SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: FC-09-1695
DATE: 20120405
RE: Nilofar Chaudry, Applicant
AND
Javed Islam Chaudry, Respondent
BEFORE: J. Mackinnon J
COUNSEL:
Mary Jane Binks, for the Applicant
Pam MacEachern, for the Respondent
HEARD: March 21, 2012
E N D O R S E M E N T
[ 1 ] This is a motion brought by the Applicant seeking to set aside the administrative dismissal of her action, and an application by the Respondent seeking an order for partition and sale of the former matrimonial home.
[ 2 ] In June 2008, the husband obtained a divorce. The Applicant was properly served and did endeavour to file an answer on her own behalf. She was unable to do so because her answer was not accompanied with the required filing fee. Before she corrected this deficiency, the divorce had been granted. She intended to dispute the date of separation. She says the date is March 2008. The Respondent says the date is January 2000.
[ 3 ] The application that is the subject of this motion was commenced in July 2009. In it, the Applicant sought an equalization of net family property and other relief. An answer was delivered by the Respondent acting in person. He did not plead a limitation defense. He acknowledged that the equalization of property was an “important item that needs to be sorted out”. Two case conferences were held. The first appears to have been a formality. At the second case conference on October 21, 2010, Master Roger set aside the notice of approaching dismissal dated July 14, 2010 and extended the timetable to July 31, 2011. He ordered each party to deliver an updated financial statement and to set out the value of all assets and liabilities as of both alleged dates of separation. In addition, he required the Applicant to schedule a settlement conference by November 30, 2010. The Applicant did not deliver a statement showing values at the earlier separation date. Nor was a settlement conference scheduled.
[ 4 ] In June 2011, the Respondent brought a motion seeking an order to sell the former matrimonial home. The Applicant’s previous counsel consented to the order. The Applicant maintains that she neither knew that the motion had been brought nor that her previous counsel had consented to it.
[ 5 ] The Applicant heard from the Respondent’s counsel on July 27, 2011 that her own lawyer was no longer in practice. She retained her current counsel who was able to obtain the file on September 2, 2011. It was in a state of disarray. It did not contain the notice of approaching dismissal. There was nothing in it to show that the previous lawyer had communicated with the Applicant with regard to the motion or the order that was made at it. The file did not contain a financial statement for the Applicant. It showed no steps having been taken to schedule a settlement conference.
[ 6 ] On July 31, 2011, the action was administratively dismissed for delay. Applicant’s current counsel learned of this for the first time from the Respondent’s counsel on September 12, 2011. At that time, the Respondent’s lawyer (not Ms. MacEachern) also wrote: “I would think there is no need to bring the action back at this point and to simply focus on moving forward with a settlement but I will leave that up to you as it was your client’s claim”.
[ 7 ] Applicant’s counsel advised that they were collecting the information needed to complete her financial disclosure. Correspondence and telephone calls were exchanged between counsel but no settlement was reached. In December, Respondent’s counsel provided notice that unless a satisfactory arrangement was achieved within one week, they would move for sale of the former matrimonial home. She added: “I should advise that we are not prepared to entertain any discussions relating to equalization issues or others as your client has simply delayed for too many years. These people separated in 2000. Even if your client were to succeed on her prior claim for relief suggesting the date of separation was actually sometime around the time of the divorce, that limitation period too has now passed and her Application dismissed for delay on her part.” This was followed by another letter advising “we will be seeking to enforce both the 6 year limitation period as well as the 2 year limitation period which has also now expired.”
[ 8 ] This reference is to Section 7(3) of the Family Law Act , R.S.O. 1990, c. F.3 which establishes the applicable limitation periods:
7 (3) An application based on subsection 5 (1) or (2) shall not be brought after the earliest of,
(a) two years after the day the marriage is terminated by divorce or judgment of nullity;
(b) six years after the day the spouses separate and there is no reasonable prospect that they will resume cohabitation;
(c) six months after the first spouse’s death. R.S.O. 1990, c. F.3, s. 7 (3) .
[ 9 ] The Applicant states that she did not move immediately in September 2011 to set aside the dismissal because the parties were involved in settlement discussions. When those came to an end in December 2011, she says that she moved promptly and filed this motion on February 2, 2012.
