COURT FILE NO.: FC-15-182-00 DATE: 2017-07-21 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ROSEMARY DUSKOCY, Applicant AND: TERRANS DUSKOCY, Respondent

BEFORE: THE HON. MR. JUSTICE J.P.L. McDERMOT

COUNSEL: D. Friend, for the Applicant M.D. Klause, K. Bromley as agent, for the Respondent

HEARD: July 20, 2017

Endorsement

[1] This was a motion brought by the respondent, Terrans Duskocy, for a sale of the matrimonial home which is jointly owned by him and the applicant, Rosemary Duskocy. The home is located at 589 Lone Pine Road, in Port Severn, Ontario.

[2] Since the parties separated on November 18, 2014 after 23 years of cohabitation, Ms. Duskocy has remained in possession of the matrimonial home. Mr. Duskocy, who lives in Alberta, has continued since then to pay certain expenses of the home, including the mortgage, interest on a line of credit registered against the home, utilities and heat, as well as car insurance and a loan on the vehicle used by Ms. Duskocy. Counsel says that these payments total between $2,800 and $3,000 per month. [1] None of these payments are characterized as spousal support and Mr. Duskocy receives no tax relief for these payments, and Ms. Duskocy pays no taxes on these payments.

[3] Mr. Duskocy now says enough is enough. He wants to sell the home and obtain some relief from payment of these household expenses. He says that he can no longer afford to make the payments to Ms. Duskocy and is now in trouble with the Canada Revenue Agency (“CRA”) because he is not paying his taxes. He says that, considering Ms. Duskocy’s financial situation, there is no purpose to holding onto the home because will not qualify for financing and it is inevitable that the home will be sold in any event. He acknowledges that he will have an obligation to pay spousal support, which he suggests should be set at $1,500 per month based upon the income valuation that he obtained suggesting his income to be some $75,000 per annum.

[4] Ms. Duskocy says that it is inevitable that the home will be transferred to her because Mr. Duskocy owes him a significant amount of money, including spousal support arrears and $70,000 wrongfully removed from the joint account by Mr. Duskocy. She says that she can assume the present mortgage on the home, assuming Mr. Duskocy assumes liability for the line of credit and removes it from the title to the home. She says that Mr. Duskocy cannot rely upon the income valuation because it is dated, and Mr. Duskocy has acted in bad faith because he has failed to file an updated financial statement or a 2016 income tax return and financial statements for the business as ordered by Wood J. on August 22, 2016.

Sale of Home

[5] Regarding the sale of the home, Ms. Bromley acknowledges that this is effectively a motion for summary judgement under Rule 16 of the Family Law Rules. Summary judgment may be granted where “there is no genuine issue requiring a trial of a claim or defence”: see Rule 16(6) of the Family Law Rules [2].

[6] The evidentiary requirement for a party seeking this remedy is set out in Rule 16(4):

a. The party making the motion shall serve an affidavit or other evidence that sets out specific facts showing that there is no genuine issue requiring a trial.

b. The responding party has a duty to respond. Under rule 16(4.1), the party responding to a motion for summary judgment shall not make mere denials, but must provide by affidavit specific facts which showing a genuine issue for trial.

[7] This is also a motion for the sale of the home under s. 3 of the Partition Act which read as follows:

3. (1) Any person interested in land in Ontario, or the guardian of a minor entitled to the immediate possession of an estate therein, may bring an action or make an application for the partition of such land or for the sale thereof under the directions of the court if such sale is considered by the court to be more advantageous to the parties interested.

[8] The case law generally favours an order for partition and sale of a home by a co-tenant unless the opposing party can demonstrate prejudice. The onus is on the party resisting the sale to show prejudice, and that has been defined as being malicious, vexatious or oppressive conduct by the moving party seeking the sale. Alternatively, partition and sale should not be granted where the sale will cause hardship to the responding party which amounts to oppression: see Afolabi v. Fala, 2014 ONSC 1713 at para. 29 and 33 to 35. The standard of malicious, vexatious or oppressive conduct has been confirmed by the Court of Appeal in Latcham v. Latcham (2002), 27 R.F.L. (5th) 358 (Ont. C.A.) where the court confirmed the high threshold required to resist the sale of a home as follows [at para. 2]:

That standard, as the Divisional Court noted, was reaffirmed by this court in Silva v. Silva (1990), 1 O.R. (3d) 436 (Ont. C.A.) and requires malicious, vexatious or oppressive conduct. This narrow standard for the exercise of discretion flows from a joint owner's prima facie right to partition.

