Court of Appeal for Ontario

Docket: C64491

Judges: MacPherson, LaForme and Roberts JJ.A.

Parties

Between

Mark Kowalsky (Respondent) Applicant

and

Denise Asselin-Kowalsky (Appellant) Respondent

Counsel

Patrick J. Kraemer, Justine A. Dalton and Michael A. van Bodegom, for the appellant

Kim S. Kieller and Ainsley Hunter, for the respondent

Hearing and Appeal

Heard: June 7, 2018

On appeal from: The order of Justice Emile Kruzick of the Superior Court of Justice, dated December 7, 2007, and from the order of Justice Michael G.J. Quigley, dated March 27, 2008.

Decision

By the Court:

A. Overview

[1] The appellant appeals from the order finally determining the issues of equalization, child support and spousal support ("the final trial order"), and from the order dismissing her motion to set aside the final trial order. The appellant also seeks to file fresh evidence on appeal.

[2] This appeal presents highly unusual circumstances in that it involves the appeal from orders that were granted over ten years ago to parties who have been separated for almost 15 years and whose children are now in their 30s. It is equally exceptional because the entire passage of time can be explained by the evidence of the appellant's prolonged history of serious mental health issues, which this court accepted as the basis for granting the appellant an extension of time to appeal by order dated September 29, 2017.

[3] The appellant and the respondent were married for 22 years when they separated in 2003. The respondent instigated proceedings in 2005 to obtain a divorce and to determine finally the issue of equalization of the parties' net family property, including the former matrimonial home. In response, the appellant raised claims for child and spousal support. The parties were granted a divorce in 2006.

[4] The other issues finally came on for trial starting on November 27, 2007. The appellant failed to appear and the trial proceeded in her absence, although her brother attended and advised that the appellant's health did not permit her to attend. The appellant's subsequent motion to set aside the final trial order was dismissed on March 27, 2008, when the appellant again failed to attend.

B. Analysis

[5] The appellant submits that she was unable to attend the trial or her motion because she was physically and mentally incapable of doing so. She maintains that in the circumstances, justice requires that the final trial order of the trial judge and the order of the motion judge be set aside. She asks that this court determine the issues that were before the trial judge or, alternatively, that there be a new trial.

[6] We requested and the parties agreed to make submissions, first, on whether the decisions under appeal should be set aside, which included whether the appellant's fresh evidence ought to be admitted, before proceeding with argument on the merits.

(1) Motion to Admit Fresh Evidence on Appeal

[7] The appellant's fresh evidence consists of her affidavit in which she sets out her medical history, including various medical notes and records of her attending physicians, the affidavit of Dr. David A. Jones, who provided a psychological assessment of the appellant, the history of the proceedings, various financial statements and records, and the affidavit of Brad Borkwood, a chartered professional accountant and chartered business valuator, of Bluepoint Valuations Inc., who provided an earnings report about the respondent for support purposes.

[8] We admit the appellant's fresh evidence on appeal because it satisfies all of the criteria for its admission: it could not have been provided before trial; it is credible; and it is conclusive of the main issue on this appeal, namely, whether the justice of the case requires that the orders under appeal be set aside, in order to prevent an unjust result: Sengmueller v. Sengmueller, 1994 CarswellOnt 375, at para. 34.

[9] We do not accept the respondent's submission that the issue to be determined is whether the trial judge and the motion judge erred by failing to adjourn the proceedings before them. The fresh evidence, by definition, was unknown to the presiding judges. The underlying merits of their orders are therefore largely irrelevant on this unusual appeal. The questions to be determined are whether, on the basis of the fresh evidence and the other evidence in the record, the appellant has excused her failure to attend the trial and her motion and, if so, whether the justice of the case requires that the orders under appeal be set aside on the basis of procedural fairness.

[10] None of the fresh evidence could have been provided with due diligence prior to or at trial because, as this evidence (and the other evidence on the record) establishes, the appellant was mentally unable to attend. Moreover, the appellant's litigation guardian and solicitor having been removed mere weeks before trial (respectively, on October 15, and November 14, 2007), the appellant lacked any means of assistance, other than her brother who, as noted earlier, attended at trial and advised the trial judge that the appellant could not attend because of her health. This situation continued past the motion date in March 2008 and persists to the present day.

