Superior Court of Justice
COURT FILE NO.: FS-19–12249 DATE: 20210416
BETWEEN:
SAEID SARRAFIAN Applicant
– and –
OLENA LEANNA LEKSIKOVA Respondent
COUNSEL: Jaret Moldaver, for the Applicant Alla Koren, for the Respondent
HEARD: April 8, 2021
ENDORSEMENT
P.J. Monahan J.
[1] The Applicant seeks an order for exclusive possession of the property municipally known as 31 Montfort Dr., Toronto (the “Montford Property”) together with an order that the Respondent vacate the Property within 15 days. The Applicant is the owner of the Property and, until August of 2019, resided there along with the Respondent and their two children. The Respondent and the two children have continued to reside in the Property following the departure of the Applicant.
[2] This is the second occasion in the last five months where the Applicant has brought a motion for exclusive possession of the Montfort Property. In response to the Applicant’s initial motion in November 2020, Diamond J. permitted the Respondent to continue to occupy the Montford Property on an interim, without prejudice basis provided that she satisfy the following two conditions (the “Two Conditions”):
a. commencing in December 2020, the Respondent assume responsibility for the monthly payments towards a $400,000 collateral mortgage secured against the Montfort Property; and
b. the Respondent bring a motion for interim spousal support within 90 days of November 26, 2020.
[3] The Applicant submits that the Respondent has failed to satisfy either of these conditions and he therefore renews his motion for exclusive possession of the Montfort Property.
[4] In response, the Respondent seeks to have the Two Conditions set aside on the basis of Rule 25 (19) of the Family Law Rules, and argues that she should be entitled to continue to occupy the Property on an interim basis.
[5] For the reasons that follow, I grant the Applicant’s motion and order the Respondent to vacate the Montfort Property within 60 days, subject to certain conditions set out below.
Background Facts
[6] The parties were never married. Their relationship commenced in 2008 and they began cohabiting in or around April 2009. They have two children, an 11-year-old son and nine-year-old daughter.
[7] The parties differ as to their separation date. The Applicant claims that they separated in 2015 and, although they both resided in the Montfort Property from 2017 to 2019, while there they were living separate and apart. On the other hand, the Respondent argues that they did not separate until August 2019.
[8] The Applicant is a Chiropractor and Physiotherapist who has in the past operated a chain of clinics specializing in medical rehabilitation services. He has also operated a custom homebuilding business through a wholly-owned corporation, Luxury Castle Homes Inc., although he states that he currently has no construction projects.
[9] The Respondent is a real estate broker. In addition, over the last number of years she has purchased a number of investment properties which she has rented out, renovated and/or sold.
The Montford and Burncrest Properties
[10] The Montfort Property is solely owned by the Applicant who oversaw the construction of a new home on the Property that was completed in 2017.
[11] There are two encumbrances on the Montfort Property, a first mortgage of approximately $1 million in favour of The Bank of Nova Scotia, and a second mortgage in favour of Tribecca Finance Corporation (“Tribecca”) in the amount of $440,000 (the “Collateral Mortgage”).
[12] The purpose of the Collateral Mortgage was to assist the Respondent in her purchase of an investment property located at 91 Burncrest Drive in Toronto. Tribecca, who was the proposed second mortgagee on the Burncrest Drive property, refused to advance the funds unless additional security was provided. The Applicant therefore agreed to provide the Collateral Mortgage against the Montfort Property.
[13] The Respondent has been leasing the Burncrest Drive property for a rent of $2900 per month. However, for unexplained reasons, in or about October 2019, she ceased making any payments in relation to the Burncrest Drive property, including in respect of the first mortgage, the second mortgage/Collateral Mortgage in favour of Tribecca, or the property taxes.
The Second Mortgage/Collateral Mortgage Goes into Default
[14] When the Respondent failed to make the October 2019 payment of $4300 on the Collateral Mortgage, the Applicant paid Tribecca on her behalf, in order to prevent the Collateral Mortgage from going into default. However after that date no further payments were made to Tribecca by either the Applicant or the Respondent, with the result that both of the Tribecca mortgages (i.e. the second mortgage on the Burncrest Drive Property as well as the Collateral Mortgage) went into default.
