COURT FILE NO.: CV-07-2698-00
DATE: 20140715
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MOHAMMAD YOUNAS QURESHI
Plaintiff
– and –
KHALID MAMOOH QURESHI, BAGHZA SHAHEEN QURESHI, ZUBAIR KHALID QURESHI, HUMAIRA YASMEEN QURESHI, TOSHEEBA KAUSAR QURESHI, AND ILYAS QURESHI
Defendants
Walter Kravchuk, for the Plaintiff
Tahir Majeed, for the Defendant
HEARD: February 24, 25, 26, 2014
REASONS FOR JUDGMENT
TZIMAS j.
[1] This action is a claim for liquidated damages in the sum of $82,000 as well as pre and post-judgment interest and costs on a substantial indemnity basis. The alleged debt arises out of a promissory note signed by the defendants. The promissory note was executed on or about September 20, 2006. The plaintiff’s lawyer sent a demand letter to the defendants seeking the full repayment of $82,000 on March 27, 2007. There was no response to that demand.
[2] The defendants refused to pay the alleged sum owing. Khalid Mahmood Qureshi (Khalid), who was involved in all aspects of the discussions and payments leading up to and including the signing of the promissory note, was present during the whole trial but did not testify. The defendants, Baghza Shaheen Qureshi (Baghza); Humaira Yasmeen Qureshi (Humaira); and Zubair Khalid Qureshi, (Zubair); who are Khalid’s wife, daughter and son respectively, and who did testify, took the position that although they signed the promissory note, they did not understand its contents because they did not speak, read or write English. They acknowledged that the document was translated to them but they understood that the document was one of many documents connected to their immigration papers. Moreover, these three defendants suggested that they never received the funds that were the subject of the promissory note. Rather, they suggested that the plaintiff’s conduct was fraudulent and that in the circumstances they should be relieved of their obligations to pay any damages.
[3] The only issue for this court is to determine whether the promissory note is valid. In doing so, the court must consider:
a) Did the defendants promise to pay the accumulated debt of $82,000?
b) Did the Promissory Declaration prepared by Mohammad reflect the clear intentions of the parties?
c) Did the defendants voluntarily sign the Promissory Declaration?
[4] For the reasons that follow, judgment is granted in favour of the plaintiff. The promissory note is valid. The defendants promised to pay the accumulated debt of $82,000 and voluntarily signed that promissory note to reflect their commitment.
BACKGROUND FACTS
[5] The plaintiff, Mr. Mohammad Younas Qureshi (Mohammad), came to Canada from Pakistan in 1976. In 1990, his brother, Khalid, approached him about the possibility of finding a way for him and his family to immigrate to Canada.
[6] Mohammad and Khalid concluded that the only way to enable Khalid’s immigration would be if their children would agree to get married. Mohammad testified that in Pakistan, the marriage of first cousins is not unusual. Such a marriage would set in motion a series of sponsorships, beginning with Khalid’s daughter and then through her, Khalid and the rest of the family.
[7] That plan was set in motion in 1998 with the marriage of Mohammad’s son Ilyas and Khalid’s daughter Tosheeba. The actual wedding ceremonies occurred in Pakistan but Ilyas did not participate in them. Rather, he signed the necessary papers and had somebody stand in for him. Tosheeba arrived in Canada in 1999.
[8] Apart from the wedding, Ilyas had to be able to demonstrate that he had sufficient funds to sponsor his in-laws and their two other children. Mohammad advanced some substantial amounts of money in favour of his son to increase his son’s income. This included a false declaration to the Canada Revenue Agency that showed Ilyas to be earning a much higher income than he actually was earning. By extension, the inflated income resulted in a greater tax liability to the CRA, which Mohammad paid on his son’s behalf.
[9] Mohammad gave additional evidence of having to sell certain property back in Pakistan to obtain the necessary cash flow to satisfy the various financial requirements that were connected to Khalid’s application. Some of that evidence was confusing and in some instances involved documents in the Urdu language.
