Taherkhani v. Esteghamat-Ardakani

2022 BCCA 62 Taherkhani v. Esteghamat-Ardakani

COURT OF APPEAL FOR BRITISH COLUMBIA Citation: Taherkhani v. Esteghamat-Ardakani, 2022 BCCA 62 Date: 20220203 Docket: CA46711 Between: Mehran Taherkhani Respondent (Claimant) And Rosa Donna Este also known as Rosa Donna Taherkhani also known as Donna Este Respondent (Respondent) And Mina Esteghamat-Ardakani also known as Mina Estegahamat-Ardakani and Francis Amir Este Appellants Before: The Honourable Madam Justice Bennett The Honourable Madam Justice Stromberg-Stein The Honourable Madam Justice Fisher On appeal from: An order of the Supreme Court of British Columbia, dated February 7, 2018 (Taherkhani v. Este, Vancouver Docket E-131501). Oral Reasons for Judgment Counsel for the Appellants (via videoconference): J.K. McEwan, Q.C. E.A. Kirkpatrick K.E.H. Thompson Counsel for the Respondent, Mehran Taherkhani (via videoconference): J.R. Shewfelt The Respondent, appearing in person (via videoconference): R.D. Este Place and Date of Hearing: Vancouver, British Columbia January 31, 2022 Place and Date of Judgment: Vancouver, British Columbia February 3, 2022 Summary: The appellants apply under s. 9(3) of the Court of Appeal Act for an extension of time, standing and leave to appeal an order made February 7, 2018. The order, which proceeded by consent, set aside a settlement agreement and final consent order for corollary relief in a family law action between the respondents. The

appellants were later added as parties to the family action. The appellants have also appealed three other related orders. Held: Applications allowed. The interests of the appellants were not represented at the hearing when the February 7, 2018 order was made, and in the unique circumstances of this case, their interests were adversely affected. The appellants also raise a reasonable argument that setting aside a consent order on the basis of fraud when the veracity of fraud is at issue, as it is in this case, requires more than accepting untested admissions in a non-adversarial context. Since the four related appeals will be heard together, it is in the interests of justice to grant the applications so all substantive issues can be addressed in an efficient manner. [1] FISHER J.A.: The appellants, Mina Esteghamat-Ardakani and Francis Amir Este, apply for standing and leave to appeal an order of February 7, 2018, as well as an order granting an extension of time to do so given the date of the order. The February 7, 2018 order set aside a settlement agreement and final consent order for corollary relief in a family law action between the respondents, Mehran Taherkhani and Rosa Donna Este. For ease of reference I will refer to the parties by their given names, with no disrespect intended. [2] There is no dispute that because Mina and Francis were not parties to the family law action at the time the February 7, 2018 order was made, they must seek standing and leave to appeal under s. 9(3) of the Court of Appeal Act, R.S.B.C. 1996, c.

77. That section confers on this court the authority to "exercise any original jurisdiction that may be necessary or incidental to the hearing and determination of an appeal". [3] There is also no dispute that the factors this court is to consider in exercising its discretion to grant leave to appeal to a non-party are those set out in Société des Acadiens v. Association des Parents, [1986] 1 S.C.R. 549 at 594, cited by this court in Coburn and Watson's Metropolitan Home v. Home Depot of Canada Inc., 2019 BCCA 308 at para. 44, leave ref'd [2020] S.C.C.A. 38873, [2020] S.C.C.A. 38965: The test applied in order to determine when a case was a proper case for leave was whether the applicant would have been a proper, if not a necessary, party to the action. A number of factors which affect the exercise of a court's discretion on such an application are reflected in the cases. An appellant should be able to show, for example, (a) that its interest was not represented at the proceeding; (b) that it has an interest which will be adversely affected by the decision; (c) that it is, or can be, bound by the order; (d) that it has a reasonably arguable case; and (e) that the interests of justice in avoiding a multiplicity of proceedings would be served by the grant of leave. Background facts [4] The circumstances of this application are somewhat complex and unusual. The essential background

