2024 ONSC 7185

Superior Court of Justice – Ontario

Court File No.: CV-17-2126-00 Date: 2024 12 23

Between:

INPANAYAGAM, Myriam Janany ANSLEY, Caroline ANUSHA KARALASINGAM, personally, and in her capacity as the Estate Trustee Without a Will of the Estate of BENEDICT INPANAYAGAM, also known as BENEDICT JEHAAN INPANAYAGAM INPANAYAGAM, Mary Plaintiffs

- and -

THILLAINADARAJAH, Rajivan THILLAINADARAJAH, Anojan SENTHOORAN, Vanee Harichandran Defendants

Before: Lemay J.

Counsel: Frank Feldman, for the Plaintiffs M.L. Biggar, for the Defendants, Rajivan Thillainadarajah, and Anojan Thillainadarajah M. Christopher Diamond, for the Defendant, Vanee Harichandran Senthooran

Heard: July 16 and September 25, 2024. Written submissions completed November 21st, 2024

Reasons for Judgment

[1] This is an action that has had a long and tortured history before the Courts. I have been involved in it since February of 2023. At that time, I imposed a timetable on the parties. That timetable limited them to bringing motions for undertakings and refusals, which were scheduled in 2023. Those matters were heard by Doi J., who has released two decisions on these issues.

[2] However, disputes still remain. Specifically, there are disputes over the tracing orders that Doi J. issued for the mortgages on the property on Chickadee Lane as well as the follow up questioning that flowed from Doi J.’s previous order. The Defendants say that they have provided everything necessary. The Plaintiffs say that the Defendants have ignored Court orders, and that the Plaintiffs should be given leave to bring a motion to strike out the Statement of Defence. The Plaintiffs also seek an order for the tracing of funds from the sale of the property on Chickadee Lane.

[3] For the reasons that follow, I have determined that there are some additional steps that the Defendants should take in order to expand on and clarify the answers that they have already given as well as providing some answers to some written questions. However, I have also determined that the other relief that the Plaintiffs have sought should be denied. At this point, this matter needs to proceed to mediation and, ultimately, to trial.

Background

a) The Parties

[4] In setting out my brief summary of the parties and the claim, I am not making any findings of fact. My description is merely provided for the purposes of providing the background necessary to understand my disposition of these issues. It expressly does not bind any judge hearing the merits of this dispute.

[5] The Plaintiffs are all related to each other. As a result, I will use first names when referring to individuals to avoid confusion. No disrespect is intended by this. Caroline Ansley is a cousin to Benedict and Myriam, who are brother and sister. Mary is the mother of Benedict, and Anusha is Benedict’s wife. Benedict passed away during the course of this litigation.

[6] The Defendants are brothers. At some point, these parties all had a close relationship. I understand that Rajivan was involved in a relationship with Myriam for a number of years prior to the commencement of this litigation. The relationship ended sometime in early 2017. Anojan is Rajivan’s brother.

[7] On the Plaintiff’s theory of the case, the Defendants Thillainadarajahs agreed to help the Plaintiffs Caroline and Myriam with the purchase of a property on Chickadee Lane in Caledon, because Caroline and Myriam were unable to obtain all of the necessary financing.

[8] The Defendants have a different theory, which is that they had wanted to purchase the property and had asked Benedict to put an offer in on the property for them. They describe a different history to the purchase, ownership and sale of the property than the Plaintiffs.

[9] Ms. Vanee Harichandran Senthooran was the lawyer who acted for the Plaintiffs at various times during the course of this transaction. She has generally been less involved in the procedural disputes than the other parties and her role in this matter is not relevant for the issues that I have to decide.

[10] In any event, the property was purchased in June of 2013. It was then leased and, ultimately, sold. Mortgages were also placed on the property in this time period, allegedly for the profit of Rajivan and Anojan. In January of 2017, Myriam and Rajivan’s relationship ended. The Plaintiffs claimed that they had not received their portion of either the proceeds of sale from the property or the proceeds from the mortgages that were placed on the property. The Defendants claim that the Plaintiffs were not entitled to any of these proceeds.

[11] Although both the Thillainadarajahs and Ms. Senthooran are still involved in the action, this motion is between the Plaintiffs and the Thillainadarajah Defendants. Therefore, when I refer to the Defendants throughout these reasons, I am referring to the Thillainadarajah Defendants.

b) The Procedural History

[12] This action was originally commenced by way of two Statements of Claim, which were issued on May 15th, 2017. By way of an Order of Sproat J. on February 9th, 2018, the two actions were consolidated into one action. Pleadings were ultimately closed in the consolidated action in May of 2018.

