Court of Appeal for Ontario

Date: 2019-09-23 Docket: C65731 Judges: Doherty, Harvison Young and Thorburn JJ.A.

Between

Farhad Derakhshan (Applicant) Appellant

and

Seema Narula (Respondent) Respondent

Counsel

Farhad Derakhshan, acting in person

Ian C. Vallance, for the respondent

Heard

September 16, 2019

On Appeal

On appeal from the judgment of Justice Elizabeth C. Sheard of the Superior Court of Justice, dated January 24, 2018.

Reasons for Decision

Overview

[1] The application judge dismissed the appellant, Mr. Derakhshan's application for retroactive spousal support, unjust enrichment and consequent constructive trust in twelve properties, a declaration that there was a joint family venture in the accumulated value of the properties, and an order for the return of his shares in Turtle Island Staffing, an Indigenous staffing company.

[2] On this appeal, Mr. Derakhshan claims the application judge made palpable and overriding errors of mixed fact and law. He seeks an order to set aside the decision and have the case reheard by a new judge. He also claims the application judge's reasons were inappropriately copied from the written submissions of the respondent.

Analysis and Conclusion

Spousal Relationship

[3] Section 29 of the Family Law Act, R.S.O. 1990, c. F.3 defines a spouse as a married couple or "two persons who are not married to each other and have cohabited continuously for a period of not less than three years", or have "a relationship of some permanence, if they are the parents of a child".

[4] Mr. Derakhshan and Ms. Narula met in 2006. There was clear evidence of a romantic relationship at some point and the parties lived together from the summer of 2011 to September 2012.

[5] The application judge noted however, that Ms. Narula and Mr. Derakhshan had no children together, were never married and referred to themselves as "single" on their tax returns. Moreover, they largely kept separate bank accounts and Mr. Derakhshan used many different addresses on his driver's licence, car insurance, passport, and income tax returns. They maintained separate residences for all but one year.

[6] Thus, while she accepted that Mr. Derakhshan and Ms. Narula were in a romantic relationship at some stage and lived together for approximately one year, the application judge found that Mr. Derakhshan failed to prove that he and Ms. Narula were in a spousal or common-law relationship for three years as required by the provisions in the Family Law Act, as "I cannot conclude that they cohabited for a continuous period of not less than three years".

[7] There was ample evidence to support this conclusion.

Unjust Enrichment

[8] In order to prove a claim in unjust enrichment, Mr. Derakhshan must prove that Ms. Narula has been enriched, Mr. Derakhshan suffered a corresponding loss, and there is no juristic reason for the enrichment: Pettkus v. Becker, [1980] 2 S.C.R. 834.

[9] Mr. Derakhshan's unjust enrichment claim relates to 12 properties in Ottawa. From 2006 to 2012, Ms. Narula bought, renovated, and either rented or sold the properties. Mr. Derakhshan, or his companies, did much of the renovation work. When they first met, Ms. Narula was a successful businesswoman. Mr. Derakhshan admitted at trial that he was "poor" when he met Ms. Narula.

[10] Ms. Narula testified that she paid Mr. Derakhshan $2,192,598.78 between 2006 and 2012. Mr. Derakhshan admitted to receiving $1,625,063.35 over the six-year period but claims he was entitled to more.

[11] Mr. Derakhshan conceded that his records were lacking but called no expert evidence to support the value of the work done or his alleged investment of monies into the properties. His only proof was before and after photos, evidence of some of his own workers, his own spreadsheets, and supplier invoices. It was impossible to correlate the invoices with the monies paid to him. Moreover, his claimed increase in value of the properties was based on his own assessment.

[12] By contrast, Ms. Narula signed all the agreements of purchase and sale, paid the down payment, and arranged mortgage financing in her name alone. Ms. Narula agreed that Mr. Derakhshan had done work but asserted that Mr. Derakhshan had been paid for the work he did. She backed up her assertion by producing copies of cancelled cheques and T4s together with spreadsheets summarizing that documentary evidence. There was no evidence that at any time prior to their break up, Mr. Derakhshan asserted any claim to be paid for work done either by virtue of a joint venture, unjust enrichment, or otherwise.

[13] The application judge found that Mr. Derakhshan therefore failed to prove his claim for unjust enrichment as he was unable to adduce evidence to satisfy the court that he was not paid for work that he did or that Ms. Narula was unjustly enriched at his expense. There was ample evidence to support her findings. At the oral hearing before this court, the appellant submitted that the respondent had given false evidence at trial. There is no basis for this court to interfere with the application judge's findings.

