Patel v. Patel, 2011 ABQB 662

Court of Queen ’ s Bench of Alberta Citation: Patel v. Patel, 2011 ABQB 662 Date: 20111031 Docket: 0703 08337 Registry: Edmonton Between: Vinod Patel, Kalpna Patel and Kalpana Patel Plaintiffs/ Defendants by counterclaim - and - Suresh Patel, Jyotsana Patel and Madhuben Haribhai Patel Defendants/ Plaintiffs by counterclaim _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice R.A. Graesser _______________________________________________________ Nature of Application [ 1 ] The Defendants (Plaintiffs by Counterclaim) seek

summary judgment on their counterclaim against the Plaintiffs for filing and/or continuing certificates of lis pendens against the Defendants’ property without reasonable cause. The Plaintiffs (Defendants by Counterclaim) seek an adjournment so that they can examine the Defendant Madhuben Patel for discovery as they believe her evidence may assist them in resisting

summary judgment. The application for adjournment was filed on October 5, 2011. The applications were heard on October 7, 2011 by way of a special chambers application.

[ 2 ] Following argument on both applications, I reserved decision, advising that if I allowed the adjournment for questioning, the questioning would be under Rule 6.8 (questioning witness before hearing) so the entire transcript would be filed for use at the application, and not questioning by way of examination for discovery. Background [ 3 ] This is a dispute among close family members. Suresh Patel and Vinod Patel are brothers. Kalpana Patel is their sister. Madhuben Patel is their mother. Kalpna Patel is Vinod’s wife.

Jyotsana Patel is Suresh’s wife. [ 4 ] Before January, 1990, Madhuben Patel and her late husband (Suresh, Vinod and Kalpana’s father) owned a condominium property in Edmonton, Unit 30. [ 5 ] According to Vinod, it had been purchased by him and Kalpna for his parents in September, 1987. He deposes that they paid “the purchase price and transaction costs”. Land titles documents show Unit 30 was purchased for $38,000.00, and a mortgage was taken out at the same time as the purchase for $35,465.00. [ 6 ] On January 23, 1990, Madhuben and her husband transferred Unit 30 to Vinod and Kalpna.

The transfer recited a consideration of $45,000.00 but nothing was paid to Madhuben and her husband. There was a small mortgage of $4,000.00 left owing. [ 7 ] Vinod and Kalpna immediately mortgaged Unit 30 for $43,818.00 in favour of Central Guarantee Trust, but retained those funds.

They were in the process of purchasing a motel property and their parents had apparently agreed to help them financially. [ 8 ] Unit 30 was sold by Vinod and Kalpna on March 5, 1990 for $51,000.00. [ 9 ] On March 23, 1990, Kalpna purchased Unit 54 for $83,000.00 by paying some $39,000.00 in cash (according to the statement of adjustments) and assuming a $45,000.00 mortgage already registered against the title.

Vinod states that he intended that Unit 54 be held by Kalpna and him for Madhuben and her husband, who occupied the property. [ 10 ] In July, 1991, Kalpna transferred a joint interest in Unit 54 to Vinod, and she and Vinod remortgaged Unit 54 with a $60,000.00 mortgage in favour of Scotiabank, paying out the existing mortgage and keeping the $15,000.00 difference. [ 11 ] It would appear that Kalpna and Vinod made the mortgage payments for Unit 54 while they owned it, totaling some $24,050.00. [ 12 ] Kalpna and Vinod transferred Unit 54 to Madhuben in June, 1992, for no consideration.

After the transfer, Kalpna and Vinod made no further payments on it. The property was stated to be worth $94,000.00. [ 13 ] Vinod and Kalpna claim that when they transferred Unit 54 to Madhuben, Madhuben agreed that she was holding Unit 54 in trust for Vinod and Kalpna. [ 14 ] However, Vinod’s evidence on discovery was that he did not think that his mother was holding Unit 54 in trust for him. His evidence was that after Unit 30 had been transferred by Madhuben and his father to him and Kalpna, his father claimed that he was owed

approximately $50,000.00 and that Unit 54 was held in trust by Vinod and Kalpna for him and Madhuben. Indeed, on discovery Vinod stated that “It (Unit 54) was always for them in trust or whatever” and when asked if he was holding Unit 54 in trust for his parents, he said “Yes, you can say so.” [ 15 ] In April, 2002, Madhuben transferred Unit 54 to Suresh and Jyotsana. The consideration for the transfer was stated to be $130,000.00 but was past consideration for monies allegedly spent by Suresh for his parents’ benefit or paid to them before the transfer.

