ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: FS-12-3476-00
DATE: 2014-07-25
B E T W E E N:
CHRISTOPHER ROBIN LEE SMART
R. Richard Stone, for the Applicant
Applicant
- and -
DEBORAH LYNN SMART aka DEBORAH LYNN GORDON
Self-represented
Respondent
HEARD: July 23, 2014,
at Brampton, Ontario
Price J.
Reasons For Order
NATURE OF MOTION
[1] Christopher Smart moved in February 2014, to suspend enforcement of his child support obligations by the Family Responsibility Office (“FRO”) pending the hearing of his motion to vary the order on which the obligations are based. The reason he offered to the court at the time was that he had overpaid child support, because the amount being collected is based on his income in 2009, which was $33,280 per year, and his income now is $20,800 per year, consisting of disability benefits he has received since an injury he sustained in a motor vehicle collision in 2009. He stated that he was concerned that before the court could vary his child support obligation, FRO would seize his Registered Retirement Savings Plan, with adverse tax consequences for him.
[2] Ms. Smart opposes Mr. Smart’s motion. She argues that Mr. Smart has not fully disclosed his income and assets. Further he owes more support than FRO has calculated because of his undisclosed income and because the parties’ two children have incurred education expenses, a portion of which Mr. Smart should have paid.
[3] During the proceeding, the court discovered that in October 2013, Mr. Smart received over $140,000 in settlement of a claim for long term disability benefits arising from his injury. He failed to disclose this to Ms. Smart, FRO, the Court, or even, apparently, to his lawyer in the present proceeding, Mr. Stone, until the court required him to produce his solicitor’s file in the civil proceeding. He then disclosed that he had already used $12,000 of the funds he had received to repay a loan his girlfriend had made to him to cover his legal fees in the present proceeding.
[4] Mr. Smart deposited the remainder of the settlement funds into investment accounts at the Bank of Nova Scotia (“Bank”) of which FRO apparently had no knowledge. If the court had made the order Mr. Smart was seeking and had stayed enforcement of his child support obligations by FRO, then FRO would have been powerless to garnish these accounts for arrears of support that Mr. Smart owed.
[5] In light of these developments, the court made an order on March 21, 2014, with Mr. Smart’s reluctant consent, directing his Bank to hold the balance of his funds, with the exception of $3,500 per month, which Mr. Smart said he needed to meet his monthly expenses. Mr. Smart declared monthly expenses of $3,681.42 in a financial statement that he swore May 1, 2013, but these included some discretionary expenses, such as $240 per month for alcohol and tobacco.
[6] Mr. Smart now moves to lift the restriction that the court imposed in March, to permit the Bank to release $11,360 plus disbursements that Mr. Stone requires as a retainer to represent him at a trial management conference, which the court has scheduled to take place on September 15, 2014, and at the ensuing trial.
[7] Mr. Smart brought the present motion on only one day’s notice to Ms. Smart, on the ground of urgency. When scheduling the motion, Mr. Stone’s office informed the court, presumably based on information from Mr. Smart, that Ms. Smart had agreed to have the motion heard on July 23, 2014. Ms. Smart attended and advised the court that she did not consent to the date, or to being given short notice. She required more time to prepare responding material.
BACKGROUND FACTS
[8] On August 10, 2012, Mr. Smart moved to vary the order of Herold J. dated December 21, 1999, which required him to pay $484 per month to Ms. Smart as child support for their two children, Katherine and Stephanie Smart, based on Mr. Smart’s sworn income of $33,280. Mr. Smart asked the court to terminate his child support obligation on the grounds that:
a) Neither Katherine nor Stephanie was living with her mother or was enrolled in a full-time educational program; and
b) Mr. Smart’s income had fallen below $33,280 as a result of an injury he had sustained in a motor vehicle collision in August 2009, after which he has been receiving long-term disability benefits, amounting to only $20,800 per year.
