COURT FILE NO.: CV-11-2570-00
DATE: 20140912
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
BLAGO NIZIC
James Smith, for the Applicant
Applicant
- and -
ZDRAVKO PETROVIC and THE TORONTO-DOMINION BANK
David Martin, for the Respondents
Respondents
REASONS FOR JUDGMENT
Skarica J.
TABLE OF CONTENTS
Overview. 3
Nature of Proceedings. 3
Trial Proceedings. 4
The Audio Tape. 4
The Evidence. 5
Blago Nizic. 5
Examination of Nizic. 5
Cross-Examination of Nizic. 12
Ivanka Nizic. 15
Examination of Ivanka. 15
Cross-Examination of Ivanka. 22
Other Evidence for the Plaintiff 31
Jasminka Cimesa. 31
George Vukovich. 32
Evidence for the Defence. 32
Farid Muhtat 32
Evidence of Alan Smith. 33
Evidence of Stanka Stanojvic. 33
Evidence of Dan Barnabic. 35
Evidence of John White. 36
Zdravko Petrovic. 38
Examination of Petrovic. 38
Cross-Examination of Petrovic. 50
Assessment of Evidence – Credibility Findings of Nizic, Ivanka & Petrovic. 65
Assessment of Nizic Evidence. 65
Assessment of Ivanka Evidence. 66
Assessment of Petrovic Evidence. 69
Conclusion as to Facts. 78
The Law. 79
Statute of Frauds. 79
Purchase Money Resulting Trust 85
Land Transfer Tax Act 86
Illegality. 87
Limitations Act 88
Order 89
Overview
[1] The applicant Blago Nizic (“Nizic”) inherited a Toronto property from his father. He sold the property and wanted to invest the monies in a condominium. Nizic’s sister found a penthouse condominium in Toronto and a decision was made to buy it. The applicant says that the respondent offered to put the condo in the respondent’s name and hold it in trust so that the applicant could avoid capital gains taxes. The respondent says that originally he and Nizic’s sister agreed to buy the unit but the sister backed out before closing and the monies used to buy the condo came from the respondent and not the applicant.
Nature of Proceedings
[2] Initially, the proceeding was commenced by way of application issued June 22, 2011 in the Ontario Superior Court of Justice (see Trial Exhibit 1 – Tab 1). The applicant sought a declaration that the respondent, Zdravko Petrovic (“Petrovic”) holds in trust the condominium unit known municipally as Unit 1704, 38 Fontenay Court (Penthouse 4), Toronto and that Nizic is the 100% owner of the said property.
[3] Affidavits were sworn by the three major players and are contained in Trial Exhibit 1. Nizic swore an affidavit on June 22, 2011 (Trial Exhibit 1, Tab 2). Petrovic and Nizic’s sister, Ivanka Nizic (“Ivanka”) swore responding affidavits on August 19, 2011 and September 20, 2011 respectively (Trial Exhibit 1, Tabs 3 and 4 respectively).
[4] Justice Conlan on February 15, 2012 ordered and directed that the application was directed to be a trial under Rule 38.10(1)(b) and ordered the trial expedited.
[5] A number of other pre-trial orders were made with the purpose of streamlining the proceedings, including limiting motions and pleadings. The trial commenced on May 22, 2013. It was heard over many days and the evidence portion of the trial finished on June 19, 2014. Written submissions by counsel were filed subsequently, to be delivered by August 22, 2014.
[6] Normally, I would briefly review the evidence heard at trial. However, given the extensive evidence heard, with many months of adjournments in between, I purpose to review the evidence in greater detail in order to satisfy all parties that I have carefully considered all the evidence called at trial.
Trial Proceedings
The Audio Tape
[7] Trial Exhibit 1, Tab 2 (B) contains an audio tape transcript which records a conversation between the applicant Nizic and the respondent Petrovic in April 2010. The conversation is in Croatian and it has been translated into English. The respondent’s counsel sought to exclude the tape as his client was unaware he was being taped and cited privacy concerns. I ruled that the tape was admissible.
The Evidence
[8] The evidence consisted in the main of Nizic, his sister Ivanka and the respondent Petrovic and related exhibits. A few other witnesses were also called relating to more specific aspects of this case.
[9] I will summarize the three main witness’s evidence in some detail and render assessments regarding their credibility. The other more minor witnesses that were called will also be summarized but in less detail as the case rises or falls with the credibility of the three main players referred to.
Blago Nizic
Examination of Nizic
[10] Blago Nizic is the applicant. He is 71 years of age, married and lives in Mississauga. He is originally from Bosnia-Herzegovina arriving in Canada in 1964. He worked for Ford for 35 years retiring on October 1, 2004. He has two sisters, Ivanka and Mara. Ivanka lives in Toronto and Mara lives in Bosnia-Herzegovina. He has known the defendant for 35 years and got a close friendship with him through his sister Ivanka.
[11] Blago Nizic inherited 2 Bearwood Drive, Toronto from his father. The house was sold for $800,000. After the mortgage was paid off, Nizic received $520,000 (see Exhibit 1, Tab 4(A) Cassels Brock cheque, January 21, 2004, payable to Nizic in the amount of $520,434.38). Nizic decided to buy a condo as an investment. According to Nizic, the respondent Petrovic convinced Nizic that he should put the apartment in Petrovic’s name. “He knew how to trick government to avoid capital gains tax”. Nizic owned his own home in his name. His sister Ivanka was close friends with Petrovic and approved of this plan.
[12] On January 22, 2004, Nizic, Ivanka and Petrovic attended the Croatian Credit Union in order to put this plan into effect. They met with the bank manager, Joe Vinski, and a number of financial transactions ensued. Exhibit 1, Tab 2 (Tab 2 and attached appendices are in Nizic’s affidavit) and Exhibit 1, Tab 4 (Tab 4 and attached appendices are in Ivanka’s affidavit) were referred to and relied upon by Nizic in his evidence. The flow of funds from the approximate $520,000 Cassels Brock cheque payable to Nizic can be summarized as follows:
(1) January 27, 2004 - $520,434.38 – Cassels Brock cheque deposited on January 22, 2004 into Nizic’s account 2810895 – see Trial Exhibit 1, Tab 4(B).
(2) January 22, 2004 - $405,000 – transferred to term in account 2810895 – Nizic account – see Trial Exhibit 1, Tab 2(A).
Nizic’s evidence was that the $405,000 was the amount needed to pay for the condo (also referred to as apartment).
(3) January 22, 2004 - $405,000 is broken into two pieces with:
(a) $344,274 being transferred from account 2810895 (Nizic’s account) to 2773309 (Petrovic’s account) – see Exhibit 1, Tab 2(A).
(b) $60,276 being transferred from account 2810895 (Nizic account) to 2773309 (Petrovic account) – see Exhibit 1, Tab 2(A).
Total transferred on January 22, 2004, from Nizic to Petrovic was $344,274 + $60,276 = $405,000.
(4) January 22, 2004 – The bigger piece transferred to Petrovic - $344,274 – was used to purchase in Petrovic’s name a Certificate of Deposit #8159 in the amount of $344,274 dated January 22, 2004. The Certificate was dated to be be redeemed on June 1, 2005 and was signed by Petrovic.
Other transfers were also made from Nizic’s account 2810895 from the Bearwood sale monies as follows:
(5) January 22, 2004 – A certified cheque payable to Mercedes Benz in the amount of $35,000. Nizic testified that this cheque was given to Ivanka to buy her Mercedes Benz. See cheque at Exhibit 1, Tab 4(D). See journal voucher at Exhibit 1, Tab 4(B).
(6) January 22, 2004 - $24,877 was transferred from Nizic account 2810895 to Petrovic account 2773309 – see Exhibit 1, Tab 2(A).
Nizic’s testimony was that this transfer was due to Petrovic to pay him for money that Ivanka borrowed for house renovations on 2 Bearwood Drive.
(7) January 29, 2004 - $14,000 certified cheque from Nizic account 2810895 payable to Dean Myers – see Exhibit 1, Tab 4(J). Nizic testified that this $14,000 cheque was given to his sister Ivanka to buy a GM car – an Oldsmobile Alero.
[13] Exhibit 5 was entered as the original passbook wherein the voucher entries described above are detailed in the passbook.
[14] The condominium (“condo”) as at January 2004 was still not completed. In February of 2006 Petrovic moved into the premises without Nizic’s permission. Nizic panicked. The statement of adjustments at Exhibit 1, Tab 3(F) indicates that the condo was purchased on a final basis in February 2006.
[15] Nizic confirmed paragraphs 10, 12 and 9 of his affidavit where he indicated that Petrovic assured him the property was being maintained and if he wanted money out of it, Petrovic would deal with it. Nizic spoke to him less and less in 2008 and 2009. Petrovic was paying no rent. Petrovic kept him in the dark and Nizic was surprised when Petrovic moved in. Petrovic repeatedly said he had no time to see him and there was no problem and he would give the money and transfer any property to Nizic.
[16] In April 2010, Nizic decided to meet with Petrovic and secretly recorded the conversation. The conversation and English translation appear at Exhibit 1, Tab 2(B). At p. 9 to 11 of the transcript, there is a discussion regarding $415,000. Nizic indicates that when he sells the apartment, will Petrovic return $415,000 and he can deduct the amount he lent Iva (Ivanka). Petrovic says, “What $415,000?” Nizic says, “The apartment is $405,000 and Iva gave $10,000 in cash”. Petrovic says, “Didn’t I pay off her car”. There is silence and then Petrovic says, “Didn’t I pay off her Pontiac and she still owes me $4,200 for that. Blago, we won’t argue over that”.
[17] Petrovic later indicates, “I went and paid off her car... In addition to that, I have given her for the apartment $115,000…I send it to her to Makarska $115,000 dollars. I have all the invoices, I don’t lie”. At p. 12, Petrovic says, “I have every invoice and everything is clear”. At p. 12 also, Nizic indicates that Petrovic entered the apartment without Ivanka’s permission or knowledge. Petrovic responds by saying at p. 13, “How’s without her knowledge when she has received $40,000 until the apartment is transferred from one name to the other.”
[18] Paragraph 32 of Nizic’s affidavit gives credits for the amounts of $4,200 for the car and $114,000 paid for the apartment in Makarska.
[19] At page 14 of the audio recording, Nizic indicates that, “What is important for her is, when you sell the apartment, to give her the portion that belongs to her.” Petrovic responds, “I swear with Jesus blood, I never said that I won’t do that”.
[20] Nizic indicated that the apartment did not belong to his sister but it was his.
[21] At Exhibit 1, Tab 3, para. 10 of Petrovic’s affidavit, Petrovic outlines loans made to Ivanka. Copies of the cheques are attached at Exhibit 1, Tab 3(D):
September 29, 2002 $10,000
October 5, 2002 $15,000
April 15, 2003 $ 170
May 5, 2003 $ 5,600
[22] The September 29, 2002 and October 5, 2002 loans total $25,000. Nizic indicates that his Exhibit 5 passbook entry on January 22, 2004 shows a transfer to Petrovic’s account 2773309 of $24,877 which is $123 short of $25,000. This was repayment of the 2002 loans and Ivanka topped it up with $123 cash. Credit vouchers located at Exhibit 1, Tab 4(C) indicate on January 22, 2004 a transfer of $24,877 from Nizic account 2810895 to Petrovic account 2773309.
[23] The $5,600 amount for the May 2003 loan was to be addressed by Ivanka. Nizic disputes that Ivanka transferred $344,274 into Petrovic’s account on January 22, 2004. Nizic’s evidence, supported by the documentation, supports Nizic’s claim that it was Nizic that transferred that amount and more for a total of $405,000. Nizic agrees with the original paragraph 11 of Petrovic’s affidavit that Petrovic used the $344,274 to obtain the Certificate of Deposit to purchase the condominium.
[24] Petrovic grew tired of dealing with Ivanka and told Nizic if she calls once more, he will break her teeth.
[25] Exhibit 1, Tab 2(C), (F) and (G) are copies of three letters dated September 30, 2010; March 30, 2011 and April 26, 2011 respectively sent by Nizic’s lawyer to Petrovic. The September 30, 2010 letter, in particular, advises that a s. 71 Land Titles Notice has been registered on the condominium and asks for the return of the $405,000 used to purchase the condo plus interest and legal fees.
[26] Notwithstanding this notice, Exhibit 1, Tab 2(D) indicates that Petrovic registered a $200,000 TD Bank charge on the property on March 25, 2011.
[27] Nizic testified that Petrovic never paid rent for 87 months which should be $2,700 per month for a penthouse unit. Exhibit 1, Tab 2(E) is a listing for sale of the condominium by Petrovic in June to October, 2008 asking for $569,000. Petrovic never told Nizic he was trying to sell the unit. Nizic’s testimony was that “he keeps me in dark from day one”. At paragraph 22 of the Nizic affidavit at Exhibit 1, Tab 2, Nizic confirms that this was done without his knowledge or consent.
[28] Trial Exhibit 4, Tab 3 was a copy of the will of Nizic’s father, Luka Nizic (“Luka”) wherein Luka Nizic leaves the house at 2 Bearwood Drive in Toronto to his only son Blago Nizic. As a result of this will, Nizic sold the Bearwood property.
