Court File and Parties

Toronto Court File No.: CV-16-555775 Date: 2017-06-30 Ontario Superior Court of Justice

Between: Abdullah Bin Ali Al Khulaqhi, Applicant – and – Easa Al Khulaqhi, Respondent

Counsel: David Winer, for the Applicant Ralph Swaine, for the Respondent

Heard: June 20, 2017

Reasons for Decision

Edwards J.:

[1] The Applicant and the Respondent are brothers who purchased a condominium unit municipally known as 2006 Martin Grove Road, Unit 27, Toronto, Ontario (“the Property”). The property was purchased in 2008 and title was registered showing that Abdullah had a 25 percent interest, while Easa had a 75 percent interest in the property.

[2] At the time of closing Abdullah contributed $3,000 towards the down payment, while Easa contributed $7,000. There is a dispute with respect to the amounts paid by each of the brothers with respect to the carrying costs for the property. Regardless, in 2014 Abdullah left the property which he was occupying with his brother, and by 2016 the relationship between the brothers appears to have deteriorated to the point where Easa wanted to buy Abdullah out of his interest in the property and offered the sum of $10,000.

[3] It was in this time frame that Abdullah maintains that he found out for the first time that the title on property showed he only had a 25 percent interest in the property.

[4] On February 5, 2016, the brothers met at a lawyer’s office to discuss a resolution of Abdullah’s interest and ultimately minutes of settlement were signed, the terms of which provided:

The parties have agreed as follows: -

1. The first party [Easa] will pay a total sum of $80,000 to the second party [Abdullah] to buy out his share in the property located at 2006 Martin Grove Road, Unit 27, Toronto, ON.
2. This payment will be made within 60 days of this agreement.

[5] The minutes of settlement were signed by both parties and witnessed by their respective lawyers.

[6] Easa did not make the payment required by the minutes of settlement. Litigation ensued. In the notices of application that both parties commenced, they sought partition and sale of the property. In Abdullah’s notice of application he seeks, as alternative relief, enforcement of the minutes of settlement.

[7] In the responding materials filed by Easa, he initially took the position that while the minutes of settlement did not incorporate a term with respect to how the $80,000 was to be funded, it was understood with Abdullah that the $80,000 was coming from their father and that he would release the funds only if Abdullah released an interest that he had on property in India. By the time this matter got before this Court, Easa no longer asserted that position.

[8] On August 9, 2016, the parties entered into a consent order before Matheson J. The order of Matheson J. provided for a mechanism pursuant to which the property could be sold and the proceeds of sale paid into Court. The two applications brought by the brothers were to be heard together.

Position of Abdullah

[9] Abdullah asserts that in his notice of application he not only sought an order under s. 3(1) of the Partition Act, but he also sought as alternative relief enforcement of the minutes of settlement. Simply put, Abdullah argues that the minutes of settlement are unambiguous and require Easa to pay him $80,000 for his interest in the property.

Position of Easa

[10] Counsel for Easa acknowledged at the commencement of the hearing that his client no longer asserted that the minutes of settlement were subject to an agreement that the $80,000 would be paid to Abdullah through funding from their father, provided Abdullah released his interest in property located in India.

[11] The position now taken by Easa is that it is impossible to enforce the minutes of settlement because the minutes of settlement contemplated that Easa would only pay Abdullah $80,000 “to buy out his share in the property”. Given that the property has now been sold to a third party, it is now argued that it is impossible to complete the minutes of settlement because Abdullah no longer has the ability to transfer his interest in the property to Easa.

Analysis

[12] During the course of argument I enquired of counsel as to whether or not there was any evidence that Easa had an ability to pay the $80,000, short of having the property sold. In that regard, I was advised by counsel that while Easa may have applied to the Toronto Dominion Bank for funding, there was no evidence that his application for a loan was ever approved by the bank. On the evidence before this Court Easa initially suggested that the minutes of settlement were subject to a side-agreement, pursuant to which the $80,000 would be paid by their father in return for Abdullah releasing his interest on property in India. The fact that Easa has now resiled from that argument, in my view speaks volumes. Specifically, I do not accept that Easa was ever in the position to fund the $80,000. His argument now that the minutes of settlement cannot be enforced because Abdullah cannot transfer his interest to Easa and thereby be bought out, in my view is entirely specious.

[13] It was open to Easa right up to the time when the property was listed and ultimately sold to pay Abdullah the $80,000, in return for which Abdullah would transfer his interest to Easa and be bought out as contemplated by the minutes of settlement.

[14] In Remedy Drug Store Co. v. Farnham, 2015 ONCA 576, Epstein J.A. stated at para. 54:

Courts are motivated to enforce settlements for good reason. As Swan puts it at p. 52 of her treatise, “There are strong policy reasons for the court’s attitude to settlements: it is in everyone’s interest that litigation be concluded by the parties’ agreement.”

[15] In essence, Easa argues that by commencing his application and thereby seeking an order for petition and sale, Abdullah repudiated the minutes of settlement. The reality, however, of Abdullah’s application was relief that sought an order under the Partition Act, but in the alternative also sought enforcement of the minutes of settlement. In my view, the application commenced by Abdullah was not a repudiation of the minutes of settlement. As such, an order shall issue requiring Easa to pay Abdullah the sum of $80,000 out of the proceeds of sale presently being held in trust pursuant to the order of Matheson J. As for the question of costs, counsel for Easa suggested at the conclusion of argument that win or lose an appropriate order of costs as it relates to his client would be $8,400. As for Abdullah, costs were sought in the amount of $16,000 in the event Abdullah was successful, and if Abdullah lost an amount of $10,000 would be appropriate to be paid by Abdullah.

[16] I was not advised that there were any offers to settle that would engage the application of Rule 49. As such, in fixing costs the principle that this Court must consider is what the losing party might reasonably expect to pay in costs. In that regard Mr. Swaine confirmed that his client, win or lose, was content with the figure of $8,400. In my view, an appropriate award of costs in favour of Abdullah would be the sum of $11,000 plus HST and any assessable disbursements. If there are any offers to settle to which I was not made aware at the time of the arguing of this motion, counsel can submit brief written submissions that address this issue.

Justice M.L. Edwards Released: June 30, 2017