Executive Summary: Key Legal and Evidentiary Issues

• Whether summary judgment was appropriate to resolve the dispute over a failed cryptocurrency investment without a full trial
• Extent to which fraudulent misrepresentation by the directing mind of a corporation justified piercing the corporate veil and imposing personal liability
• Significance of email assurances “guaranteeing” protection of principal through stop-loss orders, and whether those assurances were false and reckless
• Causal link between the misrepresentations about risk management for cryptocurrency trading and the plaintiff’s decision to loan funds to the corporate defendant
• Proper measure of damages in fraud: rescission of the loan agreement and recovery of out-of-pocket losses rather than contractual interest or loss-of-bargain damages
• Availability of joint and several liability, pre- and post-judgment interest, and later costs determination against both the corporation and its sole directing mind

Factual background and relationship between the parties
Bushra Helal, a realtor who also held investment properties through her own numbered company, met Michael Santonato in 2017 through a personal development leadership course. At the time, he was a senior financial advisor at Experior Financial Group Inc., and later became Experior’s Executive Director. He also solely owned and controlled 8340501 Canada Corp. (834), serving as its only shareholder, director, officer, and directing mind. Over time, she came to treat him as her financial advisor and agent for certain investments, including an RRSP that remained largely inactive. Their dealings expanded beyond traditional products to higher-risk private investments, reflecting her interest in higher returns in exchange for greater risk.

Early high-return private investments
Before the disputed cryptocurrency transaction, Ms. Helal successfully completed several private, higher-yield deals introduced or arranged by Mr. Santonato. In July 2019, she loaned $5,000 to iSpeed Productions for a film project, collateralized by gold bars, and earned approximately a 70% return. In October 2020, she co-lent funds with Mr. Santonato and another investor to 2771029 Ontario Inc. for a cottage project at 14% interest; despite some delays, she was repaid principal and received a strong return. She also entered into a series of real estate–related loans directly with 834: a $40,000 USD loan at 12% interest in April 2021, a $100,000 CAD loan at 8% in June 2021, and a $70,000 CAD loan at 17.2% in January 2022. Each of these loans was repaid in full, with interest, reinforcing her confidence in both 834 and Mr. Santonato.

The move toward cryptocurrency investments
Parallel to the real estate and private lending, the parties discussed cryptocurrency investments. Ms. Helal expressed both interest and concern: she was drawn to the opportunity for higher returns but wary of Bitcoin’s volatility and the risk of losing principal. In January 2021, she wrote to ask directly whether any principal invested in cryptocurrency would be guaranteed or at risk. In response, on January 19, 2021, Mr. Santonato emailed that stop-loss mechanisms would be used to protect her capital, expressly stating “I guarantee it,” and further assuring her that part of the funds would be diversified into stocks to add an extra layer of protection. These assurances were central to persuading her that the risk could be managed. Over subsequent months, she continued to show interest in crypto opportunities while emphasizing her need for principal protection. In an April 15–16, 2021 email exchange, she stated she was prepared to invest about $39,000 USD in cryptocurrency on the condition that the principal be guaranteed, explicitly saying crypto was acceptable “as long as you can guarantee the principal,” and expressing trust in his crypto judgment. He thanked her for her trust and confirmed that a separate loan agreement would document the arrangement. Although there is reference to a written crypto loan agreement around June 7, 2021, that document was not produced and its outcome was unclear on the record.

The July 2022 loan agreement for crypto trading
The investment at issue arose later. In June 2022, the parties negotiated by email the terms of a larger cryptocurrency-focused loan. On July 16, 2022, Ms. Helal and 834 executed a written loan agreement for $171,859 CAD (the Loan Agreement). The loan was for six months at 12% interest, with monthly payments of $1,718 and an option to roll over 50% of the principal for a further term at 16% interest with higher monthly payments. The funds were to be invested in cryptocurrency, with trading strategies supposedly including stop-loss orders to limit downside risk. Unlike the earlier real estate loans, this transaction failed. Although 834 made partial payments totaling $19,772.59 between July 2022 and May 2023, it could not repay the balance of the principal or the ongoing contractual interest. The shortfall was attributed by Mr. Santonato to the volatility and sharp downturn in the crypto markets. He denied diverting funds for personal use and maintained that investment losses explained the failure to meet the loan obligations.

Admissions, communications, and the dispute over personal liability
In November 2022, facing difficulty making payments, Mr. Santonato wrote to Ms. Helal that he would be unable to make the intended payment for that month, stating he took “full 100% responsibility” and that he was committed to “making up additional income to pay you back myself,” characterizing repayment as only a matter of time. He referenced steps such as seeking other employment. Later, he sent a video message explaining that he did not legally owe the funds personally but wished to preserve the relationship by trying to repay her from his own efforts on a gratuitous basis. Throughout, he insisted that the loans were with 834, not with him personally, and that he never personally guaranteed repayment of principal or interest under the Loan Agreement or any earlier agreement. He also stressed that, as a sophisticated realtor with a holding company and prior experience lending to other corporations, she understood the distinction between a company and its directing mind, and that each of her loans—whether to iSpeed, 277, or 834—had always been structured as corporate, not personal, obligations.