[10] The upshot according to Mohammad was that various financial contributions and costs were incurred by him to support his brother’s aspiration to immigrate to Canada with his family. Khalid was very poor and without Mohammad’s support, Khalid and his family would not have succeeded in their efforts to come to Canada.
[11] Mohammad also testified that Khalid was very aware of Mohammad’s financial support and he agreed that the monies advanced by Mohammad to support his family’s immigration efforts would be treated as a loan and that once in Canada, Khalid would eventually reimburse Mohammad for that financial support.
[12] Khalid and his family’s immigration applications were successful and they arrived in Canada in May 2006.
[13] In September 2006, Mohammad drafted what he called a “Promissory Declaration”. The Promissory Declaration stated:
By Virtue Of This Deed of Promissory Declaration Hereby State That We All Owe $82,000.00 (Eighty Two Thousand Canadian Dollars), (Equal Share Of Loan On All Declarants To;
Mr. Mohammad Younas Qureshi Son Of Multan K. Qureshi, Resident of Building No. 5233 Dundas Street West, Suite 1825, Toronto, Ontario, Canada, M9B 6M1
And We All Further Undertake The Following:
That We Will Pay Above Mentioned Loan Within Two Years Of This Undertaking Date.
We All Will Honour Our Promissory Commitment Made In This Declaration And Will Not Try To Look Reasons To Delay Payments And Will Try Our Utmost To Pay The Full Amount Mentioned Above to Mr. M. Younas Qureshi.
That Mr. M Younas Qureshi Has Authority to Confiscate Our Belongings, Properties Etc. If We Refuse Or Avoid Payment Of Loan Back To Him In Time.
That Mr. M. Younas Qureshi Has Authority to Garnish Directly His Payment Of Loan From Our Jobs Incomes/Salaries/Employment/Business At Any Time.
[14] Mohammad asked all four of the defendants to sign the promissory note and they did so in Toronto. He explained that he had Mr. Mohammad Tayyab explain the document in Urdu / Punjabi to each of the witnesses and that Mr. Tayyab also witnessed the signatures. There was a second witness by the name of Mr. Faisal Qayoom.
[15] Mohammad also testified that he sent a demand letter to the defendants on March 27, 2014. When that was ignored, Mohammad was obliged to commence legal proceedings.
[16] Mr. Tayyab and Mr. Qayoom, through their testimony at trial, verified Mohammad’s evidence as it related to both the explanation of the document, the date, time and location of the signing, and the order in which the witnesses signed the document. Both of these witnesses testified that they were third parties and had no interest in this matter. Mr. Qayoom in particular did not know any of the parties and was merely a witness, at Mr. Tayyab’s request.
[17] According to Mohammad and Messrs. Tayyab and Qayoom, Humaira was the first person to sign the Promissory Declaration. This was done a few days before September 20, 2006, because she was going away on a trip. She went to Mohammad’s home where she also met Mr. Tayyab and Mr. Qayoom. Mr. Tayyab explained the document and she signed it.
[18] The remaining three defendants, Khalid, Baghza, and Zubair, went to Mohammad’s home on September 20, 2006. As in Humaira’s case, Mr. Tayyab explained the document to them in the Urdu / Punjabi language and they agreed to sign the document. Mr. Tayyab and Mr. Qayoom witnessed the signatures for these three individuals.
[19] As noted above, Khalid, who undertook all the negotiations and arrangements with his brother to facilitate the immigration application for him and his family, was in court for the full duration of the trial. However, he chose not to testify and not to respond to his brother’s evidence.
[20] The three defendants who did testify, that is, Baghza, Humaira and Zubair, said that they did not have any direct knowledge of the background, context or the agreement between Mohammad and Khalid. But all three agreed that there was an agreement and that Khalid knew about all the financial details.
[21] Regarding the signing of the Promissory Declaration, Baghza, Humaira and Zubair testified that they recalled signing the subject document but they did not understand what it was that they were signing. Each of these three defendants identified his and her respective signature. All three also testified that they signed the Promissory Declaration in 2005 in Pakistan. They said that Mr. Tayyab visited them in Pakistan prior to their immigration to Canada and had them sign various immigration documents. They said that the Promissory Declaration was included in that bundle of documents.
