Milosevic v. Milosevic, 2021 ONSC 1213

COURT FILE NO.: 42679/19 DATE: 2021-02-17 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Dusica Milosevic, Applicant AND: Danilo Milosevic, Respondent

BEFORE: Kurz J.

COUNSEL: Lydia Moritz, for the Applicant Sasha Faraone, for the Respondent

HEARD: January 19, 2021

Endorsement

[1] The Applicant wife (“the wife”) moves for an order that:

1. the Respondent husband (“the husband”): i. Pay her table child support for the two children of the marriage based on an imputed annual income for the of $350,000; ii. Pay her spousal support of $7,300 per month on a without prejudice basis commencing April 1, 2020 based on the SSAG mid-range with no income imputed to her; iii. Pay the $400 per month bi-weekly payment on the mortgage registered against the matrimonial home that the wife says was obtained solely for the purpose of the husband’s business; iv. Make all payments on the Scotiabank line of credit bearing account number 453811312054, used for the husband’s business, pending further order of the Court; v. Provide a certified business valuation of the present value of his business, VCMS Security Services Inc. within 30 days; vi. Pay her $50,000 as advance costs to allow her to retain a certified business valuator to value his business and determine his income for support purposes;

2. The following persons provide their third-party records to her regarding the husband and his businesses: i. Jovan Purvic; ii. Victor Harding, and iii. Harding Security Services Inc. (“Harding SSI”).

[2] The husband moves to sever the divorce from the corollary relief.

[3] In addition, both parties also move to dismiss the motions of the other. I will have more to say about the regrettable trend of moving for that relief below. Suffice to say that it is improper and should end.

Background

[4] The parties married on August 9, 2009 and separated on May 25, 2019. They have two children, now 11 and 5 ½ years old. The children are presently in the primary care of the wife, as they have been since birth. The wife says that she took maternity leave for one year after the birth of the parties’ oldest child and then returned to work for approximately 3 months. She says that she has not thereafter worked outside the home. However, the husband states that she has a business and should have an income from $15 – $30,000 per year imputed to her.

[5] The husband is the principal of a security monitoring company called VCMS Security Services Inc. (“VCMS”). It is the third iteration of the same company, which began as a sole proprietorship registered in the wife’s name, even though it was never her business, and then was changed into a sole proprietorship registered in the husband’s name. Finally, it was incorporated as VCMS.

[6] The wife claims that the husband was always in charge of the family finances and that she went along with whatever he requested. He bought vehicles for each of them that were registered in his name but whose loans were placed in her name. He arranged for title to the matrimonial home to be registered in her name, even though he was paying all of the expenses. He then put a mortgage on the home in order to inject funds into his business, leaving her a debt of $400 bi-weekly. The husband denies that the money from the mortgage went into his business. He claims that the proceeds were used to pay family debts. I am unable to decide that question on the materials before me. In any even, he agrees to continue paying those $400 bi-weekly payments.

[7] The husband moved out of the matrimonial home on June 1, 2019. He did not exercise overnight access to the parties’ children until March 14, 2020. At that time, Chozik J. made a consent order that the husband would exercise access on alternate weekends from Friday at 5:00 p.m. until Sunday at 7:00 p.m. and Tuesdays and Thursdays from after school until 7:00 p.m.

[8] After the husband moved out of the matrimonial home, be began paying the wife total, unallocated support of $6,000 per month. Then, about six months later, in January 2020, he unilaterally reduced the amount to $3,000 per month, claiming that he could not afford to pay more. From that amount, he deducted $121.50 per month, for car and home insurance payments, leaving her with a balance of only $2,908 per month. That is the amount that he is paying at this time, albeit not pursuant to any order or agreement. Hence those payments presently attract no tax consequences.

[9] That wife says that this amount is vastly inadequate and has left her to rely on the generosity of her parents and even food banks. She asserts that the expenses associated with the matrimonial home alone (i.e. mortgage, property taxes and utilities) total at least $4,500 per month. She adds that she also has to cover basic monthly expenses such as groceries ($2,000), car insurance ($275), car loan ($567) and gas ($400), which total $3,042 per month. Along with the home expenses, she claims that her expenses total $7,742 per month or $92,904 per year. She had to return the automobile that she was driving in which the loan was in her name but title in that of the husband because she could not afford it. Yet as pointed out above, he claims a car loan expense.

[10] The wife points out that in two sworn financial statements since separation, the husband claims annual expenses of between $170,000-$175,000 with no decrease in assets or increase in debt.

