Leka v. Leka, 2017 ONSC 5516
CITATION: Leka v. Leka, 2017 ONSC 5516
COURT FILE NO.: FS-11-72971
DATE: 20170918
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: OLTION LEKA, Applicant
AND:
JULIA LEKA, Respondent
BEFORE: Shaw J.
COUNSEL: Oltion Leka, self-represented
Valois Ambrosino, counsel, for the Respondent
HEARD: September 12, 2017
ENDORSEMENT
background
[1] The applicant and respondent were married in 1995 and separated in 2011. Since November 2011, the respondent and the two children of the marriage, who are now 16 and 9 years of age, have lived in New York state.
[2] The applicant and respondent both had motions before the court returnable on September 12, 2017. Given the relief being sought by both parties, it was agreed that the issues to be dealt with were financial disclosure and the sale of the matrimonial home. The respondent also wanted to make submissions regarding an order for payment of an interim disbursement but there was insufficient time to do so as this matter was scheduled on a regular motion’s list which is for motions less than one hour. In order to deal with all issues, this matter should have been scheduled as a long motion.
[3] The original application was commenced in September 2011. There were a number of interim orders made in September and October 2011. When the parties last attended in court in November 2011, an agreement was reached that the respondent would live in New York with the two children of the marriage. They have lived there since that time.
[4] In April 2017, the respondent filed an answer to the application commenced in 2011. She also filed a sworn financial statement and affidavit.
[5] In her notice of motion before the court, the respondent is seeking, amongst other things, an order for the listing and sale of the jointly owned matrimonial home located at 1100 Queen Street West, Unit 14 in Mississauga Ontario (the “property”). She is also seeking an order for financial disclosure. There are issues of ongoing and retroactive child and spousal support and a determination of the applicant’s income. The respondent will be arguing that income should be imputed to the applicant, beyond his declared employment income. There are also claims for an equalization of net family property. In that regard, the respondent alleges that the applicant has an interest in two separate corporations, from which he may have earnings, and is seeking to have those corporations valued.
[6] The applicant has also filed a motion in which he is seeking, amongst other things, an order that he be permitted to buy the respondent’s one-half interest in the matrimonial home. He also raises issues of child and spousal support. He has also sought additional financial disclosure from the respondent.
Financial Disclosure
[7] Although the parties have been separated for close to six years, until recently, there has been little, if any, exchange of financial disclosure. The respondent filed her financial statement with the court in May 2017. The applicant filed his financial statement in July 2017.
[8] Before hearing submissions on this motion, the parties had discussions and signed “Partial Temporary Minutes of Settlement” dealing with the request for financial disclosure. The bulk of the issues were resolved, on consent, other than seven items.
[9] Rule 13 of the Family Law Rules sets out in detail the financial disclosure obligations of parties involved in a matrimonial dispute. There are Rules which set out the sanctions a party can face for failure to comply with their financial disclosure obligations. In Roberts v. Roberts, 2015 ONCA 450, 2015 CarswellOnt 9247 (Ont. C.A.), the court dealt with the importance of financial disclosure in family litigation. At paras. 11 and 12 the court held:
The most basic obligation in family law is the duty to disclose financial information. This requirement is immediate and ongoing. Failure to abide by this fundamental principle impedes the progress of the action, causes delay and generally acts to the disadvantage of the opposite party. It also impacts on the administration of justice. Unnecessary judicial time is spent and the final adjudication is stalled.
[10] While full and timely disclosure is essential to the timely adjudication of disputes, the principle of proportionality must also be considered. In Boyd v. Fields, 2006 CarswellOnt 8675 (Ont. S.C.J.), Justice Perell stated the following at para 12:
Full and frank disclosure is a fundamental tenet of the Family Law Rules. However, there is also an element of proportionality, common sense, and fairness built into these rules. A party’s understandable aspiration for the utmost disclosure is not the standard. Fairness and some degree of genuine relevance, which is the ability of the evidence to contribute to the fact finding process are factors. I also observe that just as non-disclosure can be harmful to a fair trial, so can excessive disclosure be harmful because it can confuse, mislead and distract the trier of fact’s attention from the main issues and unduly occupy the trier of fact’s time and ultimately impair a fair trial.
