Superior Court of Justice - Ontario

NEWMARKET COURT FILE NO.: FC-11-39200-01

DATE: 20190121

RE: Angela Baiu, Applicant AND: Lucian Baiu, Respondent

BEFORE: The Honourable Madam Justice H. McGee

COUNSEL: Self-Represented Applicant Self-Represented Respondent

HEARD: January 15, 2019

Ruling on Motions

Decision on Respondent’s Motions for Final and Temporary Orders

[1] This is Mr. Baiu’s motion for a final order adjusting the amount of equalization that he was ordered to pay after the 2013 Trial of Application FC-11-39200. He also asks for temporary Orders for disclosure. All motions are plead within a Rule 15 Motion to Change: FC-11-39200-01. A motion to adjust an equalization payment is not available within a Motion to Change and I dismiss it on both procedural and substantive grounds. Disclosure is granted in part, pending compliance with stated terms. Costs are to be paid by Mr. Baiu.

Litigation Context

[2] The parties’ eleven year marriage ended on January 12, 2011. Ms. Baiu issued this Application in October 2011. In the years to follow there was to be no resolution of the parenting or financial issues arising from the end of their marriage.

[3] The trial of the claims in Ms. Baiu’s Application and Mr. Baiu’s Claim by Answer was heard over five days in November 2013 by Justice Gilmore. She released her Judgment on January 13, 2014.

[4] The final Order grants the mother custody of the parties’ two sons, then aged 12 and 7; differential child support, and a payment of equalization. The equalization was primarily driven by two assets owned by the father: the former matrimonial home (where he still lives and out of which operates his business) and a shareholder’s loan. Neither party sought costs following the release of the trial decision.

[5] In February 2014 Mr. Baiu appealed Justice Gilmore’s final Order to the Court of Appeal for Ontario.

[6] The parties were divorced on April 24, 2014.

[7] Six days prior to the appeal hearing Mr. Baiu filed a Notice of Motion seeking to adduce fresh evidence. The motion was dismissed. His appeal was heard April 21, 2015. It was dismissed in reasons released the same day.[^1] Costs of $8,000 were awarded to Ms. Baiu.

[8] In their reasons, the Court of Appeal specifically dismissed Mr. Baiu’s concerns with Justice Gilmore’s findings on the value of his shareholder’s loan.

[9] Mr. Baiu filed an application for leave to appeal to the Supreme Court of Canada on June 22, 2015. On October 29, 2015 the application for leave was dismissed.

[10] On November 30, 2015 Mr. Baiu filed a motion for reconsideration with the Supreme Court of Canada. On January 15, 2016 the motion for reconsideration was not accepted and the file on Leave was closed.

[11] Throughout, Mr. Baiu refused to pay the equalization. He refused to pay the costs awarded to Ms. Baiu on the dismissal of his Appeal.

[12] In December 2015 Ms. Baiu filed a Writ of Seizure of Sale with the York Region Sherriff’s office to enforce the outstanding equalization payment of $134,808, plus interest, and the $8,000 award of costs.

[13] Mr. Baiu vigorously contested the enforcement process despite having ample means to satisfy the terms of the final Order and the award of costs.

[14] On March 14, 2016 Mr. Baiu issued this Motion to Change the January 13, 2014 final Order of Justice Gilmore. Below are the orders sought in his Motion to Change:

(a) To vary the final Order for sole custody to Ms. Baiu, to joint custody,

(b) To terminate the order for child support effective May 1, 2015 and replace terms of support in an amount to be determined,

(c) To vary the order for no spousal support to provide that Ms. Baiu pay spousal support in an amount to be determined,

(d) To adjust the amount of equalization payment from $134,808.49[^2] to $51,518.24.[^3]

[15] The Motion to Change has been actively case managed by Justice Douglas. Over the course of two Case Conferences Mr. Baiu has resisted providing any evidence that might support a material change in his income. He relies exclusively on his Form 13.1 Financial Statement which does not account for the whole of the income available to him from his corporation.