[15] On November 5, 2019, counsel for Tribecca wrote to the Applicant and the Respondent, notifying them that their mortgages on the Burncrest Drive property and the Montfort Property were both in default. Tribecca demanded the payment of $4300 that had been due on November 1, 2019. Tribecca also advised that in both October and November 2019, it had made payments of approximately $4950 to the first mortgagees on the Burncrest Drive property, Yogesh and Rita Shah (the “Shah Mortgagees”), in order to prevent the first mortgage (the “Shah Mortgage”) from going into default. Tribecca demanded reimbursement for the amounts paid to the Shah Mortgagees.
[16] On November 12, 2019, counsel for the Applicant wrote to counsel for the Respondent regarding the Respondent’s failure to make the payments on the Collateral Mortgage. The Applicant advised that he had made the October 2019 payment to Tribecca, in order to avoid personal liability and enforcement action on the Collateral Mortgage against the Montfort property. Counsel for the Applicant further stated as follows:
Please note that my client will be seeking reimbursement from your client for all payments he makes to service the second mortgage plus interest. In fact, his servicing of the mortgage is evidence of his trust claims as against the Burncrest property.
[17] The Respondent states that she interpreted the reference by the Applicant to “his servicing the mortgage” as an indication that the Respondent was taking over responsibility for making the payments on the second mortgage on the Burncrest Drive.
[18] The November 12, 2019 letter from the Applicant to the Respondent did not make reference to the fact that the Respondent had ceased paying the Shah Mortgage on the Burncrest Drive property, and that Tribecca was also seeking reimbursement of the amounts it had paid to the Shah Mortgagees in order to prevent that mortgage from into default.
[19] It is unclear whether the parties had any further discussions, either with each other or with Tribecca or the Shah Mortgagees, about the status of these mortgages. What is clear is that no further payments were made by either the Applicant or the Respondent to either Tribecca or the Shah Mortgagees. The only reason the Shah Mortgage did not go into default was that Tribecca continued making the monthly payments of $4950 to the Shah Mortgagees throughout 2020. In addition, in March 2020, Tribecca also paid nearly $16,000 to the City of Toronto in property tax arrears associated with the Burncrest Drive property.
[20] The Respondent claims to have been completely unaware of the fact that no payments were being made on the Collateral Mortgage throughout 2020, nor did she know that Tribecca was making the payments on the Shah Mortgage as well as property tax payments to the City of Toronto on her behalf.
[21] Having had no response to its demands for payment, Tribecca commenced a legal action against the parties in the Ontario Superior Court. In January 2021, Tribecca obtained judgment in the amount of $528,247.62 against both the Applicant and the Respondent, who were also ordered to deliver possession of both the Montford Property and the Burncrest Drive property to Tribecca. On February 18, 2021, Tribecca applied for a writ of possession against both properties.
[22] In the meantime, the Applicant has continued to make the regular monthly payments on the first mortgage on the Montfort Property, and this mortgage appears to be in good standing. The Applicant has also continued to pay all the other carrying costs associated with the Montfort Property, including property taxes, utilities, insurance and maintenance. He estimates the monthly carrying costs for the Montfort Property (including the first mortgage but not the Collateral Mortgage) to be approximately $5000.
Diamond J.’s November 2020 Endorsement
[23] As noted above, the Applicant sought an order for exclusive possession of the Montfort Property in November 2020 on the basis that the parties were never married, the Montford Property did not constitute a matrimonial home, and the Respondent had no claim for possession under Part II of the Family Law Act.
[24] Diamond J., relying upon the decision of McGee J. in Persk v. Lazaris[^1], noted that there are circumstances where a non-titled spouse may have a claim to continue living in a family home post-separation. This includes cases where a non-titled spouse is claiming a constructive trust in the property, or seeks to occupy the property in lieu of spousal support.
[25] The Respondent is claiming a constructive trust in the Montford Property. Although Diamond J. observed that he would have expected more supporting evidence in support of this trust claim, he was not prepared to find the claim to be frivolous. Diamond J. also noted that the Respondent is claiming an entitlement to spousal support, and the monthly payments being made by the Applicant for the carrying costs of the Montfort Property could stand in lieu of spousal support.