[13] The action was brought by the Plaintiffs in respect of alleged breaches by the Defendants Rajivan and Anojan Thillainadarajah in respect of their alleged misappropriation of the proceeds of sale from the property as well as misappropriation of the proceeds from the second and third mortgages that were placed on the property in 2014. The causes of action include fraud, claims of breaches of trust, unjust enrichment, breach of fiduciary duty and other related claims.

[14] The action against Ms. Senthooran is based on her involvement in this case as counsel. She was involved in various parts of this transaction. The Plaintiffs claim, in essence, that she failed to properly represent their interests in the purchase, mortgage and subsequent sale of the Chickadee Lane property. The claim against her is for breach of contract and negligence.

[15] Discoveries were held in the fall of 2020. After these discoveries, counsel for the Plaintiffs filed a complaint with the Law Society of Ontario about counsel for the Defendants, Ms. Biggar. Ms. Biggar commenced a Court action against Mr. Feldman, the Plaintiffs’ counsel. There were other issues that caused delays in this matter, including the passing of Benedict. It is also abundantly clear to me that the relationship between counsel has been and remains fraught, to put it mildly.

[16] This matter first came before me in February of 2023. At that time, the Plaintiffs had brought a motion for a timetable to be imposed under Rule 48. The motion was opposed, but I granted it. I also made amendments to the timetable that the Plaintiffs had proposed. Those amendments were designed to move this matter towards trial more promptly.

[17] One of the key steps that I took in the timetable was to limit the motions that could be brought to motions in respect of unfulfilled undertakings and refusals. A strict timetable was set for those matters, and they proceeded to a hearing before Doi J. Both sides sought relief in respect of unanswered undertakings and items that had been refused.

[18] One of the issues that Doi J. was asked to address was whether the Plaintiffs should be granted a tracing order in respect of the second and third mortgages. He granted that order, stating:

[12] Given the particular circumstances of this case, I am satisfied that Rajivan and Anojan should be required to produce the financial records in their possession that trace the funds related to the second and third mortgages on the subject Property: Q762-780 to Rajivan's examination for discovery.

[13] Tracing is often a post-judgment remedy that a plaintiff will exercise to identify and/or recover funds over which they hold a proprietary interest: La Farge Canada Inc. v. McAdoo, 2009 ONSC 2035 at paras 21-22; Sun-Times Media Group, Inc. v. Black, [2007] OJ No 795 (SCJ) at para 43. However, in certain cases, tracing funds may be relevant to threshold issues of liability and/or damages (i.e ., as distinct from any post-judgment tracing remedies) to establish or prove a plaintiff's cause of action: La Farge at paras 9 and 25; Popov v. Jones, 2011 ONSC 665 at para 83.

[14] In this case, I am satisfied that any records held by Rajivan and Anojan in respect of the second mortgage taken on February 4, 2014 and/or the third mortgage taken on July 29, 2014, respectively, are relevant to the Plaintiffs' underlying claims by going to show whether Rajivan or Anojan improperly mortgaged the subject Property to take the proceeds for their own benefit. Having regard to the nature of the claims against Rajivan and Anojan, respectively, I find that any second and/or third mortgage records in their possession are relevant and important to the issue of their liability to the Plaintiff's, irrespective of any post-judgment tracing of funds that may later be pursued, In my view, the Plaintiffs should have these records to prove their case: Popov at para 83. Accordingly, I am satisfied that any second or third mortgage records held by Rajivan and/or Anojan, respectively, should be produced and disclosed.

[19] In addition to that Order, Doi J. directed the parties to each provide other answers to undertakings that were not complete and questions that were improperly refused. A deadline of forty-five days for the completion of these answers was imposed by Doi J.

[20] On almost the first business day after the forty-fifth day had passed, July 5th, 2024, Defence counsel wrote to my judicial assistant seeking leave to bring a motion finding the Plaintiffs in contempt for failing to provide the answers directed by Doi J. in a timely manner. I provided the parties with directions as to the further steps that were required to complete the undertakings and answers to refusals and scheduled a case conference for September 12th, 2023.

[21] The Plaintiffs counsel then made it clear, in late July of 2023, that he was also seeking leave to bring a contempt motion against the Defendants because they had also failed to fully comply with the Orders of Doi J.

