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CITATION: Wraich v. Wraich, 2015 ONSC 2217
COURT FILE NO.: FS-08-344571
DATE: 2015/04/09
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Parvinder Wraich, Applicant
AND:
Nirmal Wraich, Respondent
BEFORE: Justice Moore
COUNSEL: Preet Kaler, for the Applicant
Nirmal Wraich, In Person
DATES HEARD: February 10, 11 and 12, 2015
E N D O R S E M E N T
[1] Parvinder Wraich (“Parvinder”) is the applicant in this matter. She gave her evidence in chief in the form of an affidavit, dated February 2, 2015. Certain portions of the affidavit were struck as irrelevant to the sole issue remaining in this matter, that being the disposition of property.
[2] Parvinder married Nirmal Wraich (“Nirmal”) in February of 1987. She testified that theirs was a traditional arranged marriage, as was common in their culture. They have three grown children.
[3] The parties immigrated to Canada from India in May of 2000. At that time, they brought with them approximately $23,000 from their savings.
[4] Nirmal controlled financial issues. The parties have been separated since October 2008 and they have lived separate and apart since that time. They were divorced on April 2, 2014.
[5] The parties jointly own the matrimonial home, known municipally as 3660 Swanson Drive in Mississauga. That home was appraised with a value of $586,000 as of November 13, 2013.
[6] Parvinder testified that there was an outstanding mortgage in the form of a line of credit secured to the property and worth approximately $270,000.
[7] Prior to separation, the mortgage payments were made through a joint bank account.
[8] Following separation, Nirmal stopped making mortgage [line of credit] payments and, Parvinder testified, he depleted their funds by withdrawing large sums of money from the joint account, thereby rendering Parvinder unable to keep up with the required payments to service the debt.
[9] In and around July of 2009, Parvinder had to pay the Bank of Montréal and legal fees totaling $32,000 to bring the matrimonial home out of power of sale proceedings. She factors this money into her equalization claim.
[10] She insists that Nirmal has not provided complete financial disclosure or proper accounting of the money that he removed from the joint account before and after the date of separation.
[11] She further states that Nirmal obtained a collateral line of credit on the matrimonial home and had her sign a secured line of credit agreement for $300,000 in July of 2007.
[12] About two weeks following separation, on or about November 13, 2008, Nirmal transferred Wyecroft into the name of his nephew, Mr. Mohar, who lives and works primarily in the province of Alberta.
[13] Pursuant to the order made by Spies J on August 19, 2013, Parvinder obtained a valuation of Wyecroft at $150,000 as of November 13, 2008. She testified, and I accept, that that valuation applied as at the date of separation.
[14] Parvinder asserts that Wyecroft was not sold on her consent or sold before the date of separation. She insists that the property was transferred on November 13, 2008, two weeks after separation. She adds that she had no knowledge whatsoever that Nirmal had any intention of selling the property.
[15] Nirmal's nephew, at one time a party in this matter, purchased the property. Parvinder insists that this transfer was designed to defeat or reduce her equalization interest by depleting family assets.
[16] Two days after Wyecroft was transferred to the nephew, Nirmal leased the property back from his nephew and he continued to do so throughout this litigation.
[17] Nirmal is claiming that he suffered a financial loss after separation. Parvinder denies this and states that, in any event, that has no bearing on the issue of equalization as, on the date of separation, Nirmal had more assets than Parvinder and therefore, she insists that he owes a substantial equalization payment to her.
[18] Nirmal has stated earlier in these proceedings that he had operated Mattest NDE Inc. (‘Mattest”) at a loss since his business accounts were frozen pursuant to the order of Justice Czutrin, dated December 9, 2008, and that is why he has had to borrow money from other parties. Parvinder insists, however, that Nirmal has provided no documentary proof of such borrowings, despite court orders requiring him to do so.
[19] Parvinder states that since their arrival in Canada in 2000, they had never borrowed any money from anyone in India and there was no reason for them to borrow money.
[20] As noted above, the parties immigrated to Canada with about $23,000 in savings. Thereafter, Parvinder testified, they received some additional sums of money from the sale of their house and business in India. She received some inheritance from her father's estate. Other than these amounts, she insists that the parties never received any other money, especially in the form of loans, from India.
[21] She adds that it was only just before, during and after separation that Nirmal started siphoning money that he claimed he used to repay loans he took from individuals in India.
[22] Although Nirmal valued Mattest to be worth only $15,621 in his financial statement of January 19, 2015, he has not provided any substantiating evidence of its value, despite there being a court order in place to have the Corporation valued as of the date of separation. At a bare minimum, she insists, pursuant to the financial statement of the company as at December 31, 2008, the Corporation had total assets of $121,018 and end of year retained earnings of $36,695.