[11] Given these principles, I will now consider the financial disclosure issues that are in dispute.
[12] The respondent’s first request is that the applicant provide his personal income tax return for 2011 including all applicable slips, attachments and schedules. The applicant’s position is that he has provided payslips for that year and therefore does not need to produce the full return. Pay slips are not sufficient and he must produce his 2011 income tax return including all applicable slips, attachments and schedules.
[13] The respondent requests a reconciliation, together with supporting documents, on an annual basis, of all monies received from all sources, particulars of those sources and full particulars of where the funds were deposited, including copies of banking statements/credit statements.
[14] Given the claims being advanced by the respondent, this request is not unreasonable or disproportionate but I would limit the request to the past three years. The respondent has agreed that she will provide the same disclosure.
[15] The third item in dispute was a request for copies of the applicant’s personal bank statements and cancelled cheques for the past three years. The respondent alleges that the applicant may have sources of income, other than those earned from employment. The respondent has identified two businesses namely Echoline Transport Inc. and 783-3741 Canada Inc. Corporate searches indicate that the applicant is a director of both corporations and both appear to be active as recently as 2016. The applicant does not dispute the existence of those corporations but claims they are inactive and in fact he intends to dissolve both corporations. The applicant’s evidence is that he will be retaining the services of the appropriate expert, which I presume may be an accountant, to complete returns for these corporations. He has agreed to produce those returns. He indicated that there has been no business activities performed by these corporations and he has not earned any income. This may be accurate. The request for the applicant’s personal bank statements for the past three years is not, however, a mere fishing expedition. The personal bank statements may in fact be of assistance to both parties in determining whether or not any additional income should be imputed to the applicant for the purposes of calculating child and spousal support. The respondent has also agreed to produce her personal bank statements for the past three years.
[16] The respondent has requested copies and details of all savings passbooks, personal check registers, term deposit receipts, treasury bills and any other type of savings, wherever located for the past three years. The respondent has requested this disclosure again to determine whether or not additional income should be imputed to the applicant. The applicant’s position is that he is prepared to produce records for the date of separation and also for the date disclosure was requested. His position is that requesting records for the past three years is too onerous and not proportional.
[17] The applicant has filed a financial statement sworn July 17, 2017 in which he lists a number of savings and other accounts showing a balance as on the date of valuation and as of the date of the swearing of his financial statement. He also sets out a list of debts both as of the valuation date and date of the swearing of his financial statement. Given the respondent’s claim for retroactive support and imputing income to the applicant, the request for the applicant to provide documentation regarding his savings and investments is not an unreasonable request. The respondent has agreed to do the same.
[18] The respondent has requested copies of all credit card statements for the past three years. Based on arguments that may be advanced with respect to lifestyle and earnings, as it relates to imputing income, the request for this documentation is reasonable and proportionate. The respondent has agreed to produce the same disclosure.
[19] The respondent has requested copies of bank statements for all corporate bank accounts for the past five years. The applicant’s position is that this request is too onerous and is a costly undertaking. He advances arguments of proportionality. I note, however, that the applicant does not dispute that the corporations exist and has produced some of the bank statements for these corporations which would suggest that he has access to the records. There is no reason to request more than three years of records. The respondent may, however, seek additional bank statements for all corporate bank accounts if the records produced for the past three years necessitate further disclosure.
[20] Lastly, the respondent requests a copy of the applicant’s passport for disclosure relating to trips he may have taken which would go to arguments about lifestyle and the imputation of income. This is not an onerous request.
Sale of the Matrimonial Home
[21] The applicant and respondent are joint owners of the property. The applicant has had possession of and resided in the property since the date of separation and has paid all the expenses.
