2024 QCCS 100, 2024 QCCS 100

Nath c. Ray 2024 QCCS 100 SUPERIOR COURT C A N A D A PROVINCE OF QUEBEC DISTRICT OF MONTREAL N o : 500-17-122971-222 DATE: 8 January 2024 PRESIDING: THE HONOURABLE AZIMUDDIN HUSSAIN, J.S.C. NEMAI NATH Plaintiff v.

RUBAL RAY and NAYAN RAY Defendants JUDGMENT (Application for sale of co-owned immovable, claim for damages) OVERVIEW [ 1 ] The Plaintiff Nemai Nath applies for the sale of an apartment building located at [...] in Montreal ( Immovable ), equally co-owned in undivided co-ownership with the Defendant Rubal Ray. [ 2 ] The Plaintiff also claims damages in the form of lost rental income and reimbursement of the down payment he made for the purchase of the Immovable. [ 3 ] The Defendant Rubal Ray is the cousin of Mr. Nath’s wife, and the Defendant Nayan Ray is Rubal’s father and Mr.

Nath’s wife’s uncle. [1] The Defendants administer the Immovable. They were served with the proceedings but, for reasons known only to them, chose not to file an answer or contest the application. They must therefore live with the consequences of the present judgment without having

availed themselves of the opportunity to present their side of the story. [2] [ 4 ] For the reasons set out below, the Court orders the sale of the Immovable, and awards damages to the Plaintiff but for less than the amount claimed. ANALYSIS Applicable principles [ 5 ] The applicable principles of law are clear.

A co-owner is not required to remain in undivided co-ownership and therefore may demand the end of the indivision through sale of the property. [3] He has a right to the revenues produced by the co-owned property in proportion to his ownership share. [4] Like all parties to a contract, he has a right to the enforcement of his counterparty’s contractual obligations. [5] Application of principles to the present case [ 6 ] On 29 May 2013, Mr. Nath and Rubal Ray purchased the Immovable in undivided co-ownership for $475,000. Mr.

Nath paid the down payment of $104,000 by refinancing another property of his. [ 7 ] He and Rubal Ray signed a notarized agreement on 14 February 2017 ( Agreement ) acknowledging the foregoing and agreeing that Mr. Nath has a right to be reimbursed the amount of the down payment through the rental payments from the Immovable. The Agreement confirms in 2017 that Mr. Nath has been reimbursed by way of monthly payments of $504.17 since the purchase of the Immovable in 2013. [ 8 ] Rubal Ray respected the Agreement for some years, increasing the monthly payment according to the variation in the monthly amount that Mr.

Nath needed to pay on the credit line used to make the down payment. The credit line was subject to a variable rate of interest, hence the change in the monthly amount. [ 9 ] As of April 2021, the monthly amount that Mr. Nath owed on his credit line was $536.65. Rubal Ray paid this until April 2022, at which point he stopped. As of March 2023, Mr.

Nath has been obliged to pay $635.52 per month on his credit line but has been deprived since April 2022 of the payments owed to him under the Agreement. [ 10 ] The moment at which Rubal Ray ceased paying the monthly amount under the Agreement coincides with a dispute between the parties arising from the Defendants’ request that Mr. Nath agree to transfer to Mr. Ray’s sister a 1/3 ownership share of the Immovable. The Defendants stated to Mr. Nath that they are the ones administering the Immovable, and therefore the transfer of a share to Mr. Ray’s sister would be compensation for that work. [ 11 ] Mr.

Nath refused the request, and this refusal led to a stop in the monthly payments that were supposed to be made under the Agreement, which constitutes a breach of contract on the part of Rubal Ray. The Defendants also stopped giving Mr. Nath access to the Immovable, including the leases for the apartments. [ 12 ] Additionally, the relationship became violent: on 28 July 2022, Nayan Ray demanded to meet Mr. Nath in front of the Immovable, and when the latter met him at the agreed-upon time, Mr. Ray became increasingly escalated and started calling Mr.

