Glover v Kumar, 2012 ABQB 516

Court of Queen ’ s Bench of Alberta Citation: Glover v Kumar, 2012 ABQB 516 Date: 20120815 Docket: 1101 16330 Registry: Calgary Between: Ken Glover Applicant - and - Kevin Kumar Respondent Editorial Notice: On behalf of the Government of Alberta personal data identifiers have been removed from this unofficial electronic version of the judgment. _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice G.C. Hawco _______________________________________________________ [ 1 ] This is an application by Ken Glover ( “ the Applicant ” ) for a declaration that the Respondent, Kevin Kumar, has no interest in the lands legally described as:

Plan 9210[...] Block 3 Lot 8 Excepting thereout all mines and minerals [ 2 ] In addition, the Applicant seeks an order directing the Registrar of the Alberta Land Registration District to reissue title to the land in the names of Ken Glover and Sandra Lachance pursuant to s. 190 of the Land Titles Act , RSA 2000, c L-4. [ 3 ] The Applicant also seeks an order directing the Registrar of the Alberta Land Registration District to discharge the following encumbrances: i. Writ registered as Instrument Number 071 [...] 797 ii. Notice of Intention to sell registered as Instrument Number 071 [...] 552 iii.

Writ registered as Instrument Number 111 [...] 324 (CRA) [ 4 ] The Applicant submits that Mr. Kumar does not have an interest in the lands. Mr. Kumar could not be located and was served substitutionally. The other Respondents are not named in the Court documents. However, they are Katherine Twamley and Leslie O ’ Brien. They are the people who registered the Writ as Instrument Number 071 [...] 797. They have not been named as Respondents in the original application but have been served through their counsel because they have filed a Writ against the property in the amount of $169,241 on June 19, 2007.

That debt was incurred by Mr. Kumar. [ 5 ] The Canada Revenue Agency has also filed a Writ, shown as Instrument Number 111 [...] 324 for money owing to it by Mr. Kumar. I understand from counsel that the CRA take no position in Mr. Glover ’ s application as their claim is not against Mr. Glover, but is against Mr. Kumar. [ 6 ] I note that the briefs which were filed in these proceedings were filed under court file number 1101-03193. That was a mortgage foreclosure action by Scotia Mortgage Corporation against Mr. Kumar, Mr. Glover, Ms. Lachance, as well as her estate, and Mr. Joe Ramlal.

That action is on-going and has been stayed pending Mr. Glover ’ s application in these proceedings. It took some time for me to locate file number 1101-16330 as no one had referred to it and everyone had assumed, in the application before me, that we were proceeding, for some reason, under the mortgage foreclosure file. In any event, the parties are as indicated. Facts [ 7 ] In 1999, Sandra Lachance and the Applicant purchased a residence on Citadel Hills Circle NW in Calgary, the lands legally described above. [ 8 ] In early 2004, the Applicant and Ms.

Lachance encountered financial difficulties in that the prime mortgagee was going to foreclose and they needed money. They spoke to a neighbour who recommended that they contact Kevin Kumar. [ 9 ] The Applicant and Ms. Lachance met with Mr. Kumar who advised that he could assist with refinancing. Mr. Kumar suggested that he would purchase the lands from them and place a new mortgage for a higher amount to payout Prime Mortgage and to pay for his own fee in assisting them. [ 10 ] Mr. Kumar advised the Applicant and Ms. Lachance that, in the interim, they could lease the house from him and that when

the financial arrangements were complete, he would sell the house back to them for $1.00 and the assumption of the new mortgage. [ 11 ] The Applicant and Ms. Lachance were not particularly sophisticated borrowers. They were presented with a Transfer of Land, which they executed. Mr. Kumar also provided the Applicant and Ms. Lachance with his banking information and instructed them to send money for the mortgage payments to him so that he could make the new mortgage payments. They did so. [ 12 ] The prime mortgage was paid out.

Scotia Mortgage Corporation placed a new mortgage on the lands in the amount of $235,311. Subsequently, in or about June 2004, Mr. Kumar presented the Applicant and Ms. Lachance with a Residential Real Estate Purchase Contract. The seller was listed as Joe Ramlal and the purchasers were the Applicant and Ms. Lachance only. The purchase price was $227,966. [ 13 ] The Applicant and Ms. Lachance had not heard of Joe Ramlal. Mr. Kumar advised them to execute the Real Estate Purchase Contract and said that he would attend to all of the legalities to have the property transferred back to the Applicant and Ms.

