COURT FILE NO.: FS-18-3999
DATE: 20210630
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
NAZANIN ESKANDARI
Applicant
– and –
SHERVIN ROWSHANI-ZAFARANLOO
Respondent
Elena E. Mazinani, for the Applicant
Herschel I. Fogelman, for the Respondent
HEARD: June 29, 2021
M.D. Faieta j.
reasons for decision
[1] The Applicant wife brings this motion for an order that the Respondent husband:
(a) Make an advance equalization payment of $100,000 within 30 days pursuant to Rule 24(18) of the Family Law Rules;
(b) Comply with the terms of the joint retainer of the expert, Patricia Harris.
BACKGROUND
[2] The parties began cohabitating in March, 2013, were married in March, 2015 and separated on March 1, 2018. There are no children of the marriage. This Application was issued in July, 2018.
[3] The Respondent is a dentist. He owned four dental practices on the date of separation. The Applicant was diagnosed with Multiple Sclerosis in 2005. She takes several medications and attends counselling to treat MS, depression and manage chronic pain.
[4] On August 28, 2018, on consent, Justice Chiappetta ordered, amongst other things, that:
(a) The Respondent shall pay interim spousal support in the amount of $10,250.00 per month to the Applicant. [paragraph 1]
(b) The Respondent shall retain Christine Larkin, a Chartered Professional Accountant, to prepare valuations of the Respondent’s income and dental practices. If the Applicant is discontent with the reports, she shall attempt to resolve same with Ms. Larkin and, if unsuccessful, the parties shall jointly pay for the critique to be done by a CPA selected by the Applicant. [paragraph 4]
(c) The net proceeds of sale of the matrimonial home shall be equally distributed to the parties. [paragraph 5]
[5] Ms. Larkin produced a valuation report dated October 18, 2018 and a income report dated December 17, 2018.
[6] On May 16, 2019, the Applicant’s motion for an order requiring the Respondent to retain Patricia Harris of Fuller Landau LLP to complete a valuation and income report and for an advance payment of $100,000 “… to cover her interim legal fees and disbursements under Rule 24(12)” was heard. The motion was dismissed. The Applicant was ordered to pay costs of $2,000.00. The parties were ordered to follow the consent order of Chiappetta J. in that the Applicant was required to relay her “discontent” in writing to Ms. Larkin and then “attempt to resolve” her discontent with Ms. Larkin’s reports. If the Applicant’s concerns could not be resolved, then Patricia Harris, who had been selected by the Applicant for this purpose, would prepare a critique of the reports.
[7] On September 20, 2019, counsel for the Applicant delivered a letter to Ms. Larkin outlining her numerous concerns with her reports. By letter dated October 18, 2019, Ms. Larkin provided a ten-page response that addressed each concern.
[8] On November 20, 2019, the parties appeared before Justice Goodman on a telephone call conference call to determine next steps. On consent, the following Order was granted:
Within 7 days, Ms. Harris (whom Ms. Eskandari has chosen to provide a critique of Ms. Larkin’s reports) is to provide a letter to the parties, confirming that she is being retained jointly by them to conduct a critique of Ms. Larkin’s reports (asset and income). [To be clear, if Ms. Eskandari wishes instead to obtain an independent valuation of assets and/or income, Dr. Rowshani is not obliged by any prior court order to fund or share the costs of such a valution (s)]
On the understanding that the critique will be completed in 60-90 days, the Settlement Conference in this case is fixed for February 21, 2020 …
[9] On January 6, 2020, a further conference call before Justice Goodman was held. Her Endorsement states:
The procedural/interpretation issues could not be resolved, despite extensive attempts to do so before today & today as well,
The Applicant, Ms. Eskandari, wishes to bring a long motion to seek an order requiring Dr. Rowshani to (1) comply with his obligations under para 4 of the Order of Chiappetta J., dated Aug 28/18 and (2) to pay interim disbursements of $60,000 to Ms. Eskandari. …
Order to go , …
Long motion to take place on April 16, 2020 for ½ day; …
Within 45 days, counsel for Ms. Eskandari shall provide Dr. Rowshani with a letter from Ms. Harris advising of the estimated costs of each of the critiques referred to in paras 1 & 2 of the Nov 8/19 draft joint retainer and the amount required by the valuator as a retainer to do the work required to complete the two critiques. …
[10] A letter dated June 20, 2020 from Patricia Harris reflect the parties’ joint retainer agreement to have Fuller Landau: (1) prepare an expert report setting out a critique of Ms. Larkin’s income report for the Applicant as well as providing their opinion of the Respondent’s income for the years 2017-2019; (2) prepare a critique of Ms. Larkin’s reports related to the valuation of the Respondent’s business interests. The letter also requires that the parties pay a retainer of $20,000.00 and estimates that the total fee will be $40,000.00.
