SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 178/12
DATE: 2015-12-16

RE: John Donald Matheson, Applicant

AND:

Sherry Lynn Matheson, Respondent

BEFORE: Heeney R.S.J.

COUNSEL:
Glen Carey, Counsel for the Applicant
Allen Wilford, Counsel for the Respondent

HEARD: December 2, 2015 at Goderich

ENDORSEMENT

[1] An interim order is intended to provide a temporary resolution of the issues pending a trial. It is rarely perfect but is generally adequate to make sure the bills get paid, provide some order in the parties’ lives and enable them to move the case on to trial. As such, parties are to be discouraged from returning to court to tinker with interim orders. The principle of proportionality coupled with the high cost of litigation demand that the parties conserve their resources and deal with any necessary adjustments to the interim order at trial, on a full evidentiary record.

[2] The parties in this case appeared before me on October 13, 2013 and, in a lengthy special appointment, argued a motion and cross-motion for interim relief that dealt with a multiplicity of issues. They were provided with a comprehensive 9 page endorsement from me dated November 4, 2013, which resolved all of those issues on a temporary basis, and provided the parties a framework for dealing with any further disclosure issues that might arise pending a trial.

[3] Now, two years later, the parties are back before me, arguing yet another lengthy motion and cross-motion, which in some cases amounts to an attempt to re-argue matters that were previously decided, and in others amounts to an attempt to make minor adjustments to my previous order that would better be dealt with by the trial judge. Proportionality has been thrown to the wind, as is evident by the fact that this latest motion and cross-motion have generated an entire banker’s box full of documents.

[4] I will deal with the issues raised summarily, in the order in which they were argued, beginning with the Wife’s motion.

[5] Her first request is for an order that she be provided with all documents held by BDO relating to C & M Construction, which is a company operated by the Husband, but which is wholly owned by a holding company owned equally by both parties. She has already been provided with volumes and volumes of financial documents in the possession of the Husband, which her counsel had in hand when he cross-examined the Husband on November 6, 2013. Some questions were asked regarding these documents and some undertakings were given that were later answered. However, a further request for voluminous disclosure followed in April, 2014.

[6] In January, 2015, the business suffered a major fire which destroyed all of its records. Fortunately one employee had a memory stick with a great deal of data on it, and this has been provided to the Wife. The Wife now seeks access to any records relating to the business that are in the possession of its accountant, BDO.

[7] During argument, I was directed to a letter from Linda Bross, a CA with BDO, dated August 12, 2015. It confirmed that as early as April, 2014 they had agreed to provide the Wife and her accountant with access to all of C & M’s business records for review. They were also prepared to provide access to all of BDO’s working papers, provided that a standard release be executed by the Wife, in accordance with the firm’s national policy. The Wife refused to sign.

[8] It is immediately obvious that this motion is unnecessary, because BDO was already willing to provide access to company records in its possession more than 1 ½ years ago. To the extent that the Wife’s motion seeks disclosure of the working papers of BDO, they have a privacy interest in those papers, and would be entitled to be served with the notice of motion so that they could assert that interest if they chose to do so. They were not served.

[9] After pointing out the obvious, the court recessed briefly. Following the recess, Mr. Wilford, for the Wife, announced that she would sign the release, and would not be pursuing that portion of the motion further. That claim for relief is dismissed as abandoned.

[10] The next claim was for an order that the Husband, at his expense and through C & M, install a cement pad and erect a prefabricated building for the Wife so that she can get her antique business off the ground. That is essentially the same claim that was argued before me in the fall of 2013, which was dismissed for want of any legal authority to support my jurisdiction to make such an order. Mr. Wilford returns to reargue the matter, armed with legal authority that supports the proposition that where one party has a clear entitlement to an equalization payment in a known amount (usually based on the admissions of the other party) it is open to the court to make an order for an advance payment toward the equalization entitlement, with final adjustments to be made at trial. This is often utilized where a property is sold and money is held in trust to the credit of both parties equally. If there is no dispute that one party is entitled to an equalization payment of at least X, and the money held in trust to the credit of the other party exceeds X, there is no mischief in ordering payment out of the trust monies of a sum that does not exceed the equalization entitlement.

