Stork v. Stork, 2015 ONSC 312
NEWMARKET COURT FILE NO.: FC-13-43880-00
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
Sandra Fern Stork Applicant
– and –
David Ian Stork Respondent
David A. Jarvis, for the Applicant
Howard Nightingale, for the Respondent
HEARD: January 14, 2015
ENDORSEMENT
mCgEE j.
Background to Motions
1Two motions were heard on January 14, 2015. Mrs. Stork asks for a further advance on her equalization payment in the amount of $80,000. Mr. Stork opposes the relief sought and asks for an order for spousal support.
2The parties separated on February 15, 2012 after 25 years of marriage. They have two adult children, ages 26 and 24. For the purposes of this motion, both are independent.
3The former matrimonial home, registered in Mr. Stork’s name alone, was sold on June 3, 2014. On consent, each party received $150,000 from the sale proceeds. Certain other amounts were also paid, some of which are in dispute. The balance of proceeds remaining in trust is $380,993.97.
4Also in dispute is the value of the home on the date of separation – which is not the same value as the date of sale value. Evidence of the date of separation value has been requested and has remained outstanding for a lengthy period. It was provided by Mr. Stork’s counsel during the hearing of this motion.
5The parties have scheduled a Trial Management Conference for April 21, 2015. Although the court has expressed optimism that a trial of the issues could proceed in the May 2015 sittings; counsels are well aware of the chronic scheduling challenges within this jurisdiction. It is not unrealistic that the trial would not be called until November 2015.
Mrs. Stork’s Motion
6Mrs. Stork seeks an order for a payment of $80,000 from the sale proceeds held in trust as an advance on an equalization payment. Mr. Stork says that the $150,000 previously advanced is sufficient pending trial. He resists any further release of monies.
7On the second ground of the motion, the parties have agreed that Mr. Stork shall attend at the Read Clinic for a medical/vocational assessment on February 23, 25 and if necessary, March 2, 2015. It is further agreed that the costs of the assessment shall be paid from the proceeds of sale held in trust. Mrs. Stork shall pay Mr. Stork’s mileage and parking for the attendances.
8Mr. Stork now asks for taxi fare in lieu of a mileage rate. I decline to consider this additional request as it was not before the court, and in any event, will be within his financial means upon receipt of the spousal support determined herein. Not on consent, I order that any cancellation fees for the clinic, or costs pf rescheduling an appointment shall be borne by Mr. Stork.
9Mrs. Stork also seeks an order for directions on the valuation of Mr. Stork’s matrimonial home contents and sports memorabilia collection. These are items of modest value, the latter being the leftover items not accepted by the purchaser of Mr. Stork’s business, sold during the marriage.
10Each party has an obligation under Rule 13 to provide, and to update a sworn Financial Statement that includes the value of all possessions held on the date of separation. The failure to do so can result in an adverse inference. I am not clear on the direction sought by counsel, and will provide only as follows, in order to assist the parties in settling or trying this particular issue. I am not prepared to give further directions given the limited scope of this motion and the more pressing issues to be decided.
11Order to go that each party is to provide the other with an affidavit within 40 days of the release of this decision. The affidavit is to clearly set out his or her evidence as to the value of any contents held at the date of separation. For Mr. Stork, his affidavit is to include the value of any sports memorabilia held at the date of separation and details of any subsequent sales of those items. Those affidavits shall form the parties’ evidence in chief on the topic, on which they may be cross-examined.
12I shall now turn to the issue of Mrs. Stork receiving a second advance on an equalization payment, after receipt of $150,000 in June of last year.
13Mrs. Stork does not seek an order based the need to “level the playing field” as contemplated in Stuart v Stuart[1], most recently cited with approval in Ludmer v Ludmer[2]. Rather, she relies on a line of cases that begins with Justice Lane’s decision in Zagdanski v. Zagdanski,[3].
