Court File and Parties
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MASSOUMEH MAHROUH
Plaintiff/Responding Party
– and –
MOHAMAD REZA GHEISARY and GHEISAR (aka “Jason”) GHEISARI and ANNAHITA ZAMANI
Defendants/Moving Party
COUNSEL:
Matthew R. Harris, for the Plaintiff/Responding Party
Mark A. Klaiman, for the Defendant/Moving Party Gheisar (aka “Jason”) Gheisari
No one appearing for the Defendants Mohamad Reza Gheisary and Annahita Zamani
HEARD: November 19, 2020 and May 26, 2021
REASONS FOR DECISION
DIETRICH J.
Overview
1The plaintiff, Massoumeh Mahrouh, commenced this action on May 5, 2020 against her former husband, the defendant Mohamad Reza Gheisary (“Gheisary”), Gheisary’s brother Gheisar (aka Jason) Gheisari (the “moving party”), and the moving party’s former common law spouse Annahita Zamani (“Zamani”). Gheisary is an undischarged bankrupt.
2The plaintiff alleges that Gheisary made a fraudulent conveyance of shares of a company, 1476964 Ontario Inc. (“147 Ontario”), whose sole asset was land, to the moving party. She further alleges that the moving party and the other defendants have conspired against her to cause her hardship by preventing her from collecting on the judgment she obtained against Gheisary in her family law proceeding, and that, in the process, they have been unjustly enriched.
3In 2011, approximately one year before the plaintiff and Gheisary separated, Gheisary and the moving party entered into an agreement dated October 7, 2010 (the “Agreement”). In the Agreement, Gheisary agreed to transfer shares of two companies, including 90 percent of his shares in 147 Ontario, to the moving party. Gheisary transferred the shares in satisfaction of an alleged debt that Gheisary owed to the moving party, which debt allegedly exceeded the value of the shares transferred.
4Subsequently, in April 2020, the moving party petitioned Gheisary into bankruptcy to collect on alleged debt that Gheisary incurred after the Agreement and owed to the moving party. The trustee in bankruptcy sold Gheisary’s five remaining shares in 147 Ontario to the moving party, in part to pay the trustee’s fees. The plaintiff is the principal creditor in the bankruptcy.
5Each of the defendants Gheisary and Zamani has brought separate claims against the plaintiff claiming funds that she allegedly owes to them, which she denies.
6The moving party brings this motion for summary judgment, and if granted, an order vacating registration of a certificate of pending litigation (“CPL”) registered against the property held by 147 Ontario.
7The moving party seeks a dismissal of the action against him. He asserts that the plaintiff’s claim to set aside Gheisary’s conveyance of his shares to the moving party is statute barred, as is her claim for damages for unlawful conduct conspiracy. He also asserts that the plaintiff has not made out her conspiracy claim.
8For the reasons that follow, I decline to grant summary judgment, or partial summary judgment, to the moving party. A trial is required in this matter.
Issue
9The issue in this matter is whether there is a genuine issue requiring a trial of one or both of the plaintiff’s claim to set aside Gheisary’s share transfer and her claim for conspiracy and unjust enrichment, including whether either of the claims is statute barred.
Background Facts
10I will set out a chronology of events, noting that some of the evidence is disputed. Accordingly, factual references should not be taken as findings of fact for the purposes of the trial.
11The plaintiff and Gheisary were married on November 7, 1988. They separated on November 6, 2011. The plaintiff commenced family law proceeding on March 12, 2012.
12Gheisary and the moving party incorporated 147 Ontario on May 16, 2001. They were officers and directors, and each owned fifty issued and outstanding common shares of 147 Ontario. 147 Ontario acquired title to a property, municipally known as 53-61 Observatory Lane, in the City of Richmond Hill (“Observatory Lane”), on February 25, 2012.
13Gheisary and the moving party incorporated a second company, Gheisari Bros. Inc. (“GBI”), on March 1, 2002. GBI was incorporated to acquire a property municipally known as 10415 Yonge Street, in the City of Richmond Hill. They were officers and directors of GBI, and each owned fifty issued and outstanding common shares. The property held by GBI was sold prior to the Agreement and is not in issue in this proceeding.
