COURT FILE NO.: CV-19-0901 and CV-20-4546 (Brampton) DATE: 2023-11-29 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

SUKHJINDER GANDHI Applicants

-and-

OLUSEGUN FAJEBE

Respondents

AND BETWEEN:

OLUSEGUN FAJEBE

Applicants

-and-

SUKHJINDER GANDHI and BHUPINDER MOONDI

Respondents

Jide Oladejo, for Fajebe Chris Tonks, for Ghandi

Heard: April 12, 13, 14, 2023 in person; April 17 and 28, 2023 by videoconference; final written submissions received June 23, 2023

Justice R. Chown

Corrected REASONS FOR Judgment

[1] The central question in these applications is ownership of 175 Vodden Street West, Brampton. Each party brought an application seeking a declaration of ownership. By order of Ricchetti R.S.J., these applications proceeded as a trial with the evidence of the parties provided by affidavit and cross examination.

[2] My decision rests significantly on burdens that have not been met. It is hard to accept the evidence of either party.

[3] For simplicity and without intending any disrespect, I will refer to the parties using their surnames only. Fajebe is an individual who held title to 175 Vodden West until August 31, 2012. Ghandi is a registered real estate agent who has held title to the property since that date. Fajebe says Ghandi agreed to hold the property in trust for Fajebe. Ghandi says he bought it outright from Fajebe as an investment and rented it back to Fajebe.

[4] I find that Fajebe has a 24.8% beneficial interest in the property, and I am ordering the property to be sold with the net proceeds of sale divided accordingly.

Background

[5] On or shortly after May 10, 2012, Fajebe received a demand letter from lawyers acting on behalf of his mortgagee, Bridgewater Bank. He owed $13,700. He had kept his mortgage payments up to date but did not realize his municipal taxes were not being paid by the mortgagee and included in his mortgage payments, as had been the case with his prior mortgagee (Scotiabank).

[6] Fajebe had had an unhappy prior experience with another property. He had fallen behind on his mortgage and the mortgagee sold the house power of sale, with a $140,000 deficiency. He could not pay the deficiency so went bankrupt in 2009 and received a discharge in 2010.

[7] Not wanting this to occur again, Fajebe looked for ways to address the problem he had with Bridgewater Bank. He had seen an advertisement by Ghandi indicating Ghandi could assist with tax arrears problems. He met with Ghandi and told him his problems. Ghandi advised him that he could not assist in arranging a loan to pay the taxes but could assist him in selling the property. Fajebe decided to sell it. He did not want to sell it but did not want to face another deficiency in power of sale proceedings. On May 22, 2012, Ghandi wrote Bridgewater’s lawyer on Fajebe’s behalf, asking for an indulgence of several weeks. Bridgewater would not grant any indulgences. On May 25, 2012, Fajebe received a notice of sale from Bridgewater.

[8] On Ghandi’s advice, Fajebe listed the property for sale at a price of $459,000. Ghandi posted the listing on MLS on May 22, 2012. Fajebe did not receive any offers. On June 12, 2012, Fajebe reduced the price to $449,000.

[9] Fajebe says that when there will still no offers, “I was forced to approach my uncle Samson Foluke.” [1] The available documentation shows that Fajebe tried to sell the property to Foluke. Ghandi prepared the agreement of purchase and sale (APS) and had Foluke sign a buyer representation agreement. Fajebe and Foluke negotiated a price of $435,000. The APS the two of them signed was conditional on approval by both sides’ lawyers.

[10] Fajebe denies that he and Foluke negotiated a “sale.” He says the APS they signed evidences the intention to exchange title. Foluke would hold title, would obtain a mortgage, and would hold the property in trust for Fajebe while Fajebe paid the mortgage. However, the APS shows an initial offer by Foluke of $400,000, a sign back by Fajebe for $440,000, and a sign back by Foluke for $435,000. The sign backs show negotiation that is not consistent with a trust arrangement. If Foluke was to hold the property in trust, there would be no need for negotiation over price. There is no hint of a trust arrangement in the contemporaneous documents. Fajebe says that the price they eventually adopted was necessary so that Foluke would be sure to get a mortgage for the property. This is not credible for four reasons. First, there is more than one sign back. If the issue was that a lower price would have meant a lower downpayment, there would have been no need to go back and forth. Second, the numbers are not consistent with this evidence. Fajebe asked for $40,000 more than Foluke’s initial offer. Foluke responded with $35,000 more. If the concern was that the price was too high for purposes of the mortgage, Foluke could have gone back with his previous price instead of increasing by $35,000. Third, the negotiations happened on the same day, suggesting there would not have been time for Foluke to consult potential mortgagees between the offers. There is no documentation to suggest Foluke might have obtained a mortgage. Fourth, Foluke did not testify, and there was no adequate explanation as to why he would not testify to support Fajebe’s evidence that the arrangement was intended to be a trust arrangement. Nothing particularly turns on the outcome of this controversy, but it mirrors the controversy that must be decided in this trial, i.e ., whether Ghandi was holding the property in trust for Fajebe.

[11] Ghandi sent a copy of the APS to Bridgewater’s lawyer to advise that the property had been sold with a closing date of July 31, 2012. Unimpressed by the APS because of its conditions, the lawyer explained in an email dated July 3, 2012 that Bridgewater would not stop its enforcement proceedings.

[12] The arrangement between Fajebe to Foluke did not proceed. According to Fajebe, Foluke “backed out of the deal at the last minute.” [2] If accurate, this is not surprising as there was no financial benefit to Foluke for the arrangement, and considerable risk.

[13] Ghandi referred Fajebe to a mortgage broker with the goal of re-mortgaging the property. The mortgage broker assisted with an application to Home Trust for a mortgage. On July 31, 2012, Home Trust provided a mortgage commitment of $307,500 – not enough to pay off the Bridgewater mortgage.

