Zaidi v. Syed Estate

Zaidi v. Syed Estate Collection Decisions of the Court of Appeal Date 2024-05-23 Neutral citation 2024 ONCA 406 Docket numbers COA-23-CV-0303 Judges van Rensburg, Katherine; Sossin, Lorne; Dawe, Jonathan Subject Civil Decision Content COURT OF APPEAL FOR ONTARIO CITATION: Zaidi v. Syed Estate, 2024 ONCA 406 DATE: 20240523 DOCKET: COA-23-CV-0303 van Rensburg, Sossin and Dawe JJ.A. BETWEEN Aqeel Zaidi also known as Aqeel Abbas Zaidi Applicant (Appellant) and Estate of Asim Raza Syed and Rabab Fatima Naqvi, Trustee Respondents (Respondents) Karanpaul Randhawa, for the appellant Ranbir S. Mann, for the respondents Heard: May 8, 2024 On appeal from the order of Justice Paul M. Perell of the Superior Court of Justice, dated February 22, 2023, with reasons reported at 2023 ONSC 1244, and from the costs order dated April 27, 2023, with reasons reported at 2023 ONSC 2586. REASONS FOR DECISION The Application [1] The appellant, Mr. Zaidi, commenced an application in the Superior Court against the estate of Mr. Syed (his uncle) and the estate trustee, Ms. Naqvi, who is the late Mr. Syed’s widow (and Mr. Zaidi’s aunt). Mr. Zaidi was seeking to enforce a settlement agreement dated April 7, 2021. He claimed that he was entitled to payment by the estate of $94,283 and accrued interest under the agreement. Ms. Naqvi opposed enforcement of the settlement. [2] The underlying dispute was in relation to a condominium unit purchased by Mr. Syed in 2017 (the “Unit”). The Unit was leased to Mr. Zaidi for himself and for a sister of Mr. Syed and her two children. [3] Mr. Zaidi claimed that sometime between April and June of 2019, Mr. Syed agreed to sell the Unit to him for $420,000 after Mr. Zaidi became a permanent resident.[1] He deposed that after they reached this oral agreement, he stopped paying rent on the Unit, and all of the monthly payments he made thereafter (which increased from $1,600 per month to $2,450 and then to $2,495) were used to service the mortgage and were on account of the purchase price. [4] Mr. Zaidi became a permanent resident in January 2020. Mr. Syed died shortly thereafter, and ownership of the Unit passed to his estate. Mr. Zaidi deposed that he told Ms. Naqvi about his oral agreement with Mr. Syed and that she agreed to honour it. [5] By contrast, Ms. Naqvi asserted that Mr. Zaidi’s monthly payments were used to pay the mortgage, as Mr. Syed had financial difficulties and was otherwise unable to carry the property; that Mr. Zaidi was to purchase the Unit by the end of 2019, but had failed to do so; that the rent had increased to $2,000 per month in January 2020; and that Mr. Zaidi’s payments were on account of rent and the repayment of a $10,000 loan. The loan, made by Mr. Syed in November 2018, was not in dispute. [6] Ms. Naqvi deposed that, after Mr. Syed’s death, she and Mr. Zaidi had jointly retained a real estate agent who was related to both of them by marriage, to act on a sale of the Unit to Mr. Zaidi. The purchase price in the agreement of purchase and sale was $550,000, which Ms. Naqvi understood was the fair market value of the Unit. Mr. Zaidi insisted, however, that the $550,000 was only a notional amount, and that the real purchase price was $420,000, the amount he and Mr. Syed had agreed to two years earlier. His evidence was that the higher amount was shown on the agreement of purchase and sale so that he could obtain a $420,000 mortgage, and then use the funds to purchase the Unit. [7] The parties were at an impasse with respect to the sale. After several family Zoom meetings, they entered into the settlement agreement, pursuant to which the estate would pay Mr. Zaidi $94,283 and Mr. Zaidi would vacate the Unit by a specified date so that it could be sold. The settlement agreement also relieved Mr. Zaidi of the repayment of a “credit card amount” of $7,300. [8] Ms. Naqvi retained counsel after Mr. Zaidi demanded payment in early July 2021. In a letter dated July 7, 2021, Ms. Naqvi’s lawyer told Mr. Zaidi that his client disputed the alleged agreement on various grounds, “more particularly that the [settlement agreement] was executed involuntarily by [her]”. He advised that the sum of $94,283 would be held back from the proceeds of sale of the Unit and paid into court unless there was a settlement. In response, Mr. Zaidi retained his own counsel who insisted on a holdback of $109,283 from the sale of the Unit ($94,283 plus $15,000 security for costs), which amount was held in trust when the sale of the Unit was closed on July 30, 2021, and eventually paid into court. In November 2021, Mr. Zaidi commenced the underlying application to enforce the settlement agreement. [9] The application was dismissed. The application judge concluded that the estate was entitled to rescission of the settlement agreement on the alternative grounds of innocent misrepresentation, unconscionability and undue influence. He set out his findings with respect to each ground for rescission, at paras. 