SUPERIOR COURT OF JUSTICE – ONTARIO
COURT FILE NO.: FS-12-3929-00
DATE: February 25, 2013
RE: Hasnae Albaroudi, Applicant
AND:
Bassam Tarakji, Respondent
BEFORE: Ricchetti, J.
COUNSEL:
J. Gold, Counsel, for the Applicant
M. Roshan, Counsel, for the Respondent
HEARD: February 21, 2013
ENDORSEMENT
THE MOTION
[1] The Respondent, Bassam Tarakji (“Tarakji”) brings this motion to set aside a Certificate of Pending Litigation issued on September 7, 2013.
THE FACTS
[2] The parties commenced to live together in 2003. The parties were not married for the purposes of the Family Law Act.
[3] The Applicant, Hasnae Albaroudi (“Albaroudi”) had two children from a previous marriage. Tarakji had three children from a previous marriage.
[4] The parties lived in a prior home with Albaroudi’s children. The prior home was registered in the name of Tarakji. He purchased this home and paid its ongoing expenses.
[5] In 2006 Tarakji purchased 5376 Anvil Lane, Mississauga (“Property”). The Property was purchased in Tarakji’s name only. Tarakji was the sole financial contributor to the Property’s purchase. Tarakji has been the only party paying the expenses relating to the Property.
[6] Tarakji’s children moved into the Property with the parties.
[7] Albaroudi, generally, was not employed outside the home during the cohabitation. She upgraded her education during this period. She primarily remained at home, took care of the children and took care of the home while Tarakji worked at his businesses. Tarakji was self employed during this period. He owned a barbershop and a condominium but neither is registered in his name.
[8] Albaroudi did not contribute to food or other living expenses at the home. The parties kept their finances separately.
[9] On February 12, 2009 the Property was transferred to Mohamad Osama Zeinabdin, a friend of the Tarakji. On the same day, a mortgage well in excess of the value of the Property was registered in favour of Tarakji’s sister in law. It appears from the evidence of the sister in law that this transaction was a sham. It was done for the purpose of creditor protection by Tarakji. A document dated February 18, 2009 was executed by Tarakji and Mr. Zeinabdin stating it was a sham transfer and mortgage. There is nothing in this document stating that Tarakji was not the legal and beneficial owner of the Property. Read as a whole, that is the only inference that can be drawn from the document.
[10] Tarakji now alleges that the Property was never his. He claims it was his brother’s property the whole time and he was simply paying the mortgage in lieu of rent to his brother. It hardly explains why Tarakji granted a charge to the Royal Bank on July 25, 2006 (the day the Property was purchased) in his name. This provides a very different reason why he was paying the mortgage – he had personal liability to the bank for the mortgage.
[11] Tarakji states that the Property was registered in his brother’s name since his brother was a non-resident of Canada and therefore, couldn’t hold title to property in Canada.
[12] Tarakji also produced a Statutory Declaration dated November 15, 2006 that he holds the Property in trust for his brother, Mohammed Ghassan Tarakji. It is unclear which lawyer commissioned the Statutory Declaration. There is no affidavit from the commissioning lawyer. There is no affidavit from Mohammed Ghassan Tarakji. Tarakji states this Statutory Declaration was executed when he bought the Property but it was in reality done months after the Property purchase had been completed in the name of Tarakji.
[13] If the Property was truly Tarakji’s brother’s property, there would have been no reason to transfer it to Mr. Zainabdin’s name. Why would Tarakji be concerned about his creditors?
[14] If the Property was truly Tarakji’s brother’s property, why has the brother not brought a motion to remove the CPL from his property?
[15] The parties separated in October 2011.
[16] On September 6, 2012 Albaroudi brought an ex parte motion seeking a Certificate of Pending Litigation on 5376 Anvil Lane, Mississauga. Justice Lemon granted the order.
[17] Albaroudi claims an interest in the Property on the basis she was a traditional housewife and stay at home mother which permitted Tarakji to focus on his businesses. In addition, she alleges she provided some painting, decorating services, provided decor items and did the landscaping to the Property. She claims an interest in the Property on the basis of Implied, Resulting or Constructive Trust (unjust enrichment).
