Tariq v. Exquisite Bay Development Inc., 2024 ONSC 41

COURT FILE NO.: CV-22-00686376-0000

COURT FILE NO.: CV-22-00689146-0000

DATE: 2024-01-02

ONTARIO

SUPERIOR COURT OF JUSTICE

RE: Emaduddin Chowdhury, Refayat Tahsina Alam, Suhail Syed, Rizwana Banu, Mohamed Aftab Pasha, Ranbir Singh Cheema, Lakhvir Kaur Cheema, Jaskarandeep Singh Luddu, Rupinder Kaur Jaswal, Hardeep Singh Khosa, Manjit Kaur Khosa, Jawed Yusuf, Ranjit Singh Toor, Sukhwinder Kaur Toor, Balwinder Singh Toor, Harpinder Kaur Toor, Ajinder Singh Sandhu, Manjot Singh Sandhu, David Predovich, Kerrese Predovich, Usman Sharif, 2784612 Ontario Inc., and 2784162 Ontario Inc., Plaintiff

-and-

Exquisite Bay Development Inc., Bay Homes Inc., Bay International Inc., Bay Management Inc. 2474229 Ontario Inc., 2468924 Ontario Inc., 2460741 Ontario Inc., Bay Lawrence Inc., Ahmed Raza Yousuf, Muhammad Yousuf, Harinder Takhar, James John Murray, Kiran Malhotra, Mohammad Taiyab Mansoor, Vandyk – The Ravine Limited, Vandyk Properties Incorporated, John Vandyk, Richard Ma, Sherman Chan, 2462686 Ontario Inc., Ella Boltyansky, Yuri Boltyansky, KingSett Mortgage Corporation, Maneesh Prabhakar, 2213155 Ontario Inc., Mint Capital Mic Inc., and John Doe Corporation, Defendants

RE: Mohammed Tariq, Plaintiff

-and-

Exquisite Bay Development Inc., Ahmed Raza Yousuf, Muhammad Yousuf, Bay Management Inc., Harinder Takhar, James John Murray, Kiran Malhotra, Bay Homes Inc., Bay International Inc., Mohammad Taiyab Mansoor, Bay Lawrence Inc., 2462686 Ontario Inc., Ella Boltyansky, Yury Boltyansky, 2213155 Ontario Inc., Maneesh Prabhakar, Mint Capital Mic Inc., 2474229 Ontario Inc., 2468924 Ontario Inc., 2460741 Ontario Inc. , Vandyk Properties Incorporated, Vandyk– The Ravine Limited, John Vandyk, Richard Ma, Sherman Chan, KingSett Mortgage Corporation, Muhammad Iqbal Ghauri, And Roomana Ghauri, Defendants

BEFORE: Robert Centa J.

COUNSEL: Rocco Giordano Scocco and Anique N.G. Dublin, for the plaintiffs Emaduddin Chowdhury et al.

Angela Valencia, for the plaintiff Mohammed Tariq

Josh Suttner, for the defendants Vandyk – The Ravine Limited, Vandyk Properties Incorporated, John Vandyk, Richard Ma, and Sherman Chan

Jonathan G. Bell and Megan Steeves, for the defendant KingSett Mortgage Corporation

James Macdonald, for defendants Harinder Takhar, James Murray, and Kiran Malhotra

Gurteg Singh and Gurpreet Chandok, for defendant MINT Capital Mic Inc.

HEARD: October 11, 2023

ENDORSEMENT

Overview

[1] I am case managing these two proceedings, which share many common facts. All of the plaintiffs purchased pre-construction homes at 320 Derry Road with the defendant, Exquisite Bay Development. The developer did not complete the homes in the time required by the agreements of purchase and sale. Eventually, the developer alleged that the plaintiffs had breached the agreements of purchase and sale, declared the agreements at an end, and retained the plaintiffs’ deposits.

[2] Eleven groups of plaintiffs have asserted their claims in one proceeding.^1 I will refer to these plaintiffs as the Chowdhury plaintiffs, as Emaduddin Chowdhury is the first plaintiff listed in the title of proceedings. Mohammed Tariq commenced a separate action and is separately represented.^2 In broad strokes, both claims make the same assertions against the same collection of defendants.

[3] First, the plaintiffs have sued the developer, its related companies, and its directing minds.[^3] None of the Exquisite Bay defendants brought the motions that are the subject of this decision.

[4] The plaintiffs have also sued four other groups of defendants. These groups of defendants have each brought motions to strike out the statements of claim.

[5] The plaintiffs have sued Harinder Takhar, James Murray, and Kiran Malhotra. On August 20, 2021, these three men resigned as directors of Exquisite Bay. The plaintiffs seek to recover from the former directors for a variety of economic torts and under the oppression remedy.

[6] The plaintiffs have sued KingSett Mortgage Corporation, which was the commercial lender to the development. The developer defaulted on its mortgage and construction financing from KingSett. The plaintiffs assert that KingSett participated in a conspiracy with the other defendants. The plaintiffs seek damages from KingSett for a wide range of economic torts.

[7] The plaintiffs have sued Vandyk - the Ravine Limited,[^4] Vandyk Properties Incorporated, and three directors of the Vandyk companies, named John Vandyk, Richard Ma, and Sherman Chan. Vandyk purchased the development from the developer for $38 million. The plaintiffs assert that the Vandyk companies and their directors participated in a conspiracy with the other defendants. The plaintiffs seek damages from the Vandyk defendants for a wide range of economic torts.

[8] The plaintiffs have sued Mint Capital Inc., which appears to have been the mortgagee on a personal mortgage held by one of the directing minds of Exquisite Bay. The plaintiffs allege that Mint Capital Inc. is liable to them for unjust enrichment or knowing receipt.

[9] Each of the four groups of defendants moved under rule 21.01(1)(b) to dismiss the statement of claim as disclosing no reasonable cause of action. In addition, the defendants relied on rule 25.11 and moved to strike some or all of the pleading as scandalous, frivolous, or vexatious. The defendants also ask the court to refuse leave to amend the claims.

[10] I find that the statements of claim are flawed. They are confusing, plead evidence, and are replete with bald conclusions. They fail to set out material facts in support of many of the causes of action they assert.

[11] Unfortunately, while the plaintiffs’ factums set out the law relating to motions under rules 21.01 and 25.11, and the substantive law related to each of the causes of action asserted, they did not demonstrate where the statement of claims sets out the material facts that would make out those causes of action. The factums did not engage with the defendants’ submissions regarding why the claims were deficient.

[12] I agree with many, but not all, of the submissions of the moving defendants. I strike out many of the claims advanced against the moving defendants. In most cases, but not all, I grant leave to the plaintiffs to amend the claim if so instructed. I urge the plaintiffs to think carefully about whether or not they are able to plead material facts in respect of some of the claims struck out.

Factual background

[13] On October 24, 2022, Mr. Tariq issued an initial statement of claim and, on June 19, 2013, issued an amended statement of claim. The Chowdhury plaintiffs issued a consolidated fresh as amended statement of claim on June 28, 2023.

[14] I will not attempt to summarize the near-140 pages that make up the two statements of claim. Much of the detail in each claim relates to the Exquisite Bay defendants. A broad overview of the plaintiffs’ theory of the case is found in the Chowdhury plaintiffs’ factum on this motion:

1. This matter involves a group of purchasers (the Plaintiffs) of a development project commenced by Exquisite Bay Development Inc. (“Exquisite Bay”), Bay Homes Inc., Ahmed Raza Yousuf (“Ahmed”), and other individuals and corporations, which was titled Longview Ravine Estates (the “Development”). The Development was a disaster, and Ahmed chose to deceive the purchasers by regularly communicating to the purchasers that the development was continuing, despite his development companies losing their Tarion licenses, and his companies becoming insolvent. These false communications were made all through 2021 and up until April 14, 2022, the day the Development was transferred to Vandyk – The Ravine Limited. Ahmed, needed to keep the financial failure of the Development a secret from the purchasers in order to ensure that the Development could be sold, encumbrance free, to Vandyk – The Ravine Limited.

2. Kingsett, being the lender for Exquisite Bay did not want the Development to go bankrupt, as this would complicate its ability to draw its money out of the Development. As such, Kingsett pushed Ahmed to keep all of the purchasers in the dark about the Development’s financial troubles, and Ahmed’s intent to sell the Development to a new builder. Kingsett funded Vandyk – The Ravine Limited with $10 million dollars more than they gave to Exquisite Bay, to purchase the Development. This increase in Kingsett’s investment was less than two years after it made loans to Exquisite Bay.

3 Similarly, Vandyk – The Ravine Limited depended upon Ahmed’s secrecy in order to ensure that the Development would be transferred without any legal challenge from the purchasers.

