BARRIE COURT FILE NO.: FC-18-1505-00
DATE: 20190923
CORRIGENDA: 20190924
SUPERIOR COURT OF JUSTICE – ONTARIO – FAMILY COURT
RE: Angie Gorog, Applicant
-and-
Frank Gorog, Respondent
BEFORE: The Honourable Madam Justice R.S. Jain
COUNSEL: Ainsley Hunter, for the Applicant
Michael Kril-Mascarin, for the Respondent
HEARD: September 19, 2019
REVISED ENDORSEMENT
The text of the original endorsement has been corrected with the text of the corrigendum (released September 24, 2019)
Introduction
[1] The Applicant brought a motion pursuant to ss. 12 and 40 of the Family Law Act, R.S.O. 1990, c. F.3 (FLA) for a preservation order restraining the Respondent from depleting his assets, dealing with any of his property and freezing his only bank account. She submits that if she does not obtain this order, she may not receive the funds she is potentially owed both in equalization and support.
[2] The Respondent opposes the Applicant’s motion and requests it be dismissed with costs.
[3] As a preliminary matter, the Applicant’s motion originally also requested relief regarding financial disclosure and disclosure for a s. 30 assessment. Counsel agreed to narrow the issues so that the motion could be heard within the one-hour time permitted for regular motions.
[4] For this motion, I have reviewed the following:
(a) Paragraphs 1 to 26 of the Applicant’s Affidavit sworn July 9, 2019 at Vol. 2, Tab 15;
(b) Paragraphs 1 to 24 of the Applicant’s Reply Affidavit sworn Sept. 10, 2019 at Vol. 2, Tab 21;
(c) Applicant’s Financial Statement sworn July 9, 2019 at Vol. 2, Tab 16;
(d) Applicant’s Statement of Law;
(e) Respondent’s Financial Statement sworn September 12, 2018 at Vol. 1, Tab 11;
(f) Paragraphs 1 to 44 of the Respondent’s Affidavit sworn August 20, 2019 at Vol. 2, Tab 20;
(g) Affidavit of Respondent sworn September 17, 2019;
(h) Affidavit of Lambros Mermigis sworn July 12, 2019 at Vol. 2, Tab 17;
(i) Affidavit of Asma Malik sworn August 19, 2019 at Vol. 2, Tab 18;
(j) Affidavit of Zsofia Zoltan sworn August 20, 2019 at Vol. 2, Tab 19; and,
(k) Respondent’s Statement of Law.
Decision
[5] The Applicant’s motion is dismissed. Paragraphs 2 and 3 of the preservation order of McDermot J. dated July 18, 2019 are terminated.
Facts and Analysis
[6] The parties cohabited in 2007 and married on December 17, 2010. They have one child together, Ava Borbola Gorog born August 31, 2007. Tragically, the family was involved in two car accidents: one involving both parties and the child on July 5, 2010; and one involving just the respondent in 2016. The injuries suffered were serious and life altering, and the parties commenced a motor vehicle accident (MVA) actions as a result. On June 15, 2018 they received settlement funds as follows: the Respondent received $1,053,893.27, the Applicant received $117,771.59 and Ava received $1,239,000.00, which is in in a structured settlement, as well as $18,206.80 that the parties received in trust for Ava. The parties separated shortly afterwards on June 21, 2018.
[7] According to the Applicant, the Respondent owes her an equalization payment and support. She says that the parties differ on the value for the matrimonial home, some date of marriage deductions and some other relatively nominal items. The most significant disputed item in the equalization calculation is whether the proceeds of the Respondent’s settlement funds from the MVA are properly excluded from the net family property. Additionally, the Applicant alleges that the Respondent is depleting the settlement funds in a manner that will make the equalization payment and/or support impossible. The Applicant says that in the 13 months since the settlement funds were received, the Respondent has spent over $235,000.00. She says this is excessive and relies on multiple medical reports made by professionals during the course of the MVA that she alleges confirm the Respondent is “unable to manage his finances independently due to his impairments as he often overspends and makes impulsive purchases.”[^1] The Applicant argues that since the settlement proceeds were not broken down, the Respondent has not and cannot prove that they all fall under excluded damages under the FLA.
