COURT FILE NO.: FC-17-54087
DATE: 20200129
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Emma Claire Trefler
Applicant
– and –
Stephen Adam Elias and William (Bill) Elias
Respondents
Ronald V. Zaldin, for the Applicant
Jesse Rosenberg, for the Respondent, Stephen Adam Elias
Martine Ordon, for the Respondent, William Elias
HEARD: January 13-15, 2020
REASONS FOR DECISION
CHARNEY J.:
Introduction
[1] The respondents in this matter, Stephen Elias (Stephen) and William Elias (William), have each brought a motion to ask the court to determine the validity of a $950,000 mortgage for a loan allegedly made by William to his son Stephen. Both Stephen and William take the position that the mortgage secured a bona fide loan that should be repaid from the proceeds of the sale of the mortgaged home located on Davis Drive, in Uxbridge Ontario (the Davis Drive property). Those sale proceeds are currently held in trust pursuant to an earlier court order.
[2] The motions are opposed by the applicant, Emma Trefler, who is Stephen’s former spouse. In her Application, she seeks to have the mortgage removed from the Net Family Property calculation because it was “invalid”. Emma takes the position that the mortgage is “bogus” and the respondents have failed to prove that William lent $950,000 to Stephen. She argues that the validity and amount of the loan should not be dealt with on these motions, but should wait to be decided along with all other issues when this proceeding goes to trial.
Facts
[3] Most of the facts relevant to these motions are undisputed. Indeed, the only relevant fact that is in dispute is the amount of money, if any, lent by William to Stephen to build the house on the Davis Drive property. There are other facts in dispute between the parties, but, as I will explain below, none of these other disputed facts are relevant to the legal issue that I am asked to decide on these motions.
[4] Emma and Stephen began living together in 2011, and were married on May 4, 2014. They have three children aged 3, 5 and 7.
[5] Prior to separation, Emma and Stephen jointly owned and lived with their children in a home on Ridge Gate Crescent in Mount Albert, Ontario (the matrimonial home). The matrimonial home was sold for $1,025,000 on July 14, 2017, following separation. The net proceeds of sale of the matrimonial home (approximately $780,000) have already been divided, and are not at issue on this motion.
[6] The parties dispute their date of separation. Stephen alleges that it was on May 15, 2017, and Emma alleges it was one month later, on June 15, 2017. The choice between the two separation dates is not relevant to the legal issue I have to decide on this motion, and I make no determination in that regard.
[7] During the marriage, on April 15, 2016, Stephen purchased a vacant lot on Davis Drive. The purchase price was $335,000, plus closing costs. The property was registered solely in his name. His intention at the time was to build a home that the family would move into once it was completed.
[8] In his evidence, Stephen refers to the Davis Drive property as an “investment property”, which he would eventually sell. Whether the property is properly described as an “investment property”, how long Stephen intended to keep the property before selling it, and whether he ever intended or agreed to add Emma as a registered owner on title, are all matters in dispute, but are not relevant to the legal issue I have to decide on this motion, and I make no determination in that regard.
[9] There is no dispute that the vacant lot on Davis Drive was purchased during their marriage, the couple separated before the house was completed, and the house was never occupied as a matrimonial home. The home on Davis Drive was sold on July 24, 2019 for $1,550,000. There is no dispute that the net value of the Davis Drive property on the date of separation must be included in the Net Family Property for the purposes of equalization. While the parties dispute the value of the Davis Drive property on the date of separation, there is no dispute that it was worth more than $950,000, whichever valuation date is chosen. Therefore, the valuation date value of the Davis Drive property does not have to be decided on this motion.
[10] Since the matrimonial home on Ridge Gate Crescent was mortgaged, Stephen could not obtain a conventional mortgage for the vacant lot on Davis Drive, and Stephen could not afford to purchase and build on the Davis Drive property without financial assistance from both Emma’s parents and his father.
[11] The purchase of the vacant lot on Davis Drive was financed by a loan from Emma’s parents to Stephen in the principle amount of $329,567. Emma’s parents and Stephen entered into an oral agreement regarding the purchase financing by which Stephen agreed to pay interest on a monthly basis. Stephen paid interest on Emma’s parents’ loan in the approximate amount of $950.00 per month until he repaid the loan in February 2018. There is no dispute regarding the loan, the amount, or that it has been fully repaid.
[12] Prior to the purchase of the vacant lot, Stephen’s father, William, agreed to lend Stephen the money to finance the construction of the house that was to be built on the vacant lot. Like the loan from Emma’s parents, this was an oral agreement.
[13] William has worked in construction for most of his life, and he spearheaded the construction of the house on the Davis Drive property. In contrast to the loan from Emma’s parents, which was advanced in one payment, the money for construction of the home was advanced by William as the building was being constructed. The construction began in April 2016, and funds were paid as work was done and various invoices and expenses came due.
[14] It is not surprising that there was no loan documentation or mortgage registered with respect to either Emma’s parents’ loan or Stephen’s father’s loan prior to Stephen and Emma’s separation. Stephen and Emma were married and their parents trusted them.
[15] The evidence of William and Stephen is that William advanced the funds for the construction of the Davis Drive house, with the intention that William would be paid back after the Davis Drive home was constructed and the Ridge Gate Crescent home was sold. At that point Stephen could place a conventional mortgage on the Davis Drive home.
[16] When Emma and Stephen separated in May or June 2017, the Davis Drive home was approximately 75% complete. The house was not completed until October 2017, when an occupancy permit was issued.
[17] Again, not surprisingly, as Stephen and Emma’s marriage unravelled, both Emma’s parents and Stephen’s father wanted some documentation and security for their respective loans.
