Ontario Superior Court of Justice

COURT FILE NO.: CV-10-408767
DATE: 20140210

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

NHUAN LUONG, by her Litigation Guardian the PUBLIC GUARDIAN AND TRUSTEE

Applicant

– and –

MY HA TRINH

Respondent

Tony Nguyen, for the Applicant

Saba Ahmad, for the Respondent

HEARD: January 17, 2014

t. mcewen j.

reasons for decision

[1] The Respondent, My Ha Trinh (the “Respondent”), seeks to vacate the ex parte Mareva Injunction originally granted by Chapnik J. on October 4, 2010, and thereafter extended. The Respondent submits that the injunction was issued on the basis of misrepresentations and non-disclosure contained in the original ex parte application. The Respondent initially filed materials asking that the Mareva Injunction be vacated or varied. At the hearing, however, the Respondent took the position only that it should be immediately vacated.

overview

[2] The Applicant, Nhuan Luong (the “Applicant”), is an 87 year old woman with nine children including the Respondent. In 1979, she immigrated to Canada with her husband as part of the boat person exodus from Vietnam. In 1982, six of the siblings, including the Respondent, purchased a home at 75 Tecumseth Street (the “home”). Various family members have resided in the home. The Applicant’s husband passed away in 1992, and the Applicant suffered a stroke in 1998. Between 2003 and 2009, the Applicant and Respondent generally resided in the home together. Commencing in approximately 2005, the Applicant’s health began to deteriorate and the Respondent took on additional roles as caregiver. It is during this time that the Applicant and various other siblings of the Respondent claim that the Respondent became abusive towards the Applicant and began to engage in erratic and violent behaviour. This lead to a confrontation between the Respondent and some of her siblings. The Respondent sold her interest in the home to her sibling, Steven Trinh, for $60,000 in or about July 2009. The Respondent was thereafter essentially forced from the home as she and her siblings could not get along. Subsequently, according to the Applicant’s affidavit filed at the hearing before Chapnik J., the Applicant noticed that approximately $300,000 that she had kept in the home was missing. She also believes that the Respondent had stolen other money from her in the past. The Applicant’s claim was supported by allegations that the Respondent had amassed approximately $470,000 in cash and investments that she could not possibly have accrued on her own without stealing from the Applicant.

[3] Chapnik J. granted the Interim and Interlocutory Mareva Injunction that ordered, amongst other things, that the Respondent be restrained from accessing funds from her accounts at the Bank of Montreal, TD Waterhouse, TD Canada Trust and safety deposit boxes. This was subject to her being allowed to withdraw funds of $5,000. The Respondent was also ordered to return certain personal property and funds allegedly belonging to the Applicant.

[4] Unfortunately, since the Mareva Injunction was granted the matter has become derailed. The Respondent has changed legal representation on three occasions. The Applicant’s solicitor obtained an order removing himself as solicitor of record but thereafter reappeared after the court appointed the Public Guardian and Trustee as litigation guardian for the Applicant. The Respondent has been living in homeless shelters and essentially without funds, subject to the recent order of Matheson J. dated October 8, 2013. That order allowed monthly payments of $2,500 for legal fees and $300 for living expenses for four months. The Respondent also has mental health issues and has been diagnosed as having a bipolar disorder.

[5] By Orders of Corrick J. dated June 1, 2011, and Whitaker J. dated December 19, 2011, $45,000 was paid out to the Applicant for living expenses on a without prejudice basis.

the respondent’s position

[6] The Respondent submits that the Mareva Injunction ought to be set aside on the basis that the Applicant failed to meet the obligation of full and frank disclosure at the Mareva Injunction hearing. She submits that the Applicant did not have a strong prima facie case, and therefore should not have been entitled to the relief sought.

[7] The Respondent relies on a number of problems with the Applicant’s affidavit, including her capacity to swear the affidavit, as well as other inconsistencies and inaccuracies contained in the affidavit.

