Court File and Parties
Court File No.: FS-18-09 Date: July 31, 2025 Ontario Superior Court of Justice
Between:
NASRIN MIRSHAHI Applicant
- and -
TROY PATRICK McCARTHY and McCARTHY DÉCOR INC. Respondents
Counsel:
- Alnaz Jiwa, for the Applicant
- Jordan Sobel, for the Respondents
Heard: January 28, 29, 30, 31, February 3, 4, and 6, 2025
Reasons for Judgment
Wilkinson J.
Introduction
[1] This case involves claims for unjust enrichment made by both parties as against each other, and claims for ownership of a jointly owned property following the breakdown of a common law relationship. The parties lived together between 2012 and 2017. They do not have any children.
[2] The Respondent, Troy McCarthy, owns a wallpapering business known as McCarthy Décor. Although she already had a full-time job, the Applicant, Nasrin Mirshahi, assisted Mr. McCarthy with the business. The parties disagree as to the nature and extent of work that Ms. Mirshahi provided to the business. Ms. Mirshahi claims that Mr. McCarthy and McCarthy Décor have been unjustly enriched by her labour. She seeks financial compensation for the unpaid hours that she worked for the company.
[3] There are also issues in dispute between the parties relating to two different properties. Early in their relationship the parties moved into a condominium owned by Ms. Mirshahi, located at 2121 Roche Court, Unit 308, in Mississauga, Ontario ("Roche Court"). They later purchased a property together at 224 Vodden Street, in Brampton, Ontario ("Vodden Street").
[4] During the time the parties lived together at Roche Court, Mr. McCarthy did not pay rent, condominium fees or mortgage payments, even though he kept materials and equipment for his wallpapering business in the condominium. Ms. Mirshahi claims occupation rent from Mr. McCarthy and/or his company, McCarthy Décor, for use of the condominium.
[5] Renovations were undertaken at the Roche Court property during the time the parties lived there together. The parties do not agree as to the extent of Mr. McCarthy's involvement in paying for, and completing, the renovations. Mr. McCarthy claims that Ms. Mirshahi has been unjustly enriched by his efforts, resulting in a claim that he has a constructive trust in Roche Court.
[6] After living together for approximately eighteen months at Roche Court, the parties jointly purchased the Vodden Street property. Originally the parties owned the property as joint tenants, but they now own it as tenants in common.
[7] The parties eventually refinanced Vodden Street after living there together almost two years. Through the refinance, the parties agreed to payout Ms. Mirshahi's remaining mortgage in the amount of $61,251.65 on the Roche Court property, thus increasing the mortgage on the Vodden Street property. Mr. McCarthy claims that Ms. Mirshahi has been unjustly enriched by receiving funds to payout her mortgage while his mortgage obligations were increased. Mr. McCarthy therefore argues that he has an equitable trust in the Roche Court property.
[8] Each party claims to have made all the mortgage payments for the Vodden Street property during the period of the parties' co-habitation. Each party therefore claims 100% ownership of Vodden Street.
[9] The parties separated in October 2017, but continued to reside together in the Vodden Street home. Following the separation, Ms. Mirshahi paid the mortgage for Vodden Street until April 2019, when by consent order, Mr. McCarthy agreed to pay all ongoing mortgage payments for Vodden Street, in exchange for receiving temporary exclusive possession of the property. Mr. McCarthy has continued to make the mortgage payments since April 2019. Ms. Mirshahi claims occupation rent from Mr. McCarthy and/or McCarthy Décor for the period of time following the separation that he did not contribute to the mortgages at Vodden Street.
[10] There was no written agreement between the parties setting out the details of the financial arrangements between them during the course of their cohabitation.
[11] For the reasons that follow, I find:
a) Mr. McCarthy and/or McCarthy Décor owe Ms. Mirshahi $81,000 for the labour she provided to the business;
b) Ms. Mirshahi has not been unjustly enriched by the renovations provided by Mr. McCarthy to Roche Court;
c) Mr. McCarthy is not required to pay occupation rent to Ms. Mirshahi for the time that he lived at Roche Court;
d) Ms. Mirshahi owes Mr. McCarthy $30,625.83 for his half of the increased mortgage on Vodden Street that was used to payout the TD mortgage on Roche Court;
e) The parties are equal owners of Vodden Street; and
f) Mr. McCarthy does not owe Ms. Mirshahi occupation rent for the period of time that he lived at Vodden Street without paying the mortgage.
Background
[12] At the time that the parties met in 2012, Ms. Mirshahi owned the Roche Court condominium where she lived with her son, Sorhab Barfehi, and his wife. A few months after Ms. Mirshahi met Mr. McCarthy, she moved into his rented basement apartment in Pickering, Ontario, where the parties lived together for approximately six months. During that time, Mr. McCarthy paid the rent, and all the carrying costs for the apartment.
[13] In April 2013, the parties moved into Roche Court, where they lived together for approximately eighteen months, along with Sorhab and his wife. In January 2015, the parties purchased Vodden Street as joint tenants.
[14] In order to finance the purchase of Vodden Street, the parties both entered into a private second mortgage with mortgagee Daniel Scott for $35,000. The Daniel Scott mortgage was a one-year interest only mortgage, with payments of $378.88 monthly, commencing February 1, 2015. Once all disbursements were paid, $30,870.62 was applied to the Vodden Street mortgage.
[15] Ms. Mirshahi states that Mr. McCarthy agreed to pay for all the interest payments and the principal when the Daniel Scott mortgage matured, but this did not happen. Mr. McCarthy claimed to have contributed to the Daniel Scott mortgage.
[16] In addition to the Daniel Scott mortgage, the parties entered into a mortgage with Equitable Bank, which was the first charge on the property. Both parties claim to have most, or all, of the Equitable Bank mortgage expenses. There is no question that the Equitable Bank mortgage payments were deducted from the Royal Bank account that Ms. Mirshahi held jointly with her son, Sorhab. The parties provided conflicting evidence as to who made the mortgage payments for the Vodden Street property.
[17] Following their separation in the fall of 2017, the parties lived separate and apart at Vodden Street until Ms. Mirshahi moved out in April 2019 after a consent order was made on April 2, 2019. The order permitted Mr. McCarthy to have temporary exclusive possession of Vodden Street, in exchange for being exclusively responsible for all mortgage payments, insurance payments, and other carrying costs for Vodden Street.
[18] On January 22, 2021, Ms. Mirshahi purchased a property in Burlington, Ontario, where she presently lives with her mother. At the time of purchase, the mortgagee, TD Bank, provided Ms. Mirshahi with mortgage funds resulting from a refinance of Roche Court, which included $37,136.12 to discharge the Daniel Scott mortgage, which at that point had not been repaid. This amount included a penalty for paying the mortgage out early, and legal fees. Ms. Mirshahi took out a line of credit with RBC Bank to complete the purchase.
[19] On September 26, 2023, Mr. McCarthy applied to convert the joint tenancy for Vodden Street into tenants in common. As Mr. McCarthy made this application unilaterally, there is no agreement between the parties as to how the ownership of Vodden Street property is to be divided between them.
Issues
Can Ms. Mirshahi make a claim for unjust enrichment in this trial when it has not been specifically pleaded?
Is Ms. Mirshahi's claim for compensation for the work performed for the company statute-barred under the Limitations Act, 2002?
If Ms. Mirshahi's claim for compensation is not barred by the Limitations Act, has she made out a claim for unjust enrichment as against McCarthy Décor and/or Mr. McCarthy, and if so, what is the remedy?
Has Mr. McCarthy made out a claim for unjust enrichment as against Ms. Mirshahi, for his renovation work at Roche Court, and if so, what is the remedy?
