Profound Credibility Issues Cannot be Resolved by Summary Judgment

By Dickson Appell
Profound Credibility Issues Cannot be Resolved by Summary Judgment

It is a fundamental principle of summary judgment that it cannot be granted in the face of conflicting evidence requiring an assessment of credibility. The recent Superior Court decision in Malaviya v. Dhir, 2023 ONSC 1993, provides a good example of the credibility issues that can arise in cases involving the nature of the parties’ relationship, as well as allegations of coercive control and duress.

The parties in Malaviya v. Dhir separated in 2020. In 2005, they entered into a Cohabitation Agreement, pursuant to which Ms. Dhir waived entitlement to any interest in Mr. Malaviya’s company. Mr. Malaviya sold the company in 2018 for $115 million. After the parties separated in 2020, Ms. Dhir moved to set aside the Cohabitation Agreement pursuant to s. 56(4) of the Family Law Act, specifically on the basis of unconscionability, undue influence, duress, and inadequate financial disclosure. Mr. Malaviya then brought a summary judgment motion to dismiss the claim to set aside the Agreement.

The parties filed significant evidence on the summary judgment motion, which included an Acknowledgement provided by Ms. Dhir to the lawyer who acted for her in negotiating the Cohabitation Agreement. The Acknowledgement stated that the lawyer had advised Ms. Dhir that the Agreement was not in her best interests, that the lawyer had recommended that Ms. Dhir obtain a copy of Mr. Malaviya’s Shareholder Agreement with the other shareholders of his company and that Ms. Dhir instructed the lawyer to proceed in the absence of the Shareholder Agreement.

The motion judge stated that had insufficient financial disclosure been the only basis for Ms. Dhir’s claim to set aside the Cohabitation Agreement, she would have granted the summary judgment motion. However, she held that the claim of insufficient financial disclosure was connected to claims of duress, unconscionability, and undue influence, which could not be resolved through summary judgment. Indeed, Ms. Dhir’s evidence was that she acted against her lawyer’s advice at the time due to Mr. Malaviya’s coercive control over her.

Mr. Malaviya denied Ms. Dhir’s allegations, relying on the Agreement itself, which stated that Ms. Dhir was not under duress when she signed it, and on evidence regarding Ms. Dhir’s education and accomplishments. Ms. Dhir had a law degree and an MBA, extensive business experience, and sat on numerous boards of directors. Mr. Malaviya also argued that Ms. Dhir’s evidence consisted only of bald allegations in her affidavits, which were not corroborated by any other evidence.

The motion judge held that while Mr. Malaviya raised issues that should be considered, they were not determinative. With respect to Ms. Dhir’s accomplishments, the motion judge noted that a person’s intelligence and business acumen “does not preclude a finding that … she was demeaned and emotionally controlled … to the point that she was unable to exert autonomy over her own decision-making process when the Agreement was negotiated”.

Similarly, the absence of corroboration for Ms. Dhir’s claims of abuse and control did not demonstrate that Ms. Dhir had failed her obligation to put her best foot forward on the motion for summary judgment: “Often, the only witnesses who can give direct evidence about the nature of a spousal relationship are the parties themselves. … A couple may present in a certain way in public and yet have a very different relationship ‘behind closed doors.’ This is one of the reasons that credibility and reliability assessments are critical.”

Mr. Malaviya’s motion for summary judgment was dismissed, on the basis that there was a genuine issue for trial regarding the circumstances surrounding the negotiation and execution of the Cohabitation Agreement. The Honourable Justice Shaw held that she was unable to make the necessary findings of fact to reach a just an expeditious determination, and to resolve the matter in the absence of a trial: “The credibility issues are too profound to make a determination based on a paper record.”

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