COURT OF APPEAL FOR ONTARIO DATE: 20200309 DOCKET: C67193
Tulloch, Benotto and Jamal JJ.A.
BETWEEN
A.A. Applicant (Appellant)
and
Z.G. Respondent (Respondent)
AND BETWEEN
S.A. Plaintiff (Appellant)
and
A.A. & Z.G. Defendants (Respondents)
Counsel: Lauren Daneman, Mark Russell and William Friedman, for A.A. and S.A. David Weisman, for Z.G.
Heard: March 4, 2020
On appeal from the order of Justice Emile R. Kruzick of the Superior Court of Justice, dated June 27, 2019.
REASONS FOR DECISION
[1] This appeal arises from a long-standing, high-conflict family law dispute. At the conclusion of oral submissions, we advised the parties that the appeal was dismissed with reasons to follow. These are our reasons.
FACTS
[2] A.A. (the husband) and Z.G (the wife) [1] were married in 1991. They purchased a property together and built a new house. S.A (the husband’s father) advanced nearly $900,000 toward the construction costs. The couple signed a mortgage to the husband’s father in the amount of $800,000.
[3] The parties separated in 2008 and the husband’s father sought to enforce the mortgage against them. He obtained default judgment from the husband. The action against the wife was consolidated with the family law proceedings. The matter would not reach trial until 2012.
[4] In the meantime, in 2009 the wife purchased the husband’s interest in the matrimonial home. The husband’s interest in the home was held as security for support payments. (It has since been exhausted).
[5] The wife then sold the home to third parties. From the sale proceeds, $800,000 was paid to the father. The parties agreed that the father would post a letter of credit to secure the ongoing payments to the wife for support and equalization. He did so.
[6] The consolidated proceeding eventually wound its way to trial. A 64-day trial was heard over a period from 2012 until 2014. The trial judge released his 426-paragraph judgment in 2015.
[7] The trial judge ordered the husband to pay to the wife periodic spousal support of $7,000 per month or – at his option – a lump sum payment of $585,000. He also ordered that husband to pay retroactive child support of $196,462 and an equalization payment of $489,354 plus interest dating back to 2008. He required the husband to provide a letter of credit to secure the payments.
[8] The trial judge dismissed the father’s mortgage claim against the wife on the basis that the mortgage was a sham. (The father appealed. Although this court did not agree that the mortgage was a sham, the husband’s father did not establish that he made advances on the mortgage, so his appeal was dismissed).
[9] The husband has paid nothing to the wife since the judgment. (This court refused to hear his appeal as a result).
[10] The husband filed for bankruptcy in 2017. When he was ultimately discharged, the wife received approximately $44,000.
[11] By 2019 the husband’s arrears of support alone exceeded $1 million. At this point, he decided that he wanted to pay the outstanding amounts for support by taking advantage of the lump sum option.
[12] He brought a motion to the Superior Court for:
- advice and directions regarding the lump sum payment and spousal support provisions in the judgment; and
- an order that the wife be required to provide a satisfaction piece upon payment of certain sums and consent to release to his father the letter of credit for $800,000.
[13] The wife brought a motion seeking to draw on the letter of credit to pay support. She also requested that the order of costs be apportioned as between support and other relief.
[14] The husband’s motion was originally returnable before Diamond J. At the court’s suggestion and with the consent of the parties, it was transferred to Kruzick J., who had presided at the trial.
ORDER UNDER APPEAL
[15] The motion judge dismissed husband’s motion and provided clarification that: (i) the spousal support was $7,000 per month if the lump sum was not paid; and (ii) the letter of credit was to secure payments to the wife for support and equalization.
[16] He allowed the wife’s motion that the letter of credit be paid to her. By addendum to his decision, he apportioned the trial costs between support and property and awarded costs of $20,000 to the wife.
ISSUES ON APPEAL
[17] The husband and his father appeal on the basis that the motion judge erred by:
- varying the judgment when he was functus officio;
- terminating the lump sum spousal support order and converting it into an obligation to pay periodic support indefinitely;
- misapprehending the impact of the bankruptcy;
- ordering the letter of credit to be paid to the wife; and
- apportioning the costs order.
ANALYSIS
[18] We do not accept the appellants’ submissions.
The judge was not functus officio, nor did he convert the lump sum payment
[19] The appellants submit that the motion judge had no jurisdiction to make the orders because he was functus officio. We disagree for two reasons.
[20] First, the motion judge was asked for “advice and direction” on the support payment provisions in the judgment. The judgment required periodic payments or “the husband may if he chooses, satisfy the periodic support obligation by a lump sum payment in the amount of $585,000”.
[21] The motion judge was perfectly positioned to address this, which he did as follows:
The order speaks for itself. The husband has an obligation to pay periodic support of $7,000 a month to the wife which he could have satisfied by a lump sum. …he did not make a lump sum payment so that the periodic support obligation continues [Emphasis added].
[22] The motion judge did not “convert” the lump sum payment to a periodic support payment. The periodic support payment was in the judgment. The husband’s failure to pay the lump sum meant that the periodic support continued.
[23] Second, even if there had been a change in the final order, the court has the authority to do so pursuant to r. 15 of the Family Law Rules, O. Reg. 114/99. In this regard, we do not agree with the motion judge’s comment that he was functus officio.
[24] By resolving the issues before him the motion judge was following the primary objective of the Family Law Rules to “deal with cases justly” by ensuring that the procedure is fair to all parties, saving time and expense and dealing with the case in the way that is most appropriate to its importance and complexity (r. 2). Rule 2 specifically grants judges some procedural freedom to resolve family law disputes fairly and expeditiously. The motion judge’s approach was both fair and expeditious in the true spirit of r. 2.
The bankruptcy and the letter of credit
[25] During oral submissions, we were advised that the letter of credit was released to the wife so this no longer formed part of the appeal. However, it does form part of the analysis with respect to the appellants’ submissions on the bankruptcy.
[26] The appellants submit that the motion judge misapprehended the effect of the bankruptcy by explaining that the equalization payment remains owing. They submit that the bankruptcy extinguished the obligation to make the equalization payment. We do not agree. The motion judge indicated that the line of credit was to secure equalization and support and this “creates an equitable trust”. As an equitable trust it did not form part of the bankrupt’s estate.
[27] Accordingly, the motion judge did not misapprehend the effect of the bankruptcy.
Allocation of costs
[28] Under all the circumstances, it was appropriate for the trial judge to allocate a portion of the trial costs to support. The motion judge, having presided over a long trial, was well-positioned to know the percentage of the costs properly attributable to support claims.
[29] For these reasons, we dismissed the appeal.
[30] The evidence before the motion judge was that the husband owes over $1.7 million to the wife, although she claims it is closer to $850,000. What is clear is that he has paid nothing towards spousal or retroactive child support.
[31] Under these circumstances, and, given the reasonableness of the respondent’s bill of costs, we order that the appellants pay the respondent costs of $23,000 all inclusive, on a substantial indemnity basis.
“M. Tulloch J.A.” “M.L. Benotto J.A.” “M. Jamal J.A.”
Footnote:
[1] Although the parties are divorced, for ease of reference we refer to them as husband and as wife.
