Hornstein v. Kats et al., 2020 ONSC 870

COURT FILE NO.: CV-09-394447

DATE: 2020-05-21

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Stephen Dyment, Counsel for the Plaintiff

ADRIANA HORNSTEIN Plaintiff

– and –

ANATOLY KATS and RACHEL HIGGINS Defendants

– and –

RACHEL HIGGINS Plaintiff by Crossclaim/Counterclaim

– and –

ANATOLY KATS and ADRIANA HORNSTEIN Defendants by Crossclaim/Counterclaim

Mark Ross, Sharon Sam, Counsel for the Defendant Kats Mitchell Wine, Counsel for the Defendant Higgins Mitchell Wine, Counsel for the Plaintiff by Crossclaim/Counterclaim Mark Ross, Sharon Sam, Counsel for the Defendant by Crossclaim/Counterclaim Kats, Stephen Dyment; Counsel for the Defendant by Crossclaim/Counterclaim Hornstein

HEARD: November 20 -23, 26-30, 2018; December 10, 2018; May 21-24, 27, 29, 30, 2019; October 18, 2019

BROWN, CAROLE J., J.

REASONS FOR DECISION

The Action

[1] The plaintiff, Adriana Hornstein (“the plaintiff” or “Hornstein”), brings this action as against the defendant, Anatoly Kats (“Kats”), for:

1. A declaration that the plaintiff owns an undivided one-half beneficial interest in the property known as 49 Alexis Blvd., Toronto (“49 Alexis” or “the subject property”) and that Kats is holding title to the property in trust solely for the plaintiff, to the extent of her undivided one-half beneficial interest;

2. In the alternative, a declaration that the plaintiff and Kats are equal partners as to capital and profits;

3. A declaration that the property is held as partnership property between the plaintiff and Kats, in equal shares, and an order that the partnership be wound up and dissolved;

4. An order that each of the plaintiff and Kats account for all sums invested as capital, advanced to and received from the property and/ or partnership;

5. An order that the net share of each party be equalized;

6. An order that the plaintiff be entitled to trace all funds received by Kats from the property and/or partnership in excess of his net share through any account, investment or property purchased with such funds;

7. An order that the property be partitioned and sold and that the net proceeds of sale be paid to each of the parties in such amounts so as to equalize the net share of each party; and

8. An order that Kats repay to the plaintiff all money invested in or advanced to the property by her with respect to the purchase, maintenance, servicing and carrying costs of the property, and in addition, that Kats compensate the plaintiff for her time and effort in managing the property.

[2] As against Rachel Higgins (“Higgins”), the plaintiff claims as follows:

1. A declaration that the Agreement of Purchase and Sale for the property dated January 7, 2011 between Kats as vendor and Higgins as purchaser (“APS”) is null, void, and of no force or effect;

2. In the alternative, in addition to the net share to which the plaintiff is entitled, damages against Kats in an amount of no less than $85,000, being one half of the estimated difference between the sale price set out in the APS and the greater of the current market value of the property as of the date of this amended claim.

[3] The defendant, Kats, alleges that the plaintiff contributed nothing to the purchase of 49 Alexis, and further, that she did not contribute to any carrying costs, expenses for utilities, services, repairs or maintenance, and is therefore not entitled to equalization of payment of any monies claimed, as she did not pay him for any such amounts. Further, she failed to pay the $10,000 that she had promised him as a reward for putting 49 Alexis in his name. She also failed to repay him $12,000 of the $15,000 that she had borrowed from him for the purchase of yet another property, 117 Waterloo, Toronto (“117 Waterloo”), not related to 49 Alexis.

[4] Kats also counterclaimed against the plaintiff for a declaration that she has no legal title to the house and claimed damages.

[5] Another defendant, Higgins, alleges that since November 2012, she has been ready and willing to close the APS that she signed with Kats for the purchase of 49 Alexis, when a severance issue related to the Planning Act, R.S.O. 1990, c. P.13 (“severance issue” or “Planning Act issue”) was resolved. She alleges that the plaintiff improperly and unreasonably delayed closing from December 2012 to the present. She claims against the plaintiff damages for slander of title, damages under the Land Titles Act, R.S.O. 1990, c. L.5 (“LTA”), and punitive damages of $50,000.

[6] Higgins also crossclaimed against Kats. This claim was withdrawn when she and Kats reached a settlement agreement.

Positions of the Parties

Position of the Plaintiff, Adriana Hornstein

[7] It is the position of the plaintiff that she and Kats entered into an oral agreement on a 50-50 basis to be partners in the purchase of a property municipally known as 49 Alexis. The plaintiff maintains that she contributed her share toward the purchase, renovations, and upkeep of the property. The plaintiff acknowledges that starting in December 2009, when she alleges that Kats and his family moved into the house, Kats alone contributed to the maintenance, upkeep, repairs, renovations, and carrying costs of the house. As well, she alleges that he alone received all rents from the property.

[8] It is the theory of the plaintiff’s case that Kats failed to honour the partnership agreement, but instead, attempted to sell the property, title of which was in his name, without her consent, and to preclude her from sharing in the proceeds of disposition.

[9] It is further her theory that the APS between Kats and Higgins was terminated or was null and void as a result of the wording of an amendment to the APS.

[10] The plaintiff states that the only issues to be determined as regards the plaintiff and Kats are (i) whether the plaintiff and defendant are partners in the property; (ii) or alternatively, whether she has a beneficial interest in the property; (iii) or alternatively, whether any amounts are due and owing by the defendant to her regarding her investment in the property. Further, if a partnership was entered into, an issue to be determined is what respective shares do each of the plaintiff and Kats hold, based on a full and proper accounting, and whether the plaintiff is entitled to an order that the house be partitioned and sold.

[11] As regards Higgins, the plaintiff states that the issues are (i) whether the APS between Kats and Higgins is null and void due to an amendment to the APS; (ii) whether Higgins is entitled to any damages from the plaintiff based on slander of title or under the LTA; and (iii) whether the actions of the plaintiff justify a claim for punitive damages. Higgins had originally also advanced a claim for specific performance; but the claim was withdrawn when she and Kats reached a settlement agreement as regards their crossclaims.

[12] It is the position of the plaintiff that the issue is not whether she made a contribution to the purchase price, but rather, whether a partnership was intended from the beginning. If she failed to perform obligations under the partnership, the law of partnership provides the defendant with remedies, including to terminate the partnership and ask for an accounting. This was not done. It is her position that there was a partnership and that she is entitled to benefit fully from all profits and proceeds of disposition, regardless of what she may have contributed to the property.

[13] In the event that she is not found to have been a partner, the plaintiff claims an interest in the property based on (i) constructive trust and that Kats held title to one-half of the property on her behalf, or (ii) a percentage based on the net contributions of the parties to the purchase, maintenance, and repair of the property, after taking into account occupation rent during the period in which Kats and his family occupied the house, along with rent received by Kats from third parties and retained by him.

[14] In the further alternative, the plaintiff maintains that she is entitled to partition and sale of the property.

Position of the Defendant, Anatoly Kats

[15] It is the position of Anatoly Kats that the plaintiff has failed to establish, on a balance of probabilities, any interest in 49 Alexis.

[16] It is the position of Kats that the plaintiff approached him and proposed that, on a 50-50 basis, they purchase a property that was being sold under power of sale, renovate the property and sell it for profit. They would each pay, as a down payment, $60,000; contribute equally to the carrying costs and renovations; and equally divide the proceeds of disposition after sale.

[17] It is the position of Kats that the plaintiff thereafter indicated that she was unable to pay her share of the down payment, as she could not go to Israel to get the money, but claimed that she would secure a second mortgage and make her contribution that way. Instead, several months later, Kats discovered that she had taken out a second mortgage in his name and had cross-collateralized it on his own home at 17 Virgilwood, Toronto (“17 Virgilwood”). He discovered this when he was contacted by the second mortgagee, when no payments on the second mortgage had been made.

[18] It is further the position of Kats that the plaintiff made no payments toward the mortgages/ interest, carrying costs, renovations, repairs, or maintenance regarding the property. He made all payments in order to keep the property. The plaintiff failed to honour all aspects of the agreement that she had originally proposed.

[19] It is the position of Kats that, due to the heavy financial load, he was required to sell his own home at 17 Virgilwood at a loss and move into 49 Alexis. Finally, in December 2010, due to continuing financial stress, he decided to sell the subject property. Through a real estate agent, he advertised the property for sale at $525,000. Rachel Higgins, also a defendant in this case, offered $525,000 for the property, which Kats accepted. Due to a severance issue, and subsequently, notices placed on the property’s title by the plaintiff, the closing has been delayed from 2012 to the present.

Position of the Defendant, Rachel Higgins

[20] It was the position of Higgins that when she found 49 Alexis, she had been looking for a home with certain specifications for over one year. The house was listed for sale for $525,000. She placed an offer that was accepted by Kats. Due to a Planning Act issue, the closing could not occur as originally agreed, and was extended.

[21] Prior to resolution of the Planning Act issue in November 2012, the plaintiff placed a notice on the property such that the transaction could not close. That first notice was only valid until December 31, 2012. On December 19, 2011, a second, indeterminate notice was placed on the property by the plaintiff, which remains on title to date. The plaintiff has refused to have the notice removed to date, impeding closing.

The Evidence

[22] The material events in this case took place over the course of three years. A timeline of key events is as follows:

• March-April 2009: Hornstein approached Kats and proposed they buy 49 Alexis together;

• June 4, 2009: The transaction to buy 49 Alexis closed;

• December 15, 2009: Kats and his family moved into 49 Alexis;

• January 7, 2011: Kats and Higgins finalized an APS for 49 Alexis, with a closing date of May 30, 2011 (eventually revised to May 11, 2012);

• February 18, 2011: Hornstein registered a caution on the title of 49 Alexis, effective for 60 days;

• April 11, 2011: Hornstein appeared before Master Sproat, who granted an order by which closing of 49 Alexis would proceed, with half of the proceeds deposited into court until the matter between Hornstein and Kats is resolved (“Court Order” or “Order of Master Sproat”);

• May 11, 2011: Initial closing date for 49 Alexis, per APS;

• June 7, 2011: Hornstein registered a notice on title with an expiration date of December 31, 2012 (“First Notice”);

• May 11, 2012: Revised closing date for 49 Alexis, per Amendment to the APS between Kats and Higgins (“Amendment to the APS”);

• November 2012: Planning Act issue at 49 Alexis resolved;

• December 5, 2012: Second revised closing date for 49 Alexis between Higgins and Kats; and

• December 19, 2012: Hornstein registered another notice on title with no expiration date (“Second Notice”).

[23] A summary of the relevant evidence, as it relates to the issues, is as follows.

Evidence of the Plaintiff

Adriana Hornstein

[24] The plaintiff testified that she came to Canada in 1981, worked in medical technology, bought and sold numerous properties, and had an off-track betting business with her husband, which they subsequently lost. She stated that she owned four properties, all of which were mortgaged to the hilt. Those properties, which were owned with partners, were sold under power of sale. She testified that over the years, she had purchased and sold approximately 30 properties and was familiar with buying under power of sale. She testified that she purchased 51 Alexis in the 1990s, then subsequently sought others to purchase it from her, but the bank ultimately sold the property under power of sale. In cross-examination, she stated that, in fact, she did not purchase 51 Alexis, but rather, her husband did, and she guaranteed the mortgage. Her son rented the property to university friends and then sold the property. Subsequently, after being shown a parcel register for 51 Alexis, she admitted that, indeed, she had owned the property, and her son had never owned it. In cross-examination, she was taken through numerous purchase and sale transactions where she had given evidence contradictory to the documentary evidence produced to her.

[25] She stated that she had managed 49 Alexis, but that it was ultimately put up for sale under power of sale. She attempted to convince one person, Armando Vasquez (“Vasquez”), to buy that property with her, but he was ultimately not able to do so. She testified that he wanted to purchase it because he knew the neighbours at 51 Alexis and wanted to be near them. This statement was denied by Vasquez in his testimony.

[26] She then approached Kats, owner of 51 Alexis, with a similar proposal.

[27] With respect to the purchase of 49 Alexis, she admitted that she had requested that Vasquez prepare a declaration before Kats closed the property on June 4, 2009 (“Vasquez declaration” or the “Declaration”). The Declaration stated as follows:

This is to confirm that I signed an offer to purchase property at 49 Alexis from the Bank of Montréal in January 29, 2008. We were unable to close as we were short of the necessary funds. We assigned this to Mr. Anatoly Kats as per Adriana’s instructions on May 23, 2008. I received [from] A. Hornstein, $10,000 in March 2008.

[28] The Declaration further stated that Vasquez had received an additional $15,000 from Hornstein to extend the closing. Hornstein did not produce any documentary evidence of having given either $10,000 or $15,000 to Vasquez. The bank statements she did produce were not complete and omitted a number of seminal pages. In the Third Amended Statement of Claim, she had claimed that she had given $30,000 to Vasquez. There was no evidence of this either.

[29] She testified that the date was wrong and denied that Vasquez had written the Declaration before closing. She subsequently stated that she believed the Declaration may have been done prior to closing but was given to her after closing. She claimed both of these amounts as part of her contribution to 49 Alexis.

[30] She then approached Kats, who owned 51 Alexis, and whom she had met. As he was in the renovation business, she proposed that they buy 49 Alexis together, each pay 50% of the $120,000 down payment, share equally the carrying costs, upkeep, and maintenance, that he renovate the property, that she would get mortgage approval, and that they could thereafter sell it for a profit. She stated that they both contributed to the down payment of 49 Alexis, that he looked after repairs and maintenance and that she looked after tenants, applications for mortgages, and applications to the Landlord and Tenant Board (“LTB”).

[31] She stated that as regards 49 Alexis, she put in $27,000, while Kats put in $18,000. She testified that she obtained a mortgage with Home Trust that was $2,809 per month, inclusive of property taxes, and was to be automatically withdrawn from Kats’ bank account. She testified that she transferred money to Kats’ account for payments on the mortgage and gave him $500 per month as he was also receiving money from the tenant. However, she had previously indicated that the tenant was not paying rent and that she had to go to the LTB to rectify the matter.