[16] On September 18, 2017 Justice Douglas conducted a Settlement Conference. As a condition precedent to Mr. Baiu proceeding any further with his Motion to Change, Justice Douglas ordered that the Court of Appeal costs of $8,000 be paid, as well as the outstanding equalization payment.

[17] On September 27, 2018 Mr. Baiu appealed the Order of Justice Douglas. The Motion for Leave to Appeal was dismissed April 27, 2018.

[18] Meanwhile, the Sherriff’s office continued enforcement. On August 29, 2018 Mr. Baiu brought a motion to cancel the Sherriff’s sale of land scheduled for September 13, 2018. The land in question was the former matrimonial home, in Mr. Baiu’s sole title, which has increased in value from $593,792[^4] in 2011 to well over $1,000,000.[^5] There are no encumbrances on the home, but for a line of credit with a balance of $46,936.[^6] Mr. Baiu’s motion was dismissed by Justice MacPherson, with a caveat that it could be reconsidered were Mr. Baiu to pay the outstanding writs.

[19] Finally, in September 2018 Mr. Baiu paid the outstanding equalization, interest and the Court of Appeal costs. Ms. Baiu voluntarily agreed to cancel the sale upon receipt of those amounts alone, despite not receiving any reimbursement for costs paid to the Sherriff.

[20] It was a generous gesture. She thought that a difficult period had finally come to a close.

[21] On December 21, 2018, Mr. Baiu served Ms. Baiu with a motion for:

(a) An order to change child support,

(b) An order for spousal support,

(c) An order to change custody,

(d) An order to amend the equalization according to fresh evidence,

(e) An order to file cost submissions for trial,

all to be heard January 11, 2019 on a full day hearing. In the limited time available she replied in an affidavit of January 4, 2019. She asks the court to declare Mr. Baiu a vexatious litigant.

Motion heard Friday January 11, 2019

[22] Mr. Baiu scheduled a full day hearing for January 11, 2019 and confirmed in writing that it would proceed at 9:00 a.m. But he was not ready to proceed when court opened. I called the matter in and gave preliminary direction on the order of submissions. I asked questions to better orientate me to the relief sought, and asked Mr. Baiu for the draft order required by the Rules. He did not have one.

[23] As I came to understand that Mr. Baiu was asking for an order changing the equalization payment, I alerted him to the court’s lack of jurisdiction to do so.

[24] Mr. Baiu asked for more time. It was granted. An hour later the court again called the matter in. Mr. Baiu asked for more time and permission to get a copy of the transcript. Permission to obtain a transcript was, and is granted. The matter finally began at 11:30 a.m.

[25] Mr. Baiu announced that irrespective of my earlier advice, he would focus on his motion to change the equalization payment in the 2014 final Order. He then proceeded to read out lengthy excerpts from various cases for which he did not have copies for either Ms. Baiu, or the court.

[26] On the court’s later direction, he did provide those cases on January 15th, 2019.

[27] Upon a careful review of those cases, I now understand what Mr. Baiu was referencing. He argues on the basis of Rule 59.06 (2) (a) of the Rules of Civil Procedure[^7]. The Rules of Civil Procedure are not applicable in this proceeding. It is the Family Law Rules that apply.

[28] The family law rule that best matches Rule 59.06 (2) is Rule 25.19, which reads:

CHANGING ORDER — FRAUD, MISTAKE, LACK OF NOTICE

(19) The court may, on motion, change an order that,

(a) was obtained by fraud;

(b) contains a mistake;

(c) needs to be changed to deal with a matter that was before the court but that it did not decide;

(d) was made without notice; or

(e) was made with notice, if an affected party was not present when the order was made because the notice was inadequate or the party was unable, for a reason satisfactory to the court, to be present.

[29] Before addressing the correct application of Rule 25.19; it is necessary to first identify that the order sought within Mr. Baiu’s December 21, 2018 Notice of Motion, and inconsistently relied upon in his oral submission, is to amend the equalization according to fresh evidence.[^8] This is the basis upon which Ms. Baiu made her January 4, 2019 response and prepared her submissions. Neither party provided any case law on the test for fresh evidence or addressed it in his or her submissions.

