Court File and Parties

COURT FILE NO.: CV-17-584050 MOTION HEARD: 2023-03-23 REASONS RELEASED: 2023-06-26

SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

ANN BUIK, SANDRA BUIK and CATHERINE BUIK, TRUSTEES OF THE ESTATE OF WILLIAM BUIK, DECEASED Plaintiffs

• and-

CANASIA POWER CORP., TARUN CHANNA, ASHOK DHILLON, CANASIA POWER SERVICES PVT LTD., CANASIA SOLAR CORP., TAWFIF AHMAD AL-KUSAYER, B. LAMBA, R. BREARLY, B. DHARDWAR, J. VERLEZZA, E. SUGAR, W. PEARSON, D. PHILLIPS, S. RANA, R. NOTAY, D. GILL, H. RANA, H. CHAGGER, G. SOOMAL, S. CHOPRA, V. MERAPALA, J. BANGARU, S. MAWJI, M. BADALIAN, M. BANERJEE, K. MAHAL, G. BURGRESS and G. MATTHEW Defendants

BEFORE: ASSOCIATE JUSTICE McGRAW

COUNSEL: J. Dunphy E-mail: jdunphy@wagnersidlofsky.com -for the Defendants Tarun Channa and Ashok Dhillon

M. Katzman E-mail: mkatzman@katzmanlitigation.com -for the Plaintiffs

REASONS RELEASED: June 26, 2023

Reasons For Endorsement

I. Introduction

[1] This is a motion by the Defendants Tarun Channa (“Channa”) and Ashok Dhillon (“Dhillon”) (the “Moving Defendants”) to compel the Plaintiffs to respond to the Moving Defendants’ Demand For Particulars dated January 17, 2022 (the “Demand”).

II. Background

[2] The Plaintiffs are trustees of the Estate of the late William Buik and judgment creditors of the Defendant Canasia Power Corp. (“Canasia”), a defunct corporation. The Moving Defendants were directors of Canasia.

[3] The judgment at issue arises from a previous action by the Plaintiffs against Canasia in Court File No. CV-11-420429. On June 2, 2014, Himel J. granted Judgment to the Plaintiffs in the amount of $2,346,253.74 plus interest compounded at a rate of 15% per annum as of January 30, 2014 (the “Judgment”). An appeal of the Judgment was dismissed.

[4] On October 9, 2015, the Plaintiffs conducted examinations in aid of execution of the Moving Defendants (the “Examinations”). The Moving Defendants brought Canasia’s banking records from 2006-2015 to the Examinations. The Moving Defendants gave numerous undertakings, including to disclose expenses and payments made to creditors by Canasia from 2006-onwards. In satisfaction of their undertakings, the Moving Defendants subsequently sent correspondence with explanations and additional records.

[5] Based on the documents and information produced by the Moving Defendants, the Plaintiffs commenced this action by Notice of Action dated October 6, 2017 and Statement of Claim issued on November 3, 2017. Among other things, the Plaintiffs claim against the Defendants other than Canasia: damages in the amount of $2,346,253.74 for violations of the Fraudulent Conveyances Act (Ontario) (the “FCA”) and the Assignments and Preferences Act (Ontario) (the “APA”), and further and/or in the alternative, breach of constructive trust and purchase money resulting trust and/or unjust enrichment; further, or in the alternative, setting aside any transactions between Canasia and its co-Defendants under the FCA and the APA, and declaring that the co-Defendants hold assets beneficially owned by Canasia as a constructive and/or resulting and/or purchase money resulting trust for the benefit of the Plaintiffs.

[6] On February 17, 2021, the Plaintiff brought a motion to, among other things, compel answers to undertakings and the Moving Defendants brought a motion to strike the Statement of Claim for lack of particularity. In Reasons For Decision dated May 14, 2021 (Buik v. Canasia Power Corp., 2021 ONSC 3403), Abrams A.J. dismissed the motion to strike commenting “some lack of particulars is owing to the nature of the claims and the fact that the plaintiffs continue to await answers to undertakings to permit them to expand upon their allegations” (para. 21). Abrams A.J. also noted, “Further, and in any event, a demand for particulars can, and should be, delivered (at first instance), if the defendants need greater clarity and precision in the pleas to enable them to plead. And the issue is if they need particulars” (para. 21).

[7] The Defendants delivered the Demand on January 17, 2022. The Plaintiffs refused to respond on the basis that the particulars are within the knowledge of the Moving Defendants and are not required to plead.

