CITATION: Price v. Price, 2016 ONSC 728

Oshawa COURT FILE NO.: FC-15-2079

DATE: 20160128

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN

Kim McLaughlin Price

Applicant

— and —

Richard Price

Respondent

COUNSEL:

S. Chinoy for the applicant

M. G. Michaels for the respondent

HEARD: January 19, 2016

Timms J.

ENDORSEMENT

[1] On December 9, 2015, Justice Scott granted the applicant an ex-parte order pursuant to both sections 12 and 40 of the Family Law Act, R.S.O. 1990, c. F.3 (FLA). That order effectively prevented the respondent from dealing with any of his property in any manner. Her Honour also granted the applicant exclusive possession of the matrimonial home pending its sale and an order for a certificate of pending litigation against another property. Costs were reserved.

[2] The order of December 9, 2015 then came before Her Honour for a review on December 15, 2015. The respondent attended on that day, on his own but with a letter from his now counsel, seeking an adjournment. Based on what I assume were certain oral submissions by the respondent, Her Honour modified her prior order to permit the respondent to disburse certain funds to pay for the school fees for the parties’ child, to pay monies to the applicant who then had to pay the mortgage on the matrimonial home, to receive certain monies to use as he saw fit, and to withdraw certain monies to allow him to travel to British Columbia to visit his daughter over Christmas as previously planned. The review was then adjourned to January 12, 2016, with costs reserved once again. All terms not modified remained as previously ordered.

[3] On January 12, 2016, both parties and their counsel attended before me. The respondent sought an adjournment because his counsel had just been served with a lengthy affidavit replying to the respondent’s materials, which had been served one week prior. The applicant opposed any adjournment. I found that to be an unreasonable position and adjourned the motion to myself on January 19, 2016, and awarded costs against the applicant in the amount of $700.00. On consent, I also made an order that the net proceeds from the sale of the matrimonial home, which was scheduled to close on the very next day, be held in trust pending further order of the court.

[4] On January 19, 2016, I heard the complete argument on the review of Justice Scott’s orders. I reserved my decision and made an order in accordance with a consent filed that day dealing with the disbursement of certain funds from proceeds from the sale of the matrimonial home.

[5] Both counsel filed facta for the motion but only counsel for the respondent filed a casebook. During argument, only counsel for the respondent made any reference to the jurisprudence as to when the court should, or should not, make preservation orders pursuant to either section 12 or 40 of the FLA:

Orders for preservation

12. In an application under section 7 or 10, if the court considers it necessary for the protection of the other spouse’s interests under this Part, the court may make an interim or final order,

(a) restraining the depletion of a spouse’s property; and

(b) for the possession, delivering up, safekeeping and preservation of the property.

Restraining orders

40. The court may, on application, make an interim or final order restraining the depletion of a spouse’s property that would impair or defeat a claim under this Part.

[6] The jurisprudence with respect to this issue could be said to be somewhat inconsistent. Having reviewed quite a number of judgments, I am satisfied that the correct test to be applied is as follows:

• The onus lies on the party asserting that a preservation order is necessary to protect his or her interests under Part I of the FLA, or that his or her claim for support under Part III of the Act would be impaired or defeated unless a preservation order was made, to demonstrate that on the balance of probabilities.

• The standard that the court should apply is not the high threshold required for the granting of a Mareva injunction.

• Different decisions apply different standards. Some consider whether there is “a real risk that assets could be dissipated before the equalization claim is determined”[^1]; others suggest that an order should be made “out of an abundance of caution”.[^2] The correct standard is the same one to be applied when determining whether to grant an interim injunction:

1. Is there a serious issue to be tried?

2. Will the moving party suffer irreparable harm if relief is not granted? and

3. Which party will suffer the greater harm from granting or refusing the remedy pending a decision of the merits?[^3]

[7] Several cases decided under section 12 of the FLA make the point that the court should first consider the likelihood that the moving party will receive an equalisation payment.[^4] Justice McGee of this court nicely summarised this in Benvenuto when she said at paragraph [30]:

As discussed by Justice Sachs in Bronfman v. Bronfman, 2000 22710 (Ont. S.C.J.) there are certain cases in which the trier of fact has a clear record with respect to the payment of an equalization, and others in which it is far less certain. Within the latter category, the court will give serious consideration to the other factors, such as the balance of convenience and the risk of dissipation prior to trial.

