COURT FILE NO.: 219/16 DATE: 2018/10/04 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Lisa Ann Jeffrey Applicant – and – Casey Adam McNab Respondent

Counsel: J. Singer, for the Applicant D. Wowk, for the Respondent

Heard: September 24, 2018

THE HONOURABLE JUSTICE J.R. HENDERSON

DECISION ON MOTION

INTRODUCTION

[1] This decision deals with motions brought by both the applicant (“Jeffrey”) and the respondent (“McNab”) for interlocutory relief. Although some of the relief requested today is characterized by counsel as “clarification” of my order on the previous interlocutory motions dated April 26, 2018 (“the April order”), in fact, these motions today primarily relate to issues that have arisen since my earlier decision. Today’s decision, accordingly, should be read in conjunction with my written reasons for the April order.

[2] At the return of the present motions the parties consented to orders that related to the listing of the NOTL property for sale, the costs of repairing and staging the NOTL property, the manner of presenting the property for sale, the location of Jeffrey’s Savannah cats during showings of the property, and the extent to which McNab could obtain relief from the current non-dissipation order. Also, I made unopposed orders regarding the questioning of two non-parties.

[3] The remaining issues, argued today, are as follows:

1. Should the April order be changed to provide that McNab pay temporary spousal support in the amount of $4,500 per month, given the fact that the mortgage will be renegotiated and the NOTL property will be listed for sale?
2. Should Jeffrey be ordered to sign all documentation regarding the re-mortgaging of the NOTL property?
3. Should McNab be ordered to pay interim disbursements to Jeffrey in the amount of approximately $56,500 so that she can continue to engage Kalex Valuations Inc. (“Kalex”) to conduct a valuation of McNab’s businesses?
4. Should McNab be required to reinstate Jeffrey on his health benefit plan, and pay $448.74 to Jeffrey for health care expenses that she has incurred since McNab terminated the coverage?
5. Should McNab be permitted to attend the NOTL property and on what terms?
6. May McNab dispose of assets outside of the usual and ordinary course of his business for the purpose of paying his reasonable living expenses?

SPOUSAL SUPPORT

[4] Jeffrey requests “clarification” of the April order regarding temporary spousal support. That order reads as follows:

Commencing on April 15, 2018 and on the 15th day of each month thereafter the respondent shall pay to the applicant temporary without prejudice spousal support of $2,000 per month, plus the respondent shall pay the household expenses of the NOTL property consisting of the mortgage, property taxes, property insurance, water bill, heat/gas bill, electric bill, cable satellite bill, and Internet satellite bill.

[5] Jeffrey submits that clarification of my earlier order is permitted pursuant to Rule 25(19)(c) that reads, “The court may, on motion, change an order that needs to be changed to deal with a matter that was before the court but that it did not decide”.

[6] It is Jeffrey’s position that it was my intention to make a temporary spousal support order in the April order that would result in Jeffrey receiving the benefit of approximately $4,500 per month. Jeffrey would receive this benefit by way of a monthly payment of $2,000 per month plus payment by McNab of the household expenses including the mortgage.

[7] The evidence today suggests that the mortgage is about to be renegotiated so that the monthly payments will drop from approximately $2,992 to approximately $866 per month. This will mean that, if the existing order remains as is, McNab’s financial monthly obligation pursuant to the April order will be reduced. Counsel for Jeffrey submits that this must not have been my intention.

[8] In my written reasons in April 2018, I found that McNab had income of $250,000 per year and Jeffrey had income of $20,000 per year, and I further found that the SSAG guidelines suggest that spousal support based on these income figures should be in the range of $4,500 per month. Counsel submits that because I made reference to the SSAG guidelines, I must have intended for spousal support to be in the range of $4,500 per month.

[9] Counsel for Jeffrey requests that I clarify the April order by changing the existing order to provide that McNab pay spousal support of $4,500 per month and that Jeffrey pay all household expenses.

