COURT OF APPEAL FOR ONTARIO

CITATION: York University v. Markicevic, 2017 ONCA 651

DATE: 20170810

DOCKET: M47518 (C62351)

Epstein J.A. (In Chambers)

BETWEEN

York University

Plaintiff (Respondent)

(Moving Party)

and

Michael Markicevic
, Janet Fleming, Mima
    Veronica Markicevic, Aleeyah Apparel Inc., operating as A-Tech Construction and
    Design Inc., Aleeyah Inc., AFC Inc. operating as Arsenal Facility Consulting
    Inc., Toronto Engineering Company, Gugas International, Canadian &
    American Concrete Renovation & Drain-Layer Ltd., Roman Ritacca, Luigi Lato,
    Phil Brown, Riaz Jadavji, Helen Saoulli Georgiou, Vasos Georgiou, George
    Saoulli, Georgia Saoulli, Guram Sekhniashvili, Gia Sekhniashvili, John Doe #1,
    John Doe #2, John Doe #3, Jane Doe #1, Jane Doe #2 and Jane Doe #3

Defendants (
Appellant
)

(
Responding Party
)

William C. McDowell and Brian Kolenda, for the moving
    party

Daniel Zacks and Jamie Spotswood, for the responding
    party

Heard: May 5, 2017

REASONS FOR
    DECISION

OVERVIEW

[1]

The respondent in appeal, York University, seeks security for costs of
    the appeal against the appellant, Michael Markicevic.

[2]

After a lengthy trial, Mr. Markicevic was found to have defrauded York
    and was ordered to pay over $1.8 million in damages plus $1.37 million in
    costs. He was also found to have made fraudulent conveyances to his partner and
    daughter of certain property he owned. At the material time, Mr. Markicevic was
    the Assistant Vice-President of Yorks Campus Services and Building Operations.

[3]

Although, in his evidence on the motion, Mr. Markicevic appears to maintain
    his innocence, he has not appealed either finding - that he defrauded York or
    that he conveyed property in order to defeat the interests of his creditors. Instead,
    in his appeal, Mr. Markicevic focuses on two grounds; one concerning the
    implications of a mutual release (the Release) signed by all parties, and the
    other concerning whether Yorks claims against him were statute barred.

[4]

For the reasons that follow, I have determined to exercise my discretion
    and order security for costs.

FACTS

[5]

On December 17, 2009, the President of York, Dr. Mamdouh Shoukir, met
    with other senior York officials to discuss allegations of fraud concerning Mr.
    Markicevic. The meeting was arranged when Noel Badiou, an ombudsman-type
    employee at York, advised Dr. Shoukir that a number of undisclosed York
    employees had brought to his attention certain allegations that Mr. Markicevic
    had defrauded York. However, at this point, no witnesses were willing to come
    forward on the record. Mr. Badiou met again with Dr. Shoukir on January 17 and
    19, 2010. Mr. Badiou's notes of these meetings, which were agreed by the
    parties to be admissible at trial, indicate that at this time there were three
    separate sources of allegations of Mr. Markicevics financial
    inappropriateness".

[6]

On January 28, Mr. Markicevic sent a letter to Dr. Shoukir, Gary Brewer,
    York's Vice-President Finance and Administration, and Harriett Lewis, Yorks
    General Counsel, denying the rumours that he was involved in fraud. Mr. Markicevic
    steadfastly maintained that he "managed the University's resources with
    the utmost of integrity".

[7]

Ultimately, on January 29, a whistleblower came forward and met with Dr.
    Shoukir, Ms. Lewis and Mr. Badiou. At this meeting the whistleblower provided a
    package of documents. These documents added additional credibility to the
    allegations of fraud against Mr. Markicevic.

[8]

Later that day, Mr. Markicevic was confronted by Ms. Lewis and Mr. Brewer
    with this documentary evidence and, once again, with the allegations
    themselves. Mr. Markicevic repeated his denial of any inappropriate activity.

[9]

On February 1, Dr. Shoukir met with Ms. Lewis, Mr. Brewer and Bruno Bellissimo,
    the head of Yorks internal audit team, to determine a course of action in
    dealing with Mr. Markicevic. Mr. Brewer recommended that Mr. Markicevics
    employment be terminated without cause. Dr. Shoukir approved this
    recommendation. Yorks President also instructed Mr. Bellissimo to investigate
    the fraud allegations.

[10]

Over the course of that day (February 1) Mr. Brewer and Mr. Markicevic
    negotiated the terms of a severance agreement that included the Release. The
    Release was executed on February 2nd. Under the terms of the severance
    agreement Mr. Markicevics employment was terminated without cause and York
    agreed to pay him 36 months gross salary ($696,166).

[11]

The relevant sections of the Release stated the following:

2.a) In consideration of this Release and Undertaking, YORK
    UNIVERSITY (the Releasee) hereby remises, releases and forever discharges the
    Releasor, of and from all manner of actions, causes of action, suits, debts,
    dues, accounts, bonds, covenants, contracts, complaints, human rights applications,
    claims and demands for money, damages, loss, or injury of any nature or kind
    whatsoever, that the Releasee ever had or now has against the Releasor, that
    York University and its present and former directors, officers, employees,
    Board of Governors, agents, servants and insurers as the case may be ever had
    or now has against the Releasor, for or by reason of, or in any way arising out
    of the Releasor's employment with York University.

b) York University (the Releasee) confirms that it shall not
    take any steps or initiate any proceedings against the Releasor  in respect
    of, or arising out of the Releasor's employment with York University. The
    Releasee acknowledges that the Releasor does not, by the consideration
    aforesaid or otherwise, admit any liabilities or obligations of any kind
    whatsoever.

c) The Releasee confirms that this Release is a complete bar to
    any proceeding of any kind involving any claim, complaint or demand against the
    Releasor for any cause, matter or thing, except for breaches referred to in
    paragraph 3 hereof.

[12]

York received legal advice during these negotiations. In the first draft
    of the Release, York included a clause that released Mr. Markicevic from all
    claims but for claims heretofore unknown to the Releasor arising out of any
    illegal acts. York ultimately agreed to remove this carve-out for unknown
    claims from the Release.

[13]

York commenced an action against Mr. Markicevic on January 26, 2012,
    claiming substantial damages and related relief for deceit, conversion, breach
    of fiduciary duty, knowing receipt and conspiracy. Mr. Markicevic, in addition
    to denying that he committed any fraud, took the position that the Release
    precluded York from bringing the action, and that the action was statute
    barred, on the basis that York had discovered the claim by mid-December 2009.

[14]

The trial judge summarily dealt with both of these issues  the impact
    of the Release and whether Yorks action was brought outside of the limitation
    period.

[15]

In terms of the Release, the trial judge reasoned that as a fiduciary, Mr.
    Markicevic had a positive obligation to disclose to York the full extent of his
    fraudulent activity. Instead, Mr. Markicevic had done the opposite and had actively
    denied that he had done anything improper. The trial judge reasoned that as a
    result of this intentional and material non-disclosure, the severance
    agreement, including the Release, should be set aside. Additionally, Mr. Markicevics
    denial of any wrongdoing amounted to a material misrepresentation, entitling
    York to rescission of the severance agreement, including the Release. (I note
    here that, at trial, the parties agreed to lead evidence of the Release
    negotiations and drafts on the basis that the trial judge would rule on the
    admissibility of this evidence at the end of the trial. However, the trial
    judge did not provide the ruling.)

[16]

In terms of the limitation period issue, the trial judge stated that
    although employees had approached Mr. Badiou with complaints about Mr. Markicevic's
    financial impropriety in December 2009, none had been willing to go on the
    record at that time. It was not until January 29, 2010 that the whistleblower
    went on the record, and provided documents to Ms. Lewis. The trial judge held
    that this was the earliest date that York could be said to have discovered its
    potential claim against Mr. Markicevic. Accordingly, the claim was not statute
    barred, as it was brought within two years of this date.

ANALYSIS

A.

The test
    for security of costs

[17]

The test for security for costs for an appeal is set out in Rule
    61.06(1)(a) and (c) of the
Rules of Civil
    Procedure
.
[1]
These provide that, in an appeal where it appears that:

(a)      there is good reason to believe that the appeal is
    frivolous and vexatious and that the appellant has insufficient assets in
    Ontario to pay the costs of the appeal;

(c)      for other good reason, security for costs should be
    ordered,

a judge of the appellate court, on motion by the respondent,
    may make such order for security for costs of the proceeding and of the appeal
    as is just.

[18]

The language of r. 61.06 is permissive, not mandatory. As noted by Watt
    J.A. in
Pickard v. London Police Services Board
, 2010 ONCA 643, 286
    O.A.C. 153 (In Chambers), a respondent is not entitled as of right to an order
    for security for costs, even where the requirements of the applicable paragraph
    of r. 61.06(1) are met. The permissive "may" reserves to the motion
    judge a vestige of discretion to refuse the order. The overarching principle to
    be applied to all the circumstances is the justness of the order sought:
Pickard
at para. 17,
Galustian v. SkyLink Group of Companies Inc.,
2010 ONCA
    645, at para. 26.

