ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 12-55682
DATE: 2013/12/18

BETWEEN:

A.C. and I.C.

Plaintiffs

– and –

L.C.

Defendant

Charles M. Gibson and Ian B. Houle, for the Plaintiffs

Pierre J. Champagne and Julie Paquette, for the Defendant

HEARD: November 27, 2013 (Ottawa)

REASONS FOR DECISION ON MAREVA INJUNCTION

R. SMITH J.

Overview

[1] The plaintiffs A.C. and I.C. obtained an interim ex parte Mareva injunction freezing all of their father’s assets and restraining him from dissipating any assets until judgment is obtained. They seek to make this Mareva injunction permanent. They further seek an order preventing L.C. from destroying or encumbering any property including his residence in Kanata, and ordering him to attend examinations to answer questions relating to his assets, including any property, funds, investments, accounts and sources of income he may possess.

[2] The plaintiffs have sued their father, L.C., for damages of $7,650,000 resulting from repeated assaults, physical and emotional abuse, intentional infliction of mental distress, wrongful imprisonment, including damages for past and future lost income, future cost of care, aggravated and punitive damages.

[3] The defendant’s former girlfriend, E. T. D. (“Elisabeta”) signed an affidavit stating that the defendant intended to dissipate all of his assets:

(a) by making frequent trips to the casinos to withdraw $500 and then only play $20 on the machines;

(b) by withdrawing $300,000 from his Scotiabank RRSP; and

(c) by travelling abroad regularly nearly once a month.

[4] The defendant has brought a motion to set aside the interim ex parte Mareva injunction on the grounds that the plaintiffs have not shown that they have a strong prima facie case and because there is not sufficient evidence that there is a serious risk that the defendant will dissipate assets before judgment.

[5] The defendant denies that he ever assaulted or physically or mentally abused his daughters. In addition, he denies that he has changed his spending habits by going to casinos or travelling more often than in previous years. He further states that he has not withdrawn any funds from and never had a $300,000 RRSP at the Scotiabank. He acknowledges that he has a $300,000 line of credit with Scotiabank registered against his residence in Kanata.

Test for a Mareva Injunction

[6] The parties agree that the test to obtain a Mareva injunction is set out in the case of Chitel et al. v. Rothbart et al., (1983) 1982 1956 (ON CA), 39 O.R. (2d) 513 (C.A.) at p. 2, which held that the moving party must establish a strong prima facie case on the merits of the case and meet the following five requirements:

(1) The plaintiff should make full and frank disclosure of all matters in his knowledge which are material for the judge to know;

(2) The plaintiff should give particulars of his claim against the defendant, stating the grounds of his claim and the amount thereof, and fairly stating the points made against it by the defendant;

(3) The plaintiff should give some grounds for believing that the defendants have assets here;

(4) The plaintiff should give some grounds for believing that there is risk of the assets being removed before the judgment or award is satisfied; and

(5) The plaintiff must give an undertaking as to damages.

[7] In Ghaeinizadeh v. Ku De Ta Capital Inc., 2010 ONSC 4146 (S.C.J.), at para 51 Perell J. stated that: “…the moving party must also establish that he or she would suffer irreparable harm if the injunction [was] not granted…” and further stated at para 50 “A Mareva injunction, sometimes called a freezing order, is granted only sparingly and in the clearest cases: Aetna Financial Services Ltd. V. Feigelman, 1985 55 (SCC), [1985] 1 S.C.R. 2 (S.C.C.).”

[8] In Farah v. Sauvageau Holdings Inc., 2011 ONSC 1819 (S.C.J.) at para 110 the Chitel test was distilled into the following three key requirements: “…the moving party must establish: (1) a strong prima facie case; (2) that the defendant has assets in the jurisdiction; and (3) that there is a serious risk that the defendant will remove property or dissipate assets before judgment...”

1. Strong Prima Facie Case

[9] In Regina v. Consolidated Fastfrate Transport Inc., 1995 1527 (ON CA), [1995] O.J. No. 1855 (C.A.) Galligan J.A. at p. 10 stated that the moving party must demonstrate not only that it has a prima facie case but a strong prima facie case on the merits to obtain a Mareva injunction.

[10] In Beca v. Spork, [2009] O.J. No. 1754 at para 10 Turnbull J. defined a strong prima facie case as follows: “This term has received various interpretations from the courts in Canada. In SLMsoft.com Inc. v. Rampart Securities Inc. (Trustee of), 2004 6329 (ON SC), [2004] O.J. No. 3290 at para 14, Ground J. applied the test that the plaintiff must show it is "clearly right" in its allegations or that "it is almost certain to succeed at trial”.

[11] The plaintiffs have made allegations of serious abuse at the hands of their father. If their allegations are proven at trial there will be a lot of sympathy for their situation. However, their allegations are denied by the defendant and as a result there is a serious credibility issue to be decided at trial.

[12] The plaintiffs have presented limited independent objective evidence supporting their allegations, as there are no medical reports or reports from the Children’s Aid Society confirming any abuse by the father. A copy of a police report filed on March 27, 2005, when the plaintiffs left their home at the age of 19, was included. In his report the officer wrote that the plaintiffs told him that their father had been violent with them and beat them regularly. However, no charges were laid and the police officer did not make any independent observations confirming that any abuse had occurred.

[13] The plaintiffs’ claim also raises the issue of the extent that reasonable force is permitted to be used to discipline children. The court will have to make findings on whether the level of physical discipline used by the father was reasonable in the circumstances, which can only be done by hearing evidence and making findings of credibility.

