juin 16. 2020

Can You Commit Civil “Conspiracy” Against Your Spouse?

Leitch v. Novac, 2020 ONCA 257 (CanLII)

Maybe.

That was the conclusion reached by the Ontario Court of Appeal recently, in a case called Leitch v. Novac.

The issue had first been raised on a motion for summary judgment, where the presiding judge set the stage with these words:

This is a case in which the parties, Jennifer Leitch and Anthony Novac, were determined to live beyond their means to the point that they have mostly obliterated the significant assets and capital they owned on the date of separation over six years ago.

Jennifer’s insistence that she is the subject of a massive and complex conspiracy and Anthony’s past misrepresentations to Jennifer about his actual income have led to distrust, revenge, litigation, enormous legal fees and the likelihood that their children will suffer a drastically reduced lifestyle from the one they have known.

At separation, the spouses had been married for 15 years. The wife was a lawyer who had left private practice to study full-time for her Master’s in law. The marriage broke down when the wife admitted to having an ongoing extra-marital affair with a law school professor.

The husband had been an entrepreneur in the gaming business for over 20 years. He had spent his career working alongside his successful 84-year-old father, in increasingly-responsible roles for various casino projects and land development deals. While still married to the wife in 2006, he sold an online gaming platform which netted $11.5 million. The motion judge described the impact of that sale this way:

This allowed the parties to live a very luxurious lifestyle, including purchasing a $3.5 million house in Rosedale, vacation properties in Florida and Caledon, employing a full-time nanny and part-time housekeeper, purchasing an expensive art collection and memberships at Royal Canadian Yacht Club and the Caledon Ski Club. During the marriage, Anthony controlled the family finances.

The nature and scope of those finances was now the focus of the spouses’ dispute. The husband claimed that since separating from the wife, most of his yearly income came from a $120,000 consulting contract. The motion judge explained the wife’s position on this:

Jennifer disputes that the consulting contract is representative of Anthony’s income and submits it is simply another ruse concocted by Anthony and his father to deprive Jennifer and the children of the support to which they are entitled. She submits that $120,000 does not even cover the rent for the home that Anthony currently occupies in Forest Hill.

The judge also heard evidence that in 2018, the husband sent the wife an email claiming that he had not earned more than $115,000 per year since 2006. As the facts revealed, at that time he was actually earning $800,000 per year from a single management contract alone. The motion judge added:

There were many other examples throughout 2014 when it was clear that Anthony was misrepresenting his income to Jennifer. The most egregious of those is the fateful communication on October 16, 2014 when Anthony told Jennifer that reimbursing her $354 for the children’s dental appointments would essentially leave him with no money. At that moment, Anthony had $739,238 in his personal account and spent $610 on dinner that night with his girlfriend.

Against this background, the wife accused the husband and his father of jointly conspiring to shelter and conceal millions of dollars of the husband’s true income and assets from her, using various trust vehicles and corporate arrangements. The intent, she alleged, was to deprive her and the children of their support entitlements under Family Law.

After hearing motions and cross-motions for various relief, the judge granted partial summary judgment against the wife, precluding her from going forward to have her conspiracy claims against the husband heard by a trial court.

The wife appealed – successfully – to the Ontario Court of Appeal. That Court concluded that the motion judge had made several errors; amongst them was the manner in which she had analyzed the tort of conspiracy and its potential place in resolving disputes between spouses.

For one thing, the motion judge had raised concerns about the far-reaching legal and policy implications of potentially extending the tort of conspiracy to situations that involve family members, and expressed a fear that such claims would “become the new norm”. She effectively concluded that the statutory Family Law regime was a “complete code” for addressing spousal support, and that for policy reasons there was no room for adding tort claims to the mix.

According to the Appeal Court, this approach was in error. In fact, the motion judge’s preconceived notion on the policy factors may have coloured her assessment of the facts, and her evaluation of whether the test for conspiracy might have been satisfied in this case. It also noted that the judge may have misconstrued some of the documentary evidence that had been provided to her, which again may have impacted her assessment on whether the summary judgment threshold had been met here.

In the end, the Appeal Court concluded that “there is no reason why a claim in conspiracy cannot be asserted” in this Family Law-based scenario, and ordered that the wife’s conspiracy allegations could proceed to trial.

For the full text of the motion judge’s ruling, see:

Leitch v. Novac, 2019 ONSC 794 (CanLII)

For the full text of the appeal decision, see:

Leitch v. Novac, 2020 ONCA 257 (CanLII)

[This post by Russell Alexander first appeared on FamilyLLB.com on June 9, 2020]