Moghimi v. Dashti, 2016 ONSC 2116

Moghimi v. Dashti, 2016 ONSC 2116

CITATION: Moghimi v. Dashti, 2016 ONSC 2116

COURT FILE NO.: FS-14-396507

DATE: 20160329

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Yalda Moghimi Applicant

– and –

Ebrahim Dashti Respondent

Joel Etienne, for the Applicant

Aryan Yassavoli, for the Respondent

HEARD: March 23, 2016

F.L. Myers J.

Background

1At the conclusion of the hearing of the motion I advised counsel that, in view of the immediacy of the upcoming trial, I was dismissing the motion with reasons to follow. These are my reasons for dismissing the motion.

2The respondent moves on the eve of trial to amend his answer to add a claim for an unequal share of net family property under s.5(6) of the Family Law Act, R.S.O. 1990, c.F.3. Rule 11(3) of the Family Law Rules, O. Reg. 114/99, provides that “the court shall give permission to a party to amend an application, answer or reply, unless the amendment would disadvantage another party in a way for which costs or an adjournment could not compensate.” In my view, the amendment sought is untenable and granting permission at this time and in these circumstances would indeed prejudice or disadvantage the applicant in a manner that cannot be compensated by an award of costs or by an adjournment.

The Relevant Facts

3The applicant commenced this application on July 30, 2014. The parties are in their late 30s. They have no children. They got married on February 28, 2010. The period of cohabitation is in issue.

4In addition to the usual claims for spousal support and equalization of net family property, in this proceeding the applicant seeks orders for an unequal division of net family property, invalidating a “falsified” second mortgage on the matrimonial home in favour of the respondent’s parents, and an accounting for the value of a condominium that the respondent owns. The essence of the applicant’s claims is that the respondent has engaged in fraudulent transactions with members of his family to try to hide title to his assets or to try to reduce the recoverable value of his assets in a net family property calculation.

5In his answer dated September 11, 2014, the respondent says that he bought the condominium registered in his name in trust for his sister. He says that although title to the matrimonial is in his name, he purchased that property in trust for his father. He also claims that the second mortgage on the matrimonial home secures a debt advanced to the respondent by his father to help him buy and furnish the matrimonial home. That is, the respondent says that he granted security for his debt over a property that he does not own. The apparent inconsistency of the father taking a mortgage against the home that he is said to already own beneficially was seemingly lost on the respondent.

6In his answer, the respondent claimed exclusive possession of the matrimonial home, equalization of net family property, and spousal support for himself.

7The issues with significant economic value in this proceeding are: (a) whether the applicant can obtain recognition for value in the condominium; and (b) whether the applicant can succeed in invalidating the second mortgage on the matrimonial home and get behind the alleged trust under which the respondent says he holds the property for his father. If she cannot access the value of those assets, then the applicant seeks recovery of net family property on an unequal basis to provide some compensation for the value to which she would otherwise have expected to be entitled in the ordinary course.

8The parties held a settlement conference in January, 2016. It was apparent that they would not settle and that they were both eager to get to trial. Accordingly, the conference was converted into a trial management conference and a trial date was booked on consent for April 4, 2016 (i.e. next week).

9After the settlement conference, the applicant confirmed that she is no longer proceeding with her claims against the condominium property. She has properly narrowed the issues and limits the property relief that she now seeks to her claims in respect of the matrimonial home.

10Rather than recognizing this advance in the proceedings and continuing to narrow the issues, the respondent came back with this motion to add a new claim to an unequal division of net family property in his favour.

The Motion

11The respondent initially proposed to bring his motion to amend his answer in writing as a Rule 14B motion. The applicant objected because, among other things, under the trial management order, no motions may be brought before trial except with leave of the case management judge. I heard counsel at a case conference by telephone and granted leave to the respondent to bring a contested motion at an oral hearing. The leave requirement helped to ensure that the motion to amend could be heard in an orderly but urgent manner so as to impinge on the trial schedule as little as possible.

12The motion first came on for hearing on March 18, 2016. At that time, the respondent’s motion materials were not before the court. I adjourned the motion and ordered that costs thrown away of $1,000 be paid by the respondent to the applicant before the return of the motion. A review of the court’s records subsequently established that the respondent had indeed filed his materials with the court before the motion. Although the motion materials had not made it into the file in time for the first hearing of the motion, this occurred through no fault of the respondent. The applicant quite fairly therefore does not oppose an order setting aside the prior costs award. Accordingly, the costs awards made in the endorsement dated March 18, 2016 (for which no formal order has yet been signed) is set aside.

