COURT FILE NO.: CV-21-00004196-0000 DATE: 2023 08 09

SUPERIOR COURT OF JUSTICE – ONTARIO 7755 Hurontario Street, Brampton ON L6W 4T6

RE: ALEXANDRA TANG, 2505006 ONTARIO CORPORATION and 2510516 ONTARIO LTD, Plaintiffs

AND: XPERT CREDIT CONTROL SOLUTIONS INC. aka RIGHT CHOICE BUILDERS INC., SAM JOSHI aka SANJIVE JOSHI, SHAN MANGAL, PYRAMID PROPERTIES MANAGEMENT & CONSTRUCTION INC., 2748236 ONTARIO INC., SHAYNA DALLAS aka SHAYNA KASH aka SHANYA LAURENT aka SHAYNA LAUREN ELIZABETH DALLAS, 2697909 ONTARIO INC., BHALLA AJIT, GURPAL SINGH, Defendants

BEFORE: RSJ L. RICCHETTI

COUNSEL: JARVIS, A., for the Plaintiffs, Alexandra Tang, 2505006 Ontario Corporation and 2510516 Ontario Ltd; and CHHINA, S., for the Defendants, 2697909 Ontario Inc. and Shayna Dallas.

HEARD: August 1, 2023, by video conference

ENDORSEMENT

THE MOTION

[1] This is a motion by the Plaintiffs for an order that Shayna Dallas (Dallas) and 2697909 Ontario Inc. (269 Ont.) be found in contempt of court.

[2] All parties agreed to proceed with this motion on the written record and to have the motion heard virtually.

THE FACTS

[3] On April 22, 2022, Justice Daley ordered Ms. Dallas and 269 Inc. to pay $65,500 in costs to the Plaintiffs.

[4] On May 27th, 2022, the Court of Appeal Ordered Ms. Dallas and 269 Inc. to pay $3,700 in costs to the Plaintiffs.

[5] The Plaintiffs sought to examine Ms. Dallas, on behalf of the Dallas Defendants, as an aid to execution.

[6] Ms. Dallas, on behalf of the Dallas Defendants, refused to attend an examination in aid of execution in 2022.

[7] The Plaintiffs brought a motion to compel the attendance.

[8] On January 12th, 2023, Justice Kumaranayake ordered the Dallas Defendants to submit to an examination in aid of execution (for the outstanding cost orders) on January 26th, 2023 (a date fixed by the court on January 18th, 2023 as counsel could not agree on a date) and to deliver specified documentary productions no later than 5 business days prior to the examination. Justice Kumaranayake also ordered Ms. Dallas and 269 Inc. to pay costs of $7,000.00 to the Plaintiffs.

[9] Justice Kumaranayake’s Order, as it relates to the documentary production, states:

4. THIS COURT ORDERS that Shayna Dallas and 2697909 Ontario Inc. shall produce the following documents no later than five (5) business days in advance of the date of the examination in aid of execution. The documents to be produced are:

a) Documents and records in the power possession or control of Shayna Dallas and 2697909 Ontario Inc. with respect to funds received/loaned or paid/transferred by or to Gurpal Singh and Ajit Bhalla on the charges registered on the property known as 1073 Westmount in Mississauga, Ontario, as instruments PR3758616, PR3756937, PR3814299 (hereinafter the Charges) including documents and records of funds, payments, expenses, payout statement, mortgage statement and details pertaining to the Charges; and

b) Documents and records in the power possession or control of Shayna Dallas and 2697909 Ontario Inc. with respect to all funds, payments, advances, expenses, invoices and transfers made or between Shayna Dallas/2697909 Ontario Inc. to or from Shan Mangal, 2748235 Ontario Inc. and/or Pyramid Properties Management & Construction Inc. occurring since December 20, 2020.

[10] Some documents were delivered by the Dallas Defendants on January 19, 2023, at approximately 9 pm. However, for the reasons to follow, I have serious doubts the entire extent of the documents ordered to be produced, were in fact produced.

[11] Ms. Dallas appeared virtually at the examination in aid of execution on January 26, 2023. Ms. Dallas did not answer questions, some undertakings were initially given, but then Ms. Dallas left shortly after the examination commenced because she said she was too ill to remain at the examination.

[12] The following exchange took place at the examination:

MR. JARVIS (for the Plaintiffs): So are you – I still am not done the examination. I’m still going to have a couple more undertakings and requests on the record. Are you going to arrange a date for her to come back and attend?

MR. CHHINA (for Dallas/269 Ont.): If that’s what – what you would like, even after you’ve been paid, yeah, we can schedule another examination.