Nath names and at one point grabbed a stone from the ground and threw it at Mr. Nath. [ 13 ] Mr. Nath dodged the stone and started running when he saw that Nayan had grabbed a stick from inside the Immovable and was coming at him to hit him. Mr. Nath ran home, which is five minutes away. An hour later, both Nayan and Rubal Ray appeared outside Mr. Nath’s house and rang the doorbell and started to bang on the door and windows. [ 14 ] Rubal called Mr. Nath’s daughter to demand that Mr. Nath come out and discuss. She told them to leave and that otherwise she would call the police.

They left. [ 15 ] In light of the above, the Court will order the Defendants not to be in contact with Mr. Nath, his wife Jhuma Roy, or their children in any way. They must communicate with the lawyers for the Plaintiff for any matter related to the Immovable. Amounts owed under the Agreement [ 16 ] Rubal Ray is in default of the monthly payments to Mr. Nath for the period as of April 2022, which adds up to $11,622.83 by November 2023, but there is also an ongoing breach of the Agreement since Mr. Ray owes $635.52 on a monthly basis from the rental revenue.

It is clear from the evidence that these payments were withheld as retaliation against Mr. Nath for his refusal to accede to the Defendants’ request for the transfer of 1/3 of the ownership interest in the Immovable. [ 17 ] The Court will order Rubal Ray to pay $11,622.83 to Mr. Nath and to pay the monthly amount of $635.52 until the sale of the Immovable and the full reimbursement of the amount owed to Mr. Nath under the Agreement. Amounts owed as lost profits [ 18 ] On top of this, Rubal Ray has not distributed to Mr. Nath the rental income generated by the six apartments of the Immovable since at least 2018.

Mr. Ray claimed that the Immovable’s costs were greater than its revenue and asked Mr. Nath to pay 50% of the losses. Yet, Mr. Ray did not provide any documents to establish the losses of which he spoke, and when Mr. Nath suggested that it be sold since there was no point in holding on to a property that was losing money, Mr. Ray refused, stating that maybe the Immovable will be

profitable in the future. [ 19 ] The Court is convinced on a balance of probabilities by the evidence presented by Mr. Nath, namely the three Statements of Real Estate Rentals filed by Rubal Ray with the Canada Revenue Agency ( CRA ), for the years 2019-2021, that the Immovable was profitable and there were no grounds for refusing the distribution of the profits. [ 20 ] According to these statements, the Immovable had a net income of a. $15,469.51 in 2019, b. $11,693.89 in 2020, and c. $7,214.05 in 2021.

The gross rental income for those years was $43,200, $43,000, and $36,000, respectively. [ 21 ] The Plaintiff claims for five years of lost profits, namely from 2019 until 2023, inclusively. He does not base his calculations on the above Statements of Real Estate Rentals, but rather on various amounts that the Defendants would have told him in the past as to revenues and expenses related to the Immovable. [ 22 ] Mr. Nath testified that the Defendants told him in the past that the costs of repairs and maintenance were $300 per month. He also stated that they told him they were collecting $4,200 in rent per month.

Bank statements from 2019 and 2020 show monthly loan reimbursement amounts around $2,200. Under the Agreement, Rubal Ray owed to Mr. Nath a monthly amount of $536.65 and now owes $635.52. Mr. Nath rounds this figure to $500 per month as an expense of the Defendants, for the purposes of calculating the profits owed to him. [ 23 ] He therefore calculates a net monthly profit of $1,200, based on $4,200 in rent and $3,000 in expenses, composed of bank loan reimbursement, reimbursement under the Agreement, and repairs and maintenance costs.