[10] In my view, the April order is very clear. Moreover, at the return of the motion in April 2018 Jeffrey’s counsel took the position that a fixed monthly amount of spousal support was not appropriate, and that there should be an order of $2,000 per month plus payment of the household expenses by McNab. In the April order Jeffrey received exactly what she requested.

[11] Jeffrey took the position in April 2018 that there was a binding agreement between the parties that McNab was to pay temporary spousal support of $2,000 per month plus McNab was to pay all of the household expenses as defined above. In the alternative, counsel for Jeffrey argued that support should be payable pursuant to the SSAG guidelines.

[12] I accepted Jeffrey’s primary argument. I found that there was a binding agreement between the parties for spousal support to be payable as discussed above. Thus, the order was made on the primary argument, not the alternative argument, raised by Jeffrey. I calculated that the temporary support order that was made resulted in a benefit to Jeffrey of approximately $4,692 per month. In the course of my reasons, I used the SSAG guidelines to calculate approximate support in order to confirm that the existing binding agreement between the parties was appropriate.

[13] In summary, at the return of the motion in April 2018, Jeffrey argued that there was a binding agreement and that a court should make an order in accordance with that binding agreement. I accepted that submission and made the order on the exact terms as requested by Jeffrey. No clarification is necessary.

[14] As an alternative, in the present motion, counsel for Jeffrey submitted that the renegotiation of the mortgage would reduce the amount of spousal support payable by McNab, and that this fact provided a foundation for a change to the existing order.

[15] This argument fails for two reasons. First, this submission presumes that there is a motion to change the existing order before the court, but Jeffrey has not delivered a motion to change. The motion before me was in the nature of a clarification, not a motion to change. It would be unfair to McNab if Jeffrey was permitted to bring a motion for clarification and then argue a motion to change.

[16] Second, I am not convinced that there is a material change in circumstance because of a change in the terms of the mortgage. At the present time, under the existing order, Jeffrey receives $2,000 per month in spousal support, plus all of her household expenses are paid. If the mortgage is renegotiated and reduced, Jeffrey will still receive $2,000 per month in spousal support, plus all of her household expenses will be paid. It is difficult to accept that there is a material change in these circumstances.

[17] I will add that, as I discussed in my earlier decision, temporary spousal support orders are orders in which the court seeks to achieve some form of rough justice for the parties until the matters have been resolved on a permanent basis. In my view, the adjustments to the mortgage as discussed above do not change that approach. Rough justice is still achieved if the existing order remains as it is.

[18] I specifically decline to make any comment about whether the temporary spousal support order should be changed if and when the NOTL property is sold.

[19] For these reasons, Jeffrey’s request to clarify the April order regarding temporary spousal support is dismissed.

RE-MORTGAGING THE PROPERTY

[20] In my earlier decision, I ordered that Jeffrey co-operate with McNab to facilitate the immediate renegotiation of the terms the mortgage on the NOTL property so as to increase the amortization period and minimize the monthly payments.

[21] McNab has now made arrangements to renegotiate the mortgage. The net result will be that the mortgage payment will be reduced from approximately $2,992 per month to $866 per month. Jeffrey has declined to execute the documentation in support of the renegotiation of the mortgage, in part, because of the position she has taken with respect to the effect of the renegotiation on her entitlement to temporary spousal support.

[22] Now that the spousal support issue has been resolved, above, the parties should proceed with the renegotiation of the mortgage. Accordingly, it is ordered that Jeffrey shall sign all documents provided to her by McNab within 72 hours of receipt in relation to the renegotiation of the mortgage on the NOTL property.

[23] I decline to make any order with respect to responsibility for any penalties incurred in relation to early termination of the mortgage.

INTERIM DISBURSEMENTS

[24] Jeffrey requests an order that McNab pay to Jeffrey interim disbursements of approximately $56,500 pursuant to Rule 24(18), formerly Rule 24(12), so that Jeffrey can continue to engage Kalex to conduct a valuation of McNab’s businesses.

