The article: http://www.haaretz.com/hasen/spages/1063597.html
Jerry:
"...This is a brave article. Will Jews hear it or will Jews respond in a common reflex manner which insists on fighting fire with fire and denouncing this kind of criticism of Israeli thinking as giving comfort to the anti-Semites of this world? Everyone avoids this discussion in North America because of the widespread belief that everything Israel does is right. It reminds me of the American bumper stickers I saw while living in California in the early 70's: "America -- love it or leave it." In other words, sha shtil. Fortunately, for the world, the anti-Vietnam war forces weren't sha shtil and the war finally ended. Everybody won when that happened...."
Morry:
"...Like Jerry, I well remember those bumper stickers, and the word that invariably came to mind every time was "jingoism," with its clear definition of "my country right or wrong." History long ago taught all of us that when a country feels threatened from outside, (as Israel does, and certainly with justification) jingoism is even stronger in the hearts and minds of those who feel at such risk. And so I fear that this article will, in spite of its inherent logic, not only fail to move anyone, but may well stoke the fire of the opposition to such views. Some will, I suspect, even label it as treasonous. Is this man safe? I would worry. Ans as for the attempt to distinguish between “Zionism” and “Israel”….well, not in my lifetime, I despair..."
Itzik:
"...Oy vey, what a hodge podge, this mess is.
Here is for me its deepest contradiction and its fuzziest thinking even within its own terms of reference. On the one hand this kind of thinking is rejected: “A Jewish and democratic state? The Zionist left said yes automatically, fudging the difference between the two and not daring to give either priority.” That is to say, what Levy rejects is the glossing over of the apparent antimony between a Jewish state and a democratic state. Levy will not, like the left he tries to eviscerate, “fudge” that distinction.
Yet we have him right next, on the other hand, saying, “Anyone who wants a meaningful left must first air out Zionism in the attic. Until a movement that courageously redefines Zionism arises from the mainstream, there will be no broad left here.” Please, someone, square me that circle. How does Levy even begin to conceive of an aired out *Zionism* that has any coherence as a particular idea and a democratic state? Any idea of Zionism that is not empty must privilege Jewishness and, therefore, as we refuse to fudge, must cut against democracy.
There is also screed in this piece from the tilted, question begging circularity of its title, to calling Barak variously, a “grave digger”, a “hangman” and a “liar”, to mainstream politicians “making two wars” (with the clear implication of unjustifiably starting two wars as a foregone conclusion), to Israeli voters being so mindless as to be misled by “lies” (read: "ideas I disagree with"), to the “warmonger litany”—“Lebanon, Gaza, the killed children, cluster bombs, white phosphorus and all the atrocities of occupation”. Watch this for a contrast: https://mediapilot.georgetown.edu/sharestream2gui/GT-Video.jsp?myname=0d21b6201f103fed011f423c5f5e01d3&cid=0d21b6201f103fed011f4208b74801be&windowSize=full&originalAspectRatio=false)
And Levy fails to back up what he is so self righteously vociferous about condemning—the lie that there is no one to talk to about peace. Let him or any of you tell me whom Israel can talk to, name names if you can, as Abbas is now over extended in the P.A. and Hamas is gaining popular support, and is without question part of a continuum of terror that runs from Iran through a possibly flexible Syria through Hezbollah and to Hamas, all grounded in the tenets of the Muslim Brotherhood.
No?
Again, names please?
Levy can’t put his money where his mouth is, judging by this piece: good at hortatory declamation, bad at thinking and reasoning and evidence.
And riddle me this, now stepping outside Levy’s own terms of reference, how is it that Italy, say, can be considered an Italian country, where Italian is spoken, where myths of Italian origin feed national sensibility, where ethnic Italians the world over have certain national prerogatives, where things Italian inform public education, and so on, while still being perceived as a liberal democracy, with its own WW11 past not so far behind it, while Israel cannot be?
So unlike Jerry, I (who, probably like Jerry, favor a two state solution, a program of unilateral withdrawal from the West Bank, and who’s confounded by the Settlement Policy) find this article intellectually cowardly rather than brave. And Jerry’s false either/or categorization of its reception—“Will Jews hear it or will Jews respond in a common reflex manner which insists on fighting fire with fire and denouncing this kind of criticism of Israeli thinking as giving comfort to the anti-Semites of this world”—as though one cannot criticize it save for a “common reflex”, is, with all due respect to Jerry, an insult to independent and nuanced thought, and harbors a certain unseemly, self satisfaction...."
Saturday, February 14, 2009
Unconscionability
http://www.canlii.org/en/on/onca/doc/2008/2008onca809/2008onca809.html
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"...[1] This appeal addresses the question of whether a trade union may invoke the jurisdiction of the court to enforce fines that it has imposed against its members for crossing a picket line.
[2] The respondents, Jeffrey Birch and April Luberti, were fined by the appellant union for crossing the picket line to attend work during a legal strike. In an application to the Superior Court of Justice, Justice Robert Smith held that a provision in the appellant’s constitution authorizing the fines was an unenforceable penalty clause. The appellant appeals that finding.
[3] For the reasons that follow, I would dismiss the appeal.
Are Mr. Birch and Ms. Luberti entitled to defend in the Small Claims Court?
[12] The union’s position before the application judge and in this court was that by failing to appeal their fines to a three member panel and then to file a complaint (if necessary) to the Public Service Labour Relations Board, Mr. Birch and Ms. Luberti lost their right to defend against the actions commenced in the Small Claims Court for the enforcement of the fines.
[13] The application judge held that once the union had sued its members in the Small Claims Court the members were entitled to raise any defence open to them. The application judge made reference to rule 25.07(4) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 relating to the pleading of defences and to rule 25.06(2) concerning the pleading of points of law. The application judge observed that the union had not provided him with any authority in support of its position that he should deprive a defendant in the Superior Court from pleading all possible defences available.
Are the fines imposed on Mr. Birch and Ms. Luberti penalties imposed under the union constitution, and, if so, are they unenforceable by the court?
14] The application judge concluded that the relationship between a trade union and its members is governed by the union constitution which is a contractual relationship. See Berry v. Pulley, 2002 SCC 40 (CanLII), [2002] 2 S.C.R. 493 at para. 48:
[T]he time has come to recognize formally that when a member joins a union, a relationship in the nature of a contract arises between the member and the trade union as a legal entity. By the act of membership, both the union and the member agree to be bound by the terms of the union constitution, and an action may be brought by a member against the union for its breach[.]
The application judge held that the contract between the union and its members is a contract of adhesion as the members had no real bargaining power with the union: see Berry at para. 49.
[15] The application judge further held that, at common law, the courts will not enforce a penalty clause in a contract that does not provide a genuine pre-estimate of damages: see Canadian General Electric Co. v. Canadian Rubber Co. of Montreal (1915), 27 D.L.R. 294 (S.C.C.); Dunlop Pneumatic Tyre Co. Ltd. v. New Garage and Motor Co. Ltd. [1915] A.C. 79 (H.L.); J.G. Collins Insurance Agencies Ltd. v. Elsley Estate, 1978 CanLII 7 (S.C.C.), [1978] 2 S.C.R. 916.
Is the penalty imposed by the union enforceable because it is not unconscionable in the circumstances?
[19] In respect of the enforcement of the penalty clause, the application judge concluded that notwithstanding the language used by Sharpe J.A. in Peachtree II “the [common] law rule remains in effect that the courts will not require a party to pay a genuine or true penalty on grounds of public policy.” However, as a result of the views expressed by Sharpe J.A. in Peachtree II, the application judge considered the application of the doctrine of unconscionability to the facts of this case.
[20] The application judge adopted the test for unconscionability expressed in Ekstein v. Jones, 2005 CanLII 30309 (ON S.C.), 2005 CanLII 30309 (Ont. S.C.) at para. 57 as follows:
(a) that the terms are very unfair or that the consideration is grossly inadequate [and]
(b) that there was an inequality of bargaining power between the parties and that one of the parties has taken undue advantage of this.
[33] On appeal to this court Sharpe J.A. said at para. 30:
Should the impugned clause in the present case be assessed from the perspective of the common law rule against penalty clauses or does the appellant’s case amount to a request for relief from forfeiture? For the following reasons, I consider that the appellant’s case amounts to a request for relief from forfeiture.