[22] According to the applicant’s financial statement, the property had an assessed value on the date of separation of $425,000. According to his financial statement, as at May 13, 2017, its value is $720,000. The current balance on the mortgage is $65,688 leaving equity of approximately $654,000. According to the financial statements from both parties, and without considering any possible value to the two businesses, the property is the main asset owned by the parties as of the date of separation.
[23] The respondent is seeking a sale of the property pursuant to s.2 of the Partition Act. In Afolabi v. Fala, 2014 CarswellOnt 6769 (Ont. S.C.J.). Emery J. held at paras. 27 to 29:
Under the Act, a joint tenant has a prima facie right to an order for the partition or sale of lands held with another joint tenant. The other joint tenant has a corresponding obligation to permit that partition or sale. These have been described in the case law as fundamental rights flowing from a joint tenancy. The court is required to compel such partition or sale if no sufficient reason can be shown why such an order should not be made.
[24] The onus to show what circumstances are present in a proceeding that might require the court to exercise its discretion to refuse an application for a partition or sale order rests with the party opposing the application. That party must show the court there is a sufficient reason recognized in law why in order for partition or sale should not be made. At para 33 and 34 Emery, J. stated:
The judicial trend in recent times has been to confine the discretion of the court to refuse an order for the petition or sale of jointly held property to a narrow standard. The Court of Appeal in Latcham v. Latcham (2002), 2002 44960 (ON CA), 27 R.F.L. (5th) 358 (Ont. C.A.) confirms that the proper standard for the exercise of judicial discretion to refuse partition under section 2 of the Partition Act required evidence of malicious, vexatious or oppressive conduct. The court held that this narrow standard for the exercise of discretion flowed from a joint owner’s prima facie right to partition.
[25] In Bailey v. Rhoden 2008 CarswellOnt 4988 (Ont. S.C.J.), 2008 42427, it was held that the court could refuse partition and sale if it were shown that the sale would cause a hardship to the joint tenant resisting the application and that the hardship amount to oppression.
[26] These principles were cited with approval by the Divisional Court in the recent decision of Kaphalakos v. Dayal 2016 ONSC 3559.
[27] The applicant’s evidence is that if the property were sold, it would cause him a financial hardship. I do not accept that argument.
[28] According to the applicant’s financial statement, he currently earns $105,000 per annum. Since the date of separation, the value of his RRSPs has increased from $78,000 to approximately $205,000. Although the applicant’s evidence is that he financed the RRSP through loans, it demonstrates a financial ability to secure financing to accumulate assets.
[29] I would describe the applicant’s current debts to be relatively modest. Other than the mortgage on the property of approximately $65,000, his only other significant debt is an amount owing to Canada Revenue Agency for taxes in the sum of $16,599 and a loan he claims is owing to the respondent of $27,000.
[30] Based on this information from the applicant’s financial statement, there is no evidence that the sale of the property would cause hardship to the applicant. While the sale may cause an inconvenience to the applicant as he will have to make new living arrangements, such inconvenience is not a basis to oppose a request for sale of the jointly-owned property.
[31] There is no evidence of any vexatious, malicious or oppressive conduct related to the request for the sale of the home. There is significant equity in the property and the respondent, as joint owner, has a right to request the sale of that property.
[32] The applicant’s position is that he would like to purchase the respondent’s one-half interest in the house. He proposes having the house appraised and then, after a credit for the expenses he has paid since the date of separation, he would pay the respondent her one-half interest. The applicant also indicated that he wants to maintain the home so that his children have a place to stay in Canada. I note, however, that in the applicant’s affidavit sworn July 17, 2017 he indicates that the children have spent time at the matrimonial home on only four occasions in the last six years. There would be no basis, therefore, for the applicant to maintain the home for the benefit of the children.
[33] As noted by Bielby, J in Manteau v. Nyarko, 2011 ONSC 5407, a party’s wish to purchase an interest does not refute the prima facie right to request and obtain an order for sale.
[34] The respondent proposes that upon sale of the matrimonial home, she should receive her one-half of the net proceeds but that the applicant’s share should be held in trust pending resolution of the equalization of net family property as she claims an equalization payment will be owing to her.
