Court File and Parties
COURT FILE NO: FC-19-2064 DATE: 2022-02-15 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Erin McKay, Applicant AND Carl Vlazny, Respondent
BEFORE: The Honourable Mr. Justice Marc Smith
COUNSEL: Judy Overgaard as friend of the Court on behalf of the Applicant Richard Bowles, Counsel for the Respondent
HEARD: February 9, 2022 by video conferencing
Reasons for Decision
M. Smith J
[1] The Applicant brings a motion for the following reliefs:
a. An order granting the Applicant permission to amend her Application to include: (i) an alternate claim for a constructive trust; (ii) damages for the intentional infliction of mental suffering and distress; and (iii) restraining the Respondent from disseminating compromising videos and/or photographs of the Applicant.
b. An order permitting an appraisal of the property municipally known as 51 Counsel Road, Coolbellup, Western Australia (“Australian Property”).
c. An order for disclosure in accordance with paragraphs 5, 6 and 7 of the Applicant’s Notice of Motion dated January 26, 2022.
[2] The Respondent seeks a dismissal of the motion.
[3] For reasons that follow, the Applicant’s motion is partially granted.
Issue #1 – Amendment of the Pleadings
Legal principles
[4] Rule 11(3) of the Family Law Rules, O.Reg. 114/99 (the “FLR”) reads as follows: “On motion, the court shall give permission to a party to amend an application, answer or reply, unless the amendment would disadvantage another party in a way for which costs or an adjournment could not compensate.”
[5] The rule is mandatory, and an amendment may be permitted at any stage of the proceedings: see Lerus v. Vilgrain, 2020 ONCJ 77, at paras. 315 and 316.
[6] An amendment will be allowed unless the opposing party can demonstrate bad faith or that the amendment will cause disadvantage that cannot be remedied through costs or an adjournment. The fact that the amendment is an afterthought or whether it raises a new issue is irrelevant: see Smith v. Smith, 2021 ONSC 1990, at paras. 18 to 24.
[7] The amendment must be allowed unless it is plain and obvious that it discloses no reasonable cause of action. The party resisting the amendment must demonstrate that the amended claim stands no change of success: see Cohen v. Estate of Cohen, 2021 ONSC 2463, at paras. 44 to 47.
Analysis
[8] The Respondent reminds the Court that the parties have been in litigation for 4.5 years, comprised of many Court appearances, such as seven (7) Settlement Conferences, two (2) procedural motions and two (2) contested motions. The matter was originally on the January 2021 trial list, but the trial is now scheduled to proceed in May 2022.
[9] The Respondent argues that the Applicant treats the litigation as a game, and she has no real interest in any of the requests made. At paragraph 9 of his affidavit sworn on February 3, 2022, he states: “The Applicant’s entire approach to litigating this separation is the creation of straw man arguments and fallacies reinforced with false righteous indignation and contrived moral outrage. She relies heavily on mistruths, incomplete evidence, sly but destructive innuendos and cherry picking to create her arguments.”
[10] The Respondent outlines at great length the impact that this litigation has had on the family, including the children. He alleges that the Applicant has “waged an outrageously malicious campaign to take away my liberty”, including allegations of violence, abuse, neglect, and sexual misconduct complaints to the police, the Children’s Aid Society, and other institutions.
[11] The Respondent says that if the disadvantage that would be occasioned by an amendment, is not one that can be addressed by costs or an adjournment. The Respondent suggests that the overriding principle of fairness would not be met if the Applicant was permitted to amend her pleadings and the trial was postponed.
[12] The Respondent states that the Applicant is not coming to Court in good faith. In her original Notice of Motion, the Applicant was seeking to designate the Australian Property as the matrimonial home, while now, she is asserting a constructive trust. It is argued that the Applicant does not have clean hands because she is changing her position three (3) months before trial (i.e. designation of matrimonial home to constructive trust), and she is adding a new issue (i.e. damages claim) that is significant. For 2.5 years, the Respondent has known the case that needed to be met, only to be told that it is now a completely different case.
[13] The Respondent submits that it is plain and obvious that the amended claims will not succeed for the following reasons:
a. The Applicant’s claim for constructive trust is devoid of merit. The Respondent says that the Applicant has misrepresented the amount of money that she has contributed, and she has grossly exaggerated her efforts in maintaining the property or her role in the repairs to the Australian Property.
b. The tort claim is fraught with difficulty because the facts necessary to support the claim of intentional infliction of harm have not been plead nor do they exist. The Respondent acknowledges that his behaviour of recording a sexual act with the Applicant was inappropriate, but he was sentenced accordingly to the severity of his offence. He denies that he has distributed the content of an intimate video elsewhere, or that he intended to cause the Applicant harm. He says that the Applicant has suffered from mental health problems before the alleged incidents in question. Furthermore, the Respondent says that amending her pleadings has been a live issue since January 2021, and the fact that the Applicant is pleading ignorance at this late stage of the proceedings is tantamount to bad faith.
c. In terms of the injunction, the Applicant is seeking a substantive relief, but it is not plead in the proposed Amended Application.