[32] She stated that the terms of their partnership, which were not written, were that they would contribute equally to the purchase of the property. As regards the maintenance of the property, they would contribute equally, more or less, according to their abilities, with Kats doing the maintenance and repairs, and she dealing with tenants, collecting rents, getting better financing, calling utilities and lawyers to transfer things, and taking care of outstanding debts to utilities. In terms of the down payment, she stated that she deposited $25,000 and subsequently paid three drafts of $5,000 each on March 25, March 29, and April 17, 2009. This was not adequately or sufficiently substantiated in the documents adduced in evidence.

[33] The plaintiff testified that the partnership commenced June 4, 2009, the day 49 Alexis closed. The house was registered in the name of Anatoly Kats and his son, Yuval Babaev.

[34] The plaintiff testified that Kats lived up to the agreement until approximately 2010, as he moved into 49 Alexis in December 2009. From that time onward, she refused to pay half the mortgage, taxes, insurance, and maintenance, as he did not pay rent. She testified that he would not recognize the partnership. She said that in total, she paid $75,000 into the partnership for the house. This testimony was not substantiated by the documentary evidence.

[35] In cross-examination, she stated that when Kats moved into the house, she did not treat the relationship as at an end, but requested that her investment be returned to her. She did not pay anything further as regards the mortgage, taxes, maintenance, or upkeep of the home and did not inquire as to what the expenses were. She testified in cross-examination that prior to the tenants moving out on October 7, 2009, she did not pay the carrying costs or utilities such as Hydro, but did go to the lawyer to have him write to Toronto Hydro to explain that the utility debt was the tenant’s. That was her contribution. There is no evidence that Toronto Hydro credited Kats, who ultimately paid the outstanding Hydro bills himself. In cross-examination, she admitted that Kats also paid for the insurance just after closing, and admitted that she never paid anything for the insurance. Subsequently, in cross-examination, she stated that she had paid the tax account in 2009 via mortgage payments and she had contributed 50-50 on the first mortgage payments in October and November 2009. She also admitted that Kats paid for water and solid waste in September 2009 and the Enbridge bill in December 2009.

[36] She showed certain bank drafts that she stated were cashed to Kats’ account. She stated that she knew this because she recognized his account number on the back of the cheque. Subsequently, she stated that she assumed it was his bank account number, although she never saw the bank statement. The bank statement does not show that he deposited her cheque in his account. She then posited that perhaps his son had cashed the cheque. She admitted that she was assuming that it had gone to him. When it was put to her that she did not know his bank account number, she simply stated that she would check.

[37] She stated that if she were declared a partner and entitled to a portion of the proceeds of disposition of the home, she would pay whatever amounts were outstanding that she should have paid.

[38] During the course of the trial, she did not produce any convincing or credible evidence to substantiate the payments that she said were for the house. She pointed to a number of cheques and bank drafts that were payable to herself or others, including her lawyer. There were no records, ledgers, or bank statements that actually substantiated the amounts that she testified she had paid.

[39] She argued that Kats failed to produce any credible evidence for his financial contributions to the purchase, renovations, or repairs to the property, to any rebates received, nor any credible evidence as to when he and his family occupied the property between December 2009 and the date of trial.

[40] In cross-examination, she admitted that she had been sued by partners in a commercial property who commenced an action against her and who also reported her actions, such that she was charged criminally with certain offences to which she ultimately pled guilty. She stated that she had declared bankruptcy in 2006 and was discharged in 2007. She had outstanding judgments beyond the bankruptcy. She stated that she was unable, for nine months after the bankruptcy, to get mortgages from Schedule 1 Banks or A Banks, and that she did not buy or own property after 2007. Following the declaration of bankruptcy and the discharge, the parties who had originally sued her as regards investments were granted an Order to continue the action against her, alleging fraud. Pursuant to a restitution order issued, she is required to pay back $481,400, of which she has, to present, paid nothing.

Armando Vasquez

[41] Armando Vasquez testified that in 2005, he was attempting to find someone who could assist him in finding a place to live. His credit was not good and he could not get a mortgage. He was referred to the plaintiff, who suggested that his family or friends could pay the mortgage until his credit improved. In 2009, she asked Vasquez to become a partner with her to purchase 49 Alexis, which was being sold by the bank under power of sale. She would give him money toward the deposit and indicated that he would live on the first floor and rent out the basement. In cross-examination, he stated that she had told him that he would not pay anything, but his name would be on the property. He stated that he did not care whether his name was on the property, but that if the plaintiff had put his name on the property, he trusted her.

[42] Vasquez stated that he signed whatever documents Hornstein told him to, as he trusted her because she had helped him. He left the obtaining of a mortgage to her, as he knew or believed that she was a mortgage broker. She gave him $10,000, then $15,000, as deposits. He does not recall how the funds were given to him. He recalls that she also gave him cheques a few times to deliver to other people. At the end of the day, however, he was not able to raise the necessary financing to close the transaction.

[43] He stated that he went to her home, sat in her kitchen, and wrote the Declaration stating that he could not close the deal as he was unable to get financing. He testified that the date on the Declaration was wrong, and that she dictated what to write and he wrote it. He does not recall paying any monies to Home Trust or Cross Town for mortgage, nor any monies for legal fees. After that, they had no more contact until she called him just prior to the trial and told him she had a good proposition for him. She stated that if he would appear on her behalf at the trial, she would pay him $325, which was to replace the amount of money he would have earned driving for Uber, his job.

[44] He stated that he thereafter signed an amendment and assigned the deal to Kats on May 13, 2009. When asked why the Declaration that he signed stated that it was assigned on May 23, 2009, he indicated that he could not explain the discrepancy. He just signed the document on the instruction of the plaintiff.

[45] In cross-examination, when it was put to him that he wanted to purchase the 49 Alexis property because the neighbours at 51 Alexis were friends of his, as the plaintiff had testified, he stated that he did not know the neighbours at 51 Alexis, had no idea who lived there, and had never seen 49 Alexis.

Evidence of the Defendants

Anatoly Kats

[46] Anatoly Kats gave his evidence in Hebrew, which was translated by an interpreter.

[47] Kats is 60 years old and resides in the City of Vaughan. He moved from Israel to Canada in 2003 and worked in renovation in both Israel and Canada. He has his own renovation business. He has a grade 10 education and trained to be a certified electrician at a trade college in Israel. He also speaks Russian.

[48] His first home in Canada was located in Toronto at Wilson and Bathurst. He rented the house and lived there with his wife and four children for two years, after which they bought their home at 17 Virgilwood.

[49] By 2009, he owned two houses, 17 Virgilwood and 51 Alexis, which he purchased in 2008 under power of sale. 51 Alexis was rented to tenants when he purchased it. The tenants wanted to stay and gave him postdated cheques. However, the cheques were returned NSF. When he went to speak with them, the tenants advised that they had already paid rent to someone else and indicated it to be Hornstein, the property manager, to whom they paid rent. Kats contacted Hornstein and she said she was taking care of the property as the property manager and that she would pay him the rental money. That was how he met Hornstein.

[50] He saw Hornstein from time to time. At one point, she asked him to renovate a condominium and paid him for the work. She seemed like a decent, nice woman.

[51] In March-April 2009, the plaintiff told Kats that there was a house for sale at 49 Alexis that was being sold under power of sale for $430,000. She stated that she knew about the house as she was the property manager, and the house was being rented. She proposed that they purchase it together, renovate it, and sell it. She proposed that they each contribute $60,000 to the down payment, then indicated that she was not able to put the house in her name, as she had a problem. She offered to pay him $10,000 extra if he would agree to have the house put in his name alone. The rest of the purchase price was to be funded by a mortgage, which she had arranged with Home Trust at 7.9%. Kats did not agree with the mortgage as it was at too high a rate of interest, but the plaintiff indicated that they would refinance the mortgage at a lower rate of interest within a month after purchase. This was never done. The plaintiff did, however, obtain a second mortgage against Kats’ personal home (17 Virgilwood) unbeknownst to Kats (the “Seecharan mortgage”). This second mortgage will be discussed further below.

[52] By December 2009, due to the fact that the plaintiff never sought to refinance the mortgage at a lower interest rate, as she had promised, Kats himself arranged for refinancing of the mortgages on 49 Alexis. He obtained a mortgage for $371,000 and paid out Home Trust and the Seecharan mortgage, against Virgilwood, as witnessed by the Discharge Statements and other relevant productions in evidence.

[53] He knew nothing of a previous deal on 49 Alexis with an “Armando Vasquez”. He first heard the name during this trial.

[54] Kats testified that the plaintiff often prepared the paperwork and he signed it. They went to a lawyer, Don Kirsh. Hornstein told him that Kirsh spoke Hebrew, but Kats testified that Kirsh did not speak Hebrew. He was told that Hornstein would translate everything for him after, but that they had to rush to sign everything in order not to lose the house. Kats signed the documents as he was told, although Hornstein did not tell him what the documents he was signing were. He did not understand the documents, or the English. He and his son were at the meeting and she was in a rush, so they did not read the documents. However, Kats fully trusted and believed her, as she had been friendly, nice, and religious, which is why he signed everything she told him to.

[55] He had prepared three bank drafts for his portion of the down payment, totaling $53,000 ($40,000, $9,000, and $4,000), dated May 27 and 28, 2009, and then paid $7,000. The $40,000 had been taken from his account and the rest was cash. Hornstein told them that they should use four bank drafts instead of one.

[56] The plaintiff was to provide $60,000 for the down payment. She advised that she would take a second mortgage in her name until she could get the money from Israel.

[57] The transaction closed on June 4, 2009.

[58] Thereafter, as regards the second mortgage, Kats received a telephone call from a man named “Seecharan”, who was apparently the second mortgagee regarding a private mortgage and who told him that the mortgage was in Kats’ name and that mortgage payments had not been made. Kats had apparently signed papers for the second mortgage at the time of closing, although he did not realize it and was not advised of this by Hornstein or Kirsh. Approximately one month after being contacted by Seecharan, he learned that the second mortgage in his name was secured on his own home at 17 Virgilwood and was not secured by the plaintiff.

[59] He confronted Hornstein to inquire why the second mortgage was in his name and she indicated that she had to do it, but that she would take care of it and that he should not worry. She was nice and religious and he felt that all was fine.

[60] Title to 49 Alexis had been put 99% into his son, Yuval’s, name and 1% into his name, as Hornstein indicated that this would avoid payment of the Land Transfer Tax, since Yuval could take advantage of the first-time homebuyer benefit. She also told him that he would pay no more than $750 per month for the mortgage with Home Trust, which was $2,800 monthly, as she would pay the rest ($2,050). The payment was to be made by automatic withdrawal from Kats’ account and she was to deposit her portion into Kats’ account. She never did so, nor did she pay any other expenses for the house. Further, she never paid him the $10,000 that she had promised him for putting the house in his name alone.

[61] One day Kats received a telephone call from UEI Financial regarding an instalment purchase contract for a furnace and air conditioner, which he had not ordered. They sent him the contract and he noted that his last name was not spelled properly. “Kats” was spelled with a “z” and not “s”. His Social Insurance Number, which he had given to the plaintiff for purposes of the property purchase and mortgage, was on the contract. He had previously noted that his name had also been incorrectly spelled on documents that the plaintiff had prepared for LTB hearings, always spelled with “z” and not “s”. As well, a handwritten authorization, written by the plaintiff, authorizing her to represent Kats at the LTB, used the same incorrect spelling for his name. He was ultimately able to have the UEI Financial contract cancelled.

[62] Between June and December 2009, when the parties were still on good terms, the plaintiff asked Kats to help her purchase 117 Waterloo, which was under power of sale. The plaintiff lived in the house as a renter. She told him that she would be evicted from the house. She wanted to have Kats and her daughter purchase the house, and indicated that her daughter would take the mortgage in her name. She offered to pay him $45,000 if he would do this. The price of the house was $850,000 or $880,000. He was not interested in purchasing another house. She then asked whether he would help with the payment, as she had no money. She wanted $25,000 and he indicated that he could perhaps help with $15,000, which he gave her by certified cheque on August 24, 2009. In December 2009, the plaintiff paid to Kats $3,000 in part payment for his loan to her of $15,000. He was never reimbursed for the additional $12,000 owing to him. In cross-examination, when asked about a $3,000 cheque Hornstein gave him in part repayment, he indicated that she initially had given him a cheque for Waterloo and then had to replace it as it was returned NSF. On that second replacement cheque, she had noted on the “Re” line that the cheque was for 49 Alexis rather than 117 Waterloo, although in recorded telephone conversations with Kats, she admitted that it was for Waterloo.

[63] By December 2009, Kats’ finances were tight. He was paying mortgages on three houses. He was struggling to make all payments by himself. Because of this, he ultimately had to sell the family home at 17 Virgilwood at a loss. His family moved into 49 Alexis on December 15, 2009, after the tenants had left in October due to non-payment of rent.

[64] In a recording of a telephone conversation between the plaintiff and Kats, in Hebrew, which was translated into English, she agreed that they were to be 50-50 partners. She initially indicated that she had put $76,000 into 49 Alexis, but then indicated that she never put anything into the purchase of 49 Alexis, and never paid him back the outstanding loan of $12,000 for the purchase of 117 Waterloo. The USB of the recorded conversation in Hebrew and the translated transcript were adduced in evidence.

[65] By 2010, Kats’ financial situation was not good and he could not continue to pay all the mortgages. He found a real estate agent, advertised 49 Alexis for sale at $525,000, and listed it on the MLS. After one month, Rachel Higgins made an offer. He had never met her before she came to see the house.

[66] Kats and Higgins entered into an APS. She had attempted to negotiate a lower price but he refused, although he agreed to do some repairs and renovations to the house. The closing was to be May 30, 2011. However, due to a Planning Act issue, which required 49 Alexis and the adjacent property, 51 Alexis, to be severed, they were unable to close as planned. They negotiated several extensions and the Planning Act issue took approximately 1½ years to resolve, until November 2012. He stated that although the prices had begun to increase from the time the APS was first signed, he did not request more money for the home. He had made a deal with Higgins and believed in keeping his word.

