COURT FILE NO.: CV-18-4080-00

DATE: 2019 08 07

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

KHATIJA KHATRI

Applicant

Edward L. D’Agostino, for the Applicant

• and -

TALAT KHAN

Respondent

Gordhan Ambwani for the Respondent

HEARD: July 3, 2019 in Brampton

REASONS FOR JUDGMENT

Emery J.

1This application requires the court to determine the amount a successor in title must pay under a Writ of Seizure and Sale filed against the property of a now deceased payor for arrears in spousal support dating back to 1998.

Background

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Background

Abdur Rahim Khan owed spousal support to his former spouse, Talat Khan pursuant to the Judgment of the late Justice Caswell dated April 28, 1994 and September 15, 1994 (the “1994 Judgment”). Under the 1994 Judgment, spousal support in the amount of $1,500 a month would terminate on the date Mr. Khan’s pension from Atomic Energy Canada Limited (A.E.C.L) became payable. The 1994 Judgment also provided for post judgment interest at 8% per annum. There was no language in the 1994 Judgment the post judgment interest would be calculated on a compound basis.

3No equalization payment was awarded by or against either party in the 1994 Judgment. In her Reasons for Judgment, Justice Caswell found that Mr. Khan was entitled to retain ownership of a property in Dufferin County known as Bellwood Farm, and Mrs. Khan was entitled to retain ownership of the “Homelands” property having roughly the same value.

4Mr. Khan paid some, but not all of the spousal support ordered under the 1994 Judgment before his pension became payable on February 14, 1998. As the parties had agreed that Mrs. Khan would receive half the pension payments on an “as and when” basis, the 1994 Judgment itself made no mention of this entitlement. Paragraph 4 of the 1994 Judgment only stated that the support would terminate when the AECL pension became payable.

5Mrs. Khan did not receive any part of the pension income once Mr. Khan began to receive payments under his pension from the Superannuation Branch in February 1998 until she began to receive diversion payments commencing on February 25, 2000. Even then, she only received 13 of these payments in the amount of $2,037 each time. The Superannuation Branch ceased making payments to her because it subsequently required a court order specifying that Mr. Khan’s pension payments should be paid equally to Mrs. Khan.

6On July 15, 1998, Mrs. Khan filed a Writ of Seizure and Sale (the “Writ”) with the Sheriff for the Regional Municipality of Peel and the Sheriff for the County of Dufferin to attach all property in the name of Mr. Khan to enforce his arrears in spousal support.

7On September 10, 1998, Mr. Khan transferred title to Bellwood Farm in Dufferin County to Mohammad Munir Subhani and his wife, Khatija Khatri. It is conceded that Mr. Subhani and Ms. Khatri took title to Bellwood Farm subject to the Writ filed by Mrs. Khan.

8Mrs. Khan has pursued litigation against Mr. Khan, Ms. Subhani, Ms. Khatri and Mr. Subhani’s company, Sobhani Inc. for the last 21 years to collect all arrears in spousal support and interest to which she is entitled under the 1994 Judgment. Her rights under the Writ were complicated by the fact that a lawyer for Mr. Subhani and Ms. Khatri registered an application on August 27, 2004 to delete the writ from title.

9In Reasons for Decision released on March 27, 2017 under Khan v. Subhani, 2017 ONSC 246 (the “2017 Reasons”), I made an order, along with other relief granted in three different proceedings relating to Mrs. Khan’s claim to enforce the 1994 Judgment, that the Director of Land Titles for the County of Dufferin delete the application that had been registered on August 27, 2004 to delete the Writ. This order was made to restore the Writ to the same effect, and with the priority it held on August 27, 2004. I also granted leave for Mrs. Khan to file any other Writ with respect to the order for support if the order deleting the application registered on August 27, 2004 did not have the desired effect. These orders were made because Family Law Rule 28(4) provides that a Writ to enforce a family law order continues in effect until the Writ is withdrawn, or the court orders otherwise.

