Court File and Parties

COURT FILE NO.: 41901/19 DATE: 2020-05-15 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Marianna CUMMINGS, Applicant AND: Mark Andrew CUMMINGS, Respondent

BEFORE: Kurz J.

COUNSEL: Kathryn L. Smithen, for the Applicant Harold Niman/Christopher Mamo, for the Respondent

HEARD: in writing and by audioconference

Endorsement

Introduction

[1] An expression in the common parlance, whose origins can be traced to the 19th century, [1] holds that it is easier to beg forgiveness than to seek permission. That sentiment appears to have motivated the Respondent to breach a clear court order by refinancing the debt against a property when he was specifically enjoined from further encumbering it. That breach led a distrustful Applicant to belatedly bring an overbroad and unnecessarily ex-parte motion, which is now before the court. The task of this court is to sort out the consequences for both sets of actions and determine a proportional path forward that protects the interests of both parties.

[2] The Applicant wife (“Mariana”) urgently moves for eleven separate substantive heads of relief. Boiled down to its essence, she seeks an order:

1. granting her the right to register a certificate of pending litigation against a former matrimonial home (“the property”), now solely owned by the Respondent husband (“Mark”);
2. the right to inspect the property in Mark’s absence;
3. a Mareva injunction, freezing all of Mark’s financial accounts;
4. an order restraining any further dealing with the property or Mark’s bank accounts;
5. various disclosure including third party disclosure (the third party disclosure request that was not cited in Marianna’s letter to Conlan J. seeking leave to bring this motion); and
6. an order that Mark present himself for service of a contempt motion.

[3] Mariana originally attempted to file this motion on an ex-parte basis, but Conlan J. refused to allow the court to consider it without notice to Mark. Conlan J. found, on a preliminary basis, that this motion, as originally presented to him (without the broad third party disclosure request), was urgent. That finding is subject to the discretion of the motion judge. Conlan J. also granted an order preventing Mark from further dealing with the property without Marianna’s written consent or a court order. Conlan J. clarified that “… “deal” includes but is not limited to selling, disposing, transferring, mortgaging, encumbering, pledging, or anything else that changes the current ownership and/or equity of the property to any degree, however small.”

[4] The main concern that gave rise to this motion is the fact that in February 2020, Mark surreptitiously refinanced the mortgages registered against the property. That refinancing increased the property’s total debt load while significantly lowering Mark’s monthly payments. However, the order of Gray J. of March 21, 2019 enjoined Mark from further encumbering or selling the property without the consent of Marianna or a further court order.

[5] Marianna stated in her first affidavit in this motion that she believed that Mark had misappropriated $4.2 million in equity in the property in order to defeat her financial claims against him. She incorrectly assumed that Mark left the original first mortgage in place and that he absconded with millions of dollars in funds for which she was unable to account. Much of her supposition turns out to be incorrect.

[6] But Mark did not have Marianna’s consent or this court’s authority to refinance the property’s renovation. Further, his own materials raise concerns with the manner in which he increased the debt load against the property and used some of the mortgage proceeds to pay what he described as “family expenses”.

[7] This motion may well have been avoided or its scope lessened had Mark advised Marianna of his intention to refinance the property and had Marianna contacted Mark, through counsel, once she discovered the refinancing. That being said, Mark’s original decision to violate the Gray J. order set in place the chain of events of this motion.

[8] For the reasons that follow, I find that part of this motion is urgent. I grant some of the relief claimed to secure the property, secure a potential 2019 employment bonus that may be owing to Mark by his former employer, and to allow Marianna to inspect the property in Mark’s absence. I also order certain disclosure with regard to both the refinancing and the potential bonus. However, I dismiss the remainder of the relief without prejudice to the right to request it in the future when more normal operations of this court resume.

COVID-19 Protocols

[9] The regular operations of the Superior Court of Justice have been suspended until further notice as a result of the serious health risks posed by COVID-19. At this time of pandemic, only the most urgent matters, and a limited number of other matters can be heard. These requirements are set out in the May 13, 2020 new Consolidated Notice to the Profession as it applies to the Central West Region Central West Region, https://www.ontariocourts.ca/scj/notices-and-orders-covid-19/consolidated-notice/ and https://www.ontariocourts.ca/scj/notices-and-orders-covid-19/notice-cw/ (collectively, the “Notice”)

Background

High Conflict Litigation

[10] Marianna commenced this high conflict case in January 2019. Each party has made serious allegations of personal misconduct against the other. Marianna claimed that Mark was abusive, while he claimed that she attempted to turn the children against him. Marianna has twice before sought an order freezing Mark’s bank accounts. Each time, she argued that he would hide money in an attempt to defeat her equalization and trust claims. For his part, Mark claims that she has no such claims, as his debts were over $2 million greater than his assets on the date of separation. Both attempts to freeze Mark’s bank accounts were dismissed.

[11] There is some dispute about the continuing existence of restraining orders against Mark. Mark denied the existence of such an order, but that denial is incorrect. Counsel have kindly provided me with copies of three restraining orders that have been granted in this proceeding. There remain in place a restraining order granted by Gibson J. on January 31, 2019, which prevents Mark from contacting Marianna in any fashion other than through counsel. That order further enjoins Mark from annoying, molesting and harassing Marianna. There is an exception regarding attending at children’s activities. Gibson J.’s order was varied by Coats J. on May 6, 2019 to allow the parties to communicate by Our Family Wizard and to extend the exception with regard to Mark’s attendance at children’s activities.