[26] Since no finding had been made that the Respondent is entitled to spousal support, in Diamond J’s view it was not reasonable to permit the Respondent to maintain possession of the Montfort property indefinitely, thereby forcing the Applicant to continue making monthly payments of approximately $5000 per month while the Respondent lived rent-free in the home.
[27] Diamond J. therefore permitted the Respondent to continue to occupy the Montford Property only if she satisfied the Two Conditions described above (namely, to assume responsibility for paying the Collateral Mortgage on the Montfort Property, and to bring an application for spousal support within 90 days.) He also ordered the Applicant to make a payment of $15,000 to the Respondent, to enable her to obtain an expert critique of an income report the Applicant had provided in August 2020.
[28] Diamond J. further held that failure by the Respondent to satisfy either or both of the Two Conditions would open the door for the Applicant to renew his motion for sole and exclusive possession of the Montford Property.
Respondent’s Motion to Set Aside the Two Conditions
[29] The Applicant takes the position that the Respondent has failed to satisfy either of the Two Conditions set by Diamond J., and he has therefore renewed his motion for exclusive possession of the Montfort Property.
[30] In response, the Respondent seeks to have the Two Conditions set aside on the basis of Rule 25(19) of the Family Law Rules.
[31] With respect to the first Condition -- that she assume responsibility for payment of the Collateral Mortgage -- the Respondent states that she was unaware at the time of the motion that the Collateral Mortgage was in default, since she believed that the Applicant had been making these payments on her behalf since October 2019. The Respondent says that when she contacted Tribecca following the release of Diamond J.’s Endorsement, she was shocked to learn that the second mortgage on the Burncrest property and the Collateral Mortgage on the Montfort Property were both in default, and that Tribecca had been paying the Shah Mortgage on the Burncrest Drive property for over a year.[^2]
[32] Tribecca demanded repayment of the entire amount outstanding on the second mortgage/Collateral Mortgage, the amounts it had paid to the Shah Mortgagees in respect of the first mortgage on the Burncrest Drive property, and the property taxes paid on that property. The Respondent says that she did not have the necessary funds to repay Tribecca and, accordingly, it was impossible for her to comply with Diamond J.’s requirement that she assume responsibility for payment of the Collateral Mortgage.
[33] The Respondent argues the Applicant led or allowed Diamond J. to conclude that he had been paying the Collateral Mortgage on her behalf. Because the Applicant withheld essential information that would have affected the terms of the order if it had been disclosed, this portion of Diamond J.’s order should be set aside.
[34] With respect to the Second Condition – that she bring a motion for spousal support within 90 days – the Respondent argues that she required the timely payment of $15,000 in interim disbursements to retain an expert to undertake a critique of the Applicant’s income report. The Applicant did not provide the payment until December 23, 2020, by which time the Respondent’s expert was on vacation. On January 22, 2021, the Respondent’s expert sent a disclosure request to the Applicant, to which the Applicant did not reply until February 24, 2021. The Respondent’s expert has advised that he will not be able to deliver his critique report until mid-May 2021.
[35] The Respondent argues she has been prevented from complying with the Second Condition set by Diamond J. due to the delays caused by the Applicant. She argues that Rule 25(19) should be applied flexibly, in keeping with the “primary objective” of the Rules, and on this basis the second Condition set by Diamond J. should be set aside.
Issues
[36] The following three issues arise on this motion:
i. Should either or both of the Two Conditions set by Diamond J. be set aside on the basis of Rule 25(19);
ii. If the Conditions are not set aside, has the Respondent failed to satisfy one or both of the Conditions, such that the Applicant should be permitted to renew his motion for exclusive possession of the Montfort Property; and
iii. If the Applicant is entitled to renew his motion for exclusive possession, should such an order issue and, if so, on what terms and conditions?
