Court File and Parties

COURT FILE NO.: FS-13-1934-00 DATE: 2018 09 19 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Manjit Kaur Kang, Applicant AND: Gurnek Singh Kang, Respondent

BEFORE: Justice G.D. Lemon

COUNSEL: J. Rosenberg, Counsel for the Applicant K. Dosanjh, Counsel for the Respondent

HEARD: August 30, 2018

Endorsement

The Issue

[1] Ms. Kang seeks an order enforcing various terms of the parties’ consent order dated June 15, 2018. In December 2017, the parties were able to agree upon a number of issues that were confirmed in that consent order. However, they disagree as to what they have agreed upon.

[2] The matrimonial home has been sold and the proceeds are being held in trust. Until the parties agree on what is to be paid out of those funds, no one is benefiting.

[3] From the materials, it does not appear that the law firm holding the funds objects to paying. That firm merely seeks a joint direction or an order of this court on the matter.

[4] No one raised any issue or dispute with respect to my jurisdiction.

[5] In particular, Ms. Kang seeks:

1. An order directing the British Columbia law firm known as Kahn, Zack, Ehrlich, Lithwick LLP to forthwith release the following funds to her in satisfaction of the terms of the order.
2. An order directing the law firm to release her one-half share in the sale of the home in the amount of $403,617.01, in accordance with subparagraph 1(i) of the order, plus accrued interest.
3. An order that the equalization payment owing to her by Mr. Kang, in accordance with paragraph 1 of the order shall be calculated as follows: $194,500.00, plus prejudgment interest in the amount of $11,539.66, less post separation advances in the amount of $80,000.00, for a total equalization payment owing by Mr. Kang to Ms. Kang in the amount of $126,039.66, plus interest as accrued on this sum payable forthwith.
4. An order directing the law firm to release funds to her, from Mr. Kang’s one-half share of the funds in the amount of $27,514.00, in accordance with subparagraph 2(d) of the order, plus interest as accrued.
5. An order directing the law firm to release funds to her from Mr. Kang’s one-half share of the funds in the amount of $9,312.00, in accordance with paragraph 6 of the order regarding arrears in child support from January 1, 2018, to August 1, 2018, at the rate of $1,164.00 per month.
6. An order directing the law firm to release funds to her from Mr. Kang’s one-half share of the funds in the amount of $3,752.00, in accordance with paragraph 8 of the order regarding arrears in spousal support from January 1, 2018, to August 1, 2018, at the rate of $469.00 per month.
7. A finding that Mr. Kang is in breach of the order in failing to obey paragraphs 2, 3, 5, 6, 7, 8 and/or 9 of the order.
8. An order, pursuant to Rule 1(8) of the Family Law Rules, precluding Mr. Kang from opposing the Motion and precluding him from requesting any relief of the Court, unless and until he cures all of those breaches.

[6] While the Notice of Motion does not specifically refer to amounts owing with respect to section 7 expenses, they are set out in paragraph 3 of the order which is alleged to be breached. This issue was argued before me and I shall therefore deal with it.

[7] Mr. Kang requested a number of orders in his affidavit, but no Notice of Motion was filed. Without that Notice of Motion, I am unable to make any of those orders.

Background

[8] The terms of the consent order that are relevant are as follows (I have underlined the terms of particular dispute):

Equalization of Net Family Property (including issues of post separation accounting)

