COURT FILE NO.: FS-19-01

DATE: 2022-09-26

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

YASMINE MAHMOUD HANI SHALABY

Adela Crossley, for the Applicant

Applicant

• and -

HESHAM MAHMOUD ABDEL HALEEM NAFEI

Ron Shulman, for the Respondent

Respondent

HEARD: June 22, 2022, at Brampton, Ontario

Price J.

Reasons for Order

OVERVIEW

1Hesham Nafei (“Mr. Nafei”), moves for summary judgment dismissing the Applicant’s Application to set aside the parties’ Separation Agreement signed August 17 and 18, 2018 (“Agreement”).

2Yasmine Mahmoud Hani Shalaby (“Ms. Shalaby”), moves for financial disclosure from Mr. Nafei. Mr. Nafei responded to that motion in the affidavits he filed to support his own motion.

BACKGROUND FACTS

3Mr. Nafei resides in the United Arab Emirates (“UAE”). Ms. Shalaby resides in Ontario with the parties’ two children.

4The parties were married in Egypt on April 1, 2005. Soon after they married, Ms. Shalaby joined Mr. Nafei in the UAE, where Mr. Nafei had established a successful dental clinic.

5Both parties are certified as dentists in the UAE. However, Ms. Shalaby did not work outside the home after their first child was born. She remained at home, caring for the children and the home.

6The parties had two children during their marriage, namely:

(a) H.H.N., who is now 16 years old (born April 15, 2006); and

(b) J.H.N., who is now 11 years old (born November 12, 2010).

7Both parties are citizens of Egypt. They became permanent residents of Canada in March 2016 through a Skilled Worker Application in which Ms. Shalaby was the main applicant. Their immigration status entails a legal obligation to be physically present in Canada for two years out of every five.

8The parties returned to the UAE in 2016 to enable their children to complete their school year there, after which they all returned to Canada on July 16, 2016. On their arrival in Canada, Mr. Nafei bought a home in Mississauga for 1.2 million Canadian dollars with no mortgage, where Ms. Shalaby and the children continue to reside. He later bought a second home of similar value in Canada, also with no mortgage, for which Ms. Shalaby has obtained a Certificate of Pending Litigation.

9After spending two months in Canada in 2016, Mr. Nafei returned to the UAE, where he has since remained.

10In May 2018, the parties separated after 13 years together. During a telephone conversation between the parties on June 22, 2018, Mr. Nafei orally pronounced himself divorced from Ms. Shalaby pursuant to Islamic law. He told her that he wanted to formalize their separation through a separation agreement.

11Ms. Shalaby consulted her current lawyer, Adela Crossley, for independent legal advice. Ms. Crossley refused to take her case, as Mr. Nafei had not provided financial disclosure and Ms. Crossley regarded the terms Mr. Nafei had dictated to Ms. Shalaby to be unfair to her.

12Ms. Shalaby thereupon retained another lawyer, Sharan Sodhi, who drafted the separation agreement for her. Mr. Nafei retained his current lawyer, Ron Shulman, who represented him throughout the parties’ negotiation, drafting, and execution of the Agreement.

13The following correspondence led to the eventual signing of the Agreement:

(c) Ms. Shalaby gave initial instructions to Ms. Sodhi on July 2, 2018, to prepare the Agreement. She and Ms. Sodhi exchanged three versions of the first draft by email on July 6 and 7, 2018;

(d) Ms. Sodhi sent her first draft of the Agreement, as approved by Ms. Shalaby, to Mr. Nafei’s lawyer on July 7, 2018;

(e) Mr. Shulman sent a second draft of the Agreement to Ms. Shalaby’s lawyer on August 7, 2018;

(f) Mr. Nafei came to Canada for a short time on August 10, 2018;

(g) On August 12, 2018, Ms. Shalaby’s lawyer sent a third and final draft of the Agreement to Mr. Shulman, with changes made at paragraphs 6, 8.1, 8.2, and 10.4, benefiting her client. This was the final version that both parties signed;

(h) The parties signed the Agreement, dated August 14, 2018, on August 17 and 18, 2018, respectively.

14The Agreement contained an acknowledgement by Ms. Shalby, at para. 13:12, that:

(a) She was aware of Mr. Nafei’s financial affairs during the marriage and has obtained, or had an opportunity to obtain, all financial disclosure she wished, and is fully satisfied with the financial information she has and irrevocably waives further financial disclosure;

(b) She was aware of Mr. Nafei’s assets in and outside of Canada and has fully and independently (without relying on representations by the other);

(c) The lack of financial disclosure would not constitute a ground for avoiding or seeking to set aside provisions of the Agreement.

15The Agreement contained a further acknowledgement, at paragraph 13:13, that the agreement was fair and reasonable, and that Ms. Shalaby was not under any undue influence or duress, and was signing the agreement voluntarily.

16Ms. Sodhi signed a Certificate of Independent Legal Advice stating that she advised Ms. Shalby of her rights and obligations, and certifying that, at the time of signing, Ms. Shalaby was signing the Agreement of her own volition without any fears, threats, compulsion, or influence.

17After signing the Agreement, Ms. Shalaby pressed her lawyer to proceed with the title transfer of the matrimonial home, and documents were sent to Mr. Nafei on August 24, 2018. Ms. Shalaby’s lawyer asked for further updates and follow ups on August 28 and 30, 2018. On August 30, 2018, her lawyer received the documents confirming the transfer of title of the home and vehicles in accordance with the Agreement.

18Ms. Shalaby has received benefits pursuant to the Agreement, including a mortgage-free matrimonial home, a vehicle, $9,000.00 per month in child support, a lump sum of $40,000.00 per year in tax-free spousal support, and 100% of the children’s s. 7 expenses covered by Mr. Nafei.

19In December 2018, the children travelled to Egypt, as provided for in the Separation Agreement. Ms. Shalaby alleges that during the visit, she was not informed of the children’s whereabouts for ten days. Fowler Byrne J., in reasons dated August 1, 2019, stated, at paragraph 20, that there is still no adequate explanation for the children’s disappearance.

20At the time of the children’s disappearance, Ms. Shalaby sought the assistance of the police in Ontario. Based on the information she provided to police regarding an incident in May 2018, when the parties separated, in which she alleged that Mr. Nafei lunged at her, struck her in the head with his shoe, and violently pushed her to the ground, the police charged Mr. Nafei with assault and issued a warrant for his arrest.

21On December 19, 2019, Mr. Nafei’s lawyer complained of non-compliance with the parenting terms of the Agreement and threatened to “limit the financial terms of the Agreement.” Ms. Shalaby thereupon commenced her present application to set aside the Agreement and obtain orders regarding the children. On January 6, 2019, she began an ex parte Application in which she sought, among other relief, an Order setting aside the Agreement in its entirety on the grounds of (a) lack of financial disclosure; (b) duress; and (c) breach of the Agreement by Mr. Nafei.

22Mr. Nafei filed reports in Egypt against Ms. Shalaby and her family and began litigation against Ms. Shalaby there. Mr. Nafei has not disclosed the full particulars of that litigation to Ms. Shalaby.

23Ms. Shalaby resides in Mississauga. Both children currently reside with her pursuant to an Order of this Court dated January 8, 2019. On August 1, 2019, Fowler Byrne J. made an Order granting Ms. Shalaby interim custody of the children and prohibiting their removal from the Greater Toronto Area without Ms. Shalaby’s written consent, or a further court order.

24Mr. Nafei resides in the UAE, where the bulk of his assets are situated. He has not parented the children in person since 2019, when he learned that there was an outstanding warrant for his arrest in Ontario.

25Ms. Shalaby served a Form 20 Request for Information on Mr. Nafei on November 14, 2019, in which she requested extensive financial disclosure from him. He did not produce the information and documents requested. Ms. Shalaby made a motion for that disclosure on June 11, 2022, which this Court heard with Mr. Nafei’s motion for summary judgment.