[67] From the time he purchased the home until the present, Kats has paid for all carrying costs, utilities, including Enbridge, Toronto Hydro, waste and solid waste management, as well as all blended mortgage payments, taxes, and insurance. He presented in evidence the payments made. The accuracy of these was not disputed by counsel for the plaintiff. In the event that it is found that there was a partnership, he claims reimbursement from the plaintiff for all monies he paid regarding 49 Alexis, only for those times that he and his family did not live at 49 Alexis. Further, he went through renovations, repairs, and maintenance done on the house and their costs. The house expenses for 49 Alexis totalled approximately $164,000, excluding all expenses incurred when he and his family were living in the house, and deducting rents received from tenants who lived there when the family was not occupying the premises. All amounts were documented and produced in evidence at trial.

[68] He does not know the value of the house today.

[69] In cross-examination, his answers were consistent with those in examination in chief.

Yuval Babaev

[70] Yuval Babaev is the son of Anatoly Kats. He was born in Israel and is 33 years of age. He, his mother, and brothers moved to Toronto in 2004; his father had moved to Canada in 2003 when Yuval was about 18.

[71] He attended Seneca College, taking two years of a three-year civil engineering course, then George Brown University, where he completed a two-year computer degree.

[72] They lived first at Elgin Mills and Yonge, then at Wilson and Bathurst, and then at Finch and Bathurst, at the 17 Virgilwood property.

[73] From 2009, he had been working with his father in the renovation business. However, in 2015, he opened his own business with his brothers, doing landscaping, lawn maintenance, and snow plowing. His father now has a worker and the brothers sometimes help their father in the winter.

[74] Yuval and his father were working at 51 Alexis, doing maintenance and repairs, when the plaintiff walked in and they met. The first talk of a partnership regarding 49 Alexis may have been at 51 Alexis. The home at 49 Alexis was to be sold for $430,000 under power of sale. The plaintiff proposed that they purchase the property together, equally, and stated that $60,000 was to come from each partner to make a 50-50 deal. She made many promises and offered his father $10,000 to put the property in his name, as a kind of “reward”. Yuval remembers clearly that she indicated that nothing could be in her name. She stated that she would pay the legal costs and appraisal costs.

[75] They trusted her. There was lots of pushing and moving quickly to get things done. He recalls going to different places to sign a variety of documents.

[76] They paid their $60,000. Yuval believes that he was at all of the meetings with the lawyer, his father, and the plaintiff.

[77] The plaintiff further suggested that Yuval be put on title, as he qualified under the new homeowners’ rebate program for purchase of this home and would receive a rebate of approximately $3,500. The title indicated that Yuval was a 99% owner of the property. He testified that he did not know how that came about, but that they did what they were told by the plaintiff. The lawyer, who could only speak a bit of Hebrew, prepared all the documentation according to the instructions of the plaintiff. On the day of closing, they were told to sign various documents, and Hornstein indicated that she would explain everything to them afterward. They trusted her and expected honesty and transparency from her.

[78] The plaintiff brought no money into the closing. She had promised, prior to closing, to obtain the funds from Israel, but did not go to Israel. Yuval understood that they would not be able to close without her $60,000 contribution. However, there was apparently a second mortgage placed on the property for $50,000, which Yuval’s father did not know about. Following closing, his father continued to ask the plaintiff on many occasions what she was intending to do with respect to her contribution, indicating that she would have to pay her contribution in order to be a partner.

[79] The second mortgage was not paid on time and there were penalties accrued. Yuval’s father asked why the second mortgage had been placed in his name and why she was not paying; she replied that it was a mistake. It was his father who told him this.

[80] The plaintiff did not pay her portion of the property. The property was vacant after the tenant moved out. In December, the Kats family moved into the property as money was tight and Yuval’s father was stressed, as he had not anticipated owning three houses alone (49 and 51 Alexis and 17 Virgilwood). Yuval testified that between June 4 and December 15, 2009, he does not believe that the plaintiff paid anything toward the home. Expenses and the second mortgage went unpaid. His father was paying for everything. He does not know whether the plaintiff reimbursed his father for anything, but knows that she was not paying.

[81] Due to a buildup of occurrences, including the fact that the plaintiff was not making payments for the mortgages, they lost trust in her.

[82] At one point, UEI Financial called to indicate that Anatoly Kats had signed a document for the purchase of a furnace and air conditioning. UEI indicated that Kats could not cancel the contract as it was made by the plaintiff. Yuval contacted UEI on two occasions to indicate that they had not signed a contract. On the second occasion, someone at UEI Financial spoke with them and said that the plaintiff had worked at UEI Financial and had done a number of fraudulent or underhanded things while there. The contract was cancelled. The UEI worker warned them not to do anything with the plaintiff and suggested that they go to the police. When they did go to the police, they learned that there was a whole computer screen of complaints against her. They also did a search to see if any other unauthorized transactions had been done by her under their names.

[83] Yuval testified that personal information had been given by his father to the plaintiff regarding the purchase of the house, which she apparently used as regards the UEI contract. In cross-examination, he was taken through the UEI contract and other documents, which his father had signed. He testified that the signature on the UEI contract was different from his father’s signature. Indeed, the name was spelled incorrectly, “Kats” being spelled with a “z” rather than “s”. The same incorrect spelling was used on LTB applications that had been completed by the plaintiff. He further pointed out that the circles used around the signature were different from those used by his father, and indicated that the overall structure of the signature used by his father was different from the signatures on the UEI Financial contract and the LTB documents.

[84] As a result, their trust in Hornstein was broken. It appeared that the plaintiff was attempting to take a part of the value of the property without having paid anything into the property.

[85] Yuval testified that he knew nothing of an “Armando Vasquez” prior to the closing. Prior to April 15, 2009, he was not aware of a second mortgage on the property. He recalled that the plaintiff had, at one point, indicated that because she did not go to Israel to get her $60,000 for the down payment, she was going to take a second mortgage for her part. However, it was placed in the name of his father, and not in her name.

[86] Yuval testified that when 49 Alexis was purchased, the house was a disaster. The roof leaked and there was no insulation in the attic, so his brother worked on the roof with his father. The house needed to be painted, basement countertops needed to be changed, faucets were leaking, valves had to be changed, doors were not properly aligned, and there was ongoing maintenance. Outside, there was a lot of garbage that had to be disposed of by bringing in disposal bins.

[87] He was taken through numerous repairs and maintenance that were done in December 2009 and confirmed what had been done. He stated that he did not know about the eavestrough repairs. He was not sure whether an outside company or his father had done the attic insulation repair. The insulation was injected into the roof by hose. Light fixtures and eight pot lights in the living room and dining room were installed. The three bathrooms required extensive repair, including changing faucets, toilets, tiles broken from water damage, painting, fixing leaking drainage pipes, replacing old plumbing behind the walls, painting, and changing the fixtures. He saw some of the work being done. Hardwood floors on the main floor had to be sanded and varnished. He saw the floors before and after they were redone. He stated that the accounts for the work done seemed reasonable. He noted that the furnace was very old and thinks that his father tried to repair it and clean it. It later had to be replaced. In 2015, the basement flooded and an emergency plumbing company had to be called. The roof was replaced in 2015.

[88] Yuval testified that he had transcribed some of the telephone conversations between his father and the plaintiff. The USB stick of the transcribed conversations was adduced in evidence and the plaintiff acknowledged the accuracy of the tapes in her examination in chief.

Rachel Higgins

[89] Rachel Higgins graduated from the University of Toronto with a Masters in medical biophysics and a PhD in molecular medical genetics. She has, for 14 years, been employed with the Ontario Ministry of Health as a research scientist conducting medical research.

[90] In January 2011, she was living in Thornhill, renting a townhouse, which was put up for sale by the landlord and sold. She had to move and decided to purchase a house and move to the city, closer to her work. She looked for a house for over one year, looked at over 100 homes, then found 49 Alexis with the help of her real estate agent, Esther Greenbaum.

[91] She had specific requirements. She wanted a home for the long term; a bungalow, given her age; a home close to a synagogue, a park, as she enjoyed nature, and shops, as she wanted to walk if she was unable to drive. She had a restricted budget, as she was single. She stated that she was fussy and had to find a home that she could connect with. 49 Alexis fulfilled all of her requirements and specifications.

[92] 49 Alexis was listed for $525,000. She tried to negotiate a lower price, but Kats insisted that he would not reduce the price. However, as the property was not in good shape, she requested – and he agreed to do – repairs and renovations. The APS was executed by Higgins on January 7, 2011 with a purchase price of $525,000, a deposit of $20,000, and a closing date of May 30, 2011. She had never heard of Hornstein until she was advised that they could not close in May 2011. She had never met Kats previously.

[93] Shortly before closing, Higgins’ real estate lawyer, Shayle Rothman, contacted her to advise that there were problems due to a notice on title, registered by someone claiming an interest in the property, and that until the matter was resolved, they would not be able to close. Further, they needed severance of 49 from 51 Alexis pursuant to the Planning Act.

[94] After speaking with the seller and his real estate agent, it was determined that they should enter into a one-year extension. They executed an amendment to the APS, extending the closing from May 11, 2011 to May 11, 2012.

[95] Meanwhile, a caution had been registered on title by the plaintiff on February 18, 2011, effective for 60 days, pursuant to s. 71 of the LTA. The plaintiff went to court, on April 11, 2011, and appeared before Master Sproat to obtain a Certificate Pending Litigation (“CPL”). Master Sproat did not grant the plaintiff a CPL. Instead, she granted an order by which closing would proceed and half of the money from the proceeds of disposition would be deposited into court until resolution of the matter between the plaintiff and defendant at trial.

[96] Thereafter, the deposit of $20,000 from Higgins to Kats was replaced by a deposit of $500. When Kats and Higgins agreed to extend the closing date, they discussed the deposit and thought it would be senseless to have $20,000 in a real estate broker’s office and not earning interest. They agreed that Higgins would put up a small deposit to confirm her commitment and would put the $20,000 in an interest-bearing account. She was committed to the transaction.

[97] The wording in the Amendment to the APS concerning an option was the wording her lawyer used. She did not realize that he gave her an option. Her intention was to close the deal. She surmises that he never explained to her that she had an option.

[98] Her intention was always to close the transaction and to live in 49 Alexis. As regards to the real estate commission, she and her real estate agent, Ms. Greenbaum, never discussed the commission, or waiving it. She never agreed to waive the commission, as her real estate agent worked hard for the commission for over one year.

[99] At that point, the rental property Higgins was living in was sold by the landlord and she had to leave. She could not move into 49 Alexis due to the severance issue, which was being resolved. In the interim, she spoke with her children, Jeffrey in Australia and Ashley in Manhattan. She had moved several times in the previous few years and it was becoming too much for her. The children proposed to help her find a place to live. They were not successful finding rental accommodation. Then the children spoke about purchasing a home. She would live there temporarily until 49 Alexis closed and then the home would become that of the children, who were planning to return to Toronto. They found the cheapest home available in the area – 51 Marquette Ave. (“51 Marquette”).

[100] Her name was placed on the title of 51 Marquette, as her children were out of the country. Higgins and her children have a trust agreement whereby the children own the property and Higgins resides there. If the children wish to sell, she would be given notice. When her daughter, Ashley, returned to Toronto, they tried to transfer the house into Ashley’s name, but the Land Transfer Tax was so high that it was too expensive to transfer title at that time.

[101] Meanwhile, the plaintiff’s counsel registered a notice on title on June 7, 2011 on 49 Alexis (previously defined as the First Notice). The Notice could be deleted by the Land Registrar after December 31, 2012. The closing on 49 Alexis was extended to May 11, 2012 and the severance issues resolved in November 2012. Her lawyer advised that the Notice would expire in December 2012. She and Kats agreed to close at that time. Kats vacated 49 Alexis and moved to 51 Alexis so that Higgins could move into 49 Alexis. Financing from TD Bank was arranged and she was able to close in December 2012. However, counsel for the plaintiff registered another notice on title on December 19, 2012, which was indeterminate with no expiry date (the Second Notice), prior to expiry of the First Notice, such that they were unable to close. That Second Notice remains on title today. Higgins’s lawyer registered a notice on title on January 11, 2013 to secure Higgins’s right to the property. Higgins has tendered on three occasions over time, attempting to close.

[102] Higgins’s lawyer, Shayle Rothman, contacted the plaintiff’s lawyer, Stephen Dyment (“Dyment”) to request removal of the Second Notice in order to proceed with the closing. However, the plaintiff’s lawyer requested numerous documents that Higgins did not have, and many of which she had no control over. She testified that he was not sincere in asking for those documents, as he continued thereafter to ask for more documents. It appeared that he was simply trying to stall the process. He further requested an affidavit from her, and an agreement in writing for her to testify at the trial. He further demanded to see Rothman’s entire client file. The affidavit from Higgins was provided, but Dyment termed it “wholly inadequate”. Dyment indicated that the affidavit should have dealt with whether the APS was enforceable at law. This is, of course, a legal issue, which could not be addressed by Higgins, a layperson.

[103] Thereafter, Higgins was sued by the plaintiff, who added Higgins as a defendant to the Statement of Claim.

[104] Higgins and Kats entered into a settlement agreement on January 4, 2019, as regards their crossclaims, whereby Higgins was still able to purchase the property. The parties agreed to share equally in the net equity of the property if the property were to be sold. Higgins’ crossclaim against Kats was dropped, with each party bearing their own legal costs. Higgins was responsible for a portion of any damages that Kats may be found liable to pay to the plaintiff at trial, up to $50,000.

[105] While Dyment alleged that Higgins and Kats had colluded before the settlement agreement, she denied this. She testified that there had always been an attempt to resolve the matter amicably among the three of them. Kats had never denied Higgins’ right to occupy 49 Alexis and she understood his situation and that he had carried the property from 2011 following her purchase of the property. She did not want to cause him any additional problems but wanted to settle the matter.

[106] In cross-examination, when it was put to her that 51 Marquette also fit her requirements as it was near synagogues, shopping, and a main street, she wholeheartedly denied this, indicating that it did not meet her requirements, as it was not a bungalow and was on a busy highway, the 401. She had planned to live there only temporarily and the only reason she was still there was not her choice, but was due to the plaintiff’s actions in improperly registering the Second Notice, despite having the Court Order that protected any monetary interests the plaintiff may have been found to have in the property. She testified that she had no choice but to stay at 51 Marquette for the time being, as she was single and could not just go out and buy another home to replace 49 Alexis. 51 Marquette was not her house to sell as it belonged to the children.

