COURT FILE NO.: CV-21-00667985-0000

DATE: 20220916

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Bank of Montreal, Plaintiff

AND:

1870769 Ontario Inc. operating as Rockdale Concepts and Paata Jintcharadze, Defendants

BEFORE: MA Sanderson J.

COUNSEL: Randy Schliemann, for the Plaintiff

Paata Jintcharadze, self-represented Defendant

1870769 Ontario Inc., self-represented Defendant

HEARD: In writing

REASONS FOR JUDGMENT

Introduction

[1] The plaintiff, Bank of Montreal (the "Bank") seeks default judgment against the defendants 1870769 Ontario Inc. operating as Rockdale Concepts (the "Company") and the defendant Mr. Paata Jintcharadze, "Paata".

[2] The Bank brings this motion on notice under Rule 19.05 of the Rules of Civil Procedure.

The Company

[3] The Company was incorporated pursuant to the laws of Ontario with its registered office address located at 40 Ivan Nelson Drive, Toronto, Ontario.

The Loan Applications

[4] The Company applied for loans from the Bank.

[5] On August 26, 2020, Paata, signing as the Company's responsible officer, executed a Canada Small Business Financing Act "CSBFA" Loan Registration Form, agreeing that if the loan were granted, (i) the Company would manufacture roofing shingles, and (ii) $343,137.25 of the $350,000 CSBFA Loan proceeds would be used to purchase equipment for use in the Company's business, with the balance of $6,862.75 to be used to finance the CSBFA Loan registration fees.

The Invoice

[6] In support of its CSBFP application, Paata, on behalf of the Company, provided the Bank with an invoice for equipment, purportedly from Canadian Trucks and Equipment Ltd., "Canvac", dated August 4, 2020, bearing order number 024178 that identified two pieces of machinery with a purchase price of $171,400.00 each, exclusive of tax, listed as Hurricane 755 - 3600 CFM/27 Industrial Vacuum Loaders Serial Number - 8651749DE and Hurricane 755 - 3600 CFM/27 Industrial Vacuum Loaders Serial Number - 8745616AD, and freight cost of $5,000.00 inclusive of HST. The Invoice was for $393,014.00.

Guarantees

[11] Paata provided two personal guarantees:

(a) A guarantee for Indebtedness of the Company executed on August 26, 2020, limited to the amount of $87,500.00 plus interest to accrue from the date of demand at the Bank's prime rate of interest in effect from time to time plus 3.00%; and

(b) A guarantee for Indebtedness of the Company executed on August 26, 2020, limited to the amount of $150,000.00 plus interest to accrue from the date of demand at the Prime Rate plus 3.00%.

Advances by the Bank

[12] The CSBFA Loan proceeds of $350,000.00 were transferred into the Company's account on August 31, 2020.

Violation of the Loan Terms

[13] The CSBFA Loan proceeds were not used to pay the Invoice to purchase equipment that the Company had presented to the Bank to support its loan application before the CSBFA loan was approved and the loan proceeds were advanced to the Company.

[14] Instead, based on the evidence in the affidavit of Ms. Starkman in the Motion Record, I am satisfied that the proceeds of the CSBFA Loan and a portion of the Overdraft Facility were depleted through numerous cheques and seven (7) bank drafts totaling $419,939.00, including a draft payable to Canvac dated September 18, 2020 for $85,516.10, one for $94,920 payable to Canvac dated September 22,2020 but paid into the account of YK Group Inc, drafts dated September 28 for $85,782.30 and October 8, 2020 for $85782.20 paid to Alpha Capital Inc and 3 drafts dated November 9, 2020, December 8, 2020 and December 14,2020 totaling $69,939 paid to 277604 Ontario Limited.

Indebtedness of the Company

[15] The Bank alleges that by June 24, 2021, the Company was indebted to the Bank in the amount of $432,323.41.

The Demand

[16] On June 29, 2021, the Bank, through its counsel, made demand upon the Company and Paata.

[17] The Bank claimed that the entire amount of the indebtedness of the Company was immediately due and payable, and enclosed a Notice of Intention to Enforce Security. It also made a separate demand on Paata pursuant to his guarantees.

[18] Schedule A to the Notice of Enforcement of Security listed the Bank’s Security including any and all assets of the Company of any kind or description whatsoever including personal property, accounts receivable, inventory, equipment, goodwill and intangibles of the insolvent person, wherever located including those assets located at 22 Melham Court, Unit 6 Toronto.

[19] The Notice of Enforcement of Security Schedule A given pursuant to the Bankruptcy and Insolvency Act notified the Company that if the debt was not paid in full by July 26, 2021 the Bank would dispose of the collateral…

The Issues to be Decided

[20] I have considered the following issues on this motion for default judgment:

(a) Should this Court grant judgment for fraud? Against the Company only? If so, in what amount? Should the corporate veil be pierced and should judgment also go against Paata? In what quantum? What other remedies, if any, should be granted to the Bank given the fraud of the defendants?

(b) Should this Court award the Bank grant punitive damages against either or both Defendants, and if so, in what amount?

(c) Should this Court grant a declaration that the Defendants' debt and liability herein result from obtaining property or services by false pretenses or fraudulent misrepresentations?

(d) What is the appropriate scale and quantum of costs?

The Litigation

[21] The Bank then commenced the herein action claiming, inter alia, repayment of the loans, possession of assets provided as security for the Loans, a declaration of constructive trust, a tracing order, punitive damages, interest, a declaration that the debt arises from fraudulent misrepresentations and false pretenses within the meaning of s. 178 of the Bankruptcy and Insolvency Act and costs on a substantial indemnity basis.

Service

[22] The Statement of Claim was served on the Company and Paata as follows:

• On September 13, 2021 the process server attended at 40 Ivan Nelson Drive, Toronto, the last registered address of the Company as filed with the Ministry of Consumer and Corporate Affairs. He was advised that the Company does not carry on business at that address and that Paata was the previous occupant. On September 13, 2021 the process server also mailed a Copy of the Statement of Claim to the same address.

• On October 21, 2021 the process server left a copy of the Statement of Claim in a sealed envelope addressed to Paata at 35 Cedar Croft Boulevard, Toronto, with an adult person who gave a verbal admission that he lives in the same household. A copy was also mailed to the same address.

Noting In Default

[23] As the Company and Paata failed to file a Statement of Defence within the timeline prescribed by the Rules of Civil Procedure, on November 12, 2021, they were noted in default.

The Bank's Motion for Default Judgment

[24] The Bank then filed this motion for default judgment ex parte.

