COURT FILE NO.: 52879-17

DATE: 2019-09-12

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Robbin Dienne Williams, Applicant

AND:

Robert John Williams, Respondent

BEFORE: The Honourable Madam Justice D. Piccoli

COUNSEL: Caroline Kim, Counsel for the Applicant Iain D.D. Sneddon, Counsel for the Respondent

HEARD: August 14, 2019

THE HONOURABLE MADAM JUSTICE D. PICCOLI

Endorsement

Issues

[1] The issues before this Court are set out in the motion brought by the applicant found at volume 3, tab 30 of the continuing record, and the cross-motion brought by the respondent found at volume 4, tab 1 of the continuing record.

[2] The motions pertain to two orders made on consent.

(i) The final order of Justice G.E. Taylor of October 25, 2017, para 5, states:

“The Respondent shall refrain from depleting his assets or those of 1836828 Ontario Inc. o/a Deltex Machine Shop until such time as equalization has been

determined unless otherwise addressed in this order and/or a further Court order.”

(ii) The temporary order of Justice D.A. Broad dated March 29, 2018, at para 9, states:

The Applicant and Respondent shall be restrained from depleting or dissipating any property under his or her control, owned either directly or through a corporation over which they have control, which corporations include 1836828 Ontario Inc., Deltex Machine Shop Inc. and 2734443 Canada Inc. and that such property shall be preserved until further agreement in writing between the parties, or further court order.

[3] The applicant seeks to add the following to the non-dissipation order of Justice Broad:

In addition, the respondent, Robert John Williams, shall hereby be restrained from transferring, disposing of or encumbering the following properties: (a) the real property located at Part of Lot 1, Concession 3, Western Boundary, River Thames Survey, Harwich, as in 404267; Municipality of Chatham-Kent, being all of PIN 00893-0018, municipally known as 877 Charing Cross Road, Chatham, Ontario until further order of this Court.

[4] The applicant is seeking a non-dissipation order for the Chatham Property because she states that property was purchased with funds which were the subject matter of the above two orders. She also wishes to register a lien against the property.

[5] The respondent seeks an order that his accounts with RBC be unfrozen, save for those amounts which existed at the date of separation. He sets out the specific amounts that should be unfrozen. In the alternative, the respondent requests that his “portion of the funds” currently held in trust by Miller Thomson LLP from the sale of the matrimonial home in the approximate amount of $158,000.00; and from the sale of the respondent’s business Deltex Machine Shop Inc. in the approximate amount of $512,000.00 shall be immediately released to him.

[6] Both the applicant and respondent seek their costs.

Background

[7] The parties were married on July 29, 2000, and separated August 21, 2017. These proceedings were commenced October, 2017.

[8] The parties do not have any children together. The Applicant has children from a previous relationship.

[9] There have been several Court orders since the commencement of these proceedings. The two orders in question have been referenced in paragraph 2 above.

[10] In their pleadings, both parties sought an order restraining the other from depleting and freezing assets or for an order for possession, delivery up, safekeeping and preservative of property. The respondent cited s.12 and 40 of the Family Law Act in support of his position.

[11] The order of March 20, 2019 of Justice Braid appointed Ron Martindale Jr. and Louise Poole, Chartered Business Valuators employed by David Martindale (the “CBVs”), to provide a valuation of the parties’ interests in 1836828 Ontario Inc., 2734443 Canada Inc. and Deltex Machine Shop Inc. on the date of separation of the parties. All disclosure provided for in the order of March 20, 2019 was to be provided to the CBVs.

The Chatham Property

[12] On or about November 1, 2018, the respondent purchased the Chatham property for the sum of $850,000.00. It was and remains unencumbered.

[13] The applicant questioned the source of funds for the purchase of the Chatham property and the respondent did not readily answer this question.

[14] A motion for disclosure was brought to verify the source of funds for the purchase of the Chatham property. The respondent consented to the disclosure order at the time and the disclosures were due May 4, 2019.

[15] In his responding affidavit of July 14, 2019 (paragraph 9), the respondent admits that the Chatham property was purchased using a shareholder loan from 1836828 Ontario Inc. in the amount of $850,000.00.

[16] The respondent states that the applicant has known since at least February 8, 2019 (when she swore her affidavit in support of the motion that was then before the court) that the shareholder loan was being used to purchase the Chatham property. Accordingly, he argues that if she wanted the Chatham property covered by the order of March 29, 2018, she should have made the request then when the order was made.

[17] I have reviewed the affidavit of the applicant sworn February 8, 2019. In paragraph 44, she states that she believes (emphasis added) the money used to purchase the Chatham property came from 1836828 Ontario Inc. She did not know. She now knows, based on the respondent’s affidavit of July 14, 2019, that the Chatham property was purchased with funds from 1836828 Ontario Inc. Further, the applicant states that it is necessary that the Chatham property be specifically identified so that the land registry office will allow a lien to be registered against the property. She states this asset is, by implication, shielded by the March 29, 2018 non-dissipation order and the respondent should be prevented from selling or dissipating it.