14Zagdanski sets out four factors upon which an order for the advance of monies towards an equalization payment ought to be made. These factors are:
There is little or no realistic chance that the amount of the contemplated advance will exceed the ultimate equalization amount;
There will, therefore, be some considerable degree of certainty about the right to, and likely minimum amount of, an equalization payment;
There will be need, not necessarily in the sense of poverty, but a reasonable requirement for funds in advance of the final resolution of the equalization issue, including funds to enable the continued prosecution or defence of the action;
There may be other circumstances such that fairness requires some relief for the applicant; frequently, but not necessarily, there will have been delay in the action, deliberate or otherwise, prejudicing the applicant by, for example, running up the cost.
Advance on Equalization: The Law
15The principles within Zagdanski started on uneven footing. There is no statutory basis on which a court may order one party to pay the other a sum as an advance on his or her claim for an equalization payment.
16After an unsuccessful attempt to appeal the decision of Justice Lane, leave to appeal to the Divisional Court was granted by Then J.; see [2002] O.J. No. 3415 (Ont. Div. Ct). In granting leave to appeal, Then J. was persuaded that there was “…sufficient reason to doubt the correctness of the decision or that the correctness of the decision is at least open to very serious debate…” He also found that the issue was worthy of hearing an appeal since, the “proposition” that an advance on equalization may be ordered based on the exercise of the inherent jurisdiction of the court (as opposed to when the test for summary judgment was met) was “an important and significant extension of family law jurisprudence transcending the interests of the parties.”
17After leave to appeal was granted in Zagdanski, the parties settled the case. As the appeal was never heard, the decision of Justice Lane stands. According to the Canadian Encyclopedic Digest, “Rule of Stare Decisis” citing Horne v. Horne Estate (1986), 1986 2786 (ON SC), 54 O.R. (2d) 510 (Ont. H.C.); affirmed on other grounds (1987), 1987 4090 (ON CA), 60 O.R. (2d) 1 (Ont. C.A.):
- A decision of a court of co-ordinate jurisdiction ought to be followed in the absence of strong reasons to the contrary. Until the Court of Appeal deals with a matter, it is desirable that there be consistency of decisions among Ontario judges.
18Zagdanski has since been followed about 7 times in Ontario and has been cited with approval a further 11 times. In Laamanen v. Laamanen[4], Karakatsanis J. stated that the fact that leave for appeal was granted should not lead the court to abandon the decision in Zagdanski, given that numerous other judges of the court had ordered advances:
Although leave to appeal to Divisional Court was granted, the appeal was not pursued. By granting leave to appeal, one Superior Court Judge had some reservations about the correctness of that decision; however, numerous other judges of this court have ordered advances, either as an advance on equalization payment, or for interim disbursements, or to be characterized by the trial judge. Where a minimum equalization payment is conceded, an advance can avoid an interim judicial determination on issues best dealt with at trial, thus avoiding the need for interim support determinations and interim disbursements.[5]
19Karakatsanis J. also rejected the idea that a motion for an advance on equalization could be construed as a “partial” motion for summary judgment, and instead adopted the approach in Zagdanski;
The construct of a Rule 20 motion does not fit this context. The motion would raise issues of res judicata and would not resolve any issues or shorten the time at trial. The Ontario Court of Appeal in Ford Motor Co. of Canada v. Ontario (Municipal Employees Retirement Board) (1997), 1997 1302 (ON CA), 36 O.R. (3d) 384 (Ont. C.A.) held that parties cannot move for partial judgment as soon as they can prove a minimum recovery, especially where it does not resolve an issue, or shorten trial time. Rule 20 does not involve any consideration of need for the funds or an ability to pay.
20In Firestone v. Pfaff[6], Kiteley J. applied the factors set out in Zagdanski in deciding whether an order for an advance on equalization should be made. Kiteley J. elaborated slightly on factor 4 in agreeing that the court must consider fairness to both parties, not just the party advancing the equalization claim. She therefore considered that the husband had raised the prospect that he would claim a loss as a result of the delay in listing a cottage property for sale.
21In Arcuri-Gunasekaram v. Gunasekaram[7], Kiteley J. again considered the Zagdanski factors in deciding whether to order an advance on equalization. Kiteley J. found that factors 1 and 2 were satisfied, and that factor 3 was satisfied by the reasonable requirements of the applicant to provide for her and the children and for funds to enable her to continue to prosecute the action. Kiteley J. further considered fairness under factor 4 and, and in line with her previous decision in Firestone v. Pfaff, extended the consideration of fairness to include a finding that the respondent had acted improperly, and the possibility that the wife’s claim for equalization might soon be in competition with the claims of the husband’s creditors.
