COURT FILE NO.: CV-18-1394 DATE: 2019-03-19

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Denise Asselin-Kowalsky, Plaintiff AND: Mark Kowalsky and Catherine Kowalsky, Defendants

BEFORE: The Honourable Mr. Justice P. R. Sweeny

COUNSEL: J. Dalton, for the Plaintiff P. Chin, for the Defendant Catherine Kowalsky Mark Kowalsky, Not Appearing

HEARD: March 15, 2019 in Kitchener

E N D O R S E M E N T

[1] This is a motion by the plaintiff for an interlocutory Mareva injunction prohibiting the defendants from dealing with their assets on a worldwide basis. For the reasons that follow, the injunction is granted.

Background

[2] The plaintiff Denise Asselin-Kowalsky (Denise) married the defendant Mark Kowalsky (Mark) on August 9, 1980. They separated on July 16, 2003. There are two children of the marriage who are now adults. In the family law proceedings between Denise and Mark, Mark obtained judgment against Denise in the sum of $246,087.68 on March 27, 2008. Denise was not present at the trial.

[3] On August 18, 2006, Mark and Catherine Kowalsky (Catherine) were married. Mark is a family law lawyer.

[4] On January 20, 2015, Mark issued a Notice of Garnishment to garnish Denise’s share of her mother’s estate in the amount of approximately $250,000.00. On April 3, 2017, Justice Wein dismissed a motion to set aside the Notice of Garnishment pending Denise’s attempt to extend the time to appeal the judgment against her.

[5] On April 13, 2017, Mark deposited the garnished funds into his bank account held jointly with Catherine. He transferred roughly the same amount of money out of that joint account and used the funds toward the purchase of a condominium in Costa Rica (the Condo). Mark says the Condo is owned by a corporation controlled by Catherine. Catherine says the Condo is owned by a corporation controlled by Mark.

[6] On September 29, 2017, the Court of Appeal extended the time for Denise to file her Notice of Appeal. On February 13, 2018, Denise perfected her appeal. On May 25, 2018, Mark’s motion to quash the appeal was unsuccessful. On June 7, 2018, Denise’s appeal was allowed and a new trial was ordered. Mark was ordered to return the garnishment amount of $248,609.00 plus costs of $80,000.00 for a total of $328,609.00: Kowalsky v. Asselin-Kowalsky, 2018 ONCA 539.

[7] On October 4, 2018, Mark was examined in aid of execution with respect to the Court of Appeal orders. On October 13, 2018, the plaintiff commenced this action against Mark and Catherine. On November 13, 2018, Denise brought this motion for a Mareva injunction. On November 29, 2018, an interim Mareva injunction was obtained pending the hearing of this long motion on its merits. On January 3, 2019, the interim Mareva injunction was varied to allow Catherine to deal with her assets up to $5,000.00 per month for daily living expenses.

[8] On February 13, 2019, Catherine was cross-examined on her affidavits. Mark has been noted in default.

[9] On March 8, 2019, Denise obtained judgment against Mark in the family law action for $1,012,011.28.

The Requirements for a Mareva Injunction

[10] In Cardinal Meat Specialists Ltd. v. Zies Foods Inc., 2014 ONSC 1107, Ricchetti J., in addressing the requirements of a Mareva injunction, wrote the following at paras. 50 and 51:

There are five requirements for a Mareva injunction:

(a) the plaintiff must make full and frank disclosure of all material matters within his or her knowledge;

(b) the plaintiff must give particulars of the claim against the defendant, stating the grounds of the claim and the amount thereof, and the points that could be fairly made against it by the defendant;

(c) the plaintiff must give grounds for believing that the defendant has assets in the jurisdiction;

(d) the plaintiff must give grounds for believing that there is a real risk of the assets being removed out of the jurisdiction, or disposed of within the jurisdiction or otherwise dealt with so that the plaintiff will be unable to satisfy a judgment awarded to him or her; and

(e) the plaintiff must give an undertaking as to damages.

A Mareva injunction grants the plaintiff a far reaching remedy and causes financial upheaval to the defendant(s) by tying up assets indefinitely, before the plaintiff's claim has been determined on its merits. I recognize that a Mareva injunction should only be granted in exceptional and limited circumstances. See: Aetna Financial Services v. Feigelman, [1985] 1 SCR 2.

Analysis

[11] Mark has been noted in default. Catherine consents to a Mareva injunction with respect to the assets of Mark Kowalsky and also consents to that injunction covering the assets of Mark Kowalsky worldwide. However, she opposes the injunction with respect to her assets.