[8] The major thrust of the Respondent’s argument involves the following:

• The Applicant neither reads nor writes English, and within four months of her signing the affidavit she was assessed for dementia at the University Health Network Memory Clinic. The assessor reported that the Applicant did not fully appreciate information communicated to her;

• The estimate of the Applicant’s net worth of $604,000 was loosely calculated and, at best, guess work;

• Notwithstanding the evidence of the Applicant, there is no credible evidence that the Respondent would flee given her history in the community;

• The Applicant’s undertaking concerning damages was worthless;

• The Respondent’s income for the past 30 years (paragraph 34 of her affidavit), estimated to be approximately $129,000, was in fact false. The Respondent had earned more income than this, and certain investment income was not accounted for;

• The estimate of the Respondent’s balance in her bank accounts of approximately $470,000 (paragraph 25) was inflated by approximately $100,000;

• Disclosure was not made to the court of the fact that in 2009, the Respondent received $60,000 with respect to the sale of her share of the home;

• The Respondent had significant financial holdings prior to 2006, when the Applicant (paragraph 30) swore that $300,000 was taken by the Respondent;

• It was not disclosed to the court that the Respondent had essentially been evicted from the home and would have nowhere to live and have no access to funds except for the $5,000 allowance. This rendered her virtually penniless, homeless and vulnerable;

• Evidence of historical thefts were not well made out in the evidence and have not held up to scrutiny; and

• Others had access to the home, and therefore had access to the hidden money;

[9] Based on the above, the Respondent submits that the Mareva Injunction ought to be vacated and that a hearing to assess her own damages be conducted.

the applicant’s position

[10] The Applicant submits that the Mareva Injunction was properly obtained and submits as follows:

• Between 2005 and 2009, the Respondent began to engage in increasingly violent and bizarre behaviour that threatened the Applicant’s health and safety. This is borne out by photos taken of the house that show it being in complete disarray;

• There is a history of the Respondent taking money from the Applicant even prior to 2006;

• The Respondent could not possibly have saved the money she claims given her historical earnings even if her estimates are accurate;

• In addition to the allegation of the theft of money, it is not disputed that the Respondent took personal documentation from the Applicant, including health and bank cards, the Applicant’s jewellery and $13,000 in cash from the house;

• The Respondent violated the Court Order restricting her from accessing the CIBC safety deposit box;

• The Respondent’s siblings (the Applicant’s children) support the application and claim that the Respondent admitted to taking monies;

• At the time that the Applicant swore the affidavit she was competent and able to give instructions, and there is no evidence to the contrary;

• No one disputes that the Applicant kept large amounts of cash at the home and that it has now disappeared. Given the fact that the Respondent was the primary occupant along with the Applicant, and given her significant savings, there is a strong prima facie case that she is the one who took the funds; and

• While the Applicant may have misstated the Respondent’s savings by approximately $100,000, they are still significant and not capable of proper explanation.

[11] In the circumstances, the Applicant submits that the Respondent has not proven that the frozen funds belong to her nor has she properly explained how she could have amassed the funds in any event.

[12] The Applicant concedes, however, that the $60,000 paid to the Respondent ought to be paid to her less any monies that she has received pursuant to the order of Matheson J.

the case law

[13] In the case of Chitel et al. v. Rothbart et al. (1983), 1982 1956 (ON CA), 39 O.R. (2d) 513 (C.A.), the Court of Appeal conducted an in-depth analysis of the law concerning Mareva Injunctions and set out principles that must be followed by courts in exercising their jurisdiction to grant such relief. Speaking for the court, at p. 528, MacKinnon A.C.J.O. adopted the fundamental guidelines stated by Lord Denning as follows:

At the commencement of the outline of his guidelines in this case, Lord Denning issued an uncharacteristic caveat: “Much as I am in favour of the Mareva injunction it must not be stretched too far lest it be endangered.” He then stated his guidelines summarized as follows (pp. 984-85):

(i) The plaintiff should make full and frank disclosure of all matters in his knowledge which are material for the judge to know. ... (ii) The plaintiff should give particulars of his claim against the defendant, stating the ground of his claim and the amount thereof, and fairly stating the points made against it by the defendant. (iii) The plaintiff should give some grounds for believing that the defendants have assets here. ... (iv) The plaintiff should give some grounds for believing that there is risk of the assets being removed before the judgment or award is satisfied. ... (v) The plaintiffs must ... give an undertaking in damages.

[14] This was further quoted with approval again by the Court of Appeal in R. v. Consolidated Fastfrate Transport Inc. (1995), 1995 1527 (ON CA), 24 O.R. (3d) 564 (C.A.).