[11] The wife attempted to move for the temporary support claimed in this motion in early 2020. But she was unable to obtain a motion return date because of scheduling and disclosure issues. Of course, the pandemic was also a factor in the delay. It temporarily suspended the operation of this court and made the selection of dates more difficult.

[12] VCMS installs closed circuit security television systems at business premises. It then monitors those premises from remote "monitoring stations" which could be located anywhere in the world. The wife states, without contradiction, that the husband has opening such monitoring stations in lower wage jurisdictions such as Texas and Serbia. She has little information about those locations or the money that they earn or even their business names and structures.

[13] The wife claims that VCMS is part of a joint family venture and that she made contributions of both work and money towards the business. I am unable make any findings in that regard at this time.

[14] VCMS and its predecessor sole proprietorship are being sued by Birdseye Security Inc. (“Birdseye”), a company controlled by the wife’s brother. Birdseye claims $7,000,000, asserting that the husband and VCMS wrongfully appropriated clients and proprietary information from Birdseye and infringed its trademarks. The suit is pending. The wife claims that when the suit was initiated, the husband told her that he would redirect his corporate assets to the United States and Serbia.

[15] In or about December 2017, the parties increased the mortgage on the matrimonial home by $140,000. That led to added mortgage payments of $400 biweekly. In addition, the wife states, without contradiction, that the husband increased the parties’ joint line of credit by about $60,786. She says that the loans were for the husband’s business operations. While the husband has assumed sole responsibility for making the monthly line of credit payment, the wife is concerned that he has not been making his payments regularly. The husband consents to an order requiring the continuation of those payments.

[16] The husband has arranged for a certified business valuator (“CBV”), Patrick McCabe, to prepare a report that sets out his assets on the date of separation and his income since then. According to Mr. McCabe’s report, VCMS was only worth $17,420 at separation. Mr. McCabe determined that the husband’s annual income was:

2017 2018 2019 $100,809 $105, 329 $126,595

[17] The wife strongly disputes Mr. McCabe’s figures, pointing to the husband’s own sworn financial statements and a critique report of another CBV, Trevor Hood. She seeks an order for the advance payment of legal expenses to allow Mr. Hood to fully investigate the husband’s assets and income.

[18] One area that the wife would like to investigate is the records of two financial advisors with whom the husband consulted: Jovan Purvic and Victor Harding of Harding SSI. She seeks their third-party records of those consultations in order to better determine the extent of the husband’s business assets on the date of separation and today. While served, those persons have not filed any materials in this motion nor have they attended at this hearing.

[19] The husband opposes this request, arguing that the evidence of Messrs. Purvic, and Harding as well as Harding SSI are irrelevant because they are not CBV’s.

[20] This motion raises the following issues:

1. What are the parties’ incomes for support purposes?
2. What amount of temporary child support should the husband pay to the wife, and commencing when?
3. What amount, if any, of temporary spousal support should the husband pay to the wife, and commencing when?
4. Should the husband be ordered to pay the $400 bi-weekly payments on the addition to the matrimonial home mortgage?
5. Should the husband be required to make an advance payment of $50,000 to the wife to retain Mr. Hood to prepare reports regarding the husband’s assets and income?
6. Is the wife entitled to the third-party records of Jovan Purvic, Victor Harding and Harding SSI?
7. Is the husband entitled to severance of the divorce?

Issue No 1: What are the parties’ incomes for support purposes?

[21] The husband relies on the McCabe report to say that his income for support purposes should be $126,585 per year, the 2019 figure ascribed to him by Mr. McCabe. The wife’s notice of motion claims that $350,000 is the proper income figure. But in argument, her counsel stated that the appropriate annual figure should be $300,000. She adds that I should place no reliance on the McCabe report’s figures.

[22] For his part, the husband asks me to reject the wife’s claims that she is a simple stay at home wife. He asks me to impute at least a minimum wage income of $30,000 to her, pointing to an internet beauty and makeup business, deposits to her bank account, statements on a business website, and even a claim that she had been working for her father’s company and earning over $90,000 per year.

The McCabe Report and the Hood Critique

[23] The reliability of the McCabe report is a key question in this motion as it is relevant to more than one issue raised by the parties. The husband relies on the fact that a CBV stated that his income for support purposes, $126,595 in 2019, is far lower than alleged by the wife. Based on Mr. McCabe’s figure, the husband states that the Child Support Guideline (“CSG”) table support amount plus the Spousal Support Advisory Guideline (“SSAG”) mid-range figures are in line with his unilaterally determined $3,000 per month payments. He argues that I should accept the opinion of the expert CBV rather than the arguments raised by the wife.

