Court File and Parties
COURT FILE NO.: FS-18-93760 DATE: 2020 08 14
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
MELISSA LUCZON Emily Banks, for the Applicant emily@kpalawyers.ca Applicant
- and -
ROBERT LEE LUCZON No one appearing for the Respondent, although paged, his Answer having been struck 5 February 2020. Respondent
HEARD: 6 August 2020
REASONS FOR JUDGMENT
Trimble J.
[1] This matter came on before me today as an uncontested trial with respect to the financial aspects of the Application.
[2] At the uncontested trial, I heard from Mrs. Luczon, briefly, and reviewed her July 30, 2020 affidavit of 169 paragraphs, attaching 271 pages in exhibits. Mr. Luczon did not appear, not being entitled to any notice further than the notice for the hearing on February 5, 2020.
Background
[3] The parties met in high school., were married on July 26, 2008, and separated on August 31, 2018 although they lived separately under the same roof until November 11, 2018 when the family home was sold. The net proceeds from the sale of the jointly owned home remain in trust and are currently $75,467.01.
[4] The parties have one child, Leilani Maria Luczon, born March 16, 2017, who resides with the applicant Mrs. Luczon.
[5] On January 24, 2020, the applicant Mrs. Luczon brought a motion to strike Mr. Luczon’s Answer and Counterclaim which I adjourned to February 5, 2020 to allow Mr. Luczon to file material in response to this motion. I awarded costs to Mrs. Luczon payable at $1,250.00 by 4:00 p.m. February 28, 2020.
[6] On February 5, 2020, I granted Mrs. Luczon's motion and struck Mr. Luczon's pleadings. This followed a long and protracted history of Mr. Luczon not responding as required by the rules or by court orders. I ordered that financial issues could be addressed by way of a 14B motion and set a hearing date for the week of October 5, 2020, four to date days, to address custody and access aspects of this application. I fixed costs payable by Mr. Luczon at $2,000.00 all-inclusive to be paid by 4:00 p.m., February 28, 2020. This was in addition to my cost order of January 24.
Decision
[7] Based on the evidence, I make the following findings and orders:
1. Income for Support Purposes
[8] Mr. Luczon's disclosure has been negligible. He appears to have taken a job, recently, working at UPS, as a team lead trainee.
[9] Mrs. Luczon asks that I impute income to Mr. Luczon of $50,000 a year. I impute this income to him from November 11, 2018 onward.
[10] Mrs. Luczon has the onus of establishing both the work Mr. Luczon can do and of the income that Mr. Luczon can earn. The employment information that Mrs. Luczon has provided clearly supports a finding that Mr. Luczon, as a team lead trainee, has the ability to earn $50,000 a year.
[11] Until revised by further court order, Mr. Luczon's income for 2018 onward, shall not be less than $50,000.00 per year.
[12] The parties shall, by June 30 every year, exchange income tax returns, T4's, and CRA assessments. Mr. Luczon's child support obligation will be adjusted for the 12 months beginning August 1 every year thereafter, based on his line 150 income as produced by June 30, subject to the minimum income for Mr. Luczon of $50,000.00.
2. Spousal Support
[13] Mrs. Luczon's income for the last three years has exceeded $100,000. In 2019 her T4 indicated income of $124,830.74. Mr. Luczon, in his answer, sought to spousal support from Mrs. Luczon. With the dismissal of his answer, his claim for spousal support from Mrs. Luczon was also dismissed. Consequently, I make no order with respect to his request for support.
3. Child Support
[14] Based on Mr. Luczon's imputed income of $50,000 a year, he is obliged to pay child support, from August 1, 2020 onward, of $461 per month for one child, Leilani Maria Luczon, born March 16, 2017.
[15] I fix child support arrears up to July 31, 2020 at $9,681.00.
[16] The amount of child support payable in any given year shall be re-calculated on the income calculation, described above.
4. Section 7 Extraordinary Expenses
[17] Subject to any change in Mr. Luczon's income as determined on the exchange of information discussed, above, Mr. Luczon shall be responsible for one third of all reasonable section 7 extraordinary expenses.