[34] While the court in Peachtree II declined to decide the issue of whether a penalty clause in a contract remains per se unenforceable Sharpe J.A. did not leave much doubt concerning where the courts should head when squarely faced with this issue. He said at para. 32 of his reasons:
Second, I agree with Professor Waddams’ observation in The Law of Damages, looseleaf (Aurora: Canada Law Book Inc., 1991) at para. 8.310 that as there is often little to distinguish between the two types of clauses and that there is much to be said for assimilating both under unconscionability. The effect of assimilation would be “to provide a more rational framework for the decisions of both forfeitures and penalties”.
Unconscionability is also the direction suggested by the dictum of Dickson J. in Elsley v. J.G. Collins Insurance Agencies Ltd., 1978 CanLII 7 (S.C.C.), [1978] 2 S.C.R. 916, 83 D.L.R. (3d) 1, at p. 937 S.C.R.: “It is now evident that the power to strike down a penalty clause is a blatant interference with freedom of contract and is designed for the sole purpose of providing relief against oppression for the party having to pay the stipulated sum.” As pointed out by the appeal judge, this would also appear to be the direction of s. 98 of the Courts of Justice Act, R.S.O. 1990, c. C43: “A court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise, as are considered just.” All of this suggests to me that courts should, whenever possible, favour analysis on the basis of equitable principles and unconscionability over the strict common law rule pertaining to penalty clauses.
[45] However one articulates the test for unconscionability, I am satisfied that it involves more than a finding of inequality of bargaining power between the parties to a contract. Both the test adopted by the application judge in Eckstein and the test in Harry of the British Columbia Court of Appeal recognize that a determination of unconscionability involves a two-part analysis – a finding of inequality of bargaining power and a finding that the terms of an agreement have a high degree of unfairness. I see little, if any, difference between a description of terms of a contract as “very unfair” or “substantially unfair”. I am also of the view that “abuse of the bargaining power” identified by Robins J.A. in Fraser Jewellers is another way of describing substantial unfairness.
Standard of Review
In the much cited case of the Supreme Court of Canada in Housen v. Nikolaisen, 2002 SCC 33 (CanLII), [2002] 2 S.C.R. 235 at para. 36, the majority said:
Matters of mixed fact and law lie along a spectrum. Where, for instance, an error with respect to a finding of negligence can be attributed to the application of an incorrect standard, a failure to consider a required element of a legal test, or similar error in principle, such an error can be characterized as an error of law, subject to a standard of correctness. Appellate courts must be cautious, however, in finding that a trial judge erred in law in his or her determination of negligence, as it is often difficult to extricate the legal questions from the factual. It is for this reason that these matters are referred to as questions of “mixed law and fact”. Where the legal principle is not readily extricable, then the matter is one of “mixed law and fact” and is subject to a more stringent standard. The general rule, as stated in Jaegli Enterprises, supra, is that, where the issue on appeal involves the trial judge’s interpretation of the evidence as a whole, it should not be overturned absent palpable and overriding error.
The penalty clause is unconscionable
[50] The application judge relied upon Iacobucci J.’s reasoning in Berry that in a contract of adhesion, a union member has no bargaining power with the union. Iacobucci J. also concluded that it is when the contract is formed that determines whether there was inequality of bargaining power. When Mr. Birch and Ms. Luberti joined the union, they took the union constitution as they found it with no ability to negotiate or change its terms until they became members. The fact that they could recommend and lobby for change after becoming members does not alter the analysis.
Were Mr. Birch and Ms. Luberti required to proceed in alternative forums to challenge the validity of the penalty clause in the constitution?
[66] It is a settled principle of administrative law that a party who seeks to challenge a decision of a domestic body must first exhaust his or her internal remedies before seeking judicial review in the courts. I do not see that the principle applies here. In this case, it is the union, not Mr. Birch and Ms. Luberti, who is seeking the court’s assistance. In the case at bar, it is conceded that there is no provision in the union constitution or in the Public Service Labour Relations Act which provides for the enforcement of fines levied by the union. In my view, it would be a surprising result to permit the union recourse to the courts to enforce a fine or penalty and deny the union member the right to advance a defence that the penalty was not enforceable because it was unconscionable. I see no merit in this ground of appeal. I perhaps should add that, unlike the application judge, I find it unnecessary to resort to rules 25.07(4) and 25.06(2) of the Rules of Civil Procedure to come to this conclusion...."
Justice Jurianz dissents.
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"...[1] This appeal addresses the question of whether a trade union may invoke the jurisdiction of the court to enforce fines that it has imposed against its members for crossing a picket line.
[2] The respondents, Jeffrey Birch and April Luberti, were fined by the appellant union for crossing the picket line to attend work during a legal strike. In an application to the Superior Court of Justice, Justice Robert Smith held that a provision in the appellant’s constitution authorizing the fines was an unenforceable penalty clause. The appellant appeals that finding.
[3] For the reasons that follow, I would dismiss the appeal.
Are Mr. Birch and Ms. Luberti entitled to defend in the Small Claims Court?
[12] The union’s position before the application judge and in this court was that by failing to appeal their fines to a three member panel and then to file a complaint (if necessary) to the Public Service Labour Relations Board, Mr. Birch and Ms. Luberti lost their right to defend against the actions commenced in the Small Claims Court for the enforcement of the fines.
[13] The application judge held that once the union had sued its members in the Small Claims Court the members were entitled to raise any defence open to them. The application judge made reference to rule 25.07(4) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 relating to the pleading of defences and to rule 25.06(2) concerning the pleading of points of law. The application judge observed that the union had not provided him with any authority in support of its position that he should deprive a defendant in the Superior Court from pleading all possible defences available.
Are the fines imposed on Mr. Birch and Ms. Luberti penalties imposed under the union constitution, and, if so, are they unenforceable by the court?
14] The application judge concluded that the relationship between a trade union and its members is governed by the union constitution which is a contractual relationship. See Berry v. Pulley, 2002 SCC 40 (CanLII), [2002] 2 S.C.R. 493 at para. 48:
[T]he time has come to recognize formally that when a member joins a union, a relationship in the nature of a contract arises between the member and the trade union as a legal entity. By the act of membership, both the union and the member agree to be bound by the terms of the union constitution, and an action may be brought by a member against the union for its breach[.]
The application judge held that the contract between the union and its members is a contract of adhesion as the members had no real bargaining power with the union: see Berry at para. 49.
[15] The application judge further held that, at common law, the courts will not enforce a penalty clause in a contract that does not provide a genuine pre-estimate of damages: see Canadian General Electric Co. v. Canadian Rubber Co. of Montreal (1915), 27 D.L.R. 294 (S.C.C.); Dunlop Pneumatic Tyre Co. Ltd. v. New Garage and Motor Co. Ltd. [1915] A.C. 79 (H.L.); J.G. Collins Insurance Agencies Ltd. v. Elsley Estate, 1978 CanLII 7 (S.C.C.), [1978] 2 S.C.R. 916.
Is the penalty imposed by the union enforceable because it is not unconscionable in the circumstances?
[19] In respect of the enforcement of the penalty clause, the application judge concluded that notwithstanding the language used by Sharpe J.A. in Peachtree II “the [common] law rule remains in effect that the courts will not require a party to pay a genuine or true penalty on grounds of public policy.” However, as a result of the views expressed by Sharpe J.A. in Peachtree II, the application judge considered the application of the doctrine of unconscionability to the facts of this case.
[20] The application judge adopted the test for unconscionability expressed in Ekstein v. Jones, 2005 CanLII 30309 (ON S.C.), 2005 CanLII 30309 (Ont. S.C.) at para. 57 as follows:
(a) that the terms are very unfair or that the consideration is grossly inadequate [and]
(b) that there was an inequality of bargaining power between the parties and that one of the parties has taken undue advantage of this.
[33] On appeal to this court Sharpe J.A. said at para. 30:
Should the impugned clause in the present case be assessed from the perspective of the common law rule against penalty clauses or does the appellant’s case amount to a request for relief from forfeiture? For the following reasons, I consider that the appellant’s case amounts to a request for relief from forfeiture.
[34] While the court in Peachtree II declined to decide the issue of whether a penalty clause in a contract remains per se unenforceable Sharpe J.A. did not leave much doubt concerning where the courts should head when squarely faced with this issue. He said at para. 32 of his reasons:
Second, I agree with Professor Waddams’ observation in The Law of Damages, looseleaf (Aurora: Canada Law Book Inc., 1991) at para. 8.310 that as there is often little to distinguish between the two types of clauses and that there is much to be said for assimilating both under unconscionability. The effect of assimilation would be “to provide a more rational framework for the decisions of both forfeitures and penalties”.
