CITATION: Ignjatovic v. Vukojevic, 2017 ONSC 2247

COURT FILE NO.: 587/16

DATE: 20170721

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Aleksandar Ignjatovic, Applicant (Responding Party)

AND:

Vesna Vukojevic, Respondent (Responding Party)

AND:

Milijan Ignjatovic, Added Third Party (Moving Party)

BEFORE: Mr. Justice H.J. Wilton-Siegel

COUNSEL: Michael H. Tweyman, for the Moving Party, the Added Third Party

Vesna Vukojevic, acting in person

HEARD: In Writing

ENDORSEMENT

Introduction

[1] The Added Third Party, Milijan Ignjatovic (the “applicant”), seeks leave to appeal the order of Paisley J. dated October 6, 2016 (the “Order”). In the Order, the motion judge added the applicant as a respondent in the application and required him to disclose the final location of funds in the amount of $289,442.44 transferred out of a personal account of the applicant at the T-D Canada Trust (the “T-D Account”) on December 4, 2013 and of funds in the amount of $500,000 transferred out of a further personal account of the applicant at the CIBC (the “CIBC Account) on April 20, 2015.

Factual Background

[2] The Order was made in a proceeding relating to equalization of family property under the Family Law Act, R.S.O. 1990, c. F.3 between Aleksandar Ignjatovic (“Aleksandar”) and Vesna Vukojevic (“Vesna”). The applicant is Aleksandar’s cousin.

[3] Vesna alleges that the amount of $429,966.34 deposited very shortly before separation in a bank account jointly held by Aleksandar and the applicant (the “Joint Account”) represented Aleksandar’s share of the profits on the sale of a house pursuant to a business of Aleksandar and the applicant of buying and selling houses and should be included in Aleksandar’s net family property. Vesna says that these funds were transferred to the applicant post-separation and that the applicant is sheltering these funds for Aleksandar. She asserts that a payment of $289,442.44 out of the T-D Account to an unnamed party on December 4, 2013 represented a portion of this amount. She further asserts that a portion of a payment of $500,000 out of the CIBC Account on April 20, 2015 represents the balance of such proceeds. It appears that $315,000 of this latter amount was repaid on June 1, 2015 but the rest has not been located. On her motion, Vesna sought an order requiring the applicant to disclose the recipient(s) of these funds. The motion judge ordered the applicant to disclose information with respect to these two transfers.

[4] In addition, Vesna says that pre-separation, between 2009 and 2013, a total of $405,860 was transferred or withdrawn by Aleksandar from a joint bank account of Vesna and Aleksandar. She asserts that Mike holds a total of $405,860 as the net result of such transfers and that such monies are jointly owned by Aleksandar and her or, alternatively, are owed by Aleksandar, and in either event are effectively held by the applicant in trust for the owners thereof. A further transfer of $60,000 from Aleksandar’s company is also at issue but is not addressed in this Endorsement.

[5] In his reasons, the motion judge referred specifically to the amount of $256,000 transferred from the joint bank account of Aleksandar and Vesna to Aleksandar’s sister in Serbia between 2009 and 2013. This complicated transaction, which is not fully explained let alone evidenced in the record, involved the applicant and appears to have resulted in the applicant receiving the funds in some capacity. This amount is included in the amount of $405,860 claimed as family assets.

[6] For his part, in his affidavit, the applicant admits to transfers to and from him respecting the home equity line of credit established by the T-D in favour of Aleksandar and Vesna. However, he says that he has fully repaid all advances given to him. The applicant provided the same explanation regarding the $256,000 transferred to Aleksandar’s sister in Serbia as does Aleksandar. He also denies that he and Aleksandar were in the business of buying and selling houses.

Test for Leave to Appeal

[7] The test for granting leave to appeal under Rule 62.02(4) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 is well-settled. It is recognized that leave should not be easily granted and the test to be met is a very strict one. There are two possible branches upon which leave may be granted. Both branches involve a two-part test and in each case both aspects of the two-part test must be met before leave may be granted.

