COURT FILE NO.: 5059/15
2022 12 09
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Jeffrey Jacob Jurrius v. Kelly Lynn Garcia
BEFORE: Fowler Byrne J.
COUNSEL: Ross H. Thomson, for the Applicant
Daniel A. Robertson, for the Respondent
HEARD: September 16, 2022
E N D O R S E M E N T
[1] This motion arises from a family law proceeding in which the Applicant died on August 1, 2020.
[2] The representative of the Applicant, the now deceased Jeffrey Jacob Jurrius (“Jurrius”), seeks an order continuing this Application in the name of the Estate of Jeffrey Jacob Jurrius (“the Estate”), as well as an order compelling the Respondent to deliver any expert reports on which she intends to rely in order to support her equalization claim.
[3] The Respondent Kelly Lynn Garcia (“Garcia”) seeks security for costs, and in the event that the Estate cannot satisfy any costs order, that the costs become the personal responsibility of the Estate representative Alexander M. Wade. She also seeks an order that the claims against the estate continue, without an amendment to the Answer.
I. Background
[4] The parties were married on October 22, 2001 and separated on August 26, 2013. They had one child together, T.J., who is now 18 years old. Jurrius also had another child from a previous relationship, D.J., who is older.
[5] This proceeding started on March 11, 2015 and an Answer was served on May 12, 2015. Both parties sought, amongst other claims, equalization of their net family property. Equalization was complicated by Garcia’s ownership interest in two corporations that required valuation.
[6] Disclosure from Garcia was problematic. There have been three trial management conferences which all resulted in the postponement of the trial. To further complicate matters, on September 29, 2018, Garcia made an assignment in bankruptcy. After some further litigation, the bankruptcy was set aside on April 20, 2020.
[7] On August 1, 2020, the Applicant died intestate in British Columbia. The parties appeared at a trial management conference before Justice McGee on September 4, 2020. Garcia was advised of her obligations under s.7 of the Family Law Act, R.S.O. 1990, c. F.3 to continue her claims against the Estate and was specifically notified of the six-month limitation period with respect to an equalization claim.
[8] It appears that no one was interested in administering the estate. Accordingly, Mr. Alexander M. Wade, a local lawyer, stepped up and on June 24, 2021 was appointed a representative of the Estate of Jeffrey Jacob Jurrius in this application.
[9] Garcia did not proceed in a timely manner, so a motion was scheduled for March 25, 2022, wherein Garcia sought to extend the six-month limitation period. For reasons that are unclear, Garcia’s motion did not proceed. Instead, on April 11, 2022, Garcia moved to stay the Application due to Jurrius’ death. Unfortunately, Garcia’s materials were not uploaded to Caselines (the court’s official document sharing platform), and the matter did not proceed. Instead, Justice Trimble held a family conference. I note that the matter was automatically stayed nonetheless by Jurrius’ death.
[10] Given the age of the children, parenting issues are not before the court. Accordingly, the only issues left to be adjudicated were the equalization payment to Jurrius and retroactive child support owed to Garcia. It appears an equalization payment will be owing to the Estate, but the exact amount varies between $18,000 and $157,000. I have no information about the possible quantum of retroactive support claims. I am advised that under the intestacy laws of British Columbia, the sole beneficiaries of the Estate are Jurrius’ two children.
[11] At the hearing of this motion, the parties advised that they consented to an order to continue, and the order was made on that date.
II. Issues
[12] Accordingly, the following issues remain to be decided:
a) Should the Estate be required to post security for costs?
b) Should the Estate representative be personally responsible for the Estate’s costs?
c) Should Garcia be required to produce expert opinion evidence on the value of the corporations listed in the net family property statement?
III. Analysis
A. Security for Costs
[13] Garcia claims the Estate is insolvent. Indeed, the evidence indicates that there are few, if any, assets other than the equalization payment owed by Garcia to the Estate. In addition, the Estate has no income. The Estate does not dispute this and the Net Family Property Statement it filed confirms this.
[14] Garcia argues that counsel for the Estate is motivated to continue solely to obtain an equalization payment from which it can deduct its legal fees that were owed by Jurrius as of his death. Any amount that counsel can collect as fees from the Estate, as a result, will be deducted from the two sons’ entitlement. She argues that this amounts to a conflict of interest. It is not even clear whether Mr. Wade is able to obtain instructions from both of Jurrius’ sons, and Mr. Thomas was candid that he is having difficulty in obtaining instructions from one son. Garcia also claims that she is owed money for retroactive child support and section 7 expenses, which would be deducted from any equalization payment that she may owe to the Estate. It is uncertain whether there will be anything left over in the Estate once these two issues are determined.
[15] My authority to make an order for security for costs is derived from s.24(13) and (14) of the Family Law Rules, O. Reg. 114/99 under Courts of Justice Act, R.S.O. 1990, c. C.43. It states:
(13) 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 party habitually resides outside Ontario.
