CITATION: Wang v. Kesarwani, 2017 ONSC 6821

COURT FILE NO.: CV-17-580240

DATE: 20171120

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN: ) ) RONG JUAN WANG and YI HAO INVESTMENTS INC. Plaintiffs – and – RAHUL KESARWANI, MALTI KESARWANI, 994179 ONTARIO LTD., ARDEN AL, HERSHEY GUEVERA AL, YAN-LING DING, and SHERRY WONG Defendants ) ) ) ) ) ) ) ) ) ) ) )) Michael B. Miller, Patricia L. McLean and Rachel H. Pilc for the Plaintiffs Bryan C. McPhadden for the Defendants Rahul Kesarwani, Malti Kesarwani and 994179 Ontario Ltd. Scott Turton for the Defendants Arden Al, Hershey Guevera Al, Yan-Ling Ding and Sherry Wong ) HEARD: October 24, 2017

PERELL, J.

REASONS FOR DECISION

A. Introduction and Overview

[1] In this action, Rong Juan (Judy) Wang and her corporation Yi Hao Investments (“YH-Investments”) sue: Mr. Arden Al, Ms. Hershey Guevera Al, Yan-Ling Ding, Mr. Rahul Kesarwani, Mrs. Malti Kesarwani, 994179 Ontario Ltd. (“Kesarwani Corp.”), and Sherry Wong. The Plaintiffs allege that the Defendants conspired to commit three mortgage frauds and that Mr. Kesarwani, who is a lawyer and who acted for the Plaintiffs, was professionally negligent and in breach of his fiduciary duties.

[2] On August 9, 2017, without notice, the Plaintiffs obtained an interim Mareva injunction (freezing the assets of the Defendants), an interim Norwich Order (requiring the disclosure of information from the Defendants), and certificates of pending litigation against properties owned by the Kesarwanis, Ms. Al, and Ms. Ding. The interim orders were continued on August 18, 2017 pending the completion of cross-examinations.

[3] On September 5, 2017, the Plaintiffs abandoned the Mareva injunction as against Mr. Kesarwani and Kesarwani Corp. On September 12, 2017, the Plaintiffs abandoned the Norwich Order as against Mr. Kesarwani and Kesarwani Corp. On September 13, 2017, the Mareva injunction and the Norwich Order as against Mr. Kesarwani and Kesarwani Corp. were vacated. The injunctions as against the other Defendants were extended until October 24, 2017.

[4] On the return of the main motion to continue the injunctions, in one of the other motions now before the court, the Plaintiffs seek to have numerous paragraphs stricken from the affidavits of Mr. Al, Ms. Ding, and Ms. Wong. In the main motion, the Plaintiffs seek to have the interim interlocutory injunctions continued to trial, and for their part, the responding Defendants Mr. Al, Ms. Al, Ms. Ding, and Ms. Wong seek to have the interim interlocutory injunctions vacated. In the third motion, the Kesarwani Defendants seek damages and costs of approximately $200,000 to enforce the Plaintiffs’ undertaking as to damages.

[5] For the reasons that follow: (a) I dismiss, without costs, the Plaintiffs’ motion to strike paragraphs in the various affidavits because the Plaintiffs purported to proffer evidence to contradict or qualify the evidence they sought to strike out as prejudicial and irrelevant, and, in any event, the impugned paragraphs, if stricken, would have not changed my decision, which can be based on other evidence, and thus no purpose would be served by striking the paragraphs. Further, and without getting into the details, much of the challenged paragraphs were admissible for some purposes; (b) I vacate with costs in the cause, the Mareva injunction, the Norwich Order, and the certificates of pending litigation; and (c) I dismiss the Kesarwanis’ motion to enforce the undertaking as to damages with costs in the cause.

B. Factual Background

1. Introduction

[6] Affidavit and or cross-examination evidence were proffered for the motions now before the court from 16 witnesses; namely: Mr. Al, Ms. Al, Ms. Ding, Adamo Fucile, Neeraj Jain, Annysha Jaiswal, Mr. Kesarwani, Mrs. Kesarwani, Rachel Pilc, Yan Yan Su, Jack Tannerya, Susan Turton, Ms. Wang, Ms. Wong, Daniel Woods, and Mr. Zhang.

[7] The Plaintiff Ms. Wang speaks Mandarin and does not speak or read English. She emigrated to Canada with Mr. Zhang, whom she says she divorced in 2013. They have two children that live with her. She was a 50% owner of Y-H Investments along with Mr. Zhang until March 2016, when Mr. Zhang conveyed his 50% interest in the company to her in gratitude for her having paid for providing the stakes for his high stakes gambling. Mr. Zhang is a profligate high stakes gambler.

[8] Mr. Al is a former jewellery importer, who emigrated to Canada in 1999, where he carried on business between China and Malaysia until his bankruptcy in 2014. He has three children, a son and two daughters, the older daughter being the Defendant Hershey Guevera Al (Ms. Al). Mr. Al is fluent in English and Cantonese and has a working knowledge of Mandarin. He was a friend of Ms. Ding, Ms. Wang, and Mr. Zhang, and Mr. Al referred legal work to Mr. Kesarwani and immigration work to Daniel Woods, a non-lawyer immigration consultant.

[9] Ms. Al is Mr. Al’s 26-year-old daughter and a university student enrolled in a business management course. She speaks only English.

[10] Ms. Ding is a licensed real estate agent. She was born in China and is fluent in Mandarin and Cantonese. She emigrated to Canada in 2002 and learned English as a second language. Ms. Ding met Mr. Zhang in Canada through her husband, and the Plaintiffs engaged Ms. Ding as a real estate sales agent to sell their properties.

[11] Mr. Jain has an engineering degree but now carries on business as a private investor. He is an acquaintance of Mr. Kesarwani and his ex-wife from their school days in Ottawa.

[12] Mr. Kesarwani is a lawyer with a general practice in Toronto with an emphasis on commercial, corporate, and real estate law as well as some family law.

[13] Mrs. Kesarwani is Mr. Kesarwani’s mother. The family emigrated from India. She lives in Ottawa and has retired from career as a librarian. Apart possibly for this litigation, Mrs. Kesarwani does not know and has not met, Mr. Al, Ms. Al, Ms. Ding, Ms. Wang, Ms. Wong, or Mr. Zhang. Kesarwani Corp. is Mrs. Kesarwani’s company, which she owns with her son Mr. Kesarwani. She leaves the management of the company entirely to him.

[14] Ms. Wong is a businesswoman who operates two businesses; Canadian College of Healthcare and GC Health and Wellness Centre, that provide healthcare services (massage, acupuncture, physiotherapy, etc.). She speaks Cantonese and Mandarin. English is her second language. Ms. Wong emigrated to Canada from Hong Kong in 1990. Ms. Wong is a frequent gambler at Casino Rama, where she became an acquaintance of Mr. Al, Ms. Ding, and Mr. Zhang.

