Giustini v Workman, 2018 ABQB 1037

Court of Queen’s Bench of Alberta Citation: Giustini v Workman, 2018 ABQB 1037 Date: 20181219 Docket: 1401 02513 Registry: Calgary Between: Jordan Giustini and Jordana Giustini and Canterra Custom Homes Ltd Plaintiffs - and - Tim Workman and Karen Workman Defendants - and - Joshua Switzer, Ridout Barron, 769115 Alberta Ltd (carrying on business as Royal Lepage Foothills) and (carrying on business as Royal Lepage Foothills Real Estate Services), and Ken Rigel Third Party _______________________________________________________ Memorandum of Decision of A.R. Robertson , Q.C., Master in Chambers _______________________________________________________

Introduction [ 1 ] On November 30, 2012, the defendants Tim and Karen Workman signed a purchase agreement to buy a house from Jordan and Jordana Giustini for $1,150,000. They were already living in the house as tenants. The purchase was supposed to close a year later, on November 30, 2013. The Workmans did not close the sale. They could not get the financing they needed. On October 30, 2013 they moved out and told the Giustinis they were not able to close. [ 2 ] As tenants, they understood that the house was owned by the Giustinis. They had paid a damage deposit of $5,250 to the Giustinis.

When they agreed to buy, they paid a deposit of $35,000. [ 3 ] Neither of those deposits have been returned to the Workmans. There is no reason for the non-return of the damage deposit other than to be applied by the plaintiffs against the damage claim that they advance. [ 4 ] The house was later sold to another purchaser for $1,090,000, so the difference between the price the Workmans had agreed to and the eventual sale price is claimed by the plaintiffs as damages. That amount is $60,000.

There are other damages claimed as well, being real estate commissions incurred on that second sale, and holding costs: utilities, insurance, property taxes, and mortgage payments incurred while the house was waiting a sale to the ultimate purchaser. [ 5 ] The total claimed is $117,304.35, but the Workmans point out that one of the mortgage payments claimed, for $6,843.56, was for a month when they were tenants; they are not liable for that payment under any analysis.

Furthermore, the Workmans point out that they are entitled to credits for deposits they made to Enmax ($424), for security as tenants ($5,250) and the purchase deposit ($35,000) which total $40,674. [ 6 ] This is an application by the Workmans for

summary dismissal of the claim against them and for

summary judgment for the return of their deposits, and a cross-application by the plaintiffs for

summary judgment as against the Workmans. [ 7 ] Everyone says the facts are not in dispute, and the parties are assumed to have put their best feet forward. However, the facts are unusual. The Workmans argue that in these strange circumstances, which I detail below, the Court should not enforce the purchase agreement, and in any event none of the plaintiffs are able to show that they suffered a loss. [ 8 ] I have concluded that the claim as against the Workmans should be dismissed and their claim as against the Giustinis should be allowed.

The Background [ 9 ] The plaintiffs’ claim is, on the surface, quite straightforward. There was a purchase and sale agreement, the Workmans did not close, there was an eventual sale to another for less, and there were holding costs incurred in the intervening period. This would normally be a case for damages for the differential between the agreed-upon amount and the ultimate sale price and the holding costs and other liquidated damages that could be shown, as in Lindner v Ganatra , 2018 ABQB 635 , 2018 CarswellAlta 1887. [ 10 ] The basis for the application for

summary dismissal here is that the Giustinis did not own the house, or at least they told different parties different stories about who owned the house at different times, and now they cannot show which of them suffered damages (and they do not try to separate them for this purpose), and in any event the entire transaction is tainted with illegality and is therefore unenforceable. [ 11 ] The Workmans argue that the facts disclose that this is a case of mortgage fraud.

They were intended by the plaintiffs to be innocent participants in an elaborate scheme that resulted in $1,186,000 being transferred from Canterra to Mr. Giustini with no tax consequences, involving fraud on a credit union that, in the end, suffered no loss. [ 12 ] The Workmans also argue that the plaintiffs are unable to prove that any of them have suffered a loss. The Purchase by the Giustinis [ 13 ] Canterra Custom Homes Ltd. is a corporation controlled by Mr Giustini. He owns all the shares.

