SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-17-4968 DATE: 2020 04 27
ONTARIO
BETWEEN:
Ketan Jansari and Kalpana Jansari Applicants
AND:
Manish Jansari and Neha Jansari Respondents
COUNSEL: Surya Sasan, for the Applicants Matthew Urback, for the Respondents
HEARD: August 7th, 2019. Written submissions concluded September 20th, 2019
REASONS FOR DECISION
LEMAY J
1This application concerns the property municipally known as 24 Ural Circle in Brampton, Ontario. The Applicants Ketan Jansari (“Ketan”) and his wife Kalpana Jansari (“Kalpana”) appear on title as owning 50% of the property. The Respondents, Ketan’s brother Manish Jansari (“Manish”) and his wife Neha Jansari (“Neha”) appear on title as the owners of the other 50% of the property.
2The Applicants have brought this application for a declaration that the Respondents hold their portion of 24 Ural Circle in trust for the Applicants. In essence the Applicants argue that the Respondents did not contribute any significant funds to the purchase of the property, and contributed nothing to the mortgage payments on the property or the ongoing carrying costs of the property.
3The Respondents argue that the application should be dismissed as they are the beneficial owners of their half of the property. The Respondents argue that they contributed most of the money for the down payment when the property was purchased. The Respondents also argue that a portion of the property was rented out and the Applicants used the proceeds from the rent to cover the bulk of the carrying costs. Finally, the Respondents argue that the Applicants have had the benefit of living in the property rent-free since the time it was purchased in 2004.
4For the reasons that follow, I have concluded that the Respondents made significant contributions to the initial deposit and down payment for the property. I have also concluded that the Applicants were able to cover a significant portion of the carrying costs (including the mortgage) from the rental payments that they received. As a result, the Applicants cannot establish any basis for their claim that the Respondents hold their interest in 24 Ural Circle in trust for the Applicants. Therefore, this application is dismissed.
5The spouses of Ketan and Manish are named in this litigation, and are on title to the property. However, neither of them provided affidavits in this case, and the parties seem to agree that neither of them would offer anything in terms of evidence in addition to what was offered by their husbands.
Background
a) The Parties and the Events Leading to the Purchase of 24 Ural
6Ketan and Manish are brothers. They were both born in India. Manish is a software engineer by profession. He landed in the United States as an immigrant in 1999, and came to Canada in 2000. At the time of the house purchase, Manish was not actually in Canada, but was a resident of Canada. Manish is now a United States citizen and has been living there for some time.
7The Applicants immigrated to Canada in and around February 5th, 2003. They lived in an apartment on Martin Grove Road in Etobicoke. At the time the property was purchased, Ketan was employed as a machine operator at an automotive parts plant in Halton, while Kalpana was on maternity leave, and in receipt of Employment Insurance benefits.
8There is some evidence that suggests that Manish provided Ketan with money to cover the cost of his immigration to Canada, including paying legal and other expenses. Ketan argues that this money came from their father and that, in any event, he had paid it all back by the time of the house purchase. I will address those issues below.
9The parties entered into an Agreement of Purchase and Sale (“APS”) for 24 Ural Circle around September 20th, 2004. The APS was signed only by Ketan, and had a closing date of November 24th, 2004. The purchase price of the property was $270,000.00.
10However, the mortgage commitment documents and the mortgage were in the names of all four parties. In addition, all four parties had their names registered on title at the time of closing. The amount owing on the mortgage was $247,000.00 as of the time of closing. The closing documents were not part of the record before me, and I understand that the parties do not have them.
11There was no written trust agreement between the parties, and no evidence from which I could infer that a written trust agreement existed. Indeed, the evidence from both sides is that any understandings between the parties were communicated orally.
b) The Events Between the Purchase and 2017
12There is a basement apartment in the property. On cross-examination, Manish testified that it was his understanding that this apartment was leased out commencing in 2005. In addition, Manish believed that either the basement or the main floor has been rented out for most of the time period between 2005 and 2017. On cross-examination, Ketan testified that the property was leased “on and off”, and only starting in 2007. I will address these discrepancies below.
13In 2007, Ketan moved to the United States because he wanted to establish a business. On the evidence in the record before me, a New Jersey company called Brahmani Foods LLC was formed, with Ketan and Manish as the members/managers of the business. There was also documentation that suggested that a Quiznos franchise was being purchased by Ketan as the owner of Brahmani Foods. This documentation included an Agreement of Purchase and Sale.
14As a result of the decision to start this business, 24 Ural Circle was refinanced by the parties, and the mortgage was increased to $332,839.00. The net proceeds from this refinancing were $84,722.47. The documentation that the parties were able to find from the law firm that acted on the refinancing included a cheque for the net proceeds from the new mortgage. That cheque was payable solely to Ketan.
15Manish asserts that Ketan used this money, plus some additional money that Manish loaned to him, in order to create an investment account that would allow Ketan and his family to immigrate to the United States. Ketan disputes this claim and argues that the business was a 50/50 venture between himself and Manish.
16In any event, Ketan lived in the United States from 2007 to June of 2014 when he returned to Canada. Between 2007 and 2009, he did not work at all. From 2009 until 2014, he worked in the franchise business. The contemporaneous records show that the business was a Quizno’s franchise, but there is also mention of a Subway franchise in the cross-examinations. I will refer to it as the Quiznos business in the rest of the reasons.