Sale or Trust Arrangement?

[14] At this point, Fajebe still had not received any offers for the property. Ghandi and Fajebe discussed another arrangement. It is the nature of their arrangement that is the primary factual controversy in this case. Ghandi says he agreed to buy the property as an investment and lease it back to Fajebe. He said this would allow Fajebe to maintain some dignity with his family as they would not have to move. In contrast, Fajebe says Ghandi offered to assist him by purchasing the property and holding it in trust for him. Fajebe says there was no written documentation reflecting this understanding “because I completely trusted Ghandi.” [3]

[15] Fajebe cannot explain why Ghandi would invest in a house for Fajebe’s sole benefit, and assume considerable risk, with no return for Ghandi. The parties both described their relationship as friends, but they had no previous relationship. Ghandi first met Fajebe in May of 2012 when Fajebe approached him about his $13,700 debt problem. Prior to the sale from Fajebe to Ghandi, they never met outside of Ghandi’s office or at the property. After meeting, Fajebe and Ghandi never “hung out.” They clearly had a friendly relationship, but not one that was so friendly as to explain Ghandi assuming a large risk and making a large investment for no return – for the sole benefit of Fajebe. I cannot accept that Ghandi agreed to hold the property in trust for Fajebe without compensation, or that Fajebe would reasonably expect Ghandi to do so.

[16] Fajebe says that Ghandi told him: the only way to get the down payment and closing costs will be to reduce the purchase price to $416,000.00. He also informed me that once the Bridgewater Bank is paid out, the remaining money from the proceeds of sale would be used as down payment and closing costs. [4]

[17] Ghandi’s version is that he agreed to purchase the property for investment purposes. The contemporary documentation is consistent with Ghandi’s version and points towards a sale to Ghandi and a lease of the premises to Fajebe.

[18] An APS dated August 10, 2012 indicates that Ghandi offered to purchase the property for $400,000 and that Fajebe counter-offered to sell for $415,000. This negotiation is consistent with a sale and inconsistent with a trust arrangement. The APS required a $10,000 deposit to be paid within 24 hours to Fajebe’s lawyer, in trust. The cheque itself is not in evidence but the statement of adjustments reflects that Ghandi paid the deposit. Payment of a deposit is consistent with a sale and inconsistent with a trust arrangement. The APS included conditions that the sale was conditional on approval by both the buyer’s lawyer and the seller’s lawyers. These conditions required each party to waive the condition within five business days or the deal was off. Ghandi says that this was inserted for Fajebe’s benefit so that he could get independent legal advice before finalizing the deal. Ghandi says it was inserted for his own benefit as well, so that he could arrange financing.

[19] Ghandi also had Fajebe sign a “disclosure” document indicating that Ghandi was buying the property for investment purposes. It says: I am purchasing this property for investment use only. I will be renting this property back to Olusegun Fajebe. I have no knowledge of the value of the areas and properties may go up or down in near or distance future. I am purchasing this property to protect the Seller Olusegun Fajebe from going to power of sale and protecting him getting judgement against him from the Bridgewater Bank in future. [ sic ]

[20] The document recites Fajebe’s efforts to get alternate financing or to sell the property. This document is dated the same date as the APS, August 10, 2012.

[21] Fajebe says there was no discussion to the effect that Ghandi was purchasing the property for investment purposes. He says, “While I know I signed some documents at the direction of Gandhi, I was not asking any question about these documents because I completely trusted Gandhi.” [5]

[22] In cross examination, Fajebe was asked what the understanding was as to when Ghandi would transfer the property back to Fajebe. His answer was that in four to five years, when things got better for him, they would “sit down and talk about how to do the transfer.” However, there is no documentation to this effect. Nothing was put in writing at the time of the transaction or at any later date. There is no evidence that Fajebe even sent an email or text message that would point towards a trust rather than a sale arrangement.

Independent Legal Advice

[23] On August 16, 2012, Fajebe met with and retained a lawyer, Bhupinder Singh Moondi, to assist him with the sale. Moondi’s file contains his standard retainer letter dated August 16, 2012 confirming he will be acting on Fajebe’s behalf “with respect to your sale” of the property. The letter does not mention any trust arrangement. Moondi testified, and I accept, that Fajebe never mentioned that there was a trust arrangement between Fajebe and Ghandi.

[24] The “disclosure” document indicating that Ghandi was purchasing the property for investment purposes is not contained in Moondi’s file. It was suggested to Ghandi during his cross examination that it would have been important for Moondi to have this document to provide independent legal advice. Ghandi said he gave copies of all the documents, including a blank waiver, directly to Fajebe and expected Fajebe to give them to his lawyer. Fajebe’s evidence was that he brought nothing with him to the meeting with Moondi, but rather Ghandi sent everything to Moondi and all Moondi did was tell him where to sign documents. Moondi’s recollection was that Fajebe attended at his office with documents including the APS and the unsigned waiver.

[25] Moondi testified that he produced his complete file to the parties during this litigation. During the trial he produced two additional pages (ID verification forms) and he explained that these forms were stapled to the inside of the folder so were not initially copied by his staff when they copied the file. I accept that Moondi has produced his complete file. There is nothing in the file to suggest that the documents may have been sent directly to Moondi’s office by Ghandi. For instance, the copy of the APS in Moondi’s file does not contain a fax header to suggest it was faxed to him. While it is possible that Ghandi dropped the materials off, that seems less likely. Fajebe’s memory proved unreliable in his testimony. It is more likely that Fajebe took the documents to Moondi, including the waiver, and that he did not give Moondi a copy of the disclosure agreement.

[26] Fajebe signed the waiver document on August 16, 2023, witnessed by Moondi, thereby waiving the condition making the offer subject to legal advice. In cross examination, Fajebe acknowledged that he understood at the time that the agreement was conditional on him receiving independent legal advice.