Lachance. [ 14 ] The Applicant and Ms. Lachance were to make a $1,000 deposit and the transaction was scheduled to close on June 30, 2004. However, this did not occur as scheduled. In fact, the transfer of land occurred a few months later, in September 2004. In January 2005, Scotia Mortgage Corporation registered a Caveat pursuant to a Mortgage Amending Agreement. Scotia Mortgage Corporation then contacted the Applicant and Ms. Lachance and asked them to sign the mortgage assumption papers. [ 15 ] When the Applicant and Ms.

Lachance attended at Scotia Mortgage Corporation, they discovered that the land had been registered in their names as well as in the name of Mr. Kumar. They were also advised that the mortgage had been two months in arrears even though they had given Mr. Kumar money to make mortgage payments. They then realized that Mr. Kumar had not done so. [ 16 ] Subsequently, the Applicant and Ms. Lachance obtained copies of the sale documents and discovered that the Affidavit of Transferee was executed by Mr. Kumar. They attempted to contact Mr. Kumar but were unable to do so and have not heard from him since. [ 17 ] Mr.

Kumar has never contributed in any way to the lands. [ 18 ] In or about 2006, creditors of Mr. Kumar, Ms. Twamley and Mr. O ’ Brien, began registering Writs against Mr. Kumar ’ s alleged interest in the lands. [ 19 ] In or about June 2007, Ms. Twamley and Mr. O ’ Brien registered a Writ against the lands registered in the name of the Applicant, Ms. Lachance and Mr. Kumar in the amount of $169,241 plus costs. The Writ was registered as Instrument Number 071 [...] 797. [ 20 ] Sandra Lachance passed away in 2008. Positions of the Parties [ 21 ] The Applicant submits that the fact that Mr.

Kumar is listed as one of the registered owners of the land is not conclusive evidence that he has an interest in land. He argues that the fact that an individual is a registered owner of a parcel of land does not always result in a legal or beneficial interest in land. Mr. Kumar became a registered owner of the lands by mistake or through fraud. [ 22 ] The Applicant argues that Mr. Kumar was to take care of all the details required to place a new mortgage on the lands and transfer the lands back to the Applicant and Ms. Lachance. Mr. Kumar was not a party to the executed contract between Mr.

Ramlal and the Applicant and Ms. Lachance. However, Mr. Kumar arranged for the transfer, signed the Affidavit of Transferee, and a one-third

interest was registered in his name. The Applicant notes that neither he nor Ms. Lachance were present when the conveyancing documents were signed. In the circumstances and in light of the evidence, he argues that it would be fair and equitable for this Court to determine that Mr. Kumar has no interest in the lands. [ 23 ] The Applicant further submits that other than the current state of the register, the rest of the evidence before the Court supports the fact that Mr.

Kumar has no bona fide interest in the lands and that it would be just and equitable in the circumstances to grant an order directing the Registrar to issue title to the lands in the names of both the Applicant and Ms. Lachance. [ 24 ] Alternatively, Mr. Glover argues that Mr. Kumar has no beneficial interest in the land and that he holds his interest in trust for the Applicant and Ms. Lachance by virtue of a resulting or constructive trust. [ 25 ] The Applicant submits that a trustee does not acquire a beneficial interest in lands simply by holding lands in trust for a beneficiary.

This remains the case notwithstanding the fact that a trustee is deemed to be the absolute and beneficial owner of the lands for the purposes of the Land Titles Act . As such, the fact that Mr. Kumar is a registered owner of lands is not conclusive evidence of a legal or beneficial interest in land. [ 26 ] The Applicant notes that Mr. Kumar has never lived in the property located on the lands, nor has he made any payments towards the mortgage or contributed in any other way to the lands. The Applicant submits that as such, Mr. Kumar holds his interest in the lands in trust for the Applicant and Ms.

Lachance by virtue of an express trust. [ 27 ] The Applicant adds that where the circumstances reveal that there is a common intention that the holder of legal title is not intended to take it beneficially, the law will imply a resulting trust. [ 28 ] The Applicant concedes that the creation of an oral trust without any written agreement requires clear proof under the Statute of Frauds . The Applicant ’ s affidavit indicates that Mr. Kumar was not to have retained any interest in the land when the new mortgage was placed and the lands transferred back. Further, Mr.

