SUPERIOR COURT OF JUSTICE – ONTARIO
RE: GERTRUDE BARNHARDT
AND:
MARGARET BARNHARDT AND JAY JORDAN BARNHARDT
BEFORE: MADAM JUSTICE O’BRIEN
COUNSEL: Julia Wilkes, for the Plaintiff
HEARD: March 25, 2019
ENDORSEMENT
1This motion, made without notice, for a Mareva injunction, came before me yesterday, March 25, 2019. The Plaintiff, Gertrude Barnhardt, seeks an order essentially freezing the contents of any safe deposit box held in Ontario and registered in the name of the Defendant Margaret Barnhardt (also known as Megan Barnhardt). I am prepared to provide the order for the following reasons. However, this matter is returnable before me or another judge in motions court on April 1, 2019, to ensure the Defendant, Margaret/Megan Barnhardt (hereinafter referred to as “Megan”) has the opportunity to appear before the court before her planned departure from Toronto.
Facts
2I have before me the affidavits of Gertrude Barnhardt (“Gertrude”) and Jay Jordan Barnhardt (“J.J.”). Gertrude is J.J.’s mother.
3J.J. and Megan are married, but have been separated since July 2018. Megan is an American citizen and currently is residing in California. The dispute between the parties relates to a loan provided by Gertrude to J.J. and Megan, when they were in dire financial straits, in 2013. Gertrude had recently sold her condominium, for which she had received a payment of $485,584.74. Gertrude agreed to provide Megan and J.J. with a significant loan. The agreement was that Megan and J.J. would then make Gertrude’s rent payments in partial repayment of the loan. Gertrude had already provided a number of bank drafts to her landlord for her monthly rent, so Megan and J.J. were to pay her rent after these were used. In addition, the agreement was that the loan would be interest-free and that it would be repaid whenever Gertrude asked for the money.
4Gertrude provided Megan and J.J. with $308,400 in March and April 2013. Although I have been provided with statements from Gertrude’s bank account, I do not have any written documentation showing the precise amount paid from Gertrude to Megan and J.J.. However, both Gertrude and J.J. swear in their affidavits that the amount provided was $308,400. In addition, between July 2014 and September 2018, Megan and J.J. paid most of Gertrude’s rental payments. Again, I do not have financial documents, but both J.J. and Gertrude swear that Megan and J.J. paid Gertrude approximately $103,251.14. Therefore, the remaining amount owing to Gertrude on the loan is $205,148.86.
5In addition, in or around 2014, Gertrude agreed to have two credit cards issued in Megan’s name, one US dollar card and one Canadian dollar card. The credit cards were tied to Gertrude’s account, but it was agreed that Megan would be responsible to pay for her purchases. Using those cards, Megan incurred $11,315 CAD and $5,893 USD in debt. The credit card company has turned the matter over to a collection agency that now is seeking payment from Gertrude.
6In December 2005, J.J. purchased a diamond ring for $163,457.50 USD. The ownership of the ring is in dispute between Megan and J.J.. After Megan and J.J.’s separation in July 2018, J.J. assisted Megan to set up a personal bank account at TD bank branch #507. At that time, Megan had possession of the ring and told J.J. that she planned to sell it. She asked J.J. to provide the gemological certificate (without which it might be difficult to sell for its true value) but he refused. J.J. then retained a family lawyer, who wrote to Megan and demanded that she place the ring in the law firm’s safe. Megan refused. She then retained counsel. In the summer of 2018, J.J.’s lawyer advised him that, according to Megan’s lawyer, the ring had been put in a safety deposit box.
7Megan did not work outside the home during her marriage. The evidence before me is that she does not have any significant assets other than the ring.
8Megan is returning to Toronto from California this week, on March 27, 2019. She is scheduled to leave Toronto on April 2, 2019. The evidence of J.J. is that, to his knowledge, this is Megan’s first trip back to Toronto since their separation. He and Gertrude are concerned that Megan will take the ring to California and sell it for less than it is worth. In addition, Gertrude is concerned that, if the ring is sold in California, she will not be in a position financially to recover the amounts owed to her.
9Gertrude is 83 years-old. Her husband passed away in 1993. She lives on what she calls “a small government pension.” She has been unable to pay her rent in 2019 and has received an eviction notice.
Legal Test
10In order to obtain a Mareva injunction, the Plaintiff must have a strong prima facie case. In addition, the Plaintiff must satisfy the following five-part test:
(a) The Plaintiff must make full and frank disclosure of all material matters within 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 fairly be made against her by the Defendant;
(c) The Plaintiff must give grounds for believing the Defendant has assets in the jurisdiction;
(d) The Plaintiff must give grounds for believing 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 her;
(e) The Plaintiff must give an undertaking as to damages. (Sibley & Associates LP v. Ross, 2011 ONSC 2951, at paras 11-12)
11There is no dispute that Mareva injunctions tie up assets before judgment and, therefore, should be granted “as an exception to the general rule.” (Chitel v. Rothbart (1982), O.R. (2d) 513 (C.A.), at paras 30-32)
Application to This Case
12In this case, there is a strong prima facie case and the five-part test is met. Gertrude and J.J. have provided clear and consistent evidence about the payments provided by Gertrude, and that they constituted a loan. They also have provided evidence of partial repayment. There is clear evidence of breach of contract, and that J.J. and Megan owe a significant sum to Gertrude.
13I am satisfied that the Plaintiff has provided full and frank disclosure, to the extent she is able. I note that there is material that could have been provided by J.J., but was not (for example, his financial information and his lawyer’s letters). However, J.J. is a Defendant in this proceeding and his failure to provide full documentation is not within the Plaintiff’s control.
14With respect to the points that could be made against the Plaintiff, Gertrude acknowledges that there is no written document between the parties and that Megan may argue that the amounts provided by Gertrude were gifts and not loans. However, Gertrude has two sons and did not intend for all of her assets to be provided only to one. In addition, she has limited financial means so it is unlikely she intended to provide the funds as gifts, which did not need to be repaid. The Plaintiff has satisfied part (b) of the test.
15With respect to part (c) of the test, there is clear evidence that the ring is likely to be in a safe deposit box in Toronto.
16With respect to part (d), there is a risk that the ring will be sold and that Megan will return to California, or that the ring will be sold in California. J.J. has said that Megan already was approaching jewelers prior to her leaving for California, with an intention to sell the ring. As the evidence is that Megan does not have any other significant assets, there is a real risk that Gertrude will not be able to recover the monies owed.
17Finally, Gertrude has provided an undertaking as to damages. I note that Gertrude’s financial means are limited, as she has been unable to pay her rent. This means that Gertrude’s undertaking as to damages may be of little value. However, it also means that Gertrude faces serious harm if she is unable to collect the amounts owed. In my view, the value of the undertaking does not prevent the granting of the injunction in the circumstances of this case.
18Weighing the balance of convenience to both parties, Gertrude faces serious harm if the ring is sold and she is not able to recover the amounts owed to her. Meanwhile, it does not appear that preventing any transfer or sale of the ring until the return of this matter within a few days will cause any obvious significant harm to Megan.
19The order is granted on an interim basis, with this matter to return before me or another judge in motions court on April 1, 2019. The costs of the interim motion can be addressed on the return of the motion once notice has been provided to Megan. The Plaintiff is required to ensure that Megan is served with this endorsement and the related order as soon as possible when she arrives to Toronto. I ask that the Plaintiff provide me with the form of the order she wishes me to sign and that reflects this endorsement by e-mail to my assistant, Anna Maria Tiberio at annamaria.tiberio@ontario.ca.
Madam Justice O’Brien
Date: March 26, 2019