Court File and Parties

Court File No.: CV-23-799 Date: 2024-07-19

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Rudi Senaltindag, Sarah Senaltindag and Selma Senaltindag, Plaintiffs - and - Bedriye Leyla Kizilirmak, Defendant

BEFORE: Justice S.E. Lavine

COUNSEL: Gerald Sternberg, for the Plaintiffs Avi Bourassa, for the Defendant

HEARD: February 1, 2024

Reasons for Decision

[1] The plaintiffs, Rudi Senaltindag, his wife, Sarah Senaltindag, and his mother, Selma Senaltindag seek leave to issue and register a certificate of pending litigation on title to 1015 Bancroft Drive, a residential property in Mississauga (“the property”). The defendant, Leyla Kizilrmak, is the registered owner and occupant of the property.

[2] In the underlying action, the plaintiffs Rudi and Sarah [1], claim that they are 50% owners of the property. They seek a declaration of their ownership and rectification of title to the property.

[3] The plaintiffs also claim damages of $500,000 against the defendant for deceit, mischief, misrepresentation, theft and bad faith conduct.

Overview

[4] Selma Senaltindag and Leyla Kizilirmak were friends. It is common ground that in 2017 the plaintiffs and the defendant decided to form a partnership with a view to Selma’s son, Rudi, acquiring a 50% ownership interest in the property. A written agreement was never prepared or signed by the parties.

[5] The plaintiffs allege that, in 2017, they reached an oral agreement with the defendant for the purchase and sale of a 50% interest in her property. The plaintiffs allege that they complied with the terms of the oral agreement, making all required payments until February 2021 when the defendant unilaterally refused to permit them to make any further payments.

[6] The defendant’s position is that, from 2017 until 2021, the parties had a temporary and informal agreement. She alleges that payments were made to her by the plaintiffs in furtherance of their temporary agreement, but they never reached a firm agreement. The defendant contends that their temporary arrangement fell apart and she ultimately gave up on reaching an agreement with Rudi with respect to the purchase by him of a 50% interest in her property. In September 2022, the defendant sent a cheque in the amount of $68,983.88 to Selma Senaltindag, stating that it was a return of the plaintiffs’ investment, with interest. It is not disputed that Selma cashed the cheque and distributed the funds between herself and her son, Rudi.

[7] Rudi and Sarah maintain that they are 50% owners of the property. The defendant opposed the motion. She argues that the plaintiffs do not have a reasonable claim to an interest in her property, and that, regardless, the equities do not favour granting leave to issue a CPL.

The Factual Background

[8] The parties were cross-examined on their affidavits. Together with the documents filed, the record was lengthy. The parties delivered summary oral submissions, and with the record to be reviewed.

[9] Some core facts are not in dispute.

[10] The defendant owned the property with her former husband. When they separated, the defendant moved into the basement and rented out rooms on the upper levels as short-term rental (Airbnb). The defendant was having difficulty carrying the house financially. She was looking for a partner to purchase a 50% interest in the house, as an investment.

[11] The defendant asked her friend, Selma Senaltindag, who suggested her son, Rudi, as a partner. Rudi could not afford the investment, but Selma said that she would help him. Based on an appraisal completed in early 2017, the parties considered the property to have a value of about $1.3 million. The parties agreed that the purchase price would be $650,000.

[12] On August 25, 2017, the defendant obtained a mortgage loan of $792,000, purchased the property from her former spouse and became the sole registered owner. The mortgage payments were $3,587.64 a month. There are estimates that room rental revenue could be $5,000 a month.

[13] The parties engaged in discussion about how Rudi would pay for his 50% interest, as he could not qualify for a mortgage. A review of the record reveals that various options were discussed.

[14] In September 2017, the defendant and Rudi moved forward with their partnership. They opened a joint bank account which was to be used to collect rental income from the property. It is common ground that the parties agreed that Rudi would be responsible for 83% of the monthly mortgage payments, and half of the taxes, utilities and cleaning. It was agreed that the revenue generated from the short-term rental would be deposited in the joint bank account. Rather than receive a distribution, Rudi’s share would be applied to his monthly payment. Rudi would then pay any shortfall between the monthly rental revenue generated, and his monthly payment.

[15] It is further undisputed that Rudi and Sarah would also have to pay a ‘downpayment’ or lump sum amount to purchase the property.

[16] In December, 2017, Leyla consulted a lawyer, Mr. Lokshen, with the intention of creating a Partnership and Trust Agreement. Mr, Lokshen provided an opinion letter to Leyla, which she shared with Rudi. No written agreement was ever prepared or signed.

[17] From December 2017 until February 2021, Rudi paid monthly payments of about $1,000, sometimes more. Rudi paid with some his own funds and but more funds were advanced by Selma who provided payments to the defendant by e-transfer.

[18] It is uncontroverted that in February 24, 2021, Leyla closed the joint bank account. The plaintiffs did not make any further payments to Leyla. Thereafter, the parties both engaged lawyers and attempted to negotiate the regularization of their partnership, and the terms of a partnership/ownership agreement, without success.

[19] In August 2022, Leyla obtained a new first mortgage loan, of $1,000,000.