[8] On July 4, 2022, the Plaintiffs served a Request to Admit requesting that the Moving Defendants admit that they were privy to Canasia’s financial records and dealings from 2006-onwards and to admit that they effected transactions between 2006 and the date upon which Canasia ceased operations which violated the FCA and the APA and that they are liable to the Plaintiffs as alleged in the Statement of Claim. The Moving Defendants responded on July 19, 2022 admitting that they were privy to Canasia’s financial records and dealings from 2006-onwards and denying the allegations in the Statement of Claim.

III. The Law and Analysis

[9] Rule 25.06 states:

“(1) Every pleading shall contain a concise statement of the material facts on which the party relies for the claim or defence, but not the evidence by which those facts are to be proved.

(7) The effect of a document or the purport of a conversation, if material, shall be pleaded as briefly as possible, but the precise words of the document or conversation need not be pleaded unless those words are themselves material.

(8) Where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars, but knowledge may be alleged as a fact without pleading the circumstances from which it is to be inferred.”

[10] Flynn J. explained the contemporary approach to pleadings in Sleep Clinic London Inc. v. Merchea, 2012 ONSC 3004, [2012] O.J. No. 2471:

“22 Long gone are the days when pleadings motions could be approached in an overly technical manner. Generally speaking, a party should be at liberty to craft a pleading in the manner it chooses, providing that the Rules of pleadings are not violently offended and there is no prejudice to the other side.”

[11] In assessing the adequacy of pleadings, the purpose of the rules must be considered. Pleadings must:

i.) define clearly and precisely the questions in controversy between the litigants;

ii.) give fair notice of the precise case which is required to be met and the precise remedy sought; and

iii.) assist the court in its investigations of the truth of the allegations made. (See National Trust Co. v. Furbacher, [1994] O.J. No. 2385 at paras. 9 and 10) (Ontario Consumers Home Services v. Enercare Inc., 2014 ONSC 4154; Balanyk v. University of Toronto, at para. 27).

[12] In Jacobsen v. Skurka, (2015) 2015 ONSC 1699, 125 O.R. (3d) 279, Perell J. described the distinction in Rule 25.06(1) between “material facts” and “the evidence by which those facts are to be proved”:

[43] Rule 25.06(1) draws a distinction between the "material facts" and "the evidence by which those facts are to be proved". [page291] A material fact may itself be relevant evidence and particulars of material facts may also be relevant evidence, so the distinction drawn in the rule is not a litmus test clear differentiation, but the essence of the directive of rule 25.06 is clear enough that a pleading is not the place for a party to lead relevant evidence and to present argument to prove his claim or defence.

[44] A pleading should not describe the evidence that will prove a material fact; pleadings of evidence may be struck out: Sun Life Assurance Co. of Canada v. 401700 Ontario Ltd. (1991), 3 O.R. (3d) 684, [1991] O.J. No. 915 (Gen. Div.). The difference between pleading material facts and pleading evidence is a difference in degree and not of kind: Toronto (City) v. MFP Financial Services Ltd., [2005] O.J. No. 3214, [2005] O.T.C. 672 (Master), at para. 15. What the prohibition against pleading evidence is designed to do is to restrain the pleading of facts that are subordinate and that merely tend toward proving the truth of the material facts: Grace v. Usalkas, [1959] O.W.N. 237 (H.C.J.); Phillips v. Phillips (1878), 4 Q.B.D. 127 (C.A.). Even a pleading of an admission, which is a type of evidence, may be struck out: Davy v. Garrett (1878), 7 Ch. D. 473 (C.A.); Sun Life Assurance Co. of Canada v. 401700 Ontario Ltd., supra.”

[13] Rule 25.10 states:

“Where a party demands particulars of an allegation in the pleading of an opposite party, and the opposite party fails to supply them within seven days, the court may order particulars to be delivered within a specified time.”