facts are as follows. [5] The respondents, Mehran and Donna, were married in July 2004, and separated in March 2013. Mehran filed a Notice of Family Claim in May 2013, seeking to set aside a marriage agreement, equal division of family property, or compensation in lieu of an interest in various listed properties and a bank account (which I will refer to as the listed properties). In defending the property claims, Donna took the position that the marriage agreement prevailed and that she held all interest in the listed properties in trust for her mother, Mina. In the course of this proceeding, Donna filed an incomplete financial statement, produced trust declarations showing that she held the listed properties in trust for her mother, and gave evidence on discovery attesting to the trust. [6] On May 27, 2014, Skolrood J. issued a final order, granting the divorce and making the following orders by consent: 1. The Respondent will pay $70,000 to the Claimant in full and final settlement of all claims in the Notice of Family Claim respecting property and spousal maintenance, BY CONSENT; 2. All other claims in the Claimant's Notice of Family Claim and in the Respondent's Counterclaim (except divorce) are dismissed as if tried on the merits, BY CONSENT; 3. Each party will bear their own costs, BY CONSENT. [7] In February 2015, Donna commenced a civil action against Mina, Francis and

Craig Blackburn, Mina's common-law partner, in which Donna claimed that she had always been the 100% beneficial owner of the listed properties. She also alleged that Mina, with the participation and assistance of Francis, had encouraged her to hide her true ownership from Mehran in the family law proceeding, and sought various forms of relief to restore her ownership. [8] The trial of the civil action was heard by Funt J. in 2017. At the close of Donna's case, Mina and Francis applied to dismiss the claim as an abuse of process in light of Donna's inconsistent positions in the two actions and her admissions of having perpetrated a fraud in the family law proceeding. Justice Funt proceeded on the basis of Donna's pleadings and his acceptance of her evidence "at its highest". On May 29, 2017, he allowed the application and dismissed Donna's action, in reasons indexed as 2017 BCSC 878. [9] Mina and Francis had alleged that Mehran had been actively involved in the civil action in various ways, and took positions supportive of Donna's interests in that action. Mehran has denied active involvement. [10] In June 2017, Donna filed a notice of appeal of the order of Funt J. [11] In January 2018, Mehran filed an application in B.C. Supreme Court seeking orders rescinding the settlement agreement and setting aside the orders of Skolrood J. that dealt with the corollary relief. Although

the appellants received no formal notice of this application, they were advised of it by Mehran's then counsel. On February 7, 2018, Mehran and Donna appeared before Pearlman J. and made, in effect, a joint submission to grant the relief requested. Counsel for the appellants attended the hearing as an observer. [12] After hearing the submissions of Mehran and Donna, Pearlman J. granted the application and made the following orders by consent: 1. The settlement agreement in the within family law proceeding between Mehran Taherkhani and Donna Este be rescinded; 2. Paragraphs 1, 2 and 3 of the May 27, 2014 order of Mr. Justice Skolrood relating to the settlement agreement be set aside; 3. The claimant's notice of family claim filed May 22, 2013 proceed as if no settlement was reached and no court order for corollary relief made; 4. The time for response to this notice of application be abridged from 21 days to 14 days; and 5. Cost of this application be payable in the cause at Scale B. [13] Justice Pearlman did not provide reasons but stated this on the record: I am certainly satisfied on the basis of the materials produced on this application and the submissions made by counsel that this is an appropriate case for the court to exercise its inherent jurisdiction to rescind the settlement agreement made in the family law proceedings between the claimant, Mr. Taherkhani, and the