[24] Mr. McCabe was retained directly by the husband to prepare a report that values his separation date interest in VCMS and his post-separation income. Mr. McCabe prepared a report dated October 20, 2020 that deals with both asset valuation and income. Two issues stand out from a first glance at the report.

[25] First, the McCabe report is addressed to the husband’s counsel, Ms. Faraone. It begins by stating that “you have requested our assistance as independent consultants to provide you with an estimate of the fair market value of [the husband’s 100% interest in VCMS on the date of separation]… You have also requested an assessment of [the husband’s income for 2017-19]” [Emphasis added]. The problem, as I learned during the argument of this motion is that Ms. Faraone did not retain Mr. McCabe; the husband did.

[26] The failure to set out that distinction is relevant because of the need for scrupulous attention to detail required of an expert CBV such as Mr. McCabe. While I do not question his integrity, this slip stands out. The lack of care is relevant in light of some other concerns listed below.

[27] My second concern is the extent to which Mr. McCabe relies on representations offered by his client, the husband, rather than an independent review of the documentation. In a number of areas, particularly with regard to any expenses that the husband runs through the business, the valuator relied on the client’s representations. Mr. McCabe accepts that a relatively small amount of personal expenses are charged to the corporation: $3,180 in 2017, $5,386 in 2018 and $6,077 in 2019. What makes that concern particularly apposite is the fact that the husband claims more personal expenses in his sworn financial statements than he claims to earn, without showing where the money comes from.

[28] Mr. Hood had a great deal more to say to criticize the McCabe report. His key criticisms regarding the valuation of VCMS are:

1. The McCabe Report Should Have Included a Qualification Regarding the Scope of Review. It appears that Mr. McCabe was provided with a limited range of VCMS’s financial records. As Mr. Hood pointed out, Mr. McCabe was limited to “general ledgers and extracts of the financial statements as opposed to having the benefit of complete notice to reader, review or audited financial statements.” Presumably the client is the one who chose to provide those extracts. Mr. McCabe’s schedules refer to “extracts” from financial records rather than the complete records. Mr. Hood described that omission as “problematic”. Mr. Hood adds that “reliance on this [limited] information alone could lend to making inaccurate conclusions”
2. Mr. McCabe pointed to some large and unusual figures used to calculate the value of VCMS, which he did not explain. Mr. Hood wrote: ”[g]iven that this is an Estimate Valuation Report, and the level of rigor that is required in issuing this level of report, we would have expected such unusual balances to be explained or some detail to have been provided so that a reader of the McCabe Report could understand the basis for the valuation conclusions reached therein.”
3. Mr. McCabe did not appear to have the backup documents for the deductions from the husband’s personal tax returns. Mr. Hood writes: “[t]his supporting documentation would have been important in understanding the potential for personal or discretionary expenses that may have been deducted by Mr. Milosevic in his reported taxable income from the VCMS sole proprietorship in the 2017 and 2018 calendar years.”
4. Mr. Hood refers to Mr. McCabe’s “General Lack of Sufficient Information to Allow the Reader to Understand the Conclusion.” In that, he refers to a lack of detail about litigation in which VCMS is engaged, which may affect its value.
5. Further, Mr. Hood criticizes Mr. McCabe’s choice of valuation approach, relying on an Adjusted Book Value ("ABV") approach to value VCMS. Mr. Hood stated that it “is inappropriate based on the following considerations that include the fact that VCMS is experiencing high growth and should likely be valued using a discounted cash flow ("DCF") methodology as, at the Valuation Date, the Company's historic earnings are not indicative of its future expected earnings.” That is because VCMS’s revenues rose by 68.3% from 2017 to 2019, from approximately $404,000 in fiscal 2017 to approximately $1.14 million in fiscal 2019. Mr. Hood suggested that a DCF method was the more appropriate one because it would better capture the company’s future expected earnings.
6. Similarly, the McCabe report fails to offer either a historic or projected (into 2020) view of normalized corporate earnings. Doing so would have better illustrated which valuation method was appropriate.
7. The McCabe report also omits key information about VCMS’s customers: its customer concentration, attrition and retention. All of those are relevant to the valuation.

[29] While the concerns set out above relate to asset valuation, I point to three concerns that overlap both Mr. McCabe’s asset and income calculations. First, the numerous concerns with Mr. McCabe’s valuation methodology regarding VCMS that I have cited above must mean that, as a starting point, his income determination must be viewed with an equally sceptical eye.

[30] Second, Mr. Hood raises specific concerns about Mr. McCabe’s treatment of the issue of adding (and then grossing up) personal expenses to the determination of the husband’s income. Mr. Hood points out that, from his report, it appears that Mr. McCabe “relied mostly” on the husband’s representations about his personal expenses charged to the corporation, He did so in the absence of his own forensic review of the corporation’s general ledgers. To the extent that the husband’s representations are incomplete (or inaccurate), so too are the McCabe conclusions regarding both the expenses and the additional gross-up for tax that would apply.