[19]

In my view, r. 61.06 calls for a two-part analysis. Initially, the
    moving party bears the onus of demonstrating that the appellant falls within the
    rule. Under r. 61.06(1)(a), York must demonstrate that it appears that there is
    good reason to believe that Mr. Markicevic's appeal is frivolous and vexatious,
    and that he lacks sufficient assets in Ontario to pay the costs of the appeal.
    Alternatively, under r. 61.06(1)(c), York must demonstrate that it appears for
    other good reason that security for costs should be granted (
Miller v.
    Taylor
, 2010 ONCA 17, at para. 3;
635967 Ontario Ltd. v. Thompson
(2006), 211 O.A.C. 187 (Div. Ct), at para. 13). However, as noted in
Pickard
,
    satisfying either onus does not necessarily mean that York has a right to
    security for costs. In my view, as is the case under r. 56.01, that deals with
    security for costs at trial, satisfying the initial onus triggers an inquiry
    into the justness of the order sought.

[20]

More recent jurisprudence under the closely related r. 56.01, that deals
    with security for costs at trial, indicates that once the moving party
    demonstrates that the responding party falls within one of the categories
    contained in r. 56.01, an inquiry is triggered. (
Zeitoun v. Economical
    Insurance Group
(2008), 91 O.R. (3d) 131 (Div. Ct.), at para. 44, aff'd
    2009 ONCA 415, 96 O.R. (3d) 639). Once the inquiry is triggered "the court
    must then take into account a number of factors and make a just order. Such factors
    include the merits of the claim, the financial circumstances of the plaintiff
    and the possibility that an order for security may prevent a bona fide claim
    from proceeding. There is a broad discretion in the court in making such order
    as is just":
Stojanovic v. Bulut,
2011 ONSC 874, 10 C.P.C. (7th)
    265 (Master), at para. 5.

[21]

The language of "triggers the inquiry" has never been
    explicitly applied under r. 61.06(1). However, given the connection between the
    two rules, I am of the view that, under r. 61.06(1), as under r. 56.01, a
    finding that the appellant fits with the relevant provision of the rule,
    requires the court to go on to consider whether the order sought would be
    just in the circumstances of the case.

[22]

Accordingly, even if I conclude that York satisfies the requirements of r.
    61.06(1)(a) or (c), I must go on to determine whether an order for security for
    costs would be just. Such a determination requires balancing the responding
    partys right to access to justice against the moving partys right to protection
    from having to defend unmeritorious positions in circumstances in which it is unlikely
    to recover its costs.

B.

Security
    for Costs under Rule 61.06(1)(a)

I.    Legal Principles

[23]

As noted by the Court of Appeal in
Grenier v. Southam Inc
.
(1994), 19 O.R. (3d) 799 (In Chambers), r. 61.06(1)(a) is conjunctive.
    Accordingly, York bears the burden of demonstrating that there appears to be good
    reason to believe the appeal is frivolous and vexatious
and
that Mr. Markicevic
    has insufficient assets in Ontario to pay for the costs of the appeal.

[24]

As noted in
Pickard
,

at para. 18, the standard imposed
    by "good reason to believe" does not demand that the motion judge
    reach a definitive conclusion. Rather, it suggests a tentative conclusion of
    absence of merit and insufficiency of assets. After all, the order for security
    for costs is neither dispositive of the appeal nor fully informed. The standard
    reflects an appropriate balance of competing interests, not demanding too much
    of the responding party or settling for too little for the moving party.

II.   Insufficiency of assets to pay the costs of the appeal.

[25]

In his affidavit evidence, Mr. Markicevic outlines, with supporting
    documentation, the poor state of his finances. He states that his income is
    limited to a Canadian Pension Plan Disability Benefit. He has few assets,
    having dissipated his RRSPs to pay legal expenses, and his bank account has a
    current balance of $2,960. He owes his trial lawyers roughly $1.1 million
    dollars after already having paid them $220,000. He also has not paid the
    outstanding cost award from trial. His partner (Janet Fleming) works as a
    teacher. Mr. Markicevic admits that in March 2017 he received a transfer of
    nearly $40,000 from her father in order to pay outstanding and overdue fees of
    his appeal counsel. However, he submits that he can no longer borrow from
    commercial lenders or from family or friends.

[26]

The major assets in issue are two real estate properties  124 Woodville
    Drive, and 211 Osprey Road. Mr. Markicevic purchased the Woodville property in
    2007, for $547,990, and at closing put title in the name of his daughter, Mimi
    Markicevic. The trial judge found that this transfer was a fraudulent
    conveyance, and ordered that York could pursue its remedies as judgment
    creditor as if Mr. Markicevic were still the legal and beneficial owner of the
    property. Mr. Markicevic and Ms. Fleming currently reside in the basement of
    this property. Mr. Markicevics trial lawyers have two charges against the
    Woodville property in the amount of $1,707,000, subject to a first charge in
    favour of York in the amount of $143,000.

[27]

The Osprey Road property was purchased by Mr. Markicevic in 1987. In 2010
    he transferred it to Ms. Fleming. The trial judge found this transfer also to
    be a fraudulent conveyance, and ordered that York could pursue its remedies as
    judgment creditor as if Mr. Markicevic were still the legal and beneficial
    owner of the property. The mortgage balance on the property is currently $359,163,
    and the regular payments are maintained by Ms. Fleming.

[28]

In his affidavit, Mr. Markicevic states that he cannot encumber or
    access equity that may remain in either property. In January of 2013, Brown J.
    restrained the Markicevic defendants (including Mima Markicevic and Ms. Fleming)
    from selling or encumbering the two properties, and granted York leave to place
    certificates of pending litigation on title to them. By order dated June 25,
    2013, Brown J. removed the certificate of pending litigation against the
    Woodville property and authorized its sale or mortgage. However, this order was
    on the condition that the proceeds from any sale or financing be used only to
    pay for the future legal costs of the Markicevic defendants, and that $143,000 be
    paid into court to secure Yorks claims. The balance of proceeds from any sale
    or financing was to be put into the trust account of Mima Markicevics counsel.
    This order was upheld by a three-judge panel of the Divisional Court, with
    reasons reported at 2014 ONSC 3227. By agreement of the parties, this order of
    Brown J. was implemented by means of the charges referenced above.

[29]

On March 21, 2017, following the conclusion of trial, Mr. Markicevic
    agreed to an order setting aside the June 2013 order of Brown J. The trial
    judge ordered that the Markicevic defendants be restrained from selling or
    further encumbering either the Woodville or Osprey property without the prior
    consent of York or further order of the Court, and that none of the Markicevic
    defendants or any of their lawyers shall have resort to any of the equity in
    124 Woodville or 211 Osprey, or any of the proceeds thereof, to pay any fees,
    disbursements or taxes related to steps taken in respect of any pending or
    future appeals in this action. Mr. Markicevic states in his affidavit that I
    disagree with Yorks ability to take these enforcement steps before the appeal
    is determined. However, I do not have the resources to oppose York, and on that
    basis alone, I have had to consent to Yorks order.

[30]

The evidence establishes that whatever equity there may be in either
    property is frozen and cannot be accessed by Mr. Markicevic. And York, in the
    affidavit it has filed sworn by a law clerk at the law firm representing the
    university, agrees that there is no evidence of any other assets.

[31]

This record supports a finding that there is good reason to believe that
    Mr. Markicevic has insufficient assets in Ontario to pay the costs of the
    appeal.

III.  Is there good
    reason to believe this appeal is frivolous and vexatious?

[32]

Having determined that there appears to be good reason to believe Mr. Markicevic
    lacks assets in Ontario to pay the costs of his appeal, I will now consider
    whether there is good reason to believe that the appeal appears frivolous and
    vexatious. The meaning of frivolous and vexatious was explored in
Pickard
,
    at para. 19:

A frivolous appeal is one readily recognizable as devoid of
    merit, as one having little prospect of success. The reasons may vary. A
    vexatious appeal is one taken to annoy or embarrass the opposite party,
    sometimes fuelled by the hope of financial recovery to relieve the respondent's
    aggravation.

[33]

Rule 61.06(1)(a) requires that the appeal appear to be frivolous
and
vexatious. Given the way the rule is worded, the mere fact that an appeal
    appears to be devoid of merit, i.e. appears to be frivolous, is insufficient.
Pickard
suggested distinct requirements for "frivolous" and
    "vexatious". Likewise, Sharpe J.A. in
Perron v. Perron
, 2011
    ONCA 776, 286 O.A.C. 178 (In Chambers), found that the appeal had "a very
    low prospect of success", and that it was "very unlikely" the
    panel hearing the appeal would intervene. However, he declined to label the
    appeal as appearing "frivolous and vexatious", finding that the
    appellant sincerely believed in the importance and merits of the appeal.
Perron
was relied upon by the Divisional Court in
Baker v. Rego
, 2013 ONSC
    3309, 31 R.F.L. (7th) 323, when it considered the distinct requirements of
    "frivolous" and "vexatious". Justice McDermott cited
Perron

to hold that the fact that an appeal has very little chance of success is
    insufficient, on its own, to allow a finding that the appeal appears frivolous
    and vexatious within the meaning of r. 61.06(1)(a). Justice McDermott stated
    the following, at para. 22:

[T]here must be something more than a low prospect of success.
    The words "frivolous and vexatious" imply that the appeal must not
    only have a minimal chance of success; there must be good reason, on the facts
    surrounding the litigation, or from the conduct of the appellant, which could
    lead to a finding that the appeal is without merit and is brought for some
    other purpose than as is on its face, such as to harm a party or delay the
    proceedings or a given resultThe expectation of minimal success on the appeal
    will not alone suffice; the appeal must either be "devoid of merit"
    or there must be some other factor allowing a finding that the appeal is
    frivolous and vexatious.

