Furtney v. Furtney, 2013 ONSC 6687
CITATION: Furtney v. Furtney, 2013 ONSC 6687
COURT FILE NO.: 005310-07 (Stratford) and FD251/13 (London)
DATE: December 3, 2013
SUPERIOR COURT OF JUSTICE – ONTARIO
FAMILY COURT
RE: Ronald Scott Furtney, the estate trustee of the late Philip Leroy Furtney, the applicant
AND:
Mary Diane Furtney, respondent
BEFORE: MITROW J.
COUNSEL: Terry Hainsworth and J. Douglas Skinner for the applicant
Stephen McCotter for the respondent
HEARD: October 9, 2013
ENDORSEMENT
INTRODUCTION
[1] There are two motions, one brought by each party.
[2] The applicant seeks an order dismissing the application and the answer and claim of the respondent for delay.
[3] The respondent opposes the applicant’s motion and in response brings her own motion for preservation of the estate assets to meet a potential equalization payment. The respondent’s motion also seeks an order for an accounting as to various funds (as specifically requested in paragraph 2 of her motion). The applicant takes no issue with the request for an accounting (on the assumption that this proceeding is not dismissed).
[4] As the argument on the motions unfolded, a procedural issue developed. The applicant now submits that his motion to dismiss for delay should be determined by a trial of an issue. This request by the applicant needs to be put into context.
[5] Argument on the applicant’s motion commenced on August 9, 2013. The applicant had not yet completed his submissions when the motion was adjourned, together with an order, inter alia, requiring the respondent within 14 days to comply with her disclosure obligations including providing her income tax returns in her possession, or available to her, for the years 1990 to 2002 inclusive. A without prejudice order pending the adjournment was also made pursuant to s. 6(20) of the Family Law Act, R.S.O. 1990, c. F.3 suspending the administration of the estate until September 4, 2013. On that date it was anticipated that Mr. Skinner, estate counsel, would also attend to make submissions as to whether the suspension of the administration of the estate should continue in the event that the proceeding was not dismissed.
[6] On September 4, 2013, Mr. Hainsworth for the first time indicated that he wished to cross-examine the respondent with the cross-examination to be viva voce in open court. Submissions were also heard in relation to the continuation of the suspension order. All issues including whether the respondent should be cross-examined were adjourned to October 9, 2013, with the suspension order continuing until that date, except that the estate was permitted to pay out the balance of $212,491.61 owing for executor’s compensation pursuant to the judgment on passing of accounts made by Gorman J. on August 9, 2013 (said judgment is filed as Ex. 1).
[7] Although the applicant’s request as it was initially framed on September 4, 2013 was to conduct a viva voce cross-examination of the respondent, the applicant’s position became that the applicant’s motion should be dealt with by way of a trial of an issue.
[8] The applicant relies on r. 14(7) of the Family Law Rules, O. Reg. 114/99 that provides as follows regarding trial of an issue:
(7) The judge who hears a motion involving complicated matters may,
(a) order that the motion or any part of it be heard as a trial; and
(b) give any directions that are necessary.
[9] As an alternative, the applicant relies on r. 14(17) paragraph 3, where evidence on a motion may be given as oral evidence with the court’s permission. The applicant also cites r. 15(26) that permits trial of an issue, but that subrule is inapplicable to the present case as r. 15 deals with “motions to change” a final order in respect of custody, access or support.
[10] I find for reasons that follow that there is no merit to the applicant’s request for a trial of an issue or viva voce cross-examination.
[11] Both motions proceeded in the usual way on the basis of affidavit evidence. The applicant made no request for a trial of an issue or viva voce cross-examination prior to the commencement of argument on the motions on August 9, 2013. There were no notable intervening events after August 9, 2013 that in any way changed the evidence relied on in support of the applicant’s motion. Further, it is quite prejudicial to the respondent to be faced with this request after argument on the motions has started.
