Court File and Parties
COURT FILE NO.: 219/16 DATE: 2019/12/20
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Lisa Ann Jeffrey Applicant
- and -
Casey Adam McNab Respondent
Counsel: James D. Singer for the Applicant Donna Wowk for the Respondent
HEARD at St. Catharines, Ontario: December 16, 2019
The Honourable Justice D.L. Edwards
REASONS FOR DECISION
Background
[1] There are two motions before me. Both parties seek the sale of the former matrimonial residence at 1220 Line 3, NOTL, Ontario (“matrimonial residence”), but on different terms. Both parties also request an adjustment to spousal support. The respondent seeks an order directing the sale of a jointly held Florida property and permission to sell two Ontario properties.
[2] Some history of these proceedings is helpful to put these motions into context.
[3] Following a long motion Justice Henderson issued a decision on April 26, 2018. In that decision he ordered:
a. That the respondent to pay spousal support of $2,000 per month plus pay the mortgage and utilities for the matrimonial residence; b. That the respondent to provide disclosure to the applicant’s valuator as set out in Schedule A to the decision; c. That the respondent be prohibited from dissipating his assets; d. That the matrimonial residence be sold; e. That it was reasonable to negotiate a more conventional amortization period for the mortgage on the matrimonial residence; and f. The motion for the sale of a jointly held Florida property be dismissed.
[4] Following a second long motion Justice Henderson issued a further decision October 4, 2018. In that decision he declined:
a. to alter the spousal support, notwithstanding the mortgage payment on the matrimonial residence was substantially reduced by altering the amortization period; b. to comment on whether the temporary support should change if and when the matrimonial residence was sold; and c. to dismiss the non-depletion order against the respondent.
[5] Prior to the hearing of the second long motion the parties reached an agreement on particulars of how the matrimonial residence would be sold, most notably who the real estate agents who would represent the parties would be.
[6] I will turn now to the issue of the matrimonial residence.
Matrimonial Home
[7] The matrimonial property has not yet been sold. The applicant now wishes to purchase the respondent’s interest. The respondent agrees, but on very specific terms, and with specific consequences if the sale is not consummated.
[8] Once again background information is of assistance in understanding how the parties have reached their positions.
[9] Both parties blame the other as the reason that this property has not been sold.
[10] The respondent submits that the presence of the applicant’s cattery and conditions that she attached to how the property would be sold made the sale almost impossible. It also, in his view, suppressed the value of the home.
[11] The applicant asserts that particularly since the decision of Henderson J. on October 4, 2018 she has cooperated and did what she could do to effect a sale.
[12] She notes that on October 10, 2018, six days after Henderson J’s decision was released, she contacted her real estate agent, Doug Rempel, and directed that he contact the respondent’s agent to get the property listed. There is an email chain showing that from then until February 7, 2019 the applicant contacted Mr. Rempel several times about the listing. Finally, she was advised by him that the respondent’s agent had advised him that the respondent was non-responsive to his efforts to contact him.
[13] The respondent’s evidence is that the restrictions that the applicant wanted on how the property would be sold, such as a 48-hour notice for showings or that an outbuilding would be off limits, realistically made a sale impossible. However, I note that there is no correspondence during this time from the respondent, his lawyer or his real estate agent to corroborate this.
[14] In April 2019 the respondent’s lawyer forwarded to the applicant’s lawyer a letter of intent regarding the purchase of the property for $635,500.
[15] It was not signed. It was represented to be from an arm’s length buyer. The buyer eventually was revealed to be a friend of the respondent with whom the respondent was observed socializing at a bar/restaurant.
[16] Next followed a bit of a dance between the parties. The respondent advised that the buyer wanted to remain confidential. The buyer did attend a viewing of the property and declined to identify himself, but in his affidavit, he could not recall why he did not identify himself. The respondent’s affidavit expanded upon the buyer’s motive for wanting to remain anonymous and stated that it was because of the applicant’s boyfriend.
[17] Next on May 29, 2019 a form of a purchase agreement was sent by the respondent directly to the applicant. It was initialed by the buyer, but not signed, nor had the respondent signed it.
[18] This purchase agreement was conditional upon financing and an inspection.
