Kedmi v. Korem, 2012 NSCA 90

NOVA SCOTIA COURT OF APPEAL Citation: Kedmi v. Korem , 2012 NSCA 90 Date: 20120822 Docket: CA 381259 Registry: Halifax Between: Iris Kedmi Applicant/Appellant v. Nahman Korem Respondent Judge: The Honourable Justice David P.S. Farrar Motion Heard: August 16, 2012, in Halifax, Nova Scotia in Chambers Held: Motion for stay dismissed. Counsel: Appellant in person Candee McCarthy, for the respondent Decision: Background [ 1 ] Ms. Kedmi is self-represented. She filed a Notice of Appeal on February 20, 2012 appealing from what she describes as a judgment of Justice Clare MacLellan dated January 25, 2012. What Ms.

Kedmi is actually appealing is the reading into the record of a settlement agreement which was purportedly reached between the parties at a settlement conference held over three days in January, 2012. On June 7, 2012, she made a motion to this Court to stay the “judgment”. Justice Beveridge dismissed her motion because there was no order and, absent an order, there was nothing to stay ( Kedmi v. Korem , 2012 NSCA 65 ). [ 2 ] On July 6, 2012, Justice M.

Clare MacLellan issued what is titled a “Consent Corollary Relief Order” incorporating what the judge considered to be the agreement reached at the settlement conference. [ 3 ] Ms. Kedmi brought forward two motions before me on August 16, 2012. The first seeking to amend the Notice of Appeal and

the second, seeking to stay the Order of July 6, 2012. [ 4 ] I addressed the motion for leave to amend the Notice of Appeal summarily. Ms. Kedmi did not provide a draft amended Notice of Appeal. Mr. Korem’s counsel suggested that if she was provided with a draft amended Notice of Appeal she may in a position to consent on behalf of Mr. Korem. As a result, Ms. Kedmi will forward along a draft amended Notice of Appeal to Mr. Korem’s counsel. If they are unable to reach agreement Ms. Kedmi is at liberty to bring the matter before me at a future date. [ 5 ] At the conclusion of argument by Ms. Kedmi and Mr.

Korem’s counsel on the motion for a stay, I reserved my decision. For the reasons that follow, I would dismiss the motion, however, in these circumstances, without costs to either party. Facts [ 6 ] The appellant and respondent appeared before Justice MacLellan on January 23, 2012, to commence a divorce trial scheduled to last seven days. Both parties were represented by counsel. The appellant’s counsel requested a settlement conference. The respondent agreed. [ 7 ] Two and a half days later the parties informed the court they had reached an agreement.

They went into open court where the agreement was read into the record. The appellant’s counsel was to draft a consent order. However, the appellant dismissed her counsel and filed a Notice of Appeal claiming her trial counsel had been incompetent and that any Order resulting from the settlement conference would be too vague to be enforced. [ 8 ] Subsequently, draft orders were exchanged between the appellant and counsel for the respondent without the parties being able to agree on the form of order. As a result, Justice MacLellan ruled that she would draft and issue the order. She did so on July 6, 2012. Ms.

Kedmi says that the Order does not reflect the agreement between the parties. Specifically, she identifies three provisions in the Order which differ from her understanding of the agreement. They are as follows: 1. Paragraph 21 of the Order provides: Given the agreement between the parties that Mr. Korem pay the mortgage or line of credit, insurance and property taxes on the matrimonial home, there is no retroactive support ordered and any child or spousal support arrears accumulated under the previous court orders are forgiven. Ms. Kedmi says that she never agreed to forgiveness of child support arrears.

She says that the trial judge erred in including this provision in the Order. 2. Paragraph 22(

f) provides: During her exclusive possession Ms. Kedmi shall be responsible for the following: ... (ii) The upkeep of the property including ensuring the property is appropriately maintained; that access roads continue to be useable; and that cleared lands remain cleared. Ms. Kedmi says that the parties agreed that she would be responsible for the “day-to-day” maintenance of the property which she sees as something different than the “upkeep” of the property. 3. Paragraph 22 of the Order provides that “Property is divided under the Matrimonial Property Act as follows: ... b.

Nahman Korem shall be solely responsible for the repayment of all matrimonial debts, including the Line of Credit registered against the matrimonial home, any debt in his own name or in his joint name with Iris Kedmi, the creditors of the Crown Jewel Resort Ranch, I.N.K. Real Estate and Crown Jewel Aviation existing at the date of separation, being August 17, 2010 plus any interest accrued therein and any debt he accumulated in his own name post separation. Ms. Kedmi says she never agreed to Mr.