[31] Third, Mr. Hood points out that Mr. McCabe neglected to explicitly include a statement regarding his independence and objectivity in his report. Such a statement is required by the standards of the Canadian Institute of Chartered Business Valuators. While Mr. McCabe did sign the form 20.1 Acknowledgement of Expert’s Duty, this omission may again point to a lack of diligence in the preparation of the report.

[32] On December 15, 2020, Mr. McCabe provided a brief response to Mr. Hood’s critique. The majority of his comments defended his use of the Adjusted Book Value rather than the Discounted Cash Flow method of valuation, repeating comments made in his earlier report. He then referred to information rather than documentation provided to him by the husband about the hours that he works and ultimately the value of that work.

[33] I have not seen either Mr. McCabe or Mr. Hood cross-examined about their reports. I cannot make a definitive statement about either CBV or their work. However, Mr. McCabe’s response to Mr. Hood’s criticisms as well as the concerns that I raised on my own, lead me to discount Mr. McCabe’s report to the point where I do not rely on his findings for the purpose of this motion.

[34] What I can say is that the husband’s income numbers do not add up.

[35] Thus, in determining the husband’s income for a temporary support order, I can only arrive at a rough calculation. In doing so, I rely on the following factors:

1. According to his own sworn financial statements, the husband spends between $170,000-$175,000 per year. In order to do so, he would have to earn at least $250,000-$300,000 per year.
2. Despite all of that spending, the husband demonstrates no decrease in his assets or increase in his debts. In other words, he can afford that spending.
3. He originally paid $6,000 per month, in after tax dollars towards the wife’s expenses. Much of that was for the equivalent of spousal support, which would have allowed him a tax break if it was paid pursuant to an order or written agreement. In other words, grossed up, the figure was a fair bit higher than the $6,000 after-tax payments.
4. While the father claimed that he could not afford that amount of monthly payments, the evidence does not support that claim.

[36] Even conservatively speaking, he would have to earn at least $250,000 per year to have spent money as he has. Accordingly, I find that his income for support purposes is $250,000 per year.

[37] With regard to the wife, there is little concrete evidence of her income from any internet businesses. The husband asks to impute an annual income of $30,000 per year, roughly representing a minimum wage to her. He points to her obligation to find employment and the provisions of s. 19(1)(a) of the Child Support Guidelines (“CSG”) that allow for the imputation of income in the case of intentional under or unemployment.

[38] From the evidence, the claim of the wife working for her father appears at this stage to have been a paper claim, in which no work was actually done, and no money actually changed hands.

[39] If it were not for the pandemic, I would impute a minimum wage to the wife. But absent evidence, I will apply the same conservatism to the determination of the wife’s income as to that of the husband. Accordingly, I impute an annual income to her of $15,000 per year, one-half of a minimum wage calculation, at this time.

Issue No. 2: What amount of child support should the husband pay to the wife, and commencing when?

[40] While there is some discretion under s. 4 of the CSG when calculating table support for a payor earning over $150,000 per year, I see no reason to deviate from the s. 3 table formula. It calls for the father to pay the mother $3,277 per month in table child support.

[41] There does not appear to be a present s. 7 claim.

[42] Until the husband unilaterally reduced the payments he was making to and on behalf of the wife and children, he was arguably meeting his support obligations to them. Thereafter, he paid only $3,000 per month. That amount did not even cover his child support obligations. While he is entitled to a credit for the $3,000 per month payments, I will do so in regard to his spousal support obligations. His child support obligations take priority to his spousal support obligations: Divorce Act s. 15.3. His child support obligations commence at separation and do not require notice: Michel v Graydon, 2020 SCC 24 at para. 41.

[43] Accordingly, the husband’s child support obligation commenced on January 1, 2020 and continues to accrue on the first day of each month thereafter until further order. At the time of the release of this decision, his retroactive obligation to the mother for the period January 1, 2020 to February 28, 2021 is 14 x $3,277, or $45,878. He shall pay that amount to the wife within 30 days.

Issue No. 3: What amount of temporary spousal support should the husband pay to the wife, and commencing when?

