COURT FILE NO.: FS-14-398922 DATE: 20210308 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: ANITA BIELAK Applicant/Responding Party – and – ELI DADOUCH Respondent/Moving Party

Counsel: Bryan R.G. Smith, Jennifer Cook and Stuart Svonkin, for the Applicant/Responding Party Harold Niman, Daryl Gelgoot, Jen-Yii Liew, Jonathan Lisus, Shaun Laubman and Zain Naqi, for the Respondent/Moving Party

Heard: March 2, 2021

RULING ON PRE-TRIAL MOTION

P.J. Monahan J.

[1] Since their separation on July 31, 2013 nearly eight years ago, Anita Bielak and Eli Dadouch (the “parties”) have been engaged in protracted litigation on a fairly continuous basis. Eleven judges of this court have been involved in this or related proceedings in a substantive way, and approximately three weeks of court time has been taken up with a variety of motions and case conferences. To describe the materials filed over the course of this litigation as voluminous would be an understatement; on this motion alone, the Respondent’s motion record consists of approximately 6900 pages divided into 13 volumes. A 10-week trial is scheduled to commence on March 15, 2021.

[2] The Applicant, Ms. Bielak, claims that during the marriage, the Respondent, Mr. Dadouch, exercised control over a large and complex network of entities that included, amongst many others, two companies called Firm Capital Mortgage Corporation (“FCMC”) and Door to Door Investments Inc. (“DTD”) (collectively, the “FCMC Companies”). Ms. Bielak contends that because Mr. Dadouch controlled the FCMC Companies and had the power to dispose of the assets and income of those companies for his own benefit, the value of the assets held in those companies as of the date of separation should be included in his net family property (“NFP”) under the Family Law Act (“FLA”), and income earned by those companies should be attributed to him when determining his ability to pay child and spousal support. Ms. Bielak maintains that those assets and income potentially amount to many millions of dollars in value.

[3] Mr. Dadouch argues that there should be no consideration at trial of any issue relating to the ownership, control or valuation of the FCMC Companies, and he moves for a ruling to that effect on the following grounds:

a. The FCMC Companies are wholly owned directly or indirectly by Mr. Dadouch’s mother, Marilyn Dadouch, and are therefore irrelevant to this proceeding. Marilyn Dadouch is the sole shareholder of FCMC, which wholly owns DTD. The Respondent maintains that FCMC was set up as an income vehicle for his mother after her husband passed away in 1990. FCMC generates income by participating in mortgage investments, with that income being used to meet Ms. Dadouch’s financial needs. Since the FCMC Companies belong to his mother, the Respondent says they should not be included in the calculation of his NFP nor in determining his ability to pay support, and are irrelevant to this proceeding;

b. In June of 2017, Ms. Bielak commenced a separate civil proceeding (the “FCMC Civil Action”) in which she seeks, amongst other things, a declaration that the FCMC Companies are wholly owned, legally and beneficially, by Mr. Dadouch. In the FCMC Civil Action, which is ongoing, the Applicant claims that Mr. Dadouch has treated the assets of the FCMC Companies as part of his own personal and corporate wealth. The Respondent says that these are in substance the same claims as the Applicant seeks to establish in relation to the FCMC Companies in this proceeding. It is an abuse of process for a party to attempt to litigate the same issue in two forums. Having elected to advance her allegations regarding the management and control of the FCMC Companies in a separate civil proceeding, it would be an abuse of process to permit her to raise the same issues in this proceeding;

c. the Applicant’s allegations relating to the FCMC Companies are barred by the doctrine of issue estoppel. In April 2019, the Applicant brought a motion seeking wide-ranging disclosure in relation to the FCMC Companies. That motion was dismissed by Hood J. on October 31, 2019. In the course of his Endorsement, Hood J. found that it was neither fair nor proportional to seek disclosure with respect to a corporation (i.e. FCMC) which is not only owned by someone else but has always been operated for the benefit of someone else. Hood J. also observed that having elected to litigate issues relating to FCMC in a civil proceeding, the Applicant should not now seek to have this matter decided in Family Court. The Applicant sought leave to appeal Hood J.’s ruling, but that application was dismissed by the Divisional Court. The Respondent therefore argues that Hood J.’s ruling is binding and the Applicant is estopped from attempting to raise issues in relation to FCMC in this proceeding;