[18] On June 12, 2017, Stephen and Emma signed an “Acknowledgment and Direction”, agreeing to place a mortgage for $330,000 in favour of Emma’s parents on the Davis Drive property. Stephen registered the mortgage on title on June 16, 2017.
[19] Also on June 12, 2017, Emma and Stephen signed an “Acknowledgment and Direction” agreeing to place a mortgage of $950,000 in favour of William on the Davis Drive property. Stephen registered the mortgage on title on June 16, 2017.
[20] William’s $950,000 mortgage was registered first, and had priority over Emma’s parents’ $330,000 mortgage. Emma argues that Stephen had agreed to register her parents’ mortgage before William’s mortgage. Stephen takes the position that he did not agree to give Emma’s parents’ mortgage priority over William’s mortgage.
[21] In February 2018, Stephen repaid Emma’s parents’ loan from his share of the proceeds from the sale of the matrimonial home. Emma’s parents’ mortgage was discharged from the title of the Davis Drive property on or about February 18, 2018.
[22] Since there is no dispute that Stephen has already repaid Emma’s parents’ mortgage in full, and that mortgage has been validly discharged, the dispute regarding priority between the two mortgages is not relevant to the legal issue that I have to decide on these motions.
Procedural History
[23] As indicated above, the Davis Drive property was sold on July 24, 2019 for $1,550,000. The sale of that property gave rise to several motions and court orders that are relevant to the motions before me, and it is therefore necessary to first review the procedural history of the various motions.
[24] The continuing record in this proceeding is comprised of 24 volumes of material. I will highlight the various proceedings that are directly relevant to the motions before me.
(i) February 7, 2018 Consent Order
[25] As indicated above, the house on Davis Drive was not completed before Emma and Stephen separated in May/June 2017, and was never occupied by them as a matrimonial home. Only Stephen was registered on title.
[26] In December 2017 Stephen listed the Davis Drive property for sale. Emma discovered this, and on December 17, 2017, Emma served an Amended Application claiming a declaration for a one-half interest in the Davis Drive property.
[27] On December 21, 2017, Emma brought an urgent ex parte motion seeking an order for a Certificate of Pending Litigation (CPL) to be registered on title to the Davis Drive property, and an order to restrain Stephen from continuing to list the Davis Drive property for sale. In support of this motion Emma swore an affidavit stating that the Davis Drive property was a matrimonial home. She also indicated that she (through counsel) had registered a matrimonial home designation on the Davis Drive property on December 15, 2017.
[28] The ex parte motion for the CPL was dismissed on December 21, 2017. The motions judge held that if the property was a matrimonial home Emma could register a matrimonial home designation on the property pursuant to s. 20 of the Family Law Act, and therefore a CPL was not necessary.
[29] Emma brought the motion back with notice on January 11, 2018. The parties agreed to a consent order, which was issued on February 7, 2018 (the February 7, 2018 Order). This Order stated:
One half of the net proceeds of sale of the property municipally known as 280 Davis Drive, Uxbridge, …shall be frozen upon the sale/closing of the property – to remain in trust with the real estate lawyer handling the sale of the property, pending further Court Order or a signed Agreement by both parties as to the disposition or dispersal of these funds.
The Respondent Stephen Elias shall receive the remaining one half of the net proceeds and provide an “accounting” in due course of the receipt of his one-half of the net proceeds of sale of the [Davis Drive] property…
Both parties shall preserve their assets pending trial (save and except for the normal course of the Respondent’s business).
The Respondent Stephen Elias shall (on or before February 14, 2018) provide proof of his father Bill Elias loaning him $950,000 (dates and amounts, with documentary backup), which $950,000 was secured by a first mortgage registered on title to 280 Davis Drive, Uxbridge on June 16, 2017.
[30] Without Stephen’s knowledge or consent, Emma registered the February 7, 2018 Order on the title to the Davis Drive property. There was nothing in the Order to authorize the registration.
[31] When Emma and Stephen agreed to the February 7, 2019 Order, William was not a party to the proceedings and did not consent to the terms of the Order.
(ii) Addition of William as a Party
[32] On May 10, 2018, Emma swore an affidavit in support of a motion returnable on July 18, 2018, to amend her Amended Amended Application to add William as a party to the matrimonial litigation and to strike off and expunge from the title of the Davis Drive property his $950,000 mortgage.
[33] On July 24, 2019, William consented to be added as a party. The parties agreed that his consent was without prejudice to William’s right to bring a motion to strike out those portions of Emma’s proposed Amended Amended Amended Application (3X Amended) because it disclosed no cause of action against him.
[34] Emma served her 3X Amended Application on October 23, 2018, and William’s lawyer took the position that it disclosed no cause of action against William.
[35] In response to the concerns raised by William’s lawyer, Emma served an Amended Amended Amended Amended Application (4X Amended) on December 18, 2018, and after some correspondence between counsel, William brought a motion to strike Emma’s 4X Amended Application on July 12, 2019.
[36] William was successful on his motion to strike. In reasons released on July 17, 2019, Douglas J. carefully reviewed the 4X Amended Application and noted that Emma’s lawyer argued that the 4X Amended Application advanced two causes of action in respect of the impugned mortgage. The first was that Stephen and William failed to secure Emma’s consent to the mortgage before it was registered on title. Douglas J. concluded that this claim could not succeed because, even accepting the allegations in the pleading as proven, the Davis Drive property was never a matrimonial home, and therefore Emma’s consent to the mortgage was never legally required.
[37] Emma’s lawyer argued that the second cause of action was that William registered a false mortgage in that no funds were actually advanced. Douglas J. noted that there was no actual allegation in the 4X Amended Application that William failed to advance funds.
