COURT OF APPEAL FOR ONTARIO

DATE: 2006-12-05

DOCKET: M34206, M34009, M34379 & C43572

RE: CYNTHIA LYNCH (Applicant/Respondent on appeal) – v. MOSES SEGAL, IDYLLIC ACRES HOLDINGS INC. AND ASHOE HIGH SPEED SOLUTIONS INC. (Respondents/ Appellants on appeal)

BEFORE: DOHERTY, BLAIR AND LAFORME JJ. A.

COUNSEL: Glenn Zacher and Danielle Royal for Leonor Segal, the moving party

T.G. Bastedo Q.C. and S. Chousky for the respondent, Cynthia Lynch

D. Smith for Idyllic Acres Holdings Inc. and Ashoe High Speed Solutions Inc.

Robert Ratcliffe for Attorney General for Ontario

HEARD: November 7, 2006

E N D O R S E M E N T

Background

[1] Leonor Segal, Moses Segal’s first wife, seeks leave to intervene as a party in this appeal.

[2] The appeal is by Idyllic Acres Holdings Inc. and Ashoe High Speed Solutions Inc. – the owners of two development properties in the Town of Oakville – from the judgment of Paisley J. dated April 22, 2005, in which what Justice Paisley found to be Mr. Segal’s beneficial ownership in the appellant’s properties was ordered to be transferred to, and vested in, Ms. Lynch.

[3] Ms. Lynch is Mr. Segal’s second wife. Paisley J.’s order also required Mr. Segal to pay to Ms. Lynch the sums of:

a) $8,350,747 as lump sum child and spousal support;

b) $378,135.77 for arrears of child and spousal support;

c) $1,445,664.99 in respect of a debt owing to Ms. Lynch; and,

d) $963,084 in respect of monies promised Ms. Lynch on the sale of the parties’ home in the Bahamas.

[4] The order provided that the monetary claims would be satisfied upon the vesting of the lands in Ms. Lynch. There was no appeal from the monetary aspects of Paisley J.’s order.

[5] Mr. Segal is an extraordinarily wealthy man, with a net worth of more than $100,000,000. When it comes to his former spouses, and their children, however, he would have it appear that he has no assets. He now lives in Florida, and played no overt part in the trial or the appeal.

[6] On the appeal, Idyllic and Ashoe argued that Mr. Segal had nothing to do with them – they were owned by mysterious and undisclosed high net worth individuals and families operating through international trust vehicles out of the Isle of Guernsey. The appellants submitted that the trial judge erred in a number of ways, but in particular (i) by finding that Mr. Segal was the beneficial owner of the appellant corporations and further, that he was the beneficial owner of the development properties, and (ii) by holding that the properties were to vest in Ms. Segal or, alternatively, in making an order to that effect rather than imposing some other more suitable remedy such as a charging order.

[7] One of the appellants’ arguments on appeal was that the trial judge should not have made a vesting order respecting Mr. Segal’s property without Leonor Segal having been made a party to the proceeding. Ms. Segal has two judgments against Mr. Segal in Nevada for amounts totalling close to six million U.S. dollars, primarily for spousal and child support in relation to the first marriage. The Nevada judgments, however, had not been registered in Ontario. Nor had any steps been taken to enforce them here, pursuant to the Interjurisdictional Support Orders Act, 2002, S.O. 2002, c. 13, Part III (“the Act”), either at the time of trial or at the time the appeal was argued.

[8] At the conclusion of the appellants’ arguments, we rejected all grounds of appeal except for those relating to the vesting order. We reserved our decision in that regard on June 7, 2006.

[9] Two days later, on June 9, Moses Segal telephoned the adult son of his marriage, with Ms. Segal, Andrew (a successful young businessman in Texas), and advised him of the appeal. Andrew contacted his mother. On June 16, 2006, Ms. Segal’s Ontario solicitors attended at the family law office in Toronto to register her Nevada judgment pursuant to the Act. On June 19, they contacted the panel, seeking directions as to how to proceed to seek leave to intervene in the appeal, and on July 17, 2006, the notice of motion seeking leave to intervene was filed.