[30] In fact, the new evidence upon which Mr. Baiu seeks to rely is not even found in his materials for this motion. Upon asking him to direct me to his evidence, I saw in volume 2 of the continuing record three affidavits sworn in 2016. All contained information not available to Justice Gilmore in 2013 because it concerned subsequent tax filings, and refilings intended to correct what Mr. Baiu now states were errors in what he placed before Justice Gilmore.

[31] This discovery prompted my inquiry as to whether he intended the day’s hearing to be a final determination of his Motion to Change, or his motion served December 21, 2018.

[32] Mr. Baiu advised that he:

(a) intended the day’s hearing to be a final determination on his Rule 15 Motion to Change the equalization payment, and

(b) that he could not yet address his support claims, because he needed disclosure from Ms. Baiu.

This stated intention was not apparent from his materials, but I accept and rely upon his proposal in making this decision. As Mr. Baiu made no submissions on custody, or costs on the November 2013 trial. The latter could not be decided by me in any event.

Rule 15 Motion to Change Cannot Vary a Property Order

[33] The conduct of a Motion to Change is governed by Rule 15 of the Family Law Rules.[^9] The court’s jurisdiction to vary a final Order between former married spouses is set out in section 17 of the Divorce Act[^10]. The latter provides at section 17(1) that

17. (1) A court of competent jurisdiction may make an order varying, rescinding or suspending, prospectively or retroactively,

(a) a support order or any provision thereof on application by either or both former spouses; or

(b) a custody order or any provision thereof on application by either or both former spouses or by any other person.

[34] There is no jurisdiction for a court to vary – or as claimed in Mr. Baiu’s pleading, adjust – a payment of equalization. Procedurally, he cannot obtain this Order in a Motion to Change.

Applicability of Rule 25.19 of the Family Law Rules to Adjust the Equalization Payment

[35] The lack of jurisdiction ends this claim. Nonetheless, I will provide further reasons for its dismissal. But first, some background.

[36] Between 2006 and 2010 Mr. Baiu received a series of grants from the Canadian Government for Research and Development. He placed the monies relevant to this proceeding into Foxset IT Solutions Ltd, a corporation whose shares he wholly owned and controlled. Up to the release of the Trial decision, Foxset IT recorded the monies received as shareholder loans. There were no repayments of the loans.

[37] At all times, Mr. Baiu was wholly in control of his corporations and the only directing mind with authority to file corporate Returns.

[38] It is not clear to me whether Mr. Baiu claimed during the trial, or after delivery of the final Order that although Research and Development grants of $316,860 had been placed in Foxset IT as shareholder’s loans, they were actually withdrawn for household and personal expenses during the marriage; so that there would have been a zero balance on date of separation.

[39] Mr. Baiu blamed the failure in accounting on a lack of knowledge and/or professional advice. He does not appear to have ever acknowledged that this would have been an improper use of the grant.

[40] When considering the shareholder’s loan of $316,840 as a date of separation asset, Justice Gilmore accepted some of Mr. Baiu’s argument that the loans had been depleted within the corporation and were not available as an asset; but because the few accounting records tendered by Mr Baiu during trial demonstrated no adjustments, there was no basis upon which she could eliminate the loans as a date of separation asset. Instead, she applied a generous 50% discount. Only $158,420 was added to Mr. Baiu’s net family property.

[41] The Court of Appeal specifically upheld this exercise of discretion in their reasons dated April 21, 2015.

[42] Mr. Baiu now proposes that subsequent tax refilings, made with the intent to “correct” his tax returns and declare income from the grants is new evidence. Much of it – including purported evidence of a $16,000 personal loan also proposed today as a basis to adjust the equalization payment - is the same evidence that was unsuccessfully sought to be placed before the Court of Appeal in April 2015.

[43] In this context, I will now reconstitute Mr. Baiu’s submissions as they might fall within the parameters of Rule 25.19. I will start with the personal loan. The proposed new evidence supporting an alleged $16,000 loan made in April of 2000 is dated January 2016 – a full two years after the trial. It could not have been a mistake for Justice Gilmore to have not included it. Neither can it be considered fresh evidence, as it could have been before the court. The loan was asserted to have been made some 13 years prior to separation.

