Court File and Parties

Court File No.: FS-11-4388-00 Date: 2018 12 07

Ontario Superior Court of Justice

Between:

ANA FALACHO Alexandra Carr for the Applicant

- and -

AL FALACHO Avneet Virk for the Respondents N. Islam, for the Director of the Family Responsibility Office

Heard: November 22, 2018, in Brampton

Reasons for Decision

Emery J.

[1] The applicant wife Ana Falacho commenced an application for divorce and other relief against the respondent husband Al Falacho in 2011 after more than 30 years of marriage. In that application, Ms. Falacho asks for spousal support, equalization between net family properties and other final orders.

[2] On December 9, 2011, Justice Sproat made a temporary order that various parts of the net proceeds from the sale of the matrimonial home be paid out to Ms. Falacho and to Mr. Falacho, with the balance held in trust. The order also provided that Mr. Falacho be restrained from dissipating or depleting or otherwise withdrawing money from the RRSP’s currently held with Scotia Bank (Bank of Nova Scotia) and Manulife, and that he pay spousal support to Ms. Falacho in the amount of $3,450 per month commencing December 1, 2011. Justice Sproat made a support deduction order for the Director of the Family Responsibility Office to collect and distribute amounts owing under the support provisions of the order to Ms. Falacho.

[3] Mr. Falacho paid the spousal support he was ordered to pay until or about July 2018. He stopped paying spousal support because of health issues and because his employment had come to an end.

[4] Ms. Falacho did not know Mr. Falacho intended to stop paying spousal support until he served the motion that is before the court. In that motion, he seeks an order terminating or reducing the support payable under Justice Sproat’s order, and an order staying the enforcement of arrears of support owing to Ms. Falacho. He also asks for an order that he be entitled to withdraw funds from his RSP investment accounts that are now located at TD Canada Trust Bank for his own purposes limited to $6,285 a month, as well as to transfer $40,000 from an RSP account to his Flex-RIF account with TD Bank.

[5] Ms. Falacho answered this motion with a cross-motion seeking an order dismissing Mr. Falacho’s motion, an order for interim disbursements in the amount of $50,000 for her legal fees, and another non-dissipation order. She has asked for the non-dissipation order to prevent Mr. Falacho from depleting his RSP accounts with TD Canada Trust, among other things.

[6] Both motions were scheduled by counsel for the parties as regular motions, with the proverbial 59 minutes as the estimated time for hearing. This was a gross under estimate by each side, and an obvious attempt to circumvent the rule that requires matters of one hour or more to go over to a long motion list. Recognizing these motions will require at least three hours to hear, I required counsel to obtain a long motions date from the trial coordinators office. Accordingly, both motions are adjourned to a long motion date to be heard when called during the week of March 25, 2019 for a full day. However, at the urging of both parties, one issue from each motion was heard by me and are decided in these reasons:

1. Mr. Falacho seeks an order that stays Justice Sproat’s order for spousal support and the enforcement of arrears of spousal support payments; and
2. Ms. Falacho asks this Court to make an order preventing Mr. Falacho from dissipating or depleting or withdrawing funds from his RSP accounts with TD Canada Trust Bank, and in particular account numbers ending *6590-02, #6590-03 and *6590-04, and his RRSP account number ending *7279.

Motion to reduce or stay support

[7] Mr. Falacho seeks a reduction of the spousal support he is to pay under the temporary order made by Justice Sproat in 2011.

[8] This motion is brought within the application that Ms. Falacho commenced in 2011, and to which Mr. Falacho has filed an answer. It is not a motion to change. Even though Mr. Falacho relies upon s.17 of the Divorce Act as authority for seeking a reduction order, he has allowed the temporary order to continue. He has in fact made the payments required until March 2018 when he unilaterally decided to stop. There is currently some $34,000 in arrears owing as a result.

[9] Mr. Falacho actually seeks an order to reduce support and to stay the enforcement of arrears because of the economic reality that he cannot afford to pay the support ordered any longer. He has provided a letter from his doctor dated July 19, 2018 that he suffers from diabetes and has health issues that prevent him from full-time employment. This letter was updated and confirmed by his doctor’s note dated October 31, 2018 in the form of an exhibit to his updated affidavit.