22In Zigiris v. Foustanellas[8], at para. 43 Kane J. applied Zagdanski and advanced the applicant $25,000 to permit her financing of legal and valuation expenses (factor 3). It was found that the estimates of $15,000 and $10,000 for such expenses were appropriate. The court noted that the respondent acknowledged that he would be liable to pay the applicant some $500,000 (factors 1 and 2).
23In Ten Pas v. Ten Pas[9], the respondent husband sought an order that the amount of $140,504.06 of the net proceeds of sale of the matrimonial home be paid to Canada Revenue Agency ("CRA") to his credit, and the court dealt with this as an “advance on equalization.” The court reviewed the affidavit material and concluded that the parties had widely conflicting views on what the equalization payment would be. The court refused to grant the motion. Applying Zagdanski factor 1, D.A. Broad J. was not satisfied that,
…that there will be little or no realistic chance that the amount of the contemplated advance will exceed the ultimate equalization amount to which the respondent is entitled, and that there will be the necessary degree of certainty about the right to, and likely minimum amount of, an equalization payment to which he will ultimately be entitled. (at para. 23)
24In Thiyagarajah v. Paramsothy[10], Price J. applied Zagdanski and ordered and advance on equalization based on factors 1, 2 and 4, citing the following:
a. There is such a significant disparity in the parties' resources that there is a considerable degree of certainty about Ms. Thiyagarajah's right to an equalization payment.
b. Mr. Paramsothy has acknowledged having received the proceeds of the parties' matrimonial home, formerly owned by Ms. Thiyagarajah's parents, to which she had at least an equal interest, in an amount that was more than double the amount of the advance that Ms. Thiyagarajah has requested.
c. The action was delayed by Mr. Paramsothy's failure to comply with Lemon J.'s order that he deliver a valuation of his businesses within 60 days after May 9, 2011, which prejudiced Ms. Thiyagarajah and increased her costs (at para. 124).
25In Irwin v. Irwin[11], the applicant sought $250,000 as an advance on equalization, arguing that, based on the respondents own numbers (and adding back $50,000 due to a more accurate value of the respondent’s business) the applicant was owed at a minimum $200,000 (at para. 33-34). The respondent did not deny that he owned a “sizeable” amount of money, but argued that such an order would be too prejudicial based on the fact that he intended to request that equalization be made over time as allowed by section 9(1)(c) of the Family Law Act.
26As a result Bielby J. made an order of an advance on equalization of only $75,000, since advancing money to the level requested by the applicant would severely limit the respondent’s trial arguments as to making an equalization payment over time. Bielby J. stated “This amount is admittedly owed to the applicant and will, to some extent, level the playing field and still allow the respondent an argument as to how and when the balance of the equalization payment is to be paid” (at para. 36).
Advance on Equalization: Analysis
27To summarize, the Zagdanski factors are good law and have evolved over time. They provide guidance to a court as to when its discretion ought to be used to order an advance on equalization: there is certainty that the person will receive an equalization payment of at least that amount (part 1 and 2); there is a need and a reasonable requirement for the funds (part 3); and it is just and fair to both parties do so in the circumstances (part 4).
Part 1&2
28Counsels agree that the approximate range of equalization owing to Mrs. Stock is from $448,000 (Mrs. Stork’s best case) to $253,000 (Mr. Stork’s best case[12].) After the earlier advance of $150,000 is applied, that range reduces to $298,000 - $103,000.
29Counsel for Mrs. Stork argues that there is good reason to believe that the amount of equalization owing to his client will be in the higher range. Primarily, his position is that the date of separation value of the home is considerable higher than the figure of $682,500 used by Mr. Stork.
30He also makes a compelling argument that debts listed by Mr. Stork as owing to his father are not genuine. Mr. Stork has not repaid any monies to his father since receiving his portion of the sale proceeds. Similarly constituted debts from Mrs. Stork’s parents were not included in her net family property. From the court’s review, there will also be a modest increase in the outstanding equalization owing to Mrs. Stork when an inflated cost of disposition on Mr. Stork’s RRSPs [13]is corrected.