[44] Thanks to a very helpful chart provided by Ms. Moritz, whose accuracy the husband’s lawyer has accepted, based on an income of $250,000 per year and $15,000 for the wife, the SSAG range is:

Low Mid High Spousal $3,994 $4,666 $5,311 Child $3,277 $3,277 $3,277 NDI [1] Split $46.9% / 53.1% 44.6% / 55.4% 42.3%/57.7%

[45] This was a medium-term marriage of just under ten years with a compensatory element to the claim. The parties’ youngest child is less than six and the oldest is eleven years old. The mother left work with the birth of the older child. She remains their primary caregiver. She has been a stay at home mother for the majority of the parties’ relationship. The wife claims that she has monthly expenses of about $7,742 per month. That may be somewhat excessive. In the circumstances, I find that a spousal support figure of $4,666 per month is appropriate in the circumstances.

[46] The wife raised the issue of spousal support and the husband’s unilateral 50% reduction of his voluntary payments as early as December 2019. She attempted to bring this motion early in 2020 but was unable to do so for a variety of reasons, including the pandemic. The husband has paid $36,000 in after tax dollars to the mother in 2020, which, as set out above, I consider exclusive of child support payments. If he were to have paid the $4,666 per month that I find appropriate in the circumstances, he would have paid the wife $55,992 in 2020 and a further $9,332. The after-tax amount that the wife would have received was $3,487/mo. The after-tax difference is $487 per month or a total of $6,818 from January 1, 2020 – February 28, 2021. Accordingly, I order that he shall pay $6,818 to the wife as lump sum temporary retroactive spousal support. It shall be paid within 30 days.

[47] In addition, commencing on March 1, 2021 and continuing on the first day of each subsequent month, the husband shall pay to the wife spousal support of $4,666 per month.

Issue No. 4: Should the husband be required to pay the $400 bi-weekly payments on the addition to the matrimonial home mortgage?

[48] The husband agrees to an order that he be required to continue to make those payments and I so order.

Issue No 5: Should the husband be required to provide an advance payment of $50,000 to the wife to retain Mr. Hood to prepare reports regarding the husband’s assets and income?

Jurisdiction to Order Advance Payment of Expenses of Carrying on the Case

[49] My jurisdiction to grant an order of the advance payment of the expenses of carrying on a case arises under r. 24(18), formerly r. 24(12) of the Family Law Rules (“FLR”), which reads as follows:

PAYMENT OF EXPENSES (18) The court may make an order that a party pay an amount of money to another party to cover part or all of the expenses of carrying on the case, including a lawyer’s fees.

[50] In Stuart v. Stuart, [2001] O.J. No. 5172 (Ont. S.C.), Rogers J. summarized a number of the principles that are relevant to a consideration of a motion for the advance payment of legal expenses. They include:

1. The starting point in interpreting the rule is the FLR’s primary objective, set out in r. 2(2) – (5), which is to enable to court to deal with cases justly (r.2(2)).
2. Among the ways that the court does so are active management of cases identifying the issues and setting timetables to control the progress of the case (r. 2(5)).
3. Family law is no longer a guessing game where facts are concerned. The rules provide for full and complete disclosure. The parties are to know the facts and use this knowledge to settle or proceed to litigation. Cases should proceed expeditiously through the disclosure stage.
4. The duty in the court to ensure a fair procedure means that both parties should be able to request and give disclosure and to tackle complex valuation issues equally. One party should not be disadvantaged in the litigation by being unable to test the evidence of the other party.
5. Fairness in process also means that both parties should be equally wary about the potential of a cost order against them. The new regime of cost awards throughout the case should impact on both parties similarly.
6. Rule 24(12) is discretionary. The discretion must be applied to further the primary objective of fairness.

[51] To Rogers J.’s excellent summary of relevant principles, I add that in making its determination under r. 24(18) the court must ensure that the process is fair to all parties (r. 2(3)(a)). It must also deal with the case in ways that are appropriate to its importance and complexity (r. 2(3)(c)).

[52] After considering the principles she enunciated, Rogers J. turned to what she described as “themes” in the previous case law regarding the application of what is now r. 24(18). She summarized those themes at para. 8 of Stuart as follows:

