Court File and Parties
Court File No.: BK-22-00208573-OT31 and BK-23-00459531-0031
Date: 2025-05-06
Court: Superior Court of Justice – Ontario – Commercial List
In Bankruptcy and Insolvency
In the Matter of the Bankruptcy of Gary Man Kin Ng, of the City of Toronto, in the Province of Ontario
Re: Gary Man Kin Ng, Bankrupt
Before: Peter J. Osborne
Counsel:
- James Hardy and Erin Pleet, for PwC Inc. in its capacity as Receiver for Bridging Finance Inc., Bridging Income Fund LP, Bridging Mid-Market Debt Fund LP, SB Fund GP Inc., Bridging Finance GP Inc., Bridging Income RSP Fund, Bridging Mid-Market Debt RSP Fund, Bridging Private Debt Institutional LP, Bridging Real Estate Lending Fund LP, Bridging SMA 1 LP, Bridging Infrastructure Fund LP, Bridging MJ GP Inc., Bridging Indigenous Impact Fund, Bridging Fern Alternative Credit Fund, Bridging SMA 2 LP, Bridging SMA 2 GP Inc. and Bridging Private Debt Institutional RSP Fund
- Geoffrey Hunnisett and Ankita Gupta, for ABR PI Investments, Ltd., Global Credit Opportunities (Canada) LP, Global Credit Opportunities Fund, L.P., by its general partner Global Credit Opportunities Fund (GenPar), LLC, GCO Lux (Origination) DAC, and Global Credit Opportunities Luxembourg Multi-Feeder Fund SCSp (collectively BlackRock Funds)
- Gary Man Kin Ng, self-represented Bankrupt
- Mitch Stevenson, for KSV Advisory Inc. in its capacity as Trustee in Bankruptcy of Gary Man Kin Ng
Heard: 2025-02-25
Endorsement
Introduction
[1] This is a motion to lift the stay of proceedings against Mr. Gary Man Kin Ng (“Ng”) by each of the Receiver and BlackRock (both of which are defined below) and a motion by the Receiver to validate service of the Statement of Claim on Ng and the Ng Entities.
[2] Mr. Ng is self-represented. A court reporter was present at the hearing of these motions.
[3] This proceeding is one of many relating to and arising out of the collapse of Bridging Finance Inc. and related entities. The Receiver was appointed by orders dated April 30 and May 3, 2021.
[4] Bridging Finance Inc., Bridging Income Fund LP, SB Fund GP Inc., Bridging Mid-Market Debt Fund LP, and Bridging Finance GP Inc. (collectively “Bridging”), each by their Receiver, PricewaterhouseCoopers Inc. (in such capacity, the “Receiver”) commenced an action in this Court against Ng and others (CV-23-00698715-00 CL) on April 28, 2023.
[5] ABR PI Investments, Ltd., Global Credit Opportunities (Canada) LP, Global Credit Opportunities Fund, L.P., by its general partner Global Credit Opportunities Fund (GenPar), LLC, GCO Lux (Origination) DAC, and Global Credit Opportunities Luxembourg Multi-Feeder Fund SCSp (collectively, “BlackRock”) commenced their own action against Ng and others in this Court (CV-22-00686582-00 CL) on September 6, 2022.
[6] Ng was adjudged a bankrupt on April 5, 2023, with the result that both actions are stayed.
[7] Ng opposes the lifting of the stay of proceedings to permit either action to proceed.
[8] The Trustee in Bankruptcy does not oppose the relief sought.
[9] Defined terms in this Endorsement have the meaning given to them in the motion materials unless otherwise stated.
[10] For the reasons that follow, both motions are granted.
Motions to Lift the Stay of Proceedings
[11] In its action, Bridging seeks, among other things, damages for fraud in the amount of approximately $160 million against Mr. Ng, a declaration that Bridging’s claims against Mr. Ng survive bankruptcy, punitive damages against Mr. Ng in the amount of $1 million, and various other relief against Mr. Ng and various other defendants, including the Ng Entities.
