Court File and Parties

COURT FILE NO.: 15-55461 DATE: 2018/08/07 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

EMAD ELGUINDY and IRENE ELGUINDY Plaintiffs – and – AZIZ ELGUINDY and AFRODITE ELGUINDY Defendants

Counsel: Self-Represented (for the Plaintiffs) Mitchell J. Bates, for the Defendant Afrodite Elguindy Aziz Elguindy, not appearing or defending this action.

HEARD: May 15, 16, 17, 22, 23 and July 25, 26, 27, and 31 2018.

Turnbull, J.

[1] The plaintiffs Emad and Irene have brought this action claiming the return of $440,000 they allege they advanced to the defendants, their son and former daughter-in-law as a series of loans. These loans are allegedly related to the purchase of an investment property in Innisfil Ontario, the purchase of a residence on Mountain Brow Road, Waterdown Ontario, the advance of $100,000 to the defendant Afrodite to be held in trust for the plaintiff Irene, and miscellaneous other alleged loans. I will deal with each of them in that order.

[2] The defendant Aziz is the son of the plaintiffs and he did not defend the action and he has been noted in default. However, he did testify as a witness, called by the plaintiffs, and generally gave evidence supportive of their position.

[3] The defendant Afrodite, the former wife of Aziz and the plaintiffs’ former daughter-in-law, is defending the action and pleads that any amounts advanced were gifts. The claim was brought in December 2015 immediately after the plaintiffs learned the defendants’ marriage had broken up.

[4] Alternatively, the plaintiffs seek payment of all or part of the $440,000 on the grounds of unjust enrichment and/or breach of trust.

[5] The plaintiffs alleged in the various versions of their statement of claim that they advanced the defendants $190,000 to purchase a house in Innisfil Ontario in 2008 (the Innisville house) and a further $250,000 to purchase a home in Waterdown Ontario (the Mountain Brow House) in 2010. They allege the funds were repayable at the time Afrodite began working as a real estate agent in 2014. They further claim the sum of $100,000 was given to the defendant Afrodite to hold in trust for the plaintiff Irene and which was never repaid to her. There were no documents signed by the parties at the time of the various transfers taking place which would have confirmed their collective intentions.

General Legal Principles:

[6] This case is certainly not unique. The case law is replete with similar situations involving the transfer of funds by parents to children without proper documentation in place. When issues arise and relationships crumble, the parent demands repayment, and surprise, surprise, the child says it was a gift and it does not have to be repaid.

[7] In Jasmins v. Morris, 2016 ONSC 800, Mulligan J. presided over a demand by an alienated mother to have her daughter return $1,000,000 to her. He noted that the principles applicable to these types of cases have been considered by the Supreme Court of Canada in Pecore v. Pecore 2007 SCC 17, [2007] 1 SCR 795. In a nutshell, when a parent gratuitously advances money to a child, there is a presumption that the child holds the funds in a resulting trust for the parent and the onus is on the child to prove that he/she was not obliged to repay the monies advanced. The presumption can be rebutted on a balance of probabilities if there is sufficient evidence adduced by the defendant [1] or otherwise available from the totality of the evidence.

[8] Rothstein J., writing for the majority of the Court in Pecore v Pecore, supra, outlined some of the types of evidence the court may consider in determining the intent of the transferor. [2] They include evidence subsequent to the transfer, bank documents, control and use of funds in a bank account, granting of a power of attorney and tax treatment of the subject property.

[9] In Byrne v. Byrne, 2015 BCSC 318, the court articulated a number of factors to be considered when determining a resulting trust claim, drawing from principles enunciated by that province’s Court of Appeal in Kuo v. Chu, 2009 BCCA 405, citing Locke v. Locke, 2000 BCSC 1300. Those factors can be summarized as follows:

a. The existence of any contemporaneous documents evidencing a loan; b. Repayment provisions specified; c. The existence of any security for the loan; d. Advances to other children; e. Evidence of and demand for payment before the separation of the parties; f. Any partial repayment; g. Whether there was an expectation or likelihood of repayment.

Overview of the Evidence:

Background:

[10] The defendants were married in 2001 and separated in late 2015. This action was commenced against them shortly after their separation. They have three children of their marriage.

Evidence of Aziz

[11] At the outset, I must comment on the evidence of Aziz during this trial. He has reason to support his parents. They provided him money. If his parents get some of their money back, they will once again be able to assist him. He is in matrimonial litigation against his former wife and not surprisingly, their evidence is diametrically opposed on the amounts received and whether such amounts were to be repaid. I have carefully weighed his evidence in that respect, recognizing that in effect, he is nothing but a nominal defendant. I have no doubt that he will never be called upon by his parents to repay any of the funds claimed for the simple reason he is their son though I accept that if he had the ability to do so in the future, he would repay them.

The Innisfil House

[12] The plaintiffs have been married since 1972. In 2007, Emad testified that he had purchased a newly constructed home in Innisfil Ontario. Shortly after buying it, he re-sold it and made a nice profit on the “flip”.

[13] That transaction, being profitable, attracted the attention of Aziz and Afrodite. The defendants, who were living in a home on Aspen Court in Burlington, expressed interest in being able to purchase a home as an investment, but both agreed they did not have the funds to do so.