[14] The law of particulars can be summarized as follows:

i.) an order for particulars is discretionary and the court must make the order which is just, reasonable and fair in the circumstances of each case;

ii.) the party seeking particulars bears the onus of establishing that the particulars are not within their knowledge and are necessary to enable the party to plead;

iii.) the court should ask itself in reference to the whole of the statement of claim: “are there sufficient facts present to formulate a defence”?

iv.) any determination of the minimum level of material fact disclosure will vary depending on the kind of action and pleading under review including the relief sought;

v.) while recognizing the need for defendants to understand the case they have to meet, the courts take a realistic and pragmatic approach when considering whether to order particulars recognizing that not every claim is capable of being pleaded with the same degree of particularity and that subsequent stages in the litigation process may also function to clarify and narrow the issues;

vi.) Rule 25.06(1) requires that a pleading be a concise statement of the material facts, not all of the material facts;

vii.) Rule 25.10 requires that a claim be sufficiently particularized in order to allow the defendant to understand the case it is to meet and to provide an adequately prepared statement of defence; unparticularized pleadings which work against the purpose of pleadings – to define the issues between the parties as precisely as possible – will not be permitted. Particulars should be considered in light of the principle that each party is entitled to know the case that is intended to be made against it at trial and that particulars help to ensure that litigation is conducted fairly, openly and without surprise;

viii.) if a specific fact is not set out, but can be properly inferred from other statements in the pleading, that is sufficient for the purposes of a statement of claim;

ix.) particulars also help to limit the generality of allegations, define and narrow the scope of issues to be decided, guide the discovery process and help to streamline the litigation process, however, they are not akin to an examination for discovery which should not be seen as a substitute for particulars but nor should a demand for particulars be used to compel a plaintiff to disclose evidence or the legal nature of its argument;

x.) it is especially important that the court adopt a realistic and pragmatic approach at the pleadings stage in complex litigation to ensure that litigation is not unduly delayed and that the practical realities and expense of litigation are considered;

xi.) case management can sometimes be more effective than ordering particulars especially in ensuring that particulars do not morph into examinations for discovery and delay the litigation;

xii.) particulars should not be permitted to turn into a delay tactic or a substitute for what can be obtained through a request to inspect documents or oral and documentary discovery, otherwise, litigation will be stonewalled at an early stage through excessive particularization;

xiii.) to strike a balance between competing considerations in large and complex litigation, case management judges must have some “elbow room” to keep the litigation moving forward and prevent it from getting bogged down in interlocutory matters, such that litigation management orders can sometimes be more effective than particulars in providing an efficient structure to determine a claim;

xiv.) a court should not order a party to provide particulars that are in the nature of evidence because to do so would offend Rule 25.06(1);

xv.) Rule 25.06(1) mandates a minimum level of material fact disclosure which if not reached calls for a motion to strike the pleading as irregular, not a motion for particulars. It is only where the minimum level of material fact disclosure has been reached that the pleading becomes regular and thereafter the remedy of particulars under Rule 25.10 becomes available;

xvi.) cases where fraud and fraudulent misrepresentation are alleged have special requirements under Rule 25.06(8) in addition to the regular test for particulars, specifically, full particulars are mandatory;

xvii.) a party does not need to know the exact dollar amount of damages claimed in order to plead;

xviii.) motions for particulars and ongoing demands may be premature particularly where it becomes apparent that the defendant has already formulated its defence

xix.) if a party is limited in terms of the detail it can include in its pleading because it does not have access to the books and records of the other party, this is an important factor in determining the extent of particulars that may be required (1440195 Ontario Inc. v. 1440194 Ontario Inc., [2016] O.J. No. 2220 at paras. 10-12; Ontario v. Rothmans Inc., [2016] O.J. No. 253 at paras. 12-16; 84; Taylor v. Canada Cartage Systems, 2018 ONSC 617 at para. 21; Copland v. Commodore Business Machines Ltd. at para. 17; Economical Insurance Co. v. Fairview Assessment Centre Inc., 2013 ONSC 4037 at paras. 7-8; Sears Canada Inc. v. Pi Media Ltd., 2011 CarswellOnt 4453 at para. 51; Flynn at para. 14; 3 Dogs Daycare Inc. v. Dogtopia Enterprises Canada Inc., 2021 ONSC 514 at paras. 21-22).

[15] Consistent with a flexible, realistic and pragmatic approach to pleadings and particulars, in exercising its discretion the court must also consider Rule 1.04(1) which requires the court to liberally construe the rules to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

[16] In considering a particulars motion, the court must strike a balance between affording a plaintiff the flexibility to draft a Statement of Claim in the manner it chooses as long as the rules of pleadings are not offended with a defendant’s right to know the case it must defend with sufficient particulars in order to plead a defence. In striking this balance, it is important to identify when further particulars and specifics are more properly left to examinations for discovery, consistent with a plaintiff’s right to not be subjected to pre-discovery discovery and the most pragmatic, efficient, cost-effective and proportionate process to move an action forward. This balance is more pronounced where, as here, the Plaintiffs have advanced allegations of fraud.

