Court File and Parties
Barrie Court File No.: CV-24-524 Date: 2024-06-12 Superior Court of Justice - Ontario
Re: Darren Alan Dunbar, Applicant And: ASM Legal Professional Corporation, 2636387 Ontario Inc. and Royal Bank of Canada, Respondents
Before: The Hon. Mr. Justice R.E. Charney
Counsel: Rajiv Joshi, Counsel for the Applicant Ankit Khetarpal, Counsel for the Respondent, ASM Legal Professional Corporation Varun Mehta, Counsel for the Respondent, 2636387 Ontario Inc.
Heard: June 11, 2024
Endorsement
Facts
[1] The Applicant, Alan Darren Dunbar, brings this Application for a declaration that the monies paid on May 19, 2023, to the Respondent, ASM Legal Professional Corporation (“ASM Legal”), who was then counsel for the Respondent, 2636387 Ontario Inc., was in full accord and satisfaction towards a mortgage for $150,000 (the “Mortgage”) registered on title to a property on Esther Drive in Barrie, Ontario (the “Property”). In addition, he seeks an order that the Mortgage is not in default and for discharge of the Mortgage.
[2] The Applicant alleges that on May 18, 2023, he attended the law office of the Respondent, ASM Legal, with four bank drafts payable to ASM Legal in trust in the amount of $154,153, representing the full outstanding mortgage amount inclusive of interest to that date. The four bank drafts were comprised of the following:
a. Bank Draft from Cheng Zhang in the amount of $60,000.00;
b. Bank Draft from Wen Chun Xiong in the amount of $60,000.00;
c. Bank Draft from Qianhui Yang in the amount of $30,000.00; and,
d. Bank Draft from Mr. Dunbar (the Applicant) in the amount of $4,143.32
[3] ASM Legal is the law office of Ankit Khetarpal.
[4] The Applicant alleges that Mr. Khetarpal advised him that he could not accept the bank drafts from Zhang, Xiong and Yang unless they attended his office for identity verification or they deposited the cheques directly into the ASM Legal trust account.
[5] Based on these alleged instructions, on May 19, 2023, Mr. Dunbar instructed the three individual investors to deposit the three cheques into the ASM Legal trust account, in the total amount of $154,153.27.
[6] Accordingly, Mr. Dunbar takes the position that, acting on Mr. Khetarpal’s instructions, he paid off the Mortgage on May 19, 2023, and he is entitled to a discharge of the Mortgage.
[7] Mr. Khetarpal’s evidence is very different. He states that he had no idea who Zhang, Xiong and Yang were, and they had no connection whatsoever with the Mortgage Agreement. He advised Mr. Dunbar that he could not accept bank drafts from these unknown persons who were not a party to the Mortgage Agreement. If Mr. Dunbar wanted to use this money, Mr. Dunbar would have to deposit the bank drafts from these persons into his own account and pay the outstanding mortgage amount from Mr. Dunbar’s own account. Mr. Khetarpal therefore refused to accept these three bank drafts. Mr. Dunbar left ASM Legal and advised that he would make alternative arrangements for payment of the Mortgage.
[8] Mr. Khetarpal testified that he had no identification or verification from these third parties or any authorization from them that the funds could be used to pay off Mr. Dunbar’s Mortgage. These are all red flags that lawyers are warned about when dealing with large sums of money in real estate transactions. He expressly denies advising Mr. Dunbar to have Zhang, Xiong and Yang deposit the cheques directly into the ASM Legal trust account.
[9] Mr. Khetarpal testified that, despite his refusal to accept the funds, Mr. Dunbar deposited the funds into the ASM Legal trust account by going to the bank on May 19, 2023.
[10] Mr. Khetarpal takes the position that the funds were not provided by Mr. Dunbar, that Zhang, Xiong and Yang are not parties to the Mortgage, and that, without express authorization from Zhang, Xiong and Yang, he cannot direct the funds to the mortgagee.
[11] Mr. Khetarpal has asked the bank to remove the funds from the ASM Legal trust account, but the bank can only reimburse the funds to Zhang, Xiong and Yang, and no one knows who they are.
[12] The Respondent, 2636387 Ontario Inc., is the mortgagee. It knows only that it has not been paid the amount owing under the Mortgage. 2636387 Ontario Inc. has commenced its own action against Mr. Dunbar – Court file # CV-24-1377 – for possession of the mortgaged property and payment of the amount owing under the Mortgage, which is now $178,284.
Procedure
[13] As indicated, Mr. Dunbar’s originating process was a Notice of Application. The Application was originally returnable on April 9, 2024, but was adjourned to June 11, 2024 “for a 55 minute hearing”.
[14] There is no world in which the complex factual and legal questions raised by the parties can be addressed in under one hour. I also question whether the legal issues raised in this proceeding are amenable to an Application, given the significant factual disputes raised by the competing affidavits.
[15] None of the affidavits were cross-examined on, but each side takes the position that the other side’s affidavits are not true.
[16] The parties indicated that they were prepared to continue this matter as an Application, and to conduct cross-examinations and file new factums, after which a long hearing date (at least ½ day) will be scheduled.
[17] It is also apparent that this Application should be heard together with Court file # CV-24-1377, since they have common questions of law and fact.
[18] Another procedural issue relates to Mr. Khetarpal’s participation as counsel in this case.
[19] Mr. Khetarpal swore an affidavit, explaining why he declined to accept the bank drafts from Zhang, Xiong and Yang. This was entirely appropriate, because it was Mr. Khetarpal’s decision, based on his understanding of Law Society guidelines, to decline the proffered bank drafts without verification and authorization from Zhang, Xiong and Yang.
[20] A lawyer cannot also appear as a witness in his or her client’s litigation: Gutierrez v. The Watchtower Bible and Tract Society of Canada, 2019 ONSC 3069, at paras. 39 - 40.
[21] Mr. Khetarpal took the position that he could continue to act as counsel, because he was, in effect, representing himself. As a self-represented litigant, he can be a witness and his own lawyer.
[22] This ignores the fact that the Respondent in this case is not Mr. Khetarpal personally, but ASM Legal Professional Corporation. When he acts in this case, he is acting as the lawyer for ASM Legal in accordance with Rule 15.01(2) of the Rules of Civil Procedure, which requires that a corporate party must be represented by a lawyer.
[23] As such, I am of the view that Mr. Khetarpal cannot appear as both a witness and as counsel in this case.
Timetable
[24] The parties have agreed to follow the following timetable:
If the Applicant wants to file any additional affidavits, he must serve them by June 21, 2024.
If the Respondents want to file any reply affidavits to the new affidavits served by the Applicant, they must serve them by July 2, 2024.
Cross-examination on all affidavits will be completed by August 2, 2024.
The Applicant will serve his revised factum by August 30, 2024.
The Respondents will serve their revised factums by September 27, 2024.
[25] Following the completion of cross-examinations, the parties may schedule a triage court date through Calendly at:
Calendly - Central East Civil Long Motions & Triage Court
[26] The parties shall request ½ day to have this matter heard.
Ancillary Orders
[27] This Court Orders:
[28] This Application and Court file # CV-24-1377 shall be heard at the same time and the evidence in relation to one will be admissible as evidence in the other. Given that the parties’ respective positions are clear from their respective affidavits, there is no need for the Defendant in Court file # CV-24-1377 to file a Statement of Defence.
[29] The money deposited into the ASM Legal Professional Corporation trust account by Zhang, Xiong and Yang shall be paid into court to the credit of this Application or further order of the Court.
[30] Costs of today reserved to the hearing of the Application.
Justice R.E. Charney Date: June 12, 2024