1. To satisfy the equalization of the net family properties, the Respondent, Gurnek Singh Kang (“Mr. Kang”), shall pay to the Applicant, Manjit Kaur Kang (“Ms. Kang”), the sum of $194,500.00 plus prejudgment interest in accordance with the Courts of Justice Act rate from the date of the issuance of this Application to the date of payment, less any post separation advances on this above noted equalization payment as received by Ms. Kang from Mr. Kang’s share of the parties’ former joint bank account (TD Canada Trust Account #1179-6087604). The equalization of the net family properties, along with the equal sharing of the equities, as may be necessary, shall be satisfied in the following sequence. (i) The parties shall cooperate to ensure the immediate listing and sale of their jointly owned property municipally known as 13449 66A Avenue, Surrey, British Columbia, (“B.C. Property”), such that this sale shall occur on the open market to an arm’s length third party, or on terms as directed by the Court under the supervision of the Court, with the net proceeds of the sale to be divided unequally in Ms. Kang’s favour to ensure that she receives, in addition to one half of these net sale proceeds, the equalization payment owing by Mr. Kang to Ms. Kang in the sum of $194,500.00 plus prejudgment interest, as set out above, and less any post separation advances on this above noted equalization payment as received by Ms. Kang from Mr. Kang’s share of the parties’ former joint bank account (TD Canada Trust Account #1179-6087604). (ii) To the extent that there is any surplus remaining with respect to the net sale proceeds of the B.C. Property after the above described distributions to Ms. Kang, this surplus shall be held in trust by counsel for Ms. Kang and subject to a first charge in favour of Ms. Kang pending the satisfaction of the child support arrears owing by Mr. Kang to Ms. Kang and/or the spousal support arrears owing by Mr. Kang to Ms. Kang and/or the prospective support obligations owing by Mr. Kang to Ms. Kang and/or Ms. Kang’s costs of this Application as set out within this Order.

Retroactive Table Amount Child Support (Note: calculated as though Mr. Kang was resident of Ontario)

2. Mr. Kang’s income for support purposes shall be deemed to be, or shall be imputed to be, in the amount of $50,000.00 per annum regarding the issue of retroactive child support for years 2012 and 2013. Mr. Kang’s income for support purposes shall be deemed to be, or shall be imputed to be, in the amount of $55,000.00 per annum regarding the issue of retroactive child support for years 2014 and 2015. Mr. Kang’s income for support purposes shall be deemed to be, or imputed to be, in the amount of $75,000.00 per annum regarding the issue of retroactive child support for years 2016 and 2017. a. Pursuant to the Child Support Guidelines, Mr. Kang shall pay to Ms. Kang the Table Amount of child support in the sum of $743.00 per month for two children, namely Navpreet Kang, born November 1, 1996 and Lovdeep Kang, born October 19, 1997 (the “children”), based on his imputed income in the sum of $50,000.00 per annum, from the date of the separation, being November 5, 2012, to December 31, 2013, with credit for the amounts paid and received. b. Pursuant to the Child Support Guidelines, Mr. Kang shall pay to Ms. Kang the Table Amount of child support in the sum of $817.00 per month for two children, based on his imputed income in the sum of $55,000.00 per annum from January 1, 2014 to December 31, 2015, with credit for the amounts paid and received. c. Pursuant to the Child Support Guidelines, Mr. Kang shall pay to Ms. Kang the Table Amount of child support in the sum of $1,105.00 per month for two children, based on his imputed income in the sum of $75,000.00 per annum, from January 1, 2016 to December 31, 2017, with credit for the amounts paid and received. d. Further to the foregoing, and within 45 days from December 19, 2017, Mr. Kang shall pay to Ms. Kang aggregate arrears of Table Amount child support in the net amount of $27,514.00 from the date of separation, being November 5, 2012, to December 31, 2017, calculated as follows: [(i) below + (ii) below + (iii) below]:

   2012 and 2013 (i) $743.00 per month (Table Amount) x 14 months (November, 2012 to December, 2013) = $10,402.00 Note: Less credit to be applied on account of the interim and without prejudice Table Amount of support in the amount of $468.00 per month as paid by Mr. Kang to Ms. Kang from the date of separation, to date, in accordance with the Endorsement dated September 11, 2013, of Justice Price. Accordingly, $468.00 x 14 months = $6,552.00 that is to be credited against the above noted amount of $10,402.00 leaving a shortfall owing by Mr. Kang to Ms. Kang in the net amount $3,850.00 [$10,402.00 - $6,552.00] for years 2012 and 2013.

   2014 and 2015 (ii) $817.00 per month (Table Amount) x 24 months (January, 2014, to December, 2015) = $19,608.00 Note: Less credit to be applied on account of the interim and without prejudice Table Amount of support in the amount of $468.00 per month as paid by Mr. Kang to Ms. Kang from the date of separation, to date, in accordance with the Endorsement dated September 11, 2013, of Justice Price. Accordingly, $468.00 x 24 months = $11,232.00 that is to be credited against the above noted amount of $19,608.00 leaving a shortfall owing by Mr. Kang to Ms. Kang in the net amount of $8,376.00 [$19,608.00 - $11,232.00] for years 2014 and 2015.