Unconscionability is also the direction suggested by the dictum of Dickson J. in Elsley v. J.G. Collins Insurance Agencies Ltd., 1978 CanLII 7 (S.C.C.), [1978] 2 S.C.R. 916, 83 D.L.R. (3d) 1, at p. 937 S.C.R.: “It is now evident that the power to strike down a penalty clause is a blatant interference with freedom of contract and is designed for the sole purpose of providing relief against oppression for the party having to pay the stipulated sum.” As pointed out by the appeal judge, this would also appear to be the direction of s. 98 of the Courts of Justice Act, R.S.O. 1990, c. C43: “A court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise, as are considered just.” All of this suggests to me that courts should, whenever possible, favour analysis on the basis of equitable principles and unconscionability over the strict common law rule pertaining to penalty clauses.
[45] However one articulates the test for unconscionability, I am satisfied that it involves more than a finding of inequality of bargaining power between the parties to a contract. Both the test adopted by the application judge in Eckstein and the test in Harry of the British Columbia Court of Appeal recognize that a determination of unconscionability involves a two-part analysis – a finding of inequality of bargaining power and a finding that the terms of an agreement have a high degree of unfairness. I see little, if any, difference between a description of terms of a contract as “very unfair” or “substantially unfair”. I am also of the view that “abuse of the bargaining power” identified by Robins J.A. in Fraser Jewellers is another way of describing substantial unfairness.
Standard of Review
In the much cited case of the Supreme Court of Canada in Housen v. Nikolaisen, 2002 SCC 33 (CanLII), [2002] 2 S.C.R. 235 at para. 36, the majority said:
Matters of mixed fact and law lie along a spectrum. Where, for instance, an error with respect to a finding of negligence can be attributed to the application of an incorrect standard, a failure to consider a required element of a legal test, or similar error in principle, such an error can be characterized as an error of law, subject to a standard of correctness. Appellate courts must be cautious, however, in finding that a trial judge erred in law in his or her determination of negligence, as it is often difficult to extricate the legal questions from the factual. It is for this reason that these matters are referred to as questions of “mixed law and fact”. Where the legal principle is not readily extricable, then the matter is one of “mixed law and fact” and is subject to a more stringent standard. The general rule, as stated in Jaegli Enterprises, supra, is that, where the issue on appeal involves the trial judge’s interpretation of the evidence as a whole, it should not be overturned absent palpable and overriding error.
The penalty clause is unconscionable
[50] The application judge relied upon Iacobucci J.’s reasoning in Berry that in a contract of adhesion, a union member has no bargaining power with the union. Iacobucci J. also concluded that it is when the contract is formed that determines whether there was inequality of bargaining power. When Mr. Birch and Ms. Luberti joined the union, they took the union constitution as they found it with no ability to negotiate or change its terms until they became members. The fact that they could recommend and lobby for change after becoming members does not alter the analysis.
Were Mr. Birch and Ms. Luberti required to proceed in alternative forums to challenge the validity of the penalty clause in the constitution?
[66] It is a settled principle of administrative law that a party who seeks to challenge a decision of a domestic body must first exhaust his or her internal remedies before seeking judicial review in the courts. I do not see that the principle applies here. In this case, it is the union, not Mr. Birch and Ms. Luberti, who is seeking the court’s assistance. In the case at bar, it is conceded that there is no provision in the union constitution or in the Public Service Labour Relations Act which provides for the enforcement of fines levied by the union. In my view, it would be a surprising result to permit the union recourse to the courts to enforce a fine or penalty and deny the union member the right to advance a defence that the penalty was not enforceable because it was unconscionable. I see no merit in this ground of appeal. I perhaps should add that, unlike the application judge, I find it unnecessary to resort to rules 25.07(4) and 25.06(2) of the Rules of Civil Procedure to come to this conclusion...."
Justice Jurianz dissents.
Defence of Officiallly Induced Error
There are five elements to thew defence of officially induced error:
1. the accused must considered the legal consequences of his actions and sought legal advice;
2. government agents involved in administering the law in question had to give the advice;
3. the advice had to be erroneous;
4. the accused had to rely on the advice;
5. that reliance had to be reasonable.
Duty counsel advising the accused not to give breath samples on charges of impaired driving does not speak for the government and the defence does not arise.
R. v. Pea 93 O.R. (3d), 67, (O.C.A.)
1. the accused must considered the legal consequences of his actions and sought legal advice;
2. government agents involved in administering the law in question had to give the advice;
3. the advice had to be erroneous;
4. the accused had to rely on the advice;
5. that reliance had to be reasonable.
Duty counsel advising the accused not to give breath samples on charges of impaired driving does not speak for the government and the defence does not arise.
R. v. Pea 93 O.R. (3d), 67, (O.C.A.)
Wednesday, February 11, 2009
Installation of Software as a Repair Under Repair and Storage Liens Act
http://www.canlii.org/en/on/onsc/doc/2000/2000canlii22382/2000canlii22382.html
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"...TRAFFORD J.:—In the circumstances of this case, I am satisfied that the development of software by Microsys and its integration with the hardware of the plaintiff Anritsu’s equipment is a “repair” under the Repair and Storage Liens Act, R.S.O. 1990, c. R.25 (the “RSLA”). Money, labour and skill were applied to the equipment for the purposes and with the effect of altering and transforming its properties. Accordingly, Microsys is a “lien claimant” under that legislation and is entitled to the benefits of its enforcement regime. Moreover, in any event, independent of its entitlement under the RSLA, Microsys should be entitled to possession of the Anritsu equipment for the purposes of testing it so as to further the defence to the claims. A period of 90 days is granted for such testing. By the end of the period, that equipment is to be forthwith returned to Anritsu, subject to the rights of Microsys under the RSLA. Costs to Microsys in the amount of $3,500 are payable forthwith..."
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"...TRAFFORD J.:—In the circumstances of this case, I am satisfied that the development of software by Microsys and its integration with the hardware of the plaintiff Anritsu’s equipment is a “repair” under the Repair and Storage Liens Act, R.S.O. 1990, c. R.25 (the “RSLA”). Money, labour and skill were applied to the equipment for the purposes and with the effect of altering and transforming its properties. Accordingly, Microsys is a “lien claimant” under that legislation and is entitled to the benefits of its enforcement regime. Moreover, in any event, independent of its entitlement under the RSLA, Microsys should be entitled to possession of the Anritsu equipment for the purposes of testing it so as to further the defence to the claims. A period of 90 days is granted for such testing. By the end of the period, that equipment is to be forthwith returned to Anritsu, subject to the rights of Microsys under the RSLA. Costs to Microsys in the amount of $3,500 are payable forthwith..."
Serra v Serra: Post V Day Decline: Recession
http://www.canlii.org/en/on/onca/doc/2009/2009onca105/2009onca105.html
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"...[1] The important issue raised on this appeal is whether, and if so, in what circumstances, a market-driven post-valuation date change in the value of a spouse’s assets may be taken into account in determining whether an equalization of family property is unconscionable under s. 5(6) of the Family Law Act.[1] This legal question has not previously been decided by this Court. A second issue is whether – if the decline in value of the appellant’s principal asset may be taken into account – the equalization of family property would be unconscionable in the circumstances of this case.
[37] The steps to be taken when s. 5(6) is engaged are well-established. The court must first ascertain the net family property of each spouse, by determining and valuing the property each owned on the valuation date (subject to the deductions and exemptions set out in s. 4). Next, the court applies s. 5(1) and determines the equalization payment. Finally – and before making an order under s. 5(1) – the court must decide whether the equalization of net family properties would be unconscionable under s. 5(6), having regard to the factors listed in paragraphs 5(6)(a) through (h). See Rawluk v. Rawluk 1990 CanLII 152 (S.C.C.), [1990] 1 S.C.R. 70 at pp. 93-94; Berdette v. Berdette reflex, (1991), 3 O.R. (3d) 513 (C.A.), at pp. 525-526; Stone v. Stone 2001 CanLII 24110 (ON C.A.), (2001), 55 O.R. (3d) 491, at para. 39; LeVan v. LeVan 2006 CanLII 31020 (ON S.C.), (2006), 82 O.R. (3d) 1 (S.C.J.).
