Reasons for Decision

[1] The Plaintiff seeks two declarations in this trial of an issue:

(a) A declaration that the Amended First Mortgage, as defined below, is not enforceable as against the Plaintiff and should be set aside;

(b) In the alternative, a declaration that the increased charges resulting from the Amended First Mortgage are not enforceable as against the Plaintiff.

[2] For the reasons that follow, the Plaintiff’s claims are dismissed.

1. Introduction

[3] This dispute arises between the Plaintiff as (former) second mortgagee and the Defendant as (former) first mortgagee, by assignment, in relation to a property municipally known as 23 Thornridge Drive, Vaughan, Ontario (the “Property” or “23 Thornridge”).

[4] Both parties are corporations in the business of private mortgage financing.

[5] The Property was sold by the Plaintiff and most of the sale proceeds have been paid out. However, $600,000 has been paid into court to the credit of this action, to be distributed based on the outcome of this trial of an issue. Both parties claim to be entitled to the majority of the remaining proceeds by reason of alleged shortfalls in their respective mortgage debts.

[6] In brief, simultaneously with assuming the original first mortgage (the “Shalby First Mortgage”) by assignment, the Defendant entered into an amended and extended first mortgage (the “Amended First Mortgage”). This Amended First Mortgage contained increased and additional financial terms payable by the mortgagor, Ali Jan (Alijan) Alijanpour, an increased interest rate, and an option for the Defendant to demand payment of the principal sum in U.S. dollars at a stated fixed currency exchange rate (the “impugned charges”). As a result of these impugned charges, there is now a shortfall in the proceeds of sale which means either the Plaintiff or the Defendant will not be fully paid out. The Plaintiff’s case hinges on its allegations that the Amended First Mortgage was the product of fraud against it by the Defendant, which deprived it of being fully paid out under the terms of its second mortgage.

[7] In its amended fresh as amended statement of claim and at the outset of trial, the Plaintiff alleged that the mortgage transaction entered into by the Defendant and Mr. Alijanpour was fraudulent and masterminded by “a known fraudster”, Arash Missaghi. As such it ought to be either set aside or the impugned increased payment terms declared unenforceable against it as a matter of priority. The Plaintiff alleged during trial that Mr. Missaghi was the beneficial owner of the Property and conspired with the Defendant in a non-arm’s length transaction to: (a) redeem the Property which had fallen into default of both the (original) Shalby First Mortgage and the Plaintiff’s second mortgage, and (b) conceal the impugned charges under the Amended First Mortgage from the Plaintiff. In so doing, the Defendant was allowing interest at the higher rate to accrue. It could then exercise its option to have the principal paid in U.S. currency once the Property was eventually sold by the Plaintiff. The Plaintiff alleges it was kept in the dark by the Defendant on these matters.

[8] The Plaintiff submitted that, had it been aware of the increased financial terms in the Amended First Mortgage, it would have sold the Property under power of sale in 2018 rather than wait. The Defendant had already initiated its own power of sale proceedings against Mr. Alijanpour, but abandoned them when Shalby Investment Inc.’s (“Shalby”) lawyer advised that it had secured a sale price that would make both mortgages whole. However, this sale was terminated after Mr. Alijanpour secured a time limited right of redemption from the court on an urgent motion, and then redeemed the Shalby First Mortgage through his entry into the Amended First Mortgage with the Defendant. According to the Plaintiff, it was only after the Plaintiff eventually sold the Property under power of sale that it received the court ordered discharge statement and Amended First Mortgage and became aware of the impugned charges. The Defendant submitted that the Plaintiff had notice somewhat earlier.

[9] However, the Plaintiff’s theory shifted during the trial. Initially, the Plaintiff’s lawyer articulated the fraud as follows. Mr. Alijanpour was induced to sign an Amended First Mortgage by Mr. Missaghi and took title of the Property as a straw man. Mr. Alijanpour was Mr. Missaghi’s nominee and pawn in this scheme. The Defendant corporation is controlled by Mr. Missaghi and thus the three parties conspired to dupe the Plaintiff for Mr. Missaghi’s financial gain. This was to the Plaintiff’s financial detriment because by the time the Property was sold, the Defendant was entitled to a larger share of the equity than would have been owing under the Shalby First Mortgage. The Plaintiff abandoned its initial action to sell the Property and then delayed resuming its action to sell the Property as a result of the concealment by the Defendant of the impugned financial charges it procured in conjunction with Mr. Missaghi and Mr. Alijanpour through the Amended First Mortgage.

[10] Under this theory, the Plaintiff had to demonstrate, in part, that the Defendant was a willing participant in this alleged fraudulent scheme. The Plaintiff was primarily seeking to have the Amended First Mortgage set aside based on its fraud allegations. In the alternative, the Plaintiff was seeking a declaration that the impugned financial charges were not enforceable or held a first charge priority to the Plaintiff and its second mortgage. For the same reasons, the Plaintiff submitted that the summary judgment obtained by the Defendant (on an unopposed basis) against Mr. Alijanpour enforcing the terms of the Amended First Mortgage was of no consequence in this proceeding as to the enforceability of the impugned financial charges as against it.

[11] However, by the end of trial, in the course of reply submissions, the Plaintiff withdrew its request that the Amended First Mortgage be set aside. It also withdrew its allegations and paragraphs 25-27 from its fresh as amended statement of claim alleging that Mr. Missaghi conspired with the Defendant to defraud the Plaintiff. Rather, the Plaintiff submitted that the impugned charges are not enforceable against the Plaintiff because the Defendant, acting alone, actively concealed the Amended First Mortgage from it, despite its requests for disclosure. The Plaintiff argued that its position is reinforced by the Defendant’s decision to not register the Amended First Mortgage on title and to maintain the original principal sum under the Shalby First Mortgage as the consideration in the registered Transfer of Charge (rather than the actual amount it paid to redeem the Shalby First Mortgage which included accrued interest, charges, and penalties). The Plaintiff claims that had it known of these increased payment terms in a timely way, it would have sold the Property much sooner to reduce the accrued additional interest and challenge the enforceability of the impugned financial charges as against it. This is rather akin to a fraudulent misrepresentation claim, though the Plaintiff did not advance that specific cause of action, and rather relied on the tort of fraud.

[12] The Plaintiff also abandoned reliance on s. 93(4) of the Land Titles Act, R.S.O. 1990, c. L.5, which it had pleaded.

[13] At the original hearing of the application, the Plaintiff did not raise or rely on the provision in the Amended First Mortgage that granted the Defendant the option to demand repayment of the principal in U.S. dollars. However, the Plaintiff affirmed at trial that it was now including that provision as one that ought to also be unenforceable against it by reason of the alleged fraudulent activities of the Defendant.

[14] On January 8, 2018, default judgment was granted in favour of the original first mortgagee, Shalby, against Mr. Alijanpour in relation to the latter’s default as mortgagor under the Shalby First Mortgage. The amount of the default judgment was $2,415,722.78 plus $951 in costs and was granted by Andre J. (“Andre J. Default Judgment”). A writ of possession was granted to Shalby on January 29, 2018. The default judgment was not appealed or set aside.

[15] On January 18, 2019, the Plaintiff obtained a consent judgment against Mr. Alijanpour in relation to his default under the second mortgage. Judgment was granted by Sossin J. in the amount of $1,125,000 plus post-judgment interest at the rate of 11 percent, consistent with the rate stipulated in the second mortgage.

[16] On November 22, 2019, consent summary judgment against Mr. Alijanpour was granted by Di Luca J. in the sum of $3,261,290.58 in favour of the Defendant (“Di Luca J. Judgement”). The Defendant was the assignee of the Shalby First Mortgage and had entered into an “Amended and Extension of Time First Mortgage”, referenced as the Amended First Mortgage. By this time, Mr. Alijanpour had defaulted on the Amended First Mortgage as well. Post-judgment interest was fixed at 11.5 percent, consistent with the rate stipulated in the Amended First Mortgage.

[17] The Plaintiff commenced this proceeding by way of a Notice of Application on October 17, 2019.

[18] The Plaintiff obtained an order from Lavine J. on October 29, 2019 against the Defendant, after accepting an offer to purchase the Property from a non-party. This order directed, inter alia, that both mortgages be discharged and the sum of $600,000 be paid into court from the sale proceeds to the credit of this application pending resolution or a consent order. This amount continues to be held in court.

[19] By reasons dated December 18, 2020 (the “2020 Reasons”) in this proceeding, I ruled that the “disputed charges” (as defined in the 2020 Reasons, which included the subject increased interest rate from 8 percent to 11.5 percent but not the U.S. currency provision) under the Amended First Mortgage (the “Renewed First Mortgage” in my 2020 reasons) were enforceable and maintained priority over the outstanding indebtedness under the Plaintiff’s Second Mortgage (as defined in my 2020 Reasons), subject to a trial of an issue I directed on the question of fraud and the potential impact on the Di Luca J. Judgment. I did not rule on the issue of whether the U.S. dollar conversion provision in the Amended First Mortgage was enforceable and takes priority over the outstanding indebtedness owed to the Plaintiff, because that issue was not pleaded in the Notice of Application nor mentioned in the Plaintiff’s factum or reply factum. It was raised for the first time during oral argument, catching the Defendant off guard. Indeed, the issue of fraud was only raised for the first time by the Plaintiff in its reply factum filed in relation to the application.

[20] The parties attended at case conferences before me to deal with the management of the trial of an issue. At the case conference held on January 26, 2021, I set a timetable, including for the exchange of pleadings on the issue of fraud, affidavits of documents, and examinations for discovery. At the case conference held on February 24, 2021, I ordered, inter alia, that the Applicant (Plaintiff ) pay into court the sum of $55,615.80 to be credited against any shortfall of interest that may ultimately be found to be due to the Respondent (Defendant) for the period up to and including December 31, 2021 pursuant to s. 12(7) of the Mortgages Act, R.S.O. 1990, c. M.40, and the sum of $48,000 by way of security for costs pursuant to r. 56.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[21] The Plaintiff sought to appeal my determination that “certain charges were proper charges under 263’s mortgage and would be recoverable in the enforcement of its mortgage, and that the first mortgage has priority over the second.” The Defendant moved to quash the appeal. The Court of Appeal determined that my order was interlocutory and that the determinations I made were subject to this trial of an issue. The appeal was quashed on that basis.

3. Chronology of Events

[22] These facts are undisputed (except where noted) and provide a more fulsome understanding of the Amended First Mortgage and the surrounding circumstances.

[23] In 2016, title to the Property was transferred to Ali Jan Alijanpour by 2399021 Ontario Inc. (“History Homes”). The directors of this corporation are Troy and Terry Wilson.

[24] A first mortgage was registered against the Property on December 8, 2016, in favour of Shalby Investments and a conglomerate of individual investors in the principal sum of $2.3 million with interest at the rate of 8 percent, payable in Canadian dollars with a maturity date of January 1, 2018, subject to renewal. It was an interest only mortgage.

[25] On the same day, the second mortgage was registered in favour of the Plaintiff in the principal sum of $850,000 at an interest rate of 11 percent.

[26] Mr. Alijanpour defaulted under the Shalby First Mortgage, and on April 27, 2018, Shalby entered into an Agreement of Purchase and Sale under Power of Sale, with a sale price of $4,700,000 and a closing date of May 2, 2018. The Plaintiff was advised by Gabriel Krikunez, the lawyer acting for Shalby on this transaction, that there was no point in redeeming the Shalby First Mortgage, since the Agreement of Purchase and Sale was firm, and the second mortgage would be fully satisfied and discharged from the sale proceeds.

[27] Mr. Alijanpour registered a caution on title against the Property (“Restriction”) on April 30, 2018.

