Court File and Parties
COURT FILE NO.: FS-15-406705 and FS-17-21568 DATE: 20181227 SUPERIOR COURT OF JUSTICE – ONTARIO
FAMILY LAW APPLICATION FS-15-406705 BETWEEN: George Chuvalo, Applicant AND: Joanne Chuvalo and Janet O’Hara, Respondents
AND
GUARDIANSHIP PROCEEDING FS-17-21568 (FORMERLY 16-CF-3007-ES) BETWEEN: Joanne Chuvalo, Applicant AND Vanessa Chuvalo, Mitchell Chuvalo and George Chuvalo, Respondents
BEFORE: Kiteley J.
COUNSEL: Herschel Fogelman, counsel for Public Guardian and Trustee as Litigation Guardian for George Chuvalo in FS-15-406705 Rick Bickhram, co-counsel for Joanne Chuvalo in FS-15-406705 Sean Graham, counsel for Joanne Chuvalo in FS-17-21568 and co-counsel in FS-15-406705 Susan Popovic-Montag, Section 3 counsel for George Chuvalo in FS-17-21568 Rahul Shastri, counsel for Mitchell Chuvalo and Vanessa Chuvalo in FS-17-21568
HEARD: December 19, 2018
Endorsement at Case Conference
[1] The background is found in endorsements (in one or both actions) dated November 8, 2017 (ONSC 6687), December 21, 2017, January 8, 2018, January 12, 2018 (ONSC 311), March 15, 2018, June 28, 2018, August 29, 2018, and October 5, 2018 (ONSC 5863, ONSC 5873 and ONSC 5917).
[2] In the third endorsement dated October 5, 2018, (ONSC 5917), I scheduled this case conference to address these issues:
(a) the impact of subrule 30.1.01 and subrule 51.06(3) on these proceedings FS-15-406705 and FS-17-21568; (b) status report as to disclosure in the guardianship proceeding; (c) status report as to mandatory mediation in the guardianship proceeding; (d) if possible, set a date for a combined settlement conference and trial management conference in the family law proceeding FS-15-406705; (e) if possible, set a date for the hearing of the guardianship application FS-17-21568; (f) such other issues as counsel agree or as I direct.
[3] As required by paragraph 10 of that endorsement, counsel had filed confirmation forms in which counsel listed the issues each asked to be considered at the conference.
(a) The impact of subrule 30.1.01 and subrule 51.06(3) on the proceedings FS-15-406705 and FS-17-21568
[4] The parties have made disclosure in both actions. During the hearing on September 27, 2018, one or more counsel raised the issue of the extent, if any, to which disclosure in one action had been shared by counsel in the other action. For that reason, I established a procedure by which I expected counsel to attempt to reach consensus.
[5] I directed Mr. Fogelman to collaborate with Mr. Shastri and Ms. Popovic-Montag to attempt to arrive at consensus and advise Mr. Graham and Mr. Bickhram in writing by December 1, 2018. The letter sent by Mr. Fogelman is dated December 4, 2018 and contained the consensus that those counsel had reached.
[6] In a letter dated December 5, 2018, Mr. Graham advised Mr. Fogelman that he did not agree and set out his position. Consensus did not emerge.
[7] I heard submissions by all counsel on the steps that might be taken to resolve the issue.
[8] Rule 30.1.01 establishes a deemed undertaking. If, for example, Mr. Fogelman took the position that the deemed undertaking ought not to apply, it would be incumbent on him to bring a motion pursuant to subrule 30.1.01(8) for an order to the contrary. None of Mr. Fogelman, Mr. Shastri, Ms. Popovic-Montag, Mr. Graham or Mr. Bickhram indicated an intention to bring such a motion. In the end, counsel seemed to arrive at the conclusion that any motion to deal with this issue was premature until the court dealt with whether the two actions should be consolidated or ordered to be heard together or one after the other.
[9] I carried on with other matters on the agenda and, as indicated below, I have concluded that it is not necessary to deal with this issue at this time.
