COURT FILE NO.: FS-17-21818-00 and CV-18-00607821
DATE: 20190813
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
T.O.E.
Applicant
– and –
I.S.
Respondent
Sean Zeitz for the Applicant
Charles Wagman, for the Respondent
HEARD: August 1, 2019
C. Gilmore, J.
Reasons on motion
overview
[1] This case has a long litigation history. Given the procedural nature of this motion, it is not necessary to recite a detailed history, only those parts which are relevant to this motion.
[2] In order to settle the legal issues arising after the birth of their child, the parties signed an Agreement which dealt with custody, access, child support, s.7 expenses and property. In 2013, the respondent purchased a home for the applicant in Toronto (“the home”) for $1,187,000. The home is in the applicant’s name alone and the Agreement specifies that she has exclusive possession of it. T.O.E., a company controlled by the respondent, owns an interest free first charge on the property in the amount of $1,187,000 which matured on June 30, 2018.
[3] The Agreement provides for certain options available to the applicant in relation to the home. The relevant provisions are reproduced below:
62(c) The parties agree that on or before June 30, 2018, I. shall have the right to deal with the property on one of the two following manners, at her sole discretion:
i. Should I. not wish to retain the property beyond June 30, 2018, then the property shall be listed for sale at a price mutually agreed to by the parties. In the event that there is any disagreement between the parties in connection with any of the terms relating to the sale, then the parties agree to accept the recommendations of the real estate agent chosen by I. to list the property. Upon the sale of the property, I. shall be entitled to retain one third of the net sale proceeds and M. 2/3 of the net sale proceeds, less all proper and reasonable costs of disposition, including, real estate commissions, legal fees incurred to close the transaction and all other necessary disbursements to close the transaction. The mortgagee will arrange for the discharge of the aforementioned mortgage at the time of the sale. For the sake of clarity, there will be no reduction for the mortgage amount when calculating I.’s one-third share of the net sale proceeds. For example, if the home sells for $1,500,000 gross, the amounts deducted from the gross will be agent’s commission, outstanding taxes, utilities, etc., if any. Assuming those costs, for illustrative purposes only, equal $100,000, the remainder amount of $1,400,000 would be apportioned 2/3rds ($933,333 in this example) to M. and 1/3 ($466,667 in this example) to I. I. would have no obligation or liability in respect of the redemption of the existing mortgage. Any reasonable and agreed upon costs for marketing and staging of the property, as recommended by the real estate agent, shall be paid off the top of the sale proceeds and shall be reimbursed to the payor of such expenses; or
ii. In the alternative, and if I. wishes to retain the property, then, on or before June 30, 2018, I. shall pay to the mortgagee two-thirds of the principal amount then owing on the mortgage and M. shall cause the mortgagee to discharge the mortgage upon receipt of the said funds. M. and the mortgagee will, thereafter, have no further claim against the property whatsoever.
[4] The Agreement goes on to say that in the event that the applicant does not redeem the mortgage or sell the property by June 30, 2018 then the respondent has the right to do so and the applicant must give him vacant possession.
[5] I.S. attempted to pay out two-thirds of the mortgage principal in accordance with the Agreement but submits that T.O.E. failed to provide a discharge statement. T.O.E. takes the position that the full amount of the mortgage was due. As well, the respondent in the family law litigation, M.S., seeks to set aside the Agreement. His position is that I.S. is in breach of the Agreement and therefore the entire mortgage principal is due and owing.
[6] T.O.E. commenced a civil action against I.S. in October 2018 to enforce payment of the mortgage by way of Power of Sale and for vacant possession. T.O.E.’s position is that they are not a party to the Agreement and not bound by it. I.S.’ position on the civil claim is that the Agreement gives her the right to redeem and she was ready and willing to do so in the fall of 2018. The civil action and the family action have now been combined.
[7] This motion is brought by T.O.E. for answers to undertakings and questions taken under advisement, including productions from the third parties, Scotiabank and Dominion Lending Centres. The undertakings arose from the questioning of I.S. which took place on May 6, 2019.
[8] While it is conceded that some productions have been provided by I.S., T.O.E. takes the position that she has not provided sufficient evidence of her best efforts to fully comply. The third parties do not oppose the relief sought in T.O.E.’s Notice of Motion dated July 16, 2019 subject to there being no costs award made against them.
[9] After service of this motion, I.S. provided further productions. These reasons deal with the remaining outstanding issues.
Undertaking to Provide Copies of Income Tax Returns and Notices of Assessment
[10] I.S. has provided a complete copy of her 2018 Income Tax Return and her Notices of Assessment for 2015-2017. She has undertaken to provide her complete returns for 2015 to 2017 but has not. She claims to have exercised her best efforts to do so but without success.
[11] Mr. Wagman submitted that he did not realize this was an issue until the motion. As is clear by now, T.O.E. requires strict and complete compliance with all undertakings given. If best efforts have been used without success, there must be evidence of those efforts.
Undertaking to Provide the Complete Real Estate File of Denise Richards
[12] Ms. Darlene Richards acted on I.S.’ refinancing with Scotiabank in the fall of 2018. At the Trial Management Conference held before Goodman, J. on July 2, 2019, Mr. Wagman agreed to produce Ms. Richards’ entire file.