[14] As noted above, the rule for an amendment of a pleading is mandatory. The bar to oppose an amendment is high.
[15] I am not persuaded that the proposed amendments have no chance of success. In assessing whether the proposed amendments are not tenable in law, the Court must presume that the facts relied upon are true, unless patently ridiculous or incapable of proof. In respect to the constructive trust, there is some evidence before me that the Applicant made contributions, financial and otherwise, to the Australian Property. The Respondent may disagree with the extent of that contribution, but it cannot be said that the Applicant’s constructive trust claim discloses no reasonable cause of action.
[16] A claim for the tort of intentional infliction of mental suffering and emotional distress is recognizable in law. The Respondent acknowledges that intimate matrimonial images were routinely exchanged and collected between the parties. The Respondent claims that it was consensual, while the Applicant says that the Respondent was secretly recording her and taking photos of her without her knowledge. The Respondent was criminally charged with voyeurism and received an absolute discharge. The Applicant pleads that she has been diagnosed with PTSD, and she has been receiving therapy because of the Respondent’s conduct. I am not required to look at the factual merits of the Applicant’s claim. Rather, I must determine if the amendment raises a tenable claim. On the record before me, I find that there is sufficient evidence to conclude that the Applicant’s claim is tenable.
[17] The injunction being sought is not without factual foundation, in that there are comprising photos and/or videos in existence. I acknowledge that the Respondent denies any wrong-doing but again, at this stage of the proceedings, my analysis is one of tenability of pleadings.
[18] Another factor to consider is the duplicity of proceedings. If the request to amend the Applicant is to be denied, the Applicant would be able to commence a separate civil action for her damages claim. The historical nature of the parties’ relationship will have to be addressed in the family proceedings because, as noted by Summers J. in her Settlement Conference Endorsement, one of the issues to be determined at trial is the return and destruction of the electronic information, being the compromising and intimate photos and/or videos. Although the evidence given in the family proceedings regarding these issues would not be as extensive as in the civil proceedings, there would nonetheless be an overlap, it would be duplicative, and there is a slight chance that inconsistent findings may be made by different triers of fact. In my view, this should be avoided.
[19] While it is unfortunate that the Applicant did not move quickly enough with her motion to amend, I am not satisfied that the Applicant exhibited bad faith behaviour. Also, the Respondent was aware that these amendments were forthcoming. At the October 22, 2021 Settlement Conference before Summers J., the Applicant raised the issues of the constructive trust, the return and destruction of electronic information. Furthermore, in the Trial Scheduling Endorsement Form (“TSEF”) that was circulated after the Settlement Conference, it is noted that the Applicant wishes to amend her Application to include a claim for damages resulting from the intimate videos and photos being surreptitiously made without her knowledge or consent.
[20] I can appreciate the Respondent’s desire that he wishes to end a conflict that has been emotionally draining. He says that prolonging the litigation is not in the best interest of the children. The Respondent’s sentiment is one that is generally shared by many family law litigants and it is a factor that needs to be considered. However, in this case, I do not believe that it is sufficient. The parenting issues that would have a direct impact upon the children have already been resolved. The remaining issues, while important and arguably lingering, are not urgent. The Respondent has not convinced me that if the amendment was permitted, he would suffer any other form of disadvantage that cannot be remedied by costs or an adjournment.
[21] The Applicant is permitted to amend her Application. The May 2022 trial date shall be vacated, and the matter shall be placed on the next available trial sitting. This adjournment will provide the parties sufficient time to proceed to further questioning, disclose additional documents and obtain expert reports.
Issue #2 – The Appraisal of the Australian Property
[22] The Applicant seeks an order permitting an appraisal company to attend at the Australian Property for the purposes of obtaining a valuation of the property at the date of marriage, date of separation and today’s value.
[23] The Respondent says that he obtained and served two (2) separate comparative market analysis valuations on the Australian Property from two (2) separate real estate agents. He also submits that the Applicant has not produced any valuations on her property in Australia, nor has she obtained an appraisal.
[24] The Applicant argues that one of the valuations obtained by the Respondent is from a friend. Further, the Applicant also obtained an appraisal from a real estate agent but claims that the results are exceedingly different from one another. The Respondent’s real estate agent estimates the value at the date of marriage and separation to be $530,837 and $434,332, respectively. In comparison, the Applicant’s real estate valuation at the date of marriage and separation are between $450,000-$470,000 and $515,000-$545,000, respectively.
