Court File and Parties

NEWMARKET COURT FILE NO.: FC-16-51245-00 DATE: 20170228 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Maria Anna Koundouros Applicant – and – Nicolaos Koundouros and Stavroulla Koundouros Respondents

Counsel: Melanie Battaglia and Jordan Goldblatt, Counsel for the Applicant Aaron Franks and Courtney Wile, Counsel for the Respondent, Nicolaos Koundouros Robert B. Macdonald, Counsel for the Respondent, Stavroulla Koundouros

HEARD: January 18, 2017

McGEE J.

Reasons for Decision

Decision Summary

[1] The respondent, Stavroulla Koundouros (“Stavroulla”), advanced about three million dollars to her son, Nicolaos Koundouros (“Nick”), and her former daughter-in-law, Maria Anna Koundouros (“Maria”), during their five year marriage. She agrees that almost half of it was a gift. She wants the rest of it paid back, with interest. Her son agrees that the money is owed. He did not participate in this motion.

[2] Maria declares that she owes Stavroulla nothing. She states that if any money is owed, it is only her husband’s obligation, and not hers. She points to a May 23, 2012 homemade promissory note between mother and son, in their names alone, which charges no interest and requires no regular repayments absent demand, or sale of the property to which the moneys were to have been directed.

[3] Maria states that her former mother-in-law’s claim is a “waste of time, a nuisance and an abuse of the court process, brought only as a result of Nick and [her] separation and without any legal merit.” She has instructed her legal team to bring a motion to strike Stavroulla’s claim at this very early stage, prior to discovery.

[4] Maria’s counsels have placed before me a motion that relies on Rule 16(12) of the Family Law Rules, O. Reg. 114/99, as amended, and Rule 21.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Their argument more or less relies on a singular ground: that the promissory note is an agreement strictly between mother and son, and thus, there is no cause of action between Stavroulla and Maria.

[5] Stavroulla’s counsels reject this singular ground as the nexus of their claim. They even reject the inclusion of the promissory note within the motion materials. They present a far more nuanced and complex claim for which certain material facts have not yet been discovered.

[6] The court agrees that this is not an appropriate set of circumstances in which to strike a claim. Maria’s October 27, 2016 motion is dismissed. She shall have 20 days to file her Answer to Stavroulla’s claim.

Reasons

Advance of $1,598,000

[7] After generous gifts of $1,300,000 and $300,000, Nick and Maria approached Stavroulla for a further advance of moneys to upgrade the exterior of their home - a home that Stavroulla’s gifts had allowed the young couple to jointly purchase and extensively renovate.

[8] Stavroulla had some reservations. The home was already well appointed. She insisted upon a promissory note, and that any further advances be documented as a loan. It is acknowledged that Maria did not sign the subsequently homemade promissory note.

[9] A joint bank account in the names of Nick and Stavroulla was set up as a conduit for the funds. Maria had independent and open access to the joint account. Large sums transferred to the account were recorded on the promissory note.

[10] Tensions in the marriage arose. At some point, there were questions as to how the moneys were being used. By the time the advances were stopped, they had reached the remarkable sum of $1,598,000.

[11] Stavroulla’s counsels assert that Nick executed the promissory note not only in his personal capacity, but also as an agent for his spouse. They say that Maria freely used the joint account, and that she did so for purposes not limited to the exterior renovation. They propose that an investigation will demonstrate that Maria misdirected significant portions for her own personal use.

[12] Stavroulla’s counsels argue that Maria and Nick were unjustly enriched by the advance of any funds that increased the value of the jointly owned home; and, that any misuse by Maria breached the terms of the promissory note and created a direct relationship between her and Stavroulla.

[13] Stavroulla’s counsels seek an accounting and disclosure. They claim repayment on a joint and several basis of $1,598,000 with interest. Stavroulla pleads a constructive trust interest in the home, and a resulting trust. She asks for a sale of the home.

No Summary Judgment on a Legal Issue

[14] Rule 16 of the Family Law Rules governs family law motions for summary judgment. Subsection (12)(b) allows a court to strike out a pleading because it sets out no reasonable claim or defence in law. Subsection 12 (c)(iv) states that the court may dismiss or suspend a case should it be a waste of time, a nuisance or an abuse of court process. [1] Because Rule 16 regards summary judgment only on a legal issue, subsection (13) provides that evidence is admissible only if the parties consent, or the court gives permission.

