SUPERIOR COURT OF JUSTICE - ONTARIO
RE: SHIRIN HABIBI, Applicant
AND:
PARHAM AARABI, Respondent
AND:
SHAHRZAD ROYA SEDIGHTEHRAN a.k.a. Roya Sedightehran, a.k.a. Roya Sedigh a.k.a. Roya Arabi, in her personal capacity, and in her capacity as Trustee of the 2016 Aarabi Family Trust and the Roro Family Trust
ABOLGHASSEM ARABI
PEGAH AARABI
MICHAEL KERLEY
AARABI INVESTMENT HOLDINGS INC.
M2 VENTURES INC. A.K.A. MODIFACE HOLDINGS INC.
(Added Respondents affected by Mareva Order)
BEFORE: Kimmel J.
COUNSEL: Jaret N. Moldaver/K. Prehogan/L. Konkol/
Claire McNevin/Nadia Chiesa/S. Edwards,
for the Applicant
Gary Joseph, for the respondent Parham Aarabi, Aarabi Investment Holdings Inc. and M2 Ventures Inc., a.k.a. Modiface Holdings Inc.
Geoff Hall/Mark Greenstein, for the respondent Roya Sedightehran
George Karahotzitis/Camelia Amiri, for the respondent Abolghassem Arabi
Daniel Melamed, for the respondents Pegah Aarabi and Michael Kerley
HEARD: June 23, 2021
ENDORSEMENT
Procedural History
[1]
Procedural History
Ex parte orders were granted in favour of the applicant (“Shirin”) following an urgent hearing held on June 10, 2020. The orders were made under r. 14(12) of the Family Law Rules, O. Reg. 114/99, against her former spouse, the respondent Parham Aarabi (“Parham”), pursuant to sections 12 and 40 of the Family Law Act, R.S.O. 1990, c. F.3 (the “FLA Preservation Order”) and against her former spouse and certain of his immediate family members and various corporate affiliates and trusts (the “Aarabi Family and Affiliates”) pursuant to section 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “Mareva Order”) by order of Diamond J. dated June 10, 2020 (together, the “ex parte Injunction Order”).
2The ex parte Injunction Order was very broad in its scope and reach, extending to virtually all of the assets of not only Parham but also the Aarabi Family and Affiliates (the identified respondents herein). The respondents estimate that the originally impacted collective assets that were frozen exceeded $50 million1. A come-back motion on notice to Parham and the affected Aarabi Family and Affiliates was scheduled to be heard on June 22, 2020.
3The come-back motion was adjourned by consent order dated June 24, 2020 to October 6, 2020 and then to December 15, 2020. Each time the original FLA Preservation Order and Mareva Order were continued on an interim without prejudice basis, on terms that included the unfreezing of some previously frozen accounts and/or assets of Parham and the Aarabi Family and Affiliates, based on disclosures made by them concerning certain of the frozen assets (among other things).
4Following proposed pleading amendments in August 20202, an amended motion was served in early December 2020 seeking to continue the existing FLA Preservation Order and Mareva Order based, in part, on added causes of action against the respondents. That motion came on for hearing on December 15, 2020 before Diamond J. The court ordered questioning and the hearing was further adjourned to March 26, 2021, on interim without prejudice terms that again included the unfreezing of certain previously frozen accounts and/or assets of Parham and the Aarabi Family and Affiliates.
5Although the applicant has agreed to the release of some funds and assets over the course of the various adjournments, the respondents estimate that $40 million worth of funds and assets continue to be frozen by the FLA Preservation Order and Mareva Order. The March 26, 2021 hearing was adjourned on consent of the parties by a further order of March 17, 2021 to allow for a two day mediation, that was not successful. The next hearing date of April 23, 2021 was adjourned as a result of the Notice to the Profession from the Chief Justice of Ontario released on March 20, 2021, following the state of emergency declared in Ontario as a result of the COVID-19 pandemic.
6In total, the come-back hearing scheduled for June 22, 2020 contemplated at the time the ex parte Injunction Order was made on June 10, 2020 was adjourned four times before coming on for hearing before me on June 23, 2021 (the fifth scheduling hearing date), over a year later. All parties agree that this was a hearing de novo and that the applicant bears the onus. On such a motion, the court must be satisfied that it is appropriate for the FLA Preservation Order and/or the Mareva Order to continue, having regard to the full evidentiary record now before the court from both sides. See Lee v. Chang, 2018 ONSC 930, at paras. 35-37 and 40.
Shirin and Parham’s Relationship and the Timing of Transactions at Issue
7Shirin and Parham were married in August 20083 and they formally separated without any prospect of reconciliation in December 2019. They have one child who was born on December 31, 2014.
8Parham and his mother Roya (Roya Sedightehran, “Roya”) were involved in a business and incorporated M2 Ventures Inc., a.k.a. Modiface Holdings Inc. (“Modiface’) the year before Shirin and Parham were married. Shirin understood that Modiface was a business owned and operated by Parham and his mother Roya, but was not familiar with the day to day operations or their division of responsibilities and was not privy to the details of their ownership interests.
9The Modiface business was not the sole focus of Parham’s professional life. Parham was, and still is, also a tenured professor at the University of Toronto. Shirin worked full-time as well at Mars Discovery, both prior to and after the birth of their daughter, until she was laid off in March 2020.
10Parham and his mother were the shareholders of Modiface. Their evidence discloses that Roya held 20% of the shares and Parham held the other 80% until he transferred his shares to Aarabi Family Holdings (“AFH”) as part of a 2016 reorganization. The common shares of AFH were, in turn, transferred to the 2016 Aarabi Trust, a discretionary family trust that Parham established in 2016. Parham, Roya and a lawyer, Ron Appel, were appointed the trustees of the 2016 Aarabi Trust. The named beneficiaries of that trust included Parham’s father (Abolghassem “Sam” Arabi), his sister Pegah Aarabi (“Pegah”), her husband Michael, and their son. Parham’s “issue” and “spouse” are also beneficiaries of the 2016 Aarabi Trust, but they are not identified by name. While his daughter will always be his “issue”, Shirin ceased to be his spouse when she and Parham separated.
11The evidence discloses that, as part of a subsequent reorganization in 2018, the 2016 Aarabi Trust became a 73.11% indirect shareholder of Modiface, Roya retained 19.2% of the shares and Parham held 3.69% of the shares directly. The remaining 4% of the shares were held by other key Modiface employees. Another trust was established by Parham on April 10, 2018 called the Roro Trust, of which his mother Roya and his sister Pegah, together with Ron Appel, are the trustees. The beneficiaries of the Roro Trust are Parham’s issue (including his daughter and her issue), Roya, Sam, Pegah, and Pegah’s issue (including her son and his issue). Although Parham says that there is an understanding that his daughter is the primary beneficiary of this trust, that is not indicated in the trust documents. Parham, Roya and Pegah also all signed new wills in July of 2018.
