Court File and Parties

COURT FILE NO.: 19-88 DATE: 20210312 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Rodney Neil Fraser, Applicant AND: Carol Patricia Fraser, Respondent

BEFORE: Justice Hélène C. Desormeau

COUNSEL: Robert W. Scriven, for the Applicant Judith Wilcox, for the Respondent

HEARD: February 19, 2021

Ruling on motion

Introduction

[1] The Court must determine whether the s.71 Notice pursuant to the Land Titles Act (“LTA”) was appropriately registered on title by the wife regarding farm property owned by the husband and/or owned jointly by the husband and his parents. The husband argues it was not appropriate to register the Notice on title, and it should be removed immediately. The wife is seeking the s.71 Notice remain in place, that any order granted as a result of this motion be registered on title to any properties in which the husband has any interest, and a restraining (preservation) order pursuant to s.12 Family Law Act (“FLA”).

[2] At the outset, the Court struck the six page settlement conference brief attached at exhibit F to the husband’s affidavit dated October 27, 2020. The attachments to the brief remain as part of the court record. Though I have essentially been the case management judge, and have heard two settlement conferences, no opinion has been offered by me on the critical issues being argued today. Moreover, neither counsel objected to, nor raised any concern regarding me hearing this motion.

Position of the parties

[3] The husband is seeking an order directing the Registrar of the Land Titles division of Prescott (LRO #46) to remove the section 71 Notices from PINs 54192-0295, 54192-0120, 54192-0107, 54192-0301, 54192-0303.

[4] The wife argues that the s.71 Notices are properly on title. She also seeks an order restraining Rodney Neil Fraser from:

a. directly or indirectly, by any means whatsoever, selling, removing, dissipating, alienating, transferring, assigning, encumbering, or similarly dealing with any interest he may hold or acquire in real property, whether legal, beneficial, contingent or otherwise.

b. instructing, counseling, demanding, any other person to do any of the things he is restrained from doing by the terms of the order;

c. facilitating, assisting in, aiding, abetting, or participating in any acts the effect of which is to do the things prohibited by the terms of the order.

[5] The wife is also seeking an order that she may, pursuant to the provisions of the Land Titles Act, register any order granted against title to any real property in which Rodney Neil Fraser holds or claims an interest, including without limitation, the title to the properties described below:

a. Municipally known as 890 County Road 18, Ste Anne de Prescott, Ontario, PIN 54192-0295, and described as PT LT 8 CON 8 EAST HAWKESBURY; PT Sl/2 LT 9 CON 8 EAST HAWKESBURY AS IN R116671; TOWNSHIP OF EAST HAWKESBURY;

b. Municipally known as 896 County Road 18, Ste Anne de Prescott, Ontario, PIN 54192-0113, and described as PT LT 8 CON 8 EAST HAWKESBURY PT 1 46R6132; EAST HAWKESBURY;

c. Legally described as PT LT 7 CON 8 EAST HAWKESBURY, PART 1 46R7590, TOWNSHIP OF EAST HAWKESBURY, being PIN 54192-0301;

d. Legally described as PT LT 11-12 CON 8 EAST HAWKESBURY AS IN R127170; EAST HAWKESBURY, being PIN 54192-0107; and

e. Legally described as PART LT 15 CON 8 EAST HAWKESBURY AS IN R81909 EXCEPT PARTS 1 & 2 46R7810; TOWNSHIP OF EAST HAWKESBURY, being PIN 54192-0303.

Background

[6] After being together for 16 years, including 13 years of marriage, the parties separated on May 8, 2017. Together they have one child, who is 13 years of age.

[7] On March 12, 2019, the husband issued an application for divorce and other corollary relief, including equalization of net family property and exclusive possession of the matrimonial home.

[8] In her Answer dated April 16, 2019, the wife’s only property claim was a request for equalization. The endorsement record confirms there were no claims to amend the answer to include any other property, unjust enrichment, or trust claims. There are no claims for any interest in land set at part 4(a) of any of the wife’s three sworn financial statements dated April 16, 2019, September 20, 2020, or December 10, 2020. There is no interest in land claimed at part 1(a) of her comparison net family property statement found at tab B of her December 10, 2020 affidavit.

[9] On May 27, 2019, this Court ordered the husband provide an updated financial statement to include current values of assets and liabilities, as well as other financial disclosure. While much disclosure was provided, and ongoing discussions and progress was being made between the parties, ultimately all terms of the order were only complied with on February 18, 2021, the day before this motion was argued. The wife argues that this delay has hindered her ability to finalize her net family property (“NFP”) calculations. With all of the financial disclosure now available, the NFP calculations show monies owed to the wife. However, the parties are approximately $685,000.00 apart in their positions.

[10] The husband is a fifth generation farmer. He took over his parents farming operation. The last several years have been financially challenging for the husband’s farm operations.

[11] On March 4, 2020 the husband wrote to the wife, through counsel, to advise he was contemplating making an application for relief under the Farm Debt Mediation Act (“FDMA”) [1]. At that time, he also alerted the wife that approximately 228 acres were going to be sold to pay down debt to the bank, who was the first priority. By letter dated March 16, 2020, the wife requested the legal description of the property being sold, and details of the sale transaction.

[12] On August 5, 2020, the husband communicated with the wife that two properties were listed for sale. He enclosed the listings and the agreements.