14The moving party submits that Gheisary was indebted to him because Gheisary had received more financial benefits than the moving party had from 147 Ontario and GBI, and because the moving party had paid or settled debts owing by Gheisary in Iran. These debts have not been fully proven. To satisfy the debt then allegedly owing, Gheisary and the moving party entered the Agreement, drafted by Gheisary’s daughter, and witnessed by Stephen Macos. Gheisary agreed to transfer 45 of his 50 common shares of 147 Ontario and 37 of his 50 common shares of GBI to the moving party. Mr. Macos swore similar affidavits, several years later, on each of July 19, 2016 and June 4, 2020, stating that he witnessed the signing of the Agreement at Observatory Lane when it was signed in 2010.
15The moving party submits that on January 14, 2011, the minute book for 147 Ontario was amended to reflect Gheisary’s transfer of 45 shares to the moving party, and that Gheisary resigned as a director and officer of 147 Ontario. The excerpts of the minute book that the moving party produced reflect these changes.
16The moving party asserts that on February 9, 2011, the minute book for GBI was amended to reflect Gheisary’s transfer of 37 shares to the moving party, and that Gheisary resigned as a director and officer of GBI. The excerpts of the minute book that the moving party produced reflect these changes.
17The changes to these minute books have not been independently verified.
18In the course of the family law proceeding, Gheisary did not disclose the share transfer on his asset statement, though he was required to do so. Gheisary was ordered to produce extensive financial disclosure by Justice Magda on December 3, 2013, as were the moving party and Zamani, who were present in court that day. Gheisary, the moving party and Zamani were also ordered to attend for questioning. None of them attended for questioning.
19In the family law proceeding, Gheisary produced two financial statements dated October 1, 2012, and July 15, 2014, respectively, each disclosing the five common shares he continued to own in 147 Ontario. Gheisary also produced a chart showing that in 2014 he had only a five-percent interest in 147 Ontario. The plaintiff admitted on cross-examination that she was aware of Gheisary’s five-percent holding in 2013/2014.
20In January 2015, in the family law proceeding, Justice Nelson made an order which bound Observatory Lane with an effect similar to a CPL.
21On July 14, 2015, Justice Nelson struck Gheisary’s pleadings in the family law proceeding for breaches of numerous court orders including orders to provide financial disclosure and to attend for questioning. Justice Nelson found Gheisary to be “ungovernable.”
22On July 21, 2016, the plaintiff sought judgment in the family law proceeding against Gheisary. The moving party sought leave to intervene so that he could respond to any claim that the plaintiff might advance in respect of the shares that Gheisary conveyed to the moving party. The moving party filed an affidavit in that proceeding containing information relating to the debt Gheisary owed to him and the transfer of the 45 shares of 147 Ontario in satisfaction of that debt. The moving party was denied intervenor status in the family law proceeding.
23The plaintiff was granted judgment against Gheisary in the family proceeding in the amount of $6,504,735.55. Gheisary’s appeal of that decision was struck.
24During the course of the family law proceeding, each of the moving party and Zamani brought separate actions against Gheisary and the plaintiff.
25On January 30, 2014, the moving party commenced an action against Gheisary and the plaintiff for monies allegedly held by them on trust for the moving party (the “Moving Party’s Action”). The plaintiff defended the Moving Party’s Action by delivering a Statement of Defence on or about June 23, 2016. The Moving Party’s Action is pending against the plaintiff, but the moving party obtained a default judgment against Gheisary prior to his bankruptcy.
26On June 12, 2014, Zamani also commenced an action against Gheisary and the plaintiff for amounts they allegedly owe to Zamani (the “Zamani Action”). Zamani obtained a default judgment against both Gheisary and the plaintiff, but the plaintiff was successful in setting aside the default judgment against her. The plaintiff delivered a Statement of Defence in the Zamani Action on December 7, 2015. The Zamani Action is pending.