[11] The Applicant’s motion was rescheduled to be heard on July 30, 2020. The parties settled the motion at a case conference on June 25, 2020. By Endorsement dated June 29, 2020, Justice Goodman ordered, amongst other things, that:
- The Respondent shall pay to the Applicant the sum of $50,000.00. This sum shall be paid as follows:
a. On or before July 24, 2020, the Respondent shall pay to Fuller Landau the Applicant’s $10,000 share of the $20,000 retainer required by Fuller Landau in order to begin the joint critique that is referred to in the Order of Chiappetta J. dated August 28, 2018 …
b. On or before September 1, 2020, the Respondent shall pay the balance of $40,000 to the applicant or to whomever she may direct. [paragraph 1]
As and when invoices are delivered to the parties in relation to the balance of the cost of the “critique”, each party shall promptly pay his/her half share of such invoices to Fuller Landau; [paragraph 2]
The $50,000 referred to in paragraph 1 shall be deemed to be an advance against any equalization payment that the Respondent may owe to the Applicant. [paragraph 3]
The Applicant shall make best efforts to commence the steps necessary to obtain an expert’s report to address her claim that she is unable to work due to medical reasons. [paragraph 7]
[12] A further case conference proceeded before Justice Goodman on September 22, 2020 which provides a fulsome overview of many other attendances, not described here, that the parties have had before this court. Amongst other things, Justice Goodman’s Endorsement related to this case conference orders:
If the Respondent has not yet provided documents/information that has been reasonably requested by the valuator, retained to provide a critique of the income and dental practice(s) valuations delivered by Ms. Larkin in 2018, as amended or updated by Ms. Larkin subsequently, he shall do so within the next 20 days.
[13] A memo from Patricia Harris dated February 19, 2021, allocates their invoices as follows:
• Valuation Report - $6,490.72
• Income Report - $15,910.72
• Critique Report - $11,002.53
[14] Her memo further states that:
Based on our preliminary analysis, without dental practice appraisals (that I understand are not forthcoming), we do not think that there is much utility in completing the valuation report.
[15] On June 14, 2021, Justice Shore granted leave for the Applicant to obtain an expert medical report by September 30, 2021 with no further extensions allowed.
ISSUE #1: SHOULD THE RESPONDENT DELIVER APPRAISALS AS REQUESTED BY MS. HARRIS?
[16] A further case conference proceeded before Justice Goodman on September 22, 2020. Amongst other things, Justice Goodman’s Endorsement dated December 22, 2020, related to that conference, orders:
If the Respondent has not yet provided documents/information that has been reasonably requested by the valuator, retained to provide a critique of the income and dental practice(s) valuations delivered by Ms. Larkin in 2018, as amended or updated by Ms. Larkin subsequently, he shall do so within the next 20 days. [Emphasis added]
[17] The request made by Ms. Harris for an appraisal of each of the Respondent’s dental practices is explained in her email to counsel for both parties dated June 22, 2021. She states:
As you know, I requested appraisals of Dr. Rowshani-Zafaranloo’s dental practices (“Appraisals”) early in this joint engagement. I was advised by Mr. Fogelman’s office that no further Appraisals would be obtained by Dr. Rowshani-Zafaranloo. As such, we advised you that we would complete the valuation report without the Appraisals noting that it is not preferable and that it would result in a scope limitation.
