Court File and Parties

COURT FILE NO.: FS-18-00001107 DATE: 20190527 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: Melinn Nicole Godfrey, Applicant – and – Robin James Godfrey, Respondent

Counsel: George Karahotzitis and Melanie Larock, for the Applicant Julie K. Hannaford and Charu Ruparella, for the Respondent

HEARD: May 16, 2019

Shore, J.

Endorsement

[1] The applicant brought this motion for the release of $2,750,000 from her share of the net proceeds of sale of the parties’ jointly owned matrimonial home, municipally known as 72 Old Forest Hill Rd., Toronto, Ontario. The respondent brought a cross motion in relation to this issue, seeking a release of $500,000 from the net proceeds of sale to the applicant and $100,000 to the respondent. The respondent further seeks an order that another $2 million will be released to the applicant from her share of the net proceeds of sale on entering into an agreement of purchase for a home in Toronto.

Background

[2] The parties were married on August 1, 2004 and separated on November 3, 2017. The parties have four children from their marriage, namely Elle Jordan Karen Godfrey, born January 18, 2005; Ivy Nicola Godfrey, born December 27, 2006; Lola Bella Godfrey, born May 9, 2009; and Peavy Victoria Godfrey, born November 8, 2015.

[3] The parties are currently participating in an assessment under section 30 of the Children’s Law Reform Act, R.S.O. 1990, c.12 with Dr. Irwin Butkowsky. In the meantime, the children have their primary residence with the applicant and their secondary residence with the respondent.

[4] The parties were joint owners of the matrimonial home, municipally known as 72 Old Forest Hill Rd., Toronto, Ontario. The matrimonial home was sold on August 9, 2018.

[5] Shortly before separation, the applicant withdrew $100,000 from the joint line of credit. On October 31, 2017, the respondent withdrew $1,260,000 from the joint line of credit. The sale price of the matrimonial home was $10,500,000 and the net proceeds of sale, after discharging the joint line of credit and other disbursements was $6,911,907.87. The net proceeds of sale of the matrimonial home currently held in trust does not reflect any adjustment for the money withdrawn from the line of credit. The entire line of credit was paid off on the closing of sale.

[6] Following the sale, the parties each received $500,000 from the proceeds of sale, with the balance being held in trust by the real estate lawyer. The parties could not reach agreement on the disbursement of the remaining net proceeds of sale.

[7] There is currently $5,913,894.50 being held in trust from the net proceeds of sale. If each party were to receive 50% of the remaining net proceeds of sale they would each be entitled to $2,956,947.25. The Applicant has brought a motion for the release of $2,750,000 to her.

Positions of the Parties

[8] From the positions taken by the parties in their notices of motion and submissions, they are in agreement that at least $2,500,000 from the net proceeds of sale of the matrimonial home be released to the applicant (although the applicant is seeking $2,750,000) and $100,000 to the respondent. The difference in their positions relates to whether terms should be imposed as a condition for the release of the funds (specifically, the respondent submits that the applicant should receive $2 million from her share of the proceeds only if she purchases a home in Toronto).

[9] The respondent takes the position that the applicant is irresponsible with money and the court should be focusing on the best interests of the children, to ensure that the applicant has funds available to purchase a home for the children in the future. The respondent is not claiming that he has an interest in the applicant’s 50% share of the net proceeds. The respondent, however, submits that he has significant concern because the applicant has already had access to approximately $820,000, in addition to the spousal support and child support she receives from the respondent (and payment of 100% of the children’s s.7 expenses) and is living a lifestyle that cannot be sustained. The respondent expressed concern that the applicant is living beyond her means and, if she continues at this rate, she will run out of funds and not have sufficient money to secure a residence for the children. It is for this reason that the respondent will consent to the release of a further $2 million only in order for the applicant to purchase a home in Toronto. He is asking the court to ensure that the children’s best interests are being protected.

[10] The respondent relies on a number of cases that stand for the proposition that the courts will interfere if there is concern about future financial security of children or about the inability of a recipient to manage their financial affairs, as they relate to the well-being of the children.

[11] The applicant takes the position that the respondent cannot dictate or control what she does with her own assets. Her most significant asset on separation was her half interest in the matrimonial home. She wants to be able to manage and use her funds as she sees fit. She submits that she will not be in a position to purchase a home until she knows more about her financial circumstances, including support, and in the meantime, she wants access to her share of the proceeds of sale. The applicant submits that the respondent’s position is really about his need to control her, in that he has acknowledged that she is entitled to this money but he wants to control how and when she accesses same.

[12] Both parties have filed preliminary net family property statements. The applicant submits that she will be owed at least $707,000 from the respondent by way of an equalization payment in addition to her 50% share of the net proceeds of sale, but she could be owed as much as $4,749,000. The husband submits that he will be owed an equalization payment of $116,420 from the applicant, in addition to his 50% share of the net proceeds of sale plus some post-separation adjustments between the parties. He could not quantify the amount that may be owing to him for post-separation adjustments.

