Green v. Green et al., (2015) 338 O.A.C. 279 (CA)

• Judge: Sharpe, Pepall and van Rensburg, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: April 20, 2015
• Jurisdiction: Ontario
• Citations: (2015), 338 O.A.C. 279 (CA);2015 ONCA 541

Green v. Green (2015), 338 O.A.C. 279 (CA)

MLB headnote and full text

Temp. Cite: [2015] O.A.C. TBEd. JL.022

Diana Freda Green and Charles David Green Jr. (applicants/respondents/appellant by way of cross-appeal) v. Charles David Green Sr., Lisa Maxwell and Brenda Yurko (respondents/appellant/respondent by way of cross-appeal/respondents by way of cross-appeal) and Strike Furlong Ford LLP (appellant)

Diana Freda Green and Charles David Green Jr. (applicants/respondents) v. Charles David Green Sr., Lisa Maxwell and Brenda Yurko (respondents/respondents)

Diana Freda Green, Charles David Green Jr. (applicants/respondent/appellant) v. Charles David Green Sr., Brenda Yurko and Lisa Maxwell (respondents on application/appellant) and Strike Furlong Ford LLP and Robert James Lorne Ford (respondents on application/appellants)

(C58093; C58101; 2015 ONCA 541)

Indexed As: Green v. Green et al.

Ontario Court of Appeal

Sharpe, Pepall and van Rensburg, JJ.A.

July 21, 2015.

Summary:

In 1981, the husband purchased an island property. In 1995, title to the property was transferred to the parties' three adult children in order to save estate taxes. In 2006, the parties executed a separation agreement under which the wife surrendered any right to support. The property was to be sold with the proceeds split between the husband and wife. The wife waived her entitlement to any further equalization. In February 2008, the wife, who was represented by Ford of Strike Furlong Ford (SFF), commenced proceedings, seeking, inter alia, to set aside the separation agreement, spousal support and an equalization of family property. In November 2009, the wife made a voluntary assignment into bankruptcy. Ford and SFF removed themselves as solicitors of record. SFF filed a proof of claim for its unpaid fees (approximately $15,000). SFF obtained an order under s. 38 of the Bankruptcy and Insolvency Act authorizing it to prosecute the wife's property claims in the matrimonial proceeding. The trustee assigned its interests to SFF. SFF decided not to pursue equalization. In 2012, SFF assigned its s. 38 rights to Charles, the parties' son, for $90,000. SFF paid itself $57,500 for its claim and costs and remitted the surplus to the trustee. Charles claimed a one half ownership interest in the property. The parties' daughters, Lisa and Brenda, took the position that each of the children held a one third interest in the property. The wife was discharged from bankruptcy. The trial judge set aside the separation agreement and found that the husband was the sole owner of the property. The husband was ordered to pay the wife $433,388 in equalization. The husband was ordered to pay lump sum spousal support of $173,136. The trial judge ordered an assessment of SFF's provable claim and its s. 38 account. The husband was ordered to pay costs of $231,087.13 to the wife. Lisa was to recover $40,643.24 from Charles and half of her legal costs of $61,580.67 and disbursements of $782.88 plus HST from Ford, personally. Ford was also ordered to pay $2,053.33 to the bankruptcy trustee as one third of the trustee's fees to attend as a witness at trial. The husband and son appealed. Ford appealed from the costs award against him.

The Ontario Court of Appeal allowed the husband's appeal to the extent of setting aside the equalization payment. The property was held jointly by the husband and the bankruptcy trustee. It was to be sold and the proceeds divided equally. The son's appeal was allowed to the extent that the award of costs in favour of Lisa was set aside. Lisa and the son were to bear their own costs. Ford's appeal was dismissed.

