COURT OF APPEAL FOR ONTARIO
CITATION: Froehlich-Fivey v. Fivey, 2016 ONCA 833
DATE: 20161104
DOCKET: M47041 (C62623)
Lauwers J.A. (In Chambers)
BETWEEN
Carolina Froehlich-Fivey
Applicant (Appellant/Responding Party)
and
Jeffrey Richard Fivey
Respondent (Respondent/Moving Party)
Bonnie C. Oldham, for the moving party
D. Andrew Thomson, for the responding party
Heard: October 28, 2016
ENDORSEMENT
[1] The respondent (the moving party on this motion) moves for an order under r. 61.06 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for security for costs of the appeal. He submits that there are good reasons to believe the appeal is frivolous and vexatious and that the appellant (the responding party on this motion) has insufficient assets in Ontario to pay the costs of the appeal.
[2] For the reasons that follow, I agree with the respondent and order that the appellant post security for costs in the amount of $20,000.
Background
[3] The factual background is extensively set out in the reasons for judgment of Koke J. of the Superior Court of Justice (with reasons reported at 2016 ONSC 4729), which is under appeal.
[4] The parties began living together in February 1992 and were married on February 23, 1993. They moved to the Parry Sound area around 2000 and started a heating and air conditioning business in which they were equal owners. They separated on August 16, 2011 after about 18.5 years of marriage. They had two daughters, Christine and Stephanie. At the time of their separation, the appellant was 49 years-old, the respondent was 42, Christine was 17, and Stephanie was about to turn 15.
The Trial Judge’s Decision
[5] Before their separation, the parties both drew income from the business and used the business to pay many of their personal expenses. The appellant continued to access company accounts after their separation and ran up debts. The trial judge noted, at para. 20, on the evidence that:
[T]he parties lived well beyond their means prior to the separation. The purchased a number of expensive boats and personal watercraft, ATV’s, snowmobiles, and vehicles and they travelled regularly. Many of the purchases were made using funds and credit from the business. As will be seen below, they accumulated substantial debt at the time of separation.
[6] Appendix A to the judgment sets out the amounts owing on the various amounts in dispute. I attach it as an appendix to these reasons. The amounts in dispute and the trial judge’s determinations of those issues are set out there. The list of expenses shows the financial effects of a number of determinations of fact and credibility made by the trial judge, which he carefully explains in his reasons. The net result was that the appellant was obliged to pay to the respondent about $114,000.
[7] The trial judge issued his costs decision on September 2, 2016, reported at 2016 ONSC 5541, in which he awarded the respondent the sum of $63,940.80 for fees and $14,093.64 for disbursements, plus HST where applicable.
The Appeal
[8] In the notice of appeal, the appellant asks that the judgment be set aside in part and a judgment be granted as follows:
That the respondent pay to the appellant the sum of $3,490 per month spousal support indefinitely;
That the respondent pay to the appellant the sum of $98,295.68 to equalize the parties’ Net Family Property in exchange for her interest in the corporation.
That the respondent pay to the appellant her costs of the trial and this appeal.
[9] The notice of appeal lists thirteen grounds of appeal, all of which take issue with factual determinations made by the trial judge. I address some of them below.
Discussion
[10] The respondent submits that an order to post security for costs is justified under r. 61.06 which governs security for costs on appeal:
(1) In an appeal where it appears that,
(a) there is good reason to believe that the appeal is frivolous and vexatious and that the appellant has insufficient assets in Ontario to pay the costs of the appeal;
a judge of the appellate court, on motion by the respondent, may make such order for security for costs of the proceeding and of the appeal as is just.
(2) If an appellant fails to comply with an order under subrule (1), a judge of the appellate court on motion may dismiss the appeal.
[11] For such an order to be granted, the motion judge must: (a) have good reason to believe the appeal has no merit and is therefore frivolous and vexatious, and (b) have good reason to believe the appellant has insufficient assets in Ontario to cover the costs of the appeal: Schmidt v. Toronto-Dominion Bank (1995), 1995 3502 (ON CA), 24 O.R. (3d) 1 (C.A.). As this court observed in Schmidt, at para. 16:
A judge hearing a motion for security for costs may reach the tentative conclusion that an appeal appears to be so devoid of merit as to give "good reason to believe that the appeal is frivolous and vexatious" without being satisfied that the appeal is actually totally devoid of merit.
Is the appeal frivolous and vexatious?
[12] In my view, there is good reason to believe the appeal has no merit. It does not raise any arguable error in law. It only challenges the trial judge’s findings of fact and credibility that are sound on their face. Therefore, to succeed, the appellant must ultimately demonstrate that the trial judge made a number of palpable and overriding errors in his findings, such as failing to address a material issue, failing to take into account relevant evidence, or taking into account irrelevant evidence.