[8] The applicant herein filed her financial statement dated December 7, 2015, as part of the material to be considered for her ex-parte motion. She attached a copy of the respondent’s draft financial statement dated November 16, 2015, as an exhibit to her affidavit. The respondent had previously provided that to the applicant’s counsel before this litigation started.[^5] Taking both parties’ net family property calculations at face value, the applicant would owe the respondent over $250,000.00. That result stems in the main from the fact that the respondent owned a home at the date of the marriage, which home was sold during the marriage, and from the fact that the respondent owned his business when the parties married. While both parties, and particularly the respondent, will need to substantiate the figures for all of their assets and liabilities, prima facie the applicant will not be entitled to an equalisation payment. One would have to increase the respondent’s net family property by over $500,000.00, for the applicant to receive anything at all.[^6] If counsel for the applicant thought that possible, she should have argued that on the motion; she did not do so even in reply.

[9] Based on the above, it is presumably self-evident that the respondent will likely suffer the greatest harm if the current ex-parte preservation order under section 12 of the FLA were continued.

[10] Beyond that, in my view, the applicant has failed to demonstrate that she will suffer irreparable harm if the order is not continued. As was demonstrated during the arguments before me on January 19, 2016, the applicant’s affidavits filed on the motion are in the main composed of speculation and worse. By “worse”, I mean that they contain many outright misstatements of facts, some quite likely deliberate, as well as omissions of germane facts, and what can only be considered as attempts to shade things in her favour. My examination of that follows.

[11] The applicant’s original motion was brought ex-parte. Subrule 14(12) of the Family Law Rules, O. Reg. 114/99 (FLR), permits such motions in four possible situations:

MOTION WITHOUT NOTICE

14. (12) A motion may be made without notice if,

(a) the nature or circumstances of the motion make notice unnecessary or not reasonably possible;

(b) there is an immediate danger of a child’s removal from Ontario, and the delay involved in serving a notice of motion would probably have serious consequences;

(c) there is an immediate danger to the health or safety of a child or of the party making the motion, and the delay involved in serving a notice of motion would probably have serious consequences; or

(d) service of a notice of motion would probably have serious consequences.

[12] Only the fourth category could possibly have applied herein, and in my view once one examines all of the allegations, it did not.

[13] There is almost no jurisprudence with respect to what should happen when an ex-parte order comes back before the court as is required by subrule 14(14):

ORDER MADE ON MOTION WITHOUT NOTICE

14. (14) An order made on motion without notice (Form 14D) shall require the matter to come back to the court and, if possible, to the same judge, within 14 days or on a date chosen by the court.

[14] In this jurisdiction we have chosen to call that process a “review”, and generally speaking in keeping with that subrule, we endeavour to have the same judge who made the order sit on the review.

[15] In Ayala v. Giron, Justice Mitrow of this court was reviewing an ex-parte order which appears to have been made pursuant to both paragraphs 14(12)(a) and (b) of the FLR.[^7] In paragraphs [87] to [95] of his judgment Justice Mitrow considered the circumstances that would, and would not, justify an ex-parte motion, and in particular the requirement that the moving party make full and frank disclosure of all material facts. In paragraph [90], quoting from McLeod’s Ontario Family Law Rules Annotated 2010 (Toronto: Carswell, 2010), he says that the failure to make such disclosure is sufficient grounds to set aside the order.

[16] I agree entirely with Justice Mitrow with respect to the necessity for a party bringing an ex-parte motion to make full and frank disclosure of all material facts. The problem, as I see it, is what to do when it is determined that the moving party failed to do so. It is my view that the court must look beyond whether the original order would have been made had the moving party made full and frank disclosure of all material facts. The hearing mandated by subrule 14(14) must effectively be a de novo one, taking all the facts then known into consideration. That said, at the very least if the moving party has failed to make full and frank disclosure of all material facts, he or she will not be given the benefit of the doubt on any clash of credibility.

