COURT FILE NO.: FC-15-240
DATE: 2019/07/26
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Anderson Llewlyn Norris
Applicant
– and –
Ellen Seville Norris
Respondent
Michael Rappaport, for the Applicant
Pierre Ranger, for the Respondent
HEARD: May 29, 2019
REASONS FOR JUDGMENT
Justice marc r. labrosse
Overview
[1] Following the Endorsement of MacEachern J. dated May 3, 2019 whereby the Applicant’s pleadings were struck, the matter proceeded by way of an uncontested trial on most issues. Given that part of the relief being sought by the Respondent was the deletion of a charging order in favour of the Applicant’s solicitor, Michael Rappaport, notice was given to Mr. Rappaport to allow him to make submissions on this issue.
[2] At the conclusion of the uncontested trial on May 29, 2019, the Respondent was to advise the court as to the issues on which she was seeking adjudication. By correspondence to the court on June 3, 2019, the Respondent advised through her counsel that she was not pursuing her claim for retroactive child support and that she was not pursuing her claim for the reimbursement of her 50% share of the Scotia Bank Joint GIC unilaterally cashed by the Applicant on May 29, 2009.
[3] Consequently, the Respondent was seeking the following orders:
i. The joint tenancy of the property located at 1265 Henn Drive, Navan, Ontario (being Parcel 5-1, Sec 50M-42, Lot 5, Plan 50M-42, Cumberland – PIN #14543-0082) be severed.
ii. The Applicant’s interest in the above property (PIN # 14543-0082) be forthwith vested onto the Respondent (“Ellen Rose Seville-Norris”).
iii. The Applicant pay the sum of $35,000.00 together with pre-judgment interest thereon retroactively to June 3rd, 2009 at the rate of * % per annum.
iv. That the Charging Order registered on July 25, 2017 as Instrument No. OC1911702 against title to the property described at para. 1 of the present Order be forthwith deleted and vacated from title (PIN # 14543-0082).
[4] During the uncontested trial, it became evident that the Respondent had not requested a divorce as part of her Answer although a divorce was sought in the Application. As a result of striking the Applicant’s pleadings, there was no request for a divorce before the court. The Respondent’s Answer was therefore amended to allow her to request a divorce.
[5] On June 13, 2019, Counsel for both parties appeared before me to argue the issue of the charging order. The parties had previously been instructed to file detailed Motion Confirmation Forms setting out their respective positions on the charging order issue. Counsel for the Applicant used this process to essentially file a factum on all issues. I have only considered the submissions of Mr. Rappaport in respect of the charging order.
Evidence
[6] As part of the uncontested trial, the Respondent filed an Affidavit dated May 29, 2019, which included a statement that for the sake of expediency, she adopted the paragraphs of her Affidavits dated January 14, 2016 and April 15, 2019. Furthermore, the Respondent was called to testify at the uncontested trial and provided brief viva voce evidence.
[7] Although the Applicant disputed the Respondent’s assertion of the date of separation, his pleadings were struck and as such, the only available evidence is that of the Respondent. The parties married on February 18, 1978 and separated on February 17, 2008, being one day before their 30th wedding anniversary.
[8] The Respondent’s evidence focussed the Applicant’s interest in the jointly owned matrimonial home. As at July 21, 2010, the value of the home was appraised at $320,000.00. This was the only evidence of what the value of the home would be close to the date of separation.
[9] On May 28, 2019, the Respondent obtained an opinion letter from a real estate agent opining that the market value of the property was approximately $350,000.00. That letter acknowledges that the value is lower than other properties in the neighborhood but also listed a number of repairs and replacements that were required which were used to justify the lower value. This was the only evidence available to assess the Applicant’s interest in the matrimonial home and while I appreciate that this is not an expert report, it gives me some comfort that the market value of the matrimonial home has not increased significantly over the years.
[10] The Respondent’s evidence is that the Applicant realized most of his $50% equity in the matrimonial home after the date of separation when he unilaterally withdrew $150,000.00 on the Home Trust (Visa) secured line of credit (see Tab 6 of the Trial Record). She states that she has paid approximately $130,000.00 in interest and capital to Home Trust since 2009 and that the balance outstanding is $115,075.22. The Respondent also stated that with a real estate commission at 6%, the disposition costs in a sale of $350,000.00 would be $21,000.00 plus legal and other expenses.
[11] Since the date of separation, the Respondent estimates that she spent $49,119.74 in realty taxes, over $20,000.00 in property insurance, repairs of approximately $10,000.00 and she has paid all the ongoing utilities (including water, hydro & gas).
[12] In support of her request that the matrimonial home vest in her name, the Respondent also relies on the fact that the Applicant received a $35,000.00 advance on his entitlement for equalization on May 29, 2009. As the Applicant’s pleadings have been struck, there will be no equalization of net family property and the Applicant has not returned the $35,000.00 advance.