Mark’s Terminated Employment and Payment of Expenses

[12] Until recently, Mark was employed as the CEO of Teacher’s Life Incorporated. According to his November 22, 2019 financial statement, he was earning approximately $429,000 in late 2019, having earned $499,445 in 2018. However, he was terminated from his position for alleged cause on February 20, 2020. That was sixteen days after he had been placed on administrative leave. The termination letter is not specific as to the grounds for termination, although there were issues of trust and his cooperation with the employer’s investigation.

[13] It is not yet known whether Mark will receive his 2019 bonus. He received a $120,000 bonus for 2018. He is presently seeking new employment. It is unclear whether the previous orders and findings in this litigation played any role in Mark’s termination.

[14] There is no existing order for either child or spousal support. Rather, Mark has been paying many of his family’s numerous expenses, including private school tuition, expensive car payments, renovation mortgage payments for the property, costly children’s activity payments, and private club membership.

[15] Mark’s November 22, 2019 financial statement claims that he was paying $80,426.87 per month in various expenses. That is almost twice his generous income at the time,

[16] Among the expenses included in that financial statement were $41,548.83 per month in expenses related to the renovation of the property. Of that amount, $37,761.28 per month were mortgage payments. Mark claimed to pay a further $12,809 in various children’s expenses, including tuition, activities, RESP, clothing and summer camp. He also voluntarily paid Marianna $3,000 per month in child support. He has not made those payments in April or May 2020.

[17] As set out below, Mark’s ostensible rationale for refinancing the mortgages on the property was to reduce his monthly mortgage payments to a manageable level without losing the property or going bankrupt. Even if that were true, I do not find his justifications for failing to obtain the consent of Marianna or the court to be convincing.

Marianna’s Trust Claim to the Property

[18] The property is located at 1110 Morrison Heights Drive, Oakville. It is a grand residential home in a desirable area of Oakville. The property was once jointly owned by both parties and functioned as the family home. At some point in or about 2016, the parties decided to move out of the property in order to renovate it as their “dream home”. They also agreed that the Marianna would transfer her interest in the property into Mark’s name for nominal consideration and "… natural love and affection". That transfer was registered on August 19, 2016. Marianna obtained independent legal advice before she signed the transfer documents.

[19] The reasons for and consequences of that transfer are hotly contested. Mark says that Marianna did not wish to take on the risk that arose out of the financing necessary to carry out the renovations. Marianna says that Mark took advantage of her to cheat her out of her share. She claims a resulting trust interest on the property. Mark answers that the transfer took place at a time that separation was not contemplated and that her independent legal advice demonstrates that she intended to gift her interest in the property to him. Whether the circumstances of that transaction rebut the presumption of resulting trust found in s. 14 of the Family Law Act (“FLA”) is an issue for trial.

Negative Net Value of the Property

[20] In any event, both at the time of separation and today, the property had a negative net value. Mark says that at the time of separation, the property was worth $4.4 million, while he owed about $5.3 million in outstanding mortgages and claims by tradespeople who were working on the property. He also had a further $400,000 in unsecured debt, limiting his ability to finance the completion of the renovation.

[21] Mark has produced recent appraisals of the value of the property. The value they attribute to the property, when compared to the amount of debt registered against it, show that it will not have any net value until the renovations are completed. If it were sold now or even before Mark refinanced the property, it would likely have to be sold at a net loss. Even then, in light of the economic fallout of the COVID-19 crisis, one must question whether the property will attract anything close to the value it would have exhibited in pre-pandemic days.

Gray J. Order of March 21, 2019

[22] Mark originally took on $4.9 million in debt to finance the renovations to the property. He secured that debt with two mortgages against the property. Then on March 21, 2019, Gray J granted him the right to add a third mortgage, for $600,000, in order to pay certain tradespeople for work on the property. That third mortgage increased the face amount of the debt registered against the property to $5.5 million. As set out above, the total monthly payments on the three mortgages totalled an astronomical $37,761.28 per month.

[23] To grant Mark the right to add a third mortgage to the property, Gray J. had to set aside Marianna’s registration of a matrimonial home designation. In order to protect her, Gray J. imposed two terms on Mark:

• He ordered Mark to account for his use of the proceeds, and,
• He enjoined Mark from further encumbering the property without the consent of Marianna or a further court order.

[24] The pattern established in that motion continued with this one. Gray J. found that Mark had been “…less than fulsome in disclosing…” what he had been planning regarding that third mortgage. This led to an “… understandable lack of trust in the Applicant.” Nonetheless, the added financing was necessary to pay the tradespeople and avoid constructions liens, all of which is to the benefit of the parties. Only by paying the trades would there be a chance to realize a gain on the sale of the property. Ultimately, Gray J. granted neither side their costs because he found that both parties bore a degree of responsibility for the events that led to the motion.

Mark’s Recent Unauthorized Refinancing

[25] In early February 2020, Mark arranged, without notice to Marianna, to refinance the debt on the property. He arranged to pay off the three existing mortgages and replace them with two other mortgages, each carrying a one year term, with a total face amount of $6.5 million.

[26] The first mortgage, for $5.3 million, with a 7.99% interest rate, was granted to Hillmount Capital Inc. The terms of that first mortgage included a mortgage prepayment of $315,470, which came out of the mortgage advance, and ongoing payments of $9,000 per month.

