Court File and Parties
COURT FILE NO.: 19-55124 DATE: 2020-11-27 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: LJILJANA VRBASKI, Applicant AND: DJORDJE VRBASKI, Respondent AND: DJOKA INC., Respondent on the Motion
BEFORE: The Honourable Madam Justice L. Madsen
COUNSEL: Christopher Crisman-Cox, Counsel for the Applicant Djordje Vrbaski, Unrepresented Respondent
HEARD: November 22, 2020 In Chambers
Endorsement
IN CHAMBERS
1The Applicant brings a motion against Mr. Vrbaski, as well as against Djoka Inc., a corporation wholly owned by Mr. Vrbaski. The motion materials were served by email on Mr. Vrbaski on November 5, 2020 as well as by mail and email on Djoka Inc.
2There are no responding materials. Responding materials would have been due on November 13, 2020.
3The motion is further to the Final Order of Justice Gordon dated June 11, 2020 and seeks the enforcement of certain property and support terms set out therein. The Order of Justice Gordon was made on the basis of an Affidavit for an Uncontested Trial.
4Specifically, Justice Gordon ordered that Mr. Vrbaski pay lump sum spousal support to Ms. Vrbaski in the amount of $212,291, in addition to $187,460 on account of equalization and post-separation adjustments.
5Anticipating that Mr. Vrbaski would not cooperate in transferring his interest in the matrimonial home to Ms. Vrbaski (in partial satisfaction of the amounts owed to her), Justice Gordon’s Order permitted Ms. Vrbaski to execute documents on Mr. Vrbaski’s behalf.
6On this motion, Ms. Vrbaski seeks:
a. An order that Mr. Vrbaski transfer $20,013.49 (or a lesser amount if required under the Pension Benefits Act) to her from his LIRA; that she may execute any related documents required, on his behalf; and, that the remaining amounts owed to her on account of property be reduced by the amount of the transfer;
b. An Order that the Order of Justice Gordon may be enforced against any assets, income or debts owing to Djoka Inc. (Ontario Corporation Number 141971) or any other corporation controlled by Mr. Vrbaski, with a Notice of Garnishment to issue accordingly against Quinton Steel Ltd., Mr. Vrbaski’s employer; and
c. That the lump sum support provision of Justice Gordon’s Order be enforceable by the Family Responsibility Office.
7In her affidavit sworn October 28, 2020, Ms. Vrbaski states that Mr. Vrbaski moved to Serbia around the time of separation and has ignored his obligations to her. She states that as he did not voluntarily comply with payments ordered by Justice Gordon, his interest in the home was transferred to her under the authority provided to her under Justice Gordon’s Order. She states that the amount owing to her presently is $270,202.04, excluding interest. Ms. Vrbaski attests that Mr. Vrbaski is aware of the Court Order of Justice Gordon.
8Ms. Vrbaski says she is experiencing financial difficulty as Mr. Vrbaski withdrew significant amounts from their joint line of credit and their joint bank account at the time of separation.
Relief Sought Regarding LIRA
9Ms. Vrbaski seeks a lump sum of $20,103.49 from Mr. Vrbaski’s locked in RRSP, which she understands to be half of the value of the LIRA. She has provided a statement from RBC reflecting a 2019 value of the LIRA of $40,026.98.
10There is no information in Ms. Vrbaski’s affidavit which suggests that the LIRA is presently in pay.
11The question of whether a LIRA can be accessed in the manner suggested by Ms. Vrbaski was very recently canvassed in Langeman v. Langeman, 2020 CarswellOnt 15193. In that case, the Applicant brought an urgent motion seeking to transfer the value of the Respondent’s LIRA to her to meet his spousal support obligation to her.
12Justice MacPherson reviewed the applicable legislative framework, including the Pension Benefits Act, to which LIRA’s are subject. He found that while, when the holder of a LIRA begins to receive payments from the LIRA, the amount may be subject to execution of up to 50% of the payments received, the same does not hold true when a LIRA is not “in pay.” Justice MacPherson stated, “There is no similar provision for that would permit garnishment for an unlocked LIRA or pension when there are no payments being made.” See paragraph 26. While in that case the support obligation was periodic in nature rather than a lump sum as here, I do not find that that affects the applicability of the analysis set out by Justice MacPherson in this case.
13Accordingly, I am unable to grant the relief sought by Ms. Vrbaski with respect to payment from the LIRA at this time. As and when Mr. Vrbaski’s LIRA is in pay this may very well be an option that is open to her.
Enforceability against Djoka Inc.
14Ms. Vrbaski seeks an Order that the Order of Justice Gordon be enforceable against any income, assets, or debts owing to Djoka Inc. or any other corporation controlled by the Respondent that may subsequently receive payment for services performed by him, and that Notices of Garnishment issue accordingly.
15Ms. Vrbaski’s evidence is that Mr. Vrbaski is the sole owner of Djoka Inc. There is no evidence to contradict this assertion. She has also provided a copy of the Corporate Profile showing that he is the only officer and director of the company.
16Ms. Vrbaski’s evidence is that Mr. Vrbaski currently works for Quinton Steel Ltd. Djoka Inc. issues invoices to Quinton Steel and payment is then remitted to Djoka Inc. Due to this arrangement, she says, the existing Notice of Garnishment does not allow Quinton Steel to garnish Mr. Vrbaski’s income.
17Essentially, Ms. Vrbaski seeks to pierce the corporate veil to enforce the Order of Justice Gordon. Her evidence is that Mr. Vrbaski has not personally met his obligations to her but owns a corporate asset through which those obligations could at least partially be met.
18In Wildman v. Wildman, 2006 CanLII 33540 (ON CA), [2006] O.J. No. 3966, The Ontario Court of Appeal held that while the principle of a corporation’s separate legal entity is fundamental, it is not absolute. Where maintaining the corporate veil would fly in the face of justice, the court may pierce the veil for the purpose of enforcing an existing family law liability. A crucial question will be how the corporation is being used in the context of the separation. See also O’Neill v. O’Neill, [2007] O.J. No 1706.
19Considering the principles in Wildman on the facts of this case, I note as follows:
a. Mr. Vrbaski is the sole owner of Djoka Inc. He is also the sole officer and director. The evidence is that Mr. Vrbaski has arranged with his employer to pay Djoka Inc. rather than himself personally. As in Wildman, there does not appear to be a meaningful distinction between Mr. Vrbaski and Djoka Inc.
b. Ms. Vrbaski’s evidence is that Mr. Vrbaski has not voluntarily met his obligations since separation.
c. As a consequence of how Mr. Vrbanski has organized his affairs, Ms. Vrbaski has been deprived of support and property payments to which she is entitled.
20I am prepared to grant the relief sought by Ms. Vrbaski regarding enforcement against Djoka Inc. or other corporations that may be controlled by Mr. Vrbaski and used to receive payment for services performed. As stated by the Court of Appeal in Wildman,
In the end, although a business person is entitled to create corporate structures and relationships for valid business, tax and other reasons, the law must be vigilant to ensure that permissible corporate arrangements do not work an injustice in the realm of family law.
Enforcement by the Family Responsibility Office
21Finally, Ms. Vrbaski seeks an Order that the lump sum support set out in the Order of Justice Gordon be enforced by the FRO unless withdrawn. This seems not to have been included in the Order of Justice Gordon.
22Order to go accordingly.
Conclusion
23On the basis of the foregoing then, and unopposed by Mr. Vrbaski who filed no materials although duly serviced, order to go per paragraphs 4 and 5 of the Notice of Motion dated November 3, 2020.
24No order as to costs was sought.
L. Madsen J.
Released: November 27, 2020