[14] A copy of the father’s 1982 divorce order, obtained in Romania, was produced which stated that the marriage was dissolved because of the father’s exclusive fault and stated that he treated his first wife very badly. This evidence is of very limited probative value as to whether the father physically and emotionally abused his two daughters, as alleged, some 10-17 years later.

[15] The plaintiffs’ maternal grandmother filed an affidavit stating that her deceased daughter told her that the defendant had assaulted her shortly before her death. However, this evidence and is not related to the defendant’s conduct towards his daughters.

[16] Elisabeta, the defendant’s former girlfriend, filed an affidavit describing the defendant as controlling, manipulative and possessive and stated that the defendant had struck her on her buttocks. She further stated that, when the defendant was initially served with the statement of claim, he initially denied all of the allegations made against him, but over the course of the evening he started to admit that some of the allegations made by the plaintiffs in the statement of claim were true. However, Elisabeta did not state what specific allegations were admitted by the defendant.

[17] Elisabeta further stated that after his wife’s death the defendant took steps to encourage his daughters to leave the house as soon as possible by intentionally establishing strict rules in the house. Elisabeta stated that the defendant admitted to her that when his daughters disobeyed or did not listen to him, that he hit them. However, Elisabeta did not provide any details of when, where or how the plaintiffs were struck.

[18] Elisabeta also stated that the defendant told her that he intended to dissipate his assets so that nothing would be left for his daughters and that he had withdrawn $300,000 from his RRSP at Scotiabank. The defendant denies withdrawing any money from his RRSP or even having an RRSP at Scotiabank. The defendant admits that he has a $300,000 line of credit on his home with Scotiabank and states that Elisabeta was mistaken about withdrawing funds from an RRSP account.

[19] The defendant states in his affidavit that Elisabeta is not a reliable witness because she is a bitter former girlfriend, who admitted to being unfaithful with the defendant, and admitted that she threw paint on his car and put candies in his vehicle’s gas tank following their breakup.

[20] There is some evidence that the defendant was violent towards his first and second wife, that he established strict rules of discipline for his daughters and hit them if they disobeyed him or did not listen to him. However, there is also evidence from the defendant denying such behaviour and the evidence supporting the plaintiffs’ allegations comes from Elisabeta who is a bitter former girlfriend.

[21] The defendant has also raised limitation issues as more than two years have gone by since the plaintiffs reached the age of majority when they left home in 2005. The action was commenced in 2012, seven years after the plaintiffs reached the age of majority. The plaintiffs dispute that this is an issue but the defence argues that a limitation defence is an issue that will require findings of fact by a trial judge.

[22] The plaintiffs have not provided me with any prior legal decisions where a Mareva injunction has been granted in circumstances where the plaintiffs allege assault and physical and emotional abuse, without confirmatory evidence from some objective independent sources, and where all of the allegations are denied by the defendant.

[23] The case of Ghaeinizadeh v. Ku De Ta Capital Inc., 2010 ONSC 4146 (S.C.J.) is distinguishable from the facts before me as some of the plaintiffs were almost certain to succeed, based on uncontradicted evidence that Ku De Ta Capital Inc. had discharged mortgages or assigned them to others without notice to the plaintiffs.

[24] However, in the case before me, it is not possible to assess the credibility of witnesses based on contradictory affidavits, without substantial objective confirmatory evidence supporting one party’s version. As a result of the contradictory affidavit evidence and the factual and legal complexity of proving assault or abuse when disciplining children, I am unable to find that the plaintiffs “are almost certain to succeed at trial” based on the evidence before me.

Disposition of Strong Prima Facie Case Issue

[25] For the above reasons, the moving parties have not persuaded me that they have a strong prima facie case, namely one that is “almost certain to succeed at trial” because findings of credibility must be made which can only be made with a full appreciation of the evidence at a trial.

2. Assets in Jurisdiction

[26] It is not disputed that the defendant has assets in the jurisdiction. The defendant owns a home in Kanata, however very limited evidence was presented on the extent of any other assets owned by the defendant in Ontario. In fact the plaintiffs wish to cross-examine the defendant before judgment to find out what assets he holds.

3. Serious Risk that the Defendant will Remove Property or Dissipate Assets

[27] It is not necessary for me to address this issue given my finding that the plaintiffs have failed to prove a strong prima facie case. However there is no evidence that the defendant has taken any steps to list or sell his home in Kanata to date and the evidence does not demonstrate a substantial change in the amount of travel or number of attendances at casinos by the defendant. Elisabeta did provide evidence that the defendant had expressed an intent to dissipate assets, but she is an unhappy former girlfriend and appears to have been mistaken about withdrawing funds from an RRSP, and there has been no attempt by the defendant to list his property in Kanata for sale.

Disposition of Motion to Set Aside Mareva Injunction

[28] For the above reasons the interim Mareva injunction granted by Roccamo J. dated November 7, 2013 is set aside.

Costs

[29] The defendant may make submissions on costs within 15 days, the plaintiffs to respond within 15 days and the defendant to reply within 10 days.

Mr. Justice Robert J. Smith

Released: December 18, 2013

COURT FILE NO.: 12-55682
DATE: 2013/12/18

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

A.C. and I.C.

Plaintiffs

– and –

L.C.

Defendant

REASONS FOR DECISION

R. SMITH J.

Released: December 18, 2013