COURT FILE AND PARTIES
COURT FILE NO.: FS-13-386125
DATE: 20131112
IN THE SUPERIOR COURT OF JUSTICE AT TORONTO
RE: Leisha Marie Carey, Applicant
AND:
James Ivo Almuli, Respondent
BEFORE: Kiteley J.
COUNSEL: Steven Bookman and Chris Stankiewicz, for the Applicant
Michael B. Kleinman, for the Respondent
HEARD: November 7, 2013
ENDORSEMENT
On October 24, 2013, on an ex parte motion, I made an order authorizing the registration of a Certificate of Pending Litigation against title to the property known as 2 Commons Drive and I adjourned the motion to November 7th. On the return of the motion Mr. Kleinman took the position that the CPL should be discharged because the applicant did not assert a claim for an interest in land.
Before I heard submissions, counsel agreed that the order for the CPL should be discharged in order that the sale to innocent third parties could close on November 15th. Counsel were unable to agree on the disposition of the proceeds of sale. As a result, counsel made submissions as to whether the applicant had been entitled to the order made on an ex parte basis.
The applicant and respondent were married on November 1, 1995 and separated on December 15, 2011. On April 19, 2013, the applicant caused an Application to be issued in which she asked for extensive relief including the following:
• Child and spousal support;
• An order that the respondent immediately deliver to the applicant the sum of $2,545,768.88 plus accrued interest to the date of delivery which said monies represent monies of the applicant improperly converted by the respondent to his own use at separation from monies maintained at the Credit Agricole Luxembourg, Account No. [omitted] in a jointly held account;
• Full and complete financial disclosure;
• equalization of net family properties;
• alternatively, unequal division of the parties net family property;
• sale of family property;
• an order that properties owned by the respondent including his property at 2 Commons Drive be vested in the applicant in partial satisfaction of monies due to her from the respondent pursuant to s. 9(1)(d) of the Family Law Act;
• an order “freezing all Canadian bank accounts and assets of the Respondent”.
The last request was pursuant to s. 12 of the Family Law Act although not specifically stated.
In June 2011, the parties moved to Toronto from Luxembourg. Shortly after the separation in December 2011, the respondent purchased the property known as 2 Commons Drive. He paid cash.
On August 29, 2013, Justice Goodman began to hear a motion brought by the applicant for an order for interim child support and spousal support. While other relief was sought including a restraining order pursuant to s. 12 of the Family Law Act and financial disclosure, she heard submissions only on those issues. Submissions continued on September 12th and the decision was reserved.
In her affidavit sworn October 22, 2013 in support of the ex parte order, the applicant referred to her August 26th affidavit in which she had deposed that the respondent had used funds initially found in their joint bank account in Luxembourg to purchase 2 Commons Drive. The respondent had subsequently advised that he had taken a job in Florida and was moving on October 26th and he had sold the property. In her affidavit, she said that 2 Commons Drive was the respondent’s only Canadian asset. The applicant’s counsel determined that the closing was scheduled for November 15th and the sale price was $741,111. She said she believed that the respondent was leaving Canada and liquidating and transferring all his assets in an attempt to avoid his support and equalization obligations.
In his affidavit sworn November 4th, the respondent pointed out that the applicant did not claim a legal or equitable interest in 2 Commons Drive. He denied that his decision to relocate to Florida was clandestine or designed to defeat her claims. He reported his employment arrangements in Florida and his accommodation details. He said he had sold his Toronto home because he believed the Toronto real estate market was in a “bubble” and he wanted to cash out before a major correction occurred; and he wanted to invest the sale proceeds in the hedge fund he would be joining. He said that he had every intention to provide support to the applicant and the children.
In her reply affidavit sworn November 5th, the applicant challenged much of his evidence. She provided additional details of the tracing of funds from the jointly owned account in Luxembourg into 2 Commons Drive and referred to her claim to recover those funds as it had been advanced in her Application.
