Reasons for Judgment

Court File No.: CV-16-58524
Date: 2025-03-10
Ontario Superior Court of Justice

Between:
Stacey Lee Crawford, Plaintiff
and
Dinesh Khanna, Metro Financial Planning Limited, Veeru Kantoor, Defendants

Appearances:
Deepshikha Dutt for the Plaintiff
Benjamin Salsberg for Dinesh Khanna and Metro Financial Planning Limited
George Gligoric for Veeru Kantoor

Heard: January 21 and February 27, 2025

Released: March 10, 2025

Judge: M. Bordin

Overview

[1] The plaintiff, Stacey Lee Crawford, seeks summary judgment declaring that she is the owner of her former family home at 121 Millen Road, Stoney Creek (the “Property”). The plaintiff also seeks orders deleting from title an alleged fraudulent second mortgage and all subsequent transactions involving the mortgage and the Property. To obtain summary judgment, the plaintiff must first set aside the default judgment obtained by Veeru Kantoor (“Kantoor”).

[2] The plaintiff has a grade 10 education, is the mother of six children and previously worked as a cleaner until she had a car accident in early 2011.

[3] The defendant, Dinesh Khanna (“Khanna”), is a former Ontario mortgage broker. Khanna operated a mortgage brokerage through Metro Financial Planning Ltd. (“Metro”) until December 22, 2015, when Khanna and Metro’s brokerage licenses were suspended and later revoked because of Khanna’s business practices.

[4] The plaintiff asserts that Khanna and Metro registered a fraudulent second mortgage on title to the Property in favour of 1125916 Ontario Inc. (“112”). 112 later transferred the mortgage to Khanna’s wife, the defendant Kantoor, who then obtained judgment against the plaintiff for money allegedly owing on the mortgage and for possession of the Property. Kantoor subsequently transferred title to the Property to Khanna.

[5] The defendants oppose setting aside the default judgment and assert that the action should proceed to trial on its merits. Khanna denies the allegations of fraud. The defendants assert that the second mortgage was and is valid. Khanna asserts the plaintiff owes him for money paid to discharge the CIBC first mortgage and for municipal taxes and other costs paid with respect to the Property. Kantoor also alleges that the motion for summary judgment is not timely and should be dismissed.

[6] The action against 112 has been discontinued.

Materials Filed on the Motion

[7] The parties filed voluminous materials totalling over 2,700 pages for this motion.

[8] The plaintiff filed a 31-page affidavit with 58 exhibits, a four-page reply affidavit with four exhibits, another brief supplementary affidavit attaching a few more exhibits, and extensive excerpts from the cross-examinations of the two defendants and of another witness. There are more than 800 pages of transcripts filed by the plaintiff. The plaintiff filed a 32-page factum without leave to exceed the 20-page limit in this region, as well as an 11-page reply factum. The plaintiff’s compendium contains approximately 230 pages.

[9] Khanna filed an eight-page affidavit containing 21 exhibits, a brief affidavit from the principal of 112, Shabir Khan (“Mr. Khan”), and a transcript of the plaintiff’s cross-examination, bringing the total number of pages of transcripts to over 900. The defendant’s factum is within the prescribed page limit. Kantoor filed a factum but no affidavit.

[10] All told, there are over 200 tabs of materials in Case Center. The affidavits contain over 80 exhibits. Long trials have fewer exhibits and materials.

[11] The volume of materials filed for this motion is emblematic of what has become common practice since the advent of electronic hearings – parties file excessive materials, most of which are never referred to, with little to no direction to the court regarding what the court should review, and which cannot be reviewed amid a busy judicial schedule. There must be a return to reason and to the exercise of judgment by lawyers as to what materials are necessary and proportionate for a motion. Further, where materials are voluminous, lawyers ought to advise the court what materials they intend to rely on with specificity. It is not sufficient to simply indicate the party will rely on every record, affidavit and factum that has been filed by a party.

[12] I advised the parties that given the volume of material and the failure to upload motion confirmation forms they were required to take the court to the evidence they intended to rely upon.

Background Facts

[13] The basic timeline and events are not in dispute.

[14] The plaintiff purchased the Property for $229,000 on August 31, 2006. Khanna and Metro arranged a first mortgage from Global Investment Holdings Inc. (“Global”) at 10% interest.

[15] On February 1, 2007, the plaintiff replaced the Global mortgage with a CIBC first mortgage with a significantly lower interest rate of 2.99%, which she kept in good standing while residing at the Property.

[16] Around March 2011, the plaintiff contacted Khanna about obtaining a loan. On March 31, 2011, Khanna and Metro registered a second mortgage on title to the Property, in favour of 112 (the “second mortgage”). The registered charge states that the principal amount is $65,000 with interest at 15%, monthly payments of $862.50, and a one-year term.