[107] As Higgins had stated in examination in chief and in cross-examination, it was always her intention to close on 49 Alexis. She stated that she obtained financing and tendered on the property three times. Her intention was always to close, and if it were not her intention, she would not have been at the trial.

[108] When asked in cross-examination if she had the $20,000 deposit on 49 Alexis returned so that she could purchase 51 Marquette, she stated that this was not the reason. She stated that the purpose was only because it did not make sense to leave the money in a non-interest-bearing account for one year in the offices of the real estate agent. Indeed, she did not have the deposit returned to her until after the purchase of 51 Marquette.

Shayle Rothman

[109] Shayle Rothman acted as Ms. Higgins’ real estate lawyer regarding the property at 49 Alexis.

[110] He was called to the bar in 2007. His practice is comprised of 90% residential real estate and corporate real estate, 10% corporate commercial, plus wills and estates. He has 10 partners. He handles about 4,000 real estate transactions per year, and in his 12 years of practice, has done tens of thousands of real estate transactions.

[111] He was not involved in this case until after the signing of the APS. When he was retained, he searched the parcel register and did a parcel search. He found that there was a Planning Act breach pursuant to s. 50(3). The property had merged with an adjoining property due to the fact that both were owned by Kats.

[112] While rectification of the Planning Act issue was being pursued, it was discovered that a caution had been registered on title by the plaintiff. The matter was taken to court, and pursuant to the Order of Master Sproat, it was ordered that the transaction would close once the Planning Act issue was resolved, with an undertaking from the seller’s lawyer that 50% of the proceeds of disposition would be paid into court until determination of the final trial commenced by Hornstein against Kats.

[113] An amendment to the APS was entered into to extend the closing from May 11, 2011 to May 11, 2012 to deal with the severance issue.

[114] As regards the last paragraphs of the Amendment to the APS, set forth at paragraph 170, herein, the clause does not give Higgins an option. Rothman recommended the language to protect his client regarding the unknown future. He had no idea what could happen with government regulation changes, bank approvals, or new legislation, which may affect the transaction. If Higgins did not qualify for the “stress test” in the future, she could be in breach of the contract, as opposed to the seller.

[115] As regards to the stress test, Rothman explained that in January 2018, the government had promulgated new rules and regulations to qualify a buyer for a mortgage, to ensure that in case they would have to qualify for a higher interest rate, they would still be able to manage monthly payments. He wanted to ensure that if things changed for his client, who was agreeing to push out the closing date over one year, and to ensure that there would be no fault on her part, he needed to protect her to make sure that she would qualify for a mortgage. He testified that if the clause was intended to be an option, he would have drafted an option clause. This clause was specifically for his client and the situation to make sure that the unknown could be satisfied. He stated that one could not isolate one sentence out of the clause, but had to read the entire provision. In this case, it was a condition to ensure that his client could, one year or more later, obtain a mortgage, and if she could not, because rules and regulations had changed, she would not be liable. In cross-examination, he did not agree that the clause meant that she did not have to close if she did not want to. The original APS still exists and has been extended as a result of the Amendment to the APS. There was no mutual release or any final release of the original APS, meaning that it continues as an existing agreement. If all conditions are waived, there is a firm deal. There is no difference between a condition regarding financing and the condition in question.

[116] After the Amendment to the APS was executed, it was determined that a notice pursuant to s. 71 of the LTA had been placed on title by the plaintiff on June 10, 2011. It was to be deleted by the Land Registrar after December 31, 2012. The severance issue application was approved at the end of September 2012; but for the Notice pursuant to the LTA, the transaction would have been able to proceed to close in November 2012. Rothman followed up with the seller’s lawyer to ensure that his consent was registered on title regarding the Planning Act issue. They then had to deal with the Notice placed on title by the plaintiff, and would need her consent to remove it from title, or would have to wait until December 31 for it to expire. Rothman requested that the seller’s lawyer clean up title. Then, Rothman’s senior law clerk wrote to counsel for the plaintiff to confirm that he would consent to removal of the Notice registered on title, with 50% of the proceeds of disposition to be paid into court.

[117] Higgins had access to funds from the bank in order to close in December 2012 and, thereafter, continued to be ready, willing, and able to close. They were anticipating closing December 5, 2012.

[118] Rothman was advised that Stephen Dyment, counsel for the plaintiff, would provide a consent if he were to get six documents from Higgins that had nothing to do with his client. The issue was between the plaintiff and Kats, and the documents should have been requested of Kats’ counsel. Dyment insisted on being allowed to review Rothman’s file, which was solicitor-client privileged. Rothman would not agree to this. He saw the request as a fishing expedition. Indeed, if the plaintiff wanted the documentation, she should have requested it from the seller. In the end, to move the closing along, Rothman did agree to have Higgins sign an affidavit regarding an overview of what had transpired on the file in order to appease the plaintiff.

[119] The affidavit was provided, but Dyment termed it “wholly inadequate” and indicated that without Rothman agreeing to produce his client file, Dyment would not be able to consent to the closing of the property. Rothman stated that he felt it was a completely unreasonable request. There was an Order from Master Sproat that dealt with the closing and they were only waiting for the severance issue to be resolved, after which the transaction should be able to close.

[120] In his opinion, the Notice was moot, as they would have given the funds to the seller’s lawyer, who would have paid one-half of that amount into court, and the transaction would have been completed. The Court Order existed to deal with the proceeds of disposition, and the Master had indicated that the sale could proceed, with no issue with respect to valuation.

[121] The only issue that Rothman saw from reading all the documentation was that the plaintiff wanted more money.

[122] Higgins and Kats determined that they would wait until December 31, when the Notice would expire. However, before that occurred, the plaintiff, on December 19, 2012, placed another s. 71 notice on title, with no expiry date. The only way to remove such an indeterminate notice would be to have the plaintiff’s consent or a court Order to have it removed. One could not simply write to the Registrar to have it removed. Rothman testified that under s. 71, a party who had an interest in property could register an agreement or assignment to protect their interest, and as a result, he registered a notice on title on behalf of Higgins.

[123] Rothman explained that notices under s. 71 are used sparingly in order to protect clients’ interests and, in his practice, he has only used a notice 20 to 50 times. The plaintiff maintained that Kats was holding title in trust for her. However, Rothman stated that pursuant to s. 62 of the LTA, “a Notice of an express, implied or constructive trust shall not be entered on the register or received for registration”. He further stated that only a defeasible title can be registered, and if there is no written agreement, there would not be the ability to have it registered on title. If the Land Titles office had known that it was for a trust interest and there was no written agreement, they would not have certified the document or registered it.

Esther Greenbaum

[124] Esther Greenbaum has been a licensed real estate agent since 1990 and has worked continuously as such since then. Her business is mainly residential real estate, with some commercial real estate. She acts for both buyers and sellers. She was with Re/Max at the material times and until 2015, and is now with Sutton Group Admiral.

[125] She knew Rachel Higgins prior to the events in question. They were both from Israel.

[126] The APS in question between Higgins and Kats was entered into on January 7, 2011 and was accepted by Kats. The transaction was to close May 30, 2011. The completion date changed several times from May 30 to February 28; then to May 2; then to May 11. There was a problem with the closing, as the owner could not give a clear title. There was an issue with the Planning Act and severance of 49 Alexis from the adjacent property, 51 Alexis, which was also owned by Kats. Thereafter, there was an issue with a woman who was claiming an interest in the house and placing cautions and notices on title. Because of the severance issue, the closing was extended for one year. An agreement to amend the APS was entered into. The deposit was changed from $20,000 to $500. The deposit was to demonstrate good faith. The $20,000 was returned by Re/Max as it was known that it would be tied up for one year and was not necessary to keep so much money in the Re/Max office, where both the seller’s and buyer’s agents worked. It was replaced by the $500 deposit and was kept in trust at Re/Max.

[127] In cross-examination, Greenbaum stated that she does not recall Higgins telling her that she needed the money back in order to buy a different house. Higgins had told her that her children were looking for a house and 51 Marquette was purchased for them. She lived in that house on a temporary basis, assuming that she would be moving into 49 Alexis the following year. 51 Marquette was in her name, as Higgins’ children lived in other countries. She does not know who paid for the house, as she does not get involved with those details.

[128] 51 Marquette was not suitable for Higgins and did not fit her requirements. It was on a busy highway, had no garage, which she required, and was the cheapest property they found. It was purchased as a niche until she could move into 49 Alexis. While there may have been other properties for sale in the area of 49 Alexis, they were not looking for another replacement property, as everyone believed that she would be moving into 49 Alexis within the year.

[129] Again, in cross-examination, she stated that the Amendment to the APS was to keep the deal alive. It was not a mutual release from the deal. When the amendment was entered into, she spoke with the offer advisor at Re/Max and with lawyers, although she does not remember who. The clause regarding the option of the buyer was included. She did not draft the clause, but only typed the final amendment to the agreement.

[130] As regards the commission, it was to be paid through the seller’s agent. The buyer does not pay the commission to the agents; the seller’s agent does. She never agreed to waive commission.

Credibility of the Parties

Adriana Hornstein

[131] I do not find the plaintiff to have been a credible witness. She was contradictory and inconsistent in her evidence given. When confronted in cross-examination with documentary evidence that contradicted the evidence she had given in examination in chief, she would deny having made the first statement, change her evidence or would equivocate, then attempt to wiggle out of her previous evidence. In some cases, she would back off and concede that she had been wrong. She continued to change her position as contradictory documents and evidence were presented. Throughout her testimony, she was defensive and argumentative. She would not answer questions directly.

[132] In cross-examination, the plaintiff would often blame someone else for events that occurred, houses that she and her husband owned that were taken by the bank and sold under power of sale, and certain suspicious transactions.

[133] I found her evidence throughout to be unreliable.

Anatoly Kats

[134] In assessing the evidence of the defendant, I have taken into account that his testimony was translated throughout from Hebrew into English.

[135] I find the defendant to have been a credible witness. He was straightforward in his evidence, forthright, without equivocation or obfuscation, and was honest. His evidence was consistent with the documentary evidence, which supported his testimony. His testimony was not shaken in cross-examination.

[136] Where his evidence differs from that of the plaintiff, I prefer his evidence, unless otherwise stated.

Yuval Babaev

[137] The evidence of Yuval Babaev was straightforward and forthright. It was consistent with the documentary evidence adduced. It was also consistent with the evidence given by his father, Anatoly Kats. It was not contradicted on cross-examination.

[138] I found him to be a credible witness and where his evidence is inconsistent with that of the plaintiff, I prefer his evidence, unless otherwise indicated.

Rachel Higgins

[139] I found Rachel Higgins to be straightforward, honest, and candid throughout her testimony. She was consistent in her testimony, which was supported by the documentary evidence. Her evidence remained consistent throughout her testimony and cross-examination.

[140] I found her to be a credible witness. Where her evidence is contradictory to that of the plaintiff, I prefer her evidence to that of the plaintiff, unless otherwise indicated.

Shayle Rothman

[141] Shayle Rothman’s testimony was straightforward, well informed, and forthright. His testimony was consistent with the documentary evidence. He was an independent witness with no interest in the outcome of the proceedings.

[142] I found him to be credible.

Esther Greenbaum

[143] Esther Greenbaum gave evidence that was forthright, candid, and consistent with the documentary evidence and the testimony of others. She was a friend of Rachel Higgins, as well as her real estate agent. I did not find this to have coloured or impeded the honesty of her evidence. I found her to be a credible witness.

Armando Vasquez

[144] Armando Vasquez’ testimony was straightforward and unembellished. His memory of some of the events was poor. I found Vasquez’ credibility to be doubtful. I note that from early 2009, he had no communication with the plaintiff. She only contacted him about the trial in 2018 just prior to its commencement, requested that he testify on her behalf and paid him $325 to do so, the amount he would apparently have lost by attending trial rather than driving for Uber, which was his job.

[145] I have taken all of this into account in assessing his credibility.

Discussion of the Evidence

[146] The evidence, both viva voce and documentary, indicates the following.

[147] Kats was approached by the plaintiff in April 2009 regarding partnering on a house located at 49 Alexis Blvd., which was being sold under power of sale. Her proposal was as follows. They were to split the $120,000 down payment equally, with each contributing $60,000. They were to share in ongoing expenses and upkeep of the house, renovate it, and keep it as a rental or sell it for profit. Kats is unsophisticated. He trusted the plaintiff. He agreed to the proposal.

[148] Due to his difficulty with the English language, Kats did not understand the actual import of the documents he was signing or the mechanics of the transaction beyond the fact that each of Kats and Hornstein would contribute $60,000 of the $430,000 purchase price, with funds left over for other closing costs. The balance would be funded by a mortgage from Home Trust, which would be refinanced within a month of closing, given the high interest rate. Following closing, all carrying costs and expenses were to be shared equally. The parties would, accordingly, be 50/50 partners. This was the extent of Kats’ understanding of the agreement.

[149] This understanding was corroborated by Kats’ adult son, Yuval Babaev. Babaev also testified that the plaintiff had told them she would have to travel to Israel to obtain her share of the contribution, in the amount of $60,000. This never occurred. Instead, she advised Kats that she would obtain a second mortgage to cover her contribution, until she could go to Israel to obtain the funds.

[150] The evidence indicates, however, that the plaintiff arranged a second private mortgage for her contribution, but in the name of Kats and not in her name. Further, this second mortgage was cross-collateralized on Kats’ own home at 17 Virgilwood, without his knowledge or consent.