Position of Counsel
Mr. Bookman conceded that, in her Application, his client had not asserted a claim for an interest in 2 Commons Drive based on constructive trust principles. He advised that there was a motion returnable before this court on November 14th in which he would ask for leave to amend the Application and that relief would be sought. He nonetheless took that position that, on the unamended Application, that there was a claim for an interest in land based on her claim for an equalization of net family property, freezing order and vesting order. While he agreed that the CPL ought to be vacated in favour of the rights of the purchaser, he took the position that all of the proceeds of sale should be held in trust pending the decision at trial or on settlement.
Mr. Kleinman took the position that the applicant had not asserted a claim for an interest in land and the CPL ought to be vacated with all of the proceeds of sale of the imminent closing paid to the respondent.
Analysis
In her affidavit sworn October 22, 2013, the basis upon which the applicant sought the CPL was largely her claims: for an equalization of net family property (and alternatively unequal division); for a non-depletion order; for an order securing support payments by a charge against his property; for an order vesting property in her name including 2 Commons Drive in partial satisfaction of monies due to her; and for child support.
On October 24th, I made the following endorsement:
Counsel has referred me to Nash v. Gilbert 1993 Carswell Ont 3972. On that basis I am satisfied that the applicant has claimed an interest in land. Given the circumstances described in the affidavit and particularly the imminent closing of the agreement of purchase and sale, this is an appropriate case for a certificate of pending litigation . . . CPL to issue. Order signed. Adjourned to November 7, 2013.
S. 103(6) gives the court discretion to discharge a certificate where the applicant does not have a reasonable claim to the interest in the land claimed and where the interests of the applicant can be adequately protected by another form of security; or on any other ground that is considered just. Furthermore, the court may, in making the order, impose such terms as to the giving of security or otherwise as the court considers just.
Mr. Kleinman relies on McMurdo v McMurdo Estate (1988) 1988 8661 (ON SC), 13 R.F.L. 3rd 317 in which Master Peppiatt declined to grant an order for a CPL in an application to set aside a marriage contract and then assert claims pursuant to Part I of the Family Law Act, and alternatively to claim a ½ interest in the former matrimonial home. At paragraph 12, Master Peppiatt noted that the basic scheme is set out in s. 5 of the Family Law Act and it provides for a claim to the value of net family property, not a claim to the property itself. He held that the Act does not establish that one spouse has an interest in any of the property of the other spouse save insofar as the court may make an order under s. 9(1)(b) or (d).
Mr. Kleinman also relied on Winick v Winick 2008 CarswellOnt 6099. Lemon J. had granted an order authorizing the issuance of a CPL. Ricchetti J. made an order discharging it on the basis that the applicant had asserted a claim only for spousal and child support and was attempting to use the CPL as security for the support obligations of the respondent. He referred to it as an attempt to obtain execution before judgment which is not permitted except in rare circumstances. He noted with approval the decision in McMurdo that a claim under the Family Law Act does not create an interest in land.
In Nash v Gilbert, the husband owned two properties at the date of separation in 1989. The wife brought proceedings in 1990 in which she sought an equalization of net family property. In 1991 the husband transferred title to the two properties. The wife obtained orders ex parte authorizing the issuance of Certificates of Pending Litigation against title to both properties. The Answer of the husband had been struck. The wife brought a motion for an order adding the owners of the two properties as parties to her action and other relief. One of the purchasers brought a motion for an order vacating the CPL against title to the Port Colborne property for several reasons including that the wife had not raised an interest in the lands. In her affidavit, the wife claimed that the transfers were designed to defeat her claims to an equalization payment.
