COURT FILE NO.: FS-15-403305
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Lisa Rezai, Applicant
AND:
Glen Gibbons, Respondent
BEFORE: Madam Justice Chiappetta
COUNSEL: Harold Niman and Richard Niman, for the Applicant
Glen Gibbons, Self-Represented
HEARD: October 27, 2015
ENDORSEMENT
Background:
1The parties were married on June 18, 2010. They separated on February 3, 2013. There is one child of the marriage, Chloe Elle Gibbons (“Chloe”) born on October 30, 2012. Chloe has resided with the Applicant in the matrimonial home located at 7 Douglas Crescent in Toronto, ON (“the matrimonial home”) since separation.
2The matrimonial home is subject to a charge/mortgage of land (‘charge”) in favour of Macquarie Financial Ltd. (“Macquarie”). The Respondent made the mortgage payments for the matrimonial home from the date of separation until default on May 5, 2015.
3By Statement of Claim issued August 11, 2015, Macquarie claims against the Respondent payment on the charge in the sum of $1,801,058.13 plus interest. It further claims against the Applicant and the Respondent for possession of the matrimonial home. Macquarie pleads that defaults in installments of principal and interest payments on the charge totalling $6,595.57 occurred on May 5, 2015 and still continue. Moreover, it is pled, that the charge matured on August 4, 2015 and no further renewal, amendment or extension of charge was offered and/or accepted by the Respondent.
4Macquarie further pleads that the Applicant was made a party to the action because it would appear that the mortgaged property is a matrimonial home within the meaning of the Family Law Act, R.S.O. 19990, c.F.3 (“the Family Law Act”) such that the Applicant may have the same right to possession of the mortgaged property under s.19 of the Family Law Act (“the Macquarie action”).
5The Respondent has not filed a Statement of Defence to the Macquarie action. I am advised by counsel for the Applicant that Macquarie has obtained default judgment against the Respondent. The Applicant filed a Statement of Defence to the Macquarie action dated September 21, 2015. Therein she pleads that she is claiming exclusive possession of the matrimonial home in the within proceeding and that she has had exclusive possession of the matrimonial home since the parties’ separation in 2013. The Applicant further pleads that she will therefore be prejudiced by the relief sought in the Macquarie action. I am advised by counsel for the Applicant that Macquarie has moved for summary judgment on their claim against the Applicant and the hearing date for the motion is scheduled for the end of January 2016.
6By way Notice of Motion dated September 22, 2015, the Applicant seeks an order in this proceeding requiring the Respondent to re-finance the mortgage for the matrimonial home and pay all outstanding debts owing in relation to the property including home insurance and property taxes. She further seeks an order that the Respondent pay her $10K in monthly undifferentiated support for child of the marriage and spousal support. Further financial disclosure is as well sought by way of the motion.
7By way of Notice of Motion dated October 6, 2015, the Respondent seeks an order for the sale of the matrimonial home.
8By way of Amended Notice of Motion dated October 13, 2015 the Applicant seeks an order granting her temporary exclusive possession of the matrimonial home.
9The parties attended before me on October 27, 2015 to argue the issues as noted in their respective motions. Macquarie was not put on notice of either of the parties’ motions notwithstanding the respective relief sought pertaining to the matrimonial home.
Financial Disclosure
10By email the evening before the return date of the motion, the Respondent provided the Applicant with a large volume of financial disclosure. Understandably, the Applicant and her counsel have not had the time to thoroughly review the material. The Respondent advised the court on the motion however that he is agreeable to an order that, to the extent his productions of October 26, 2015 sent by e-mail to the Applicant’s counsel at 9:15pm are not complete, he shall produce all disclosure pursuant to section 21 of the Federal Support Guidelines, SOR/97-175, as amended and to an order that, to the extent his productions of October 26, 2015sent by e-mail to the Applicant’s counsel at 9:15pm are not complete, he shall produce all disclosure by November 13th, 2015 requested by the valuator of the Applicant, Tim Martin, as enclosed at Exhibit “A” to the Affidavit of Leth Manansala dated October 13, 2015.
The Matrimonial Home
11The Respondent is seeking an order for the sale of the matrimonial home. The Applicant is seeking an order for temporary exclusive possession of the matrimonial home and an order that the Respondent be ordered to re-finance the mortgage on the matrimonial home. At paragraph 6 and 7 of the Macquarie claim Macquarie pleads that the Respondent agreed to be bound by the provisions of the Standard Charge Terms filed as number 200809 which permit it, given the default, to lease or sell or enter on the home upon notice. The Macquarie claim seeks possession of the matrimonial home as against both the Applicant and the Respondent. As noted, however, Macquarie was not put on notice of either motion. In my view, Macquarie is an interested party on this motion and should properly have been served with the parties’ respective motion materials. Their lack of notice is rendered moot however, given my conclusions as set out below.