4. In and leading up to late 2021, investors and directors of Exquisite Bay Harinder Takhar, Kiran Malhotra, and James Murray saw that Ahmed’s Development was hopeless and doomed to fail. Therefore, they chose to pull out their money, resign as directors, and preferred the interest of certain creditors which they each had a financial interest in, on the eve of Ahmed soliciting buyers for the Development. All of these parties protected their interests and/or profited from Ahmed’s failed Development, at the expense of the purchasers.

5. Richard Ma, Sherman Chan, and John Vandyk were key players acting in their personal capacity and directly had their hands involved in negotiating Vandyk – The Ravine Limited’s purchase of the Development, months before Vandyk – The Ravine Limited was even incorporated.

6. The purchasers were left in the dark, actively deceived, and were left with no way to protect their own interests. The purchasers were only told after the Development was transferred, that they were in “breach” of their agreements with Exquisite Bay. This was a thinly veiled tactic to terminate all agreements and free up the Development for sale, when in fact none of the purchasers were in breach. The Plaintiffs are the group of purchasers who chose not to accept the meagre offer to settle from Ahmed and Exquisite Bay, and are seeking to claim justice for the deception perpetrated against them, claim their expectation damages for the equity lost in what would have been a lucrative real estate investment, and/or their loss in what would have been their new family home.

Legal principles

[15] Each of the moving defendants has brought a motion under rule 21.01(1)(b) to strike out all or parts the statements of claim on the ground that they disclose no reasonable cause of action.

[16] The proper approach on a rule 21.01(1)(b) motion is well settled.[^5] I am to take the facts asserted in the statement of claim as true unless they are patently incapable of proof or are merely bald conclusory statements of fact, unsupported by material facts.[^6] I am to read the statement of claim generously. The ultimate question is whether it is plain and obvious, assuming the facts pleaded to be true, that each of the pleaded claims discloses no reasonable cause of action. This is true where:

a. the allegations do not give rise to a cause of action;

b. the plaintiff fails to plead a necessary element of a cause of action; or

c. the allegations in the pleading are conjecture, assumptions, or speculation unsupported by material facts.

[17] This is a stringent test and the moving party must satisfy a very high threshold.[^7] However, if the claim has no reasonable prospect of success, where it is plain and obvious that the action cannot succeed, it should not be allowed to proceed to trial. Plaintiffs may not plead bald conclusions. If plaintiffs lack knowledge of the facts necessary to support the causes of action, they ought not to make the allegation in the statement of claim.

[18] It is important to note the Court of Appeal’s caution regarding Rule 21 motions and how they can cause unnecessary delay and expense at the cost of the timely adjudication of disputed on their merits:

Pleadings are very important. They frame the proceedings and the case that must be met. However, long gone are the days where proceedings could be terminated at the early pleadings stage on mere technicalities that can be cured by amendment unless it would result in non compensable prejudice to the opposing party or the administration of justice. Motions to strike can certainly serve a useful purpose at early stages of a proceeding to weed out clearly untenable causes of action that have no chance of success: Imperial Tobacco, at para. 19. But in circumstances where parties are quibbling over whether a known cause of action has been pleaded with sufficient particularity, injudicious use of motions to strike inevitably lead to proceedings becoming mired down, as here, in technical pleadings disagreements that cause unnecessary delay and expense, rather than the adjudication of the dispute on the merits.[^8]

[19] In addition, some of the defendants moved to strike out the statement of claim under rule 25.11, which permits the striking of a claim as scandalous, frivolous, or vexatious. The court may strike pleadings under rule 25.11 where they contain allegations that are irrelevant, extraneous, argumentative, or incapable of affecting the outcome of the action.[^9]

[20] Leave to amend a claim should be denied only in the clearest of cases.[^10] While a party should not be given unlimited scope to amend its pleading, I am reluctant to deprive plaintiffs of an opportunity to remedy a deficient pleading.[^11] This is particularly true where, as here, there is no evidence of harm to the defendants if leave to amend is granted and an amendment could cure the deficiency.[^12] On the other hand, where the challenged paragraphs are scandalous, frivolous or vexatious, a court is not required to grant leave to amend.[^13]

Chowdhury plaintiffs’ statement of claim

[21] The moving defendants have each challenged the Chowdhury plaintiffs’ statement of claim on a number of grounds. I will group the challenges together where they raise common issues.

The generalized claims against undifferentiated groups of defendants must be amended to provide notice and clarity

[22] The moving defendants submit that the Chowdhury plaintiffs’ statement of claim is deficient because, in several places, the allegations are made in a blanket fashion against groups of 22 or 27 defendants. The moving defendants submit that such generalized pleadings do not allow them to understand what they specifically are alleged to have done or even if they are properly included in a claim levelled at all “the Defendants.” I agree.

[23] To take only one example, paragraph 329 of the statement of claim is drafted in an impermissibly broad fashion. It states:

329. The Plaintiffs advanced funds to Exquisite Bay and, consequently, were deprived of these funds. The Defendants, and parties unknown, received these funds, directly or indirectly, and realized a corresponding enrichment. There is no juristic reason for the enrichment of the Defendants or parties unknown, nor the corresponding deprivation sustained by the Plaintiffs.

[24] Given the number of defendants the Chowdhury plaintiffs have included in this statement of claim, and their varied roles and responsibilities, this type of pleading does not permit each defendant to know the allegations to which it must answer.

[25] I direct the Chowdhury plaintiffs to amend their statement of claim to specify what each remaining defendant is alleged to have done and to plead material facts in support of each claim made against each defendant.

The claims for conspiracy are struck out, with leave to amend

[26] KingSett and the Vandyk defendants move to strike out the claims for conspiracy. They submit that the Chowdhury plaintiffs’ statement of claim is fatally flawed because:

a. it fails to specify whether it is advancing a claim of predominant purpose conspiracy or unlawful act conspiracy;

b. it does not specify what each defendant is alleged to have done to make out the tort of conspiracy; and

c. it fails to plead material facts, as opposed to bald allegations, that support each element of the tort.

[27] In their factum, the Chowdhury plaintiffs do not directly address the moving defendants’ submissions regarding the deficiencies in the claim. They simply urge the court to read the pleading generously and submit that it is difficult to plead a conspiracy given its secretive nature.

[28] I have some sympathy for the position of the plaintiffs. Nevertheless, it is not sufficient simply to recite a series of events and state that they were intended to injure the plaintiff in order to plead a conspiracy.[^14]

[29] To plead the tort of predominant purpose conspiracy, the Chowdhury plaintiffs must plead that:

a. the defendants acted in combination;

b. the defendants acted with the predominant purpose (the actual intent) of causing injury to the Chowdhury plaintiffs; and

c. as a result of the defendants’ actions, the Chowdhury defendants suffered damages.[^15]

[30] To plead the tort of unlawful act conspiracy, the Chowdhury plaintiffs must plead that:

a. the defendants acted in concert, by agreement or with a common design;

b. the defendants; conduct was unlawful;

c. the defendants conduct was directed towards the Chowdhury plaintiffs;

d. the defendants knew that, in the circumstances, injury to the Chowdhury plaintiffs was likely to result; and

e. their conduct caused injury to the Chowdhury plaintiffs.[^16]

[31] For either type of conspiracy, the Chowdhury plaintiffs’ statement of claim should plead, with clarity and precision, material facts to identify:

a. the parties to the conspiracy, and their relationship to one another;

b. the agreement between the parties;

c. the purpose or objects of the conspiracy stated precisely;

d. the overt acts done in pursuance and furtherance of the conspiracy stated; and

e. the injury and damages occasioned to the plaintiff.[^17]

[32] The Chowdhury plaintiffs have not specified which type of conspiracy they are alleging and have not pleaded material facts to support either type of conspiracy. I strike out the conspiracy pleadings against KingSett and the Vandyk defendants.

[33] The Chowdhury plaintiffs have previously amended their claim. They did not provide me with any proposed amendments that would remedy the deficiencies in this pleading. Nevertheless, given the challenges in pleading a conspiracy, I grant leave to amend the claim to assert a conspiracy claim if the Chowdhury plaintiffs choose to do so. I see no prejudice to the defendants in permitting the Chowdhury plaintiffs another chance to amend their statement of claim to correct its deficiencies.

The claims for interference with economic relations are struck out, with leave to amend

[34] The Chowdhury defendants claim damages against the Vandyk defendants and KingSett for the tort of interference with economic relations.