[13] I have considered the major grounds of appeal and do not believe that the trial judge committed any palpable and overriding errors. The first ground of appeal is that the trial judge showed bias against the appellant. The trial started on December 14, 2015 and the appellant was present, representing herself. She was unable to attend the second day of the trial for medical reasons and had Mr. Thomson, who is counsel on this appeal, attend with her on her behalf. He made submissions for an adjournment and then left. The trial judge granted an adjournment on the following terms. First, he adjourned the trial to January 6, 2016. Second, he provided in his order that all arrears of child and spousal support “are expunged, without prejudice to the parties to raise the issue of arrears during the trial.” This had the effect of stopping the efforts of the Family Responsibility Office to collect the alleged arrears. Third, he terminated child support effective immediately again “without prejudice to the parties to raise the issue of child support at trial,” although it appeared that child support was no longer tenable in light of the children’s ages. Finally, he reduced spousal support to “$1,500 per month, effective immediately, without prejudice to the parties to raise the issue of spousal support at trial.” The appellant argues that the reduction of spousal support in particular shows bias.
[14] Alleging bias against a judge is a very serious matter and it needs to be substantiated. In this case, the appellant has not done so. I am unable to discern in the endorsement of December 16, 2015, any hint of bias. The trial judge was simply attending to the situation as he understood it, given the appellant’s request for an adjournment and the prejudice it would cause to the respondent. Furthermore, the trial judge’s reasons for judgment exhibit a balanced approach to the issues. Counsel for the appellant does not point to any particular lines in the trial judgment as exhibiting bias.
[15] The second ground is that the trial judge “erred in fact and in law” in finding that the appellant “is not entitled to compensatory support given the length of the marriage and the circumstances of the parties.” The trial judge faced this issue directly, at para. 43, noting:
Carolina has worked and was re-educated during the marriage. She has experience and a university degree in both education and computer science and she has the ability, skills and education to become financially independent. In my view she is not entitled to compensatory support.
[16] He added, at para. 51:
Given that there is strong evidence that Carolina can become financially independent, a lump sum or step down of support is appropriate. Also, given the fact that this litigation alone has likely hampered Carolina's ability to become financially independent, and there is no basis for a compensatory award of support, a clear fixed termination of support is preferable to an obligation to return to court to re-litigate the issues.
[17] The trial judge was alive to the issue and addressed it fully. The relevant law was set out by this court in Gray v. Gray, 2014 ONCA 659, 122 O.R. (3d) 337. In that case, this court increased the spousal support awarded to a former wife, whose health problems prevented her from securing work. The fact that the appellant can work in this case distinguishes it from the situation in Gray. This case and Gray are not comparable at all.
[18] The third ground relates to the imputation of income to the appellant of $35, 000 to $40,000 annually. The trial judge explained his reasoning, which he based on the evidence. He grounded his finding, on the availability of work for the appellant, which he based on the evidence of a local high school principal. He did not assume that the appellant would be able to get full time employment. Rather, he stated, at paras. 45 and 46:
However, in my view, if properly focused Carolina could earn a reasonable income as a part time or supply teacher. In the case of Sinclair v. Sinclair, 2013 ONSC 1226, [2013] O.J. No 1150, 2013 CarswellOnt 2788, Parayeski J. held that the claimant “has to get on with life and support herself.” (at para 53), and he imputed an annual income to the mother of $40,000, being roughly 50% the average annual income for teachers despite the fact that she had not been working as a teacher for several years.
The evidence before the court indicates that Carolina should be able to earn at least $35,000 to $40,000 per annum from teaching given her qualifications at this time. In fact, once she is relieved of her court obligations and the distractions which come from being involved in this litigation it is likely that she can make significantly more through supply teaching, tutoring and providing computer related services.
[19] In oral argument before me, the appellant pointed out that her income for the year before trial was about $27,000, which is less than the $35,000 the trial judge imputed to her. However, it became clear during the trial that she did not realize she was eligible to teach in both the elementary and secondary panels of the school board, as the principal explained in his evidence. The trial judge’s clear expectation was that the appellant would have more time, and more opportunity to work once the case was over. This is not, on the face of it, an unreasonable expectation.
[20] The fourth, and related, ground of appeal concerns the trial judge’s limitation on the duration of spousal support. The trial judge addressed this, at paras. 51-52:
Given that there is strong evidence that Carolina can become financially independent, a lump sum or step down of support is appropriate. Also, given the fact that this litigation alone has likely hampered Carolina's ability to become financially independent, and there is no basis for a compensatory award of support, a clear fixed termination of support is preferable to an obligation to return to court to re-litigate the issues.
I am ordering that the existing order of $1500 per month for spousal support continue for a period of 12 months, from September 1, 2016 through August 31, 2017. Thereafter, I am ordering that support continue at the rate of $1300 per month for a period of four and a half years, through February 28, 2022.
The trial judge’s determination was firmly rooted in the evidence.
[21] The fifth ground of appeal is that the trial judge failed to take into account the appellant’s health “as a limiting factor in her ability to earn a greater income”. In this respect, the appellant complains that the trial judge “erred in excluding medical evidence and finding that there was no medical evidence to support her testimony.” The excluded evidence was a letter from her doctor sought to be admitted for the truth of its contents in the appellant’s reply, without calling the doctor as a witness. The trial judge refused to admit the letter, as he was entitled to do. He addressed the medical issue, at para. 44:
There is some evidence to support Carolina's claim that she now suffers from depression and/or anxiety which has resulted in a couple of brief periods of hospitalization and possibly the need for medication. However, it would appear that her condition is at least in part due to the general stress of the breakdown of the relationship and her own reduced financial situation (which in my view results in part from her refusal to come to terms with the fact that she cannot maintain her pre-separation life style and standard of living). There was no medical evidence presented during the trial that would indicate that Carolina has health issues which compromise her ability to work full time. (Emphasis added.)
