Court File and Parties
COURT FILE NO.: FC-20-886 DATE: 2022-07-05 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Sophie Sourges, Applicant AND Estate of Nick Sourges c/o James Sourges Estate Trustee, Respondent
BEFORE: The Honourable Mr. Justice Marc Smith
COUNSEL: Amanda M. Estabrooks, Counsel for the Applicant Gregory Ste. Marie, Counsel for the Respondent
HEARD: June 6, 2022, by video conferencing
REASONS FOR DECISION
M. Smith J
1The Applicant brings a motion against the Respondent, the Estate of Nick Sourges, pursuant to s. 56(4) of the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”), seeking to set aside the marriage contract, including the list and assets of liabilities (“Schedule A”) of the deceased, Nick Sourges (“Deceased”) dated November 5, 1993 (“Marriage Contract”).
2The Respondent opposes the motion.
3For reasons that follow, the Applicant’s motion is dismissed.
Background
4The parties met in 1992. Shortly thereafter, they entered into a relationship and began to cohabit, sometime during the summer of 1992.
5On November 5, 1993, the parties entered into the Marriage Contract.
6The parties married on November 7, 1993.
7The parties remained married for almost 26 years, until the Deceased’s passing on September 24, 2019.
Legal principles
8Rule 16(1) of the Family Law Rules, O. Reg. 114/99 (“FLR”), provides that a party may make a motion for summary judgment on all, or part of the claim.
9Rule 16(6) of the FLR states that a court may make a final order where there is no genuine issue requiring a trial of a claim or defence.
10Section 56(4) of the FLA empowers the court to set aside a domestic contract, or a provision in the contract, if: (a) a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made; (b) a party did not understand the nature or consequences of the domestic contract; or (c) otherwise in accordance with the law of contract.
11The court’s analysis to set aside a domestic contract comprises of a two-part process. First, the party seeking to set aside the domestic contract must demonstrate that one or more of the circumstances set out in s. 56(4) of the FLA has been engaged. Second, if the first step has been met, the court must consider whether it is appropriate to exercise discretion in favour of setting aside the domestic contract: Virc v. Blair, 2016 ONSC 49, at paras. 86-87; affirmed on appeal 2017 ONCA 394.
12Section 13 of the Evidence Act, R.S.O. 1990, c. E.23 provides that in an action against a deceased person, a party shall not obtain judgement on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence.
13Material facts occurring before the death of a party must be corroborated by the other party alleging them. The reason is that the deceased person is not available to provide their own versions of the facts: Orfus Estate v. Samuel & Bessie Orfus Family Foundation, 2011 ONSC 3043, at paras. 13 to 16.
The position of the parties
The Applicant
14The Applicant submits that there are sufficient grounds to set aside the Marriage Contract under sections 56(4)(a) and (b) of the FLA.
15The Applicant says that, approximately one week before her wedding, she was pressured by the Deceased to enter into the Marriage Contract, and she did not understand what she was signing. The Applicant relies upon the following:
a. The Deceased told the Applicant that the Marriage Contract needed to be signed, failing which, the wedding would not proceed.
b. The Deceased made representations to the Applicant that if she signed the Marriage Contract, he would pay all expenses, pay all of the bills, put aside money every year for her benefit, she would be a beneficiary of a life insurance policy, and she would continue to get support from the Deceased’s businesses, until her death.
c. The Deceased chose the lawyer for the Applicant and made an appointment, without the Applicant’s input. The Deceased drove the Applicant to her appointment while he waited outside in the car. The Applicant met with the lawyer named Inderjeet Singh Bhoi, to review the Marriage Contract.
d. Mr. Bhoi had an ongoing business relationship with the Deceased.
e. The Applicant did not sign a retainer agreement with Mr. Bhoi. The Applicant met with Mr. Bhoi on one occasion, to sign the Marriage Contract.
f. There is no record of Mr. Bhoi advocating for changes to the Marriage Contract or negotiating terms on her behalf, nor did the Applicant have an opportunity to even instruct Mr. Bhoi to do so.
g. Mr. Bhoi took no steps to address the power imbalance between the Deceased and the Applicant.
h. The Applicant signed the Marriage Contract without fully understanding its content. The terms of the Marriage Contract were not explained to the Applicant. The Applicant only received a copy of the Marriage Contract one year later.
i. The Deceased paid for Mr. Bhoi’s account for professional services.
j. The Applicant did not truly receive independent legal advice from Mr. Bhoi. The Applicant was vulnerable and needed someone to look after her interests.
