Stetco v. Stetco, 2013 ONSC 3103

CITATION: Stetco v. Stetco, 2013 ONSC 3103

COURT FILE NO.: FS-11-373865

DATE: 20130529

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Calina Stetco, Applicant

AND:

Gheorge Stetco, Respondent

BEFORE: Justice B. L. Croll

COUNSEL: V. Pohani, for the Applicant

M. Khan, for the Respondent

HEARD: May 6, 7, 8, 2013

REASONS FOR JUDGMENT

[1] Calina and Gheorge Stetco were married on December 19, 1978. They separated on October 4, 2010 after 32 years of marriage. They have two adult children.

Issues for trial

[2] The parties have resolved the issue of spousal support. Mr. Stetco is to pay Mrs. Stetco the amount of $500 per month with no review period. The issues left for trial were as follows:

i. Equalization of net family property and whether Mrs. Stetco is entitled to an unequal division of property;

ii. Mrs. Stetco’s claim for occupation rent;

iii. An accounting of funds spent from the line of credit by Mr. Stetco;

iv. An accounting for post-separation payments made towards the former matrimonial home; and,

v. Whether Mr. Stetco’s lawyer, Mr. Khan, must return funds he disbursed from the proceeds of sale of the matrimonial home that were being held in his trust account.

[3] In this regard, I note that after Mrs. Stetco had finished giving her evidence, her counsel sought leave to amend the Application to add a claim for an unequal division of net family property pursuant to section 5(6) of the Family Law Act, R.S.O. 1990, c. F.3. Counsel candidly acknowledged that the claim had not been included due to oversight. I granted the amendment for the following reasons.

[4] Rule 11(3) of the Family Law Rules, O. Reg. 114/99, provides that on motion, the court shall give permission to a party to amend an application, unless the amendment would disadvantage another party in a way for which costs or an adjournment could not compensate.

[5] Although it was not explicitly pleaded, it was clear that Mrs. Stetco has been seeking an unequal division. Indeed, the core allegation of the Application is that because Mr. Stetco continued to withdraw amounts from the Royal Bank Homeline Plan line of credit after separation, it should be his sole responsibility. As well, there is, in large part, agreement as to value of the parties’ respective assets at the separation date, the net proceeds of sale of the matrimonial home, and the net value of any assets at the date of marriage. Given this agreement, if Mrs. Stetco was seeking an equal division of net family property, there would be no need for this trial.

[6] The endorsements made before trial also illustrate that unequal division has been identified as a live issue for trial. In the Trial Scheduling Endorsement completed on November 2, 2012, Mesbur J. noted that the issue was “Equalization—particularly the treatment of post-separation increases in the line of credit secured against the matrimonial home”. In the Trial Management Conference Endorsement dated May 1, 2013, the first item Perkins J. listed as an issue for trial was “NFP equalization and Applicant Wife’s claim for an unequal NFP division.” I also note that in her opening statement, counsel for Mrs. Stetco claimed an unequal division of the proceeds of sale of the home, and in his opening statement, counsel for Mr. Stetco stated “the Husband is seeking equitable division of the net family property while the wife is seeking unequal division.” This statement alone belies the shock and surprise that Mr. Stetco’s counsel asserted in response to Mrs. Stetco’s oral motion to amend her Application.

[7] For all these reasons, I determined that there was no prejudice or disadvantage to Mr. Stetco by this amendment to Mrs. Stetco’s Application.

Background facts

[8] Mrs. Stetco is a teacher’s aide with the Toronto District School Board, where she has worked for approximately 18 years. Mr. Stetco is heavy equipment mechanic and is currently employed by GFL Environmental Company.

[9] The parties jointly owned a home at 29 Heatherington Drive in Toronto, which they bought in around 2001 or 2002. At the time of purchase, they borrowed money from The Royal Bank of Canada (“RBC”) and an RBC mortgage was placed on the home. It was Mrs. Stetco’s evidence that during the marriage, Mr. Stetco paid the mortgage, and she paid all the utilities, insurance, phone and internet charges, and that she bought the groceries for the household.