[12] Interlocutory motions are customarily disposed of by affidavit evidence. At times there may be oral questioning and transcripts of the oral questioning may be proffered on the hearing of the motion. It is not unusual for interlocutory motions in a family law matter to have some conflicting affidavit evidence. The applicant submits that the motion material raises sufficient credibility issues that it is necessary to have a trial of an issue or alternatively a viva voce cross-examination of the respondent.
[13] In my view, the authorities relied on by the applicant are distinguishable or do not assist the applicant.
[14] I find that the applicant’s motion is not a motion that involves complicated matters as contemplated by r. 14(7). In fact, the applicant’s motion is fairly straightforward. I also disagree with the applicant’s submission that substantial issues of credibility are raised on the motion material. There is nothing exceptional about the factual background, or the evidence of the parties or the issues, that requires either a trial of an issue or viva voce evidence. The applicant offered no convincing explanation as to why the applicant proceeded to argue the motions on August 9, 2013 (the inference being that the applicant saw no requirement for a trial of an issue or viva voce cross-examination, nor even a need for out-of-court oral questioning) and why the applicant changed his position.
[15] The leading case cited by the applicant is Ierullo v. Ierullo, 2006 33301 (Ont. C.A.). That case involved a motion to change a final order of spousal support. The motions judge vacated an order for trial of an issue on the basis that there were no credibility issues and then made a final order based on affidavit evidence. On appeal, it was found that there was a need to make credibility findings on significant matters in dispute which could not be properly decided without a trial. Unlike the present case, Ierullo dealt with a motion for a final order, rather than an interlocutory motion. Also, unlike the present case in Ierullo, there were credibility issues on significant matters.
[16] The cases of S.L.I. v. A.D.G., 2011 ONCJ 689 and Preston v. Markle, 2011 ONCJ 641, are both cases in the Ontario Court of Justice that dealt with a motion for summary judgment under r. 16, and in that context, the court held that where material facts are in dispute requiring a court to determine credibility, then a trial of an issue should be ordered. Both those cases were applying the jurisprudence developed over many years as to the narrow role of a motions judge who is hearing a motion for summary judgment pursuant to r. 16 of the Family Law Rules.
[17] The applicant cites Ignacy v. Ignacy, 2010 ONSC 259 (S.C.J.) for the proposition that a motion for a trial of an issue can be made at any time during the course of a hearing of a motion. That case, however, dealt with a motion to change a final order pursuant to r. 15 where the court had ordered that the matter may proceed by way of affidavit evidence, but that if in the course of the hearing the judge found that he or she cannot determine the issue on the affidavit evidence, then he or she could convert the hearing into a trial. The court relied on r. 15(26). Although in theory, the analysis in Ignacy could be applied to a motion for interlocutory relief as to the timing of a request for a trial of an issue, it would have to be a rare case, with unusual circumstances, where such relief would be ordered after argument on the motion had started.
[18] The applicant’s request is not justified in the circumstances. It increases costs unnecessarily, and accordingly the applicant’s request for a trial of an issue or viva voce cross-examination is dismissed.
[19] I now turn to the applicant’s request that the application and the respondent’s answer and claim be dismissed for delay. For reasons that follow, the applicant’s motion is dismissed.
RELEVANT BACKGROUND FACTS
[20] The applicant and the late Philip Leroy Furtney, who died on September 21, 2007 (“the deceased”), were married in 1982 and separated in 2005.
[21] In February 2007, the deceased commenced an application seeking a divorce, equalization of net family properties, freezing assets, costs and pre-judgment interest.
[22] The respondent filed an answer claiming a divorce, spousal support, equalization of net family properties, freezing assets, sale of property, pre-judgment interest, costs, an accounting of all proceeds received from the deceased’s business activities or disposition of assets within the states of Oklahoma, Texas and Florida and, finally, an accounting of all proceeds received from the malicious prosecution lawsuit filed by the deceased against criminal law authorities in the State of Florida (“the Florida action”).
[23] The deceased had various business interests including shares in a number of corporations. His financial statement sworn January 1, 2007 in Florida discloses a net family property of $4,680,607.88.