[35] The tort of interference with economic relations (sometimes called the tort of causing loss by unlawful means) is established where a plaintiff suffers economic loss resulting from a defendant’s unlawful act against a third party, intended to target the plaintiff. Conduct is unlawful if it is actionable by the third party, or would be actionable if the third party had suffered a resulting loss.[^18]

[36] The tort of intentional inference with economic relations is a narrow tort and generally operates so as to not interfere with competition between rivals for the same trade.[^19]

[37] Paragraph 312 of the Chowdhury plaintiffs’ statement of claim appears to set out all of the material facts pleaded in support of the claim for interference with economic relations:

312. The Plaintiffs further claim against the Vandyk Defendants and KingSett as a result of the tort of interference with economic relations. In the foregoing regard, these Defendants:

(a) intended to cause injury and/or harm to the Plaintiffs;

(b) committed an illegal and/or unlawful act, by way of conspiracy and/or collusion with respect to the fraudulent transaction set out above;

(c) caused damages to the Plaintiffs for the lost opportunity and equity increased value of the Properties.

[38] In their factum, the Chowdhury plaintiffs did not engage with the submissions of the moving defendants about the flaws in their statement of claim. Instead, they set out the elements of the tort of interference with economic relations and submit that the words of the statement of claim should be read generously given the unsettled nature of this tort.[^20] While I take no issue with this principle, the Chowdhury plaintiffs’ submissions did not point to any material facts in their statement of claim that, if true, would make out this tort.

[39] In my view, the claim for interference with economic relations must be struck out.

[40] First, the Chowdhury plaintiffs have not pleaded that either KingSett or the Vandyk defendants committed an unlawful act against a third party, that is, a party other than the Chowdhury plaintiffs. The failure to plead this element of the tort is fatal.

[41] Second, the Chowdhury plaintiffs have not pleaded any material facts that support their claim for interference with economic relations. For example, they have not even named or specified the third party against whom KingSett or the Vandyk parties allegedly committed the unlawful act, much less pleaded the facts underpinning that unlawful act. Simply stating that the unlawful act was “conspiracy” or “collusion” is insufficient. Moreover, the Chowdhury plaintiffs plead that KingSett, the Vandyk defendants, and the Exquisite defendants were all parties to the conspiracy, which means none of them can be the third party harmed by that alleged conspiracy. In addition, the fraudulent transaction referenced in paragraph 312 appears to be one that harmed the Chowdhury plaintiffs, not a third party, and is not one that could amount to an unlawful act against a third party.

[42] Therefore, I strike out the claims for interference with economic relations in paragraphs 1(c), 1(e), 2(c), 2(e), 3(c), 3(e), 4(c), 4(e), 5(c), 5(e), 6(c), 6(e), 7(c), 7(e), 8(c), 8(e), 9(c), 9(e), 10(c), 10(e), 14(b), 14(d), and I strike out paragraph 312 in its entirety, all as against the moving defendants.

[43] Subject to my conclusions about the Vandyk directors, I grant leave to the Chowdhury plaintiffs to amend their statement of claim to plead intentional interference with economic relations, if so advised, against the Vandyk defendants and KingSett. However, I urge them to consider carefully the material facts in their knowledge and whether such a claim is both necessary and viable.

The claims for unjust enrichment are struck out, without leave to amend

[44] Many, but not all of the Chowdhury plaintiffs claim damages for unjust enrichment from the VanDyk defendants, KingSett, and the Mint defendants. The claim pleads as follows:

Unjust Enrichment

329. The Plaintiffs advanced funds to Exquisite Bay and, consequently, were deprived of these funds. The Defendants, and parties unknown, received these funds, directly or indirectly, and realized a corresponding enrichment. There is no juristic reason for the enrichment of the Defendants or parties unknown, nor the corresponding deprivation sustained by the Plaintiffs.

330. The Plaintiffs are entitled to equitable tracing in order to recover these funds.

[45] With respect to Mint Capital, the Chowdhury plaintiffs plead that:

309. On or about April 21, 2022, the Defendant, Mint Capital received proceeds of the Fraudulent Conveyance for the discharge of a mortgage that was not registered against the Property or the Development. They have been unjustly enriched or in the alternative they have received an unjust preference.

[46] In their factum, the Chowdhury plaintiffs set out the test for unjust enrichment from Kerr v. Baranow and what a plaintiff must plead to satisfy the test.[^21] The Chowdhury plaintiffs did not explain why paragraphs 309, 329, and 330 plead material facts sufficient to make out a claim of unjust enrichment. I find that the Chowdhury plaintiffs’ pleading is deficient in several respects.

[47] First, the Chowdhury plaintiffs plead no material facts to support the bald conclusion that they are entitled to a remedy for unjust enrichment. While the Chowdhury plaintiffs describe the test for unjust enrichment, they provide no facts to support their claim against these defendants. This deficiency alone would justify striking out this pleading from the statement of claim.

[48] Second, the pleading is untenable as a matter of law. The Chowdhury plaintiffs’ entire action is predicated on them having advanced funds to Exquisite Bay. They do not plead, nor could they plead, that they paid money directly to any of the moving defendants. Even if Exquisite Bay paid that money to any of the moving defendants, their receipt of the Chowdhury plaintiffs’ money was indirect and only incidentally conferred upon them. Unjust enrichment does not extend to permit such a recovery.[^22] As the Supreme Court of Canada held:

To permit recovery for incidental collateral benefits would be to admit of the possibility that a plaintiff could recover twice – once from the person who is the immediate beneficiary of the payment or benefit…and again from the person who reaped an incidental benefit. [Citations omitted.] It would also open the doors to claims against an undefined class of persons who, while not the recipients of the payment or work conferred by the plaintiff, indirectly benefit from it. This the courts have declined to do. The cases in which claims for unjust enrichment have been made out generally deal with benefits conferred directly and specifically on the defendant, such as the services rendered for the defendant or money paid to the defendant.[^23]

[49] In my view, this second deficiency can not be cured with an amendment. The moving defendants will always be, on any plausible theory, indirect recipients of the money paid by the Chowdhury plaintiffs to Exquisite Bay. In no circumstance will the moving defendants be liable for unjust enrichment, even if they are otherwise found liable to the Chowdhury plaintiffs. The Chowdhury plaintiffs’ claim against the moving defendants for unjust enrichment is doomed and there is no reason to believe that it could be improved by further amendment.[^24]

[50] I strike out the claims for unjust enrichment found in paragraphs 1(c)(ii), 1(e)(ii), 1(f)(i), 2(c)(ii), 2(e)(ii), 2(f)(i), 3(c)(ii), 3(e)(ii), 3(f)(i), 4(c)(ii), 4(e)(ii), 4(f)(i), 5(c)(ii), 5(e)(ii), 5(f)(i), 6(c)(ii), 6(e)(ii), 6(f)(i), 7(c)(ii), 7(e)(ii), 7(f)(i), 8(c)(ii), 8(e)(ii), 8(f)(i), 9(c)(ii), 9(e)(ii), 9(f)(i), 10(c)(ii), 10(e)(ii), 10(f)(i), 14(b)(ii), 14(d)(ii), and 309, and I strike out paragraphs 329, and 330 in their entirety, all as against the moving defendants, without leave to amend.

The unjust enrichment claim against Mint Capital Inc.

[51] The Chowdhury plaintiffs appear to only seek a remedy against Mint Capital Inc. for unjust enrichment.[^25] I strike out the action against Mint Capital Inc. in its entirety, with leave to amend. I urge the Chowdhury plaintiffs to consider carefully whether they know any material facts to support a cause of action against Mint Capital, which appears to be fairly far removed from the core allegations in this claim.

The claim against KingSett for inducing breach of contract is struck out, with leave to amend

[52] KingSett moves to strike out the claim against it for inducing breach of contract. The Chowdhury plaintiffs must plead material facts to make out four elements of this tort:

a. They each had a valid and enforceable contract with Exquisite Bay;

b. KingSett was aware of the existence of these contracts;

c. KingSett intended to and did procure Exquisite Bay to breach its contracts with the Chowdhury plaintiffs; and

d. As a result of the breach, the Chowdhury plaintiffs suffered damages.[^26]

[53] KingSett submits that the Chowdhury plaintiffs have not adequately pleaded that KingSett formed a specific intent to procure a breach of the agreements of purchase and sale.

