CITATION: Ho v. Lau, 2019 ONSC 5573
DIVISIONAL COURT FILE NO.: 186/18
DATE: 20191007
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Swinton, Perell and R.D. Gordon, JJ.
BETWEEN:
GALLANT YIU TAI HO
Respondent/Appellant in Appeal
Stephen M. Grant and S. Garbe, for the Respondent/Appellant in Appeal
– and –
CECILIA YIN TONG LAU
Martha McCarthy and Lesley Burke, for the Applicant/Respondent in Appeal
Applicant/Respondent in Appeal
HEARD at Toronto: September 24, 2019
R.D. Gordon, J.
Overview
[1] After the Appellant commenced a civil action in the Commercial Court in Toronto, the Respondent brought an application in Family Court in Toronto in which she claimed spousal support and asserted trust and unjust enrichment claims based on the existence of a joint family venture with the Appellant.
[2] Before pleading his Answer to the Respondent’s Petition, the Appellant brought a motion pursuant to Rule 16(12) of the Family Law Rules to strike the application because: (1) the parties were divorced in Las Vegas, Nevada in 2005, and the divorce judgment included a spousal support waiver by the Respondent; and (2) there was already a civil action dealing with the Respondent’s trust and unjust enrichment claims.
[3] On the Rule 16 (2) motion, the Appellant submitted that the Ontario court has no jurisdiction to deal with the spousal support claim and that the equitable doctrines of laches, estoppel and preclusion are a complete defence to the Respondent’s claims. The Appellant also sought an order dispensing with the requirement that he attend a Mandatory Information Program.
[4] Justice Moore dismissed the motion. This decision deals with the appeal, with leave, from the order of March 13, 2018.
Factual Overview
[5] The following overview is based on factual allegations contained in the Respondent’s Notice of Application, as the parties filed no evidence for the motion other than two expert reports on Nevada law, and the Appellant has not yet pleaded. For the purposes of the Appellant’s motion and his appeal, the facts in the Notice of Application are assumed to be true.
[6] The parties began a romantic relationship in 1978 when they were both residents of Hong Kong. The Appellant was married at the time. In April of 1984, with the financial assistance of the Appellant, the Respondent moved to Ontario where she has resided since. The Appellant paid for the purchase of a house. Although he remained in Hong Kong, the parties’ relationship continued and eventually they had two children together, one born in 1986 and the other in 1988. The Appellant provided the Respondent with financial support and paid for nannies, private school tuition, and other expenses. Eventually, the Appellant divorced his wife in Hong Kong and on April 1, 2004 the parties were married in Las Vegas.
[7] Not long after the wedding, it became apparent that the Appellant was intent on maintaining a romantic relationship with another woman in Australia. The Respondent was unwilling to remain married in these circumstances and so in 2005 the Appellant arranged for them to return to Nevada to be divorced. The Appellant told the Respondent that the divorce would have no impact on his financial support of her.
[8] In Nevada, the parties attended the offices of a lawyer who represented the Appellant in seeking the divorce. The parties also attended upon another lawyer with an office in the same building who acted for the Respondent to file an Answer in which she effectively consented to the divorce. It is doubtful that the Respondent received independent legal advice; she did not meet with that lawyer privately and signed the documents presented to her without being informed of her rights and obligations under Nevada law or the law of any other jurisdiction.
[9] The parties were only in Nevada for a few days at the time of their marriage and at the time of their divorce. The parties were never domiciled in Nevada. Neither had any property or business interests there. Neither had any connection to the state. Nevada law requires a six-week residency in order to obtain a divorce. The Nevada divorce was finalized on June 20, 2005. The Appellant married his third wife the following month.
[10] Following the divorce, the Appellant continued to provide financial support to the Respondent approximating $500,000 per year. This support continued through to the end of 2013 when the parties had a disagreement about the ownership of certain properties held by companies controlled and apparently owned by the Respondent, namely, the Agincourt Mall and the Agincourt Professional Centre. In 2015, the Respondent arranged for the sale of the Agincourt Mall. The parties disagreed about how the proceeds of sale would be distributed, with the Appellant seeking payment to him of the entire proceeds of sale totaling $47.36 million. This dispute is the subject matter of a civil proceeding initiated by the Appellant on the Commercial List in Toronto, and in which the Respondent has asserted a counterclaim.
