COURT FILE NO.: FC-09-2171-2
DATE: 2022/11/01
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Timothy Ray Covell
Applicant
– and –
Diane Theresa Covell
Respondent
Julie Gravelle, for the Applicant
Rodney Cross, for the Respondent
HEARD: September 15, 2022
REASONS FOR DECISION ON MOTION
CARTER J.
Overview
[1] The Respondent Diane Covell has brought a motion for a stay of proceedings until the Applicant Timothy Covell has paid $16,000 in outstanding costs orders and has transferred funds from his RRSP to satisfy child support arrears as previously ordered. In addition, she seeks an order for security of costs.
[2] The motion arises in the context of a divorce application commenced by the Applicant in November 2016. He seeks orders with respect to parenting, child support and a divorce.
[3] By way of background, there are previous final orders made after the parties’ separation. An order from November 2011 provides that the mother has sole custody of the five children with access to the father as agreed upon between the parties and for the father to pay child support based on his income being $70,800 per year. Retroactive child support was fixed at $32,815. Additional provisions were made for Section 7 expenses, life insurance and spousal. Costs were fixed at $15,000.
[4] The Applicant did not appeal the 2011 order but did bring a motion to change, which was disposed of pursuant to an order of Justice Kershman dated March 14, 2014 (“the 2014 Order”). It is the language of that order that drives the current dispute between the parties. In particular, the father was ordered to pay $450 per month towards support arrears and costs and to access his locked-in RRSP to the extent possible to make similar payments. The Applicant did not appeal the 2014 Order.
[5] The motion was heard before me on September 15, 2022, at which time I reserved my decision.
Legal Principles
[6] Although the Respondent has at times framed the relief she is seeking as a “stay of proceedings” pursuant to s. 106 of the Courts of Justice Act, R.S.O. 1990, c.C.43, as am., she is also relying on the broad discretionary power given to the Court pursuant to the Family Law Rules, O. Reg. 114/99 as am., to sanction litigants. The Rules were amended in 2014 to consolidate the sanction powers. Of particular note, rule 1(8) allows the court to make an order that a party who failed to obey a court order not be entitled to further order from the court unless the court orders otherwise.
[7] The 2014 amendments removed the earlier requirement that the failure to obey an order be “wilful” for the court to be able to dismiss a party’s claim (Herman v. Rathbone, 2017 ONSC 4585 at para. 22)
[8] There is a three-step process to be utilized when considering the non-compliance of a party seeking to obtain relief from the court:
a. The court must ask whether there is a triggering event that would allow it to consider the wording of subrule 1(8);
b. If the triggering event exists, the court should then ask whether it is appropriate to exercise its discretion in favour of the non-complying party by not sanctioning that party under subrule 1(8); and
c. In the event the court determines that it will not exercise its discretion in favour of the non-complying party, it is then left with a very broad discretion as to the appropriate remedy under subrule 1(8) (Pierce v. Kisoon, 2019 ONSC 4389 at para. 15).
[9] The onus is on the non-complying party and the party seeking relief from the court to demonstrate why it would be appropriate for the court to exercise its discretion in the party’s favour (Pierce at para. 16).
[10] However, courts must take care in imposing a stay in cases where a recipient asks for a stay because of non-payment of the order sought to be changed (Pierce at para. 17).
[11] In addition, the utmost caution must be used before striking a party’s pleadings when parenting time is in issue. Parenting time is to be based only on the best interests of the children. That said, there is a difference in principle between the imposition of a stay in a case where no final order has been made and where there is a motion to change a final order respecting parenting time brough by a defaulting party (Pierce at paras. 18 to 21).
[12] The law of security for costs is governed by subrule 24(13) of the Family Law Rules. A judge may, on motion, make an order for security for costs that is just based on one or more of the following factors:
a. A party habitually resides outside Ontario.
b. A party has an order against the other party for costs that remains unpaid, in the same case or another case.
c. A party is a corporation and there is good reason to believe it does not have enough assets in Ontario to pay costs.
d. There is good reason to believe that the case is a waste of time or a nuisance and that the party does not have enough assets in Ontario to pay costs.
e. A statute entitles the party to security for costs.
[13] The initial onus is on the party seeking security for costs to show that the other party falls within one of the enumerated grounds. If the onus is met, the court has discretion to grant or refuse an order for security for costs (Izyuk v. Bilousov, 2015 ONSC 7476 at para. 39).
Stay of Proceedings/Rule 1(8)
[14] The Respondent submits that the father has not paid $16,000 in costs orders. These costs requirements were not added to FRO arrears and the father has ignored them. Nor has the father complied with the 2014 Order requiring him to transfer funds from his RRSP to satisfy child support arrears. The failure to comply with these orders should disentitle the Applicant to any relief until the payments are made.
[15] The Applicant disagrees. Justice Kershman ordered that all cost orders be enforced along with arrears of support, undifferentiated. The order is being enforced by FRO/MEP and therefore he is not failing to comply with the order. With respect to the cashing of locked-in RRSPs, due to restrictions by TD Bank he was unable to cash in any further amounts in 2014 as prior to the date the order was made he had already cashed in significant amount of RRSPs. The remaining funds were liquidated in 2015 and 2016 to cover garnishment of support and basic income needs.
