Court File and Parties

COURT FILE NO.: CV-20-650376

MOTION HEARD: 20231005

REASONS RELEASED: 20240116

SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

MANIA AGHAEI MEIBODI Plaintiff

• and -

HAMIA AGHAIEMEYBODI, FARHAD AGHAIE MIBODY, HASSAN AGHAIE MEIBODI and FOROUGH FATHI Defendants

BEFORE: ASSOCIATE JUSTICE McGRAW

COUNSEL: A. Simovonian E-mail: asimovonian@mcr.law -for the Defendants

H. Rosenberg E-mail: h.rosenberg@battisonlaw.com -for the Plaintiff

REASONS RELEASED: January 16, 2024

Reasons For Endorsement

I. Introduction

[1] These are motions by the Defendants for leave to amend their Statement of Defence and Counterclaim to claim a Certificate of Pending Litigation (“CPL”) with respect to the property located at 415 Dundas Street East, Toronto (“Dundas”) and for leave to issue and register the CPL on title to Dundas. The Plaintiff does not oppose the granting of leave to amend the Defence and Counterclaim to claim the CPL but opposes the request to issue it.

II. Background

[2] The Plaintiff and the Defendants are family members. The Defendants Farhad Aghaie Mibody (“Farhad”) and Hamia Aghaiemeybodi (“Hamia”) are the Plaintiff’s brothers and the Defendants Forough Fathi and Hassan Aghaei Meibodi (“Hassan”) are her mother and father.

[3] The Defendants allege that in 2009, the Plaintiff and the Defendants agreed to combine their future income and assets in a pool including bank accounts, credit cards and loan facilities regardless of ownership (the “Pool”). They claim that that each of the Plaintiff the Defendants had a 20% interest in the Pool and were entitled to access Pool funds for living, travel and business expenses or other needs on an “as needed” basis. Decisions regarding the Pool were decided by majority rule including with respect to the purchase and sale of various properties in Ontario. There is no written agreement with respect to this alleged arrangement or the Pool.

[4] The Plaintiff denies that this arrangement existed or that there was a broad pooling of funds or assets. The Plaintiff alleges that in 2013, she entered into a venture with the Defendants whereby they would purchase older residential properties, demolish them, build new homes and sell them (the “Venture”). The proceeds of sale were deposited into one account with funds withdrawn for the purchase or construction of other properties or paid out to the parties. The Plaintiff alleges that she, Hamia and Farhad were to each have a 25 per cent interest while her parents would share a 25 per cent interest. The Plaintiff claims that the parties understood that they would contribute funds, skill and labour on an equitable basis and benefit equally from the profits of the Venture. There is no written agreement for the Venture.

[5] The Plaintiff states that four properties were purchased as part of the Venture. 120 Hope Street, Toronto (“Hope”) was purchased on April 30, 2013 and sold on June 24, 2016. The net proceeds from the sale of Hope were applied towards the construction of 82 Burlington Street, Toronto (“Burlington”) which was purchased in January 2016 and sold in November 2018. The proceeds of Hope were also used for the purchase of 17 Stanley Avenue, Toronto (“Stanley”) and 109 Cavell Avenue, Toronto (“Cavell”). The proceeds of sale from Burlington were applied to the construction of Stanley with a portion paid out to the parties. Stanley was purchased on July 29, 2016 and sold in December 2020. Farhad is the only owner on title to Stanley. To facilitate the sale of Stanley, the Plaintiff agreed to the discharge of a CPL which she had registered on title to a property at 108 Mimico Avenue, Toronto (“Mimico”) with proceeds of sale of $1,185,850.91 held in trust. Mimico was purchased on November 12, 2020 with Hamia as registered owner. Cavell was purchased on May 31, 2017 with Farhad and Hassan as registered owners.