[10] Mr. and Mrs. Stetco entered into a joint line of credit with RBC known as the RBC Homeline Plan in December 2009. According to Mr. Stetco, the line of credit was obtained to deal with the possibility that he might not be able to find work after having had surgery. Mrs. Stetco’s evidence was that she did not want this line of credit, and that, at the time, she suggested to Mr. Stetco that if money was an issue, they should buy a smaller home.

[11] It was Mrs. Stetco’s evidence that throughout the marriage, she was physically and emotionally abused and threatened by Mr. Stetco, and that she had left the home on earlier occasions to seek refuge at women’s shelters. Although conduct is not directly relevant to the accounting and arithmetic that this case requires, it arguably explains why she signed the line of credit when she did not want to do so. It was her evidence that Mr. Stetco forced her with domestic violence and threats to go with him to the bank to sign for the line of credit. She described with some anguish how he slapped her face, pulled her hair and threatened to kill her if she did not accede to his request.

[12] Mrs. Stetco left the matrimonial home on October 4, 2010 after another episode of domestic violence. Upon leaving, she initially stayed at a women’s shelter, and is currently residing in a bachelor apartment. Mr. Stetco remained in the matrimonial home until it was sold on June 28, 2012, and has since purchased a new home.

[13] The matrimonial home was sold for $500,000. The mortgage balance on the date of closing was $174,479.14, payable to RBC. The balance at closing of the line of credit was $135,948.97. This left net proceeds of sale, after discharge of the two loans, real estate commission and legal fees, of $158,666.86.

[14] Mrs. Stetco testified that she has never taken any money from the line of credit, either before or after separation. This was not disputed by Mr. Stetco. Not surprisingly, much of the trial was taken up by questions about this line of credit, in particular, how the funds were used by Mr. Stetco and the impact, if any, of the line of credit debt on the equalization payment.

RBC Homeline Plan Line of Credit

[15] At the date of separation in October 2010, the line of credit balance was $60,068.96. At the time of sale of the home in June 2012, a further $75,880.01 had been drawn from the line of credit, increasing it to $135,948.97.

[16] Mrs. Stetco’s counsel painstakingly took Mr. Stetco through each of the withdrawals on the line of credit and the transactions shown on his bank statement. She asked where the money went and what it was used for. There were gaps of information that accompanied almost every withdrawal from the line of credit. I cite some examples.

[17] In December 2009, the line of credit statement shows a withdrawal of $34,764.07. When questioned about these monies, Mr. Stetco replied that it was impossible that he would have used that much money and suggested that the statement could be incorrect.

[18] The statements also show a number of withdrawals from January 2010 until October 2010, totalling $28,000. I note, however, that Mr. Stetco’s bank account records only commence on the date of separation, October 4, 2010. As such, there is no documentary record from which to ascertain what the withdrawals before October were used for and if the withdrawals from the line of credit were deposited into Mr. Stetco’s bank account. Mr. Stetco himself could not provide reliable viva voce record as to what happened to these monies.

[19] In March 2011, the line of credit statement shows a withdrawal of $12,975, which was paid back the same day. Mr. Stetco explained these transactions by saying that he had “lost his mind”.

[20] On June 23, 2011, the line of credit statement shows a withdrawal of $13,170.76. There was no corresponding deposit into Mr. Stetco’s bank account. Mr. Stetco could not explain how this money was spent or where else it may have been deposited.

[21] In December 2011, the line of credit statement shows a withdrawal of $24,000. The December 2011 statement of Mr. Stetco’s bank account shows deposits totalling $14,000. Mr. Stetco was unable to explain how the outstanding $10,000 was spent or where else it may have been deposited. I note that this type of mystery permeates almost all of the withdrawals.

[22] The records indicate that on July 8, 2011, Mr. Stetco deposited $3064.74 to his tax free savings account (“TFSA”). Although he indicated that he did not understand what a TFSA was, he said that it was possible that the money came from the line of credit.

[23] Mr. Stetco stated that he spent about $30,000 on renovating the Heatherington Drive home so that it could be rented in 2011. He also stated that he did the work himself, but he did not provide receipts for any expenses incurred. Originally, Mr. Stetco’s evidence was that he did one set of renovations, but in cross-examination, he described a second set of renovations that was necessary to repair damages left by the tenant. His evidence was that he spent about $10,000-$15,000 on these second renovations, but again, there was no evidentiary foundation for this amount.

