SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Marie Yvette Louise Danielle Boutin, Applicant
AND
Kevin John Lucitt, Respondent
BEFORE: Mr. Justice Timothy Minnema
COUNSEL: Erin Lepine, for the Applicant Mark S. LaFrance, for the Respondent
HEARD: June 7, 2021
ENDORSEMENT ON MOTION AND CROSS-MOTION
1This is a motion brought by the respondent who seeks to distribute the net sale proceeds from two jointly owned properties that are currently being held in trust. The applicant has brought a cross-motion for among other things an order directing the sale of a third jointly held property in which the respondent currently resides. The respondent has indicated that he is not consenting to but not opposing that sale request. In view of that, the applicant in turn indicated she agrees with the respondent’s motion regarding the disposition of the monies currently being held in trust. However, there is a dispute over the terms of the sale proposed by the applicant relating to the third property and regarding the applicant’s request that the net proceeds from that sale be held in trust until trial as security for her claims.
Background Facts
2The parties began residing together in October of 1995. They are not married. They separated in either December 2016 or April of 2017. They have two children Brendan age 21 and Paul age 18. The applicant is a teacher. The respondent was a train engineer but retired in 2020.
3When they separated, they jointly owned three properties in the greater Kingston area, on Alfred Street, Shepherd Drive, and McKendry Road.
4On August 15, 2019, at the Case Conference, the parties consented to an Order by Justice Champagne that all three properties be listed and sold. Alfred Street and Shepherd Drive were eventually sold, the former on April 20, 2020, well over a year ago, and the latter on August 31, 2020, over nine months ago. There is just shy of $700,000 being held by real estate lawyers in trust for the parties.
5Although listed for a time, the McKendry property has not sold. Regarding it, paragraph 3 of Justice Champagne’s endorsement reads “[t]he … property currently occupied by the respondent shall be immediately listed for sale with a realtor.” The respondent wanted to purchase the applicant’s interest, but the parties could not come to an agreement. The applicant is no longer interested in being bought out and is seeking to compel the sale, and as noted the respondent is now resigned to that result although he disagrees on the process.
6The parties have had a Settlement Conference, and at the time the matter was heard the matter was set for a Trial Scheduling Conference the next week, which would have already taken place. Although the issue was raised in their materials about the availability of motions such as these after a Settlement Conference, neither raised it at the hearing and both elected to proceed.
Positions/Issues
7As noted, there is no longer a dispute on the sale of McKendry Road as the respondent, who does not want it sold, acknowledges that is the inevitable result given the previous order for sale and the Partition Act and related caselaw. I agree and make that order unopposed.
8In view that, as also noted, the applicant is no longer contesting the respondent’s motion to release the funds currently held in trust equally to the parties; order to go as requested in paragraphs 1 (a) and (b) of the respondent’s Notice of Motion.
9This significantly narrows the dispute down to two distinct issues: what should be the terms of the sale of McKendry Road, and should the net proceeds from the sale of McKendry Road remain in trust until trial to secure the applicant’s claims.
Terms of Sale of McKendry Road
10Although there was much disagreement, there was no law cited regarding the proper terms directing a sale of real property. That seems to be a practical matter unique to the facts. It was over one and three-quarters years ago when the property was ordered to be listed for sale. Even though the choice of listing agent was not in dispute, clearly the parties, even with the help of very able counsel, have not been able to affect the sale. The resistance that eventually required a motion has been on the part of the respondent. More is needed. As the sale must go ahead, I am going to grant the relief requested by the applicant in paragraphs 1 (a) and (b) of the applicant’s motion. Both parties have a clear and obvious interest in maximizing their financial returns, and in view of that those orders may be altered if agreed to by the parties through counsel in writing.
Preservation or Non-Dissipation Orders
Law
11The parties agree that as joint owners of McKendry Road they are both presumptively entitled to their share of the net proceeds from the sale. They also agree that the onus is on the applicant as the moving party to show that a preservation order is necessary with respect to the respondent’s share to protect her interest. They further agree that her request is injunctive relief (see section 101 of the Courts of Justice Act), namely a court order that commands or, in this case, prevents an action.
12As to the law regarding interlocutory injunctions generally, RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] S.C.J. No. 17, at paragraphs 77 and 80 sets out the governing three-part American Cyanamid test [American Cyanamid Co. v. Ethicon Ltd., 1975 CanLII 2598 (FC), [1975] A.C. 396]. At the first stage, an applicant for interlocutory relief must demonstrate a serious question to be tried. That is to be determined based on a common sense and an “extremely limited” review of the case on the merits. A motions court judge should only go beyond a preliminary investigation of the merits when the result of the interlocutory motion will in effect amount to a final determination of the action, where the only issue is a simple question of law, or where there is no real conflict on the facts. At the second stage the applicant must convince the court that he or she will suffer irreparable harm if the relief is not granted. The third branch of the test requires an assessment of the balance of inconvenience.
