SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 5281/13

DATE: 2014-04-24

RE: ROYAL BANK OF CANADA, Plaintiff

AND:

AMIR KAVEH aka AMIR HOSSEIN KAVEH SEMNANI aka AMIR H. KAVEH and SHAHPAR GERAMI, Defendants

BEFORE: Gray J.

COUNSEL:
Shawna M. Sosnovich, Counsel for the Plaintiff

Harold Rosenberg, Counsel for the Defendant Shahpar Gerami

HEARD: April 22, 2014

ENDORSEMENT

[1] This motion by the defendant Gerami is for an order dismissing the plaintiff’s action and discharging a certificate of pending litigation (CPL). In the result, I am not prepared to dismiss the action, but I will order the CPL discharged.

[2] The defendant Gerami is married to the other defendant, Kaveh. They are now separated. They were sued by the plaintiff on various debts owing by one or both of them. Gerami settled the claim against her, by the payment of $8,043.59. She and the Bank signed a full and final release, a copy of which is attached as Schedule A. The release was signed in September and October, 2012.

[3] Default judgment has been granted against the defendant Kaveh. He apparently is no longer in the country.

[4] The Bank subsequently discovered that in 2011, Kaveh had conveyed his one half interest in the matrimonial home to Gerami, so that she is now the sole owner. As a result, the Bank commenced this action for an order declaring the transfer to be a fraudulent conveyance. It obtained, and registered, a CPL, and as a consequence, a potential sale of the property was frustrated. In affidavit material filed by Gerami, the position is taken that the transfer of Kaveh’s interest in the matrimonial home was pursuant to a marital settlement, and indeed the parties signed a separation agreement that called for the transfer. The Bank was not aware of this when it registered the CPL.

[5] Gerami now moves for an order dismissing the action, on the ground that it is barred by the terms of the release. If she succeeds in that motion, the CPL will obviously be discharged. In the alternative, if the action is not dismissed Gerami seeks an order discharging the CPL on the basis of material non-disclosure.

[6] I am not prepared to dismiss the action on the basis of the release. While the terms of the release may be broad enough to require the dismissal of the action, that is not necessarily clear. In my view, a full appreciation of the surrounding circumstances will be of assistance in interpreting the release. As Blair J.A. stated in Ventas Inc. v. Sunrise Senior Living Real Estate Investment Trust (2007), 2007 ONCA 205, 85 O.R. (3d) 254 (C.A.), at para. 45:

Contracts are not made in a vacuum, and there is no dispute that the surrounding circumstances in which a contract is negotiated are relevant considerations in interpreting contracts. As this court noted in Kentucky Fried Chicken, supra, at para. 25: “[w]hile the task of interpretation must begin with the words of the documents and their ordinary meaning, the general context that gave birth to the document or its “factual matrix” will also provide the court with useful assistance.”

[7] In this case, the surrounding circumstances cannot be fully understood without the benefit of a trial.

[8] In the result, while the motion to dismiss the action is dismissed, if the Bank wishes to pursue its claim that the transfer of the matrimonial home constitutes a fraudulent conveyance it must pursue the matter to trial. I am constrained to say that I think the Bank has an uphill battle, but that is for the Bank to consider.

[9] While I am not prepared to dismiss the action on the basis of the release, I think the release is something that should have been placed before Donohue J., who granted leave to register the CPL. In my view, it was necessary for her to be aware that the release might provide a defence to the action, so that she could consider it in deciding whether to grant the CPL.

[10] It is quite possible that Donohue J. may have decided to grant the CPL even with knowledge of the release. However, she was entitled to be made aware of it. A matter is “material” if it is relevant to the position the other party would put forward if it were present. It is not necessary that it would have dictated a different result: see Fox v. Fox, 2012 ONSC 3842, [2012] O.J. No. 2959 (S.C.J.). Also see Fox v. Fox, 2014 ONSC 1135, [2014] O.J. No. 948 (Div. Ct.).

[11] For the foregoing reasons, the motion to dismiss the action is dismissed. The CPL is discharged.

[12] I will entertain brief written submissions with respect to costs, not to exceed three pages, together with a costs outline. Mr. Rosenberg will have five days to file submissions, and Ms. Sosnovich will have five days to respond. Mr. Rosenberg will three days to reply.

Gray J.

Date: April 24, 2014

SCHEDULE A

MUTUAL FULL AND FINAL RELEASE

IN CONSIDERATION OF the payment of $8,043.59 by SHAHPAR GERAMI to ROYAL BANK OF CANADA, the receipt and sufficiency of which is acknowledged, and in consideration of ROYAL BANK OF CANADA waiving the balance of its claim against SHAHPAR GERAMI, ROYAL BANK OF CANADA and its successors, assigns, associates, affiliates, subsidiaries, officers, directors, agents, employees, and shareholders and SHAHPAR GERAMI and his successors, heirs, executors, administrators, estate trustees, and assigns, forever remise, release, and discharge each other from any and all actions, causes of action, suits, debts, dues, contracts, agreements, accounts, covenants, liens, legal and equitable claims, costs, and demands of any nature and kind whatsoever which they ever had or now have against each other up to the present time in any way related to or connected with all matters in issue in the action commenced in the Ontario Superior Court of Justice as Court File No. 4830/12 in Milton (the “Action”).

THESE PARTIES covenant and agree not to make any claims or commence or maintain any action or proceeding against any person or corporation in which any claim could arise against each other for contribution or indemnity or otherwise in respect of the Action.

IT IS AGREED AND UNDERSTOOD that this Mutual Full and Final Release shall operate conclusively as an estoppel of any claim, action, complaint, or proceeding that might be brought in the future by these parties with respect to any issue relating to the Action and that this Mutual Full and Final Release may be pleaded, if any such claim is brought, as a complete defence and reply and may be relied on in any proceeding to dismiss the claim on a summary basis.

THIS MUTUAL FULL AND FINAL RELEASE shall be binding upon these parties and their successors and assigns and shall inure to the benefit of these parties and their successors, assigns, heirs, executors, administrators, and other legal representatives.

THESE PARTIES AGREE AND UNDERSTAND that this release does not affect that Action against the co-defendants, 1713798 Ontario Ltd. and Amir Kaveh, which will be continued by the plaintiff as it chooses.

THESE PARTIES REPRESENT that they have carefully read this Mutual Full and Final Release and understand its terms and conditions without reservation. The parties acknowledge that they have received independent legal advice regarding this Mutual Full and Final Release, that they have not relied on any representations or statement of the other parties with respect to the subject matter of the Mutual Full and Final Release, that they understand that this a full, complete, and final release and that they are forever relinquishing and releasing any and all claims they have or may have against the parties released hereunder involving the subject matter described above in this Mutual Full and Final Release.

THIS MUTUAL FULL AND FINAL RELEASE and any rights, causes of actions, or claims released under this Full and Final Mutual Release have not been nor shall be transferred, assigned, or delegated to any person or entity by these parties.

THESE PARTIES AGREE that this Mutual Release may be executed in several counterparts, each of which shall be deemed to be an original and together shall constitute one and the same instrument. Signatures delivered by telecopier or facsimile shall be deemed to be original signatures for the purpose of this Release.