ISSUES

26The sole issue raised in Mr. Nafei’s motion is whether there is a genuine issue requiring a trial of Ms. Shalby’s Application to set aside the parties’ Agreement. The issue raised in Ms. Shalaby’s motion is whether she is entitled to the disclosure she requested.

POSITIONS OF THE PARTIES

Position of the Respondent/Moving Party

27Mr. Nafei submits that the evidence filed in his motion discloses that there is no genuine issue for trial and that Ms. Shalaby has failed to satisfy any of the criteria for setting aside the Agreement. He submits that Ms. Shalaby’s claim to set aside the Agreement has no plain, obvious, or realistic chance for success at trial: Milne v. Milne, 2019 ONSC 459(Ont. Sup. Ct.) at para. 15, per McDermot J. [“Milne”].

28Mr. Nafei relies on the fact that Ms. Shalaby’s lawyer prepared the first draft of the Agreement, on instructions from her client, as well as that Ms. Shalaby asked questions about Mr. Nafei’s income and how to have it represented, and about any tax payable on the support she would be receiving, and suggested revisions in the second and third draft of the Agreement that benefitted her. He further relies on the fact that, after signing the Agreement, Ms. Shalaby pressed to have the home transferred to her and received the support provided for in the Agreement.

29Mr. Nafei submits that, despite claiming that she only signed the Agreement for fear of being bankrupted by prolonged litigation, Ms. Shalaby began her Application and obtained an ex parte Order granting her custody of the children. She vigorously opposed his motions:

(a) to require her to share information about the children;

(b) to require her to communicate with him by Our Family Wizard; and

(c) to release her lawyer’s file.

30Mr. Nafei submits that Ms. Shalaby had an intimate and fulsome understanding of his finances, which he says she has repeatedly confirmed in her Affidavits and under cross-examination.

Position of the Applicant/Responding Party

31Ms. Shalby submits that there is a genuine issue for trial as to the validity of the Separation Agreement on the following grounds:

(a) The economic inequality of the parties/unequal bargaining power;

(b) Failure to disclose material information;

(c) The Respondent’s breach, or anticipatory breach, of the Agreement;

(d) The Court’s setting aside of the parenting terms of the Agreement in motions made by Ms. Shalaby.

32Ms. Shalaby submits that Mr. Nafei dictated, in large part, the terms of their Agreement in a series of WhatsApp messages and telephone calls to Ms. Shalaby. He made it clear to her that he would not negotiate the terms of the agreement, and later unilaterally withdrew some of the terms that he had initially dictated to her, and that were beneficial to her.

33Ms. Shalaby states that she signed the Agreement under duress, as Mr. Nafei had physically assaulted her during their marriage; was rich and influential in the Middle East, where the police and courts would favour him; had threatened to “disappear” her brother in Egypt; and had threatened to bankrupt her by prolonged litigation if she asserted a claim to “his” property. She submits that she had no independent source of income and depended entirely on financial support from Mr. Nafei to sustain herself and their children.

34Ms. Shalaby submits that Ms. Sodhi certified that the Agreement had been signed voluntarily despite Ms. Shalaby informing her that she felt powerless and afraid to go against Mr. Nafei.

35Ms. Shalaby submits that there was an anticipatory breach of the Agreement by Mr. Nafei. She asserts that he threatened to “limit the financial terms” of the Agreement, and laid the groundwork for doing so by falsely alleging that she had withheld the children from him in Egypt. It was only then that she made a motion to prevent him from removing the children from Ontario. Ms. Nafei additionally relies on the fact that this Court granted her the relief she sought, and has already altered the parenting arrangement set out in the Agreement.

LAW AND EVIDENCE

Legislative framework

(i) The test for summary judgment

36Based on the guidelines the Supreme Court set out in Hryniak, 2014 SCC 7, [2014] 1 S.C.R. 87 [“Hryniak”], and Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8, [2014] 1 S.C.R. 126, I must first determine, based on the evidence before me, and without using the fact-finding powers under Rule 16(6.1), whether there is a genuine issue requiring trial, whether I can fairly and justly adjudicate the dispute, and whether the motion is a timely, affordable, and proportionate procedure. If there is no genuine issue requiring a trial, I must grant summary judgment: Hryniak, at para. 66.

37The party moving for summary judgment has the onus of establishing that there is no genuine issue of material fact requiring a trial. Once that onus is met, the burden shifts to the responding party, opposing summary judgment, to demonstrate that the claim has a “real chance of success”: Hamilton Kilty Hockey Club Inc. v. Ontario (Attorney General) (2003), 2003 CanLII 24429 (ON CA), 64 O.R. (3d) 328 (Ont. C.A.), at para. 20. A self-serving affidavit is not sufficient to create a triable issue in the absence of detailed facts and supporting evidence.

38The Supreme Court in Hryniak held that the rules governing summary judgment are to be interpreted broadly, favouring proportionality and fair access to the affordable, timely, and just adjudication of claims. It reinterpreted Rule 20 of the Rules of Civil Procedure, taking into account the need for the courts to preserve the public’s access to justice. The Court’s comments apply equally to Rule 16 of the Family Law Rules, O. Reg. 114/99 sets out a similar framework for summary judgment in family law proceedings.

39Rule 16 provides, in part:

Summary judgment

When available

16. (1) After the respondent has served an answer or after the time for serving an answer has expired, a party may make a motion for summary judgment for a final order without a trial on all or part of any claim made or any defence presented in the case. O. Reg. 114/99, r. 16 (1).

Evidence required

(4) The party making the motion shall serve an affidavit or other evidence that sets out specific facts showing that there is no genuine issue requiring a trial. O. Reg. 114/99, r. 16 (4).

Evidence of responding party

(4.1) In response to the affidavit or other evidence served by the party making the motion, the party responding to the motion may not rest on mere allegations or denials but shall set out, in an affidavit or other evidence, specific facts showing that there is a genuine issue for trial. O. Reg. 91/03, s. 5.

Evidence not from personal knowledge

(5) If a party’s evidence is not from a person who has personal knowledge of the facts in dispute, the court may draw conclusions unfavourable to the party. O. Reg. 114/99, r. 16 (5).

No genuine issue for trial

(6) If there is no genuine issue requiring a trial of a claim or defence, the court shall make a final order accordingly. O. Reg. 114/99, r. 16 (6).

Powers

(6.1) In determining whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties, and the court may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.

2. Evaluating the credibility of a deponent.

3. Drawing any reasonable inference from the evidence. O. Reg. 69/15, s. 5 (1).

Oral evidence (mini-trial)

(6.2) The court may, for the purposes of exercising any of the powers set out in subrule (6.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation. O. Reg. 69/15, s. 5 (1).

Order giving directions

(9) If the court does not make a final order, or makes an order for a trial of an issue, the court may, in addition to exercising a power listed in subrule 1 (7.2),

(a) specify what facts are not in dispute, state the issues and give directions about how and when the case will go to trial (in which case the order governs how the trial proceeds, unless the trial judge orders otherwise);

(b) give directions; and

(c) impose conditions (for example, require a party to pay money into court as security, or limit a party’s pretrial disclosure). O. Reg. 114/99, r. 16 (9); O. Reg. 69/15, s. 5 (2, 3).

(10), (11) Revoked: O. Reg. 69/15, s. 5 (4).

40The Supreme Court held that a summary judgment motion judge must assess the interests of justice that would be served by summary judgment, by considering the relative efficiencies that would be served by that process and those that would be served by a trial, including the cost and speed of each procedure, the evidence that is available on the motion versus the evidence that would be available at trial, and the opportunity to evaluate such evidence fairly. As the Supreme Court stated, there will be no genuine issue requiring a trial if the summary judgment process gives the motion judge the evidence needed to fairly and justly adjudicate the dispute on its merits, and is a proportionate, more expeditious, and less expensive means to achieve a just result: see Hryniak, at para. 49.