13Notwithstanding that general test, injunctions seeking to preserve assets prior to trial have always been viewed as largely unavailable based on the principle that execution cannot be obtained before judgment, and judgment cannot be obtained before trial. This is commonly referred to as the ‘general rule in Lister’ from Lister & Co. v. Stubbs, [1886-90] All E.R. 797: see Aetna Financial Services Ltd. v. Feigelman, 1985 CanLII 55 (SCC), [1985] 1 S.C.R. 2, at paragraphs 8 and 9. The court will not grant an injunction to restrain a party from parting with his or her assets so that they may be preserved in case the other party’s claim succeeds (Aetna at para. 8). That is what the applicant is seeking here.
14There are a few long established exceptions to the Lister rule as described in Aetna at paragraph 9. Some have since been codified. For example, there is an exception now found in Rule 45 of the Rules of Civil Procedure to the effect that the rule does not apply where the moving party is seeking a restraint on the removal or dissipation of the very asset that is in question in the proceeding. That is not the case here, as the unjust enrichment claim is with respect to a pension, not McKendry Road. However, other exceptions do apply to the applicant’s claims here as set out below, with the question being whether the applicable tests have been met.
15The first is that there is a codified exception found in section 40 of the Family Law Act that permits the court to make an order restraining the depletion of a spouse’s property that would impair or defeat a claim to support. It is well established that the usual test for an interlocutory injunction as set out in RJR-MacDonald above applies, the first part being whether there is a serious issue to be tried: Taus v. Harry, 2016 ONSC 219 at para. 33; Price v. Price, 2016 ONSC 728 at paragraphs 5 and 6; Fraser v. Fraser, 2017 ONSC 3774 at para. 59; and Cummings v. Cummings, 2020 ONSC 3093 at para. 82.
16The applicant also requests a preservation order related to her claim for unjust enrichment. She argues that the same general interlocutory injunction test (‘serious issue to be tried’) applies. However, she has not established a statutory exception.1 The only available exception comes from the common law and is the relatively more recent Mareva injunction. It is only available where the moving party maintains that there is a real risk that the remaining significant assets of the responding party are about to be removed or disposed of as to render nugatory any judgment obtained after trial (see Aetna at paragraphs 15 and 25). Unless there is a genuine risk of disappearance of assets, either inside or outside the jurisdiction, the injunction will not issue (Aetna at para. 26). It requires the moving party to demonstrate a strong prima facie case rather than a good arguable case (Aetna at para. 30). The full test is set out in Chitel v. Rothbart 1982 CanLII 1956 (ON CA), [1982] O.J. No. 3540 (C.A.) at para. 43, 55 to 57, helpfully summarized by Justice Trimble in Karpacheva v. Karpacheva, 2018 ONSC 4563 at paragraphs 33 and 34 as follows (citations omitted):
33In order for the court to impose a Mareva injunction the party seeking the injunction must satisfy the court of the following things:
a) the plaintiff must also show that he or she has a strong prima facie case;
b) the plaintiff must make full and fair disclosure of all material matters within his or her knowledge;
c) the plaintiff must give particulars of the claim against the defendant, stating the grounds of the claim, the amount thereof, and the points that could be fairly made against it by the defendant;
d) the plaintiff must give the basis for believing that the defendant has assets in the jurisdiction;
e) the plaintiff must give grounds for believing that there is a real risk of the assets being removed out of the jurisdiction, or disposed of within the jurisdiction, or otherwise dealt with so that the plaintiff will be unable to satisfy a judgment awarded to him or her; and
f) the plaintiff must give an undertaking as to damages.
34The factors outlined above are guidelines for the Court to consider as opposed to rigid criteria each of which must be met before the Mareva will issue. The Court, under Section 101 of the Courts of Justice Act, should ask whether it is just and equitable that a Mareva should issue …
17I note that some of those criteria are directed at the circumstances where the injunction is sought on an ex parte basis (ie. subparagraphs 33 (b) and (c)), which is not the case here. They are in addition to the usual interlocutory injunction criteria requiring a finding of irreparable harm and a balance of convenience: see Cummings v. Cummings paragraph 67 citing Electronics Inc. v. Sualim, 2014 ONSC 5050 at para. 67.