[22] I addressed the contempt issues, along with other matters, at a case conference on September 12th, 2023. I denied both parties leave to bring a contempt motion against the other party, on the basis that it would be very difficult to prove contempt (it is a criminal standard) and on the basis of the time that scheduling and hearing such a motion would consume. That time would be better spent moving the matter towards trial.

[23] There was also a dispute between the parties about the meaning of Doi J.’s tracing order. I directed that dispute back to Doi J. for consideration, and he released an endorsement confirming that the tracing order applied to all documents in respect of the second and third mortgage in the possession, control or power of the Defendant.

[24] There still remained some outstanding answers. I addressed those issues from a procedural perspective at a case conference on January 10th, 2024. I resolved some issues, provided the parties with directions as to how to resolve the remaining issues and advised the parties that any party who failed to produce a document at this point could not rely on it at trial, except with leave of the trial judge.

[25] I also provided the parties with directions as to questioning arising from the answers to undertakings and the refusals that Doi J. had ordered answered. That questioning was scheduled for May of 2024.

c) The Current Dispute

[26] The matter came back before me at a case conference on July 16th, 2024. At that time, I was advised that the questioning scheduled for May of 2024 had not been completed until the previous week. While unfortunate, the delay was understandable and not related to the underlying problems in this case.

[27] As a result, at the Case Conference on July 16th, 2024, I provided the parties with directions, as follows:

a) In terms of the outstanding undertakings, I directed the parties to answer everything by August 31st, 2024, and then advise as to whether they were moving on any refusals or unanswered questions by September 15th, 2024.

b) In terms of the tracing order for the second and third mortgage, I directed the Plaintiffs’ counsel to outline what specific documents were missing, along with an explanation of why the second tracing order was necessary.

[28] Those directions were not complied with. When I reconvened the Case Conference on September 24th, 2024, I was faced with the fact that the Plaintiffs’ counsel had provided written questions that had to be answered, and that there were not (as yet) answers to those questions at least as far as I was aware. There were also deficiencies with the materials provided for the tracing Order (as described below). As a result, I provided the parties with further directions.

[29] Based on those directions, I have received some (but not all) of the submissions I would have expected to receive. The deadline for submissions was in November, so at this point I am going to provide the parties with my directions on the issues that have presented themselves for resolution.

Issues

[30] Based on the materials that I have received, there are four issues that need to be addressed, as follows:

a) Whether there are any deficiencies in the written answers to questions that were provided by the Defendants.

b) Whether the Defendants’ response to the tracing order for the second and third mortgages was deficient.

c) Whether a tracing order should be made in respect of the proceeds of sale from the property.

d) Whether I should grant the Plaintiffs leave to bring a motion to have the Statement of Defence struck.

[31] I will deal with each issue in turn.

Issue #1- The Answers to Written Questions

[32] There has been a great deal of discovery in this case. As part of this process, I have asked for charts on a number of occasions. The Rules of Civil Procedure spell out what is required in those charts, and it includes a column for the Court to record its disposition of the issues. However, the charts filed by the Plaintiffs do not include such a column.

[33] The Plaintiffs’ materials also contain a column outlining the position of the Plaintiffs on the answers given by the Defendants. On some occasions, the position was that “no answer has been provided”. On a few occasions, other deficiencies were noted. Those questions I have considered in reaching my decisions.

[34] However, on other occasions, the Plaintiffs have provided a quotation from some previous document. Based on those quotations alone, I cannot tell whether Plaintiffs’ counsel is satisfied with the answer or not. Given that these submissions were supposed to outline in one place all of the disputes, this lack of clarity is not helpful to the Court. Where there is nothing in bold and/or no specific deficiency noted in the Plaintiffs’ charts, I have assumed that they are content with the answers that they have received and am providing no further relief to them. Had the Plaintiffs wished to obtain additional information on those points, it should have been clearly outlined for the Court.

[35] In his written submissions, Plaintiffs’ counsel states that “the answers the Defendants have provided do not reflect an honest effort to provide us with the current location mortgage [sic] proceeds…”. He also states, “Our position remains unchanged: the majority of answers to our written questions remain outstanding or have been outright refused, and the tracing order regarding the proceeds of the subject mortgages remains unfulfilled.”

