COURT FILE NO.: CV-19-629127 DATE: 2020-08-05 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Karoline Untener Kisti, Plaintiff AND: Anna Salena Kisti, Defendant

BEFORE: Schabas J.

COUNSEL: Alexander Wilkes, Counsel for the Defendant/Moving Party Karoline Untener Kisti, Plantiff/Responding Party, in person, together with her daughter Karoline Kisti

HEARD: July 31, 2020

Reasons on Motion to Set Aside Injunction

Background

[1] This is a motion by the defendant, Anna Kisti (“Anna”), seeking to set aside a Mareva injunction and to obtain security for costs. The plaintiff, Karoline Kisti (“Karoline Sr.”), is the defendant’s 96-year-old mother. Anna is one of three daughters of Karoline Sr. – the others being Eva and Karoline (“Karoline Jr.”). Over the past 20 years, there has been litigation between Karoline Sr. and Eva, and between Karoline Sr. and Karoline Jr. Now it is Anna’s turn to be in a lawsuit with her mother. However, it is also a dispute between Anna and her sister Karoline Jr.

[2] In the early 2000s, Eva sued her mother over, among other things, title to a property that Eva had transferred to her mother, known as the “Skiview Property.” The action was settled in 2007. Title to the Skiview Property remained with Karoline Sr. At that time, and until 2008, Karoline Jr. was living with her mother. Karoline Sr.’s husband had died in 2006. In 2008, Anna moved in with her mother and Karoline Jr. left. Eva now lives in Costa Rica and is not involved in this action.

[3] In 2009, Karoline Sr. received settlement funds from a lawsuit against a municipality involving the Skiview Property in the amount of $374,432.72 (the “settlement funds”). Those funds were deposited to Anna’s bank account. It is disputed whether Karoline Sr. directed this or not. Karoline Sr.’s affidavit states that she “gave the settlement funds directly to Anna, who [she] trusted to deposit…for my benefit.” At this time Anna had taken over handling her mother’s financial affairs; however, Anna has identified an individual at the bank who questioned Karoline Sr. at the time to confirm that it was her intention to give the money to Anna. In any event, over ten years later Anna continues to have a large bank balance stemming from the settlement funds of approximately $300,000. This supports the conclusion that Anna has not disposed of the funds and there is no evidence that she has used them for any purpose other than to pay for the living expenses of her mother and herself. Although both Karoline Sr. and Karoline Jr. complained at the hearing that Karoline Sr. had supported Anna’s pursuit of a law degree while living together, there is no evidence that Karoline Sr. objected to doing so, or that Anna used any of her mother’s money to this end without her consent.

[4] In 2009, Karoline Jr. sued her mother claiming that she should be granted title to the Skiview Property (or at least be a joint tenant or tenant-in-common on title), and claiming that she was entitled to at least some of the settlement funds. It appears that both daughters feel they have made sacrifices to care for their mother, and that they should obtain assets in return for their care-giving.

[5] Karoline Jr.’s lawsuit was dismissed for delay in 2012 and a Certificate of Pending Litigation on the Skiview Property was removed in 2014.

[6] Meanwhile, in 2010, Karoline Sr. signed a Will making Anna the primary beneficiary of her estate, and did so again in 2015, at which time Karoline Sr. also added Anna as a joint tenant on title to the Skiview Property. The 2015 Will and land transfer documents were prepared by a lawyer for Karoline Sr. who has confirmed to Anna that Karoline Sr. took these steps of her own free will. The 2015 Will also stated:

“I acknowledge I have two other daughters CAROLINE SUZANNE KISTI (also known as Karoline Kisti Jr.) and EVA THERESA KISZTI (also known as Ava Theresa Kiszti) which have not been named in this my last will and testament. I have made this last will and testament after considerable thought and deliberation, and it is my choice to benefit only my daughter, ANNA SELENA KISTI , and to exclude my two other daughters.”

[7] Anna lived together with her mother in Karoline Sr.’s apartment from 2008 to about October 2018, caring for her mother, assisting her with many medical appointments, medications and daily living. However, it is now alleged by Karoline Sr. (and Karoline Jr.) that Anna was abusive to her mother and controlled her over these years, including over-medicating her, and that Anna did not contribute financially to their living expenses, all of which Anna denies.

