Court File and Parties
COURT FILE NO.: FS-18-93533 (Brampton) DATE: 20210309
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Rita Conforti Applicant
-and-
Pietro Conforti Respondent
Counsel: Lawrence Liquornik, for the Applicant W. Ross Milliken, for the Respondent
Heard: December 15, 2021 by video conference
Before: Chown J.
Reasons for Decision
[1] The respondent Mr. Conforti brings this motion for an order releasing the remaining funds in the trust account of the lawyer who jointly represented the parties in the sale of the matrimonial home. The applicant Ms. Conforti opposes based on her suspicion that Mr. Conforti may have made a side arrangement with the buyer under which he will receive additional consideration. She intends to question Mr. Conforti and others if necessary, and to seek disclosure of records, to either substantiate or answer her suspicions.
Background
[2] Ms. Conforti is 71. Mr. Conforti is 79. They were married for 53 years before separating on October 16, 2018. Their children are grown. The matrimonial home where they lived for 16 years is located on 10 acres in Caledon. The property is in an area slated for development so turned out to be very valuable.
[3] On the separation date, Mr. Conforti was charged with assaulting Ms. Conforti. Those charges were resolved with peace bond which required that Mr. Conforti not have any communications with Ms. Conforti directly or indirectly.
[4] After separation, Mr. Conforti continued to live in the matrimonial home. Ms. Conforti moved in with one of the children.
[5] In the spring of 2019, the parties agreed to list the matrimonial home for sale. They agreed on a listing price: $6 million. They agreed on co-listing agents: Mr. Conforti selected Mr. Bergamin; Ms. Conforti selected Ms. Khodar.
[6] Mr. Bergamin had been working with a developer or developers in the area. Ms. Conforti was not aware of this. Ms. Conforti says in her affidavit dated November 21, 2019 that Mr. Conforti was “initially duplicitous surrounding his selection of Mr. Bergamin as listing agent.”
[7] It was not duplicitous to select an agent who was working with a developer or developers in the area. I do not find it surprising, or duplicitous, that Mr. Conforti did not tell Ms. Conforti that Mr. Bergamin had done work with developers in the area. At that time, due to the peace bond, the Confortis were not in communication except through counsel.
[8] Mr. Bergamin presented an offer to the parties on approximately June 25, 2019 for $4.3 million from 2697482 Ontario Inc. Mr. Bergamin had acted as purchasing agent for 2697482 Ontario Inc. for two adjoining properties. Ms. Conforti deposes that Mr. Bergamin “did not disclose anything to me initially about his relationship with the [principals] of 2697482 Ontario Inc.” She deposes, “He had failed to disclose this to me in advance when he presented the Offer for $ 4.3 million,” and that he pressured her to accept the offer. This evidence is uncontested, and I accept it for purposes of this motion. I have not heard Mr. Bergamin’s side of the story. I emphasize, therefore, that this finding is made for purposes of this motion only.
[9] Ms. Conforti is justified to feel she had been deceived by Mr. Bergamin. However, Ms. Conforti does not provide evidence to implicate Mr. Conforti in this non-disclosure.
[10] Mr. Conforti wanted to accept the $4.3 million offer. Ms. Conforti did not. Her selected co-listing agent, Ms. Khodar, thought the property was worth $5.5 million to $6.2 million.
[11] In her November 21, 2019 affidavit, Ms. Conforti states:
I suspect that my husband was well aware that $4.3 million was well below fair market value and I further suspect, although I cannot prove at this time, that there may have been a collateral written or unwritten agreement between my husband and the purchaser to be paid a further sum of money in addition to the proposed $4.3 million. I am acknowledging that I do not have evidence to support this assertion but the circumstances as set out herein are extremely concerning and suspicious.
[12] On the evidence available to me, it is not reasonable to believe that Mr. Conforti was aware that $4.3 million was well below fair market value. It is not reasonable to conclude that Mr. Conforti wanted to accept the $4.3 million offer because he had a side agreement with the buyer. He was 79. His health is not good. A seller never knows what other offers will be received. $4.3 million is a lot of money. It is not surprising that he would want to jump at such an offer.
[13] In September of 2019, Ms. Conforti learned from inquiries to Town of Caledon officials that the property was in an area “approved on June 24, 2014 by town council as the preferred location for the new settlement expansion area in Bolton.” She asked Mr. Murdocca to provide an appraisal of the property. In a letter dated October 4, 2019, he appraised the property to be worth between $4.9 million and $5.3 million.
[14] At paragraph 29 of her November 21, 2019 affidavit, Ms. Conforti states that Mr. Conforti then “mysteriously” changed his opinion and decided the property was worth $4.7 million. But this was not mysterious. Mr. Conforti had obtained an appraisal that said the property was worth $4.7 million.