[25] When the motion first came before this Court on July 6, 2022, Vella J. following Casa Manila Inc v. Iannuccilli, 2018 ONSC 7083, directed the Plaintiff to serve the motion record and a copy of her endorsement on the Defendants on or before July 15, 2022.

[26] She directed that the Defendants would have until July 29, 2022 to respond to the Motion for Judgment. If they did not do so, the motion would be listed for hearing in writing the week of August 9, 2022.

[27] Neither of the Defendants notified the Plaintiff's lawyers on or before July 29, 2022 that they would be responding to the Bank's Motion for Judgment. It was listed for consideration [in writing] before me the week of August 9, 2022.

[28] Vella J. directed the Bank to provide particulars of a basis for the judge hearing the motion for Default Judgment to find that the Defendants had received the Statement of Claim and the Motion Record or otherwise know about the lawsuit.

[29] From the affidavits of service on the Company and Paata, I am satisfied that they know about the lawsuit and have chosen not to defend it.

[30] Copies of the Statement of Claim were delivered to the Company at its registered place of business as filed with the Ministry of Consumer and Corporate Affairs and mailed to the same address.

[31] The Statement of Claim was delivered to Paata's residence. An adult member of his household acknowledged that it was Paata's household.

[32] I am satisfied that the Statement of Claim came to the attention of Paata.

[33] I am satisfied that Paata is the directing mind of the Company. Paata signed all loan documents on its behalf. He regularly made representations on its behalf and directed its activities at all material times, including after the Bank deposited the loan proceeds into the corporate bank account.

[34] In part because of Paata’s ongoing direction of the Company and delivery of documents to the registered corporate address, I am satisfied that the lawsuit was brought to the attention of both Paata and the Company.

[35] On the literal wording of the Rules of Practice, default judgment might have been entertained by the Court without more, after the noting in Default. Following the best practice set out in the Casa Manila case, the Defendants were served with the Motion materials/given notice of the form of the Judgment the Bank was seeking and the basis for it. They were given further time to respond. They again did not do so.

The Motion for Default Judgment

Rule 19

[36] When a defendant is noted in default, Rule 19.02(1) provides that it "is deemed to admit the truth of all allegations of fact made in the statement of claim".

[37] Under Rule 19.05(1), where the claim is for unliquidated damages and the motion for default judgment is brought before a judge, the motion is to be supported by an affidavit.

[38] Rule 19.06 requires the judge to inquire into whether the deemed factual admissions resulting from the default support a judgment on liability as well as damages.

[39] In support of its motion for Default Judgment, counsel for the Bank filed not only the Statement of Claim but also the affidavits of Ms. Mallory Starkman, "Starkman", sworn May 20, 2022 and Mr Peter Scopazzi, "Scopazzi", sworn May 20, 2022.

[40] Starkman, a Forensic Investigator employed by the Bank, deposed that she had contacted "Canadian Vacuum Trucks and Equipment Ltd/Canvac", the equipment supplier shown on the Invoice that was provided by the Paata on behalf of the Company to the Bank to support its loan application.

[41] Starkman deposed that she had called the phone number shown on that company's website and had spoken to an individual named Stan.

[42] She deposed that Stan had advised her that Canadian Vacuum Truck and Equipment/ Canvac had not issued the Invoice that Paata had presented on behalf of the Company as evidence of its intention to buy equipment, a prerequisite of a CSBFA loan.

[43] She deposed that Stan had advised her that neither the date nor the invoice number on that invoice match any invoices that his company would have issued.

[44] Starkman deposed that she had concluded from her review that the Company falsified the Invoice and did not use the CSBFA Loan proceeds received from the Bank to buy equipment from Canvac/Canadian Vacuum Trucks and Equipment Ltd.

[45] I am satisfied on this uncontradicted evidence that the Company did not buy equipment from Stan's company pursuant to the Invoice.

[46] Starkman also deposed that she had ascertained that the Company had a business account with the Bank starting in August 2020. She referred to its corporate bank statements from August 2020 to May 2021, noting that the CSBFA Loan proceeds of $350,000.00 were transferred into it on August 31, 2020.

[47] She concluded that the CSBFA loan proceeds and a portion of the Overdraft Facility paid by the Bank into the Company's corporate bank account had been depleted through a series of seven (7) bank drafts totalling $419,939.00.

[48] Starkman deposed that an Ontario business names search conducted on September 23, 2021, turned up three businesses with the business name Canvac.

[49] Based on the documents she reviewed that were attached to her affidavit, she concluded that Paata on behalf of the Company authorized a business registration of a Canvac corporate name on September 4, 2020, days after the Bank advanced the CSBFA Loan funds to the Company.

[50] Starkman deposed that she was of the view that Paata, on behalf of the Company, registered the Canvac business name to make it appear to the Bank that payments by draft to Canvac were being made in compliance with the CSBFA loan conditions/to make it look like the Company was paying Canvac for equipment as per the [false] Invoice that had been submitted to support the loan application.

[51] Starkman deposed that drafts payable out of the Company's corporate account were made payable to Canvac but deposited into the accounts of YK Group and Alpha Capital Inc.

[52] Starkman deposed that she had not been able to establish a direct connection between those two entities and the Company, although she thought they were operating as cheque cashers.

[53] Starkman deposed that Paata, on behalf of the Company, also paid some of the CSBFA loan proceeds out of its corporate account to 277604 Ontario Limited "277".

[54] 277's registered office address is 40 Ivan Nelson Drive, Toronto, Ontario, the same registered office address as the Company.

[55] 277 was incorporated with Paata as its sole director on September 4, 2020, four days after the CSBFA Loan proceeds were deposited into the Company's Business Account.

[56] 277 registered another "Canvac" business name in Ontario on the same date. Paata authorized this business name registration.

[57] I find in part on this evidence that the Company/Paata were attempting by these actions to hide from the Bank that the loan proceeds were not being used to buy equipment pursuant to the Invoice, as had been represented on the CSBFA loan application.

The Amount Owing by the Company

[58] The Bank, in its written motion materials, submitted that at the close of business on April 19, 2022, it was owed $450,758.01 on the Loans, inclusive of principal and interest. Interest continues to accrue at the rates specified in the contractual documents.

ANALYSIS

Governing Legal Principles on Rule 19.05 Default Judgment Motions

[59] In considering a motion such as this, the Court must scrutinize the evidence and determine whether the moving party has met the civil standard of proof.