[25] Given the discrepancies between the real estate valuations, the Applicant submits that a proper certified appraisal of the Australian Property is necessary.
[26] To my knowledge, there are no rules under the FLR or other legislation that requires a family law litigant to obtain a formal appraisal of the property. That said, I can see the value in obtaining an appraisal in circumstances where the letters of opinion provided by the real estate agents lack in substance or as in this case, are strikingly different from one another. I assume that the formal appraisal by a certified appraiser will be more comprehensive and include an in-depth analysis about the market value of the property at the various dates. On that assumption, the appraisal may be of great assistance to the trier of fact.
[27] With the trial being postponed, I see no prejudice to the Respondent with allowing the Applicant to obtain an appraisal. Also, the Australian Property is a significant asset for the parties and its value may have an important impact on the Net Family Property (“NFP”) calculation.
[28] The Applicant shall be permitted to obtain an appraisal of the Australian Property, within 30 days, at her own costs. The expense of obtaining an appraisal can be disputed at trial.
[29] Regarding the Applicant’s own property in Australia, during argument, counsel indicated that it is the Applicant’s intention to obtain a formal appraisal of this property, at her own costs.
Issue #3 - Disclosure
Legal principles
[30] Rule 13 of the FLR sets out the financial disclosure that is required for family law proceedings.
[31] Rule 2(2) of the FLR states that the primary objective of the rules is to enable the Court to deal with cases justly.
[32] Full and frank disclosure is important in family law cases but there is an element of proportionality, common sense and fairness built into the FLR. The Court needs to consider the materiality of the disclosure requested: see McDowell v. McDowell, 2021 ONSC 1954, at paras. 25 to 30.
Analysis
[33] The Applicant says that since the filing of the Notice of Motion, the Respondent has provided additional disclosure. The remaining disclosure being requested is set out in the Applicant’s draft Order dated February 9, 2022, (the “Draft Order”) and described below.
Intimate Images
[34] The Applicant is seeking the disclosure of all intimate videos and photographs in the Respondent’s possession. She argues that the evidence is relevant and necessary to her damages claim and notes that this issue was referenced by Summers J. in the TSEF.
[35] I agree.
[36] I note that in the Respondent’s affidavit, he says that he is in possession of intimate images. He writes at paragraph 49 of this affidavit that: “All private material from the marriage is stored in my safe and labelled ‘for my lawyer’s eyes only’ and has remained that way since February 2020, after my arrest and charge.”
[37] Given that the tort of intentional infliction of mental suffering and emotional distress is now going to be an issue at trial, I find that the intimate images and videos are relevant and necessary.
[38] The Respondent shall provide to the Applicant, within 30 days, a copy of all videos and photographs that are in his possession, as described in the Draft Order.
Financial Disclosure
Paragraph 6(i) of the Draft Order
[39] The Applicant seeks the “bank statement to confirm the deposit amount of the Canadian tax return paid to the Respondent in May 2020, for the 2019 tax year.” This is not required. The income tax return which has been produced by the Respondent is sufficient evidence to confirm that the Respondent has received a refund.
Paragraph 6(ii) of the Draft Order
[40] The Applicant seeks “evidence of value of the Respondent’s RRSPs as of the date of separation”. This is not required. According to the Respondent, he has produced his 2019 RRSP statement from Manulife.
Paragraphs 6(iii) to (x) of the Draft Order
[41] The Applicant seeks evidence of value of the Respondent’s personal effects. Under Part 4(b) of his Financial Statement, the Respondent estimates that the market value of his general household items and vehicles totals $88,040 on the date of marriage and $33,600 on the date of separation. During argument, counsel for the Respondent confirmed that the source of the value of the Respondent’s personal effects has not been disclosed.
[42] The Respondent submits that the request for this type of disclosure is unreasonable and disproportionate. He reasons that if he was to remove the $88,040 of disputed personal items for which disclosure is requested, the resultant NFP value would remain in the negative, namely minus $49,792. There is therefore no need to disclose it.
[43] I believe that the Respondent’s reasoning is flawed. First, the Respondent is not prepared to remove the $88,040 from his Financial Statement. By relying upon these values at trial, the Applicant is surely entitled to receive evidence as to how the Respondent determined the values set out in his Financial Statement. Second, the Respondent improperly assumes that all other values that he has inserted in his Financial Statement will be accepted by a trier of fact.
[44] At paragraph 91 of the Respondent’s affidavit sworn February 2, 2022, he explains his valuation methodology regarding the personal items as follows: “Values in my financial statement are based on parametric estimations of other similar items widely existing on the internet, and the difference between purchase and sale amounts, given their various states of wear and tear and the short duration of our marriage.” Clearly, the Respondent relied upon various sources on the internet to arrive at his valuations. The Applicant is entitled to this evidence.
