Pavlyshyn v Vinokurov, 2019 ABQB 980

Court of Queen’s Bench of Alberta Citation: Pavlyshyn v Vinokurov, 2019 ABQB 980 Date: 20191218 Docket: 0803 04223 Registry: Edmonton Between: Walter Pavlyshyn (Also Known as Vladimir Pavlyshyn) Applicant - and - Dmitry Vinokurov, 1184162 Alberta Ltd. and Izabella Vinokurov Respondents _______________________________________________________ Decision of the Honourable Mr. Justice G.S. Dunlop _______________________________________________________ 1.

Overview [ 1 ] Walter Pavlyshyn applies for an order transferring to him a 69% interest in land and a building in Edmonton, Alberta, currently registered to 1184162 Alberta Ltd. (“118”), or alternatively either equitable damages or a rectification of the share registry of 118 to give him 69% of the shares together with a direction for the valuation of 118. [ 2 ] Mr. Pavlyshyn’s claim is based on the fact that between November 2005 and March 2006 he paid $110,000 to Car Masters

Collision Ltd. as deposits toward the purchase of land and a building then occupied by Car Masters Collision. In these reasons I will refer to the land and building as the Car Masters Property and I will refer to Car Masters Collision Ltd. as Car Masters Collision. [ 3 ] The respondents to Mr. Pavlyshyn’s application are 118, Dmitry Vinokurov and Izabela Vinokurov. Dmitry Vinokurov married Mr. Pavlyshyn’s daughter in 2004, but they separated in February 2006 and were divorced by September 2009. Izabela Vinokurov is Dmitry Vinokurov’s mother. The Vinokurovs are jointly represented by Mr. Mintz on this application.

No one appeared for 118. [ 4 ] In 2005 Mr. Pavlyshyn and Mr. Vinokurov discussed purchasing a property together out of which Mr. Vinokurov would operate his existing car audio and accessories business and Mr. Pavlyshyn would operate his planned car repair business. In October of 2005, they identified the Car Masters Property as suitable and had discussions with Rose McKay and Allan McKay, the owners of Car Masters Collision. Mr.

Pavlyshyn paid a total of $110,000 to Car Masters Collision in the following installments: November 2, 2005 $10,000.00 January 3, 2006 $18,000.00 January 24, 2006 $32,000.00 February 24, 2006 $25,000.00 March 24, 2006 $25,000.00 [ 5 ] Izabella Vinokurov paid $50,000 to Car Masters Collision as follows: April 25, 2006 $25,000.00 May 25, 2006 $25,000.00 [ 6 ] Title to the Car Masters Property was transferred to 118 on June 12, 2006. [ 7 ] The outcome of this case turns on whether Mr.

Pavlyshyn paid $110,000 in deposits on behalf of 118, and if not, what rights and remedies he has flowing from the deposits he paid and the deposit agreements he signed. It also turns on whether the price paid for the Car Masters Property was $160,000 or $320,000. [ 8 ] I find that Mr. Pavlyshyn paid deposits on his own behalf and not on behalf of 118, because he had no involvement with 118, and because both he and Mr. McKay understood that Mr. Pavlyshyn was purchasing a portion of the Car Masters Property directly. The deposits Mr.

Pavlyshyn paid give him an ownership interest in the Car Masters Property in proportion to the total purchase price paid to by Car Masters Collision and its owners, the McKays. [ 9 ] The determination of the purchase price turns on the credibility of Mr. Vinokurov and Mr. Mckay, who testified that the purchase price was $320,000, and Mr. Pavlyshyn, who testified that it was $160,000. I find Mr. Vinokurov and Mr. McKay not credible on this issue. Based on Mr. Pavlyshyn’s testimony and the documents surrounding the sale, I conclude that the price was $160,000. Consequently, Mr.

Pavlyshyn has a 68.75% interest in the Car Masters Property corresponding to his payment of 68.75% of the purchase price. [ 10 ] The transfer of title to 118 in June 2006 did not defeat Mr. Pavlyshyn’s unregistered interest, because 118 and Mr. Vinokurov had knowledge of and participated in the transactions giving rise to Mr. Pavlyshyn’s interest in the property. [ 11 ] The parties who appeared on this application also argued that there was a verbal agreement between Mr. Pavlyshyn and Mr. Vinokurov. They have different views of the terms of that agreement and which of the two men breached it.

