COURT FILE NO.: CV-15-3722 DATE: 2019 02 27

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: MANJIT SINGH BAINS, IQBAL SINGH BANEPAL, and BHUPINDER SINGH CHALIANE v. SUMANDER SINGH KHATRI

BEFORE: Doi J.

COUNSEL: Monica Goyal, for the Plaintiffs Darrell Paul, for the Estate Trustee Leena L. Kumar, for the Defendant

HEARD: January 23, 2019

ENDORSEMENT

Overview

[1] This is a partial summary judgment motion by the Plaintiffs, Manjit Singh Bains and Bhupinder Singh Chaliane, for declarations that: (i) a trust agreement dated January 4, 2014 (“Trust Agreement”) is valid and binding; and (ii) they each own a 20% interest in title to a property located on Braidwood Lake Road under the terms of the Trust Agreement. In the alternative, the moving Plaintiffs seek leave to register a certificate of pending litigation on title to the property.

[2] For the reasons that follow, this motion is dismissed.

Preliminary Matters

[3] At the outset of this motion, I dealt with two (2) preliminary matters.

(i) Request to Adjourn

[4] The first matter was a request by moving Plaintiffs’ counsel to adjourn the motion to afford more time for her to consider the analysis in Mason v. Perras Mongenais, 2018 ONCA 978 released December 5, 2018. In my view, counsel had adequate opportunity to review this area of jurisprudence before the return of this motion. I add my view that Mason does not alter the jurisprudence for partial summary judgment motions, but applies fairly established principles from leading appellate cases including Hryniak v. Mauldin, 2014 SCC 7, Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, and Butera v. Chown, 2017 ONCA 783. I declined to adjourn the motion.

(ii) Refusals Motion

[5] The second matter was a request by the Plaintiffs and the Estate Trustee to argue the Defendant’s refusals motion as a preliminary matter before proceeding to address the partial summary judgment motion. [1] For these reasons, I declined to hear the refusals motion.

[6] The moving Plaintiffs relied on an affidavit sworn by Rameshbhai Patel, a lawyer, who states that he witnessed the Defendant execute the Trust Agreement that is the subject of this motion. During the Defendant’s cross-examination on his affidavit, Mr. Patel refused to answer one-hundred (100) questions. The Defendant brought a motion, heard on December 3, 2018, for answers to these refusals. Owing to deficiencies in the supporting record, the refusals motion was dismissed with leave for the Defendant to return it on a better record. When the Defendant tried to return the motion, the moving Plaintiffs and the Estate Trustee objected to scheduling it as a short motion before the partial summary judgment motion set for January 23, 2019. They claimed that the refusals motion needed a long motion return date. They also refused to adjourn the January 23, 2019 summary judgment motion to allow the refusals motion to be heard first. The Defendant then decided to argue the summary judgment motion without seeking answers to Mr. Patel’s refusals and advised the parties of his position.

[7] Before me, counsel for the Estate Trustee initially took the position that the refusals previously had been answered by Mr. Patel. [2] He then proposed grouping the refusals into a set of 20 questions that could form the subject of a refusals motion that he proposed to argue as a preliminary matter before arguing the partial summary judgment motion.

[8] The Defendant objected to proceeding with his abandoned refusals motion. He takes the position that the refusals have not been answered in a meaningful way. His counsel also stated that she was wholly unprepared to argue the refusals motion, which would be a lengthy matter given the number of refusals, that the Defendant previously abandoned after electing to rely on the refusals to challenge the adequacy of the partial summary judgment motion record.

[9] I declined to hear the refusals motion as the Defendant had abandoned it. Given the number of outstanding refusals, it also was far from clear that the motion could be addressed without compromising the parties’ ability to argue the partial summary judgment motion within its allocated time.

Factual Background

[10] This action concerns an ownership dispute over a property. There are competing versions as to how the parties came to be involved with it.

[11] The moving Plaintiffs claim that they jointly purchased the property as an investment along with the deceased Plaintiff Iqbal Singh Banepal, the Defendant Sumander Singh Khatri, and a further investor, Manjinder Singh Rai. [3] They claim that the investors all agreed for the Third Party, Raghbir Singh Lubana, to act as their realtor in purchasing the property. [4] The investors are said to have tendered an offer to purchase the property for $495,000.00, which the seller accepted. The offer was made solely in the Defendant’s name, purportedly to allow the investors to benefit collectively from his status as a first time home buyer.