[46] In my opinion, a court may take into account a post-separation date change in the value of a spouse’s assets, and the circumstances surrounding such a change, for purposes of determining under s. 5(6) of the Family Law Act whether equalizing net family properties would be unconscionable. An order for an unequal division of net family properties is exceptional, however, and may only be made on such a basis (i) where the circumstances giving rise to the change in value relate (directly or indirectly) to the acquisition, disposition, preservation, maintenance or improvement of property (s. 5(6)(h)), and (ii) where equalizing the net family property would be unconscionable, having regard to those circumstances (taken alone or in conjunction with other factors mentioned in s. 5(6)).
[47] In this regard, the threshold of “unconscionability” under s. 5(6) is exceptionally high. The jurisprudence is clear that circumstances which are “unfair”, “harsh” or “unjust” alone do not meet the test. To cross the threshold, an equal division of net family properties in the circumstances must “shock the conscience of the court”: see Merklinger v. Merklinger reflex, (1992), 11 O.R. (3d) 233 (Ont. Gen. Div.), aff’d 1996 CanLII 642 (ON C.A.), (1996), 30 O.R. (3d) 575 (C.A.); Roseneck v. Gowling 2002 CanLII 45128 (ON C.A.), (2002), 62 O.R. (3d) 789 (C.A.); McDonald v. McDonald reflex, (1988), 11 R.F.L. (3d) 321 (Ont. S.C.); and LeVan (S.C.J.).
[48]
I note, for example, the following comments of Backhouse J. in LeVan, and of Jennings J. in Merklinger:
LeVan, at para. 258:
“Unconscionability” is a much more difficult test to meet than “fairness” and as a result, the courts have only minimal discretion to order anything other than an equal division of family property. Unconscionable conduct has been defined as, among other things, conduct that is harsh and shocking to the conscience, repugnant to anyone's sense of justice, or shocking to the conscience of the court. [Citations omitted].
Merklinger, at para 54:
Section 5(6) of the Family Law Act, 1986 permits me to order an unequal allocation of value if to do otherwise would be unconscionable. The legislature deliberately chose to strictly define the severity of the result of the application of s. 5(1) which must pertain before there can be any judicial intervention. The result must be more than hardship, more than unfair, more than inequitable. There are not too many words left in common parlance that can be used to describe a result more severe than unconscionable. [Emphasis added].
[49] However, it does not follow that because the threshold is exceptionally high the factors to be taken into account in assessing whether that threshold has been crossed should not include post-separation changes in the value of a spouse’s assets and the circumstances surrounding that change. In an article published after the trial decision in LeVan, but before the argument on appeal, Professor Bala stated:[12]
It is submitted that while the outcome in LeVan may well be correct, the courts should interpret the vague, general words of s. 5(6)(h) to include the factor of a post-separation decline in property values that renders an equalizing of net family properties as evaluated on separation date to be unconscionable. It seems inappropriate for there to be judicial recognition only of post separation increases in property values, with post-separation declines ignored, even in situations of “unconscionability.” While in some circumstances it is appropriate to expect the titled spouse to dispose of the assets after separation or bear the full risk of not doing so, there are circumstances when such a disposition would be unreasonable.
[50] I agree. This is precisely one of those situations.
[51] Elmer E. Driedger first articulated what is now accepted as the guiding principle of modern statutory interpretation when he said:[13]
Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.
This principle has been adopted as the standard by the Supreme Court of Canada on numerous occasions. See, for example, Rizzo & Rizzo Shoes Ltd., Re, 1998 CanLII 837 (S.C.C.), [1998] 1 S.C.R. 27, at para. 21, and Bell ExpressVu Ltd. Partnership v. Rex, 2002 SCC 42 (CanLII), [2002] 2 S.C.R. 559, at para. 26.
[52] The rationale behind the statutory direction in s. 5 of the Family Law Act that net family property is to be shared equally – with the rare exception provided in s. 5(6) – is set out in s. 5(7) of the Act:
The purpose of this section is to recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6). [Emphasis added.]
[53] This rationale is affirmed in the preamble of the Act, which states:
Whereas it is desirable to encourage and strengthen the role of the family; and whereas for that purpose it is necessary to recognize the equal position of spouses as individuals within marriage and to recognize marriage as a form of partnership; and whereas in support of such recognition it is necessary to provide in law for the orderly and equitable settlement of the affairs of the spouses upon the breakdown of the partnership, and to provide for other mutual obligations in family relationships, including the equitable sharing by parents of responsibility for their children; [Emphasis added.]
[54] There is a jurisprudential theme running through the cases to the effect that relief may only be granted under s. 5(6) where there has been fault-based conduct on the part of the asset-owning spouse, that is, that the word “unconscionable” embraces factors relating to “unconscionable conduct” only: see, for example, von Czieslik v. Ayuso 2007 ONCA 305 (CanLII), (2007), 86 O.R. (3d) 88 (C.A.); LeVan; and Merklinger. In von Czieslik, for instance, Lang J.A. noted in obiter, “the legislative restriction of s. 5(6)’s application to certain enumerated circumstances, none of which have to do with ownership, but all of which relate to fault-based conduct on the part of the other spouse” (at para. 29).
[55] Respectfully, I do not think this proposition is correct. First, it is clear that not all of the enumerated circumstances in s. 5(6) relate to fault-based conduct on the part of a spouse. Three of them – 5(6)(a), (b) and (d) – do. Four of them – 5(6)(c), (e), (f) and (g) – do not. One – 5(6)(h), the general basket clause at issue here – may or may not arise in conduct-related circumstances. Accordingly, there is no basis for concluding that the general basket clause in the list must take its colour and meaning from a previous list of specific conduct-based factors and, therefore, that the “circumstances” referred to must themselves embody fault-based conduct. That is not the case.
[56] Secondly, neither the purpose or object of the s. 5 equalization payment scheme, the s. 5(6) exception, nor of the Act itself call for such an interpretation. The design of the legislation is to promote the goals of certainty, predictability and finality in the resolution of property matters following the breakdown of marriage. This, in turn, is founded on the central premise articulated in s. 5(7) that “inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of [their joint] responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6).” (emphasis added)
[57] Thus, to ensure adherence to the policy choices made by the Legislature, and reflected in s. 5(7) and the preamble of the Act, equalization of net family properties is the general rule. As with most rules, however, there are exceptions – in this case, the high-threshold unconscionability provisions of s. 5(6). This exception is expressly contemplated by the caveat “subject only to the equitable considerations set out in subsection (6)” set out in s. 5(7). Judicial discretion with respect to equalization payments is therefore severely restricted, by statutory design, but it is not eliminated altogether since there is discretion to order an unequal payment where “the court is of the opinion that equalizing the net family properties would be unconscionable”: see, for example, Skrlj v. Skrlj reflex, (1986), 2 R.F.L. (3d) 305 at p. 309 (Ont. S.C.).
[58] There is no principled reason that I can see, given the language of the Act and its purpose or objects, to confine the word “unconscionable” in s. 5(6) only to circumstances arising from fault-based conduct on the part of one of the spouses. Although unconscionable conduct is obviously an appropriate consideration in determining whether equalizing the net family properties would be unconscionable, in my opinion the true target of the limited exception to the general rule is a situation that leads to an unconscionable result, whether that result flows from fault-based conduct or not.
[59] I do not read this Court’s decision in von Czieslik as requiring anything to the contrary. That case evolved out of pre-separation misconduct on the part of the husband. He had “gifted” a large portion of his assets to a friend just prior to the separation, thus reducing his net family property and frustrating his former wife’s right to share in what had been accumulated during the marriage. It was in this context that Lang J.A., understandably, focussed on the “fault-based conduct” of the husband. However, the s. 5(6) issue in the case was whether, in making a s. 5(6) award, courts are restricted to the difference between the parties’ net family properties (the court held it was not). The issue was not, as here, whether post-separation circumstances that do not involve misconduct on the part of the asset-owning spouse may be taken into account.
Unconscionability
[64] It is worth emphasizing that the legal issue in question here is whether a market-driven decline in value of a spouse’s assets post-separation may be considered as a factor in determining whether an equalization of net family property is unconscionable under s. 5(6). Concluding that it may be considered as a factor does not lead necessarily to a finding on the facts that an equalization order would be unconscionable. This is an important distinction, in my view, and may sometimes be overlooked in the heat of the debate over finality and certainty versus discretionary fairness.