[54] Paragraphs 172 to 192 of the statement of claim set out the pleadings with respect to the plaintiff Jawed Yusuf. Mr. Yusuf asserts that on April 22, 2022, he met with the defendant Ahmed Raza Yousuf. The Chowdhury plaintiffs plead that Mr. Yousuf is a directing mind of the Exquisite Bay defendants. The statement of claim asserts that, at this meeting, Mr. Yousuf said the following things:

186. On April 22, 2022, Mr. Yusuf and Mr. Sharif met with Ahmed to discuss the status of the Development. During that meeting, Ahmed advised Mr. Yusuf and Mr. Sharif:

(a) that in January 2022, Kingsett asked him to inject additional capital in the amount of $5,000,000.00;

(b) that on February 2022, Kingsett asked him to inject an additional $5,000,000.00;

(c) that Kingsett gave him two months to secure the additional $5,000,000.00 or Kingsett would take over the Development and either sell the lots or the land to another purchaser;

(d) that he spoke with his legal advisors regarding whether he should try to raise the additional funding but the Agreements of Purchase and Sale did not give him the right to do that;

(e) that Kingsett told him to cancel all the Agreements of Purchase and Sale since the property market has gone up and relaunch the Development at higher sale prices per lot;

(f) that Kingsett threatened to appoint a Receiver;

(g) that it was mutually agreed with Kingsett that he would terminate all the Agreements of Purchase and Sale and the deposits plus six percent compounded interest would be transferred into his lawyer’s trust account;

(h) that he did not notify the buyers of the issues he was having with funding because he was worried he would be sued by the buyers for the return of their deposits;

(i) that he could terminate the Agreements of Purchase and Sale by using section 36 of the Agreements;

(j) that they would be receiving their termination letters shortly;

[55] While I accept KingSett’s submission that, as drafted, the statement of claim impermissibly pleads evidence, that is a minor concern. I have no doubt that the Chowdhury plaintiffs, if they turn their minds to it, could reframe the evidence set out above (along with the pleading currently found in paragraph 311) as material facts that plead that KingSett formed a specific intent to procure a breach of the agreements of purchase and sale.

[56] I strike out the pleading of inducing breach of contract, but grant leave to the Chowdhury plaintiffs to amend the claim to plead all the elements of the tort and the material facts necessary to make out the tort. I see no prejudice to KingSett to permit the Chowdhury plaintiffs another opportunity to plead this claim, if so advised.

The claims against the Vandyk directors are struck out, without leave to amend

[57] The Chowdhury plaintiffs assert personal claims against John Vandyk, Richard Ma, and Sherman Chan, who are directors of the Vandyk companies. In my view, these claims should be struck out, without leave to amend.

[58] Directors enjoy protection from civil liability for the discharge of their duties on behalf of the corporation. A claim against directors must set out allegations of conduct that takes them outside of their role as directing minds of the corporation they serve. The actions of the directors must in themselves be tortious or must demonstrate a separate identity or interest from the corporation to make the impugned actions or conduct their own.[^27]

[59] The law of Ontario is clear that pleadings against directors are to be subjected to a hard look and a high level of scrutiny.[^28] If a plaintiff wants to sue an officer or director in their personal capacity, it is not unreasonable to hold that plaintiff to a fairly high standard regarding the content of their pleading.[^29] This is because the court is concerned that claims may be advanced against individual directors for tactical purposes. As Carthy J.A. noted,

My first observation is that I recognize the policy concern expressed by the Divisional Court, and other General Division judges, over the proliferation of claims against officers and directors of corporations in circumstances which give the appearance of the desire for discovery or leverage in the litigation process. This is a proper concern because business cannot function efficiently if corporate officers and directors are inhibited in carrying on a corporate business because of a fear of being inappropriately swept into lawsuits, or, worse, are driven away from involvement in any respect in corporate business by the potential exposure to ill-founded litigation.[^30]

[60] The allegations in the Chowdhury plaintiffs’ statement of claim against the Vandyk directors are manifestly deficient. The statement of claim does not plead any facts alleging that the Vandyk directors took any actions in their personal capacity or even explain what they each are alleged to have done. All of the claims against the Vandyk directors suffer from this common defect. Tellingly, every allegation against the individual directors is also made against the Vandyk companies. In many cases, the statement of claim uses the term “Vandyk Defendants” to refer compendiously to the companies and the directors. This approach is exactly contrary to what is required. The allegations fail to describe any conduct of the directors which would serve to detach them from their role as directors and which could ground a finding of personal liability against any of them. The Chowdhury plaintiffs have not pleaded any conduct by any of the directors that was separate and apart from their role as directors in the Vandyk companies.

[61] In their factum, the Chowdhury plaintiffs did not point to any material facts that would make out a plausible claim against the directors and did not suggest any amendments to their claims that could cure these defects.

[62] I strike out all of the claims against the individual Vandyk directors as disclosing no reasonable cause of action. I strike out:

a. paragraphs 1(c)(iii), 2(c)(iii), 3(c)(iii), 4(c)(iii), 5(c)(iii), 6(c)(iii), 7(c)(iii), 8(c)(iii), 9(c)(iii), 10(c)(iii), 14(b)(iii), in their entirety; and

b. each reference to John Vandyk, Richard Ma, and Sherman Chan in paragraphs 1(c), 2(c), 3(c), 4(c), 5(c), 6(c), 7(c), 8(c), 9(c), 10(c), 14(b), 65, 66, 67 and 71.

[63] I also decline to grant leave to amend the claim against the Vandyk directors. The Chowdhury plaintiffs were placed on clear notice that the Vandyk directors were challenging the sufficiency of the pleading against them. Despite that, and despite the clarity of the law relating to the high bar for suing directors, the Chowdhury plaintiffs proposed no amendments to its claim that could cure these deficiencies.

[64] I do not see any way that the Chowdhury plaintiffs could advance tenable allegations that would give rise to a plausible cause of action against the Vandyk directors. Given the apparently tactical nature of this claim, I deny leave to amend the claim.

The claims against the former directors of Exquisite Bay are not struck out

[65] The Chowdhury plaintiffs plead that:

a. Harinder Takhar was a directing mind of Exquisite Bay and a shareholder of Chalmers Group Inc.;

b. John Murray was a directing mind of Exquisite Bay; and

c. Kiran Malhotra was a directing mind of Exquisite Bay and a director of 1218939 Ontario Limited.

[66] Mr. Takhar, Mr. Murray, and Mr. Malhotra all resigned as directors of Exquisite Bay on August 20, 2021. I will refer to them collectively as the former directors. Each of Mr. Takhar, Mr. Murray, and Mr. Malhotra move to dismiss the claims against them as disclosing no reasonable cause of action.

[67] The Chowdhury plaintiffs have pleaded the extensive involvement of each of the former directors in the conduct that led to the plaintiffs losing their deposits. The Chowdhury plaintiffs have pleaded that, shortly before the former directors resigned, they arranged for preferential repayments of large loans to related companies that doomed the development and served to defeat the expectations of the Chowdhury plaintiffs as creditors of the development. The statement of claim provides as follows:

313. Pursuant to a Loan Agreement dated July 10, 2018, the Chalmers Group Inc. and 1218939 Ontario Limited (collectively the “Chalmers Group”) loaned $6,500,000.00 to Exquisite Bay (the “Chalmers Loan”).

314. On June 1, 2021, the Chalmers Group delivered a Notice of Payment to Exquisite Bay requesting full and final payment of the Chalmers Loan.

315. On August 4, 2021, the Chalmers Group and Exquisite Bay entered into a settlement agreement for $10,341,982.81. It was a term of the settlement agreement that Exquisite Bay would immediately pay the Chalmers Group $7,201,982.81. This amount was paid on August 20,

317. On August 20, 2021, the same date as the repayment of the Chalmers Loan, Mr. Takhar and Mr. Malhotra resigned as directors of Exquisite Bay. Mr. Murray resigned as a director of Exquisite Bay on December 5, 2021.

318. The Defendants, Ahmed, Muhammad, Mr. Takhar, Mr. Murray and Mrs. Malhotra (the “Exquisite Directors”), made a conscious decision to repay the Chalmers Loan with the purpose of avoiding obligations to creditors, in particular the Plaintiffs. The misconduct of the Exquisite Directors was not foreseeable by the Plaintiffs as creditors, and they could not reasonably have protected themselves against such conduct.

319. As a result of the conduct of the Exquisite Directors, Exquisite Bay did not have the finance to complete the Development. The Exquisite Directors knew or should have known that by repaying the Chalmers Loan, the Development would have failed.

[68] The Chowdhury plaintiffs plead that the former directors were not acting at arm’s length and conferred a preference on the Chalmers Group at a time when Exquisite Bay was insolvent or on the verge of insolvency.

[69] In paragraphs [58] and [59], I set out the law relating to when a claim against directors will be struck out. While that law also applies to the situation of the former directors, their nexus to the allegedly fraudulent and oppressive misconduct is far more direct than those of the Vandyk directors. It is much more plausible that the Chowdhury plaintiffs could advance tenable allegations that would give rise to a plausible cause of action against the former directors than the Vandyk directors.

