



COURT OF APPEAL FOR ONTARIO

CITATION: Bakhsh v. Merdad, 2022 ONCA 130

DATE: 20220215

DOCKET: C69201

van Rensburg and Roberts JJ.A. and
    Tzimas J. (
ad hoc
)

BETWEEN

Rana Abdulrahman Bakhsh

Plaintiff
(Respondent)

and

Khalid Bin Abdul-Aziz Abbas
    Merdad

Defendant
(Appellant)

Steven Benmor and Misha Leslie, for the
    appellant

W. Douglas R. Beamish, for the respondent

Heard: November 26, 2021

On appeal
    from the order of Justice Shaun OBrien of the Superior Court of Justice dated
    February 19, 2021.

REASONS
    FOR DECISION

[1]

This appeal involves a dispute over a
    condominium property located in Ontario (the condominium property). The
    parties are former spouses who were married and resided, and whose marriage was
    annulled, in Saudi Arabia. The central issue is whether the claim by the
    respondent, Ms. Bakhsh, in relation to the condominium property, is an
    equalization claim under the
Family Law Act
, R.S.O. 1990, c. F.3 (
FLA
),
    as the appellant, Mr. Merdad, argues, or a resulting or constructive trust
    claim as Ms. Bakhsh pleaded.

[2]

In Ms. Bakhshs statement of claim, she has
    claimed, among other things, a declaration of her 100% beneficial interest in
    the condominium property whose legal title is in Mr. Merdads name. In
    response, Mr. Merdad brought a motion under rr. 21.01(1)(a) and (3) of the
Rules
    of Civil Procedure
, R.R.O. 1990, Reg. 194, to dismiss the action on the
    bases that the court has no jurisdiction over the subject matter of the action,
    or that it is
res judicata
or statute-barred.

[3]

Mr. Merdad argued that Ms. Bakhshs Ontario claim
    is an equalization claim. As such, it was precluded because: Ontario has no
    jurisdiction over this matter that is governed by Saudi Arabian law and should
    have been heard there; the parties property issues had already been decided in
    their annulment proceedings in Saudi Arabia, making this claim
res judicata
;
    and, in any event, Ms. Bakhshs equalization claim is statute-barred as it was
    not commenced within the applicable two-year limitation period under s. 7(3)(a)
    of the
FLA
. Mr. Merdad asked in the alternative that the proceedings
    be transferred to the family law list. The motion judge refused Mr. Merdads motion
    to dismiss Ms. Bakhshs action, transferred it to the

family law list,
    and granted Ms. Bakhsh $10,000 as her costs of the motion.

[4]

Mr. Merdad repeats the same arguments on
    appeal about the characterization of Ms. Bakhshs claim as a statute-barred
    equalization claim, which the motion judge rejected. We see no error that
    warrants appellate intervention.

The court has jurisdiction and the claim is not
res judicata

[5]

First, does the Ontario court lack
    jurisdiction over the subject matter of Ms. Bakhshs claim because the
    claim should have been brought in the parties annulment proceedings or other
    civil proceedings in Saudi Arabia, and is it also
res judicata
? The
    answer is no.

[6]

Ms. Bakhsh could not have brought her claim in
    Saudi Arabia. It is not disputed that, as the motion judge found, in accordance
    with s. 15 of the
FLA
, the law of Saudi Arabia, as the parties last
    common habitual residence, applies to Ms. Bakhshs claim in respect of the
    Ontario property. Based on the expert evidence called by the parties, the
    motion judge determined, correctly, in our view, that the question of the
    parties interests in property located outside Saudi Arabia had not been
    decided and could not have been decided in their annulment proceedings or in
    the separate civil proceedings concerning a property in Saudi Arabia.

[7]

The parties annulment proceedings only dissolved
    the marriage and did not resolve any other legal issues. As the parties
    experts agreed, and the motion judge accepted, Saudi Arabian law does not
    provide for equalization claims. The family courts in Saudi Arabia resolve
    issues related to the status of marriages, such as divorces and annulments, but
    do not have jurisdiction over property and financial disputes. The motion judge
    accepted Ms. Bakhshs experts evidence that property and financial disputes
    are within the jurisdiction of the Saudi Arabian civil courts.

[8]

In fact, and in confirmation of Ms. Bakhshs
    experts opinion accepted by the motion judge, the parties have been engaged in
    separate civil proceedings, apart from their annulment proceedings, in the civil
    court in Saudi Arabia. Ms. Bakhsh commenced a lawsuit in the civil court to
    determine the parties respective interests in property located in Jeddah,
    Saudi Arabia, that was acquired during their marriage. Further, the motion
    judge accepted Ms. Bakhshs experts unchallenged evidence that the civil
    courts of Saudi Arabia decline jurisdiction to deal with claims involving ownership
    of property and land outside of Saudi Arabia.

[9]

It is therefore clear that Ms. Bakhsh could
    not bring her claim for the condominium property in Saudi Arabia. Saudi Arabia
    does not have jurisdiction over the claim and the claim is therefore not
res
    judicata
. Moreover, Ontario clearly has jurisdiction to adjudicate the
    claim of Ms. Bakhsh, who resides in Ontario, concerning property located in
    Ontario, legal title to which is in Mr. Merdads name.

[10]

The motion judges determination that the Ontario court does
    not lack jurisdiction and that Ms. Bakhshs claim was not
res judicata
was amply supported by the record and contains no error.