[11] The Respondent initiated her claims for spousal support and equitable relief arising from a joint family venture by way of application issued on March 20, 2017 after a consent order was made removing the civil claim from the Commercial List. The Appellant has not filed an Answer in the family law proceedings, electing instead to bring a motion under Rule 16(12) of the Family Law Rules to strike the Respondent’s claim in its entirety. The motions judge declined to do so.
Jurisdiction
[12] Under s. 19(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, an appeal lies to the Divisional Court from an interlocutory order of a judge of the Superior Court of Justice, with leave as provided in the rules of court.
[13] The order dismissing the Appellant’s motion was interlocutory in nature. Leave to appeal was granted on June 28, 2018.
Standard of Review
[14] The parties agree that whether a claim is to be struck or dismissed under Rule 16(12) is a question of law engaging review on a standard of correctness.
The Applicable Law
The Applicable Rules
[15] The Appellant’s motion to strike or dismiss the Respondent’s claim was brought pursuant to Rule 16(12) of the Family Law Rules which provides as follows:
The court may, on motion,
(a) Decide a question of law before trial, if the decision may dispose of all or part of the case, substantially shorten the trial or save substantial costs;
(b) Strike out an application, answer or reply because it sets out no reasonable claim or defence in law; or
(c) Dismiss or suspend a case because,
(i) The court has no jurisdiction over it,
(ii) A party has no legal capacity to carry on the case,
(iii) There is another case going on between the same parties about the same matter, or
(iv) The case is a waste of time, a nuisance or an abuse of the court process.
[16] Rule 16(13) provides that on a motion under subrule (12), evidence is admissible only if the parties consent or the court gives permission.
[17] On a motion to strike for failure to disclose a reasonable cause of action, the test is whether it is plain and obvious that the claim has no reasonable prospect of success. On a motion to stay or dismiss a claim for lack of jurisdiction the question is whether the Superior Court has jurisdiction or not. [See Grand River Enterprises Six Nations Ltd. v. Attorney General (Canada), 2017 ONCA 526 (C.A.)]. In making its determination, the court is to assume that all facts contained in the application can be proved unless they are patently ridiculous or incapable of proof. [See Lysko v. Braley (2006), 2006 11846 (ON CA), 79 O.R. (3d) 721 (C.A.)].
[18] With respect to the Appellant’s motion that his attendance at the Mandatory Information Program be excused, the motion is pursuant to Rule 8.1(8), which provides that the court may, on motion, order that the provisions of Rule 8.1 requiring a party to attend a Mandatory Information Program do not apply because of urgency or hardship or for some other reason in the interest of justice.
Recognition of a Foreign Divorce Judgment
[19] Section 22 of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) speaks to the recognition of a foreign divorce. As neither subsections (1) nor (2) apply on the facts of this case, s. 22(3) is the applicable subsection. It provides that nothing in s. 22 abrogates or derogates from any other rule of law respecting the recognition of divorces granted otherwise than under the Divorce Act. Section 22 (1) thus preserves the common law’s approach to the recognition of foreign divorces in accordance with conflict of laws principles.
[20] At common law, there is a presumption of the validity of a foreign divorce decree. The effect of this presumption is to impose upon the Respondent the onus of establishing why that presumption should be rebutted. In the context of a motion under subrule 16(12), however, the onus upon the moving party, in this case the Appellant, would be to show that it is plain and obvious that the Respondent would not be able to rebut the presumption of validity.
[21] As summarized by Chappel, J. in Wilson v. Kovalev, 2016 ONSC 163, the grounds upon which the court may refuse to recognize a foreign divorce are as follows:
The Respondent did not receive notice of the Divorce Application;
The foreign Divorce is contrary to Canadian Public Policy;
The foreign court or other authority that granted the divorce did not have the jurisdiction to do so under the law of the foreign country;
There is evidence of fraud going to the jurisdiction of the granting authority; or
There was a denial of natural justice by the granting authority in making the divorce order.