[24] The respondent’s financial statement sworn April 11, 2007 discloses a net family property of $603,673.76.
[25] However, the respondent had yet to value her shares in two corporations and her jewellery. Those assets have since been valued at a total of over $3.1 million. The respondent submits that her net family property (after making an adjustment so that her 50 percent share of a property owned with the deceased had the same value as assigned by the deceased) is $3,646,162.50.
[26] These numbers generate an equalization payment owing to the respondent in the amount of $517,000 (rounded).
[27] The respondent also alleges that the deceased’s net family property may be significantly higher than disclosed. This relates to the Florida action and is discussed more fully when dealing with the issue regarding preservation of estate assets.
THE BASIS FOR THE APPLICANT’S MOTION
[28] The evidence on behalf of the applicant consists of two affidavits signed by Ms. MacDonald, who is Mr. Hainsworth’s assistant. The respondent’s evidence consists of one affidavit signed by her.
[29] In April 2006, the deceased retained a lawyer in Mr. Hainsworth’s firm to deal with matrimonial matters and shortly thereafter the respondent retained Mr. Clayton.
[30] Counsel were able to reach an agreement regarding the valuation date being June 15, 2005 through exchanges of correspondence in June 2006.
[31] There is no dispute that both parties retained the same chartered accountant to conduct appraisals of the various private companies owned by the parties. After commencement of the application on February 7, 2007 in Stratford, the parties arranged for a case conference date. It was set for July 4, 2007.
[32] Near the end of June 2007, a document brief had been prepared for the deceased, including various appraisals and also including various income tax returns and notices of assessment and reassessment.
[33] At this point Mr. Hainsworth and Mr. Clayton were attempting to work out a production order on consent prior to the case conference.
[34] There is no dispute between the parties that the case conference resulted in a consent production order requiring both parties to produce various documents. The applicant’s motion material indicated that a copy of the signed and issued order could not be located and instead the material included a copy of a draft approved order. It is clear from the endorsement in the record that a production order was made on that date.
[35] The first “hiatus period” was from the date of the deceased’s death in September 2007 until June 18, 2008 when Mr. Hainsworth wrote to Mr. Clayton to move the matter forward and this included requesting inspection of the minute books for corporations that the respondent had an interest in.
[36] Apparently, the corporate solicitor for those corporations (not Mr. Clayton) was not making the corporate minute books available, but after an exchange of correspondence including a letter from Mr. Clayton to the corporate solicitor, the required documentation was eventually made available for inspection by the applicant. This process consumed over six months, as apparently it was not until March 2009 that someone from Mr. Hainsworth’s firm attended at the offices of the corporate solicitor to inspect the minute books.
[37] A notice of approaching dismissal had been issued in early September 2008 and this prompted a settlement conference date being set for November 21, 2008 after an exchange of correspondence between counsel.
[38] However, it was common ground between Mr. Hainsworth and Mr. Clayton that the settlement conference would have to be adjourned because of the delay in obtaining an inspection of the respondent’s corporate minute books. The new date for the settlement conference was April 22, 2009.
[39] The applicant’s material indicates that prior to the settlement conference, Mr. Hainsworth and Mr. Clayton communicated to get matters “back on track” and as a result a consent order was worked out to be submitted to the judge at the settlement conference.
[40] At the settlement conference, only counsel from Mr. Clayton’s office was present (and that counsel was also appearing as agent for Mr. Hainsworth) and the result of the settlement conference was that an order was made transferring the matter from Stratford to London. However, the court did not make a production order. The evidence indicates that the court felt it was not necessary to formally make a production order. The judge at the settlement conference also appointed himself as the permanent case management judge. There is no dispute, however, that the case management judge now no longer sits in London, Ontario.
[41] The terms of the agreed upon production were summarized in a letter dated April 27, 2009, forwarded to Mr. Hainsworth from the lawyer in Mr. Clayton’s firm, who had attended in Stratford to speak to the settlement conference.