[24] When asked about how the withdrawals from the line of credit were spent, Mr. Stetco consistently replied that he transferred the money into his own account so that money was there to cover the mortgage payments, and that these transfers were necessary to ease his stress. The documentary evidence, however, does not support his explanation.

[25] In particular, Mr. Stetco stated that he needed the funds from the line of credit for the mortgage because he did not work in 2009, after his surgery in 2008. His Notice of Assessment for 2009, however, shows total income of $46,356, including T4 earnings of $37,156, employment insurance benefits of $4,470 and workers’ compensation benefits of $4,026. At that time, Mrs. Stetco was still living in the matrimonial home and paying utility, phone and grocery expenses. When shown his 2009 Notice of Assessment, Mr. Stetco denied that that represented his income.

[26] According to Mr. Stetco’s own Request to Admit, his income after Mrs. Stetco left in October 2010 was $3208.50 per month. The bank records indicate that, at that time, the mortgage was $1883 per month. His financial statement also sets out household expenses of $956 per month, which includes a high monthly telephone expense of $382.97. This results in a surplus, after mortgage and other expenses, of $369 at the end of each month.

[27] Mr. Stetco also explained his withdrawals from the line of credit by claiming that Mrs. Stetco had left the tax and utility bills unpaid for some three or four months prior to her leaving in October 2010 and that it was necessary for him to pay thousands of dollars in arrears. The record filed, however, shows that the property tax, water and electricity bills were current, or at most, one month late, and in modest amounts.

[28] Mr. Stetco’s 2011 Notice of Assessment shows income of $57,762. He also earned rental income in 2011, as he charged $1,000 per month to rent out the upper part of the home. While Mr. Stetco states that he received rent for only three months, an order issued by the Landlord and Tenant Board dated January 23, 2012 indicates that the tenant had not paid rent for the four month period of October 1, 2011 to January 31, 2012, and that the tenancy began in February 2011. Accordingly, the inference can be drawn that Mr. Stetco earned eight months of rental income in 2011, adding $8,000 to his other income of $57,762.

[29] It is agreed that in 2011 Mr. Stetco paid $24,669 on the RBC mortgage. He has also filed a chart that indicates his household expenses of maintenance and taxes for 2011 were $1,471.29. Even accounting for income tax on the $57,762 of taxable income, Mr. Stetco would be left with a surplus at the end of each month. Yet, the line of credit records indicate that he withdrew approximately $44,000 from the line of credit in 2011. Again, he was unable to provide any credible explanation for the withdrawals.

[30] Mr. Stetco accepted that from separation until the date of the sale of the home, he spent some $4,500 at restaurants, and some $2,400 for beer and liquor. His evidence was that he does not cook so he had to eat out often after Mrs. Stetco left, and that he had a few parties with his friends and needed to have the alcohol for them. He explained that he had the parties to deal with his stress and to prevent him from getting sick. Mr. Stetco also purchased a used Mercedes in 2011 for $13,000.

[31] As indicated, Mr. Stetco withdrew $60,068.96 from the line of credit before separation and $75,880.01 after separation. Throughout his evidence, he was unable to provide a reliable or credible account for how this money was spent.

[32] Notably, in the middle of his cross-examination on the second day of trial, Mr. Stetco stated that it would not be fair for Mrs. Stetco to be responsible for one-half of the line of credit incurred since separation, and that she should not be liable for this. However, when Mr. Stetco returned on the third day of trial, he resiled from his earlier evidence and reiterated that Mrs. Stetco should share in the total line of credit liability, both pre and post separation. On day three of the trial, Mr. Stetco stated that he had not understood the question of the day before. I do not accept this explanation. I observed Mr. Stetco’s original answer, and in fact, given the surprising nature of that answer, I repeated counsel’s question to ensure there was no confusion. Mr. Stetco understood the question when first asked, and was clear that Mrs. Stetco should not be responsible for the money taken from the line of credit after separation.