5. Child Support Enforcement
[18] The Family Responsibility Office shall enforce child support and section 7 awards, both retrospective and prospective, on behalf of Mrs. Luczon.
6. Matrimonial Home
[19] Mrs. Luczon provided two net family property calculations, one in which she attributed the whole of the value of the matrimonial home (and the mortgage) to her, and the other in which she attributed half of the value (and the mortgage) to each of the parties.
[20] No document was provided establishing ownership, prima facie, of the matrimonial home, such as the parcel register page. However, the City of Mississauga tax bills were sent to both of the parties. The Statement of Adjustments from the lawyer who acted on the purchase of the home on November 1, 2008, and of the lawyer who acted in the sale of the home in December 2019, both listed both parties as their clients. The offers to purchase, and the sale documents relating to the home in 2019 all listed both parties as owners.
[21] Based on the documents and Mrs. Luczon's evidence before me, I find that the home was jointly owned.
7. Net Family Property
[22] Based on my finding of joint ownership of the family home, I have determined net family property based on the NFP statement in the record at Exhibit PP. Under this net family property statement, the equalization payment that Mrs. Luczon owes to Mr. Luczon is $36,213.50.
[23] Mr. Luczon has already received $25,000.00 from the net proceeds of the sale. Since the value of the home was included in the NFP statement, his NFP payment must be reduced by that amount, leaving a net NFP payment by Mrs. Luczon to Mr. Luczon of $11,213.50.
8. Unequal Equalization
[24] Mrs. Luczon seeks unequal distribution of net family property under section 5(6) of the Family Law Act, and in particular items (d) - the spouse's intentional or reckless depletion of his or her net family property - and (h) - any other circumstance relating to the acquisition, disposition, preservation, maintenance or in improvement of the property.
[25] For reasons that follow I deny this request.
[26] Mrs. Luczon asks the court to look at both pre-and post separation events. In this case, she argues that she should be entitled to a greater than 50% share of equalization because Mr. Luczon’s conduct should shock the conscience of the court. For example: (a) Mrs. Luczon made the down payment for the home, kept the mortgage in good standing, and paid all the bills without any help from Mr. Luczon. She was the main provider for the family, both before and since separation, and will have the responsibility of the children (see Eckenswiller v Eckenswiller, 1988 CarswellOnt 1362, at para 43), (b) Mr. Luczon had a history of alcohol abuse, which caused him to be absent from the home, leaving most of the responsibilities of the household and family to Mrs. Luczon both before and after separation. Therefore, the presumption of an equitable distribution of joint responsibilities between the spouses in accordance with their talents, skills, and abilities is displaced (see: Martin v. Martin, 2007 CarswellOnt 683, and McCutcheon v. McCutcheon, 1986 CarswellOnt 27, para. 23), (c) Mr. Luczon was physically and psychologically abusive (McCutcheon, supra, and Giba v. Giba, 1996 CarswellOnt 2948), (d) Mr. Luczon’s Answer and Counterclaim were struck due to his failure to make financial disclosure, because he increased the line of credit on the house post separation unbeknownst to Mrs. Luczon, and because wife was struggling to maintain the home for herself and the children (see: Williamson v. Williamson, 2016 ONSC 1180).
[27] Mrs. Luczon argues that by receiving $25,000 from the equity of the sale of the matrimonial home, Mr. Luczon has received approximately 60% of his equalization. Therefore, because of the conduct, above, Mrs. Luczon should be entitled to receive all money left in the real estate lawyer's trust account as satisfaction of the equal unequal distribution.
[28] In my view, the approach by Mrs. Luczon is incorrect.