18The Mareva injunction test has been applied recently in a number of family law cases, a few of which have already been noted: for example see Karpacheva v. Karpacheva, Laliberte v. Monteith, 2018 ONSC 7032, Hadaro v. Patter, 2019 ONSC 4574, and Cummings v. Cummings.
Analysis
19Regarding the applicant’s support claims, I accept that there is a serious issue to be tried. However, I am not satisfied that she would suffer irreparable harm if the preservation order were not granted, nor am I convinced that the balance of convenience would favour her.
20Depending on whose date of separation is accepted by the court, the applicant’s support claims were brought very roughly about two years after separation. Perhaps because of the ages of the children and her level of earnings, there have been no interim support orders that I am aware of in the four years since separation. There is therefore no evidence that the respondent has avoided or refused to pay an established support obligation, court ordered, or has otherwise ignored court orders.
21The applicant states that it would be hard for the Family Responsibility Office to garnish the respondent’s funds. There is no evidence to support that, and I am unable to take judicial notice of it. The applicant has not suggested that FRO cannot enforce against the respondent’s pension, a known and steady source of income. The legislation suggests otherwise (see the Family Responsibility and Support Enforcement Act, 1996 at s. 1(1)(e)).
22The support preservation order is being sought because it would no doubt be convenient for the applicant to obtain an immediate payout to her of any monies found owing upon judgment. However, she has not established that it would be more convenient than allowing the respondent access to his own money that he indicates he will need to purchase a new home in light of having to vacate McKendry Road when it sells.
23In summary the evidence does not establish that that the applicant will suffer irreparable harm in the sense that there is a real risk that any support amounts awarded at trial could not be recovered, or that the balance of convenience favours her. The request for a section 40 restraining order is dismissed.
24Regarding the preservation order sought with respect to her unjust enrichment claim, the applicant incorrectly sought to apply the same ‘serious issue to be tried’ test. Regardless, she made only one Mareva-type argument in her affidavit, indicating that “the children have told her that the respondent has been telling them about his plans to buy a sailboat to travel around the world” and that she “understands” that he is still a member at the local yacht club. The supposition was that this could happen immediately, despite the pandemic, that it would require all his assets and savings, and that there would therefore be nothing left to satisfy any amount found owing to her on her claims. The alleged statements attributable to the adult children are clearly hearsay. Further, the husband denied saying that, denied being a member of the yacht club, denied being an experienced enough sailor for such an enterprise, and denied any such intention. Perhaps in view that, the applicant made no mention of the alleged ‘sell everything and sail around the world’ risk in either her Factum or in argument.
25The applicant’s main point regarding the injunction related to her unjust enrichment claim was a concern that, despite the respondent having significant assets and indicating that he wanted to purchase a home, he would not have sufficient “liquid” assets to satisfy her claims if she was successful. Without going into the complicated strong prima facie case analysis, in my view, along with the balance of convenience as already noted, that concern simply is not what a Mareva injunction was created to address. For such an injunction to issue, there must be a real or genuine risk of the disappearance of assets, and there is no evidence of that in this case. The inconvenience of just not having liquid assets at hand to satisfy a judgment is insufficient to qualify for the injunction per the test as set out above.
26I would add that, while the applicant appears to have abandoned her argument that there is a real or genuine risk that the respondent will dissipate his assets to defeat her claims, if she truly had such a concern she could have easily maintained the status quo and ensured that his equity in McKendry Road was preserved until after trial. She just needed to do nothing. It is her motion that has compelled the stalled sale. The respondent was resisting it. She had security and chose to release it.
27In summary, the evidence does not satisfy the test for a Mareva injunction. The request for that relief is also dismissed.
Decision
28Orders to go as set out above.
29I note that support payors often prefer that monies be set aside on the sale of real property to satisfy a support order rather than having to deal with FRO enforcement. Sometimes both parties will agree setting aside a sum to secure their expected claim for costs. The respondent here indicated as alternative relief in his Notice of Motion that $50,000 from the monies currently being held in trust ($25,000 each) be set aside pending agreement or other court order. The parties are at liberty to agree to a similar arrangement regarding net proceeds from the sale of McKendry Road as between themselves.
30Both parties have requested costs. That is a complicated matter, with settlement on some issues, some compromise on the eve of the hearing, and some mixed results. Appreciating that there may be other factors to consider that are unknown, such as offers to settle, if the parties still want to address me on that issue they can request a 30 minute Zoom hearing from the Trial Coordinator, provided that they do so within 10 days.
Mr. Justice Timothy Minnema
Date: July 13, 2021