[10] In his confirmation form, Mr. Graham asserted at page 4 that an order had been made that the proceedings be heard together. As indicated in paragraph 7 of the endorsement dated November 8, 2017 (ONSC 6687), in an endorsement dated July 25, 2016, Wilton-Siegel J. had directed that a case management judge should be appointed in the family law proceeding and a case conference should be convened “to determine whether these parties intend to proceed with the divorce proceedings”. Contrary to the confirmation form, no order has been made that the proceedings be heard together.
(b) Status Report as to disclosure in the guardianship proceeding
[11] In the second endorsement dated October 5, 2018 (ONSC 5873), I made orders in response to Joanne Chuvalo’s motion for directions. In his confirmation form, Mr. Shastri took the position that Mitchell Chuvalo’s undertakings had been fulfilled in correspondence dated October 17 and 30 in accordance with paragraph 35 of the endorsement.
[12] Mr. Graham took various positions in his confirmation form and at the case conference. First, he argued that Mitchell Chuvalo had failed to answer his undertaking to produce medical records.
[13] Second, Mr. Graham asserted that the endorsement dated October 5, 2018 deprived his client of the ability to test the validity of testamentary instruments and would likely precipitate an adjournment of the hearing of the guardianship application. He asked for leave to cross-examine the lawyers who prepared the powers of attorney.
[14] Third, Mr. Graham took the position that the grounds for an accounting by Mitchell and Vanessa Chuvalo are obvious and that his client should be permitted to bring a motion heard on the Estates List to compel a passing of the accounts.
[15] Fourth, Mr. Graham insisted that his client was entitled to a copy of Mr. Chuvalo’s will in order that she could prepare a management plan.
[16] Fifth, Mr. Graham queried whether, in my endorsement, I had circumscribed the undertakings Mitchell Chuvalo had given in cross-examination.
[17] Sixth, Mr. Graham took the position that the decision dated October 5, 2018 on the motion for directions was a substantive decision and should be re-heard by another judge. In submissions, he noted that in paragraph 2 of the endorsement dated June 28 I had indicated that I would not hear submissions on “substantive motions or applications”. He asked that I clarify what was “substantive”.
[18] Seventh, he generally took issue with the approach to the division of the family and guardianship proceedings. Implicit in many items in his confirmation form is a criticism of how the cases have progressed.
[19] As for the first, Mr. Shastri noted that until he had received Mr. Graham’s confirmation form, he was not aware that there was an issue as to the medical records undertaking. Other than counsel’s assertion that he has failed to comply, I have no basis to conclude that he did fail to comply.
[20] As for the second, in paragraph 22 of the endorsement dated October 5, 2018 (ONSC 5873), I held that, for purposes of the motion for directions, the key issues were the validity of the powers of attorney and the consequences if found any valid or revoked. I concluded that disclosure on those issues was not essential at that time. By including it in his confirmation form, Mr. Graham is attempting to re-argue the motion for directions.
[21] As for the third, the issue of whether the court might order an accounting is tied up with the guardianship application and ought not to be bifurcated.
[22] As for the fourth, Mr. Fogelman does not participate in the guardianship proceeding but he pointed out that in his client’s affidavit of documents, the PGT had listed Mr. Chuvalo’s will and that that had provoked the rule 30 issue. In other words, Joanne Chuvalo has a copy of the will albeit produced in the family law application. Given Mr. Graham’s insistence that the journalist who is following the cases has a copy of the will, I infer that it is already in the public domain and accordingly, I need not consider the impact of rule 30.1.01 on that specific document.
[23] As for the fifth, at paragraphs 25 and 35 of the second October 5, 2018 endorsement (ONSC 5873) I indicated that the motion for production of “Financial Records” from Mitchell Chuvalo was dismissed without prejudice to being brought back on before me after Mitchell Chuvalo has responded to his undertakings and clarified the questions under advisement which he was required to do no later than November 5, 2018. Given the priority of the family law application, I need not now deal with whether Mitchell Chuvalo’s undertakings have been answered.
