COURT FILE NO.: FS-19-8255
DATE: 20221129
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Lynne Marie Hevey, Applicant
AND:
Charles James Hevey, Respondent
BEFORE: The Honourable Justice J. A. Desotti
COUNSEL: A. Drury Counsel, for the Applicant
R. Haas Counsel, for the Respondent
HEARD: October 6, 27 and Nov 1, 2022
ENDORSEMENT
A. The Issues
[1] I have read the affidavits, the factums, the ‘Book of Authorities’ and various orders that I have already made, the requested orders by both counsels and the motions before me.
[2] There are at least three issues before me as follows:
a) The proper disclosure of the value of the respondent’s asset;
b) The disclosure of documents in the respondent’s possession;
c) Whether the respondent is in contempt of my order of December 13th, 2021 and/or my interim order of May 10th, 2022 or both.
[3] The order of December 13th, 2021 states as follows:
THIS COURT ORDERS THAT:
The motion is permitted to proceed on an ex parte basis.
The motion is permitted to proceed prior to a case conference.
On an interim without prejudice basis:
a) The Respondent, Charles James Hevey, is retrained(sic) from depleting any of his assets until the disposition of this matter.
b) The Respondent, Charles James Hevey, is prohibited from removing any assets from Ontario.
c) The Respondent Charles James Hevey, prohibited from disposing or transferring the property known as “Tavoid Lands” with the following legal description:
PLAN 33M412 PT BLK 2 RP
33R19857 PART 4
IRREG
1.35AC 252.39FR D
d) There shall be a registration on title of the property known as “Tavoid Lands” with the following legal description:
PLAN 33M412 PT BLK 2 RP
33R19857 PART 4
IRREG
1.35AC 252.39FR D
The Honourable Justice John. A. Desotti is seized of this matter.
The matter is adjourned to December 16th, 2021 to set a date for the argument of this motion on a complete record.
The Respondent, Charles James Hevey, shall be served with a copy of this order and materials forthwith.
The necessity of the Respondent, Charles James Hevey, to approve this order is dispensed with.
Costs of today are reserved to the hearing of this matter on a complete record.
[4] Counsel for the applicant indicated that the credibility of the respondent is decidedly in issue. I agree.
[5] I observed the respondent in answering questions both in chief and in cross-examination in a manner that attempted to convey a misunderstanding of both the December 13th, 2021 order and May 10th, 2022 order and the trusts that he was the sole beneficiary of.
[6] The May 10th, 2022 interim order is as follows:
PURSUANT TO THE FAMILY LAW ACT, THIS COURT ORDERS THAT:
The Respondent, Charles James Hevey, is restrained from depleting any of his assets until final disposition of this matter, subject to the terms contained herein.
This order shall not include small personal items such as:
Assets with a value of less than $10,000;
Furniture;
Personal vehicles;
Used items in the Respondent, Charles James Hevey’s home;
Appliances; and,
Any items of a similar nature.
The Respondent, Charles James Hevey, is prohibited from removing any of his assets from the province of Ontario, save for his guns and ammunition, as identified in paragraph four of the Settlement Agreement made in the Circuit Court of the 17th Judicial District Florida, January 2021.
The Respondent, Charles James Hevey, is prohibited from seeking the instructions of the Trustee of PMP Trust, to dispose of or transfer the property known as the 'Tavoid Lands' with the following legal description: Plan 33M412 PT BLK 2 RP, 33R19857 Part 4, IRREG, 1.35AC 252.3 9FR D.
This order shall not prohibit Wonderland Commercial Centre Inc. or Tavoid Holdings Inc. from conducting its business in the ordinary course, including the collection of rents and other income, and the payment of expenses for the operation of these companies, including the payment of employees, utilities, property taxes, income taxes, and interest charges. Rents collected may be deposited in the Wonderland Commercial Centre bank account at Huntington Bank located in Michigan, U.S.A.
