Executive Summary: Key Legal and Evidentiary Issues

• Dispute over whether an unwritten 50/50 joint venture for a used car dealership and related property purchase was honoured or repudiated by the plaintiff.
• Conflict in evidence about who actually funded the $625,000 downpayment on the Kennedy Road property, including alleged large cash payments and third-party cheques.
• Legal effect and interpretation of a signed trust declaration stating that 12048728 Canada Inc. held a 50% beneficial interest in the property in bare trust for the plaintiff.
• Credibility assessment of competing oral testimonies, corroborating witnesses, and sparse documentation in a culturally “handshake-based” business relationship.
• Characterization of the defendant’s “fundamental breach” argument as one of contractual repudiation, not the discredited doctrine of fundamental breach, and its rejection on the facts.
• Calculation of net profit on the sale of the property and allocation of 50% of that profit, plus return of the plaintiff’s contribution, resulting in a monetary judgment of $555,493 plus interest, with costs to be determined.

Background and parties

This case arises from an oral agreement between the plaintiff, Younes O S Zuregat, and the defendant, Massiullah Kohgadai, to go into business together operating a used car dealership in Scarborough, Ontario. They agreed to be equal partners: each would contribute 50% of the capital required to acquire a commercial property for the lot and to fund business operations, and each would receive 50% of the profits. The business was to operate under the name Car Nation Canada through the defendant company, 12048728 Canada Inc., of which Kohgadai was the sole shareholder, officer and director.
Zuregat was an immigrant to Canada who operated a jewelry and pawn shop, Gold and Cash Jewelry Inc., which generated significant cash on hand. Kohgadai was an experienced used car dealer operating an established dealership, Import Motors Canada, focusing on high-end vehicles. They were introduced through a mutual friend, Musad Sharaf, and eventually decided to become business partners on a handshake, consistent with their stated cultural practice of conducting business based on honour rather than formal documents.

The oral joint venture and acquisition of the Kennedy property

The parties agreed to open a used car dealership in Scarborough, selecting 1153 Kennedy Road, a former furniture store, as the location. The purchase price for the Kennedy Road property was $2,300,000. The Agreement of Purchase and Sale, accepted on February 13, 2020, named “Massi Kohgadai for a company to be incorporated” as purchaser and required two deposits of $50,000 each. One deposit cheque for $50,000 dated March 26, 2020, drawn on 7718745 Canada Inc. (a company controlled by Kohgadai), was produced in the litigation, and the court accepted that total deposits of $100,000 were paid, with the March 26 cheque representing the second deposit.
A mortgage of $1,675,000 was advanced on June 2, 2020, to companies owned and controlled by Kohgadai, including 7718745 Canada Inc. Title to the property was ultimately taken in the name of 12048728 Canada Inc., incorporated on May 8, 2020, with its head office at the Kennedy property. Although both legal title and the financing were placed entirely within companies controlled by Kohgadai, it remained common ground that the parties’ oral bargain was for a 50/50 venture, including equal contributions to the Kennedy property.

Competing accounts of the funding contributions

The central factual dispute concerned whether the plaintiff actually paid his 50% share of the downpayment on the Kennedy property. Kohgadai maintained that he alone paid the remaining $625,000 required for the downpayment beyond the mortgage and deposits, and that he never received any money from the plaintiff. On this version, the plaintiff’s failure to contribute constituted a serious breach and repudiation of the oral agreement, disentitling him to any share of the property or the profit on its resale.
In contrast, Zuregat testified that he contributed a total of $310,000 toward the downpayment: $230,000 in cash and $80,000 through cheques drawn on corporations controlled by his friend Sharaf. He said he first paid $100,000 in cash in late March 2020, taken from the safe at his pawn shop in the presence of Sharaf and delivered to Kohgadai, who counted it using an electronic counting machine. A second cash payment of $130,000 allegedly occurred in June 2020, again with cash taken from the shop safe, this time in the presence of his brother, Suhaib, and delivered to and counted by Kohgadai at his office.
Both Sharaf and Suhaib testified to witnessing these respective cash deliveries and supported the plaintiff’s account. Kohgadai categorically denied ever receiving either cash payment and emphasized that there were no receipts or contemporaneous documents evidencing such large transfers of cash.
With respect to the $80,000 in cheques, two cheques for $40,000 each, dated May 1 and May 4, 2020, were drawn on two corporate accounts controlled by Sharaf and made payable to 7718745 Canada Inc. Sharaf and the plaintiff testified that this $80,000 represented repayment of a debt Sharaf owed to the plaintiff arising from a condominium transaction, and that, at the plaintiff’s request, it was paid directly to Kohgadai’s company as part of the plaintiff’s contribution to the downpayment. The reason the payments were split between different accounts and dates was explained as a cashflow issue on Sharaf’s side.
Each cheque contained the handwritten reference “Range Rover.” Sharaf stated that it was Kohgadai who asked him to insert this notation, and he did so without further inquiry. Kohgadai’s evidence was that these cheques were payment for a Range Rover purchased by Sharaf from his dealership. However, he did not produce any bill of sale, ownership transfer documentation, or other business records to substantiate that such a vehicle sale occurred.