12Macquarie has obtained default judgment against the Respondent in the Macquarie claim. In light of this, the court need not consider his request for the sale of the matrimonial home. The matrimonial home will be sold. The Respondent’s Notice of Motion dated October 6, 2015 is therefore dismissed.
13The Applicant asks the court to order the Respondent to re-finance the mortgage on the matrimonial home. The Applicant argues that the Respondent has breached a court order and deliberately not paid the mortgage on the matrimonial home or has failed to do so out of negligence. On June 30, 2015, on consent, Justice Stevenson ordered in part that pending the case conference scheduled for July 24, 2015, the Respondent shall be responsible for all payments toward the mortgage on the matrimonial home. No payment was made in accordance with her Honour’s order.
14Further, the Applicant argues that the Respondent had the funds to pay the mortgage in May 2015 but chose not to do. At paragraph 37 of his affidavit sworn October 6, 2015, the Respondent deposes that he missed a mortgage payment in March of 2015 and was unable to catch up. He deposited $184,481.73 into his personal banking account, however, on February 10, 2015 and $19,000 on April 1, 2015. None of these monies were used to make a mortgage payment on the matrimonial home. Further he transferred $55,025 to his father, Malcolm Gibbons, on March 6, 2015, the same month he missed the mortgage payment.
15Finally, the Applicant directs the court’s attention to a letter from the Respondent’s first lawyer, dated February 21, 2013. Therein it is written that the Respondent “advises that he is unsure if he will be able to make the next mortgage payment. If your client does not agree to the listing and sale of the matrimonial home in the near future, my client may be forced to go into default with the mortgage payments and consider costly litigation in order to seek the court’s assistance in the sale of the matrimonial home.” Counsel for the Applicant argues that the Respondent seems to have the ability to get money when he needs it as despite his threat of default in 2013, he was able to make the mortgage payments for a further two years.
16The Respondent submits that he did not intentionally default on the mortgage payments. Rather, he was no longer able to afford to pay them. His evidence is that his income is far less today than what it was when he purchased the matrimonial home for $2,395,000 in July 2010. In September 2009 he started a new hedge fund known as Radiant Investment Management (“Radiant”) which ultimately failed in September 2013 after three years of poor performance. He had been borrowing significant monies since 2011 to fund Radiant and carry the family expenses.
17The Respondent deposes that he currently resides in a 1200 square foot condominium. He was not able to pay his own rent of $3,000 from June – September 2015. He sold his Bentley. He moved in with the Applicant’s parents for over six months in order to save money and spend more time with Chloe. He delayed purchasing a car and used public transit to and from work. His evidence is that he asked the Applicant for some assistance with the June 2015 mortgage payment when it became clear to him that he was not going to be able to make the payment.
18The Respondent deposes that since the downfall of Radiant he has struggled to make timely mortgage payments. He was relying on his monthly rental income of $8K and was constantly plugging the shortfall in his accounts with loans from family, friends and any liquidity he had. His evidence is that the deposit of $184,481.73 on February 10, 2015 into his bank account was sale proceeds from the sale of one of his real estate holdings and was used to pay back some loans. Similarly his evidence is that the transfer to his dad of $55,025 was a partial repayment of a loan which he had taken in the summer of 2013.
19By correspondence dated June 5, 2015 Macquarie advised the Respondent that the mortgage on the matrimonial home matured on August 4, 2015 and it would not be offering the Respondent a renewal. His evidence is that he has tried to obtain a renewal of the mortgage. To demonstrate his efforts, the Respondent attached at exhibit T to his affidavit sworn October 6, 2015, a letter from Nick Panoulis of Mortgage Intelligence dated September 25, 2015, confirming that “we are unable to offer you a mortgage at this time due to your debt servicing ratios being over the acceptable range.”
20The evidentiary record on this interim motion does lend itself to a just and fair adjudication of whether the Respondent intentionally defaulted on the mortgage obligations or the order of Justice Stevenson in this regard. The default could have been intentional, negligent or as a result of the Respondent’s insufficient means. Further evidence is required to make such a significant finding, including a clearer understanding of the Respondent’s present assets and income with the assistance of an income evaluation and a testing of his evidence of insufficient means through questioning or viva voce cross examination.
21Nor do I agree with the submission of the Applicant in terms of the court’s jurisdiction to order the Respondent to re-finance the mortgage. Counsel for the Applicant submits that the court’s jurisdiction to make such an order is grounded in Section 34(d) of the Family Law Act wherein a court making an interim order for support under section 33 may do so respecting any “matter authorized to be ordered under clause 24 (1)(a)-(e)”. Under section 24 (1)(e) of the Family Law Act a court may “order a spouse to pay for all or part of the repair and maintenance of the matrimonial home and of other liabilities arising in respect of it, or to make periodic payments to the other spouse for those purposes”. Counsel provided the court with a 2002 British Columbia Supreme Court case (Mund v. Mund, 2002 BCSC 1229) to demonstrate its submission but admitted in its factum that the case was not directly applicable and was being used only “as a means of demonstrating the flexibility with which a Court can utilize the remedy sections 34(d) and 24(1)(e).”