12Shirin and Parham’s marriage became strained in 2016 and they began marriage counselling in June 2016. After some attempts to save their marriage through counselling, Parham advised Shirin that he wanted to separate in an email dated September 17, 2017. By that time, Parham had already effected the initial (2016) reorganization. Continued efforts to reconcile thereafter were unsuccessful and the parties separated for good on December 26, 2019. By that time the second reorganization and 2018 estate planning had taken place. Importantly, Modiface was sold to L’Oreal, and the sale closed in March 2018, resulting in aggregate initial sale proceeds paid of approximately $45 million USD.
13Parham insists that the thought of separating was not a constant between September 2017 and December 2019 and that the focus was on reconciliation in this period. However, in his Answer he concedes that the parties had drifted apart by the fall of 2017 and were leading parallel lives. He also admitted on questioning to having a girlfriend who he gave significant funds to. Although the parties purchased a new home in 2019, Shirin says Parham never fully moved into it and he had a separate bedroom.
14Shirin says she was not aware of the details of the reorganization of Modiface in 2016 when AFH was incorporated and the 2016 Aarabi Trust was established, nor of the details of the subsequent 2018 reorganization, Roro Trust and estate planning. Although Parham claims to have told her about these transactions, there is no contemporaneous corroborative evidence of him having done so. There is similarly no contemporaneous evidence to corroborate Parham’s assertion that he told Shirin that the total value of the sale proceeds was approximately $45 million USD. Shirin admits to knowing that Modiface was sold but denies having been told about the magnitude of the sale proceeds. Shirin was not privy to the precise shareholdings in Modiface but was aware that it was owned by Parham and his mother Roya.
15Shirin’s lack of knowledge of the details of the various transactions and arrangements undertaken by Parham and his family members is consistent with her conduct throughout, including her motion for the ex parte Injunction Order upon discovering the extent of the Modiface sale proceeds and receiving some information about the flow of funds from that transaction. Shirin’s ex parte Injunction Motion was brought following her receipt of financial disclosure from Parham, from which she says she learned for the first time about the extent and value of his indirect interest in Modiface and the extent of the proceeds from the sale to L’Oreal that had closed in March 2018.
16I accept Shirin’s evidence about her limited knowledge of the various transactions and arrangements leading up to and including the sale of Modiface to be credible and find that she was largely kept in the dark about these transactions, arrangements and the estate planning undertaken by Parham and the Aarabi Family and Affiliates. Unbeknownst to Shirin, most of the approximately $45 million USD in sale proceeds from the sale of Modiface to L’Oreal was distributed in accordance with Parham’s directions to various Aarabi Family and Affiliates. Very little of the sale proceeds were retained by Parham.
Evidence About the Modiface Sale Proceeds
[17]
Evidence About the Modiface Sale Proceeds
Parham acknowledges that there were only three transfers, totalling $450,849.91, whereby he transferred a small proportion of the Modiface sale proceeds into a joint account with Shirin. These funds were applied, together with the net sale proceeds from the sale of their previous home, towards the purchase of a new home on Glenrose Avenue, in Toronto, in July 2019 for $4.2 million. Shirin and Parham took out a $2.9 million mortgage to fund the balance of the purchase of this home. There is no evidence to suggest that Parham disclosed to Shirin that there were additional funds available from the sale of Modiface to complete this purchase without the two of them having to take on significant mortgage financing.
18The Modiface sale proceeds were initially all paid into USD bank accounts held by Roya and Pegah. This was said by Parham to have been done as a matter of convenience although the totality of the evidence about that is not particularly persuasive, having regard to the fact that he did have his own USD bank account and the others said to have been involved in the discussions about the rationale for the payment into Roya and Pegha’s account have not given any (in the case of the lawyers at McCarthy Tetrault) or entirely consistent (in the case of Roya) evidence on this point.
19The sale proceeds were then re-distributed to various other accounts among the Aarabi Family and Affiliates (Parham, Roya, Pegah, Sam and the Roro Trust). Parham controlled and directed the distribution of the sale proceeds attributed to the shares owned by the 2016 Aarabi Trust, including $15 million USD that he ostensibly gifted to his father on or about March 16, 2018. However, $14,995,000.00 of those funds originally deposited into a joint account held by Sam and Pegah were then transferred into an investment account held solely by Pegah.
20While Parham insists the funds were gifted to his father, his father signed a deed of gift of the same funds to Pegah. Parham’s evidence about the $15 million gift to his father did not initially disclose the deed of gift from Sam to Pegah or the subsequent wills. Despite all of these documents, Parham, Pegah and Michael all maintain that the $15 million still belongs to Sam. The combined effect of the estate planning and related transactions is that these funds appear to have been notionally gifted by Parham to Sam, with the prospect that they (or assets that they are used to purchase) may flow back to Parham at some later point in time.
21Although Parham claims to have told Shirin about the gift to his father, Shirin denies this. I find her evidence to be credible, that she did not know that Parham had given $15 million to his father. I find it hard to believe that she would have agreed to take on joint responsibility for a $2.9 million mortgage for their new house if she had known there were funds of this magnitude available from the Modiface sale that had been given away to Parham’s father. Further, the arrangements regarding that gift, including the initially undisclosed deed of gift by Sam of the same funds to Pegah, and the various estate planning arrangements, have not been adequately explained.
22Further sale proceeds were also distributed to the Roro Trust ($4.5 million USD) and into other accounts held by Roya and Pegah. Roya and Pegah both acknowledge that they received sale proceeds and distributed them in accordance with instructions received from Parham ($1.4 million USD to be used for the education and special needs of Pegah’s son, $10 million CAD to CRA to satisfy Parham’s tax liabilities, $1.1 million USD to purchase a beneficial interest said to have been held by Roya in a property in California).
23Roya holds some of the share sale proceeds on her own account in respect of the sale of her own shares. However, Roya admits she is holding $6.393 million in share sale proceeds in trust for Parham (she was entitled to $13 million on sale and received $20 million). She also claims to be holding $2.1 million for Pegah’s son in trust. There is no documentation to back up these informal “trust” arrangements.
Events Leading Up to the Ex Parte Injunction Order
[24]
Events Leading Up to the Ex Parte Injunction Order
The applicant contends, now that she has become aware of the details, that the various corporate and trust arrangements were intentionally structured in advance of the sale of Modiface so as to minimize the amount of share sale proceeds held directly by Parham, while he maintained complete control and direction over to whom and for whose benefit they were distributed. Parham maintains that these transactions and arrangements were tax driven. However, his conduct is not entirely consistent with that since he acknowledges that he did not follow all of the tax advice that was given prior to the re-organization in 2016. For example, Parham appears to have had significant tax obligations in excess of $1 million that he directed be satisfied by funds held by Roya and Pegah. Further, sale proceeds payable to the 2016 Aarabi Trust appear to have flowed through Parham’s hands before being gifted to Sam.