[65] Although a purely market-driven decline in the value of Mr. Serra’s principal asset is at the heart of these proceedings, this case is not about whether a significant post-separation drop in the value of an individual’s stock portfolio, precipitated by a deep but temporary recession, will amount to unconscionability. Such an occurrence may well be a factor for consideration under s. 5(6)(h), but whether it would be sufficient by itself to constitute “unconscionability” is quite another matter. Each case must be determined on its own facts. In the circumstances here, however, I am satisfied that an equalization of net family property would be unconscionable, given the dramatic downward turn in Mr. Serra’s fortunes and the factors giving rise to, and surrounding, it.
[66] This is not a situation where any of the other factors listed in clauses (a) through (g) of s. 5(6) come into play to be weighed in the analysis against the market-driven decrease in value. For example, there is no fault-based conduct on the part of Mr. Serra that could – if it existed – be evaluated in the s. 5(6) analysis against the market-driven factors affecting his assets, as there was in such cases as LeVan, von Czieslik and others.[14] As the trial judge noted, “[t]here is no suggestion that the decline in the value of the business is other than market-driven.” Nor – for reasons mentioned above – is this a situation like LeVan where Mr. Serra could have disposed of the business (or of his shares in it) as a hedge against their downward trend in value, another factor that could otherwise be considered in the mix. It was necessary to keep Ajax Textiles afloat to enable him to continue to meet the interim support and capital obligations he had been ordered to pay.
[67] In these circumstances, an equalization of net family property that requires Mr. Serra to pay more than his total net worth (and arguably as much as twice his net worth) because of a marked decline in the value of his major asset post-separation – over which he had absolutely no control and in spite of his best efforts to save the business in the face of Ms. Serra’s trust claims, the preservation order and the need to comply with his support obligations – is, in my view, unconscionable. In so concluding, I have taken into account that Ms. Serra is not a woman without means. The trial judge found she left the marriage “with assets worth a considerable amount.” She has net family property of about $1 million in addition to her interest in the Florida property. She has lived, and continues to live, a life of relative luxury, 6 months in Canada and 6 months in Florida. The trial judge found she had been “very well compensated” for her contributions to the business during the course of the marriage...."
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"...[1] The important issue raised on this appeal is whether, and if so, in what circumstances, a market-driven post-valuation date change in the value of a spouse’s assets may be taken into account in determining whether an equalization of family property is unconscionable under s. 5(6) of the Family Law Act.[1] This legal question has not previously been decided by this Court. A second issue is whether – if the decline in value of the appellant’s principal asset may be taken into account – the equalization of family property would be unconscionable in the circumstances of this case.
[37] The steps to be taken when s. 5(6) is engaged are well-established. The court must first ascertain the net family property of each spouse, by determining and valuing the property each owned on the valuation date (subject to the deductions and exemptions set out in s. 4). Next, the court applies s. 5(1) and determines the equalization payment. Finally – and before making an order under s. 5(1) – the court must decide whether the equalization of net family properties would be unconscionable under s. 5(6), having regard to the factors listed in paragraphs 5(6)(a) through (h). See Rawluk v. Rawluk 1990 CanLII 152 (S.C.C.), [1990] 1 S.C.R. 70 at pp. 93-94; Berdette v. Berdette reflex, (1991), 3 O.R. (3d) 513 (C.A.), at pp. 525-526; Stone v. Stone 2001 CanLII 24110 (ON C.A.), (2001), 55 O.R. (3d) 491, at para. 39; LeVan v. LeVan 2006 CanLII 31020 (ON S.C.), (2006), 82 O.R. (3d) 1 (S.C.J.).
[46] In my opinion, a court may take into account a post-separation date change in the value of a spouse’s assets, and the circumstances surrounding such a change, for purposes of determining under s. 5(6) of the Family Law Act whether equalizing net family properties would be unconscionable. An order for an unequal division of net family properties is exceptional, however, and may only be made on such a basis (i) where the circumstances giving rise to the change in value relate (directly or indirectly) to the acquisition, disposition, preservation, maintenance or improvement of property (s. 5(6)(h)), and (ii) where equalizing the net family property would be unconscionable, having regard to those circumstances (taken alone or in conjunction with other factors mentioned in s. 5(6)).
[47] In this regard, the threshold of “unconscionability” under s. 5(6) is exceptionally high. The jurisprudence is clear that circumstances which are “unfair”, “harsh” or “unjust” alone do not meet the test. To cross the threshold, an equal division of net family properties in the circumstances must “shock the conscience of the court”: see Merklinger v. Merklinger reflex, (1992), 11 O.R. (3d) 233 (Ont. Gen. Div.), aff’d 1996 CanLII 642 (ON C.A.), (1996), 30 O.R. (3d) 575 (C.A.); Roseneck v. Gowling 2002 CanLII 45128 (ON C.A.), (2002), 62 O.R. (3d) 789 (C.A.); McDonald v. McDonald reflex, (1988), 11 R.F.L. (3d) 321 (Ont. S.C.); and LeVan (S.C.J.).
[48]
I note, for example, the following comments of Backhouse J. in LeVan, and of Jennings J. in Merklinger:
LeVan, at para. 258:
“Unconscionability” is a much more difficult test to meet than “fairness” and as a result, the courts have only minimal discretion to order anything other than an equal division of family property. Unconscionable conduct has been defined as, among other things, conduct that is harsh and shocking to the conscience, repugnant to anyone's sense of justice, or shocking to the conscience of the court. [Citations omitted].
Merklinger, at para 54:
Section 5(6) of the Family Law Act, 1986 permits me to order an unequal allocation of value if to do otherwise would be unconscionable. The legislature deliberately chose to strictly define the severity of the result of the application of s. 5(1) which must pertain before there can be any judicial intervention. The result must be more than hardship, more than unfair, more than inequitable. There are not too many words left in common parlance that can be used to describe a result more severe than unconscionable. [Emphasis added].
[49] However, it does not follow that because the threshold is exceptionally high the factors to be taken into account in assessing whether that threshold has been crossed should not include post-separation changes in the value of a spouse’s assets and the circumstances surrounding that change. In an article published after the trial decision in LeVan, but before the argument on appeal, Professor Bala stated:[12]
It is submitted that while the outcome in LeVan may well be correct, the courts should interpret the vague, general words of s. 5(6)(h) to include the factor of a post-separation decline in property values that renders an equalizing of net family properties as evaluated on separation date to be unconscionable. It seems inappropriate for there to be judicial recognition only of post separation increases in property values, with post-separation declines ignored, even in situations of “unconscionability.” While in some circumstances it is appropriate to expect the titled spouse to dispose of the assets after separation or bear the full risk of not doing so, there are circumstances when such a disposition would be unreasonable.
[50] I agree. This is precisely one of those situations.
[51] Elmer E. Driedger first articulated what is now accepted as the guiding principle of modern statutory interpretation when he said:[13]
Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.
This principle has been adopted as the standard by the Supreme Court of Canada on numerous occasions. See, for example, Rizzo & Rizzo Shoes Ltd., Re, 1998 CanLII 837 (S.C.C.), [1998] 1 S.C.R. 27, at para. 21, and Bell ExpressVu Ltd. Partnership v. Rex, 2002 SCC 42 (CanLII), [2002] 2 S.C.R. 559, at para. 26.
[52] The rationale behind the statutory direction in s. 5 of the Family Law Act that net family property is to be shared equally – with the rare exception provided in s. 5(6) – is set out in s. 5(7) of the Act:
The purpose of this section is to recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6). [Emphasis added.]
[53] This rationale is affirmed in the preamble of the Act, which states:
Whereas it is desirable to encourage and strengthen the role of the family; and whereas for that purpose it is necessary to recognize the equal position of spouses as individuals within marriage and to recognize marriage as a form of partnership; and whereas in support of such recognition it is necessary to provide in law for the orderly and equitable settlement of the affairs of the spouses upon the breakdown of the partnership, and to provide for other mutual obligations in family relationships, including the equitable sharing by parents of responsibility for their children; [Emphasis added.]
[54] There is a jurisprudential theme running through the cases to the effect that relief may only be granted under s. 5(6) where there has been fault-based conduct on the part of the asset-owning spouse, that is, that the word “unconscionable” embraces factors relating to “unconscionable conduct” only: see, for example, von Czieslik v. Ayuso 2007 ONCA 305 (CanLII), (2007), 86 O.R. (3d) 88 (C.A.); LeVan; and Merklinger. In von Czieslik, for instance, Lang J.A. noted in obiter, “the legislative restriction of s. 5(6)’s application to certain enumerated circumstances, none of which have to do with ownership, but all of which relate to fault-based conduct on the part of the other spouse” (at para. 29).
