Court File and Parties

COURT FILE NO.: CV-22-683217 DATE: 20230713

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CHICAGO TITLE INSURANCE COMPANY, Plaintiff

AND:

JOHN DOE, JANE DOE, XUAN DIEU VY NGUYEN, 2735046 ONTARIO INC. o/a LPR GLOBAL, CANG TRAN a.k.a. TRAN VAN CANG a.k.a. CANG V. TRAN a.k.a. CANG VAN TRAN, TENG CHUN CHIAO a.k.a TENG CHUN CHAO, THUY DOAN QUANG, NGUYEN HOANG DUY, ALBERT BAIRD and KERRY JAMES, Defendants

BEFORE: Justice Papageorgiou

COUNSEL: Michael A. Katzman for the Plaintiff

READ: July 13, 2023

Endorsement

Overview

[1] This matter relates to mortgage fraud.

[2] On or about March 11, 2021, two individuals purporting to be the owners of 7128 Baskerville Run, Mississauga, Ontario obtained mortgage proceeds in the amount of $585,700 from a mortgagee, Ryan Mortgage Income Fund. These mortgage proceeds were placed into an account held by BMO (the “Fraudulent Mortgage Proceeds”).

[3] The Plaintiff, Chicago Title Insurance Company, (“Chicago Title”) provided title insurance to the mortgagee.

[4] It was later determined that the individuals who obtained the mortgage were not the owners of the Property.

[5] Chicago Title made investigations and obtained information from the Deputy Director of Land Titles which led it to various accounts where the Fraudulent Mortgage Proceeds were placed and moved as well as details of such individuals’ identity.

[6] Chicago Title obtained a Norwich Order in respect of some banks who then provided further information about where the mortgage proceeds were moved.

[7] Some of these investigations led to a Defendant Ngoc Tran who was not yet a Defendant.

[8] On May 5, 2023 I permitted Chicago Title to add Ngoc Tran as a defendant and to the Norwich Order. I adjourned the motion for the Mareva injunction pending receipt of this additional information.

The Issues

[9] The two issues are:

Issue 1: Does Chicago Title meet the test for a Mareva injunction? Issue 2: Should the Mareva injunction be granted ex parte?

Conclusion

[10] I conclude that Chicago Title has met the test for a Mareva injunction, to be granted on an ex parte basis. Chicago Title shall serve the materials and this Order on the Defendants and the motion shall return before me on July 24, 2023.

Analysis

Issue 1: Does Chicago Title meet the test for a Mareva injunction?

[11] I will set out the general test for a Mareva Injunction followed by an analysis of each of the elements of the test.

The Legal Test for a Mareva Injunction

[12] The requirements for a Mareva Injunction are as follows:

a. The plaintiff must establish a strong prima facie case on the merits of the main Action;

b. The plaintiff should give some grounds for believing that the Defendant has assets in the jurisdiction;

c. The plaintiff must persuade the Court that the Defendant is removing or there is a real risk that the Defendant is about to remove his or her assets from the jurisdiction or it is otherwise disposing of such assets in a manner that is out of the normal course with the aim of making himself or herself judgment proof or beyond the Court’s authority;

d. The plaintiff must show that it will suffer irreparable harm if the Order is not made and that the balance of convenience favours it.

e. The plaintiff must give an undertaking as to damages: Pugliese v Acruri, 2011 CarswellOnt 4375 at para 6.

Strong Prima Facie Case

[13] Chicago Title has established a strong prima facie case that mortgage fraud has occurred, as well as the identity of the persons who received the proceeds of this fraud.

[14] First, the true title holders are not the individuals who obtained the Fraudulent Mortgage Proceeds. The police determined from video footage that the Defendants Albert Baird and Kerry James attended at BMO and obtained the Fraudulent Mortgage Proceeds. The police arrested them.

[15] Second, the Deputy Director of Land titles convened a Tribunal Hearing determined that the mortgage was fraudulent and deleted the mortgage from title.