[15] Daniel Woods is an immigration consultant, who Ms. Wang and Mr. Zhang referred to as “the Chief Justice”. He was a federal civil servant for 20 years until 1993, when he went into private practice, sometimes in association with a law firm. Through a connection with Mr. Al, Mr. Woods was retained by Ms. Wang and Mr. Zhang to prepare a separation agreement in 2011 and later to process their citizenship applications. There is a controversy about whether Mr. Woods was retained to apply for a divorce for Ms. Wang and Mr. Zhang. Mr. Woods’ son, Andrew (Chris) Woods acted as a commissioner of oaths on one of the alleged mortgage frauds. Mr. Daniel Woods was an acquaintance of Mr. Al, who referred him work, Mr. Kesarwani, and Ms. Ding. Mr. Woods does not know Ms. Wong.

[16] Mr. Fucile is an articling student at Mr. Kesarwani’s law office. Ms. Jaiswal was an articling student at Mr. Kesarwani’s law office during the events of 2017. Ms. Pilc is a lawyer at Dickinson Wright LLP, the Plaintiffs’ lawyers. Ms. Su is an interpreter engaged by the Plaintiffs. Mr. Tannerya is a partner at Dickinson Wright LLP. Ms. Turton is a law clerk for F. Scott Turton, who is counsel for Mr. Al, Ms. Al, Ms. Ding, and Ms. Wong.

[17] Eleven witnesses; namely: Mr. Al, Ms. Al, Ms. Ding, Mr. Jain, Ms. Jaiswal, Mr. Kesarwani, Mrs. Kesarwani, Ms. Wang, Ms. Wong, Mr. Woods, and Mr. Zhang, were examined under oath.

[18] There are irreconcilable differences in the witnesses’ respective accounts of what occurred. Most of the accounts of the events have inconsistencies and incredulities. Some witnesses have alternative versions of their own accounts of the events. In the cross-examinations, there were reciprocal attacks on the reliability, credibility, and honesty of the witnesses. I have read the transcripts of the unfocussed, unorganized, and dysfunctional cross-examinations of the witnesses, and the transcripts are replete with inane, unfair, and improper questions and evasive and unintelligible answers. There are countless improper interruptions and interferences. There are countless instances where it is not clear that the witness understood the question and countless instances where the questions are unintelligible. There are numerous refusals of proper questions that should have been answered. Large portions of the evidence have the quality of pulp fiction.

[19] As the action progresses, the judges hearing other interlocutory motions and the trial judge will have to make their own determinations and they may come to different or other findings of fact as the evidentiary record develops. My findings of fact and of credibility are not to be taken beyond the motions now before the court.

[20] I make the following finding of fact hermetically just for the purposes of deciding the interlocutory motions now before the court.

2. Factual Background

[21] In December 2010, Ms. Wang (born 1977) and Mr. Zhang (born 1964) emigrated to Canada from China pursuant to the immigrant investor program. Ms. Wang and Mr. Zhang speak Mandarin and they are non-lingual in English. They have two children, the eldest daughter being an American citizen having been born during Ms. Wang’s brief visit to the United States.

[22] Ms. Wang and Mr. Zhang arrived in Canada with at least six million dollars. How this was so and how they have sustained themselves in Canada, where neither of them has any employment or businesses, apart Mr. Zhang’s gambling and YH-Investments land development projects, is not explained. On the instructions of counsel, during her cross-examinations, Ms. Wang refused to answer any questions about the source of her wealth or about her business affairs in China and about her travel to China. The explanation of some of the Defendants for the Wang-Zhang wealth is that they believe that Mr. Zhang was a criminal who managed to get his wealth out of China to become a money launderer in Canada. I make no finding other than saying that it is unknown how Ms. Wang and Mr. Zhang acquired their considerable wealth or how they got it out of China for investments in Canada.

[23] In 2011, the Wang-Zhang family moved into a house at 77 May Avenue, Richmond Hill. The house was purchased for $1,255,000 cash with no financing.

[24] Ms. Wang and Mr. Zhang deposed that in February 2011, they separated. Mr. Zhang may believe that a separation is the same as divorce. They signed a separation agreement dated February 10, 2011. The agreement was prepared by the immigration consultant, Daniel Woods, who was introduced to Ms. Wang and Mr. Zhang by Mr. Al, who had been introduced to them by Ms. Ding. Mr. Woods was associated with a law firm that reviewed his work outside the immigration area, and he testified that he recommended that Ms. Wang and Mr. Zhang obtain independent legal advice because of the extent of their property holdings. Mr. Woods says that he was not given instructions to proceed with divorce proceedings.

[25] After the separation, Mr. Zhang moved out of the family home, but he would return from time to time to visit the children. According to Ms. Wang, Mr. Zhang would sometimes stay overnight in a separate bedroom. According to Mr. Zhang, he would stay overnight only if Ms. Wang was away.

[26] Although separated, Ms. Wang and Mr. Zhang remained business partners. On September 1, 2011, YH-Investments was incorporated. Its books and records are kept by a Mandarin speaking accountant. The corporation was owned equally by Ms. Wang and Mr. Zhang and its purpose was to purchase and develop real property.

[27] On November 7, 2011, shortly after YH-Investments’ incorporation, it purchased 55 Avenue Rd., Richmond Hill. The property was purchased for $900,000 cash without any financing. The property was subsequently severed to become 55 and 57 Avenue Rd. New houses were constructed on both properties. No explanation is provided as to how the improvements were paid for.

[28] On November 11, 2011, YH-Investments purchased a property municipally known as 21 Sunnywood Crescent, Richmond Hill, Ontario for $1,050,000 cash without financing. In 2012, the existing bungalow on the property was demolished, and a new two-storey home was constructed. No explanation is provided as how the improvements were paid for. Ms. Wang believes that the Sunnywood property is now worth between $3.75 million and $4.25 million.

[29] In early 2012, Mr. Zhang introduced Ms. Wang to Ms. Ding. Ms. Ding’s husband had been a countryman of Mr. Zhang in China. Ms. Ding would encounter Mr. Zhang at Casino Rama, a gambling establishment, north of Toronto. Ms. Ding introduced Ms. Wang and Mr. Zhang to Mr. Al. Ms. Ding says that she lent hundreds of thousands of dollars to Mr. Zhang who needed the money to pay for gambling. Mr. Al says he also lent money to Mr. Zhang. Mr. Zhang’s evidence is that Ms. Ding and Mr. Al were the borrowers and he the lender of hundreds of thousands of dollars.

[30] On June 30, 2012, Ms. Wang and Mr. Zhang purchased 45 Parr Place, Thornhill, Ontario for $3.5 million with a $2.3 million mortgage from the Bank of Montreal. The balance of $1.2 million was paid from cash. This property is where Ms. Wang resided with the children. There are documents in which Mr. Zhang specifies Ms. Wang’s home as his address.

