COURT FILE NO.: FS-21-44224 DATE: 2024-12-13 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: S.P., Applicant AND: D.D., Respondent
BEFORE: Justice C. Conlan
COUNSEL: Ms. L. Oliver, for the Applicant Mr. L. Mongillo, for the Respondent
HEARD: November 12, 2024
REASONS FOR DECISION
Introduction
[1] The Applicant wife, S.P., moves to amend her Application issued in May 2021. The Respondent husband, D.D., opposes the relief being sought and, in the alternative, asks for a sizeable costs award ($170,000.00) against S.P. if the motion is granted.
[2] The proceeding is getting stale. Multiples conferences have been held, and several motions too, but efforts to have the case finally tried have failed. A trial was to take place during the blitz sittings in March/April 2024, however, it was adjourned (not on consent) at the request of S.P. It was then expected that a trial would occur during the blitz sittings in October 2024, but that did not happen either because this motion, and the leave application that necessarily preceded it, effectively adjourned the hearing.
[3] The parties have two children who are now in their mid-twenties. As originally constituted, the proceeding commenced by S.P. was all about support, child and spousal, and property issues.
[4] S.P.’s motion to amend her pleading seeks to do two things. First, to add four respondents to the proceeding – D.D.’s brother, T.D., and his other brother, M.D., and two further persons, D.B. and G.B., who are/were business associates of the husband and who loaned money in the past to the wife. Second, to plead the tort of conspiracy and to claim damages arising therefrom. The theory underlying the said cause of action is that the husband and the four persons sought to be added as respondents have engaged in a concerted effort to conceal the income and the assets of D.D., resulting in damages to S.P. in excess of six million dollars.
Analysis
The Law
[5] This Court shall (that language is mandatory) give permission to S.P. to amend her pleading as requested unless the amendment would disadvantage D.D. in a way for which costs or an adjournment could not compensate – 11(3) of the Family Law Rules.
[6] The test set out in subrule 11(3) is not an onerous one. To the contrary, the test “strongly favours permitting amendments unless prejudice is demonstrated”, and thus, it is not wrong for the motion judge to ask whether the party responding to a request to amend a pleading (here, D.D.) has demonstrated prejudice that should preclude S.P. from amending her Application as requested. Studley v. Studley, 2022 ONCA 810, at paragraph 15.
[7] Where, as here, the proposed amendments include the pleading of a new cause of action (the tort of conspiracy), the draft amended pleading must be read generously, and the amendment must be granted unless it is “plain and obvious” that it discloses no reasonable claim in law. In other words, even if accepted as true, do the material facts pleaded support the new claim being advanced? Smith v. Smith, 2021 ONSC 1990, at paragraph 22; Bouzanis v. Bouzanis, 2021 ONSC 5330, at paragraph 24.
[8] During the hearing of the motion, this Court asked counsel for S.P. whether she agreed with the summary of the law of conspiracy outlined at paragraphs 50 and 51 of the factum filed on behalf of D.D., and counsel for S.P. replied in the affirmative. Paragraphs 50 and 51 of the husband’s factum are set out below.
There are two types of civil conspiracy in Canada: (1) conspiracy to injure and (2) conspiracy to use unlawful means. Neither has been properly pleaded nor supported by the Applicant. Each type of conspiracy requires the Applicant to establish either directly or by inference, an agreement between the Respondent and third parties she seeks to add. The Supreme Court of Canada confirmed that the predominant purpose of the defendant’s conduct is to cause injury to the plaintiff in the conspiracy to injure branch of the claim. For the conspiracy to use unlawful means, the conduct must be directed to the Applicant and that the Respondent and added parties should have known in the circumstances that injury to the Applicant was likely to result and it did result. There is no evidence of injury in this case nor of a joint intention nor agreement.
Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959
The Tort of civil conspiracy requires an agreement between two or more people. They must either act unlawfully while knowing their actions will harm the plaintiff or act lawfully but with the intention of harming the plaintiff.