59 to 61 of his reasons as follows: In my opinion, the elements for rescission for innocent misrepresentation are satisfied in the immediate case. Mr. Zaidi by his conduct and by his silence represented to Ms. Naqvi that the late Mr. Syed had committed to selling the condominium unit to Mr. Zaidi pursuant to an oral contract. Mr. Zaidi by his conduct and silence represented to Ms. Naqvi that he had a right to be repaid what he had paid while living in the condominium unit because of the promise made by the late Mr. Syed. These false material representations induced Ms. Naqvi to enter into the transaction…. In my opinion, all of these elements of traditional and contemporary unconscionability are present in the facts of the immediate case. Ms. Naqvi was in a vulnerable position. She was being taken advantage of. She ought to have received independent legal advice and representation. The bargain was certainly improvident or unfair from Ms. Naqvi’s perspective. The agreement reached with the late Mr. Syed for Mr. Zaidi to purchase the condominium unit, was unenforceable and she was under no obligation to have the Estate sell the condominium unit to Mr. Zaidi and no obligation to sell it at historic values that did not reflect the property’s fair market value…. In my opinion, the elements for rescission for undue influence are satisfied in the immediate case…. [T]here is no presumption of undue influence and there was no outright abuse of power in the immediate case; there was, however, manipulation, cultural pressure, and coercion that compelled Ms. Naqvi to agree to the Settlement Agreement. I find as a fact that there was undue influence in the immediate case. [Emphasis added.] [10] The application judge awarded Ms. Naqvi $28,000 in costs on a partial indemnity scale with a reduction from the costs claimed in her costs outline. He noted that the application proceeded as if it were a motion and cross-motion for summary judgment, and that this was a fair and reasonable award of costs for the successful party. Grounds of Appeal [11] Mr. Zaidi contends that the application judge made four reversible errors in dismissing the application: (1) the application judge denied him procedural fairness by deciding the application on grounds that had not been pleaded; (2) the application judge erred in determining credibility issues, and ought to have directed a trial; (3) the application judge failed to consider his alternative claim for unjust enrichment; and (4) the application judge failed to respect the principle of the finality of settlements. [12] Mr. Zaidi also seeks leave to appeal the award of costs, asserting that the application judge failed to consider an alleged agreement between the parties that costs would be limited to $15,000. Discussion [13] We address each ground of appeal in turn. (1) Alleged Denial of Procedural Fairness [14] Mr. Zaidi’s first argument is that the application judge relied on legal principles that were not advanced by Ms. Naqvi, and that as a result he was deprived of procedural fairness. He contends that Ms. Naqvi’s main challenge to the enforcement of the settlement agreement was that the application did not comply with the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for proceedings against an estate. He relies on this court’s decision in Singh v. Trump, 2016 ONCA 747, 408 D.L.R. (4th) 235, at paras. 