[14] Emad testified that he and his wife agree to help them out. He stated that to assist his son and daughter-in-law, he purchased a house on Swan Street in Innisfil (the Innisfil house) directly from the builder and signed an agreement with the builder to register it in the names of the defendants. Emad stated that he did that because he was unable to qualify for a mortgage. Afrodite agreed with this in her examination in chief. He noted the house had been purchased for $280,000 plus approximately $23,000 of upgrades for tiles and other finishing items. At the time of the closing of the purchase in April 2008, a first mortgage of $217,000 was registered on title with the defendants named as the chargors.

[15] In his examination in chief, Emad stated that he advanced the defendants approximately $190,000 to permit them to purchase the Innisfil residence.

[16] Mr. Bates agreed that the plaintiffs had advanced $75,000 which was deposited in the defendants’ bank account and from which $72,000 was paid to close the transaction. I find the defendants are bound by the presumption of resulting trust and the defendants have not rebutted that presumption.

[17] Emad also identified a $46,000 deposit made to the defendants’ BMO bank account on April 4th, 2008 and alleged that he made that deposit. [3] Aziz, not surprisingly, supported his father’s testimony. The defendant Afrodite did not testify with respect to that deposit nor was she cross examined on it. I am satisfied that the plaintiff Emad Elguindy has proven that he was the source of those funds, based on his evidence and the relative proximity of the deposit to the time of purchase of the Innisfil property. I find on the evidence that those funds were used by the defendants to partially finance the balance of funds required to close the Innisfil house purchase and hence attract the presumption of resulting trust, which has not been rebutted by the defendants.

[18] Emad Elguindy swore that he again advanced a further $20,000 to the defendants to assist with the purchase and upgrades to the Innisfil house. He again pointed to exhibit ID A, tab 7 which shows a deposit to the defendants’ bank account for that amount on April 17, 2008. I find that the plaintiff Emad advanced those funds to the defendants to facilitate the purchase of the Innisfil home. I find that the presumption of resulting trust does apply to those funds and that presumption has not been rebutted.

[19] Emad also stated that he had advanced a further sum of $68,000 to the defendants to facilitate their ability to obtain a first mortgage at the time of the purchase of the Innisfil residence. However, aside from his bald allegation, no evidence was led that those funds were advanced and received by the defendants. Aziz reviewed the sums received from his parents for the purchase of the Innisfil residence in his evidence and did not even mention any advance of $68,000. The plaintiffs have not proved on a balance of probabilities that the funds were ever advanced to the defendants and/or received by them. Thus, the presumption of resulting trust does not apply to these funds. That claim for $68,000 cannot succeed.

[20] In her examination in chief, Irene stated that either she or her husband had made the aforesaid bank deposits to facilitate the Innisfil house purchase. She seemed very uncertain about that part of her evidence. However, in her affidavit sworn June, 9, 2017 [4], she swore that it was her husband who provided the money to purchase the Innisfil house. I find that it was Emad who made the deposits from an account he controlled or had access to or that he held in his own name.

[21] The house was rented for approximately $1400 per month. The rental payments were deposited to a joint account held by Irene and her son Aziz. Irene made the mortgage payments, paid the taxes and dealt with the associated property maintenance costs. Any funds in excess of the related housing costs were for the use of Irene. That evidence was not disputed. That arrangement lasted for about five years until the mortgage came due. An extract of some of the monthly bank statements of the TD Bank was entered as exhibit 9. The account, registered in the joint names of Irene Elguindy and Aziz, shows some monthly mortgage payments of $1400 being deposited in the account.

[22] Emad testified that when the defendants were originally unable to “flip” the Innisfil house, he suggested to the defendants that they could hold on to it and repay the plaintiffs the monies they had advanced when it was ultimately sold. The defendant Afrodite strongly denies this allegation and testified that at all times it was understood to belong to the defendants. Mr. Bates has submitted that the best evidence of that, aside from the registration of ownership, was the fact that they ultimately increased the mortgage when it came due to assist them in defraying certain outstanding debts. I have no doubt the plaintiffs became aware of that mortgage increase when the monthly mortgage payments which Irene was making had to be increased despite Aziz’ testimony that he and Afrodite tried to keep the increased payments from coming to their attention.

[23] Emad Elguindy stated that the registration of ownership was left that way so that the defendants could enjoy some profit to keep for their children and their education. He agreed that there was no written document to reflect that alleged agreement, no mortgage or promissory note as they simply trusted their son and his wife.

[24] That apparent trust was broken, according to him, when the defendants first remortgaged the house for an increased amount in 2015 without advising the plaintiffs and secondly when they sold the house in July 2016 without the plaintiffs’ knowledge or permission. He estimated that even after the mortgage was increased in July 2015 to approximately $320,500 to pay off their outstanding debts, the defendants ultimately made a profit of $147,000 and not one cent was paid to the plaintiffs.