Canterra had been the previous registered owner, but on May 5, 2010, Canterra sold the house to the Giustinis for $1,640,000. That purchase was financed with a loan of $1,200,000 from First Calgary Financial. The Giustinis were the borrowers on the mortgage. The $1,200,000 was paid to Canterra as the vendor. The Giustinis were then to pay Canterra the balance of the purchase price, or the “cash to close”, being $440,000 (without addressing adjustments). [ 14 ] The Giustinis did not ever live in the house and it appears that they did not ever pay Canterra the cash to close.

Some evidence was put forward of “payments” but they do not make much sense. [ 15 ] One was of $300,000 but the notation is “shareholders loan” – that is, they were lending Canterra money, not paying for the house – and it seems unlikely that it was in payment anyway because it was paid 11 weeks before they bought the house from Canterra. [ 16 ] The other was a “payment” of $167,274 but the notation is, “Clearing account adjustments for interest on 19 Aspen”, after the closing.

The reference to the address is correct, but the timing seems wrong, the notation is clearly wrong, and the total of these two “payments” is $467,272.00, which is $18,274 more than the cash to close. [ 17 ] In an answer to an undertaking, Mr. Giustini gave a different explanation for how the “cash to close” was paid, but it did not make much sense either. [ 18 ] While the Workmans were tenants, they wrote cheques to the Giustinis, both for their security deposit and their rent. They now know that the rent cheques were deposited to Canterra’s bank account.

Canterra paid the expenses associated with the ownership of

the house. The Trust Declaration [ 19 ] Initially, only Mr. and Mrs. Giustini sued, but Canterra is now the one that is said to have suffered the damages (maybe). Mr. Giustini has sworn that Canterra was the owner all along, even though the title was registered to him and his wife as joint tenants at the time of the rental to the Workmans and when they agreed to sell to the Workmans. Mr.

Giustini refers to a trust declaration dated 10 months after the Giustinis bought the house from Canterra. [ 20 ] But this trust declaration does not make much sense either. [ 21 ] Firstly, it was created long after the Giustinis bought the house from Canterra, but even more strange is that fact that it was only signed by Mr. Giustini, not by his wife. All he could declare as a trust was his half interest in a jointly owned house. There is no evidence of a trust declaration made by her. Mrs.

Giustini’s evidence adds to the confusion of the plaintiffs’ case, because her evidence is that she was not aware of any trust either by herself or by Mr Giustini for anyone. [ 22 ] Furthermore, Mr. Giustini’s trust declaration said that it was, “In consideration of the sum of $1,200,000 and other good and valuable consideration”. It was dated March 21, 2011. That amount was not actually paid by Canterra to Mr. Giustini, but rather it was recorded as a debt owed by the company to him, as sole shareholder, in the amount of $1,186,000.

If he collects on that debt, the result will be a transfer to him of $1,186,000 from his corporation tax free, instead of as dividend or salary. [ 23 ] His evidence is that the consideration was stated to be $1,200,000 because that was the value of the house. His evidence is a little confusing because it clearly misses some important facts, in particular his wife’s involvement: Q. Well, the idea was that Canterra was going to pay $1.2 million and become the beneficial owner of the house, right? A.

No, the idea was that Jordan Giustini was holding the title as trustee, the beneficial owner was Canterra Custom Homes Limited, and the value of the home was $1.2 million or the consideration. Q. And the concept or the goal here was that Canterra would become the beneficial owner of the entire interest in the house? Not just your half interest, but the entire interest? A. No, Conterra was always the owner. Canterra built the house. Canterra bought the land. Canterra owned the house when it was a show home.

I took the house into my personal name so that I could put a personal mortgage on the asset because the carrying costs were less, and during that period, Canterra still maintained its ownership as the beneficial owner of the home. [ 24 ] A review of the trust declaration would suggest that by this trust declaration he purported to transfer the beneficial ownership of the house, or at least his undivided one-half interest (subject to the right of survivorship held by his wife) back to Canterra.