[27] The second mortgage was to members of the Drakopoulos family, who previously held a $1.5 million mortgage. The terms of that new second mortgage were a face amount of $1.2 million, with interest payable at 11% annually and no monthly payments. There was a prepayment of almost $200,000.

[28] In other words, with the refinancing, Mark included most of the mortgage payments into the mortgage debt itself. Despite the $6.5 million face amount of the mortgages, the actual mortgage advance was $5,865,991.70. Most of the difference was the prepayments and various fees that Mark agreed to pay to obtain the mortgages.

[29] That new refinancing makes a great deal of immediate financial sense from Mark’s point of view as it reduces his monthly payments by over 75% (from $38,000 to $9,000 per month) at a time that Mark is unemployed. However, the apple represented by these temporarily favourable mortgage terms has two worms embedded in it.

[30] First and foremost, the transaction was forbidden by the Gray J. order, absent consent or a further court order. That term was crystal clear. Mark failed to even inform Marianna of his refinancing plans, let alone seek her consent. He clearly breached the order.

[31] Second, Mark increased the face amounts owing on the mortgages by $1 million, from $5.5 to $6.5 million. Further, he did not consult Marianna about his intended use of these added funds. Not only was she deprived of any say about the manner in which the face amounts of the mortgage were increased, she had no say about how the extra funds that were placed in Mark’s bank account were to be used.

[32] To be fair, Mark did not remove $1 million or anything close to that figure from the mortgage proceeds. His advance, over and above repayment of the three original mortgages, payment of various fees and prepayments on the new mortgages, was $177,000. Mark says that he used that money primarily to pay renovation costs and various family expenses (including some of his own).

Mark’s Justifications for Refinancing without Authorization

[33] Mark justifies his actions by claiming both compliance and necessity. In other words, he claims that his breach of Gray J.’s order was actually compliance. He adds that he had to do so for his and Marianna’s benefit. He deposes:

I believe that I was complying with Justice Gray’s Order. I took the same loan amount that existed at the time of Justice Gray’s Order and I reworked the terms to allow us to keep the property and avoid foreclosure. Marianne has benefited immensely from this as it has kept any value to her claim for a resulting trust alive and she certainly has not been prejudiced by these actions.

[34] He adds:

The intention was to borrow the same amount that was owing in relation to the property at the time of the Justice Gray order, but to borrow it in a more efficient way on better terms to allow the property to stay afloat, give the opportunity for it to be complete, and the chance for our family to avoid bankruptcy.

[35] What really appears to have occurred is that Mark ran out of money to pay the mortgage he had previously negotiated. He first defaulted in January 2020. He then lost his job and his source of income.

[36] Mark points out that after the previous mortgages, renovation costs, prepayments, holdbacks, and fees for the new sets of mortgages were paid, he was advanced only $5,863,000 of the $6.5 million face value of the mortgages. Of that amount, he received only $177,000. The trust statement of his real estate lawyers, Diamond and Diamond, confirms that assertion.

[37] Even with the $177,000, Mark states that most went to renovation costs. He states that those funds, along with a $100,000 originally allocated towards landscaping of the property in the mortgage commitment were actually allocated as follows:

a. $158,000 for home and construction expenses; b. $65,000 for expenses to support Marianne and the children; and c. $55,000 kept on hand for future home expenses and landscaping.

Of course, these numbers add up to $278,000 rather than $277,000.

[38] Mark has produced two letters from his real estate lawyer, Mark Clouse, both dated April 28, 2019. One letter confirms that the Diamond and Diamond law firm, of which Mr. Clouse is an associate, is holding $216,254.97 in trust for holdbacks on the renovations. The second confirms that the original first mortgage was paid out in full on or about February 26, 2020.

[39] Mark has also produced a self-generated spreadsheet in which he represents that he spent $64,806.01 of the mortgage advance on the following “family expenses”:

CLA – Life Insurance $ 2,200.00 Tuition for T [2] $ 2,500.00 Tuition for J $10,237.00 Health and Dental Premium $ 775.00 Running shoes for J Foot Locker $ 900.63 Email transfer to Marianna for Support $ 3,000.00 RESP and NRSP deposits $ 5,600.00 Investment Deposits Transfers to Investments $ 3,000.00 Oakville Club $ 6,253.49 RBC Loan $ 1,404.60 FDR Porsche $ 1,641.77 Car Insurance Porsche $ 209.70 J’s hockey – Spring & Oakville Ice Academy $ 3,760.00 Porsche Inspection & Repairs $ 5,439.43 Dinner with Jordan $ 105.88 Lease and Extended Warranty Payments - Porsche $ 4,337.17 407 Charges – Marianne $ 1,991.42 Lease payments – BMW $ 8,449.96 Retainer – Stephen Cross $ 3,000.00 Total: $64,806.01

[40] That list includes a number of expenses that appear to be personal to Mark, including $11,628.07 for his Porsche (although he spends $10,441.38 in lease and 407 charges for Marianna’s BMW). He spent $3,000 for his counselling (albeit recommended by this court). There are $8,600 in investments, including an RESP. There is also a $6,253.49 payment to the Oakville Club.