[16] Third, the productions ordered by the Tribunal as well as productions pursuant to two Norwich Orders show how portions of the mortgage proceeds were moved from the BMO account to the Defendants in the following manner:

a. On April 5, 2021 a bank draft made payable to 2735046 Ontario Inc. (“273”) in the amount of $250,000.00 was purchased using a portion of the Fraudulent Mortgage Proceeds, which bank draft was thereafter deposited into RBC bank account number 02186 100-703-8. The principal of 273, Cang Tran gave evidence before the Tribunal that confirmed this and also evidence that this money was subsequently withdrawn.

a. On April 10, 2021, a bank draft made payable to Teng Chun Chiao a.k.a Teng Chun Chao in the amount of $50,000.00 was purchased using a portion of the Fraudulent Mortgage Proceeds but which was thereafter deposited into CIBC bank account no. 06422/8828733 on or about April 12, 2021;

b. On April 10, 2021, a bank draft made payable to Nguyen Hoang Duy in the amount of $35,000.00 was purchased using a portion of the Fraudulent Mortgage Proceeds, which bank draft was subsequently deposited into TD bank account no. 11042-6144854 on or about April 12, 2021;

c. On April 12, 2021, a bank draft made payable to 273 in the amount of $125,000.00 was purchased using a portion of the Fraudulent Mortgage Proceeds, which bank draft was subsequently deposited into RBC bank account number 02186 100-703-8;

d. On April 13, 2021, 273 caused a bank draft to be payable to Ngoc Tran in the amount of $20,000 from RBC account 02186 100-703-8. CIBC confirmed that this amount was deposited into his account and that it corresponded to the $20,000 bank draft he received.

e. On April 19, 2021, a certified cheque in the amount of $25,000.00 was purchased using a portion of the Fraudulent Mortgage Proceeds.

f. On April 19, 2021, a certified cheque in the amount of $25,000.00 was purchased using a portion of the Fraudulent Mortgage Proceeds.

[17] In summary, I am satisfied that Chicago Title has established a strong prima facie case for the following reasons: a) The Deputy Director of Land Titles and the police have already concluded that a mortgage fraud occurred; b) Chicago Title has shown that that Mr. James and Mr. Baird were the ones who impersonated the real title holders. They obtained the Fraudulent Mortgage Proceeds, deposited them into a BMO account and then distributed them to each of the other Defendants by way of bank drafts which were then deposited into a variety of different bank accounts. Some of these proceeds were then moved again. This has been confirmed by extensive productions made by other banks pursuant to the Norwich Orders.

Assets in the Jurisdiction

[18] Chicago Title has provided extensive evidence that the Defendants have assets in the jurisdiction, which are the bank accounts.

Risk of Dissipation

[19] The risk of removal or dissipation can be established by inference, and that inference can arise from the circumstances of the fraud itself, taken in the context of all of the surrounding circumstances: Sibley & Associates LP v. Ross et al, 2011 ONSC 2951 at para 63.

[20] The risk to be assessed is whether in all of the circumstances the assets are likely to be dealt with in a manner that will severely hamper or defeat the plaintiff’s attempts to realize on any judgment that it might obtain: Sibley & Associates at para 51.

[21] Based upon the way in which these Fraudulent Proceeds were obtained, and the systematic and consistent way in which they were distributed to these Defendants, I am satisfied that an inference can be made that there is a real risk that the Defendants will remove their assets from the jurisdiction and/or dissipate assets to avoid a Judgement and collection efforts.

Balance of Convenience and Irreparable Harm

[22] I am satisfied that Chicago Title will suffer irreparable harm and that the balance of convenience also favours it because of the strong evidence of fraud and the risk of removal which will render any judgment meaningless if the accounts in question are not frozen. Chicago Title has limited the Mareva Injunction Order to the monetary limits of the funds received by each of the Defendants.

Undertaking as to Damages

[23] Chicago Title has provided an undertaking as to damages.

Issue 2: Should the Mareva Injunction be made Ex Parte?

[24] I am also satisfied that this Order should be made ex parte. Based upon the conduct for which Chicago Title has provided a strong prima facie case, there is a strong risk that if the Defendants are served with these materials they will dissipate their asset.

[25] Given that the Order will be limited to a ten day duration, and is limited to the funds which these Defendants actually received from the Fraudulent Proceeds, I am satisfied that any possible harm to them is limited.

Justice Papageorgiou Date: July 13, 2023