Court File and Parties
KINGSTON COURT FILE NO.: 252/15
DATE: 20191001
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Mervin Brian Schick, Applicant
AND
Deborah Lynn Cardinal, Respondent
BEFORE: Mr. Justice Timothy Minnema
COUNSEL: Mark S. LaFrance, for the Applicant
Gene C. Colman and Kulbir K. Rehal, for the Respondent
HEARD: September 9, 2019
ENDORSEMENT ON LONG MOTION
[1] These are two motions by the applicant husband, one to have the respondent wife found in contempt related to disclosure, the other for a long list of relief including receivership and winding up of two companies, claims under the Ontario Business Corporations Act, sale of the former matrimonial home, leave to seek equalization beyond the limitation period, an advance of funds, further disclosure, and questioning. The motion took one full day to argue. It took longer than that just to read the voluminous material filed.
Background
[2] The parties married on June 16, 1990 and have two children, Justin and Steven, who are now adults.
[3] On May 8, 2001, they incorporated a company 1475459 Ontario Inc. as equal shareholders. According to the corporate records, the husband was made the sole director and an officer (President) and the wife was made an officer (Secretary).
[4] Shortly afterwards the three of them (the two parties and the limited company) entered into a Franchise Agreement dated July 1, 2001 with ‘End Of The Roll Carpet & Vinyl, A Corporate Partnership’. The numbered company began operating a retail carpet and flooring business called End of the Roll, and the parties were its employees. For ease of reference, counsel have referred to 1475459 Ontario Inc. as “OPCO”, short for operating company.
[5] According to the husband, the wife worked in the office and was responsible for managing the books and the banking, and he handled sales, orders, pricing and staff related issues. That is not seriously disputed as a rough generalization, although the wife says there was considerable overlap and no bright line between their responsibilities.
[6] A few years later, on December 7, 2004, the parties incorporated a second company Schick’s Holdings Inc., again as equal shareholders. The husband was made a director and officer (President) and the wife was also made a director and officer (Secretary). For ease of use the parties have referred to this company as “HOLDCO.”
[7] On March 31, 2006, HOLDCO bought a property at 695 Gardiners Road for $1,250,000 and took on a mortgage.
[8] On July 1, 2006, the Franchise Agreement (“FA”) was renewed. The agreement is in evidence, signed by the parties, OPCO, and the Franchisor. At the same time a Guarantee and Transfer Restrictions Agreement was signed by the parties and the Franchisor, and an Authorized User Agreement was signed by OPCO and the Franchisor. A few general points:
(a) The business was required to operate at a certain location, which for OPCO was 1365 Midland Avenue, Unit 90, Kingston. However, the FA acknowledged that the “Franchisee” had purchased real property (although in fact HOLDCO did) and intended to relocate by the summer of 2007.
(b) The FA’s term was for 5 years, with a right to renew for a further 5 years upon certain conditions including timely notice.
(c) The FA could be terminated by the Franchisor for any number of defaults or breaches including: if the Franchisee ceased or threatened to cease carrying on business or took or threatened to take any action to liquidate its assets (paragraph 13.2(f)); if a receiver was appointed to take charge of any aspect of the Franchisee’s business (paragraph 13.2)(j)); and if any corporate step or proceeding was taken by the Franchisee to wind up the business (paragraph 13.2(m)).
(d) The transfer of shares of OPCO to anyone other than the parties was restricted and required the Franchisor’s consent.
(e) Upon default by OPCO (see (c) above) the Franchisor was required to give it thirty (30) days’ notice if it elected to terminate the agreement.
[9] At some point in time, probably in 2007 as indicated, OPCO moved to 695 Gardiners Road, Kingston, and began to operate the business from there as a tenant of HOLDCO.
[10] On July 1, 2011, per paragraph 8(b) above, the Franchise Agreement expired. There is no suggestion that notice was given by OPCO to exercise the 5-year renewal. Indeed, there is no evidence from the Franchisor about its view of the status of the FA. However, it appears that business carried on as usual with both sides (OPCO and the Franchisor) honoring their mutual obligations under the expired agreement. The husband has not explained this arrangement, while the wife suggests it is now to a month-to-month agreement even though there is nothing in the FA providing for that.
[11] About a year later, on September 1, 2012, the parties separated. They continued living together (under the same roof) on and off. Little changed with respect to their financial arrangements and their operation of the business vis-à-vis the Franchisor. There was, however, tension between the two of them, and the wife alleges long-standing domestic abuse.