Claim for breach of fiduciary duty is struck out, with leave to amend

[70] The former directors challenge the Chowdhury plaintiffs’ pleading of a breach of fiduciary duty. The pleading is found in paragraph 324, it states:

324. The Exquisite Directors breached their fiduciary duties, duties of care, and duties of good faith and acted in a conflict of interest when they, inter alia, preferred their own interest over those of Exquisite Bay and its creditors.

[71] The former directors submit that the Chowdhury plaintiffs do not plead either to whom they owed a fiduciary duty or how the fiduciary duties were breached. I agree.

[72] It is not clear if the Chowdhury plaintiffs are pleading that the directors owed a duty to Exquisite Bay (which would be uncontroversial) or to the Chowdhury plaintiffs (which would be far more unusual). The amended pleading must address this point.

[73] Moreover, if the pleaded fiduciary duty was owed by the former directors to Exquisite Bay, the Chowdhury plaintiffs must plead material facts to explain how the duty was breached and the facts that would underpin any right of the Chowdhury plaintiffs to a remedy for a breach of duty owed to the corporation. If, on the other hand, the pleaded fiduciary duty was owed to the Chowdhury plaintiffs, they must plead material facts to support such a duty as well as the facts supporting their claim for a remedy.

[74] I strike out the pleading of a breach of fiduciary duty by the former directors with leave to amend.

The claim under the Assignments and Preferences Act is not struck out

[75] The former directors move to strike the claims related to the alleged violation of the Assignments and Preferences Act.[^31]

[76] First, the former directors submit that the claim should be struck because the Chowdhury plaintiffs have only pleaded “a bald allegation that Exquisite Bay was insolvent…not an allegation of material fact.” I disagree. This is only a pleading. The Chowdhury plaintiffs have clearly pleaded that Exquisite Bay was insolvent at an important time. That is a material fact and it is more than sufficient to permit the former directors to plead in defence. Whether or not the evidence demonstrates that Exquisite Bay met the legal test for insolvency at any particular point in time is a question for much later in this proceeding.[^32] I have no doubt that the former directors are able to plead in response to this aspect of the Chowdhury plaintiffs’ statement of claim.

[77] Second, whether or not the plaintiffs are entitled to a remedy under the Assignments and Preferences Act, if they are able to demonstrate that the directors were involved in a prohibited preferential transaction, that could be relevant to other relief that the plaintiffs are seeking, including under the oppression remedy. In my view, the remedial consequences of this pleading are a matter better left for trial and do not justify striking out the claim.

[78] I do not strike out the Chowdhury plaintiffs’ claims related to the Assignments and Preferences Act.

The oppression claims are not struck out

[79] The former directors submit that the oppression claim against them should be struck out. I disagree.

[80] As noted above, I disagree with the submission of the former directors that the plaintiffs’ allegation that the claim under the Assignment and Preferences Act should be struck out. The plaintiffs have pleaded that the former directors preferred their own interests by repaying the Chalmers loan to companies in which they had a direct or indirect interest. The plaintiffs plead that the payment defeated their reasonable expectations as creditors of Exquisite Bay. This is particularly true given the plaintiffs’ allegations that Exquisite Bay defrauded them.

[81] The former directors may be able to prove that the repayment of the loan was justified in all of the circumstances of the case, but, in my view, they cannot succeed on a Rule 21 motion.

[82] I also disagree with the former directors that the plaintiffs have not pleaded a reasonable expectation that was defeated by their actions. The pleading is perfectly clear in this respect. The former directors can readily ascertain the expectations of the Chowdhury plaintiffs. While the Chowdhury plaintiffs may not be able to prove their claims at trial, it is far from plain and obvious that they will not be able to do so.

[83] I do not strike out the oppression claims against the former directors.

The claims for punitive and aggravated damages are not struck out

[84] I do not accept the moving defendants’ submissions that the claims for aggravated or punitive damages should be struck out. The Chowdhury plaintiffs will have an opportunity to amend their claims. Depending on what, if any, causes of action they are able to prove, it is not plain and obvious to me that the claims of the Chowdhry plaintiffs and Mr. Tariq would not warrant punitive or aggravated damages. The defendants have not satisfied me that the claims for aggravated or punitive damages will occupy any additional time in examinations or impose onerous production obligations. There is no reason to strike out these claims at this time.

Mr. Tariq’s statement of claim

[85] The moving defendants have each challenged Mr. Tariq’s statement of claim on a number of grounds. I will group the challenges together where they raise common issues.

The generalized claims against “the Defendants” must be amended to provide notice and clarity

[86] The moving defendants submit that Mr. Tariq’s statement of claim is deficient because, in several places, the allegations are made in a blanket fashion against all of the defendants. The moving defendants submit that such generalized pleadings do not allow them to understand what they specifically are alleged to have done or even if they are properly included in any particular claim. I agree.

[87] To take only one example, paragraphs 108 to 110 of the statement of claim are drafted in an impermissibly broad fashion. They state:

108. Further or in the alternative to the above, the plaintiff states that the defendants have become unjustly enriched by illegally terminating the APS; the plaintiff has a constructive trust in the Property.

109. The defendants have made profits from not just the plaintiff’s deposited funds, but from all of the purchasers’ funds deposits on the Project, hence co-mingled all purchasers’ funds to make profits. As such, the purchasers are also entitled to those profits.

110. The defendants have received the benefit of the plaintiff’s deposit funds without completing the construction of the Property, but instead, illegally terminated the APS and fraudulently sold the land on which the Property was to be built to make further profit as the housing market prices increased. The defendants have been unjustly enriched at the expense and detriment of the plaintiffs and there is no justifiable reason in law for the defendants to have benefitted and for the plaintiff to have incurred such loss. The plaintiff relies upon the doctrine of unjust enrichment as relief. Plaintiffs.

[88] It seems unlikely that all of the defendants are properly included in these paragraphs. For example, Mr. Tariq cannot plausibly assert that each of the defendants “terminated the APS”.

[89] Given the number of defendants Mr. Tariq has included in this statement of claim, and their varied roles and responsibilities, Mr. Tariq’s pleading does not permit each defendant to know the allegations to which it must answer.

[90] I direct Mr. Tariq to amend his statement of claim to specify what each defendant is alleged to have done and to plead material facts in support of each claim made against each defendant.

The claims for conspiracy are struck out, with leave to amend

[91] KingSett and the Vandyk defendants move to strike out the claims for conspiracy. They submit that Mr. Tariq’s statement of claim is fatally flawed because:

a. it fails to specify whether it is advancing a claim of predominant purpose conspiracy or unlawful act conspiracy;

b. it does specify what each defendant is alleged to have done to make out the tort of conspiracy; and

c. it fails to plead material facts, as opposed to bald allegations, that support each element of the tort.

[92] I will not repat the legal principles relating to pleading conspiracy, which are set out above in paragraphs [28] to [31].

[93] The key passages of Mr. Tariq’s statement of claim that relate to the alleged conspiracy are paragraphs 71 and 92, which read as follows:

71. It seems that Vandyk did not complete its own due diligence of third-party interests or was reckless, negligent, and willfully blind due to a lucrative deal. Alternatively, Exquisite Bay did not disclose the existence of buyers’ APS and interest of the multiple parties in the lands. This points to the fact that the transaction was a result of conspiracy and was a collusive transaction hence fraudulent in order to deprive victims.

72. The Defendants Vandyk Properties, their Directors and Kingsett Mortgage Corporation knowingly were party to a fraudulent transaction or were reckless, negligent or wilfully blind to the facts of this transaction, specifically that APSs were already signed and deposits were already collected from bona fide purchasers. The corporate defendants and their directors colluded and acted in concert with their primary objective being to make more profit.

[94] In my view, the pleading is deficient. Mr. Tariq’s statement of claim does not allege what type of conspiracy is being alleged. It does not plead that alleged conspirators’ predominant purpose was to harm Mr. Tariq. The statement of claim does not plead any unlawful conduct, or even the alleged agreement among the conspirators.

[95] I strike out all references to conspiracy in Mr. Tariq’s statement of claim, with leave to amend.

The claims for unjust enrichment are struck out, without leave to amend

[96] Mr. Tariq seeks damages of $1 million for unjust enrichment from all of the defendants. His statement of claim pleads that:

108. Further or in the alternative to the above, the plaintiff states that the defendants have become unjustly enriched by illegally terminating the APS; the plaintiff has a constructive trust in the Property.

109. The defendants have made profits from not just the plaintiff’s deposited funds, but from all of the purchasers’ funds deposits on the Project, hence co-mingled all purchasers’ funds to make profits. As such, the purchasers are also entitled to those profits.

110. The defendants have received the benefit of the plaintiff’s deposit funds without completing the construction of the Property, but instead, illegally terminated the APS and fraudulently sold the land on which the Property was to be built to make further profit as the housing market prices increased. The defendants have been unjustly enriched at the expense and detriment of the plaintiffs and there is no justifiable reason in law for the defendants to have benefitted and for the plaintiff to have incurred such loss. The plaintiff relies upon the doctrine of unjust enrichment as relief.

