Overview

[1] Each of the parties brings a motion for the release of funds being held in trust by a real estate lawyer.

[2] The applicant wife brings a motion for:

(a) an order directing the real estate lawyer who acted for the parties on the sale of the matrimonial home and a commercial property on Mount Pleasant Road in Toronto to release the sum of $1.5 million of the net proceeds of the sale of the properties to the applicant's lawyer in trust.

(b) An order directing the real estate lawyer to retain the balance of the net proceeds of sale pending written agreement between the parties or further court order; and

(c) An order that the respondent produce the original handwritten promissory note for the alleged $500,000 loan from this late father for the applicant's expert to inspect and return.

[3] The respondent husband's cross-motion is for an order directing the same real estate lawyer to release the sum of $1,468,108.87 of the net proceeds of the sale of the properties to the respondent's lawyer in trust.

The Facts

[4] The parties were married on June 27, 1998 in Toronto. After a 20-year marriage they separated on October 19, 2018.

[5] The parties have 4 children:

IH, now 21, born August 18, 2000 (daughter)

EH, now 19, born December 19, 2002 (daughter)

MH, now 17, born August 14, 2004 (son)

SH, now 15, born January 18, 2007 (son)

[6] Since separation, all four children have been primarily living with the applicant, subject to the two eldest daughters attending post-secondary school.

[7] The matrimonial home on Owen Boulevard in Toronto was sold in August 2020 for $4,570,000. The sale closed on October 9, 2020.

[8] The applicant is a part-time Assistant Professor (non-tenured) at the University of Toronto, Department of Pharmacology. She has been working under contract at U of T since 2004. Her current contract ends in June 2022. In 2021, she earned $91,000 through employment.

[9] The respondent is a dentist who used to practice out of a commercial property on Mount Pleasant Road in Toronto ("Mount Pleasant property").

[10] The respondent has not been practicing dentistry since September 2020, as he is facing a professional regulatory hearing before the Royal College of Dental Surgeons of Ontario. The respondent is also facing criminal charges for alleged sexual assault and sexual interference. The criminal proceedings are ongoing.

[11] The Mount Pleasant property was sold on November 5, 2021.

[12] The matrimonial home and the Mount Pleasant property were jointly owned by the parties.

[13] Each party received $250,000 from the proceeds of sale of the Mount Pleasant property.

[14] Each received also received $200K from the proceeds of sale of the matrimonial home.

[15] The respondent received $700K from the proceeds of sale of his dental practice (which sold for $900K) in November 2021. $200,000 is being held back by the respondent's solicitor.

[16] As of January 8, 2022, Mr. Shapiro, the real estate lawyer, was holding $2,936,217.75 in trust, comprised of $1,880,928.51 from the sale of the matrimonial home, and $1,055,289.24 from the sale of the Mount Pleasant property. As agreed upon by the parties, $50,000 of the amount being held in trust, is being held in trust for the children.

[17] The applicant is requesting an order that the real estate lawyer release $1.5 million to her which would leave $1,436,217.75 in trust.

[18] Accordingly, the current disposition of the proceeds of sale of both properties is as follows:

Matrimonial Home

Mount Pleasant Property

Dental Practice

Total

Date deal closed

October 9, 2020 (sale)

November 5, 2021

Sold for

$4,570,000

$1,550,000

$900,000

Applicant Received

$200,000

$250,000

Respondent Received

$200,000

$250,000

$700,000

Real Estate Lawyer holding

$1,880,928.51

$1,055,289.24

$2,936,217.75 (which includes $50,000 being held in trust for the children)

Respondent’s Lawyer holding

$200,000

[19] Commencing August 1, 2021, the respondent has been paying $1,000 per month for child support for 4 children, pursuant to a temporary order of Leiper J. dated August 3, 2021. He also pays $500 per month towards the children's RESPs.

[20] On September 1, 2020, Mr. Malz wrote a letter to the real estate lawyer acting on the parties' behalf with respect to the matrimonial home, and said that all funds are to be held in trust until an agreement of the parties or a court order.