[15] Subsequently, in United States of America v. Friedland, 1996 8213 (Ont. S.C.), Sharpe J. provided the following guidance:

26 It is a well established principle of our law that a party who seeks the extraordinary relief of an ex parte injunction must make full and frank disclosure of the case. The rationale for this rule is obvious. The Judge hearing an ex parte motion and the absent party are literally at the mercy of the party seeking injunctive relief. The ordinary checks and balances of the adversary system are not operative. The opposite party is deprived of the opportunity to challenge the factual and legal contentions advanced by the moving party in support of the injunction. The situation is rife with the danger that an injustice will be done to the absent party. As a British Columbia judge noted recently:

There is no situation more fraught with potential injustice and abuse of the Court’s powers than an application for an ex parte injunction.

(Watson v. Slavik, [1996] B.C.J. No. 1885, August 23rd, 1996, paragraph 10.)

27 For that reason, the law imposes an exceptional duty on the party who seeks ex parte relief. That party is not entitled to present only its side of the case in the best possible light, as it would if the other side were present. Rather, it is incumbent on the moving party to make a balanced presentation of the facts in law. The moving party must state its own case fairly and must inform the Court of any points of fact or law known to it which favour the other side. The duty of full and frank disclosure is required to mitigate the obvious risk of injustice inherent in any situation where a Judge is asked to grant an order without hearing from the other side.

28 If the party seeking ex parte relief fails to abide by this duty to make full and frank disclosure by omitting or misrepresenting material facts, the opposite party is entitled to have the injunction set aside. That is the price the Plaintiff must pay for failure to live up to the duty imposed by the law. Were it otherwise, the duty would be empty and the law would be powerless to protect the absent party.

29 These principles are so well established in the law that it is hardly necessary to cite supporting authority. They find expression in the Rules of Court. Rule 39.01(6) provides:

Where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on the motion or application.

30 The principle has been affirmed and reaffirmed by judicial decision. In the leading Ontario case on Mareva injunctions, Chitel v. Rothbart (1982) 1982 1956 (ON CA), 39 O.R. (2d) 513, a judgment of the Court of Appeal, Associate Chief Justice MacKinnon stated, at page 519:

There is no necessity for citation of any authority to state the obvious that the plaintiff must, in securing an ex parte interim injunction, make full and frank disclosure of the relevant facts, including facts which may explain the defendant’s position if known to the plaintiff. If there is less than this full and accurate disclosure in a material way or if there is a misleading of the court on material facts in the original application, the court will not exercise its discretion in favour of the plaintiff and continue the injunction.

31 The duty of full and frank disclosure is, however, not to be imposed in a formal or mechanical manner. Ex parte applications are almost by definition brought quickly and with little time for preparation of material. A plaintiff should not be deprived of a remedy because there are mere imperfections in the affidavit or because inconsequential facts have not been disclosed. There must be some latitude and the defects complained of must be relevant and material to the discretion to be exercised by the Court. (See Mooney v. Orr, (1994) 1994 1779 (BC SC), 100 B.C.L.R. (2d) 335; Rust Check v. Buchowski (1194) 1994 7416 (ON SC), 58 C.P.R. (3d) 324.

32 On the other hand, a Mareva injunction is far from a routine remedy. It is an exception to the basic rule that the Defendant is entitled to its day in court before being called upon to satisfy the Plaintiff’s claim or to offer security for the judgment. This is clear from the decision in Chitel v. Rothbart, supra. It was emphasized by the decision of the Supreme Court of Canada in Aetna Financial Services v. Feigelman 1985 55 (SCC), [1985] 1 S.C.R. 2, where Justice Estey referred to what he described as “the simple proposition that in our jurisprudence, execution cannot be obtained prior to judgment and judgment cannot be obtained prior to trial”.

[16] The law concerning whether a court should permit payments out of accounts or assets frozen by an interlocutory Mareva Injunction was analyzed by Molloy J. in Canadian Imperial Bank of Commerce v. Credit Valley Institute of Business and Technology, 2003 12916. Justice Mallow stated the following:

I was not directed to, and am not aware of, any Canadian authority directly on point. However, in my view, the balancing of interests test applied by the English courts in this situation is consistent with the respective purposes underlying the proprietary and Mareva injunctions as identified by Canadian courts and is therefore an appropriate test to apply here. With respect to the consideration of the merits of the defendants’ case, I am inclined to the view expressed by Roch LJ. and by the Master of the Rolls in Sundt Wrigley & Co. v. Wrigley that the relative merits of the plaintiff’s case and the defence advanced by the defendant is a relevant consideration when balancing the competing interests of the parties. However, I would not go so far as to make it a pre-requisite for the defendant to demonstrate an arguable case on the merits before the Court should engage in the balancing of interests process. This is subject, however, to one caveat. Where the plaintiff has frozen assets and advanced an arguable case that those assets are subject to a proprietary claim by the plaintiff, there is an onus on the defendant to put forward credible evidence as to the source of the subject assets if the defendant seeks to use the funds for his own purposes. It is only where the defendant can demonstrate that the assets are from a source other than the plaintiff that the usual rules for variation of a Mareva will apply. Otherwise, his right to use the funds will be subject to the balancing of interests in the exercise of the court’s discretion.
Accordingly, the test to be applied is as follows:

(i) Has the defendant established on the evidence that he has no other assets available to pay his expenses other than those frozen by the injunction?