[151] Her claim that she contributed to the down payment by taking a second mortgage, the Seecharan mortgage, is not borne out by the evidence. The plaintiff testified that because she did not have her $60,000 contribution, she advised Kats that she would take a second mortgage in her own name and against her own property until she got the cash. The evidence further indicates that the plaintiff did not make payments on the second mortgage. It appears that it had been arranged by the plaintiff using the defendant’s name and information, which she had been given by the defendant for purchasing the home, without advising the defendant that his name was on the second mortgage. It appears that the defendant signed the second mortgage commitment in April 2009. He testified, however, that he was not aware of what he was signing, but did so as the plaintiff told him that the documents had to be signed quickly and did not explain the import of the documents. He only learned about the second mortgage, and the fact that it was in his name, after payments were past due. He further learned that the additional security for the advance had been registered against his home, 17 Virgilwood. Thus, the plaintiff had not taken out a second mortgage to pay for her 50% of the down payment. Nor had she paid the monthly mortgage payments on the second mortgage. He confronted the plaintiff with all of this and she stated that she would take care of it. At trial, she acknowledged that she was responsible for the second mortgage. As regards the Seecharan mortgage, the $2,765 interest payments (3 outstanding payments and 5 NSF charges) are also without significant support to relate them to the mortgage on 49 Alexis as opposed to a deposit on the 117 Waterloo property.

[152] The plaintiff failed to make any payments on the Home Trust or Seecharan mortgages, which fell to Kats to pay.

[153] Kats maintains that the plaintiff never provided her portion of the down payment (or other costs), yet now insists that she is a 50% partner with Kats on the house. It is the position of Kats that she is not a partner and has no interest in the house. Beyond a few hundred dollars, none of which went into the equity of the house, the plaintiff has failed to provide any meaningful contribution to be considered a partner or to attract an equitable remedy that would allow some finding of a beneficial, resulting, or constructive trust.

[154] While Kats contributed his $60,000 as of May 28 (the evidence indicates bank drafts of $9,000 and $40,000 on May 27, 2009 and $4,000 and $7,500 on May 28, 2009, all smaller bank drafts as the plaintiff told him to do this), which is corroborated by the plaintiff’s evidence, the plaintiff failed to contribute her share.

[155] At trial, the plaintiff claimed that the $7,500 bank draft was her contribution, although evidence to this effect was contradictory and there was no other reliable, independent evidence other than her testimony to support this. In her written closing submissions, it appears that she finally admitted that the contribution was made by Kats.

[156] She further claims that she contributed $25,000 as a deposit, but has failed to produce any or any sufficient evidence to indicate that she was the source of the funds. Evidence in this regard was again contradictory. She further claimed that she contributed $9,500 with no sufficient or credible documentation in support. An additional claim that she paid $5,000 was also without any credible evidence.

[157] It is further the evidence of Kats that the plaintiff promised to pay him an additional $10,000 for putting the property in his name alone. The plaintiff testified that she often dealt with properties through other people in this way and, indeed, attempted to use her daughter and the defendant to purchase the property located at 117 Waterloo in Toronto, which she was renting.

[158] As regards her past dealings with the same properties, including 49 Alexis, 51 Alexis, and 117 Waterloo, her testimony in cross-examination as to her interests in those properties from 1997 onward indicated that some dealings were with people she barely knew and some were apparently of doubtful character. She further testified as to her involvement in various mortgages on those properties. 117 Waterloo, which she owned from 1986 to 2005, and on which she gave several mortgages over the years, was sold under power of sale on two occasions and each time was repurchased by an owner friendly to the plaintiff. Her cross-examination testimony was inconsistent with her evidence in chief.

[159] Both Kats and his adult son, Yuval Babaev, testified that as part of the mortgage application process for 49 Alexis, Kats had provided the plaintiff with his personal information. Without his permission, the plaintiff applied for a new furnace/air conditioner from UEI Financial, and without his consent or knowledge, signed his name at the bottom of the application, spelling it incorrectly. It was the evidence of Kats and Babaev that the signature was not Kats’, referencing his signature on other documents and noted that his name was even spelled incorrectly as “Katz” with a “z” and not “Kats” with an “s”. Both Kats and Babaev further testified that the documents prepared by the plaintiff for the LTB also spelled Kats’ name incorrectly with a “z” rather than “s”. The signature on the LTB document was also the same as the signature on the UEI contract.

[160] Having reviewed the signatures identified by Kats and Babaev as Kats’ signature and the signatures on the UEI contract and the LTB documentation, I am satisfied, even without an expert opinion, that the UEI contract and the LTB documentation signatures are not the signatures of Kats. In addition to spelling his name incorrectly, they appear to be different in structure from those identified by Kats and Babaev, in documents Kats himself signed. I note that the LTB documentation was all prepared by the plaintiff, and the signature thereon, purportedly Kats’, is the same as the signature on the UEI contract. On a balance of probabilities, I find that the information contained in the UEI contract was fraudulently inserted by the plaintiff, and that she forged Kats’ signature without his consent.

[161] Based on all of Kats’ financial evidence produced, he covered both mortgages, ultimately consolidated them into a mortgage he obtained from Scotia Bank, and paid all carrying costs and expenses. Kats produced charts of payments made, which include all carrying costs, utilities, repairs, maintenance, and deducting rents received from tenants and the periods during which his family lived in the house.

[162] The plaintiff did not contribute to the property, to any mortgage/tax payments, nor to any other carrying costs, utility and service charges, nor to upkeep and repairs. Indeed, Kats’ financial situation became so difficult from having to pay for everything that he finally had to sell his home at 17 Virgilwood, at a loss, and move into 49 Alexis after the tenant there moved out due to the tenant’s non-payment of rent. Kats thereafter determined that he should sell 49 Alexis, and he put it on the market in December 2010.

[163] Higgins sought to purchase a home, as the rented residence in which she was living was to be sold by the landlord and it was necessary for her to seek a new residence. She retained a real estate agent, Esther Greenbaum, and presented a “wish list” of a number of things, which she sought in a home. She saw many homes prior to finding 49 Alexis, which was the first property she had seen that was suitable and consistent with her “wish list”. She placed an offer on the home and the APS was entered into on or about January 7, 2011, with approved purchase price of $525,000 and a deposit of $20,000 provided by Higgins. The closing date was to be May 30, 2011 (later amended to May 11, 2011), and Higgins had obtained bank financing.

[164] As regards the APS with Higgins, Kats had listed the property, to which he had title, openly and not clandestinely. Higgins was a bona fide third party purchaser.

[165] At that point, the transaction was unable to close for two reasons:

1. The plaintiff had registered a caution on 49 Alexis on February 18, 2011 pursuant to s. 71 of the LTA on the ground that she was entitled to a 50% interest in the lands, which were held by the registered owner, Kats, in her interest. The caution stated that she was a beneficiary and the registered owner was a trustee with respect to a 50% ownership interest. She placed the caution on title in order to prevent any dealing with the land without her consent.

2. Pursuant to the Planning Act, severance had to be obtained between 49 and 51 Alexis, as both were owned by Kats, which caused title to the two properties to merge, pursuant to the Act. Kats was required to seek a severance.

[166] Until the caution was discovered on title, Higgins had never heard of the plaintiff, Hornstein.

[167] Hornstein brought a motion before the court on April 12, 2011, seeking, inter alia, an order for a certificate of pending litigation on title to 49 Alexis. The court declined to order a CPL, but rather made an order that the closing of the APS would proceed on the following basis:

[F]ifty percent (50%) of the net proceeds of sale of the property municipally known as 49 Alexis Blvd., Toronto paid into Court or as may otherwise be agreed to by the parties or further ordered by the Court.

[168] The plaintiff’s evidence was that she was content with the Order, as her fair share would be protected in court. However, she ultimately failed to honour that Order, instead placing two Notices on the property, contrary to the provisions of the LTA, rather than permitting the sale to proceed, with payment into court of 50% of the proceeds until the outcome of this trial.

[169] Due to the additional time required for severance to be effected pursuant to the Planning Act, an extension of the closing to May 11, 2012 was agreed upon by Kats and Higgins on the basis that the deposit of $20,000 would be replaced by a deposit of $500 to keep the agreement alive, but not tie up so much money which would otherwise be sitting in the real estate agent’s office for one year.

[170] The extension contained the following provisions:

SELLER AGREES that the Deposit Cheque [of $20,000] shall be returned in full to the Buyer and replaced with a cheque in the sum of five hundred dollars (CAD $500), within 5 (five) Banking Days after the receipt and acceptance of this Amendment, to be held in trust by Re/Max Realtron as a new Deposit.

BUYER will have the first right of refusal in case she changes her mind and no longer wants to buy that house at 49 Alexis Boulevard.

THIS OFFER IS CONDITIONAL upon the Buyer arranging, at the Buyer’s own expense, a new first Charge/Mortgage satisfactory to the Buyer in the Buyer’s sole and absolute discretion. Unless the Buyer gives notice in writing delivered to the Seller no later than 5 (five) Business Days after written notice from the Seller that title is in compliance with the Planning Act, that there is no certificate of pending litigation registered against title or any other title issues with title (to be verified by the Buyer’s lawyer), that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller within the time period stated herein.

THIS OFFER IS CONDITIONAL upon the Buyer’s sole and absolute discretion to complete this transaction. Unless the Buyer gives notice in writing delivered to the Seller no later than 5 (five) Business Days after written notice for the seller and that title is in compliance with the Planning Act, that there is no certificate of pending litigation registered against title or any other title issues with title (to be verified by the Buyer’s lawyer), that this condition is fulfilled, this offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller within the time period stated herein.

[171] As regards the “conditional” provisions under the APS, the language was drafted by Higgins’s real estate lawyer to provide protection, given that the closing of the transaction had been put off for a full year, which was an unusually lengthy period of time for a residential transaction. The lawyer testified that this afforded Higgins protection in the event that there were intervening factors that may make it difficult to close the transaction, including obtaining the bank financing at time of closing, or legislation that changed the “stress test” used by lending institutions.

[172] Based on the evidence, the plaintiff became aware of the extension in May 2011 and her counsel emailed counsel for the defendant requesting the terms of the extension, failing which he was to bring another motion to court to protect the plaintiff’s interest. The requested information was provided on June 2, 2011. On June 10, 2011, the plaintiff registered a notice against the property pursuant to s. 71 of the LTA, which “may be deleted by the Land Registrar after 2012/12/31”.

[173] It was the evidence of the plaintiff that she was not agreeable to the extension, given that this would mean she would not have her share of the proceeds of disposition in 2011, which she wanted to use for re-investment purposes before the market increase.

[174] Indeed, this registration of a notice on title was done despite the Court Order from Master Sproat. Moreover, pursuant to the Court Order, the closing funds were to be paid into court and not directly to the plaintiff, such that she would only receive the money after the action was tried and only if it was found that her claim was meritorious.

[175] Further, despite the fact that the plaintiff agreed that if the Planning Act issue was resolved before December 31, 2012, such that the APS could close, she nevertheless selected the date of December 31, 2012 as the date for deletion of the notice, which would have prevented an earlier closing.

[176] Due to all of the closing issues and the significant delays in obtaining the property at 49 Alexis, Higgins was required to vacate her rental property and had to find other property. She has two adult children who were living outside of Toronto but planned to return. As a result of her needing to vacate her rental property and her children’s intention to return to Toronto, her children suggested that they would buy a property and she would live in it until 49 Alexis was able to close. As a result, Higgins and her daughter viewed properties and purchased 51 Marquette in Toronto. While this property did not meet Higgins’s “wish list”, it was cheap and it was not her intention to reside there for any longer than necessary until 49 Alexis closed.

[177] Severance was finally obtained and 49 Alexis could be sold by November 2012. Kats and Higgins were ready to close, with Higgins having obtained bank financing. It was anticipated that the transaction would close, given that the Notice on title, filed by the plaintiff, would expire on December 31, 2012, and the Court Order stipulated that the transaction would proceed, and 50% of the proceeds would be paid into Court. On November 28, 2012, in anticipation of the closing, counsel for Higgins requested that counsel for the plaintiff advise of the status of the matter and whether the plaintiff was prepared to lift the Notice upon payment of the sale proceeds into court. A second email was sent to plaintiff’s counsel on November 29, seeking plaintiff counsel’s assistance in completing the sale of the property with a desired closing date of December 5 or 6. The email further stated as follows: “We will require your client’s Consent and/ or your Consent together with your Direction on how to pay the proceeds in accordance with the Motion” (i.e. the Order of Master Sproat requiring that 50% of the proceeds be paid into court pending determination at trial or other Order of the Court).

[178] In the interim, however, the plaintiff registered another Notice on title on December 19, 2012, prior to expiry of the previous Notice.

[179] In response, counsel for the plaintiff wrote to counsel for Higgins on December 5, 2012, indicating that it was his instruction from the plaintiff to delete the Notice, upon being satisfied as to the bona fides of the transaction. In order to satisfy themselves, counsel for the plaintiff requested production of the MLS listing agreement for 49 Alexis; the APS; a copy of the draft/ down payment payable to the real estate broker; copies of extension agreements; the agreement between Kats and Higgins regarding renovations to the property to be done by Kats; and a copy of the application for severance and the severance decision. In addition, counsel for the plaintiff stated the following:

The concern we have is that it appears that Mr. Kats was aware of the need for a severance at the time he signed the agreement of purchase and sale with your client without my client’s knowledge or consent and as you are aware, section 50(3) of the Planning Act dealing with subdivision control prohibits the entering into of an agreement of purchase and sale unless the subdivision control provisions have been complied with. Further, it appears that after signing the agreement of purchase and sale with your client, Mr. Kats may have expended further monies to renovate the property without adding anything additional to the sale price.

[180] Both Higgins and her real estate lawyer were reluctant to provide counsel for the plaintiff with all of the requested documents. Some of the documents were not in their possession, and some of them were already in the possession of the plaintiff, to their knowledge. Further, there was no agreement between Higgins and the plaintiff, such that it was not for Higgins to attempt to satisfy the plaintiff regarding the transaction. If the plaintiff wanted documents, they were properly to be requested from and produced by Kats.

[181] Higgins’ counsel responded to counsel for the plaintiff, putting the plaintiff on notice of the issues central to Rachel Higgins’s counterclaim. That correspondence stated:

Your client is right now in breach of a court order – she knew the details of the sale previously (as did you). The sale transaction has not changed. But for the fact that this endorsement is not an order, the matter would proceed. We encountered a Rule 50 Planning Act difficulty, which was why the sale was delayed. It has since been resolved. Your client has alleged fraud against the purchaser (which she is free to do, although this is subject to consequences). As you are now not complying with the Court Order, your client is now in the process of slandering title. I will leave it to you to advise her what to do, however, I am not quite sure what she could do (other than comply with the Court Order).