Equitable Doctrines as a Defence
[22] The Appellant submits that the equitable doctrines of estoppel, acquiescence, preclusion and laches afford him a complete defence in this matter with respect to the claim for spousal support. For the purposes of this appeal, all of these defences are offered in support of the general contention that a spouse who has participated in obtaining a divorce and taken no steps to challenge it for many years, while the other spouse, in reliance upon the divorce, has remarried, is precluded from then challenging the validity of the divorce.
[23] Indeed, in Downton v. Royal Trust Co., 1972 148 (SCC), [1973] S.C.R. 437, the Supreme Court of Canada held that a person may be precluded from attacking the validity of a foreign divorce if, under the circumstances, it would be inequitable for him or her to do so.
Analysis
Presumptive Validity of the Foreign Divorce
[24] The motions judge agreed with the Respondent’s position that there was an issue with respect to the validity of the Nevada divorce, and it would not be appropriate to assume that the divorce was valid for purposes of the motion. In addition, he held that s. 22 of the Divorce Act did not assist the Appellant (Reasons at para. 34). In his view, the Appellant had not established that the application of the Respondent set out no reasonable claim in law, as required by Rule 16(12) (at para. 37).
[25] The Appellant takes the position that the Superior Court of Justice in Ontario has no jurisdiction to entertain the claims of the Respondent because of the existence of the Nevada divorce, obtained in 2005.
[26] Clearly, the Appellant begins the family law proceeding with the presumption that the Nevada divorce is valid. Accordingly, the onus will ultimately be on the Respondent to satisfy the court that the presumption is rebutted.
[27] However, it is important to note that the primary ground of relief sought by the Respondent is a declaration pursuant to s. 22 of the Divorce Act that the Ontario court not recognize the Nevada Divorce Decree that would otherwise be a bar to her spousal support claim. Her alternative claim for relief is for an order setting aside the Nevada Divorce Decree.
[28] At this stage of the proceedings, it is the Appellant who must satisfy the court that the facts as contained in the Respondent’s application result in no reasonable prospect that she can be successful. In our view, the Respondent pleads facts sufficient to bring into question the jurisdiction of Nevada to grant the divorce, namely that neither party met the residency requirements necessary for the Nevada court to properly exercise its jurisdiction. Those facts are taken to be true for the purposes of the Rule 16(12) motion.
[29] Given the pleading, it is not plain and obvious that the Nevada divorce would be recognized in Ontario pursuant to s. 22 of the Divorce Act.
[30] In these circumstances, there is clearly a triable issue of whether the foreign divorce ought to be recognized and the Appellant’s rule 16(12) motion based on jurisdiction cannot succeed.
[31] A similar conclusion was reached by the Ontario Court of Appeal in Jahangeri-Mavaneh v. Taheri-Zengekan (2005), 2005 17771 (ON CA), 14 R.F.L. (6th) 9, in which it held that it was inappropriate to move under Rule 16 to strike out a claim for spousal support after an Iranian divorce when the Applicant raised triable issues relative to the validity of the divorce.
The Equitable Doctrines
[32] The Appellant argued that a consideration of the equitable defences available to him on the application leaves no doubt that the Respondent’s claims have no reasonable prospect of success. In particular, it was argued that the Appellant’s marriage, subsequent to and in reliance upon the Nevada divorce, and the effect of a finding of the invalidity of the divorce on him and his current wife, render the equities of the situation clearly in his favour.
[33] The motions judge does not deal directly with this argument in his reasons.
[34] However, it is important to note that the Respondent’s overriding request is a declaration under s. 22 of the Divorce Act that the Nevada divorce not be recognized in Ontario. At this juncture of the proceedings, the effect of such a declaration is not plain and obvious. Such a declaration does not invalidate or void the divorce and does not necessarily mean that the Appellant’s subsequent marriage is void or even voidable. It would not render the Appellant a bigamist in Canada as he was not subsequently married in Canada. At this juncture, it is not entirely clear, based on the Respondent’s pleadings, what injustice would result to the Appellant or his current spouse if the Nevada divorce was not to be recognized in Canada.
[35] In any event, the consideration of equitable defences requires a consideration of all the equities, not just those pertaining to the Appellant and resolving these equities is not a matter to be resolved by a pleadings motion under rule 16(12).