[16] As previously noted, at the heart of this motion is the 2014 Order. The relevant aspects of the order are as follows (emphasis added):
The father shall access the TD Canada Trust locked-in RRSP No. 8235772 and shall withdraw as much as he can every year, as allowed under the hardship rules of the RRSP, and pay such amounts, net of tax, to either the Ontario Family Responsibility Office (FRO) or the Nova Scotia Maintenance Enforcement Program (MEP), which is to be applied towards child support, spousal support and cost arrears.
Arrears of child support, spousal support, special expenses and costs are to be paid at the rate of $450.00 per month commencing April 1, 2014. The sum of $450.00 is based on the Father’s income of $54,200.00. In the event that the Father’s income increases, the arrears payment shall increase in proportion to any increase in his income.
[17] Much of the evidence and the submissions on this motion focused on whether FRO and/or MEP had been collecting costs arrears as opposed to other arrears. Although there was initially some ambiguity, the most recent evidence shows that costs arrears were not being enforced. In the endorsement of Justice MacEachern of March 3, 2022, it is noted that “it is now common ground between the parties that the Family Responsibility Office has not been enforcing the previous costs awards”. In addition, an updated Statement of Arrears from FRO shows that the costs awards were only just recently added.
[18] However, just because FRO was not enforcing the costs awards does not mean that the Applicant was failing to comply with the 2014 Order. He was required to pay $450 per month towards all arrears, including costs arrears. There is no suggestion that he did not substantially comply with the order to pay $450 per month. There was no condition that he pay a set amount towards costs arrears as opposed to child support or spousal support arrears. How FRO chose to enforce the order is irrelevant.
[19] In light of the fact that the Applicant did not “fail to comply” with this aspect of the 2014 Order, there is no triggering event that would allow me to consider the wording of subrule 1(8).
[20] The failure to pay down arrears with RRSP funds rests on a different footing.
[21] The evidence demonstrates that the Applicant made the following withdrawals from his RRSP:
a. $12,918 in 2014;
b. $12,148 in 2015; and
c. $5,944.11 in 2016.
[22] The Applicant’s evidence is that the 2014 withdrawal came before the 2014 Order. As such it would not be subject to the wording of the order. His explanation for the other withdrawals is that he used the funds to “to cover garnishment of support and pay basic needs.” He also says that he did not qualify under either of the two financial hardship provisions that would allow him to withdrawn funds from his RRSP.
[23] I would begin by noting that this latter explanation makes no sense. If he was not permitted to make withdrawals, one wonders how he was able to access funds in 2015 and 2016, which he clearly did. Furthermore, it is not clear what he means when claims that the funds were used to cover garnishment of support. The very term garnishment implies that funds were being taken from his employment wages.
[24] Ultimately, as admitted, the Applicant chose to use the RRSP funds withdrawn in 2015 and 2016 for his own purposes and not to pay down arrears. As set out in his affidavit of November 10, 2021, he abided by the terms of Justice Kershman’s orders except with respect to the locked- in RRSP. At least as it relates to the 2015 and 2016 withdrawals, there is no question that the Applicant has failed to obey an order. The Respondent had established a triggering event within the meaning of subrule 1(8) of the Family Law Rules.
[25] Having found a triggering event, the onus is on the Applicant to demonstrate that it would be appropriate for this Court to exercise its discretion in favour of the non-complying party by not sanctioning him. He has not done so. For the reasons set out above, his explanations for failing to pay arrears with the RRSP funds are unclear and contradictory.
[26] As a result, I am left with a very broad discretion as to the appropriate remedy. I have considered the fact that this application is being heard in the context of a motion to change a final order and that, despite claiming that concerns about the RRSP provision has led to this process, the Applicant has not sought to change that aspect of the order. I have also considered the fact that the Applicant is seeking changes with respect to parenting time. However, it is important to note that only one of the children is under the age of 18 and she will turn 18 shortly. The Respondent has stated that she would agree to a change in the wording of the parenting time order to “as per the child’s wishes, as agreed upon in writing by email between the child and the Respondent father from time to time.” The reality is that at this late stage the parenting issues do not loom large.
[27] The Respondent's motion is therefore allowed, and the Applicant's application is stayed pending payment of the sum of $18,092.11 net of tax, representing the amounts withdrawn from the RRSPs in 2015 and 2016 and not paid towards arrears and obtaining leave of the court.
[28] If the parties are unable to agree, the Applicant may make written submissions as to any reductions to the $18,092.11 based on tax implications within 14 days of the release of this decision. The Respondent will have 10 days after receipt of the Applicant’s submissions to respond. Written submissions will be restricted to three pages.
Security for Costs
[29] Given my findings, it is unnecessary for me to consider the issue of security for costs at this time.
Costs
[30] If the parties are unable to agree on the liability and/or quantum of costs for this motion by November 18, 2022, written submissions of no more than three pages, along with bills of costs and offers to settle, may be provided to me at 10 day intervals and I will make a decision. Costs submissions are to be sent to my attention via email to scj.asssitants@ontario.ca
Carter J.
Released: November 1, 2022
Released: November 1, 2022
COURT FILE NO.: FC-09-2171-2
DATE: 2022/11/01
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Timothy Ray Covell
Applicant
– and –
Diane Theresa Covell
Respondent
REASONS FOR DECISION
Carter J.