As we examined the available documents it became apparent that completing the valuation report without the Appraisals would incur fees without any additional meaningful result. Below is an excerpt of [my] email to you in May of this year:
As stated numerous times, our preliminary work regarding the valuation of Dr. Rowshani-Zafaranloo’s business interests (that was invoiced as part of this joint engagement) indicates that there is little to no utility in proceeding with this component of the engagement (i.e. the valuation report and the valuation critique) without appraisals of the dental practices.
In my experience, for the majority of corporations valued by myself and my colleagues wherein the underlying business is a dental practice, Appraisals are obtained or provided by counsel. The Appraisals are prepared by a dental practice broker/appraiser such as Tier 3 or ROI. The brokers have a database of transactions that provide market expertise and transactional data to support their goodwill calculations. We then incorporate the Appraisals into the valuation of the corporation which takes into account other assets and liabilities of the entity (similar to incorporating a real estate appraisal into a holding company valuation).
Appraisals are generally obtained by the business owner, but in certain cases the non-business owner obtains their own Appraisal, especially if they dispute the findings or wish to independently verify the business owner’s appraisal report results.
All of the above has been previously communicated. … [Underlining added]
[18] The Respondent states that he does not have the requested appraisals. He further states that he should not be required to obtain the requested appraisals for several reasons. He baldly asserts that the appraisals would be “unduly expensive” but only provides hearsay evidence that the cost will be $30,400 inclusive of HST. While he states that results of the reports would be “unreliable” because too much time has passed however, he offers this opinion without the expertise to do so and without providing an affidavit from an expert to support this assertion.
[19] The Respondent further submits that the preparation of the requested appraisals will result in a duplication of costs as Ms. Harris is a Certified Business Valuator and has “all of the tools” required to property assess the value of a dental practice without the requested appraisals. This assertion is unfounded given the explanation provided in the above email.
[20] The Respondent states that his valuator, Ms. Larkin, states that an appraisal is not the generally accepted approach to calculate the goodwill of a dental practice. The fact that Ms. Larkin believes that the valuation approach that she has used is preferable to the approach used by Ms. Harris is far from determinative. Ultimately, the trial judge, after hearing the evidence of these experts, will be in a better position to assess the merits of their differing approaches.
[21] I find that the requests made by Ms. Harris for the Appraisals is reasonable. She has explained why in her professional opinion it is required. I also reject the Respondent’s submission that this request is not proportional when, according to his most recent financial statement, the four dental corporations owned by the Respondent had a value of $1,076,900 on the date of separation and the Respondent has annually earned about $475,000-$600,000 in self-employment income, as assessed by the CRA, during 2018-2020.
ISSUE# 2: SHOULD A FURTHER ADVANCE ON AN EQUALIZATION PAYMENT BE GRANTED?
[22] In her Amended Notice of Motion, the Applicant requests an “… advance equalization payment of $100,000 pursuant to Rule 24(18) of the Family Law Rules, within 30 days …”. She seeks this payment in order to pay her share of Ms, Harris’s fees, future litigation expenses, primarily legal costs and the cost of retaining a medical professional to opine on the impacts of her medical conditions.
[23] This request, as phrased, is a non sequitur in that an advance equalization payment is not made pursuant to the Family Law Rules or, for that matter, the Family Law Act. Instead, under Rule 24(18), an order for interim costs can be granted. The tests are similar but different.
Advance Equalization Payment
[24] The test for an advance equalization payment was described by Justice D.A. Jarvis in Testani v. Haughton, 2016 ONSC 5827, at para. 25:
There is no statutory basis on which a court may order one party to pay the other a sum as an advance on his or her claim for an equalization payment: Stork v. Stork, 2015 ONSC 312 (Ont. S.C.J.). In Zagdanski v. Zagdanski (2001), 2001 CanLII 27981 (ON SC), 55 O.R. (3d) 6 (Ont. S.C.J.) a partial equalization payment was advanced. Despite doubt being expressed about the correctness of that decision, McGee J. in Stork identified at least seven times in Ontario that Zagdanski had been followed and noted that it had been cited with approval a further 11 times. The Zagdanski factors are:
There is little or no realistic chance that the amount of the contemplated advance will exceed the ultimate equalization amount.
There will, therefore, be some considerable degree of certainty about the right to, and likely minimum amount of, an equalization payment.