Kumar has never asserted an interest in the lands or even communicated with the Applicant since he became one of the registered owners. [ 29 ] Therefore, the Applicant submits that the conduct of the parties in the circumstances supports the conclusion that Mr. Kumar has no interest in the lands and justifies the imposition of a resulting trust in favour of the Applicant and Ms. Lachance. [ 30 ] Alternatively, the Applicant submits that Mr. Kumar holds his interest in the lands in trust for the Applicant and Ms. Lachance by virtue of a constructive trust.

The Applicant relies on the fact that a court can impose a constructive trust where there has been an unjust or wrongful enrichment. [ 31 ] By virtue of his ownership in the lands, Mr. Kumar has been wrongfully enriched to the corresponding deprivation of the Applicant and Ms. Lachance. The Applicant submits further that in light of the facts of this case, there is no juristic reason for Mr. Kumar ’ s enrichment. [ 32 ] Since Mr. Kumar does not have an interest in the lands and that a writ can only attach to Mr. Kumar ’ s exigible lands, no writ can attach in this case.

The writ registered on the title to the lands as Instrument Number 071 [...] 797 should therefore be discharged. [ 33 ] The Respondents Twamley and O ’ Brien oppose the application of Mr. Glover. They say that the Applicant and Ms. Lachance were represented by counsel when they transferred their property to Mr. Ramlal, and that Mr. Ramlal could place a mortgage on the property and sell it to whomever he desired. [ 34 ] The Respondents state that in order to mortgage the property, Mr.

Ramlal represented to the bank (and as set out in the mortgage documents) that he was the lawful owner of the property and that there was no limitation or restrictions on his title. The Applicant and Ms. Lachance must have intended to deceive the bank with respect to the lawful ownership of the property. The

Respondents argue that the Applicant and Ms. Lachance were not creating a trust of any description since to do so would amount tomortgage fraud. If they did intend to deceive the mortgage company, they ought not now be entitled to come before the Court seekingequity. Decision [35] I am satisfied that Mr. Kumar has no actual interest in the lands. Unfortunately, he was not able to be contacted and so has notbeen examined. Apparently, Mr. Ramlal was not examined either. [36] Although the Applicant and Ms.

Lachance may have been, deliberately or otherwise, engaged in conduct meant to deceive themortgage company, the mortgage company has not taken any issue. The Respondents Twamley and O’Brien seek to put forward theargument that because there was an intention to defraud the mortgage company, there can be no resulting trust created. [37] This appears to be somewhat similar to the situation in Luitenko v McAleer, 2009 ABCA 369, on appeal from a decision ofJustice Clark. In that case, the Plaintiff had wanted to purchase a property, but did not qualify for a mortgage.

She approached theDefendants who assisted her in obtaining a mortgage through a broker. The property was registered in the names of the Defendants. ThePlaintiff made the mortgage payments and lived in the house.

Some two years later, the Appellants asked her to vacate the property. [38] Justice Clark concluded that the parties were engaged in a process that he construed to be tantamount to mortgage fraud.Notwithstanding this comment, he accepted the Plaintiff’s evidence and found that the behaviour of the Defendants was unconscionableand that the Plaintiff was entitled to have the title of the property transferred into her name, notwithstanding the mortgage fraud. As hesaid, neither the Plaintiff nor the Defendant came to the court with clean hands, but that matter was not before him. [39] The matter went to appeal.

On appeal, the Court said that the trial judge properly concluded that both parties had engaged inmortgage fraud. Notwithstanding this, they held that the trial judge was bound to decide who had the equitable interest in the propertyand concluded that the property in question was entirely held on a resulting trust by the Defendants for the Plaintiff. As stated by thecourt at paragraph 8: We are all of the view that finding a resulting trust would have been appropriate in this case. See Rathwell v. Rathwell, (SCC), [1978] 2 S.C.R. 436; Bergman v. Bergman, 2002 ABQB 493 and Novakovic v.

Kapunsniak, 2008 ONCA 381 for theproposition that where common intention is presumed or inferred by the circumstances, a resulting trust will be implied as a matter oflaw. The finding of common intention in the instant case is well supported by the factual underpinnings. It is clear that a purchase wasmade by Luitenko in the name of the McAleers. Although the mortgage was taken out by the McAleers, the person who advanced thepurchase monies (apart from the mortgage company) was Luitenko. The resulting trust accrues to the benefit of Luitenko. See Dyer v.Dyer (1788), 2 Cox Eq. Cas. 92, 30 E.R. 42 (Eng. Ch.