[23] She testified that Nirmal is associated with the business known as Malrin NDE Inc. which is owned by another of his nephews. This company was started after the date of separation and it is her impression that the company has been able to do the same or similar business with clients who were originally clients of Mattest.
[24] Parvinder has asked Nirmal for financial disclosure indicating his affiliation with Malrin but he has not provided any.
[25] Nirmal did provide an affidavit stating that he used to be an employee of Malrin in the past but now has no financial or other relationship with the company but a Corporation profile report shows that he is named as administrator and that the principal place of business is in Brampton Ontario where he resides. Furthermore, a search conducted by the Ministry of government services for any Corporation containing Nirmal's name also showed him as being listed as the administrator for Malrin since January 26, 2009.
[26] Parvinder testified that, other than a small one bedroom apartment owned by Nirmal and heavily mortgaged with hardly any equity, neither she nor he had any assets at the time of their marriage.
[27] Before immigrating to Canada in 2000, Nirmal and Parvinder purchased two properties in India from their joint savings and neither property was mortgaged.
[28] Title to both properties was taken in Nirmal's name and remained so until the date of separation. Parvinder believes that those properties are still registered in his name.
[29] No evidence was lead regarding the ownership of these properties as a matter of the law of India or the value of either property at times relevant to the issues before me; as such, they will not factor into the outcome of this case.
[30] Parvinder testified that, in October 2008, around the date of separation, Nirmal drained their bank of Montréal joint account [294-308-4066] by transferring money from it as follows:
on October 9, 2008, he transferred $20,000 to the company account;
on October 28, 2008 he was drew $40,000 a bank draft which came from the line of credit into the joint account;
on October 29, 2008 he was drew another $20,000 via bank draft;
on October 29, 2008, he made a cash withdrawal of $5000; and
on October 28, 2008, he withdrew $9500 from a joint US checking account [0489-462-0467]. This was the account in which Parvinder deposited money from her late father's estate for their children.
[31] Parvinder states that at the date of separation on October 30, 2008, Nirmal had a closing balance of $37,776.64 in his bank of Montréal business account [2670-1027-922].
[32] As at the date of separation, Parvinder insists that Nirmal had a closing balance of $9,508 in his bank of Montréal business account [2670-103-4962]. Directly after that date of separation, Nirmal withdrew additional sums of money from this account totaling $10,550, which sent that account into overdraft.
[33] She adds that Nirmal deposited $145,808.48 into his Toronto Dominion Bank business account [74805249863] on November 13, 2008. Parvinder believes this may represent the proceeds he received from the sale of the commercial property but Nirmal has not provided the requested complete supporting documentation.
[34] Between November 2008 and December 2008, Nirmal withdrew and/or transferred sums of money from his Toronto Dominion business account [7480-524-9863] totaling $138,000. Nirmal withdrew a further amount from that account totaling approximately $25,413 between January 2009 and May 2009.
[35] In December 2008, Nirmal withdrew and/or transferred money from his ICICI bank account [101660151] totaling approximately $160,005.
[36] Parvinder testified that a sum of $40,000 of this amount is currently held in trust by her previous lawyer, Ms. Julie Amourgis. She insists that this was the amount that Nirmal had withdrawn from the joint bank of Montréal account in the form of a bank draft. Pursuant to the order of Justice Wilson, the draft was to have been frozen and not cashed; however, Nirmal gave it to a friend of his, Mr. Khurana, who owned a Money Mart and provided cash to Nirmal.
[37] Parvinder testified that another draft of $20,000, which was also to have been frozen pursuant to an order of this court, was cashed at Money Mart.
[38] The remaining $50,000 (approx.) that Nirmal withdrew from the joint bank of Montréal accounts has still not been deposited back to date, despite the freezing order of this court.
[39] Parvinder states that Nirmal transferred $145,000 to his offshore account in India after separation. She states that this money may be in one of three of his ICICI bank accounts [08959731, 000701089597 and/or 000701260010] and/or in other undisclosed bank accounts.
[40] She testified from her recollection of the Rule 20 questioning that Nirmal claimed that he had $50,000 in cash which he kept in his closet.
[41] Parvinder testified that before separation, she worked for Mattest as well as at a subsidiary of Mattest, Harman NDE Institute.
[42] She stated that although she was working in and managing these companies, Nirmal was the only person who accessed corporate bank accounts. He was the only person with the key to the mailbox. She testified that she was paid approximately $3,050 per month by way of salary from Mattest, money which Nirmal deposited into their joint bank of Montréal account.