17Kalpana resided in Canada at 24 Ural for much of the time that Ketan was involved in the Quiznos business. As noted above, in June of 2014 Ketan returned to Canada and has remained there ever since. I have no evidence as to what Ketan’s employment has been since his return to Canada.
c) The Events Since 2017
18In April of 2017, the Applicants advised the Respondents that they wished to sell 24 Ural Circle. An exchange of messages ensued, and it became clear that the Applicants wanted the Respondents to relinquish their interest in 24 Ural Circle.
19The Respondents went to 24 Ural Circle to discuss the issue with the Applicants and were refused entry. The basement tenants, however, let the Respondents into the house. It is not clear if any substantive discussions between the parties ensued.
20On May 19th, 2017, the Applicants had their counsel write to the Respondents to advise them that the Applicants were claiming that the Respondents held their interest in 24 Ural Circle in trust for the Applicants. Counsel advised that this action would be commenced if the Respondents did not transfer their interest in the property to the Applicants.
21An application was commenced by the Applicants on November 15th, 2017. It was amended on two occasions. The only affidavit in the application record is from Ketan. No other affidavits were filed.
22A responding record was also filed in May of 2018. It contains an Affidavit from Manish as well as an Affidavit from Vishal Mehta, who is a friend of Manish’s. Mr. Mehta’s affidavit indicates that he loaned money to Manish for his portion of the money. Mr. Mehta also indicates that the money he loaned to Manish was transferred directly to Ketan’s bank account in October of 2004. Finally, Mr. Mehta states that he was repaid by Manish. Mr. Mehta was not cross-examined.
23Cross-examinations were conducted by both parties, and answers to undertakings were exchanged by the parties. The application was originally supposed to proceed in December 2018, but was adjourned to August 2019. All of that material was filed before me as part of the record, and I have considered all of it.
d) Post-Hearing Submissions
24Each side claims that they loaned the other side sums of money. Therefore, at the conclusion of the hearing, I invited the parties to provide additional submissions on the issue of the loans that were allegedly made to each other. I was also clear that these additional submissions were to contain “nothing beyond what is in the record.”
25In filing these materials, it appears that both sides have provided documentation that was not part of the record before me. I have reached two conclusions about that documentation:
a) None of it changes the analysis I have set out below or the conclusions I have reached. b) In any event, the new documentation is not admissible as the record for the Application was complete at the time that it was argued.
26Each side was also given the right to reply to the other side’s submissions, and I have taken those replies into account in conducting my analysis below.
Issues
27There are four issues that arise in this case, as follows:
a) Can this matter be disposed of by way of an application? b) If so, does the Statute of Frauds bar the Applicants’ claim? c) Should the Respondent’s share of 24 Ural Circle be imposed with a constructive trust? d) Should the Respondent’s share of 24 Ural Circle be imposed with a resulting trust?
28I will address each of these issues in the sections that follow.
Issue #1- Can This Case be Disposed of by Way of an Application?
29This matter was set for a three hour hearing on August 7th, 2019. At the outset of the hearing, I asked both counsel whether they were content to have this matter disposed of by way of an application, rather than a trial.
30Just before the hearing before me started, counsel for the Applicants advised counsel for the Respondents that he wished to have a trial of an action. Counsel for the Respondents was not prepared to consent to this relief, and sought to have the matter disposed of on the record that had been filed.
31Counsel for the Applicants argued that the application should be adjourned for a trial of an issue for the following reasons:
a) Some financial disclosure had just been received at the end of June as part of the undertakings from the Respondents. Counsel also seemed to suggest that an accounting expert may be able to go through all of the transactions and banking records and provide the court with more information. b) Ketan was aware of other friends who had provided Ketan with the funds for the down payment, and these people could be present and provide testimony if there was a trial of an issue. The Applicants’ counsel also seemed to be attempting to link the information about Ketan’s friends to the financial documentation that was disclosed in June of 2019 by the Respondents, but that linkage is not clear on the evidence that I have. c) There were issues of credibility that would have to be resolved to dispose of this case.
32Counsel for the Respondents argues that this matter should be heard and determined on the basis of the materials before me. They submit that a trial of an issue should not be ordered for the following reasons:
a) The Applicants had chosen to proceed by way of an Application, and should not now have two opportunities to present their case. b) The credibility issues can be resolved on the paper record before me.
33I have concluded that this matter can be appropriately determined by an application, and that I can dispose of the issues raised on the record before me. In order to explain my reasons for reaching this conclusion, I will set out the relevant legal principles, as well as the factual issues that arise in this case.
a) The Relevant Legal Principles
34The analysis starts with the powers of a judge hearing an application. Rule 38.10 (1) of the Rules of Civil Procedure R.R.O. 1990, Reg. 194 gives the judge hearing an application the power to, inter alia, grant or dismiss the application, convert the application into an action or order the trial of an issue. Ordering the trial of an issue and converting an application into an action are similar powers.
35In considering whether to convert an application into an action, the Court will look at a series of factors. Those factors were set out by G.P. Smith J. in Collins v. Canada (Attorney General) ( (2005) , 76 O.R. (3d) 228 at para 5 ), as follows:
a) Whether there are material facts in dispute; b) The presence of complex issues requiring expert evidence and/or a weighing of the evidence; c) Whether there is a need for an exchange of pleadings and/or discoveries; and d) The importance and impact of the application and of the relief sought.
