Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20220215 DOCKET: C69201

van Rensburg and Roberts JJ.A. and Tzimas J. (ad hoc)

BETWEEN

Rana Abdulrahman Bakhsh Plaintiff (Respondent)

and

Khalid Bin Abdul-Aziz Abbas Merdad Defendant (Appellant)

Counsel: Steven Benmor and Misha Leslie, for the appellant W. Douglas R. Beamish, for the respondent

Heard: November 26, 2021

On appeal from the order of Justice Shaun O’Brien of the Superior Court of Justice dated February 19, 2021.

Reasons for Decision

[1] This appeal involves a dispute over a condominium property located in Ontario (“the condominium property”). The parties are former spouses who were married and resided, and whose marriage was annulled, in Saudi Arabia. The central issue is whether the claim by the respondent, Ms. Bakhsh, in relation to the condominium property, is an equalization claim under the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”), as the appellant, Mr. Merdad, argues, or a resulting or constructive trust claim as Ms. Bakhsh pleaded.

[2] In Ms. Bakhsh’s statement of claim, she has claimed, among other things, a declaration of her 100% beneficial interest in the condominium property whose legal title is in Mr. Merdad’s name. In response, Mr. Merdad brought a motion under rr. 21.01(1)(a) and (3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to dismiss the action on the bases that the court has no jurisdiction over the subject matter of the action, or that it is res judicata or statute-barred.

[3] Mr. Merdad argued that Ms. Bakhsh’s Ontario claim is an equalization claim. As such, it was precluded because: Ontario has no jurisdiction over this matter that is governed by Saudi Arabian law and should have been heard there; the parties’ property issues had already been decided in their annulment proceedings in Saudi Arabia, making this claim res judicata; and, in any event, Ms. Bakhsh’s equalization claim is statute-barred as it was not commenced within the applicable two-year limitation period under s. 7(3)(a) of the FLA. Mr. Merdad asked in the alternative that the proceedings be transferred to the family law list. The motion judge refused Mr. Merdad’s motion to dismiss Ms. Bakhsh’s action, transferred it to the family law list, and granted Ms. Bakhsh $10,000 as her costs of the motion.

[4] Mr. Merdad repeats the same arguments on appeal about the characterization of Ms. Bakhsh’s claim as a statute-barred equalization claim, which the motion judge rejected. We see no error that warrants appellate intervention.

The court has jurisdiction and the claim is not res judicata

[5] First, does the Ontario court lack jurisdiction over the subject matter of Ms. Bakhsh’s claim because the claim should have been brought in the parties’ annulment proceedings or other civil proceedings in Saudi Arabia, and is it also res judicata? The answer is no.

[6] Ms. Bakhsh could not have brought her claim in Saudi Arabia. It is not disputed that, as the motion judge found, in accordance with s. 15 of the FLA, the law of Saudi Arabia, as the parties’ last common habitual residence, applies to Ms. Bakhsh’s claim in respect of the Ontario property. Based on the expert evidence called by the parties, the motion judge determined, correctly, in our view, that the question of the parties’ interests in property located outside Saudi Arabia had not been decided and could not have been decided in their annulment proceedings or in the separate civil proceedings concerning a property in Saudi Arabia.

[7] The parties’ annulment proceedings only dissolved the marriage and did not resolve any other legal issues. As the parties’ experts agreed, and the motion judge accepted, Saudi Arabian law does not provide for equalization claims. The family courts in Saudi Arabia resolve issues related to the status of marriages, such as divorces and annulments, but do not have jurisdiction over property and financial disputes. The motion judge accepted Ms. Bakhsh’s expert’s evidence that property and financial disputes are within the jurisdiction of the Saudi Arabian civil courts.

[8] In fact, and in confirmation of Ms. Bakhsh’s expert’s opinion accepted by the motion judge, the parties have been engaged in separate civil proceedings, apart from their annulment proceedings, in the civil court in Saudi Arabia. Ms. Bakhsh commenced a lawsuit in the civil court to determine the parties’ respective interests in property located in Jeddah, Saudi Arabia, that was acquired during their marriage. Further, the motion judge accepted Ms. Bakhsh’s expert’s unchallenged evidence that the civil courts of Saudi Arabia decline jurisdiction to deal with claims involving ownership of property and land outside of Saudi Arabia.

[9] It is therefore clear that Ms. Bakhsh could not bring her claim for the condominium property in Saudi Arabia. Saudi Arabia does not have jurisdiction over the claim and the claim is therefore not res judicata. Moreover, Ontario clearly has jurisdiction to adjudicate the claim of Ms. Bakhsh, who resides in Ontario, concerning property located in Ontario, legal title to which is in Mr. Merdad’s name.

[10] The motion judge’s determination that the Ontario court does not lack jurisdiction and that Ms. Bakhsh’s claim was not res judicata was amply supported by the record and contains no error.

