Court File and Parties
COURT FILE NO.: CV-23-00001981-0000 DATE: 2023 11 08
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
PARADIGM CHANGE CONSULTING INC., BALWANT BHANDAL, GOGINDER BHANDAL and NAVNEET BHANDAL
Plaintiffs
- and -
NAVDEEP SINGH BOPARAI, LU VESTA GROUP OF COMPANIES LIMITED, VERANCE DEVELOPMENT CORPORATION, RHOMBI NORTH BAY DEVELOPMENT I LP, RHOMBI NORTH BAY DEVELOPMENT II LP, LOTUS NORTH BAY GENERAL PARTNER I INC., and LOTUS NORTH BAY GENERAL PARTNER II INC.
Defendants
Counsel: S. Kamalie & K. Khak, for the Plaintiffs
HEARD: November 3, 2023
REASONS FOR DECISION
MAREVA INJUNCTION
DALEY J.
Introduction
[1] The plaintiffs in this action bring an ex parte motion for a Mareva injunction restraining the defendants, their servants, employees, agents, assigns, directors and officers from directly or indirectly dealing with certain properties and assets fully particularized in their motion material.
[2] As discussed below, the plaintiffs assert, in the action they have commenced, that the defendants defrauded them of a substantial sum of money which the plaintiffs paid over to the defendants based on the fraudulent conduct and misrepresentations made by the defendant Navdeep Singh Boparai (“Boparai” and the “Defendant”) who is an officer and director of each of the corporate defendants.
[3] For the reasons that follow and in the terms fully set out in the draft order to issue, I have concluded that the plaintiffs have made out a case for the granting of a Mareva injunction.
Legal Framework:
[4] A party seeking an interlocutory Mareva injunction that would restrain a defendant from dissipating assets or from conveying away his or her own property pending the court’s determination in the proceedings must satisfy the requirements set out in RJR-McDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311 and must establish: (1) a strong prima facie case; (2) irreparable harm if the remedy for the defendant’s misconduct were left to be granted at trial; (3) the balance of convenience favours granting an interlocutory injunction; (4) the defendant has assets in the jurisdiction; and (5) that there is a serious risk that the defendant will remove property or dissipate assets before judgment: Wang v. Feng, 2023 ONSC 2315 at para. 127.
[5] The risk of removal or dissipation of assets can be established by inference and the defendant’s prior fraudulent activities and improper conduct including concealment, deception, evasion and clandestine behavior may support an inference that the defendant will remove or dissipate property: Wang at para. 128.
[6] Where the evidence discloses a strong prima facie case that a defendant has perpetrated a premeditated and substantial fraudulent scheme against innocent parties, “the law’s reluctance to allow prejudgment execution must yield to the more important goal of ensuring that the civil justice system provides a just and enforceable remedy against such serious misconduct”: 2092280 Ontario Inc. v. Voralto Group Inc., 2018 ONSC 2305 at para. 28; see also Wang at para. 129.
[7] Absent special and unusual circumstances, a plaintiff seeking interlocutory injunctive relief must provide an undertaking as to damages, as the plaintiffs have in this case.
[8] A party seeking interlocutory injunctive relief must make full and frank disclosure of all material facts relevant to the court’s consideration of the motion and cannot take advantage of the ex parte nature of the motion to the unfair detriment of the party opposite.
Evidentiary Overview:
[9] The plaintiffs filed a very substantial evidentiary record in support of their motion for the injunctive relief.
[10] As set out in detail in the evidentiary record, the plaintiffs Balwant Bhandal and Goginder Bhandal are the parents of the plaintiff Navneet Bhandal, who owns and operates the plaintiff Corporation Paradigm Change Consulting Inc. (“Paradigm”).
[11] The defendant Boparai’s niece is married to the plaintiffs Balwant Bhandal and Goginder Balwant’s son.
[12] Through this family connection, the Defendant encouraged the plaintiffs to invest in mortgages, property development, and a family trust.
[13] As outlined in significant detail in the affidavit evidence submitted, the plaintiffs’ investments and financial arrangements with the Defendant are grouped under three separate headings, namely the Mortgage Investment, the North Bay Project Investment and the Family Trust.
[14] In the Mortgage Investment the plaintiffs collectively, including Paradigm, at the urging and based on representations made by the Defendant agreed to invest in mortgage financing being carried out by the Defendant and advanced to his firm the sum of $1,065,000. This included $200,000 drawn from a home equity line of credit.
[15] This Mortgage Investment resulted in the sum of $1,031,800 being invested in a property owned by the Defendant namely, the Wellandport Property, with the balance of $33,200 from the investment being unaccounted for by the defendants.