[17] On August 28, 2013, 112 transferred the second mortgage to Kantoor for $1. The next day, Kantoor issued a Statement of Claim against the plaintiff in Court File No. CV-13-42897-SR, claiming that the plaintiff had defaulted on the second mortgage (the “Kantoor Action”). The lawyer on record for the Kantoor Action was Ross McLeod (“McLeod”). The Kantoor Action sought $53,645.75 plus pre-and post-judgment interest at a rate of 15%.

[18] On September 27, 2013, Kantoor obtained default judgment against the plaintiff for $37,442.92, and for possession of the Property.

[19] On March 17, 2014, Kantoor transferred the Property to Khanna. The consideration for the transfer, as stated in the parcel registered for the Property, was $200,000. On or about March 25, 2014, the plaintiff signed a note stating that she was giving Kantoor vacant possession.

[20] The second mortgage was deleted from title following the transfer of the Property to Khanna.

[21] On June 29, 2016 the plaintiff registered a caution on title. The Statement of Claim in this action was issued August 29, 2016.

[22] On October 17, 2016, Goodman J. made an order on consent allowing Khanna to pay out the CIBC first mortgage and for that mortgage to be discharged. The CIBC first mortgage was discharged on November 11, 2016.

[23] On April 20, 2017, the parties consented to the order of Milanetti J. issuing a Certificate of Pending Litigation (“CPL”). The CPL was registered on title on April 21, 2017. A Fresh as Amended Statement of Claim was issued on May 19, 2017.

[24] The defendants served their Statement of Defence to the Fresh as Amended Statement of Claim on May 30, 2017. The plaintiff served her Statement of Defence to the Counterclaim of the Defendants on July 3, 2018.

[25] All examinations for discovery were completed between July 2018 and April 2019.

[26] The defendants passed the trial record on September 7, 2021. The action was never scheduled for trial. The plaintiff’s notice of motion is dated March 15, 2024. The action is on the May 2025 assignment court to schedule a trial date.

The Issues to Be Determined

[27] Based on the plaintiff’s submissions, the central issues are the validity of the second mortgage and whether the default judgment should be set aside.

[28] According to the defendants, the central issue is an accounting of the amounts owing by the plaintiff on the second mortgage and for amounts paid by Khanna with respect to the Property after the plaintiff vacated the Property.

[29] With respect to the disputed facts, I have three principal sources of information before me. I have the plaintiff’s affidavit, Khanna’s affidavit, and the decision of the Financial Services Tribunal (“FST”) in Metro Financial Planning Limited and Dinesh Khanna v. Ontario (Superintendent Financial Services), 2017 ONFST 4 (the “FST Decision”).

[30] Both parties rely on the findings in the FST Decision. The plaintiff submits that the findings in the FST Decision are binding on this court and that I should accept all of them.

[31] The plaintiff also relies on a decision of the Law Society of Ontario (“LSO”) in Law Society of Ontario v. McLeod, 2021 ONLSTH 35 (the “LSO Decision”) and the decision in Kantoor v. Comparone, 2023 ONCA 812.

[32] The plaintiff’s position is that the FST Decision, together with the other decisions, address all the issues pertaining to the validity of the second mortgage. The plaintiff submits that the findings in the FST Decision lead to the conclusion that the default judgment must be set aside and the accounting issues left for trial.

[33] The defendants submit that the FST Decision, the LSO Decision, and Kantoor v. Comparone do not deal with all the issues, that the issue of the validity of the default judgment turns on the accounting of amounts owing under the second mortgage, and that the amount paid by Khanna with respect to the Property is inextricably intertwined with the ownership of the Property and these issues can only be determined at trial.

[34] Before I can address the substantive issues, I must address the admissibility of Mr. Khan’s affidavit and whether and to what extent I can rely on the FST Decision, the LSO Decision and the Kantoor v. Comparone decision.

Mr. Khan’s Affidavit

[35] Mr. Khan’s affidavit responds to evidence given by the plaintiff in cross-examination about her conversations with Mr. Khan. The plaintiff was cross-examined on July 22, 2024. Mr. Khan’s three-page affidavit was sworn on September 16, 2024. It contradicts some of the plaintiff’s evidence at her cross-examination about her conversations with him. The defendants rely on Mr. Khan’s affidavit to highlight problems with the plaintiff’s credibility.

[36] The plaintiff takes the position that Mr. Khan’s affidavit, filed after her cross-examination, should not be admitted. The plaintiff submits that when deciding whether to grant leave under r. 39.02(2), the court must ask the following four questions:

a. Is the evidence relevant?
b. Does the evidence respond to a matter raised on the cross-examination, not necessarily raised for the first time?
c. Would granting leave to file the evidence result in non-compensable prejudice that could not be addressed by imposing costs, terms, or an adjournment?
d. Did the moving party provide a reasonable or adequate explanation for why the evidence was not included at the outset?