[25] The Innisfil house was sold on July 5, 2016 for $427,000. The plaintiffs testified that the house was sold without their knowledge but that is difficult to accept because the Agreement of Purchase and Sale was signed in April 2016, a few months after the defendants had separated. The defendants were already involved in matrimonial squabbling over the usual issues: custody, access, child support etc. The statement of adjustments [5] prepared at the time of closing reflects that fact in the various disbursements made from the closing proceeds to lawyers and $14,000 paid to Afrodite pursuant to a child support order. In his cross examination, Emad acknowledged that Aziz did advise him that he and Afrodite planned to sell the Innisfil house as part of their effort to settle the ongoing matrimonial financial issues “without going to court”. I accept that Aziz did keep his parents appraised of the planned sale of that property. I have no doubt they knew of the proposed sale before its actual closing date because by then they had obtained a default judgment (which was ultimately set aside by order of this court) and registered an execution against the defendants.

Analysis:

[26] I find the fact that the bank account into which the rental payments were to be made was in Irene and Aziz’ names is consistent with the plaintiffs’ version of events. All the funds invested into this property were provided by the plaintiff Emad. If the property had been gifted absolutely to the defendants, there would be no purpose for Irene to involve herself in payment of the mortgage and taxes and other associated expenses. Emad Elguindy testified that he was unable to qualify for a mortgage at the time of purchase and that is hardly surprising considering the fact that he was sentenced to a significant prison term of eight years for fraud on October 2, 2008 [6]. I have no doubt that the impetus for Irene and not Emad to be handling the rent and expenses was due to the ongoing fraud charges outstanding against Emad.

[27] I also find that the reason Aziz discussed the proposed sale of the Innisfil house with his father was because he was aware of his father’s right to be repaid from the proceeds of sale. Otherwise, there was no logical reason for him to have discussed the pending sale with his father if it was in fact owned outright by he and Afrodite with no financial obligation to his father.

[28] I accept the evidence proffered by the plaintiffs, particularly that of Irene that the funds provided by Emad for the purchase of the Innisfil home were to be repaid by the defendants. I had little or no confidence in the accuracy or honesty of Emad for reasons explained later in this judgment. I am reinforced in this finding in that the plaintiffs did not also claim any portion of the $147,000 profit enjoyed on the sale of the property. Emad suggested in his submissions that the plaintiffs should be awarded the profits from the sale of the residence on the basis of unjust enrichment because it was intended by the plaintiffs that the profits from the sale would be used for the benefit of the defendants’ children. I do not agree with that contention as the property was registered in the names of the defendants with no designation that it was held in trust. Furthermore, I agree with Afrodite’s evidence that the profits were to be used for the benefit of the family which obviously would constitute a benefit for the children.

[29] The evidence is clear that the defendants continually lived beyond their means and were constantly in debt. Mr. Bates accordingly submitted that the plaintiffs could never reasonably have had an expectation of repayment. While there was not security for the loan in a traditional legal manner, such as a promissory note or second mortgage, the continued ownership of the house and the monthly receipt of rental income deposited into the joint account with Aziz, assured the plaintiffs of the continued existence of the source from which repayment could ultimately be paid. The uncontradicted evidence was that Irene was able to enjoy the use of the excess rental funds in the account each month after the payment of the mortgage. While there was no formal demand for repayment of the funds until after the defendants’ separation, the claim was issued almost immediately which is consistent with the plaintiffs’ evidence that they intended the monies advanced to simply be a loan. I accept the plaintiffs’ evidence that the defendants were to enjoy the profit from the sale of the home for the benefit of their children or themselves after the repayment was made. I accept the evidence of Aziz that he did not repay his parents some of the money from his share of the sale proceeds due to his personal dire financial situation after the marriage breakdown.

[30] It was not disputed that the plaintiff Emad advanced the defendants $75,000 for the purchase of that home. Afrodite did not seriously contest the fact that the two additional sums of $46,000 and $20,000 were advanced for the same purpose. Upon its sale, the defendants were obliged to repay the Emad that sum of money, which is $141,000.

[31] Afrodite’s contention from the time she filed a statement of defence was simply that the plaintiffs claim “had no merit” [7] and that the action was an abuse of process. In her Amended Statement of Defence filed at the outset of trial, she pled that the plaintiffs did not lend the defendants the money to purchase the Innisfil property nor the Mountain Brow Road property. She never explicitly pleaded that funds were advanced, but they were gifts. I recognize the pleadings merely define the issues and do not constitute evidence but they do reflect what I perceived to be “shifting sands” in her defence. At trial, she acknowledged once the issue was raised, that she did receive $100,000 from Irene as trust funds which she improperly allowed to be used for the defendants’ benefit.

[32] With respect to the Innisfil house investment property, I felt that Afrodite was somewhat evasive in her evidence. I have no doubt that she knew why title to the property had to be taken in the names of the defendants. [8] Other than cleaning up some damage and garbage in the residence after some tenants vacated and some general management of the property, she and Aziz did little to manage this property. She knew that Irene was managing the funds and paying the bills relating to the property which I find is consistent with Irene and Emad retaining an interest in the property which transcended an outright gift. I find that Afrodite knew it was an investment property and that she and Aziz were to enjoy the profits from the sale of the residence after the mortgage was paid out and the plaintiffs were repaid the funds they advanced.

[33] In reaching that conclusion, I have carefully considered the factors enumerated in Pecore v Pecore, supra [9] and Byrne v. Byrne, supra [10]. On the totality of the evidence and having had the opportunity see and hear the parties testify on this issue, I am satisfied that the plaintiffs at all times intended to loan the funds to their son and daughter-in-law and that the defendants knew this money was to be repaid without interest upon sale of the residence.