10The Writ against the property owned by Mr. Khan in 1998 has been reinstated and therefore remains against title to Bellwood Farm. Mr. Subhani transferred his interest in Bellwood Farm to Ms. Khatri in 2018. Ms. Khatri now brings this application as the sole owner for a determination of the amount owing under the Writ so that she may pay that amount, subject to any set-off she is entitled to assert, to have it discharged.

Positions of the parties

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Positions of the parties

Mr. D’Agostino submits on behalf of Ms. Khatri that the amount owing for arrears of spousal support under the Writ must be determined as of September 10, 1998. This was the date the title to Bellwood Farm was transferred by Mr. Khan. Ms. Khatri is not responsible for the payment of spousal support Mr. Khan was ordered to pay, or any interest on those amounts under the 1994 Judgment. She is obligated to pay only that amount that was attached by the Writ against Mr. Khan’s property interest in Bellwood Farm as of September 10, 1998.

12Mr. D’Agostino argues that the amount secured by the Writ on the date of transfer is subject to any payments that Mr. Khan ever made towards arrears, and any credits he was entitled to claim. Ms. Khatri also seeks a setoff for those costs I have awarded to her against Mrs. Khan throughout this litigation. Those costs were awarded on an earlier application that Ms. Khatri had brought to clear title of other encumbrances registered by Mrs. Khan, and on motions decided in the 2017 Reasons brought in an action commenced by Mrs. Khan in Brampton in the year 2000 (the “Brampton action”).

13Mr. Ambwani made a preliminary submission that this application to quantify the amount of spousal support owing under the Writ is premature. He argues that the Brampton action must first be heard and its issues determined. In the Brampton action, Mrs. Khan alleges that, among other things, the transfer of title to Bellwood Farm from Mr. Khan to Mr. Subhani and Ms. Khatri in 1998 was a fraudulent conveyance and should be set aside. Mr. Ambwani submits that if title is returned to Mr. Khan or his estate, the equity in Bellwood Farm will be available to satisfy all claims that Mrs. Khan is making against Mr. Khan. Mrs. Khan’s intention to collect as much as legally possible under 1994 Judgment from executing the Writ is understandable as Mr. Khan passed away more than a year ago.

14Mr. Ambwani states that Mrs. Khan is seeking spousal support ordered under the 1994 Judgment, as well as spousal support payable through her entitlement to an equal share of the pension payments under her agreement with Mr. Khan, plus all accrued interest. Mrs. Khan claims that the amount owing under the Writ for support arrears to the date it was filed, including interest accruing on a compound basis since October 1,1998, totals $1,444,102.17.

15Mr. Ambwani also argues that, although Ms. Khatri is entitled to setoff $33,206.33 for the costs awarded on the previous application she brought to clear title to Bellwood Farm, she is not entitled to set off a further $35,000 for costs awarded for the motions in the Brampton action because those costs were awarded to herself and Mr. Subhani jointly.

Analysis

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Analysis

Ms. Khatri has brought the only application that is before the court. The only issue on that application is what amount, if any, Ms. Khatri must pay to Mrs. Khan under the Writ, subject to any court order relevant to that question.

17In order to compute the amount owing, Ms. Khatri begins with the amount Mr. Khan owed Mrs. Khan for spousal support under the Writ filed on July 15, 1998 when Mr. Khan still owned that property. This fact is important because the Writ was registered expressly for the enforcement of spousal support.

18The Writ attached to all property owned by Mr. Khan in Dufferin County at the time Mr. Khan transferred title to Bellwood Farm in September 1998. This was the same Writ that was reinstated pursuant to my orders in March 2017. Ms. Khatri acknowledges she and Mr. Subhani took title to Bellwood Farm in 1998 subject to that Writ.

19Ms. Khatri has filed an affidavit in support of the application. Mrs. Khan has filed an affidavit in response to the application in which she does not challenge or contest any of the evidence given by Ms. Khatri. There were no cross-examinations conducted on those affidavits by either party.