[17] One relatively unique feature of the present case is that as a result of the Examinations and the undertakings, the Moving Defendants have produced some documentation and information which gave rise to this action. As set out below, this is material to my conclusions on this motion, including the extent to which the particulars sought are within the knowledge of the Moving Defendants and the Plaintiffs’ obligation to provide them.

[18] The Moving Defendants also assert that the Plaintiffs should advise the co-Defendants other than Canasia of the basis for the claims against them. However, this is a motion to compel the Plaintiffs to respond to the Demand. The Demand was made by the Moving Defendants, all of the Demands relate specifically to the Moving Defendants and this motion was brought by the Moving Defendants. Further, the names of the other co-Defendants were disclosed in the records produced by the Moving Defendants. Accordingly, any specific inquiries with respect to the other Defendants which are not otherwise addressed by the particulars ordered below as requested by the Moving Defendants may be canvassed on examinations for discovery.

[19] My conclusions on the Demands are set out below.

[20] Demands #1, 2 and 3 (Damages) – The Moving Defendants demand full particulars of the calculation and breakdown of the damages claimed against Channa and/or Dhillon for: violations of the FCA and the APA including a complete listing of any and all disputed transfers (Demand #1, Statement of Claim, para. 1(a)); breach of constructive and/or resulting trust (Demand #2, Statement of Claim, para. 1(b)); and unjust enrichment (Demand #3, Statement of Claim, para. 1(h)). The Moving Defendants do not require the calculation and breakdown of the Plaintiffs’ damage claims in order to plead. The amount set out in the Statement of Claim is the amount of the Judgment. This is sufficient for the purposes of pleading. As with substantially all litigation, particulars regarding damages are more appropriately left to examinations for discovery with breakdowns and calculations provided by way of undertakings, additional exchanges of information and possibly expert reports before trial. The Plaintiffs are not required to answer these Demands.

[21] Demands #4 (Impugned Transfers), Demands #5, 6 and 7 (Funds and Assets) and Demand #8 (Non-Parties) – The Moving Defendants request full particulars of the “impugned transfers” (defined as “inter alia, a large number of transfers of funds by Canasia” to the Defendants other than Canasia) including but not limited to the dates and amounts of all transfers allegedly made to Channa and/or Dhillon (Demand #4, para. 15, Statement of Claim). The Moving Defendants also demand full particulars of: the funds and assets alleged to have been transferred to Channa and/or Dhillon for no or insufficient consideration (Demand #5, para. 19, Statement of Claim); the funds and assets beneficially owned by Canasia that are alleged to be held by Channa and/or Dhillon with a view towards defeating, hindering or delaying creditors (Demand #6, para. 20, Statement of Claim); funds and other assets alleged to be held by Channa and/or Dhillon to the Plaintiffs’ benefit on a resulting and/or constructive trust and/or purchase money resulting trust (Demand #7, para. 25, Statement of Claim); and all funds alleged to have been transferred by Canasia to Channa and/or Dhillon and full particulars of any and all such funds alleged to have been transferred by Channa and/or Dhillon to non-parties (Demand #8, para. 28, Statement of Claim).

[22] There is significant overlap between these Demands. All of them are largely related to the “impugned transfers” and based on the documents and information produced by the Moving Defendants which in turn form the basis of the causes of action and allegations set out in the Statement of Claim. Therefore, I will consider them together.

[23] The Plaintiffs argue that they should not be required to answer the Demand because the Moving Defendants are the source of the documents and information and therefore have knowledge of the particulars. In numerous paragraphs of the Statement of Claim, they plead that specific details of funds transferred by Canasia are solely within the knowledge of the Moving Defendants. The Moving Defendants claim that the particulars are not within their knowledge and are required to plead.

[24] The present case bears some similarities to Diamond, a case cited by Morgan J. in Economical:

“[10] Courts have said repeatedly that while Rule 25.10 dealing with particulars is generally discretionary, Rule 25.06(8) makes particulars mandatory where fraud and/or fraudulent misrepresentation is alleged. That type of allegation puts the pleading into an altogether different category. Thus, for example, in Diamond & Diamond in Trust v Maniatokos, [2003] OJ No 2336, the court dealt with a pleading that contained numerous causes of action. The defendant’s motion for particulars contained merely perfunctory affidavit support, which did not establish whether the particulars were already within the defendant’s knowledge. At paragraph 15, Master Egan stated:

The motion for particulars is therefore dismissed with one exception. Rule 25.06(8) requires full particulars of fraud. Despite the delay tactics and deficiencies of the defendant’s material, I reluctantly conclude that the plaintiff should provide particulars of the allegations of fraud and bribery. Fraudulent documents are alleged to have been produced by the defendants in the absence of a denial. I assume the defendants have the documents; however, the defendants cannot know what documents the plaintiff alleges are fraudulent.