Summary judgment framework
The motion proceeded under Rule 20 of the Ontario Rules of Civil Procedure, which allows summary judgment where there is no genuine issue requiring a trial. The court recited the Supreme Court of Canada’s framework in Hryniak v. Mauldin, emphasizing that summary judgment is appropriate where the record permits the judge to make necessary fact findings, apply the law, and achieve a fair, proportionate, and efficient resolution. The moving party (here, Ms. Helal) had to show there was no genuine issue for trial; if successful, the burden shifted to the defendants to establish a real chance of success at trial. Both parties were required to put their “best foot forward” on the evidentiary record. The judge found the documentary and affidavit record sufficient, determined there were no genuine issues of credibility that required a trial, and concluded that summary judgment was the just and proportionate means of resolving the dispute.

Corporate separateness and piercing the corporate veil
A key legal question was whether 834’s corporate veil should be pierced so that its sole directing mind, Mr. Santonato, would be personally liable for the company’s indebtedness. The court set out the standard that a corporation is ordinarily a separate legal person whose shareholders and officers are not liable for corporate obligations. However, in exceptional circumstances, the veil may be lifted where the corporation is completely dominated and used as a vehicle for fraud or improper conduct. Applying the Transamerica and FNF Enterprises line of authorities, the judge first found that 834 was clearly “completely dominated” by Mr. Santonato: he was the only shareholder, director, and officer, and no one else had a directing role. The second requirement—fraudulent or improper conduct giving rise to the liability—turned on whether his assurances regarding stop losses and principal protection amounted to civil fraud and fraudulent misrepresentation.

Civil fraud and fraudulent misrepresentation findings
The court reviewed the four elements of civil fraud: (1) a false representation by the defendant; (2) knowledge of its falsehood or recklessness as to truth; (3) reliance by the plaintiff; and (4) resulting loss. It also referenced appellate authority adding that, for fraudulent misrepresentation, the defendant must intend the plaintiff to rely on the representation. The judge concluded that these elements were met. First, the January 19, 2021 email in which he said he would use stop losses to “guarantee” protection of principal was found to be a false representation. Stop-loss orders are risk-management tools intended to cap downside by automatically closing positions at preset prices. The evidence showed that, for the particular crypto platforms used, such stop-loss functionality was not available in the way he had represented. Under cross-examination, he conceded that he could not have implemented stop losses on at least some, if not all, of the chosen crypto platforms, and there was no evidence that any stop-loss orders were ever placed. Second, the court held that he acted at least recklessly. He made authoritative assurances about guaranteeing principal through stop losses without having confirmed that those tools were actually available or workable on the trading platforms being used. He did not investigate whether stop losses could be set, and even once he learned that they could not be used as promised, he failed to inform her of this fact. That non-disclosure was treated as a further fraudulent misrepresentation: a half-truth that became misleading because he left critical risk information unsaid. Third, the record of emails and communications showed clear reliance. Before committing her funds, Ms. Helal repeatedly articulated concerns about volatility and insisted on some form of principal guarantee. She expressly conditioned her willingness to invest in crypto on the assurance that the principal would be protected. The court accepted that his guarantee of principal through stop losses was a decisive factor in her decision to proceed with the July 2022 Loan Agreement. Fourth, the loss was evident. She extended $171,859 CAD to 834; only $19,772.59 was returned, leaving a substantial shortfall. The judge rejected the argument that credibility issues required a trial, characterizing the defence evidence as largely self-serving and unsupported, while finding the contemporaneous written record to be clear and internally consistent with fraud.

Effect of fraud on the Loan Agreement and measure of damages
Because the fraudulent misrepresentation induced the Loan Agreement, the judge held that the contract was “tainted by fraud” and should be set aside through rescission. In such cases, the injured party may elect to sue in tort for deceit rather than enforce the contract. The measure of damages in deceit focuses on restoring the plaintiff to the position they would have occupied had the misrepresentation not been made, rather than giving them the benefit of the bargain or the contractual return they expected. Applying this principle, the court concluded that Ms. Helal was entitled to her out-of-pocket loss: the principal she advanced, less the amounts repaid. She was therefore awarded $171,859.00 minus $19,772.59, for a net tort damages award of $152,086.41. Because the contract itself was rescinded, she was not entitled to the contractual interest or any additional “loss of bargain” return that might have been payable under its terms, but she did receive entitlement to pre- and post-judgment interest on the damages figure under the Courts of Justice Act.

Liability, interest, and costs outcome
On the summary judgment motion, the court ordered judgment in favour of Ms. Helal against both 8340501 Canada Corp. and Michael Santonato on a joint and several basis. It found that 834’s corporate veil should be pierced because he, as its directing mind, used the company in connection with fraudulent misrepresentations that induced her to lend the funds for cryptocurrency trading. The judge characterized his indifference to the truth of his “guarantee” about stop losses, and his failure to correct that misrepresentation once he knew it could not be honoured, as sufficiently wrongful and improper to justify personal liability. The court awarded damages of $152,086.41 representing her net out-of-pocket loss, plus pre-judgment and post-judgment interest calculated in accordance with the Courts of Justice Act. The decision did not fix a specific dollar figure for interest or costs; instead, it set a schedule for written costs submissions if the parties were unable to agree. Accordingly, while the principal damages award in favour of the successful party, Ms. Helal, is known to be $152,086.41, the precise amounts of interest and costs were left to later determination or agreement and cannot be exactly quantified from the decision itself.