25As indicated earlier in this endorsement, I accept Shirin’s evidence that she was genuinely surprised when she learned of the magnitude of the share sale proceeds and of certain financial transactions between Parham and his parents and sister involving many tens of millions of dollars that Parham disclosed for the first time on his financial statement, provided to the applicant in this proceeding on April 8, 2020. Despite Parham’s assertion that he provided Shirin with a detailed accounting and tracing of the distributions of his share of the share sale proceeds (including the portion from the 2016 Aarabi Family Trust that was distributed to him), there is no documentary record of this alleged detailed accounting and tracing.
26Further, it is illogical to suggest that Shirin knew about this magnitude of share proceeds and still went along with taking on joint responsibility for a $2.9 million mortgage on the parties’ new home purchase in 2019. Her acknowledgment that she knew there was a company and that it had been sold does not amount to an admission that she knew of the magnitude of the sale proceeds or of the nature and extent of the dealings between Parham and his mother and sister, with respect to AFH, the two trusts and their estate plans.
27It was the discovery of the details of these extensive arrangements and funds received that Shirin says was the catalyst for her ex parte motion. The stated justifications for bringing that motion were summarized in part in the June 10, 2020 endorsement of Diamond J., which is relatively short. I have extracted the relevant portions as follows:
While the Court has obviously yet to hear from either the respondent (who is represented by counsel) or the added respondents, on my reading of the applicant's ex parte motion materials (which are primarily sourced from the respondent's recent financial disclosure), I am satisfied that there are sufficient grounds to support the applicant proceeding without notice to the respondent. Under Rule 14(12) of the Family Law Rules, a party may bring a motion without notice if:
a) the nature or circumstances of the motion make notice unnecessary or not reasonably possible;
b) there is an immediate danger of a child's removal from Ontario, and the delay involved in serving a notice of motion would probably have serious consequences;
c) there is an immediate danger to the health or safety of a child or of the party making the motion, and the delay involved in serving a notice of motion would probably have serious consequences; or
d) service of a notice of motion would probably have serious consequences.
On the record before me, the respondent's recent financial disclosure raises serious questions as to whether he, along with the added respondents, conspired to defeat the applicant's claims in this proceeding by (a) intentionally misrepresenting the actual proceeds from the sale of the respondent's business Modiface Inc. to L'Oreal, (b) creating and using various trusts and corporations designed to act as conduits through which substantial sale proceeds were clandestinely transferred out of the reach and knowledge of the applicant, and (c) agreeing to receive, manage and disburse those undisclosed sale proceeds under the guise of potentially questionable transactions.
As an example, the respondent transferred the sum of $15,000,000.00 to his father Abolghassem Aarabi as a "gift", and that sum came from the sale proceeds of Modiface which company, according to the applicant, formed part of the marital assets. No further particulars supporting the validity of this alleged gift have been provided by the respondent in his disclosure to date.
Further, the respondent's mother Shahrzad Roya Sedightehran was paid over $12,000,000.00 from the sale proceeds. While the respondent lists her as a 20% shareholder in Modiface (and thus the $12,000,000.00 payment could in theory amount to a dividend or something similar), there is further evidence in the record that she then transferred property back to the respondent.
The timing of both the creation of the trusts and the payments to the added respondents also call the legitimacy of the actions of the respondents into question.
In my view, and admittedly only having reviewed the applicant's motion materials, providing the respondents with notice of this motion could very well have serious consequences and risk the further movement of money and/or property to the added respondents, some of which are outside Canada.
The applicant has provided her required undertaking as to damages, and there is no evidence of any potential immediate harm to the respondents if the relief sought by the applicant is granted. As such, I am prepared to sign the draft interim Order provided by counsel to the applicant but am removing the proposed term requiring the respondents to deliver certain further disclosure within 10 days, as that issue is premature at this time.
28Prior to the granting of the FLA Preservation Order and Mareva Order on June 10, 2020, the Parham and Shirin had consented to a mutual preservation order signed by Paisley J. on April 7, 2020 of a much narrower scope (the “Consent Preservation Order”). Although Parham criticizes Shirin for moving ex parte in the face of that order, the prior order was disclosed to the court when she applied for her ex parte Injunction Order on June 10, 2020.
29No party suggested in their written or oral submissions that the Consent Preservation Order be resurrected as a possible outcome of this motion, although the applicant did point out in response to a question from the court at the conclusion of oral argument that the mechanism by which the June 10, 2020 ex parte Injunction Order was implemented was to extend and replace certain paragraphs of Paisley J.’s Consent Preservation Order.
Summary of Outcome
[30]
Summary of Outcome
I have concluded that the applicant was justified in bringing an urgent ex parte motion for the freezing and preservation of assets based on the disclosures that had come to light. However, that is not what the court is concerned with at this stage, over a year later. The court must be satisfied now, de novo, that the applicant meets the test for the FLA Preservation Order against Parham and the Mareva Order against Parham and the Aarabi Family and Affiliates if these orders are to be continued. The applicant has a heavy onus in a case such as this. I find that she has met her onus for the continuation of the FLA Preservation Order against Parham but not for the Continuation of the Mareva Order against the other Aarabi Family and Affiliates.
The Applicant’s Onus
[31]
The Applicant’s Onus
The ex parte Injunction Order is comprised of two different orders, with different tests that must be satisfied by Shirin for them to be continued:
a. The FLA Preservation Order is against Parham alone and must meet the requirements of ss. 12 and 40 of the Family Law Act (“FLA”).
b. The Mareva Order is against Parham and his Family Members and Affiliates and must meet the test for a Mareva injunction.
32In addition, because the original order was sought ex parte pursuant to r. 14 of the Family Law Rules, Shirin must also satisfy the court that she made full and fair disclosure of all material facts when the order was sought and obtained. Pursuant to Rule 39.01(6) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, a failure to make full and fair disclosure of all material facts is, itself, a sufficient ground for setting aside any order obtained ex parte.
The Continuation of the FLA Preservation Order
[33]
The Continuation of the FLA Preservation Order
The jurisdiction to grant a non-dissipation order in the context of family law is found within ss. 12 and 40 of the FLA, which provide as follows:
12: In an application under section 7 or 10, if the court considers it necessary for the protection of the other spouse's interest under this Part, the court may make an interim or final order, a) restraining the depletion of the spouse's property; and b) for the possession, delivering up, safekeeping and preservation of the property.
- The court may, on application, make an interim or final order restraining the depletion of a spouse's property that would impair or defeat a claim under this Part. [Part III]
34The Court must balance the following when making a preservation order against a spouse: (a) the relative strength of the applicant’s case, and whether there is a serious issue to be tried; (b) the balance of convenience (or inconvenience); and (c) irreparable harm. This ultimately involves "an assessment of the risk of dissipation of the assets in existence prior to trial.” See Bronfman v. Bronfman, [2000] O.J. No. 4691 (S.C.), at paras. 2829. See also Price v. Price, 2016 ONSC 728, [2016] O.J. No. 466, at para. 7.