[60] Himel J. wrote in Fuda v. Conn, 2009 CanLII 1140 at paragraph 16:

[A]lthough the Rules provide the consequences for noting in default, the court has the jurisdiction and the duty to be satisfied on the civil standard of proof that the plaintiff is able to prove the claim and damages. If the court finds the evidence to be lacking in credibility or lacking "an air of reality", the court can refuse to grant judgment or grant partial judgment ….

[61] In Elekta Ltd. v. Rodkin, 2012 ONSC paragraph 11, D.M. Brown J., as he then was, held that, in considering a motion for judgment, the court must engage in the following enquiry:

(a) What deemed admissions of fact flow from the facts pleaded in the Statement of Claim?

(b) Do those deemed admissions of fact entitle the plaintiffs, as a matter of law, to judgment on the claim?

(c) If they do not, has the plaintiff adduced admissible evidence which, when combined with the deemed admissions, entitles it to judgment on the pleaded claim?

[62] Bearing these principles in mind I'll deal seriatum with the issues this Court must address.

Breach of Contract

[63] The Bank claims entitlement in the Statement of Claim for damages/repayment of the full balance on its loans with interest calculated pursuant to the terms of its loan contracts with the Company. It also claims the relief set out in paragraphs 9-11 of the draft judgment pursuant to the contractual rights granted to the Bank in documents signed by the Company.

[64] To the extent that Counsel for the Bank sought relief based on Breach of Contract, on the material filed, I am satisfied for the reasons set out earlier that the Company has breached its Contracts with the Bank and the Bank is entitled to exercise the contractual remedies specified in the contractual documents, including but not limited to immediate payment of the debt and enforcement of its security by seizing the assets of the Company specified in the contractual documents and disposing of them.

[65] Had I been asked to do so I would have been prepared to sign judgment against the Company for damages for Breach of Contract calculated at $432,323.41 (being the balance owing on the Loans, as at June 24, 2021, plus pre- and post-judgment interest accruing from that date at the rates set out in the applicable loan agreements, namely: (i) the Prime Rate plus 3% per annum on the CSBFA Loan, and (ii) the Prime Rate plus 2.15% per annum on the Overdraft Facility.

[66] Similarly, I would have been prepared to sign judgment against Paata based on his guarantees limited to $87,500 and $150,000 of the Company's indebtedness plus interest on those amounts to be calculated as per the terms of the Guarantee documents.

[67] Since I have not been asked to do so, I have not decided whether it would have been appropriate for this Court to pierce the corporate veil to make Paata personally liable had the Company simply breached its contracts with the Bank [i.e. had there been no holding of fraud].

Unjust Enrichment.

[68] At paragraph 24 of the Statement of Claim: The Bank further pleads that it is entitled to a declaration of constructive trust in its favour over whatever real or personal property to which the Bank can trace the monies received by the Defendants as a result of the fraud which has enriched the defendants or others under their direction and correspondingly deprived the Bank of its money in the absence of any juridical reason for doing so. (emphasis Added) [At A-134 Caselines].

[69] On this motion for default judgment:

"the Bank seeks a declaration that the Company and Paata are trustees for the benefit of the Bank as beneficiary in respect of monies obtained from them directly or indirectly, including any benefits in the absence of consideration or entitlement, accompanied with an order entitling the Bank to trace such monies, including any benefits, to any real and or/personal property in which the defendants have any real or beneficial interest or to any other person or entity who received such funds, accompanied with an order for a declaration of a constructive trust over all such property in favour of the bank. (emphasis added)

[70] The proposed judgment makes no reference to unjust enrichment or benefits received in the absence of consideration.

[71] I conclude that the Bank has given up its claim based on unjust enrichment.

Liability of the Company and Paata for Fraud and Appropriate Remedies Therefor

[72] Counsel for the Bank asks this Court to conclude that the Bank is entitled to judgment against both Defendants for fraudulent misrepresentation in the amount of $432,323.41 (being the balance owing on the Loans, as at June 24, 2021, plus pre- and post-judgment interest accruing from that date at the applicable rates set out in the applicable loan agreements, namely: (i) the Prime Rate plus 3% per annum on the CSBFA Loan, and (ii) the Prime Rate plus 2.15% per annum on the Overdraft Facility.)

[73] A plaintiff seeking judgment based on fraudulent misrepresentation must prove the following on a balance of probabilities: (i) a false representation made by the defendant, (ii) some level of knowledge of the falsehood of the representation (whether through knowledge or recklessness), (iii) the false representation caused the plaintiff to act and (iv) the plaintiff's actions resulted in a loss. Tsui-Wong v. Xiao, 2018 ONSC 3315, para of the Company. 244; Midwest Amusement Park, LLC v. Cameron Motorsports Inc., 2018 ONSC 4549, para. 84.

[74] The Bank also seeks equitable remedies against both the Company and Paata because of the fraud including a declaration or declarations of constructive trust and tracing remedies.

[75] In considering the liability issues and appropriate remedies for fraudulent misrepresentation, I have reviewed the deemed factual admissions in the undefended Statement of Claim and the uncontradicted affidavit evidence in the Motion for default judgment and have borne in mind the principles in Fuda and Elekta mentioned earlier.

Conclusion on the Company's Liability for Fraudulent Misrepresentation

[76] I am satisfied that Paata, knowing that they were false, made representations on behalf of the Company that the CSBFA loan proceeds would be used to buy specified equipment as shown on a false Invoice purporting to be from Canadian Vacuum Truck and Equipment.

[77] I am satisfied that the Bank relied upon those representations to its detriment in agreeing to extend a CSBFA loan to the Company and in paying the loan proceeds into the Company's bank account.

[78] I am satisfied that after the CSBFA loan proceeds were advanced into the corporate account of the Company, the Company did not use the loan proceeds to purchase the Equipment specified in the Invoice, or any comparable equipment.

[79] To obfuscate what it was really doing, shortly after funds were advanced by the Bank to the Company in July 2020, Paata on behalf of the Company made a business registration in the name of Canvac, incorporated 277, which in turn registered another Canvac, and then directed payment/s to Canvac and 277 to make it appear to the Bank that the Company was applying the CSBFA loan proceeds as had been represented on the loan application.

[80] I am satisfied that Paata on behalf of the Company disbursed the loan proceeds in a manner contrary to the representations the Company had made to the Bank to induce it to make the loans.

[81] These fraudulent misrepresentations made by Paata on behalf of the Company and the other steps he took to hide the fraud on behalf of the Company caused the Bank to suffer losses and damages.