However, by his evidence as quoted, there was never any conveyance of the beneficial interest in the house from Canterra to him and his wife in the first place. They apparently agreed to pay $440,000 for the privilege of being bare trustees for Canterra. Income Tax Returns [ 25 ] The evidence gets more odd. Although Mrs.

Giustini apparently believed that the house was theirs, and the house (that they did not live in, so it was not their principal residence under the Income Tax Act ) was eventually sold to another purchaser, she did not declare any rental income or claim any rental expenses, or claim any utility expenses, or any capital loss in her income tax returns for the relevant time. Its existence as her asset simply does not show up on her tax returns. [ 26 ] When the property was sold to the new owner, the shortfall required to pay off the mortgage to First Calgary Financial was paid by Canterra. [ 27 ] According to Mr.

Giustini’s evidence quoted above, “Canterra was always the owner.” [ 28 ] But the Workmans did not enter into an agreement with Canterra. Neither did First Calgary Financial. Neither did Mrs. Giustini, other than to buy the house from Canterra before the Workmans came along. The Arguments [ 29 ] The Workmans admit that the reason they did not close the purchase was because they were unable to get the financing. That had nothing to do with the strange dealings at the Giustini/Canterra end.

But in the process of probing the damages claimed by the Giustinis, who were the original plaintiffs, the evidence that we now see started to come out and it eventually led to Canterra being added as plaintiff. But even now the plaintiffs do not try to explain with certainty who the owner was, or who suffered the damages. They say it does not matter. [ 30 ] The Workmans argue that it does matter. [ 31 ] It seems to have mattered to First Calgary Financial.

First Calgary Financial advanced $1,200,000 on the basis that this was a real purchase by the Giustinis from Canterra for $1,640,000, but that number seems to have been invented for the purposes of getting $1,200,000 into the hands of Canterra.

There is no evidence before me that the house was ever actually worth this much. [ 32 ] The Workmans had tried to assume the existing mortgage to First Calgary Financial, but the Giustinis would not agree, and when they discussed the financing with their bank, they were told that the property value was less than the purchase price – that is, less than $1,150,000 – and that stymied their ability to finance the purchase. Mr. Workman’s evidence (page 60 of the cross-examination

transcript) suggests that the value was less than the existing mortgage to First Calgary. [33] The Workmans point out that the plaintiffs’ statements about ownership of the house was “fluid, depending on the audience”. [34] When the plaintiffs borrowed money from First Calgary, the owners (the purchasers) were Mr. and Mrs. Giustini. [35] When they filed tax returns, apparently the house was not the Giustinis. Canada Revenue Agency was not told of the houserental, or purchase and eventual sale and loss, at least in relation to Mrs. Giustini.

She apparently bought a half interest in a house for$1,640,000 that they sold for $1,090,000. One might expect that significant capital loss (half of $490,000, or $245,000) would have beenclaimed in her tax return. It was not. [36] For Canada Revenue Agency purposes, the transfer to Mr.

Giustini of the $1,186,000 tax free was made because the plaintiffssaid that Canterra was always the owner. (Otherwise, there would have been a capital gain or profit based on the sale from Canterra tothe Giustinis for $1,640,000.) [37] When dealing with the Workmans, the owners were the Giustinis, both as landlords and as vendors.

They were the landlordsto whom the Workmans paid the security deposit and the rent, and with whom they signed the agreement to purchase. [38] But when the rent cheques were deposited, and expenses were claimed, the owner was Canterra, and presumably the rentalincome and expenses were declared and claimed in Canterra’s tax returns. [39] When claiming damages, the plaintiffs now say the damages were suffered by Canterra, although their claim and the brieffiled in opposition to this application are not clear. Maybe the damages resulting from the failed sale to the Workmans was suffered bythe Giustinis.

They are the plaintiffs who originally sued. But Mr. Giustini said that the beneficial ownership was always with Canterra. [40] The explanation that Mr. Giustini gave (quoted above) for having the house registered in their names personally was to getthe best financing deal from First Calgary. They showed the house address as their own address on the mortgage commitment, althoughMrs.