[13] The husband was pushed into Farm Debt Mediation by a creditor. To obtain a stay of proceedings against him, the husband applied to the Farm Debt Mediation service for a mediation pursuant to s. 5.2 of the FDMA. The husband communicated this information to the wife on September 3, 2020. At the same time, he advised that there was an accepted conditional offer on one of the listed properties. He enclosed the Agreement of Purchase and Sale (“APS”), as well as a Notice to Creditors for Stay of Proceedings pursuant to s.5(1)(a) FDMA.

[14] On September 17, 2020, the husband served his settlement conference brief for the Settlement Conference that took place on September 24, 2020. On September 24, 2020 the wife learned that the sale of property identified as PIN 54182-120 [2] was scheduled to close September 30, 2020. Prior to that date she was not advised the conditions of the APS has been fulfilled. Due to insufficient financial disclosure by the husband, she was unable to determine the impact and significance of the sale. Consequently, she registered the s.71 Notice on the basis that she has an unregistered interest in the properties pursuant to her claim for equalization. Her position was that when the husband indicated in his letter of March 4, 2020 that he was being forced to sell 200 acres, this was to advise her of the husband’s circumstances, not that he was actually selling the land.

[15] On September 28, 2020, the wife wrote to the husband indicating that the Notice to the Creditors dated August 18, 2020 regarding Farm Debt Mediation was only disclosed with the husband’s settlement conference brief. The wife questioned why she was not served with a Notice to Creditors, despite her being a creditor with a claim against the husband. The wife renewed a prior request for an accounting regarding the property sold by the husband in November 2017, including the reporting letter and a copy of the trust ledger. The wife also repeated a request for the Anne-Vista Farms 2019 Financial Statement, which was to be completed in late March 2020. Clarification was sought regarding the two properties being sold, to confirm if they were the same as those mentioned to in the March 4, 2020 correspondence. If so, she states, then the August 5, 2020 correspondence was the first answer to the request for a legal description of the property, despite being requested on March 16, 2020.

[16] The wife pointed out that the husband’s February 24, 2020 Financial Statement did not comply with the terms of my May 27, 2019 order, and requested it be rectified. She also requested that counsel provide “[a]ll documents relating to your client’s Farm Debt Mediation (as per your undertaking)”, amongst other disclosure.

[17] In that same correspondence, the wife also advised the husband: “[g]iven your client’s dealings with properties in which our client has an interest, a Notice has been registered on title to all properties owned by your client, a copy of which is enclosed. We understand that a sale is to be completed in respect of PIN 54192-0120 on September 30th, 2020. Our client does not wish to impede the sale and will discharge the Notice upon being provided the requisite documents including the statement of adjustments, mortgage payout statement and trust ledger.”

[18] The s. 71 Notice, as attached to the September 28, 2020 correspondence, sets out in the statements “[t]his notice is pursuant to Section 71 of the Land Titles Act. This notice is for an indeterminate period.” The schedule states that counsel “confirm that the applicant has an unregistered estate, right, interest or equity in the land described as all of the Parcels/PINs: 54192-0295, 54192-0120, 54192-0113, 54192-0107, 54192-0301, and 54192-0303. The lands are registered in the name of Rodney Neil Fraser and/or Neil Rodney Fraser and/or Rodney Fraser, and subject to a life estate in favour of David Fraser and Leona Fraser in respect of PIN 54192-0295, and I hereby apply under Section 71 of the Land Titles Act for entry of a Notice in the register for the said parcels. This notice will be effective for an indeterminate time…” The Notice does not specify what interest in the land the wife claims to have or to have had. Of note, the email correspondence sent to counsel confirms that the letter was emailed on September 29, 2020 at 1:16 p.m., the day prior to the sale closing.

[19] With regard to the sale of the property, the husband’s lender, National Bank, wanted all of the proceeds of sale, in exchange for a partial discharge of his blanket mortgage (approximately $750,000.00). This was contrary to counsel’s understanding of the FDMA, however, the arrangement was approved by Stephanie Belair-Hoffman, the senior administrator in Ontario for the Farm Debt Mediation Service. The National Bank nevertheless was persuaded to relinquish some of their security so that counsel could retain some of the monies to pay a portion of the husband’s legal fees in relation to his matrimonial file.

[20] The s.71 Notice registered by the wife was not noticed until the day of closing, and affected the land which was to be sold. An exchange of correspondence ensued between both counsel, the National Bank, and the purchaser’s lawyer at significant expense. Once the husband’s counsel provided the documentation sought by the wife (“requisite documents including the statement of adjustments, mortgage payout statement and trust ledger”), the wife took the position that husband’s counsel was not entitled to receive monies for his legal fees for the matrimonial file, and requested a written undertaking that the funds would be held in his trust account. This undertaking was given, and the wife discharged the Notice.

[21] The wife did not have any issue with discharging the Notice on the land, but took issue with the fact that not all sale proceeds were being used to pay down the debt. In the context of the Farm Debt Mediation proceedings, the wife felt it was improper that any of the sale proceeds be used for the husband’s personal expenses rather than for payment of creditors.

[22] On October 14, 2020, the husband learned that the Farm Debt Mediation was scheduled for October 27, 2020. On October 19, 2020, the husband wrote to the wife reiterating that the registration of the Notices is improper, and seeking them to be discharged. Failing their discharge, a motion would be brought for same. He enclosed Bulletin Numbers 96001 and 2000-2 by the Ministry of Consumer and Commercial Relations, directed to all Land Registrars.