[43] Just before the date of separation, in and around October 16, 2008, Nirmal fired Parvinder from her position at Mattest.
[44] Also, following the date of separation, Nirmal turned off Hydro, telephone and cable and left outstanding accounts unpaid. At that time, Parvinder was living in a shelter. She states that Nirmal took sole charge of their finances, drained their bank accounts and left her to borrow funds in order to pay the mortgage and arrears on the utility bills.
[45] Parvinder added that between the date of separation and the present, aside from the amount given her by Nirmal on consent to settle all issues of support, she has been the sole financial provider for herself and the children.
[46] Therefore, even if Parvinder were to factor in the valuation of the Indian properties and not account for the additional missing sums of money from various bank accounts as mentioned above, according to her net family property statement, Nirmal would owe her an equalization payment in the amount of $390,424. Therefore, even if she were to buy out the respondent’s interest in the matrimonial home, based on its current valuation, he would still owe her an equalization payment of $205,924.
Credibility
[47] I have set out Parvinder’s evidence at some length because I found it to be clear, concise and compelling. I accept and value her evidence, in part because it stands untested by cross examination (Nirmal having opted to ask her no questions at all) but also because I found it to be consistent internally and preferable to any evidence to the contrary offered by Nirmal.
[48] Nirmal did not do well as a witness on his own behalf and he admitted this in his closing submissions. During cross examination, his credibility was repeatedly found wanting. He contradicted his evidence in chief and answers given in questioning before trial. His answers tended to be vague; he was evasive and often unresponsive.
[49] Importantly, he offered no plausible reason for his repeated failures to comply with court orders regarding freezing of assets and financial disclosure. By way of example, despite the provisions of the order of Kiteley J, dated October 24, 2014, requiring him to provide documentary proof of the value of property in India at the date of the marriage, he provided neither proof nor explanation for non-compliance.
[50] That order also required him to provide audited reports of all money transfers/transactions in Canada, India or elsewhere; he did not comply and offered no explanation for non-compliance.
[51] Despite the freezing order made by Czutrin J on December 9, 2008, Nirmal withdrew $15,000 in cash on December 12, 2008 and between December 17 and 18, 2008, he sent $60,000 to India. He clearly breached the freezing order through these and other transactions.
[52] Nirmal was shown the July 28, 2009 order of Justice Wilson requiring that he, inter alia, pay back $40,000 from his ICICI accounts. Ultimately, he agreed that he did not comply with that order although he did arrange for Mr. Ravi Khuranna to fund that amount from his Money Mart business and ultimately the money was paid into the trust account of Ms. Amourgis. He was taken to other provisions of that court order and confirmed that he did not comply specifically with the provisions of paragraph three, four and six, for example.
[53] There are many other examples but suffice to say that the accuracy and completeness of Nirmal’s evidence was tested and found badly wanting.
[54] Nirmal's description of the Wyecroft purchase and sale transactions defies logic and is not supported by any documentation and/or the evidence of Parvinder.
[55] He said that Wyecroft was purchased at the request of Parvinder who wanted to start a teaching institute and operate it from that unit. At that time, Nirmal insisted that he was operating an inspection business from the matrimonial home.
[56] Notwithstanding that Nirmal's business, Mattest, was an incorporated entity that he was the sole director and shareholder of, he took $187,000 from the line of credit secured against the matrimonial home, purchased Wyecroft and had title taken in the name of Mattest. He produced no loan agreement or other documentation supporting the use of family money for Mattest.
[57] He agreed that the appraisal report for Wyecroft fixed its value at $150,000 but, without support founded on any document or credible evidence at trial, he insisted that Parvinder so wanted the property that he agreed to a purchase it at above market value.
[58] Again despite the clear evidence received on consent of the parties as to the value of the property at $150,000, Nirmal offered no credible evidence for its sale to his cousin at $140,000.
[59] Nirmal takes the position that he/his company sold the property on October 4, 2008, days before the separation date, which he asserts occurred on October 30, 2008. That deal closed on November 10, 2008. No evidence was heard from the cousin/purchaser at trial. I do not accept that the property was sold at fair market value to an arms-length purchaser after the separation date at $140,000.
[60] As for the asset values of Mattest’s equipment and furniture at Wyecroft, he agreed that he was asked for and undertook to give asset valuations during the course of questioning before trial but he offered no explanation for why he failed to complete that undertaking.
[61] Nirmal seeks one half of the value of the matrimonial home and so his evidence regarding the home becomes relevant. He agreed that the matrimonial home has appreciated in value between the separation date and the date of trial and he appreciates that the increase in value of the property was occasioned without his contribution toward its carrying costs or the cost of maintaining the mortgage/line of credit in the interval.