[8] The test to be applied on a motion for preservation or restraining order was set out by Timms J. in Price v. Price[^2]:
The onus lies on the party asserting that a preservation order is necessary to protect his or her interests under Part I of the FLA, or that his or her claim for support under Part III of the Act would be impaired or defeated unless a preservation order was made, to demonstrate that on the balance of probabilities.
[9] Timms J. goes on to say that although there have been different decisions and different standards, the correct standard requires answers to the following questions:
Is there a serious issue to be tried?
Will the moving party suffer irreparable harm if relief is not granted? and,
Which party will suffer the greater harm from granting or refusing the remedy pending a decision of the merits?
Is there a serious issue to be tried?
[10] This question relates to the relative strength of the Applicant’s case, i.e. how likely it is that the Applicant will receive an equalization payment or support? The motion before me is not asking me to determine whether all or none of the settlement funds should be included or excluded in the Respondent’s NFP. Both parties agree there has been inconsistency in the approach taken by the courts on the issue of exclusion of damages under s. 4 (2) of the FLA. The Applicant says there is nothing binding on the court and argues the preservation order should be made out of “an abundance of caution.”[^3] However, despite the inconsistency and the alleged risks, I agree with the Respondent’s position that the majority of the cases adopt the reasoning that damages are excluded.[^4]
[11] In terms of the support issues, the Respondent is currently paying the Applicant child support as Ava resides primarily with the Applicant. I find the fact that he is paying the child support shows that the Respondent is not avoiding the issue. The issue of temporary spousal support was not before me, and neither party made submissions on the issue of entitlement; however, it is clear the issue is in dispute.
[12] The amount of weight that is placed on the strength of the Applicant’s case varies depending on the context and circumstances. I find that the Applicant has failed to establish that she has a prima facie, certain or clear claim for an equalization payment or spousal support from the Respondent. The final determination must be left up to the trial judge failing any agreement between the parties. In motions for preservation or non-depletion order, when the likelihood that the moving party will receive an equalization payment or support is unclear or uncertain, the court must then give “serious consideration to the other factors, such as the balance of convenience and the risk of dissipation prior to trial.”[^5]
Will the moving party suffer irreparable harm if relief is not granted?
[13] This question relates to the risk of dissipation of the assets in existence prior to trial and whether the preservation order is required to protect the Applicant’s claim for equalization and support and ensure that there is enough property available to satisfy entitlements that arose during the relationship. Specifically, it is to avoid a situation where the Applicant’s claims are not impaired or defeated because the Respondent has dissipated the assets. As stated above, the Applicant says the Respondent is unable to responsibly manage his finances. She says he has and is recklessly and/or impulsively spending the settlement funds he received and that he has spent approximately $235,000.00 in 13 months. She further relies on medical reports from 2014 and obtained for the MVA, that discuss the respondent’s financial challenges at that time.
[14] When taken out of context, I agree with the Applicant that the amount of $235,000.00 is shocking. However, the Respondent has explained that he is managing his finances reasonably and can account for every penny he has spent.[^6] He explained that some of the big expenditures have been directly related to this litigation, specifically legal fees and the retainer for the assessment. Another large purchase was for a vehicle because the Respondent’s vehicle broke down after separation.[^7]
[15] The Respondent also argues that the medical reports are dated, irrelevant and not applicable to this matter. The medical reports are all over five years old and were obtained for the MVA. The Respondent has never been assessed regarding lack financial capacity. The Respondent filed affidavits from each of the medical professionals to reply to the Applicant’s allegations. Their affidavits all basically said that their reports from the MVA should not be taken out of context or relied upon to prove that the Respondent currently lacks financial capacity to manage his funds.[^8] Further, one professional (occupational therapist) who worked with the Respondent until January 2018 commented that, “reckless and excessive spending would be the opposite of Mr. Gorog’s tendency” and that “Mr. Gorog’s functional abilities have significantly improved with rehabilitation programming…I have no reason to believe that Mr. Gorog cannot manage his own finances.”[^9]
[16] For all the above reasons, I find that the Applicant has failed to prove that she will suffer irreparable harm if the relief she requests is not granted.