[182] However, rather than returning to court to seek directions, as should have been done, the plaintiff registered another Notice on title, pursuant to s. 71 of the LTA, on December 19, 2012, prior to expiry of the previous notice, thus preventing the APS from closing, after the First Notice was deleted from title on December 31, 2012. Under the new Notice, no termination date was set out in the document. Indeed, said Notice is still on title to the property and is still preventing closing. The defendant and Higgins had agreed upon a number of extensions in order to close.

[183] On January 11, 2011, counsel for Higgins registered a notice on 49 Alexis pursuant to s. 71 of the LTA, based on her contractual or beneficial interest in the property, in order to protect her interests as third party purchaser pursuant to the APS.

[184] In April 2013, following several requests by counsel for the plaintiff to review Higgins’ counsel’s file, which is, of course, solicitor-client privileged, Higgins agreed to provide an affidavit to counsel for the plaintiff regarding the circumstances of her purchase of the property, although it was not her obligation to do so. However, the affidavit was found by the plaintiff’s counsel to be unsatisfactory. Indeed, based on all of the evidence, both viva voce and documentary, it is unlikely that any information provided to counsel for the plaintiff would have sufficed. It appears from the evidence that the plaintiff’s goal was not to have the bona fides of the APS established, but rather to delay the closing and to gather evidence to support the invalidation of the APS so that she could enjoy the increase in value of the property since January 2011. Indeed, counsel for the plaintiff attempted on numerous occasions to have Higgins sign a witness statement setting forth her knowledge and recollection of the facts related to her purchase of the property, requesting that she provide an affidavit as to whether the APS was “enforceable in law”. He wanted to pose questions to Higgins for her written response, use the responses to draft an affidavit for her execution, as well as to have her consent to testifying at the trial of the Hornstein/Kats action. Lastly, he also attempted to obtain from counsel for Higgins “his complete real estate file in detail” in order “to determine what it is [Higgins] has done to protect her rights as purchaser of this property and what assistance [Higgins] can be to [Hornstein] with respect to [Hornstein’s action with Mr. Kats]”.

[185] The evidence of Rothman, real estate counsel for Higgins, at trial was that he was not prepared to have Higgins waive solicitor-client privilege to allow Dyment, counsel for the plaintiff, to review Higgins’s entire legal file, as he did not trust that Hornstein or Dyment were acting in good faith in seeking information from Higgins. Thereafter, contact between Dyment and Higgins/Rothman broke off in April 2013.

[186] During the trial, Kats and Higgins entered into a tentative settlement agreement. There is no issue as regards termination of the APS as between Kats and Higgins. Both consider, and have always considered, the APS and Amendment to the APS to be active and binding on them. There is no evidence of any collusion between the defendants, as argued by counsel for the plaintiff.

[187] In addition to resolving the issues between them, the settlement agreement provides that Higgins agreed to be responsible for any amounts ordered to be paid by Kats to Hornstein up to a maximum of $50,000. Higgins testified that she entered into this settlement agreement given the uncertainties involved in litigation and that it made sense to reach a deal with Kats.

Overview of the Plaintiff’s Claims

[188] The plaintiff claims a trust interest under the LTA and a declaration as regards a one-half beneficial interest in 49 Alexis, with Kats holding title in trust for Hornstein, or alternatively, a partnership and a declaration that Kats holds the property in trust for the partnership. The plaintiff conceded that she was satisfied that as of May 2011, Higgins was a bona fide purchaser of 49 Alexis. However, the transaction was unable to close due to the above-mentioned Planning Act issue, which was known to the plaintiff, as was the extension of the APS. In June 2011, the plaintiff registered a notice with an expiry date of December 2012. In November 2012, the Planning Act issue was resolved and the severance granted. Both Kats and Higgins were ready, able, and willing to proceed with the APS. However, due to the plaintiff’s notice and her failure to provide consent, the transaction could not proceed as planned, such that an extension had to be obtained. It was the evidence of the plaintiff that she would not consent, as the property value had increased and she wanted to set aside the APS. In December 2012, the plaintiff registered a second Notice without expiry date, which is still on title. That Notice was based on a trust interest and was improperly registered, as that trust interest is not to be registered on title, pursuant to s. 62 of the LTA. The Second Notice continued and continues to prevent the transaction from closing.

Partnership

[189] In her closing written submissions, the plaintiff claims a partnership interest. She initially, in her first Statement of Claim, claimed a beneficial/trust interest.

[190] Does the plaintiff have a 50% partnership interest in 49 Alexis?

[191] Partnership is a legal term derived from common law and equity and has been codified in various provincial statutes. The three essential ingredients of a partnership are (i) a business, (ii) carried on in common, and (iii) with a view to profit: Backman v. Canada, 2001 SCC 10, [2001] 1 S.C.R. 367, at paras 17-18. However, the fact that co-owners intended to acquire, hold, and sell a building for profit does not make them partners: A. E. LePage Ltd. v. Kamex Development Ltd. (1977), 1977 CanLII 44 (ON CA), 16 O.R. (2d) 193 (C.A.). Partnerships arise from contract; as such, regard must be had to the true contract and intention of the parties appearing from all the facts of the case.

[192] If the alleged agreement has not been reduced to writing, the court must consider what the parties said and did and assess objectively whether, in context, their words and actions establish an intention to be bound. It is not necessary for every conceivable matter to be resolved between the parties before an enforceable contract is created. The question for determination is whether the parties have reached an agreement on all matters that are vital or fundamental to the arrangement or whether they intended to defer legal obligation until a final agreement has been reached: Le Soleil Hotel and Suites Ltd. v. Le Soleil Management Inc., 2009 BCSC 1303, [2009] B.C.J. No. 1900, at paras. 328 and 330.

[193] As regards oral contracts, Jamshidi v. Dependable Mechanical Systems Inc., 2018 ONSC 7101, at para. 4, outlines five factors to keep in mind:

1. Credibility: The credibility of the witnesses must be tested against those facts that are not seriously in dispute, and with the preponderance of the evidence and probability surrounding the events.

2. Burden of proof: The person seeking to enforce a disputed oral contract has the onus, both legal and evidentiary, of proving, on a balance of probabilities that the alleged contract was made.

3. Basic contractual principles apply: There must be proof of offer, acceptance and certainty of terms.

4. Consensus ad idem: The parties must agree on the essential terms, and these terms must be capable of being determined with a reasonable degree of certainty.

5. Legal test to final agreement: The court must assess whether the parties have indicated to the outside world in the eyes of the objective reasonable bystander, their intention to contract and the terms of such contract. This is an objective test and is not about the parties’ subjective intentions or beliefs.

[194] Thus, in applying the objective, reasonable person test, courts will consider parties conduct before, during, and after a disputed agreement. Where there is disagreement on the facts of how the parties conducted themselves, “the court must decide which version of events is the most reliable”, that is, which version is “in harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable”. This may entail a credibility assessment: Jamshidi, at paras 4-5.

[195] In applying the tests set forth above, I find as follows. The down payment required for 49 Alexis was $120,000. According to the proposal made by the plaintiff to Kats, each party was to contribute $60,000. The testimony and evidence is set forth above. The balance of the purchase price was to be funded by a mortgage with Home Trust. All carrying costs were to be shared equally between the plaintiff and defendant. The plaintiff did not honour her side of the agreement. While she indicated that she would provide a second mortgage to take care of her $60,000 (as she was not able to obtain the cash at that time), the second mortgage was taken out by the plaintiff and her lawyer in the name of Kats, not in her name, and was cross-collateralized on Kats’ house, contrary to what she had advised him and without his knowledge. Further, she did not contribute to any of the carrying costs thereafter. I have already made my assessment as regards credibility. The plaintiff’s evidence regarding her version of the facts as regards a partnership is not credible or reliable.

[196] Moreover, based on all of the evidence, evidentiary and documentary, the parties have not indicated by their actions to the outside world and to the objective reasonable bystander their intention to contract and the terms of said contract. They are not ad idem. The plaintiff has not honoured any of her side of the agreement, while Kats has honoured his. Indeed, all obligations have been left to Kats.

[197] It is of note that following closing, when the plaintiff had not paid her contribution before Kats knew about the second mortgage in his name, he advised her that if she did not contribute her share, she was not a partner and there was no partnership. This statement to her and his intention was based on equal financial contribution by the plaintiff and Kats. From the beginning, Kats stated that a partnership would require the plaintiff to pay her contribution, which she did not do.

[198] Based on the foregoing, and the evidence, the agreement was not reduced to writing and thus it must be considered whether the parties’ statements and actions established an intention to be found, which I find they did not. I am not satisfied that an enforceable contract was created. There is nothing to suggest that the parties contemplated that a “final” agreement had to be reached prior to their legal obligations under their agreement or arrangement. There is no evidence to suggest that this was the case.

[199] While it is clear from both the words and actions of Kats that he intended from the beginning to enter into and be bound by the plaintiff’s proposed agreement, it is not clear that that was also the plaintiff’s intention. From the beginning, her words bespoke the intent to form a partnership. However, from the beginning, her actions did not accord with her purported intention. She proposed that each party contribute a down payment of $60,000 and take out a mortgage for the rest. She proposed that all expenses related to 49 Alexis be shared equally. She arranged for the mortgage and prepared all documentation, but put the mortgage in Kats’ name alone. She failed to contribute a down payment, said she did not have the funds, then proposed to take out a second mortgage to pay for her contribution to the down payment. Kats later discovered that she had placed the second mortgage in Kats’ name and cross-collateralized it on his own home. She made no payments on the first or second mortgage, or on the carrying costs and expenses. Her actions belied any purported intention to form a partnership and suggested that she was using Kats from the beginning.

[200] The court cannot make a contract for the parties if they have not agreed upon its material terms: Picavet v. Clute, 2012 ONSC 2221, at para 13. Where an oral contract is disputed, the trier of fact must determine whether the objective reasonable bystander would conclude, in light of all the material facts, that the parties intended to contract and that the essential terms of the contract can be determined with a reasonable degree of certainty: at para. 10. In this case, I conclude that they cannot.

[201] Section 4 of the Statute of Frauds, R.S.O. 1990, c. S.19, prevents a person from bringing an action on an oral agreement regarding lands. Where the claimant can establish detrimental reliance and part performance sufficient to indicate the existence of the alleged contract, s. 4 can be avoided. In this case, however, based on all of the evidence, and based on the plaintiff’s failure to perform her obligations under the terms of the alleged partnership, I am of the view that the plaintiff cannot establish detrimental reliance, or part, or any, performance that would establish the existence of the alleged contract. The plaintiff failed to perform any obligations. She cannot be said to have acted to her own detriment such that it would be inequitable for Kats to rely on s. 4.

[202] I do not find, on all of the evidence before this court, that the plaintiff contributed any monies to the purchase or ongoing expenses of the subject property. I do not find that the Seecharan mortgage can be considered a contribution by the plaintiff to the original purchase price. I note, in this regard, that the Seecharan mortgage was under Kats’ name and was cross-collateralized against his primary residence, 17 Virgilwood. Hornstein has paid nothing regarding the property. While representing that she obtained the mortgage to satisfy her 50% of the down payment, that it was in her name and collateralized against her properties, it was, in fact, taken out in Kats’ name and was cross-collateralized against his property. She had him sign documents related to the second mortgage, advising him that they were additional necessary documents for the closing, without explaining what they were.

[203] While the plaintiff argues that she continued to manifest an intention to recognize the partnership to the time of trial, it would appear that any such manifestation of intention on her part, which I found not to have existed, would simply have been in her own interest to do. She improperly registered an indeterminate notice on title in the face of the Order of Master Sproat, which permitted the sale of the property to close on conditions. The property from 2012-2013 to the time of trial apparently increased in value and she wanted to take advantage of and benefit from the increase as a “partner”. Moreover, the “partnership” has cost her nothing, as she had contributed nothing financially. While the plaintiff testified that she contributed by managing the property, collecting rents, communicating with lawyers and mortgage brokers, she submitted no evidence as to exactly what she did on what dates, or what monetary value should be placed on this. There is no evidence to indicate that she gave any rent collected to Kats. Kats’ evidence was that all rents went to her, through December 2009. Further, the evidence indicates that the LTB hearings were held prior to December 2009, due to the tenant’s failure to pay rent, and the tenant moved out in October 2009.

Constructive and Resulting Trust

[204] Where a person advances funds to contribute to the purchase price of a property but does not take legal title to the property, a purchase money resulting trust can arise: Nishi v. Rascal Tracking Ltd., 2013 SCC 33, [2013] 2 S.C.R. 438, at para.1. When a person unrelated to the person taking title of property advances funds, the law presumes that the parties intended that the person who advanced the funds holds a beneficial interest in the property in proportion to that person’s contribution. The presumption is rebuttable. The three requirements for a purchase price resulting trust are as follows: (i) the alleged trustee has title to the property; (ii) the claimant must have supplied the whole or part of the purchase price when property was being bought from a third party and transferred into the alleged trustee’s name; and (iii) the claimant must prove that he or she acted throughout as a purchaser: Krates Keswick Inc. v. Crate, 2017 ONSC 6195, at para. 56. In this case, based on all of the evidence, the plaintiff has not established, on a balance of probabilities, that she supplied all or part of the purchase price when the property was initially bought and transferred into Kats’ name or that she acted throughout as a purchaser. Indeed, I have found that she did not contribute to the purchase of the property. The second mortgage (the Seecharan mortgage) was not and cannot be considered a contribution by the plaintiff. Without Kats’ knowledge, the second mortgage was put in his name, and in the end, it was he who made payments on said mortgage. Therefore, I do not find a purchase price resulting trust applicable to the plaintiff in this matter: see also Rattu v. Arbreau, 2015 ONSC 129.