[42] This agreed upon production obligated the parties within 30 days to exchange Canada Revenue Agency directions for disclosure of income tax returns for the years 1990 to 2002 and required the respondent to provide the valuations for her companies also within 30 days. There was also a “best efforts” requirement for the respondent within 30 days to provide some corporate financial statements for a named corporation. On behalf of the applicant, there was an obligation within 30 days to provide an update on the particulars of various lawsuits in the United States, including the Florida action, and to provide some additional information regarding a named corporation.
[43] The Canada Revenue Agency direction signed by the respondent was sent promptly but apparently there was an issue with it as Revenue Canada would not accept it for various reasons. The evidence on behalf of the applicant (which is not disputed) is that Mr. Hainsworth wrote to Mr. Clayton on July 10, 2009 requesting a new direction, and that a response was never received and that no proper direction was ever provided.
[44] By letter dated April 28, 2009, Mr. Hainsworth wrote to Mr. Clayton referencing the disclosure agreed to by the parties at the settlement conference (although not ordered), and specifically requesting valuation of the respondent’s corporate holdings.
[45] The applicant’s material then indicates the file went into “a second hiatus” that lasted approximately a year. The reason for the hiatus is not specified in Ms. MacDonald’s affidavit. However, Ms. MacDonald’s affidavit attaches some emails from late September 2010 between herself and Mr. Clayton’s assistant, referencing the valuation of the respondent’s business interests “which had been ordered over a year ago” according to Ms. MacDonald. The result of this email exchange appeared to be that Mr. Clayton’s assistant would speak to Mr. Clayton and “hopefully we can get this on the move again,” according to Mr. Clayton’s assistant.
[46] On December 1, 2010, Mr. Hainsworth forwarded a letter to Mr. Clayton reminding Mr. Clayton as to the respondent’s obligation to complete the appraisals of her companies. In this letter, Mr. Hainsworth suggests that “as both our clients winter in the south” that this information could be exchanged while the clients are away and suggesting that counsel could then be in a position, when the clients return from their winter sojourn, to have some concrete instructions as to settlement or continuation of the litigation.
[47] There was no response to this letter and on May 3, 2011 Mr. Hainsworth wrote a brief letter to Mr. Clayton indicating he is getting “pressure to move this matter along” and asked as to the status of the respondent’s corporate valuations.
[48] Ms. MacDonald’s affidavit then concludes with her evidence that she was told by Mr. Hainsworth that in May 2011 Mr. Hainsworth had written to the estate beneficiaries indicating there was a likelihood that the case had “gone into hiatus, that it would ultimately be dismissed for delay” and further that Mr. Hainsworth and the beneficiaries were of the belief that neither the respondent nor the beneficiaries contemplated continuing with the litigation and that everyone was of the belief, including Mr. Hainsworth, that the action would ultimately be dismissed for delay.
[49] It was the applicant’s position that the respondent had caused delay because the respondent had not furnished any of the disclosure as ordered at the case conference and had failed (despite repeated requests) to produce the business valuations of her two corporations as promised in April 2009 (now over four years ago). The applicant submits that this conduct merits dismissal for delay.
THE POSITION OF THE RESPONDENT ON THE ISSUE OF DISMISSAL FOR DELAY
[50] The respondent deposes that she retained Mr. McCotter in December 2012 and that she asked that he “move the file along” as Mr. Hainsworth said that he would not be moving the file along.
[51] In relation to this last statement, the respondent attached to her affidavit a letter from Mr. Hainsworth to Mr. Clayton dated November 11, 2011. I set out the contents of this brief letter that are as follows:
As a result of a breakdown in communications with my own clients, I will no longer be moving this file forward.
I rather guess that you are in the same boat.
I will not be defending any motion for an administrative dismissal.
Yours very truly,
[52] The respondent, who is now 70 years of age, deposes that the litigation process has been emotionally very difficult and expensive for her. She deposes that there were periods when she felt “harassed” by “the applicants” and found it difficult to carry on. She denies any suggestion that she wanted to delay this matter. She deposes she should not be deprived of the equalization payment owing to her.