[29] The Bearwood property had been in Ivanka’s name from 1988 to 2000. Ivanka got in financial trouble and the father was advised the house could be in jeopardy. In 2000, the house was transferred from Ivanka to Luka. The date of the will was March 2001 and the father died on November 30, 2002.
[30] Nizic testified that Petrovic has not paid any money to him.
Cross-Examination of Nizic
[31] In cross-examination, Nizic indicated that Ivanka bought the house with $250,000 that her father gave her. In 1999, Ivanka’s name was on the title and Ivanka signed the mortgages. After the 2000 transfer, Ivanka continued to pay on the mortgages even though Luka had the title.
[32] The meeting at the bank with Petrovic, Ivanka, Nizic and the bank manager, Mr. Vinski, lasted one hour. Nizic personally handed the Cassels Brock cheque to Mr. Vinski.
[33] It was pointed out that the Certificate of Deposit in Exhibit 1, Tab 3(E) had Nizic’s account number scratched out – 2810895 – with the teller’s initials and Petrovic’s 2773309 account number was written in.
[34] Within six to eight months all of the $520,000 went out leaving him with a balance of $1,400. $344,000 was big money to him. There is no written document indicating that Petrovic would either give it back as cash or give it back as property in the future. Nizic indicated, “Now you can see how much I trusted him”. Nizic did not put it in his wife or children’s names because Petrovic assured him that he’s an expert, he knows how to trick the government to avoid the capital gains tax. He did not do a contract because Petrovic hypnotized his sister. “If he told her to jump from the CN Tower, she would follow the order and I make the other mistake, I follow recommendation of my sister – he will never cheat you”. Nizic owned the Bearwood property for a day and never paid any capital gains on it. The house on Bearwood might have been lost due to Ivanka’s financial problems and her father stepped in and sold the title to him. Nizic trusted Ivanka to manage the condo for him. Nizic gave $405,000 for the condo in 2004 which would not close until February 2006. Someone from his family directed Petrovic to send at least $114,000 or $115,000 to Croatia to buy a condo. Nizic had promised his father he would help his sisters. Accordingly, he directed Ivanka to send $114,000 to Mara in Europe. Ivanka went bankrupt in 2000-2001 at the time of the transfer of the house to Luka. However Ivanka continued to pay the mortgage. Nizic agreed that Ivanka transferred the house for a limited purpose, i.e. to avoid losing the property in bankruptcy. She gave away the house to avoid the creditors.
[35] Regarding the Exhibit 1, Tab 4(J) $14,000 cheque to Dean Myers on Nizic account 2810895, Nizic testified that he bought a GMC car from money from the estate. Ivanka was bankrupt and the car was put in Petrovic’s name due to the fact that Ivanka had a terrible driving record and the insurance would be sky high. The car also probably would be subject to seizure due to the bankruptcy. Petrovic and Ivanka never dated and were never friends. The car was actually owned by Ivanka but it was in Petrovic’s name just like the apartment. Ivanka trusted Petrovic very much. It was their arrangement with Petrovic to put the apartment in Petrovic’s name. The condominium did not belong to Ivanka. Ivanka, however, did openly transfer the property to the father’s name to avoid creditors.
[36] In re-examination, Nizic confirmed he never altered any documents.
[37] Trial Exhibit 6(O) indicates that Ivanka’s bankruptcy was on March 23, 2004. Exhibit 6(F) is a transfer deed and indicates that Ivanka transferred Bearwood to her father on November 29, 2000.
[38] The true owner of Bearwood was the father. When the property was purchased in 1988, the father provided the money to buy the property. It is to be noted that the Exhibit 6(F) transfer deed has a note on the side of the document: “trust agreement”.
Ivanka Nizic
Examination of Ivanka
[39] Ivanka Nizic (Ivanka) testified that she is 68 years old and has never dated Petrovic and has never lived with him. Her brother is the applicant Blago Nizic (“Nizic”) and she has a sister, Mara, in Bosnia-Herzogovina.
[40] The vouchers that appear attached to her affidavit in Exhibit 1, Tab 4 and her brother’s affidavit at Exhibit 1, Tab 2 were obtained from the Croatia Credit Union Bank. She got them from a teller named Anna Gaspar.
[41] She drove her brother to Cassels Brock to pick up the $520,434 cheque dated January 21, 2004 (see Exhibit 1, Tab 4(A)) that her brother received from the sale of 2 Bearwood.
[42] On January 22, 2004, she went to the Croatia Credit Union Bank with Petrovic and Nizic to meet Joe Vinski, the bank manager. Her brother was planning to return all the money borrowed from Petrovic for renovations regarding 2 Bearwood. The Exhibit 1, Tab 3(D) cheques of (1) September 29, 2002 for $10,000 and (2) October 5, 2002, for $15,000 represented loans from Petrovic for renovations to Bearwood.
[43] At Exhibit 1, Tab 4(C) there is an entry charging account 2810895 (Nizic) and transferring it to account 2773309 (Petrovic) in the amount of $24,877. She topped it off with $123 cash given to Petrovic to make a total of $25,000 to pay off the loans. This was done on January 22, 2004 in Mr. Vinski’s office. Mr. Nizic’s Exhibit 5 bank book also confirms that $24,877 was paid to account 2773309 (Petrovic) on January 22, 2004.
[44] At the January 22, 2004 meeting her brother Nizic:
(1) deposited the $520,000 cheque,
(2) returned $24,800 to Petrovic,
(3) wanted to invest in the condo at 38 Fontaney and accordingly,
(4) $405,000 was paid to Petrovic for the condo.
[45] Her brother Nizic and her had the idea to invest in a condo (apartment). She went with Petrovic in the sales office two times. Petrovic had better understanding about construction. She said to Petrovic, “My brother would love to buy an apartment but he’s scared to take up the gain”, i.e. he’s scared of the capital gain. Petrovic responded by saying, “No problem, I can put it on me if you’re scared of that”.
[46] She wanted the penthouse 1704 and asked Naline, how much is it? She was told $405,000. The apartment cost $383,000 but with tax, GST, lawyers, the total was $405,000. She added, “Petrovic tried to cheat on the first step to the last”.
[47] The Exhibit 5 bank book belonging to Nizic indicates that on January 22, 2004, $405,000 was transferred to Petrovic. The Exhibit 1, Tab 3(E) Certificate of Deposit of $344,274 dated January 22, 2004 was received by Petrovic on January 22, 2004 when they were in the bank office. The Exhibit 1, Tab 4(C) voucher confirms that, from Nizic’s account were transferred into Petrovic’s account, the following sums: $344,274 + $60,276. The total is $405,000 which is what Nizic gave Petrovic.
[48] The Exhibit 1, Tab 4(D) January 22, 2004 certified cheque of $35,000 to Mercedes Benz was for the purchase of a Mercedes that was supposed to go back to Croatia for use of her, her brother and her sister, Mara. The claim by Petrovic in his affidavit at Exhibit 1, Tab 3 paragraph 6 that he purchased the Mercedes is a lie. Her brother bought the Mercedes for $35,000 cheque plus $2,045 in change. Petrovic drove her there to pick it up. She did not give the car to Petrovic. The bill of sale at Exhibit 1, Tab 4(D) shows a total balance of $37,045.90. Petrovic put the car in his name because of her bankruptcy records and he agreed to do that. It was also done for insurance reasons as insurance for two cars is less. She kept the car for six months until June 30, 2004 and then shipped it off to Bosnia-Herzogovina. She used the Atlantic & Pacific Company depicted at Exhibit 1, Tab 4(F). The car was shipped to Croatia and she picked it up with her sister Mara.
[49] She personally arranged to have the car shipped and paid $2,500 cash for the shipping. Petrovic did not pay the $2,500 but he is shown as the shipper because he was the registered owner but he was not involved in the shipping. She made all the arrangements. Petrovic had no interest in the vehicle. She loaned him the car in Croatia in the summers of 2005, 2006 and 2007 due to the fact that Petrovic was visiting his sick father. The Exhibit 1, Tab 4(F) Ontario Vehicle History shows her as the owner as at 09/12/15 with Petrovic as the previous owner. The car is still in Bosnia.
[50] She denies that there was ever any deal that Petrovic and her were equal 50/50 partners.
[51] One day Petrovic called and said, “I am in. I move in”. She was surprised, his moving in was not part of the deal. He was supposed to ask her brother as to what to do. Petrovic’s answer was that due to the warranty, if you put someone else in, it will be destroyed. She was very angry. “You’re not supposed to do it this way. You are supposed to tell brother when the apartment is ready.” She’s been there on three occasions. She told him after a year, you got to move out; you can’t say here forever. He continued to live there, he promised to put it up for sale but he did not consult her or her brother.
[52] Regarding the Exhibit 1, Tab 2(E) listing in 2008 for a sale price of $569,900, Petrovic never told her he put it up for sale.
[53] When Petrovic was told why he moved in, he said, “Did you ask him ever who pay for maintenance, who pay tax, who pay maintenance, tax and the mortgage?” She told him the rent was $2,700 per month which would cover everything and still leave $1,200 per month. In 2007, 2008 she contacted Petrovic and he got more angry, “Don’t call me anymore, what you got to do with this. I talk to Blago”.
[54] When she could not handle it anymore, she saw a lawyer in 2009. This led to the Exhibit 1, Tab 2 demand letters from the lawyer sent to Petrovic.
[55] Regarding the May 6, 2003, cheque of $5,600 (see Exhibit 1, Tab 4(G) and Exhibit 1, Tab 3(D)) regarding the loan for MBNA card, she gave him $5,600 cash and he gave her the cheque. This was done due to her bankruptcy. She has no receipts. She gave him the cash in her kitchen.
[56] She has no recollection of the Exhibit 1, Tab 3(D) cheque for $170. Regarding the Exhibit 1, Tab 3(D) cheque of $2,807.25 to the Receiver General, she never asked him to send it in 2003.
[57] Regarding the Exhibit 1, Tab 3(D) cheque of $1,486.31, the Mike Brkic in the memo is her common law husband. She knows nothing of this cheque.
[58] Petrovic sent $114,000 to her sister Mara in Bosnia to buy an apartment there. Petrovic sent several cheques in varying amounts to her sister to total $114,000. Petrovic took it from the $405,000 that Blago Nizic had given him.
[59] Exhibit 1, Tab 4(J) is a cheque for $14,000 for a Chevrolet Alero. Her brother bought the car for her. The car, again, was put in Petrovic’s name for insurance purposes. Petrovic paid $14,200 to finish paying for the car. She paid him $10,000 cash and so $4,200 is still owing. Petrovic confirms this in the audio recording at Exhibit 1, Tab 2(B) at p. 10, 15 where Petrovic mentions she still owes him $4,200 after giving him $10,000 cash.
[60] Ivanka went bankrupt. Exhibit 6(O) shows she filed an assignment in bankruptcy on March 23, 2004. She owed Canada Revenue Agency (CRA) $1,300,000. At page 5 Section C of the document she says she has not, within the last 5 years disposed or sold any property to relatives or others in excess of $500. Gambling was the source of her problem. In her examination at p. 23 of Exhibit 6(O) she reveals the transfer to her father of the 2 Bearwood property.
[61] Regarding the house at 2 Bearwood, she purchased it for $550,000 (see Exhibit 6(C)). Her father gave her the money for the Bearwood purchase. The house was put in her name because her father could not get a mortgage because he is not living in Canada. The mortgage on the house was $295,000. She lived with her common law husband, Mike Brkic, there from 1988 to 1993. After that, they rented it out for $4,000 per month.
[62] Her father was mad when he heard about her financial problems and he wanted the house back. On November 29, 2000, she transferred the house from her to Luka Nizic (see Exhibit 6(F)). The transfer/deed of land says trust agreement on the side of the document. Exhibit 9 is the $295,000 mortgage that is signed by her, Ivanka Nizic, on February 2, 1988. Her common law husband, Mr. Brkic made the mortgage payments.
[63] When she was interviewed during the bankruptcy proceedings, (Examination of Bankrupt by Official Receiver dated April 22, 2004) she indicated at page 21 of Exhibit 6, Tab O that “a family member owned the residence. It is owned by my father. I own it from 1988 to 2000… My common law pays – Mike Brkic – pays $1,600 rent”. At page 22, she reported, “parts of the house were being rented by me to share in the costs. Apartment is no longer being rented. When I transferred the apartment back to my father, I did not get any money from my father, I did not get any money from my father for it… He is from a communist country and it is not safe to invest there; he is planning to come here some day.”
[64] At page 23 of Exhibit 6, Tab O examination, she reports that 2 Bearwood was sold for $800,000 and she got nothing from the sale of the house.
[65] At page 29 of Exhibit 6, Tab O examination, she is asked:
Q: Do you own or lease a motor vehicle.
A: No.
These answers were in April, 2004.
[66] Ivanka testified that at that time in April 2004, she did own the Mercedes and Alero. In her mind, the question was: Did you lease? She testified, “I did not lease, I owned”. Her understanding “at that minute was just lease”. Her father in his will, left 2 Bearwood solely to her brother Blago Nizic and she was okay with it (see the will at Exhibit 6(G) at bottom of page 8-page 9).