[34]

York argues that the Court need "only find that there are good
    reasons to believe that the appeal is so devoid of merit to be frivolous and
    vexatious". For this principle it quotes
Schmidt v. Toronto Dominion
    Bank
(1995), 24 O.R. (3d) 1 (C.A.): "a judge hearing a motion for
    security for costs may reach the tentative conclusion that an appeal appears to
    be so devoid of merit as to give "good reason to believe that the appeal
    is frivolous and vexatious" without being satisfied that the appeal is
    actually totally devoid of merit".

However, in my view focusing
    only on this paragraph is an error. Later in the same judgment, the court held
    the following

"the
    apparent merits of the appeal, the presence or absence of an oblique motive for
    the launching of the appeal, and the appellant's conduct in the prosecution of
    the appeal will be relevant to a determination of whether there appears to be
    good reason to believe that the appeal is frivolous and vexatious. No doubt, in
    specific cases, other factors will also be relevant".

[35]

An appeal that appears to rise even to the level of "low prospect
    of success" or "unlikely to succeed" is not "frivolous
and
vexatious". To find that an appeal is frivolous and vexatious there must
    be something that supports the conclusion that the appeal is
    "vexatious" in order for security for costs to be available under r.
    61.06(1)(a).

[36]

There is no evidence that Mr. Markicevic, in his conduct during this
    litigation, has done anything that would support a finding that this appeal is "vexatious".
    Unlike in
Pickard
, Mr. Markicevic did not file a claim out of time and
    disclosing no reasonable cause of action. Unlike in
Henderson v. Wright
,
    2016 ONCA 89, 345 O.A.C. 231, it cannot be said that he has been less than
    diligent in his pursuit of the litigation. Unlike in
Szpakowsky
, he
    does not have a lengthy history of non-compliance with cost awards and court
    orders. Unlike in
Schmidt
, Mr. Markicevic has not failed to comply
    with the rules, and did not only move to perfect the appeal when forced to do
    so.  There is no evidence that Mr. Markicevic is pursuing his appeal for
    reasons other than he believes it has merit.

[37]

My conclusion that the record does not support a finding that the appeal
    is vexatious means that York is not able to satisfy the test under r.
    61.06(1)(a).

[38]

This does not mean that an analysis of whether the appeal has any merit
    becomes unnecessary. The merits of the appeal remain relevant to the
    determination of what is just in the circumstances of the case. I now turn,
    therefore, to my assessment of this issue.

a)

Limitation
    period

[39]

On the limitations issue, Mr. Markicevic is essentially claiming that
    the trial judge erred in finding that the earliest that York's claim was
    discoverable was January 29, 2010 and hence that York had commenced its action
    in time. I agree with Yorks submission that the question of discoverability is
    one of mixed fact and law, as it requires the application of s. 5 of the
Limitations

Act
,
2002
, S.O. 2002, c. 24, Sch. B, to the facts of this
    case. York cites the following from
Longo v. MacLaren Art Centre Inc
.
,
    2014 ONCA 526, 323 O.A.C. 246, at para. 38: "The question of whether a
    limitation period expired prior to the issuance of a statement of claim is a
    question of mixed fact and law. Thus, the issue for determination on this
    appeal is whether the motion judge made a palpable and overriding error in
    concluding that the claim was statute barred".

[40]

Accordingly, it will be difficult for Mr. Markicevic to show that the
    trial judge erred in holding that, applying the test found in the
Limitations
    Act, 2002
, the claim was discoverable, at the earliest, on January 29,
    2010. However, I do agree that several of the points Mr. Markicevic raises are
    at least arguable. By way of example, in her four paragraph analysis on this
    issue, arguably the trial judge did not make certain important findings of
    fact. It is also arguable that the trial judge raised the standard required for
    a claim to be discoverable from one of
prima facie
knowledge (that Mr.
    Markicevic alleges York had in December, 2009 when some allegations of
    financial impropriety were first brought to the attention of Mr. Badiou) to one
    of knowledge that the allegations were reliable, achieved only when the
    whistleblower went on the record. Such an error, if demonstrated, would be one
    of law, reviewed on the standard of correctness. I do not view these arguments as
    appearing to be frivolous.

[41]

Finally, York advances the position in its factum that where a fiduciary
    conceals essential aspects of his involvement in wrongdoing, the beneficiary
    will not be taken to have discovered a claim. Although not cited, I take York
    to be invoking equitable fraud, stated by the Supreme Court in
R. v. Guerin
,
    [1984] 2 S.C.R. 335, thusly:

It is well established that where there has been a fraudulent
    concealment of the existence of a cause of action, the limitation period will
    not start to run until the plaintiff discovers the fraud, or until the time
    when, with reasonable diligence, he ought to have discovered it.

[42]

This argument may prove difficult for York to advance. Mr. Markicevics
    position, as I understand it, is that with reasonable diligence, York could
    have discovered the fraud in December 2009 and that any concealment by him
    after that point in time no longer mattered. Again, it may be that the
    principles of equitable fraud would apply, but I do not see York's invocation
    of them as rendering this ground of appeal no longer arguable.

b)

The
    Release

[43]

Mr. Markicevic submits that there is no impediment to granting a release
    in fraud, provided that the fraud claim is in the contemplation of the Releasor
    at the time the release is entered into. Mr. Markicevic alleges that the trial
    judge erred in finding he had a positive duty to disclose, given that at the
    time of execution of the Release, York: a) was aware of allegations of fraud
    against him and the existence of documentary evidence from the whistleblower b)
    had directed its internal audit team to conduct an investigation, and c) was in
    possession of an email from Stephen Jacobson, Yorks Director of Financial
    Services for the Campus Services and Business Operations that he (Mr. Jacobson)
    had seen documents evidencing criminal activity on the part of Mr. Markicevic.
    Mr. Markicevic also relies on evidence of the negotiations of the Release (the
    admissibility of which, as previously indicated, was never ruled upon), showing
    that York, with the advice of counsel, agreed to exclude the carve-out of
    "claims heretofore unknown to the Releasor arising out of any illegal
    acts".

[44]

Mr. Markicevic relies on
Isailovic v. Gertner
, 2008 ONCA 895,
    for these propositions. In that case, the trial judge made the following
    comments, at paras. 64, 72 (reported at 2008 CarswellOnt 244):

Nondisclosure, fraud or misrepresentation can vitiate a
    release. However, the nondisclosure, fraud or misrepresentation must be
    material to the person entering into the agreement. Furthermore, an agreement
    cannot be set aside for failure to disclose what one suspected, even if the
    party had a duty to disclose.

The parties entered into a release settling the matters between
    them. The reasons that Mr. Isailovic has put forward are not a basis for
    setting aside the agreement between the parties. In particular, his concerns
    with respect to the lack of disclosure, lack of reporting and diversion of
    funds were concerns that he had prior to entering into the settlement
    negotiations. He made a choice to proceed with the settlement, even though his
    concerns may not have been satisfied. The settlement precludes him from
    instituting an action against Mr. Gertner.

[45]

The trial decision was upheld by the Court of Appeal, which held, at
    paras. 2-3, that:

The appellant knew that the respondent was a fiduciary. He knew
    that the respondent had not fully disclosed the financial dealings on the
    property he knew that there was "$95,410 in play". Yet, with all
    this knowledge, the appellant nonetheless decided to compromise his
    non-disclosure claim and signed the release. He did so with the benefit of
    legal advice In these circumstances, he can no longer complain about the
    respondent's conduct.

[46]

Mr. Markicevic also relies upon
Radhakrishnan v. University of
    Calgary Faculty Assn
.
, 2002 ABCA 182, 215 D.L.R. (4th) 624. In this
    case, at paras. 67-68, 71, the Alberta Court of Appeal noted that:

In negotiating even a contract of the utmost good faith, one
    need not disclose a fact which the other party already knows The same is true
    of a contract with a fiduciary where the beneficiary already knows the fact not
    disclosed Here the appellant did not know a fact, but suspected it, and
    decided to compromise instead of compelling disclosure of fact. Such a contract
    of compromise cannot be set aside on the ground that the fact suspected was not
    disclosed Any suggestion that one party could upset a contract freely entered
    into, because of prior failure to disclose to him a fact which he suspected and
    believed before the contract, is startling. The whole idea of misrepresentation
    as a ground to upset a contract is that one entered into the contract under a
    false belief induced by the other party to the contract. Relief from a contract
    for breach of a duty to disclose proceeds on similar reasoning.