[9] Mr. Smart moved on February 10, 2014, for an order suspending his obligation to pay child support until further order of the court. He stated that he believed that he had overpaid child support, based on his reduced income since his motor vehicle collision, and that he was concerned that FRO would attach his RRSP, which would have adverse tax consequences to him.
[10] At a Case Conference on March 6, 2014, I asked Mr. Smart whether he had undertaken any legal proceedings to recover compensation for the income loss he had sustained in the collision. When his counsel advised that another lawyer had commenced such an action on Mr. Smart’s behalf, I advised Mr. Smart that I proposed to make an order requiring him to disclose the contents of his solicitor’s file in connection with the civil litigation to Ms. Smart, who is self-represented. At Mr. Smart’s request, I adjourned the conference to March 26 to give him the opportunity to consult his counsel in that proceeding regarding the proposed order.
[11] At the resumption of the conference on March 26, Mr. Stone, tendered a letter from Mr. Smart’s litigation counsel, Mr. Waxman, dated March 19, 2014, disclosing, for the first time to Ms. Smart and to the court, that Mr. Smart’s RBC Long Term Disability claim had settled for $207,500 (all-inclusive) and that on October 18, 2013, the net amount of $140,634.30, after payment of fees, HST, and expenses, had been paid to Mr. Smart.
[12] Upon questioning by the court as to the whereabouts of the $140,634.30 that he had received, Mr. Smart initially stated that, with the exception of $12,000 that he had paid to Mr. Stone, he had deposited the funds to investment accounts at the Bank. When Mr. Stone advised the court that he had received no payments from Mr. Smart since before October 18, 2013, Mr. Smart revised his response, stating that he had previously borrowed $12,000 from his girlfriend to pay Mr. Stone’s retainer, and that when he received the $140,634.30, he used $12,000 of the funds to repay his girlfriend.
[13] To prevent Mr. Smart from dissipating the settlement funds in a way that would prevent FRO from collecting arrears of child support that he owed, which they calculated were $6,633.40, and any further arrears that might be found to be owing based on a recalculation of Mr. Smart’s income since 2009, when Herold J.’s order was made, I made an order, with both parties’ consent, on March 26, 2014, as follows:
a) Adjourning the proceeding to June 18, 2014, for a settlement conference;
b) Permitting FRO to continue collecting child support and enforcing payment, but avoiding, if possible, the seizure of Mr. Smart’s RRSP’s;
c) Requiring Mr. Smart to obtain a clarification in writing as to how the amounts paid to Mr. Smart were calculated, so that a determination could be made as to his income, on a yearly basis for the period since the motor vehicle collision;
d) Directing Mr. Waxman to make no further distribution of proceeds of any settlement or judgment in Mr. Smart’s motor vehicle action(s); and
e) Directing the Bank of Nova Scotia to make no payment from Mr. Smart’s accounts other than to FRO, with the exception that Mr. Smart could disburse from his savings account $3,500 per month, beginning April 1, 2014, which his lawyer said Mr. Smart needed to cover his monthly household expenses and monthly debt servicing.
[14] Mr. Smart now moves for an order lifting the restriction on his Bank, in order to make it possible for him to withdraw sufficient funds to pay a retainer that Mr. Stone requires for his anticipated legal costs of $11,360 plus disbursements in connection with the trial management conference, scheduled to take place on September 15, 2014, and the ensuing trial.
THE ISSUES
[15] The court must determine the following issues:
a) Is there urgency requiring the motion to be heard immediately?
b) Should the motion be adjourned?
c) If the motion is adjourned, should Mr. Smart be permitted to make an interim withdrawal for Mr. Stone’s fees?
THE PARTIES’ POSITIONS
[16] Mr. Smart submits that he is in urgent need of the funds to pay Mr. Stone’s fees so that he can get an early start preparing for the trial management conference on September 15, 2014. He argues that the funds that will remain in his accounts after he withdraws the amount he needs for Mr. Stone’s retainer will be ample to satisfy any obligation he may be found to have to Ms. Smart. If this is correct, then it would not be necessary for the court to weigh the parties’ competing claims to the funds.