41In Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200, at para. 32, Corbett J. described the current approach to summary judgment motions following the Supreme Court of Canada’s decision in Hryniak, as follows:

Summary judgment motions come in all shapes and sizes, and this is recognized in the Supreme Court of Canada’s emphasis on “proportionality” as a controlling principle for summary judgment motions. This principle does not mean that large, complicated cases must go to trial, while small, single-issue cases should not. Nor does it mean that the “best foot forward” principle has been displaced; quite the reverse. If anything, this principle is even more important after Hryniak, because on an unsuccessful motion for summary judgment, the court will now rely on the record before it to decide what further steps will be necessary to bring the matter to a conclusion. To do this properly, the court will need to have the parties’ cases before it.

42The guidance that the Supreme Court gave in Hryniak as to how Rule 20 should be applied to promote timely and affordable access to the civil justice system applies equally to how Rule 16 should be applied in the family law context. Karakatsanis J., on behalf of the Supreme Court, noted that such motions are an opportunity to simplify pre-trial procedures and move the emphasis away from the conventional trial, in favour of proportional procedures tailored to the needs of the particular case. At para. 49, she stated:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

43Karakatsanis J. held that the judge hearing a motion for summary judgment must compare the procedures available in such a motion, supplemented, if necessary, by the fact-finding tools provided by Rules 20.04(2.1) and (2.2), (similar to Family Law Rule 16(6.1) with those available at trial, to determine whether the court can make the necessary findings of fact and apply the principles of law to those facts in a proportionate, most expeditious, and least costly manner, to achieve a just result:

…Proportionality is assessed in relation to the full trial. It may require the motion judge to assess the relative efficiencies of proceeding by way of summary judgment, as opposed to trial. This would involve a comparison of, among other things, the cost and speed of both procedures….It may also involve a comparison of the evidence that will be available at trial and on the motion as well as the opportunity to fairly evaluate it. (Para. 57)

44If there appears to be a genuine issue requiring a trial, I must exercise my discretion to determine whether the need for a trial can be avoided by using the powers under Rule 16(6.1), provided their use will not be contrary to the interests of justice and will lead to a fair and just result, and serve the goals of timeliness, affordability, and proportionality in light of the litigation as a whole: Hryniak, at para. 66.

45If a genuine issue is found, Rule 16(6.1) empowers the court to determine if a trial can be avoided by:

(1) weighing the evidence;

(2) making credibility findings on the evidence; and

(3) drawing reasonable inferences of fact from the materials filed.

In the alternative, the Court may also direct a mini-trial or focused hearing under Rule 16(6.2) for any issues remaining on the motion for summary judgment.

46A partial summary judgment will be ordered when it is clear that bifurcating the issues would result in a more expeditious, cost-effective, and just conclusion of the matter, having regard to Rule 2(2) of Family Law Rules, which prevides that the purpose of the Rules is to “enable the court to deal with cases justly”: Milne, supra, at paras. 89-90; Rules, Rule 2(2).

(ii) The test for setting aside a separation agreement

47The test for “no genuine issue at trial” has been explored in a number of cases which all enunciate the point of success at trial. If it is “plain and obvious” or “realistic” that the claim will not succeed, there is no genuine issue. No chance of success is the test to be met.

48The applicable test to set aside a separation agreement is found in s. 56(4) of the Family Law Act, R.S.O. 1990, c. F.3. It provides:

56(4) A court may, on application, set aside a domestic contract or a provision in it,

a) if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;

b) if a party did not understand the nature or consequences of the domestic contract; or

c) otherwise in accordance with the law of contract.

(iii) Applying the legal tests to the facts of this case

49I will examine the issue of whether there is a genuine issue for trial by reference to each of the grounds upon which Ms. Shalaby seeks to set aside the Agreement.

(a) Material non-disclosure

50Courts act with care in determining when it is appropriate to exercise their discretion in favour of setting aside an agreement. This is in large part due to the weight which is placed on private citizens being able to negotiate and make their own arrangements with respect to an agreement, especially when independent legal advice was obtained: Butty v. Butty, 2009 ONCA 852, 99 O.R. (3d) 228 (Ont. C.A.) at para. 50, per curiam [“Butty”]. The Applicant is essentially asking the court to accommodate her change of mind.

51In LeVan v. LeVan (2008), 90 O.R. (3d) 1, [2008] O.J. No. 1905, 2008 ONCA 388, at para. 51, the Court of Appeal held that s. 56(4) comprises a two-stage analysis:

a) Can the party seeking to set aside the agreement demonstrate that one or more of the s. 56(4) circumstances is engaged?

b) If so, is it appropriate for the court to exercise its discretion to set aside the agreement?

52The Court of Appeal, in Virc v. Blair, 2014 ONCA 392, 119 O.R. (3d) 721 [“Virc”], set out the approach to be taken by the Court on a motion for summary judgment to dismiss a spouse’s application to set aside a separation agreement. In Virc, the applicant sought to set aside the separation agreement she had entered into with her former husband. She argued that her husband had deliberately and materially misrepresented the value of his interest in a company, with the result that she had received an equalization payment that was substantially less than what she was entitled to. The respondent/husband moved for summary judgment dismissing her claim.

53This Ontario Superior Court, in a decision reported at [2012] O.T.C. Uned. 7104, granted the husband's motion. The motions judge concluded that, even if the values provided by the husband were false, there was no genuine issue for trial because the wife had information that should have caused her to question the husband's disclosure before she signed the separation agreement. The wife appealed. The Court of Appeal allowed the appeal and ordered that the wife's application proceed to trial.

54The wife in Virc argued that, besides the non-disclosure, the parties' inequality of bargaining power resulted in undue influence, that the husband's eagerness to resolve matters created duress, that the terms regarding child support and the matrimonial home were unconscionable, and that the terms of the agreement should be altered to provide for spousal support.

55The Court of Appeal held that assessing whether the agreement complied with the objectives of the Divorce Act, R.S.C., 1985, c. 3 (2^nd Supp.) respecting spousal support was a genuine issue requiring a trial, and that given the unresolved issues, the allegations of undue influence, duress and unconscionability also should have been determined by a trial judge on a full factual record: Virc, para. 76.

56In Virc, the motion judge held, at para. 55, that the fact that the appellant "had information that should have caused her to question" the veracity of the husband's disclosure precluded any chance of successfully setting aside the agreement, even if the respondent had, in fact, deliberately made false disclosure. In other words, the motion judge determined that the appellant ought to have known that the value her husband attributed to his date of marriage interest in his company was overstated. In making this determination, the motion judge relied on an excerpt from Cheshire & Fifoot. She wrote, at para. 83 of her reasons:

Further, where the recipient spouse has a reason to question the information provided, but does not, no misrepresentation or omission could result in the contract being avoided. I refer to Cheshire and Fifoot, The Law of Contract, 10th ed., at p. 244, and quoted in Farquar, at para. 35:

Knowledge of the untruth of a representation is a complete bar to relief, since the plaintiff cannot assert that he has been misled by the statement, even if the misstatement was made fraudulently. In such a case, "the misrepresentation and concealment go for just absolutely nothing . . .".