[15] Mr. Bergamin then presented the parties with an offer from 1289846 Ontario Inc. for $4.7 million. Ms. Conforti describes that her lawyer Mr. Liquornik’s research revealed that this numbered company was related to 2697482 Ontario Ltd., signifying that the two offers were coming from the same developer. She does not directly say this in her affidavits, but I infer Ms. Conforti felt this was a further attempt to deceive.
[16] The fact that a different but related numbered company was used to make the second offer is not in itself surprising or deceptive. It would have been wise for Mr. Bergamin to explain this to Ms. Conforti. (Again, I have not heard his side of the story on this point.) However, there is no evidence in the material implicating Mr. Conforti in a plot with the developer. It appears likely that Mr. Conforti told Mr. Bergamin of the $4.7 million appraisal he had obtained, Mr. Bergamin told the developer, and the developer offered this amount.
[17] Mr. Conforti wanted to accept the $4.7 million offer. Ms. Conforti did not.
[18] Ms. Conforti then obtained a further appraisal from an AACI accredited appraiser, Mr. Ashworth. This appraisal found the property to be worth $5.3 million.
[19] The developer agreed to pay this price. An agreement of purchase and sale was concluded on February 20, 2020, with a closing date of September 15, 2020.
[20] Mr. Conforti planned, and still plans, to buy a new residence. However, between the date of sale and the date of closing, the pandemic hit and as a result he did not advance his plans. For this reason, and because the buyer / developer had no immediate use for the property, Mr. Conforti entered into an agreement to remain in occupation following the closing. Mr. Conforti says this agreement “came together fairly quickly following a discussion between me and Mr. Bergamin, in early September 2020.”
[21] The arrangement calls for a vendor take back mortgage (VTB) to Mr. Conforti for $1.6 million. He remains in occupation. For the first year, he does not pay rent or receive mortgage payments. Starting the second year, he receives mortgage payments and pays rent. Either party can cancel the arrangement on 60 days notice.
[22] This arrangement was not disclosed to Ms. Conforti or even to the lawyer jointly retained on the sale, Mr. Soppelsa, until immediately before the scheduled closing date. It resulted in a need to push back the closing for 8 days, to September 23, 2020.
[23] In her December 9, 2020 affidavit, Ms. Conforti describes Mr. Conforti’s “behaviour” ( i.e., his making a side arrangement to stay in occupation of the matrimonial home and not disclosing the arrangement until immediately before closing) as “deceptive and troubling.”
[24] As an exhibit to his affidavit on this motion, Mr. Conforti has provided an email dated September 8, 2020 from Mr. Bergamin to the lawyer providing him independent advice on the sale, Ms. Cruickshank. This email sets out an outline of the arrangement. This email tends to confirm that the arrangement was made in early September 2020. The lawyer jointly representing the parties on the sale, Mr. Soppelsa, was not made aware of the arrangement until he received an email from Ms. Cruickshank on the evening of September 14, 2020, i.e., the day before the scheduled closing. Of course, it should have been disclosed earlier, but I do not see the arrangement or its late disclosure as evidence that Mr. Conforti is involved in another side arrangement with the developer or any plot to deceive Ms. Conforti.
[25] Ms. Conforti initially objected to the arrangement, but an agreement was reached whereby $1.6 million from the sale proceeds was released to Ms. Conforti and nothing was release to Mr. Conforti, other than the $1.6 million VTB. Later, the parties agreed to the release of a further $350,000 each from the net sale proceeds.
[26] Currently, there is approximately $1.27 million in net sale proceeds in Mr. Soppelsa’s trust account. Mr. Conforti continues to reside in the matrimonial home. He wants to move on with his life which he says “will at some point, perhaps soon, include purchasing a residence to live in.” He says the $350,000 that was paid out of the proceeds by agreement is not enough to purchase a residence. On his behalf, Mr. Milliken acknowledged that because the arrangement with the developer can be terminated on 60 days notice, the $1.6 million mortgage funds could be used to purchase a residence. However, Mr. Milliken submitted that Mr. Conforti should not have to prove he needs the money for it to be released.
The Test
[27] Under s. 12 of the Family Law Act, R.S.O. 1990, c. F.3, in an application for equalization or to resolve questions of ownership,
if the court considers it necessary for the protection of the other spouse’s interests …, the court may make an interim or final order,
(a) restraining the depletion of a spouse’s property; and
(b) for the possession, delivering up, safekeeping and preservation of the property.
For support applications, the court has similar authority under s. 40.
[28] An early leading case interpreting s. 12 is Lasch v. Lasch (1988), 64 O.R. (2d) 464. Justice Granger said at para. 13:
The purpose of an order under s. 12 of the Act is to ensure that there are sufficient assets to make an equalization payment once the court determines such payment and makes an order under s.9 of the Act.
