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Posts from the ‘Fraud in Family Law’ Category

Appeal Court Affirms No Claim for Emotional Harm Arising from Birth of Unwanted Child

Appeal Court Affirms No Claim for Emotional Harm Arising from Birth of Unwanted Child

An unusual case arising from a man’s lawsuit over a baby he didn’t want has now been heard by the Ontario Court of Appeal.

As I reported here, the facts involved a man and woman who had a brief romantic fling in 2014, lasting less than two months. After going on a few dates, they had unprotected sex on several occasions. Although it was not strictly proven before the court, the man recalled his understanding, from various things the woman said, that she was taking birth control pills and did not intend to conceive a child.

But a few weeks after their short relationship ended, the man, in his early 40s, found out that the woman, in her early 30s, was pregnant. She went on to give birth, at which time it was confirmed that the man was the father.

The man, who was a budding doctor, sued the woman in civil court for over $4 million, claiming her fraudulent misrepresentation had deprived him of the choice of when and with whom to share the responsibility of parenthood. The court framed his cause of action in these words:

Although it was not presented in this way, the claim can be viewed as a tort claim for involuntary parenthood made by one parent against the other. It is clear that the alleged damages do not relate to a physical or recognized psychiatric illness. In essence, the damages consist of the [man’s] emotional upset, broken dreams, possible disruption to his lifestyle and career, and a potential reduction in future earnings, all of which are said to flow from the birth of a child he did not want. Although the claim is not for the direct costs associated with raising the child, all of the damages claimed by the [man] are the result of consequences flowing from the unwanted birth of a child, albeit unwanted only by the father.

(And it’s important to note that the man was suing for emotional harm of the non-pathological variety only; he was not suing for physical harm or for monetary damages, such as for any undesired child support obligations he may have. On that latter point, a separate Family Law suit, disputing his obligation to pay child support based on the woman’s alleged fraud and deceit, was also underway and would be heard separately).

The lower court, in striking out the man’s claim, held that his allegations disclosed no reasonable, legally-recognized cause of action, because a claim for fraudulent misrepresentation – which is a tort in Canadian law – was aimed at compensating the man for any financial damages, not emotional ones. In other words, the man was trying to claim for the types of damages that were simply not actionable through a fraud claim.

In its recent decision, the Ontario Court of Appeal agreed, adding that the woman’s alleged lie as to her being on birth control – even if it was proved that she told it – was not enough to form the basis of the man’s claim for emotional injury. Plus, any harm the man suffered was not tantamount to a “personal injury” in the traditional legal sense.

Do you think the original decision – now affirmed on appeal – was correctly decided? What are your thoughts?

For the full text of the decision, see:

PP v DD, 2017 ONCA 180 (CanLII)

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at RussellAlexander.com

 

 

 

Husband Mortgages Home Without Wife’s Knowledge, Based on False Statement – Yet Mortgage Not Set Aside

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Husband Mortgages Home Without Wife’s Knowledge, Based on False Statement – Yet Mortgage Not Set Aside

In this unusual recent case, the outcome on a motion is not what you’d likely expect: the lender to a likely-fraudulent husband – who unbeknownst to the wife got a mortgage on the home they shared – was successful (for now) in resisting the wife’s motion to have that questionable mortgage set aside.

The couple had been married for 17 years, but throughout the course of the marriage the title to the matrimonial home was in the husband’s name only. Without the wife’s knowledge or consent, the husband obtained a $45,000 mortgage on the home from the lender; to achieve this, he had an untrue statement registered on title to the effect that “I am separated from my spouse and the property was not ordinarily occupied by us at the time of our separation as our family residence.” The same false statement was also repeated on the registration of the mortgage, and on a signed statement given to the lender by the husband.

(This deceptive statement was necessary because otherwise, under s. 21(1) of the Ontario Family Law Act, a spouse cannot “dispose of or encumber” an interest in the matrimonial home unless the other spouse consents, or if a separation agreement or court order allows it. And because the wife’s name was not on title in this case, the lender did not get notice that it was (or may be) a matrimonial home).

Not surprisingly, the wife brought a motion to set this mortgage aside, claiming among other things that the husband’s self-serving affidavit should not have been relied on by the lender to advance the mortgage funds. The lender opposed it, on the basis that the mortgage was actually valid and had been made in good faith, and that at the time it was given, the lender did not have notice that the property was a matrimonial home.

(The lender’s stated position sought to bring the transaction within the wording of s. 21(2) of the Family Law Act, which states that if a spouse encumbers the home in breach of s. 21(1), then the transaction can be set aside unless the person holding the interest (in this case, the lender) acquired it “for value, in good faith and without notice … that the property was a matrimonial home”. The other possible exception, under s. 21(3), is where the encumbering spouse makes a statement that he or she is separated, and that the property was not ordinarily occupied by the spouses as a family residence).

Perhaps surprisingly, the wife’s motion to set aside the mortgage was dismissed.