[13] On January 27, 2023, the cost orders were paid.

[14] Subsequently, Mr. Chhina advised, despite having agreed to re-attend the examination, even if the costs were paid, that Ms. Dallas would no longer attend for an examination.

THE LAW

[15] There is no dispute about the applicable law.

[16] The moving party must prove, on the liability phase, each of the following essential elements beyond a reasonable doubt:

a) The alleged contemnor had knowledge of the order [not disputed here],

b) The conduct complained of by the moving party was clear and unambiguous in the order [not disputed here], and

c) The alleged contemnor deliberately and flagrantly failed to comply with the order.

[17] Even where the essential elements have been established, the court has an overriding discretion as to whether to making a finding of contempt.

[18] Making a finding of contempt is a last resort, only to be make in the most deserving cases, where it is necessary because the alleged contemnor has flagrantly refused to comply with the court order(s) and no other remedy is available or likely to obtain compliance.

POSITION OF THE PARTIES

The Plaintiffs

[19] The Plaintiffs submit that J. Kumaranayake’s Order was knowingly deliberately and flagrantly breached in that:

a) Dallas did not attend the examination in aid of execution as ordered. Essentially, the attendance was a “non” attendance by Ms. Dallas; and

b) The Dallas Defendants did not produce the specified documents that J. Kumaranayake ordered to be produced.

The Dallas Defendants

[20] The Dallas Defendants submit that the motion be dismissed because:

a) Dallas attended an examination in aid of execution as ordered;

b) The costs orders have now been paid, so an examination in aid of execution is no longer appropriate or necessary; and

c) All financial disclosure, as ordered by J. Kumaranayake, has been made.

ANALYSIS

Attendance at the examination of execution

[21] There is no question that a proper or complete examination in aid of execution was not conducted on January 26, 2023. It is admitted by the Dallas Defendants.

[22] The background to this proceeding is relevant.

[23] There is a long history of the Defendants, including the Dallas Defendants, “stonewalling” and delaying this proceeding. See the comments of J. Daley in Tang v. Xpert Credit Control Solutions Inc., 2022 ONSC 2460 at para. 21 and other decisions of this court including J. Kumaranayake’s endorsement of January 12, 2023 (paragraphs 14 – 29) which deals with the extraordinary efforts by the Plaintiffs to proceed with this very examination and motion.

[24] Accepting, for the moment, that Ms. Dallas was too ill to continue with the examination, her counsel did agree to produce Ms. Dallas “even if” the cost orders were subsequently paid. This is not disputed.

[25] Ms. Dallas later refused to re-attend the examination, despite her counsel agreeing to re-attend.

[26] The problem here is that aside from Ms. Dallas’ assertion that she was too ill to continue, there is no evidence to the contrary.

[27] Suspicion based on prior conduct is not evidence that Ms. Dallas was well enough to complete the examination on January 26, 2023.

[28] If Ms. Dallas was too ill to continue with the examination, that would not amount to a deliberate and flagrant breach of J. Kumaranayake’s Order.

[29] I agree that the examination in aid of execution became moot given that the costs orders were paid on January 27, 2023. But, I do remain troubled that the Dallas Defendants’ counsel agreed to produce Ms. Dallas, at a later date, even if the costs had been paid, but then unilaterally revoked the agreement.

[30] Even if I were to find that the Dallas Defendants were in contempt for deliberately and flagrantly failing to attend an examination in aid of execution on January 26, 2023 as ordered, the subsequent payment of the costs on the very next day, purged the contempt.

[31] In these circumstances, I am not prepared to find Dallas in contempt of court for failing to attend the examination in aid ordered by J. Kumaranayake.

Production of Documents

[32] Some documents were provided by the Dallas Defendants after 5 pm on January 19, 2023. The documents were delivered at 9 pm.

[33] I have reviewed what was produced by the Dallas Defendants very carefully. The documents produced by the Dallas Defendants on January 19, 2023 were extremely limited.

[34] However, there is a serious problem in finding that the Dallas Defendants deliberately and flagrantly failed to produce the documents ordered.

[35] First, there really is no clear evidence from the Plaintiffs on this alleged failure to produce all the specified document, notwithstanding that there were three affidavits of Jocelyn Jarvis in support of this motion.

[36] Second, there was only one affidavit filed by the Respondent. It is an affidavit from Dallas’ counsel’s law clerk. The law clerk has no personal knowledge of the issues. It does not assist the court to determine the adequacy of the productions.