[29] He said at para. 17:
A restraining order should be restricted to specific assets and there should be an onus on the party seeking the restraining order to prima facie show that he or she is likely to receive an equalization payment equal to the value of the specific assets.
[30] In that case, the parties had run a joint line of credit up to its limit after separation. The husband had sold a property in his name and was intending to use the proceeds to buy a house. Justice Granger said he was “concerned, having regard to the past history of this case, that the ability of either party to satisfy an equalization payment will be impaired unless I make an order restraining the disposition and/or encumbrance of certain assets.” He made a preservation order accordingly.
[31] In Batler v. Batler (1988), 67 O.R. (2d) 355 at para. 7, Justice Granger said:
If jointly owned property is sold prior to trial, prima facie the net proceeds of sale should be held in trust pending the determination of equalization to avoid prejudice to either spouse arising from the sale. If the parties agree or if there are sufficient assets to satisfy the potential equalization payment the funds could be dispersed.
[32] In Bronfman v. Bronfman, decided 12 years later, the wife sought to extend a preservation order she had obtained on an ex parte motion. Justice Sachs applied the test applicable to a request for an injunction by considering: (1) the relative strengths of the parties’ positions; (2) the balance of convenience; and (3) whether irreparable harm may occur if relief is not granted. Paragraphs 26 though 31 of Justice Sachs’s decision are instructive. In particular, she says:
a court will want to consider how likely it is that the plaintiff or petitioner will receive an equalization payment. It will also want to consider the effect that granting, or not granting, such an order will have on the parties. Under s. 12, the agenda is to protect the spouse's interests under the Family Law Act, so that if a spouse is successful in obtaining relief under that Act, there are assets available to satisfy that relief. Relevant to this exercise is an assessment of the risk of dissipation of the assets in existence prior to trial.
[31] … There are certain cases where the factual record, and the applicable legal principles, make it very clear that a spouse will be entitled to an equalization payment in a particular amount. In such cases, considerable weight will be given by the court to this factor when deciding an interim application under s. 12, and perhaps less weight to the other factors. There are others where the facts and the law are disputed and complicated. ... In such cases, the court will want to go on and give serious consideration to the other factors, being the balance of convenience and the risk of dissipation prior to trial. [Emphasis added.]
[33] A more recent leading case is Taus v. Harry, 2016 ONSC 219. Justice Gauthier’s held, at para. 35, that the test under s. 12 or s. 40 is the same: “The question to be asked is whether there is a real risk that the applicant's equalization claim and claim for retroactive support could be defeated if the preservation/non-dissipation order is not made.” In that case, equalization had not been determined, with each party saying the other would owe a significant amount. Specifically, the applicant said the respondent would owe her $130,000. Justice Gauthier found no evidence that the respondent was financially irresponsible, and “nothing to suggest that he would take steps to avoid any financial obligation he is ultimately determined to have” (Ibid., at para. 24). She accepted the respondent’s position that $200,000 should be paid out from trust, leaving just $46,400 each secured.
[34] Price v. Price, 2016 ONSC 728 is another example where there was no evidence a significant equalization payment would be required. In fact, the applicant, who had obtained a preservation order on an ex parte basis, failed to show any likelihood that she would be entitled to equalization. Justice Timms set aside the preservation order. In doing so, he said (at para. 6), “The correct standard is the same one to be applied when determining whether to grant an interim injunction.”
Application
[35] Mr. Conforti deposes that other than the matrimonial home the parties had only simple and identifiable net family property at the date of separation. This is supported by review of the parties’ financial statements.
[36] The parties divided their investments and have now sold the matrimonial home. Mr. Conforti’s view is that the remaining net proceeds need to be paid out and there is then nothing left to fight about. He says Ms. Conforti’s suspicions are unfounded, and nothing more than a “conspiracy theory.”
[37] Mr. Liquornik argues on behalf of Ms. Conforti that it’s not that simple. However, the only issue he has identified between the parties is equalization, and the only concern addressed in the materials for this motion or in argument is Ms. Conforti’s suspicion of an undisclosed side deal between Mr. Conforti and the buyer.
[38] Based on the evidence and argument in this motion, the only way that Mr. Conforti will owe Ms. Conforti a significant equalization payment is if there is such a side deal.