[17] In this case, the applicant’s original affidavit in support of the ex-parte relief contains a substantial number of significant errors and omissions. While some might be inadvertent, or the result of a careless examination of various documents, some can only have been deliberate.

[18] I will start with the matter of the sale by the respondent of his business to Desjardins Financial Security Investments Inc. (Desjardins), which sale was finalised on December 21, 2014. The applicant said in her affidavit that the sale by the respondent to Desjardins was a “quick sale”, implying that the respondent did not receive as much as he could have otherwise. When one considers totality of the allegations contained in the affidavits filed on this motion, it is clear that the sale was hardly a “quick” one. Discussions, of which the applicant was very aware, had been going on for many months.

[19] More importantly, the respondent did not receive $1,500,000.00 as alleged by the applicant. Aside from the respondent and his companies, there were two other sellers – Irene Walsh and Deborah Woolacott. As the asset sale agreement makes clear, the vendors did not receive $1,500,000.00. They collectively owed $376,053.32 to Desjardins, which amount was deducted from the purchase price, leaving $1,123,946.68. The amount paid by Desjardins on the closing was $626,396.41. Of that amount, the respondent received $486,396.41; the remaining amount was divided between the other two vendors. The final balance of $500,000.00 was to be paid off over five years in five equal annual installments, starting December 15, 2015.[^8] Those instalments were to be divided proportionally among the vendors, with the respondent to receive 81% thereof. In other words, the respondent would be paid a further $405,000.00 over five years. The total amount owing to the respondent pursuant to the agreement was therefore $891,396.41. This is over 40% less than the amount alleged by the applicant.

[20] What is odd is that the applicant herself attached the asset sale agreement as Exhibit D to her affidavit filed on the ex-parte motion. Additionally, the applicant signed various documents to facilitate the sale because she was the sole director of several of the respondent’s companies. She clearly understood both that the respondent’s total share of the sale proceeds was only $891,396.41, and that after the initial payment, he was only going to receive $81,000.00 annually, starting with December 15, 2015. She says as much in paragraph 38 of her affidavit. The best that can be said about the manner in which the applicant overall described the sale of the respondent’s business, is that was a sloppy attempt to colour the respondent as having far greater assets than he actually did.

[21] Still on the matter of the sale of the respondent’s business, the applicant said in paragraph 36 of her original affidavit that she had no idea what happened to the first installment cheque from Desjardins ($486,396.41). However, as demonstrated by the respondent in his material filed for the motion, he deposited $200,000.00 from that amount into the parties’ joint account on January 14, 2015. Thereafter, the applicant transferred the amount of $111,350.00 from the joint account to her own account. Whether the applicant used those monies to pay for family expenses or not does not matter. What does matter is that the applicant understood full well what had happened with a good portion of the sale proceeds. Based on other facts contained in paragraph 46 of the respondent’s affidavit, it is more likely than not that the applicant knew full well where the remaining money went.

[22] The applicant did not mention in her original affidavit that on October 16, 2005, she had taken $19,000.00 from the bank account of the respondent’s business and deposited it into her own account. This amount does not appear to be reflected in her financial statement sworn on December 7, 2015.

[23] The applicant said in paragraph 7 of her original affidavit that the respondent had opened an investment account at TD Waterhouse on July 12, 2015. That allegation was based on an account application, a copy of which was attached to the applicant’s affidavit. Putting aside the fact that the correct date appears to have been July 12, 2014, this document is clearly nothing more than an application. It is not proof that an account was opened, a fact denied by the respondent in his affidavit.

[24] The applicant said in the first sentence of paragraph 10 of her original affidavit: “The respondent is purportedly seeking to use funds belonging to the spouses jointly owned corporation that are invested in RBC to purchase annuities for himself”. Putting aside the rather odd choice of the word “purportedly”, the only inference that can be drawn from that, and from Exhibit G attached to the applicant’s affidavit, is that the applicant was of the belief that the respondent had at least $272,063.64 in a non-registered account and that one-half belonged to her. That does not appear on her financial statement, nor does she provide anything to prove that such monies actually existed.