[ 10 ] The Respondent is opposed to setting aside the administrative dismissal. He says that the Applicant has delayed at all stages of the proceeding, that she still has not complied with part of the disclosure order, and that even accepting her version of the date of separation, the limitation period expired in 2010. In his submission, the dismissal should stand. The Respondent is 68 years of age. He has been maintaining this house for the Applicant since 2000. He wants to retire and says he needs to get his equity out in order to do so.
[ 11 ] The test for setting an administrative dismissal order has been elucidated in Williams v. Williams , 2010 ONSC 2636 , 82 R.F.L. (6th) 448 (Ont. Master). Master Macleod stated at paras. 19 and 24:
19 As a consequence of the three decisions of Scaini, Giant Tiger and Finlay it is possible to summarize the approach to setting aside administrative dismissal orders under Rule 48.14 of the civil rules. The following principles emerge:
a) An order dismissing an action for delay made by the Registrar is an order of the court. A party having notice of the order must treat it as valid and move promptly to set it aside. Technical deficiencies do not render the order a nullity.
b) The objective of the court reviewing the Registrar's order is not to punish a party for technical non compliance with the rules but to determine whether or not it is just to set aside the dismissal order under all of the circumstances.
c) The court should consider the four Reid factors which may be summarized as:
i. explanation of the litigation delay which led to the dismissal notice and order in the first place;
ii. inadvertence in missing the deadline set out in the notice;
iii. promptly moving to set aside the order once it comes to the attention of the moving party; and,
iv. prejudice or lack of prejudice to the defendant.
d) Of these factors, prejudice will be the key consideration. Prejudice to the defendant must be balanced against the prejudice to the plaintiff in losing the right of action. Conversely there must be compelling reasons not to grant the order if there is no prejudice to the defendant.
e) Prejudice to the defendant is not the prejudice inherent in facing the action in the first place but prejudice in reviving the action after it has been dismissed. This could be prejudice caused by delay that would support dismissal under civil rule Rule 24 or it could be prejudice that has arisen post dismissal because of reliance on the finality of the order.
f) Besides the enumerated Reid factors there may be other factors that should be considered in a particular case. An example of such a factor might be the peculiar delay between the notice and the dismissal that occurred in the case at bar.
g) In weighing the relevant factors, the court should not engage in speculation concerning rights of action against a lawyer or former lawyer and should focus on the rights of the parties rather than on the conduct of counsel.
24 In my view the trilogy of cases decided by the Court of Appeal under Rule 48 should inform the approach to setting aside the order of the clerk under the Family Law Rules. The Reid factors are appropriately addressed but should be weighed in context giving particular consideration to prejudice and with a view to effecting a just result. Ultimately the question of whether or not to set aside the order is an exercise of discretion.
[ 12 ] The Applicant suggests that the slow movement of the case was due to her previous lawyer’s inactivity. It had always been her intention to continue with her proceeding.
[ 13 ] The Respondent submits that if the conduct of the case by previous counsel resulting in the dismissal was negligent rather than merely inadvertent, this characterization favours dismissal of the motion: Aguas v. Rivard Estate , 2011 ONCA 494 , 335 D.L.R. (4 th ) 365. I am not prepared to make a finding as to whether the former counsel was negligent in his handling of the Applicant’s file in relation to the administrative dismissal or merely inadvertent. I prefer the approach taken by the Court of Appeal in Finlay v. Van Paassen , 2010 ONCA 204 where Laskin J.A. stated at paras. 31 - 33:
31 Finally, although not necessary to my decision, I wish to comment on two other considerations relied on by the motion judge to deny Finlay relief. The motion judge rested his decision principally on the two-year delay in moving against the registrar's order, but he also referred to the possibility of a negligence claim against Finlay's law firm and the "expiration of the limitation period". Neither consideration, in my view, is germane. The motion judge said:
I also think that the Plaintiff is not necessarily out any remedy and LPIC may, indeed, become involved, although I express no opinion, and certainly no opinion as to whose negligence would be involved as I do not know exactly what took place between Mr. Morris and Mr. Ferro.
In sum, two years of delay took place after the expiration of the limitation period. Taking that into account and also the fact that the Defendants have some entitlement to rely on the finality of the registrar's order, I think the motion cannot succeed.
