Superior Court of Justice – Ontario

COURT FILE NO.: CV-18-00602572-0000

DATE: 20220204

RE: MARK CHANG AS ESTATE TRUSTEE OF THE ESTATE OF SYDNEY RAMOND CHANG, DECEASED Plaintiff

AND:

MEI QIONG CHEN, YU YING GUAN aka ANNA GUAN, HODJAT FIROOZI and DIRECTOR OF TITLES Defendants

BEFORE: A.A. Sanfilippo J.

COUNSEL: Lawrence Hansen, for the Plaintiff James H. Chow, for the Defendants, Mei Qiong Chen and Yu Ying Guan aka Anna Guan Adam Zasada, for the Defendant, Hodjat Firoozi (did not appear) Jan Roberson, Director of Titles (Statutory Party - ss. 57(13)(14), Land Titles Act)

HEARD (By videoconference): February 4, 2022

ENDORSEMENT

DELIVERED ORALLY:

[1] The Plaintiff, Mark Chang as Estate Trustee of the Estate of Sydney Raymond Chang (the “Chang Estate”) brought this motion, in writing, for default judgment against the Defendants Mei Qiong Chen and Yu Ying Guan. This motion was brought on notice to all Defendants, which included not only Mrs. Chen and Ms. Guan but also Hodjat Firoozi. The Director of Titles was named as a party Defendant and provided with notice of this proceeding in accordance with section 57(14) of the Land Titles Act, R.S.O. 1990, c. L.5.

[2] By endorsement of January 31, 2022, I directed that this motion be heard orally. This motion was heard today.

[3] In this motion, the Plaintiff sought an Order directing the Director of Titles to delete from title to property known municipally as Suite 2131, 25 Bamburgh Circle, Toronto (the “Subject Property”) the following:

(a) The Transfer registered on July 20, 2015 as Instrument number AT 3952146 transferring title to the Subject Property from the late Sydney Chang to Sydney Chang and Yu Ying Guan as joint tenants (the “Impugned Transfer”).

(b) The Charge/ Mortgage of Land registered on December 2, 2016 as Instrument number AT4422928 with Hodjat Firoozi as Chargee securing repayment of the principal amount of $300,000 (the “Impugned Mortgage”).

(c) The Continuing Power of Attorney registered on December 2, 2016 as Instrument number AT4422910 with Yu Ying Guan as Donee/ attorney for property (the “Impugned Power of Attorney”).

(d) The Certificate of Pending Litigation issued on December 7, 2018 and registered on December 11, 2018 as Instrument Number AT5029934 (the “CPL”).

[4] The lawyer for Mrs. Chen and Ms. Guan appeared on this motion, but without instructions, having lost contact with his client Ms. Guan and, as I will explain, in light of Mrs. Chen’s passing. The lawyer for the moving party Plaintiff conveyed that the lawyer for the Defendant Hodjat Firoozi has consented to the relief sought in this motion and that the Director of Titles does not take any position regarding the relief sought in this motion.

I. FACTUAL BACKGROUND

[5] The late Sydney Raymond Chang deposed, in an affidavit sworn September 17, 2018, that he was a retired priest, at that time 89 years old, who was never married or engaged in any relationship of any kind. The late Sydney Raymond Chang died on March 23, 2019. I will refer to him, respectfully, as the “Deceased Plaintiff”.

[6] The Deceased Plaintiff deposed that he began travelling to Toronto in 2001, the year that the Subject Property was purchased, and then moved to Toronto on a full-time basis in 2006. He deposed that he purchased the Subject Property with his sister, Moi Ying Chang, by Transfer Deed registered as Instrument number D768452 on March 16, 2001, as was established by production of the Transfer Deed and abstract of title. His sister later removed herself from title to the Subject Property, leaving the Deceased Plaintiff as the only registered owner.

[7] The Deceased Plaintiff deposed that he did not, at any time, transfer title to the Subject Property to anyone, in any manner. He deposed that on September 9, 2011, he executed a Continuing Power of Attorney in favour of his brother, Mark Chang (the “Chang Power of Attorney”), and that he never revoked the Chang Power of Attorney, or executed any other Power of Attorney.

[8] The Deceased Plaintiff deposed that he met Mrs. Chen in or around 2004, when she was caring for an elderly neighbour, and who had exigent circumstances that he agreed to assist with: first, by storing Mrs. Chen’s belongings in the Subject Property when Mrs. Chen was no longer able to live with the elderly neighbour by reason of her passing; and second, by allowing Mrs. Chen to live with him in the Subject Property when she had nowhere else to live. The Deceased Plaintiff deposed that he did not, at any time, have a close relationship with Mrs. Chen, that she did not contribute to the expenses of the Subject Property and that the only support that Mrs. Chen provided to him was to assist with walks when his mobility became compromised.