[25] I find that the primary purpose of an interim disbursements order is to “level the playing field.” The court must guard against one party being disadvantaged by being unable to test the evidence of the other party. See Stuart v. Stuart, [2001] O.J. No. 5172 at paras. 5-8, and Green v. Whyte, 2017 ONSC 4760 at para. 18.

[26] In the Stuart case at para. 8, subparagraphs 11-13, Rogers J. set out some factors for consideration when one party requests interim disbursements from the other. In summary, the requesting party must show that the proposed disbursements are reasonable and necessary, that the requesting party is incapable of funding the disbursements, and that the requesting party’s claim is meritorious as far as can be determined on a balance of probabilities.

[27] In the present case, I have already found that there is merit to Jeffrey’s claim. Also, I find that Jeffrey is incapable of funding the disbursements for a business valuation report from Kalex. Jeffrey has only been able to finance this litigation and to pay for her disbursements to date by borrowing money from her current boyfriend. Clearly, Jeffrey’s boyfriend has no ongoing obligation to continue to fund this lawsuit.

[28] Therefore, the only real issue is whether the proposed disbursements are reasonable and necessary.

[29] In my earlier decision, I found that McNab, through his corporations, sold the assets in Niagara Patient Transfer for approximately $5,600,000. He then directed the net proceeds of that sale into other corporations, including the corporation known as 193. It appears as if 193 owned assets valued at approximately $4,600,000 as of 2016, including real estate of $1,200,000.

[30] Given that background, I wrote at para. 74 of my reasons for the April order that, “McNab and Jeffrey operated several businesses through a web of interconnected corporations. The opinion of an expert will be essential to the prosecution of the claim. Nothing short of full and complete disclosure is warranted.”

[31] Further, I find that there have been difficulties obtaining complete disclosure from McNab with respect to all of his corporations. Those difficulties gave rise to the term in the April order that required McNab to answer the request for disclosure from Kalex as set out in Kalex’s letter of April 8, 2018, which was attached as Schedule A to my decision.

[32] Still further, McNab has not yet retained his own business valuator. The parties separated in June 2015, more than three years ago. McNab has made a suggestion that he intends to retain a valuator; however, to date McNab still has not done so. Thus, I accept that the responsibility fell to Jeffrey to obtain disclosure from McNab, and then to retain an expert business valuator to provide an opinion.

[33] Given these factors, I find that it is reasonable and necessary for Jeffrey to continue to engage Kalex to conduct a valuation of McNab’s businesses.

[34] Jeffrey has already paid fees of approximately $28,000 to Kalex in her attempt to value McNab’s businesses. Most of those fees have been directed toward obtaining disclosure from McNab. Kalex has provided a letter that sets out in detail the particulars of the work that Kalex has yet to do and the costs. Kalex, in its letter, states that the costs will be a further $50,000 to $60,000 plus HST in order to complete the valuation.

[35] Accordingly, it is ordered that McNab pay interim disbursements to Jeffrey in the sum of $56,500 ($50,000 plus HST) so that she can continue to engage Kalex Valuations Inc.

THE HEALTH BENEFIT PLAN

[36] McNab, through his corporations, had a health benefit plan that provided coverage for Jeffrey. As a term of an earlier adjournment, on December 15, 2016, McNab agreed that he would not remove Jeffrey from the health benefit plan without agreement between the parties or court order.

[37] McNab removed Jeffrey from his health benefit plan in May 2018. Jeffrey asks that her coverage be reinstated and that McNab reimburse her in the amount of $448.74, for health care expenses that she has personally incurred since the plan was terminated.

[38] McNab submits that the term of the earlier adjournment is no longer binding and that it was not incorporated into a court order. He has deposed that the health benefit plan was a costly expense and that he chose to terminate the entire plan. He states that there is no health benefit plan at present for McNab, Jeffrey, or any employee.

