There seems to be a plethora of cases where unwitting parents transfer the legal title of real estate to their son or daughter, only to be caught up in costly and time-consuming litigation when their adult child separates from his or her spouse, and that spouse alleges an interest in the real estate. The recent case of Dadwal v.Parmar 2021 BCSC 1970 is an apt example of the situation that parents of divorcing children find themselves in.
In Dadwal the parties were married for two years. Five years before their marriage Rupinder Kaur Dadwal’s parents purchased a rental property in her name, paying $425,000. Dadwal’s mother deposed that purchasing the property in the name of her daughter was to assist her daughter to establish a credit record.The property was purchased with a $53,000 down payment that came from a joint account between Dadwal and her mother and a mortgage of $340,000 was secured. The evidence of Dadwal and her mother was that her parents’ funds were used to purchase the property, which was rented at all times, and that she and her husband, Ravinder Singh Parmar, never contributed any monies to the property. The rental income supported the mortgage. Shortly after the property was purchased, a bare trust agreement was executed confirming that the beneficial owners were Dadwal’s parents. The bare trust agreement was signed by the claimant, her parents and two independent witnesses.
The court action commenced in July 2018 and shortly after the respondent husband filed a certificate of pending litigation against the property. In November 2019 the parties were divorced and in July 2020 Dadwal’s parents instructed her to list the property for sale. An agreement was struck that the property would be sold and that each party’s solicitor would hold one-half of the net sale proceeds in trust, pending the resolution of Parmar’s claim. The property sold for $1,086,000 in August 2020 and the net sale proceeds were $680,000.
In December 2020 Dadwal and her parents brought an application to have the trust funds released and paid to the senior Dadwals. The master refused the application and ordered that the respondent husband provide his list of documents by Jan. 15, 2021. Dadwal tried again and brought a summary trial application in April 2021 but was rebuffed by the court, which ordered that examinations for discovery be conducted after which Dadwal could renew her application. More documents were exchanged and discoveries took place in June 2021. The parties then agreed to reset the claimant wife’s application to Aug. 25, 2021.
A flurry of activity followed, as Parmar suggested he needed to discover the witnesses to the bare trust agreement. He also stated that he would add Dalwal’s parents as parties to the action and claimed that certain bank statements had not been produced by Dadwal. Despite these last-ditch efforts to slow down the process, the hearing proceeded on Aug. 25 as scheduled.
The respondent husband argued that the matter was not suitable for summary trial on the basis of conflicting evidence. He also suggested that he needed to complete certain steps in the litigation, including discovering the witnesses to the trust deed; adding the claimant’s parents as parties; and obtaining additional documents from the claimant.
The court cited Gichuru v. Pallai 2013 BCCA 69 and summarized the issues to be considered when determining the suitability of a summary trial:
-The amount involved
-The complexity of the matter;
-Any prejudice likely to arise by reason of delay;
-The cost of a conventional trial;
-The course of the proceedings;
-The time of the summary trial;
-Whether the summary trial may create an unnecessary complexity in the resolution of the dispute;
-Whether the application would result in litigating in slices.
The court determined that the case was suitable for summary trial and recited Justice Mary Newbury’s comments from Everest Canadian Properties Ltd. v. Mallmann 2008 BCCA 275 at para. 34:
As this court noted in Anglo Canadian Shipping Co. v. Pulp, Paper & Woodworkers of Canada, Local 8 (1988), 27 B.C.L.R. (2d) 378 at 382 (C.A.), a party cannot, by failing to take such steps, frustrate the benefits of the summary trial process. Where the application is brought by a plaintiff, the defendant may not simply insist on a full trial in hopes that with the benefit of evidence, ‘something might turn up’: see Hamilton v. Sutherland (1992), 68 B.C.L.R.(2d) 115,  5 W.W.R. 151 at paras. 66-67 (C.A.)
Parmar managed to keep the senior Dadwals out of their funds for a lengthy period of time, despite the absence of any evidence that the property was beneficially owned by his wife. The claimants ought special costs but the court observed that the respondent’s conduct did not rise to the level required for a special costs award and ordered ordinary costs.
The respondent insisted that he and his wife contributed monies to the purchase and renovation of the property, but he was unable to produce any documents to support this claim, despite extensive document production. He also alleged that the bare trust agreement was a forgery, advancing only his suspicions and providing no evidence or proof of his allegation. The court ordered the release of the net sale proceeds to the claimant in trust for her parents.
The respondent’s claim, which was devoid of merit, took over three years to resolve, but not for lack of motivation by the claimant. The respondent was able to use the Rules of Court to drag out the proceedings, increasing the costs of both parties, a too-familiar strategy in our family courts today.
This article was originally published in The Lawyer’s Daily, a division of Lexis Nexis.