SUPERIOR COURT OF JUSTICE - ONTARIO
RE: HIS MAJESTY THE KING IN RIGHT OF ONTARIO, Plaintiff
AND:
SANJAY MADAN (a.k.a. SADANAND MADAN), SHALINI MADAN, CHINMAYA MADAN, UJJAWAL MADAN, INTELLISOURCES INC., NEWGEN SOLUTIONS INC., 1058350 CANADA LTD., 1846932 ONTARIO INC., VIDHAN SINGH and WANG & ASSOCIATES PROFESSIONAL CORPORATION, AVPS HOLDINGS INC., AVPS RECRUITING INC., AVPS INVESTMENTS INC., AVPS PROPERTIES INC., 2305509 ONTARIO INC., 1784357 ONTARIO INC., 6875459 CANADA INC., Defendants
BEFORE: Justice Cavanagh
COUNSEL: Christopher Du Vernet and Carlin McGoogan, for the Moving Parties, the Defendants Sanjay Madan, Shalini Madan, Chinmaya Madan, and Ujjawal Madan
Nansy Ghobrial, for the Responding Party, Plaintiff
HEARD: August 19, 2022; additional written submissions received on September 2, 2022.
ENDORSEMENT
Introduction
1The plaintiff, His Majesty the King in Right of Ontario (“Ontario”), has brought the within action for remedies in relation to two alleged frauds: the misappropriation of funds from the Support for Families Program (“SFFP”) and kickbacks associated with Ontario’s hiring of IT fee-for-service consultants.
2This Court made an Order dated October 19, 2020, without notice, granting a Mareva injunction against the defendants, including Sanjay Madan, Shalini Madan, Chinmaya Madan and Ujjawal Madan (the “Madan Defendants”). The October 19, 2020 Order restrained the defendants from dealing with assets in Ontario. This order was extended by Order dated October 28, 2020. When these Orders were made, Ontario’s claims were in relation to the alleged SFFP fraud.
3On January 29, 2021, I made an order extending the Mareva injunction and freezing the defendants worldwide assets pending disposition of the action (the “Mareva Order”). There was no additional evidence filed by Ontario with respect to the facts in relation to the kickback scheme. On that day, I also made an Order granting leave to Ontario to amend the statement of claim to, among other amendments, make a claim in relation to the alleged fee-for-service fraud.
4Sanjay Madan has admitted that he took money from the SFFP and that he participated in the fee-for-service scheme and received kickbacks.
5Each of Chinmaya Madan, Ujjawal Madan and Shalini Madan deny any involvement in either the SFFP fraud or the kickback scheme.
6All of the money derived from the SFFP fraud has been seized and paid into Court.
7The Madan Defendants bring this motion to vary the Mareva Order to permit them to access additional funding to pay for legal expenses (i) associated with defending this action, and (ii) associated with defending criminal prosecutions against Sanjay Madan and Shalini Madan, as well as to pay for therapy expenses for Ujjawal Madan and Chinmaya Madan.
8To pay for these expenses, the Madan Defendants seek permission to sell two properties that are subject to the Mareva Order, a condominium (and storage locker) at 44 St. Joseph Street, Toronto (“44 St. Joseph”) and a house at 162 Kingsdale Avenue, Toronto (“162 Kingsdale”).
Analysis
9The issue on this motion is whether the Mareva Order should be varied to permit the Madan Defendants to access assets, specifically, 44 St. Joseph and 162 Kingsdale, to pay for ordinary living expenses, therapy expenses, and legal expenses in connection with their defence of this civil action and, in the cases of Sanjay Madan and Shalini Madan, their defences to criminal charges.
Is the Mareva Order a proprietary injunction or a non-proprietary injunction?
10With respect to a motion such as this one, the leading authority is the decision of Molloy J. in Canadian Imperial Bank of Commerce v. Credit Valley Institute of Business and Technology, 2003 12916 (ON SC) [CIBC].