[18] Tarakji states that Albaroudi made no financial contributions to the Property or to the household and therefore, her trust claim cannot be a reasonable one. Tarakji's sole ground for seeking the discharge of the CPL is the strength of Albaroudi's claim. No other prejudice or impact the CPL has had or will have has been brought forward by Tarakji.
THE ANALYSIS
[19] S. 103 (6) of the Courts of Justice Act provides:
(6)The court may make an order discharging a certificate,
(a) where the party at whose instance it was issued,
(i) claims a sum of money in place of or as an alternative to the interest in the land claimed,
(ii) does not have a reasonable claim to the interest in the land claimed, or
(iii) does not prosecute the proceeding with reasonable diligence;
(b) where the interests of the party at whose instance it was issued can be adequately protected by another form of security; or
(c) on any other ground that is considered just,
and the court may, in making the order, impose such terms as to the giving of security or otherwise as the court considers just.
[20] In Royal Bank of Canada v. 1514357 Ontario Ltd., Justice Marrocco at para. 41 made the following comment applicable to this case:
I am satisfied that RBC is required to demonstrate that it has a reasonable claim, not that the claim is likely to succeed. The appropriate test in this regard was set out by Justice Blair [as he then was] in Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300, at para. 62:
Under the Courts of Justice Act, R.S.O. 1990, c. C.43, section 103, a certificate of pending litigation may be issued by the court where a proceeding is commenced in which an interest in land is in question. The authorities cited above confirm the principle that if reasonable claims are put forward in an action for a constructive trust or a fraudulent conveyance in respect of a property, a certificate of pending litigation may issue pending trial. The party seeking the certificate need not prove its case at this point. The test is met where there is sufficient evidence to establish a reasonable claim to an interest in the land based upon the facts, and on which the plaintiff could succeed at trial: Vettese v. Fleming, [1992] O.J. No. 1013, supra, at pp. 244-245 (per Chapnik J.); 931473 Ontario Limited v. Coldwell Banker Canada Inc. (1991), 5 C.P.C. (3d) 238 (Ont. Gen. Div., Sutherland J.), at pp. 257-261.
[21] Does Albaroudi have a reasonable trust claim?
[22] Kerr v. Baranow, 2011 SCC 10 is the leading case on resulting and constructive trusts in family situations. The question essentially is whether there was a “joint family venture” and a link between the claimant’s contributions and the family ventures asset/wealth accumulation. The claimant’s contribution need not necessarily be a direct financial contribution or to the acquisition or ongoing expenses of the Property but the contribution needs to be for the preservation, maintenance or improvement of the Property. In some cases, such a contribution has been found where one party remains at home and thereby permitting the other party to amass assets or income to pay for the Property. It all depends on the facts and circumstances of each case.
[23] On the evidence before me, Albaroudi made no significant direct financial contribution to the purchase, maintenance or improvement as to the Property. They kept separate finances. She contributed to none of the household expenses. She did live with Tarakji for approximately 8 years in a domestic relationship. Tarakji was able to focus his attention on his businesses during this period of time. Albaroudi’s claim will or will not succeed on whether a joint family venture can be established by her during that 8 year period. Whether such a joint family venture can be established is a question of fact. While Albaroudi’s claim appears to be a weak one on the evidence before me, I cannot say it is devoid of merit. Given the respective roles of each of the parties, some of the factors discussed by Justice Cromwell in Kerr, supra, such a proprietary claim might very well succeed at trial.
[24] I am satisfied that, based on the evidence before this court, there is a reasonable trust claim by Albaroudi to an interest in the Property.
[25] That does not end the matter. Even where the plaintiff’s claim is reasonable, the court is required to exercise its equitable discretion, based on all the relevant circumstances of the case, to determine whether to grant or deny the motion.
