COURT FILE NO.: FS-17-00419392
DATE: 20180605
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Joan Louise Diosy, Applicant
AND:
Gabor Diosy, Respondent
BEFORE: Kiteley J.
COUNSEL: Bobbi M. Olsen and Hayley E. Dilazzaro, for the Applicant
Kathryn Hendrikx, for the Respondent
HEARD: June 5, 2018
ENDORSEMENT
[1] The Applicant and Respondent were married in 1979. They have two adult children. They separated and reconciled in 2009 and 2014. On June 28, 2017 they separated again coincidental with the Respondent being arrested for assaulting the Applicant. The Respondent has been incarcerated since he was arrested. He pleaded guilty, he has served his sentence and he is subject to a three year probation order that prohibits him from contacting the Applicant or being within 300 meters of the former matrimonial home. While incarcerated on the Ontario charges, the Respondent consented to be extradited to the United States. On May 4, 2018, he was extradited to the State of Florida where he is awaiting trial on a criminal matter from 2014 also involving the Applicant as complainant. As I understand it, he intends to plead guilty and he expects a short incarceration. He is optimistic that he will return to Ontario by the end of 2018.
[2] The Application was issued on August 30, 2017 and was served on September 7, 2017. The Applicant asked for a divorce, equalization of net family property, sale of property including the matrimonial home, spousal support, and other relief.
[3] The Respondent served the Answer on December 4, 2017 in which he indicated he did not agree with any of the relief sought.
[4] On May 24, 2018 the Applicant served her notice of motion in which she seeks an order for sale of the jointly owned matrimonial home without his consent and subsidiary orders that would give her authority to make all decisions related to the sale. She also asks for an order that she receive all of the proceeds of sale of the house, although in her notice of motion, alternatives to that are included. She asks for an order for severance of the divorce from the corollary relief. The Applicant deposed that in May 2018 she had entered into an agreement of purchase and sale to buy a condominium. She made a deposit of $50,000 and must pay the balance of $1.2 million on August 8, 2018. She deposed that obtaining accommodation other than the matrimonial home was of emotional importance to her in securing a place that would afford her safety on the return of the Respondent from Florida that may occur before the end of 2018.
Respondent’s request to adjourn the motion
[5] Counsel for the Respondent served a notice of motion returnable today in which she asked for an adjournment of the Applicant’s motion and she asked for directions. She relied on the affidavit of her law clerk but it is clear that the source of most of the information in that affidavit is Ms. Hendrikx.
[6] Counsel for the Respondent asked for a 30 day adjournment to July 5 and she committed to providing his responding affidavit no later than June 26, 2018. The basis upon which she sought the adjournment was primarily that she has communication challenges in seeking instructions from her client who is incarcerated in Florida. Since he was extradited on May 4, 2018, she has had 10 minute telephone conversations with him on two occasions, namely on May 23 and May 30. The motion record was served after the first and before the second but the institution limits the telephone calls to 10 minutes. Counsel could not prepare a responding affidavit and does not have instructions. In his Answer, he opposed both the Applicant’s property claims and her request for a divorce. In her submissions on the request for the adjournment and subsequently on the merits of the motion, Ms. Hendrikx referred to the entire continuing record and her communications with her client before he left Ontario.
[7] After hearing submissions I made a ruling dismissing the request to adjourn on the basis that the Respondent has had ample notice of the Applicant’s request to sell the matrimonial home starting with service of the Application on September 7, 2017. Furthermore, if the motion is not heard until July 5 and if it was then refused, the Applicant would have only 33 days to come up with a solution to her financing needs and I found that the Applicant ought not to be put in that position. I was satisfied that that is the sort of prejudice which defeated the request for the adjournment.