[19] The applicant’s counsel several times asked the respondent’s counsel whether the respondent was prepared to accept the offer, but he received no response.
[20] Finally, on June 21, 2019 the respondent’s counsel said that he would accept the offer and enclosed what purported to be a standard agreement of purchase and sale executed by the purchaser and the respondent. In fact, the signature page was not included, but was forwarded several days later.
[21] This agreement was conditional upon financing and a satisfactory inspection of the property. The price was $635,500.
[22] On June 25, 2019 the applicant through counsel rejected that offer, but she agreed to buy the property for $636,000 with no conditions.
[23] The respondent rejected this and obtained a further offer from the third party for $500 more, but the offer was still conditional upon financing, and also conditional upon the purchaser reviewing the offer with a real estate lawyer.
Analysis re: Matrimonial Home
[24] Both parties agree that the court has the power to order joint assets be sold. The court does not have the power, per se, to order a purchase of one joint owner’s interest by the other.
[25] The applicant submits that where one party frustrates a court order that a property be sold, then the court has the power to make orders to carry out the previous order to sell the property, which includes an order for one of the joint owners to sell his/her interest to the other joint owner. Allan v. Dabor, 2017 ONSC 5452
[26] The respondent is not contesting my power to make such an order as he indicates that he just wants the property sold at a reasonable price, but he wants fallback terms should the applicant not complete the transaction.
[27] I find that the conduct of both parties is to some extent at fault in this matter.
[28] I accept that some of the listing conditions by the applicant overly complicated the sale process, but I also find that there is no evidence that the respondent took any steps from the date of the order in October 2018 until at least February 2019 to attempt to resolve these issues.
[29] I also find that the respondent’s conduct regarding the third-party offer is troubling at the very least. The secrecy is troubling; the unsigned documents are troubling; and his reaction to the applicant’s offer is also troubling.
[30] Unless the respondent was aware of facts that were not shared with the applicant, clearly the applicant’s unconditional offer was considerably better than a conditional offer from the third party.
[31] Even if the respondent was concerned that the applicant would not complete the transaction, she made her offer in late June. We are now in late December. Clearly had the respondent accepted that offer, either the matter would be resolved, or he would be in a much better position to argue bad faith by the applicant.
[32] In the circumstances, I find that it was the respondent who was ultimately at fault for the failure of the property to be listed, and that his failure to accept the applicant’s offer was unreasonable.
[33] I order that the property be purchased by the applicant on the terms of the agreement of purchase and sale attached to her affidavit of August 9, 2019 at tab 55V of the Continuing Record with the following alterations:
a. The $50,000 deposit shall be delivered to Sullivan & Mahoney no later than January 15, 2020; b. The closing date shall be 42 days from the date of this decision; c. The requisition date shall be five (5) days prior to the closing date; d. Each party shall bear his or her costs of the transaction; e. The reference to “any court ordered costs” contained in Schedule A is clarified to mean the expenses of the matrimonial residence that Henderson J. ordered the respondent to pay on an ongoing basis up to the closing date; and f. The paragraph included in Schedule A regarding the pool equipment is deleted and the phrase “all pool equipment” is added to paragraph 1 under “Chattels included”.
[34] The existing mortgage, as well as the secured line of credit which is in the approximate amount of $20,000 shall be discharged from the sale proceeds. The accounting of these debts as between the parties shall occur as part of the resolution of property issues to be made by the trial judge.
[35] In light of my findings regarding the respondent’s conduct, I am not prepared to grant the relief sought by him which would give him unilateral control of the sale should the applicant not complete her agreement to purchase the property.
[36] I now turn to the issue of spousal support.
Spousal Support
[37] Henderson J. in his decision of April 26, 2018 found that the applicant’s claim for temporary spousal support succeeded on two grounds. First, the parties entered into a legally binding agreement that the respondent would pay spousal support of $2,000 per month plus the household expenses for the matrimonial residence. Second, he found that she had entitlement for temporary support in accordance with the provisions of the Family Law Act.
[38] He accepted the applicant’s income to be $20,000. This finding is not disputed by the respondent for the purposes of this motion.