[9] This Court takes no serious issue with what was submitted on behalf of the husband in those two paragraphs. I would prefer, however, to quote from the decision of Justice Goudge, for the Court of Appeal for Ontario, in Agribrands Purina Canada Inc. v. Kasamekas, 2011 ONCA 460, at paragraph 24, where Goudge J.A. refers to the seminal authority in Canada on the tort of civil conspiracy, the decision of the Supreme Court of Canada in Canada Cement Lafarge Ltd. v. British Columbia Lightweight Aggregate Ltd.. Paragraph 24 of the decision in Agribrands, supra is set out below.
The seminal case in Canada on the tort of civil conspiracy is Canada Cement Lafarge Ltd. v. British Columbia Lightweight Aggregate Ltd., [1983] 1 S.C.R. 452, [1983] S.C.J. No. 33. Speaking for the court, Estey J. described, at pp. 471-72 S.C.R., two categories of conspiracy recognized by Canadian law:
Although the law concerning the scope of the tort of conspiracy is far from clear, I am of the opinion that whereas the law of tort does not permit an action against an individual defendant who has caused injury to the plaintiff, the law of torts does recognize a claim against them in the combination as the tort of conspiracy if:
- whether the means used by the defendants are lawful or unlawful, the predominant purpose of the defendants' conduct is to cause injury to the plaintiff; or,
- where the conduct of the defendants is unlawful, the conduct is directed towards the plaintiff (alone or together with others), and the defendants should know in the circumstances that injury to the plaintiff is likely to and does result.
In situation (2) it is not necessary that the predominant purpose of the defendants' conduct be to cause injury to the plaintiff but, in the prevailing circumstances, it must be a constructive intent derived from the fact that the defendants should have known that injury to the plaintiff would ensue. In both situations, however, there must be actual damage suffered by the plaintiff. [page 435]
The Law Applied
[10] In my opinion,
(i) the amended Application delivered on behalf of S.P. pleads sufficient material facts that, if read generously and are accepted as being true, are capable of supporting the new claim being advanced – the civil tort of conspiracy among D.D. and the four to-be-added respondents; (ii) the amendments would not disadvantage or prejudice D.D. in a way for which costs or an adjournment (in this case, both) could not compensate; and, thus, (iii) the amendments should be permitted and the motion granted.
[11] On the first point, the amended pleading alleges the following:
(i) that D.D. and the four additional respondents have acted in concert to try to shelter the income and assets of D.D. (and we know that D.D.’s income and his assets are relevant to the proceeding because S.P. is claiming, among other things, spousal support, child support, a non-depletion of assets order, and equalization of net family properties); (ii) that D.D., commencing in or around November 2019, moved all of his personal banking to new accounts and, with his brother T.D., cashed in a life insurance policy with a cash surrender value of 1.8 million dollars; (iii) that financial records for the building, design, and construction business operated by D.D. and his two brothers, specifically those from the years 2018 and 2019, not long before the date of separation, have not been disclosed, even though it can reasonably be expected that the business was doing very well during that time period given its financial position before 2018 (for example, the business had 29 million dollars in work in progress at the end of 2017); (iv) that the financial records for the business that have been requested by S.P. but not disclosed are relevant to a determination of the value of the business as of the date of separation (May 2020); (v) that the financial records for the business that have been requested by S.P. but not disclosed are relevant to an assessment of the reasonableness of the valuation report for the business as of the date of separation, which report shows a value of nil, excluding real estate holdings that are held by a separate holding company; (vi) that D.D.’s brother, M.D., has commenced a court proceeding in Toronto seeking, as against D.D., T.D., and the business, an oppression remedy under section 248 of the Ontario Business Corporations Act, R.S.O. 1990, c. B.16, as amended, and payment of 1.1 million dollars, plus other relief regarding access to the books and records of the business; (vii) that the payment that was owing by the business to M.D. but not paid was due to be paid around the time of the date of S.P.’s separation from D.D.; (viii) that D.D. and his two brothers have worked together to frustrate repeated attempts by S.P. to obtain disclosure of pleadings and documents in the Toronto court proceeding, including the appraisal of the business; (ix) that