[12] The Receiver alleges, among other things, that Mr. Ng defrauded Bridging by: (i) misappropriating loans advanced by Bridging to his companies, (ii) misrepresenting the existence of a securities investment account held by 889 Manitoba (an Ng Entity), which was offered as security for loans advanced to 889 Manitoba; and (iii) misrepresenting his own wealth pledged via personal guarantees he gave for Bridging’s loans to his companies.
[13] In its action, BlackRock seeks, among other things, damages against Ng for fraud and fraudulent misrepresentation in the amount of approximately $75 million, representing the amount that BlackRock loaned in reliance upon the allegedly fraudulent misrepresentations made by Ng in concert with other defendants.
[14] BlackRock alleges that Ng defrauded the BlackRock Funds by negligently and/or fraudulently misrepresenting that his personal net worth was in excess of $150 million and other representations as set out in the Claim. It also alleges that Ng defrauded the BlackRock Funds by pledging a fraudulent investment account as security for $67 million in loans 2889 Manitoba, a portion of which loan was personally used by Ng to finance his acquisition of the interest in BFI.
[15] Ng has previously been held to have engaged in fraudulent misconduct by a Hearing Panel of the Investment Industry Regulatory Organization of Canada (“IIROC”), including in respect of his dealings with Bridging. The IIROC Hearing Panel found that Ng orchestrated a scheme to obtain $172 million in loans from three lenders—including Bridging—by providing falsified collateral records he provided in support of security for those loans. The IIROC Hearing Panel further found that Ng used part of these loans to purchase his 50% interest in Bridging.
[16] In its reasons, the IIROC Hearing Panel imposed a fine of $5 million, costs of $194,000, and permanently barred Ng from registration in any capacity.
[17] On April 5, 2023, Ng was adjudged bankrupt by order of McEwen J. He has not been discharged and the administration of his estate is ongoing. KSV Restructuring Inc. has been appointed as Ng’s trustee in bankruptcy (the “Trustee”). The bankruptcy order was based in part on the IIROC penalties described above—towards which Ng has made no payments, and in his reasons, McEwen, J. specifically stated that “in reaching this conclusion, it is worth noting that allegations and findings of fraud against Mr Ng remain beyond the scope of this analysis.”
[18] Section 69.4 of the Bankruptcy and Insolvency Act ("BIA") empowers the Court to lift a stay of proceedings in respect of a creditor or person if it is satisfied that:
a. the creditor or person is likely to be materially prejudiced by the continued operation of the stay; or
b. it is equitable on other grounds to make such a declaration.
[19] To lift the stay of proceedings, the moving party must satisfy the Court that there are “sound reasons”, consistent with the scheme of the BIA, to relieve against the automatic stay: Ma v. Toronto-Dominion Bank, para 3.
[20] As observed by Penny, J. in Global Royalties Ltd. v. Brook, 2015 ONSC 6277, para 20, leave to appeal ref’d 2016 ONCA 50, sound reasons constituting material prejudice or other equitable grounds include the following three factors, any of which is sufficient to lift the stay of proceedings:
a. actions for which discharge would not be a defence;
b. actions involving sufficient complexity to make the summary procedure under section 135 of the BIA inappropriate; and
c. actions in which the bankrupt is a necessary party for the complete adjudication of matters at issue involving other parties.
[21] I am satisfied that, while only one is necessary, all three factors apply here and that there are sound reasons for allowing both actions to proceed against Ng. Both the Receiver (on behalf of the creditors of Bridging for whom it brings its action), and BlackRock will suffer material prejudice absent an order lifting the stay of proceedings.
[22] First, each of the Receiver’s claim and BlackRock’s claim cannot be discharged in Ng’s bankruptcy proceedings as the actions are grounded allegations of fraud and fraudulent misrepresentation, a judgment in respect of which will survive a bankruptcy discharge.
[23] Section 178(1)(e) of the BIA provides that an order of discharge does not release the bankrupt from any debt or liability resulting from obtaining property or services by false pretenses or fraudulent misrepresentation, other than a debt or liability that arises from an equity claim. Accordingly, the claims of both the Receiver and BlackRock fall within this exception.