I find that there was no contract between them, because they never achieved certainty with respect to terms. [ 12 ] Mr. Pavlyshyn sought an oppression remedy under the Business Corporations Act in the alternative. It is not necessary for me to consider that issue, because I have found in his favour on his claim to a direct interest in the property. [ 13 ] Pursuant to

section 190 of the Land Titles Act, I order the Registrar to cancel the existing certificate of title to the Car Masters Property and issue new certificates of title showing Mr. Pavlyshyn and 118 as tenants in common, with Mr. Pavlyshyn holding an undivided 68.75% interest and 118 holding an undivided 31.25% interest. 2. 118 [ 14 ] 118 was incorporated by Mr. Vinokurov’s accountant, Doug Russell, on July 28, 2005. Apparently, Mr. Russell provided a minute book relating to 118 to Mr. Vinokurov, but no corporate documents were put into evidence before me.

There is a corporate search in evidence which shows that as of March 24, 2008, 118’s registered office and records address were Ms. Vinokurov’s home, that Mr. Pavlyshyn, Mr. Vinokurov and Ms. Vinokurov were directors and that Mr. Pavlyshyn held 34% of the voting shares, Mr. Vinokurov held 30% and Ms. Vinokurov held 36%. The 2008 corporate search also records and that an annual return and change of director and shareholder were filed on November 3, 2007. [ 15 ] Mr. Pavlyshyn did not subscribe for shares in 118 and did not receive any share certificates. [ 16 ] Mr.

Pavlyshyn did not consent to act as a director, he has never attended a directors’ meeting and he has not acted as a director. Consequently, although Mr. Pavlyshyn deposed in his affidavit that he is a director of 118, as a matter of law, he is not:

Business Corporations Act , s. 105(5). [ 17 ] There are no documents signed or possessed by Mr. Pavlyshyn that connect him to 118, except a 2005 Deposit Agreement which describes 118 as one of three purchasers, the other two being Mr. Pavlyshyn and Mr. Vinokurov. When Mr. Pavlyshyn signed the Deposit Agreement, he understood that 118 was a corporation through which Mr. Vinokurov would be purchasing his interest in the Car Masters Property. [ 18 ] All other documents relating to 118 were created at Mr. Vinokurov’s direction or were signed by him on behalf of 118. [ 19 ] Mr.

Vinokurov testified in his September 2009 questioning and before me that the shares in 118 were initially held 50/50 by him and Mr. Pavlyshyn, but that shares were transferred to Ms. Vinokurov when funds were put into the corporation. If Mr. Pavlyshyn initially held 50% of the shares then any transfer of shares reducing his percentage should have been signed by him. No such transfer was put into evidence. [ 20 ] According to the March 24, 2008 corporate search, the only time a change of shareholders or directors was registered was on November 3, 2007. This does not align with Mr.

Vinokurov’s evidence regarding when Ms. Vinokurov became a shareholder, being when she injected funds into 118, in April and May 2006. However, the November 3, 2007 registration does follow closely an October 11, 2007 letter from Mr. Pavlyshyn’s lawyer to 118 requesting information about the corporation, including clarification of Mr. Pavlyshyn’s shareholdings. It appears that the information at corporate registry was changed in response to Mr. Pavlyshyn’s inquiry. [ 21 ] Ms.

Vinokurov was responsible for keeping the books of 118, but no financial statements or other financial records were put into evidence, except for a bank statement dated December 30, 2005 showing that an account was opened on December 15, 2005 with an opening balance of zero, a deposit was made on December 19, 2005 of $100 and withdrawals were made and bank charges and interest were charged on December 28 totalling $112.15, leaving a negative balance of $12.15 on December 30, 2005. [ 22 ] I also note that Mr. Vinokurov swore in his affidavit of value on May 24, 2006 that he was the agent of 118. [ 23 ] Mr.

Vinokurov testified that he kept Mr. Pavlyshyn informed of everything he was doing, including the creation of 118, and that Mr. Pavlyshyn agreed that a corporation should be formed to hold the land. Mr. Pavlyshyn denied this and specifically denied knowing or agreeing to the incorporation of a company to hold the land. For the reasons set out under Credibility, below, I accept Mr. Pavlyshyn’s evidence. [ 24 ] I conclude that everything done in the name of 118 was done by Mr. Vinokurov and Ms. Vinokurov with no involvement by Mr. Pavlyshyn. [ 25 ] Mr.

