ONTARIO SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-13-481531
DATE: 20150707

BETWEEN:

MADAN KANMANY RAMALINGAM
Plaintiff

– and –

MATHINI KUSALAKUMAR
Defendant

Vitali Luchko, for the plaintiff
Mathini Kusalakumar, appearing in person

HEARD at Toronto: May 25, 2015

REASONS FOR JUDGMENT

Stinson J.

[1] These reasons relate to a mini-trial heard by me on May 25, 2015. The mini-trial had its origins in a motion for summary judgment brought by the plaintiff, which was argued before me on December 31, 2014. At that time I concluded that the case raised issues of credibility that could only be determined at an oral hearing, with live evidence. I therefore directed a mini-trial and gave further directions at a case conference held on April 16, 2015.

[2] There were two issues to be decided on the mini-trial and the evidence was relatively narrow. The first was whether the defendant held title to a residential property on Olympia Drive in North York (the “Property”) as a bare trustee on behalf of the plaintiff or whether she was the absolute owner of the Property and the plaintiff was a mere tenant. The second issue concerned whether the defendant was liable to the plaintiff in relation to two loans advanced in 2008 and 2009, one for $12,000 and the other for $30,000.

Background

[3] The plaintiff purchased the Property in Year 2000 and obtained a mortgage loan in order to do so. Unfortunately, the plaintiff suffered financial reversals in the next few years. As a result, when the original mortgage matured and was due for renewal, the plaintiff was unable to obtain financing in his own name due to his poor credit rating. According to the plaintiff’s evidence, he arranged with a friend, Selvan Anton, to assume ownership of the Property, as a “bare trustee” on his behalf. Mr. Ramalingam transferred title to Mr. Anton for no consideration. Mr. Anton then applied for and successfully obtained mortgage financing, as an accommodation for Mr. Ramalingam. Mr. Ramalingam paid all expenses associated with the transfer and the mortgage transactions and paid all ongoing mortgage payments, property taxes, insurance costs and maintenance expenses relating to the Property. As he had before the transfer to Mr. Anton, Mr. Ramalingam continued to reside in the Property. Mr. Anton never took possession.

[4] Unfortunately, Mr. Anton died in an accident in 2006. Despite his death, the prior arrangement continued, because all mortgage statements, tax statements, etc., came to the Property and were paid by Mr. Ramalingam. By 2008, however, the mortgage obtained by Mr. Anton was maturing. Mr. Ramalingam still had a bad credit rating and he therefore had to find another person to do what Mr. Anton had done for him in 2004.

[5] At this point the parties’ stories diverge somewhat. Mr. Ramalingam testified that he was not acquainted with the defendant before the events in question. He said that he had mentioned his problem with the maturing of the mortgage to his sister in England, Indragandhi Rasiah. In turn, Ms. Rasiah had an acquaintance in England, Ms. Kasthury Mahadevan, who also had a sibling in Toronto, the defendant Mathini Kusalakumar. According to the evidence of Ms. Rasiah, Ms. Mahadevan suggested to her that Ms. Kusalakumar might be willing to help the plaintiff and Ms. Mahadevan agreed to speak to the defendant (her sister) to inquire whether she would be willing to do so.

[6] According to Ms. Rasiah, Ms. Mahadevan subsequently told her that the defendant had agreed to help and she introduced Ms. Rasiah to the defendant via telephone. Ms. Rasiah explained to the defendant the proposed arrangement whereby, as Mr. Anton had previously, Ms. Kusalakumar would take title to the Property as a bare trustee and would secure a new mortgage, while all expenses would be paid by the plaintiff. The defendant told Ms. Rasiah that she was willing to help.

[7] According to the plaintiff’s evidence, he and the defendant then made direct contact and the defendant agreed to proceed as discussed. Because Mr. Anton had died, arrangements had to be made for his estate to transfer title to the defendant. The defendant paid no consideration to become the new registered owner of the Property. The transfer was made, and the defendant obtained a new mortgage in her name in order to pay out the former mortgage. Thereafter, Mr. Ramalingam paid all expenses associated with the Property, as before, and he continued to reside there. He deposited funds in the defendant's bank account to cover the required payments on the mortgage.