[12] To pay the required deposit, it is claimed that Mr. Lubana tendered a bank draft of $5,000.00 drawn from the Defendant’s bank account on behalf of the investors. To raise the required down payment, the five (5) investors made or arranged for a series of payments in varying amounts leading up to the closing, with each investor holding a 20% interest in the property that was registered on title as a Notice of Unregistered Interest on December 31, 2013. In aggregate, the investors are said to have tendered a total of $100,955.78 in closing funds. On December 23, 2013, the purchase transaction closed with the Defendant allegedly holding title to the property in trust for the investors.

[13] To document the joint investment, it is claimed that the investors executed in counterpart a Trust Agreement dated January 4, 2014. Under its terms, the Defendant took a 20% personal share in the property while holding title in trust as the solely-named registered owner and trustee for the beneficial owners, namely the other four (4) investors. The balance of the purchase price is said to have been financed by a mortgage held solely in the Defendant’s name. Three (3) of the investors, including the Defendant, are said to have opened a joint bank account that was used to tender the down payment funds and to collect rent from tenants at the property that went to pay the mortgage, taxes and other carrying costs.

[14] The Defendant has a completely different account. He claims to have been the sole purchaser of the property which he bought to be his personal residence. He denies that he intended to buy it as an investment property, and denies entering into the investment arrangement described by the moving Plaintiffs. He claims to have paid the initial $5,000.00 purchase deposit with his own funds. He also claims to have made the balance of the down payment by using his own funds, by borrowing additional funds from Mr. Rai, and by obtaining further funds from his realtor, Mr. Lubana, against an outstanding amount owing to the Defendant. The Defendant claims to have paid all of the mortgage payments, taxes and other carrying costs from his own funds.

[15] The Defendant states that the Plaintiffs and Mr. Lubana colluded to defraud him by fraudulently misrepresenting the alleged trust agreement and its registration on his property. He says that he attended Mr. Patel’s law office and signed the Trust Agreement after Mr. Lubana falsely advised him that it was a tax benefit document. Claiming to have only limited English language skills, the Defendant states that he could not read the Trust Agreement and relied on Mr. Lubana to explain it to him. He disputes evidence in Mr. Patel’s affidavit, and takes issue with the Trust Agreement by pointing to various discrepancies in the different versions of the document that have been filed on this motion. He claims that the Plaintiffs acted without his knowledge or consent in registering the Trust Agreement as a caution on his property, which adversely affected title to his property and its value.

Law

[16] The test for summary judgment is well-established. Under Rule 20.01(1), a plaintiff may move for summary judgment on all or part of a claim. Pursuant to Rule 20.04(2)(a), the court shall grant summary judgment if there is no genuine issue requiring a trial with respect to a claim or defence. In Hryniak v. Mauldin, 2014 SCC 7, the Supreme Court held (at para. 49):

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[17] Properly applied, Rule 20.04 avoids more protracted litigation when that is unnecessary to achieve a just result. The motion judge must determine if a fair appreciation of the evidence and issues, which is required to find the necessary facts and apply the relevant legal principles, can confidently be accomplished by summary judgment or whether it may only be achieved at trial; Hryniak at para. 50.

[18] A motion for partial summary judgment is a rare procedure reserved for an issue that may be readily bifurcated from those in the main action and dealt with expeditiously and cost effectively; Butera v. Chown, Cairns LLP, 2017 ONCA 783 at para. 34, and paras. 29 to 35; see also Mason v. Mongenais, 2018 ONCA 978 at para. 22. Given its potential to delay the main action, its inability to dispose of the entire action, and its risk of creating duplicative or inconsistent findings at trial, partial summary judgment may not be in the interests of justice depending on the litigation context as a whole; Mason at paras. 30 to 35. That being said, resolving an important claim may significantly advance access to justice and be the most proportionate, timely and cost effective approach; Hryniak at para. 60.

[19] Under Rule 20.02(2), a responding party to a motion for summary judgment must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial. The parties must put their best foot forward as to the existence or non-existence of a material issue to be tried.

[20] The court should first determine if there is a genuine issue requiring a trial based only on the evidence in the motion record, and without using the fact-finding powers under Rule 20.04(2.1) and (2.2). A determination as to whether there is a genuine issue requiring a trial is made by reviewing the evidentiary record. Summary judgment must be granted if there is no genuine issue requiring a trial.