57The Court of Appeal noted that the motion judge had failed to mention that the authors of Cheshire & Fifoot went on to write:

It must be carefully noticed, however, that relief will not be withheld on his ground except upon clear proof that the plaintiff possessed actual and complete knowledge of the true fact – actual not constructive, complete, not fragmentary. The onus is on the defendant to prove that the plaintiff had unequivocal notice of the truth. In particular, the mere fact that a party has been afforded an opportunity to investigate and verify a representation does not deprive him of his right to resist specific performance or to sue for rescission. As Lord Dunedin once said:

No one is entitled to make a statement which on the face of it conveys a false impression and then excuse himself on the ground that the person to whom he made it had available the means of correction. [page 736]

[I]t is no answer to a suit for relief to say that inspection of the contracts or of the lease or of the bills of costs was expressly invited but was not accepted.

58The Court of Appeal in Virc concluded:

[58] Once the motion judge assumed that there had been deliberate material misrepresentations, she erred in shifting the onus to the appellant to inquire as to the veracity of the respondent's financial disclosure. In the face of a deliberate material misrepresentation, the onus is not appropriately placed on the recipient spouse. Rather, the burden is on the party disclosing to establish actual knowledge of the falsehood by the recipient. The respondent could point to no authority for the proposition that the suggested duty of a spouse receiving financial disclosure in a matrimonial case, to investigate or test the veracity of the information provided, overtakes deliberate material non-disclosure by the other spouse.

59The effect of non-disclosure on the integrity of a Separation Agreement is not limited to instances of deliberate misrepresentation. It applies equally to circumstances involving deliberate and material non-disclosure. The Court of Appeal in Virc stated, in part:

[62] In Butty v. Butty, (2009), 99 O.R. (3d) 228, [2009] O.J. No. 5176, 2009 ONCA 852 this court overturned the trial judge's determination that the marriage contract should be set aside pursuant to s. 56(4)(a) because the husband had failed to disclose significant assets or debts when the contract was made. … in the case under appeal, the finding of actual knowledge on the part of the appellant is lacking.

[63] In Quinn [Quinn v Epstein Cole LLP, (2008), 92 O.R. (3d) 1, 2008 ONCA 662], this court noted, at para. 4, that a spouse could not resile from the consequences of failing to pursue further disclosure “unless she demonstrated that [the husband’s] financial disclosure was inaccurate, mileding or false.” In Quinn, unlike the case under appeal, the appellant had no evidence of non-disclosure but maintained that more such evidence might be forthcoming as a result of examinations for discovery.

[64] Next, the motion judge erred in granting summary judgment when relevant factors that required a determination were left unresolved.

[65] In Rick v. Brandsema, [2009] 1 S.C.R. 295, [2009] S.C.J. No. 10, 2009 SCC 10, the Supreme Court of Canada considered the implications of the deliberate failure of a spouse to provide all the relevant financial information in negotiations for the division of assets….

[66] The Supreme Court held that the deliberate failure to make full and honest disclosure of all relevant financial information may render the agreement vulnerable to judicial intervention where the result is a negotiated settlement that is substantially at variance from the objectives of the governing legislation….

[67] The motion judge erred by making a determination in the absence of a resolution of these key factors….

[Emphasis added, citations added]

60This Court followed the Virc approach in Turk v. Turk, 2015 ONSC 5845 [“Turk”], where an order for summary judgment was not granted as the court was not confident that it could make findings of the necessary facts and apply the relevant legal principles so as to resolve the issue of setting aside a separation agreement.

G. Section 56(4) analysis

[103] I am satisfied that the Respondent has not demonstrated that there is no genuine issue requiring a trial. Indeed, a trial is required to determine (a) whether the Respondent failed to disclose significant assets existing when the contract was made and whether he failed to disclose the value of those significant assets; and (b) whether the Applicant was subject to duress.

[Emphasis added]

61Mr. Nafei’s failure to make financial disclosure before the parties entered into the Agreement is evident from his evasivness during questioning of him on July 27, 2021, when he was asked whether he had disclosed his net worth to Ms. Shalaby when he entered into the Agreement.

101. Q. Is it not correct that you did not provide any financial disclosure in your separation agreement?

A. Actually speaking, Mrs. Crossley, there was complete transparency between me and Mrs. Shalaby regarding the financial issues and our financial situation. She had all the details, all the user names and passwords, so, accordingly, she made her requirements, and she dictated them, actually. And we did our negotiations. And, accordingly, she didn’t need to have a financial disclosure, and it is, I believe, mentioned in the separation agreement that since she knows everything, so she asked no need. So, we followed our agreement.

102. Q. So, SIR, I AM GOING TO REPEAT THE QUESTION. If you can kindly answer, I am going to repeat…

A. I did.

103. Q. …the question. No, you did not answer, sir. It requires a yes or no answer. Did you provide any financial disclosure in your separation agreement? Yes or no?

A. According to our agreement, we had an agreement that no need, because she had everything…she knew everything, and she was sharing everything.

106. Q. So, when he signed this separation agreement, the date that you signed it, sir, how would you…what would you say your net worth was on that date? If you say that Ms. Shalaby knew everything about your financial situation, I am asking you about your financial situation. When you signed this agreement, what was your net worth?....

107. A. … the net worth at that time, I cannot recall at that time, was three years ago.

[Emphasis added]

62Mr. Nafei would not acknowledge that, even in his present motion, he has refused to provide financial disclosure:

179. Q. I am talking about this court proceeding that … she commenced it in January of 2019…. Would you agree with me that you have refused to provide financial disclosure?

180. MR. SHULMAN: It is a legal question, because his position is outline. It is not a refusal to provide. It is there is no relevance to provide it and it is the subject of your motion, as well.

181. Q. …in this document, sir, which is called a Form 20, a request was made since November 14^th of 2019 for you to provide what I call financial disclosure… And, sir, to date, nothing in this has been provided. Why not?

MR. SHULMAN: Counsel, our legal position has been already outlined. I am not sure why you are asking him a legal argument to the comment of his legal position.

[Emphasis added]

63Apart from Mr. Nafei’s non-disclosure, there are facts regarding his assets and the value of assets of his that Ms. Shalaby was aware of which remain in dispute and require a trial. For example, it is not disputed that Mr. Nafei is the Chairman and CEO of the Damas Medical Centre in the UAE through which he conducts his dental practice. Ms. Shalaby alleges that at the time the Agreement was negotiated, Mr. Nafei was the owner of the Medical Centre and did not disclose its value. At his cross-examination, Mr. Nafei, at Q. 262 and 291, denied that he was the owner of the Medical Centre. Mr. Nafei was confronted, at Q. 244 and Q. 253, with an exhibit attached to Ms. Shalaby’s affidavit dated August 24, 2020, being a letter from the Accounting Manager of the Medical Centre to the Canadian Embassy, which states that Mr. Nafei is the owner. Mr. Nafei alleged, at Q. 257 to 267, that the Accounting Manager did not have the authority to issue the letter and disputed the Manager’s signature.

(b) Undue influence, duress and unconscionability

64Ms. Shalaby submits that she was under undue influence and duress when she signed the Agreement, as well as that its terms were unconscionable.

65In Berdette v. Berdette, 1991 CanLII 7061 (ON CA), 1991 CarswellOnt 280 (Ont. C.A.), Galligan J.A. set out the test for undue influence:

I adopt the definition of undue influence found in the judgment of Henry J. in Brooks v. Alker (1975), 1975 CanLII 423 (ON SC), 22 R.F.L. 260, 9 O.R. (2d) 409, 60 D.L.R. (3d) 577 (H.C.), at p. 416 [O.R., p. 266 R.F.L.]. There undue influence was defined as the "unconscientious use by one person of power possessed by him over another in order to induce the other to" do something.

[Emphasis added]

66Finlayson J.A., speaking for the majority of this Court in Stott v. Merit Investment Corp. (1988), 1988 CanLII 192 (ON CA), 19 C.C.E.L. 68 said that in order for pressure to amount to duress it must be "'a coercion of the will', or it must place the party to whom the pressure is directed in such a position as to have 'no realistic alternative'" but to submit to it.