27The moving party petitioned Gheisary into bankruptcy as a result of alleged debts incurred after the Agreement. Master Mills granted a bankruptcy order on April 10, 2018. On April 19, 2018, the trustee in bankruptcy served the Notice of Bankruptcy on Gheisary’s creditors, including the plaintiff. The Notice of Bankruptcy disclosed Gheisary’s debts totaling $7.8 million.
28On May 1, 2020, this court approved the sale of Gheisary’s five-percent interest in 147 Ontario in accordance with the moving party’s purchase offer dated January 9, 2020. The moving party then owned all of the shares of 147 Ontario.
29On July 28, 2020, the plaintiff obtained an order, retroactive to May 5, 2020, pursuant to s. 38 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. 27, as a creditor of Gheisary’s estate, to permit her to continue her proceeding against Gheisary and the other defendants. She is the creditor with the largest claim to Gheisary’s bankrupt estate.
30On the same date, the plaintiff obtained an order from Justice Koehnen permitting a CPL to be registered against Observatory Lane, which replaced the order made in the family law proceeding by Justice Nelson.
31Gheisary has not delivered any pleadings in the plaintiff’s action and Zamani has served a Notice of Intent to Defend.
Positions of the Parties
32The moving party asserts that the plaintiff does not raise any genuine issue requiring a trial in her Amended Statement of Claim, and that he is entitled to summary judgment dismissing the action against him.
33The moving party submits that he did not cause the plaintiff any of the harm she alleges and that she was fully aware of Gheisary’s transfer of his shares of 147 to the moving party, and his reasons for it, by July 21, 2016 at the latest. Accordingly, he asserts that the plaintiff’s claim to set aside the sale of the shares of 147 Ontario as a fraudulent conveyance under the Fraudulent Conveyances Act, R.S.O. 1990, c. F.29 (the “FCA”) is statute barred. The plaintiff failed to bring her claim within two years of knowing the facts that gave rise to her cause of action as prescribed by the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. (the “Limitations Act”), which is the relevant legislation.
34Though not specifically pled in his notice of motion, the moving party argues that the plaintiff’s claims of conspiracy are also statute barred. The moving party did plead that at no material time did he ever enter into any agreement or conspiracy with his co-defendants to cause harm to the plaintiff as she alleges in her Amended Statement of Claim.
35The plaintiff asserts that this is not an appropriate case for summary judgment and that the moving party has not met his onus to show that there is no genuine issue requiring a trial. The plaintiff asserts that the matter should proceed to a trial in the normal course including discovery and production of documents because a full appreciation of the evidence and issues, which is required to make determinative findings, can only be achieved by trial.
36The plaintiff further asserts that Gheisary’s fraudulent conveyance of shares to the moving party was, in essence, a transfer of land. Accordingly, her claim to set it aside engages the ten-year limitation period pursuant to the Real Property Limitations Act, R.S.O. 1990, c. L-15 (the “RPLA”) and not the shorter limitation period under the Limitations Act. She further asserts that she has demonstrated a prima facie case in support of her conspiracy claim, that more evidence will be made available in the discovery, and that the damages she suffered can be assessed at trial.
Is there a genuine issue requiring a trial of one or both of the plaintiff’s conspiracy claim and her claim to set aside the transfer of Gheisary’s shares in 147 Ontario to the moving party?
Law
37Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that the court shall grant summary judgment if it is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.
38The court should first determine if there is a genuine issue requiring a trial based only on the evidence in the motion record, without using the fact-finding powers set out in rule 20.04 (2.1) and (2.2). The analysis of whether there is a genuine issue requiring a trial should be done by reviewing the factual record and granting summary judgment, if there is sufficient evidence to fairly and justly adjudicate the dispute and summary judgment would be a timely, affordable and proportionate procedure.