Cross-Examination of Ivanka
[67] Her brother turned to her as his advisor on his real estate investment because he trusted her. Her brother worked 87 hours a week and she had not worked since 1985. She had some experience in investing in real estate because she had a condo at 2030 Dundas Street and a real estate house with her ex-husband. She did not go to a lawyer regarding this investment because she trusted Petrovic. Her brother did not pay her to do real estate investments.
[68] Regarding the Exhibit 1, Tab 2(A) vouchers, she saw the originals in January 2004 but was not there when they were prepared. The teller, Anna Gaspar made copies of the originals in 2008, 2009 and “she don’t have however any interest to do something crook”.
[69] Regarding the $10,000 and $15,000 cheques in Exhibit 1, Tab 3(D) Petrovic wrote loans on those cheques. She cannot recall the $170 cheque or what it was for. Regarding the Exhibit 1, Tab 4(C) transfer of $24,877 to Petrovic, her brother wrote a cheque. She does not have the cheque. Petrovic has the cheque.
[70] The Statement of Adjustments at Exhibit 1, Tab 3(F), shows that the sale price of the condo was $383,822.89 and total with tax and other items was $413,077.77.
[71] Ivanka testified that when she asked how much the condo was Petrovic and the sales lady said $405,000, “nobody – no one of them mentioned $383”. She testified that both Petrovic and the sales lady lied to her.
[72] There is no reference in her affidavit that her brother Nizic wished to avoid the capital gain and that is why Petrovic put it in his name. She replied, “Yes, that was the reason, avoid capital gain”. She was asked why that was not mentioned earlier in her affidavit or in her examination on the affidavit. The following exchange took place:
Q: Why are you mentioning it today for the first time?
A: I said from day one, that the reason to my brother – avoid capital gain.
Q: Okay.
A: I say that from day-one.
[73] She was asked to find that information in her affidavit. After looking through her affidavit, she testified, “I don’t see nothing there”. She explained that the reason Petrovic did it was because he is her friend and he would not lose anything. She testified that the bank manager, Mr. Vinski, suggested at their meeting (upon hearing the suggestion that they want “to put on” Petrovic $405,000 for condo purchase) that a piece of paper be drawn up between Nizic and Petrovic. Petrovic jumped up and said, “No, no that’s not necessary I honest person”.
[74] Petrovic could keep the interest on the term deposit which was invested for approximately two years. That would be profit for Petrovic for this favour. None of the money given over to Petrovic was returned to Nizic.
[75] For the $114,000 sent to Croatia for the condo purchase by her sister, she instructed “Stanka” to send out 15 or 20 cheques to different people to make $114,000. Petrovic filled out the cheques under her direction. He gave out $114,000 under her direction. The money, $114,000, was broken apart in 15 to 20 pieces and reassembled in Croatia.
[76] Ivanka acquired the Mercedes in January, 2004 and did not reveal it to the trustee in bankruptcy in March, 2004. She was asked if she revealed to the trustee her second car, the Oldsmobile. Her response was that she does not remember being asked about a second vehicle. She owned two vehicles at that time but she understood the question at that minute was regarding leasing. She owned two vehicles at that time and both were in the name of Petrovic. Her ownership of these vehicles is confirmed by the documents included at Exhibit 1, Tab 4(D) (January 22, 2004 certified cheque of $35,000 for Mercedes) and Exhibit 1, Tab 4(J) (January 29, 2004 certified cheque of $14,000 for Oldsmobile).
[77] The reason given for putting the vehicles in Petrovic’s name was that she wanted the vehicles in Petrovic’s name for insurance reasons. If one person keeps more than one car, insurance would cost less. Also she had a bad driving record – quite a few tickets. The following exchange then took place:
Q: Well, didn’t you think then that the insurance company would be unhappy with your driving the car and paying less than they would normally charge you for the insurance on the car?
A: Why worry about insurance?
Q: Well, were you cheating the insurance company by driving your car…
A: Well, everybody cheating.
Q: Is that your answer?
A: I would pay more.
[78] Ivanka confirmed that in 2005, 2006 and 2007 she made many enquiries regarding the condo regarding why he was not paying rent or why he was not giving the condo back. Yet Petrovic every year went to Croatia and she lent him the Mercedes to drive around Croatia. Her explanation is that they were not at the point then as they are now. Petrovic moved into the apartment against the wishes of her brother. She testified that in 2005, 2006 and 2007 they did not have a problem with Petrovic.
[79] The problems started when she phoned him many times and then her brother called and Petrovic said he would come to talk but he never did. She told her brother, when Petrovic moved in, that Petrovic wanted to stay one year to avoid capital gains and apartment still under warranty if they need something fixed. This warranty explanation is not in her affidavit or in her examination. After much evasion, Ivanka finally testified that she does not know if the warranty explanation is in her affidavit. She visited him after he moved in after February, 2006. She went for a BBQ with Stanka Stajnovich. Petrovic said he had to stay there for one year. She was on notice as of the 2007 BBQ time that Petrovic may sell the property. She wanted him to sell it. She trusted Petrovic that he would not cheat her brother. They knew him for 25 years and trusted him. She lost faith in Petrovic and went to see a lawyer in 2009.
[80] She received copies of the letters sent by Nizic’s lawyer to Petrovic that are included at Exhibit 1, Tab 2 (C), (G), (F).
[81] She wanted the money back with interest or the condominium back. The final closing of the condominium was February, 2006. They saw the lawyer in February, 2009. In the first year at the time of the BBQ, she was asking for the property back. Her brother over the time period 2004 to 2009, wanted his money back or the apartment back.
[82] Regarding the $5,600 cheque located at Exhibit 1, Tab 4(G), she gave him cash money and he gave her a cheque. She did the whole cheque except the signatures. She did this on May 6, 2003 due to her being in a panic due to her bankruptcy which occurred in 2004. The bankruptcy report indicated she owed Revenue Canada (“CRA”) 1.3 million dollars. Ivanka was evasive when she was asked how much she owed CRA in the year 2000 when the Bearwood transfer was made to her father. The following exchange took place:
Q: How much in the red with Revenue Canada as of time you transferred the house to your father in the year 2000?
A: Well deep enough – deeply enough to transfer house to father
[83] No clear answer was ever given as to the amount of Revenue Canada debt at year 2000. Ivanka was asked repeatedly what caused the $1.3 million liability over a 15 year span with no income from 1985 and gambling losses but gave evasive answers. The reason for giving Petrovic $5,600 cash for a $5,600 cheque was that she wanted cover “from Revenue, from bankruptcy”. After repeated questions from page 23 to 25 of the May 29, 2013 transcript, she indicated she wanted to hide the $5,600 from Revenue Canada.
[84] In Exhibit 1, Tab 3(D) is a cheque payable by Petrovic to Royal Gate Apartments with “Memo re Mike Brkic” in the amount of $1,486.37. Exhibit 11 is the original of the cheque and it has a date stamp of 2006-01-04 on it. Ivanka is told that Petrovic is making a claim of $1,486 which was paid by him for her benefit.
[85] Ivanka testified that that cheque had nothing to do with her; it’s between her common law husband and Petrovic. Ivanka was then confronted with her testimony from her examination on September 20, 2011, at p. 32 of the May 29 trial transcript:
Mr. Martin, “This is the original, if it helps you, and this is the cheque, which I’ve just handed up as an exhibit, roughly, $1486. Are you aware of the situation?”, question mark, “Can you tell me, is that your handwriting?” Question mark. Answer, “That’s – I remember now – that’s a cheque for the”, dot, dot, “my apartment for I live with my common-law and I gave him cash for that.” Question, “That’s Mike Brkic?” Answer, “Yeah.” Question, “Is that your handwriting on the cheque?” Answer, “Yes.” “And that’s your signature?” question mark. “All my writing”, answer. Question, “What can you tell me about the payment of the money?” Question mark. “How’d you get the money?” Question mark. Answer, “My common-law give it to me money. Petrovic always wanted to put some cheque”, dash, “I gave him cash.” Question, “Why did Mr. Brkic just pay the cash to the landlord?” Answer, “well, I’m in charge for that.”
[86] Eventually, Ivanka testified that she remembers a little but she did not pay attention. She denied owing Petrovic money for the cheque as if she did, she would be dead now because he is rough.
[87] Exhibit 12 are three rental cheques paid by Petrovic to the condo owner for interim occupancy before the final closing. The cheques are dated from November, 2005 to January 1, 2006 in the amount of $1,820 each. Petrovic made payments in November, December 1 and January 1, 2006 when occupying the condo. In either January 4 or April 1, 2006, Petrovic wrote out a cheque to her landlord. It was pointed out this was at a time when they were surprised that Petrovic had moved into the condo without informing them. It was pointed out that Petrovic was acting like a bad man by moving into the apartment in November 2005 and she is meeting with him in January or April, 2006 and he is doing her a favour by writing a cheque to her landlord. Ivanka’s response was that he got money for that cheque. Counsel pointed out that in 2006, she is taking Petrovic’s money, visiting his apartment, eating at his BBQ. Ivanka agrees that in 2006 she was pretty friendly with him.
[88] The Oldsmobile was purchased for $32,000. Down payment was made by Blago Nizic’s $14,000 cheque. She traded in her old car and received $2,000 and there was $15,000 of financing with no interest.
[89] Exhibit 14 was entered which is the car purchase agreement. Ivanka was asked if there was a lien against the car she traded in. She indicated no, there was no lien. Exhibit 14 shows that the trade-in allowance for the vehicle traded in was $14,500. There was a payout on liens against the trade-in of $14,380.00.
[90] Ivanka then admitted that she did owe $14,000 on the car traded in: “Yes of course. Car wasn’t paid for 5 years”. Exhibit 14 shows that approximately $19,000 was financed. Ivanka says Petrovic paid $1,400 in payments. It is suggested that Petrovic paid $5,600 in financing payments and then Petrovic paid off the balance. Ivanka denies it. Ivanka denies that Petrovic paid the extra $5,600 in payments on the car. The car was transferred to her nephew – Mr. Pavicic. Pavicic and Petrovic had the car in their names; she drove the car from 2004 to 2008. Both men were nominal parties because they would buy the insurance policies due to her not having a good driving record.
[91] Petrovic had lent her money for the renovation at Bearwood i.e. cheques for $10,000 and $15,000. Exhibit 6(F) at page 2 of the deed says, “transfer from trustee to beneficial owner”. Her father sent her $250,000 in 1988. There were no currency controls in Yugoslavia at that time.
[92] In re-examination, it was pointed out that the Exhibit 5 bank book with respect to the transfer of $24,877 into Petrovic’s account was done by way of a transfer and not a cheque.
[93] The “client” in the Exhibit 1, Tab 2 (C), (F) and (G) letters were meant for her brother.
[94] In the January 22, 2004 meeting Petrovic did not ask for repayment of the November, 2003 cheque for $5,600 or for the Royal Gate apartment cheque or the Receiver General 2003 cheque.
[95] For the Oldsmobile Alero, the car was taken from Petrovic’s name and Petrovic paid the dealer to a zero balance. She gave Petrovic $10,000 cash and $4,200 is a credit owing.
Other Evidence for the Plaintiff
Jasminka Cimesa
[96] Ms. Cimesa testified that she is an independent interpreter and translator. She did the translation from Croatian to English in the transcript in Exhibit 1, Tab 2(B).
[97] Certain portions of the tape were played to her by the plaintiff’s counsel and she confirmed the portions as accurate with the possible exception of substituting “shit” for trouble. Her evidence was not shaken in cross-examination.
George Vukovich
[98] He is a real estate broker. He prepared Exhibit 1, Tab 2(H). He attempted to determine an appropriate lease rent for the penthouse unit 1704.
[99] The closest unit was Unit 1603, which is a two bedroom plus one, which was leased in 2010 for $2,500 per month. Because Unit 1704 is a penthouse, the plaintiff would get a bit more, i.e., $2,700 per month. Also, Unit 1704 has two parking spots, while 1603 had only one parking spot.
[100] In cross-examination, Mr. Vukovich indicated that if $2,700 is fair for 2010, a rental in 2006 could be higher because the unit is new. Rents also increase in the second year onwards.
Evidence for the Defence
Farid Muhtat
[101] He is a real estate agent in Toronto.
[102] Typically the rental value of a condo does not cover the mortgage amount combined with the maintenance fee and the property tax, so condo owners have to pay additional expenses out of their own pocket.
[103] His opinion, based on rentals of lower floor units and a condo value of $420,000, $430,000, was that the rental should not be more than $1,800.
[104] In cross-examination, Mr. Muhtat indicated he did not do an appraisal of 1704 because he is not a certified appraiser.
[105] Penthouses typically get the highest rental rate. Additional parking spots have value. Unit 1701 sold for $454,000. It was a penthouse. He did not get results for Unit 1603 in his search. In 2008, Unit 1704 was listed for sale at $569,000. Unit 1603 is similar to 1704 in square footage. Unit 1501 is smaller (about ½ the size of 1603) and got $1,500. Unit 1603 got $2,500.