Records produced by Suresh show that $286,000.00 was transferred by Suresh to his parents’ bank account between October, 1987 and March, 2007, with $17,500.00 of that paid before April, 1994 and $58,000.00 paid after April, 2002. No funds changed hands at the time of the transfer. [ 16 ] Suresh also estimates in his affidavit of April 30, 2009 that he paid a further $140,500.00 to or for the benefit of his parents between 1987 and 1994. [ 17 ] Suresh states that when he and Jyotsana acquired title, they had no knowledge of any remaining interest in the property by Vinod and Kalpna.

Madhuben and her husband continued to live in Unit 54 until her husband’s death in 1993.

Thereafter, Madhuben stayed in the property until 2007, although she spent some time living with Suresh in England and Unit 54 was used by “family members” from time to time when Madhuben was not there. [ 18 ] In December, 2005, Vinod and Kalpna filed a caveat against Unit 54, claiming: an interest as beneficial owners pursuant to a constructive or resulting trust that arose when the caveators provided the funds for the purchase of the property on behalf of Madhuben Haribhai Patel; the registered owners holding her interest in thee property in trust for the said Madhuben Haribhai Patel... [ 19 ] A notice to take proceedings on the caveat was served on the Plaintiffs shortly after.

No proceedings were commenced, and the caveat was discharged in early May, 2006. However, the Plaintiffs commenced action against the Defendants claiming an equitable interest in it by reason of the trust they claimed, and they filed a certificate of lis pendens against title to Unit 54 on May 15, 2006, 12 days after their caveat had been discharged. The statement of claim in the 2006 action was never served on the Defendants and it expired, although the lis pendens was not discharged.

This action was commenced on June 28, 2007. [ 20 ] The Defendants learned of the certificate of lis pendens in July, 2007, around the time it was decided that Madhuben should move to a care home. When Madhuben moved into a care home, the Defendants decided to sell Unit 54. They demanded that the Plaintiffs discharge the lis pendens registered against the property. [ 21 ] The Plaintiffs discharged the May, 2006 lis pendens on November 9, 2007, but on the same day filed a new certificate of lis pendens against title based on this action. [ 22 ] Examinations for discovery were conducted on October 17, 2008.

Vinod and Kalpana were questioned; Kalpna was not. The Plaintiffs took no steps to examine Madhuben for discovery until the adjournment was sought in October, 2011. [ 23 ] As a result of their failure to answer undertakings given on the examination for discovery, Vinod’s and Kalpana’s action against the Defendants was dismissed with costs by Jeffrey J. on August 12, 2009. Kalpna’s action was not dismissed as she was not in default of any undertakings. [ 24 ] By order dated February 3, 2010, Smith J. declared that the Plaintiffs had no valid interest that could encumber unit 54.

That application was apparently not opposed. The lis pendens was maintained against Unit 54 until after Smith J.’s order. [ 25 ] When the Defendants applied for

summary judgment of Kalpna’s claim in December, 2010 Master Breitkreuz dismissed the application but directed that Kalpna post $20,000.00 as security for costs to maintain the remaining portions of the action. The

$20,000.00 has since been posted. [ 26 ] The Master commented in a memo to the file dated December 10, 2010 that “the possibility of such a claim (unjust enrichment and an accounting) being successful in the face of Madam Justice Smith’s order is virtually impossible”. [ 27 ] The Defendants claim that they have suffered loss and damage by reason of the wrongful filing of the certificate of lis pendens against title, alleging that their plan to sell the condominium in July 2007 at its then market value of $305,000.00 was thwarted by the lis pendens against title.

Unit 54's value when the lis pendens was eventually discharged was $220,000.00 and its current market value is $215,000.00 or less, and they have incurred expenses holding the property over the past four years. [ 28 ] Vinod’s affidavit of September 28, 2011 attached a “record of accounts of Kalpna Patel which evidences payments made by or on behalf of him and Kalpna on behalf of Madhuben”, totalling $25,050.00 from October 31, 1989 to May 4, 1992 to Canada Trust, and $11,270.00 from February 1, 1990 to December 1, 1991 to Central Guarantee.

The Central Guarantee payments appear to relate to a mortgage registered against Unit 30, which had been transferred to Robbi Cameron for $51,000.00 (cash of $7,500.00 and assumption of $43,500.00 mortgage) in February, 1990. [ 29 ] Vinod’s September 28, 2011 affidavit swears that the June, 1992 transfer to Madhuben was “under the same express understanding by all parties that it would be owned by my mother beneficially for Kalpna Patel and me and would be returned to us when Madhuben Haribhai Patel and Haribha Patel ceased to live there for any reason”. [ 30 ] In response to the Defendants’ knowledge of the Plaintiffs’ unregistered interest in Unit 54, or the trust acknowledged by Madhuben to the Plaintiffs, Vinod deposed that “it is my belief that due to our culture and how our family operated my mother would have advised Suresh and Jyotsana Patel of my beneficial and equitable interest in Unit 54.” Adjournment Application [ 31 ] I will deal firstly with the Plaintiffs’ request for an adjournment to question Madhuben.