d. Parties whose interests are impacted by a proceeding have the right to notice and full participation. Any determination of issues in relation to ownership and control of the FCMC Companies will directly impact Marilyn Dadouch and the FCMC Companies, yet the Applicant has never sought to make Ms. Dadouch or those companies parties to this proceeding, nor has she moved to consolidate the FCMC Civil Action with the matrimonial proceeding. Having failed to add Ms. Dadouch and the FCMC Companies as parties in a timely manner or consolidated the two proceedings, the basic rules of natural justice foreclose the Applicant’s attempt to have issues in relation to the FCMC Companies determined at trial; and

e. the Applicant’s pleadings failed to allege any material facts in relation to the FCMC Companies. Parties are required to identify the issues that need to be investigated at trial so that both parties know or should know what case they must meet. The Applicant’s failure to do so in relation to the FCMC Companies precludes her from litigating any issues relating to the management and control of those Companies at trial.

[4] I emphasize at the outset that the substantive merits of the claims advanced by Ms. Bielak relating to the FCMC Companies, which are mere allegations that have not been proven, are not at issue on this motion. All I am being asked to determine now is whether Ms. Bielak should be permitted to raise issues relating to the ownership, control or valuation of the FCMC Companies at trial.

Are the Applicant’s Claims in relation to the FCMC Companies Relevant to this Proceeding?

[5] The Respondent says that the Applicant’s claims that relate to the FCMC Companies are irrelevant to this proceeding since the FCMC Companies are owned by his mother and have always been operated for her benefit.

[6] The Applicant, on the other hand, maintains that although formal legal title to the FCMC Companies may be in the name of Ms. Dadouch, the Respondent controls the Companies and has the ability to dispose of their assets and income for his own benefit or the benefit of others. Therefore, the assets of the FCMC Companies are part of his “property” (as that term is defined in the FLA) as of the date of valuation, and the income generated by the FCMC Companies should be taken into account in determining his ability to pay support.

[7] As courts have frequently remarked, the definition of “property” in s. 4 (1) of the FLA is extremely broad and goes beyond considerations of mere paper title. That definition is as follows:

“property” means any interest, present or future, vested or contingent, in real or personal property and includes,

(a) property over which a spouse has, alone or in conjunction with another person, a power of appointment exercisable in favour of himself or herself,

(b) property disposed of by a spouse but over which the spouse has, alone or in conjunction with another person, a power to revoke the disposition or a power to consume or dispose of the property, and

(c) in the case of a spouse’s rights under a pension plan, the imputed value, for family law purposes, of the spouse’s interest in the plan, as determined in accordance with section 10.1, for the period beginning with the date of the marriage and ending on the valuation date.

[8] The opening words of s. 4 (1) define property in particularly broad terms, as “any interest, present or future, vested or contingent, in real or personal property.” Subsection 4 (1) (b) includes within that definition property which the spouse has disposed of, but which the spouse has the power, either alone or with another person, to revoke the disposition or to consume or dispose of the property. The value of all “property” (as defined) that is owned by a spouse on the valuation date (generally the date of separation), is to be included within the calculation of the spouse’s NFP for the purpose of determining entitlement to an equalization payment under s. 5.

[9] Although the definition of property in s. 4 (1) is broad, it is not unlimited. In Lowe v. Lowe, 2006 ONCA 804, the Court of Appeal stated that “property” for purposes of Part I of the FLA should be interpreted in a contextual manner consistent with the scheme and purpose of the Act. [1] Based on this “modern approach” to statutory interpretation, the Court of Appeal defined property under section 4 (1) as including assets accumulated during the marriage and which “can fairly be said to bear some relationship to the partnership that the marriage is said to create.” [2] This interpretation is consistent with the purpose of requiring equalization of net family properties upon separation or divorce, which s. 5 (7) describes as to “recognize that childcare, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities.” [3]

[10] The Applicant alleges that although paper title to the FCMC Companies may be held by Marilyn Dadouch, the Respondent exercised management, direction and control over the Companies and treated the wealth represented by the Companies as forming part of his own personal and corporate wealth. Viewed in the context of the expansive definition of “property” in Part I of the FLA, it is obvious that the Applicant’s claims relating to the Respondent’s management and control of the FCMC Companies are relevant to this proceeding, since they are probative of the issue of whether the value of the assets of those companies should be included within the definition of the Respondent’s “property”, and thus his “NFP”, for purposes of ss. 4 and 5 of the Act.