Evidence of Alan Smith
[106] He is a real estate lawyer who was to file a report and be recalled. He was not recalled.
Evidence of Stanka Stanojvic
[107] Stanka is a family friend of Petrovic’s for 30 years. She is a friend of Ivanka’s, but not a close friend. Stanka’s handwriting appears in the Exhibit 19, Exhibit 20, Exhibit 21 and Exhibit 22 cheques that also appear at Exhibit 1, Tab 3(D). She would fill out cheques for Petrovic because he was bad for writing cheques. He would sign the cheques and give addresses for her to fill. She did this many times.
[108] Sometime in the beginning of 2004, she filled out 10 to 15 cheques at Ivanka’s direction. They were to total $114,000 and then sent to Croatia for the condo, what Ivanka bought. One of the cheques was for $5,000 made out to her and it was sent to Croatia.
[109] One time there was a large amount of cash, about $20,000 (she did not count it), when she visited Ivanka. Ivanka said Petrovic gave it to her. She was going away. Petrovic was there.
[110] She could not recall about the cheques. She would not keep track or pay attention how much and who the cheque was for. “He need pay something for Ivanka or something between them but I never get into it.”
[111] In cross-examination, she indicated that the $5,600 cheque does not have her handwriting. If Ivanka gave him $5,600 for this cheque in her kitchen, she would not know anything about it.
[112] She said that Ivanka and Petrovic said before the BBQ that they bought the condo 50/50. She then said that they said it before they bought it. She could not recall where Ivanka said this, was supposed to be 50/50. She would not recall where, what and how. She cannot recall Ivanka at the BBQ telling her to leave because of an argument.
[113] Numerous conversations were put to her regarding the condo between her and Ivanka, but Stanka could not recall. The only disagreement was about the $20,000 that Stanka saw on the countertop. Ivanka said the money wasn’t there.
[114] Regarding the $20,000, Ivanka said, “there is $20,000, Petrovic bring it to me.” She did not count it, it was bigger bills. They both told her it was $20,000. Ivanka exploded when she heard Petrovic was listing the place for sale and accused her of giving Petrovic the agent. Ivanka was very upset about the sale and that she did not know anything about it. She does not know who Petrovic’s cheques were payable to and kept no record of the cheques.
[115] In re-examination, she recalls Mr. Petrovic brought a flower arrangement as a house warming present.
Evidence of Dan Barnabic
[116] Mr. Barnabic is a licenced paralegal. He was also a member of the Croatian Credit Union. The Ontario Government closed the credit union down due to improprieties that were perpetrated by its manager Joe Vinski and other officers. The improprieties involved fraudulent activities regarding selling and re-selling of real estate properties.
[117] Mr. Barnabic, in 2011, spoke to a Mr. White who had authority to obtain Petrovic’s banking records. Mr. White provided Petrovic’s statements but the year 2004 was not in the statements. He contacted Mr. White a second time to obtain the missing 2004 statements. The records of the credit union were in disarray and government officials had difficulty locating certain accounts and there was no chance of getting it. For some reason, most of the information in 2004 was non-existent.
[118] In the summer of 2011, Petrovic retained Mr. Martin, who Mr. Barnabic works for. Petrovic indicated he had given Ivanka many cheques. He may have them. He was also going to check with the Credit Union. Eventually Petrovic could not find any records of the cheques. Petrovic indicated he misplaced his bank book.
Evidence of John White
[119] Mr. White is the Manager of Asset Management and Recoveries with the Deposit Insurance Corporation of Ontario.
[120] He was involved with the administration and liquidation of the Croatian Toronto Credit Union.
[121] He was asked to provide all the records of the credit union and documents relating to the bank records of Mr. Petrovic and provided everything that could be found.
[122] The state of the loan records was that they were not in the greatest shape and a lot of work was done to put them in proper working order. The accounting records of the credit union were in excellent shape.
[123] The credit union did not go into liquidation until October 18, 2010. There was a data conversion in the credit union on December 31, 2004 and the records they had started then.
[124] They have all the account database and general ledger database from the old system which were done up on backup tapes. They had no problems with respect to the correctness of the records prior to this specific incident.
[125] In cross-examination, Mr. White indicated that both Mr. Nizic and Mr. Petrovic’s records were reviewed.
[126] Mr. White testified that he had no evidence that the Exhibit 5 bank book did not represent accurately the activity of Mr. Nizic’s account.
[127] He is satisfied, per Exhibit 6, Tab 2 that accounts 2750901 and 2773309 are accounts belonging to Mr. Petrovic.
[128] He has no evidence that $405,000 was not deposited into the account of Mr. Petrovic on January 22, 2004. He has no knowledge of the financial dealings and arrangements between Mr. Petrovic and Mr. Nizic.
[129] The Croatian Credit Union closed its doors on December 23, 2010. Up to that day, anyone that wanted to go in there and who wanted to get a passbook updated with all their activity could go in and do that. He has no evidence that the January 22, 2004 vouchers showing $405,000 going into Mr. Petrovic’s account are inaccurate. As far as he knows, Mr. Petrovic has made no claim against the credit union for missing monies.
[130] In re-examination, Mr. White indicated that in this case, the teller has initialled the transactions on the vouchers. In a lot of cases the teller will stamp the back as opposed to the front. The two amounts of $344,274 and $60,276 credited to 2773309 in Exhibit 1, Tab 2(A) would not be anything out of the ordinary.
[131] In re-cross-examination, the Exhibit 5 passbook shows $520,434.38 deposited in January 22, 2004 and then $405,000 transferred to term and then after that $405,000 was transferred to Mr. Petrovic’s account.
Zdravko Petrovic
Examination of Petrovic
[132] Zdravko Petrovic (Petrovic) never told Ivanka or Blago Nizic he had experience in capital gains tax.
[133] Petrovic testified that he was not a party to avoid capital gains tax regarding the condo at Fontenay.
[134] From January 2004 until 2010 Ivanka would have coffee and talks with him and never asked for the condo to be returned.
[135] At the housewarming party, there was no argument or suggestion he had moved in improperly.
[136] On January 22, 2004, he attended the meeting at the credit union with Ivanka, Blago Nizic and Mr. Vinski, the bank manager.
[137] Ivanka never told him about her bankruptcy. He learned about it in 2007-2008. He was not close friends with Nizic. After the bank meeting he saw him once thereafter in Herzogovina. Petrovic confirmed he spoke to Nizic on the audio tape which is included at Exhibit 1, Tab 2(B).
[138] Ivanka told him that she owned 2 Bearwood and never told him someone else owned it. He did work at Bearwood. The house was totally destroyed inside. The value of his work was $24,000 and something. Ivanka hired him.
[139] Mr. Barnabic prepared the affidavit sworn by Petrovic that appears at Exhibit 1, Tab 3. At para. 3 Petrovic says, “I consider him to be a friend of mine”. Petrovic testified that’s not true, “we were never friends”.
[140] At para. 5 of his affidavit Petrovic states, regarding the condo, “I was asked to become a 50/50 partner with Ivanka” and agrees that is correct.
[141] Further, at para. 5, Petrovic states that he advanced Ivanka $5,000 on January 18, 2004; $15,245 on February 8, 2004; $20,245 on March 18, 2004; and $20,245 on May 18, 2004. The cheques are attached at Exhibit 1, Tab 3(A). These four cheques were for the down payment as Ivanka had no money.
[142] At para. 6 of his affidavit Petrovic indicates he purchased a Mercedes for $37,045.90. He agrees that is correct.
[143] At para. 7 Petrovic indicates he provided the Mercedes to Ivanka who took it to Croatia. He agrees that para. 7 is correct. The car was registered in his name. He bought it first for himself with his money. The purchase was made on January 22, 2004. The car he bought but when she pays him off, she will get the car. First he took his Mercedes cheque and then “we” went to the Credit Union meeting. We is Ivanka and himself.
[144] At para. 8 of his affidavit Petrovic indicates the vehicle was shipped by Atlantic and Pacific Shipping. The invoice is attached at Exhibit 1, Tab 3(B). The invoice identifies the shipper as Zdravko Petrovic and the consignee is Mara Hercey, Herzogovina.
[145] The invoice for the Mercedes is included in Exhibit 1, Tab 3(B) and is dated January 22, 2004 with Zdravko Petrovic as purchaser. The same day he paid $37, 045.90 by way of a cheque money order. Exhibit 23 was filed as the original cheques found at Exhibit 1, Tab 3(A). Exhibit 24 was filed as the original shipping invoice located at Exhibit 1, Tab 3(B). Exhibit 25 was filed as the original Mercedes invoice found at Exhibit 1, Tab 3(B). Exhibit 14 is the original of Exhibit 1, Tab 3(B) which is Dean Myers Oldsmobile purchase invoice dated January 29, 2004, with Zdravko Petrovic as purchaser. The money for the purchase came from his bank, the Credit Union. The car was bought for Ivanka. She promised to return the money. The price of the car was $34,000 - $14,000 or $14,500 was paid down at the start and the rest was financed. When he finally paid off the car in 2005 he paid $14,000 and something. The money order used to pay off the car was $14,267.14. It is Exhibit 18. Ivanka paid him $10,000 cash which would leave him paying $24,000 something for the car. She had financing.
[146] He made loans to Ivanka. They are referred to at para. 10 of his affidavit. They are as follows:
Exhibit 19 – cheque for $15,000 – October 5, 2002 – see Exhibit 1, Tab 3(D)
Exhibit 20 – cheque for $10,000 – September 29, 2002 – see Exhibit 1, Tab 3(D)
Exhibit 21 – cheque for $5,600 – May 6, 2003 – see Exhibit 1, Tab 3(D). This $5,600 was a loan. Ivanka did not give him $5,600 cash.
Exhibit 22 – cheque for $170 – April 15, 2003 – see Exhibit 1, Tab 3(D). Petrovic filled out this cheque.
Exhibit 10 – Revenue Canada cheque for $2,807.25 – January 15, 2003 – see Exhibit 1, Tab 3(D). This was a loan to Ivanka to pay taxes.
Exhibit 11 - cheque to Royal Gate - $1,486.31 – 20060104 – Ivanka said she didn’t have money for rent – she lives there.
[147] At para. 11 of his affidavit, he states that Ivanka transferred the amount of $344,274 into his Credit Union account. At the January 22, 2004 meeting he was expecting to get his money back from Ivanka. The Exhibit 17 Certificate of Deposit for $344,274, dated January 22, 2004, was signed by him a day later. The next sentence in para. 11 of his affidavit: “I used those monies to purchase the condo unit” is not correct. She had to pay her debts to him and she had to pay her half of the apartment. He testified at p. 70-74 of the June 18, 2014 transcript:
A. She had to pay me my debts and half of the apartment. I asked her what all this amount was and she said it was for what I owe you and half the apartment.
Q. Were you surprised to see this much money?
A. Yes.
Q. So, in the end, what was the money used for?
A. When I sent her money to Croatia, she bought an apartment there, and then I terminated the term deposit.
Q. Approximately how much later was that?
A. Six to eight months. I don’t know exactly.
Q. So, at that time, what do you do with the money that was owed to you?
A. When I went – the discussion? I paid myself for, for everything that she owed me.
Q. And that would be the cheques we discussed here?
A. That’s correct.
Q. Anything else?
A. What was left, she took it for herself.
Q. Okay. So, when you say “she took it for herself”, do you mean you paid it to her?
A. It’s all paid.
Q. Yeah. Now, evidence was given earlier by Stanka Stanovic that there was a payment of $20,000 as well. Is that correct?
A. That’s correct.
Q. Is that cash?
A. Correct, it was cash.
Q. So, the evidence would be that you paid yourself the cheques listed in paragraph 10…
A. Correct.
Q. So….
THE COURT: So, the paragraph 10 cheques plus 25,000?
MR. MARTIN: 20. 20,000.
A. 20,000.
THE COURT: 20,000? Okay.
MR. MARTIN: Q. And then what happened with the remaining money?
A. The rest of the money she got in cheques. I don’t know in what names. I know she brought her sister’s children and two or three cheques went on their name.
THE COURT: Alright. Just, just so I understand it, paragraph 10 is approximately 35,000 more or less, give or take, and then another 20. So, that’s 55,000. And you’re saying that you paid her how much then?
A. Whatever was left to the last penny.
THE COURT: Well, the last would be about $290,000. So, how was that paid?
A. That can’t be because 114,000 went to, to Croatia.
THE COURT: How was that - - and how did that go there?
A. She brought some ladies and 20 names were written down.
ZDRAVKO PETROVIC: A list. Yeah, a list.
A. A list.
THE COURT: Okay. Do we have any documentation here?
ZDRAVKO PETROVIC: No.
MR. MARTIN: There’s no - - there’s no documentation.
THE COURT: No documentation.
A. I don’t think there is.
MR. MARTIN: It’s admit - - it’s admitted - - it’s admitted by the other side that the money was paid.
THE COURT: Right. Okay.
MR. MARTIN: Okay.
THE COURT: But then - - alright. So then that, that takes us from 290 to minus 114, so that’s still quite a sum of money, 180,000, let’s say. What happened to - - how was - - how was that paid then?