[25] There are other “shadings”, if not outright errors, advertent or not, and unsubstantiated allegations, in the applicant’s affidavits. However, those outlined above are the more major ones and suffice to demonstrate that the applicant failed completely to make full, frank, and accurate disclosure in her original affidavit in support of the ex-parte order. All of this must ultimately tip the balance in favour of the respondent no matter how high the threshold of risk.

[26] Should the preservation order made under section 40 of the FLA be continued? There is almost no case law on this. However, I see no reason to approach the question any differently than I did regarding the section 12 order.

[27] The respondent’s ability to use any of his assets to produce income is presently nil. Beyond that, he has very little, if any, income from any sources. He has some pension income, some minor amounts from commissions from mortgage brokering, and some even more minor amount from teaching wood-working classes at Lee Valley. The respondent said that he had hoped to earn income from teaching State Farm franchises how to sell securities, but so far Desjardins had not asked him to do that. While the applicant asserts that the respondent could be, or should be, earning extra income, she seems to gloss over his age (65), his health (quite precarious), and the non-compete clause in the agreement when he sold his business in 2014. If the preservation order with respect to his assets were continued until trial or agreement otherwise, it would likely be next to impossible for the respondent to do anything other than subsist.

[28] Thus while the applicant’s income is likewise quite small, the reality is that whether together or apart, the parties herein cannot maintain their current expenses except by dipping significantly into capital. After the sale of the business in December 2014, they were only able to maintain the life-style that they did by utilising capital. They lived well beyond their income means while together; something will have to give now.

[29] My conclusion with respect to the section 40 order continuing is therefore the same. It cannot stand.

[30] My order is that all aspects of the order made by Justice Scott on December 9, 2015 must be set aside, except for that portion which allowed the applicant to register a certificate of pending litigation against the property located at 90 Duke Street, Bowmanville. It is clear that the respondent did take some money from the parties’ joint account to acquire that property. While it may be that presumption or resulting trust will operate against the applicant having any beneficial interest in that money, that remains to be seen. Additionally, the two persons who are the registered owners of that property, the respondent’s son and daughter-in-law, have not responded to the order made.

[31] I am also continuing my own temporary consent order of January 19, 2016. However, for the sake of clarity, I am considering that this order amounts to what we used to call a “temporary, temporary order”, and as such it is open to the respondent to bring it back before the court after the case conference.

[32] Counsel for the respondent may serve and file cost submissions, restricted to five pages, exclusive of a bill of costs, by forwarding same to my secretary within ten days of the release of these reasons. Counsel for the applicant may serve and file their response, restricted to five pages, within seven days thereafter and counsel for the respondent may serve and file their reply, restricted to five pages, within four days thereafter.

The Honourable Mr. Justice Roger Timms

DATE RELEASED: January 28, 2016

[^1]: Davis v. Tangredi, 2006 44269 (ON SC), at para. 23. [^2]: Barbini v. Edwards, 2014 ONSC 6762, [2014] O.J. No. 5601, at para. 91. [^3]: This is sometimes worded as whether the balance of convenience favours the moving party. See Chi v. Wang, 2010 ONSC 1366, [2010] O.J. No. 874, at para. 23. [^4]: See Bronfman v. Bronfman, 2000 22710 (ON SC), 51 O.R. (3d) 336 and Benvenuto v. Whitman, 2012 ONSC 2696, [2012] O.J. No. 2019. [^5]: The respondent had also included his notices of assessment for 2012, 2013, and 2014, as well as certain bank account records. [^6]: Or reduce the applicant’s net family property by more than $250,000.00, and increase the respondent’s net family property by more than $250,000.00, or some other combination to the same effect. [^7]: Ayala v. Giron, 2011 ONSC 3302, [2011] O.J. No. 2701. [^8]: Additionally, those payments themselves provide ample security, and although they were later adjusted so that they were paid out monthly at $6,750.00, they still provide ample security.