16The Applicant says that she was questioned by counsel for the Deceased regarding all of the foregoing events leading up to the signing of the Marriage Contract. It is submitted that the Applicant’s evidence was credible and given in a forthright manner. The Applicant argues that she was consistent in her responses, and she has never wavered in her evidence.
17The Applicant argues that she was in a vulnerable position, and she had a significant inequality of bargaining power vis a vis the Deceased. The circumstances of the transaction were oppressive, pressure driven and led to the Applicant’s exploitation as a vulnerable party. The Applicant submits that there are sufficient grounds to set aside the Marriage Contract.
18In addition to the above, the Applicant says that the Deceased failed to provide evidence documenting the value of the assets set out in Schedule A. Furthermore, the Applicant submits that the Deceased failed to disclose significant assets, at the time of the signing of the Marriage Contract. Specifically, the Applicant refers to an abstract of a property located at 1113 Cyrville Road, in the city of Ottawa, showing that the Deceased purchased this property in 1987 and sold it after the signing of the Marriage Contract. The Applicant states that the Deceased owned this property at the time of marriage and that the Deceased failed to list this asset in Schedule A of the Marriage Contract.
19The Applicant argues that the Marriage Contract should be set aside because the Deceased failed to make full disclosure of his significant assets.
The Respondent
20The Respondent concedes that the Marriage Contract does not operate to exclude the business assets of the Deceased from equalization in the event of death. Notwithstanding, the Respondent argues that the validity of the Marriage Contract is an issue for trial and that the Applicant’s credibility is best determined by oral evidence at a trial. It is submitted that when weighing the evidence and evaluating the credibility of the Applicant, it should not only be restricted to the evidence around the issue of the Marriage Contract. Rather, the court should evaluate the totality of the Applicant’s evidence and credibility on all issues.
21The Respondent submits that there are genuine issues requiring a trial because of the numerous credibility issues raised with regards to the Applicant. Examples of such credibility issues are summarized below:
a. During questioning, the Applicant’s evidence was that she never spoke to Mr. Bhoi about “financial stuff”, that “I never spoke to him about anything, I never talked to him at all, I just went into his office and signed”, that “I didn’t read it, I didn’t read anything”, and “I never saw anything, I just initialed the pages and left.” It is argued by the Respondent that this strains credulity in the face of the certificate of independent legal advice of Mr. Bhoi that reads, in part, the following: “…that I acted solely for her and explained fully to her the nature and effect of the said Agreement and she did acknowledge and declare that she fully understood the nature and effect thereof and did execute the said document in my presence and did acknowledge and declare and it appeared to me that she was executing the said document of her own volition and without fear, threat compulsion or influence of Nick Sourges or any other persons.”
b. The Deceased had his own lawyer, Stuart Herbert, who also provided a similar certificate of independent legal advice.
c. Mr. Herbert and Mr. Bhoi are both deceased. The Deceased’s son, Jim Sourges, does not know Mr. Bhoi and as far as he is aware, the Deceased did not have a regular working relationship with Mr. Bhoi.
d. Schedule A of the Marriage Contract lists the Deceased’s net worth, as of September 30, 1993, well before the signing of the Marriage Contract.
e. The credibility of the Applicant must be assessed in relation to what she says was promised by the Deceased, in the face of the obvious intent of the Marriage Contract that all his business-related assets were excluded from equalization, couple with the fact that the Applicant did not have any information about the Deceased’s business or financial affairs, such as:
i. The Deceased told the Applicant that she, and many others, were owners of the business, but there is no supporting affidavit from third parties regarding this assertion.