[34] The defendants have failed to rebut the presumption of resulting trust with respect to the $141,000 advanced to purchase the Innisfil house investment property. From that sum, $11,000 should be deducted and credited to Afrodite with respect to the funds garnished from her and deposited by Emad in his account.

[35] Hence, the plaintiff Emad Elguindy is entitled to judgment of $130,000 from the sale proceeds of the Innisfil house.

The Mountain Brow Road House (MBR house)

[36] In 2010, the defendants were living with their children in a home they had purchased in 2002 on Aspen Court in Burlington. The plaintiff Emad was safely ensconced in a prison cell in the penitentiary system after receiving an eight year sentence for fraud.

[37] The defendants decided to sell their home and purchase a larger home on Mountain Brow Road, Waterdown Ontario. The MBR house was purchased for $660,000 in 2010.

[38] The defendant Afrodite explained how the financing of the MBR house was effected. The Aspen Court residence sold for $405,000. They applied the net proceeds of $69,993.73 of that sale to the purchase price. Her parents then gave her and Aziz a gift of approximately $30,000 to help with the purchase. Afrodite (allegedly) used $25,000 of her RRSP funds as a first time homebuyer, which is difficult to understand as she and Aziz owned a family residence on Aspen Court. They obtained a first mortgage against the MBR residence of $528,000. The balance of the funds needed to close came from a draft for $54,478.12 which Aziz provided from his account. There was not serious argument from Afrodite that these funds came from his mother.

[39] Shortly after the defendants’ took possession of the MBR house in July 2010, Irene moved in and lived with them, her private area remaining in the basement of that home. She lived with them until about 2014 when she moved to an apartment on Maple Street in Burlington where she recommenced habitation with her husband upon his release from prison. Afrodite testified that she did not think the defendants needed to repay the plaintiffs for the $54,478.12 because Irene was going to move into the residence and live with them.

[40] The plaintiffs gave differing versions of how the purchase of the MBR house was financed. Irene stated that she received an inheritance from a friend named Dorothy Taylor shortly before the time of this purchase by the defendants. This rather large inheritance was to be received in two or three payments and the first amounted to $172,972.08 [11]. She testified that the defendants knew she was inheriting this money and they asked her to help them out with the purchase of the MBR house. She complied with their request and allegedly transferred those funds to the defendants by simply endorsing the bank draft. To support that contention, the plaintiffs produced a very poor and faint copy of a bank draft payable to Irene for that sum of money. [12] A copy of the back of the document, showing deposit details and her endorsement was not provided. Aziz certainly would have known into which of the defendants’ accounts it was deposited but he had not provided copies of the bank statements which would have proved such a deposit occurred.

[41] The plaintiffs have not given me details to prove that the $172,908 inheritance was given to the defendant Afrodite, or Aziz for that matter. Emad stated in his examination in chief that the $54,478.12 paid to Haber and Associates [13] on June 25, 2010 was drawn from the $172,987.00 and that the $$54,478.12 was not a separate claim but included in the $172,987.00 alleged advance. I am not satisfied on the evidence provided by the plaintiffs that the $172,987 bank draft was in fact advanced to the defendants as asserted. The plaintiffs have not properly produced all relevant banking documents which should have been available to them at the time of the alleged transfer. Such documents might prove on a balance of probabilities that the amounts claimed were in fact withdrawn from one of their accounts at a date proximate to the alleged advance. Interestingly, even the bank statements for the bank account from which this $54,478.12 bank draft was drawn have not been produced by the plaintiffs. If it was drawn from an account of the defendants, presumably the same one as into which the $172,987 had allegedly been deposited, as noted above, I would have expected Aziz to have obtained the relevant bank statements to help out his parents. He testified that he had attempted to get bank records from the various banks but after seven years, he said that he was advised the bank destroys such records. This action was commenced in 2015 and he has not produced any evidence of his efforts to obtain the bank records nor any verification from the bank or banks that the accounts no longer exist.

[42] I accept Afrodite’s evidence with respect to how the purchase of the MBR house was financed. I further accept her evidence that there was never any discussion between Irene and the defendants with respect to repayment of the funds advanced by her to purchase the house. There may have been an expectation of repayment on Irene’s part but that was not communicated to the defendants. She was clearly confused with respect to how the $172,908 bank draft was handled. I reject her evidence relative to the purchase of the MBR residence.

[43] When the defendants had purchased their original home on Aspen Court in Burlington in 2002, the plaintiffs gave the defendants a $50,000 gift to assist them to purchase it. I find that the same intention existed when Irene provided $54,478.12 to allow the defendants to have sufficient funds to close the purchase. Irene was going to be moving into that residence to live with the defendants while Emad was serving his prison sentence.

[44] She did not demand any security for her alleged loan. Unlike the Innisfil investment home, the defendants provided the very great majority of the funds themselves. The house was registered in their names and Irene nor Emad had anything to do with managing mortgage payments, tax or insurance payments or maintenance costs.

[45] I am satisfied that the defendants have rebutted the presumption of resulting trust.