[55] Respectfully, I do not think this proposition is correct. First, it is clear that not all of the enumerated circumstances in s. 5(6) relate to fault-based conduct on the part of a spouse. Three of them – 5(6)(a), (b) and (d) – do. Four of them – 5(6)(c), (e), (f) and (g) – do not. One – 5(6)(h), the general basket clause at issue here – may or may not arise in conduct-related circumstances. Accordingly, there is no basis for concluding that the general basket clause in the list must take its colour and meaning from a previous list of specific conduct-based factors and, therefore, that the “circumstances” referred to must themselves embody fault-based conduct. That is not the case.
[56] Secondly, neither the purpose or object of the s. 5 equalization payment scheme, the s. 5(6) exception, nor of the Act itself call for such an interpretation. The design of the legislation is to promote the goals of certainty, predictability and finality in the resolution of property matters following the breakdown of marriage. This, in turn, is founded on the central premise articulated in s. 5(7) that “inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of [their joint] responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6).” (emphasis added)
[57] Thus, to ensure adherence to the policy choices made by the Legislature, and reflected in s. 5(7) and the preamble of the Act, equalization of net family properties is the general rule. As with most rules, however, there are exceptions – in this case, the high-threshold unconscionability provisions of s. 5(6). This exception is expressly contemplated by the caveat “subject only to the equitable considerations set out in subsection (6)” set out in s. 5(7). Judicial discretion with respect to equalization payments is therefore severely restricted, by statutory design, but it is not eliminated altogether since there is discretion to order an unequal payment where “the court is of the opinion that equalizing the net family properties would be unconscionable”: see, for example, Skrlj v. Skrlj reflex, (1986), 2 R.F.L. (3d) 305 at p. 309 (Ont. S.C.).
[58] There is no principled reason that I can see, given the language of the Act and its purpose or objects, to confine the word “unconscionable” in s. 5(6) only to circumstances arising from fault-based conduct on the part of one of the spouses. Although unconscionable conduct is obviously an appropriate consideration in determining whether equalizing the net family properties would be unconscionable, in my opinion the true target of the limited exception to the general rule is a situation that leads to an unconscionable result, whether that result flows from fault-based conduct or not.
[59] I do not read this Court’s decision in von Czieslik as requiring anything to the contrary. That case evolved out of pre-separation misconduct on the part of the husband. He had “gifted” a large portion of his assets to a friend just prior to the separation, thus reducing his net family property and frustrating his former wife’s right to share in what had been accumulated during the marriage. It was in this context that Lang J.A., understandably, focussed on the “fault-based conduct” of the husband. However, the s. 5(6) issue in the case was whether, in making a s. 5(6) award, courts are restricted to the difference between the parties’ net family properties (the court held it was not). The issue was not, as here, whether post-separation circumstances that do not involve misconduct on the part of the asset-owning spouse may be taken into account.
Unconscionability
[64] It is worth emphasizing that the legal issue in question here is whether a market-driven decline in value of a spouse’s assets post-separation may be considered as a factor in determining whether an equalization of net family property is unconscionable under s. 5(6). Concluding that it may be considered as a factor does not lead necessarily to a finding on the facts that an equalization order would be unconscionable. This is an important distinction, in my view, and may sometimes be overlooked in the heat of the debate over finality and certainty versus discretionary fairness.
[65] Although a purely market-driven decline in the value of Mr. Serra’s principal asset is at the heart of these proceedings, this case is not about whether a significant post-separation drop in the value of an individual’s stock portfolio, precipitated by a deep but temporary recession, will amount to unconscionability. Such an occurrence may well be a factor for consideration under s. 5(6)(h), but whether it would be sufficient by itself to constitute “unconscionability” is quite another matter. Each case must be determined on its own facts. In the circumstances here, however, I am satisfied that an equalization of net family property would be unconscionable, given the dramatic downward turn in Mr. Serra’s fortunes and the factors giving rise to, and surrounding, it.
[66] This is not a situation where any of the other factors listed in clauses (a) through (g) of s. 5(6) come into play to be weighed in the analysis against the market-driven decrease in value. For example, there is no fault-based conduct on the part of Mr. Serra that could – if it existed – be evaluated in the s. 5(6) analysis against the market-driven factors affecting his assets, as there was in such cases as LeVan, von Czieslik and others.[14] As the trial judge noted, “[t]here is no suggestion that the decline in the value of the business is other than market-driven.” Nor – for reasons mentioned above – is this a situation like LeVan where Mr. Serra could have disposed of the business (or of his shares in it) as a hedge against their downward trend in value, another factor that could otherwise be considered in the mix. It was necessary to keep Ajax Textiles afloat to enable him to continue to meet the interim support and capital obligations he had been ordered to pay.
[67] In these circumstances, an equalization of net family property that requires Mr. Serra to pay more than his total net worth (and arguably as much as twice his net worth) because of a marked decline in the value of his major asset post-separation – over which he had absolutely no control and in spite of his best efforts to save the business in the face of Ms. Serra’s trust claims, the preservation order and the need to comply with his support obligations – is, in my view, unconscionable. In so concluding, I have taken into account that Ms. Serra is not a woman without means. The trial judge found she left the marriage “with assets worth a considerable amount.” She has net family property of about $1 million in addition to her interest in the Florida property. She has lived, and continues to live, a life of relative luxury, 6 months in Canada and 6 months in Florida. The trial judge found she had been “very well compensated” for her contributions to the business during the course of the marriage...."
Tuesday, February 10, 2009
Family Law Case Bifurcation: Simioni v. Simioni
http://www.canlii.org/en/on/onsc/doc/2009/2009canlii934/2009canlii934.html
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"...[3] Two fundamental procedural questions are to be determined by the Court on this motion. First, should Denis be granted an order splitting the issues in this marital dispute and directing that a first trial be held respecting the validity of the Separation Agreement, and if so, on what terms? Regardless of the answer to that question, a second question remains whether and to what extent Silvana is entitled to now have the full financial disclosure she seeks.
[15] First, it should be accepted as non-controversial that both the Family Law Rules and the inherent jurisdiction of the Court provide ample authority and power to permit cases such as this to be split: Family Law Act, section 2(10); Rule 12(5). The jurisprudence confirms that this is an authority and power that ought to be exercised if convenient, and if the exercise of the power would be in the interests of justice. The interests of justice will be served if there are clear time and expense benefits to be gained from the bifurcation and determination of the threshold issue, provided no real or meaningful prejudice is caused to either party: Elcano Acceptance Ltd. et al v. Richmond, Richmond, Stambler & Mills, [1986] O.J. No. 578 (O.C.A.); General Refractory Companies of Canada v. Venturedyne Ltd., [2001] O.J. No. 746 (S.C.J.O.); Royal Bank of Canada v. Kilmer van Nostrand Co., [1994] O.J. No. 1476 (Ont. Ct. Jus.(Gen. Div.)).
[16] Nevertheless, it is equally important to remember that the splitting of a trial effectively denies the fundamental principle that as far as possible, multiplicities of proceedings are to be avoided, and thus the power to split a case should be regarded as one that is narrowly circumscribed and to be exercised in only the clearest of cases – in cases that exhibit the exceptional merit that calls upon the Court to exercise its inherent power: Courts of Justice Act, section 138; Elcano, above; Carriero (Litigation Guardian of ) v. Flynn, [2004] O.J. No. 3117 (S.C.J.O.). In light of this caution, the onus necessarily lies upon the party seeking to bifurcate to satisfy the Court on a balance of probabilities that if granted, severance will result in the “just, expeditious and least expensive determination of the proceeding on its merits”.: Merck & Co. v. Brantford Chemicals Inc., [2004] F.C.J. No. 1704 (F.C.C.) at para 4.
38] The reason claimed for this extraordinary request appears to be essentially cost and complexity related. There is no doubt that Denis’s financial affairs will be complicated and I expect disclosure will entail substantial expense. The tip-of-the-iceberg history of his and Silvana’s financial affairs reflected in the motions materials, and summarized above, make that evident beyond doubt. He has been a very successful businessman, and the enormous success of Ojon Corporation leading to its ultimate sale to the Estee Lauder Corporation for a substantial sale price following an estate freeze undertaken by Denis, unquestionably will have added to the complexity of his financial life. I accept that there will be significant cost entailed in providing financial disclosure in this case, involving accounting and tax experts and the expenditure of significant time and effort. I accept that without a determination of the validity of the Agreement, full blown disclosure would entail the production of marriage date value, separation date value for two separate dates, value at the Separation Agreement date, and current value.