[11] To reiterate the comment made earlier, at this stage the claims advanced by Ms. Bielak are mere unproven allegations. The point, however, is that if the Applicant is able to establish these claims at trial, this could well result in a determination that the value of assets of the FCMC Companies, in whole or in part, should be included within the Respondent’s NFP.

[12] Similarly, the Federal Child Support Guidelines, SOR/97-175 provide that where a spouse is a shareholder, officer or director of a corporation, and thereby has the power to direct income from the Corporation to himself, the court may attribute income of the corporation to that spouse for the purpose of determining the spouse’s support obligations. [4] The Applicant has submitted a Corporation Profile Report for FCMC indicating that at all relevant times, Mr. Dadouch has been the sole officer and director of FCMC. Depending on the evidence adduced at trial, the Applicant may be able to establish that some or all of the income of FCMC should be attributed to Mr. Dadouch for support purposes. This is further indicia of the relevance of the Applicant’s claims relating to Mr. Dadouch’s management and control of the FCMC Companies in this proceeding.

[13] I therefore conclude that the Applicant is not precluded from advancing claims in relation to the FCMC Companies on grounds of relevance.

Is the Applicant’s Attempt to Litigate Issues Relating to the FCMC Companies in this Proceeding an Abuse of Process?

[14] The Respondent argues that the Applicant should not be permitted to advance claims or allegations that relate to the FCMC Companies in this proceeding since she has made essentially the same claims in the FCMC Civil Action. To permit the Applicant to litigate the same legal issues in two different forums would give rise to an abuse of process. As Dunphy J. noted evocatively in Watts v. Chun, 2016 ONSC 1586, “circus performers may be able successfully to ride two horses, litigants cannot.” [5]

a. General Principles on Abuse of Process

[15] The leading case on the doctrine of abuse of process is Toronto (City) v. C.U.P.E., 2003 SCC 63 (“CUPE”), where the Supreme Court of Canada held that the doctrine engages the inherent power of the court to prevent the misuse of its procedure, thereby bringing the administration of justice into disrepute. [6] One circumstance in which an abuse of process has been said to arise is where the litigation before the court is found to be, in essence, an attempt to relitigate a claim which the court has already determined. Thus in CUPE, the Supreme Court held that it would be an abuse of process to permit a person convicted of sexual assault, and dismissed from his employment as a result, to be reinstated by a labour arbitrator who concludes, on the evidence before him, that the sexual assault did not take place.

[16] It is important to recognize that this bar against relitigation only applies where it is the same legal issue that is being raised in different forums. It is not uncommon for the same set of facts to give rise to a variety of legal consequences; thus it cannot be an abuse of process merely to pursue those various legal consequences in different proceedings. This was made plain in Canam Enterprises Inc. v. Coles, 2002 SCC 63, [7] where the purchaser of a commercial property commenced an action seeking a declaration that a mortgage secured on the purchased property was void because of misrepresentations made by realtors on behalf of the seller. That action was dismissed. The purchaser then commenced a second proceeding against its solicitor claiming damages for alleged negligence, which prompted the solicitor to commence a third-party claim against the realtors, who in turn commenced a fourth-party claim against the seller.

[17] It was argued that the second proceeding constituted an abuse of process because the same evidence that had been considered in the first proceeding would be relied on in the second. Goudge J.A. held that, despite the fact that the evidence considered in both proceedings might well be the same, the second proceeding raised distinct legal issues which had not been considered in the first proceeding, including the realtor’s duty of care towards the purchaser Canam. Because the issues raised in the two proceedings were different, it was not an abuse of process to allow the second proceeding to go forward. [8]

[18] To the same effect is Phillion v. Ontario (Attorney General), 2014 ONCA 567 ("Phillion"), [9] where Romeo Phillion, who had been convicted of murder in 1972, many years later obtained previously undisclosed materials from the Crown that included potential exculpatory evidence. On a Reference to the Court of Appeal, the Court found no wrongdoing on the part of the police or Crown in failing to disclose this exculpatory evidence at the time of Mr. Phillion’s original trial. The Court of Appeal nevertheless quashed his conviction on the basis that the evidence could reasonably have affected the outcome of Mr. Phillion’s criminal trial.