This was framed as a request for an examination for discovery. Counsel for the Defendants objected, claiming that this was simply a delay tactic. [ 32 ] I rejected the Plaintiffs’ counsel’s argument under Rule 13.6(3)(r):

(3) A pleading must also include a statement of any matter on which a party intends to rely that may take another party by surprise, including, without limitation, any of the following matters: ... (

r) a provision of an enactment. that the matter should be adjourned because the Defendants had not specifically referred to s. 60 of the Land Titles Act in their notice of application. It was clear that the Defendants would rely on that provision and notice had been given of that intention approximately a year ago. Failure to specifically refer to a commonly-known and obvious statutory provision is not fatal to an application being heard.

There was no suggestion that the Plaintiffs were caught by surprise by the arguments. [ 33 ] Noting that Madhuben had moved to a care home in 2007 according to the evidence, I enquired as to whether she was capable of being questioned in any meaningful way. Vinod’s September 28, 2011 affidavit alleges that he has had almost no contact with

Madhuben because Suresh has made it impossible for them to have contact with her since 2002; Suresh’s counsel advised that his information from Suresh is that Madhuben has Alzheimer’s or dementia and does not recognize Suresh most of the time. [ 34 ] There is no evidence before me of Madhuben’s capacity to be examined; I did not adjourn the application for evidence one way or the other to be provided. [ 35 ] It is of course unclear what Madhuben might say, if she is competent to be questioned.

The Defendants’ counsel argues that it doesn’t really matter, as knowledge of the “trust” as alleged in Vinod’s affidavit or Madhuben having told Suresh and Jyotsana of the trust before they acquired the property in 2002 does not satisfy the tests for defeating the indefeasibility of title provisions in the Land Titles Act , R.S.A. 2000, c.

L-4, referring specifically to s. 203(3) : The knowledge of the person that any trust or interest that is not registered by instrument or caveat is in existence shall not of itself be imputed as fraud. [ 36 ] Madhuben has provided no affidavit evidence in the matter so it is speculation as to what she might say about the trust and discussions with Suresh and Jyotsana. The evidence on point is the denial of knowledge by Suresh as to his and Jyotsana’s awareness and Vinod’s allegation of cultural expectations. [ 37 ] Generally, there is a right to question a party to an action: see 5.17 and its predecessors.

There is also a right to serve an appointment to be questioned as a witness for the purpose of a hearing under Rule 6.8 and its predecessors. The Courts in Alberta have been slow to interfere with these “rights”, although Rule 5.19(

b) permits the court to “cancel an appointment for questioning that the Court considers unnecessary, improper or vexatious”. Abuse of process and the bar on “fishing” have been recognized as reasons to limit or bar use of Rule 266 (R. 5.17's predecessor) rules: Robertson v.

Wasylyshen , 2003 ABCA 279 . [ 38 ] The foundational rules (R. 1.2) dealing with fairness, justice, efficiency, economy and proportionality, must also be factored into any application. [ 39 ] Here, at this late stage, after the Plaintiffs’ claims have been dismissed (but for Kalpna’s claim for unjust enrichment and an accounting), more than four years after the action was commenced and more than 19 years after the trust was alleged to have been created, it is an abuse of process to seek to question Madhuben, regardless of her mental state.

The Plaintiffs have, according to Vinod’s evidence, had almost no contact with Madhuben since 2002. She was sued by them in 2007, apparently while still living in Unit 54 and before she moved to a care home. [ 40 ] The Defendants’ special chambers brief was filed on September 16, 2011, and it was not until after the Plaintiffs’ brief was filed on September 28, 2011 and a few days before the application that the request to question Madhuben arose. [ 41 ] In these circumstances, it is too late for the Plaintiffs to try and bolster their case by a fishing expedition of Vinod’s elderly mother.

They have had more than four years to attempt to learn what she will say of the trust and her discussions with Suresh and Jyotsana. A request to do so at the 11 ½ hour suggests that this is a delay tactic, or a desperate move, or both. [ 42 ] Fairness and justice apply to all parties, not merely the party seeking a procedure under the Rules of Court. No appointments were served in relation to any proposed questioning.