[205] The plaintiff claims, in the alternative, a beneficial interest arising from a constructive trust. It is of note that a constructive trust is a remedy and not a cause of action: Bell v. Bailey, 2001 CanLII 11608 (ON CA), [2001] O.J. No. 3368 (C.A.), at para. 33. A constructive trust is available (i) where the defendant has been unjustly enriched at the expense of the plaintiff, or (ii) where the defendant has committed a breach of duty in equity and, in good conscience, he or she should not keep any ill-gotten gains (e.g. failure of a fiduciary to disclose all material facts): Boal v. International Capital Management Inc., 2018 ONSC 2275, at para. 66; Toronto Dominion Bank v. Preston Springs Gardens Inc., [2004] O.J. No. 2679 (S.C.), at para. 12. There was no evidence adduced to establish that Kats had a duty in equity to the plaintiff that he breached. Further, the evidence does not establish that Kats has been unjustly enriched at the expense of the plaintiff. Indeed, Kats has contributed almost all of the value of the property, including down payment, mortgage payments, carrying costs, maintenance, and upkeep. It appears that the plaintiff is basing her claim for unjust enrichment on her assumptions that the property has gained substantially in fair market value since it was placed on the market by Kats and that she should share in the value of the property, including any increase in fair market value. However, as I have found, her contribution to the property was minimal. She did not fulfil her obligations pursuant to the oral agreement. Moreover, any increase in value from 2012 to the present is the result of her improper actions in placing an indeterminate Notice on the property, which has prevented the sale from being completed, and refusing to provide consent to have said Notice lifted, as will be discussed further below.

[206] I note that any increase in value of the property from December 2012, when the deal should have closed on the terms stipulated in the Court Order, and today is due to the plaintiff’s improper actions in registering another indeterminate Notice on title on December 19, 2012, contrary to the said Court Order, and contrary to the interests permitted to be registered pursuant to s. 62 of the LTA. As a result of her knowingly improper actions, she should not be entitled to share in any increase in the value of the house.

[207] To justify the remedy of constructive trust, the plaintiff must be able to point to a link or causal connection between his or her contribution and the acquisition, preservation, maintenance, or improvement of the disputed property: Pro-Sys Consultants Ltd. v. Microsoft Corp., 2013 SCC 57, [2013] 3 S.C.R. 47, at paras. 91-92. I am not satisfied that the plaintiff has established such a link or causal connection between her contribution and the acquisition, preservation, maintenance, or improvement of the subject property.

[208] In making this finding, I have considered that the plaintiff did make a single payment of $1,400 to Kats for carrying costs and that she states that she also contributed her time in contacting the lawyer and bank regarding the purchase of the house and the LTB regarding the tenant who had not paid her his rent. I do not find this to be sufficient to establish a “sufficiently substantial and direct link”, a causal connection, or a nexus to establish a constructive or beneficial trust. As regards the $1,400, Kats acknowledged that in November 2009, subsequent to closing, the plaintiff did pay $1,400 in response to his repeated demands for payment and this amount should be reimbursed to the plaintiff from the $12,000 owing to the defendant for 117 Waterloo.[A1]

[209] Kats did the renovations and repairs on the house, paid all supplies and labour in that regard, and had estimates of his costs and receipts regarding labour done by others. When the plaintiff commenced her claim at the time of the sale of the house, she only claimed for damages, not an interest in the property.

Cautions/ Notices

[210] Were the notices properly registered on title by the plaintiff?

[211] The plaintiff registered a caution on the property based on her alleged interest in the property on February 18, 2011, which was to expire 60 days later. She brought a motion for registration of a CPL based on her alleged interest in the property.

[212] At the return of the CPL motion on April 12, 2011, Master Sproat did not grant the CPL, but rather ordered that the sale would proceed, and that pursuant to Rule 45.02 (right to a specific fund), “50% of the sale proceeds would be paid into court or as may otherwise be agreed by the parties or by further order of the court”. While Master Sproat found sufficient evidence to support the preservation of funds pending trial, she left the determination of whether the plaintiff actually advanced funds to the trial.

[213] The plaintiff thereafter registered the First Notice against the property on June 10, 2011, which was to expire on December 31, 2012. In the interim, Kats was dealing with the Planning Act severance issue, which had to be obtained before the transaction could close. The severance was obtained, and Kats and Higgins were ready to close as of November of 2012.

[214] Higgins’s lawyer contacted the plaintiff’s lawyer to request that they consent to removal of the Notice on title so that the sale could close, confirming that the provisions of Master Sproat’s Order would be honoured.

[215] Counsel for the plaintiff then demanded certain information from Higgins regarding the APS, including Higgins’s lawyer’s client file, which was solicitor-client privileged. Failing delivery of said information, counsel for the plaintiff warned that he would bring another motion to court for instructions, which indicates that he recognized the validity of the Court Order.

[216] Despite the Court Order obtained to protect the plaintiff’s claim, the plaintiff subsequently registered the Second Notice on title pursuant to s. 71(1) of the LTA, this time with no expiration date, on December 19, 2012, prior to the First Notice expiring. That Notice remains on title to this day to prevent any dealing with the land without her benefitting from any property increase in value as regards her purported half interest. Indeed, a letter from counsel for the plaintiff to counsel for Kats, dated January 31, 2013, attempts to persuade Kats’ counsel that it would be in both parties’ interest to invalidate the APS, so that an appreciation in market value would be enjoyed by Hornstein and Kats alone.

[217] The documentation sought by plaintiff’s counsel was not provided, and rather than bringing a motion to the Court for directions in compliance with the Court Order, as he said he would, the plaintiff registered a notice on title, preventing closing of the sale of the property from Kats to Higgins. Kats was prepared to honour the APS despite increased real estate values. Higgins was ready and able to close. However, the Notice prevented the parties from closing. Indeed, Higgins tendered at closing, indicating her intention and ability to close, but was prevented from closing due to the plaintiff’s Notice.

[218] Pursuant to s. 71(1) of the LTA, registration can be achieved by two means: (i) registration that is authorized pursuant to the Act, or (ii) registration by the Director of Titles: Benzie v. Kunin, 2012 ONCA 766, 112 O.R. (3d) 481. The Notices filed by the plaintiff are not authorized by the LTA, nor has the plaintiff’s Notice been approved by the Director of Titles. Therefore, the Notice currently registered on title, which has prevented the sale of the property since December 19, 2012, is unauthorized and improperly registered.

[219] It is of note that a trust interest, including an express, implied or constructive trust shall not be entered on the Register pursuant to s. 62 of the LTA. The case law makes it clear that a trust interest is not the proper subject of a registration under s. 71: Clairville Holdings Ltd. v. Botiuk, 2014 ONSC 6505; McLeod v. Spencer, 2015 ONSC 5984, 60 R.P.R. (5th) 231, at paras. 17-19; Bao v. Mok, 2019 ONSC 915, at paras. 60-62, 146-155.

[220] Section 62 of the LTA states as follows:

Trusts not to be entered

(1) A notice of an express, implied or constructive trust shall not be entered on the register or received for registration.

Description of owner as a trustee

(2) Describing the owner of freehold or leasehold land or of a charge as a trustee, whether the beneficiary or object of the trust is or is not mentioned, shall be deemed not to be a notice of a trust within the meaning of this section, nor shall such description impose upon any person dealing with the owner the duty of making any inquiry as to the power of the owner in respect of the land or charge or the money secured by the charge, or otherwise, but, subject to the registration of any caution or innovation, the owner may deal with the land or charge as if such description had not been inserted.

[221] The plaintiff also claimed that she relied on the Ministry of Consumer and Commercial Relations Bulletin Number 2000-2 of July 21, 2000. This claim is ill founded and has no application to these circumstances. The applicable Bulletin No. 96001, issued July 10, 2016, was not complied with by the plaintiff, who failed to obtain approval of the Director of Titles, as the notice did not relate to the specifically enumerated topics. Further, no time limitation for the life of the registration was set forth; rather, it was indeterminate, such that it still is on title today and has tied up the property for eight years, since 2012. Moreover, the registration would not have been approved, as it did not comply with s. 62, because it was a purported trust interest in the property.

Claims regarding Higgins

[222] Regarding the claim of the plaintiff as against Higgins: (1) Was the APS entered into on January 7, 2011 bona fide? (2) Was the Amendment to the APS extending the closing date of the APS to May 11, 2012 bona fide and legally binding on the parties to the APS?

[223] With respect to the counterclaim of Higgins, as against the plaintiff: (1) Is Higgins entitled to damages from the plaintiff for slander of title at common law or by virtue of the Land Titles Act? (2) Is Higgins entitled to punitive damages from the plaintiff?

Whether the APS and the Amendment to the APS are bona fide or Null and Void

[224] The plaintiff claims as against Higgins:

A declaration that the agreement of purchase and sale for the property dated January 7, 2011 between Kats as vendor and Rachel Higgins as purchaser or any other agreement between the said individuals for the sale of the property, without the consent or approval of the plaintiff, is null and void and of no further force or effect.

[225] It is the position of the plaintiff that the APS is null and void because, firstly, it is not a bona fide agreement between the parties. Rather, she alleges that the parties colluded to deprive the plaintiff of her legal rights. Secondly, because of the conditional nature of Higgins’s obligations as stated in the Amendment to the APS, the APS ceased to be an enforceable agreement as of May 2011.

[226] Based on all of the evidence, I am satisfied that the APS and the Amendment to the APS are bona fide. In this case, the relationship of vendor and purchaser is an arm’s-length transaction. Neither party knew the other prior to entering into the APS. There was no evidence of collusion regarding the APS and the Amendment to the APS. The parties sought throughout to try to resolve the issues. The evidence of both the purchaser and her real estate agent was that if the purchase proceeded, the commission was to be paid by the seller’s agent, as was the standard practice. I note that at the trial of this action, the plaintiff conceded that the APS may have been a bona fide agreement, but alleged that the Amendment to the APS was not, although no evidence for that position was offered. In the plaintiff’s written argument, no submissions were offered questioning the bona fides of the Amendment to the APS.

[227] Instead, argument was advanced in the written submissions that there were issues of enforceability of the APS regarding the extension of the closing date, due to the conditions and circumstances under which Higgins could choose not to proceed with the purchase of the property. It is of note that the vendor, Kats, had agreed to the extension and he and Higgins considered the terms to be binding. The presence of conditions for the benefit of one party that that party may waive at its sole discretion does not alter the binding nature of the contract: Wiebe v. Bobsien, 1985 CanLII 142 (BC CA), [1985] B.C.J. No. 1742 (C.A.). I note, however, that the dispute in the Wiebe case involved the parties to the contract, with one party contesting the bona fides of the contract, whereas in this case, the two parties to the contract, namely Kats and Higgins, both considered the relevant terms of the contract to be binding on them and consider that there was no uncertainty with respect to its provisions, including the conditions in favour of Higgins. In this case, it was the plaintiff, who was not a party to the contract, who is alleging that the contract was not binding. I am not satisfied that the plaintiff has any standing in that regard and do not consider her arguments on this issue further.

[228] Moreover, the evidence of the real estate lawyer who drafted the Amendment to the APS testified that the condition was included for the protection of the plaintiff, given that the closing date was postponed for a year, which is an extremely long period of time. In the event of a legislative or governmental change that may have affected Higgins’s eligibility for a mortgage, this was intended to protect Higgins. It is not an option clause, and was not drafted as an option clause, which is why it does not read as an option clause. I accept the evidence of Rothman, that it has the same effect as including a financing or inspection condition in the APS. Both Kats and Higgins testified that their intention continued to be to close the transaction. While I note that Higgins testified that given the fact that she had not been able to close for eight years and there had been such strife and animosity as a result of her being dragged into the litigation as well, and that while she had been left with a “bad taste” as regards to the purchase, it appears that Kats and Higgins continue to be willing to close the transaction, given that Higgins continued to be present at trial throughout.

[229] I find that the APS and Amendment to the APS are valid agreements.

Amendment to Pleading

[230] Based on all of the foregoing, counsel for Higgins, at the end of trial, sought an amendment to Higgins’ pleading to amend paragraph 31(g) and to add 31(h) as follows:

(g) a declaration that in registering the notice on title to the property under section 71 of the Land Titles Act as instrument AT3202382 on December 19, 2012 pursuant to the provisions of sections 24, 25, 159 and 160 of the Land Titles Act, the plaintiff Adriana Hornstein has slandered the title to the property and breached the provisions of section 132 of the Land Titles Act causing Rachael Higgins damages.

(h) damages for breaches by the plaintiff of the provisions of the Land Titles Act or, alternatively, damages in negligence for said breaches.

[231] Rule 26 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, states that the court shall grant an amendment to a pleading at “any stage of an action” on such terms as are just. The request will be denied if it will cause prejudice that cannot be compensated for in costs or an adjournment.

[232] I granted the amendments after argument by counsel. The amendments do not require any additional facts that have not already been canvassed over the years of this litigation and were not already fully canvassed during the trial. No new head of damage is alleged. The amendment was only sought because, during trial, the plaintiff admitted in cross-examination that she was prepared to allow the APS to close if the severance issue was resolved prior to the deletion of the First Notice. It is clear that the plaintiff was aware of s. 132 of the LTA, and was made aware during the course of the trial on at least two occasions, that the claim, while it had been characterized simply as slander of title, was in fact a broader claim.

[233] The common law cause of action for slander of title and damages under s. 132 of the LTA are distinct: Captain Developments Ltd. v. Nu-West Group Ltd., [1982] O.J. No. 3369 (H.C.), reversed on other grounds, (1984) 1983 CanLII 1886 (ON CA), 45 O.R. (2d) 213 (C.A.). Slander of title requires proof of malice, in the legal sense, as an essential element. Section 132 of the LTA establishes a cause of action for a person who has suffered damages as a result of someone registering a caution on title without reasonable cause, with the operative words being “without reasonable cause”. The LTA, therefore, creates a statutory cause of action that does not require malice as an essential ingredient: see paras. 49-50.

Higgins’s Claims for Damages for Slander of Title

[234] Regarding the counterclaim, the only issue is whether slander of title applies, and whether damages for slander of title should be awarded.

