Court File and Parties

COURT FILE NO.: F949/18

DATE: 20190731

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Louis Utsy Gregory Hadaro, Applicant

AND:

James Arthur Patten, Respondent

BEFORE: Tranquilli J.

COUNSEL: Lisa M. Walters, for the Applicant

James E. Dean, for the Respondent

HEARD: In writing

ENDORSEMENT

[1] I previously heard the applicant’s motion on May 15, 2019, wherein he sought interim relief including spousal support, an order restraining the respondent from depleting property in his possession and control, that the respondent maintain the applicant’s entitlement to extended health benefits and other related relief. The threshold issue was whether the applicant was a “spouse” pursuant to s. 29 of the Family Law Act, R.S.O. 1990, c. F.3, as amended.

[2] By endorsement dated June 10, 2019, I found that the applicant established prima facie entitlement to spousal support on an interim basis.

[3] I invited and received written submissions from the parties on the applicant’s request for a non-depletion order as it was only briefly addressed by the parties during oral argument.

[4] The applicant seeks a non-depletion order in relation to the following real and personal property:

a. Property municipally known as 14 Chalmers Street, London ON N5Y 4E9; and

b. The following art (hereinafter the “art collection”):

i. Four Persian rugs;

ii. Joseph Farquharson painting;

iii. Asian vase;

iv. Tobacco jar;

v. David Cox Sr. painting;

vi. Jane Vivian painting;

vii. Henry Parker painting;

viii. David Nash sculpture;

ix. Denyse Thomasos painting;

x. Henry Henshall watercolour;

xi. Three Brabrazon Brabrazon watercolours; and

xii. Gary Evans painting;

[5] In his application, the applicant alleges that he and the respondent were involved in a joint family venture and that the respondent has been unjustly enriched by the applicant’s contributions to the relationship such that the applicant is entitled to a payment to address the unjust enrichment. He also claims that the residential property is held in trust for him by the respondent by way of a resulting trust. The application also seeks an order restraining the respondent from depleting “any property” under his control and to preserve that property until further order of the court. The affidavit evidence of the applicant and respondent as it relates to the contention of the existence of a joint venture, trust and unjust enrichment was previously summarized in my endorsement of June 10, 2019.

[6] The applicant acknowledges that s. 12 of the Family Law Act, does not apply, as the parties are not married to each other. The applicant relies on s. 40 of the Act, which falls under Part III of the Act. Part III of the Act addresses support obligations and includes an expanded definition of “spouse” to also include either of two persons who are not married to each other and who have cohabited continuously for a period of not less than three years. Section 40 provides:

The court may, on application, make an interim or final order restraining the depletion of a spouse’s property that would impair or defeat a claim under this Part.

[7] In addition, although s. 12 of the Act does not apply to this proceeding, the applicant argues the relief pursuant to that provision is analogous to an interim preservation order that is available under r. 45.01(1) of the Rules of Civil Procedure. The applicant maintains that the assets are the subject of the litigation, that there is a serious issue to be tried as it relates to the joint venture and trust claims and that the balance of convenience favours a non-depletion order. The applicant’s affidavit evidence states that the respondent has been donating, selling and auctioning some of the art collection in question. The applicant contends he will be prejudiced if the respondent continues to deplete these assets and is left with insufficient property to satisfy any award in the applicant’s favour in this proceeding.

[8] The respondent contends that these assets should not be subject to a non-depletion order. In his written submissions, he advises that the art items at para. 4(b)(ii)(x) and (xi) are no longer in his possession. He states that the Farquharson painting has not been in his possession for the past six years and that the applicant removed the Brabrazon Brabrazon watercolours from the home “years ago”. He does not address the circumstances of how the Henshall watercolour is no longer in his possession. He also claims that the applicant has removed other pieces of the art collection from the residential property and may be storing them in Toronto.