The Advance of $100,000

[46] During the course of this trial, the plaintiffs were granted leave to amend their statement of claim to plead that $100,000 was advanced to the defendant Afrodite to be held by her in trust for the use of Irene. The trial was adjourned to permit both parties to produce bank records and to conduct examination on the issues surrounding this claim in early June, 2018. I clearly directed in court on the record that the plaintiff Emad was to be examined first, and the defendants were to be examined later the same day. I directed that if a problem with this procedure was to arise, the trial co-ordinator was to be immediately contacted to arrange a telephone conference call with me. Both parties did not comply with this order. On the date of the examinations, Mr. Elguindy refused to be examined first. After an inappropriate loss of temper by Mr. Elguindy, Mr. Bates and Afrodite left the office where the examination was to take place. I was never notified of this aberration in the proposed schedule and hence, when this matter returned for trial continuation in July, examinations and proper productions had not taken place. Both parties were guilty of improper production and failure to comply with the court order.

[47] Afrodite agreed in her examination in chief that the plaintiff Irene had asked her to hold $100,000 in trust for her and one way or another the funds were deposited into an account opened in the names of her daughter Zoe, Aziz and herself. The various versions of how and where the funds were transferred differed and do not detract from the fact that Afrodite was to hold those funds in trust for Irene.

[48] Emad stated that his wife treated her daughter in law Afrodite like a daughter. Afrodite agreed that she always had a good relationship with her mother-in-law. Emad recalled that, in his presence in their Maple Avenue apartment, his wife gave the defendant Afrodite a cheque for $100,000 to keep the money in safekeeping for her in her bank account. Frankly, I reject that evidence for several reasons. First, there is no evidence of such a cheque being drawn on any of the partial banking statements produced by the plaintiffs. Secondly, both Irene and Afrodite agreed that one of the purposes in transferring $100,000 to Afrodite was to keep the money far from the grasp of the plaintiff Emad. [14]

[49] This is contrasted with his wife’s evidence on the point. Irene stated that she was fearful that her husband, when released from prison in the very near future, would get hold of the money she had inherited and dissipate it. Hence, she requested her daughter in law Afrodite to take $100,000 and hold it in safe keeping for her where she and her husband Emad could not easily get their hands on it.

[50] The defendant Afrodite denies that occurred. She recalled that while Irene was living with the defendants, Irene and Aziz were afraid that Emad would want to get his hands on her money. Irene purportedly told Irene that she did not want to be able to access the funds by debit card and that she wanted her daughter in law to deposit the funds in an account in her (Arfodite’s) name so that the funds would be available for Irene when she needed them. Afrodite stated that Aziz was given the money and instead of being deposited as requested by Irene, it was deposited in a joint account held in the names of her daughter Noe, her husband and herself. That money was mixed with the defendants’ funds and used by them from time to time as needed. Afrodite openly testified that when they were short of funds, she and Aziz would borrow from that account and then repay the money.

[51] Afrodite nor Aziz ever produced the account statements for the bank account into which the $100,000 was deposited. They had a positive obligation to do so in litigation such as this. They further had an obligation to keep these funds segregated from their own funds and not to use those funds for their own purposes. The beneficiary of that trust, Irene, has a right to know where the money was deposited from time to time and if it was used in other ways by the defendants aside from their acquisition and sale of the Humphrey Street property.

[52] Afrodite testified that she and her husband had taken some of their own money and together with the $100,000 received from Irene, they purchased an investment property at 158 Humphrey Street in Waterdown Ontario. After owning the property for a short while, they sold it in May 2013. The reporting letter from their solicitors on the sale was entered as exhibit 7 and the statement of adjustments at page 4 of that exhibit shows the sum of $163,500.45 was paid to Aziz. At page 8 of exhibit 6, that exact amount was deposited into the BMO account held jointly by Zoe, Aziz and Afrodite. Those funds were gradually spent so that by October 2014, there was only about $17,000 left in the account. Afrodite agreed that that balance was transferred to the use of Aziz and herself to reduce their joint line of credit instead of being repaid to Irene.

[53] In her cross examination, Afrodite agreed that without the use of Irene’s money, they could not have made a profit on that property flip. She suggested in her evidence that Irene “fronted” the transaction, as if to suggest that Irene knew it was occurring. I totally reject that evidence. Irene testified that the $100,000 was the last of her money and so she wanted it kept by Afrodite in an account controlled by her.

[54] Irene further stated that she believed certain sums were repaid to her mother-in-law when requested but she could not verify when or how much.

[55] Irene denied she ever received such funds and first realized there might be problem when time she requested $25,000 to purchase a car and the funds were not forthcoming.

[56] The plaintiffs produced exhibit 9 pursuant to my mid-trial order that each party produced bank records for all their bank accounts for the relevant periods. That exhibit contains some monthly bank statements of a TD Bank account held jointly by Aziz and Irene for the period from January 1, 2013 to December 31, 2014. The true beneficial owners of that account were Emad and Irene. However, there are a significant number of pages missing in the print out and in particular there are no statements covering the period May 13, 2013 to December 31, 2014. Emad advised the court that those copies were all that the bank produced for him. That statement defies credibility as far as I am concerned. I do not accept his statement that the bank was able to provide him with copies for the early part of that time period and the end of it but the interim period was not available. The missing pages cover the very period after the defendants sold the Humphrey Street house and deposited $163,000 in the BMO account jointly held in the names of Zoe, Aziz and Afrodite. Afrodite said that certain payments were made from those monies to Irene when requested but she was unable to identify them from her bank statements for that account. If the account statements of the plaintiffs had been fully produced, deposits into their accounts corresponding date wise with withdrawals from the defendants accounts would have allowed the number and amounts of such alleged repayments, if any, to be determined.