Q. He told you he’s making this conditional on independent legal advice. Go see a lawyer?

A. Very correct.

[27] In light of this admission and the documentation I have described, I find that Fajebe was aware that Ghandi had a conflict as he was the listing agent and was now becoming the purchaser.

[28] Fajebe said that Ghandi gave him Moondi’s number. The implication here, which was further advanced during the trial, was that the advice given by Moondi was not truly independent because Ghandi was a referral source for Moondi. Fajebe initially named Moondi as a respondent in his application. Fajebe asked for relief against Moondi including a declaration that Moondi was negligent in giving independent legal advice and that Moondi knew, or ought to have known, that Ghandi’s intention was to defraud Fajebe. These allegations against Moondi have been dropped.

[29] In cross examination, it was put to Moondi that Ghandi was a real estate agent and was from the same country as Moondi before coming to Canada, and that’s why Ghandi referred Fajebe to Moondi. Moondi’s response was that he visits many real estate offices and leaves his cards, but he denied that Ghandi had been sending many clients to him. I accept this evidence.

[30] Fajebe’s position remains that Moondi was a participant in Ghandi’s fraud. Fajebe’s claim is weakened if Moondi was not a participant because it would be difficult to explain how Moondi’s file would be perfectly consistent with a sale and inconsistent with a trust arrangement if Moondi was not in on it. However, there is no reliable evidence of any significant connection between Ghandi and Moondi. There is no basis to think that Moondi would or did participate in a fraud against Fajebe. The potential repercussions for Moondi would be enormous and the benefits negligible. Fajebe presents no realistic theory for why Moondi would participate. Furthermore, the fact that Fajebe dropped his claims against Moondi cuts against Fajebe’s position. I do not accept that there was any misconduct by Moondi.

[31] As will be seen, I have concluded that there was some sort of discussion between Ghandi and Fajebe that Fajebe would continue to participate in ownership of the property, or some sort of loose agreement to this effect. However, Mr. Moondi was not made aware of this.

The Lease

[32] On August 17, 2012, Ghandi and Fajebe signed a two-year lease agreement for the property, with Ghandi as landlord and Fajebe as tenant. Fajebe says that he was deliberately misled into signing the lease agreement. Fajebe claims that Ghandi told him that to obtain a mortgage, Ghandi would need to show the mortgagee a lease agreement indicating that he would be renting the property out. Fajebe also claims that Ghandi told him: Canada Revenue Agency may come after him [Ghandi] for tax purposes because he already owns a property that he lives [in]. I therefore must sign the lease agreement and provide cheques indicating the rent payments. [6]

[33] Fajebe’s position is that Ghandi told him the required “rent” payments under the lease, $2,300, were equivalent to the mortgage payments Ghandi would be required to make.

[34] Fajebe made $2,300 payments without fail until June 2013, when he could not pay the full amount. He fell into arrears at that time and has remained in arrears. The payments became irregular in their amounts and frequency, and the arrears climbed. As of December 2017, Fajebe began paying $1,900 per month, although he has missed some months. According to Ghandi’s rent schedule, in August of 2019 the total rent past due was $42,236.24. [7] Ghandi said that Fajebe began paying $1,900 per month when this dispute arose. Ghandi says that Fajebe has refused to allow access to the property to install carbon monoxide detectors and stopped paying the water bill. He also says that Fajebe has been parking cars without licence plates on the property, a by-law infraction, and that resulted in Ghandi having to pay a fine. Fajebe did not refute these allegations.

[35] Fajebe’s position is that he “never defaulted on any rent payment … I am never his tenant and he was never my landlord. The understanding that we had was that he was to hold the property in trust for me.” [8] Fajebe says he asked Ghandi to show how much the mortgage amounts were. There is no documentation of such a request being made, although there was mention of it in a recorded conversation I will describe below. It does not assist Fajebe’s position that he is so far in arrears in his payments, because if he believed his payments were going towards the mortgage, he ought not to have allowed the payments to fall into arrears.

[36] In March 2017, Ghandi brought proceedings before the Landlord Tenant Board for payment of the rent owing and to evict Fajebe. However, when Fajebe obtained a lawyer and claimed ownership in the property, Ghandi discontinued the LTB proceedings. He wanted to resolve the issue without having to hire a lawyer.

The Closing

[37] The APS called for a closing date of August 30, 2012.

[38] Fajebe testified that he attended at Moondi’s office only once, on August 16, 2012. He says that at that time, Moondi had him sign all required documents including certain closing documents. He adamantly denies attending on August 31, 2012, the eventual closing date. This adamant denial was not credible. August 31, 2012 is the date indicated on a receipt written in longhand in Fajebe’s handwriting. The impossibility of Fajebe’s evidence is apparent by the text of the handwritten receipt. First, the date of the receipt, August 31, 2012 was not the intended closing date. As of August 16, 2012, when Fajebe says he prepared the receipt, Moondi did not know and could not have known that the closing would be on August 31, 2012. Second, the calculated amounts in the receipt reflect not only the required amount for the mortgage payout (which was not known on August 16, 2012) but also an adjustment for property tax calculated to August 31, 2012. [9]

[39] Mr. Oladejo argues that it is immaterial how many times Fajebe attended Moondi’s office, and that this error is understandable given the amount of time that has passed. I largely agree with this submission, except that it fails to acknowledge Fajebe’s adamant stance on this issue. Fajebe may have perceived that conceding he met with Moondi more than once might undermine his position. In reality, had he conceded some uncertainty on the point, it would not have undermined the trustworthiness of his evidence so much.