Is Mr. McCarthy required to pay Ms. Mirshahi occupation rent for the period of time that he lived at Roche Court?
Does Mr. McCarthy have an equitable trust claim against Ms. Mirshahi for his contribution to the payout of the TD mortgage on the Roche Court property? If so, what is the remedy?
What is the percentage of ownership of Vodden Street as between the parties?
Is Ms. Mirshahi entitled to occupation rent from Mr. McCarthy in relation to the Vodden Street property?
Issue #1: Can Ms. Mirshahi make a claim for unjust enrichment in this trial when it has not been specifically pleaded?
The Law
[20] This issue is one of fairness and notice. Finlayson J.A. provides guidance with respect to this issue in Kalkinis (Guardian of) v. Allstate Insurance Co. of Canada (1998), 41 O.R. (3d) 528, at pp. 533-34, when he stated:
The trial judge cannot make a finding of liability and award damages against a defendant on a basis that was not pleaded in the statement of claim because it deprives the defendant of the opportunity to address that issue in the evidence presented at trial.
[21] However, the jurisprudence suggests that there is not a hard rule against awarding relief that was not pleaded. The Kalkinis case involved a determination of whether an insurer had received and acted upon instructions to cancel an increase in coverage under an insurance policy. However, the trial judge also found the insurer liable on the basis that the agent was negligent in not advising the insured that the cancellation was not in his best interests. This relief had not been pleaded. The Court of Appeal confirmed that this fresh analysis was highly prejudicial to the appellant at para. 11 of the decision:
The parties, certainly the appellant, were proceeding on the basis that this was an action in contract on an insurance policy. The record had been developed within the confines of the cause of action as pleaded. Accordingly, it was impermissible for the trial judge to entertain an argument founded on totally different legal principles.
[22] In 936464 Ontario Ltd. v. Mungo Bear Ltd. (2003), 74 O.R. (3d) 45, the Divisional Court considered if a claim for quantum meruit could be awarded by a trial judge when the pleading had been for breach of contract. The Court found that the evidence to determine both issues was the same, and that the evidentiary record would have been the same whether quantum meruit had been pleaded or not (para. 44). For this reason, the Court drew a distinction between the facts before it, and the facts in Kalkinis where the relief awarded by the trial judge was a completely new cause of action.
[23] Similarly, in McLean v. Danicic (2009), 95 O.R. (3d) 570 (Sup. Ct.), at para. 84, the Court noted that it could consider whether the tort of intentional infliction of mental suffering and emotional distress was made out, even though it was not pleaded, because the allegations of fact in the Statement of Claim provided the basis for finding the necessary elements of the tort.
Analysis
[24] The words "unjust enrichment," "quantum meruit," "constructive trust" and "resulting trust" do not appear in Ms. Mirshahi's Application. However, I note that the Application seeks orders that:
a) The Respondent holds Vodden Street in trust for the Applicant;
b) That the Respondent pay occupancy rent for the use of Vodden Street;
c) That the Respondents pay to the Applicant monies in lieu of her work and efforts that benefitted them; and
d) That the Respondent repays the Applicant the sum of $200,000 for all advances and loans given by her to him.
[25] The Application also sought other orders that were withdrawn at the trial, which will not be repeated here.
[26] I am satisfied that the language in the Application is sufficient to provide Mr. McCarthy and McCarthy Décor with adequate notice of the claims being made by Ms. Mirshahi. In addition, Rule 20 questioning was conducted where Ms. Mirshahi was questioned about the work that she claims she performed for the company, and she was cross-examined about this claim during the trial. In his submissions, counsel for the Respondents did not identify any prejudice that they have suffered as a result of the Application not specifically pleading "unjust enrichment."
[27] Ms. Mirshahi's failure to specifically plead unjust enrichment in her Application therefore does not preclude her from leading evidence of unjust enrichment at trial, nor does it preclude her for claiming damages for unjust enrichment.
Issue #2: Is Ms. Mirshahi's claim for compensation for the work performed for the company statute-barred under the Limitations Act?
The Law
[28] In McConnell v. Huxtable, 2014 ONCA 86, the Ontario Court of Appeal held that in family law cases, the two-year limitation period set out in the Ontario Limitations Act, 2002, typically commences on the date of separation. Justice Rosenberg stated at para. 52:
Generally speaking, a claim of unjust enrichment requires that the defendant retain a benefit without juristic reason in circumstances where the claimant suffers a corresponding deprivation. In other words, the relevant act of the defendant is simply the act of keeping the enrichment (or the omission to pay it back) once the elements of the unjust enrichment claim have crystallized. In the family law context, this may typically occur on the date of separation, when shared assets, including real property, are divided and the possibility therefore arises of one party holding onto more than a fair share.
[29] Justice Rosenberg further clarified the analysis at para. 54:
I would think that ordinarily the claim should be taken not to have been discovered until the parties have separated and there is no prospect of resumption of cohabitation: see Maddaugh and McCamus, The Law of Restitution, looseleaf, release no. 11 (Toronto: Canada Law Book, 2013), at 3:500.30; and Wilson v. Fotsch, [2010] B.C.J. No. 850, 2010 BCCA 226, at para. 10).
Analysis
[30] Ms. Mirshahi testified that Mr. McCarthy made assurances to her that they were building his business together. She testified that she was actively involved in working for the business and promoting the business, even though she did not receive a salary from the business. Mr. McCarthy maintains that no such statements were made to Ms. Mirshahi, and that she only helped out a little with the business. His evidence was that she was mostly just keeping him company when he attended work sites, and that the business had been established long before the parties entered into a relationship.
[31] The documentary evidence provided by both parties establishes that at times there was an intermingling of payments from the company to Ms. Mirshahi and her son, and payments by Ms. Mirshahi for company expenses. These issues will be addressed in greater detail below, but are mentioned here for the purpose of determining the date when Ms. Mirshahi could have discovered her claims against Mr. McCarthy.
[32] A good example of the co-mingling of Ms. Mirshahi's funds with company funds is when Ms. Mirshahi used $10,000 of her $13,000 personal injury settlement to pay off the company's loan to Ford Credit Canada for a company truck. There was also evidence from Ms. Mirshahi that she deposited cheques from the company bank account, into the joint account she held with her son, which were then used by her to pay both company expenses and personal expenses for Mr. McCarthy.
[33] I am satisfied that there was evidence of sufficient financial interaction between Ms. Mirshahi and the company to delay her discovery of equitable claims made against Mr. McCarthy, and also the business, until the date of separation. No evidence was led at the trial as to a precise date of separation, although there appears to be agreement between the parties that the relationship was over by sometime in October 2017.
[34] The two-year limitation period during which Ms. Mirshahi was required to commence her application against the Respondents therefore began running in October 2017. The fact that she stopped asking to be paid in 2015 does not automatically halt her claim of unjust enrichment for the services that she claims she performed for the company.
[35] Ms. Mirshahi's Application was filed on January 15, 2018. I therefore find that Ms. Mirshahi's claims set out in the Application are not barred by the operation of the Limitations Act, 2002.
Issue 3: Has Ms. Mirshahi made out a claim for unjust enrichment as against McCarthy Décor and/or Mr. McCarthy, and if so, what is the remedy?
The Law
[36] To prove a claim for unjust enrichment, the claimant must show: (1) that the opposing party has been enriched; (2) that the claimant suffered a corresponding deprivation; and (3) that there is no juristic reason for the enrichment: Kerr v. Baranow, 2011 SCC 10, at paras. 36 and 40.
[37] To establish that the opposing party has been enriched, the claimant must prove that they gave something to the opposing party that was received, and retained. It must be a tangible benefit that has enriched the opposing party, and that can be restored to the claimant by way of payment of money (Kerr, at para. 38).