[19] Mr. Phillion then commenced a civil action seeking damages for alleged negligence and wrongdoing on the part of the Crown and police in relation to his murder conviction. The Crown moved to have the civil action dismissed as an abuse of process on the basis that the issues raised in the tort claim had already been determined by the Court of Appeal, which had found no wrongdoing on the part of the authorities.

[20] The Court of Appeal found that the Mr. Phillion’s civil proceeding did not constitute an abuse of process because it raised legal issues that had not been considered in the Reference, specifically, issues of negligence and a common law duty of care that the Crown or the police may have owed towards Mr. Phillion. Feldman J.A. on behalf of the Court of Appeal noted that orders dismissing an action as an abuse of process should only be granted “in the clearest of cases and only when allowing the action to proceed would bring the administration of justice into disrepute.” [10]

b. Application of General Principles

[21] In order to determine whether permitting the Applicant to pursue claims relating to the management and control of the FCMC Companies in this proceeding would constitute an abuse of process, it is necessary to consider whether she is attempting to relitigate the same issues here as she has raised in the FCMC Civil Action.

[22] It is well established that a claim for equalization under s. 5 of the FLA does not involve any change in the legal or beneficial ownership of assets owned by spouses at the time of separation. Equalization of NFP gives rise to a right on the part of the spouse with the lesser NFP to receive a monetary payment from the other spouse equal to 50% of the difference between their respective NFPs. It thus gives rise to a debtor-creditor relationship in the sense that the creditor spouse obtains the right to a monetary claim from the debtor spouse. But regardless of whether or from whom an equalization payment is required, each spouse retains ownership of his or her own property both before and after the breakdown of the marriage. [11]

[23] The relief sought in the FCMC Civil Action is quite different. That claim is for a declaration that the FCMC Companies are wholly-owned, beneficially and legally, directly or indirectly, by Mr. Dadouch. Further, to the extent that title to the FCMC Companies has been transferred to Marilyn Dadouch, the FCMC Civil action seeks an order directing that such title be transferred to Mr. Dadouch, or that a declaration be issued that Marilyn Dadouch holds any such title as a bare trustee for Mr. Dadouch.

[24] The distinctions between the two proceedings include the following:

i. whereas the Applicant claims an equalization payment as well as payment of child and spousal support from the Respondent in this proceeding, in the FCMC Civil Action, the Applicant does not seek any payment or other relief from the Respondent;

ii. the FCMC Civil Action involves proprietary claims in relation to the ownership of the FCMC Companies, whereas in this proceeding the Applicant merely seeks monetary payment(s) from the Respondent, which will not affect the ownership of the FCMC Companies;

iii. the current proceeding involves a determination of the parties’ respective NFPs and equalization, whereas the concept of NFP and/or entitlement to equalization do not arise in the FCMC Civil Action;

iv. the FCMC Civil Action will not consider any obligation on the part of Mr. Dadouch to pay child or spousal support to either the Applicant or the children of their marriage, issues that arise squarely in this proceeding;

v. the expansive definition of “property” applicable to proceedings under Part I of the FLA does not apply in the FCMC Civil Action, which will be determined on the basis of property rights as defined at common-law.

[25] For these reasons, I find that the Applicant is not prevented from raising claims in relation to the FCMC Companies in this proceeding by virtue of the fact that she has commenced the FCMC Civil Action. Because the legal issues raised in the two proceedings as well as the relief claimed are quite different, allowing the Applicant to proceed with both does not involve an abuse of this Court’s process. In the words of Feldman J.A. in Phillion, this is not the “clearest of cases where allowing two matters to proceed would bring the administration of justice into disrepute”.