[Emphasis added]

67In Turk, Kitely J., at para. 93, accepted the Newfoundland and Labrador Supreme Court’s definition of duress from Keough v. Keough [2005] N.J. No. 327:

Duress is said to occur where there is such pressure placed on one of the parties that any consent by that party is not sufficient to uphold the agreement. There exists an absence of choice which in effect vitiates any ability to lawfully consent. However, duress sufficient to void an agreement does not arise based only upon a lack of will to proceed but rather it must be based upon a resolution on the part of the submitting party that there is no other practical choice but to perform the act in question. Duress can be established based upon actual or threatened violence or upon economic consideration.

68At the hearing of the motion in the present case, Mr. Nafei submitted that the Supreme Court’s analysis of unconscionability in Miglin v. Miglin, [2003] 1 S.C.R. 303, 2003 SCC 24 does not apply in a motion for summary judgment, which is governed strictly by the considerations set out in s. 56(4) of the FLA. His position in this regard is contrary to the Court of Appeal’s treatment of those issues in Virc. In Virc, the Court stated:

Spousal support, undue influence, duress and unconscionability

[76] Miglin requires the court to consider the extent to which a separation agreement takes into account the factors and objectives listed in the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.). This analysis requires the court to look at the agreement in its totality. The spousal support provisions cannot be considered in isolation as they are inextricably linked to other aspects of the agreement. The property settlement and spousal support provisions in this agreement were negotiated in tandem and, given the potential extent of the respondent's misrepresentations, a court would need to review both aspects of the agreement together. Under these circumstances, assessing whether the agreement with respect to spousal support complies with the objectives of the Divorce Act is a genuine issue requiring a trial. I am additionally of the view that given the unresolved issues, the allegations of undue influence, duress and unconscionability should also be left to be determined by the trial judge on a full factual record.

[Emphasis added]

69The majority of the Supreme Court of Canada in Miglin set out a two stage approach for determining whether to allow an application for spousal support in the face of a separation agreement with contrary terms. Stage one requires the Court to examine the circumstances in which the agreement was negotiated and executed to determine whether there is any reason to discount it: Miglin, para. 80. The Court stated, in part, in that regard:

(i) The Circumstances of Execution

81. … the court should be alive to the conditions of the parties, including whether there were any circumstances of oppression, pressure, or other vulnerabilities, taking into account all of the circumstances, including those set out in s. 15.2(4)(a) and (b) and the conditions under which the negotiations were held, such as their duration and whether there was professional assistance.

82. …There may be persuasive evidence brought before the court that one party took advantage of the vulnerability of the other party in separation or divorce negotiations that would fall short of evidence of the power imbalance necessary to demonstrate unconscionability in a commercial context between, say, a consumer and a large financial institution. …The degree of professional assistance received by the parties will often overcome any systemic imbalances between the parties.

83. … where the power imbalance did vitiate the bargaining process, the agreement should not be read as expressing the parties’ notion of equitable sharing in their circumstances and the agreement will merit little weight.

(ii) The Substance of the Agreement

84. … The court must determine the extent to which the agreement takes into account the factors and objectives listed in the Act, thereby reflecting an equitable sharing of the economic consequences of marriage and its breakdown. Only a significant departure from the general objectives of the Act will warrant the court’s intervention on the basis that there is not substantial compliance with the Act. …

85. … The greater the vulnerabilities present at the time of formation, the more searching the court’s review at this stage.

i. The circumstances of execution

70Ms. Shalaby submits that Mr. Nafei exercised undue influence over her by unscrupulously using his economic power over her and their children to induce her to sign the Agreement on the terms he dictated. She says that she signed the Agreement under duress because, by threatening to “disappear” her brother in Egypt and to bankrupt her by prolonged litigation, Mr. Nafei placed her under such pressure as to leave her no realistic alternative but to submit to his terms. Finally, she says that the Agreement was unconscionable in that her economic vulnerability was not fully compensated by the assistance of counsel, who followed her instructions to draft the Agreement on the terms her husband had dictated, knowing the power he exercised over her and the fact that she had neither bargaining power nor a realistic alternative to submitting to those terms.

71I find that the following evidence supports Ms. Shalaby’s allegations of undue influence, duress, and unconscionability and raises a genuine issue for trial:

(a) There is an outstanding warrant for Mr. Nafei’s arrest on a charge of assault involving an allegation of domestic violence by him against Ms. Shalaby during the marriage, a charge which he has failed to return to Canada to respond to;

(b) The courts in Canada would be powerless to enforce Ms. Shalaby’s entitlement to equalization of assets situated in the Middle East, including the Damas Medical Centre in the UAE and Mr. Nafei’s apartments in Cairo, Egypt;

(c) Neither the UAE nor Egypt is a signatory of the Hague Convention on the return of children; this means that Canadian courts would have no reliable means of securing the children’s return to Canada if they travelled or were removed there and Mr. Nafei withheld them;

(d) At paragraph 20 of her reasons dated August 1, 2019, Fowler Byrne J. noted that there was still no adequate explanation for the children’s disappearance in Egypt for 10 days in December 2018. She noted that the parties’ son, Hazem, had confided to his counsellor that he had lied about his whereabouts to protect his father. She further noted that Ms. Shalaby had given the court in the motion before her a copy of a text message between Hazan and his father, which Ms. Shalaby also attached to her affidavit in the present motions, which disclosed that Mr. Nafei had told Hazem that an order of this Court was not as strong as an order from Allah and stated: “Coz I don’t give a damn about Canada or courts in Canada or law in Canada as it’s not Islamic laws. If judge come here to me I’ll prison him:).” Fowler Byrne J. noted that Mr. Nafai had informed Hazem by text that “if ur mom came to Egypt or any Islamic country I can put her in jail u know that”. While these events and messages post-date the parties’ signing of the Agreement, they support Ms. Shalaby’s evidence concerning the threats Mr. Nafei made to her before the Agreement was signed and Ms. Shalaby’s fear that Ms. Nafei had the disposition and ability to carry out his threats;

(e) On July 2, 2018, Mr. Nafei sent to Ms. Shalaby a WhatsApp message in Arabic, which she attached with a translation as an exhibit to her Affidavit, in which he set out the terms he planned to impose on her. These consisted of the following:

(i) $9,000.00 monthly in child support, and payment of tuition for the children, to be increased 10% annually;

(ii) Spousal support of $40,000.00 per year for so long as Ms. Shalaby remained unemployed and spent all of her time caring for the children;

(iii) Sole custody of the children to Ms. Shalaby, to be transferred to Mr. Nafei if she married or obtained employment;

(iv) Mr. Nafei’s apartment in Cairo, to be transferred to her;

(v) Ms. Shalby to release her interest in the Smouha Top House apartment in Egypt;

(vi) No restriction on Mr. Nafei’s communication with the children, each of whom was to have a cell phone to communicate with him;

(vii) Ms. Shalaby was to be able to travel with the children to Egypt;

(viii) During summer vacations, the children would stay in Egypt each year for the months of July and August, and Mr. Nafei would be kept informed of their vacation.