Motion for sale of former matrimonial home
[8] In submissions, counsel for the Applicant relies on the Partition Act and the decision in Silva v. Silva [990 CarswellOnt 319] in which the Ontario Court of Appeal held that a joint owner has a prima facie right to an order for partition and sale. The Court held that an order pursuant to s. 2 of the Partition Act should not proceed where it can be shown that it would prejudice the rights of either spouse under the Family Law Act. The three criteria for considering whether there is “prejudice” are whether assets will be depleted, preventing an equalization payment; whether a child living in the home will suffer harm if forced to move; and whether the applicant joint owner has demonstrated malicious, vexatious or oppressive conduct.
[9] On the record before me, there are no children living in the home and the applicant has not demonstrated malicious, vexatious or oppressive conduct. Furthermore, given the draft net family property statement, sale of the former matrimonial home will not deplete or prevent an equalization payment. It is the case that the costs of disposition on the significant assets have not been calculated and those could reduce his net family property. It is also the case that no value has been attributed to the shares in the professional corporation which will increase his net family property. Without taking all of that into consideration, on the basis of the Applicant’s preliminary net family property statement, he owes her an equalization payment of approximately $2.3 million.
[10] On that basis, there can be no argument that sale of the former matrimonial home will prejudice the Respondent by depleting or preventing an equalization payment.
[11] I allowed counsel for the Respondent considerable liberty in making submissions and relying on hearsay evidence because she did not have a responding affidavit. In her submissions, counsel for the Respondent made an interesting submission that, if the driving factor in sale is to provide the Applicant with sufficient funds to close her condominium purchase on August 8, that there was an alternative. Looking at the Respondent’s unsworn form 13.1 financial statement and accepting it to be reliable for the moment, he is the legal owner of an investment account with a balance of over $5 million. Counsel suggested as an alternative that the court could order that the financial institution pay to the Applicant $1.2 million so that she could close on her purchase on August 8. In that way, the motion could be adjourned to July 5 so that the Respondent could have the opportunity to participate in the motion as to whether to sell the matrimonial home.
[12] I have given some thought to that alternative but ultimately reject it for these reasons. First, the law is clear that the Applicant has a prima facie right to an order for sale and there is no evidence he will be prejudiced. If I adjourned to July 5 on that condition, it would still not be possible for the Respondent to provide evidence that would defeat the motion for sale. Of all of the factors relevant to an order for sale, the one he would argue is whether the sale would deplete or prevent an equalization payment. On all of the evidence, he will be making the equalization payment, not her. An order for sale cannot be characterized as prejudicing him.
[13] Second, the Respondent expresses a desire to live in the former matrimonial home when he returns from the United States. He wants to have a home after having been incarcerated in Toronto and in Florida for a period that may total 18 months. That is unrealistic. He is subject to a 3 year probation order that prohibits him from being within 300 metres of the home and he could have access only if the Ontario Court of Justice varied that order. While a variation order is possible if the Applicant were not living there, it would only occur following a formal motion to the Ontario Court of Justice which could not be undertaken before he returns. That would not defeat her prima facie right to sell.
[14] Third, the Respondent may have an emotional attachment to the matrimonial home in which they lived for many years and in which their children grew up. As counsel for the Respondent pointed out, the parties did not sell when they became empty nesters and by inference, they agreed to hold onto the property indefinitely. But that does not have an impact on whether the Applicant has a prima facie right to sale.
[15] As indicated below, I grant the motion for sale of the home.
Conditions of the sale of the former matrimonial home
[16] In her notice of motion, the Applicant asks for an order that she be permitted to sign any and all documentation to facilitate the sale, accept the first reasonable offer, direct the real estate agent in the marketing and sale, and select the real estate lawyer.
[17] In granting the order for sale, it is reasonable to give the Applicant the authority to take all of those steps. As indicated above, the basis for the request to adjourn the motion is that counsel has not been able to take instructions from her client and not been able to prepare his responding affidavit. While it may improve with time, at the moment, Ms. Hendrikx is limited to 10 minute phone calls once a week. If his consent was required to all of the steps in the sale of the home, it would not be possible to do so in a timely way and would defeat the purpose of the order for sale. Furthermore, the financial information that is now available indicates that the parties have amassed considerable wealth during the many decades of their relationship. As Ms. Hendrikx observed, they did that by working side by side all of that time. From that I infer that the Respondent has confidence that the Applicant will make decisions that benefit both of them in the long run.
