COURT FILE NO.: CV-18-76438 / CV-18-76438-A1/FC-20-194
DATE: 2020/10/30
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: THE ESTATE OF ELEANOR BEARDSLEY by its Litigation Guardian JANE BROWN, Plaintiff
AND
KAREN BEARDSLEY, Defendant
AND
DAVID BEARDSLEY and GORDON BEARDSLEY, Third Parties
BEFORE: Justice Marc R. Labrosse
COUNSEL: Jennifer Therrien, Counsel, for the Plaintiff Beverley Johnston, Counsel, for the Defendant David Cutler, Counsel for the Third Parties
HEARD: October 19, 2020
ENDORSEMENT
Overview
[1] The Defendant Karen Beardsley brings this motion pursuant to Rule 6 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules”), to consolidate actions CV18-76438/CV18-76438-A1 with family court application FC-20-194.
[2] The civil action was commenced in May 2018 and results from a transfer of funds from the Plaintiff, Eleanor Beardsley, to the account of the law firm representing the Defendant, Karen Beardsley. There is no dispute that the funds were to be used for the purchase of a new home for Karen Beardsley. The Plaintiff is now deceased, and the action is being continued by her Estate. This transfer of funds was the result of a series of discussions between the Defendant and her then husband, David Beardsley, who is the son of the Plaintiff. Karen and David Beardsley were in the process of separating at the relevant time. The Defendant received the funds and they were used to purchase her new home which allowed her to move out of the matrimonial home that she shared with David Beardsley.
[3] The Plaintiff claims that the funds were a loan from Eleanor Beardsley to Karen Beardsley. The Defendant denies that she agreed to a loan from Eleanor Beardsley and claims that if anyone is liable to the Plaintiff, it is David Beardsley as he orchestrated the alleged loan.
[4] Contemporaneous with the transfer of funds from the Plaintiff to the Defendant, the Defendant and David Beardsley entered into a separation agreement which purported to resolve issues which were part of their separation. In January 2020, Karen Beardsley commenced a family court application seeking to enforce the terms of the separation agreement. David Beardsley responded by seeking to set aside the separation agreement and by requesting that there be an equalization of net family property.
[5] The Defendant, Karen Beardsley, focuses on the fact that the civil and family court files result from the same transaction being the transfer of funds from the Plaintiff to the Defendant which included the signing of the Separation Agreement to support her position that the matters should be consolidated.
[6] For the reasons set out herein, I conclude that there should not be a consolidation. The factors to consider weigh heavily in favor of allowing the summary trial in the civil action to proceed to a determination of the terms surrounding the transfer of funds of funds and who the principles to that transaction are. Once this is decided, the matters in the family court application can proceed and this Court is prepared to assist the parties in having that matter proceed in a timely fashion.
Factual Background
[7] Karen and David Beardsley were married in 1983 and separated in August 2014. They have two children who are independent adults. In or about May 2016, the parties were structuring their separation. It was agreed that they would put the matrimonial home up for sale but that in the meantime, Karen would secure her own living accommodations. At some point, Karen found a residence at 50 Goldora Private in the City of Ottawa that she wished to purchase.
[8] Although some of the facts surrounding David’s role in the selection of the home may be in dispute, for the purposes of this motion, the only evidence before the Court is the affidavit of Karen which sets out the following events:
a. In May 2016, Karen was looking for a new home and David was helping her. They both went to Scotiabank to inquire about financing. They were told that Karen’s financing would be problematic before the sale of the matrimonial home but that to review the financing application, the bank would require a signed separation agreement between Karen and David;
b. Karen thought that the property at 50 Goldora Private was perfect for her. David told her not to worry about the financing application as his brother Gordon would provide a loan for the purchase of the property. Karen proceeded to make an unconditional offer that was eventually accepted. David subsequently told her that Gordon was no longer willing to finance the purchase;
c. The separation agreement was signed on May 26, 2016. David drove it over to the bank to be added to the application for financing. On May 27, 2016, Karen was advised that her application for financing was not approved;
d. David then advised Karen that he would be getting the money from his mother, Eleanor Beardsley, and that it would be sent to her real estate lawyer.
e. Prior to closing, $250,000 was transferred to the account of Karen’s lawyer for the purchase of her new home. No documentation was drafted or signed with respect to the terms associated with the transfer of funds to Karen.
f. The matrimonial home was eventually sold in July 2017. The proceeds of the sale of the matrimonial home were eventually divided equally and paid out to both Karen and David.
