PETERBOROUGH COURT FILE NO.: FC-13-509
DATE: 20140831
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Richard Kucharski, Applicant
AND:
Annette Kucharski, Respondent
BEFORE: THE HON. MR. JUSTICE P.H. HOWDEN
COUNSEL:
C. Pineiro, Counsel for the Applicant/Responding Party
T. Williams, Counsel for the Respondent/Moving Party
HEARD: August 29, 2014
ENDORSEMENT
[1] This motion was brought originally by the respondent without notice for registration of a Certificate of Pending Litigation (CPL) against property municipally known as 3983 Wallace Point Rd., Peterborough. It was filed on August 7, 2014. On August 11, counsel for the respondent appeared before Justice Bale on this motion. The request for the CPL was refused, not on substantive grounds but because the respondent’s pleading (i.e. her Answer) failed to include a CPL request and failed to claim an interest in land.
[2] A further order was made that day and it is the subject of the motion before me. It was ordered that:
The proceeds of sale of 3983 Wallace Point Rd. shall be held in trust by the applicant’s lawyer pending further order of the court.
The motion is adjourned to August 29, 2014.
The motion papers are to be served on the applicant together with the order forthwith.
[3] Before me, counsel for the moving party-respondent requested that the preservation order for the funds from sale of what was the matrimonial home be continued pending determination of the equalization. Mr. Pineiro said he expected that an equalization payment would be arrived at in his client’s favour in view of the payment of what the applicant regards as excluded property by way of inheritance toward the matrimonial home ($140,000), his encumbrance during the marriage of a credit line debt of $67,000 without documentation to show it improved the property, and the likely disparity between the parties' pension valuations in view of the large difference in the parties’ historic earnings. The matrimonial home was registered throughout only in the name of the applicant.
[4] I do not see any evidence of the additional debt of $67,000 alleged by Mr. Pineiro. Ms. Kucharski’s affidavit indicates that in calculating the equity of about $75,000 in the matrimonial home, Mr. Kucharski overstated the combined mortgage and line of credit by $45,000. In his NFP statement he shows the combined debt as $104,000, not the approximately $150,000 that he swears in his affidavit is the combined debt. Mr. Kucharski says he put another $40,000 into the home “to make it saleable”. That is the only evidence that might justify such added debt not being left to his charge. I do not consider that kind of bald statement as serious evidence justifying the additional debt as coming off what he will probably owe.
[5] Mr. Pineiro submits that unless the preservation order is continued, the applicant will obtain the funds and spend it as he sees fit, to the detriment of the respondent who will probably not receive her expected equalization payment in that event.
[6] Ms. Williams, relying on the applicant’s affidavit material, submits that the applicant purchased the home and maintained it solely from his own funds. Ms. Kucharski never contributed to it. He spent the inheritance received from his father of $140,000 during the marriage on the matrimonial home. The request by the respondent for a preservation order was refused initially and the CPL motion was refused. Mr. Kucharski wishes to use the money received from the sale of the home on Wallace Pt. Rd. to provide the down payment on a residential property that was to close on August 29. Bridge financing was in place to carry the loan required for the purchase to August 29, hence the urgency of determination of this motion before the next business day after August 29 which will be September 2, the day after Labour Day. The purchase was completed by Mr. Kucharski, as I understand his affidavit, on August 22 last.
[7] Ms. Williams says that the respondent has delayed disclosing what she was required to do. She has proven no contribution toward the matrimonial home which is solely Mr. Kucharski’s property. There are no children. And any equalization payment can be made by a roll-over from the applicant’s pension; it is not necessarily to be made in cash. In his material, Mr. Kucharski summed up the situation as: there will be no prejudice to the respondent because “allowing the (purchase) to close with funds generated by sale ... (will mean that) Annette will be in the exact same place she would have been if the sale had not taken place. That is, the equity has simply moved to a different property. It is still there. Nothing has impacted the Respondent’s claims.” (R. Kucharski aff., para. 21).