[31] Ms. Wang and Mr. Zhang deposed that they divorced in July, 2013, and Mr. Zhang produced a copy of the divorce decree purportedly granted by Justice Paisley sitting in Newmarket on July 25, 2013. Mr. Zhang deposed that Mr. Al had arranged for the divorce through his connection with Mr. Woods (“the Chief Justice”). Mr. Zhang deposed that Mr. Al delivered the decree to Ms. Wang’s home. Mr. Zhang said he paid Mr. Al $5,000 for Mr. Woods’ services. The divorce decree is suspicious, because there is no record of it in Newmarket and Justice Paisley sits in Toronto, not Newmarket. Moreover, the application for divorce in the Newmarket file, in which Mr. Zhang is the applicant, is dated July 23, 2013 and a two-day processing of a divorce is improbable. For the purposes of the motions before the court, I can and will assume, however, that Ms. Wang and Mr. Zhang were divorced in 2013 and lived separate lives but carried on business together as co-owners of YH-Investments.

[32] In 2013, the Wang-Zhang family home at 77 May Avenue was sold for $1,355,000. Ms. Ding was the real estate salesperson acting on the sale. Ms. Wang moved her family into 45 Parr Place.

[33] In the fall of 2014, Mr. Al made a proposal in bankruptcy. Mr. Al testified that his bankruptcy was precipitated by him and his wife being reassessed by Revenue Canada for the money he made in his importing business in Malaysia. Mr. Al said that he was not carrying on business in Canada, but was reassessed nevertheless. Since the bankruptcy, Mr. Al has had no income, and he has lived on the support of his family in Malaysia, who provide monthly payments to him of between $2,000 and $15,000.

[34] Mr. Al deposed that by the time of his bankruptcy, he had loaned Mr. Zhang over $400,000 for Mr. Zhang’s gambling habits and debts. These loan receivables are not documented and do not appear as assets in Mr. Al’s bankruptcy proceedings.

[35] Mr. Zhang denies that he borrowed any money from Mr. Al. There is, however, no denying that Mr. Zhang is a high stakes gambler who has lost hundreds of thousands if not millions of dollars that Ms. Wang and possibly others were prepared to cover. Although Ms. Wang did not mention Mr. Zhang’s profligacy until she was cross-examined, she admitted paying millions of dollars to pay for Mr. Zhang’s gambling activities. Mr. Zhang said that he asked and was given approximately $6.0 million, largely from the sales of YH-Investments’ properties.

[36] Ms. Wang’s evidence on cross-examination confirmed that she had given millions of dollars to Mr. Zhang so that he could gamble. During cross-examination, she testified:

1126. Q. You advanced 5 to 6 million dollars to Mr. Zhang. Allow me to clarify that. Was it actually to Mr. Zhang that you gave the money?

A. Yes.

1127. Q. Did you pay any of that money to anyone else?

A. No.

1128. Q. Did he tell you what he needed that money for?

A. To play at the casino.

1129. Q. Was it to pay any gambling debts that he already had?

A. No.

1130. Q. When did you give him that money, the 5 to 6 million dollars?

A. Ever since coming to Canada, the money was advanced to him at different times.

1131. Q. In what amounts?

A. Sometimes more, sometimes less, different amounts.

1132. Q. What's the most you gave to him at any one time?

A. 2.5 million, I think.

….

1146. Q. Since March 4, 2016, how much money have you given Peter [Mr. Zhang]?

A. Maybe less than 100,000.

1147. Q. Altogether?

A. Yes. No, sorry, less than 1 million.

1148. Q. Less than 1 million.

A. Sorry, yes.

[37] Mr. Zhang frequently gambled at Casino Rama. It seems that Ms. Ding was also a gambler as was Mr. Al. Ms. Wong, another of the Defendants who gambled at Casino Rama, says that she met Mr. Zhang at the baccarat tables. Ms. Wong and Mr. Zhang became acquaintances. In undocumented loans of gambling chips and cash, Ms. Wong says she loaned Mr. Zhang $180,000. Ms. Wong says that she understood that Mr. Zhang owned YH-Investments. She testified that he promised to repay his indebtedness to her by selling or mortgaging the properties of his corporation. Mr. Zhang denies even knowing Ms. Wong.

[38] Ms. Ding testified that she also loaned money to Mr. Zhang for his gambling. This too is denied by Mr. Zhang.

[39] Because of the bankruptcy, Mr. Al lost his matrimonial home. In 2015, Ms. Wang and Mr. Zhang allowed Mr. Al to reside rent free at the Sunnywood property. Mr. Al says he paid rent. In any event, he and his terminally ill wife and two of their three children moved into the Sunnywood home. Ms. Wang says that the charitable accommodation was to be temporary, but, to her chagrin, the Als stayed rent free for almost two years. None of this is documented by leases or payment receipts, but for present purposes, I do not have to decide whether Mr. Al was a squatter or a renter of the Sunnywood property for almost two years.

[40] In May 2015, at a meeting at 45 Parr Place, Mr. Al introduced Mr. Kesarwani to Mr. Zhang and Ms. Wang. Mr. Kesarwani thought he was at Ms. Wang’s and Mr. Zhang’s matrimonial home and that they were married. At the meeting, which had the purpose of possibly retaining Mr. Kesarwani for legal services, Mr. Kesarwani met Ms. Wang, whom he says was introduced as Mr. Zhang’s wife. Ms. Ding was also in attendance at the meeting. Mr. Zhang said that he met with Mr. Kesarwani briefly outside the house and that Mr. Kesarwani never came inside the house.

[41] After this meeting, Mr. Kesarwani began providing legal services for YH-Investments. Because Mr. Kesarwani does not speak Mandarin or Cantonese, he would take instructions from Mr. Zhang with the aid of Ms. Ding and Mr. Al acting as interpreters.

[42] In June 2015, Mr. Kesarwani acted for YH-Investments to place a $900,000 mortgage from the CIBC on the 57 Avenue Rd. property. Mr. Kesarwani and Ms. Ding deposed that mortgaging the 57 Avenue Rd. property would not have been possible if Mr. Zhang was shown to be the owner of YH-Investments. Accordingly, ownership of the corporation was transferred to Ms. Ding and then the CIBC approved the mortgage. The transaction was completed, and Ms. Ding says that she paid the money to Mr. Zhang. Mr. Kesarwani says that he understood that the money was to be used to repay Mr. Zhang’s gambling debts.

[43] Mr. Zhang deposed, however, that when he learned of the transaction, he was enraged because he had not authorized it and thought that Ms. Ding was stealing the money. He testified that Ms. Ding promptly repaid the money less $70,000, which he paid of his own money to redeem the mortgage and repay the indebtedness to the CIBC. Ms. Ding deposed, however, that Ms. Wang learned about the mortgage on 57 Avenue Rd., and it was Ms. Wang who paid the CIBC and with the mortgage being discharged, Ms. Ding transferred ownership back to YH-Investments.

[44] Pausing here, I need not making any finding about the truth and propriety of the mortgaging of 57 Avenue Rd. beyond noting that it is a very suspicious transaction but one in which the CIBC ultimately was not harmed. I also observe that if Ms. Wang’s and Mr. Zhang’s version of this occurrence is true, then it is bizarre that they had anything more to do with Ms. Ding or with Mr. Kesarwani.