36As noted in McKay Estate v. Love ( (1991) , 6 O.R. (3d) 511 (Gen. Div.) , aff’d [1991] O.J. No. 3032 (C.A.) ) there are some circumstances where the court has the jurisdiction to deal with an application where there are material facts in dispute between the parties. The finding in McKay, supra is based on the structure of Rule 14.05 (3), which lists specific types of proceedings that can be brought by way of an application. At the end of Rule 14.05(3), there is a basket clause in subsection 14.05(3)(h) that allows for any other type of proceeding to be brought where it is “unlikely that there will be any material facts in dispute.”
37Therefore, if the application relates to one of the specific types of application that are listed in Rule 14.05(3), such as a declaration of an interest in or charge on land (subsection (e)), then the application judge has the jurisdiction to resolve disputes over material facts without converting the matter to an action or directing the trial of an issue. This reasoning has been adopted in other cases where the issue was an interest in or charge on land. See, for example, Hazelton Homes Corporation v. Katebian 2019 ONSC 4015.
38The question then becomes whether the powers of a judge on an application are as extensive as a judge’s summary judgment powers under Rule 20. In Maurice v. Alles ( 2016 ONCA 287 ), the Court of Appeal held that the summary judgment powers did not apply on an Application. In reaching this conclusion, Hourigan J.A. also noted that where credibility findings on central issues are necessary, then the application will have to be converted into an action.
39This brings me to the question of to what extent can material facts in dispute be resolved on an application. Metropolitan Toronto Condominium Corporation No. 747 v. Korolekh ( 2010 ONSC 4448 ) assists in answering this question. Korolekh was a case that arose under the Condominium Act 1998. In his reasons, Code J. considered his jurisdiction in detail, and spent considerable time (at paras 47 and following) on the procedural aspects of the case. He concluded that the ultimate question to be decided was whether the disputed material facts could be resolved fairly, on the basis of the record filed including cross-examinations, without hearing viva voce testimony. A similar conclusion was reached in Poersch v. Aetna ( [2000] O.J. No. 270 (S.C.J.) at para 86 ).
b) Applying the Law to the Facts
40In this particular case, I have concluded that none of the arguments advanced by the Applicants justify a trial of an issue, or converting this application to an action. There are also other reasons why this matter can and should be determined by way of an application.
41I start with the Applicants’ assertion that financial data was recently provided by the Respondents in their answer to undertakings and that this should result in a trial of an issue. Having reviewed that financial data, it consists of banking records and other transaction records. The documents are clear on their face, are limited to what they say, and are not subject to dispute. What inferences are to be drawn from those documents are a matter of argument.
42However, I received no explanation from counsel for the Applicants as to how expert accounting evidence would assist the trier of fact in understanding these documents. In my view, additional expert evidence would not assist the trier of fact. They are records of withdrawals, deposits and transfers. Three key questions arise from the financial evidence:
a) Where did the money for the deposit and the down-payment come from? b) Who paid the expenses for the 24 Ural Circle home? c) Did the income from the rents fund the bulk of the expenses for the 24 Ural Circle home?
43All of these questions are factually driven. None of them require an accountant or other forensic expert to explain the records to the trier of fact. There is no reason to delay this Application to await such an explanation.
44This brings me to the claim that Ketan has friends that, if I ordered a trial of an issue, could be available to provide viva voce evidence that they loaned him the money for the down payment. There are four problems with this submission as follows:
a) Counsel was unable to provide me with the names of any of these “friends”. As a result, it is difficult to ascertain if they actually exist. The application should not be held up for potential testimony from unidentified witnesses. b) There is no evidence in the financial records before me to show any possibility of unnamed friends providing Ketan with this money, or to show that Ketan paid the money back to unnamed friends. There is also no evidence that the documents disclosed by the Respondent in June of 2019 demonstrate, in any way, that Ketan’s friends provided him with the money. c) Although less significant, it is unlikely that the existence of these friends would have been recalled on the eve of the hearing of the application when their existence was not mentioned at all during Ketan’s cross-examination on his affidavit. d) Finally, the Applicants have had numerous opportunities to put their case forward, and have amended their pleadings twice. Even with these amendments, there was no explanation as to why the evidence from Ketans friends was not provided for the hearing of this motion. This omission is particularly troubling when the answers to undertakings are reviewed. On April 24th, 2019, counsel for the Applicants advised that the deposits into Ketan’s bank accounts were monies “borrowed from Mr. Jansari’s friends.” This matter was heard more than three months later, and there was no additional evidence proffered to support this bald assertion by the Applicants.
45The question of whether or not Ketan’s friends loaned him the money for the down-payment does not rise to the level of a credibility dispute that requires either viva voce evidence or the trial of an issue. The absence of any credible corroborating evidence (including even the names of the friends) would be sufficient to reject the Applicants’ assertions in this regard. However, there is also evidence to the contrary from the Respondents, including evidence that the monies for the deposit came from Manish’s friends, not Ketan’s friends. I will return to that evidence in my analysis of the issues, below.
46This brings me to the last potential impediment to resolving this matter by way of an application. The Applicant argues that credibility findings have to be made in this case, and as a result I should defer this matter to a trial of an issue, where each party can be cross-examined again.
47I reject this argument for two reasons. First, one of the significant pieces of evidence in this case is the documentation. As will be seen when I review the evidence, the credibility of Manish on the key question of who provided the initial funds for the down payment and deposit is significantly enhanced by the financial records that I do have. As a result, the documentary record (which is not going to change) is of significant assistance in resolving any credibility disputes that exist on one of the key issues in this case.