148-49, as authority that there is a denial of procedural fairness where a motion judge grants or dismisses a claim on a motion for summary judgment that is not within the scope of the motion before the court, and that a fair hearing requires that a party have notice of the matters that will be at issue at the hearing. [15] In Singh, this court noted that the summary judgment motion in the court below had been limited to two categories of claims that were asserted in the notice of motion and included in the parties’ factums. Because the motion judge had gone beyond the contentious issues when he dismissed causes of action that fell outside the scope of the motion for summary judgment, the dismissal of these causes of action was set aside on appeal. [16] By contrast, in this case the dispute that was decided by the application judge – whether the settlement agreement was enforceable against Ms. Naqvi because of the circumstances surrounding its negotiation and execution – was squarely raised by the parties in the evidence and argument. While her counsel had raised an objection to how the proceedings were commenced, Ms. Naqvi also opposed the enforcement of the settlement agreement on the basis that she had entered into it “involuntarily”. Indeed, the application judge observed that the parties “focused on” this issue. [17] The application judge provided a remedy that was specifically requested by Ms. Naqvi. In her affidavit responding to the application to enforce the settlement, Ms. Naqvi asked that the settlement agreement be set aside, and at para. 51 she set out the basis for this relief. She stated that she “did not want to sign the alleged agreement and had signed it involuntarily”, referring to 11 factors relating to the family, cultural and religious pressures that led her to enter into the settlement and to sign the settlement agreement. [18] Mr. Zaidi addressed Ms. Naqvi’s contention that the settlement agreement was unenforceable. In his initial affidavit he challenged the assertion that the agreement was entered into involuntarily, referring to Ms. Naqvi having executed the agreement while having input from her realtor, his wife, and her daughter, and that the fact that he was not present or in contact with her during the settlement discussions. Ms. Naqvi was cross-examined about who was present at the negotiation and signing of the settlement agreement, and she was challenged on whether she had been threatened or forced. [19] In their factums on the application the parties joined issue on Ms. Naqvi’s assertion that she had signed the settlement agreement involuntarily and whether the agreement should be set aside, as Ms. Naqvi requested. Mr. Zaidi specifically addressed the factors outlined at para. 51 of Ms. Naqvi’s affidavit, setting out reasons why each factor did not assist in giving reasonable grounds to set aside the agreement. Ms. Naqvi’s factum also claimed that the settlement agreement was entered into due to “undue influence … by [her] close relatives”. In his reply factum, Mr. Zaidi asserted that, although Ms. Naqvi was arguing undue influence, she was relying on cases dealing with economic duress, and he argued that there was no evidence that such pressure caused Ms. Naqvi to sign the agreement. [20] In our view there was no procedural unfairness to Mr. Zaidi. The application judge provided a remedy that was specifically requested by Ms. Naqvi when he refused to enforce the settlement agreement. While only one of the three alternative legal bases relied on by the application judge – undue influence – had been specifically raised by Ms. Naqvi, there was no question that she was relying on the circumstances leading to the settlement agreement in resisting its enforcement, and Mr. Zaidi put forward his own evidence and challenged Ms. Naqvi on her account of the various circumstances. This is not a case where a judge stepped outside of the issues that were joined by the parties to find liability thereby depriving a party of the right to a fair opportunity to meet the case. [21] The specific legal label attached by a party to their claim or defence is not determinative of whether an action has been decided outside the scope of the pleadings: see e.g., Tall Ships Development Inc. v. Brockville (City), 2022 ONCA 861, 476 D.L.R. (4th) 500, at para. 94. The forms of action must be interpreted with a measure of common sense: Leslie v. Mississauga (City) (2006), 81 O.R. (3d) 415, at para. 15. And, as Perell J. noted in Cashbloom Canada, ULC v. Ridgeway Design Centre Inc., 2017 ONSC 2994, at para. 6, the court will not take an overly technical approach to determining whether a claim or defence has been adequately pleaded. [22] Even if we were to accept that the application judge went too far in relying on innocent misrepresentation and unconscionability, which were not specifically asserted by Ms. Naqvi’s counsel, undue influence was expressly raised as a basis for setting aside the settlement agreement. The application judge, at para. 61 of his reasons, explained why the elements of rescission for undue influence had been satisfied in this case. He noted