(2) Was the Appellant Incapable of Attending the Trial and Her Motion?

[11] There is no issue that due to her scoliosis and a number of back surgeries, the appellant has been physically disabled from employment and in receipt of disability pension benefits since 1999. The record, including the fresh evidence, demonstrates that the appellant has also struggled with serious mental health issues since at least 1995.

[12] The respondent does not dispute that the appellant has suffered from various physical and mental disabilities over the years. In these proceedings, he instigated motions to have the appellant assessed and to appoint the Public Guardian and Trustee as her litigation guardian.

[13] A year before trial, the respondent stated in an affidavit:

I have been increasingly concerned about the mental health of the respondent over the last three years of separation, as I see her withdraw from the world and retreat into her own little reality. Recent events have convinced me that she needs psychiatric help that she is not getting.

[14] Nine months before trial, the respondent brought a motion seeking, among other relief, that the appellant "submit to a mental examination by one or more health practitioners pursuant to section 105 of the Courts of Justice Act, R.S.O. 1990, c. C.43."

[15] At trial, he produced photographs purporting to show that the appellant had randomly splattered paint all over the matrimonial home. Within days of the completion of trial and before the final trial order was released, the respondent assisted one of their sons in completing the necessary forms under the Mental Health Act, R.S.O. 1990, c. M.7, to have the appellant assessed in hospital.

[16] However, the respondent disputes that the appellant lacked the capacity to attend trial or her motion. He submits that there is no formal opinion of incapacity by a qualified capacity assessor and that there is no evidence that the appellant was a "special party" under the Family Law Rules, O. Reg. 114/99.

[17] We do not accept these submissions.

[18] First, a fundamental purpose of the appellant's fresh evidence is to explain her absence at trial and her motion. In order to succeed on her appeal, her explanation must be sufficiently cogent that it credibly excuses her absence and such that it would be procedurally unfair to allow the trial and motion orders to stand. The level of her inability to attend must obviously be serious to reasonably explain her absence. However, there is no requirement that she prove a certain level of incapacity including one that rises to the definition under the Substitute Decisions Act, S.O. 1992, c. 30 or the Mental Health Act. We also note that incapacity for the purposes of the representation of a person under a disability under r. 7.04 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, speaks to a person who is "mentally incapable … in respect of an issue in the proceeding" [emphasis added], not necessarily for all purposes in all aspects of her life.

[19] Second, the evidence establishes that the appellant was incapable of dealing with and attending at trial or her motion because of her mental health issues.

[20] Crucially, within days of the trial, the appellant was found incapable. On December 5 and 7, 2007, the appellant was brought into hospital by police for mandatory assessment under the Mental Health Act. On December 7, 2007, she was involuntarily admitted to Orillia Veteran's Hospital where she remained until released on January 23, 2008. While in hospital, the appellant became aware of the final trial order and instigated a motion to set it aside on December 24, 2007. Obviously, the trial judge was not aware of this traumatic event nor of the appellant's condition because her hospitalization occurred very soon after the conclusion of the uncontested trial.

[21] Further, according to Dr. Jones' assessment, the appellant meets the diagnostic criteria for Posttraumatic Stress Disorder ("PTSD") and Major Depressive Disorder, Recurrent Severe, but those chronic depressive symptoms are part of the PTSD symptom complex and are secondary to that diagnosis. Her chronic pain symptoms are described as a Somatic Symptom Disorder Persistent with Predominant Pain. His opinion is that her Paranoid Personality Disorder is a manifestation of extreme psychological defenses that have resulted from cumulative trauma over the years. Significantly, he opines that she has likely been chronically impaired from as early as 1995 and remains highly impaired by her chronic PTSD and associated Major Depressive symptoms today. He estimates her current level of functioning is only 45-50 on a scale of 100. He concludes that the combined impairments of the appellant's chronic physical problems and her chronic PTSD symptoms make it extremely difficult for her to take care of herself.

[22] With respect to the appellant's ability to deal with the extreme stress of the family law proceedings, Dr. Jones explains:

It is highly probable that she was in no state to understand the basic rules of the court and the steps she should have taken to protect her interests, including seeking spousal and child support and the equalization of net family property. And even if she was able to maintain a rudimentary understanding of those rules, despite having PTSD, her paranoid defense system and her fear of confronting and standing up to the man whom she perceives as abusive could also have been powerful enough to emotionally paralyze her and prevent her from taking steps necessary to protect her interests.

