COURT FILE NO.: CV-21-00673253-0000

MOTION HEARD: 2022/05/24

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: GOLIZADEH, plaintiff/moving party

AND:

VOSSOUGHI et al, defendant/responding party

BEFORE: Associate Justice R. Frank

COUNSEL: David Schatzker for the Plaintiff/Moving Party

David A. Brooker for the Defendant, Jebraeil Vossoughi/Responding Party

HEARD: May 24, 2022

ENDORSEMENT

[1] This is a motion by the Plaintiff, Mohammad Golizadeh (“Golizadeh”), for an order pursuant to Rule 45.02 of the Rules of Civil Procedure that the Defendant, Jebraeil Vossoughi, also known as Jabi Vossoughi (“Vossoughi”), pay $180,000 into court pending the final disposition or settlement of this action.

[2] Vossoughi was the owner of a property at 14 Laurwood Court, Aurora, Ontario (the “Laurwood Property”). In January 2021, Vossoughi sold the Laurwood Property and the net sale proceeds totalled approximately $258,000 (the “Disputed Sale Proceeds”). The Plaintiff claims an interest in a portion of the Disputed Sale Proceeds and seeks an order pursuant to Rule 45.02 that $180,000.00 from the Disputed Sale Proceeds be paid into court.

BACKGROUND FACTS AND PARTIES’ POSITIONS

[3] In 2016, Golizadeh, Vossoughi and the Defendant, Mojtaba Shafaeeyamcheloo (“Shafaee”), decided to invest in residential real estate in the Greater Toronto Area. The three parties entered into an agreement that provided, among other things:

a. they would purchase three properties with each holding one of them as legal titleholder in trust for the remaining two;

b. the existing houses on the properties would either be demolished, and a new build would be erected or, alternatively, renovated extensively;

c. they would each contribute equally toward expenses related to the properties; and

d. upon completion of construction, the properties would be sold and the proceeds would be distributed equally.

[4] Pursuant to the agreement, two properties were purchased in 2016. One property was purchased in Shafaee’s name (the “Seaton Property”) and a second, the Laurwood Property, was purchased in Vossoughi’s name. The third property was never purchased.

[5] Subsequently, the parties entered into a written agreement dated September 8, 2017 (the “Trust Agreement/Declaration”) that provided, among other things, that each of Shafaee and Vossoughi held the two properties in trust for Golizadeh, Vossoughi and Shafaee, and confirmed that each of them held a one-third interest in each property.

[6] The relationship between Golizadeh, Vossoughi and Shafaee broke down over time. In September 2018 the parties began discussions about ending their business relationship.

[7] The facts relating to the September 2018 discussions and the subsequent events leading to this action and motion are in dispute. In particular, there is a dispute as to whether the discussions culminated in any agreement(s) altering or replacing the Trust Agreement/Declaration.

[8] Vossoughi’s evidence is that in September 2018, Golizadeh, Vossoughi and Shafaee agreed to terms of their separation which they wrote down in two English language agreements, one for each of the properties (the “Agreement Between Partners”), the essential terms of which included that:

a. Vossoughi would have sole beneficial title to the Laurwood Property (of which he had legal title);

b. each of Golizadeh and Shafaee would have a one-half beneficial interest in the Seaton Property (of which Shafaee had legal title);

c. after September 30, 2018, each of Golizadeh, Vossoughi and Shafaee would be responsible for the expenses for their own beneficially owned property;

d. each of Golizadeh, Vossoughi and Shafaee would provide evidence of all expenses they had incurred with respect to the properties up to September 30, 2018, with an accounting based on an agreed‑upon value. Each of them would make any necessary payments to each other based on the accounting;

e. once the parties agreed on the accounting, a lawyer would be retained at equal expense to draft formal documentation, including a releasee; and

f. all previous agreements between the parties were no longer valid.

[9] Additional evidence from Vossoughi, key aspects of which are contested by the Plaintiff, includes the following:

a. the parties made three attempts to obtain the necessary information and documentation to reconcile their contributions in accordance with the Agreement Between Partners. The first attempt was between October and December of 2018; the second was between June and August 2019 (after the Seaton Property had been sold); and the third was between May and September 2020;

b. Golizadeh, Vossoughi and Shafaee ultimately agreed on a reconciliation, including the amounts to be paid as between the three partners, which was confirmed in September 2020;

c. Shafaee retained a lawyer who drafted a document entitled “Mutual Full and Final Release” which confirmed the amounts that Golizadeh, Vossoughi and Shafaee were to pay to each other. The Mutual Full and Final Release was circulated to the Plaintiff and Vossoughi in October 2020;

d. Vossoughi and Golizadeh’s daughter, acting on behalf of Golizadeh, exchanged text messages confirming Golizadeh’s agreement with the amounts to be paid as set out in the Mutual Full and Final Release; and

e. in December 2020, Shafaee’s lawyer asked that each of the Plaintiff and Vossoughi review the Mutual Full and Final Release with independent counsel for execution. There was no response from the Plaintiff.

