Court File and Parties

BARRIE COURT FILE NO.: FC-19-332-00 DATE: 20200123 CORRECTED DATE: 20200124

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Ramona Anthony, Applicant AND: Grant Anthony, Respondent

BEFORE: The Hon. Madam Justice S.E. Healey

COUNSEL: K.S. Kieller, Counsel for the Applicant B. Burke and R. Kamin, Counsel for the Respondent

HEARD: January 16, 2020

Corrected Endorsement: The text of the original Endorsement was corrected on January 24, 2020 and the description of the correction is appended.

Endorsement

[1] The applicant’s motion seeks disclosure-related orders and an order for interim payment of funds to be applied toward her legal costs and the expense of an income valuation report to be prepared by Steve Ranot of Marmer Penner Inc.

[2] The parties worked throughout the day to narrow the scope of the disclosure orders being requested. At the end of the day argument was heard on some aspects of the disclosure, as well as the payment of Mr. Ranot’s costs.

[3] Counsel disagree about why this motion was brought and under what circumstances. At a case conference held on April 9, 2019, an order for production was made on consent that required disclosure within 90 days. Ms. Kieller argues that, not having received all the material ordered by late November, the matter had to be urgently litigated. Ms. Kieller takes the position that these documents should have been available by now. She also firmly believes that a corporate structure chart could be immediately produced by the respondent’s counsel.

[4] Ms. Kieller does not deny that she made the motion originally returnable on a day not cleared in advance with opposing counsel, and on which she knew opposing counsel was unavailable. Her explanation for this is that December 5, 2019 was the only date available to the court before January 2020, and that the matter was urgent.

[5] I am unable to align with that position, in terms of either urgency or necessity. What occurred here is that following the case conference the parties began their own negotiations. The respondent parted ways with his former lawyer in June 2019, and retained his new lawyers in August once he learned that the agreement that he thought he and the applicant were working toward would not be finalized. He learned this after Ms. Kieller returned from summer vacation.

[6] The lawyers then took steps to get before a mediator, Stephen Grant. In the meantime, the interim order from April was taking care of the applicant’s immediate needs. The order requires the respondent to pay spousal support in the amount of $4,000 per month, along with the mortgage, property taxes and line of credit registered against the home in which the applicant is residing, and gives her exclusive possession of that property and vehicle. The respondent is not in default of that part of the order, nor was he when this motion was scheduled.

[7] The respondent’s present counsel, Mr. Burke, was uncomfortable with the provision in the April order that required a joint business valuation of all business assets owned by the respondent, other than his interest in Binscarth Holdings LP (“Binscarth”). The same chartered business valuator was to complete any income valuation for the respondent’s income, excluding any income from Binscarth. Mr. Burke proposed to Ms. Kieller that the respondent retain his own business valuator for those purposes. In turn, the applicant decided to retain Marmer Penner Inc. to complete that work. The parties were still targeting mediation.

[8] Then, an unfortunate occurrence - Mr. Grant’s office informed the respondent’s lawyers that the mediation date had been released, but failed to inform Ms. Kieller’s office. Misunderstandings developed. Ms. Kieller seems to have concluded that the respondent’s lawyers were pursuing litigation and took a preemptive strike by bringing this motion for outstanding disclosure in the face of the order of April 9, 2019.

[9] There is no question that the that the timelines in the April order were not met, and some of the items remain outstanding, but this is not a recalcitrant respondent who has provided nothing. The evidence shows that he had provided a good portion of the ordered disclosure at the time this motion was scheduled.

[10] It must also be appreciated that the respondent’s business holdings appear to be reasonably complex and may include transfer of trust capital in or about 2009 from a trust created by the respondent’s father in 1996. The exercise of tracing this capital will lead to a determination of whether the assets of Binscarth are excluded property under the Family Law Act. I accept the evidence that the respondent’s lawyers have been working, since being retained in August, to obtain records from the law firms historically involved. I also accept that this is a difficult and time-consuming task because the records are both historic and within the control of third parties.

[11] Furthermore, some of the requests being made by the applicant in her motion were not ordered in April 2019, but rather have since been requested through correspondence sent from Ms. Kieller beginning on October 29, 2019 through to November 15, 2019. The motion was served on November 25th. Ever since, the respondent and his lawyers’ time has been sidetracked by responding to the motion, including two attendances, rather than focusing on collecting the financial information and documents.

[12] Ms. Kieller argues that Mr. Ranot requires the outstanding documents to do his work. While that might be true, these documents will also be required by the respondent’s expert, Vivian Alterman of AP Valuations, and are being track down for that purpose. The case is moving forward, just not at the pace demanded by the applicant and her counsel.

[13] This case would benefit from some thoughtful forward planning at this point so that future steps, including future motions, are not taken abruptly and costs wasted. In the view of the court, the most pressing need is to have the corporate structure set out in an organizational chart. I agree with Ms. Kieller that this should not wait to be delivered to the applicant as part of Ms. Alterman’s report.