   2016 and 2017 (iii) $1,105.00 per month (Table Amount) x 24 months (January 2016, to December, 2017) = $26,520.00 Note: Less credit to be applied on account of the interim and without prejudice Table Amount of support in the amount of $468.00 per month as paid by Mr. Kang to Ms. Kang from the date of separation, to date, in accordance with the Endorsement dated September 11, 2013, of Justice Price. Accordingly, $468.00 x 24 months = $11,232.00 that is to be credited against the above noted amount of $26,520.00 leaving a shortfall owing by Mr. Kang to Ms. Kang in the net amount of $15,288.00 [$26,520.00 - $11,232.00] for years 2016 and 2017.

Retroactive Section 7 Expenses

3. The parties shall split, on an equal (50/50) basis, the children’s section 7 expenses, from the date of separation, to December 31, 2017, such that Mr. Kang shall reimburse Ms. Kang for the cost of 50% of the children’s section 7 expenses during this defined retrospective period. This reimbursement payment shall be made by Mr. Kang to Ms. Kang within 45 days from December 19, 2017. This reimbursement is in the aggregate amount of $24,347.00.

Retroactive Spousal Support

4. Mr. Kang’s income for support purposes shall be deemed to be, or shall be imputed to be, in the amount of $50,000.00 per annum regarding the issue of retroactive spousal support for years 2012 and 2013. Mr. Kang’s income for support purposes shall be deemed to be, or shall be imputed to be, in the amount of $55,000.00 per annum regarding the issue of retroactive spousal support for years 2014 and 2015. Mr. Kang’s income for support purposes shall be deemed to be, or shall be imputed to be, in the amount of $75,000.00 per annum regarding the issue of retroactive spousal support for years 2016 and 2017.

5. Mr. Kang shall pay to Ms. Kang a lump sum of arrears in spousal support, on a net of tax basis, from the date of the separation through to December 31, 2017, within 45 days from December 19, 2017, calculated, as follows: 2012: Nil 2013: Nil 2014: Nil 2015: $6,204.00 [gross arrears calculated at $502.00/month x 12 per the mid-range of the Spousal Support Advisory Guidelines and subject to being netted for tax based on the income tax rates of the parties, i.e., at the rate of 15% on account of Ms. Kang’s income and at the rate of 20.5% on account of Mr. Kang’s income] 2016: $5,628.00 [gross arrears calculated at $469.00/month x 12 per the mid-range of the Spousal Support Advisory Guidelines and subject to being netted for tax based on the income tax rates of the parties, i.e. at the rate of 15% on account of Ms. Kang’s income and at the rate of 20.5% on account of Mr. Kang’s income] 2017: $5,628.00 [gross arrears calculated at $469.00/month x 12 per the mid-range of the Spousal Support Advisory Guidelines and subject to being netted for tax based on the income tax rates of the parties, i.e. at the rate of 15% on account of Ms. Kang’s income and at the rate of 20.5% on account of Mr. Kang’s income] and based on Ms. Kang’s 2016 income information. Note: this amount of arrears shall be subject to a potential adjustment (up or down) pending the receipt of Ms. Kang’s 2017 income information as to be determined based on her pending 2017 Income Tax Return and her 2017 Notice of Assessment and/or Reassessment.

Prospective Child Support including Section 7 Expenses

6. Pursuant to the Child Support Guidelines, and based on an annual income imputed to Mr. Kang in the amount of $75,000.00, Mr. Kang shall pay to Ms. Kang the Table Amount of child support in the sum of $1,164.00 per month, prospectively, starting from January 1, 2018, and on the first day of each consecutive month thereafter. Mr. Kang’s child support obligation shall continue until each of the children are no longer a child of the marriage as defined under section 2 of the Divorce Act.

7. The children’s prospective section 7 expenses, starting from January 1, 2018, shall include, but shall not be limited to, their post-secondary educational expenses, and their medical, dental and health related expenses, which Mr. Kang shall be responsible to contribute 60% towards the cost of such section 7 expenses and which Ms. Kang shall be responsible to contribute 40% of towards the cost of such section 7 expenses, on an after tax basis and after taking into account any direct contributions towards these section 7 expenses that either or both of the children may make.