[18] I will grant the motion including those conditions.
Proceeds of Sale of the former matrimonial home
[19] In her notice of motion the Applicant asked for an order that the entire net proceeds of sale be released to her with the Respondent’s share being credited to him as an advance on equalization. She suggested alternatives.
[20] I am not prepared to release all of the funds to the Applicant. Pursuant to the December 15, 2017 consent order, the Applicant continues to receive $10,000 per month as dividend income, continues to receive her salary of $116,000 and the Respondent made an advance of $250,000. As indicated above, it is apparent that the Respondent will be making the equalization payment to the Applicant. However, there are enough unknown variables that he ought to be given an opportunity to provide the disclosure and the expert valuation reports that will assist in arriving at a final equalization payment. He ought not to lose his half of the equity in the former matrimonial home in the meantime. I will allow him an opportunity to bring a motion for release of his share of the funds to him.
Severance of the divorce from the corollary relief
[21] The Applicant and Respondent separated on June 28, 2017 when he was arrested. The Applicant has asked for a divorce and the Respondent is opposed. If I made an order for severance, the Applicant could not bring a motion for divorce judgment before June 29, 2018. On the record before me, I see no basis for him challenging the grounds for divorce once the year has elapsed. However, there is no urgency for granting the motion for severance and it is fair to give him the opportunity to oppose the motion for severance.
Contents of the former matrimonial home
[22] In her notice of motion the Applicant asks for an order that she have exclusive possession of the contents of the home pending final disposition of the matter. She says she will take some belongings with her and store the balance. The fact is that he is not available to take possession of any of the contents. She has possession; she does not need an order for exclusive possession.
Costs of the motion
[23] After reading the endorsement in the presence of counsel and the Applicant, I heard submissions as to costs. The Applicant asks for costs of $10,000. The Respondent takes the position that the costs outline of counsel for the Applicant is too high and that the amount of $5000 would be more reasonable for the services rendered. And she asks that those costs be “in the cause” meaning the liability to pay would be established based on the ultimate outcome of the case.
[24] The Applicant made an offer to settle consistent with her notice of motion. She was not fully successful on her motion and did not achieve an outcome equal to or better than her offer to settle.
[25] Counsel for the Respondent pointed out that at the settlement conference Paisley J. had left the costs of the conference to the judge hearing the motion.
[26] I do not order any costs of the motions or of the settlement conference for these reasons. I understand why the Applicant brought this motion and I am satisfied it was a reasonable motion. She was successful on the key issue of sale of the home but did not succeed on all issues. But the Respondent is challenged to participate in the case as long as he is in the United States. It is the case that he is in that position due to his own conduct. However, from the outset on June 28, 2017 he accepted responsibility for his conduct in Ontario. When he consented to extradition, he in effect accepted responsibility for his conduct in Florida. He appears to be focused on clearing up these issues. His behaviour is reasonable. Based on divided success and reasonable behaviour by both parties in the context of this motion and the settlement conference, the Applicant ought not to recover costs and the Respondent ought not to be ordered to pay costs.
ORDER TO GO AS FOLLOWS:
[27] Order to go for the sale of the matrimonial home on the conditions listed in paragraphs 1 – 6 of the notice of motion returnable today, which conditions are to be incorporated into the order that will be signed and entered.
[28] From the net proceeds of sale, the Applicant shall receive 50% forthwith after closing.
[29] The lawyer acting on the closing shall hold the remaining 50% in his/her trust account without prejudice to any motion the Respondent might bring that he is entitled to his 50% share.
[30] The motion as requested in paragraphs 7 – 11 is dismissed.
[31] The motion for severance of the divorce is dismissed without prejudice to the Applicant making a further motion after June 28, 2018 on no less than 30 days’ notice to the Respondent.
[32] No costs of the motion, the cross-motion or of the settlement conference.
Kiteley J.
Date: June 5, 2018