[45] Returning to the narrative, in 2015, Mr. Zhang was living in Montreal where he had purchased a condominium for approximately $0.5 million. Ms. Ding deposed that she visited Mr. Zhang and his girlfriend Yang Fang in Montreal. Ms. Ding deposed that she lent Mr. Zhang more funds to gamble including paying $20,000 interest on his pawning of an expensive watch. This loan is denied by Mr. Zhang.

[46] In January 2016, Mr. Kesarwani acted on the sale of 55 Avenue Rd. Ms. Ding acted as real estate salesperson. The sale proceeds of $1.5 million were paid to YH-Investments and then apparently they went to Mr. Zhang. Ms. Ding says that she paid $30,000 of her own money to tradespersons who were not paid for renovations to the property. The Plaintiffs dispute that Ms. Ding made this payment.

[47] On February 1, 2016 Casino Rama sued Mr. Zhang for $195,000 plus interest. Mr. Zhang said he paid $55,000 to reduce this debt.

[48] In February 2016, Mr. Kesarwani acted on the sale of 57 Avenue Rd. Ms. Ding acted as real estate salesperson. The property was sold for $1.8 million and YH-Investments was paid in part by taking back a third mortgage for $270,000 and the net proceeds of sale of $1.5 million was paid to YH-Investments, and once again, it seems that this money went to Mr. Zhang. Mr. Kesarwani says that after the closing Mr. Zhang, without explanation, wrote off and discharged the $270,000 third mortgage.

[49] I pause here to say that the sale and the third mortgage on 57 Avenue Rd. is another suspicious transaction. One malign interpretation of the facts is that Mr. Zhang, aided by Ms. Ding, who would have been interested in earning a commission on the sale, conspired with the purchaser to pull off an “Oklahoma” in which the purchase price is overstated to obtain financing for the transaction. Mr. Kesarwani, who may have been duped into facilitating this fraud, if that is what it was, deposed that Ms. Wang may have a claim against Mr. Zhang in respect of the $270,000 mortgage that was mysteriously discharged. Mr. Zhang denies that he ever discharged the third mortgage and that the discharge is a forgery. Ms. Wang said that Ms. Ding said that the $270,000 would be forthcoming but it never was paid and during her cross-examination, Ms. Wang said: “as I come to think it, it made me very angry and I think it was very suspicious.” For present purposes, I do not have to make any findings about the probity and propriety of the sale of the 57 Avenue Rd. property.

[50] On March 4, 2016, Ms. Wang became the sole shareholder of YH-Investments. Mr. Zhang resigned as director. Mr. Zhang deposed that he transferred YH-Investments to repay Ms. Wang for all the money she had given him, which money he lost gambling. Mr. Zhang deposed that he had nothing to do with YH-Investments after March 4, 2016.

[51] In the winter of 2016, Ms. Wang decided to sell the Sunnywood property, where the Al family was living, and she enlisted the help of Mr. Al and Ms. Ding. In March 2016, Mr. Zhang signed an agreement to sell the Sunnywood property for $3.9 million, but the transaction was conditional on financing, and it did not proceed.

[52] On March 21, 2016, Mr. Al’s wife paid $60,000 as the down payment for her daughter Ms. Al’s purchase of 70 Dunrobin Crescent in Vaughan, which was a house to be constructed. In the meantime, the family was continuing to live at the Sunnywood property.

[53] It is Mr. Kesarwani’s evidence that around this time, Mr. Zhang attended on Mr. Kesarwani to arrange a six-month first mortgage of the Sunnywood property, which mortgage was to be personally guaranteed by Mr. Zhang. Mr. Kesarwani says that apart from indicating urgency, Mr. Zhang did not explain the purpose of the borrowing, but Mr. Kesarwani came to understand that the money from the mortgage was to be used to pay gambling debts. Mr. Kesarwani says that he was not told that Mr. Zhang was not still the owner of the YH-Investments and that he had no reason to suspect that there had been a change in ownership. Mr. Zhang, however, denies that he ever gave Mr. Kesarwani instructions to mortgage the Sunnywood property.

[54] Mr. Zhang’s cross-examination does not probe Mr. Zhang’s meetings with Mr. Kesarwani. Mr. Zhang testified that he signed documents on only four occasions. Three occasions, two of which were at a restaurant and one at Mr. Kesarwani’s office, were to sign failed offers to sell the Avenue Rd. properties and once there was a meeting with respect to his children’s passports. Thus, during his cross-examination, Mr. Zhang testified:

553. Q. You are...

A. Let me tell you this: with the lawyer, right, I signed...three times. I signed the first offer was signed in his company [office]. The second and the third time was signed in a restaurant. All these three didn't go through, failed. Then, another thing I signed with this lawyer was about my children's passport. And then, after that, I did not sign anything at all with this lawyer. Those are all the occasions that I signed anything.

[55] It was Mr. Kesarwani’s evidence that he attempted, without success, to find a lender for Mr. Zhang, and Mr. Kesarwani says that the amount required by Mr. Zhang increased from $150,000 to $300,000. Mr. Kesarwani also deposed that he learned that the $300,000 was to be used to repay Ms. Ding who had lent money to Mr. Zhang for gambling. Here it may be noted that Ms. Ding’s husband had abandoned his family to return to China, but he left her some money. Mr. Kesarwani also said that he understood that Ms. Ding needed the funds repaid for a pending purchase of 171 Timber Creek, Kleinburg, Ontario.

[56] Ultimately, Mr. Kesarwani arranged that his acquaintance, Mr. Jain, would lend $150,000 and that Kesarwani Corp. would lend $150,000. The security was to be a $300,000 mortgage with interest at 8% per annum and also a promissory note from Mr. Zhang with interest at 4% per month if the loan was not repaid. In other words, the mortgage security and the promissory note security were not symmetric, and Mr. Zhang would pay higher interest on default.

[57] I pause here to say that the Plaintiffs submit that over and above the fact that they deny that YH-Investments ever authorized the $300,000 mortgage, such lending would be illegal as contrary to the Mortgages Act, the Interest Act, and the Criminal Code for charging penalty interest after default and for charging a criminal rate of interest. For present purposes, this is an issue that I need not decide for many reasons, including the absence of actuarial evidence about the effective interest rate.

[58] In any event, on June 2, 2016, a six-month $300,000 mortgage on the Sunnywood property with interest payable at 8% per annum was apparently granted by YH-Investments and registered against the title of the property. The mortgagees were Mr. Jain and Kesarwani Corp., each as to a 50% interest. Mr. Kesarwani acted for the borrower and the lenders. It seems that although the mortgage was in the face amount of $300,000, the sum actually advanced by the lenders was more. Mr. Kesarwani’s trust ledger statement indicates that $331,523 was advanced. However, the trust ledger statement for the subsequent discharge of the $300,000 mortgage indicates that the additional principal was $51,600.

