The Issue and the Positions of the Parties on this Motion Brought by the Applicant

1Should this Court make a preservation or non-dissipation of assets order arising from the recent sale of real properties by a corporation or corporations wholly owned by its/their exclusive shareholder, the Respondent Mr. Crosier? That is the singular issue to be decided by this Court.

2The moving party Applicant, Ms. Crosier, says yes. In her Notice of Motion dated 25 August 2021, she seeks “[a]n Order that the Respondent…shall not deplete and shall preserve his assets in Ontario, in Canada and abroad, for support and property purposes pursuant to sections 12 and 46 of the Family Law Act including but not limited to [five real properties in the Niagara area]”. Really, the net amount of the proceeds of sale of the Niagara properties is what Ms. Crosier seeks to preserve.

3Mr. Crosier says no, at least not in the broad form of the order being requested.

The Uncontroverted Facts

4There is no question that:

i. several real properties in the Niagara area were recently sold;

ii. those Niagara properties were owned by Lyons Montrose Inc. and/or Lyons Montrose Holding Inc.;

iii. at the time of the recent sale(s), Mr. Crosier was the exclusive shareholder of the two corporations;

iv. Ms. Crosier has advanced a claim in this proceeding that she is, in fact, and despite a Share Purchase Agreement between the parties that suggests otherwise, the real 100% owner of the corporations;

v. Mr. Crosier vehemently denies that claim;

vi. in a Final Order dated June 28, 2019, Justice Kurz, at clause 28 therein, expressly identified the remaining issues yet to be determined as including the parties’ respective interests in the Niagara properties owned by the corporations;

vii. Mr. Crosier has acknowledged, under oath or affirmation, at out-of-court questioning, that Ms. Crosier “owns half this land”, that is the Niagara real property that is in the name of one or both of the corporations (see page 132 of the electronic PDF file of the Applicant’s August 12, 2021 affidavit);

viii. notwithstanding Mr. Crosier’s oral submission at Court that Ms. Crosier knew about the sale(s) of the Niagara properties in advance, something denied by Ms. Crosier, there is no evidence that Ms. Crosier was actively involved in the sale(s) in any way;

ix. the sale(s) generated net proceeds, and none of those net proceeds has been paid to date to Ms. Crosier, and nobody except Mr. Crosier (not even Mr. Eakins) knows anything about the net proceeds.

The Law

5This Court, if it considers it necessary for the protection of Ms. Crosier’s interests under Part I of the Family Law Act, R.S.O. 1990, c. F.3, as amended, which Part deals with family property, has the jurisdiction to make an order, whether temporary or final in nature, restraining the depletion of Mr. Crosier’s property and/or for the preservation of that property – section 12 of the Family Law Act.

6For the purposes of section 12, “property” includes any interest in real property, even (in some circumstances) property already disposed of – section 4(1) of the Family Law Act, the definition of “property”.

7A former spouse (one already divorced), like Ms. Crosier, may be granted a section 12 Family Law Act order. As noted by Justice Kristjanson in Laliberte v. Monteith, 2018 ONSC 7032, at paragraph 23, that is clear from the plain wording of section 7(1) of the Family Law Act.

8Where the party seeking the section 12 order has a contingent claim, that is one that depends on successfully setting aside a contract before the claim can materialize, and where the property sought to be preserved is not owned by the other spouse (or former spouse) but rather by a non-party to the proceeding, the court ought to assess whether the standard test for a Mareva injunction has been met. Laliberte, supra, at paragraphs 25 through 33, and Dimartino v. Dimartino, 2016 ONSC 7461, a decision of Justice Charney, at paragraphs 25 through 31.

9Finally, a section 12 Family Law Act order should generally be restricted to specific assets, as an overly broad order could run the risk of significantly and unreasonably interfering with the operation of a business, for example. Lasch v. Lasch, a decision of Justice Granger, quoted approvingly by Justice Kristjanson at paragraph 41 of Laliberte, supra.

The Law as Applied to Our Facts

10Relying on Lasch, supra and Laliberte, supra, I conclude that the order being sought by Ms. Crosier is too broad. It seeks to restrain unspecified assets of Mr. Crosier, wherever they may be. I will not accede to that request.