[36] However, as I have described at paragraph 34, the Plaintiffs’ chart only points to specific deficiencies for some of the questions. It is not the Court’s role to look at an answer and guess whether it is sufficient for the other party’s purposes. I also note that I have provided relief in respect of the tracing order for the second and third mortgages, as described below. There may be some duplication between what I have ordered in response to the specific written questions and the relief I have provided in the next section.

[37] My usual approach in a motion of this nature would be to put my disposition of each disputed issue into a final column of an undertakings chart. However, the document that the Plaintiff provided was also provided as a PDF (and not uploaded to CaseLines). As a result, I am going to review the answers briefly by number as they appear in the Plaintiffs’ chart along with my disposition of them. Where I have skipped numbers, I have specifically not found there to be any dispute. It is not an omission, and I am neither requiring nor permitting any further submissions on issues that were not specifically addressed.

[38] I should also make two general points in respect of all of these issues. First, there are the principles that apply to all discovery issues. Those are detailed in Ontario v. Rothmans Inc., 2011 ONSC 2504. That decision sets out the principle that arguable relevance is the starting point, but not necessarily the finishing point for production decisions. The Court must also ensure that the parties are not unduly burdened by their production obligations but that they can prepare their case and respond to the other party’s case. Viele v. Gargan Investments Ltd., 2019 ONSC 2112 at para. 56.

[39] This brings me to two more specific observations about the Plaintiffs’ requests in this case. First, I am concerned about the breadth of some of these requests. While it will be important to understand where the funds came from to buy this property, as well as where the funds from the mortgage went, it would not be proportionate to turn this proceeding into a complete investigation of the Defendants’ financial circumstances for the last ten years.

[40] Second, I have specifically dealt with (and denied) the Plaintiffs’ request for a tracing order in respect of the sale proceeds for the Chickadee Lane property. The reasons for that denial apply to various questions related to the sale proceeds from that property as well.

[41] With that background in mind, I will now address the specific questions asked by the Plaintiffs that remain in dispute. The issues in dispute and my disposition of them are as follows:

a) Question #1- to the extent that Counsel for the Defendants has the information set out in the Plaintiffs’ chart, it is to be specifically enumerated.

b) Question #2 - is to be answered to the extent that the information is available from the Bank. In addition, the steps that are (and have been) taken to gather the information are to be specifically enumerated in the Defendants’ Affidavits.

c) Question #5 - Given that the answer to Question #4 is that I do not recall, then the answer to this question would seem to be obvious: “I don’t recall”. However, that answer should be specifically set out in the Affidavits that I am ordering the Defendants to provide.

d) Question #9 - this is a question that flows from Question #8. The answer to question #8 was whether the lawyers who acted on the purchase and/or sale of the Chickadee Lane property had been paid from the joint bank account. The answer to that question was no. Question 9 asks, “If so, could you contact the lawyers to obtain cancelled checks?” Given that the answer to question #8 was no, Question #9 does not arise and nothing further will be ordered.

e) Questions #10 to #13 - these questions deal with the efforts to contact the solicitors who acted on the purchase, sale or mortgage of the Chickadee Lane property. The answers from the Defendants deal with the lawyer who acted on the second and third mortgages. That answer is not sufficient. The Defendants must identify all of the legal representatives who acted for them on the purchase, mortgaging and sale of the property and make efforts to have those individuals review documents to trace funds in respect of the second and third mortgages. For clarity, those individuals are not required to trace the funds with respect to the sale of the property or other issues. The answers are to be limited to the second and third mortgages that were taken out on the property. The steps taken by both Defendants are to be set out in the Affidavits I have ordered.

f) Questions #14 to #17 - these questions relate to the signature card for the closed joint account. It is quite possible that the answers to all of these questions are as described by the Defendants in their Affidavits as set out in their answers to question 14. However, the Plaintiff also notes that there is some documentation (as set out for Question #1) that is in the possession of the Defendants. The answer to question #14 is to be re-confirmed with that information being provided to TD if that information has not already been provided. It is not clear to me whether these questions were answered with TD being aware of that information. The Defendants are to update the answers to these questions accordingly.

g) Questions #18 and #19 - for these questions, the Plaintiffs are seeking “any other bank statements that refer to or in any way deal with the assets , liabilities or business of the Defendants.” The Defendants take the view that this request is overly broad. I agree. The tracing Order of Doi J. was in respect of specific funds that were received and flowed through specific accounts. The Plaintiffs’ request is for an entire accounting of everything the Plaintiffs did from a financial perspective. There is also no limitation on the time period that this question covers. These questions were properly refused.