Bankruptcy - Topic 2765

Trustees - Powers of - Admission and disallowance of proofs of claim and proofs of security - The parties' marital home, an island property, was held exclusively in the husband's name - The parties separated - The wife, represented by Strike Furlong Ford (SFF), commenced proceedings, seeking, inter alia, equalization of family property - The wife made a voluntary assignment into bankruptcy - SFF removed itself as solicitor of record and filed a proof of claim for its unpaid fees (approximately $15,000) - SFF obtained an order under s. 38 of the Bankruptcy and Insolvency Act authorizing it to prosecute the wife's property claims in the matrimonial proceeding - The trustee assigned its interests to SFF - SFF decided not to pursue equalization - SFF assigned its s. 38 rights to Charles, the parties' son, for $90,000, who also decided not to pursue equalization - The trial judge found that the husband was the sole owner of the island property and that, as neither SFF nor Charles had pursued the equalization claim, it constituted unrealizable property that could be returned to the wife on her discharge - The trial judge ordered a substantial equalization payment to be made to the wife - The trial judge also ordered an assessment of SFF's provable claim and its s. 38 costs - The Ontario Court of Appeal held that the trial judge had erred in ordering the assessments - Regarding SFF's provable claim, allowing claims that had been accepted by the trustee to be attacked in collateral proceedings would disrupt the orderly administration of bankruptcies - Further, while it was open to the trial judge to assess any party and party costs in the action, it was for the trustee to question or challenge the s. 38 account - See paragraphs 67 to 75.

Bankruptcy - Topic 6421

Administration of estate - Actions by creditors - General - The parties' marital home, an island property, was held exclusively in the husband's name - The parties separated - The wife, represented by Strike Furlong Ford (SFF), commenced proceedings, seeking, inter alia, equalization of family property - The wife made a voluntary assignment into bankruptcy - SFF removed itself as solicitor of record and filed a proof of claim for its unpaid fees (approximately $15,000) - SFF obtained an order under s. 38 of the Bankruptcy and Insolvency Act authorizing it to prosecute the wife's property claims in the matrimonial proceeding - The trustee assigned its interests to SFF - SFF decided not to pursue equalization - SFF assigned its s. 38 rights to Charles, the parties' son, for $90,000, who also decided not to pursue equalization - The trial judge found that the husband was the sole owner of the island property and that, as neither SFF nor Charles had pursued the equalization claim, it constituted unrealizable property that could be returned to the wife on her discharge - On that basis, the trial judge ordered the husband to pay $433,388 to the wife in satisfaction of her equalization claim - On appeal, the son asserted that, as assignee and purchaser of the wife's interest, he was the rightful owner of one half of the property - The Ontario Court of Appeal rejected the son's argument - A s. 38 assignee was entitled to recovery of the value of its claim in bankruptcy and costs incurred - Any surplus was remitted to the estate - The son would recover the $90,000 he had paid for the assignment, but he was not entitled to a one half interest in the property - See paragraphs 47 to 56.

Bankruptcy - Topic 6487

Administration of estate - Distribution - Right of bankrupt to property incapable of realization - The parties' marital home, an island property, was held exclusively in the husband's name - The parties separated - The wife, represented by Strike Furlong Ford (SFF), commenced proceedings, seeking, inter alia, equalization of family property - The wife made a voluntary assignment into bankruptcy - SFF removed itself as solicitor of record and filed a proof of claim for its unpaid fees (approximately $15,000) - SFF obtained an order under s. 38 of the Bankruptcy and Insolvency Act authorizing it to prosecute the wife's property claims in the matrimonial proceeding - The trustee assigned its interests to SFF - SFF decided not to pursue equalization - SFF assigned its s. 38 rights to Charles, the parties' son, for $90,000, who also decided not to pursue equalization - The trial judge found that the husband was the sole owner of the island property and that, as neither SFF nor Charles had pursued the equalization claim, it constituted unrealizable property that could be returned to the wife on her discharge - On that basis, the trial judge ordered the husband to pay $433,388 to the wife in satisfaction of her equalization claim - The Ontario Court of Appeal allowed the husband's appeal, setting aside the equalization award - The wife had no capacity to assert an equalization claim as it had vested in the trustee on her assignment into bankruptcy - Further, while s. 40(1) of the Bankruptcy and Insolvency Act required the trustee, prior to his or her discharge, to return to the bankrupt any property incapable of realization, the trustee had not yet been discharged - The Act did not provide for the automatic return of any property or surplus to a bankrupt following discharge - It was not open to the trial judge to make an equalization award - See paragraphs 39 to 42.

