Court File and Parties

COURT FILE NO.: 301/20 DATE: 2023-12-18 SUPERIOR COURT OF JUSTICE, FAMILY COURT- ONTARIO

RE: Stephanie Michelle Niessen, Applicant AND: Kevin John Niessen, Respondent Rita Niessen, Party to the motion

BEFORE: Mr. Justice Robert B. Reid

COUNSEL: M. VanderSpek, Counsel, for the Applicant A. Sarnowski, Counsel, for the Respondent J. Reina Tamayo, Counsel for the party to the motion

HEARD: December 1, 2023

decision on motion

Introduction and background:

[1] This decision deals with a second motion brought before me by the applicant. The first was heard November 27 and 28, 2023, and my decision is dated December 11, 2023. One purpose of both motions was to preserve assets pending the equalization of net family property.

[2] At the hearing of the first motion on November 27, 2023, the parties consented to a temporary and without prejudice order enjoining Rita Niessen and 20 Valley Communities Inc. (“20 Valley”) from encumbering or otherwise dealing with the property at 3446 Rittenhouse Road, Vineland, Ontario (“Rittenhouse Road”), and enjoining the respondent, Rita Niessen and 20 Valley from encumbering or otherwise dealing with that property, pending the release of my decision on the motion. That order therefore expired on the December 11, 2023.

[3] During the course of the first motion, the applicant became aware that the respondent or Rita Niessen on behalf of 20 Valley had received an advance of mortgage funds secured against Rittenhouse Road. She also found out that Rittenhouse Road had been listed for sale. On receipt of that information, she advised of her intention to bring this urgent motion to be argued before me on December 1. A notice of motion, supporting affidavit, and responding affidavits were all served and filed on short notice.

[4] By way of background, the applicant and respondent are former spouses, having been divorced October 3, 2022, and are the parents of three children. The application was issued on August 4, 2020 including, as amended, claims for equalization, freezing and preserving assets and the sale of family property. Since that time, the parties have litigated numerous disputes, some of which relate to the alleged failure of the respondent to provide proper disclosure. Contempt motions are pending.

[5] Rita Niessen is the mother of the respondent, and is also the director and president of 20 Valley.

[6] In the motion before me, the applicant seeks an order that:

• Rita Niessen and 20 Valley were in breach of paragraphs 1 and 2 of the consent order made by me dated November 27, 2023;

• all mortgage funds advanced pursuant to the charge against Rittenhouse Road be payable to the applicant’s counsel in trust or alternatively that they be paid into court;

• Rita Niessen and 20 Valley provide a full accounting of the mortgage funds received, including confirmation of all payments made to third parties; and

• the real estate listing of Rittenhouse Road be terminated.

[7] As with the prior motion, this motion did not seek to add 20 Valley as a party.

[8] For reasons explained in my December 11, 2023 decision, Rita Niessen was made a party to the application, in her personal capacity and as director of 20 Valley.

[9] As was detailed in my December 11 decision, Rittenhouse Road was transferred to 20 Valley in exchange for another property known as 4040 Victoria Avenue, Vineland (“Victoria Avenue”). The exchange was for equal value. Prior to the transfer, the respondent, Rita Niessen, and her husband Heinz Niessen owned Victoria Avenue in equal shares.

[10] In support of her claims in this motion, the applicant deposes that on November 20, 2023, 20 Valley transferred title of Rittenhouse Road (or some part of it) to Rita Niessen and Heinz Niessen for no consideration.

[11] Part of the disclosure ordered in my December 11 decision related to the sale of Victoria Avenue and the purchase of Rittenhouse Road. The applicant required the disclosure, at least in part, to explore whether the respondent has depleted his equity in properties to which she claims an interest, and which otherwise could be a source of funds for an equalization payment.

[12] In my December 11 decision, a Certificate of Pending Litigation (“CPL”) was authorized to be registered against Rittenhouse Road.