[41] The same spreadsheet also sets out what Mark describes as “Trade and Home Expenses” which total $157,444.87. A number of those expenses appear to be personal expenses for Mark, including:

Sleep Country $ 5,500.00 Structube Home Furniture $ 4,405.64 Computer Keyboard and Supplies $ 600.00 Storage $ 4,040.38 Miele Appliance Parts $ 687.00 The Bay -Bedding and Home Supplies $ 2,540.11 Wayfair Bedding $ 612.43 Cogeco Cable $ 283.75 Home Depot Household Items $ 275.22 Total: $18,944.53

[42] Mark does not explain why he calls these, apparently personal expenses, “Trade and Home Expenses”. If they were incurred to prepare the property to be shown once it is completed, it is not clear why furniture could not be rented to stage the property once the renovations are completed. I note that Mark appears to live in the property and the items appear to have been purchased to allow him to do so. He says that he lives in the property to avoid capital gains taxes once it is sold (i.e. to maintain it as a principle residence for tax purposes). His counsel says he has nowhere else to live, having previously sold the matrimonial home after the parties moved out of the property. He does not say what he did with the furniture from that home.

[43] Marianna fairly states that she was never given advance notice of Mark’s refinancing plans, let alone consulted about them. As she points out, Gray J. removed the matrimonial home designation only upon a strict term requiring her consent or a court order before any further encumbrances could be placed on the property. Gray J. did so to ensure that the equity in the property would not be reduced and that Mark would not use the proceeds of any refinancing for personal use. Having been granted that indulgence, Mark has taken advantage of it.

[44] Despite filing a 180-page affidavit, inclusive of exhibits, Mark never explains why he failed to notify Marianna of his intended transactions before he engaged in them. As set out above, he justifies rather than explains his behaviour. If his reasons for the refinance were as benign and out of control as he claims them to be, surely the court, if not Marianna would have agreed to some form of refinancing for the property, as Gray J. did in March 2019 (although not necessarily on the same terms that he secretly negotiated).

[45] Yet Mark chose, in Gray J.’s word, not to be “forthcoming”. As set out at the beginning of these reasons, the court can only infer that Mark felt that it was better to beg forgiveness than seek permission. That course of conduct is not acceptable. What you permit you promote.

[46] It is foundational to our system of justice that court orders be obeyed. In Dumont v. Lucescu, 2015 ONSC 494, Douglas J. explained that “[p]rotection of the integrity of the administration of justice is at stake if a litigant willfully disobeys a court order [citations omitted].” Empty declarations about the importance of obedience to court orders is not sufficient. As O’Connell J. stated in Jassa v. Davidson, 2014 ONCJ 698, at para. 44 “[c]ourt orders are not made as a form of judicial exercise. An order is an order, not a suggestion and non-compliance must have some consequences”

Two Problems with Marianna’s Motion

[47] That being said, there are also two related problems with Marianna’s motion. First, she based this motion on an inaccurate premise: that Mark somehow obtained and hid “approximately $4.2 in equity in our property” from the refinancing. She likely would have discovered the error in her statement had her counsel contacted Mark before bringing this motion. While her scepticism was justified, the range of this motion is not. That misunderstanding was likely responsible for the overbreadth of this motion.

[48] That leads to the second problem with this motion: Marianna failed to move promptly upon discovering the refinancing. Her distrust of Mark motivated her to keep her own knowledge of the transactions secret for that time, even in her counsel’s correspondence with Mark’s counsel. Again, confronting Mark would likely have revealed the truth. Marianna’s delay also speaks to the urgency of much of the relief that she seeks.

[49] On March 19, 2020, Marianna‘s counsel wrote to Mark’s counsel, seeking to set up a case conference. As set out below, Marianna was already aware of Mark’s new mortgage transactions at the time of this correspondence. In her email, Ms. Smithen set out a number of issues that she intended to deal with at the case conference. None of them related to the mortgage transactions that she had recently discovered. Her email states:

Dear Mr. Mamo and Ms. Hill,

My law clerk, Armando Dominguez, is seeking a time and date next week for the Teleconference that Justice Coats endorsed when we saw her on March.

I intend to revise my client’s Case Conference Brief from last time to focus on the issues I think need to be addressed. What we will address is the parenting time during the Corona Virus “scare”; (b) the terms of my client’s choice of appraiser to attend at 1110 Morrison Heights Drive, Oakville; disclosure that can and should be ordered now. My intention is to put in writing the various Family Law Rules that give a judge the authority to make an Order at a conference. It is my view that this will help narrow the issues for when her Motion returns and also, potentially, gives her the ability to m [sic] informed Offers to Settle on some or all of the financial issues.

We will also seek to have the terms about the disclosure re Teachers Life incorporated into an Order.

I will do my best to communicate to the court what we agreed to and what we didn’t. Of course, you can correct me if I’m wrong.

I do not intend to raise any of the difficulties we had over the scheduling of last Monday’s Motion with the view to addressing only the issues that t vested with addressing and for the purpose of keeping our clients’ matter moving forward towards resolution.

I seek your consent to serve and file late. I will have the Brief to you by sometime tomorrow.

[50] Marianna explained her reticence as arising from her fear that Mark was effectively making himself “judgment proof” to defeat her claim. She asserted: “I believe that Mark would do anything he possibly can to defeat my family law claims.” Marianna added that she felt that if she informed Mark of her knowledge of the transactions, he would have “squandered or hidden” the money to make himself “judgment proof”. Therefore, she kept quiet about the transaction for over a month before bringing this motion.