[38] The claimant does not have to demonstrate that the opposing party retained the benefit permanently (Kerr, at para. 38). The benefit conferred on the opposing party by the claimant can be positive or negative, such as sparing a party from incurring an expense that they would otherwise have been required to incur (Kerr, at para. 38).
[39] There is a two-step process to determine the lack of a juristic reason for one party's retention of a benefit given to them by the other party. The first step is a consideration of the established categories of juristic reasons to deny recovery, such as the terms of a contract, the intention to make a gift, or other equitable or statutory obligations. If there is no juristic reason from an established category, then the party seeking a finding of unjust enrichment has made out a prima facie case under the first part of the test (Kerr, at para. 38).
[40] The prima facie case established by a party seeking a determination of unjust enrichment is rebuttable where the responding party can show there is another reason to deny recovery. The burden of proof is therefore shifted to the responding party to show the reason why the enrichment should be retained. The court shall look to all the circumstances of the transaction when determining if there is a reason to deny recovery, including in particular the reasonable expectation of the parties, and public policy considerations (Kerr, at para. 38).
[41] If either party establishes a claim for unjust enrichment, they may be entitled to either a monetary or proprietary award (Kerr, at para. 46). There are various ways to determine the value of a monetary award owed to a party seeking an award for unjust enrichment, including awarding the party compensation for the monetary value received by the other party for unpaid services provided by the party seeking compensation (Kerr, at para. 49).
[42] If a monetary award is inappropriate or insufficient, a proprietary award may be required where the Applicant can demonstrate a causal connection between his contributions and the acquisition, preservation, maintenance or improvement of the property. In this circumstance the Applicant can be granted a share of the property proportionate to the unjust enrichment as a constructive trust (Kerr, at para. 50).
Position of Ms. Mirshahi
[43] Ms. Mirshahi testified that although she maintained a full-time salaried position performing quality control services for Torcad Ltd. during the parties' cohabitation, she also provided labour to McCarthy Décor. She testified that in 2012, she worked about 12 to 15 hours per week on weekends for McCarthy Décor, as she was learning the business.
[44] Ms. Mirshahi testified that in 2013 she started to become more actively involved in McCarthy Décor, including sanding walls, smoothing out bumps, and pre-gluing and preparing the areas to be wallpapered. She testified that eventually she was competent enough to apply wallpaper to areas where there were no high ceilings.
[45] Ms. Mirshahi testified that by 2014 the company was busy, and she was working thirty to sixty hours a week providing labour for McCarthy Décor.
[46] Both parties agree that Ms. Mirshahi was not paid a wage or a salary for the work that she performed for McCarthy Décor. Ms. Mirshahi argues that Mr. McCarthy and McCarthy Décor were unjustly enriched by her labour, and that she is entitled to be paid a wage for the labour she provided to the company.
[47] Ms. Mirshahi relies on the following evidence in support of her claim that she provided labour that had value to Mr. McCarthy and McCarthy Décor:
She testified that she would regularly come home in the afternoon from her salaried job, and then join Mr. McCarthy at his work site, and work into the evening;
Ms. Mirshahi identified a number of locations where she worked with Mr. McCarthy applying wallpaper, including renovating the fitting rooms at The Bay, Yorkdale Mall, dental offices, lawyers' offices, a daycare centre in Oakville, Mr. Sub, TD Bank as well as work performed at the Delta Hotel in Kingston which took place over two weekends;
Ms. Mirshahi testified that in the evenings once they returned home, she washed rags and other materials used for the business, while Mr. McCarthy watched television;
Ms. Mirshahi provided some text messages between herself and Mr. McCarthy from 2013 and 2017 that discuss Ms. Mirshahi working with Mr. McCarthy;
Ms. Mirshahi's son, Sorhab, testified that on a few occasions he worked with his mother and Mr. McCarthy on various job sites, and that he witnessed his mother gluing wallpaper. He also testified that she would come home late with Mr. McCarthy after work;
Jash Dand, a friend of Sorhab's, testified that he worked for McCarthy Décor on a few occasions performing general labour, and that it was Ms. Mirshahi who told him which tasks to perform;
Jash Dand also testified that when he was at the jobsite he witnessed Ms. Mirshahi cutting and gluing wallpaper;
Neilish Dand testified that when he worked for McCarthy Décor he took instructions from both Ms. Mirshahi and Mr. McCarthy, and that it was Ms. Mirshahi who taught him how to cut and glue wallpaper as he did not have previous experience in wallpapering;
Ms. Mirshahi provided copies of two certificates she obtained from Frank Mechanical Lift Truck and Engine Repair on March 4, 2015, which declared her to be a "Competent Specialist in Fall Protection", and also "Safe Operation of the Aerial Work Platform Man Lift". Ms. Mirshahi testified she obtained these certificates so that she was licensed to operate a lift truck at the company work sites, particularly since Mr. McCarthy's certificate to operate a lift truck had expired;
Ms. Mirshahi produced bank documents confirming that she used $10,000 of her personal injury settlement to pay off the loan on a truck owed by McCarthy Décor;
Ms. Mirshahi also testified that when she was at job sites with Mr. McCarthy she would speak with other trades people, such as painters, and promote the business;
Ms. Mirshahi testified that there were people employed by McCarthy Décor such as Neilish Dand who were paid $25 per hour. Ms. Mirshahi testified that she performed the type of work that they performed for the company.
Position of Mr. McCarthy
[48] In his Answer to the Application, Mr. McCarthy made the following bold statement:
"The Applicant has provided nothing to the company except a drain on its finances."
[49] Mr. McCarthy's evidence during the trial was not nearly as aggressive as his pleading. He testified that he had been running his company as its sole shareholder for many years prior to meeting Ms. Mirshahi. He acknowledged that Ms. Mirshahi "helped out" with the business, but denied that her contributions increased the profits of the company. He did not provide specific details with respect to the work Ms. Mirshahi performed for the company.
[50] Mr. McCarthy provided statements from contractors including John Agiropoulos, Giulio Tomassi, and Marco Rossi, who had worked with Mr. McCarthy on various projects. The essence of these statements is that while Ms. Mirshahi was seen on job sites with Mr. McCarthy, she did not appear to be doing any work.
[51] Although these statements are hearsay statements, since Ms. Mirshahi chose to make them exhibits, they were accepted into evidence. However, I place little weight on these written statements, as the authors of these statements were not tested by cross-examination. Overall, these statements offer little assistance in my determination as to the extent to which Ms. Mirshahi worked with, or for, McCarthy Décor.
[52] Mr. McCarthy denied that Ms. Mirshahi was involved in marketing his business, and he denied ever receiving a customer because of her efforts. Mr. McCarthy testified that his referral-based business was in place long before he met Ms. Mirshahi, and that he obtains work mostly through word of mouth.
Analysis
[53] The parties agree that Ms. Mirshahi did not receive a salary or wages from McCarthy Décor Inc. Otherwise, there is little they agree upon with respect to Ms. Mirshahi's involvement in McCarthy Décor.
[54] Ms. Mirshahi's evidence that she provided labour to McCarthy Décor was supported by the testimony of her son, Sorhab, as well as the testimony of Jash Dand, and Neilish Dand. All three witnesses worked at times for Mr. McCarthy, and all confirmed that they saw Ms. Mirshahi preparing walls for wallpapering at a job site. Further, Jash Dand and Neilish Dand confirmed that it was Ms. Mirshahi who told them what to do at the work site.