[22] All three defendants confirmed that they did not obtain independent legal advice and that they did not object to what they were asked to sign.
[23] All three defendants focused much of their testimony on a narrative that had as its objective the smearing of Mohammad’s reputation. They highlighted the misrepresentations to the CRA as evidence of fraudulent activity by Mohammad. They also said that Mohammad had a reputation of arranging marriages in their community and insinuated that those unrelated transactions were further examples of Mohammad’s fraudulent conduct. That said, these defendants had no direct knowledge or evidence of these allegations. More significantly, they had no evidence of any fraud by Mohammad in relation specifically to the Promissory Declaration.
[24] Bagzha went as far as to suggest that they did not require any assistance from Mohammad to come to Canada and that they had the financial means to come on their own. But then Bagzha also said that she had no knowledge of how any of the costs were covered for their move to Canada. She knew that there was an agreement between Mohammad and Khalid but she did not know the contents of that agreement. When pressed about this issue, Bagzha conceded that as far as she knew, it was Mohammad’s son and her son in-law, Ilyas, who covered all their expenses for their move to Canada. She went on to ask the question: “If they said they would cover our expenses on their own, why would we pay?”
[25] Bagzha also testified that since their arrival to Canada she and her family lived with Ilyas and contributed to the living expenses. However, Bagzha was unable to substantiate those alleged payments with any back records or other statements.
[26] In short, Baghza, Humaira and Zubair in their testimony took the position that they should not be held liable for the debt owing against the Promissory Declaration because they did not understand what they were signing; they thought it was a document related to their immigration; and they suggested that they did not receive the funds. However, they acknowledged that Mohammad and/or Ilyas covered their expenses and ultimately their immigration to Canada was successful. They also agreed that Khalid had an agreement with Mohammad relating to their immigration but they did not know any of those details.
ANALYSIS
a) The Law
[27] There are two issues for consideration. The first is whether the defendants are liable for the debt of $82,000 under the terms of the Promissory Declaration. The second concerns the implications of Khalid’s failure to testify at trial.
(a) Promissory Notes and the Plea of Non Est Factum
[28] Beginning with the law on promissory notes, section 176(1) of the Bills of Exchange Act, R.S.C., 1985, c. B-4, states:
A promissory note is an unconditional promise in writing made by one person to another person, signed by the maker, engaging to pay, on demand, or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person or to bearer. [Emphasis added.]
[29] It is widely recognized that the cardinal rule of contract interpretation “is that the court should give effect to the intention of the parties as expressed in their written agreement", see for example, Venture Capital USA Inc. v. Yorkton Securities Inc. (2005), 2005 15708 (ON CA), 75 O.R. (3d) 325 (C.A.). It is also widely recognized that where the intention of the parties "is plainly expressed in the language of the agreement, the court should not stray beyond the four corners of the agreement": see KPMG Inc. v. Canadian Imperial Bank of Commerce, 1998 1908 (ON CA), at para. 5, leave to appeal to S.C.C. refused, [1999] S.C.C.A. No. 36; Indian Molybdenum Ltd. v. R., 1951 378 (SCC), [1951] 3 D.L.R. 497 (S.C.C.), at p. 502; Eli Lilly & Co. v. Novopharm Ltd., 1998 791 (SCC), [1998] 2 S.C.R. 129, at pp. 166-68 (S.C.C.).
[30] Insofar as the underlying factual matrix of an agreement is concerned, such consideration ought to be with regard to objective evidence underlying the negotiation of the contract but without reference to the subjective intention of the parties, and in a manner that accords with sound commercial principles and good business sense, such that it avoids commercial absurdity: Eli Lilly & Co. v. Novopharm Ltd.; and Kentucky Fried Chicken Canada, a Division of Pepsi-Cola Canada Ltd. v. Scott's Food Services Inc. (1998), 1998 4427 (ON CA), 114 O.A.C. 357.