[40] The documents show that Fajebe attended Moondi’s office on August 16, 2012 and signed the waiver on that date. The documents also show that efforts were made to effect the closing early – on August 22, 2012. Moondi asked Bridgewater to prepare a discharge statement effective that date. The documents are consistent with Fajebe attending Moondi’s office on that date. He provided ID, and Moondi signed and dated an ID verification form that day. Fajebe also signed an undertaking document and an affidavit that had been prepared by Ghandi’s lawyers and faxed to Moondi on August 21, 2012 (according to the fax headers). If the fax headers are correct, and I accept that they are, Fajebe could not have signed these on August 16, 2012.

[41] Moondi testified that the parties decided to move the closing date forward from August 30, 2012 to August 22, 2012. Fajebe’s spouse had to provide ID as she had to sign a spousal consent to the transfer. She was to attend Moondi’s office on August 22, 2012. At Moondi’s request, Bridgewater’s lawyers prepared a letter setting out the amount required to discharge the mortgage as of August 22, 2012. This letter also indicated a per diem amount in the event the closing was delayed beyond August 22, 2012.

[42] Because Fajebe’s spouse did not attend on August 22, 2012, the closing date had to be adjusted. It was adjusted at least one more time to close on August 31, 2012. The documents are consistent with Fajebe and his wife both attending Moondi’s office on August 31, 2012, and I accept that they both attended on that day.

[43] After some wrinkles with Bridgewater were ironed out on closing day, the deal closed. The net proceeds to Fajebe were $34,306.37 according to Moondi’s trust ledger statement and closing report. Payment of this amount is documented by a cheque from Ghandi’s lawyer’s trust account for $25,215.46 and a cheque from Moondi’s trust account for $9,090.91.

The Joint Account

[44] Bank records show that these two cheques were deposited into an account held in the joint names of Ghandi and Fajebe. The parties have different explanations for this unusual feature in the case.

[45] Ghandi says that Fajebe had problems with creditors and did not want to deposit the money into his own account, so Ghandi “agreed to assist him” by having Fajebe added as a joint account holder on his account at Scotiabank. Both parties agree that Fajebe was added to Ghandi’s account a few days before closing. Ghandi testified that Fajebe came to the bank with Ghandi and signed to become a joint account holder, and Fajebe deposited the cheques. The bank statement covering the applicable time frame shows that the account address remained Ghandi’s address. It also shows that the two cheques for the proceeds of sale (totalling $34,306.37) were deposited to the account on August 31, 2012.

[46] Fajebe denies that he had creditors chasing him at the time. He says he had been discharged from bankruptcy. He says that he never saw the cheques. He says Ghandi deposited the cheques to the account without his knowledge. [10] Fajebe claims that Ghandi told him that being added to the account would boost Fajebe’s credit rating and assist his chances in getting a mortgage from Scotiabank in future. Ghandi says he subsequently closed the account. There is no evidence that Fajebe ever used the account other than to deposit the cheques for the net proceeds of the sale.

[47] Nothing specifically turns on why Fajebe was added to the joint account, but Fajebe acknowledges being aware of the joint account. Moondi’s closing report to Fajebe is dated August 31, 2012 and indicates that he enclosed “My trust cheque payable to your order for $34,306.37.” This statement is somewhat incorrect because, as I have noted above, there were two cheques. However, the total of $34,306.37 is correct. The proper inference from the documents and evidence is that with Fajebe’s knowledge the cheques were deposited into the Scotiabank account.

[48] Ghandi acknowledges that on September 12, 2012, he transferred the funds out of the account to another account he owns. Ghandi says that he transferred the funds out of the account because he was concerned that Fajebe might remove the funds from the account. He says Fajebe owed him $2,300 for last month’s rent and $15,000 as an agreed upon amount for required repairs and deficiencies to the property revealed by the home inspection. Ghandi claims that he and Fajebe agreed upon this amount and agreed it would be paid after closing. Ghandi says that he gave the remainder of the money from the proceeds of sale “in cash to Fajebe over the next several months.” None of this is documented. The $15,000 is not even explained in any detail and is not supported with any documentary or other evidence. Fajebe denies that Ghandi raised any issues from the home inspection or that they even talked about a $15,000 adjustment.

[49] The problems allegedly revealed by the home inspection included broken tiles, the garage door not working, the roof leaking, and problems with the furnace. Ghandi said that he did not want to close and to resolve the impasse they agreed on $15,000. There was no evidence that any of this was documented at the time. The home inspection report is not in evidence. Ghandi did not assert that the required repairs were completed. In other words, on his evidence, he received a credit for the cost of these repairs but never did the repairs and Fajebe continued to live in the property. Furthermore, Ghandi did not dispute Fajebe’s evidence that Fajebe did all repairs to the property, and Ghandi did not assert that he completed or funded any repairs or improvements to the property. With respect to the alleged cash payments Ghandi described, Ghandi did not explain why the payments were made in cash over a period of several months.

[50] I do not accept Ghandi’s evidence on these points. Ghandi has not established that Fajebe received any consideration for the $34,306.37 deposited to the joint account.

Contributions

[51] The agreed upon purchase price was $415,000. This figure was arrived at through negotiation between the parties. However, at the time, Ghandi was Fajebe’s real estate agent. Ghandi admitted in RECO proceedings (discussed below) that he did not advise Fajebe to get third party advice from an independent real estate agent. He admitted he had an ethical obligation to “promote and protect the best interests” of Fajebe. He admitted that “At all times, Fajebe assumed Ghandi was working on Fajebe’s behalf in a fiduciary capacity.”

[52] Given the conflict of interest, asymmetry of knowledge of the market, and the power imbalance, it is therefore difficult to know what the appropriate price for the property was. However, as there is no appraisal evidence, the best evidence I have as to the value of the property is the negotiated purchase price.

[53] The net proceeds of sale to Fajebe were $34,306.37. That amount represents his equity contribution to the property.

