Court File and Parties

COURT FILE NO.: FS-16-184 (Brampton) DATE: 20210211 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Fiona Docherty, Applicant AND: Joseph Melo, Respondent

BEFORE: Justice R. Chown

COUNSEL: M. Osadet, for the Applicant R. Kirszbaum, for the Respondent Fernando Ribeiro, in person

HEARD: February 9, 2021

Endorsement

[1] This is a motion brought by the applicant to set aside the order of Justice Shaw dated December 12, 2019. Justice Shaw’s order removed a Certificate of Pending Litigation (CPL) that was in place since April 2017 against a property the respondent owns at 19695 Main Street, Alton, Ontario. The applicant wants the CPL reinstated.

[2] The matter was given to me on Friday, February 5, 2021 as there was a request for an urgent hearing of the motion. I held a hearing by Zoom on Tuesday, February 8, 2021 to deal with the question of urgency. The applicant also seeks an order prohibiting the respondent from selling the property until her motion is heard, and I dealt with that issue as well.

[3] In her second affidavit, the applicant states that the motion is urgent because:

a. The property in question is listed for sale;

b. The property is a unique property and cannot be replaced;

c. The property was the source of my income, being the Field Stones Coffee and Tea Lounge.

[4] The applicant seeks to set aside Justice Shaw’s order under rule 25(19)(1) of the Family Law Rules (applicant’s counsel confirmed that there is a typo in the notice of motion where it refers to Rule 25(1)). In her affidavit the applicant submits that the respondent committed a fraud in connection with the December 2019 motion. She says that, “The removal of the CPL was achieved through misrepresentations to the Court, which can be revealed through examinations of the respondent and the mortgagee of the property.” She goes on to say: “The alleged mortgage amounts are not accurate and are not substantiated. The respondent alleged he was in financial ruin yet has not sold the property until now.” The applicant further states that she derived income from the property, and it was submitted that her financial future is tied up in the property.

[5] The applicant’s affidavits also suggest that the subject property has special value to the applicant because it was bought from her mother, and because her father’s ashes are there.

[6] For the following reasons, I do not consider the motion urgent. Further, I am not prepared to make an order prohibiting the sale of the subject property.

Urgency

No recent event justifies sudden or new urgency

[7] The recent event that supports the applicant’s position that this matter is urgent is the listing of the property for sale late last week. Justice Shaw’s order was made over a year ago. Her order contemplated that the property would be listed for sale. The time for raising issues about the unique nature of the property, the special value of the property to the applicant, or the fact that the applicant derived income from it, was in front of Justice Shaw.

[8] The respondent’s affidavit indicates that he listed the property for sale in July 2020 and did not get any offers, so he has now re-listed it. The current listing of the property is not an unforeseen event that suddenly gives rise to new urgency.

No recently discovered evidence

[9] It is not the case that the applicant has newly discovered evidence to support her motion. The evidence that the applicant relies upon to support her fraud allegation was all available, or could have been available, at the time the motion to remove the CPL was argued in front of Justice Shaw. The applicant did not seek questioning at that time.

Claim of ineffective prior counsel

[10] The applicant’s affidavits suggest that her prior lawyer was ineffective and abandoned her just prior to the motion before Justice Shaw. Justice Shaw’s endorsement from December 12, 2019 states:

I note that the applicant’s former counsel was informed on November 11, 2019 that the respondent intended to bring this motion. After receiving no response, the applicant's counsel was served with the motion record on November 25, 2019. On December 5, 2019, respondent’s counsel received a notice of change of representation indicating that the applicant intended to represent herself. The applicant has had sufficient time to prepare response to the motion and she did not do so.

[11] The concern about ineffective counsel or the applicant’s inability to effectively present her own case, and the refusal of the requested adjournment, are or would have been matters for an appeal. The applicant has had over a year to find new counsel. She attempts to explain the delay by saying she had surgery in February 2020 and months of post-surgical issues. Without more, this does not justify her delay. In any event, the complaints the applicant has about her former lawyer and her delay in obtaining a new lawyer do not justify the claim that this matter is now urgent.

Claim that sale will take away her livelihood

[12] Ms. Osadet submitted that the applicant’s entire financial future is tied up with this property. However, that is not made out in the affidavit evidence.

[13] The applicant’s affidavit does state that the CPL was granted in April 2017 “because I am seeking possession of the Field Stones Property, based on our Joint Venture.” However, I have no details about the nature of the joint venture. I have no evidence as to the extent of income the applicant derived from the property while the Field Stones Coffee and Tea Lounge was in operation. I do not have evidence about what the applicant has been doing for income since the early spring of 2016. I do not have evidence showing how her income declined as a result.

[14] The applicant’s affidavit indicates that the respondent changed the locks to the café in early spring 2016, rendering the business inoperable. That was close to five years ago. I have not been provided with any other evidence to support the claim that the property was the source of the applicant’s income, such as financial statements or income tax documentation.

Interim order prohibiting sale

[15] The nature of the fraud alleged by the applicant is to the effect that the respondent and the mortgagee together inflated the amount of the mortgage on the property.

[16] The evidence the applicant relies on to show fraud includes a hand-written ledger which “does not indicate a contract of any kind, nor does it show the full history of the alleged mortgage. … The hand-written ledger provided is ONE PAGE in length. This cannot possibly be the entire mortgage history and there is no proof the ledger is a consecutive page in a ledger book as it is one page long.” The applicant’s affidavit states that this document was an exhibit before Justice Shaw; however, it was not in the motion materials before me.