[28] On the same day, Peter Knezy was retained by Ivan Terziev to act on an assignment of the Shalby First Mortgage and prepare the Amended First Mortgage in favour of the Defendant.

[29] Also on the same day, Mr. Alijanpour brought an urgent application before this court to enjoin the pending sale of the Property by Shalby. Shalby opposed the application.

[30] On May 1, 2018, Dietrich J. issued an endorsement providing Mr. Alijanpour the right to redeem the Shalby First Mortgage until noon on May 2, 2018.

[31] On May 1, 2018, the Plaintiff also registered a caution against the title of the Property.

[32] On May 2, 2018, the Defendant was incorporated for the purpose of the assignment and Amended First Mortgage transactions.

[33] On May 2, 2018, the Defendant’s lawyer, Mr. Knezy, closed the assignment of the Shalby First Mortgage deal with Mr. Krikunez acting on behalf of Shalby. Fred Yack, acting for Mr. Alijanpour, transferred the sum of approximately $2.594 million (being the redemption value of the Shalby First Mortgage), allegedly received from Mr. Knezy to Mr. Krikunez.

[34] On May 3, 2018, Mr. Knezy registered the Transfer of Charge from Shalby to the Defendant, but not the Amended First Mortgage or its terms, on title.

[35] On May 3, 2018, the Amended First Mortgage between Mr. Alijanpour and the Defendant was signed. It was prepared on May 2, 2018. Mr. Alijanpour’s Restriction was also removed on this day by Mr. Yack.

[36] On September 19, 2018, BYLD Barristers sent a letter to Mr. Terziev and Mr. Knezy warning of a potential identity fraud involving “Alan” Alijanpour, aka Arash Missaghi, in the context of requesting payout statements for two unrelated properties.

[37] From in and around March 2019 to October 2019, Gardiner Roberts LLP, on behalf of the Plaintiff, made numerous requests of Mr. Turton, acting for the Defendant, for payout statements in relation to the Amended First Mortgage. These requests went unanswered.

[38] On November 1, 2019, the Plaintiff sold the Property under power of sale for $4,350,000.

[39] The Defendant was ordered to provide a payout statement of its Amended First Mortgage to the Plaintiff so that the pending sale could be closed. This is when the Plaintiff alleges it discovered the total additional charges and fees.

[40] On November 22, 2019, Di Luca J. granted summary judgment on an unopposed basis in favour of the Defendant against Mr. Alijanpour, enforcing the financial terms of the Amended First Mortgage.

[41] This proceeding was initiated by the Plaintiff by Notice of Application issued October 17, 2019. The application was heard and determined, subject to this trial of an issue ordered by my 2020 Reasons released December 18, 2020. I directed that pleadings be exchanged for the trial of an issue.

4. Issues

[42] The issues are:

(a) Did the Di Luca J. Judgment determine the priority issue before this court and therefore render this trial of an issue res judicata? In other words, is this proceeding an impermissible collateral attack against the Di Luca J. Judgment?

(b) Did the Plaintiff plead the tort of civil fraud? If not, does the Plaintiff have standing to seek the declaratory relief requested?

(c) Did the Defendant commit civil fraud against the Plaintiff by concealing the increased financial terms in the Amended First Mortgage from it?

(d) If the Defendant engaged in fraudulent activity against the Plaintiff, is declaratory relief the appropriate remedy?

[43] This proceeding is not a collateral attack on the Di Luca J. Judgment. The Di Luca J. Judgement does not render this trial of an issue res judicata or an abuse of process, in light of the Plaintiff’s modified claim for a declaration addressing enforceability of the impugned financial charges against it alone.

[44] While the Plaintiff did not plead a tort claim seeking damages in its initial Notice of Application or in its statement of claim for this trial of an issue, it did plead declaratory relief and allegations of fact supporting its fraud claim. The Defendant has standing to seek the alternative declaratory relief.

[45] The Plaintiff has not discharged its burden of proof (on a balance of probabilities) in its fraud claim against the Defendant.

[46] Therefore, no declaratory relief is awarded.

[47] Accordingly, the Defendant shall have judgment in accordance with my ruling as reflected in my 2020 Reasons. I will receive submissions in writing with respect to the calculation of the amounts owed to the Defendant under the terms of the Amended First Mortgage based on my 2020 Reasons if the parties cannot agree.

Preliminary Issue #1: Collateral Attack on the Di Luca J. Judgment

[48] A final order of a court that has not been overturned on appeal or quashed is binding and conclusive. A party may not collaterally attack the order. As stated in Wilson v. The Queen, 1983 CanLII 35 (SCC), [1983] 2 S.C.R. 594, at p. 599 [Wilson], “a collateral attack may be described as an attack made in proceedings other than those whose specific object is the reversal, variation, or nullification of the order or judgment.”

[49] Therefore, “an order of a court which has not been set aside or varied on appeal may not be collaterally attacked and must receive full effect according to its terms”: Wilson, at p. 604.

[50] The Di Luca J. Judgment did not determine the enforceability of the impugned terms as against the second mortgage. Rather, it only determined that the Amended First Mortgage was enforceable as against Mr. Alijanpour, including the impugned charges, and awarded judgment for the outstanding amount under the Amended First Mortgage.

[51] The Defendant argues that this proceeding is a collateral attack as against the Di Luca J. Judgement. The Plaintiff was seeking to have that judgment set aside. Since the Plaintiff has changed its position and is seeking a declaration (in the alternative) that the impugned terms are not enforceable against it only and do not take priority over its second mortgage, this proceeding can no longer be characterized as a collateral attack. The issue before this court is not rendered res judicata by the Di Luca J. Judgment because the issue of priority of the impugned charges vis-à-vis the two mortgages was not determined. I do not accept that the Plaintiff was privy to the summary judgment motion, and therefore bound to the Di Luca J. Judgment, because it knew that the motion was going to proceed and declined to attend or attempt to intervene. This is because the order that was being sought by the Defendant was not relevant to the issue of priority of the impugned charges or their enforceability as against the second mortgagee. It merely established Mr. Alijanpour’s liability under the Amended First Mortgage to the Defendant.

Preliminary Issue #2: Standing of the Plaintiff to Attack the Amended First Mortgage

[52] In the amended fresh as amended statement of claim, the Plaintiff sought a declaration that the Amended First Mortgage is not enforceable as against it and should be set aside, and a declaration that the increased charges resulting from the Amended First Mortgage are not enforceable against it.

[53] Pursuant to s. 97 of the Courts of Justice Act, R.S.O. 1990, c. C.43, the court has the discretion to make binding declarations of right whether or not any consequential relief is or could be claimed. The requirements for exercising that discretion are met in this case. The court has jurisdiction to hear this matter. The dispute is real and not theoretical. The Plaintiff has a genuine interest in its resolution and the Defendant has an interest in opposing the declaration being sought.

[54] The Defendant submits that the Plaintiff has no standing to set aside the Amended First Mortgage as it is not a party to that agreement. I agree. In any event, the Plaintiff ultimately withdrew that prayer for relief.

[55] The remaining issue is the enforceability of the impugned increased payment provisions of the Amended First Mortgage as against the Plaintiff only.

[56] The Plaintiff does have standing to seek a declaration that the impugned financial charges resulting from the Amended First Mortgage are not enforceable as against it. The issue of priority and whether that priority is lost due to fraud is at the heart of this trial of an issue.

Issue #1: Did the Defendant Commit Fraud Against the Plaintiff by Concealing the Impugned Financial Charges from it?

The Law of Fraud

[57] The Plaintiff relies on Bruno Appliance and Furniture Inc. v. Hryniak, 2014 SCC 8, [2014] 1 S.C.R. 126, at para. 21, which sets out the following elements of the tort of civil fraud:

(a) a false representation made by the defendant;

(b) some level of knowledge of the falsehood of the representation on the part of the defendant (whether through knowledge or recklessness);

(d) the plaintiff’s actions resulted in a loss.

[58] The tort of fraud is an intentional tort.

[59] The Plaintiff also relies on Indcondo Building Corporation v. Sloan, 2014 ONSC 4018, 121 O.R. (3d) 160, at para. 52 [Indcondo], a fraudulent conveyance case, for the following elements being badges of fraud:

(a) the donor continued in possession and continued to use the property as his own;

(b) the transaction was secret;

(d) the transfer documents contained false statements as to consideration;

(e) the consideration is grossly inadequate;

(f) there is unusual haste in making the transfer;

(g) some benefit is retained under the settlement by the settlor;

(h) embarking on a hazardous venture; and

(i) a close relationship exists between parties to the conveyance.

[60] Pursuant to Indcondo, at para. 53, while the burden of proof lies on the Plaintiff to establish the fraud, an inference may be made in favour of the Plaintiff should some of the badges of fraud exist. The court held that “[p]roof of one or more of the badges of fraud will not compel a finding for the plaintiff but it may raise a prima facie evidentiary case which it would be prudent for the defendant to rebut”: Indcondo, at para. 53.

[61] The Plaintiff submits that it has demonstrated many of the badges of fraud, and thus the Defendant must satisfactorily explain the suspicious circumstances through evidence. The Defendant responds that the badges of fraud from Indcondo are not applicable as it was a fraudulent conveyance case.

[62] I agree with the Defendant.

[63] The doctrine of fraudulent concealment is not a cause of action. Rather it is a doctrine with respect to the postponement or tolling of a limitation period: Zeppa v. Woodbridge Heating & Air-Conditioning Ltd., 2019 ONCA 47, 144 O.R. (3d) 385.

[64] The Plaintiff did not provide any jurisprudence to support its position that this doctrine can give rise to declaratory relief arising from the tort of civil fraud. The doctrine of fraudulent concealment has no application.

[65] The Plaintiff does assert, however, that the fraud is the failure by the Defendant to disclose the impugned financial terms when the Plaintiff repeatedly requested them for the purposes of its own Power of Sale proceedings, and the failure to include the impugned financial terms when the Defendant registered its Transfer of Charge, as will be further elaborated.

[66] I must examine the surrounding circumstances to ascertain whether the requisite intent and elements of the tort of fraud have been proven: Derry v. Peek (1889), 14 App. Cas 337.

[67] Accordingly, I will focus on the claim of fraud ultimately advanced by the Plaintiff with respect to the Amended First Mortgage. The Plaintiff does not challenge the validity of the assignment of the Shalby First Mortgage to the Defendant.

The Evidence

[68] The Plaintiff candidly admitted that it had trouble procuring its witnesses. Indeed, the court never heard from the alleged fraudster, Mr. Missaghi, his associate, Samira Yousefi, nor one of Mr. Alijanpour’s alleged lawyers, Fred Yack. These witnesses were on the Plaintiff’s original list of witnesses as disclosed during its opening statement and under, what turned out to be, defective summons.[^1] The Plaintiff also withdrew another witness from its original list, one of Mr. Alijanpour’s lawyers, Julian Binavince, at the end of its case, after having started his examination in chief. The Plaintiff candidly admitted that it did not know what the evidence of its witnesses, aside from Hootan Ghovanloo (its corporate representative), would be until those witnesses gave their testimony.

[69] Other evidentiary challenges presented themselves at the trial, requiring a number of oral rulings and a voir dire of one of Mr. Alijanpour’s lawyers, Greg Sidlofsky.

[70] Because the Plaintiff ran out of witnesses during the first week of trial, due to it having served defective summons and having failed to give adequate notice to Mr. Alijanpour that it intended to pierce his solicitor-client privilege before calling his lawyers as witnesses, the trial of an issue was adjourned to March 2024. In all, the court received under two days of evidence during the first week of this trial.