[54] The sale price and adjusted 2012 realty tax was $415,382.19. Ghandi’s lawyer’s file was not put in evidence. Ghandi’s mortgage records were not put in evidence. However, the RECO complaint states that the first mortgage Ghandi arranged was for $311,250. This is consistent with Ghandi’s evidence at trial.

[55] In result, it appears that Ghandi contributed $415,382.19 - $311,250.00 = $104,132.19. This includes the $10,000 deposit.

2013-2016

[56] Ghandi’s statement of rental payments [11] shows rental payments were made uneventfully until June of 2013, when there was an NSF payment. Fajebe began to fall behind in his rent. He made consistent payments but after May 2013, more often than not, he paid less that the full $2,300 amount. No documented contemporaneous communications about the rent are in evidence. In fact, there is very little evidence about what happened between the parties between June of 2013 and mid-2016. According to the schedule of rental arrears, the arrears ballooned from zero in May 2013 to $13,200 by October of 2016. There is very little evidence that might explain why Ghandi did not pursue the rental arrears more aggressively.

[57] Ghandi’s evidence is:

35. Fajebe would default on his rent obligations from time to time, as he was not able to pay the full amount of the rent. Notwithstanding, I worked with him in order to allow him to catch up on his arrears.
36. In or around early October 2016, as Fajebe was falling further and further into rental arrears and I began demanding payment from him, he began making unfounded claims to the ownership of the Property as property values had generally increased.
37. The only offer I ever made to Fajebe was that I told him that if he kept the Property in good shape and was a good tenant, that I would give him $5000.00 gratuitously if I required the Property back for the purposes of selling it with vacant possession.

[58] Fajebe’s evidence is that his brother and sister died in February and June of 2016. He was worried because he realized he did not have any document that tied him to ownership of the property and was concerned that his family may be left without a remedy if he died. He started calling Gandhi in July of 2016 and Ghandi did not return his calls for over three months. Ghandi eventually picked up his call and agreed to meet at his workplace. They met in October of 2016. Fajebe surreptitiously recorded the meeting.

[59] Ghandi’s evidence did not address his reluctance to meet with Fajebe, even though on the recording he seems to acknowledge his non-responsiveness in the initial moments of their meeting. He claimed he had been busy because his mother had been ill and had passed away. The low priority that Ghandi apparently gave to meeting with Fajebe, when Fajebe owed him so much rent, seems inconsistent with a true landlord-tenant relationship.

[60] Ghandi’s position in the meeting is also difficult to reconcile with his position at trial.

The Recorded Meeting

[61] Near the beginning of the recording, Fajebe says the death of his brother and sister were a “rude awakening,” and he says the house “is not even in my name, what can we do so that I can retransfer, because it’s just you I know right now.” This was a reference to the fact that title was solely in Ghandi’s name. Excerpts from the conversation include:

Ghandi: Yea, because I bought, I bought it on payment right.... I can sell it back to you.” … Fajebe:… “Remember, I put money there too from my old down payment that I put, that I transferred...” Gandhi: Because I put almost 80 or 90k in that property. Fajebe: Yea the second mortgage. But I paid for it. Gandhi: No I'm paying for it what you are paying is not covering the whole cost. Its not covering the whole cost, I'm paying double that on the mortgage, where did you get this different story? Fajebe: No, we need to clear that. Now you are saying something completely new to me.

[62] Fajebe’s reference to a second mortgage is confusing because there was no second mortgage. In his testimony, Fajebe asserted that Ghandi told him at the time of the sale that there was a second mortgage. Later in the recording, Fajebe again alludes to the second mortgage and appears to be saying that he agreed to pay $2300 in rent because Ghandi had done him a favour and Ghandi was obtaining a second mortgage. However, this conversation was happening four years after the sale. I conclude that Fajebe’s recollection at that time was inaccurate, and it remains inaccurate.

[63] As noted, in the recording Ghandi said what Fajebe was paying was “not covering the whole cost” and “I’m paying double that on the mortgage.” During cross examination, Mr. Oladejo took Ghandi through a rough calculation and Ghandi admitted that the mortgage, insurance, and taxes were about $420 less than the $2,300 rent. This calculation was very rough. The mortgage amount Mr. Oladejo referred to was from a 2012 document, the taxes from a 2017 document, and the insurance from a 2012-2013 policy. And Ghandi was not asked about other potential expenses.

[64] On the recording, after Ghandi tells Fajebe that the amount Fajebe is paying in rent pays only a portion of the mortgage and expenses, he then says:

I showed you what it’s costing me, my insurance and everything else. I showed you before, right? Anyway, regardless of that, the easy way to deal with this thing, like its complicated for me as well and everything else, I want to get this whole house altogether right so best way to get is fix it up and sell it and then you take whatever share you want to take [ sic , emphasis added].

[65] The conversation continued with the parties frequently talking over each other, but Ghandi repeatedly tried to get Fajebe to say how much he wanted, or what his expectations were. They discussed whether the property should be fixed up before being sold. Ghandi expressed the view that it should either be sold “as is,” or it should be fixed up completely. He felt that only a complete makeover would increase the property’s value adequately to make the investment worthwhile. The parties never clarified who would fund the renovations, but Ghandi suggested they each obtain a quote.

[66] At the time of this meeting, according to Ghandi’s schedule of rent arrears, Fajebe was about $13,000 in arrears on his rent. There is not a mention of this on the recording.

[67] The conversation between the parties is much more consistent with them having joint ownership than with either party’s version at trial. Other exchanges from the conversation include Ghandi saying because of “stuff” he was dealing with and the “situation I am going through right now”:

I don't have time to discuss this thing but I’ll give you whatever fair share you want . Just tell me what you want, I put the house on the market for sale, sell the house, you take your share , you buy another house or you spend the money, do what you want to do that's your choice right, we would just go that way right. So let's discuss, give me a number , we would do that if you want fix the house, put it on the market, sell the house, or sell as it is, we can do it tomorrow we can do it now. [Emphasis added.]