13The parties argued the motion on March 23, 2016. The respondent seeks an order amending his answer to add a claim for an unequal division of net family property. Such a claim is available under s.5(6) of the FLA where an equal division of net family property would be unconscionable. The respondent acknowledges that in order to succeed in a claim for an unequal division of net family property, the Court of Appeal has determined that the burden will be on him to establish that an equal division of net family property would be so unfair so as to “shock the conscience of the court.” This is an “exceptionally high” burden. Serra v. Serra, 2009 ONCA 105 at para 47. One relevant factor under s.5(6)(e) of the FLA is whether an equal division of net family property results in a payment that is disproportionately large in relation to a period of cohabitation that is less than five years.

14The respondent delivered an affidavit in support of his motion to amend. He recites that the issue for trial is whether the loan from his father is to be deducted from his net family property or whether, as asserted by the applicant, it is a sham. He says that another issue for trial is “the effect of a short cohabitation of 27 months with the respondent and the effect of such short time on the unequal division of net family property.” He says that he wants to have his pleadings reflect all of his claims at the trial so as to carry out the primary objective of the Family Law Rules to deal cases justly as enshrined in Rule 2(2).

15The respondent has not provided a draft of his amended answer for the applicant or the court to consider. Counsel advises that the proposed amendment will consist of a one-line statement that the respondent makes a claim for an unequal division of net family property under s.5(6) of the FLA. That is a prayer for relief fit for a writ of summons. However, since the abolitions of writs in 1984, pleadings require allegations of material facts upon which a prayer for relief is based.

Pleadings in Family Law Matters

The respondent relies on Stefureak v. Chambers, 2005 CanLII 16633 (ON SC). In that case, Quinn J. dealt with a request by a family law respondent to amend his answer at trial. At para. 11, Quinn J. held that there is no difference between Rule 11(3) of the Family Law Rules and Rule 26.01 of the Rules of Civil Procedure. “In other words,” he wrote, “Family Law amendments are not special.” The respondent put particular emphasis on para. 16 of Stefureak in which Quinn J. wrote:

Undermining the importance of pleadings

[16] I agree with Mr. Dedinsky in his submission that every time an amendment is allowed there is an attendant risk that the importance of pleadings will be undermined. And there can be little doubt that pleadings in family proceedings are often sad creations. Admittedly, I could become quite attracted to the notion that parties should live or die by their pleadings as initially drafted – this would nicely focus the mind of counsel at an early stage in the case. Rule 11(3) provides little incentive for the careful attention to the preparation of pleadings and so serial pleadings are here to stay.

16Relying on the sad state of pleadings and a judge’s expression of despair because they are here to stay is hardly compelling legal reasoning in support of an amendment in this case. Pleadings have important purposes in the just determination of a dispute. They provide notice to the other party of the case that she has to meet. There is no principle more important to the fairness of a dispute resolution process than that each side is entitled to fair notice. Once the parties know what the case is about, they make choices and take actions. They produce relevant documents based on the issues raised and facts pleaded in support of those issues. They may question the other parties and possibly third parties as well on the facts that underlie the issues or which arise from the documents produced. At trial, the pleadings set the scope of the admissibility of evidence. Evidence presented at trial must be relevant to an issue joined in the pleadings.

17In this case, the pleadings set the boundaries for the pre-trial processes that have been going on for the past 20 months. They will also set the boundaries of admissibility for the upcoming trial. But there is a mis-match or incongruity if a new issue to be added for the trial has not been the subject of disclosure, questioning, or case conferences up to this point. Pre-trial disclosure of relevant documents is a cornerstone of the Family Law Rules. A process that requires a party to go to trial without disclosure and discovery of relevant documents and evidence is allowing trial by ambush and surprise. That is not a just process. Therefore, an assessment is required as to whether an injustice will result if an amendment is allowed in this case and, if so, whether an adjournment of the trial and/or an order of costs can prevent that injustice from occurring.