[53] There was some suggestion in the applicant’s material that the respondent had instructed the accountant to cancel the corporate valuations. The respondent denies that she provided those instructions.
[54] The respondent attaches the corporate valuations to her affidavit. It is apparent that those documents were completed in September 2009. The respondent has no explanation why the two corporate appraisals were not provided to Mr. Hainsworth. She indicated she had “assumed” that Mr. Clayton had been provided with those documents.
[55] In an exchange of letters between Mr. McCotter and Mr. Hainsworth in early May 2013 (appended to the respondent’s affidavit), it appears Mr. McCotter is unaware that Mr. Hainsworth did not have the valuations until it was confirmed in a letter from Mr. Hainsworth and this prompted a response from Mr. McCotter that he would have the valuations to Mr. Hainsworth “in short order.”
[56] Correspondence from Mr. McCotter also indicates that he is attempting to review the file and to comply also with the production order made at the case conference. Mr. McCotter also has some disclosure requests that he made as set out in his correspondence, including information about the over $6.6 million recently paid out in August 2012 to one of the corporations in which the deceased’s estate has an interest.
[57] At the hearing of the motion on October 9, 2013, the applicant conceded that “although not perfect,” the respondent’s tax returns had been provided and hence this requirement has been complied with. The applicant also agreed that the disclosure promised on behalf of the respondent, as confirmed in her lawyer’s letter dated April 27, 2009 (following the settlement conference), had been provided.
[58] It is apparent that after Ms. MacDonald’s initial affidavit was served, which was sworn May 13, 2013, that this prompted an immediate response from Mr. McCotter and, by letter dated May 16, 2013, he forwarded various documents including the long sought-after corporate valuations, and this also included the jewellery appraisal dated July 9, 2007.
[59] Although not entirely clear during argument on the motions, it appears that most, if not all, of the disclosure required to be produced by the respondent in the order made at the case conference has now been produced.
THE LAW IN RELATION TO DISMISSAL FOR DELAY
[60] The law on a motion to dismiss for delay is well settled. The proceeding should not be dismissed unless: (1) the default is intentional and contumelious; or (2) the plaintiff or his or her lawyers are responsible for the inexcusable delay that gives rise to a substantial risk that a fair trial might not now be possible. (Armstrong v. McCall, 2006 CarswellOnt (C.A.) at para. 11.)
[61] In the second branch of the test, the requisite level of delay has been referred to either as “inexcusable” or “inordinate” or “unreasonable in the sense that it is inordinate and inexcusable.” Where such a delay has occurred, a rebuttable presumption arises that the defendants are prejudiced because there is a substantial risk that a fair trial might not be possible. There are several reasons for the presumption; one recognizes that memories fade over time and another recognizes that justice delayed is justice denied; expeditious justice is the objective; the presumption strengthens with the length of the delay: see Armstrong, supra, at para. 12 and Tanguay v. Brouse, 2010 ONCA 73 (C.A.) at para. 2.
[62] When determining whether a delay has been inexcusable, the court should consider the issues raised by the case, the complexity of the issues, the explanation for the delay and all relevant surrounding circumstances. In considering whether the defendant has sustained prejudice, the court should consider the availability of witnesses, whether the evidence is largely documentary or based on the recollection of individuals, the efforts by the defendant to preserve its evidence and any other relevant consideration: see Armstrong, supra, at para. 12.
DISCUSSION – APPLICANT’S MOTION FOR DISMISSAL FOR DELAY
[63] Applying the first part of the test, I find that there is no conduct on behalf of the respondent in relation to the delay that can be described as intentional and contumelious.
[64] In the second part of the test, it is necessary to find first whether the respondent or her lawyers are responsible for an inexcusable and/or inordinate delay.
[65] This requires an examination as to what portion of the delay is attributable to the respondent.
[66] The reality is that both parties have shared in the delay. Put another way, there is a sufficient helping of laches to fill each party’s plate.