Guistini testified that they never had any intention of living there. [41] The Workmans argue that this strange evidence allows three possible constructions to determine who the contracting partywas on the purchase and sale agreement that they signed. [42] The first is that Mrs. Giustini never had any interest in the property, something that would apparently be a surprise to her.However, she did not pay anything. The “cash to close” came from Mr. Giustini, or Canterra. If that is the case, she has no damageclaim. The top-up to close the sale came from Canterra. [43] The second is that Mrs.

Giustini held a 50% interest and Canterra held the other 50%, with its interest being registered in Mr.Giustini’s name as bare trustee. That might mean that Mr. Giustini was signing for an undisclosed principal/beneficiary, but if so, hepersonally has no damage claim. [44] The third is that the trust is not valid at all. It purports to be a complete transfer of the entire fee simple to Canterra, exceptthat Mr. Giustini did not own the full interest, and could not transfer even his half interest without severing the joint tenancy.

There is noevidence that that occurred, because it was never perfected by registration or otherwise acting on it: Felske Estate v Donszelmann, 2009ABCA 209. He apparently never let his wife know. [45] The Workmans argue that the entire transaction was tainted by mortgage fraud and tax evasion. The sale to them (or theultimate purchaser) was the last necessary step in a mortgage fraud case, because the value was exaggerated in the loan from FirstCalgary. There is no evidence that the property was ever worth $1,640,000 other than the purchase agreement between Mr. and Mrs.Giustini and Canterra.

Since the “cash to close” was never actually paid, the proper analysis here is to conclude that the entiretransaction was intended to move $1,200,000 from Canterra to Mr. Giusini, and maybe to him and his wife, with no tax consequences. That was almost completely successful. They found a buyer to pay the mortgage debt (less the top-up by Canterra). [46] In this alleged scheme, the first step was to arrange the mortgage with First Calgary. To do that the value had to beexaggerated, to justify the mortgage for what otherwise appears (by Mr.

Giustini’s own evidence) to have been the value all along, at apreferred interest rate. [47] However, a problem was that Canterra had guaranteed the mortgage. [48] Accordingly, instead of allowing the mortgage loan to go into default (the usual next step in a mortgage fraud), a buyer had tobe found, preferably for a price higher than $1,200,000, with new financing so that First Calgary could be paid in full and not rely onCanterra’s guarantee. [49] The sale to the Workmans was therefore the necessary third step in what was a mortgage fraud that would see no victim. FirstCalgary would be fully paid.

When the Workmans did not close, a new buyer had to be found. Canterra paid the difference to obtain arelease from its guarantee. [50] When a transaction is connected with an illegal transaction in which the plaintiff was a party, and he cannot succeed withoutrelying upon the illegal transaction, the action must fail. In Zimmerman v Letkeman, (SCC), [1978] 1 S.C.R. 1097(1977) , the Court cited with approval Alexander v Rayson, [1936] 1 K.B. 169 and reproduced this passage: [W]here the intention of both or one of the parties is that the object shall be used by the purchaser or hirer for an unlawful purpose.

Insuch a case any party to the agreement who had the unlawful intention is precluded from suing upon it. Ex turpi causa non oritur actio. The action does not lie because the Court will not lend its help to such a plaintiff.

[51] In Zimmerman, the respondent was trying to enforce a contract in circumstances where he, as purchaser, and the appellant, asvendor, had signed two different agreements. The first one set out a purchase price of an apartment building of $135,000. The secondone said the purchase price was going to be $117,500, and that the first agreement was null and void. The respondent then applied forfinancing on the basis of the first agreement. The appellant would-be vendor found out, and disclaimed any obligation on the secondagreement.

The lender was not, in fact, misled – it knew that the purchase price was $117,000. [52] The trial judge dismissed the claim on the basis of the ex turpi causa doctrine. The Saskatchewan Court of Appeal reversed. The Supreme Court of Canada then reversed the Court of Appeal and dismissed the claim. The Court reproduced this passage from Clarkv Hagar, 1894 CanLII 4 (SCC, 1893), 22 Can.