[15] Stavroulla’s counsels do not consent to the promissory note being in the record before me. They assert that I can make no findings with respect to the note, even with the expanded powers under Hryniak v. Mauldin, [2014] 1 SCR 87, 2014 SCC 7. I agree. Moreover, I find that three uncontested facts are sufficient to carry the claim over the low threshold of “no reasonable claim.” Maria and Nick jointly sought further advances to improve their home; Maria had independent access to the jointly held bank account to which funds were deposited by Stavroulla, and the funds benefitted Maria’s titled one-half ownership of the home.

[16] I decline to award summary judgment on the legal issue of whether the promissory note is dispositive of the legal issues between Stavroulla and Maria.

Rule 21.01 of the Rules of Civil Procedure

[17] Maria’s counsels rely on Rule 21.01, which reads:

To Any Party on a Question of Law

21.01 (1) A party may move before a judge,

(a) for the determination, before trial, of a question of law raised by a pleading in an action where the determination of the question may dispose of all or part of the action, substantially shorten the trial or result in a substantial saving of costs; or

(b) to strike out a pleading on the ground that it discloses no reasonable cause of action or defence, and the judge may make an order or grant judgment accordingly. R.R.O. 1990, Reg. 194, r. 21.01 (1).

[18] I have some concern whether counsels can use Rule 21 of the civil rules in these circumstances. I find no gap within the Family Law Rules sufficient to invoke Rule 1(7). As most eloquently stated by Justice Benotto in the recent Court of Appeal case of Frick v. Frick, 2016 ONCA 799,

[t]he Family Law Rules were enacted to reflect the fact that litigation in family law matters is different from civil litigation. [They] provide for active judicial case management, early, complete and ongoing financial disclosure, and an emphasis on resolution, mediation and ways to save time and expense in proportion to the complexity of the issues. They embody a philosophy peculiar to a lawsuit that involves a family.

[19] This is a family dispute.

[20] Nonetheless, I will deal with the submissions of Maria’s counsels. Rule 21.01 of the civil rules is generally employed to strike a claim that discloses no reasonable cause of action; the test being one of “no reasonable prospect of success.” [2] It is not a motion for summary judgment. [3] When a pleading “raises a factual matrix of concern [4] to the plaintiff within which the defendant’s possible liability could be located, it successfully assert[s] a cause of action within Rule 21.01. [5]

[21] The court cannot conclude at this early stage that Stavroulla’s claim has no reasonable prospect of success. As noted above, I do not find the promissory note dispositive. The advances flowed through a joint account to which Maria had independent access, the particulars of which have not yet been discovered. Neither can it be said that there is no reasonable chance of success on the trust claims. The advances were solicited as a joint benefit, and conferred as a joint benefit. Indeed, how could Stavroulla assert a trust claim against a jointly owned property without notice to both owners?

Order

1. Maria’s October 27, 2016 motion is dismissed.
2. Maria shall have 20 days to file her Answer to Stavroulla’s claim.
3. The respondent Stavroulla’s cost submissions are to be served and filed in the continuing record by March 10, response by March 24, reply if needed by March 31, 2017.

Justice H. McGee Date: February 28, 2017

Footnotes

[1] Counsels neither relied nor referenced Rule 1(8.2) of the Family Law Rules: “The court may strike out all or part of any document that may delay or make it difficult to have a fair trial or that is inflammatory, a waste of time, a nuisance or an abuse of the court process.” Orders dismissing actions for abuse of process are only available in the clearest of cases in which to fail to do so, would bring the administration of justice into disrepute. This is not such a case, nor is it so characterized by counsel.

[2] Green v. Canadian Imperial Bank of Commerce, (2014) 2014 ONCA 90, 370 D.L.R. (4th) 402 (C.A.). In other instances the test is cited as “no reasonable chance of success.”

[3] Greatrek Trust S.A./Inc. v. Aurelian Resources Inc., 2009 ONSC 6095, 2009 CarswellOnt 748. D.M. Brown J. goes on to say that they are not even close cousins. One wonders then why relief on this motion to strike a claim under the civil rules was also presented as a motion for summary judgment under the Family Law Rules.

[4] The ‘factual matrix of concern’ in these circumstances is not yet fully known. And at this early stage, it need not be. “To require a party to plead material facts before financial disclosure would run contrary to the way family litigation is conducted, contrary to the family rules and contrary to basic fairness.” see Frick v. Frick, 2016 ONCA 799 at paragraph 16.

[5] 1309489 Ontario Inc. v. BMO Bank of Montreal, (2011) 2011 ONSC 5505, 107 O.R. (3d) 384, as summarized in 2016-2017 Ontario Annual Practice.