[82] I am satisfied that on behalf of the Company, Paata directed payment out of the corporate account of cheques and bank drafts contrary to the express terms of the loans.

[83] In short, I am satisfied that the Bank has proved fraud against the Company to the civil standard.

Quantum of Damages owed by the Company for Fraud

[84] I am prepared to sign judgment in favour of The Bank against the Company in the amount of $432,323.41 (being the balance owing on the Loans, as at June 24, 2021, plus pre- and post-judgment interest accruing from that date at the applicable rates set out in the applicable loan agreements; namely: (i) the Prime Rate plus 3% per annum on the CSBFA Loan, and (ii) the Prime Rate plus 2.15% per annum on the Overdraft Facility.)

Conclusion on Paata's Personal Liability for Fraud

[85] Although on the wording of the Statement of Claim, the fraudulent misrepresentations that Paata made to the Bank and the other steps that he took giving rise to the judgment against the Company for fraud were made/taken by Paata on behalf of the Company, I am satisfied that the corporate veil should be lifted here and that personal liability for fraud must attach to Paata.

[86] In Shopper's Drug Mart v 6470360 Inc., 2014 ONCA] the Ontario Court of Appeal at paragraphs 43-45 referred to 642947 Ontario Ltd v Fleisher 2001 CanLII 8623 (ON CA), 56 OR(3d)417(CA) observing that while typically, the corporate veil is pierced when the company is incorporated for an illegal, fraudulent or improper purpose, it can also be pierced when incorporated, if those in control expressly direct a wrongful thing to be done. Courts will disregard the separate legal personality of a corporate entity where it is completely dominated and controlled and being used as a shield for fraudulent or improper conduct

[87] I am satisfied that here Paata dominated and controlled the activities of the Company at all material times.

[88] I am satisfied that Paata expressly directed and implemented the wrongful things that were done, including the fraudulent misrepresentations and subsequent misdirection of the loan funds.

[89] 277 has been clearly linked to Paata.

[90] On the fraud claim I am satisfied that the corporate veil should be lifted in all the circumstances here and that judgment should go against Paata for fraud for the same amount as the judgment for fraud against the Company as set out in paragraph 81 of these Reasons.

[91] The Bank/ Starkman have not yet been able to connect YK and Alpha to Paata and/or the Company. The Bank has identified and implicated them in other similar fraudulent schemes. It implies that it has valid grounds to believe that Paata/the Company were using YK and Alpha as cheque cashers to further their misappropriation of the loan funds. Since the Bank is no longer claiming unjust enrichment, nothing turns here on the Bank’s present inability to prove unjust enrichment.

Other Requested Remedies for Fraud - Declaration/s of Constructive Trust and Tracing Order/s

[92] The Bank submitted that the fraud of the Company and Paata entitle it to equitable remedies including constructive trust and tracing orders.

[93] In 1 (L) of the Statement of Claim the Bank sought a mandatory order compelling the Company and Paata to forthwith deliver an accounting of all monies or benefits received from the Bank, the accounting to include particulars as to how and where the money obtained from the Bank was expended, accompanied with an order for disgorgement of such funds and any profits earned thereby.

[94] 1(M)of The Statement of Claim reads as follows:

the Bank seeks a declaration that the Company and Paata are trustees for the benefit of the Bank as beneficiary in respect of monies obtained from them directly or indirectly, including any benefits in the absence of consideration or entitlement, accompanied with an order entitling the Bank to trace such monies, including any benefits, to any real and or/personal property in which the defendants have any real or beneficial interest or to any other person or entity who received such funds, accompanied with an order for a declaration of a constructive trust over all such property in favour of the bank (emphasis added) see Caselines A-125m.

[95] The Statement of Claim continues

at para 23: The Bank pleads that as the result of the foregoing it is entitled to an Order tracing all amounts received by the Defendants as the result of the fraud to any real and personal property or to any source or location in which the loan proceeds can be traced and to which the Defendants have a legal or beneficial interest on such terms as may seem just

at paragraph 24: The Bank further pleads that it is entitled to a declaration of constructive trust in favour over whatever real or personal property to which the Bank can trace the monies received by the Defendants as a result of the fraud which has enriched the defendants or others under their direction and correspondingly deprived the Bank of its money in the absence of any juridical reason for doing so (emphasis Added) [At A-134 Caselines]

[96] In its motion for default judgment:

[97] As noted above the Bank appears to have given up its claim to relief as a result of unjust enrichment. The proposed wording of the draft Judgment provided by counsel for the Bank for signature by this Court includes the following:

at para 13 THIS COURT ORDERS AND DECLARES that Rockdale and Paata are trustees for the benefit of the Plaintiff, as beneficiary in respect of the proceeds, and the Plaintiff is entitled to trace and follow such monies: to any real or personal property in which Rockdale and Paata have any legal or beneficial interest and into the hands of any other person corporation or other entity who received such monies other than bona fide purchasers for value without notice

at para14: This Court orders that upon execution of the tracing order referred to in paragraph 13 above the plaintiff may in respect of any amounts awarded to it, in each instance elect in whole or in part between a constructive trust and/or equitable lien and (ii) damages as against the party or party holding the said proceeds

[98] I note again that in the requested draft judgment there is no longer any mention of enrichment or benefits in the absence of consideration.

The Bank’s Submissions on Constructive Trust and a Tracing Order

[99] Counsel for the Bank submitted that this Court should declare a constructive trust over the loan proceeds and impose a tracing remedy. He submitted that where property has been fraudulently obtained, the Courts have repeatedly converted the wrongdoer into a trustee for the entity that has been defrauded. Courts have repeatedly impressed funds obtained by fraud with constructive trusts and issued accounting and tracing orders to assist in their recovery, Noreast Electronics Co 2018 ONSC 5169; Bank of Montreal v 1874232. (unreported)

[100] Counsel for the Bank cited Soulos v Korkontzilas 1997 CanLII 346 (SCC), [1997] 2 SCR 217 in support of its requests re constructive trust and tracing.

[101] In Soulos, the Supreme Court of Canada explained that constructive trusts may be imposed, not only as a remedy for unjust enrichment but also where good conscience dictates that constructive trusts be used to correct wrongs or injustices.

[102] At paragraph 17 of Soulos, Chief Justice McLachlin held constructive trusts to be available "to hold persons in different situations to high standards of trust and probity and prevent them from retaining property which in good conscience they should not be able to retain."

[103] With respect to tracing, the Bank is seeking tools for it to determine where the CSBFA loan proceeds it paid into the Company's corporate account ultimately went.