[39] I will not decide whether the terms of the adjournment from December 15, 2016 continue to be binding. However, in my view, if one party is covered by a health benefit plan that is controlled by the other party after separation, the status quo with respect to that health benefit plan should remain in place on a temporary basis until the proceeding has been resolved. Accordingly, regardless of whether or not the terms of the adjournment continue to be binding, I find that McNab should have maintained health benefit coverage for Jeffrey until the completion of this proceeding.

[40] Therefore, it is ordered that McNab forthwith reimburse Jeffrey in the amount of $448.74. It is also ordered that McNab reinstate coverage for Jeffrey under a health benefit plan that is the same plan or a similar plan to the one that existed on December 15, 2016.

MCNAB ATTENDING THE PROPERTY

[41] McNab and Jeffrey are joint owners of the NOTL property, and accordingly McNab has a prima facie right to attend the property. Further, there will be some necessary repairs and staging to the NOTL property before it can be listed for sale. I accept that McNab will need to attend the NOTL property at least occasionally to assess the state of the property and consider the appropriate manner in which to show the property.

[42] Jeffrey submits that she fears for her safety in the presence of McNab, and she requests an order that McNab only be permitted to attend the property in the presence of an on-duty police officer.

[43] I find that there is very little evidence to suggest that Jeffrey has reason to fear for her safety in the presence of McNab. There is no history of domestic violence between these parties. There was one incident that occurred in June 2018 when there was a verbal altercation between the parties when they both unfortunately attended the same bar. There was no physical altercation.

[44] In my view, if the parties were together on the property in the presence of another reputable person, there is very little likelihood that there would be any difficulty between them.

[45] McNab has suggested that I permit him to attend the NOTL property on notice to Jeffrey and in the presence of either a police officer, on-duty or off-duty, or another person to be agreed upon by the parties. I find that this is sufficient.

[46] Accordingly, it is ordered that McNab will be entitled to attend the NOTL property on 48 hours’ notice to Jeffrey, and when McNab does attend the property, he will be accompanied by an off-duty or on-duty police officer, or such other person as agreed upon by the parties.

MCNAB’S DISPOSITION OF ASSETS

[47] In my earlier decision I ordered that McNab and his corporations were restrained from disposing of any assets outside of the usual and ordinary course of business. By way of the consent orders of today’s date, the parties agreed to relax this non-dissipation order by permitting McNab to make transactions in order to facilitate compliance with court orders in this proceeding and to pay his professional and legal fees.

[48] McNab now asks for a further exception to the non-dissipation order to permit him to pay his reasonable living expenses. In my view, such an exception to the existing non-dissipation order is not necessary.

[49] The evidence before me suggests that McNab is having difficulty paying his living expenses in part because he is not drawing a salary from any of his corporations. I confirm that in my earlier decision I found that two of McNab’s corporations, CTG and 193, are financially healthy. I understand that McNab is not drawing a salary from these corporations because he is trying to leave money in the corporations in order to build them up. However, McNab is not precluded by my order from paying himself a salary. I find that a salary to the person who controls a business is an expense that is in the usual and ordinary course of business.

[50] Accordingly, if McNab is having difficulty paying his living expenses, he has an immediate remedy open to him. Specifically, he can pay a reasonable salary to himself through his corporations. Therefore, McNab’s request for a further exception to the existing non-dissipation order is dismissed.

CONCLUSION

[51] For these reasons, orders will issue in accordance with paragraphs 19, 22, 35, 40, 46, and 50 of this decision.

[52] If the parties cannot resolve the issue of costs, I direct that the party seeking relief shall deliver written submissions to the trial co-ordinator at St. Catharines within 20 days of the release of this decision, with responding submissions to be delivered within 10 days thereafter. If no submissions are received within this timeframe, the parties will be deemed to have settled the costs issue as between themselves.

J.R. Henderson J. Released: October 4, 2018