h) Question #20 - as I understand it, this question concerns whether there was a transfer of funds from the joint account opened to administer the mortgage proceeds and the sale proceeds for the Chickadee Lane property. While the question as posed is overbroad (as it covers every transaction), the question is to be answered to the extent that the Defendants are aware of any transfer of monies from the joint account in respect of the second and third mortgages.

i) Questions #21-26 and #28 - these questions deal with the same general issue, which is the production of tax returns from the Defendants. These questions were refused by the Defendants on the basis that the mortgage funds and the sale funds were all tax-free and would not have appeared on their tax returns. The Plaintiffs argue that these questions were refused and should be answered. I disagree. Accepting that the proceeds from a mortgage are generally tax free, the requests for tax return information in respect of the second and third mortgages becomes overbroad. These questions were properly refused.

j) Questions #29 to 34 -these questions deal with document production in respect of financial statements of either of the Defendants. The specific question, however, concerns “in respect of the subject proceeds”. To the extent that the subject proceeds are the second and third mortgages, these questions are relevant and are to be answered. However, let me explain the limited scope of the answer that I am expecting the Defendants to provide. The Defendants are to provide details that may exist in the listed documents about the second and third mortgage. They are not required to produce the entirety of any of the documents. It is just specific, transactional information that is required.

k) Questions #35 and #36 - these are two very broad questions that deal with whether there are any “investment advisors, counsel, accountants, account representatives, real estate agents, vendees, potential vendees” or other parties that may have information about the second and third mortgages. The questions are worded too broadly. However, the Defendants argue that these questions are too remote. I disagree. The question of whether any of the Defendants’ other professional advisors know anything about the transfer and/or uses of the funds from the second and third mortgage is not too remote. In my view, making inquiries of these professional advisors about that issue (and only that issue) is within the scope of Doi J.’s order. The Defendants are, therefore, directed to make those inquiries. Again, however, those inquiries are limited to the second and third mortgages.

l) Questions #37 and 41 - these questions relate to the tracing of the proceeds from the sale. For reasons set out below, those questions are properly refused.

m) Question #38 - this is a request by the Plaintiffs for a listing of what the Defendants have already disclosed. Those documents should be clear to the Plaintiffs, and the Defendants are not obligated to restate this information for the Plaintiffs. This question was properly refused.

n) Questions #39 and #40 - Question 39 is a question about why the Defendants have failed to produce any financial documents or the like that would trace the funds from the second and third mortgages. The Defendants have set out, in general terms, what documents they have provided. Whether this evidence is satisfactory is a question for trial. If the evidence is not satisfactory, then the trial judge may draw adverse inferences against the Defendants. Similarly, question 40 is a question of what the evidence shows. Again, it is a matter for trial. These questions are properly refused. However, the Defendants will be bound to explain these answers at trial with the evidence they have produced.

[42] As can be seen, some of these questions need further clarification and further information, but the additional information that I am ordering the Defendants to produce is limited. In answering these questions, I would also remind the parties of the general observations I made at paragraphs 36-40.

[43] There are a couple of other issues that need to be addressed. First, at paragraph 3 of his submissions, Plaintiff’s counsel raises concerns with the Defendants’ submissions. Specifically, he states as follows:

3. The endorsement from the September 24, 2024 Case Conference is abundantly clear at paragraph 6, that the “written submissions should be complete and should not require me to reference other documents”. Despite these clear instructions, the Defendants’ answers repeatedly rely on various documents from this litigation to avoid directly answering many of the written questions. We also note that the answers provided have not been answered by way of affidavit, despite it being required under Rule 35.02(1) of the Rules of Civil Procedure.

[44] There are two problems with the first half of this statement. First, the fact that a question has been answered previously does not entitle the Plaintiff to have the answer repeated in another document. Second, in any event, I have already described my concerns with the Plaintiffs’ submissions in this case. Given those concerns, it is difficult to see how the Plaintiffs can obtain any relief by arguing deficiencies on the part of the Defendants.

[45] In terms of the requirement for the answers to be put into an Affidavit, I am granting that request as it is a request that clearly fits within the Rules. Discovery is under oath, and the same should be true for written discoveries. However, I am also making it clear that having these answers put into an Affidavit does not provide the Plaintiffs with any rights to either conduct further cross-examinations or any other relief whatsoever.