He arrives at a total of $36,000 by multiplying $1,200 by 12 months and then 5 years, and then taking 50% of the product. [ 24 ] Instead of relying on the vague and general out-of-court declarations of the Defendants, as conveyed by Mr. Nath in his testimony, as to the amount of rent and expenses, the Court prefers to rely on the Statements of Real Estate Rentals, which Mr. Nath obtained from Rubal Ray’s accountant, with Mr. Ray’s consent. Mr. Nath and Mr. Ray have the same accountant. [ 25 ] The reliability of this documentary evidence is greater than the out-of-court declarations conveyed by Mr.

Nath, especially considering that preparing and filing them with CRA is done in the ordinary course of business and is required by law to be truthful and kept on file. [6] Rubal Ray could hardly claim that the information contained in these documents is unreliable, the documents are from his own tax file. [ 26 ] Also, the Defendants refused to appear in the present proceedings, and therefore the Court was faced with an impossibility of obtaining their testimony. [ 27 ] Finally, the information contained in the Statements of Real Estate Rentals can be seen as admissions insofar as that information constitutes an acknowledgment of facts that produce legal consequences against Rubal Ray. [7] [ 28 ] Under the Statements of Real Estate Rentals, the net income declared by Rubal Ray as 50% co-owner of the Immovable was $7,734.75 for 2019, $5,846.95 for 2020, and $3,607.03 for 2021.

In all of these statements, in the

section “Details of other co-owners and partners”, Mr. Ray admits that Mr. Nath is 50% co-owner and that his share of net income is the same dollar figure set out above for each of the years. [ 29 ] The annual average over the three years is $5,729.58 and therefore Mr. Nath has a right to that profit as the other 50% co-owner of the Immovable. [ 30 ] The next point is the period over which the Plaintiff can claim the lost profits. While he calculates five years between 2019 and 2023, he can only begin as of June 2019 since he is time-barred to claim the lost profits before that.

He filed his originating application on 14 November 2022, and so the three-year prescription period [8] plus the Covid-related suspension of extinctive prescription [9] allows him to reach back to June 2019. [ 31 ] The Court calculates a period of four years and six months from June 2019 to December 2023. At an annual average of $5,729.58 in net income for Mr. Nath, the total for this period is $25,783.11. The Court will accordingly order this amount to be paid as damages for lost profits.

Access to Immovable, collection of rents, sale of Immovable [ 32 ] The Plaintiff asks for a declaration to the effect that he has the right to collect the rents paid by the tenants of the Immovable. The Court will grant this request but specify that he will have to pay to the Defendant Rubal Ray 50% of the net amount collected, i.e., after deduction of the monthly reimbursement amount of $635.52 under the Agreement and the expenses related to the Immovable. [ 33 ] In light of the above, the Court will grant Mr. Nath’s application to sell the Immovable.

The co-ownership situation is untenable, and the relationship between the parties is toxic. The law allows for Mr. Nath to leave the co-ownership. [ 34 ] Given the dysfunctional relationship between the parties, the Court will set down the modalities of the sale process, specifying that Rubal Ray has the right to receive copies of any purchase offers, but the approval of an offer must come from Mr. Nath for it to be considered accepted.

DISPOSITION FOR THESE REASONS, THE COURT: [ 35 ] GRANTS in part the Modified Application for Sale and in Partition of an Immoveable ; [ 36 ] ORDERS the sale by agreement of the property ( Immovable ) described as follows: DESIGNATION An immoveable known and designated as original lot number [...] ([...]) according to the official cadastre of Quebec, registration division of Montreal.