[13] Finally, the Respondent also relies on the fact that the Applicant has three outstanding costs awards owing to the Respondent totalling $24,250.00.
Charging Order
[14] The charging order was obtained by the Applicant’s lawyer, Michael Rappaport on July 6, 2017. It was obtained without notice to the Respondent. The Applicant did not oppose. As part of the motion record filed in support of the charging order, the Applicant’s lawyer included a copy of the Endorsement of Corthorn J. dated November 21, 2016 and provided the following evidence about that Endorsement in his affidavit:
- I was instrumental in protecting the Respondent/Client’s interests in the matrimonial home on a motion which was brought by the Respondent/Client’s wife to transfer his interest to her before the Hon. Madam Justice Corthorn on October 21, 2016, attached at Tab E.
[15] The Respondent opposes that the charging order was granted. She was not given notice of the Motion by the Applicant’s solicitor to obtain the charging order and she says it was obtained in breach of paragraph 77(4) of the Endorsement of Corthorn J. dated November 21, 2016. That paragraph reads:
77(4) Neither party shall encumber title to the matrimonial home, other than as provided in this endorsement, without further order of the Court.
[16] While the Endorsement was attached to Mr. Rappaport’s affidavit as an exhibit, there is no mention of paragraph 77(4) in the affidavit and there is nothing indicating that leave was sought to further encumber the matrimonial home or that para. 77(4) was brought to the attention of the judge who granted the charging order.
[17] On June 13, 2019, the uncontested trial continued after Mr. Rappaport was notified of the Respondent’s request to vacate the charging order from the title to the matrimonial. Both parties presented their arguments to the court. In his argument, Mr. Rappaport relies on the Court of Appeal’s decision in Taylor v. Taylor, 2002 44981 (ON CA), 60 OR (3d) 138, where the court cited public policy reasons in favour of granting solicitor’s charging orders to encourage lawyers to represent clients who are unable to pay as their cases progress.
[18] Mr. Rappaport argued that his paid retainer with the Applicant ended at the time of the charging order and that he continued to represent the Applicant on a pro bono basis since that time as the Applicant was unable to afford legal representation.
[19] The Respondent argues that this is nothing more than a non arm’s length acquiescence to judgment as was deemed inappropriate in Boyd v. Boyd (2008), 2008 1417 (ON SC), 54 R.F.L. (6th) 460 (Ont. S.C.). She further states that the order of Corthorn J. at para. 77(4) of her endorsement is injunctive in nature and that leave ought to have been sought prior to any step being taken to encumber the matrimonial home.
Analysis
[20] The consideration of the issues before the court is greatly influenced by the fair market value of the matrimonial home both at the date of separation and today. The Applicant listed the value of the matrimonial home on his financial statement at $470,000.00 based on a Municipal Property Assessment Corporation (MPAC) value of $441,000.00 in 2015 (see Tab 6 of Trial Record). However, there is no evidence before the court to justify such a value. In my view, the MPAC assessment would be insufficient to determine the fair market value. While the current opinion on value recognizes that the value of $350,000.00 is low, that lower value is supported by the significant repairs required to the property. Consequently, the best available evidence is that the current market value of the matrimonial home is $350,000.00.
[21] As for the value at February 17, 2008, being the date of separation, there is no direct evidence. The appraisal dated July 21, 2010 sets the value at $320,000.00. The Applicant’s financial statement gives a value of $470,000.00 on May 7, 2009 and then $500,000.00 on December 20, 2014. This suggests a minimal increase in value over those five years.
[22] For the purposes of calculating the Applicant’s interest in the matrimonial home at the date of separation, it would be safe to provide some reduction to the appraised value of $320,000.00 to account for time between February 17, 2008 and July 21, 2010. In considering all the evidence available, I set the market value of the matrimonial home at $300,000.00 on the valuation date.
[23] There is no dispute in the evidence that the Applicant withdrew $150,000.00 on the home line of credit after the date of separation and as such, he would have received an amount equal to his equity in the matrimonial home on the date of separation. In considering the 2019 value of $350,000.00, the Applicant’s share in the increase in value of the matrimonial home would be $25,000.00. When considering disposition costs of $21,000.00 plus the ongoing carrying costs for the line of credit, repairs, utility taxes, insurance, repairs and outstanding cost awards, it is clear that the Applicant has no resulting equity remaining in the matrimonial home. Consequently, I have no difficulty concluding that the joint tenancy for the matrimonial should be severed and that the Applicant’s interest in the matrimonial home should vest in the Respondent.
