BARRIE COURT FILE NO.: FC-15-725-00 DATE: 20160623 ONTARIO SUPERIOR COURT OF JUSTICE FAMILY COURT
BETWEEN:
Mary Emily Dove Applicant – and – Michael Peter Dove Respondent
Counsel: Alex Finlayson, for the Applicant David Winnitoy, for the Respondent
HEARD: June 16, 2016
RULING ON MOTION
MCGEE J.
Overview
1The applicant wife asks the Court to set aside the parties’ April 20, 2012 separation agreement pursuant to section 56(4) of the Family Law Act. In the alternative, she asks that the spousal support terms within that agreement be set aside in accordance with a Miglin [1] analysis. In this motion, she seeks orders for the significant disclosure that she believes to be necessary to those determinations.
2The agreement provides for an equalization payment and a non-reviewable five year term of tax deductible spousal support in the monthly amount of $16,666; commencing January 1, 2012 and ending December 31, 2016 [2]. The support and property terms are contracted as inexplicably intertwined.
3The respondent husband cross-motions for an order that the application to set aside the separation agreement be bifurcated from the de nova claims for equalization and spousal support. Specifically, his Notice of Motion seeks an order that no disclosure be provided to the wife until her claim to set aside their separation agreement is determined.
4The husband moderated his position on disclosure during oral submissions. He consents to the disclosure necessary to determining the claim per section 56(4) of the Act. He resists production of the balance.
5For the reasons set out below, I am not persuaded that there will be any benefits to a bifurcation of the issues. Even if the agreement is not set aside, the wife has her claim to set aside the terms for spousal support. A Miglin analysis cannot be done without all of the evidence being available. [3] On the facts of this case, that evidence will largely be the same evidence necessary to a claim under section 56 (4) of the Family Law Act.
6I then make certain orders for disclosure.
7The balance of relief sought within the wife’s motion is on consent. Order to go pursuant to paragraphs 5 (amendment of pleadings), 8 (production within 45 days [4] of any disclosure ordered herein) and 9 (questioning before the Settlement Conference). Although also on consent, I decline to order the scheduling of the Settlement and Trial Management Conferences, or that the trial proceeds in the May 2017 sittings. Further scheduling is governed by the Rules, the Consolidated Practice Direction, and available court resources.
Bifurcation
8Bifurcation is the division of triable issues into separate proceedings. It creates a multiplicity of legal proceedings that section 138 of the Courts of Justice Act R.S.O. 1990, c. C.43, s. 138 requires be avoided as far as possible.
9Rule 2 of the Family Law Rules O. Reg. 439/07 give considerable direction regarding the conduct of proceedings. Courts have a duty to deal with cases justly, and to actively manage cases. Its duty includes ensuring that the procedure is fair to all parties; saves time and expense, and deals with cases in ways that are appropriate and proportionate to their importance and complexity - within an overall view of available resources.
10The decision whether to bifurcate is fact specific, and has been extensively considered within applications to set aside a domestic contract. Former spouses should be able to rely upon their domestic contracts, and courts take a general view that such contracts are to be respected. [5] At the same time, section 56(4) of the Act permits a party to challenge a domestic contract on enumerated grounds. A former spouse who launches such a challenge may be significantly prejudiced should he or she have to fund two trials.
11In Simioni v. Simioni [6] Justice Quigley provides a comprehensive analysis of the legal principles and relevant considerations for bifurcation within a claim to set aside a domestic contract. Provided that no real or meaningful prejudice is caused to either party, he reasons that the court has the power to split a case, should there be clear time and expense benefits to be gained. He goes on to say:
Nevertheless, it is equally important to remember that the splitting of a trial effectively denies the fundamental principle that as far as possible, multiplicities of proceedings are to be avoided, and thus the power to split a case should be regarded as one that is narrowly circumscribed and to be exercised in only the clearest of cases - in cases that exhibit the exceptional merit that calls upon the Court to exercise its inherent power: Court of Justice Act, section 138; Elcano, above; [Carreiro (Litigation Guardian of ) v. Flynn, [2004] O.J. No. 3117 (Ont. S.C.J.)].