[6] The Plaintiff claims that disputes arose between her and the Defendants and in May 2019 Farhad arranged individual bank accounts for the parties. The Defendants allege that in August 2019, the Plaintiff and the Defendants agreed that the Plaintiff would cease contributions to the Pool. The Plaintiff further alleges that in August 2019 Farhad suggested that, in order to take advantage of a higher interest rate and higher balance, the Plaintiff move funds from her personal account to a shared Tangerine account (the “Tangerine Account”) which had been set up for property expenses. The Plaintiff says she moved $51,600 of her personal funds into the Tangerine Account based on Farhad’s suggestion. The Defendants claim that the Tangerine Account held Pool funds.

[7] The Plaintiff alleges that in early December 2019 she advised Farhad that she intended to purchase a property and obtained his assistance in retaining a real estate lawyer. On January 9, 2020, the Plaintiff requested that Farhad transfer $40,000 from the Tangerine Account to her personal bank account which she used to purchase Dundas in January 2020 with a closing date in April 2020.

[8] Farhad advised the Plaintiff by email dated February 11, 2020 that the Defendants would be removing their funds from the Tangerine Account temporarily and that he was making her aware in the event that she was showing the account statement to potential lenders. On February 14, 2020, the Defendants withdrew $349,183.63 leaving behind the Plaintiff’s amount of $94,454.47.

[9] The Plaintiff commenced this action by Statement of Claim issued on October 29, 2020, and amended on December 23, 2020 in which she claims, among other things, declarations that the Defendants hold her 25 per cent interest in Cavell, Stanley and Mimico in trust, or alternatively, for a constructive or resulting trust or an interest to be determined by the court and an accounting. The Defendants served their Statement of Defence and Counterclaim on February 25, 2021. They claim, among other things, a declaration that Dundas, a property owned by the Plaintiff in Sweden and other assets are part of the Pool in which the Plaintiff has a 20 per cent interest. The Defendants also seek a winding up of the Pool including the sale and partition of Dundas with a reference and an accounting. The Plaintiff served her Reply and Defence to Counterclaim on May 14, 2021.

[10] This matter first came before me on August 2, 2023, however, only 60 minutes had been scheduled. After case management and significant discussions between counsel, the parties agreed to interim payments of $425,000 to the Plaintiff and the Defendants with this motion adjourned to today. At a telephone case conference before me on September 6, 2023 counsel confirmed that this motion was proceeding and another motion by the Defendants to discharge CPLs on Mimico and Cavell granted by Order of Master Abrams (as she then was) dated November 4, 2020 was scheduled for January 27, 2024.

III. The Law and Analysis

[11] For the reasons that follow, I dismiss the Defendants’ motion to issue the CPL.

[12] The court’s jurisdiction to grant leave to issue a CPL is set out in section 103 of the Courts of Justice Act (Ontario). Master Glustein (as he then was) summarized the factors which the court must consider on a CPL motion in Perruzza v. Spatone, 2010 ONSC 841 at para. 20:

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

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

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

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

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

[13] While I am satisfied that there is a triable issue with respect to whether the Defendants have a reasonable claim to an interest in Dundas, I conclude that it would not be just and equitable in all of the circumstances to grant the CPL.

[14] The court must first determine if there is a triable issue with respect to the Plaintiff’s claim to an interest in Dundas which would support the granting of the CPL (Saggi v. Grillone, 2020 ONSC 4140 at paras. 31, 55 and 67; Zhao v. 8657181, 2020 ONSC 2864 at paras. 9 and 11; G.P.I. Greenfield at para. 20; Saggi at para. 67; Boal v. International Capital Management Inc., [2018] O.J. No. 1954 at para. 64). This threshold requires there to be a triable issue as to a reasonable interest in land, is a gateway requirement for a CPL and has been described as whether the remedy sought by the plaintiff, including a constructive or resulting trust and tracing remedies, are possible remedies at trial (Sun Rise Elephant Property Investment Corporation v. Luu, 2018 ONSC 5247 at paras. 10-12). The party opposing the CPL bears the onus to show that there is no triable issue (Boal at para. 64).