48Second, the credibility and/or reliability of Ketan’s evidence is suspect for a number of reasons. His cross-examination transcript is both internally inconsistent and inconsistent with the documentation that has been filed. Some examples of those inconsistencies are as follows:
a) Ketan was asked whether he would have been able to apply for a mortgage without Manish and Neha’s help. He answered yes. In the very next question, Ketan was asked “did you apply for a mortgage on your own?” and answered “No, I never because we needed help.” These two answers are inconsistent with each other. b) In respect of his immigration application, Ketan testified that he did not hire Brownstein, Brownstein and Associates as his immigration lawyers. After being confronted with various contemporaneous documents, Ketan acknowledged that the Brownstein firm was involved in his immigration to Canada.
49I am reaching no conclusions on why Ketan’s evidence has these frailties in it. Indeed, one explanation is quite possibly the length of time that has passed (more than fifteen years) since many of the relevant events took place. As a result, some confusion and poor recollection is to be expected. However, it also means that I should be looking first to the contemporaneous documents to resolve any factual disputes between the parties.
50Given the foregoing analysis, it is my view that this matter can be disposed of on the basis of the application record before the court.
Issue #2- Does the Statute of Frauds Bar The Applicants’ Claim?
51The Respondents argue that section 4 of the Statute of Frauds R.S.O. 1990, c. S. 19 bars the Applicant’s claim. Section 4 states:
No action shall be brought to charge any executor or administrator upon any special promise to answer damages out of the executor’s or administrator’s own estate, or to charge any person upon any special promise to answer for the debt, default or miscarriage of any other person, or to charge any person upon any contract or sale of lands, tenements or hereditaments, or any interest in or concerning them, unless the agreement upon which the action is brought, or some memorandum or note thereof is in writing and signed by the party to be charged therewith or some person thereunto lawfully authorized by the party. R.S.O. 1990, c. S.19, s. 4 ; 1994, c. 27, s. 55.
52I am of the view that this provision does not bar the Applicant’s claim. I agree with the Respondent that it is not open to the Applicant to claim the existence of an express trust. However, this does not preclude the Applicants from claiming either a constructive trust or a resulting trust.
53The Respondents cite the decision of Sundarampillai v. Ponnambalam ( 2015 ONSC 5466 ) in support of their argument that the Statute of Frauds bars the Applicants’ claims. In that decision, Diamond J. was considering a case that was broadly similar to the one before me. While Diamond J. concluded (as I have) that there was no express trust, he also analyzed the questions of whether there was a constructive trust or a resulting trust. I will conduct the same analysis.
Issue #3- Should a Constructive Trust be Imposed on the Respondents’ Interest in 24 Ural Circle?
54The Applicants argue (at paragraph 23 of their factum) that a constructive trust claim is made out if they can establish the three elements of unjust enrichment. This is not quite correct.
55The law of constructive trusts is set out in the decision of Kerr v. Baranow ( 2011 SCC 10 , [2011] 1 S.C.R. 269 ). The three elements of an unjust enrichment are discussed by Cromwell J. in that decision. He goes on to observe that, once an unjust enrichment has been found, the court must then decide whether to provide a monetary remedy or a proprietary remedy (see the discussion at paras. 46 to 53). A constructive trust will be found to exist when a proprietary remedy is provided.
56The analysis of whether a constructive trust exists starts with the application of the three requirements for determining whether there has been an unjust enrichment:
a) An enrichment by one party; b) A corresponding deprivation of the other party; and c) The absence of a juristic reason for the enrichment.
57I will consider each of these issues in turn.
a) An Enrichment by One Party
58One of the problems with the evidence in this case comes in quantifying the enrichment that the Respondents have obtained. In the course of argument, I asked both counsel to advise me of the value of 24 Ural Circle and the value of the mortgage remaining on the property. They were able to agree on the value of the mortgage remaining on the property at approximately $300,000.00.
59The parties were not able to agree on the value of the property. The Applicants say that the total value of the house is $500,000.00. The Respondents say that the total value of the house is $800.000.00. There is nothing in the record that provides me with any indication as to the precise value of the property. Therefore, it is difficult to calculate the actual increase in value in the Respondent’s interest in the 24 Ural Circle property, making it difficult to determine what the actual enrichment is.
60However, the question of whether there has been an unjust enrichment of the Respondents can be approached by considering five questions:
a) Where did the money for the down-payment and the deposit come from? b) Did Ketan pay Manish back for the amounts that Manish advanced to him either before or after the down-payment was made? c) Who received the rents from the property, and in what amount? d) Who was out of pocket for the operating costs of the property, and in what amount? e) What happened to the money from the 2007 loan increase?
61I will deal with each of these issues in turn.
The Down-Payment For the House
62The cost of the house when it was purchased was $270,000.00. The mortgage was $247,860.00. The down-payment would have been a total of approximately $22,000.00. Manish argues that this money came almost exclusively from him and his friends. Ketan says that he and Kalpana had been saving money since their arrival in Canada and/or that the money came from his friends for the down payment. I reject both arguments, and conclude that the bulk of the money for the down-payment came from the Respondents.
63I start with Ketan and Kalpana’s immigration to Canada. The evidence disclosed that Manish provided Ketan with approximately $15,000.00 USD to fund his immigration. Ketan testified that this money came from their father through Manish, and was not Manish’s money.