[12] After a few years of what was likely a very uncomfortable situation, it appears that the parties decided to address separating their property. They already had an old appraisal of 695 Gardiners Road (again owned by HOLDCO) dated August 22, 2012, obtained for mortgage purposes. Collins Barrow, the corporation’s accounting firm, was retained to value the shares of OPCO.
[13] The parties then began to work out the terms of their financial separation themselves, using a blank form Separation Agreement. They signed an agreement on June 6, 2015, and then another on June 22, 2015. Both were witnessed. The husband suggests that he was essentially a passenger in those negotiations, which the wife strongly denies.
[14] The 1st Separation Agreement, along with dealing with personal assets and debts, provided that the husband was to retain the then matrimonial home and the wife was going to retain both companies. The 2nd Separation Agreement also dealt with personal assets and debts and with the matrimonial home as above but did not deal with the companies. Instead there were two separate Share Repurchase Agreements (“SRA”) executed the same day (June 22, 2015), namely that each company would repurchase the husband’s shares. The effect of the two agreements therefore appears to be very similar, and the wife described the 2nd in her Answer as a “revised version” intended to give effect to the first one. However, the Share Repurchase Agreements had a “closing date” of July 6, 2015 and indicated that if not carried out by then through no fault of either party then all obligations would cease with no liability. The closing did not occur as required.
[15] Between the first and second versions of the Separation Agreements the wife, on June 10, 2015, had a ‘Form 8A: Application (Divorce)’ served on the husband seeking only a simple divorce. Despite the fact that it was issued (court seal affixed), the husband says that that he did not believe it to be authentic and did nothing. There is no suggestion, however, that he wanted to contest the divorce. The Divorce Order was granted on July 28, 2015, effective August 28, 2015. The husband claims he did not receive a copy of the issued order at the time.
[16] It is not clear what further discussions or actions took place with respect to the redistribution of the property following their agreements. I do note that the following year the corporate accountant Karen Sands at Collins Barrow sent a letter dated March 4, 2016 to a lawyer Mr. Tarnowecky “on behalf of our mutual clients, Ms. Deborah Cardinal and Mr. Mervin Schick” to deal with share adjustments because she understood the parties wanted to sell OPCO but keep HOLDCO.
[17] Then on February 6, 2017 the husband was arrested and charged with having assaulted the wife a few weeks earlier. They had still been living in the same home on and off and working together on and off up until that time. He was released the next day on conditions. On April 19, 2017, he pled guilty and was placed on probation, which terms included that he not attend the wife’s place of work (being OPCO) or the matrimonial home, and not communicate with her except through counsel. The husband is of the view that the wife tried to initiate communication or contact with him directly several times in an effort to have him breach his probation. The husband was in fact charged for a breach (being within 200 metres) on August 19, 2017 and pled guilty on December 6, 2017. The second probation order, oddly, did not include the previous exception to the non-contact order that permitted communication between counsel.
[18] On December 11, 2017, the husband issued his Application. The respondent’s Answer is dated February 16, 2018. The applicant’s Reply is dated March 2, 2018. There are a few unusual aspects with respect to those pleadings that are relevant to the motions before me, most importantly their positions with respect to the Separation Agreements.
[19] The husband in his Application did not make any mention of the Separation Agreements. The wife did, but her position in her Answer is not easy to follow:
(a) At paragraph 15, she referred to the Separation Agreements indicating that the parties settled all their separation issues but that the agreements were not implemented. In the next paragraph she said “it is the position of the Respondent that these joint assets [the previous matrimonial home and the two companies] must be sold (or transferred between the spouses in the case of the matrimonial home).”
(b) At paragraph 27 regarding the home, she noted that she still resided there, and they continued to hold it jointly, but that she wished to retain it if possible. Alternatively, she would consent to its sale to “an arm’s length third party”.
(c) Paragraph 62 of her Answer says “… due to the lapsing of the two Share Repurchase Agreements and the prior financing commitment the Respondent had received through her financial institution in 2015 in order to finance a buyout of the Applicant’s corporate interests, there is no clear mechanism by which the parties should now give effect to the terms of their agreement. As a result, it is now the Respondent’s wish for the parties’ corporate interests to be sold at the earliest opportunity.”