20Mrs. Khan has not brought a cross-application to raise an issue going to the quantification of the amounts owing under the Writ. Instead, the affidavit she filed in response to the application sets out the factual basis for the amounts she claims are owing. In paragraphs 3, 4, 13, 14, 15, Mrs. Khan frames the issue as follows:

3. The Statement of Claim (to commence the Brampton action) was filed by me among other things for the recovery of the support payments as ordered by Honourable Madam Justice Caswell on September 15, 1994. In terms of the order I am entitled to receive $1,500.00 per month as support payment commencing March 1, 1994 to terminate when Abdur’s A.E.C.L pension becomes payable. The A.E.C.L. Pension for Abdur started March 1, 1998. I am entitled for 50% pension payable to Abdur.

4. The amount of share of Pension payable to me is $2,130.00 per month subject to indexing. The Judgment bears interest at the rate of 8% per cent per year commencing on September 15, 1994.

5. The order dated September 15, 1994 passed by Honourable Madam Justice Caswell directs my ex-husband Abdur to provide me support from March 1, 1994 to February 1998, @ $1,500.00 monthly until his pension starts. After his pension starts, I am entitled to receive 50% of his pension.

6. I believe my ex-husband Abdur passed away in March 2018. I am entitled for spousal support @$1,500.00 per month from March 1994 to February 1998 and equal division of the pension from March 1998 to March 2018. I am entitled for interest @ 8% per annum on outstanding amount.

7. I have prepared a chart detailing the outstanding support payments and division of the pension with interest. Attached hereto and marked as Exhibit “B” is a copy of the chart.

21Mr. Ambwani stated during his submissions on behalf of Mrs. Khan that the swing issue on this application is whether her entitlement to spousal support under the 1994 Judgment merged with her entitlement to diversion payments representing 50% of Mr. Khan’s pension income when it became payable. In my view, that statement is putting the question too broadly. The sole legal issue for this court to determine is whether the amount owing under the Writ includes the accumulated deficit for pension payments Mrs. Khan did not receive under Mr. Khan’s pension once it became payable, plus interest, or if the principle amount was limited to the arrears in spousal support as of the date the Writ was filed on July 15, 1998.

22It is clear from the Reasons for Judgment of Justice Caswell, as well as paragraph 4 of the 1994 Judgment, that spousal support would terminate once the A.E.C.L. pension became payable. It is an undisputed fact that the A.E.C.L pension became payable to Mr. Khan on February 14, 1998.

23The Writ did not secure future amounts owing by Mr. Khan for one half his pension payments that should have been paid to her, or any amount she is now seeking as spousal support in lieu of those payments. In this respect, I refer to the decision of Somers J. in Gay v. Ontario (Director of the Family Support Plan), 1993 CanLII 5558 (SCJ). In that case, Somers J. was asked to make a preliminary ruling on the jurisdiction of the court to hear a motion to determine the extent of the interest held by the Director of the Family Support Plan in certain property in Brampton that was subject to two writs of seizure and sale that had been filed to enforce support arrears. A property in the name of the payor had been sold and an undertaking given to hold $6,000 in trust of the purpose of moving those writs from title. When the new owners went to sell the property five years later, the writs of seizure and sale were detected, and the motion was brought for the necessary determinations.

24The Director took the position that the amount of all accumulated arrears were outstanding under the writs, for a total of sum $51,000.

25After Somers J. decided that he had jurisdiction to make a declaration as to the extent of the interest or charge on the land under Rule 14.05, he then concluded in paragraph 13 that:

13Counsel for the applicant urges that this legislation being procedural in its nature was meant to change no more than the procedure under which executions could be filed or existing writs of execution could be amended. What it does not do, he argues, is go to the point of affecting the substantive rights of the subsequent owners who when they purchased the land were conscious of there being an indebtedness of only $6,000. As indicated the property was purchased by the applicants in August of 1988 and the transfer of the property was registered August 12, 1988. The first support execution order was registered May 10, 1988, and the earlier one February 19, 1987. I agree with the proposition that the introduction of the Family Support Plan Act permits the writs of execution to be amended to show the increased indebtedness, even though the writs of execution existed before the passing of that Act. I do, however, question whether under the circumstances this amendment can do any more than put any subsequent purchaser on notice of the amount of indebtedness as of the date of his acquisition of the property. In my view as of the date of registration of the transfer from Sudol to the applicants, the amount owing was $6,950. A subsequent amendment to the writ of execution, does not, in my opinion, run with the land to reflect any amount over and above the sum of $6,950 because after that date, that is August 12, 1988, the land no longer belonged to Sudol.