The Respondent, Charles James Hevey, shall be permitted, on motion with 14 days’ written notice to the Applicant, Lynne Marie Hevey, for leave and/or direction of the court to dispose of, or encumber, or otherwise deal with, the Tavoid Lands or other holdings or assets of Wonderland Commercial Centre Inc. or Tavoid Holdings Inc.
This order shall not prohibit the Respondent, Charles James Hevey, from conducting his business as a land developer and/or consultant, either as an individual, or through a trust or corporation including:
a) the acquisition, lease, or sale of lands in the ordinary course of his work or business;
b) encumbering or charging his assets to obtain financing for the acquisition of lands;
c) the payment of costs and expenses in the ordinary course of his work or business, including those costs and expenses reasonably incurred in the course of development of lands (such as engaging, hiring or retaining third-party professional advisors, consultants, contractors or suppliers); including the hiring and payment of employees and professional advisers; and including travel costs (including air travel, hotel and meals costs).
d) the payment by any associated individual, trust or corporation to the respondent, and receipt by the respondent of, any contracted fee for, or profits from, the fruits of this work or business.
- Notwithstanding paragraph 6 herein, the Respondent, Charles James Hevey, shall be required to report to the Applicant, Lynne Marie Hevey, any asset he plans on disposing of, either as an individual, or through a trust or corporation. Disposition of an asset shall include:
a) The sale of any real property owned by the Respondent individually, or through a corporation or a trust.
b) Any incumbrance of real property owned by the Respondent individually, or through a corporation or a trust.
c) Any transfers of money from a corporation, trust or otherwise to the Respondent for personal or commercial use. Such transfers can be disclosed to the Applicant in writing through counsel. Such transfer shall not include the Respondent's income.
This order shall not prohibit the Respondent, Charles James Hevey, from the use of funds to pay his and his family’s reasonable ongoing expenses, including his and his family’s housing (including mortgage, utilities, common area charges, and property taxes), food and household supplies, health and dental, life insurance premiums, reasonable vacation and entertainment, transportation (including vehicle lease), personal care and hygiene, phone, debt payments, and clothing.
This order shall not prohibit the Respondent, Charles James Hevey, from the retainer and payment of his lawyers in the herein proceeding, the proceedings in Superior Court of Justice court file number 550/19, and in any other legal proceedings which may subsequently be commenced touching on the facts and issues in the herein proceeding.
This order shall not prohibit the Respondent, Charles James Hevey, from the payment of the costs, if any, to travel to and stay in Ontario, as may be necessary, in relation to his consultation with Ontario counsel, and participation in the herein proceedings, the proceedings in Superior Court of Justice court file number 550/19, and in any other legal proceedings which may subsequently be commenced touching on the facts and issues in the herein proceedings.
This order shall not prohibit the Respondent, Charles James Hevey, from the use of funds to pay his income taxes.
The Applicant, Lynne Marie Hevey, and the Respondent, Charles James Hevey, may return this matter to Court for a variation of paragraphs 3, 4, 6, 7, 8, 9, 10 in the event of an issue warranting the Court's intervention. Where possible, Justice John A. Desotti shall hear that variation request.
The Respondent, Charles James Hevey, shall pay the costs of this motion to the Applicant fixed in the amount of $7,500 inclusive of disbursements and HST.
[7] Also, I have included the June 27th, 2022 order as follows:
PURSUANT TO THE FAMILY LAW ACT, THIS COURT ORDERS THAT:
- The Applicant, Lynne Marie Hevey, and the Respondent, Charles James Hevey, shall each disclose to the other, the corporate records for the numbered companies 1705815 Ontario Inc., 1705816 Ontario Inc., and 1705817 Ontario Inc., including the following information:
i. who owned what shares on the date of separation up until the date of this Order;
ii. the voting power of each class shares; and
iii. the value of assets owned by these corporations on the date of separation, November 14, 2006.
