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Partition Refused For Fraudulent Ownership

Desta v Tadesse 2015 BCSC 1183 involves an action broughFraudulent Ownershipt by a tenant in common to force the remaining co-owner to sell the property under the Partition of Property act, that was refused by reason that the other co-owner became so by reason of impersonation and fraud in the transfer to him.

The court was satisfied that the co-owner became such by reason of a fraudulent transfer by an impersonator, and that he knew of the fraud, and as such his claim for partition and sale was dismissed, and the title to the property and his name was declared void and set aside to its previous owner

  Legislation

[68]         The applicable provisions of the PPA provide as follows:

2(1)      All joint tenants, tenants in common . . . and all parties interested in any land may be compelled to partition or sell the land, or a part of it as provided in this Act.

  1. In a proceeding for partition it is sufficient to claim a sale and distribution of the proceeds, and it is not necessary to claim a partition.
  2. In a proceeding for partition where, if this Act had not been passed, an order for partition might have been made, and if the party or parties interested, individually or collectively, to the extent of ½ or upwards in the property involved request the court to direct a sale of the property and a distribution of the proceeds instead of a division of the property, the court must, unless it sees good reason to the contrary, order a sale of the property and may give directions.

[69]         The Land Title Act, R.S.B.C. 1996, c. 250 [LTA] provides as follows:

23(2)    An indefeasible title, as long as it remains in force and uncancelled, is conclusive evidence at law and in equity, as against the Crown and all other persons, that the person named in the title as registered owner is indefeasibly entitled to an estate in fee simple to the land described in the indefeasible title, subject to the following:

. . .

(i)         the right of a person deprived of land to show fraud, including forgery, in which the registered owner has participated in any degree;

. . .

25.1(1) Subject to this section, a person who purports to acquire land or an estate or interest in land by registration of a void instrument does not acquire any estate or interest in the land on registration of the instrument.

(2)        Even though an instrument purporting to transfer a fee simple estate is void, a transferee who

(a)        is named in the instrument, and

(b)        in good faith and for valuable consideration, purports to acquire the estate,

is deemed to have acquired that estate on registration of that instrument.

(3)        Even though a registered instrument purporting to transfer a fee simple estate is void, a transferee who

(a)        is named in the instrument,

(b)        is, on the date that this section comes into force, the registered owner of the estate, and

(c)        in good faith and for valuable consideration, purported to acquire the estate,

is deemed to have acquired that estate on registration of that instrument.

  1. Discussion

[70]         Mr. Desta’s claim for sale and distribution of the proceeds in relation to the property in question, made pursuant to s. 6 of the PPA, rests upon his registered one-half interest on title, as a tenant in common.

[71]         The onus falls to Ms. Tadesse, who resists the orders sought, to satisfy the court there is good reason to the contrary. In this regard, Ms. Tadesse advances the following as good reasons: (a) Mr. Desta’s title is void, as a result of his participation in a fraudulent transfer to him; (b) even if Mr. Desta’s title is not void for having participated in the fraud/forgery, it is void because he did not deal with the registered owner and acquire title upon faith in the register; and, (c) Mr. Desta did not give valuable consideration for his title and he holds it in trust for Ms. Tadesse and her siblings.

[72]         Turning, first, to the question of whether Ms. Tadesse has shown that Mr. Desta acquired his title as a result of a fraudulent transfer or not, the evidence clearly establishes that Alganesh Alula impersonated Amete Debretzion and forged her signature for the purpose of transferring title from Amete Debretzion to Mr. Desta. Notably, Ms. Alula was a witness for Mr. Desta and her admission of the fraud and forgery was elicited from her by Mr. Desta; moreover, Mr. Desta testified that it was Alganesh Alula who transferred title to him, and he tendered records of the notary public which showed that Ms. Alula identified herself using a driver’s licence bearing her photograph and the name of Amete Debretzion.

[73]         The more controversial question is whether Mr. Desta was a participant in the fraud or not. In this regard, Ms. Tadesse relies upon the evidence of Ms. Alula, Mr. Dayel, and some documentation. Ms. Alula testified that it was Mr. Desta who convinced her that she looked sufficiently similar to her sister to successfully transfer title from Amete Debretzion to him. Mr. Dayel’s evidence supported this testimony of Ms. Alula, and their evidence is supported by documentation inconsistent with a belief by Mr. Desta that he acquired his title from Alganesh Alula.

[74]         Mr. Desta denied any participation in the impersonation and forgery that put him on title; he did, however, admit being present while Ms. Alula successfully impersonated Amete Debretzion, and he acknowledged that he signed a mortgage assumption agreement with Lia, not with Alganesh Alula. The former is suspicious but the latter is particularly difficult to square with Mr. Desta’s version of events: that is, at all material times he believed that Ms. Alula was the owner of the property, that she was transferring one half of her title to him, and that he was assuming the existing mortgage with Ms. Alula as his co-mortgagor and co-owner. In relation to the assumption of the mortgage, it is notable that in his testimony, Mr. Desta said, “Anything related to Lia Tadesse I did not know about” and “It was none of my business to help Lia Tadesse qualify for a mortgage”, yet the documentary evidence shows that Mr. Desta applied for approval to assume the existing mortgage on the same day and to the same bank officers as Lia, and then signed the mortgage assumption agreement at the same time as Lia, as witnessed by a notary public.

[75]         I accept Ms. Alula’s explanation for Mr. Desta’s participation in the fraud and forgery as true. Mr. Desta was, at the time, a trusted friend whom she believed was desirous of helping Ms. Alula and her children out of the bind they were in as a result of Frowene’s unexpected departure from Canada, at a time when she held title under the name Amete Debretzion. This is consistent with: (a) the testimony of Mr. Dayel; (b) the timing of the transfer from Saba to Lia, and a resultant need for a new co-owner and co-mortgagor to sign a mortgage assumption agreement; and, (c) the documented history of the property which supports the evidence of Ms. Alula and her children that trusted members of the local Ethiopian community took title solely for the purpose of helping the children qualify for financing.

[76]         I reject Mr. Desta’s assertion that he was ignorant of, and did not participate in, the fraud and forgery of Ms. Alula, and conclude that Mr. Desta acquired his title by fraud and forgery in which he participated, by abetting Ms. Alula in her impersonation and forgery. I am satisfied that the title in the name of Amete Debretzion was held in trust for Lia Tadesse (and her siblings with an equitable interest) and that they have been deprived of an interest in land as a result of the fraud and the claim herein. Accordingly, pursuant to s. 23(2) of the LTA the indefeasibility of the title upon which Mr. Desta relies in his application under s. 6 of the PPA has been defeated. His title is of no force and is cancelled.

[77]         It is not a matter of contention that at the time of the transfer to Mr. Desta from Alganesh Alula, the register showed only Amete Debretzion and Saba Tadesse as the owners. Thus, even if Mr. Desta did not participate in the fraudulent transfer to him, Mr. Desta did not acquire his title by putting his faith in the register and dealing with the person registered as owner; he is, therefore, precluded from relying on the presumption of acquisition upon registration afforded by s. 25.1 of the LTA because he has failed to meet the prerequisite of good faith: see Gill v/ Bucholtz, 2009 BCCA 137, paras. 7-9.

[78]         In view of the foregoing conclusions Mr. Desta’s claim for relief under the PPA must fail, and there is no need to address the trust claim.

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