Court File and Parties
Court File No.: FS-23-00038496-0000 Date: 2024-09-09 Superior Court of Justice - Ontario
Re: Setareh Namdar, Applicant And: Amir Ali Maali, Respondent
Before: Mathen J.
Counsel: Meysa Maleki / Nadine Saba / Harold Niman, for the Applicant Dani Frodis, for the Respondent
Heard: September 3, 2024
Endorsement
[1] On September 3, 2024, this motion was brought to address two issues:
a. Should this Court continue a preservation order, made in October 2023 on an ex parte basis, against the proceeds of sale from a property solely owned by the Respondent, Amir (“Respondent”, “Amir”); or in the alternative, should the Court issue the order de novo?
b. Should the Respondent pay to the Applicant, Setareh (“Applicant”, “Setareh”) interim costs and disbursements of $146,508.35, to be later credited to him?
Background
[2] The parties married in Iran on November 22, 2003, and separated on October 16, 2023. There are two children of the marriage; SM, age 15, and KM, age 10. SM was born in Iran. KM was born in Toronto.
[3] Prior to separation, the parties and their children lived together in Iran.
[4] The parties became Canadian permanent residents in 2011.
[5] The parties separated when Setareh fled Iran for Toronto, leaving the two children with the Respondent. Setareh claims that she had no alternative to secure her safety.
[6] Setareh obtained the ex parte order prior to leaving Iran. On October 12, 2023, Justice Akazaki of this Court agreed to preserve the proceeds of sale from a property owned by Amir and located at 109 Roe Avenue, Toronto (“109 Roe”). On October 13, 2023, Setareh served Amir with an Application for divorce.
[7] Justice Akazaki’s ex parte order was to be reviewed within fourteen days. For a number of reasons that review did not occur. The within hearing is the return of that original ex parte motion.
[8] In the meantime, Amir challenged Ontario’s jurisdiction to hear the case on the basis inter alia that the parties were living in Iran. On March 25, 2024, Justice Kraft found that:
a. The Applicant had not been habitually resident in Ontario for at least one year preceding the date of the Application and, therefore, Ontario had no jurisdiction over the divorce or corollary relief.
b. The parties, however, did have a real and substantial connection to Ontario.
c. Under the doctrine of forum non conveniens, Ontario was the proper forum for the Applicant’s claims.
d. In paragraph 63, Justice Kraft stated:
The Ontario FLA applies with respect to Setareh’s claims for spousal support. Although I have found that this family had more than one ordinary residence, both in Iran and Ontario, the place where both spouses had their last common habitual residence was Iran. As such, the FLA will not apply to Setareh’s property division claims, or her equitable claims for unjust enrichment and joint family venture. Section 15 of the FLA is applicable such that the law of Iran will govern the property rights of both spouses.
[9] On July 3, 2024, Justice Kraft amended paragraph 63 on the basis that “whether the FLA applies to Setareh’s equitable claims for unjust enrichment and joint family venture was not before [her]”. Justice Kraft ordered the entire paragraph to be replaced with:
The Ontario FLA applies with respect to Setareh’s claims for spousal support. Although I have found that this family had more than one ordinary residence, both in Iran and Ontario, the place where both spouses had their last common habitual residence was Iran. As such, the FLA will not apply to Setareh’s property division claims or the proprietary elements of her equitable claims for unjust enrichment because s.15 of the FLA is clear that the law of Iran will govern the property rights of both spouses. (emphasis added)
[10] In an August 2024 motion before Justice Vella, Setareh sought a temporary order for spousal support and an order for interim disbursements.
[11] Citing the need to obtain an expert income valuation report, the Respondent Amir sought to adjourn the motion for support until November. Justice Vella agreed that a report was needed “given the complicated nature of the Respondent’s business enterprises in Iran, France and Canada”.
[12] The Respondent pressed for a variation of the preservation order. He also sought to have $100,000 paid out from the funds currently subject to that order.
[13] Justice Vella agreed to adjourn the spousal support motion to December 5, 2024. After imputing income of $400,000 to Amir she ordered him to pay temporary spousal support of $7,843 per month.
[14] Justice Vella then set down the Respondent’s claim regarding the preservation order and the Applicant’s claim for interim disbursements for a one-hour motion, which proceeded before me on September 3.
[15] Amir argues that there is no basis for any further preservation order.
[16] Amir argues that he needs access to the funds in order to satisfy the temporary support orders for Setareh, to pay his counsel and to obtain the expert income report.
[17] Setareh argues that given the enormous financial disparity between the parties it is appropriate to award interim disbursements and costs.
