COURT FILE NO.: 563/12 [PERTH]
DATE: 2013/DEC/31
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Wayne Francis Fleming
Nammarra Dokken George, for the Applicant
Applicant
- and -
Helena Jane Fleming
Ron Paritzky, for the Respondent
Respondent
HEARD: August 23, 2013
The Honourable Mr. Justice J. M. Johnston
RULING ON MOTION FOR LEAVE TO APPEAL
[1] This is an Application seeking leave to appeal the decision of Justice Tausendfreund dated May 17, 2013, on the grounds that there are conflicting decisions to the Orders and it is desirable that leave to appeal be granted or, alternatively, on the grounds that there appears to be good reason to doubt the correctness of the Tausendfreund Orders and the proposed appeal involves matters of such importance that, in this Court’s opinion, leave to appeal should be granted.
Background:
Orders Sought to be Appealed:
[2] A Settlement Conference was conducted in this family law matter on May 17, 2013, by Justice Tausendfreund. At the Settlement Conference, Justice Tausendfreund made two Orders , both now the subject of leave for appeal as follows:
(1) The Settlement Conference is adjourned sine die and shall not be continued without leave of the Court.
(2) Leave is granted to the Respondent to amend her pleadings and claim spousal support at trial.
Parties’ Background:
[3] The Applicant, Wayne Francis Fleming, commenced a claim seeking to enforce provisions of a Separation Agreement between he and the Respondent, dated September 28, 2011. A term of the agreement required the parties to enter into a Shareholders’ Agreement with respect to four Corporations they owned, to provide for an orderly buy-out of his or her interests in the said corporations, in the event of disagreement.
[4] Section 13 of the Separation Agreement states the parties acknowledge that at the time of separation they were owners of the four Corporations, carrying on businesses as “Rent To Own”. The parties acknowledged in the Separation Agreement that the Applicant and Respondent each owned two of the four Corporations. Pursuant to the terms of the Separation Agreement, “necessary shares shall be transferred in each of the Corporations in order that the parties are equal shareholders in each of the four Corporations. They shall each be Directors in the Corporations but the parties presently owning the Corporation shall remain President and the party being added shall be named Secretary. All Corporation affairs including wage adjustments will require two signatures as will all cheques for all four Corporations.”
[5] In her Answer, the Respondent seeks a buy-out arrangement with respect to each of the four Corporations. The Respondent’s proposed agreement would result in each party owning two Corporations, returning them each to the position they were in prior to the separation. The Respondent’s proposal would allow both parties to carry on business separately from one another and to continue to earn income to support themselves and their children. The Applicant seeks a buy-out arrangement wherein one party would purchase the entire interest of the other party in each of the four Corporations.
[6] The Applicant specifically seeks in his claim enforcement of Section 13(e) of the Separation Agreement which states:
“The parties acknowledge that a Shareholder Agreement must be entered into at some point in the near future to provide for an orderly buy-out of one or both of the parties in the event that they cannot communicate in the operation of the Corporation or agree upon the appropriate cost to be paid from the same.”
[7] Section 13(e) is the only section of the Separation Agreement addressing the possibility that the Applicant and Respondent’s business relationship may become unworkable. The Agreement provides no mechanism and no guidance on how a buy-out may be accomplished.
The Respondent argued at the Settlement Conference that, in light of the ambiguity in the Separation Agreement, in particular, Section 13(e), the absence of powers in the Family Law Act to deal with Ontario Corporations, the Respondent argued that the matter was not ready to proceed to trial. She argued further amendments to the pleadings were required and/or a separate Application under the Ontario Business Corporations Act was needed, in order to determine the current Application. In the alternative, the Respondent sought a stay of the Application, pursuant to Rule 2(1) of the Family Law Act, until such time as an Application may be brought and determined in the Ontario Superior Court of Justice regarding the corporate issues.
[8] The Separation Agreement provided that each spouse would be an equal owner of the four corporations and therefore self-supporting, accordingly the Agreement stated no spousal support would be payable.
[9] The endorsement of Justice Tausendfreund at the Settlement Conference states:
“Issues of Child and Spousal Support cannot be addressed at Trial absent resolution of Section 13(e) of the Separation Agreement relating to the four Corporations now equally owned and controlled by these parties who apparently cannot communicate on a personal level well enough to resolve that impasse they themselves have created. Absent this Agreement, it gives rise to a separate action which must be addressed before this matter can and should proceed. It may be that this can be accomplished within this Family Law Act proceeding or by separate action with future consolidation, yet regardless, pleadings and discoveries at a minimum appear to be called for. For these reasons, Settlement Conference adjourned sine die and not to be continued without leave of the Court.
Intent of Separation Agreement is that each party have equal income – if that is not so in interim, leave for Trial to seek relief in that regard, subject to prior amendment of pleadings.”
The Law:
Rule 61, Rule 62 and Rule 63 of the Rules of Civil Procedure Apply where an appeal lies to the Divisional Court the Court of Appeal of Ontario:
[10] An Appeal lies to the Divisional Court from an interlocutory Order of a Judge of the Superior Court of Justice, with leave as provided by the Rules of Court.