[8] I have read both cases referred to me by counsel. The one which is more on point is Gray v. Gray because there are no children as in this case and the court dealt with the husband’s half share as a joint tenant as his only asset. In this case, were the respondent to require payment of equalization in cash, the only asset on which it could be realized is the equity of Mr. Kucharski in the matrimonial home. I find that whatever the pension valuations will be, Mr. Kucharski’s will likely be close to twice the value of the respondent’s. In my view the case law is pretty clear that in using his inheritance which he only received during the marriage toward the matrimonial home, it has lost its excluded character. I make no finding in that regards as that issue is not before me but the point is that the applicant will probably owe an equalization payment to the respondent of more than a nominal amount and I see no other asset which would provide security for the required funds for that purpose. The respondent has shown a strong prima facie case for the probability of a significant equalization payment in her favour.
[9] On the other hand, for him to have to default on either a loan or the purchase serves no purpose. I accept Mr. Kucharski’s position on that - if he is simply allowed to substitute one home for the other and the new one has an equity at least equal to that of the matrimonial home without his spending the balance on anything substantial beyond the new home, then the same end result would occur for the respondent without prejudice to Mr. Kucharski’s position.
[10] As Granger J. held in Gray v. Gray (1990), 1990 12216 (ON SC), 31 RFL (3d) 97,
In my view, as Mrs. Gray is entitled to receive her entitlement to equalization in cash, she is entitled to have Mr. Gray’s net proceeds of sale in trust or in court in order to be available to satisfy her equalization claim.
[11] For “net proceeds of sale”, one can substitute his “equity in the new house”. Only the amount required to close the purchase or pay the bridge loan in the amount of the net closing funds plus interest need be released from trust if the total amount is not required for that purpose.
[12] To achieve the purpose for which this motion was brought, which I find is correct in law, while having the above findings in mind, it is ordered that:
If the purchase as described in Mr. Kucharski’s affidavit filed on this motion is still proceeding, the amount of the funds held in trust by Ms. Williams’ firm LLF Lawyers LLP shown to be required to purchase the property municipally known as 2658 Marsdale Drive, Peterborough may be released for the sole purpose of completing the purchase by Richard Kucharski of property municipally known as 2658 Marsdale Dr., Peterborough directly or by paying a bridge loan used to close the said purchase;
The purpose and intent of this order is to permit the purchase by Richard Kucharski to proceed and to require him and his solicitors, in consideration of his sale and purchase of the said properties, to see that, in Mr. Kucharski’s words, Annette Kucharski will be in the exact same position she would have been in if the sale of 3983 Wallace Point Rd., Peterborough had not taken place, that is, that the equity has simply moved to another property. The interest of Richard Kucharski in either property is hereby charged as security for the realization of the intent and purpose of this order pursuant to ss. 9, 12, and 13 of the Family Law Act, RSO 1990, c.F.3 and he and his solicitors shall be accountable to this court for the execution of this order;
This restraining order shall be registered against the title to the property known as 2658 Marsdale Dr., Peterborough as a charge against the said property.
If the purchase of the Marsdale Dr. property has not closed, the motion by the respondent Annette Kucharski is granted and the sale proceeds shall remain as they are now in trust in the possession of LLF Lawyers LLP until determination of the equalization owing in this case.
[13] It should be noted by the parties and their solicitors that ss. 9 and 12-13 of the Family law Act permit sale of the subject property charged with performance of an obligation if there is default of that obligation.
- (1) In an application under section 7, the court may order,
(b) that security, including a charge on property, be given for the performance of an obligation imposed by the order;
- If the court has ordered security or charged a property with security for the performance of an obligation under this Part, the court may, on motion,
(a) vary or discharge the order; or
(b) on notice to all persons having an interest in the property, direct its sale for the purpose of realizing the security or charge.
[14] I may be spoken to by counsel regarding the form and wording of this order.
HOWDEN J.
Date: August 31, 2014