OTTAWA COURT FILE NO.: FC-12-1503
DATE: 2014/05/27
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
RAHUL KOCHAR
Applicant
– and –
AMITA KOCHAR
Respondent
Carol A. Crawford and Linsey Sherman, for the Applicant
William Abbott and Aaron Mastervick, for the Respondent on June 19, 2013
Beverley Johnston, for the Respondent on December 20, 2013
HEARD: June 19 and December 20, 2013 at Ottawa
reasons for decision
KERSHMAN J.
Introduction
[1] This is an interim motion brought by the Respondent (“Wife”) to deal with the issues of: (1) partition and sale of a non‑matrimonial home; (2) an order requiring the Applicant (“Husband”) to pay for interim disbursements; (3) imputation of income to the Husband; (4) interim child support; and (5) interim spousal support,
Preliminary Orders
[2] On consent, the parties agreed to the following order:
(1) the Wife and the children shall continue to remain on the Husband’s health and dental care plan;
(2) the parties acknowledged that the Husband’s income tax returns have been provided;
(3) the parties consent to the Husband amending his pleadings;
(4) there will be no claim for an advance payment on equalization on this motion; and
(5) there will be an order for questioning within 60 days of January 8, 2014.
Factual Background
[3] The Husband is 33 years of age. The Wife is 30 years of age. The parties were married on October 29, 2004 and separated on March 11, 2011. There are two children of the marriage, Zara Kochar, born August 24, 2008 and Mikhil Kochar, born December 9, 2009.
[4] The Husband is employed by DCR/Phoenix Development Corporation Ltd. (“Phoenix Homes”) as Vice‑President. His line 150 income is as follows:
Year
Line 150 Income
2009
$127,931
2010
$166,526
2011
$204,500
2012
$204,500
2013
$204,500
[5] The Wife attended university in New York City. Prior to graduating, she moved to Canada to marry the Husband. She subsequently attended the University of Ottawa but did not complete a degree.
[6] Over a period of years, the Wife provided interior design services for Phoenix Homes and received a salary. Prior to termination, her salary was approximately $78,000.00 per year. She received a six‑month severance package, in November 2012. One of the issues with this case is whether the Wife did provide services to Phoenix Homes or whether this was an income splitting mechanism.
[7] In 2012/2013, the Wife attended a design course in India.
[8] There is a rental property at 39 Winding Way, Ottawa, Ontario (“Winding Way”), which the Wife seeks to have sold at this time.
Issues
[9] The issues on this interim motion are the following:
(1) Should there be an order for partition in sale of a vacant non‑matrimonial home on Winding Way, Ottawa, Ontario;
(2) Should the Wife receive interim disbursements of $50,000.00 from the Husband, which would be applied towards an analysis of his income.
(3) What is the Husband’s income for interim child support and interim spousal support purposes;
(4) Did the wife earn an income or was the payment to her an income splitting mechanism; and
(5) Based on the Husband’s income, what is the quantum of interim child support and interim spousal support to be paid as of June 1, 2013.
1) Should there be a Partition in Sale of the Winding Way Property
Wife’s Position
[10] The Winding Way property is a vacant rental bungalow of approximately 1100 square feet on a waterfront lot.
[11] The Wife argues that this property should be partitioned and sold so that she can receive her share of the proceeds from the sale to allow her to pay living expenses.
[12] The Wife has produced a letter of opinion from a real estate agent indicating that the value of the property is $1.2 million – $1.4 million.
Husband’s Position
[13] The Husband argues that the sale of the Winding Way property is premature. He provided an appraisal of the property from Shore, Tanner and Associates dated August 10, 2011, showing an appraised value of $775,000.00.
[14] The Husband indicates that subsequent to obtaining the appraisal, he spoke with an appraiser at Shore, Tanner and Associates who indicated that the value of the property had not changed in 2012.
[15] The Husband argues that there is no equity in the property based on the following encumbrances registered against the property:
a. First mortgage in favour of the Laurentian Bank of Canada for $400,000.00 registered on October 11, 2006;
b. Second Mortgage in favour of the Canada Trust Company for $166,000.00 registered on October 11, 2006;
c. Third Mortgage in favour of Kuckoo Kochar and Madhu Kochar for $162,100.00 registered on December 15, 2006.
[16] The Laurentian Bank mortgage was subsequently assigned to Kuckoo Kochar and Madhu Kochar on September 4, 2012. The Canada Trust mortgage was also assigned to Kuckoo Kochar and Madhu Kochar on October 10, 2012.
[17] All three mortgages were all assigned from Kuckoo Kochar and Madhu Kochar to the Bank of Montreal on October 25, 2012. The Bank of Montreal then re‑assigned the three mortgages back to Kuckoo Kochar and Madhu Kochar on May 30, 2013.
[18] The Husband argues that the liabilities for the three mortgages against the property total in excess of $827,000.00. He argues that neither party contributed any money to the purchase or the expenses of the property and that as of date of the separation, his parents had made the following payments on Winding Way:
Initial investment including third mortgage
$186,500.00
Payments made on the Laurentian Bank mortgage
$144,834.00
Payments made to Canada Trust Company
$65,985.00
Payments made towards property taxes
$15,036.00
Net rent recovery
($38,508.00)
Miscellaneous expenses
$10,178.00
Total
$384,025.00
[19] The Husband argues that in addition to the $384,025.00 owed to his parents on the date of separation, the balance of the mortgages owing to Laurentian Bank and the Canada Trust Company at the date of separation were as follows:
Laurentian Bank
$277,139.00
Canada Trust Company
$166,000.00
Total
$443,139.00
Analysis
[20] The Court is being asked to deal with the sale of a non‑matrimonial home on an interim motion. The Wife argues that the only way to determine the value of the property is to list and sell it. She argues that whether it is an appraisal or a letter of opinion from a non‑appraiser will not determine the value of the property. Actually listing the property for sale and selling it will determine its true value.