[23] Bulletin 96001 dated July 10, 1996 replaces Bulletin 95005, and was issued as there were s. 71 Notices placed on title yet were sometimes unrelated to interest in land. After review, due to the complex nature of the documents, occasionally inconsistent decisions were made regarding their acceptance. Thus, a new form was created so that the applicant’s solicitor could make a statement that the document relates to an interest in land, and addresses the removal of the notice which was previously complex. The Bulletin provides that it is not necessary to specify the nature of the interest, and it can be effective for an “indeterminate time”, at which time a court order or consent of all parties would be required to remove the Notice. A non-exhaustive list was provided to demonstrate types of notices that have been approved by the Director of Titles for registration under s.71 of the LTA. That list includes for instance an agreement which provides for a charge to secure the payment of a debt or performance of an obligation (i.e. a charge given to secure the obligations under a cost-sharing agreement, a Notice of Right of First Refusal, Notice of Listing Agreement, Notice of Purchaser’s or Vendor’s Lien, a Notice of General Assignment of Rents, etc.).

[24] Bulletin 2000-2, dated July 21, 2000, provided further details for procedures when registering cautions and clarified the use of the amended caution procedure. The LTA was amended so cautions protecting agreements of purchase and sale are now registered under s.71.

[25] On October 27, 2020, when the husband signed his affidavit in support of this motion, no response to the October 19, 2020 correspondence was received. Consequently, the motion was scheduled for November 6, 2020. That date was adjourned to December 15, 2020, which was then adjourned to this motion hearing date.

[26] The husband argues that he sold the parcel of land so that he could conduct the Farm Debt Mediation in good faith. He hoped the sale would demonstrate that he has taken significant and drastic changes to reduce his debt load in order to address his financial situation.

[27] The husband argues that the s.71 Notices on title are of concern as he will have to disclose the fact of same at Mediation, which will likely cause significant concerns to both his secured and unsecured creditors.

[28] The wife indicates that the family law proceedings are a matter of public record, and any interested person can learn the details of her claim from the court record. The court however is alert to the deemed undertaking rule at Rule 30.1 Rules of Civil Procedure.

[29] Further, the wife argues that under the FDMA, the husband has a positive obligation to disclose all his creditors upon making an application. The wife argues that the husband did not include her claim for equalization in his FDMA proceedings, contrary to his statutory obligations. It is her belief that the husband’s apprehension is better characterized as a concern that the Notices undermine his efforts to breach his statutory obligations by concealing her family law claims. Given this, her concerns about non-disclosure in the family law context are heightened. She points out that the husband learned on October 14, 2020 that the Mediation would occur October 27, 2020, but when the husband wrote to the wife on October 19, 2020, the mediation date was not disclosed. As a creditor, the wife should have been made aware of all proceedings under the FDMA process. She advances that the failure to include her as a creditor in the application and the conduct of refusing to disclose the status of the proceedings is, in her view, a clear attempt to disregard and avoid her legitimate claims. At the time of swearing the affidavit on December 10, 2020, the husband had not disclosed the outcome of the mediation.

[30] The husband is the sole owner of parcels 54192-0120, 54192-0113, 54192-0107, 54192-0301 [3]. Parcels 54192-0295 and 54192-0303 are owned by the husband and his parents, who have a life interest in those properties. The wife argues that the life estate is registered in favour of the husband’s parents on PIN 54192-0295, the matrimonial home property, but they reside on PIN 54192-0113. Her affidavit states: “but [the husband’s parents] do not own this property nor any other property upon which the Notice has been registered.” The evidence however shows that the Notice is registered on both PIN 54192-0295 and 54192-0303, which are jointly owned by the husband and his parents.

[31] On January 4, 2021 the parties appeared before me for a settlement conference continuation. An order regarding financial disclosure was made on consent, to be disclosed within 30 days, which includes, inter alia, disclosure of the mediation report from the Farm Debt Mediation Services.

[32] On February 4, 2021, the husband wrote to the wife to indicate that the updated financial statement would be provided, but wished to have the 2020 Financial Statement for Anne-Vista Farms finalized to provide everything at one time. More time was requested. The disclosure was ultimately provided on February 18, 2021.

[33] With regard to disclosure of the Farm Debt Mediation Services, the husband provides an undated proposal, wherein he indicates: “I am also working through my matrimonial litigation with the assistance of counsel. I am hopeful that an update with regard to that matter can be provided at the mediation.” He discloses a Farm financial statement, dated August 24, 2020 wherein in the notes, at page 2, he indicates his wife “should be listed as a creditor, amount to be determined, due to the potential equalization payment subject to matrimonial litigation.”

[34] The husband maintains that the wife has never held a mortgage, lease, right to purchase, a lien, any form of agreement or contract, right of first refusal, occupancy agreement, postponement of a charge, or any other interest in those properties. As such, the s.71 Notices are improperly registered on title to his properties.

[35] The husband nevertheless acknowledges that the wife may have an entitlement to an equalization payment as a result of their separation.

[36] The wife contends that as a result of the husband’s ongoing failure to comply with my order of May 27, 2019 regarding financial disclosure and the lack of disclosure about the Farm Debt Mediation process leaves her without any ability to determine what assets remain to satisfy an equalization claim. This caused the s. 71 Notices to be registered. She has demonstrated cooperation for the sale of PIN 54192-0120, and will continue to cooperate for any future sale.

Issue 1: Are the s. 71 Notices pursuant to the Land Titles Act properly on title?

[37] The wife’s primary argument is that a claim for equalization of net family properties brings an interest in land into question, and may be registered on property to prevent the property being dealt with without any notice to her.

[38] In support of this argument, the wife relies on Nash v. Gilbert, 1993 CarswellOnt 3972, at paras. 18 -19, which was followed by Carey v. Almuli, 2013 ONSC 6976, at paras. 18-19, which I will review below. Both of these cases deal with a Certificate of pending litigation (“CPL”), as opposed to a s.71 LTA Notice. Neither counsel could direct me to, nor could I find, any cases where equalization claims are secured under s.71 of the Land Titles Act.