[59] With respect to the $300,000 mortgage, Ms. Ding and Mr. Al deposed that they went to Mr. Kesarwani’s office to translate for Mr. Zhang and to give instructions to Mr. Kesarwani. Mr. Kesarwani deposed that all of the $300,000 and actually somewhat more was paid to Ms. Ding or to the vendor-builder of the 171 Timber Creek Boulevard property pursuant to YH-Investment’s direction provided by Mr. Zhang. Mr. Zhang, however, says that all the documents for this transaction have his forged signature. He denies receiving any proceeds from the mortgage, and the Plaintiffs, in essence, say that the Defendants defrauded them of in excess of $300,000.

[60] The evidence with respect to the $300,000 is one of several examples where it would appear that either Mr. Zhang perjured himself or Mr. Al, Ms. Ding, and Mr. Kesarwani perjured themselves.

[61] Returning to the narrative, on June 13, 2016, Ms. Ding purchased 171 Timber Creek Boulevard. The purchase price was $1.4 million. Ms. Ding did use the money she received from the $300,000 mortgage to purchase 171 Timber Creek. A trust ledger statement from Mr. Kesarwani’s law office indicates that Ms. Ding directly or indirectly received $306,732.31 and that Mr. Kesarwani received legal fees of $9,911.19 for acting on the purchase of 171 Timber Creek and the mortgaging of the Sunnywood property. Ms. Ding’s position is that she was owed the money raised from the mortgage as repayment of the loans she had made to Mr. Zhang and as repayment for the sums that she had paid for YH-Investments.

[62] On June 27, 2016, Ms. Wang signed an agreement to sell the Sunnywood property for $5.9 million, but the transaction, which was conditional on financing, did not proceed.

[63] Mr. Kesarwani deposed that YH-Investments did not make any payments on the $300,000 mortgage and that as a result the default provisions of the promissory note with the greater interest rate became enforceable. There is an issue, but one I need not decide, about whether the default provisions of the promissory note were lawfully triggered.

[64] On July 20, 2016, Casino Rama obtained a default judgment for $198,410.53 against Mr. Zhang, and in August 2016, it filed a writ of seizure and sale.

[65] Mr. Kesarwani deposed that in November 2016, he was retained by Mr. Zhang to complete a $2.7 million mortgage on the Sunnywood property. Mr. Kesarwani deposed that it was around this time that he learned for the first time that Ms. Wang was the sole owner of YH-Investments. The mortgage transaction did not proceed nor did another sale of the Sunnywood property in January 2017.

[66] Ms. Wang admitted that in December of 2016, at the direction of Mr. Al and Ms. Ding, Mr. Kesarwani was retained by YH-Investments to apply for a mortgage loan from Mortgage Company of Canada (MCC) on the security of the Sunnywood property. She was aware of these efforts to mortgage the property and aware that the efforts were not successful.

[67] In December 2016, Ms. Wang gave Ms. Ding bank drafts of approximately $140,000 to pay for Mr. Zhang’s debt at Casino Rama.

[68] In early 2017, Ms. Wong chanced to meet Mr. Zhang at a mall, and he promised to repay his debt to her. She says that shortly after this meeting, she went with Mr. Zhang to an illegal casino where she saw Mr. Zhang harassed for repayment of a $700,000 gambling indebtedness. As noted above, Mr. Zhang deposed that he does not know Ms. Wong, never gambled with her, and never borrowed money from her.

[69] It is Ms. Wang’s evidence that on February 22, 2017, she attended with Mr. Al and Ms. Ding at Mr. Kesarwani’s office. She understood that the purpose of the meeting was to sign documents for the sale of the Sunnywood property. She says that she signed numerous documents. Ms. Wang deposed that she spoke Mandarin to Ms. Ding, who, in turn, spoke Cantonese to Mr. Al, who, in turn, spoke English to give instructions to Mr. Kesarwani. Ms. Wang deposed that February 22, 2017 was the last time she was at Mr. Kesarwani’s office.

[70] Under cross-examination, Ms. Wang’s account of her visit to Mr. Kesarwani’s office changed. Her initial account was that she believed the purpose of the meeting on February 22, 2017 was to sign documents for a sale of the Sunnywood property but she was deceived into signing mortgage documents. Ms. Wang’s altered account was that she believed the purpose of the meeting on February 22, 2017 was to sign sale documents and also to sign a notional mortgage to facilitate the sale of the Sunnywood property. Ms. Wang admits that she signed the documents but says that she was deceived about what she was signing. Ms. Wang denies that she was raising money to discharge her ex-husband’s gambling debts. She also persisted in saying that she had no meetings with Mr. Kesarwani after February 22, 2017.

[71] It was Mr. Kesarwani’s evidence that there was meeting on February 22, 2017, but that its purpose was not to sign mortgage or sale documents but to do some corporate business for YH-Investments.

[72] Mr. Kesarwani testified that there, was, however, a mortgage transaction meeting that occurred the next day when Ms. Wang, along with Mr. Al and Ms. Ding, attended a meeting at Mr. Woods’ office. Mr. Kesarwani said he participated by phone. Later, Mr. Kesarwani said the meeting occurred at Ms. Wang’s home. Mr. Woods’ evidence was that the meeting on February 23rd was at Ms. Wang’s home. Mr. Woods did agree with Mr. Kesarwani that he was not at the meeting and rather participated by telephone.

[73] Also in attendance on February 23, 2017 were Mr. Woods and his son Andrew, also known as Chris. Ms. Wang is alleged to have signed the mortgage documents at this meeting. The dates on the mortgage documents are February 23 and 28, 2017 and March 6, 2017. The documents were commissioned by Andrew Woods. His father, Mr. Woods, deposed that all the variously dated documents were signed on the 23rd.

[74] The Defendants’ account of the meeting was that Ms. Wang wished to sell and or to mortgage the Sunnywood property to repay Mr. Zhang’s gambling debts to loan sharks who were pressing for payment. The Defendants say that Ms. Wang signed the mortgage documents. The Defendants assert that Ms. Wang knowingly gave instructions for the mortgaging of the Sunnywood property and for the distribution of the mortgage proceeds to discharge the first mortgage on the property and to discharge the gambling debts of her ex-husband and to make payments to Ms. Ding and Ms. Wong for the moneys owed to them by Mr. Zhang.

[75] The competing evidence about the meeting on February 23, 2017 cannot be reconciled. Either Ms. Wang is lying or all of Mr. Al, Ms. Ding, Mr. Kesarwani, and Mr. Woods are lying.

[76] In any event, on March 1, 2017, the $1,175,000 mortgage was registered. The one-year mortgage charged interest at 12% per annum. The mortgage was granted to Maria Kapetanios. The mortgage funds were paid: (a) $440,600 to discharge the $300,000 mortgage and Mr. Zhang’s promissory note; (b) $267,180.31 to Ms. Ding; (c) $150,000 to Mr. Al; (d) $150,000 to Ms. Wong; (e) $70,324.66 for municipal realty taxes; and (f) $34,214.16 to Mr. Kesarwani for legal fees.