[55] Over the course of the three days that Ms. Mirshahi testified, she provided evidence regarding the process of applying wallpaper. Although she confirmed that she was not an expert, she established that she had more than general knowledge concerning the art of applying wallpaper. She described her work using wall tackers to ensure a smooth appearance and the removal of bubbles. She also discussed using a scissor lift, sanding walls, pre-gluing the wallpaper, and applying wallpaper on the bottom half of walls. She testified that Mr. McCarthy always did the higher work. I accept this evidence.
[56] I also accept Ms. Mirshahi's evidence that she washed cloths and rags used in the work of McCarthy Décor in the evenings when the parties returned home.
[57] Ms. Mirshahi testified that the company paid $25 per hour to Neilish Dand for his work, and that her abilities were superior to his. Ms. Mirshahi therefore argues that her hourly rate ought to be valued at a higher rate than Neilish Dand. She suggests that $35 per hour is an appropriate hourly rate to assign to her labour.
[58] Ms. Mirshahi claims that Mr. McCarthy and/or his company owe her a total of $274,000 in compensation for the hours of work that she provided to the business. This amount is calculated by using an hourly rate of $35 per hour, for an average of 35 hours per week, working 48 weeks per year, which results in an annual gross salary of approximately $58,000 per year, for four years and eight months, from 2012 to the parties' separation in the fall of 2017.
[59] Ms. Mirshahi also testified that by working without pay for the company she lost the opportunity to earn income elsewhere with a second job. She therefore argues that she has suffered a corresponding deprivation to Mr. McCarthy's enrichment, which is not justified by a juristic reason. Ms. Mirshahi seeks financial compensation for the free labour she provided to the company.
[60] Based on the evidence before me, Ms. Mirshahi has established on a balance of probabilities that she performed work for which she was not paid. Unfortunately, there was no information before me as to what the company's profits or losses would have been if Ms. Mirshahi had not been assisting Mr. McCarthy. I also have no specific evidence before me to establish that the company was able to take on more work and earn greater profits because jobs were completed more efficiently due to the contributions of Ms. Mirshahi.
[61] I note, however, that at Mr. McCarthy's questioning, his counsel refused to provide copies of Mr. McCarthy's Quickbooks from 2011 onward. In my view, production of the Quickbooks for McCarthy Décor is clearly relevant. I draw a negative inference from Mr. McCarthy's failure to provide the accounting information for his company, that Mr. McCarthy's company was more profitable in the years that Ms. Mirshahi provided free labour to the company.
[62] Ms. Mirshahi also seeks to rely upon Mr. McCarthy's tax returns that show dividend withdrawals from the company by him of $70,200 in 2016, and a net income of $99,900 in 2017 to support her claim for unjust enrichment. She argues that her contributions allowed the company to be sufficiently profitable for Mr. McCarthy to take dividends from the company, and to earn an income in the range of $100,000.
[63] The test in Kerr v. Baranow requires that the benefit received be a tangible benefit that can be quantified by way of a repayment to the claimant. On the evidence before me, I find that Ms. Mirshahi assisted McCarthy Décor on a regular basis between January 2013 and the fall of 2017. I accept the evidence of Sorhab Barfehi, Jash Dand and Neilish Dand that they witnessed Ms. Mirshahi cutting and gluing wallpaper, and that Ms. Mirshahi was providing them instructions on the job. The fact that Mr. McCarthy took substantial dividends in 2016, and his income in 2017 of almost $100,000, suggest that the business was profitable. I infer that Ms. Mirshahi's contributions to the company also contributed to the income received by the company.
[64] Ms. Mirshahi was already working a full-time job at Torcad Ltd. I accept her evidence that she often worked weekends with Mr. McCarthy. In his testimony, Neilish Dand confirmed that there was weekend work. He also stated that Ms. Mirshahi came to the worksite in the afternoons once she had finished her other job.
[65] I reject Mr. McCarthy's evidence that Ms. Mirshahi was simply keeping him company at the worksite. Indeed, in his evidence he confirmed that Ms. Mirshahi "helped out" with the company's work, and that she may have spent time teaching Gabriel, one of his employees.
[66] I accept that some weeks Ms. Mirshahi did work 35 hours as she claims. But I also find it most likely that other weeks she did not work as many hours. Ms. Mirshahi did not provide me with any time logs or other way to establish the hours that she worked.
[67] I find that a reasonable number of hours for Ms. Mirshahi to have worked on average, at the company as a second job, is 15 hours per week.
[68] I accept the evidence of Neilish Dand that he was paid $25 per hour by the time he left in 2015, and that Ms. Mirshahi was more skilled than him. I find that $25 per hour is an appropriate hourly rate for Ms. Mirshahi to be paid. I therefore find that Ms. Mirshahi is entitled to be paid for 15 hours per week at $25 per hour = $375 per week for 48 weeks = $18,000 per year. The total pay she is owed by McCarthy Décor for 4.5 years x 24,000 = $81,000.
[69] Ms. Mirshahi has established that Mr. McCarthy and McCarthy Décor were unjustly enriched by her free labour. Ms. Mirshahi shall accordingly be compensated by a payment of $81,000 from Mr. McCarthy and/or McCarthy Décor. As Mr. McCarthy is the sole shareholder for McCarthy Décor, the benefit received by the company for her efforts is in effect a benefit received by Mr. McCarthy.
Issue #4: Has Mr. McCarthy made out a claim for unjust enrichment as against Ms. Mirshahi for his renovation work at Roche Court, and if so, what is the remedy?
[70] The parties agree that they lived together at Roche Court from April 2013 until they bought the Vodden Street home in January 2015. Ms. Mirshahi testified that during the time that the parties lived together at Roche Court, she made all the mortgage payments, and paid all the carrying costs for the house. She also testified that Mr. McCarthy did not make any rental payments to her when he lived at Roche Court.
[71] Mr. McCarthy did not dispute that he did not pay rent or pay any of the carrying costs for Roche Court while he lived there. However, he claims that he paid for materials and performed renovations at the property that increased the value of the property. He therefore argues that Ms. Mirshahi has been unjustly enriched by these renovations.
[72] Numerous witnesses testified about the renovations that took place at Roche Court. All the witnesses were consistent in testifying that Mr. McCarthy sound proofed a wall, and did some painting. I was not given any evidence as to the value of this work, or the number of hours it took Mr. McCarthy to complete this work.
[73] Mr. McCarthy also claims that he paid approximately $4,500 towards the renovation costs at Roche Court. I was not provided with receipts for many of these expenses. According to Mr. McCarthy, the additional renovations included installing hardwood flooring, putting in new kitchen cabinets, installing new baseboards, and installing new doors. Ms. Mirshahi produced a credit card statement to confirm that she contributed to the cost of the hardwood flooring. Ms. Mirshahi's son, Sorhab, testified that he and Jash Dand ripped out the flooring and then another person named Robert installed the flooring. Sorhab testified that his mother paid cash to Robert for this work.
[74] Sorhab also testified that in 2014 he, Jash, and his mother tore out the old kitchen. He stated that he and his wife designed the new kitchen online through IKEA, and then he went with his mother to IKEA to pick out the materials. He testified that he paid for it, and IKEA delivered it to the home. Sorhab testified that he purchased the tile, and that a man named Steven, whom he met through his mother and Mr. McCarthy, installed the tile and the backsplash, and was paid cash by Sorhab. Sorhab stated that IKEA installed the quartz countertop, and that he bought the appliances with Jash. Sorhab testified that the total cost was around $13,000, and that he paid the cost himself. Ms. Mirshahi also testified that Sorhab paid for the materials from IKEA.
[75] Mr. McCarthy initially testified that he paid for the tile, but then changed his answer to state that he did not pay for the tile. Mr. McCarthy testified that he paid for the IKEA kitchen, and that Ms. Mirshahi repaid him for most of it, except for $2,000.