[24] As for the sixth, there is a considerable body of jurisprudence that addresses the distinction between substantive and non-substantive issues or between substantive and procedural issues. It is neither appropriate nor necessary for me to provide counsel with further clarification. Suffice it to say that the second endorsement dated October 5, 2018 (ONSC 5873) is a procedural decision.
[25] As for the seventh, the detailed endorsements listed above reflect the decisions made.
(c) Status report as to mandatory mediation in the Guardianship proceeding FS-17-21568
[26] Parties and counsel had participated in mandatory mediation in August, 2018 and it was not successful.
(d) If possible, set a date for a combined settlement conference and trial management conference in the family law proceeding FS-15-406705
[27] The Application was issued November 20, 2015. The claims asserted include a divorce, spousal support, equalization of net family property, unequal division and trust claims with respect to 3 properties that are directly or indirectly in the name of Joanne Chuvalo. In her Answer, Joanne Chuvalo takes the position that the parties had not separated and therefore there were no grounds for a divorce, for spousal support or for equalization of net family property.
[28] On behalf of the PGT, Mr. Fogelman asks that a date be set as soon as possible for a combined settlement conference and trial management conference in the family law proceeding. He expressed pessimism about the prospects of settlement but urged that a trial date be set as soon as possible.
[29] Mr. Graham pointed out that he had not yet had an opportunity to conduct questioning of the person in the Office of the Public Guardian who was responsible for carriage of the case and that, in his confirmation form, Mr. Fogelman had taken the position that Joanne Chuvalo had to comply with three conditions before the questioning of the PGT would take place. First, she had to comply with the consent order dated June 28, 2018 that required her to list the Tiny Township property for sale. She had listed it but the listing had expired. Second, she had to comply with the first October 5, 2018 endorsement (ONSC 5863) and pay costs of $3000 of the unsuccessful rule 25(19)(B) motion which I had directed her to pay by November 5, 2018. Third, she had to answer her outstanding undertakings.
[30] During a recess, Mr. Graham and Mr. Fogelman came to a partial agreement. After he had served his confirmation form, Mr. Fogelman had received a copy of the new listing on the Tiny Township property so that was no longer an issue. And he took the position that he would not require compliance with the undertakings as a pre-condition of questioning of the PGT. He did insist on payment of the costs to which I will refer below.
[31] As indicated above, Mr. Fogelman had raised Joanne Chuvalo’s outstanding undertakings as a reason for not presenting a representative of the PGT for questioning. While Mr. Fogelman does not require the undertakings as a pre-condition, he does however, want the undertakings answered and he wanted Joanne Chuvalo to take a position on the “under advisements”. He had tentatively reserved January 17 for a motion. I will not authorize Mr. Fogelman to bring such a motion at this time. I am optimistic that the Applicant will comply by February 15 but if she has not done so, I will consider what steps ought to be taken to ensure compliance.
[32] At paragraph 13 of the endorsement dated August 29, 2018 I indicated as follows:
In the course of this case conference, on the subject of the identity of an institutional manager who might be appointed in the guardianship proceeding, counsel referred to the fact that one of the issues in the family law proceeding was whether George Chuvalo was a beneficial owner of property, title of which is held by Joanne Chuvalo. I pointed out to counsel that as long as the issue of contested ownership was outstanding in the family law proceeding, it warranted ensuring that the two proceedings carried on in tandem in the family law team. Having contemplated this further, I am now of the view that the issue of alleged ownership of property needs to be explored before a management plan could be finalized. There is commonality between the guardianship proceeding and the family law proceeding at least in that respect.
[33] Although not directly involved in such a conference, I gave Mr. Shastri and Ms. Popovic-Montag an opportunity to provide input on the issue of a combined conference in the family law application. Ms. Popovic-Montag took the position that the family law case had to proceed first because it would lead to a decision as to who as between Joanne and George owned property. According to title, Joanne Chuvalo is the registered owner directly or indirectly of three properties and is an equal shareholder of the corporation that owns the substantial investment account. Ms. Popovic-Montag reminded us that it would not be possible for Joanne Chuvalo in the guardianship proceeding to propose a management plan without knowing the property in which George Chuvalo had an interest.