31I am satisfied that there is some certainty that Mrs. Stork will receive an equalization payment of at least a further $80,000.
Part 3
32Mrs. Stork states that her primary need for a further advance of equalization is to assist her with costs of housing. Post separation, she used the amount of $150,000 to financially reorganize and to purchase a home. She completed renovations on that home in the amount of $28,000. She now has $518,047 in personally secured debt, $54,106 in monies owing to her parents and $21,289 in outstanding legal fees[14].
33I am satisfied that Mrs. Stork has a need and a reasonable requirement for the funds sought by way of an advance.
Part 4
34Mr. Stork is fearful that Mrs. Stork has over extended herself financially and will not be able to meet her future obligations, including any payment of lump sum spousal support. He states that it would be unfair to release any further monies, and that the balance of the sale proceeds needs to be preserved to secure his claims for lump sum support, and any adjustment of the post separation carrying costs of the home.
35Mr. Stork’s concerns are not without some merit. It is hard to imagine how Mrs. Stork intends to service the debt that she has incurred post separation on her present salary, even without the obligation for spousal support.[15]
36For the court to consider whether an advance would be just and fair to both parties, it must take just as hard a look at the competing claims as it does at the proposed advance.
37Counsel for Mr. Stork values his retrospective claim, and his prospective lump sum claim for spousal support in the amounts of $47,565 and $97,848 respectively.
38I have significant concerns with those amounts as proposed. On the former, I have not been given support mate calculations for either of 2012 and 2013 to assess a range of calculations. The amount of $47,565 has not been reduced for tax.
39The prospective lump sum for support is even more uncertain. While Davis v Crawford[16] provides appellate authority for a lump sum of spousal support in a long term marriage, the case before me is easily distinguished. There is no evidence that Mrs. Stork is unable to make periodic payments of support, or that she will avoid an order to do so.
40The amount of $97,848 is also not certain. It has not been reduced for tax. It is unclear to me what variables have been used in the figure’s calculation.
41Mr. Stork may be successful on his claim for a reallocation of post separation housing expenses incurred from February 15, 2012 to June 3, 2014. Mr. Stork states in his January 9, 2015 affidavit that he paid $39,194 during this period. He seeks $19,597 as payment of Mrs. Stork’s share.
42That claim is best heard at trial when it can be considered with the claim for spousal support during the same period. It must also be considered in light of the fact[17] that any post separation increase in the property being maintained will be solely enjoyed by Mr. Stork.
43Is it fair to order a further payment of $80,000 given the competing claims by Mr. Stork?
44Counsel for Mrs. Stork makes much of the conduct factors inherent in a consideration of fairness within the fourth factor. He describes deliberate delay and poor conduct on the part of Mr. Stork. I cannot not make findings of credibility on the motion, but do observe that Mr. Stork’s Net Family Property Statement and a valuation of the home on date of separation were first passed to applicant’s counsel during the hearing of the motion.
45Ultimately, this is not a matter in which the advancer of the monies has a claim for unequal division, for payment over time, or is managing significant creditors or facing the risk of bankruptcy. The monies are secure and I am satisfied that the equalization payment will be higher than that calculated by Mr. Stork. A further advance will also protect Mr. Stork from an assessment of prejudgement interest.
46At the same time, I am satisfied that there will be some offsetting claims to be determined for the period of February 15, 2012 to June 3, 2014, but on the record before me, I do not have any basis to determine the range of that calculation.
47It is unusual for a party to make a claim for an advance of equalization. It is even more uncommon for a party to make a claim after already receiving significant monies. By rehousing herself in a manner in which her debt has escalated, Mrs. Stork has placed herself in a difficult financial position, pending and post trial.
48I exercise my discretion to order Mr. Stork to advance the amount of $60,000 to Mrs. Stork as a credit to her claim for equalization. In making my order, I am attempting to strike a balance between the certainty that Mrs. Stork will be entitled to an amount of at least $80,000, her need to reduce debt and fairness to Mr. Stork in preserving funds for potentially offsetting claims which will need to be determined at trial.