11In CIBC, the defendants moved to vary injunction orders against them to permit payment of various expenses, including ongoing living expenses and legal fees for civil and criminal counsel. Molloy J., at para. 11, identified assets of the defendants with an approximate value of $5.7 million of which at least $4 million was directly traceable to funds advanced by CIBC. These assets were caught by the injunction order.
12In CIBC, Molloy J. held, at para. 15, that on a motion such as this, it is important at the outset to determine whether the Mareva Order is a proprietary injunction or a non-proprietary injunction: This is necessary because a different analysis must be followed where the Mareva order is a proprietary injunction as opposed to a non-proprietary injunction.
13As noted by Molloy J. in CIBC at paras. 15-16, a proprietary injunction is granted to preserve an asset in the possession of a defendant, which the plaintiff says belongs to the plaintiff, or is subject to a trust in favour of the plaintiff. A Mareva injunction, in contrast, does not require the plaintiff to show any ownership interest in the property subject to the injunction and does not require the plaintiff to establish a case of fraud or theft. It is a recognized exception to the rule that the court has no jurisdiction to attach the assets of a debtor for the protection of a creditor prior to the creditor obtaining judgement.
14In CIBC, at para. 17, Molloy J. explained the purpose of a non-proprietary Mareva injunction:
The purpose of the Mareva injunction is a limited one. It is meant to restrain a defendant from taking unusual steps to put his assets beyond the reach of the plaintiff in order to thwart any judgment the plaintiff might eventually obtain. It is not meant to give the plaintiff any priority over other creditors of the defendant, nor to prevent the defendant from carrying on business in the usual course and paying other creditors. The nature of the Mareva is such that it is typically sought and granted, in the first instance, without notice to the defendant, but then is subject to a motion by the defendant to vary the injunction to permit payments in the usual course of business or living.
15In CIBC, at paras. 19 and 26(i), Molloy J. held that there is a preliminary test for the defendant to satisfy before obtaining relief from a Mareva injunction. This preliminary test applies whether the Mareva injunction is a proprietary injunction or a non-proprietary injunction. The defendant must satisfy the court that he has no other assets available to pay his expenses other than those frozen by the injunction.
16Ontario accepts that the Mareva Order is sufficiently broad that it captures all of the Madan Defendants’ worldwide assets. As such, on this motion, this preliminary test is satisfied.
17In CIBC, at para. 20, Molloy J. held that “[a]dditional considerations apply to a defendant’s motion to vary a proprietary injunction”.
18Molloy J. addressed whether the defendant who seeks to use funds subject to a proprietary injunction must show an arguable case on the merits before the Court should engage in the process of balancing the competing interests of the plaintiff in not permitting the defendant to use the plaintiff’s money for his own purposes and of the defendant in ensuring that he has a proper opportunity to present his defence before assets in his name are removed from him without a trial. Molloy J., at para. 25, held that it is not a pre-requisite for the defendant to do so, subject to one caveat:
Where the plaintiff has frozen assets and advanced an arguable case that those assets are subject to a proprietary claim by the plaintiff, there is an onus on the defendant to put forward credible evidence as to the source of the subject assets if the defendant seeks to use the funds for his own purposes. It is only where the defendant can demonstrate that the assets are from a source other than the plaintiff that the usual rules for variation of a Mareva will apply. Otherwise, his right to use the funds will be subject to the balancing of interests in the exercise of the court’s discretion.
19Having explained this caveat, Molloy J., at para. 26, stated the test to be applied where the injunction is a proprietary injunction:
Accordingly, the test to be applied is as follows:
(i) Has the defendant established on the evidence that he has no other assets available to pay his expenses other than those frozen by the injunction?
(ii) If so, has the defendant shown on the evidence that there are assets caught by the injunction that are from a source other than the plaintiff, i.e. assets that are subject to a Mareva injunction, but not a proprietary claim?