[31] The doctrine of non est factum may be relied upon only in very limited instances to defeat a contract obligation. As it is explained in Columbia Trust Co. v. Solihull Ent. Ltd. (1986), 1986 1063 (BC SC), 3 B.C.L.R. (2d) 123 (S.C.), at para. 32: “Non est factum means ‘I never made the deed’. It is, as Lord Wilberforce points out in Saunders v. Anglia Bldg. Soc., [1971] A.C. 1004, a plea.” Such a plea may be raised if the defendant can establish a fraudulent representation or a mistake as a result of some deceit “which ordinary diligence could not penetrate or some mischance which ordinary diligence could not avert…”: see Marvco Color Research Ltd. v. Harris, 1982 63 (SCC), [1982] 2 S.C.R. 774 (S.C.C.), at p. 781, citing Anson, Law of Contracts (12th ed. 1910) 151-52.
[32] The plea of non est factum is not available by a defendant who is careless or who fails to exercise reasonable care in the signing of a document as against a person who seeks to rely upon that document in good faith and for value. Justice Cartwright in Prudential Trust Co. v. Cugnet, 1956 90 (SCC), [1956] S.C.R. 914 S.C.C., at p. 932 explained:
[G]enerally speaking, a person who executes a document without taking the trouble to read it is liable on it and cannot plead that he mistook its contents, at all events, as against a person who acting in good faith in the ordinary course of business has changed his position in reliance on such document.
[33] The burden of proving non est factum is on the party seeking to disown his or her signature. This would include proof that he or she took the necessary care before signing the document.
(b) Failure to Testify
[34] It is open to the court to draw adverse inferences from the failure to produce evidence. Such inferences are discretionary and should not be drawn unless it is warranted in all the circumstances. The Court of Appeal in Parris v. Laidley, 2012 ONCA 755, at para. 2, describes the type of inquiry to be conducted:
What is required is a case-specific inquiry into the circumstances including, but not only, whether there was a legitimate explanation for failing to call the witness, whether the witness was within the exclusive control of the party against whom the adverse inference is sought to be drawn, or equally available to both parties, and whether the witness has key evidence to provide or is the best person to provide the evidence in issue.
[35] Applying the law to the facts of this case, one of the most problematic challenges in the consideration of the evidence was Khalid’s decision not to testify in this trial. Plaintiff’s counsel was correct to point out that it is up to counsel and the parties involved to decide how they would like to advance their position and what evidence they would like to lead.
[36] However, in this case, the evidence of Mohammad and the three defendants was that Khalid knew about all the particulars concerning his request to immigrate to Canada. He was the one who approached Mohammad and discussed how he and his family might come to Canada. Khalid’s son, Zubair, confirmed that Khalid was the one who knew about the various financial arrangements underlying their immigration. Baghza also confirmed that her husband knew everything relating to their immigration. In short, all three defendants identified Khalid as a material witness, and indeed the most significant of all the witnesses.
[37] Against such representations, the court noted that Khalid was in court during the whole trial. He was available to testify and by all accounts he had key evidence and insofar as the defendants were concerned he was the best person to provide the evidence in issue. And yet, he was not called to testify. When questioned by the court about this decision and whether counsel was certain about his approach, the court was told that Khalid would not have anything to add to the testimony already given by his wife and his children. Who knew about the financial arrangements relating to the Qureshis’ immigration? Khalid did according to his wife and children. Where was Khalid during these proceedings? Present at all times either in the courtroom or immediately outside of the courtroom. Why was he not being called to testify? He had nothing to add to the evidence already before the court.
[38] In these circumstances, Mohammad’s testimony concerning the sponsorship activities, the related financial costs to Mohammad and the agreement between the two brothers was not challenged or refuted by the defendants. The inference to be drawn from Khalid’s failure to testify is that he approached Mohammad about the possibility of immigrating with his family to Canada; that he was aware of the financial arrangements that Mohammad undertook to support the application; and that he and Mohammad reached an agreement with respect to the financial obligations and how Khalid and his family would satisfy that obligation.
