COURT FILE NO.: FC-17-1064
DATE: 2021/03/29
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Lynda Van Delst (Hronowsky)
Applicant
– and –
Thomas John Hronowsky
Respondent
Katharine Shadbolt, Counsel for the Applicant
Self-Represented
HEARD: January 12, 13, and 15, 2021
REASONS FOR JUDGMENT
Justice Engelking
[1] I begin by saying that this was a tragically unnecessary hearing.
[2] On April 24, 2019, I released my Reasons for Judgment[^1] on a trial held in January of 2019. Mr. Hronowsky appealed the trial decision and on May 29, 2020, the Ontario Court of Appeal released its decision[^2]. The Court of Appeal allowed Mr. Hronowsky’s appeal on one issue; specifically, it determined that the value of both parties’ pensions ought to have been based on a normal age of retirement of 60. In the trial decision, Mr. Hronowsky’s was valued as of age 60, while Ms. Van Delst’s was valued at age 65. The Court of Appeal directed the matter back to this court to determine the Family Law Value (“FLV”) of Ms. Van Delst’s pension at a normal retirement age of 60 and to do concomitant adjustments to the equalization payment, as well as to my August 16, 2019 costs order, if necessary. Specifically, in its’ Reasons for Judgment, the Court of Appeal stated at paragraph 43:
[43] What remains to be done in this case is a calculation of the equalization payment owing based on a correct normal retirement date of age 60 for both parties. The appellant’s expert provided a calculation assuming a normal retirement date of age 60 and it appears that the respondent’s expert prepared this calculation as well. In the circumstance of this case, where important arguments regarding normal retirement date were not clearly made before the trial judge, and where further cost and delay should be minimized, I would direct the matter back to the trial judge to determine the equalization payment owing based on the experts’ age 60 calculations plus the parties’ further equalization calculation submissions.
[3] Further, at paragraph 71, the Ontario Court of Appeal found:
[71] I would allow the appeal in part and order that the parties’ pensions be valuated in accordance with these reasons, and that the resulting adjustment be made by the trial judge to the equalization order. If the parties cannot agree on the costs of the appeal and the trial, they may serve and file written submissions of no more than five pages, plus bills of costs, within two weeks of the date of these reasons.
[4] In its’ Costs Endorsement dated June 19, 2020[^3], the Ontario Court of Appeal found at paragraph 3:
[3] In our reasons, we referred the final calculation of the equalization payment to the trial judge to reflect our conclusions regarding the value of the respondent’s pension. We refer the fixing of the trial costs to the trial judge after she has recalculated the equalization payment.
[5] Subsequent to the Court of Appeal decision being rendered, I held a conference with the parties. In my endorsement dated June 30, 2020, after setting out the very paragraphs from the Ontario Court of Appeal quoted above, I noted that the issues to be addressed were three, namely: 1) was there a dispute as to the FLV of Ms. Van Delst’s pension at a normal retirement age of 60; 2) if so, what evidence did the parties propose to adduce as to the appropriate figure; and 3) how would a hearing be conducted, if necessary.[^4] Ms. Van Delst’s expert from trial, Mr. Guy Martel, had previously produced a letter dated October 26, 2018, upon which Ms. Van Delst sought to rely. Mr. Hronowsky did not agree with the value attributed to her pension by Mr. Martel. At the conference, I indicated to Mr. Hronowsky that if it was his intention to proffer his own expert as to the value, he needed to identify that by the next conference, which was scheduled for July 10, 2020.
[6] On July 10, 2020 Ms. Van Delst confirmed that Mr. Martel was producing an addendum to his expert report filed at trial specifically on the FLV of her pension at age 60, which was to be served on Mr. Hronowsky by July 17, 2020. If Mr. Hronowsky intended to retain his own expert to provide an opinion on that issue, his expert’s report was to be served on August 14, 2020. Two days of trial were to be scheduled to hear the matter.
[7] Rather than minimize “further cost and delay”, as suggested by the Court of Appeal, the parties ultimately conducted a three day hearing on the issue, where their respective experts each provided opinions on the FLV of Ms. Van Delst’s pension at a normal retirement of age 60 which were less than one thousand pre-tax dollars apart.
[8] The reason the parties found themselves in this situation is that, notwithstanding my very clear directives in my endorsements from the two pre-trial conferences on June 30 and July 10, 2020, Mr. Hronowsky did not seem to appreciate at the commencement of the hearing that the only issue being addressed in the trial was a determination of the FLV of Ms. Van Delst’s pension at age 60, and potential resulting adjustments to the equalization payment and costs, if necessary.