(iii) The defendant is entitled to the use of non-proprietary assets frozen by the Mareva injunction to pay his reasonable living expenses, debts and legal costs. Those assets must be exhausted before the defendant is entitled to look to the assets subject to the proprietary claim.
(iv) If the defendant has met the previous three tests and still requires funds for legitimate living expenses and to fund his defence, the court must balance the competing interests of the plaintiff in not permitting the defendant to use the plaintiff’s money for his own purposes and of the defendant in ensuring that he has a proper opportunity to present his case before assets in his name are removed from him without a trial. In weighing the interests of the parties, it is relevant for the court to consider the strength of the plaintiff’s case, as well as the extent to which the defendant has put forward an arguable case to rebut the plaintiff’s claim.
20On this motion, the parties disagree on the question of who bears the onus of proving that the assets to which the Madan Defendants seek access to pay for their living and legal expenses are or are not subject to a proprietary claim.
21The Madan Defendants submit that the Mareva Order is a non-proprietary injunction and that assets they propose to liquidate, 44 St. Joseph and 162 Kingsdale, are non-proprietary assets. They submit that, as such, they are entitled to use the proceeds of sale of these assets to pay for reasonable living expenses and legal expenses. The Madan Defendants submit that the onus is on Ontario to tender evidence showing that Ontario has a proprietary claim to these assets, and it has failed to discharge this onus.
22Ontario submits that when a Mareva injunction is granted that freezes a defendant’s worldwide assets, the onus is on the defendant who seeks to vary the injunction to use frozen assets for living expenses and legal expenses to demonstrate through evidence that the assets to which he seeks access are non-proprietary. Ontario submits that the Madan Defendants have not discharged this onus because they have not shown that 162 Kingsdale and 44 St. Joseph were not acquired using money received by Sanjay Madan from the kickback scheme.
23Ontario is willing to agree to an order permitting the sale of 162 Kingsdale to allow the Madan Defendants to access proceeds of sale representing the value of 162 Kingsdale that Ontario contends, based on evidence from its forensic expert, is non-proprietary. This amount is $242,226.35. Ontario submits that the remaining proceeds of sale should be paid into court. Ontario submits that the non-proprietary proceeds should be allocated (i) in the amount of $96,615 to Sanjay Madan’s criminal counsel, (ii) the amount of $55,596 to Shalini Madan’s criminal counsel, and (iii) in the amount of $90,015 to be paid into court and released to Sanjay Madan and Shalini Madan on a monthly basis in the amount of $3,100 for living expenses.
24As I have noted, in CIBC, Molloy J. held that at the outset the court is called on to determine whether the Mareva order is a proprietary injunction or a non-proprietary injunction. At para. 25 of her decision, Molloy J. held that the initial onus is on the plaintiff to advance an arguable case that frozen assets are subject to a proprietary claim by the plaintiff.
25Ontario submits that it has shown that it has a claim to a proprietary interest in 44 St. Joseph and 162 Kingsdale and that the Mareva Order is a proprietary injunction. Ontario relies on the fact that Sanjay Madan engaged in the kickback scheme, and it asserts that Shalini Madan, Chinmaya Madan, and Ujjawal Madan have been unjustly enriched as a result of the kickback scheme perpetrated by their co-defendants. Ontario seeks a constructive trust over all assets derived from the kickback scheme including, through tracing of monies received by Sanjay Madan as kickbacks, 162 Kingsdale and 44 St. Joseph.
26Ontario submits that the test to be applied on this motion is stated in CIBC, at para. 26, and that when I engage in the balancing exercise explained at para. 26(iv), I should exercise my discretion to decline the variation of the Mareva Order sought by the Madan Defendants.
27I begin my analysis by noting that when Ontario first obtained a Mareva injunction on October 20, 2020, on a motion without notice, Ontario’s Statement of Claim alleged only that money from the SFFP was stolen in the spring of 2020. No allegation of any fraud in relation to the kickback scheme was made.