(ii) If so, has the defendant shown on the evidence that there are assets caught by the injunction that are from a source other than the plaintiff, i.e. assets that are subject to a Mareva injunction, but not a proprietary claim?

(iii) The defendant is entitled to the use of non-proprietary assets frozen by the Mareva injunction to pay his reasonable living expenses, debts and legal costs. Those assets must be exhausted before the defendant is entitled to look to the assets subject to the proprietary claim.

(iv) If the defendant has met the previous three tests and still requires funds for legitimate living expenses and to fund his defence, the court must balance the competing interests of the plaintiff in not permitting the defendant to use the plaintiff’s money for his own purposes and of the defendant in ensuring that he has a proper opportunity to present his defence before assets in his name are removed from him without a trial. In weighing the interests of the parties, it is relevant for the court to consider the strength of the plaintiff’s case, as well as the extent to which the defendant has put forward an arguable case to rebut the plaintiff’s claim.

analysis

[17] I am troubled by the circumstances in which the Mareva Injunction was obtained. My concern stems mainly from the fact that the court was misinformed about the amount of the Respondent’s assets (exaggerated by approximately $100,000) and her historical income (which was set at an artificially low level). The court was also informed that the Applicant had periods of unemployment, the lengths of which were exaggerated. The court also did not receive disclosure about the fact that the Respondent received $60,000 for the sale of her interest in the home. At this motion, the Applicant did not dispute the fact that these inaccuracies were presented to Chapnik J.

[18] I am also concerned about the fact that the main thrust of the application for a Mareva Injunction appears to be the theft of the $300,000. Prior to 2006, however, the Respondent had amassed certain assets and there is little or no evidence that her assets increased appreciably after the alleged theft of the Applicant’s funds. This would support the Respondent’s argument that she did not take the monies and that her assets had nothing to do with the alleged theft.

[19] Conversely, I am mindful of the Applicant’s claims of abuse and the evidence of the squalid living conditions (which in fairness the Respondent disputes) that were in existence in or about 2009. Further, even if the Respondent’s evidence is accepted with respect to her historical earnings, I also have difficulty understanding on the record before me how she could have amassed her current level of assets. When one does an analysis of her historical earnings it is difficult to reconcile how she could have saved approximately $370,000 after accounting for taxation and living expenses. There is also uncontradicted evidence of the Respondent taking the Applicant’s personal belongings, including documentation and jewellery, as well as violating the Court Order concerning access to the safety deposit box. Given the history of the Applicant and the Respondent living together, their hoarding tendencies and the evidence that the Respondent did maintain large of amounts of cash in safety deposit boxes, it is also very possible that the Respondent took funds from the Applicant and did not deposit them in any bank or financial institution.

[20] All that being said, it is clear that after 2009, the Respondent found herself in dire circumstances given the fact that she had sold her interest in the home, was no longer welcome there and had virtually no access to her savings as a result of the Mareva Injunction. Unfortunately, as noted above, the Respondent did not meaningfully move to set aside or vary the Mareva Injunction in a timely fashion, although perhaps this is not surprising given her difficult personal circumstances with respect to housing, funding and mental health.

[21] The Applicant now concedes that the Respondent is entitled to at least $60,000 less payments made pursuant to Matheson J.’s Order. The Respondent’s solicitor submits that the Respondent is not interested in simply receiving this amount. She submits that the circumstances of this case justify the Mareva Injunction being set aside completely, followed by a hearing concerning the damages incurred by the Respondent. She further submits that the receipt of the $60,000 would jeopardize the Respondent’s access to social assistance benefits that she currently receives. If the court were to find that only $60,000 should be released, the Respondent prefers that the funding Order of Matheson J. continue, and that all monies continue to be frozen.

[22] In my view, neither of the proposals made by the parties is satisfactory.