Should Either of the Two Conditions be Set Aside?
a. The Limited Scope of Rule 25(19)
[37] Rule 25(19) provides a limited basis for this Court to change or set aside an earlier order of the Court. Apart from instances where the order was obtained on an ex parte basis or with the participation of only one party,[^3] an order of this Court may only be set if it was obtained by fraud, where it “contains a mistake”, or where the order “needs to be changed to deal with the matter that was before the court but that it did not decide.”[^4]
[38] The relatively limited scope of Role 25 (19) is appropriate and necessary given the need for finality and certainly in family law litigation. To be sure, a party who is dissatisfied with a court order may undertake an appeal in the normal course. But absent an appeal or the limited circumstances provided for in Rule 25 (19), parties are entitled to proceed on the basis that a court order is binding and may be relied upon. Moreover, Rule 25 (19) should not regarded as a form of supplementary or shadow appeal process, to deal with events arising subsequent to the court order. Utilizing Rule 25(19) in this fashion would not only produce needless uncertainty, it would also frustrate parties’ efforts to settle disputes, for fear that the matter would be re-opened later because a party had become dissatisfied with the terms of the order. Any such efforts would be inconsistent with the “primary objective” of dealing with cases justly, as set out in Rule 2 (2) and 2 (5).
b. The First Condition should not be set aside
[39] The First Condition required the Respondent to assume responsibility for paying the Collateral Mortgage on the Montfort Property. The Respondent says she was unable to do so because the mortgage was in default and Tribecca was demanding repayment of the entire principal amount of the Collateral Mortgage, plus the amounts paid to the Shah Mortgagees, and would not accept a resumption of monthly payments.
[40] Diamond J imposed this Condition on the understanding that the Applicant had been making the payments on the Collateral Mortgage on the Respondent’s behalf and that the mortgage remained in good standing as of November 2020. The Respondent argues that the Applicant misled Diamond J in this regard, by stating in an affidavit that he had been paying “100% of the expenses relating to the [Montfort] property, including all utilities, property tax and insurance and mortgage.”
[41] In response, the Applicant argues that the statement in his affidavit was in fact correct since he was paying all of the expenses relating to the Montfort Property, including the first mortgage on the property. He argues that the Collateral Mortgage was the responsibility of the Respondent and was not an expense associated with the Montfort Property.
[42] It would appear that Diamond J. was misled by statements in the affidavits of both parties,[^5] since on two separate occasions in his Endorsement he referred to the Applicant paying the Collateral Mortgage. The question is whether the misstatements in the parties’ affidavits and/or the resulting incorrect statement in Diamond J’s Endorsement gives rise to a right in the Respondent to now set aside that portion of Diamond J’s order requiring the Respondent to assume responsibility for paying the Collateral Mortgage.
[43] In support of her argument that this First Condition should be set aside, the Respondent relies on cases which have held that where a party withholds or omits essential facts as the basis for a court order, that order can be set aside pursuant to Rule 25 (19).[^6]
[44] However, the cases relied upon by the Respondent involved circumstances where an order was obtained without notice or through a default judgement, and the motion to set it aside was brought either under Rule 25(19) (d) of the Family Law Rules or Rule 19.08 of the Rules of Civil Procedure. Diamond J’s order was obtained on a contested motion, and thus neither Rule 25(19) (d) nor Rule 19.08 have any relevance.
[45] Nor does Rule 25 (19) (b) (which provides that an order may be set aside where it “contains a mistake”), apply here. A court order contains a “mistake” only where it contains a typographical error, a misstatement of what was actually endorsed by the court, or where it does not correctly reflect the common intention of the parties.[^7]
[46] For reasons described earlier, absent fraud (which I find did not occur here), the mere omission of relevant facts by a party on a contested motion does not give the other party the right to set aside the resulting order pursuant to Rule 25 (19) (b). Otherwise Rule 25 (19) (b) would effectively permit parties to attempt to set aside any order with which they disagree, on the basis that the order contained a mistake. To the extent that a party believes that a court order is somehow mistaken or in error, the proper remedy is to appeal, not to move to set aside the order under Rule 25 (19).
[47] I therefore decline to set aside the First Condition.
c. The Second Condition should not be set aside
[48] The Respondent seeks to set aside the Second Condition in Diamond J’s endorsement, which required her to bring a motion for spousal support within 90 days. She claims that she was unable to comply with the order because the Applicant waited almost a month before paying her the $15,000 she required to obtain an expert critique of the Applicant’s income report.
[49] The fact that a party may have had difficulty in complying with a court order is not a circumstance referenced in Rule 25 (19). The Respondent has failed to identify any plausible basis upon which I have jurisdiction to set aside this portion of Diamond J.’s order, and I decline to do so.