[71] After a lengthy adjournment, the court heard from further witnesses on behalf of the Plaintiff.[^2]

[72] The trial proceeded by way of viva voce evidence, with certain witnesses permitted to testify virtually. The court heard from the following witnesses called by the Plaintiff: Hootan Ghovanloo, Patrick Nersesian, Kristina Boyarkina, Greg Sidlofsky, Gabriel Krikunez, and Peter Knezy. The court heard from only one witness on behalf of the Defendant: Ivan Terziev.

[73] Since an assessment of credibility was essential in reaching my findings of fact, I will review the witness testimony in some detail.

Hootan Ghovanloo

[74] Mr. Ghovanloo testified as the representative of the Plaintiff. He is not an officer, director, shareholder or employee of the Plaintiff. He described himself as an independent contractor in charge of this mortgage transaction. He described his experience as being in real estate. He was a mortgage broker for more than 15 years. He described his role with the Plaintiff as being in charge of its private mortgage deals since its incorporation six or seven years ago.

[75] He became aware of the mortgage lending opportunity with respect to the Property when a real estate agent contacted him. He visited the Property and saw that Mr. Missaghi was inside the house. However, his investigation showed that Mr. Alijanpour was the owner and not Mr. Missaghi. Hence, he recommended proceeding with providing a second mortgage to Mr. Alijanpour.

[76] He testified that he knew of Mr. Alijanpour from the Persian community and queried his ability to finance the Property at the time. The Plaintiff became a mortgagee and stood second behind the Shalby First Mortgage. The Plaintiff was provided with six or seven months of advance mortgage payments by the mortgagor.

[77] In 2016, the Plaintiff registered the subject second mortgage against the Property. Mr. Ghovanloo believes the principal sum loaned was $850,000. He could not recall, during testimony, who the first mortgagee was, until his memory was refreshed. He confirmed that the Plaintiff registered the second mortgage on the same day as the Shalby First Mortgage was registered.

[78] Mr. Ghovanloo testified that after Mr. Alijanpour defaulted on the second mortgage, he developed suspicions that Mr. Alijanpour was a “straw man” owner of the Property and that the beneficial owner was Mr. Missaghi. From doing research on the internet, Mr. Ghovanloo knew Mr. Missaghi to have a reputation as a fraudster.

[79] After default, Mr. Ghovanloo testified that the Plaintiff intended to redeem the Shalby First Mortgage and sell the Property in and around April 2018. The Plaintiff’s lawyers requested payout statements from the Defendant’s lawyer but did not get one. Rather, Mr. Ghovanloo received a summary of the payout owing to Shalby for redemption purposes, which reflected the total consideration required to redeem the mortgage upon Mr. Alijanpour’s 2018 default ($2.941 million) and was ultimately financed by the Defendant by Transfer of Charge. In the interim, Shalby told Mr. Ghovanloo that it received an offer to purchase the Property which it wanted to accept. Shalby assured the Plaintiff that the second mortgage would be fully paid out from the sale proceeds. Mr. Ghovanloo was told that the offer to purchase was for $4.7 million and was scheduled to close on May 2, 2018. This information was reflected in a letter dated April 27, 2018 from Mr. Krikunez to the Plaintiff’s lawyer, Mr. Amouzgar. As a result of this letter, the Plaintiff stopped its own enforcement action with respect to the Property.

[80] The Plaintiff disputed some of the charges reflected in the Shalby discharge statement, including the legal fees and a three-month bonus interest payment to Shalby. At that time, the Plaintiff decided to take over the enforcement proceedings against the Property.

[81] However, the sale was never completed. Mr. Ghovanloo could not recall when he was informed that the sale did not close.

[82] Mr. Ghovanloo did not have any direct knowledge about the circumstances underlying the failed sale transaction. He also had no direct knowledge about the assignment of the first mortgage from Shalby to the Defendant.

[83] However, by email dated May 4, 2018 from Mr. Krikunez to the Plaintiff’s real estate lawyer, Lori Mark Mr. Ghovanloo learned that the Shalby First Mortgage had been redeemed by Mr. Alijanpour. When a search of the Property was done, Mr. Ghovanloo discovered that the Shalby First Mortgage had been assigned to the Defendant by Transfer of Charge dated May 3, 2018. However, the Amended First Mortgage terms were not registered on title. According to the transfer, the total principal mortgage debt of $2.3 million was transferred by Shalby to the Defendant as consideration.

[84] When he did eventually find out the new terms, Mr. Ghovanloo stated that he and the Plaintiff “were shocked” because they had never seen the interest rate or the form of currency change. He stated that they had never seen these types of changes in all their years. He initially said that he learned of the Amended First Mortgage on June 7, 2019. He later testified that he did not remember exactly when the Plaintiff learned of the impugned charges, except that it was in 2019. He then backtracked and testified that the interest rate changing “a little” when there is an assignment or renewal is not unusual, but that the currency changing from Canadian to U.S. dollars is unusual.

[85] The “Agreement Amending and Extending Time for Payment of Charge/Mortgage of Land” between Mr. Alijanpour and the Defendant was dated May 2, 2018 (referenced throughout as the “Amended First Mortgage”). According to that document, the interest rate was increased to 11.5 percent calculated monthly and not in advance, up from the original 8 percent. The document also provided that the mortgagee could direct repayment of any or all of the principal at maturity in U.S. dollars at a fixed exchange rate. Furthermore, the document provided for fees payable by Mr. Alijanpour, including legal fees, lender’s broker fees, and required prepaid interest of two months.

[86] The concern raised by the Amended First Mortgage was that there may no longer be enough equity in the Property for the Plaintiff’s second mortgage to be paid out. When the Plaintiff eventually sold the Property after a further default by Mr. Alijanpour occurred, there was a shortfall for the total outstanding. Mr. Ghovanloo could not remember how much the shortfall was. He knew that there is $600,000 from the sale proceeds being held in court.

[87] The Property was sold in 2019 by Mr. Ghovanloo to a person he had shown many properties to in the past.

[88] Mr. Ghovanloo added at the end of his testimony in chief that when he attended at the registered corporate address of the Defendant (George Patten Boulevard) to serve the Defendant with the Notice of Application in these proceedings, he was surprised to meet Patrick Nersesian at the door. This was on July 30, 2020. He testified that the door was open and he gave the documents to Mr. Nersesian. Mr. Ghovanloo also saw a woman but could not identify her. He said there was no conversation. He was shocked because he knew Mr. Nersesian as a person who used to run a bakery in the Persian community. He noted that Kristina Boyarkina was listed as president and secretary of the Defendant corporation as of 2018. Ivan Terziev and his wife, Elena Metchikova, were also listed as directors of the Defendant in 2019.

[89] Under cross-examination, Mr. Ghovanloo stated that he did not know who Kristina Boyarkina was.

[90] He also stated that he currently receives instructions from a lawyer in the Caymen Islands named Botar MacMara who is a director of the Plaintiff. However, at the material times in 2018, he took instructions from Dr. Ariel Reyhanian who was the director of the Plaintiff. Dr. Reyhanian is alive and well, living and practicing as a dentist in Toronto. Mr. Ghovanloo stated that Dr. Reyhanian did not have any serious health problems that would prohibit him from giving evidence. Similarly, Mr. MacMara had no health barrier to giving evidence. Mr. Ghovanloo claimed that he does not know who makes decisions on behalf of the Plaintiff. He then waffled and stated he was not sure who had provided instructions to him in 2018 and 2019.

[91] Mr. Ghovanloo was shown an affidavit sworn by Mr. Alijanpour on August 16, 2018 in relation to the Di Luca J. Judgement. He confirmed that he saw the Term Sheet for the Amended First Mortgage which was attached as an exhibit, and that he would have read it at the time. The Term Sheet revealed the increased interest rate. Furthermore, in the body of the affidavit, Mr. Alijanpour states that the new interest rate is 11.5 percent. The Term Sheet, however, did not reflect the U.S. dollar conversion provision. Mr. Ghovanloo confirmed that he would have seen all the new financial terms at that time insofar as disclosed in the Term Sheet. He confirmed again that he saw this document in August 2018. Then, after confirming this twice and it being pointed out that the increased interest rate was disclosed, he backtracked and stated that he did not know if he had knowledge of the Term Sheet and the new financial terms contained in the Amended First Mortgage agreement in August 2018 by virtue of this affidavit. He added that he was unsure as to whether the Plaintiff’s lawyers had seen it at the time either.

[92] He was then shown the affidavit of Susan Turton affirmed October 23, 2019 and filed in the Barrie action which the Plaintiff brought against the Defendant. In paragraph 9 of that affidavit, Mrs. Turton deposed that the summary judgment proceeding by the Defendant against Mr. Alijanpour to enforce the terms of the Amended First Mortgage (which resulted in the Di Luca J. Judgment) had been adjourned to a long motion date to be heard in November 2019 in Oshawa. Mr. Ghovanloo confirmed he read the affidavit and saw this at the time. He confirmed that, notwithstanding this knowledge, he did not go to Oshawa to attend at, or intervene in, the motion.

Patrick Nersesian

[93] Mr. Nersesian is the common law spouse of Kristina Boyarkina. He stated he did not know why he had been summoned by the Plaintiff to testify. He knew that the matter was about (words to the effect of) “two parties fighting over a loan or payment or whatever”.

[94] Mr. Nersesian stated that he was aware of the Property. The extent of his involvement with the Property is that he attended it once about five or six years ago for maintenance and repair. He did some odd jobs for Mr. Missaghi from time to time.

[95] Mr. Nersesian said that his business installs panels on roofs and does electrical work. He attended at the Property with his electrician for about 10 or 15 minutes because he was asked by Mr. Missaghi to do some electrical work. He explained that he had known Mr. Missaghi’s father and this was his connection to him. He confirmed that he knew the Property was tenanted but only because Mr. Missaghi told him.

[96] At the time, Mr. Nersesian was behind on his own personal rent and asked Mr. Missaghi for a loan in the sum of $10,000.

[97] Mr. Nersesian first met Mr. Alijanpour at the end of 2018 in Mr. Missaghi’s office. This was not a pre-planned meeting – he just happened to be there at the same time. Mr. Nersesian never spoke to Mr. Alijanpour about the Property and has no idea who owned the Property. Mr. Nersesian emphasized that he has had no involvement in the Property whatsoever.

[98] Mr. Nersesian and his spouse lived at 12 George Patton for two years, about five years ago. He specifically recalled Mr. Ghovanloo attending to deliver documents. He testified that he saw Mr. Ghovanloo and someone else attend and drop off papers at the door. Then, they returned and knocked on the door. Mr. Nersesian opened the door and Mr. Ghovanloo handed the papers to his spouse, Ms. Boyarkina. Mr. Nersesian said that he “guessed” the person who handed the papers over was Mr. Ghovanloo. He later clarified that it was Mr. Amouzgar who told him the night before his testimony that the papers served related to this proceeding and Mr. Ghovanloo’s identity.

[99] Mr. Nersesian further testified that, after receiving the documents, he and his spouse were shocked and called Mr. Missaghi who reassured them that the matter did not involve them and would be resolved. Mr. Nersesian testified that this was the last time he ever spoke to Mr. Missaghi, in or around July 30, 2020.

[100] Mr. Nersesian volunteered that Mr. Missaghi forged his signature on papers for a house to be rented. He did not share the details and said it was not in relation to the Property.

[101] Mr. Nersesian confirmed that he does not know who Ivan Terziev is, nor his spouse, Elena Metchikova. He also does not know lawyers Fred Yack, Julien Binavince or Peter Knezy.

[102] Mr. Nersesian confirmed that he was not involved in any companies belonging to Mr. Missaghi. He did not answer as to whether he was aware of the Defendant corporation. He admitted that he and his spouse use a corporation that was opened by Mr. Missaghi.