64I reject Ketan’s assertions for the following reasons:
a) Ketan has provided no documentation or records whatsoever to demonstrate that this money was coming from his father. b) Ketan’s statement that the money came from his father because his father’s wish was for Ketan to transfer to Canada is internally inconsistent with the documentation that Ketan has filed on this proceeding. In particular, Ketan has stated that he paid approximately $7,000.00 CAD in total to Manish prior to the purchase of 24 Ural Circle. The only explanation I have as to why these monies would be being paid from Ketan to Manish before the purchase of 24 Ural is that they were being repaid to Manish as a result of monies to cover the cost of Ketan’s immigration to Canada. If it was money from his father, then Ketan would not have had to repay it to Manish. c) Manish has provided evidence from 2000 showing that Manish was providing his father Kusum Jansari with approximately $8,000.00 USD. The reasons that these funds were provided was not explained, but it is clear that significant sums of money were flowing from Manish to his father. This flow of money suggests that it is less likely that any money Ketan received from Manish to fund immigration expenses was actually money from Manish’s father. d) Ketan himself acknowledged on cross-examination that his father passed away in 2000. The most significant cheque, for $10,000.00 USD was not paid to Ketan by Manish until March 2001. There is no explanation as to how this money came from Ketan’s father if he had already passed away, particularly when the fact of the transfers from Manish to his father is considered.
65As a result, I conclude that the monies to fund Ketan’s immigration to Canada were provided by Manish to Ketan. This is important both because it demonstrates that Manish was supporting Ketan, and because Ketan claims to have paid back approximately $7,000.00 CDN to Manish in the time between Ketan’s arrival in Canada in February of 2003 and the purchase of the house in November of 2004.
66This brings me to whether the Applicants could have saved $22,000.00 on their own for the down-payment for the house. I note that this amount excludes the transaction costs and land transfer tax, but those amounts were not quantified by the parties.
67In the course of his cross-examination, Ketan originally stated that the money for the deposit was from savings in his President’s Choice bank account, which were then transferred to his Scotiabank account. I will now consider that claim.
68At the time of the house purchase in November 2004, Ketan was employed by an automotive parts manufacturer in Halton Region, and Kalpana was on maternity leave and in receipt of Employment Insurance benefits from the Government of Canada.
69Manish produced a spreadsheet of Ketan and Kalpana’s income for the period from March 2004 to April 2005. It showed net earnings for both Ketan and Kalpana combined of between $1,556.40 a month at the low end and $3,811.08 at the high end. The total net income for this thirteen month period was $32,754.52. Although the numbers do not match precisely with what is shown in Ketan’s bank statements for income, they are very similar. As an answer to undertakings, the Applicants took no dispute with the Respondents’ calculations, and I also accept them.
70From this net income, the Applicants would have had to pay rent (because they were living in an apartment) as well as pay for their food, transportation and other necessities. The rent was not precisely quantified by the parties. However, based on the financial records, there was a monthly cheque of $880.00 regularly paid on the first or second day of the month. Other evidence suggests that the rent might have been as high as $1,200.00 per month.
71Either way, given the fact that Ketan and Kalpana immigrated to Canada in February of 2003, there is no possible way that they could have paid for all of their living expenses and saved $22,000.00 for the down-payment in the twenty months that they were in Canada.
72Then, there are the amounts that Ketan claims he paid back to Manish between June of 2003 and the end of November 2004. The evidence I have shows that Ketan claims to have made payments to Manish of $7,000.00 in cheques and $11,600.00 in ABM withdrawals. The cash withdrawals were allegedly transferred to the Respondents. Paying back this amount, plus saving the deposit would be $40,600.00 of the Applicants’ net income.
73The Applicants only made between $1500.00 and $3800.00 a month in net income. Over thirteen months, the amount of net income that they received was only $31,000.00, and the amounts received on a monthly basis were higher in later months. Over the twenty months that the Applicants lived in Canada prior to purchasing 24 Ural Circle, their total net income was likely less than $45,000.00. Therefore, the amount the Applicants claim to have saved for a deposit plus the amounts that they claim to have repaid would have absorbed most (if not all) of their after-tax income, leaving virtually nothing for rent or food.
74At $880.00 a month for twenty months, their rent would have resulted in the Applicants spending an additional $17,600.00. When added to the $41,600.00 that the Applicants claim to have paid back in loans and/or saved for the deposit, the total would appear to substantially exceed the net income that they earned before 24 Ural Circle was purchased, leaving no money for the Applicants to cover the costs of transportation, food or other expenses.
75Given the lack of information provided by the Applicants, the foregoing analysis cannot be completely precise. However, it provides a clear picture of the likely income and expenses that the Applicants had between arriving in Canada and purchasing 24 Ural Circle. Ketan’s evidence that he and Kalpana saved for their deposit and paid money back to Manish is unsustainable when the underlying facts are considered.
76This brings me to the question of whether, as Ketan claims, the money for the deposit came from his “friends”. I note that this claim is inconsistent with Ketan’s claim that the money was generated through the Applicants’ savings. In any event, however, there is no evidence to support this claim either. More than two years after this proceeding started Ketan’s counsel did not even know the names of these “friends”. Further, there is no financial documentation anywhere in the records that would support this claim. I have set out the reasons I reject this evidence at paragraph 44. I also note that the obligation to prove an unjust enrichment rests with the Applicants, and they are required to provide evidence to support their position.
