Court File and Parties

COURT FILE NO.: FC-21-1599 DATE: 2023/06/12 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

NAHIDA AKTER MUKTA, Applicant – and – AHMED ZAFOR and M. A. BATEN BEGUM SELINA KHANDAKAR, Respondents

COUNSEL: Selim James Levy, for the Applicant Golan Yaron, for Ahmed Zafor Self Represented, for M. A. Baten Begum Selina Khandakar

HEARD: May 30, 2023

Motion on Preservation Order

[1] This is the continuation of the motion heard on April 13, 2023. At that time, I made an interim order for spousal support and for interim disbursements and adjourned the Respondents’ motion for the release of net proceeds from the sale of a home to another date because the motion had been short served on the Applicant.

[2] The Respondent husband (“the husband”) and the added Respondents (“the husband’s parents”) initially brought a summary judgement motion seeking a declaration that the husband’s parents were the legal and rightful owners of the property located at 2826 Richmond Road, in Ottawa (“the Property”), and seeking the release, to them, of the balance of the net proceeds currently held in trust.

[3] The Applicant wife (“the wife”) opposes the motion and asks that the net proceeds remain in trust pending the final determination of her claims at trial. In her Application, the wife takes the position that the husband is the equitable owner of one half of the Property as a result of all the contributions he made to its purchase and upkeep during the course of the parties’ marriage. More precisely, she claims the following:

An Order that the Respondent's parents, MA Baten and/or Begum Selina Khandakar, have been holding the municipal property known as 2826 Richmond Road in Ottawa, Ontario (hereinafter the "matrimonial home") in trust for the Respondent and, consequently, that said property is a matrimonial home which shall be equalized.

[4] When this motion first came before me, I pointed out to the parties that in Ontario, a claim for equalization does not create an interest in the property to be divided, it creates an in personam claim to the value of the property that is to be divided (Fraser v. Fraser, 2021 ONSC 1900). Therefore, even if the wife’s position prevailed at trial, she would not be entitled to an interest in the Property, but only to a monetary award from the husband himself, in the form of an equalization payment.

[5] Therefore, I questioned whether the issue before the court should be the determination of who the owner(s) of the Property is\are (an issue that should be left for trial), or if the parties should instead focus on whether the existing preservation order should remain in place pending trial to secure the payment of the equalization that the husband will be required to pay to the wife.

[6] Despite this, at the return of the motion before me the Respondents pursued their summary judgment motion, and the wife filed a 271 page-long responding affidavit mainly focused on proving that the husband is, indeed, the equitable joint owner of the Property with his parents.

[7] At the outset of the motion hearing, after having reviewed all the materials filed for this motion, I made it clear to the parties that I would not grant summary judgment on the issue of the ownership of the Property. It is clear to me that there is a genuine issue requiring a trial before such determination can be made. The sheer volume of materials filed by both parties in support of their respective position on this issue makes this abundantly apparent.

[8] Therefore, this motion proceeded on the issue of whether the existing preservation order should remain in place pending trial.

[9] The parties married on December 9, 2011, in Bangladesh. The wife immigrated to Canada on November 27, 2012. In 2015, the Property was purchased in the husband’s sole name. The Respondents claim that although purchased in the husband’s name, the Property was paid for entirely by the husband’s parents, who reside in Bangladesh, for the benefit of the entire family. After it was purchased, the parties lived in that home as a couple with the husband’s sister and parents, who stayed in Canada with their children for lengthy periods of time.

[10] The parties do not agree on when they separated. The wife states that they separated on October 21, 2020, and the husband states that they separated on March 15, 2018, when he accepted a position to teach in Texas, United States. There is a 2.5-year gap between the parties’ respective positions on the date of separation, the determination of which will have a significant impact on all the claims raised in this proceeding. At some point in 2019, the husband transferred the title of the Property to his parents (there was no amount owing on the mortgage by that time) without notice to the wife, and without her knowledge.

[11] The wife claims that placing the title in the husband’s parents’ names was intended to defeat any claim she may have had in that property. The Respondents strongly dispute this and allege that the Property was purchased by the husband’s parents with their own money, for their and their children’s use, and was never intended to be the husband’s property.

[12] The voluminous evidence before me establishes, at least on a prima facie basis, that the husband’s parents made significant contributions toward the purchase of the Property and the payment of the mortgage, all of which went through the husband’s bank account (since the husband’s parents were not residents of Canada at the time).

[13] The evidence also strongly suggests that the husband has also invested some of his own money into the purchase and/or upkeep of the home during the parties’ marriage. The transfer of the Property from the husband’s sole name to his parents’ joint names for no consideration, after the husband’s alleged date of separation but before the wife’s alleged date of separation, in and of itself raises important suspicion. The determination of who is the rightful owner of the Property involves a complex tracing exercise that only the trial judge will be able to decipher. In addition, the determination of which of the two alleged dates of separation is the correct one will have an important impact on the ownership of the Property for the purpose of equalization.

[14] The property was sold by the husband’s parents in June 2022. Following an ex parte motion brought by the wife after she discovered the impending sale, and to avoid the husband’s parents being liable for damages if the sale did not go through, the parents consented to a temporary without prejudice order providing that one half of the net proceeds would remain in trust pending a determination of the issues in dispute around the ownership of the home. After the sale went through, the husband’s parents received $212,500 and an equal amount continues to be held in trust pursuant to the May 2022 consent order.