[17] Ms. Smart submits that there is no urgency to the motion as the date for the trial management conference was set a month ago and is still more than a month and a half in the future. No date has yet been set for trial.
[18] Ms. Smart would like the funds retained in Mr. Smart’s accounts so that they will be available to pay the child support that Mr. Smart ends up owing her, and the amount he is obliged to contribute to the children’s education expenses pursuant to s. 7 of the Federal Child Support Guidelines.
ANALYSIS AND EVIDENCE
a) Is there urgency?
[19] In Hood v. Hood,[^1] Belch J. commented “[i]t is my decision that an urgent motion within a court proceeding contemplates issues such as abduction, threats of harm, dire financial circumstances and these can be addressed prior to a case conference.”[^2] Mr. Smart does not assert that he will suffer “dire financial circumstances.” The need for Mr. Smart to withdraw funds so that Mr. Stone can be fully retained to get an early start preparing for a trial management conference more than a month and a half in the future does not meet the test of urgency.
[20] The date for the trial management conference is September 15, 2014. It was scheduled at a settlement conference on June 18, 2014. Mr. Smart has not satisfactorily explained why he waited more than a month after the date was set before bringing his motion, or why he requires the immediate release of funds to retain Mr. Stone for a conference that is to take place a month and a half from now.
b) Should the motion be adjourned?
[21] The court exercises discretion as to whether to allow or deny an adjournment request. In Toronto-Dominion Bank v. Hylton, Epstein J.A., for the Court of Appeal, commented on how this discretion should be exercised:
Against the backdrop of the nature of the proceeding and the parties to the proceeding, the court should consider the evidence and strength of the evidence of the reason for the adjournment request, the history of the matter, including deliberate delay or misuse of the court process, the prejudice to the party resisting the adjournment and the consequences to the requesting party of refusing the request.[^3] [Emphasis added.]
[22] Adjourning the motion to August 13, 2014, a date when both parties indicate that they will be available, and more than a month before the trial management conference, will not cause significant prejudice to Mr. Smart. A denial of Ms. Smart’s request, on the other hand, would breach her right to natural justice, and cause prejudice to her by depriving her of a reasonable opportunity to respond.
[23] The Court of Appeal identified additional factors to be considered in relation to adjournment requests in Law Society of Upper Canada v. Igbinosun.[^4] Weiler J.A., speaking for the Court, stated:
A non-exhaustive list of procedural and substantive considerations in deciding whether to grant or refuse an adjournment can be derived from these cases. Factors which may support the denial of an adjournment may include a lack of compliance with prior court orders, previous adjournments that have been granted to the applicant, previous peremptory hearing dates, the desirability of having the matter decided and a finding that the applicant is seeking to manipulate the system by orchestrating delay. Factors which may favour the granting of an adjournment include the fact that the consequences of the hearing are serious, that the applicant would be prejudiced if the request were not granted, and the finding that the applicant was honestly seeking to exercise his right to counsel and had been represented in the proceeding up until the time of the adjournment request. In weighing these factors, the timeliness of the request, the applicant’s reasons for being unable to proceed on the scheduled date, and the length of the requested adjournment should also be considered.[^5] [Emphasis added]
[24] These factors further support the granting of an adjournment here. Mr. Smart has not yet produced the information that the order dated March 21, 2014, required him to produce. He was to have forthwith and, in any event, by April 7, 2014, obtained from Mr. Waxman, and produced to Ms. Smart, a clarification in writing as to how the amounts paid to him for CPP disability, RBC Long Term Disability and Income Replacement Benefits were calculated, so that a determination can be made as to his income, on a yearly basis, for the period since his motor vehicle accident and going forward. He has not done so.
[25] Ms. Smart has complied, to the extent she can, with the orders of the court. She is not orchestrating delay. It is in her interest to have issue of Mr. Smart’s income, and the extent of his support obligation, determined because she seeks an increase in the support he is paying. That said, the parties’ daughters must attend at the schools where they have studied, and provide their consent to the release of their records of enrollment, attendance, and performance from 2006 to the present, and of their education expenses on a yearly basis.