S.C.R. 510: What is meant in this case, and in all cases as to the application of the test is, that in every case, whether in indebitatus assumpsit or in anaction upon a bond, note or other instrument, it appears either by admission on the pleadings, or in the evidence given upon theissues joined upon the pleadings in the case, that the action is connected with an illegal transaction to which the plaintiff was aparty, the question arises whether he can or cannot succeed in his action without relying upon the illegal transaction. If hecannot, the action fails; if he can, it prevails.

But it never has been held, nor so far as I have been able to find hitherto contended, that inan action upon a note or other instrument in security for money requiring prima facie no evidence of consideration the plaintiff is entitledto recover upon the mere production of the instrument, notwithstanding that the defence is that the instrument sued upon was executedfor an illegal consideration in respect of a transaction to which the defendant was himself a party. (Emphasis added in bold.) [53] The Court held that in order to succeed the respondent had to rely on an illegal contract. [54] The courts will not enforce a trust in furtherance of an arrangement made for an illegal or immoral purpose: Mayer v OsborneContracting Ltd, 2010 BCSC 1249 at para. 246, and the cases cited there. [55] Accordingly, the Workmans argue that since the entire series of transactions was to effect a variety of illegal outcomes –fraud on First Calgary Financial and tax evasion by creating a phony sale from Canterra to the Giustinis at an inflated price - theplaintiffs cannot sue on the failed purchase and sale agreement. [56] The plaintiffs point out that under our Torrens system of title registration the Giustinis could have granted a good title, and theissues as between the Giustinis and Canterra would not have prevented the sale from closing.

Furthermore, Canterra has not made anyclaims regarding the trust declaration. The covenant of quiet enjoyment (the covenant that no one shall challenge the purchasers’ title)was not at risk. However, these things were also true in Zimmerman. That factor did not influence the Court. [57] They also assert that the Workmans have not shown that they were guilty of wrongdoing sufficient to invoke the applicationof the ex turpi causa doctrine. Reference is made to Stephen v MacLean, 2018 ABQB 53, 2018 CarswellAlta 96.

However, in that caseMaster Schlosser said that given the evidence before him he was not willing to find that there was fraud on the Workers’ CompensationBoard or tax evasion, rather than prudent business planning. The decision is based on the particular facts. [58] The plaintiffs also refer to Royal Bank v Levy, 2011 ABQB 700, where a defendant attempted to invoke ex turpi causa in aclaim by the bank for fraud, because an employee of the bank was involved in the fraud. Therefore, the argument went, the bank wasinvolved in the illegal activity and could not sue.

The argument was dismissed because the employee was a rogue employee actingoutside the scope of his authority. Those facts bear no resemblance to these. [59] The doctrine has been discussed in some other recent cases. Dirom v Perera, 2004 ABQB 657 sets out a useful review of thelaw starting at paragraph 218. The court will not assist a wrongdoer in profiting from an illegal scheme or act: Hall v Hebert, (SCC), [1993] 2 S.C.R. 159 at para. 12. The doctrine of ex turpi causa is one of public policy: no court will lend its aid to aman who founds his cause of action upon an immoral or an illegal act.

The court will not lend aid to such a plaintiff: Holman vJohnson, 1 Cowp. 341 (Eng. K.B., 1775), cited with approval in Veilleux v Boulevard Heights Ltd, (SCC), 52 S.C.R.185 (1915). [60] The plaintiffs also argue that the sale contract to the Workmans did not arise directly from the allegations of wrong-doing.

The sale agreement was validly entered into between Jordan and Jordana Giustini and the Workmans and it is discrete. [61] It has been said that the illegality must not be as to a collateral matter but in the very transaction on which the plaintiff reliesfor his claim: Major v Canadian Pacific Railway, (SCC), 64 S.C.R. 367 (1922).