[8] Under Rule 62.02(4)(a), the moving party must establish that there is a conflicting decision of another judge or court in Ontario or elsewhere (but not a lower level court) and that it is, in the opinion of the judge hearing the motion, “desirable that leave to appeal be granted.” A “conflicting decision” must be with respect to a matter of principle, not merely a situation in which a different result was reached in respect of particular facts: Comtrade Petroleum Inc. v. 490300 Ontario Ltd. (1992), 1992 CanLII 7405 (ON SC), 7 O.R. (3d) 542, 55 O.A.C. 316 (Div. Ct.).

[9] Under Rule 62.02(4)(b), the moving party must establish that there is reason to doubt the correctness of the order in question and that the proposed appeal involves matters of such importance that leave to appeal should be granted. It is not necessary that the judge granting leave be satisfied that the decision in question was actually wrong – the first aspect of the test is satisfied if the judge granting leave finds that the correctness of the order is “open to very serious debate”: Nazari v. OTIP/RAEO Insurance Co. (2003), 2003 CanLII 40868 (ON SC), 3 C.C.LI. (4th) 149, [2003] O.J. No. 3442 (Sup. Ct.); Ash v. Lloyd’s Corp. (1992), 1992 CanLII 7652 (ON SC), 8 O.R. (3d) 282, [1992] O.J. No. 894 (Gen. Div.). In addition, the moving party must demonstrate matters of importance that go beyond the interests of the immediate parties and involve questions of general or public importance relevant to the development of the law and the administration of justice: Rankin v. McLeod, Young, Weir Ltd. (1986), 1986 CanLII 2749 (ON SC), 57 O.R. (2d) 569, [1986] O.J. No. 2380 (H.C.J.); Greslik v. Ontario Legal Aid Plan (1988), 65 O.R. (2d) 110, 30 O.A.C. 53 (Div. Ct.).

Analysis

[10] I will address each branch of the test for leave to appeal in turn.

The Test under Section 62.02(4)(a)

[11] The motion judge added the applicant as a third party pursuant to Rule 7(5) of the Family Law Rules, O. Reg. 114/99, which provides that a person may be named as a respondent in a matrimonial application if joinder would enable the Court to decide all the issues in the case. If the respondents are "involved" or if their financial affairs are inextricably intertwined and naming them would not prejudice or disadvantage them in any way, then they may be named as parties: see Rule 7(3) of the Family Law Rules. In addition, Rule 5.03 of the Rules of Civil Procedure provides that "every person whose presence is necessary to enable the court to adjudicate effectively and completely on the issues in a proceeding shall be joined as a party to the proceeding".

[12] The applicant acknowledges that the motion judge exercised discretionary authority in making the Order. The applicant argues, however, that the decision of the motion judge conflicts with other decisions in two respects.

[13] First, the applicant argues that, as a matter of law, the applicant could not be added as a third party unless Vesna could establish a cause of action against him. He says that the decision in Kim v. Trump, 2014 ONSC 2129, 26 B.L.R. (5th) 314 is a conflicting decision in this regard. In particular, the applicant says that no order can be made against him in respect of equalization of family property under the Family Law Act and that, therefore, Vesna does not have a cause of action against him. The applicant relies on the decision of Santilli v. Piselli, 2010 ONSC 2874, 87 R.F.L. (6th) 135, which he says is a conflicting decision in this regard.

[14] These arguments proceed on an erroneous understanding of the basis for the decision of the motion judge. The motion judge did not add the applicant as a party with a view to enforcing an equalization payment against him. Instead, the motion judge added the applicant as a party to the proceeding to obtain a determination, in connection with the trial of this proceeding, of the extent to which monies held by the applicant constitute family assets of Aleksandar and Vesna and to require the applicant to repay any such assets in order that they can be dealt with in the equalization of assets between Aleksandar and Vesna in this proceeding. In the present case, the evidence indicates that the financial affairs of Aleksandar, and of Aleksandar and Vesna, have been inextricably intertwined with the assets of the applicant. A trial is required to determine whether or not the applicant continues to owe monies to them. Adding the applicant as a party will enable the determination of the financial relationship between the applicant, on the one hand, and Aleksandar and Vesna, on the other. It will also enable the collection and equalization between Aleksandar and Vesna of any family assets currently determined to be owing by the applicant. The motion judge had the discretion to make such order given the circumstances of this case as discussed further below. Accordingly, these decisions are not conflicting decisions for the purpose of the test in Rule 62.02(4)(a).