28The Mareva Order made on January 29, 2021 extended the prior Mareva injunction. Sanjay Madan has admitted that he took money from the Support for Families Program (“SFFP”). The Madan Defendants accept that, as it pertains to the SFFP funds, Ontario obtained a proprietary injunction. The monies taken from Ontario through the SFFP fraud have now been seized and paid into Court and, as it relates to these monies, the Mareva Order is no longer operative.
29Also on January 29, 2021, Ontario obtained an order, on consent, amending the Statement of Claim to, among other amendments, make claims in relation to the alleged kickback scheme. Further amendments were made that resulted in Ontario’s Amended Amended Statement of Claim dated October 29, 2021.
30Because the monies taken from Ontario through the SFFP fraud have been seized and paid into court, the initial question before me is whether Ontario has advanced an arguable case that assets frozen by the Mareva Order, including 44 St. Joseph and 162 Kingsdale, are subject to a proprietary claim by Ontario in relation to the kickback scheme.
31In Ontario’s Amended Amended Statement of Claim, Ontario claims damages in respect of the alleged kickback scheme. Ontario also seeks a declaration that all monies wrongfully obtained from it, and any assets acquired by the defendants with said monies, are held in a constructive trust in Ontario’s favour. Ontario seeks an order tracing all monies and assets which belong to the constructive trust.
32In the Amended Amended Statement of Claim, at para. 44 and 45, Ontario pleads material facts in relation to the kickback scheme:
Beginning in at least 2010, Sanjay, Singh, companies they control, and/or others known to them conspired to subvert the plaintiff’s procurement process and policies by engaging in a kickback/secret commission scheme whereby Sanjay would cause the plaintiff to contract with particular VORs to engage consultants put forward by Singh and Singh would secretly pay or cause to be paid the Singh Secret Commissions to Sanjay (the “Madan/Singh Kickback Scheme”).
Also beginning in at least 2010, Sanjay and others conspired to subvert the plaintiff’s procurement process and policies by engaging in a kickback/secret commission scheme whereby Sanjay would cause the plaintiff to contract with particular VORs to engage consultants put forward by others, and the others would secretly pay or cause to be paid the Other Secret Commissions to Sanjay (the “Madan/Others Kickback Scheme”). The full particulars of the Madan/Others Kickback Scheme and the total amount of all Other Secret Commissions thus paid, are known to the defendants.
33Ontario pleads that it suffered damages as a result of these schemes in that it entered into fee-for-service contracts that it otherwise would not have. Ontario pleads, in the alternative, that it suffered damages in that it paid more under the relevant fee-for-service contracts than it otherwise would have.
34Ontario pleads that Sanjay Madan was unjustly enriched as a result of receipt of secret commissions. Ontario pleads that Sanjay Madan diverted some or all of the secret commissions to others, including the other three Madan Defendants, and/or into assets owned by them, who were unjustly enriched.
35In Peter v. Beblow, 1993 126 (SCC), [1993] 1 S.C.R. 980, the Supreme Court of Canada confirmed, at para. 3, the three elements that must be satisfied for an action for unjust enrichment: (1) an enrichment; (2) a corresponding deprivation; and (3) the absence of a juristic reason for the enrichment.
36In Beblow, the plaintiff claimed a constructive trust over the defendant’s property because of contributions made to the property without compensation. McLachlin J. (as she then was), writing for the majority, at para. 25, recognized that in Canada the concept of the constructive trust, a proprietary concept, has been used as a vehicle for compensating for unjust enrichment in appropriate cases. McLachlin J. held that a finding that a plaintiff is entitled to a remedy for unjust enrichment does not imply that there is a constructive trust.
37McLachlin J. held, at paras. 25 and 29, that in order for a constructive trust to be found, there must be a direct link to the property which is the subject of the trust by reason of the plaintiff’s contribution (in addition to showing that monetary compensation is an inadequate remedy).