Prospective Spousal Support

8. Commencing January 1, 2018, and on the first day of each consecutive month thereafter, Mr. Kang shall pay spousal support to Ms. Kang in the amount of $469.00 per month based on an income imputed to him in the amount of $75,000.00 per annum and based on Ms. Kang’s 2016 income. Note: this amount of spousal support shall be subject to a potential adjustment (up or down) pending the receipt of Ms. Kang’s 2017 income information as to be determined based on her pending 2017 Income Tax Return and her 2017 Notice of Assessment and/or Reassessment. This spousal support obligation is calculated in accordance with the mid-range of the Spousal Support Advisory Guideline. This spousal support shall be tax deductible to Mr. Kang and it shall be taxable as income to Ms. Kang.

9. Further to paragraph 8 above, Mr. Kang shall continue to pay prospective spousal support to Ms. Kang, on the first day of each consecutive month, until December 31, 2022, and consistent with the amount to be arrived at in accordance with the formula set out in paragraph 8 above as based on an income imputed to him in the amount of $75,000.00 per annum and based on Ms. Kang’s annual income to be determined in accordance with her annual Income Tax Return and Notice of Assessment and/or Reassessment, but subject to an annual adjustment in accordance with the Consumer Price Index Canada for prices of All-Items (as published by Statistics Canada), using a base year of January 1, 2018. This spousal support obligation shall continue to be calculated in accordance with the mid-range of the Spousal Support Advisory Guideline. This spousal support shall be tax deductible to Mr. Kang and it shall be taxable as income to Ms. Kang. This prospective spousal support obligation of Mr. Kang is subject to variation in the event of a material change in circumstances and shall terminate effective January 1, 2023.

Analysis

Advances on Equalization Payment

[9] Ms. Kang submits that she has received a total of $80,000.00 from Mr. Kang’s share of the joint bank account. Mr. Kang disagrees and submits that the amount to be deducted is $272,497.77. I accept Ms. Kang’s position.

[10] This issue is resolved by looking at the wording of the order. The amounts to be credited were “any post separation advances … as received by Ms. Kang from Mr. Kang’s share of the parties’ former joint bank account.” The amounts referred to by Mr. Kang in excess of the $80,000.00 were for costs or payments paid out of Ms. Kang’s share of the account. Only the $80,000.00 was paid as specified in the order.

Prejudgment Interest on Equalization Payment and Support Payments

[11] There are two issues here.

[12] First, Ms. Kang has calculated the interest on the equalization payment but has failed to factor into those calculations that $40,000.00 was paid on each of September 11, 2013, and December 1, 2016. Her counsel agrees that the total, as claimed in the Notice of Motion, is therefore more than is actually owed. Mr. Kang made no other submissions on this point so I can presume that the interest rates used and calculations made are otherwise accepted.

[13] On my calculations, the equalization payment (less the $80,000 plus interest to January 1, 2018) is $122,031.30. That amount shall attract interest at the rate of 1.36% from January 1, 2018, to the date of payment.

[14] Second, Mr. Kang submits that he should not have to pay interest on the outstanding child and spousal support amounts in issue since he forwarded a release to Ms. Kang to have the funds released in February 2018. Since Ms. Kang refused to sign it, the funds could not be released. He submits that it is her own fault that she has not received the funds owing.

[15] However, Mr. Kang’s release added a clause that the funds to be released were in satisfaction of all child support arrears, spousal support arrears and ongoing child support to May 2018. The funds to be released were $52,509.00. Yet on the record of this motion, Mr. Kang owed more than that in support payments. In my view, the release was a not-so-veiled attempt to renegotiate the agreement. Ms. Kang was entirely correct to refuse to sign the document.

[16] Further, the record indicates that in July of 2018, Mr. Kang flatly refused to release any funds from the trust. His conduct demands that interest continue to run on the outstanding amounts.

[17] I therefore order that the funds to be released by this order for child support, section 7 expenses and spousal support are to incur interest payable from Mr. Kang’s share of the proceeds of sale at whatever interest rate the fund has accrued since February 3, 2018 (45 days from December 19, 2017, as set out in paragraphs 2(d) and 3 of the order).