[38] Douglas J. struck several paragraphs from the 4X Amended Application, and Emma was given 30 days to amend the Application to include a clear and concise cause of action against William, supported by allegations of material facts.
[39] Emma served and filed her 5X Amended Application (dated August 16, 2019) on October 11, 2019. Paragraph 6 on page 16 of the 5X Amended Application now states:
The Respondent Bill Elias did not advance the $950,000 in loans that the Respondent Stephen Elias alleges his father loaned him with respect to the construction of 280 Davis Drive, Uxbridge (or any such loans in any amount)…
(iii) Sale of the Davis Drive Property
[40] On or about July 24, 2019, Stephen received an offer to purchase the Davis Drive property for $1,550,000. By this point it had been on the market for 20 months. The closing date was scheduled for August 30, 2019.
[41] On August 28, 2019, Stephen was informed by his real estate lawyer that the purchaser of the Davis Drive property discovered the matrimonial home designation and the February 7, 2019 Order registered on title. Emma was asked to remove these registrations, but refused, and the sale failed to close on August 30, 2019. The purchasers agreed to extend the closing to September 6, 2019.
[42] On August 31, 2019, Emma’s lawyer advised Stephen’s lawyer that the matrimonial home designation would be cancelled on September 2, 2019. He refused, however, to discharge the registration of the February 7, 2019 Order.
[43] On September 4, 2019, Stephen brought an urgent motion returnable the next day to have the February 7, 2019 Order discharged from title.
[44] On September 5, 2019, the parties agreed to a consent Order discharging or deleting the February 7, 2019 Order from the title of the Davis Drive property to permit the closing of the sale of the property on September 6, 2019.
[45] The parties agreed, on a without prejudice basis, that all of the proceeds arising from the sale of the Davis Drive property, after payment of legal fees ($1,800) and arrears of municipal taxes ($27,800), would be held in trust by the solicitor having carriage of the sale “pending further agreement of the parties or pending further Court Order”.
[46] The consent Order stated:
The issue of further payouts or disbursements to arise from the sale of the proceeds of the Property shall be adjourned to a regular Motion returnable October 23, 2019, being the Court’s first available date for a regular motion.
[47] The suggestion that the issue of further payouts or disbursement could be heard on “the Court’s first available date for a regular motion” was obviously overly optimistic. Through a circuitous path, described below, the contemplated motions were eventually heard by me over a three-day period from January 13 – 15, 2020.
(iv) The Motions at Issue
[48] The parties scheduled a conference call with Sutherland J. on September 24, 2019 in order to schedule the various motions that would be brought in relation to the impugned mortgage. On September 25, 2019, Sutherland J. issued a consent Order setting out a timetable for the steps that had to be taken to proceed with two proposed motions. The first motion, to be brought by Stephen and supported by William, was a motion to order the disbursement of the proceeds of the sale of the Davis Drive property. The second motion was a summary judgment motion to be brought by William. The purpose of both motions was to have William’s mortgage paid from the proceeds of the sale of the Davis Drive property that were held in trust.
[49] Sutherland J. set out a detailed timetable for the parties to follow, and ordered that any cross-examinations in relation to the motions be conducted on November 4 and 5, 2019. The motions were to be heard on a single day during the November 2019 trial sittings if time was available.
[50] Pursuant to the agreed timetable, Stephen served a Notice of Return of Motion seeking, inter alia, an order directing the immediate release of funds arising from the proceeds of the sale of the Davis Drive property currently held in trust as follows:
i. $950,000 to William;
ii. $274,757.50 to Stephen;
iii. The balance ($274,757.50) to remain in trust pending further court order or written agreement of the parties, without prejudice to Stephen’s position that the total amount currently owed to William is approximately $1,124,677.50.
[51] Stephen argues that by this motion he is simply asking the court to enforce the terms of the consent Order of February 7, 2018 (see para. 29, above).
[52] William’s motion claims, inter alia, an Order declaring the validity of his mortgage formerly registered on title of the Davis Drive property, and an Order directing the immediate release to him of $950,000 from the proceeds of the sale of the Davis Drive property currently held in trust, without prejudice to his right to claim that the actual amount owing was $1,124,677.50 plus interest.
[53] While the applicant did not raise any objection to the form of the Notice of Motion, I note that William’s Notice of Motion of October 10, 2019 does not actually request or make reference to “summary judgment”. That said, the factum filed in support of William’s motion clearly states that he moves for an order pursuant to rules 1(5), 1(7) and 16(12)(b) of the Family Law Rules, dismissing Emma’s claim against him as disclosing no cause of action, and, in the alternative, summary judgment pursuant to rule 16 of the Family Law Rules. Moreover, several affidavits and other documents filed by the applicant in response to that Notice of Motion refer to it as William’s “pending motion for summary judgment”. Given Sutherland J.’s endorsement of September 25, 2019, which expressly noted William’s intent to proceed with a motion for summary judgment, and the detailed position clearly set out in William’s factum served on November 8, 2019, I am satisfied that all parties understood and proceeded on the basis that this was a motion for summary judgment, and I may consider William’s motion on that basis, notwithstanding what I consider to be a technical deficiency in his Notice of Motion.
[54] As indicated, Sutherland J.’s consent Order set November 4 and 5, 2019 as the dates for the cross-examinations. The cross-examinations were scheduled for those dates, but, on November 1, 2019, Emma advised that she was now self-represented and requested an adjournment of the motions. The lawyers for Stephen and William refused the adjournment request, but Emma purported to cancel the cross-examinations of Stephen and William, and did not attend for her own cross-examination on November 4 or 5, 2019.