[36] In this respect, the Respondent’s Application pleads that she was told by the Appellant that “nothing would change financially as a result of their divorce”. It is fair to infer that it was in reliance upon this representation that the Respondent participated as she did in the divorce process in Nevada. Contrary to that representation, the Appellant now asserts a claim to assets which were held by corporations of which the Respondent was and is the sole shareholder and has discontinued the significant support he had previously been providing.
[37] In these circumstances, it cannot be said that the equitable defences render it plain and obvious that the Respondent cannot succeed in her claims.
The Civil Claim
[38] The motions judge rejected the Appellant’s argument that the constructive trust claim and unjust enrichment claim fell within Rule 16(12)(c)(iii) – there is another case going on between the same parties about the same matter. He found that the civil claim did not include a claim for spousal support, and, if there were overlapping claims between the two proceedings, the case management judge who has been appointed can deal with this.
[39] I see no error on the part of the motions judge. Whether the Nevada divorce is recognized in Ontario or not has no legal impact on the Respondent’s ability to assert her equitable claims based on the existence of a joint family venture.
[40] The Respondent first made her equitable property-related claims by way of counterclaim to the Appellant’s civil action. On consent, it was determined that her equitable claims related to the joint family venture she alleges, along with her claim for spousal support, should properly be dealt with in the setting of a family proceeding. Accordingly, her counter-claim in the civil proceeding is restricted to a determination of her rights relative to the Agincourt Professional Centre and the proceeds of sale of the Agincourt Mall. It is noteworthy that the Order providing for the withdrawal of the joint family venture claim and the spousal support claim from the civil proceeding indicates that the Respondent retains the ability to seek an order that both matters be tried together.
[41] It seems somewhat disingenuous for the Appellant to consent to an order that the Respondent’s joint family venture claim proceed separately as a family proceeding only to then take the position that it should be dismissed as duplicative of the civil action.
[42] In any event, although there are similarities in the two actions such that they might benefit from being tried together, they are sufficiently distinct to allow them to be pursued separately: the civil action involves general trust principles as applied to very specific assets. The family action involves trust principles arising out of a joint family venture – an equitable doctrine not otherwise recognized in the commercial or civil context.
Attendance at the Mandatory Information Program
[43] The Appellant’s motion also sought an order allowing the Appellant to forego attendance at the Mandatory Information Program. The request was made based on the health of the Appellant, his advanced age, his residency in Hong Kong and his representation by experienced counsel.
[44] The test for dispensing with attendance is whether there is urgency, hardship or it is otherwise in the interest of justice. The motions judge determined that there was insufficient evidence of the medical issues facing the Appellant to determine whether it was appropriate to dispense with attendance. However, he failed to consider other relevant factors which were established on the pleadings before him, namely, the Appellant’s advanced age and his residency in Hong Kong. Had he done so, these factors, combined with the Appellant’s legal representation in these proceedings, in my view, render it in the interests of justice to dispense with his attendance.
The Appeal of Costs
[45] The Appellant neither sought nor obtained leave to appeal the costs order made by the motions judge. The result obtained on this appeal does not render the costs award inappropriate.
Conclusion
[46] This appeal is granted in part. The Appellant’s appeal of the motions judge’s refusal to strike or dismiss the Respondent’s claims is dismissed. His appeal of the motion judge’s refusal to dispense with his attendance at the Mandatory Information Program is granted.
[47] The Respondent shall have her costs of the appeal, fixed at $20,000, an amount agreed upon by the parties.
R.D. Gordon, J.
I agree _______________________________
Swinton, J.
I agree _______________________________
Perell, J.
Released: October 7, 2019
CITATION: Ho v. Lau, 2019 ONSC 5573
DIVISIONAL COURT FILE NO.: 186/18
DATE: 20191007
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Swinton, Perell and R.D. Gordon, JJ.
BETWEEN:
GALLANT YIU TAI HO
Respondent/Appellant in Appeal
– and –
CECILIA YIN TONG LAU
Applicant/Respondent in Appeal
REASONS FOR JUDGMENT
R.D. Gordon, J.
Released: October 7, 2019