[8] These arrangements continued until February 2013, when, once again, the mortgage on the Property was up for renewal. According to the evidence of Mr. Ramalingam, he contacted the defendant on a number of occasions asking for documentation with respect to the mortgage renewal, without success. Ultimately, the defendant contacted him and told him that the mortgage had not been renewed, but had been left open and the mortgage payments and interest rate had increased. She demanded increased payments from Mr. Ramalingam, but she never provided him any documentation. In response, he refused to provide any more money to her until she provided the mortgage information. The defendant then for the first time took the position that she was the owner of the Property and Mr. Ramalingam was a mere tenant. As well, without the plaintiff’s knowledge or approval, the defendant took out a second mortgage on the Property, for approximately $29,000, thereby reducing the equity by that amount.

[9] The defendant then commenced proceedings before the Landlord and Tenant Board seeking to terminate Mr. Ramalingam’s tenancy for nonpayment of rent. In view of the dispute between the parties about ownership of the Property, Mr. Ramalingam commenced this proceeding and, as a result, the Landlord and Tenant Board proceeding was adjourned sine die pending resolution of this action.

[10] For her part, Ms. Kusalakumar paints a different picture. She testified that she was acquainted with the Ramalingam family through her temple in Toronto before any of the transactions in dispute. She denied that she was introduced to them through her sister, Ms. Mahadevan. No affidavit evidence from Ms. Mahadevan was placed before the court. Ms. Kusalakumar denied that she entered into any arrangement to assume title to the Property as a bare trustee on behalf of the plaintiff. Rather, she asserted that she purchased the Property in her own name. She further asserted that she allowed Mr. Ramalingam to reside in the house as her tenant.

[11] According to her evidence, matters proceeded satisfactorily for several years until early 2013, when Mr. Ramalingam stopped paying rent. As a result, Ms. Kusalakumar took steps before the Landlord and Tenant Board to end the tenancy.

The Dispute

[12] As a result of the events I have described above, the first mortgage on the Property went into default. Mr. Ramalingam claims that he attempted to persuade Ms. Kusalakumar to allow him to bring the mortgage into good standing, but she refused. Mr. Ramalingam claims that he also attempted to deal directly with the first mortgagee, but was unable to do so on the basis that, from the perspective of the mortgagee, he had no standing. The net result was the first mortgagee issued a notice of sale under mortgage. The second mortgage also went into default.

[13] Ultimately, the Property was sold by way of the power of sale proceedings. Mr. Ramalingam and his sister were the purchasers. Mr. Ramalingam has continued to reside there with his family throughout. The Landlord and Tenant Board proceedings have gone no further. Rather, the parties’ dispute has been brought to court in this lawsuit.

The Claims of the Plaintiff

[14] In relation to the Property, Mr. Ramalingam sues for the damages he says arose by reason of the defendant refusing to comply with their trust arrangement. Due to that repudiation, he says, he lost substantial equity in the Property. He calculates his loss based on the difference between the value of the Property at the time the defendant repudiated the agreement, and the new purchase price he was forced to pay. The principal balance of the first mortgage in February 2013 when the dispute arose was $344,348.56. The price that the plaintiff had to pay to purchase the Property under power of sale was $449,000, a difference of $104,651.44. The plaintiff asserts that is the amount of equity that was lost as a result of the defendant’s failure to honor the trust arrangement, since (on the plaintiff’s version of events) he should have been able to obtain from her a complete conveyance of the Property for no payment to her. The defendant denies any such obligation on the ground that she was the absolute owner of the Property.

[15] Quite apart from the dispute regarding the ownership of the Property, the plaintiff also sues to recover two loans allegedly made to the defendant. Once again, these transactions involved Ms. Rasiah, the plaintiff’s sister in England. According to Ms. Rasiah's evidence, at about the time that she approached the defendant to assume title to the Property as trustee for the plaintiff, the defendant asked her for a loan. According to Ms. Rasiah, she was asked to lend $15,000, but could only afford to loan $12,000. She agreed with the defendant that the defendant could repay the $12,000 loan when title to the Property was transferred back to the plaintiff. She added that the defendant requested that she not disclose to the plaintiff about the $12,000 loan, because the defendant had already agreed to help him gratuitously. The loan was not disclosed to the plaintiff, but the defendant delayed signing the documents relating to the refinancing of the Property until the $12,000 was advanced to her. According to Ms. Rasiah, she transferred the $12,000 by way of international money transfer to the defendant.