77However, there is documentation that supports the Respondents’ assertion that the money for the deposit came from Manish and his friends. That documentation includes:
a) A wire transfer form showing a payment of $4,000.00 USD from one of Manish’s friends, Vishal Mehta, directly to Ketan’s President’s Choice bank account. This transfer was sent on October 23rd, 2004. There is also a deposit to Ketan’s President’s Choice bank account of $4,803.96 CAD that is an amount converted from $3,990.00 USD. The most logical inference is that this deposit was the wire transfer, and the ten dollar difference appears to be the transfer fee. b) Bank documents showing that Manish’s brother-in-law, Jitendra Butani, withdrew approximately $8,000.00 USD from his bank accounts at approximately the same time that similar deposits were made to Ketan’s President’s Choice bank accounts. While there is no direct paperwork establishing the payments specifically, Manish has testified that he arranged the payments, and there is evidence that Manish paid this money back. As a result, I infer that these payments were made by Mr. Butani to Ketan to assist with the deposit, and that the monies were paid back to Mr. Butani by Manish.
78Given all of the foregoing evidence, I conclude that the deposit monies for the house came primarily from the Respondents. There is direct evidence that $15,000.00 of the $22,000.00 deposit came from the Respondents. Further, given their recent arrival in Canada and their financial situation, the Applicants would not have been able to afford to purchase this house without the assistance of the Respondents.
The Amounts Advanced to Ketan by Manish
79The Applicants also argue that, even if they did receive payments from the Respondents to assist in the purchase of 24 Ural Circle, those monies were paid back over time. In support of this argument, a list of repayments was provided by Ketan. There are some significant problems with Ketan’s list of repayments that causes me to reject it. Those problems are as follows:
a) There is no supporting documentation for any of these repayments. Some of them were made by cheque, and the cheques were not provided. Most of them were made by withdrawals from the Automatic Banking Machine, but there is no evidence anywhere in the record (other than Ketan’s assertions) to show that this money was transferred from Ketan to Manish. b) In some periods, for example in September 2004, the withdrawals from Ketan’s bank account were more money than the total salary that the Applicants received that month. It is difficult to accept that the entirety of the Applicants’ salaries was going to repay Manish, especially when (during this time period) Ketan originally asserted that he and Kalpana were saving for the down-payment on the house. c) At the same time that Ketan claims that the September 2004 ABM withdrawals (of $3,200.00) were allegedly paid to Manish, Ketan also claims that he had been able to make an additional payment of $4,000.00 to Ketan on July 30th, 2004. At paragraphs 67-71, I have set out my conclusions that the Applicants did not have the income to save for a portion of the down payment. These conclusions are fortified when the alleged repayments of $11,640 from ABM withdrawals and $7,000.00 in cheques between June 30th, 2003 and November 30th, 2004 are considered. The Applicants’ income simply do not support these alleged repayments. d) In the time period between 2007 and 2009, Ketan testified that he was not working, and that he was waiting for the Quiznos business to develop. However, in those three years, Ketan still claims to have repaid Manish approximately $5,500.00. There is no explanation as to where this money would have come from if Ketan was not working.
80In addition, in the previous section, I have explained why I reject Ketan’s assertions that the money for his immigration into Canada came from his father. I accept that this money came from Manish’s funds. As a result, the amount advanced by Manish to Ketan for Ketan’s immigration costs prior to the purchase of 24 Ural Circle was approximately $15,000.00 USD. This money was over and above the monies that Manish advanced for the deposit on 24 Ural Circle. In other words, the Respondents provided the Applicants with a great deal of money between 2000 and 2004.
81As a final matter, there is a further wire transfer from Manish to Ketan in early 2007 for approximately $5,000.00 USD. Again, even if Ketan had paid off some of the money owing to Manish, this payment from Manish (along with the property tax payment mentioned at paragraph 92(a)) suggests that Ketan is being supported, to some extent, by Manish in 2007. Ketan did not explain this specific payment in his affidavit.
82Having determined that Manish advanced Ketan significant sums for his immigration (and for other purposes in 2007) and that Ketan did not have the income to pay those sums back and save for a house, there is no basis to conclude that Ketan made the repayments to Manish that he alleges were made.
The Rents on 24 Ural Circle
83Between 2004 and 2017, portions of 24 Ural Circle were rented out. The documentation that I was provided with included a lease that showed that, from July 1st, 2007, the main floor of the property was being leased to a tenant for $1,200.00 per month. Under this lease, the tenant was also required to pay 60% of the utilities for the whole house. However, I was not provided with any other documentary evidence on the amounts that were paid in rent for 24 Ural Circle, or the time period when the property was rented.
84When cross-examined, Ketan stated that he had received somewhere between $1,200.00 and $1,500.00 in rent for the property. He also testified that 2007 was the first time that he rented out the property. This is a surprising assertion, given that both parties agree that there was a basement apartment in the property. One would have expected that the basement apartment would have been rented out from 2004.
85It is clear that the property was rented out for a period of time between 2007 and 2015. It is not clear as to precisely the length of that time period, or how much rent was received. That information would be in the control of the Applicants, as they received the rents. They have not provided those records.
86In addition, Ketan acknowledged that none of the monies received from the rents were transferred from the Applicants to the Respondents. Instead, the money from the lease was used to pay the mortgage and, if there were sums left over, to pay the remaining carrying costs for the house.
87The question then becomes how long did the Applicants receive lease payments for? There are few financial records that answer this question. However, Ketan testified that the rental was “on and off” until 2015, and that they stopped having a tenant in the house in 2015. I note that, during argument, Applicants’ counsel asserted that the property was only rented out until 2010. I reject this assertion, as it is contradicted by Ketan’s own evidence on cross-examination.