[15] It is not the court’s role to determine whether the claim will likely succeed at trial (HarbourEdge Mortgage Investment Corp. v. Timbercreek Mortgage Investment Corp. (Trustee of), [2016] O.J. No. 265 at para. 56; Sun Rise at para. 10). In determining if there is a triable issue, the evidentiary bar is low and the court is not to assess credibility or decide disputed issues of fact (Huntjens v. Obradovic, 2019 ONSC 4343; Sunrise at para. 10; Saggi at paras. 45 and 62; Bains v. Katri, 2019 ONSC 1401 at para. 36). Rather, the court must examine the whole of the evidence and, without deciding disputed issues of fact and credibility, consider whether the moving party’s case constitutes a reasonable claim to the interest in land claimed in the action (Huntjens at para. 21; Boal at para. 64).

[16] In my view, the Plaintiff has not discharged her onus to demonstrate that there is no triable issue with respect to whether the Defendants have a reasonable claim to an interest in Dundas. The Defendants’ claim to a beneficial interest in Dundas is premised on their assertion that $40,000 from the Pool was used by the Plaintiff to purchase Dundas. It is not disputed that $40,000 was advanced to the Plaintiff at her request from funds being held collectively in the Tangerine Account and used in the purchase of Dundas. The dispute is with respect to why the funds were being held and what terms the parties agreed to or understood and what funds the Tangerine Account was comprised of. The Plaintiff submits that there was no Pool, that separate bank accounts were established after the Venture, the Tangerine Account was for expenses and that she advanced funds to the Tangerine Account to take advantage of the interest rate and larger balance. The Defendants submit that the $40,000 advanced to the Plaintiff were Pool funds and that Dundas is a property subject to the terms of the Pool.

[17] On the record before me and the low threshold which applies, I am satisfied that there is sufficient basis to establish a triable issue based on the connection between the $40,000 advance and the purchase of Dundas including a constructive or resulting trust (Saggi at paras. 64-65). There is no dispute that the funds were advanced and used to purchase Dundas, the issue is whether these funds belonged to the Pool, the Plaintiff or otherwise. To conclude that these remedies may not be available to the Defendants, particularly in the absence of any written agreements, I would have to make multiple findings of fact and credibility. This is not possible or appropriate on this motion, at this stage of the proceedings and on this record.

[18] If the gateway requirement of a triable issue is met, the court must then consider whether it is just and equitable based on all of the circumstances to exercise its discretion to grant or maintain a CPL by considering and balancing the equities (572383 Ontario Inc. v. Dhunna;, [1987] O.J. No. 1073 (Sun Rise at para. 12; Tribecca Development Corp. v. Danieli, 2015 ONSC 7638; Huntjens at para. 48). In considering the equities as between the parties the court may consider the non-exhaustive list set out in Dhunna: (a) whether the plaintiff is, or is not, a shell corporation; (b) whether the land is, or is not, unique; (c) the intent of the parties in acquiring the land; (d) whether there is an alternative claim for damages; (e) the ease or difficulty of calculating damages; (f) whether damages would be a satisfactory remedy; (g) the presence or absence of another willing purchaser; and (h) the harm done to the defendant if the certificate is allowed to remain, or to the plaintiff if the certificate is removed, with or without the requirements of alternative security (Dhunna at paras. 10-18; Saggi at para. 28; Sun Rise at paras 12-17; Huntjens at para. 49; Bat-Amy v. Zribi, 2010 ONSC 1272 at paras 21-22). To the extent not covered by the relative harm to the parties, I have also considered the balance of convenience (Bains at para. 37).