[20] In September 2022, Leyla sent a cheque to Selma in the amount of $68,983.88, which Leyla states was comprised of $55,780 which the plaintiffs had paid to Leyla between October 2017 and January 2021, with interest calculated at prime plus 3%. The plaintiffs did not try to return the money. Selma deposited the cheque on October 7, 2022, and gave approximately $13,000 to Rudi. The plaintiffs never raised any issue with respect to Leyla’s calculation of the amount which the plaintiffs had paid to her.

[21] The central issue in dispute is whether the parties reached an oral agreement as to the essential terms of the purchase by Rudi of a 50% ownership interest in the property, which was then carried out, as the plaintiff alleges; or, whether they never reached agreement, as alleged by the defendant.

[22] Leave to issue a CPL may be granted by the court under s. 103 of the [Courts of Justice Act]. The test on a contested motion for leave for a CPL is the same as on a motion to discharge a CPL. The applicable two-part analysis is well established and agreed to by the parties.

[23] The threshold question is whether the plaintiff has a reasonable claim to an interest in the land in question. The issue is whether there is a triable issue, not whether the plaintiff will likely succeed: GPI Greenfield Pioneer Inc. v Moore at para. 20. The court is to not to assess the credibility of the deponents and the assertions made by them as to the merits, but also, is not to rely on the pleadings or accept the affidavits uncritically. As explained by Lane J. in Waxman v. Waxman, [1991] O.J. No. 89 (Ont. S.C.J.), at para. 8: “my duty is to examine the whole of the evidence as it stands after cross-examination and, without deciding disputed issues of fact and credibility, consider whether on the whole of the evidence the plaintiff's case constitutes a reasonable claim to the interest in land claimed.”

[24] If the court finds that there is a triable issue as to whether the plaintiff has an interest in land, the court must go on to consider the equities. Some factors to be considered are the often referred to eight Dhunna factors: namely: (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 from the CPL. These factors are non-exhaustive. See 572383 Ontario Inc. v. Dhunna, 1987 Carswell Ontario, 551 (Ont. Master); Perruza v. Spatone, 2010 ONSC 841, at para. 20.

[25] The overarching principle is that the court must exercise its discretion in equity and consider all relative matters between the parties in the particular case to determine whether the CPL should be maintained or discharged: see, GPI Greenfield Pioneer Inc. v Moore 2002 at para. 17.

Reasonable Claim to an Interest in Land

[26] It is also uncontroverted there is no written agreement, and accordingly, no compliance with s. 4 of the [Statute of Frauds]. See also, Lo Faso v. Ferracuti Estate, 2013 ONCA 123, at para. 26.

[27] The plaintiffs claim that they reached a clear oral agreement with the defendant which they performed. They argue that the essential elements of a contract for the purchase of land were agreed: the parties agreed to the purchase and sale of a 50% interest in the property for a consideration of $650,000. The plaintiffs contend that the monthly payments were part performance of the agreement, and for that reason, is not defeated by the [Statute of Frauds]. They contend the contract and part performance of it satisfies the threshold question of an interest in land.

[28] The plaintiffs explain that the monthly payment equal to 83% was arrived at on the basis that Rudi could not afford to purchase the property, or to obtain financing to pay the defendant for his 50% interest. It was, they say, agreed that Rudi would pay an amount equal to approximately $650,000 of the $800,000, or 83%, of the mortgage loan which the plaintiff had obtained on August 25, 2015.

[29] The plaintiffs take various positions about whether any ‘downpayment’ on the $650,000 was part of the agreement. In their statement of claim, the plaintiffs allege that the agreement was that, since they could not provide a ‘downpayment’, they would be responsible for 83% of the mortgage payments and “in addition would pay extra amounts towards the downpayment, when they were able to do so”, and that “there was no time limit when the downpayment had to be paid.”

[30] In their factum, the plaintiffs’ position is that the terms of the agreement were that Rudi would purchase 50% of the property for $650,000 and would pay Leyla by monthly payments of 83% of the mortgage and other expenses of the property, off-set by his share of the rental revenue. There is no mention of a downpayment.

[31] The plaintiffs do not refer in their factum to Rudi’s affidavits, and cross-examination on his affidavits. There are contradictions within Rudi’s affidavit evidence on the issue of a downpayment: for example, in his first affidavit Rudi stated that he and Sarah were required to pay Leyla a $50,000 downpayment as part of the essential terms of the alleged agreement, but in his second affidavit and on cross-examination, he denied that this was an essential term of the agreement.

[32] In oral submissions, Mr. Sternberg on behalf of the plaintiffs stated that there was an agreement as to a $50,000 downpayment and monthly payments equal to 83% of the mortgage, and 50% of costs of the property, offset by the rental income. Mr. Sternberg noted that the plaintiffs also paid the cost of insurance on the property for several years.

[33] It would appear that the plaintiffs’ position is that, once they commenced making monthly payments equal to 83% of the monthly mortgage payment for an undefined period of time, the plaintiffs immediately acquired a 50% interest in the property which they are now entitled to, regardless of how much of the purchase price was actually paid.