[18] I conclude that there continues to be a need for the preservation order. I agree with Amir that the standard to grant such an order is high. However, I find there is a risk of dissipation of the proceeds of sale of 109 Roe that otherwise could be used to satisfy Setareh’s spousal support and other claims. In addition, I do not find Amir’s account of his financial circumstances plausible and, therefore, I do not accept his argument that he will suffer great prejudice if he is denied access to the funds currently under preservation.
[19] I find that Setareh’s request for interim disbursements is not merited. While I agree that a case need not be “exceptional” for this discretionary tool, I am not persuaded that Setareh meets the required criteria for such an order. She is not impecunious, nor am I persuaded that the disbursements she seeks are necessary.
Should the preservation order continue or in the alternative a new one be ordered?
[20] Justice Akazaki’s order for the ex parte motion was not accompanied by reasons. His original endorsement simply states that “the Applicant’s rights could be prejudice resulting in dire financial consequences, if the preservation order is not granted on a temporary basis.”
The question of misrepresentation
[21] Amir argued that Setareh’s initial ex parte motion was obtained through misrepresentation. While resolving this claim is not central to my finding, it is appropriate to deal with such a serious allegation.
[22] Amir alleges at paragraph 13 of his factum numerous misrepresentations by the Applicant. They include points argued by Setareh in the motion for jurisdiction on which the Court found against her, such as the couple’s last common habitual residence, and whether Amir will owe her a substantial equalization payment.
[23] The mere fact that a party states a legal claim that is later dismissed by a court does not render that claim a “misrepresentation”.
[24] Amir also cites claims made by Setareh about the details of his business holdings. The parties disagree on these details and have expressed their beliefs in sworn affidavits. Amir’s disagreement with Setareh does not by itself prove misrepresentation.
[25] I am not persuaded that Setareh’s initial application for the ex parte order was based on misrepresentation.
Considering the preservation order de novo
[26] Amir argues that I should consider the question of a preservation order on a de novo basis. He points to Habibi v. Habibi, 2021 ONSC 5574 where Justice Kimmel stated that despite prior preservation orders, a motion was to be heard on a de novo basis. In that case, however, all parties had already agreed (para. 6) and so the issue was not addressed at length.
[27] At the hearing, Setareh acknowledged that she bears the onus for demonstrating that the funds from 109 Roe should remain under preservation. I agree with Amir that the onus is a heavy one and there is no presumption that the prior order should continue. I therefore will treat the issue as de novo.
[28] Justice Akazaki’s original ex parte order was made on the basis of both section 12 and section 40 of the Family Law Act.
[29] Section 12 allows for a preservation order “if the court considers it necessary for the protection of the other spouse’s interests” with respect to equalization or other property claims.
[30] Section 40 allows for a preservation order “restraining the depletion of a spouse’s property that would impair or defeat a claim” for support including spousal support.
[31] Given Justice Kraft’s prior ruling, the FLA does not apply to Setareh’s property claims or to the proprietary elements of her equitable claims. Therefore, Setareh is not entitled to a preservation order under section 12.
[32] As only section 40 is available, this means that I must be satisfied that, without a preservation order against the proceeds of sale of 109 Roe, Setareh’s remaining claim for spousal support would be impaired or defeated. Setareh must demonstrate this on a balance of probabilities.
[33] The standard for a preservation order is the same one to be applied to injunctive relief, namely:
a. Is there a serious issue to be tried?
b. Will the moving party suffer irreparable harm if relief is not granted?
c. Which party will suffer the greater harm from granting or refusing the remedy pending a decision of the merits?
Zadeh v. Zamani, 2023 ONSC 522 at para. 38
Parties’ Positions
[34] The proceeds of sale for 109 Roe are approximately $1.1 million.
[35] Setareh argues that Amir has vast resources that have not yet been properly disclosed to the Court. She points to the couple’s extremely lavish lifestyle as evidenced from credit card slips for the period 2022-2023 showing, among the following:
a. A charge of just under $8,000 for a dinner at a supper club in the UAE;
b. Hotel charges in the tens of thousands of dollars for hotel stays of a few to several days all over the world; and
c. Almost $27,000 in shopping and dining in a single month (March, 2023).
[36] Setareh points out that Amir has worked for years for Iran Ogofh Industrial Development Company (“IOID”), a multi-million dollar company that mines oil “in the largest fields of Iran”. Amir is currently the Managing Director.
[37] Amir also has a company in Canada called Enerserve. There is unclear evidence about the company’s operations, staff and revenue. Under previous questioning, Amir purported to be ignorant of such basic facts as whether the company had any phone lines. He was vague about the Enerserve’s activities and clients. Justice Kraft was not persuaded by Amir’s claim that the company’s business is “very limited”. I find it possible that Enerserve is a source of funds for Amir that must be explored.