respondent, Donna Este, and to also grant the order sought on this application by consent that paragraphs 1, 2, and 3 of the May 27th, 2014 order of Mr. Justice Skolrood, but related to the settlement agreement, be set aside. [14] The following day, February 8, 2018, Mehran applied to be added as a respondent in Donna's appeal of the order of Funt J. Justice D. Smith, in chambers, granted the application on the basis that the outcome of the appeal could affect him. She noted that if the appeal were to be dismissed, Mehran would need to add Mina and Francis to his family claim, and he would then be required to prove that Donna owned all or some of the listed property at the time of separation. [15] The appeal was heard on March 6 and 7, 2018. Mehran supported Donna's position that the appeal should be allowed, with the case remitted to the Supreme Court for a determination on the merits. On July 16, 2018, in reasons indexed as 2018 BCCA 290, the appeal was dismissed. Justice Frankel, for the court, considered an application by Mehran to adduce new evidence consisting of the Pearlman J. order and the materials that were before him. Justice Frankel found only the Pearlman J. order itself to be relevant to the appeal to provide context to Mehran's submissions "in regard to his ability to assert a claim to the properties and funds that are the subject matter of the within action": at para.

68. With respect to the re-opening of the family law claim, the court noted Mehran's submission about the difficulties he would encounter if the appeal were to be dismissed, but did not consider Mehran's position to be relevant: [120] Mr. Taherkhani submits it will be difficult for him to pursue his property claims against Donna. He notes that if this appeal is dismissed, then he will have to add Mina and Francis as parties to the divorce action and then, in the context of that action, carry the burden of establishing the disputed assets are beneficially owned by Donna and are, therefore, family property. Mr. Taherkhani says he will have to expend considerable time and money in that regard. To avoid having to do so, he supports Donna's request for a new trial of the within matter; a trial in which Donna will bear the burden of establishing her beneficial ownership of those assets. [121] The lis at the trial of the within matter was between Donna on the one hand, and Mina, Francis, and Mr. Blackburn on the other. Donna's action was dismissed because she had abused the process of the court. That subsequent events in another action have opened the door for Mr. Taherkhani to advance a claim to the disputed assets does not, in any way, lessen the seriousness of Donna's misconduct, or militate in favour of her being allowed to proceed in the face of that misconduct. [122] In my view,

the position Mr. Taherkhani finds himself in is not relevant to the disposition of this appeal. [16] On August 29, 2018, Mehran filed an application to add Mina and Francis as parties to the family law claim and to amend his Notice of Family Claim. The amendments recast the claim quite substantially. In addition to claiming an undivided half interest in the listed properties as against Donna, Mehran claimed an unequal division of family property that was "wrongfully retained" by Mina and/or Francis due to their allegedly fraudulent conduct. That application was not heard until November 2019. On January 28, 2020, in reasons indexed as 2020 BCSC 101, Giaschi J. granted the application and made the orders sought. [17] On July 8, 2021, in reasons indexed as 2021 BCSC 1339, Giaschi J. dismissed an application by Mina and Francis to set aside portions of the Pearlman J. order. He considered the jurisdictional arguments of the applicants to be matters for this court. [18] Meanwhile, on November 29, 2019, while the application to add Mina and Francis as parties was under reserve, Mehran commenced a new civil action in the Chilliwack Registry of the B.C. Supreme Court alleging fraud as against Donna, Mina and Francis. The appellants were unaware of this action until late November 2020. On July 13, 2021, in reasons indexed as 2021 BCSC 1745, Giaschi J. dismissed an application by Mina

and Francis to stay the family law action and allowed an application by Mehran to stay the Chilliwack action, with liberty for Mehran to apply to lift the stay in the event either the Pearlman J. order or his order adding Mina and Francis to the family claim are set aside on appeal. [19] In addition to this application for leave to appeal the Pearlman J. order, Mina and Francis have appealed all three orders of Giaschi J.: the order of January 28, 2020, adding them as parties; the order of July 8, 2021, dismissing their application to set aside the Pearlman J. order; and the order of July 13, 2021, staying the Chilliwack action. These matters have been case managed by Fenlon J.A., who has ordered all four appeals to be heard together. The applications [20] The appellants submit that their interests were not represented before Pearlman J. and their interests have been affected by his order, especially now that they have been added as parties to the family law action. With respect to a reasonably arguable case, they point to various problems with the manner in which Mehran's application to re-open was presented to Pearlman J. including the absence of proof of fraud, the limited statutory authority under family law legislation to determine property division once a divorce has been granted, and submit that the court was functus after the final order of Skolrood J. was entered. They