[10] I note that Mr. Falacho obtained a refraining order from Justice Ricchetti against the director on the condition that he bring a motion to change the support order, which he has done, and that he would pay ongoing support of $3,450 per month commencing October 1, 2018. What he now seeks to do is substitute a reduced amount for the amount he was to pay pursuant to the refraining order.

[11] Ms. Falacho does not raise arguments that Mr. Falacho has failed to provide a reason to vary Justice Sproat’s order for ongoing spousal support and the suspension of arrears. She does not raise arguments about the presumption in favour of maintaining the status quo pending trial. Rather, she seeks to maximize the amount of support that Mr. Falacho can reasonably be expected to pay, preferring instead to emphasize the intent behind her cross-motion for a non-dissipation order.

[12] The situation is compounded by the fact that Justice Sproat made the order dated December 9, 2011 with the consent of the parties. It is therefore contractual in nature. As an order having a contractual basis, Mr. Falacho would have to seek a variation of the order based on contractual principles. That he has not done.

[13] To be clear, the order Mr. Falacho seeks is not a temporary order that varies support payable under a final order pending a full hearing on a motion to change. Here, there has been no final order made, and there is no motion to change. Rather, Mr. Falacho seeks a variation of a temporary order. The jurisdiction of this court to make such an order is therefore important to consider.

[14] In Damaschin-Zamfirescu v. Damaschin-Zamfirescu, 2012 ONSC 6689 (SCJ), Justice Chappel examined the jurisdiction of the court to make a variation of a spousal support order made pending trial.

[15] I read Justice Chappel’s decision to say that the court has the authority to make an interim order that varies spousal support payable under a temporary order. Despite the absence of statutory power to do so under the Divorce Act, the court has the inherent jurisdiction to amend interlocutory orders where it would be just. Her Honour reached this conclusion, however, after observing the following provisos and limitations (at para. 20):

1. Parties in family cases should be encouraged to advance their case to trial as soon as possible. Proceedings to vary interim support orders should not be encouraged: Lipson v. Lipson;
2. Variation proceedings relating to temporary orders should not become the focus of the litigation: Cutaia-Mahler v. Mahler; and
3. The onus on a party who is seeking to vary a temporary support order rather than waiting for trial is a heavy one: Coley v. Coley (1981), 20 R.F.L. (2d) 327 (Man. C.A.).

[16] The parties agree that the two part test for a motion to vary a temporary support order set out in Photopoulos v. Arrigo, 2010 ONSC 6191 applies on this motion:

1. Has the payor made out a prima facie case for a reduction of spousal support; and
2. Does the payor come to the court with clean hands?

[17] In Photopoulos, the court noted that the father’s income had declined, and considered that it “made no sense” to have arrears accumulate while the parties were working towards a new financial arrangement. The court also noted that a stay is a temporary measure to permit the parties to have a full hearing of the matters between them on the merits. The court also reduced the monthly support payments, without prejudice for the parties to restructure their financial affairs in the meantime.

[18] I find on the evidence that Mr. Falacho has demonstrated a prima facie case for obtaining an order that he pay less spousal support because of his medical condition, and by virtue of his retirement due to his inability to work. In post-retirement, Mr. Falacho will have an income of $77,696 from private and public pension sources and WCB benefits he recieves. Based on the relative incomes of the parties, this would entitle Ms. Falacho to support in the amount of $1,901, $2,218 and $2,460 per month at the mid low, and high range of the SSAG’s, respectively. As each of these alternatives is significantly less than the amount he is currently ordered to pay, I conclude that Mr. Falacho has a good prima facie case to meet the first part of the test.

[19] I also find that Mr. Falacho has made out a prima facie case to stay arrears in support at least since July 2018, when his termination from employment became effective. The observations made by the court in Photopoulos come to mind here.

[20] Those findings, however, are not the end of the matter. I am not convinced that Mr. Falacho comes to court with clean hands to satisfy the second part of the test. Mr. Falacho transferred his RSP accounts from Scotia Bank and Manulife to TD Canada Trust Bank without leave of the court. Ms. Falacho submits that at some point, Mr. Falacho withdrew $40,000 from those accounts. He explains that the majority of that money went to pre-purchase his funeral, which he submits was a legitimate expense.