While an adjournment could be granted on terms (as was suggested by counsel for the Plaintiffs) such as thrown away costs, I must still consider 1.2(2)(b): to facilitate the quickest means of resolving a claim at the least expense, and 1.2(3)(c): to refrain from filing applications or taking proceedings that do not further the purpose and intention of these rules. [ 43 ] Permitting a party to avail him or herself of every step contemplated by the rules where there is no likelihood that the outcome of such steps will ultimately assist in resolving the matters, or where the potential benefits are disproportional to the efficiency and expense involved, is contrary to the purpose and intent of the rules.

[44] There are undoubtedly many situations where last-minute questioning may be appropriate, and where marginal steps may beallowed to proceed on terms such as costs. But this is not one of those appropriate cases. [45] The Plaintiffs’ application for an adjournment to question Madhuben is dismissed. That leaves me to decide the Defendants’application on the merits, and on the evidence before me.

Summary Judgment Application [46] The Defendants seek, at this stage, only a determination that the Plaintiffs’ lis pendens was filed or maintained withoutreasonable cause.

If that issue is determined in their favour, it has been agreed between the parties that there will be an assessment ofdamages at a later date. [47] It is clear that to be successful in recovering damages as a result of the wrongful filing of a certificate of lis pendens, theclaimant must not only succeed in defeating the claimed interest in land, but must prove that the lis pendens was filed without reasonablecause: s. 149 of the Land Titles Act: 149 A person filing or continuing a certificate of lis pendens without reasonable cause is liable to make compensation to any person whomay have sustained damage by that filing or continuation. [48] The Defendants cite Hennesey Cup Developments Ltd. v.

Western Concord Manufacturing Ltd., 2000 ABQB 693, Bergmanv. Bergman, 2004 ABCA 194 and Allarco Group Ltd. v. Suncor Inc. Resources Group, Oil Sands Div., 1987 CarswellAlta 144 (C.A.)in relation to the issue of “without reasonable cause”. [49] The Plaintiffs cite Holt Renfrew & Co. v. Henry Singer Ltd., 1982 ABCA 135 , 1982 CarswellAlta 92 (C.A.),arguing that the court will have to make credibility assessments based on conflicting evidence which will require viva voce evidence at atrial, making

summary judgment inappropriate. They also refer to Pioneer Exploration (Trustee of) v. Euro-Am Pacific EnterprisesLtd., 2003 ABCA 298 for the appropriate test for

summary judgment placing the evidentiary burden of proving no triable issue on theapplicant, leaving the respondent to only raise doubt to avoid

summary judgment. See also Kwan v. Superfly, 2011 ABQB 343. [50] A good statement of the law relating to defeating the indefeasibility of title because of “Land Titles fraud” is found in AllarcoGroup at para. 26: I need not refer to the numerous cases that have held that fraud means actual fraud. In Holt Renfrew & Co. v. Henry Singer Ltd.; HenrySinger Ltd. v. Holt Renfrew & Co.; Holt Renfrew & Co. v. Thompson & Dynes Ltd., 1982 ABCA 135 , 20 Alta.

L.R. (2d) 97at 107, [1982] 4 W.W.R. 481, 135 D.L.R. (3d) 391, 37 A.R. 90 (C.A.), McDermid J.A., after referring to a number of cases, said: In my opinion those cases read in the context of the facts do not support the proposition that knowledge of the existence of anunregistered interest, coupled with knowledge that the unregistered interest will be defeated by concluding the transaction, is sufficient toconstitute fraud.

There must be an additional element. [51] In that case, the Court of Appeal cited 3 earlier decisions to determine the “additional element”: Scandia Meat Market Ltd. v.KDS Investment Co., [1977] W.W.R. 542 (S.C.T.D.), Loke Yew v. Pert Swettenham Rubber Co., [1913] A.C. 491 (P.C.) and Kaup v.Imperial Oil Ltd., (SCC), [1962] S.C.R. 170. [52] In Scandia, the additional element was found because the purchaser had knowledge of the unregistered interest and agreed asto certain facts with the vendor. It was found to be Land Titles fraud for the purchaser to later deny the existence of those facts.

[ 53 ] In Loke Yew , the purchaser had given an undertaking to the vendor that it recognized and would deal with the third party’s unregistered interest in a portion of the lands.

The Privy Council found fraud on the purchaser’s part when it attempted to defeat the third party’s interest. [ 54 ] In Kaup , volunteers were not sheltered by the indefeasibility provisions, and the register could be rectified. [ 55 ] After reviewing these cases, the Court of Appeal concluded that the purchaser could not rely on the indefeasibility provisions because it had agreed to acquire the assets and liabilities of the vendor, including certain leases and the unregistered equitable interest of the plaintiff.