32 A judge who refuses to set aside a dismissal order will naturally be concerned that the effect of the refusal will be to deprive an innocent party of its day in court. To protect the claim of the innocent party, the judge will often raise the possibility of a negligence action against the party's own lawyer. Although perhaps understandable, I do not find this helpful. Speculation about whether a party has a lawsuit against its own lawyer, or the potential success of that lawsuit, should not inform the court's analysis of whether the registrar's dismissal order ought to be set aside.
33 In my view, on a motion to set aside a dismissal order, the court should be concerned primarily with the rights of the litigants, not with the conduct of their counsel. …
I also note that in Aguas , the Court of Appeal set aside the dismissal order even where the former lawyer was negligent but the new lawyer had moved almost immediately to set it aside.
[ 14 ] The first step taken in the action by the Respondent after the October 2010 case conference was to schedule the motion for sale in June 2011. I conclude that neither party was particularly active between those two dates.
[ 15 ] I am satisfied that the litigation delay that led to the dismissal notice was not intentional on the Applicant’s part and that she was not aware that the Master’s order meant her action was going to be dismissed on July 31, 2011 if a settlement conference had not been scheduled before that date. I am also satisfied that, having regard to the position taken by the Respondent’s lawyer in the correspondence noted above, the Applicant acted with sufficient promptness in moving to set aside the dismissal order.
[ 16 ] The Respondent also relies on presumed prejudice arising from the expiration of the second limitation period in March 2010. Wellwood v. Ontario Provincial Police , 2010 ONCA 386 , 319 D.L.R. (4 th ) 412, held that “the expiry of a limitation period can give rise to some presumptive prejudice, the strength of which increases with passage of time”: para 60. In Wellwood , the action was dismissed by the registrar on November 25, 2005, the limitation period expired in February 2006 and the motion to set aside the dismissal was brought in April 2007. The fact that the limitation period expired after the administrative dismissal is significant. Setting aside that order would have the dual effect of depriving the Defendant of the benefit of the dismissal and of the limitation period. This is not the case here where setting aside the administrative dismissal order would put the Respondent back in the same position he was in before that order was made, namely, he would be responding to a timely application, assuming the Applicant is successful in proving the date of separation she asserts. These were the facts in Clairmonte v. Canadian Imperial Bank of Commerce , 1970 470 (ON CA) , [1970] 3 O.R. 97 (Ont. C.A.) which the majority in Wellwood acknowledged as significantly different:
Clairemonte was a case where an action was commenced within a limitation period and the progress of the action thereafter was protracted, following which the defendant sought to have the action dismissed for delay. Justice Laskin held that, in that situation, the fact of the expiry of a limitation period prior to the dismissal motion was irrelevant. The defendant's cause for complaint concerned the undue delay in prosecuting the live action.
That is not this case. Here, the First and Second Actions were both dismissed, the limitation period expired, and inordinate delay transpired before the respondent moved to set aside the dismissal orders. In the case at bar, if the dismissal of the Second Action were to be set aside, the appellants would lose the benefit both of court-sanctioned dismissal orders, which had already been granted in recognition of undue delay by the respondent, and of the expiry of the applicable limitation period.
[ 17 ] I conclude that the expiry of the limitation period does not give rise to a presumption of prejudice to the Respondent on the facts in this case. Nor is there actual prejudice to the Respondent. There is substantial prejudice to the Applicant. She would be severely prejudiced in losing her right of action.
[ 18 ] For these reasons, the administrative dismissal order is set aside.
[ 19 ] The next issue is whether the Respondent’s application for the partition and sale of the former matrimonial home should be allowed. The Respondent submits that a previous order for its sale was already made, with the consent of Applicant’s counsel of record at the time. Further, as a joint owner, he has a prima facie right to the sale. Because the parties are already divorced, the property is no longer a matrimonial home and has lost the special protections provided by the Family Law Act . The Respondent is 68 years of age, he wants to retire and he needs to obtain his equity from the home in order to arrange to do so.
[ 20 ] The Applicant opposes the partition and sale of the former matrimonial home. She has not challenged the court’s jurisdiction to make the requested order. She lives in the house with the parties’ 33 year old son who has been diagnosed with schizophrenia-undifferentiated type. The Applicant wishes to retain the home because she believes the son is better off there. In addition, she seeks the opportunity of showing at trial that, with the equalization payment due to her and other adjustments for retroactive support, she would be in a position to set off the Respondent’s interest in the home against amounts due and owing to her.