[9] Mr. Hronowsky did not agree with the outcome of the original trial, nor did he agree with the outcome at the Ontario Court of Appeal, though he did not seek to appeal the latter to the Supreme Court of Canada, which would have been the proper avenue of redress for those portions of the decision he thought incorrect. It was necessary, in this hearing, to repeatedly reiterate that the job with which I was tasked by the Ontario Court of Appeal was to value Ms. Van Delst’s pension at age 60 and adjust the equalization payment and/or costs accordingly, and that relitigating my original findings or those of the Court of Appeal would not be permitted.
Ms. Van Delst’s Motion
[10] Additionally, Ms. Van Delst brought a motion on the first day of trial seeking relief based on Rule 2(3) and Rule 1(8) of the Family Law Rules, which included striking all or part of Mr. Hronowsky documents wherein he raised issues already litigated and decided, and seeking an order for security for the monies owed to Ms. Van Delst. Specifically, Ms. Van Delst sought to have certain portions of Mr. Hronowsky’s expert, Mr. Jocsak’s report dated August 14, 2020 struck and to have monies either paid into court or certain property of Mr. Hronowsky’s transferred to Ms. Van Delst pursuant to Section 9 of the Family Law Act. She also sought an order requiring Mr. Hronowsky to comply with certain provisions of previous orders of the court. Some orders were granted orally, for reasons given on the record. Additional reasons and my reasons for those portions of the motion not decided orally are provided herein.
[11] Ms. Van Delst submitted that Mr. Hronowsky has specifically failed to comply with certain provisions of the Divorce Order dated April 24, 2019, as well as failed to pay costs awarded by the Court of Appeal on March 4, 2020 of $2,500 and on May 29, 2020 (effective June 19, 2020) of $15,000.
[12] With respect to the Divorce Order dated April 24, 2019, Ms. Van Delst submits that Mr. Hronowsky has failed to produce his 2018- and 2019-Income Tax Returns and Notices of Assessment/Reassessment contrary to paragraphs 8 and 9 of the Order. Mr. Hronowsky concedes that he had not done so, and provided no valid reason. On January 12, 2021, I granted an oral decision that he was required to do so by 10:00 a.m. on January 13, 2020.
[13] Ms. Van Delst also submitted that Mr. Hronowsky has failed to provide an appropriate Direction/Authorization to the Scotiabank for the children’s RESP account ending in #1184 as per paragraph 25 of the Divorce Order. Mr. Hronowsky disputes this and states that he has provided an adequate Direction to the bank. However, both parties were communicated with by email on April 9, 2020 by Ms. Cathleen Wansa, assistant manager at Scotiabank, 186 Bank Street, as to what was required from Mr. Hronowsky to permit the bank to release information to Ms. Van Delst, which was a signed and witnessed Direction in the form contained at Exhibit “H” to Ms. Van Delst’s affidavit in support of the motion sworn on December 30, 2020. Mr. Hronowsky is required to provide a signed and witnessed Direction as per Exhibit “H” of Ms. Van Delst’s affidavit as soon as practicable, taking the current restrictions related to the COVID-19 pandemic into consideration.
[14] With respect to the cost awards of the Court of Appeal, Mr. Hronowsky did not pay them. Indeed, he did not approve the Orders as drafted by Ms. Van Delst’s counsel. They were finalized by the Registrar of the Court of Appeal after a hearing by teleconference on August 4, 2020, and issued and entered on August 24, 2020. Mr. Hronowsky still did not pay. Ms. Van Delst, therefore, took measures to enforce them, plus the accruing interest on both awards, and commenced garnishment proceedings in September of 2020. Mr. Hronowsky served two Disputes to Garnishment on October 8, 2020 based, in part, on the Orders not having been settled. On October 28, 2020, the Registrar of the Court of Appeal sent an email from Justice Nordheimer to Ms. Van Delst and Mr. Hronowsky confirming that both he and the panel approved their Orders as already issued and entered. The Attorney General, in the interim, collected on the garnishment and sent a cheque for $17,632.74 to Ms. Shadbolt, which she retained in her trust account pending Mr. Hronowsky’s garnishment dispute. Ms. Van Delst requests that the funds be released to her, and, notwithstanding Mr. Hronowsky’s dispute, I am of the view that Ms. Van Delst is entitled, immediately, to those funds. I orally ordered them released to her. In doing so, I relied on Abu-Saud v. Abu-Saud, 2020 ONCA 824. In that case, the Court of Appeal stated at paragraph 20:
- We end with this. While Mr. Abu-Saud’s newly launched motion to vary the trial judge’s order was not before us for determination, it was referenced as yet another example of Mr. Abu-Saud’s persistent attempts to avoid his court-ordered obligations. Rule 1(8)(e) of the Family Law Rules, O. Reg. 114/99, explicitly empowers the court to order that a party who has not complied with prior orders is not entitled to any further order from the court unless the court orders otherwise. In our view, any attempt by Mr. Abu-Saud to vary support or take any other step in the Superior Court of Justice proceedings while he remains in substantial non-compliance with the trial judge’s order and the orders of this court would appropriately attract such an order, in keeping with the primary objective of the Family Law Rules, as stated under r. 2(2), to “deal with cases justly”, including saving expense and time, as stated under r. 2(3)(b).