The trust declaration and beneficial interest

Shortly after closing, the plaintiff became concerned that neither the corporate structure nor the registered title to the Kennedy property reflected his agreed 50% interest. In early July 2020, he arranged a meeting with a lawyer, attended by himself, Kohgadai, and, according to the plaintiff and Sharaf, Sharaf as well. The lawyer (who later did not testify) advised that a trust declaration should be prepared and executed to document the plaintiff’s beneficial interest in the property.
On July 2, 2020, a trust declaration was executed by 12048728 Canada Inc., signed by Kohgadai as its sole director and officer and commissioned by the lawyer. The declaration:

• Identified 12048728 Canada Inc. as the registered owner of the Kennedy property;
• Affirmed that the company held 50% of the “estate interest in the subject lands in trust for” the plaintiff and “has no beneficial interest therein”;
• Stated that “fifty percent of all monies and other consideration utilized in the acquisition of the land … were beneficially owned by Younes Zuregat and the source of the funds were totally from him”; and
• Confirmed that the plaintiff “is the beneficial owner of the fifty percent of the lands and always has been since the date of acquisition,” with the company acting as a bare trustee for that 50% interest.
  The plaintiff relied heavily on this declaration as written acknowledgment that he had both contributed funds and held a 50% beneficial interest in the Kennedy property from the time of acquisition.
  By contrast, Kohgadai claimed he signed the declaration only in anticipation that the plaintiff would in future wire his 50% share of the downpayment. He asserted that the trust was contingent on that payment, which he says was never made. However, the declaration itself contains no wording that makes the plaintiff’s beneficial entitlement conditional or prospective; instead, it speaks in the present and past tense, describing monies already provided and an existing beneficial ownership from the date of acquisition. The lawyer did not give evidence to support the defendant’s interpretation or to suggest any drafting error.
  The court rejected the characterization of the arrangement as a purchase money resulting trust and treated the case as one of an express bare trust, driven by the plain wording of the declaration. The document was accepted as corroborative of the plaintiff’s asserted contributions and his 50% beneficial interest in the property.

