Asiyaban v. Aghdasi, 2020 ONSC 6096

Court File and Parties

COURT FILE NO.: CV-19-623015 DATE: 2020-10-08

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: VAHID MEHDIZADEH ASIYABAN, Appellant AND: HALIME KHATOUN AGHDASI, Respondent

BEFORE: Pollak J.

COUNSEL: David Marcovitch, for the Appellant, Plaintiff Gord McGuire, for the Respondent

HEARD: June 29, 2020

Endorsement

1The Appellant, Plaintiff, Mr. Asiyaban and the Defendant, Respondent, Ms. Halime Aghdasi were in a common law relationship from 2003 to 2017. In this action, the Plaintiff’s claim is that he contributed significant time and expense purchasing, carrying, constructing and renovating a property in Nobelton, which was owned by the Defendant and that he is the beneficial owner of the property and is entitled to a constructive trust and damages for unjust enrichment.

2He was granted a CPL and registered it on 123 Ellis Avenue, Nobleton, Ontario, (the “Property”) on July 25, 2019.

3He appeals a Masters’ order to discharge that CPL on the Property.

4The standard of review of a Master’s order is agreed by the parties. Appellate interference is granted “only if the Master made an error of law or exercised his or her discretion on the wrong principles or misapprehended the evidence such that there is a palpable and overriding error”.

5On July 5, 2019, the plaintiff moved for an “ex parte” order for a CPL on the Property on the ground that he owned it in whole or in part as the “sole beneficial and equitable owner.” A Master refused to make the Order finding that:

“I am not satisfied that the plaintiff has provided sufficient evidence with respect to an interest in land. In particular, there is no documentary evidence supporting the alleged financial contribution to the subject property. Motion adjourned without a date. This motion may be brought on again on a without notice basis on further evidence”.

6On July 24, 2019, Mr. Asiyaban swore a new affidavit to remedy the deficiency in his first “ex-parte motion”. He deposed that:

“One of the challenges I face is that most of my documentation is still in the Property. However, I was able to contact a number of the trades that provided services to the Property. The trades provided me with copies of the invoices they had available. They are attached as Exhibit “B”. The invoices total $140,341.00”.

7The master granted the CPL and endorsed the record as follows:

“Based on the additional invoices set out in the further affidavit of the plaintiff sworn 24 July 2019, I am satisfied that the plaintiff has established a reasonable claim to an interest in the land based upon facts which he could succeed at trial…

Order to go in of the draft order attached…”

8Mr. Asiyaban registered a CPL on title.

9The Defendant, Ms. Aghdasi moved to discharge the CPL by Notice of Motion dated September 23, 2019, returnable November 6, 2019. The motion did not proceed as Mr. Asiyaban’s counsel could not attend.

10In December 2019, before a new return date had been set, the tenants of the Property unexpectedly gave Ms. Aghdasi notice they would be terminating their lease effective that month. Without the tenants’ rental income Ms. Aghdasi could not pay the monthly carrying costs of $6,825.52 and did not want to default on the mortgage. In order to sell the property, she moved to discharge the CPL.

11The discharge motion was heard on February 13, 2020. The Master discharged the CPL unconditionally on the following grounds:

• Mr. Asiyaban’s failure to produce or disclose the existence of handwritten agreements between the parties regarding the Property on the ex parte motion was a failure of full and frank disclosure, which was itself grounds for discharge;
• The Master’s finding that one of the invoices relied on to satisfy entitlement to the CPL was fraudulent, which itself was fatal to the CPL; and
• The exercise of the court’s discretion in equity.

12Following the discharge of the CPL, the Defendant entered into an agreement to sell the property. Right before the closing, the Plaintiff moved for a stay of the Master’s decision pending his appeal seeking to stop the sale or to have the proceeds paid into court.

13In order to proceed with the sale, Ms. Aghdasi agreed that pending the hearing of the Plaintiff’s motion to stay (scheduled for March 17, 2020) she would back hold 50% of the net proceeds of sale to be held in her lawyer’s trust account.

14The sale closed on March 10, 2020, and 50% of the net sale proceeds, ($202,244.13), were paid into counsel’s trust account. The stay motion could not proceed on March 17, 2020, as a result of the court’s closure by reason of the COVID-19 pandemic.

15The defendant requested that the court hold an urgent hearing requesting that the monies held in trust released. After several case conferences with the parties, a consent timetable was established for the filing of the materials to proceed with a remote hearing to hear the appeal of the Order to discharge the CPL, rather than only dealing with the defendants request for the release of the funds. The parties agree that if the Plaintiff’s appeal is not successful, the monies would be released from counsel’s trust account to the Defendant.

