Court File and Parties

Court File No.: FC-18-1188 Date: 2019/07/31 Superior Court of Justice – Family Court

Re: Clifford Blackmore, Applicant And: Karima Abdi, Respondent

Before: Justice A. Doyle

Counsel: Self-represented, for the Applicant Pierre Ranger, Counsel for the Respondent

Heard: July 23, 2019

Endorsement

[1] The motions before the Court deal with various issues arising from the parties’ short cohabitation.

[2] The Respondent brings a motion for the following:

• An Order striking the Application on the basis that the Applicant has no standing as an undischarged bankrupt;
• In the alternative, security for costs in the amount of $50,000.00; and
• Costs.

[3] The Applicant brings a motion for the following:

• That the Respondent pay into Court the amount of $120,000.00 in trust for the Applicant as security;
• Unredacted disclosure of the Agreement of Purchase and Sale of the Respondent’s home, amendments and inspection reports;
• A tracing of funds from the sale proceeds of the home;
• Recovery of his property in the amount of $21,2290.34 plus HST;
• A timetable for this action;
• That the Respondent not communicate with the Applicant’s son, Timothy Blackmore;
• That the Respondent provide her address; and
• Costs.

[4] On consent, the Court orders that the Applicant will communicate with the Respondent’s counsel through counsel’s Hotmail account.

Background

[5] The parties commenced cohabitation in March 2015 and separated on February 24, 2017 when the Applicant was removed by the Ottawa Police Service from the 1650 Grey Nuns Drive property (“home”). He and his son from a previous relationship (who has 50% of parenting time with the biological mother) had been living with the Respondent and her children at the home.

[6] The Applicant faced charges of assault, uttering threats and theft alleged by the Respondent and was ultimately acquitted in April 2018.

[7] The home was purchased in December 2015 and the Applicant claims that he paid part of the deposit. The Respondent claims that she paid the complete deposit of $76,000 from sale proceeds of a previously owned property. Title for the home was placed in the Respondent’s name alone.

[8] The home underwent extensive renovations and the parties differ on what contributions, money or money’s worth, were made by the Applicant. The Applicant states he spent an inordinate amount of time on these renovations.

[9] The home was sold after the separation and the proceeds have been disbursed by the Respondent.

[10] The Applicant is claiming a constructive and/or resulting trust and also seeking to recover funds from the Respondent on the basis of unjust enrichment and/or quantum meruit.

[11] At a Case Conference held on July 12, 2018, the parties agreed to an interim Order whereby they would provide disclosure and that the Applicant could recover his personal belongings, tools, and chattels at a time and date to be arranged between counsel.

[12] A motion was brought by the Applicant on January 8, 2019 for, among other things, an Order of Certificate pending litigation and an Order that the sale proceeds from the home be held in trust. Since the home was already sold and proceeds disbursed, Justice Audet found those issues were moot. The Court noted that the key issue in this case is whether the Applicant had standing to bring this Claim in light of his undischarged bankrupt status. She ordered that this issue must be decided first before any other steps in this matter could proceed.

[13] Justice Audet ordered the Applicant to produce his Bankruptcy documentation and granted the Respondent leave to bring a motion to address the issue of the Applicant’s standing before the Court. After that determination, the Respondent could then file her responding materials.

[14] With respect to the Applicant’s belongings, Justice Audet ordered that the Applicant could attend a storage facility to retrieve his belongings as set out the July 12, 2018 Order. This Order was without prejudice to the Respondent to claim storage fees and the Applicant to claim the return of more items belonging to him.

[15] The Court will deal with each head of relief sought.

1. Should the Application be dismissed as the Applicant, as an undischarged bankrupt, does not have standing to bring this application?

Decision

[16] The Respondent asserts that, as an undischarged bankrupt, the Applicant has no capacity to start or continue his Application and hence it should be struck.

[17] For the reasons that follow, the Court dismisses this motion.

[18] The definition of “property” under s. 2 of the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3 (BIA), is extremely broad and covers property of every kind whatsoever, including assets in relation to which the bankrupt has contractual or contingent rights, such as the licence agreements in the present case.

[19] The Applicant filed an assignment of bankruptcy on January 24, 2018, and Doyle Salewski Inc. was appointed trustee of the estate of the bankrupt by the official receiver.

[20] The Applicant commenced this Application after the assignment and he is scheduled to be discharged in January 2020.

[21] The Applicant has provided a letter from his Trustee in Bankruptcy Doyle Salewski Inc. dated March 22, 2019, which acknowledges the family lawsuit against the Respondent for constructive trust to be a chose in action which is an asset in the bankruptcy and the Trustee authorizes the Applicant to continue this action.

[22] In addition, the Applicant has produced an email from the trustee dated March 20, 2019, confirming that they consent to him pursuing the matter and they would be entitled to 30% from the proceeds after costs.

[23] The Respondent relies on s. 38 of BIA which provides:

Where a creditor requests the trustee to take any proceeding that in his opinion would be for the benefit of the estate of a bankrupt and the trustee refuses or neglects to take the proceeding, the creditor may obtain from the court an order authorizing him to take the proceeding in his own name and at his own expense and risk, on notice being given the other creditors of the contemplated proceeding, and on such other terms and conditions as the court may direct.