[39] He then reviewed the respondent’s income situation. He noted that the respondent had sold his business and invested the proceeds of the sale into other businesses. He stated that “(t)his capitalization of the parties’ primary income generating asset cannot be used as a way for McNab to avoid paying spousal support.”
[40] The respondent’s evidence at that time was that he netted $4,100,000 from the sale of the assets.
[41] Justice Henderson analyzed what he viewed the respondent’s income should be for spousal support purposes and stated: “I find that McNab’s income for temporary support purposes is $250,000 per year.”
[42] He noted that the respondent’s financial affairs were complicated and as he did not have any expert report on income, determined the respondent’s income in two different ways. He calculated that a 5% return on $4,100,000 would be $200,000. He also examined the profitability of the respondent’s corporations and concluded that on that basis the respondent’s income could have been $200,000. He added personal expenses which his corporations paid for him and concluded that the respondent’s income for support purposes was $250,000.
[43] Justice Henderson examined the expenses of the matrimonial residence and concluded that the benefit that the applicant was receiving from these payments was $2,692. If one added the $2000 per month cash also paid to the applicant, the total spousal support was $4,692. He concluded that based upon the income figures under the Spousal Support Advisory Guidelines (“SSAG”) the spousal support would be in the range of $4,500. He therefore made the spousal support order.
[44] The issue came back before Henderson J. on another long motion. His reasons were released October 4, 2018. The mortgage on the matrimonial home was being renegotiated so that the monthly payment dropped from $2,992 to approximately $866. This meant that the respondent’s financial commitment pursuant to Henderson J’s earlier order would be reduced. The applicant sought to have the difference paid to her as increased spousal support.
[45] In his October 4, 2018 reasons, Henderson J. stated that in his earlier decision he had accepted the applicant’s primary ground for spousal support, namely the binding agreement, and had not made the order on the alternative argument. He said that his calculations of the respondent’s income and reference to the SSAG were made just to ensure that the existing agreement was appropriate.
[46] Justice Henderson declined to alter the spousal support. He rejected that the renegotiated mortgage was a material change in circumstances. Further, he said that temporary spousal support was intended to achieve rough justice until the parties resolved their issues on a permanent basis.
[47] Finally, he declined to comment on whether temporary spousal support should be changed if and when the matrimonial residence was sold.
[48] As the matrimonial residence is finally being dealt with pursuant to my order, the applicant now seeks to have a varied support order in the range of $4,500 because of the material change in circumstances.
[49] The respondent also seeks an adjustment to spousal support. However, he submits that the expert reports that he has produced show that his income is in fact $94,000. Further, he has produced a spreadsheet that shows that, rather than having a net sale proceeds of $4,100,000 after he sold his business, he had approximately $2,700,000.
[50] The applicant submits that her expert has raised serious questions about these reports and the respondent has failed to respond to those questions.
Analysis re: Spousal Support
[51] There is some confusion between the two decisions of Henderson J. as to the basis upon which spousal support was ordered. However, as these are temporary orders, I am now able to clarify the situation.
[52] There are some basic principles that apply to motions to vary interim spousal support orders.
[53] Proceedings to vary interim support orders should not be encouraged. The onus is on the party seeking to vary a temporary order as to why it should not wait for trial to be determined. Damaschin-Zamfirescu v. Damaschin-Zamfirescu, 2012 ONSC 6689 at para 29
[54] A party cannot rely on his own failure to provide adequate disclosure to argue that the decision on the inadequate disclosure should be given less deference. Colivas and Colivas, 2016 ONSC 715 at para 29
[55] How, then do these principles apply to our facts?
[56] First, I accept Henderson J.’s findings that the applicant has established a right to spousal support under the Family Law Act.
[57] The respondent does not dispute Henderson J.’s finding that the applicant’s income for purposes of this motion is $20,000.
[58] The respondent has now produced expert reports on income as well as further details regarding his net sale proceeds. However, I find that I do not have satisfactory explanations to the many questions that this recent disclosure by the respondent raises.
[59] At the first long motion the respondent represented to the court that his net sale proceeds from his business was $4,100,000. Now he suggests that it was approximately $2,800,000.