[26] But there is more to it than that. Even if, contrary to the above, I had found that the doctrine of abuse of process was somehow engaged here, in my view it would not be an appropriate remedy to bar the Applicant from raising issues that relate to the management and control of the FCMC Companies in this proceeding. The right to an equalization payment is a statutory entitlement of spouses in Ontario upon divorce or separation, to be determined in accordance with the requirements of the FLA. I have found that the evidence and arguments which the Applicant seeks to advance that relate to management and control of the FCMC Companies are relevant to the determination of her statutory entitlement. If she were barred from advancing such evidence or arguments, the result would be that her entitlement to equalization would be determined otherwise than in accordance with the requirements of the statutory scheme.

[27] I find that this cannot have been the intention of the legislature in enacting the equalization provisions of the FLA. The legislature created a statutory entitlement to equalization so as to recognize and give effect to the joint responsibilities and partnership inherent in the marital relationship. That objective is rendered no less fundamental by virtue of the fact that one spouse may have elected to commence separate civil litigation dealing with matters that touch on the same issues.

[28] I therefore find that (i) permitting the Applicant to proceed with her claims in relation to the FCMC Companies does not constitute an abuse of process; and (ii) even if the doctrine of abuse of process were somehow engaged in this case, it would not be appropriate to preclude the Applicant from obtaining a determination of her entitlement to equalization in accordance with the requirements of the FLA, which includes the opportunity to raise claims relating to the management and control of the FCMC Companies. [12]

Is the Applicant’s Attempt to Litigate Issues Relating to the FCMC Companies Precluded by the Doctrine of Issue Estoppel?

[29] During pretrial questioning in this case, the Applicant asked questions and requested disclosure relating to the FCMC Companies. Most of those requests were refused by the Respondent on grounds that they were irrelevant. The Applicant brought a refusals motions seeking, amongst other things, an order compelling the Respondent to answer questions and produce documents in relation to FCMC Companies.

[30] In October 2019, Hood J. dismissed the Applicant’s refusals motion as it related to the FCMC Companies, finding that the disclosure requested was neither proportional nor fair. In the course of his Endorsement, Hood J. expressed the view that the Applicant should have directly put issues relating to the FCMC Companies forward in the family law proceeding, as opposed to having the issue litigated in a separate civil action. Having chosen a different forum to have the issue of who should have the benefit of FCMC, Hood J. indicated that the Applicant should not now seek to have this matter decided in Family Court. Hood J. further observed that this is not a situation “where a spouse has historically used a corporation to funnel income elsewhere or to hide assets that have always been treated as his or her own prior to separation.”

[31] The Respondent argues that Hood J.’s ruling on the Applicant’s refusals motion gives rise an estoppel, preventing the Applicant from litigating any issues that relate to management or control of the FCMC Companies at trial.

a. General Principles Governing Issue Estoppel

[32] As Binnie J. explained in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, the underlying purpose of the doctrine of issue estoppel is to balance the public interest in the finality of litigation with the public interest in ensuring that justice is done on the facts of the particular case. [13] Because estoppel is a doctrine of public policy designed to advance the interests of justice, the rules governing issue estoppel are not to be mechanically applied.

[33] Binnie J. set out a two-step framework governing the application of issue estoppel. First, a court must determine whether the party seeking to rely on the doctrine has satisfied the following three conditions:

i. That the same question was decided in the judicial decision which is said to create the estoppel;

ii. that this prior judicial decision was final; and

iii. that the parties to the prior judicial decision or their privies are the same persons as the parties to the proceeding in which the estoppel is raised.

[34] If these preconditions to the operation of issue estoppel have been satisfied, the court must proceed to the second stage of the analysis. This involves the exercise of discretion in order to determine whether the application of issue estoppel in the particular circumstances of the case would work an unfairness. Such unfairness could arise in a variety of ways, including where the prior proceeding had a different purpose or different stakes than the proceeding in which the estoppel is sought to be applied. [14]

b. Application of General Principles

[35] In my view, Hood J.’s ruling on pretrial disclosure does not give rise to an estoppel in the manner proposed by the Respondent, for two reasons.

[36] First, the issue decided by Hood J. was the narrow one of whether, during the pretrial process, the Respondent should be required to answer questions or produce documents relating to the FCMC Companies. Hood J. was not asked and thus did not decide what issues could be raised by either party, including the Applicant, at trial.