D.D. and the two non-family respondents sought to be added to the within proceeding, D.B. and G.B. – business associates of D.D. and persons who previously loaned money to S.P., have acted in concert to syphon about $856,000.00 from the “family coffers”, which term this Court interprets as referring to income and assets of D.D. which would otherwise be susceptible to S.P.’s claims regarding spousal support, child support, and equalization of net family properties; (x) that D.D., D.B., and G.B. have worked together to frustrate repeated attempts by S.P. to obtain a full accounting of those funds and to obtain disclosure of the particulars of the loan that was advanced by D.B. and G.B. to S.P. but which was really orchestrated by D.D.; (xi) that the funds that were syphoned from the “family coffers” were taken from the joint line of credit registered against the title to the matrimonial home; (xii) that S.P. has been provided with no disclosure as to what happened with those funds, despite her repeated attempts to obtain the same; and (xiii) that D.D. was always the person primarily responsible for the couple’s finances, and that the financial disclosure being sought by S.P. is required so that she can retain experts to review D.D.’s business and income valuations and assess for herself the merit of D.D.’s litigation position that there has been a dramatic decline in his income and, thus, he can no longer support the parties’ previous lifestyle.
[12] The above alleged facts must be taken as a whole. If that is done, and if the alleged facts are assumed to be true, then I am of the opinion that they are capable of supporting the new cause of action being put forward by S.P., whether it be the respondents’ intentional conduct predominantly designed to cause injury to S.P. (the first category of the tort of civil conspiracy recognized in Canadian law) or unlawful conduct conspiracy (the second category).
[13] Put another way, it is not “plain and obvious” that the amended pleading advanced by S.P. discloses no reasonable claim in law.
[14] It must be highlighted that D.D., in my respectful view, has contributed to an appearance of a lack of transparency in terms of disclosure. One example will suffice, something that arose during the hearing of the motion being decided herein. This one example operates as a microcosm of the obfuscation on the part of D.D. when it comes to disclosure.
[15] On December 13, 2023, the parties appeared before Chang J. Among other things, Justice Chang ordered that D.D. shall disclose “the applicable statement of defence in the civil action involving [his] brother”. That order was made on consent.
[16] Along with other items of disclosure ordered to be produced by Chang J. that have not been produced by D.D., that specific order with regard to the Toronto court proceeding has not been complied with.
[17] As this Court was preparing for and hearing S.P.’s motion, I was concerned as to why such a seemingly simple matter remained outstanding. I then discovered that there is, in fact, no “statement of defence” in the Toronto court proceeding because that proceeding commenced by M.D. is an application and not an action.
[18] Of course, that would have been known to D.D. when he consented to the order made by Justice Chang. It would have been known that S.P., her counsel, and Chang J. were under a misapprehension about the nature of that court proceeding in Toronto. It would have been known that what S.P. really wanted was disclosure of what was filed in response to M.D.’s claims, and it would have been known that the order being consented to would go no distance to achieving that objective because no “statement of defence” existed.
[19] During the hearing of S.P.’s motion, this issue arose. I asked counsel about it. Both counsel addressed it. Both counsel were advised by this Court that I thought it was advisable to obtain a transcript of the proceeding before Justice Chang. Neither side objected to that. The transcript was obtained, and copies were provided to both counsel for their review and for their further submissions, if any.
[20] During the hearing of S.P.’s motion, I was left with the clear impression on behalf of D.D. that Justice Chang knew at the time that the order was made that it would, or at least might, not be able to be complied with, and that is why His Honour spoke about the potential for an affidavit by D.D. explaining that a specified document cannot be produced because it simply does not exist.
[21] At the time, I thought that it would be very strange for a judge to order that something like a “statement of defence” be disclosed if the judge knew or even suspected that such an order could not be complied with because the document simply did not exist.
[22] So, I read the transcript of the court proceeding before Justice Chang on December 13, 2023. That review proved to be very discouraging.
