Court File and Parties

COURT FILE NO.: FS-17-416361 DATE: 20180730 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Annette Levine Applicant – and – Stephen Levine Respondent

COUNSEL: Steven Benmor, for the Applicant Valois P. Ambrosino, for the Respondent

HEARD: July 26, 2018

BEFORE: C. Gilmore, J.

Endorsement on Motion

Overview

[1] This is the respondent’s motion for an advance on equalization to be used as a credit towards the purchase of the cottage property at 1167 Parkers Point Road, Gravenhurst, Ontario (“the cottage”) and the office condominium at 7 Hendon Avenue, North York, Ontario (“the office condo”). Both the cottage and the office condo are owned by the applicant.

[2] The cottage sale was scheduled to close on the day the motion was heard, July 26, 2018. By way of endorsement dated July 26, 2018, the court postponed the closing date until July 31, 2018, in order to allow for the preparation and release of these reasons. The office condo is scheduled to close on August 15, 2018.

[3] The applicant does not seek to have the advance on equalization paid to him directly. Rather, he seeks a credit of $1,070,000 towards the purchase of the cottage and the office condo.

[4] The applicant has brought a cross-motion seeking enforcement of the Agreements of Purchase and Sale for the cottage and office condo which are unconditional and require cash on closing. The applicant resists the respondent’s motion on the grounds that he is asking the court to order partial summary judgment on the equalization payment. There are significant amounts which are in dispute. Indeed, the applicant’s counsel calculates a difference between the parties’ respective positions on equalization at over $2,795,000.

[5] The applicant’s position is that this court does not have the jurisdiction to order a credit and effectively pre-determine any portion of the equalization payment where questioning has not occurred, some disclosure remains outstanding and the valuation of the respondent’s business has not commenced.

[6] The respondent’s position is that even allowing for what he characterizes as the applicant’s unreasonable position on many of the numbers, the respondent would be owed an equalization payment of $740,664. It would be unfair to require him to pay the applicant the full amount owing on the sale of the cottage ($2,280,000) and the office condo ($400,000) when she owes him at least that much by way of equalization. The post separation adjustments for occupation rent claimed by the applicant are without foundation given that the respondent has paid for all expenses for the cottage, matrimonial home and children since separation.

[7] The applicant takes the position that not only would an advance on equalization be precluded by case law and the circumstances of this case, the respondent is seeking a trust interest in one-half of the value of all three properties. The applicant prepared an NFP using the assumption that the respondent would be successful in that claim. If he is, he would owe her an equalization payment of $971,143.11. There are also post separation adjustments claimed by the applicant for occupation rent and retroactive spousal support totalling $448,344. He would therefore owe her $1,419,487.11 plus 50% of the funds due on closing for the cottage and office condo ($1,147,300) for a total of $2,566,787.11.

[8] Both parties have provided an alternate position which would involve the applicant paying half the sale price of the cottage after adjustments. The stumbling block with respect to this alternative is whether the funds would be payable to the applicant directly or paid into trust.

Background

[9] This is a high conflict case which has been litigated continuously for over a year. The parties have litigated everything from spousal support and occupation of the cottage to the selection of realtors for the sale of the properties. They have both made significant and negative allegations about the other party’s behaviour both generally and with respect to their conduct in this litigation. It was clear from seeing them in the courtroom that the tension between them is palpable.

[10] The parties were married for 25 years. They have three children who are all adults but attending post-secondary education. The parties had a traditional marriage in which the applicant remained at home to care for the children. Later in the marriage she obtained employment but the respondent was the main income earner.

[11] The respondent is an accountant with his own practice. He runs the practice out of the office condo. His income for support purposes on an interim motion was found to be $198,000. The valuation of his practice and his income for support purposes is to be completed by Ms. Bonnie Prussky, a Certified Business Valuator. She is to be paid a $50,000 retainer from the sale proceeds of the properties.

[12] The respondent resides in the matrimonial home. The matrimonial home is registered in the name of the applicant. It is listed for sale but has not sold. The applicant resides in a new home registered in her name, which was purchased by placing a line of credit on the matrimonial home.

[13] The respondent services the line of credit debt, pays all expenses related to the matrimonial home and cottage and all of the children’s expenses. He also pays spousal support of $7,548.00 per month. This amount is based on his income as found by Moore, J. (which the applicant disputes) and takes into account the other debt and child related payments being made by the respondent.

[14] Reciting a history of the litigation to date is not required for the purposes of this motion. However, it is important to review the terms of the endorsement of Moore, J. dated November 27, 2017, with respect to the sale of the subject properties.

[15] At paragraph 58 of his endorsement dated November 27, 2017, Moore, J. ordered that the matrimonial home, office condo and cottage be listed for sale and sold in accordance with the terms sought in the applicant’s Amended Notice of Motion dated October 18, 2017. Those terms required that the proceeds of sale of the properties net of the usual adjustments, be held in trust pending further court order.