(f) Ms. Shalaby attached to her affidavit dated August 24, 2020, a letter from the Accounting Manager of the Damas Medical Centre in the UAE, of which Nafai is the Chairman and CEO, to the Canadian Embassy. In it, he admits that the Centre has a value of approximately $2.5 million Canadian dollars, to the Canadian Embassy, and statesthat Mr. Nafei is the owner of the Medical Centre;

(g) At his cross-examination, Mr. Nafei was evasive when asked about messages he sent to Ms. Shalaby, attached to her affidavit, containing the demands he was making and the instructions he was dictating to her. The following exchange occurred:

26. Q. Mr. Nafei, is that your name at the top of that document?

A. I cannot confirm this, Ms. Crossley.

27. Q. Do you see…I will spell it, Mr. Nafei.

A. Do I see what?

28. Q. I will spell it for you, H-E-S-H-A-M, is that your first name?

A. This is my first name, and the second name, as well. But I am not confirming that this is the message, or this is my profile on whatever social media…

29. Q. Okay.

A. …platform.

30. Q. Okay. So, Mr. Nafei, I am going to read this text for you, and I am hoping that, as I read it, it may jog your memory, sir, okay? So let me start reading it for you, sir. It says:

“…Let your lawyer do the job. I am a bit busy. Call the lawyer office and make a problem with them, modification one, joined (sic) custody. Two, home here is not to be sold except for your kids, and can be sold for anybody if I don’t give you your support. Three, 9K for kids, ends by their university graduation. Four, increase 10 percent every two years for kids’ support. Five, cash, 40K for your lifetime, unless married or work. Six, travelling for kids after mutual agreement. Seven, Egypt in summer vacation. That is all. Again, this is not your rights as Shariah law. Neither the situation now, you are not following Shariah’s, but you are using and depending on my generosity…”

And on the following page…Luuis, if you can please go up…go down, sorry, to the following page:

“…After this agreement, I see no need to have any kind of contact unless in case of emergency of consultation about the kids. Papers in Egypt are ready, which will be proceeded after the Canada one. I push him hard. Let your lawyer to keep on buzzing. These are the final agreement, which I will not accept any negotiations about…”

Does that sound about right, sir, in terms of your text to Ms. Shalay?

MR. SHULMAN: Are you asking him whether he send that message, or are you asking him whether the message is correct?

31.Q Whether he remembers that now.

MR. SHULMAN: Okay.

32. Q. Do you remember that sir?

A. Actually speaking, we had lots of text messages. And…back and forth, as well as telephone calls. I was so much pressured from Mrs. Shalaby, Mrs. Crossley, regarding financial issues. She was asking, and I was trying to cope with what she was asking. And as I remember quite well, that each time we reached to an agreement, she changed it after it, and asked for more, pressuring me so much. So I cannot confirm exactly these messages, but I can confirm that I was financially so much pressured in conversations, and multiple text messages, and whenever we reached an agreement, she again raised another issue. That is all what I can confirm.

33. Q. Okay, sir. So, let me read the following to you, and then I will ask a question, okay, sir?

A. Sure.

34. Q. Let me read this:

“…These are the final agreement, which I will not accept any negotiations about…” If you were to read that to you as I just did, sir, would you agree with me that it sounds as if these are the terms that, one, you don’t want to negotiate about?

A. I can…when I read this, I can say that this is a person that has been pressured, reached to…after negotiations, to a specific deal after which you are going to find another demand and another condition. Given that, even before any kind of agreement, I was forbidden, not by law, but I was forbidden from contacting my kids, and the mobile number, even was changed, and they were forbidden to talk to me.

36. Q. Okay.

A. So, this message…this sentence, this text that you read now, shows a person who accepted a deal after deal after condition after condition. And again, I am confirming that I cannot recall, because there were a lot of text messages, and a lot of phone calls, and I am not confirming that this screenshot of whatever mobile, or whatever social media platform, is really mine, or it is not edited, no.

[Emphasis added]

72The terms Mr. Nafei dictated to Ms. Shalaby, as appears from his text messages to her, were substantially the same as those that appear in paragraphs one through seven of the signed Agreement.

73Mr. Nafei did not include the above-mentioned text in his affidavit describing the negotiations he had with Ms. Shalaby, as Mr. Shulman confirmed at Q. 72, after Mr. Nafei had said, at Q. 65, that he was unable to remember whether it was attached to his affidavit.

ii. The substance of the Agreement

74In order to determine whether the Agreement was unconscionable, the court must consider whether its terms satisfied the basic objectives of the Divorce Act. An assertion in an agreement, even one entered into with legal advice, that the agreement is fair and reasonable, and that the parties have had full financial disclosure and waive their right to further disclosure, is not conclusive as to the manner of execution. It is one fact for the court to consider and must be assessed, with all of the other terms, in the context of each parties’ actual financial circumstances, the actual extent of their knowledge of those circumstances, the vulnerability of the weaker party in making those assertions, and how the substance of the financial terms compare to what the agreement provides.

75An assertion that the agreement was fair and reasonable was made in Simioni v. Simioni, 2009 CanLII 934 (ON SC), para. 13. In that case, M.G.J. Quigley, J., in deciding to bifurcate the trial and first try the issue of whether the agreement was valid, stated:

[33] This is an appropriate case for bifurcation but the goals of that severing can only be achieved if Denis is required to provide financial disclosure to Silvana. The notion that there could be a trial on issues such as the validity of this Separation Agreement without financial disclosure is baseless. The suggestion in the motions materials that the validity of the Separation Agreement could be fully considered and justly determined in the absence of full disclosure by Denis is not only counter-intuitive, but frankly, contrary to the entire information providing foundation for family law litigation in this Province as set out in Rule 13 of the Family Law Rules, section 8 of the Family Law Act, and section 21(2) of the Federal Child Support Guidelines.

[Emphasis added]

76In approaching the substance of the Agreement in the present case, the court not only requires evidence of Mr. Nafei’s financial circumstances, but of whether the divorce he apparently obtained in Egypt is valid and deprives this court of jurisdiction to entertain Ms. Shalby’s claims for spousal support. (See: Cheng v. Liu, 2017 ONCA 104).

77Section 22(1) of the Divorce Act sets out the test for a foreign divorce:

Recognition of foreign divorce

22 (1) A divorce granted, on or after the coming into force of this Act, by a competent authority shall be recognized for the purpose of determining the marital status in Canada of any person, if either former spouse was habitually resident in the country or subdivision of the competent authority for at least one year immediately preceding the commencement of proceedings for the divorce.

78Ms. Shalaby argues that the divorce which Mr. Nafei obtained in Egypt is not valid as the parties were not habitually resident in Egypt for at least one year immediately preceding the commencement of those proceedings. Although they are citizens of Egypt, they have not resided in that country or spent any significant time there, given that Ms. Shalaby has been resident in Canada and Mr. Nafei lives and works in the UAE.

(c) Mr. Nafei’s anticipatory breach of the Agreement

79For the following reasons, I am not satisfied that the evidence gives rise to a genuine issue for trial as to whether the Agreement should be set aside on the ground that Mr. Nafei repudiated the Agreement or demonstrated an intention to breach it.

80Repudiation of an agreement occurs when one of the parties intentionally refuses to perform the contract so as not to be bound by it, through either words or conduct and without justification. There must be a clear breakdown of the foundation of the contract such that the thing which was bargained for has not been provided: M.S. v. I.S., 2021 ONSC 3715 at paras. 118-119, per Nishikawa J. [“M.S.”].

81A fundamental breach is “a failure in the breaching party’s performance of its obligations under the contract that deprives the non-breaching party of substantially the whole benefit of the agreement.”: M.S., supra, at para. 121.

82The test for a fundamental breach requires the court to determine the real purpose of the contract, the true benefit the contract is supposed to provide the innocent party, and the extent to which the misperformance does not merely fall short of what was desired by that party but rather denies them substantially all benefit of that contract: M.S., supra, at para. 122.

83The Court must consider five factors when determining whether a party has been substantially denied the benefit of the contract:

(a) The ratio of a party’s obligations not performed to that party’s obligations as a whole;

(b) The seriousness of the breach to the innocent party;

(c) The likelihood of repetition of the breach;

(d) The seriousness of the consequences of the breach; and

(e) The relationship of the part of the obligation not performed to the whole obligation.