Barristers and Solicitors - Topic 842

Duty to court - Liability for costs - For improper conduct - The wife, who was represented by Ford of Strike Furlong Ford (SFF), commenced proceedings, seeking, inter alia, to set aside a separation agreement in which she had waived spousal support and an equalization of family property - In November 2009, the wife made a voluntary assignment into bankruptcy - Ford and SFF removed themselves as solicitors of record - SFF filed a proof of claim for its unpaid fees (approximately $15,000) - SFF obtained an order under s. 38 of the Bankruptcy and Insolvency Act authorizing it to prosecute the wife's property claims in the matrimonial proceeding - The trustee assigned its interests to SFF - SFF decided not to pursue equalization - SFF assigned its s. 38 rights to Charles, the parties' son, for $90,000 - SFF paid itself $57,500 for its claim and costs and remitted the surplus to the trustee - The wife was substantially successful at trial - The trial judge ordered Ford, personally, to pay the costs of Lisa, one of the parties' daughters, who had been added as a party by SFF, in the amount of half of her legal costs of $61,580.67 and disbursements of $782.88 plus HST - Lisa had incurred costs over $200,000 - Ford appealed from the costs award - The Ontario Court of Appeal dismissed the appeal - Under rule 24(9)(c) of the Family Law Rules, a lawyer could be ordered to pay personally any party's costs - Ford's and SFF's conduct was contrary to the interests of their former client and served to increase the costs of all parties - They ran up costs without reasonable cause and wasted costs incurred by other parties - A cause that was designed to serve Ford's and SFF's self interest and that was contrary to their former client's interests was not reasonable - Moreover, they had complicated and extended the proceedings - There was ample evidence to support the trial judge's conclusion that Ford had acted in bad faith - There was no reason to interfere - See paragraphs 95 to 119.

Barristers and Solicitors - Topic 849

Duty to court - Liability for costs - For conduct of proceedings - [See Barristers and Solicitors - Topic 842 ].

Barristers and Solicitors - Topic 852

Duty to court - Liability for costs - For causing delay or costs to be incurred without reasonable cause - [See Barristers and Solicitors - Topic 842 ].

Courts - Topic 2001

Jurisdiction - General principles - Determination of the rights of the parties before the court - The parties' marital home, an island property, was held exclusively in the husband's name - The parties separated - The wife, represented by Strike Furlong Ford (SFF), commenced proceedings, seeking, inter alia, equalization of family property - The wife made a voluntary assignment into bankruptcy - SFF removed itself as solicitor of record and filed a proof of claim for its unpaid fees (approximately $15,000) - SFF obtained an order under s. 38 of the Bankruptcy and Insolvency Act authorizing it to prosecute the wife's property claims in the matrimonial proceeding - The trustee assigned its interests to SFF - SFF decided not to pursue equalization - SFF assigned its s. 38 rights to Charles, the parties' son, for $90,000, who also decided not to pursue equalization - The trial judge found that the father was the sole owner of the island property and that, as neither SFF nor Charles had pursued the equalization claim, it constituted unrealizable property that could be returned to the wife on her discharge - On that basis, the trial judge ordered the husband to pay $433,388 to the wife in satisfaction of her equalization claim - On appeal, the Ontario Court of Appeal rejected the husband's assertion that the trial judge had erred in awarding an equalization payment because equalization was not before the trial judge - Equalization was a live issue in so far as, rightly or wrongly, it was being pursued by the wife - Even though neither SFF nor Charles pursued it, the issue remained unresolved - See paragraphs 33 to 38.

Family Law - Topic 773

Husband and wife - Actions between husband and wife - Property - Where spouse declares bankruptcy - [See Bankruptcy - Topic 6421 and Bankruptcy - Topic 6487 ].