[67] In examining how the litigation evolved, including communication between counsel prior to the issuance of the application, there is no basis for substantial criticism of either party’s conduct in moving the matter forward up to and including the settlement conference in April 2009.
[68] While it is true that for a period of a little over four years after the settlement conference the respondent failed to provide disclosure as required, despite letters from Mr. Hainsworth, it is also clear that during portions of this four year period the applicants lost interest in the litigation, as confirmed in Mr. Hainsworth’s letter dated November 11, 2011. This four year period included a “second hiatus” period according to the applicant’s evidence from late August 2009 until late September 2010. It is apparent during that hiatus period that neither party seemed interested in moving the matter forward.
[69] The much sought-after corporate appraisals from the respondent were in existence since September 2009. For reasons that are not clear, they were not produced until after Mr. McCotter was engaged in this case.
[70] I find that it is too simplistic a view of this case to allege, without context, that the respondent failed to provide the requested documents for over four years or longer. There was also a lack of interest by the applicant in moving this matter forward, and this is not surprising, given the clear evidence that an equalization payment will be owing by the estate to the respondent.
[71] For example, if a motion had been brought a number of years ago complaining about the non-production of the respondent’s material, the likely reality is that this would have prompted fulfillment of the respondent’s obligations with reasonable dispatch (as in fact happened after Mr. McCotter was retained) including production of the corporate appraisals that had been in existence since September 2009.
[72] I also take into account the age of the respondent and her evidence as to the stress of the litigation and that she in essence left this matter to her lawyer.
[73] In the circumstances, while there is delay that is attributable to the respondent, I find that any delay attributable to the respondent or her previous lawyer does not rise to the level of being inordinate and/or inexcusable.
[74] Alternatively, if the delay caused could be properly described as inordinate or inexcusable, then a rebuttable presumption arises that the applicant is prejudiced because there is a substantial risk that a fair trial might not be possible. On the evidence, I would find that in those circumstances that the presumption has been rebutted. This case is primarily a paper case as the most substantive issue is the equalization payment.
[75] In her brief reply affidavit, Ms. MacDonald addresses the issue of prejudice to the applicant. In paragraph 10, she deposes that for a period of time the respondent had received large sums of money, approaching $400,000 annually and that it was the intention of the applicant to pursue and track these funds forensically to trace them to the respondent’s net family property. Ms. MacDonald adds that as the litigation progressed, the parties appeared to “lose interest in the litigation” and the mounting cost of litigation.
[76] Ms. MacDonald then deposes being advised by Mr. Hainsworth as to his deep concern that banking and other documents would now have been lost or will be irretrievable due to the passage of time.
[77] With respect, this is very weak evidence. This is not the type of evidence that should be coming from a lawyer’s assistant. There is no evidence from a deponent who would have the necessary knowledge as to what documents are retrievable and what documents are not retrievable. In fact, there is no evidence specifically as to what banking records are being (or would have been) sought, and for what periods of time, and neither is there any evidence that banks have been approached about the existence of relevant records.
[78] In Armstrong, supra, the Court of Appeal for Ontario expressed disapproval when the defendant doctors (this was a medical malpractice case) attempted to prove actual prejudice by having their lawyer sign an affidavit on the basis of information and belief. It was held that this type of evidence should come directly from the doctors and not filtered through the doctors’ lawyer. (See also Martens v. Gehweiler, 2013 ONSC 968 (S.C.J.) at paras. 44-45, where Korpan J. disapproves of the practice of having legal staff swear affidavits especially in relation to potentially contentious issues.)
[79] Accordingly, even if there was an inordinate and/or inexcusable delay, the evidence satisfies me that this is not a case where there is a substantial risk that a fair trial might not be possible.