[35] While there are outstanding disclosure issues which may have an impact on determining the equalization payment owing by one party to another, given the equity in the matrimonial home, there should be funds released to both parties with the balance held in trust pending further written agreement or court order.
[36] Until such time as financial disclosure is completed and there is a more accurate assessment of each party’s net family property, I order that the matrimonial home shall forthwith be listed for sale. Upon sale, each party shall receive $50,000 from the net proceeds. This is without prejudice to either party applying to court for a further distribution or reaching an agreement, in writing, to a further release of funds. The balance of the proceeds of sale shall be held in trust by the lawyer who completes the real estate transaction.
[37] The applicant made submissions about concerns of the listing agent to use if the property was to be listed for sale. These issues were not raised in his motion materials and at this time, there is no evidence why the listing agent proposed by the respondent is not appropriate.
[38] Lastly, the respondent has requested that paragraphs 9, 10, 53, 79 and Exhibit C of the applicant’s affidavit sworn July 17, 2017 be struck as they make reference to settlement discussions. I find that paragraph 9 and Exhibit C set out details of settlement discussions and that paragraph 9 and Exhibit C should be struck.
[39] If the applicant files any further affidavits, he should not include any reference to any settlement discussions between the parties.
[40] In summary, I order the following:
An order shall go as per the “Partial Temporary Minutes of Settlement” filed by the parties;
The applicant shall produce his personal income tax return for 2011 including all applicable slips, attachments and schedules within 60 days;
The applicant and respondent shall each provide a reconciliation, together with supporting documents, on an annual basis, of all monies received from all sources, particulars of those sources and full particulars of where the funds were deposited, including copies of banking statements/credit statements for the past 3 years within 60 days;
The applicant and respondent shall provide copies of their personal bank statements for the past three years within the next 60 days;
The applicant and respondent shall produce copies of their savings passbooks, personal check registers, term deposit receipts, treasury bills and any other type of savings for the past three years within 60 days;
The applicant and respondent shall provide copies of all credit card statements for the past three years within 60 days;
The applicant shall provide copies of complete bank statements for all corporate bank account for Echoline Transport Inc and 783-3741 Canada Inc. the past three years within 60 days;
The applicant shall provide a copy of his passport within 60 days;
The matrimonial home known as 1100 Queen Street West, unit 14, Mississauga Ontario shall forthwith be listed for sale with Belinda Lelli, Royal LePage Real Estate Services Ltd., 103 – 4025 Young Street, Toronto Ontario within 30 days;
The applicant and respondent shall fully cooperate with the sale of the property, including allowing the use of a lockbox on the property, allowing signage on the property, allowing the sales representative access to the property to prepare it for open houses, allowing open houses and allowing showings as requested by sales representative;
The property shall be listed at a price recommended by the sales representative;
The time of closing shall be not more than 90 days from the time of acceptance of the offer;
In the event of any disagreement between the parties relating to the acceptance of an offer, either party may apply to the court on short notice and on an urgent basis for an order determining whether the offer be accepted and directing the parties to accept the offer if appropriate;
Upon sale of the property, the applicant and respondent shall each receive $50,000 from the net proceeds of sale with the balance to be held in trust by the real estate lawyer handling the transaction without prejudice to either party applying to the court for a further distribution or any further written agreement between the parties;
Paragraph 9 and Exhibit C of the applicant’s affidavit sworn July 17, 2017 shall be struck; and
The balance of the issues shall be adjourned to be returned to the court on 10 days’ notice by either party.
[41] If the parties cannot reach an agreement on costs, they may submit written submissions, of no more than two pages, double-spaced and a bill of costs.
Shaw J.
Date: September 18, 2017
CITATION: Leka v. Leka, 2017 ONSC 5516
COURT FILE NO.: FS-11-72971
DATE: 20170918
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
OLTION LEKA, Applicant
AND:
JULIA LEKA, Respondent
ENDORSEMENT
Shaw J.
Released: September 18, 2017