[24] Where an eventual judgment debt would not be discharged in bankruptcy, forcing the plaintiff to wait until discharge constitutes material prejudice: Global Royalties, at para. 27.
[25] To establish sound reasons for lifting the stay, the moving party need only plead specific facts which, if proved, could result in an award of monetary damages falling within the ambit of section 178(1): Scott (Re), 2014 ONSC 5567, paras 28-29, citing Ieluzzi, Re, 2012 ONSC 3447 at para. 10.
[26] In making such a determination, the court may consider the pleadings and any other contextual facts on the record: Re Ramgulam-Rafiq, 2024 ONSC 6085 at para. 24, citing H.Y. Louie Co. Limited v. Bowick, 2015 BCCA 256 at para. 47, per Newbury J.A. dissenting but not on this point.
[27] The sound reasons requirement imposes a low threshold, and the moving party is not required to prove its allegations nor establish a prima facie case against the bankrupt: Ma, at para. 2; and Re Ramgulam-Rafiq, at paras. 18-20. Rather, courts will inquire only into the merits of the action to the extent that the bankrupt adduces evidence that the action is frivolous, vexatious or has little chance of success: Global Royalties (ONCA), at para. 35; and Ma, at paras. 2-3.
[28] For any judgment debt to survive discharge under section 178(1)(e), three elements must be satisfied: (i) false pretences or fraudulent misrepresentation; (ii) a passing of property or provision of services; and (iii) a link between the debt or liability and the fraud: Poonian v. British Columbia (Securities Commission), 2024 SCC 28, para. 54.
[29] The allegations as pleaded in the Claim in each action satisfy all three elements.
[30] I accept the submissions of each of the Receiver and BlackRock that if it proves the allegations in its Claim, Ng will have obtained loans from Bridging through false pretenses. While false pretenses and fraudulent misrepresentation are separate concepts, the essential test for each is that “the property was obtained by ‘deceit’, whether by positive act or failure to disclose material facts”: Poonian at para 61, citing Janis Sarra, Geoffrey B. Morawetz and L. W. Houlden, The 2024 Annotated Bankruptcy and Insolvency Act (Toronto: Carswell, 2024) at §7:199.
[31] The plaintiff in each action alleges in its Claim that Ng misrepresented the extent of the assets that Ng and one of the Ng Entities, 889 Manitoba, could pledge as security to obtain loans from Bridging, and that the security held by Bridging either did not exist or had been grossly overstated. If those allegations are proven, the first element required under section 178(1)(e) will have been satisfied.
[32] The second element required under section 178(1)(e), the “passing of property”, will also be satisfied if the Receiver and BlackRock prove the allegations in their respective Claims.
[33] The governing test for this second element requires that there “be a loss in the form of a transfer of property or delivery of services, as well as a debt or liability corresponding to that loss”: Poonian, at para. 70.
[34] If the plaintiff in each action proves that Ng misrepresented his assets to obtain financing from Bridging and/or from BlackRock, with the result that Bridging and BlackRock held either non-existent or dramatically inferior security, each plaintiff will have established a loss in the form of a transfer of property and a debt corresponding to that loss. Accordingly, the second element under section 178(1)(e) will be satisfied.
[35] Third, if the plaintiff in each action proves the allegations in the Claim, there will be a direct link between its damages and Ng’s misrepresentations. To satisfy the third element under section 178(1)(e), “the debt or liability must have been created as a result of false pretences or fraudulent misrepresentation”: Poonian, at para. 74.
[36] If the Receiver proves that Bridging advanced loans to Ng based on Ng’s misrepresentations regarding the assets he would be providing as security, Bridging will have established a direct link between its damages and Ng’s false pretences. Similarly, if the BlackRock Funds prove their allegations, they will have established a link between the creation of the debtor liability and the deceit by the debtor: but for the fraudulent misrepresentations by Ng, BlackRock would not have loaned money as they did. Accordingly, the final element under section 178(1)(e) will be satisfied in each case.