[39] These factors, however, do not eliminate the need for Denis to comply, at least in part, with the disclosure obligations imposed upon him under our law. As Perell J. noted at paras. 13-14 of Boyd v. Fields, 2006 CarswellOnt 8675, adopting the approach of Rogers J. in Chernyakhovsky v. Chernyakhovsky, [2005] O.J. No. 944, the disclosure obligations mandated by the Family Law Rules are the be considered in light of Rule 2(3), and obtaining factual evidence in marital litigation is no longer to be “a game of hide and seek.” Equally, however, it is not to be used to cause delay or reap tactical advantage. The Court has to consider the burden imposed by the disclosure sought relative to its probative value, how it fits into the overall context of the case and whether it relates to a central issue in the case or only to matters on the periphery.
46] For reasons set out above, I have concluded that Denis’s motion to bifurcate ought to succeed, although as will be evident on different terms than those proposed. I reject Silvana’s contention that she will be severely prejudiced by a decision to bifurcate this proceeding as a result of the scarcity of resources available for future trial sittings, with these matters possibly not being resolved for three years or more. I reject that contention, not on the basis that it is not possible that she might not otherwise be correct, but rather on the basis that in circumstances where this Court determines to permit the extraordinary procedural remedy of trial bifurcation, as it intends to do in this case, the obligation rests with the Court to structure the procedure relating to the future progress of the severed litigation to ensure that the objectives of bifurcation are achieved. Those objectives are a speedier and more cost effective resolution of as many of the issues in the dispute as possible. I can assure both parties that I intend to ensure that these goals continue to be achieved, as I hope my orders in this matter will make clear.
47] Order to go as follows:
(a) Order severing trial and ordering that a trial of issues first be held relating to the validity of the June 29, 2007 Separation Agreement between Silvana Simioni and Denis Simioni;
(b) Counsel to prepare for me a proposed timetable and schedule of steps under which the litigation of the validity of the June 29, 2007 Separation Agreement will proceed to trial, such schedule to be provided to me not later than March 15, 2009. They may attend on me or arrange a teleconference as part of that process;
(c) Within a period of time to be determined by me after consultation with counsel under (b), and following their consultation with appropriate accounting and taxation advisers, Denis Simioni shall produce a Financial Statement as required by Rule 13 of the Family Law Rules as at June 29, 2007, as well as section 8 of the Family Law Act, and section 21(2) of the Federal Child Support Guidelines;
(d) Within a period of time to be determined by me after consultation with counsel under (b), Denis Simioni shall produce all minute books, closing books, constating and valuation documentation relating to the estate freeze of Ojon Corporation shareholdings, or any other corporation in which he may have had an interest prior to June 29, 2007;
(e) Questioning of the parties, to the extent not already completed, shall proceed on all materials necessary to permit the first trial to proceed on an expedited basis;
(f) I am to be designated as Case Supervision judge for this litigation, and no motions or other pretrial steps are to be taken by either party except in consultation with and as ordered by me..."
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"...[3] Two fundamental procedural questions are to be determined by the Court on this motion. First, should Denis be granted an order splitting the issues in this marital dispute and directing that a first trial be held respecting the validity of the Separation Agreement, and if so, on what terms? Regardless of the answer to that question, a second question remains whether and to what extent Silvana is entitled to now have the full financial disclosure she seeks.
[15] First, it should be accepted as non-controversial that both the Family Law Rules and the inherent jurisdiction of the Court provide ample authority and power to permit cases such as this to be split: Family Law Act, section 2(10); Rule 12(5). The jurisprudence confirms that this is an authority and power that ought to be exercised if convenient, and if the exercise of the power would be in the interests of justice. The interests of justice will be served if there are clear time and expense benefits to be gained from the bifurcation and determination of the threshold issue, provided no real or meaningful prejudice is caused to either party: Elcano Acceptance Ltd. et al v. Richmond, Richmond, Stambler & Mills, [1986] O.J. No. 578 (O.C.A.); General Refractory Companies of Canada v. Venturedyne Ltd., [2001] O.J. No. 746 (S.C.J.O.); Royal Bank of Canada v. Kilmer van Nostrand Co., [1994] O.J. No. 1476 (Ont. Ct. Jus.(Gen. Div.)).
[16] Nevertheless, it is equally important to remember that the splitting of a trial effectively denies the fundamental principle that as far as possible, multiplicities of proceedings are to be avoided, and thus the power to split a case should be regarded as one that is narrowly circumscribed and to be exercised in only the clearest of cases – in cases that exhibit the exceptional merit that calls upon the Court to exercise its inherent power: Courts of Justice Act, section 138; Elcano, above; Carriero (Litigation Guardian of ) v. Flynn, [2004] O.J. No. 3117 (S.C.J.O.). In light of this caution, the onus necessarily lies upon the party seeking to bifurcate to satisfy the Court on a balance of probabilities that if granted, severance will result in the “just, expeditious and least expensive determination of the proceeding on its merits”.: Merck & Co. v. Brantford Chemicals Inc., [2004] F.C.J. No. 1704 (F.C.C.) at para 4.
38] The reason claimed for this extraordinary request appears to be essentially cost and complexity related. There is no doubt that Denis’s financial affairs will be complicated and I expect disclosure will entail substantial expense. The tip-of-the-iceberg history of his and Silvana’s financial affairs reflected in the motions materials, and summarized above, make that evident beyond doubt. He has been a very successful businessman, and the enormous success of Ojon Corporation leading to its ultimate sale to the Estee Lauder Corporation for a substantial sale price following an estate freeze undertaken by Denis, unquestionably will have added to the complexity of his financial life. I accept that there will be significant cost entailed in providing financial disclosure in this case, involving accounting and tax experts and the expenditure of significant time and effort. I accept that without a determination of the validity of the Agreement, full blown disclosure would entail the production of marriage date value, separation date value for two separate dates, value at the Separation Agreement date, and current value.
[39] These factors, however, do not eliminate the need for Denis to comply, at least in part, with the disclosure obligations imposed upon him under our law. As Perell J. noted at paras. 13-14 of Boyd v. Fields, 2006 CarswellOnt 8675, adopting the approach of Rogers J. in Chernyakhovsky v. Chernyakhovsky, [2005] O.J. No. 944, the disclosure obligations mandated by the Family Law Rules are the be considered in light of Rule 2(3), and obtaining factual evidence in marital litigation is no longer to be “a game of hide and seek.” Equally, however, it is not to be used to cause delay or reap tactical advantage. The Court has to consider the burden imposed by the disclosure sought relative to its probative value, how it fits into the overall context of the case and whether it relates to a central issue in the case or only to matters on the periphery.
46] For reasons set out above, I have concluded that Denis’s motion to bifurcate ought to succeed, although as will be evident on different terms than those proposed. I reject Silvana’s contention that she will be severely prejudiced by a decision to bifurcate this proceeding as a result of the scarcity of resources available for future trial sittings, with these matters possibly not being resolved for three years or more. I reject that contention, not on the basis that it is not possible that she might not otherwise be correct, but rather on the basis that in circumstances where this Court determines to permit the extraordinary procedural remedy of trial bifurcation, as it intends to do in this case, the obligation rests with the Court to structure the procedure relating to the future progress of the severed litigation to ensure that the objectives of bifurcation are achieved. Those objectives are a speedier and more cost effective resolution of as many of the issues in the dispute as possible. I can assure both parties that I intend to ensure that these goals continue to be achieved, as I hope my orders in this matter will make clear.