[44] Mr. Baiu’s proposed reconstitution of the shareholder’s loans suffers the same impossibility. Subsequent tax refilings, i.e. those made after the date of the trial, that are tendered as proof that the shareholder’s loans were reduced by income draws, could not have been available to Justice Gilmore.

[45] Neither are the returns, nor the 2016 affidavits fresh evidence. A recharacterization of an asset post separation in these circumstances does not change its date of separation value. The claim must be dismissed.

[46] In closing this section I will address Rule 25.19(a) and (e). Much of Mr. Baiu’s submissions focus on misconduct by Ms. Baiu. He asserts a lack of notice that his shareholder’s loans were an asset within his net family property.

[47] Ms. Baiu’s conduct is irrelevant to a determination of Mr. Baiu’s net family property. The grants, the corporations, their and Mr. Baiu’s personal tax returns were at all times entirely in Mr. Baiu’s control. It was his decision how, or how not to present his evidence at trial.

[48] Rule 13 of the Family Law Rules operates to make him responsible for a full accounting of his financial circumstances, whether or not he anticipated that his shareholder’s loans would be found to be an asset at trial. Even had Ms. Baiu not initially included a shareholder’s loan value for Mr. Baiu in her NFP, once the evidence of the loan manifested at trial, it was open to the trial judge to make a finding as to its date of separation value.

[49] In summary, Mr. Baiu cannot succeed in his claim to adjust the equalization payment in the final Order of January 13, 2014. The corresponding claim in his March 14, 2016 Motion to Change is dismissed on a final basis.

Claim for Spousal Support: no Originating Process

[50] I will also take this opportunity to dismiss on a final basis Mr. Baiu’s motion for spousal support. His Motion to Change can only seek to vary a final Order. There is no final Order that he receive spousal support. He made no claim for spousal support in his November 17, 2011 Claim and Answer.

Motion for Further Financial Disclosure on Child Support

[51] Mr. Baiu was quite aggressive in his assertion that Ms. Baiu provide detailed financial disclosure to him, including the income of her new spouse. The latter is not relevant to a claim for child support, absent a claim for hardship.[^11] Mr. Baiu’s Form 13.1 discloses no basis for a hardship claim.

[52] The final Order provides for differential child support of $539 based on Mr. Baiu having 2013 self-employment income of $115,549 and Ms. Baiu having 2013 employment income of $62,843.

[53] Mr. Baiu asks to terminate his payment of child support as of this day. He does not contribute to the boys’ section 7 expenses. He has yet to provide proof of the life insurance required in the final Order.

[54] Mr. Baiu’s December 28, 2018 Form 13.1 Financial Statement shows monthly self-employment income of $3,000 from his corporation: “Blue IT On Demand Inc.” and he indicates that he operates the business out of his home. He let slip during a somewhat rambling segment of afternoon submissions that he has a new contract.

[55] Mr. Baiu’s personal Notices of Assessment have been disclosed. They show line 150 income in 2015 of $78,540; in 2016 of $56,234 and in 2017 they show income of $0.00.

[56] 2017’s Notice of Assessment, if authentic, is a poor fit with Mr. Baiu’s Financial Statements filed in this proceeding. In his December Form 13.1 he shows not only monthly income, but annual expenses of $56,125; $1,194,670 in assets (a rounded million for his home and $194,670 in various investments and savings) and only $54,130 in debt, plus $153,300 stated to be a “personal loan.”

[57] It bears observing that this is his sworn financial position after he paid the outstanding equalization and costs enforced by the Sherriff.

[58] Mr. Baiu files no disclosure respecting the corporation(s), but for two business account statements for Blue IT. I can see from the September 2018 statement that $6,328 was deposited on September 21, 2018, and that Mr. Baiu is paying his household utilities from that account. He does not list his corporate banking account on his Form 13.1, nor does he show his utilities being paid by the corporation.