Considerations on the Appropriateness of Constructive Trust and Tracing

Constructive Trust

[104] The declaration of a constructive trust is discretionary.

[105] While I am satisfied that good conscience dictates that the Company and Paata should not be allowed to retain the fruits of their fraud in commercial matters, the Courts have set out conditions that should be met before constructive trusts should be imposed.

[106] In Kerr v Baranow 2011 SCC 10, Cromwell J. explained at paragraph 50 that proprietary remedies should not generally be granted unless (1) a monetary award is inappropriate or insufficient and (2) the plaintiff can demonstrate a link or causal connection between his or her contributions and the acquisition of property.

Has the Bank Demonstrated that A Monetary Remedy is Insufficient?

[107] I have considered whether the Bank has sufficiently proven that monetary damages would be inadequate.

[108] The actions taken to date by the Bank have left it unable to collect the damages owing to it.

[109] I am satisfied that the Bank has sufficiently demonstrated that to date a monetary remedy has been insufficient.

Has the Bank Demonstrated a Causal Connection Between the Loan Proceeds and the Acquisition of Property by the Defendants?

[110] The Starkman affidavit makes it clear that as of now the Bank cannot locate the loan proceeds.

[111] The Bank has not yet been able to determine whether the Company or Paata received any or most of the loan proceeds themselves and/or if they or persons under their direction received loan proceeds and whether they used them, for example, to purchase assets.

[112] The Bank has no evidence to identify existing loan proceeds or to link them to assets over which a constructive trust could properly be declared

[113] On this basis alone, unless and until the Bank is able to adduce such evidence, it would be inappropriate to declare a constructive trust.

[114] If, and when after “tracing” as ordered below, the Bank is in a position to identify intact loan proceeds or assets purchased with loan proceeds, the Bank will be at liberty to move to adduce the requisite proof of connection between the loan proceeds and assets/property or properties over which it is seeking a proprietary remedy.

Criteria in Paragraph 45 of Soulos

[115] The Supreme Court of Canada has set out the criteria for the Imposition of a Constructive trust in Soulos at paragraph 45.

[116] Even if the plaintiff can demonstrate that a proprietary remedy can be justified for personal reasons or based on a need to ensure that others like the defendants remain faithful to their duties, criterion four is that there must be no factors which would render the imposition of a constructive trust unjust.

[117] The Bank will also be at liberty to adduce any other evidence it deems relevant to the Court’s exercising its discretion in deciding whether to declare the imposition of a constructive trust over specific assets.

[118] Now is not the time for applying the criteria with respect to the declaration of a constructive trust or trusts.

[119] Suffice it for me to say here that were I doing so, following the criterion 4 set out by the Supreme Court of Canada in Soulos at paragraph 45, I would have considered it necessary to consider the effects of a declaration of constructive trust on other creditors of the Defendants.

[120] One possible unjust effect that has been highlighted in the legal literature and recent caselaw is the effect on general creditors of the defendants in the event of their insolvency.

[121] In “Constructive Trusts In Insolvency a Canadian Perspective” 2016 94 Canadian Bar Review 85, the author, Anthony Duggan, has explained that a constructive trust, an equitable proprietary interest awarded to prevent unjust enrichment or to deter wrongdoing, gives the Plaintiff an equitable interest in a disputed asset as opposed to simply a money claim for the value of the asset. This is particularly important if the defendant is insolvent or if there is a substantial risk that the defendant may become insolvent before the judgment is satisfied.

[122] He explained why this is important - the declaration of a constructive trust allows the Plaintiff to take the disputed asset out of the defendant insolvent’s estate, with the result that the Plaintiff will recover its claim at the expense of the Estate [which is correspondingly depleted]. In other words, the amounts available to the unsecured creditors of the Estate are correspondingly diminished.

[123] To illustrate that insolvency and other factors can affect the exercise of the Courts’ discretion, Duggan referred to Baltman v Melnitzer (1996)43 CBR(3d) 33, 1996 Carswell Ontario 4337, 1996 OJ No 3963.

[124] In that case, even though the loan proceeds could be causally connected to the assets over which the bank was seeking a declaration of constructive trust, the Court refused to declare a constructive trust overt those assets.

[125] The facts in Baltman were as follows: the Royal Bank made loans to Melnitzer pursuant to a contract that was induced by Melnitzer’s fraud.

[126] The Royal Bank opened an $8 million line of credit, taking various kinds of security in support of Melnitzer’s debt.

[127] Melnitzer drew on the line of credit, using it to buy paintings. He then went Bankrupt owing the Bank about $2,500,000.

[128] The bank’s security was insufficient to cover Melnitzer’s debt.

[129] The Bank sought a constructive trust over the paintings as proceeds of the loan advances.

[130] Although the case was pre Garland v Consumer’s Gas Co 2004 SCC 25 [2004] 1 SCR 629 and pre Soulos and the Bank’s liability argument was based on outdated law with respect to unjust enrichment, the case remains relevant here because the Court specifically considered whether, if the bank had been successful on its unjust enrichment argument, it would have exercised its discretion and would have declared a constructive trust remedy.

[131] In that case, where the assets over which a constructive trust was being sought could be causally linked to the loan proceeds, and where the bank loan was induced by fraud, the Court would still have refused to exercise its discretion to declare a constructive trust.

[132] In holding that a constructive trust would not have been appropriate it gave the following reasons: (1) the commercial nature of the relationship between Melnitzer and the bank; (2) the bank did take security over certain collateral but chose not to take security in the paintings; (3) the Bank had its normal contractual remedies against Melnitzer; (4) the bank had the right to claim as a creditor in Melnitzer’s bankruptcy; (5) the bank’s loss was due to its own negligence, lack of investigation and breach of its own credit granting rules; and (6) the bank’s aim in asking for a constructive trust was to “jump the queue” over other unsecured creditors in the bankruptcy.

[133] The Court wrote: “this is a case where a large and sophisticated commercial enterprise entered a loan contract and conditions of the arrangement… Now having been burned…the bank is attempting to rewrite the contract, and after the fact, obtain new security at the expense of other creditors.

[134] In his article, Duggan canvassed three approaches to the declaration of constructive trusts where the defendants are insolvent and discussed the potential pitfalls and advantages of each. [see Chambers “Resulting Trusts in Canada 38: 2 Alta Law Review 378; Paciocco “The “Remedial Constructive Trust: A Principled Basis for Priorities Over Creditors” 1989 vol 68 no. 2 Can Bar Review 315; Calnan “Proprietary Rights and Insolvency” Oxford University Press 2009].