16The Appellant relies on Perruzza v. Spatone 2010 ONSC 841 decision, wherein the court set out the test regarding issuances and discharges of a CPL as follows:

(i) The test on a motion for leave to issue a CPL made on notice to the respondents is the same as the test on a motion to discharge a CPL (Homebuilder Inc. v. Man-Sonic Industries Inc., 1987 CarswellOnt 499 (S.C. - Mast.) ("Homebuilder") at para. 1);

(ii) The threshold in respect of the "interest in land" issue in a motion respecting a CPL (as that factor is set out at section 103(6) of the Courts of Justice Act, R.S.O. 1990, c. C.43) is whether there is a triable issue as to such interest, not whether the appellant will likely succeed (1152939 Ontario Ltd. v. 2055835 Ontario Ltd., 2007 CarswellOnt 756 (S.C.J.), as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Gen. Div. - Comm. List) at para. 62);

(iii) The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has "a reasonable claim to the interest in the land claimed" (G.P.I. Greenfield Pioneer Inc. v. Moore, 2002 6832 (ON CA), 2002 CarswellOnt 219 (C.A.) at para. 20);

(iv) Factors the court can consider on a motion to discharge a CPL include (i) whether the appellant is a shell corporation, (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (viii) the harm to each party if the CPL is or is not removed with or without security (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (S.C. - Mast.) at paras. 10-18); and

(v) The governing test is that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL should be granted or vacated (931473 Ontario Ltd. v. Coldwell Banker Canada Inc., 1991 CarswellOnt 460 (Gen. Div.); Clock Investments Ltd. v. Hardwood Estates Ltd., 1977 1414 (ON SC), 1977 CarswellOnt 1026 (Div. Ct.) at para. 9).

17The test for discharging a Certificate of Pending Litigation is summarized as: the court must exercise its discretion in equity and look at all the relevant matters between the parties in determining whether or not the certificate should be vacated. The Appellant must show that the Master made an error of law or exercised his or her discretion on the wrong principles or misapprehended the evidence such that there is a palpable and overriding error.” As well, the discretionary decision of a master is entitled to “considerable deference”.

18The Appellant’s objection to the Master’s order is that the master ordered that the CPL be discharged even though it was found that the plaintiff had established a triable interest to a claim in the property, which it is submitted is the “threshold issue”. The Master refused to provide him with protection even though it was found that the Plaintiff established a triable claim. The Applicant was “vulnerable and liable to having his investment dissipated by the respondent”.

19The Appellant submits that the “overriding consideration” on this appeal was whether the orders and their effect were fair and equitable.

20The Appellant submits that result is not fair and is grounds in itself to grant the appeal.

21The Appellant emphasizes that the Respondent acknowledges that the sale proceeds should be held if a triable interest is found to exist. She deposed that:

“….Should this Honourable Court determine that the Appellant has a triable case, a portion of the sale proceeds of the Nobelton Property can be paid to my counsel….providing the appellant with security rather than hindering any sale from occurring.”

22He argues that notwithstanding this admission, the Master ordered that the CPL be discharged without any conditions and awarded substantial indemnity costs of the motion to the Respondent.

23The Appellant submits that the Master erred in law; misapprehended the evidence; made inferences, conclusions and assumptions not based on the evidence; and, misapplied applicable principles. As well, it is alleged that the Master erred by allowing argument for and granting relief different than that requested in the notice of motion.

24The Appellant identifies the following specific issues on this appeal:

• “The extent to which an individual’s admitted and established interest in a property is entitled to court protection, and when that protection will be lost;
• The sufficiency of notice and disclosure regarding a motion before the court; and,
• The assessment of costs”.

25The Appellant seeks an order: setting aside the orders of the Master; and, that the net proceeds of the sale of the Property, (to the extent they are still available or traceable), be held pending further order of the court.

The ex-parte CPL

26In 2019, the appellant states he moved for the CPL because around February 19, 2019, without his knowledge, the respondent refinanced the Property and removed $200,000.00 worth of equity. She has not accounted for the funds. Further, in June of 2019, the respondent listed the Property for sale without advising him. He was concerned about the loss of his interest in the Property would be lost.

27The Appellant therefore commenced this action and moved for an ex-parte CPL.

The order to discharge the CPL

28The Master exercised the court’s discretion in equity to discharge the CPL based on all of the relevant circumstances including:

• The fraudulent invoices;
• The Plaintiff’s non-disclosure of two agreements regarding the ownership of the Property.
• The fact in two agreements, the Applicant stated he had no interest in the Property. He promised not to interfere with the sale of the Property;
• The lack of any reliable evidence that he contributed any money towards the property;
• The property was not unique;
• The fact the Appellant agreed the property should be sold;
• The Appellant’s interest in the property was monetary in nature;
• The imminent prejudice to Ms. Aghdasi if she was not permitted to sell.

