale or $13,404.57 on a substantial indemnity scale. Under Rule 15.01(1), costs are to be on a partial indemnity scale absent any special feature of the proceeding that would justify a higher scale of costs. Although the Default Defendants are found here to be fraudulent actors, nothing in the litigation itself justifies substantial indemnity costs.

[16] The Default Defendants shall pay costs to the Plaintiff in the all-inclusive amount of $9,676.75.

Date: June 21, 2022

Morgan J.