[15] Indeed, had the funds not been available to pay Ms. Van Delst immediately, my order would have been to provide Mr. Hronowsky 24 hours to comply with the Orders, failing which he would not have been permitted to lead evidence in this hearing. Releasing the funds to Ms. Van Delst immediately permitted Mr. Hronowsky to be in compliance with the two cost orders from the Court of Appeal and to participate fully in this hearing. I, therefore, made an oral decision on January 12, 2021 that the funds could be immediately released to Ms. Van Delst.
[16] With respect to Mr. Jocsak’s report dated August 14, 2020, I declined to strike those portions of it which may pertain to issues already litigated and decided. Having said that, I am very mindful that the issue before me is exceedingly narrow based on paragraphs 43 and 71 of the Court of Appeal’s Reasons for Decisions dated May 29, 2020 and paragraph 3 of their Costs Endorsement dated June 19, 2020 quoted above. Consequently, those portions of Mr. Jocsak’s report which do not pertain to the FLV of Ms. Van Delst’s pension at a normal retirement age of 60, and the concomitant adjustments to the equalization payment and/or costs award, will not be considered by the court.
[17] Finally, I will deal further the last issue on the motion, that of security for sums owing, in the substantive decision below.
[18] A third day of trial was required as Mr. Hronowsky sought to cross-examine Ms. Van Delst on the affidavit she filed in support of her motion, in order to rectify “incorrections” contained therein. In the end, the only error Mr. Hronowsky was able to establish out of an eleven page, 61 paragraph affidavit with Exhibits “A” to “W”, was that Ms. Van Delst indicated that he had delayed matters from the commencement of the Application by three months, rather than the approximately two months it took him to file his Answer. The cross-examination of Ms. Van Delst on her affidavit, which I permitted out of an abundance of caution and to ensure a fair hearing, turned out, in fact, to be a complete waste of time.
[19] Mr. Hronowsky purported to also file a Motion for certain relief. However, it was served only on Friday, January 8, 2020 on Ms. Van Delst, did not conform to the Family Law Rules and was not accompanied by any evidence in support. It was, thus, not entertained by the Court.
The FLV of Ms. Van Delst’s Pension at age 60
[20] As I have indicated above, the parties’ experts were less than $1,000 in pre-tax dollars apart in their opinions of the preliminary value of Ms. Van Delst’s pension at a normal retirement age of 60. They diverged in three areas: 1) unisex mortality rates; 2) contingent survivor benefit (or likelihood of an eligible spouse); and, 3) nominal tax rates at disposition.
[21] Ms. Van Delst’s expert, Mr. Guy Martel, provided a Supplementary Addendum dated July 16, 2020 to his original report dated October 26, 2018, in which he provided a calculation of Ms. Van Delst’s pension using a normal retirement age of 60 as directed by the Court of Appeal. In his original report, Mr. Martel had provided calculations based on two different scenarios, one which included Ms. Van Delst continuing to accrue pensionable service while on leave without pay and the other which included only the portion of her service already repaid. However, in his addendum, Mr. Martel provided only a calculation from the first scenario, noting that it was the one accepted at trial and not interfered with on appeal.
[22] Mr. Martel adopted the following assumptions in his addendum report:
• Unisex mortality rates in accordance with the 2014 Canadian Pensioners Mortality Table of 46% male and 54% female;
• A 0% chance of Ms. Van Delst having an eligible spouse if retirement is within one year of the valuation date (of September 2, 2016) and a 58% of Ms. Van Delst otherwise having an eligible spouse upon retirement; and,
• An estimated tax rate being applicable to Ms. Van Delst of 17.6 % if she retires at age 60 and of 18% if she retires at age 65.
