COURT FILE NO.: FS-09-109-0002
DATE: 20180308
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
L.S.
Elissa Gamus and Dara Church, for the Applicant
Applicant
- and -
D.S.
Veena Pohani, for the Respondent
Respondent
HEARD: March 5, 2018
REASONS FOR DECISION ON MOTION
Conlan J.
I. The Background
[1] On February 16, 2016, after a very lengthy trial, Fitzpatrick J. made a Final Order which, in part, dealt with both child and spousal support. Commencing January 1, 2013, the Respondent father, D.S., was ordered to pay child support in the amount of $2251.00 per month for the three children of the marriage. Commencing the same date, D.S. was ordered to pay spousal support to the Applicant, L.S., in the amount of $2068.00 per month.
[2] The said Final Order was based on the 2013 incomes of the parties, which the Court fixed at $37,500.00 for L.S. and $162,500.00 for D.S. That income figure for the Respondent father was not based on his income tax returns and T4s but rather was an imputed amount based on the evidence at trial.
[3] The parties were married on August 6, 1988, separated in early September 2008 and were divorced on January 20, 2014.
[4] The oldest child, a young lady, was born in January 1999 and is now 19 years of age. She is a full-time student at the University of Toronto, Mississauga campus. She resides with L.S. and commutes to school each day. The middle child, a girl, was born in May 2003 and is now 14 years old. The youngest child, a girl, was born in June 2007 and is now 10 years of age.
[5] At the time that the said Final Order was made, and now, the two youngest children spent/spend equal time with the parties.
[6] At the time that the said Final Order was made, and now, D.S. was/is married to another woman.
[7] On July 11, 2016, Justice Fitzpatrick ordered costs against D.S. in the amount of $600,000.00. Nothing has been paid to date.
[8] On July 12, 2016, one day later, D.S. declared bankruptcy. That proceeding is still ongoing. D.S. has not yet been discharged.
[9] In September 2017, D.S. brought a Motion to Change the said Final Order. He sought an Order that he, starting October 1st, pay child support for the three children in a monthly amount "to be decided" based on his alleged gross annual income of $58,788.60. He also sought an Order that the parties contribute proportionately towards the cost of post-secondary education for the 19 year-old child. Finally, he sought an Order fixing the arrears of child and spousal support at nil as of September 30, 2017.
[10] The $58,788.60 is taken from D.S.'s 2016 tax year T4.
[11] The Motion to Change is premised on the assertion by D.S. that his income has gone down significantly since the said Final Order was made as he is now an employee and not the owner or operator of any of the three corporations that Fitzpatrick J. had found he was the sole shareholder of.
[12] The Motion to Change is being opposed by L.S.
II. The Motion
[13] L.S. moves for (i) an Order for summary judgment, dismissing the father's Motion to Change, or (ii) an Order that the Motion to Change not be heard until D.S. has fully complied with all outstanding Court Orders including but not limited to that of Justice Fitzpatrick referred to above, or (iii) an Order that the Motion to Change be stayed pending full compliance with all outstanding Court Orders, and (iv) if summary judgment is refused, an Order for security for costs ($45,000.00, payable thirty days before trial) against the Respondent father. In addition, L.S. requests that the Motion to Change not be heard or stayed until after the results of the Respondent father's bankruptcy proceeding.
[14] The Motion is opposed by D.S.
[15] L.S. has filed, as part of her Affidavit in support of the Motion, a statement from the Family Responsibility Office which shows, as of November 6, 2017, support arrears owing by D.S. in the amount of $409,265.25. Also filed is the mother's Proof of Claim form in the bankruptcy proceeding, showing a total unsecured debt owing to her of nearly $1.1 million dollars, $319,000.00 (approximately) of which is a preferred claim that relates to child and spousal support.
[16] In his Affidavit, D.S. makes three major points. First, his assignment in bankruptcy has materially changed his financial situation. Second, he is "a high school graduate running a small one man business" (paragraph 37), which is a different situation than what was presented to the Court during the trial before Justice Fitzpatrick. Third, Fitzpatrick J. never determined the parties' incomes beyond the year 2013. The Trustee in Bankruptcy's Report is attached to D.S.'s Affidavit; it indicates that the Trustee is not opposing an absolute discharge. The Report was signed by the Trustee and approved by the Inspector, who happens to be L.S. The father has also filed his T4 for the year 2017 which shows employment income from Miracles in Glass Inc. of $47,030.88.