[11] The problem is that the Wife is not seeking a sum certain as an advance toward equalization, she is instead seeking a blank cheque from the Husband to cover whatever it might cost to erect her building. There is no evidence before the court as to what such a project might cost. Mr. Wilford suggested that a $20,000 advance should do it, but that hardly qualifies as evidence.

[12] While the Wife is entitled to a 50% share in the value of the construction equipment, which one appraisal puts in the neighbourhood of $300,000, no Net Family Property Statement has been put before the court. It is, therefore, impossible to say what the Wife’s equalization entitlement will ultimately be. The value of the construction equipment is but one entry in the calculation. For that reason, an advance payment toward her equalization entitlement is inappropriate. That claim is again dismissed.

[13] One claim can be dealt with on consent. An order will go that the Husband provide the Wife with copies of all documents relating to his fire loss claim, including any Proof of Loss and supporting documentation, as well as disclosure as to the status of that claim on an ongoing basis.

[14] The Wife claims an increase in spousal support. One reason an adjustment is necessary is that she agreed to the consent order of Gorman J. dated August 19, 2015, whereby child support for the child Lyndsay would cease as at August 31, 2015 at the latest. The issue as to whether child support should have terminated as of the earlier date of September, 2014, was left open to be dealt with at the argument of these motions. Mr. Carey, for the Husband, sought to do so. However, that issue does not deal with interim relief from now until the trial. Instead, it looks backward to see whether support should be retroactively changed and, if it is, what credit the Husband is entitled to. That is more appropriately dealt with at trial, when all of the debits and credits that have accumulated between these parties can be tallied up and resolved in one calculation. That motion is adjourned to the trial judge.

[15] As noted, the cessation of child support is an appropriate ground upon which to revisit the issue of spousal support. Child support has priority over spousal support, and the SSAGs consistently generate a lower spousal support award where child support is also being paid. As a practical matter, child support helps to pay the monthly costs of running the Wife’s household, and the cessation of that support constitutes a material change in circumstances.

[16] However, the Wife sought to recalculate spousal support not only on this ground, but also on the basis that income should be imputed to the Husband relating to his business dealings with Dale Walden and his business Kelden Developments Inc. She alleges that the Husband has been making regular payments to Mr. Walden’s company for the purpose of hiding income from her.

[17] The Husband’s affidavit denies this but, more importantly, Dale Walden has sworn an affidavit dated August 13, 2015, in which he explains his financial dealings with the Husband. Essentially, he supplies workers to do carpentry work on homes that the Husband is framing for him, and is reimbursed for the cost thereof by the Husband. This arrangement saves money for the Husband, because Mr. Walden’s business is a non-union shop and the hourly rates paid are much lower than the Husband would otherwise have to pay.

[18] I have no reason to disbelieve this evidence. To impute income from this source as the Wife requests would require me to find that Mr. Walden has committed perjury in the affidavit that he has sworn. There is no basis for such a finding. If the Wife wishes to pursue this allegation further, she may do so at trial.

[19] The Wife also sought imputation of income to the Husband relating to a residence in Armow which was purchased together by the Husband and a real estate investor, Mr. Kirkconell, and subsequently renovated. The argument is this: the renovations were done by C & M, which the Wife, through the holding company, is an equal owner of. C & M’s work resulted in the creation of equity in that residence due to the increase in value following renovations. It is argued that this equity (1/2 of $20,000) should be attributed to the Husband.

[20] However, this argument ignores the fact that C & M billed for all of their work and were paid by the partnership. While the Husband may have created some unrealized equity through this business venture, such equity is a post-separation asset, not income. The property does generate a nominal amount of rental income, of which the Husband’s share is about $500 per year.

[21] The Wife also seeks to impute income to the Husband from the farming operation. In my previous endorsement I declined to do so, because the farm was in a break-even position. However, the Husband’s 2014 Income Tax Return shows net farming income of $15,218.72. He explains that this is because he was in the process of selling off his herd. Part of it was sold in 2014 and the rest will be sold in 2015. I infer that his 2015 return will reflect similar net farming income, and will impute the sum of $15,000 to the Husband in that regard.