35Parham has focussed on what he alleges is an absence of evidence of him dissipating assets to make himself "judgment proof." "[T]he court does not issue orders restraining people from dealing with property without some evidence, as opposed to bare allegations." See Pollak v. Pollak, 1993 CanLII 16080 (ON SC), [1993] 48 R.F.L.(3d) 56 (Ont. S.C.), at para. 7. Parham suggests that his prior agreement to the freezing of several of his accounts under the Consent Preservation Order demonstrates that he is acting in a bona fide manner and not seeking to thwart any of Shirin’s claims.
36Parham argues that the only real issue here is whether the dissipation and distribution of those assets was to make Parham “judgment proof” (as opposed to for the legitimate tax or family planning and gifting purposes that he contends). Parham argues that his actions have not served to make him “judgment proof” and he says he has not hidden anything, pointing to the fact that all of the transactions were disclosed to Shirin as part of his financial disclosure in this case (he says even earlier). Parham is a Canadian resident and gainfully employed in Ontario. He suggests that there is no risk that he will not be able to pay her any amounts deemed owing.
37Parham further asserts that the FLA Preservation Order in this case does not serve the main objective of these FLA provisions (ss. 12 and 40), which is to protect the spouse's interests under the FLA, so that if a spouse is successful in obtaining relief under the Act (for example, for equalization or support), there are assets available to satisfy said relief. Put another way, he argues that there is no established risk that his assets will be depleted or that the purposes of the FLA will be defeated leading to irreparable harm to the applicant4.
38However, Shirin has not merely alleged a dissipation of assets, she has evidence that Parham has distributed to others or spent virtually all of the proceeds of sale of Modiface that he was directly or indirectly entitled to, totalling tens of millions of dollars. Most of those funds are now in the hands of others, with only a portion of those having been used thus far for the direct or indirect benefit of Shirin or their daughter ($450,000.00 towards their home and $100,000.00 donation to their daughter’s school) or to satisfy outstanding obligations, such as the payment to the CRA. Parham does not suggest that he still has much, if any, of the sale proceeds left that could be made available to satisfy any judgment that Shirin may prove to be entitled to. To the contrary, he continues to defend the legitimacy of the $15 million gift to his father, the distribution of more than $5 million to the trusts he established and payments exceeding $1.1 million paid to his mother (over and above the amounts attributable to her direct shareholdings in Modiface).
39In the context of this high conflict case, and given the history of dealings between Parham and the Aarabi Family and Affiliates that were not fully disclosed to Shirin, it is not reasonable for Parham to ask Shirin or the court to accept his promise that he will eventually pay her whatever is found to be owing. His affairs have been structured in such a way that he does not directly hold the Modiface sale proceeds and he is currently on sabbatical from his tenured position as a professor at the University of Toronto. His statement that he will honour his obligations and in the meantime remain gainfully employed and pay what he owes to Shirin does not address the larger concern of how he will satisfy a significant equalization payment reflective of the true value of the proceeds of sale of his interests in Modiface (if ordered) in light of the steps he has already taken to distribute or gift those assets to his other family members.
40I do not need to make a final determination at this time about Parham’s purpose or intention in the creation of the trusts, the estate planning and/or his distributions and gifts to the Aarabi Family and Affiliates. The circumstantial evidence is sufficient to satisfy this aspect of the test, having regard to:
a. the timing of the various transactions: after Parham had declared (in September 2017) that he wanted to separate and during a period when the parties’ marriage must have been strained in light of that declaration, which was made following acknowledged attempts at marriage counselling; separation was a clear possibility despite their ongoing efforts to reconcile; and
b. the fact that Shirin was not fully informed of the various transactions and estate planning that was carried out in 2018 or the full magnitude of the proceeds from the sale of Modiface.
The dissipation of assets by Parham during this time period provides a sufficient foundation for a finding that there is a risk that he may continue to deplete or dissipate his assets pending the determination of Shirin’s equalization entitlement.
41That said, Shirin's claim as to the extent of assets to be preserved needs to be specific. There is an onus on Shirin to demonstrate that she will receive an equalization payment in the amount that is at least as much as the value of the assets she is seeking to freeze. Parham contends that Shirin has not done so because she seeks to freeze Parham’s (and his family's) assets in an amount that vastly exceeds what she is claiming, or could claim, by way of an equalization payment. See Lasch v. Lasch, 1988 CarswellOnt 235, (Ont. H.C.), at para 17. While her entitlement to some equalization payment is not disputed, the amount to which she will be entitled is very much in dispute.
42In support of this position, Parham has attempted to calculate what he calls Shirin’s “best day” equalization payment. This calculation starts with the report of Shirin’s expert (Mr. Ranot5) and the suggestion by her expert that $34 million should be added back into Parham’s Net Family Property for purposes of calculating any equalization payment. After adjusting for certain erroneous assumptions said to have been made by Mr. Ranot, and deducting a date of marriage value for Modiface, which Mr. Ranot assumed to be zero (whereas Parham’s expert, Robert Wolfe, has prepared a valuation of Modiface as at the date of marriage that indicates it was worth $10 million6), Parham argues that Shirin’s “best day” for purposes of equalization would be a payment of between $12,077,164.00 - $13,677,164.00 (after adjusting for amounts already paid to her and depending on how many of the disputed points raised by Shirin’s expert are adjusted for).
43Shirin argues that her expert’s analysis is credible (her expert Mr. Ranot having acknowledged one error pointed out by the respondent’s expert and adjusted his analysis by $200,000.00) and conservative because it does not attempt to value certain other interests or future payments owing under the sale to L’Oreal. According to Mr. Ranot, Shirin’s “best day” equalization payment would be $18.5 million, but he does not deduct what Shirin admits Modiface was worth on the date of marriage ($2 million), so Parham argues that, even on Mr. Ranot’s own numbers, Shirin’s “best day” would be $17.5 million.
44The point made by Parham (and the other respondents in the analysis of the continuation of the Mareva Order) is that, even if the FLA Preservation Order should continue, it should be scaled back so that the value of the assets it preserves is commensurate with the equalization entitlement that Shirin may have under the FLA. Parham’s concern is that an aggregate of $40-50 million in assets are currently being tied up for a “best day” of far less than that amount, on either expert’s approach.