[29] Procedurally, the steps to be taken when s. 5(6) is engaged are well-established. The court must first ascertain the net family property of each spouse by determining and valuing the property each owned on the valuation date (subject to the deductions and exemptions set out in s. 4). Next, the court must apply s. 5(1) and determine the equalization payment. Finally -- and before making an order under s. 5(1) -- the court must decide whether the equalization of net family properties would be unconscionable under s. 5(6), having regard to the factors listed in paras. 5(6)(a) through (h) (see: Serra v Serra, 2009 ONCA 105, supra, at para 37):
[30] The legislature's intention in section 5(6) and 5(7), was to treat marriage as a partnership in which each party contributed to the marriage in different ways, but in which those contributions were recognized as having equal value in the marriage. If both parties have contributed according to their respective abilities, talents, and mutual or agreed perception of their roles in the marriage, then equalization leads to a fair result, subject to the equitable principles of unconscionability. (See: Reeson v. Kowalik (Reeson), , [1991] O.J. No. 1634 (Gen Div.).
[31] Unequal distribution of net family property under section 5(6), therefore, is an exception to the general rule. Hence, judicial discretion to depart from equal distribution of net family property is severely restricted by the Legislature. The discretion is only allowed where the court is of the opinion that equalizing the net family properties would be unconscionable.
[32] The Court of Appeal has called the discretion to make unequal division as "strictly limited". The intention of the section is not to allow the court to exercise discretion to alleviate every situation that might be viewed as unfair or inequitable. If that was the test, then there would be the equal sharing would not be the rule in most cases (see: Ward v. Ward, 2012 ONCA 462).
[33] The courts have been united in holding that the test for unconscionability is a very high one (see, for example: Woods v Robertson, [1998] O.J. No. 4730). In Symmons, 2012 ONCA 747, the Court of Appeal said that it was "exceptionally high" because the policy underlying the Family Law Act was to create predictability and certainty in division of family property, and to restrict or minimize the exercise of discretion to the extent possible.
[34] The Court of Appeal also held that the focus under section 5(6) is whether the equal distribution of net family property is unconscionable, looking at the case as a whole, and not whether it is unconscionable in light of any fault-based analysis of unconscionable behaviour of one of the parties. In other words, the question is whether the result of equal distribution is unconscionable, not whether the conduct of the parties in particular is unconscionable, although the latter will be central to the analysis (see: Symmons, supra, at para. 36, and 58).
[35] In this case, I do not find that equal distribution of net family property in this case 'shocks the conscience of the court.' I say this for a number of reasons.
[36] First, Mrs. Luczon's request that she keep Mr. Luczon's undistributed equity in the home involves "double dipping". For example: (a) she wants Mr. Luczon to pay for 50% of the mortgage, property taxes, and upkeep of the house from date of separation to date of sale, yet seeks to retain all of the equity remaining in the lawyer's trust account; (b) she seeks from Mr. Luczon $26,077.39 in full satisfaction of his credit card debt which was satisfied out of the proceeds of the house, yet she says that the conduct of depleting assets should also lead to a reduction in equalization payable to him; and (c) she seeks $30,000 from him representing the difference between the offer that he refused to sign back and the actual sale price of the house, yet she also seeks a reduction in equalization payable to him based on his conduct.
[37] It would not be fair or equitable to permit Mrs. Luczon to recover, fully, for the these "expenses" or "losses" and then penalize Mr. Luczon further by reducing his equalization.
[38] Second, and more important, the cause of Mr. Luczon's conduct, which Mrs. Luczon says should result in unequal distribution of net family property, is his alcoholism. Alcoholism is a disease - a terrible disease - that has ruined many marriages. Mrs. Luczon bears the onus of proof on the high standard under section 5(6). She has not met it. There is no doubt that the unequal distribution of net family property in this case may seem unfair. Since Mr. Luczon's conduct arises form a disease, however, absent other factors, I cannot say that unequal distribution of net family property meets the high test of unconscionability.
9. Post separation adjustments
[39] Mrs. Luczon seeks post separation adjustments as follows: RBC credit card judgment against husband $26,077.39 50% property tax November 18 to December 19 5,322.00 50% mortgage payments November 18 to December 19 16,157.10 50% property repairs 2,576.50 Costs awarded 5 February 2020 2,000.00 Costs awarded 24 January 2020 1,250.00 Total $53,382.99
[40] I agree with these post separation adjustments.