1. The ordering of interim disbursements is discretionary: Airst v. Airst, [1995] O.J. No. 3005 (Ont. Gen. Div.); Hill v. Hill (1988), 63 O.R. (2d) 618 (Ont. H. C.) and Lossing v. Dmuchowski, [2000] O.J. No. 837 (Ont. S.C.J.).
2. A claimant must demonstrate that absent the advance of funds for interim disbursements, the claimant cannot present or analyse settlement offers or pursue entitlement: Hill v. Hill, (1988), 63 O. R. (2d) 618 (Ont. H.C.) and Airst v. Airst, [1995] O.J. No. 3005 (Ont. Gen. Div.).
3. It must be shown that the particular expenses are necessary: Lossing v. Dmuchowski, [2000] O.J. No. 837 (Ont. S.C.J.).
4. Is the claim being advanced meritorious? Lynch v. Lynch, (1999), 1 R.F.L. (5th) 309 (Ont. S.C.J.) and Randle v. Randle, 1999 ABQB 954, (1999), 3 R.F.L. (5th) 139 (Alta. Q.B.).
5. The exercise of discretion should be limited to exceptional cases: Organ v. Barnett (1992), 11 O.R. (3d) 210 (Ont. Gen. Div.).
6. Interim costs in matrimonial cases may be granted to level the playing field: Randle v. Randle, 1999 ABQB 954, (1999), 3 R.F.L. (5th) 139 (Alta. Q.B.).
7. Monies might be advanced against an equalization payment: Zagdanski v. Zagdanski, 2001 Carswell Ont. 2517 (Ont. S.C.J.).

[53] Rogers J. added that some of those principles may no longer hold their previous weight. In particular, while the moving party must prove that the advance payment of expenses is necessary and reasonable, the order need no longer be exceptional. As I read her decision and find, the key factor is “to ensure all parties can equally provide or test disclosure, make or consider offers or possible [sic] go to trial. Simply described, the award should be made to level the playing field” (para. 8(9)).

[54] The reasons of Rogers J. have been followed in a number of subsequent cases, including the decision of Mesbur J. in Ludmer v Ludmer, 2012 ONSC 4478. Mesbur J.’s condensed four-part test for the court’s exercise of disclosure, adopted from Stuart, was further adopted by the Divisional Court in Peerenboom v. Peerenboom, 2018 ONSC 5118 (Div. Ct.).

[55] In Peerenboom, the court confirmed at paras. 25-26 that the moving party in a motion for the payment of advance costs has the evidentiary burden of proving:

1. the necessity and reasonableness of the fees and disbursements, given the nature of the case and the funds available;
2. the moving party’s claim is meritorious;
3. the moving party is unable to fund the litigation without the order; and
4. the responding party has the resources or access to resources to pay interim costs and disbursements requested.

Analysis of Claim for Advance Payment of Expenses of Carrying on the Case

[56] Here, I find that:

1. the necessity and reasonableness of a deeper critique or alternative valuation of both the husband’s income and the V-day value of his business are proven for reasons set out above. The wife, with the assistance of Mr. Hood, has raised a number of concerns about the accuracy of Mr. McCabe’s income and business valuations. Further, she will need assistance in dealing with the husband’s US and Serbian affiliates. It is reasonable that she obtain her own CBV to assist her with that. Further, the wife has provided a letter from Mr. Hood stating that the estimated cost of his work, valuing the husband’s business is $15,000 plus HST and the cost of an income analysis would be $12,000–$20,000 plus HST. Thus, including HST, the range is $30,510 - $39,550.
2. Similarly, based on the information presently before me, I find that the wife’s claims for an equalization payment and support based on an accurate representation of the husband’s income and V-Day assets, is meritorious.
3. At present the wife lacks the funds to pay for the costs that Mr. Hood proposes. However, she will be receiving retroactive support payments from the husband as set out below. The child support payments should not be used to pay for a CBV but the spousal support payments may be so allocated, to the extent available.
4. At this interim stage, I have reason to believe that the husband has the resources to make a payment under r. 24(18).

[57] All of that being said, I must still consider what would be the appropriate quantum of payment under r. 24(18). While the wife will be receiving a substantial retroactive payment from the husband, as stated above, most of that retroactive payment is for child support. That money is to be used to support the children, not pay for litigation accounting. I add that the wife has had to rely on family and and live below her previous means for some time. She says that she had to give up her car and share one with her family. It is reasonable that she be able to purchase or lease one of her own. Further, the husband appears to have been able to offload some of his debt on the wife and the matrimonial home.

[58] It is reasonable that the wife contribute some money that she is receiving for retroactive and ongoing spousal support to Mr. Hood’s costs. But she will require financial assistance from the husband as well to ensure that the necessary reports can be completed.

[59] Of the $30,510 that is the minimum Mr. Hood suggested, I find that the wife should contribute $10,255 and the husband $20,255. This is without prejudice to a request for further funds under r. 24(18).

Issue No 6: Is the wife entitled to the third-party records of Jovan Puric, Victor Harding and Harding SSI?

[60] Each of those three third parties have been served with motion materials but have failed to respond to them.

[61] The husband hired Mr. Purvic to assist him prior to separation in determining the value of VCMS. The mother says that Mr. Puric offered him recommendations about restricting the company, including foreign expansion to lower wage jurisdictions and moving company assets outside of Ontario.