18Justice Quinn went on to recognize two other issues that can arise on an amendment motion:

The merits of the amendment

[18] Mr. Dedinsky submits that the father has no hope of succeeding in his claim for sole custody. Certainly, at this stage of the evidence, his prospects are not appealing. Yet, if there is a possibility that the substance of the amendment can be proven, the merits of the requested amendment are of no concern, unless it is plain and obvious that there is no legitimate evidentiary utility to the amendment. And that is not the case at bar.

Bad faith

[19] The existence of bad faith is an exception to everything. Consequently, where it can be shown that the amendment is motivated by bad faith, there is inherent jurisdiction in the court to refuse the amendment. Here, there is no evidence of bad faith

19That is, even if an amendment will not cause harm to the other party that cannot be prevented or repaired with an adjournment or a costs award, an amendment will not be allowed if it is proposed in bad faith or if it is plain and obvious that there is no legitimate basis for the amendment.

20Under the Rules of Civil Procedure the review of the merits of a proposed amendment to a pleading is phrased slightly differently. On a motion to amend under Rule 26.01, the court will consider whether a proposed amendment pleads a “tenable” claim. In Marks v. Ottawa (City), 2011 ONCA 248 the Court of Appeal wrote that a "proposed amendment must be shown to be an issue worthy of trial and prima facie meritorious." In Brookfield Financial Real Estate Group Limited v. Azorim Canada (Adelaide Street) Inc., 2012 ONSC 3818 at para. 23, D.M. Brown J. (as he then was) adopted the following discussion of the issue from Morden and Perell, The Law of Civil Procedure in Ontario, 1st ed. (Markham, Ont.: LexisNexis, 2010)

On a motion to amend a pleading, the court does not examine the factual merits of the proposed amendments or the moving party's motives for seeking the amendment, but it does examine whether as a matter of law, the amendment raises a tenable claim or defence and whether the proposed amendment has been properly pleaded in the sense of complying with the rules that govern pleadings, including sufficient particularity. Put somewhat differently, it makes little sense to grant an amendment that will immediately be challenged as legally unsound, and the court may inquire into the merits to ensure that the amendment is tenable in law and compliant with the rules of pleading. The case law establishes that proposed amendments are to be read generously with allowance for deficiencies in drafting[.] [Emphasis added]

21Accordingly, Rule 11(3) requires that a motion to amend be allowed unless:

a. the amendment would cause an unjust process that cannot be fixed by an adjournment or costs;

b. the amendment proposed is untenable i.e. not properly pleaded and not prima facie meritorious in law; or

c. the amendment is made in bad faith.

Analysis

22In my view, the analysis of the proposed amendment involves all three exceptions.

The Proposed Amendment is not Tenable

23The respondent provides no draft pleading to assess. I need not decide whether this is fatal in this case. However, producing a draft amended pleading is certainly better practice. As noted above, counsel proposed a one-line amendment that will simply make the claim under s.5(6) of the FLA. No particulars or facts are provided to allow the applicant or the court to understand the basis upon which the respondent claims that an equal division of net family property will “shock the conscience of the court.”

24It is important to recall that the respondent pleads that he holds title to the matrimonial home in trust for his father and that his father holds second mortgage security on the property. If he wins on these points, then his net family property is reduced to an inconsequential amount. Unequal division in favour of the respondent only becomes a real issue if the applicant succeeds in establishing that there is equity in the matrimonial home to be equalized. Hypothesizing that a court finds that the respondent’s evidence that matrimonial home was purchased in trust for his father is not credible and that the second mortgage is an unenforceable sham, how could the respondent then obtain an unequal division of the equity? On what facts could a court’s conscience possibly be shocked by an equal division of a property when it has just found the husband guilty of sham efforts to try to hide its value from his spouse? As he has not provided a draft pleading, there are no factual allegations or particulars to assess. In light of the exceptionally high burden of proof that an equalization payment would shock the court’s conscience, ought there not be significant particulars pleaded to support such a specific and difficult test? The only thing mentioned by the respondent in his affidavit is his contested claim that the length of cohabitation was 27 months. But there are no facts pleaded to support a claim that an equal division would lead to a payment that is disproportionately high in light of the period of cohabitation let alone unconscionably so. The length of cohabitation alone is incapable of meeting the exceptionally high legal standard especially in the circumstances described in this paragraph. I readily conclude therefore that the proposed amendment does not raise an issue “worthy of trial and prima facie meritorious." I would go further and say that it makes little or no sense when considered in light of the fact that the only time unequal division might matter is when a court has already ruled against the respondent on title and on the mortgage.