[55] On November 4, 2019, Emma served an urgent 14B Notice of Motion asking for an order adjourning the parties’ cross-examinations to a date in December 2019 or January 2020, and adjourning the respondents’ motions to a date in December 2019 or January 2020.
[56] On November 18, 2019, Emma’s adjournment motion was dismissed. The Court’s endorsement stated: “Motions and questioning to proceed (obviously questioning needs to be rescheduled but should proceed as soon as possible)”.
[57] On November 28, 2019, Emma wrote to counsel for the respondents advising them that she wished to proceed with the cross-examination of Stephen and William, and asked them to advise her of their clients’ availability for cross-examination “from now until Christmas and in the first two weeks of January”.
[58] Counsel for William responded on November 30, 2019:
In the event the matter does not get called this week and no return date is ordered, my client and I are available for questioning on any of January 9, 14, 16 or 17, 2020.
However, in the event the matter is called and/or ordered returned on a date that conflicts with your ability to question my client, it is, and will be, my position that you intentionally breached the terms of the Endorsement of Sutherland J., dated September 25, 2019, that required questioning to take place on November 4 and 5, 2019, by failing to attend, and that the motions should proceed without questioning.
[59] Of the dates offered, Emma chose January 16, 2020 as the date for the cross-examination.
[60] The motions could not be reached during the November 2019 trial sittings. On December 18, 2019, the parties were advised by the Trial Coordinator that the motions could be heard on January 13, 2020, and that this was the only available date prior to the Spring 2020 sittings commencing May 18, 2020.
[61] Emma objected to the motions proceeding before she could conduct the cross-examinations scheduled for January 16, 2020, and advised the respondents and the Trial Coordinator’s Office that she would be requesting an adjournment on this basis.
[62] At the return of the motion on January 13, 2020, Emma’s former lawyer, who advised the Court that he was now acting as her agent, requested an adjournment of the motion so that the cross-examinations scheduled for January 16, 2020 could proceed.
[63] Counsel for the respondents opposed the adjournment request, taking the position that Emma had failed to comply with Sutherland J.’s timetable and the Court had already dismissed her request for an adjournment on November 18, 2019.
[64] After hearing submissions, I indicated that I would exercise my authority under Rule 16(6.2) of the Family Law Rules, which authorizes the Court to order that oral evidence be presented by one or more parties, and ordered that the cross-examination of William and Stephen proceed in Court on January 14, 2020. Counsel for the respondents decided that they would not cross-examine Emma. Accordingly, the motions proceeded on the basis of the affidavits filed by the parties and the courtroom cross-examinations of the respondents conducted by Emma’s “agent”.
Motions for Summary Judgment
[65] Rule 16 of the Family Law Rules sets out the procedure for motions for summary judgment. Rule 16(6) provides: “If there is no genuine issue requiring a trial of a claim or defence, the court shall make a final order accordingly.”
[66] Rule 16(6.1) sets out the court’s powers on a motion for summary judgment:
(6.1) In determining whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties, and the court may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.
[67] Rule 16(6.1) is identical to rule 20.04(2.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[68] The court’s powers on summary judgment motions were extensively reviewed by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, where it laid out a two-part roadmap for summary judgment motions. Given the similarity between the Family Law Rules and the Rules of Civil Procedure, the Supreme Court’s roadmap in Hryniak is now applicable to summary judgment motions under the Family Law Rules. The Court stated, at para. 66:
On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.
[69] Rule 16(6.2) of the Family Law Rules, like rule 20.04(2.2) of the Rules of Civil Procedure, permits the judge hearing the motion to order that oral evidence be presented by one or more parties (a “mini-trial”).
[70] As indicated above, I relied on this power to order the cross-examination of the parties in the proceeding before me. Both respondents were cross-examined by the applicant’s counsel, and counsel for each of the respondents chose not to cross-examine the applicant.
[71] Even with these extended powers, a motion for summary judgment is appropriate only if the material provided on the motion “gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute” (Hryniak, at para. 50).
[72] In Hryniak, the Supreme Court held (at para. 49) that there will be no genuine issue for trial when the summary judgment process “(1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.”
[73] To defeat a motion for summary judgment, the responding party must put forward some evidence to show that there is a genuine issue requiring a trial. A responding party may not rest on mere allegations or denials of the party’s pleadings, but must set out—in affidavit material or other evidence—specific facts establishing a genuine issue requiring a trial.
[74] The motion judge is entitled to assume that the record contains all of the evidence that would be introduced by both parties at trial. A summary judgment motion cannot be defeated by vague references as to what may be adduced if the matter is allowed to proceed to trial.
[75] Pursuant to rule 16(5) of the Family Law Rules (like rule 20.02(1) of the Rules of Civil Procedure) affidavits may be made on information and belief, but “if a party’s evidence is not from a person who has personal knowledge of the facts in dispute” the court may, if appropriate “draw conclusions unfavourable to the party”.
[76] If the court does not make a final order, or makes an order for the trial of an issue, rule 16(9) provides that the court may:
(a) specify what facts are not in dispute, state the issues and give directions about how and when the case will go to trial (in which case the order governs how the trial proceeds, unless the trial judge orders otherwise);
(b) give directions; and
(c) impose conditions (for example, require a party to pay money into court as security, or limit a party’s pretrial disclosure).
[77] These powers are in addition to the courts powers under rule 1(7.2) of the Family Law Rules, which provides a long list of procedural conditions and directions that a court may impose in any family law proceeding.