With the building thereon erected bearing civic number [...], Montreal, province of Quebec, [...]. [ 37 ] APPOINTS the Plaintiff Nemai Nath as the person designated to sell the Immovable and to take all steps necessary or useful to accomplish the sale of the Immovable, and to thereafter file the report of the sale in the present court file; [ 38 ] AUTHORIZES the Plaintiff, if he so deems necessary or desirable, to retain the services of a real-estate broker to be paid a commission of no more than 5% of the sale price of the Immovable, to be paid out of the proceeds of the sale; [ 39 ] ORDERS that the sale of the Immovable be made according to the following modalities: The sale will be made in the name of the Plaintiff and the Defendant Rubal Ray, without legal warranty and at the risk of the buyer; All purchase offers must be submitted to both the Plaintiff and the Defendant Rubal Ray, but any offer must be approved by the Plaintiff in order to be accepted; The sale price shall be paid by way of certified cheque or money order and be deposited into the trust account of the notary who prepares the act of sale, under reserve of all deposits which may have already been paid, and shall be held in the trust account of the notary until such time as the distribution of the proceeds of the sale has been effected; The act of sale will be prepared at the expense of the buyer; The commission for the real-estate broker, if any is owing, will be paid from the proceeds of sale at the time of the signature of the act of sale; All adjustments of any nature whatsoever, including those related to municipal and school property taxes, will be made at the date of the signature of the act of sale and the buyer shall pay, at the moment of the act of sale, the property taxes for the period covering the date from the sale to the end of the fiscal year for the taxing authority concerned; All taxes, withholdings, fees or impositions that may result from the sale will be at the expense of the buyer; [ 40 ] AUTHORIZES the Plaintiff to withdraw from the sale proceeds any amount necessary to reimburse himself the outstanding balance owed under the agreement between the Plaintiff and the Defendant Rubal Ray of 14 February 2017, signed in front of the notary Mtre.

Marie Revelis, minute number 1 379 (Exhibit A-3, Agreement ), and ORDERS the Plaintiff thereafter to pay 50% of the remaining balance of the sale proceeds to the Defendant Rubal Ray; [ 41 ] ORDERS the Defendant Rubal Ray to pay to the Plaintiff the amount of $11,622.83 as damages for the unpaid reimbursement instalments due under the Agreement, plus interest at the legal rate and the additional indemnity according to

article 1619 of the Civil Code of Québec as of the date of the present judgment; [ 42 ] ORDERS the Defendant Rubal Ray to pay $635.52 per month to the Plaintiff as of 31 December 2023 in conformity with the Agreement, until such time as the Plaintiff is collecting the rent from the tenants directly, as set out at paragraphs 44-46 below, or until such time as the Immovable is sold and the outstanding balance still owing pursuant to the Agreement is fully repaid through the Plaintiff’s withdrawal of the reimbursement amount from the sale proceeds; [ 43 ] ORDERS the Defendant Rubal Ray to pay to the Plaintiff the sum of $25,783.11 as damages for lost profits, plus interest at the legal rate and the additional indemnity according to

article 1619 of the Civil Code of Québec as of the date of the present judgment; [ 44 ] DECLARES that the Plaintiff has the right to access the Immovable and collect the rent of the tenants of the Immovable until its sale, and ORDERS the Plaintiff to pay to the Defendant Rubal Ray 50% of the net amount of rent collected by the Plaintiff, i.e., after deduction of the monthly reimbursement amount of $635.52 and expenses related to the Immovable;

[ 45 ] ORDERS the Defendants to remit to the Plaintiff the keys to the Immovable and copies of the current leases for the rental units of the Immovable, within five (5) days of this judgment through the offices of the Plaintiff’s lawyers, Alepin Gauthier Avocats Inc.; [ 46 ] ORDERS the Defendants not to hinder the Plaintiff’s access to the Immovable; [ 47 ] ORDERS the Defendants to refrain from any contact or attempt at communication with the Plaintiff, his wife Jhuma Roy, or their children, and ORDERS the Defendants to communicate with the lawyers for the Plaintiff for any issue related to the Immovable and the execution of the present judgment, subject to any out-of-court agreement between the parties as to the means of communication; [ 48 ] WITH legal costs. _ _ AZIMUDDIN HUSSAIN, J.C.S.

Mtre. Franco Tamburro ALEPIN GAUTHIER AVOCATS INC. Lawyer for the Plaintiff Date of hearing: 22 November 2023 Suspension of advisement under

article 323 CCP: 21 December 2023 Resumption of advisement: 28 December 2023