[26] In 931473 Ontario Ltd. v. Coldwell Banker Canada Inc. (1992), 5 C.P.C.(3d) 238, the court made the following comment:
In Sandhu v. Braebury Homes Corporation et al. (1986), 39 R.P.R. 10, Rosenberg J., on an appeal from a refusal by a District Court Judge to discharge a CPL, where the refusal was based on the grounds that there was a triable issue in the action for specific performance and that the claim was not frivolous or vexatious, held that in so limiting the court's discretion under s. 116 the District Court Judge exercised his discretion on a wrong principle, and so allowed the appeal. Rosenberg J. found, as had the court below, that there was a triable issue and that the claim was not frivolous and vexatious and, further, he agreed that s. 46 made no significant changes in the law as stated in the predecessor statutory provisions. However, Rosenberg J. took issue with the proposition that under s. 116 the basic principle was that a CPL should not be discharged unless it is shown there is no triable issue as to the plaintiff's right to specific performance. At p. 14 he states as follows:
The "basic principle" referred to, and apparently followed by the learned District Court Judge, is supported by a number of cases: Freedman v. Lawrence (1978), 1978 1422 (ON SC), 18 O.R. (2d) 423, 6 C.P.C. 24, 82 D.L.R. (3d) 747 (Ont. H.C.); Galinski v. Jurashek (1976), 1 C.P.C. 68 (Ont. H.C.); Notarfonzo v. Goodman (1981), 24 C.P.C. 127 (Ont. N.C.); 515924 Ont. Ltd. v. Greymac Trust Co. (1984), 45 C.P.C. 80 (Ont. H.C.); and Bernhard v. United Merchandising Enterprises Ltd. (1984), 1984 1897 (ON SC), 47 O.R. (2d) 520 (Ont. H.C.). Notwithstanding the number of times that the Ontario High Court has considered the matter and confirmed the "basic principle", I am of the view that the appropriate approach was enunciated by the Ontario Divisional Court in the case of Clock Investments Ltd. v. Hardwood Estates Ltd. (1977), 1977 1414 (ON SC), 16 O.R. (2d) 671, 79 D.L.R. (3d) 129 Steele J. stated [at p. 674 O.R. J:
• "... the governing test is that the Judge must exercise his discretion in equity and look at all of the relevant matters between the parties in determining whether or not the certificate should be vacated."
I am in respectful agreement with that statement. The discretionary nature of an order to discharge a CPL was emphasized by Anderson J. in Pete & Marty's (Front) Ltd. v. Market Block Toronto Properties Ltd. 5 C.P.C. (2d) 97, 37 P.P.R. 157, albeit in a case where damages were also claimed and were found to provide a satisfactory alternative remedy.
[27] Tarakji has demonstrated that his is prepared to put his assets outside of the reach of creditors, having already entered into a sham or fraudulent transaction to do so with the Property and having already placed other assets such as his business and condominium in his son’s name. Tarakji’s evidence as to the beneficial ownership of the Property is quite troubling and highly suspicious that this is simply another attempt to avoid his assets being available to third parties, including Albaroudi. I have little doubt that if Albaroudi is successful, there will be no assets for Albaroudi to attach if the CPL is discharged.
[28] In this case, the equities strongly favour dismissing the motion and allowing the CPL to remain on title to the Property.
[29] The motion is dismissed.
COSTS
[30] Any party seeking costs shall serve and file written submission on entitlement and quantum within two weeks of the release of these reasons. Written submissions shall be limited to 3 pages, with attached Costs Outline and any authorities.
[31] Any responding party shall have one week thereafter to serve and file responding submissions. Written submissions shall be limited to 3 pages with any authorities relied on attached.
[32] There shall be no reply submissions without leave.
Ricchetti, J.
Date: February 25, 2013
COURT FILE NO.: FS-12-3929-00
DATE: February 25, 2013
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Hasnae Albaroudi, Applicant
AND:
Bassam Tarakji, Respondent
BEFORE: Ricchetti, J.
COUNSEL:
J. Gold, Counsel, for the Applicant
M. Roshan, Counsel, for the Respondent
ENDORSEMENT
Ricchetti J.
DATE: February 25, 2013