45The FLA Preservation Order is not intended to be security. For purposes of this motion, I do not need to precisely calculate Shirin’s potential FLA claims and match them precisely to assets belonging to Parham. However, according to Parham’s April 8, 2020 financial statement, his indicated net family property is CDN $4,058,364.33 ($1.761 million of which is a loan said to be owing to him with no indication of the timing or likelihood of its repayment). This leaves only $2.3 million in liquid assets to satisfy any equalization payment he may owe to Shirin. Even if the additional $6.393 million in sale proceeds received by Roya that she says she is holding in trust for Parham is added to this figure (although not included in Parham’s financial statement), there does not appear to be any basis for arguing that Parham’s current assets exceed the value of either expert’s calculation of Shirin’s “best day” equalization payment.
46At this stage, it is not guaranteed that Shirin will achieve her “best day”, which depends upon her success on certain of the asserted causes of action in her amended application, including alleged fraudulent conveyances, shams and conspiracy against all of the respondents. However, for purposes of the continuation of the FLA Order, I am satisfied that Shirin has demonstrated a serious issue to be tried on her claim for a substantial equalization payment that exceeds the current assets disclosed on Parham’s April 8, 2020 financial statement. In the wake of Parham’s disposition of tens of millions of dollars during the two years prior to this financial statement, the balance of convenience favours preserving whatever assets he currently has (and has had since the FLA Preservation Order was made) to satisfy whatever equalization entitlement Shirin eventually establishes.
47This is not intended to be security, but is, rather, an order pursuant to ss. 12 and 40 of the FLA imposing an obligation of preservation and non-depletion of property in circumstances where there has already been significant dissipation under the direction and control of the respondent of share sale proceeds from his original 80% shareholdings in Modiface. I find that an interim order is necessary to freeze Parham’s remaining property and restrain any further depletion of it that could impair or defeat the applicant’s FLA claims. I find that such an order under ss. 12 and 40 of the FLA is necessary to protect Shirin’s interests. However, exceptions will need to be made to ensure that Parham has access to funds to satisfy his reasonable daily living expenses, to meet his ongoing obligations to Shirin and the parties’ daughter as well as to other normal course creditors, and to cover his professional fees as this case proceeds.
48Parham’s concern that the relief sought in Shirin's Amended Notice of Motion and Supplementary Factum is overreaching by attempting to freeze the assets of the Aarabi Family and Affiliates in an amount that not only exceeds, but more than doubles, Shirin's “best day” will be addressed in the next section of this endorsement dealing with the Mareva Order and how far it should extend, beyond what the FLA Preservation Order that is limited to Parham’s assets.
The Continuation of the Mareva Order
[49]
The Continuation of the Mareva Order
The applicant relies upon the Mareva Order to enjoin the property in the hands of the other Aarabi Family and Affiliates, who are strangers to the family law proceeding and whose assets are not subject to preservation under ss. 12 and 40 of the FLA.
50The test for a Mareva injunction is well settled, and most often cited in the case of Chitel et al. v. Rothbart et al., (1982) 1982 CanLII 1956 (ON CA), 39 O.R. (2d) 513. It is more stringent than the test for a preservation order under the FLA. The requirements that the applicant must establish are that:
a. she has a strong prima facie case;
b. the respondents have assets in the jurisdiction;
c. there is a serious risk that the respondents will remove their property or dissipate assets before judgment.
See O2 Electronics Inc. v. Sualim, 2014 ONSC 5050, at para. 67 and Ghaeinizadeh v. Ku De Ta Capital Inc, 2010 ONSC 4169, [2010] O.J. No. 3217 (S.C.).
51The applicant also must establish that she will suffer irreparable harm if the injunction is not granted and that the balance of convenience favours granting the injunction. See Lee, at para. 43. This is often tied into the assessment of risk of the removal or dissipation of assets before judgment.
a. Strong Prima Facie Case
[52]
Strong Prima Facie Case
It has already been established that Shirin has demonstrated a serious issue to be tried on her equalization claim against Parham. For the Mareva injunction, this must rise to the level of a strong prima facie case and I find that it does, for the same reasons as I have found there to be a serious issue to be tried. While the amount of the equalization payment remains to be determined, I am satisfied that it will be significant and likely higher than the assets that Parham has identified on his financial statements. However, the equalization claim is not a cause of action that exists as against anyone other than Parham and there would be no need to continue the Mareva Order against him alone when it has already been determined that the FLA Preservation Order shall continue against him. The continuation of the Mareva Order must be justified with regard to the claims against the other respondents.
53The causes of action against the other respondents are for fraudulent conveyances, sham trusts and civil conspiracy. Shirin must demonstrate a strong prima facie case in respect of at least one of these causes of action to continue the Mareva Order against the other Aarabi Family and Affiliates. There are challenges with components of each of these causes of action on the fully developed record now before the court, but I am satisfied that there is a strong prima facie case against the Aarabi Family and Affiliates for at least some of these claims.
54A fraudulent conveyance of real or personal property is one that is made with intent to defeat, hinder, delay or defraud creditors or others of their just and lawful actions, suits, debts, accounts, damages, penalties or forfeitures (“claims”). If established, such conveyances are void against the holders of such claims pursuant to s. 2 of the Fraudulent Conveyances Act, R.S.O. 1990, c. F.29.
55All parties recognized that a spouse has standing to allege a fraudulent conveyance where they had an existing claim at the time of the impugned transaction. It is further acknowledged that a spouse can initiate a claim after the fact where the transfers were kept secret from them. See Stone v. Stone, 2001 CanLII 24110 (C.A.), at paras. 25 and 29. The applicant argues that a spouse also has standing to make a claim for fraudulent conveyances even before separation in circumstances where the marriage is strained and separation (and the subsequent equalization claim) are impending. For this proposition, she relies upon the case of Goldman v. Kudelya, 2015 ONSC 4674, at paras. 69-72.
56In Purcaru v. Seliverstova, 2016 ONCA 610, [2016] 80 R.F.L. (7th) 28, at para. 5 the Court of Appeal affirmed the lower court’s determination (Purcaru v. Seliverstova et al., 2015 ONSC 6679, [2015] 69 R.F.L. (7th) 388, at para. 100) that a spouse asserting a fraudulent conveyance can rely on “badges of fraud” that have been recognized as indicators of an intention to defeat or defraud creditors. Establishing the existence of “badges of fraud” shifts the onus to the respondents to rebut the inference of fraudulent intention.
57Some of these recognized “badges of fraud” have been demonstrated in this case. Most significant are the non-arm’s length transfers by Parham to family members without consideration, including the transfer of his shareholdings to the 2016 Aarabi Trust, the $15 million gift to his father Sam, the funds deposited into his mother Roya’s bank account exceeding the value of her 20% shareholdings in Modiface when it was sold (funds that she now says she holds in trust for Parham) and the funds transferred to Pegah and Roya, said to be held in trust for Pegha’s son.
58The existence of these “badges of fraud” shifts the onus to the respondents to demonstrate that there was no intent to defeat Parham’s creditors or others of their just and lawful claims against him. Parham argues that he had no significant creditors in 2018 at the time of these transactions whose claims he could have intended to defeat or defraud.