The additional element was found by the purchaser seeking to repudiate its undertaking to acquire the property subject to the plaintiff’s unregistered interest. [ 56 ] In Holt Renfrew , the Court of Appeal found the “additional element” to be present. There, while the purchaser knew of the unregistered interest, it made its offer to purchase subject only to registered interests.

Nevertheless, its solicitor had previously represented to the vendor that the purchaser was prepared to acquire the land subject to the lease, and had not corrected or withdrawn that representation. [ 57 ] Here, it is clear that there is nothing in the evidence so far that establishes “something more”, let alone that the Defendants even knew about the Plaintiffs’ claim of an unregistered interest before they acquired title.

I do not see that the Defendants were mere volunteers (as in Kaup ) as the uncontradicted evidence establishes that they had advanced or given Suresh’s parents significantly more than the $130,000.00 reflected as consideration for the transfer.

Past consideration does not make them volunteers. [ 58 ] Testing the Plaintiffs’ claims of an unregistered interest, whether some sort of equitable mortgage (which has never been argued) or that Madhuben was trustee of the property for them, against the facts gives no support to the claim of a trust, whether constructive or resulting. [ 59 ] A resulting trust might be presumed from the transfer of Unit 54 to Madhuben, as there is no presumption of advancement from a child to a parent. But that transaction cannot be looked at in isolation.

The relevant chronology includes Unit 30. [ 60 ] In 1989, Madhuben and her husband owned Unit 30, subject to a mortgage which had $4,000.00 owed against it. They transferred Unit 30 to Vinod and Kalpna in January, 1990 for a stated consideration of $45,000.00 but actually received nothing, although they apparently continued to live there. Vinod and Kalpna immediately mortgaged the property for approximately $44,000.00. I assume that the existing mortgage was paid out, so they may have netted some $40,000.00. Vinod and Kalpna apparently made the mortgage payments as long as they owned Unit 30.

They then sold Unit 30 a year later for $51,000.00 and received $7,500.00 in cash as the purchaser assumed the mortgage. [ 61 ] While Vinod’s affidavit evidence was that he and Kalpna purchased Unit 30 for his parents in 1987, the difference between the purchase price and the new mortgage is less than $5,000.00.

There is no evidence that Vinod or Kalpna or Kalpana made any mortgage payments from the time of the purchase until they took title themselves in early 1990. [ 62 ] In March, 1990, coincidentally with the sale of Unit 30, Kalpna purchased Unit 54 for $83,000.00, assuming a $45,000.00 mortgage and paying some $39,000.00 in cash (presumably from the sale of Unit 30). So Vinod and Kalpna had netted some $47,500.00 out of Unit 30, but put $39,000.00 of that into Unit 54. That still left them with a surplus of approximately $8,500.00.

Even if they had paid the initial down payment on Unit 30, they were still ahead financially. Kalpna made the mortgage payments on the assumed mortgage until the property was transferred to Madhuben in June, 1992, although they had the benefit of the $40,000.00 mortgage proceeds from Unit 30 for a year or so, and continued to benefit from the cash surplus from its sale. They were left, however, with making mortgage payments on Unit 54 while Vinod’s parents lived there. [ 63 ] From Madhuben and her husband’s viewpoint, they started with Unit 30, with $35,405.00 owed against it.

The down payment and cash to close and closing costs may have come from Vinod and Kalpna, although there is no documentation supporting that. They then transferred all of their interest in Unit 30 to Vinod and Kalpna and received nothing. A little more than a year later, they were living in Kalpna’s Unit 54, which had $39,000.00 cash invested in it, but a $45,000.00 mortgage against it.

[ 64 ] Then Kalpna and Vinod remortgaged Unit 54, netting approximately $15,000.00 from the new mortgage. The property was then transferred to Madhuben describing a value of $94,000.00, but with $60,000.00 owed against it. [ 65 ] Put another way, by June, 1992, Madhuben had equity in Unit 54 of perhaps $34,000.00, having had approximately $40,000.00 equity in Unit 30 two and a half years earlier.

Vinod and Kalpna had received approximately $23,500.00 out of mortgage and sale proceeds over and above the cash they had invested in Unit 54. [ 66 ] The payments Vinod claims to have made on behalf of his parents appear to be mortgage payments. The amounts in his affidavit of September 28, 2011 do not make any sense. He may have made payments on Unit 30 from January, 1990 until it was sold in March, 1990. Giving his list of payments the most generous

interpretation, that he started making mortgage payments on October 10, 1989 at $370.00 bi-weekly, his payments on Unit 30 would total $4,070.00 to the end of March, 1990. [ 67 ] Payments on Unit 54, at $490.00 per month, totaled $11,270.00 from February 1, 1990 to December 1, 1991. Even though not shown on the “reconciliation” provided by Vinod, payments at that rate to June, 1992 would add another $2,940.00. [ 68 ] I make these calculations noting that the payments in the reconciliations do not line up with the mortgage documentation or sale dates. But I believe my calculations are favourable to the Plaintiffs.