[15] As I am not prepared to decide who is the rightful owner(s) of the Property at this interim stage, I have to decide whether the net proceeds should remain in trust pending trial. In other words, should the temporary without prejudice preservation order made in May 2022 be extended to ensure that there are sufficient funds available to satisfy the equalization payment that the husband will ultimately owe to her?

[16] The legislative provision allowing for preservation order to be made is s. 12 of the Family Law Act, R.S.O. 1990, c. F.3. The test applicable to the determination of this question was set out in Bronfman v. Bronfman. In that case, the wife also sought to extend a preservation order she had obtained on an ex parte motion. The court stated that the test applicable was the same as the one applicable to a request for an injunction, in which the court must consider the following factors:

(1) the relative strengths of the parties' positions; (2) the balance of convenience; and (3) whether irreparable harm may occur if relief is not granted.

[17] Paragraphs 26 through 31 of Justice Sachs's decision are instructive. She says:

… a court will want to consider how likely it is that the plaintiff or petitioner will receive an equalization payment. It will also want to consider the effect that granting, or not granting, such an order will have on the parties. Under s. 12, the agenda is to protect the spouse's interests under the Family Law Act, so that if a spouse is successful in obtaining relief under that Act, there are assets available to satisfy that relief. Relevant to this exercise is an assessment of the risk of dissipation of the assets in existence prior to trial.

[18] It is not disputed that the husband was the family’s breadwinner during their marriage. He previously worked at Carleton University as a professor/lecturer. Before and after he completed his Ph.D., he was employed with the Bank of Canada, earning a good income. In 2018, the husband accepted a position in Texas as a professor with the University of Houston, where he continues to work to this day. His income over the past few years from his position as a professor in Texas has been in the range of $125,000 US. Last year, his total income from all sources was in the range of $195,000 CAN.

[19] According to the husband’s most recent financial statement, on the date of the parties’ separation (being March 2018 according to him), his main assets comprised of:

• his pension plan with the Bank of Canada, which had a Family Law Value of $342,779, and;
• his ownership interest in the Property – if any. I am not aware of the 2018 value of the Property but it was sold in 2022 for $425,000 (with no mortgage).

[20] The husband also claims that he had $90,000 in cash on the date of marriage, and that he owed substantial sums of money to his parents and brother ($100,000). I am far from certain that proper financial disclosure has been provided to support these figures, given the round numbers shown in his financial statement, which I find lack significant details.

[21] By the time the wife’s alleged date of separation (in 2020), the husband was the owner of a property located at 158 Baseline Road in Ottawa, which he purchased in his sole name in April 2018. The husband claims that he purchased this property with the financial assistance of his parents, and once again the evidence in that regard raises credibility issues and involves a tracing exercise. The property was sold in December 2020 for an amount that appears to have generated net proceeds of $463,563, the use of which by the husband is unknown or still in dispute.

[22] The husband’s pension plan with the Bank of Canada had a much higher Family Law Value of $539,463 at the date of separation advanced by the wife. It is my understanding that the husband has not provided full financial disclosure of his assets as of that date of separation, since he claims that the parties’ separation occurred more than two years before.

[23] Neither party provided a proper Net Family Statement showing the equalization payment that might be owing by the husband to the wife on either date of separation. Regardless, it is clear that the husband will owe an equalization payment which has yet to be quantified.

[24] The uncontested evidence before me shows that other than the $212,500 currently held in trust, the husband has very little assets in Canada which could be used to satisfy an equalization payment. He now works and resides in Texas, does not own real estate in Canada, and has elected at some point after October 2020 to transfer the commuted value of his pension out of the Bank of Canada pension plan. The current location of these funds is unclear. While the husband claims that part of these funds ($100,000) have been invested in a U.S. based investment company (Housing Corporation USA) and the other part ($200,000) in a Canadian based investment company (Amero Gelato Inc.), the evidence before me is significantly lacking in that regard and comprises solely of the husband’s declaration to that effect in his financial statement (and the financial statement does not mention where these corporations are established; this is only what the Respondent’s counsel asserted during his submissions).

[25] To summarize, I conclude that the husband will owe an equalization payment to the wife. I also conclude that at this point, the evidentiary record does not show that there will be assets available to satisfy that payment once the trial is completed. Indeed, and without making a finding in that regard, the evidence before me in this motion raises important concerns that the husband may have taken steps to transfer his assets out of Canada for the purpose of shielding himself from the obligation to make an equalization payment.

[26] In my view, the husband’s parents’ inability to access the balance of the funds held in trust pending trial will not cause them irreparable harm. The evidence shows that they have access to significant sums of money which they have used to buy real estate in Canada and which they have lent to their children for various purposes. They have already received half of the net proceeds ($212,500) from the sale of the Property, and I do not accept that not receiving the balance will cause them irreparable harm or other financial hardships.

[27] If indeed the retention of these funds in trust has the potential of causing them irreparable harm, then it was open to the husband to use his own assets (for instance, the funds received after electing to cash in his pension plan) to pay them back while this proceeding runs its course, instead of investing his money in various business ventures.

[28] For these reasons, I order that the proceeds from the sale of the Property currently held in trust shall remain in trust pending final determination of the parties’ claims at trial.

Costs

[29] The wife was successful in this motion (both hearings). If the parties are unable to resolve the issue of costs, I will accept brief written submissions not exceeding three pages each (double-spaced, 12-point font) excluding Offers to Settle and Bills of Costs, in accordance with the following timelines:

• The wife to serve and file by June 26, 2023;
• The husband to serve and file by July 10, 2023;
• The wife’s reply, if any, and not exceeding one page, by July 17, 2023.

Justice Julie Audet Date: June 12, 2023