[103] Mr. Nersesian confirmed that he has never authorized Mr. Missaghi to use his own personal address as a corporate address.

[104] Mr. Nersesian declared that Mr. Missaghi ruined his life.

[105] There was no cross-examination.

Kristina Boyarkina

[106] Like her spouse, Mr. Nersesian, Ms. Boyarkina disclaimed any knowledge as to why she had been summoned to testify.

[107] She confirmed that she and Mr. Nersesian rented the house at 12 George Patton for two years in 2019.

[108] Her description of Mr. Ghovanloo’s attendance at 12 George Patton is as follows. Someone knocked on the door and brought documents. She asked her husband to open the door. Her husband talked to Mr. Ghovanloo. Both gave their names to Mr. Ghovanloo, and Ms. Boyarkina accepted the documents from him.

[109] Ms. Boyarkina saw that the parties on the document were corporations but did not recognize them.

[110] Ms. Boyarkina testified that she was first introduced to Mr. Missaghi by her husband in 2019. She said that Mr. Missaghi would come to their home for dinners with his “baby momma”, which she clarified was “his woman”. Ms. Boyarkina stated that Mr. Missaghi visited their house often, both when they lived at 12 George Patton and later when they moved to another house in Markham.

[111] Ms. Boyarkina stated that to her knowledge Mr. Missaghi never used her address as one of his corporate addresses, but added that he could have, as anyone could.

[112] Ms. Boyarkina was shown a corporate profile report of the Defendant that identified her as president, secretary, treasurer, and director as of May 9, 2018. She was also listed with these positions on the corporate profile reports for 2019 and 2020. The 2018 corporate profile report also showed the corporate address as being 12 George Patton Avenue. Ms. Boyarkina was adamant that she knew nothing of the Defendant corporation and had never consented to being an officer and director. She also disclaimed knowing Mr. Terziev or Ms. Metchikova, who were also listed as directors.

[113] Ms. Boyarkina acknowledged having signed documents for Mr. Missaghi, but this was with respect to the corporation he set up for her called Canadian Cooling Corporation. This latter company continues to be operated by her and owned by her.

[114] Ms. Boyarkina added that she first learned about her name being listed as an officer and director for the Defendant corporation on the witness stand and that Mr. Missaghi could easily have added her name without her knowing.

[115] The last time Ms. Boyarkina spoke with Mr. Missaghi was about three years ago.

[116] Ms. Boyarkina stated that she does not know Mr. Alijanpour or lawyer Greg Sidlofsky. She did know Mr. Yack as Mr. Missaghi’s lawyer because he incorporated Canadian Cooling Corporation for her.

[117] Ms. Boyarkina then pulled papers from her purse and indicated that she had brought her corporate papers for Canadian Cooling Corporation, which have Mr. Yack’s name on them.

[118] She confirmed she had no knowledge whatsoever about the Property.

[119] Under cross-examination, Ms. Boyarkina explained that while she does not normally carry her Certificate of Incorporation with her, she felt she should bring it to court to show what corporation she does own. She did this to show that she did not own either of the two corporations which are parties to this proceeding. Ms. Boyarkina stated that she had not had any discussion about this matter with her husband since being served with the summons two weeks prior, except to answer his question about whether either of the corporate parties belong to them. She told him they do not. Ms. Boyarkina also confirmed that she had no discussions with the Plaintiff’s lawyers about her anticipated testimony.

[120] Ms. Boyarkina’s decision to bring her own articles of incorporation to the court unprompted and her explanation for doing so was somewhat suspect given her adamant position that she did not know what this lawsuit was about or why she had been called to testify.

Ali Jan Alijanpour (also known as Alijan Alijanpour)

[121] Mr. Alijanpour appeared with personal counsel to deal with any potential solicitor-client privileged matters given the fact that some of his alleged lawyers were being called to testify.[^3] A Farsi interpreter was sworn in and provided to Mr. Alijanpour.

[122] Mr. Alijanpour is an artist who paints and sells his art. He also operates an art school. He has lived in Toronto since 2000.

[123] Mr. Alijanpour first met Mr. Missaghi in 2014. Mr. Missaghi, also from the Persian community, commissioned a painting from Mr. Alijanpour. Mr. Missaghi retrieved the painting and paid for it with a cheque.

[124] Mr. Alijanpour stated that he had no other business relationship with Mr. Missaghi. Any and all communications he had with Mr. Missaghi were about the art.

[125] Mr. Alijanpour stated that the last time he communicated with Mr. Missaghi was in 2018. In 2019, he filed a complaint with police against Mr. Missaghi because Mr. Missaghi had purchased many paintings from Mr. Alijanpour and his cheques were returned for “not sufficient funds”. Mr. Alijanpour said he found out Mr. Missaghi was a known scammer by reading a newspaper story. Mr. Alijanpour described the paintings he painted for Mr. Missaghi as belonging in a museum. Mr. Alijanpour had not been paid as of the date of his testimony.

[126] Mr. Alijanpour stated that he was aware of the Property. He said that Mr. Missaghi, who called him a brother, offered to put the Property in Mr. Alijanpour’s name. Mr. Missaghi claimed to own the Property. Mr. Missaghi said he had taken a mortgage on the Property and now wanted it back. At the time, Mr. Alijanpour trusted Mr. Missaghi.

[127] Mr. Alijanpour testified that he consented to having his name put on title as owner of the Property, at least initially.

[128] Mr. Alijanpour confirmed that his lawyer for the transaction was Julien Binavince. He hired him on March 10, 2019. Mr. Alijanpour recalled meeting in Mr. Binavince’s office two or three months later, and that Greg Sidlofsky, another lawyer, and Mr. Missaghi were also present.

[129] Mr. Alijanpour referenced a text message he received from Mr. Missaghi. When asked whether he brought it to court, he said no. He said that he did not pay attention to the summons which required him to bring to court all relevant documents.

[130] When shown the power of sale that stated he became the owner of the Property in October 2015, Mr. Alijanpour said he had never seen this document before. It did not refresh his memory as to the date of the transfer, which he testified was in 2016.

[131] The prior owner of the Property had been History Homes. Its directors were Terry Wilson and Troy Wilson. Mr. Alijanpour stated he had met Troy Wilson casually at Mr. Missaghi’s business office, but not Terry Wilson.

[132] Mr. Alijanpour disclaimed any direct involvement in the transfer of title to the Property to him, except that he confirmed that he signed the necessary documentation to affect the transfer. Mr. Alijanpour testified that Mr. Missaghi brought the documentation to him and asked him to sign, which he did. Mr. Alijanpour did not pay any consideration for the transfer of title. He confirmed that Mr. Missaghi paid all carrying costs in relation to the Property. Mr. Alijanpour did not live there either.

[133] Mr. Alijanpour testified that Mr. Missaghi gave instructions on his behalf to the lawyers involved in the transfer of title (under power of sale) from History Homes to him. He then clarified that during this transaction, Mr. Missaghi’s lawyer, Mr. Sidlofsky, was acting for him on the transfer. It was after this transaction that he retained Mr. Binavince. Mr. Alijanpour confirmed that he received no communications from Mr. Sidlofsky and did not provide any instructions to him. Mr. Missaghi took care of all of this.

[134] Mr. Alijanpour knew of Mr. Yack as another lawyer acting for Mr. Missaghi. Mr. Alijanpour met with Mr. Yack alongside Mr. Missaghi once or twice, a long time before he retained Mr. Binavince.

[135] Mr. Alijanpour confirmed that he hired Mr. Binavince. Mr. Alijanpour did not have to give him instructions because he trusted Mr. Binavince to do what was necessary on his behalf.

[136] Mr. Alijanpour claimed that he knew nothing about the Amended First Mortgage and the impugned financial terms. He stated he was unaware of signing such a document at all. Mr. Alijanpour recalled no discussions around increasing the interest rate from the Shalby First Mortgage or changing the currency from Canadian dollars to U.S. dollars. When the agreement was then shown to him, Mr. Alijanpour said that, while he saw his name on it, he did not know about it. However, he indicated that Mr. Missaghi would put documents before him, and he would just sign them. He did not know if this was one of those documents. Mr. Alijanpour said he would willingly sign whatever documents Mr. Missaghi asked him to during this time frame, until he lost trust in Mr. Missaghi.

[137] Mr. Alijanpour was then asked to identify his signature at the end of the document. He said that normally he would place a period in the “eye” of his signature, meaning a circle with a dot in it directly above his signature. It was not there. Initially, he stated that the rest of the signature looked like his. However, Mr. Alijanpour did not know what to say given the lack of a period within the “eye”.

[138] Mr. Alijanpour then volunteered that no one explained this document to him. He does not read English.

[139] Mr. Alijanpour testified that he knew of Patrick Nersesian because he would see him often at Mr. Missaghi’s office. However, Mr. Alijanpour had no relationship or association with Mr. Nersesian.

[140] Mr. Alijanpour stated that Mr. Nersesian took him to Mr. Sidlofsky’s office in connection with an out of court cross-examination. Mr. Alijanpour was told to repeat whatever Mr. Sidlofsky told him to say in the examination. Mr. Alijanpour could not remember whether he was told to lie or whether the things he was told to say were the truth. He could not recall if he was told to hide Mr. Missaghi’s involvement with the Property. After this session, Mr. Alijanpour found out there was a second mortgage on the Property. He said he was distressed and confused as he had never been to court before. It was later revealed that the session in question was a cross-examination of Mr. Alijanpour on his affidavit in relation to the mortgage enforcement action, not this proceeding.

[141] Mr. Alijanpour stated that his memory is so mixed up that, up to the day of his testimony, he could not recall exactly what happened in relation to the Property.

[142] Mr. Alijanpour was impeached with an answer he gave in cross-examination on a related matter in which he was sued by the Plaintiff. After testifying that he did not see other properties before taking title to 23 Thornridge, he was presented with his answer in the cross-examination transcript in which he stated that he had considered buying other properties before buying the subject Property. His explanation was that normally one would do that, not that he did. He then said that he made a mistake at the cross-examination and did not know what he was answering at the time. He acknowledged that he had an interpreter at the cross-examination.

[143] Mr. Alijanpour testified that he met Mr. Missaghi’s associate, Samira Yousefi, three times, including together with Mr. Missaghi.

[144] Mr. Alijanpour did not bring any relevant documents to trial, notwithstanding that he was required to do so in the summons to witness. While his personal lawyer submitted that Mr. Alijanpour did not have any relevant documents, this submission was undermined when Mr. Alijanpour checked his mobile phone and located relevant text messages. These text messages included a note confirming that on April 20, 2019, Mr. Alijanpour, Mr. Missaghi, and Mr. Sidlofsky had an appointment at Mr. Binavince’s office.

[145] Mr. Alijanpour also admitted that on February 1, 2022, a lawyer he retained when he was considering intervening in this proceeding, John Mather, obtained a complete copy of Mr. Sidlofsky’s files in which he was identified as Mr. Sidlofsky’s client regarding the Property. This included a copy of the Amended First Mortgage and the Di Luca J. Judgment.[^4]

[146] Mr. Alijanpour disclaimed knowledge of an email from Mr. Missaghi to his lawyer, Mr. Sidlofsky, dated July 31, 2018, which purported to show that Mr. Missaghi was trying to locate other mortgage lenders to take over the Shalby First Mortgage and the second mortgage, and recommended Ms. Samira Yousefi as a mortgage broker.