[9] The Defendant Ms. Guan is Mrs. Chen’s daughter. The Deceased Plaintiff deposed that he had a cordial relationship with Ms. Guan, and only knew her through Ms. Guan’s visits to see her mother.

[10] The Deceased Plaintiff deposed that he learned through his brother, Mark Chang, of the following:

(a) that by Instrument number AT 3952146 registered on July 20, 2015, title to the Subject Property was said to be transferred from Sydney Chang to Sydney Chang and Ms. Guan as joint tenants. The Deceased Plaintiff denied that he agreed to this Impugned Transfer. He deposed that he never met the lawyer who is said to have acted on the Impugned Transfer and denied that Ms. Guan was his spouse, as stated on the Transfer Deed.

(b) that a Power of Attorney was produced that was said to be executed on May 11, 2015 and registered against title to the Subject Property on December 2, 2016 as Instrument number AT4422910 with Ms. Guan as Donee/ attorney for his property. The Deceased Plaintiff denied ever agreeing to, or executing any such Impugned Power of Attorney. In support of this evidence, the Chang Estate filed the affidavit of Nargas Barak, who is shown as one of the witnesses on the Impugned Power of Attorney. Ms. Nargas Barak deposed that she did not meet the Deceased Plaintiff at any time, that her signature on the Impugned Power of Attorney is a forgery and that, indeed, her name is mis-spelled on the Impugned Power of Attorney in the space where it is indicated to have been written by her.

(c) That a Mortgage was registered on title to the Subject Property on December 2, 2016 as Instrument number AT4422928, with Hodjat Firoozi as mortgagee/ chargee securing repayment of the principal sum of $300,000. The Deceased Plaintiff deposed that he did not agree to this Impugned Mortgage, did not execute any documents in relation to it and did not receive any of the principal amount said to be advanced.

[11] The Deceased Plaintiff deposed that he did not execute, authorize or know about any of these Impugned Documents. I accept this evidence as uncontradicted, unchallenged, credible, reliable and plausible.

[12] In the course of searching the title to the Subject Property, the Deceased Plaintiff became aware that a mortgage had been registered on title to the Subject Property on July 23, 2015 in favour of Maryam Aghakhan Moheb (the “Impugned Moheb Mortgage”) as Instrument number AT3955390. The Impugned Moheb Mortgage was discharged by Instrument number AT4427329 registered on December 7, 2016. The Deceased Plaintiff deposed that he had no knowledge of the Impugned Moheb Mortgage, had not agreed to it, and had not received any of the principal amount said to be advanced.

[13] In furtherance of this action, the Deceased Plaintiff obtained leave from this Court on November 28, 2018 to issue a Certificate of Pending Litigation against title to the Subject Property. The CPL issued on December 7, 2018 and was registered on December 11, 2018 as Instrument Number AT5029934.

[14] Upon the passing of the late Sydney Raymond Chang on March 23, 2019, the Chang Estate obtained an Order of this Court, on May 31, 2019, to continue this action, and to amend the title of proceedings to reflect the transfer of interest from the Deceased Plaintiff to the Chang Estate.

II. PROCEDURAL BACKGROUND

[15] Upon service of the Statement of Claim, Mrs. Chen and Ms. Guan delivered a Statement of Defence, and Ms. Chen also delivered a Counterclaim, on August 24, 2018, alleging that the Deceased Plaintiff and Mrs. Chen were in a relationship, and that the Deceased Plaintiff had agreed to transfer full title to the Subject Property to Mrs. Chen or to her daughter, “anytime that she wished it, for natural love and affection”. By Counterclaim, Mrs. Chen sought a declaration that the Deceased Plaintiff held title to the Subject Property in trust on their behalf.

[16] In his Reply and Defence to Counterclaim, delivered on September 13, 2018, the Deceased Plaintiff denied that he had any relationship with Mrs. Chen or Ms. Guan, or that he agreed to transfer any property to them, at all.

[17] The mortgagee defendant, Mr. Firoozi, delivered a Statement of Defence on September 12, 2018, pleading that the Impugned Mortgage is a valid and enforceable charge. Mr. Firoozi pleaded and relied on the allegations pleaded by Mrs. Chen and Ms. Guan that the Deceased Plaintiff had agreed to transfer the Subject Property to them. Alternatively, if a fraud has been perpetrated, Mr. Firoozi pleaded that the Deceased Plaintiff was in the best position to prevent or avoid the fraud, and not Mr. Firoozi.

