Executive Summary: Key Legal and Evidentiary Issues

• Competing claims over life insurance proceeds based on oral and written assurances from the named beneficiary.

• Validity of a testamentary trust challenged for vagueness and failure to meet the “three certainties” in trust law.

• Allegations of conflict of interest and mismanagement against the trustee of the estate and business shares.

• Dispute over corporate control between a 50% shareholder and a trustee with voting power over the other 50%.

• Requests to remove the estate trustee, trustee of the shares, and director of the family business.

• Assessment of oppressive conduct under corporate law and fiduciary standards in trust and estate administration.

Facts and background

This case arose from disputes within a family following the illness and death of Rafie Moghadam, a successful business owner and co-founder of PARS 2000, a company operated at the Ottawa airport. Rafie and his wife Zahra each held 50% of the company’s shares. Their daughter Soraya, a physician and senior officer in the Canadian Armed Forces, was appointed as the sole director of the company in 2023 following allegations of financial mismanagement by her brother Saied, who had been the company’s Operations Manager.

Following Rafie’s diagnosis with Fahr’s Disease and his increasing care needs, he moved in with Soraya in July 2023. Soraya funded his care personally, spending over $179,000. There were assurances from Zahra and other family members that Soraya would be reimbursed from Rafie’s life insurance proceeds. Although Zahra was the named beneficiary, the policy proceeds were paid into court due to Soraya’s claim.

Rafie and Zahra had executed mirror wills in 2021. Rafie’s secondary will created a trust for his 50 shares in the company, naming Soraya as trustee. Zahra challenged the validity of this trust, arguing it was void for vagueness and lacked the three certainties required under trust law (intention, subject matter, and objects). Zahra also applied for Soraya’s removal as trustee, estate trustee, and company director, citing conflict of interest and oppressive conduct.

Entitlement to life insurance proceeds

The court found that the family had made a binding agreement that Soraya would be reimbursed from the insurance proceeds in exchange for funding Rafie’s care. The written confirmation of the agreement, Zahra’s admission under cross-examination, and the financial evidence all supported this conclusion. The judge held that this constituted either a valid contract or a claim under unjust enrichment and detrimental reliance. Soraya was entitled to receive the full amount of the insurance funds held in court.

Validity of the trust

Zahra’s argument that the trust was void for vagueness was rejected. The court held that the trust met the legal test for validity. The will clearly expressed the intention to create a trust, identified the subject matter (the shares), and defined the beneficiaries (Zahra for life, then the children, with a preference to Saied). Although the trustee had broad discretion, discretionary trusts are legally valid. The trust’s purpose—safeguarding the business during Zahra’s life and distributing value afterward—was sufficient.

Challenge to the will

Zahra also attempted to challenge the validity of Rafie’s will but failed to provide medical evidence or proof of undue influence. The court found no reason to doubt Rafie’s capacity or the voluntariness of the will, especially since it was a mirror will jointly executed by both spouses with independent legal advice. The challenge was dismissed as unsubstantiated.

Request to remove Soraya from key roles

The court declined to remove Soraya as the director of the corporation. It held that Soraya had been lawfully appointed and that her actions—although opposed by Zahra—were directed at restoring legal and financial order within the business. Zahra’s objections did not meet the legal standard for oppression under the Canada Business Corporations Act.

However, the court found that Soraya’s simultaneous role as trustee of Rafie’s shares created a serious conflict of interest. By voting those shares, she was able to block Zahra’s efforts to change company leadership, despite holding those shares in trust for Zahra’s benefit. She also failed to provide proper accounting to Zahra. As a result, the court ordered Soraya’s removal as trustee of the shares, although she remained the estate trustee. The parties were given the opportunity to agree on a new trustee or return to court if needed.

Conclusion

Soraya retained her positions as estate trustee and company director. The trust was upheld as valid. She was awarded the full insurance proceeds as reimbursement for her father’s care. However, due to a conflict of interest, she was removed as trustee of the company shares held in trust under Rafie’s will. The decision emphasized the need to balance fiduciary duties in overlapping roles within estates, trusts, and closely held family businesses.