(d) At paragraph 73 she repeated that position adding that an orderly sale will be required and referred to the alleged need for OPCO to maintain strict compliance with the “existing but now expired” Franchise Agreement. In the subsequent paragraphs she set out what an orderly sale would look like.
(e) Recall, per paragraph 14 above, that on their face the Separation Agreements provide for the wife to retain the companies and the husband to retain the home. That is very different than her position in the above paragraphs. However, at paragraphs 47 and 52 of her Answer she referred to each Separation Agreement as an “enforceable domestic contract under the Family Law Act”, and similarly at paragraph 61 she asserted that the agreements are “legally enforceable contracts and, as such, the parties’ intentions expressed therein should be respected.” In her Claim by Respondent at paragraphs 2 and 3 the wife sought “Final Orders” declaring the enforceability of both Separation Agreements.
[20] In his reply, while he does not specifically deny signing them, the husband indicates that he did not receive copies of the Separation Agreements and Share Purchase Agreements until after he brought his application, and he sets out in some detail what he alleges are the problems with them. However, he has not sought an order to have them set aside. Domestic contracts are presumed to be valid and enforceable unless there is a declaration pronouncing them void or an order is made setting them aside: MacLeod v. MacLeod, 2019 ONSC 2136 at paragraph 23. That said, paragraph 4 in both agreements indicates that “[a]ny part or provision of this agreement that is found to be … unenforceable shall be severable from the agreement, and the remainder of the agreement following that finding shall continue in full force and effect.”
[21] The wife indicated (in her affidavit notably dated February 27, 2019) that she intends to amend her now 1½ year old Answer. She said that she is unsure why her previous counsel indicated that she wanted the companies sold when she is “wholly against” it. The wife’s current counsel submitted that he communicated this intent to the husband’s counsel some time ago. However, there is still no motion. Further, there is also no clear indication what a revised pleading might look like. The wife maintains that OPCO has no real value and that it therefore should only be sold as a last resort after all possible remedies are exhausted, one of which she notes is her buying out the husband’s interest. It is not clear whether she is relying on the Separation Agreements in that regard. One of her affidavits says in reference to the Separation Agreements that she would “like these transactions to take place”.
[22] A few other points regarding the pleadings are relevant to the motions. First, the wife claims exclusive possession of the matrimonial home pursuant to the Family Law Act, which could be relevant to the sale of the home issue. However, as the parties are now divorced and no longer spouses, that relief is not available: Miller v. Miller, [1996] O.J. No. 863 (Ont. C.A.) at paragraph 10. Second, although left out of the style of cause above, the husband named OPCO and HOLDCO as respondents. This makes sense as orders made in this proceeding may impact and bind them. Obviously, given their structure, those corporations are unable to take realistic positions (the parties are unable to agree), and they have therefore been noted in default. When I use the word “parties” in this decision, I am being technically incorrect by meaning just the husband and wife.
[23] Getting back to the rough background chronology, on February 21, 2018 a case conference date was set for May 11, 2018. After a potential breach of probation situation that the husband’s counsel addressed by way of correspondence to the wife’s lawyer, the wife sought to have the husband breached for that very same solicitor’s communication. Both counsel were interviewed by the police, and days before the case conference the wife’s counsel requested to be and was removed as counsel of record for the wife. At the case conference on May 11, 2018, with the wife representing herself, an extensive disclosure order was made on consent, with specific timelines.
[24] The probation order was varied to again permit communication between counsel. The wife retained new counsel and on consent the parties agreed to an order for disclosure that subsumed the previous one and provided new timelines for completion. That order was signed in chambers by Justice Robertson on June 11, 2018 and is the basis for the husband’s contempt motion.
[25] The driving force behind the other relief sought by the husband is his having been shut out of the operations of OPCO and the decisions with respect to both companies since effectively February 6, 2017. He maintains that the wife has acted and will continue to act in a way that benefits only her and compromises his financial interests.