Korem’s responsibility for the repayment of matrimonial debts being limited to those incurred before the date of separation which is August 17, 2010. She says he was to be responsible for all matrimonial debts and/or business debts regardless of when they were incurred. The date of August 17, 2010 was not discussed between the parties. She points to an example of where she had to replace a well pump on April 11, 2011, in the approximate amount of $2,600, a matrimonial debt which Mr.

Korem refuses to pay. [ 9 ] It is these alleged errors in the Order, as well as the previously mentioned grounds of appeal (that the Order is too vague and that her counsel was incompetent), that Ms. Kedmi appeals. [ 10 ] At the hearing of the motion, it was unclear to me what relief Ms. Kedmi is seeking on her appeal. Is she simply seeking to set aside the provisions of the Order which she contests or is she seeking to have the entire Order set aside?

At first she was of the view that she wanted it entirely set aside but after further discussion it appears that she is only seeking to have the provisions dealing with matrimonial and business assets, child support and upkeep of the matrimonial home set aside, and will be seeking a trial on those issues. Issue [ 11 ] Should the Order of July 6, 2012, be stayed?

Discussion [12]

Section 90.41 of the Civil Procedure Rules authorizes a judge of this Court to stay the execution of an order pendingdisposition of the appeal: 90.41(1) The filing of a notice of appeal shall not operate as a stay of execution or enforcement of the judgment appealed from.

(2) A judge of the Court of Appeal on application of a party to an appeal may, pending disposition of the appeal, order stayed theexecution and enforcement of any judgment appealed from or grant such other relief against such a judgment or order, on such items asmay be just. [13] The principles regarding a motion for a stay of execution have been set out many times by this Court.

Recently in Soontiens v.Giffin, 2011 NSCA 1 as follows: [18] There are well known, but competing principles that come into play when the losing party asks this Court to stay the execution orenforcement of a lower court's order pending an appeal.

It has long been the law in Nova Scotia that an appeal does not stay theexecution or enforcement of a judgment and a successful litigant should not lightly be deprived of the fruits of what has been ordered. ... [19] On the other hand, there may be circumstances where to ensure that the statutory right to challenge the correctness of a lowercourt's decision is not rendered illusory, a court hearing an appeal must grant a stay or some other order.

This is recognized in Rule90.41(2) ... [20] As is usually the case, the parties do not dispute that the test to be applied is based on the seminal decision of Hallett J.A. inFulton Insurance Agencies Ltd. v. Purdy (1990), (NS CA), 100 N.S.R. (2d) 341. The test has two parts.

On theprimary test, an applicant can be successful if it establishes, on a balance of probabilities, there is an arguable issue raised by the appeal,irreparable harm to the appellant should the stay not be granted (assuming the appeal is ultimately successful) and the appellant willsuffer greater harm if the stay is not granted than the respondent if the stay is granted. [21] The appellant may also be successful in obtaining relief pending an appeal even if it cannot meet all of the criteria for the primarytest if there are exceptional circumstances that nonetheless make it fit and just to grant a stay.

This is known as the secondary test. Theappellant waives any reliance on the secondary test. The parties differ widely on the application of the criteria dictated by the primarytest. [14] Ms. Kedmi does not rely on the exceptional circumstances test. She is saying she will suffer irreparable harm if an order is notgranted. I will assume that the appellant’s proposed amended Notice of Appeal and the existing Notice of Appeal on file raise arguableissues.

I will limit my analysis to whether the appellant demonstrated, in these circumstances, that she will suffer irreparable harm. [15] In her affidavit filed in support of her motion no reference is made to the irreparable harm that Ms. Kedmi says she will suffer ifthe stay is not granted. She simply says she will suffer irreparable harm without identifying what that harm may be. Her brief filed insupport of the motion provides some insight into the irreparable harm she says she may suffer.

In para. 37 she says: I believe if this pending order goes into effect and that preservation is not issued by the court, it will cause me irreparable harm. Basedon Mr. Korem’s past behaviour I believe he will immediately start hiding and protecting the matrimonial physical assets in order toprotect me from accessing them if I prevail with the appeal and the case is retried. [16] From this I take Ms. Kedmi to be saying that, if she succeeds on appeal, there will be no assets left for her to realize the fruitsof her success. [17] Mr. Korem, in his affidavit, sets out why he says the stay should not be granted: 14.