In light of this caution, the onus necessarily lies upon the party seeking to bifurcate to satisfy the Court on a balance of probabilities that if granted, severance will result in the "just, expeditious and least expensive determination of the proceeding on its merits".: Merck & Co. v. Brantford Chemicals Inc. 2004 FC 1400, [2004] F.C.J. No. 1704 (F.C.) at para. 4.
12There are a number of questions a party seeking to bifurcate must answer. Are the issues clearly divisible? If so, will success in one part narrow, dispose of, or open settlement opportunities for the remaining issue(s)? Will it do so without causing excessive duplication, undue delay, or otherwise prejudicing a party? In other words, will bifurcation maintain fairness, while adding value to the court process by saving time and expense for the parties, and the court system as a whole?
13There are a number of recent cases that have considered bifurcation. In each of Simioni, [7] Baudanza v. Nicoletti [8], Dillon v. Dillon, 2013 CarswellOnt 17537 (Ont. S.C.J.), Balsmeier v. Balsmeier, 2014 ONSC 5305 [10] and Grossman v. Grossman, 55 R.F.L. (7th) 207 (Ont. S.C.J.), Schulman v. Ganz 2015 ONSC 3254 [12] the Court found significant benefits to the separation of triable issues. In cases in which the issues were not so easily separated, bifurcation was prejudicial to a party, or a two-step process offered no overall economies, bifurcation was not ordered: G. (C.M.) v. G.(R.) 2013 ONSC 961 [13], Hall v. Sabri, 11 R.F.L. (7th) 380 (Ont. S.C.J.), and Lakhoo v. Lakhoo [15].
14The latter cases carry another common thread. All were cases in which the issue of spousal or child support had to be determined irrespective of whether the separation agreement was set aside.
15In the Alberta Court of Appeal decision of Lakhoo, a lower court’s decision to bifurcate the validity of a prenuptial agreement was set aside despite counsel’s argument that bifurcation would obviate the need for the disclosure of certain financial records. The Court observed:
If only it was that easy. Unfortunately, there remains the matter of spousal support and unless the parties agree on the quantum and duration of the spousal support Mr. Lakhoo should pay Mrs. Lakhoo, (who has not worked since the marriage), it seems that disclosure of this financial information will be required in any event. In other words, there would be no saving of time or resources if the trial were split as the chambers judge has directed. This court has previously said that trials should not be split unless the savings are clear or at least probable (See: Gallant v. Farries, 2012 ABCA 98, 522 AR 13; Edmonton Flying Club v. Edmonton Regional Airports Authority, 2013 ABCA 91 at paras 15-16, 544 AR 6).
16I find that the facts of this case fit squarely into this latter category of cases. The issues raised by the applicant wife are not easily separated, and I see no potential to significantly narrow a remaining issue, or enhance settlement opportunities by creating a two-step process. How is the court to decide whether the 2010 agreement on support met the objectives of section 15.2 of the Divorce Act, or was signed under unimpeachable circumstances, without understanding the parties’ full financial positions at the time of separation, including the values of their assets? And if spousal support is to be reconsidered, so too must the wife’s contribution to the post-secondary expenses of their three children that has been wholly assumed by the husband.
17I can discern no savings in time and expense for either of the parties, or the court system as a whole that would be realized by separating the issues. A two-step process might create an earlier end to the wife’s claim for equalization, but the primary property issue is the value of the respondent’s dental practise. A valuation of its earnings would still be necessary for the proposed Miglin analysis. The evidence and expertise necessary to determine income from the dental practise is largely the same evidence and expertise necessary to determining the value of the practise.
18On the facts of this case, I find that it would be procedurally unfair for the wife to have to conduct two separate proceedings on essentially the same information. There would be significant duplication and undue delay.
19Although not necessary to the determination, I also find that refusing bifurcation will not cause the husband any prejudice that cannot be remedied through an award of costs. A party may recover his costs incurred in defending an action to set aside a domestic contract, including costs of providing disclosure. [16] There is no concern that the mother would be unable to satisfy an award of costs. At the time of this hearing, her net worth is in excess of 5.6 million dollars.
20The respondent husband’s motion for bifurcation is dismissed.
Applicant Wife’s Claim for Disclosure
21Once the question of bifurcation has been determined, the court can then determine the appropriate and proportionate scope of disclosure, should the parties be unable to agree.