[147] Mr. Alijanpour disclaimed any knowledge of History Homes. He was shown a 2017 Certificate of Revival of that corporation bearing his name as the applicant and director. When shown the signature, Mr. Alijanpour testified that the signature looked like his. The dot is evident in the “eye” above his signature. Mr. Alijanpour admitted that perhaps it was his signature. He stated that the name on the 2019 Articles of Revival, Laila Azizadeh, was Mr. Missaghi’s wife. The lawyer of record, Mr. Yack, was Mr. Missaghi’s lawyer. However, when taken to his cross-examination transcript again and shown that he identified Mr. Yack as his lawyer, Mr. Alijanpour said that Mr. Sidlofsky advised him to answer this way, that is to lie. When confronted with other answers from his cross-examination that contradicted his present testimony, Mr. Alijanpour speculated that perhaps the cause of the contradictory answers was the interpreter used.

[148] Finally, Mr. Alijanpour disclaimed any knowledge of Ivan Terziev.

[149] Based on his examination in chief, there was evidence to suggest Mr. Alijanpour was a straw man with no stake in the Property except in name only. Mr. Alijanpour also cast some doubt on the authenticity of some of the signatures on documents attributed to him.

[150] However, in cross-examination, Mr. Alijanpour added salient features to this story that seriously undermined some of his key evidence in chief.

[151] Under cross-examination, Mr. Alijanpour acknowledged that he twice said in the cross-examination transcript that Mr. Yack was his lawyer and that he made a mistake when he answered that way.

[152] He acknowledged that he has been running an art business and school in Toronto and North York for over 20 years. When put to him that it was implausible that he had not learned English in all that time, he responded that he can speak English “as much as a normal individual” but that he is not a “professional” in English speaking. This exchange came after Mr. Alijanpour answered Mr. Turton’s question before the interpreter had translated it. Mr. Alijanpour stated however that if a document in English is put before him, he always asks someone to explain it to him.

[153] Mr. Alijanpour admitted that he has sued Mr. Missaghi, Mr. Missaghi’s wife, and a number of companies because between September 2014 and July 2017, Mr. Missaghi purchased 70 paintings valued at $419,000 that were not paid for. Mr. Missaghi also commissioned additional $370,000 worth of paintings that were not paid for, according to the lawsuit he filed. He agreed that the amount owing to him as reflected in the lawsuit was $789,000. Mr. Alijanpour added that, in fact, the paintings were worth $1,125,000 retail, as opposed to the special prices he gave to Mr. Missaghi. He agreed that by July 2017, Mr. Missaghi owed him a lot of money.

[154] When suggested to him that 23 Thornridge had been put in his name by Mr. Missaghi as security for the amounts owing to him, Mr. Alijanpour responded to Mr. Turton, “Prove it.”

[155] Mr. Alijanpour was then shown an affidavit he affirmed on May 22, 2019 in this proceeding. He admitted that the signature on the affidavit was his, even though there was no period in the “eye” of his signature. Mr. Alijanpour explained that perhaps he forgot to apply it on this occasion.

[156] Mr. Alijanpour was directed to paragraph 8 of his affidavit in which he deposed that Mr. Missaghi told him that he would give him title to the Property until he paid all the amounts owed on account of the art he sold to him.

[157] Mr. Alijanpour’s answer was: “who would say this?”

[158] Mr. Binavince commissioned this affidavit. As stated, he was a witness for the Plaintiff whom the Plaintiff withdrew after commencing a brief examination in chief, and whom Mr. Alijanpour admitted was his lawyer.

[159] Mr. Alijanpour was shown another affidavit that purported to bear his signature. It was affirmed on May 7, 2019. He again identified his signature. He agreed that there was no period in the “eye” of his signature. When it was put to him that sometimes he adds the period and sometimes he does not, Mr. Alijanpour responded, “perhaps”. Mr. Binavince also commissioned this affidavit.

[160] In this particular affidavit, Ms. Rose Bahrami (a lawyer in Mr. Binavince’s office who speaks Farsi) was stated to have translated the affidavit. Mr. Alijanpour disclaimed that it had been translated at all. He testified that he was directed by Mr. Binavince to sign without reviewing it because Mr. Binavince was too busy to have it translated.

[161] Again, in this affidavit, Mr. Alijanpour deposed that his interest in the Property was to secure the total purchase price for the art bought or commissioned by Mr. Missaghi and that, as of the date of the affidavit, the sum of $300,000 remained outstanding. Mr. Alijanpour’s response was that the affidavit was a fraudulent document which he totally rejected.

Gregory Sidlofsky

[162] Mr. Sidlofsky is a lawyer called to the bar of Ontario.

[163] He had personal LAWPRO counsel in relation to matters potentially protected by solicitor-client privilege.

[164] The tension here derived from the fact that Mr. Alijanpour said that Mr. Sidlofsky was not his lawyer, whereas Mr. Sidlofsky claimed he had been. Mr. Sidlofsky was clearly lawyer of record for Mr. Alijanpour in relation to the application to prevent the sale of the Property by Shalby. Accordingly, a voir dire was conducted to determine the existence of a lawyer-client relationship. I was satisfied that Mr. Sidlofsky was in a lawyer-client relationship with Mr. Alijanpour and preferred his evidence over Mr. Alijanpour’s on this issue. By agreement, the evidence elicited on the voir dire then became part of the trial record.

[165] Mr. Sidlofsky testified that he was retained by Mr. Alijanpour on April 20, 2018. At that time, a retainer agreement was signed by Mr. Alijanpour. Mr. Alijanpour was accompanied by Mr. Nersesian, who acted as interpreter, and Mr. Missaghi. Mr. Sidlofsky came to be retained after being contacted by Troy Wilson.

[166] Mr. Sidlofsky was retained to act for Mr. Alijanpour in relation to an application to enjoin Shalby from selling the Property under a power of sale. He was instructed to do this at the initial meeting. Mr. Sidlofsky personally met with Mr. Alijanpour to commission the affidavit in support of the application. Mr. Sidlofsky testified that Mr. Alijanpour was actively in favour of trying to save the Property from the power of sale. Mr. Alijanpour did not play a passive role in this meeting.

[167] Mr. Sidlofsky commissioned one affidavit for Mr. Alijanpour for the application against Shalby and relied on three other affidavits affirmed by Mr. Alijanpour. Mr. Yack commissioned the other affidavits.

[168] Mr. Sidlofsky had a total of four face to face meetings with Mr. Alijanpour, including attending with him on the above referenced cross-examination of his affidavit.

[169] Mr. Sidlofsky could not recall if he had any telephone conversations with Mr. Alijanpour and agreed that his English was poor. However, he did exchange emails with him using Irenaartgallery@yahoo.ca, which is the name of Mr. Alijanpour’s art gallery.

[170] Mr. Sidlofsky confirmed that he received instructions directly from Mr. Alijanpour between April 2018 and June 2019, at which time Mr. Binavince became Mr. Alijanpour’s lawyer.

[171] Mr. Sidlofsky was instructed in writing by Mr. Alijanpour to take instructions from Troy Wilson. At a meeting, Mr. Alijanpour verbally instructed Mr. Sidlofsky to take instructions from Mr. Missaghi. Mr. Sidlofsky knew that Mr. Wilson and Mr. Missaghi were business partners.

[172] Only later did Mr. Sidlofsky come to understand that Mr. Nersesian was a nominee of Mr. Missaghi. He also discovered that Mr. Nersesian would hold properties on behalf of Mr. Missaghi, as Mr. Alijanpour was doing.

[173] Mr. Sidlofsky confirmed that he obtained the right for Mr. Alijanpour to redeem the Shalby First Mortgage by noon on May 2, 2018 from Dietrich J.

[174] In addition, Mr. Sidlofsky’s firm was hired to represent Mr. Alijanpour to oppose a summary judgment motion by the Defendant (the Di Luca J. Judgment) in a motion to set aside a noting in default of the Plaintiff and a Mortgages Act assessment. Mr. Alijanpour did not pay his fees.

[175] It is Mr. Sidlofsky’s evidence that Mr. Alijanpour understood that he was his lawyer and that Mr. Alijanpour was genuinely interested in the outcome of the proceedings. Mr. Sidlofsky understood that Mr. Alijanpour shared the same goals as did the beneficial owner of the Property, Mr. Missaghi. Mr. Sidlofsky also had a certified interpreter for Mr. Alijanpour for preparation and cross-examination and had the affidavits to be affirmed by Mr. Alijanpour translated. Mr. Sidlofsky added that he and Mr. Alijanpour were able to converse in English sometimes.

[176] Mr. Sidlofsky confirmed that he provided his files to Mr. Binavince once Mr. Binavince became Mr. Alijanpour’s lawyer. Mr. Sidlofsky admitted that Mr. Binavince raised the issue of a possible conflict of interest, but maintained the conflict was because for a period of time both he and Mr. Binavince acted for Mr. Alijanpour concerning the same matter. This conflict resolved once Mr. Binavince was formally retained and Mr. Sidlofsky transferred his files.

[177] Mr. Sidlofsky confirmed that he was the lawyer acting for History Homes when that entity originally purchased the Property. He also described History Homes as the beneficial owner of the Property.

[178] Under cross-examination, Mr. Sidlofsky confirmed that the signature on the April 30, 2018 affidavit was indeed Mr. Alijanpour’s. Mr. Sidlofsky confirmed that he commissioned the affidavit and was satisfied that Mr. Alijanpour understood and agreed with its contents.

Gabriel Krikunez

[179] Mr. Krikunez is a lawyer called to the bar of Ontario. He has practiced primarily in the area of real estate for 18 years.

[180] He acted for Shalby and a number of private investors in relation to the Shalby First Mortgage. He confirmed that Mr. Alijanpour was the mortgagor but could not recall who acted for him. He knows he received a certificate of independent legal advice on behalf of Mr. Alijanpour.

[181] The principal amount of the Shalby First Mortgage was around $2.3 million and the interest rate was 8 percent, bearing monthly payments of $15,333.33. Mr. Krikunez registered the Shalby First Mortgage. This was an interest only mortgage.

[182] Mr. Krikunez recalls that Mr. Alijanpour went into default of the monthly payments and did not cure it. Accordingly, his clients took enforcement steps. Shalby issued a claim and notice of sale and obtained judgment and an order for possession. Shalby sent the sheriff to change the locks and take possession. Mr. Krikunez could not recall if the Property was occupied. They listed the Property for sale.

[183] Mr. Krikunez noted that Mr. Alijanpour did not defend the claim, and therefore default judgment was issued against him for the total amounts claimed by Shalby as outstanding as of the date of the Andre J. Default Judgment.

[184] Mr. Krikunez personally attended at the Property. He noted that it was a bigger house, but it was dated, showed signs of “quite a bit of wear”, and was “musty”. He said it was not befitting of the neighbourhood and needed work.

[185] Mr. Krikunez obtained two appraisals for the Property. It was valued at $3.9 million and $4.1 million respectively. Shalby received an offer to purchase for $4.7 million, which his clients accepted. The closing date was May 2, 2018 and a deposit of $400,000 was paid.

[186] Mr. Krikunez testified that he did not believe the offer to purchase to be genuine because Mr. Missaghi’s spouse delivered the offer and was involved in the borrower’s transaction in some way. The offer was unattractive from his perspective because it had many conditions. Mr. Krikunez knew that Mr. Missaghi was involved with this offer in some way because Mr. Missaghi was copied on an email that he received from David Booker, who was then apparently acting for Mr. Alijanpour.

[187] On April 30, 2018, Mr. Krikunez received an urgent application from Mr. Alijanpour returnable the following day, on May 1, 2018. Mr. Krikunez attended and Mr. Alijanpour was successful in part insofar as he was given a brief period of time to redeem the Property.

[188] Mr. Alijanpour was able to redeem the mortgage, with the consequence that the Agreement of Purchase and Sale was terminated.

[189] Mr. Krikunez confirmed that Mr. Sidlofsky represented Mr. Alijanpour on the urgent application.