[11] Rule 62.02(4) of the Rules of Civil Procedure R.O. 1990 Reg 194 provides that leave to appeal should not be granted unless:
(a) there is a conflicting decision by another Judge or Court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the Judge hearing the Motion, desirable that leave to appeal be granted; or
(b) there appears to the Judge hearing the Motion good reason to doubt the correctness of the Order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.
Analysis:
[12] Rule 62.02(4) consists of two disjunctive branches and, in turn, each branch has two conjunctive requirements. The first branch of Rule 62.02(4)(a) summarized in Phaneuf v. Ontario [2008 O.J. No. 908] stating:
“The ‘conflicting decision’ test under Rule 62.02(4)(a) refers to there being a conflict in respect of a principle of law applied in the decision at issue as applied by other Courts and it being desirable for the Divisional Court to deal with the apparent conflict.”
[13] An exercise of discretion that leads to a different result because of particular circumstances does not constitute a “conflicting decision” as contemplated by the Rules; a “conflicting decision” is one which a Court has followed different principles to guide the exercise of its discretion (Comtrade Patroleum Inc. v. 490300 Ontario Ltd. (1992) 1992 7405 (ON SC), 7 O.R. (3d) 542(ON) CTJ (Gen. Div. Div. Ct.) at paragraph 7.)
[14] In assessing whether it is desirable for the Divisional Court to deal with an apparent conflict, the Motion Judge should consider such factors as what is at stake in the Order being challenged, the likelihood of the appeal being successful, the sufficiency of the record for the purpose of deciding the issues on the appeal and the problem of expense and delay.
[15] The Applicant argues that there are conflicting decisions in the first Order granted by Justice Tausendfreund, namely, adjourning the Settlement Conference sine die. The Respondent, in his Factum, argues, “the juridical basis upon which the Order could have been made was pursuant to Rule 17(8)(b.1) of the Family Law Rules, which provides that ‘on notice’ orders may be made for the ‘preservation of the rights of the parties’. However, the Order does not preserve the ‘status quo’, and instead has the opposite effect of restricting and advocating rights in the following ways:
(a) it stops the Applicant’s right of proceeding; and
(b) it takes away the Applicant’s right to procedural fairness and hearing on the merits relative to the issues.
[16] The Applicant argues that Justice Tausendfreund’s Order uses Rule 17(8)(b.1) as a “sword, as opposed to a shield (i.e. a preservation Order)” as the Rule intends. The Applicant argues that “the Order adjourning the Settlement Conference”, had final consequences and removed his right to seek a final determination of his claim on the merits. Further the Applicant argues the final effect of the Order was granted without the right to be fully heard and without procedural fairness.
[17] I disagree with the Applicant’s analysis. In my view, the first Order granted by Justice Tausendfreund, namely, adjourning the Settlement Conference, was an option available to him under the Family Law Rules. Rule 2 of the Family Law Rule states the primary objective of the Rules is “to ensure the Court deal with cases justly”. (Rule 2(2)) Further, Rule 2(3) states that dealing with cases justly includes:
(a) ensuring that procedure is fair to all parties;
(b) saving time and expense;
(c) dealing with a case in ways that are appropriate to its importance and complexity; and
(d) given appropriate Court resources to cases while taking account of the need to give resources to other cases.
[18] Rule 2(5) provides that the Court shall promote the primary objective by active management of cases which include 2(5)(d) setting timetables or otherwise controlling the process of the case.
[19] Rule 17 of the Family Law Rules governs conferences in the Family Court. Specifically, Rule 17(8) provides:
“At a case conference, settlement conference or trial management conference the Judge may, if it is appropriate to do so…
(a)…or give direction for the next step.
(b.1) if notice has been served, make a final order or any temporary order.
[20] I do not agree with the Applicant’s interpretation that either or both of Justice Tausendfreund’s Orders are final. Neither Order stops the Applicant’s right of proceeding, nor do the Orders take away the Applicant’s right to procedural fairness. Both Orders are procedural, they “set the stage for a determination on the merits” and do not dispose of either party’s substantive rights. I agree with the Respondent’s argument that Justice Tausendfreund’s reasons make it clear that the Settlement Conference was adjourned because pleadings and discoveries appear to be called for in order to properly determine the issues of the corporations. The Judge stated that the issues could be raised within the Family Law proceeding, or could be determined in a separate action, specifically, under the Ontario Business Corporations Act. In my view, the Judge had a duty to manage the case before him and to control the progress of the case.
[21] Justice Tausendfreund’s Order simply acknowledges that, while the Applicant is entitled to seek relief under Section 13(e) of the Separation Agreement, the Trial Judge would not be able to properly deal with the issue in accordance with the existing pleadings. The Separation Agreement clearly contemplates that a buy-out agreement between the parties was to be entered into. However, the Agreement provides absolutely no direction as to how and in what form the buy-out agreement would take. There is no mechanism for providing for the buy-out of Ontario corporations pursuant to the Family Law Act. By necessity, the Trial Judge would have no option but to refer to the Ontario Business Corporations Act. By acknowledging this problem at the Settlement Conference stage, Justice Tausendfreund’s Orders were an attempt to set the procedural stage in which a Trial Judge could ultimately substantively deal with the issues. Justice Tausendfreund’s Orders do not prohibit the Applicant from proceeding, but rather they requires the Applicant and/or Respondent to take steps in order to make this matter ready for trial. The Judge did nothing more than ensure an orderly trial. Accordingly, in my view, the first Order granted by Justice Tausendfreund is not in conflict with other decisions. This Order was made having regard to the complexity of the issue of the parties’ Corporations. The Order is necessary in order to ensure that the issue of the Corporations is fairly dealt with.