88There is some additional evidence about tenants, however, that calls Ketan’s evidence about how long there was a tenant in the property into question. Manish’s Affidavit states that, in 2017, he and Neha visited 24 Ural Circle. However, Ketan and Kalpana would not let them into the house. As a result, the tenant (who recognized them) let them in. Manish’s evidence about whether there was a tenant in 2017 was not challenged, either on cross-examination or through any additional documentation. As a result, I accept that there was a tenant in the basement apartment in 2017, and that tenant had been renting the property long enough to be able to recognize Manish when he came to visit.
89As a result, I conclude as follows:
a) There was a tenant in the house for most, if not all of the time, from 2007 to 2017. While there is evidence that supports that there was a tenant in the house from early 2005, that evidence was not as clear. b) The rent paid by this tenant (or tenants) ranged from $1,200.00 (the amount on the lease) to $1,400.00 or $1,500.00, which were the amounts suggested by Ketan. c) The rent paid by the tenants was kept by the Applicants and not shared by the Respondents. d) The tenants also made a contribution to the utilities. The lease sets out a contribution of 60 percent, and there is no contrary evidence in the record. As a result, I accept that the tenant paid 60% of the utilities costs for the property from 2007 to 2015.
90To summarize, there was a tenant in the property for most of the time period between 2007 and 2015, and the monies from this tenant were kept exclusively by the Applicants. I now turn to the carrying costs for the house.
The Carrying Costs of the House
91On the evidence of both parties, the Applicants were responsible for the carrying costs of the property. Those costs would have included utilities, property taxes and other maintenance costs. It is up to the Applicants to establish both what these costs were and how much they paid for them. They have offered very limited evidence in this regard. When I asked Applicants’ counsel in argument what evidence there was of these costs, he directed my attention to the credit card and bank statements that were filed. It is difficult to precisely identify the carrying costs from these statements.
92However, I do have some evidence on these carrying costs, as follows:
a) In 2007, Manish paid the property taxes for the year, which amounted to $3,179.81. It is clear that the money for these payments originated from Manish’s bank accounts. Ketan states that Manish was paying the property taxes that year because Manish owed Ketan money. There is no evidence to support this claim. Indeed, the evidence I do have (which is that Ketan was not working in 2007) suggests that Manish was paying the property taxes because Ketan did not have the money to do so. I have no information on the other payments of property taxes. b) The mortgage payments from 2004 to 2007 were between approximately $630.00 and $750.00 every two weeks. The documentation I have been given suggests that the mortgage payment was approximately $1,219.00 per month as of February 2019. I do not have any documentation to fill in the gaps but, given the value of the mortgage it is likely the amount remained much the same throughout the period the parties have owned the property. c) I have no documentation or indication as to the cost of the utilities payments but, as I have noted, 60% of these costs were paid for by the tenant in the time period between 2007 and 2015.
93I have already set out my conclusions about the presence of a tenant in the previous section. When the value of the rent paid by the tenant (or tenants) is considered, it is clear that it covered most (if not all) of the cost of the mortgage. Indeed, in months where the tenant paid $1,400.00 or $1,500.00, there would have been money left over for the Applicants to pay their share of the utilities or a portion of the property taxes.
94In other words, on the evidence I do have the carrying costs paid by the Applicants would have been very limited.
The Money From the Refinancing
95This brings me to the Quizno’s business. Ketan alleges that this business was a joint venture, split 50/50 between him and Manish. Manish, on the other hand, alleges that Ketan had wanted to come to the United States and start a business, and that the Quizno’s business was his business.
96It is clear that approximately $85,000.00 was raised from the refinancing of 24 Ural Circle. It is also clear that this money went into the Quiznos’ business. What is less clear is who this business benefitted. I also note that there was a further withdrawal of equity from 24 Ural Circle at some point in 2008 or 2009. My analysis below applies equally to these funds.
97The documentation on this issue is inconclusive, although it suggests that the business was more likely purchased for Ketan. The documentation establishing the company shows that both Manish and Ketan were listed on it. However, that is explained by the fact that Manish was a United States resident at the time, and that Ketan was attempting to immigrate. The sale documents for the franchise, on the other hand, are in Ketan’s name alone, and he is the one who signed the documentation for the purchase of the business. In addition, Ketan was the one who moved to the United States to establish this business.
98There is also no clear evidence of what happened to the business when Ketan returned to Canada in 2014. As a result, it is not clear what happened to any proceeds of sale, or whether there actually were any proceeds.
99However, even taken at their best, these facts do not support the Applicants’ position. At most, the Applicants and the Respondents used the money raised from the property to fund a joint venture. At its worst for the Applicants, the money from the property was used to fund a venture for the Applicants.
100While I am of the view that the evidence favours the conclusion that the business belonged to Ketan and was run for his benefit, I do not have to decide that issue given my conclusions on the other issues. Since the Respondents paid for the bulk of the deposit, and the lease payments funded much of the mortgage and other carrying costs, even an equal split of the funds raised from the refinancing does not support a conclusion that the Respondents received an enrichment from the property.
101On the other hand, if Ketan received the entirety of the refinancing for his benefit, that would actually support a conclusion that the Applicants had received an enrichment from the property that they might not be entitled to.
Conclusions
102Having determined that the bulk of the money came from Manish and Neha, and that the carrying costs of the house were largely subsidized by the rent, I cannot conclude that there was an enrichment of the Respondents by the efforts of the Applicants. Instead, the value of the investment of all parties has gone up, which was part of the intention behind purchasing the house in the first place.