[62] After separation, the husband had VCMS valued by Victor Harding of Harding Security Services Inc.

[63] The husband says that the records of Mr. Purvic, Mr. Harding and Harding Security Services Inc. should not be disclosed because they are not CBV’s. Thus they cannot give expert evidence of the value of VCMS.

[64] The jurisdiction to order third party disclosure is found in FLR r. 19(11), which reads as follows:

DOCUMENT IN NON-PARTY’S CONTROL (11) If a document is in a non-party’s control, or is available only to the non-party, and is not protected by a legal privilege, and it would be unfair to a party to go on with the case without the document, the court may, on motion with notice served on every party and served on the non-party by special service, (a) order the non-party to let the party examine the document and to supply the party with a copy at the legal aid rate; and (b) order that a copy be prepared and used for all purposes of the case instead of the original.

[65] In Marcoccia v. Marcoccia, 2009 ONCA 162 (Ont. C.A.) the Ontario Court of Appeal offered the following analysis of r. 19(11) at para. 8:

Rule 19(11) of the Family Law Rules provides for the making of an order requiring a non-party to let the party seeking the records examine the documents and to supply the party with a copy of the legal aid rate. The judge may make the order where the document is not protected by legal privilege and “it would be unfair to a party to go on with the case without the document”.

[66] In Matthys v. Foody, 2009 CarswellOnt 3791 (Ont. S.C.J.) Mackinnon J. considered the expectations for the parties to a motion under r. 19(11) and concluded:

In my view the words also encompass the ability of a party to make a formal request for documents from a non-party with the expectation that the request, reasonably made, will be granted. A non-party should be expected to entertain a reasonable request with knowledge of the law, including the courts ability on proper notice to order production from the non-party pursuant to Family Law Rule 19(11).

[67] In Bailey v. Bailey, 2012 ONSC 2486 Mulligan J., having considered a number of authorities, adopted the following six rules for the application of r. 19(11):

• The documents are in a non-party’s control.
• The documents are available only to the non-party.
• That the documents are not protected by legal privilege.
• It would be unfair to require to the moving party to proceed without this information.
• All of the documents requested ought to be provided as relevant and necessary.
• The application has to be on notice to the non-party.

[68] This test has been adopted in a number of subsequent cases (see, for example, Girdlestone v. Bentley, 2020 ONCJ 444, at para. 19 and Duleba v. Sorge, 2018 ONSC 6022 at para. 10).

[69] Here the records holders may not be certified business valuators, but, depending on their expertise, may be qualified as participation experts (see r. 20.1 (14)). Further, they are likely fact witnesses. Their files potentially record information and documentation provided to them about the husband’s income and or assets.

[70] Here, I find that all six parts of the Bailey test are met. I order that the third parties produce the records requested.

Severing the Divorce

[71] The husband seeks to sever the divorce from the corollary relief.

[72] The jurisdiction to do so is found in r. 12(6) of the FLR. It states that:

SPLITTING DIVORCE FROM OTHER ISSUES (6) The court may, on motion, make an order splitting a divorce from the other issues in a case if, (a) neither spouse will be disadvantaged by the order; and (b) reasonable arrangements have been made for the support of any children of the marriage.

[73] Section 11(1)(b) of the Divorce Act similarly requires the court, before granting a divorce

(b) to satisfy itself that reasonable arrangements have been made for the support of any children of the marriage and, if such arrangements have not been made, having regard to the applicable guidelines, stay the granting of the divorce until such arrangements are made ...

[74] The parties have been separated for over a year without having reconciled so, prima facae they are entitled to a divorce.

[75] The wife argues that I should not sever the divorce because:

1. The court cannot know for certain that reasonable arrangements have been made for the support of the children in the absence of better disclosure and the completion of further expert reports;
2. She is claiming a trust interest in 50% of the husband’s businesses outside of Canada. She fears that a divorce will prejudice those claims.
3. There is no urgency to the request.
4. The husband has been obstructive and vexatious throughout this litigation.

[76] I must reject the mother’s arguments because, dealing with those objections in order:

1. The requirement under s. 11(1)(b) is for “reasonable” child support arrangements, not perfect ones or ones that may later be found to be correct at trial. Until I decided this motion, there was reason to make a s. 11(1)(b) argument. But the order that I make in this endorsement, is reasonable albeit not likely perfect. But it reasonably supports these children until trial, at which time, based on more complete evidence, a trial judge may adjust the amount of support.
2. The mother has offered no legal or factual support for her fears about the effect of a divorce on claims she may make against the husband in other jurisdictions. Her concerns are vague and speculative;
3. Urgency is not a prerequisite to a severance order;
4. No previous findings have been brought to my attention that support the claim that the husband has been obstructive or vexatious during these proceedings.