- 1705815 Ontario Inc., 1705816 Ontario Inc., and 1705817 Ontario Inc. shall disclose:
i. who owned any shares in the companies on the date of separation, November 14, 2006, up until the date of this Order;
ii. the voting power of each class of shares; and
iii. the value of assets owned by these corporations on the date of separation, November 14, 2006.
- The Respondent, Charles James Hevey, shall disclose to Aaron B. R. Drury, counsel for the Applicant, Lynne Marie Hevey, the trust documents for the trust known as ‘CVX Trust’, including corporate documents relating to the companies contained within that trust for the following:
a) Devlon corporation;
b) Devlon Properties;
c) SR20; and
d) CVX Skydominiums.
The Respondent, Charles James Hevey, shall make himself available for oral questioning for two full days in Sarnia, Ontario at a mutually agreed upon examination centre, prior to the return date of the motions on October 6, 2022 with the Respondent’s counsel, Robert A. Haas, being permitted to attend for such examination by video link or alternatively, in person.
Davis Martindale LLP shall be appointed to complete a forensic audit of the Respondent, Charles James Hevey’s assets, including any corporations and trusts, from November 14, 2004 to the date of this Order, and the Applicant, Lynne Marie Hevey, and the Respondent, Charles James Hevey, shall:
a) sign any Authorization and Directions necessary to complete this report; and
b) provide any documents necessary to complete the report, as requested by the Auditor.
The issue of payment for the cost of the forensic audit is adjourned to the return of this matter on October 6, 2022.
Leave is hereby granted to the Applicant, Lynne Marie Hevey, to file the following documents:
a) Notice of Contempt Motion dated February 18, 2022 made first returnable March 3, 2022;
b) Notice of Motion dated February 18, 2022, made first returnable March 3, 2022;
c) Affidavit of the Applicant, Lynne Marie Hevey, sworn February 18, 2022; and
d) Return of Service executed by Christina Rojas confirming personal service of the above documents upon the Respondent, Charles James Hevey, at 10:03 p.m. on March 7, 2022 at 2040 NW 25th Street, Boca Raton, Florida, 33431.
Leave is hereby granted, if necessary, to the Respondent, Charles James Hevey, to file his Notice of Motion dated June 17, 2022 made first returnable October 6, 2022.
This matter is hereby adjourned to 2:00 p.m. on Thursday, October 6, 2022.
The issue of costs of this motion is hereby reserved to the return date of October 6, 2022.
B. The History
[8] Justice Hockin first took up this matter by freezing the respondent’s assets. Justice George then set aside that order on August 8th, 2019 and terminated the action by way of a summary judgment action. This matter then went to the Court of Appeal, which reversed Justice George’s termination order, and ordered the matter to trial.
[9] The parties had separated on November 14th, 2006. At the time, both the respondent and his/their counsel assured the applicant that the respondent had no assets and that all assets were vested with their children.
[10] What was not indicated to the applicant was that PMP Trust of which the respondent was the sole beneficiary was a common shareholder of the companies that the children were also the shareholders. Obviously, this allowed the respondent to access these company assets whenever he wanted.
[11] In the affidavit of Lynne Hevey dated December 10th, 2021, she states that the respondent through accessing 1705815 Ontario Inc., 1705816 Ontario Inc., and 1705817 Ontario Inc., he received the sum of $15,467,880,54.
[12] The respondent stated with certainty that it was the children who owned the assets, yet through subterfuge, he was the beneficiary of these millions of dollars.
[13] This sum of monies, that is the $15,467,880.54 has nothing to do with the $21,500,000.00 that is most recently referenced in the respondent’s response to the applicant’s order that is sought.