[24] This section pertains to creditors who wish to pursue the bankrupt despite the fact of the bankruptcy. It does not apply to the bankrupt who wishes to pursue his own claim. Section 66 of the BIA also deals with creditors and other parties’ rights as a result of the stay of proceedings which occurs as a result of the act of bankruptcy. These stays do not apply to bankrupts such as the Applicant.

[25] In addition, if the bankrupt had commenced his action before he made an assignment in bankruptcy, he could have applied under Rule 11.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for a transmission of interest as a result of bankruptcy. This Rule does not apply here as the application was commenced after his assignment of bankruptcy.

[26] Section 71 of the BIA, states as follows:

On a bankruptcy order being made or an assignment being filed with an official receiver, a bankrupt ceases to have any capacity to dispose of or otherwise deal with their property, which shall, subject to this Act and to the rights of secured creditors, immediately pass to and invest in the trustee named in the bankruptcy order or assignment, and in any case of change of trustee the property shall pass from trustee to trustee without any assignment or transfer.

[27] However, the trustee has rights to bring actions on behalf of the bankrupt to recover: See s.72 of BIA.

The provisions of this Act shall not be deemed to abrogate or supersede the substantive provisions of any other law or statute relating to property and civil rights that are not in conflict with this Act, and the trustee is entitled to avail himself of all rights and remedies provided by that law or statute as supplementary to and in addition to the rights and remedies provided by this Act.

[28] As stated in Vetro v. Canadian National Exhibition Association, 2014 ONSC 4324, 17 C.B.R. (6th) 326, paras 34-35:

[34] As a result, any property in the licences and/or their renewals that the plaintiff subsequently acquired automatically vested with the trustee in bankruptcy. The plaintiff’s right to deal with his property, including any cause of action that the plaintiff may have had against the defendant in relation to the termination of the licences, also vested with his trustee in bankruptcy.

[35] For these reasons, I conclude that the plaintiff had no capacity to commence or continue this action against the defendant. This action is a nullity and an abuse of process, and must be dismissed.

[29] Under the scheme of the BIA, it is not simply the property of the bankrupt owned at the date of bankruptcy which passes to the trustee; any property acquired by the bankrupt prior to his discharge also vests in the trustee.

[30] As the Supreme Court of Canada held in Wallace v. United Grain Growers Ltd., 1997 SCC 332, [1997] 3 S.C.R. 701, per Iacobucci J. for the Court, upon assignment into bankruptcy, the statute provides that the bankrupt relinquishes his ability to deal with existing and after-acquired property, as it all vests in the trustee in bankruptcy.

[31] It is undisputed that the Applicant’s property vested with his trustee in bankruptcy.

[32] He does not fall into the exceptions set out in Wallace, such as “salary, wages or other remuneration from a person employing the bankrupt”.

[33] Normally, the trustee could on behalf of the Applicant pursue his action against the Respondent. The Trustee has authorized him to do so with respect to his constructive trust claim. Hence, he can continue his action.

[34] With respect to the chattels, although there has already been an Order for a distribution of chattels, the Applicant must obtain a letter of authorization from the Trustee that it is consenting to the Applicant pursuing this claim and file the same with the Court.

2. Should the Applicant and/or Respondent be ordered to pay into Court security for costs in the amount of $50,000 or $200,000 respectively?

Position of the parties

[35] The Respondent submits:

• That the Applicant’s chance of success are slim;
• The Respondent will be put through considerable expense to obtain receipts and contracts, credit card transactions and all expenses related to the home;
• The Applicant is judgment proof as he has few assets as a recently declared bankrupt;
• He has already incurred further Canada Revenue Agency debts;
• He has declared bankruptcy on a previous occasion; and
• If the Respondent is successful, she will have no ability to recoup costs against him unless there is an order for security for costs.

[36] The Applicant submits:

• He wishes the Respondent to pay $120,000.00 into Court as he believes she is a possible flight risk;
• He states that given the measures she has already taken to “disenfranchise him from his rightful interest in the home, he believes that she will make plans to return to her home country, France as she has previously entertained”; and
• The Respondent is from Paris, France and has dual citizenship with Canada and France. She has three children in Canada, one who lives independently in Quebec City and she has sole custody of her two younger children.

Decision

[37] The security for costs remedy is used to prevent a litigant’s pursuit of another person in court without attention to the merits of their claim, and to prevent the legal costs that Respondent would likely incur to defend the case. Court proceedings should not give individual litigants a forum for carrying on in whatever manner they may choose, oblivious to the impact of that conduct on the other side and oblivious to the mounting costs of litigation: see Chatur v. De Los Reyes, 2012 ONCJ 527 and McGraw v. Samra, 2004 ONCJ 164, [2004] O.J. 3610.

[38] The issue of security of costs is provided for in Rule 24(13) of the Family Law Rules, O. Reg. 114/99, which provides:

24(13) A judge may, on motion, make an order for security for costs that is just, based on one or more of the following factors:

1. A party ordinarily resides outside Ontario.

[39] This is not the case here as both parties live in Ontario.