[41] There is one more.
[42] In August 2019, the parties received an Offer to Purchase the jointly owned matrimonial home in the amount of $980,000. Mr. Luczon did not sign back the offer notwithstanding that the time for doing so was extended to accommodate him. The offer expired.
[43] In November 2019, the parties received an offer for the sum of $950,000, which resulted in the sale of the home. That offer was $30,000 less than the August 2019 offer. That loss arises solely from Mr. Luczon's inability or refusal to sign back the August offer. Accordingly, the loss between the two offers was $30,000, or $14,325 per party after deducting the real estate commission of 4.5% (30,000 - 4.5% commission of $1,350 x 50%).
[44] This brings the total post separation adjustments to $67,707.99, in total.
10. Net amount owing
[45] Mr. Luczon is entitled to receive from Mrs. Luczon a net family property equalization payment from Mrs. Luczon (net of his $25,000 already received) of $11,213.50. He owes $67,707.00 in post separation adjustments. Accordingly, he owes her a net payment of $56,484.48.
[46] Mr. Luczon's proportion of the $75,467.01 of the equity in the jointly owned home which remains in trust is $37,733.50. That money should be paid to Mrs. Luczon in partial satisfaction of amounts owing to her. After deducting Mr. Luczon's equity in the house, the remaining amount he must pay Mrs. Luczon is $18,760.99.
Costs
[47] Mrs. Luczon seeks her costs from Mr. Luczon of full indemnity of $12,759.28. Alternately, she seeks $11,483.35 on a substantial indemnity basis or $7,655.57 on a partial indemnity basis. She argues that since the matter is uncontested, and given the issues and Mr. Luczon's intransigence, she should receive her costs on a substantial indemnity basis.
[48] I disagree.
[49] Costs awards have three purposes: to partially indemnifying a successful litigant for costs of the litigation, to encourage settlement, and to discourage and sanction improper behaviour of litigants (see Serra v. Serra, 2009 ONCA 395).
[50] More recently, in Mattina v. Mattina, 2018 ONCA 867, our Court of Appeal said:
[9] Section 131(1) of the Courts of Justice Act, provides that cost orders are in the discretion of the court. Rule 24 of the Family Law Rules sets out a framework for awarding costs for family law cases in the Family Court of the Superior Court of Justice, in the Superior Court of Justice and in the Ontario Court of Justice. Although the Family Law Rules do not expressly govern costs awards in the Court of Appeal, they have been used to guide this court's analysis on costs in family law disputes.
[10] This court has held that modern family cost rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants; (2) to encourage settlement, and; (3) to discourage and sanction inappropriate behaviour by litigants. Rule 2(2) adds a fourth fundamental purpose: to ensure that cases are dealt with justly, and Rule 24(12), which sets out factors relevant to setting the amount of costs, specifically emphasizes "reasonableness and proportionality" in any costs award.
[12] Rule 24(1) creates a presumption of costs in favour of the successful party of a motion, case, or appeal and the presumption that a successful party is entitled to costs applies equally to custody and access cases.
[13] Consideration of success is the starting point in determining costs. This presumption does not, however, require that the successful party always be entitled to costs. An award of costs is subject to: the factors listed in r. 24(12), r. 24(4) pertaining to unreasonable conduct of a successful party, r. 24(8) pertaining to bad faith, r. 18(14) pertaining to offers to settle, and the reasonableness of the costs sought by the successful party.
[14] Rule 24(12) sets out a list of factors the court shall consider in determining an appropriate amount of costs: (a) the reasonableness and proportionality of each of the following factors as it relates to the importance and complexity of the issues: i. each party's behaviour, ii. the time spent by each party, iii. any written offers to settle, including offers that do not meet the requirements of rule 18, iv. any legal fees, including the number of lawyers and their rates, v. any expert witness fees, including the number of experts and their rates, vi. any other expenses properly paid or payable; and (b) any other relevant matter.
[15] The Family Law Rules only expressly contemplate full recovery costs in specific circumstances, e.g. where a party has behaved unreasonably, in bad faith or has beat an offer to settle under r. 18(14).