[60] It is virtually incomprehensible that, as an experienced businessperson, the respondent could misapprehend his financial situations to such a great extent. Clearly such variation requires detailed and complete explanations, which I do not have.
[61] I find that the information which Henderson J. had for the long motion is currently the best information upon which to make a determination. He had calculated that based upon a 5% return on the net sale proceeds of $4,100,000, the respondent should have been able to generate $200,000 per year. He then added certain personal expenses that his corporations had paid for him to reach an income of $250,000.
[62] I accept that Justice Henderson’s rough justice approach to interim support is an appropriate one in the circumstances, and that the calculation of $200,000 income on the $4,100,000 is a conservative one. However, I disagree that personal expenses should be added to that $200,000 figure. It results in double counting.
[63] Therefore, for purposes of this motion for interim spousal support I find that the respondent’s income is $200,000 per year.
[64] The applicant also seeks to vary support due to the sale of the matrimonial residence. She asserts that the mortgage payment shall increase from $651.30 to $1,916.21 per month. Her counsel submits that if the order is not varied, then the respondent would be responsible for this increased payment pursuant to Henderson J.’s order.
[65] In reality the applicant is seeking a larger increase in support as she alleges the respondent’s income at $250,000 should result in support of $4,500 per month. Currently he is paying $2,000 cash per month plus the expenses of the matrimonial home in the range of $1,600 per month.
[66] I am satisfied that the purchase of the respondent’s interest in the matrimonial residence constitutes a material change in circumstances, and it is appropriate to vary interim spousal support.
[67] Interim spousal support shall change effective the closing date of the sale of the respondent’s interest in the matrimonial residence to $3,675 based upon incomes of the respondent of $200,000 and the applicant of $20,000 being in the mid-range of the SSAG.
[68] A Support Deduction Order to issue.
[69] So long as spousal support is payable, the parties shall provide each other with updated income disclosure, including Notices of Assessment by June 30th of each year.
Sale of Respondent’s Residence and Tecumseh properties
[70] The respondent seeks leave to sell these two properties. He wishes to relocate his residence from Virgil. As well, he would like to sell the Tecumseh property and invest the net proceeds in another income producing property.
[71] The applicant’s primary concern is that the respondent does not dissipate his assets through this process.
[72] I vary the non-depletion order and permit the respondent to sell his residence at 678 Line 2, Virgil provided:
a. He invests the net sale proceeds into another residence or maintains those funds in an interest bearing GIC; b. The Virgil residence is unencumbered. Any new residence must also be unencumbered. In other words, the respondent may not incur new debt on the new residence, and he may not reduce his investment in real estate by these transactions (other than the transaction costs); c. Within 30 days of the sale of the Virgil residence he shall provide an accounting to the applicant; and d. Within 30 days of the purchase of a new residence he shall provide an accounting of this transaction to the applicant.
[73] I grant leave for him to sell the property at 13810 Tecumseh Road Tecumseh, Ontario and invest the net proceeds in an income producing property provided:
a. He shall not increase his debt by these transactions; b. He shall not reduce his investment in real estate by these transactions, other than for the transaction costs; c. He shall within 30 days of each transaction provide a written accounting to the applicant; and d. After he sells the Tecumseh property if he does not within 30 days purchase a replacement property, he shall place the net funds in a GIC.
Florida Joint Property
[74] This issue was not argued before me, but it was mentioned in passing by counsel.
[75] I decline to order a sale of this property for lack of jurisdiction. However, I urge the parties to take, what should be a very simple step: list and sell this property with the net proceeds being held in trust until property matters are resolved either by agreement or trial.
Accounting by Applicant of chattels that she has sold
[76] The respondent seeks an accounting of chattels that the applicant has sold.
[77] I order that within 30 days the applicant provide to the respondent an accounting of all chattels from the matrimonial residence or the Florida property, that she has sold. The accounting shall include the chattel sold, the amount received and where the funds are or for what purpose they have been used.
Costs
[78] Unless the parties can agree upon costs, the applicant shall provide her cost submissions within 14 days; the respondent 7 days later; and a reply, if any, within 5 days. Cost submissions shall be limited to three pages.
D.L. EDWARDS J. Released: December 20, 2019