[21] I disagree. Justice Sproat’s order clearly stated that Mr. Falacho was not to dissipate or deplete or otherwise withdraw money from the registered accounts held at Scotia Bank and Manulife. It is my view that transferring the funds in those accounts to another financial institution where he may have withdrawn money after it left either Scotia Bank or Manulife, or from the RSP or the RRSP account at the new financial institution violated the spirit, if not the letter of the court order dated December 9, 2011.

[22] I consider Mr. Falacho’s unilateral decision to stop paying spousal support just because he received a notice of termination letter is also a violation of the temporary order dated December 9, 2011. The arrears that have accumulated as a result of that decision are beyond the ambit of this court to dispense justice in the form of a waiver.

[23] In the result, Mr. Falacho has not satisfied the second part of the test necessary to justify a reduction of the spousal support payable under the 2011 order. Like any request for equitable relief, for someone in Mr. Falacho’s position to receive equity, he must do equity. Mr. Falacho’s conduct prevents this court from finding that he comes to the court with clean hands to justify a reduction of the spousal support he was ordered to pay, or a stay of that support above a lesser amount. It remains open for him to bring a motion for summary judgment, or to seek a trial date for the determination of what amount of spousal support, if any, he must pay as a final order.

[24] The motion for a reduction or stay of the temporary spousal support Mr. Falacho has been ordered to pay is dismissed.

[25] Mr. Falacho also asks this court for an order staying arrears that have accumulated for the support he has not paid under the refraining order and the original order made in 2011. In view of the submissions made by Ms. Carr that recognize the limits of what he can afford, Mr. Falacho is ordered to pay $17,000 for those arrears that accumulated before August 2018. The balance of the arrears is hereby stayed pending trial.

Further order for a non-dissipation order

[26] In addition to the order made by Justice Sproat dated December 9, 2011 and the refraining order obtained on August 14, 2018, an order was made by Justice Price on October 30, 2018 when these motions were first brought. The order made by Justice Price provided that Mr. Falacho shall not dissipate any of his RSP investment accounts with TD Canada Trust Bank for the numbers ending *6590-02, *6590-03, and *6590-04, and his RRSP account number ending *7279, subject to a withdrawal in the amount of $4,285.71 on November 1, 2018 for his own purposes, and an additional $4,285.71 on November 1, 2008 as a sufficient amount to pay $3,450 to the applicant through the Family Responsibility Office after tax. This order was expressly made without prejudice to the position of either party with respect to whether arrears of support are owing.

[27] The order made by Justice Price expired upon the hearing of Mr. Falacho’s motion, without prejudice to either party’s submissions to renew those orders when the motion was heard on November 22, 2018.

[28] Ms. Falacho seeks a non-dissipation order with respect to Mr. Falacho’s RSP and RRSP’s at TD Canada Trust Bank. She looks to those accounts to secure a capital amount from which she can receive arrears of support, and any ongoing spousal support the court has ordered. She also looks to those accounts to realize her outstanding claim for equalization against Mr. Falacho. While it might be said that Ms. Falacho seeks execution before judgment in the form of a non-dissipation order, sections 12 and 40 of the Family Law Act permit the Court to grant such orders to preserve assets in a family law case.

[29] To prevent Mr. Falacho from further breaching the order made on December 9, 2011, I am allowing the cross-motion. It is hereby ordered that Mr. Falacho shall not dissipate, deplete, transfer or otherwise withdraw any funds from his accounts at TD Canada Trust, including but not limited to those RSP investment accounts with account numbers ending *65902-02, *6590-03, and *6590-04 or his RRSP account ending with account number *7279, except to:

a) Redeem $4,285.71 each month to pay $3,450 to the Director of the Family Responsibility Office for distribution to Ms. Falacho until further order, effective December 1, 2018; and b) Redeem a sufficient amount to pay $17,000 net of tax towards any arrears owing under the order made by Justice Sproat.

[30] A support deduction order shall issue.

Costs

[31] If Ms. Falacho seeks costs, written submissions shall be filed by December 12, 2018 consisting of no more than two pages, not including time dockets or disbursement receipts. Mr. Falacho shall then have until December 19, 2018 to file responding submissions limited to the same extent. No reply submissions are permitted without leave. All written materials may be sent to my judicial assistant, Ms. Melanie Powers by email at melanie.powers@ontario.ca or fax at 905-456-4834 in Brampton.

Emery J. Released: December 7, 2018