Vinokurov said when he was questioned on his affidavit in September 2009 that Mr. Pavlyshyn made his payments to Car Masters Collision on behalf of 118. He gave an undertaking to provide any documentation supporting that assertion. In his response to that undertaking he said there are no documents. [ 26 ] A bank account for 118 was opened in December 2005. If Mr. Pavlyshyn had intended to make deposits on behalf of 118, it would have been easy and convenient from a bookkeeping point of view for him to deposit the funds into 118’s bank account and for 118 then to make the payments to Car Masters Collision.

The fact that he did not do so, suggests to me that he was not aware of 118’s existence at that time, and he was making the deposits on his own behalf. [ 27 ] I conclude that Mr. Pavlyshyn made his payments on his own behalf and not on behalf of 118 because at the time he made the payments he was unaware that Mr. Vinokurov had made him a shareholder of 118. Furthermore, if Mr. Pavlyshyn had made a payment on behalf of 118, I would expect this to be reflected in 118’s records, for example as a shareholder’s loan.

The absence of such documentation supports my conclusion. [ 28 ] During oral argument I raised with both counsel whether Mr. Pavlyshyn had appointed Mr. Vinokurov his agent to do whatever Mr. Vinokurov thought best with respect to the legalities of acquiring the Car Masters Property. This was a new issue raised by me, not raised in written argument by any party. Under this theory, even if Mr. Pavlyshyn were not aware of the creation of 118 and the things Mr. Vinokurov did in 118’s name, Mr. Pavlyshyn would be bound by the actions of Mr. Vinokurov, acting as his agent.

My conclusion, based on the evidence of both men, is that Mr. Pavlyshyn left the paperwork to Mr. Vinokurov and the lawyer and accountant, but he did not give Mr. Vinokurov authority to create a corporation and make that corporation the registered owner of the Car Masters Property. 3. Credibility [ 29 ] Mr. Pavlyshyn testified he did not agree to 118’s incorporation naming him as a shareholder and he did not agree to the transfer of the Car Masters Property to 118. He says that his agreement with Mr. Vinokurov was that they would purchase the Car Masters Property jointly, with Mr.

Pavlyshyn holding his interest in his own name and Mr. Vinokurov holding his interest either directly or through a corporation. Mr. Pavlyshyn also says the purchase price for the Car Masters Property was $160,000. [ 30 ] Mr. Vinokurov testified that he and Mr. Pavlyshyn agreed to the incorporation of 118 naming them both as shareholders, and they agreed to purchase the Car Masters Property through 118. He also says that the purchase price was $320,000 consists of $160,000 paid in cheques and bank drafts and $160,000 paid in cash. [ 31 ] Mr.

Vinokurov’s testimony is not credible for the following reasons. • He swore an affidavit of value on May 24 or 29, 2006 stating that the purchase price was $160,000. Either that was a lie under oath or affirmation or his evidence that the purchase price was $320,000 repeated in this action in affidavits, questionings on affidavit and in person before me on the hearing of this application, were lies under oath or affirmation.

• He signed a purchase agreement dated March 27, 2006 which states that the purchase price was $160,000. • He signed an agreement dated January 24, 2006 which states that the purchase price was $160,000. • In his first questioning on affidavit in September 2009, Mr. Vinokurov testified that the agreed price for the Car Masters Property was $320,000, which was recorded in handwriting by the lawyer, Graham Fersovich, who was acting for everyone: Car Masters Collision, the McKays, Mr. Vinokurov, Mr. Pavlyshyn and 118. Mr.

Vinokurov went on to testify that the only documents supporting the price being $320,000 are Mr. Fersovich’s notes. Mr. Fersovich did not testify or swear an affidavit in this action, and no handwritten document recording the purchase price as $320,000 was entered into evidence. • Mr. Vinokurov testified in his September 2009 examination that he paid $100,000 in cash on this transaction which did not come from a bank account, instead it was something like cash in a mattress at home. Later in that questioning, when asked why his mother had 36% of the shares in 118, Mr.

Vinokurov testified that $50,000 or $60,000 of the cash he contributed came from his mother, which came from her bank account. No bank statements were submitted in evidence to support this contention, nor did Ms. Vinokurov provide any sworn evidence on this application. Mr. Vinokurov gave an undertaking to produce cancelled cheques or bank statements from his or his mother’s bank accounts containing receipts of disbursements of funds in connection with the Car Masters Property or in connection with 118.

