ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Syed Mansoor Ali Naqvi Applicant/Moving Party
– and –
Quratulaien Adil Respondent/Responding Party
COUNSEL:
O. Ogunniyi, for the Applicant/Moving Party
A. Farooq, for the Respondent
HEARD: February 2, 2018
BEFORE: Woodley, s. j.
ENDORSEMENT ON MOTION
Overview
1The Applicant, Syed Mansoor Ali Naqvi (Mr. Naqvi), has brought a motion for partition and sale of certain property registered in the name of the Respondent Quratulaien Adil (Mrs. Adil) that is used by Mrs. Adil, her husband, and their two minor sons, as their family home.
2Mr. Naqvi claims to be entitled to the relief as a 50% beneficial owner of the property pursuant to a Trust Agreement dated January 25, 2015.
Issue
3Is the Applicant, Mr. Naqvi, entitled to the relief sought by the motion?
Facts
4In January of 2015, Mrs. Adil and her husband were contemplating purchasing a new home from a builder.
5In or around this time, Mrs. Adil was approached by Mr. Naqvi, who proposed that he would jointly purchase the home with Mrs. Adil, by way of a partnership.
6Mr. Naqvi, drafted a Trust Agreement, and presented the Trust Agreement to Mrs. Adil for signature.
7Mrs. Adil executed the Trust Agreement without amendment and without obtaining any legal advice.
8By way of background, Mr. Naqvi has a Masters’ Degree in Philosophy, a PhD in Chemistry, is the president and CEO of the business MBBP that purportedly has thousands of members, is a licensed insurance agent, is a licensed real estate agent, and is the owner of a real estate brokerage company with 103 employees.
9Mrs. Adil is a stay at home mother to her two sons. She has a B.A. from Karachi, Pakistan in computer science. Mrs. Adil’s mother tongue is Urdu. English is Mrs. Adil’s second language.
10The Trust Agreement, drafted by Mr. Naqvi is dated January 25, 2015, and is written in English.
11The Trust Agreement dated January 25, 2015, provides as follows:
a. Mrs. Adil will take title to the property in her name alone;
b. Mrs. Adil is said to hold a 50% interest in the property for Mr. Naqvi;
c. Mrs. Adil is required by the Trust to convey a 50% share in the property to Mr. Naqvi in the event that: i. Mr. Naqvi requests a transfer; or ii. upon Mrs. Adil’s death.
d. Mr. Naqvi has the right to transfer or sell his interest to the property if Mrs. Adil no longer wishes to hold Mr. Naqvi’s share in trust.
e. Mr. Naqvi is responsible for payment of 50% of all mortgage payments, mortgage pre-payments, utilities accounts, insurance, common expenses, repairs and property taxes
f. Mrs. Adil is to execute a Will to distribute Mr. Naqvi’s interest to him upon her death; and
g. Neither Mr. Naqvi nor Mrs. Adil may sell or transfer their share of the property without the express written consent of the other party.
12According to the affidavit evidence filed on the motion:
a. Mr. Naqvi has never requested a transfer of his 50% interest;
b. Mrs. Adil has never advised that she no longer wished to hold Mr. Naqvi’s share in trust;
c. Mr. Naqvi failed to pay 50% of the property expenses as required by the Trust immediately following purchase and on an ongoing basis to date;
d. Mrs. Adil does not consent to the sale of the property as it is her family home; and
e. As required by the Trust, Mrs. Adil executed a Will that leaves 50% of the property to Mr. Naqvi on her death.