This latter statement would seem toconflict with, and thereby be at least modified or clarified, if not overruled, by Zimmerman, where the illegality was not in the specificsale contract being sued upon, but in the intention of the plaintiff to use the prior agreement as part of an overall scheme of defraudingthe lender – even though the lender was not, in fact, defrauded. [62] The plaintiffs also point out that the ex turpi causa defence was developed after the action was commenced.

That is a factorthat could distinguish Zimmerman, because in that case it was the vendor’s discovery of the intent to misled the lend that caused him torefuse to take part. [63] The plaintiffs ask for

summary judgment, arguing that the facts to support the ex turpi causa defence will apparently not bestronger at trial. Each party is to put their best foot forward. Alternatively, they argue that at most the ex turpi causa defence applies onlyto the claim for “lost profits”, which I think is a reference to the loss on the land sale. The damages relating to the holding costs shouldbe allowed. [64] The plaintiffs argue that

summary judgment on the ex turpi causa issue should not proceed without a trial, citing Kindrachukv Belseck, 2012 ABQB 515, 2012 CarswellAlta 1414, Studio Homes Ltd v Carter, 2015 ABQB 741, 2015 CarswellAlta 2164, andAngus Partnership v Salvation Army (Governing Council), 2018 ABCA 206. However, in Angus at paragraph 80, the Court of Appealreinforced the availability and importance of

summary judgment applications:

In a

summary judgment application, the parties must put “their best foot forward” and not hold back evidence they think would behelpful at trial. Despite the chambers judge’s speculation about possible evidence, the evidence he contemplated being available at trialwas not actually required to resolve this action.

The undisputed facts were sufficient to conclude that the Angus claim cannot succeed.This truism applies with particular force here, given that Angus commenced this litigation almost nineteen years ago (October 6, 1999). [65] Furthermore, the Workmans argue, the plaintiffs are unable to demonstrate that any of them suffered a loss, and they do nottry to do that. The plaintiffs reply that one or more of them suffered a loss, and that is enough to allow the claim to succeed.

Analysis [66] In my view, the only purpose of a trial would be to allow the plaintiffs the opportunity to try to put forward some moreevidence to explain the inconsistent assertions that they have made throughout. However, I have to assume that they have put their bestfoot forward, and, in particular, I am to assume that their financial records and other evidence would not have shone a better light on thecircumstances, or that evidence would be before me.

That is, an adverse inference is appropriate: Sticks and Stones CommunicationsInc v Hole's Greenhouses & Gardens Ltd, 2015 ABQB 774 at para. 32, citing Master Schlosser in 1214777 Alberta Ltd v 480955Alberta Ltd, 2014 ABQB 301 . The Ex Turpi Causa Defence [67] The analysis of these facts must include a consideration of whether the Giustinis were simply agents for an undisclosedprincipal. That seems to be the thrust of the approach by the plaintiffs, and certainly by Mr. Giustini, who swore that Canterra ownedthe house all along. [68] But that is not a valid assessment of these facts.

There was a sale by Canterra to the Giustinis, and it was not simply a transferof the title for nominal consideration to place it in their names for some reason. Mr. Giustini swore an affidavit of value for the LandTitles Office saying that the value was $1,640,000.

There was evidence tendered, although it does not stand up to any scrutiny, that theGiustinis had paid the cash to close. [69] If Canterra were the “real” vendor to the Workmans, there would have been GST payable on that intended sale, and therewould likely have been a new home warranty, because Canterra is a house builder. [70] If Canterra was the owner all along, then it was paid the $1,200,000 by the mortgage proceeds and either (

a) it has a claimagainst the Giustinis for the cash to close, or (

b) the cash to close was paid. If the latter, Canterra recovered $1,640,000 from this house. (As mentioned, the evidence about the Giustinis actually paying the cash to close is very unsatisfactory.) A later sale for less than theprice that Canterra had contracted with the Giustinis would not be a loss to Canterra. [71] Either that or it was actually a real sale from Canterra to the Giustinis, they sold the house for a massive loss only about twoyears after buying it, and the trust argument that Mr. Giustini now asserts is nonsense. [72] This approach might make more sense, although it requires ignoring these facts: (

a) the trust declaration that followed the sale by 10 months, (

b) the recitation in the trust declaration that $1,200,000 was consideration, and (

c) it was signed only by Mr. Giustini and not by his wife, making the whole exercise a nullity. [73] That is, in order to accept that it was a real sale, the whole of the evidence about the trust must be ignored. We must alsoignore the absence of any tax returns by Mrs.