[39] The wife argues that the s.71 Notice is akin to a Certificate of pending litigation. The husband disagrees. For reasons that follow, I also disagrees with the wife’s argument.

[40] In order to properly articulate the differences, I find it useful to analyze the distinctive remedies available, including the s.71 Notice, Certificate of pending litigation and the equalization regime as found in the FLA.

Section 71 LTA

[41] The wording of s. 71 LTA is for the protection of unregistered estates, and states the following:

71 (1) Any person entitled to or interested in any unregistered estates, rights, interests or equities in registered land may protect the same from being impaired by any act of the registered owner by entering on the register such notices, cautions, inhibitions or other restrictions as are authorized by this Act or by the Director of Titles. R.S.O. 1990, c. L.5, s. 71 (1).

[42] A s.71 Notice is put on title without any judicial intervention. The registration itself requires the applicant’s counsel to confirm that the applicant has an unregistered estate, right, interest or equity in the land.

[43] In Bruce Eco Landbank Inc. v. Bruce Eco Industrial Park Corp., 2016 ONCA 35, the Court agreed with the trial judge’s determination that the potential right to become a 50% shareholder in a corporation that owns land, so as to become entitled to any share of any profit generated from the sale of that land, is not entitled to register under s.71 Land Titles Act. In that case, the appellant submitted that a registration under s.71 is permissible if a party has a potential financial interest in the outcome of a sale of land. The Court found that submission was too remote from the intended ambit of s.71 LTA. (See paras. 2 and 3)

[44] Justice Carole Brown, in Horntein v. Kats et al., 2020 ONSC 870 dealt with a s.71 Notice registered on title. At paragraph 218 found that the Notice was unauthorized and improperly registered. At paragraphs 219 and 221, she stated:

It is of note that a trust interest, including an express, implied or constructive trust shall not be entered on the Register pursuant to s. 62 of the LTA. The case law makes it clear that a trust interest is not the proper subject of a registration under s. 71: Claireville Holdings Ltd. v. Botiuk, 2014 ONSC 6505 (Ont. S.C.J.); McLeod v. Walker, 2015 ONSC 5984, 60 R.P.R. (5th) 231 (Ont. S.C.J.), at paras. 17-19; Bao v. Mok, 2019 ONSC 915 (Ont. S.C.J.), at paras. 60-62, 146-155.

…The applicable Bulletin No. 96001, issued July 10, 2016, was not complied with by the plaintiff, who failed to obtain approval of the Director of Titles, as the notice did not relate to the specifically enumerated topics. Further, no time limitation for the life of the registration was set forth; rather, it was indeterminate, such that it still is on title today and has tied up the property for eight years, since 2012. Moreover, the registration would not have been approved, as it did not comply with s. 62, because it was a purported trust interest in the property.

[45] Ultimately, Brown J. found that the plaintiff had not established a basis for any entitlement to a 50-50 interest in the property. She found the plaintiff acted unreasonably and vindictively, that she persisted in preventing the sale of the property by improperly using two Notices, which she, through her counsel, registered on title. Brown J found that the plaintiff had no claim to a partnership interest, nor a trust interest, beneficial or constructive, in the property, that she had contributed essentially nothing to the property that would entitle her to any interest in it. She ordered the immediate removal of the s.71 Notices.

[46] In the case at hand, a review of the Continuing Record shows that the wife is not advancing any unjust enrichment or trust claims.

Certificate of pending litigation

[47] Rule 1(7) of the Family Law Rules provides that if is a rule does not cover a matter adequately, the court may give directions, and the practice shall be decided by analogy to these rules, by reference to the Courts of Justice Act (“CJA”) and, if the court considers it appropriate, by reference to the Rules of Civil Procedure (“RCP”).

[48] Section 103 CJA and Rule 42.01 RCP address the issuance of a Certificate of pending litigation. The relevant sections for this proceeding are ss. 103(1), 103(4) and 103(5), which state:

103 (1) The commencement of a proceeding in which an interest in land is in question is not notice of the proceeding to a person who is not a party until a certificate of pending litigation is issued by the court and the certificate is registered in the proper land registry office under subsection (2). R.S.O. 1990, c. C.43, s. 103 (1).

Liability where no reasonable claim

(4) A party who registers a certificate under subsection (2) without a reasonable claim to an interest in the land is liable for any damages sustained by any person as a result of its registration. R.S.O. 1990, c. C.43, s. 103 (4).

Recovery of damages

(5) The liability for damages under subsection (4) and the amount thereof may be determined in the proceeding in respect of which the certificate was registered or in a separate proceeding. R.S.O. 1990, c. C.43, s. 103 (5).

[49] The ultimate question when determining if a CPL should be granted by the court, is whether the wife can show that an interest in land “is in question”.

[50] The wife relies on Carey v Almuli, 2013 ONSC 6976 to support her position that by asserting a claim for equalization, that an interest in land is in question.

[51] In Carey v Almuli, supra, Kiteley J. confirmed her earlier ruling stemming from an ex-parte motion, where the Court granted an order permitting a CPL to be registered on title. In granting this relief, the Court relied on Nash, supra. At the return of the motion, counsel argued the CPL should be discharged as the applicant had not asserted a claim for an interest in land. The applicant conceded that no claim was advanced for an interest in the property based on constructive trust principles. The argument was nevertheless a claim for an interest in land based on a claim for an equalization of the net family property. Justice Kiteley remained of the view that Nash was properly applicable. She found that on the basis of Nash, the applicant brought into question an interest in the land by asserting a claim for an equalization of net family property, as well as asserting a claim for a vesting order pursuant to s.9(1)(d) and for an order pursuant to s.12 FLA.