[ 21 ] In Goldman v. Kudeyla , 2011 ONSC 2718 , 5 R.F.L. (7 th ) 149, McGee J. provides a helpful summary of the law with respect to judicial order for sale prior to trial. She states at paras. 17, 18 and 19:
17 A property owner, whether the holder of an exclusive interest or a joint interest has a prima facie right to sale. When the property consists of an interest in a matrimonial home, that prima facie right is subject to any competing interests under the Family Law Act that would otherwise be defeated.
18 To make a pre-trial order for the sale of a matrimonial home the court must first determine whether the resisting party has established a prima facie case that he or she is entitled to a competing interest under the Family Law Act . If not, then the right to sale prevails. If so, then the motion for sale is denied unless the selling party can demonstrate that the sale would not prejudice the rights of the resisting party.
19 There have been a number of cases in which the Court has denied an interim motion for sale prior to trial such as Arlow v. Arlow (1990), 1991 12940 (ON CA) , 33 R.F.L. (3rd) 44 (OCA,) Walters v. Walters , 1992 8599 (ON SCDC) , [1992] O.J. No. 1564, 1992 CarswellOnt 811 and more recently, Kereluk v. Kereluk , 2004 34595 , Ontario S.C.J. In each case there were compelling circumstances in which one or both tests favoured the resisting party, such as the availability of trial within a short period, prejudice on the equalization payment, or the need to preserve the residence for a vulnerable spouse or child who might well retain the home in the cause.
[ 22 ] In this case, there is no issue as to ownership. Nor can there be a claim for exclusive claim; the house lost its status as a matrimonial home by reason of the divorce. There is judicial authority for the proposition that an order for sale of jointly owned property ought not to be made before trial where there is a substantial right in relation to property to be tried, and that determination of the equalization payment may be such an issue: Walters v. Walters , 1992 8599 (ON SCDC) , [1992] O.J. No. 1564, 1992 CarswellOnt 811 (Gen. Div.); Kereluk v. Kereluk , (2004), 2004 34595 (ON SC) , 9 R.F.L. (6 th ) 385, 2004 CarswellOnt 4332 (SCJ).
[ 23 ] Section 9(1) of the FLA states:
9 (1) In an application under section 7, the court may order,
(a) that one spouse pay to the other spouse the amount to which the court finds that spouse to be entitled under this Part;
(b) that security, including a charge on property, be given for the performance of an obligation imposed by the order;
(c) that, if necessary to avoid hardship, an amount referred to in clause (a) be paid in installments during a period not exceeding ten years or that payment of all or part of the amount be delayed for a period not exceeding ten years; and
(d) that, if appropriate to satisfy an obligation imposed by the order,
(i) property be transferred to or in trust for or vested in a spouse, whether absolutely, for life or for a term of years, or
(ii) any property be partitioned or sold. R.S.O. 1990, c. F.3, s. 9 (1) ; 2009, c. 11, s. 25 .
[ 24 ] The Applicant has not established on a prima facie basis that she will be able to invoke the provisions of FLA section 9(1)(d) after the equalization payment owing to her has been determined. She has not presented a net family property statement at either the date of separation that she relies upon nor upon the earlier date asserted by the Respondent. She has not yet complied with the order to make disclosure with respect to the earlier date. The Respondent concedes that an equalization payment may be due to the Applicant, but it cannot be determined until she completes her disclosure and the date of separation is adjudicated. In order to obtain an order at trial that the Respondent transfer his interest in the home to her, the Applicant must establish an entitlement to an equalization payment equal to or greater than the Respondent’s equity in the home. The court has no power under section 9 of the FLA to transfer the house to her subject to a payment by her to him of the difference between what he owes her and his equity in the home. The Applicant has not established a prima facie case on this motion that she has an entitlement to a “competing interest” under section 9(1)(d) of the FLA .
[ 25 ] I do not regard this as a case where the determination of the equalization payment is a substantial right that must await determination at trial. Entitlement to have an equalization payment determined at trial may be a substantial right sufficient to postpone the sale of jointly held property prior to trial where there is an evidentiary basis to demonstrate on a prima facie basis that the likely award would enable the claimant to seek a legal remedy in relation to the property as a result of that determination. That is not the case here.
[ 26 ] The Applicant also submits that regardless of her ability to obtain such an order, she might be in a position to afford to purchase the home from the Respondent after trial if she could afford to pay him the difference between any equalization payment due to her and the fair market value of his interest in the home at that time. In my view, this does not describe a right to be determined at trial.