22Although not fully articulated in its factum or oral argument, the Applicant’s submission suggests that the re-financing of the mortgage is an “other liability” arising from the maintenance of the matrimonial home and is therefore properly included when the court is making an interim order for support. The Respondent’s evidence is that his attempts at re-financing were unsuccessful. The court was not provided with the application or representations made by the Respondent to Mortgage Intelligence that led to its letter of September 25, 2015 and the author of the letter did not provide the court with a sworn affidavit. The letter itself, therefore, is given little weight on this motion for the truth of its contents.
23The letter is reflective, however, of the reality of the Applicant’s request and the limitations of the court’s jurisdiction in this regard. The Applicant asks the court to make an order “requiring the Respondent to re-finance the mortgage for the parties’ matrimonial home.” While section 24(1)(4) gives the court broad discretion the discretion is limited to ordering a spouse to do something directly within his or her control. Re-financing the mortgage is not directly within the Respondent’s control. Rather, the ultimate decision is left to the lender’s acceptance. In effect, the Applicant is asking the court to make an order as against the Respondent, the compliance and success of which is dependent on the actions of a third party. In my view, this is beyond the scope of the court’s jurisdiction as granted by sections 34(d) and 24(1)(e).
24Further, even if the court had jurisdiction to order the Applicant to re-finance the matrimonial home, such an order would only be warranted if the Applicant was entitled to an order for temporary exclusive possession. For reasons set out below, I have concluded that she is not.
25In seeking an order for temporary exclusive possession of the matrimonial home, the Applicant relies on section 24(3)(a) of Family Law Act which states that the court should consider the best interests of the child affected in determining whether to make an order for exclusive possession. Section 24(4)(a) of the Family Law Act states that the court shall consider the possible disruptive effects on the child of a move to other accommodations in determining the best interest of a child.
26In her affidavit sworn October 13, 2015 the Applicant deposes that it is not in Chloe’s best interest for the matrimonial home to be sold as “most importantly, [Rosedale] is a safe and quiet neighbourhood. I am a member of the neighbourhood association and we are involved in planning and attending neighbourhood picnics, play dates and community meetings.” She further deposes that Chloe has grown up playing with neighbours close in age. In my view, the evidence offered fails to demonstrate that a move from the matrimonial home would possibly result in disruptive effects on Chloe. Chloe is 5 years old. The private school she attends is not in Rosedale. Her maternal grandparents do not reside in Rosedale. She is young enough to meet new neighbours close to her age and there are many other safe and quiet neighbourhoods in the city of Toronto for her and the Applicant to make a home.
27Counsel for the Applicant submits that a sale of the matrimonial home is premature. The Respondent’s full financial status is yet developed, it is argued and the Applicant may wish to purchase the Respondent’s interest in the matrimonial home with her family’s financial assistance. Further, the Applicant relies on Martin v. Martin 1992 2786 (ON CA), [1992] O.J. No. 565 (C.A.) and submits that orders for the sale of a matrimonial home before resolution of Family Law Act issues, particularly the determination of the equalization payment, should not be made as a matter of course. I agree that such orders should not be made as a matter of course. I am not making an order for the sale of the matrimonial home, however. The home is already subject to power of sale proceedings. I have found that I am without jurisdiction to order the Respondent to re-finance the mortgage nor is there sufficient evidence on this motion to determine if the default was intentional or because of a genuine lack of funds. I have also found that the Applicant has not demonstrated that an order for temporary exclusive possession of the matrimonial home in in the best interests of Chloe.
28Moreover, The Applicant has remained in the matrimonial home for over 2 years since separation with the parties’ 5 year old daughter. The matrimonial home has four bedrooms. The Respondent made the mortgage payments until default on May 5, 2015. In her Application, the Applicant is not seeking permanent exclusive possession of the matrimonial home. She has made a constructive trust claim which in the circumstances lends itself to a monetary and not a proprietary award if successful. Any proceeds from the sale of the matrimonial home as a result of the Macquarie action could be held in trust pending the resolution of the financial issues in this proceeding. The Applicant’s interests are therefore protected notwithstanding the potential sale of the matrimonial home in accordance with the Macquarie action.
29Counsel for the Applicant further submits that to permit the matrimonial home to be sold under a power of sale is an absolute disgrace. I agree that it is not the ideal conditions of sale. Given my findings herein I would suggest that the parties attempt to raise the prospect of a more orderly sale with Macquarie. It would be in the parties’ best interests to attempt to take control of the pending sale by way of a process designed to fully retain the entirety of the available equity of the home.
30While there is no official valuation of the matrimonial home in evidence, the Respondent assesses the market value of the matrimonial home at $3M while the Applicant assesses it at between $2.5M and $2.8M. Considering the Macquarie action, this