[9] There is, however, authority that a sale of the home will not be ordered where it cannot be demonstrated that the moving party would benefit from the sale, but these results appear to have occurred only where a trial is close at hand: see Ludmer v. Ludmer, 2012 ONSC 4478 and Magnella v. Federico, 2012 ONSC 5696. Barring this, malicious, vexatious or oppressive conduct must be proven by the party resisting the sale. In fact, it might be interpreted as being oppressive conduct to request an order for the sale of a home when a trial is only months away; that is certainly not the case here, and although an income report was obtained in June, 2016, the parties still have not moved this matter along and now a further income analysis will be necessary to confirm the respondent’s 2016 income. The trial of this matter appears to be in the distant future.

[10] Mr. Friend suggests that Mr. Duskocy has been acting in bad faith and has indulged in oppressive conduct. He notes that Mr. Duskocy has failed to file and serve an updated financial statement since he filed his answer in October, 2015, more than 20 months ago. Mr. Friend also says that Mr. Duskocy has also failed to provide financial statements of his corporation as ordered by Wood J. in August, 2016. He says that Mr. Duskocy arbitrarily decided to cease paying the $500 payments that he had been making since July, 2016. He suggests that Mr. Duskocy is only making the payments on account of the matrimonial home expenses because it preserves an asset in which he has an interest and says that security for ongoing spousal support will be necessary in the future. He also says that the tax liability that Mr. Duskocy relies upon is nothing other than a sham intended to force a sale of the home by the Canada Revenue Agency.

[11] I disagree with this assessment. Since November, 2014, Mr. Duskocy has voluntarily paid the expenses of the home without the need for a court order. He has also paid utilities, taxes and vehicle expenses, including a vehicle loan on Ms. Duskocy’s truck which is over $700 per month. Moreover, whether these payments were as low as $2,508 per month, or as much as $3,484.52 [3], these payments are significantly more than Mr. Duskocy would have paid in spousal support considering the fact that he has never received any tax relief from these payments. This can hardly be seen as oppressive or vexatious conduct.

[12] The fact that Mr. Duskocy has not made fulsome financial disclosure is concerning. But that is an issue that goes to spousal support and not the sale of the home. And Mr. Duskocy has obtained a report from a business valuator as to his income through the “joint” retainer ordered by Wood J. on January 20, 2016. That retainer may have been joint between the parties but payment for the report certainly was not as Mr. Duskocy has not been reimbursed for the cost of this report which has been paid by him in full. He has also paid for the appraisal of the home without reimbursement. A further financial statement or income tax return as ordered by Wood J. should have been produced; however, that documentation would not have answered what Mr. Duskocy’s income was without a further income report from BDO showing what Mr. Duskocy’s actual business income was.

[13] Although I do not find Mr. Duskocy has adequately explained the debt to CRA which he says is in excess of $45,000, I would not be surprised that Mr. Duskocy has failed to pay taxes considering the fact that he maintains a residence in Alberta, and pays at least $2,500 per month towards the matrimonial home and also considering his income was in the range of about $88,000 in 2015. And I feel it is inconsistent for Mr. Friend to submit that the intention of Mr. Duskocy incurring the CRA debt was to sell the home through the back door, when he also says that the only reason the Mr. Duskocy pays the expenses is to preserve that asset. To force a sale of the only significant matrimonial asset would do nothing other than to jeopardize that asset through a forced sale and would also do nothing other than put money into the CRA’s hands (considering Mr. Duskocy’s equity in the home totals no more than $50,000); to say that he would manufacture a debt to force a sale which would do nothing other than pay that debt makes no sense whatsoever.

[14] I therefore do not find that Ms. Duskocy has proven the malicious, vexatious or oppressive conduct required to object to a sale of the home. She also has not addressed the issue of hardship respecting the sale of the home; although it is acknowledged that she suffers from disabilities and has significant medical expenses, these are not related to the home itself but to the needs of Ms. Duskocy to be addressed through spousal support below. I note that although Ms. Duskocy has requested exclusive possession of the home, there are no children of the marriage; Ms. Duskocy has not addressed how her financial position would be assisted through exclusive possession and abuse is not an issue considering the fact that Mr. Duskocy lives in Alberta: see the criteria for exclusive possession under s. 24(3) of the Family Law Act [4]. Ms. Duskocy has not proven hardship related to her need for continued possession of the home which is, in my view, necessary to resist a motion for the sale of the home.