[57] Exhibit 10 confirms my concerns in that respect. It is an email exchange between Emad and Mr. Bates. In that email, Emad produced certain bank print outs for the TD Bank account. Two days after receiving those productions, Mr. Bates complained in a reply email that only the statements for January to May 2013 had been produced and he demanded about the rest of the documents. Emad replied “the account was closed apparently as the bank did not find more documents in that account”. That response has no air or reality or truth as exhibit 9 clearly shows the account was still open as of December 31, 2014. The period of time for which the banking statements were missing from May 13, 2013 to Dec. 31, 2014 coincides with the defendants’ deposit of $163,000 to their BMO account. I draw an adverse inference against the plaintiffs with respect to this incomplete production of records and infer that the documents were likely not favourable to the plaintiffs’ case.

[58] Regardless of whatever version of events one accepts with respect to when the $100,000 was advanced, it is clear those funds were advanced to Afrodite to be held in trust by her for the benefit of Irene. Not only did she improperly co-mingle the funds with those of the defendants, she and Aziz converted the funds to their own use without Irene’s knowledge or consent. The defendants have provided no documentary proof that any of those funds have been paid out to Irene for her use. As a trustee, she has a duty to account to the beneficiary of the trust.

[59] The $100,000 constituted trust funds. They have not been repaid. They were improperly used by the defendants to invest in the Humphrey Street property flip and apparently made a $63,000 profit on that transaction. In using the funds of the plaintiff without the knowledge or consent of the plaintiff Irene, they were unjustly enriched by $63,000.

[60] In Kerr v Baranow, 2011 SCC 10, the Supreme Court of Canada articulated at paras. 36-39 the three prerequisites to found a claim in unjust enrichment. First, the defendant must be enriched by the plaintiff. Second, a corresponding deprivation must be suffered by the plaintiff. Third, there is no juristic reason for the enrichment and corresponding deprivation.

[61] I find that the defendants have been unjustly enriched by the improper and unauthorized use of Irene’s funds in the acquisition and sale of the Humphrey Street property. They then appropriated the profits of $63,000 plus some of the $100,000 entrusted to Afrodite to their own benefit.

[62] The plaintiff Irene Elguindy is prima facie entitled to the benefit of the $163,000. She is not entitled to pre-judgment interest because the claim for the $100,000 was not clearly identified in the pleadings until the mid-trial amendment to the Statement of Claim was granted by me.

[63] However, I also accept that Afrodite’s evidence that some of the funds were repaid to Irene from time to time at Irene’s request is true and in reaching that decision, I apply an adverse inference against the plaintiffs for their failure to provide bank statements for the period from May 2013 to December 2014 which very well may have allowed a proper calculation of those amounts.

[64] In the circumstances, I find that because of the misbehaviour of both parties with respect to these funds and the production of documents to assist the court, a best estimate of the funds advanced to Irene is $25,000 which shall be deducted from the funds otherwise payable to her.

[65] In the circumstances, the plaintiff Irene shall have judgment with respect to the $100,000 advanced as trust funds in the sum of $138,000.

Miscellaneous Advances:

[66] The plaintiff Irene inherited a significant amount of money from a close personal friend. The plaintiffs allege that aside from the funds loaned to the defendants as outlined above, they made other miscellaneous loans to the defendants to help them with their financial problems over the years which have never been repaid.

[67] On the evidence in this case, there is little doubt that the defendants were spending far in excess of their means. Their credit card debts are significant as evidenced in the 2015 refinancing agreement for the Innisfil home [15] and show a clear pattern of incurring excessive debt with the associated high interest rates that inevitably come with credit card overspending.

[68] Emad identified a bank draft issued in favour of Aziz in November 2008 for the sum of $23,870 [16] as an example of funds advanced to assist the defendants due to their extravagant life style. However, I was given no details of what this money was used for, whether the defendant Afrodite was even aware of it being advanced and what the specific agreement, if any, was for its repayment. I am not satisfied on the evidence that this was a loan or even a gift to the defendants. Aziz never produced the bank account into which the funds were allegedly deposited for the benefit of the defendants nor did he explain how the funds were allegedly used.

[69] In his cross examination of Afrodite, Emad drew her attention to exhibit 8 which is a series of account statements from the TD Bank account of his wife Irene. He suggested to the defendant that the two withdrawals on July 14, 2014 from that account totaling $97,000 were given to the defendants. Afrodite denied that she or Aziz had ever received those funds. I accept her evidence on that point. The plaintiffs have not proved on the balance of probabilities that those funds were ever given to either one of the defendants and hence the presumption of a resulting trust does not even come into play.