[16] In due course, Ms. Rasiah informed the plaintiff about the $12,000 loan that she had provided to the defendant. The plaintiff reimbursed Ms. Rasiah for the $12,000 and thereafter became entitled to repayment of that sum. To date, no repayment of the $12,000 has been made, according to the plaintiff.

[17] The evidence of the defendant was to the effect that she never discussed the $12,000 loan or any loan with Ms. Rasiah or that the plaintiff and she never received such a loan. She therefore denied any liability for this $12,000 loan.

[18] Ms. Rasiah gave further evidence about a subsequent loan she claimed to have made to the defendant, this one for $30,000. According to her, in 2009 the defendant called her claiming that the mortgage loan that she had taken out on the Property occupied by Mr. Ramalingam was greater than the value of the Property. She therefore told Ms. Rasiah that she needed collateral for the mortgage in the amount of $50,000 to protect her interests. It later emerged, however, that Ms. Kusalakumar wanted to purchase a house for herself and needed $50,000 for that purpose. According to Ms. Rasiah, she told Ms. Kusalakumar that she did not have $50,000, but she would help in any way she could. She tape-recorded the telephone conversation between herself and Ms. Kusalakumar in which this topic was discussed. Ultimately, Ms. Rasiah agreed to lend $30,000 to Ms. Kusalakumar on the basis that she would repay that sum when title to the Property was transferred back to the plaintiff. The $30,000 advance was made by way of a transfer of funds from Ms. Rasiah to the plaintiff who in turn paid $30,000 in cash to the defendant. Thus, according to the plaintiff, the defendant was obliged to return the $30,000 to him when the title to the Property was transferred back to him. To date, the defendant has not repaid the $30,000.

[19] For her part, the defendant denies any discussions with respect to a $30,000 loan. She further asserts that there was no advance of $30,000 by either Mr. Ramalingam or Ms. Rasiah. She therefore disputes responsibility for this sum.

[20] As matters stand, in this action the plaintiff is seeking damages of $104,651.44, representing his lost equity in the Property, payment on account of the first loan in the amount of $12,000 and payment on account of the second loan in the amount of $30,000.

Anlaysis

[21] As the foregoing recitation of facts demonstrates, this is a credibility case. The plaintiff asserts that the Property transaction between himself and the defendant was a trust arrangement in which the defendant was, in effect, a bare trustee. The arrangement was one of convenience so that a mortgage loan could be obtained at a time when the plaintiff did not have a sufficiently good credit rating. The arrangement was that the plaintiff would pay all the expenses and at the appropriate time receive a reconveyance of title. The defendant disputes this, asserting that she purchased the Property herself for her own purposes and allowed the plaintiff to remain as a tenant only. There is also a dispute regarding the loans that the plaintiff says were made to the defendant, which the defendant denies entirely.

[22] There are thus two starkly different and irreconcilable versions of the events in dispute. My task, therefore, is to assess the credibility of the witnesses and decide, on a balance of probabilities, which version I accept. For the reasons that follow, I prefer and accept the evidence that was tendered on behalf of the plaintiff and I reject the evidence of the defendant.

[23] As I mentioned at the outset of these reasons, the case proceeded by way of a mini-trial before me. The plaintiff and the defendant testified in person. In addition, Ms. Rasiah testified, by way of video link from England. All three witnesses had previously sworn affidavits that formed part of the evidence. At the mini-trial they gave additional evidence in chief and were cross-examined. I will comment on the credibility of each.