[21] If, on the record, there appears to be a genuine issue requiring a trial, the motion judge should determine if the need for a trial can be avoided by using the fact-finding powers under Rule 20.04 (2.1) and (2.2) to weigh evidence, evaluate credibility, and draw inferences based on oral evidence. These discretionary powers are presumptively available to the motion judge unless it is in the interests of justice to exercise them only at trial; Trotter Estate, 2014 ONCA 841 at para. 75. Using these fact-finding powers is not contrary to the interests of justice if they lead to a fair and just result and serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole; Hryniak at para. 66.

[22] Credibility is an important consideration when reviewing the evidence on the motion to determine whether oral evidence or a trial is required. The more important that credibility is to determining a central issue, the harder it will for a motion judge to confidently resolve the dispute solely on a paper record; 2212886 Ontario Inc. v. Obsidian Group Inc., 2018 ONCA 670 at paras. 40 and 41; Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450 at para. 44.

[23] In cases involving allegations of fraud, the courts have expressed a preference for credibility issues to be determined at trial. Making a finding of fraud is a serious matter that calls for a rigorous and careful examination of the evidence as a whole, particularly as to the credibility of a witness, and may also involve the evaluation, assessment and comparison of the credibility of multiple witnesses. Given these required findings in cases featuring allegations of fraud, a summary judgment motion is not a suitable procedure even with the Rule 20.04(2.1) expanded powers. The evidentiary issues in such cases are best determined by considering them in the context of all the other evidence at trial; Cannon v. Funds for Canada, 2012 ONSC 399 at paras. 476-479 and 485, leave to appeal refused [2012] O.J. No. 5117 (Div. Ct.); 1305268 Ontario Inc. v 823042 Ontario Inc., 2018 ONSC 6121 at paras. 12 and 13.

Analysis

[24] Having regard to the evidence adduced by the parties and the nature of the credibility issues in this case, I have no hesitation in finding that there is a genuine issue requiring a trial. I am also satisfied that it would not be possible to have a full and proper appreciation of the evidence based on the written record, and that it would not be in the interests of justice to decide these issues on a motion. Fairness to the parties requires that there be a trial.

The Trust Agreement

[25] The moving Plaintiffs seek partial summary judgment by way of a declaration that the Trust Agreement dated January 4, 2014 is valid and binding. They also seek a further order for the Defendant to add the Plaintiffs on title to the subject property as owners. In the alternative, they seek an order for leave to register a certificate of pending litigation on the subject property. They rely on the above-mentioned background facts to establish that the investors entered into a legally recognizable and enforceable agreement to create a trust in support of their investment in the subject property. This is said to have led the investors, including the Defendant, to execute the Trust Agreement fully intending to create binding legal obligations under the investment arrangement that they agreed upon. They characterize the Trust Agreement as a valid written contract which the Defendant willingly executed to hold the subject property in trust for the benefit of the investors. They describe these facts as being clear and straightforward, and claim that there is no genuine issue in dispute.

[26] However, a number of important factual matters are clearly in dispute. The moving Plaintiffs claim that the Defendant flagrantly breached the Trust Agreement to improperly take ownership of the subject property which he had held in trust for the group of investors. In stark contrast, the Defendant claims that the Third Party realtor fraudulently misled him into signing the Trust Agreement after colluding with others to defraud him of the home that he bought for himself. These issues directly impact the authenticity of the Trust Agreement, which constitutes the underlying basis for the various claims and defenses raised in this action. These facts are very controversial, as reflected in the highly conflicting evidence of the parties. The credibility of the parties and other material witnesses will be critical in determining the validity of the Trust Agreement.

[27] I find that the validity of the Trust Agreement cannot be resolved on this partial summary judgment motion. I also find that the matter cannot be resolved fairly or justly by using fact-finding tools to supplement the evidentiary record on this motion. There are serious credibility issues that cannot be determined without a trial. Deciding the validity of the Trust Agreement will require substantial evidence from multiple witnesses at trial to make requisite findings as to the nature of the subject property, how the purported investment was to be structured, the nature and extent of any trust relationship, and how the alleged purchase transaction occurred, among other things.

[28] The moving Plaintiffs take strong issue with the Defendant’s explanation of how he purchased the subject property. They claim that he is deliberately acting in clear breach of the Trust Agreement to misappropriate the property that he was entrusted to hold on behalf of the other investors. The Defendant claims that the Plaintiffs and the Third Party realtor conspired to defraud him and took advantage of his vulnerability due to his limited language skills and lack of sophistication. From the pleadings, affidavits and cross-examinations, I find that there are multiple factual matters interwoven into competing accounts that will require credibility findings that cannot be determined without hearing viva voce evidence. Although the paper record is an extensive one, I find that it would not be fair or just to make credibility findings of this sort on the basis of only a written record.