[70] I am further not satisfied on the evidence that the plaintiffs have proved that there were any other advances made by the plaintiffs to the defendants. In their statement of claim, the plaintiffs had claimed $190,000 was advanced for the purchase of the Innisfil house. That was an overstated number. They claimed $250,000 was advanced for the purchase of the MBR house but that was significantly overstated based on my findings. The $100,000 trust fund transfer was not even mentioned in the pleadings and only identified at trial. The plaintiffs’ records were lacking. Their recollection of events was also lacking and sometimes inconsistent.

Payment of the Judgment

[71] As I finalized this ruling, I have taken into consideration that a large sum of money may ultimately be directed to Emad Elguindy from the proceeds held in court to the credit of this action.

Evidence of Emad Elguindy:

[72] Mr. Bates has urged the court to consider the evidence of Emad very skeptically based on a number of factors. I have done so as I have considered my judgment in this matter.

[73] Emad was confrontational and non- responsive to many questions during his cross examination and certainly argumentative from time to time. He admitted doing cash contracting work. He admitted appropriating $11,000 garnished from Afrodite after the default judgment upon which the garnishment was founded had been set aside. He justified that as being a relatively minor amount of money compared to the $440,000 he argued was owed to the plaintiffs by the defendants.

[74] In the proceedings before Langdon J. in 2008 in which he was given a penitentiary sentence, Emad advised the court that the funds which he had improperly taken from a disabled man were in a bank account in Egypt, but could not be accessed due to currency restrictions imposed by the Egyptian government. Langdon J. gave no credence to that evidence nor virtually any evidence offered by the defendant. [17]

[75] However, in April 2008, just six months before his sentencing, Emad Elguindy has testified in this case that he (emphasis mine) had given $190,000 to the defendants to permit them to purchase the Innisfil house.

[76] In an affidavit sworn by him on June 9th, 2017 [18] with respect to an interlocutory proceeding in this matter, he swore as follows:

9. The purchase price for the 1959 Swan Street was, as I recall, $285,900. I paid a down payment of $10,000 at the very beginning then $15,000 in January 2008…
10. On April 5, 2008 I deposited in the defendants’ joint account no. 38713016-946 the amount of $46,000. On April 9, 2008 I deposited in the Defendants’ joint account a further $75,000. The defendants initially had not qualified for the mortgage before $68,000 was to be paid on a line of credit they advised me of at that time. I paid them another $68,000.

[77] At the trial of this action, he said the funds came from both he and his wife. However, on her own evidence, Irene stated she had only worked for three years in Ontario before permanently retiring during the 1980’s. She did not receive her inheritance until 2010. Emad has not produced the bank statements from which those funds were allegedly advanced by him, nor has his wife. As noted above, I have no doubt that it is Emad Elguindy who funded the loans to purchase the Innisfil home.

[78] There is just one problem with all this. As he sentenced Emad Elguindy in October 2008, Langdon J. noted the following at page 14: [19]

It is interesting that Mr. Elguindy suggests that Mr. Orchard pursue him civilly. Of course he has told us he has no assets in Canada, and nothing abroad, and anything he may have here or abroad is in his wife’s name.

[79] In my view, Emad Elguindy probably perjured himself before Langdon J. as he knew that at the very least, he had a right to repayment of the loans he had made to the defendants.

[80] At para. 22 and 23 of the his affidavit sworn October 22, 2017, Emad swore that he started this claim in December 2015 immediately upon learning from his son Aziz that the Innisfil home had been sold by the defendants for $427,000 without the consent or knowledge of the plaintiffs. On the evidence before this court, that evidence is false. The agreement to sell the property was not signed until April 2016 and the closing took place in July 2016.

[81] The affidavits of Aziz [20] and Irene [21] also sworn June 9, 2017 parrot the same misinformation as contained in the affidavit of Emad with respect to why and when this action was commenced.

[82] It is apparent to this court that Mr. Emad Elguindy has been the orchestra leader in preparing this case and presenting it, from day one. It is apparent to me that Irene and Aziz have tailored their evidence to confirm the position taken by Emad in this matter.

[83] Because of the restitution order made against Emad Elguindy by Langdon J. in 2008 as found in exhibit 2, I do not feel that the funds can be properly released without the court dealing with that restitution order, which is an order of this court. I feel that is particularly important in this case as a judge of this court has already dealt with Emad Elguindy for causing a large sum of money to disappear which did not belong to him. Accordingly, I direct that:

a. A copy of this judgment and a copy of the Proceedings at Trial before the Honourable Mr. Justice Langdon dated October 2, 2008 be delivered to the Crown Attorney at Brampton Ontario. b. that the Office of the Crown Attorney at Brampton attempt to contact the victim of the 2008 fraud conviction, Garry Orchard, to determine the following information for this court: i. Is Garry Orchard still alive? ii. If not, has his will been probated or his estate administered? Are the Estate Trustees or Administrators willing and available to attend before the court if they wish to pursue payment of the restitution order? iii. Has Garry Orchard been paid any money in accordance with the restitution order? iv. Does Mr. Orchard wish to appear before this court in person or with counsel to advise this court with respect to the status of payment of the restitution order and related procedural issues? If so, his full mailing address and phone number should be provided to the court to facilitate any scheduling arrangements which have to be made.

[84] I am requesting the office of the Crown Attorney in Brampton, Ontario to advise me as quickly as possible in writing of any of the aforementioned information addressed to the Office of the Superior Court of Justice in the John Sopinka Courthouse in Hamilton.