See Lockridge v. Director, Ministry of the Environment, 2013 ONSC 6935, at para. 24.

[37] The plaintiff does not rely on her statements made in cross-examination to which Mr. Khan’s affidavit responds. As a result, the plaintiff submits that Mr. Khan’s affidavit is not relevant.

[38] The plaintiff submits that she gave the same evidence on the matters referred to in Mr. Khan’s affidavit during her examination for discovery on January 11, 2019, over five years before the defendants raised this issue. The defendants concede this point.

[39] The plaintiff says that the defendants have provided no explanation for why the evidence in the Mr. Khan’s affidavit was not included prior to the cross examination. Khanna says it is because his current lawyer was not his lawyer at the time of the examinations for discovery and did not read the transcripts. This is not a sufficient reason.

[40] I find that the evidence is not relevant on this motion beyond the issue of credibility. As will be explored below, there is other evidence that raises issues with the plaintiff’s credibility. Mr. Khan’s affidavit is not necessary to address the plaintiff’s credibility. Mr. Khan’s affidavit does not add anything to the substantive issues before me. While Mr. Khan’s affidavit responds to evidence at the plaintiff’s cross-examination, the same evidence was raised years earlier. The defendants have not provided an adequate explanation for why the evidence was not included when they first filed responding materials on the motion. Mr. Khan’s affidavit is not admitted. Even if it was admitted, I would not find it useful to resolve the issues before me.

Admissibility of Prior Decisions

[41] The Court of Appeal for Ontario in Plate v. Atlas Copco Canada Inc., 2019 ONCA 196, at para. 53, adopted the following statement of Binnie J. at para. 7 of British Columbia (Attorney General) v. Malik, 2011 SCC 18:

[A] judgment in a prior civil or criminal case is admissible (if considered relevant by the chambers judge) as evidence in subsequent interlocutory proceedings as proof of its findings and conclusions, provided the parties are the same or were themselves participants in the prior proceedings on similar or related issues. It will be for that judge to assess its weight. The prejudiced party or parties will have an opportunity to lead evidence to contradict it or lessen its weight (unless precluded from doing so by the doctrines of res judicata, issue estoppel or abuse of process).

[42] Malik has been applied in the context of final determinations on the merits in subsequent civil proceedings: Plate, at para. 54. Whether a prior civil or criminal decision is admissible in trials on the merits will depend on the purpose for which the prior decision is put forward and the use sought to be made of its findings and conclusions: Malik, at para. 46.

[43] Malik directs that lack of identity of issues goes to weight, not admissibility: at para. 43. In Plate, the fact that the issues in the criminal proceedings were not identical to those in the civil proceeding did not operate as a bar to admissibility of the sentencing judge’s findings: Plate, at para. 58.

[44] The court first determines if the prior decision is admissible: Malik, at para. 48; Plate, at paras. 56-58. The findings in the prior decision must be relevant to the issues raised in this motion: Plate, at para. 58. If the findings in the prior judgment or decision are determined to be admissible, the weight and significance of the findings is to be considered: Malik, at para. 48; Plate, at para 60.

[45] Malik directs that the weight to be afforded to the findings will depend on all the circumstances of each case, including factors such as the similarity of the issues to be decided, the identity of the parties, the nature of the earlier proceedings, the opportunity given to the prejudiced party to contest the previous finding, whether the prior proceedings were criminal or civil (because of the differing burdens of proof), and on all the varying circumstances of particular cases: Plate, at paras. 62 and 70-71; Malik, at paras. 42, 47-48.

The FST Decision is Admissible

[46] In November and December of 2016, the FST conducted a nine-day hearing into the proposal to revoke Metro’s mortgage brokerage licence and Khanna’s mortgage broker licence, and to refuse Khanna’s application for a new broker licence: FST Decision, at paras. 1-3, and 6. Extensive documentary evidence was tendered at the hearing and 12 witnesses testified: at paras. 6 and 28. The plaintiff was one of the complainants who testified: at para. 155. The complainants, including the plaintiff, testified at length and were subject to extensive cross-examination: at para. 29. Khanna and Metro called two witnesses, McLeod and a process server. Although entitled to testify, Khanna did not do so: at paras. 28 and 31.

[47] The FST was satisfied that for the most part, the relevant evidence given by the complainants with respect to the facts was sufficiently clear, convincing, and cogent to be credible and accepted by the FST: at para. 30. The FST found that the complainants were relatively unsophisticated borrowers who relied on and trusted Khanna and Metro to provide them with services in accordance with their professional obligations: at para. 30. The FST Decision was rendered on May 8, 2017, revoking the mortgage broker and brokerage licenses of Khanna and Metro.