There will be need, not necessarily in the sense of poverty, but a reasonable requirement for funds in advance of the final resolution of the equalization issue, including funds to enable the continued prosecution or defence of the action.
There may be other circumstances such that fairness requires some relief for the applicant; frequently, but not necessarily, there will have been delay in the action, deliberate or otherwise, prejudicing the applicant by, for example, running up the cost.
[25] The Respondent submits that there is no certainty as to the minimum equalization payment that is owed to the Applicant given the Respondent’s claims under s. 5(6)(e ) and (h) of the Family Law Act. The Respondent’s Net Family Property Statement shows that the Applicant is owed $401,119.72 based on his own business valuation reports. The Applicant has already received $50,000 as an advance and now seeks a further $100,000 advance. Given the short duration of the cohabitation, the Respondent’s reliance on s. 5(6))(e) and (h) of the FLA, and the lack of any details of the parties’ arguments on this point, I am unable to find that there is no realistic chance that the proposed advance will exceed the ultimate equalization amount.
[26] I am also not satisfied that the Applicant’s need for $100,000 has been demonstrated for the following reasons.
[27] First, the request for $100,000 is arbitrary in that the Applicant did not provide an estimated bill of costs outlining the amount of legal fees and disbursements for the anticipated remaining steps in this proceeding nor did she file an affidavit(s) outlining the amount that she owes Ms. Harris, nor the estimated fees and disbursements for an expert medical report and vocational assessment.
[28] Second, the Applicant’s current financial position is unclear. Rather than deliver a new financial statement, the Applicant filed an affidavit pursuant to Rule 13(12) to update her financial statement dated June 17, 2020. The affidavit states that there are no substantial changes to her financial statement other than her increased debt of about $25,000 for legal fees. However, given that her financial statement indicates that her monthly expenses are about $13,000 greater than her monthly income, I would have expected that her debt would have increased by about $150,000.00 rather than only $25,000.00.
[29] Third, the Applicant has received $96,583 from the sale of the matrimonial home in August, 2018 and a $40,000 interim advance (in addition to the $10,000 that was paid on her behalf directly to Fuller Landau). There is no evidence of how these monies were spent.
[30] Finally, the delay in this proceeding over the last year arising from the Respondent’s refusal to deliver the appraisals requested by Ms. Harris has delayed the resolution of this proceeding, resulted in numerous court attendances, and wasted money.
[31] I dismiss the request for an advance equalization payment as not all the requirements for the advance of an equalization payment have been satisfied.
Interim Costs
[32] An order for interim costs is available under Rule 24(18) of the Family Law Rules. The purpose of an order for interim costs is to level the “playing field” between the parties: Ma v. Chao, 2016 ONSC 585 (Div. Ct.), at para. 4; Stuart v. Stuart, 2001 CanLII 28261(Ont. S.C.); Ludmer v. Ludmer, 2012 ONSC 4478.
[33] In Ludmer, at paras. 14-17, Justice Mesbur summarized the applicable principles as follows:
14 The law concerning orders for interim disbursements or interim fees and costs in family law cases has evolved over the years. Here, the relevant rule is rule 24(12) of the Family Law Rules, which deals with orders for interim fees and costs in family law cases. It simply says: "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." One of the primary themes of the case law is that orders may be required in order to "level the playing field" between the litigants.
15 The jurisprudence surrounding rule 24(12) was neatly summarized by Rodgers J in Stuart v. Stuart and has been followed in many cases since then. Simply put, when considering a request for interim disbursements under the Family Law Rules, it is no longer necessary to find exceptional circumstances in order to make an order. The order is a discretionary one. In exercising discretion under the rule, the court must ensure the primary objective of fairness under the Family Law Rules is met.
16 As the court said in Stuart,
The discretion should be exercised 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.
An order under section [sic] 24(12) should not immunise a party from cost awards. The order is to allow the case to proceed fairly and should not be such that a party feels a license to litigate. ...
The claimant must clearly demonstrate that the disbursements are necessary and reasonable given the needs of the case and the funds available ...
The claimant must demonstrate that he or she is incapable of funding the requested amounts.
The claim or claims being advance in the case must be meritorious as far as can be determined on the balance of probabilities at the time of the request for disbursements.