III. The Law
[17] I focus here on the law as it relates to summary judgment. The materials filed by both sides concentrate on that issue. That is the principal relief being sought by the moving party. If that relief is granted, then nothing else needs to be considered except for costs of the Motion.
[18] Besides, the law with regard to security for costs, the only other item of relief contained in the Motion that may require some analysis, is straight-forward and may be summarized this way. The burden of proof rests with L.S., on balance. This Court should examine the factors listed in Rule 24(13) of the Family Law Rules. Even then, the order is discretionary and may still be refused. If it is granted, wide discretion is available in terms of quantum and means of payment. Izyuk v. Bilousov, 2015 ONSC 3684.
[19] On the more substantial issue of summary judgment, if there is no genuine issue requiring a trial of D.S.'s Motion to Change, the Court shall make a final order accordingly: Rule 16(6) Family Law Rules.
[20] The burden of proof is on L.S., the party bringing the Motion for summary judgment: Rule 16(4). The standard of proof is on a balance of probabilities.
[21] In considering the question of whether there is a genuine issue requiring a trial, in addition to reviewing the evidence filed by both sides on the Motion, this Court may do any or all of the following, unless it is decided that the interest of justice dictates that such powers ought to be exercised only at a trial: (i) weigh the evidence, (ii) evaluate the credibility of a deponent, and (iii) draw reasonable inferences from the evidence: Rule 16(6.1).
[22] For the purposes of exercising any of those three powers, the Court may order that either or both sides give oral evidence on the Motion, and time limits may be imposed on such evidence: Rule 16(6.2).
[23] The following principles may be gleaned from a careful review of the decision of the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, which decision has consistently been applied by the Courts in the context of motions for summary judgment in family law cases.
[24] First, it is the principle of proportionality that ought to drive the Court's decision on a Motion for summary judgment. There will be no genuine issue requiring a trial when the judge hearing the Motion is able to reach a fair and just determination on the merits.
[25] Second, what does that mean – a fair and just determination on the merits? It means (i) that the judge hearing the Motion is able to make the necessary findings of fact, (ii) is able to apply the law to the facts, and (iii) the process employed to do those things is a proportionate, more expeditious and less expensive means to achieve a just result (as compared to a trial).
[26] The judge must be able to have confidence in the conclusions reached on the Motion, otherwise, the case ought to proceed to trial.
[27] Third, the judge hearing the Motion should follow a two-stage procedure. Initially, consider only the evidence filed without regard to Rule 16(6.1), the expanded powers. Then, afterwards, if there appears to be a genuine issue requiring a trial, the judge may (but does not have to) weigh the evidence, evaluate credibility and draw reasonable inferences.
[28] Fourth, there is certainly a culture shift that was signalled by the decision of the Supreme Court of Canada referred to above. The Courts have been encouraged to, wherever possible, deal with matters expeditiously. Cases should proceed to trial only if they really have to. The summary judgment process can, where employed properly, increase access to affordable and timely justice. A trial should no longer be viewed as the default procedure.
IV. The Positions of the Parties
[29] Again, I focus here on the summary judgment issue. On security for costs, the debate is simple. L.S. wants the Order - $45,000.00, or another sum, payable by D.S. thirty days before trial. D.S. opposes any Order for security for costs.
[30] On summary judgment, through her counsel, L.S. submits that there is no genuine issue requiring a trial because there has been no material change in circumstance. D.S. has not established "an involuntary change" in his financial circumstances (paragraph 20 of the Applicant's Factum).
[31] In summary, per L.S., the bankruptcy does not affect D.S.'s income. Even if it does, it does not amount to a material change because it was a voluntary decision made by D.S., is insignificant and is temporary.
[32] Further, according to L.S., D.S. deserves no leniency from this Court. He has failed to make proper disclosure, failed to pay costs, and failed to pay support.
[33] In addition, L.S. argues that it is no answer for D.S. to state that the Final Order of Fitzpatrick J. was not meant to apply to years after 2013 because the inadequate evidentiary record post-2013 that was before the Court at trial was largely due to D.S.'s own failures.
[34] L.S. also submits that what D.S. is really doing is engaging in an attack on the correctness of the said Final Order, an Order that was never appealed.