[190] Mr. Krikunez speculated that Mr. Alijanpour was a straw man. Mr. Krikunez kept repeating that he was “guessing” this to be so. He also “understood” that Mr. Missaghi was involved in many questionable transactions, but again had no first-hand knowledge of this.

[191] Mr. Krikunez identified the Parcel Register for 23 Thornridge, dated November 27, 2016, showing Mr. Alijanpour as the registered owner. Mr. Krikunez performed this title search.

[192] Mr. Krikunez did not recall receiving a notice to redeem from the Plaintiff, but had his memory refreshed by a letter dated January 3, 2018 from Ms. Mark, on behalf of the Plaintiff, seeking to redeem the Shalby First Mortgage. However, he did not know whether the request to redeem was genuine or serious. He agreed that a caution was registered against the Property by the Plaintiff, meaning that it wanted to be a consenting party to any dealing concerning the Property.

[193] Mr. Krikunez also acted for Shalby with respect to the assignment of its first mortgage to the Defendant. He recalled that Mr. Knezy acted for the Defendant in this transaction. Mr. Krikunez identified the Transfer of Charge dated May 3, 2018 from Shalby to the Defendant corporation.

[194] When asked why the principal amount of the mortgage on the assignment was listed at $2.3 million instead of the actual redemption cost of $2.594 million, Mr. Krikunez responded that this was the original principal amount of the loan with accrued interest. He testified that this statement was correct because the Mortgages Act permits either transferring a charge on redemption (as was the case here) or discharging a mortgage and registering a new mortgage. The Defendant chose an assignment.

[195] Mr. Krikunez recalls receiving the redemption funds of about $2.594 million through Mr. Yack. He was unsure as to when Mr. Yack came to represent Mr. Alijanpour but recalls that Mr. Knezy actually delivered the funds. Mr. Krikunez recalls being informed that some of the funds were coming from Mr. Yack. Mr. Krikunez did not recall doing a three-way transaction with Mr. Yack and Mr. Knezy.

[196] Mr. Krikunez could not recall whether there was a mortgage amendment agreement – only that the mortgage was redeemed by way of a court judgment. He was not involved in changing any of the terms reflected in the Shalby First Mortgage as this was a pure assignment. Once his clients were paid out, his involvement with the Property ended.

[197] Mr. Krikunez recalled that Mr. Alijanpour assessed the Shalby First Mortgage payout account under the Mortgages Act, which resulted in a small settlement in favour of Mr. Alijanpour of around $10,000. That was Mr. Krikunez’s last involvement with this Property.

[198] Mr. Krikunez disclaimed any knowledge of Ivan Terziev.

Peter Knezy

[199] Mr. Knezy is a retired lawyer, formerly called to the bar of Ontario. He practiced real estate law from February 1998 to December 2022.

[200] Mr. Knezy acted as lawyer for the Defendant in relation to the assignment of the Shalby First Mortgage and the Amended First Mortgage.

[201] Mr. Knezy was retained by the Defendant on April 30, 2018.

[202] Mr. Knezy testified that the principal of the Defendant is Ivan Terziev.

[203] Mr. Knezy denied any personal involvement with Mr. Alijanpour, but rather dealt with Mr. Alijanpour’s lawyer, Mr. Yack, throughout his brief retainer.

[204] Mr. Knezy described his role as follows. He was retained to do a title search to ensure the Shalby First Mortgage was in the first position and to complete the assignment before the closing date of the sale under the power of sale by Shalby. The closing date for the assignment was May 2, 2018, so there was a short timeframe.

[205] Mr. Knezy brought his paper file with him and produced the Parcel Register dated April 30, 2018 obtained by him in relation to the Property. He identified the caution that was registered by Mr. Alijanpour; however, he explained that the caution was removed by Mr. Yack as part of the assignment transaction.

[206] Mr. Knezy did not agree with the suggestion that this was a three-way transaction. The transaction had two parties only: the assignor and the assignee. However, Mr. Alijanpour was involved as mortgagor because the Amended First Mortgage was to immediately follow the assignment.

[207] The assignment of mortgage/Transfer of Charge was registered at 15:14 p.m. on May 3, 2018.

[208] Mr. Knezy learned of Mr. Alijanpour’s caution just minutes before the assignment was registered. However, Mr. Knezy explained that he was not concerned about the restriction because the assignment transaction had already closed and Mr. Yack undertook to remove the restriction. The registration of the assignment took place about one hour after the transaction was completed and was a formality because the funds had been provided to Shalby. Mr. Knezy and Mr. Yack’s law clerk delivered the funds to Mr. Krikunez by way of a certified cheque. The certified cheque was drawn on Mr. Yack’s trust account because Mr. Knezy had deposited the funds from his client, the Defendant, in Mr. Yack’s account.

[209] Mr. Knezy clarified that closing meant when the funds were transferred and the assignment was released by Mr. Krikunez’s office. The reason Mr. Alijanpour’s caution was irrelevant to the assignment was because it was registered after the Shalby First Mortgage and it was the Shalby First Mortgage that was being assigned. The assignment of the mortgage did not cause it to lose its priority against the caution. On the other hand, Mr. Alijanpour’s caution had to be removed because it prohibited any dealings with the title. Therefore, it had to be removed in order for the assignment to be registered, and it was removed. The sum of $2,594,141.59 was paid to Shalby as the consideration for the assignment. This reflected the full principal of $2.3 million, plus accrued interest, additional fees, and charges due under the Shalby First Mortgage.

[210] Mr. Knezy explained that the amount of consideration reflected on the registered Transfer of Charge was $2.3 million, which was the original principal sum, instead of the consideration of $2.594 million, and that this was done at Mr. Krikunez’s request. Mr. Knezy had no concerns about this, as it is acceptable to reflect the original principal of a mortgage in the Transfer of Charge. Mr. Knezy denied that inserting this amount was a false statement or representation to the public. He stated that in his 20 years of experience, the amount listed in transfers of charges is often the original mortgage amount. The insertion of this amount is not intended to reflect exactitude with what is outstanding under the mortgage.

[211] Mr. Knezy also stated that it was Mr. Krikunez who prepared the first draft of the Transfer of Charge. Mr. Knezy reviewed it. He found the content to be satisfactory. Mr. Knezy did not raise Mr. Krikunez’s preference to insert the original Shalby First Mortgage principal amount with his client. This was an appropriate procedure.

[212] Mr. Knezy signed the Transfer of Charge electronically for both parties, as he had Mr. Krikunez’s authority to do so.

[213] Mr. Knezy also simultaneously prepared the Amended First Mortgage between Mr. Alijanpour and the Defendant. He was retained at the same time, April 30, 2018, for that transaction. Mr. Knezy did not negotiate the terms. Rather, the terms were communicated to him by his client, the Defendant. Mr. Knezy confirmed the signed “Agreement Amending and Extending Time for Payment of Charge/Mortgage of Land” dated May 2, 2018 as the Amended First Mortgage between Mr. Alijanpour and the Defendant.

[214] Mr. Terziev attended at Mr. Knezy's office to sign the Amended First Mortgage on behalf of the Defendant. Mr. Knezy witnessed his signature.

[215] After the assignment and the Amended First Mortgage were completed on May 2, 2018, they were registered on May 3, 2018. Mr. Knezy agreed that preferably the registration would have happened on May 2, 2018 when funds were released to Mr. Krikunez, but stated he ran out of time to do so.

[216] Mr. Knezy agreed that he had written a draft registration agreement (“DRA”) in preparation for the assignment transaction, which was in his file. He provided the DRA to Mr. Krikunez, who expressed concerns about it. The purpose of a DRA is to outline the protocols for registration. However, the DRA was never finalized or signed.

[217] Under the proposed DRA, Mr. Yack was listed as the Borrower’s solicitor and Mr. Krikunez was listed as the Existing Lender’s solicitor. Mr. Krikunez objected to having to wait for registration of the assignment prior to releasing funds and exchanging documentation. It happened the other way around. While this was of concern to Mr. Knezy, it was not a “fatal” concern. The concern is that if the assignment is transferred to someone else in between registration, his client would have released funds and not obtained the first mortgage which is its security for the loan to Mr. Alijanpour. Therefore, the risk can be “profound”. However, Mr. Knezy knew Mr. Krikunez from experience to be honourable in his conduct, so he was not concerned that this would happen. Mr. Knezy stated he had done “thousands of such transactions” without DRAs.

[218] Mr. Knezy had no other concerns about the two transactions. He was aware that there was a court ordered power of sale, so was not concerned about the legality of the position of the first mortgage. Mr. Knezy was also aware that Mr. Krikunez’s office was very close to completing a power of sale transaction to a third party, so time was of the essence. On April 30, 2018, Mr. Knezy had been told about the pending closing. He discussed the pending sale with Mr. Krikunez’s office, who confirmed that it was scheduled to close on May 2, 2018.

[219] Mr. Knezy produced a series of emails between himself and Mr. Krikunez on May 2, 2018 outlining the chronology of the assignment transaction. He also produced his email exchange with Mr. Yack regarding removal of Mr. Alijanpour’s caution from title between April 30 and May 2, 2018. In the email exchange, Mr. Knezy confirmed that Mr. Alijanpour would be paying the lender extension fee (two months’ interest) and his own fees and charges, totaling approximately $104,000, and that the funds were to be deposited into Mr. Knezy’s account. It was decided that the funds would be deposited directly from Mr. Yack’s account into Mr. Krikunez’s account, totaling approximately $2,594,000. This was done. Mr. Knezy was personally aware of this because he walked with Mr. Yack’s clerk to the bank to deposit his client’s funds into Mr. Yack’s account and witnessed the certification of Mr. Yack’s cheque to Mr. Krikunez in trust. The additional amount owing to Mr. Knezy’s client was paid separately and not deducted from the deposit because that is the way Mr. Yack wanted it. Mr. Knezy walked the certified cheque, with Mr. Yack’s clerk, over to Mr. Krikunez’s office that same day.

[220] Mr. Yack transferred the additional funds owing to the Defendant, such as Mr. Knezy’s fees, by way of a separate cheque handed over to Mr. Knezy when he attended at his office to deliver the assignment transaction funds from the Defendant on May 2, 2018. This sum totaled $160,000. Mr. Yack agreed to pay the requisite funds to the Defendant, including Mr. Knezy’s fees, separately.

[221] Mr. Knezy stated he was certain the funds were deposited into Mr. Krikunez’s account by way of certified cheque from Mr. Yack because he personally witnessed the transaction at the bank, which was completed by Mr. Yack’s law clerk. He does not have a copy or image of the deposit slip, however. Mr. Yack’s law clerk kept that. Mr. Knezy had no reason to doubt Mr. Yack’s integrity in this transaction. Mr. Knezy knew him to be a senior member of the bar and had had a prior transaction with him in 2017.

[222] Mr. Knezy was shown the draft closing documentation for the assignment of the Shalby First Mortgage contained in his file, and in particular an Acknowledgement and Direction signed by Mr. Alijanpour dated May 2, 2018 with an attached register extract called “Notice Plus Schedule to Notice of Agreement Amending Charge”. Mr. Knezy explained it was not registered because it was not necessary to register it. Mr. Knezy prepared it, of his own accord, in case it became necessary to register. The document is only needed if the principal amount of the original mortgage was being increased. This would then constitute public notice of the increase in the principal funds advanced under the mortgage. However, this did not happen, so it was not necessary to register it.

[223] When asked by the Plaintiff’s lawyer, Mr. Knezy explained that he did not attach the “Agreement Amending and Extending Time for Payment of Charge” to the Notice of Transfer because it is not the practice of the real estate bar to do that. The reason is that there is additional information in these agreements that need not be registered. Mr. Knezy stated that information that does not increase the principal amount by an additional advance of money under the principal of the mortgage need not be registered. No additional funds were advanced to Mr. Alijanpour by the Defendant by way of increasing the principal amount from the Shalby First Mortgage.