[78] It is now well settled that “both parties on a summary judgment motion have an obligation to put their best foot forward” (see Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753, at para. 9). Given the onus placed on the moving party to provide supporting affidavit or other evidence under rule 16(4) (the equivalent to rule 20.01 of the Rules of Civil Procedure), “it is not just the responding party who has an obligation to ‘lead trump or risk losing’” (see Ipex Inc. v. Lubrizol Advanced Materials Canada, 2015 ONSC 6580, at para. 28).
[79] A party bringing a motion for summary judgment does not thereby reverse the onus of proof or alleviate his onus to prove the elements of his claim. The initial burden of proof is on the party who moves for summary judgment. Only after the moving party has discharged its evidentiary burden of proving that there is no genuine issue requiring a trial for its resolution does the burden shift to the responding party. See for example, Sanzone v. Schechter, 2016 ONCA 566, at paras. 30-32, confirming the initial evidentiary obligation borne by the moving party (in that case the defendant) on a summary judgment motion.
[80] On a summary judgment motion, a motion judge may grant judgment in favour of the responding party, even in the absence of a cross-motion for such relief: Meridian Credit Union Limited v. Baig, 2016 ONCA 150, at para. 17, citing King Lofts Toronto I Ltd. v. Emmons, 2014 ONCA 215, at paras. 14-15, and Kassburg v. Sun Life Assurance Co. of Canada, 2014 ONCA 922, at paras. 50-52. However, there must be an evidentiary record on which such judgment can be granted for either the moving party or respondent: Clearway Construction Inc. v. The City of Toronto, 2018 ONSC 1736, at para. 6.
[81] While Rule 16(6.1) provides the court hearing a summary judgment motion with “enhanced forensic tools” to deal with conflicting evidence on factual matters, the court should employ these tools and decide a motion for summary judgment only if it can do so fairly: Eastwood Square Kitchener Inc. v. Value Village Stores, Inc., 2017 ONSC 832, at paras. 3-6 (and cases cited therein).
Partial Summary Judgment
[82] The Court of Appeal has cautioned against granting motions for partial summary judgment where there is a risk of re-litigation of issues and inconsistent outcomes. In Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, the Court held that although the summary judgment rules now permit the fact-finding process to be staged, the court is obliged to assess the advisability of a staged summary judgment process in the context of the “litigation as a whole” (paras. 33-35). The Court stated, at para. 44:
Evidence by affidavit, prepared by a party’s legal counsel, which may include voluminous exhibits, can obscure the affiant’s authentic voice. This makes the motion judge’s task of assessing credibility and reliability especially difficult in a summary judgment and mini-trial context. Great care must be taken by the motion judge to ensure that decontextualized affidavit and transcript evidence does not become the means by which substantive unfairness enters, in a way that would not likely occur in a full trial where the trial judge sees and hears it all.
[83] In Butera v. Chown, Cairns LLP, 2017 ONCA 783, the Ontario Court of Appeal indicated that while partial summary judgment remains available in appropriate cases, specific consideration must be given to whether a partial summary judgment will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole. In some cases partial summary judgment will not result in any efficiencies, and will only delay the trial and increase the time and expense. These concerns are particularly apparent when a motion for summary judgment deals with only some but not all issues between the same parties. If the facts and evidence relating to the issues are intertwined or closely related, there is little benefit, and potential detriment, to proceeding with a motion for summary judgment. The Court stated, at para. 31:
A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost effective manner.
[84] I also adopt the analysis of Sanfilippo J. in York Regional Standard Condominium Corporation No. 1206 v. 520 Steeles Developments Inc., 2018 ONSC 3766, at paras. 93 - 94:
Recent cases where partial summary judgment is upheld all have a common element: the partial summary judgment resolved a discrete issue that could be separated from the other claims or parties in the surviving case…
The jurisprudence highlights that a motion judge hearing a summary judgment motion must balance the competing objectives set out in Hryniak: namely, the court must weigh the efficiencies achieved by some summary resolution against the risk of duplicative or inconsistent findings in the surviving elements of the case. The motion judge must be certain that the net result of the partial summary judgment process is an overall increase in efficiency in adjudicating the case…
[85] See also: Crawford v. Toronto (City), 2018 ONSC 1729, at para. 42 and “Sanokr-Moskva” LLC v. Tradeoil Management Inc., 2018 ONSC 2967, at paras. 12-17.
Analysis
[86] At their core, both Stephen’s and William’s motions seek essentially the same relief: the release to William of $950,000 from the proceeds of the sale of the Davis Drive property currently held in trust. I will deal with William’s motion first.
[87] Before doing so, I note that Emma has challenged William’s standing to bring this motion. She argues that this is a family law proceeding, and the equalization of Net Family Property is a matter to be settled between her and Stephen.
[88] Given that William was added as a party to this proceeding at the behest of Emma, this position is simply untenable. As an added party, William can bring whatever motion he wants.
[89] In any event, since Emma is challenging the validity of William’s mortgage, he will be directly affected by the Court’s decision and would be entitled to be added as a respondent under rules 7(3)(b) and 7(5) of the Family Law Rules even if Emma had not brought a motion to have him added.
(i) Does the Application Disclose a Cause of Action Against William?
[90] William’s first position is that, notwithstanding the addition of para. 6, page 16 of the 5X Amended Application (see para. 39, above), the 5X Amended Application still fails to disclose any cause of action against William, and should be dismissed against him on that basis.
[91] Emma’s position on this issue is somewhat confusing. While her 5X Amended Application does allege that William “did not advance the $950,000 in loans”, and her affidavit on this motion refers to William’s “bogus” loans, Emma’s agent was adamant in his submissions to the Court that Emma was not alleging fraud.