[9] On May 11, 2018, the Plaintiff commenced the civil action. On October 31, 2019, I ordered that the civil action would proceed by summary trial and a timetable was set out for the filing of evidence with the summary trial to proceed in February 2020. The evidence in chief was filed by affidavit. The structure of the summary trial allowed for limited cross-examinations and argument. The summary trial was to be conducted in one day.
[10] The Plaintiff passed away on November 28, 2019.
[11] In January 2020, Karen commenced a family court application to enforce the terms of the separation agreement signed in May 2016. David responded by seeking to set aside the separation agreement and requested an equalization of net family property.
[12] On February 12, 2020, the summary trial date was vacated to allow Karen to bring this consolidation motion.
Applicable Law
[13] Rule 6.01 of the Rules deals with the consolidation of proceedings. This rule is directed at determining if:
a. There is a question of law in common;
b. There is a question of fact in common;
c. The relief claimed in the proceedings arises out of the same transaction or occurrence or series of transactions or occurrences.
[14] Where the Court determines that the criteria set out in this rule have been met, the Court still retains the discretion to order consolidation or not. In exercising this discretion, our courts will often point to the following non-exhaustive list of factors to be considered as set out in CN v. Holmes, 2011 ONSC 4837:
(a) the extent to which the issues in each action are interwoven;
(b) whether the same damages are sought in both actions, in whole or in part;
(c) whether damages overlap and whether a global assessment of damages is required;
(d) whether there is expected to be a significant overlap of evidence or of witnesses among the various actions;
(e) whether the parties the same;
(f) whether the lawyers are the same;
(g) whether there is a risk of inconsistent findings or judgment if the actions are not joined;
(h) whether the issues in one action are relatively straight forward compared to the complexity of the other actions;
(i) whether a decision in one action, if kept separate and tried first would likely put an end to the other actions or significantly narrow the issues for the other actions or significantly increase the likelihood of settlement;
(j) the litigation status of each action;
(k) whether there is a jury notice in one or more but not all of the actions;
(l) whether, if the actions are combined, certain interlocutory steps not yet taken in some of the actions, such as examinations for discovery, may be avoided by relying on transcripts from the more advanced action;
(m) the timing of the motion and the possibility of delay;
(n) whether any of the parties will save costs or alternatively have their costs increased if the actions are tried together;
(o) any advantage or prejudice the parties are likely to experience if the actions are kept separate or if they are to be tried together;
(p) whether trial together of all of the actions would result in undue procedural complexities that cannot easily be dealt with by the trial judge;
(q) whether the motion is brought on consent or over the objection of one or more parties.
Analysis
[15] The first step is to consider Rule 6.01(a) and apply it to the matters before the Court. Given how the events have transpired, we start with the overall timeframe of the family court application, being a long-term (30 year) marriage whereby an equalization of net family property is sought by David Beardsley. Within this long-term marriage are the events of May-June 2016 where the bulk of the factual issues transpired including the signing of a separation agreement on May 26, 2016. The setting aside of that separation agreement and the circumstances in which it was signed are significant issues within the family court application.
[16] Within the civil action, the signing of the separation agreement takes on a different role. It is a fact which forms part of the narrative of what led to the transfer of funds from the Plaintiff to the Defendant but its legal validity is not an issue.
[17] It remains that when I consider if the proceedings have a question of fact in common or if the relief claimed arises out of the same transaction, there is no doubt that the equalization of net family property will be directly impacted by the determination of if the transfer of funds was a loan or otherwise. The facts surrounding the signature of the separation agreement are linked to both the transfer and to the equalization and as such, I conclude that the criteria set out in Rule 6.01(1) has been met.
[18] I now turn to the exercise of my discretion and the factors set out in CN v. Holmes. I do not intend on to refer to each of these factors but only those that are the most significant in my decision.
