COURT FILE NO.: FS-20-20791
DATE: 20210714
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Eleanor Weitzner, Applicant
AND:
Daniel Lupu, Respondent
BEFORE: S. Shore, J.
COUNSEL: Lawrence Liquornik, for the Applicant
Murray Teitel, for the Respondent
HEARD: June 30, 2021
Amended ENDORSEMENT
[1] The primary issue before the court today is the disbursement of net proceeds of sale of a matrimonial home, for a home that has not been listed for sale or sold as of yet.
[2] The Respondent brought a motion for an order for the listing and sale of the jointly owned matrimonial home forthwith, an order setting out the terms with respect to the listing and sale of the matrimonial home, and an order for an equal disbursement of the net proceeds of sale. While the Applicant does not object to the listing and sale of the home, she is requesting that only 50% of the net proceeds of sale be distributed at this time with 50% being held in trust pending further court order or agreement. The Applicant is also requesting an order delaying the listing for sale of the matrimonial home until August 15, 2021.
[3] For the reasons set out below, I am ordering the listing and sale of the matrimonial home forthwith. I am making an order that some of the proceeds of sale remain in trust, but not in the sum requested by the Applicant.
[4] The issues of this motion are not complicated and should have been resolved at the case conference. However, it is clear from reading the file that this is a high conflict case. I have concerns about both party’s behavior and judgement at various times in this litigation. The legal fees incurred to date, the frequent involvement of police and JF&CS, delays, certain actions by the parties, positions taken by the parties on various issues and exposure of the children to the conflict weighs heavily on my mind. My order is going to be very detailed to minimize and room for dispute or delay. One final comment on the level of conflict before turning to the motion before me: From the brief summary provided in the parties’ materials and in submissions, it seems to me that if the parties do not show a significant shift in their approach to this litigation, they will both end up spending their life savings and all of their assets on legal fees and they both risk a finding of emotional and psychological harm to the children being made against them. There are some very serious allegations made with respect to the Respondent in determining the best interest of the children, which are not being addressed as they are being obfuscated by the conflict between the parties. The parties need to focus on addressing the issues on a timely basis.
Brief Background:
[5] The parties started living together in 2012 and were married in September 2015. The parties entered into a marriage contract including a release of spousal support and a release of an equalization of their net family property. They have two young children, aged four and two years old. The parties disagree on the date of separation, but they physically separated on December 10, 2020.
[6] Following separation, the parties entered into a nesting arrangement with the children. However, for reasons that are not relevant to this motion, the children now have their primary residence in the matrimonial home with the Applicant and the Respondent has supervised parenting time. The Applicant and the children continue to reside in the jointly owned matrimonial home located on Stonedene Avenue, in Toronto. There is approximately $580,000 of equity in the home.
Proceeds of sale:
[7] The parties agree that the jointly owned matrimonial home should be listed for sale. They disagree on when the home should be listed, but that will be addressed further below. The Applicant is seeking an order that 50% of the net proceeds of sale of the matrimonial home be held in trust pending court order or agreement, with the other 50% to be distributed equally between the parties. The Respondent requests that the full amount of the net proceeds of sale be released to the parties equally upon the closing of sale.
[8] There is approximately $580,000 of equity in the matrimonial home, after payment of the mortgage, real estate commissions and legal fees. If the proceeds were divided equally, each party would receive approximately $290,000. The Applicant submits the parties should each receive $145,000 on the closing of sale with the remaining $290,000 to be held in trust.
[9] The parties agree that there is a presumption in favour of an equal distribution of the proceeds of sale of the jointly held matrimonial home. The Applicant is asking that a preservation order be made on three grounds:
Under s.12 of the Family Law Act (FLA) a preservation order should be made to satisfy any equalization payment owing between the parties.
Under s.40 FLA, a preservation order is needed to secure future spousal support and child support obligations, including s.7 expenses. The children attend Jewish day schools and day camp, so the parties have significant s.7 expenses. Further, the Respondent has not made any contribution to the expenses of the jointly owned matrimonial home following separation and the Applicant submits he owes significant post-separation adjustments.
Finally, the Applicant submits that it is in the best interest of the children that money be held in trust. Jewish Family & Child Service (JF&CS) has recommended that the Respondent undergo forensic evaluation, including phallometric testing, and both parties agree that to some degree a s.30 assessment may be required. The Applicant submits that if proceeds are not held in trust, the assessments may not take place because the Respondent has no money to pay for these expenses and it is in the best interest of the children that the assessments take place.
Security for Property Claims
[10] The Applicant acknowledges that the need for security regarding property claims is a weak argument. There is a marriage contract addressing property claims. It is the Respondent who is seeking to set aside the contract and, if successful, may be owed an equalization payment. The Applicant’s position is that there is a marriage contract that should not be set aside, and, in any event, she would not be entitled to an equalization payment. I am not prepared to withhold funds from the proceeds of sale under this argument.
[11] The majority of cases relied on by the Applicant are cases where money was held in trust to satisfy probable property claims. These are easily distinguishable and not relevant to the case before this court.