[77] There is no signed direction from the Plaintiffs with respect to the dispersal of the funds from the $1,175,000 mortgage, and Mr. Kesarwani deposed that he relied on Ms. Wang signing his Trust Ledger Statement on March 6, 2017. As noted above, Ms. Wang denies any meetings after February 22, 2017 and Mr. Woods’ evidence was that all the documents were signed on February 23, 2017.

[78] Pausing here in the narrative of the factual background, if Ms. Wang and Mr. Zhang are to be believed, by the start of March 2017, Ms. Ding and Mr. Al have either duped Mr. Kesarwani or he conspired with them to defraud YH-Investments of approximately $1.1 million which was used to pay Ms. Ding, Mr. Al, and Ms. Wong for Mr. Zhang’s gambling indebtedness. However, if the Defendants are to be believed, the $300,000 mortgage and the $1,175,000 mortgage were authorized by Mr. Zhang and by the Plaintiffs. The loss is approximately $1.1 million because slightly more than $70,000 was paid to Richmond Hill for property tax arrears on the Sunnywood property.

[79] For present purposes, for reasons that I will explain below, I need not decide whether the fraud version or an innocent version is the correct version of what transpired about the $1,175,000 mortgage. I do note that to avoid double counting, the loss to YH-Investments with respect to the $300,000 was encompassed by the $1,175,000 mortgage. The $300,000 mortgage was discharged for $440,600 of which a portion went to Mr. Jain and a portion went to Kesarwani Corp.

[80] In this last regard, Mr. Jain may have a cause for complaint, because it appears that the $440,600 was not divided evenly and more went to Kesarwani Corp. than to him. Mr. Jain deposed that he received approximately $171,000. I also note, but make no finding, that whether Mr. Kesarwani was duped or not and whether or not Mr. Jain has a cause for complaint, Mr. Kesarwani’s handling of these two mortgage transactions is very problematic. He had numerous conflicts of interest, he took instructions from Mr. Al and Ms. Wong who were the main beneficiaries of the transactions, and his accounting and his reporting of the transactions were sloppy.

[81] The optics of all these transactions is not good for Mr. Kesarwani, and the optics are not improved by the fact that on March 31, 2017, he and his mother purchased 16 Echo Valley Road, Toronto, Ontario. Thus, the Plaintiffs allege that part of the purchase price for 16 Echo Valley Road was derived in part from the $440,600 paid to discharge the $300,000 mortgage. Mr. Kesarwani, however, deposed that the purchase price was financed from two mortgages; one from Scotiabank and the other from the CIBC on the security of several properties owned by the Kesarwanis. For present purposes, I need not decide what use Mr. Kesarwani made of his share of the $440,600.

[82] Returning to the narrative, in April 2017, Ms. Wong met Mr. Zhang at Casino Rama, and she deposed that because she had been repaid $150,000, she was prepared again to lend him more money. In partially documented loans of ATM withdrawals or transfers, Ms. Wong says she loaned Mr. Zhang and his girlfriend Yang Fang from Montreal another $60,000 raising the outstanding indebtedness to $90,000.

[83] It is not clear to me why, but sometime between April 1 and 13, 2017, Ms. Wang attended at the Royal Bank to discuss her investments. Ms. Wang testified that as a result from her meeting at the bank, she learned there was a $300,000 mortgage and a $1,175,000 mortgage registered against the title of the Sunnywood property.

[84] On April 13, 2017, the Plaintiffs retained Dickinson Wright LLP. They immediately arranged for the registration of a restriction against the title to the Sunnywood property. The restriction stated that no transfer or charge of the lands or any part thereof shall be registered without the written consent of the registered owner.

[85] It is the Defendants’ evidence that on April 17, 2017, which was Easter Monday, Ms. Wang, along with Mr. Al and Ms. Ding, attended on Mr. Kesarwani at his office and gave him instructions and signed the documents to place a one-year $550,000 mortgage on the Sunnywood property as collateral security for Ms. Al’s purchase of 70 Dunrobin, Vaughan. Mr. Kesarwani was aware of the restriction registered by Dickinson Wright LLP but essentially ignored it because Ms. Wang was giving him instructions to prepare the mortgage and she signed the mortgage documents. Ms. Wang, of course, denies meeting and giving instructions to Mr. Kesarwani.

[86] Ms. Wang denies that she agreed to the $550,000 collateral mortgage. She denies that she attended Mr. Kesarwani’s office on April 17, 2017. However, Ms. Jaiswal, who was Mr. Kesarwani’s articling student, testified that she witnessed Ms. Wang at a meeting that she understood had the purpose of signing documents for a mortgage.

[87] Pausing here, I shall continue to sidestep from making the very-very hard finding on an interlocutory motion of frauds, forgeries, and false testimonies and confine myself to saying that all the Defendants, and most particularly Mr. Kesarwani, will have some explaining to do having regard to his ignoring the registered restriction and having regard to the discrepancies in his reporting letter, which, among other inaccuracies, reports that the collateral security was provided for Ms. Wang’s niece. The truth of the matter is that Ms. Wang and Ms. Al are not relatives, and Ms. Wang has no nieces.

[88] Returning again to the narrative, on April 19, 2017, a collateral $550,000 mortgage on the Sunnywood property with interest payable at 12% per annum was granted by YH-Investments to Global Investment Holdings Inc. The collateral mortgage was part of the security provided by Ms. Al to complete her purchase of 70 Dunrobin. Ms. Al says that her father was the originator of this transaction and that she was not aware that YH-Investments had provided a collateral mortgage.

[89] Meanwhile on April 25, 2017, 45 Parr Place was sold. Ms. Wang then purchased 27 Abner Miles Dr., Vaughan for $2.6 million. She mortgaged the property for $2.6 million to the Royal Bank.

[90] Ms. Ding deposed that she lent Mr. Zhang $25,000 in May 2017.

[91] On May 5, 2017, Ms. Wang’s lawyers at Dickinson Wright LLP contacted Mr. Kesarwani making inquiries about the $1,175,000 mortgage. At this time, Ms. Wang’s lawyers were not aware of the $550,000 mortgage.

[92] Again on May 9, 2017, Ms. Wang’s lawyers requested details about the $300,000 mortgage and the $1,175,000 mortgage. They still were not aware of the $550,000 mortgage. The requested information was not provided.

[93] On May 31, 2017, still unaware that the $550,000 mortgage had occurred, the Plaintiffs’ lawyers registered another restriction against the title of the Sunnywood property. The restriction stated that no transfer or charge on the lands may be made without the written consent of YH-Investments, specifically authorized by Judy Wang, and that notice that consent is required shall be sent to Ms. Wang c/o of Dickinson Wright LLP.

[94] On June 5, 2017, Ms. Ding granted a $160,000 second private mortgage on 171 Timber Creek.

[95] On June 7, 2017, the Plaintiffs’ lawyers delivered a direction terminating Mr. Kesarwani’s retainer and directing him to deliver his YH-Investment files to them.

[96] On June 15, 18, 19, 21, 23, and 26, 2017, Ms. Wang’s lawyers made attempts to obtain all of Mr. Kesarwani’s files for YH-Investments by communications with Mr. Kesarwani or his office staff.