[34] The defendant denies that such an agreement was reached, or that any agreement was reached. She states, in her affidavit, that she and Rudi had a temporary and informal agreement that Rudi would contribute 50% of the monthly expenses related to renting out rooms in the property for short term rental, help with maintenance tasks for the property, and make monthly payments equal to 83% of Leyla’s monthly mortgage payments. Further, Rudi would receive half of the monthly rental revenue which would be credited toward his monthly payments. Leyla states that this was a temporary arrangement and if they reached a deal on terms of purchase of a 50% interest in the property, the funds which Rudi had advanced would be applied to the purchase price, failing which the funds would be returned as a loan.

[35] It is evident, from a review of the record as a whole, that the parties were engaged in discussion about how and when Rudi and Sarah would pay for his 50% interest in the property, from 2017 until 2021. It is also evident that there were disputes over various aspects of their partnership arrangement, which broke down. The plaintiffs continued to make payments until the defendant unilaterally closed the joint bank account in February 2021, and the plaintiffs’ access to the rental revenue ended. Since that date, the plaintiffs made no further payments. Whether they reached an agreement on the essential terms, as the plaintiffs allege, or whether they never reached agreement, as the defendant alleges, will involve credibility findings and findings of fact on disputed issues that cannot be determined on this motion.

[36] That said, the plaintiffs’ failed to include the fact that they accepted $68,983.88 from the defendant in their statement of claim or in their affidavits, or address it in reply. The plaintiffs offer no explanation for failing to state that the defendant sent them a cheque for $68,983.88, stating that it was repayment of their payments, with interest, which they accepted.

[37] In oral submissions, Mr. Sternberg noted that when the mortgage came due on August 25, 2022, the defendant re-financed the mortgage with a new mortgage in the amount of $1 million. Mr. Sternberg advised that, at that point, the principal remaining on the mortgage was about $700,000, and accordingly, the defendant took out $300,000 of the equity in the property. Mr. Sternberg suggests that the payment of $68,588.33 to the defendants was distribution of a share in the equity which the defendant took out of the property.

[38] The plaintiffs, however, did not file any evidence with respect to having received the funds, either on their motion, or in reply, and did not mention it in their factum. They did not state the basis on which they accepted the funds, or why they did not try to return them in furtherance of the agreement they say was reached and did not try to make any further payments to the defendant by e-transfer or other means.

[39] The plaintiffs do not state that they will return the $68,983,88. The only reasonable inference from the plaintiffs’ silence is that the plaintiffs intended to keep the $68,983.88, which they say are the funds they advanced as part performance of the agreement, plus interest, or which they alternatively contend created a purchase money resulting trust, and yet still maintain that they obtained a 50% interest in the property.

[40] In my view, there are serious issues with respect to the plaintiffs’ claim to a declaration that they hold a 50% ownership in the property, and, in particular, whether there was an oral agreement with clear terms. Even if there is a triable issue as to whether the plaintiffs have an ownership interest in the property, having given careful consideration to the whole of the record and the submissions made, I conclude that the equitable factors do not favour granting leave to register a CPL on the property.

[41] The core of the claim made by the plaintiffs is that they sought to secure a 50% interest in a house that they might eventually be able to live in, or sell for profit, without having been able to qualify for mortgage financing. I accept that this may have been a unique opportunity for Rudi and Sarah that arose as a result of their mother’s friendship with the defendant. It is, however, unrealistic to suggest that if the plaintiffs’ allegation is proven, that the parties would, at this juncture, resume a partnership; or that Rudi and Sarah would live in the property together.

[42] The plaintiffs have already received what, on the record before me, is not disputed to be a return of the funds they advanced, plus interest. If the plaintiffs prove that that they have a 50% ownership interest, their damages are calculable. The value of the property, the amount the plaintiffs contributed to the property and the amount the plaintiffs have received can all be calculated. I am satisfied that damages are an adequate remedy.

[43] The plaintiffs sought, in the alternative, an order that the defendant not be permitted to sell or encumber the property, or that, if she does, that the proceeds of sale be paid into court. This would be, in the circumstances, effectively asking for a Mareva injunction. The plaintiffs have not provided any evidence that they will be unable to enforce a judgment against the defendant. For the same reasons that I have declined to grant leave to the plaintiffs to issue a CPL, I am not satisfied that the alternate form of security should be ordered.

[44] For all these reasons, the motion is dismissed.

[45] The parties are encouraged to agree on costs of this motion. If they are unable to do so, the parties may provide written submissions of no more than three pages in length, exclusive of supporting materials and any offers to settle. The defendant may deliver and file her submissions within thirty days, and the plaintiffs may file their submissions within thirty days thereafter, following which the materials will be placed before me. The parties should deliver their submissions through the civil JSO portal, as well as directly by email to my assistant at Joanna.Skalko@ontario.ca

The Honourable Madam Justice S. E. Lavine Released: July 19, 2024

[1] As all plaintiffs have the same last name, for clarity, I have followed the convention adopted by the plaintiffs in their materials of referring to the plaintiffs by their first names, and do not intend any lack of respect by doing so.