[34] Mr. Graham agreed with the proposition that a decision as to ownership of property had to precede the guardianship application. He stressed however that his client did not want to be rushed into the family law settlement conference and trial management conference without being prepared.
[35] In other words, during this case conference, one of the few things on which counsel agreed was the priority of the family law application over the guardianship application. On the basis of that agreement, and the financial circumstances and health circumstances to which reference has been made in earlier endorsements, I am making orders below that give priority to the family law application. I am satisfied that it is imperative that the family law application be dealt with as soon as possible which requires that a combined conference be held in order that an early trial date may be set. I am not staying the guardianship application but I am not now setting a next event.
[36] Based on that conclusion, it is not necessary to consider a motion to consolidate or a motion for an order for trial together or one after the other. No counsel asked that I schedule such a motion and the consensus is that the family law action must be given priority.
[37] Mr. Fogelman and Mr. Bickhram are available on the date set out below. Mr. Sean Graham advised that he would likely be involved in a trial. Mr. Christopher Graham has attended on at least one prior occasion and I understood that they were equally involved. Mr. Sean Graham advised that his brother had been involved in a trial that had gone on for some time and that might require his attention in February. Having confirmed that Mr. Bickhram is available, it is not a requirement that his co-counsel attend a combined settlement conference and trial management conference in the family law application. The conference will proceed if only Mr. Bickhram is available.
[38] At the conclusion of the case conference, I scheduled the combined conference in the family law application and indicated to counsel that I would deal with other issues in this endorsement.
(e) If possible, set a date for the hearing of the guardianship application FS-17-21568
[39] In the endorsement dated October 5, 2018 (ONSC 5873) I indicated that, at the request of counsel for Joanne Chuvalo in the guardianship application, I had set a date for the hearing of the application on August 24, 2018. On June 27, 2018, counsel for Joanne Chuvalo asked that I postpone the hearing and I re-scheduled it for September 20, 2018. As indicated in the endorsement dated August 29, 2018, at the request of counsel for Joanne Chuvalo at the case conference on August 24, I vacated the September 20 date and did not schedule another hearing date. At the case conference on December 19, 2018, Mr. Graham did not ask that I set a date for the hearing of the guardianship application because he continued to pursue disclosure issues.
[40] Given that Mr. Graham is not asking that the court set a date for the hearing of the guardianship application and the priority that I am giving to the family law application, I do not intend to set a date for a future event.
(f) Such other issues as counsel agree or as I direct
Added issue #1: Order (ONSC 5863) October 5, 2018 that Joanne Chuvalo pay costs by November 5, 2018
[41] In his confirmation form, Mr. Fogelman pointed to the failure by the Applicant to comply with the order that she pay costs in the amount of $3000 by November 5, 2018. He took the position that compliance with the order should be a pre-condition to questioning of the PGT.
[42] Mr. Graham indicated that his client did not want to be in breach of that endorsement as to costs. He took the position that she did not have the resources to pay the costs because her only funds were in the investment account to which her only access was the monthly payment made pursuant to the consent order dated September 26, 2016. He asked the court to make an order that the costs be paid out of that account.
[43] In her form 13.1 financial statement dated September 13, 2018, Joanne Chuvalo indicates that she is the owner of 3 properties. As I understand it, Joanne and George are equal shareholders in 1059481 Ontario Limited [1] that is the owner of an investment account. The financial disclosure by George Chuvalo indicates that his only significant asset is the investment account although, in the family law application, a claim for a trust interest in all of the 3 properties is asserted. Mr. Fogelman takes the position that on the basis of information provided, it was likely that Joanne Chuvalo would be required to make a significant equalization payment and, if the court ordered those costs to be paid out of the investment account as suggested by Mr. Graham, it would mean that the costs ordered to be paid by Joanne Chuvalo to the PGT would be paid out of funds to which Mr. Chuvalo was entitled.