[10] That motion has spawned two additional motions. First, on behalf of Ms. Lynch, Mr. Bastedo moved to quash the motion to intervene on the grounds that Ms. Segal does not have the right to register and enforce her Nevada judgment under the Act. The rationale for this motion was two-fold: (a) only the Director of Family Support has the right to enforce such a judgment unless requested not to do so; and (b) there is no right to register a foreign judgment for spousal and child support in Ontario under the Act unless the targeted spouse resides in Ontario, which Mr. Segal does not. The jurisdictional issue raised by this second point prompted the Attorney General for Ontario to seek leave to intervene as well.

[11] Moments before the commencement of argument on these motions, counsel for Ms. Segal advised Mr. Bastedo that Ms. Segal had withdrawn her request to the Director to enforce her judgment. Mr. Bastedo then indicated that he would not be proceeding with Ms. Lynch’s motion to quash, and it was withdrawn.

[12] On the view we take of these proceedings, it is not necessary for us to deal with the Attorney General’s motion either. For the reasons that follow, we dismiss Ms. Segal’s motion for leave to intervene in the appeal.

Further Facts

[13] Ms. Lynch and Mr. Segal lived together from 1994 until August 2001. They have two children, who are currently almost twelve and eight years of age. Mr. Segal ceased paying support in December 2002, and this litigation was commenced in July 2003.

[14] Leonor Segal and Moses Segal were married for twenty-six years. The children of their marriage are now adults.

[15] Ms. Segal has now remarried – to a distant cousin of her first husband who is said to be even wealthier than Moses Segal. Ms. Segal and her present husband are highly respected members of the Jewish community in Montreal, well-known for their generous charitable works and contributions in that City. Ms. Lynch is aware of this through her continued contacts with another relative of Mr. Segal, Phyllis Segal Denaburg, who lives in Toronto, and who attends family gatherings with Ms. Segal’s current husband from time to time.

[16] At no time prior to June of this year did Ms. Segal take any steps to register or enforce her Nevada judgments in Ontario or to intervene in Ms. Lynch’s action, although she was well aware of the existence of that action.

[17] Ms. Lynch deposes that Mr. Segal has long threatened to bring his first wife into the picture to usurp any award she might obtain, that he stated he would practice a “scorched earth policy” and would rather see anyone take value from the properties than Ms. Lynch. This attitude was confirmed in an e-mail to Ms. Lynch, dated December 19, 2005, in which Mr. Segal said: “I think it is now time to invite U-NO-WHO from Montreal to the picnic. She is not needy, but is very hungry, will eat a lot, and will never go away.”

[18] Ms. Segal’s notice of motion for leave to intervene is dated July 17, 2006. On July 18, Mr. Segal sent another e-mail to Ms. Lynch. It said:

While at the shore in my house with my kids give serious consideration to the following: NEMO ME IMPUNE LACESSIT [emphasis in e-mail].

[19] Roughly translated, “Nemo me impune lacessit” means “No one messes with me and gets away with it”.

[20] At the time of the argument of these motions, Ms. Lynch and her children had moved from the Province of Ontario and were living in protective custody in New Jersey. The move was prompted, according to Ms. Lynch, when she was advised by Toronto Police to move because of concerns for her safety. There is some support for these allegations in police documentation in the record.[^1]

[21] There is only one inference to be drawn from the foregoing: Moses Segal – who did not participate in the trial or the appeal, and who the appellant corporations say is entirely removed from them – is the instigator of this eleventh-hour attempt to intervene by Ms. Segal. Given the trial judge’s findings that Mr. Segal is the beneficial owner of the corporations, and indeed, that he and the corporations are one and the same – a finding with which we, as previously indicated, will not interfere – it is difficult not to conclude that the appellants are behind the attempted intervention as well.

[22] That is not to say that Ms. Segal has been treated any better by their former spouse than has Ms. Lynch. His attitude towards each, in relation to his support obligations, can only be described as contemptible. Ms. Segal has made numerous – and expensive – unsuccessful attempts to enforce her Nevada judgments in the United States. Everyone acknowledges that the difficulties of both spouses arise out of the extraordinary lengths to which Moses Segal goes to hide himself and his substantial assets from them, as well as other creditors, and his remarkable ability to succeed in doing so.