[76] I was provided with very few receipts or invoices regarding the renovations completed at Roche Court. Mr. McCarthy gave vague and inconsistent evidence regarding the details of his financial contribution to the renovations. Sorhab Barfehi's evidence that he paid for the materials to renovate the condominium was clear and sufficiently detailed to satisfy me of its reliability.
[77] Mr. McCarthy did not provide sufficient evidence to prove that he paid for the bulk of the renovations at Roche Court. I accept that he sound proofed a room, and assisted with painting the condominium. The evidence is that Mr. McCarthy did not pay rent, condominium fees, or mortgage payments during the time he lived at Roche Court. I therefore find that while he was not paid for his time in completing the renovations, the obligation of Ms. Mirshahi to repay Mr. McCarthy for what he paid for materials and to pay him for his labour is offset by his lack of contribution to his living accommodations at Roche Court. Mr. McCarthy's claim that Ms. Mirshahi was unjustly enriched by the renovations that he completed at Roche Court therefore fails.
Issue #5: Is Mr. McCarthy required to pay Ms. Mirshahi occupation rent for the period of time that he lived at Roche Court?
[78] Mr. McCarthy lived at Roche Court for approximately eighteen months. I was not provided with information as to the rental value of the space that Mr. McCarthy had access to while living at Roche Court. Ms. Mirshahi's claim for occupation rent from Mr. McCarthy at Roche Court fails on this basis.
Issue #6: Does Mr. McCarthy have an equitable trust claim against Ms. Mirshahi for his contribution to the payout of the TD mortgage on the Roche Court property?
[79] When the parties refinanced Vodden Street in December 2016, Ms. Mirshahi received a cheque in the amount of $61,251.65 to payout the remaining TD mortgage owed on the Roche Court condominium in full. I accept Ms. Mirshahi's evidence that Mr. McCarthy agreed that she would receive these funds in recognition of her contribution to the business. This evidence is consistent with my finding that Ms. Mirshahi's labour contributions to the business are to be valued at $18,000 per year, since this refinance occurred after Ms. Mirshahi had been assisting McCarthy Décor for approximately three years. Mr. McCarthy's claim for a resulting trust therefore fails, as I have found that he received consideration for the funds advanced.
[80] However, as I have already found that Mr. McCarthy and his company were unjustly enriched by Ms. Mirshahi's labour, and have made an award accordingly, it is fair and equitable that Mr. McCarthy receive credit for half of the funds that were advanced to pay Ms. Mirshahi's mortgage with TD for Roche Court. Accordingly, Mr. McCarthy is entitled to repayment from Ms. Mirshahi in the amount of $30,625.83.
Issue #7: What is the percentage of ownership of Vodden Street as between the parties?
[81] The parties currently own Vodden Street as tenants in common. There is no agreement between the parties as to how the ownership of the property should be divided between them. Based upon their respective financial contributions to the property, each party takes the position that they are entitled to a 100% ownership of the property.
[82] To determine an appropriate division of the ownership of Vodden Street, consideration must be given to all the relevant factors, including each party's contribution to the downpayment on the property, which party made mortgage payments, insurance payments and utility payments on the property, and if either of the parties invested funds into renovating the property.
a) Each party's contributions to the Vodden Street purchase
[83] In January 2015 the parties jointly purchased 224 Vodden Street as joint tenants. Just prior to the Vodden Street purchase, a second private mortgage for $35,000 through lender Daniel Scott was placed on Roche Court which was owned exclusively by Ms. Mirshahi.
[84] At the time that the second mortgage for $35,000 was placed on Roche Court, Ms. Mirshahi's original first mortgage with TD had only $69,002.26 remaining. From the $35,000, a net amount of $30,870.62 was paid to the real estate lawyer as a contribution to the purchase of Vodden Street.
[85] Both parties agreed that Ms. Mirshahi's mother, Darres Beygum Mirshahi, contributed $10,000 towards the purchase. Darres Beygum Mirshahi testified that this amount was a loan to her daughter. I therefore attribute the $10,000 payment from Darres Mirshahi to Nasrin's downpayment of the Vodden Street home.
[86] Ms. Mirshahi testified that Mr. McCarthy agreed to make all the interest payments, and to pay off the principal sum of the $35,000 Daniel Scott mortgage at the end of the year when it became due. However, she testified that Mr. McCarthy did not make any of the interest payments in the first year, nor did he pay off the $35,000 mortgage when it became due one year later, on January 1, 2016. In fact, the Scott mortgage was not paid out until January 2021, well after the parties separated, when Ms. Mirshahi arranged a refinancing of Roche Court to permit her to purchase a second property in Burlington, Ontario.
[87] Ms. Mirshahi testified that Mr. McCarthy "may" have made some payments to her to repay her for the interest payments on the Daniel Scott mortgage. She stated that she "cannot recall" if the payments were made by Mr. McCarthy, but that she could not find the payments in her bank account.
[88] Mr. McCarthy gave inconsistent evidence regarding payment of the Daniel Scott mortgage. In his Answer he stated that he paid $5,000 towards the mortgage, but at trial he testified that he had actually paid $10,000 towards the Scott mortgage.
[89] Mr. McCarthy testified that a number of e-transfers to Ms. Mirshahi near the end of 2015 were intended to pay down the Scott mortgage by $10,000. However, Mr. McCarthy also testified that the e-transfers in 2015 were intended to be for the Equitable Life mortgage. Mr. McCarthy has not established that he contributed any funds towards the Daniel Scott mortgage. The bank records in evidence confirm that Ms. Mirshahi has made all the payments for the Daniel Scott mortgage.
[90] It is therefore appropriate that Ms. Mirshahi is credited with having made the $30,870.62 contribution to the Vodden Street downpayment with funds provided through the Daniel Scott mortgage that attached to her Roche Court property.
[91] Mr. McCarthy testified that he had been saving money from payments made to him by clients, and that he contributed $29,686 to Vodden Street from these payments. Mr. McCarthy provided a bank statement confirming that $29,686 came out of his business account on December 29, 2014. He also provided confirmation that a cheque for $40,000 was sent to the real estate lawyer, which included his downpayment, the $10,000 contribution from Ms. Mirshahi's mother, and land transfer taxes which were divided between the parties.
[92] I note that Ms. Mirshahi's brother, Amin Mirshahi, testified that he loaned Ms. Mirshahi $5,500 to be used towards the purchase of Vodden Street, and that this amount has not yet been repaid. I also note that Sorhab Barfehi also testified that he gave his mother a cashier's cheque from the bank for $5,000, and $3,000 cash, that were to be used towards the purchase of Vodden Street. Sorhab provided a bank statement showing $5,000 being withdrawn. I also note Ms. Mirshahi's evidence that her mother also gave her $7,000 USD to be used towards the purchase, and that Mr. McCarthy agrees he received approximately $4,000 CAD in his account from Darres Beygum Mirshahi.
[93] I accept the evidence of the various witnesses that these amounts were loaned to Ms. Mirshahi. However, Ms. Mirshahi has not established that these funds were specifically used to purchase Vodden Street.
[94] I consequently find that the parties contributed very similar amounts to the downpayment on the Vodden Street property, with Ms. Mirshahi's portion being only $10,000 more than the funds contributed by Mr. McCarthy. This contribution of downpayment funds to the purchase is therefore a neutral factor when determining the percentage of ownership of Vodden Street as between the parties.
b) Mortgage payments by the parties: the Vodden Street mortgage
[95] Both parties provided charts summarizing all the mortgage payments that they each claimed to have made, resulting in large totals that they each claim entitle them to full ownership of Vodden Street. Unfortunately, the fluidity of financial exchanges between the parties makes it impossible to determine from reviewing the records which party paid which mortgage payment.
i) Mortgage payments made in 2015
[96] The bank statements provided by Ms. Mirshahi from her Royal Bank account held jointly with her son show monthly mortgage payments going through the account to Equitable Bank in the amount of $2,420.26 per month initially, and then increased to $2,612.88 per month due to an issue with the property taxes that were included in the mortgage payments.