Mendes Da Costa J. noted McMurdo as well as the authorities on which Master Peppiatt had relied. He referred as well to Bajada v Bajada (1991) 1991 12840 (ON SC), 32 R.F.L. (3d) 70 in which the court had held that a claim for an interest based on constructive trust did place an interest in land into question. He referred to Bank of Montreal v Ewing (1982) 1982 1794 (ON SC), 35 O.R. (2d) 225 (Div. Ct.) and Chilian v. Augdome Corp. (1991) 1991 7335 (ON CA), 2 O.R. (3d) 696 (OCA) for the proposition that the applicant did not have to claim an interest in the land in question but rather a CPL could be authorized if “any title to or interest in land is brought in question”. At paragraph 18- 19, he held as follows:
However, in proceedings for a certificate of pending litigation, there is no requirement that the non-titled spouse should claim an interest in land. As the law has evolved, the test is whether an interest in land is “brought in question”. In its preamble, the Family Law Act recognizes marriage as a “form of partnership”, and expresses the necessity to provide in law for the “orderly and equitable settlement of the affairs of the spouses upon the breakdown of the partnership”. The elaborate provisions contained in Part I are designed to achieve this result. As part of the process, the Act recognizes the obvious fact that the “values” to be equalized flow from the spousal property. Thus, an order for preservation may be granted under section 12 of the Act, if the court considers it necessary for the protection of the “other spouse’s interests under this Part”. Further, an equalization application may result in an order for the sale or other disposition of property, including the matrimonial home, under the wide powers conferred by section 9 of the Act. In circumstances of this nature, it does not seem an extravagant use of language to suggest that an application for an equalization payment does bring an interest in land in question, and that the claimant spouse should be afforded the protection of a certificate. Indeed, absent this protection, the statutory scheme could be defeated should the property in issue come into the hands of a bona fide purchaser for value without notice.
Be this as it may, the claim of the applicant to an equalization payment does not stand alone. The affidavit of the applicant is made in support of her claim to set aside the transfer of the Port Colborne property. . . While the applicant has no interest in the Port Colborne property, the certificate should not be vacated. I am of the view that a claim to set aside a transfer of property, in order to realize an entitlement to an equalization payment, does bring an interest in land in question and is sufficient to ground a certificate of pending litigation. I find further that the applicant has adduced sufficient evidence to establish a reasonable claim. I hasten to add that it is not my task to assess credibility or to comment on the merits of the case, functions that must be left to the trial judge.
I remain of the view that Nash v Gilbert is applicable. It contains a more refined analysis of the rights arising from Part I of the Family Law Act than does McMurdo. The reasons for decision in Winick are not persuasive because the claims in that case were limited to spousal and support. The conclusion in Winick that McMurdo applied was obiter dicta.
On the basis of Nash v. Gilbert, the Applicant has brought into question an interest in the land by asserting a claim for an equalization of net family property, for a vesting order pursuant to s. 9(1)(d) and for an order pursuant to s. 12. The respondent has not met the burden to set aside the order.
Mr. Kleinman took the position that if I did find that the applicant was entitled to the order for a CPL, that I should nonetheless order that only 50% of the net proceeds be held in trust. He conceded that there was no evidence that the respondent would be prejudiced if all of the proceeds were held but he pointed out that his client intended to use the net proceeds to invest in the hedge fund in which he would be involved in Florida.
I have reviewed the respondent’s financial statement sworn May 13, 2013. At that time he had substantial assets. The only asset in Canada was his interest in 2 Commons Drive. Given the absence of prejudice and the fact that he has no other assets in Canada, I consider it to be a reasonable exercise of my discretion to order that all of the proceeds be held in trust.
I am optimistic that counsel will be able to agree on costs of the motion. If unable to agree, they should make written submissions not exceeding 3 pages with a costs outline and offers to settle, if any, at intervals of five days.
ORDER TO GO AS FOLLOWS:
On consent, order to go discharging the certificate of pending litigation.
The net proceeds of sale shall be held in an interesting bearing account in trust to the credit of this action by Michael B. Kleinman, Barrister and Solicitor, pending written agreement or further order of this court.
DATE KITELEY J.