[10] Vossoughi then entered into an agreement of purchase and sale with respect to the Laurwood Property. Vossoughi advised the Plaintiff of the sale, which was scheduled to be completed at the end of January 2021. Prior to the completion of the sale, the Plaintiff’s lawyer advised Vossoughi’s lawyer that the Plaintiff: (i) claimed to be entitled to one-third of the Disputed Sale Proceeds based on the Trust Agreement/Declaration; and (ii) took the position that the Disputed Sale Proceeds were not to be released to Vossoughi.

[11] Following the sale, the Disputed Sale Proceeds were held in trust by Vossoughi’s lawyer. Golizadeh continued to assert that the Disputed Sale Proceeds were subject to the Trust Agreement/Declaration, which Vossoughi denied.

[12] In February 2021, Shafaee’s lawyer wrote to Vossoughi’s lawyer and the Plaintiff’s lawyer indicating that “Mr. Shafaee understands there is a discrepancy regarding which document holds authority over the venture and is not prepared to provide an opinion at this time” and “Mr. Shafaee is not prepared to comment on the question of the validity of the Agreements the parties’ executed.”

[13] Over the ensuing months, the parties were unable to reach an agreement with respect to the disbursement of the Disputed Sale Proceeds. Golizadeh commenced this action in December 2021. When Vossoughi advised that he would instruct his lawyers to release the Disputed Sale Proceeds unless the Plaintiff brought a motion to obtain an order securing the funds, the Plaintiff brought this motion. While the motion was pending:

a. Shafaee and Vossoughi resolved their respective claims against each other in March 2022; and

b. on April 7, 2022, Justice Myers ordered a release of $75,000.00 from the Disputed Sale Proceeds that were still being held in trust by Vossoughi’s lawyers.

[14] Vossoughi asserts that the Trust Agreement/Declaration is no longer binding. He argues that the Trust Agreement/Declaration was superseded by the Agreement Between Partners which contained all the essential terms necessary for a binding agreement. Further, he asserts that the subsequent communications by and on behalf of the three partners confirmed an agreement as to the amounts that were payable to each of them based on the reconciliation of their respective expenses.

[15] Golizadeh argues that the Trust Agreement/Declaration remains in force. He asserts that the Disputed Sale Proceeds are an identifiable fund and that he is entitled to $180,000 from that fund, which should be preserved pending trial. Golizadeh’s position is that the Agreement Between Partners is not binding because it was subject to conditions that were not fulfilled. Golizadeh also asserts that the events that followed the Agreement Between Partners, including the attempts to quantify the amounts payable as between Golizadeh, Vossoughi and Shafaee, did not result in any binding agreement. On that basis, Golizadeh objects to Vossoughi’s reliance on certain communications included or referred to in the Vossoughi’s responding motion record, which Golizadeh asserts were made on a without prejudice basis and are, therefore, subject to litigation privilege and inadmissible. Vossoughi’s response to the privilege claim is that the communications are admissible evidence of a binding settlement and agreement between the partners.[^1]

LAW AND ANALYSIS

[16] The issue raised on this motion is whether the Plaintiff has met the test for an order to pay a specific fund into court pursuant to Rule 45.02 of the Rules of Civil Procedure, which provides as follows:

45.02 Where the right of a party to a specific fund is in question, the court may order the fund to be paid into court or otherwise secured on such terms as are just.

[17] The Court of Appeal has adopted a three-part test for the application of Rule 45.02:

(i) the plaintiff must claim a right to a specific fund;

(ii) there must be a serious issue to be tried regarding the claim to the fund, and

(iii) the balance of convenience must favour granting the relief requested.[^2]

[18] An order under Rule 45.02 is “a limited exception to the law’s deep-seated aversion to providing a plaintiff with execution before trial” and is an extreme remedy to be exercised only with due vigilance and caution.[^3] Where the plaintiff asserts a general claim and looks to the defendant’s assets only as a means of satisfying a monetary judgment, interference with the defendant's assets is more difficult to justify. However, interference may be more readily justified where the plaintiff's right is specifically related to the asset in question.[^4]

(i) Is there a claim to a specific fund?