[33] When assessing Mr. Stetco’s credibility as to how he used the line of credit, I have also considered his evidence about issues beyond this liability. As indicated, it was his position that the December 2009 withdrawal of approximately $35,000 was impossible and suggested it was attributable to bank error. He also rejected the information in the letter from the Anduhyaun Shelter that referred to the physical, emotional, psychological and financial abuse that Mrs. Stetco has suffered for over thirty years. Rather, Mr. Stetco’s evidence was that Mrs. Stetco bruised herself in order to lay false accusations against him, a scenario I reject entirely. In rejecting this version of events, I note that in 1992, pursuant to an emergency motion brought in the Family Division of this court in Newmarket, Mr. Stetco was restrained from removing his children from school or the school bus, and was ordered not to harass Mrs. Stetco or the children on a temporary basis. In 1993, Mr. Stetco was charged with assault and uttering threats, although I appreciate that the disposition of this charge is unknown. Mr. Stetco also acknowledged being in jail for some three or four days in 2006 or 2007, having been charged with assault. He also admitted to being convicted of assaulting his daughter when she was sixteen years old, although he appeared to suggest he was only disciplining her.

[34] Mr. Stetco purchased a new home after the sale of the matrimonial home in June 2012; he initially was unable to remember the purchase price, and then indicated that it was close to $400,000. After some persistent questioning, he advised that he had made a down payment of $74,000. I note that this was at a time when the proceeds of sale of the matrimonial home were being held in trust. Finally, I note that Mr. Stetco has not paid the support of $2,000 due May 1, 2013 and ordered by Mesbur J. on November 2, 2012.

[35] Mr. Stetco repeatedly indicated that he did not understand the questions he was being asked. In my view, however, those responses were a self-serving way to avoid a forthright reply. Overall, I find that Mr. Stetco was evasive, unclear and cavalier with his evidence. With respect to the withdrawals from the line of credit, he offered many different and unsubstantiated explanations. There is, in my view, not a scintilla of reliable evidence to establish that Mrs. Stetco has in any way benefited from the money from the line of credit, either before or after separation. Before Mrs. Stetco left the home, their home life and household responsibilities functioned as had always been the case. They each paid certain bills, and she cooked and cleaned. There was no apparent need for the line of credit. After separation, Mrs. Stetco has continued to lead a very modest life. She lives in a bachelor apartment, has no car and rarely, if ever, spends money on entertainment or eating outside the home. In contrast, Mr. Stetco bought a used Mercedes, bought a new home, regularly eats out, entertains his friends, and contributed to his registered retirement savings account (“RRSP”) in 2010 and TFSA in 2011.

Net Family Property Division

[36] Besides the matrimonial home, each party had other limited assets at valuation date. Mrs. Stetco has a pension from the Toronto District School Board valued at $13,381.31. She also had a bank account balance of $1,977.39. Mr. Stetco has no pension. He had an RRSP worth $8,976.51 on the valuation date, a chequing account of $2828.47 and a TFSA of $2,037.07. They owned the matrimonial home as joint tenants.

[37] There was some discussion at trial about the value of household items at separation. Mrs. Stetco left the matrimonial home with a few garbage bags filled with her personal belongings. Everything else was left in the home and she never returned to retrieve anything. In her net family property statement, she has included a value of $8,475 for general household items and vehicles owned by Mr. Stetco, as this was the figure that he used on his financial statement sworn June 26, 2012.

[38] Mrs. Stetco’s net family property statement dated May 9, 2013, in which the entire line of credit is divided equally between the parties, results in an equalization payment owing from Mr. Stetco to Mrs. Stetco of $3,479.13. Given that the entire line of credit liability has been divided equally in this calculation, the payment owing simply equalizes the difference between the value of each of Mr. and Mrs. Stetco’s assets.

[39] However, Mrs. Stetco seeks an unequal division of net family property, on the basis that it would unconscionable to equalize the net family properties, having regard to Mr. Stetco’s intentional or reckless depletion of his net family property: see s. 5(6) of the Family Law Act.

[40] The test for an unequal division is a high one. The accepted standard of unconscionability requires circumstances that go beyond unfairness, harshness or injustice: see Parmigiani v. Parmigiani, [2006] O.J. No. 1268, at para. 91.