Child Support

[18] Mr. Kang agrees that the amount of $27,514.00 is properly payable from the funds in trust pursuant to paragraph 2(d) of the order.

[19] Mr. Kang agrees that the amount of $10,476.00 is payable for the period between January 1, 2018, and September 1, 2018, pursuant to paragraph 6 of the order.

[20] Both amounts are to be paid from Mr. Kang’s share of the trust funds.

Section 7 Expenses

[21] The order requires Mr. Kang to pay $24,347.00 as reimbursement for section 7 expenses. His counsel submits that these funds were paid prior to the order. Be that as it may, the order is clear and is presumed in law to be correct. It is based on a settlement between the parties. Whether it was paid before or not, this amount is due and owing under the order and must be paid from his share of the funds in trust.

Spousal Support

[22] Mr. Kang agrees that the amount of $4,221.00 is payable for the period between January 1, 2018, and September 1, 2018, pursuant to paragraph 8 of the order.

[23] Mr. Kang agrees that the amount of $17,460.00 is payable for lump sum spousal support pursuant to paragraph 5 of the order.

[24] Both amounts shall be paid from his share of the funds in trust.

Ms. Kang’s One-Half Share

[25] Mr. Kang consents to the payment of Ms. Kang’s one-half share of the sale of the matrimonial home, as set out in Ms. Kang’s Notice of Motion.

Breach

[26] There is no doubt that Mr. Kang is in breach of the consent order. Given the materials from both sides already filed on the motion, there would have been no benefit in preventing his counsel from making submissions. Mr. Kang’s position was unsuccessful but not unarguable.

[27] Ms. Kang seeks no other remedy for Mr. Kang’s breach; his conduct can best be dealt with in a costs order.

Result

[28] Accordingly, Kahn, Zack, Ehrlich, Lithwick LLP is ordered to forthwith make the above payments to Ms. Kang out of Mr. Kang’s share of the funds held in trust along with Ms. Kang’s share of the funds. Any remaining balance in the trust fund shall remain in trust pending further order of the court.

[29] The payments to be paid from Mr. Kang’s share of the funds are as follows:

a) $27,514.00, pursuant to paragraph 2(d) of the order (retroactive child support payments); b) $10,476.00, pursuant to paragraph 6 of the order (retroactive child support owing from January 1, 2018, to September 1, 2018); c) $24,347.00, pursuant to paragraph 3 of the order (reimbursement for section 7 expenses); d) $4,221.00, pursuant to paragraph 8 of the order (retroactive spousal support owing from January 1, 2018, to September 1, 2018); e) $17,460.00, pursuant to paragraph 5 of the order (lump sum spousal support). f) Those payments shall accrue interest payable from Mr. Kang’s share of the proceeds of sale at whatever interest rate the fund has accrued since February 3, 2018, (45 days from December 19, 2017 as set out in paragraphs 2(d), 3, and 5 of the order). g) $122,031.30, pursuant to paragraph 1 of the order (equalization payment, less $80,000.00, plus interest up until January 1, 2018). This amount shall attract interest at the rate of 1.36% from January 1, 2018, up to the date of payment. h) Ms. Kang’s one-half share of the proceeds of sale of the matrimonial home, plus interest accruing on that amount in the trust fund.

[30] This matter has dragged on for far too long. If Kahn, Zack, Ehrlich, Lithwick LLP has any questions or a need for clarification of this order, they may write to me directly at Superior Court Office, 74 Woolwich Street, Guelph, Ontario, N1H 3T9, with copies to the parties. If so, the parties shall have 10 days in which to respond to any of those questions or clarifications.

Costs

[31] Ms. Kang shall provide costs submissions within the next 15 days. Mr. Kang shall provide responding submissions within 15 days thereafter. No reply submissions shall be served unless I request them.

[32] Each submission shall be no more than three pages, not including any Offers to Settle or Bills of Costs.

[33] Written submissions shall be forwarded to me at my office at the Superior Court Office, 74 Woolwich Street, Guelph, Ontario, N1H 3T9.

Lemon J. Date: September 19, 2018