[29] In raising the adequacy of the paper record on this motion, I am quite mindful of the controversy surrounding the evidence from Mr. Patel, the lawyer who claims to have witnessed the Defendant execute the Trust Agreement. His evidence is central to making a determination on the validity of the Trust Agreement, which goes to the heart of the underlying claim. His affidavit concisely states that the Defendant appeared to be in a normal state, without any signs of intoxication or impaired capacity, when he signed the Trust Agreement. Mr. Patel further claims to have explained the Trust Agreement to the Defendant before he signed it. He states that the Defendant understood that he would own 20% of the subject property, and that the three Plaintiffs and Mr. Rai would each have a 20% stake in the property (i.e., for a total of 80% held by the other four investors) that the Defendant would collectively hold in trust under the Trust Agreement terms.

[30] The Defendant fundamentally disagrees with Mr. Patel’s account. He claims that Mr. Lubana deliberately misled him when he purported to translate and explain the transaction documents. He also claims that he consumed alcoholic beverages with Mr. Lubana before attending Mr. Patel’s office to sign the Trust Agreement, by which time they were both drunk. He also claims to have not received any advice from Mr. Patel regarding the Trust Agreement. Mr. Patel seems to corroborate this last point in his letter to Defendant’s counsel dated May 17, 2016 which explains that he merely witnessed the Defendant signing the Trust Agreement and expressly states that legal advice was not sought or given on that occasion. This is consistent with the Trust Agreement itself that bears a stamped disclaimer next to Mr. Patel’s signature (i.e., by which he attests to witnessing the Defendant’s signature) which states:

PLEASE NOTE THAT THIS DOCUMENT IS NOT PREPARED BY MY OFFICE, NEITHER LEGAL ADVISE [sic] SOUGHT NOR GIVEN.

[31] When cross-examined on the plain discrepancy between his affidavit and his correspondence and disclaimer, Mr. Patel refused to answer. He also refused to answer several basic questions, including whether there were multiple versions of the Trust Agreement (as appears to be the case given the multiple versions found in different parts of the record on this motion), whether he had an original version, whether he took any notes when the Defendant signed the agreement, how long he spent with the Defendant that day, and how he ascertained that the Defendant understood the terms of the Trust Agreement. He refused to provide the Trust Agreement, referred to as Exhibit “A” in his affidavit, which is missing from the affidavit.

[32] I find that the credibility issues in this proceeding cannot be determined on the affidavits, documents, and transcripts filed on this motion, as proceeding in this fashion could well lead to the type of substantive unfairness described in Baywood at para. 44. I also find that this is not a case for employing fact-finding tools at a mini-trial. Partial summary judgment would not dispose of the entire case, and inevitably would leave some of the claims to proceed to trial. The interwoven nature of the issues and evidence in this case will not lead to the kinds of procedural efficiencies which could otherwise make partial summary judgment appropriate. Rather, a mini-trial in this case would run the risk of duplicative proceedings or inconsistent findings of the sort that appellate courts repeatedly have cautioned is not appropriate for summary judgment; Hryniak at para. 60; Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450; Hamilton (City) v. Their + Curran Architects Inc., 2015 ONCA 64; Butera v. Chown, Cairns LLP, 2017 ONCA 783; Mason v. Perras Mongenais, 2018 ONCA 978; Healthy Lifestyle Medical Group Inc. v. Chand Morningside Plaza Inc., 2019 ONCA 6.

[33] Applying the principles described above, I conclude that there is a genuine issue that requires a trial. To arrive at a proper and fair determination regarding the validity of the Trust Agreement, particularly given the completely irreconcilable positions taken by the moving Plaintiffs and the Defendant, respectively, viva voce evidence will be necessary. In view of the important credibility findings that will be required to determine the allegations of fraud and fraudulent misrepresentation that have been raised in this case, I find that a trial is necessary; Cannon at paras. 476-479 and 485; 1305268 Ontario at paras. 12-13. In arriving at this decision, I also find that the interwoven nature of the issues and evidence will not result in procedural efficiencies that would make partial summary judgment appropriate. For these reasons, the motion for a declaration is dismissed.

Certificate of Pending Litigation

[34] As an alternative to seeking partial summary judgment, the moving Plaintiffs sought leave for a certificate of pending litigation to be issued on the subject property. However, they did not include a claim for a certificate of pending litigation in the originating process or pleading as required under Rule 42.01(2).