The Proposed Amendment Will Cause Disadvantage that cannot be Fixed or Prevented by an Adjournment or Costs

25The applicant wants to get on with the trial. So too does the respondent. The respondent has just returned from abroad specifically to attend the trial. Yet he did not propose any terms that might prevent prejudice by his proposed amendment. Specifically, he did not propose to present himself for questioning before the trial. While he was willing to accept an adjournment of the trial if necessary to prevent prejudice by the late amendment, he did not make a specific proposal to be responsible for costs thrown away i.e. the wasted expense of any trial preparation that will have to be repeated and for any additional discovery booking.

26In Mio v Mio, 2014 ONSC 2186, Justice Pazaratz dealt with a similar issue. In that case, the mother made a last minute effort to add a claim for retroactive child support. As in this case, the proposed new claim had not been mentioned during the pre-trial procedures, including settlement and trial management conferences, at which disclosure of the issues ought to have occurred if they truly were issues.

27Justice Pazaratz analyzed the issue of prejudice as follows:

21. The Respondent seeks the amendment but does not seek an adjournment. The Respondent does not oppose an adjournment if requested by the Applicant. Clearly, if the amendment is granted, an adjournment would be necessary.

a. I disagree with the Respondent’s characterization that retroactive child support is simply a legal issue, and it’s simply a matter of doing mathematical calculations based on already filed tax returns.

b. Additional factual considerations would almost certainly arise.

c. If there is no adjournment and the motion is argued based on the current materials, the Applicant will be disadvantaged. He had no notice that the retroactivity issue would be before the court. He did not file any evidence on this topic, nor does his factum address this topic.

d. As well, because the issue had not been previously raised, the Applicant’s counsel was not able to address the issue of testing or responding to the significant retroactive support claim. Disclosure requests and perhaps questioning might have been required. Additional affidavits from other deponents might also have been assembled.

e. Accordingly, if the amendment were to be granted and there is no adjournment, the Applicant would be fundamentally disadvantaged.

22. An adjournment – removing the matter from the current trial sittings -- would be necessary. But what would the adjournment entail?

23. At the very least, an adjournment would create a number of future steps:

a. The Respondent would have to file materials setting out the factual basis for the retroactive support claim.

b. The Applicant would have to file responding materials.

c. The Respondent might file reply materials.

d. Given the initial component of “attributed income” in the February 4, 2010 order, Applicant’s counsel might deem it necessary to schedule Questioning.

e. Transcripts might have to be ordered.

f. A new court date would have to be obtained for a long motion.

g. All of these additional steps would inevitably take time. The hearing of the motion could easily be delayed by another four to six months.

28The same considerations apply here.

29In discussing the possibility of an adjournment and a costs award to ameliorate the prejudice of the last-minute motion, Pazaratz J. wrote:

26. Accordingly, while in some ways an inevitable adjournment would provide some compensation for the Applicant, in many ways an adjournment would simply create more disadvantage.

27. Notably, while the Respondent submits that any prejudice to the Applicant can be compensated by costs, she’s not actually offering to pay any costs

30Adjournments and delay are also not fully compensated by costs. Delay prevents the early, efficient resolution of the proceeding. Delay increases the distressing elements of litigation. In family litigation in particular, where inter-personal emotions are very substantial drivers of parties’ positions and settlement, minimizing delay and preventing delay from becoming a weapon in the hands of a more moneyed or emotionally powerful litigant has its own value. See: Letang v. Hertz Canada Limited, 2015 ONSC 72, at para. 18.

31Rather than lamenting the inevitability of late amendments to poorly drafted pleadings as suggested by Quinn J., I prefer the approach of Pazaratz J. below that is more in keeping with current thought typified by the Supreme Court of Canada’s landmark decision in Hryniak v. Mauldin, 2014 SCC 7, 2014 SCC7. Pazaratz J. wrote in Mio:

32. Rule 11(3) is an important rule, but it’s not the only rule:

a. The primary objective of the rules is to enable the court to deal with cases justly. (Rule 2(2)).

b. The court must ensure procedural fairness to all parties; time and expense should be reduced (Rule 2(3)).

c. The parties and their lawyers are required to help the court promote the primary objective (Rule 2(4)).