[46] Those Affidavits are to be provided within sixty (60) days of today’s date for both Defendants.

Issue #2- The Answers to the Tracing Order for the Mortgages

[47] Some brief additional detail about the orders that were made on this issue are necessary. Counsel for the Plaintiffs argues that the Defendants have not complied with the tracing order in respect of the second and third mortgages and seeks a further tracing order in respect of the sale proceeds.

[48] In my July 16th, 2024, endorsement I provided the following directions in respect of the tracing order:

a. By August 7th, 2024, the Plaintiffs’ counsel is to provide a letter to Defendants’ counsel identifying what documentation is missing pursuant to my disclosure order and the order of Doi J. This letter is also to identify what documentation can be seen as missing from the documentation that has been produced as well as the basis for the request for a tracing order.

b. By August 31st, 2024, the Defendants’ counsel is to provide a response to the letter described in paragraph (a).

c. I am to be copied on those letters.

[49] I also directed that I was to be copied on these letters. I do not recall being copied on any correspondence, although it is quite possible that I was sent correspondence, as I had four different assistants between July 16th and September 12th, 2024. When we reconvened the hearing, I raised that issue and was advised that Plaintiffs’ counsel had provided a letter on August 7th, 2024. It stated, in part:

Missing Documentation

The missing documentation we continue to seek is exactly what has been ordered by this Court, to enable a tracing and accounting of the proceeds of the second and third mortgages. Your responses to this undertaking have been virtually non-existent, if not contemptuous. We acknowledge receipt of the sworn affidavits outlining your client’s “efforts”; however, these responses have failed to provide any meaningful documentation, information or explanation in compliance with the orders issued by Justice Doi and Justice LeMay. The documentation we are missing is clear, as specified by His Honour Justice Doi at paragraph 3 in his endorsement of October 13, 2024, clarifying his endorsement of May 15, 2023, namely:

‘Rajivan and Anojan Thillainadarajah are to disclose any financial records in their possession, control or power, or within their power to obtain, that would assist in tracing the subject funds: Rules 30.02(1) and 30.01(1)(b): Trade Capital Finance Corp. v. Cook, 2021 ONSC 7134 at para. 48. The required disclosure should include records with information about the source, payment and flow of the subject mortgage loan proceeds in their possession, control, or power that would support a tracing of these funds.”

[50] The letter does not identify any specific documentation that was missing, contrary to my directions. It goes on to explain, in detail, why a tracing order is being sought on the sale proceeds as well.

[51] At the case conference, although I had not seen this letter, I indicated that a letter that did not identify any specific missing documentation would likely not entitle the Plaintiffs to any further disclosure. The letter reproduced above would not have been sufficient to justify any further Order.

[52] However, at the case conference, I provided the Plaintiffs with a further opportunity to provide a list of the outstanding documentation within fourteen (14) days thereafter. On October 7th, 2024, both Defendants’ counsel and I received a list of information from the Plaintiffs’ counsel, as follows:

1. Please send us the TD bank account number confirmed to be in your possession as of October 7, 2024;

2. All correspondence between TD Bank and the Thillainadarajahs with respect to obtaining the joint TD bank account number;

3. Copies of all cancelled cheques from the joint TD account;

4. Reproductions of all available bank statements and/or transaction history from the joint TD Bank account from 2014 until the account was closed;

5. A list of individuals who may have received funds from the joint TD bank account;

6. All KYC (Know Your Client) information on file with TD Bank relating to the joint TD Bank account and relating to the flow of the proceeds of the mortgage; and

7. A narrative explanation with all relevant documents describing and documenting the flow of funds from the proceeds of the mortgages up until the present day.

[53] This was a list that it was easier to respond to. As a result, Defence counsel duly provided a response, which reads as follows:

While they finally able to locate the account number of the joint account and the date of its closure, they confirmed that they do not have access to the data in relation to the account beyond seven years. This is consistent with the evidence of Rajivan Thillainadarajah and, indeed, statements on the website of TD. You may satisfy yourself on this point.

As a result, we remain unable to provide any further documentation regarding the use of the proceeds of the second and third mortgages.

