Court File and Parties

Citation: Arconti v. Fousek, 2017 ONSC 7459 Court File No.: CV-17-573493 Date: 2017-12-13 Superior Court of Justice - Ontario

Re: Luigino Arconti, Plaintiff And: Lenka Fousek, Matt Lamb, Paul Fousek Jr., Paul Fousek Sr., Eva Fousek, Defendants

Before: Cavanagh J.

Counsel: Christopher D. Salazar, for the Plaintiff/Moving Party Matthew Giesinger, for the Defendants/Responding Parties

Heard: December 11, 2017

Endorsement

[1] The plaintiff and the defendant, Lenka Fousek, are estranged married spouses. The defendant Matt Lamb is Lenka Fousek’s current partner. The defendant Paul Fousek Jr. is Lenka Fousek’s brother. The defendants Paul Fousek Sr. and Eva Fousek are Lenka Fousek’s parents.

[2] In the Statement of Claim, the plaintiff claims damages in the amount of $160,000 for unjust enrichment, fraud and conspiracy, and additional damages in the amount of $160,000 for breach of contract. The plaintiff also claims punitive damages. In the alternative, the plaintiff claims an order requiring the defendants to hold the sum of $160,000 plus any interest accrued and any disgorged profits in a constructive and/or resulting trust in favour of the plaintiff. The plaintiff also claims other relief.

[3] There are two motions before me.

[4] The defendants move to strike out the Statement of Claim in this action. The rely on s. 21.8 of the Courts of Justice Act in support of their submission that this action must be brought in the Family Court because a threshold claim for all causes of action pleaded is for entitlement to an equalization payment, or a claim for enforcement of a separation agreement, and that s. 21.8(1) provides that an action for such claims shall be commenced, heard and determined in the Family Court.

[5] In addition, and in the alternative, the defendants submit that the Statement of Claim discloses no reasonable cause of action and they rely upon rule 21.01(1)(b). They also submit that the court has no jurisdiction over the subject matter of the action and that the action is frivolous or vexatious or is otherwise an abuse of the process of the court. They rely upon rules 21.01(3)(a) and (d) and rule 25.11 of the Rules of Civil Procedure.

[6] The plaintiff opposes this motion, and moves for an order transferring the within action to the Superior Court of Justice, Family Court, proceeding FC-14-1324-00. The plaintiff submits that such an order would be in accordance with the endorsement of the Honourable Mr. Justice Diamond dated September 1, 2017. This endorsement was made in response to a request from the defendants that the court dismiss the action pursuant to rule 2.1.01 of the Rules of Civil Procedure on the ground that it appears on its face to be frivolous or vexatious or otherwise an abuse of the process of the court.

[7] In the Statement of Claim, the plaintiff alleges that:

a. In the course of their seven year marriage, the plaintiff and Lenka Fousek (“Lenka”) accumulated over $300,000 worth of furniture, electronics, artwork, appliances, and other household items which, at all material times, were jointly owned (the “Assets”). The plaintiff pleads that these assets were stored and used at the marital home while the couple resided there.

b. In the spring of 2013, the plaintiff and Lenka began experiencing marital problems and, on or about July 1, 2013, the sale of the marital home closed. Prior to closing, Lenka told the plaintiff she would take care of organizing the transportation and storage of the Assets at a storage facility.

c. Lenka retained a private storage company to pack, transport, and store all of the Assets that, together, required four large containers.

d. The plaintiff and Lenka agreed that:

i. Lenka would arrange for the safe and secure storage of the Assets at a storage facility registered in both of their names;

ii. Lenka would consult him so they could jointly decide which Assets to sell;

iii. The plaintiff would receive his proportionate share of the proceeds of any sales of the Assets; and

iv. Any Assets which they did not sell would be divided up through their eventual divorce proceedings.

e. Lenka arranged for the storage company to transport the Assets to a property in Barrie that she had recently purchased with Mr. Lamb and, thereafter, she and Mr. Lamb enjoyed the use and benefits of the Assets.