29Ms. Aghdasi’s evidence is that the parties had renovated and sold properties for a profit, but that the Property was hers, she used her money from the sale of her residence to buy it, and that she had paid for all renovation costs and carrying costs herself.

30The parties separated in July 2017. They signed a handwritten agreement dated July 20, 2017, which states that the Nobleton property belonged to Ms. Aghdasi:

“I Vahid Mehdizadeh will leave the premises of 123 Ellis Ave on July 20, 2017 and no longer live there as I have agreed to and acknowledge Halime Aghdasi is the sole owner and I do not have interest in property as common in-law”.

31They signed another handwritten agreement dated July 20, 2017, which states:

“Halime Aghdasi is the sole owner of the above mentioned property and as agreed she is solely to [sic] decided and sale [sic] the property without interfering and disturbing the transaction. I Vahid [illegible] have no interest in the above property…”

32Mr. Asiyaban signed the agreements and initialled both acknowledging that he had been given a copy. These agreements were not disclosed to the ex-parte Master by the Appellant. Ms. Aghdasi believes that the Applicant has no interest in the Property.

33The Applicants main argument is that the Master still found the Appellant met the threshold of establishing a triable claim to an interest in the Property and that the Respondent failed to discharge her burden of demonstrating the Appellant's lack of a reasonable claim to the interest in the Property. That however, is not the test to be applied on the discharge of a CPL.

34The Appellant does not deny that he signed the agreements regarding the Property, wherein he states he had no interest in the property and promises not to interfere with its sale. He did not produce or refer to these agreements when he moved before the court ex parte seeking a CPL on the basis of his claimed equitable interest in the property.

35The Master’s evidentiary conclusions were, in my view, made only on the issue of a lack of disclosure on the ex parte motion and whether there was reliance on a fraudulent invoice and not on the merits of the action as alleged by the Appellant. It was the Master’s function to either accept the Plaintiff’s explanation as to why he had not advised the court of the two signed agreements and to make a finding that the KELuxe invoice he submitted into evidence was not a legitimate invoice.

36The Appellant argues that notwithstanding the Master’s finding of non-disclosure of the agreement, the Master should have considered whether if full and fair disclosure of the material facts had been made, the CPL would have been granted.

37Had the Master done so, the Appellant submits the order would not have been made.

38As the Master did not consider this alternative approach a reviewable error was made. I do not agree. The Master properly considered all of the relevant factors and exercised discretion in accordance with the proper test as referred to above.

39The Appellant also objects to the Master consideration of the Dhunna factors: the intent of the parties when acquiring the land; the uniqueness of the land; the inclusion of an alternative claim for damages; whether damages would be a satisfactory remedy; and, the harm to each of the parties if the CPL is or is not removed with or without security. He submits that these factors are not relevant because “the essence of a constructive or resulting trust claim is the return or transfer of property beneficially owned by the claimant but being improperly held by the respondent. It should not matter why the property was acquired, whether the property is unique or whether damages would be an appropriate remedy, all of which are at the heart of the Dhunna factors. Ownership should not be divided because damages might provide an alternative remedy or that a different property might be more suitable. In a claim for specific performance, to acquire an ownership interest in property, the Dhunna factors make sense. The moving party should establish why “that” interest in “that” is so important and why a different but similar or equal interest does not satisfy”. On this basis, the Appellant submits that the Master proceeded and analyzed on the wrong principles. I disagree. In accordance with the proper test that I have set out, the Master had considered all relevant factors for the proper exercise of the court’s discretion.

40The Appellant argues that the Master misinterpreted the purpose for a CPL. A CPL provides “security” by preserving the asset pending judgment. He submits that a CPL gives notice that a claim to an interest in the property exists. The existence of a claim is enough. The CPL preserves the asset pending judgment.

41As I have already found, the Master had to consider all of the relevant factors to satisfy the relevant test, which is referred to above. The Appellant’s submissions do not address the proper elements of the test the Master was required to apply.

42The Appellant complains that the Master found no evidence to support his submission that the Respondent did dissipate her assets. The Appellant submits that the Master erred in coming to this conclusion. I disagree. The Respondent believed that the Appellant had no interest in the Property in accordance with the agreements referred to above and therefore it was reasonable for her to assume she had no obligation to inform the Appellant of her actions regarding the Property.

43The Appellant further argues that at the hearing, counsel objected to the relief requested by the respondent, namely removal of the CPL without condition. The Master made an order for relief not requested in the notice of motion. There is, however, no evidence before this court on this issue. On the basis of the e-mail evidence between counsel, I find that there was no improper or unfair process at the hearing with respect to the relief being requested.

44I find that even if the Master had not made a finding of material non-disclosure, and no finding of reliance on a fraudulent document, the discharge order would have been within the master’s discretion to make based on the totality of the evidence before the court. I find no error of law in the Master’s conclusion on the evidence that the Appellant had failed to make full and frank disclosure on the ex parte motion or that the Appellant relied on a fraudulent invoice. That finding was not based on a palpable and overriding error nor an error in principle. I also find that there was no error in principle in finding that the equities favoured discharge.