2. A party has an order against the other party for costs that remains unpaid, in the same case or another case.

[40] This is not the case here.

3. A party is a corporation and there is good reason to believe it does not have enough assets in Ontario to pay costs.

[41] This is not relevant here.

4. There is good reason to believe that the case is a waste of time or a nuisance and that the party does not have enough assets in Ontario to pay costs.

[42] I do not find that this Application is a waste of time or a nuisance claim. The Applicant’s materials detail his extensive history with the Respondent in her previous residence, his relationship with her, the details of his contributions, refinancing of Le Ruisseau Circle (the Respondent’s previous residence), the Respondent’s bank statements showing deposits of sums of $5000.00 that he said he had given her, communication regarding the Respondent’s husband’s name on title of the Respondent’s previous matrimonial home (a fact not known to the Applicant); copy of the Respondent’s separation agreement that he had assisted her with and a copy of the Agreement of Purchase and Sale of the home. The Applicant was the owner of Ideal Homes, a sole proprietorship he started in 2004. It was a full-service company that completed renovations, painting and staging. He was in the business and it is certainly possible he assisted in the renovations of the home.

[43] Although this does not make his claim proven, it does show that he indeed had a relationship with her, was knowledgeable about her personal circumstances, was involved with her and her family and there was financial involvement with her and her properties.

[44] On the other hand, the Respondent indicates that she has proof that she paid the deposits and paid for all the renovations. She indicates that the Applicant’s contributions were minimal or nil. Her right to respond is not a waste of time or a nuisance.

[45] Based on the materials before me, and the Applicant’s representations at the hearing and his status as an undischarged bankrupt, I find that he does not have assets in Ontario to pay costs if they were awarded against him. However, this factor set out in #4 includes two criteria and only one criterion has been met here.

[46] There is no evidence with respect to the Respondent’s assets in Ontario.

3. Is the applicant entitled to damages for his items?

[47] The Applicant alleges the following:

• That he did not receive the return of his Samsung smart TV but rather the Respondent’s older model television. Given her lack of co-operation, he has replaced the TV and has provided a receipt attached to his affidavit of $709.63;
• All items, except his tools, were damaged. He indicates when he opened the storage unit, the items were not safely kept with no packaging or protection including paintings, bedding, furniture and décor accessories. On top of his items, lay construction material and debris. Most of the receipts for these items were in the home and he had been denied access. He has produced a receipt from Ikea from December 2016 for a bedroom set in the amount of $1109.46 before taxes;
• That items such a camera system, doorbell, vase, paintings, speaker system and kitchenware with values assigned are alleged to be missing or damaged. He has provided photos or pictures of them and an estimated value;
• Three German shepherd dogs valued at total of $7500.00 (with no receipts or proof of value); and
• Wishes the return of the engagement ring valued $1500 he gave her.

[48] The transfer of these items were dealt with in a Court Order. The Applicant alleges that she has not complied with the Order. The issue of compensation for allegedly missing or destroyed goods is not properly done by way of a motion that does not include all receipts, valuations of items and full cross-examination. The issue of compensation for the Applicant is adjourned to the trial provided that the Trustee in Bankruptcy consents to this Claim.

4. Is the Applicant entitled to disclosure?

[49] The Applicant requests the following:

• A copy of the unredacted Agreement of Purchase and Sale of the home, any amendments and inspection reports; and
• Tracing from the sale proceeds.

[50] Family law cases require full financial disclosure. This matter requires the disclosure of the appropriate documentation in order that the parties are aware of the case they have to meet, can assess the chances of success, enter into meaningful settlement discussions with full disclosure and canvas the evidence that ultimately will be used at trial.

[51] The Applicant is making a claim on the home and hence the sale price, an inspection of the property setting out any defects, and the sale proceeds and its distribution are both relevant and material to the issue of whether the Applicant has a claim of unjust enrichment and/or quantum meruit against the Respondent.

[52] Accordingly, these documents will be produced by the Respondent to the Applicant within 30 days from the date of this Court order.

5. Should the Respondent be prohibited from contacting the Applicant’s son, Timothy?

[53] Although the Applicant has set out this relief in this motion he has not provided any evidence of why this order should be granted. The court requires evidence as to why this is in Timothy’s best interests and what actions, if any, by the Respondent warrant such a prohibition. Therefore, this motion is dismissed.

6. Should the Respondent provide her address to the Applicant?

[54] The basis and reasons for this request has not been provided by the Applicant and therefore, this motion is dismissed.

7. Should the Court set a timetable for this application?

[55] The Respondent agrees that a timetable is appropriate.

[56] The timetable will be as follows:

• Within 45 days from the date of this Order, the Respondent will file her responding materials;
• The parties will conduct questioning by November 29, 2019; and
• The parties will set this matter down for a settlement conference on or before January 30, 2020.

[57] The determination of costs is dependent on the success of the Applicant to prove his claim set out in the Application. Therefore, the issue of costs is reserved to the trial Judge.

Justice A. Doyle Date: July 31, 2019