[35] The factors to consider on a motion for leave to issue a certificate of pending litigation are well established. In Perruzza v. Spatone, 2010 ONSC 841, Master Glustein, as he then was, helpfully set out the following principles (at para. 20):

(i) The test on a motion for leave to issue a CPL made on notice to the defendants is the same as the test on a motion to discharge a CPL; (ii) The threshold in respect of the “interest in land” issue in a motion respecting a CPL is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed; (iii) The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has “a reasonable claim to the interest in the land claimed”; (iv) Factors the court can consider on a motion to discharge a CPL include (i) whether the plaintiff is a shell corporation, (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (viii) the harm to each party if the CPL is or is not removed with or without security; and (v) The governing test is that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL should be granted or vacated [citations omitted].

[36] From the evidence before me, I am satisfied that the moving Plaintiffs have met the initial threshold of demonstrating a triable issue with their claim to an interest in the subject property. While the circumstances surrounding the claimed investment and Trust Agreement are unclear and in dispute, I am satisfied that the record contains sufficient evidence to meet the relatively low threshold for this part of the test for leave. However, for the reasons that follow, the other applicable factors lead me to find against granting leave on this motion.

[37] There is no evidence that the subject property is unique to the moving Plaintiffs. Their evidence is clear that they acquired the property as an investment to earn a profit. In the circumstances, damages can be easily quantified based on the cost of purchasing the property against costs incurred. Their statement of claim also includes a claim for damages, such that an award of damages would appear to be readily calculated and offer an adequate remedy. I also find that the balance of convenience favours the Defendant. While the registration of a certificate of pending litigation may inconvenience the Defendant and complicate any future sale of the subject property that may be contemplated, the certificate may be discharged when future sale proceeds are paid into court. To the extent that the moving Plaintiffs seek a certificate of pending litigation as a form of security for their claim, it bears noting that the Defendant is not a shell corporation but an individual who testified during his cross-examination that he is employed. Should the moving Plaintiffs have concerns about the dissipation of assets, it is open for them to seek relief by way of a Mareva order. A certificate of pending litigation is intended to protect an interest in land in situations where other remedies would be ineffective.

[38] For all of the foregoing reasons, the motion for leave to issue a certificate of pending litigation is dismissed.

Costs

[39] The parties made cost submissions at the conclusion of this motion.

[40] The Defendant sought his costs on a substantial indemnity basis in the amount of $10,575.35, inclusive of his counsel’s attendance on this one day motion plus disbursements and HST. In the alternative, the Defendant sought his costs on a partial indemnity basis in the all-inclusive amount of $9,292.80.

[41] Given the nature of the issues and submissions on this motion, I am satisfied that an award of costs fixed at $8,000.00, inclusive of disbursements and HST, is a fair, reasonable and proportional amount for successfully opposing this motion. I add that the moving Plaintiffs sought an all-inclusive amount of $15,000.00 for their costs, and the Estate Trustee sought a fixed amount of $750.00 reflecting his limited role on the motion that was argued largely by the moving Plaintiffs.

[42] Costs for this motion are awarded to the Defendant in the fixed amount of $8,000.00, inclusive of disbursements and taxes, and are apportioned as follows:

(i) $7,750.00 is payable to the Defendant forthwith by the moving Plaintiffs; and (ii) $250.00 is payable to the Defendant forthwith by the Estate Trustee.

Doi J.

DATE: February 27, 2019

Footnotes:

[1] The Estate Trustee, Pardeep Singh Grewal, is acting for the Estate of Iqbal Singh Banepal (a deceased Plaintiff in this action) pursuant to an Order to Continue issued November 22, 2018. The Estate Trustee was represented on this partial summary judgment motion by counsel who supported the motion brought by the moving Plaintiffs.

[2] See paragraph 9 and Exhibit “C” (Refusals Chart) to the Responding Affidavit of Rameshbhai Patel sworn November 26, 2018 and delivered in response to the Defendant’s refusals motion returnable December 3, 2018.

[3] Pursuant to an Order to Continue issued on November 22, 2018, Pardeep Singh Grewal is the Estate Trustee for the late Mr. Banepal’s estate. The other investor, Manjinder Singh Rai, is not a party in these proceedings.

[4] The realtor, Mr. Lubana, is employed as a real estate agent by Century 21 People’s Choice Realty Inc. Brokerage. Both Mr. Lubana and the corporate brokerage are named as Third Parties to this action. The Third Parties did not appear on this motion for partial summary judgment, and did not take a position on the motion.