[92] Putting aside this inconsistency, there is no question that the registration of an alleged sham mortgage designed to subvert the equalization of Net Family Property does raise a legal issue that must be determined by the Court: S.A. v. A.A., 2017 ONCA 243, at paras. 34-45, leave to appeal dismissed, S.A. v. Z.G., 2017 CanLII 61798 (SCC); Rivas v. Milionis, 2018 ONCA 845. If no loan is actually made, the “invalid” mortgage must be removed from the Net Family Property calculations. This is a question that may properly be considered by the Court in a matrimonial proceeding, and William is a proper party for the determination of that issue.
[93] Reading the 5X Amended Application generously, with allowance for inadequacies due to drafting deficiencies, the applicant has alleged a claim that is cognizable in a matrimonial proceeding.
(ii) Motion for Summary Judgment
[94] William’s second position is that there is no genuine issue requiring a trial on the issue of the validity of the mortgage, and summary judgment should be granted in his favour.
[95] As the moving party, the initial onus is on William to prove that there is no genuine issue requiring a trial.
Acknowledgment and Direction
[96] William and Stephen rely on the “Acknowledgment and Direction” signed by Emma on June 12, 2017 as evidence of her knowledge of and consent to the $950,000 mortgage on the Davis Drive property.
[97] Emma takes the position that she signed the “Acknowledgment and Direction” agreeing to place a mortgage of $950,000 in favour of William under duress. In her affidavit dated October 21, 2019, Emma states that Stephen threatened that he would never repay her parents the $330,000 they loaned him to purchase the Davis Drive property unless she agreed to sign the “Acknowledgment and Direction” in favour of Stephen’s father.
[98] This affidavit is inconsistent with Emma’s earlier affidavit dated December 21, 2017, which makes no reference to duress or coercion. In that affidavit Emma states:
I was asked to sign a spousal consent to this mortgage to Stephen’s dad, Bill Elias, (which I did) – because both of us (Stephen and I) had intended that the Uxbridge home to be our matrimonial home, to be put into both our names – as we had done with our first (Mount Albert) home. I am not sure if his father really advanced him all of the $950,000 he secured by mortgage. I need proof of that.
[99] To be clear, Emma was never a registered owner of the Davis Drive property, and it was never a matrimonial home under s. 18 of the Family Law Act, and therefore, as found by Douglas J. in his July 17, 2019 decision, Emma’s consent to William’s mortgage was not legally required under s. 21 of the Family Law Act. As the only registered owner of the Davis Drive property, Stephen had the legal right to register William’s mortgage without Emma’s consent or agreement. I do not doubt that Stephen wanted Emma’s written acknowledgment of his father’s loan as a quid pro quo before he agreed to register Emma’s parents’ mortgage. The fact that both acknowledgments were signed the same day is not a coincidence. By this point, all trust between the couple was gone, and each party was, legitimately, trying to protect the money loaned to Stephen by their respective parent(s). That, by itself, does not amount to duress as that term has been defined.
[100] The case of S.A. v. A.A., 2017 ONCA 243, also dealt with a former wife’s challenge to the validity of a mortgage between her ex-husband and his father. In that case the mortgaged property was the matrimonial home, and the wife’s consent to the mortgage was required by s. 21 of the Family Law Act. The wife alleged that she was under duress when she agreed to the mortgage. Referencing earlier decisions, the Ontario Court of Appeal summarized the definition of duress at paras. 27 and 28:
But not all pressure, economic or otherwise, is recognized as constituting duress. It must be a pressure which the law does not regard as legitimate and it must be applied to such a degree as to amount to “a coercion of the will”, to use an expression found in English authorities, or it must place the party to whom the pressure is directed in a position where he has no “realistic alternative” but to submit to it, to adopt the suggestion of Professor Waddams (S.M. Waddams, The Law of Contract (2nd ed., 1984), at p. 376 et seq.). Duress has the effect of vitiating consent and an agreement obtained through duress is voidable at the instance of the party subjected to the duress unless by another agreement or through conduct, either express or implied, he affirms the impugned contract at a time when he is no longer the victim of duress.
Another formulation of the test applicable to economic duress, taken from the Pao On v. Lau Yiu, [1979] 3 All E.R. 65 (P.C.), and cited in Stott, at para. 49 (WL Can), is: “the victim must have entered the contract against his will, must have had no alternative course open to him, and must have been confronted with coercive acts by the party exerting the pressure”.
[101] In my view, the financial pressure alleged in this case was a legitimate exchange to the benefit of each party, and did not amount to coercion. Stephen had the legal right to refuse to register a mortgage to secure Emma’s parents’ loan, since this was not part of the original loan agreement. Even if he had refused to register a mortgage in favour of Emma’s parents, there was nothing stopping Stephen from registering a mortgage in favour of his father. The quid pro quo alleged by Emma was to the financial benefit of her parents, who were seeking security in the face of the couple’s crumbling marriage. Emma had an alternative course open to her – she could have refused to sign the acknowledgment of William’s mortgage, and her parents could have sought to enforce their loan to Stephen as unsecured creditors.
[102] While I reject Emma’s argument that the acknowledgment was signed under duress, I give little weight to the acknowledgement as evidence on this motion. In my view, the real issue on this motion is not whether William lent money to Stephen to construct the home on Davis Drive, but how much was advanced. I am satisfied that although Emma signed the “Acknowledgment and Direction”, she had no real knowledge how much money William had lent to Stephen, and her signature on that document cannot be used as confirmation that the correct sum is $950,000.
[103] Were this the only evidence in support of the motion, it would not, in my view, be sufficient to grant summary judgment.
Affidavit Evidence
[104] William and Stephen also rely on their respective affidavits that outline the terms of the loan agreement and trace the source and use of the funds advanced by William to Stephen to construct the house on the Davis Drive property.