[18] On January 3, 2019, Ms. Guan assigned into bankruptcy (the “Guan Bankruptcy”). The Statement of Liabilities in the Guan Bankruptcy lists the Impugned Mortgage, said to constitute a liability of $320,550.

[19] On August 20, 2019, the Chang Estate obtained an Order of this Court issued by Master Mills, as she then was, lifting the stay of proceedings resulting from operation of s. 69.3(1) of the Bankruptcy and Insolvency Act, in relation to this Action, “to permit the proceeding to continue to judgment”, but that “there shall be no enforcement of any judgment as against the bankrupt [Ms. Guan] without further leave of this Court.” (the “August 2019 Bankruptcy Order”)

[20] On September 12, 2019, on motion brought by the Chang Estate, Master Abrams, as she then was, issued an Order to implement a discovery plan, and ordered that Mrs. Chen and Ms. Guan pay the Chang Estate costs in the amount of $2,962.33 (the September 2019 Order”). This Order has not been complied with by Mrs. Chen or Ms. Guan.

[21] On September 4, 2020, in explanation of failure to attend at a Case Conference to address a motion sought to be advanced by the Chang Estate to strike the Statement of Defence of Mrs. Chen and Ms. Guan, the lawyer for Mrs. Chen deposed that Mrs. Chen had passed away. On September 11, 2020, Master Brott ordered that the Plaintiff’s motion to strike the Statement of Defence of Mrs. Chen and Ms. Guan would be adjourned to November 23, 2020, peremptory to the Defendants Mrs. Chen and Ms. Guan, and set a timetable for these Defendants to obtain an Order to Continue the Counterclaim and to respond to the motion to strike (the September 2020 Order”).

[22] On the return of the motion to strike, on November 23, 2020, the responding party Defendants Mrs. Chen and Ms. Guan sought a further adjournment of the motion to strike. Master Brott provided these Defendants with a further indulgence, to December 18, 2020, to comply with the previous Court Orders, noting in her endorsement that these Defendants “have done absolutely nothing except show disregard for the previous two Orders”. Master Brott also ordered that the Defendants Mrs. Chen and Ms. Guan pay the Chang Estate costs in the amount of $5,000 (the “November 2020 Order”).

[23] These Defendants did not, by December 18, 2020, comply with the September 2019 Order, the September 2020 Order or the November 2020 Order.

[24] On May 27, 2021, Master La Horey, as she then was, granted the Plaintiff’s motion to strike the Statement of Defence of Mrs. Chen and Ms. Guan, and also striking the Counterclaim brought by Mrs. Chen. The Court awarded costs in favour of the Plaintiff in the amount of $1,621.76 (the “May 2021 Order). This motion was on notice to Mrs. Chen and Ms. Guan, whose counsel appeared to contest the relief sought, although on the advice that he had no instructions from his clients.

[25] On August 11, 2021, the Chang Estate noted the Defendants Mrs. Chen and Ms. Guan in default.

III. ANALYSIS

[26] The Chang Estate relies on Rule 19.05(1) in support of its submission that Mrs. Chen and Ms. Guan are deemed to admit the truth of all allegations of fact made in the Statement of Claim by reason of their Statement of Defence and Counterclaim being struck and the resultant noting in default. I accept this submission, although I consider that it is unnecessary to find the facts in this action on the basis of the deemed admission provided by Rule 19.05(1) because I accept the sworn affidavit evidence of the Deceased Plaintiff, the late Sydney Raymond Chang.

[27] The Deceased Plaintiff’s evidence was unchallenged and uncontradicted. The Defendants conducted no cross-examination of the Deceased Plaintiff and filed no contrary evidence. The Defendants had ample time to examine the Deceased Plaintiff for discovery, or cross-examine on his sworn affidavit evidence, and did not do so. The Defendant mortgagee, Mr. Firoozi, did not tender any evidence, at all. The broad, sweeping allegations pleaded in the Statement of Defence and Counterclaim of Mrs. Chen and Ms. Guan were struck. The Defendant Mr. Firoozi’s reliance on these allegations is thereby similarly undermined. I accept the evidence of the late Syndey Raymond Chang, as set out earlier in these reasons, as credible, reliable, and plausible, in addition to this evidence being unchallenged and uncontradicted.