[97] On June 22, 2017, the Plaintiffs’ lawyers wrote a letter of complaint to the Law Society of Upper Canada.

[98] On June 26, 2017, Maria Kapetanios commenced mortgage power of sale proceedings with respect to the $1,175,000 mortgage.

[99] On June 29, 2017, Mr. Kesarwani delivered some of his file material with respect to the $1,175,000 mortgage and the $550,000 mortgage, including the reporting letters, which Ms. Wang denies ever receiving previously. Mr. Kesarwani did not deliver his file with respect to the $300,000 mortgage.

[100] On June 30, 2017, Ms. Wang, with an interpreter and her lawyers, attended at the York Regional Police in Richmond Hill to make a complaint and the matter was referred to the fraud investigation unit.

[101] On July 19, 2017, Ms. Ding listed 171 Timber Creek for sale.

[102] On July 19, 2017, the Law Society advised the Plaintiffs that it was investigating the matter.

[103] On July 27, 2017, Global Investments Inc. commenced mortgage power of sale proceedings with respect to the $550,000 mortgage.

[104] On August 3, 2017, Ms. Wang and YH-Investments commenced an action against Mr. Kesarwani for professional negligence and for breach of fiduciary duty. They also sued Mr. Al, Ms. Al, Ms. Ding, Mr. Kesarwani, Kesarwani Corp., and Ms. Wong for conspiracy, fraud, conversion and unjust enrichment. And the Plaintiffs sued Mrs. Kesarwani for conversion and unjust enrichment.

[105] On August 9, 2017, the Plaintiffs brought motions without notice before Justice Dow and were granted a Mareva injunction, a Norwich Order, and certificates of pending litigation. Ms. Wang deposed that all of the $300,000, $1,175,000 and $550,000 mortgage transactions were frauds and forgeries and that YH-Investments had received no funds from these transactions and rather that the funds had been misappropriated by the Defendants. As required by Rule 40.03 of the Rules of Civil Procedure, the Plaintiffs provided the court with an undertaking as to damages.

[106] On August 18, 2017, the interim Orders were continued by me pending cross-examinations and examinations.

[107] On August 31, 2017, Mr. Zhang swore an affidavit in which he deposed that he had never-ever borrowed money from Mr. Al, Ms. Ding, or Ms. Wong. He denied knowing Ms. Wong. He said that he lent substantial sums to Mr. Al and Ms. Ding that have never been repaid. He said he trusted them to interpret the documents he signed. He said his signature on the $300,000 mortgage on the Sunnywood property was forged.

[108] On September 5, 2017, the Plaintiffs abandoned the Mareva injunction as against Mr. Kesarwani and Kesarwani Corp. On September 12, 2017, the Plaintiffs abandoned the Norwich Order as against Mr. Kesarwani and Kesarwani Corp. On September 13, 2017, I vacated the Mareva injunction and the Norwich Order as against Mr. Kesarwani and Kesarwani Corp. and I vacated the certificate of pending litigation against 16 Echo Dr. I also extended the injunctions as against the other Defendants until October 24, 2017.

[109] On September 15, 2017, the parties appeared before me for a consent order vacating the injunctions as against the Kesarwani Defendants, continuing the interim Orders until October 24, 2017 against the others, and to provide a schedule for cross-examinations.

[110] Up to October 11, 2017 the Kesarwani Defendants had incurred more than $110,200 in fees, including HST and $6,090.98 in disbursements. These sums do not include the expenditure for the motion to enforce the undertaking as to damages. Mr. Kesarwani, who is a lawyer, claims a business loss of approximately $80,000 because of the time he spent personally engaged in responding to the interlocutory injunction Orders and for loss of goodwill and for lost retainers.

C. Discussion and Analysis

1. Introduction

[111] I have already explained at the outset why I am dismissing without costs the Plaintiffs’ motion to strike various allegations in the affidavits delivered for the motions.

[112] To explain why I am making orders without costs to vacate the Mareva injunction the Norwich Order, and the certificates of pending litigation and dismissing the Kesarwanis’ motion to enforce the undertaking as to damages, I shall in this introduction set out the applicable legal principles. Then, in the sections that follow, I shall apply the principles to the circumstances of this bizarre case as it has developed so far.

[113] To obtain a Mareva injunction, a plaintiff must satisfy the normal criteria for an injunction and also several additional criteria. For a Mareva injunction, the moving party must establish: (1) a strong prima facie case; (2) that the defendant has assets in the jurisdiction; and (3) that there is a serious risk that the defendant will remove property or dissipate assets before the judgment. A Mareva injunction should be issued only if it is shown that the defendant's purpose is to remove his or her assets from the jurisdiction to avoid judgment. The moving party must also establish that he or she would suffer irreparable harm if the injunction were not granted and that the balance of convenience favours granting the injunction. Absent unusual circumstances, the plaintiff must provide the undertaking as to damages normally required for any interlocutory injunction.

[114] When the plaintiff has acted improperly in obtaining the interlocutory injunction or when the plaintiff’s claim fails, the court will inquire as to damages suffered by the defendant from the interlocutory injunction, unless there are special circumstances or inequitable conduct by the defendant. The courts take the undertaking as to damages to be a serious matter and are not sympathetic to those who try to resile from the undertaking. There is a strong presumption that a party who gives an undertaking to obtain an interlocutory injunction should be held to the undertaking, but the court may dispense with the undertaking in special circumstances.

[115] The requirements for a Norwich Order are: (1) the plaintiff must have a bona fide claim or potential claim against a wrongdoer; (2) the defendant to the Norwich proceeding must have a connection to the wrong beyond being a witness to it; (3) the defendant to the Norwich proceeding must be the only practical source of the needed information; (4) the interests of the party seeking the disclosure must be balanced against the interests of the defendant to the proceeding, including his or her interest in privacy and confidentiality, and any public interest that would justify non-disclosure; and (5) the interests of justice must favour obtaining the information. The fundamental principle underlying the Norwich Order is that the party against whom the order is sought has an equitable duty to assist the applicant in pursuing its rights.

[116] In GEA Group AG v. Ventra Group Co., the Ontario Court of Appeal emphasized that the jurisdiction to make a Norwich Order is an extraordinary jurisdiction that is only exercised when the court is satisfied that it is necessary that it should be exercised. Cronk J.A. stated at para. 85:

… The important point is that a Norwich order is an equitable, discretionary and flexible remedy. It is also an intrusive and extraordinary remedy that must be exercised with caution. It is therefore incumbent on the applicant for a Norwich order to demonstrate that the discovery sought is required to permit a prospective action to proceed, although the firm commitment to commence proceedings is not itself a condition precedent to this form of equitable relief.

[117] On a motion for an interlocutory injunction made without notice, there must be full and fair disclosure of all material facts. A material fact is one that the court may need to know in coming to its decision and that if not disclosed may affect the outcome of the decision. The moving party on a motion without notice must inform the court of any points of fact or law known to it that favour the other side. It is not sufficient to simply attach relevant documentary evidence as an exhibit to the applicant's supporting affidavit without revealing or highlighting the material facts. If there is material non-disclosure, the court may dissolve the injunction notwithstanding that it otherwise would have been appropriate to continue it.