[37] As noted above, an estoppel only arises when the same legal question was decided in a prior proceeding. Because Hood J. did not decide what matters could be raised at trial, his decision cannot create an estoppel precluding either party from raising issues at trial, whether in relation to the FCMC Companies or any other matter.

[38] This basic point can be illustrated by considering the opposite scenario. Suppose Hood J. had granted the Applicant’s motion for further disclosure in relation to the FCMC Companies and, in the course of that ruling, found that the Respondent had historically directed income or assets to the FCMC Companies. Would the result of such a ruling have been that the Respondent would have been required to include the value of the FCMC Companies in his NFP and, moreover, that he would have been estopped from disputing at trial whether the value of the FCMC Companies should be included in his NFP calculation? It is obvious that no such estoppel could have arisen, for the simple reason that the determination of what is or is not to be included in either spouse’s NFP is a matter for trial rather than for determination on a refusals motion. By parity of reasoning, Hood J.’s dismissal of the Applicant’s refusals motion cannot mean that the Applicant is now precluded from arguing, at trial, that the value of the FCMC Companies should be included in the Respondent’s NFP.

[39] Thus, the first precondition for the establishment of an estoppel, namely, whether the same issue was decided in the two proceedings, has not been satisfied. On this ground alone, no estoppel arises.

[40] Even if, contrary to the above, I had found that the preconditions for the establishment of an estoppel have been satisfied, in my view this would be an appropriate circumstance to exercise my discretion and refuse to apply an estoppel in the manner proposed by the Respondent, on grounds of unfairness.

[41] The motion before Justice Hood was a refusals motion brought by the Applicant, not a motion for partial summary judgement brought by the Respondent. Thus, the underlying NFP, equalization, income and support issues with respect to the FCMC Companies were not raised on the refusals motion. To now apply that decision as a final adjudication on the merits of important aspects of the case, especially where neither party sought or argued for any such relief, would be unfair and inappropriate.

[42] This is underscored by the nature of the process on the refusals motion, and the record upon which it was decided. The refusals motion was argued on the basis of a documentary record only, without the benefit of viva voce evidence or cross-examination. There was limited evidence before Hood J. in relation to the assets or income of the FCMC Companies, as well as the business or financial relationships between the FCMC Companies and other entities owned or controlled by Mr. Dadouch. Nor did the Applicant have an opportunity to put forward all the evidence she expects to adduce at trial to demonstrate that the Respondent controlled the FCMC Companies, including evidence she has obtained subsequent to the refusals motion.

[43] In short, this is a textbook instance of a situation described by the Supreme Court of Canada in Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, namely, where there is “a significant difference between the purposes, processes or stakes involved in the two proceedings.” [15] The doctrine of issue estoppel has been developed to serve the ends of justice and should not be applied mechanically to work an injustice. [16] That in my view would be the result if the Applicant were to be precluded from having the equalization and support issues arising from her allegations regarding the FCMC Companies adjudicated on a full evidentiary record and after full argument on the merits.

[44] I therefore find that the pretrial ruling of Hood J. on the refusals motion does not prevent the Applicant from raising issues at trial relating to the management and control of the FCMC Companies.

Is The Applicant Precluded From Raising Issues Relating To The FCMC Companies At Trial Because Marilyn Dadouch and the FCMC Companies Are Not Parties To This Proceeding?

[45] The Respondent argues that it would be profoundly unfair to Marilyn Dadouch and the FCMC Companies to consider issues that may affect their rights without them having been added as parties. Because the Applicant failed, long ago and without explanation, to add Ms. Dadouch or the FCMC Companies as parties, the Respondent submits that she cannot now litigate issues at trial that might adversely affect their rights.

[46] The “necessary parties” to a proceeding under the FLA are determined in accordance with Rule 7 of the Family Law Rules. The relevant portions of Rule 7 are as follows:

7. WHO ARE PARTIES – CASE – (1) A person who makes a claim in a case or against whom a claim is made in a case is a party to the case.

(3) PERSONS WHO MUST BE NAMED AS PARTIES – a person starting a case shall name,

(a) as an applicant, every person who makes a claim;

(b) as a respondent,

(i) every person against whom a claim is made, and

(ii) every other person who should be a party to enable the court to decide all the issues in the case.