[28] I am satisfied, further, that the Deceased Plaintiff’s evidence, as well as the deemed admissions under Rule 19.05(1), meet the requirements of Rule 19.06. Specifically, the facts established by the moving party Chang Estate entitle it to the judgment sought, on the consent of Mr. Firoozi and confirmed as unopposed by the other Defendants. I will explain why.

[29] The court has jurisdiction to direct the rectification of title if it is satisfied that a fraudulent instrument has been registered on title on or after October 19, 2006: Subsection 57(13), Land Titles Act, RSO 1990, c L.5.

[30] Section 155 of the Land Titles Act provides that “a fraudulent instrument that, if unregistered, would be fraudulent and void is, despite registration, fraudulent and void in like manner.” Section 1(a) of the Land Titles Act provides that a “fraudulent instrument” means an instrument “under which a fraudulent person purports to receive or transfer an estate or interest in land.” The Land Titles Act defines, in s. 1, that a “fraudulent person” means a person who executes or purports to execute an instrument if “the person holds oneself out in the instrument to be, but knows that the person is not, the registered owner of the estate or interest in the land affected by the instrument.”

[31] I am satisfied, on the evidence of the Deceased Plaintiff, which I have accepted, and on the basis of the deemed admissions, that Ms. Guan acted fraudulently in obtaining and causing to be registered against title to the Subject Property, the Impugned Transfer, the Impugned Mortgage and the Impugned Power of Attorney. I accept the Deceased Plaintiff’s evidence that he did not execute, authorize or know about any of these documents and that they were obtained by Ms. Guan without the Deceased’s Plaintiff’s knowledge or authority. I note that Mrs. Chen had a role in this conduct, but that the Impugned Transfer, the Impugned Mortgage and the Impugned Power of Attorney all confer interest to Ms. Guan, or transfer rights by Ms. Guan, alone.

[32] I thereby conclude that the Impugned Transfer and the Impugned Mortgage are fraudulent instruments, under the Land Titles Act, in that the Impugned Transfer is an instrument under which a fraudulent person, Ms. Guan, purported to receive an interest in the Subject Property, and the Impugned Mortgage is an instrument under which a fraudulent person, Ms. Guan, purported to transfer an interest in land.

[33] In regard to the interests of Mr. Firoozi as mortgagee under the Impugned Mortgage, I have noted that Mr. Firoozi has consented to an Order deleting the Impugned Mortgage from title to the Subject Property. This is consistent with the principles pertaining to deferred indefeasibility as they relate to Mr. Firoozi’s status as an “intermediate owner” as defined in the case law as the “party who acquired an interest in title from the fraudster”: Lawrence v. Maple Trust Company, 2007 ONCA 74, at para. 21. The burden of the fraud would then fall on the “party who has the opportunity to avoid it, rather than the innocent homeowner who played no role in the perpetration of the fraud”: Lawrence, at paras. 1 and 58.

[34] I thereby order, on the consent of the Defendant Firoozi and with no position taken by any other Defendant, that the Impugned Transfer and the Impugned Mortgage be deleted from title to the Subject Property. I declare that the Impugned Power of Attorney is of no force and effect and shall be deleted from the records of the Land Registry Office. I also order that the CPL be discharged from title to the Subject Property, as it serves no further purpose.

[35] I turn then to the Plaintiff’s claim for punitive damages. The Plaintiff’s lawyer submitted that the Plaintiff should be granted an award of punitive damages in the amount of $50,000, to denounce the conduct of Mrs. Chen and Ms. Guan, and to deter such conduct by others. The lawyer for Mrs. Chen and Ms. Guan submitted that they are already subject to the cost awards totaling $9,584.09 resulting from the September 2019 Order, the November 2020 Order and the May 2021 Order, which they have been unable to pay, and that a punitive damage award of $50,000 would be “crushing” to Ms. Guan, a bankrupt.

[36] The purposes of a punitive damage award are set out by the Supreme Court of Canada in Whiten v. Pilot Insurance Co., 2002 SCC 18. At para. 94, the Court explained that punitive damages are appropriate where “there has been high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour”, and are necessary to “achieve the objectives of retribution, deterrence and denunciation”. I am satisfied that an award of punitive damages shall be awarded against Ms. Guan for the purpose of deterrence, that is to deter the defendant and others from similar misconduct in the future, and for the purpose of condemning this conduct.