[23] Mr. Martel opined that assuming a 0% chance of having an eligible spouse, the preliminary value of Ms. Van Delst’s pension would be $757,494 and the FLV would be $486,249. If a 58% probability of having an eligible spouse is applied, those figures change to a $759,332 preliminary value and $487,459 FLV.
[24] The summary of Mr. Martel’s results are as follows:
| 0% probability of having an Eligible spouse for value A | 58% probability of having an Eligible Spouse for value A | |
|---|---|---|
| Preliminary Value | $757,494 | $759,332 |
| Family Law Value | $486,249 | $487,459 |
| After-tax value at 18% | $398,724 | $399,716 |
| After-tax value at 17.6 % | $400,669 | $401,666 |
[25] Mr. Hronowsky’s expert, Mr. Jamie Jocsak, provided his expert opinion via his letter to Mr. Hronowsky dated August 14, 2020. In it he indicates that he has used the same assumptions as Mr. Martel, “with the exception of minor differences”. Namely, Mr. Jocsak has used a mortality rate of 50% male and 50% female as opposed to Mr. Martel’s 46% male and 54% female, and Mr. Jocsak used a 60% probability of Ms. Van Delst having an eligible spouse for all three values calculated as opposed to Mr. Martel’s 0% for one value and 58% for the other two values. There was also a slight difference in the “T. Factor” between the two reports, with Mr. Martel using 4.51 and Mr. Jocsak using 4.50. When asked about these differences (but for the 0% likelihood of having a spouse for value A)[^5], Mr. Jocsak noted that his were “rounded” while Mr. Martel’s were more specific, but that both approaches are perfectly acceptable within the industry for such valuations. Even Mr. Hronowsky referred to these differences as “minimal” or “negligible”. Mr. Jocsak’s also applied an estimated average tax rate in retirement for Ms. Van Delst of 17.1% as opposed to Mr. Martel’s 17.6% or 18%.
[26] The results of Mr. Jocsak’s calculations on page 2 of his letter are as follows:
• Preliminary value of pension benefits $758,482
• Less: portion allocated to the period prior to marriage (34.15%) ($259,022)
• Family law value (65.85% of preliminary value) $499,460
• Less: contingent income tax (using the income tax rate below) ($85,408)
• Net value (after tax family law value) $414,052
• Estimated average income tax rate in retirement: 17.1%
[27] Thus, the difference in the preliminary value of Ms. Van Delst’s pension between the two is either $988 ($758,482 - $757,494) or $850 ($759,332 - $758,482).
[28] The difference in the FLV of Ms. Van Delst’s pension is either $13,211 ($499,460 - $486,249) or $12,001 (499,460 - $487,459). Mr. Jocsak’s indicated that the reason for this difference in the FLV is that, upon instruction from Mr. Hronowsky, he did not deduct Ms. Van Delst’s outstanding contributions for her leaves without pay during marriage of $12,545.70. In other words, this calculation was done as per Scenario #2 at the original trial[^6]. Mr. Jocsak testified that he did this at the behest of Mr. Hronowsky; left to his own judgment, he would have deducted the contribution deficiency. Indeed, Mr. Jocsak indicated that, but for the instructions he received from Mr. Hronowsky, he would have applied the same methodology used by Mr. Martel regarding the contribution deficiency. If the $12,545.70 is removed from Mr. Jocsak’s calculations, the difference of the FLV of the pension in the two reports is either $665.30 or $544.70.
[29] In paragraph 29 of my Reasons for Decision dated April 24, 2019, I found that the “Family Law value of Ms. Van Delst’s pension is that pursuant to Scenario #1 of Mr. Martel”. This finding was not addressed, let alone set aside, by the Ontario Court of Appeal in their Reasons dated May 29, 2020. This finding, therefore, stands.
