Fridays with Rogers Partners

August 04, 2023

At our weekly meeting, Itai Gibli discussed the recent decision of the Ontario Superior Court of Justice in Alsous v. Shahin, 2023 ONSC 3995.

Overview

The Court dismissed a motion for an order directing a civil and family proceeding to be consolidated, heard together, or heard sequentially. The Court held that the two proceedings did not meet the criteria set out in Rule 6 of the Rules of Civil Procedure so as to justify consolidation, hearing together, or hearing sequentially.

Background

The plaintiff in this action, Rana Alsous, had previously initiated two proceedings. One was a family proceeding between herself and her husband, Elias Shahin, the defendant in this action. The second was a civil proceeding between herself and Duaa and Bishara Hadweh. Duaa is Elias’ sister. Bishara is Duaa’s husband and Elias’ brother in law.

The respondent and defendants in those respective proceedings brought a motion to have them consolidated, heard together, or heard sequentially per Rule 6 of the Rules of Civil Procedure.

In the family proceeding Alsous and Shahin each claimed against each other for divorce, spousal support, child support, decision-making responsibility for their three children, parenting time with the children, equalization of net family property, and other corollary relief.

In the civil proceeding, Alsous brought a claim for unjust enrichment against the Hadwehs. Alsous alleged that the Hadwehs approached her to contribute $200,000 towards the purchase price of their home, (“the Rymal Property”) and requested she pay off some of their debts to facilitate their obtaining of financing for the balance of the purchase price. Alsous alleged she transferred around $216,000 for these purposes. Alsous claimed that she was the beneficial owner of all or part of the Rymal Property based upon a resulting or constructive trust.

The Hadwehs argued the estate of Elias’ and Duaa’s father Ibrahim Shahin was the beneficial owner of the Rymal Property, despite the registration of title in the Hadwehs names. Ibrahim died intestate and the Hadwehs assert that after his death the Rymal Property became beneficially owned by them and their five surviving siblings, including Elias Shahin. The property was sold and the amount derived from the proceeds was held in trust pending final disposition of the civil proceeding.

The Hadwehs pleaded that around July 15, 2006, Ibrahim acquired a commercial property in Hamilton (the “Upper Sherman Property”) and placed Alsous on the title to it, despite the fact that all the funds for its acquisition came from him. The Hadwehs further pleaded that upon the sale of the Upper Sherman Property in 2014, the proceeds of around $275K were paid to Alsous with a view to her using those proceeds to acquire another property for Ibrahim’s benefit in the future.

The Hadwehs pleaded that the funds advanced by Alsous for the acquisition of the Rymal property were proceeds of the sale of the Upper Sherman Property and Alsous never had any legal, beneficial, or equitable interests in the amounts used to purchase the Rymal Property. Further, any ownership interest Alsous had in the Upper Sherman Property and the proceeds of its sale, including the amounts used to acquire the Rymal Property was subject to a resulting trust in Ibrahim’s favour, and the inclusion of Rana’s name on title or transfer of funds into her bank account was for convenience only and not a gift.

Issue

Should the proceedings be consolidated, heard together, or heard sequentially?

Legislative Framework

The Family Law Rules have a section dealing with the consolidation of a family law proceeding and civil proceeding, but the Court held that because Rule 6 of the Rules of Civil Procedure is more particularized and instructive, the Rules were more appropriate to determine the issue.

Rule 6.01 of the Rules of Civil Procedure provides that where two or more proceedings are pending in the court, and it appears to the court that:

  1. they have a question of law or fact in common;
  2. the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences; or
  3. for any other reason an order ought to be made under the rule.

the court may order that the proceedings be consolidated or heard at the same time or one immediately after the other.

In assessing whether there is a question of fact or law common to both proceedings, the focus is on whether the proposed common issue has sufficient importance in relation to the other facts or issues such that it would be desirable that the matters be consolidated, heard at the same time, or after each other (see Canadian National Railway v. Holmes, 2011 ONSC 4837 at para. 43).

The court is to follow a two-step process in determining whether to make a consolidation order or an order for a trial together. First, the court will consider whether the criteria defined by the rule has been satisfied. Second, it will consider whether the balance of convenience favours such an order (see Canadian National Railway at para. 43).

The Court cited some factors that should be taken into account at the second stage, derived from a longer list of factors set forth in Canadian National Railway. The court should consider:

  1. the extent to which the issues in each action are interwoven;
  2. whether there is a risk of inconsistent findings or judgments if the actions are not joined;
  3. whether the issues in one action are relatively straightforward compared to the complexity of the other action;
  4. whether a decision in one action, if kept separate and tried first, would likely put an end to the other actions or significantly narrow the issues for the actions or significantly increase the likelihood of settlement;
  5. the litigation status of each action;
  6. whether any of the parties will save costs, or alternatively have their costs increased, if the actions are tried together.

Application

The Court held there was no issue of law in common between the two proceedings. In the family proceeding, the legal issue was whether any interest that Alsous had in the Rymal Property forms part of her net family property and is therefore subject to an obligation to make a payment to Shahin for equalization. In the civil proceeding, the legal issue was whether Alsous has a beneficial interest in the Rymal property by way of a resulting or constructive trust as against Ibrahim Shahin’s estate or its beneficiaries.

While the Court accepted that there may be a factual issue in common – namely, whether Rana Alsous made an advance of funds to acquire a beneficial interest in the Rymal Property, and if so, the value of it – a finding of a common issue of fact, by itself, is not sufficient to satisfy the first branch of the test. The common issue must have sufficient importance to make it desirable that the proceedings be heard together. So there is some discretion for the finder of fact with respect to the application of this rule.  

The Court also held that the balance of convenience did not warrant the proceedings being consolidated or tried together. The Court explained that the issues relating to the Rymal Property in the two proceedings were not interwoven.

The finding in the civil proceeding would depend on Rana’s dealings with Ibrahim and the source of funds into her bank account and their application to the acquisition of the Upper Sherman Property, its sale, and the transfer of proceeds into Rana’s bank account and then to the Hadwehs to fund the purchase of the Rymal Property. None of those facts were relevant to the family proceeding. Thus, there would be no risk of inconsistent findings if the civil proceeding were to be tried first.

Next, the Court explained that the issues in the civil proceeding were relatively straightforward compared to the more complex family proceeding. Moreover, a decision in the civil proceeding respecting Rana’s beneficial interest in the Rymal Property, if kept separate and tried first, would actually narrow the issues in the family proceeding.

Further, the litigation statuses of the two proceedings were not aligned. The civil proceeding was ready for trial at a much earlier date than the family proceeding.  There was also no indication that any of the parties would save costs if the proceedings were tried together.

Lastly, the Court noted the inappropriateness of the late stage at which the consolidation motion was brought. In Flitney v. Howard, the Court held that “the purpose of consolidation is to save expense and avoid multiplicity of pleadings and proceedings and this purpose can only be achieved by ordering consolidation at a very early stage. To order it on the very eve of trial would not accomplish that purpose”.

Takeaways

Main Takeaway 1 – a common factual issue by itself is not sufficient to satisfy the first branch of the common law test for consolidation, hearing together, or hearing sequentially. The common issue must have sufficient importance to make consolidation, hearing together, or hearing sequentially desirable.

Takeaway 2 – the balance of convenience is an important factor in determining consolidation, hearing together, or hearing sequentially.

Takeaway 3 – Rule 6 motions should be brought at early stages of proceedings.