[47]

The trial judge held that non-disclosure by a fiduciary, such as Mr. Markicevic,
    in itself, entitled York to set aside the Release. She further held that Mr. Markicevic
    made a material misrepresentation in denying wrongdoing.

[48]

In my view, considering that the evidence would seem to indicate that
    York had some knowledge or suspicions of the fraud when it executed the Release,
    the correctness of the trial judges holdings on this issue is at least called
    into question by
Isailovic
and
Radhakrishnan
.

[49]

There is also the issue of the trial judges failing to explicitly rule
    on the admissibility of the negotiations over the Release. Mr. Markicevic
    relies on this alone as an error of law. Again, it is not necessary to opine on
    the likely success of this ground of appeal. It is sufficient that this ground
    is neither plainly devoid of merit, nor frivolous. While perhaps not likely to
    succeed, I am of the view that it is arguable.

[50]

York raises an alternative argument in its factum (one that it says it
    argued below, but the trial judge did not find necessary to decide). York
    states that the Release did not actually release York's claims against Mr. Markicevic
    as the Release does not expressly include unknown or future claims.

[51]

However, the Release does cover any claims York "now has"
    against Mr. Markicevic. Simply because the claim was (according to York) not
    yet discovered at the time the Release was signed does not mean it did not then
    exist. On the trial judge's own findings, it was arguably already discoverable
    by this point given the information and documentation York had been provided by
    the whistleblower. The fact that the carve-out of "unknown claims arising
    from illegal acts" was removed from the Release during the negotiations may
    also be relevant to Mr. Markicevics position on this issue.

[52]

Although I am of the view that Mr. Markicevics appeal will be an uphill
    battle, it cannot be described as being devoid of merit.

C.

Security
    for Costs under Rule 61.06(1)(c)

[53]

This takes me to whether security for costs should be granted pursuant
    to r. 61.06(1)(c). In considering the proper interpretation of r. 61.06(1)(c),
    the comments of Laskin J.A. in
Combined Air Mechanical Services Inc. v.
    Flesch
, 2010 ONCA 633, 286 O.A.C. 172 (In Chambers), at para. 8, are
    helpful:

What constitutes "other good reason"? The court does
    not have a closed list of cases in which security for costs has been ordered
    under the residual category. The list of reasons justifying security under the
    residual category is open ended. However, the "other good reason"
    must be related to the purpose for ordering security: that a respondent is
    entitled to a measure of protection for costs incurred and to be incurred in
    the proceeding, which is now on appeal. And, the "other good reason"
    should be a fairly compelling reason, as the respondent cannot meet the
    requirements of either of the first two categories. Security for costs awards
    under the residual category are not to be made routinely.

[54]

York submits that this courts decisions under r. 61.06(1)(c) establish
    that a finding of fraud at trial amounts to another good reason to order
    security for costs in an appeal. York points to the following cases:
Hall-Chem
    Inc. v. Vulcan Packaging Inc
.
(1994), 72 O.A.C. 303 (In Chambers)
    (C.A.);
Royal Bank of Canada v. Hi-Tech Tool and Die Inc.
, 2013
    CarswellOnt 5678 (In Chambers) (C.A.);
Gardiner Miller Arnold LLP v. Kymbo
    International Inc.
, 2006 CarswellOnt 9436 (In Chambers) (C.A.); and
798839
    Ontario Ltd. v. Platt
, [2014] O.J. No. 6077 (In Chambers) (C.A.). In each
    case, the motion judge took into account the fact that the trial judge had made
    a finding of fraud against the appellant. And, in each case the motion judge
    referred to the danger of dissipation of assets.

[55]

Mr. Markicevic's position is that, in appropriate circumstances, a
    finding of fraud may be "other good reason" to order security for
    costs. However, he submits that a finding of fraud alone does not justify
    ordering security for costs. What is required is evidence that supports an inference
    that an appellant found liable for fraud will dispose of assets in order to
    prevent the respondent from satisfying cost awards. Mr. Markicevic submits that
    as there are no assets remaining to dispose of in this case, no such inference
    is available, and therefore there is no reason to order security for costs.

[56]

Each of the cases relied upon by York identified a finding of fraud
    against the appellant as being of some relevance to whether an order for
    security for costs should be granted under r. 61.06(1)(c). In relation to
Hall-Chem
,
    Weiler J.A., in her conclusion on security for costs, stated "While [the appellant's]
    counsel argued that this case is not one which comes within the definition of
    "special circumstances," I am of the view that a finding of fraud is
    a special circumstance". In
Hi-Tech Tools
, MacFarland J.A., in
    considering whether to order security for costs, observed that "there is
    authority that where a trial judge has made strong factual findings of fraud
    against on [sic] appellant an order for security for costs can be made".
    In
Kymbo
, Gillese J.A. stated that "the special circumstances of
    a finding of collusion and secret dealings to deprive [the respondent] of its
    costs bring of [sic] the motion within Rule 61.06 (1)(c)".

[57]

Finally, in
Platt
, at para. 53, Simmons J.A. concluded that the
    appellant's fraudulent conduct required that an order for security for costs be
    made under r. 61.06(1)(c):

I conclude that it is likely that [the appellant] will make
    every effort to obstruct collection of the costs of the trial and the appeal,
    should he be unsuccessful on appeal. While I am not satisfied that the moving
    parties have demonstrated at this point that there is good reason to believe
    that his appeal is frivolous, I have no hesitation in characterizing it as
    weak. In these circumstances, I consider it appropriate that the moving parties
    be provided with some measure of protection against the costs of what is likely
    to be an unsuccessful appeal, as well as of the trial.

[58]

In my view, a finding that the appellant has committed fraud,
    particularly if such a finding is in conjunction with a finding that the
    appellant has taken steps to put his assets out of the reach of his creditors, provide
    "other good reason" to justify an order for security for costs under
    r. 61.06(1)(c). However, neither of these findings  independently or
    collectively - mean that an order for security for costs should necessarily issue.
[2]

[59]

Again I say, the objective is to reach a result that is just. This takes
    me to the issue of impecuniosity.

[60]

Mr. Markicevic provided an affidavit with documentation that supports a
    finding that he is impecunious and that an order for security would deny him
    his ability to pursue his appeal.

[61]

Beyond a sentence in its factum, York has not challenged Mr.
    Markicevic's contention to this effect. He was not cross-examined on his
    affidavit. There is no dispute that the two properties reviewed above are
    frozen pursuant to court order. Rather, York points out that Mr. Markicevic
    admits in his affidavit that he has been able, with the assistance of
    "family and friends", to pay his appeal lawyers at least to the date
    of the motion (although they were said to be acting without fees on the
    motion). Moreover, while stating that his "family and friends" were
    unable to assist further, Mr. Markicevic had not explained what other steps he
    had taken to find resources for the appeal or suggested that counsel would not
    act on the appeal despite Mr. Markicevics apparent impecuniosity.

[62]

With respect, the argument that an order for security for costs will not
    necessarily interfere with Mr. Markicevics ability to pursue his appeal as he
    will be able to continue to rely on the generosity of friends and family, is
    speculative.

[63]

On this record, I find that Mr. Markicevic is impecunious.

[64]

This finding raises the concern that if an order for security is
    granted, Mr. Markicevic may not be able to continue with his appeal. This is
    particularly important given I have found that Mr. Markicevics proposed appeal
    is not frivolous or vexatious. On access to justice grounds these two findings
    strongly favour dismissing the motion.
See
Larabie
    v. Montfils
(2004), 181 O.A.C. 239 (In
    Chambers) and
Szpakowsky v. Kramar
, 2012 ONCA 77, 19
    C.P.C. (7th) 274.

[65]

But, the inclusion of a rule as broadly worded as r. 61.06(1)(c)
    demonstrates that the legislators clearly contemplated circumstances, rare
    though they may be, in which it may be just to order security for costs even
    though such an order might have the effect of depriving a party of his right to
    pursue a potentially meritorious appeal.

[66]

Here, the determination of what is just involves taking into account all
    circumstances relevant to the equities of the order being requested. In this
    regard, the following factors are also relevant:

a)

the findings of
    fraud  serious fraudulent conduct committed by a senior officer of a public
    institution who was in a fiduciary capacity.

b)

the finding that
    Mr. Markicevic took steps to protect his assets from being available to the
    claims of his creditors.

c)

the fact that
    neither of these two findings have been challenged on appeal.

d)

the impact of Mr.
    Markicevics fraudulent conduct on the other relevant considerations under r.
    61.01(6). It has left him in the position in which he has insufficient assets to
    pay the costs of the appeal. It has left him in the position in which he is
    impecunious.

[67]

As I have said, there will be the rare case where it is just to order
    security under r. 61.05(1)(c) even if the order may deprive an appellant from
    pursuing an appeal that arguably has merit. As Laskin J.A. said in
Combined
    Air,
the
"other good reason" must
    be compelling and must relate to the purpose for ordering security: that a
    respondent is entitled to a measure of protection for costs incurred in the
    appeal.