[68] At the same time, Fajebe seemed to be largely in the dark about (or perhaps he had forgotten) how the 2012 purchase was financed.

Fajebe: when you are saying you put money down, that’s where I was like, what does that mean. Ghandi: Well I did put money down, right, when I bought the house [inaudible] Your gonna do 20, 25k, which from you, right, that’s, but… Fajebe: No, from your own pocket. Ghandi: From my own pocket I put 70, 80 down at least.

[69] At another point, Ghandi says, “I will just explain something to you I will just tell you Olu its my house, you have no paper, right, its just me.” Fajebe then started talking over Ghandi and Ghandi kept asking him to listen, eventually saying, “if I say something bad I don't mean it, right now I'm not in the mood to talk to anybody.” This seems to have been an acknowledgement that by saying, “you have no paper,” and seemingly threatening to treat Fajebe as per the written documents, Ghandi had gone too far. Ghandi then resumed the discussion about fixing up the house, at the same time encouraging Fajebe to move out: “To fix the house you have to move out because all of the fixing need to be done right, if you don't fix the house I can sell the house as it is I don't care but I want you to just tell me what you want from it that's it” [ sic ].

[70] In other parts of the conversation, Fajebe’s comments are not consistent with Ghandi holding the property in trust for Fajebe. Fajebe says, “Let’s do a feasibility study” about fixing up the house and then selling it. Fajebe says, “I want you to get a little profit” or “I want you to get away with profit.” At no point does Fajebe assert that Ghandi is merely holding the property in trust for him.

[71] The conversation ends with considerable friendly discussion. I should note here that the “transcript” of the conversation that has been provided is not accurate. I have listened to the entire recording. Where I have quoted from the conversation, I have checked the accuracy from the recording itself.

[72] Ghandi’s explanation for the recorded conversation is inadequate. He explained that he has had to pay tenants before to get them to leave, and that paying some money if a tenant will leave can avoid headaches. When asked why he said to Fajebe, “You have no paper,” he could not answer other than to say sometimes you say things for no reason. He similarly could not answer why they would discuss fixing the house up and selling it.

[73] I received no or little evidence about how the discussions regarding fixing up the property and selling it subsequently progressed. For instance, neither party provided copies of any contractor estimates or any other documentation on this subject. Ghandi’s affidavit provides no details about what happened after the meeting. The narrative only picks up in March of 2017 when Ghandi threatened and then brought an LTB application.

Application to LTB

[74] By March of 2017, the arrears of rent were $18,000. Ghandi engaged a paralegal and served Fajebe with a notice to end the tenancy. Fajebe retained Mr. Oladejo to respond. Mr. Oladejo set out Fajebe’s position in detail in a letter dated April 18, 2017 to the paralegal acting for Ghandi. Ghandi then unilaterally withdrew his application to the LTB, in the hope of resolving matters.

[75] The letter of April 18, 2017 indicated that Fajebe would be “asking the court to set aside the transfer of the property” and that Fajebe would “be seeking punitive damages as well as costs on substantial indemnity basis in the event that he is forced to commence litigation against your client.”

Meeting with Oladejo

[76] An email dated May 17, 2017 [12] shows that Fajebe invited Ghandi to contact Mr. Oladejo to discuss the issues, and Ghandi did reach out to Mr. Oladejo, eventually resulting in a meeting on November 8, 2017. In the meantime, Fajebe had made a complaint to RECO, and by text messages on October 25, 2017, Ghandi had asked him to withdraw the complaint. It appears that the RECO complaint, not the rent arrears (which had continued to climb from May to October of 2017), spurred Ghandi to agree to the meeting. Of course, given the threat of litigation and the claim for punitive damages, it was perhaps understandable that Ghandi was unenthusiastic about meeting with Fajebe and Mr. Oladejo even though the rent arrears were climbing.

[77] Ghandi attended the meeting without the assistance of counsel. After the November 8, 2017 meeting, Mr. Oladejo sent an email dated November 22, 2017 to Ghandi enclosing a draft trust agreement that would have had Ghandi acknowledge he was holding the property in trust for Fajebe. The email Mr. Oladejo sent said that Ghandi had admitted he was holding the property in trust. Fajebe testified that Ghandi admitted this in the meeting. Ghandi denies making this admission. Mr. Oladejo did not testify as he was also trial counsel.

[78] The meeting was intended as a settlement meeting. The draft agreement included a clause that said the parties agreed to seek independent legal advice before executing the agreement. In these circumstances, the meeting is cloaked with settlement privilege. In any event, I am not prepared to find that Ghandi admitted in the meeting that he was holding the property in trust for Fajebe.

[79] The November 22, 2017 email asked Ghandi to provide the signed agreement by December 5, 2017. Ghandi did not respond to the email. Despite his prior threat to commence proceedings, Fajebe did not commence any proceedings. The matter remained largely in stasis until February 28, 2019, when Ghandi commenced his application in Superior Court. At that point, the alleged arrears of rent were over $39,000. Fajebe did not commence his competing Superior Court application until December 3, 2020.

The RECO Hearing

[80] On September 15, 2022, the Discipline Committee of RECO released a decision imposing an $11,000 fine on Ghandi in relation to his dealings with Fajebe. The order was made based on agreed facts and an agreement as to penalty.