[17] The applicant also states that the mortgagee is “a non-arm’s length associate” of the respondent but she does not provide detail as to their relationship or explain what motive the mortgagee would have to participate in a fraud.

[18] The applicant states that the “amount owing on the property was $156,000” in 2015 but in the time between then and June 2017, “the mortgage was inflated to over $600,000.” This is not supported with any documentation. I was not provided with a parcel register for the subject property to show the mortgage or the original amount of the mortgage. It appears the applicant has not been privy to the mortgage amounts advanced or payments made or the mortgage balance. However, there is no evidence before me that this documentation has been refused. Rather, it was apparent at the hearing that the mortgagee has not recently been asked by the applicant to provide better or current documentation to support the mortgage balance history.

[19] The applicant further states that, in 2016, the mortgagee affirmed an affidavit “in which he claimed the mortgage amount was $687,000 on Field Stones, even though the property was only valued at $700,000 at that time.” I was not provided a copy of this affidavit and no further context was provided.

[20] In her reply affidavit, the applicant says, “The alleged mortgage amounts are not accurate and are not substantiated.” However, no details are provided.

[21] The mortgagee is Fernando Ribeiro. Mr. Ribeiro attended the hearing today without counsel. He had not filed an affidavit. He described the advances he has made which included paying unpaid property taxes in arrears in 2019. He said that the mortgage rate is 8.75%. He said that every month the mortgage goes into arrears. He said that if the subject property is not sold by the respondent, he intends to take steps to force a sale through mortgage enforcement proceedings. He has let it go so long so the parties could realize the property’s full value from a sale, as opposed to the value from a distress sale. He strongly denies that there has been any fraud. He emotionally related that he was banker for 38 years. No one has ever accused him of fraud. He offered to provide documentation showing the particulars of the mortgage amounts advanced and the status of the mortgage and, as indicated, it was apparent that he had not recently been asked by the respondent to produce records relating to the mortgage.

[22] It is incumbent on a party who seeks to suspend the operation of a court order on the basis that the order was obtained through fraud to put forth cogent evidence to support the allegation. It is not enough to make what amounts to generalized assertions of fraud in affidavits, with no supporting documentation, and to assert that the fraud will be proven though questioning.

[23] With the request for an order prohibiting the sale of the property, effectively, I am being invited to grant a stay of Justice Shaw’s order, and I decline.

[24] In my opinion, the affidavit evidence available to me on this motion does not make out a case for fraud. I recognize that the applicant’s position is that more evidence will be forthcoming, but the current evidence does not rise to the level of a serious question. In the face of a court ruling which anticipated the sale of the property, strong evidence of fraud would be required before I would grant an order prohibiting that sale.

[25] Further, the applicant has not provided adequate evidence to establish that she will suffer irreparable harm if the property is sold. Justice Shaw’s order includes a provision that the net proceeds of the sale of the property are to be held in trust until further order or agreement. This will effectively prevent depletion of the asset.

[26] In addition, the applicant has not established that the balance of convenience would favour prohibiting the sale. As already indicated, I have been provided no evidence to establish the income she derived from the property. An order prohibiting the sale of the property would delay the sale of the property which is more likely to do harm to the respondent’s financial position than to enhance it. The interest accumulation will deplete the net value of the property, and there is a strong risk that power of sale proceedings will commence. A distress sale of the property will not help achieve full value for the property.

Continuing breach of disclosure order

[27] Justice Shaw’s order did not turn on the value of the property, the amount of the mortgage, or the diminishing equity in the property should it not be sold. Rather, her endorsement focused on the delay in prosecuting this application and the failure of the applicant to comply with a disclosure order for two years.

[28] Justice Shaw’s finding that the applicant had not complied with a disclosure order is not addressed by the applicant, except in paragraph 35 of the her affidavit dated February 4, 2021 where she says that the respondent’s claims that she had not provided disclosure were “false.” However, no details are provided. In contrast, the respondent deposed that since that Justice Shaw’s order was made, “I have not received a shred of disclosure from her subsequent to this.” The appropriate conclusion on the limited evidence I have is that the applicant remains non-compliant with a court order for disclosure. On this basis alone, it would be inappropriate to grant the relief the applicant has requested.

Disposition

[29] The request for an urgent hearing is dismissed. The request for an order prohibiting the sale of the subject property is dismissed. The balance of the motion is adjourned to the next available long motions date which is August 16, 2021 at 10:00AM for a three-hour hearing. By February 26, 2021, counsel shall develop their own timetable for delivery of affidavit materials, questioning, and delivery of facta. Mr. Ribeiro is to be involved in the discussions to set the timetable. If by February 26, 2021 counsel and Mr. Ribeiro have not agreed on a timetable, counsel may email me through my judicial assistant in Owen Sound to arrange a brief 9AM Zoom hearing.

[30] I am advised that there have been multiple attendances in this matter including case conferences, and neither party thought a further case conference would be useful. The parties are waiting for assignment court and a trial date. A case conference of the issues in this motion shall not be required.

Costs

[31] The respondent was fully successful at today’s hearing. The applicant shall pay to the respondent the costs of today’s attendance in the all-inclusive amount of $1,500, to be paid upon the resolution of the application.

Original Signed by: Chown J. Date: 2021-02-11