[97] Ms. Mirshahi testified that Mr. McCarthy had suggested that the mortgage payments go through her Royal Bank account because that is where her pay cheques from Torcad were deposited.
[98] There is no question that Mr. McCarthy sent e-transfers to Ms. Mirshahi in 2015 totaling $27,900. Mr. McCarthy testified that this entire amount was for the Vodden Street mortgage, even though the total mortgage payments owed for 2015 were only $24,587.84.
[99] Ms. Mirshahi testified that although there were cheques made out to her from Mr. McCarthy for the mortgage payments, Mr. McCarthy would ask for cash from her for more than the amount of the cheques or payments that he gave to her. Ms. Mirshahi therefore denies that Mr. McCarthy made mortgage payments for Vodden Street.
[100] I do not accept Mr. McCarthy's evidence that the e-transfers sent in 2015 to Ms. McCarthy were intended to be exclusively for the Vodden Street mortgage. The parties purchased the property together, with each of them contributing similar amounts to the downpayment. It does not make sense that Mr. McCarthy would agree to pay all the mortgage costs for the new home by himself, particularly when Ms. Mirshahi worked full-time at her own job.
[101] In addition, I also note Mr. McCarthy's testimony that some of the e-transfers in late 2015 were to repay Ms. Mirshahi for the Daniel Scott mortgage. This evidence contradicts his evidence that all the e-transfers to Ms. Mirshahi in 2015 were to pay for the Vodden Street mortgage.
[102] The evidence establishes that money was being exchanged and intermingled between the parties. For example, on February 9, 2015, there is a payment from Ms. Mirshahi's Royal Bank account to Capital One mastercard, which was the business credit card for McCarthy Décor. Mr. McCarthy did not provide any explanation as to why funds from Ms. Mirshahi's personal account were being used to pay the credit card expenses for the business.
[103] I accept Ms. Mirshahi's evidence that she was contributing to the Vodden Street mortgage costs, in addition to paying for the Daniel Scott mortgage on Roche Court, and the original TD mortgage on Roche Court. However, I do not accept that she was exclusively paying for the Vodden Street mortgage. The salary she received from Torcad was not sufficient to pay the Vodden mortgage, the Scott mortgage, and the TD mortgage for Roche Court.
[104] In 2015, Ms. Mirshahi's son, Sorhab, was not working as he was recovering from surgery. There is no evidence before me that he was contributing to the TD mortgage on the Roche Court property at that time. I find that the only plausible explanation as to how Ms. Mirshahi had sufficient funds to pay the three mortgages is that she was receiving financial contributions from Mr. McCarthy.
[105] In the absence of reliable evidence as to the specific sums designated for the mortgage paid by each party, I find that each party contributed equally to the Vodden Street mortgage in 2015.
ii) Mortgage payments made in 2016
[106] Sorhab Barfehi testified that he began working for McCarthy Décor on a regular basis in 2016. He testified that he performed many tasks for Mr. McCarthy, for which he was paid by McCarthy Décor, including helping Mr. McCarthy clean out his phone and transfer images, and cleaning up his hard drive, and updating his Quickbooks.
[107] Sorhab testified that Mr. McCarthy then started asking him to perform more labour-oriented tasks such as cleaning his truck, and the dirty tools and ladder that were in the truck. Sorhab also took out garbage from the truck, and other materials present in the truck, such as doors and baseboards.
[108] Sorhab also testified that he built Mr. McCarthy a computer that accommodated Mr. McCarthy's interest in commodities trading. Sorhab testified that he went to three different stores with Mr. McCarthy to purchase the necessary parts for the new computer, and that he cloned the data for the new computer along with his friend Jash Dand. Sorhab also assisted Mr. McCarthy with installing a triple monitor set up. Sorhab testified that he taught Mr. McCarthy how to use a trading platform on the computer, although Sorhab never engaged in trading himself.
[109] Sorhab testified that he was paid approximately $1,400 per month for his services, plus his car insurance was paid for by McCarthy Décor. He testified that he spent some of this income, but he left the rest as rent for his mother to assist with the Roche Court TD mortgage payments. Ms. Mirshahi also testified that Sorhab helped her with payments for the TD mortgage.
[110] The joint Royal Bank account held by Ms. Mirshahi and Sorhab confirms regular monthly deposits of $1,475.93 starting in February 2016. There are also copies of cheques in evidence to Mr. Barfehi from McCarthy Décor confirming this amount was paid to Mr. Barfehi on a monthly basis.
[111] Mr. McCarthy denied that Sorhab regularly worked for him. He testified that commencing in 2016 the $1,475.93 paid each month was intended to be a contribution to the Vodden Street mortgage. In addition, there were monthly cheques in the amount of $1,858.45 made out to Mr. McCarthy from McCarthy Décor, which Mr. McCarthy testified were also used to cover the cost of the Vodden Street mortgage. Mr. McCarthy also testified that the cheques were sent out in Sorhab's name in order to obtain benefits coverage for him.
[112] As in 2015, the banking records from 2016 demonstrate that the parties were intermingling funds and payments. For example, on September 1, 2016, there is a cheque for $1,858.45 deposited into the TD account, which Mr. McCarthy testified was a payment for the mortgage. However, that same day the bank statement shows a $1,800 cash withdrawal being made from the account. Ms. Mirshahi testified that Mr. McCarthy frequently asked her for cash, often to pay employees, and that sometimes the amount he asked for in cash was greater than the amount in the cheques.
[113] I accept the evidence of Sorhab Barfehi that starting in 2016 he provided labour to assist Mr. McCarthy with cleaning his tools, and that he was also providing computer and other technological services for Mr. McCarthy. I find that Mr. Barfehi's pay was for services he provided to Mr. McCarthy commencing in 2016, and that his pay of $1,475.93 per month was used in part to assist Ms. Mirshahi with the mortgage payments for Roche Court where Sorhab continued to live. Mr. Barfehi did not claim to be working full-time for Mr. McCarthy, nor does his pay of $17,700 annually suggest that he was working full-time.
[114] As in 2015, the evidence as to which party was making specific mortgage payments in 2016 is not clear. I accept the evidence of both parties that they were making mortgage payments in 2016. In the absence of reliable evidence to the contrary, I find that the parties contributed equally to the Vodden mortgage payments in 2016.
iii) December 2016 - Refinance of Vodden Street
[115] Ms. Mirshahi testified that she was complaining to Mr. McCarthy that she was paying too much each month in mortgage payments, and carrying costs for the two properties, so Mr. McCarthy suggested that they remortgage Vodden Street and pay off the Roche Court condo mortgage. Ms. Mirshahi testified that Mr. McCarthy suggested that the Roche Court mortgage be paid off to compensate Ms. Mirshahi's hard work.
[116] Mr. McCarthy testified that it was Ms. Mirshahi's idea to pay off the Roche Court condominium mortgage.
[117] The parties refinanced the mortgage on Vodden Street on December 30, 2016 by entering into a mortgage for $450,000 with Computershare Trust Company of Canada, also described by the parties as "MCAP." With the refinance the parties paid out the first mortgage with Equitable Life for $379,389.33. The refinance also paid $5,735 towards Ms. Mirshahi's Canadian Tire credit card, which she testified was used for expenses for McCarthy Décor. The refinance also included a payment of $61,251.65 to Toronto Dominion Bank, to payout the mortgage on Ms. Mirshahi's condominium at Roche Court.