[41] As stated in Serra v. Serra, 2009 ONCA 105, [2009] O.J. No. 432, at para. 58:

There is no principled reason that I can see, given the language of the Act and its purpose or objects, to confine the word "unconscionable" in s. 5(6) only to circumstances arising from fault-based conduct on the part of one of the spouses. Although unconscionable conduct is obviously an appropriate consideration in determining whether equalizing the net family properties would be unconscionable, in my opinion the true target of the limited exception to the general rule is a situation that leads to an unconscionable result, whether that result flows from fault-based conduct or not. [Emphasis in original.]

[42] Mr. and Mrs. Stetco were married for over 30 years. Less than a year before the marriage ended, it was Mrs. Stetco’s evidence that Mr. Stetco forced her to sign the joint line of credit when she did not want to, by using the same violence and threats of violence that he had inflicted on her in the past. I accept this evidence. It was agreed that Mrs. Stetco did not withdraw a single cent from the line of credit, whereas Mr. Stetco withdrew $60,068.96 before separation and $75,880.01 after. Despite these large withdrawals, Mr. Stetco has not offered a clear or credible explanation as to how the funds were spent. There was also a deficit of documentary evidence to explain how the money was used. I draw a negative inference from the failure to provide any receipts or bank statements that explain his expenditures.

[43] There is, as has been stated, no evidence to suggest that Mrs. Stetco benefitted in any way from the line of credit, while there is evidence that Mr. Stetco benefitted personally. As stated, he spent money on dining, contributed to various savings vehicles, bought a used Mercedes and a new home.

[44] In my view, this is a case where the circumstances “shock the conscience of the court”, and call for an unequal division of net family property: Merklinger v. Merklinger (1992), 1992 CanLII 7539 (ON SC), 11 O.R. (3d) 233, [1992] O.J. No. 2201, (Ont. Gen. Div.), aff'd (1996), 1996 CanLII 642 (ON CA), 30 O.R. (3d) 575, [2006] O.J. No. 4080 (C.A.). The parties had one significant asset, the matrimonial home. I am satisfied that to require Mrs. Stetco to use her share of the proceeds of the home to pay for one-half of a large loan for which she obtained no benefit, direct or indirect, after a long and difficult marriage, would be reprehensible, and shock the conscience of any informed and reasonable person.

[45] Mrs. Stetco is entitled to the equalization payment of $3479.13 (the amount owing if the line of credit were divided equally), plus one half the proceeds of sale of the matrimonial home, after deducting legal fees and disbursements relating to the sale, real estate commission and the RBC mortgage. There shall be no deduction for the RBC Homeline line of credit. The calculation of the net proceeds of sale is as follows:

received from purchaser $479,557.96

paid to discharge RBC mortgage

• $174,479.14

paid to Century 21 real estate

• $8,250

transaction levy

• $65

legal fees and disbursements

• $2,147

net proceeds = $294,616.82

one-half net proceeds ÷2 = $147,308.41

[46] Accordingly, Mrs. Stetco is entitled to $147,308.41 plus the equalization payment of $3479.13, to arrive at a sum of $150,787.54. As Mrs. Stetco has already received an advance of $15,000, she is entitled to a remaining equalization payment of $135,787.54.

Occupation rent

[47] Mrs. Stetco also claims occupation rent at the rate of $1,000 per month from the date of separation, October 4, 2010, until the house was sold on June 28, 2012. She submits that $1,000 is reasonable, given that this was rent that Mr. Stetco charged for renting the upper portion of the home during 2011.

[48] In determining occupation rent, the following factors are relevant: the timing of the claim for occupation rent, the duration of the occupancy, the inability of the non-resident spouse to realize on her equity in the property, any reasonable credits to be set off and other competing claims in the litigation: see Griffiths v. Zambosco (2001), 2001 CanLII 24097 (ON CA), 54 O.R. (3d) 397, [2001] O.J. No. 2096, at paras. 49-50 (C.A.).