[38] Amir raises several points against the preservation order.
[39] First, he argues that there is no risk that he will either remove or dissipate the net proceeds “in a manner that is distinct from his usual business or living practices”.
[40] Second, Amir says, even if Setareh were to be awarded a significant lump sum payment for spousal support, she has not demonstrated that she will suffer irreparable harm if the preservation order is not granted. For example, he says, she has $400,000 security in another jointly owned property in Toronto.
[41] Next, Amir argues that he requires access to the funds under preservation in order to pay support to Setareh, to pay costs to Setareh and to pay his legal and professional fees. Amir says that if he is unable to pay the outstanding costs and spousal support orders, then Setareh may move to have his pleadings struck. Amir “desperately requires access to his Canadian assets in order move this matter forward in a fair manner”.
[42] In his written materials Amir argued that he is under restrictions in moving money from Iran. He deposed:
As an Iranian national, I am severely limited in my ability to transfer funds from one country to another. In Canada, I understand every bank, credit union, financial services cooperative, caisse populaire, authorized foreign bank and money services business must treat every financial transaction originating from or bound for Iran, regardless of its amount, as a high-risk transaction for the purposes of subsection 9.6(3) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000.
Analysis
[43] Amir argues that, because Setareh is limited to a spousal support claim under the FLA, that significantly decreases the money she is likely owed. According to Amir, this makes it unlikely that the depletion of the 109 Roe proceeds would significantly impede or impair her claim.
[44] It is too quick to say that Setareh’s claim arising under Canadian law is limited to spousal support. Justice Kraft amended her endorsement to say that the FLA would not apply to the proprietary elements of Setareh’s equitable claims for unjust enrichment. That does not exclude the possibility of equitable relief via a monetary remedy.
[45] I do accept that the bulk of Setareh’s claims appear to relate to spousal support. However, on that issue, I find Setareh’s evidence on the likely quantum more persuasive than Amir’s. Amir appears to have access to significant resources outside of Canada. I am persuaded that Setareh’s evidence of the couple’s expenditures is an accurate description of their general lifestyle. Amir insists that 2022-2023 was an outlier year that does not represent the couple’s activities and spending habits during their marriage. I find this implausible given Amir’s position in a highly successful Iranian oil company and the admitted wealth of his family.
[46] I am not persuaded by Amir’s argument regarding the difficulty of moving funds from Iran. The clear wording of the FINTRAC website – some of which Amir reproduces in his materials – mandates the standard of diligence to be observed by Canadian financial institutions. It does not prove that an Iranian national is, per se, prohibited from transferring monies into Canada. Amir did not press this point in his oral submissions. I do not find that there is any evidence that he is under a legal disability or will suffer jeopardy from moving his funds into Canada.
[47] This was a 20-year marriage. There are two children for whom Setareh deposes she had the primary responsibility and care.
[48] I find that there is a serious issue to be tried with respect to spousal support. I am persuaded that such support may be set at a very high level.
[49] I also find that Setareh will suffer irreparable harm if the preservation order is not granted. I am satisfied on a balance of probabilities that the proceeds of sale of 109 Roe are at risk of depletion. Amir has admitted that he intends to use the proceeds to satisfy the current cost awards against him, the ongoing temporary support awarded against him, the completion of an expert income report he believes he needs, and his own legal fees. These commitments are already well above $100,000 and there is no indication that they will slow down over the coming months.
[50] In an attempt to meet the Court’s concerns, Amir suggests that I make a without prejudice order that neither he, nor any business owned by him, will transfer any of his Canadian assets outside of Canada, pending further agreement or court order.
[51] I find that this proposed order does not meet the risk of depletion because it would only prevent Amir from moving his assets outside of Canada. Amir would remain at liberty to dissipate the funds within the country at will.
[52] Amir argues that he is suffering and will suffer greater harm from a preservation order than Setareh would suffer from it being lifted or not continued. He cites the possibility that Setareh will move to have his pleadings struck if he is unable to satisfy court orders. I find this argument question-begging. It requires me to accept that the funds under preservation are Amir’s only resources – which I do not.
[53] I find that it is Setareh who will suffer greater harm if the preservation order is lifted:
a. I am persuaded that Setareh has a case for significant spousal support and that dissipation of Amir’s Canadian funds could impede satisfaction of her claim.
b. Amir has deposed that he needs the funds to satisfy various obligations. Therefore, he has admitted that he intends to dissipate at least some of the funds immediately.
c. I am persuaded that Amir has significant funds outside Canada. There is no evidence that he risks severe financial deprivation if he is not permitted to access the funds from the proceeds of sale.
d. I am not persuaded that Amir is under any particular constraint in moving funds from Iran or other countries to Canada.