ii. The Applicant claims to have an interest in the Deceased’s various businesses such as N.J. Investments Limited, N.M.J. Investments Limited, Sourges N. Investments Limited, and N.M.J. Holdings Limited, but the Applicant does not have any knowledge about these companies.
iii. The Applicant claims to have an interest in the Sourges Family Trust, but the Applicant does not have any information regarding this trust.
iv. The Applicant claims to have an interest in the property at 1080 Ogilvie Road because the Deceased would have promised her that she would inherit a part of the building, known as the plumbing showroom.
v. The Applicant claims to have an interest in the property in Greece because the Deceased told her that she should have it and that she would be spending her summers on this property.
vi. The Applicants claims to have an interest in the properties municipally known as 145 and 146 Stewart street, in the city of Ottawa, because the Deceased said that she would possess part of it.
f. Jim Sourges, the Deceased’s son, gave evidence that the Applicant became a manager of the plumbing showroom, and she was never involved in any of the corporate workings or financing of the businesses. The Applicant was never a shareholder, never had signing authority, and was never asked to provide security on any loans or to give input on any financial matters.
22The Respondent points out that the only evidence regarding the events leading up to the forming and signing of the Marriage Contract is the Applicant’s own testimony. There are no other witnesses or documents corroborating the Applicant’s version of events. The Respondent states that, in these circumstances, the issue of the Applicant’s credibility is accentuated and must be closely scrutinized.
23Regarding the failure to disclose the property located at 1113 Cyrville Road, the Respondent says that the Deceased was not the beneficial owner of that property. The Deed shows that the owner is “Sourges, Nick In Trust”. It is therefore inappropriate to conclude that the Deceased failed to disclose assets because the record is not determinative that this is in fact the case.
24The Respondent relies upon s. 13 of the Evidence Act and argues that the Applicant is not able to corroborate any of her claims regarding the events leading up to and including the signing of the Marriage Contract or the Deceased alleged failure to disclose or provide documents substantiating the value of the assets and liabilities set out in Schedule A.
Analysis
25The validity of the Marriage Contract cannot be dealt with summarily. This issue needs to be determined in the context of a trial, on a full evidentiary record.
Failure to understand – 56(4)(b) of the FLA
26The Applicant alleges that she did not understand the terms and conditions of the Marriage Contract. She did not review the terms and conditions of the Marriage Contract, including Schedule A. She was not afforded the opportunity to review the Marriage Contract. She did not receive independent legal advice. She was pressured to sign the Marriage Contract, failing which she would not have gotten married.
27In my view, because there is no corroborating evidence regarding the events leading up to the forming and signing of the Marriage Contract, the Applicant’s evidence must be carefully scrutinized. Determining if the Marriage Contract is valid is fundamentally tied to the Applicant’s credibility.
28At the cross-examination dated February 9, 2022, the Applicant testified as follows regarding the forming and signing of the Marriage Contract:
a. Two days before the marriage, the Deceased asked her to sign the Marriage Contract, which he explained was needed if there was a breakdown in the marriage. The Applicant was upset. She told the Deceased that a contract was not necessary.
b. The Applicant denied reading the Marriage Contract, saying, “No, sir. I never read it. I never read anything in the contract. I just initialed it and I left and went into the car with my husband.” It was suggested to the Applicant that there was a discussion about listing the respective assets and liabilities. The Applicant responded, “No, sir. I don’t know anything about that. Nothing was discussed with me. I don’t know who it was discussed with, but not with me.”
c. The Applicant was asked on whether she disbelieved the statement of assets and liabilities that was set out in Schedule A. She responded, “I’ve got to think about that. I don’t know what disbelieve – I – I would say today, I know he has more money. He has more money.”
d. The Applicant testified that if she signed the Marriage Contract, the Deceased would put $25,000 yearly in an account for the Applicant and pay all expenses. Regarding the Applicant’s daughter, Natasha, the Deceased “…said that he would take care of my daughter and he would buy her a car. He would pay her tuition.” The Applicant testified that the statement regarding caring for her daughter was made by the Deceased on the night that the Deceased brought up the Marriage Contract.