[13] I did not make an order preserving Rittenhouse Road pursuant to rule 40 of the Rules of Civil Procedure on the basis that no undertaking as to damages had been filed by the applicant as required by sub-rule 40.03, and since 20 Valley was not a party to the proceedings or the motion. Although Rita Niessen is a director and officer of 20 Valley, it was not proper to, in effect, pierce the corporate veil and impose an obligation on her as an officer and director that actually relates to the corporation.

Discussion:

Real Estate Listing:

[14] As an exhibit to the affidavit of the respondent dated November 30, 2023, a letter from the realtor who had listed Rittenhouse Road for sale confirmed the following dates: exclusive listing on August 25, 2023; listing on the MLS on November 5, 2023; and an adjustment of the listing expiration date to November 30, 2023. He further advised in that letter that Rittenhouse Road was no longer listed for sale.

[15] Neither the applicant nor the court were made aware that Rittenhouse Road had been listed for sale as early as August 25, 2023.

[16] Because the property is no longer listed for sale, it is unnecessary to make an order requiring that the listing be terminated as requested in the notice of motion.

Past and Future Charge Advances:

[17] Charge No. NR656247 was registered against Rittenhouse Road on November 27, 2023, in the amount of $1,137,000.

[18] Rita Niessen deposed in her November 30, 2023 affidavit that 20 Valley received $299,985 on November 28, 2023 as a draw against the approved financing.

[19] Rita Niessen also deposed that $220,000 had been advanced by the same lender in September 2023, which debt was consolidated with the November 27 charge, such that total available “new” funds were $917,000. She deposed that approximately $138,000 has been advanced to pay trades working in the Rittenhouse Road project. She proposes that further funds be advanced as needed to pay creditors on the project in order that it continue. She therefore opposes the request that charge funds be advanced and held by counsel or by the court.

[20] The commitment letter from the mortgagee found at Exhibit H to the affidavit of Jennifer Lalonde sworn November 30, 2023 makes it clear that the funds are to be available “strictly for use in completing the severing of 2 (two) lots from the parent parcel by installing all services to the two new lot lines as per municipal requirements and for reimbursement of the cost of constructing two new foundations on the proposed severed lots.” The letter further states that: “Draws are to be paid based on the receipt of Appraisers inspection reports detailing per cent completion.”

[21] Rita Niessen also notes the term of the charge that: “The Mortgagor(s) shall not grant or permit any further mortgages, charges, or encumbrances of any nature to be registered against the property without prior consent in writing of the Mortgagee and in the event of breach of this covenant the Mortgagee shall be entitled to commence default proceedings.” She is concerned that orders made in response to actions taken by the applicant may have the effect of triggering a default.

[22] The applicant is justified in her concern that the actions of the respondent and Rita Niessen have been taken in furtherance of their own interests, without regard to and perhaps in opposition to the applicant’s anticipated entitlement to be paid an equalization payment. I need not repeat the issues of credibility that were detailed in my December 11 decision. To those can be added the concerns raised in this motion: the failure to advise the court of the real estate listing, the failure to advise the court of the new charge, and the series of decisions by the respondent to proceed with the project without regard to the outstanding motion, justified by his desire to complete the Rittenhouse Road project on his own terms.

[23] However, it is not an available or appropriate remedy to require the advancement of mortgage funds for a purpose outside of the mortgagee’s commitment and have the funds held (either by counsel or the court). Funds that have already been advanced and paid to suppliers and other creditors are beyond the reach of the court.

[24] The respondent’s expressed purpose in proceeding with the project is to have the property severed, construct a home for his parents, and sell other portions (either developed or as building lots) for a profit.

[25] In my view, the appropriate remedy for the applicant is to restrict the alienation of the Rittenhouse Road parcels, or alternatively to have any sale proceeds held in trust pending resolution of the equalization issue as between the parties.