say that any proceeding to set aside such an order based on fraud must be brought in a fresh action. Finally, the appellants submit that granting leave will avoid a multiplicity of proceedings as they intend to argue this appeal alongside the appeal of the order of Giaschi J. adding them as parties, and is therefore in the interests of justice. [21] Mehran submits that Mina and Francis were not affected or bound by the Pearlman J. order at the time it was made, and the jurisprudence allows the court below to set aside a consent order under its inherent jurisdiction. He also says that there are good policy reasons not to grant standing to newly added parties to an action to appeal every order previously made, as this would contribute to uncertainty, delay and inefficiency. [22] Donna submits as well that Mina and Francis were not affected by the Pearlman J. order and says that she admitted to the fraud on Mehran and consented to set aside the Skolrood J. order "in order to undo the fraud and do equity". She refers to her evidence in her civil action in which she admitted giving false evidence in her discovery in the family law proceeding at the instigation of her mother and her brother as well as evidence of Mehran that he was fooled. She also points out that her mother has never sworn an affidavit or given any evidence about this matter. She relies extensively on "undertakings

and representations" made to this court during her appeal of the Funt J. order that Mina and Francis "will be added to the re‑opened family proceeding". [23] Before I address the factors relevant to this application, I want to briefly address Donna's reliance on these undertakings and representations. She asserts that it was in the contemplation of the parties and the judges that Mehran "could very well pursue his claims through the Family Claim". She relies on statements by Mr. McEwan before Smith J.A. in chambers as well as before the division that heard the appeal. Mehran went so far as to institute contempt proceedings against Mina and Francis for breaching this undertaking by opposing his application to add them as parties and to amend his pleadings and by pursuing appeals. That contempt proceeding was dismissed on July 31, 2020. In reasons indexed as 2020 BCCA 226, Groberman J.A., in chambers, found the undertaking given to the court to be a very limited one: that in the event the appeal was dismissed, Mina and Francis would not take the position that the order of Funt J. estopped Mehran from pursuing any rights he might have to property or funds in the hands of Mina. This decision was upheld by a division of this court on November 23, 2020: 2020 BCCA 345. [24] Mr. McEwan candidly concedes that his statements to Smith J.A. in chambers presumed that Mehran could add his

clients to the family law claim but he points out that this application was made only the day after the Pearlman J. order was made and this cannot ground jurisdiction. The undertaking made before the court during the appeal was different, and in my view, Groberman J.A.'s description of it was entirely accurate. Although I appreciate Donna's frustration with this process, her assertions overstate what Mr. McEwan represented to the court and they are not relevant to this standing and leave application.

1. Interests not represented at the hearing [25] There is no question that the interests of Mina and Francis were not represented at the hearing before Pearlman J. Although their counsel was aware of the proceeding and attended as an observer, no submissions were made on their behalf. They contend that the submissions made by both Mehran and Donna were aligned regarding the relief sought and pursued for the purpose of creating an "ostensible jurisdiction" for Mehran to pursue claims against them that he could not otherwise pursue as family claims. They say the only true purpose of the order was "to set the stage for engaging the court's coercive power" over them. [26] Whether or not the application before Pearlman J. was as calculated as Mina and Francis suggest, the fact is that the parties before him were not adversaries, and despite the nature of the application, it proceeded by consent. The judge had Funt J.'s reasons before him, and would therefore have been aware that Donna's action had been dismissed without findings of fact having been made. He was also advised by Donna's counsel that much of Donna's evidence and the positions taken were "very much disputed by her mother and brother". Despite this, it appears that the application was allowed simply on the basis of Donna's admissions, even though she and Mehran at that point--Donna's appeal was about to be heard--had a common goal of facilitating Mehran to recover against Mina and Francis.