f. On or about August 26, 2014, Lenka and Mr. Lamb sold the Barrie property and moved the assets into storage and/or the homes of the other defendants.

g. Between 2014 and 2015, Lenka and Mr. Lamb sold the majority of the Assets without consulting the plaintiff or providing him with his proportionate share of the sale proceeds.

h. In or around August 2015, the defendants, or some combination of them, purchased a home and Lenka, Mr. Lamb, and Lenka’s parents moved there shortly thereafter. At this time, the Assets that had not been sold were moved to this property and/or to the home of Paul Fousek Jr.

i. On or about April 21, 2015, Lenka filed a consumer proposal under the Bankruptcy and Insolvency Act. She did not inform the plaintiff of her proposal and he was never given an opportunity to participate as a creditor. The proposal was accepted by her creditors.

j. In and around the end of May 2015, the plaintiff learned of the proposal through word-of-mouth in his community. He contacted the Office of the Superintendent of Bankruptcy Canada to inquire about Lenka’s bankruptcy proceedings. This office subsequently sent information to the plaintiff on the proposal, pursuant to which the plaintiff learned that Lenka had listed the value of her assets and personal belongings at just $1,500.

k. In or around that time, the plaintiff learned that the Assets were not at the storage facility, but that Lenka had sold many of the Assets, and given the remaining assets to the other defendants.

l. The plaintiff asserts causes of action of unjust enrichment, breach of contract, fraud and conspiracy.

[8] The defendants submit that this entire action is predicated on the plaintiff’s alleged entitlement to one half of the marital assets. The defendants submit that equalization of marital assets is addressed by section 5 of the Family Law Act and, pursuant to section 21.8(1) of the Courts of Justice Act and the Schedule referenced therein, matters involving the Family Law Act shall be commenced, heard and determined in the Family Court. The defendants also submit that the claim for breach of contract is unenforceable because it is not in writing as required by s. 55(1) of the Family Law Act or, alternatively, proceedings for enforcement of a separation agreement shall under s. 21.8(1) of the Courts of Justice Act shall be commenced, heard and determined in the Family Court.

[9] In Mikhail v. Cole, 2016 ONSC 5349, the plaintiff commenced a civil suit in which he alleged that his estranged spouse fraudulently concealed her assets so that she would not have to make an equalization payment or spousal support payments. The damages claimed by the plaintiff were premised on his alleged entitlement to an equalization payment and spousal support under the Family Law Act. No entitlement had been proven under the Family Law Act. The defendants brought a motion to strike out the plaintiff’s claim and submitted that he must bring an application under the Family Law Act to prove his entitlement to an equalization payment and/or spousal support. The defendants in that case submitted that the action was an abuse of process and should be struck pursuant to rule 21.01(3)(d) of the Rules of Civil Procedure.

[10] In Mikhail, Gibson J. referred to a decision of the Court of Appeal in which the Court of Appeal had written that the appellant was attempting in a civil action for damages brought under the Rules of Civil Procedure to address issues governed by the Family Law Act, the Child Support guidelines and the Family Law Rules. The Court of Appeal held that the attempt amounted to an abuse of process. Gibson J., relying upon this and another authority, concluded that to permit the action to proceed would allow the plaintiff to circumvent the Family Law Act, and would constitute an abuse of process. He did not consider it necessary to decide whether it was plain and obvious that the Statement of Claim discloses no reasonable cause of action.

[11] I agree with the reasoning of Gibson J. in Mikhail. This reasoning applies directly to the plaintiff’s civil action. All of the claims made in the action are predicated upon the plaintiff’s claim to an entitlement to an equalization payment under the Family Law Act. The plaintiff is not permitted to pursue such a claim indirectly through the causes of action pleaded in the Statement of Claim. If the plaintiff has a claim for an equalization payment under the Family Law Act, he must pursue it in the Family Court as required by section 21.8 (1) of the Courts of Justice Act. As well, a claim for payments based upon the oral agreement pleaded in the Statement of Claim, if permitted at all because it is not in writing, must be brought in the Family Court.