[35] D.S., through his counsel, submits that he had no choice but to declare bankruptcy in the face of the exorbitant costs award made against him, $600,000.00. Further, "bankruptcy is the highest material change to one's income there can be and there is no greater change to one's financial status and income than a bankruptcy" (paragraph 4 of the Respondent's Factum).
[36] According to D.S., it is clear from paragraph 105 of Justice Fitzpatrick's Reasons for Judgment that the income that was imputed to D.S. was not intended to persist after 2013: "[w]hile I appreciate that will be disappointing given that we are now into 2016, I simply cannot determine income beyond 2013 based on the evidentiary record before me".
[37] D.S. considers L.S.'s now apparent opposition to his discharge from bankruptcy as senseless and malicious on her part.
[38] In short, per the Respondent, D.S., he can easily establish a material change in circumstances in that (i) five years have passed since 2013, (ii) he does not currently and has never earned the income that was imputed to him in the said Final Order, (iii) he is a bankrupt, meaning that all of his property has vested in the Trustee, (iv) he is an employee and no longer an owner of any company, and (v) his tax documentation proves that his annual gross income is $58,788.60 (paragraph 16 of the Respondent's Factum).
V. Decision
[39] On the question of whether there has been a material change in circumstances, that issue is not a genuine one that requires a trial. With confidence, it can be decided now on the basis of the materials filed.
[40] There has been no material change in circumstances.
[41] Without a material change in circumstances, D.S. cannot possibly succeed on his Motion to Change. Thus, it must be dismissed at this stage. The Motion for summary judgment is therefore granted.
[42] L.S. shall be awarded some costs. If the issue of costs cannot be settled between the parties, I will accept written submissions, each one limited to three pages, excluding attachments. L.S. shall file within thirty days of the release of these Reasons. D.S. shall file within fifteen days thereafter. Without leave of the Court, there shall be no reply submissions filed.
[43] Now, the why for this decision, one that has significant consequences for both sides, something not at all lost on this Court.
[44] A material change in circumstances "generally entails some new facts or circumstances which, if known at the time, would likely have resulted in different terms in the order". Trang v. Trang, 2013 ONSC 1980, 2013 CarswellOnt 4069 (S.C.J.), at paragraph 40.
[45] A change is generally not to be considered a "material" one where it is not long lasting and significant, and/or where it is by choice. Corcios v. Burgos, 2011 CarswellOnt 3910 (S.C.J.), at paragraph 33.
[46] A bankruptcy does not necessarily mean that a support order should be varied or cancelled. It may not even amount to a material change. Fendelet v. Dohey, 2006 CarswellOnt 6220 (S.C.J.), at paragraph 25.
[47] There have certainly been cases where a bankruptcy has been found to be one factor which, combined with others, amounts to a material change in circumstances, for example, the decision of the Court of Appeal for Ontario in Mwanri v. Mwanri, 2015 ONCA 843 (see, in particular, paragraph 55).
[48] In oral submissions at Court in Orangeville on March 5, 2018, Ms. Pohani, on behalf of D.S., pointed to one thing as amounting to a material change in D.S.'s circumstances – his assignment in bankruptcy. Ms. Pohani submitted, and I accept, that the consequence of that is a vesting of D.S.'s assets with the Trustee.
[49] The problem that D.S. faces is that his voluntary choice to declare bankruptcy on the heels of the costs Order of Fitzpatrick J., if known at the time of His Honour's Final Order, would almost certainly not have resulted in anything different in terms of child and spousal support. His Honour's ruling on support was based on the imputation of income to D.S. Income is different than assets. Putting aside the issue of "surplus income", which neither side gave any submissions on, D.S.'s assignment in bankruptcy has nothing to do with his income or his capacity to earn money.
[50] In addition, although it would likely be considered significant, D.S.'s assignment in bankruptcy is not long lasting. By the Respondent's own evidence, he ought to have been already discharged, absolutely, but for the Applicant's alleged intransigence. Ms. Pohani submitted that a bankruptcy hearing will be held shortly. D.S.'s status as an undischarged bankrupt is merely temporary. Even his status as a discharged bankrupt will have a shelf life to it.
[51] Unlike the situation in Mwanri, supra, D.S. points to nothing else here, except the bankruptcy, to support his argument that there has been a material change.