[44] Mr. Graham strenuously takes issue with that proposition. He repeated his client’s position that the family law application is bound to fail because the parties had never separated and therefore there was no basis upon which a court could order an equalization payment. He also repeated his position that the application in FS-15-406705 was fundamentally flawed for various reasons including that the application had originally been signed by Mitchell Chuvalo and had only been signed by George Chuvalo pursuant to the order I made dated November 8, 2017 (ONSC 6687 paragraph 38(a)).
[45] I am not prepared to have the costs order be a barrier to Joanne Chuvalo participating in the combined conference. I have set the date for the combined conference and I expect to set an early trial date on that occasion. However the issue of her compliance will be addressed at the combined conference. The order required her to pay by November 5, 2018. She did not appeal that order. She is not permitted to challenge it or ask that it be changed. She will be expected to comply.
Added issue #2: listing of Tiny Township property for sale
[46] In his confirmation form, Mr. Fogelman had pointed out that Joanne Chuvalo was in breach of the consent June 28 order in that she had failed to re-list after the original listing had expired. Before this case conference started, Joanne Chuvalo had re-listed it. I raised a related issue.
[47] In paragraph 2 of the consent order dated June 28, 2018, Joanne Chuvalo was ordered to
take necessary steps to getting 1592184 Ontario Incorporated (“159”) into good standing, including retaining an accountant to complete income taxes and any further steps as may be required to get 159 into good standing to facilitate the sale of the Property.
[48] Mr. Graham advised that his client had taken no steps to comply with paragraph 2 and that she had no intention of taking such steps because she did not have the money to do so. Mr. Fogelman pointed out that pursuant to that same consent order each of the parties received $50,000 from the investment account.
[49] I observed that there was a risk that the corporate owner could not close on an agreement of purchase and sale. I make no further order at this point. Joanne Chuvalo is the sole shareholder. She is the only person who can take steps to ensure that the corporation is in sufficient good standing that it can convey title. I will expect a report at the combined conference on February 15, 2019 as to the steps that Joanne Chuvalo has taken to comply with the consent order.
Added issue #3: divorce application, what relief and allegations does the PGT stand behind; who will be questioned and an order to questioning; supplementary affidavit of documents by PGT
[50] Mr. Graham queried whether the PGT was required, in advance of questioning, to state what relief he was seeking and what allegations he continued to pursue on behalf of George Chuvalo; who would attend for questioning; and whether the PGT should be required to prepare a supplementary affidavit of documents. Based on the discussion Mr. Graham and Mr. Fogelman had during a recess, Mr. Fogelman will produce the decision-maker from the PGT. And Mr. Graham will have the opportunity to ask questions about the content of the family law application. Mr. Fogelman raised the prospect that he and Mr. Graham will not agree on questions that Mr. Fogelman takes the position are subject to litigation privilege.
Added Issue #4: request by Mr. Graham to correct an endorsement
[51] On September 27, 2018 I heard the motion for directions and released an endorsement dated October 5, 2018 (ONSC 5873). At paragraph 6 appears the following:
In FS-15-406705, at the outset of the trial of an issue on January 8, 2018, counsel for Joanne Chuvalo conceded that Mr. Chuvalo did not have capacity to instruct counsel. On that date I made an order appointing the Public Guardian and Trustee as representative of George Chuvalo pursuant to rule 4(3) of the Family Law Rules who has all the powers of a Litigation Guardian under rule 7 of the Rules of Civil Procedure. The PGT retained Mr. Fogelman.