[59] Mr. Baiu is correct that Ms. Baiu has not updated her financial disclosure in the past two years. She has not to date sought an increase in differential child support, despite being the primary caretaker of the boys for significant periods during the year while Mr. Baiu travels. She is under an obligation to disclose her income for support purposes.

[60] At the same time, Mr. Baiu has been less than forthright in his financial disclosure. As the moving party, I require Mr. Baiu to first provide a full record of his income for support purposes. Order to go as follows:

1. Provided that Mr. Baiu has paid costs of $3,254.40 (see paragraph 67 below) and has served and filed by April 12, 2019:

(a) Corporate Tax Returns for Blue IT On Demand Inc. from the year of incorporation to present,

(b) Corporate Tax returns for Foxset IT Solutions Ltd from 2013 to present,

(c) Financial Statements for Blue IT On Demand Inc. from the year of incorporation to present,

(d) Financial Statements for Foxset IT Solutions Ltd from 2013 to present,

Ms. Baiu shall serve and file by May 3, 2019 a Form 13.1 Financial Statement with proof of her current and 2018 income, and her 2016 and 2017 Notices of Assessments.

2. Until Mr. Baiu pays the costs of $3,254.40 and provides the above disclosure, he may take no further steps in this Motion to Change pursuant to Rule 1(8) of the Family Law Rules.

Vexatious Litigant

[61] I cannot deal with Ms. Baiu’s request in her January 4, 2019 affidavit to find Mr. Baiu to be a vexatious litigant because it is not made in the form of a motion.

[62] At the same time, I am recording my observation of Mr. Baiu’s relentless and unreasonable litigation conduct displayed within this Motion to Change. This is a marked change from the courtesy and sensibleness noted by Justice Gilmore in the conclusion to her reasons. Mr. Baiu is encouraged to consider my observation fair warning.

Costs

[63] To avoid additional time and expense for written costs submissions, at the end of the hearing I asked the parties to each set out costs claimed in the event that he or she were successful. Neither party served an Offer to Settle.

[64] Ms. Baiu seeks costs of only $2,880 for a full day hearing.

[65] Ms. Baiu was the successful party on today’s attendance. She is entitled to her costs. The amount is reasonable for a full day hearing and proportionate given the amount sought by Mr. Baiu: $1,600 on costs of $4,000.

[66] I have reviewed Ms. Baiu’s claim for costs in relation to the factors set out in Rule 24(12) of the Family Law Rules and the purposes of a costs award, particularly, to discourage and sanction inappropriate behaviour by litigants.[^12] Bringing yet another action to “adjust” the equalization payment, after having exhausted all appeal routes is textbook unreasonable litigation conduct that must be sanctioned. A Motion to Change is not an Appeal.

[67] Given the modest amount sought, her success and Mr. Baiu’s unreasonable litigation conduct in pursuing a claim that he was advised at the beginning of the day could not be successful, I grant Ms. Baiu fees of $2,880 plus HST for a total of $3,254.40.

[68] If Ms. Baiu seeks an order for the costs of the Sherriff’s enforcement, she may file a 14B Motion to my attention on 20 days’ notice to Mr. Baiu, who must file his response 10 days thereafter.

Justice H. McGee

Date: January 21, 2019

[^1]: But for the peripheral issue of setting aside an Order for Spousal Support of $1.00 per annum, as the COA found that no Order was necessary to preserve Ms. Baiu’s claim for spousal support. [^2]: Equalization payment and retroactive support of $232,728.65 less the advance of $97,920 [^3]: This would be the amount owing if the shareholder’s loan had had no value. [^4]: Value on date of separation. [^5]: July 2018 value asserted in Mr. Baiu’s July 27, 2018 affidavit as “between $1,000,000 and $1,225,000. [^6]: Mr. Baiu’s sworn Financial Statement of December 28, 2018. [^7]: R.R.O. 1990, Reg. 194 [^8]: Emphasis added. [^9]: O.R. 114/99 [^10]: R.S.C. 1985, c.3 as amended [^11]: SOL test, section 10 Federal Child Support Guidelines [^12]: Mattina v Mattina 2018 ONCA 867