Family Law - Topic 868.3

Husband and wife - Marital property - Distribution orders - Equalization payments - [See Bankruptcy - Topic 6487 and Courts - Topic 2001 ].

Family Law - Topic 944

Husband and wife - Marital property - Distribution orders - Practice - Persons who may apply or continue application - [See Bankruptcy - Topic 6487 ].

Family Law - Topic 966

Husband and wife - Actions between husband and wife - Practice - Costs - The parties' matrimonial proceedings involved a substantial property and the wife's application to set aside a settlement agreement - The trial judge, having set aside the agreement, ordered the husband to pay $433,388 to the wife in satisfaction of her equalization claim - The wife was awarded lump sum spousal support of $173,136 - The husband was ordered to pay costs of $231,087.13 to the wife - On appeal, the equalization payment was set aside - The husband challenged the trial judge's award of costs to the wife - The Ontario Court of Appeal dismissed the husband's costs appeal - The trial lasted 15 days - The litigation lasted over five years - The wife was largely successful in her claim - The husband had behaved unreasonably - Although the equalization payment had been set aside, the trial judge's determination of the amount of the costs award revealed no error and did not result in any injustice - See paragraphs 76 to 87.

Family Law - Topic 966

Husband and wife - Actions between husband and wife - Practice - Costs - The parties' matrimonial proceedings involved an island property that had been registered in the three adult children's names for tax purposes - At trial, the son and the father each asserted that they held equal half interests in the property - The two daughters (Lisa and Brenda) asserted that the children had equal one third shares - The trial judge found that the husband was the sole owner of the property and ordered him to make a substantial equalization payment to the wife - The son was ordered to pay costs to Lisa in the amount of $40,643.24, plus disbursements and HST - On appeal, the son challenged the costs award against him as well as the trial judge's refusal to order costs in his favour - The Ontario Court of Appeal held that the son and Lisa were to bear their own costs - There was no basis for an award in favour of the son - The trial judge's finding that the daughters were entitled to costs because they were aligned with the mother, who was successful, was not supported by the evidence - Lisa was not more successful in her claim than the son - The alignment with a party already adequately represented by legal counsel did not justify an award of costs - See paragraphs 88 to 94.

Family Law - Topic 4011

Divorce - Corollary relief - Maintenance awards - Lump sum - The marriage was a long-term, traditional one - At separation, the wife was 63 years old and had significant health concerns - She sought, inter alia, spousal support - The trial judge found that the husband had failed to comply with his financial disclosure obligations, that he was in receipt of unreported income and that there was a significant shortfall between his reported income and his sworn budget - As the wife was in immediate need and the husband had resisted making periodic payments, a lump sum award of $173,136 was appropriate - This represented seven years of support and was based on the wife's income of $4,815 and the husband's imputed income of $60,000, both incomes as of the date of separation - The trial judge also ordered the husband to pay $433,388 to the wife in satisfaction of her equalization claim - On the husband's appeal, the Ontario Court of Appeal held that the lump sum award was "fit and appropriate" - The trial judge took into account the husband's age and limited employability - Given the length and traditional nature of the marriage, limiting support to seven years was very generous to the husband - Finally, as the court was setting aside the equalization payment, the wife would receive significantly less from her share - See paragraphs 57 to 66.

Family Law - Topic 4021.4

Divorce - Corollary relief - Maintenance awards - Considerations - Ability to pay (incl. potential to earn income and calculation of income) - [See Family Law - Topic 4011 ].

Family Law - Topic 4034

Divorce - Corollary relief - Maintenance awards - Effect of division of matrimonial property - [See Family Law - Topic 4011 ].

Family Law - Topic 4176

Divorce - Practice - Costs - Party and party costs - [See first Family Law - Topic 966 ].

Practice - Topic 6923.2

Costs - General principles - Power to refer matter of costs for assessment (incl. with directions) - [See Bankruptcy - Topic 2765 ].