[39] Similarly, distilled to its essence, the testimony of the three defendants confirmed that Khalid made all the financial arrangements and commitments with Mohammad and all four of them signed the Promissory Declaration. They said that they saw the full document from top to bottom and they identified their signatures. They took issue with the location where the signing took place but what was most significant was the admission that Mr. Tayyab explained the document to them in the Urdu / Punjabi language.
[40] The testimony that the Promissory Declaration was part of a bundle of documents related to the execution of various other immigration documents was far from convincing. But even if that scenario were accepted as true, which it is not, that would not operate to invalidate the defendants’ signatures because the three defendants also agreed that Mr. Tayyab explained the Promissory Declaration to them and that they then signed that document voluntarily.
[41] Moreover, to the extent that the three defendants implied that they were coerced to sign the Promissory Declaration, absent which Mohammad would not continue with his sponsorship efforts, or that the promissory note was slipped in with the immigration documents, there was no evidence to support such a contention or conclusion.
[42] But even if Mohammad had asked the Qureshis to execute a Promissory Declaration at the time that the other immigration papers were being completed, there would not have been anything untoward in such a request. It would not have been unreasonable for Mohammad to seek to secure his loan to his brother and his family. The issue would come back to the overriding questions: a) did the defendants promise to pay the accumulated debt of $82,000? b) did the Promissory Declaration prepared by Mohammad reflect the clear intentions of the parties? and c) did the defendants voluntarily sign the Promissory Declaration? The answer to all three questions is “yes”.
[43] The Promissory Declaration is clear on its face. Although the three defendants may not have known the details of the agreement between Khalid and Mohammad, they knew that there was an agreement. Then the Promissory Declaration was explained to all the defendants. In the face of their own evidence that the document was explained to them, the defendants cannot very well say that they did not know about any financial obligation to Mohammad or that they did not understand what they were signing. They did so voluntarily.
[44] When it comes right down to it, the defendants obtained the benefit of Mohammad’s financial support and their immigration applications were successful; they came to Canada. Having secured that outcome, they chose to renege on their financial obligations to Mohammad.
[45] The defendants attempted to advance the plea of non est factum on the suggestion that Mohammad’s underlying conduct as it related to the strategy to effect a successful immigration application for Khalid was fraudulent. They then tried to suggest that such fraudulent activity extended to the Promissory Declaration and ought to operate to invalidate it.
[46] The defendants’ position is rejected. In the context of this proceeding, the particular strategy deployed by Mohammad, Ilyas, and Tosheeba, as it related to the arranged marriage and then the CRA representations is not relevant to the validity of the Promissory Declaration. Insofar as the Promissory Declaration is concerned, there was no evidence before this court to conclude that there was any misconduct or misrepresentation in relation to the drafting, explanation and execution of the Promissory Declaration.
[47] The court accepts Mohammad’s testimony that with respect to the Promissory Declaration, Mohammad drafted the document; he arranged to have Mr. Tayyab, an unrelated third party, explain the document to each of the defendants; he had an additional witness attend at the signing to document; and he provided the defendants with a reasonable period of time to satisfy those obligations.
[48] Against these findings, there was no evidence before this court regarding any objections by the defendants to this arrangement. At no time did the defendants raise any concerns with either the arrangements related to their immigration efforts or the Promissory Declaration. If it were to be accepted that the Promissory Declaration were signed in Pakistan, then between 2005 and 2007 the defendants had the opportunity to express their protest through a hand-written note, an e-mail or other forms of communication, but there was no such protest. If as the court finds the Promissory Declaration was signed in September 2006, then the period for the expression of a complaint would have been between 2006 and 2007.
[49] The more likely explanation is that in their enthusiasm to do whatever they could to secure their immigration to Canada, the defendants were prepared to agree to whatever strategy would obtain their goal. That same enthusiasm carried through to the signing of the Promissory Declaration. But then something happened and they changed their minds. In these circumstances, they cannot now take the position that they did not understand what they were signing or that they were misled in any way. The defendants either understood the implications of their signature or were careless as to their corresponding obligations. On either explanation, they are bound to meet those obligations.