[52] In Nazar Estate v. Nazar, 1998 CarswellOnt 4648 (Ontario Court of Justice, General Division) Swinton J heard a motion to discharge a CPL by the defendant, while the plaintiff sought to amend the Statement of Claim. The CPL was put on title following an ex-parte motion. At paragraph 11, Swinton J indicated the following:

Had the defendant had an opportunity to contest the motion for the Certificate [of pending litigation] or been given an opportunity to seek its discharge in a timely fashion, she would have likely succeeded in preventing the registration of the Certificate. The Statement of Claim made no claim for the relief of a Certificate of Pending Litigation. Moreover, a Certificate of Pending Litigation can be ordered only if an interest in land is in question, and here, there is no interest in land claimed in the Statement of Claim. Rather, the claim was for an equalization of all net family property, and generally a claim for equalization does not constitute a claim for an interest in land, as it is a claim for a monetary payment Bajada v. Bajada (1991), 32 R.F.L. (3d) 70 (Ont. Gen. Div.), at 74. While a Certificate was ordered in Nash v. Gilbert, [supra], that case is distinguishable, in that the wife sought to set aside an allegedly fraudulent conveyance in order to realize her entitlement to an equalization payment. In the opinion of Mendes Da Costa J., this brought into question an interest in land. Here, no such interest in land is at issue: Nazar Estate v. Nazar, 1998 CarswellOnt 4648, at para. 11.

[emphasis added]

Equalization

[53] The equalization regime is governed by sections 4 to 11 of the Family Law Act. The properly applicable sections to this case are the following:

4(1) Definitions

“net family property” means the value of all the property, except property described in subsection (2), that a spouse owns on the valuation date, after deducting,

(a) the spouse’s debts and other liabilities, and

(b) the value of property, other than a matrimonial home, that the spouse owned on the date of the marriage, after deducting the spouse’s debts and other liabilities, other than debts or liabilities related directly to the acquisition or significant improvement of a matrimonial home, calculated as of the date of the marriage; (“biens familiaux nets”)

“property” means any interest, present or future, vested or contingent, in real or personal property and includes,

(a) property over which a spouse has, alone or in conjunction with another person, a power of appointment exercisable in favour of himself or herself,

(b) property disposed of by a spouse but over which the spouse has, alone or in conjunction with another person, a power to revoke the disposition or a power to consume or dispose of the property, and

(c) in the case of a spouse’s rights under a pension plan, the imputed value, for family law purposes, of the spouse’s interest in the plan, as determined in accordance with section 10.1, for the period beginning with the date of the marriage and ending on the valuation date; (“bien”)

5 (1) When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them. R.S.O. 1990, c. F.3, s. 5 (1).

7 (1) The court may, on the application of a spouse, former spouse or deceased spouse’s personal representative, determine any matter respecting the spouses’ entitlement under section 5. R.S.O. 1990, c. F.3, s. 7 (1).

9 (1) In an application under section 7, the court may order,

(a) that one spouse pay to the other spouse the amount to which the court finds that spouse to be entitled under this Part;

(b) that security, including a charge on property, be given for the performance of an obligation imposed by the order;

(c) that, if necessary to avoid hardship, an amount referred to in clause (a) be paid in instalments during a period not exceeding ten years or that payment of all or part of the amount be delayed for a period not exceeding ten years; and

(d) that, if appropriate to satisfy an obligation imposed by the order,

(i) property be transferred to or in trust for or vested in a spouse, whether absolutely, for life or for a term of years, or

(ii) any property be partitioned or sold. R.S.O. 1990, c. F.3, s. 9 (1); 2009, c. 11, s. 25.

10 (1) A person may apply to the court for the determination of a question between that person and his or her spouse or former spouse as to the ownership or right to possession of particular property, other than a question arising out of an equalization of net family properties under section 5, and the court may,

(a) declare the ownership or right to possession;

(b) if the property has been disposed of, order payment in compensation for the interest of either party;

(c) order that the property be partitioned or sold for the purpose of realizing the interests in it; and

(d) order that either or both spouses give security, including a charge on property, for the performance of an obligation imposed by the order,

and may make ancillary orders or give ancillary directions. R.S.O. 1990, c. F.3, s. 10 (1).

11 (1) An order made under section 9 or 10 shall not be made so as to require or result in the sale of an operating business or farm or so as to seriously impair its operation, unless there is no reasonable alternative method of satisfying the award. R.S.O. 1990, c. F.3, s. 11 (1).

[54] The Ontario Court of Appeal considered the interplay of a bankruptcy and equalization claim as set out in the FLA in Thibodeau v Thibodeau, 2011 ONCA 110, which sheds light on the context of today’s equalization regime. It stated:

37 Unlike its predecessor — the Family Law Reform Act, R.S.O. 1980, c. 152, which featured a division of property scheme — Ontario's Family Law Act adopted an equalization payment regime. Separating spouses are not entitled to receive a division of property. Rather, they are entitled (generally speaking) to receive one-half of the value of the property accumulated during the marriage. An equalization payment is the chosen legislative default position.