Giustini reflecting the rental or sale. [74] Until the defendants started finding discrepancies in the evidence, this transaction was presented to the Workmans and to thecourt in the statement of claim, as firstly a purchase by the Giustinis from Canterra, with a mortgage by the Giustinis to First Calgary,and secondly as an agreement to sell by the Giustinis to the Workmans, with damages suffered by the Giustinis. But there is confusingevidence, and Mrs.

Giustini’s own evidence makes it clear that she was not aware of any trust or, presumably, any agency. [75] The fact that the information given by the Giustinis to First Calgary Financial and the Land Titles Office as to their addresssuggested clearly that they were going to live in this house. That seems to have been designed to mislead. [76] Overlain is the fact that there does not ever appear to have been a value of $1,640,000 when the Giustinis bought fromCanterra.

It is at least suspicious that they bought in 2010, rented the house for only two years, and then agreed to sell it for a $490,000loss in November 2012. The collapse of the price of oil that so seriously affected Alberta’s economy (and real estate values) did notoccur until 2014.

There is no evidence before me that explains why the Giustinis would take such a heavy loss so soon after buying thehouse, which they had successfully rented in the interim apparently at a rental rate sufficient to pay the mortgage payments. [77] The fact that they are unable to show that they actually paid the cash to close is very revealing. They seem to have had nomoney invested in the house. [78] Given the facts here, the analysis takes the Court to only one conclusion: that the explanation put forward by the Workmans iscorrect. This was a sale to the Giustinis of the house owned by Mr.

Giustinis’ company at an inflated price in order to perpetrate a fraudon First Calgary, with a bail-out planned by effecting a sale to get the financial institution paid, while also removing almost $1,200,000from the company without a tax consequence. Zimmerman is the guiding case on these facts. [79] No other analysis makes any sense. The ex turpi causa doctrine is in play and I am satisfied that at trial the judge wouldexercise his or her discretion not to enforce the contract.

No Damages Shown [ 80 ] Alternatively, the plaintiffs as a group are unable to explain simple aspects of their claim to entitle any of them to damages. [ 81 ] Under the “trust” analysis of the facts, Canterra has clearly not suffered any damages, at least not by the later failed sale to the Workmans, as I have explained. It received $1,640,000 from the sale of a house that was likely only worth $1,200,000. [ 82 ] The Giustinis’ evidence is conflicting on material points. Mr. Giustinis’ own evidence is to the effect that he did not suffer any damages, because Canterra owned the house at all times. Mrs.

Giustinis’ evidence discloses that she paid nothing. If she suffered a significant loss on the ultimate sale to the new buyer, she did not report it to CRA. The better conclusion is that she invested no money, she held no interest, and she suffered no loss. [ 83 ] But in the end the plaintiffs’ claims for damages are simply not clear, and they are not going to be any clearer at trial.

Summary judgment is appropriate. Conclusion [ 84 ] The claim against the Workmans is dismissed. The claims by the Workmans for the security deposit and their deposit on the purchase are allowed as against Mr. and Mrs. Giustini, totalling $40,250.00. They will not have judgment as against Canterra (as distinct from a costs award) because they did not deal with Canterra. [ 85 ] If the parties are unable to agree on costs, they may make an appointment through the masters’ chambers clerk to speak to them. [ 86 ] I thank counsel for their excellent arguments on this interesting dispute.

Heard on the 29 th day of October, 2018. Dated at the City of Calgary, Alberta this 19 th day of December, 2018. A.R. Robertson M.C.C.Q.B.A. Appearances: Philip Carson Miller Thomson LLP for the Applicants/Respondents (Defendants) Michael Kwiatkowski and Rahim Merchant McLeod Law for the Respondents/Applicants (Plaintiff) No one appearing for the Third Party