38Ontario submits that it has shown the required nexus between its deprivation and the assets in question because it has shown, through expert forensic analysis, that funds received by Sanjay Madan as kickbacks were used to acquire 44 St. Joseph and, at least in part, 162 Kingsdale. Ontario relies on a right of an owner of property to trace his property into the hands of others while it was in identifiable form.
39The Madan Defendants dispute that the evidence supports the conclusion that money received by Sanjay Madan as kickbacks was used to acquire 44 St. Joseph or 162 Kingsdale.
40Ontario relies on the facts in CIBC to support its contention that it has advanced an arguable claim to a proprietary interest in 44 St. Joseph and 162 Kingsdale. Ontario points out that in CIBC, apartment buildings were purchased with cash received from CIBC and these buildings were held to be subject to a proprietary injunction. Ontario submits that the same circumstances exist on this motion because, it contends, the properties at 44 St. Joseph and 162 Kingsdale were purchased with cash received from the kickback scheme, a fraud perpetrated on Ontario.
41In support of this submission, Ontario relies on the following statement by Molloy J. in CIBC, at para. 15:
A proprietary injunction is granted to preserve an asset in the possession of a defendant, which the plaintiff says belongs to the plaintiff, or is subject to a trust in favour of the plaintiff. It is typically sought in cases of alleged theft, conversion or fraud where the defendant, by some wrongdoing, comes into the possession of the plaintiff’s property. The purpose of the injunction is to preserve the disputed property until trial so that the property will be returned to the plaintiff if successful at trial, rather than used by the defendant for his own purposes.
42I do not agree that the factual circumstances on this motion are the same as those in CIBC. There is an important difference. In CIBC, Molloy J. held, at para. 12, that the two apartment buildings were purchased using funds directly traceable to CIBC funds. In contrast, on this motion, Ontario has not alleged or shown through evidence that through the kickback scheme, Sanjay Madan came into possession of Ontario’s property. Ontario has not alleged or shown through evidence that 44 St. Joseph or 162 Kingsdale were acquired using funds obtained by Sanjay Madan from Ontario or traceable to its funds. Ontario alleges that Sanjay Madan received kickbacks from Singh and others. Ontario does not make a direct claim to the return of any of its money received from Ontario by Sanjay Madan, or assets derived therefrom.
43Ontario has not shown a direct link between its money and 44 St. Joseph or 162 Kingsdale. The pleaded allegations made by Ontario in relation to the alleged kickback scheme, taken at their highest, and having regard to the evidentiary record, do not support a claim by Ontario against the Madan Defendants for a constructive trust over assets of the Madan Defendants.
44For these reasons, Ontario has not advanced an arguable case that the assets of the Madan Defendants that are frozen by the Mareva Order are subject to a constructive trust in favour of Ontario. Whether or not money received by Sanjay Madan from Singh or others as kickbacks was used to acquire 44 St. Joseph or 162 Kingsdale does not affect this conclusion.
45Ontario, in its supplemental written submissions, submits that recognition that Ontario has a proprietary interest in the assets in question is consistent with how courts have addressed similar issues in the context of civil forfeiture. Ontario cites Ontario (Attorney General) v. McDougall, 2011 ONCA 363 where the Court accepted that if money acquired through the sale of drugs is used to acquire property, the interest acquired in the property is the “proceeds of crime” under the definition in 2. 2 of the Civil Remedies Act, 2001. Ontario also submits that apart from remedies under the Civil Remedies Act, 2001, there is a real risk that to allow the Madan Defendants to use proceeds of sale from 44 St. Joseph or 162 Kingsdale to pay for legal expenses would be to sanction laundering of proceeds of crime, an offence under s. 462.31 of the Criminal Code.