38 Secondly, it is clear from the authorities and the scheme of the legislation, that a spouse entitled to receive an equalization payment is a creditor of the payor spouse. And an unsecured creditor at that. As Galligan J.A. observed in Berdette v. Berdette (1991), 3 O.R. (3d) 513 (Ont. C.A.), at pp. 524-25:

The intent of this legislation is to establish partnership and equal sharing of property accumulated during marriage. That intent is not effected, however, by the sharing of the assets themselves as was done under the Family Law Reform Act, R.S.O. 1980, c. 152, which preceded the [FLA] It is done by the sharing of the value of the assets. The distinction is crucial and is one that is not infrequently overlooked. For example, in his Annotation to Rawluk v. Rawluk, [1990] 1 S.C.R. 70 [other citations omitted] ... Professor James G. McLeod speaks of "a statute that, by its terms, provides for the equitable distribution of property." In my view, the definition of "net family property" contained in s. 4(1), the opening words of s. 4(2), s. 5(1), and s. 5(6), all show that the [FLA] does not provide for the distribution of property. Rather, it provides for the payment of money when the net family property of one spouse is less than that of the other.

I make particular reference to s. 4(1), which defines "net family property" as the value of all property which a spouse owns on valuation day. In this way, net family property is distinct in nature from "property" in the statutory sense found in s. 4(1) and from the word "property" in its ordinary sense.

[Underlining in original]

See also Shea v. Fraser (2007), 2007 ONCA 224, 85 O.R. (3d) 28 (Ont. C.A.), at para. 27; Schreyer v. Schreyer (2009), 2009 MBCA 84, 70 R.F.L. (6th) 237 (Man. C.A.) at paras. 125-132; Burson v. Burson (1990), 29 R.F.L. (3d) 454 (Ont. Gen. Div.); and Gaudet (Litigation Guardian of) v. Young Estate (1995), 11 R.F.L. (4th) 284 (Ont. Gen. Div.).

39 Given its powers under s. 9(1) of the Family Law Act, the court can impose a legal relationship between the spouses other than a debtor-creditor relationship pursuant to the equalization process, if the record justifies such exceptional and intrusive action. The court can order the transfer to or vesting of property in one of the spouses. It can order the creation of trusts of property or a charge against property in favour of one spouse with respect to the other spouse's property. …

40 It bears highlighting here that the enhanced remedies available under s. 9(1) of the Family Law Act give rise to proprietary rights in the spouse benefitting from the order. They are therefore exceptions in an equalization payment regime and give rights that may affect third parties of whom the trier may be unaware and who are not represented in the proceedings. It follows, in my view, that these remedies should not be imposed indiscriminately or routinely, and only if there is a real need and there are sound reasons on the record for doing so.

41 Indeed, lower courts have recognized the need for a principled approach to the application of an enhanced s. 9(1) remedy. Such orders are to be made only where there is a real need for them, after all relevant considerations have been taken into account, and not as a matter of course. As Whalen J. stressed, in Colquhoun v. Colquhoun, 2007 CarswellOnt 18 (Ont. S.C.J.), at para. 168, "[t]here must be a proven concern that payment [of an ordered equalization payment] will not be honoured" (emphasis added) before the court can order the transfer or partition and sale of property under s. 9(1).

42 The onus is on the party seeking such an order, and as a general rule the court's discretion will only be exercised in favour of a s. 9(1) order where it is established — based on the targeted spouse's previous actions and reasonably anticipated future behaviour — that the equalization payment order granted will not likely be complied with in the absence of additional, more intrusive provisions: Kennedy v. Sinclair (2001), 18 R.F.L. (5th) 91 (Ont. S.C.J.), at para. 45; Lynch v. Segal (2006), 82 O.R. (3d) 641 (Ont. C.A.), at para. 32; Raymond v. Raymond (2008), 64 R.F.L. (6th) 160 (Ont. S.C.J.); Alldred v. Alldred, [1998] O.J. No. 3606 (Ont. Gen. Div.); McDonald v. McDonald (1994), 5 R.F.L. (4th) 215 (Ont. Gen. Div.), aff'd McDonald v. McDonald (1997), 33 R.F.L. (4th) 425 (Ont. C.A.).

[55] In essence, the Ontario Court of Appeal in Thibodeau sets out that, generally speaking, a claim for equalization under the FLA does not create an interest property. The FLA sets out a regime for equalization of the net family properties. Section 5 indicates that the spouse whose net family property is the lesser of the two net family properties is entitled to one-half of the difference between them. Section 9 contains the enforcement mechanisms available to the court. It does not confer the power to redistribute property (see Danecker v Danecker, 2014 ONCA 239). Consequently, it is the value of property that is divided, not the property itself (see Thibodeau v. Thibodeau, 2011 CarswellOnt 686, 2011 ONCA 110 (Ont. C.A.).

[56] In her factum, the wife states “[b]ecause of the nature of an equalization payment, its importance in ensur[ing] equitable division of assets, and the means available under the Family Law Act, a claim to an equalization payment brings an interest into question.” [emphasis added]. For reasons set out below, and as established by the Family Law Act and the caselaw above, I find the wife’s argument is not supported in law.

[57] With the greatest of respect to Kiteley J. in Carey, I am of the view that the Family Law Act in Ontario creates an equalization of wealth, not division of property. This view follows those expressed in Thibodeau, supra and Nazar Estate, supra. Carey, upon which the wife relies, is distinguishable from this case as the wife herein was not asserting a claim for a vesting order, and until this motion, was not seeking an order under s.12 FLA.

[58] Further, while the list is not exhaustive, I am not persuaded that an equalization claim falls within the intended ambit of s.71 LTA.

[59] Further, Certificates of pending litigation were designed to allow parties to protect an interest in property, but not a claim for money or an equalization payment.