13The affidavit evidence also disclosed the following further information:
a. The purchase price of the property was approximately $400,000;
b. Mrs. Adil obtained a mortgage of approximately $380,000 from the builder on closing. The mortgage is registered in Mrs. Adil’s name alone. Mr. Naqvi did not co-sign or guarantee the mortgage and has no exposure to any risk on the mortgage;
c. Mrs. Adil and her husband had the required $40,000 down payment that was required to purchase the property from the builder and intended to purchase the property on their own. However, shortly prior to the closing Mrs. Adil was frightened into thinking that they would lose the property and so she entered into the “partnership” Trust Agreement with Mr. Naqvi;
d. To date Mr. Naqvi has contributed approximately $35,000 to the purchase and payment of expenses relating to the property;
e. Mr. Naqvi claims that Mrs. Adil attempted to sell the property without his knowledge and that another unnamed realtor told advised him of this fact (hearsay). Mrs. Adil denies this claim and advises that she has no intention of selling the property as it is her family’s home. Her intention as evidenced by the Trust Agreement and her Will is to live in the property forever or until her family wants to move, which they do not;
f. Mr. Naqvi claims that Mrs. Adil breached the terms of the Trust through the registration of a second mortgage. Mrs. Adil denies any breach and notes that the Trust contains no prohibition against her obtaining financing. For example – she solely obtained the first mortgage of $380,000 which was not contemplated by the Trust and there was no claim of breach. Therefore the second mortgage also cannot be deemed a breach. In any event, Mrs. Adil claims that the necessity of the second mortgage was caused by Mr. Naqvi’s failure to contribute 50% to the expenses. Mrs. Adil notes that the second mortgage is in good standing and does not affect Mr. Naqvi’s interest; and
g. Mrs. Adil claims that it is Mr. Naqvi who has breached the Trust through his ongoing failure to pay 50% of the expenses following which he then moved to void the agreement to sell the home and obtain a profit - which relief is NOT contained in the terms of the Agreement nor ever discussed between the parties.
14While no appraisal or opinion of value was filed with the Court, counsel advised that it is estimated that the value of the home has increased by approximately $200,000, since its’ purchase.
15If I were to allow Mr. Naqvi’s motion, the result would be that Mrs. Adil’s family home would be sold and the profits divided 50/50 (subject to adjustments). Mr. Naqvi would obtain approximately $100,000 as a return on his original $35,000 investment. This payment would seemingly be tax free as the home is registered solely in Mrs. Adil’s name and as such is subject to the principal residence tax exemption as Mr. Naqvi has never requested that his interest be registered on title.
The Parties’ Positions
Mr. Naqvi’s Position
16Mr. Naqvi claims to have an equitable interest in the property pursuant to a presumption of resulting trust.
17Mr. Naqvi further claims entitlement to the sale of property as a “person interested in land” pursuant to s. 3(1) of the Partition Act, R.S.O. 1990, c. P. 4.
18Mr. Naqvi relies upon authorities to assert that his right to partition and sale can only be refused in exceptional circumstances where the opposing party has established that there has been “malicious, vexatious, or oppressive conduct”. (See Greenbanktree Power Corp. v. Coinmatic Canada Inc. (2004), 2004 CanLII 48652 (ON CA), 75 O.R. (3d) 478 (C.A.) and Wise Enterprises Inc. v. J. Weiss Investments Ltd., 2017 ONSC 5468.)
Mrs. Adil’s Position
19Mrs. Adil claims that the Trust Agreement is valid and that the parties are bound by the terms of the Agreement which do not allow the partition and sale of land as requested by Mr. Naqvi.
20Mrs. Adil further asserts that the Partition Act is not applicable as Mr. Naqvi has no right to immediate possession of the property and that Mr. Naqvi’s rights are limited by the Trust Agreement to receive a transfer of the shares upon request (which he has never done) or upon Mrs. Adil’s death.
Analysis
21This motion, if granted, would determine the application and there would be no further proceeding before the court excepting a reference to divide the proceeds of sale of the property between the “owners” of the property.
22Mr. Naqvi seeks relief from the court of equity. He seeks a declaration that he is the beneficial owner of 50% of the property and then he seeks enforcement of those provisions of the Partition Act that would force the sale of the property.