[24] Mr. Ramalingam gave his evidence in a straightforward fashion. The arrangement he described with Ms. Kusalakumar was identical to the arrangement that he had previously had in place with Mr. Anton, prior to the latter’s death. The documents that the plaintiff presented were consistent with that arrangement. In particular, Mr. Ramalingam described the arrangements that were made when the Property was transferred from Mr. Anton’s estate to the defendant. Because the equity in the Property properly belonged to him, Mr. Ramalingam received the lion’s share of the proceeds of the refinancing that took place on that occasion, after payment out of the previous mortgage. This is strong confirmation that he was the true owner.

[25] In addition, the plaintiff produced a wide range of documents that reflected the payments made by him. He paid into the defendant’s bank account on a regular basis the amounts necessary to cover the mortgage payments and realty taxes on the Property. His parents paid directly for the house insurance and life insurance on the defendant. Somewhat naïvely, the defendant claimed she was unaware that house insurance was necessary. All maintenance expenses and repairs and other costs associated with the Property were paid by the plaintiff. All of this is entirely consistent with and confirmatory of the plaintiff being the true owner. And, of course, he remained in occupancy throughout.

[26] The evidence of the plaintiff was also consistent with the evidence of Ms. Rasiah. I acknowledge that Ms. Rasiah and the plaintiff are siblings. That said, Ms. Rasiah’s evidence was backed up by a tape recording of a key conversation with the defendant in which reference was made to both the original loan (6000 U.K. pounds or CDN$12,000) and the defendant’s request for a $50,000 loan. The audio recording is powerful evidence that these loans were made, as asserted by the plaintiff and Ms. Rasiah. This evidence is therefore further supportive of the truthfulness of Mr. Ramalingam’s testimony.

[27] As I have mentioned, Mr. Ramalingam gave his evidence in a straightforward fashion. At no time during his cross-examination or in response to any questions posed by me did he vary from his underlying story. He appeared as a honest and reliable witness.

[28] Turning to Ms. Rasiah, I found her, too, to be a credible witness. She, too, gave her testimony in a straightforward fashion. On the key issue of the loans, her evidence was supported by the recording. She was able to respond in a logical and persuasive fashion to questions posed on cross-examination and by me.

[29] I have no serious reason to doubt the accuracy of any of the evidence provided by Ms. Rasiah.

[30] I turn at last to the evidence of Ms. Kusalakumar. I did not find her to be a credible witness. One of the principal reasons for this was her denial of the existence of the loans. The testimony she gave at the mini-trial in relation to this subject was inconsistent with the recorded and transcribed conversation. When confronted with those contradictions, she gave evasive and non-responsive answers. In her testimony at trial, she denied the existence of the original loan of $12,000. In the recorded conversation she more or less expressly conceded the existence of that loan. She denied asking for a further loan, yet the recorded conversation reflects her doing precisely that. Her contradictory testimony and her evasiveness give me strong reason to doubt the accuracy or truthfulness of much of her evidence.

[31] Ms. Kusalakumar was similarly evasive and gave non-responsive answers when questioned about the payments for the expenses associated with the Property. If, as she claims, she actually owned the Property, her assertion that she was unaware that house insurance was necessary simply does not make sense. As well, her stated reason in the recorded telephone conversation for wanting the loan of $50,000 was so that she could purchase a house for herself and her family. If, as she asserts, she already owned the Property in which the plaintiff was residing as her tenant, she could have easily terminated that tenancy and either moved in herself or sold the Property and purchased another house with the available equity. Once again, the recording contradicts the story that the defendant is now telling, giving me additional cause to doubt the accuracy of her evidence before me.

[32] Overall, the evidence tendered on behalf of the plaintiff is logical and consistent with the allegations he makes. It is consistent with the evidence of Ms. Rasiah and it is far more persuasive than the version of events proffered by the defendant. As far as the defendant’s evidence is concerned, its inconsistencies and lack of logic lead me to disbelieve it.

[33] Accordingly, where there is any material dispute on any factual issue of importance, I prefer and accept the evidence proffered on behalf of the plaintiff over that of the defendant and I expressly reject the defendant’s evidence.

[34] On the basis of the foregoing, I make the following findings of fact:

(a) The defendant was, throughout, the beneficial owner of the Property.