[51] Marianna deposes that she and her counsel learned about the transaction on March 18, 2020, when her counsel happened to conduct a property search on the property. In her reply affidavit, Marianna gives a number of overlapping reasons that she did not bring her motion earlier. In essence, she says that she delayed because:

• She wanted to take time to consider her response;
• She felt that Mark’s behaviour was “reckless”, so she wanted to “tread carefully”.
• She only acted when Mark missed a support payment.
• Her counsel had health and staffing issues.
• She relied on certain representations made before Coats J at a March 12, 2020 case management case conference. I will not consider any evidence of any discussions before or by Coats J. that were not included in her endorsement (see r. 17(23) of the Family Law Rules and Bordynuik v. Bordynuik at para.8).

[52] None of this justifies Marianna’s failure to contact Mark through counsel to place her concerns on the table before bringing an “urgent” ex-parte motion, seeking fourteen substantive heads of relief. The request for third party disclosure was not considered urgent enough to even mention in counsel’s letter to the court, seeking leave to bring this motion.

[53] Marianna’s request for leave to bring an urgent ex-parte motion was properly denied by Conlan J., who required service on Mark. Despite Mark’s breach of Gray J.’s order, with the information available to me, I conclude that this motion should not have been brought on an ex-parte basis.

[54] The problem with the lack of notice to Mark was not simply a procedural one. The premise of Marianna’s motion was that Mark had pocketed about $4.2 million dollars. That was the result of a misunderstanding that was resolved through the production of the exhibits attached to Mark’s affidavit. For example, he attached the lawyer’s trust ledgers from his mortgage transactions to that affidavit. Those ledgers show the allocation of the mortgage proceeds. They demonstrate that money from the proceeds of the two new mortgages was paid to satisfy and remove the original first mortgage, to Home Trust with a face amount of $3.4 million. Due to delays unrelated to Mark, that previous first mortgage had not been removed from the property register at the time that Marianna brought her motion.

[55] Further, the new mortgage advances, with the exception of the $177,000 cited above, do not appear to have gone to Mark at all. They went directly to pay off mortgages, debts, fees and costs related to the new mortgages and the renovation. Not all of the $177,000 went to Mark either, although he was able to allocate those funds as he saw fit. I will have more to say about that below.

[56] None of my criticisms of this motion excuse Mark’s conduct in violation of Gray J.’s order. Marianna did not violate a court order.

Issues:

[57] This case raises the following issues:

1. Are some or all of the issues raised by Marianna urgent, as described by the Notice and the Addendum? If so:
2. Is Marianna entitled to a certificate of pending litigation against the property?
3. Is Marianna entitled to a Mareva injunction against Mark?
4. Is Marianna entitled to a preservation order against Mark?
5. If Marianna is entitled to relief against Mark, what should be the terms of that relief?

Issue No. 1: Are some or all of the issues raised by Marianna urgent as described by the Notice and the Addendum?

Test for Urgency

[58] In Thomas v. Wohleber, 2020 ONSC 1965, I reviewed this court’s test for urgency both before its suspension and at the present time. I wrote at para. 33 that:

… it is important to emphasize the scrupulousness with which the urgency standard must presently be enforced. That may even mean that some issues that may have been heard on an urgent basis because the test of urgency was not strictly applied in a non-pandemic world will not meet the high threshold set by the Notice. It may mean that some issues in a motion are urgent while others are not.

[59] In that case, I set out the following factors necessary to meet the present test of urgency:

1. The concern must be immediate; that is one that cannot await resolution at a later date;
2. The concern must be serious in the sense that it significantly affects the health or safety or economic well-being of parties and/or their children;
3. The concern must be a definite and material rather than a speculative one. It must relate to something tangible (a spouse or child's health, welfare, or dire financial circumstances) rather than theoretical;
4. It must be one that has been clearly particularized in evidence and examples that describes the manner in which the concern reaches the level of urgency.

[60] I do not find that all of the issues in this motion are urgent. In light of the evidence presented to date, the non-urgent issues relate to the broad third party disclosure and some of the other disclosure relief requested as well as the proposed contempt motion. In a teleconference with counsel, Ms. Smithen advised me that Marianna is not pursuing a contempt finding. While dismissing some of Marianna’s other claims, I make no finding as to their urgency.

Issue No. 2: Is Marianna entitled to a certificate of pending litigation against the property?

Jurisdiction and Test for Certificate of Pending Litigation

[61] The jurisdiction to grant a certificate of pending litigation is found in s. 103 of the Courts of Justice Act, which requires a claim to an interest in land. The test does not simply look to whether there is a triable issue with regard to that alleged interest. The court will look to a number of factors in order to attempt to do justice between the parties and prevent harm. The court will not grant or maintain a certificate of pending litigation if damages are an adequate remedy (Guz v. Olszowka, 2019 ONSC 5308, at paras. 27 (4), 52-53).

Marianna Fails to Meet the Test for a Certificate of Pending Litigation

[62] Here, Marianna’s concern is not with any unique aspect of the property. Rather she claims that she should share in its net proceeds once it is sold. In other words, an award of damages would suffice.

[63] Accordingly, I find that Marianna fails to meet the test for a certificate of pending litigation.