His response to that undertaking was “There was nothing run through personal accounts.” • Later in the September 2009 examination, Mr. Vinokurov testified that the $110,000 his mother contributed to the property came from Ms. Vinokurov selling her condominium to Mr. Vinokurov, Mr. Vinokurov obtaining a mortgage on the condominium, paying the mortgage proceeds to Ms. Vinokurov and Ms. Vinokurov paying the mortgage proceeds back to Mr. Vinokurov. Before me Mr. Vinokurov again testified to the sale and mortgage arrangement with his mother.

If that transaction took place, there would be documentary evidence of it including a transfer of title, a mortgage, and bank statements showing the mortgage proceeds being paid to Mr. Vinokurov and then being paid by him to Ms. Vinokurov. The Vinokurovs adduced no documents into evidence before me regarding this sale and mortgage transaction. • Mr. Vinokurov testified in his September 2009 examination that 118 filed taxes and he believes it had financial statements, but none were introduced into evidence before me. • Mr.

McKay testified before me that Car Masters Collision kept records of the payments it received for the Car Masters Property and that those records were destroyed 7 or 8 years after the sale. Since the sale was in 2006, that means the records were destroyed no earlier than 2013. Mr. McKay testified that Mr. Vinokurov never contacted Mr. McKay to ask him to preserve Car Masters Collision’s records. Mr. Pavlyshyn filed his Originating Notice and Affidavit on March 26, 2008, which include his evidence that the purchase price was $160,000. The fact that Mr.

Vinokurov never sought Car Masters Collisions’ records regarding payments received, when according to Mr. Vinokurov half of those payments were made in cash with no records kept by him, casts doubt on both Mr. Vinokurov’s credibility generally, and his evidence regarding cash payments specifically. [ 32 ] Allan McKay, one of the owners of Car Masters Collision provided an affidavit and testified before me, stating that the purchase price was $320,000, consisting of $110,000 from Mr. Pavlyshyn and $210,000 paid in cash and cheques by Mr. Vinokurov. Mr.

McKay’s testimony is not credible on the purchase price issue for the following reasons: • He signed the January 24, 2006 agreement and the March 27, 2006 purchase agreement, which both state that the purchase price was $160,000. • He testified before me that he received cash payments every time he received a cheque or money order and in the same amount, but he does not remember whose idea it was that part of the purchase price be paid in cash and he does not remember why it was paid in cash. • He testified that he took the cash payments totalling $160,000 home and did not deposit them in any bank account.

He also said he did not provide any receipts for the cash payments.

He offered no explanation for why he would keep such a large amount of cash at home or what he did with it. • At one point in his cross-examination he testified that he does not know why Subserious was named in the January agreement, but then later he testified that he understood Subserious was buying the Car Masters Property. • He is a convicted thief, having pled guilty in the fall of 2019 to theft of $300,000 worth of automotive parts. [ 33 ] The Vinokurovs argue that the provision in the January 2006 agreement that Car Masters Collision and the McKays would pay back double the amounts received supports the conclusion that cash payments were made mirroring the bank drafts and cheques.

I disagree. The more reasonable explanation is that the January 2006 agreement accurately describes the amounts paid to that date as $60,000, and the double deposit refund was an inducement to the vendors to proceed with the sale. [ 34 ] The Vinokurovs also argue that the City of Edmonton assessment of the Car Masters Property at $264,000 supports the conclusion that the sale price was more likely $320,000 rather than $160,000, particularly as the sale included some assets in addition to the land. I disagree.

The City of Edmonton assessment is scant evidence of value in the absence of proof of the qualifications of the assessor and his or her direct evidence. Furthermore, people may agree to sale prices that differ from the municipally assessed values. In this case I have evidence from Mr. Pavlyshyn that the Car Masters Property was run down, and from Mr. McKay and from the transfer of land that Car Masters and the McKays owed $150,000 on a rent to own agreement with the registered owner.

From the McKays point of view, they may have been happy to be rid of this property and their obligations under the rent to own agreement. [ 35 ] All of the documentary evidence supports the conclusion that the sale price was $160,000. The only evidence that the sale price was $320,000 is the testimony of Mr. Vinokurov and Mr. McKay, which is not credible for the reasons set out above.