[9] The respondent also advised that the parties have entered into a consent agreement that will allow for the respondent to sell the residential property and hold the proceeds in trust pending resolution of this matter. The respondent argues that the applicant has not established how the non-depletion order as it relates to the art collection is necessary to protect his claim for spousal support and that the sale of these items would fund an award of spousal support. Finally, the respondent claims that a non-depletion order would impose an additional expense as he is moving to a smaller residence and would need to pay for storage of those items.

Analysis

[10] As the parties have agreed that the proceeds of the sale of the residential property will be held in trust pending resolution of this proceeding, I find that there is no need for a non-depletion order on the real property. The remaining issue is whether a non-depletion order should apply to the art collection.

[11] Although unjust enrichment, joint venture and a trust are asserted, the application and motion do not articulate whether the respondent seeks a finding of a beneficial interest in the art collection based on its value and uniqueness, for example, whether he asserts he holds legal title to any or all of the items in issue or whether the issue is to preserve property in the respondent’s possession to satisfy a monetary award. In his written submissions the applicant’s main concern seems to be that there is a risk of the respondent depleting certain assets such that there will insufficient finances to fund any award that may be made in the applicant’s favour.

[12] Section 40 of the Family Law Act allows for an order restraining the depletion of a spouse’s property that would impair or defeat a support claim. I made an order for interim spousal support with ancillary relief. There is nothing in the evidence on this motion to indicate that the respondent has either refused or is unable to comply with that order. I therefore conclude that s. 40 of the Act does not apply to allow for a non-depletion order in these circumstances as there is no evidence that depletion of this property would impair or defeat the applicant’s claim for spousal support. If the applicant seeks the preservation of the property in respect of his claims in trust, joint venture and unjust enrichment, in my view, s. 40 does not apply as it is not connected to a support obligation. Further, an order under s. 40 is usually made when there is evidence that the payor is not complying with a support order or there is evidence of blameworthy conduct.[^1] I acknowledge that the parties have each raised questions about the other’s conduct in their written submissions; however, in my view, there is no proper evidence of either non-compliance or blameworthy conduct to warrant the order under this section.

[13] The Family Law Rules do not provide for an interim preservation order. Section 1(7) of the Family Law Rules provides that if these rules do not cover a matter adequately, the court may give directions and the practice shall be decided by analogy to these rules, by reference to the Courts of Justice Act and the Act governing the case and, if the court considers appropriate, by reference to the Rules of Civil Procedure. However, the Court of Appeal has held that resort to r. 1(7) will be a rare instance as the Family Law Rules reflect the fact that family litigation is different from civil litigation.[^2] That said, the nature of the applicant’s trust, unjust enrichment and joint venture claims are such that it could be said that this is one of those rare instances where resort to the civil rules is appropriate.[^3]

[14] Although the applicant referred to r. 45 of the Rules of Civil Procedure, in my view the appropriate rule under which to seek this relief is r. 40, pertaining to a Mareva injunction and s. 101(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 as amended. As explained by Kristjanson J. in Laliberte v. Monteith,[^4] a Mareva injunction is intended to prevent the dissipation of assets pending the determination of a civil matter.

[15] In Karpacheva v. Karpacheva,[^5] Trimble J. noted that generally, Courts should rarely issue orders freezing assets before judgment against the owner of those assets. They are granted where the claimant has a reasonable and justiciable cause of action and there is serious risk the assets will be dissipated to avoid judgment and execution. At paragraph 33, Trimble J. set out the criteria the moving party must satisfy to impose a Mareva injunction. These are guidelines for the court to consider as opposed to rigid criteria :

a. establish a strong prima facie case;

b. make full and fair disclosure of all material matters within his or her knowledge;

c. give particulars of the claim against the defendant, stating the grounds of the claim, the amount thereof, and the points that could be fairly made against it by the defendant;

d. establish that there is a serious risk of the assets being removed out of the jurisdiction, or disposed of within the jurisdiction, or otherwise dealt with before judgment; and

e. give an undertaking as to damages.