59While Shirin argues that this was done to defeat her claims upon the parties’ separation, they did not separate until December 2019, approximately eighteen months after the transactions at issue. Parham and Roya, supported by the other respondents, argue that even if a spouse can in theory be a “potential creditor” there needs to be some catalyst or event to render one spouse a potential creditor of the other. Otherwise, in theory, a spouse could always, in hindsight, be considered to be a potential creditor since many couples go through rough patches and “strains” in their marriage. I agree with this concern, but that is not the end of the analysis in this case.
60In the Stone case, the court recognized that there is not an ongoing debtor/creditor relationship between spouses but that the court may consider a spouse to be a creditor when a triggering events occurs giving rise to a right to make an equalization claim, even if the claim is not actually made at the time because of lack of full disclosure to the spouse who might have otherwise made the claim (see paras. 26-34). See also Reisman v. Reisman, 2014 ONCA 109, [2014] 118 O.R. (3d) 721, at paras. 57-59.
61One of the triggering events identified in Stone is an application by one spouse under s. 5(3) of the FLA for improvident depletion of a spouse’s net family property, which provides that:
Improvident depletion of spouse’s net family property
(3) When spouses are cohabiting, if there is a serious danger that one spouse may improvidently deplete his or her net family property, the other spouse may on an application under section 7 have the difference between the net family properties divided as if the spouses were separated and there were no reasonable prospect that they would resume cohabitation.
62I have already determined that Shirin did not have full disclosure of the various transactions leading up to the sale of Modiface. I find that, given their history of marriage difficulties and attempts at marriage counselling dating back to June 2016 and Parham’s declaration of his desire to separate in September 2017, Shirin could have brought an application for improvident depletion under s. 5(3) of the FLA while the parties were still co-habiting (e.g. before they separated in December 2019) if she had been made aware of the full extent of the transactions and the re-organization of Parham’s affairs and estate planning that was undertaken in the 2016 to 2018 time period. I find this continuum of events to be sufficient to render Shirin a potential creditor of Parham’s for her equalization entitlement at the time of these transactions leading up to the distribution of the Modiface sale proceeds.
63While the parties did not actually separate for two years, their marriage was strained and the prospect of separation was impending. This is not diminished by the fact that they jointly bought a new home, particularly given Shirin’s evidence that Parham had his own room and never fully moved into the home. Nor is the looming prospect of the parties’ separation following Parham’s September 2017 email negated or diminished by the family trips taken in conjunction with business travel and/or so that they could both spend time with their daughter on vacation also do not negate. There is no evidence of further counselling or improvements in their relationship after that date.
64The “badges of fraud” that have been identified involving gratuitous transfers of significant sums of money by Parham to other Aarabi Family and Affiliates raise a presumption of an intention on Parham’s part to defeat or defraud Shirin’s potential equalization claim. This presumption has not been rebutted by the evidence on this motion. The applicant has established a strong prima facie case of fraudulent conveyances involving the distribution of at least some of the tens of millions in USD proceeds from the sale of Modiface.
65The trust arrangements are discussed in the next section.
66Alleged Sham Trusts: A sham trust may be declared void if the settlor had no intention of relinquishing control of the trust assets to the trustees, but rather intended to retain control of the assets purportedly held in that trust so as to create the appearance of a disposition of assets. See Re McGoey, 2019 ONSC 80, at paras. 19-20.
67The 2016 Aarabi Family Trust did not even have a bank account when the share sale transaction closed, despite ostensibly being the indirect majority selling shareholder of the Modiface shares that were sold in March 2018. The evidence establishes that Parham directed the distribution of the $36 million USD in share sale proceeds that should have been distributed to the 2016 Aarabi Family Trust to Roya and Pegah. There is no evidence of any meeting or decision by the trustees and a lack of any contemporaneous documentation regarding the holding or distribution of those share sale proceeds, all of which were directed by Parham.
68Parham appears to have disregarded the operation of the trust and treated it as his own. Roya, who is one of the trustees, admits she had no knowledge of the shares and did whatever Parham told her to do. There is no evidence from Mr. Appel, the other trustee.
69There is a strong prima face case that the 2016 Aarabi Family Trust was either a sham trust or was established as part of an attempt to take Parham’s assets out of Shirin’s reach.
70While there are some unanswered questions about the establishment of the Roro Trust and its intended beneficiaries, there is less evidence about the flow of funds involving that trust and I do not need to make any finding about whether that trust is a sham trust for purposes of this motion.
71The further “undocumented” trusts, comprised of the over $6 million in excess sale proceeds received by Roya and said to be held in trust by her for Parham and the over $1 million said to be held in trust for Pegah’s son are not true trusts in the sense that they are comprised of funds that are acknowledged to be controlled by Parham.
72The applicant’s claims for fraudulent conveyance and asserting sham trusts arise from Parham’s conduct, in which other Aarabi Family and Affiliates are indirectly implicated. The civil conspiracy claims, discussed in the next section, implicate his other family members directly in Parham’s efforts to take assets out of reach from Shirin’s equalization claims.
73Civil Conspiracy: There are two types of civil conspiracy: Unlawful conduct and predominant purpose to harm. No unlawful conduct is particularized. An agreement or joint plan or common design said to have been for the purpose of depriving Shirin of her equalization entitlement in respect of the Modiface share sale proceeds is alleged in this case. A mere assertion of an objective to harm Shirin is not sufficient. Martin v. Astrazeneca Pharmaceuticals Plc, 2012 ONSC 2744, [2012] O.J. No. 2033 (S.C.) at paras. 184-185, 188-189. Actual knowledge or intention need not always be established. For example, co-conspirators can be implicated by actions that they knew or should have known could result in injury to the applicant. See Helmy v. Helmy, 2000 CanLII 22452 (Ont. S.C.), at paras. 88-89.
74The applicant alleges a joint plan between Parham and the other Aarabi Family and Affiliates to assist him in diverting his share of the Modiface sale proceeds to ensure that they were not in his hands upon his separation from Shirin, and that they all knew or should have known that this would injure or harm Shirin.
75While the other respondents are clearly implicated in the fraudulent conveyances and sham trusts in respect of which Shirin has established a strong prima facie case, the evidence does not establish the knowledge or wilful blindness of the other Aarabi Family and Affiliates involved in these transactions regarding the damage or injury to Shirin. There is no evidence that they were aware of the marital strain commencing in 2016 or of the email that Parham sent to Shirin in September 2017. To the contrary, Roya claims to have been unaware of any marital problems between Parham and Shirin at the time of the impugned transactions.