[ 36 ] I am doubtful that Mr. Vinokurov made any cash payments to Mr. McKay, but even if he did, they were not part of the purchase price for the Car Masters Property. [ 37 ] Mr. Pavlyshyn’s testimony is coherent, and consistent both internally and with the documents. I accept his version of events in all respects. In particular, I find that the sale price was $160,000 and Mr. Pavlyshyn did not make deposits on behalf of 118. 4. Deposits and Deposit Agreements [ 38 ] In October 2005, Mr. Pavlyshyn and Mr. Vinokurov had discussions with the McKays about purchasing the Car Masters Property.

No written agreement for sale was prepared, but a Deposit Agreement was drawn up and signed by some of the parties. According to Mr. Vinokurov, the Deposit Agreement was drafted by a lawyer, Graham Fersovich, who was acting for everyone. The agreement is dated 2005, with the day and month left blank. It describes “Car Masters Collision Ltd. and Allan McKay and Rose McKay” as the Vendor, and 118, Mr. Vinokurov and Mr. Pavlyshyn as the Purchaser.

The copies of the Deposit Agreement in evidence have some words or portions of words cut off, perhaps by a photocopier, but the last of the recitals appears to read: “AND WHEREAS the Purchaser wishes to purchase the assets and land of [the] Vendor located at 4817 – 118 Ave and the Vendor wishes to sell the Assets to the [Purc]haser” (inferred words or portions of words are in square brackets) [ 39 ] The operative clauses of the Deposit Agreement provide that the Vendor acknowledges receipt of a $10,000 deposit from the Purchaser, which the Vendor would refund to the Purchaser if the Purchaser chose not to proceed with the purchase on or before November 10, 2005, or if the Vendor chose not to proceed with the sale. [ 40 ] The Deposit Agreement was drafted with places for all named parties to sign, but only Rose McKay, Allan McKay and Walter Pavlyshyn signed it.

Car Masters Collision, 118 and Dmitry Vinokurov did not sign. [ 41 ] Mr. Pavlyshyn gave Mr. McKay a $10,000 bank draft dated November 2, 2005 payable to Car Masters Collision. [ 42 ] On January 3, 2006 Mr. Pavlyshyn provided another bank draft payable to Car Masters Collision, this one in the amount of $18,000. He provided another bank draft in the amount of $32,000 on January 24, 2006. Also on January 24, 2006, the McKays, Mr. Vinokurov and Mr.

Pavlyshyn signed an agreement entitled “To Whom It May Concern”, which reads as follows: This is an Agreement Between Subserious Extreme Car Audio, Dmitry Vinokurov, Vladimir Pavlyshyn And Car Masters Collision LTD., Rose McKay, Allan McKay Subserious Extreme Car Audio did give on this the 24th of January 2006 to Car Masters the sum of $32,000 to be used against the balance owing on the property located on 4817-118ave, Edmonton, Alberta, Canada, T5W-1B5.

Balance on the property is as follows $160,000 original purchase price -$28,000 already paid -$32,000 Paid today ________________________ $100,000 balance To be paid in 4 equal payments of $25,000 on the 24th of each consecutive month. If for any reason Car Masters Collision, Rose McKay, Allan McKay should decide not to continue with the sale of the mentioned property they agree to reimburse the amount already paid to them at a rate of double the amount. (e.g. if $60,000 paid then the repayment would be $120,000) [ 43 ] Subserious Extreme Car Audio is a trade name used by Mr.

Vinokurov’s corporation, 1014926 Alberta Ltd. In the remainder of these reasons, “Subserious” means 1014926 Alberta Ltd. operating as Subserious Extreme Car Audio. Although the January 2006 agreement says Subserious had made payments to Car Masters, it did not in fact do so. All payments up to January 24, 2006 were made by Mr. Pavlyshyn. [ 44 ] Although Subserious and Car Masters Collision are named as parties to the January 2006 agreement, there are no lines for

their officers to sign. Rose McKay, Allan McKay, Dmitry Vinokurov and Vladimir Pavlyshyn all signed. [45] 118 is not mentioned in the January 24, 2006 agreement. [46] The January 24, 2006 agreement implies that Car Masters Collision and the McKays agreed to sell the Car Masters Propertyto Subserious, Mr. Vinokurov and Mr. Pavlyshyn for $160,000. Mr. Vinokurov testified in his questioning in September 2009 that thereference to Subserious in this agreement was a mistake by the lawyer who prepared it and that it should have referred to 118 instead.The lawyer did not provide evidence before me.

