Executive Summary: Key Legal and Evidentiary Issues

• Plaintiffs had previously committed mortgage fraud by registering sham mortgages and fraudulent discharges to frustrate creditors.

• Funds from the sale of fraudulently encumbered properties were distributed pursuant to a prior court order.

• Plaintiffs challenged the Public Guardian and Trustee (PGT) for disbursing funds in a manner they claimed misinterpreted the order.

• The court found that the Plaintiffs’ claim was statute-barred under the Public Guardian and Trustee Act.

• Plaintiffs failed to provide mandatory notice under the Crown Liability and Proceedings Act, rendering the proceeding a nullity.

• The court dismissed the action and awarded costs to the PGT, finding the claims entirely without merit.

Facts of the case

Christian C. Chijindu, a former lawyer, along with his wife Joy Nkiruka Chijindu and his sister Ijeoma Chijindu, had been involved in a series of fraudulent real estate dealings involving two Ontario properties—one on West Shore Road in Pickering and another on Solina Road in Clarington. They misrepresented the properties’ mortgage statuses, registered fraudulent discharges, and created sham mortgages between themselves to mislead creditors.

Following the discovery of these fraudulent actions, both properties were sold under power of sale. The proceeds from these sales were held in court to satisfy creditor claims. In a related decision by Justice Woodley, the court determined the debts owed and their priority among various creditors, including a $200,000 mortgage in favour of Harsha Rathod, a former client and friend of Christian. Justice Woodley found that the Plaintiffs had colluded in a scheme to defraud creditors and ordered disbursement of sale proceeds accordingly.

The Plaintiffs’ claim against the PGT

In the present action, the Plaintiffs sued the Public Guardian and Trustee, alleging that the Accountant of the Superior Court misinterpreted the earlier court order by paying more funds to Ms. Rathod than justified, particularly from the West Shore Road property. They argued that since Joy Chijindu only held a 0.01% interest in that property, the disbursement should have been limited proportionately, and the remainder paid to Ijeoma, who held 99.99%.

They sought various reliefs, including production of communications between Ms. Rathod and the Accountant, a declaration regarding the correct interpretation of the earlier judgment, and an order requiring the Accountant to pay Ijeoma approximately $98,580.

The court’s decision

Justice Parghi dismissed the Plaintiffs’ claim, ruling that it was barred under section 5.1(1) of the Public Guardian and Trustee Act, which prohibits proceedings for damages against the PGT for actions taken in good faith. The Plaintiffs did not allege bad faith, and their attempt to recharacterize the relief sought as declaratory rather than monetary was found to be artificial. The judge noted that the essence of their claim was monetary compensation, bringing it within the scope of the statutory bar.

Furthermore, the Plaintiffs failed to comply with section 18 of the Crown Liability and Proceedings Act, which requires prior notice before commencing proceedings against the Crown. This failure rendered the proceeding a nullity and could not be cured by the court or waived by the Crown.

Justice Parghi emphasized that even if he had considered the Plaintiffs’ requests for relief, he would have rejected them as wholly without merit. He agreed with the prior judgment that the Plaintiffs had engaged in a coordinated fraudulent scheme and that the funds were appropriately disbursed to Ms. Rathod, the fraud victim, in accordance with the court’s intent. Accepting the Plaintiffs’ argument would have undermined that intent and led to an absurd result.

Costs awarded

Given the Defendant’s full success and the Plaintiffs’ disregard of repeated warnings that the claim was statute-barred, the court awarded costs to the PGT in the amount of $1,500, inclusive of disbursements and HST, payable within 30 days.