Practice - Topic 7040

Costs - Party and party costs - Entitlement to party and party costs - Unsuccessful party - [See second Family Law - Topic 966 ].

Practice - Topic 7103

Costs - Party and party costs - Special orders - Conduct by party or counsel (incl. breach of court rules) - [See Barristers and Solicitors - Topic 842 ].

Trusts - Topic 2041

Resulting trusts - Voluntary property transfers - General - In 1981, the husband purchased an island property - In 1995, title to the property was transferred to the parties' three adult children in order to save estate taxes - However, the parents and children continued to treat the property as if it was owned by the parents - The parties separated - In 2008, the wife commenced proceedings, seeking, inter alia, equalization of family property -  The trial judge found that the husband was the sole owner of the island property - The Ontario Court of Appeal held that the trial judge had correctly determined that the property had not been gifted to the parties' three children - However, the trial judge had improperly disregarded the ownership admissions made by the husband and wife, who had both admitted that they held an equal beneficial interest in the property - The husband was not the sole owner - As of the date of transfer of title to the children, the property was held by the husband and wife on a resulting trust - The wife had a one half interest - See paragraphs 43 to 46.

Cases Noticed:

Blowes v. Blowes (1993), 16 O.R.(3d) 318 (C.A.), refd to. [para. 40].

Marino (Bankrupts), Re (2004), 189 O.A.C. 14; 72 O.R.(3d) 274 (C.A.), refd to. [para. 41].

Deloitte & Touche LLP v. Marino - see Marino (Bankrupts), Re.

McNamee v. McNamee (2011), 280 O.A.C. 372; 106 O.R.(3d) 401; 2011 ONCA 533, refd to. [para. 44].

Martin v. Sansome (2014), 314 O.A.C. 375; 118 O.R.(3d) 522; 2014 ONCA 14, refd to. [para. 44].

Garage Causapscal Ltée, Re, [1961] S.C.R. 83, refd to. [para. 48].

Traders Finance Corp. v. Levesque - see Garage Causapscal Ltée, Re.

Coba Industries Ltd. v. Millie's Holdings (Canada) Ltd. (1985), 65 B.C.L.R. 31; 20 D.L.R.(4th) 689 (C.A.), refd to. [para. 53].

C.A.M. v. D.M. (2003), 176 O.A.C. 201; 67 O.R.(3d) 181 (C.A.), refd to. [para. 77].

Hamilton v. Open Window Bakery Ltd. et al., [2004] 1 S.C.R. 303; 316 N.R. 265; 184 O.A.C. 209; 2004 SCC 9, refd to. [para. 78].

MacDonald v. MacDonald (1997), 109 O.A.C. 19 (C.A.), refd to. [para. 85].

Galganov v. Russell (Township) (2012), 294 O.A.C. 13; 350 D.L.R.(4th) 679 (C.A.), refd to. [para. 101].

Ezard (Bankrupt), Re, [2011] O.T.C. Uned. 4474; 80 C.B.R.(5th) 231 (Sup. Ct.), refd to. [para. 109].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 38(3) [para. 52].

Courts of Justice Act Regulations (Ont.), Family Law Rules, Reg. 114/99, rule 24(9)(c) [para. 101].

Family Law Rules - see Courts of Justice Act Regulations (Ont.).

Counsel:

Aaron Franks and Michael Zalev, for the appellant, Charles David Green Sr.;

Mathew H. Hilbing and Frank Coscarella, for the appellant by way of cross-appeal, Charles David Green Jr.;

Sanjeev P. Mitra and Miranda Spence, for the appellants, Strike Furlong Ford LLP and Robert James Lorne Ford;

Margot Poepjes, for the respondent, Diana Freda Green;

Russell Alexander, for the respondent, Lisa Maxwell;

Brenda Yurko, acting in person.

This appeal and cross-appeal were heard on April 20, 2015, by Sharpe, Pepall and van Rensburg, JJ.A., of the Ontario Court of Appeal. On July 21, 2015, the court released the following judgment.