[16] Rule 24(4) addresses the situation in which a successful party has behaved unreasonably.
[51] Despite subrule 24(1), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party's own costs or ordered to pay all or part of the unsuccessful party's costs. The conduct of both parties is relevant to the discussion. A party who is otherwise entitled to costs may be deprived of costs (a rare event), or have them reduced, if that party's conduct merits correction.
[52] Under Rule 24(5), in deciding whether a party has behaved reasonably or unreasonably, the court shall examine, among other things, the party's behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle, the reasonableness of any offer the party made; and any offer the party withdrew or failed to accept.
[53] Rule 24(8) directs the Court to award full recovery costs against a party who has acted in bad faith.
[54] Just because an award of costs may be on a full recovery basis does not mean that the successful party is entitled to whatever costs were incurred. The court assessing costs is still required to consider all of the factors in such an award (see: United Soils Management Ltd. v. Mohammed, 2019 ONCA 128) and make one that is reasonable, proportional, and fair for the payor to pay and the receiver to receive.
[55] In this case, Mrs. Luczon is entitled to her costs from Mr. Luczon. The only question is the amount.
[56] In normal circumstances, I would have awarded Mrs. Luczon partial indemnity costs. I fix costs, however, at $5,792.58 all inclusive comprising $5,000.00 for fees and $792.58 for disbursements (with each figure including HST).
[57] I have reduced Mrs. Luczon's costs because, of the three purposes of costs outlined by the Court of Appeal in Serra, behaviour modification is relevant in these circumstances. I say this for the following reasons:
In the Covid-19 Pandemic world, the Court, the Provincial Government, and all those who use the Court are required to adjust to new ways of doing business. In four short months, the Court has gone from a completely paper-driven institution, to a paperless institution. The change is not complete. We are still in transition. The Court and the Provincial Government have put in place interim solutions made necessary by the Pandemic, but discussions continue for more permanent, long-term solutions for e-filing and electronic file management.
The essential question that every lawyer must ask him or herself at each step in a file is: "How can I help the Court to help my client?" That question is even more important in the Pandemic period. How that this question is answered, at least mechanically, is different, now.
Because everything is filed electronically, counsel are entreated by the court to file concise materials that are issue-focussed, efficient, and surgical, and not prolix and repetitive. By extension, submissions must eliminate the sniping and saying things merely to add colour that often happens in family matters (see: Supplementary Notice to the Profession and Litigants in Civil and Family Matters - Including Electronic Filings and Document Sharing (Caselines Pilot) dated August 5, 2020, the Consolidated Notice to the Profession, Litigants, Accused Persons, Public and the Media (revised 13 May 2020), and Central West Region's Notices).
Specifically, Part A section 8 of the Chief Justice's Notice to the Profession revised13 May 2020 says "The Court expects parties will only submit brief materials to allow for a fair, timely and summary disposition. … Every effort must be made, however, to limit filed materials to only those necessary for the hearing. Filings must also comply with restrictions that have been placed on the length of material that can be submitted in connection with each event, such as limits on the number of pages for an affidavit or conference brief. Refer to the relevant regional Notice for these requirements. Caselaw and other source materials referenced in factum should be hyperlinked. Where hyperlinks are provided, it will not be necessary to file Books of Authorities.
In this case, the materials that Mrs. Luczon filed violated the Notice to the Profession and were unwieldy and difficult in the extreme to use. They could not have been drafted by anyone asking him or herself: "How do these materials help the Court help my client?"
Had the documents been submitted to the Court in paper in the same state as they were submitted electronically, I would have returned them to the lawyer, adjourned the uncontested trial to another two-hour time slot, and ordered that the materials be refiled in a Rule/Practice Direction/Notice to the Profession compliant, and comprehensible format.