[68]

I am of the view that the impact of the unchallenged fraud and related
    findings favour ordering security for costs. The fraud relates to the purpose
    for ordering security. Mr. Markicevics fraudulent conduct permeates the entire
    analysis under r. 61.06(1) as it is this fraud that has largely contributed to his
    being in the financial position he finds himself in. In the unique
    circumstances of this case there is a compelling reason to make an order for
    security for costs.

D.

Quantum of
    Security

[69]

York seeks $150,000 in security for the costs of the appeal.

[70]

York argues that in his Notice of Appeal Mr. Markicevic raises at least
    nine grounds of appeal. York submits that although he now has taken the
    position that he will only advance two grounds  the Release and the limitation
    period  York cannot be assured that he will not pursue the other grounds. York
    goes on to say that if such were the case, it would need to refer to 22 days of
    evidence and over 3,000 pages of transcript.

[71]

I would not give effect to the argument that such a large amount should
    be ordered on the basis that Mr. Markicevic may change his position with
    respect to the issues he intends to pursue on appeal. If circumstances
    materially change either party can return to this court.

[72]

In all of the circumstances, I order Mr. Markicevic to provide $75,000 in
    security for the costs of the appeal.

[73]

The security ordered shall be provided within 45 days of the date of the
    release of these reasons in a form satisfactory to counsel for York. Mr.
    Markicevic shall not perfect his appeal until he has provided the security I
    have ordered.

DISPOSITION

[74]

For these reasons, I order Mr. Markicevic to post security for costs of
    the appeal in the amount of $75,000.

[75]

At the conclusion of argument, counsel indicated that they would notify
    the court office if they were able to resolve the issue of costs. Not having
    heard from counsel, the following schedule is imposed for submissions as to
    costs. York may make brief written submissions on the costs of this motion
    within 15 days of the release of these reasons. Mr. Markicevic may respond
    within 15 days after receipt of Yorks submissions. York will have another 10
    days to reply.

Gloria Epstein
    J.A.

[1]
York does not rely on r. 61.01(1)(b), which I discuss below.

[2]
In fact, security for costs were not ordered in either
Hall-Chem

or
Hi-Tech Tools
, in the former because of lack of evidence supporting the
    quantum of security sought and in the latter because of money paid into court.


COURT OF APPEAL FOR ONTARIO

CITATION: Bruff-Murphy v. Gunawardena, 2017 ONCA 698

DATE: 20170908

DOCKET: C61576

Lauwers, Hourigan and Benotto JJ.A.

BETWEEN

Callum
    Bruff-Murphy and Hope Bruff-McArthur

by their
    Litigation Guardian Liese Bruff-McArthur,

Liese
    Bruff-McArthur personally, and Richard McArthur

Plaintiffs (Appellants)

and

Neloni Gunawardena

Defendant (Respondent)

Geoffrey D.E. Adair, for the appellants

Daniel I. Reisler and Jessica L. Kuredjian, for the
    respondent

Heard: May 15, 2017

On appeal from the judgment of Justice Paul B. Kane of
    the Superior Court of Justice, sitting with a jury, dated August 22, 2016.

COSTS ENDORSEMENT

[1]

In reasons dated May 15, 2017, the appeal was
    allowed and the appellants were awarded costs of the appeal in the amount of
    $22,000.

[2]

The parties have field written
    submissions regarding the costs of the trial. After consideration of same, we
    order that the costs of the trial be reserved to the discretion of the judge
    presiding over the re-trial.

P. Lauwers J.A.

C.W. Hourigan J.A.

"M.L. Benotto J.A."


COURT OF APPEAL FOR ONTARIO

CITATION: Chao v. Chao, 2017 ONCA 701

DATE: 20170912

DOCKET: C63275

Hoy A.C.J.O., van Rensburg and Roberts JJ.A.

BETWEEN

Anne Elizabeth Chao

Applicant (Respondent)

and

David Chih Ching Chao

Respondent (Appellant)

Alex Toolsie, for the appellant

Glenda D. McLeod, for the respondent

Heard: June 23, 2017

On appeal from the order of Justice D. A. Broad of the Superior
    Court of Justice at Kitchener, Ontario, dated December 20, 2016, with reasons
    reported at 2016 ONSC 7911.

van Rensburg J.A.:

A.

Overview

[1]

A husband and wife dispute property ownership following marriage
    breakdown. The parties were married in 1974. They separated in 2011 after 37
    years of marriage. There were four children of the marriage who are independent
    adults. The husband, who had worked in the computer industry, stopped working
    after losing his job in 1994. The wife worked full-time until 1978, after which
    she had some part-time work as a piano teacher.

[2]

The main issue in the matrimonial proceedings is how to
    characterize the more than $1.3 million in investments derived from money the
    husbands parents provided during the parties marriage. The disputed funds constituted
    the bulk of the parties assets. Some of the disputed funds were used to
    purchase two successive matrimonial homes. The larger part was invested and the
    income generated was used to pay the majority of the familys expenses. Some of
    the investments were in the husbands name, some were in the wifes name, and others
    were in the husband and wifes names jointly. Some accounts were in the joint
    names of one or both of the parties and one or more of their children.
[1]
On or about the time of separation, and without the wifes consent, the husband
    transferred more than $1 million of the investments to his mother or to
    accounts maintained by him with his mother or other family members
(in some cases after forging the wifes signature).
The husband
    contends that this occurred after the wife withdrew $32,000 from a jointly-held
    investment.

[3]

The husband argues that all the disputed investments were held in
    resulting trust for his parents or were loans that must be repaid to his mother
    (since his father is deceased). The wife argues that all of the advances were
    gifts to both parties and that there was no expectation of repayment.

[4]

On summary judgment the husband was ordered to pay the wife the sum of
$592,308 in equalization, as well as spousal support arrears and pre-judgment
    interest. The wife was also granted a charge over the former matrimonial home
    to secure payment of the equalization amount. The motion judge dismissed both
    parties claims for ongoing or lump sum spousal support.

[5]

The husbands appeal challenges the following: (1) the suitability of
    summary judgment; (2) the striking of portions of his affidavit dated August
    11, 2016; (3) the counting of dissipated assets and double counting; (4) the characterization
    of the investment monies; and (5) the appropriateness of granting security
    against the former matrimonial home.

[6]

For the reasons that follow, I would dismiss the appeal.

B.

Decision of the motion judge

[7]

The evidence before the motion judge consisted of affidavits of the
    parties and the affidavit of Lillian Chao, the husbands mother. The wife
    brought the summary judgment motion after the litigation had been outstanding
    for four years. The wife had filed a net family property statement, which she
    amended. The husband had made some financial disclosure, including in an
    affidavit of documents, but had not produced a net family property statement.
    Orders had been made against the husband compelling further financial
    disclosure as well as answers to undertakings and refusals on his questioning.

[8]

The wife moved to strike certain paragraphs of one of the husbands affidavits
    in which he sought to correct errors in the wifes net family property
    statement respecting the investment accounts. This was argued as a preliminary
    matter and addressed in the motion judges summary judgment reasons. The motion
    judge struck some, but not all, of the impugned paragraphs, on the basis that
    the husband had failed to provide full and complete disclosure of relevant
    documents as required by the
Family Law Rules
, O. Reg. 114/99, as
    amended.

[9]

In dealing with the property issues, after setting out the relevant
    legal principles, the motion judge endorsed the idea that the same factors and
    principles could be used to determine whether advances made by a parent were
    subject to a resulting trust or were loan advances. That is, he framed the
    issue as whether the parent intended to retain a hold on the amounts advanced
    (at para. 77). He then considered the following facts as relevant:

1.

the
    husband managed the investments without any consultation with his parents;

2.

the
    parties declared the associated interest and capital gains for income tax
    purposes;

3.

there
    were no contemporaneous documents evidencing a loan or any other hold on the
    amounts advanced by the husbands parents;

4.

there
    was no evidence of any statement or representation characterizing the advances
    at any time prior to separation;

5.

there
    was no demand for return of capital or income by Lillian Chao until after the
    separation;

6.

the
    demand for repayment was triggered by the wife withdrawing funds following
    separation;

7.

there
    was no evidence of any partial repayment at any time prior to separation;

8.

none
    of the income or capital gains earned on the investments was paid to the
    parents;

9.

there
    was no evidence of the parents inquiring about the investments;

10.

the monies were
    advanced by the husbands parents to help the parties out; and

11. the
    amounts comprising the sum of $99,582, which the husband characterized as an
    outstanding loan, had been advanced long ago and there was no evidence of any
    realistic expectation of repayment on the part of Lillian Chao.

[10]

The motion judge concluded that there were no issues of credibility
    requiring a trial since there was no real disagreement between the parties
    about what anyone said or did in relation to the advances and the investments.
    Rather, the disagreement between the parties related to their subjective
    beliefs and assumptions, which were largely irrelevant and did not require a
    trial to resolve (at para. 82).

[11]

The motion judge found that the presumption of resulting trust in favour
    of Lillian Chao had been rebutted. The various advances made by the husbands
    parents could not be characterized as held in resulting trust for the parents, or
    loans.

[12]

He also found that the monies from the husbands parents that went into
    the matrimonial homes, even if the advances were made to the husband, would in
    any event have lost their status as excluded assets under s. 4(2)(5) of the
Family
    Law Act
,

R.S.O. 1990, c. F.3
.