[30] Similarly, in my trial decision, I accepted the FLV of Ms. Van Delst’s pension provided by her expert, Mr. Martel, albeit at age 65 rather than 60. The assumptions upon which Mr. Martel based his valuation in his October 26, 2018 report with respect to unisex mortality (46% and 54%) and the likelihood of having an eligible spouse post-retirement (0% and 58%) are the same as in his 2020 addendum. Indeed, Mr. Jocsak testified that it is necessary to make assumptions when doing actuarial work, and that there can even be slight differences in calculations dependent upon the program an actuarial is using. He considered Mr. Martel’s ranges to be well within the norm. Indeed, his opinion was that a difference of less than $1,000 on a $700,000 figure “is considered to be the same.” This being the case, I see no reason to divert from Mr. Martel’s opinion in respect thereto. Therefore, I find that the FLV of Ms. Van Delst’s pension at a normal retirement age of 60 is $486,249.
Disposition Rate
[31] With respect to the tax rate to be applied to Ms. Van Delst at retirement, I found in paragraph 46 of my April 24, 2019 decision, under the title “Disposition Costs” that the parties “also appear to agree that the marginal tax rate to be applied to Ms. Van Delst’s RRSP is 18%”.[^7] In the Ontario Court of Appeal decision, Justice Hourigan stated at paragraph 63: “I am not persuaded that there is a basis to interfere with the trial judge’s calculation of notional disposition costs.”
[32] Both experts testified once again as to the tax rate to be applied to Ms. Van Delst in retirement. Mr. Martel estimated her average income tax rate to be 18% after age 65 or 17.6% after age 60. Mr. Martel explained in his evidence that he arrived at a 17.1% tax rate between ages 60 and 65 and a 17.8% rate after age 65. A weighted average of the two resulted in a 17.6% tax rate for retirement after 60. However, if Ms. Van Delst retires after age 65, her average tax rate, based on her projected income outlined in Mr. Martel’s report would remain at 18%.
[33] Mr. Jocsak estimated Ms. Van Delst’s average income tax rate in retirement to be 17. 1% after age 60. At page 5 of his August 14, 2020 letter, Mr. Jocsak explains how Ms. Van Delst’s average income tax rate is arrived at as follows:
The income tax adjustment reflects Ms. Van Delst’s estimated average income tax rate in retirement. This is calculated by determining Ms. Van Delst’s estimated average income tax rates based on the assumed retirement dates used to calculate the three commuted values which comprise the preliminary value (i.e. A, B and C as outlined in Table 2). Ms. Van Delst’s estimated average tax rate in retirement is then determined by blending the average income tax rates corresponding to each commuted value (i.e. A, B, and C) based on [the] same weighting that was used to determine the preliminary value.
[34] Mr. Jocsak testified that his method is meant to be consistent with determining the preliminary value of the pension at age 60 by blending the tax rate with the same weighting used to calculate it. Mr. Martel testified that he calculated a projected tax rate at ages 60 and 65 and then averaged the two. Mr. Jocsak was of the view that now that the question of normal retirement age has been determined by the Court of Appeal to be 60 for Public Service Superannuation Act, RS.C. 1985, c. P-36 members (before 2013) in Ontario, his approach aligns the FLV (and the assumed retirement age as determined by the Court of Appeal) with the tax rate. In footnote #9 on page 6 of his report, Mr. Jocsak stated: “if age 65 is considered the normal retirement age in the PSSA, as was done in Mr. Martel’s October 26, 2018 report, average tax rate ‘B’ is 18.1% and weighted average tax rate is 17.2%.” Mr. Jocsak stated in his evidence that he only commented on the change of rate if age 65 is used as a normal retirement age, which he indicated is no longer “up for discussion.” Mr. Jocsak’s logic appeared to be that the normal age of retirement of 60 is the assumed retirement age.
[35] Ms. Van Delst, however, submits that the rate to be chosen is Mr. Martel’s average tax rate at age 65, because she does not intend to retire before that age. She submits that valuing a PSSA pension at a normal retirement age of 60, as one is now required to do pursuant to the Ontario Court of Appeal decision, is very distinct from determining at what age the tax rate should be applied. Ms. Van Delst’s position is that the normal retirement age “travels with the pension valuation”, not with the determination of disposition costs. She submits further that the appropriate tax rate to apply is that based on a probable disposition date in the circumstances of the particular case. In support of this proposition, Ms. Van Delst relies upon Knight v. Knight, 2018 ONSC 3294, wherein Justice Nelson accepts at paragraph 55 that “notional disposition costs may be deducted from a spouse’s net family property if there is satisfactory evidence of a likely disposition date and it is clear that such costs will be inevitable when the owner disposes of the assets or is deemed to have disposed of them.” (Underlining is original).