39If there appears to be a genuine issue requiring a trial, then the court should determine if the need for a trial can be avoided by using the fact-finding powers under rule 20.04 to weigh evidence, evaluate credibility and draw inferences. Their use will not be against the interest of justice if it will lead to a fair and just result, and will serve the goals of timeliness, affordability, and proportionality in light of the litigation as a whole.
40The Supreme Court in Hryniak v. Mauldin, 2014 SCC 7, 1 S.C.R. 87 held at para. 49:
There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
41The moving party has the burden to show that there is no genuine issue requiring a trial: Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764, 108 O.R. (3d) 1 at para. 100.
42The test for determining whether summary judgment should issue is whether the full appreciation of the evidence and the issues that is required to make determinative findings can be achieved by a motion or only trial: Combined Air, at para. 50.
43As noted by the Court of Appeal for Ontario in Combined Air at paras. 38 and 46, the amendments to rule 20.04 were intended to eliminate unnecessary trials, but not all trials. It reiterated the importance of trials and the advantages possessed by the trial judge by citing the Supreme Court of Canada decision in Housen v. Nikolaisen, 2002 SCC 33, 2 S.C.R. 235, where the Supreme Court adopted the following observations from R. D. Gibbens in "Appellate Review of Findings of Fact" (1992), 13 Adv. Q. 445, at p. 446: S
The trial judge is said to have an expertise in assessing and weighing the facts developed at trial. Similarly, the trial judge has also been exposed to the entire case. The trial judge has sat through the entire case and his ultimate judgment reflects this total familiarity with the evidence. The insight gained by the trial judge who has lived with the case for several days, weeks or even months may be far deeper than that of the Court of Appeal whose view of the case is much more limited and narrow, often being shaped and distorted by the various orders or rulings being challenged.
Analysis
The Conspiracy Claim
44For the reasons that follow, I find that the moving party has not met his onus to show that there is no genuine issue requiring a trial respecting the plaintiff’s conspiracy claim.
45On this summary judgment motion, the moving party argued that there is no genuine issue requiring a trial of the plaintiff’s conspiracy claim and that the plaintiff’s claim must fail. The moving party did not, however, plead the test for conspiracy that the plaintiff must meet. He only included it in his factum. He asserts that the plaintiff has made bald allegations of acts by the defendants which have prevented her from recovering the monies due to her under the judgment in the family law proceeding, and that she has not proven that she lacked the financial wherewithal to pursue her judgment prior to the bankruptcy as a result of the moving party’s conduct.
46The moving party further asserts that if the plaintiff can prove the fraudulent conveyance claim, then the conspiracy claim does not result in damages that are actionable; and, therefore, the conspiracy claim becomes irrelevant. This pleading was also not included in the moving party’s notice of motion but appeared only in his factum.
47The moving party argued that the plaintiff has adduced no evidence of any wrongful conduct by the moving party after she obtained her judgment in the family law proceeding. Therefore, her claim is statute barred.
48The details of the plaintiff’s conspiracy claim are set out at paragraphs 25 to 31 of her Amended Statement of Claim. Specifically, the plaintiff alleges that the defendants have initiated multiple lawsuits over approximately ten years to cause her to expend all funds at her disposal, they have withheld information from her contrary to court orders, and they have failed to attend for questioning and interfered with court processes. The plaintiff further alleges that these defendants have hidden assets outside of Canada, that the moving party acted as an agent of Gheisary and provided accounting information to Gheisary’s accountant in the family law litigation, and that the moving party and Gheisary provided inaccurate information to their accountants and made limited and incomplete financial disclosure. She asserts that all of this conduct was inflicted on her to cause her hardship.
49The plaintiff submits that the evidence adduced by the moving party on this summary judgment motion does not show that the alleged conspiracy did not occur or that no trial of that issue is required.
50The plaintiff asserts that this is so, at least in part, because the moving party’s motion was brought for summary judgment based on a limitation period relating to the fraudulent conveyance and not for summary judgment based on the plaintiff’s inability to make out a case of conspiracy. The plaintiff submits that the notice of motion focused on limitation periods relating to the fraudulent conveyance in particular, and the responding materials and cross-examinations were correspondingly focused on that issue and did not address the conspiracy claim.