[118] I do not accept the evidence of Mr. McCarthy that Ms. Mirshahi was making all the financial decisions, and that he just went along with what she wanted. By December 2016, Mr. McCarthy had been running his own corporation for eight years. There is no evidence before that Mr. McCarthy lacks financial sophistication. In fact, he acknowledged during his testimony that he engages in online trading. I therefore accept Ms. Mirshahi's evidence that it was Mr. McCarthy's idea to pay off the TD mortgage on her condominium as an acknowledgment of the labour she provided to the company. The issue of paying off the TD mortgage for Roche Court is a neutral factor when considering the ownership of Vodden Street as between the parties.
[119] Regarding the refinance payment of $5,735 to Ms. Mirshahi's Canadian Tire mastercard, Ms. Mirshahi provided a bank statement showing numerous debits from her account that were applied to pay the Canadian Tire Mastercard. However, she does not have any of the credit card statements dealing with these expenses. I accept Ms. Mirshahi's evidence that this card was often used for expenses for McCarthy Décor, such as gas purchases, Home Depot purchases, purchasing water for the workers at job sites, and a first aid kit. In his testimony, Mr. McCarthy did not deny that Ms. Mirshahi sometimes used the Canadian Tire credit card for work purchases.
[120] As I have no documentation of the purchases, I am allocating 50% of the expenses on the Canadian Tire mastercard to be for the benefit of Mr. McCarthy or his company, and 50% of the expenses to be for the benefit of Ms. Mirshahi. The payment of this credit card debt from the refinance of Vodden Street is therefore a neutral factor when considering each parties' claim to ownership of the property.
iv) Mortgage payments made in 2017
[121] As in the previous two years, there was insufficient evidence before me to reliably determine specifically which payments for the mortgage were made by each party in 2017.
[122] Mr. McCarthy testified that he discovered in 2017 that Sorhab's use of the company benefits had caused the company's extended health care insurance premiums to increase, so Sorhab was removed from the benefit plan, and taken off the payroll. Mr. McCarthy testified that it was Ms. Mirshahi who managed how payments were sent to Sorhab. Given that it was Mr. McCarthy's decision to remove Sorhab from his company's benefit plan, his testimony that Ms. Mirshahi was solely responsible for determining how payments were to be received by Sorhab is not credible.
[123] Starting in April 2017, Sorhab's name appeared on the monthly cheques for $1,858.45. These cheques were deposited into the Royal Bank account that Ms. Mirshahi held jointly with Sorhab. In addition, e-transfers were sent to Ms. Mirshahi in the amount of $1,850 per month, which were also deposited into the Royal Bank account from which the mortgage payments for Vodden Street were made.
[124] On March 14, 2017, an e-transfer was sent from McCarthy Décor to Ms. Mirshahi's Royal Bank account for $3,000, with a second e-transfer two days later for the unusual amount of $2,401. Mr. McCarthy testified that he paid Sorhab $2,500 for a computer and monitor in 2017, and that otherwise, all the cheques and e-transfers made in 2017 were intended to be for mortgage payments, and not to pay Sorhab for any work performed. However, Mr. Barfehi testified that these payments were made to him to pay him for the installation of a security camera, and to reimburse him for the cost of the camera. The bank statements from McCarthy Décor confirm that these two e-transfers were made specifically to Sorhab. I therefore find that Mr. McCarthy's evidence unreliable that all cheques and e-transfers sent to Ms. Mirshahi and Sorhab in 2017 except for $2,500 were intended to pay for mortgage payments for Vodden.
[125] I accept the evidence of Mr. Barfehi that his employment with McCarthy Décor continued until the parties separated in October 2017. I therefore reject Mr. McCarthy's evidence that all payments made to Sorhab were in fact payments for the mortgage. However, I accept that Mr. McCarthy did make some contributions to the mortgage in 2017. I find it likely that the $1,850 e-transfers made monthly to Ms. Mirshahi included contributions to the Vodden Street mortgage.
[126] Ms. Mirshahi did not testify that she paid for any of the carrying costs of Vodden Street. I therefore accept Mr. McCarthy's evidence that he was paying the carrying costs for Vodden Street, including home insurance costs which were $1,550 annually, for the almost three years that the parties lived there together. In addition, Mr. McCarthy provided copies of the utility bills received that he says he paid.
[127] However, I also accept Ms. Mirshahi's evidence that Mr. McCarthy did not want to use the company business card for his online trading, so he requested that Ms. Mirshahi use her credit card to allow him to purchase stocks. Although he denied that Ms. Mirshahi was funding any of his online trading, Mr. McCarthy was very vague in his answers when questioned about his online trading practices. I also draw a negative inference from Mr. McCarthy's refusal to produce details of his online trading account when asked to do so at his questioning. I accept Ms. Mirshahi's evidence that she was providing funds through the Canadian Tire mastercard for at least some of Mr. McCarthy's online trading expenses.
[128] Overall, the evidence suggests that there was an exchange of funds between the parties throughout the time that they lived at the Vodden Street property until the date of separation in October 2017, where each party contributed to their joint expenses. In the absence of reliable evidence to establish otherwise, I find that each party contributed 50% to the mortgage payments for Vodden Street from the time of purchase in January 2015, until the parties' separation in October 2017.
v) Mortgage payments for Vodden Street post separation
[129] Mr. McCarthy does not dispute that Ms. Mirshahi paid for all the mortgage payments for Vodden Street from the date of separation until the consent order was signed in April 2019. He acknowledges that she paid $34,754.12 towards the mortgage between November 2017 and April 2019. During this time Mr. McCarthy lived at the property, and used the property to store equipment and materials for his company, but he paid no rent and made no mortgage payments.
[130] Ms. Mirshahi testified that in April 2019 she agreed to leave the Vodden Street house, as Mr. McCarthy was bringing women home, and it was uncomfortable for Ms. Mirshahi. The order granting Mr. McCarthy exclusive possession of the Vodden Street property was a temporary, without prejudice order. By agreeing to vacate the home, Ms. Mirshahi was not abandoning her ownership rights to the property.
[131] Mr. McCarthy has paid the MCAP mortgage faithfully since April 2019. He also paid the Scott mortgage regularly until January of 2021 when Ms. Mirshahi arranged for that mortgage to be repaid in full when she refinanced Roche Court to permit her to purchase a property in Burlington.
[132] As Mr. McCarthy has been making all the mortgage payments and paying for all the carrying costs for Vodden Street since April 2019, he clearly has made the larger financial contribution between the two parties to the mortgage. However, it must also be recognized that Mr. McCarthy has had the benefit of the exclusive use of the property throughout this time, including use of the property by his company.
[133] Although he testified in chief that he had lived alone at Vodden Street until he remarried in November 2022, under cross-examination Mr. McCarthy admitted that his brother had lived at the property for two and a half years. He also admitted that his wife lived with him at the property for approximately two years, and that the property has been rented at the rate of $3,200 plus utilities since the fall of 2024. Ms. Mirshahi has not received the benefit of rental payments from any of the individuals who have lived at Vodden Street since April 2019.
