COURT FILE NO.: FS-51930-16 DATE: 2018-08-10 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

Anamaria Maghetiu, Counsel for the RODICA VIORICA LEU - and - Applicant

JONEL JOCA Respondent

Patrick Kraemer, Counsel for the Respondent

HEARD: April 23, 24, and 27, 2018

The Honourable Justice C.D. Braid

REASONS ON MOTIONS

Corrected decision: The corrections were made on August 15, 2018. The reference to the Court File No.: “FS-47823-16” in the Citation on page 1 and the back page have now been corrected to read “FS-51930-16”.

I. Overview

1Rodica Leu and Jonel Joca were married for 24 years. The parties have brought competing motions and seek the court’s assistance to equalize net family property. The primary issues in dispute are the treatment of two loans in favour of the husband’s parents and the value of the husband’s taxi licence.

2The following are the issues to be decided on these motions:

A. Is this an appropriate case for summary judgment? B. How should the matrimonial home loan be treated? C. How should the taxi licence loan be treated? D. What is the value of the taxi licence? E. Equalization of net family property

3For the reasons set out below, I decline to make any order regarding the enforceability of the matrimonial home loan. I accept the expert’s valuation of the taxi licence and assign zero value to the taxi loan in the equalization process. Lastly, I find that the husband owes an equalization payment of $4,022.55 to the wife.

II. Background Facts

4Rodica Leu is currently 58 years of age. In these reasons, I shall refer to Ms. Leu as the wife.

5Jonel Joca is currently 61 years of age. In these reasons, I shall refer to Mr. Joca as the husband.

6The parties were married on August 6, 1991 and separated on June 1, 2015. They were divorced in 2017.

7During the first few years of the parties’ marriage, the husband’s parents loaned $120,000 to both parties to purchase the matrimonial home. The parents also loaned $66,000 to the husband to purchase a taxi licence.

8The husband’s father, Trajan Joca, passed away in 2017. The husband’s mother, Julijana Joca, was given notice of these proceedings. She was questioned as a witness on these motions regarding the two loans. She has not been added as a party and did not make any submissions on these motions.

III. Analysis

A. Is This an Appropriate Case for Summary Judgment?

9The husband brought a motion for the sale of the jointly owned matrimonial home and his taxi licence. In addition, he requests that the court validate two loans made by his parents during the marriage, and seeks an order that his mother be paid from the proceeds of the sale of these two assets.

10In response, the wife seeks summary judgment. She agrees that the matrimonial home should be sold but asks that the remaining relief sought by the husband be dismissed. The wife asks the court to determine equalization of net family property, and submits that the court should determine that the parental loans should be assigned zero value in the equalization process.

11Two matters that were initially contested are no longer in issue. First, the wife has withdrawn her claim for occupation rent. Second, the husband no longer seeks to include smaller personal loans from his parents as debts on his net family property calculation.

12The court shall only grant summary judgment if it is satisfied that there is no genuine issue requiring a trial. Pursuant to Rules 20.04(2)(a) and 20.04(2.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the court shall consider the evidence submitted by the parties and may exercise any of the following powers for the purpose of determining whether there is a genuine issue requiring a trial, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.
2. Evaluating the credibility of a deponent.
3. Drawing any reasonable inference from the evidence.

13In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court of Canada clarified the test to apply on a summary judgment motion. There will be no genuine issue requiring a trial if the evidence permits the court to make a fair and just determination on the merits. This will be the case when a motion for summary judgment (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

14What is fair and just depends on the nature of the issues, and the nature and strength of the evidence. There is an obligation on each party to “put its best foot forward.” The responding party must present its best case or risk losing: Canada Mortgage and Housing Corp. v. Greenspoon, 2015 ONSC 6882, at para. 28.

15In this case, the wife submits that the court should make adverse findings of credibility against the husband. However, there is very little dispute about the facts. I find that it is not necessary to draw any adverse inferences or even to assess credibility.