[19] There is no doubt that the issue of the loan or gift of $250,000 is an issue that is interwoven in both proceedings. The answer to that question will significantly impact both proceedings. The determination of that main issue in the civil action may go a long way to simplifying the issues in the family court proceeding. However, it remains that if the separation agreement is set aside, the equalization of net family property arising from a 30-year marriage will extend far beyond the focused issue of determining if the transfer of funds was a loan or otherwise.
[20] There will certainly be an overlap in evidence. However, it remains that the bulk of the evidence will be given by the two main parties David and Karen Beardsley and much will turn on the Court’s determination of what happened between them in May-June 2016. However, some evidence may be required from the same witnesses if the matters proceed separately. A significant consideration is the fact that the factual record for the summary trial is in large part complete. The evidence-in-chief of those witnesses has been obtained and the parties will have a limited opportunity to cross-examine witnesses. This process was agreed to on consent as reflected in my October 31, 2019 endorsement.
[21] It is a relevant factor that the parties are not the same in both proceedings. Neither the Estate or Gordon Beardsley is a party in the family court application. This is certainly an important consideration given that the structure of the summary trial allows for these parties to be out of the litigation as soon as a decision is made and thus limit their costs. However, it may not necessarily allow for the winding up of the Estate as there may be issues surrounding the characterization of the transfer and the parties involved that may prevent the Estate being concluded.
[22] From an evidentiary standpoint, the circumstances of the signing of the separation agreement will be a significant part of the evidence for the determination of its validity. While there is some overlap based on the involvement of the bank, a factual determination of the evidence surrounding the signature of the separation agreement is not required for the civil action.
[23] Another important issue is the risk of inconsistent findings. While the timeline for the transfer of funds and the execution of the separation agreement is the same, the issues in the civil action do not require a finding of what exactly happened leading up to the signature of the separation agreement. For the purposes of the civil action, the evidence will be limited to the fact that the bank wanted a separation agreement and that the parties presented a signed separation agreement to the bank for financing purposes. The remaining factual matrix surrounding the separation agreement is confined to the family proceedings to determine if it is a valid agreement. The legal validity of that agreement does not impact the civil action.
[24] It is also relevant to consider that the resolution of the sole issue in the civil action, being a loan or otherwise will resolve an important issue which is part of the equalization of net family property.
[25] While the Defendant has accused David Beardsley of dragging his heels in the family court application, there is no doubt that the proceedings are nowhere near being at the same stage. The family law claim was commenced in January 2020 and has not progressed significantly. Even if David had pushed the matter forward, the COVID-19 pandemic would likely have also been part of the delay. Conversely, the civil action is ready to proceed, and a decision can likely be obtained within the next six months. Such a timetable is not available in the family court action. Also, to keep the civil action in abeyance while the necessary steps in the family law application proceed would certainly add additional time and money to the Estate and to Gordon Beardsley.
[26] Globally, when I consider all the factors from CN v. Holmes, the balance clearly favors allowing the civil action to proceed to its conclusion in the immediate future and then assessing what remains in the dispute between the parties in the family court application. This does not mean that the family court application should be allowed to sit in abeyance. I am prepared to hold a Case Conference with the parties in the family court application and to assist with setting out a timeline for that matter to move forward in a timely manner. That request can be made through Trial Coordination.
[27] For these reasons, the consolidation motion of Karen Beardsley is dismissed. The summary trial should therefore be scheduled to proceed on a date to be fixed by Trial Coordination.
Costs
[28] The parties are encouraged to resolve the issue of costs. If they are unable to agree, the Plaintiff and the Third Parties will have 15 days from the date of this Endorsement to provide written costs submissions. Thenceforth, the Defendant will have 15 days to respond. Each written costs submission shall not exceed 3 pages, excluding additional attachments.
Justice Marc R. Labrosse
Date: October 30, 2020
COURT FILE NO.: CV-18-76438 / CV-18-76438-A1/FC-20-194
DATE: 2020/10/30
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: THE ESTATE OF ELEANOR BEARDSLEY by its Litigation Guardian JANE BROWN, Plaintiff
AND
KAREN BEARDSLEY, Defendant
AND
DAVID BEARDSLEY and GORDON BEARDSLEY, Third Parties
ENDORSEMENT
Justice Labrosse
Released: October 30, 2020