46I do not need to address these submissions. The question before me is whether Ontario has advanced an arguable case that the frozen assets are subject to a proprietary claim by Ontario. This is to be determined by the evidentiary record and Ontario’s claim as pleaded. Ontario’s only claim, as pleaded, that could be a proprietary claim is its claim to a constructive trust and I have concluded that, on the facts pleaded and the evidentiary record, Ontario has not advanced an arguable proprietary claim on the basis of a constructive trust.
47I conclude that the Mareva Order, as it pertains to Ontario’s claims in relation to the kickback scheme, is a non-proprietary injunction.
Should the Mareva Order be varied to permit the Madan Defendants to access funds to pay for legal expenses in connection with their civil and (in the cases of Sanjay Madan and Shalini Madan) criminal defences?
48Where a defendant seeks to vary a Mareva injunction that is not a proprietary injunction to permit payment of expenses from frozen assets, the defendant must satisfy the court that he has no other assets from which to make the payments. As I have noted, the Madan Defendants have satisfied this preliminary test.
49Where a non-proprietary Mareva injunction has been granted, even a broad and comprehensive one such as the Mareva Order, it is subject to variation to permit payments in the usual course of business or living, including for payment of legal expenses. The defendant must satisfy the court that he requires the money for a purpose that does not conflict with the policy underlying the Mareva injunction. See CIBC, at paras. 17-18.
50Chinmaya and Ujjawal Madan seek permission to sell 44 St. Joseph and they seek a direction that the proceeds of sale be paid to their legal counsel, Du Vernet, Stewart, in Trust, to be applied by them solely to legal fees, disbursements and HST, and therapy expenses incurred in connection with this proceeding.
51The Madan Defendants provided a budget for the civil action updated to April 1, 2022. The budget estimates time expected to be needed (for each of lead counsel and second counsel) and fees for the defence of the civil action for the following activities:
a. preparation for and argument of funding motion including preparation for and conduct of cross-examinations of two Crown deponents and preparation for and attending at examinations of four defendants, review transcripts, prepare factum, review Crown factum and argument of one day motion;
b. review of proposed amendments to Statement of Claim, investigation of facts pertaining to new allegations, and preparation of Amended Statements of Defence (4);
c. review of banking records and other files (estimated at 225,000 pages) and liaison with prospective forensic experts re: new allegations being advanced, evidence relied upon by Plaintiff to support same, review banking documents;
d. identification of and interviewing prospective witnesses and for clients with respect to new allegations;
e. correspondence to and from clients and Crown;
f. preparation of affidavit of documents for four clients including requesting and obtaining documents from third-party institutions;
g. review of Crown’s list of documents and production;
h. preparation of the appeal material and conduct of appeal of order striking out counterclaims;
i. initial consultations with Indian counsel for each of the four Madan Defendants.
52The time estimated for senior counsel is 180 hours and the time estimated for second counsel is 470 hours. The estimated fees are $440,750 which, with HST, total $498,047.50. Disbursements, including forensic expert fees, are estimated to be $50,850.
53The Madan Defendants propose that all funding released for civil legal expenses and living expenses shall be subject to the same accounting procedure as set out in paragraph 4 of the Order of this Court dated October 12, 2021.
54In its Amended Amended Statement of Claim, Ontario seeks $41 million in damages against all the defendants as a result of both the FFFP fraud and the kickback scheme, in addition to punitive damages. Ontario submits that in considering what quantum, if any, to release to the Madan Defendants, the court must be cautious not too counteract the purpose of the Mareva Order and render it of no effect.
55Ontario submits that the budget for the civil action is grossly inflated. Ontario points out that a very substantial amount has already been released to the Madan Defendants for the defence of the civil action, notwithstanding that, although there have been a number of motions, the litigation has not advanced beyond the pleading stage. Ontario submits that the Madan Defendants have not advised what proportion of the estimated budget each of them is responsible for, while, at the same time, maintaining that each is only willing to bear their own legal costs.