[15] Second, as a related matter, the applicant says that the motion judge erred in failing to conduct an inquiry into the merits of Vesna’s claim against the applicant. He says that this is contrary to the principle articulated in Reichwein v. Reichwein, 2016 ONSC 831, [2016] O.J. No. 678. He says that if the motion judge had inquired into the merits of Vesna’s claim, he would have concluded that the $429,000 resulted from the sale of the applicant’s house and that he was entitled to retain those monies.

[16] As is discussed further below, the motion judge concluded that the facts with respect to the applicant’s involvement with the flow of funds involving the bank accounts and the line of credit of Aleksandar and Vesna was not clear on the record before him. The motion judge had ample evidence for this conclusion. Moreover, as discussed below, the motion judge was not required to, and did not, restrict his consideration to transactions involving the $429,000 Vesna alleges represents Aleksandar’s share of the profit on the sale of a house. As mentioned, he also took into consideration the pre-separation transfers described above. Given the evidence in the record, the determination of these issues requires a trial. Accordingly, the decision does not conflict with the principle in Reichwein.

[17] Based on the foregoing, the applicant has not satisfied the first branch of the test for the granting of leave to appeal under Rule 62.02(4)(a).

[18] In any event, the applicant has also failed to establish that it is desirable that leave be granted. The purpose of the decision of the motion judge to add the applicant as a party to the action has been set out above. Rather than adding to the length of the trial in this proceeding and the costs of the parties, as the applicant suggests, adding the applicant as a party will simplify the determination of the issues described above. Any costs of the applicant can be addressed by a costs award in the proceeding directed against Vesna to the extent that her allegations regarding the origin of, and entitlement to, the monies at issue prove incorrect.

The Test under Rule 62.02(4)(b)

[19] The test under Rule 62.04(b) requires that the applicant establish that the correctness of the Order is “open to very serious debate”.

[20] The applicant makes the following five submissions regarding the correctness of the decision.

[21] First, the applicant says the motion judge “pre-decided” the issue and that the manner in which the judge conducted the motion gave rise to a reasonable apprehension of bias. I do not agree.

[22] The motion judge observed several times that the motion materials of Aleksandar and the applicant did not permit a clear determination of the issues raised by Vesna. That does not constitute ”pre-judging” the issue nor does it exhibit any bias. Nor does the fact that the motion judge asked Aleksandar to address Vesna’s position first and did not ask for submissions from Vesna’s counsel.

[23] Further, neither the applicant nor Aleksandar was able to clarify the issue of the entitlement to the funds at issue. In addition, as discussed above, the issue before the motion judge was not limited to the question of whether or not $429,000 of the funds represented the profits from a business between Aleksandar and the applicant, and the motion judge’s discussion of other transactions therefore does not demonstrate that he failed to understand the parties’ positions, as the applicant suggests.

[24] Second, the applicant says that the motion judge’s reasons were inadequate and did not properly apply the law regarding adding a party. I do not agree. While it might have been preferable for the motion judge to have expressed the basis for his conclusion more expansively, the basis for his decision is clear. As discussed above, the motion judge did not consider the issue of the ownership of the funds at issue in the post-separation transactions, or the net result of the transfers of monies to and from the applicant in the pre-separation transactions, to be sufficiently clear on the face of the record before him to permit a determination in favour of the applicant without a trial. Accordingly, the motion judge added the applicant as a party to the proceeding to obtain a determination, in connection with the trial in this proceeding, of the extent to which the applicant is holding monies that are owing to, or are the property of, Aleksandar or Aleksandar and Vesna, jointly.