[23] We are satisfied that the appellant lacked the capacity to prepare for and attend at trial and the motion. The uncontested trial and motion resulted in orders that had disastrous financial consequences for the appellant. By the final trial order, she was required to make an equalization payment of $117,500.31 and her claims for spousal and child support were dismissed. The motion judge ordered that she pay additional monies to the respondent in the amount of $173,277.11.

[24] After the trial in 2007 and until 2017, the appellant's income flowed from a modest long-term disability pension ($1,664 to $2,989 monthly) and the Canada Pension Plan ($905 to $1,253 monthly).

[25] By virtue of a report prepared by Bluepoint Valuations Inc., it appears that the respondent's income as a family lawyer should have increased from $116,000 to $174,000 between 2003 and 2017. The respondent sold the former matrimonial home for $538,000 in 2015. He kept the entire proceeds of sale. He has remarried. He and his wife own a home in Midland and a condominium in a gated community in Costa Rica. They own three vehicles, two Mercedes cars and a BMW motorcycle.

[26] For several years after the marriage ended, the appellant lived with her mother. Her mother died in December 2014. The respondent commenced garnishment proceedings to recover proceeds from the estate of her deceased mother. So far, he has obtained $248,609 and seeks to obtain an additional $100,000 plus from the garnishment proceedings against the appellant.

[27] In our view, the outcome would likely have been dramatically different had the appellant been present at the trial and her motion, and had she been given the opportunity to challenge the respondent's evidence with her own evidence and through cross-examination and submissions.

[28] In particular, the appellant has raised serious issues as to the validity of the equalization of the former matrimonial home and the dismissal of her claim for spousal support. There is also a serious question as to whether the respondent gained an unfair advantage in both purchasing the matrimonial home at a greatly discounted value and receiving an award that the appellant pay for repair costs. Similarly, on its face, the appellant's claim for compensatory and needs-based spousal support is also a serious issue to be tried, given the length of the marriage, her financial support of the respondent through his education, her significant disability, and her impoverishment through supporting her two children without child support from the respondent.

[29] As a result, in these highly unusual circumstances, justice requires that the final trial order and order of the motion judge be set aside. The garnishment order, which flows from these, must also therefore be set aside and the garnished monies in the amount of $248,609 plus interest paid back to the appellant.

(3) Should the Merits of the Family Law Proceedings Be Determined by This Court or at a New Trial?

[30] The appellant submits that this court should determine all issues and, if necessary, provide an adjournment to allow the respondent to conduct cross-examinations and file further responding evidence. The respondent maintains all issues should be determined at a trial.

[31] Regrettably, we are not in a position on this record to determine the issues of equalization, and child and spousal support, all of which require credibility assessments and findings of fact. These issues must be determined at a new trial.

C. Disposition

[32] Accordingly, we allow the appellant's appeal, set aside the final trial order of Kruzick J. dated December 7, 2007, and the order of Quigley J. dated March 27, 2008, and order that the issues of equalization and support be determined at a new trial. We also set aside the garnishment order. The respondent must return to the appellant the garnished amount of $248,609, plus interest from the date of garnishment, within fourteen days of the release of these reasons.

[33] Given the age of these proceedings, it is in the parties' best interests, and they agree, that the trial should be case-managed and expedited. We agree that the outstanding issues should be determined expeditiously through a fair and proportional process in keeping with the primary objective of the Family Law Rules.

[34] While we have ordered that there be a new trial, this obviously does not preclude the parties from trying to resolve this matter out of court. We strongly encourage them do so. It is in the parties' best interests to make every effort to settle their dispute entirely or at the least, significantly narrow the issues to be determined at trial. We would remind the parties of the potential cost consequences to a party who fails to accept an offer that was as favourable as or more favourable than the result achieved at trial.

[35] The costs of this appeal are unusually high because of the myriad steps that were required. As a result, the appellant is entitled to her partial indemnity costs of the appeal, including the motion for an extension of time and the fresh evidence motion, in the amount of $80,000, inclusive of disbursements and applicable taxes.

Released: June 11, 2018

J.C. MacPherson J.A.

H.S. LaForme J.A.

L.B. Roberts J.A.