A party has an order against the other party for costs that remains unpaid, in the same case or another case.
A party is a corporation and there is good reason to believe it does not have enough assets in Ontario to pay costs.
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.
A statute entitles the party to security for costs.
(14) The judge shall determine the amount of the security, its form and the method of giving it.
[16] In Izyuk v. Bilousov, 2015 ONSC 3684, as adopted by the Divisional Court in Sabijan v Sabijan, 2021 ONSC 7605, Justice Pazaratz stated when considering whether to order security for costs, the court must turn its mind to the following:
a) The initial onus is on the party seeking security for costs to show that the other party falls within one of the enumerated grounds.
b) If the onus is met, the court has discretion to grant or refuse an order for security.
c) If the court orders security, it has wide discretion as to the quantum and means of payment of the order.
d) The order must be “just” and be based on one or more of the factors listed in subrule 24(13).
(Citations omitted).
[17] In this case, the Estate is situated outside of Ontario – in British Columbia. Accordingly, if there is a cost order levied against the Estate, it has no assets in this province from which Garcia could collect.
[18] Given that the first prong of the test has been satisfied, I do not need to consider whether the Estate’s claims are a “waste of time or a nuisance” in order to proceed.
[19] When deciding whether to exercise my discretion, I have considered the following principles:
a) Orders for security for costs are a blunt instrument. They are not intended to act as a roadblock to genuine claims. They should be used sparingly and carefully because they may well have the effect of barring a party from access to the court process for a proper review of existing orders: Gauthier v. Gauthier, 2019 ONCA 722 at para. 8; Izyuk at para. 37;
b) It can be inferred that an analysis under this section will include some consideration of the merits of the case, and whether it is a nuisance: Peters v. Peters et al, 2018 ONSC 7550 at paras. 38-39;
c) The purpose of security for costs is to protect a party from nuisance or irresponsible litigation, conducted without regard to the merits of the case or the costs likely to be incurred: Izyuk at para. 36.
d) It is not the intention of any rule governing procedure in the court to deny access to the court by a person who has a genuine claim and is unable to satisfy … an outstanding order for security for costs due to circumstances beyond his control: McGraw v. Samra, 2004 ONCJ 164 at para. 23, as adopted in Pigeault v. Pigeault, 2009 CarswellOnt 1558 at para. 19;
e) The Family Law Rules, read as a whole, yield the unmistakable intention of the Rules Committee that litigants not be permitted to use the court as a playground. This rule is but one remedy to stop a case in its tracks until a party veering outside of the rules brings him or herself into line with them. It is a control on a blithe pursuit of another person in the courts without attention to the merits of the pursuit and the legal costs likely to be incurred by the respondent to defend the case. It is a remedy built on the principle that court proceedings are expensive and time consuming and not to be launched frivolously or without due regard to the impact on the responding party: McGraw at para. 24, as adopted by LW v. AW, 2011 ONSC 7596 at para. 15;
f) Cases must be dealt with justly, which means ensuring that the procedure is fair to all parties, that it saves time and expense, that it is dealt with in a way that is appropriate to its importance and complexity and using the appropriate court resources: r. 2(2) and r. 2(3) of the Family Law Rules.
[20] I have no difficulty in finding that the Estate’s claim has some merit. No matter whose position is taken, there will be an equalization payment to the Estate. What remains to be seen is whether a retroactive support claim will exceed any equalization payment ordered.
[21] I do not find the Estate and its representative to be “playing games.” They sought the authority of the court to appoint a representative of the Estate of the purposes of this application, and that order was granted. That order was not appealed.
[22] Also, given Jurrius’ limited means, I recognize that in order for him to adjudicate his case, and frankly, to have access to justice, Mr. Thomas probably had to agree to hold off collecting on his account until after the matter was resolved or tried. This is not an uncommon occurrence in family law matters where all the parties’ assets are tied up in property, like a matrimonial home.
[23] I find it telling that neither of the sons had any interest in stepping up to represent the Estate and fighting for the equalization payment. Mr. Thomson advised that they cannot get instructions from one of the sons. But for the actions of Mr. Thomson and Mr. Wade, I suspect nothing would have happened with the Estate.
[24] Where I am having difficulty is that the primary motivation for this application does not appear to be for the benefit of the Estate. The sole beneficiaries of the Estate are Jurrius’ two sons. The parties were candid that if there is anything left in the Estate, those funds will be used to pay for Mr. Wade’s services and to pay for the outstanding legal fees owed by Jurrius to his counsel, who now represents the Estate. The rest will be distributed to the two sons. That means that for every dollar paid to Mr. Wade to move this matter forward, and for every dollar collected for unpaid fees to Mr. Thomson’s firm, there is less for the beneficiaries of the Estate, for whom they purportedly represent. It is appropriate that because of this apparent conflict, Mr. Wade was appointed to guard the Estate’s, or namely, the beneficiaries’ interests. He must conduct himself and give his instructions accordingly.