[37] Moreover, in addition to the above, which in my view constitute “sound reasons” for lifting the stay and allowing both actions to proceed, I am satisfied that the allegations of the Receiver and BlackRock against Ng are supported by the key contextual facts on the record. Those include, but are not limited to, the finding already made by the IIROC Hearing Panel that Ng has engaged in fraudulent misconduct.
[38] The IIROC Hearing Panel accepted that Ng orchestrated a scheme to obtain $172 million in loans from three lenders—including Bridging—by providing falsified collateral records; that Ng used part of these loans to purchase a 50% interest in Bridging; and that, as noted in its Reasons, Ng “should face the most severe consequences” for his actions, imposing the maximum fine of $5 million, among other penalties.
[39] For those reasons, I accept that the claims of the Receiver and BlackRock are not frivolous, vexatious or have little chance of success. It follows that the plaintiff in each action should not be prejudiced by continuing to delay its action when the damages that would flow from a judgment will survive Ng’s bankruptcy discharge in any event.
[40] I am also satisfied that it would be inappropriate to deal with the claims of the Receiver and BlackRock against Ng by way of summary procedure. This Court has previously observed that fraud is “too serious a matter to be dealt with on a summary proceeding” where liability and damages are yet to be established: Sher, Re, para 59; see also Global Royalties, at para. 28.
[41] The Court in Global Royalties observed at para. 28 that the fraud claim there raised complex factual issues that required documentary and oral discovery, were likely to involve numerous procedural steps; and presented credibility issues that necessitated viva voce evidence.
[42] All of those factors apply to the actions here. If the Receiver and BlackRock were restricted to the summary procedure established by section 135 of the BIA, they would be deprived of the procedural tools necessary to adduce relevant evidence, resulting in material prejudice.
[43] I am further satisfied that Ng is a necessary party to both actions. In addition to the claims advanced against Ng and the Ng Entities, the Receiver and BlackRock each advance claims against several other parties alleged to have knowingly assisted and/or knowingly received proceeds from the funds misappropriated by Ng. Those defendants include Ng’s brother, his former spouse (who has herself cross-claimed against Ng for contribution and indemnity) and another person believed by the Receiver to have been in a romantic relationship with Ng.
[44] Material prejudice will arise where the bankrupt is a necessary party for the complete adjudication of matters in an action involving other parties, particularly where other claims in the action revolve around the alleged fraudulent conduct of the bankrupt: Koval (Bankruptcy), Re, paras 3-7; Turner, Re, para 9; and Global Royalties at para. 29.
[45] The material prejudice arises from things such as the duplication of expense associated with proceeding separately; the risk of differing outcomes on liability and/or damages; and the inability to obtain discovery evidence from the bankrupt within the civil proceedings: Catahan, Re, paras 14–16; Turner, Re, at paras 9-10; and Koval, at para. 7.
[46] I am satisfied that both the Receiver and BlackRock would suffer material prejudice if required to proceed against Ng separately. Such would be inconsistent with common sense, the avoidance of prejudice to the plaintiffs and the efficient use of scarce judicial resources.
[47] Finally, I have considered the materials filed and the submissions made by Ng in opposition to the motion to lift the stay in each action. None of them is compelling to persuade me to deny the motions.
[48] Ng makes various allegations against the Receiver in his factum filed on the motion in that action, including that:
a. the Receiver has been an inspector in his bankruptcy and “knows very well there are no funds in the estate”;
b. the Receiver has a fiduciary duty to mitigate costs and risk, both of which are increased if the stay were lifted;
c. the Receiver would not face any material prejudice if the stay were not lifted;
d. the Receiver is “merely acting in a performative manner which seems to be self-serving”;
e. the Receiver “stands to gain hundreds of thousands of dollars of fees charged to the [Bridging] estate”;
f. the motion seeks to “supersede” the fact that Ng would otherwise soon be eligible to apply for a discharge;
g. the Receiver made “callous use of the word ‘fraud’”. “Adding fraud to a claim because you ostensibly think that it would make it not be dischargeable from a bankruptcy is lazy and suspicious”;
h. a summary procedure is appropriate; and
i. the Receiver “is failing to respect the efficiency and time of this Court by introducing last-minute, incoherent, and wild and imaginary accusations without evidence that do not result in any financial benefit for the BFI estate”.