The Applicant's position

[21] The applicant believes that, at a minimum, she is entitled to an equalization payment of approximately $850,000 plus her entitlement to a post-separation adjustment of approximately $90,802. The latter figure is comprised of $16,120 for various repairs to the matrimonial home prior to its listing, as well as occupation rent of $74,682 for the Mount Pleasant property between October 9, 2018 and November 5, 2021.

[22] The applicant believes that her entitlement to equalization may, in fact, be greater than $850,000 because the respondent did not, in his Financial Statement dated February 27, 2019 or in his updated Financial Statement dated February 2, 2022, disclose his interest in a property known as 41 Walkview Crescent, Richmond Hill ("Walkview Property"). The Walkview Property is jointly owned by the respondent and Dorna Farshid. Dorna Farshid was, according to the applicant, the bookkeeper for the respondent's two fast food restaurant businesses which he purchased in or around 2012.

[23] The applicant also claims that the respondent has intentionally or recklessly depleted his assets thereby entitling her to more than half the difference between their net family properties.

[24] After the sale of the matrimonial home was closed in October 2020, the applicant and the children moved to a rental accommodation, a smaller house located on Yorkminster Road. The applicant is paying $4,900 a month to rent the house, and $600 toward the older daughter E's rental accommodation in London, Ontario where E attends university. The applicant seeks the release of the funds being held in trust so that she can put a down payment on another home.

[25] The applicant also seeks the release of funds so that she can pay $18,135 representing the outstanding balance of M's tuition at a private school in Toronto. The applicant claims that the school will not release M's marks until tuition has been paid in full.

[26] The applicant alleges that the respondent has funneled large amount of money out of the country to Iran and into failing businesses over the years. That, combined with the allegation that the respondent did not make voluntary support payments for almost two years between August 2019 and July 2021, and the respondent's alleged lack of disclosure, fuel her request that after $1.5 million in trust funds is released to her, the balance of the funds should be held in trust and not released to the respondent who may dissipate the funds without first meeting his legal obligations to the applicant.

[27] The applicant argues that if the balance of the trust funds nominally owed to the respondent is released to him, the children will ultimately suffer as the respondent cannot be trusted to meet his legal obligations. For instance, the applicant suggests that, in reviewing the respondent's bank accounts, it is unclear what he has done with approximately $1.0 million in funds as the respondent has not paid down any debts and the money is not to be found in his saving accounts.

[28] The applicant obtained a judgment from an Iranian court on September 5, 2020 in respect of the parties' Mehr (Islamic marriage contract) whereby the respondent owes the applicant $565,000 representing 896 gold coins. The respondent acknowledge this debt and proposes that it be delt with outside the NFP equalization process, however, if it is included, it would represent a debt he owes to the applicant. Moreover, the respondent argues that the applicant ought not to be able to relitigate the property issue in Ontario. Nothing in my reasons prejudices the respondent's ability to argue that the treatment of the Mehr in Iran is res judicata for the court here in Ontario.

[29] The respondent has not provided an income report for the years of 2019, 2020 and 2021. The applicant retained an expert to provide a report concerning the respondent's Child Support Guidelines income from 2015 to 2018. The report concludes that the respondent earned the following income:

2018

2017

2016

2015

$850,000

$820,000

$940,000

$690,000

Respondent's Position on the Applicant's Motion and his Cross-motion

[30] The respondent states that the Royal College of Dental Surgeons of Ontario has suspended his license on a temporary basis pending the outcome of a disciplinary proceeding and until criminal charges are resolved. He has pleaded not guilty to all charges.

[31] The respondent deposes that his income was $270,000 for the years 2016 to 2018, $281,032.78 for 2019. These numbers come from the respondent's expert McCabe Valuation Consulting's June 7, 2019 report. The respondent has not produced an expert report for subsequent years but claims that his income has dropped significantly and that he earned $65,834.00 in 2020 and $41,336.72 in 2021. He claims that he currently derives no income.

[32] The respondent calculates that for the first six months after separation, he provided an average of $26,000 a month towards family expenses. Then he reduced the sum to an average of $15,000 to $20,000 a month until March 2020 when he ran out of money. He denies that he stopped paying child support but states that he was originally putting the funds into a joint bank account. Then, when the applicant refused to use the funds to pay household bills and mortgage payments, he began to pay bills directly (mortgage, house insurance, utilities, car insurance, car leases, children's private school, cell phones, Visa and interest on the credit line).