26This decision looks at section 10.1(1) of the Family Support Plan Act, R.S.O. 1990, Chapter S.28 then in effect. That section is not significantly different than what is now section 44(2) of the Family Responsibility and Support Arrears Enforcement Act, which reads as follows:

2When a statutory declaration is filed under clause (1) (a), the writ of seizure and sale shall be deemed to be amended to specify the amount owing in accordance with the statutory declaration.

27There was no evidence on this application that Mrs. Khan had filed any statutory declaration under either statute with the Sheriff of Dufferin County. As a result, there is no evidence that she took any step to increase the amount of spousal support arrears secured under the Writ. After Bellwood Farm was conveyed to Ms. Khatri and Mr. Subhani, the amount owing under the Writ as of the date of the transfer was the only amount Mrs. Khan could enforce as against the property.

28The nature of Mrs. Khan’s entitlement changed entirely after February 14, 1998 from an entitlement that she be paid spousal support, to an entitlement arising from property held or controlled by Mr. Khan in the form of pension payments under his A.E.C.L. pension. Those pension payments were not payments in the nature of spousal support. Mrs. Khan had no entitlement to receive spousal support payments after Mr. Khan’s pension became payable, which means payable it had to be payable to her as well as to Mr. Khan.

29I therefore conclude that the amount owing by Mr. Khan for spousal support as of September 10, 1998 was the only principle amount secured by the Writ. The Writ does not, and never has attached to Mr. Khan’s interest in Bellwood Farm for unpaid pension money Mrs. Khan was entitled to receive.

The basis for calculations under the Writ

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The basis for calculations under the Writ

The logical starting point to calculate the amount owing for arrears in spousal support to a certain point in time would be the operative paragraph in the order granting spousal support. In the 1994 Judgment, Justice Caswell made that order in paragraph 4:

4. AND THIS COURT FURTHER ORDERS AND AJUDGES that Abdur Rahim Khan pay, on a monthly basis, the sum of $1,500 for the support of Talat Khan, to commence March 1, 1994; Support Deduction Order to issue forthwith and to be indexed in accordance with the Consumer Price Index for Statistics Canada as published by Statistics Canada, all support payments to be a charge on Abdur Rahim Khan’s estate and the monthly support to terminate when Abdur Rahim Khan’s A.E.C.L. pension becomes payable.

31There were four charts to which counsel made reference when arguing this application. A Chart for Support Payments was attached to a letter from Mr. Anthony N. Speciale dated March 19, 2002 to the Sheriff in each Region of Municipality of Peel and for the County of Dufferin found at Exhibit C of Ms. Khatri’s affidavit. Mr. Speciale represented Mrs. Khan from the beginning of this litigation until his death in 2018.

32In that letter, Mr. Speciale goes on to describe that the amount outstanding by Mr. Khan to Mrs. Khan is $99,825.71 for support arrears to March 1, 2002. In support of the amounts claimed by Mr. Speciale as owing to Mrs. Khan as of March 19, 2002, he enclosed, among other things, his chart where support arrears are calculated using compound interest.

33A similar chart was attached by Mrs. Khan as Exhibit B, to which she refers in paragraph 15 of her affidavit. Arrears are calculated in Mrs. Khan’s chart, together with compound interest, up to March 1, 2018. Mrs. Khan’s chart appears to be the same as Mr. Speciale’s chart up to March 1, 2002, with slight variations for the calculation of interest.

34Mr. D’Agostino makes reference to a third chart showing Support Obligation/Payments to February 14, 1998 that is attached as Exhibit D to Ms. Khatri’s affidavit. This was the date on which Mr. Khan’s pension from A.E.C.L. became payable. According to Mr. D’Agostino submission, it was on this date that Mr. Khan’s obligation to pay support payments ceased pursuant to paragraph 4 of the 1994 Judgment. In this chart, Mr. D’Agostino calculates that Mr. Khan owed $48,668 for arrears in spousal support to Ms. Khan as of February 1, 1998, without interest.