A. All in cheques.
THE COURT: And where are those?
A. I had all the cheques, but I don’t know what happened to them. Either I lost them or my daughter threw them in the garbage. So, I don’t know.
THE COURT: Okay.
A. I tried to get them from the bank.
THE COURT: Which bank?
A. At the credit union, the Croatian Credit Union.
THE COURT: Okay.
A. But all my information for 2004 are all destroyed.
THE COURT: Okay.
A. And I believe that was deliberate.
THE COURT: Okay. So, you indicated, “I used these monies to purchase the condominium unit.” That’s not - - that’s not true?
A. She asked for the money. She said she needed the money.
[148] Petrovic indicated he sent $114,000 from his account to Croatia to buy a condo in Europe before the term deposit was opened. He then later paid himself back. All of the money obtained from the term deposit was paid out within 2004.
[149] As indicated at para. 11 of his affidavit, the original agreement was that the condo would be 50/50 but later she changed her mind; she indicated he should take title in his name. She said that in 2004 when she got her money back. This created a big problem for him. He had to take all the money from the bank and get a mortgage. None of the $344,724 was used to pay for the condo.
[150] Ivanka was the only one working with him. Nizic had no contact with him. Ivanka never said she was working for him. All negotiations with the condo were with Ivanka. The error in para. 11 with respect to using the money to buy the condo unit was due to “either a misunderstanding on my part or Dan Barnabic when this was being prepared and either a misunderstanding was on my part or his”.
[151] Exhibit 1, Tab 3(F) is the statement of adjustments for the condo dated February 1, 2006. It shows balance due on occupancy as $40,490. Exhibit 26 is a copy of a money order dated October 17, 2005 wherein Petrovic paid $40,490 on October 19, 2005 to his lawyers which was due when he closed the condo.
[152] Exhibit 15, Tab 4 is a copy of a TD Canada Trust passbook. The original passbook was entered as Exhibit 27. It shows a withdrawal of $159,625.26 on February 1, 2006 which was used for the closing of the apartment. The statement of adjustments at Exhibit 1, Tab 3(F) shows a purchase price of $383,822. The difference to close the real estate deal was done by mortgage. None of this money came from the original $349,000 amount. The condo closed on February 1, 2006. Ivanka had said a year before she was not going in 50/50. An RBC bank book was entered as Exhibit 28.
[153] On January 22, 2004, $24,000 was paid for his repairs to Ivanka’s house. Vinski was writing something and a few days later, it was in his account. Nothing was signed at this meeting. Nizic was silent at the meeting. The following details of the meeting were provided by Petrovic at p. 91 of his June 18, 2014 testimony:
Q. Did Vinski (ph.) provide any advice to anyone about handling the money, about how to handle the money?
A. No.
Q. Were there any discussions at the meeting about Blago owning the condominium.
A. No.
Q. Was ownership of the condominium even discussed at the meeting?
A. No, we didn’t.
Q. Was it discussed that you would receive money more than the amount for your repair work or for loans to you?
A. I just received the amount that I spend on repairs of the house.
Q. Well, didn’t anyone say to you that you’d receive more than that?
A. No.
Q. Were there discussions on that day about you receiving a term deposit?
A. No, nothing.
Q. How long do you believe the meeting lasted?
A. Maybe 20 minutes.
[154] The Mercedes cheque, dated January 22, 2004 deposited at Exhibit 1, Tab 4(D) was not there at the meeting. The cheque at Exhibit 1, Tab 4(J) Meyers cheque is drawn on his account and is payment for the Oldsmobile.
[155] Ivanka and Petrovic went to look for the condo together in 2004 and they both decided on the unit and Petrovic put his name on the contract and it was planned that Ivanka would do it later. She did not say it was for Blago Nizic. Petrovic paid for all the deposits. He only received the second and third of the letters from the lawyer that was sent to him. When asked if he mortgaged the property further after getting the letters, Petrovic testified, “I was asking for a line of credit because I was building a house in Croatia”. Petrovic estimates the value of the condo at $460,000 to $480,000. He invited Ivanka to the housewarming after he moved in. She brought a housewarming gift at the BBQ party. He previously had told her he moved in.
[156] Regarding the audio tape, parts of it were read to Petrovic for his response. At page 12 of Exhibit 1, Tab 2(B) at page 12 at time number 3:36 to 3:37 the English version indicates Blago: “You entered into the apartment without her knowledge”. Zdravko: “Whose knowledge”. Blago: “Iva’s knowledge”. Petrovic testified that Ivanka knew he was in the apartment at the time he entered it.
[157] At page 13 of the audio tape time 4:04 to 4:13, the English version is, “You’ll see Blago, when I finish this, I’ll call you and give to you what belongs to her so you can see, calculate. I will bring the cheque”. Petrovic is asked if he promised to bring a cheque and he responds, “No, I didn’t promise to bring a cheque”.
[158] Regarding the Exhibit 1, Tab 4(B), (C) vouchers, he received the $344,274 as outlined in the voucher but he never received the $60,726. He accepts the first line but not the second. His account has been destroyed for 2004.
[159] Regarding the Exhibit 5 withdrawal of $35,000 on January 22, 2004 (re Mercedes Benz) he does not feel it is correct. It is in the bank book because it was done at the Croatia Credit Union and they can do whatever they want.
[160] Likewise, the entry in Exhibit 5 that he received $405,000 on January 22, 2004 is also not correct. He did not receive $405,000.
[161] Exhibit 29 was filed which deletes answers of Petrovic to questions 391, 396, 397 and 419 of his previous examination and inserts corrected answers.
[162] Petrovic testified he owes no money to Ivanka; he owes no money to Blago. At the time of his examination in 2011, he owed them no money.
[163] Exhibit 30 was entered as certified copies of real estate documents relating to 2 Bearwood Drive in Toronto.
Cross-Examination of Petrovic
[164] The Exhibit 1, Tab 3 affidavit was signed and sworn by Petrovic before David Martin, his counsel at trial. Petrovic testified he had just returned from Croatia – so he just signed it. He read what he could – he does not understand English well.
[165] It was pointed out that at no time in his cross-examination on his affidavit (conducted in English) did Petrovic say he did not understand the questions.
[166] He was read the following Q & A from his cross-examination:
Q. Did you read the affidavit before you swore it?
A. Yes.
[167] At trial, Petrovic indicated he read what he understood. At page 10 of the June 19 trial transcript, counsel notes that Petrovic answered the question in English before the translator translated the question. Petrovic acknowledged he understood the question in English. Petrovic testified that the three of them – Nizic, Ivanka and himself were at the meeting.
[168] Petrovic testified that after leaving the bank there was no discussion about the condominium.
[169] At his cross-examination on August 19, 2011, he was asked:
Q. Do you remember going to my client’s house for dinner after making the agreement to buy the condominium?
A. Yes.
[170] Petrovic’s response was that maybe he misunderstood. The only agreement was between Ivanka and him. He agreed that his trial answer is not the answer he gave in 2011.
[171] In his affidavit para. 3, Petrovic indicates, “I consider him [Nizic] to be a friend of mine”. His trial testimony in-chief was that Mr. Barnabic must have misunderstood him. Ivanka was his friend, not Blago. His trial testimony was that he rarely saw Nizic after 2004, maybe one time. In his cross-examination Petrovic stated in response to Q 51: “Yeah, I see him all the time at church”. Petrovic’s explanation is that he saw him in church but did not talk to him.
[172] Petrovic’s trial testimony was that in the early part of 2004, he was asked by Ivanka to buy a condo, it was a joint decision.
[173] This exchange takes place at pages 14-15 of the June 19 trial transcript:
Q. Normal. Okay. Now, we’re talking about the condominium and in the early part of 2004, you were asked by Ivanka about buying a condominium known as Fountains of Edenbridge, correct?
ZDRAVKO PETROVIC: Correct, yes.
A. Correct.
Q. And it was Ivanka’s decision about the purchase of Unit 1704, correct?
A. No, it was a joint decision.
Q. Okay. If you can turn to page 76 of the transcript, sorry, page 15, Question 76 of the transcript? At page 15, Question 76, “And my understanding, as from my client, from client’s sister is that she made the decision that Unit 1704 was going to be the unit to be purchased, correct?” Answer, “Yes, sir.” Is that -- wait, wait for the question, please. I asked you that question and you gave that answer, sir, correct?
A. I gave that answer, correct, but it doesn’t come under our understanding because she doesn’t know anything about the apartment. She doesn’t know the layout or anything.
Q. Well, Ivanka went there with you, didn’t she, sir?
ZDRAVKO PETROVIC: Yes.
A. Yes.
Q. Okay. And so, just to finish that last point, the answer you gave in 2011 is different than the answer you gave yesterday. In 2011, you said she made the decision. Yesterday you said you both made it?
A. I didn’t mean anything bad with that. It’s exactly what happened.
Q. So, yesterday’s answer was correct?
A. Correct.
Q. And the answer from the discovery was not correct?
A. I don’t see any difference between the numbers, whether it was one or two. We were both there.
[174] At trial Petrovic’s testimony was that the purchase price of the condo was $404,900 - $100 less than $405,000. At trial he was asked that if he knew that the house at Bearwood had been sold. His response at trial was, “Not at that time”.
[175] In the cross-examination at Q100 he was asked, “And then you knew the house was sold”. Petrovic’s answer was, “Yeah, I know”.
[176] Petrovic indicated that they bought the condo in January 2004. Ivanka told him the house was sold, he could not remember if it was January 20, 2004. At trial, he confirmed he knew there was money coming from the sale of the house and they went to the bank on January 22.
[177] Trial Exhibit 15, Tab 8 was shown to Mr. Petrovic. Petrovic confirmed that it was the offer worksheet for the condo. The worksheet refers to the purchase of Ste. 1704 on January 18, 2004 by Petrovic. The purchase price was $404,900. At the bottom is a summary of four deposit cheques 1, 2, 3 and 4. The balance of 25% on closing of $40,490 was due on closing and it says June 9, 2005.
[178] At Exhibit 3, Tab 3(A) of Petrovic’s affidavit the cheques referred to in Exhibit 15, Tab 8 appear:
#1 - $5,000 on January 18, 2004
#2 - $15,245 on February 18, 2004
#3 - $20,245 on March 18, 2004
#4 - $20,245 on May 18, 2004
[179] These cheques were all written on Petrovic’s Croatia Credit Union account 2773309.
[180] Exhibit 23 is the original of the first cheque - $5,000 on January 18, 2004 was deposited on February 6 – this is the earliest date that any money came out of his account regarding these deposit cheques.
[181] The four deposit cheques add up to $5,000 + $15,245 + $20,245 + $20,245 = $60,735.
[182] Petrovic agrees with those figures. Petrovic agrees that he went to the bank on January 22, 2004. Petrovic disagreed that money was placed into his account from Mr. Nizic’s account that day. Petrovic testified, “That day, nothing was put”. Petrovic was not there to have that money put into his account; he was there because Ivanka told him that she was going to return the money he had loaned her. He is asked, “Do you agree that money went into your account, sir?” His answer is, “No.” In his cross-examination, he is asked at Q116 (with reference to the $344,274):
Q116: Do you agree that went into your account?
A: Yes I do.
Q. It says 2773309
A. Yes.
Q. Yes.
A. Yes.
Q. You accept that.
A. Yes.
[183] His answer to these questions is “I agree but not that it came that day. Only $24,000 something for the material came.”
[184] Petrovic indicated that he received the Certificate of Deposit at Exhibit 1, Tab 3 (E) and signed it several days after January 22, 2004 even though it is dated January 22, 2014. The Certificate of Deposit indicates: “It shall be on deposit until June 1, 2005”. Petrovic agrees that the money is supposed to stay there until June 1, 2005.
[185] The following exchange then takes place at p. 25-26 of the June 19 trial transcript:
Q. Which means the money is supposed to stay there until June 1, 2005, correct?
A. Correct.
Q. And that was the money that was in that certificate to use to purchase the rest of the condominium, correct?
A. No, that’s not it. She only had to give 250,000. She, she put in more. I don’t know why. I asked her why. I asked her to return my loans and for her expenses.
Q. So, why would you agree, sir, to keep $344,000 in your name for 17 months?
A. Ivanka was like a sister to me. I believed her everything.
Q. I see. So, you say you only got $24,000 that day?
A. That’s what it says in the book.
Q. Okay. And you say you were owed all this other money?
A. What do you mean what other money?
Q. You said you went to the bank that day to get repaid all your money. Do you remember you said that?
ZDRAVKO PETROVIC: Yes.
A. Yes.
Q. And you got 24,000 and change that day?
A. Correct.
Q. Okay. And was there anything more owed to you that day?
A. She owed me and she told me when we were driving please only take what you spent when you worked on it and she didn’t want her brother to know what she did.
Q. Alright. And none of that is ever in -- never been put in affidavit, has it, that story?
A. I don’t think it is.
[186] It is pointed out to Petrovic that the Exhibit 5 bank book entry on January 22, 2004 shows that $405,000 was transferred to Petrovic’s account. Petrovic says that is not correct but that his account records have been destroyed. Petrovic has no documentary evidence to contradict Exhibit 5.
