SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV012-467114
DATE: 20130204

RE: Kiet Trung Lam and Anh Soai Lam, Applicants

– AND –

Lam Chang, Respondents

BEFORE: Justice E.M. Morgan

COUNSEL:
Robert Watt, for the Applicants

Ben Mignardi, for the Respondent

HEARD: February 4, 2013

ENDORSEMENT

[1] The Applicants are brother and sister and are the registered owners, as joint tenants, of 18 Elmhurst Drive, Toronto (the “Property”). The Property was purchased by them on July 4, 2003.

[2] The Respondent is either the former spouse or the former common law partner of the Applicant Kiet Trung Lam (“Mr. Lam”). There is some question about the formal validity of their marriage in Ontario; however, it is undisputed that they lived together for approximately ten years and have two children together. They separated in June 2012. The Respondent and the two children currently reside at the Property.

[3] The Application is for an Order authorizing the sale of the Property and division of the proceeds between the Applicants as joint owners. Counsel for the Applicants acknowledges that the Respondent may have a claim against Mr. Lam’s half of the Property or proceeds therefrom, although he disputes the merits of that claim. Mr. Lam has agreed to place half of the proceeds of any eventual sale of the Property in trust for a resolution of the financial claims between himself and the Respondent. That would leave his sister, the Applicant Anh Soai Lam (“Ms. Lam”), free to dispose of her half of the proceeds of sale as she sees fit.

[4] I understand from the affidavits filed by the parties that Mr. Lam has leased another residence for the Respondent and the two children, and that the Respondent has agreed to move out of the Property so that it can be sold. Both counsel assure me that the parties are acting cooperatively in this respect, and that the only issue here is how much of the proceeds of sale to hold in trust.

[5] In her affidavit, the Respondent has described a number of business ventures and properties owned by the Applicants and other members of their family in which she alleges she has an interest. She describes a retail business that she started with her sister-in-law, Ms. Lam, along with numerous businesses, property purchases, mortgage financing, and other commercial dealings in which she has been involved with the Lam family. She also describes salaries which various family members are paid from the combined business ventures. According to her affidavit, the Respondent herself receives a salary from one of the businesses.

[6] In short, the Respondent contends that the Applicants’ family has intermingled its funds in their businesses and properties in a way that makes individual ownership difficult to identify. Counsel for the Respondent submits that in reality the family – including herself – all own the various properties and businesses collectively.

[7] The Respondent’s position on this Application is that she agrees to the sale of the Property, and will be moving out of the Property with her children in order to accommodate this sale. However, it is her view that the entire proceeds of sale should be held in trust pending resolution of her global claims against Mr. Lam, Ms. Lam, and other family members and family-owned business entities.

[8] Since it is an open question as to whether the Respondent was formally married to Mr. Lam, it is not clear whether the Family Law Act or the common law applies to their relationship. Specifically, the Respondent may or may not have a right to equalization of net family assets under the Family Law Act, or she may or may not have a right as a common law spouse to apply for an interest in the property on a constructive trust basis. In addition, she may or may not have a right to possession of the Property as a matrimonial home. None of these issues go to title to the Property, which has always been registered jointly in the names of both Applicants. All of the Respondent’s claims can be pursued as personal claims against Mr. Lam alone.

[9] Counsel for the Applicants submits that since there is no claim by the Respondent to actual title to the Property, section 3 of the Partition Act authorizes its partition and sale. In response, counsel for the Respondent argues that there is far more at issue between the parties than the Property. The Respondent sets out her claims with some specificity at paragraph 67 of her affidavit. Under the heading “Intended Lawsuits”, paragraph 67states:

67. It is my intention to bring a law suit for, among other things, the following relief:

i. Claim for resulting and/or constructive trust in respect to all properties mentioned above;

ii. Claim for my share of all of the aforementioned businesses;

iii. Child and spousal support;

iv. Equalization of Net Family Property;

v. Such further and other relief as counsel may advise and this Honourable Court permit.

[emphasis in original]

[10] The claims that the Respondent intends to bring are, as indicated, outlined in her affidavit contained in the record before me. As of now, these claims have not yet been brought in this or any other proceeding. Indeed, this paragraph makes it clear that these are but some of the claims the Respondent may raise in the future. Between the property claims, the claims on businesses, and the family law claims, the Respondent and Mr. Lam (and possibly other members of Mr. Lam’s family) appear to be headed for a protracted period of litigation.