[18] Given that the Chatham property was purchased with funds that were protected by both orders, it is clearly captured in those orders.

[19] Accordingly, I find that it is appropriate to grant the orders sought by the applicant in relation to the Chatham property.

Unfreezing the Respondents accounts

[20] The respondent states that, because his accounts are frozen, he is unable to pay for even day to day living expenses.

[21] The parties have not sworn financial statements since 2017. Therefore, I cannot ascertain the needs of either party.

[22] The respondent also states that he requires funds to pay outstanding taxes owing for 2018, which were due in August 2019. He states the amount owing is approximately $400,000.00 (para. 36 of July 14, 2019 affidavit).

[23] The respondent has not provided evidence of the taxes he states are owing.

[24] The respondent’s 2018 tax return shows his line 150 income was $61,075.00 ($29,250.00 being dividend income).

[25] The respondent further states that without access to his “personal” investment accounts, he risks “potentially devasting losses in the case of a market drop”.

[26] The respondent takes the position that the order of Justice Broad covered only assets that existed at the date of separation and that he should be entitled to use the funds which have increased in value since the date of separation. He states that the intention of “the non-dissipation order was to preserve the monies and assets that existed at the date of separation pending the resolution of the outstanding issues relating to equalization.” He goes on to state that the order cannot be used to prevent him from accessing money he accumulated post separation or from managing his corporations’ capital and property as he seems fit. He states the total increase in funds in his accounts since the date of separation is $2,434,725.22 and that he should have use of those funds.

[27] The applicant states that part of the reason that the value of the respondent’s assets at the date of separation cannot be determined is because:

1. The respondent has failed to provide court ordered disclosure;
2. The respondent liquidated his operating company in October 2017, within months of the parties’ separation and he did not sell the company at fair market value but chose to sell the equipment in auction. [I am told the valuator will be providing a valuation for this company as if it were a going concern and under the liquidation model];
3. In October of 2017, the respondent started planning to sell his 50% share in a building, held by the holding company 2734443 Canada Inc. The sale price was $515,000.00 and the sale was scheduled to close on March 30, 2018. The applicant only discovered the sale while investigating financial disclosure; and
4. The respondent sold the assets of his operating company (Deltex Machine Shop) after separation for $69,330.00 USD. However, he told the applicant shortly after separation that the minimum value of the company was $700,000.00 and that it would generate an income of $140,000.00.

[28] The applicant further states that a preliminary review of the investment and banking statements as of July 29, 2019, provided by the respondent, indicate that:

1. In September 2017, the month after separation, the respondent withdrew at least $230,000.00 from his corporation;
2. The respondent has received significant deposits from undisclosed sources, totaling hundreds of thousands of dollars;
3. The respondent wrote himself a cheque for $525,000.00 from an investment account protected by the non-dissipation agreement;
4. The respondent transferred $500,000.00 to undisclosed sources;
5. The respondent received as much as $700,000.00 from undisclosed sources and then transferred $500,000.00 to undisclosed sources;
6. The respondent received an online deposit of $449,821.81 from unknown sources;
7. The respondent has made numerous withdrawals and transferred funds to himself and to others, despite the non-dissipation orders, including trying to pay a costs order to applicant’s counsel via e-transfer; and
8. There appear to be at least two bank accounts that have not been disclosed, to which the respondent has transferred funds.

[29] The applicant also asks the court to note the following:

1. The respondent has been using protected funds to “day trade”, which he himself refers to as “high risk”;
2. The respondent used protected funds to buy the Chatham property;
3. There continues to be a lack of disclosure by the respondent, more recently, because of an insistence that the applicant and her lawyer sign a confidentiality agreement (there is no need for a confidentiality agreement given the implied undertakings in the Family Law Rules, O. Reg. 114/99);
4. The respondent has made threats to move away and live abroad;
5. The respondent has a girlfriend with American citizenship;
6. The respondent may leave the country once the conditions of his bail end in September 2019;
7. In November 2018, the respondent threatened legal action against the applicant’s lawyer for providing financial disclosure to the valuator and he threatened to financially ruin the applicant; and
8. The respondent is unemployed, does not have a strong relationship with his family and has chosen not to have a relationship with the applicant’s children.

The applicant states that the respondent cannot be trusted. She is concerned he will do everything possible to defeat her claim for an equalization payment. She states that the equalization payment may be higher than the funds currently held in trust.

The Law and its Approach to the Facts

[30] Much of the case law provided by counsel for the respondent deals with the grounds upon which an order is made for non-dissipation pursuant to section 12 of the Family Law Act, R.S.O. 1990, c. F.3.

