Court File and Parties

COURT FILE NO.: FS – 12 – 18244
FS – 13 - 018834

DATE: 20131009

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Maria Alida Ferreira, Applicant

AND:

Joao (John) Carlos Esteireiro, Respondent

BEFORE: Kiteley J.

COUNSEL: Jeanie DeMarco, counsel for the Applicant

Judith M. Nicoll, counsel for the Respondent

HEARD: September 24, 2013

ENDORSEMENT

[1] The parties entered into an Arbitration Agreement. On May 24, 2013, the Arbitrator issued an award in which she concluded that there had been a “terminating event” in accordance with the separation agreement and that the Respondent had overpaid spousal support. She ordered the Applicant to repay to the Respondent $287,500 as an overpayment of spousal support, net of the tax benefit to him which left a balance due of $143,700. That payment was due within 60 days, namely by July 23, 2013. I will refer to this as the substantive award.

[2] The first application listed above had been commenced in 2012 as a result of the termination of spousal support payments. Shortly after it was issued, the parties pursued the arbitration. Following release of the substantive award, the Applicant brought a motion in that application for an order granting leave to appeal the substantive award. In an endorsement dated July 5, 2013, Mesbur J. dismissed the motion for leave to appeal and ordered the Applicant to pay costs of the motion in the amount of $9,500.

[3] In an award dated July 23, 2013 the Arbitrator ordered the Applicant to pay costs of the arbitration to the Respondent in the amount of $70,510.34 payable within 60 days. I will refer to this as the costs award.

[4] On July 25, 2013 the Applicant issued a second application in which she requested the following:

(a) A declaration that the substantive award and the costs award are invalid or null and void;

(b) A declaration that the Respondent breached, frustrated and/or repudiated the arbitration agreement;

(c) An order removing the arbitrator;

(d) An order setting aside the substantive award;

(e) An order that the court direct a trial of an issue as to damages for breach, frustration or repudiation of the Arbitration Agreement;

(f) An interim order reinstating spousal support in the amount of $12500;

(g) An order changing the order of Justice Mesbur pursuant to rule 25(19);

(h) An order staying the substantive award and the costs award pursuant to rules 38(34) and (35).

[5] In the first application, the Respondent brought a motion returnable August 6, 2013 in which he asked for an order incorporating the substantive award into a court order. At the request of the Applicant, Czutrin J. adjourned it to August 15th and ordered the Applicant to pay costs to the Respondent in the amount of $1,000. On August 16, 2013, Sachs J. granted the motion, incorporated the substantive award into an order, and ordered the Applicant to pay $143,700 and pay costs of the motion in the amount of $5,000 inclusive of disbursements and taxes.

[6] On August 14, 2013, counsel amended the second application in which additional relief was sought including the following:

A declaration that the substantive award and the costs award are invalid, or null and void, or should be set aside pursuant to sections 6.1 and 6.2 of the Arbitration Act.

[7] In the first application, the Applicant brought a motion pursuant to rule 25(19) of the Family Law Rules and rule 59.06 of the Rules of Civil Procedure in which she sought clarification, correction or change of the order made by Sachs J. dated August 16, 2013. That motion was heard on September 23rd and Sachs J. dismissed it and ordered costs of the motion in the amount of $2,500 payable forthwith.

[8] In the second application, following the delivery of his Answer dated September 18th, the Respondent served a motion seeking summary judgment which is scheduled to be heard on October 29, 2013.

[9] Counsel for the Respondent brought two motions returnable September 24th: for an order enforcing the costs award by incorporating it into a court order; and for an order for security for costs. The material filed for both motions was under the first application. During submissions it became apparent that the first motion properly belonged in the first application and the second properly belonged in the second application. For that reason, Ms. DeMarco asked that the motion for security for costs should be dismissed. Given the extraordinary activity as summarized above, the error is not surprising. It is a technicality. There is no prejudice to the Applicant if I correct the error. As indicated above, I am issuing this endorsement using both court file numbers.

Motion to Enforce the Costs Arbitral Award dated July 23, 2013

[10] Ms. DeMarco does not challenge the Respondent’s submission that, vis-à-vis the costs Arbitral Award, the four requirements of s. 59.6(1) of the Family Law Act have been met. Pursuant to s. 59.8(2) of the Arbitration Act, 1991, the application to enforce the costs award was brought in the original proceeding and an originally signed version of the costs Arbitral Award has been provided.

[11] Ms. DeMarco did not object to the form of the order sought by counsel for the Applicant. Her position was that I should stay the enforcement of the order for costs of the arbitration pending the disposition of the hearing on October 29th.

[12] Section 47.(1) of the Arbitration Act, 1991 provides that an application to set aside an award shall be commenced within thirty days after the applicant receives the award. It is common ground that the costs Arbitral Award was dated July 23rd and the second application was amended on August 14th to include a request that the costs award be set aside. Pursuant to s. 59.8(4) of the Family Law Act, the court shall make an order in the same terms as the award unless (a) the thirty day period has not yet elapsed; (b) there is a pending application to set the award aside; or (c) the award has been set aside. In this case, there is a pending application to set the award aside. Rule 59.6(5) applies and I have the jurisdiction to order a stay. It is reasonable to do so.