[135] Duggan referred to two “relatively recent” cases, Credifinance Securities Limited v. DSLC Capital Corp 2011 ONCA 160, 2011ONCA 160 and General Motors Corporation v. Peco Inc. (2006) 15 BLR (4th) 283 (Ont SCJ).

[136] Duggan wrote: The common thread…is that in both cases there was effectively only one other creditor apart from the claimant; the other creditor was guilty of wrongdoing…; and the purpose of the constructive trust remedy was to prevent the other creditor benefiting from its own wrongdoing…The implication is that outside these circumstances, the court should be reluctant to grant the remedy because (1) if there are multiple other creditors the court may have trouble identifying the potential adverse consequences for them, and (2 )in the absence of wrongdoing on the other creditor’s part, it is hard to see the justification for preferring the claimant. In the latter connection, both cases at least implicitly reject the voluntary acceptance of risk argument for constructive trust relief and in Credifinance, the court [La Forme JA at paragraph 43 wrote: [the outcome of the case] should not be interpreted to suggest that once a civil fraud by the bankrupt is proven, and that is coupled with a loss and ability to trace the consequences of the fraud, then a constructive trust will always be imposed. That, in my view is too broad.

[137] I note that the Court continued at Paragraph 44: Constructive trust is a discretionary remedy in a bankruptcy there are interests to be considered besides those of the defrauder and defraudee: there are other creditors. Thus the exercise of remedial discretion must be informed by additional considerations…(emphasis added).

[138] Duggan commented that that statement by La Forme JA is “entirely consistent with the ruling in Baltman.”.

[139] The author concluded at p 108: The law in Canada governing the availability of constructive trust relief in insolvency is unsettled at both the doctrinal and policy levels …at the policy level there is a tension in bankruptcy law between the pari passu principle and the principle that the bankruptcy estate does not extend beyond the debtor’s own property at the date of the bankruptcy… On the one hand, if the remedy is too readily available, the principle may be compromised too much…On the other hand a blanket denial of the remedy may prejudice legitimate third party claims. A solution might be to leave balancing of competing interests to the courts’ discretion, but too broad a discretion now may lead to unpredictable outcomes and increased litigation to the detriment of the estate. This is the main reason for skepticism about Paciocco’s involuntary creditor approach…It is hard to know how the courts discretion can be eliminated altogether without doing excessive violence to either the principle of pari passu or the property of the estate principle. But the discretion can be constrained in the interests of achieving a better balance between the two principles and more predictability in the case law. Cases like Credifinance and Peco suggest that this may be the direction in which the courts are heading.

“Tracing” Order Sought

[140] The proposed paragraph 13 of the draft Judgment reads as follows THIS COURT ORDERS AND DECLARES that Rockdale and Paata are trustees for the benefit of the Plaintiff, as beneficiary in respect of the proceeds, and the Plaintiff is entitled to trace and follow such monies: to any real or personal property in which Rockdale and Paata have any legal or beneficial interest and into the hands of any other person corporation or other entity who received such monies other than bona fide purchasers for value without notice.

[141] With respect to the fruits of the fraud, the Bank seeks to trace the loan proceeds received by the Company and Paata. The location of the funds paid into the Corporate Bank account in July of 2020 is at present unknown. The Bank seeks to trace into as of yet unidentified funds, including into the hands of any other person, corporation, or other entity who received funds other than bona fide purchasers for value without notice.

[142] Counsel for the Bank submits that the exception for bona fide purchasers for value without notice provides sufficient protection to other creditors.

[143] I have therefore considered whether, so long as the exception for creditors of the defendants qualifying as bona fide purchasers for value without notice is included in paragraph 13, this wording would sufficiently protect third party creditors.

[144] Even if I were prepared to decide whether the wording in paragraph 13 of the draft judgment would sufficiently protect third party creditors I would not have been satisfied on the information available to date.

[145] I do not have information about the other creditors of the defendants.

[146] It appears from Creditfinance and Peco that in the event of insolvency the exception for bona fide purchasers for value without notice might not be sufficient to prevent injustice to general creditors. From those cases, it appears that whether there could be an injustice could depend at least in part on the identity and number of general creditors

[147] Not all general creditors in insolvency proceedings are likely to be bona fide purchasers for value without notice.

[148] I also note that other factors affecting the exercise of the Court’s discretion may depend on the types of information considered by the Court in Baltman including whether a constructive trust should be used to “jump the queue” over other unsecured creditors in the bankruptcy.

[149] It could also depend on the types of doctrinal and policy considerations discussed in the Duggan article .

Summary Re Availability of Constructive Trust

[150] Here, given the present inability of the Bank to identify loan proceeds and link any specific property to the loan proceeds, there is no asset over which a declaration of Constructive Trust would be appropriate.

[151] Although in the circumstances known to date, any declaration of trust would be inappropriate, that may change if the exercise of “tracing” uncovers and identifies loan proceeds and links them to property over which a constructive trust could be declared.

[152] If by ‘tracing’ the Bank is able to identify such property, it may then call upon the Court to exercise its discretion to declare a Constructive Trust over such Property.

[153] As the Supreme Court of Canada explained in paragraph 45 of Soulos the Court must then ensure that there are no other factors that would make the imposition of a Constructive Trust unjust. The Court specifically mentioned consideration of other creditors.

[154] At this time, there appears to be a substantial possibility that the defendants will be involved in bankruptcy and insolvency proceedings. The Bank obviously views this as a real possibility as it is seeking a prospective order as part of this judgment with respect to the defendants’ fraud under s 178 of the Bankruptcy Act.

[155] The existence of other creditors and the nature of their claims in bankruptcy proceedings are not yet known.

[156] The Court, in exercising its discretion, would consider the information available, including whether the defendants were insolvent.

[157] After tracing is complete, the Court may be in a better position exercise its discretion with respect to the imposition of constructive trust including in its consideration of factor 4 in paragraph 45 of Soulos [i.e. whether there are factors that would render the imposition of a constructive trust unjust in all the circumstances].

[158] The Court could also receive information relevant to other factors that could be relevant in the exercise of discretion in declaring a Constructive Trust, including information on factors such as those considered in Baltman.

“Tracing”

[159] Here the draft judgment sought by the Bank at para 13 reads as follows: THIS COURT ORDERS AND DECLARES that Rockdale and Paata are trustees for the benefit of the Plaintiff, as beneficiary in respect of the proceeds, and the Plaintiff is entitled to trace and follow such monies: to any real or personal property in which Rockdale and Paata have any legal or beneficial interest and into the hands of any other person corporation or other entity who received such monies other than bona fide purchasers for value without notice.