[80] I should also briefly deal with jurisdiction to hear a motion for dismissal for delay in the Family Court. Most of the authorities deal with civil, non-family proceedings. However, in Fakeiry v. Fakeiry, 2012 ONSC 7233, [2012] O.J. No. 6102, McDermot J. was dealing with a motion for dismissal for delay in a Family Court proceeding. I share his conclusion that the Family Law Rules do not specifically address this relief and that r. 24 of the Rules of Civil Procedure, which deals with dismissal for delay, is not readily adaptable to family law proceedings, particularly given the wording of r. 24.01(1) which lists circumstances of a plaintiff’s conduct that enables a defendant to have an action dismissed for delay. McDermot J. concludes that the availability of a remedy to dismiss for delay is available to the court as an exercise of its inherent jurisdiction to dismiss for delay where to continue a proceeding could be an abuse of process (Fakeiry, supra, paras. 31-33). I would add that the court could also entertain a motion for dismissal for delay as part of r. 2(3) which requires the court to deal with cases justly and the court’s duty in r. 2(4) to promote that primary objective.
[81] Although not directly on point, I have considered a recent Court of Appeal for Ontario decision that in family law cases pleadings should only be struck and trial participation denied in exceptional circumstances and where no other remedy would suffice. That decision was rendered in a case dealing with a motion to strike pleadings in a family law case on the basis of failure to comply with existing orders for disclosure: Chiaramonte v. Chiaramonte, 2013 ONCA 641 (C.A.) at paras. 31-32.
RESPONDENT’S MOTION FOR SUSPENSION OF ADMINISTRATION OF ESTATE
[82] Section 6(20) of the Family Law Act allows a court, on motion by a surviving spouse, to make an order suspending the administration of a deceased spouse’s estate for the time and to the extent that the court decides.
[83] I find there is no real issue that the amount of $517,000, as discussed earlier, should be preserved to meet a potential equalization payment based on the current financial statements and updated financial disclosure from the respondent.
[84] However, an issue has surfaced regarding the Florida action. The background facts are set out below.
[85] The respondent deposes that during the 1990s the deceased ran a number of Florida bingo halls through a Florida corporation called Bradenton Group Inc. (“Bradenton”) and that Bradenton is a corporation that is wholly owned by 800438 Ontario Limited, in respect of which the deceased disclosed a 50% interest. This interest was valued by the deceased at date of separation at $155,000 in his financial statement.
[86] In the mid 1990s, the deceased was arrested and imprisoned in the State of Florida for racketeering and Bradenton’s operations were shut down by the State of Florida under racketeering and corruption legislation. The charges against Bradenton and the deceased were eventually dropped and Bradenton and its subsidiaries sued the State of Florida for damages. The litigation arose during the 23 year marriage of the respondent and the deceased.
[87] The complicating factor arises because on the valuation date the status of the litigation was that the Bradenton lawsuit for damages had been dismissed by a jury. Therefore, the applicant takes the position that the Florida action had a value of nil on the valuation date. The respondent deposes, and the applicant does not dispute, that Bradenton was eventually successful in its appeal and that in August 2012 the State of Florida paid to Bradenton slightly in excess of $6.6 million in damages and interest as a result of the lawsuit that arose during the marriage of the respondent and the deceased.
[88] The respondent takes the position that the full amount paid to Bradenton represents the proceeds from the Florida action, that the deceased’s estate has a 50% interest in the proceeds and, accordingly, that this will generate an additional equalization payment owing by the applicant to the respondent in the amount of $1,658,778, and that when added to the equalization payment of $517,000 (rounded) referred to earlier, results in a total potential equalization payment owing to the respondent in the amount of $2.176 million. Accordingly, the respondent submits that this sum should be preserved within the estate until this matter is dealt with on a final basis.
[89] No evidence was filed on the motion as to the current value of the estate, although there were some submissions from the applicant’s counsel as to the potential current value. There was evidence in the form of Ex. 1 filed on the motion, (the judgment on passing of accounts referred to earlier). Schedule A attached to that judgment shows that the value of the estate assets as at May 1, 2012 was just under $3.8 million.
[90] The evidence suggests that the estate does have more than sufficient assets to meet the respondent’s best case scenario.
[91] It was submitted on the applicant’s behalf that $600,000 should be held back from the administration of the estate being the potential equalization payment (ascribing zero value to the Florida action) plus some amount for costs.