[22] In the event that I am in error that there are not conflicting decisions in relation to the Order adjourning the Application, I go on to consider whether it would be desirable for leave to be granted. I agree with the Respondent, the only success the Applicant can hope to achieve in appealing this Order of adjournment, is the Orders be set aside and the parties return to the position they were in, resuming a Settlement Conference, without a procedure for resolving the issue of the parties’ Corporations . This result would not further the case and would cause further delay and expense.
[23] I next consider whether or not the first Order granted by Justice Tausendfreund, adjourning the Settlement Conference is such that there is good reason to doubt the correctness of the decision. Rule 62.2(4)(a) of the Rules of Civil Procedure does not require that I find Justice Tausendfreund’s decision to be wrong. It is sufficient to grant leave for an appeal if I am persuaded simply that there is “good reason to doubt the correctness of the decision”.
[24] For the reasons stated above, I find that Justice Tausendfreund’s decision to adjourn the Settlement Conference was necessary under the circumstances. Accordingly, there are no grounds to find that there are ‘good reasons to doubt the correctness of the decision’. I acknowledge the Applicant’s argument that adjournment of matters “sine die” is no longer an accepted practice. It would have been preferable that the Conference simply be adjourned. However, under these unique circumstances, the intention of the Settlement Conference Judge was to control the process, to ensure that steps were taken by either to make this matter ready for trial. If deemed necessary by the Settlement Conference Judge, he has jurisdiction to adjourn a Conference. The fact that the Conference was adjourned “sine die” and required leave to return the matter were simply tools used by the Judge to ensure something was done to make this matter trial ready. It was and is completely open to the Applicant to return the matter to a Settlement Conference, if procedural steps are taken.
Order 2: Permitting Amendment of Pleadings to Allow for Spousal Support Claim:
[25] I proceed to consider the second Order granted by Justice Tausendfreund at the Settlement Conference, namely, an Order permitting amending of the pleadings to include a spousal support claim by the Respondent.
[26] The Applicant argues that leave ought to be granted in relation to this Order on the basis that the Judge made a finding of fact that would be binding on the Trier of fact and that he did so without permitting the Applicant due process. The Applicant argues that leave ought to be granted both on the grounds that there are other decisions conflicting with Justice Tausendfreund on the principle of making the Orders determining substantive rights and, secondly, on the basis that there is a good reason to doubt the correctness of the decision.
[27] The manner in which the Order of Justice Tausendfreund is drafted makes it appear that he made a finding of fact that would be binding on the Trier of fact, namely, that the intention of the Separation Agreement was such that each party would have equal income. In my view, the endorsement of Justice Tausendfreund makes it clear that he was simply granting leave to the Respondent to amend her pleadings to include a claim for spousal support. In part, the Judge granted this relief on the basis that a possible interpretation of the Agreement was that the parties would have equal income pursuant to the Separation Agreement, once they were equal owners of the four Corporations. However, his reasons for granting the relief do not form an integral part of the Order itself. Properly drafted, the Order should simply state that leave is granted to the Respondent to commence a claim for spousal support. It would be for the Trier of fact at the trial to determine the issues corollary to the claim, including whether or not the claim is prohibited pursuant to the terms of the Separation Agreement. The Tausendfreund, Order does not grant substantive relief, it did not grant spousal support. . The Order simply adds the issue of spousal support to the issues for the Trial Judge to be determine.
[28] In my view, there are no conflicting decisions on this principle, nor is there good reason to doubt the correctness of the second Order granted by Justice Tausendfreund. Accordingly, there is no basis upon which to grant leave to appeal the second Order of Justice Tausendfreund.
Conclusion:
[29] For reasons stated above, I am not satisfied that leave to appeal to the Divisional Court ought to be granted on either or both of the two Orders granted by Justice Tausendfreund at the Settlement Conference on May 17, 2013. Accordingly, the Applicant’s Motion for Leave is dismissed.
[30] In the event the parties cannot agree upon costs, the Applicant shall prepare written submissions limited to two pages and, in addition, a Bill of Costs. The Respondent shall serve and file the submissions and the Applicant shall be entitled to the right-of-reply with the same limitations to be completed within twenty-one days within receiving the Respondent submission.
___________________________
The Honourable Mr. Justice J.M. Johnston
Released: December 31, 2013
COURT FILE NO.: 563/12 [PERTH]
DATE: 2013/DEC/31
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Wayne Francis Fleming
Applicant
- and -
Helena Jane Fleming
Respondent
RULING ON MOTION FOR LEAVE TO APPEAL
The Honourable Mr. Justice J. M. Johnston
Released: December 31, 2013