Published by Investigation Counsel PC, Fraud Recovery Lawyers
March 10, 2025
March is Fraud Awareness Month. Our firm often reminds fraud victims that in fraud recovery matters, success often rises or falls on whether the victim can secure an asset at the outset of litigation to recover from when a judgment is finally rendered. In the case of Sherif Gerges Pharmacy PC. v. Niam Pharmaceuticals Inc. the risks to a fraud victim of bringing an asset freezing motion for a ‘Mareva’ injunction became real as the victim did not prove the defendant was unlikely to have assets at the time of judgment. The victim was ordered to pay the defendant $25,000 in costs before taking any further steps in his recovery case. Our case summary follows:
Case Summary:
Sherif Gerges Pharmacy PC. v. Niam Pharmaceuticals Inc., 2025 ONSC 970
Heard: February 3, 2025
Judgment: February 12, 2025
Reasons for Decision
In this case, the applicant, Sherif Gerges, sought legal remedies against the respondent, Adesh Vora, alleging fraudulent transactions and unauthorized property sales. Both Gerges and Vora are pharmacists. Gerges requested an injunction to freeze funds, a preservation order, and a production order to trace the movement of funds related to property sales.
The dispute centered on three commercial units in Toronto jointly owned through a company co-owned by Gerges and Vora. Without Gerges’ knowledge or consent, Vora unilaterally removed Gerges as a director and proceeded to sell the properties in April 2024, generating $2,911,842.79 in net proceeds. These funds were then distributed, primarily to entities controlled by Vora, without documented justifications.
When Gerges discovered what had occurred, he filed a motion, arguing that Vora’s actions were fraudulent and oppressive.
With respect to the asset freezing motion, the Court held that the test for a Mareva injunction had not been met. The Court held Gerges had proven a strong prima facie case (that a conversion / theft of funds had occurred), and that the assets had been dissipated from their jointly held company.
However, the Court also held that Gergers had not proven evidence of ‘future dissipation’. Rather, the Court held that Vora had substantial assets in Ontario and had agreed to hold some of the misappropriated funds in escrow. In other words, the Court held that Gerges had not proven that his case deserved special treatment, and that he would have to get in line with all others in the clogged Canadian court system.
The Court also denied Gergers a Preservation Order – ruling the proceeds of the misappropriation had been disbursed and were not in an identifiable fund. The Court further denied an urgent tracing order, ruling the case for urgency had not been made and that the tracing could take place through the usual discovery process.
Our Commentary
This case highlights the high bar for freezing orders that fraud victims must meet to secure an asset to recover from. Canadian Courts will grant Mareva injunctions where rogues do not show they have assets in Canadian jurisdiction to pay a judgment for at least the liquidated amount of the loss.
One problem with this motion was that it involved professional people both as the plaintiff and defendant. The defendant, due to his profession, had assets. This defendant was not viewed by the court as typical rogue that Maveva injunctions are issued against. The sting of this decision is that although the plaintiff here had proven the misappropriation of his corporate property, he had to pay the wrong doer $25,000 to carry on his case.
Injunction motions are discretionary decisions – they are ruled by the laws of equity. Some say going court is similar to going to a casino – the outcomes are uncertain. There is no debate that how the evidence is viewed is somewhat of a game of chance. To reduce the risk, an analysis of the legal test to make should be closely scrutinized before the motion is heard.