Joint Family Venture

[14] The question of whether there is a joint family venture is a question of fact and must be assessed by having regard to the relevant circumstances including:

• a. mutual efforts;
• b. economic integration;
• c. intention of the parties;
• d. priority of the family; and
• e. length of the relationship.

[15] The use of funds for family purposes or situations where one spouse takes all may also indicate a pooling of resources. The more extensive the integration, the more likely it is that they have engaged in a joint family venture: Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at paras. 84-98.

[16] While a joint family venture claim logically becomes stronger when the relationship begins to resemble that of spouses, a spousal relationship is not required for there to be a joint family venture. A spousal requirement is inconsistent with the doctrine of unjust enrichment which developed in response to inequitable outcomes resulting from strict definitions of spouses and narrow views of domestic arrangements: Pettkus.

[17] While the application judge held in her reasons that, "[t]o establish that he and Ms. Narula were engaged in a joint family venture he would have had to show that they were in a spousal relationship. He did not", this must be read in the context of the two preceding paragraphs which provide that:

[86] There was no evidence or suggestion that Derakhshan was providing services other than services directly related to the Properties. The facts in this case are different from those in other "joint family venture" cases, as noted above. With respect to the Properties, there was no pooling of funds, no common purse, no financial intertwining, and no amassing of a common pool of savings. All of the funds came from or through Narula, who took all the financial risk and absorbed any losses. Apart from a small ($300.00) joint account opened by Narula in India, which she and Derakhshan could access while travelling in India, Narula and Derakhshan kept their finances separate.

[87] While there may have been some financial overlap, not uncommon between couples in a relationship, the evidence fell short of showing an economic integration between Derakhshan and Narula, a key indication of a joint family venture.

[18] While a spousal relationship is not a legal prerequisite to finding a joint family venture, there was ample evidence to justify the application judge's conclusion that there was no joint family venture in these circumstances.

[19] There was no evidence that Mr. Derakhshan was providing services other than services directly related to the properties. There was no pooling of funds or economic integration. At most, there was some financial overlap but no economic integration of the sort that indicates a joint family venture. For these reasons, we find that the application judge's reasons provide ample basis to conclude that there was no joint family venture.

Transfer of Shares in Turtle Island

[20] In 2008, Ms. Narula and a third party, Dumont, created a business together called Turtle Island Staffing. Ms. Narula used one of Mr. Derakhshan's inactive numbered corporations, 2093030 Ontario Inc., for the company. Dumont held 51% of the shares, Mr. Derakhshan held 49% through his company, and Ms. Narula held no shares. Ms. Narula testified that this was done because the majority shareholder had to be of Indigenous heritage in order to submit tenders for government work.

[21] The application judge accepted Ms. Narula's evidence that it was always their intention that Mr. Derakhshan would transfer his shares to Ms. Narula and he eventually did. Ms. Narula's evidence on this point was corroborated by the company accountant, Mr. Siddiqi, who was called by Mr. Derakhshan.

[22] In 2011, Mr. Derakhshan's shares were transferred to Ms. Narula for $1.00. While Mr. Derakhshan claimed that his signature was forged, he produced no expert evidence of forgery and the accountant testified that Mr. Derakhshan told him he willingly transferred the shares.

[23] The application judge therefore rejected Mr. Derakhshan's claims that his shares in Turtle Island Staffing were fraudulently transferred to Ms. Narula. For reasons more fully explained by the application judge, there was evidence upon which the application judge could reasonably conclude the shares were not fraudulently transferred.

Were the Application Judge's Reasons Inappropriately Copied from the Written Submissions of the Respondent?

[24] Mr. Derakhshan claims that because the decision was rendered more than six months after the hearing, there is reason to suggest the application judge relied unduly on the respondents' written submissions.

[25] We do not agree.

[26] Mr. Derakhshan bears the onus to show that a reasonable person, apprised of the relevant facts, would conclude that the application judge failed to come to grips with the issues and deal with them independently and impartially. He has not done so. The trial was heard over 21 court days with 24 witnesses being called and 142 documents entered as exhibits. Both parties were invited to provide written submissions and did so. The reasons for decision is a new document that does not copy Ms. Narula's written submissions.

[27] The application judge carefully reviewed the evidence and the law on the issues before her. We find there is no merit to this submission.

Conclusion

[28] There is no palpable and overriding error in the application judge's findings or in her conclusion dismissing the appellant, Mr. Derakhshan's claims. On the contrary, her reasons were measured and comprehensive.

[29] For these reasons, the appeal is dismissed. Costs to the respondent in the amount of $20,000.

"Doherty J.A"

"Harvison Young J.A."

"Thorburn J.A."