51Notwithstanding, the plaintiff submits that she can demonstrate a prima facie case for conspiracy in her action. She submits that the conspiracy began prior to the incorporation of 147 Ontario, and included Gheisary’s failure to disclose the share conveyance by Gheisary to the moving party to pay alleged debts at a time when the evidence shows that the defendants were aware of problems in the marriage between the plaintiff and Gheisary. She further submits that during the family law proceeding Gheisary was persistent in his non-disclosure, and the defendants took steps contrary to court orders, including failure to make disclosure. In 2015, Gheisary’s pleadings were struck after he was found to be ungovernable. In 2016, Gheisary and the moving party attended at the undefended trial with the goal of intervening. In 2017, Gheisary’s appeal of the judgment the plaintiff obtained in the family law proceeding was struck. All the while, in 2014, each of the moving party and Zamani hired the same law firm to bring the Moving Party’s Action and the Zamina Action. Gheisary has been noted in default in each of these Actions, but the actions remain extant against the plaintiff.
52The plaintiff further submits that Marmer Penner Inc., Gheisary’s expert in the family law proceeding, stated that, notwithstanding that Gheisary was its client, the financial advice on Gheisary’s assets was provided by the moving party “on consultation from” Gheisary.
53In 2018, the moving party petitioned Gheisary into bankruptcy, which Gheisary did not oppose. Based on the non-opposition, the plaintiff submits that Gheisary and the moving party colluded to put Gheisary into bankruptcy to give the moving party an opportunity to purchase Gheisary’s remaining five shares of 147 Ontario when it was likely that the moving party would be the only buyer. The plaintiff further submits that, on March 15, 2019, the trustee in bankruptcy wrote to Gheisary for information regarding the conveyance of his shares. The letter is responded to by the same law firm that represents the moving party and Zamina, which appears, based on the correspondence, to be representing Gheisary as well. The plaintiff submits that she attended a mediation at the trustee’s counsel’s office on September 4, 2019, with respect to the sale of the shares to the moving party, but the matter did not get resolved, in part because a settlement would have required her to agree to lifting the order made in the family law proceeding that prevented Observatory Lane from being sold or encumbered.
54I do not disagree that the evidentiary record does not support all of the plaintiff’s allegations. This is not surprising in light of the fact that there has been no exchange of affidavits of documents and no examinations for discovery. Accordingly, the court has limited ability to use its fact-finding powers to weigh evidence, assess credibility and draw inferences.
55I agree with the plaintiff’s assessment of the moving party’s summary judgment motion. The subject matter of the motion is the limitation period relating to the alleged fraudulent conveyance and not the merits of the conspiracy claim.
56As held in Malleck v. Batten, 2015 ONSC 887, at para. 18, without the parties having exchanged affidavits of documents or engaged in questioning, the fact-finding rules do not assist a judge to determine if a trial can be avoided and in making a fair and just determination of the case on its merits. In an action involving conspiracy, the merits of the case cannot be established without documentary discovery.
57At this stage, there is insufficient evidence before the court to properly assess the relationships among the defendants and their involvement in the family law proceeding. Each of them failed to appear for questioning and at least some of them failed to make disclosure when ordered to do so. The plaintiff submits that a full appreciation of the evidence will require viva voce evidence. I agree. Credibility is an issue in this case.
58Recently, in Novac v. Leitch, 2020 ONCA 257, 150 O.R. (3d) 57, the Ontario Court of Appeal held at para. 51 that conspiracy can exist in addition to other causes of action and that “conspiracy is not a ‘blunt instrument’ to respond to this [non-disclosure] misconduct. It is a valuable tool in the judicial toolbox to ensure fairness in the process and to achieve justice. If the tort of conspiracy is not available, then co-conspirators have no skin in the game. Their participation in hiding income or assets is a no-risk proposition.”