45The court has a broad discretion to discharge a CPL. The Master exercised discretion in equity and considered all the relevant factors between the parties in determining whether or not the certificate should be vacated.”

46I do not accept that the master made impermissible findings of credibility or findings on issues in dispute in the action on whether Mr. Asiyaban made contributions to the property.

47Mr. Asiyaban admitted that the written agreements were authentic, that he had signed both of them, but did not disclose them to the court. Further, he did not dispute that he had called Mr. Peighambari repeatedly asking for an invoice. He did not dispute that the invoice was fraudulent. Contrary to his first affidavit, he admitted that he did not get the KELuxe invoice from the contractor.

48The evidence of Mr. Peighhambari, was not challenged on cross-examination and not disputed by Mr. Asiyaban in his responding affidavit. Mr. Asiyaban’s response to Mr. Peighambari’s evidence was to ignore it and give new evidence. He advised the “ex parte” Master that he got the invoice directly from the contractor, but on the discharge motion he deposed that he “found” the invoice lying around his store. The Master made no error with respect to the finding that the invoice was fraudulent.

49For all of the above noted reasons, the Appeal is dismissed. This court declares the monies in counsel’s trust account can be released to the Respondent.

Costs Appeal

50The Appellant further appeals the costs award of the master. The Appellant appears to make the same arguments that he made before the Master on costs. The reasons of the Master clearly address his submissions and I cannot find any reviewable errors made by the Master.

51The Appellant submits that the Master made two reviewable errors by ordering costs on a substantial indemnity basis without fully reviewing all the factors; and challenges the quantum of costs ordered. The Appellant argues that his misconduct was not reprehensible, scandalous or outrageous and that the Master did not consider the factors set out in the Rules. The Master only considered the appellant’s actions with regard to lengthening the proceeding. The Master failed to consider the Respondent's actions. The Appellant submits that the Respondent’s actions also lengthened the proceeding as she withdrew the acknowledgement of the Plaintiff’s interest in the Property.

52Rule 57.01 (1) provides for a consideration of the following:

a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer; b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed; c) the amount claimed and the amount recovered in the proceeding; d) the apportionment of liability; e) the complexity of the proceeding; f) the importance of the issues; g) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; h) whether any step in the proceeding was, i) improper, vexatious or unnecessary, or, j) taken through negligence, mistake or excessive caution; k) a party’s denial of or refusal to admit anything that should have been admitted; l) whether it is appropriate to award any costs or more than one set of costs where a party, m) commenced separate proceedings for claims that should have been made in one proceeding, or, n) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and, o) any other matter relevant to the question of costs.

53The Appellant submits that this should have been part of the consideration.

54In the endorsement, the Master presumed costs would be assessed on a partial indemnity basis. As seen from the Reasons, I do not agree that this is accurate.

Quantum

55The Appellant argues that Rule 57.01(1)(b) requires the court to consider the amount of costs an unsuccessful party would expect to pay and the Master did not do so.

56He submits that it was a 2-hour motion. There was no cross-examination. The respondent’s current and former counsel claimed 71 hours of time and sought costs for 61 hours (10 hours was for new counsel’s preparation). The Master granted the amount requested without considering reasonableness, proportionality or expectations. 71 hours for a 2-hour motion without cross-examination is excessive. It is not reasonable or expected.

57He criticizes the Respondent’s bill of costs as Dockets were not provided and it is unclear how much time was spent and what materials were prepared for the motions.

58The Appellant submits that all of these errors are reviewable and justify granting leave to appeal the costs awarded and setting aside the costs order. I do not agree. I find no error in the award of substantial indemnity costs, which were within the Master’s Discretion. The failure of full and frank disclosure on an ex parte motion and the tendering of a fraudulent document can justify the imposition of substantial indemnity costs. (see Sweda Farms. Ltd. v. Ontario Egg Producers, 2011 ONSC 2248)

59The Master awarded full costs for all the hours claimed by respondent’s previous counsel and for the materials she prepared. The materials prepared by previous counsel dealt with many issues, not just the CPL. It is unclear how much was awarded for these unrelated issues.

60The quantum of costs is discretionary with the Master being in a far better position to assess their reasonableness as well as the other factors set out in the rules. I can not find that the Masters’ discretion was improperly exercised.

61For these reasons, the Appeal on costs is dismissed.

Costs

62The parties have reached an agreement on costs to be awarded on a partial indemnity basis of $8,000, to the successful party, the Respondent, on this Appeal. The Respondent is therefore awarded costs on a partial indemnity basis of $8,000, in accordance with the agreement of the parties.

Pollak J.