[54] While this response provides some information, I am of the view that more is necessary. Specifically, it is not sufficient to say that the information can be obtained from TD Bank. The Defendants have an obligation to both make efforts to obtain that information from TD Bank and to spell out those efforts for the Plaintiff. To that end, I am ordering the Defendants to provide the following within sixty (60) days of today’s date:

a) The account number for the TD account described in point one at paragraph 52 is to be disclosed.

b) Any documents in points 2 through 6 that are in the possession, control or power of the Defendants are to be disclosed. To that point, I note that TD no longer has the documents. This order only requires the Defendants to search their own records to determine what they have.

c) The information on who was spoken to at TD Bank about obtaining these documents, when they were spoken to and what specifically was said is to be produced. That evidence is to include any written correspondence to or from TD.

d) The information in paragraphs (a) to (c) is to be provided by way of an Affidavit from one of the Defendants as part of the answers to written questions.

[55] However, there are some points in the Plaintiffs’ requests that should not have to be addressed. First and foremost, there is no basis for a narrative report. Second, once the Defendants records are searched and TD confirms what the Defendants’ counsel has said, this line of inquiry is at an end.

[56] For clarity, I do not expect this list to produce much, if any, more documentation. I am of the view, however, that the requests need to be addressed with more particularity.

[57] Finally, these answers are also to be provided by way of Affidavit from the Defendants.

Issue #3- Tracing Order for the Sale Proceeds

[58] I start by noting, as Doi J. noted, that a tracing order is often a post-trial remedy. In this case, Doi J. ordered a tracing order on the proceeds of the second and third mortgages to determine whether those proceeds were taken for the benefit of the Defendants.

[59] Counsel for the Plaintiff argues that the fact that the tracing order was made for the proceeds of the mortgages means that it should be made for the sale proceeds as well. There are two problems with this request, each one of which is sufficient for me to deny it.

[60] First, Defendants’ counsel correctly points out that, if the Plaintiffs had also wanted a tracing order for the sale proceeds, they could have asked Doi J. to issue it. They chose not to. The parties should not be constantly re-doing their requests for production, especially in a case such as this where leave is required to bring further motions and the scheduling of undertakings and refusals motions was specifically dealt with at that time.

[61] Second, it is not at all clear to me how the tracing order for the sale proceeds would assist in proving the Plaintiffs’ cause of action. The monies from the sale of the property would have been used to discharge any mortgages or other encumbrances on the property. The remainder would have been kept by the Plaintiffs. That fact is not going to become clearer with a tracing order. It is different than the mortgages, where the uses of the funds were both relevant and unclear. In that respect, I note the claims that the Defendants made in paragraph 32 of their Fresh Amended Statement of Defence are the sort of claims that support the need for a tracing order. Such support for a tracing order in respect of the sale proceeds is not obvious on the pleadings.

[62] As Master Dash noted in Lafarge Canada v. McAdoo, 2009 ONSC 2035 at paras 21 and 22:

[21] I am of the view that the same principles applies to a plea of entitlement to a tracing order. The onus is on the plaintiff to establish its right to ask questions respecting a specific tracing of assets at this stage and in my view it has failed to do so. Those types of questions must first await a successful judgment in the action in favour of the plaintiff. In other words the plaintiff must first establish not only that the defendant is liable to it based on the breach of contract or misrepresentations, but that it also has a proprietary interest in the funds and is entitled to a tracing remedy. Only then may the plaintiff ask questions to actually trace the funds.

[22] If it were otherwise, then a plaintiff could examine a defendant as to its assets prior to judgment in a damages action based on breach of contract or misrepresentations simply by pleading a claim for a tracing order. To allow that would invite plaintiffs to make such claims in every case. It would turn discoveries in all such actions where a tracing remedy is claimed into a pre-judgment judgment debtor examination.

[63] Generally, tracing orders are not granted prior to judgment. In order to be relevant before judgment is granted, a tracing Order has to be relevant to the issues in dispute. It is an exceptional remedy, and it is up to the Plaintiffs to demonstrate that it is justified on the facts of this case. The Plaintiffs’ primary arguments are that, if the funds for the second and third mortgages should be traced, so should the sale proceeds. There is no further explanation of that point and, as I have set out at paragraph 61, I do not find it persuasive.

[64] For the foregoing reasons, the Plaintiffs’ request for a tracing remedy on the proceeds of the sale is denied.

Issue #4- Leave to Bring a Motion to Strike

[65] Counsel for the Plaintiffs acknowledges that this remedy would not be a remedy of first resort. In fact, it is usually a remedy of last resort and the party against whom it is sought will have to be given an opportunity to cure any defect first. The Court will also have to look at the circumstances as a whole: Koohestani v. Mahmood, 2015 ONCA 56 at para. 54.