47] Order to go as follows:
(a) Order severing trial and ordering that a trial of issues first be held relating to the validity of the June 29, 2007 Separation Agreement between Silvana Simioni and Denis Simioni;
(b) Counsel to prepare for me a proposed timetable and schedule of steps under which the litigation of the validity of the June 29, 2007 Separation Agreement will proceed to trial, such schedule to be provided to me not later than March 15, 2009. They may attend on me or arrange a teleconference as part of that process;
(c) Within a period of time to be determined by me after consultation with counsel under (b), and following their consultation with appropriate accounting and taxation advisers, Denis Simioni shall produce a Financial Statement as required by Rule 13 of the Family Law Rules as at June 29, 2007, as well as section 8 of the Family Law Act, and section 21(2) of the Federal Child Support Guidelines;
(d) Within a period of time to be determined by me after consultation with counsel under (b), Denis Simioni shall produce all minute books, closing books, constating and valuation documentation relating to the estate freeze of Ojon Corporation shareholdings, or any other corporation in which he may have had an interest prior to June 29, 2007;
(e) Questioning of the parties, to the extent not already completed, shall proceed on all materials necessary to permit the first trial to proceed on an expedited basis;
(f) I am to be designated as Case Supervision judge for this litigation, and no motions or other pretrial steps are to be taken by either party except in consultation with and as ordered by me..."
Imprisonment for Failure to Pay Support under a Temporary Order under FRSAEA: and Mootness
http://www.canlii.org/en/on/onca/doc/2008/2008onca825/2008onca825.html
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"...[1] This is a somewhat unusual appeal. The issues between the appellant and respondent are no longer contentious. The appellant (the “Director”) all but concedes that the appeal should be dismissed and the order of Kent J. affirmed. However, the Director submits that there is uncertainty regarding the power to make an order directing imprisonment upon default in payment under the terms of a temporary order made pursuant to s. 41(14) of the Family Responsibility and Support Arrears Enforcement Act, 1996, S.O. 1996, c. 31 (“FRSAEA”). The Director asks this court to confirm the existence of the power to make that order where circumstances warrant. Additionally, the Director submits that, assuming the power to make the order exists, this court should identify the steps judges should take to ensure that the proposed subject of the committal order is treated fairly when the order is made.
III. ANALYSIS
(1) The statutory power to make a temporary order for support that includes a term directing imprisonment upon default in payment.
[26] The constraints on the use of imprisonment where the payor fails to comply with an order made at the end of a default proceeding have full application to non-compliance with temporary orders made in those proceedings. At least two additional factors suggest further caution. First, presumably the adjournment of the hearing indicates that the court is satisfied that the full merits of the default hearing should be addressed at a subsequent time. Courts should be hesitant to order the potential imprisonment of the payor absent the full inquiry into the merits of the proceedings. Second, where the matter is adjourned, presumably the payor will be back before the court within a relatively short time. Any failure to comply with the temporary order may well be more appropriately addressed when the default proceeding is back before the court.[3]
(2) The appropriate procedure where the court proposes to impose a committal order
[27] Counsel advise that the payor is often unrepresented in default hearings. We will assume that the payor is unrepresented in considering the steps that a court should take to ensure that a payor is treated fairly before making a committal order as a term of a temporary order under s. 41(14). Counsel agree that, before making a committal order, the court must be satisfied that the payor is aware of the nature and effect of the proposed committal order and is given a fair opportunity to speak to the appropriateness of the imposition of a committal order in the circumstances.
[28] Counsel for the respondent favours a more formal process involving the taking of evidence under oath and giving the payor an opportunity to call evidence and cross-examine witnesses. Counsel for the Director submits that the level of formality suggested by counsel for the respondent is neither necessary, nor appropriate. He makes the point that temporary orders are made in the context of the adjournment of the default hearing. Counsel for the Director suggests, correctly in our view, that the formalities associated with a full hearing on the merits are not necessary when settling the terms of an adjournment.
[29] In our view, the courts that conduct default hearings are better positioned than this court to appreciate and address the demands of fairness in any given circumstance. However, a few broad observations may be helpful.
[30] The liberty of a payor who is potentially the subject of a committal order is put in jeopardy if the order is made. At a minimum, fairness in the context of a proposed order that could result in imprisonment requires that:
• the court explain to the payor the nature of the proposed committal order and the effect it could have on the payor’s liberty;
• the court explain to the payor why it is considering making the committal order; and
• the payor be given an opportunity to respond to the reasons offered by the court and to advise the court of any additional facts that may be relevant to the court’s decision to make the order.
[31] It is best left to the wisdom of individual judges in individual cases to decide exactly how to ensure that the payor is given the necessary information and the opportunity to put his or her position forward. We do, however, accept that the context in which the proposed order is being considered must be borne in mind in deciding what steps are necessary to ensure that the payor is treated fairly. Where the order in issue is a term of an adjournment sought by the payor, it would not be helpful to impose a procedural regime that would effectively result in adjournments to gather further information so that the terms of the adjournment could be settled. The common sense of the courts conducting these hearings will no doubt prevail.
[32] We also think that if the court concludes that a committal order is a proper term of a temporary order, the court should make the adjournment of the default proceedings as short as the circumstances reasonably permit, thereby hopefully reducing the risk of non-compliance..."
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"...[1] This is a somewhat unusual appeal. The issues between the appellant and respondent are no longer contentious. The appellant (the “Director”) all but concedes that the appeal should be dismissed and the order of Kent J. affirmed. However, the Director submits that there is uncertainty regarding the power to make an order directing imprisonment upon default in payment under the terms of a temporary order made pursuant to s. 41(14) of the Family Responsibility and Support Arrears Enforcement Act, 1996, S.O. 1996, c. 31 (“FRSAEA”). The Director asks this court to confirm the existence of the power to make that order where circumstances warrant. Additionally, the Director submits that, assuming the power to make the order exists, this court should identify the steps judges should take to ensure that the proposed subject of the committal order is treated fairly when the order is made.
III. ANALYSIS
(1) The statutory power to make a temporary order for support that includes a term directing imprisonment upon default in payment.
[26] The constraints on the use of imprisonment where the payor fails to comply with an order made at the end of a default proceeding have full application to non-compliance with temporary orders made in those proceedings. At least two additional factors suggest further caution. First, presumably the adjournment of the hearing indicates that the court is satisfied that the full merits of the default hearing should be addressed at a subsequent time. Courts should be hesitant to order the potential imprisonment of the payor absent the full inquiry into the merits of the proceedings. Second, where the matter is adjourned, presumably the payor will be back before the court within a relatively short time. Any failure to comply with the temporary order may well be more appropriately addressed when the default proceeding is back before the court.[3]
(2) The appropriate procedure where the court proposes to impose a committal order
[27] Counsel advise that the payor is often unrepresented in default hearings. We will assume that the payor is unrepresented in considering the steps that a court should take to ensure that a payor is treated fairly before making a committal order as a term of a temporary order under s. 41(14). Counsel agree that, before making a committal order, the court must be satisfied that the payor is aware of the nature and effect of the proposed committal order and is given a fair opportunity to speak to the appropriateness of the imposition of a committal order in the circumstances.
[28] Counsel for the respondent favours a more formal process involving the taking of evidence under oath and giving the payor an opportunity to call evidence and cross-examine witnesses. Counsel for the Director submits that the level of formality suggested by counsel for the respondent is neither necessary, nor appropriate. He makes the point that temporary orders are made in the context of the adjournment of the default hearing. Counsel for the Director suggests, correctly in our view, that the formalities associated with a full hearing on the merits are not necessary when settling the terms of an adjournment.
[29] In our view, the courts that conduct default hearings are better positioned than this court to appreciate and address the demands of fairness in any given circumstance. However, a few broad observations may be helpful.
[30] The liberty of a payor who is potentially the subject of a committal order is put in jeopardy if the order is made. At a minimum, fairness in the context of a proposed order that could result in imprisonment requires that:
• the court explain to the payor the nature of the proposed committal order and the effect it could have on the payor’s liberty;
• the court explain to the payor why it is considering making the committal order; and
• the payor be given an opportunity to respond to the reasons offered by the court and to advise the court of any additional facts that may be relevant to the court’s decision to make the order.
[31] It is best left to the wisdom of individual judges in individual cases to decide exactly how to ensure that the payor is given the necessary information and the opportunity to put his or her position forward. We do, however, accept that the context in which the proposed order is being considered must be borne in mind in deciding what steps are necessary to ensure that the payor is treated fairly. Where the order in issue is a term of an adjournment sought by the payor, it would not be helpful to impose a procedural regime that would effectively result in adjournments to gather further information so that the terms of the adjournment could be settled. The common sense of the courts conducting these hearings will no doubt prevail.
[32] We also think that if the court concludes that a committal order is a proper term of a temporary order, the court should make the adjournment of the default proceedings as short as the circumstances reasonably permit, thereby hopefully reducing the risk of non-compliance..."
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