[64] If I am wrong in that finding, I would nonetheless exercise my discretion to refuse to grant that relief. I do so because of the risk that the first mortgagor will call that mortgage and demand immediate payment if such a certificate is registered. Additional Condition and Representation number 17 of the first mortgage commitment, states: “[n]o subsequent encumbrances, debts or other mortgages with respect to the property without the Lender’s written consent.” Also according to the mortgage commitment, its terms remain binding on Mark notwithstanding the closing of the mortgage. I have not been shown the actual mortgage documents, but I assume that those terms are included in the mortgage itself.

[65] Because the property likely has a negative value at this time, the registration of a certificate of pending litigation would offer Marianna little reward but raise, at least to some extent, the risk that the property would be lost. I believe, as set out below, that Marianna’s interests can be protected in a different manner.

Issue No. 3: Is Marianna entitled to a Mareva Injunction?

Jurisdiction and Test to Grant a Mareva Injunction

[66] The jurisdiction of the Superior Court to grant an interlocutory injunction is found under s. 101 of the Courts of Justice Act. A Mareva injunction is a “drastic and extraordinary” remedy, one only granted when very strict terms are met. As Favreau J. explained in Paveau v. Ferreira, 2018 ONSC 1573:

46 A Mareva injunction is available to freeze the defendants' assets where there is a risk that the assets will be moved or dissipated to avoid judgment. It has been described as a "drastic and extraordinary". It is recognized as extraordinary relief because the courts do not generally grant judgment before a determination of the merits of a claim [References omitted].

[67] The test for granting a Mareva injunction is stricter than the one for an ordinary injunction. That test is explained and described by Perell J. in O2 Electronics Inc. v. Sualim, 2014 ONSC 5050 at para. 67 as follows:

67 Because procedural law disfavours pre-judgment execution, to obtain a Mareva injunction, a plaintiff must satisfy the normal criteria for an injunction and also several additional criteria. For a Mareva injunction, the moving party must establish: (1) a strong prima facie case; (2) that the defendant has assets in the jurisdiction; and (3) that there is a serious risk that the defendant will remove property or dissipate assets before the judgment. A Mareva injunction should be issued only if it is shown that the defendant's purpose is to remove his or her assets from the jurisdiction to avoid judgment. The moving party must also establish that he or she would suffer irreparable harm if the injunction were not granted and that the balance of convenience favours granting the injunction. Absent unusual circumstances, the plaintiff must provide the undertaking as to damages normally required for any interlocutory injunction.

Marianna Fails to Meet the Test for a Mareva Injunction

[68] Here Marianna has not established a strong prima facie case that she has an equalization or trust claim against Mark. I say that simply because he appears to have had a negative net family property on the date of separation and because the property has a negative net value at this time. In saying this, I am not attempting to make a finding for any future proceedings in that further disclosure may reveal evidence not available to me in this motion.

[69] However, Marianna does have a strong prima facie case that she has a claim to child and spousal support. The children have been in her primary case since separation. Mark was earning well over $400,000 per year and was the primary breadwinner for the family until he was fired for cause. While he was paying expenses for the family voluntarily, I cannot say how a trial judge, if called upon, would square those payments to Mark’s support obligations.

[70] Moving forward, it is at least possible that income will be imputed to him because of the reasons for his termination (see Maharaj v Wilfred-Jacob, 2016 ONSC 6520, at para. 169).

[71] However Marianne’s problems with a Mareva injunction arise from a lack of proof that Mark is removing his assets from the jurisdiction (as she originally implied) or that he intends to do so. She can argue that he is dissipating them, although that is at least in part because of his loss of employment. Where her claim really founders is in regard to the requirement that she prove that Mark’s purpose is to remove his or her assets from the jurisdiction to avoid judgment.

[72] The evidence before me does not point to Mark intending or attempting to remove assets from this jurisdiction in order to make himself judgment proof. I say this even though he has clearly breached Gray J.’s order. What he appears to be doing is attempting to maintain the property until he can sell it. That he did so improperly does not mean that he intends to make himself judgment proof or that he intends to defeat her claims. I am not convinced of those assertions.

[73] The key issue here is to preserve any equity in the property until it is sold, thereby protecting any support, property and trust claims that Marianna may have.

[74] I add that freezing all of Mark’s bank accounts, as Marianna has requested, would be of little long term value to her. His affidavit of April 30, 2020 (which includes copies of the relevant statements) shows that he currently has $89,661.71, net, in his bank accounts and $193,611.35 owing in lines of credit (in addition to the $6.5 million on mortgage debt). While Mark is in breach of the Gray J. order, he is not in breach of any court order that requires him to pay any money to Marianna. That issue will likely be resolved in the future as the court’s process open up further.

[75] At a time that Mark is unemployed, a freezing order would prevent him from accessing any funds to pay his or his family’s expenses, including any voluntary support. I note that Mark says that he has used some of the mortgage proceeds to pay support, an allegation that Marianna denies. I am not in a position to know which is true, although Mr. Mamo conceded that Mark has not paid the $3,000 voluntary payments for March and April.

[76] Accordingly, I dismiss the request for a Mareva injunction.

Issue No. 4: Is Marianna entitled to a Preservation Order?

Jurisdiction and Test to Grant a Preservation Order

[77] I find that Marianna is entitled to a preservation order against the property.

[78] The court’s jurisdiction to issue a preservation order is found at sections 12 and 40 of the FLA. Under FLA s. 12, a preservation order is available for the safekeeping of property to protect an equalization claim as follows:

Orders for preservation

12 In an application under section 7 or 10, if the court considers it necessary for the protection of the other spouse’s interests under this Part, the court may make an interim or final order,

(a) restraining the depletion of a spouse’s property; and (b) for the possession, delivering up, safekeeping and preservation of the property.