[23] There is nothing in that transcript that supports any submission that Justice Chang had any reason to believe that the order for production of the “statement of defence” in the Toronto court proceeding may not be able to be complied with. There is nothing in that transcript that supports any submission that Justice Chang had any reason to believe that the said order might be the subject of the affidavit that His Honour referred to as being a tool to be used where a document cannot be produced because it does not exist. There is nowhere in that transcript that Chang J. was advised that the court proceeding in Toronto was actually an application and, therefore, there would be no “statement of defence” available.
[24] If this is how D.D. approaches a very basic request for disclosure, then I have serious concerns about how cooperative he has, or has not, been about disclosure generally.
[25] The most basic obligation in family law, a requirement that is both immediate and ongoing, is the duty to disclose financial information. Roberts v. Roberts, 2015 ONCA 450, at paragraph 11.
[26] S.P. alleges that D.D. has failed miserably in adhering to that obligation, and the conspiracy that she now alleges is linked to that alleged intentional failure. This Court has no hesitation in concluding that a prima facie case for conspiracy has been demonstrated.
[27] On the second point, disadvantage or prejudice to D.D., there is none. He will have plenty of time to sufficiently respond to the amended pleading to be delivered on behalf of S.P. He will have lots of time to question S.P. about her allegations of a conspiracy and to adequately prepare for trial. He will have at his disposal all of the litigation tools that he needs to try to defeat the conspiracy claim, whether at trial or pretrial, including a motion for summary judgment that may or may not raise an issue about a limitation period. He will have the comfort of knowing that S.P. faces a serious risk of paying significant costs if she is unsuccessful in her claim for conspiracy, akin to a situation, for example, where fraud is alleged but found to be without merit.
[28] The trial that was scheduled to proceed this year has already been adjourned. There are no fixed trial dates set. And, further, I have decided to not make any order for costs in favour of S.P. even though she has been completely successful on her motion.
[29] The motion ought to have been brought much sooner than it was brought. By S.P.’s own affidavit evidence filed in support of the motion, she knew about D.D.’s alleged financial disclosure avoidance, his tendency to hinder the free flow of financial information between the parties, and his business relationships with the four to-be-added respondents long before October 2024, when she finally decided to bring the within motion. In delaying the bringing of the motion and effectively forcing another adjournment of the trial, which trial was marked peremptory on her, S.P. acted unreasonably. She is, therefore, to be deprived of the costs that she is otherwise presumptively entitled to receive - 24(4) of the Family Law Rules.
[30] The postponement of the trial, the costs decision made herein, and the tools available to D.D. going forward, are sufficient compensation in the circumstances of this case.
[31] Finally, as for the request by D.D. for costs in the amount of $170,000.00, which I gather is based on the notion that those costs were incurred in preparation for a trial that has now been adjourned twice and will now be wasted because the nature of the proceeding has changed significantly in light of the conspiracy claim, I decline to make any such award. If S.P. ends up being successful on the conspiracy claim, then any such award made by this Court today would be absurd. Further, the costs incurred by D.D. in having his counsel prepare for trial previously will not be wasted. They will be put to good use in trying to defeat all of the claims advanced by S.P. in her original pleading, which claims all still exist.
Conclusion
[32] For the above reasons, S.P.’s motion is granted. She may amend her Application in accordance with the draft attached as Exhibit “B” to her affidavit sworn on October 21, 2024 (see the document on Case Center at page Master A1000).
[33] On costs, I have already decided that S.P. will not receive any costs for the motion. D.D. will not receive any costs thrown away for anything that preceded the motion. I am not inclined to order costs of the motion in favour of D.D., however, it would be procedurally unfair for me to decide that insular issue in the absence of receiving submissions by counsel.
[34] If D.D. wishes to pursue such an order under 24(4) of the Family Law Rules, then he shall serve and file written submissions. Two pages maximum, excluding necessary attachments. The filing deadline is January 10, 2025 at 4:00 p.m. S.P.’s response is due within ten calendar days after her counsel’s receipt of D.D.’s submissions. No reply by D.D. is permitted.
Justice Conlan Date: December 13, 2024