In oral testimony before me, Mr. Vinokurov testified that he drafted this documenthimself and he said he made a mistake when he was filling it out, inserting Subserious instead of 118. [47] Mr. McKay testified before me that he understood he was selling the Car Masters Property to Subserious, but he also testifiedthat he was prepared to sell the Car Masters Property to Mr. Vinokurov and Mr. Pavlyshyn directly, that he received payments from Mr.Pavlyshyn personally, and that he understood that Mr. Pavlyshyn was purchasing a portion of the property. [48] I find, based on the testimony of Mr. Pavlyshyn and Mr.

McKay and the wording of the 2005 Deposit Agreement and theJanuary 2006 agreement, that Car Masters Collision and the McKays agreed to sell the Car Masters Property to Mr. Pavlyshyn, Mr.Vinokurov and a corporation, either 118 or Subserious, at the purchasers’ option, for $160,000. [49] Mr. Pavlyshyn provided two more payments of $25,000 each to Car Masters Collision, on February 24, 2006 and March 24,2006. [50] The effect of Mr.

Pavlyshyn’s payment of $110,000 toward the total purchase price of $160,000 was to transfer to him anequitable interest in a corresponding portion, 68.75%, of the Car Masters Property: Rose et al v Watson (1864) 10 HL Cas 672 at p 678,cited in Rully v Rotman (ON SC), [1954] 3 DLR 479 (Ont.

HCJ) at para. 8. [51] Where a title has been registered in one party’s name only and in the circumstances ought to have included another party as atenant in common as to an undivided percentage interest, I have the power to order that change: Land Titles Act, s. 190; Westlock FoodsLtd v Bonel Properties Ltd, 1991 ABCA 223 , [1991] AJ No. 807 (QB). 5.

Purchase Agreement, Izabella Vinokurov’s Payments,and Transfer [52] On March 27, 2006, Car Masters Collision, 118 and Rose and Allan McKay signed a Purchase Agreement, in which CarMasters Collision (defined as the Vendor) agreed to sell the Car Masters Property to 118 (defined as the Purchaser) for $160,000 payableto Car Masters Collision, plus four monthly payments of $1,875 each payable to 420398 Alberta Ltd., with a possession date of May 24,2006. [53] In March 2006, 420398 Alberta Ltd. was the registered owner of the Car Masters Property, subject to the rights of CarMasters Collision and the McKays under a rent to own agreement.

The details of that rent to own agreement are not in evidence beforeme. [54] The Purchase Agreement contains the following clause entitled “Payment of Purchase Price”: The Purchaser shall pay the Purchase Price, adjusted as described in

section 1 (k), as follows: (

a) the Vendor acknowledges that the Purchaser has paid to the Vendors, a deposit in the amount of $85,000.00 plus $625.00monthly payments of $1875 for the months JAN 06 to MARCH 2006 inclusive (the “Deposits”). (

b) on March 27, 2005 a further payment of $25,000.00 and on April 24, 2006 a further payment of $25,000.00 and on theClosing Date May 24, 2006, $25,000.00 plus the monthly payments of $1875 for April and $1481.61 May 2006, representing thebalance of the Purchase Price, plus or minus adjustments. (bold type in the original) [55] Contrary to that clause, 118 did not pay anything to Car Masters Collision at any time. The only payments Car MastersCollision received for the Car Masters Property up to the end of March 2006 were five payments from Mr.

Pavlyshyn totalling $110,000and rental payments of $1,875 per month for the months of January, February and March, 2006 paid by Subserious. [56] Mr. Pavlyshyn is not mentioned in the March 27, 2006 Purchase Agreement and he did not sign it. Consequently, he is notbound by it. Mr. Pavlyshyn had no knowledge of the Purchase Agreement in March 2006. At the date of the Purchase Agreement, theinterest of Car Masters Collision and Rose and Allan McKay in the Car Master’s Property was subject to Mr.

Pavlyshyn’s equitableinterest in a 68.75% share of the property, arising from his payment of $110,000 in deposits on a purchase price of $160,000. ThePurchase Agreement did not change that. [57] On April 24 and May 24, 2006 Izabela Vinokurov made two payments of $25,000 each to Car Masters Collision. [58] On June 12, 2006 a transfer was registered at the Land Titles Office, in which 420398 Alberta Ltd. transferred the CarMasters Property to 118. The transfer states that the consideration was $150,000 paid to 420398 Alberta Ltd. by Allan McKay, RoseMcKay and Carmac Paint and Collision Ltd..