[14] Furthermore, and in reference to the derivative action before Justice Nicholson (The London Action), Justice Nicholson noted at paragraph 55 as follows:
Furthermore, as the controlling mind of the Hevey organization, I do not accept that James was unaware of the withdrawal of funds over the years, taken as advances and shown on the books as dividends, to compensate Jeremy and Ryan. No concern was raised by the accountant on his cross-examination. Jeremy has produced documentation which shows large sums of money taken out by Jeremy were diverted to James. In my view, the more likely situation is that James has always been in control of how all funds have been dispersed.
The request to terminate this action by the respondent is thus not granted.
[15] As noted, I have made three previous determinations in this matter. This is my final involvement with the matter that is before me.
C. The Contempt Motions
[16] I have reviewed all of the case law counsel has provided and the five elements that are required before a finding of contempt can arise. I will not review the first four elements as they are properly reflected in the applicant’s factum and were the subject of extensive comments by counsel for the respondent.
[17] Nevertheless, it is the fifth element that is most egregious, namely that the respondent breached these two orders in a deliberate and willful fashion.
[18] Forgetting for the moment the first breach, which I consider straight forward and obvious, the second breach that amounted to the new mortgage would have had to have been underway well before or around the same time as my May 10th, 2022 order.
[19] In short, the organization of this mortgage would have arisen around the same time as my order and regardless of my order.
[20] With respect to the two motions for contempt, the factual circumstances are not in issue. The respondent sold his boat slip for $149,500.00 on January 18, 2022 contrary to my order of December 13, 2021 and received the sum of $685.00 from Manulife (affidavit of the applicant dated June 21st, 2022).
[21] There is thus a contempt finding.
[22] Likewise, in my order of May 10th, 2022, the continuation of the preservation order, the respondent on June 1st, 2022 placed a mortgage of $213,750.00 on his property in Michigan.
[23] On May 27th, 2022, the respondent discharged an old mortgage and registered a new mortgage.
[24] The respondent then placed another mortgage on the property and some $213,750.00 in funds was then paid to CVX Skydominiums LLC, Hevey Charles James Trustee, Rhemstone Corp Member, and Hevey Charles James President and Secretary.
[25] Paragraph 8 of my May 10th, 2022 order made it incumbent on the respondent to notify the applicant or her counsel if any encumbrance was being made against any of his property. This was not done and I conclude there was absolutely no confusion in paragraph 8 of my May 10th, 2022 order.
[26] I note that there was some attempt by the respondent, when he testified, to feign that he was confused about whether the May 10th, 2022 applied to business activities in the United States since the order arose out of the Ontario Superior Court. There was no such limitation in the May 10th, 2022 order.
[27] Again, to make this absolutely clear any confusion was intentional and purposeful on the part of the respondent.
[28] On this point, although not related to the matter that is before me but part of a companion action arising out of London, Justice Nicholson in a claim by the respondent for a derivative action, made the following findings in his decision at paragraph 48 as follow:
In my view, the disposition of this application turns on my determination of whether Mr. Hevey is acting in good faith. I am unable to reach that conclusion. It is my view that the application has been commenced in order to gain a tactical advantage in the matrimonial proceedings and the dispute over the alleged loans. I find the primary purpose of this application is the removal of Jeremy as director.
[29] In the result, the respondent is thus in breach of that order.
[30] As part of my June 27th, 2022 order, I ordered a forensic audit. This entire matter is back before the court because of the false assertion by the respondent back in 2006 that he had no assets. Clearly, PMP Trust had assets or had access to assets and thus the costs of any forensic audit should be borne by the respondent.
[31] In the result, the costs of such an audit shall be borne by the respondent from the date of separation until present. I agree with counsel for the applicant that the day to day activities of the trust known as PMP Trust should be most carefully scrutinized from that date onward.
[32] I agree with counsel for the applicant that cost awards have not been working. Nevertheless, I am prepared to make one final comprehensive court order dealing with disclosure and other issues as follows:
An Order that the Respondent, Charles James Hevey, shall disclose to the Applicant, Lynne Marie Hevey, the names of PMP Trust beneficiaries from the date of separation, November 14, 2006, up until the date of this Order.