[105] William’s affidavit states that he has been involved in construction and financing of residential and commercial real estate since 1983. Based on this experience, he was aware that Stephen would not qualify for conventional financing to build a home on a vacant lot, and he therefore agreed to finance the construction of the home on the vacant lot. Stephen promised to repay the loan once the house was completed and he could arrange for conventional financing.
[106] The proposed house was approximately 4500 square feet plus a garage and unfinished basement. Stephen estimated that the cost to build on the vacant lot would be approximately $967,500 (approximately $215 per square foot), not including exterior landscaping and decking. This was at the low end of the usual cost of $200 to $300 per square foot because William was in the building trade.
[107] William stated that the final price to build the house was $1,376,000 including interest to April 4, 2018. Since the home was being built on a vacant lot, there were several additional costs, including clearing the trees and importing 100 truck-loads of clean fill to dry out the boggy land before construction could begin.
[108] In order to assist Stephen with the financing, William took out a home equity line of credit (HELOC) in the amount of $500,000 through the Royal Bank of Canada, which was secured against William’s own house in Markham, Ontario. In June 2016, William increased the HELOC to $752,000. The documents related to the HELOC are all appended to his affidavit. On June 30, 2017, the HELOC had an outstanding balance of $550,657.
[109] William explained that as he drew the funds from the HELOC he would either give Stephen a cheque that he deposited in his bank account or he would pay the trades directly. He has provided copies of Stephen’s bank statements from May 2016 reflecting a corresponding credit to the debits on his HELOC statements.
[110] William has provided invoices and estimates totalling approximately $400,000, although many of the labourers were paid in cash and there is no documentation to confirm these payments.
[111] William prepared a detailed spread sheet setting out all of his and Stephen’s expenditures related to the construction of the house on the Davis Drive property. The spread sheet sets out the date, purpose, and cost of each expenditure, who paid the money and the source of the funds. According to this spread sheet, by June 30, 2017 William had expended (not including interest payments), $1,172,053 on the construction of the Davis Drive home. Following June 30, 2017, approximately $180,000 more was spent to complete the home construction.
[112] William’s spread sheet indicates that as of June 30, 2017 he paid $263,540 in cash, $42,141.13 on his credit card, and $783,826.62 from his HELOC for construction costs. Stephen contributed an additional $82,544.61 from his own funds.
[113] The evidence provided by William and Stephen to support William’s motion is far from perfect. There are certainly gaps in the invoices, and William cannot, as he readily acknowledges, account for every dollar he claims to have spent on the construction of the home. That said, I am satisfied that William and Stephen have provided the court with the best evidence available to them. They were both cross-examined in Court, and were, in my view, able to satisfactorily explain the gaps in the invoices and the validity of the various expenses set out in William’s spread sheet. A trial judge would be in no better position to assess the credibility of their evidence.
[114] There is no dispute that the Davis Drive property started as a vacant lot, and that there is now a 4,500 square foot, five bedroom, four bathroom, home on the property that was sold for $1.55 million dollars. It did not simply spring from the swampy ground like a mushroom. Both Stephen and William testified that the construction cost for such a house would be between $200 and $300 per square foot, and the $950,000 mortgage was based on a conservative estimate of the construction costs. The actual price of construction has exceeded that estimate.
[115] In my view, William has satisfied his initial onus of proving, on a balance of probabilities, that $950,000 was advanced for the construction of the home and that the mortgage was, therefore, a valid mortgage.
[116] The onus then shifts to the applicant to put forward some evidence to show that there is a genuine issue requiring a trial.
[117] Emma’s affidavit fails to counter any of the evidence set out in William’s and Stephen’s affidavits with regard to the cost of construction of the home. She does not, for example, have any evidence to counter their assertion that the cost of building such a house is between $200 and $300 per square foot. She argues that William and Stephen have failed to provide sufficient evidence to prove the amount of the loan, but has provided no evidence to contradict their evidence. She has no evidence regarding any other source of funds for the construction of the house.
[118] Emma alleges that Stephen subjected her to emotional abuse and bullying, and her affidavit includes text messages from Stephen to her that are the most hurtful, abusive and hateful that I have ever seen. She argues that these texts are evidence that Stephen hates her and has fabricated the mortgage to hurt her and ruin her financially. While these texts from Stephen are undoubtedly disturbing, they do not persuade me that William did not provide the funds for the construction of the home on the Davis Drive property. In this case, the sins of the son should not be visited on the father.
[119] The applicant has not persuaded me that there is a genuine issue requiring a trial. I have read the affidavits of William and Stephen and reviewed the documents they rely on to support their position. I have considered their explanation for why the documents do not provide a complete accounting of their construction expenses. I have heard and observed both William and Stephen cross-examined on their affidavits. I have considered Emma’s responding affidavits and the evidence she relies on to contradict their testimony. In reviewing this evidence I have relied on the powers set out in rule 16 (6.1) of the Family Law Rules.
[120] This evidence gives me the confidence that I “can find the necessary facts and apply the relevant legal principles so as to resolve the dispute”. There is no reason to believe that any different or better evidence will be available to the trial judge in this proceeding.
(iii) Should Partial Summary Judgment Be Granted?
[121] The next issue is whether this is an appropriate case for partial summary judgment. Do the efficiencies achieved by the summary resolution of this issue outweigh the risk of duplicative or inconsistent findings in the surviving elements of the case?
[122] In my view, this is an appropriate case for partial summary judgment. I reach this conclusion for the following reasons.