[36] At paragraph 54 of my trial decision, I found that Ms. Van Delst intended to work until age 65. As is indicated in paragraph 31 above, I applied an 18% disposition rate to Ms. Van Delst’s pension at trial the Court of Appeal did not overturn that finding, notwithstanding that it found that the normal age of retirement for Ms. Van Delst ought to have been 60 for the purposes of calculating the FLV of her pension. For these reasons, I, therefore, find that an 18% disposition rate for Ms. Van Delst’s pension remains a reasonable one, and that the notional cost of disposition of Ms. Van Delst’s pension is $87,525.
Equalization
[37] Based on my above findings, the net family property calculation from trial is revised as follows:
| Assets on Valuation Date | Wife | Husband |
|---|---|---|
| 6519 Empire Grove Street | $239,950.00 | $239,950.00 |
| Household Items and Goods | $12,500.00 | $13,725.00 |
| Pension | $486,249.00 | $1,129,294.00 |
| RBC ***301 RRSP | $118,817.00 | |
| RBC ***739 TFSA | $52,761.00 | |
| RBC ***976 | $7,052.00 | |
| RBC ***939 | $4,899.00 | |
| RBC ***137 | $675.48 | |
| Severance Pay | $68,217.21 | |
| Scotia ***129 | $162,615.93 | |
| Scotia ***720 | $4,853.00 | |
| Canada Savings Bonds | $85,000.00 | |
| Cash | $7,000.00 | |
| Canada Savings Bond Registered Product | $4,653.28 | |
| Scotia Securities Inc. | $441,957.48 | |
| ScotiaTrust ***266 | $65,120.66 | |
| ScotiaTrust ***082 RRSP | $154,407.85 | |
| Retroactive Pay | $3,028.62 | $4,000.00 |
| TOTAL | $925,932.10 | $2,380,794.41 |
| Debts and Liabilities on Valuation Date | Wife | Husband |
|---|---|---|
| VISA card debt | $2,037.66 | |
| Notional cost of disposition on pension | $87,525.00 | $291,358.00 |
| Notional cost of disposition on RRSP | $21,387.00 | $41,037.77 |
| Notional cost of disposition on retroactive pay | $897.98 | $1,800.00 |
| Notional cost of disposition on severance pay | $26,089.74 | |
| TOTAL | $111,847.64 | $360,285.51 |
| Assets on Marriage Date | Wife | Husband |
|---|---|---|
| RRSP | $26,464.00 | $16,762.32 |
| RBC Term Deposits | $23,5000.00 | |
| Canada Savings Bonds | $12,500.00 | $133,500.00 |
| Bank balances | $9,338.04 | $2,865.83 |
| Severance pay | $11,644.00 | $26,594.24 |
| Scotiabank GIC | $15,000.00 | |
| Vehicle | $7,500.00 | |
| TOTAL | $83,446.04 | $202,222.39 |
| Debts and Liabilities on Marriage Date | Wife | Husband |
|---|---|---|
| Disposition cost on RRSP | $4,763.52 | $4,324.60 |
| Disposition cost on severance pay | $3,858.82 | $11,967.41 |
| TOTAL | $8,622.34 | $16,292.01 |
| Summary | Wife | Husband |
|---|---|---|
| Net Value of Property on Valuation Date (Assets – Debts and Liabilities) | $814084.46 | $2,020,508.90 |
| Net Value of Property on Marriage Date (Assets – Debts and Liabilities) | $74,823.70 | $185,930.38 |
| Net Family Property (NFP) (Net Value of Property on Valuation Date – Net Value of Property on Marriage Date) | $739,260.76 | $1,834,578.52 |
| Difference Between NFP | $1,095,317.76 | |
| Equalization Payment | $547,658.88 |
[38] I find that Mr. Hronowsky owes Ms. Van Delst an equalization payment of $547,658.88.
Pre-judgment Interest
[39] Mr. Hronowsky was ordered at trial to pay pre-judgment interest on the equalization payment from September 17, 2018, which the parties agreed would be 1.5%. He is, thus, required to pay pre-judgment interest on the entire balance from that date to April 24, 2019, for a total of $4928.93.
Post-judgment Interest
[40] Post-judgment interest, which is now 2%, is payable on the entire amount from April 24, 2019 to May 13, 2019, on which date Mr. Hronowsky made a partial payment, for a total of $540.16. As of May 13, 2019, Mr. Hronowsky is to receive credit for $204,589.28, less the pre-judgment interest of $4928.93 and post-judgment interest to May 13, 2019 of $540.16, leaving a credit of $199,120.19. Post-judgment interest is payable at 2% on the remaining balance of $348,538.69 from May 14, 2019 to the present, which results in $13,063.04
[41] Mr. Hronowsky owes Ms. Van Delst a total of $361,601.73, being the remainder of his equalization payment and post-judgment interest, which is payable within fifteen days of the release of this decision.
