Hatuka v. Segal, 2017 ONSC 5623

CITATION: Hatuka v. Segal, 2017 ONSC 5623

NEWMARKET COURT FILE NO.: FC-16-51241-00

DATE: 20170925

SUPERIOR COURT OF JUSTICE – ONTARIO – FAMILY COURT

RE: Avinoam Hatuka, Applicant and Gali Segal, Respondent

BEFORE: The Honourable Madam Justice H. McGee

COUNSEL: Mr. L. Liquornik, Counsel for the Applicant Mr. D. Frodis, Counsel for the Respondent

HEARD: September 15, 2017

ruling on motion

McGEE J.

[1] The respondent Ms. Segal moves to set aside my Order of March 22, 2015, specifically, an Order for the sale of the jointly owned matrimonial home in which she continues to reside, and an Order for the child and spousal support that the applicant father is to pay upon the closing of that sale.[^1]

[2] Ms. Segal relies on Rule 25(19) of the Family Law Rules. The Rule has been recently clarified by the Ontario Court of Appeal to include the authority to set aside an order.[^2] It reads as follows:

Changing Order — Fraud, Mistake, Lack of Notice

(19) The court may, on motion, change an order that,

(a) was obtained by fraud;

(b) contains a mistake;

(c) needs to be changed to deal with a matter that was before the court but that it did not decide;

(d) was made without notice; or

(e) was made with notice, if an affected party was not present when the order was made because the notice was inadequate or the party was unable, for a reason satisfactory to the court, to be present. O. Reg. 151/08, s. 6.

[3] It is useful to provide some brief litigation context.

Background

[4] The parties separated in June of 2016. They have two school age children. The children and the respondent mother continue to reside in the jointly owned 1.7 million dollar matrimonial home. The home is encumbered by a joint mortgage in excess of $610,000. Ms. Segal is a foreign trained lawyer who is not presently employed. Mr. Hatuka is a commercial realtor.

[5] Mr. Hatuka served his Application on June 30, 2016. Ms. Segal retained family law counsel who prepared and served, but did not file her Answer, Claim by Answer and Financial Statement. A case conference was scheduled for January 3, 2017. Ms. Segal attended the conference having dismissed her counsel, seeking an adjournment to retain new counsel. The adjournment was granted. On the return date of February 9, 2017 she appeared without counsel and sought a further adjournment.

[6] The endorsement of February 9, 2017 is fulsome. Sale of the home was fully case conferenced. Leave was granted to Mr. Hatuka to bring a motion accordingly. In the interim, Ms. Segal was required to file her Answer and Financial Statement by March 10, 2017 failing which, she would be noted in default. If she was in good standing the balance of issues, such as custody and access, child and spousal support and equalization were to continue to be conferenced on May 12, 2017.

[7] The father served his motion for sale, and incidents of sale a month later on March 13, 2017, to be heard March 22, 2017. From Mr. Hakuta’s perspective, there was urgency in having the motion heard. For the past year neither party had had the ability to discharge the joint mortgage and/or purchase the other’s interest.[^3] Moneys that ought to go to the support of the family were being absorbed by the home. He was personally struggling with the carrying costs of the home while maintaining a separate residence.

[8] Costs of $2,500 for the February 9, 2017 case conference were ordered to be paid by Ms. Segal in the amount of $2,500. Her approval to the form of the Order was dispensed. Justice Jarvis closed his endorsement with “[t]here has been too much delay already in this case.”

[9] On March 17, 2017 Ms. Segal served her own Notice of Motion seeking child and spousal support, life insurance designation and an order dismissing the motion for sale. It is unknown to me whether those issues had been fully conferenced. The motion was not scheduled through the trial coordinator. It was not before the Court on March 22, 2017.

[10] Nonetheless, Ms. Segal and her counsel appeared on March 22, 2017 pressing for her motion to be heard as an add-on, citing hardship and distress to Ms. Segal should the home be ordered sold without support in place. Each party had filed extensive materials in support of his and her respective motions. Ms. Segal’s supporting materials included a 93 personal affidavit with 32 exhibits.

[11] The Court made not insignificant accommodations for the balance of the list and both motions were heard[^4] – each as a one hour motion.

[12] Both parties were well represented on the motion. Mr. Hatuka was the successful party. Orders were made for the sale of the home - which was not to close before the end of the school year[^5]; and for amounts of child and spousal support to commence upon the sale. Until sale, Mr. Hatuka was to continue to pay the expenses on the jointly owned home.

Ms. Segal’s July 9, 2017 Motion to Set Aside the March 22, 2017 Order

[13] The basis upon which Ms. Segal seeks to apply Rule 25(19) to set aside the Order of March 22, 2017 is unclear.

[14] This motion to set aside was case conferenced on June 23, 2017. Justice Kaufman provided a specific timetable for the delivery of materials, including a Book of Authorities to be filed by September 13, 2017. No case law was provided but for referencing a decision of this judicial officer on an uncontested trial.

[15] Ms. Segal does not raise any issue of mistake.

[16] Subsection (c) of Rule 25(19) is not applicable.

[17] Ms. Segal does not raise any issue of lack of notice or non-attendance.[^6] Mr. Hatuka’s March 22, 2017 motion was case conferenced, on notice and fully argued by experienced counsel.