The problems with the Affidavit included: a. The Affidavit filed for the straightforward, uncontested trial was 169 paragraphs and 16 pages long. b. The affidavit was prolix and often unfocussed. It contained things ‘for colour’ rather than for its probative value. c. The best evidence rule was not followed. For example, a central issue was what to do with the net proceeds of sale from the home. There was no direct statement by Mrs. Luczon in her affidavit as to who owned the home. A copy of the abstract of title was not provided. I was able to clarify my evidentiary questions by hearing from Mrs. Luczon, as a witness. d. There were 46 exhibits (some of several pages) comprising 271 pages in total. Some were excerpts from Case Conference Briefs, Settlement Briefs, and settlement discussions. They are inadmissible. I ignored them except as to costs. There many photographs, copied four to a page, many of which were sideways or were unclear as to what was being shown. There were 25 pages containing two photos per page, taken apparently by one cell phone, of another cell phone, showing all Mr. Luczon's alcohol purchases beginning in October 2018. Many of these photos are upside down (even when the other photo on the page is not). Many of the photos are out of sequence. Other exhibits are edited. For example, only page 18 of 29 of the summary page of the OCL's report is included. e. The pages were not numbered. f. The documents were not in searchable PDF format. g. There was no index hyperlinking the documents in the index or the page numbers, and the documents themselves. h. There was no hyperlink between the exhibit references in the Affidavit to the exhibits themselves.
The problems with the Factum included: a. The PDF document called "factum" as submitted, in fact, was a compilation of a factum, a list of hyperlinked cases, and some, but not all of the cases referred to in the factum. b. It had no index hyperlinking the documents in the index or the page numbers, and the documents themselves. c. All case references in the factum were contained in footnotes, not in the factum immediately following the proposition for which it was cited. d. There were no hyperlinks in the factum to the cases such that the Court could move seamlessly from a proposition in the factum, to the specific paragraph in the case cited in support, then back to the factum. e. Hyperlinks to the cases were only provided in the schedule of cases at the end of the factum. Eight of 21 cases in the list of cases were hyperlinked only to the CarswellOnt database which requires the judge to have his or her username and password at hand. The references to cases reported in the database (e.g. to citations referring to ONSC, ONCA, or O.J. No. citations) do not require inputting such information.
Order
[58] Judgment shall issue as follows;
Mr. Luczon's Income for Support Purposes
- Mr. Luczon's income is imputed at $50,000.00 per year beginning November 11, 2018;
Child Support and S. 7 Expenses
Mr. Luczon shall pay child support for one child (Leilani Maria Luczon, born March 16, 2017) from August 1, 2020 onward a $461 per month;
Child support arrears from November 11, 2018 to July 31, 2020 are fixed at $9,681.00;
Subject to any change in Mr. Luczon's income as determined on the exchange of information discussed, below, Mr. Luczon shall be responsible for 30% of all reasonable s. 7 extraordinary expenses.
The Family Responsibility Office is to enforce child support and s. 7 obligations;
The parties shall, by June 30 every year, exchange income tax returns, T4's, and CRA assessments;
Mr. Luczon's child support and s. 7 obligation will be adjusted for the 12 months beginning August 1 every year thereafter, based on his line 150 income as produced by June 30. For future child support and s. 7 obligations, subject to any further order of the Court, Mr. Luczon's income shall not be less than $50,000.00;
Unequal Distribution of Net Family Property
- Mrs. Luczon's claim for unequal distribution of net family property under s. 5(6) of the Family Law Act is dismissed;
Property Claims
The solicitor holding the balance of the net proceeds of sale of the jointly owned home shall pay Mrs. Luczon $37,733.51 representing her share of the $75,467.01 remaining in trust of the net proceeds.
In full satisfaction of all property claims, Mr. Luczon shall pay Mrs. Luczon $56,494.50, paid as follows: a. The solicitor holding the balance of the net proceeds of sale of the jointly owned home shall pay Mrs. Luczon $37,733.51 representing Mr. Luczon's share of the $75,467.01 remaining in trust, and b. Mr. Luczon shall pay Mrs. Luczon a further $18,750.99 for all property related issues
In addition, Mr. Luczon shall pay Mrs. Luczon costs fixed at $5,792.58 inclusive of fees, disbursements and applicable taxes.