56This is complex litigation involving substantial claims and many documents. I am not able to conclude on the evidence before me that the Madan Defendants’ estimated budget for legal expenses is grossly inflated. I am satisfied that it is reasonable for 44 St. Joseph and 162 Kingsdale to be sold and that the proceeds of sale be available to pay for reasonable legal expenses. By permitting these properties to be sold with the proceeds of sale deposited to the trust account of counsel for the Madan Defendants, I am not deciding what legal expenses will be reasonable for the defence of the civil action going forward.
57The Madan Defendants will be subject to the same obligations with respect to legal expenses as are currently in place and are set out in paragraph 4 of my Order dated October 12, 2021. This Order provides that counsel for the Madan Defendants shall provide an accounting in respect of funds released to it and that if Ontario is not satisfied that amounts held in trust by counsel for the Madan Defendants have only been applied to reasonable legal fees and disbursements, Ontario is at liberty to move for a further Order on a going forward basis in relation to funding of reasonable legal expenses.
58Sanjay Madan and Shalini Madan are subject to criminal charges. The criminal charges are serious and the issues are complex. The charges are scheduled for a seven week jury trial. In CIBC, Molloy J. considered the ongoing cost of criminal counsel to be a high priority. In my view, the cost of criminal defence counsel for Sanjay Madan and Shalini Madan is a high priority.
59Shalini Madan provided a budget prepared by her criminal defence counsel. The budget was prepared for a seven week jury trial. The estimate is $412,800 plus HST.
60Sanjay Madan has provided a budget prepared by his criminal counsel for the seven week jury trial. The estimate for legal expenses is $433,950 plus HST.
61Sanjay Madan and Shalini Madan seek an order severing their joint tenancy on title to 162 Kingsdale and permitting Chinmaya Madan to list 162 Kingsdale and to sell it for the best offer received. Sanjay and Shalini Madan ask that the several proceeds of sale deriving from the sale of 162 Kingsdale shall be paid to Du Vernet, Stewart In Trust to be applied (i) to ordinary living expenses incurred by each of them, (ii) to legal expenses incurred in connection with this civil action (and for legal expenses incurred in connection with the severance and sale of 162 Kingsdale), and (iii) directing Du Vernet, Stewart to disburse from the proceeds of sale funds for legal expenses to their respective criminal lawyers in accordance with their respective budgets filed.
62Ontario submits that it is premature at this stage to release funds to criminal counsel for preparation for the trial which is not scheduled to commence until the fall of 2023. Ontario notes that it appears that there are settlement discussions which, if successful, may obviate the need for a trial. Ontario submits that the funds to be released at this stage should be limited to the amounts sought excluding the estimated cost of the jury trial.
63In these circumstances, where (i) there is a non-proprietary Mareva injunction, (ii) Sanjay Madan and Shalini Madan are facing serious criminal charges, and (iii) their criminal defence lawyers require assurance that funding will be available for the trial, I am not satisfied that it would be proper to limit the amount of funds to be released to criminal defence counsel to an amount that excludes the estimated cost of trial. If there is a resolution that obviates the need for a trial, this will significantly reduce the expenditure for legal expenses, and the amounts not needed for reasonable legal charges for the criminal proceedings shall be returned to Du Vernet, Stewart to be held in trust or paid into court.
Therapy expenses
64Chinmaya Madan and Ujjawal Madan seek leave to use proceeds from the sale of 44 St. Joseph for therapy expenses. Ontario responds that it does not consent to the use of frozen money for this purpose because it is not satisfied that these expenses are not covered by benefit plans available to Chinmaya Madan and Ujjawal Madan.
65Counsel for Chinmaya Madan and Ujjawal Madan submits that he has advised counsel for Ontario that the plans do not cover these expenses and that they cannot find a therapist in the U.S. who would testify in a Canadian court. Counsel for Ontario has asked for copies of the benefit plans and, I understand, they were not provided.
66Counsel agreed to confer and to attempt to resolve this issue. If they are not able to do so, Chinmaya Madan and Ujjawal Madan may renew their motion for this relief.