[11] In essence, counsel for the Respondent contends that the Respondent requires some security for the claims she intends to bring. He submits that it therefore seems logical to hold both Applicants’ halves of the proceeds of the sale of the Property in trust. There is no point, he argues, in forcing his client to chase Ms. Lam for her half of the funds once the Respondent is determined to have a financial interest in other properties and businesses currently registered to Ms. Lam or other members of the family.

[12] In answer to my question as to why the Respondent has a right to security for her claims against Ms. Lam, counsel for the Respondent points to the affidavit evidence about the intermingling of funds. He notes that the Respondent’s evidence is that the Applicants and family manage their financial affairs in a way that makes one family member’s assets indistinguishable from another’s. Paragraph 62 of the Respondent’s affidavit concludes that:

Based on the above, it is my belief that, among other transactions, monies were flowing to and from the businesses to all parties since 1999; mortgage funds from the Elmhurst property were utilized in the purchase of the Wardlaw property; and, mortgage from the Elmhurst property were utilized in the businesses such as for transfers to pay suppliers of the companies, or business expenses.

[13] The intermingling of funds and assets, of course, is the basis for the Respondent’s eventual claims, which may or may not turn out to have merit. However, this is not evidence that would lead to a Mareva injunction or some other form of pre-judgment security. The Respondent’s affidavit identifies Ontario real estate and solvent Ontario businesses owned and run by the Applicants’ family. There is no evidence that these assets are being dissipated or are fleeing the jurisdiction.

[14] Most importantly, the claims set out in the Respondent’s affidavit are, as the Respondent herself has labeled them, intended lawsuits. None of the Respondent’s claims have found their way into an action or court application. In my view, there are no grounds to support the Respondent’s request for pre-judgment security, and it goes without say that there are no grounds to support something in the nature of pre-litigation security. If the Respondent ever does sue, and ever does obtain judgment against Ms. Lam on any of her proposed claims, she can then seek to enforce the judgment in the usual way.

[15] As a final point, counsel for the Respondent submits that his client could have sought a certificate of pending litigation against the Wardlaw property referenced above, as that property is one that is held by Ms. Lam or her husband where the Respondent claims an interest. Counsel for the Respondent further submits that requiring Ms. Lam’s half of the proceeds of sale of the Property at issue here to be held in trust would accomplish the same thing as a certificate of pending litigation on the Wardlaw property.

[16] The Respondent cannot have the court trade future claims against Ms. Lam and her family for a claim to Ms. Lam’s proceeds of sale in the present Property. The Respondent must actually bring an action claiming an interest in the Wardlaw property before anything with respect to that property, including a certificate of pending litigation, can be adjudicated. The Respondent seems to consider the present proceedings to be akin to a work-out of already determined claims about the Applicants’ various assets. It is not. It is a discrete application about the Property on Elmhurst Drive, which she has sought to answer by making a set of as yet unadjudicated (and un-sued upon) claims.

[17] The Respondent’s family situation speaks to a claim to an interest in Mr. Lam’s half of the Property, and it is agreed that his half of the proceeds will be held in trust. Any claims against Ms. Lam are strictly anticipatory, and will have to be brought to court in the usual way by the Respondent before they can be adjudicated or form the basis of a court order.

[18] The Applicants are authorized to list the Property for sale with a licensed real estate broker to be sold at fair market value. The Applicants shall have possession of the property within 30 days of the date of this Order. Half of the net proceeds of sale received from the sale of the Property shall be held by counsel for the Applicants in trust pending final resolution of the issues herein; the other half of the net proceeds of sale from the Property shall be paid to Ms. Lam.

[19] The balance of the Application – i.e. that part of the Application relating to the issue of what moneys may be owing by Mr. Lam to the Respondent – shall be converted to an action and shall proceed to trial.

[20] The Applicants have submitted a Costs Outline which is quite reasonable. The Respondent shall pay costs to the Applicants in the amount of $3,944.83, inclusive of disbursements and HST.

Morgan J.

Date: February 4, 2013