[26] If Ms. Smart is unable to enlist her daughters’ cooperation in obtaining the necessary records, it will seriously weaken her claims. In this event, she must disclose their refusal to Mr. Smart immediately and give him their contact information, so that he can serve them, if he wishes, with a motion for production from a non-party, or apply to join them as parties to the proceeding.
[27] The court requires Kathleen and Stephanie’s school records in to make a determination as to the periods when they were attending school and whether their enrollment could reasonably be expected to enhance their eventual economic self-sufficiency. The court must make this determination in order to decide what support, if any, Mr. Smart should have paid, and should continue to pay, and what amount, if any, he must contribute to the payment of his daughters’ education expenses. See my decision in Rotondi v. Rotondi, at paras. 28-46.[^6]
[28] An adjournment of Mr. Smart’s motion is in the interests of justice. Neither party has tendered the evidence the court requires to quantify Ms. Smart’s claim and to compare it with the balance that would remain in Mr. Smart’s accounts after he makes his proposed withdrawal of funds to pay his lawyer. The court requires this information to determine whether the balance that would be left in the accounts would be less than what is necessary to satisfy Ms. Smart’s claim.
c) Should an interim withdrawal be permitted as a term of the adjournment?
[29] It is common in family law proceedings for funds to be held in trust pending a determination as to the parties’ entitlement. The most frequent occasion for this is where a matrimonial home has been sold and the parties’ dispute how the net proceeds should be divided. It is common, in such cases, for a party to apply for a partial distribution of the funds pending trial. The purpose of such a distribution is usually to enable the applicant to pay his/her legal fees in the proceeding, or in a related proceeding.
[30] When a motion for release of funds is made, the court must balance the competing claims for the funds. It must weigh the relative importance of the immediate purpose for which the moving party seeks to apply the funds to be released and the eventual purpose to which the funds might be applied, following a determination of the parties’ competing claims.
[31] A comparison of the funds available with the recipient spouse’s claim is necessary before a determination can be made as to whether a partial distribution should be made. In Folahan v. Folahan, a motion for partial distribution was refused where the payer spouse was unemployed, and his use of his share of the net proceeds of the sale of the matrimonial home to pay his legal fees in his criminal proceeding would have put at risk the future support of his children.[^7] I adopted the approach taken in Cipollone v. Cipollone, where Ferguson J. dismissed a similar motion by a husband to have some of the family assets paid to him to help him pay his defence costs. While recognizing in para. 21 that the need to preserve one’s freedom is as fundamental as one’s need for food and shelter, Ferguson J. stated:
However, it seems to me that all the circumstances should be assessed in the same way a court would on any interim motion for support or preservation of family property. The court must balance the interests of the children and each of the parents. The court must consider the objectives set out in s. 15 of the Divorce Act concerning spousal support and child support.[^8] [Emphasis added.]
[32] In Singh v. Singh, I noted that a spouse’s obligation to pay his legal fees cannot be given a higher priority than his obligation to support his children.[^9] This does not always preclude a distribution. In Pang v. Pang, Lemon J. granted an order for partial distribution, noting, “[t]here are sufficient assets to fund both Mr. Pang’s defence and provide support.”[^10]
[33] I proposed to the parties today that, pending the return of the motion, they could consent to the release of funds to each of them, in equal amount, on a without-prejudice basis. I noted that it would be unfair for Mr. Smart to access funds that Ms. Smart may eventually be entitled to, in order to continue his lawyer’s retainer, while Ms. Smart is unable to retain counsel herself because she lacks the necessary funds as a result of Mr. Smart’s non-compliance with his child support obligations to her. A report from FRO that was filed during this proceeding discloses that Mr. Smart was in arrears of his child support obligations in the amount of $5,404.58 as of June 23, 2014.