[37] Essentially, what the court is left with is the Plaintiffs’ submissions that the Dallas Defendants have not provided all the specified relevant documents AND a review of the documents produced by the Dallas Defendants.

[38] On the other hand, the Dallas Defendant’s submit (and confirmed to this court on this motion by counsel) that they do not have, in their power, possession or control, any further documents relating to the transactions described in J. Kumaranayake’s Order.

[39] Again, some background to the transactions is necessary.

[40] 269 Ont. was purchaser of the subject property under a power of sale from 274 Ontario Inc. in November 2020. The sale price was allegedly $700,000. The closing was in December 2020. Ms. Dallas was the signatory of the purchase transaction of the subject property.

[41] 269 Ont. gave a mortgage back to 274 Ont. “on closing for $694,880 for the “registered amount”.

[42] 269 Ont. obtained a subsequent loan from Bhalla, the day after 269 Ont. acquired the subject property for $424,000 secured on the subject property as a second mortgage.

[43] 269 Ont. subsequently refinancing to yet another party in early 2021 for $500,000. The Dallas Defendants’ current counsel in this proceeding, acted on this financing.

[44] Clearly the Dallas Defendants, and in particular Ms. Dallas, were intimately involved in the transaction at issue in this proceeding. The flow and use of funds would be known. Documents would be available to show what monies were received, from who and what monies were paid out and to who. Especially, by the then owner 269 Ont. of which Ms. Dallas was the principal and signatory.

[45] However, as described below by J. Daley, Ms. Dallas also signed documents relating to the transactions described by J. Kumaranayake order, on behalf of the seller (274 Ont.) and 250 Ont. (a Plaintiff), although not an authority for either corporation.

[46] Ms. Dallas, under oath, denied having any knowledge of even the most basics of the transactions despite the fact that substantial monies were involved. This is what J. Daley had to say in Tang v. Xpert Credit Control Solutions Inc., 2022 ONSC 1493:

[30] Based on the evidence from the cross-examination of Shayna Dallas, it is beyond doubt that she has little or no personal knowledge of any of the issues at stake in this litigation and certainly has not offered any cogent evidence based on personal knowledge in response to the plaintiffs’ motion seeking leave to register a CPL.

[31] Although this defendant has held herself out as a real estate investor, when cross-examined on her affidavit, she acknowledged that she left the day-to-day issues concerning the Property up to her builder, the defendant Mangal, and her lawyer. She was unable to answer even the most basic questions as to the transactions whereby 269 obtained title to the Property.

[32] By way of examples, this defendant was unable to provide information and answers to the following questions:

(1) what deposit was to be paid in the transaction between 269 and 274?

(2) was the $10,000 deposit called for in the APS paid?

(3) did Mangal and his corporation have a financial interest in 269?

(4) did she have a lawyer review the APS before she signed it?

(5) did 269 have any funds in hand when the APS was executed?

(6) when was a building permit applied for and did she pay for it?

(7) when was building scheduled to commence on the vacant Property?

(8) what lawyer did she use for the purchase of the Property and for the Ajit loan and where was her lawyer’s office located?

(9) what harm would occur if a CPL was granted?

(10) while Ms. Dallas alleges that she is an investor in the Property she was unable to state how much money she had invested.

[33] The defendant Dallas further acknowledged in cross-examination that she verbally delegates tasks to Mr. Mangal, her supposed contractor.

[34] Prior to the scheduled closing date this defendant acknowledged that she was aware of a “technical error” in respect of the notice of sale.

[35] Furthermore, the uncontradicted and unexplained evidence is that the defendant Dallas signed two sets of documents relating to the title to the Property, on behalf of corporations when she had no authority to do so.

[36] Firstly, this defendant is shown as the signing authority on behalf of 274 in completing the Transfer of Charge from 274 to Gurpal Singh, dated December 23, 2020 which was to be registered in Land Titles as against the Property. There is no dispute by the defendant that she had no authority whatsoever to execute documents on behalf of 274.

[37] Next, on December 24, 2020 the defendant Dallas signed a charge to be registered against the Property purporting to be a duly authorized signing authority for 250, wherein she is also identified as a guarantor. Again, it is acknowledged that this defendant had no authority whatsoever to sign that charge or the Acknowledgement and Direction that related to it, which she also executed on behalf of 250.

[38] No cogent, admissible, and clear evidence has been offered on behalf of the defendants explaining how and why the defendant Dallas executed these documents. By way of double hearsay only, an email from a solicitor purporting to have been involved in the transactions relating to these documents indicates that they were signed in error. This is of no value in terms of evidence. I am left to draw a negative inference as against the defendants for their failure to adduce any admissible evidence concerning the execution of these documents, when clearly that evidence was called for in the circumstances and must be available.