(5) PARTY ADDED BY COURT ORDER – The court may order that any person who should be a party shall be added as a party, and may give directions for service on that person.

[47] In this proceeding, the only claims made by the Applicant are against the Respondent. No relief is sought from either Marilyn Dadouch or the FCMC Companies. Thus, they are not “necessary parties” by virtue of either Rule 7 (1) or 7 (3)(b)(i).

[48] Nor is it contended by either the Applicant or Respondent that the addition of Marilyn Dadouch or the FCMC Companies as parties is necessary in order to enable the court to decide all the issues in the case, in accordance with Rule 7 (3)(b)(ii). This is because it is anticipated that Marilyn Dadouch, the Respondent, and other witnesses with relevant knowledge will be called as witnesses and can provide evidence with respect to the management and control of the FCMC Companies.

[49] The Respondent nevertheless argues that Marilyn Dadouch and the FCMC Companies are necessary parties because the Applicant’s allegations will have a "major impact” on their legal rights. Thus the failure of the Applicant to name them as parties precludes her from raising issues that relate to Ms. Dadouch or the FCMC Companies at trial.

[50] There are a number of difficulties with the position put forward by the Respondent.

[51] First, a court exercising discretion under Rule 7 will generally only add a person to an FLA proceeding where a claim is asserted or an order is being sought against that person. Although there is jurisdiction to add individuals or corporations as parties where their rights are “directly affected” (even though no order could be made in favour of, or against them), such jurisdiction is exercised sparingly. [17]

[52] More fundamentally, neither the Applicant, Respondent, Marilyn Dadouch nor the FCMC Companies, propose that the latter be added as parties to this proceeding. In fact, although the Respondent now claims that Ms. Dadouch and the FCMC Companies are necessary parties, this is contrary to the position he has taken throughout the litigation. For example, in March 2017, the Respondent’s counsel cautioned counsel for the Applicant that “[i]f Ms. Bielak moves to add FCMC as a party to the litigation then any such motion will be opposed.”

[53] Although the Respondent alleges that this proceeding will have a “major impact” on the enjoyment of Ms. Dadouch’s and the FCMC Companies’ legal rights, we have not heard on this motion from either Ms. Dadouch or the FCMC Companies as to the nature of this impact. In short, there is no evidence in the record upon which it could be determined whether, or how, this proceeding would or would not impact the rights of either Ms. Dadouch or the FCMC Companies.

[54] If the Respondent is of the view that the audi alteram partem principle requires the addition of either Marilyn Dadouch or the FCMC Companies as parties, then the obvious solution is for him to move to have them named as such. (Alternatively, Marilyn Dadouch or the FCMC Companies could themselves seek to be added as parties.) Having failed to do so and, in fact, having opposed any such attempt by the Applicant, it is not now open to the Respondent to argue that the Applicant is precluded from raising issues relating to the management or control of the FCMC Companies at trial.

[55] I therefore find that the fact that neither Marilyn Dadouch nor the FCMC Companies are named as parties does not preclude the Applicant from raising issues relating to the management and control of the FCMC Companies at trial.

Is the Applicant Precluded from Litigating Issues Relating to the FCMC Companies Because She Has Failed to Plead Material Facts in Relation to the Companies?

[56] The Respondent argues that parties are required to identify the issues that need to be investigated at trial so that both parties know or should know what case they must meet. In this case, her Application failed to plead any facts in relation to the FCMC Companies. The Applicant’s silence regarding the FCMC Companies in this proceeding, followed by Justice Hood’s refusals ruling, means that there has been no meaningful discovery or record regarding the Companies. It would therefore be unfair to permit the Applicant to litigate issues relating to the management and control of the FCMC Companies at trial.