[13]

The motion judge found that, contrary to the wifes claim, the husband
    no longer had any beneficial interest in a property in Waterloo, accepting the
    husbands evidence that he had transferred his interest to his children who,
    over time, had transferred their interests back to their paternal grandmother. With
    respect to the husbands silver and gold interests, the motion judge accepted
    the silver had been gifted to the parties equally and was not satisfied that
    the gold was still in existence and in the possession of the husband.

[14]

The motion judge ordered the husband to pay the wife the sum of
$592,308 in equalization, spousal support arrears of $27,680, and pre-judgment
    interest totalling $34,795.28. He also granted the wife security over the former
    matrimonial home to secure payment of the equalization sum pursuant to s.
    9(1)(b) of the
Family Law Act
. The motion
    judge dismissed the parties claims for ongoing and lump sum spousal support.

C.

Analysis

(1)

Suitability of the Summary Judgment Procedure

[15]

Rule 16(6) of the
Family Law Rules
provides that, on a summary
    judgment motion, if there is no genuine issue requiring a trial of a claim or
    defence, the court shall make a final order.

[16]

The moving party bears the onus of showing there is no genuine issue requiring
    a trial. The responding party may not rest solely on mere allegations or
    denials, but shall set out, in an affidavit or other evidence, specific facts
    showing that there is a genuine issue for trial: r. 16(4.1).

[17]

The husband makes three related arguments disputing
    the appropriateness of summary judgment in this case.

[18]

First, the husband argues that a decision should
    not have been made without Lillian Chaos oral testimony, since her rights were
    affected by the judgment.

[19]

Lillian Chao swore an affidavit dated March 7,
    2013 that was appended as an exhibit to the husbands affidavit. The affidavit
    asserts continuing ownership of the monies given to the parties. Lillian Chao says
    that she and her husband provided monies for the purchase price of both matrimonial
    homes on the understanding that when the house was sold they would receive half
    of the proceeds. She also says that during 1986-1988 and from 1994 until the
    parties separation, she and her husband supported the parties living expenses
    by having the husband manage their investments and by gifting only the
    dividends, capital gains and interest to the husband. As evidence of a
    continuing interest in the monies, she asserts that she and her husband
    continued to include the investment income on the disputed funds in calculating
    the 10% of their annual income that they donated to charity. Her affidavit also
    states she and her husband made loans totalling $99,582.40 to the parties,
    which remain outstanding.

[20]

The husband asserts that the judgment effectively
    (if not legally) extinguishes Lillian Chaos entitlement to repayment of the
    disputed funds. While Lillian Chao as a non-party is not bound by the judgment
    and can still pursue a claim (a position endorsed by the wife on appeal), given
    his mothers advanced age, it would be practically difficult for her to proceed
    with a claim. He also asserts that an independent claim by his mother would be
    inconsistent with the overall purpose of summary judgment, which is to reduce,
    and not to promote, litigation.

[21]

I would not give effect to this argument. The
    summary judgment procedure was invoked by the wife at a time when all of the
    evidence she had been able to marshal about the investments was available, and
    when it was apparent that the husband would not provide any further disclosure.
    The wifes position was that the investments belonged to the parties, and not
    to the husbands parents, who had made advances as gifts to the family without
    expectation of repayment. The husband and mothers position was to the contrary,
    and it was up to them to ensure that her position was before the court, and to
    join her as a party to the extent her interests were implicated.

[22]

The appropriateness of adding a party to
    litigation cannot determine the suitability of summary judgment. While it may
    well have been preferable for Lillian Chao to have been a party to the
    proceeding, on a summary judgment motion, the court must decide the claims
    presented in the litigation on the evidence before it. The fact that the
    husband chose to put Lillian Chaos position before the court by affidavit
    without seeking to join her as a party, was not a basis for refusing summary
    judgment.

[23]

The husbands second and related argument is
    that summary judgment should not have been granted without requiring oral
    evidence from Lillian Chao either under r. 16(6.2) or in a directed trial. He
    argued that her affidavit did not provide complete information. However, the husband
    did not ask for his mother to provide oral evidence at the summary judgment
    motion. Instead he asserted, before the motion judge and on appeal, that his
    mother would be willing to attend
at a trial
to provide a complete account of the various advances that were made.

[24]

This argument ignores the requirement in summary
    judgment for each party to put its best foot forward:
Ramdial v.
    Davis
, 2015 ONCA 726, [2015] O.J. No. 5630 at para. 27. The
    husband cannot succeed on summary judgment by saying that further or better
    evidence would be available in the future. The motion judge was entitled to
    assume, as he did at para. 83 of his reasons, that the evidence before him was
    the best evidence available.

[25]

Lastly, the husband argues that it was an error
    to grant summary judgment since there were material facts in dispute. The husband
    relies on the statement articulated by this court and referred to in
Hryniak
    v. Mauldin
, 2014 SCC 7, [2014] 1 S.C.R. 87, at
    para. 48, that summary judgment is most often appropriate in document driven
    cases, with few witnesses and limited contentious factual issues.

[26]

I disagree. The decision in
Hryniak

clearly states that these articulated circumstances are
    helpful observations butshould not be taken as delineating firm categories of
    cases where summary judgment is and is not appropriate (at para. 48).

[27]

Hryniak
establishes, at para. 49, that
    there will be no genuine issue requiring a trial when:

[T]he judge is able to reach a fair and just
    determination on the merits on a motion for summary judgment. This will be the
    case when the process (1) allows the judge to make the necessary findings of
    fact, (2) allows the judge to apply the law to the facts, and (3) is a
    proportionate, more expeditious and less expensive means to achieve a just
    result.

[28]

Similar principles apply to summary judgment
    motions under the
Family Law Rules
:
Ramdial
    v. Davis
, at para. 29.

[29]

Considering these goals, I see no error in the
    motion judges decision to grant summary judgment. He concluded that there are
    no issues of credibility which would require a trial relating to the proper
    characterization of the advances made by the respondents parents (at para.
    82). He noted:

There is no real disagreement between the
    parties, or between the applicant and Lillian Chao, on what anyone said or did
    in relation to the advances and the investments. The disagreement between the
    parties relates to their subjective beliefs and assumptions which are largely
    irrelevant. A trial is not necessary to resolve the dispute about the parties
    subjective beliefs and assumptions.

[30]

Contrary to the husbands assertion, the motion
    judge found that there were no material facts in dispute. It is not that he
    disbelieved Lillian Chaos evidence about her
subjective
belief at the time she swore her affidavit, that she retained some
    interest in the monies. Rather, he concluded that the
objective

evidence  the absence of any contemporaneous documents
    evidencing a loan, of any specified manner of repayment, of any security held
    for the loan, of any partial repayment, of any demand for payment prior to
    separation or evidence of expectation or likelihood of repayment, and the
    presence of advances to their other children  together
outweighed
the evidence of her personal assumptions.

[31]

I will say more later on the appropriateness of
    considering these factors in distinguishing between a gift and loan. For the present
    purposes, absent an error in his approach to the legal question, the motion
    judge was entitled to find that there was no issue requiring a trial and to
    award summary judgment. I see no such error.

(2)

Striking Parts of the Husbands Affidavit

[32]

The husband asserts that the motion judge erred
    in striking parts of his affidavit dated August 11, 2016, delivered in response
    to the summary judgment motion. The decision to strike was based primarily on
    the husbands failure to disclose documents and to answer undertakings and
    refusals on his questioning.

[33]

The husband contests the striking out of passages
    in which he pointed out errors in the wifes assumptions and calculations relating
    to the investment accounts. He says that striking these passages ought to have
    been reserved as a last resort and deprived the court of important evidence
    relevant to the equalization issue. The husband also contends that the motion
    judge erred in concluding that the husband had failed to comply with earlier
    disclosure orders, as this contradicted the findings of Flynn J., when on June
    13, 2016 he dismissed the wifes motion to strike the husbands pleadings.

[34]

I disagree.

[35]

The last resort principle is relevant to an order
    striking a partys pleading  in effect, permitting the matter to proceed on an
    unopposed basis, without the participation of the defaulting party. This
    sanction should only be imposed in exceptional circumstances and where no
    other remedy would suffice:
Chiaramonte v. Chiaramonte
, 2013 ONCA 641, [2013] O.J. No. 4790, at para. 31;
Carpenter
    v. Carpenter
, 2016 ONCA 313 (C.A., in chambers), at para.
    19.

[36]

Flynn J. was not prepared to strike out the
    husbands pleadings. He dismissed the wifes motion to strike the husbands
    pleadings for failure to comply with disclosure orders on the basis that the orders
    only required best efforts, and therefore were not mandatory, precise and
    capable of enforcement to a degree that would justify striking the pleadings
    for non-compliance.

[37]

By contrast, the motion judge on summary
    judgment did not strike the husbands pleadings, and his order did not prevent
    the husbands participation in the motion. Rather, the motion judge struck
    paragraphs from the husbands affidavit containing evidence of the husband,
    which ought to have been supported by documents he failed to disclose.