[187] Counsel pointed out that the Exhibit 1, Tab 2(A) journal vouchers from January 22, 2004, shows $405,000 taken from Nizic account 2810895 were credited to Petrovic account 2773309 as follows:
(1) $344,274 – which went to the Certificate of Deposit,
(2) $60,726 – which went to 2773309
[188] The total of these two transfers into his account is $405,000 which is the purchase price of the condominium. Petrovic says the $60,726 never came but he has no documentary evidence to disprove it. Petrovic testified that Nizic and Mr. Vinski are friends and suggests they together destroyed everything. That information is not in Petrovic’s affidavit. There is no evidence of that happening – it is Petrovic’s belief.
[189] The four cheques that Mr. Petrovic forwarded for the deposits on the condo from his account 2773309 total $60,735. The second January 22 transfer into his account 2773309 reflected in the Exhibit 1, Tab 2(A) voucher totals $60,276. There is only a $9 difference. The cheques for the deposits all came from Petrovic account 2773309 which was where the Exhibit 1, Tab 2(A) transfer went into. Petrovic maintained that the $60,000 never came. However Petrovic has no papers; everything was destroyed. Pursuant to Exhibit 15, Tab 8, the balance of the 25% deposit on the condo of $40,490 was due on June 9, 2005. The Certificate of Deposit in Exhibit 1, Tab 3(E) did not mature until June 1, 2005 which was a week before the $40,490 was due for occupancy. The following significant questions and answers occur at p. 34 of the June 19 transcript:
MR. SMITH: Q. And that is why, sir, that this certificate of deposit didn’t mature until June 1, 2005, which is a week before the $40,000 payment was due for occupancy. That was arranged for that purpose, correct?
A. Correct.
[190] Petrovic agrees that he received $24,877 on January 22, 2004. Exhibit 5 shows $24,877 transferred on January 22, 2004 to Petrovic account 2773309. This money was one payment for the loans of $10,000 and $15,000 Mr. Petrovic had made earlier to Ivanka for his work at Bearwood. Petrovic is asked that “is it your story then that you went on January 22, 2004 to the bank with the intention of getting money repaid to you and all you wanted was $24,000.” Petrovic indicates, “I didn’t ask for that. Ivanka told me to say that in front of her brother”. Petrovic agreed that has not been put in any affidavit. Petrovic did not agree that the $344,000 term deposit was set aside for the condo. When he received it, he called Ivanka and asked what it was. She answered nicely that half was for the apartment and to pay back what she owes him. She asked him to be a 50/50 partner but he has no evidence of that.
[191] $114,000 was sent to Croatia for a purchase of a condo there. Petrovic is asked, “You knew that money was being put into an account and that money was being transferred to your account. You knew that.
[192] Petrovic testified, “I didn’t know. I just know about the certificate”.
[193] Question 209 of his prior examination was then put to him:
Q209: And that they were putting money into an account and transferring money into your account?
A. Yeah.
[194] Petrovic says he was thinking the $24,000 something and that is how he understood it.
[195] Petrovic testified that the 2001 Mercedes Benz was bought with his own money. The Mercedes was purchased the same day as when he went to the bank. Exhibit 5 shows that on January 22, 2004 a certified cheque from the account of Mr. Nizic for $35,000 was made payable to Mercedes Benz.
[196] Petrovic testified that’s not the cheque. Petrovic does not know what that cheque was for. Petrovic has no evidence that he bought the Mercedes because it was all destroyed. Petrovic testified he repaid himself the $37,000 six to seven months later when the term deposit was cancelled and the car went to Croatia. He has no evidence showing this repayment. Ivanka took possession of the Mercedes after he had it a day or two. Regarding the Exhibit 1, Tab 4(D) certified cheque to Mercedes Benz drawn on Nizic account 2810895, dated January 22, 2004, Petrovic says that cheque was not given to purchase the Mercedes where they went. He paid by a money order cheque made at 11:00 a.m. with a Croatia stamp in the middle but he has no record of it.
[197] Petrovic threw out his Croatia Credit Union bank book when they closed the Croatia Credit union in 2010 and he took out all his money.
[198] It was pointed out that Mr. White testified that the Croatia Credit Union was shut down in December 2010 and that Petrovic would have thrown out his bank book around that time – something like that – he wasn’t sure exactly.
[199] The audio taped conversation between Nizic and Petrovic took place on April 26, 2010. Petrovic was asked: “Q. that was before you threw out your bank book.” Petrovic could not remember exactly, “I don’t remember”.
[200] Petrovic was shown parts of the “records” conversation in Exhibit 1, Tab 2(B) where discussions occur over payments for the apartments, car, and the $115,000 sent to Croatia. At pages 60-61 of the June 19 trial transcript this significant exchange takes place:
Q. And on the next page, at page 11, in April of 2010, at entry 2:39, you say, “I have all the invoices, Blago. I don’t lie.” That’s what you said, right?
ZDRAVKO PETROVIC: Yeah.
MR. SMITH: Q. Okay. And you, you had them and what did you do with them?
A. I had all of it in one box.
Q. And then?
A. It either went in the garbage or my daughter threw it out. I, I don’t know. I just know it disappeared.
Q. I see. And at page 12, at the entry at 2:56....
THE COURT: Page 12?
MR. SMITH: Yes, sir.
THE COURT: Thank you.
MR. SMITH: And entry -- Madam Reporter, when I say 2:56, it’s 2 colon 56.
COURT REPORTER: Thank you. I have it.
MR. SMITH: Thank you. Oh, yes, you have a copy. Good.
MR. SMITH: Q. You say further, sir, and I appreciate I'm paraphrasing, the -- you say that, “I have every invoice.” So you said that again?
A. I believed so.
Q. Okay. And none of those have been produced, right?
A. I don’t have it. Who was expecting this?
[201] Counsel indicates that the point of the tape is that Petrovic and Nizic are having a conversation about money and you tell him nothing is wrong; you don’t cheat anyone. And that there are several discussions about different amounts of money in that taped conversation. Counsel also, “in the face of that, the records that you refer to and your bank book, you threw out?” Petrovic responds, at p. 64, “I threw all the bank books”.
[202] Exhibit 1, Tab 4(J) is a $14,000 certified cheque dated January 29, 2004 on account 2810895 made out to Dean Myers, GM dealer for the Oldsmobile Alero.
[203] Petrovic denies this money came from Nizic’s account. Petrovic testified he will give his life that the $14,000 is his money but does not deny that the number on the cheque is Nizic’s account. Exhibit 5 also confirms that a $14,000 certified cheque GMC was taken out of Nizic’s account on January 30, 2004. Petrovic’s explanation is, “I don’t know what happened but it looks like they were working against me”. Petrovic says he paid the $2,500 shipping fee for the Mercedes but it is not mentioned in his affidavit.
[204] Regarding the Exhibit 1, Tab 3(D) cheques for $170, $5,600, he paid himself back for these cheques.
[205] Petrovic testified that he had a list of all the loans but threw it out – he had the cheques. Petrovic has no bank records regarding pulling out the term deposit.
[206] Petrovic says he doesn’t know exactly what “owe” means despite using the word in his evidence.
[207] Regarding his affidavit at Exhibit 1, Tab 3 at paragraph 11, Petrovic indicated he stated, “He used the monies to purchase the condo unit”.
[208] Petrovic testified that he didn’t understand. He didn’t use the money to buy the condo. He made a mistake in the affidavit.
[209] From the $344,000 he was holding, he wrote her cheques and these are the cheques of which he has no record. Ivanka told him before February 2006, when the condo closed, that the condo was all his.
[210] In his cross-examination in 2011, Petrovic did not know when Ivanka told him to take sole title.
[211] In his cross-examination, in 2011, Petrovic was asked what he owed Bill for the condominium. Petrovic stated at the cross-examination $121,000 something. Petrovic stated he owed it to Ivanka, not Bill.
[212] At trial, through Exhibit 29, Petrovic purported to correct that answer by saying he owed nothing to Ivanka.
[213] Petrovic testified that he did not get the first demand letter from the lawyer on September 30, 2010. Petrovic indicated, “I didn’t receive it.” The next one was dated March 31, 2011 and he did receive that.
[214] On March 25, 2011 he took out a $200,000 collateral mortgage (line of credit) to build a condo in Croatia.
[215] In his cross-examination in 2011, regarding Q425 about the first letter, he stated, “Later I find note in the security guard. He give it to me. And after two more letters send to me I find in front of my door.” Petrovic continued to deny at trial that he got all three letters.
[216] Petrovic, at trial, maintained that he was owed $24,000 and not $4,200 for the Oldsmobile Alero purchase.
[217] In his 2011 cross-examination at Q384, Petrovic testified that Ivanka gave him $10,000 cash for the GMC payment made in July 2005 of $14,267.14 and that the balance owing was $4,200. Petrovic maintained at trial that $24,000 was still owing.
[218] Petrovic has no note or record of paying Ivanka $20,000 cash. Petrovic indicated that Stanka was there and saw everything.
[219] Petrovic says he paid Ivanka a series of cheques totalling $111,591. There are no copies of these cheques that Petrovic can produce.
[220] Ivanka gave him the specific total of $111,591. This all occurred in 2004 after they went to the bank.
[221] The schedule that is outlined in Exhibit 16 – none of that math was presented at his examinations for discovery. The $20,000 cash payment and the $111,591 figures were not part of his affidavit.
Assessment of Evidence – Credibility Findings of Nizic, Ivanka & Petrovic
[222] After an exhaustive review of the trial evidence, exhibits, I have come to the following conclusions regarding the credibility of the three main witnesses in this case.
Assessment of Nizic Evidence
[223] Nizic struck me as a hardworking simple man. His explanation and the details provided regarding the sale of 2 Bearwood and resultant purchase of the condominium is completely confirmed by the numerous vouchers and bank documents contained in Exhibit 1. His explanation was not shaken in cross-examination. The transfer of Ivanka to her father of 2 Bearwood to avoid bankruptcy creditors is suspicious but Nizic played no role in it although he did ultimately benefit.
[224] There was no evidence that Luka Nizic did not provide $250,000 in 1988 to Ivanka. The Exhibit 6(F) transfer deed does refer to a trust agreement. The only evidence regarding that $250,000 payment in 1988 was indirectly supplied by a later defence witness, Dan Barnabic, a licenced paralegal who assisted Petrovic in preparing his affidavit. Mr. Barnabic was not qualified as an expert but had family living in Croatia which he visited in the 1980’s. He testified it would be difficult for an individual to move $200,000 from Yugoslavia in 1988 but it would be probably possible for a corporation doing business. This evidence has very little probative value in determining whether or not Luka Nizic provided Ivanka with $250,000 in 1988. There is no evidence that proves he did not. Accordingly, I am not prepared to say that Luka Nizic did not pay the $250,000 to Ivanka pursuant to a trust agreement as noted on Exhibit 6(F).
[225] Regardless, I find that the plaintiff Nizic gave his evidence in a plain, straightforward manner. His evidence was confirmed by numerous documents and his evidence was not contradicted in any serious way. I find him to be a credible witness and I find that he told the truth in giving his evidence. I accept Nizic’s evidence that the defendant offered to put the condo in his name so that Mr. Nizic could avoid capital gains taxes.
Assessment of Ivanka Evidence
[226] I find Ivanka to be an evasive witness who appears to go to extreme measures to hide her true financial dealings from a variety of agencies and corporations including Revenue Canada, car insurance companies and the trustee in bankruptcy. The $114,000 sent to her sister Mara to purchase a condo in Europe was broken into 15 to 20 pieces by a variety of cheques signed by different individuals and these cheques were re-assembled in Croatia to total $114,000. According to her, she gave Petrovic $5,600 for him to write a $5,600 cheque to her in 2003 because she wanted cover from Revenue Canada from bankruptcy. Eventually she admitted that she wanted to hide the $5,600 from Revenue Canada.
[227] She bought two vehicles in January 2004 – the Mercedes and the Alero. Both vehicles were put in Petrovic’s name so that she would pay cheaper insurance due to her bad driving record and lesser rates if one owns more than one vehicle at a time. Her justification for cheating the insurance was that “well, everybody cheating”.
[228] In her examination in April 2004 conducted by the trustee in bankruptcy she was asked if she owned or leased a vehicle. She responded no. This was not true. She had bought two vehicles in January 2004 and had put both in Petrovic’s name supposedly for insurance reasons. Her explanation is that she at that minute thought she was being asked if she leased any vehicles. I do not find this explanation credible. In 2000, she transferred her home to her father due to her deteriorating financial position which eventually led to bankruptcy. She had recently purchase two vehicles and had Petrovic’s name on the vehicles in order for her to pay lesser premiums and in her words that was okay because everybody is cheating. The $5,600 cheque manoeuvering was done to hide money from Revenue Canada. I find that she deliberately lied to the trustee in bankruptcy about her two cars. I infer as well that the cars were put in Petrovic’s name in order to hide the cars from her looming bankruptcy proceedings.