[13] The arbitrator directed that the costs be paid within 60 days of the award which is dated July 23rd. Ms. Nicoll asks that I incorporate that time limit in the order. If I did so, the time for compliance with my order would have passed before I make the order. I am not prepared to make such an order. While I understand that the Applicant is responsible for some of the passage of time in having this motion heard, I am not prepared to advance the requirement of payment sooner than 60 days from this date.

Motion for Security for Costs

[14] On behalf of the Respondent, Ms. Nicoll asks for an order requiring the Applicant to provide security for costs in the amount of $100,000.

[15] Rule 24(13) of the Family Law Rules provides that the court may make an order for security for costs that is just, based on one of several factors. Ms. DeMarco agreed that the Applicant resides outside of Ontario and hence the rule applies.

[16] Ms. DeMarco agreed that three costs orders were outstanding in the first proceeding: costs of $9,500 ordered by Mesbur J.; costs of $5,000 ordered by Sachs J. on August 16th and costs of $2,500 ordered the day prior to the hearing of this motion. She said that, before leaving for court that day, she had given instructions for payment of the costs ordered by Sachs J. and that the cheque was in the mail. She said that the costs of $9,500 had not been paid because in the second application, a request had been made for an order changing the order of Justice Mesbur pursuant to rule 25(19) and for an order staying enforcement of the costs award pending the determination of the application pursuant to rules 38(34) and (35) and s. 59.8(5)(b) of the Family Law Act, and, in the amendment of the second application, a request had been added to the claim for damages to include damages for an amount equal to the costs ordered to be paid pursuant to the order of Mesbur J.

[17] I agree with Ms. Nicoll that Ms. DeMarco should have brought the payment with her. However I accept Ms. DeMarco’s assertion as an officer of the court that payment of both orders (one of which was only 24 hours old) was imminent. For the purposes of this motion only, I accept the explanation for not paying the costs ordered by Mesbur J. I am satisfied that there are no costs orders outstanding that justify an order for security for costs.

[18] Ms. Nicoll and Ms. DeMarco both made submissions on the criterion that there is good reason to believe that the case is a waste of time and that the Applicant does not have enough assets in Ontario. Because the residence criterion has been met, I decline to deal with these submissions.

[19] I agree that it is just that an order be made for security for costs by reason of the ordinary residence of the Applicant.

[20] Ms. DeMarco observed that her client ought not to be required to pay security for costs when it is the Respondent’s motion for summary judgment. I disagree. The second application was launched by the Applicant. Whether an order for security for costs is made in relation to the response to that proceeding or in relation to the response to the motion the Applicant intends to bring on October 29th or to initiate and pursue his motion for summary judgment on October 29th, he is entitled to ask for security for costs.

[21] As for the amount sought, I do not have a costs outline that justifies the amount sought. In her submissions, Ms. DeMarco took the position that a maximum of $16,000 should be ordered to reflect the costs involved in responding to the motion she intends to bring on October 29th.

[22] I agree that the amount ordered should be substantially less than sought. This order is not designed to give the Respondent security for payment of the costs contained in the Arbitral Award. It is designed to protect him from costs in the second application.

[23] Counsel agree that the Applicant owns shares in Trilliant Inc. Based on the evidence heard at the arbitration (which was not before me on this motion), counsel disagree as to the value of the shares (which might be the subject of an IPO). It does appear that Trilliant Inc. is an Ontario corporation. I have concluded that it is just to make an order requiring the Applicant to post those shares as security for costs in the amount of $16,000.

ORDER TO GO AS FOLLOWS:

[24] In action FS – 12 - 18244 the motion by the Respondent for an order pursuant to s. 59.8(4) of the Family Law Act is granted as follows:

On a partial recovery basis, costs of the Respondent, John C. Esteireiro, of $35,000 plus HST of $4,550 for a total of $39,550 plus disbursements of $30,960.34 for a total owing in costs of $70,510.34, shall be paid to him by the Applicant, Maria Alida (also known as Marlida) Ferreira, within 60 days of this date.

[25] In action FS – 12 – 18244 pursuant to s. 59.8(5)(b) of the Family Law Act, the order in paragraph 24 is stayed pending the disposition of the motion for summary judgment returnable October 29, 2013.

[26] In action FS – 13 – 018834, the motion by the Respondent for an order pursuant to rule 24(13) of the Family Law Rules is granted as follows:

By October 21, 2013 at 5:00 p.m. Eastern, the Applicant shall provide to counsel for the Respondent all of the original share certificates in her name or held on her behalf in Trilliant Inc. as security for this order for costs in the amount of $16,000 plus such costs, if any, that I order with respect to this motion.

[27] If by October 15, 2013 counsel are unable to agree as to costs of the motions heard before me then the following shall apply:

(a) By October 18, 2013, Ms. Nicoll shall deliver written submissions not exceeding 3 pages plus costs outline plus offer to settle if any;

(b) By October 23, 2013, Ms. DeMarco shall deliver written submissions not exceeding 3 pages plus costs outline plus offer to settle if any.

Kiteley J.

Date: October 10, 2013