[8] In October 2018, when Karoline Sr. was 94 years old, she became ill with pneumonia, bronchitis and perhaps had a mild heart attack. Although Karoline Sr. alleges, emphatically, that Anna isolated her from Karoline Jr., Karoline Jr. was visiting her mother in the apartment during this illness, and in fact was present when Karoline Sr. was taken to hospital by ambulance on October 10, 2018. This is not disclosed in Karoline Sr.’s affidavit in support of the injunction.

[9] Karoline Sr. remained in hospital until October 29, 2018 when she was moved to a rehabilitation centre where she remained until November 14, 2018. At that time, Karoline Jr. took Karoline Sr. out of the centre to live with her. Anna describes this as an “abduction”, but Karoline Sr.’s affidavit refers to this as her “liberation.”

[10] In the early part of 2019, while Karoline Sr. was staying with Karoline Jr., Anna continued to live in her mother’s apartment. However, during that time, Anna provided funds to her mother for living expenses totalling approximately $41,000. This was also not disclosed by Karoline Sr. in seeking the Mareva injunction.

[11] Karoline Jr., who made submissions for and with her mother at the hearing before me, produced emails on this motion confirming transfers of funds to Karoline Sr. by Anna, but asserts that this was her mother’s money from the settlement funds. Whether the settlement funds belong to Karoline Sr. or Anna, it is significant that in 2019, in the period leading up to the obtaining of the Mareva injunction, Anna did provide money to Karoline Sr. (and, indirectly, Karoline Jr.) and made other payments, such as property tax payments on the Skiview Property and rent for the apartment in early 2019. Anna was in fact using those funds for the benefit of her mother, but this was not disclosed to the Court by Karoline Sr.

[12] In June 2019, as Anna had not yet moved out of the apartment (although she had said she would), Karoline Sr. and Karoline Jr. took steps to occupy the apartment and forced Anna to leave. The police were involved, and there are disputes over precisely what happened.

[13] Left behind in the apartment where she had lived for over 10 years were Anna’s banking and other records which showed considerable balances, stemming from the deposit of the settlement funds in 2009.

[14] Lawyers were engaged by both parties. Karoline Sr. claimed that the transfer of title on the Skiview Property should be reversed and she sought an accounting from Anna, asserting that she never agreed to give the settlement funds or a half interest in the Skiview Property to Anna. There was also communication about Anna getting access to her documents left behind in the apartment, including copies of her mother’s medical records, and other possessions, some of which Anna requires to respond to the allegations against her.

[15] On October 15, 2019, Karoline Sr. commenced this action, on October 17, 2019, Karoline Sr. obtained, ex parte, a Mareva injunction freezing Anna’s bank accounts and preventing any alienation of Anna’s interest in the Skiview Property. That injunction was continued on consent in October 25, 2019.

[16] For some period of time following the issuance of the Mareva injunction, Anna had no access to funds and lived in a shelter. She is now sharing an apartment with another individual and living on her pension income of approximately $1,500 per month. Anna now moves to set the injunction aside or, alternatively, to vary the order to allow her access to funds to meet her expenses and to pay for legal representation in this case.

[17] When the action was commenced and the injunction was obtained, Karoline Sr. was represented by counsel. However, there has now been a falling out between Karoline Sr. and her former counsel who has advised that he is “exercising a solicitor’s lien” over the assets that are the subject of the injunction in order to recover his fees. Based on correspondence in the record, and her own involvement before me, it is clear that the plaintiff’s action is now being run by Karoline Jr.

The test for a Mareva injunction

[18] A Mareva injunction is an extraordinary remedy, granted to freeze assets when there is a real risk of the assets being disposed of or removed from the jurisdiction of the Court such that the plaintiff will be unable to recover on any judgment subsequently awarded to her.

[19] It is well-established that to obtain a Mareva injunction the plaintiff must satisfy the following 5-part test (see Sharpe, Injunctions and Specific Performance, looseleaf edition, at 2.850 – 2.900):

a. The plaintiff should make full and frank disclosure of all material facts within her knowledge;

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

c. The plaintiff should give grounds for believing that the defendant has assets in the jurisdiction;

d. The plaintiff should give grounds for believing that 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 judgement awarded to her; and

e. The plaintiff must give an undertaking as to damages.

