Court File and Parties

CITATION: Al-Ghabra and 202 v. Ali et al., 2010 ONSC 651 COURT FILE NO.: 383-09 DATE: 2010-01-27

SUPERIOR COURT OF JUSTICE – ONTARIO DIVISIONAL COURT

RE: MOHAMMED AL-GHABRA and 2025452 ONTARIO INC., Appellants/Respondents in Cross Appeal AND: MOHAMMED ALI AL-ALI, ALI REAL ESTATE TRUST, et al, Respondents/Appellants in Cross-appeal

BEFORE: McCombs, Lederman, and Molloy, JJ.

COUNSEL: Jeffrey W. Kramer, for the appellants/respondents in cross-appeal Ronald B. Moldaver, Q.C., for the respondents/appellants in cross-appeal

HEARD: January 26, 2010

Endorsement

BY THE COURT

[1] This is an appeal and cross-appeal from the order of Spence J. dated August 29, 2008.

[2] The appellants (respondents on the cross-appeal) were successful in their motion for sale of a commercial property under the Partition and Sale Act; but the motions judge attached two conditions to his order. The appellants appeal the imposition of the two conditions.

[3] One of the respondents, Ali Real Estate Trust (“ART”), cross-appeals seeking an order reversing the order for sale, or alternatively, an order imposing additional conditions on the appellant for the sale to proceed.

[4] For the reasons that follow, both the appeal and the cross-appeal are allowed in part. We uphold the finding that 2025452 Ontario Inc. (“202”) was the co-owner of the property with the prima facie right to partition and sale; however, we are also of the view that the condition imposed by the motions judge requiring the prior payment of $1 million cannot stand in light of the conflicting evidence on whether it has already been paid. In the result, the sale cannot proceed until the issues of payment of the purchase price and alleged oppression to ART are resolved at trial.

[5] The central issue before the motions judge was whether the $1 million (which was part of the purchase price for 50% interest in the Creekbank property) was paid by 202 to ART. The motions judge correctly found that the issue of whether or not the full purchase price had been paid did not affect the question of whether 202 has a 50% co-ownership interest. There were ample indicia of co-ownership, for example: the agreement of purchase and sale; the passing of title; the assumption of the mortgage by 202 as required by the agreement; the refinancing of the property by both parties; and the use of the rental income for the benefit of both parties.

[6] The sale was not conditional upon payment of the balance owing; and the fact that there was a balance owing was, as the motions judge found, a matter of debt between the parties, and not a question going to title.

[7] The governing principle for the granting of an order for sale under s. 3 of the Partition Act, R.S.O. 1990 c. P.4, was stated by Morin J. in Investissements Inc. 2006 22113 (ON. S.C.) at para. 13:

A person who holds land as a tenant-in-common has a prima facie right to sale of those lands at any time, if the sale is sought without vexation or oppression. The court should grant the request for sale unless sufficient reason appears for not doing so. See Davis v. Davis 1953 148 (ON CA), [1954] O.R. 23 (C.A.) and Greenbanktree Power Corp. v. Coinamatic Canada Inc. 2004 48652 (Ont. C.A.).

[8] The motions judge imposed two conditions to the sale proceeding:

1. that 202 as a condition of the sale, pay to ART $1million within 30 days;
2. that ART be permitted to purchase the interest of 202 for a price equal to 50% of the sale price for the property as fixed by the court prior to the sale proceeding.

[9] The motions judge found that to permit the sale without these conditions would be oppressive. He stated as follows:

If the Applicants were to be allowed to require the partition and sale of the property without the unpaid purchase price first being paid up, the result would be that they would in effect receive a free ride on the investment in the property made by the Respondents. That would be unjustified and therefore unfair. To allow that result to be imposed on the Respondents would be oppressive and therefore contrary to the approach required in the cases mentioned above.

[10] With respect to the first condition, the finding of non-payment of the $1 million purchase price depended upon the weighing of conflicting evidence and a determination of the credibility of the parties. Such issues are material and genuine and should have been left to a trial for determination.

[11] As this issue is inextricably tied to whether the sale should proceed, we conclude that it must first be determined in a trial of an issue, both with respect to whether the purchase price had been paid in full, and if not, whether in all the circumstances, permitting a sale of the property under the Partition Act would be oppressive to ART.

[12] With respect to the second condition, relying on the cases of Dibattista v. Menecola (1990) 75 O.R. (2d) 157 (C.A.) and Martin v. Martin (1992) 8 O.R. (3d) (C.A.), it was argued that the motions judge had no jurisdiction to convey a benefit to one party over the other. Given our earlier finding that the sale cannot proceed, it is not necessary for us to deal with this issue.

[13] In the result, paragraphs 1, 2 and 3 of the order of the motions judge dated August 29, 2008 are set aside. The issues with respect to the payment of the purchase price by 202 and whether 202 is entitled in all of the circumstances to partition and sale of the property are referred to be dealt with in the same manner as the other issues referred to in paragraph 4 of the order of the motions judge.

[14] Success was divided on these appeals. In the circumstances, there will be no order as to costs.

J. D. McCombs J. S.N. Lederman J. A.M. Molloy J.

Released: 2010-01-27