[22] I am not prepared to make any other adjustments to the Husband’s income for purposes of recalculating spousal support. I found his annual income for support purposes to be $107,760 in my last endorsement. With this one adjustment, it becomes $122,760.

[23] As to the Wife, she recently started employment at a cheese factory. Her paystubs reveal that she earned $4,224 from August 31 to the period ending November 15. That averages out to $384 per week or $19,968 per year. I will use that figure in the SSAGs calculation.

[24] Divorcemate indicates that spousal support, on a “without child support” basis, runs from a low of $2,056 to a high of $2,741, with a midpoint of $2,398 per month. In my view, there is no reason not to make an order at the middle of the range. An order will go that interim spousal support is increased to $2,400 per month, commencing September 1, 2015, which is the same date that child support terminated.

[25] The Wife also seeks reimbursement for the cost of the Snider equipment appraisal, on the basis that the Husband refused to allow her on to the property to assist the appraiser and to ensure that no property had been hidden by the Husband. She claims that the appraisal has been rendered “worthless” and therefore demands reimbursement.

[26] The evidence relating to the Wife’s attendance at the property for purposes of the appraisal is in dispute in virtually every respect. However, what is important for purposes of her motion is not what the evidence says, but what it does not say. She does not give particulars of any pieces of equipment that she knows to exist but which were missed during the appraisal. It is, therefore, pure speculation that anything was missed at all. Furthermore, there is nothing in the Snider appraisal that indicates that it is incomplete, or that the appraiser was hampered in any way in conducting the appraisal.

[27] This portion of the motion is dismissed.

[28] Turning to the Husband’s motion, he seeks a credit for s. 7 expenses which he claims he paid, without the Wife having paid the 32% contribution she was ordered to make. Once again, this is not an issue that needs to be dealt with at the interim stage. If the Husband is entitled to a credit in this regard, it can be tallied up at trial along with the other debits and credits accruing to the parties to arrive at one final figure to be paid by one party to the other. This motion is adjourned to be dealt with by the trial judge.

[29] It is, however, appropriate to vary the s. 7 order that was previously made, in light of the adjustments to interim spousal support ordered above. Divorcemate indicates that, at the midpoint spousal support level, the Husband should pay 65.8% of s. 7 expenses while the Wife should pay 34.2%. The interim order is varied in that regard, effective September 1, 2015.

[30] Similar comments apply to the Husband’s request for reimbursement of life insurance premiums on the Wife’s life, to secure her mortgage debt. He paid them on her behalf until June, 2015, when she finally cancelled the life insurance coverage at his request. Again, if the Husband is entitled to a credit in this regard, it can be dealt with at trial.

[31] The Husband also seeks a restraining order against the Wife. By some means that has not been explained, she gained access to his personal bank account records. She also surreptitiously entered the premises of C & M, where she took photographs of various ledgers and boxes of documents.

[32] While the Wife is entitled to reasonable disclosure, this form of self-help must be discouraged. A restraining order will issue as requested.

[33] The Husband also requested that the Wife be prohibited from bringing any further motions without leave. Such an order is not appropriate. While much of her motion was devoid of merit, her claim for an adjustment of spousal support was legitimate. As to the Husband’s motion, much of it was unnecessary as well, and should have been deferred to trial.

[34] On consent, this case is adjourned to a Settlement Conference/Trial Management Conference set for April 7, 2016 at 10 a.m. (1 ½ hours needed). The parties are strongly urged to make every effort to settle this case, before all of their assets are completely consumed in legal fees.

[35] If the parties cannot agree on costs, I will accept brief written submissions, limited to 2 pages, from Mr. Wilford within 15 days, with responding submissions from Mr. Carey within 10 days thereafter, and any reply within 5 days thereafter. Failing that, the issue as to costs shall be reserved to the trial judge.

“T. A. Heeney R.S.J.”

Regional Senior Justice T. A. Heeney

Date: December 16, 2015