[37] In terms of amount, the Supreme Court stated, in Whiten at para. 94, that “where they are awarded, punitive damages should be assessed in an amount reasonably proportionate to such factors as the harm caused, the degree of the misconduct, the relative vulnerability of the plaintiff and any advantage or profit gained by the defendant.” I note that Ms. Guan engaged in two impugned mortgage transactions – both the Impugned Merob Mortgage and the Impugned Firoozi Mortgage – showing a pattern of conduct that must be denounced. This would support a higher punitive damage award. However, in assessing all factors, including Ms. Guan’s bankruptcy, I have concluded that a punitive damage awards of $10,000 is appropriate.

[38] I turn now to other terms proposed by the Plaintiff and Mr. Firoozi as terms of the draft Order, being certain declaratory relief; an Order that this Judgment is not released by a discharge from bankruptcy of the Defendant Ms. Guan; that there is no finding of fraud against the Defendant Firoozi; and that there is no award or costs against the Defendant Firoozi. I decline to make any of these proposed Orders. First, the proposed term regarding the impact of Ms. Guan’s bankruptcy on the collection of the monetary amounts of this judgment was not before me on this Motion and, indeed, was reserved to the Court in bankruptcy by the August 2019 Bankruptcy Order. Second, the declaratory relief sought is subsumed in the Orders that I will grant discharging the Impugned Transfer, the Impugned Mortgage and the CPL from title, and in deleting the Impugned Power of Attorney from the Land Registry Office. Third, the remainder of the proposed relief was either not pleaded and sought in this Motion, or forms part of the reasons for the Orders that I will grant, and not the Orders themselves.

[39] Last, I turn to the issue of costs. The Plaintiff delivered a Cost Outline to set out the Chang Estate’s claim in costs. I observe that the Plaintiff claims actual costs incurred in the amount of $7,418.90, all inclusive of legal fees, disbursements, and applicable taxes. On a substantial indemnity basis, these costs are stated in the amount of $6,207.54, all inclusive, and on a partial indemnity basis, in the amount of $4,996.18, all inclusive.

[40] I have reviewed the Cost Outline and am satisfied that the hourly rates charged and the number of hours of time spent on this action and this motion are reasonable.

[41] The Plaintiff is clearly entitled to an award of costs of this action and of this motion – apart, of course, from the cost awards totalling $9,584.09 resulting from the September 2019 Order, the November 2020 Order and the May 2021 Order. The Plaintiff seeks these costs on a substantial indemnity level, based on the conduct of Mrs. Chen and Ms. Guan.

[42] Awards of costs on a substantial indemnity basis are reserved to those exceptional cases where the party’s conduct supports a higher award of costs. I find that this is such a case. The Defendants Mrs. Chen and Ms. Guan did not advance their defence position beyond the pleadings stage, in this four year old action, repeatedly failed to comply with court orders that had the effect of delaying the adjudication of this case and putting the Plaintiff to the extensive process necessary to remove these unauthorized registrations from title, I award the Plaintiff, Chang Estate, costs payable by Mrs. Chen and Ms. Guan on a substantial indemnity basis, fixed in the amount of $6,207.54, all inclusive of costs, disbursements and applicable taxes.

IV. DISPOSITION

[43] Based on these reasons, I order as follows:

(a) The Land Registrar shall delete the transfer registered as instrument no. AT3952146 (the “Impugned Transfer”) on title to the condominium property municipally known as 25 Bamburgh Circle, Suite 2131 (the “Subject Property”). The form of Order shall contain the legal description for the Subject Property.

(b) The Land Registrar shall delete the charge which is currently registered as instrument number AT4422928 (the “Impugned Mortgage”) from title to the Subject Property.

(c) I declare that the power of attorney purportedly given by Sydney Raymond Chang to Yu Ying Guan (the “Impugned Power of Attorney”) is void, and of no force or effect.

(d) The Impugned Power of Attorney, registered against title to the Subject Property as Instrument number AT4422910, shall be deleted from the records of the Land Registry Office.

(e) The Land Registrar shall discharge the Certificate of Pending Litigation which is currently registered as instrument no. AT5029934 on title to the Property.

(f) The Defendant Yu Ying Guan shall pay the Plaintiff punitive damages in the amount of $10,000.

(g) The Defendants Mei Qiong Chen and Yu Ying Guan shall forthwith pay the Plaintiff costs on a substantial indemnity basis, fixed in the amount of $6,207.54, all inclusive of fees, disbursements and applicable taxes.

(h) This action is otherwise dismissed, without costs.

(i) This order bears post-judgment interest in accordance with the Courts of Justice Act, R.S.O. 1990, c. 43.

[44] The Plaintiff may submit a form of draft Order, in pdf and Word format, approved as to form and content, to my judicial assistant, for consideration.

JUSTICE A.A. SANFILIPPO

Date: February 4, 2022