[97] In his factum, Mr. Tariq submitted that his statement of claim pleaded sufficient material facts to survive a motion to strike. Those submissions, in their entirety, read as follows:

39. The paragraphs related to unjust enrichment are intertwined with other paragraphs detailing the facts known at the time of pleading about allegations regarding the conspiracy, fraud and inducement of breach of contract. The unjust enrichment claim is pleaded with sufficient material facts. Specifically, paragraphs 108 to 110 and 115 deal with unjust enrichment.[^33]

[98] I disagree. I find that Mr. Tariq’s pleading of unjust enrichment is deficient in several respects.

[99] First, Mr. Tariq pleads no material facts to support the bald conclusion that he is entitled to a remedy for unjust enrichment against the moving defendants.

[100] Second, Mr. Tariq fails to distinguish among the varied roles played by each of the defendants. It is impossible for any of the moving defendants to understand what it is that they are alleged to have done to become unjustly enriched.

[101] Third, for the reasons set out in paragraph [48], this pleading is untenable as a matter of law. Whether it was his money, or the assignors’ money, it was delivered to Exquisite Bay, not any of the moving defendants, who received the money indirectly. Unjust enrichment does not extend to permit such a recovery.[^34]

[102] For the reasons set out in paragraph [49], this claim cannot be salvaged through an amendment. I strike out the portions of paragraphs 1(l) and 137(l) that deal with unjust enrichment, and the entirety of paragraphs 108, 109, and 110 as against the moving defendants only, all without leave to amend.

The claim against KingSett for inducing breach of contract is struck out, with leave to amend

[103] KingSett moves to strike out the claim against it for inducing breach of contract. There are four elements to this tort:

a. Mr. Tariq must have had a valid and enforceable contract with Exquisite Bay;

b. KingSett was aware of the existence of the contracts;

c. KingSett intended to and did procure Exquisite Bay to breach its contracts with Mr. Tariq; and

d. As a result of the breach, Mr. Tariq suffered damages.[^35]

[104] KingSett submits that the Mr. Tariq has not properly pleaded the elements of the tort of inducing breach of contract and that the statement of claim fails to plead material facts capable of making out the breach. I agree.

[105] In paragraph 94, Mr. Tariq pleads as follows:

94. The Defendants Vandyk Properties, Vandyk – the Ravine Limited, their Directors and Kingsett Mortgage Corporation are also liable for the tort of inducing breach of contract, as they had knowledge of the contract between Exquisite Bay Development Inc. and the Plaintiffs, they intended to procure a breach of that contract; the defendants’ conduct caused Exquisite Bay Development to breach the contract; and the Plaintiffs suffered damages as a result. On at least two occasions, Vandyk Directors, John Vandyk, Richard Ma and Sherman Chan met with Ahmed Yousuf and discussed the Plaintiffs situation regarding their deposits. Kingsett Mortgage Corporation pressured Exquisite Bay into selling the property and informed Vandyk of the fact of an impending sale before the listing for sale was announced, rather than having the project go into receivership due to Exquisite Bay’s apparent insolvency. This arrangement was most convenient for Kingsett Mortgage Corporation as it preferred their own interests to make more profits by being on both sides of the deal, providing mortgage for both Exquisite Bay Development and Vandyk.

[106] In his factum, Mr. Tariq did not make any submissions regarding KingSett’s challenge to the pleading of inducing breach of contract. If there are additional material facts in the statement of claim that support this pleading, Mr. Tariq did not bring them to my attention.

[107] I find that Mr. Tariq’s statement of claim does not adequately plead the tort of inducing breach of contract against KingSett. The claim is lacking the material facts necessary to make out the elements of the tort.

[108] I strike out the claim against KingSett for inducing breach of contract, with leave to amend.

The claims against the Vandyk directors are struck out, without leave to amend

[109] Mr. Tariq asserts claims against John Vandyk, Richard Ma, and Sherman Chan in their personal capacities. In my view, these claims should be struck out, without leave to amend.

[110] The applicable legal principles are set out above in paragraphs [58] and [59].

[111] The allegations in Mr. Tariq’s claim against the Vandyk directors are manifestly deficient. Mr. Tariq pleads that “all the corporate defendants and their directors were in cahoots” and that the “corporate defendants are merely shell corporations and/or have conspired with one another to defraud the plaintiff and the corporate veil must be pierced as the individual directors should be held personally responsible.” In his factum, Mr. Tariq submits that:

[Mr. Tariq] alleged that the Vandyk Directors, being John Vandyk, Richard Ma and Sherman Chan were cognizant of the plaintiffs contracts with Exquisite Bay and had met with the Exquisite Bay Director Ahmed Yousuf to discuss the same.

[112] I find that Mr. Tariq does not plead sufficient material facts to support a claim against the Vandyk directors in their personal capacity. Mr. Tariq does not plead any material facts that would be sufficient to establish that the Vandyk directors acted outside their role as directors or that their actions were personally tortious.

[113] I strike out paragraphs 17, 18, and 19, in their entirety. I also strike all other references to the Vandyk directors that are found in paragraphs 84, 85, 92, 94, 133, and 135.

[114] I also decline to grant leave to amend the claim against the Vandyk directors. Mr. Tariq has proposed no amendments to its claim that could cure these deficiencies. For similar reasons to those given above with respect to the Chowdhury plaintiffs’ pleading, I do not see any way that Mr. Tariq could advance tenable allegations that would give rise to a plausible cause of action against the Vandyk directors. I decline to grant leave to amend the claim.

The claims against the former directors of Exquisite Bay are struck out, with leave to amend

[115] Mr. Tariq’s statement of claim seeks damages from the former directors of Exquisite Bay. In paragraphs 86 to 88 of the statement of claim, Mr. Tariq pleads that the former directors made “fraudulent misrepresentations and breached the implied duty [of] honest contractual performance” and “directed wrongful things to be done”.

[116] The applicable legal principles are set out above in paragraphs [58] and [59].

[117] The former directors submit that all of the claims should be struck without leave to amend. The former directors do not explain why Mr. Tariq should not receive leave to amend his claim, other than saying that the plaintiff has had sufficient time and opportunity to review the evidence and pleadings in this action and that any tenable claim should have already been pleaded. I do not see that they would face any particular prejudice if leave to amend is granted.

[118] In his factum, Mr. Tariq submits that his claim against the former directors should not be struck for the following reasons:

In the case of the Exquisite Bay Directors, they benefitted from the plaintiffs’ deposits by paying themselves (through other corporate vehicles). They also preferred the interests of certain parties over the plaintiffs’ interests. Such was the case when Ahmed Yousuf and other directors of Exquisite Bay, being Harinder Takhar, Kiran Malhotra and James John Murray preferred to pay Harinder Takhar and Kiran Malhotra, who were directors and shareholders of Exquisite Bay when they learned the project was having financial difficulty contrary to the Assignments and Preferences Act, RSO 1990, c A.33, section 4. These individual directors preferred their own or preferred the interest of certain parties’ financial interest despite owing a duty to the corporation to act in its interest, whether that be working to ensure the project get more funding. These directors knew the lots were actively being purchased and people made deposits. Any director and any shareholder of a corporation would make inquiries as to the status of the project. Instead, as 50% individual shareholders, Harinder Takhar and Kiran Malhotra ensured their investment was secured through the acquisition of a lot from the project and that their investment was returned with interest before washing their hands of the project. See paragraphs 7, 8, 9, and 94-107 of Tariq’s Amended Statement of Claim.

[119] In my view, Mr. Tariq has advanced a theory of a case against the former directors, but the statement of claim does not adequately plead material facts to support the causes of action Mr. Tariq asserts against the former directors.

[120] In particular, Mr. Tariq must identify, with precision, the material facts that relate to the former directors and demonstrate what causes of action are being asserted against them. It is of no use to lump the former directors in among all of the other defendants.

[121] That said, the close nexus of the actions of the former directors and the losses suffered by Mr. Tariq certainly justifies me granting leave to Mr. Tariq to amend his statement of claim to plead material facts to support claims against the former directors.

[122] I strike out all of the claims against the former directors and grant Mr. Tariq leave to amend his claim, if so advised.

