Court File and Parties

Court File No.: CV-22-00000352-0000 (Belleville)
Date: 2025-05-13
Court: Superior Court of Justice - Ontario

Plaintiff: Parham Pozhhan
Defendant: Pedram Pozhhan

Before: Graeme Mew
Counsel: Jennifer Ng, for the plaintiff
Pedram Pozhhan (defendant in default), did not participate

Heard: 2025-05-13, at Belleville (in writing)

Endorsement

[1] On 20 June 2024 I gave partial default judgment in favour of the plaintiff: Pozhhan v. Pozhhan, 2024 ONSC 3575. I will not repeat the facts in that endorsement which are also pertinent to this one.

[2] My previous judgment, inter alia:

a. Declared that the plaintiff is the sole beneficial owner of a residential property at 83 Moira Street East in Belleville (the “Property”), free and clear of any claim, right, title or interest of the defendant;

b. Ordered that all right, title and interest in the Property vested in the plaintiff, nunc pro tunc effective 17 November 2014, free and clear of any claim by the defendant or his creditors, mortgagees, successors or assigns, subject only to the interests of TD pursuant to a mortgage and subsequent charge in TD’s favour; and

c. Directed that the plaintiff’s ownership shall be recorded on title.

[3] I directed that the balance of the relief claimed in the plaintiff’s motion for judgment, including the issues of damages and costs, were adjourned to be heard by me, in writing or as I might otherwise direct, on a date to be set in consultation with the trial coordinator.

[4] The plaintiff now seeks judgment on the balance of his claim. I would note that although the defendant remains in default, it appears from an exchange of emails between the defendant and Becky Veen of Mackay Insurance Brokers Inc. in September 2024 concerning insurance on the Property, that the defendant has been made aware that title to the Property is now registered solely in the plaintiff’s name.[1]

[5] The plaintiff now seeks damages comprised of his out-of-pocket costs caused by the defendant’s alleged breach of fiduciary duties and misappropriation of trust funds, punitive damages, and full indemnity costs.

Additional Facts

[6] Since a default on the first mortgage on the Property held by TD Bank occurred due to the defendant’s conversion of funds which had been remitted to him by the plaintiff to make mortgage payments to TD Bank, the plaintiff has paid all monthly payments owing on the charge directly to the TD Bank.

[7] In late December of 2024, the plaintiff secured financing and paid off the remaining balance owing on the first charge in favour of the TD Bank, that had been previously registered by the defendant against the Property, as well as the outstanding balance of $40,439.56 on a line of credit utilised by the defendant and secured as a second charge against the Property.

[8] The plaintiff’s affidavit dated 25 March 2025 discloses that, as a result of the defendant’s alleged breach of fiduciary duties and misappropriation of funds, the plaintiff has incurred payments and losses totalling $45,657.76 comprised of the following:

a. $40,466.04, being the total amount paid to discharge the credit facility that the defendant had withdrawn from, and registered against the Property;

b. $4,128.00, being the e-transfers made to the defendant (monthly in each of February through May of 2024), which the defendant retained and failed to remit to the mortgagee; and

c. $1,063.72, representing expenses, fees and disbursements charged by the mortgagee, TD Bank, on default of the first mortgage, when the defendant failed to remit the monthly mortgage payments owing.

Discussion

[9] The amounts claimed are all supported by the evidentiary record and flow from the causes of action pleaded and the relief sought in the statement of claim, namely the outstanding balance on the line of credit that was opened by the defendant without the plaintiff’s knowledge, the mortgage funds diverted by the defendant, and the expenses, fees and disbursements arising from the mortgage default resulting from that diversion of funds. Judgment will, accordingly, go for the total of $45,657.76 claimed.

[10] Consistent with the approach taken by this court in Philbin v. Orford, 2023 ONSC 6949, paras. 92-93 (a case also involving breach of fiduciary duties and misappropriation of funds), the plaintiff seeks pre-judgment interest on the sum of $45,657.76, calculated at the rate of 2.8% from the date of issuance of the statement of claim (10 November 2022). I am satisfied that I should exercise my discretion to award pre-judgment interest as requested.

[11] The plaintiff also seeks punitive damages. Punitive damages can be awarded on a motion for default judgment: Bank of Montreal v. 1886758 Ontario Inc., 2022 ONSC 4642, para. 34; Camlibra Consulting Inc. v. Mulville, 2021 ONSC 4570, para. 28. As the Supreme Court of Canada indicated in Vorvis v. Insurance Corporation of British Columbia, [1989] 1 S.C.R. 1085 at 1108, conduct meriting punitive damage awards must be harsh, vindictive, reprehensible and malicious as well as extreme in its nature, and such that by any reasonable standard deserving of full condemnation and punishment. Awards of punitive damages are restricted to exceptional conduct that "offends the court's sense of decency": Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130, para. 196.

[12] The defendant's behaviour left the plaintiff with no alternative to pursuing him in court. Having done so, I found that the defendant had abused his position of authority and trust: first, by failing to transfer, upon request, legal title in the Property to its rightful (and the beneficial) owner, to which he has contributed nothing aside from his "name" on the mortgage; secondly, by his registration, without notice or consultation to the plaintiff, of a $40,000.00 line of credit against the Property; and finally, by diverting funds receipted by him intended for the mortgage, apparently for his own use or benefit.

[13] I am not persuaded, reprehensible though the defendant’s conduct may have been, that it rises to a level that would engage an award of punitive damages.

[14] I am, however, satisfied that the defendant’s behaviour, and the inevitable litigation that resulted from it, has been such that costs should be awarded on a substantial indemnity scale. As recently held in BMO Trust Company v. Aubin, 2025 ONSC 2298, paras. 86-87:

[86] Substantial indemnity costs are costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties.

[87] Courts will generally award substantial indemnity costs to compensate a party for the other party's conduct during the course of litigation, rather than compensating for conduct that occurred prior to litigation. However, substantial indemnity costs may be sought in relation to conduct that occurred prior to litigation so long as damages sought are not in reference to the same conduct.

[15] The detailed bill of costs submitted by the plaintiff discloses substantial indemnity costs incurred of $32,665.73. Such costs are reasonable and proportionate in the circumstances.

Decision

[16] For the foregoing reasons, the plaintiff shall have judgment on the remaining balance of his claim not covered by my judgment of 20 June 2024 as follows:

a. Damages in the amount of $45,657.76.

b. Pre-judgment interest on that sum calculated from 10 November 2022 to the date of this judgment at 2.8%.

c. Costs on a substantial indemnity basis, fixed at $32,665.73.

Graeme Mew
Date: 13 May 2025

Note

[1] In response to Ms. Veen’s message, the defendant wrote: “[The plaintiff] is a tenant that was supposed to pay for insurance and he has not paid rent in months. The case is in court and he has made several fraudulent attempts with his assumptions. I’m travelling abroad right now and will evict him upon my return.” No further steps have been taken by the defendant in relation to either the Property or the judgment since that exchange.