76The onus is high in conspiracy claims and cannot be based on assumptions or speculation. Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, [2014] O.J. No. 851 (S.C), at para. 84. See also BTR Global Opportunity Trading Ltd v. RBC Dexia, 2011 ONCA 620. Such has not been made out by the applicant in respect of the civil conspiracy claims.
b. Irreparable Harm – Risk of Dissipation or Removal of Assets
[77]
Irreparable Harm – Risk of Dissipation or Removal of Assets
The applicant contends that Parham and his mother, father and sister arranged their affairs so that the sale proceeds were beyond the reach of the applicant and that type of fraudulent conduct gives rise to an inference that there is a risk of dissipation or removal of the assets beyond the reach of the court. The applicant argues that this is further exacerbated by their continued concealment of the full extent and of their efforts even after the litigation had commenced. This was evidenced by the lengths they went not to disclose the deed of gift of the $15 million from Sam to Pegah (which undermined Parham’s narrative that he had a genuine intention and desire to gift $15 million to his father) and their failure to initially disclose the full extent of their contemporaneous estate planning done in conjunction with the sale of Modiface and distribution of sale proceeds.
78As a result of these efforts, Parham’s share sale proceeds have now been co-mingled with the assets of the other Aarabi Family and Affiliates. The fact that they have not yet removed the assets from the jurisdiction or reach of the court provides cold comfort to Shirin given all that has transpired.
79The respondents argue that the movement of assets between them, but not outside of the jurisdiction or reach of the court, is not enough to satisfy the test for a Mareva injunction, which is strict for good reason. They put forward two propositions in opposition to the continuation of the Mareva Order:
a. A Mareva injunction should only be issued if it is shown that the defendant’s purpose is to remove his or her assets from the jurisdiction to avoid judgment. See O2 Electronics, at para. 67;
b. The applicant must demonstrate that, unless an injunction is granted, his or her rights will be nullified or impaired by the time of trial (applying the irreparable harm component of the test). See Ghaeinizadeh, at para. 51.
80I have already found the latter point to have been satisfied in the context of the determination that the FLA Preservation Order should continue as against Parham. The other respondents argue that the fact that they continued to hold the sale proceeds (or other properties in Ontario into which they were converted) for the entire twenty-one month period after the sale and before Parham and Shirin separated does not support the inference or concern raised by Shirin that there is, or ever was, a risk of removal or dissipation of those assets from the jurisdiction or from the reach of the court.
81While the applicant’s claims may be pursued, she is not entitled to security for future judgment. That is not the purpose of a Mareva injunction. Although the applicant’s claims are serious, and I have found that she has demonstrated a strong prima facie case in respect of some of the causes of action alleged, a Mareva injunction is an extraordinary remedy and I am not satisfied that the strict requirements of the test has been met. There has been no demonstrated risk of dissipation or removal of assets from the reach of the court by the other Aarabi Family and Affiliates.
c. Balance of Convenience – the Scope of any Continued Order
[82]
Balance of Convenience – the Scope of any Continued Order
The applicant’s arguments were predicated on the co-mingling of the share sale proceeds and the concern that assets of Parham that continue to be frozen under the FLA Preservation Order may not be sufficient to satisfy her equalization entitlement, once determined. Based on disclosures provided by the respondents since the Mareva Order was made in June 2020, the applicant has voluntarily agreed to release certain accounts and assets of the respondents. The respondents argue that the scope is still far too broad.
83Various alternative scopes were proposed by the respondents, however, their primary argument on the balance of convenience was that it favours them given how far overreaching the initial Mareva Order was, covering assets that in the aggregate are still in the range of $40-50 million for claims that, on Shirin’s “best day” could not amount to more than approximately $17.5 million.
84The arguments about the balance of convenience do not need to be determined in light of my findings in the previous section of this endorsement regarding the continuation of the Mareva Order. If the Mareva Order was going to be continued, I would have addressed (and restricted) its scope as part of the terms, but that is not the basis on which the decision to dissolve (or not to continue) the Mareva Order has been made.
Challenges Arising from Ex Parte Disclosure Concerns Raised by the Respondents
85Rule 39.01(6) of the Rules of Civil Procedure (incorporated by reference into the Family Law Rules by virtue of r. 1(7)), provides as follows:
Where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on the motion or application.
86Parham argues Shirin did not make full and fair disclosure:
a. She claimed to be shocked and surprised about gifts made by Parham to family members, but did not disclose at the time of the ex parte Injunction Order her own (albeit much smaller in magnitude) gifts she made to her family members (her parents and brother). She did not file a financial statement in advance of that motion and denied these gifts until bank statements had to be produced following questioning, as a result of which she was reminded of these forgotten gifts.
b. She asserted in support of the ex parte Injunction Order that funds were being used by Parham and the Aarabi Family and Affiliates to build homes but had, and still has, no evidence to substantiate this.
c. She alleged there had been fraudulent transfer or “gift” of shares to Roya, but admitted that she was not privy to the shareholding arrangements and that this was just a surmise or suspicion.
d. She downplayed Roya’s role in Modiface but admitted that she was not privy to the day to day operations of the company.
87The applicant does not agree with the respondents’ characterization of the alleged non-disclosures or unsupported allegations, and has provided explanations for them and contends that they are not material when considered in context. I agree. The decision to dissolve (or deny the continuation of) the Mareva Order has not been made on the basis the above or any other alleged non-disclosures by the applicant at the time the ex parte Injunction Order was made. Nor do I find these to be grounds upon which to deny the continuation of the FLA Preservation Order.
Procedural Grounds for Setting Aside the Mareva Order Raised by the Respondents
[88]
Procedural Grounds for Setting Aside the Mareva Order Raised by the Respondents
Roya submitted a series of procedural grounds upon which the Mareva Order should be set aside, or not continued, having regard to the heavy onus for Mareva injunctions because they are exceptional given that they are granted ex parte and the court ordinarily does not permit execution before judgment. In light of the determination that the Mareva Order will be dissolved, these procedural arguments do not add anything but for completeness they will each be briefly addressed.
89The first procedural ground argued for the dissolution of the Mareva Order was that the applicant failed to ensure that the come-back motion was heard within a reasonable time and that it is entirely unacceptable and unheard of for it to have taken over a year for this motion to be heard, even accounting for delays due to COVID-19 and even though some of the adjournments were on consent. The essence of this argument appears to be that Diamond J. should have dissolved the Mareva Order back in December 2020 when he concluded that the record was incomplete and ordered further questioning. I am not going to revisit or second guess now the reasoning behind the court’s direction in December 2020 for the parties to proceed to questioning, nor do I think it appropriate to fault the applicant entirely for that or any of the other delays, which all parties acquiesced in.
90The second procedural ground argued for the dissolution of the Mareva Order was that there was no reason for the motion to have been brought ex parte in the first place. All respondents join in the assertion that this was not a case of extraordinary urgency given the timing and sequencing of events and given that the sale proceeds continued to be held. Even at the first hearing, the urgency was described as a “worry”. It was argued that is not enough to justify proceeding ex parte. The essence of this argument appears to be that the Mareva Order should not have been granted in the first place. I am not going to revisit or second guess now whether the ex parte Injunction Order should have been made at the time. As stated earlier in this endorsement, I am satisfied that Shirin had a basis for concern at the time the motion for the ex parte Injunction Order was initially sought.