[19] In exercising the court’s equitable discretion, I have concluded that the equities favour the Plaintiff. While the Defendants are not a shell corporation, the more material factors favour the Plaintiff. To start, I cannot conclude that Dundas is unique. In determining whether a property is unique, the court should consider the purchaser’s subjective interests and the circumstances of the underlying transaction (Lucas v. 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52 at paras. 73-74). The Defendants have not identified any unique characteristics of Dundas except to state that, like the other Properties which the parties have purchased, the parties “could” use it as a residence. The fact that Dundas “could” be used as a residence is insufficient to establish that it is unique. Like the other properties at issue in this litigation, the Plaintiff purchased Dundas as an investment. The Defendants were not involved in its purchase. The purchase of Dundas must also be considered in the overall context of the purchase of the properties at issue as investments.

[20] I also conclude that damages would be a satisfactory remedy (John E. Dodge Holdings v. 805062 Ontario Ltd., 2001 CanLII 28012 (ON SC), [2001] O.J. No. 4397 at para. 59; Hassanzadeh v. Davoodi, 2022 ONSC 6977 at para. 17). The Defendants seek declarations that all assets set out in their Statement of Defence and Counterclaim are part of the Pool, that the Plaintiff has a 20% interest in the Pool, and that the Plaintiff holds Dundas in trust for the Pool and the Defendants. The Defendants also claim a winding up of the Pool and the sale and partition of the assets including Dundas (which they assert is an alternative claim for damages) together with an accounting and a reference. The Defendants submit that the main issue in these proceedings is which funds form part of the Pool. If the Defendants’ claim with respect to Dundas is successful, the Pool amount can be calculated and divided between the parties based upon the $40,000 advanced to the Plaintiff, the proceeds of sale from Dundas, the respective interests of the parties and other applicable amounts and/or relevant factors determined by the court in the reference or otherwise. The Defendants are ultimately claiming money with respect to the Pool assets, all of which can be calculated using the remedies which they seek. To grant the CPL would allow it to be used as security for damages which is contrary to the purpose of a CPL (Tribecca at para. 20).

[21] In my view, the relative harm of granting the CPL would be greater for the Plaintiff and the balance of convenience favours the Plaintiff. In exercising its discretion, the court must consider the impact of granting a CPL which effectively acts like an injunction:

“The purpose of a CPL is to provide notice to the world that there is an issue with respect to the title of the property and/or that there is an interest claimed in the property. Once registered, the CPL prevents a subsequent purchaser from asserting the defence of bona fide purchaser for value without notice. It has the same general effect on a subsequent encumbrancer. This has profound consequences for the titleholder; the CPL effectively acts like an injunction because virtually no one will complete a purchase of the property with an outstanding unresolved claim looming. This impact has been judicially recognized: see Matheson v. Gordon, 2004 CanLII 28475 (ON SC) at para. 22; Bowbriar Investments Inc. v. Wellesley Community Homes Inc., [1977] O.J. No. 66 (S.C.) at para. 9.” (Middlesex Centre (Municipality) v. McRobert, 2017 ONSC 4552 at para. 12)

[22] If the CPL is granted, it would prevent or impair the Plaintiff from selling Dundas and/or using it as security to borrow. This would effectively allow the Defendants to obtain injunctive relief without bringing an injunction application. In all of the circumstances, I am satisfied that both the harm and inconvenience of granting the CPL would be greater to the Plaintiff than the Defendants, particularly where the dispute over Dundas relates to a $40,000 advance which they allege belongs to the Pool. While I recognize that the Defendants’ claim with respect to Dundas is greater than $40,000, it must be considered in the broader context of the overall value of Dundas, the fact that this litigation relates to at least 4 properties and other assets and the amounts currently being held in trust for Mimico and other assets together with amounts already paid out to the parties.

[23] In my view, the conclusions above properly balance the parties’ rights and interests and are just and equitable in all of the circumstances.

III. Disposition and Costs

[24] Order to go granting the Defendants’ motion for leave to amend their Statement of Defence and Counterclaim to claim the CPL and dismissing their motion that the CPL be issued.

[25] If the parties cannot agree on the costs of this motion they may file written costs submissions with me, not to exceed 3 pages (excluding Costs Outlines) on a timetable to be agreed upon by counsel.

Released: January 16, 2024

Associate Justice McGraw