Did the Respondent Fail to Satisfy Either of the Conditions?
[50] It is evident that the Respondent did not comply with either of the Conditions set by Diamond J. However, the Respondent seeks to justify her failure to do so by virtue of circumstances which she claims were beyond her control.
[51] As discussed earlier, the Respondent argues that she was unable to assume responsibility for the Collateral Mortgage because it was in default and Tribecca refused to accept a resumption of monthly payments. The difficulty with the Respondent’s argument is that the default was a direct result of her own failure to make payments on either the Collateral Mortgage or the Shah Mortgage. She cannot now attempt to justify her inability to resume payments when the difficulty was created by her own decision, for reasons not explained, to simply cease making the necessary payments in October 2019.
[52] As for her argument that she was unable to bring a motion for spousal support because of the actions of the Applicant, Diamond J did not specify the date upon which the Applicant was required to pay the $15,000 to the Respondent to fund the expert critique. Nor did he make the requirement that the Respondent bring a spousal support motion conditional on the Applicant making the payment within a specific timeframe. The Applicant made the payment within 30 days and there is no suggestion that he was in breach of his obligations under Diamond J’s order.
[53] I therefore find that the Respondent failed to satisfy either of the Two Conditions set by Diamond J., and the Applicant is entitled to renew his motion for exclusive possession of the Montfort Property.
Should the Applicant’s Motion be Granted?
[54] The Respondent says that in the intervening four months since this matter came before Diamond J., his need to obtain exclusive possession of the Montfort Property has become even more urgent.
[55] As described above, Tribecca has now obtained judgement against both the Applicant and the Respondent requiring, amongst other things, that the parties deliver up possession of the Montfort Property. The Applicant indicates that he wishes to refinance the property and pay the outstanding amounts owing to Tribecca. However he states that he is unable to secure such financing unless he is in possession of the property. The Applicant is concerned that if the Respondent remains in possession, Tribecca will seize the property and sell it, with the result that his remaining equity will be further eroded.
[56] The Applicant also indicates that the Respondent’s continued occupation of the Montfort Property is causing him significant personal hardship. He has recently been required to sell a number of other properties he previously owned, and he has been residing at his cottage in Orillia, which is a three-hour commute daily to Toronto.
[57] The Applicant has offered to make a number of payments to the Respondent on a without prejudice basis, to assist her in securing and moving to alternative accommodations, including: payments of $5000 towards her first and last month’s rent; payment of $2500 per month towards her future rent for a minimum of six months; and child support in the amount of $2000 per month after the Respondent vacates the property.
[58] In response, the Respondent indicates that she lacks the means to secure another residence for herself and the children. She also states that the children’s lives are structured around the home at Montfort as they attend private schools close to the home and all of their activities are situated within a short distance away.
[59] At the same time, the Respondent acknowledges that Tribecca is in the process of enforcing its security by power of sale against the Montfort Property. She does not propose to make any payments to Tribecca. The Respondent indicates that both she and the Applicant will be forced to vacate the property and the only question is when that will occur.
[60] In these circumstances, I find that the Applicant’s entitlement to possession of the Montfort Property is compelling. Contrary to the Respondent’s assertions, it is not inevitable that both parties will be forced to vacate the Montford Property, since the Applicant proposes to attempt to obtain financing in order to avoid the seizure and sale by Tribecca. It is the Respondent’s continued possession of the property, combined with her refusal or inability to make any payments to Tribecca, that is frustrating the Applicant’s efforts in that regard.
[61] Nor should the Applicant’s claim for possession be postponed on account of the Respondent’s claim for a constructive trust in the property. The Respondent’s continued occupation threatens to further erode the remaining equity in the property, including any entitlement she may have by way of constructive trust. In fact, by granting the Applicant exclusive possession he may well be able to preserve not only his own interests but, albeit indirectly, any potential claim that the Respondent may have.