16I find that this is an appropriate case for summary judgment. Where there is disagreement about the facts, the husband has not shown that there is a genuine issue for trial. The evidence that has been filed permits the court to make a fair and just determination on the merits. There is no genuine issue requiring a trial.

B. How Should the Matrimonial Home Loan Be Treated?

17In June of 1995, the parties jointly purchased the matrimonial home. The husband’s parents loaned $120,000 to the parties so that they could purchase the home. A mortgage was registered against the matrimonial home in favour of the husband’s parents in the amount of $120,000. The parties signed a promissory note for the same amount, which was without interest and payable on demand. The parties did not make any payments and the husband’s parents did not make any demands for payment prior to the date of separation.

18The parties have consented to an order that the matrimonial home be sold. The current value of the home will be determined on the open market.

19The wife seeks to discount the matrimonial home loan for property division purposes to reflect the fact that there was no prospect of enforcement as of the date of separation. Although her claim is phrased as an unequal division of net family property, she does not ask the court to order the husband to assume a greater proportion of this debt. Instead, she asks that the court determine that the matrimonial home loan be assigned zero value in the equalization calculation.

20The parties disagree about the value of the matrimonial home on the date of separation and regarding the amount owing on the matrimonial home loan. In my view, it is not necessary to determine the value of the home and the loan in order to equalize net family property.

21The matrimonial home is jointly held. Fifty percent of the value of the home will be assigned to the assets held by each of the parties. In addition, the loan is a joint debt so fifty percent of the loan value will be assigned to the debts held by each of the parties. Whatever the values of the asset and debt on the date of separation, they will be equally distributed on both sides of the net family property calculation. The values need not be determined as they will not affect the ultimate calculation for equalization purposes.

22At the time of arguing the motion, the wife’s counsel explicitly stated that the enforceability of the mortgage should be dealt with in a separate proceeding. However, the wife’s proposed draft order directs that the sale proceeds from the home be distributed equally between the parties, without payment of the matrimonial home loan which is secured by a mortgage registered on title. On the other hand, the husband seeks an order that the matrimonial home loan be validated, and that his mother be paid from the proceeds of the sale of the home. In my view, neither of these orders can be made at this time.

23The husband’s mother has not been added as a party to these proceedings and she has not made submissions regarding the enforceability of the loan. It would be inappropriate for the court to make a determination regarding enforceability of the loan without having the mother participate as a party and have counsel make submissions on her behalf. Absent a ruling regarding enforceability, I do not have jurisdiction to order the validation of the loan or to order the discharge of the registered mortgage. However, absent a discharge of the mortgage, the property cannot be sold and the proceeds cannot be distributed.

24The parties have consented to an order that the matrimonial home be sold, which is in their best interests. In order to sell the home, the mortgage must be discharged. Section 12 of the Mortgages Act provides a mechanism for the parties to resolve their dispute regarding the mortgage. When the amount due under a mortgage is under dispute, the court may permit payment into court of the amount due in exchange for an order discharging the mortgage: see Mishev v. Shah, 2011 ONSC 1672.

25In the circumstances, it is appropriate that the parties settle the dispute regarding the mortgage debt in a separate proceeding. I therefore direct the parties to pay $120,000 of the sale proceeds into court, pursuant to s. 12 of the Mortgages Act. Once that payment is made into court, the mortgage shall be discharged. The remaining proceeds of the sale shall be distributed in accordance with the order.

26Once the funds are paid into court, the parties may resolve their dispute regarding the enforceability of the mortgage in a separate proceeding under s.12 of the Mortgages Act. In the alternative, if the parties agree that they do not wish to litigate that issue, the $120,000 can be paid to the mother and the mortgage discharged in the ordinary course.