that, although there was no outright abuse of power, there was manipulation, cultural pressure, and coercion that compelled Ms. Naqvi to agree to the settlement agreement. There is no basis to interfere with the application judge’s findings in relation to this ground for rescission of the settlement agreement. (2) Alleged Failure to Direct a Trial [23] As his second ground of appeal, Mr. Zaidi argues that the application judge ought not to have granted summary judgment because there were factual issues in dispute that depended on an assessment of credibility for their determination. He points to the application judge’s observation at para. 18 of the reasons that “[w]ith these many contentious issues of fact and of credibility, a case like the case at bar typically would be both inappropriate for an application and also inappropriate for a motion for a summary judgment”. [24] There is no merit to this submission. After making this observation, the application judge went on to explain that (1) it was not necessary on the major issues to make findings of credibility or to choose between the competing versions of events in order to decide the case; and (2) he agreed with the parties that the case could be fairly resolved summarily. What is key is that Mr. Zaidi had commenced an application seeking to enforce the settlement, and that neither party had sought the trial of an issue. Indeed, both sides urged the application judge to determine the case summarily and they indicated that no more evidence would be called if the matter went to trial. [25] We agree with Ms. Naqvi that, having chosen to proceed in this manner, Mr. Zaidi cannot now complain that it was inappropriate for the application judge to determine the matter as though there were competing motions for summary judgment: Voreon Inc. v. Matas Management Services Inc., 2023 ONCA 745, at para. 37. In any event, there is no reason to interfere with the application judge’s assessment that the matter was suitable for summary determination. This determination is entitled to deference on appeal, in the absence of an extricable error in principle, or a palpable and overriding error: Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, at para. 30. No such error has been demonstrated here. (3) Alleged Failure to Consider Unjust Enrichment [26] Mr. Zaidi’s third argument is that the application judge erred in failing to consider his alternative claim for unjust enrichment. He asserts that the estate was enriched by the increased monthly payments that he made from June 2019 onward, and by repairs and renovations that he made to the Unit in anticipation of becoming its owner. He asks that this court direct a trial of the issue of unjust enrichment. [27] The problem with this argument is that, although there was a brief reference in para. 2(z) of the notice of application to “unjust enrichment”, the relief sought by Mr. Zaidi in the application and at the hearing before the application judge was the enforcement of the settlement. He claimed that he was entitled to make the application and to have it heard summarily. [28] When Ms. Naqvi’s counsel attempted to cross-examine Mr. Zaidi on his expenditures, his counsel objected, stating that his client was “not claiming repayment of receipts”. Mr. Zaidi’s counsel also objected to the question whether Mr. Zaidi had obtained permission to do the renovations, stating that “because my client’s claim is to enforce the [settlement agreement], I don’t see what the relevance is whether he obtained permission to do repairs at [the Unit].” Although he ultimately permitted questions about why Mr. Zaidi had not kept copies of the receipts and whether he had communications with Mr. Syed or Ms. Naqvi about the repairs, the objections by Mr. Zaidi’s counsel had the effect of circumscribing the scope of cross-examination on these matters, and were reinforced by his repeated insistence that the application strictly concerned the enforceability of the settlement agreement. [29] Contrary to Mr. Zaidi’s submissions, the application judge did not overlook his claim for unjust enrichment. Mr. Zaidi’s initial and reply factums in the application do not address the legal test for unjust enrichment or the evidence to assert a claim for unjust enrichment. Neither factum refers to a basis for a claim for compensation other than through the enforcement of the settlement agreement. As such, it is understandable that the application judge did not address the issue of unjust enrichment. The