[25] Third, the applicant says that the decision of the motion judge was based on an error of law insofar as it assumed that an equalization payment could be enforced against a third party. As discussed above, that was not the purpose in adding the applicant as a third party. Rather, the applicant was added to allow a determination as to whether, and in what amount, the applicant owed any monies to Aleksandar, or to Aleksandar and Vesna, and, if so, to bind the applicant regarding the payment of such assets to the relevant party or parties in order that the entitlement to all of the family assets of Aleksandar and Vesna can addressed in this proceeding. The case of Buttar v. Buttar, 2013 ONCA 517, 116 O.R. (3d) 481 is of no relevance to this issue, as it addresses the issue of in specie distributions between parties to matrimonial litigation which is not at issue in this action.

[26] Fourth, the applicant says that the motion judge’s decision on preservation of property is vague and unfair to the applicant. It is my understanding, however, that Vesna did not seek a preservation order but rather leave to seek such an order and that Vesna acknowledges that the Order is incorrect in this respect. On the assumption that both parties are proceeding on this basis, it would therefore appear that nothing further is required in respect of this error in the Order on the present motion.

[27] Lastly, the applicant says that the motion judge failed to analyse the factual evidence regarding the origin and flow of monies between the parties. He says that, instead, the motion judge concentrated on the transfer of $265,000 to Aleksandar’s sister in Serbia, which was not raised as an issue by Vesna.

[28] As mentioned, Vesna’s claims, as described above, can be divided into two classes of transaction: (1) pre-separation transactions; and (2) post-separation transactions.

[29] With respect to the pre-separation transactions, the motion judge concentrated on the payment of $256,000 to Aleksandar’s sister in Serbia. While Aleksandar and the applicant have provided an explanation for this transfer, the determination of the facts pertaining to the transfer requires a trial, as discussed above. Moreover, this transaction is only one of the pre-separation transactions involving the transfer of monies to and from the applicant that must be reconciled as a whole to determine if the applicant owes any monies to Aleksandar, or to Vesna and Aleksandar.

[30] With respect to the post-separation transactions, the applicant’s claim that he was not in a business with Aleksandar cannot be established on the basis of the materials in the record. It also requires a trial for determination. There is evidence in Vesna’s affidavit that could reasonably support her contention that Aleksandar and the applicant were engaged in the business of buying and selling houses. Accordingly, there is evidence to support her contention that the amount of $429,966.34 deposited into the Joint Account and later transferred to the applicant represented Aleksandar’s profit from the most recent sale.

[31] While it would have been preferable if the motion judge had provided a fuller explanation of his decision and, in particular, had dealt separately with these two different categories of transactions, the motion judge had a reasonable basis for the Order. In particular, he did not misapprehend Vesna’s grounds for the relief sought by referring to the pre-separation transactions, specifically the $256,000 transferred to Serbia, in making the Order. Vesna had previously raised this issue in the larger context of the reconciliation of the pre-separation transactions.

[32] Accordingly, the applicant has failed to satisfy the first branch of the test in Rule 62.02(4)(b).

[33] The applicant has also failed to demonstrate that the appeal involves a matter of public importance or a matter relevant to the development of the law and the administration of justice. The Order addressed a simple question of whether the admitted dealings between Aleksandar and the applicant, including the transfer of funds to the applicant and dealings with monies held in a joint account in the names of Aleksandar and the applicant, involved monies that are owing to Aleksandar, or to Aleksandar and Vesna, and are therefore family assets of Aleksandar and Vesna to be addressed in this proceeding. It is necessary to add the applicant to the proceeding to get a determination of these issues in this proceeding, and a further determination, if appropriate, of whether Vesna is entitled to any such monies on the equalization of family assets to be addressed in this proceeding.

Conclusion

[34] Based on the foregoing, the applicant’s motion for leave to appeal is dismissed.

Costs

[35] Vesna seeks costs on a full indemnity basis. She has provided a costs outline seeking costs of $4,046.91 on a full indemnity basis or $2,428.15 on a partial indemnity basis. There is no basis for an award of costs on a substantial indemnity basis. The amount sought on a partial indemnity basis, representing legal services billed to Vesna, is reasonable. The applicant’s costs on a similar scale exceeded this amount. Accordingly, Vesna is entitled to costs in the amount of $2,428.15 payable forthwith.

Wilton-Siegel J.

Date: July 21, 2017