[11] The terms of Rule 25.06(8) eliminate the need for affidavit support in a motion for particulars involving allegations of fraud. Fairview is entitled to receive full particularization of each allegation of fraud made against it before pleading in defence. There is no need for a representative of Fairview to swear an affidavit stating that these particulars are necessary for its pleading, since the relevant Rule already states that they are necessary for the Plaintiffs’ pleading.”

[25] In Diamond, the court ordered the plaintiffs to provide particulars regarding their fraud claims even though it assumed that the defendants possessed the documents upon which the plaintiffs based their fraud allegations. In the present case, the Moving Defendants have had possession and control of Canasia’s books, records and documents and produced some to the Plaintiffs. The Moving Defendants have also been privy to Canasia’s dealings from 2006-onwards. It was these documents and other information that led the Plaintiffs to conclude that there had been fraudulent, preferential and/or other improper transactions involving Canasia and the Defendants and commence this second action.

[26] When questioned by the court, Plaintiffs’ counsel conceded that the Plaintiffs could prepare a list of the “impugned transactions” based on the documents and information produced by the Moving Defendants. However, the Plaintiffs submit that they should not be required to do so because the documents and information which are the source of these allegations are within the knowledge of the Moving Defendants. This raises a material distinction, made in Diamond. Although the Moving Defendants have possession of the books, records and documents and have knowledge of Canasia’s dealings, this does not necessarily mean that they have knowledge of the specific transactions, transfers and/or other conduct which the Plaintiffs allege is fraudulent or improper. In fact, the uncontroverted evidence on the record before me is that the Moving Defendants do not. In my view, the Statement of Claim falls short in providing the requisite particulars for claims of fraud and other improper conduct specifically where it refers to the “impugned transfers” as simply a “large number” of transfers from Canasia to the other Defendants.

[27] Accordingly, I conclude that it is just, fair and proportionate for the Plaintiffs to provide some particulars. The Plaintiffs shall provide particulars regarding the “impugned transactions” including, where possible, dates, amounts and parties so as to identify the transactions and/or transfers which they allege are fraudulent or otherwise improper and upon which their claims under the FCA and APA and other causes of action are grounded. As the Plaintiffs do not have all of the documents or the knowledge of Canasia’s dealings that the Moving Defendants have, the particulars they can provide will be limited. The particulars will be further limited by the fact the Moving Defendants have not satisfied all of their undertakings from the Examinations and advise that they have been unable to locate some records. Given the overlap with respect to these Demands, these particulars are a complete response to these Demands. In my view, the delivery of these particulars will provide the Moving Defendants with sufficient knowledge of the case against them for the purposes of pleading and will assist the parties during the discovery process.

[28] The Plaintiffs shall provide these particulars within 60 days. This is not to be taken as an invitation for the Moving Defendants to seek any further particulars. Once these particulars have been delivered, the Defendants shall deliver their Defence(s) pursuant to the timetable below and the litigation is to proceed to documentary and oral discoveries. Further inquiries shall be made during examinations for discovery and the process of answering undertakings and dealing with any refusals and in the subsequent exchange of expert reports and/or information before trial.

IV. Order and Costs

[29] To minimize any further delays and move this action forward efficiently order to go as follows (the dates may be amended on consent of the parties):

i.) the Plaintiffs shall deliver the particulars ordered above within 60 days;

ii.) the Defendants shall deliver their Statement of Defence within 30 days of receipt of the particulars;

iii.) the Plaintiffs shall deliver their Reply, if any, within 30 days of receipt of the Statement of Defence;

iv.) the parties shall deliver their Affidavits of Documents on or before November 30, 2023;

v.) examinations for discovery shall be completed by February 29, 2024.

[30] If the parties cannot agree on the costs of this motion, they may file written costs submissions not to exceed 3 pages (excluding Costs Outlines and other attachments) on a timetable to be agreed upon by counsel. Counsel may schedule a telephone case conference with me, if necessary.

Released: June 26, 2023

Associate Justice McGraw