[62] After separation, he cut off all utilities. He was aware that power of sale proceedings were initiated against the home but, knowing that Parvinder and the children of the marriage were living in the home with his consent, he took no steps to bring the mortgage into good standing.
[63] His equalization claim regarding the house must be viewed in context; he contributed nothing to its upkeep, maintainence or mortgage after separation and, as noted above, for his own purposes outside of any joint family endeavor, he significantly increased the mortgage debt that Parvinder had to carry.
Occupation Rent
[64] In his affidavit evidence (evidence in chief) at trial, Nirmal made a claim for occupation rent. He submits that he was arbitrarily removed from the home and was forbidden to communicate with Parvinder. Since separation, he submits that he has lived in inferior conditions to those he had been accustomed to.
[65] Nirmal’s submissions ignore the fact that he did not plead a claim for occupation rent at any time during this litigation before trial.
[66] He left the home following an altercation following which he was charged and ordered, as a term of his bail, to have no contact with his wife and son. At no time did he ask Parvinder to pay occupation rent and he consented to her having possession of the home.
[67] The family continued to live in the home, with Nirmal’s knowledge and consent, but Nirmal paid neither spousal nor child support. He did not contribute toward the cost of maintaining the home following separation. He added nothing toward the increase in value of the home during separation; on the other hand, Parvinder had to source and pay $32,000 to pay mortgage arrears after separation and carry all costs associated with the property.
[68] He tendered no evidence of specific financial difficulty arising from his consent to live away from the home.
[69] Having considered the factors relevant to an award of occupation rent[^1], the totality of the circumstances of the case and that occupation rent is a remedy that is exceptional and to be used cautiously, I decline to award Nirmal occupation rent.
Unequal Division of Net Family Property
[70] Section 5 of the Family Law Act (R.S.O. 1990, CHAPTER F.3) speaks to the division of net family property in Ontario. More specifically, section 5(7) provides:
(7) The purpose of this section is to recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6).
[71] And the equitable considerations are set out in section 5(6) as:
(6) The court may award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion that equalizing the net family properties would be unconscionable, having regard to,
(a) a spouse’s failure to disclose to the other spouse debts or other
liabilities existing at the date of the marriage;
(b) the fact that debts or other liabilities claimed in reduction of a
spouse’s net family property was incurred recklessly or in bad faith;
(c) the part of a spouse’s net family property that consists of gifts made
by the other spouse;
(d) a spouse’s intentional or reckless depletion of his or her net family
property;
(e) the fact that the amount a spouse would otherwise receive under
subsection (1), (2) or (3) is disproportionately large in relation to a
period of cohabitation that is less than five years;
(f) the fact that one spouse has incurred a disproportionately larger
amount of debts or other liabilities than the other spouse for the
support of the family;
(g) a written agreement between the spouses that is not a domestic
contract; or
(h) any other circumstance relating to the acquisition, disposition,
preservation, maintenance or improvement of property.
[72] Nirmal has claimed debts owing to people in India and repaid during separation to reduce his net family property as at the date of separation and to explain the use of funds he took from the line of credit and bank accounts.
[73] His evidence does not support his claim. He provided no loan agreements. He produced no documentation confirming how the money was transferred from Indian currency to Canadian currency or how it was delivered to Canada, how it was spent and by what means these loans were repaid.
[74] It is both incredible and incredibly suspect to assert that substantial sums of money were borrowed from friends in India and yet no documentary trail of borrowing and repayment has been established. Especially is this so since Parvinder stated in her affidavit evidence, and was not cross-examined upon it, that the parties borrowed no money while they lived in Canada at all.
[75] At one point, Nirmal insisted that he borrowed money from India because Parvinder claimed she could not sleep at nights because their mortgage debt was so high. Nirmal agreed that the mortgage interest rate was 5.85% whereas the money he said that he borrowed from India incurred interest at the rate of 2% per month or 24% per year and, as such, the India loans were four times more expensive than was the mortgage.
[76] As his cross-examination continued, Nirmal was taken back to the loans which he gave evidence about in this trial and in previous proceedings and in his various financial statements. In the result, it became clear that at different times, he claimed to have borrowed money on different occasions and in different amounts than he testified to in his evidence in chief.
[77] In a financial statement dated 23 October 2014, for example, he specified loans totaling $60,000 from India. Then in his statement of 19 January 2015, he specified loans totaling $170,000. Then in his financial statement of February 6, 2015, he specified loans of $30,000 which he went on to explain represented his share [50%] of $60,000 worth of loans taken out before separation from sources in India.
