RSS
Search

OCA says lawyers can pursue matrimonial assets of client

2019-10-30

Jonathan Miller HeadShot

A recent judgment in his client’s favour reinforces the right of lawyers to pursue matrimonial assets in family law proceedings when past accounts have not been paid, even when the ownership of that property is in dispute, says Toronto litigator Jonathan Miller.

“The decision echoes previous judgments by the Supreme Court over the past 20 years when dealing with similar issues,” says Miller, an associate with the Toronto office of Shibley Righton LLP.

Appearing before the Superior Court of Ontario, Miller represented a family law firm that was owed money by a woman who was involved in a lengthy and contentious divorce and custody case. The two parties resolved the custody issue, at which time the firm asked for payment of past accounts before continuing the litigation, but instead of settling, the woman retained another lawyer.

A year later, an action was started on behalf of the family law firm, asking the woman to come to the table to help devise a plan to repay what was owed, he says.

“Despite telling her that she needed to defend against that claim, she didn’t, and so my client eventually took default proceedings, and there it sat because once we registered the writ of execution, we waited for the wife to get some proceeds from the matrimonial home,” Miller tells AdvocateDaily.com.

After the husband found out about the writ of execution against the wife’s interest in the property, Miller says the man argued that it was an invalid encumbrance under s. 21 of the Family Law Act, which states that a spouse cannot encumber the matrimonial property without the consent of the other spouse.

According to court documents, the husband asked the court to lift the writ so his wife could transfer the property to his name only without paying the amount owed to her previous counsel, but that request was denied.

“I find that [the lawyers] were an arm’s-length party to a commercial transaction. In the circumstances of this case, s. 21 (1) of the Act is not engaged and the writ is not an encumbrance,” the judgment states.

When the case went to the Ontario Court of Appeal (OCA), it was dismissed quite quickly, with the court’s reasoning summed up in just over one page, says Miller.

He says it’s crucial that the court agreed a law firm can make claims against the assets of former clients when payment is due, even if the ownership of that property is in dispute.

“The wife did not encumber the matrimonial home,” the OCA ruling reads. “The respondent was an arm’s-length creditor at the time the writ was filed. It was entitled to file the writ. The fact that the wife owned the house was information readily available to any creditor at the time.”

Miller says that part of the judgment reinforces a line of case law established by the Supreme Court.

“This is another step in the direction to clarify when someone may or may not offend s. 21 of the Family Law Act,” he says.

On a personal level, Miller says this was an important case since it took him outside his comfort zone, which is in his firm’s professional liability, commercial litigation and construction law practices.

“I have rarely dealt with family law issues, so the various arguments made in advance of the motion really forced me to get involved in areas of litigation where I was not that familiar,” he says.

“For a young lawyer such as myself, that’s vital, because the decision in my client’s favour was a real confidence booster and showed me that I could take on new challenges outside my usual area of practice,” Miller says.

 

Name and Title
Featured
2019-10-30