[229] When she was asked details of amounts regarding CRA debt in 2000 she was evasive. How she could eventually owe $1.3 million in taxes in 2004 when she had no income since 1985 was never explained. She was contradicted at times by prior testimony in her previous examination. She testified to details that were not included in her previous affidavit and/or previous cross-examination. For example, she testified that from day one, that the reason for Petrovic’s name being put on the condo was for her brother to avoid capital gains taxes. When asked to find it in her affidavit, she saw nothing there because it is not mentioned in her affidavit.
[230] I find that Ivanka is an unscrupulous individual who has expended much energy for many years in hiding her true financial affairs from the government, insurance companies and debtors including the trustee in bankruptcy. She is not a credible witness. By an ironic twist of fate, however, given her history of secret manoeuverings and transactions, she is exactly the type of person who would recommend to her brother to accept an offer to put her brother’s condo in another person’s name in order to avoid capital gains taxes.
Assessment of Petrovic Evidence
[231] I find that Petrovic is not a credible witness for the following reasons:
(1) As indicated in the summary of evidence, Petrovic’s evidence at trial was contradicted on numerous occasions in varying degrees by his 2011 examination. Petrovic’s explanations included, for example at page 90 of the June 19 transcript that his memory at trial was better than three years earlier in 2011. Or that some questions he understood and others he didn’t. Petrovic could not remember if at one time during the cross-examination, in the presence of his counsel, whether he indicated that he did not understand the questions. I have reviewed the cross-examination. It was 76 pages in length with 475 questions. There appears to be no difficulty with Petrovic understanding questions and responding appropriately. There is no indication that he was having difficulty in understanding the questions. His claim that he doesn’t understand English well is not substantiated by the 2011 cross-examination questions and answers.
(2) It is obvious in the audio recording in April 2010 that Nizic is accusing Petrovic of moving into the condo improperly and that there is ongoing discussions regarding amounts that are owing by Petrovic. Petrovic assures Nizic that he is not cheating anyone and had receipts and records for everything. At this trial, Petrovic did not produce these receipts and records. It is inconceivable that in the face of the accusations and financial concerns dismissed at the April 26, 2010 audio tape that Petrovic would later throw these items out. Yet the evidence from Petrovic was that he threw out his bank book around the time the credit union was closed which was December 2010. Petrovic told Dan Barnabic he misplaced the bank book. Petrovic testified that he had all of the invoices in the one box. “It either was in the garbage or my daughter threw it out. I don’t know. I just know it disappeared.”
Petrovic confirms, that in the face of a taped conversation regarding money and differing amounts, he afterwards threw out all the bank books. Petrovic, without any evidence at all, testified that Nizic and Mr. Vinski are friends and suggests together they destroyed everything. Petrovic says he will give his life that the $14,000 certified cheque at Exhibit 1, Tab 4(J) drawn on Mr. Nizic’s account of 2810895 for the purchase of the Alero is in fact his money and denies that this money came from Nizic’s account. It is clear that the $14,000 certified cheque is drawn on Nizic’s account of 2810895. The Exhibit 5 bank book also confirms that the certified cheque was taken out of Nizic’s account on January 30, 2004. There is absolutely no evidence at all that the Croatian Credit Union bank records have been interfered with or are fraudulent in any way at all. The other various independent business records filed, i.e. the statement of adjustments, the automobile purchases, the cheque from the sale of the Bearwood property are all consistent with the amounts listed in the Croatian Credit Union records.
Yet when Petrovic is confronted with the Exhibit 5 book which confirms that the Exhibit 1, Tab 4(J) cheque was drawn in Nizic’s account, his explanation is “I don’t know what happened but it looks like they were working against me.”
This explanation has no credibility. There is no evidence that the records filed as exhibits are fraudulent or have been tampered with in anyway at all. When the records contradicted Petrovic’s evidence, he takes refuge that his 2004 records are destroyed and cannot be located as an excuse for instances where the records clearly refute his sworn evidence.
(3) The banking records clearly refute Petrovic’s evidence in a number of glaring instances. Three examples clearly illustrate this point:
- The Exhibit 1, Tab 2(A) vouchers clearly indicate $405,000 was transferred from Nizic’s account to Petrovic’s account on January 22, 2004. The deposit was broken into two transfers:
i) $344,724 which was used to purchase a certificate of deposit.
ii) $60,726 which went to account 2773309. Petrovic admits to receiving the $344,724 but not the $60.726. Petrovic admits to forwarding four cheques for the deposits on the condo from his account 2773309, totalling $60,735. This is a $9 difference from the second $60,726 transfer from Nizic. It is clear, from the banking records, that $60,726 was transferred from Nizic to Petrovic’s account and that Petrovic used this money in the same account to pay for the four deposits on the condo, totalling $60,735.
Petrovic testified that the 2001 Mercedes purchased on January 22, 20014 was purchased with his own money. The Exhibit 5 bank book and the Exhibit 1, Tab 4(B) $35,000 certified cheque clearly establishes that the money to purchase the Mercedes came from Nizic’s account 281895, dated January 22, 2004 and not from Petrovic’s account.
Similarly, Petrovic testified that he would give his life that the $14,000 paid for the Alero in January 2004 was his money and denies that it came from Nizic’s account. Yet the Exhibit 1, Tab 4(J) $14,000 certified cheque is dated January 29, 2004, being drawn on account 281095, which is Nizic’s account. The Exhibit 5 bank book confirms that the $14,000 certified cheque is taken out of Nizic’s account on January 30, 2004.
(4) Petrovic’s trial accounts of monies owing to him by Ivanka are contradicted by his own previous statements. For example, Petrovic testified at trial that $24,000 was owed to him for the Oldsmobile and not $4,200. In his 2011 cross-examination, Petrovic testified that Ivanka gave him $10,000 cash for the GMC payment made in July 2005 of $14,267.14 and that the balance owing was $4,200. In the audiotaped conversation located at Exhibit 1, Tab 2(B) at page 10, Nizic refers to Ivanka giving him $10,000 and that she still owes him $4,200 for paying off the Pontiac.
Further Petrovic claims that the original $14,000 paid for the car came from his money when the bank records clearly established that the original $14,000 came from Nizic’s account. Petrovic’s claim to being owed $24,000 for the Alero has no credibility.
(5) Regarding the $344,274 Certificate of Deposit, it is clear that the banking records (see Exhibit 1, Tab 2(A)) establish that on January 22, 2004 $344,274 was transferred from Nizic to Petrovic’s account and this money was used to buy the certificate of deposit. The Certificate of Deposit did not mature, [see Exhibit 1, Tab 3(E)] until June 1, 2005, which was one week before $40,490 was due to be paid on June 9, 2005, to complete the deposit portion of the condo purchase - see Exhibit 15, Tab 8. Petrovic, at trial, was asked at trial:
And that is why, sir, this certificate of deposit didn’t mature until June 1, 2005, which is a week before the $40,000 payment was due for occupancy. That was arranged for that purpose, correct?
Petrovic answered, “correct”.
I conclude that the $405,000 transfer by Nizic to Petrovic was done to cover the purchase price of the condo which was $404,900. There were two transfers - $60,726 which was used to be used to cover the deposits required and $344,274, which was to be used upon closing when the condo was ready for occupancy.
Accordingly, I find that Petrovic’s original claim that the $344,274 Certificate of Deposit was to be used to purchase the condo unit is consistent with the trial evidence. I find that his claim at trial that he made an error as a result of confusion or misunderstanding is not credible.
(6) It follows that Petrovic’s claim that $405,000 was not transferred into his account is not credible. The vouchers clearly prove that $405,000 was transferred and the documents establish that the $405,000 was eventually used to purchase the condominium, subject to deductions as outlined in Exhibits 3 and 3(A).
Petrovic has no documentary evidence to refute the flow of funds as indicated in the exhibits and takes refuge in his claim that all his account records have been destroyed.
(7) Petrovic stated that from the $344,274 Certificate of Deposit he paid $111,591 to Ivanka by way of cheques. He has no copies of these cheques. The schedule of payments made in Exhibit 16 does not appear in his affidavit or in his cross-examination. The Exhibit 16 credits conveniently add up to $344,274. They include $24,074 for the Oldsmobile and $37,046 for the Mercedes purchase. I have found that $4,200 was owing for the Oldsmobile and nothing for the Mercedes, as Nizic paid for it by certified cheque.
I cannot imagine anyone paying over $100,000 in cheques to anyone and not keeping records, especially if they had the records in April 2010 and were put on notice at that time that there were concerns about cheating, payments and the propriety of moving into the condo as discussed in the audiotape. Further, Petrovic’s claim at trial that Ivanka only had to give $250,000 and she put in more and he doesn’t know why, is absurd. Petrovic claimed that when he received the $344,000 term deposit, he called Ivanka and asked what it was; she answered nicely that half was for the apartment and to pay back what she owes him. She asked him to be a 50/50 partner, but he has no evidence of that. Accordingly, his evidence is that she, without informing him in advance, simply transferred $344,000 to him. He testified that the $344,000 was not set aside for the condo. It would then have to be the greatest of coincidences that the $344,274 in combination with the $60,726 just happen to add up to $405,000 which is the purchase price of the condo.
(8) Accordingly, the evidence, reduced to its simplest, clearly establishes that Nizic provided the monies to purchase the condo and Petrovic put it in his name. Petrovic claims that he used zero percent of Nizic’s money for the condo and 100 percent of Petrovic’s money is not credible and not supported by the trial evidence at all.
Conclusion as to Facts
[232] As previously indicated Nizic was a credible witness. Ivanka and Petrovic, for reasons outlined, were not credible witnesses.
[233] Accordingly, I accept Nizic’s evidence that he bought the condo for $405,000 and provided Petrovic with the $405,000 to complete the purchase. I find that Nizic was and is the owner of the condo. The condo was placed in Petrovic’s name after Nizic was persuaded by Petrovic and Ivanka that Nizic could avoid capital gains taxes by putting the condo under Petrovic’s name.
[234] Mr. Petrovic had no authority to live in the condo without permission of Nizic and without payment.
[235] Regarding the rent claimed, the closest rental looked at by the plaintiff and defendant’s real estate experts was Unit 1603, which rented for $2,500 per month. Unit 1704 is a penthouse with two parking spots. I accept that, on the evidence before me, $2,700 per month is a fair rental.
[236] Accordingly, I accept the plaintiff’s calculation of monies advanced/credits/balance due as at June 2014 as outlined in Exhibit 3(A).
[237] Accordingly, I find that Nizic is entitled to be paid in the amounts set out in Exhibit 3(A).
[238] Regarding the burden of proof, I find that the plaintiff has easily proven his case well beyond the balance of probabilities. In fact, I find that the evidence that Nizic is the owner of the condominium is overwhelming and would meet the criminal burden of proof beyond any reasonable doubt.
The Law
Statute of Frauds
[239] The defendant argues that s. 4 of the Statute of Frauds is applicable. That section requires contracts for transfer of land to be in writing including creating a trust for land.
[240] In Taylor v. Rawana and Rawana, 1990 6916 (ON SC), 74 O.R. (2d) 357 C.A., the Ontario Court of Appeal held that part performance of a contract may make it enforceable even though it is not in writing as required by s. 4 of the Statute of Frauds.
[241] The law is set out at page 5 of Taylor follows:
The law on this matter is old and substantial law rooting, as it does, in the law of England, back to the late 1800s. I was assisted in my determination of the legal principles to be adopted in this case with the statements of the law set out by Professor Anthony G. Guest in Anson's Law of Contract, 24th ed., William R. Anson and Anthony G. Guest, eds. (Oxford University Press), also Professor Cheshire, in Cheshire and Fifoot's Law of Contract, 11th ed. (1986), and Professor J. Chitty's The Law of Contracts, 25th ed., Anthony G. Guest, ed. (London: Sweet & Maxwell, 1983), as it relates to the part performance aspect of a contract that otherwise would be required to be in writing because of the Statute of Frauds, R.S.O. 1980, c. 481.
Professor Guest sets out in the 24th edition of Anson's Law at p. 84, and I quote:
Under the equitable doctrine of part peformance the Courts will in certain cases allow a contract, even though of a kind required to be proved by writing, to be proved by oral evidence, when the party seeking to enforce the contract has done acts in performance of his obligations under it. The doctrine, however, is strictly limited, and certain requirements must be satisfied before it can apply.
The first requirement is that the performance must be referable to the contract:
The first requirement is that the acts of part performance relied upon be such as must be referable to some contract, and may be referred to the alleged one; that they prove the existence of some contract, and are consistent with the contract alleged.
At p. 86 Professor Guest gives an example in reference to acts that must be done in performance and cannot be done in preparation for performance, that is, instructing a surveyor to prepare a valuation, or a solicitor to prepare a conveyance. These were found in various cases to be insufficient.
The circumstances here, the part performance that I have found, relate directly to the contract. The taking up of possession and the renovation work of the plaintiff relates directly to the contract as alleged.
Secondly, on p. 86 Professor Guest indicates that the acts of part performance relied upon must have been performed by the plaintiff. In other words, the plaintiff cannot rely on acts that were performed by the defendant and adopt those acts as being part performance by the plaintiff. As I have indicated earlier, in part performance here there were clearly acts that were done by the plaintiff.