C. How Should the Taxi Licence Loan Be Treated?

27In July of 1994, the husband’s parents loaned the husband $66,000 to purchase a taxi licence. The parents and the husband entered into a demand note with interest accruing at prime plus 5%, and payable on demand. The husband did not make any payments and the husband’s parents did not make any demands for payment prior to the date of separation.

28In July of 1994, the $66,000 demand note in favour of the husband’s parents was registered under the Personal Property Security Act (PPSA). Even though there was an option to register it for 25 years or a perpetual period of time, it was only registered for 5 years. There is no evidence that it was ever renewed during the marriage. There was no security registered under the PPSA as of the valuation date.

29On June 20, 2017, the mother’s lawyer prepared a discharge statement showing the interest that has compounded annually on this loan. This discharge statement showed that more than $500,000 is now owing on that loan.

30The husband seeks an order that the taxi licence loan be validated, and that his mother be paid from the proceeds of the sale of the licence. The wife submits that the court should determine that the taxi loan should be assigned zero value in the equalization process.

31During this litigation, the husband and his mother gave evidence that the taxi licence loan is a valid and enforceable loan. If the loan is found to be unenforceable, the husband argues that the advance of the funds should be considered a gift. However, the documents are inconsistent with the finding that this was a gift.

32The following facts support the finding that this was a loan:

i. In 1994, the husband signed a demand note; ii. In 1994, the husband signed a general security agreement granting his parents a security interest in the taxi licence; iii. In 1994, the loan was registered under the PPSA; iv. In 2017, the loan was re-registered under the PPSA; and v. In 2017, the mother’s lawyer prepared a discharge statement showing the outstanding balance on the loan.

33I find that the funds were advanced as a loan and not as a gift. There were contemporaneous documents evidencing the loan. Security was taken pursuant to the security agreement and the PPSA registration. The funds were advanced with an expectation of remuneration: the parents expected repayment and the husband believed he was obligated to repay them.

34The court must examine the likelihood that the husband would be successful in raising a limitations period issue against the mother’s claim as at the date of separation. The parties agree that if the limitation period expired for this loan, a subsequent demand cannot revive the claim. If the loan has expired, it should not be shown as a debt on the husband’s net family property statement. Only legally enforceable debts can be taken into account to reduce the legally shareable property of a spouse.

35Under the former Limitations Act, R.S.O. 1990, c. L.15, the limitation period for the taxi licence demand loan began to run at the time that the promissory note was made. The act giving rise to the cause of action was the delivery of the note, not the failure to respond to a demand letter: see Hare v. Hare, [2006] O.J. No. 4955 (Ont. C.A.).

36The current Limitations Act, 2002 includes provisions for transition between the new Act and the prior Limitations Act. If the claim was discovered before January 1, 2004, the former limitation period applies: see s. 24(5) of the Limitations Act, 2002.

37In this case, the prior Limitations Act applies and the limitation period was six years. Therefore, the limitation period for the taxi loan demand note expired in 2000 and the loan is no longer enforceable. On the husband’s Net Family Property statement, the taxi loan shall therefore be shown as having zero value as of the valuation date.

D. What is the Value of the Taxi Licence?

38The taxi licence was purchased in 1995 for $80,000. The licence is solely in the husband’s name.

39During this litigation, the husband retained Patrick McCabe to provide a valuation of the taxi licence. Mr. McCabe determined that the mid-point value of the taxi licence was $171,119 on the date of separation. I accept that Mr. McCabe is a properly qualified expert and I accept his valuation in its entirety.

40Mr. McCabe’s expert report referenced data that he examined related to the emergence of Uber in the community as of the valuation date. Mr. McCabe took into account the looming possibility that Uber was going to enter the local market and that this would likely have an effect on the value of taxi licences.

41At the time of his questioning in October of 2017, the husband accepted Mr. McCabe’s valuation of the taxi licence. He also accepted that Mr. McCabe’s expertise and knowledge exceeded his own in this area. The wife also accepts the midpoint value provided by Mr. McCabe.