The reconciliations in Vinod’s affidavit reference mortgage payments. The Plaintiffs have had 19 years to come up with documentation and details of other payments, and these reconciliations are the best they could provide. [ 69 ] All tolled, then, the Plaintiffs may have made payments on mortgages for the two properties for the relevant times of $18,280.00. Before transferring Unit 54 to Madhuben, Vinod and Kalpna appear to have essentially reimbursed themselves for the payments that they had made to that time, by remortgaging Unit 54 and keeping $15,000.00. On a cash basis, they are still $5,000.00 ahead.

That might equate to an initial investment in Unit 30, so at worst, they are about even. [ 70 ] There is no evidence of any contributions or payments made by Kalpana to or for her parents. [ 71 ] It is also relevant that Patel senior was pressing Vinod for payment of some $50,000.00 in 2002, and claimed in correspondence that Unit 54 was held in trust for him and Madhuben. [ 72 ] No credible evidence has been presented by or on behalf of Vinod, Kalpna or Kalpana to document the existence of any debt owed to them by Madhuben or her husband.

The only credible evidence demonstrates that Vinod and Kalpna benefitted more from the condominium transactions than they cost them. [ 73 ] While it could perhaps have been arguable that there was a presumption of advancement when Madhuben and her husband transferred Unit 30 to Vinod and Kalpna, that suggestion was negated by Vinod on discovery when he acknowledged that Unit 54 was held in trust for his parents.

Any presumption of advancement would appear to have been negated by the transfer to Madhuben in 2002. [ 74 ] From the evidence before me, it is likely Vinod and Kalpna who were indebted to Madhuben and her husband at that time, not the other way around. [ 75 ] I can find nothing in the evidence to support a suggestion, let alone establish, that the Plaintiffs had any reasonable basis on which to file a caveat in 2005, sue in 2006 and file a certificate of lis pendens , and then sue again in 2007 and place another certificate of lis pendens against title.

No doubt children frequently help their parents financially without documenting the transactions. Vinod may have helped his parents much more than the documents show, but that is of little help to him.

[ 76 ] It seems to me that the best the Plaintiffs could hope for in questioning of Madhuben is that she might acknowledge some sort of indebtedness to them or some trust arrangement.

But if she communicated any of that to Suresh and Jyotsana before they took title from her, why would they pay off a mortgage and have the property free and clear, knowing that Vinod and Kalpna (and Kalpana) had a claim that the property was held in trust for them? [ 77 ] Even assuming knowledge of some unregistered interest of Vinod, Kalpna and Kalpana and taking title knowing that would defeat the unregistered interest, that does not establish the “something more” required by Holt Renfrew and Allarco . [ 78 ] To prove the something more, the Plaintiffs would have to show that there was a debt owed to them in some fashion, or that Madhuben was holding the property in trust for them, that the Defendants knew of the debt or the trust, plus more .

Even if Madhuben confirmed that she held the property in trust and had communicated that to the Defendants, and Madhuben’s evidence was preferred over the Defendants’, the additional element is not demonstrated. The best the Plaintiffs hope for is that Madhuben might confirm the trust, confirm that she told the Defendants about it, and then that they can discover something else that will help them establish Land Titles fraud. That speculation, after the litigation has proceeded for more than four years, is not enough to defeat

summary judgment. [ 79 ] Hennessy Cup Developments Ltd. v. Western Concord Manufacturing Ltd. , 2000 ABQB 693 , deals with the issue of reasonable grounds to conclude that there is an interest in land to be claimed by a caveator (similar to the test for filing a certificate of lis pendens ). Ritter J. (as he then was) applied both a subjective and objective test for determining reasonable cause at the time the caveat was filed. He concluded at para. 22: I am satisfied that at the time it filed the Caveat, Hennessey should have arrived at one of two conclusions.

First, the Agent was wrong or misrepresenting the facts when it advised Hennessey that the $85,000.00 Offer had been accepted. If it came to this conclusion, it would have been unreasonable for it to file its Caveat. The second conclusion it might reasonably have arrived at was that the $85,000.00 Offer was accepted and never matched by Western to the point of completion of a sale. If it arrived at that conclusion, it was not unreasonable for it to file the Caveat.