[26] There has already been a CPL granted against the project. In addition, there will be an order that no parcel of the Rittenhouse Road project is to be alienated by the respondent or Rita Niessen, both of whom are now titled owners, except on at least 30 days written notice to the applicant and with any funds received from the sale of such parcels, after payment of necessary costs associated with the sale, to be paid into trust with the applicant’s solicitor pending agreement or further court order.

[27] Rita Niessen deposes that $50,000 has been paid from the mortgage advance to the respondent for payment as project manager by bank draft dated November 28, 2023. She proposes that an additional $30,000 be paid to the respondent for those services. It may be that a payment for project management to the respondent falls within the purposes permitted by the lender. However, it is also a fact that the respondent has accumulated child and spousal support arrears said to be in the range of $24,000 as of early September 2023.

[28] Therefore, there will also be an order that 50 per cent of any fees or salary to be paid to the respondent or to any other entity as compensation for his services on the Rittenhouse Road project will be remitted by the payor directly to the Family Responsibility Office until child and spousal support arrears are eliminated.

Accounting for funds received:

[29] Transparent disclosure has been a scarce commodity in this litigation. In my decision of December 11, I explained why an order for disclosure was appropriate.

[30] In the affidavits filed by the respondent and Rita Niessen sworn November 30, 2023, they itemize the amounts and recipients of some of the funds advanced pursuant to the charge registered on November 27, 2023. A full detailed accounting is appropriate, and there will be an order to that effect, to be provided by the respondent and Rita Niessen to the applicant within 30 days.

Breach of Court Order:

[31] The applicant alleges that the respondent and Rita Niessen breached the court order made on consent restricting their ability to encumber or otherwise deal with Rittenhouse Road.

[32] The consent order was made on November 27, 2023, early in the motion hearing that began at 10:30 a.m. Charge No. NR656247 was registered at 10:22 the same morning. No mention of it was made to counsel for the applicant or to the court.

[33] Rita Niessen deposed that she had understood that the charge had been registered on November 24 and that as a result, neither she nor 20 Valley were in breach of the consent order.

[34] It does not appear that Rittenhouse Road was encumbered after the court order was made, even though the lack of disclosure and therefore the lack of candour by the respondent and Rita Niessen is troubling. Actions of that nature taint their credibility in other matters before the court.

[35] Since there was no actual breach of the November 27, 2023 consent order, there will be no declaration to that effect.

Summary:

[36] Based on the foregoing, there will be an order as follows:

a. no parcel of the Rittenhouse Road project is to be alienated by the respondent or Rita Niessen, except on at least 30 days written notice to the applicant and with any funds received from the sale of such parcels, after payment of necessary costs associated with the sale, to be paid into trust with the applicant’s solicitor pending agreement or further court order.

b. 50 per cent of any fees or salary to be paid to the respondent or to any other entity as compensation for his services on the Rittenhouse Road project will be remitted by the payor directly to the Family Responsibility Office until child and spousal support arrears are eliminated.

c. Rita Niessen and the respondent are to provide a complete detailed accounting as to the disbursement of mortgage funds received pursuant to charge No. NR656247 including confirmation of all payments made to third parties, to be provided by the respondent and Rita Niessen to the applicant within 30 days.

Costs:

[37] The parties are encouraged to resolve the question of costs consensually.

[38] As indicated at the hearing of the November 27 motion, it appears that costs of several previous appearances had been reserved to me as the motions judge. Because of the number of appearances and their outcomes, if there was no agreement, I ordered that there be a short hearing dedicated to the issue of costs.

[39] It makes sense that submissions about the costs of this motion be reserved to the same hearing so motions costs for hearings to date on related issues can be assessed once.

[40] The parties are to contact the trial coordinator to arrange for a date so that oral submissions on costs can be received, to be argued in the time frame of a short motion. Bills of costs and costs outlines should be filed in advance and uploaded to CaseLines.

Reid J

Date: December 18, 2023