Motion 1: Contempt
[26] As a preliminary matter, I agree with the wife that the Notice of Motion for contempt is required to contain the clearly articulated particulars of each charge. There is a very limited exception to this requirement, namely where the particulars are readily attainable from the supporting affidavit and no objection is raised. In either case the onus is on the party seeking a finding of contempt to spell out precisely what act or omission constitutes the charge. Newstead v. Hachey, 2019 ONSC 5213, a decision discussed at the hearing, cites the sources for those propositions at paragraphs 3 to 5. I also agree with the wife that the husband’s Notice of Motion is deficient as it only refers to the paragraphs of the order that he alleges have been breached; the details of the charges are found in the supporting affidavit. However, the time for the wife to raise her objection is not after the husband’s lawyer has completed his oral submissions, as was done here. The motion was served 8 months ago, and was addressed in court at least twice previously. While the wife objected to another aspect of the process, namely the length of the husband’s factum, she did not complain at those attendances about the form of the Notice of Motion. She did not object at the start of argument. Raising this issue mid-hearing almost seems tactical. I would not give effect to her request to dismiss the motion because of the lack of particulars.
[27] There is no dispute about the law of civil contempt, which is comprehensively set out by Justice Chappel in Jackson v. Jackson, 2016 ONSC 3466.
[28] The wife indicates that she consented to the timelines in the order after consulting with both the corporate accountant and the Franchisor or “Head Office”, as both play a role in fulfilling the productions required. The order directs her to make certain disclosures and do certain things (for example complete draft year-end Financial Statements for both companies for the 2016 and 2017 tax years with the corporations’ accountant), within specified timelines. When these were not completed well after their deadlines, the motion for contempt was brought. The requirements were completed however, or substantially completed[^1], in the month or so before the motion was heard. Again, that was about 8 months after the motion was served, and about one year after required.
[29] The order is clear and not subject to different interpretations. There is no question that the wife breached it in failing to provide the required statements and disclosure within the specified timelines; she was not even close. That is conceded. The question is, was it wilful?
[30] Two things jump out at me from the voluminous materials. First, the husband is feeling financially vulnerable, and obtaining the required information per the order in a timely way was understandably a priority for him both to keep this proceeding moving and to protect his interests. As he notes in his factum, the duty to disclose is a fundamental principle and delay generally acts to the disadvantage of the other party.
[31] Second, however, I note that the wife’s counsel have been on the file for her since the court order was made. They understand the nature and importance of compliance. They have been assisting her by steady communication with the corporate accountant, the successor accountant, the Franchisor or ‘Head Office’, and with the husband’s lawyer, all with a view to satisfying the order. The communications in evidence clearly show that efforts were being made to comply. That the wife needed to enlist her lawyers to take an active role assisting her speaks to the difficulty of the task.
[32] The husband relies on a letter from the previous corporate accountant Ms. Sands dated November 9, 2018, wherein she indicates that her firm is “still waiting for information” from the wife and that “[f]or a long period of time we have been waiting for responses to our questions about the year end for [OPCO] which were mainly asking for an inventory listing …” The wife indicates the inventory lists were historically based in part on information provided to her from the husband, and it was his “mess” in that area, not fully understood by her at the time, that contributed to the delay in satisfying certain aspects of the disclosure. Regardless, what is clear is that the wife’s lawyers contacted Ms. Sands immediately after that letter, on November 12, 2018, to enquire specifically about what missing information and/or documents were required.
[33] In reviewing all the work on compliance globally, I fail to see convincing evidence that satisfies me beyond a reasonable doubt that the failure to provide the timely reports and information required by the order was wilful or deliberate. Again, the fact alone that the wife enlisted her lawyers to get it done, which I expect came at a cost, suggests that she took the order seriously and made reasonable efforts in good faith to comply.
[34] Ultimately the contempt power remains a matter for the court’s discretion, to be used sparingly, and is typically reserved for cases involving defiant conduct that falls at the most significant end of the spectrum (Jackson at paragraph 56). The delay here is certainly at the serious end of the timeliness spectrum for a family law case, which has unfortunate implications. However, in my view the evidence does not establish that wife refused what is required, intentionally dragged her feet, or ignored the court order such that her behaviour would fall at the serious end of the defiance spectrum.
[35] For those reasons, I decline to make the order sought. In a sense, because of both the difficulty in scheduling such a long motion and an unexpected adjournment, the wife benefitted from having a long window to fix the problems before a finding of contempt needed to be considered or made. The result is that the purpose of the civil contempt process – to compel compliance rather than to punish – was fulfilled or substantially met without need for the exceptional finding.
Motion 2
A. Sale and Preservation Orders Requested Regarding the Companies: Requests 1, 3 in part, 7, and 8
[36] As noted above, the husband is feeling financially vulnerable, and for good reason. He is an equal shareholder of two companies and a joint owner of a house that are in the wife’s control.