35A fourth chart marked as Exhibit M to Ms. Khatri’s affidavit shows Mr. D’Agostino’s calculations with interest and amounts claimed for credits up to October, 2018.

36Ironically, the best evidence for finding the amount owing for spousal support under the Writ comes from Mrs. Khan herself. The Writ is dated July 15, 1998 and makes specific reference to an order the court made on April 28, 1994 and September 15, 1994 in favour of Talat Khan. This reference is a clear connection between the 1994 Judgment and the Writ. On the face of the Writ, the Sheriff for the County of Dufferin is directed to seize and sell real and personal property owned by Mr. Khan and to realize from that seizure and sale the sum of $64,668.43, plus interest at 8% per year commencing on July 14, 1998. These details on the face of the Writ are conclusive as to the amount of spousal support the Writ was intended to enforce under the 1994 Judgment.

37For the purpose of calculating support arrears with compound interest, the chart attached to Mr. Speciale’s letter to the Sheriff in 2002 shows that his calculation of support arrears totalled $66,565.10 as of August 1, 1998. This is the line entry immediately after July 15, 1998. The calculation shown on his chart for spousal support arrears, including interest as of October 1998 immediately following the date that the title to Bellwood Farm was transferred from Mr. Khan, shows a balance owing of $74,351.38. This increase was due in part because of interest, and in part from the fact Mrs. Khan was not receiving any payment for those three months from Mr. Khan or his pension plan.

38Mrs. Khan’s chart attached as Exhibit B to her affidavit shows calculations that are remarkably similar. According to the calculation on the line for the spousal support owing plus interest as of October 1, 1998, the amount of $74,738.34 is shown as the total amount due on that date. This calculation includes Mrs. Khan’s claim for 8 payments of $2,120.30 each month since March 1, 1998 that she expected to receive as her equal share in Mr. Khan’s pension after it became payable on February 14, 1998.

39Although Mrs. Khan has prepared documents claiming lesser amounts owing under the Writ at different points in time throughout 1998, I am allowing her claim that spousal support arrears, including interest, added up to $74,738.34 as of October 1, 1998. I make this allowance because it takes the spousal support claim Mrs. Khan is making up to the date that title to Bellwood Farm was transferred. It also recognizes a transition period of eight months where Mrs. Khan was not receiving her share of the pension payments. This was the time for the parties to file the necessary documentation to divert half those pension payments to Mrs. Khan on a permanent basis.

40I also accept this total for spousal support arrears as of October 1, 1998 for base line purposes, even though the interest in Mrs. Khan’s chart was likely calculated on a compound basis. Fixing arrears in the amount of $74,738.34 is consistent with the evidence, and little objection, if any, was raised on behalf of Ms. Khatri about how interest was calculated up to that point in time.

Credits

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Credits

Ms. Khatri is entitled to the benefit of all amounts that Mr. Khan was able to claim as a credit or setoff from the total arrears owing, and any retroactive payments he made towards the support arrears that had accumulated prior to July 15, 1998 under the 1994 Judgment.

42The amounts Ms. Khatri is entitled to claim as a credit for Mr. Khan’s payments on arrears, or rights to setoff are as follows:

1. $5,000 for a payment towards arrears that Mr. Khan made on December 3, 1998. This payment is acknowledged by Mrs. Khan;

2. $8,070 made by Mr. Khan pursuant to the order of Justice Wein dated November 3, 1999. This payment is also acknowledged by Mrs. Khan;

3. Credit for $10,000, being 50% of $20,000 owed by Mr. Khan and Mrs. Khan pursuant to paragraph 3 of the 1994 Judgment for the outstanding account payable to the firm of Soberman, Isenbaum and Colomby. Mrs. Khan’s chart shows this credit was given to Mr. Khan on March 20, 2000.

43I find that Ms. Khatri is entitled to those credits against the amount owing for spousal support arrears under the Writ in the amount of $23,070. These credits shall be deducted from $74,738.34 found owing under the Writ as of October 1, 1998.