[13] There was no discussion during the Conference as to solicitor-client privilege being claimed over any part of the file. Both counsel conceded they did not turn their mind to it at that time.
[14] Ms. Richards’ file was sent to Mr. Zeitz on July 24 and July 26, 2019. Mr. Wagman submitted that he produced to Mr. Zeitz everything he received from Ms. Richards. Mr. Zeitz wrote to Ms. Richards on July 29, 2019 (copying Mr. Wagman) noting that the file he received did not contain any emails sent or received from Mr. Rana, I.S., Scotiabank or Dominion Lending Centres. Mr. Zeitz sought electronic copies of those emails prior to the motion scheduled for August 1, 2019.
[15] Ms. Richards responded the same day indicating that she was unaware of any order for production of her file and that the “vast majority of my file is subject to solicitor/client privilege.” She asked for a copy of Goodman, J.’s order.
[16] Mr. Zeitz responded on July 31, 2019 indicating his surprise at Ms. Richards’ email. He advised that solicitor-client privilege had been waived on consent. Mr. Wagman wrote to Mr. Zeitz (copying Ms. Richards) indicating that solicitor-client privilege was not discussed at the July 2, 2019 conference and that he was not waiving solicitor-privilege on behalf of his client. He advised that any solicitor-client privileged documents would not add to T.O.E.’s arguments in any event.
[17] T.O.E. argues that obtaining the subject emails is important because any emails related to redemption of the mortgage or any intention on the part of I.S. to flip the property, should be before the trier of fact at the trial scheduled for March 2020. That is, there was never any intention to allow I.S. the benefit of redeeming only 2/3 of the mortgage and then immediately selling the property. T.O.E. suspects the emails may refer to these issues.
[18] Mr. Zeitz on behalf of the T.O.E. makes the following arguments with respect to production of the emails:
a. The production of this file is not in issue, only the scope of the production.
b. The scope of production was never qualified at the July 2, 2019 conference and therefore privilege should be inferred to be waived.
c. It is unreasonable for Mr. Wagman to withhold all of the emails when there may well be emails that are not privileged.
[19] Mr. Wagman, on behalf of I.S., submits that he when he received the file from Ms. Richards it did not contain any privileged documents. No waiver can be inferred because of the order of Goodman, J. The privilege claimed is absolute and has not been waived. In any event, any advice given by Ms. Richards to I.S. is not being relied upon as a basis for a claim in this lawsuit or a defence and is immaterial to the case.
[20] The concern of the court as it relates to this issue is that the matter is being argued in a vacuum. Neither Mr. Wagman, Mr. Zeitz, nor the court have seen the allegedly privileged emails. Before any sense can be brought to this or any substantive arguments made, the emails must be produced in the proper context. I.S. will be ordered to request them from Ms. Richards and a proper process implemented to determine the issues of both privilege and relevance.
The Dominion Lending and Scotiabank Files
[21] T.O.E. requires I.S. to produce a copy of her complete and unredacted loan application file with Dominion Lending Centres including any emails sent and received between I.S., Dominion Lending Centre (or its agents) or Aman Rana that lead to issuance of the pre-approval letter dated June 22, 2018. T.O.E. also requires I.S. to produce an unredacted copy of her application for credit file with Scotiabank.
[22] I.S. provided blanket directions (drafted by M.S.’ family law counsel) to both Dominion and Scotiabank after agreeing on consent to do so at the April 25, 2019 motion. T.O.E. received some disclosure after delivering those directions but maintains that the disclosure was incomplete. Information in the Scotiabank file was redacted as it related to the third-party guarantor.
[23] T.O.E.’s position is that the Directions executed by I.S., while helpful, are not what he asked for. Specifically, the undertaking required that I.S. write directly to Scotiabank requesting the complete lending file including any application or personal financial statements that may have been provided to the bank when it assessed her mortgage application. I.S. was to copy Mr. Zeitz on that correspondence. I.S. was also to provide an unredacted copy of her mortgage application with Scotiabank and her application for credit.
[24] Scotiabank responded to I.S.’ signed direction on July 8, 2019 and provided the mortgage loan application file, however, some of the records were redacted due to third party privacy concerns.
[25] I.S. takes the position that she has provided everything she is able to provide in the circumstances. The blanket direction to Scotiabank was drafted by M.S.’ family law counsel and was comprehensive. Further, I.S. deposed that she never had any direct contact with Scotiabank, as her contact was her broker at Dominion Lending.
[26] I agree with T.O.E. that the issues in this civil claim are somewhat different from the issues in the family law file. The blanket direction signed by I.S. for the family law file does not suffice. I see no reason why I.S. should not be required to write directly to Scotiabank reciting the provisions of her undertaking given at page 25 of her questioning on May 6, 2019. If Scotiabank has nothing further to release, then all avenues will have been exhausted.