[15] Ms. Duskocy suggests that she will end up with the home in any event at the end of the day. Here the evidence provided by each party differs. Both parties acknowledge that if the home is placed in her name, she will owe an equalization payment to Mr. Duskocy. She says it will be $59,430.50; Mr. Duskocy says it will be $70,921. Considering that the equity in the home is just over $100,000 and the debts are joint, the equalization payments propounded by each party indicates that there are very few matrimonial assets other than the equity in the home.

[16] Ms. Duskocy says that, even if the home is placed in her name, she will still be owed $29,664.50. She bases this figure on a wrongful $70,000 withdrawal that Mr. Duskocy made from the joint account which she has not proven or addressed in her material. She also says that Mr. Duskocy will owe her more than $85,000 in retroactive spousal support notwithstanding the fact that he appears to have paid over $100,000 towards Ms. Duskocy’s living expenses since separation. She only credits to Mr. Duskocy one half of the payments made towards the home even though she received the exclusive benefit of the home. There may be countervailing claims for occupation rent as Mr. Duskocy has been out of possession of the home since separation. I find Ms. Duskocy’s figures suspect and I do not find them to be sufficiently compelling to avoid a sale of the home, especially when there is no indication that these parties are close to trial or resolution.

[17] There shall be an order for partition and sale of the home as requested by the respondent husband. The terms for the sale of the home set out below are self-explanatory, but I note that I am going to order reimbursement of Mr. Duskocy for the appraisals and valuations of the home and business as these were specifically ordered to be a “joint” retainer.

Spousal Support

[18] The applicant requests spousal support payable by the applicant. This should have been in place many months ago. In the normal course, the respondent should have been paying support, and the applicant should have been paying her living costs, including the mortgage on the home.

[19] There is no issue as to entitlement. The only issue is the quantum of spousal support.

[20] The real issue is the income of the respondent. Ms. Bromley suggests from the income valuation that Mr. Duskocy’s income is $74,756 as provided for in the income report of Lance Clark from BDO. [5] She says that because of the hardship that the respondent finds himself in, he should pay at most the lowest Spousal Support Advisory Guidelines (“SSAG”) amount at this income, which is $1,700 per month; in fact she suggested going outside of the SSAG and ordering only $1,500 per month.

[21] No reason was given for departing from the SSAG. In fact, I agree with Mr. Friend’s arguments in this regard, especially taking into account Mr. Duskocy’s failure to file an updated financial statement or his 2016 tax return as ordered by Wood J. Mr. Friend points out that Mr. Duskocy’s income has been steadily rising from a low of $58,977 in 2013 to $77,245 in 2014 to a high of $88,047 in 2015. Counsel suggests that spousal support be based upon an income of $85,000 per annum based upon the last year of income that we have reliable information on, being 2015.

[22] I agree with this approach. Without updated financial disclosure, I do not find that it is appropriate to average income as done by the income valuator, especially when Mr. Duskocy’s income has been steadily increasing. I find that Mr. Duskocy’s income for support purposes is $85,000 as suggested by Mr. Friend.

[23] Based upon the SAGG calculation filed by Mr. Friend, and based upon his client’s disability income of $14,124, the spousal support would have a range of between a low of $2,211 to a high of $2,700 per month; midrange SSAG support would be $2,580. [6]

[24] Mr. Friend suggests spousal support in the higher end of the range. I again find this compelling; Ms. Duskocy has serious disabilities and has drug and medical expenses not covered by any government program of $264 per month. Even though this does not appear to be a compensatory claim for spousal support, I find that spousal support should be more than the mid-range of support because of the applicant’s disabilities and needs.

[25] Mr. Duskocy will pay temporary spousal support of $2,650 to commence the month after the sale of the home. As the truck is in his business’ name, I am going to permit him to pay the loan on that vehicle and the vehicle insurance as third party spousal support payments unless the applicant exercises her option to return the vehicle to the possession of Mr. Duskocy in which case full support is payable directly to Ms. Duskocy.