[79] Under FLA s. 40, a court may make a preservation order to protect against a party depleting their property to impair or defeat a support claim. The provision reads as follows:

Restraining orders

40 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.

[80] While the two provisions are not identically worded, in Price v. Price, 2016 ONSC 728 at para. 6, Timms J. reviewed a number of authorities that consider both of them. He found that they are subject to the same test, writing:

The onus lies on the party asserting that a preservation order is necessary to protect his or her interests under Part I of the FLA, or that his or her claim for support under Part III of the Act would be impaired or defeated unless a preservation order was made, to demonstrate that on the balance of probabilities.

[81] Timms J. concluded that the test for a preservation order is “… not the high threshold required for the granting of a Mareva injunction.” Rather, “[t]he correct standard is the same one to be applied when determining whether to grant an interim injunction.”

[82] Timms J. then sets out the appropriate test for a preservation order. It is one whose third prong focusses in part on relative harm. He states that the test consists of the following three parts:

1. Is there a serious issue to be tried?
2. Will the moving party suffer irreparable harm if relief is not granted? And
3. Which party will suffer the greater harm from granting or refusing the remedy pending a decision of the merits?

[83] Here, I find that the test for a preservation order is met with regard, at least under FLA s. 40. I say this because:

1. Although there is presently no support order, Marianna raises a serious issue with regard to her claims to child and spousal support. Right now, with the exception of what appears to be a voluntary payment of $3,000 per month, Mark is supporting his family by paying numerous expenses.
2. In addition, Marianna can fairly point to Mark’s intentional breach of the Gray J. order to say that the court cannot simply rely on Mark to obey future support orders.
3. There is a risk of irreparable harm in that: a. Mark is presently unemployed. b. It is possible that income will be imputed to him because he was fired for cause. c. In large measure because of the renovation of the property, Mark has few other resources to pay a retroactive or prospective support order based on an imputed income. d. The COVID-19 crisis may have affected the value of the property, likely reducing any equity in the property once it is sold. e. As stated above, Mark has already breached a court order preventing him from further encumbering the property. f. Conlan J. has already issued what can be characterized as an interim-interim preservation order regarding the property. There is no evidence or reason to believe that Mark has been harmed by it. Even if such an order were registered against title to the property, it would not amount to a lien. On the other hand, Mark has shown that he will not strictly obey an order enjoining his dealings with the property unless it is made enforceable. That could occur if it is registered against the property.

[84] I have not granted a preservation order against Mark’s bank accounts, primarily for reasons set out above. However in doing so, I assumed that he would continue paying family expenses, at least out of the $177,000 he obtained through the refinancing. Part of that assumption is that he would continue to pay the $3,000 per month that he has been voluntarily paying to Marianna. He has sufficient funds available to him to do so. If he fails to do so within the next fourteen days, I grant Marianna leave to move on an urgent basis for support. Such a motion would be returnable before me.

Issue No.5: If Marianna is entitled to relief against Mark, what should be the terms of that relief?

[85] Mark’s materials show that he does not oppose an interim preservation order upon the same terms as the Conlan J. order described above. But that order is not significantly different than the one that Mark already violated. In order to ensure that it is not violated again, my order shall be registered against title to the property.

[86] Inasmuch as Mark has used funds purportedly intended for the renovation of the property for family and even personal use, without authorization, I cannot assume that he will not do so again unless a further order is made. Therefore it is necessary to make a preservation order, prohibiting Mark from dealing with any of the funds presently held in trust by Diamond and Diamond, other than direct payments to contractors or tradespeople performing work on the property or as set out in this order.

[87] Mark may well be entitled to a 2019 employment bonus and damages related to his employment termination. He has not earned the trust of the court that he will use the money exclusively for purposes that would support himself and his family. It is appropriate to make a preservation order that any such funds obtained from Teacher’s Life Incorporated, net of legal fees incurred to obtain them, be held in trust by his employment lawyer and that Marianna have disclosure with regard to the status those claims.

[88] Mark agrees that Marianna is entitled to inspect the property and to bring with her an appraiser of her choice. She requests that Mark not be present for the inspection. She points out that he is still subject to a restraining order, a contention that Mark denies. The temporary order of Gibson J. of January 31, 2020 as amended by the Coats J. order of May 6, 2020 includes a broad non-harassment and non-communication order (subject to certain exceptions cited above), albeit one that does not restrict Mark from being within a certain distance of Marianna.

[89] Mark says that he now lives in the property. He says through counsel that he does not wish Marianna to be alone in the property for two reasons. First, he does not wish her to harm herself because a porch is still under construction. He adds that he does not wish her to have access to his personal items in the property.

[90] As set out above a general non-harassment order remains in place. The parties may communicate through Our Family Wizard or see each other in public at their child’s activities, but I still feel that it is necessary to avoid the possibility of conflict between them in close quarters. I believe that my order below will serve the interests of both parties.

[91] Accordingly, Marianna is entitled to inspect the property with the appraiser of her choice in Mark’s absence. But if he wishes, he may appoint someone to be present in his stead who will not interfere with the inspection. I set out further terms below.