[37] Regarding the companies he seeks (1) to have them wound up with a receiver appointed, (2) in the alternative to have the assets of the companies sold by a third party sales officer, and (3) until one of those two orders is made and carried out he seeks an order restraining the wife and HOLDCO from withdrawing, transferring or otherwise encroaching upon any funds of HOLDCO without his prior approval, except for the monthly banking fees.
[38] I am not prepared to grant the sale and receivership orders. Simply put, I do not see how the court can on an interim motion order the final disposition of those companies in the face of two Separation Agreements that provide, notwithstanding the wife’s confusing and perhaps inconsistent position, for a different result. Until they are set aside or a “finding” is made that the provisions dealing with the companies are unenforceable, the Separation Agreements cannot be ignored. I would add that it is also unclear what the Franchisor’s position would be regarding OPCO. It is aware of and even involved in the accounting and disclosure issues in this file but has not weighed in on whether the Franchise Agreement has been renewed, monthly or otherwise, whether it can be renewed, or what position it would take should a receivership or forced sale be ordered. As noted, the wife asserts that without a Franchise Agreement (or even with one that operates month-to-month) OPCO has no real value, and the husband seems to agree indicating that he does not know what value, “if any”, it might have. Without a Franchise Agreement or commitment from the Franchisor, both the future of OPCO and its value are uncertain. Further, if the Franchise Agreement still has bearing on the relationship, pursuant to paragraphs 14.3 and 15.3 the Franchisor may also have rights to purchase OPCO’s assets once steps to wind up or sell are taken.
[39] I would add, in support of my decision, that there is case law that, at a minimum, cautions against making such a final order on an interim motion (see Marot v. Marot, 2019 ONSC 866, at paragraph 41, found in both parties’ Briefs of Authorities). Although counsel indicate that they are not relying on it, I would also note section 11 of the Family Law Act which generally discourages orders being made for the sale of operating businesses.
[40] Notwithstanding the above, I would however grant the requests to temporarily restrain the wife from encroaching on the funds of HOLDCO without the approval of the husband. HOLDCO is the biggest asset in this case. Protecting its value until there is resolution, or at least some clarity on the positions at a settlement conference, seems to me to be the prudent way forward. Given the injunctive nature of the relief, I make the findings that the husband (as an equal owner) has a strong case, he has set out grounds for believing that the wife has already dissipated this asset and/or that there is a risk of that occurring, and the asset itself serves as security for any damages that could result from those orders.
B. Sale and Preservation Orders Requested Regarding the Home at 1675 Ormsbee Road: Requests 2, 3 in part, 4, 5, 6, and 14
[41] The husband seeks to have the home at 1675 Ormsbee Road, Battersea, Ontario, sold under the Partition Act. He also seeks an order that, pending a sale, the wife make all payments concerning the home (which she indicates that she has already been doing) and that she be restrained from compromising its equity. He points to draws she has made on the personal line of credit secured against the home since the date of separation.
[42] This seems to be a straight forward prayer for relief and I would grant it without hesitation except that, again, the Separation Agreements have to be considered. On one hand they provide that forthwith upon execution the husband shall purchase the home from the wife for $163,000, which in my view would not be an impediment to the relief sought. However, on the other hand, there are rather unusual clauses in both agreements under “other terms and conditions” as follows (bolding in originals):
[43] (June 6, 2015 agreement): WIFE SHALL HAVE THE RIGHT TO BE THE FIRST TO PURCHASE BACK THE MATRIMONIAL HOME IF HUSBAND WISHES TO SELL THE HOME AT THE PRICE OF $163,000.
[44] (June 22, 2015 agreement): WIFE SHALL HAVE THE FIRST RIGHT TO PURCHASE THE MATRIMONIAL HOME FOR THE SUM OF $163,000, IF THE HUSBAND EVER IS TO SELL/TRADE THE HOME. THE WIFE AGREES TO PAY AN ADDITIONAL AMOUNT FOR ANY BUILDINGS ADDED TO THE PROPERTY AS OF JUNE 30, 2015, FOR THE CURRENT (AT THE TIME OF PURCHASE) MARKET VALUE OF THE NEW STRUCTURES.
[45] It might still take some oral evidence at trial to clarify what the parties intended here, but again until the legal effect and correct interpretation of those Separation Agreements (or the provisions in them) are determined, they are presumed to be valid and enforceable. The wife per her pleadings, albeit somewhat confusingly and inconsistently, seeks to rely on them.