[44] In concluding that the plaintiffs have established a triable issue, the following evidence leads me to that decision:

(1) in the Dallas Defendants’ statement of defence it is admitted that 274 notified 269 that there had been a technical error in 274’s notice of sale and that the transaction could not close;

(2) on all of the evidence, the defendant Dallas knew or ought to have known that the power of sale proceeding instituted by 274 was probably unlawful;

(3) even though the defendant Dallas was aware that the Property was worth $860,000, as she has stated in her statement of defence, she and her co-defendants, on the face of the evidentiary record available, probably engaged in improvident sale of the Property from 274 to 269;

(4) the defendant Dallas has admitted that she did not have authority to execute the title documents relating to the Property and no cogent or admissible evidence has been adduced explaining how those documents came to be signed by her;

(5) the evidence adduced by the plaintiffs as to the unconscionable mortgage transaction involving the defendant Xpert is entirely uncontradicted.

[47] One would expect that Ms. Dallas would have all the documents relating to the subject transactions, if not in her personal possession, certainly within her power or control, including from the lawyers that were involved for her and who requested (and had her sign documents on behalf of other corporations).

[48] Now, turning to what was produced by the Dallas Defendants on January 19, 2023.

• There is the 274 Ont. VTB take back mortgage commitment from 269 Ont. to the seller 274 Ont. signed by Ms. Dallas personally and on behalf of 269 Ont.
• A copy of the 274 Ont. VTB charge and corporate resolutions regarding the 274 Ont. VTB.
• A copy of the loan, security and corporate documents for the subsequent loan from Bhalla to 269 Ont. The vast majority of the advanced monies were directed to another company, Pyramid Properties Management and Construction.
• There is an agreement with Pyramid regarding work to be done on the subject in 2021.

[49] There are no cheques/bank drafts or other such financial documents.

[50] There are no trust ledgers even for the transactions where current counsel acted on the second refinancing (which was included in J. Kumaranayake’s Order).

[51] The transactions remain as opaque as ever. The actions of the participants in the transactions, and who was directing the transactions, also remain opaque.

[52] Some of the documents produced to the Plaintiff from other defendants/sources, describe inconsistencies with the “directions” produced by the Dallas Defendants. For example, a Direction produced by the Dallas Defendants (signed by Ms. Dallas) directed funds to Pyramid. Yet, Pyramid denied it received any money. As a result, it is not sufficient to say I produced the Direction as it does not verify where the monies actually went.

[53] It is simply inconceivable that Ms. Dallas and 269 Ont. do not have, in their power, possess or control, additional financial documents for the transactions described in the J. Kumaranayake’s Order. Dallas’ counsel today expressly confirmed this to the court today.

[54] However, I go further than that. The Dallas Defendants’ counsel confirmed today that his clients have no further financial documentation relating even to the transaction, being the second $500,000 financing referred to above, where the same counsel as here today acted as solicitor. For example, where are the trust ledgers, copies of cheques and other relevant documents would have been required to be kept under the Law Society regulations by solicitors for this second financing? Yet, that is the confirmation made by the Dallas Defendants’ counsel today that there is nothing in his possession that could be called upon (i.e. in their power or control) by the Dallas Defendants to respond to J. Kumaranayake’s Order.

[55] Has the Plaintiff proven in this case beyond a reasonable doubt that there has been a “deliberate and flagrant breach” to produce the specified financial documents, and, in light of the Plaintiff’s evidence (or lack thereof) and the in-court confirmation by the Dallas Defendants?

[56] While the court remains extremely skeptical that the Dallas Defendants have complied with the J. Kumaranayake’s Order, and skeptical of the accuracy of the “in-court confirmation”, I am not persuaded that the Plaintiff has met the onus in this case.

Conclusion

[57] The motion is dismissed. However, this decision is without prejudice to the motion being renewed on new evidence that clearly demonstrates that the Dallas Defendants had in their power, possession or control to the documents ordered to be produced that were not produced pursuant to the J. Kumaranayake’s Order.

Costs

[58] Either party seeking costs may submit written submissions, within two weeks, limited to 3 pages PLUS any Offers and authorities.

[59] A party against whom costs are claimed, may submit responding written submissions, within two weeks, limited to 3 pages PLUS any Offers and authorities.

[60] There will be no reply submissions.

RSJ L. Ricchetti Released: August 09, 2023