The claims against Mint Capital are struck out, with leave to amend

[123] Mr. Tariq pleads that Mint Capital advanced funds to Ahmed Yousuf for a mortgage. Mr. Tariq pleads that Mr. Yousef repaid that mortgage on April 18, 2022, using funds from Exquisite Bay that included Mr. Tariq’s deposit funds. Mr. Tariq pleads as follows:

On or about April 18, 2022, MINT CAPITAL MIC INC. received funds stemming from the plaintiffs’ deposits for a discharge of a mortgage. This transaction was not registered on the subject property’s parcel register. Mint Capital Mic Inc., being the recipient of defrauded funds are liable to return the defrauded funds under the doctrine of knowing receipt as they received the funds for their own benefit, has actual or constructive knowledge of facts which would put a reasonable person on inquiry, but failed to inquire as to the possible fraudulent misappropriation of the funds.

[124] Mint Capital moves to strike out this pleading. In its factum, Mint Capital makes a number of factual assertions, including the following:

4. Mint gave a mortgage for an amount of $500,000 to Mr. Ahmed Raza Yousuf. Accordingly, Mint secured the amount by registering a charge on the property described as Pin 25063 – 2052 LT, 1138 Woodington Avenue, Oakville. The charge was registered as HR11708097 on or around June 22, 2020, and later was transferred under charge no. HR1759863 on or around January 20, 2021.

5. Once Mr. Ahmed paid the loan amount along with the interest to Mint, the mortgage on the Residential Property was discharged on or around April 21, 2022 as per procedures. Other than this mortgage, Mint has no involvement in the transaction as mentioned by the plaintiffs in the Consolidated Action.

6. The fact is that Mint gave mortgage to Mr. Ahmed Yousuf Raza and a charge was registered as per the amount. The mortgage repayment was delayed and accordingly Mint suffered a loss. When Mint received the mortgage repayment, according to the procedures the charge was discharged.

7. The Mint like any other lender had no way to find out the source of the funds used by Mr. Ahmed. More importantly, it is not for Mint or any other lender to ensure the same. Mr. Ahmed had funds and paid Mint to get the mortgage discharged and that’s all-what matters from Mint’s perspective.

[125] I do not accept Mint’s submissions. Mint brought a motion to strike out the action under rule 21.01(1)(b).[^36] No evidence is admissible on such a motion.[^37] The facts set out above do not appear in Mr. Tariq’s statement of claim. These facts simply appear in Mint’s factum, entirely unsupported by anything approaching a proper or admissible evidentiary record. These facts are not admissible on a rule 21.01(1)(b) motion. If these appeared in an affidavit, on a different type of motion, they might be admissible and relevant.

[126] That said, Mint is correct that Mr. Tariq’s statement of claim does not properly plead a cause of action in knowing receipt. The tort of knowing receipt has an exacting fault requirement.[^38] The legal test for knowing receipt requires Mr. Tariq to plead that:

a. Mint Capital received trust property;

b. for its own benefit or in its personal capacity,

c. with actual or constructive knowledge that the trust property is being misapplied.[^39]

[127] In addition to actual knowledge, including wilful blindness or recklessness, requirement (c) can be met where the recipient, having “knowledge of facts which would put a reasonable person on inquiry, actually fails to inquire as to the possible misapplication of the trust property.”[^40]

[128] There is also a strict traceability requirement of knowing receipt. The plaintiff must plead that the stranger took title to, possession of, or control over the trust property; this is because liability for this tort is based on unjust enrichment principles.[^41]

[129] Mr. Tariq’s statement of claim contains no material facts that could make out a claim in knowing receipt. In particular, the pleading with respect to the fault requirement is manifestly deficient. It is not enough to plead a bald conclusion. Mr. Tariq must plead material facts that could support that conclusion. He has not done so.

[130] Because of how Mr. Tariq lumped all of the defendants together in the prayer for relief, I am uncertain if Mr. Tariq intends to advance any other claims against Mint. I do not see any material facts in the statement of claim that would support any claim against Mint. In any event, I strike all claims against Mint, with leave to amend.

Pleadings related to the property-specific remedies are struck out in accordance with an earlier court order

[131] As mentioned above, the statements of claim in both actions have been amended several times as this litigation has developed. Initially, the plaintiffs sought orders transferring the lots at issue to the plaintiffs, for specific performance of the agreements of purchase and sale, and declarations that mortgages placed on the properties were invalid.

[132] In furtherance of the relief sought at trial, the plaintiffs brought motions seeking certificates of pending litigation and other interim relief. The parties ultimately resolved those motions pursuant to a consent order dated May 23, 2023. That order provided, in part, that the claims seeking property-based relief would be struck, without leave to amend:

All claims made with respect to relief sought or interests claimed in the Development itself, or the individual lots, including claims for Certificates of Pending Litigation, constructive trust, specific performance and for any declaration that KingSett’s mortgages on the Development or the Lots are not valid or enforceable, are struck without leave to amend.

[133] Mr. Tariq delivered an amended statement of claim on June 9, 2023, but the amended claim did not delete the claims for property-based relief as required by my order of May 23, 2023. For example, Mr. Tariq’s claim still contains the following:

1(c) An Order for specific performance requiring the Defendants, or any one of them, to transfer title to the Property (defined below) to the plaintiff, pursuant to the Agreement of Purchase and Sale (the “APS”) and Assignment Agreement with the plaintiff dated August 1, 2019, and May 28, 2021, respectively, and to fulfill all obligations pursuant to the terms of their Agreements;

(k) An Order that a Certificate of Pending Litigation be issued and registered on the Property over which the APS and Assignments were entered into, legally described as:

Lot 15, PLAN 43M2113; CITY OF MISSISSAUGA, bearing PIN number 13214-0885 (LT) (hereinafter “Property”);

(o) a Declaration that the Charges/Mortgages identified as Instrument Nos. PR4032438 and PR4032440 registered in favour of the defendant, Kingsett Mortgage Corporation, is/are void ab initio, and/or voidable, as against the Plaintiffs;

[134] Mr. Tariq’s pleading must be revised to comply with my order issued on May 23, 2023. No further indulgences will be provided.

Pleadings regarding the social importance of the claim are struck out, without leave to amend

[135] Mr. Tariq’s statement of claim includes the dramatic heading “Societal importance of the issues in this claim: principle of free will in contract is eliminated.” Mr. Tariq then pleads why, from his perspective, “the issues outlined in this claim are off the utmost importance for not only the plaintiff, but for other buyers of any real estate project.” Mr. Tariq then pleads his opinion that:

113. When there is finally an opportunity for buyers to purchase pre-construction homes through a builder, there is tremendous amounts of pressure for buyers to quickly provide deposits to the builders and sign an APS, often without legal advice (for fear of missing the short window of opportunity) to obtain property. Such pressure is tantamount to duress, coercion or compulsion and effectively eliminates the essential requirement of ‘free will’ in a valid and enforceable contract. The power imbalance in these types of APSs is significant and has enabled developer vendors and their associates to act with impunity and total disregard for purchasers’ well-being and hard-earned funds.

[136] Many of the moving defendants moved to strike these paragraphs from the statement of claim because they were irrelevant, scandalous, and would unduly complicate documentary and oral discovery. In his factum, Mr. Tariq submitted as follows in defence of paragraphs 111 to 115:

The plaintiffs are mostly individuals, with limited means. In contrast, the defendants are mostly corporations, or directors of the same, with deep financial pockets. The clauses contained in Mr. Tariq’s pleadings regarding social impact and importance are relevant to these proceedings, as it draws attention to the “routine” way developers, and other parties who benefit from working with developers, take advantage of buyers through various means, such as “standard form” agreements for purchase and sale, which significantly favours the builders, in a hot real estate market, particularly, the real estate market in the Greater Toronto Area in Canada at the material time of when deposits were collected.

[137] I do not accept this submission, which betrays a misunderstanding of the rules of pleading and the purpose and structure of a civil action.

[138] First, paragraphs 111 to 115 have nothing whatsoever to do with Mr. Tariq’s situation. According to the statement of claim, Mr. Tariq did not purchase a pre-construction home through a builder. Rather, he took an assignment of the agreement from his friends, the defendants, Mr. and Mrs. Ghauri. According to the statement of claim, they assigned the purchase contract to Mr. Tariq “due to the high cost of the property.” Mr. Tariq does not plead that he was the subject of any pressure from a builder. The generalized allegations contained in paragraphs 111 to 115 are irrelevant to Mr. Tariq’s claim.

[139] Second, these paragraphs are argumentative and, given their complete irrelevance to Mr. Tariq’s situation, appear to have been inserted only for colour. Such allegations should be struck out as scandalous, contrary to rule 25.11.[^42]

[140] I strike out paragraphs 111 to 115, inclusive, without leave to amend.

The claims for punitive and aggravated damages are not struck out

[141] I do not accept the moving defendants submissions that the claims for aggravated or punitive damages should be struck out. Mr. Tariq will have an opportunity to amend his claims. Depending on what, if any, causes of action they are able to prove, it is not plain and obvious to me that this would not warrant punitive or aggravated damages. The defendants have not satisfied me that the claims for aggravated or punitive damages will occupy any additional time in examinations or impose onerous production obligations.