Evidence assessment and repudiation argument

Legally, the defendants framed their position in terms of repudiation of the agreement, arguing that the plaintiff’s failure to contribute to the downpayment was so significant that it effectively ended the contract and disentitled him to share in the profits. The judgment notes that, although earlier case law had developed a doctrine of “fundamental breach,” that doctrine has since been laid to rest by the Supreme Court of Canada. The court treated the defendants’ position as a repudiation argument based on the seriousness of the alleged non-payment, not as an invocation of the old fundamental breach doctrine.
Given the starkly opposed narratives, the judge emphasized the need to weigh credibility by looking to independent corroboration, documentary evidence, and consistency with surrounding circumstances. Both principal parties had strong financial motives to fabricate, and their demeanour did not meaningfully assist in distinguishing truth from falsehood. Instead, the decisive factors were the corroborative testimony of the plaintiff’s witnesses, the pattern of the parties’ informal dealings, the business context, and the terms of the trust declaration.
The court accepted that the parties’ business habit of not reducing arrangements to writing, even for multi-million-dollar transactions, explained the absence of receipts or emails documenting the cash transfers. The plaintiff’s pawn shop business reasonably provided access to large sums of cash. The testimony of Sharaf and the plaintiff’s brother about the cash deliveries was found to be consistent and not shaken on cross-examination.
Regarding the $80,000 by cheque, the court accepted that these funds were paid at the plaintiff’s direction by Sharaf to 7718745 Canada Inc. as part of the plaintiff’s contribution. The reference to “Range Rover” was found to be a notation inserted at the defendant’s request, and the lack of any supporting paperwork for a vehicle sale undermined the defendant’s explanation that the cheques related to a car purchase.
Most importantly, the trust declaration’s unqualified statement that 50% of the property was held in bare trust for the plaintiff and that the funds used for that share came entirely from him was treated as clear, contemporaneous recognition of both the plaintiff’s contributions and his beneficial interest. The court concluded that the declaration reflected an already-existing trust relationship, not a contingent arrangement awaiting payment.
Having accepted the plaintiff’s evidence, corroborated by his witnesses and supported by the declaration, the court found that he had in fact contributed $230,000 in cash and $80,000 through Sharaf’s cheques, for a total of $310,000 toward the Kennedy property. There was therefore no breach or repudiation of the oral joint venture agreement on his part, and the defendants’ argument that he forfeited any right to share in the profits was dismissed.

Renovation expenses claim

In addition to claiming a 50% share of the profits on the property, the plaintiff sought reimbursement for expenses allegedly incurred in renovating the Kennedy property to make it suitable for a used car dealership. He advanced a revised claim at trial of $61,396, supported by invoices for items such as a forklift and ramp, carpet removal, painting, ramp restoration, and signage.
The court accepted that some work was done on the property but found the plaintiff’s proof of payment to be inadequate. Large invoices were produced without corresponding evidence that they had actually been paid, despite the plaintiff’s testimony that he used cheques and could have obtained copies from his bank. In the absence of proof of payment, the court declined to award any amount for the renovation invoices and dismissed this portion of the claim.

Sale of the property and damages calculation

The business relationship effectively ended in early 2021, when both parties and Sharaf were charged with vehicle-related offences that led the bank to close the defendant’s accounts. Although the charges were later dropped and the court was given little detail about them, their practical impact was that Kohgadai decided to terminate the relationship and sell the Kennedy property.
On June 18, 2021, the Kennedy property was sold for $3,220,000, generating a substantial profit over the $2,300,000 purchase price. The parties filed an agreed statement of facts establishing the purchase price and confirming that the defendants had made the monthly mortgage payments before the sale, totalling $97,300. In addition to the $100,000 in deposits, the downpayment included $625,000 paid by the defendants, offset by the $310,000 contributed by the plaintiff as found by the court.
In calculating damages, the court adopted the defendants’ profit computation, which deducted the mortgage, mortgage payments, closing costs, deposits, and downpayment from the sale price to arrive at a net profit of $490,987. As a 50% beneficial owner, the plaintiff was entitled to half of that profit, or $245,493. When his $310,000 contribution was then factored back into the equation (to ensure he was repaid that amount in addition to his share of profit), the court concluded that the plaintiff was entitled to $555,493. On this analysis, the defendants, and particularly Kohgadai, retained $757,794, representing their share of the profit and their net contributions to the purchase and carrying costs.

Final outcome and orders

The court found that the plaintiff had honoured his obligations under the oral joint venture agreement and that a 50% beneficial interest in the Kennedy property was held in his favour under an express bare trust. The repudiation argument advanced by the defendants was rejected because the factual premise—that the plaintiff failed to pay his share—was not accepted. While the plaintiff’s claim for renovation expenses failed for lack of proof of payment, he succeeded on his core claim for a share of the profit on the sale of the Kennedy property and repayment of his contributions. In the result, the successful party is the plaintiff, Younes O S Zuregat, who obtained judgment against the defendants for a total monetary award of $555,493, together with pre- and post-judgment interest under the Courts of Justice Act, with the precise amount of interest and any costs award to be determined later based on written submissions.