42The husband now disputes the valuation of the taxi licence on the basis of the emergence of Uber in this region. The husband has not provided any additional expert evidence of value. He argues that his experience as a taxi driver provides him with expertise regarding the valuation of the licence.

43I disagree. The husband is not an objective or properly qualified expert. I am not satisfied that his experience as a taxi driver gives him expertise to value a taxi licence. In addition, the husband’s challenge to Mr. McCabe’s valuation is unfounded since Mr. McCabe’s valuation already took into account the existence of Uber and its impact on the taxi business.

44The husband also argues that the current value of the taxi licence is relevant for purposes of calculating net family property. I disagree. For purposes of equalization, the court must consider the value as at the valuation date, not its present day value: see s. 4(1) of the Family Law Act.

45Finally, the husband also argues that notional disposition costs should be deducted from the value of the taxi licence. I do not agree.

46In determining whether disposition costs should be deducted from an asset’s value, the court should consider evidence of the probable timing of the asset’s disposition. It is appropriate to deduct disposition costs if there is satisfactory evidence of a likely disposition date and if it is clear that such costs will be inevitable when the owner disposes of the assets: see Sengmueller v. Sengmueller, [1994] O.J. No. 276 (C.A.); [Bortnikov v. Rakitova, [2016] O.J. No. 3060 (C.A.)].

47An allowance for disposition costs from net family property should not be made where it is not clear when, if ever, the assets will be sold. However, the court need not find that the sale of the asset is inevitable. The court should determine whether it is more likely than not that the assets would be sold, at which point disposition costs would inevitably be incurred: see Buttar v. Buttar, 2013 ONCA 517.

48The husband states that he will be forced to sell the taxi licence to repay the taxi loan. However, I have found that there is a limitation period issue with respect to this loan. In addition, the mother has not brought a civil action for collection of this debt, and her evidence is noncommittal as to whether she will ever seek to enforce this debt. The husband has not provided satisfactory evidence of a likely disposition date. In addition, he has not provided evidence of what the disposition costs would be if he sells the licence.

49In all of the circumstances, it is fair to assign the mid-point range value as set out by Mr. McCabe in his report. I find that, for purposes of equalization, the taxi licence should be valued at $171,119 as at the date of separation.

E. Equalization of Net Family Property

50For the reasons set out below, I accept the wife’s net family property calculations in their entirety, save and except for one minor adjustment. I make the following findings regarding the net family property calculation:

a) Value of the Matrimonial Home

51As I have previously stated, it is not necessary for the court to determine values of the jointly held assets. I note, however, that the only available evidence regarding the value of the matrimonial home on the date of separation is the valuation provided by Shirley Lohmer, who is a certified real estate appraiser.

52I accept Ms. Lohmer’s opinion that the matrimonial home had a market value of $325,000 on the date of separation. For purposes of the net family property calculation, I assign $162,500 to each party for the value of the matrimonial home.

b) Household Contents

53The parties disagree about the value of the household contents. Neither has obtained a valuation of the contents. They both concede that the value of the contents is not significant enough to justify the cost of a trial solely on this issue.

54The court is not obliged to make findings of fact with respect to each item of ordinary household contents. The parties should not spend hours of court time arguing over minor differences in value for items of minor worth: see Kimpton v. Kimpton, [2003] O.J. No. 2626 (S.C.J.).

55In this case, I find that it is appropriate to dispose of the household contents by auction. The parties shall share equally in the proceeds of the sale and the value of the household contents shall not be included in the equalization calculation.

c) Value of Vehicles

56The parties disagree about the value of the wife’s 2005 Toyota Camry. I accept the VMR Canada statement provided by the wife, which shows that the retail value of the vehicle is $3,575.