claim was simply not before him. Rather, as already noted, counsel were firm in their mutual request that the application judge finally dispose of the application in a summary fashion and the focus was on the enforceability of the settlement agreement. As such, there was no error on the part of the application judge in failing to address unjust enrichment and there is no basis for this court to direct a trial of that issue. (4) Alleged Failure to Respect Finality of Settlements [30] As his fourth ground of appeal, Mr. Zaidi contends that the application judge failed to respect the principle supporting the finality of settlements. He says that the application judge incorrectly relied on events that took place after the settlement agreement was signed as a basis for its rescission. He relies on Deschenes v. Lalonde, 2020 ONCA 304, 447 D.L.R. (4th) 132, where this court stated that “a settlement agreement will not be rescinded on the basis of information that has come to light following the settlement that indicates that a party has entered into an improvident settlement”: at para. 27. [31] We do not see the alleged error. The application judge did not rely on subsequent events to rescind the settlement agreement. There was no information that came to light, or any other evidence, to suggest that Ms. Naqvi had a change of heart or otherwise with the benefit of hindsight was not prepared to complete the settlement. Rather, the application judge referred to the subsequent events in order to explain how the litigation came about. Ms. Naqvi first obtained legal advice after Mr. Zaidi sent an email to her nine days before the payment was due, demanding written confirmation that day of how the payment would be made, failing which he would register a caution on the Unit. The following day her lawyer notified Mr. Zaidi that Ms. Naqvi disputed the enforcement of the agreement, including on the basis that it was executed “involuntarily”. [32] The application judge expressly acknowledged that there is a strong presumption in favour of the finality of settlements. However, relying on para. 28 of Deschenes, he went on to correctly state that a settlement agreement is a contract and can be set aside in the same way that a contract may be rescinded, including for innocent misrepresentation, undue influence or unconscionability. [33] The application judge’s approach was correct at law. He recognized that settlements are generally final, but he went on to review the evidence and to conclude that there was a legal basis for refusing enforcement of the settlement reached in this case. It was open to him to find on the evidence that Ms. Naqvi had entered into the settlement as a result of cultural and family pressures, and to rescind the settlement agreement on the alternative grounds that the agreement was procured through undue influence, that the terms of the agreement were unconscionable, and that the settlement was premised on a misrepresentation by omission when Ms. Naqvi was led to believe that the oral agreement between Mr. Zaidi and her husband was enforceable. Leave to Appeal Costs [34] Finally, Mr. Zaidi also seeks leave to appeal the costs award. He asserts that the application judge erred in awarding Ms. Naqvi more than $15,000 in costs. [35] The test for leave to appeal an award of costs is set out in Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27: a court should not set aside a costs award on appeal unless the court below made an error in principle or if the costs award is plainly wrong. [36] There is no basis to grant leave to appeal costs. It was not an error in principle for the application judge to award more than $15,000 in costs simply because that was the amount on which the parties had agreed, on a without prejudice basis, to be paid into court as security for costs so that the sale of the Unit could proceed. The $15,000 holdback made for this purpose from the net sale proceeds did not amount to an agreement on costs. Nor has any other error in principle been demonstrated. Disposition [37] For these reasons the appeal is dismissed and leave to appeal costs is denied. Costs of the appeal are payable by Mr. Zaidi to Ms. Naqvi fixed in the agreed-upon inclusive amount of $10,000. “K. van Rensburg J.A.” “L. Sossin J.A.” “J. Dawe J.A.” [1] According to Mr. Zaidi, his permanent resident status was necessary to avoid payment of a 15% non-resident speculation tax which, based on the purchase price of the Unit, would have amounted to $63,000.