91The third procedural ground for the dissolution of the Mareva Order was based on the over-breadth and overreaching of the original order. Although it was voluntarily scaled back multiple times by the applicant, the respondents argue that does not cure the overreaching problem. It was argued that the ex parte Injunction Order sought and requested by the applicant was not a surgical strike to get at a particular asset(s). The alleged co-mingling of assets does not address the initial over-breadth of the Mareva injunction sought and obtained against, for example, a property that Roya had purchased in 1997, ten years before the parties were married and 22 years before they separated, or the house purchased many years earlier by Pegah and her husband. It was also argued that the extent of overreaching in this case essentially rendered the applicant’s undertaking as to damages meaningless because of the magnitude of assets that she tied up, and resulting potential damages, could never be made whole by Shirin if she is not ultimately successful. The overbreadth is a concern but the applicant appears to have acted reasonably in agreeing to scale back the scope based on disclosures and requests made by the respondents. Given that I am not continuing the Mareva Order, I do not need to address this fully now and it may have future implications, so I will leave it to be determined if and when it is necessary.
92The fourth procedural ground for the dissolution of the Mareva Order was a further argument of non-disclosure in relation to the title to property held by Roya, which applicant’s counsel pointed out had been disclosed as part of the applicant’s original motion records.
93I would not have denied the continuation of the Mareva Order on any of these procedural grounds if I had otherwise decided that the test for its continuation by the applicant had been met. The decision to dissolve (or not continue) the Mareva Order has not been made on the basis of any of these procedural grounds.
Orders and Final Disposition
[94]
Orders and Final Disposition
For the reasons set out in this endorsement, the FLA Preservation Order shall continue and the Mareva Order shall be dissolved. The assets covered by the FLA Preservation Order shall include the monies that Roya acknowledges she is hold in trust for Parham from the proceeds of the sale of Modiface.
95I trust that counsel will be able to work out proposed wording to implement this, having regard to the manner in which the ex parte Injunction Order was initially implemented. I may be contacted through my judicial assistant (linda.bunoza@ontario.ca) for a case conference to settle the precise wording of the order if it is not something that can be settled by agreement among counsel.
96As indicated earlier in these reasons, exceptions will need to be made to the continuing FLA Preservation Order to ensure that Parham has access to funds to satisfy his reasonable daily living expenses and meet his ongoing obligations to Shirin and the parties’ daughter as well as to other normal course creditors and to cover his professional fees as this case proceeds. These have been accommodated on an ad hoc basis up until now but it would seem reasonable to have some protocol in place for addressing them so that it does not become an ongoing issue. If counsel are unable to work out a protocol in this regard, a case conference may be requested by contacting my judicial assistant.
97The applicant is granted leave to amend her application in the form proposed and the respondents may amend, or deliver, response(s) to the claims against them within 30 days of being served with the issued amended Application, if so advised. The applicant may serve an amended Reply to any response so received within 20 days of service.
98Although the Mareva Order against the Aarabi Family and Affiliates is being dissolved, the court expects those respondents to respect the formal and informal trust arrangements that are in place and about which they have provided evidence in support of their opposition to the continuation of the Mareva Order. Further, given the claims that are continuing against them, they are expected to keep detailed records and accounts of their dealings with any of Parham’s direct or indirect 80% portion of the Modiface share sale proceeds as they may well be called upon to account for those proceeds (or assets into which they can be traced) when the applicant’s claims are determined.
Costs
[99]
Costs
Costs were not addressed at the hearing of this motion. There are many components to the issues that were argued and many different parties and positions put forward. It would be preferable if the parties could reach an agreement on costs now that the outcome of this motion is known. The parties are encouraged to try to do so and to advise the court, by email to my assistant at linda.bunoza@ontario.ca by August 31, 2021 if they are able to, or alternatively a case conference may be requested so that an orderly process for the determination of costs can be established.
KIMMEL J.
Date: August 16, 2021
Footnotes
- The parties have often used round figures in the tens of millions of dollars in their submissions without specifying whether those represent USD or CDN dollars. The currency is not material for purposes of this motion. The currency is only indicated in this endorsement where it was specified in the reference source from which it was taken. Given the volume of material, the exercise of searching through all sources to determine the currency where it might have been specified elsewhere has not been undertaken.
- The applicant seeks, as part of her relief on this motion, leave to amend the application in the form provided to the respondents in August 2020. Leave is granted to the applicant to amend her application as proposed to incorporate these amendments, which the respondents have been aware of for almost a year and which were provided prior to questioning. Rule 11 of the Family Law Rules mandates that the court shall grant leave for a pleading amendment absent a showing of a disadvantage to another party that cannot be compensated by costs or an adjournment. No such disadvantage has been demonstrated by any of the respondents, although they have not consented to the amendments. The motion before me was argued having regard to the proposed pleading amendments.
- The filed materials indicate two different dates of marriage, August 21 and 30, 2008. Nothing turns on this difference for purposes of this motion.
- Parham and Shirin agree that the objective of an order pursuant to section 12 or 40 is to avoid the situation in which a party obtains a final judgment only to find that the time elapsed during the litigation has given the opposing party an opportunity to put himself or herself in a position that the recipient spouse will be unable to collect and he or she will have only a "Pyrrhic victory." See Bronfman, at para. 27. The provision is intended to reflect the fiduciary obligation on the part of the payor spouse to honour the entitlements that have arisen throughout the relationship.
- Mr. Ranot’s evidence is challenged by the respondents on various grounds, including that what he has done is not an expert valuation within the scope of his particular expertise because the report he has prepared does not come within any of the recognized categories of Chartered Business Valuation reports. Rather, he has made various unverified assumptions. They further criticize him for advocacy in having completely discounted Roya’s role in Modiface and deducting all of her earnings over 11 years in his calculations. The respondent argue that the court should exercise its gatekeeper function to exclude his evidence entirely and that these defects cannot be addressed in the court’s weighing of the evidence. White Burgess Langille Inman v Abbott and Haliburton, 2015 SCC 23, [2015] 2 S.C.R. 182. However, for purposes of illustration his analysis is taken as a starting point in this “best day” assertion that Parham advances.
- The evidence of Dr. Wolfe is objected to by the applicant for having been tendered after the deadline for expert reports and not in compliance with the Rules, without a list of documents or a CV or any specified qualifications. The applicant also observes that Parham’s sworn evidence on September 17, 2020 ascribed a much lower date of marriage valuation of Modiface, of $2.158 million. A lot of assumptions are built into both of the expert reports that are relied upon for this analysis. Neither expert was cross-examined on this motion. Yet, each side urges the court to accept their expert and disregard the other. The court must approach the analyses predicated on these reports with caution at this stage.