[52] In his confirmation form, Mr. Graham took the position that it was a factual error to attribute to the Applicant that she conceded the point “at the outset of the trial”. He took the position that Joanne Chuvalo had “consistently, for years, taken the position that George Chuvalo (“George”) lacks capacity to instruct counsel, throughout the litigation”. And he cited examples of where she had taken that position. He asserted that
This factual error goes to the heart of these proceedings. It should be corrected on the record. Perhaps the Endorsement could be correct to read “at the outset of the trial of an issue on January 8, 2018, purported counsel for George Chuvalo, Tanya Road, conceded that George lacked capacity to instruct her”.
[53] I do not consider that a factual error has been made. Whether Joanne Chuvalo had taken the position on earlier occasions that George Chuvalo lacked capacity is not the issue. The evidence before me on the trial of an issue demonstrated that he lacked capacity to instruct counsel and as a result of the position taken by her counsel, I did not have to hear submissions on the question of whether he lacked that capacity.
Added Issue #5: 25th anniversary
[54] Mr. Graham pointed out that Joanne and George were married on January 27, 1994 and on January 27, 2019, 25 years will have elapsed. On behalf of Joanne Chuvalo, he asked counsel for Mitchell and Vanessa Chuvalo to allow Joanne and George to have an opportunity to spend some time together, perhaps over dinner. Mr. Shastri had not responded. This was the first the Ms. Popovic-Montag had heard of the issue. She advised that she will use her best efforts to take instructions from George Chuvalo and inform Mr. Graham of his position by January 18. Mr. Shastri confirmed that, if Mr. Chuvalo agreed to a rendezvous, that Mitchell and Vanessa would co-operate to make the arrangements.
Case management
[55] As indicated in the endorsement dated October 20, 2017 by Justice Stevenson and my endorsement dated November 8, 2017, I was designated to hold a case conference to decide next steps and to conduct the trial. Stevenson J. indicated to counsel that settlement discussions would be before a different judge.
[56] As indicated in the endorsement dated January 12, 2018 (ONSC 311), I conducted the trial of the issue as to whether George Chuvalo had the capacity to decide whether to reconcile and I remained seized of the other outstanding issues.
[57] As indicated in the endorsement dated June 28, 2018, in order to achieve some modicum of progress with respect to what turned out to be the second consent order with respect to sale of the Tiny Township property, I could not avoid treading on settlement discussions. At paragraph 2 of that endorsement I indicated that I will not hear submissions on substantive motions or applications.
[58] I am leaving the Family Law Team in Toronto effective December 31, 2018. However, I will continue to manage both the family law application and the guardianship application up to but not including hearing the trials. In other words, as indicated in the June 28 endorsement, I have reversed the original expectation. It would not be an efficient use of judicial resources to hand off management of these proceedings at this time.
Orders
IN FS-15-406705 ORDER TO GO AS FOLLOWS:
[59] Counsel and the parties (including the instructing solicitor from the Office of the Public Guardian and Trustee) shall attend before me on February 15, 2019 at 2:30 to 4:30 for a settlement conference and trial management conference.
[60] Counsel are not required to deliver settlement conference briefs. Each party shall serve an offer to settle no later than February 11, 2019 and bring the offers to settle to the settlement conference.
[61] Counsel are required to prepare a joint Trial Scheduling Endorsement. By February 4, 2019, counsel for the Applicant shall provide to counsel for the Respondent a draft Trial Scheduling Endorsement with Part 1 completed. By February 6, 2019, counsel for the Respondent shall provide to counsel for the Applicant the draft Trial Scheduling Endorsement with Part 2 completed. By February 8, 2019, counsel shall serve and file the confirmation form along with the finalized Trial Scheduling Endorsement with as much of Part 3 completed as is possible.
IN FS-17-21568 ORDER TO GO AS FOLLOWS:
[62] After the conclusion of the combined settlement conference and trial management conference in FS-15-406705, I will set a date for a case conference to decide what next step, if any, I will schedule.
IN FS-15-406705 AND FS-17-21568 ORDER TO GO AS FOLLOWS:
[63] Neither party in either action may bring any motion without leave from me.
[64] Costs of this case conference reserved to the trial judge.
KITELEY J. Date: December 27, 2018