29The Marriage Contract indicates that the Deceased was represented by Mr. Herbert and that the Applicant was represented by Mr. Bhoi. Each party signed the agreement and initialed every page. Each lawyer signed a Certificate of Independent Legal Advice (“CILA”). Mr. Bhoi confirmed that he witnessed the Applicant sign the Marriage Contract and that he explained the nature and effect of the agreement to the Applicant. Mr. Herbert and Mr. Bhoi are both deceased. The CILA directly contradicts the Applicant’s testimony.
30Schedule A of the Marriage Contract discloses the Deceased’s assets and liabilities as of September 30, 1993. Because of the date inserted on Schedule A, this suggests to me that Schedule A may have been prepared several weeks before the signing of the Marriage Contract. It raises the question as to whether discussions about the Marriage Contract ensued between the Applicant and the Deceased, many weeks before the signing of the Marriage Contract.
31It is acknowledged by the Applicant at paragraph 8 of the Marriage Contract that the Deceased has fully and completely disclosed his net worth and that the Applicant is satisfied with the disclosure. This acknowledgment is in direct contradiction to the Applicant’s testimony that the Deceased has more money.
32Paragraph 6 of the Marriage Contract reads as follows: “Nick recognizes the role he has come to assume in the development and care of Sophie’s daughter, Natasha Haniff. Nick agrees to continue to meet such responsibilities in the event that Sophie either dies or is incapable of providing care to her daughter.” This paragraph already formed part of the Marriage Contract when it was presented to the Applicant a couple days before the wedding. For it to be included in the Marriage Contract, it suggests to me that discussions may have occurred before the drafting of the Marriage Contract, which is in contradiction to the Applicant’s testimony.
33On the face of the Marriage Contract, the Applicant received independent legal advice, received financial disclosure, acknowledged that the financial disclosure was adequate, and the Applicant’s daughter was being cared for in the event of her death or incapacity. The Applicant’s evidence is in clear conflict with the intent and wording of the Marriage Contract. I am therefore unable to determine that the Applicant did not understand the nature or consequences of the Marriage Contract, pursuant to s. 56(4)(b) of the FLA.
Failure to disclose – 56(4)(a) of the FLA
34The Applicant also asserts that the Marriage Contract should be set aside pursuant to s. 56(4)(a) of the FLA, because the Deceased failed to disclose significant assets from Schedule A, more particularly a property municipally known as 1113 Cyrville Road. This property was purchased by the Deceased in 1987 for $195,000 and sold after the signing of the Marriage Contract.
35The abstract for 1113 Cyrville Road confirms that the Deceased purchased this property on September 4, 1987. However, the Deed lists the purchaser as “Sourges, Nick In Trust”. The abstract further reveals that this property was then transferred to N.M.J. Holdings Limited on September 16, 2000.
36The term “in trust” means that the property is being held for the benefit of a third party. On its face, the Deed confirms that at the time the Marriage Contract was signed, the Deceased was not the beneficial of the property because it was being held in trust.
37To add to the confusion, the Applicant’s evidence regarding the property on Cyrville Road is that it was purchased sometime in 2009 or 2010: “What I do know that in 2000 – summer ’10 or so or ’09, I don’t remember the year. A property at 1113 Cyrville Road was purchased. And that property was transferred to my – to N.M.J.”
38The evidence on the issue of the disclosure of 1113 Cyrville Road is far from being clear. While the property was eventually transferred to a company owned by the Deceased, the evidence is insufficient for me to conclude with certainty that the Deceased was the beneficial owner of 1113 Cyrville Road at the time of the Marriage Contract. Therefore, I am unable to conclude that the Deceased failed to disclose a significant asset.
39In light of the conflicting evidence, there is no basis for me to exercise my discretion in setting aside the Marriage Contract. It would be patently unfair to do so.