[160] In considering the appropriateness of the “tracing” sought, I have reviewed a paper by Dan Parlow,”Parlow” of Kornfield LLP, “The Principles of Tracing” presented at the Trial Lawyers Association of British Columbia on June 21, 2021.

[161] In the introduction to the paper, Parlow set out the various uses of the “tracing” word.

[162] He wrote: Tracing (sometimes called following) may be used to describe one or more of an equitable remedy, a remedy at law, or an accounting process. Sometimes it is said not to be a remedy but a process to establish a proprietary claim. Tracing as an accounting process may also give rise to an effective remedy, for example, when a creditor traces assets in the hands of others pursuant to the Fraudulent Conveyances Act or the Bankruptcy and Insolvency Act. Finally in limited circumstances tracing may be a common law remedy in its own right. Equitable tracing is almost always asserted as an adjunct to one or more other equitable remedies which form the proprietary base for the entitlement to trace. At common law it may be asserted where possession has passed but legal title remains with the claimant. As an accounting process, tracing is a mechanism used to establish whether and to what extent such an equitable remedy may be available…It may also be used to follow property which has been converted into other forms or transferred into the hands of others, even where a proprietary base is not established.

Tracing Considerations

[163] I have already rejected the Bank’s claim for immediate entitlement to a Constructive Trust in the absence of information properly identifying the subject matter of the proposed constructive trust and any evidence linking the asset/s identified to the loan proceeds.

[164] It follows that at present, I am not allowing “tracing” as an adjunct to a constructive trust.

[165] At the same time, given the fact that this Court has found egregious fraudulent conduct on the part of both defendants, I am satisfied that authorizing the Bank to fully follow the path of the loan proceeds is reasonable and in the interests of justice. Indeed, it is necessary to assist the Bank to prevent the fraudsters from retaining property that they in good conscience should not be allowed to retain.

[166] I therefore order the defendants to provide a written detailed accounting to the Bank within 30 days with respect to the loan proceeds, including particulars of all uses/dispositions/their path to date, including particulars as to how and where the money obtained from the Bank was expended and any profits earned using the loan proceeds. This order includes production of bank statements and transactions and without limitation wire transfers cheques or other forms of transactions from any of the Company’s or Paata’s accounts into and from which the Plaintiff’s funds were deposited, including transfers to third parties. I order that this obligation to account to the Bank will continue on an ongoing basis until such time as the judgment is paid in full.

[167] With the tools provided in this judgment, the Bank should be able to completely follow the path of the loan proceeds and determine whether it can demonstrate to the court a link or causal connection between the loan proceeds obtained by fraud and the subsequent acquisition of specific assets or property.

[168] The “Tracing” that this Court is granting to the Bank is intended to enable the Bank to follow the loan proceeds by compelling the defendants to provide the detailed information needed for the Bank to determine whether it may have a basis for the establishment of proprietary rights over identifiable assets/to establish whether and to what extent an equitable remedy such as constructive trust or trusts may yet be available.

[169] I note that the defendants were ordered to submit to cross examination and discovery regarding their Waxman v Waxman assets as part of a tracing exercise in order to permit the plaintiffs “to recover misappropriated trust funds after legal or equitable rights had been conclusively proved at trial”.

[170] Here, the Bank has not requested oral discovery.

[171] The amounts in issue in this case are much less than those in Waxman.

[172] The “tracing” in writing requested and ordered here is appropriate given the amounts in issue.

Right to Elect Between Remedies

[173] The draft Judgment seeks to preserve the Bank’s right to elect between claiming a constructive trust/proprietary right in property yet to be uncovered or to claim damages, once it had been able to knowledgably determine which course of action would be more beneficial to it.

[174] In my view, that is appropriate in all the circumstances of this case

[175] In Tracy v Instaloans Financial Solutions Centres, (BC) 2010 BCCA 357 the BC Court of Appeal approved the trial Judge’s conclusion that the plaintiffs were entitled to refrain from making an election until they were able to gauge which remedy was effective.

[176] Once it has received the information on the path of the loan proceeds mentioned above /the information needed to make an informed election, the Bank will be entitled to choose between damages and constructive trust remedies and I so order.

Proceedings Post Judgment

[177] I have considered whether a final Judgment should be issued at this time in light of the need for the ongoing processes mentioned herein.

[178] A similar issue arose in Waxman v Waxman, 2002 Can LII 20932.

[179] In the Supplementary Reasons in that case, the Court ordered that the plaintiffs could be allowed to follow assets post judgment.

[180] In the Kornfield article on tracing, Parlow dealt with this issue in Section VIII on Two Stage Trials.

[181] Parlow wrote: The procedural implications of this entitlement were discussed in the Canadian context in the supplemental reasons in Waxman v Waxman, 2002 Can LII 20932. Under the heading ”The Proper Tracing Sequence” the Court rejected the argument that having failed to call evidence at trial relevant to the tracing of certain assets, the plaintiffs should not be allowed to cure the deficiency by gathering information and tracing in stages.

[182] The Court noted that if parties were required to call such evidence at trial, the cost and length of litigation would be greatly increased.

[183] Parlow noted that in Tracy v Instaloans Financial Solutions Centres (BC), 2010 BCCA 357, the BC Court of Appeal referred to the reasons in Waxman v Waxman and held that the tracing in stages of certain assets should be allowed.

Punitive Damages Claim

[184] I note that the Bank seeks an award of punitive damages in the sum of $150,000.00 [down from the $250,000 claimed for Punitive Damages in the Statement of Claim], on the basis that the Defendants' conduct was malicious, premeditated, and should offend this Honourable Court's sense of decency.

[185] I have concluded on the record submitted that the defendants knowingly and fraudulently induced the Bank to enter into a loan agreement and to advance loans to it, knowing it would not be buying equipment with the money and then disbursed the fruits of the fraud in a manner contrary to their representations. The conduct represents a marked departure from the ordinary standards of decent behaviour.

[186] The Supreme Court of Canada in Whiten v. Pilot Insurance Co., 2002 SCC 18, paras. 43 and 36 directed that the purpose of punitive damages relates to retribution, denunciation and deterrence. For the majority of the Court, Justice Binnie wrote:

Punitive damages are awarded against a defendant in exceptional cases for "malicious, oppressive and high-handed" misconduct that "offends the court's sense of decency": Hill v. Church of Scientology of Toronto, 1995 CanLII 59 (SCC), [1995] 2 S.C.R. 1130, at para. 196. The test thus limits the award to misconduct that represents a marked departure from ordinary standards of decent behaviour. Because their objective is to punish the defendant rather than compensate a plaintiff (whose just compensation will already have been assessed), punitive damages straddle the frontier between civil law (compensation) and criminal law (punishment).