The claim is not an equalization claim nor is it statute-barred

[11] Next, is Ms. Bakhsh’s equitable trust claim in fact an equalization claim under the FLA and is it therefore barred by the two-year limitation period set out in s. 7(3)(a) of the FLA?

[12] Absent any evidence as to the law of limitation of actions in Saudi Arabia, it appears to be common ground that Ontario law would apply. If Ms. Bakhsh’s claim is not an equalization claim, the ten-year limitation period under s. 4 of the Real Property Limitations Act, R.S.O. 1990, c. L.15, would apply and the respondent’s action would not be statute-barred. This court’s decision in McConnell v. Huxtable, 2014 ONCA 86, 118 O.R. (3d) 561, supports the application of the ten-year limitation period under the Real Property Limitations Act to family law constructive trust claims.

[13] It is clear in our view that Ms. Bakhsh’s claim is not a thinly veiled attempt to dress up an equalization claim as an equitable trust claim. Rather, Ms. Bakhsh seeks to impose a resulting or constructive trust over the condominium property that she financially maintained and in respect of which she seeks a declaration of sole beneficial ownership. Indeed, Mr. Merdad does not suggest that the claim represents an abuse of process but rather that any claim involving the former spouses’ property acquired during the marriage is necessarily an equalization claim under the FLA and is now statute-barred under s. 7(3)(a). According to Mr. Merdad, the FLA and its rules provide a complete code for equalization of property claims between spouses and former spouse.

[14] We disagree with Mr. Merdad’s submission that all property claims between spouses or former spouses must necessarily be equalization claims. And it does not follow that the expiration of time to bring an equalization claim entails the expiration of a constructive or remedial trust claim. Equalization claims and equitable trust claims remain distinct.

[15] The FLA equalization provisions do not deal with property, per se, but, rather, with the equitable calculation, division, and distribution of the value of net family property. Here, Ms. Bakhsh brings forward an equitable trust claim and not a claim for equalization of the value of the parties’ net family property. A claim of ownership is distinct from a claim for a share in property value; an equitable trust claim addresses the former and the equalization regime of the FLA covers only the latter: McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401, at para. 59.

[16] The equalization provisions of the FLA also do not preclude an equitable trust claim respecting property. Section 10(1) of the FLA expressly permits a court application for a determination between spouses or former spouses “as to the ownership or right to possession of particular property, other than a question arising out of an equalization of net family properties” and the court may “declare the ownership or right to possession”, as the respondent has claimed, among other remedies. Importantly, the two-year limitation period in s. 7(3)(a) of the FLA applies only to an application based on subsections 5(1) or (2) and not to the determination of a question of ownership between spouses set out in s. 10(1) of that Act.

[17] The appellant’s reliance on the Supreme Court of Canada’s decision in Rawluk v. Rawluk, [1990] 1 S.C.R. 70, is, respectfully, misplaced. Rather, it supports Ms. Bakhsh’s position.

[18] At issue in Rawluk was whether the doctrine of constructive trust could be applied to determine the ownership of assets of married spouses under the provisions of the FLA or whether the remedy was abolished and superseded by the equalization of matrimonial property and other provisions under the FLA. Mrs. Rawluk claimed a one-half interest in the matrimonial property by way of a remedial constructive trust.

[19] The Supreme Court in Rawluk confirmed that the FLA incorporated the constructive trust remedy that could be used in the matrimonial property context to allocate proprietary interests and that the FLA did not constitute an exclusive code for determining the ownership of matrimonial property: at pp. 89-91, 93 and 97. While the doctrine of constructive trust can be used to settle questions of ownership for the purpose of determining the net family property of each spouse, this function is “totally distinct from the process of determining how the value of matrimonial property should be distributed under the equalization process”: at p. 93.

[20] As a result, we reject the appellant’s submission that Ms. Bakhsh’s claim is an equalization claim that is statute-barred. The motion judge was correct to conclude that the two-year limitation period under the FLA, which applies to equalization claims, does not apply to Ms. Bakhsh’s claim.

There is no error with the motion judge’s costs order

[21] Finally, Mr. Merdad takes issue with the motion judge’s $10,000 costs order in favour of Ms. Bakhsh. He argues that because he was successful in having the proceedings transferred to the family law list, the costs award was punitive.

[22] There is no basis to interfere with the motion judge’s discretionary costs decision. The parties had agreed that the successful party on the motion would be entitled to costs in the amount of $10,000. It was entirely within the motion judge’s reasonable exercise of her discretion to determine that Ms. Bakhsh was the successful party, especially since she prevailed on the principal disputed issues on the motion.

Disposition

[23] The appeal and motion for leave to appeal costs are therefore dismissed.

[24] The respondent is entitled to partial indemnity costs from the appellant in the agreed upon amount of $7,915.01, inclusive of disbursements and applicable taxes.

“K. van Rensburg J.A.”

“L.B. Roberts J.A.”

“E. Ria Tzimas, J. (ad hoc)”