Court File and Parties

COURT FILE NO.: CV-22-00690981-0000 DATE: 20230828 ONTARIO SUPERIOR COURT OF JUSTICE

RE: TPINE FINANCIAL SERVICES INC., Plaintiff -and- GUNMEET SINGH et al. Defendants

BEFORE: Shin Doi J.

COUNSEL: Joey Jamil and Dominique Michaud for the Plaintiff Avi Freeland and Ryan Atkinson for the Defendants

HEARD: May 29, 2023

Endorsement

[1] On May 29, 2023, I heard the Plaintiff’s motion for continuation of the interim Mareva Order dated December 2, 2022 and leave to register a certificate of pending litigation on title to property municipally known as 6902 Mayfield Road, Caledon, Ontario (the “Caledon Property”). I granted the Plaintiff’s motion and ordered the Hanjra Defendants (as defined below) to pay monies into court until final disposition of this action; and granted leave to the Plaintiff to register a certificate of pending litigation on title to the Caledon Property. I noted that my reasons would follow.

[2] On August 24, 2023, the parties appeared before me because the Hanjra Defendants had arranged financing in the amount of $3,650,000.00 to be paid into court and sought a discharge of the certificate of pending litigation. It is important to note that the Hanjra Defendants still had not paid any monies into court despite the order dated December 2, 2022 and my order dated May 29, 2023. The parties agreed to settle the matter as follows:

a. The Hanjra Defendants shall pay the sum of $3,650,000.00 into court within 30 days;

b. If the Hanjra Defendants pay that sum, then the Plaintiff shall discharge the Certificate of Pending Litigation on the Caledon Property and the Plaintiff shall forego the Certificate of Pending Litigation on other property (CV-23-00701408-0000) and the Plaintiff shall discharge any cautions as it relates to the deposit funds;

c. The Hanjra Defendants shall abandon its leave to appeal the order dated May 29, 2023; and

d. The parties shall attend mediation for 1 day within 30 days of payment.

[3] The parties further agreed that if the payment was not made, then the above would be without prejudice to either party, including any appeals.

[4] The parties requested my reasons of May 29, 2023, and so I set forth my reasons below.

Background Facts

[5] The Plaintiff alleges that the defendants The Boss Group Ltd. (“Boss Group”), JKS Carrier Ltd. (“JKS Ltd.”), Gunmeet Singh (“Singh”), Jasvir Kaur Sidhu (“Sidhu”), and 14377613 Canada Inc. (the “Mareva Defendants”) engaged in a fraudulent invoicing scheme which induced the Plaintiff to advance approximately the amount of $7,500,000.00 to Boss Group between June 1 and September 29, 2022.

[6] The Plaintiff and Boss Group entered into an invoice factoring agreement, the Master Purchase and Sale Agreement which provided that the Plaintiff would provide financing to Boss Group and in return, the Plaintiff was entitled to purchase the right to collect on certain invoices issued to Boss Group to companies.

[7] In November 2022, the Plaintiff conducted an audit on its account with Boss Group and discovered that certain invoices were fake. The Plaintiff discovered that the Mareva Defendants created a fraudulent scheme whereby Boss Group provided invoices evidencing a debt owing to Boss Group by JKS Ltd. or other third parties but no goods were transported and the invoices purchased did not reflect a real debt.

[8] It is alleged that Boss Group and the other Mareva Defendants used funds from the Plaintiff to purchase the Caledon Property for $15,000,000.00. It is further alleged that the Hanjra Defendants received a total of $3,650,000.00 as a deposit for the Caledon Property. The deposit was to be held in trust until the completion or termination of the agreement of purchase and sale dated August 25, 2022 between Hanjra Group and 143 Inc. It is also alleged that the Hanjra Defendants have been using those funds for construction improvements to the Caledon Property and the funds have been dissipated, in part to pay off a vendor take-back mortgage, contrary to the provision that the monies would be held in trust. It is the Plaintiff’s position that the Mareva Defendants and the Hanjra Defendants acted in concert.

Payment of monies into court

[9] The Hanjra Defendants were ordered by Justice Myers and Justice Vermette on December 2 and 12, 2022, to pay the deposit monies into court but the Hanjra Defendants have not done so. The Hanjra Defendants are in breach of those court orders.

[10] The Plaintiff argues that there is a direct connection between its funds and the deposit. The Plaintiff submits evidence that the deposit monies total the sum of $3,650,000.00.

[11] The Plaintiff cites Rule 45.02 which provides that where the right of a party to a specific fund is in question, the court may order the fund to be paid into court or otherwise secured on such terms as are just. Rule 45.02 provides interim preservation of property pending litigation and the Plaintiff meets the test for relief: the Plaintiff claims a right to a specific fund, there is a serious issue to be tried regarding the Plaintiff’s claim to that fund (as discussed below); and the balance of convenience favours granting the relief sought by the Plaintiff (News Canada Marketing Inc. v. TD Evergreen, a Division of TD Securities Inc., [2000] O.J. No. 3705, 100 A.C.W.s. (3d) 45 (S.C.J.), as cited at para. 18, Sadie Moranis Realty Corporation v. 1667038 Ontario Inc. 2012 ONCA 475).

[12] Pursuant to the orders of Justice Myers and Justice Vermette, I order the Hanjra Defendants to pay the deposit monies in the sum of $3,650,000.00 into court.

Certificate of Pending Litigation

[13] The purpose of a certificate of pending litigation registered on title is to give notice that the property is subject to a dispute and to protect interests in the property pending the resolution of the dispute. The leading case on whether a certificate of pending litigation should be registered is Perruzza v. Spatone, 2010 ONSC 841. The threshold in respect of the “interest in land” issue in a motion is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed. Further, as set out in Perruzza v. Spatone, at para. 20, “the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a certificate of pending litigation should be granted or vacated.”

[14] I am satisfied that there is a triable issue as to whether the monies advanced by the Plaintiff were used as deposit monies by the Mareva Defendants for the purchase of the Caledon Property, whether there is a constructive trust over the deposit monies and the Caledon Property as alleged by the Plaintiff, and whether the monies have been dissipated. The court in December 2022 was also satisfied that “the evidence shows a strong prima facie case of fraud as against the Mareva Defendants,” which included the attempt to purchase the Caledon Property with the funds advanced by the Plaintiff.

[15] As argued by the Plaintiff, if a certificate of pending litigation is not granted against the Caledon Property, the Plaintiff would be unprotected and the Hanjra Defendants would be free to dispose of or further encumber the Caledon Property. The Hanjra Defendants have not complied with the orders of December 2022, requiring them to pay the monies into court. The Plaintiff’s claim as against the Hanjra Defendants is therefore not secured. Accordingly, the balance of equities favours granting leave to the Plaintiff to issue and register a certificate of pending litigation on the Caledon Property.

[16] The Hanjra Defendants argue that they will be prejudiced by the certificate of pending litigation. If the Hanjra Defendants pay the deposit monies into court, the Hanjra Defendants may bring a motion to remove the certificate of pending litigation against the Caledon Property because the Plaintiff’s claim as against the Hanjra Defendants could then be secured by the monies paid into court (s. 103(6) Courts of Justice Act). The caselaw stipulates that the proceeds paid into court should not exceed the plaintiff’s judgment and provide more security than reasonably required.

Costs

[17] I have reviewed the costs submissions of the parties and fix costs of the motion at $15,000.00 payable by the Hanjra Defendants to the Plaintiff.

Shin Doi J. Date: August 28, 2023