[45] The Respondent is to provide evidence of value for the personal effects set out under Part 4(b) of his Financial Statement.
Paragraph 6(xi) of the Draft Order
[46] The Applicant seeks evidence of value for the Respondent’s Australian business as of the date of separation. The Respondent’s evidence is that there was no business because it failed to succeed. As such, there are no assets/liabilities, income, or expenses, as set out in his notice of assessment and tax returns. This issue was also covered during questioning. I am satisfied that there is no basis to request further disclosure. The Applicant’s request is denied.
Paragraph 6(xii) of the Draft Order
[47] The Applicant requests that the Respondent provide financial disclosure of the monies transferred in 2019 to the Respondent’s sister, Makayla Webb. The Respondent responds that he has produced 12 months of bank statements and no transfer to Ms. Webb is listed in those statements because it never happened. In my view, sufficient disclosure has been made. The Applicant’s request is denied.
Paragraph 6(xiii) of the Draft Order
[48] The Applicant claims that the Respondent had student loans owing as of the date of marriage. On the evidence before me, I see no basis for this request. The Applicant’s request is denied.
Paragraph 7(i) to (iv) of the Draft Order
[49] The Applicant says that on January 8, 2020, Associate Justice Kaufman ordered that the Respondent produce bank statements for year 2019. The Applicant argues that there are missing years and/or months in the disclosure produced by the Respondent. In response, the Respondent says that the request has been satisfied.
[50] Regarding the request at paragraph 7(i) of the Draft Order, the Applicant has provided evidence that the Royal Bank account exists. The Respondent is to provide the 2019 statements.
[51] The request set out at paragraphs 7(ii) of the Draft Order is denied. I see no basis to request the bank statements of December 25, 2019 to January 24, 2020.
[52] Paragraph 7(iii) of the Draft Order pertains to a BankWest account. There is no reliable evidence before me that this account exists. The Applicant’s request is denied.
[53] Paragraph 7(iv) of the Draft Order deals with some missing BankWest account statements. The Respondent has produced some but not all the statements. The Applicant’s request for the January 1, 2019 to February 19, 2019 bank statements is granted.
Undertakings
[54] The Applicant seeks an order that the undertaking given by the Respondent on November 12, 2020, be fulfilled. The undertaking that was agreed upon reads as follows: “Okay. So, let’s do an undertaking, Mr. Bowles, let’s get those police records to the extent that they exist and we’ll both get our clients to fill out the necessary documents. Are you in agreement with that?”
[55] The Respondent says that his police reports from the 911 calls have been produced.
[56] In her reply affidavit sworn on February 4, 2022, the Applicant acknowledges that the Respondent produced disclosure for the 911 calls, but not the police records in relation to the criminal charges for voyeurism.
[57] The excerpt of the transcript provided by the Applicant does not allow me to conclude that the undertaking given was as broad as what is being requested. The Respondent has fulfilled his undertaking.
[58] The Applicant’s request is denied.
Conclusion
[59] For the reasons set out above, I make the following orders:
a. The May 2022 trial date is vacated. The trial is adjourned to the next available trial sitting.
b. Pursuant to s. 11(3) of the FLR, the Applicant shall be granted permission to amend her Application signed October 21, 2019, to include (i) an alternate claim for damages for a constructive trust interest in the Australian Property; (ii) a claim for intentional infliction of mental suffering and emotional distress; and (iii) a restraining order regarding the dissemination of compromising videos and/or photographs. The Applicant shall file and serve her amended Application within 30 days of the date of this decision.
c. The Applicant shall be permitted to obtain an appraisal of the Australian Property, within 30 days of the date of this decision.
d. Within 60 days of the date of this decision, the Respondent shall disclose the following:
i. The intimate videos and photographs taken by the Respondent of the Applicant in his possession, as set out at paragraph 5 of the Draft Order.
ii. The evidence of value for the Respondent’s personal effects that are detailed under Part 4(b) of his Financial Statement sworn February 3, 2022.
iii. The bank statements referred to at paragraph 7(i) and 7(iv) of the Draft Order.
Costs
[60] Although the Applicant has partially succeeded in her motion, I am not inclined to award any costs because of the Applicant’s delay in her request to amend the Application. However, if a party wishes to make written submissions on costs, that party shall file and serve written submissions (maximum three (3) pages, excluding the Bill of Costs and Offers to Settle) within 30 days of the date of this decision. The other party shall then respond within 15 days thereafter, with the same page limitations.
M. Smith J
Released: February 15, 2022