[20] Mareva injunctions are extraordinary and drastic remedies. Because of the serious impact of such Orders, they are granted sparingly and are subject to review on motion by the affected party. As Mareva injuctions are sought without notice and usually on an urgent basis, leaving the Court dependent on the information provided by the party seeking the order, full and frank disclosure of all material facts must be provided.

[21] Gans J. observed in United States of America v. Yemec (2003), 67 O.R.(3d) 394 at para. 1:

Ex parte injunctions in general and Mareva injunctions in particular are often the bane of the judicial process. They present judges with the most vexing of issues on an immediate and urgent basis while simultaneously obliging the moving party to make full and frank disclosure of the relevant facts, if known, including facts which may explain the position or inure to the benefit of the defendant. Furthermore, where a Mareva injunction is ordered, a "profound unfairness" occurs since a defendant's assets are tied up indefinitely, in more severe circumstances than even with an execution after judgment, which may force the defendant to settle rather than await "vindication after trial". [notes omitted]

[22] Consequently, if on review it is shown that a party did not make full and frank disclosure, the injunction may be set aside, even if the fact or facts not disclosed are not determinative. As the Divisional Court has stated, "any fact that would have been weighed or considered by the motion's justice in deciding the issues, regardless of whether its disclosure would have changed the outcome, is material": Forestwood Co-operative Homes Inc. v. Pritz (2002), 2002 CarswellOnt 490, 156 O.A.C. 359 at para. 26

[23] On this motion, the defendant, Anna, submits that the injunction should be set aside on two grounds: (1) the plaintiff’s failure to make full and frank disclosure; and (2) that in any event the test for an injunction has not been met as there is no risk that Anna will dispose of or remove the assets from the jurisdiction.

Full and frank disclosure

[24] In my view, the plaintiff failed to make full and frank disclosure to the Court when the injunction was obtained in October 2019.

[25] Karoline Sr. did not provide the Court with the history of her litigation with her other daughters, especially the prior history of the action by Karoline Jr. over the same assets when Karoline Jr. is now being presented to the Court as Karoline Sr.’s liberator. While the Court is not in a position to decide whether she is a liberator or an abductor at this stage, the prior history with Karoline Jr. is relevant to an assessment of the matter and the appropriateness of the extraordinary injunctive relief that was sought, especially when much of the information presented to the Court by Karoline Sr. was provided to her by Karoline Jr. who, it is said by Karoline Sr., “began to uncover the cruelty, abuse and dishonesty that had been perpetrated by Anna over many years.”

[26] I have also noted above the failure to disclose Karoline Jr.’s access to her mother prior to being taken to hospital in October 2018, which is also inconsistent with the plaintiff’s narrative that Anna had isolated her mother and prevented access to her by Karoline Jr.

[27] Further, Karoline Sr. did not disclose the fact that, since her “liberation” by Karoline Jr., Anna has in fact provided significant funds to Karoline Sr. to ensure she had money on which to live while with Karoline Jr. in early 2019. In addition, there is evidence that Anna paid taxes on the Skiview Property in 2019 and also paid rent for the apartment in 2019 after Karoline Sr. moved in with Karoline Jr. This was also not disclosed by the plaintiff.

[28] On the motion before me, Karoline Jr. argued that these payments by Anna were made with her mother’s money, from the settlement funds, and so are not really payments by Anna at all. Whether the settlement funds belong to Anna or Karoline Sr. is not the point at this stage, however, as the issue is whether those assets should be frozen. As Anna was using at least some of those assets to the benefit of her mother, that ought to have been disclosed to the Court when the injunction was sought as it was a material consideration in determining whether the assets should be frozen. Further, it is conduct by Anna that is inconsistent with that of someone who is seeking to hide or remove assets for her own benefit.

[29] Anna also takes issue with other facts put before the Court in October 2019, such as how she was forced out of the apartment and who it was who called the police, and what has happened to her bank records and her copies of her mother’s medical records which were left behind and, it is submitted, could assist her in rebutting allegations of over-medicating and taking advantage of her mother. Further, although Karoline Sr. is presented in her affidavit as a vulnerable and trusting woman dependent on her daughters, she attended the hearing of the motion before me, sat at the counsel table with her daughter, Karoline Jr., and spoke up several times. Despite her age and her evidence that she has only a “basic” understanding of English (her affidavit was interpreted to her by an Hungarian/English interpreter) she appeared to have a very good grasp of what was going on. I was also advised that she now lives alone in her apartment, although is frequently seen and assisted by Karoline Jr.