[48] Khanna and Metro were parties to the FST hearing. A full hearing was held. The plaintiff gave evidence and was extensively cross-examined. Khanna was entitled to testify. He was represented by counsel. He called witnesses. He made extensive submissions. The proceedings before the FST were judicial in nature. Khanna and Metro were given the opportunity to the contest the FST findings.

[49] Among the issues considered by the FST were whether Khanna, as a mortgage broker, contravened the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c. 29 and whether he engaged in past conduct that affords reasonable grounds for the belief that he will not deal or trade in mortgages in accordance with the law and with honesty and integrity: FST Decision, at para. 8.

[50] As will be considered in greater detail below, the FST Decision addressed the issues of the nature, amount and validity of the second mortgage, the service of the Statement of Claim, the transfer of the mortgage and the Property: at paras. 155-171. The issues are essentially the same issues that are before me. I find that the findings and conclusions of the FST in the FST Decision are admissible and entitled to considerable weight.

The LSO Decision is Admissible

[51] The plaintiff seeks to rely upon the following findings and conclusions of the LSO, at paras. 95-132 of the LSO Decision:

a. There was no documentary evidence obtained by Mr. McLeod that any funds had in fact been advanced by Kantoor under the mortgage prior to arranging the transfer under power of sale;
b. There was no agreement of purchase and sale for the transfer from Kantoor to Khanna;
c. The first mortgage was not discharged on closing;
d. McLeod did not take steps to ensure that Kantoor took reasonable steps to confirm fair market value for the Property; and
e. No accounting was provided to the plaintiff, as required under the Mortgages Act, R.S.O. 1990, c. M.40 during a power of sale proceeding.

[52] The defendants did not participate in the hearing before the LSO. The plaintiff was called as a witness. McLeod did not appear or participate at the hearing. The purpose of the hearing was to determine whether McLeod had engaged in professional misconduct by, among other things, participating in or knowingly assisting in dishonest or fraudulent conduct in connection with eight power of sale/mortgage enforcement transactions, and if so, the sanction for that conduct.

[53] The dealings with the Property and McLeod’s involvement in the claim, default judgment and transfer of the Property to Khanna were reviewed in detail by the LSO. The LSO concluded that Khanna had engaged in dishonest and fraudulent conduct and that McLeod assisted in Khanna’s fraud against mortgagors: LSO Decision, at paras. 258-259. The LSO concluded that McLeod acted improperly in relation to several mortgages and power of sale proceedings and engaged in professional misconduct.

[54] McLeod was the lawyer for Khanna in the claim on the second mortgage, default judgments and subsequent dealings with the Property. He was therefore the agent for Kantoor but appears to have taken instructions from Khanna. The issues, evidence, and conclusions in the LSO hearing with respect to the Property overlap with those before me. Although the principal issue in the LSO hearing was different, the LSO was convinced Khanna had engaged in dishonest and fraudulent conduct. This is consistent with the conclusion of the FST and the Court of Appeal for Ontario in Kantoor v. Comparone.

[55] I am prepared to allow into evidence the five conclusions from the LSO Decision set out above. Conclusions a., b. and d. relate to the details of the transfer of the Property from Kantoor to Khanna and concern information that Khanna and Kantoor would have access to. The plaintiff would not have access to such information. The defendants could easily produce evidence to contradict these conclusions. The same is true for conclusion e. Conclusion c. can easily be determined from an abstract of title.

Findings in Kantoor v. Comparone

[56] The plaintiff relies on Kantoor v. Comparone, Court File No. 35591/12, where Ramsay J. held that the FST Decision found that the business model of Khanna and Metro was essentially illegal, that Khanna not only brokered the mortgages, he administered them when neither he nor Metro were licenced to administer mortgages.

[57] Ramsay J.’s decision was upheld by the Court of Appeal for Ontario in Kantoor v. Comparone, 2023 ONCA 812. The Court of Appeal held, at paras. 4-6:

Meanwhile, in 2017, the Financial Services Tribunal (the “FST”) issued a decision denying [Khanna’s] application for a new mortgage broker’s licence and revoking his company’s mortgage brokerage licence. As set out in the FST Decision, the allegations were that:

Mr. Khanna engaged in past conduct that affords reasonable grounds for the belief that he will not trade or deal in mortgages in accordance with the law and with honesty and integrity; and that Mr. Khanna provided false information to the Superintendent with respect to his most recent application for a mortgage broker licence.

Following a nine-day hearing, the FST determined that the allegations had been established.

As articulated in its 62-page decision, the FST concluded that [Khanna] and Metro Financial Planning Ltd.’s business model was essentially illegal. [Citations omitted.]

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M. Bordin
Released: March 10, 2025