[14] Second priority should be a determination - whether by agreement, motion for partial summary judgment or the trial of an issue - with respect to whether Binscarth is excluded property.

[15] Third, the valuation reports should be completed on the basis of that determination.

[16] Along the way there will be interim steps that may be required, such as questioning. In short, there needs to be a written litigation plan.

[17] Although Ms. Kieller suggested that a case management judge be appointed, this case is already being case managed by Wildman, J. However, I will remain involved to be available, if necessary, to assist counsel to reach a litigation plan.

[18] The applicant has also moved for payment of interim disbursements. The applicant’s financial statement shows that she has no liquid savings, but rather only RSP savings that will trigger tax consequences if collapsed, potentially giving rise to a greater need for spousal support.

[19] The respondent’s counsel submits that the applicant has not met the evidentiary burden to be granted such relief, as outlined by Mesbur, J. in Ludmer v. Ludmer, 2012 ONSC 478 at para. 58:

I have no evidence of the wife requesting any further information or explanation from Mr. Ranot about his proposed fees, although she has had months to do so. Mr. Ranot does not outline with any particularity how much time he expects the engagement to require, why it requires that time, who will be performing the bulk of the work, and why. Apparently, the husband has spent about $140,000 in commissioning the four reports he has produced. I have no real evidence of why a critique of those reports would cost as much as Mr. Ranot suggests, nor do I know how much the income analysis portion of the assignment might cost. The wife bears the onus of showing what is necessary to proceed to trial, what it will likely cost, and why. She has failed to do this.

[20] Mr. Burke argued that Mr. Ranot has provided the same pro-forma letter in this proceeding and that the motion should be dismissed on that basis. Nonetheless, during argument he indicated that his client was willing to make a payment of $17,500. For the purpose of considering the motion’s merits, I have disregarded that offer.

[21] Ludmer was a different case than that before me. The wife had previously been denied the relief that she was seeking for payment of interim costs under an earlier motion, where the motion judge had not found her claim to be meritorious. While not finding her new motion to be res judicata, Mesbur, J. stated at para. 25:

[i]n the particular circumstances of this case, where similar motions have already been denied, it seems to me the wife has a higher burden to show the necessary factual foundation to support her motions. She is not precluded from bringing the motion; she must meet the higher burden I have articulated.

[22] I question the correctness of applying a higher evidentiary burden - the civil standard of proof on a balance of probabilities does not have a sliding scale depending on whether a motion has been previously argued. In any event, in addition to applying that elevated standard of proof, Mesbur J. noted that the wife’s motion had been adjourned by Czutrin, J. so that her motion could be brought on “better and proper material of the wife outlining with greater detail and supported by evidence as to what disbursements she may have if she chooses to challenge the yet to be served expert reports” (para. 62).

[23] If there is such a thing as an elevated burden, it does not apply to this case. Mr. Ranot has delivered a preliminary fee estimate in the range of $15,000-$30,000 plus HST to calculate the respondent’s income over three years. It is not the $60,000-$80,000 range estimated in Ludmer, even though the respondent’s financial affairs, as Mr. Ludmer’s were noted to be, are complex.

[24] Applying the facts of this case to the criteria set out by Rodgers, J. in Stuart v. Stuart, [2001] O.J. No. 5172 (S.C.J.) the evidence demonstrates that:

(i) the applicant has shown that she is incapable of funding the required amounts to retain Mr. Ranot; (ii) on the balance of probabilities, her claims for spousal support and equalization of net family property appear to be meritorious, as underscored by the existing spousal support order made on consent; (iii) the respondent’s own material concedes that his financial holdings are complex, and therefore the estimate for the report appears to be reasonable; and (iv) the expenditure is necessary. The respondent elected a preference to not proceed with a jointly retained expert as initially contemplated by the parties. In these circumstances the applicant is not required to limit herself to a critique of the respondent’s expert’s report as his counsel suggests, but is entitled to retain an expert to proceed at a pace not dictated by Ms. Alterman’s progress.