[16] The applicant’s affidavit sets out some evidence in support of his property claim regarding the art collection. The affidavit evidence sets out a joint “venture” where some items were purchased by the respondent, some by the applicant and describes that the item would be sold on consignment on occasion with the applicant listed as owner, funds paid to the applicant and then the funds deposited by the applicant into the respondent’s account. He also sets out his concern that the respondent has been depleting the art collection through his observations of some items on auction. However, the affidavit evidence lacks precision in identifying the particulars of the art collection that is the subject of the requested order, including when acquired, who holds title, the estimated value of each item and where the item(s) are located. No particulars are given as to the items the applicant says he saw placed by the respondent on auction, including the nature of the time, who holds title, when this occurred and the price or estimated value. I note that on questioning, the respondent refused to provide appraisals of the art collection in his possession; however, that refusal was not the subject of this motion.

[17] Therefore, while there is some evidence that may support a non-depletion order, I find that the evidence falls short of establishing a prima facie case in respect of the art collection in issue on the motion. Material information is lacking on the record: the nature of the proprietary claims in respect of each item, information about the specific items and the basis of the applicant’s connection to each item. There is also insufficient evidence relating to the risk of depletion. I recognize that the respondent’s written submissions refer to his preference and perhaps intention to sell the art items in his possession in order to avoid storage costs. This has not occurred yet and is not properly in evidence. Finally, the applicant has not provided an undertaking as to damages.

[18] Given the manner in which the applicant’s motion for the non-depletion order was presented, I have also considered whether a non-depletion order could be issued pursuant to r. 45 for interim preservation of property as the dispute in this proceeding relates in part to the art collection.

[19] As set out by Sachs J. in Tariboo Holdings Ltd. v. Storage Access Technologies[^6], in order to obtain an order under r. 45 the moving party must establish that:

a. The assets sought to be preserved constitute the very subject matter of the dispute;

b. There is a serious issue to be tried regarding the claim to that asset, and;

c. The balance of convenience favours granting the relief sought by the moving party.

[20] Although the affidavit provides some evidence that the art collection is part of the subject matter of the dispute, I find it is lacking particulars, as previously reviewed at para. 16. The second part of the test also requires me to consider the strength of the applicant’s case as it relates to those assets, which cannot be done properly without that information. Finally, I am without any evidence as to the estimated value of the items and any costs associated with the storage or disposition of the items so as to give due consideration to the balance of convenience.

[21] In this case, I find that the record is insufficient to allow for an order pursuant to either r. 40 or 45 of the Rules of Civil Procedure. While there are some indicia of a prima facie case or that there is a serious issue to be tried in respect of the applicant’s proprietary claims to the items in the art collection, there is important information missing. The submissions indicate that further disclosure between the parties is wanting; however, a motion for such relief is not before the court at this time. Disclosure should occur so as to assist them in addressing the status and possible disposition of the collection. I encourage them to do so in order to avoid unnecessary depletion of their resources through additional legal expenses.

[22] For the foregoing reasons, the applicant’s motion for a non-depletion order is dismissed without prejudice to renewing a motion for this relief in the future with further and better evidence. I am not seized of this matter.

[23] Although the applicant was unsuccessful on his motion for this particular relief, I order no costs. The parties have otherwise consented to an order regarding costs of the motion whereby the respondent shall pay to the applicant the amount of $4,000.00 forthwith. I have signed that order.

« Justice K. Tranquilli »

Justice K. Tranquilli

Date: July 31, 2019

[^1]: Keyes v. Keyes, 2015 ONSC 1660 at paras. 74-76. [^2]: Frick v. Frick, 2016 ONCA 799 at paras. 11-12. [^3]: See, for example, [^4]: 2018 ONSC 7032 at para. 31. [^5]: 2018 ONSC 4563 at para. 29. [^6]: 2002 CarswellOnt 3811 (S.C.J.) at para. 6.