[25] Accordingly, while I do not find that Mr. Thomson or Mr. Wade have acted improperly in any way, it appears that Mr. Thomson may have as great an interest in this application’s outcome as Garcia or the beneficiaries. He cannot hide behind his status as a non-party to avoid a possible costs order against the Estate, which was incurred in pursuit of his own interests, in the event that this application results in no equalization payment being owed and Garcia’s assets are diminished with no recourse for her legal fees. This is not a situation where the payment of security cannot be made for reasons beyond the control of the Estate or Mr. Thomson, because Mr. Thomson has control of the situation, subject to Mr. Wade’s direction. Mr. Thomson and Mr. Wade must have some consideration for the impact of their actions on Garcia, who, in the end, may owe the Estate little or nothing.
[26] Accordingly, the Estate, or even Mr. Thomson on its behalf, should post security for costs in the event they wish to pursue the matter further.
[27] With respect to the quantum, unfortunately, Garcia provided no Bill of Costs on which to base my order. In submissions, Garcia suggested the sum of $40,000.
[28] As indicated, this matter is almost ready for trial, except for disclosure issues addressed below. Accordingly, it would be appropriate to make an order for security for costs up to trial, and then a further amount in the event the parties proceed to trial. Given the lack of a Bill of Costs, I will set an amount that is appropriate.
B. Responsibility of Estate Representative
[29] Due to my decision regarding security for costs, it is not necessary to decide this issue. Accordingly, this request is dismissed, without prejudice to the parties’ ability to raise the issue again when the issue of the costs of trial is addressed.
[30] Nonetheless, I remind Mr. Wade that he acts as a fiduciary with respect to the Estate and the beneficiaries. He must act cautiously, prudently, and not unnecessarily expend Estate funds in pursuing a claim that may not have any merit. His responsibilities must be assessed at each stage of this litigation.
C. Expert Reports by Garcia
[31] Garcia has placed values for certain corporate assets in her net family property statement. The Estate seeks an expert opinion to support those values.
[32] In Kraemer v. Kraemer, 2019 ONSC 944 at para. 24, Justice Lemon reviewed the relevant authorities and concluded that a party who places a certain value for an asset in their sworn financial statement bears the onus of establishing the accuracy of that value, on the balance of probabilities. Where that value cannot be readily ascertained, or there is a serious dispute with respect to that value, an independent valuation may be required. The failure of the deponent to provide credible evidence to support a value may result in a value being assigned which is less advantageous to the party claiming the asset.
[33] These principles are relevant to this case before me. It is obvious that the Estate disputes the values as set out in Garcia’s financial statement and net family property statement. The value of these corporate assets is crucial to determining whether an equalization payment is owed. If Garcia wishes to take the position that the values she claims are accurate, she is obligated to prove it.
IV. Conclusion
[34] This matter has been delayed on several occasions and must move forward on a timely basis. Accordingly, based on the foregoing, I make the following orders:
a) The Estate, or anyone on its behalf, shall post the sum of $5,000 as security for Garcia’s costs in this application;
b) Until which time this security is posted, the Estate may not take any step in this case, except to appeal this order;
c) Garcia shall provide any expert reports on which she intends to rely at trial, in addition to any reports already served, and in particular with respect to 2059162 Ontario Ltd., which shall be served no less than 60 days from the date that security is posted; any responding expert reports must be served 45 days thereafter;
d) This matter shall be placed on the trial sittings commencing June 5, 2023 and is peremptory to both parties;
e) The parties shall attend before me, by videoconference, at 8:30 a.m. for one last combined settlement conference and trial management conference on a date to be arranged by the trial coordinator, which shall be after all expert reports are filed and no later than May 26, 2023; for this conference, the parties are expected to file a comparative net family property statement, any supporting expert evidence, DivorceMate calculations, and a spreadsheet of what each party claims is owed by the other;
f) If the matter is proceeding to trial, the Estate shall post an additional $15,000 as security for costs no later than May 29, 2023; failure to do so will stay the action;
g) The parties are encouraged to resolve the issue of costs themselves; if they are unable, both parties are to serve and file their Costs Outline and two pages of written costs submissions, single-sided and double spaced, on or before January 6, 2023; responding written submissions, with the same size restrictions, shall be served on or before January 20, 2023; and
h) The remainder of the two motions are dismissed.
Fowler Byrne J.
DATE: December 9, 2022
COURT FILE NO.: 5059/15
DATE: 2022 12 09
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Jeffrey Jacob Jurrius v. Kelly Lynn Garcia
COUNSEL: Ross H. Thomson, for the Applicant
Daniel A. Robertson, for the Respondent
ENDORSEMENT
Fowler Byrne J.
DATE: December 9, 2022