[12] The plaintiff submits that if I were to conclude that the claims made in the action must be made in the Family Court, I should exercise my jurisdiction to transfer the action to the Family Court pursuant to the authority of section 107 of the Courts of Justice Act. In support of this submission, the plaintiff relies upon the endorsement of Diamond J. dated September 5, 2017.

[13] In his endorsement Diamond J. considered a referral by the registrar’s office pursuant to rule 2.1.01(7) following receipt of a written request under Rule 2.1.01 (6) by the defendants. Diamond J. dismissed the defendants’ request to dismiss the action under this rule. In his endorsement, Diamond J. wrote:

At this stage, I believe that the proper course of action would be for the defendants to bring a formal motion, which would either request that this proceeding be transferred to the Family Court list (with the remaining defendants potentially being added as parties pursuant to section 7 (5) of the Family Law Rules), or seek a consolidation of this proceeding with a family law proceeding to be presumably commenced by the plaintiff or Lemka (sic). While I agree that this proceeding cannot proceed on its own, I do not believe that Rule 2.1 is the proper vehicle through which these issues should be determined.

[14] The plaintiff submits that:

a. The endorsement of Diamond J. clearly sets out in the decision that this court does not have jurisdiction over the issues involved in the proceeding.

b. Diamond J.’s endorsement then proceeds to deal with the appropriate disposition of the proceeding.

c. Diamond J.’s decision involves the same parties as are before me on these motions, and was a final decision.

d. The defendants’ motion to strike is an attempt to use the reasons of Diamond J.’s endorsement, while ignoring the disposition.

e. The defendants’ motion is an impermissible collateral attack on a decision of the court, the decision of Diamond J.

[15] I disagree with the plaintiff’s submissions in this regard. The only decision that was made by Diamond J. was the dismissal of the defendants’ request to dismiss the action pursuant to rule 2.1.01. The statements made by Diamond J. upon which the plaintiff’s relies were not necessary findings of any right, question, or fact distinctly put in issue and directly determined by Diamond J., which is required for issue estoppel to apply. These statements were expressions of what, based upon the material before him, Diamond J. considered to be proper courses of action available to the plaintiff. The defendants are not precluded by the doctrine of issue estoppel, or the related doctrine relating to collateral attacks on a judicial decision, from moving to strike out the plaintiff’s Statement of Claim.

[16] The defendants oppose an order transferring the action to the Family Court. The parties to the action that is pending in the Family Court are the plaintiff and Lenka Fousek. The defendants rely upon Rule 7(5) of the Family Law Rules that provides that leave of the Court is required to add parties to the an action in the Family Court. The defendants submit that the plaintiff has not satisfied, or even attempted to satisfy, the requirements for the addition of parties under this rule.

[17] In my view, it would not be proper for me to transfer this action to the Family Court pursuant to section 107 of the Courts of Justice Act. I do not know whether there are any proper grounds that would justify the inclusion of added parties to the Family Court proceeding. If the plaintiff wishes to seek leave to add additional parties to the proceeding that is already pending in the Family Court, he is at liberty to do so. If such a motion is brought, the judge hearing the motion in Family Court will be able to decide whether such relief should be granted.

[18] Because of this conclusion, it is not necessary for me to decide whether the defendants have shown that the Statement of Claim discloses no reasonable cause of action.

[19] For these reasons:

a. The Statement of Claim is struck out and the action is dismissed.

b. The plaintiff’s motion for an order transferring this action to the Superior Court of Justice, Family Court, proceeding FC-14-1324-00 is dismissed.

[20] The defendants advised that, if successful, they intend to seek costs of their motion, jointly and severally, as against the plaintiff and his former counsel. If the parties are unable to resolve costs, the defendants are directed to make written submissions concerning costs within 30 days. The plaintiff and the plaintiff’s former counsel (if costs are sought against counsel) shall make responding submissions within 15 days of receipt of the defendants’ submissions.

The defendants, if so advised, may make very brief reply submissions within five days thereafter.

Cavanagh J.

Date: December 13, 2017