[81] Among the agreed facts are the following:

8. Gandhi acted as purchaser, landlord, mortgagor, listing salesperson, and buyer salesperson. At no time was Fajebe advised to get third party advice from another registrant about the potential risks to the strategy devised by Gandhi. However, Gandhi did advise Fajebe to obtain independent legal advice and made the APS conditional on Fajebe's solicitor's approval. At all times, Fajebe assumed Gandhi was working on Fajebe's behalf in a fiduciary capacity.
9. After picking up the cheques, Fajebe' deposited the monies in a joint account held by Gandhi and Fajebe. The $34,306.37 was deposited on August 31, 2012, into the joint account. On September 10, 2012, the funds were transferred from the joint account by Gandhi.
10. In 2016, Fajebe and Gandhi met. During this meeting, Fajebe indicated house prices had gone up. Gandhi did indicate that he would give Fajebe something out of the proceeds of sale, if he vacated the home. The exact parameters of the ownership were not finalized or defined. Gandhi asked Fajebe what he wanted if the Property was sold, and Gandhi openly discussed the idea that the Property could be improved for a higher sale price.
11. The parties have commenced civil proceedings against each other to determine the legal and beneficial owner of the Property, or in the alternative, what is the equity stake (if any) for the parties. It is agreed that Gandhi failed to comply with the Code of Ethics as follows:
12. Gandhi entered into a real estate service relationship with Fajebe without clearly setting out the precise nature of the transaction(s), thereby breaching … the Code of Ethics.
13. Gandhi, by failing to complete the APS and lease documentation properly … breached sections 4, 5, and 39 of the Code of Ethics.

Improvements

[82] In his affidavit of January 19, 2021 (para. 35), Fajebe says that he has been responsible “for all the repair of the property including changing the kitchen, carrying out plumbing and other works in the property as necessary.”

[83] In re-examination, Fajebe testified that he made a lot of improvements to the house. He changed the boiler. He changed windows. He painted the living room and other areas of the house every two to three years. He changed the “kitchen table” [13] to granite by himself. He never discussed making these changes with Ghandi.

[84] However, no documentation to support that these changes were made is in evidence. Importantly, there is no evidence before me regarding the cost of making these changes or improvements. As a result, this evidence does little to support the claimed constructive trust. I will note here that constructive trust is claimed in Fajebe’s factum at B-1-153 and in his closing submissions but was not claimed in his notice of application. The notice of application does, however, claim an accounting. Mr. Tonks did not object to the constructive trust allegation on the basis that it was not pleaded. I infer that the claim is not a surprise. Had the lack of a proper pleading been an issue, I would have granted leave to amend to allege constructive trust. In any event, it is more accurate to say that the circumstances here give rise to an implied trust or a resulting trust.

Analysis

Was there an express trust arrangement?

[85] Fajebe stands by his position which is, in effect, that Ghandi agreed to hold the property in trust for him without compensation. If there was such an agreement, the arrangement would be classified as an express trust. However, Fajebe’s position makes no sense. It would have made no sense for Ghandi to have taken on a large financial liability and a huge risk for Fajebe for no commercial reward. Fajebe’s version is contrary to ordinary human experience. I acknowledge that both Fajebe and Ghandi testified that they considered the other a friend, but their behaviour is not consistent with a close friendship.

[86] I find that Fajebe sold the property to Ghandi but gave the net proceeds of sale to Ghandi as a contribution towards equity in the property. Fajebe wanted to prevent the property from being sold power of sale. He was anxious to maintain some equity in the property. Ghandi was prepared to invest in the property and to share equity in the property with Fajebe. I find that Ghandi recognized Fajebe had an interest in the property. This conclusion is compelled from the content of the recorded conversation, from the fact that Ghandi was not more concerned about pursuing the rent, and from Fajebe’s evidence. While I do not accept much of Fajebe’s evidence, I do accept that he feels cheated by Ghandi and find this consistent with Fajebe receiving assurances from Ghandi to the effect that he would share in the investment.

[87] However, I am unable to determine with any precision what assurances Ghandi gave. I am unable to identify from the evidence any specific agreement as to the parties’ respective interests in the property or how they would be calculated as time passed with Ghandi paying the mortgage, insurance, and taxes and Fajebe paying “rent.”

[88] In result, Fajebe has not met his burden of showing that there was an express trust arrangement, or the particulars of it. However, Fajebe’s contribution described above is impressed with an implied or resulting trust.

[89] Chapter 10 of D.W.M Waters, Mark R. Gillen & Lionel D. Smith, Waters’ Law of Trusts in Canada, 4th ed . (Toronto: Carswell, 2012), notes that the terms “constructive trust,” “implied trust,” and “resulting trust” often get used interchangeably. The authors describe the distinctions at p. 394 to 395 and note the overlap among these terms. In this case, the trust arises out of the principle that Equity does not presume gifts, and from the fact that Ghandi has not proven the $34,306.37 he received was intended for something other than Fajebe’s contribution to ownership of the property. I need not classify the arrangement with academic precision. I will simply refer to the arrangement as an implied trust.

The beneficial interests in the property.

[90] Fajebe claims a 100% beneficial interest in the property, and his submissions do not suggest or allow for any alternative. The prayer for relief in his notice of application does not include any potential middle ground. He does not, for instance, make a claim for damages. As against Ghandi, he requests a declaration that the property is held in trust for him by Ghandi, an order transferring the property to him, and an accounting with respect to monies paid. [14]

[91] Ghandi denies any understanding other than a sale and lease as is documented in the APS and lease. The prayer for relief in his notice of application seeks a declaration that he is the legal and beneficial owner of the property and that Fajebe’s occupation of the premises constitutes a residential tenancy. However, he requests relief that raises the possibility of an implied trust and allows for middle ground. Specifically, he requests:

a. “a Declaration setting out Ghandi and Fajebe’s respective legal and beneficial interest in the Property”; and b. an order requiring the parties to compensate or reimburse one another for their respective contributions to the property.