17 Thus, the wife's evidentiary burden includes establishing the necessity and reasonableness of the fees and disbursements, given the nature of the case and the funds available. She must also show she is incapable of funding the fees and disbursements herself. Last, she must show that her claims are meritorious.
[34] The Applicant has failed to provide sufficient evidence regarding the necessity and reasonableness of the fees and disbursements. As noted there is no evidence regarding the estimated fees and disbursements that can be anticipated to be incurred to trial.
[35] It is unclear whether the claims for an equalization payment and for spousal support will be meritorious. I note that the Applicant was ordered one year ago to make best efforts to obtain an expert’s report that addresses her claim that she is unable to work due to medical reasons. That report has not yet been provided.
[36] On the other hand, the Respondent claims that he has $1.1 million in debts and will need to leverage his business interests if required to pay the advance sought by the Applicant. This factor would not have been an impediment had the other factors been satisfied.
Issue Estoppel and Abuse of Process
[37] The Respondent submitted that the Applicant’s request for advance equalization payment should be dismissed based on issue estoppel and abuse of process in that the Applicant has already received an advance equalization payment. The Respondent provided no case law precedent where the principle of issue estoppel or abuse of process has been applied when a second advance payment is sought.
[38] The relationship between issue estoppel, res judicata and abuse of process was explained by Perell J. in Pennyfeather v. Timminco Ltd., 2016 ONSC 3124 at para. 60, aff’d 2017 ONCA 369, leave to appeal refused 2018 CarswellOnt 554 (S.C.C.):
Res judicata, issue estoppel, and abuse of process, which are related and partially overlapping legal doctrines, are bars to litigation that preclude a party from re-litigating a claim, a defence, or an issue that already has been determined. Cause of action estoppel, which is a branch of res judicata, precludes a litigant from asserting a claim or a defence that: (a) it asserted; or (b) had an opportunity of asserting and should have asserted in past proceedings, which is the rule from Henderson v. Henderson, supra. Issue estoppel, another branch of res judicata, precludes a litigant from asserting a position that is inconsistent or contrary to a fundamental point already decided in a proceeding in which the litigant participated. The requirements for an issue estoppel are: (1) the parties must be the same; (2) the same question must be involved in the initial and subsequent hearing; (3) the question must have been actually litigated and determined in the first hearing and its determination must have been necessary to the result; and (4) the decision on the issue must have been final: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 (S.C.C.). Abuse of process is a doctrine that a court may use to preclude re-litigation. The court has an inherent jurisdiction to prevent the misuse of its process that would be manifestly unfair to a party to the litigation or would in some other way bring the administration of justice into disrepute, and the court can and has used this jurisdiction to preclude re-litigation when the strict requirements of res judicata are not satisfied: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77 (S.C.C.); …
[39] In my view, the “same question” is not involved on this further request for an advance equalization payment. There is no evidence that the requests are the same in that the advances were sought for the same specific reasons or were to cover the same litigation expenses. Accordingly, the Applicant is not estopped from advancing a request for an additional advance. Further, I do not find it to be an abuse of this court’s process for the Applicant to seek a further advance given that this proceeding has had more than 15 court attendances with the result that funds initially advanced have been largely spent on interim proceedings, whether it be motions or case conferences.
CONCLUSIONS
[40] The Applicant’s motion is granted in part. The Respondent shall deliver the Appraisals requested by Ms. Harris within 30 days. The Applicant’s request for an advance is dismissed.
[41] Should the parties wish to advance a claim for costs despite their divided success on this motion, then they shall deliver their costs submissions by July 16, 2021, their responding submissions by July 23, 2021 and their reply submissions by July 30, 2021. Each costs submission shall be no more than three pages exclusive of any offers to settle and outlines of costs.
Mr. Justice M.D. Faieta
Released: June 30, 2021
COURT FILE NO.: FS-18-3999
DATE: 20210630
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
NAZANIN ESKANDARI
Applicant
– and –
SHERVIN ROWSHANI-ZAFARANLOO
Respondent
REASONS FOR DECISION
Mr. Justice M. D. Faieta
Released: June 30, 2021