There is no obvious error in this finding.
[22] The final ground of appeal concerns the fact that the respondent called Christine Larkin as an expert valuation witness. She is an accountant at the firm to which responsibility for maintaining the company’s books and records was transferred after the parties’ separation. Her impartiality was challenged at trial. The trial judge rejected the challenge, at paras. 94- 95:
Carolina questions whether the court should accept Ms. Larkin as an expert. Although she agrees that Ms. Larkin is qualified to provide the value of a business, she points out that her association with the business disqualifies her as an expert.
I do not share these concerns. Ms. Larkin filed and confirmed an Acknowledgment of Experts Evidence. She was initially hired to provide a business valuation, which she completed on March 29, 2012 and thereafter she was retained to prepare the company's financial statements for 2011 and then performed the income analysis which was completed on November 2, 2012. Despite her subsequent association with the business, I find no basis that Ms. Larkin was not able or willing to provide the court with fair, non-partisan and objective evidence.
[23] The decisions on whether a witness is biased, and whether to accept expert evidence, are quintessentially within the trial judge’s mandate. In this case, the trial judge knew that Ms. Larkin was a participant expert witness. As this court held in Westerhof v. Gee Estate, 2015 ONCA 206, 124 O.R. (3d) 721 and Gordon v. Canada (Attorney General), 2016 ONCA 625, at paras. 327-328, the evidence of participant experts is not subject to the strictures of r. 53 of the Rules of Civil Procedure. The Supreme Court in White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, [2015] 2 S.C.R. 182, at para. 49, stated that:
The trial judge must determine, having regard to both the particular circumstances of the proposed expert and the substance of the proposed evidence, whether the expert is able and willing to carry out his or her primary duty to the court.
[24] That is precisely what the trial judge did.
[25] Taken together, the grounds of appeal challenge the trial judge's findings of fact, the inferences he drew from the facts, and his assessments of credibility and reliability. He gave detailed and coherent reasons for all of these. As Strathy C.J.O observed in Henderson v. Wright, 2016 ONCA 89, [2016] O.J. No. 533, at para. 19: “In such cases, there is almost no possibility of successfully overturning the result.” In my view, the appeal has little if any merit.
Does the appellant have insufficient assets in Ontario to cover the costs of the appeal?
[26] The appellant’s financial situation is difficult. As the respondent points out, the orders that have not been appealed require her to pay him about $158,000. Further, the matrimonial home, as of the date of separation, was valued at $294,000 and has a current first mortgage on it of about $142,000. The respondent acknowledges that, since he assumed the second mortgage on the house pursuant to the trial judge’s order, there is some equity in the house. In addition, the appellant has a LIRA worth about $185,000.
[27] The respondent in his affidavit states:
Although she has these assets, she also had in excess of $60,000 in debt (in addition to the mortgage) in 2011. I know that her credit card and other debts have increased significantly since the date of separation from the information disclosed on her updated financial statements and because I have been contacted by creditors threatening to terminate services to Carolina (hydro, property taxes) for non-payment.
[28] In response to this direct challenge, the appellant provides no substantive financial information. She states simply that “I am informed by my bank that I will have access to a portion of my LIRA in April 2017”, about $20,000. She adds that the creditors referred to by the respondent in his affidavit called him at a time when he “was paying no support or was arbitrarily deducting amounts from the support he was ordered to pay leading to debt being accumulated by me”. She does not, however, provide any evidence as to the amount of debt she is now carrying.
[29] Taken together, the evidence on the appellant’s financial responsibilities and means gives me no confidence that she has sufficient liquid assets to cover the costs of the appeal. Indeed, if she is unsuccessful on appeal then the current state of her finances would leave the respondent with a formidable collection problem. Further, if the appellant actually has equitable room in her assets to pay a costs award, then she should be in a position to provide security for costs by, for example, posting a letter of credit: See Perron v. Perron, 2011 ONCA 776, 345 D.L.R. (4th) 513; Baker v. Rego, 2013 ONSC 3309, O.J. No. 2590; and Children's Aid Society of York Region v. G.S., 2010 ONSC 3804, 98 R.F.L. (6th) 179.
Disposition
[30] Taking into account the lack of merit of the appeal, the respondent’s exposure to the costs of the appeal, and his prospective difficulty in collecting costs from the appellant, I find good reason to order the appellant to post security for costs in this case. I therefore order the appellant to post security for costs in the amount of $20,000 within 60 days of the date of this order, failing which a judge of this court may dismiss the appeal on motion.
[31] I fix costs of the motion at $6,000 inclusive of disbursements and applicable taxes, payable by the appellant.
“P. Lauwers J.A.”