2. Interests adversely affected that are or can be bound [27] Mina and Francis submit that in the particular circumstances here, the Pearlman J. order had the effect of compromising their interests, as the application to re-open the family law claim was intended to create a back-up plan by which Donna could proceed against them in the event her appeal was unsuccessful. They say that while they may not have been bound by the order at the time it was made, they became bound, and clearly directly affected by it, once they were added as parties to the re-opened claim. They also cite U.K. authority to support their submission that a subsequent party bound by a judgment between prior parties can appeal that judgment: K.R. Handley, Res Judicata, 4th ed. (London: Butterworth's, 2009) at 9.11, citing Borealis AB v. Stargas Ltd., The Berge Sisar, [2001] 2 All E.R. 193 at 199-200 paras. 15-16. [28] Mehran counters this submission by citing factors that are considered when determining if a person is entitled to notice of an application or when a party's consent is required on a court order, more particularly that the time to assess the effect of a person's interest is at the time the order is made: Robert Hungerford Law Corporation v. Stenner, 2017 BCCA 55; Evans v. Silicon Valley IPO Network, 2003 BCSC 954 aff'd 2004 BCCA 149. This factor is of course important in assessing whether a

person is adversely affected by an order, but in my view, it fails to take into account the fact that a person later added to an action will be affected and bound by prior orders made in the action. What that affect will be will depend on the circumstances. [29] Mehran also relies on the reasons of Giaschi J. in refusing the appellants' application to set aside the Pearlman J. order, where he concluded that there was no impact on Mina and Francis as a result of that order: [48] Mina and Francis do not have a claim, right, or interest in property that was affected by the order of Justice Pearlman. The order of Justice Pearlman merely reinstated the family action. It did not extinguish a claim or detract in any way from the property rights and interests of Mina and Francis. The order did open the door to the later application to add Mina and Francis as parties to the family action but, in my view, that is not sufficient to give them standing to set aside the order. [57] At a minimum, there must be a direct or indirect impact on the legal rights of a person before it can be said that they are a person who "may be affected" by an order. There is no such impact on Mina and Francis as a consequence of Justice Pearlman's order. The order did not, in fact, affect any claim, right or interest they had. [30] I do not ascribe to the notion that the reinstating of the family law action,

which "opened the door" to the later application to add Mina and Francis as parties, was insufficient to give them standing in the rather unique circumstances here. The application before Pearlman J. was made in the midst of Donna's appeal, and its purpose was not merely to allow Donna to "undo the fraud" and reach a fair settlement with Mehran but rather to provide a basis for Mehran to proceed against Mina and Francis, if necessary, in an effort to recover the listed properties for Donna. Mehran's application to add Mina and Francis as parties on August 29, 2018, the month following the release of this court's reasons dismissing Donna's appeal, confirms this. [31] In light of this purpose, Mina and Francis would have been proper parties to the family law proceeding at the time of the application before Pearlman J. Moreover, the question of whether fraud had been perpetrated in the family law proceeding, which included allegations against the appellants, was disputed and had never been determined, and this issue was not carefully canvassed in the application. [32] I am therefore satisfied that in these rather unique circumstances, the interests of the appellants were sufficiently adversely affected by the Pearlman J. order at the time it was made, and they clearly became directly affected and bound by it once they were added as parties to the action.

3. Reasonably arguable case [33] The Pearlman J. order was based in part on Mehran's submission that the case of Racz v. Mission (District) (1988), 22 B.C.L.R. (2d) 70 (C.A.) confirmed the court's inherent jurisdiction to set aside a consent order, as well as the principle that a consent order can be set aside on any ground that would invalidate a contract, including fraud. Mehran relies on the same authority on this application. He also submits that the appellants' argument on jurisdiction under the family law regime ignores the fact that Pearlman J.'s order was made, not under statute, but under the court's inherent jurisdiction, and their argument on the two-year time limitation fails to distinguish between the continuation of an existing action (which the Pearlman J. order effected) and a new proceeding. [34] Donna echoes Mehran's submissions on this issue. [35] The appellants' argument is that the Pearlman J. order was a nullity because the court was functus officio once the Skolrood J. order was entered and the court had no jurisdiction to reconsider it other than in very limited circumstances, citing the principles set out in R. v. Blaker (1983), 6 C.C.C. (3d) 385 at para.