The consent agreement basically provided that I would have full control of the matrimonial assets and I am also solelyresponsible for the matrimonial debts. .. 18. The Appellant, prior to the consent agreement was in control of the business and it went from an operating business that was notearning any profit, but was managing its debts to being on the brink of bankruptcy. 19. Right after the consent agreement, in January 25, 2012 I approached various lenders and I was able to get personal andgovernment backed loans and line of credit to assist me in rebuilding the business. 20.

I negotiated these loans on the basis that Corollary Relief Order gave me all the matrimonial assets and based on my personalcommitment to resume operation. This was done against detailed business plans and my personal guarantees. 21. The businesses loans from ECBC are still in arrears over $700,000.00 as are outstanding taxes with the Municipality of theCounty of Victoria in an amount of over $60,000.00 as of today. A copy of a letter from the County is attached hereto as Exhibit B. 22.

I approached ECBC and negotiated payment terms to withhold them from foreclosure procedures in order to allow me anopportunity to recover the businesses. 23. I negotiated with the County to hold off on a tax sale until after Thursday, August 16th, when this Stay application is heard. If nostay is granted, I am hopeful that I will be able to negotiate a payment arrangement with them. ...

26. Contrary to what Ms. Kedmi claims, I cannot sell any assets as all the assets are mortgaged to ECBC and are encumbered by a General Security Agreement to ECBC and East Coast Credit Union. There is also registered mortgage to D.W. Matheson. As well, the home is mortgaged with Scotiabank. 27. Based on the fact that the value of the assets is below the debt level I have no financial incentive to motivate me to sell the assets. 28.

I have been operating the business since the consent agreement and while it has not recovered and is not making a profit, I am making some progress in managing its debt repayment and resuming some business units (beekeeping, vineyard, maple operation and selection harvesting the woodlot). ... 33. In addition to obtaining loans on the basis of the Corollary Relief Order, I have also acquired business assets since that time, also on the basis that I had a reliable court order that allowed me to start rebuilding the business.

I purchased work horses, tools and equipment (on credit and borrowed funds) which I do verily believe would be at risk if in the hands of the Appellant. 34. Despite a preservation order restricting her from doing so, the Appellant disposed of and sold assets including all of the horses we previously owned. The Appellant blames an inability to care for the animals as her excuse in disposing of them and I do verily believe there is a great risk to these animals if she gained control over the land and resort. I cannot afford to find alternate arrangements for the care of these horses.

I require use of the land as per the order to maintain them. [ 18 ] Mr. Korem’s affidavit establishes the following key facts: 1. He has arranged for personal and government backed loans and lines of credit to assist in rebuilding the business. A stay of the order may jeopardize these relationships. 2. He has negotiated payment terms with ECBC to prevent them from foreclosing on the business assets. 3. The assets are encumbered by a mortgage to ECBC and are encumbered by a general security agreement. The home is mortgaged to Scotiabank.

Even if he wanted to sell the assets, in light of these encumbrances, he could not do so without first satisfying these creditors. 4. He has been operating the business since the settlement agreement and is making progress. 5. He has acquired other assets since the settlement agreement. 6. Any progress which he has made to date in revitalizing the business would be jeopardized by a stay. [ 19 ] Ms. Kedmi has not satisfied me that she would suffer irreparable harm if the stay is not granted. [ 20 ] Her belief that Mr. Korem is dissipating assets is just that, a belief.

The evidence before me, and the position of the parties before the settlement conference judge, was that the matrimonial and business debt exceeded the value of the matrimonial and business assets. It would be very difficult if not impossible to sell any of the assets without paying off the debt. As Mr. Korem says, it would not make any sense to sell the assets when the debt exceeds their value. [ 21 ] Further, Ms. Kedmi has not identified any assets of any value that could be realized on should she be successful on her appeal. [ 22 ] Finally, it appears to me, based on the affidavit of Mr.

Korem, that if I were to grant the stay it may cause the creditors to seek to realize on the security which would result in the loss of the assets including the matrimonial home. [ 23 ] For these reasons the motion for a stay is dismissed. [ 24 ] Mr. Korem requested costs in the amount of $5,000.00 on the stay motion. Neither party is presently working or earning an income. In the circumstances, I decline to award costs to either party. Farrar, J.A