[92] Marianna seeks an order of wide-ranging third party disclosure, stating that the bank statements attached to Mark’s March 20, 2020 affidavit did not show the flow-through of the funds from the two new mortgages. As set out above, most of that money did not go into those accounts and was paid directly by Mark’s real estate lawyer. Further, this head of relief was not even considered by Conlan J. when he made the threshold finding that this motion is urgent. I will not entertain that aspect of this motion.

[93] That being said, some aspects of Mark’s finances warrant disclosure in light of his breach of the Gray J order and ancillary to the other relief set out herein. That disclosure must be proportional and necessary, in light of my findings on those aspects of this motion that are and are not urgent. In particular, I find that under r. 1(7.2)(a) and 13 (7), Marianna is entitled to the disclosure set out in the paragraph below within 30 days or otherwise as stated.

Order

[94] For the reasons set out above, I make the following order:

1. Mark is prohibited from further dealing with the property without the written consent of Marianna or a court order. The term, “deal” includes but is not limited to selling, disposing, transferring, mortgaging, encumbering, pledging, or anything else that changes the current ownership and/or equity of the property to any degree, however small.”
2. This order shall be registered against title to the property.
3. Mark is also prohibited from dealing with any of the funds presently held in trust by Diamond and Diamond without the written consent of Marianna or a court order, other than for: a. direct payments to contractors or tradespeople performing work on the property or b. as otherwise set out in this order, unless he has either.
4. If Mark wishes to use funds held in trust by Diamond and Diamond for any other purpose, including the transfer to another law firm, he shall first obtain the written consent of Marianna or a court order.
5. Mark shall serve a copy of this endorsement on Diamond and Diamond, Mark Clouse and any other lawyer whom Mark may retain in regard to any transactions regarding the property.
6. Any employment bonus that Mark receives from his former employer, net of legal fees incurred to obtain it, shall be held in trust by his employment lawyers, Whitten and Lublin, until further order or agreement in writing. He shall also advise Marianna within 48 hours of his counsel receiving those bonus funds.
7. Should Mark settle any claims arising out of his employment or its termination with Teacher’s Life Incorporated, he shall immediately advise Marianna through counsel. He shall provide copies of any settlement agreement to her within 48 hours of its execution. The proceeds of any such settlement, net of legal fees, shall be held in trust by his employment lawyer pending further agreement or court order.
8. Mark shall provide a copy of this endorsement on Whitten and Lublin. If Mark changes employment counsel, he shall provide this endorsement to that counsel.
9. Marianna is entitled to inspect the property with the appraiser of her choice upon the following terms: a. Counsel shall arrange a date and time. b. Marianna may be at the property for up to three hours. c. Mark will arrange to provide the key for Marianna, which she will return when she has finished the inspection. She shall not make any copy of that key. d. Mark will not be present for the inspection. He may arrange to have another person present, who will not interfere with the inspection. e. If there are any areas that Mark believes to be unsafe in the property, he shall advise Marianna, through counsel of those areas. f. Marianna shall not remove anything from the property. Nor shall she photograph any of Mark’s personal items other than furniture and fixtures in the property. g. If there are any issues with regard to the terms of Marianna’s inspection of the property, counsel may arrange a conference call with me to resolve it.
10. Mark shall produce to Marianna within 30 days or otherwise as stated: a. an up-to date trust ledger for Mark from Diamond and Diamond; b. timely notice of any expenditures of funds from Diamond and Diamond; c. a copy of Diamond and Diamond’s trust ledger for Mark upon demand, although not more than once every 30 days; d. copies of all invoices for expenses paid by Mark out of the $177,000 mortgage proceeds described above, whether paid directly by Diamond and Diamond or Mark; e. a copy of Mark’s applications for the current first and second mortgages; f. a copy of Mark’s Record of Employment from Teacher’s Life Incorporated; g. Notice of the payment of any bonus for 2019 by Mark’s employer within 48 hours of receipt of that bonus. h. Copies of all bank statements for all of Mark’s bank or investment accounts of any kind, whether held in his name alone or jointly with another person or by a corporation in which he is a principal, from January 1, 2020 to date. i. Copies of all credit card statements for all of Mark’s credit cards, whether held in his name alone or jointly with another person or by a corporation in which he is a principal, from January 1, 2020 to date.
11. If Mark fails to restore the voluntary payments of $3,000 per month to Marianna, within 14 days, I grant her leave to move on an urgent basis for support. Such a motion would be returnable before me.

[95] The balance of this motion is dismissed, without prejudice to Marianna’s right to apply for further disclosure in the future.

Reasons Deemed an Order

[96] In the circumstances of the COVID-19 emergency, these Reasons for Decision are deemed to be an Order of the Court that is operative and enforceable from the time of their release without any need for a signed or entered, formal, typed Order. The parties may submit a formal Order for signing and entry once the court re-opens.

“Marvin Kurz J.” Electronic signature of Justice Marvin Kurz, Original will be placed in court file Dated: May 15, 2020

[1] Lives of the Queens of England from the Norman Conquest with Anecdotes of Their Courts by Agnes Strickland, Volume 9, Chapter 1: Mary Beatrice of Modena, 1846, Quote Page 39, Henry Colburn Publisher, London. (Google Books Full View): https://books.google.ca/books?id=82IBAAAAQAAJ&q=%22than+permission%22&redir_esc=y&hl=en#v=snippet&q=%22than%20permission%22&f=false [2] I use only the initials of the children to protect their privacy