[52] Whether or not he is now an employee has nothing to do with his income, as it was admitted by Ms. Pohani in her oral submissions that D.S. is still working for the same companies that he was involved with before his assignment in bankruptcy.
[53] Analyzing paragraph 16 of the Respondent's Factum, referred to above in these Reasons, (i) that five years have passed since 2013 is irrelevant as the decision proposed to be varied was made in February 2016, and it is well-established in the jurisprudence that a variation proceeding is not an invitation to go behind the decision under review, and the support awards made against D.S. were clearly not time-limited in their wording when one examines paragraphs 242 and following of the Reasons for Judgment, (ii) given the decision of Fitzpatrick J., never appealed from and presumed to be correct, it is irrelevant whether D.S. ever actually earned the income attributed to him, (iii) the bankruptcy issue has been dealt with above, (iv) the employee issue has been dealt with above, and (v) the reliance on tax documentation to support D.S.'s alleged current income is exactly the very same argument that was considered and rejected by Justice Fitzpatrick.
[54] Thus, giving the Respondent the benefit and considering all things that may be capable of constituting, even collectively, a material change in circumstances, I am confident that D.S.'s Motion to Change stands no chance of success.
[55] Ms. Pohani took this Court through the two Affidavits filed by L.S. in support of her Motion, arguing that many of the allegations made by the Applicant are spurious and without any supporting evidence. None of those paragraphs is relevant to my decision that there is no genuine issue requiring a trial, more specifically, that there is no genuine issue on whether there has been a material change in circumstances. There clearly has not.
[56] Ms. Pohani focussed much attention on the fact that L.S. signed the Trustee Report, referred to above in these Reasons. That is also irrelevant to the threshold issue of whether there has been a material change in circumstances.
[57] Ms. Pohani described her client's position as "bankruptcy 101"; "he (D.S.) cannot own anything"; "the Trustee steps into the feet of the debtor".
[58] Again, the support awards that D.S. wants to vary have nothing to do with what he owned then or owns now. Support is based on income. Yes, to some degree, the Trustee steps into the feet of the debtor, D.S., but the Trustee does not take away his income or affect his ability to earn money.
[59] Ms. Pohani asked for leave to question, in Court, L.S. on her Affidavit evidence. That request was denied by this Court, for two reasons. First, there is no need to exercise the expanded powers in Rule 16(6.1), and thus, there is no need to hear oral evidence under subrule 6.2. Upon reviewing the written materials, I can safely determine whether there is a genuine issue requiring a trial. There is not. Second, the stated purpose of that proposed in-Court examination was to show the alleged speculative nature of many of L.S.'s assertions. Even accepting that argument, it makes no difference to this Court's decision.
[60] Finally, Ms. Gamus, counsel for L.S., referred to many other reasons as to why the Respondent's Motion to Change should not be allowed to proceed, including but not limited to: (i) his non-compliance with Fitzpatrick J.'s costs Order, which is admitted, (ii) his non-compliance with Fitzpatrick J.'s life insurance Order, which is admitted, (iii) his non-compliance with Fitzpatrick J.'s equalization payment Order, which is admitted, (iv) his history of untimely and incomplete disclosure, as found by Fitzpatrick J. at paragraphs 52 through 55 of the Reasons for Judgment, which is admitted, (v) that D.S. is engaged in a collateral attack on the decision of Fitzpatrick J., which I agree is plainly evident from his Affidavit and the Factum filed on his behalf, and (vi) that there is scant evidence of D.S.'s post-Final Order income, which I agree with.
[61] Those findings are not necessary to the resolution of the Motion, however, they do give this Court some comfort in knowing that the remedy of summary judgment and the dismissal of D.S.'s Motion to Change, an undoubtedly serious remedy, does not cause any injustice or inequity on the facts of this case.
[62] The Motion for summary judgment is granted. There has been no material change in circumstances. That conclusion can be made with confidence on the basis of the Motion materials filed. There is no genuine issue requiring a trial. D.S.'s Motion to Change is therefore dismissed.
Conlan J.
Released: March 8, 2018
COURT FILE NO.: FS-09-109-0002
DATE: 20180308
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
L.S.
Applicant
- and -
D.S.
Respondent
REASONS FOR DECISION ON MOTION
Conlan J.
Released: March 8, 2018