59I find that the relationship between Gheisary and the moving party specifically, and the relationships among the defendants generally, are key and material issues requiring a trial on the conspiracy claim. The production of documents and the discovery process should provide material evidence respecting the relationships among the defendants and their conduct at relevant times. The plaintiff makes a number of allegations against them that they prevented her from collecting her judgment. I accept the moving party’s submission that these allegations have not been proven. However, the plaintiff has not had the benefit of production and discovery. Accordingly, I am unable to use my fact-finding powers to conclude that there is no genuine issue for trial. A trial is necessary to make the necessary findings about the relationships among the defendants and their motives, and to assess their credibility.
60The narrative on how the alleged conspiracy unfolded is critical in this case, and the judge will benefit from the witnesses’ live testimony to properly appreciate it.
61As Lauwers J.A. commented in Baywood Homes Partnership v. Haditaght, 2014 ONCA 450, 120 O.R. (3d) 438 at para. 44:
Evidence by affidavit, prepared by a party’s legal counsel, which may include voluminous exhibits, can obscure the affiant’s authentic voice. This makes the motion judge’s task of assessing credibility and reliability especially difficult in a summary judgment and mini-trial context. Great care must be taken by the motion judge to ensure that decontextualized affidavit and transcript evidence does not become the means by which substantive unfairness enters, in a way that would not likely occur in a full trial where the trial judge sees and hears it all.
62I should also note that, in this case, where the moving party is seeking a dismissal of the action against him, I would be reluctant to use my enhanced fact-finding powers to find that there is no issue requiring a trial against him. If summary judgment were granted in favour of the moving party, the action could still continue against the other defendants. Indeed, he would likely be called as a witness in that trial. Accordingly, to grant summary judgment would not end the proceeding, and could lead to potentially inconsistent findings.
63The moving party also argues the defence of a limitation period respecting the conspiracy claim, though, as noted, he did not specifically plead this defence in his notice of motion. He submits that all of the alleged wrongdoing which gives rise to the conspiracy claim took place before June 2016, and prior to July 21, 2016 when the plaintiff obtained judgment in the family law proceeding. Therefore, being more than two years before the plaintiff brought her action, the conspiracy claim is statute barred.
64The moving party further asserts that if the plaintiff is alleging that the moving party’s application to petition Gheisary into bankruptcy constituted conspiracy, then the limitation period would commence on or about April 19, 2018, when she would have known about the bankruptcy because she, as a creditor, would have been notified of it by the trustee in bankruptcy. Because she issued her claim on May 5, 2020, the moving party asserts that it is statute barred. The moving party submits that the plaintiff has provided no evidence of any acts of the defendants in furtherance of the alleged conspiracy after May 6, 2018.
65The plaintiff asserts that the actions pled respecting the alleged conspiracy occurred in 2019 and 2020 and are well-within the two-year limitation period. She further submits that the moving party’s act of bringing the bankruptcy application and Gheisary’s non-opposition occurred on April 10, 2018, which is also within the limitation period as a result of the tolled limitation periods due to COVID-19, retroactive to March 16, 2020.
66For the reasons discussed below, I am satisfied that the issue of the limitation period defence should not be determined on this summary judgment motion.
The Fraudulent Conveyance Claim
67The moving party asserts that there is no genuine issue requiring a trial in the fraudulent conveyance claim because the plaintiff’s claim is statute barred.
68The moving party submits that the plaintiff’s claim to have Gheisary’s conveyance of 45 shares of 147 Ontario to him set aside pursuant to the FCA is statute barred. He asserts that the applicable limitation period is two years pursuant to the Limitations Act, and that it is not ten years pursuant to the RPLA. He argues that the RPLA has no application because the plaintiff’s action is not an action to recover land, but an action to have shares returned to a bankrupt’s estate.
69The moving party relies on Stravino v. Buttinelli, 2015 ONSC 1768, at paras. 66 and 67, in support of his assertion that the fact that land is incidentally involved in a fraudulent conveyance claim does not mean that the action is governed by the RPLA. See also Beniuk v. Leamington (Municipality) 2020 ONCA 238, 150 O.R. (3d) 129 at para. 51, where the Ontario Court of Appeal refers to Justice Perell’s clarification in Toronto Standard Condominium Corp. No. 1487 v. Market Lofts Inc., 2015 ONSC 1067, 53 R.P.R. (5th) 67.