11I strongly disagree, however, with Mr. Crosier’s submission that our claimant must meet the test for a Mareva injunction. Factually, our case bears absolutely no resemblance to what Justices Kristjanson and Charney were confronted with. In Laliberte, supra, the party seeking the section 12 Family Law Act order made wild, bald, unsupported allegations about the other side having transferred assets off-shore and into the names of relatives, friends, and other entities, and then she sought to restrain that property of those non-parties (see paragraph 15 of the decision). No wonder the Justice in that case held that a fairly high hurdle needed to be cleared. In Dimartino, supra, the requesting party was attempting to attack multiple transfers of property as amounting to fraudulent conveyances, but the main complaint in that case was with regard to a sale of a property by the husband to the husband’s son (see paragraph 6 of the decision). Justice Charney concluded that the Court could not determine the wife’s motion absent her commencing a civil action, under section 2 of the Fraudulent Conveyances Act, against the seller of the property that was the subject of the impugned transaction (the husband’s business) and against the buyer of the property (the husband’s son) – paragraph 42 of the decision.

12In our case, Mr. Crosier was at the time of the recent sale(s), and still is, in substance, the seller. He was, and still is, Lyons Montrose. He, unquestionably, in the face of Justice Kurz’ Final Order, and despite his admission at questioning that Ms. Crosier “owns half this land”, sold that land, and received the net proceeds, and kept the net proceeds, and failed to pay any of the net proceeds to Ms. Crosier, and failed to disclose any of the details of the sale(s) or the net proceeds. And now he asks this Court to hold Ms. Crosier to the standard of meeting the test for a Mareva injunction because he knows, for example, that she cannot possibly meet that test as it has been set out at paragraph 31 of Laliberte, supra, with reference to the decision of Justice Trimble in Ekaterina Ivanova Karpacheva v. Valery Vladimirovich Karpacheva, 2018 ONSC 4563, at paragraph 33. Why, for instance, I ask rhetorically, would Ms. Crosier provide an undertaking as to damages when there is an acknowledgement by the other side that she is entitled to at least half of the net proceeds of sale? Why, in the same vein, would Ms. Crosier have to establish that there is a serious risk that Mr. Crosier will remove property or dissipate assets before judgment when he, admittedly, just did exactly that? With respect, it makes no sense to employ the Mareva injunction test to our facts.

13The net proceeds of sale of these Niagara properties, that total amount of money, whatever it is and wherever it is (known only to Mr. Crosier), is “property”. And it is a specific asset, not vague or overly broad, in the name(s) of one or both of the corporations. And those corporations, for our purposes here in a family law case dealing with an equitable and discretionary remedy (as opposed to a commercial case about piercing the corporate veil), are Mr. Crosier.

14Despite the very able submissions of Mr. Eakins, I will not permit a technical splicing of the party/non-party conversation, on our facts, to defeat the relief being sought in our case. I am persuaded, on balance, that a narrow order is truly necessary for the protection of Ms. Crosier’s property interests.

This Court’s Order

15This Court, therefore, orders that Mr. Crosier and the two named corporations are hereby restrained from depleting any of the net proceeds of sale of the Niagara properties, and further this Court orders that all of the net proceeds of sale of the Niagara properties shall be preserved pending a further order of a court of competent jurisdiction.

16The result is that the Applicant’s Motion is allowed in part.

Costs

17If costs cannot be agreed on, I will accept brief written submissions. The Applicant shall file hers within thirty (30) calendar days of the date of this Endorsement. The Respondent shall file his within fifteen (15) calendar days after his or Mr. Eakin’s receipt of the Applicant’s submissions. No reply is permitted without leave of the Court. Each submission shall be limited strictly to three pages in length, excluding attachments. Any submission that does not comply with these directions will not be read.

18I thank Mr. Stangarone and Mr. Eakins for their very helpful authorities, written argument, and oral submissions. They focussed on what was really important and did not waste any time or money. Much appreciated.

“C.J. Conlan”

C.J. Conlan J.

Date: November 11, 2021

Crosier v. Crosier, 2021 ONSC 7462

Case Summary

The Issue and the Positions of the Parties on this Motion Brought by the Applicant

The Uncontroverted Facts