[25] For the foregoing reasons this court orders:

1. By January 29, 2020, the respondent shall provide an organizational chart of the respondent’s direct and indirect interests in trusts, unincorporated and incorporated entities at the date of separation, based upon his knowledge to date. This chart shall be updated and provided to the applicant’s counsel each time any new information is learned that would affect either of the parties’ entitlement under s. 5 of the Family Law Act.
2. By January 29, 2020, the respondent shall confirm by affidavit whether he has any interest in any business, company, joint venture or trust not included in his affidavit sworn January 14, 2020. If he has any further interest, he shall fully identify the trust or business entity and the extent of his interest in each.
3. By March 15, 2020, the respondent shall provide, if not already provided, the following: (a) all evidence he intends to utilize in this action to claim that his interest in Binscarth is excluded property as defined by Part 1 of the Family Law Act; (b) a copy of all credit card statements used by the respondent for business purposes from January 1, 2017 to present, with an indication for each statement of the amount that was paid for by the business and not reimbursed by the respondent to the business; (c) a copy of all monthly statements for any line of credit, bank loans or any other borrowing or indebtedness by the respondent or any business from January 1, 2017 to present; (d) if existing, financial statements of each trust for which the respondent is a beneficiary and/or trustee from inception to present. If no financial statements exist, he shall provide a list of assets held by each trust from January 1, 2017 to present; (e) in respect of the respondent’s stock trading losses reported on his personal income tax returns for 2017 and 2018, details of the stock’s or stocks’ proceeds of disposition and adjusted cost base that created those losses, and an explanation as to why the losses are treated as business losses and not capital losses. If the explanation arises out of tax advice received from his advisors, the respondent shall provide a letter from such advisors setting out that explanation; (f) with respect to commission expenses for 2016 to 2018 inclusive: (i) general ledger expense detail showing supplier names and amounts for the respondent’s commission expenses, except with respect to his claimed excluded interests; (ii) confirmation whether any portion of rent expense pertains to home-office expenses; (iii) confirmation whether rent is paid to a third party or is a home-office expense; (iv) confirmation whether the utility expense is all cell phone or other utilities; (v) A breakdown of expenses by supplier for office and supply expenses as claimed on his personal income tax returns; (vi) details about whether the $12,000 management fee expense in 2017 and the $2,500 casual labour expense was paid to an arms’ length party. (g) full accounting records for 2017 to present to include income statements, balance sheets, trial balance, corporate tax returns complete with all schedules, notices of assessment or reassessment, adjusting journal entries and general ledger for 1862438 Ontario Inc. and 975393 Ontario Inc.; (h) for 1862438 Ontario Inc. and 975393 Ontario Inc., a continuity schedule of all shareholder/partnership loan account(s) from January 1, 2017 or the corporate year ending prior to January 1, 2017 to present, including details of each transaction such as date, amount and nature of transaction; (i) details of 975393 Ontario Inc.’s operations and whether its loans receivable and payable are to/from arms’ length parties and the key terms of those loans; (j) supporting documents for the carrying charges claimed as deductions on the respondent’s 2016 and 2018 personal income tax returns including details of the investments purchased with the loans for which interest expense has been claimed; (k) if existing, financial statements and/or corporate income tax returns and notices of assessment and reassessment from 2016 to 2019 for 1862902 Ontario Inc. and 1862889 Ontario Inc.; (l) if existing, copies of all personal net worth and personal net income statements signed by the respondent for credit applications of any kind made in the past 5 years; and (m) if available, evidence from CRA showing that the respondent does not have a personal notice of reassessment for 2018.
4. If the respondent is unable to meet the deadline of March 15, 2020 because a document or information is not within his possession or control, he shall seek the consent of the applicant to extend such deadline, and failing such consent, shall seek leave of the court to extend the deadline.
5. The respondent shall forthwith provide the applicant with the amount of $35,000 as funds toward her accounting/valuation costs, to be credited to any other amounts to be paid to her in the proceeding other than pursuant to the interim spousal support order.
6. If he is not done so already, the respondent shall serve and file an updated Financial Statement and Certificate of Financial Disclosure within 7 days.
7. All remaining relief sought in the applicant’s motion is dismissed.
8. The parties shall exchange proposed litigation plans for the further steps in this case by February 15, 2020. If they are unable to reach consensus on a mutual litigation plan, they shall promptly thereafter arrange a telephone conference with me through the trial coordinator’s office in Barrie.
9. Each party shall bear their own costs of this motion.

[26] The cost order is being made because success on this motion was mixed. While disclosure has been ordered by this court, I have made no finding as to whether it has already been provided in whole or part. The respondent has not refused production of information and documents, and appears to be cooperating with his counsel and other advisors to obtain the information sought. Further, I accept that some of the delay is attributable to non-parties that have control of the information and documents. Also, I conclude that the motion was first brought precipitously given the trajectory that this file was on, without clearing dates with counsel. Although each party made a settlement offer for the motion, neither was as favourable to them as the order made. Finally, the respondent was prepared to fund some of the interim costs being sought by the applicant. Had the parties had longer to negotiate on the day of the argument of the motion (they negotiated until approximately 4:00 p.m.), I strongly suspect that consensus would have been reached on some if not all items of dispute, including funding the Marmer, Penner report.

HEALEY J. Date: January 24, 2020

January 24, 2020 – Correction: Para. 25, subparagraph 8 on page 7 (first line) now reads: The parties shall exchange proposed litigation plans for the further steps in this case by February 15, 2020.