[38]

Rule 19 of the
Family Law Rules

provides that where a party does not follow the disclosure rule, the
    court may order that a document favourable to the partys case may not be used:
    r. 19(10)(b). More generally, r. 1(8.1) permits the court to deal with any
    failure to follow the rules by invoking the sanctions set out in r. 1(8) for
    failure to obey an order. These sanctions include an order striking out
    anyother document filed by a party and an order that all or part of a
    document that was required to be provided but was not, may not be used in the
    case: rr. 1(8)(c) and (d).

[39]

The husband did not file his own net family
    property statement. He failed to comply with orders to provide documents
    respecting his investments, and with an order requiring his answers to
    undertakings and refusals on examination. In refusing an order to strike the
    husbands pleadings, Flynn J. did not find that the husband had made full
    disclosure. There was no inconsistency between Flynn J.s findings and those of
    the motion judge.

[40]

The motion judge noted that it was evident from
    the husbands corrections to the wifes figures that he possessed information
    that he failed to disclose. In response to the errors pointed out in the
    husbands affidavit, the wife made certain corrections which were reflected in
    her amended net family property statement and in her subsequent affidavit.
    Where she continued to contest the corrections she explained why. The motion
    judge did not err in striking these paragraphs of the husbands affidavit.

[41]

Finally, I note that the husband on appeal
    asserted that the corrections in his affidavit were based on his review of accounts
    that were transferred pre-separation and others that were opened
    post-separation, and that because the accounts were not in existence at the
    valuation date, they were not caught by his disclosure obligations. He also
    says that his health issues ought to have been taken into consideration when
    the motion judge concluded he had a history of non-compliance with court
    orders.

[42]

These arguments are without merit. Without
    seeking to delineate the full scope of disclosure the husband was required to
    make, it is without question that he was required to produce the documents he
    referred to in making the corrections outlined in his affidavit, if he
    expected the court to accept this evidence. Further, the husbands health
    concerns did not excuse his failure to produce the relevant documents. His
    affidavit asserts that he spent many hours verifying the wifes lists of the
    investments and identifying errors. The order striking paragraphs from his
    affidavit simply prevented the husband from relying on evidence derived from
    documents he had obviously consulted in identifying the errors, but had not
    disclosed.

[43]

In my view, the motion judges decision was
    reasonable. It was a fair and appropriate response to the husbands failure to
    produce financial information.

(3)

Counting Dissipated Assets and Double Counting

[44]

The wifes amended net family property statement
    lists the total current value of accounts and savings as $83,499.77 in her name
    and $1,234,804.93 in the husbands name. These figures were based on
    information that the wife says was available to her, including accounts transferred,
    disposed of or dissipated by the husband prior to and after separation.

[45]

The husband asserts that the motion judge erred
    in accepting the wifes figures, which included investments that no longer
    existed or had been transferred into new accounts.

[46]

The motion judge found at para. 93 that [t]he
    evidence with respect to the bank and investment accounts [was] far from
    satisfactory. He further found that this was primarily due to the [husbands
    failure] to provide full and proper documentary disclosure of the details of
    the accounts as required by the
Family Law Rules
.

[47]

This disposes of the husbands dissipated
    assets and double counting argument. The husband cannot fail to provide a full
    accounting of the investments he managed, controlled, and ultimately liquidated
    and transferred, and then complain that the judgment was based on incomplete
    information.

(4)

Characterizing the Investment Monies

a.

Gifts vs. Loans

[48]

I now come to the central issue in this case: whether
    the motion judge erred in his characterization of the monies advanced to the
    husband and wife by the husbands parents as gifts, as opposed to property of
    the parents that the husband managed on their behalf, or loans.

[49]

The motion judge found that the presumption of
    resulting trust had been rebutted, and that the various advances made by the
    husbands parents to the husband and wife could not be characterized as loans.

[50]

The husband argues that the motion judge erred
    in concluding that all of the advances of his parents were by way of gift, in
    treating all the advances in the same way, and in failing to find that at least
    some of the monies were advanced as loans or with the intention that they
    remain the parents monies. The husband says that the evidence did not rebut
    the presumption of resulting trust.

[51]

I would not give effect to any of these
    arguments.

[52]

First, with the exception of the sum of $99,582
    (which the husband characterized as a loan), all of the other monies advanced
    were described by the husband as advances that were invested by the husband on
    behalf of his parents, with the income used for the parties living expenses.
    There was little evidence of the circumstances of the advances, other than the
    following: that the parents contributed an unspecified amount as half of the
    purchase price of the parties first matrimonial home in 1975; that when that
    home was sold one half the proceeds ($130,000) was the parents share of the
    second home in 1983; and that in 2003 the parents provided the majority of the sum
    of $457,000 from the sale of their own home. There was little to distinguish
    the circumstances of the various advances, which in any event were all
    characterized in the same manner by the husband and his mother.

[53]

In concluding that the advances were by way of
    gift, the motion judge applied the correct legal test and considered the relevant
    factors. He began his inquiry with the presumption of resulting trust and then
    weighed all the evidence to determine the parents actual intent at the time of
    the transfer:
Pecore v. Pecore
,
2007 SCC 17
,
[2007]
    1 S.C.R. 795
, at paras. 5 and 44.

[54]

Here the motion judge considered factors listed
    as relevant in a number of cases concerning monies advanced by parents. These include
    the following factors identified in the context of a loan vs. gift analysis in
Locke v. Locke
, 2000 BCSC 1300, [2000] B.C.J. No. 1850 at
    para. 21, and
Kuo v. Chu
, 2008 BCSC 504 at
    para. 78, affd 2009 BCCA 405, 97 B.C.L.R. (4th) 203, at para. 9:

1.

whether there [are] any contemporaneous documents evidencing a loan;

2.

whether the manner for repayment is specified;

3.

whether there is security held for the loan;

4.

whether there are advances to one child and not others, or advances
    of unequal amounts to various children;

5.

whether there has been any demand for payment before the separation
    of the parties;

6.

whether there has been any partial repayment; and

7.

whether there was any expectation, or likelihood, of repayment.

See also
Barber v. Magee
, 2017 ONCA 558, at para. 4.

[55]

The motion judge observed, in my view correctly,
    that [f]rom the standpoint of attempting to ascertain the intention of the
    parent making the advances, the issue is whether the parent intended to retain
    a hold on the amounts advanced, regardless of whether that be by way of a
    resulting trust or a debt obligation (at para. 77). Considering the relevant
    factors, the motion judge found that the evidence supported the conclusion that
    the monies were provided by way of gift by the husbands parents. He concluded
    that the reality of the situation [was] that there never was any expectation,
    prior to the parties separation, on the part of Lillian Chao that the
    respondent and the applicant would be required to repay any portion of the
    funds advanced by her and her husband (at para. 85).

[56]

The legal test is intent
at the time
    of the transfer.
Evidence of intention that arises
    subsequent to a transfer must be relevant to the intention of the transferor at
    the time of the transfer. The court must assess the reliability of such evidence
    and determine what weight it should be given, guarding against evidence that is
    self-serving or tends to reflect a change in intention:
Pecore
, at paras. 44 and 59;
Andrade v. Andrade
, 2016 ONCA 368, 131 O.R. (3d) 532, at para. 63.

[57]

In my view, the conclusion that the monies
    advanced to the parties were given with the intent to make a gift was amply
    supported by the objective evidence in this case. There was no error in
    principle.

b.

Gifts to Whom

[58]

I note that, although not raised directly by the
    husband as a ground of appeal, the remaining question of whether the gifts were
    to the husband alone or to both parties jointly, was not explicitly addressed
    by the motion judge.

[59]

The motion judge correctly noted that the monies
    that went into the parties matrimonial homes early in the marriage, even if
    advanced to the husband alone, lost their status as excluded assets under s.
    4(2)(5) of the
Family Law Act
.

[60]

The treatment of the remaining gifted monies does
    however depend on how they were received and then how they were invested. In
    this case some of the investment accounts were in the husbands name, some were
    in the wifes name, and the majority were in the parties names jointly. As
    this court held in
Townshend v. Townshend
,
    2012 ONCA 868, 113 O.R. (3d) 321, at paras. 32-33, it is not the case that all
    gift monies lose their excluded character when deposited into a joint account
    with a spouse. In
Townshend
, the court allowed
    the husband an exclusion for one half of the monies deposited into a joint account
    where he received the monies as a third party gift.

[61]

When the motion judges reasons in this case are
    read as a whole, however, his finding that the monies were gifted to the
    husband and wife jointly is implicit. It is on this basis that he brought into
    equalization the entirety of the investment accounts and ordered the husband to
    pay the wife the sum of $592,308.

[62]

I would also note that the payment the motion
    judge required the husband to make in respect of equalization under sections 5
    and 7 of the
Family Law Act
 primarily
    reflects the return of monies he determined were already owned by the wife. In
    her amended net family property statement dated August 26, 2016, the wife
    attributed to the husband the full value of monies in which she at the same
    time asserted an ownership interest. This was likely to reflect the fact that
    those monies were no longer in the wifes possession. The nature of her
    entitlement to the monies in which she had an ownership interest at the valuation
    date, however, is as part-owner rather than as the recipient of an equalization
    payment arising from marriage breakdown.