[187] In Midwest Amusement Park, LLC v. Cameron Motorsports Inc., 2018 ONSC 4549, para. 103 Perell J. wrote:

It follows from Justice Binnie's remarks that an assessment of punitive damages requires an appreciation of: (a) the degree of misconduct; (b) the amount of harm caused; (c) the availability of other remedies; (d) the quantification of compensatory damages; and (e) the adequacy of compensatory damages to achieve the objectives or retribution, deterrence, and denunciation. These factors must be known to ensure that punitive damages are rational and to ensure that the amount of punitive damages is not greater than necessary to accomplish their purposes.

[188] In Gennett Lumber Co. v. John Doe a.k.a. Milton Harvey et al., 2019 ONSC 1345, paras. 52-53, the defendants participated in a complex fraudulent scheme by which five orders for hardwood flooring were placed by an individual purporting to be Milton Harvey with the plaintiff, a family-owned lumber company. The flooring was paid for with stolen credit cards. The plaintiff's total losses because of the fraud were $168,442.30 USD.

[189] On a motion for default judgment, Sossin J., as he was then, awarded $100,000.00 for punitive damages, concluding:

[52] In addition to compensatory damages, I am satisfied that the goals of retribution, deterrence and denunciation in the case of this organized fraud justify punitive damages.

[53] The plaintiffs seek punitive damages of $200,000. Applying the factors set out above, I find the sum of $100,000 is justified. With adjustments for the difference in currency, this award of punitive damages is roughly 50% of the actual losses suffered by Gennett, which reflects the governing rule of proportionality. An award of punitive damages that is equal to or higher than the actual losses suffered by Gennett would not be rational given the criminal sentence already imposed on Aremu and the absence of vulnerability on the part of Gennett in this case. At the same time, an award of punitive damages that is a minor fraction of the actual losses of Gennett, or could be factored in as a modest risk in participating in an organized fraud, would not reflect sufficiently the goals of retribution, denunciation and deterrence in this context.

[190] In IBEW, Local 353 Trust Funds (Trustees of) v. Shojaei, 2014 ONSC 3656, para. 16, the plaintiff sought default judgment claiming damages for amounts paid out to the defendants, who improperly submitted a fraudulent application for, and obtained, pre-retirement death benefits and health and welfare benefits from the plaintiff totaling $47,835.70. Ultimately, the court awarded $50,000.00 in punitive damages against each of the two defendants, totaling $100,000.00, finding:

I am satisfied, based on these cases, that the amount sought against each defendant is appropriate in all of the circumstances. Further, I am satisfied that the defendants' conduct was high-handed, deliberate and contumelious and is deserving of such an award of punitive damages. Without such damages, an inappropriate message would be sent to those having engaged in fraud, fraudulent misrepresentation, conspiracy and unjust enrichment, such as the defendants, that they may have no more to lose than paying back their ill-gotten gains.

[191] In Barrick Gold Corp. v. Lopehandia, 2004 CanLII 12938 (ON CA), [2004] O.J. No. 2329, paras. 54-65 the Ontario Court of Appeal confirmed that a court may award punitive damages on a motion for default judgment. In other words, the Court's "jurisdiction to make an award of punitive damages is not blunted by the fact that this is a motion for default judgment against a defendant who has failed to defend". Canadian Premier Life Insurance Co. v. Ho, 2016 ONSC 496, para. 29.

[192] Based on the principles set out above I award punitive damages against the Company of $50,000 and Paata of $50,000 to send a public message denouncing the Defendants' reprehensible fraudulent conduct and deterring others from undertaking similar frauds in the future.

Request for a Declaration that the Debt Arises due to Fraud and False Pretenses

[193] Pursuant to s. 178(1)(e) of the BIA, a discharge from bankruptcy does not release "any debt or liability resulting from obtaining property or services by false pretenses or fraudulent misrepresentation, other than a debt or liability that arises from an equity claim".

[194] The Bank seeks a declaration that the Defendants' debt and liability herein results from obtaining property or services by false pretenses or fraudulent misrepresentations.

[195] At present it appears that none of the parties in this case have been involved in bankruptcy proceedings pertaining to the Company or Paata.

[196] I agree with Myers J. on this point in Bank of Montreal v 1874232 (unreported) and in L-Jalco Holdings v Bell, 2017 ONSC 1035, that a declaration under s. 178 should not be sought on deemed admissions under Rule 19 in proceedings divorced from Bankruptcy proceedings.

Costs

[197] Given the reprehensible conduct of the defendants outlined earlier in these Reasons substantial indemnity costs are appropriate in my view.

[198] On the evidence submitted, the costs being sought by the Bank of $15,714.90 are reasonable and appropriate

Other Matters

[199] Although the Bank did not seek an order for damages based on breach of contract, it does seek relief in paragraphs 9-11 of the draft judgment based on its contracts with the defendants.

[200] Having reviewed the contractual documents and the deemed admissions and the evidence in the motion record I am satisfied that the relief claimed in those paragraphs is warranted and I so order.

[201] Accepting that the Bank is entitled to payment of the amounts set out in the factum plus interest, I have noted that pre-judgment interest rates set out in the contracts are dependent on prime rates.

[202] Since prime rates have been changing recently, I ask Counsel for the Bank to calculate the amounts owing as of the date of the release of these Reasons for inclusion in the Judgment.

[203] Counsel are asked to submit a revised draft judgment with damages updated to the date of the release of these Reasons and otherwise reflecting their content.

[204] I am prepared to order that the parties may seek further direction of this Court.

[205] I have considered whether I must remain seized of future motions and requests for further directions in this matter.

[206] I have noted that the “tracing” and the subsequent requests for Court intervention in Waxman v Waxman have continued over many years before numerous judges.

[207] Here, this was a motion in writing.

[208] I was not a trial judge who had the advantage of seeing and hearing the viva voce evidence of witnesses.

[209] I see no reason to remain seized of this matter.

[210] Any future motions or requests for further involvement may be handled by any judge of this Court.

MA Sanderson J.

Date: September 16, 2022

Bank of Montreal v. 1870769 Ontario Inc., 2022 ONSC 5100

Case Summary