[50] Turning to the nature of that obligation, Mohammad described the debt obligation as one of “Equal Share Of Loan On All Declarants” under the Promissory Declaration. In his testimony, Mohammad explained that what he meant by that expression was that the signatories to the Promissory Declaration were equally responsible for the sum of $82,000. In response to the question of whether Mohammad appreciated that he could have used the expression “jointly and severally liable” for the payment of the debt, Mohammad explained that this is what he meant by what he drafted. He testified that in any event, he trusted his brother and his family and he never expected to have to engage the legal process to be repaid. Given that explanation, the reference to an “Equal Share Of Loan On All Declarants” amounts to joint and several liability by the defendants to the plaintiff.
FINAL DISPOSITION
[51] For the foregoing reasons, judgment is to issue in favour of the plaintiff in the sum of $82,000 as well as pre and post-judgment interest pursuant to the provisions of the Courts of Justice Act, R.S.O. 1990 c. C.43, as amended and payable within 30 days from the date of this order.
[52] On the subject of costs, the plaintiff shall be entitled to costs on a substantial indemnity basis. The defendants advanced allegations of fraudulent conduct that was not substantiated by their evidence. It is accepted that costs can be awarded on a substantial indemnity scale where unproved allegations are rooted in assertions of dishonesty and go to the heart of a person’s integrity. Lax J. describes circumstances in which an award of costs on a substantial indemnity scale is appropriate in Manning v. Epp, 2006 35631 (ON SC), at paras. 7-8:
[7] Costs on the higher scale can be awarded as a form of chastisement and as a mark of the court’s disapproval of a litigant’s conduct. This is intended to punish as well as to deter others from engaging in similar conduct. Unproved allegations of fraud frequently attract awards on the higher scale. Unproved allegations of breach of trust, conspiracy, misrepresentation, breach of fiduciary duty, and the like, may also attract this kind of award: Beaver Lumber Co. v. 222044 Ontario Ltd. (1997), 5 C.P.C. (4th) 253 (Ont. Gen. Div.) at p. 256.
[8] Cost sanctions are imposed for these kinds of unproved allegations because they are rooted in assertions of dishonesty and deceit and go to the heart of a person’s integrity: Bargman v. Rooney (1999), 30 C.P.C. (4th) 259 (Ont. Gen. Div.) at pp. 268-269; Dyer v. Mekinda Snyder Partnership Inc. (1998), 21 O.R. (3d) 180 (Gen. Div.) and see cases referred to at pp.184-185.
[53] In this case, the defendants were all too pleased to raise allegations against Mohammad but they were unable to support those allegations with any objective evidence. Mohammad assisted his brother and his family with their aspirations to come to Canada, only to be accused of fraudulent conduct and to be drawn into these legal proceedings. The defendants who did testify could not point to any inappropriate conduct relating directly to the explanation and the execution of the Promissory Declaration. Their defence amounted to an attempt to impugn Mohammad’s integrity. That is very serious and cannot be condoned by this court. In these circumstances, costs on a substantial indemnity scale are appropriate.
[54] Regarding the quantum of such costs, the parties are strongly urged to reach an agreement over the issue of costs. If they are unable to do so, the plaintiff is to serve and file costs submissions by July 28, 2014. The defendants are to file responding cost submissions by August 15, 2014. The said submissions for both parties are to be limited to two pages double-spaced in 12 point font. A Bill of Costs may be attached to the said submissions.
Tzimas J.
Released: July 15, 2014
COURT FILE NO.: CV-07-2698-00
DATE: 20140715
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MOHAMMAD YOUNAS QURESHI
Plaintiff
– and –
KHALID MAMOOH QURESHI, BAGHZA SHAHEEN QURESHI, ZUBAIR KHALID QURESHI, HUMAIRA YASMEEN QURESHI, TOSHEEBA KAUSAR QURESHI, AND ILYAS QURESHI
Defendants
REASONS FOR JUDGMENT
Tzimas J.
Released: July 15, 2014