[27] Similar submissions were made by Mr. Zeitz regarding the Dominion Lending file. In that case, Dominion responded to the original Direction on June 17, 2019 by way of response from Mr. Molloy, the Dominion agent with carriage of I.S.’ file. Mr. Molloy advised that all email correspondence related to the pre-approval had been deleted because I.S. did not proceed with the loan. The balance of the file was produced although references to the co-applicant were redacted.
[28] Mr. Zeitz submits that the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c. 29, Section 48, requires a brokerage to retain complete records of every mortgage application for six years. Given that I.S.’ file is less than two years old, Dominion should be in a position to access the file including any deleted email correspondence, despite Mr. Molloy’s position. Mr. Zeitz requires a complete copy of the unredacted file including all emails.
[29] Similar to her position on the Scotiabank file, I.S. submits that she provided a blanket direction to Dominion as drafted by M.S.’ family law counsel. She has fully complied with all answers to undertakings.
[30] To date, Dominion has not provided an unredacted copy of I.S.’ file including all email correspondence. Notably, I.S. has not volunteered to produce any email correspondence she had with either Dominion, Mr. Molloy or Scotiabank. As such, further steps must be taken by I.S. to fully comply with her undertaking regarding Dominion. I agree that paragraphs 18-20 of her affidavit dated July 16, 2019 are somewhat unresponsive to this issue. As such, I.S. should be required to write directly to Dominion and Mr. Molloy to ensure the fully unredacted file is produced to her.
[31] In summary, I find that I.S. must take further steps in order fully comply with her undertakings given. This includes her writing directly to the parties involved to ensure the unredacted files are fully produced including any email correspondence. Issues of privilege in relation to Ms. Richards’ file can be dealt with as per the process set out below.
ORDERS
[32] The respondent shall produce her Income Tax Returns for the years 2015, 2016 and 2017. If she is unable to do so, she must provide detailed evidence of her best efforts to obtain those documents.
[33] The respondent shall direct Ms. Richards to provide to Mr. Wagman a copy of the all emails sent or received by I.S., Ms. Richards, Mr. Rana, Scotiabank or Dominion Lending Centre (Mr. Molloy) in her real estate file. Mr. Wagman to itemize the documents by sender/recipient and date. Mr. Wagman shall identify the documents over which the respondent claims privilege and an explanation as to why. This issue to be conferenced by Goodman, J. and, if she deems it necessary, a further motion scheduled at which the court may review the documents in dispute to determine issues of privilege and relevance. Alternatively, the documents may be submitted to Goodman, J. if she deems such a process to be within her mandate as Case Management judge.
[34] The respondent to forthwith write to Scotiabank directly with respect to undertakings #2 and #4 and Under Advisement #1 given on May 6, 2019. Counsel for T.O.E. to be copied on this correspondence.
[35] The respondent to forthwith write to Dominion Lending and her former broker, Mr. J.M. Molloy with respect to item 3 in Undertaking #2 given on May 6, 2019.
[36] An unopposed order shall issue with respect to paragraphs 5, 6 and 7 of the applicant’s Notice of Motion dated July 16, 2019.
COSTS
[37] The applicant seeks full indemnity costs of $21,000. The applicant submits that this motion should not have been required. The resolution of all of these issues was fully within the control of the respondent who has acted in bad faith by failing to comply with her undertakings.
[38] Immediately following the conference on July 2, 2019 Mr. Zeitz wrote to Mr. Wagman and identified all outstanding issues. The respondent continued to take the position that she had fully complied with her undertakings despite the obvious missing emails and the last-minute privilege issue.
[39] Finally, many of the respondent’s submissions were irrelevant. This motion related only the scope of undertakings already given.
[40] The respondent submits that this is yet another in a series of tactical motions brought by the applicant who has far more financial resources than the respondent. The only real issues were the income tax returns and the privilege issue. The respondent remains firm that she has fully complied with the undertakings given. Further, the costs sought by the applicant are unreasonably high for such a routine motion. The respondent’s costs were only $7,000 on a partial indemnity scale.
[41] I agree with the applicant. Not much more effort would have been required from the applicant to write directly to Scotiabank and Dominion Lending and offer up a process for dealing with the privileged contents of Ms. Richards’ file, thereby entirely avoiding this motion. To take the position that she simply refused to do more was not reasonable. Further, the respondent’s position on the privilege issue was puzzling given that no one had never looked at the documents in question nor even enquired about them.
[42] Costs are therefore in order in favour of the applicant. There is an issue, however, that despite the court’s agreement with the applicant’s position, that no further material documents will be produced even with the orders made herein. In fairness, the amount of costs should be reduced in the event that the entire matter becomes a “bootless quest” in which the applicant receives nothing more than what they already have. Costs are therefore ordered to be paid by the respondent in the amount of $7,500.
[43] No costs are ordered against Soctiabank or Dominion Lending Centres and the applicant shall be responsible for any costs related to the production of the documents in paragraphs 6 and 7 of the applicant’s motion.
C. Gilmore, J.
Released: August 13, 2019
COURT FILE NO.: FS-17-21818-00 and CV-18-00607821
DATE: 20190813
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
T.O.E.
Applicant
– and –
I.S.
Respondent
REASONS FOR JUDGMENT
C. Gilmore, J.
Released: August 13, 2019