Div.) at 43 where the court stated: “The clear result of all the cases, without a single exception, is that the trust of a legal estate, whether freehold, copyhold, or leasehold;whether taken in the names of the purchasers and others jointly, or in the names of others without that of the purchaser; whether in onename or several; whether jointly or successive, results to the man who advances the purchase-money.” [40] The fraud issue has been raised here, but not by the parties to the transaction. Rather, it has been raised by the RespondentsTwamley and O’Brien, who are seeking to enforce their claim as against Mr.

Kumar’s interest. Mr. Kumar held the land pursuant to aresulting trust. He did not have a legitimate interest in the property. [41] Where there is no contribution and where there is no evidence that a gift was intended, the presumption of resulting trust willnot be rebutted: Pecore v Pecore, 2007 SCC 17 , [2007] 1 SCR 795 at paras 20 and following and Kerr v Baranow, 2011 SCC10 , [2011] 1 SCR 269. As stated in the latter decision, by Justice Cromwell, at para 19: As Rothstein J. explained, a presumption of a resulting trust is the general rule that applies to gratuitous transfers. When such a transfer is

made, the onus will be on the person receiving the transfer to demonstrate that a gift was intended. Otherwise, the transferee holds that property in trust for the transferor. This presumption rests on the principle that equity presumes bargains and not gifts ( Pecore , at para. 24 ). [ 42 ] In DRJ v MJ , 2009 ABCA 272 464 AR 16 , our Court of Appeal stated, at para 45: A resulting trust arises when property is in one party's name, but that party is under an obligation to return it to the original title owner because of a fiduciary duty or because the party holding the property gave no value for it.

The presumption of resulting trust is a rebuttable presumption of law that applies if there is insufficient evidence to displace the presumption. The presumption may be relevant where there has been a gratuitous transfer and where evidence as to the transferor's intention is unavailable or unpersuasive: Pecore at para. 23 . Because equity presumes bargains, not gifts, the presumption of resulting trust has the effect of placing the burden on the transferee to demonstrate that a gift was intended where a transfer has been made without consideration. [ 43 ] In A.H.

Oosterhoff et al , Oosterhoff on Trusts: Text, Commentary and Materials , 7 th ed (Toronto: Carswell, 2009), the authors state, at 597: The resulting trust is a new equitable interest that arises because the transferor lacked donative intent and therefore the title holder has an equitable obligation to hold the property for the benefit of the transferor. It follows from this that, since the equitable obligation arises immediately upon the transfer or purchase, the resulting trust arises at that time.

It is true that the parties may not have given much thought to the matter until one of them brings an action to sort out their differences, but the resulting trust is not created by a court ’ s declaration that B holds property upon resulting trust for A. It exists as soon as the equitable obligation arises and the judicial order is merely the court ’ s imprimatur upon an existing state of facts. [Emphasis added] [ 44 ] So I come to the conclusion that Mr. Kumar held the property pursuant to a resulting trust. The equitable obligation arising therefrom arises immediately.

The Respondents Twamley and O ’ Brien come along some years later and attempt to file a Writ as against his interest. As Master Hanebury said in Drebert v Coates , 2008 ABQB 684 459 AR 230 , a creditor ’ s writ can only attach to the debtor ’ s exigible land. [ 45 ] In the end result, the interest of Mr. Kumar does not have an actual interest and his name should be removed from the title.

The writ filed by the Respondents Twamley and O ’ Brien and any document arising therefrom shall be removed. [ 46 ] I would direct the Registrar to reissue title to the lands in the names of Ken Glover and Sandra Lachance. [ 47 ] The Applicant would normally be entitled to costs. I am not awarding costs in this case as the Respondents Twamley and O ’ Brien would have no way of knowing that Mr. Kumar did not have a legitimate interest in the land. Ultimately, they were also deceived by Mr. Kumar as was the mortgage company initially.

The Applicant ought not to be entitled to obtain costs as the result of inappropriate actions taken some years ago by himself and Ms. Lachance. Heard on the 17 th day of May, 2012. Dated at the City of Calgary, Alberta this 15 th day of August, 2012.

G.C. Hawco J.C.Q.B.A. Appearances: Judy Burke Demiantschuk Lequier Burke & Hoffinger LLP for the Applicant Guy Lacouriere Lacourciere Associates for the Respondent