[24] With respect to the $35,000.00 advance on the equalization payment, there is documentation to support that those funds were advanced by the Respondent to the Applicant and that they were an advance against the Respondent’s equalization payment as the Applicant admitted to this in his Response to Request to Admit (see Tab 7 of Trial Record). However, there is no evidence associated with that advance to specify what the terms were. Was it understood that it was a debt owing to the Respondent in the event that no equalization payment would be owing to the Applicant? Was it contemplated that there could be no equalization payment? I am unable to infer that there was a term of the advance that required re-payment of the debt in the event that there was no equalization payment owing. I am of the view that the burden of establishing that this is a debt that must be reimbursed falls on the Respondent and that she has not discharged that burden. The Respondent’s claim to an order for the reimbursement of the $35,000.00 is denied.
[25] Finally, I must deal with the charging order. I start by recognizing that charging orders certainly have an important place in allowing clients to secure representation when they would be otherwise unable to pay for such representation. Section 34 of the Solicitors Act, R.S.O. 1990, C. S. 15 (Solicitors Act), codifies the right to a lien on proceeds of judgment where there appears to be good reason to believe that the solicitor would otherwise be deprived of his or her costs. The order is discretionary and can be made against the “fruits of litigation” where real or personal property has been recovered or preserved through a lawyer’s litigation efforts: see Taylor v. Taylor, 2002 44981 (ON CA), 60 O.R. (3d) 138.
[26] In the present circumstances, I question if a charging order is intended to be available in the normal course of all family law litigation. It would seem to me that the wording of s. 34 of the Solicitors Act contemplates that a solicitor is entitled to a charge on the property recovered or preserved through the instrumentality of the solicitor. The terms “instrumentality of the solicitor” has been interpreted to mean that the solicitor’s efforts played a substantial and integral part in the recovery or preservation of an asset or assets to which the charging order might apply: see Patton v. Patton (2008), 2008 731 (ON SC), 54 R.F.L. (6th) 446 (Ont. S.C.), at para. 40.
[27] I question if it meant to apply to a usual retainer in a family law dispute or if more is required. However, that assessment belongs to the judge who adjudicates on the motion for the charging order. The problem lies with the fact that although the charging order was made with judicial authority, the is no other distinction with the situation where counsel commences an action against his or her client, obtains judgment by default or on consent and registers an execution on the title to a matrimonial home. Such a circumstance is fraught with difficulties and potential for abuse: see Boyd v. Boyd.
[28] In the present situation, I do not believe that the judge who granted the charging order had any indication that Corthorn J. had made an order prohibiting any party from encumbering the matrimonial home. Clearly, the Applicant was aware of the charging order and did not oppose it. This is more problematic by the fact that the Applicant had already withdrawn his equity in the matrimonial home as at the date of separation. In addition, the affidavit of Mr. Rappaport does not specify that the joint line of credit was solely the responsibility of the Applicant who had unilaterally withdrawn the funds for his own use or that the Respondent was challenging the Applicant’s right to an equalization payment.
[29] In the end, the evidence demonstrates that when the charging order was obtained, the Applicant had little or no further equity in the matrimonial home and there was a significant dispute as to the Applicant’s entitlement to an equalization payment. The result is that Respondent would be saddled with the Applicant’s legal fees to be paid from her equity in the matrimonial home. Such a result is unacceptable and was certainly not presented to the judge who granted the charging order.
[30] I conclude that the charging order was obtained in circumstances where the judge who granted it did not have the full picture of the parties’ financial circumstances and their respective entitlement to the equity in the matrimonial home. The Respondent’s request to have the charging order deleted and vacated from title is thus granted.
Conclusion
[31] It is hereby ordered that:
i. The parties shall be divorced;
ii. The joint tenancy of the property located at 1265 Henn Drive, Navan, Ontario (being Parcel 5-1, Sec 50M-42, Lot 5, Plan 50M-42, Cumberland – PIN #14543-0082) be severed;
iii. The Applicant’s interest in the above property (PIN # 14543-0082) be forthwith vested onto the Respondent (“Ellen Rose Seville-Norris”); and
iv. That the charging order registered on July 25, 2017, as Instrument No. OC1911702 against title to the property described at para. 1 of the present Order be forthwith deleted and vacated from title (PIN # 14543-0082).
[32] Finally, with respect to costs, the Respondent may write to me with her costs submissions within 15 days of this decision, such submissions not to exceed three (3) pages, excluding a Bill of Costs and attachments.
Mr. Justice Marc R. Labrosse
Released: 2019/07/26
COURT FILE NO.: FC-15-240
DATE: 2019/07/26
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Anderson Llewlyn Norris
Applicant
– and –
Ellen Seville Norris
Respondent
REASONS FOR JUDGMENT
Mr. Justice Marc R. Labrosse
Released: 2019/07/26