The Affidavit of Value, sworn by Mr. Vinokurov, states as follows: 1. I am the agent of transferee named in the within or annexed transfer and I know the lands therein described.

2. I know the circumstances of the transfer and true consideration paid by the transferee is as follows: The Sum of $160,000.00 paid to Allan McKay, Rose McKay and Car Master Collision Ltd. (formerly Carmac Paint and Collision Ltd.). 3. The transferors named in the transfer is the Corporation from whom Allan McKay, Rose McKay and Car Master Collision Ltd. acquired the lands. 4.

The current value* of the land**, in my opinion is $160,000.00. *”Value” means the dollar amount that the land might be expected to realize if it were sold on the open market by a willing seller to a willing buyer. **”land” includes buildings and all other improvements affixed to the land. [ 59 ] The transferee was 118. Contrary to Mr. Vinokurov’s affidavit, 118 did not pay any of the purchase price to Car Masters Collision or the McKays. $110,000 was paid by Mr. Pavlyshyn and $50,000 was paid by Ms. Vinokurov. [ 60 ] 118 was controlled by the Vinokurovs. Mr. Vinokurov was aware of and participated in Mr.

Pavlyshyn’s payment of $110,000 in deposits to Car Masters Collision against a purchase price of $160,000. This is not a case of mere knowledge of an unregistered interest in land; Mr. Pavlyshyn’s interest arose as part of a transaction in which Mr. Vinokurov and 118 participated. This participation is something more than mere knowledge. [ 61 ] 118 did not appear on this application. The Vinokurovs did not argue that Mr. Pavlyshyn’s interest in the Car Masters Property was defeated by the transfer to 118 in June 2006, when Mr. Pavlyshyn had no interest registered on title.

I find that 118 took title subject to Mr. Pavlyshyn’s 68.75% interest because the participation of 118 and Mr. Vinokurov in the transactions giving rise to Mr. Pavlyshyn’s interest is something more than mere knowledge, establishing fraud within the meaning of sections 62 and 203 of the Land Titles Act : Angus Partnership Inc v Salvation Army (Governing Council) 2018 ABCA 206 at para. 51 . 6. Possession, Use and Expenses [ 62 ] According to Mr. Vinokurov’s September 2009 affidavit, possession of the Car Masters Property was taken on or about January 2006.

It is not clear from that affidavit who took possession then. The Car Masters Collision invoices dated January 25, February 1 and March 1, 2006 imply that Subserious took possession as tenant, because those invoices are addressed to Subserious and refer to “rental”. This is supported by Mr. Vinokurov’s August 2019 affidavit which states that Subserious paid rent to Car Masters Collision from January to May 2006, in the amount of $1,875 per month. [ 63 ] At some point Subserious moved into the Car Masters Property. Mr. Vinokurov swears in his September 2009 affidavit that Subserious moved in in December 2006. Mr.

Pavlyshyn swears in his March 2008 affidavit that Subserious had been operating out of the Car Masters Property since January 2006. According to Mr. Vinokurov’s August 2019 affidavit, Subserious has continued to operate out of the Car Masters Property. I conclude that Subserious has been in possession of the Car Masters Property from January 2006 to the present. [ 64 ] Subserious paid all utilities, property taxes and insurance related to the Car Masters Property from June 2006 onward, but paid no rent. Based on the figures in Mr.

Vinokurov’s August 2019 affidavit, the average monthly payment for utilities, taxes and insurance from June 2006 to August 2019 was $1,933. [ 65 ] Mr. Vinokurov deposes in his August 2019 affidavit that Subserious has also spent $165,168 on renovations, repairs and equipment of and for the Car Masters Property. [ 66 ] Subserious has no ownership interest in the Car Masters Property, because it did not pay any of the purchase price to Car Masters Collision or the McKays. Subserious may have a claim against the owners (118 and Mr. Pavlyshyn) for amounts Subserious has expended.

That claim is not before me on this application. [ 67 ] The Vinokurovs argue that Subserious’ payments toward the Car Masters Property should be used to adjust the Vinokurovs percentage shareholdings in 118. This submission ignores the fact that Subserious is a corporation and thus a legal person distinct from its owners. Contributions by Subserious are not contributions by the Vinokurovs. [ 68 ] Mr. Pavlyshyn used the Car Masters Property in the evenings and on weekends starting sometime in 2006 and continuing until September 2007. According to Mr. Vinokurov’s September 2009 affidavit, Mr.