Disposition
67For these reasons, I make the following Order:
a. The Madan Defendants are permitted to access additional funding to pay for legal expenses associated with defending this action in amounts not to exceed the amounts specified in the budgets prepared by Du Vernet, Stewart and included in the motion materials, as follows:
i. Setting aside the “no dealings” order registered on title to the condominium unit and storage locker owned by Chinmaya Madan at 44 St. Joseph Street;
ii. Directing the Land Registrar to discharge the said “no dealings” order on 44 St. Joseph Street;
iii. Permitting Chinmaya Madan to list 44 St. Joseph Street on the Multiple Listing Service with a licensed real estate agent at a price and on such terms as recommended by that agent, and to sell 44 St. Joseph Street for the best offer received;
iv. Directing that the proceeds of sale of 44 St. Joseph Street shall be paid to Du Vernet, Stewart in Trust to be applied by them solely to legal fees, disbursements, and HST, incurred in connection with this proceeding on behalf of Ujjawal Madan and Chinmaya Madan;
v. setting aside the “no dealings” order registered on title to the property owned by Shalini Madan and Sanjay Madan at 162 Kingsdale Avenue, Toronto;
vi. Directing the Land Registrar to discharge the said “no dealings” order on 162 Kingsdale;
vii. Permitting the defendants Sanjay Madan and Shalini Madan to register a Transfer of severing their joint tenancy on title to 162 Kingsdale;
viii. Permitting Chinmaya Madan to list 162 Kingsdale on the Multiple Listing Service with a licensed real estate agent at a price and on such terms as recommended by that agent, subject to notification to and approval by Ontario, and to sell 162 Kingsdale for the best offer received;
ix. Directing that the several proceeds of Shalini Madan and Sanjay Madan derived from the sale of 162 Kingsdale shall be paid to Du Vernet, Stewart in Trust to be applied to ordinary living expenses incurred by Sanjay Madan and Shalini began, respectively, and to legal fees, disbursements, and HST incurred in connection with this proceeding, and for legal expenses incurred in connection with the severance and sale of 162 Kingsdale;
x. Directing and authorizing Du Vernet, Stewart to disburse from the proceeds of sale of 162 Kingsdale funds for legal expenses to be incurred by Sanjay Madan and Shalini with respect to the criminal proceedings against them, to their criminal solicitors, Chris Sewrattan and Craig Bottomley, in accordance with their respective budgets filed on this motion;
xi. Authorizing Chris Sewrattan and Craig Bottomley, respectively, to apply such funds to legal fees, disbursements, and HST to be incurred in representing Sanjay Madan and Shalini Madan in the criminal proceedings against them, and directing them to return any unused funds to Du Vernet, Stewart in Trust at the conclusion of such proceedings, which funds shall be held in trust pending the conclusion of the within action or further order of the Court.
b. Directing that all funding relief for civil legal expenses and living expenses shall be subject to the same accounting procedure as set out in paragraph 4 of my order dated October 12, 2021.
68In her submissions, counsel for Ontario advised that she would propose language to be included in an order providing for the sale of the two properties. By making this endorsement, I do not foreclose Ontario from providing input into the language of the formal order providing for the sale of the two properties or otherwise giving effect to this endorsement.
69At the hearing, I did not receive a submission from Ontario’s counsel about the amount of proceeds of sale that should be held in trust by counsel for the Madan Defendants to cover reasonable legal expenses in the civil action going forward (if I were to conclude that the Mareva Order is a non-proprietary injunction) and what amount, if any, should be paid into court. If this is not agreed upon, I will receive submissions from counsel when the formal order is settled.
70I ask counsel to provide me with an approved form of order that gives effect to this endorsement.
71If the parties are unable to resolve costs, they may make written submissions in accordance with a timetable agreed upon by counsel.
Cavanagh J.
Date: September 21, 2022