103I reach that conclusion for the following reasons:
a) The Applicants would not have been able to purchase 24 Ural Circle without the assistance of the Respondents. b) Ketan has not paid the money given to him by Manish back in any meaningful way, although some small amounts may have been paid back. c) The Applicants had most of the carrying costs of 24 Ural Circle subsidized by the rent from either the basement apartment or, for a number of years after 2007, the rental of the main floor. d) Any of the carrying costs that the Applicants have been required to pay over the years are justified, and are not an enrichment for the Respondents, because they have been able to live in the house rent-free for the past sixteen years.
104Having determined that there was no unjust enrichment, the Applicants’ claim of a constructive trust must fail. However, I will also consider the other two branches of the test.
b) A Corresponding Deprivation of the Other Party?
105Counsel for the Applicants argues that his clients suffered a deprivation because they were required to pay the carrying costs of the house. I reject that argument. My conclusions in the previous section make it clear that the lease payments funded a considerable portion, if not all of, both the mortgage payments and the carrying costs for the past fifteen years.
106The argument advanced by the Applicants in support of a deprivation is that the Respondents made no contribution to the carrying costs, and the Applicants were required to pay those costs. I accept that some, but not all, of the carrying costs were paid by the Applicants. This does not end the inquiry.
10724 Ural Circle was jointly owned. However, the Applicants have had, for the most part, the sole use and enjoyment of the property as their primary residence. As a result, any additional carrying costs that they were required to pay over the years are more than justified by their use and enjoyment of the property as their primary family home.
108As a result, I conclude that there was no deprivation.
c) Is There a Juristic Reason for the Enrichment?
109Given my findings on the first two branches of the test, it is not necessary to address this branch of the test in any great detail.
110In my view, there is a juristic reason for the Respondents to have an interest in 24 Ural Circle. I reach that conclusion for two reasons. First, they are on title to 24 Ural Circle, and it was intended that they have an interest in the property. Second, if the Respondents had not assisted the Applicants with the purchase of 24 Ural Circle, the Applicants would never have been able to buy it.
111On this second point, I should briefly note one argument advanced by the Applicants. In the Application, it is alleged that the Respondents asked to be placed on the title of 24 Ural Circle to assist in the Respondents credit rating. There is no evidence to support this assertion. Indeed, given the flow of funds from the Respondents to the Applicants, and the acknowledgement of Ketan (at paragraph insert ) that the Applicants needed help to buy the property, I infer that it was more likely that, as stated by Manish, the Applicants needed help with their credit rating, and help securing a mortgage.
d) Conclusion
112For the foregoing reasons, I have concluded that the Applicants have been unable to demonstrate an unjust enrichment. As a result, the claim of a constructive trust over the Respondents’ interest in the house fails.
Issue #4- Should the Respondents’ Interest in 24 Ural Circle Revert to the Applicants on the Basis of a Resulting Trust?
113The doctrine of resulting trust is explained by the Supreme Court of Canada in Pecore v. Pecore ( 2007 SCC 17 , [2007] 1 S.C.R. 795 ) where the Court stated (at para. 20):
A resulting trust arises when title to property is in one party’s name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner: see D. W. M. Waters, M. R. Gillen and L. D. Smith, eds., Waters’ Law of Trusts in Canada (3rd ed. 2005), at p. 362. While the trustee almost always has the legal title, in exceptional circumstances it is also possible that the trustee has equitable title: see Waters’ Law of Trusts , at p. 365, noting the case of Carter v. Carter (1969) , 70 W.W.R. 237 (B.C.S.C.).
114I have already set out my conclusions on the issue of a constructive trust in the previous section. A resulting trust would require a finding that the Respondents were fiduciaries, or gave no value for their share of the property. Neither finding is supportable on the record before me.
115There is no indication of a fiduciary obligation between Manish and Ketan, and none was argued. The point that was argued was that the Respondents did not give any value for the property. However, the analysis I have set out above makes it clear that the Respondents funded most (if not all) of the down payment for the property, as well as having provided the Applicants with other funds throughout the relevant time periods.
116The Respondents gave value for the portion of the property that belongs to them. Therefore, there is no basis for finding the existence of a resulting trust in this case either.
Conclusion
117For the foregoing reasons, the application is dismissed. The Respondents hold their interest in 24 Ural Circle as beneficial owners, and are not trustees for the Applicants.
118The parties are encouraged to resolve the issue of costs. In the event that they are unable to do so, the Respondents have fourteen (14) calendar days from the release of these reasons to file their costs submissions. Those submissions are to be no more than three (3) single-spaced pages, exclusive of bills of cost, offers to settle and case-law.
119The Applicants have a further fourteen (14) calendar days from the receipt of the Respondents’ costs submissions in order to file responding costs submissions. Those submissions are to be no more than three (3) single-spaced pages, exclusive of bills of cost, offers to settle and case-law.
120There are to be no reply submissions without leave of the Court. Further, there are to be no extensions in the deadline for costs submissions, even on consent, without my leave. If costs submissions are not received in accordance with the timeline set out above or an extension is not specifically sought from me, then there will be no costs for this matter.
121Given the ongoing health crisis, the parties are to provide their costs submissions by e-mail to my judicial assistant. The total documentation is to be no more than 9.9 megabytes of data. Any cases are to be provided by hyperlink rather than through PDF copies. The parties are also required to undertake to file a hard copy of their costs submissions with the Court once regular Court operations resume. If the parties require an extension to prepare their costs submissions, they are required to make that request through my judicial assistant as well.
LEMAY J
Released: April 27th, 2020.