[92] Counsel advised at the hearing that a portion of the estate is subject to U.S. tax. There is no evidence as to what this tax liability might be. If tax has to be paid on any portion of that Florida action settlement then that would reduce the respondent’s potential equalization payment (assuming that the Florida action proceeds form part of the deceased’s net family property).
[93] Given the fact that the Florida action had been dismissed by the jury as at the valuation date, the respondent may face a difficult task at trial to show that the value of the Florida action on that date was equivalent to the eventual settlement. At trial, the value of the Florida action will have to be determined on the basis of facts as they existed on the valuation date and the respondent will be faced with the task of adducing evidence, probably including expert evidence, as to the value of that action.
[94] It is beyond the scope of this motion for the court to make any type of determination as to what is likely to happen at trial. It is not possible at this stage of the proceeding to make a finding that the respondent will not succeed. The respondent is entitled to have the estate preserve sufficient assets to meet the respondent’s potential best case scenario.
[95] In all the circumstances, I find that $2.2 million should to be set aside by the estate. However, given the dearth of evidence as to the current value of the estate and the potential liabilities, and also taking into account that there may be some liabilities, including taxes, that will attach to the payout in the Florida action, the order below is without prejudice to the rights of the parties on motion to request a change to the amount held back on the basis of relevant fresh evidence.
FURTHER PROGRESS OF THIS CASE
[96] The order below requires counsel to appear before me for the purpose of setting the next steps in this case.
[97] The parties are directed to give consideration as whether this matter requires case management and, if so, whether a new case management judge should be appointed.
[98] Given that the respondent is claiming spousal support, the parties are directed to consider whether spousal support can be ordered pursuant to either the Family Law Act or the Divorce Act given the death of the deceased, and/or whether it is necessary to amend the pleadings to advance a claim for support against the estate pursuant to the Succession Law Reform Act.
[99] The parties are to discuss whether a further settlement conference is necessary and, if so, the potential scheduling of same.
[100] The parties should also discuss and be ready to address any other disclosure or case management issues.
[101] It will be helpful if the parties direct their attention to agreeing on a timetable as to the necessary steps required to move this case to settlement or trial.
ORDER
[102] For reasons set out above, an order shall issue incorporating the following:
The applicant’s motion for dismissal for delay is dismissed.
Pending the disposition of this proceeding on a final basis, the administration of the estate of Philip Leroy Furtney, deceased, shall be suspended to the extent of $2.2 million and this amount shall be retained by the estate and shall not be paid out, but this order is without prejudice to the right of either party to bring a further motion to change this amount if subsequent relevant fresh evidence becomes available that may affect the potential equalization payment owing to the respondent.
The applicant is charged with the responsibility to ensure that adequate assets are retained within the estate at all times to ensure compliance with this order.
An order for an accounting shall issue as asked in paragraph 2 of the respondent’s motion at tab 15 of the continuing record.
Counsel shall appear before me at 9:15 a.m. on January 29, 2014 for the following purpose:
a) to establish a timetable for the next steps in this proceeding;
b) to set a further settlement conference date, if requested;
c) to address other procedural, disclosure or case management issues including amendments to pleadings, if any; and
d) to address the issue of whether it is necessary to have this matter case managed and, if so, whether the existing case management order needs to be changed.
If counsel are unavailable to appear on the date set out above, then counsel may contact the trial coordinator to obtain a new date and the trial coordinator may reschedule the matter to a different date with my prior approval.
If the parties cannot agree on costs, then the parties shall forward their written costs submissions to the trial coordinator, with the respondent’s submissions to be forwarded within 14 days from the date of this order, the applicant’s submissions to be forwarded within 14 days thereafter and any reply within 7 days thereafter. The submissions shall not exceed three pages plus copies of any offers, time dockets, accounts and authorities and the reply submissions, if any, shall not exceed two pages.
“Justice Victor Mitrow”
Justice Victor Mitrow
Date: December 3, 2013