Mr. Stork’s Motion
49Mr. Stork seeks an order for temporary spousal support in the amount of $1,556 per month. He also seeks an order that Mrs. Stork provide a complete list and accounting of the contents that she removed from the matrimonial home. As the latter has been addressed as a mutual order in paragraph 11 above, I shall address only the claim for spousal support in these reasons.
50Mr. Stork is presently in receipt of CPP disability income in the amount of $10,196 per annum. He is in a period of cancer recovery and states that he is unable to work. His view is supported by a psychological report dated September 15, 2014. Mrs. Stork does not accept a view that he cannot work, hence the further assessment scheduled for next month.
51Mr. Stork’s Financial Statement sworn January 8, 2015 indicates $57,857 of annual expenses which include more modest housing expenses than those incurred by Mrs. Stork. He deposes that his monthly deficit is being supplemented by the sale proceeds of the home.
52Both parties are 56 years of age. Mr. Stork is clearly in need of spousal support. Mrs. Stork is strongly opposed to any payment of spousal support. Entitlement of either party to support is not in issue. Rather Mrs. Stork argues that Mr. Stork is not in need as he has his sale proceeds and savings. Alternatively, she submits that the trial judge is better able to determine the claim for support.
53The law is clear that a spouse is not obliged to fund one’s daily expenses through capital. Both parties must organize their post separation financial affairs in keeping with their means.
54Temporary support is intended to provide income for a dependent spouse pending a trial of the issues. A court need not conduct a complete inquiry into all aspects and details; rather an award of temporary support is a holding order.
55Mrs. Stork is a dental hygienist. She works 14 days a month between two offices. In 2014 she earned $52,865. For the purposes of this motion, Mr. Stork’s counsel is not seeking an order imputing Mrs. Stork with the equivalent of a fulltime income. Counsel for Mr. Stork calculates the range of spousal support set out within the Spousal Support Advisory Guidelines as :
a. $1,333 (Low 53.9/46.1 NDI)
b. $1,556 (Mid 50.2/49.8 NDI)
c. $1,586 (High 50/50 NDI)
56Mrs. Stork states in her affidavit of January 9, 2015 that an unexpected shift in office responsibilities at the end of December 2014 will result in a $5,000 reduction to her 2015 income. She provides no evidence that she is unable to make up the difference in 2015 earnings through other measures. I have calculated the range based on her projected income of $47,865:
d. $1,177 (Low 55.4/44.6 NDI)
e. $1,373 (Mid 51.7/48.3 NDI)
f. $1,462 (High 50/50 NDI)
57I accept that Mrs. Stock has considerable debt, although it is debt of her choosing. The advance of equalization determined above will relieve her of some measure of debt, improving her ability to pay support.
58Using a blended approach to the ranges above, and knowing that the trial judge can reassess the amount of support should the reported reduction in income for Mrs. Stork not transpire, I award Mr. Stork the amount of $1,450 in temporary support, commencing January 1, 2015.
59Support deduction order to issue.
Justice H. McGee
Released: January 23, 2015
12001 28261 (ON SC), 2001 CarswellOnt 4586
22012 ONSC 4478, 2012 CarswellOnt 9702
3(2001) 55 O.R. (3d.)
4(2005), 2005 50808 (ON SC), 25 R.F.L. (6th) 441, 2005 CarswellOnt 8037
5Interestingly, Justice Karakatsanis, as she then was, connects the issues of interim spousal support and an advance on an equalization payment. In this case, it is the payor who seeks an advance on equalization. Nonetheless, I agree that the issues are connected. Rather than alleviating need by way of an advance on an equalization payment, Mrs. Stork can be said to have greater ability to pay support, as an advance will act to reduce her post separation debt.
62012 ONSC 4909, 2012 CarswellOnt 10550
72013 ONSC 8017
12As identified in his Net Family Property Statement dated January 8, 2015, but only delivered to counsel on January 14th, during the hearing of the motion.
13Mr. Stork claims a disposition rate of 35% at a time that he is earning $10,196 per annum.
14As set out in her Financial Statement sworn November 28, 2014.
15Ironically, it is her debt situation that underscores her need for an advance of equalization.
17And in the absence of any trust claims