Full and Frank Disclosure Made

[12] Catherine asserts that the plaintiff has failed to make full and frank disclosure of all material matters within her knowledge. This motion was fully argued before me. The plaintiff filed a series of affidavits in support of the motion. Catherine filed responding affidavits. Any deficiencies in the material presented have been challenged by Catherine. I am satisfied that there is no deficiency in disclosure such that the plaintiff is disentitled from obtaining her injunction. An injunction is equitable relief. I am satisfied that the plaintiff comes to court with clean hands and is in a position to ask for equitable relief.

Plaintiff has Strong Prima Facie Case

[13] At the time the claim was issued, Mark owed Denise $335,609.00. The plaintiff claims that Mark and/or Catherine severed the joint tenancy in their matrimonial home, transferred funds from Mark to Catherine regarding the Condo which is owned by a corporation, and that Mark and Catherine have conspired to move Mark’s assets and joint assets into Catherine’s name to evade payment of monies owed by Mark to Denise.

[14] Mark and Catherine listed the matrimonial home for sale in April 2018. On June 8, 2018, after the Court of Appeal allowed the appeal, Catherine severed the joint tenancy in the matrimonial home. In November 2018, Catherine and Mark held estate sales to sell all the assets they owned in the matrimonial home.

[15] Mark and Catherine assert that they separated on February 10, 2018. The assertion that Mark and Catherine are separated appears contradicted by evidence. Mark and Catherine travelled together to Cuba and Costa Rica notwithstanding this alleged separation. Catherine and Mark used pseudonyms on their Facebook accounts. There are Facebook posts which show Mark and Catherine engaged in activities together. There are Facebook posts in October 2018 wherein Catherine speaks of retiring to Costa Rica. She consistently refers to “we” and “us” and has acknowledged that that reference is to Catherine and Mark. Her evidence that she is merely putting on a public face in order to market the Costa Rica condominium and to put on a brave front to her friends seems incredible. Catherine’s assertion that she was making the Facebook posts to ensure the Costa Rica condominium was appropriately marketed is not consistent with her ceasing to make the Facebook postings almost immediately after they were disclosed in the affidavit of Denise.

[16] On August 31, 2018, Catherine issued a claim against Mark. The claim sought approximately $650,000.00 in liquidated damages. The claim was not defended by Mark. On October 31, 2018, a motion was brought to amend the claim to seek a declaration with respect to ownership of the matrimonial home and for consent judgment in favour of Catherine. The motion was clearly prepared collaboratively with Mark.

[17] With respect to the matrimonial home, the statement of claim in the claim brought by Catherine against Mark alleged a sale price of $800,000.00. However, the matrimonial home was sold to a friend of Catherine’s pursuant to an agreement of purchase and sale which allowed Mark and Catherine to continue to reside on the property for six months and to store personal items in a room in the house. The sale price was $725,000.00. The purchaser moved into the property. The transaction was extended but has since been terminated. The purchaser still resides in the home.

[18] I am satisfied, based on the evidence, that the plaintiff has a strong prima facie case with respect to her claims against Mark and Catherine.

Grounds for Believing the Defendants have Assets in the Jurisdiction

[19] The matrimonial home is in the jurisdiction. In addition, Catherine has bank accounts in the jurisdiction. The plaintiff has satisfied this requirement.

Grounds for Believing there is a Real Risk of the Assets being Removed or Disposed of

[20] In this case, the defendants have sold personal property, they are in the process of selling the matrimonial home, and have indicated an intention to move to Costa Rica. The plaintiff has satisfied this requirement of the Mareva injunction.

Plaintiff must give an Undertaking as to Damages

[21] The plaintiff has given the undertaking as to damages.

Conclusion

[22] In the circumstances, a Mareva injunction shall issue and that injunction should be worldwide. The plaintiff provided an order which I have signed today.

Costs

[23] Rule 39.02(4) of the Rules of Civil Procedure provide that the party who cross-examines on an affidavit shall provide a copy of the transcript free of charge to any adverse party and is liable for the partial indemnity costs of every adverse party on the motion in respect of the cross-examination regardless of the outcome of the proceeding, unless the court orders otherwise. The cross-examination of Catherine was necessary to address the issues on the motion. In the circumstances, and considering the conduct of the defendants, the plaintiff is entitled to recover the costs of that cross-examination and is not required to pay the partial indemnity costs of Catherine.

[24] The plaintiff has been successful and accordingly is entitled to her costs on a partial indemnity basis. I have reviewed the bill of costs and am satisfied that it is fair and reasonable and the plaintiff is entitled to the costs on a partial indemnity basis fixed in the amount of $30,000.00 payable by the defendants to the plaintiff forthwith.

Sweeny J.

DATE: March 19, 2019