[34] Mr. Stone suggested today that the parties consent to the release of $2,500 to each of them. Ms. Smart was prepared to agree to this, on a without prejudice basis, but Mr. Smart would not give his consent. Therefore, no funds will be released until August 13, 2014, unless Mr. Smart reconsiders his position and the parties submit their signed consent to an interim order providing for such payment(s).
CONCLUSION AND ORDER
[49] The foregoing analysis is, of course, provisional, and will need to be adjusted, based on the further evidence that will be required from the parties, as set out below. However, based on this provisional analysis, it appears that $165,187.17 may remain in Mr. Smart’s accounts in January 2015 and that his potential liability to Ms. Smart may be $66,164.32. This would leave a surplus of $98,673.58 once his obligations to that point are discharged, subject to any further liability he may have for costs. A portion of any balance may have to be set aside as security for future child support and s. 7 contributions, if these are warranted.
[50] If Ms. Smart is successful in her position that she is owed further child support, she may be entitled to costs. It would be unfair, in my view, to permit Mr. Smart to gain the substantial advantage of legal representation against a self-represented litigant when Ms. Smart’s inability to afford legal representation may be attributed to Mr. Smart’s failure to pay child support in accordance with Herold J.’s order, as adjusted for later increases in Mr. Smart’s income. It will be up to the parties, however, to negotiate an agreement as to what distributions should be made from Mr. Smart’s accounts to each of them, pending the final resolution of their issues.
[51] Based on the foregoing, it is ordered that:
Mr. Smart’s motion is adjourned to August 13, 2014, at 9:00 a.m. before me;
Mr. Smart shall, by July 31, 2014, produce the following to Ms. Smart:
(a) The clarification from Mr. Waxman required by my Order dated March 21, 2014;
(b) An up-to-date financial statement; and
(c) His income tax return for 2013, with all schedules and attachments and his Notice of Assessment for that year.
- Ms. Smart shall, by July 31, 2014, produce the following to Mr. Smart:
(a) An affidavit setting out the periods when they were “Children of the Marriage”, within the meaning of the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.). For each period when they were dependent on their parents, the affidavit shall provide their places of residence and the reasons for their dependency (for example, enrollment in school, illness, etc.). Details shall be provided in each case, together with the records Ms. Smart will rely upon at trial to prove that they were Children of the Marriage during these periods, and entitled to support. She will not be permitted to tender other documentary evidence of their dependence at trial without leave of the trial judge;
(b) Kathleen and Stephanie’s records of enrollment at school, attendance, and performance (i.e. transcripts) from 2006 to the present; their education expenses on a yearly basis; and their income tax returns for any years for which a claim is being made for contribution to s. 7 expenses for them, or written confirmation that they have been asked for these records and have refused to provide them. If they refuse, Ms. Smart shall provide the address where each of them can be served with a motion, and Mr. Smart shall have leave to bring a motion, on notice to them, for production of records from non-parties. Alternatively, he shall have leave to move to strike Ms. Smart’s claim for child support or s. 7 expenses for the child who has refused to provide these records.
(c) An up-to-date Financial Statement; and
(d) Her income tax return for 2013, with all schedules and attachments, and her Notice of Assessment for that year.
Price J.
Released: July 25, 2014
Footnotes
[^1]: Hood v. Hood (2001), 2001 28129 (ON SC), 20 R.F.L. (5th) 78 (Ont. S.C.)
[^2]: Hood, at para. 12
[^3]: Toronto-Dominion Bank v. Hylton, 2010 ONCA 752, at para. 38
[^4]: Law Society of Upper Canada v. Igbinosun (2009), 2009 ONCA 484
[^5]: Igbinosun, at para. 37
[^6]: Rotondi v. Rotondi, 2014 ONSC 1520, at paras. 28‑46
[^7]: Folahan v. Folahan, 2013 ONSC 2966, at para. 26
[^8]: Cipollone v. Cipollone (1996), 1996 19744 (ON SC), at para. 22
[^9]: Singh v. Singh, 2011 ONSC 4643, at para. 25
[^10]: Pang v. Pang, 2009 28214 (ON SC), at para. 24