[77] Accordingly, the divorce shall be severed from the corollary relief claims.

Conclusion

[78] In conclusion, I order:

1. Commencing March 1, 2021 and continuing on the first day of each succeeding month until further order, the father shall pay to the mother $3,277 per month in temporary table child support for the two children of the marriage, This amount is based on his income of $250,000 per year.
2. The husband shall pay to the wife $45,878 in retroactive temporary table child support for the period January 1, 2020 – February 28, 2021. He shall do so within 30 days.
3. Commencing March 1, 2021 and continuing on the first day of each succeeding month until further order, the father shall pay to the wife temporary spousal support of $4,666 per month.
4. The husband shall pay to the wife $6,818 in retroactive temporary spousal support. He shall do so within 30 days.
5. Commencing December 1, 2020 and continuing until further order, the husband shall continue to pay the $400 bi-weekly payments on the addition to the mortgage on the matrimonial home located at 354 English Mill Court in Milton Ontario.
6. The husband shall pay $20,255 to the wife within 30 days as an advance payment of her legal expenses under r. 24(18). This amount is subject to reallocation at trial.
7. Jovan Puric shall provide to the solicitor for the Applicant a complete copy of his file regarding the Respondent Danilo Milosevic, VCMS Security Services Inc., VCMS Security Services and VCMS Security, including but not limited to notes, records, reports, all communications including emails and texts regarding those persons and entities.
8. Victor Harding, and Harding Security Services Inc. shall provide to the solicitor for the Applicant a complete copy of their files, regarding the Respondent Danilo Milosevic, VCMS Security Services Inc., VCMS Security Services and VCMS Security, including but not limited to notes, records, reports, all communications including emails and texts regarding those persons and entities.
9. The divorce shall be severed from the corollary relief. Either party is at liberty to move for a divorce.

Costs

[79] The parties should attempt to resolve the issue of costs on their own. If they are unable to do so, the Applicant may submit her costs submissions of up to three pages, double-spaced, one-inch margins, plus and bill of costs/costs outline and offers to settle within 14 days of release of this endorsement. She need not include the authorities upon which she relies so long as they are found in the commonly referenced reporting services (i.e., LexisNexis Quicklaw, or WestlawNext) and the relevant paragraph references are included. The Respondent may respond in kind within a further 14 days. No reply submission will be accepted unless I request it. If I have not received any submissions within the time frames set out above, I will assume that the parties have resolved the issue and make no costs order.

Note about the Practice of Moving to Dismiss the Other Party’s Motion

[80] I do not know where the lamentable trend of one party moving to dismiss the other party’s motion began, but I am seeing it with greater frequency. It is hard to think of a step in a proceeding that is more redundant, and wasteful than to move to dismiss the other side’s motion.

[81] Under r. 14(1), the type of relief available in a motion for interlocutory relief is:

i. A temporary order for a claim made in an application; ii. Directions on how to carry on a case; iii. A change in a temporary order.

[82] The term, claim, is not defined in the FLR, nor is it defined in the Rules of Civil Procedure. The first definition of the term found in the Oxford Canadian Dictionary, Barber, ed. Oxford U. Press, 1998, is “demand as one’s due or property”. Other definitions include “a demand or request for something considered one’s due (lay claim to; put in a claim)”

[83] On those reasons, I find that r. 14(1)(i) refers to a claim for substantive relief that is raised within an application (i.e. within the proceeding). A request to dismiss a motion is not a claim for such relief.

[84] Further, I remind the profession that we judges actually read the materials before us. When we are not provided with a consent, we assume that the motion is opposed. That is why it is scheduled for argument. That understanding is reinforced by the confirmation form (Form 14C), which tells us what relief is sought and whether it is on consent or opposed. Further, we are aware that all motions must be proceeded by a case conference. It is also assumed that as good professional practice, counsel will speak to each other before a motion is brought. In short, if a motion is opposed, we judges are capable of discerning the other party’s position from reading the materials.

[85] One further point, was the husband here, in moving to dismiss the wife’s motion, saying that she is not entitled to any relief at all, even child support for the two children in her primary care? I didn’t think so.

[86] It is to be hoped that parties and their counsel will desist from moving to dismiss the other party’s motion and instead explain why they oppose it. That practice will save everyone the unnecessary expenditure of time and energy.

“ Marvin Kurz J. ”

Electronic signature of Justice Marvin Kurz, Original will be placed in court file Date: February 17, 2021

[1] Net Disposable Income