[60] Although the wife has not asserted a trust claim, it is clear that pursuant to section 62 of the Land Titles Act and Horntein v. Kats et al, supra, trust interests are the not proper subject of a registration under s.71.

[61] The wife’s sworn financial statements also belie any alleged interest in the land itself.

[62] Having considered all of the above, I am not persuaded that the s. 71 Notice is properly on title. As such, I order the immediate discharge of all s.71 Notices on title.

Issue 2: Is a Restraining (Preservation) Order appropriate?

[63] Section 12 of the FLA is the section that provides that a court can make an order for the preservation of property in a family law proceeding:

In an application under section 7 or 10, if the court considers it necessary for the protection of the other spouse’s interests under this Part, 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.

[64] Section 40 of the Family Law Act further permits a court, on application, to make an interim or final order restraining the depletion of a spouse's property that would impair or defeat a claim under the same Part.

[65] The purpose of the preservation order under section 12 FLA is to ensure that if the court does determine that an equalization payment is owing, there are sufficient funds available to satisfy that payment: see Bronfman v. Bronfman (2000), 51 O.R. (3d) 336 (Ont. S.C.J.); See Smith v. Smith, 2016 ONSC 1157 at para. 240.

[66] In Burke v. Poitras, Lacelle J. states:

The case law confirms that a party seeking a preservation order is in a stronger position if equalization has been determined and ordered: Taus v. Harry, 2016 ONSC 219 (Ont. S.C.J.) at para. 32; LeVan v. LeVan, [2006 CarswellOnt 7334 (Ont. S.C.J.)], at para. 20. The question to be asked is whether there is a real risk that the applicant's equalization award could be defeated if the preservation/non-depletion order is not made: Taus v. Harry at para. 35.

[67] Although such an order must be necessary to protect a party’s claim to an equalization payment and to prevent the claim from being defeated, the very high legal threshold required for the granting of a Mareva injunction is not the applicable standard. Radosavljevic v. Radosavljevic (1986), 57 O.R. (2d) 51 (Ont. H.C.): Taus v. Harry, supra, at para. 33. Also see Crouchman v. Garant, 2020 ONSC 5693, at para. 17.

[68] In Price v. Price, 2016 ONSC 728, the Court reviewed the test to apply with regard to deciding whether a preservation order should be made pursuant to s. 12 of the FLA (or a restraining order under s. 40):

The onus lies on the party asserting that a preservation order is necessary to protect his or her interests under Part I of the FLA, or that his or her claim for support under Part III of the Act would be impaired or defeated unless a preservation order was made, to demonstrate that on the balance of probabilities.

[69] Justice Timms in Price v. Price, supra, goes on to determine that the correct standard is the same one to be applied when determining whether to grant an interim injunction:

1. Is there a serious issue to be tried?
2. Will the moving party suffer irreparable harm if relief is not granted? and
3. Which party will suffer the greater harm from granting or refusing the remedy pending a decision of the merits? (Also see Gorog v. Gorog, 2019 ONSC 5510, at para. 9)

[70] Some Courts have expressed the third criteria above as a determination of whether the balance of convenience favours the moving party: See for instance Chi v Wang, 2010 ONSC 1366 at para. 23.

[71] As discussed by Justice Sachs in Bronfman v. Bronfman (Ont. S.C.J.) there are certain cases in which the trier of fact has a clear record with respect to the payment of an equalization, and others in which it is far less certain. Within the latter category, the court will give serious consideration to the other factors, such as the balance of convenience and the risk of dissipation prior to trial.

[72] In Jeffrey v. McNab, 2018 ONSC 2635, when determining if a non-dissipation order was appropriate, the Court found there would be irreparable harm if a party were to liquidate or dispose of all of their assets.

Analysis

[73] In reviewing the three requisite criteria, the evidence supports that equalization is a serious issue to be tried. I have considered that both parties agree an equalization is payable, at issue is quantum. The parties are very far apart on this issue. If the wife’s claim is made out, then equalization will be significant.

[74] While I am aware it has taken quite some time to receive the husband’s disclosure as ordered by me on May 27, 2019, the record now shows compliance with that order. Despite ongoing discussions between counsel in trying to resolve the file, the disclosure was to be fulfilled within the timelines set out in the order.

[75] In addition, the husband has failed to disclose the mediation report from the Farm Debt Mediation Services, as ordered by the Court, on consent, on January 4, 2021. This was to be disclosed within 30 days of that order.

[76] The wife’s counsel argues that there have been numerous attempts by the husband to conceal information about his assets and income, and disposing of assets. In particular, the wife is concerned about the husband’s lack of details regarding the Farm Debt Mediation proceedings.

[77] This argument is disputed by the husband, who takes the position that he provided adequate notice of his intention to list and sell of one of the properties, and was forthcoming in advising his creditors and the Farm Debt Mediation Service of the wife’s equalization claim. In support of his argument, he directs the Court to an undated proposal, wherein he indicates: “I am also working through my matrimonial litigation with the assistance of counsel. I am hopeful that an update with regard to that matter can be provided at the mediation.” He discloses a Farm financial statement, dated August 24, 2020 wherein in the notes, at page 2, he indicates his wife “should be listed as a creditor, amount to be determined, due to the potential equalization payment subject to matrimonial litigation.”

[78] Section 5(2) Farm Debt Mediation Act states that an application must include the names and addresses of all of the farmer’s creditors. The application filed with the court, attached to the affidavit of Courtney Caskanette, dated February 18, 2021 does not list the wife’s name in the liabilities worksheet, nor is there evidence that the wife’s address was provided.