[235] The common law test for slander of title in Ontario is as set forth in Captain Developments Ltd. v Nu-West Group Ltd, [1982] O.J. No. 3369 (H.C.), reversed by the Court of Appeal on its facts without comment on the statement of law, (1984) 1983 CanLII 1886 (ON CA), 45 O.R. (2d) 213 (C.A.). The court cited, at para. 35:

The common law action for slander of title is a specific form of the tort of injurious falsehood. The essential elements of the common law tort are considered in Fleming, the Law of Torts (5th ed., 1977), at pp. 697-99:

Injurious falsehood, then, consists in the publication of false statements, whether oral or in writing, concerning the plaintiff or his property, calculated to induce others not to deal with him… the falsehood must be communicated to a third person… Falsity is not presumed but must be affirmatively established by the plaintiff…

It is an essential element of the cause of action that the falsehood was published with ‘malice’… today the predominant view seems to be that malice, in the sense of some indirect, dishonest or improper motive, or, at any rate, an intent to injure without just cause or excuse, must be proved by the plaintiff as an essential part of his cause of action. It is sufficient evidence of malice that the defendant knew the disparaging statement to be false… Conversely, an honest belief in an unfounded claim is not actionable; nor is mere carelessness (in contrast to recklessness or conscious indifference to truth)…

…actual damage is the gist of injurious falsehood even when it is reduced to writing… The loss, moreover, must be monetary: for injured feelings, the plaintiff must look to the law of defamation.

…Thus, to succeed in a claim for slander of title, the plaintiff must establish either that he was unable to dispose of the property or that it lowered the price.

[236] Thus, the malice must be some indirect, dishonest, or improper motive, or, at any rate, an intent to injure without just cause or excuse. The person advancing the claim for slander of title must also establish that he or she was unable to dispose of the property or that it lowered the price.

[237] In this case, the publications of the “false statement” were the registration of the two Notices by Hornstein; Higgins had a beneficial or contractual interest in the subject property pursuant to the signed APS, which was sufficient for her Notice to be registered on title. However, the plaintiff registered the Notices on June 11, 2011 and December 19, 2012 to prevent dealings with the property, the Notices being registered after the Court Order of Master Sproat that the closing was to proceed, with 50% of the proceeds of disposition to be paid into court pending determination of the trial and any entitlement the plaintiff may have had to the proceeds. The Second Notice, being indeterminate, remains on title to this day and continues to prevent the closing. Both Notices were improperly registered, as they do not conform to the types of interests that are to be registered and the approval of the Director of Titles was not sought, as required.

[238] In light of the Court Order, the Notice registrations constituted communications to third parties. The plaintiff’s knowledge that the registrations were not proper, nor properly registered, and that she should have returned to court, as stipulated in and in compliance with the Court Order, satisfy the “malice” requirement and Higgins suffered damages as a result of the improper registrations, in that she was not able to close.

[239] It is of note that there is no case law or authority that deals with the claim for slander of title by a party claiming a beneficial or contractual interest such as that claimed by Higgins. Higgins submits that the word “property” should be broadly interpreted to include any property interest held by a plaintiff, whether that interest is legal, beneficial, or contractual.

[240] My reading of the cases involving slander of title leads me to conclude that the claim for slander of title would be that of Kats and not Higgins. To succeed in an action for slander of title, the following foundational cases suggest that the successful party is (i) the owner of the property and (ii) attempting to sell said property. For example:

• Damages were awarded to the plaintiff owner and seller of a house, as she received a price lower than expected because of newspaper reports that the house was haunted: Manitoba Free Press Co. v. Nagy (1907), 1907 CanLII 46 (SCC), 39 S.C.R. 340;

• Damages were awarded to the plaintiff owner of a house, as she was deprived of title by a co-owner’s fraudulent actions: Hermanson v. Martin (1986), 1986 CanLII 3241 (SK CA), 52 Sask. R. 164 (C.A.);

• The plaintiff owner and seller of land was awarded damages against a third-party contractor that registered a caution on title to force settlement discussions between the plaintiff and the defendant: Guilford Industrial Ltd. v. Hankinson Management Services Ltd., [1973] B.C.J. No. 666 (S.C.), at paras. 17, 24, 28; and

• In the Nu-West case mentioned above, the plaintiff owner and seller of lots was awarded damages against the defendant buyer, who registered a caution on title in order to tie up the land: at para. 29.

[241] Higgins was not the owner of 49 Alexis, nor was she attempting to sell it. While she has a contractual or beneficial interest in the property, I am not satisfied that that is sufficient as regards to her claim for slander of title. Kats, on the other hand, was the owner of 49 Alexis and was attempting to sell the property; notices improperly filed by Hornstein therefore affected Kats’ right to sell the property

Higgins’s Claims for Damages under the LTA

[242] Higgins also submits that she is entitled to damages pursuant to s. 132 of the LTA:

Liability where caution improperly registered

A person who registers a caution without reasonable cause is liable to make to any person who may sustain damage by its registration such compensation as is just, and the compensation shall be deemed to be a debt due from the person who has registered the caution to the person who has sustained damage.

[243] It is the position of Higgins that the issue is whether the plaintiff had reasonable cause to register the notices, rather than returning to court to seek direction as a result of the Court Order. It is the position of Higgins that there was no reasonable cause. The wording of the Court Order was clear that the APS was to close with 50% of the proceeds from the sale of the property to be paid into court after closing, unless there was a further Order of the court.

[244] While resolving the issue of whether there is reasonable cause to register a caution, the Nu-West court examined the conduct of the party involved: Nu-West, at para. 29. In that case, the court found that the caution was registered “without reasonable cause” because the solicitor for Nu-West, which registered the caution, made various threats to tie up the land: at paras. 29-30. While counsel for Hornstein did not make threats, he did state in his email of May 31, 2011 that he planned to return to court for directions, which was never done. The need to return to court was reinforced in correspondence from Kats’s lawyer to the plaintiff’s lawyer on December 11, 2012. Nevertheless, the plaintiff registered another notice on December 19, 2012, which also bespoke a lack of reasonable cause and malice. It is of note that both notices registered on title were improper pursuant to the provisions of the LTA, specifically s. 62, the applicable interpretive Bulletin No. 96001, and case law.

[245] The question arises as to whether s. 132 of the LTA is applicable also to notices in addition to wrongfully registered cautions, as stipulated. It is the position of Higgins that a broad interpretation of s. 132, which would include notices, is appropriate, as an improperly registered notice will cause as much damage to an innocent party as an improperly registered caution. Indeed, while a caution is only for 60 days, a notice may have a much longer life and therefore may cause much more damage. It is the position of Higgins that the modern method of statutory interpretation must be applied in interpreting s. 132. The modern approach, as stated in Kerr v. Danier Leather Inc (2005), 2005 CanLII 46630 (ON CA), 77 O.R. (3d) 321 (C.A.), aff’d 2007 SCC 44, [2007] 2 S.C.R. 331, is:

[…] the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament: at para. 82.

[246] Alternatively, Higgins submits that she has a private cause of action with respect to the plaintiff’s breaches of the provisions of the LTA and that it is appropriate for the court to find an intention by the legislature that breaches of the statute by a party may support a private cause of action, or alternatively, that such breaches support a negligence action.

[247] Section 132 of the LTA deals specifically with improperly registered cautions that cause damage to any person. There is no mention of a notice, only a caution. While I find the plaintiff’s actions egregious, and while the plaintiff did improperly register notices against the property – which prevented Kats from selling 49 Alexis to Higgins – I am not satisfied that either slander of title or s. 132 of the LTA is applicable to Higgins in the circumstances.

Claims for Damages

[248] The plaintiff sought a valuation of the property and a share in any increase in value between the original sale date and the present. As I have already found, the plaintiff herself, by her actions, prevented the sale of the property to proceed as originally planned. There was no expert evidence at trial as regards the value of the subject property, nor any evidence regarding loss of half of any profits due to appreciation in value in the property. No expert witnesses were called and the values are therefore all based on guesses, surmises, and assumptions. The plaintiff’s claim stated that the property it is worth $ 1,250,000. All counsel referred to the property as currently being a “million-dollar property”. However, as I have already stated, those statements are not evidence and no other evidence was adduced as regards the value of the property. There is, therefore, no evidence on which I can determine a current market value. Moreover, the plaintiff is not entitled to a valuation based on all of my findings above.

Punitive Damages

[249] Regarding damages suffered as a result of the improperly placed notices, I am of the view that those damages were foreseeable. Higgins’s damages were mitigated by her entering into the settlement agreement with Kats.

[250] Higgins claims punitive damages of $50,000 from the plaintiff. Pursuant to Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595, punitive damages in a tort case are largely restricted to intentional torts. They are not compensatory, but are based on punishment, deterrence, and denunciation of the wrongdoer, and the quantum awarded should be proportional to the behaviour in question.

[251] It is further Higgins’s position that if the court is unable to award damages as a result of the procedural issues raised – but considers Higgins’ position to be worthy of recovery of damages – punitive damages would be appropriate.

[252] On behalf of Higgins, it is submitted that an award of $50,000 is appropriate, as Higgins should never have been made a defendant to the action and forced to incur significant legal costs. Additionally, her ability to take title to the subject property has been delayed for over eight years due to this action, the registration of the Second Notice, and the plaintiff’s delay in bringing the trial to action. It is further submitted that the registration of the Second Notice was improper, as the plaintiff and her counsel should have returned to court, pursuant to the Order of Master Sproat, and sought direction with respect to the APS, but they knowingly failed to do so. Further, their actions in registering the Second Notice were unreasonable, given that the Court Order had provided protection to the plaintiff, pending trial and final determination of the issues, in the event that the plaintiff’s claims were found meritorious. It appeared that the plaintiff and her counsel were intent upon attempting to ensure that she would be able to benefit from any increase in property value. In light of all of the foregoing circumstances, an improperly registered and indeterminate notice was unreasonable, unjustified, and malicious.

[253] I have previously found the actions of the plaintiff to be egregious, unreasonable and malicious. They were intentional and unnecessary, particularly given the court order of Master Sproat, and without legal foundation.

[254] Higgins has been put to significant expense over the last eight years as she waits to take possession of 49 Alexis. She was hindered by the improperly registered and indeterminate Second Notice, and was brought into this action unnecessarily. She is therefore entitled to punitive damages, which I fix at $35,000.

Conclusion

[255] Based on all of the evidence, the plaintiff has not established a basis for any entitlement to a 50-50 interest in 49 Alexis, nor any other interest in the property. There is no evidence nor any sufficient evidence to establish that she honoured any part of the alleged agreement or paid 50% of her share of the down payment, blended mortgage payments, ongoing carrying costs, expenses, utilities, services, or repairs, despite the fact that this is what she had originally proposed to Kats. The evidence establishes that all the above expenses fell to Kats to pay, that he struggled to do so, but ultimately did so, while having to sell his own home at 17 Virgilwood at a loss in order to do so, and ultimately determined that he would also have to sell 49 Alexis. Based on all of her actions, the plaintiff appears to have had no intention to honour any part of the purported agreement between them, based on her own proposal, which was that they each contribute equally to the purchase price, carrying costs, repairs, upkeep, and maintenance of the property equally. Throughout, the plaintiff gave no indication that she intended to be bound by the proposed agreement that she presented to the defendant.

[256] The plaintiff failed to fulfill her end of the agreement, breached said agreement, and misrepresented to Kats certain things, such as that she had taken a second mortgage to pay her portion of the down payment, when she had, in fact, put the second mortgage into his name and secured it against his home at 17 Virgilwood, such that he was required to make all payments.

[257] The plaintiff took advantage of Kats and his trust placed in her, his relative lack of sophistication in dealing in properties, and his difficulty with the English language. She convinced him to become involved in a partnership, which was to be an equal, 50-50 partnership, and failed throughout to live up to her part of the bargain. She failed to contribute any funds to the partnership, thereby breaching their agreement, and signed his name to a contract without his authorization. She thereafter acted unreasonably and vindictively regarding the sale of the property, even after she had gone to court to obtain an order for 50% of the proceeds of disposition from sale of the property to be paid into court pending trial of the action. She persisted in preventing sale of the property by improperly using two Notices, which she, through her counsel, registered on title in 2011, the latter of which remains on title, improperly, to this day.

[258] I am further satisfied, based on all of the evidence adduced, that the plaintiff has no claim to a partnership interest, nor a trust interest, beneficial or constructive, in the subject property. I am satisfied, based on the evidence, that the plaintiff contributed essentially nothing to the property that would entitle her to any interest in the property.

[259] I note that the plaintiff still owes Kats $12,000 of the $15,000 she borrowed from him to purchase another property, 117 Waterloo, which had nothing to do with 49 Alexis. 117 Waterloo which she rented and in which she and her husband lived, was to be sold under power of sale. She was looking for a purchaser friendly to her. She had originally approached Kats about purchasing this property also, but he declined. She then requested $25,000 from him, but he declined. She thereafter requested a loan of $15,000, which he agreed to, and which he paid by certified cheque. $12,000 of the loan remains outstanding and is to be paid by the plaintiff to Kats.

[260] In conclusion, I order as follows:

1. The APS and the Amendment to the APS for 49 Alexis are valid and the transaction is to proceed as agreed between Kats and Higgins.

2. The indeterminate notice registered on 49 Alexis on December 19, 2012 is improperly registered and is to be immediately removed such that the transaction can proceed.

3. The plaintiff has no entitlement to a division of the subject property, has no interest in the property, and has no interest in any potential increase in value from 2011, when she improperly registered two notices on title, such that the sale of 49 Alexis could not proceed, to this day.

4. Kats is entitled to the outstanding balance on the loan that he advanced to the plaintiff with respect to another property, 117 Waterloo, in the amount of $12,000, payable forthwith, less $1,400, the amount Hornstein paid Kats at one point.

5. Higgins is entitled to punitive damages in the amount of $35,000, payable by the plaintiff forthwith.

Costs

[261] I would strongly urge counsel to arrive at an agreement as regards to costs and to submit that to me. In the event that counsel are unable to cooperate and come to an agreement, counsel may provide their Bills of Costs, to a maximum of three pages, within 60 days.

Released: 2020-05-21

[A1]Your Honour, just to be clear, did Kats acknowledge that this amount should be reimbursed to Hornstein? (That’s what the whole sentence suggests.) If not, replace this sentence with: “As regards the $1,400, Kats acknowledged that in November 2009, subsequent to closing, the plaintiff did pay $1,400 in response to his repeated demands for payment. This amount should be reimbursed to the plaintiff from the $12,000 owing to the defendant for 117 Waterloo. [A1]”