[19] The “specific fund” requirement means that there must be a specific fund readily identifiable when the order is sought. It also requires that the plaintiff assert a legal right to the specific fund as a claim in the litigation rather than just making a claim in damages. If the claim is for damages, then no order under Rule 45.02 will be made because a claim for damages is not a claim to a legal right to a fund.[^5]

[20] The first part of the “specific fund” requirement can be satisfied if the plaintiff shows that a specified and differentiated sum of money exists under the control of the defendant or a third party. The money in question does not have to be physically separated or segregated from other monies. The question is whether the claimed fund is reasonably identifiable (i.e., differentiated) by a book-keeping entry or other line-item descriptor.[^6]

[21] Vossoughi submits that the Plaintiff has not claimed a specific fund because:

a. he initially made a claim with respect to the entire Disputed Sale Proceeds, which was subsequently decreased to a claim to $180,000;

b. part of the fund originally claimed ($75,000) has been paid out of trust pursuant to the April 7, 2022 order of Justice Myers; and

c. in any event, the Plaintiff’s claim is for an uncertain amount.

[22] In my view, neither the payment out of a portion of the proceeds of sale nor the fact that the plaintiff is unable to quantify the exact amount that he may ultimately be entitled to from the remaining trust funds demonstrates determinatively that there is no specific fund (or no longer a specific fund). I do not interpret Rule 45.02 as requiring that a moving party must, in all circumstances, be able to determine with certainty the exact amount it claims to be entitled to from a specific fund. The dispute between the parties may very well involve a determination of whether the moving party is entitled to the fund and, if so, the portion of the fund to which the moving party is entitled.

[23] The Plaintiff’s claim relates to a one-third interest in the Disputed Sale Proceeds. Those funds were and remain readily identifiable. While the precise quantification remains one of the issues in dispute, the funds in issue have been and continue to be held in the trust account of Vossoughi’s lawyers pending the resolution of the dispute between the parties and, more recently, the disposition of this motion. On the evidence before me, I am satisfied that there is a reasonably identifiable fund of money sufficient to satisfy the first branch of the test under Rule 45.02 of a claim to a right to a specific fund.

(ii) Is there a serious issue to be tried?

[24] The second branch of the test under Rule 45.02 requires the moving party to demonstrate that there is a serious issue to be tried with respect to the plaintiff’s claim to the fund.[^7] To satisfy this branch of the test, the moving party must show “a serious prospect of ultimate success”.[^8]

[25] The crux of Vossoughi’s argument is that the Plaintiff is not able to demonstrate that there is a serious issue to be tried because his claim is based on the Trust Agreement/Declaration that has been superseded by the Agreement Between Partners and the agreed‑upon financial reconciliation. Vossoughi submits that the Agreement Between Partners is a binding agreement because it contained all of the essential terms by which the relationship between the parties was to be governed. Vossoughi asserts that the fact that it contemplated that a formal written document would be prepared and signed subsequently does not alter its binding nature.[^9] He also asserts that the contemporaneous correspondence (including texts and emails involving the Plaintiff and his daughter), and the actions of the parties, confirmed and were consistent with the binding nature of the Agreement Between Partners.

[26] The problem with Vossoughi’s position is that there are a significant number of disputed facts surrounding the entering into of the Agreement Between Partners in September 2018 as well as the events that took place over the next three years with respect to the disputed accounting and reconciliation of the amounts owing as between Golizadeh, Vossoughi and Shafaee. While Vossoughi argues that the Agreement Between Partners provided all of the essential terms required to create a binding agreement, that question is not settled for reasons that include the following:

a. there is a dispute as to whether the conditions provided for under the Agreement Between Partners were fulfilled;

b. the Agreement Between Partners contemplates a financial reconciliation, which Vossoughi acknowledges was not completed in 2018, and the Plaintiff’s position is that it was never completed. In this regard, there were at least two periods (the fall of 2018 and June 2019) during which Golizadeh, Vossoughi and Shafaee tried but failed to reach a final resolution with respect to the quantification of the amounts owing from each to the others. Although Vossoughi submits that the third attempt at a financial reconciliation was successfully completed by September 2020, the evidence as to whether an agreement was reached is far from clear. For example, Vossoughi relies on a draft agreement that he submits was prepared by Shafaee’s lawyer to formalize the parties’ agreement. However, the correspondence enclosing the agreement provides that Vossoughi and the Plaintiff were to confirm that they had obtained independent legal advice (or waived it) and that the parties were to execute the Full and Final Release. The evidence indicates that neither of those happened.

c. there is evidence that as late as February 2021 Shafaee was not prepared to express a view about the status of the agreement(s) between the parties.