[16] After this initial investment, the Defendant proposed to the plaintiffs that they place the proceeds of their Mortgage Investment in another investment namely the North Bay Project Investment. Despite the plaintiffs’ hesitancy they agreed to invest the proceeds from their Mortgage Investment in this investment on the basis that they were guaranteed to earn a minimum of 10% per annum in interest and that all of their funds would be returned to them within two years.
[17] In June of 2019, the Defendant advised the plaintiffs that their Mortgage Investment return on investments would be paid out to them in installments, however the Defendant did not provide any explanation as to why they were not receiving the entire proceeds of their Mortgage Investment.
[18] The plaintiffs were advised that the proceeds of their Mortgage Investment were being invested in a property in North Bay with the municipal address of “351 Birch Road”. However, as a result of subsequent investigations carried out by the plaintiffs it was determined that the North Bay property was actually “351 Birchs Road” which was composed of three parcels owned by the defendants Lotus North Bay General Partner II Inc. and Rhombi North Bay Development II LLP. The Defendant is the sole director, officer and controlling mind of both of these corporations as determined by the plaintiffs’ corporate investigations.
[19] In June 2019 the Defendant advanced monies totaling $1,354,101 in four separate installments to the plaintiffs through Paradigm’s bank account which in turn were paid over on the Defendant’s direction in the actual amount of $1,355,000 to the North Bay Project Investment. All of the defendant companies have an investment interest or participation in the development of the North Bay Project under the Defendant’s direction.
[20] On August 6, 2019, the Defendant met with Navneet Bhandal to review with her a contract referred to as the North Bay Project Investment Agreement. This agreement provided that the plaintiffs would be paid 10% for their investment over a two-year term. This plaintiff was encouraged to simply execute the agreement which described the Defendant as the “borrower” and paradigm was identified as the lender. On execution of the agreement of the Defendant signed and initialed the document. During the period from June 2019 to August 2022 the plaintiffs made several requests of the Defendant that he provide them with a copy of the North Bay Project Investment Agreement, however he did not do so.
[21] Starting in January 2019, of the Defendant recommended to the plaintiffs that they establish a family trust. Ultimately on the recommendation and direction of the Defendant the plaintiff Balwant Bhandal withdrew $400,000 from his home equity line of credit and forwarded the funds to the Defendant who agreed to establish a family trust for the plaintiffs.
[22] Despite demands from the plaintiffs that he provide evidence and details with respect to the so-called family trust, at no time has the defendant provided any evidence whatsoever that a family trust has been established with the proceeds paid over to him.
[23] Subsequent to the execution of the North Bay Project Investment Agreement it came to the attention of the plaintiffs that the Defendant had created a new version of this agreement which contained significant discrepancies from the agreement executed by the plaintiff Navneet Bhandal, including that rather than the investments being for a term of two years, this altered version of the agreement provided that the principal and accrued interest otherwise payable to the plaintiffs would be due in five years from June 2019. It is the evidence and the plaintiffs’ position that at no time did they agree to such an investment timeline. It’s asserted that the Defendant crafted a new and fraudulent version of the North Bay Project Investment Agreement.
[24] Subsequent to the Defendants’ failure to re-pay to the plaintiffs of their investment, it was determined that the Defendant had been sanctioned by the Financial Services Commission of Ontario (“FSCO”) and that his license as a mortgage broker and that of his brokerage firm were revoked by FSCO in September and December 2018. He was also fined $50,000 for trading in mortgages while his license had been under suspension.
[25] In an interim order issued by FSCO in May 2018, the following findings were made: (1) the Defendant used false promises and deception in having persons sign for mortgages they did not understand; (2) the Defendant had abused his license to realize significant economic benefits for himself to his clients’ detriment; (3) the Defendant had demonstrated a propensity for deceit and poses a risk to his clients and the public; (4) and the Defendant’s conduct has been fraudulent and dishonest.
[26] Furthermore, since the defendants have not returned to the plaintiffs their investment monies, further investigation by the plaintiffs has revealed that funds otherwise to be used for the North Bay Project Investment were in fact used by the Defendant for investment in the defendant corporations. The evidence demonstrates that the Defendant invested all or a substantial part of the plaintiffs’ investment funds in the property known as 351 Birchs which is also referred to as the Lakeshore Properties a proposed condominium development.
[27] Since the institution of this action, counsel for the defendants who refers to himself as “insolvency counsel”, distinct from defence counsel in this litigation, proposed to counsel for the plaintiffs that the plaintiffs await the sale of the Lakeshore Properties which is allegedly scheduled to close in December 2023 before proceeding any further in this litigation. Counsel further stated that in the event the plaintiffs rejected the proposal, the defendants would proceed with a filing pursuant to the Bankruptcy and Insolvency Act.
[28] The plaintiffs’ counsel requested details as to the sale of the Lakeshore Properties, including a copy of the agreement of purchase and sale in September 2023, however no such evidence has been provided by counsel on behalf of the defendants.