[ 27 ] A joint owner does not have a right to purchase a property from the other owner. The desire to purchase a jointly held property from the other owner by setting off the equalization payment against the price and adding a cash amount to make up the shortfall is not a right that can be determined at trial. If the Walters and Kereluk cases noted above are authority to the contrary, then I respectfully disagree. The Ontario Court of Appeal held in Martin v. Martin , (1992) 1992 7402 (ON CA) , 8 O.R. (3d) 41, 55 (C.A.), that there is no right of first refusal on jointly held property. Either owner can bid on the property once it has been listed for sale: Silva v. Silva , (1990) 1990 6718 (ON CA) , 1 O.R. (3d) 436, 42 (C.A.).
[ 28 ] I have also considered the Applicant’s submission with respect to her claim for retroactive spousal and child support. She submits that when determined at trial, the amount owing to her may be sufficient in combination with the equalization payment to equal the Respondent’s equity in the house. In her application, she claimed $798 per month child support retroactive to June 2008 and $1,000 per month spousal support also retroactive to June 2008. Entitlement to child support is disputed.
[ 29 ] The parties have been separated for either 12 years or 4 years. The Applicant has occupied the house for 12 years in the absence of the Respondent. He has paid the mortgage, property taxes and insurance, the energy bills, and repairs up until September 2008, and the mortgage and insurance thereafter. He says that, on average, he has provided the Applicant with between $2,200 and $2,500 per month on account of her expenses without any tax deduction. The Applicant does not provide any figures with respect to amounts he has paid to or for her benefit. The adult child living with the Applicant is 33 years of age and is in receipt of ODSP. The Applicant has not established a prima facie case to retroactive support on the record before me.
[ 30 ] Counsel for the Applicant asks the court to exercise its discretion to decide not to order a sale before trial. I am not persuaded that I have any such free standing discretion. If I do, I am disinclined to exercise it. The length of separation has been long no matter which date of separation is correct. The Respondent made it clear to the Applicant in April 2007 that he thought the house should be sold because neither could afford it. The Applicant has had an opportunity to make an offer to purchase the home from the Respondent. She has not shown a prima facie case that she may be entitled to all of the Respondent’s equity in the house, how she would be able to make up a shortfall due to him or whether she is able to assume sole liability for the mortgage encumbrance. The Applicant has not yet completed her financial disclosure. The Respondent has a legitimate need to sell the house. He is 68 years of age and reasonably wants to make the necessary financial arrangements for his own retirement.
[ 31 ] For these reasons, the former matrimonial home is ordered to be sold. Given the concession that an equalization payment may be owing to the Applicant, one-half of the net proceeds of sale shall be released to her and the balance held in trust in an interest-bearing account to the credit of the action pending an agreement or order as to distribution. To assist the parties when the Applicant’s disclosure is complete, it will be sufficient to hold back from the Respondent the amount that may be necessary to cover the equalization payment that he may be found to owe to the Applicant.
[ 32 ] The Applicant is required to complete her financial disclosure with respect to the year 2000 date of separation and to schedule a settlement conference within 60 days. If the case is not settled at that time, it shall precede to trial at the November 2012 trial sittings of this court.
[ 33 ] Success has been divided. The Applicant has succeeded on her motion to set aside the administrative dismissal. The Respondent has succeeded on his application to sell the property but not to the equal release of the funds before trial. The Respondent made an offer to settle by setting aside the dismissal order, selling the house and distributing the net proceeds equally between the parties. The Applicant also made an offer, however it was to settle her application on a final basis.
[ 34 ] Despite the divided success, in view of the terms of the Respondent’s offer, I find that he is entitled to some partial costs which I have fixed at two thirds of the amount claimed on the partial indemnity scale, namely $3,500 inclusive. The costs shall be paid from the Applicant’s share of proceeds of the sale of the home.
J. Mackinnon J
RELEASED: April 5, 2012
COURT FILE NO.: FC-09-1695
SUPERIOR COURT OF JUSTICE - ONTARIO RE: Nilofar Chaudry, Applicant AND Javed Islam Chaudry, Defendant BEFORE: J. Mackinnon J COUNSEL: Mary Jane Binks, for the Applicant Pam MacEachern for the Respondent ENDORSEMENT J. Mackinnon J
RELEASED: April 5, 2012