See: M.S., supra, at para. 123

84Writing for the unanimous Ontario Court of Appeal in Spirent Communications of Ottawa Ltd. v. Quake Technologies (Canada) Inc., 2008 ONCA 92, 88 OR (3d) 721 (Ont. C.A.), leave to appeal to S.C.C. refused, 2008 CanLII 36473, Gillese J.A. stated:

[53] Repudiation does not automatically bring a contract to an end. Rather, it gives the innocent party the right to elect to treat the contract as at an end. If that election is made, the parties are relieved from further performance and the innocent party may sue for damages. As a general rule, the innocent party must make the election and communicate it to the repudiating party within a reasonable time. [Citation omitted.]

85In Brown v. Belleville (City), 2013 ONCA 148, 114 O.R. (3d) 561 (Ont. C.A), Cronk J.A., writing for the unanimous Court of Appeal, stressed that, if a contract is repudiated, the innocent party’s communication of its election to disaffirm the contract must not only be communicated “within a reasonable time”, but also be communicated “clearly and unequivocally”:

[45] It appears to be settled law in Canada that where the innocent party to a repudiatory breach or an anticipatory repudiation wishes to be discharged from the contract, the election to disaffirm the contract must be clearly and unequivocally communicated to the repudiating party within a reasonable time. Communication of the election to disaffirm or terminate the contract may be accomplished directly, by either oral or written words, or may be inferred from the conduct of the innocent party in the particular circumstances of the case: McCamus, at pp. 659-61.

[53] I underscore that an act of repudiation, in itself, does not terminate the repudiated contract. Rather, as I have indicated, the innocent party must elect to disaffirm or affirm the contract. Where disaffirmation is intended, this election must be clearly and unequivocally communicated to the repudiating party on a timely basis.

86Ms. Shalby’s application to set aside the Agreement sufficiently communicated her intention to disaffirm the Agreement. However, there is insufficient evidence to support her position that she was justified in doing so solely on the basis of the letter Mr. Nafei’s lawyer sent on December 19, 2019, complaining of non-compliance with the parenting terms of the Agreement and threatening to “limit the financial terms” of the Agreement.

87In order to determine whether the Agreement was unconscionable, it would be necessary for the court to consider whether its terms satisfied the basic objectives of the Divorce Act. In approaching that issue, the court would not only require evidence of Mr. Nafei’s financial circumstances, but whether the divorce he apparently obtained in Egypt is valid and would deprive this court of jurisdiction to entertain claims by Ms. Shalaby for spousal support. (See: Cheng v. Liu, 2017 ONCA 104).

88Section 22(1) of the Divorce Act sets out the test for a foreign divorce:

Recognition of foreign divorce

22 (1) A divorce granted, on or after the coming into force of this Act, by a competent authority shall be recognized for the purpose of determining the marital status in Canada of any person, if either former spouse was habitually resident in the country or subdivision of the competent authority for at least one year immediately preceding the commencement of proceedings for the divorce.

89Based on the above, Ms. Shalaby argues that the divorce which Mr. Nafei obtained in Egypt is not valid as the parties were not habitually resident in Egypt for at least one year immediately preceding the commencement of those proceedings. Although they are citizens of Egypt, they have not resided in that country or spent any significant time there, given that Ms. Shalaby has been resident in Canada and Mr. Nafei lives and works in the UAE.

(d) The best interests of the children

90In exercising its residual discretion to set aside a domestic contract, the Court hearing a motion for summary judgment to dismiss an application to set aside a separation agreement must consider whether the parenting terms of the Agreement are in the best interests of the children. Rule 56(1) of the Family Law Rules sets out that the court may consider the best interests of the child in determining the validity of any terms of a separation agreement. That Rule provides:

56 (1) In the determination of a matter respecting the education, moral training or decision-making responsibility or parenting time with respect to a child, the court may disregard any provision of a domestic contract pertaining to the matter where, in the opinion of the court, to do so is in the best interests of the child.

91The Court of Appeal in Kawartha-Haliburton Children’s Aid Society v. M.W., 2019 ONCA 316 stated that, particularly when dealing with parenting issues, the court should proceed cautiously in granting summary judgment. The court must ensure that the evidence submitted by the party seeking summary judgment is sufficiently comprehensive and persuasive to ensure that the court can do justice to the resolution of the issue, and ensure that the best interests of the child are advanced.

92In the present case, the evidence regarding the allegations of domestic violence and regarding the children’s disappearance in Egypt is insufficient to enable me to determine whether the parenting terms of the Agreement should be set aside as being contrary to the children’s best interests.

93In Milne, the Applicant, like Ms. Shalaby presently, sought to have her Separation Agreement set aside. Both parties claimed their respective respondents threatened excessive legal action if their terms of settlement were not complied with and agreed to, thereby making it impossible to negotiate and resulting in duress at the time of signing. In Milne, the Applicant did not have independent legal advice at the time of signing and while she bolstered her position claiming to lack financial disclosure, she had, in fact, received some material which she knew to be incomplete, which the judge considered to be a reason for dismissing her claim to set aside the agreement: Milne, supra, at paras. 5 and 65. Ms. Shalaby had access to a number of documents and knowledge of expenses at the time of signing, and Mr. Nafei argues that this court should for the same reason, dismiss her claim.

94In Milne, the applicant submitted that the agreement was unconscionable due to a decline in her financial position and a claim of reconciliation. Despite this, summary judgment was granted dismissing her claim to set aside the agreement, the judge determining that issues with respect to the negotiation of the agreement could readily be split from the recent issues that required consideration: Milne, supra, at para. 92.

95In the present case, Mr. Nafei argues that the integrity of the parties’ agreement, based on the negotiations leading to its execution, can be separated from more recent concerns about the parenting arrangement, which can be dealt with by varying the agreement.

96The intended goal of a summary judgment is to expedite an issue for the purposes of achieving a just result through more inexpensive means. The Court in Milne found that a summary judgment would allow the parties to avoid the time and expense required for calling various lawyers involved in the negotiations and would save the Respondent in that matter from being forced to comply with what the Judge noted was an apparent “fishing expedition regarding disclosure.” This time and expense would also be saved in the current matter by bifurcating the issues and granting a partial summary judgment dismissing the claims to set aside the Agreement. Milne, supra, at paras. 91-92.

(e) Issues of credibility requiring a trial

97Where there are credibility issues, the court cannot ignore them. The court must consider using its enhanced fact-finding powers. If credibility issues cannot be resolved on the motion record, the Court must consider ordering oral evidence (i.e., a mini-trial) or deferring the issue to trial. There is a risk that, in an effort to dispose of a case in a summary fashion, the motion judge will not properly analyze the evidence.

98In the present case, the issue of whether the Agreement is valid is so intertwined with the issues of disclosure and the parties’ credibility, both of which require further questioning after Mr. Nafei has made the necessary production of documents, that it is not practicable for the Court to try to determine that issue at this motion for summary judgment, even if the Court were to exercise the powers conferred on it by Rule 16(6.1).

99There are multiple issues of credibility that may affect the validity of the Agreement. These include:

(a) Which of the parties was directing the negotiations that led to the signing of the separation agreement;

(b) What Mr. Nafei’s financial circumstances were, and how much knowledge Ms. Shalaby had of them prior to signing the agreement; and

(c) Whether Mr. Nafei threatened economic harm to Ms. Shalaby and physical harm to her brother.