[46] I agree with the husband, as noted above, that the wife is incorrect in maintaining that she has a legal claim for exclusive possession. Even if she did, on these facts and in particular with no “child” living in the home, it would be a hollow position and not preclude an interim order for a sale: see Khan v. Khan, 2019 ONSC 4687. However, as also noted in that same case at paragraph 10, where substantive rights in relation to the property are likely to be jeopardized by an order for sale, the matter should be deferred until the issues are decided under the Family Law Act. In my view the proposed sale could jeopardize the wife’s apparent option to purchase.
[47] For those reasons I am not prepared to order the sale of the home at this time. However, given the husband’s equal ownership and his concerns noted above, and applying the test in the same way as in paragraph 41 above, I make the preservation orders requested which while formally opposed were not seriously disputed.
C. Disclosure Order: Request 13
[48] This request seeks to restrain the wife from dissipating “any property under her care and control”. In my view it is too generally worded and all encompassing.
D. Disclosure Orders: Requests 9, 10, 11, 12, 15, and 18
[49] The husband concedes that two of his disclosure requests are satisfied (paragraphs 10 and 12 in his Notice of Motion), but he still seeks two further requests at paragraphs 9 and 11. He also seeks orders that the wife file a fresh Financial Statement and for Questioning.
[50] The first disclosure request is for updated records from HOLDCO’s account ending in 618 from May 1, 2018 to present, and after that within 15 days following each month end. I can see no difficulty here. It will allow the husband to monitor the non-dissipation orders.
[51] The second disclosure request is to permit the CIBC to produce to the husband documents he may request concerning the two companies. This creates no burden for the wife and, although I am not aware that CIBC has had notice, I am prepared to grant it. I understand the husband is still an officer of both companies, but if there is a difficulty effecting this order it can be brought back before me on notice to the bank.
[52] The husband’s Notice of Motion asks that the wife serve and file a fresh Financial Statement within 30 days. However, she provided a new one about one month before the hearing. I do not see the need for such an order. An update will of course be required per the Family Law Rules for the settlement conference, which I will speak to further below.
[53] Lastly, the husband seeks an order for Questioning under Rule 20. In my experience, evidence about Net Family Property is rarely as complicated as evidence dealing with extensive post-separation property adjustments. Given all the questions the husband has about the time period after February of 2017, it would be unfair to him to proceed without Questioning. The wife claims that the husband is deficient in his own disclosure obligations and argues that the procedure is “premature” and should be put off until that is rectified. However, no motion has been brought for disclosure or Questioning of the husband. In my view, postponing Questioning would add to the delay more so than proceeding with it would. It is hard to see how this procedure would create undue expense particularly compared to the costs put into this motion. I note that the Questioning as proposed will likely take place about 2 years after this proceeding started -- 7 years after the date of separation -- and cannot be said to be premature.
E. Advance on Legal Fees: Request 16
[54] The husband seeks and advance of $25,000 on account of legal fees and disbursements, to be credited to the wife in the final accounting of the financial issues or otherwise repaid by him to her. There is no dispute about the three-part test, recently summarized in McCain v. Melanson, 2017 ONSC 916, at paragraph 4. The wife’s simple answer to this request is to point to the third part of the test, namely that the moving party must satisfy the court that he is incapable of funding the amount requested, and then to the husband’s most recent Financial Statement which indicates an RRSP of $114,500. I agree that the test has not been met.
F. Leave to Extend the Limitation Period to Seek Equalization: Request 17
[55] As noted, the Divorce Order was granted on July 28, 2015 effective August 28, 2015, and the application seeking equalization was issued on December 11, 2017. Section 7(3) of the Family Law Act says that an application “shall not be brought after the earliest of … two years after the day the marriage is terminated by divorce”, which I take to be the latter date. The husband was therefore a little over 3 months late. Had the divorce not intervened the husband would have been well within time, as the other limitation period is calculated as 6 years from the date of separation which would be September 1, 2018.
[56] The Act provides a unique 3-part test to extend the time related to a section 7(3) limitation period:
2(8) The court may, on motion, extend a time prescribed by this Act if it is satisfied that,
(a) there are apparent grounds for relief;
(b) relief is unavailable because of delay that has been incurred in good faith; and
(c) no person will suffer substantial prejudice by reason of the delay.