44Ms. Khatri claimed further credit for payments made by Mr. Khan to Mrs. Khan between February 25, 2000 and January 27, 2001 in lieu of payments she expected to receive from his A.E.C.L. pension. However, these payments were made to compensate Mrs. Khan for payments due to her from his pension as an income generating property. Mr. D’Agostino conceded on behalf of Ms. Khatri that the only basis to make this claim for these further amounts as a credit was an acknowledgement by Mr. Speciale at an appearance before this court on May 9, 2018. As there was no evidence that this money was paid toward support arrears one way or the other, I find that Ms. Khatri has not satisfied me on the balance of probabilities that she is entitled to a credit for those payments.

45I therefore find that, after the permitted setoffs and credits as between Mr. Khan as the payor and Mrs. Khan, the amounts owing under the Writ were reduced to $51,668.34.

46Mrs. Khan is entitled to interest at 8% per year under the 1994 Judgment on that amount. The accumulated interest, not compounded, on the arrears in spousal support secured by the Writ comes to $86,250 since October 1, 1998.

47The principle amount of $51,668.34 for spousal support arrears, plus $86,250 for interest, brings the total currently owing under the Writ to $137,918. That amount is therefore attached to Bellwood Farm. (This assumes Mr. Khan had that much equity in Bellwood Farm to begin with.) However, this amount is subject to set-off by the costs that Mrs. Khan has been ordered to pay in this litigation.

Set-off for costs

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Set-off for costs

Ms. Khatri was awarded $33,206.33 in costs on the application she brought against Mrs. Khan in Brampton court file number CV-12-4945. On April 30, 2018, Ms. Khatri and Mr. Subhani were also awarded $35,000 for costs jointly against Mrs. Khan in the Brampton action court file number 00-BN-2492. Mr. D’Agostino advised the court that Ms. Khatri waives interest on those costs.

49Mrs. Khan argues that the costs awarded in the Brampton action to Ms. Khatri along with Mr. Subhani ought not to be set-off against any amounts owed to her under the Writ because they are payable jointly. Mr. Subhani is not a party to the application, nor is there evidence before the court that he has assigned his interest in those costs to Ms. Khatri. There is also no evidence that he has released Mrs. Khan from those costs to permit Ms. Khatri to claim the entire amount.

50To overcome this difficulty, I hereby order that Ms. Khatri is entitled to set-off the full amount of both sets of costs in the total amount of $68,206.33, provided that she obtains a full and final release from Mr. Subhani on or before September 16, 2019. By this release, Mr. Subhani must release his interest in the costs award dated April 30, 2018 in favour of Mrs. Khan. This fact must be proven by filing an affidavit of service that the release was served on Mrs. Khan and her lawyer, Gordhan Ambwani, as well as attaching a copy of that release as an exhibit. Otherwise, Ms. Khatri is entitled only to set-off the costs awarded on the first application, and one half the costs awarded on April 30, 2018 in the Brampton action. These two parts total $50,706.33.

51In the event Mr. Subhani releases Mrs. Khan from his entitlement to costs, the total amount Ms. Khatri must pay to discharge the Writ shall be $69,712.

52If Mr. Subhani does not provide a release in favour of Mrs. Khan by September 16, 2019, the total amount she must pay to discharge the Writ shall be $87,212.

53Upon full payment of the amount owing in either case, Mrs. Khan shall personally, or through her lawyer of choice, direct the Sheriff in Dufferin County to vacate the Writ. Ms. Khatri shall then be at liberty to apply to have the Writ deleted from title to Bellwood Farm once and for all.

Costs

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Costs

The parties are encouraged to resolve the issue of costs for this application between them. If the involvement of the court to assess costs is requested, the following terms shall apply:

1. The party seeking costs shall file written submissions by August 15, 2019;

2. The responding party shall then have until August 23, 2019 to file responding submissions;

3. Written submissions shall consist of no more than three double spaced typewritten pages, not including offers to settle or a bill of costs.

4. No submissions in reply are permitted without leave.

55All written submissions regarding costs shall be sent to my judicial assistant by fax at 905-456-4834, or by email to melanie.powers@ontario.ca in Brampton.

Emery J.