57The vehicle owned by the husband and used as a taxi was not included in the valuation of the taxi licence. The value of this vehicle is not in dispute.

d) Notional Disposition Costs

58For the most part, the values of bank accounts and investments are not disputed. However, the parties disagree about whether notional disposition costs should be applied to the investments. In this case, no evidence was provided regarding contingent tax rates.

59The court has the discretion to accept one party’s estimates or to set its own contingent tax rate based on what the court deems to be appropriate: see Truong v. Truong, 2012 ONSC 3455. It is appropriate to apply disposition costs to registered retirement investments, since tax will be deducted when money is withdrawn. Having considered the evidence of income, I assign the following disposition costs to each party: 10% contingent tax liability for the husband and 15% contingent tax liability for the wife.

60I accept and adopt the entirety of the wife’s net family property statement, except for one minor adjustment: there should be no disposition cost on a tax-free savings account. Therefore, the value of the husband’s TFSA should be increased to $1,671.97.

e) Taxi Licence

61For the reasons set out above, the taxi licence shall be assigned a value of $171,119 on the net family property statement.

f) Debts and Other Liabilities

62For the reasons set out above, I do not assign any value to the matrimonial home loan as a debt. If the matrimonial home debt is found by another court to be enforceable, the debt is shared equally between the parties.

63I assign zero dollars to the value of the taxi loan. All other debts have been agreed to by the parties.

g) Conclusion Regarding Equalization Calculation

64Exhibit 2 is the wife’s Net Family Property Brief. I find that the wife’s Net Family Property Statement, contained in Exhibit 2, accurately reflects my findings in this case. The only adjustment to the list of assets and debts is that the value of the husband’s TFSA is increased to $1,671.97 (an increase of $167.19).

65For all of these reasons, I find the wife’s net family property to be $291,559.76 and the husband’s net family property to be $299,604.85. My findings regarding the value of the husband’s TFSA results in an increase to the husband’s total property (from the figures in Exhibit 2) of $167.19. Therefore, the husband owes the wife an equalization payment of $4,022.55.

IV. Costs

66At the conclusion of the proceedings before me, I invited the parties to deliver bills of costs and any offers to settle in sealed envelopes to my chambers. After making the substantive determinations on the motions, I turned to the issue of costs. I then opened the sealed envelopes and reviewed the materials provided by the parties.

67The wife seeks substantial indemnity costs of the action in the amount of $47,296.26. The husband has prepared separate costs outlines for each motion. The total bill of costs of the two motions is $30,523.61 on a partial indemnity basis or $40,826.13 on a substantial indemnity basis.

68The following offers to settle were exchanged:

a) The wife’s first offer was sent in September 2016, before proceedings were commenced. The wife sent an informal offer to settle, proposing that she be released from any loans owed to the husband’s parents and that her interest in the matrimonial home be placed in her daughter’s name. b) The husband’s first offer was sent in January 2017. He sent a formal offer to settle, proposing that the wife transfer her interest in the home to the husband without receiving any payment. She would be released from the loans. They would each retain ownership their own investments, etc. c) The wife’s second offer was sent in September 2017. The wife sent a formal offer to settle with two options: i. The husband purchase the wife’s interest in the matrimonial home for $103,700 and there would be no additional equalization payment or debt collected. ii. In the alternative, the matrimonial home be sold, the husband receive the first $58,700 and the remaining proceeds be distributed evenly. There would be no further equalization payment and all other claims would be dismissed.

69The wife’s first offer was informal but entirely reasonable. It would have greatly simplified the issues and avoided the need for the court action.

70Although the wife’s second offer was worded slightly differently than the court’s judgment, it would have led to a more favourable outcome for the husband than the ultimate decision that I have reached in this case.

71In determining quantum of costs, the court is to consider the factors set out in Rule 24 of the Family Law Rules, as well as s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. I have considered these factors.

72I have also considered the principles in Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.). The fixing of costs should reflect what the court views as a fair and reasonable amount to be paid, rather than any exact measure of the actual costs to the successful litigant.