[31] The purpose of a non-dissipation order under section 12 of the Family Law Act is to ensure that if the Court does determine that an equalization payment is owing, there are enough assets available to satisfy the equalization payment. (See: Syed v. Syed, 2017 ONSC 2588 [2017] O.J. No. 2174).

[32] Although both parties acknowledge that an equalization payment is owing by the respondent, the amount owing is far from being clear. The decision of Justice Doyle in Syed v. Syed v. Syed, 2017 ONSC 2588 is instructive in setting out the purpose of a section 12 order as well as the checklist of factors for such an order. In this case the orders have been made – one on a final basis and one on a temporary basis.

[33] It is not disputed that the respondent has not provided all court ordered disclosures which were due April 2019. He refused to do so, in part on the basis that the applicant has failed to sign a non-disclosure agreement. As of July 29, 2019, he has not completed his disclosure to the valuators and has refused to provide any of the disclosure he gave to the valuators to the applicant.

[34] Due to the respondent’s failure to provide court ordered financial disclosure, the Court does not have the benefit of valuation of this husband’s business. It is his duty to provide financial disclosure. That was made very clear by the Ontario Court of Appeal in the decision of Roberts v. Roberts, 2015 ONCA 450, [2015] O.J. No. 3236.

[35] Given that the orders are already in place and given that the business valuation has not been completed due to the respondent’s failure to provide timely disclosure, it cannot be ascertained whether there are enough assets available to satisfy the applicant’s equalization payment, which is the premise behind the non-dissipation orders.

[36] I am advised that the valuator will complete his work within three weeks of obtaining the remaining disclosure from the respondent.

[37] On the material before me, it is unclear whether the assets which are being valued are solely owned by the respondent. The applicant indicates in her pleadings that she and the respondent purchased Deltex Machine Shop Inc. in 2010. In her 2017 financial statement she swears that she thinks she has a 50% interest in this Company. The Respondent refers to the company as his company and on his 2017 financial statement he deposes that he has a 100% interest in the company. Ownership is of course relevant to whether the applicant would be entitled to an increase in value of any of the assets. The applicant has not plead any equitable relief, but she has sought an unequal division of net family property in her favour.

[38] Given all of the above and at least until the valuation is complete, I am not prepared to order that the accounts be unfrozen or that the respondent receive his “portion of the funds” currently held in trust by Miller Thomson LLP from the sale of the matrimonial home and from the sale of Deltex Machine Shop Inc.

Release of funds

[39] The respondent also raised the issue of whether an interim release of funds from the funds held in trust from the sale of the former matrimonial home and the respondent’s business should be made.

[40] I had asked the parties to discuss the possibility of releasing certain funds.

[41] Counsel for the applicant is agreeable to releasing $50,000.00 to her client from the proceeds of sale being held in trust by her firm and $50,000.00 to the respondent from his own investments. For some reason, the respondent did not consent to this. Should he change his mind and consent, then that order can be made on consent. The respondent should be able to choose which of his investments he liquidates for this purpose.

Disposition

[42] Paragraph 9 of the consent order of Justice Broad, dated March 29, 2018 shall be amended as follows:

9a) The Applicant and the Respondent shall be restrained from depleting or dissipating any other property under his or her control, owned either directly or through a corporation over which they have control, which corporations include 1836828 Ontario Inc., Deltex Machine Shop Inc., and 2734443 Canada Inc, and that such property shall be preserved until further agreement in writing between the parties, or further court order.

9b) In addition, the Respondent, Robert John Williams, shall hereby be restrained from transferring, disposing of or encumbering the following property:

a. the real property located at Part of Lot 1, Concession 3, Western Boundary, River Thames Survey, Harwich, as in 404267; Municipality of Chatham-Kent, being all of PIN 00893-0018, municipally known as 877 Charing Cross Road, Chatham, Ontario,

until agreement in writing by the parties or until further order of this court.

[43] If the respondent seeks to trade certain assets because of market values, he shall advise the applicant and she shall have 48 hours to either consent to the trade or not. If she does not consent, the trade cannot be made.

[44] If the respondent seeks to pay $400,000.00 in corporate taxes which he states are due in August 2019, he needs to prove the amount owing within an explanation from his accountant as to why the taxes are owing, as it may be that this is something the applicant will consent to or a Court will order once the business valuations are complete.

[45] The respondent’s motion is otherwise dismissed without prejudice to it being brought back before the Court once the business valuations have been completed. If the matter is brought back before the Court, a net family property comparison statement must be filed in support of the respondent’s motion.

Costs

[46] If the parties cannot agree as to costs, they are directed to provide written submissions. The submissions shall be no longer than four typed pages, double-spaced, in addition to any relevant Bill of Costs and written Offers to Settle. The applicant shall provide costs submissions within 14 days and the respondent shall provide any response 10 days thereafter. In the event submissions are not received in the time line set out herein costs shall be deemed settled.

D. Piccoli J

Released: September 12, 2019