[57] The leading case on the adequacy of pleadings in FLA proceedings is the Court of Appeal’s 2016 decision in Frick v. Frick, 2016 ONCA 799 (“Frick”), [18] where Benotto J.A. made it clear that it is not necessary for a spouse to plead the specific assets that allegedly form part of the other spouse’s NFP. The key question is whether a party has been appropriately alerted to the issues that will be raised at trial, since notice of a claim and the opportunity to respond to it is a basic principle of fundamental justice. [19] Such notice can be achieved through an amendment to pleadings, but it may also may result from a clear delineation in the course of litigation (i.e. through case conferences, motions or discussions between counsel) identifying the real issues in dispute. [20]

[58] In this case, the Applicant has properly pleaded her claims for equalization and child and spousal support. The Applicant further alleged in her pleading that the Respondent “is the recipient of direct and indirect benefits from many businesses/entities including Firm Capital Corporation, Firmvest Capital Corporation and Firm Capital Properties Inc.” Although her pleading did not reference the FCMC Companies, neither did she specifically refer to numerous other entities owned or controlled by the Respondent and which the Respondent acknowledges should properly be included in the calculation of his NFP.

[59] Nor can there be any doubt that the Respondent has been aware for many years that the Applicant seeks to include the value of the FCMC Companies in the Respondent’s NFP. Of course, the Respondent has consistently taken the position that the FCMC Companies belong to his mother and that the assets of the Companies are irrelevant to this litigation. But the Applicant has been equally insistent in taking the opposite position, as evidenced by the refusals motion she brought before Justice Hood in 2019, and her attempt to appeal Hood J.’s ruling to the Divisional Court. Thus the Respondent can hardly maintain that he has been taken by surprise by the fact that the Applicant intends to pursue the matter at trial.

[60] As for the Respondent’s objection that there has been no meaningful discovery or record regarding the FCMC Companies, this is due entirely to the fact that the Respondent has successfully resisted the Applicant’s attempts to obtain documentary discovery and answers to questions. Indeed, it is the Applicant who may well be disadvantaged by the limited discovery that has occurred in relation to the FCMC Companies since the Respondent, as sole officer and director of FCMC, has access to relevant records whereas the Applicant may not.

[61] I therefore find that the Applicant is not precluded from litigating issues relating to management and control of the FCMC Companies at trial by virtue of the fact that her pleadings did not make reference to the Companies.

Disposition

[62] The Respondent’s motion is dismissed.

[63] If the parties cannot settle the issue of costs on this motion, I may be spoken to at the commencement of trial.

P. J. Monahan J. Released: March 8, 2021

Citations

[1] Lowe v. Lowe, 2006 ONCA 804, [2006] O.J. No. 132 (C.A.).

[2] Lowe at para 14 (citing Pallister v. Pallister, 1990 ONSC 12272, [1990] O.J. No. 2091, 29 R.F.L. (3d) 395 (Gen. Div.), at pp. 404-05 R.F.L.).

[3] FLA, s. 5 (7).

[4] Federal Child Support Guidelines, SOR/97-175, s. 18.

[5] Watts v. Chun, 2016 ONSC 1586, at para 2.

[6] Toronto (City) v. C.U.P.E., 2003 SCC 63 (“CUPE"), at para 37.

[7] Canam Enterprises Inc. v. Coles, 2002 SCC 63 (allowing an appeal from the judgement of the Ontario Court of Appeal reported at 2000 ONCA 8514, [2000] O.J. No. 4607, on the basis of the reasons of Goudge J.A., dissenting in the Court of Appeal.)

[8] See 2000 ONCA 8514, [2000] O.J. No. 4607, at paras. 55-61.

[9] Phillion v. Ontario (Attorney General), 2014 ONCA 567 ("Phillion").

[10] Phillion at para. 49.

[11] See generally Schreyer v. Schreyer, 2011 SCC 35.

[12] For clarity, I make no determination as to whether, in circumstances which might give rise to an abuse of process, some remedy other than as proposed by the Respondent on this motion might be available and/or appropriate.

[13] Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 (“Danyluk"), at para 33.

[14] See CUPE, at para 53; Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, at paras 36 to 48.

[15] Penner, at para 42.

[16] Danyluk, at para 1.

[17] Noik v. Noik, 2001 ONSC 27970, [2001] O.J. No. 372 at para 32.

[18] Frick v. Frick, 2016 ONCA 799 (“Frick”).

[19] Frick at para. 36-37.

[20] Poulin v. Poulin, 2017 ONSC 64, at paras 39-43.