2. Fraud or Folly

[118] The evidence before the court gives me the choice of attributing the Plaintiffs’ loss of approximately $1.1 million to fraud or to folly. The above description of the factual background reveals that the Plaintiffs either have a strong prima facie case of being the victims of several frauds and forgeries or that the Defendants have a strong prima facie defence that the Plaintiffs are the victims of their own greed and or stupidity.

[119] For present purposes, I prefer the folly version of the facts. In general, I found Ms. Wang’s, and particularly Mr. Zhang’s evidence, self-serving, implausible, inconsistent, illogical, incredible, unreliable, evasive, and inconsistent with the documentation. That is not to say that the Defendants were in every respect credible and reliable witnesses. In particular, Mr. Al’s, Ms. Ding’s, and Mr. Kesarwani’s evidence is suspect and in many respects, their evidence is incredible and unreliable.

[120] There is the prospect that some witnesses committed perjury or were dishonest, but for the purposes of this motion, it is not necessary for me to make a final determination. For present purposes, I limit myself to saying that the Defendants’ accounts were better collaborated by common sense, by the documents - to the extent that the documents were reliable, and by the non-party witnesses who may have had bad memories but who had no or little motive to prevaricate or to lie or to expose themselves to perjury charges.

[121] I have no doubt that Mr. Justice Dow made the correct interim interlocutory orders based on the evidence before him, but the factual record is now substantially different.

[122] Since in the context of the Mareva injunction and the Norwich Order, I do not believe Ms. Wang and Mr. Zhang’s evidence, I conclude that the Plaintiffs have not shown a strong prima facie case of fraud and this is particularly true with respect to the Plaintiffs’ claims against Ms. Wong. For this reason alone, I shall not continue the Mareva injunction, the Norwich Order, and I shall vacate the certificates of pending litigation.

[123] The Plaintiffs’ case against Ms. Wong is very weak. Her evidence that she lent money to Mr. Zhang and that he told her that he would repay her is at least partially corroborated and Mr. Zhang’s denial of knowing Ms. Wong appears to be a lie or a mistake.

[124] The case against Ms. Al is also weak. On Ms. Wang’s own evidence, albeit somewhat disgruntled, she extended a great deal of charity to the Al family. There has been no draw down on the collateral mortgage that YH-Investments gave to support Ms. Al’s purchase of the 70 Dunrobin property. So far, Ms. Al’s purchase of 70 Dunrobin Crescent was paid for by her mother’s down payment and by the mortgagees.

[125] The Plaintiffs’ cases against Mr. Al and Ms. Ding are better than the cases against Ms. Wong and Ms. Al, but still the Plaintiffs’ case is filled with holes and inconsistencies such as why would the Plaintiffs have continued to transact business with Ms. Ding, Mr. Al, and Mr. Kesarwani: (a) after Ms. Ding purportedly stole $900,000 by mortgaging 57 Avenue Rd; or (b) after Ms. Ding did not collect the $270,000 missing from the purchase monies from 57 Avenue Rd.

[126] However, even if I am wrong in concluding that the Plaintiffs have not shown a strong prima facie case, they also fail to satisfy the other elements of the test for granting the extraordinary interlocutory relief of pre-judgment execution and pre-pleading and pre-discovery disclosure of evidence. In this regard, the Plaintiffs have not shown that there is a serious risk that the Defendants will remove property or dissipate assets for the purposes of avoiding paying a judgment against them. The Defendants are not fleeing the jurisdiction, and to the extent that they are using the Plaintiffs’ money, they have an arguable case that it was received to discharge Mr. Zhang’s indebtedness.

[127] Further, with the exception of Ms. Ding, the Defendants’ assets were not acquired using the Plaintiffs’ funds. Ms. Al is not leaving the jurisdiction and she is not dissipating assets of which she personally has none apart from 70 Dunrobin Crescent.

[128] Moreover, I conclude that the Plaintiffs, in moving without notice, did not make full and fair disclosure of all material facts. In this regard, it is not that the Plaintiffs did not inform the court of any points of fact or law known to it that favour the Defendants, but it is that the Plaintiffs did not inform the court of numerous material facts about the relationship between the parties, the history of transactions between them, the circumstances of Mr. Zhang’s gambling, and the prior history of selling and mortgaging properties.

[129] In the result, I vacate with costs in the cause the Mareva injunction, the Norwich Order, and the certificates of pending litigation. I order the costs in the cause because although the Defendants were successful on the interlocutory motions, it may subsequently be determined that fraudulently or wrongfully they took advantage of the Plaintiffs. The Plaintiffs may ultimately succeed against the Defendants. This is a case where a trial judge will be in a better position to make the just, fair, and appropriate costs award including provisions for claims over against co-defendants; hence, costs in the cause.

[130] Turning to Mr. Kesarwani’s motion to enforce the Plaintiffs undertaking as to damages. As I have already said, based on the evidentiary record before Justice Dow, it is understandable why he made interim interlocutory Orders against Mr. Kesarwani and Kesarwani Corp. However, the record now clearly reveals that the requirements for a Norwich Order, which is an extraordinary-extraordinary order, were not satisfied. The Plaintiffs did not need any information from Mr. Kesarwani to confirm their own knowledge and belief that YH-Investments had not authorized the three mortgage transactions, and they already knew whom to sue based on the information they received from Mr. Kesarwani. The Plaintiffs were wise to abandon the interim interlocutory injunctions against the Kesarwanis in September.

[131] However, it is presumptuous and brazen of Mr. Kesarwani to attempt to claim victory. He claims some sort of vindication from the circumstance that the Plaintiffs abandoned both injunctive orders in early September. There is, however, no vindication here. The Plaintiffs’ case against Mr. Kesarwani has not been abandoned nor discontinued. The Plaintiffs ultimately may succeed in their claims against Mr. Kesarwani.

[132] From the Plaintiffs’ perspective, the Norwich Order served its purpose, and while it is true that there should never have been a Mareva injunction or a Norwich order against the Kesarwanis, it remains to be determined whether Mr. Kesarwani was professionally negligent and in breach of his fiduciary duties to the Plaintiffs. There is a strong prima facie case against Mr. Kesarwani for negligence and breach of fiduciary duty, and he may also have some explaining to do to Mr. Jain.

[133] If Mr. Kesarwani ultimately provides satisfactory explanations and successfully defends the claims against him, then he can claim vindication and costs. The undertaking as to damages, is an undertaking given to the court, and I think it premature and presumptuous for Mr. Kesarwani to ask for damages in the circumstances of this case where the merits of his defence to the professional negligence claims remains to be determined and where there is enough on the record to put Mr. Kesarwani to a defence of his conduct.

D. Conclusion

[134] For the above reasons, I dismiss all of the motions without costs.

___________________

Perell, J.

Released: November 20, 2017