Summary judgment
40I find that there are genuine issues for trial, and I decline to exercise my discretion of using the enhanced powers contained in r. 16(6.1) by the FLR.
41The Applicant’s cross-examination on her affidavit has limited value because it took place out of court. There are too many contradictions between the Applicant’s testimony during cross-examination and the contents of the Marriage Contract. I am not able to assess the Applicant’s credibility on the written record, nor am I able to resolve the contradictions and accept one version as opposed to the other.
42Oral evidence at trial is necessary and crucial to determine whether the Applicant was in a vulnerable position, whether she suffered a significant inequality of bargaining power, whether she did not understand what she was signing, or whether she truly did not receive independent legal advice.
43I agree with the Respondent’s position that weighing the evidence and evaluating the credibility of the Applicant must be made on the whole of the evidence because it can affect the Applicant’s credibility on the issue of the forming, negotiation, and signing of the Marriage Contract.
44The oral evidence that needs to be presented at trial goes beyond the evidence surrounding the forming and signing of the Marriage Contract. A mini trial restricted on the issue of the Marriage Contract would, in my view, be insufficient, to fully evaluate the Applicant’s testimony.
45Take for example the evidence that was given by the Applicant regarding her assertions that she has an ownership in the Deceased’s businesses. The Applicant’s evidence was not clear or consistent:
a. The Applicant was asked if she was claiming an ownership interest in N.J. Investments Limited. The Applicant first answered, “I don’t know” to then “Yes, I’m claiming”. When asked to explain the reason for the claim, she responded “I don’t really know and I don’t remember. I don’t remember or don’t recall. I don’t know. I don’t know.”
b. The Applicant testified that she was claiming an interest in N.M.J. Investments Limited. When asked to provide the reason for this claim, the Applicant answered, “What I do know that in 2000 – summer ’10 or so or ’09, I don’t remember the year. A property at 1113 Cyrville Road was purchased. And that property was transferred to my – to N.M.J.” The Applicant then admitted that she did not put any money into the purchase of that property, only her “sweat and blood”.
c. The Applicant testified that she was claiming an interest in N.M.J. Holdings Limited. She was again asked to provide the reason for this claim and the Applicant answered, “Well, my understanding today is that all the – and what my husband told me while he was sick that the company is – his company that he owned and what he was saying about it? He was saying – I don’t know. I don’t remember. I’m all confused now. Sorry, I don’t know.” The Applicant then admitted that she was not an owner in N.M.J. Holdings Limited.
d. The Applicant testified that she was claiming an interest in the Sourges Family Trust. She was again asked to provide the reason for this claim and the Applicant answered, “I don’t know anything about the trust and I don’t know anything about it.”
46The Applicant wavered in her evidence regarding her ownership interests in the Deceased’s businesses. This evidence may affect the overall credibility of the Applicant, and it must be further explored and tested at trial.
47The purpose of the Marriage Contract was clear. The Deceased wanted to protect his business assets, and arguably, he wanted to exclude them from equalization. The Applicant’s evidence regarding the Deceased’s promises that she had an ownership interest in his businesses is in direct contradiction to the intent of the Marriage Contract.
48The Applicant is the only living witness. As set out above, there are several credibility issues raised with regards to the Applicant and the evaluation of her overall credibility is essential. The enhanced fact-finding powers are simply insufficient to make a proper determination of the issues. A trial on the totality of the evidence is required to achieve a fair and just appreciation of the forming and signing of the Marriage Contract.
Disposition
49The Applicant’s motion is dismissed.
COSTS
50On March 7, 2022, the Applicant was successful in her motion for interim spousal support. The costs of that motion were reserved until the disposition of this motion. Given that the Respondent was successful in this motion, I am inclined not to award costs to either party, because of the shared success in both motions.
51That being said, if a party wishes to make costs submissions, that party may file written costs submissions (limited to three pages, excluding the Bill of Costs and Offers to Settle), within 30 days of these Reasons for Decision. The other party to respond, within 15 days thereafter, with the same page restriction.
M. Smith J
Released: July 5, 2022