Analysis

[23] The court’s power to permit a proposed party to intervene is discretionary. Rule 13.01 provides:

13.01(1) A person who is not a party to a proceeding may move for leave to intervene as an added party if the person claims,

(a) an interest in the subject matter of the proceeding;

(b) that the person may be adversely affected by a judgment in the proceeding; or

(c) that there exists between the person and one or more of the parties to the proceeding a question of law or fact in common with one or more of the questions in issue in the proceeding.

(2) On the motion, the court shall consider whether the intervention will unduly delay or prejudice the determination of the rights of the parties to the proceeding and the court may add the person as a party to the proceeding and may make such order as is just.

[24] With respect to the Court of Appeal, rule 13.03(2) states that:

Leave to intervene as an added party ... in the Court of Appeal may be granted by a panel of the court, the Chief Justice of Ontario or the Associate Chief Justice of Ontario.

[25] In Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd. (1990), 74 O.R. (2d) 164 at 167 (C.A.) Dubin C.J.O. articulated the test to be applied on motions such as this as follows:

Although much has been written as to the proper matters to be considered in determining whether an application for intervention should be granted, in the end, in my opinion, the matters to be considered are the nature of the case, the issues which arise and the likelihood of the applicant being able to make a useful contribution to the resolution of the appeal without causing injustice to the immediate parties.

[26] In general, however, courts have interpreted the intervention provisions somewhat more narrowly in strictly private litigation – the situation here – as opposed to the approach taken in public or constitutional litigation. As Chief Justice McMurtry noted, in Authorson (Litigation Guardian of) v. Canada (Attorney General), 9 C.P.C. (5th) 218 (Ont. C.A.), at para. 8:

In contrast, Ontario courts have interpreted Rule 13 more narrowly in conventional, non-constitutional litigation. (See for example, Peixeiro v. Haberman (1994), 20 O.R. (3d) 666 (Ont. Gen. Div.), at 670. Intervention of third parties into essentially private disputes should be carefully considered as any intervention can add to the costs and complexity of litigation, regardless of an agreement to restrict submissions.

[27] Here, had Ms. Segal registered her Nevada judgments in Ontario prior to the trial and applied for intervention status at that stage, it may well be she would have succeeded, at least with respect to the issues concerning the ownership of the appellant corporations and their properties, and the matter of the vesting order. As a registered spousal judgment creditor entitled to equal priority with Ms. Lynch over Moses Segal’s property, she could be said to have an interest in those subject matters and to be a person who may be adversely affected by a judgment in relation to them. On Ms. Segal’s behalf, Mr. Zacher submits that the same considerations apply on appeal and that Ms. Segal acted as soon as she became aware of the appeal and of the fact that someone had finally located some exigible assets that can be affixed to Mr. Segal.

[28] In our view, however, more than those factors must be taken into account in the exercise of our discretion whether to grant Ms. Segal leave to intervene at this stage of the proceedings. We are directed by rule 13.01(2) to “consider whether the intervention will unduly delay or prejudice the determination of the rights of the parties to the proceedings”, and, as Dubin C.J.O. noted in Peel, supra, we must also weigh “the likelihood of the applicant being able to make a useful contribution to the resolution of the appeal without causing injustice to the immediate parties.”

[29] In our view, it would be unfair and unjust to permit Ms. Segal to intervene at this stage of the appeal because it would unduly delay and prejudice Ms. Lynch’s rights on the appeal, and because we do not believe that the utility of any contribution her submissions might make to the resolution of the appeal outweigh the injustice that would prevail if she were allowed to intervene in the circumstances. We decline to exercise our discretion in favour of making such an order.

[30] The court is empowered, under ss. 9(1)(d)(i) and 34(1)(c ) of the Family Law Act, R.S.O. 1990, c. F.3, to grant a vesting order for the equalization of net family property or for the provision of child or spousal support. There is no requirement under the FLA for notice to be given to anyone in particular when such an order is sought. We are not aware of any other statutory or legal prerequisite that would require Ms. Lynch to give notice of the details of her claim to Ms. Segal nor were we referred to any such authority by counsel.