[123] The first reason relates to the February 7, 2018 Order (para. 29, above), by which the parties agreed to freeze “one half of the net proceeds” of sale of the Davis Drive property, and Stephen agreed to provide proof that William loaned him the $950,000 secured by the mortgage on the Davis Drive property.
[124] As I read this Order, the intention was that once proof of the mortgage was provided, the mortgage would be paid out from the proceeds of the sale, and the “net proceeds” would be distributed as per paragraphs 1 and 2 of the Order (one-half held in trust, and one-half released to Stephen). It is commonly understood that “net proceeds” means that the payment of registered encumbrances on title will be deducted from the proceeds of sale before the proceeds are distributed to the parties. As a secured creditor, the mortgagee has a right to repayment of the loan prior to distribution of the proceeds.
[125] The flaw in the February 7, 2018 Order was the requirement that Stephen “provide proof of his father Bill Elias loaning him $950,000”. This left unanswered the question of who was to be the arbiter of the “proof” provided. The February 14, 2018 deadline set out in the Order was extended by a consent Order of April 3, 2018 to May 11, 2018, but Emma remained unsatisfied with Stephen’s “proof”.
[126] I understand why Emma took this position. As I indicate in these Reasons, at para. 113, the evidence provided by William and Stephen on this motion was far from perfect. William and Stephen cannot account for every dollar spent on the construction of the home. In my view, Emma was acting in good faith when she took the position that Stephen’s proof was not sufficient.
[127] Nonetheless, it is the Court, not the parties, that must make the final determination of whether William and Stephen have proven, on the balance of probabilities, that the $950,000 loan was actually advanced. As indicated, I am satisfied that William and Stephen have met that onus, and therefore the $950,000 held in trust should be paid to the mortgagee in accordance with the intent of the February 7, 2018 Order.
[128] A second reason partial summary judgment is appropriate in this case is that the validity of the mortgage is a discrete issue, and William has been added as a party to this family law proceeding only by virtue of that issue. If the validity of the mortgage can be decided, it will permit the case to proceed on issues that relate only to Emma and Stephen.
[129] This case has already produced a massive 24 volume continuing record that has consumed considerable judicial resources. A grossly disproportionate amount of litigation has been undertaken. This motion alone took three days to argue. If a discrete issue can be dealt with on a summary basis, the result will be a shorter trial and significant savings for all parties. Removing the mortgage from the equalization calculation might even permit the parties to settle their remaining financial issues.
[130] William’s security has been held hostage by this litigation since the closing of the sale of the Davis Drive property on September 6, 2019. As a secured creditor, William should have been paid from the proceeds of sale on September 6, 2019, but the proceeds of sale have been held in trust since that date. The September 5, 2019 consent Order expressly contemplated William bringing a motion to have “the issue of further payouts or disbursements” settled by the Court. Having met the test for summary judgment, it would be unfair to continue to involve William in this litigation and deny him access to these funds. As indicated, much of this money was borrowed from William’s HELOC, and he is being charged interest until he can repay it.
[131] Only the funds secured by the $950,000 mortgage will be released to William at this time. Any funds not secured by the mortgage will remain in trust until further agreement of the parties or the final resolution of the equalization of Net Family Property at trial. Accordingly, Stephen’s motion for the release to him of $274,757.50 (one-half the balance of the net proceeds after the mortgage is paid) is dismissed, without prejudice to any position he may take at trial regarding the equalization of Net Family Property.
[132] In addition, William has claimed damages against Emma for the interest he has paid on his HELOC since September 6, 2019. I was not given sufficient information or evidence to deal with this issue on this motion for summary judgment. If William chooses to remain a respondent in this proceeding he may pursue this relief at trial. Otherwise, since the validity of the mortgage has been confirmed, and no other relief is claimed against him, William may bring a motion to remove himself as a respondent to these proceedings, and his future participation, if any, will be as a witness.
(iv) Conclusion
[133] Based on the foregoing, summary judgment is granted in William’s favour according to the following terms:
a) This Court finds that the Respondent, William Elias’ mortgage for $950,000, formerly registered on title to the property municipally known as 280 Davis Drive, Uxbridge Ontario, was a valid mortgage.
b) This Court orders that $950,000 from the proceeds of the Respondent, Steven Elias’ sale of the property municipally known as 280 Davis Drive, Uxbridge Ontario, currently held in the trust account of Mr. Bobby Vakili, Barrister and Solicitor, be immediately released to the Respondent, William Elias.
c) These orders are without prejudice to the Respondents’, Stephen Elias and William Elias, position that the total currently owing from Stephen to William is $1,124,677.50, inclusive of principle and interest. I make no finding or determination with respect to any claim over $950,000.
d) These orders are without prejudice to William Elias pursuing any claim for damages against the Applicant, Emma Trefler, if he chooses to remain a respondent in these proceeding. Otherwise, William may bring a motion to be removed as a respondent.
e) All other claims for relief are dismissed, without prejudice to any party’s right to request that relief from the trial judge.
f) Subject to the final determination of Central East Trial Scheduling Court, all outstanding issues will proceed to trial in the May 2020 trial sittings.
g) I am not seized.
[134] If the parties cannot agree on costs, the respondents may each file costs submissions within 30 days of the release of this decision. Each respondent’s submissions will be limited to 3 pages plus costs outline and any offers to settle. The applicant may file responding submissions within 15 days thereafter. Since the applicant will be responding to two respondents, the applicant’s responding submissions are limited 6 pages total, plus costs outline and any offers to settle.
Justice R.E. Charney
Released: January 29, 2020
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Emma Claire Trefler
Applicant
– and –
Stephen Adam Elias and William (Bill) Elias
Respondents
REASONS FOR DECISION
Justice R.E. Charney
Released: January 29, 2020