6. They also say that neither the Family Relations Act, R.S.B.C. 1996, c. 128 nor the Family Law Act, S.B.C. 2011, c. 25 authorize a determination in respect of family property after a final order has issued and only civil remedies subsist once recourse to the statutory regime has been made. They further point to the statutory cause of action for entitlement to property being exercisable only for two years following the dissolution of marriage and the fact that the application to set aside the Skolrood J. order was made more than three years after it was entered. [36] The appellants rely on Long v. Red Branch Investments Limited, 2018 BCCA 115 to support their submission that a fresh action is required to set aside a judgment as vitiated by fraud. They distinguish Racz on the basis that it did not concern an alleged fraud but rather a consent judgment that had been signed by counsel and entered without authority. [37] Red Branch did not involve a consent order, but an allegation that a judgment had been fraudulently obtained, discovered after a trial and the subsequent dismissal of an appeal. This court dismissed an application to re-open the appeal to admit fresh evidence. It did not consider it appropriate to exercise its inherent jurisdiction to set aside a fraudulently obtained judgment where all of the elements of the alleged fraud were in issue. In those circumstances,

the court held that the appropriate (and traditional) approach in British Columbia was to bring a new action in the trial court. [38] Whether a fresh action is required to set aside an entered consent order on the basis of fraud is not entirely clear. However, where the veracity of the evidence of fraud is in issue, as it is in this case, it is my view that the appellants raise a reasonable argument that at the very least, a determination of the fraud requires more than simply accepting untested admissions in a non-adversarial context. They also raise a reasonable argument about the limited jurisdiction of the court below to set aside a final consent order that has the effect of re-opening a family law property claim more than two years after the granting of a divorce.

4. Interests of justice to avoid a multiplicity of proceedings [39] Mehran also relies on the reasons of Giaschi J. in the application to set aside the Pearlman J. order to support his submission that there are good policy reasons to refuse to grant leave to appeal an order to non-parties. However, that application was based on the court's power to re-open and vary an order made by another judge of the same court, and the authorities and policy considerations relied on reflect considerations somewhat different from those before this court in this leave application. I do not see an order granting standing and leave to appeal to Mina and Francis as one that would contribute to uncertainty, delay and inefficiency, as submitted by Mehran. As noted above, all three orders of Giaschi J. are under appeal and all four appeals have been directed to be heard together. The order adding Mina and Francis to the re-opened family law proceeding is especially connected to the Pearlman J. order. Granting standing and leave to appeal would permit all substantive issues to be addressed in an efficient manner.

5. Extension of time [40] For obvious reasons, the appellants require an extension of time to make these applications. They did not seek to challenge the Pearlman J. order until they were added to the family law claim by the January 28, 2020 order of Giaschi J. They then proceeded to do so within 30 days of that order. The matter was delayed for various reasons, including the contempt applications referred to above. They have always intended to bring this appeal, which is clearly connected to the three other appeals, most notably of course, the appeal of the order adding them as parties to the family law proceeding. Conclusion [41] I am satisfied that Mina and Francis have established factors that support this court exercising its discretion to grant standing and leave to appeal the Pearlman J. order, as well as an extension of time. This order forms the basis for the subsequent orders made by Giaschi J. Granting leave will ensure that all material issues will be brought before the court. [42] I would therefore allow the applications and grant the orders sought. [43] These orders are responsive to the Notice of Motion for standing and leave filed December 21, 2021, which has a style of cause in which only Mina and Francis are appellants. This style of cause differs from that in the Notice of Application for leave to appeal filed February 25, 2020 and the affidavits filed in support, which include two corporate appellants and a trustee of the Mina Esteghamat-Ardakani Alter Ego Trust No.

1. As the applicants for the Motion were only Mina and Francis, I would also order the style of cause in CA46711 be amended accordingly. [44] BENNETT J.A.: I agree. [45] STROMBERG-STEIN J.A.: I agree. [46] BENNETT J.A.: The extension of time is granted, standing and leave to appeal are both granted, and the style of cause will be amended accordingly. "The Honourable Madam Justice Fisher"