[62] In considering whether to grant the Applicant exclusive possession I have also taken into account the best interests of the children, in accordance with s. 24 (3) and (4) of the Family Law Act. There is no doubt that requiring the Respondent to vacate the property will cause disruption in the lives of the children. At the same time, permitting the Respondent to continue her current occupation will not avoid that disruption, since Tribecca will then move to take possession. Moreover, any such action by Tribecca would come without notice and would be much more disruptive than an orderly relocation in accordance with a court order. Further, if the Applicant is able to refinance the Montfort Property, the children will be able to reside there with him during his parenting time.
[63] The Respondent maintains that she cannot afford to secure alternate accommodation in the area of the Montfort Property. I would note, however, that she was prepared in November 2020 to make payments of $4300 per month to Tribecca on account of the Collateral Mortgage. Further, the financial payments offered by the Applicant will assist her in her efforts to secure alternate accommodation.
[64] I am also prepared to grant the Respondent up to 60 days to vacate the property in order to ensure an orderly transition, in accordance with the request of her counsel in oral argument.
Disposition
[65] Order to go as follows:
a. The Respondent’s motion to set aside the terms contained on page 4 of the November 26, 2020 Endorsement of Diamond J. is hereby dismissed;
b. A declaration that the Respondent has failed to comply with the terms of Diamond J.’s November 26, 2020 Endorsement;
c. A declaration that the Applicant is entitled to sole and exclusive possession of the property municipally known as 31 Montfort Drive, Toronto, ON (the “Property”);
d. An order that the Respondent deliver up vacant possession of the Property to the Applicant within 60 days of this order;
e. The Applicant is given leave to issue a writ of possession in respect of the Property, pursuant to Rule 60.10 of the Rules of Civil Procedure and Rules 1(7), 2(2), and 28 (10) of the Family Law Rules;
f. The Applicant shall make the following payments to the Respondent on a without prejudice basis, with such amounts to be credited to the Applicant in the calculation of any child and/or spousal support payable, or other financial settlement between the parties:
i. On a without prejudice basis, the following payments on account of spousal support:
$5,000 for the purpose of assisting with first and last month’s rent for alternate accommodation for the Respondent and the children, to be paid within 30 days of this order;
Payments of $2,500 per month for six months to assist the Respondent with the rental of alternate accommodation for herself and the children following her vacating the Property. The first such payment will be due 30 days following the Respondent vacating the Property, and the remaining five (5) payments will be due each subsequent 30 days, for a total payment of $15,000 over the six months; and
ii. on a without prejudice basis, $2,000 per month on account of child support, to be paid on the first day of each month commencing June 1, 2021 and continuing until modified by agreement of the parties or further court order.
[66] I invite the parties to attempt to settle the issue of costs. In the event that they are unable to do so, the Applicant may serve and file written costs submissions by April 28, 2021, and the Respondent may serve and file written costs submissions by May 7, 2021. Costs submissions shall be no more than 5 double-spaced pages, not including Bills of Costs and Offers to Settle.
P. J. Monahan J.
Released: April 16, 2021
[^1]: 2016 ONSC 1356.
[^2]: I note in passing that it is difficult to understand the Respondent’s alleged shock at this discovery since she had not paid anything to Tribecca or the Shah Mortgagees for over a year. While she claims to have believed that the Applicant was paying Tribecca on account of the Collateral Mortgage, she offers no explanation as to who she thought was paying the Shah Mortgage. Moreover, the January 2021 Judgment obtained by Tribecca against the Applicant and the Respondent states that it was obtained on proof of service of the Statement of Claim by Tribecca against both defendants.
[^3]: See Rule 25 (19) (d) & (e). In addition, a default judgement has been determined to be subject to variation pursuant to the combined effect of Rule 1(7) and Rule 19.08 of the Rules of Civil Procedure: see AMC v. GC, 2013 ONSC 2608 at para 47.
[^4]: See Rule 25 (19) (a), (b) and (c), respectively.
[^5]: The Respondent had also stated in her affidavit that the Applicant was paying the Collateral Mortgage on her behalf.
[^6]: See, for example, Fazuludeen v. Abdulrazack, 2020 ONSC 2123 at para 30; AMC v GC, at para 47.
[^7]: See generally Grey v. Rizzi, 2010 ONSC 2858, affirmed 2011 ONCA 436; Henderson v. Henderson, 2015 ONSC 2914 at paras 84 to 102.