An Order that Respondent, Charles James Hevey, shall disclose to the Applicant's Counsel all information concerning his application to Wells Fargo Bank, including documents related to:
a. Publicly Traded Stock
b. Income Producing Real Estate
c. Non-Real Estate Partnerships, LLCs
d. Non-Income Producing Real Estate
e. Residential Land Developments Projects
f. Contracts or Notes Receivables
An Order, requiring Wells Fargo Bank to make best efforts to provide to the Applicant's Counsel any applications made by the Respondent for funds for the period of 2004 to 2008 including any documents to support his application.
An Order that the Respondent, Charles James Hevey, shall disclose any and all assets held by the company known as "Headwater Properties" including the corporation structure, share allocation and value of assets.
An Order that the Respondent, Charles James Hevey, shall disclose any and all assets owned by Rhemstone Corporation including the corporation structure, share allocation and value of assets.
An Order that Charlotte Hevey shall disclose any assets in her name as of November 14, 2006.
An Order that Charlotte Hevey shall disclose her income tax returns and notices of assessment, or any equivalent document for the tax years 2006 to 2021.
An order that Charlotte Hevey and Charles James Hevey, shall disclose any trusts they have been the beneficiary of from 2006 to todays date.
An order that the Respondent, Charles James Hevey, shall pay the costs of the forensic audit, including any disbursements.
An order that the Respondent, Charles James Hevey, is not entitled to any further court order until the costs sanctions imposed are complied with by the Respondent.
An order finding that the Respondent breached the orders of Justice John A. Desotti dated December 13, 2021and May 10th, 2022.
An Order that the Respondent, Charles James Hevey, shall pay into court the proceeds from any disposition of assets since the interim Order of the Honourable Justice John. A Desotti dated December 13, 2021.
An Order that the Respondent, Charles James Hevey, shall disclose the corporate records for Rhemstone Corporation as well as the bank account information for this company.
The Applicant, Lynne Marie Hevey, and the Respondent, Charles James Hevey, shall be permitted for the use of the business computer, from the Hevey Group of Companies, that may be at Harrison Pensa or Micheal Schultz’s office, as follows:
a) The Applicant, or her agents, shall have access to the computer, including the Business Vision Program, for one week at a time, to be arranged with whomever has possession of the computer, including any hard copy files;
b) Following the Applicant having her time with the computer, the Respondent, or his agents, shall have access to the computer, including the Business Vision Program, for one week at a time to be arranged with whomever has possession of the computer, including any hard copy files;
c) Neither the Applicant nor the Respondent shall delete, remove, alter, or otherwise tamper with the files or programs on the computer. It is the intention of this Order that the Applicant and the Respondent shall each have a chance to receive and download business records;
d) Harrison Pensa, or an agent of the Applicant and the Respondent, are permitted to oversee the use of the computer during these times.
The Applicant, Lynne Marie Hevey, and the Respondent, Charles James Hevey, shall each provide an Affidavit of Documents to the other by January 31, 2023, including any documents contained in the disclosure Orders of this Court. The parties shall update their Affidavit of Documents periodically throughout this proceeding as more information becomes available to them.
The Respondent, Charles James Hevey, shall pay the costs of these motions to the Applicant, Lynne Marie Hevey, fixed in the amount of $7500.00 and the costs of the June 27, 2022 motion in the amount of $7500.00
This Order bears post-judgment interest at the rate of 4% per annum effective from the date of this Order. Where there is a default in payment, the payment in default shall bear interest only from the date of default.
In the event of any further breach of any of these orders, further contempt orders shall be brought with cost sanctions and potential significant penalty results.
[33] My trial coordinator can be approached with respect to the penalty component of these findings of contempt of court orders within 15 days.
The Honourable Justice J. A. Desotti
Date: November 29, 2022