Analysis

[13] As set out above, the dispute is not about whether the funds should be released to the applicant but whether there should be some control and/or condition attached, arising out of concern for the applicant’s alleged mismanagement of funds and for the financial security of the children in the future. The respondent is agreeable to releasing up to $2.5 million if and when the applicant purchases a primary residence in Toronto.

[14] The respondent referred to a number of cases in which the courts have placed conditions on money paid to a recipient, out of concern for a party’s inability to manage their financial affairs or out of concern for the financial security of the children in the future. The respondent has expressed a concern that the children will not have a place to live given the applicant’s spending. However, all of the cases relied on by the respondent relate to child support. The cases included Simon v. Simon (1999), 46 O.R. (3d) 349 (C.A.); M. (O.) v. K. (A.), [2000] R.J.Q. 2339 (C.S.); S.(F.) v. P.(V.), [2003] R.D.F. 615 (Q.C. C.S.); and Tauber v. Tauber (2001), 18 R.F.L. (5th) 384 (Ont. S.C.). Counsel for the respondent could not direct the court to a single case on point. Even in the child support cases relied on by the respondent, the court is clear that it will only interfere with the recipient’s spending of child support in exceptional circumstances (see for example Simon v. Simon at para. 38-41). Child support cases are significantly different than the case before me, in that child support is the right of the child. The children in this case have no claim or rights with respect to the proceeds of sale of the matrimonial home or the equalization payment owing.

[15] On the other hand, the applicant referred to a number of cases that stand for the legal presumption that each party that owns 50% of a property is entitled to 50% of the net proceeds of sale (see for example Creasey v. Chretien, 2009 CarswellOnt 1997 (S.C.) at para. 56, Afshar v. Mahmoodi, 2016 ONSC 2875 at para. 31, and Korman v. Korman, 2015 ONCA 578, 126 O.R. (3d) 561). If a party resists the release of funds under section 12 of the Family Law Act, R.S.O. 1990, c. F.3, that party has the onus to show why a preservation order should be made. However, counsel for the respondent was clear that they were not moving under section 12 of the Family Law Act.

[16] The respondent’s position was that the order can be made as an incident of custody and access, having regard to the best interests of the children. At paragraph 45 of the respondent’s affidavit he states that if he and the applicant did not have children together, he would not care how she spends her money.

[17] Courts have been loath to tie financial issues to the issue of custody and access and yet the respondent is specifically proposing same. The fact that the parties have children together does not create the legal basis for controlling the release of the applicant’s own funds to her. In the case before me, the children do not have a right to the applicant’s money. While I may have concerns about the spending pattern of both parties, this does not give me jurisdiction to control how the parties spend their own money. The court is not in the business of supervising how parties spend their money except in exceptional cases such as non-depletion orders or the exceptional child support case.

[18] The Family Law Act sets out the purpose behind orders for child support and spousal support and for the determination of the quantum of spousal support. Part I of the Family Law Act sets out the property regime on the breakdown of a marriage. The purpose behind Part I is set out in section 5(7). Nothing in the property provisions of the Family Law Act directs the court to turn its mind to rights of the children or ties the equalization payment to the best interests of the child. The respondent is essentially asking the court to amend and read in an additional purpose to section 5(7) of the Family Law Act, which I am not prepared to do. As such, the respondent’s motion is denied.

[19] The applicant has a right to access her share of the proceeds of the matrimonial home, without any preconditions. She is asking for $2,750,000. This will still leave over $200,000 from her share of the proceeds of sale in trust, to cover the equalization payment owing pursuant to the respondent’s calculation and some addition funds for post-separation adjustments, if any.

[20] Given that the applicant was successful on her motion there is a presumption that she is entitled to her costs, subject to submissions by the parties.

Order

[21] Order to go as follows:

1. The applicant shall receive $2,750,000 from her share of the net proceeds of sale of the jointly owned matrimonial home, municipally known as 72 Forest Hill Rd., Toronto, Ontario.
2. The respondent shall receive $100,000 from his share of the net proceeds of sale of the jointly owned matrimonial home.
3. The remaining net proceeds of sale of the matrimonial home shall remain in trust with David Goldstein until further court order or agreement between the parties.
4. If required, both parties shall execute directions authorizing David Goldstein to release the funds as set out in paragraphs 1 and 2 above within 10 days of this order.
5. If the parties are unable to reach an agreement on the issue of costs of this motion within two weeks of this order, the applicant may make submissions for costs, to be no more than three pages not including her bill of costs, offers to settle or other relevant material. The respondent shall serve his responding submissions within five business days of receipt of the applicant’s submissions, with the same restriction on length of submissions.

Shore, J. Released: May 27, 2019