[49] I am not persuaded that Mrs. Stetco was responsible for any prejudicial delay in listing the home for sale or in executing the documents for closing. She was living in a bachelor apartment and needed the proceeds of sale, so there would have been no benefit to her to delay the steps necessary to sell the house. Further, although Mrs. Stetco was a joint owner of the home, it was not feasible for her to physically return to the house given her fears for her safety. The history of abuse she suffered obstructed her ability to even communicate with Mr. Stetco about housing issues. Her evidence was that she would rather die than go back to the home. I also note that she only learned that the house had been rented through a casual conversation with a former neighbour, not from Mr. Stetco.

[50] Mrs. Stetco brought her Application in October 2011, one year after she left the matrimonial home. She indicated that after separation, she had stayed at the shelter for about two and a half months, moved to her daughter’s apartment, and then moved to her own apartment. She was referred to her counsel through the shelter’s services. Given the circumstances through which she left the home, there was no unreasonable delay in issuing the Application.

[51] While the Application was amended late in the proceedings to include a claim for occupation rent, this is but one consideration in determining occupation rent. I also note that while the Application did not formally seek occupation rent, the issues of Mr. Stetco living in the house, receiving rental income, sitting on her equity and refusing to give Mrs. Stetco her share were raised in the original Application. On balance of the relevant factors, I am of the view that occupation rent is fair in these circumstances.

[52] When determining the quantum of occupation rent, the mortgage and any other carrying charges paid by the occupying spouse must also be considered. Mr. Stetco paid $43,296.60 towards the mortgage from separation until sale. These mortgage payments are both principal and interest payments, and as stated in Higgins v. Higgins, 2001 CanLII 28223 (ON SC), [2001] O.J. No. 3011 (S.C.J.), at para. 57, the claim of an occupying spouse should not be restricted to principal, as the non-occupying spouse benefits from interest payments as well. Mr. Stetco has also listed maintenance fees totalling $1539.30 spent on the home. Although I note that there is no evidentiary basis for this amount, it is not unreasonable. I find that Mrs. Stetco is responsible for half of the mortgage payments, namely $21,648.30 and half of the maintenance, namely $770, and that her occupation rent claim, exclusive of any interest, is $21,000. Mrs. Stetco’s claim for occupation rent is set off by the by the mortgage and maintenance payments.

Disbursements by Mr. Khan

[53] Mr. Khan is Mr. Stetco’s lawyer on this family law matter. He also acted for both parties on the sale of the matrimonial home.

[54] In late March 2013, Mrs. Stetco prepared motion materials seeking release of $25,000 from the proceeds of sale of the matrimonial home being held in trust, as an advance on her equalization payment or as an interim lump sum towards disbursements. The correspondence filed indicates that counsel resolved the matter without bringing the motion. In particular, on March 26, 2013, Mr. Khan wrote to Mrs. Stetco’s counsel, Ms. Pohani, indicating that he was trying to contact his client about an advance of $15,000 to her client. On March 27, 2013, Ms. Pohani wrote to Mr. Khan confirming that $15,000 would be released to Mrs. Stetco as an advance equalization payment and that the motion would be withdrawn.

[55] The $15,000 was advanced to Mrs. Stetco, but Mr. Khan also advanced $15,000 to Mr. Stetco. It appears that he did so without informing Mrs. Stetco or her counsel. It was Mrs. Stetco’s evidence that she thought that Mr. Khan was putting Mr. Stetco’s interest ahead of hers, and that when he disbursed the funds to Mr. Stetco he was acting in his capacity as Mr. Stetco’s family law lawyer and not their joint real estate lawyer.

[56] At the trial management conference on May 1, 2103, it came to light that Mrs. Stetco had received a cheque for $64,333.93 from Mr. Khan and that Mr. Stetco had received a cheque for $30,000 from Mr. Khan. Perkins J. took the cheques and appended them to this trial record.

[57] Mr. Khan was not a witness, and continued to represent Mr. Stetco throughout. Not surprisingly, the evidence about these disbursements was awkward and indirect. Any evidence about the payments had to be elicited through the two parties, the only witnesses.