22Within her Notice of Motion, the wife asks for a lengthy and detailed list of disclosure. Extensive oral and written submissions were provided. I make the following observations and findings:
(a) the dismissal of the father’s motion for bifurcation renders moot the husband’s objection to producing disclosure not directly relevant to a date of separation analysis; (b) proportionate disclosure protects both parties from incurring unnecessary fees and being subject to increased costs awards; (c) the wife’s counsel states that she will pay for any expert reports and the costs of obtaining disclosure, but for the costs of Mr. MacKay, the accountant; (d) some of the items sought are conditional on reviewing preliminary disclosure; (e) certain orders sought within the wife’s Notice of Motion effectively bind third parties to disclose, or be questioned, without the notice required in Rule 20 of the Family Law Rules. I therefore decline to require Mr. MacKay and Mr. Tuck to make themselves available for questioning per paragraph 2 of the applicant’s Notice of Motion; (f) I am not persuaded that I have the jurisdiction to order a party to sign a release. I therefore decline to require the husband to sign a joint direction per paragraph 4 (a) (b) (c) and (d) of the applicant’s Notice of Motion; (g) Neither am I persuaded to make the orders sought at paragraphs 4 (e) or (f) of the applicant’s Notice of Motion. To make such an order is to break solicitor client privilege. There is no evidence that it has been waived. The respondent can choose how to defend this action, and may or may not decide on his own volition to seek the requested disclosure; (h) I am not persuaded to make the order sought at paragraphs 4 (g) or (h) of the applicant’s Notice of Motion. Such correspondence is in the applicant’s control; and (i) it is premature to require experts to consult. Should Ms. Alterman, Mr. Tuck or another professional be retained to provide expert assistance, the parties can consider on consent, or the court can order that the experts prepare a report setting out the relevant differences in their respective opinions, see Rule 1 (7.2) (k) Family Law Rules.
23Order to go as follows, in addition to the orders on consent referenced in paragraph 7 above, and my order in paragraph 20 dismissing the request for bifurcation:
- The respondent shall produce the documentation in Schedule “A” and “B” to the letter of Vivian Alterman dated November 10, 2015 within 45 days of the date of this Order.
- The respondent shall produce the documentation in Schedule “C” to the letter of Vivian Alterman dated November 10, 2015 within 45 days following the receipt of a written request from the applicant’s counsel.
- The parties shall prepare a disclosure chart for the items contained in Schedules A and B (C if requested) and shall update same within a Certificate of Financial Disclosure, or an on-line software program as the items are provided, so as to avoid any disputes as to what has been provided.
24Costs submissions are to be submitted in writing, no more than three pages, exclusive of any Bill of Costs or Offer to Settle. Applicant’s submissions are due by July 27, 2016, response by August 24, 2016, reply if any by September 7, 2016.
Justice H. McGee DATE: June 23, 2016
[1] 2003 SCC 24, 34 R.F.L. (5th) 255 (S.C.C.) [2] The amount was calculated as one million dollars payable over 60 months – tax deductible. [3] See: Kelly v. Kelly, 7 R.F.L. (6th) 301 (Ont. C.A.)). [4] Orally amended on consent from the 14 days set out in the Notice. [5] Hartshorne v. Hartshorne, 2004 SCC 22, 47 R.F.L. (5th) 5 (S.C.C.) [6] , 74 R.F.L. (6th) 202 Bifurcation was ordered in this case, as there was a jurisdiction issue. If the contract stood, the parties were required to arbitrate. [7] supra [8] , 11 R.F.L. (7th) 329 (Ont. S.C.J.) [9] , 2013 CarswellOnt 17537 (Ont. S.C.J.) , [10] , 2014 ONSC 5305, 50 R.F.L. (7th) 390 (Ont. S.C.J.) [11] , 55 R.F.L. (7th) 207 (Ont. S.C.J.) [12] 2015 ONSC 3254 [13] 2013 ONSC 961, 48 R.F.L. (7th) 422 (Ont. S.C.J.) [14] , 11 R.F.L. (7th) 380 (Ont. S.C.J.) [15] , 2014 ABCA 98, 2014 CarswellAlta 348 (Alta. C.A.) [16] Such costs can be significant, particularly if there is a qualifying Rule 18(14) Offer.