[54] I shall therefore order a temporary preservation order with respect to the proceeds of sale for 109 Roe.
Is this an appropriate case for interim disbursements?
[55] Setareh seeks interim disbursements. She bears the onus to persuade me that the relevant legal test is met in this case.
[56] Rule 24(18) of the Family Law Rules provides: “The court may make an order that a party pay an amount of money to another party to cover part or all of the expenses of carrying on the case, including a lawyer’s fees.”
[57] The purpose of Rule 24(18) is often described as “leveling the playing field” between the parties. It is a discretionary tool to ensure fairness.
[58] The caselaw on interim disbursements can be distilled into the following broad factors for me to consider:
a. Impecuniousness – absent the advance of funds, the claimant will not be able to pursue their case: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 SCR 371
b. Necessity – the expenses for which the order is sought are demonstrably necessary: Stuart v. Stuart. In Turk v. Turk, 2016 ONSC 4210 Kiteley, J. discusses the need to provide a breakdown of legal costs based on lawyers involved, including professional valuator fees.
c. Fairness – the order will “level the playing field” between the parties: Stuart v. Stuart
[59] Some of the additional factors in the caselaw, such as whether an order might “immunize” a party against costs awards, or whether there is an equalization payment against which monies might be advanced, are not relevant in this case.
[60] Interim disbursements in family proceedings differs from advance costs in the civil context. Advance costs are limited to “exceptional” cases: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 SCR 371. The Respondent concedes that the standard in family law is less stringent: Stuart v. Stuart, supra at para 8.
Analysis
[61] I find that Setareh and Amir are not on a level playing field. Nevertheless, for the following reasons, I am not persuaded that interim disbursements are appropriate.
[62] First, while Setareh does not have nearly the same resources as Amir, she is not impecunious. Her sworn financial statement shows a net family property on the date of separation of $2,500,000. She has properties in Iran and in Toronto. Setareh argues that she should not have to sell her properties to fund her litigation because Amir is so much wealthier than she is. But the question under this part of the test is whether a party has funds, not whether it would be inconvenient to access them.
[63] Setareh has also amassed considerable funds while in Canada. She does not dispute that she has had access to approximately $345,000 after she fled to Ontario and that this has been on a tax-free basis. She was recently awarded temporary spousal support of $7,843 per month. Given that the children remain in Iran, she has no childcare expenses.
[64] At the hearing, a question arose over what had happened to the above-noted $345,000. Setareh’s counsel stated that it has gone towards maintaining her lifestyle because Amir has yet to pay any support.
[65] All of this suggests that Setareh has made significant discretionary expenditures. She has done so using funds at least some of which could have been put towards what she knew would be ongoing legal proceedings. In the circumstances, I am not persuaded that she is or should be treated as impecunious.
[66] Second, I am not persuaded that the requested disbursements are necessary.
[67] Setareh’s original notice of motion sought interim disbursements of $30,549.55. On August 21, 2024, she amended her notice to increase the amount to $146,508.35. She did so because after learning that Amir intended to retain an income expert she decided that she would need one, too. Setareh properly included a breakdown of all the expenses. They now include between $80,000 and $105,000 for a Chartered Business Valuator to whom Setareh’s counsel has already reached out and who provided a quote for their services in a case of this kind.
[68] Setareh believes that Amir’s quest for an income report is a ploy to further delay proceedings and avoid a fair settlement. Even if that is so, I find it premature to grant her the funds to prepare her own. We do not know what Amir’s income report will say. Once that report is received, numerous steps might be taken short of preparing a full-blown competing report. It is also possible for the parties to cooperate now to ensure that any expert retained will be credible and acceptable to both of them. I am not persuaded of the need, at present, for such a significant expenditure.
[69] The Applicant’s request for interim disbursements is therefore dismissed. Given that the case continues to evolve, my dismissal is without prejudice.
[70] The parties have each failed to obtain their requested relief. Consequently, they shall bear their own costs.
Order
[71] In conclusion, I make the following order:
a. The proceeds of sale of the property municipally known as 109 Roe Avenue, Toronto, Ontario M2M 2J1 shall be preserved in the trust account of the lawyer acting on the transaction subject to further agreement or order of the court pursuant to section 40 of the Family Law Act.
b. The Applicant’s request for interim disbursements is dismissed without prejudice.
c. The parties shall bear their own costs.
Mathen J. Date: September 9, 2024