Costs Award at Trial
[42] I do not see any basis to alter my decision on costs dated August 16, 2019. Ms. Van Delst’s outcome on this portion of the trial remains more favourable to her than her last three offers to Mr. Hronowsky dated November 8, 2018, December 31, 2018 and January 11, 2019 and far more favourable to her than both of Mr. Hronowsky’s offers dated January 30, 2018 and January 13, 2019. Mr. Hronowsky continues, therefore, to owe Ms. Van Delst $32,732,32 in costs, plus interest at 2% from that date to March 29, 2021, being $1,058.21, also payable 15 days from the release of this decision.
[43] Mr. Hronowsky, thus, continues to owe Ms. Van Delst a total of $395,392.26.
Method of Payment and Security
[44] As I have indicated at the outset, Ms. Van Delst brought a motion seeking an order for security or enforcement of my order. She does so based on what she submits to be Mr. Hronowsky’s vexatious behaviour to date, which includes him not complying with the provisions of my April 24, 2019 order to provide proof of his annual income or to sign an authorization in a form acceptable to the bank, not settling the costs orders of the Court of Appeal, not paying the costs orders of the Court of Appeal, disputing garnishment to satisfy them and generally delaying everything. The parties separated in September of 2016. Ms. Van Delst commenced her litigation in 2017 and has been waiting almost four years for it to conclude; she simply wants to be paid what is owed to her and for the matter to end.
[45] Mr. Hronowsky disputes that he has acted in a vexatious manner, stating that his concern is with ensuring the correctness of matters. He states that he too wants the matter to end. While Mr. Hronowsky verbalizes his wish for this matter to conclude, he does not seem to be able to permit it to do so. As I have indicated above, this hearing was entirely unnecessary, particularly given that both parties’ experts were less than $1,000 apart in their respective assessments of the value of Ms. Van Delst’s pension at a normal retirement age of 60, that being the only question for this court to decide. It could have come to a very prompt and inexpensive conclusion after the Court of Appeal released its’ decision; instead it has come to one which was delayed and expensive, to the parties and to the justice system. Indeed, Mr. Hronowsky was still talking about bringing further motions at the end of the second leg of this trial. This cannot happen.
[46] Given Mr. Hronowsky’s inability to put to rest his dispute with Ms. Van Delst, I am inclined to provide her with a remedy if Mr. Hronowsky does not satisfy his debt in a timely manner.
[47] Section 9(1)(d) of the Family Law Act provides:
- POWERS OF THE COURT – (1) In an application under section 7, the court may order,
(d) that, if appropriate to satisfy an obligation imposed by the order,
(i) property be transferred to or in trust for or vested in a spouse, whether absolutely, for life or for a term of years, or
(ii) any property be partitioned and sold.
[48] As was pointed out by the Ontario Court of Appeal at paragraph 68 of its’ decision, at the conclusion of the first trial, Mr. Hronowsky’s counsel represented that Mr. Hronowsky had enough liquidity to pay whatever equalization was ordered. The Court indicated at paragraph 66 that it would not give effect to Mr. Hronowsky’s submission that he be permitted to satisfy part of his equalization payment by transfer of a lump sum out of his pension plan. Mr. Hronowsky owes Ms. Van Delst a cash payment, and a cash payment he shall make.
[49] In his Financial Statement sworn on December 10, 2018, Mr. Hronowsky showed that he had a total value of accounts, savings and investments, excluding his pension, of $1,056,684.44 as of December 10, 2018. In particular, it showed a non-registered investment account valued at $489,599.09 as of that date and a Tax-Free Savings Account valued a $65,120.66. If those accounts still exist, their value is sufficient to satisfy the sums currently owed to Ms. Van Delst. If they do not exist, however, a transfer from Mr. Hronowsky’s pension to Ms. Van Delst may be utilized by way of a rollover, but will have to be appropriately grossed up for tax.