In fact, if it had been right in this conclusion, its Caveat would have been both reasonable and enforceable. [ 80 ] In Bergman , the Court of Appeal held that damages could flow from unreasonable continuation of a lis pendens , although there found that no damages had been suffered. Nominal damages were awarded. Test for

Summary Judgment [ 81 ] Counsel for both parties referred to Kwan v. Superfly Inc. , 2011 ABQB 343 for the test for

summary judgment under the new Rules of Court . In Kwan , Marceau J. concluded that R. 7.3 “operates in the same manner and follows the same legal principles as its precursor”, citing several other recent judgments to the same effect. He held at paras. 21 - 23: 21 Two critical principles that govern

summary dismissal can be gleaned from the decision of the Supreme Court of Canada in Papaschase Indian Band No. 136 v. Canada (Attorney General), 2008 SCC 14 , [2008] 1 S.C.R. 372. At para. 10 the court wrote: ... The

summary judgment rule serves an important purpose in the civil litigation system. It prevents claims or defences that have no chance of success from proceeding to trial. Trying unmeritorious claims imposes a heavy price in terms of time and cost on the parties to the litigation and on the justice system. It is essential to the proper operation of the justice system and beneficial to the parties that claims that have no chance of success be weeded out at an early stage. Conversely, it is essential to justice that claims disclosing real issues that may be successful proceed to trial. [Emphasis added.] 22 And further at para. 19: ... A

summary judgment motion cannot be defeated by vague references to what may be adduced in the future, if the matter is allowed to proceed. To accept that proposition would be to undermine the rationale of the rule. A motion for

summary judgment must be judged on the basis of the pleadings and the materials actually before the judge, not on suppositions about what might be pleaded or proved in the

future. [Emphasis added.] 23 I agree with the proposition that in general the test for

summary dismissal is that it must be "plain and obvious that the action cannotsucceed", the action is "bound to fail" or the action has "no prospect of success": Boudreault v. Barrett, 1998 ABCA 232 at para. 9, 219A.R. 67; De Shazo v. Nations Energy Co., 2005 ABCA 241 at para. 17, 367 A.R. 267. The burden of proof required in

summarydismissal applications was set out by our Court of Appeal in Murphy Oil Co. v. Predator Corp., 2004 ABQB 688 at para. 17, 365 A.R.326, affirmed 2006 ABCA 69 at paras. 27-28, 384 A.R. 251. The Court of Appeal agreed with scheme provided at para. 17 of thechambers decision: 17 In

summary, the relevant principles are these: 1. A party bringing a motion for

summary judgment bears the legal onus of showing no genuine issue for trial. 2. There is no onus on the responding party to prove a genuine issue for trial. 3. If the applicant for

summary judgment discharges his/her onus on the material filed, a respondent who does not resist theapplication through admissible evidence risks judgment against him/her. That is an evidentiary burden. 4. There is no obligation on the respondent to file material. He/she can accept the risk described above. If the applicant fails todischarge his/her legal onus, the application will fail. 5. More commonly a respondent will provide admissible evidence opposing the motion.

In that event, the court will consider all theevidence to determine whether the applicant has shown that there is no genuine issue for trial. [82] Coincidentally, that case also dealt with the alleged wrongful filing of a lis pendens and Marceau J. held at para 46 that maliceneed not be proved, relying on Hennessy. [83] The Plaintiffs cite Scandinavian Bank v. Shuman, (AB CA), [1917] 3 W.W.R. 745 (S.C.A.D.) and 620126Alberta Ltd. v. Dominion International Inc., 2004 ABQB 889.

There, it was held at para. 4 that it was not incumbent on the defendantto “prove every fact which upon the trial he will have to establish to save himself from judgment. Particularly is this the case when, ashere, the evidence of some of the material facts can be had only from others”. There, the defendant’s evidence for the purposes of themotion satisfied the Court that there was a triable issue. [84] In 620126 Alberta, Clarke J. dealt with the use of hearsay on

summary judgment motions, noting that

summary judgmentmotions are not interlocutory, and hearsay should not be allowed. The Plaintiffs object to hearsay and argue that the Defendants have notmade out their case that there is no genuine issue for trial because of hearsay in Suresh’s affidavit. [85] I agree that Suresh cannot speak on behalf of Jyotsana. There is no evidence from her on the record. But there is also noevidence that suggests that she was aware of Vinod’s and Kalpna’s claims before she and Suresh took title to Unit 54.