[85] Upon receipt of this information from the Crown Attorney, an addendum to this judgment will be released. Until further order of this court, and until all appeal periods have expired or all appeals have been heard, the funds paid into court shall remain in court.

Abuse of Process:

[86] The defendant Afrodite claimed that this action was an abuse of process and was simply brought to provide Aziz leverage in his matrimonial lawsuit against her. I reject that this action constitutes an abuse of process. If nothing else, the defendants’ improper use of Irene’s $100,000 rebuts that assertion.

Pre Judgment Interest

[87] The plaintiffs are not entitled to pre-judgment interest on the amounts awarded to them. They only claimed pre-judgment interest in their Fresh As Amended Statement of Claim filed with leave of the court on May 16, 2018. They are entitled to post-judgment interest on their judgments at the rate prescribed under the Courts of Justice Act and any regulations thereto.

Costs:

[88] The plaintiffs, though self- represented, seek their costs of this action. They have been partially successful in this action but not totally so. The trial has been protracted due to the failure of the plaintiffs to properly plead the details of the damages claimed. They have failed to produce documents which would have facilitated the presentation of their case and an understanding of it by the defendants. Their failure to produce documents and to have their pleadings clearly articulate that part of their claim was for the $100,000 entrusted to Afrodite, denied the defendant Afrodite the ability to make a meaningful Rule 49 Offer to Settle before trial.

[89] While certainly self-represented parties have the right to be awarded costs in particular cases, I do not think that this is one of them. The legal costs of Afrodite have been significantly increased due to their incomplete pleadings which necessitated a mid-trial amendment. They also have added to the cost and delay of the trial by their incomplete production of documents.

The plaintiffs and defendants shall bear their own costs. The costs of the defendant Afrodite shall be paid from the funds available to the defendants prior to any division of the funds between Afrodite and Aziz. Part of the reason this trial took so long was the failure of Aziz to participate in a meaningful way, including providing production of bank records and other documents to assist the court. Furthermore, Afrodite has been partially successful resulting in some of the funds in court being available to the defendants for allocation to them in their family law litigation. Aziz will benefit directly or indirectly from that success. He therefore should bear part of its cost.

Conclusion:

[90] The plaintiff Emad Elguindy shall have judgment against the defendants in the sum of $130,000, payable from the funds in court to the credit of this action, subject to further order of this court in accordance with comments above under the heading “Payment of the Judgment”.

[91] The defendant Afrodite Elguindy shall have judgment for $11,000 payable from the funds in court to the credit of this action, subject to further order of this court in accordance with comments above under the heading “Payment of the Judgment”. [22]

[92] The plaintiff Irene Elguindy shall have judgment against the defendants in the sum of $113,000, payable from the funds in court to the credit of this action, subject to further order of this court in accordance with comments above under the heading “Payment of the Judgment”.

[93] The balance of the funds in court to the credit of this action shall remain in court until further order of a Judge of the Superior Court of Justice.

Turnbull, J.

Released: August 7, 2018

Footnotes

[1] Pecore v. Pecore, supra, at para 44. [2] Pecore v Pecore, supra at para. 55 to 68. [3] See exhibit ID A, tab 6. [4] Exhibit 5, para. 6. [5] Exhibit ID B, tab 21. [6] Exhibit 2: Reasons for Sentence imposed by the Honourable Justice Kenneth Langdon of the Superior Court of Justice. I have never seen any party in any case, other than the worst cases involving bodily harm or death to another, described so harshly by a Judge, and I might add, based on the facts recited in the transcript of the reasons, very appropriately. As I read these reasons, I must state that I question if the funds allegedly loaned to the defendants in this case, in fact came from the victim of Mr. Elguindy’s fraud, Garry Orchard. Another motivation for Emad Elguindy not wanting any property registered in his name may have been his desire to avoid execution of a restitution order which he undoubtedly knew would be made if he was found guilty of fraud. [7] Paragraph 10, Statement of Defence. Trial Record, tab 4. [8] While not determinative of this finding, it is interesting that in 2013 when the defendants used the funds of Irene to purchase an investment property on Humphrey Street, the registration of the ownership was in her parents’ name because the defendants could not qualify for a mortgage. [9] At paragraph 8 of these reasons. [10] At paragraph 9 of these reasons. [11] See exhibit ID A, tab 8. [13] See exhibit ID A, tab 11 [14] That is not difficult to understand when one considers his extensive record for fraud and dishonesty which are so eloquently articulated by Langdon J. in his reasons for sentence found at exhibit 2 of these proceedings. [15] Exhibit ID A, tab 12, page 32. [16] Exhibit ID A, tab 13. [17] Exhibit 2: Transcript of Reasons for Sentence. [18] Exhibit 3. [19] Exhibit 2, page 14, first paragraph. [20] Exhibit 4. [21] Exhibit 5 [22] Strictly speaking, Afrodite did not include a counterclaim for this amount in her pleadings. However, it is evident that she is entitled to return of the $11,000 from the plaintiff Emad Elguindy and she should not be required to incur further time and expense to initiate and pursue legal proceedings for that remedy. In making this order, I am guided by Rule 1.04 which requires the court to make orders to permit the most expeditious and least costly means to allow issues to be finalized.