[23] With respect to the Respondent’s submission, I am not of view that the Mareva Injunction should be set aside in its entirety at this time. It is difficult to properly analyze all of the various disputed evidence based on the record before the court. While the Respondent raises compelling arguments concerning the weaknesses in the original application for a Mareva Injunction, there are still compelling concerns raised by the Applicant with respect to the Respondent’s participation in the disappearance of the Applicant’s monies based on what I have outlined above. Further, the effect of any order that I make upon the Respondent’s entitlement to social assistance is not a valid or proper consideration. The case must be considered on its merits.

[24] The Respondent is entitled to at least the payment of $60,000. There is also evidence that the monies that the Respondent had prior to 2003 would have included monies earned by her given her track record of earnings and savings. Based on the current record there is no compelling evidence that all of the monies that she received prior to 2003 came from the Applicant. In fact, the Applicant, in her own affidavit used at the original application, did not even make this assertion. At paragraph 36 she swore that she was of the opinion and belief “that some, if not all, of the money in My Ha’s various bank accounts belongs to me”.

[25] Therefore, I find that the Respondent has satisfied the court that some assets should be released. She has put forward credible evidence that she legitimately accrued at least some of the subject assets on her own, and that they could not possibly be the property of the Applicant. The thorny issue concerns the amount that ought to be released based on the record and pending a further determination at trial that will involve a more fulsome record including viva voce evidence.

[26] Although the number is not precise, it appears as though the total amount of the monies traced to the Respondent is between $360,000 and $390,000. As I have noted, $45,000 has been paid out to the Applicant for living expenses on a without prejudice basis. It is apparent, however, from the examination of My Binh Trinh, the Respondent’s sister, that most of those monies were used to pay the Applicant’s legal fees.

[27] Based on all of the evidence that has been presented at this motion, it is my view that the $60,000 that the Applicant received from the sale of her interest in the house should be released to the Respondent without any deduction as per the Order of Matheson J., as the amounts paid to date have been exceedingly modest.

[28] Additionally, I order the release of $75,000 (for a total of $135,000) based on the evidence adduced that the Respondent did have earnings and savings prior to the alleged theft of the $300,000 that would have reasonably resulted in her ability to save at least an amount in this range. While it is impossible to come up with any sort of precise figure, it is my view that the aforementioned figure is reasonable given the Respondent’s work and savings history. In analyzing the entire matter, I am also struck by the fact that the Applicant, and the siblings that support her, take great issue with the Respondent’s ability to save considerable amounts of money; however, they have no difficulty putting forth the proposition that the Applicant would have been able to save approximately $600,000 during her lifetime. They assert this notwithstanding the fact that the lifestyles and types of employment enjoyed by both the Applicant and the Respondent have been similar for many years.

[29] I should note that the Applicant also argued that based on the decision of Newbould J. in Enbridge Gas Distribution Inc. v. Marinaccio, 2011 ONSC 2313, the motion ought to be dismissed since, in this case, as was the case in Enbridge, any difficulties with the injunction ought to be dealt with by way of appeal since there are no new facts today that are materially different from the situation at the time that the Mareva Injunction was granted. With the exception of the undertaking concerning damages, I disagree. Based on my analysis, significant new facts of been adduced, particularly with respect to the $60,000 payment and errors concerning the Respondent’s work history, earnings and savings that have now been corrected, at least to a great degree.

[30] Lastly, I should also note that the Applicant brought a cross-motion seeking additional funding. I dismiss that motion. It was not vigorously pursued by the Applicant, nor was any supporting case law presented. Further, the Applicant has already received $45,000 from the frozen funds and in my view, no further order should be made in this regard at this time. This is particularly so because the funds were obtained for living expenses, and some, at least, have been used to pay legal expenses as per the above noted evidence.

disposition

[31] For the reasons above, a variation of the Injunction ought to be granted and the Respondent should receive the amount of $135,000 from the frozen funds. I appreciate that this may cause some logistical difficulties given the way the funds are currently deposited. If the parties cannot resolve this issue I may be spoken to.

[32] The Applicant’s cross-motion for additional funding is dismissed. The issue of converting the application to an action was not pursued at the motion.

[33] Having heard submissions with respect to the issue of costs, I further order that the Applicant pay the Respondent her costs in the amount of $10,000.

[34] Lastly, I should note that this is a matter that calls out for mediation, or failing settlement, a speedy trial. If the parties desire, I can be spoken to at a 9:30 a.m. appointment.

T. McEwen J.

Released: February 10, 2014