[33] He asserts that, if anything, he has overpaid child support since he has contributed about $360,000 up to March 2020, but only owed a total of $98,000 in child support. He continues to pay $1,000 per month in child support and contributes another $500 per month to the children's RESP. He also pays for I's car insurance of $2,904, I's condo insurance of $300 and her cell phone. He claims that he has paid $40,000 for E's private school, and $52,000 for M's private school since separation.

[34] The respondent alleges that, with the applicant's educational qualifications and experience, she could obtain a full-time job with a large pharmaceutical company earning $200,000 a year and asks the court to impute the applicant's income at that level.

[35] The respondent denies that the applicant was the primary caregiver of the children and suggests that the applicant was not burdened with care of the children as the couple had a full-time nanny, and the applicant's mother lived with the family.

[36] The respondent states that all funds that he sent to Iran were with the applicant's full knowledge and acquiescence. He alleges that the couple engaged in a family business venture that went poorly. He deposes that $1.1 million was sent to Iran in 2004 for a house building project. After the project was completed, the parties’ funds were returned over the period June 2009 to 2011, but due to the sanctions against Iran and the sharp decline of the Iranian currency against the Canadian dollar, the investment had sunk to $300,000. The respondent claims that this transaction occurred many years ago and is not relevant to their separation which occurred in 2018.

[37] As for the respondent's two fast food franchise restaurants, the respondent claims that the applicant knew about these business ventures. However, they were not successful and the respondent sold them.

[38] The respondent claims that the applicant owes him a post-separation adjustment of $520,000. This contrasts with the applicant who claims that she is owed $90,802 in post-separation adjustments for various repairs to the matrimonial home prior to its listing, as well as for occupational rent for the Mount Pleasant property.

Discussion

[39] The parties provided voluminous material on their motions which went into great detail concerning their marital differences.

[40] I see the issues as far more limited:

(1) What is the appropriate treatment of the release or retention of trust funds?

(2) Should the respondent be ordered to produce the original of the promissory note between him and his late father?

Issue #1: What is the appropriate treatment of the release or retention of trust funds?

[41] The total of the proceeds of the matrimonial property and Mount Pleasant Property being held in trust is $2,936,217.75. Both properties were jointly owned. Half of the proceeds is $1,468,108.88. This is approximately $1.5 million which is the amount that the applicant seeks in release.

[42] I have no issue with releasing $1.5 million to the applicant as this is very close to her one-half entitlement towards the net proceeds. Based on the respondent's Notice of Motion, I do not understand the respondent to be objecting to such relief.

[43] The controversy is about what to do with the remaining $1,436,217.75.

[44] The applicant insists that the court order that this balance be held in trust as she will be owed a sizable equalization payment, a post-separation adjustment and that is not even considering her argument for an unequal division of net family property due to the respondent squandering his assets in an irresponsible manner.

[45] The applicant's further position is that, given the history of this litigation and the support obligations that are owed by the respondent, the balance of the proceeds should continue to be held in trust.

[46] The respondent disagrees and makes the following suggestion: hold back the sum of $1.0 million from the proceeds of $2,936,217.75 which are being held in trust, which would leave $1,936,217.75 for distribution, or $968,108.88 for each party. The respondent also seeks the release to him of the $200,000 from the sale of his dental practice which is being held in trust by his lawyer.

[47] Looking at the parties' comparative NFP statements, I would recalibrate the respondent's calculation of his NFP obligation as follows:

[48] He arrives at his position that the applicant owed him $199,896.74 following a division of NFP. But this is entirely dependent on him convincing the court that his father made a personal loan of $500,000 to him. Secondly, a big difference between the parties is the value at separation date of the respondent's dental practice. He values it at $579,500 whereas the applicant values it at $925,000. Accepting, for the purposes of argument, that the applicant's position is the correct one, this is a difference of $345,500. The respondent also includes a $65,000 gift from his father that he seeks to exclude from his calculation. While there are other differences between the parties concerning their NFP equalization calculation, only making these adjustments to the respondent's calculation of his NFP by assuming that the applicant will be successful on these points, results in a difference of $910,500 which, when equalized, increases the respondent's NFP payment by $455,250 which would result in his owing the applicant $255,353.26. In other words, whereas in the applicant's NFP calculation the respondent owes her $357,605.17 (in comparison to the respondent's position that the applicant owes him $199,896.74), by making the above adjustments - which represent the main points of controversy between the parties - I arrive at a determination that the respondent would owe the applicant $255,353.26.