[92] It is procedurally significant that these requests are made in Ghandi’s pleading because it explicitly opens a range of remedies and made the extent of each parties’ beneficial interest in the property relevant from the outset of this proceeding. The parties were both obliged to put forth the evidence available to them on this issue if they sought a finding in their favour. The parties were both entitled to require production of records from the other relevant to determining their respective beneficial interests. If they were dissatisfied with the extent of production, the parties could have brought an appropriate motion. Neither party provided an accounting of the monetary contributions or labour contributed to the property. Beyond providing evidence as to the initial contributions towards the purchase price of the property, described above, neither party has provided significant evidence to demonstrate their respective beneficial interests in the property. As I have already noted, Fajebe did request an accounting in his notice of application, but he did not press for this relief in his submissions. It would undermine the principle of finality to order an accounting after trial when all the issues an accounting might address could have been addressed in the trial.

[93] Obviously, Fajebe has enjoyed the benefit of the house and has occupied it continuously. He cannot reasonably have expected that Ghandi would contribute over $100,000 and enjoy no benefit from this investment. I accept that Fajebe thought he was paying the expenses associated with ownership of the house and thought he was building equity in it. But Fajebe cannot reasonably have thought that he would acquire all the equity in the house. I do not accept Fajebe’s evidence that he did not know Ghandi contributed towards the purchase price. Even if Fajebe was unaware of Ghandi’s contribution, it was not objectively reasonable for him to believe that somehow Ghandi had arranged a first and second mortgage for the full purchase price and that he would accept the risk of becoming a mortgagor for the property without also enjoying some benefit.

[94] Exhibit X to Ghandi’s affidavit of October 2, 2019 shows Ghandi’s rent revenue. As described above, sample mortgage, insurance and tax documents allowed a rough calculation of $1900 for these expenses. However, Ghandi was in a position to provide, and Fajebe was in a position to demand through a motion, disclosure of full particulars and accurate calculations. Neither party did this.

[95] Fajebe has the burden of proving the extent of any constructive trust. He has not met his burden to show that the monthly payments he has made represent more than rent. He has not provided adequate evidence for me to conclude how much, if any, additional “credit” he should receive towards capital because of his rent payments.

[96] Similarly, Ghandi has not proven his net contributions to the property since the purchase up to the date of the trial. He had the burden of proving that his contributions to the expenses of the property exceeded the “rent” he received. He has not provided the evidence required.

[97] In result, the state of the “rent” or monthly payments and the expenses incurred by each party shall fall where they lie. This is an appropriate result for the reasons already described but also because both parties went years without pursuing each other. Fajebe did not pursue efforts to confirm a trust arrangement. If he did request documents to show the amount of the mortgage (as he claimed in his cross examination), he did not pursue it with any diligence. Ghandi did not pursue his claim for rent with any diligence.

[98] The appropriate finding of the parties’ beneficial ownership shares must therefore be based solely on the parties’ respective proven contributions to the property in 2012. Their respective contributions were:

Ghandi	$104,132.19	75.2%
Fajebe	$34,306.37	24.8%
	$138,438.56	100.0%

[99] I will be making an order for the sale of the property with the net proceeds of the sale to be divided in these proportions.

Was there a landlord-tenant arrangement?

[100] For completeness I will deal with Ghandi’s request for a declaration that Fajebe's occupation of the property constitutes a residential tenancy and/or leasehold interest in accordance with the Residential Tenancies Act, 2006, S.O. 2006, c. 17. Ghandi has not met his burden on this issue. I decline to find that the arrangement between the parties was a landlord-tenant relationship. I find that the lease signed by the parties is unenforceable because the true arrangement between the parties was an implied trust based on their respective contributions to the property.

[101] However, fairness dictates that Fajebe must pay $1,900 per month from the start of the trial. For simplicity and as an element of “rounding off” the result, I will say the start of the trial was April 1, 2023. Therefore, from April 1, 2023 until the property is sold, Fajebe shall pay Ghandi $1,900 per month towards the mortgage, insurance, taxes and other expenses of the property, and shall continue to pay utilities.

Disposition

[102] This court declares that the beneficial ownership of the property is shared between the parties in the following percentages: 75.2% to Ghandi; 24.8% to Fajebe.

[103] This court orders: a. The property shall be listed and sold and the net proceeds of sale shall be distributed to the parties in amounts corresponding to their respective beneficial ownership. b. If the parties are unable to work out terms for listing and selling the property, they may arrange a 9:00 a.m. videoconference appointment to address the issue with me. c. To the extent he has not already done so, Fajebe shall pay Ghandi the monthly amount of $1,900 for the month of April 2023 and each month thereafter, ending on and pro rated to the day Fajebe vacates the property. d. All other claims are dismissed. e. If the parties cannot resolve the issue of costs, they are to file, by January 8, 2024, written submissions of not more than three double spaced pages plus offers, bills of costs, and supporting dockets. Reply submissions of not more than two double spaced pages may be filed by January 16, 2024.

Chown J. Released: November 29, 2023 Corrected version released February 5, 2024 to change title to “Reasons for Judgment” and to correct typographical errors in paras. 60, 73, 93, and 97.

[1] Para. 6 of Fajebe’s affidavit of November 22, 2019. [2] Para. 8 of Fajebe’s affidavit of November 22, 2019. [3] Para. 9 of Fajebe’s affidavit of November 22, 2019. [4] Para. 11 of Fajebe’s affidavit of November 22, 2019. [5] Para. 12 of Fajebe’s affidavit of November 22, 2019. [6] Para. 24 of Fajebe’s affidavit of November 22, 2019. [7] Exhibit X to Ghandi’s affidavit of October 2, 2019. [8] Para. 30 of Fajebe’s affidavit of November 22, 2019. [9] I will not review it here but I have been able to replicate Moondi’s arithmetic leading to the $35,215.46 figure on the receipt. [10] Para. 22 of Fajebe’s affidavit of November 22, 2019. [11] Exhibit X to Ghandi’s affidavit of October 2, 2019. [12] Exhibit V to Ghandi’s affidavit of October 2, 2019. [13] I suspect he meant the kitchen counter. [14] Fajebe also requested other declarations against Moondi.