I do not see thatthe Defendants’ failure to file direct evidence from Jyotsana casts doubt on the validity of the Defendants’ claim. Suresh’s affidavit dealswith all of the essential points necessary to support their claim for

summary judgment. [86] Essentially, the Plaintiffs argue that there is a triable issue about whether they had a reasonable basis to file and maintain thelis pendens. There is no evidence as to what Madhuben may say. If she acknowledges that there was a trust, or if the Plaintiffs’ evidencethat their culture and custom establishes that Suresh and Jyotsana knew or ought to have known that the Plaintiffs were owed money andthat Madhuben would have been holding Unit 54 in trust for her eldest son Vinod, the Plaintiffs may have been reasonable in filing the lispendens.

This assumes that the trier of fact rejects Suresh’s evidence that they had no knowledge of any debt or trust. [87] As to the “something more” requirement to support their lawsuit, Plaintiffs’ counsel candidly acknowledges that at present,there is nothing in the evidence to establish anything more than knowledge. However, they hope to establish that through the evidence ofMadhuben.

[ 88 ] As held by Marceau in Kwan ,

summary judgment is not defeated by “vague references to what may be adduced in the future, if the matter is allowed to proceed” (at para. 22). [ 89 ] The best that can be said is that the Plaintiffs have pursued their action and maintained their lis pendens subjectively believing that they had a good claim against the Defendants, and that their claim amounted to an interest in Unit 54. As to being able to prove that claim, they had the hope that they would be able to find some evidence to support Land Titles fraud.

Having failed to do so to date, their hopes are now placed in finding something in Madhuben’s evidence that might help them. [ 90 ] There is no evidence presently, after four years of litigation, giving any support to “something more” than knowledge. And indeed, there is no direct evidence to refute Suresh’s denial of knowledge.

References to assumptions and cultural expectations fall far short of the sort of knowledge that must be found to establish Land Titles fraud. [ 91 ] From the objective basis of determining whether the lis pendens was reasonably filed and maintained, I see no reasonable basis for Vinod to believe that he was owed anything by his parents in relation to Unit 54, or that the property was held in trust for him. His recent affidavit evidence contradicts, without explanation, his discovery evidence that he and Kalpna held Unit 54 in trust for his parents.

He may have had expectations as to his entitlements being the eldest son. But he has been unable to establish that any debt was owed to him by his parents, and he has not explained in any way the transactions relating to Unit 30. He has not put forward any evidence to refute that he and Kalpna benefitted from both Unit 30 and Unit 54 by way of receiving mortgage proceeds and sale proceeds for Unit 30 and mortgage proceeds from Unit 54.

Those proceeds offset any payments made by him or Kalpna for his parents’ benefit, at least any payments supported by credible evidence. [ 92 ] Any argument (apparently raised for the first time at the application) that the transfer from Madhuben to Suresh and Jyotsana was a fraudulent preference, preferring the debt owed to them by the parents over the debt owed to Vinod and Kalpna by the parents is fully answered by the fact that the Plaintiffs have not established that there was anything owed to them by the parents. [ 93 ] From the evidence before me, I am satisfied on a balance of probabilities that Vinod had no reasonable basis to assert a claim for an interest in Unit 54.

No additional evidence has been submitted on behalf of either Kalpna or Kalpana. There is nothing from either of them to support that they had any reasonable basis to assert claims for an interest in Unit 54. Even if they were simply following Vinod and relying on him, I do not see that any such reliance helps them. And even if it did, when Vinod testified on discovery that he and Kalpna were holding Unit 54 in trust for his parents, any semblance of a claim against the lands evaporated.

Following his evidence, there was no reasonable basis to maintain the lis pendens . [ 94 ] The objective elements for filing the certificate of lis pendens are to be considered as of the date it was filed. There is no support in the evidence for a reasonable basis to assert any claim for an interest in Unit 54 as at the time the lis pendens was filed. That basis must exist at the time of filing. There is no free period between the filing date and examinations for discovery or questioning.

One cannot encumber another’s land on the hopes that something will emerge in record production or questioning to support the claim. Conclusion [ 95 ] The Plaintiffs’ application for an adjournment is dismissed. [ 96 ] The Defendants’ application for

summary judgment against the Plaintiffs is granted. The Plaintiffs have raised no genuine issue to be tried, and the Defendants have established on a balance of probabilities that the Plaintiffs had no reasonable basis to file or maintain the lis pendens . [ 97 ] The Defendants are entitled to proceed to assess damages against the Plaintiffs. They are entitled to the costs of this application, to be determined by the judge who assesses damages.

Heard on the 07 th day of October, 2011. Dated at the City of Edmonton, Alberta this 31 st day of October, 2011. R.A. Graesser J.C.Q.B.A. Appearances: Philip A. du Heaume Bryan & Company LLP for the Plaintiffs Jonathan Hillson & Andrew Harasymiw Fraser Milner Casgrain LLP for the Defendants