[21] The Wife argues that in the case of Ross v. Ross, 2010 ONSC 3590, 92 R.F.L. (6th) 159, Pedlar J. set out the law with respect to the sale of a non‑matrimonial home on an interim motion. Paragraphs 50 and 51 state:
The remaining issue relates to the request by the applicant for an order for the cottage property on Adam's Lake, which was purchased in May, 2007, approximately 16 months prior to the date of separation, be sold. I find that the cottage is not a matrimonial home within the meaning of the Family Law Act, based on the material filed on this motion.
Given that the cottage is not a matrimonial home, section 2 of the Partition Act is the governing statutory provision with respect to an application for the sale of the cottage.
[22] As this is an interim motion, there is no reason to make the order for partition and sale in relation to a rental property at this time. Furthermore, there may or may not be any equity in the property based on the appraisal and the encumbrances outstanding, including monies owing to the Husband’s parents.
[23] While the Wife argues that there is equity in the property, the Court does not view the situation in the same light. From the Court’s perspective, the Husband’s parents hold the second and third mortgages on the property. The parents have been making payments on all of the mortgages and payment of the taxes and other expenses on the property to protect their interests. The Wife argues that the limitation period of two years has long passed with respect to some of the alleged debts for the mortgages. The Husband’s counsel points out correctly that the parents would be paying the arrears under the mortgages and taxes as well as other expenses in accordance with the mortgages and standard charge terms governing those mortgages. The limitation period under a mortgage is 10 years. The Court finds the limitation period has not passed in this case.
[24] In addition, the Court finds that the Wife’s Answer does not claim the relief for partition and sale of the property under the Partition Act. Furthermore, the Court finds that the Wife did not plead the material facts upon which such a claim could be made.
[25] The Court finds that the issue of partition and sale of the Winding Way property is an issue for trial together with how much is owing under the mortgages. Accordingly, that relief on the motion is dismissed.
2) Should there be a Payment of Interim Disbursements of $50,000 by the Husband to the Wife
Wife’s Position
[26] The Wife argues that interim disbursements of $50,000 should be ordered payable by the Husband to allow the Wife to retain an expert to undertake an income analysis of the Husband’s income. The proposed valuator is Mr. Tom Strezos, a chartered business valuator with Deloitte. According to the evidence, he requires a $25,000.00 retainer for his services.
[27] The Wife argues that she wished to avoid retaining the expert by requesting that the Husband provides an income analysis for support purposes. She says that the Husband refused to provide the analysis, which requires the Wife to retain an expert.
[28] The Wife argues she does not have the necessary funds to pay for the income analysis.
[29] The Wife relies on the factors set out in the Supreme Court of Canada decision in British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 SCR 371 to allow interim disbursements to be paid out. These factors are: (1) impecuniosity; (2) prima face case of sufficient merit; and (3) special circumstances.
[30] The Wife argues she does not have any money to pay for this report and that she has incurred additional debt as follows: (1) American Express - $3,000; (2) MBNA - $24,000; and (3) $20,000 from her parents. The Court notes that this increased debt of $47,000 has been incurred since the last hearing. The Court notes that the Husband is paying the following expenses: (1) the cost of the full‑time nanny that lives with the children in both homes; and (2) the Husband’s parents are paying for the private school of the children.
Husband’s Position
[31] The Husband argues that he should not have to make an advance for interim disbursements of $50,000.00. Firstly, he argues that the Wife has the monies to pay Mr. Strezos because she has at least $430,000.00 worth of jewellery from which she can fund the payment.
[32] He further argues that she has not, since the date of separation being in March 2011, either gone back to school for training or found employment. The evidence is that she took a six‑week holiday to India and has taken other vacations since separation.
[33] The Husband argues that the Wife has not shown (1) that the disbursements are necessary and reasonable; (2) that her claims are meritorious; and (3) that she is incapable of funding the requested as set out in Stuart v. Stuart (2000), R.F.L. (5th) 188 at para. 9.
Analysis
[34] Rule 24(12) of the Family Law Rules is a discretionary rule that allows the court to make an order for interim disbursements. While the Wife may have $250,000.00 to $430,000.00 worth of jewellery as set out in her own sworn financial statement, it may not be very liquid or achieve a proper price. This fact, together with the fact that she has no income, shows that she appears to have little or no money.
[35] The Court is satisfied that these interim disbursements are important to the success of the Wife’s claim. Furthermore, a certain amount of money for interim disbursements is just and reasonable. Accordingly, to further the primary objective of fairness, the Court exercises its discretion finds that the Husband shall pay $25,000.00 directly to Mr. Strezos the chartered business valuator within the next 20 days to conduct a valuation, the scope of which is related to his income only. Once the valuation is completed, the Court will review the valuator’s account and determine how much more, if any, the Husband should pay. The Court will not characterize the $25,000.00 payment at this time. At a later date, the Court can characterize it either as spousal support, child support or an advance on equalization.
3) What is the Husband’s Income for Child Support and Spousal Support Purposes?
(continues exactly as in source...)
Mr. Justice Stanley J. Kershman
Released: May 27, 2014
OTTAWA COURT FILE NO.: FC-12-1503
DATE: 2014/05/27
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
RAHUL KOCHAR
Applicant
– and –
AMITA KOCHAR
Respondent
Reasons for decision
Kershman J.
Released: May 27, 2014