Analysis:
[29] As to the test that a plaintiff must meet in order to be granted a Mareva injunction, this was outlined by Molloy J in Canadian Imperial Bank of Commerce v. Credit Valley Institute of Business and Technology, 2003 CanLII 12916 (ON SC), [2003] O.J. No. 40 at para. 16 where she stated:
A Mareva injunction does not require the plaintiff to show any ownership interest in the property subject to the injunction and does not require the plaintiff to establish a case of fraud or theft. It is a recognized exception to the rule established in Lister v. Stubbs (1890), 45 Ch. D. 1 that the court has no jurisdiction to attach the assets of a debtor for the protection of a creditor prior to the creditor obtaining judgment. Because of the exceptional nature of the relief, the test on the merits for obtaining a Mareva injunction is more onerous than for other injunctive relief and requires that the plaintiff establish a strong prima facie case: Chitel v. Rothbart (1983), 1982 CanLII 1956 (ON CA), 39 O.R. (2d) 513 at 522 and 532 (C.A.). In addition to the other requirements for an injunction, the plaintiff must show that the defendant is taking steps to put his assets out of the reach of creditors, either by removing them from the jurisdiction of the court or by dissipating or disposing of them other than in the normal course of business or living: Chitel v.Rothbart at p. 532-533.
[30] The evidence adduced on this motion is clear and well supported by the documentary evidence introduced in the affidavit material in terms of establishing the fact that the plaintiffs paid over to the Defendant the substantial sums and that the defendants have refused or failed to repay to them their investment.
[31] Turning to the considerations set out in RJR-McDonald Inc., I find, firstly, that the plaintiffs have established a strong prima facie case with respect to the alleged fraud and breaches carried out by the Defendant and his associate defendants. There is compelling evidence demonstrating a fraudulent scheme by the Defendant to take the plaintiffs’ monies, to invest them for his own benefit and to deny repayment to the plaintiffs.
[32] I further find that in the event the Mareva injunction is not granted, the plaintiffs will suffer irreparable harm in that by far most of the funds turned over to the defendants represented the lifetime and retirement savings of the plaintiffs which may never be recovered even if the plaintiffs are successful at trial.
[33] Furthermore, I have concluded that the balance of convenience clearly favours the plaintiffs. The defendants, following the granting of the injunction, will have an opportunity to call for the court to reconsider the injunctive relief granted and to modify, if necessary the terms of the injunction.
[34] As to the defendants’ assets, the record prima facie indicates that the defendants do have assets within the jurisdiction, particularly given that the defendants have retained insolvency counsel and furthermore given the Defendant’s role in the defendant corporations.
[35] I also find that the record demonstrates that there is a serious risk that the defendants will remove, dissipate or otherwise dispose of assets not in the ordinary course of business before judgment could be obtained by the plaintiffs. The evidence with respect to the Defendant’s conduct as a mortgage broker, his loss of license and alleged fraudulent conduct involving other parties, more than amply supports the drawing of the reasonable inference that the plaintiffs could lose any reasonable opportunity to recover their investment as a result of further fraudulent conduct by the Defendant and the defendant corporations: see Wang at para. 128.
Conclusion:
[36] For the reasons as outlined, the plaintiffs’ motion for the Mareva injunction is granted.
[37] Counsel for the plaintiffs submitted a draft order for consideration by the court in the event their motion was granted.
[38] As the draft order submitted does not fully complied with the terms of the draft order typically granted by the Commercial Court division of this court, I am having my administrative assistant send to counsel a properly formatted specimen order which I am directing them to follow in redrafting the order for further submission to me and if acceptable for my signature.
[39] I do not remain seized of this matter for the purpose of any hearing relating to the continuation of the injunction due to my unavailability.
[40] The costs of this motion are deferred to the next court.
[41] An order shall issue in accordance with the draft order that will be signed by me.
Daley J.
Released: November 8, 2023
COURT FILE NO.: CV-23-00001981-0000 DATE: 2023 11 08
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
PARADIGM CHANGE CONSULTING INC., BALWANT BHANDAL, GOGINDER BHANDAL and NAVNEET BHANDAL
Plaintiffs
- and -
NAVDEEP SINGH BOPARAI, LU VESTA GROUP OF COMPANIES LIMITED, VERANCE DEVELOPMENT CORPORATION, RHOMBI NORTH BAY DEVELOPMENT I LP, RHOMBI NORTH BAY DEVELOPMENT II LP, LOTUS NORTH BAY GENERAL PARTNER I INC., and LOTUS NORTH BAY GENERAL PARTNER II INC.
Defendants
REASONS FOR DECISION MAREVA INJUNCTION
Daley J.
Released: November 8, 2023