[30] A finding that the plaintiff has failed to make full and frank disclosure does not mean that an ex parte injunction must be overturned. The court still retains a discretion to maintain the order in order to ensure that justice is served. However, in this case the non-disclosure was material and relevant to the issues, and I would overturn the injunction on this basis.

No evidence of a real risk that the assets will be dissipated or removed

[31] In my view, the evidence on the motion for the injunction was, and remains, insufficient to justify the injunction.

[32] In addition to the failure to disclose Anna’s use of funds to her mother’s benefit since the so-called “liberation” of Karoline Sr., which as I have noted is inconsistent with an attempt to remove or convert funds to herself, there is in fact little or no evidence before the Court that there is a real risk that the assets will be dissipated or removed from the jurisdiction by Anna.

[33] Perhaps the only evidence raising an issue about Anna being a flight risk was Karoline Sr.’s assertion that she did not know Anna’s current address; however, Anna had a lawyer at the time and there was no evidence that she had fled, nor did Karoline Sr. state in her affidavit in support of the injunction that she feared that Anna would flee the jurisdiction with money that may come from the settlement funds. Anna was born in Canada in 1951 and there is no evidence that she has lived anywhere else or has any contacts or assets in any other country.

[34] Nor is there evidence that Anna was dissipating the assets, or intends to do so. Although it is asserted that she was commingling the money with her own assets and had several different accounts, Anna receives only a modest pension income, and the banking is quite straightforward with most of the money invested in a Tax Free Savings Account and in GICs. There is no evidence that Anna has been living an extravagant lifestyle and spending money irresponsibly. The settlement funds were received in 2009, and there is no evidence that they have been improperly spent by Anna, or even spent at all as most of it is still sitting in the bank.

[35] In my view, therefore, the plaintiff’s evidence did not, and does not, support the issuance of a Mareva injunction.

Security for costs

[36] Although Anna’s motion seeks an order for security for costs pursuant to Rule 56.01(e) of the Rules of Civil Procedure, this was not pressed with any vigour at the hearing by Anna’s counsel.

[37] The concern that Karoline Sr. will not have sufficient assets to pay Anna’s costs for the litigation due to the fact that Karoline Sr. appears to have a debt to her former counsel is not supported by adequate evidence. The precise amount of the debt is unknown, and in any event Karoline Sr. continues to be a joint tenant owner of the Skiview Property, and she receives a pension income.

[38] Nor can I find that the action against Anna is frivolous or vexatious. Although I have concerns with the lack of full and frank disclosure by the plaintiff, there are many issues in dispute, which, as I stated to the parties at the hearing, I am not in a position to resolve or form a view on at this stage of the proceeding. However, the claim does raise serious issues.

Conclusion

[39] The motion to set aside the Mareva injunction issued on October 17, 2019 and extended on October 25, 2019, is granted. The motion for security for costs is dismissed.

[40] In deciding to set aside the injunction I considered granting the alternative relief of only permitting access by Anna to funds necessary for her monthly living expenses, and to pay her lawyer; however, that would effectively be continuing an injunction that is not supported by evidence, would be unfair to Anna, and put the Court in the position of supervising the use of funds without adequate justification.

[41] Anna seeks damages arising from the improper obtaining of the injunction based on the plaintiff’s undertaking as to damages. In my view, that is something that should be pursued as a separate inquiry on a motion or by way of counterclaim in the action. There is inadequate evidence before me on which to determine any award of damages to Anna, and it would be inappropriate to do so at this time.

[42] Anna’s counsel also seeks to have the funds declared not subject to the “solicitor’s lien” asserted by Karoline Sr.’s former counsel. I have nothing before me on this issue other than an email from Karoline Sr.’s former counsel stating that he is “exercising a solicitor’s lien” on the assets which were the subject of the order. I have no order or “lien” before me and am not in a position to address this issue, one way or another. However, Karoline Sr. continues to have an interest in the Skiview Property which I was told is more than adequate to cover the amount claimed by her former counsel, a claim which would be against Karoline Sr. and not Anna.

[43] As to costs, Anna shall provide written submissions not exceeding 3 pages, not including supporting materials, to me within 14 days of the release of these Reasons, and Karoline Sr. shall provide responding submissions within 14 days of receipt of Anna’s submissions.

Schabas J. Date: 2020-08-05