[16] The applicant argues that it would not be fair to pay the funds from the cottage and office condo into trust. This is because the order of Moore, J. did not address a circumstance in which a non-arm’s length purchaser bought the properties. In short, it would not be fair for the respondent to have the benefit of ownership of the cottage and office condo, and any corresponding growth in their equity while the applicant has nothing from the sales.

Analysis and Case Law

[17] A lengthy analysis need not be entered into with respect to the issue of the determination of any amount of advance on equalization. This court is not in a position to make such a calculation where significant amounts are in dispute. A few examples of the delta between the parties’ positions on equalization are as follows:

a. The applicant’s NFP statement value the respondent’s accounting practice at $1 million. The respondent’s NFP statement values it at $0. Ms. Prussky’s valuation of the practice has not even started because the retainer will only be paid on the sale of the properties.

b. The applicant submits that the respondent has included post separation adjustments in his NFP statement including the line of credit on the matrimonial home and carrying costs for the cottage and matrimonial home.

c. There are disputes concerning the proof of and alleged double counting of a loan from the respondent’s mother.

d. There are disputes about whether certain accounts were joint or sole with the respondent insisting they are joint and the applicant insisting the respondent took all the money out on separation and the accounts therefore must be shown entirely as the respondent’s asset.

e. There are a myriad of other disagreements including the value of the parties’ vehicles, the disposition costs on RRSPs and the ownership of the safety deposit box and value of its contents.

[18] In Zagdanski v. Zagdanski, the court ordered an advance on equalization in the amount of $700,000 to the wife on a motion for partial summary judgment. In doing so, the court set out certain parameters for making such an order. They include (my summary):

a. There will be little or no chance that the amount of the advance will exceed the final equalization amount;

b. There will be a degree of certainty about the right to an equalization payment and the minimum amount;

c. There is a reasonable requirement for funds in advance of any final determination of the case, and;

d. Fairness, prejudice or delay require that such a payment be made.

[19] In Haroun v. Haroun (Endorsement of Mesbur, J. dated June 25, 2001), ONSC, the court declined to order a further advance on equalization. The wife had already received $250,000 by way of advance and sought a further $350,000.

[20] The court declined to order the advance because the facts did not lend themselves to partial summary judgment. That is, there was a dispute about the value of the pharmacies owned by the husband and a valuation of those businesses had not been completed, there had been no cross-examination on the parties’ affidavits, and there were numbers in both parties’ NFP statements which were “to be determined.” While it was clear that the husband would owe the wife an equalization payment, it was not clear that that payment would exceed $300,000. As such, the court declined to order any further advance on equalization.

[21] Similar to Haroun, there are many missing and contested pieces to the parties’ claims for equalization. As such, neither the facts nor the case law lends itself to allowing the court to engage in any fact finding exercise with respect to even a partial equalization number.

[22] However, the matter does not end there. Both parties provided alternative positions during the course of the motion. The result of those positions would be that the respondent would pay for half the value of the cottage, subject to certain adjustments. The applicant insists that the funds should be paid to her given that the respondent will have the benefit of ownership of the cottage. If a third party had purchased the cottage, she would have received the entire amount.

[23] The respondent seeks to have the funds paid into trust which would comply with the direction of Moore, J.

[24] The alternative position scenario advanced by counsel is fair and reasonable in my view and should be adopted subject to adjustments. The remaining issues is whether the funds should be paid into trust.

[25] I agree with the applicant’s counsel’s argument that the respondent should not receive the benefit of ownership of both the cottage and the office condo without the applicant receiving some corresponding benefit. As such, I make the following orders:

[26] The respondent shall pay the following sums in the relation to the sale of the cottage property scheduled to close on July 31, 2018:

a. 50% of the sale price net of the mortgage balance for the applicant’s share. This amount (less $50,000 as set out below) shall not be paid to the applicant but shall be applied to pay down the line of credit on the matrimonial home being TD Account Number 4144648.

b. $78,820 for net commission on the sale. The amount is subject to later adjustment with respect to the applicant’s share and the respondent’s previous $50,000 deposit. This amount to be paid on closing to the real estate brokerage by the applicant’s real estate solicitor.

c. $50,000 from the applicant’s share of sale proceeds shall be held back from the funds used to pay down the line of credit on the matrimonial home and be paid to Ms. Bonnie Prussky for the preparation of business and income valuation of the respondent.

[27] The respondent shall pay the following amount in relation to the sale of the office condo scheduled to close on August 15, 2018:

a. $400,000 payable to the applicant directly less the following sums to be paid by his real estate solicitor:

(i) $22,600 for real estate commission;

(ii) Any other adjustments required on sale.

b. The respondent may not further encumber either the cottage or the office condo without the consent of the parties or court order.

Costs

[28] Neither party was completely successful on this motion. If the parties cannot agree on costs, I will receive written submissions of no more than 2 pages in length, exclusive of any Offers to Settle or Bill of Costs. Costs shall be submitted on a 7 day turnaround starting with the respondent on August 7, 2018.

C. Gilmore J. Released: July 30, 2018