70The plaintiff accepts that as the responding party, she may not rest solely on the allegations or denials in her pleadings, but she must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial. As set out in Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 (ONSC) at paras. 26 and 27; aff’d 2014 ONCA 878 (Ont. C.A.), she must put her best foot forward with respect to the existence or non-existence of material issues to be tried.
71The plaintiff submits that she has done so. She asserts that the relevant limitation period is the ten-year limitation period set out in the RPLA and not the two-year limitation period set out in the Limitations Act. She submits that because the fraudulent conveyance between Gheisary and the moving party is, at its core, a transaction involving land, not shares, she should be afforded the ten-year limitation period. She further submits that the fact that the court may provide her with a monetary award, as opposed to an interest in the land, does not take away from the fact that her claim is for a share of the land.
72The plaintiff further submits that courts have held that where a spouse makes a strategic decision to put property beyond the scope of a spouse by placing it in a company that is run by another party, the action may give rise to a claim in oppression or other malfeasance of corporate conduct, or may give rise to a constructive trust or a piercing of the corporate veil. The plaintiff asserts that deliberate steps were taken by Gheisary and the moving party to shield Gheisary’s interest in Observatory Lane from her, and that there was no purpose for the corporation other than to hold the property. The moving party conceded the latter fact in his cross-examination.
73The plaintiff submits that Gheisary’s conveyance of shares in 147 Ontario to the moving party and the moving party’s petition for a bankruptcy order against Gheisary were for the sole purpose of giving the moving party alone ownership over Observatory Lane to the exclusion of the plaintiff.
74The plaintiff submits that her action is for recovery in respect of the “fraudulent conveyance of land tied to shares.” In support of her submission, the plaintiff relies on the reasoning of McConnell v. Huxtable, 2014 ONCA 86, 118 O.R. (3d) 561. In McConnell, the Court of Appeal for Ontario considered the relationship between the Limitations Act and the RPLA in the context of a family law dispute.
75In McConnell, the respondent common law wife brought an action for unjust enrichment seeking a remedial constructive trust in a real property owned by the appellant common law husband or, alternatively, a monetary award. The lower court found that a claim for unjust enrichment in which the claimant seeks a remedial constructive trust in another’s property is an “action to recover any land” within the meaning of s. 4 of the RPLA.
76The Court of Appeal for Ontario at para. 23 summarized the conclusion of the motion judge’s finding that “a case in which someone asks the court to award them ownership of part or all of a piece of land held by someone else is an action to recover land.” The Court of Appeal for Ontario also referred to the motion judge’s conclusion that “[i]t should not matter how many material facts there are or whether the entitlement to land requires a two-step analysis, so long as the application makes a claim of entitlement to ownership of land.” [Emphasis added.]
77The Court of Appeal for Ontario adopted the motion judge’s reasoning and found that the respondent’s claim was an “action” within the meaning of s. 4 of the RPLA; that the action was one to “recover”; and that the action was to recover “land.”
78The Court of Appeal for Ontario held at para. 20 that a claim for constructive trust as a remedy for unjust enrichment is a claim for a right to the land.
79The Court of Appeal for Ontario then considered whether an application for the equitable remedy of a constructive trust in real property is an application for recovery of any concluded at para. 38 that the respondent was making a claim for recovery of land in the sense land, and that she sought to obtain land by judgment of the court. The fact that the court may provide her with an alternative remedy of a monetary award did not take away from the fact that her claim was for a share of the land.
80The plaintiff has brought a claim for unjust enrichment.