[134] The fact that Mr. McCarthy has been solely paying the mortgage and all the carrying costs for Vodden Street since 2019 does not increase Mr. McCarthy's right to greater percentage of the ownership of Vodden Street. Mr. McCarthy has had the exclusive use of the property during this time, and in addition, he has solely received the benefit of any rent or other payments received by others living at Vodden Street. In addition, I accept Ms. Mirshahi's evidence that she asked Mr. McCarthy to agree to rent the Vodden Street home to help finance the carrying costs, but he refused.
vi) Improvements to Vodden Street - Before and after the date of separation
[135] Mr. McCarthy provided receipts demonstrating that he and/or McCarthy Décor has invested almost $40,000 in improvements to the property, both before and after the date of separation. It is reasonable to conclude that the renovations totaling approximately $28,000 prior to the date of separation including a new air conditioner, furnace and windows benefited McCarthy Décor, as well as the parties. Mr. McCarthy testified that he also put a gate around his office at the home so that no one could access it when he was not there.
[136] Mr. McCarthy has paid an additional approximately $12,000 for a new roof, entrance to the property, and water tank replacement since taking over sole responsibility for payment of the mortgage and carrying costs for Vodden Street in April 2019.
[137] It should also be noted that Mr. McCarthy admitted during the trial that he expensed the costs of the renovations through his company. There is little evidence before me as to why these repairs or renovations were required, and if they were renovations particularly required due to the needs of McCarthy Décor.
[138] Mr. McCarthy chose to make repairs or improvements to the property knowing that Ms. Mirshahi was still a titled owner of the property. Ms. Mirshahi testified that she was not consulted before any of the renovations were undertaken. I therefore find that Mr. McCarthy's decision to invest funds in improving the property does not establish that he has a greater ownership interest in the property than Ms. Mirshahi. However, I accept that these renovations likely increased the value of the Vodden Street home.
Conclusion – Equal Division of ownership of Vodden Street until April 2019
[139] Although there were gaps in the evidence and some inconsistencies in the evidence of both parties, overall there were fewer inconsistencies in the testimony of Ms. Mirshahi. Accordingly, where the evidence of Ms. Mirshahi conflicts with the evidence of Mr. McCarthy, I have generally preferred the evidence of Ms. Mirshahi as being more reliable and credible.
[140] There were numerous times in his testimony when Mr. McCarthy changed his evidence or provided contradictory evidence. A number of these inconsistencies have already been highlighted in these reasons. However, one stark example of Mr. McCarthy's shifting evidence was when he offered two different stories in his testimony as to why Ms. Mirshahi used her personal injury settlement to pay off his truck loan. At first he stated that she was reimbursing him for the mortgage and her driving infractions (for which he provided no other details), but then he later stated that he was being reimbursed for Sorhab's cupboards. I am left to conclude that the most credible version of the facts is the one which Ms. Mirshahi provided: that she used her personal injury settlement to help Mr. McCarthy's business because she saw their relationship as a team working together.
[141] The parties contributed very close to the same amounts when the property was purchased, although with her mother's loan of $10,000, Mr. Mirshahi contributed slightly more to the purchase.
[142] The parties provided conflicting and inconclusive evidence regarding who made the mortgage payments for Vodden Street during the time of the parties' cohabitation at the property. I find that neither party has satisfied their onus of establishing on a balance of probabilities that they have made all the mortgage payments for the property from January 2015 until April 2019.
[143] The evidence confirms that Mr. McCarthy was providing regular payments to Ms. Mirshahi, but I also accept Ms. Mirshahi's evidence that she was contributing to the mortgage payments from her regular salary that she received from Torcad, and providing funds for Mr. McCarthy's online investments. Ms. Mirshahi's payroll deposits from Torcad were going directly into the Royal Bank account from which the mortgage payments were deducted.
[144] I therefore find that up until the date of separation the parties had integrated finances with respect to the Vodden Street property, and consequently, I find that they contributed equally to the mortgage payments and carrying costs for Vodden Street up until the consent order was made in April 2019 for Mr. McCarthy to take over paying all expenses related to Vodden Street.
[145] The parties shall therefore each be found to be a 50% owner of the property as tenants in common.
Issue #8: Is Ms. Mirshahi entitled to occupancy rent from Mr. McCarthy in relation to the Vodden Street property?
[146] There is no dispute that Mr. McCarthy was running McCarthy Décor out of the Vodden Street property. He built a special garage to keep the wallpaper glue at the correct temperature, and he did not dispute Ms. Mirshahi's evidence that he stored equipment and other supplies for the company in the basement and in other parts of the house.
[147] After the parties were separated and Ms. Mirshahi was no longer receiving financial benefit from Mr. McCarthy's business, it is appropriate that he and/or his business pay occupation rent to Ms. Mirshahi. Ms. Mirshahi suggests that the upper portion of the house can attract a rental payment of $3,000 and the basement can be rented for $1,500, for a total rental payment for the entire house of $4,500.
[148] Ms. Mirshahi provided no evidence to support her occupation rent claim. In addition, given that Mr. McCarthy is currently renting the entire home for $3,200 plus utilities, I find that that price is a more reasonable estimate of the value of occupation rent from November 2017 to April 2019.
[149] However, I accept Mr. McCarthy's evidence, supported by receipts, that his company has paid almost $40,000 for repairs or renovations to the home. It does not matter whether the money spent on the improvements also benefited the business. Mr. McCarthy was the sole shareholder for the business, so although the improvements may have been write-offs for the company - and I make no finding in this regard - the fact is that either Mr. McCarthy or his company paid for the improvements, and Ms. Mirshahi, as an owner of the property, is a beneficiary of the money spent improving the property.
[150] I also recognize that Mr. McCarthy has paid most of the utility costs and all of the insurance costs for Vodden Street since it was purchased in 2015.
[151] Given that Mr. McCarthy paid for improvements to the property through McCarthy Décor, totaling approximately $40,000, and given that he has paid the insurance and utility costs for the property for most of the time that the parties have owned the property, I find that any occupation rent potentially owed to Ms. Mirshahi is offset by the value of the renovations completed by Mr. McCarthy. Accordingly, Mr. McCarthy and McCarthy Décor are not required to make any payments for occupation rent to Ms. Mirshahi for their occupation of Vodden Street.
Conclusion
[152] Ms. Mirshahi has successfully established that McCarthy Décor and Mr. McCarthy were unjustly enriched by her labour. The company and/or Mr. McCarthy must pay Ms. Mirshahi $81,000 for her contribution to Mr. McCarthy and the company for her unpaid labour.
[153] Mr. McCarthy is entitled to a payment of $30,625.83 from Ms. Mirshahi for his half of the $61,251.65 that was advanced to Ms. Mirshahi to payout the TD mortgage on Roche Court when the Vodden Street mortgage was refinanced in December 2016.
[154] Mr. McCarthy has not established that Ms. Mirshahi has been unjustly enriched by his contributions to the renovations at Roche Court.
[155] Mr. McCarthy and McCarthy Décor are not required to pay occupation rent to Ms. Mirshahi for his use of Roche Court and Vodden Street.
[156] The parties are each entitled to a 50% ownership interest in the Vodden Street property. Should one party wish to purchase Vodden Street from the other, but the parties cannot agree as to the value of the property, they may contact the trial office to schedule a one-day continuation of this trial, once both sides have had an opportunity to obtain a valuation report for the property. Should a continuation of this trial be required, both parties must be prepared to have their respective property valuators provide expert testimony.
[157] Alternatively, the parties may choose to simply list the property for sale, following which the net proceeds of sale shall be shared equally between them.
[158] Mr. McCarthy does not owe Ms. Mirshahi occupation rent for his use of Vodden Street, or the use of the property by his company.
Costs
[159] The parties are encouraged to resolve the issue of costs. In the event that they are unable to do so, each party may prepare a cost submission, to be no longer than three pages double-spaced, not including any Bills of Costs or Offers to Settle. All submissions shall be filed, served and uploaded to Case Center by August 13, 2025. All cost submissions shall also be sent to my attention at scj.csj.general.brampton@ontario.ca.
Released: July 31, 2025
Wilkinson J.