[66] Counsel for the Plaintiffs points to Starland Contracting Inc. v. 1581518 Ontario Ltd., 2009 ONSC 30449 (ON SCDC). In that case, the Court noted (at para. 26):

[26] The ability of the court to control the litigation process is particularly important in matters that are case managed, such as construction lien actions. The authority to dismiss proceedings for repeated failure to comply with court orders and flagrant disregard for the court process is an essential management tool. A case management judge or master who has a continuous connection with an action, the parties and their counsel is well-positioned to monitor the conduct of the participants throughout the proceedings, and to determine whether anyone is deliberately stalling, showing bad faith or abusing the process of the court when deadlines are missed and defaults occur under procedural orders. A decision to dismiss an action or strike an action or strike a pleading because of such defaults is entitled to deference, unless that decision is shown to have been exercised on wrong principles or based upon a misapprehension of the evidence such that there is a palpable and overriding error.

[67] Counsel argues that permitting the Defendants to avoid providing the information required by the tracing Order would render those types of orders meaningless and would frustrate the Plaintiffs’ ability to prove their case.

[68] The problem with this submission is twofold. First, the Defendants have taken steps to disclose at least some of the information and they have taken further steps to demonstrate that other information that has been requested is not available. Second, the trial Judge will have a number of other tools in their arsenal to address any non-disclosure that remains when this matter gets to trial. To that end, I note that once the deadline for production of additional documents has passed, the parties will require leave from the trial judge to rely on anything further and adverse inferences may be drawn from a failure to produce documents.

[69] In addition, it must be remembered what the Plaintiffs are seeking in this case. First, they are seeking leave to bring a motion almost two years after a timetable was set in this matter. This motion will undoubtedly further delay the litigation of this case.

[70] Second, the Plaintiffs’ proposed motion, if successful, would result in the Plaintiffs succeeding on their action on the basis of a procedural, rather than a substantive, argument. It is better, where possible, to have disputes resolved on their merits. In this case, both parties have been distracted from the merits of the dispute on a number of occasions, including pursuing collateral actions, complaints to the LSO and contempt motions. Given the likely outcome of this case, the parties’ efforts would be better expended moving this matter to trial.

[71] For all of these reasons, the Plaintiffs’ request for leave to bring a motion to strike the Defendants’ Statement of Defence is denied.

Conclusion and Costs

[72] For the foregoing reasons, the Defendant is to provide the additional information set out above. The remainder of the Plaintiffs’ requests are dismissed.

[73] For clarity, absent truly exceptional circumstances the discovery portion of this litigation is at an end once the steps that I have ordered are completed. The parties have a mediation in March of 2025 and, if necessary, I may be spoken to afterwards in respect of any further timetabling that is required. The parties should note that a trial date in this matter will need to be set, and it would be my expectation that this matter will be set down for trial in the first half of 2025 if it is not resolved at mediation. This matter is clearly going to take five or more days, so it will be a blitz list matter.

[74] Given the fact that success was divided on this matter and given the efforts that the Court had to take in order to ensure that the issues actually got adjudicated, it would seem to me that each side should bear their own costs for the preparation of these submissions. In that respect, I specifically note that neither party has followed my directions as to how to prepare the materials to address this matter.

[75] However, should either side be seeking costs, they may make costs submissions of no more than two (2) single-spaced pages, exclusive of bills of costs, offers to settle and case-law by no later than December 31st, 2024. Those submissions are to be served, filed and uploaded to CaseLines. Those submissions must address the failures of the party making the submissions to follow my instructions.

[76] Each side may respond to a request for costs made by the other side in submissions that are also to be no more than two (2) single-spaced pages, exclusive of bills of costs, offers to settle and case-law. Those submissions are to be served, filed and uploaded by January 10th, 2025.

[77] There are to be no extensions for the time for costs submissions, even on consent, without my leave. In the event that costs submissions are not received in accordance with the timetable set out above, there shall be no order as to costs for these issues.

[78] I should also note that, in addition to serving, filing and uploading their costs submissions, counsel are also required to provide an electronic copy of them to my judicial assistant. They will have received her e-mail with this decision.

[79] Finally, I have noted that the most recent round of submissions has not been uploaded the CaseLines. The parties are directed to upload their materials as soon as possible.

LEMAY J. Released: December 23, 2024