[58] What appears to have occurred is that Mr. Khan made a further advance of $34,333.93 to Mr. Stetco and/or to himself on account of fees. In any event, when Mrs. Stetco asked Justice Perkins to stop payment on the $34,333.93, he could not do so as those monies had already been disbursed. It is because this $34,333.93 was already paid out to Mr. Stetco and/or his counsel that Mr. Khan presented the cheque for $64,333.93 to Mrs. Stetco. In other words, in his capacity as real estate solicitor for both parties, Mr. Khan was intending to equalize what each party received from the proceeds of sale. The problem is, this was contrary to what had been agreed. Perkins J. noted in his May 1, 2013 endorsement, that Mr. Khan agrees “that the parties and Justice Kiteley agreed that sale proceeds would be held pending any court order.” Mr. Stetco’s own trial management brief dated August 22, 2012, states as follows: “The matrimonial home has been sold and the mortgage and line of credit has been paid off out of the sale proceeds. The balance funds in the amount of $156,667.86 are held in trust account subject to be distributed on the court order.”

[59] In closing submissions, Mr. Khan agreed to return the $15,000 advanced to Mr. Stetco together with the sum of $34,333.93 that was apparently taken for his fees and/or Mr. Stetco.

[60] Finally, I direct Mr. Khan to the recent practice direction published by the Law Society of Upper Canada in (2013), 114 O.R. (3d) lxiii-lxiv, which states:

A lawyer who represents one of the spouses in a matrimonial dispute should not act for both spouses with respect to the sale of the matrimonial home because of the potential for a serious conflict of interest developing.

A lawyer who acts for both spouses with respect to the sale of the matrimonial home is acting on a joint retainer and must comply with subrules 2.04(6) through (10) of the lawyers’ Rules. When a lawyer is retained on a joint retainer, no information received in connection with the matter from one client can be treated as confidential as far as any of the other clients in the joint retainer are concerned. In such a situation, the lawyer has a fiduciary duty to protect both clients and to disclose all relevant information to both clients.

If the lawyer is acting for both spouses in the sale of the matrimonial home only and a dispute arises between the spouses as to the manner in which the closing proceeds are to be distributed, the lawyer may not distribute the proceeds in a manner inconsistent with the instructions of both of the clients. The lawyer cannot prefer the interests of one client over the other. In such a situation, the lawyer should not pay out any portion of the proceeds without the written consent of both spouses or without a court order (see subrule 2.07(6) of the lawyers’ Rules).

Divorce

[61] Mrs. Stetco also seeks a divorce. The evidence indicates separation occurred on October 4, 2010 and there is no reasonable prospect of reconciliation. Accordingly, a divorce order shall issue, and unless appealed, it shall take effect, and the marriage is dissolved, on the thirty-first day following the release of these reasons.

Conclusion

[62] Based on the foregoing, the following orders are made:

I. Mr. Stetco shall pay the sum of $135,787.54 to Mrs. Stetco on account of the equalization owing. In order to satisfy this payment:

a. The cheque of $30,000 payable to Mr. Stetco and the cheque of $64,333.93 payable to Mrs. Stetco, currently attached to the trial record, will be attached to a copy of these reasons to be picked up by Ms. Pohani, counsel for Mrs. Stetco. Ms. Pohani shall deliver the cheque for $64,333.93 to Mrs. Stetco. The cheque for $30,000 payable to Mr. Stetco shall be destroyed by Ms. Pohani.

b. Mr. Khan shall issue a cheque for $30,000 payable to Ms. Pohani in trust and deliver same to her within five days of the release of these reasons.

c. Mr. Khan shall issue a cheque for $41,453.61 payable to Ms. Pohani in trust and deliver same to her within five days of the release of these reasons. This amount is composed of the $15,000 paid to Mr. Stetco without authorization plus a sum of $26,453.61 taken from the $34,444.93 that Mr. Khan took out of the proceeds of sale, funds that properly belong to Mrs. Stetco.

II. Mrs. Stetco shall be entitled to pre and post judgment interest on the amount due and owing pursuant to the Courts of Justice Act.

Costs

[63] If the parties are unable to agree on costs of this trial, this shall be addressed by way of written submissions. Mrs. Stetco has until June 12, 2013 to make submissions; Mr. Stetco has until June 21, 2013 to respond. Mrs. Stetco has a further period until July 2, 2013 to reply to Mr. Stetco’s submissions. Submissions shall be no more than three pages in length, excluding any Bills of Costs or Offers to Settle.

Croll J.

Date: May 29, 2013