Pavlyshyn was not asked to pay anything for that use. As a 68.75% owner, Mr. Pavlyshyn was entitled to use the property. 7. Breach of Contract and Specific Performance [ 69 ] Mr. Pavlyshyn argues that he and Mr. Vinokurov formed a contract to buy the Car Masters Property together in equal shares which Mr. Vinokurov breached by having 118 acquire the property using Mr. Pavlyshyn’s deposits.

The Vinokurovs argue that the two men agreed to form a family business operating out of the Car Masters Property which would be home to both Subserious’ car audio and accessories business and a new automotive repair and bodywork business to be jointly owned by both men, and that Mr. Vinokurov breached that contract by failing to quit his job and come to work full time in the new business. I find that no contract was formed between the two men because there was no certainty with respect to the performance required by each party.

There is no written contract between the two men, and each has a different recollection of what was agreed.

[ 70 ] Each party argued opposite sides of the specific performance issue, with Mr. Pavlyshyn submitting that the Car Masters Property is unique and the Vinokurovs arguing that it is not. I do not need to resolve that issue because I find that there is no contract between the two men which could be enforced by way of specific performance. [ 71 ] The basis of my decision that title to the Car Masters Property be changed to reflect Mr.

Pavlyshyn’s 68.75 % interest is not the enforcement of a contract, but the recognition of his equitable interest having paid 68.75% of the purchase price in the agreement for sale with Car Masters Collision and the McKays. Had Car Masters Collision and the McKays failed to transfer title, then there might have been a specific performance issue, in an action against them. But they did transfer title to one of the purchasers, 118, so the specific performance issue does not arise with respect to the contract for sale of the Car Masters Property. 8. Oppression [ 72 ] Mr.

Pavlyshyn sought an oppression remedy under the Business Corporations Act as an alternative to a proprietary remedy with respect to the registered ownership of the Car Masters Property. As I am granting the proprietary remedy, it is not necessary for me to consider the alternative relief. [ 73 ] The Vinokurovs argue that because Mr. Pavlyshyn has sought a remedy as a shareholder of 118 and because he is a shareholder of 118, his rights must be determined as a shareholder, and not as a purchaser or owner directly. They argue it would be illogical and unfair to find him to be a tenant in common with 118.

I disagree, for three reasons. First, Mr. Pavlyshyn founded his claim on alternative grounds. They are not inconsistent, but even if they were, that would not be fatal: Rule 13.8. Second, there is no evidence before me of what value there is in the shares of 118. That will depend in part on what obligations 118 has to Ms. Vinokurov arising out of her payment of $50,000 toward the purchase price of the Car Masters Property, and what obligations flow in both directions between 118 and Mr.

Pavlyshyn, as owners of the Car Masters Property, on the one hand, and Subserious, on the other hand, given that Subserious has used the property and paid various expenses. Consequently, Mr. Pavlyshyn’s shares in 118, whether he has 34% or some other percentage, may be worthless. I cannot conclude that there is any inequity or windfall to Mr. Pavlyshyn in recognizing his direct personal interest in the Car Masters Property. Third, Mr. Pavlyshyn is a 34% shareholder in 118 as a result of Mr. Vinokurov’s unilateral actions in giving Mr. Pavlyshyn 50% and then transferring some of those shares to Ms. Vinokurov.

The Vinokurovs cannot complain about the results of their own actions. 8. Disposition [ 74 ] I order that the Registrar of the Land Titles Office cancel the existing certificate of title to the Car Masters Property and issue new certificates of title, setting forth that Walter Pavlyshyn is the owner of an estate in fee simple as to an undivided 68.75% interest and that 1184162 Alberta Ltd. is the owner of an estate in fee simple as to an undivided 31.25% interest in the same land. [ 75 ] If the parties are not able to agree on costs, costs may be spoken to no later than February 28, 2020.

Heard on the 17 th day of October, 2019. Dated at the City of Edmonton, Alberta this 18 th day of December, 2019. G.S. Dunlop J.C.Q.B.A. Appearances: Julie V. Shepherd MLT Aikins for the Applicant

Bruce Mintz Mintz Law for the Respondents