Costs

[142] If the parties are not able to resolve costs of this action, each group of defendants may email its costs submission addressing both actions of no more than five double-spaced pages to my judicial assistant on or before January 9, 2024. The Chowdhury plaintiffs and Mr. Tariq may each deliver their responding submission of no more than five double-spaced pages on or before January 16, 2024. Any party filing costs submissions must also file a bill of costs. No reply submissions are to be delivered without leave.

Robert Centa J.

Date: January 2, 2024

[^3]: Exquisite Bay Development Inc., Bay Homes Inc., Bay International Inc., Bay Management Inc. 2474229 Ontario Inc., 2468924 Ontario Inc., 2460741 Ontario Inc., Bay Lawrence Inc., Ahmed Raza Yousuf, Muhammad Yousuf, Mohammad Mansoor, 2462486 Ontario Inc., Ella Boltyansky, and Yuri Boltyansky. [^4]: On November 14, 2023, after the oral argument on these motions, Conway J. issued an order appointing a receiver and manager for, among other entities, Vandyk-The Ravine Limited pursuant to s. 243(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3. Paragraph 12 of that order provided that no proceeding, including these proceedings, could be commenced or continued except with the written consent of the receiver and leave of the court, and stayed all proceedings against the debtors, including Vandyk-The Ravine Limited. Nothing in this decision is meant to undermine the order of Conway J., which remains in full force and effect. The plaintiffs in these proceedings must comply with the order of Conway J. [^5]: R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45, at para. 22; Operation Dismantle v. The Queen, 1985 CanLII 74 (SCC), [1985] 1 S.C.R. 441, at p. 455; Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, [2020] 2 S.C.R. 420, at para. 14; FNF Enterprises Inc. v. Wag and Train Inc., 2023 ONCA 92, 165 O.R. (3d) 401, at para. 12; Fernandez Leon v. Bayer Inc., 2023 ONCA 629, at para 8; Asghar v. Toronto Police Services Board, 2019 ONCA 479; MacKinnon v. Ontario Municipal Employees Retirement Board, 2007 ONCA 874, 88 O.R. (3d) 269; Tran v. University of Western Ontario, 2015 ONCA 295; Stronach v. York Region, 2023 ONSC 1264, at para. 12; MacLean v. National CarWash Solutions, 2020 ONSC 6032 at para. 22; Region Plaza Inc. v Hamilton - Wentworth (Regional Municipality) (1990), 1990 CanLII 6761 (ON SC), 12 O.R. (3d) 750. [^6]: Trillium Power Wind Corp. v. Ontario (Ministry of Natural Resources), 2013 ONCA 683, 117 O.R. (3d) 721, at para. 31; Balanyk v. University of Toronto, 1999 CanLII 14918 (Ont. S.C.J.), at para. 29. [^7]: PMC York Properties Inc. v. Siudak, 2022 ONCA 635, 473 D.L.R. (4th) 136, at para. 30. [^8]: PMC, at para. 34. [^9]: Astley v. Verdun, 2007 CanLII 16817, at para. 53, [^10]: South Holly Holdings Ltd. v. The Toronto-Dominion Bank, 2007 ONCA 456, at para. 6. [^11]: Tran, at para. 27. [^12]: South Holly Holdings, at para. 6. [^13]: Huachangda Canada Holdings Inc. v. Solcz Group Inc., 2019 ONCA 649, 147 O.R. (3d) 644, at para. 31; 1588444 Ontario Ltd. v. State Farm Fire and Casualty Co., 2017 ONCA 42, 135 O.R. (3d) 681, at para. 25. [^14]: Normart Management Ltd. v. West Hill Redevelopment Co. (1998), 1998 CanLII 2447 (ON CA), 37 O.R. (3d) 97, at p. 104. [^15]: Canada Cement Lafarge Ltd. v. British Columbia Lightweight Aggregate Ltd., 1983 CanLII 23 (SCC), [1983] 1 S.C.R. 452, at pp. 471-72. [^16]: Agribrands Purina Canada Inc. v. Kasamekas, 2011 ONCA 460, 106 O.R. (3d) 427, at para. 26. [^17]: Beaver Lumber Inc. v. Hamer, 2004 CanLII 17180 (Ont. S.C.), at para. 31; Bank of America v. Mutual Trust Co., [1992] O.J. No. 2662 (Ont. C.J.). [^18]: A.I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12, [2014] 1 S.C.R. 177, at paras. 5, 23, 43, 45. [^19]: The Tewaaraton Lacrosse League v. Ontario Lacrosse Association, 2022 ONSC 3592, at para. 68. [^20]: Citing Avante Automobile (2017) Corporation v. BMW Canada Inc., 2018 ONSC 7406, at para. 9. [^21]: Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 32. [^22]: Boulanger v. Johnson & Johnson Corp. (2003), 2003 CanLII 52154 (ON CA), 174 O.A.C. 44, at para. 20. [^23]: Peel (Regional Municipality) v. Canada; Peel (Regional Municipality) v. Ontario, 1992 CanLII 21 (SCC), [1992] 3 S.C.R. 762, at p. 797. [^24]: Twelve Gates Capital Group v. Mizrahi Development Group, 2018 ONSC 7656, at para. 33; Miguna v. Ontario (Attorney General) (2005), 2005 CanLII 46385 (ON CA), 205 O.A.C. 257, at para. 22. [^25]: See the prayer for relief in the statement of claim, paragraphs 1(f), 2(f), 3(f), 4(f), 5(f), 6(f), 7(f), 8(f), 9(f), 10(f), and paragraphs 309 and 310. [^26]: Drouillard v. Cogeco Cable Inc., 2007 ONCA 322, 86 O.R. (3d) 431, at para. 26; Chaba v. Khan, 2020 ONCA 643, at para. 17. [^27]: ScotiaMcleod Inc. v Peoples Jewellers Ltd. (1995), 1995 CanLII 1301 (ON CA), 26 O.R. (3d) 481 (C.A.) at p. 491. [^28]: Stronach v. York Region, 2023 ONSC 1264, at para. 13; Ghany v. Federal Express Canada Ltd., 2009 CanLII 41898 (Ont. S.C.), at paras. 32-33. [^29]: Ghany, at para. 33. [^30]: ADGA Systems International Ltd. v. Valcom Ltd. (1999), 1999 CanLII 1527 (ON CA), 43 O.R. (3d) 101 (C.A.) at pp. 104-105; Jama (Litigation guardian of) v. McDonald’s Restaurants of Canada Ltd., [2001] O.T.C. 203 (S.C.). [^31]: R.S.O. 1990, c. A. 33. [^32]: Stelco Inc., Re (2004) 2004 CanLII 24933 (ON SC), 48 C.B.R. (4th) 299 (Ont. S.C.). [^33]: Paragraph 115 of the statement of claim reads: “Overall, the plaintiff states that the APS entered into by the plaintiff and Exquisite Bay is valid and enforceable, notwithstanding the Property being fraudulently sold to Vandyk Properties, but for certain unconscionable provisions in the APS, which ought to be struck, namely 12, 17, 21, and 36.” In my view, this paragraph does not plead any material facts in support of the unjust enrichment claim. [^34]: Boulanger, at para. 20. [^35]: Drouillard, at para. 26; Chaba v. Khan, at para. 17. [^36]: Mint makes a passing reference to rule 25.11 in its notice of motion and factum, but clearly relies on rule 21.01(1)(b) as the basis to strike out the claims. [^37]: Rule 21.01(2)(b). [^38]: Quantum Dealer Financial Corporation v. Toronto Fine Cars and Leasing Inc., 2023 ONCA 256, at para. 55. [^39]: Caja Paraguaya de Jubilaciones y Pensiones del Personal de Itaipu Binacional v. Garcia, 2020 ONCA 412, 151 O.R. (3d) 52, at para. 57. [^40]: Caja Paraguaya at para. 57; Citadel General Assurance Co. v. Lloyds Bank Canada, 1997 CanLII 334 (SCC), [1997] 3 S.C.R. 805, at para. 49; Gold v. Rosenberg, 1997 CanLII 333 (SCC), [1997] 3 S.C.R. 767, at para. 74; Paton Estate v. Ontario Lottery and Gaming Corporation (Fallsview Casino Resort & OLG Casino Brantford), 2016 ONCA 458, 131 O.R. (3d) 273, at para. 62. [^41]: Quantum, at para. 54; Citadel, at pp. 821 to 825. [^42]: Braysan Properties Inc. “In Trust” v. Muchos et. al., 2022 ONSC 3703, at para. 52;