[39] The merits of Ms. Conforti’s claim are weak. There is suspicion on the part of Ms. Conforti, but no evidence that Mr. Conforti will owe Ms. Conforti a significant or even any amount of money. The circumstances are more easily explained by Mr. Conforti being less demanding and perhaps naïve about the purchase price, and either being delayed by the pandemic or procrastinating about moving. Given that the Confortis received the highest appraised value of the property, it seems unlikely that a developer would also offer Mr. Conforti a side deal for more consideration. Given that the developer is banking the land at this time and given that approaching the closing date Mr. Conforti had not moved out of the property, it is not surprising that the developer would agree to the arrangement that allows Mr. Conforti to remain in occupation on the terms described. It has negotiated a significant deferral of payment of capital. The available facts fit better with Mr. Conforti’s evidence than with Ms. Conforti’s theory. In my view, Ms. Conforti does not raise a prima facie case for further equalization.
[40] As a result, this is not one of those cases described by Justice Sachs in Bronfman, supra, where there is some certainty that one party will owe an equalization to the other. The “considerable weight” the courts give to that fact does not apply.
[41] Considering next the risk of irreparable harm, there is no evidence to support a concern that Mr. Conforti will hide or deplete assets. There is no evidence of Mr. Conforti behaving in a financially irresponsible manner. There is no evidence of risk that Mr. Conforti’s assets will leave Ontario. To the extent that there has been some delayed or inadequate disclosure by Mr. Conforti, these were explained in during Mr. Milliken’s argument. There is no reason to think that Mr. Conforti is going leave Ontario with his money, hide his money, or waste his money.
[42] Ms. Conforti’s suspicion of Mr. Conforti is no doubt born of distrust. However, Ms. Conforti has not adequately proven a basis for mistrust. The Confortis were together for 53 years. If Mr. Conforti had acted unethically in the past, I have no doubt Ms. Conforti could and would have provided details.
[43] I have reviewed many cases involving requests for s. 12 or s. 40 orders and conclude that, overall, this case does not have the features found in most cases where preservation orders have been made. I will give some examples.
[44] In Stokaluk v. Stokaluk, [2003] O.J. No. 3097, risk was found to exist based on allegations of a propensity to gamble.
[45] In Both v. Both, [2008] O.J. No. 1358, the husband had encumbered the matrimonial home and moved assets to a corporation in which his wife had no interest.
[46] In Barrotti v. Barrotti, the husband had seriously failed in his disclosure obligations and was in substantial default of an order.
[47] In Fatahi-Ghadenari v. Wilson, 2016 ONSC 6863 at para. 88, there was evidence of discrepancies in tax documents (the ones the husband had produced in the litigation and the ones that had been received from third parties did not match). The husband had diverted funds from the sale of property (exotic cars in his business) to put them beyond the reach of the wife.
[48] In Syed v. Syed, 2017 ONSC 2588, court orders for disclosure were disrespected, properties were encumbered with mortgages, and money was spent for unnecessary renovations, and provided to family members.
[49] In Fraser v. Fraser, 2017 ONSC 3774, the husband had structured his affairs improperly or illegally to hide significant amounts of taxable income from the government; he sold a joint asset without even telling his spouse; and he had raised the prospect of bankruptcy.
[50] In Barbini v. Edwards, 2014 ONSC 6762, the husband owned a business. He had not provided sufficient financial information. Interim orders for support were in place. Justice Emery made a preservation order, holding at para. 91 that it was “warranted given the complexity of the issues yet to be determined by the court in this application, questions of credibility on those issues and the ever present risk that where one party owns a business, assets could be dissipated to defeat the rights of another without it.”
[51] In Burke v. Poitras, 2020 ONSC 3162 at para. 267-269, the court described significant failure to make financial disclosure, concealing of assets or income, disposing of jointly owned property unilaterally, and attempting to frustrate the other party’s claims.
[52] The features described in these cases are not at play here.
[53] I have considered the possibility of ordering the release of some of the funds held in trust and preservation of some. However, there is no basis upon which I could assess what amount might be appropriate. Mr. Liquornik said that he cannot say whether half of the amount being held in trust is enough, or even all of it. This only reinforces the speculative nature of Ms. Conforti’s position.
[54] Ms. Conforti points out that Mr. Conforti has not established that he has any need for the money. This can be a factor to consider when assessing the balance of convenience. However, it is not a controlling factor. Ms. Conforti’s case appears weak and she has not demonstrated significant risk of irreparable harm. A preservation cannot be justified based solely on the fact that the party whose money is tied up does not need the money.
[55] Ms. Conforti is in no way precluded from advancing her claim to test her suspicions. She has every right to pursue this. However, in the circumstances of this case she has no right to security while doing so.
Disposition
[56] The funds being held in trust shall be distributed to the parties equally, or as they may otherwise agree. This is without prejudice the either party’s claims.
Costs
[57] If the parties cannot agree on the costs of this motion then, not later than March 22, 2021, counsel should contact my assistant Linda Thompson to obtain a date for a brief 9:00AM video conference hearing on the issue. Any required written materials may be submitted to me though Ms. Thompson in advance of the hearing.
“Justice R. Chown”
Released: March 9, 2021