[26] Pending sale of the home, and commencing August 1, 2017, Mr. Duskocy shall continue to pay the expenses of the home as set out in paragraph 3 of his affidavit sworn January 12, 2017. These shall be deemed to be third party payments of spousal support within the meaning of the Income Tax Act [7], and shall therefore be deductible in the hands of Mr. Duskocy and taxable to Ms. Duskocy. In addition, also commencing August 1, 2017, Mr. Duskocy shall make a spousal support payment of $500 per month as he was previously.

[27] I am not going to address financial disclosure or another income valuation as these issues were not placed before me in any motion before the court and have been dealt with by previous orders.

Order

[28] There shall be a temporary / final order as follows:

a. On a final basis, there shall be an order for partition and sale of the matrimonial home located at 589 Lone Pine Road, Port Severn, ON on the following terms:

i. The home shall be listed with a realtor and at a price agreeable to the parties. If the parties cannot agree on a realtor, the home may be co-listed with two realtors each of whom will be chosen by each party and the home shall be listed at a price recommended by the two realtors;

ii. The applicant shall cooperate in the listing and sale of the home and shall keep the home in a neat and orderly condition suitable for marketing and showing. The applicant shall make the home available for all showings as arranged by the realtor or realtors.

iii. The parties shall each sign all documentation necessary for the listing and sale of the properties including the listing agreement, any agreement of purchase and sale recommended by the realtor(s), and all necessary closing documents.

iv. The applicant shall provide vacant possession as required by any agreement of purchase and sale or order of this court in order to facilitate the closing of any sale of the property.

v. Upon the closing of the sale of the home, the net proceeds of the sale of the home after payment of real estate commission, legal fees and towards discharge of any and all encumbrances registered against the property, shall be held in trust by the real estate solicitor subject to any further order or agreement between the parties. Provided that, forthwith upon the closing of the sale of the home, the respondent shall be reimbursed for the applicant’s one half share of the costs of the business and income valuation as well as the appraisal on the home from the applicant’s share of the net proceeds.

vi. If the parties are unable to agree on an issue or any party refuses to sign or cooperate in the listing, either party may bring this matter back by way of a motion for directions before any judge of this court, which motion shall be on three days’ notice to the other party.

b. On a temporary basis, and pending the sale of this property and commencing August 1, 2017, the respondent shall continue to make payments as set out in para. 3 of the respondent’s affidavit sworn January 12, 2017 and found at Tab 10 of the continuing record, totalling $2,508 per month. These payments shall be deemed to be third party payments of spousal support within the meaning of the Income Tax Act.

c. In addition to these payments, on a temporary basis and pending the sale of the home, commending August 1, 2017, the respondent shall pay the applicant $500 per month in periodic spousal support.

d. Commencing on the first day of the month after the closing of the sale of the matrimonial home, the respondent shall pay the applicant temporary spousal support in the amount of $2,650 per month. Provided that, on a temporary basis, the respondent shall continue to pay the loan and the vehicle insurance on the 2012 Ford Escape as third party spousal support payments to be deducted from the spousal support payment of $2,650 per month, unless and until the applicant exercises her option to return the vehicle to the possession of the respondent in which case full support is then payable directly to the applicant.

[29] It appears to me that, based upon submissions made by the parties, success in this matter was divided and that costs may therefore not be an issue. If costs are an issue, the parties may make submissions as to costs on a ten day turnaround, with the applicant to provide her submissions first and the respondent second. No reply submissions are permitted. Costs submissions to be no more than three pages in length not including offers to settle and bills of costs.

McDERMOT J. Date: July 21, 2017

Footnotes

[1] In an affidavit sworn on January 12, 2016, Mr. Duskocy says that these payments total some $2,508 per month. However, in a chart attached as Ex. A to Mr. Duskocy’s affidavit sworn July 4, 2017, Mr. Duskocy deposes that he has paid $101,051.11 between November, 2014 and March, 2017. That averages out to $3,484.52 per month ($101,051 / 29 months). According to that chart, Mr. Duskocy was paying $2,955.89 per month in the first months of 2017 which included a payment of $500 per month on top of the home and vehicle expenses; Ms. Duskocy says that Mr. Duskocy is no longer making that $500 payment. [2] O. Reg. 114/99 [3] See footnote 1 [4] R.S.O. 1990, c. F.3 [5] See p. 2 of the Income Report found at Ex. I to the affidavit of the respondent sworn July 4, 2017. [6] See Ex. A to the affidavit of the applicant sworn July 7, 2017. [7] R.S.C. 1985, c. 1 (5th Supp.)