[49] Ng goes on to submit that he has been open and direct about his dealings with the owners and principals of Bridging. In particular, he plainly admitted, on December 16, 2024, during an examination conducted by the Trustee, to paying bribes to David and Natasha Sharpe, the former CEO and CIO of Bridging respectively, after the Sharpes required bribes in exchange for overlooking potential due diligence requirements for loans to Ng’s companies. Ng’s own sworn evidence was that he paid to each of David and Natasha Sharpe the amount of $500,000, in addition to which he made additional transfers of funds or items to them which he described as follows: “yeah, a couple hundred grand here and there. Gifts, like, a gold Rolex that David wanted. Natasha got a diamond necklace that she wanted.”
[50] Ng submits in his factum filed on these motions, and reiterated in his submissions to the Court, that “there is no specific law that states it is illegal to give the principal and owners of a private organization a bribe”. “Canadian anti-corruption laws only [apply] to government officials and the BFI owners were clearly not government officials.” “The fact that Mr. Ng was open and honest about providing a bribe to the principals of Bridging shows that no fraud occurred on Mr. Ng’s part”.
[51] In all, I cannot accept Ng’s submission that either action is frivolous, vexatious or has little chance of success, or that, as he submits that “even if the Receiver wins, there is no money to be had anyways. This is a huge waste of time and money that could otherwise go to the stakeholders of BFI”. Nor do I accept his submission that I ought to ignore the findings of the IIROC Hearing Panel since it is “just a private members’ club”.
[52] To state the obvious, I am not making any determination on the merits of the allegations in either action. I am, however, satisfied for the purposes of these motions that the actions are not frivolous, vexatious or have little chance of success at this stage.
[53] For all of these reasons, I am satisfied that the stay of proceedings in Ng’s bankruptcy should be lifted pursuant to section 69.4 of the BIA to permit the action by each of the Receiver and BlackRock to proceed.
Motion to Validate Service of the Claim
[54] The Receiver also moves for an order validating service of the Statement of Claim in its action on Ng and the Ng Entities.
[55] Such an order may be granted pursuant to rule 16.08(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, where the Court is satisfied that the document came to the notice of the person to be served.
[56] Clearly and unequivocally, the Claim has come to Ng’s notice and attention. Ng confirmed by electronic mail communication, among other things, that he had received the Motion Record of the Receiver in connection with this motion, which includes, among other materials, the Statement of Claim.
[57] Responding to service of documents via email can be sufficient to demonstrate that the party was aware of the proceedings, in the context of justifying an order under rule 16.08: Dufferin Communications Inc. v. Ducic & Fleming Fitness Inc., 2023 ONSC 4390, para 10. I am satisfied that service should be validated on Ng.
[58] I am also satisfied that service on Ng constitutes service on the Ng Entities. Each of those Entities has Ng as a director. For all but one (Chippingham AM), he is the sole officer and director. For Chippingham AM, the corporate documents confirm that Ng is both a director and the President (and officer).
[59] In short, I am satisfied that Ng has notice and is aware of the Statement of Claim in both his personal capacity and in his capacity as director and controlling mind of each of the Ng Entities. Service on corporations has been validated where a director and/or controlling mind was aware of the document in their personal capacity: 1705371 Ontario Ltd. v. Leeds Contracting Restoration Inc., 2018 ONSC 7423, para 63; and Royal Bank of Canada v. HCB Thickson Ltd. et al., 2019 ONSC 7084, para 29.
[60] Accordingly, service on the Ng Entities is also validated.
Result and Disposition
[61] The motion of each of the Receiver and BlackRock to lift the stay of proceedings pursuant to section 69.4 of the BIA in order that both actions can proceed is granted.
[62] The Motion of the Receiver to validate service of the Statement of Claim in its action on Ng and the Ng Entities is granted.
[63] Orders to go in accordance with these reasons.
Peter J. Osborne