(b) The arrangement between the plaintiff and the defendant was that the defendant was a bare trustee of the Property on terms that all expenses associated with the Property were to be paid by the plaintiff and, at the request of the plaintiff, the defendant was obliged to convey title to the Property from herself to the plaintiff.

(c) The plaintiff performed his obligations under the parties’ agreement up until the time the first mortgage matured. Improperly, the defendant failed to communicate accurate information about the status of the first mortgage as requested by the plaintiff, and the plaintiff justifiably refused to continue to make payments to the defendant until the defendant provided this information, which she failed to do.

(d) When she asserted in early 2013 that the plaintiff was a tenant of the Property and that a landlord-tenant relationship existed, the defendant denied the existence of and repudiated the true agreement between the parties. She further confirmed that repudiation and denial by commencing proceedings before the Landlord and Tenant Board. The defendant acted improperly by doing so and by preventing the plaintiff from communicating with the first mortgagee, thus precluding him from preventing the power of sale proceedings from unfolding as they did.

(e) As a consequence of the defendant’s conduct, in order to preserve the Property so that he and his family could continue to reside there, the plaintiff was forced to purchase the Property from the first mortgagee as part of the power of sale proceedings. In doing so he suffered a loss of $104,651.44.

(f) Ms. Rasiah advanced $12,000 to the defendant in 2008 by way of loan. Ms. Rasiah advanced a further $30,000 to the defendant by way of loan in early 2009. The first advance was made directly; that indebtedness has been assigned by Ms. Rasiah to the plaintiff. The second advance was made via funds transferred to the plaintiff which she in turn paid to the defendant in cash. The plaintiff is therefore entitled to seek repayment on Ms. Rasiah’s behalf. Neither loan has been repaid.

(g) Under the terms of the loans, they were to be interest-free until the defendant was asked to transfer the Property to the plaintiff. The defendant’s repudiation of the trust agreement in early 2013 amounted to a refusal by her to acknowledge her obligations thereunder. In turn, it triggered the running of interest on the loans. She has not paid anything on account of these sums.

conclusion and disposition

[35] In view of the findings of fact that I have made based on my assessment of the evidence and the credibility of the witnesses, the plaintiff is entitled to succeed in this proceeding. I therefore order and adjudge as follows:

(a) I declare that the plaintiff was the sole beneficial owner of 30 Olympia Drive during the time title to that property was in the name of the defendant and that throughout, his interest was held in trust by the defendant for the plaintiff’s benefit.

(b) I award the plaintiff damages of $104,651.44 on account of the equity lost in 30 Olympia Drive as a result of the defendant’s breach of their trust agreement.

(c) I award the plaintiff $42,000 on account of the two loans.

(d) I award the plaintiff prejudgment interest on the foregoing sums pursuant to the provisions of the Courts of Justice Act, R.S.O. 1990, c. C.43 from March 7, 2013 forward, being the date upon which the defendant commenced her Landlord and Tenant Act proceeding.

[36] In relation to costs, I invite the parties to reach agreement. If they are unable to do so, I will receive written submissions as follows:

(a) The plaintiff shall serve his bill of costs on the defendant, accompanied by written submissions within fifteen days of the release of these reasons.

(b) The defendant shall serve her response to the defendant within fifteen days thereafter.

(c) Plaintiff shall serve his reply, if any, within ten days thereafter.

(d) In all cases, the written submissions shall be limited to three pages, plus bills of costs.

(e) I direct that counsel for the plaintiff shall collect copies of all parties' submissions and arrange to have that package delivered to me in care of Judges' Administration, Room 170 at 361 University as soon as the final exchange of materials has been completed. To be clear, no materials should be filed individually: rather, counsel for the plaintiff will assemble a single package for delivery as described above.

___________________________ Stinson J.

Released: July 7, 2015

COURT FILE NO.: CV-13-481531
DATE: 20150707

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

MADAN KANMANY RAMALINGAM
Plaintiff

– and –

MATHINI KUSALAKUMAR
Defendant

REASONS FOR JUDGMENT

Stinson J.

Released: July 7, 2015