[78] In my view, Nirmal has not made out the existence of the claimed loan debts and even if the loans did exist and were used to pay down the mortgage (which has also not been proven), the interest rate differentials would constitute reckless loans for purposes of section 5(6)(b).
[79] I turn now to consider whether equalizing net family property would be unconscionable having regard to section 5(6)(h): “any other circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property”.
[80] Nirmal rightly submits that the threshold of unconscionability is quite high. In Braaksma[^2] the court held that it requires a much stricter test than mere unfairness, harshness or injustice.
[81] And in Serra[^3] the court confirmed that to cross the threshold, the circumstances must shock the court. Only when this exceptionally high threshold has been crossed will the court exercise its discretion by doing what is just, fair and equitable in the circumstances.
[82] This is a case in which the threshold has been met. Nirmal triggered an erosion of the family’s net worth that came, not as a result of market conditions entirely outside of his control nor made in concert with his wife but from a deliberate, unilateral course of conduct for which he alone is responsible. The full extent of this erosion is unknown because Nirmal has not made full disclosure of his finances despite the duty imposed on him by the Family Law Rules and court orders.
[83] I find that he acted in bad faith in incurring debts and liabilities and a disproportionately larger amount of debts and liabilities than Parvinder did for the support of the family.
[84] I accept Parvinder’s submissions that:
On the date of separation the market value of the matrimonial home was $480,000 and each party might have been entitled to $240,000.
Nirmal added $300,000 to the indebtedness secured by the home. He spent $187,000 to purchase Wyecroft; he used $40,000 for his personal and/or business expenses; and he withdrew a further $40,000 in October 2008. In total, he withdrew $267,000 from the joint line of credit, an amount greater by $27,000 than an equal share of the matrimonial home would have been.
The parties agree that there is currently $67,000 in trust with Ms. Amourgis.
Nirmal withdrew $94,500 from the joint account, $40,000 now in trust with Ms. Amourgis and $54,500 that has yet to be repaid.
Nirmal admitted that there was a balance of approximately $47,284 on the date of separation in the business accounts of Mattest NDE Inc. and Harman NDE Institute.
Nirmal was ordered to provide a valuation of Mattest NDE Inc. as at the date of separation but he has failed to do so. That cannot be condoned. In addition to the money in business account, Nirmal has agreed that Mattest had approximately $36,000 in accounts receivable at the date of separation. Both the money in business accounts and the value of accounts receivable are subject to equalization.
Nirmal admitted to having at least $50,000 in his ICICI bank account in India. That money is also subject to equalization.
Nirmal has two pensions. The value of these, net of the value of Parvinder’s pension, amounts to $29,374 subject to equalization.
Disposition
[85] Given that Nirmal withdrew more than one half of the equity in the matrimonial home prior to separation, I order that ownership of the home be vested in Parvinder, absolutely.
[86] As noted above, Nirmal depleted family property by withdrawals from bank and line of credit funds prior to the date of separation. He is credited with $240,000 of the $267,000 actually withdrawn and an equal division of the equity in the matrimonial home thereby.
[87] There shall be an unequal sharing of the remaining net family property with the result that Nirmal is ordered to pay Parvinder the sum of $184,702.70, being approximately 65% of the known funds as described above.
[88] In the result, Nirmal obtains an overall equalization of all net family property of approximately 45%, being 50% of the equity in the home and 35% of the remaining known funds. In my view, he is fairly dealt with, keeping in mind his intentional, shocking conduct aimed at financially disadvantaging Parvinder in the lead up to separation and his non-compliance and inappropriate hiding of his true financial picture both before and after separation.
[89] Parvinder shall recover her costs of the litigation in an amount to be agreed upon between the parties or fixed by me. In the event that the parties are not able to resolve costs issues, they may serve and file written submissions, not to exceed three typed, double spaced pages each and supported by Parvinder’s Bill of Costs and other relevant supporting material.
[90] Parvinder’s costs submissions must be filed within 30 days in the Family Law office for my attention; Nirmal’s responding submissions must be filed within 15 days thereafter. No Reply submissions will be received.
Moore J.
DATE: April 9, 2015
[^1]: Charron v. Carron, [2014] ONSC 496
[^2]: Braaksma v. Braaksma (1992), 1992 8623 (ON SC), 41 R.F.L. (3d) 304 at paras 12-15; aff’d (1997) 25 R.F.L. (Ont. C.A.)
[^3]: Serra v. Serra, 2009 ONCA 105 (C.A.) at paras. 47-48 & 71