[79] Pursuant to s.7(1) FDMA, upon receipt of a duly completed application under s.5, the administrator shall forthwith give notice of the application to each creditor listed in the application made under s.5(1) (a) or in the case of an application under s.5(1) (b) notice to each secured creditor. While the court does not have the application itself, the list of creditors in the financial statement do not all appear to be secured creditors (ie: the husband’s law firm), and as such I find it is more likely than not that the application was one filed pursuant to s.5(1) (a), and thus notice to the wife would have been provided had she been properly listed.

[80] Section10(1) FDMA sets out that following the financial review of the farmer’s affairs and providing a report (as per s.9(4)), the administrator shall appoint a mediator, and inform all of the creditors listed in the application of the mediator’s appointment, and provide a copy of the s.9(4) report to all persons that will be participating in the mediation. The mediator would then review the report and meet with all the creditors for the purpose of assisting them in reaching a mutually acceptable arrangement.

[81] Counsel argues that the wife is not listed as an unsecured creditor per se, given that a specific amount of debt is required to be inserted, however, she is flagged as a creditor in the notes section. This does not explain why the wife’s interests were not listed in the hand-written application dated August 17, 2020.

[82] Moreover, I find that had the wife’s interests been properly flagged by the husband, she would have received a Notice to Creditors, she would have been invited to the Mediation, and she would have had the opportunity to advocate for herself at that Mediation.

[83] On the evidence before me, I am troubled by the husband’s actions in not listing his wife as a creditor in the Farm Debt Mediation. However, it is possible that the Mediation report, which has not yet been disclosed, will clarify whether or not the wife’s interests were actually protected. I am also concerned with the husband’s delays in complying with consent orders for financial disclosure.

[84] I am persuaded that should the husband dispose of the properties, there will likely be insufficient funds to satisfy the equalization payment.

[85] As such, I find the risk of being unable to realize an equalization claim would amount to irreparable harm.

[86] I find that the wife will suffer the greater harm if I refuse the remedy pending a decision on its merits.

[87] Based on all of the evidence before me and the strength of the wife’s case, I find that the wife has met her onus. I find it is appropriate to make a restraining (preservation) order regarding the properties.

[88] I will also make myself available to assist in time sensitive issues should the need arise, and to this end, officially designate myself as the case management judge.

[89] The parties shall act in a commercially reasonable manner regarding the transactions involving the husband’s properties. Should there be unresolved dispute between the parties, the court will review the issue, and costs will be imposed in accordance with the Rules.

Disposition

[90] The Registrar of the Land Titles Division of Prescott (LRO #46) shall remove the section 71 Notices upon PINs: 54192-0295, 54192-0120, 54192-0113, 54192-0107, 54192-0301, and 54192-0303.

[91] Pursuant to s.12 FLA, restraining (preservation) order to go, restraining Rodney Neil Fraser from:

a. directly or indirectly, by any means whatsoever, selling, removing, dissipating, alienating, transferring, assigning, encumbering, or similarly dealing with any interest he may hold or acquire in real property, whether legal, beneficial, contingent or otherwise.

b. instructing, counseling, demanding, any other person to do any of the things he is restrained from doing by the terms of the order;

c. facilitating, assisting in, aiding, abetting, or participating in any acts the effect of which is to do the things prohibited by the terms of the order.

[92] The wife may, pursuant to the provisions of the Land Titles Act, register this restraining order against the following properties:

a. Municipally known as 890 County Road 18, Ste Anne de Prescott, Ontario, PIN 54192-0295, and described as PT LT 8 CON 8 EAST HAWKESBURY; PT Sl/2 LT 9 CON 8 EAST HAWKESBURY AS IN R116671; TOWNSHIP OF EAST HAWKESBURY;

b. Municipally known as 896 County Road 18, Ste Anne de Prescott, Ontario, PIN 54192-0113, and described as PT LT 8 CON 8 EAST HAWKESBURY PT 1 46R6132; EAST HAWKESBURY;

c. Legally described as PT LT 7 CON 8 EAST HAWKESBURY, PART 1 46R7590, TOWNSHIP OF EAST HAWKESBURY, being PIN 54192-0301;

d. Legally described as PT LT 11-12 CON 8 EAST HAWKESBURY AS IN R127170; EAST HAWKESBURY, being PIN 54192-0107; and

e. Legally described as PART LT 15 CON 8 EAST HAWKESBURY AS IN R81909 EXCEPT PARTS 1 & 2 46R7810; TOWNSHIP OF EAST HAWKESBURY, being PIN 54192-0303.

[93] Justice Desormeau shall henceforth be the case management judge on this file.

[94] In my view, the results of this motion are very close to divided. If the parties cannot otherwise agree on the issue of costs, they shall each provide, in electronic format, brief written submissions of no more than 3 pages, plus bills of costs, offers to settle, and case law. The husband has 20 days from the release of this Ruling. The wife shall have 20 days thereafter to respond, and the husband has a further 5 days after the response is served to reply, if so required.

Justice Hélène C. Desormeau Date: March 12, 2021

[1] At all times during the court proceedings the husband and wife have been represented by counsel, and all communication has gone through counsel. Given this, I will simply reference communications being made, and stop referencing it as going through counsel.

[2] I assume this is a clerical error in the wife’s affidavit, and PIN 54192-0120 was the property being sold.

[3] While the wife’s affidavit identifies the parcels as “54182”, I presume these are one and the same as “54192” as referenced by the husband, and the PIN used for the registration of the Notice.