In this judgment of the Ontario Superior Court of Justice, Justice Kiteley reviews the law regarding whether an equalization claim creates an “interest” in land such that the court does not have discretion to discharge a Certificate of Pending Litigation (CPL).
The Applicant Mother, Ms. Carey and Respondent Father, Mr. Almuli, married on November 1, 1995 and separated on December 15, 2011. In June 2011, prior to separation, the parties moved from their home in Luxembourg to Toronto. Shortly after their separation, the Respondent purchased a property in Toronto, known as 2 Commons Drive, for which he paid cash.
On April 19, 2013, the Applicant commenced an Application in which she sought extensive relief including, but not limited to:
- Child and spousal support;
- An equalization of net family property;
- Alternatively, unequal division of the parties’ net family property;
- Sale of family property;
- An order that properties owned by the Respondent, including his property at 2 Commons Drive, be vested in her in partial satisfaction of monies due to her from the Respondent pursuant to s. 9(1)(d) of the Family Law Act; and
- An order “freezing all Canadian bank accounts and assets of the Respondent”.
In August 2013, Justice Goodman began to hear a motion brought by the Applicant for an order for interim child and spousal support. In her Affidavit in support of that motion, the Applicant claimed that the Respondent had used funds initially found in the parties’ joint bank account in Luxembourg to purchase 2 Commons Drive.
When the Respondent advised the Applicant in October 2013 that he had taken a job in Florida and had sold 2 Commons Drive, the Applicant brought an ex parte (or emergency) motion for an order authorizing the registration of a Certificate of Pending Litigation against title to 2 Commons Drive. She claimed, in her affidavit in support of the ex parte motion, that the Respondent was leaving Canada and liquidating his assets in an attempt to avoid his support and equalization obligations. The Applicant further claimed that 2 Commons Drive was the Respondent’s only Canadian asset.
On October 24, 2013, Justice Kiteley made an ex parte Order authorizing the registration of a CPL against title to 2 Commons Drive and adjourned the motion to November 7th.
Return of the Motion
At the return of the motion, the Respondent’s counsel took the position that the CPL should be discharged because the Applicant did not assert a claim for an interest in land.
At the outset, the parties consented to the CPL being discharged in order that the sale of 2 Commons Drive to two innocent third parties could close on November 15th. However, counsel were unable to agree as to the disposition of the proceeds of sale. As such, at the return of the motion, counsel made submissions as to whether the Applicant had been entitled to the ex parte order.
Central to that issue, was whether the Applicant held an interest in 2 Commons Drive, and whether the court should exercise its discretion to discharge the CPL.
The Applicant’s counsel submitted that there was a claim for an interest in land based on her claim for an equalization of net family property, freezing order and vesting order, and took the position that all the proceeds of sale should be held in trust pending the decision at trial or on settlement. In contrast, the Respondent took the position that the Applicant had not asserted a claim for an interest in land, and the CPL ought to be vacated with all of the proceeds of sale of the imminent closing paid out to the Respondent, who intended to use the funds to invest in the hedge fund in which he would be involved in Florida.
Section 103(6) of the Courts of Justice Act gives the court discretion to discharge a CPL where the Applicant
…does not have a reasonable claim to the interest in the land claimed and where the interests of the Applicant can be adequately protected by another form of security; or on any other ground that is considered justice. Furthermore, the court may, in making the order, impose such terms as to the giving of security or otherwise as the court considers just.
Madam Justice Kiteley reviewed case law submitted by the Respondent’s counsel indicating that the court should exercise its discretion to discharge a CPL where the Applicant did not assert an interest in property.
In the end, Justice Kiteley, relying on Nash v Gilbert, held that “the Applicant has brought into question an interest in the land by asserting a claim for an equalization of net family property, for a vesting order pursuant to s. 9(1)(d) [of the Family Law Act] and for an order pursuant to s. 12. The Respondent has not met the burden to set aside the order.”
Relying on the Respondent’s counsel’s claim that the Respondent would not be financially prejudiced if the net proceeds continued to be held in trust, Justice Kiteley further held that it was reasonable for her to exercise her discretion to order that all the proceeds be held in trust. Central to that decision, was the fact that the Respondent had substantial assets at the time of swearing his Financial Statement (May 13, 2013) and that his only asset in Canada was 2 Commons Drive.