Which party will suffer the greater harm from granting or refusing the remedy pending a decision of the merits?
[17] This question relates to the balance of convenience or inconvenience of granting the preservation or non-depletion order.
[18] The Respondent’s settlement proceeds are his only source of income. The Respondent says that it is unlikely he will ever be able to “rejoin the workforce” and he has “no intention of depleting” his funds.[^10] Since I have already found that the Applicant failed to meet the first and second branch of the test for a preservation order, I find that the balance of convenience favours that a preservation order not be made.
Order
[19] For all the reasons set out above, I make the following order:
(a) The Applicant’s motion is dismissed; and
(b) Paragraphs 2 and 3 of the Order of McDermot J. dated July 18, 2019 are terminated.
[20] If the parties cannot agree on costs, I will receive written submissions commencing with the Respondent serving and filing his submissions on or by October 1, 2019, followed by the Applicant serving and filing her submissions on or by October 8, 2019, then the Respondent’s reply submissions, if any, served and filed on or by October 11, 2019. Cost submissions shall be no more than 1 page in length (12 pt font size, regular 1-inch margins, 1.5 spacing), exclusive of any costs outline or offers to settle. All costs submission shall be delivered via email at: barriejudsec@ontario.ca. If no submissions are received by October 11, 2019, the issue of costs will be deemed to have been settled between the parties.
[21] Both of these parties have now spent tens of thousands of dollars on this family litigation. This family has already suffered enough tragedy with respect to the motor vehicle accidents, injuries suffered, family conflict and now the separation. I have no doubt that it was a hard fight for the settlement monies, given that it took approximately 8 years to receive them. My hope for this family going forward is they will focus on resolving the issues civilly and with a sense of proportionality so they don’t drain all their funds litigating these issues. This includes negotiating to avoid potential future motions regarding financial disclosure and the s. 30 assessment. I trust that counsel have fully informed their clients of alternative dispute resolution methods such as mediation if it is appropriate. I strongly encourage the parties to consider this option when or if they are ready and/or once the custody/access assessment has been completed.
Jain, J.
Released: September 24, 2019
CORRIGENDUM
Paragraph [5] has been corrected to read: “Paragraphs 2 and 3 of the preservation order of McDermot J. dated July 18, 2019 are terminated.”
Paragraph[19] (b) has been corrected to read: “Paragraphs 2 and 3 of the Order of McDermot J. dated July 18, 2019 are terminated.”
[^1]: Affidavit of Applicant dated July 9, 2019, paras. 20 to 22.
[^2]: Price v. Price, 2016 ONSC 728, 2016 CarswellOnt 1263.
[^3]: Barbini v. Edwards, 2014 ONSC 6762, 2014 CarswellOnt 16559 at para 91.
[^4]: de Champlain v. de Champlain, 1986 CarswellOnt 261; and, Lukovnjak v. Weir, 2016 ONSC 6893, 2016 CarswellOnt 17525.
[^5]: Bronfman v. Bronfman, 2000 CanLII 22710, (2000), 51 O.R. (3d) 336 (Ont. S.C.J.); and, Benvenuto v. Whitman, 2012 ONSC 2696, [2012] O.J. No. 2019 (Ont. S.C.J.).
[^6]: Affidavit of the Respondent, dated August 20, 2019 paras. 31 to 36.
[^7]: Affidavit of the Respondent, dated August 20, 2019 para. 32.
[^8]: Affidavit of Lambros Mermigis dated July 12, 2019; Affidavit of Asma Malik, dated August 19, 2019; and Affidavit of Zsofia Zoltan dated August 20, 2019.
[^9]: Affidavit of Zsofia Zoltan dated August 20, 2019.
[^10]: Affidavit of Respondent dated August 20, 2019, paras. 43 to 44.