The claim is not an equalization claim nor is it statute-barred

[11]

Next, is Ms. Bakhshs equitable trust claim in fact an
    equalization claim under the
FLA
and
is it therefore barred by the two-year limitation period set out in s. 7(3)(a) of
    the
FLA
?

[12]

Absent any evidence as to the law of limitation of actions in
    Saudi Arabia, it appears to be common ground that Ontario law would apply. If Ms.
    Bakhshs claim is not an equalization claim, the ten-year limitation period
    under s. 4 of the
Real Property Limitations Act
, R.S.O. 1990, c. L.15,
    would apply and the respondents action would not be statute-barred. This
    courts decision in
McConnell v. Huxtable
, 2014 ONCA 86, 118 O.R. (3d)
    561, supports the application of the ten-year limitation period under the
Real
    Property Limitations Act
to family law constructive trust claims.

[13]

It is clear in our view that Ms. Bakhshs claim is not a
    thinly veiled attempt to dress up an equalization claim as an equitable trust
    claim. Rather, Ms. Bakhsh seeks to impose a resulting or constructive trust
    over the condominium property that she financially maintained and in respect of
    which she seeks a declaration of sole beneficial ownership. Indeed, Mr. Merdad does
    not suggest that the claim represents an abuse of process but rather that any
    claim involving the former spouses property acquired during the marriage is
    necessarily an equalization claim under the
FLA

and is now
    statute-barred under s. 7(3)(a). According to Mr. Merdad, the
FLA
and its rules provide a complete code for equalization of property claims
    between spouses and former spouse.

[14]

We disagree with Mr. Merdads submission that all property
    claims between spouses or former spouses must necessarily be equalization
    claims. And it does not follow that the expiration of time to bring an
    equalization claim entails the expiration of a constructive or remedial trust
    claim. Equalization claims and equitable trust claims remain distinct.

[15]

The
FLA
equalization provisions do not deal with property,
per se
, but, rather, with the equitable calculation, division, and distribution
    of the
value
of net family property. Here, Ms.
    Bakhsh brings forward an equitable trust claim and not a claim for equalization
    of the value of the parties net family property. A claim of ownership is
    distinct from a claim for a share in property value; an equitable trust claim
    addresses the former and the equalization regime of the
FLA
covers
    only the latter:
McNamee v. McNamee
, 2011 ONCA 533, 106 O.R. (3d) 401,
    at para. 59.

[16]

The equalization provisions of the
FLA
also do not
    preclude an equitable trust claim respecting property. Section 10(1) of the
FLA
expressly permits a court application for a determination between spouses or
    former spouses as to the ownership or right to possession of particular
    property, other than a question arising out of an equalization of net family
    properties and the court may declare the ownership or right to possession,
    as the respondent has claimed, among other remedies. Importantly, the two-year
    limitation period in s. 7(3)(a) of the
FLA
applies only to an
    application based on subsections 5(1) or (2) and not to the determination of a question
    of ownership between spouses set out in s. 10(1) of that Act.

[17]

The appellants reliance on the Supreme Court of Canadas
    decision in
Rawluk v. Rawluk
, [1990] 1 S.C.R. 70, is, respectfully,
    misplaced. Rather, it supports Ms. Bakhshs position.

[18]

At issue in
Rawluk
was whether the doctrine of
    constructive trust could be applied to determine the ownership of assets of
    married spouses under the provisions of the
FLA
or whether the remedy
    was abolished and superseded by the equalization of matrimonial property and
    other provisions under the
FLA
. Mrs. Rawluk claimed a one-half
    interest in the matrimonial property by way of a remedial constructive trust.

[19]

The Supreme Court in
Rawluk
confirmed that the
FLA
incorporated the constructive trust remedy that could be used in the
    matrimonial property context to allocate proprietary interests and that the
FLA
did not constitute an exclusive code for determining the ownership of
    matrimonial property: at pp. 89-91, 93 and 97. While the doctrine of
    constructive trust can be used to settle questions of ownership for the purpose
    of determining the net family property of each spouse, this function is
    totally distinct from the process of determining how the value of matrimonial
    property should be distributed under the equalization process: at p. 93.

[20]

As a result, we reject the appellants submission that Ms.
    Bakhshs claim is an equalization claim that is statute-barred. The motion
    judge was correct to conclude that the two-year limitation period under the
FLA
,
    which applies to equalization claims,

does not apply to Ms. Bakhshs
    claim.

There is no error with the motion judges costs order

[21]

Finally, Mr. Merdad takes issue with the motion judges
    $10,000 costs order in favour of Ms. Bakhsh. He argues that because he was
    successful in having the proceedings transferred to the family law list, the
    costs award was punitive.

[22]

There is no basis to interfere with the motion judges discretionary
    costs decision. The parties had agreed that the successful party on the motion
    would be entitled to costs in the amount of $10,000. It was entirely within the
    motion judges reasonable exercise of her discretion to determine that Ms.
    Bakhsh was the successful party, especially since she prevailed on the
    principal disputed issues on the motion.

Disposition

[23]

The appeal and motion for leave to appeal costs are
    therefore dismissed.

[24]

The respondent is entitled to partial indemnity costs from
    the appellant in the agreed upon amount of $7,915.01, inclusive of
    disbursements and applicable taxes.

K.
    van Rensburg J.A.

L.B.
    Roberts J.A.

E.
    Ria Tzimas, J. (ad hoc)