[50] To this latter end, Ms. Van Delst sought to recall Mr. Martel to provide an opinion as to the appropriate tax rate for such a rollover, if ordered. Mr. Hronowsky objected to hearing from Mr. Martel on this issue on the basis that he had not provided an expert report in accordance with Rule 20.2 of the Family Law Rules. Ms. Van Delst submitted that pursuant to Rule 20.3, the court could appoint Mr. Martel to report on any question of fact or opinion on its’ own imitative and that pursuant to Rule 2(2) and (3), doing so was appropriate in the circumstances. Based primarily on Rule 2(3), in particular “(b) saving time and expense” and “(c) dealing with the case in ways that are appropriate to its importance and complexity”, I agreed to hear from Mr. Martel on this issue. The last thing that is required in this case is a further hearing on the even narrower question of Ms. Van Delst’s potential tax rate on the amount owing.
[51] Mr. Martel’s evidence was that his starting point if Ms. Van Delst was to access the money at age 65 was 18%. Depending on the amount of money to be rolled over (and thus added to her post-retirement income) and as of what date, the gross up required fluctuated from 21.7% ($400,000 at age 65 as of now) to 22.1% ($400,000 at age 65 as of September 2, 2016) to 21.9% ($425,000 at age 65 as of now). Given that the sum owing is slightly lower than $400,000, and that the calculation, albeit usually done as of separation date, may have been done as of a date anywhere between separation and today, including May 13, 2019, when Mr. Hronowsky made partial payment, I find that an appropriate tax rate applicable to Ms. Van Delst for gross up purposes is 21%.
Order
[52] My order, therefore, is as follows:
Within 15 days of today, the Respondent shall pay to the Applicant the outstanding balance on his equalization payment of $348,538.69, as well as $13,063.04 in post-judgment interest;
Within 15 days of today, the Respondent shall pay to the Applicant costs of $32,732,32 in accordance with my order of August 16, 2019, as well as $1,058.21 in post-judgment interest;
If the Respondent fails to pay to the Applicant the total sum of $395,392.26, pursuant to section 9(1)(d) of the Family Law Act, that sum shall be transferred to the Applicant from the Respondent’s Scotia Securities Inc. non-registered investment account ending in 404 and/or his Scotia Securities Inc. Tax-Free Savings Account ending in 266, or some combination thereof, by no later than May 1, 2021;
If the Respondent’s Scotia Securities Inc non-registered investment account ending in 404 and/or his Scotia Securities Inc. Tax-Free Savings Account ending in 266 are no longer available, the sum of $395,392.26, or the maximum transferable amount, if less than $395,392.26, shall be transferred by way of a rollover from the Respondent’s Public Service Superannuation Pension to a retirement vehicle chosen by the Applicant grossed up for tax at a rate of 21% no later than May 1, 2021. Any balance remaining if the maximum transferable amount is less than $395,392.26 shall be paid in cash no later than May 1, 2021;
If a further order with more specific particulars is required from the court to effect either of the remedies referred to in paragraphs 3 or 4, the Applicant may bring a 14B Motion without notice for same; and,
The remainder of my Final Order dated April 24, 2019 remains valid and of full force and effect.
Costs
[53] Ms. Van Delst has been the successful party on this hearing and will be entitled to costs. If the parties are unable to agree on a quantum by May 15, 2021, they may make written submissions of no more than three pages, along with copies of their Bills of Costs and Offers to Settle, to me at intervals of 10 days from that date and I will make an order.
Engelking J.
Released: March 29, 2021
COURT FILE NO.: FC-17-1064
DATE: 2021/03/29
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Lynda Van Delst
Applicant
AND:
Thomas John Hronowsky
Respondent
REASONS FOR JUDGMENT
Engelking J.
Released: March 29, 2021
[^1]: Van Delst v. Hronowsky, 2019 ONSC 2569
[^2]: Van Delst (Hronowsky) v. Hronowsky, 2020 ONCA 329
[^3]: Van Delst (Hronowsky) v. Hronowsky, 2020 ONCA 402
[^4]: Endorsement of Engelking J. dated June 30, 2020
[^5]: Mr. Jocsak testified that he was not aware of anyone other than Mr. Martel assuming a 0% change of having an eligible spouse in calculating Value A.
[^6]: This is notwithstanding Mr. Hronowsky’s position in the original trial that the FLV of Ms. Van Delst’s pension should be calculated as per Scenario #1 in Mr. Martel’s report of October 26, 2018.
[^7]: This is also the average income tax rate to which Ms. Van Delst was estimated by Mr. Martel to be subjected after age 65 on page 4 of his original report dated October 26, 2018.