[49] The treatment of post-separation adjustments is outside of the NFP equalization process. The applicant claims that she is owed $90,802 in post-separation adjustments whereas the respondent argues that, in reality, he is owed $520,000. Given the large disparity in the parties' positions, I would not attempt to factor in post-separation adjustments into the determination of what amount of trust funds to hold back.

[50] Notwithstanding the voluminous motion materials, the parties' positions are not that far apart. The applicant submits that the court should order that $1,436,217.75 be held in trust, whereas the respondent urges that $1,000,000 be so held. Taking into account the possibility that the respondent may turn out to be wrong about his NFP calculations by around $255,000, I find that holding back $1,250,000, after releasing $1.5 million to the applicant is the appropriate result.

[51] Additionally, I was not provided with any proper justification for the respondent's lawyer to continue to retain the $200,000 in trust from the sale of the respondent's dental practice.

[52] I should add that, at the hearing of the motions, the respondent conceded that his financial statement was incorrect and that he did, in fact, have approximately $500,000 more in assets here in Canada than declared on his financial statement. While I have taken that into consideration in my deliberations, I did not find that it fundamentally altered the arguments raised by the parties or that I have identified herein.

[53] Accordingly, I order that:

(a) $1.5 million from the combined sale proceeds be released to the applicant from the amounts that are being held in trust by the real estate solicitor.

(b) $1.25 million be held in trust, pending the disposition of this proceeding.

(d) $200,000 be released to the respondent by his lawyer, which were the funds that remained in trust from the sale of the dental practice.

(e) If there are minor adjustments that need to be made as a result of interest or other disbursements affecting the amounts being held in trust, the parties may write to the court.

Issue #2: Should the respondent be ordered to produce the original of the promissory note between him and his late father?

[54] The applicant relies on the full disclosure obligations under the Family Law Rules and well-established caselaw to argue that the respondent must produce the original of the promissory note between him and his late father. The respondent claims that the father lent him $500,000 which must now be returned to his late father's beneficiaries.

[55] The respondent argues that the letter is under the control of a non-party.

[56] The applicant cites the test in Bailey v. Bailey, 2012 ONSC 2486, at para. 15 and submits that the test for production is met. She suggests that the respondent has visited Iran three times over the past three years and has had ample opportunity to obtain the document which the respondent claims is in the possession of his family members.

[57] I find that that authenticity of the promissory note is an important point in this litigation. The respondent is relying on it which makes a $500,000 difference to his alleged debts in his NFP calculation. I find that the applicant has satisfied the test in Bailey and I order that the original letter be produced to the applicant's expert to inspect and return. The parties may write to the court if they are unable to agree on appropriate safeguards for the delivery of the promissory note to the applicant's expert and its return.

Costs

[58] I consider success on the motions to be divided. If the parties are unable to resolve the issue of costs, they shall make written costs submissions by September 9, 2022. Such written submissions directed to Patricia.Lyon-McIndoo@ontario.ca shall not exceed three double-spaced pages, exclusive of Costs Outlines, Bills of Costs, and Offers to Settle. Authorities are to be hyperlinked or forwarded to me via Ms. Lyon-McIndoo, my judicial assistant. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs.

Pinto J.

Released: August 12, 2022

COURT FILE NO.: FS-18-007150

DATE: 20220812

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Soheila Anita Hamadanizadeh

Applicant

– and –

Amir Abbas Haydarian

Respondent

REASONS FOR DECISION

Pinto J.

Released: August 12, 2022

Hamadanizadeh v. Haydarian , 2022 ONSC 4682

Case Summary

Overview

The Facts

The Applicant's position

Respondent's Position on the Applicant's Motion and his Cross-motion

Discussion

Issue #1: What is the appropriate treatment of the release or retention of trust funds?

Issue #2: Should the respondent be ordered to produce the original of the promissory note between him and his late father?

Costs

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Issues