[224] Mr. Knezy agreed that the conversion to U.S. dollars at the option of the mortgagee for repayment of the principal sum outstanding was not in the draft document.

[225] Mr. Knezy stated that, notwithstanding the short time frame he had within which to complete these transactions, he conducted his due diligence to his satisfaction. He acknowledged that there were two ways they could proceed, either a discharge of the first and second mortgage and a new mortgage, or an assignment. Mr. Knezy was instructed to do an assignment.

[226] Mr. Knezy did not know either Arash Missaghi or Alijan Alijanpour at the time of the transactions.

[227] Mr. Knezy denied being forced or coerced into structuring the transaction as an assignment. He noted that if the client did not like one’s advice, the client could always find another lawyer. Mr. Knezy stated he could also have refused the retainer, but did not do so.

[228] Mr. Knezy was notified by email trail on which he was copied of Mr. Krikunez’s advice that the pending sale of the Property had been terminated. Mr. Knezy received the email at about 4:40 p.m. on May 2, 2018. He acknowledged that the caution was not removed until the morning of May 3, 2018, even though the transaction closed on May 2, 2018. Mr. Knezy did not know at what time Mr. Krikunez released the funds to Shalby. There was an issue around the timing of the email chain and whether it was sent earlier, at 2:50 p.m. However, it is clear that Mr. Knezy did not receive the chain until 4:40 p.m.

[229] Mr. Knezy acknowledged that his firm was later alerted by another law firm to an individual calling himself “Alan” Alijanpour in relation to unconnected real estate transactions. However, not much flowed from this acknowledgment, despite the Plaintiff’s attempts.

Ivan Terziev

[230] The only witness called by the defence was Ivan Terziev.

[231] Mr. Terziev speaks Bulgarian, Russian, and English as his third language.

[232] He was and continues to be a director of the Defendant corporation in 2018. He was responsible, on behalf of the Defendant, for the assignment of the Shalby First Mortgage and the Amended First Mortgage.

[233] His wife’s name is Elena Metchikova. She was not involved in the May 3, 2018 assignment of the Shalby First Mortgage to the Defendant company.

[234] Mr. Terziev explained that the reason why he wanted the option to have the principal repaid in U.S. dollars at a fixed rate was because he had used his wife’s family money to fund the transaction and had been provided with those funds in U.S. currency. Mr. Terziev wanted to ensure that he would not lose any of the principal due to currency fluctuation, so he fixed the exchange rate.

[235] Up to and including May 3, 2018, no one suggested to Mr. Terziev that Mr. Alijanpour had not signed the Amended First Mortgage.

[236] Under cross-examination, Mr. Terziev was shown various requests by the Plaintiff’s lawyers for a payout statement in relation to the Amended First Mortgage from his lawyer, Mr. Turton. However, Mr. Terziev said he was unaware of these requests or what response Mr. Turton may have made to them. These requests started on March 22, 2019, and lasted through September 6, 2019.

[237] Mr. Terziev acknowledged that eventually a payout statement was provided pursuant to an urgent motion brought by the Plaintiff, which was necessary after the Plaintiff sold the Property and required the information to close the transaction. By his email dated September 9, 2019, Mr. Terziev advised the Plaintiff that the interest rate had increased from 8 percent to 11.5 percent. Mr. Terziev acknowledged being advised by the Plaintiff that it did not consider itself bound to the increase in the interest rate in terms of payout from the sale proceeds.

[238] Mr. Terziev confirmed that only he provided instructions on behalf of the Defendant regarding the assignment and Amended First Mortgage transactions.

[239] In re-examination, Mr. Terziev advised that he found out that “Alan” Alijanpour was in fact Arash Missaghi in 2019 when the Defendant was served with an affidavit by History Homes. Mr. Terziev did not recognize the names. When he found pictures through an internet search identifying Mr. Missaghi, he called Mr. Turton.

[240] At the conclusion of the evidence, both parties agreed that Alan Alijanpour and Alijan Alijanpour are not the same person.

Analysis

Assessment of Credibility

[241] I can accept some, all or none of a witness’ evidence.

[242] I have concerns about Mr. Ghovanloo’s credibility. He often required documents to refresh his memory on essential facts about the impugned transaction, such as how much was owing to the Plaintiff as a shortfall under the second mortgage. He lacked specific recollection on important matters.

[243] Overall, Mr. Ghovanloo’s evidence was largely speculative and thus not very persuasive in terms of his speculations about the alleged connection between Mr. Missaghi, Mr. Alijanpour, and the Defendant. It is also noteworthy that while Mr. Ghovanloo was put forward as the Plaintiff’s representative, he is not an officer, director or employee of the corporation. The persons from whom he took instructions during the impugned transactions and later were apparently both available, but neither was called.

[244] Mr. Ghovanloo often waffled in his answers in important areas or backtracked when confronted with documentary evidence that contradicted his testimony.

[245] Mr. Ghovanloo was directly contradicted in his version of serving Mr. Nersesian with the underlying Notice of Application by Mr. Nersesian and Ms. Boyarkina.

[246] I found both Mr. Nersesian and Ms. Boyarkina’s evidence to be overall untrustworthy, except to the extent that their respective testimony was uncontroversial or corroborated by other evidence. These witnesses, who are spouses, contradicted each other on material points and had different recollections of their involvement, as a couple, with Mr. Missaghi.

[247] They contradicted each other with respect to their relationship with Mr. Missaghi. There was a pronounced difference with Mr. Nersesian understating his relationship with Mr. Missaghi.

[248] Mr. Nersesian also did not testify that he accompanied Mr. Missaghi and Mr. Alijanpour to Mr. Sidlofsky’s office.

[249] Ms. Boyarkina’s answer about why she happened to bring her Certificate of Incorporation to court, unprompted by anyone, was not credible. She claimed to have no knowledge about this proceeding and no knowledge that her name had been attached to the Defendant corporation prior to taking the witness stand and being showed the corporate profile. Yet, she thought it would be a good idea to demonstrate what company she did own.

[250] Ms. Boyarkina’s testimony was defensive and seemed to anticipate what she claims not to have known.

[251] It is also curious that her husband, Mr. Nersesian, asked her whether they had any involvement in either of the party corporations suggesting a lack of care or concern on his part about these types of details.

[252] Ms. Boyarkina’s testimony also contradicted Mr. Ghovanloo’s evidence regarding which of them accepted service at 12 George Patton. It also revealed that Mr. Nersesian omitted from his testimony that Mr. Missaghi was a frequent social visitor to their Markham home after they left 12 George Patton. Mr. Nersesian only spoke of doing odd jobs for Mr. Missaghi. Mr. Nersesian also stated, contrary to his spouse’s testimony, that the last time he spoke to Mr. Missaghi was while they were still living at 12 George Patton. Either Ms. Boyarkina is lying, Mr. Nersesian is lying, or both are lying with respect to the extent of their involvement with Mr. Missaghi. The frequency with which Ms. Boyarkina said Mr. Missaghi came to their home with his “baby momma” as recently as three years ago is not a small detail that one would forget.

[253] Mr. Sidlofsky’s evidence was largely unchallenged and was supported by the documentary evidence. It was not suggested to him that he coached Mr. Alijanpour to lie at the cross-examination. It was not suggested to Mr. Sidlofsky that he allowed Mr. Alijanpour to affirm false affidavits or affirm affidavits without knowing their contents. I accept Mr. Sidlofsky’s evidence as credible and reliable.

[254] Mr. Alijanpour was not credible. During his cross-examination, Mr. Alijanpour became combative in his answers. He also waffled and backtracked during cross-examination when boxed into a corner.

[255] Mr. Alijanpour did not obey the summons and bring relevant documents to court with him. He seemed to not be concerned about it. Mr. Alijanpour was impeached on material issues. He had vague recollection when it suited him. Mr. Alijanpour’s memory was selective until it was refreshed. He made allegations against his lawyers that were not proven. The initial impression he gave to the court was that he could not speak English at all. However, at various times, he began answering questions before the interpreter had a chance to interpret the questions. He eventually admitted that he speaks English but that he did not feel comfortable reading English and always had someone help him with documents.

[256] Mr. Alijanpour was bluntly contradicted by Mr. Sidlofsky on several points including the existence of a lawyer-client relationship with him. Mr. Sidlofsky confirmed that Mr. Alijanpour had an interpreter and was actively engaged in the transactions.

[257] Mr. Alijanpour initially testified that signatures attributed to him on various documents may not be his due to the lack of a dot in the “eye” above his signature. However, under cross examination, Mr. Alijanpour then admitted that sometimes he puts a dot in the “eye” and sometimes he does not. His explanation that he unknowingly affirmed two false affidavits, commissioned by or under the auspices of his own lawyers, was neither plausible nor credible. Mr. Sidlofsky directly contradicted him on this point. After testifying that he had no interest in the Property, Mr. Alijanpour admitted he went to the police to complain that he had been defrauded by Mr. Missaghi of his art and that he took title to the Property to secure the debt owed to him by Mr. Missaghi.

[258] I do not accept Mr. Alijanpour’s evidence in relation to being “duped” into accepting title of the Property and being ignorant of the terms of the Amended First Mortgage. Mr. Alijanpour only admitted knowledge of certain material facts after he was confronted with contrary documentary evidence or his own past affidavits. I reject Mr. Alijanpour’s version of events leading to the acquisition of title of the Property, the subsequent assignment from Shalby to the Defendant, and the Amended First Mortgage where it is not confirmed by other credible evidence. Notably, I accept his evidence that he had no dealings with, or personal knowledge of, Mr. Terziev, the Defendant or any alleged link between either of them with Mr. Missaghi or History Homes (the predecessor owner of the Property).

[259] Mr. Ambouzgar submitted that I should accept Mr. Knezy’s evidence as credible, but then submitted that Mr. Knezy was the agent of fraud and that the Defendant, as client, is bound to his actions. Mr. Ambouzgar submitted that Mr. Knezy never had funds from the Defendant to provide to Mr. Yack. Rather, Mr. Yack had the funds all along from Mr. Missaghi. This submission is highly problematic. Mr. Ambouzgar, in answer to a question from the bench as to why he did not put this proposition to Mr. Knezy, said it would have been distasteful. Requesting a finding that Mr. Knezy was effectively an agent of fraud without having put either of these propositions to him at trial is grossly unfair to Mr. Knezy. It is a classic Browne v. Dunn (1893), 1893 CanLII 65 (FOREP), 6 R. 67 (U.K. H.L.) scenario. Furthermore, the Plaintiff failed to establish from any other source that the Defendant did not provide the funds necessary to redeem the Shalby First Mortgage to Mr. Yack on behalf of Mr. Alijanpour. In other words, there is no contradictory evidence in any event. The only evidence as to the source of these funds was from Mr. Terziev and Mr. Knezy.

[260] While Mr. Knezy’s evidence at times appeared defensive, suggesting a loyalty to the Defendant, overall it was credible and plausible. There was no evidence, or authority, to challenge his testimony deriving from his experience as a senior real estate lawyer in terms of the propriety of registering the original principal sum of the Shalby First Mortgage of $2.3 million in the Transfer of Charge registered on title. I accept Mr. Knezy’s evidence that, in his experience, amended mortgage documents are not typically registered on title. The surplus amounts accrued as a result of accrued interest, charges, and penalties arising from Mr. Alijanpour’s default under the Shalby First Mortgage. I have no evidence or law suggesting that the increased interest rate or the option to demand repayment of the principal amount of the mortgage in U.S. dollars at a fixed rate had to be registered on title. The only evidence I have on this point is from Mr. Knezy and I accept it.