(5)

Order for Charge Against Matrimonial Home

[63]

Sometime after separation, the parties agreed on
    the value of the matrimonial home and consented to an order dated January 22,
    2016, transferring the wifes interest in the home to the husband for $390,000.
    The motion judge ordered a charge on the former matrimonial home, now fully
    owned by the husband, as security for payments he owed to her under the judgment.

[64]

The husband says that the January 2016 consent
    order prohibits the charge. This is because the consent order provides that [n]either
    party shall make any further claim with respect to the former matrimonial home
    once the property is transferred.

[65]

I would not give effect to this argument. Properly
    interpreted, the consent order prohibits any further claims of the wife for an
    interest in the matrimonial home, since she has received one half of its value
    as agreed between the parties. However, the charge is not in respect of a claim
    to the property, but rather secures the performance of an obligation imposed
    by the order against property that now belongs to the husband:
Family
    Law Act
,

s. 9(1)(b), s. 10(1)(d).

[66]

As there is nothing in the prior order that
    precluded the charge, there is no basis to interfere with this part of the
    judgment.

Disposition

[67]

For these reasons, I would dismiss the appeal with costs
    to the wife in the sum of $7,000, inclusive of HST and disbursements. Paragraph
    1 of the order of Broad J. dated December 20, 2016 is replaced by the following:
    The respondent shall pay to the applicant the sum of $592,308 to reflect her
    ownership interest as well as equalization.

K. van Rensburg J.A.

I agree Alexandra Hoy
    A.C.J.O.

I agree L.B. Roberts
    J.A.

Released: September 12, 2017

[1]
There is no dispute that the children have a beneficial interest in the monies
    held jointly in their names. These are not included in the disputed funds.


COURT OF APPEAL FOR ONTARIO

CITATION: Daniel v. Miller, Canfield, Paddock and Stone, LLP,
    2017 ONCA 697

DATE: 20170908

DOCKET: C62760

Strathy C.J.O., van Rensburg and Trotter JJ.A.

BETWEEN

Julie R. Daniel

Plaintiff
(Appellant)

and

Miller, Canfield, Paddock and Stone, LLP

Defendant
(Respondent)

Robert G. Matlack, for the appellant

Myron W. Shulgan and Nicole Marcus, for the respondent

Heard: September 5, 2017

On appeal from the judgment of Justice Peter B. Hockin of
    the Superior Court of Justice, dated September 16, 2016, with reasons reported
    at 2016 ONSC 5712.

REASONS FOR DECISION

[1]

T
he

appella
nt
s
c
o
r
e
su
b
m
i
ss
ion

is
t
h
a
t

in
f
inding
th
at
sh
e
w
as

a par
t
ner

in
t
he

r
es
p
o
ndent l
a
w
f
ir
m
, r
ath
er
t
han
a
n

e
m
plo
y
ee,
t
he
t
r
i
al judge ga
v
e

i
ns
u
ffici
ent
c
o
ns
ider
at
ion
t
o
t
he
f
a
c
t
t
h
a
t

her
w
ork
w
as
c
on
t
rolled

by

the

pa
rt
ner
w
ho
s
e
c
lie
nt
s
s
he
s
er
v
ed

and
that
    s
he
w
as
    dependent on
t
he
fi
rm
f
or

her
w
or
k
.
I
n
s
o
d
oing,
s
he
s
a
ys
,
t
he
t
rial judge
f
ailed
t
o

app
l
y
t
he
tes
t
se
t

o
u
t by
t
he

Su
p
re
m
e
C
ou
r
t of
C
anada in

McCormick v. Fasken Martineau
    DuMoulin LLP
, 2
0
14

S
C
C 3
9, [2014] 2 S.C.R. 108
.

[2]

W
e do

not a
cc
ept this
s
ubmis
s
ion.

McCormick
,
t
o
w
hi
c
h the

trial
    judge adver
t
ed,

dealt
w
i
t
h
t
he i
ss
ue of
w
he
t
her

a mandatory
    re
t
irement

pro
v
i
s
ion

in a

law
f
irms par
t
ner
s
hip
    agreement of
f
ended
t
he

Human Rights Code
,

R.S.B.C. 1996,
    c. 210. The
c
on
t
rol and dependen
c
y
t
est
w
as

applied
t
o determine
w
he
t
her a particular workplace relationship placed

a

per
s
on in

a po
s
i
t
ion of
v
ulnerabili
t
y
f
or
t
he

purpo
s
e of the

Code
.

[3]

McCormick

does not

es
t
abli
s
h

control and
    dependency as an all-purpose test to determine
w
he
t
her

a per
s
on

is a par
t
ner or

an emplo
y
ee.
    Here,
t
he
t
rial judge
c
orre
ct
ly
c
on
c
luded
t
hat one

mu
s
t e
x
amine

all
t
he
s
urrounding
c
ir
c
um
st
an
c
e
s
,
t
he
s
ubs
t
ance

of
t
he

rela
t
ion
s
hip, the behaviour of the parties and the in
t
ention

of
t
he par
t
ie
s
,
t
o de
t
ermine
w
he
t
her a

par
t
ner
s
hip e
x
i
st
s: see
Backman
    v. Canada
, 2001 SCC 10,
[2001] 1
    S.C.R. 367. In
Backman
, Iacobucci and Bastarache JJ., writing for the
    court, stated
at para. 26:

Whether a partnership has been established in a particular case
    will depend on an analysis and weighing of the relevant factors in the context
    of all the surrounding circumstances. That the alleged partnership must be
    considered in the totality of the circumstances prevents the mechanical
    application of a checklist or a test with more precisely defined parameters.

[4]

I
n
f
inding
t
hat
t
he appellant
w
as

a partner

in
t
he
f
ir
m
, the trial

judge made
f
indings

of
f
a
c
t
w
h
ic
h
w
ere

a
v
ailable
t
o

him on
t
he e
v
iden
c
e. He
f
ound
t
hat
t
he
    appellant:

·

c
ond
ucte
d

h
e
r
s
e
l
f
a
s

a

pa
rt
ne
r
,
w
as
t
r
e
a
t
ed

as a

pa
rt
ner
a
nd
w
as

held o
u
t
t
o
cl
i
e
n
ts
,
t
he

Law

So
ci
e
t
y

and Cana
d
a
R
e
v
enue
    Agency

as a

par
t
n
e
r;

·

re
c
ei
v
ed

a
d
ra
w
,
wit
ho
u
t
s
ou
rc
e

ded
uct
io
n
s
o
f
i
n
c
o
m
e
t
ax

or employment
    insurance,

a
n
d
f
iled

her
t
ax

re
t
ur
n
s
a
s

a

pa
rt
ne
r
;

·

made contributions to a capital account, which were recorded in the
    financial statements, and was at risk that her capital contributions could be lost;

·

re
c
ei
v
ed

enha
nc
ed

benef
it
s and

i
ns
ur
a
n
c
e,
w
hi
c
h
w
ere a
v
ailable
o
nly
t
o par
t
ne
r
s in
t
he
fi
rm;

·

a
tt
e
n
ded

par
tn
er
s

m
ee
t
in
g
s
a
t
w
hi
c
h

de
cis
io
n
s
w
ere
ma
d
e
, par
tic
ip
at
ed
i
n
t
he
m
anage
m
ent of
t
he
f
irm

an
d
,
c
o
nt
rary
t
o

her e
v
iden
c
e,
w
as

e
ntitl
ed
t
o
v
o
t
e

on

d
ecisi
ons
m
a
d
e
a
t par
t
n
e
r
s

m
ee
t
ings;

·

had

a
cces
s
t
o
c
o
nf
ide
nt
ial in
f
or
mat
ion, which
    was only available to partners,

about
t
he

b
us
in
es
s

and
fin
an
c
ial

a
ff
ai
r
s

of
t
he
f
ir
m;

·

s
igned
fi
rm
c
hequ
e
s

a
n
d

op
i
nio
n
s

on
b
ehalf of
t
he
f
ir
m
;

·

s
hared

in
t
he

pr
ofit
s
o
f
t
he
f
irm
t
hrou
g
h

a
b
onus de
p
end
e
nt

on
t
he
p
ro
fi
t

of
t
he
f
ir
m
;

and

·

had

bui
l
t up

a

n
o
t
i
n
s
ign
if
i
c
ant pr
act
i
c
e

of her

o
w
n
.

[5]

In coming to these conclusions, the trial judge accepted the evidence of
    two other members of the firm, whose circumstances were similar to the appellants,
    who testified that they conducted themselves as partners in the firm and were
    treated as such.

[6]

The trial judge applied the relevant legal principles to his findings of
    fact and concluded that a partnership relationship existed in the context of
    the factual matrix in the case. This was a conclusion of mixed fact and law and
    the appellant has demonstrated no palpable and overriding error.

[7]

We therefore dismiss the appeal, with costs to the respondent in the
    amount of $25,000, inclusive of disbursements and all applicable taxes.

G.R. Strathy C.J.O.

K. van Rensburg J.A.

G.T. Trotter J.A.