33. Courts generally take a flexible and even forgiving approach to amending pleadings. But in an era of heightened concern about the cost, duration and emotional drain of family litigation, we cannot allow Rule 11(3) to relieve litigants of their fundamental obligation to pursue their claims in a diligent and efficient manner. [Emphasis added]

32I find that the last-second request for an amendment to plead an unparticularized claim for an unequal sharing of net family property for the first time, on the eve of trial, unaccompanied by any plan to ameliorate the prejudice of an inevitable adjournment would cause disadvantage to the applicant in a way for which costs or an adjournment could not compensate. The applicant has been waiting 20 months for a trial. The parties are entitled to timely justice. Requiring the applicant to continue to wait for whatever her just due may be puts her in a further disadvantaged position at the hands of this respondent both in terms of her bargaining position and in terms of her perception of the justness of the process.

Bad Faith

33In the family context, bad faith connotes deliberate wrongdoing. What has happened here practically speaking is transparent. The applicant gave up a claim after the settlement conference and moved her settlement goalpost much closer to the respondent’s position. Rather than making a final compromise and settling the case, the respondent came up with an idea to move his goalpost further away to take advantage of perceived weakness inherent in the applicant’s offer to compromise. It’s as if he had offered to take $10 to settle. When the applicant offered $9, he decided to up his ask to $15. The claim for unequal division is not an issue that has always been on the table but was forgotten in the pleading. It is a recent construct to try to justify a particularly aggressive negotiation tactic. In my view, given the importance of the impetus to settle in family law proceedings, this type of posturing is particularly inapt. If efforts to compromise are met with a retrenchment to a worse position, no case could ever settle. The respondent is not negotiating in good faith in a spirit of compromise. He is trying to bludgeon the economically weaker applicant financially and tactically especially if an adjournment were to be allowed.

34Having said this, I fear that there is a looseness of terminology in that a “bad faith” proceeding is not the same usage of the term as when one discusses “negotiating in bad faith.” However offensive one may consider a party’s negotiating stance, while the court can surely take cognizance of the economic realities of circumstances before it, the court does not control parties’ negotiating positions. I am not prepared to find that the motion is a deliberately wrongful proceeding brought in bad faith. But it reflects an underlying tactic that has no pull on the heartstrings of equity.

Summary

35The Family Law Rules involve significant case management. Judicial oversight begins at a case conference at the outset of every proceeding even before motions are brought. In sharp contrast to commercial litigation, not every family law case has oral discovery; but every case must have at least three judicial oversight conferences along the road to trial. The court exercises important supervisory functions in those case conferences. Judicial supervision seeks to ensure that the proceeding moves forward fairly, efficiently, affordably, and proportionately. Dealing with issues fully, openly, fairly, and on a timely basis at case conferences is an important component of the prime directive of dealing with cases justly mandated by Rule 2(2). In my view, the last minute effort to take advantage of the mandatory nature of Rule 11(3) to raise an issue that has never before been raised at a case conference or on discovery undermines the very prime directive that case management has been instituted to support. In a case managed environment, there is no need to lament sad pleadings. The law recognizes timeliness, proportionality, efficiency, and affordability as important goals of civil justice system in their own right. It is appropriate to consider these matters as elements of the disadvantage, harm, or prejudice to be balanced against the ostensible right to amend a pleading under Rule 11(3).

36Here, a late amendment, proposed with no draft pleading, with no disclosure of particularized facts capable of meeting the exceptional burden of the cause of action, brought with no mention at prior case conferences, with no proposal for further questioning, payment of costs, or any specific steps to ameliorate the disadvantage caused by an inevitable adjournment, should not and cannot be allowed to proceed. It is untenable. It causes disadvantage to the applicant in a way for which costs or an adjournment could not compensate.

Costs

37It is apparent that the applicant has been completely successful on this motion. Costs are presumed to follow the event under R.24(1). The parties should be able to resolve costs in this straightforward motion. If they cannot, then, the applicant may deliver a costs outline and no more than one page of submissions by April 1, 2016. The respondent may respond with up to two pages of submissions on April 4, 2016. Being cognizant of the commencement of the trial, I will release the costs decision quickly.

F.L. Myers J.