[57] The wife argues that the court cannot grant this relief on a standard motion, as the decision would be final and therefore a summary judgment motion is required. However, subsection 2(8) itself indicates otherwise.
[58] El Feky v. Tohamy, 2010 ONCA 647 is the leading decision, and clarifies that the test is fully contained in subsection 2(8); factors related to other limitation periods are not to be imported (paragraph 37). In examining the first part of the test, the Court of Appeal also clarified that “apparent grounds for relief” relates not to the extension of time, but rather to the relief sought in the claim itself. There, as here, that was for an equalization of Net Family Property (paragraph 27). In that case a ‘Final Agreement’ precluded equalization, but the wife had brought a claim to have the agreement set aside pursuant to subsection 56(4) of the Act. The Court at paragraph 29 weighed that claim noting that the grounds of coercion/duress turned on the credibility of the parties and other witnesses and therefore had to be determined at trial. It therefore found apparent grounds for relief.
[59] Unlike in El Feky, the husband here has not brought a claim to set aside the Separation Agreements. As noted in subsection 2(10): “[a] domestic contract dealing with a matter that is also dealt with in this Act prevails unless this Act provides otherwise.”
[60] The Separation Agreement of June 6, 2015 says in paragraph 17 that “[t]his agreement … constitutes a full, complete, and final settlement of all rights, causes, claims, and demands with respect to … property.” At first glance that appears to preclude equalization, which might loosely be characterized as ‘a right with respect to property’. However, the word “equalization” is not found in the agreements, and whether the above terms are of the scope and breadth to extinguish an equalization claim was not argued or addressed.
[61] While I am not satisfied on the material before me today that there are apparent grounds for relief, rather than dismiss this request in the Notice of Motion in my view it should be adjourned to trial where, in particular, the first part of the test can be more fully explored and properly argued. This is consistent with the wife’s position that a ‘judgment’ is required to resolve the issue. As the test is conjunctive, I refrain from commenting on the second and third requirements although ‘good faith’ was where the parties focused their arguments.
Decision
[62] For the reasons set out above, the motion at Tab 15 of the Continuing Record (contempt) is dismissed, and the motion at Tab 17 is granted in part as follows:
(a) paragraphs 1, 2, 3, 4, 5, 10 and 12 (on consent), 13, 16, and 18 are dismissed;
(b) paragraphs 6, 7, 8, 9, 11, 14, and 15 are granted;
(c) paragraph 17 is adjourned to trial.
[63] I would add with respect to relief granted in paragraph 61(b) above that, if not already specified in the Notice of Motion, those orders are subject to agreement between the parties or further order of the court.
[64] Request 19 in the second Notice of Motion seeks “[s]uch further Order that the Court may determine, in its discretion, will advance this matter in accordance with the Primary Objective of the Family Law Rules.” I have decided to case manage this file. Once the date for Questioning has been set, counsel shall communicate with the Trial Coordinator to obtain a settlement conference before me within 60 days from that date. If they cannot agree, I will set a motions date for them to appear at which time I will fix the date.
[65] I am not seeing an obvious case for costs. While the contempt motion was dismissed, bringing it may have had the desired effect of focussing attention on resolving the disclosure difficulties. The results of the second motion were divided. However, if the parties still want to address me on costs, I will accept brief written submissions from each provided that they are served and filed within twenty days. Those submissions if required shall be no more than two pages, double spaced, in addition to any relevant offers and draft bills of costs. Both parties are also permitted to make a one page costs reply within five days after receiving the other’s submissions.
Mr. Justice Timothy Minnema
Date: October 1, 2019
KINGSTON COURT FILE NO.: 252/15
DATE: 20191001
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Mervin Brian Schick, Applicant
AND
Deborah Lynn Cardinal, Respondent
BEFORE: Mr. Justice Timothy Minnema
COUNSEL: Mark S. LaFrance, for the Applicant
Gene C. Colman and Kulbir K. Rehal, for the Respondent
ENDORSEMENT ON LONG MOTION
Mr. Justice Timothy Minnema
Released: October 1, 2019
[^1]: There is a disagreement about whether the disclosure has been completely (100%) satisfied. The wife’s counsel is adamant it has been, the husband’s counsel disagrees. The court cannot resolve that issue; the numerous thick binders in which all of the documentation is found were thankfully not put into evidence -- the materials filed for these motions alone (mostly affidavits and exhibits) already fill more than a banker’s box.