Security for Support and Post-Separation Adjustments
[12] From separation until April 2021, the children spent equal time with both parents. There is no dispute that during this time the Applicant would have owed the Respondent child support on a set-off basis because the Applicant earns significantly more than the Respondent. The Applicant earns approximately $180,000 per year. The Respondent submits he has not earned any income this year, and he earned approximately $60,000 in the prior year. If there is any retroactive child support owing from the Respondent to the Applicant, it would only be for the last two months and then on a go-forward basis. The Applicant has not satisfied me that the Respondent would not pay child support if ordered. He has abided by prior court orders, including an order for costs.
[13] The Applicant submits the Respondent is financially irresponsible and has no assets from which to enforce future child support. Arrears of child support survive bankruptcy. There are several tools by which child support can be enforced if not paid. A party needs more than just a concern that support will not be paid to obtain a non-dissipation order.
[14] The Applicant relied on Justice Ferrier’s decision in Barrotti v. Barrotti, 2009 CarswellOnt 7145 (SCJ). However, that case is easily distinguishable on the facts including that there were substantial property issues still to be resolved in Barrotti and the Husband was in default of prior support orders. Those circumstances are not present in the case before this Court.
[15] Finally, there is no need to secure spousal support because if spousal support was payable, it would be owing from the Applicant to the Respondent.
[16] However, there are two other concerns raised by the Applicant that need to be addressed. The parties agree that the Applicant has been paying the expenses of the matrimonial home since separation, at a cost of approximately $5,000-$6,000 per month. The Respondent, at a minimum, would have been responsible for his half share of the capital expenses on the home (mortgage, property taxes and insurance): see for example Grass v. Hropak, 2020 ONSC 7803. The Applicant has paid $4,500 per month in mortgage payments and $280 for home insurance. It is unclear whether the mortgage payment includes property taxes, but she also pays the home security bills. Assuming the Applicant incurred approximately $5,000 per month in capital expenses for the matrimonial home from separation to date and will continue to pay these expenses until the closing of sale of the matrimonial home, the Respondent would owe the Applicant $2,500 per month for that time frame. Even if the matrimonial home does not sell until the end of this calendar year (and neither party expects it to take that long), the Respondent will owe a maximum of $30,000 to the Applicant in capital expenses for the home ($2,500x12 months), subject to other adjustments between the parties. This does not come close to the amount the Applicant is asking to be held in trust. I will order some funds be held in trust for security for reimbursement for the Respondent’s share of the capital expenses being paid by the Applicant.
[17] The other concern raised by the Applicant is that the children attend Jewish day school and Jewish camps at a significant cost. There was no motion before me for either child support or s.7 expenses. Further, if the Respondent is not earning an income, these expenses may no longer be considered reasonable (affordable) expenses under s.7 of the Child Support Guidelines. I am not in a position to make a finding on this issue at this time, but I appreciate that this a factor to consider and will be addressed further below.
[18] I have also considered that on a preliminary basis based on the evidence before me, that at a minimum the Respondent has difficulty managing his finances: see for example Stokaluk v. Stokaluk, 2003 CarswellOnt 2921. I do not need to make a finding of fact with respect to whether the Respondent continues to gamble. The Respondent has entered into at least two creditor proposals, one in 2006 and the most recent one being March 2020. He has incurred debt of over $190,000 since separation, only 6 months ago. I appreciate that much of this debt is on account of legal fees, but the debt accumulated in such a short period of time is staggering, especially in light of his claim that he has not earned income in this calendar year. The Respondent’s only asset is his equity in the matrimonial home. This highlights the need for some financial oversight to ensure the needs of the children can be met.
Cost of the Evaluation/Assessment:
[19] JF&CS has recommended that the Respondent undergo a comprehensive psychiatric evaluation, including phallometric testing. During the motion the Respondent took the position that the evaluation will likely need to take place and be paid prior to the closing of sale of the matrimonial home but if not, he is prepared to use the proceeds of sale to pay for same. This addresses the Applicant’s concern in this regard, and I will make an order accordingly. The cost of the evaluation is unknown at this time, but I anticipate that the parties will have a much better sense of the cost by the closing of sale of the home, if the evaluation has not already taken place.
[20] Both parties anticipate a s.30 or s.112 assessment taking place. The Applicant submits that if the proceeds of sale are not held in trust to pay this expense, the Respondent will not have the funds to finance the assessment. There is no cost for an assessment conducted through the Office of the Children’s Lawyer. If the parties decide to hire a private assessor, then cost will need to factor into their decision. In any event, the cost of an assessment is significantly less than the amount being requested by the Applicant to be held in trust. It is a factor I have considered in making the order below.
[21] Finally, I have also considered the Respondent’s submission that he needs access to his equity in the home, especially to meet his legal expenses. The Respondent’s ability to fund the litigation is also a factor I need to consider in determining this motion.