23Mr. Naqvi, however, is not entitled to equitable relief on motion to this Court, due to the following:
a. Mr. Naqvi comes to the court of equity with unclean hands (having failed to pay 50% of the expenses as required by the terms of the Trust Agreement and then moving for a sale not contemplated by the terms of the Trust Agreement);
b. Mr. Naqvi claims to be entitled to a beneficial interest by way of resulting trust when there is clearly a written Trust Agreement that dictates the rights of the parties. This is known as an express trust (not a resulting trust) and it is this trust, drafted solely by him in English, presented for signature to the Respondent whose first language is Urdu, that governs the rights of the parties subject to the Trust Agreement being (i) valid; and (ii) properly interpreted;
c. The validity of the Trust Agreement has not been determined by the Court. Regardless of the views of the parties – the Trust Agreement may be invalid due to any number of factors including but not limited to: oppression; imbalance of power; duress; non est factum; or lack of certainty of intention;
d. The determination of whether the Trust Agreement is valid is a matter of fact and law to be determined by the Court regardless of the views of the parties. This is especially true given the facts and circumstances of this case;
e. There are vital facts in dispute in this application which go to the core of the validity and interpretation of the Trust Agreement (knowledge, approval, intention, duress). This application cannot be determined on a motion and further cannot be determined by a review of affidavit evidence. Viva voce evidence is required for the hearing of this application which necessarily requires the application to be converted to a trial prior to any hearing date being obtained from the court;
f. If the Trust Agreement is determined to be valid, an interpretation of the terms is required to determine if the Applicant is entitled to the relief that he seeks;
g. If the Trust Agreement is found to be invalid, or if the Applicant’s failure to pay 50% of the expenses is an intentional or flagrant breach of trust, it may be that the trust is invalid or void and the Applicant entitled only to repayment of the funds “loaned” by him to date or any other forms of alternative relief;
h. Even if the Applicant were to prove that he is a person interested in land and that the terms of the Trust Agreement do not limit the application of the Partition Act, there may exist exceptional circumstances that prove that the acts of the Applicant were malicious, vexatious or oppressive such that the sale may be refused in any event; and
i. It is unclear, whether Mr. Naqvi, as an insurance broker, a realtor and/or a real estate brokerage owner, is entitled by professional rules of conduct or professional restrictions from purchasing an alleged enforceable “unregistered” interest in a property by way of the Trust Agreement, regardless of the validity or any interpretation of the Trust. Clarification of the validity of the purported purchase by an insurance agent, licensed realtor, and real estate brokerage owner is required.
24It is clear that there are crucial facts in dispute that relate to the conduct and intention of the parties, the validity of the Trust Agreement, and the interpretation of the Trust Agreement.
Disposition of Motion
25The relief sought by the Applicant may be available in some cases by motion to the court. However, in the present case, equity, procedural fairness and the administration of justice require that the matter proceed by way of a full and proper hearing on the merits with viva voce evidence before the sale of the home can be ordered and before the Applicant’s name is placed on title to the property in any manner.
26The motion by the Applicant is hereby dismissed.
27Leave is granted to allow the Respondent to temporarily lift the Certificate of Pending Litigation to enable refinancing of the first and/or second mortgage when necessary without requiring the consent of the Applicant, provided there is no increase in the total amount currently registered against the property. The Certificate will be replaced following registration of any such required refinancing.
28Subject to any offer that may affect costs, the Respondent shall be entitled to her costs for the motion. The Respondent shall file her costs submissions, limited to four (4) pages, together with any written offer to settle exchanged between the parties that may affect costs, and together with a Bill of Costs, within 30 days of today’s date. The Applicant shall file his Reply limited to
four (4) pages, together with any written offer to settle that may affect costs, together with the Applicant’s Bill of Costs, within 45 days of today’s date. Any further Response by the Applicant shall be limited to two (2) pages, filed within 60 days of today’s date.
Justice Susan J. Woodley
Released: February 5, 2018