Thirdly, the contract must be one which, if it were properly evidenced by writing, would have been specifically enforceable. I think it is trite to say that if in fact there was an agreement of purchase and sale here before us that was in writing, it would clearly be specifically enforceable.
Fourthly, there must be clear and proper evidence, either oral or written, of the existence of a contract, for the document cannot be used to transform a non-existent contract into a contract, and as I indicated, I found on the evidence there was indeed evidence of an existing contract.
These principles, as set out by Professor Guest, have been adopted by the Supreme Court of Canada in Deglman v. Guaranty Trust Co., 1954 2 (SCC), [1954] S.C.R. 725, [1954] 3 D.L.R. 785. This is a decision of Rand J. in the Supreme Court of Canada.
In the Deglman case the respondent sought to recover from the estate of a deceased aunt under an oral agreement whereby the aunt, on condition that the respondent perform certain services as she might request during her lifetime, undertook to make adequate provision for him in her will, and in particular to leave him a certain piece of land. The respondent fully performed his part of the agreement. The aunt who owned the land died intestate.
In the Deglman decision the trial judge [Spence J.] in Ontario, and the Ontario Court of Appeal [reported sub nom. Constantineau v. Guaranty Trust Co., [1953] O.W.N. 665], found that the acts that were performed by the respondent, in the appeal, were in fact acts that went directly to the contract, and were part performance of that contract. The Supreme Court of Canada disagreed and Rand J. indicated that the acts relied upon were not by their very nature referable to any dealings with the land, and because they were not referable to any dealings with the land he found that those acts could not be part performance to take the matter out of s. 4 of the Statute of Frauds, R.S.O. 1950, c. 371 and in doing so, that is in the judgment of Rand J. in his findings, he sets out the parameters and the application of the principles that I have earlier referred to by Professor Guest, and I quote two or three short pieces from the judgment of Rand J., beginning firstly at p. 726 S.C.R.:
In this appeal the narrow question is raised as to the nature of part performance which will enable the court to order specific performance of a contract relating to lands unenforceable at law by reason of s. 4 of the Statute of Frauds.
Moving down to the bottom of the page [and on to the next]:
The performance ...
that is, in the Deglman case,
... consisted of taking his aunt about in her own or his automobile on trips to Montreal and elsewhere, and on pleasure drives, of doing odd jobs about the two houses, and of various accommodations such as errands and minor services for her personal needs.
Spence J. at trial, and the Court of Appeal, found the conduct of the respondent sufficient grounds for disregarding prohibition of the Statute, and, in short, Rand J. disagreed. He found that conduct such as performed for the aunt did not relate directly to the land and therefore could not be part performance. His Lordship reviewed the statements of the law set out in Maddison v. Alderson (1883), 8 App. Cas. 467, [1881-5] All E.R. Rep. 742, 31 W.R. 820 (H.L.), perhaps the original case on the issue. He refers to one or two other cases and I quote further at p. 728 S.C.R.:
Here ... the acts of performance by themselves are wholly neutral and have no more relation to a contract connected with premises ...
that is, the land in issue in that case,
... than to mere expectation that his aunt would requite his solicitude in her will, or that they were given gratuitously or on terms that the time and outlays would be compensated in money.
He states further down:
... equity intervenes only in circumstances that are not present here.
Rand J. is supported in that judgment by Cartwright J., as he then was. The ultimate decision of the Supreme Court of Canada in that case was that the conduct in the part performance referred to could not relate directly to the land and their Lordships did not enforce that contract. It is interesting to note that they invoked, perhaps on their own motion -- it's hard to determine from the case -- an equitable principle I will refer to allowing the respondent in that case a fixed amount of money out of the estate in lieu of the order that was sought and granted to the respondent by the trial court.
I take some comfort in this decision and the reliance on the Deglman case in that the decision in Deglman was referred to very recently, albeit in a somewhat different manner, by Osborne J., as he then was, in a case he decided on April 2, 1990. The case is Morgan Guaranty Trust Co. of New York v. Outerbridge (1990), 1990 6818 (ON SC), 72 O.R. (2d) 161, 66 D.L.R. (4th) 517 (H.C.J.). The reference to the Deglman case is at p. 189 O.R. and in that decision Osborne J. refers to and adopts the principles set out by Rand J. in the Deglman decision in regard to the services performed by the respondent.
By his adoption of those principles and the reliance on that case in the circumstances he was dealing with, he in essence supports the principle. He went on further to adopt the equitable principle that was set out by Rand and Cartwright JJ. in dealing with the Morgan Guaranty Trust v. Outerbridge decision.
[242] To summarize, part performance must meet four criteria:
(1) part performance must relate directly to the contract;
(2) the acts of part performance relied upon must have been done by the plaintiff and;
(3) the contract must be specifically enforceable i.e. contract of purchase and sale;
(4) clear evidence either oral or written of the existence of the contract.
[243] In the present case, I have accepted the plaintiff’s evidence that he bought the condo and placed it in the defendant’s name with the defendant agreeing to return the condo in the future. This is clear oral evidence of the existence of the contract (criteria 4).
[244] The contract is specifically enforceable as the contract requires the defendant to keep the land in his name and return it upon request (criteria 3).
[245] The defendant was allowed to keep the interest on the certificate of deposit as his reward for entering into the contract (criteria 3).
[246] Regarding criteria 1 and 2, the plaintiff, on January 22, 2004, provided the funds of $405,000 to the defendant to purchase the contract.
[247] The agreement of purchase and sale of the condo required the defendant to initially pay four deposit cheques from February 2004 to May 2004 in the total amount of $60,735. On January 22, 2004, the plaintiff transferred $60,726 to the defendant’s account 2773309. Over the next several months the defendant paid $60,735 for the deposit cheques out of the same account 2773309.
[248] All of this evidence is confirmed by the $520,000 Cassels Brock cheque, by the journal vouchers - Exhibit 1, Tabs 4(A), 4(B), 4(C), Tabs 3(A), 3(E) and the plaintiff’s bank book – Exhibit 5. The $344,274 Certificate of Deposit was due to mature on June 1, 2005, just nine days before $40,490 was due to be paid as a final deposit amount.
[249] All of these financial payments are acts that are a series of clear steps by the plaintiff that satisfy the requirement of part performance of the contract.
[250] I conclude therefore, that there has been part performance of the contract that is specifically enforceable. Accordingly, the Statute of Frauds ss. 4, does not prevent the plaintiff from enforcing the oral contract between himself and Petrovic.
Purchase Money Resulting Trust
[251] A purchase money resulting trust arises when an individual advances funds to contribute to the purchase price of property but does not take legal title to the property. The presumption of a resulting trust can be rebutted where it is demonstrated that at the time of contribution the contributor intended to make a gift, Nishi v Rascal Trucking Ltd., 2013 SCC 33 at paras 1-2, [2013] 2 S.C.R. 438.
[252] A resulting trust presumptively arises any time a person voluntarily transfers property to another unrelated person or purchases property in another person’s name (D. W. M. Waters, M. R. Gillen and L. D. Smith, eds., Waters’ Law of Trusts in Canada (4th ed. 2012), at p. 397).
[253] The facts here are actually quite simple. Mr. Nizic paid $405,000 for the condominium and put it in the defendant’s name respectively expecting to have it returned.
[254] The evidence establishes that the bulk of the $405,000 (except for $114,000 sent to Croatia) was used to purchase the condominium.
[255] The defendant was not related to the plaintiff and it is clear from the evidence before me that the plaintiff had title placed in the defendant’s name for tax planning purposes that the defendant had suggested. At no point during this trial has Petrovic ever suggested that the proceeds advanced by Mr. Nizic were a gift. To the contrary, Petrovic submitted that he alone had bought the condominium. I therefore hold that the presumption of resulting trust has not been rebutted.
[256] As Justice Cromwell stated in Kerr v Baranow, 2011 SCC 10 at para 12, [2001] 1 S.C.R. 269, it is “settled law since at least 1788 in England (and likely long before) that the trust of a legal estate, whether in the names of the purchaser or others, ‘results’ to the person who advances the purchase money.” As such the condominium must result back to Mr. Nizic.
Land Transfer Tax Act
[257] The defendant submits that Ivanka’s father did not pay the 20% non-resident tax in 1988.
[258] I agree with the plaintiff that there was no evidence called at trial as to the proper application of the Land Transfer Tax Act.
[259] Further, the plaintiff was not involved in these 1988 transactions or even in the 2000 transfer from Ivanka to her father. I find that whatever occurred in 1988 and 2000, it does not impact what occurred between Mr. Nizic, the plaintiff and Mr. Petrovic, the defendant in the transfer of the condo in January of 2004.
Illegality
[260] The defendant claims that the plaintiff enticed Petrovic into an illegal contract which they cannot now enforce.
[261] If anyone did any enticing, I find it was Petrovic. The contract itself was the plaintiff purchasing the condo and putting it in Petrovic’s name with the reasonable expectation that Petrovic would return the condo in the future.
[262] There is nothing illegal about this contract. Mr. Nizic candidly admits that Petrovic enticed Nizic into this contract because Petrovic knew how to trick Revenue Canada and thereby, capital gains taxes could be avoided. I think that it is reasonable to infer that Petrovic had convinced the plaintiff that this was some type of tax planning that Petrovic had experience in.
[263] This aspect of illegality was not raised in the defendant’s affidavit or any defences advanced at trial.
[264] There was no evidence that Mr. Nizic was in fact accepting an arrangement that was or would be illegal. The defendant’s original claim was that the condo was a 50/50 arrangement between Ivanka and himself (I have found this not to be credible). In Fridman, Law of Contract in Canada, 6th Edition, it is indicated that a defendant cannot elicit illegality of a contract unless the illegality is clear on the face of the record or pleaded in defence or appeared from the plaintiff’s examination in-chief. On the evidence and pleadings before me, none of these requirements have been met. The defendant’s argument regarding illegality fails.
Limitations Act
[265] The defendant argues that Mr. Nizic has a two year limit for taking action to collect what was alleged to be rent due from Petrovic and has failed to do so. This would mean that since the action commenced in 2011, the plaintiff would have no claim from February 2006 to June 2009.
[266] The Limitations Act has not been pleaded by the defendant. The Ontario Court of Appeal in Strong v Paquet Estate (2000), 2000 16831 (ON CA), 50 O.R. (3d) 70 at paras 33-36, [2000] O.J. No. 2792 held that a failure to plead the Limitations Act as an affirmative defence can be fatal to the claim. In Kalkins (Litigation Guardian of) v Allstate Insurance Co. of Canada (1998), 1998 6879 (ON CA), 41 O.R. (3d) 528 at p. 533 (CA) Finlayson J.A. Stated:
It has long been established that the parties to a legal suit are entitled to have a resolution of their differences on the basis of the issues joined in the pleadings: see rule 25.06.
[267] Petrovic was barred on March 4, 2013 by order of Tzimas J. from making any further amendment to the pleadings. This was almost two years from the initial return date of the Application on July 2011. The defendant never appealed the order of Justice Tzimas and based on the delay of these proceedings caused by the defendant, Justice Tzimas was well within her authority to make the order. As such, the defendant cannot be allowed to circuitously amend his pleadings backdoor through the trial.
[268] Further, I find that no claim for rent could have been advanced by the plaintiff until the underlying issue surrounding the ownership of the condominium was resolved. The plaintiff would have had no right or ability to claim rent until a finding was made concerning the ownership of the condominium. As such even if the defendant was allowed to amend his pleadings and add a limitation defence, the limitation period would not run until there was a ruling surrounding the ownership of the property. Only then would the claim be actionable. In all these circumstances I find that the defendant’s argument regarding the Limitations Act fails.
Order
[269] Based on the findings of fact and applicability of the law as outlined, the following order is made:
(1) Justice Price’s order of July 14, 2011 is affirmed.
(2) It is declared that Blago Nizic is the legal and beneficial owner of the subject condo property and it is directed that the defendant Petrovic forthwith transfer the subject property to Blago Nizic (as a transfer from trustee to beneficial owner).
(3) The defendant, Petrovic, shall discharge the charge first registered in favour of the TD Bank registered as instrument AT1053752 on February 2, 2006.
(4) Pursuant to Justice Price’s order dated July 14, 2011, with reference to the $200,000 TD Bank mortgage with Petrovic as mortgagee, it is directed that the Registrar of Land Titles discharge instrument AT26J0453 (the other TD Bank charge) from the title to the property.
(5) The plaintiff, pursuant to Exhibit 3(A), is entitled to the return of his condominium free and clear, together with a further payment of $103,008.65 forthwith up to June 30, 2014.
(6) The plaintiff shall be entitled to retain the $1,200 paid for rent, minus credits for July to September 2014, for a further payment of $3,600.
(7) The plaintiff is to be paid his costs on a substantial indemnity basis. Counsel are to arrange a date before me to deal with the costs issue.
Skarica J.
Released: September 12, 2014
COURT FILE NO.: CV-11-2570-00
DATE: 20140912
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
BLAGO NIZIC
Applicant
- and –
ZDRAVKO PETROVIC and THE TORONTO-DOMINION BANK
Respondent
REASONS FOR JUDGMENT
Skarica J.
Released: September 12, 2014