[261] Mr. Terziev’s evidence in chief was very brief. He was not undermined in cross-examination on his key points. Mr. Terziev expressed ignorance to the fact that the Plaintiff’s lawyers made repeated requests of the Defendant’s lawyer in 2019 for a payout statement for the Amended First Mortgage. However, as pointed out by the Plaintiff, the Defendant is deemed to have this knowledge through the lawyer. There was no evidence to contradict Mr. Terziev’s testimony that his wife’s family was the source of the redemption funds and that they were provided in U.S. currency, or that he or the Defendant had not concealed the terms of the Amended First Mortgage from the Plaintiff illicitly. The Defendant relied on Mr. Knezy to properly register the Transfer of Charge on title and no law was provided to suggest that the clause providing the Defendant with the option to receive the payout of the principal sum in U.S. dollars was, effectively, an increase in the principal that had to be registered on title. As noted, this proposition was not raised at the initial hearing of the application which focused on the interest rate increase and some other disputed charges.

[262] The Plaintiff did not call Mr. Yack to support its theory that it was Mr. Missaghi’s funds, as opposed to the Defendant’s funds, that were used to redeem the Shalby First Mortgage.[^5] I have Mr. Knezy’s evidence and Mr. Terziev’s evidence as to the source of the funds. I accept that it was the Defendant’s funds that were used to redeem the Shalby First Mortgage. Furthermore, the Plaintiff has not demonstrated that Mr. Missaghi (or someone working on his behalf) conspired or worked in concert with the Defendant to secure the Property from Shalby to deprive the Plaintiff from being made whole under its second mortgage. There was much speculation at trial, but no solid evidence to make this connection. Furthermore, the conspiracy theory was abandoned at the end of the trial.

Findings

[263] The Plaintiff submitted that the Defendant was deemed to admit evidence that it chose not to cross-examine or otherwise challenge through another witness. It relies on R. v. Quansah, 2015 ONCA 237, 125 O.R. (3d) 81, at para. 79. The Plaintiff overstates the application of this principle. The court is not obliged to accept any evidence if it is found not credible when viewing the evidence at trial as a whole.

[264] The Plaintiff’s reliance on the badges of fraud to invite the court to infer fraud absent an appropriate explanation from the Defendant is misplaced. The badges of fraud are derived from fraudulent conveyance proceedings, and some of them are uniquely applicable to that scenario. That said, I examined all of the surrounding circumstances of the assignment and Amended First Mortgage to assess whether the Plaintiff has discharged its burden of proof in demonstrating the four elements of the tort of fraud.

[265] While the Plaintiff’s standard of proof is on a balance of probabilities, the court will particularly scrutinize the evidence relating to intentional torts, including fraud. The Plaintiff has failed to discharge its burden of proof on a balance of probabilities, whether or not clear and cogent evidence is required.

[266] More particularly, the Plaintiff has not proven that the Defendant wrongfully concealed the terms of the Amended First Mortgage with an intention to profit from the increased terms at the Plaintiff’s economic expense. The Plaintiff has not proven that the Defendant was acting in concert with Mr. Missaghi or that the Defendant provided Mr. Missaghi with a financial reward for allegedly inducing Mr. Alijanpour to be a “straw man” purchaser of the Property or inducing Mr. Alijanpour to enter into the Amended First Mortgage. The Plaintiff knew, or ought to have known, of at least the increased interest rate secured by the Amended First Mortgage by virtue of Mr. Alijanpour’s affidavit and attached Term Sheet, which it had in or around August 2018. The Plaintiff decided to redeem the Amended First Mortgage and sell the Property without knowing the full terms of the Amended First Mortgage even though it knew (or ought to have known) that at least some of the charges, including the interest rate, had changed and knowing that the consideration paid to redeem the Shalby Mortgage was higher than the original principal sum of that mortgage. It only brought its motion to compel a discharge statement after it entered into an agreement to sell the Property, notwithstanding its knowledge that the Defendant, for some unexplained reason, refused to provide a discharge statement despite repeated requests over a number of months. The Plaintiff did not demonstrate that the Defendant was obliged to register the impugned charges or the actual consideration paid to Shalby to redeem in its Transfer of Charge or that it was obliged to attach the Amended First Mortgage to the Transfer of Charge. The Plaintiff put forward no law to support that position or to support the proposition that the Defendant wrongfully declined to provide a discharge statement sooner than it did.

[267] Based on my review of the evidence and findings of credibility, I make the following key findings of fact and law:

(a) The Plaintiff formed a suspicion that Mr. Alijanpour was a straw man and that Mr. Missaghi may be the beneficial owner of the Property in or around April 2018.

(b) The Plaintiff stopped its initial enforcement proceedings in April 2018 based on Mr. Krukeniz’s (Shalby’s lawyer) report that Shalby had received and accepted an offer to purchase the Property that would pay out both mortgages fully.

(c) The Plaintiff had actual knowledge that the total consideration paid to redeem the Shalby First Mortgage by the mortgagor was $2.94 million on or about April 27, 2018, before the Transfer of Charge was registered on title by the Defendant’s lawyer, Mr. Knezy.

(d) On or about May 4, 2018, the Plaintiff learned from Shalby that its mortgage had been redeemed by Mr. Alijanpour and assigned to the Defendant. Mr. Ghovanloo conducted a title search and saw that the consideration in the Transfer of Charge was the original principle sum due under the Shalby First Mortgage.

(e) In or around August 18, 2018, the Plaintiff learned that the Defendant had raised the interest rate originally due under the Shalby First Mortgage from 8 percent to 11.5 percent.

(f) The Plaintiff, through its lawyers, made several requests for a payout statement to the Defendant’s lawyer in 2019 with no response.

(g) Nonetheless, the Plaintiff sold the Property under Power of Sale prior to receiving the payout statement from the Defendant (by court order).

(h) The court has insufficient evidence to determine how Ms. Boyarkina’s name ended up on the corporate profile of the Defendant.

(i) Ms. Boyarkina and Mr. Nersesian had no involvement with the Defendant’s assignment of the Shalby First Mortgage or the entry by the Defendant into the Amended First Mortgage with Mr. Alijanpour.

(j) Mr. Alijanpour was a nominee of Mr. Missaghi for the purposes of acquisition of the Property from History Homes. However, Mr. Alijanpour had a real interest in the Property by way of essentially a security interest against outstanding debt owed by Mr. Missaghi to him. Mr. Alijanpour was fully aware and consented to the transfer of title. He was also fully aware and consented to obtaining a court order permitting him to redeem the Shalby First Mortgage and entering into the Amended First Mortgage.

(k) Mr. Alijanpour did not conspire or otherwise work with Mr. Terziev or the Defendant to cause the Plaintiff economic loss when he entered into the Amended First Mortgage.

(l) Mr. Missaghi did not conspire with Mr. Terziev or the Defendant to either procure the assignment of the Shalby First Mortgage or enter into the Amended First Mortgage to benefit Mr. Missaghi and to cause economic loss to the Plaintiff.

(m) The Defendant was not obliged to register the terms of the Amended First Mortgage, the Amended First Mortgage itself or the DRA when it registered the Transfer of Charge on title. The Defendant had the right to structure the transaction with Shalby as an assignment.

(n) The Defendant did not misrepresent the principal amount of the Amended First Mortgage by maintaining the original principal amount under the Shalby First Mortgage in the Transfer of Charge.

(o) The Defendant was not obliged to provide a payout statement sooner than it did to the Plaintiff.

[268] In the end, the court did not have the “whole story”. The defence was minimalistic in its approach. On the other hand, the Plaintiff could not produce all the witnesses it wanted or needed and eventually withdrew its conspiracy theory concerning the alleged involvement of Mr. Missaghi with the Defendant for their mutual financial benefit in order to deprive the Plaintiff of realizing the whole of its mortgage debt. As a result, there are questions left unanswered. However, it was the Plaintiff’s burden to prove its allegations and it has failed to do so.

[269] In summary, the Plaintiff has failed to discharge its burden of proof, on a balance of probabilities (under any degree of scrutiny of the evidence), that the Defendant committed the tort of fraud by making any false representation by omission or concealment of the impugned charges when it declined to provide a payout statement in a timely manner to the Plaintiff or when it registered the Transfer of Charge in the form and content it did.

[270] Accordingly, this trial of an issue is dismissed. No declaration shall issue in favour of the Plaintiff.

[271] The Defendant shall provide its cost outline and written submissions within ten business days from today. The Plaintiff shall provide its cost outline and written submissions within ten days thereafter. The parties shall address the issue of payout from the proceeds currently held in trust to the credit of this matter in their respective written submissions. The written submissions will not exceed five double spaced pages each and shall be delivered, with the cost outlines, to my judicial assistant at maria.kolliopoulos@ontario.ca .

Justice S. Vella

Released: October 23, 2024

COURT FILE NO.: CV-20-00636740-0000

DATE: 20241023

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

2495940 Ontario Inc.

Plaintiff

– and –

2633346 Ontario Inc.

Defendant

REASONS FOR JUDGMENT

VELLA J.

Released: October 23, 2024

[^1]: I released an oral ruling declining to issue bench warrants for the Plaintiff’s witnesses who did not appear because the wrong courthouse address was inserted into the summons, as further elaborated in my oral reasons. [^2]: Brief reasons for adjournment are reflected in my endorsement. [^3]: Mr. Alijanpour’s personal lawyer who attended for his testimony, Mr. Watt, asked to be excused at the conclusion of his client’s testimony. He confirmed that he would not be attending for the evidence of any of Mr. Alijanpour’s lawyers, including Mr. Binavince, whose evidence had commenced. Mr. Binavince’s appearance had to be adjourned and he was ultimately withdrawn by the Plaintiff apparently for time management reasons. [^4]: Mr. Alijanpour abandoned his motion to intervene. [^5]: Fred Yack was on the Plaintiff’s witness list but it could not procure him.

2495940 Ontario Inc. v. 2633346 Ontario Inc., 2024 ONSC 5862

Case Summary

Reasons for Decision

1. Introduction

3. Chronology of Events

4. Issues

Preliminary Issue #1: Collateral Attack on the Di Luca J. Judgment

Preliminary Issue #2: Standing of the Plaintiff to Attack the Amended First Mortgage

Issue #1: Did the Defendant Commit Fraud Against the Plaintiff by Concealing the Impugned Financial Charges from it?

The Law of Fraud

The Evidence

Hootan Ghovanloo

Patrick Nersesian

Kristina Boyarkina

Ali Jan Alijanpour (also known as Alijan Alijanpour)

Gregory Sidlofsky

Gabriel Krikunez

Peter Knezy

Ivan Terziev

Analysis

Assessment of Credibility

Findings

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Issues

Statutory Provisions 3

Legal Tests 3

Legislation 4

Reasons for Decision

1. Introduction

2. Juridical History of this and Related Proceedings

3. Chronology of Events

4. Issues

Preliminary Issue #1: Collateral Attack on the Di Luca J. Judgment

Preliminary Issue #2: Standing of the Plaintiff to Attack the Amended First Mortgage

Issue #1: Did the Defendant Commit Fraud Against the Plaintiff by Concealing the Impugned Financial Charges from it?

The Law of Fraud

The Evidence

Hootan Ghovanloo

Patrick Nersesian

Kristina Boyarkina

Ali Jan Alijanpour (also known as Alijan Alijanpour)

Gregory Sidlofsky

Gabriel Krikunez

Peter Knezy

Ivan Terziev

Analysis

Assessment of Credibility

Findings

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Issues

Statutory Provisions 3

Legal Tests 3

Legislation 4