[31] The fact that Ms. Segal’s attempted intervention was instigated by Moses Segal for his own undoubtedly invidious motivations – notwithstanding we are to believe he is completely unconnected with the appeal – and the circumstances surrounding the intervention as outlined above, are relevant to the exercise of this discretion. By themselves they may be insufficient to ground an order refusing leave to intervene. However, they are not by themselves on this record, and they do form the context from which the intervention motion cannot be divorced.

[32] Ms. Segal has known about Ms. Lynch’s action almost since its inception in 2003. Indeed, with Ms. Segal’s indirect permission,[^2] Ms. Lynch spoke with Ms. Segal’s Nevada lawyer, Mr. Jimmerson, about their respective lawsuits. While it does not appear that they discussed, specifically, the fact that Ms. Lynch was seeking an interest in corporations and properties alleged to be owned beneficially by Mr. Segal, the notes of her conversation indicate that reference was made to foreign jurisdictions such as Bahamas, Turks & Caicos, Switzerland, Jersey, Guernsey and Mauritius. Guernsey, of course, is the jurisdiction where the purported secret trust investors in the appellant corporations were said to be based. In addition, it is clear that Ms. Lynch and Mr. Jimmerson talked about Ms. Segal’s right to register and enforce her Nevada judgments in Ontario (Ms. Lynch told him about the Family Responsibility Office and the steps it would take on a spouse’s behalf to enforce judgments) and about why Ms. Segal had never asserted her claim against Mr. Segal in Canada (Mr. Jimmerson said that Ms. Segal was concerned she would have to allow visitation to her then minor son, Zachary, in exchange, which she was not prepared to do).

[33] In the circumstances, it appears to us that following this conversation, it was open to Ms. Lynch to proceed on the assumption that Ms. Segal was not interested in pursuing any claim against Mr. Segal in Ontario.

[34] At the same time, Ms. Segal had ample knowledge of Ms. Lynch’s lawsuit to permit her to make inquiries and to initiate proceedings in Ontario to protect her interests vis-à-vis Ms. Lynch’s claims, had she any desire to do so. She obviously has access to good legal advice, and a simple and inexpensive search of the public record would have revealed the full nature of the claim being pursued by Ms. Lynch. She did not avail herself of either option. She could have registered her Nevada judgments under the Act and taken steps to enforce them here at any time. She did not do so.

[35] As between Ms. Lynch and Ms. Segal, their treatment at the hands of Mr. Segal has been equally tawdry, but the equities as to their personal positions, on the record, favour Ms. Lynch. Ms. Lynch is in difficult financial circumstances, needing financial support for herself and her two pre-teen children, and having received nothing from Mr. Segal. Ms. Segal is in the same situation as far as the non-receipt of support and the non-satisfaction of her judgments is concerned, but the similarity ends there. Ms. Segal has remarried. Her children are adults and at least one of them is a successful business man. Her second husband – a distant relative of Mr. Segal – is even wealthier than Mr. Segal is.

[36] Finally, Ms. Segal’s intervention would undoubtedly complicate and protract the present appeal, which has already been well and fully argued. The existence of her Nevada judgments, and their significance in relation to the granting of an order vesting the properties in Ms. Lynch, formed part of the substance of those arguments. In such circumstances, we are not able to say that the likelihood of Ms. Segal being able to make a useful contribution to the resolution of the appeal on its merits outweighs the injustice that would be worked on Ms. Lynch if she were permitted to intervene.

Disposition

[37] It is simply too late for Ms. Segal to seek to intervene in the appeal at this stage.

[38] For the reasons outlined above, the motion to intervene is dismissed, with costs to Ms. Lynch payable by Ms. Segal on a partial indemnity basis. We fix those costs at $10,000 all-inclusive, as agreed by counsel.

[39] Given this disposition, and the withdrawal of Ms. Lynch’s motion to quash, it is not necessary to deal with the Attorney General’s motion to intervene, and it is dismissed without costs.

“D. Doherty J.A.”

“R.A. Blair J.A.”

“H.S. LaForme J.A.”

[^1]: Mr. Segal soon tracked Ms. Lynch down in New Jersey, and has since instituted proceedings for custody and access in that jurisdiction.

[^2]: Conveyed through Phyllis Segal Denaburg at a time when Ms. Segal appeared sympathetic to, and willing to co-operate with, Ms. Lynch.