73On the motions, the parties filed affidavits (with supporting documents), factums, and books of authorities. Questioning was conducted and transcripts were filed. The factual and legal issues were of moderate complexity. The issues were of high importance to the parties. The two most important factors are the principle of indemnity, and the amount of costs that the unsuccessful party could reasonably have expected to pay in the event he was unsuccessful.

74At the time the motion was argued, the husband asked the court to strike all of the wife’s affidavits. For reasons given orally, this request was denied and the motion proceeded on all of the evidence.

75The wife was successful on the motions, including her motion for summary judgment that disposed of this court proceeding. Therefore, she is entitled to costs of the entire application.

76I have reviewed the detailed Bill of Costs of the parties. I find that a fair and reasonable award of costs for this action, payable by the husband to the wife, is $30,000, inclusive of HST and disbursements.

V. Final Orders

77The court makes the following final orders:

Order On Consent

1. The matrimonial home, municipally known as 49 Dawn Ridge Drive, Kitchener, Ontario, N2N 3J7, shall be listed for sale immediately, at a listing price to be determined by the parties’ joint realtor, Jack Fitzgerald of Re/Max Twin City Realty Inc. The parties shall execute and deliver all documents necessary to complete the sale of the matrimonial home.

Orders Not On Consent

2. The Respondent Husband’s Notice of Motion dated October 3, 2017 is dismissed.

3. For the purposes of property division and the determination of Net Family Property, this court orders that: a. the taxi license owned by the Respondent Husband, namely the Region of Waterloo Taxi Cab License Number 4050, shall be deemed to have a value of $171,119 as of the valuation date on the Respondent Husband’s Net Family Property; and b. the promissory note of $66,000 signed by the Respondent in favour of his parents, Trajan Joca and Julijana Joca, on July 28, 1994, and which is secured by a general security agreement registered under the Personal Property Security Act under reference file no. 731153025 with a claimed outstanding balance of $512,979.66 as at January 1, 2017, shall be discounted to zero value on the Respondent Husband’s Net Family Property.

4. The household contents shall be immediately auctioned with Ferguson Auctioneering and Appraisal, and the proceeds shall be divided evenly between the parties.

5. Upon the sale of the matrimonial home, the net sale proceeds shall be disbursed in the following order: a. commission of 5% plus HST. b. real estate legal fees and disbursements. c. $120,000 shall be paid into court pursuant to s.12 of the Mortgages Act. Once that money is paid into court, the mortgage registered against the matrimonial home shall be discharged. This mortgage is registered in the Land Registry Office # 58 as instrument number 1258291. The parties shall commence legal proceedings under s.12 of the Mortgages Act to determine the enforceability of this mortgage. In the alternative to payment into court and litigating the issue, the parties may agree that $120,000 shall be paid to Julijana Joca in exchange for a discharge of the mortgage. d. The remaining sale proceeds shall be divided into equal shares between the Applicant Wife and the Respondent Husband. The Applicant Wife shall receive her share in full. e. Prior to receiving his share of the proceeds from the sale of the matrimonial home, the following payments shall be made to the Applicant Wife out of the Respondent Husband’s share: i. The Respondent Husband shall pay to the Applicant Wife the sum of $4,022.55, as full and final settlement of equalization of the parties’ Net Family Properties. ii. The Respondent Husband shall pay costs to the Applicant Wife in the amount of $30,000, inclusive of taxes and disbursements. If there is a balance owing for payment of these costs after the proceeds of sale have been exhausted, the Respondent Husband must pay the remaining costs to the Applicant Wife forthwith. f. After all of these payments have been made from the proceeds of the sale of the matrimonial home, the remainder of the proceeds (if any) shall be paid to the Respondent.

6. The parties shall retain, free from any claim by the other, any motor vehicles, RRSPs, pensions, bank accounts, investments or other property registered in their own names or in their possession.

7. All other claims are dismissed.

Braid, J.