[27] Simply put, there is a real dispute as to whether the Agreement Between Partners was a definitive and binding agreement and whether the parties reached an agreement on the financial reconciliation with respect to the amounts each owed to the others. Resolving the disputed issues will require a determination as to which disputed facts are to be accepted. It will also require an assessment of numerous legal issues, including privilege claims and whether a settlement was reached. Overlaying those issues are questions with respect to the need for independent legal advice and the parties’ ability to understand documents drafted in English.

[28] To conclude in favour of Vossoughi’s position (i.e. that the Agreement Between Partners is binding and effective, and that it supersedes the Trust Agreement/Declaration) would essentially require me to treat this motion as a motion for summary judgment. However, as Master Muir noted in Retrocom, a Rule 45.02 motion is not a summary judgment motion.[^10] For purposes of this Rule 45.02 motion, it is not sufficiently clear that the Trust Agreement/Declaration is no longer applicable. As a result, I find that the Plaintiff has demonstrated that there is a serious issue to be tried with respect to his claim to the identified fund in issue.

(iii) Does the balance of convenience favour granting the requested relief?

[29] Vossoughi submits that the balance of convenience favours him. He argues that the Plaintiff has failed to put forward any evidence indicating why he would not be able to recover damages should his claim be successful. Vossoughi also argues that he has put forward evidence that the continued inability to access funds has caused, and will continue to cause, him hardship.

[30] I do not accept Vossoughi’s argument and am satisfied that the balance of convenience favours the granting of the relief. Vossoughi’s evidence is that while the dispute has been ongoing, he has had to borrow funds and sell assets. As a result, I find that there is a legitimate concern that Vossoughi may dissipate the specific fund if it is not preserved, which is a compelling factor in favour of the Plaintiff.[^11]

[31] I am also mindful that the basis of the Plaintiff’s claim to the fund in issue is the Trust Agreement/Declaration, an agreement under which the Plaintiff would have a proprietary interest in his one-third share of the Disputed Sale Proceeds. I recognize that the Court of Appeal has made it clear that Rule 45.02 does not require that the legal right to the specific fund claimed by the plaintiff be a proprietary right.[^12] However, I view the trust claim as an additional factor in the balance of convenience test that favours the Plaintiff and provides a further basis for an order that maintains the status quo.

Disposition

[32] For the reasons outlined above, the plaintiff’s motion is granted. Vossoughi shall instruct his lawyers, Steinbergs LLP, to pay into court, to the credit of this action and pending the final disposition or settlement of this action, the sum of $180,000.00 from the Disputed Sale Proceeds currently held in trust with Steinbergs LLP with respect to the sale of the Laurwood Property.

[33] If the parties cannot agree on the costs of this motion, they may file written costs submissions not to exceed 3 pages (excluding Costs Outlines). The Plaintiff’s cost submissions shall be filed by October 5, 2022 and the defendants’ submissions shall be filed within 7 days of receipt of the Plaintiff’s submissions.

R. Frank Associate J.

Date: September 23, 2022

[^1]: Some of the evidence filed by Vossoughi includes text messages in Farsi. There are no translations, certified or otherwise, of the Farsi text messages. Until such time as certified translations are obtained, the evidence in Farsi is non‑compliant with section 125(2)(b) of the Courts of Justice Act and prima facie inadmissible even if it is not subject to privilege.

[^2]: Sadie Moranis Realty Corporation v. 1667038 Ontario Inc., 2012 ONCA 475 (“Sadie Moranis”) at paras 17-20; Retrocom Investment Management Inc. v. Davies Smith Developments Inc. (“Retrocom”), 2014 ONSC 6128 at paras 7‑9

[^3]: Sadie Moranis, para. 17; 3Genius Corporation v Locationary Inc., 2016 ONSC 4092 (“3Genius Corporation”) at para 1

[^4]: Sadie Moranis at para 17, citing Sharpe J.A. in Injunctions and Specific Performance, 4th ed., loose-leaf (Toronto: Canada Law Book, 2012) at para 2.760

[^5]: Sadie Moranis at para 21; 3Genius Corporation at para 3

[^6]: 3Genius Corporation at paras 14-17

[^7]: Retrocom at para 10

[^8]: Sadie Moranis at para 20

[^9]: See Ruparell v. J.H. Cochrane Investments Inc. et al, 2020 ONSC 7466 at para 21, aff’d by Ruparell v. J.H. Cochrane Investments Inc., 2021 ONCA 880

[^10]: Retrocom at para 10

[^11]: Sadie Moranis at para 20

[^12]: Sadie Moranis at paras 23-27