81I find that there is a genuine issue regarding which of the two limitations periods applies and it would not be fair or just to use my enhanced fact-finding powers to determine the issue. I am of the view that there is a genuine issue as to whether the plaintiff has an interest in Observatory Lane, and whether the defendants took steps to defeat that interest. In January 2015, Justice Nelson, in the family law proceeding, made an order which bound the Observatory Lane with an effect similar to that of a CPL. Subsequently, in August 2020, Justice Koehnen made an order permitting the registration of a CPL against Observatory Lane, indicating a triable issue regarding the plaintiff’s interest in the land.
82The facts relating to the conspiracy claim are also relevant to this limitation period issue. Whether deliberate steps were taken by the defendants to shield Observatory Lane from the plaintiff through a corporate structure has not been fully discovered. The plaintiff maintains a consistent position that a trial is required on all issues. I agree.
Partial Summary Judgment
83The moving party urges this court to grant summary judgment on the limitation period relating to the fraudulent conveyance claim even if the court declines to grant summary judgment on the conspiracy claim. In making this request, the moving party is seeking partial summary judgment.
84In my view, the success of the limitations defence will depend in part on the credibility assessments of the defendants respecting their conduct during the periods in question. In Cook v. Joyce, 2017 ONCA 49, the court refused to exercise its enhanced fact-finding power on a partial summary judgment motion dealing with a limitations issue and made the following observation:
I recognize that litigants often resort to motions for partial summary judgment to decide limitation defences. However, partial summary judgment motions operate in tension with the general policy of the rules that separate hearings on one or more issues should only occur with the consent of the parties: r. 6.1.01. While a useful tool in some cases, partial summary judgment motions create their own challenges for the fair adjudication of disputes. For example, this court has cautioned that partial summary judgment may not be appropriate where it risks duplicative or inconsistent findings: Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922, at paras. 37 and 38.
In the present case, granting partial summary judgment on the settlement issue would risk an unfair result by placing in watertight compartments the assessment of the parties’ credibility on the two key issues – whether an assault occurred and whether they settled their dispute. Since the trier of fact’s view of the credibility of the parties on one issue may well influence his or her view on the other, the parties’ credibility on the two issues should be assessed together, not separately.
85In the recent decision of Malik v. Attia, 2020 ONCA 787, the Ontario Court of Appeal held at para. 61 that in considering granting partial summary judgment, a motion judge must determine whether, in the circumstances, partial summary judgment will achieve the objectives of proportionate, timely, and affordable justice or, instead, cause delay and increase expense: Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561 at paras. 29-34; Service Mold + Aerospace Inc. v. Khalaf, 2019 ONCA 369, 146 O.R. (3d) 135 at para. 14.
86In Malik, Brown J.A. set out the following considerations regarding the hearing of a motion for partial summary judgment: a) will dividing the case into several parts prove cheaper for the parties; b) how will partial summary judgment get the parties’ case in and out of the court system more quickly; and c) how will partial summary judgment not result in inconsistent findings by the multiple judges who will touch the divided case?
87In Butera, at para. 34, the Court of Appeal for Ontario held that a motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost-effective manner.
88I am not satisfied that the limitation period issues can be readily bifurcated from the conspiracy claim. The facts underpinning the conspiracy claim will also likely be relevant to the plaintiff’s claim of unjust enrichment and whether she has a claim of entitlement to an interest in Observatory Lane. Partial summary judgment in this case, in which the plaintiff has not had the benefit of document production and discovery, and where there is insufficient evidence to fairly and justly adjudicate the dispute, would be premature and not in the interest of justice.
Disposition
89The moving party has not met his onus to show that there is no genuine issue requiring a trial in the plaintiff’s action. Partial summary judgment is not appropriate in this case. The moving party’s motion is dismissed.
Costs
90The parties are encouraged to agree on the matter of costs. If they are unable to agree, they may make written submissions limited to two pages (exclusive of a bill of costs, costs outline and offers to settle, if any). The plaintiff shall serve and file such submissions within 14 days of the release of these reasons for decision, and the moving party shall serve and file similar written submissions within 14 days thereafter. Reply submissions may only be made with leave.
Dietrich J.
Released: June 28, 2021