[18] On March 22, 2017 Ms. Segal pushed to proceed with her motion on the record that was before the Court that day. She could have waited until questioning or disclosure was complete, or until after the May 12, 2017 continued conference. She chose not to.

[19] Ms. Segals’ affidavit of August 18, 2017 claims that she has suffered litigation disadvantage as a result of the following assertions. These were the initial focus of her counsel’s submissions on this motion to set aside:

(a) she has ADHD and learning disabilities;

(b) she is a recent immigrant with limited English skills;

(c) she has been largely self-represented, with gaps in representation; and

(d) she strongly believes that Mr. Hatuka has taken advantage of her, while abusing the court process.

[20] These are not grounds for a Rule 25(19) analysis.

[21] Counsel’s final submissions address Mr. Hatuka’s reported income for support purposes. Counsel suggests that there has been an act of fraud.

[22] Ms. Segal deposes in her July 6, 2017 affidavit that she discovered a 2015 Payment Summary and a September 2015 Trade Record Sheet in her first lawyer’s file after the March 22, 2017 motion. She attaches those and other documents to her affidavit and proposes that they constitute proof that Mr. Hatuka had higher 2015 income than previously disclosed. It is not contested that these documents had been earlier disclosed.

[23] The balance of the affidavit reargues the motion of March 22, 2017 and reiterates Ms. Segal’s belief that Mr. Hatuka is not fully disclosing his income.

[24] Mr. Hatuka’s July 31, 2017 affidavit acknowledges that $217,000 of gross commissions reported in his 2016 Income Tax Return was actually earned in 2015. His counsel correctly argues that attributing the 2016 income to 2015 doesn’t benefit Ms. Segal – it actually lowers the more relevant 2016 income upon which the support Order of March 22, 2017 was based.

[25] In the balance of his affidavit, Mr. Hatuka asserts that his former spouse’s allegations are “patently false” and a “reflection of her continuing intransigence and obstruction of the proceeding herein.” He worries that the drop in housing prices since March 22, 2017 has robbed both parties of valuable equity in a home that neither one of them can afford to own independently.

[26] In the subsequent 105 paragraph and 32 exhibit affidavit sworn by Ms. Segal on August 18, 2017, she explores additional issues of concern to her, none of which are relevant to a Rule 25(19) motion: her experience of the marriage, negotiations after separation, how she perceives her interests in the litigation, projected patterns of behaviour, the conduct of counsel and the scheduling of the case conferences.

[27] At paragraphs 65 – 80 of that affidavit she responds to Mr. Hatuka’s affidavit on the reporting of the 2015 commission in 2016. In doing so she incorporates hearsay comments about information she has subsequently received and reiterates her absolute certainty that Mr. Hatuka’s statements of income cannot be trusted.

[28] Setting aside an order under Rule 25(19) (a) carries a high threshold. Fraud within Rule 25(19)(a) does not have a special meaning outside the common law. A moving party must clearly prove that the other party knowingly or recklessly made a false statement with knowledge of the falsehood, and did so with wrongful intent.[^7]

[29] It may be that a trial judge, or even a future motions judge with a fuller record may find Mr. Hakuta’s income to be different than that deposed on his most recent Financial Statement. How one reports income for tax purposes is not determinative of income for child and spousal support. Many factors in the determination of income for support purposes are discretionary. The exercise is driven by disclosure and methodology. One’s income must be constantly updated per Rule 13.

[30] A different finding on a different record does not form the basis for fraud per Rule 25(19) (a). This is particularly true with temporary orders which are by definition, holding orders based on incomplete and evolving evidence. Temporary orders are not intended to be perfect. At best, they promote some measure of interim fairness while matters progress to a final resolution or determination.

[31] There will be cases in which the evidence demonstrates that a deponent knowingly or recklessly asserted a false statement of income, or other false statements in a deliberate attempt to deceive and gain litigation advantage.

[32] The evidence before me on this motion does not. Ms. Segal’s motion of July 9, 2017 is dismissed.

Costs

[33] Mr. Hakuta is the successful party. If he seeks his costs, they are to be filed by October 9, 2017; response by Ms. Segal by October 23, 2017, reply if necessary by October 30, 2017. Submissions limited to three pages, exclusive of Offers to Settle and Bills of Costs.

Justice H. McGee

Date: September 25, 2017

[^1]: Ms. Segal included in her motion a “further and in the alternative” relief that the court “direct the Applicant to produce information concerning all of his income for 2015, 2016 and 2017.” This terms lacks specificity, and in any event is outside the scope of the motion conferenced and timetabled for this one hour motion.

[^2]: Gray v. Gray 2017 ONCA 199

[^3]: To do so would require qualifying for financing in the range of $1,160,000. Even if Ms. Segal were successful in her claim for equalization (for which there is presently little of any evidence) she would need to qualify to discharge the joint mortgage of $610,000.

[^4]: Although not all aspects of each motion. Outside the scope of the time available was the father’s motion for distribution of sale proceeds and the mother’s motion for life insurance.

[^5]: In order to accommodate an easier school year transition for the children.

[^6]: This is the most common application of Rule 25(19) (d) and (e) – when a temporary or a final order is made on default in the absence of a party.

[^7]: For a comprehensive treatment on fraud, see the Supreme Court of Canada case in Parna v G. & S. Properties Ltd., 1970 25 (SCC), 1971 S.C.R. 306