Summary:
[22] The question to be asked is whether there is a real risk that the Applicant's claim for retroactive child support could be defeated if the preservation/non-dissipation order is not made: see Conforti v. Conforti, 2021 ONSC 1767 at par 33 and Taus v. Harry, 2016 ONSC 219. As set out above, there is no viable claim for spousal support owing to the Applicant and if retroactive child support is owing, the net amount owing would be from the Applicant to the Respondent. The Applicant’s strongest claim is with respect to the $30,000 post-separation adjustment for the Respondent’s half share of the capital expenses of the matrimonial home.
[23] Further, on consent, some money should be held in trust to pay the psychiatric evaluation discussed above. However, if these expenses are paid in advance of the closing of sale of the matrimonial home, then there is no need to hold money in trust for these expenses.
[24] Finally, I am prepared to hold some money in trust for the children’s education expenses for the 2021/2022 school year as it is unclear to me whether this issue will be addressed in advance of the commencement of the school year. However, if the tuition for this upcoming school year is paid prior to the closing of sale of the matrimonial home, then no funds need to be held back for this expense.
Listing and Sale of Home:
[25] Finally, the parties agree that the matrimonial home should be listed for sale, but the Applicant is requesting the listing be delayed until August 15, 2021. The Respondent is concerned that the Applicant is trying to delay and drag out the litigation so that he cannot afford legal counsel and specifically uses the delay in listing the matrimonial home for sale as an example. In her Application, the Applicant initially requested the immediate sale of the home. The Respondent agreed. However, the Applicant then advised that she wanted to wait until the spring so that she could declutter the home and they could benefit from the spring market. In the spring she advised that she wanted to wait until the case conference in May. The Applicant then raised the issue of COVID as a reason to delay the listing until October and on this motion has taken the position that the home should not be listed before August 15, 2021.
[26] The Applicant has an onus to put her best foot forward on this motion. She has failed to demonstrate the presence of a statutory factor justifying a court order overriding the prima facie right of the husband as joint tenant to sell the matrimonial home. She has filed no evidence to demonstrate that she would be prejudiced if the property was sold now. Rather, the evidentiary record indicates that the immediate sale of the matrimonial home is appropriate considering all of the circumstances: see Keyes v. Keyes, 2015 ONSC 1660 at par. 43.
[27] I am not prepared to delay the listing and sale of the home any longer. There has already been significant delay in the listing of sale of the home. The Applicant has not satisfied me that there is any real reason to delay the listing and sale. The Applicant is requesting until August 15th to list the home as she wants some time to declutter the home. The parties should rely on the recommendations of the real estate agents as what needs to be done to get the house ready for listing and sale. However, these steps shall be taken on a timely basis. There should be little to no delay and the agents should be retained and the house listed forthwith.
Pleadings:
[28] The Applicant has not served or filed her Reply. The parties’ consent to an order that the Applicant shall serve and file her Reply within fourteen days of the hearing of this motion.
Order:
[29] Order to go as follows:
The Applicant shall serve and file her Reply within 14 days of the hearing of the motion. The motion was heard on June 29, 2021.
The matrimonial home, municipally known as 66 Stonedene Blvd, Toronto, ON, shall be listed for sale and sold forthwith on the following terms:
a) The parties shall sign a listing agreement with Forest Hill Real Estate Inc. Brokerage within five business days from the release of this order.
b) The parties shall follow the recommendations of the real estate agent as to how to prepare the home for sale. The home shall be listed on MLS no later than July 16, 2021.
c) From the date of the listing on MLS until the parties enter into an Agreement of Purchase and Sale, the matrimonial home shall be kept in immaculate condition to ensure it is ready for showing at the request of the real estate agent.
d) The parties shall accommodate all requests for showings by the real estate agent and shall vacate the home during the showings.
e) The house shall be listed for sale at the price recommended by the real estate agent.
f) The parties shall accept the first reasonable offer on the home and with the closing date requested by the purchasers. “Reasonable” shall include any offer within 5% of the listing price.
g) The parties may change any of the terms above, provided that it is on consent of both parties.
h) If there are any disputes in the listing and sale of the matrimonial home, either party may bring a 14B motion to my attention.
Subject to the terms below, the net proceeds of sale of the matrimonial home shall be divided equally between the parties except that $50,000 from each party’s share shall be held in trust by the real estate lawyer, pending further court order or agreement between the parties.
If the psychiatric evaluation of the Respondent has been completed and/or paid for prior to the closing of sale of the matrimonial home, an additional $10,000 shall be released to each of the parties from the net proceeds of sale.
If the children’s Jewish day school tuition for the 2021/2022 school year has been paid for prior to the closing of sale of the matrimonial home, an additional $15,000 shall be released to each of the parties from the net proceeds of sale.
If the parties are unable to resolve the issue of costs, the parties shall each serve and file their costs submissions within ten days of release of this order. The cost submissions shall be no more than 3 pages, not including any offers to settle or bills of costs. To clarify, anything more than three pages (including summaries) shall not be read by this court. The parties can assume the Court is familiar with the rules and cases related to costs. The parties may serve and file responding costs submissions within five business days of receipt of the other party’s cost submissions to be no more than one page.
S. Shore, J.
Date: July 14, 2021