In a nutshell, there was insufficient evidence in the wife’s favour. There was nothing to suggest that the lender knew the couple, or that the lender and the husband were in collusion. The particular circumstances did not give rise to a scenario that would invite suspicion by the lender, to the extent that it should reasonably required to make inquiries about the home’s status or obtain a statement from the wife that the property was not a matrimonial home.

Instead – and absent other evidence – the court was duty-bound to assume that this was an arm’s-length transaction, and that the lender was a bona fide third-party lender. Here, there were no hallmarks that would put the lender on notice that the property was occupied as a family home; these were generally things such as the couple having the same address, or the mortgage application having information suggesting this was a family residence.

Rather, for Family Law Act purposes, the husband’s statement (though false) was sufficient “proof” that the property was not a matrimonial home – unless the lender had notice to the contrary. In this particular case, the lender did not, and the husband’s bald statement that he was separated did not put the lender on inquiry to determine the property’s status.

As the court put it:

It is certainly unfortunate that a borrowing spouse would make a false self-serving statement which results in an encumbrance on a matrimonial home without the knowledge or consent of the other spouse. Nevertheless, the issue here in whether the lender acquired the mortgage for value in good faith and without notice that the property was a matrimonial home.
The law has not yet advanced to the stage where lenders are required to look behind the statements of the borrowers. The lender was not required to obtain a statement from the wife that the property was not a matrimonial home.

In the circumstances the court could not justify setting aside the mortgage, and – because only the husband held title to the matrimonial home – the wife was not entitled to make a claim for equity in the home. Rather, she was only entitled (eventually) to an equalization payment based on the husband’s ownership.

(In simpler terms: the mortgage was not immediately set aside, but the parties’ respective rights would be untangled during later Family Law proceedings).

With that said, the court did order that there were to be no further dealings with the property, until the parties resolved their issues in those Family Law proceedings or until another court ordered otherwise. The wife was awarded her legal costs, however.

For the full text of the decision, see:

Yasmin v. Tariq, 2015 CarswellOnt 3825, 2015 ONSC 1248

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at www.RussellAlexander.com

Fraudsters are Everywhere – Even in Family Law Matters

Fraudsters are Everywhere – Even in Family Law Matters

Around the holidays, when people are inundated with shopping opportunities and may be encouraged to spend beyond their limits, we hear a lot about the various thefts, frauds and scams that get perpetrated, and how they are apparently on the rise.  This is despite the flurry of pre- and post-holiday sales, enticingly low prices, and attractive “Boxing Week” opportunities.   And the upsurge in theft is not limited to shoppers; according to a recent article  in a Toronto newspaper, the incidence of shoplifting by store employees increases by up to 50% around the holidays.  According to another article, an estimated $1.8 billion in merchandise was shoplifted from U.S. retailers in the four weeks leading up to Christmas.

As lawyers, we also see our share of scams and fraud, and not just in terms of the matters that come through our door.   Indeed, there has been a spate of attempted frauds against lawyers themselves, perpetrated by con artists of all types.

One particularly fertile area for fraud is in the realm of real estate law, where in the past fraudsters have tried to bilk mortgagees and banks (and – by extension – their lawyers) out of hundreds of thousands of dollars through sham real estate transactions and mortgages registered against homes with falsely-inflated prices.  The problem was becoming so rampant, in fact, that the Ontario government was prompted a few years ago to enact Bill 152, which changed the relevant real estate statutes (including the Land Registration Reform Act, the Land Titles Act, and the Registry Act) to close a legal loophole that could be exploited by mortgage fraudsters.

But this phenomenon is not restricted to real estate law; family law lawyers collectively see their share of scam attempts too.  One form of family law-related fraud that has regularly been making the rounds in recent years involves a purported potential “client” who contacts the lawyer by e-mail.  The so-called “client” – usually a woman, and always writing from some far-away country (typically Japan, China, Taiwan, or Korea) – details how she has obtained a sizeable divorce judgment against her ex-husband but has succeeded in collecting only a portion of it from him.   She apparently needs the help of a lawyer to collect the money; naturally at some point the lawyer is asked to advance funds in anticipation of the receipt of payment by the ex-husband of the remaining settlement funds.

(And if this scenario sounds vaguely familiar, it’s merely a family law twist on advance-fee fraud commonly known as the “Nigerian Scam”, which has made its rounds by e-mail and internet in various forms for about a decade now).

Unless you are a retailer, involved in real estate, or a lawyer, you may think these tales of theft and fraud don’t concern you.   But no matter what your situation or line of work, these illustrations highlight a point that everyone should heed:  Being alert to the potential to be defrauded – and seeing the “red flags”—is half the battle.  And taking steps to protect oneself is the other half.

For the referenced articles, see:

http://www.torontosun.com/2011/12/01/stealing-christmas

http://www.castanet.net/news/World/68904/Shoplifters-cost-1-8B-at-Christmas

For a description of the “Nigerian Scam” see:  http://en.wikipedia.org/wiki/Advance-fee_fraud