100With regard to Mr. Nafei’s propensity to exercise his power to harm her, Ms. Shalaby alleges that Mr. Nafei staged a fake withholding of the children from him during their visit to Egypt in December 2018 as a pretext for resiling from the financial terms of the Agreement. Mr. Nafei alleges that Ms. Shalaby’s father met the children at the airport and withheld them from him until a day or two before they were to fly back to Canada. Mr. Nafei’s lawyer sent a letter dated December 19, 2018, complaining of Ms. Shalaby’s non-compliance with the parenting terms of the Agreement, and threatening to “limit your client’s financial entitlements pursuant to the separation agreement….”, but the letter appears to have pre-dated the time when, according to para. 77 of Mr. Nafei’s affidavit dated August 27, 2020, he says he arrived at Ms. Shalaby’s father’s home in Egypt to assume care of the children and says that they began to be withheld from him for two weeks. Ms. Shalaby’s lawyer questioned Mr. Nafei regarding this apparent contradiction at Q. 382 and following his cross-examination, and he maintained his denial of Ms. Shalaby’s allegations.

101In Royal Bank of Canada v. 1643937 Ontario Inc., 2021 ONCA 98, the Court of Appeal for Ontario provided guidance on how credibility issues are to be addressed on a summary judgment motion. The motion judge granted summary judgment to RBC, and she found there was no genuine issue requiring a trial with respect to the validity and enforceability of the personal guarantees. The defendants appealed, arguing there was a genuine issue for trial with respect to the representations made by RBC as to their individual liability under the guarantees.

102The Court of Appeal allowed the appeal and determined that a trial was required. The Court held that the judge should have followed the Hyrniak framework and ordered a mini-trial or a full trial if she determined that she could not evaluate the credibility of the defence pleaded based on the written record alone.

103In the present case, Mr. Nafei has failed to produce the documents and information requested, which might have enabled this court to ascertain whether it could determine the issues of credibility by exercising the powers given to it by Rule 16(6.1) of the Family Law Rules. His failure to provide that disclosure, combined with his evasiveness under cross-examination, has deprived the court of any realistic opportunity to resolve the credibility issues.

CONCLUSION

104I find that there is a genuine issue for trial as to whether the Agreement should be set aside, based on duress, failure to make financial disclosure, and anticipatory breach of the Agreement by Mr. Nafei. There is ample evidence upon which the Court could, additionally, exercise its discretion to set aside the Agreement.

105Having determined that there is a genuine issue for trial, I have, in accordance with the Hryniak decision, considered whether need for a trial can be avoided by using the powers given to me as a motions judge under Rule 16(6.1). This is subject to the concerns that their use will not be contrary to the interests of justice, will lead to a fair and just result, and serve the goals of timeliness, affordability, and proportionality in light of the litigation as a whole. I have concluded that, having regard to Mr. Nafei’s failure to make financial disclosure, it is not practicable, by using the powers given to me under Rule 16(6.1) to resolve the credibility issues and make the findings of fact necessary to determine whether the Agreement is valid.

106Mr. Nafei has refused to make financial disclosure in the proceeding that Ms. Shalaby has commenced to set aside the Agreement. He has continued such refusal in the present motion. Mr. Nafei cannot withhold financial disclosure and then successfully maintain that Ms. Shalaby has failed to “put her best foot forward” in his motion for summary judgment by failing to provide the very evidence that he has unlawfully withheld.

107The Court requires Mr. Nafei’s financial disclosure in order to apply the Miglin analysis and determine whether the Agreement was unconscionable and, in particular, whether it complied with the objectives of the Divorce Act respecting spousal support and equalization of net family property. This is a genuine issue requiring a trial and given that unresolved issue, the allegations of undue influence, duress and unconscionability also should be determined by a trial judge on a full factual record.

COSTS

108Mr. Nafei precipitated Ms. Shalaby’s motion by unreasonably failing to make the full financial disclosure required by the Family Law Rules. He made his motion for summary judgment in the face of his default, and in circumstances which should have enabled him to foresee that the motion was untenable. He will, therefore, be ordered to pay Ms. Shalaby’s costs of the motions on a full recovery basis.

ORDER

109For the reasons stated above, it is ordered that:

1. Mr. Nafei’s motion for summary judgment dismissing Ms. Shalaby’s claim for an order setting aside the Agreement is dismissed.

2. Ms. Shalaby’s motion for disclosure is allowed.

3. Mr. Nafei, shall, by October 31, 2022, produce the following to Ms. Shalaby:

(a) An up-dated, sworn Financial Statement in Form 13.1;

(b) His completed Net Family Property Statement in Form 13B;

(c) Documentation in support of the value of each asset and debt listed in his Financial Statement and Net Family Property Statement;

(d) All monthly statements from January 1, 2016, to the present for all bank accounts (including savings, chequing, investment, and R.R.S.P. accounts), and all credit cards and other credit facilities, including mortgage, personal loan, and lines of credit, operated by him, alone or with others, personally or through any business in which he had a 50% or greater interest, in Canada or elsewhere, at any time during that period;

(e) All applications for credit, including credit card, lines of credit, mortgage, or personal or business loans, made at any time for any credit facility that was made available to him or to any business operated by him, at any time from January 1, 2016, to the present, in Canada or elsewhere. If the Bank does not keep or cannot provide a copy of the application, then a print-out of all electronic data created when the application was made;

(f) All monthly statements for all accounts in the name of Damas Medical Centre from January 1, 2016, to the present;

(g) An affidavit, sworn or affirmed by him, with an accounting of all assets and properties sold or otherwise disposed of, or encumbered by him or by Damas Medical Centre, from January 1, 2016, to the present, with supporting documentation. The accounting shall include particulars of the account(s) to which any funds from the said dispositions were deposited or transferred, or paid, and any withdrawals or transfers from that/those account(s) and the purposes of the withdrawals or transfers. If any of the funds were paid to any person or corporation, the accounting shall identify the recipient and the purpose of the payment. The statements for the accounts from which the funds were drawn, withdrawn, or transferred, and for the accounts into which they were deposited, transferred, or paid, shall be attached.

(h) The reporting letter for the acquisition or disposition of any real property in which he currently or has had an interest, at any time from January 1, 2016, to the present, together with all enclosures or attachments, including the Statement of Adjustments and the Lawyer’s Trust Ledger and all documentation pertaining to any loan obtained by him for the purpose of financing the purchase of such real property;

(i) All leases and rental agreements entered into by him or by Damas Medical Centre at any time from January 1, 2016, to the present, and the particulars of all rental income derived from any of his properties during that period, in Canada or elsewhere;

(j) All documents relating to court proceedings commenced by him in Egypt or the UAE and relating to Ms. Shalaby or her family from January 1, 2018, to the present, including all documents filed and orders made in the said proceedings, with certified translations to English;

4. If any document required to be produced, or information required to be provided, is not produced or provided pursuant to paragraph 2, above, the Respondent shall, by October 31, 2022, produce a sworn affidavit, setting out the following:

a) Whether the document or information ever existed, and whether it was ever in his possession;

b) If the document or information once was, but no longer is, in his possession, when and under what circumstances it ceased to be in his possession;

c) In whose possession the document or information is now believed to be, including the full contact information of the person and agency;

d) The efforts made to obtain the document or information, including written requests made (and written requests shall be made for all such documents as are not in his possession), and the responses received;

e) The reasons the document was not produced.

5. If Mr. Nafei produces an affidavit as required above, he shall additionally, within seven days of receipt, sign and return a Direction to Ms. Shalaby, authorizing and directing the person or agency believed to be in possession of the document to produce it, at Mr. Nafei’s expense, directly to Ms. Shalaby’s lawyer.

6. If Ms. Shalaby concludes, based on the documents that Mr. Nafei produces, that she is unable to determine his true income, or the value of any assets, including any businesses in which he has an interest, she has leave to bring a motion, after October 31, 2022, to require him to retain a Chartered Business Valuator to produce a comprehensive valuation of his businesses and the income he derives from them, or for an advance on her entitlements to enable her to retain her own valuator.

7. Mr. Nafei shall pay to Ms. Shalaby her costs of these motions, which I fix in the amount of $59,042.50, inclusive of HST.

(Signature of Judge)

Price J.