COURT FILE NO.: FS-21-25095

DATE: 20221202

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Gislene Aiello

Applicant

– and –

Francesco Aiello

Respondent

Courtney Hughes, for the Applicant

Salvatore Mannella and Robert Mignardi, for the Respondent

HEARD: November 22, 2022

Pinto J.

Reasons for Decision

Overview

[1] The applicant wife brings a motion seeking interim disbursements from the respondent husband in the amount of $140,000. The amount is based on:

Costs of business valuations and income analysis reports: $60,000

Costs of a real estate appraiser: $10,000

Anticipated legal fees: $70,000

Total: $140,000

[2] For the reasons that follow, I grant the applicant’s motion, but only in part. I order that the respondent pay $40,000 in disbursements to the applicant to permit her to pay for legal services for imminent next steps in the litigation.

Background

[3] The parties were married on August 15, 2009. They have two children, now 12 and 10 years old. The parties continue to live in the jointly owned matrimonial home with the children.

[4] The parties do not agree on the date of separation. The applicant claims that the parties separated on July 15, 2021. The respondent claims that the parties have not separated and indeed reconciled earlier this year. The disbursements motion proceeded without prejudice to the respondent’s position on separation.

[5] The respondent works at his family business, Green Leaf Landscaping & Maintenance Ltd. (“Green Leaf”). The applicant alleges that the respondent has an ownership interest in Green Leaf. However, the respondent claims that Green Leaf is owned by his mother and prior to his father’s passing in 2019, by his parents, who founded the company in 1987.

[6] The applicant states that she was a “stay home mother and homemaker” throughout the marriage until December 2017, when she started a small floral business dealing with outdoor planters. In 2020, she started her own business known as “Posies by Gigi.”

[7] The application was commenced on August 17, 2021. The issues in dispute are decision-making responsibility, parenting time, child support, and equalization.

[8] The first Case Conference took place on October 19, 2022, before Sharma J. Pursuant to the directions of Sharma J. in his Case Conference endorsement, the parties have exchanged Requests for Information (RFIs) and the responses are due on December 9, 2022.

[9] Paragraph 4 of the Case Conference endorsement includes directions that:

g. The applicant has leave to bring a 1-hour motion for interim disbursements, which shall be heard on November 22, 2022. Prior to this motion being filed, parties shall discuss agreeing upon a property appraiser and an income valuator, rather than each side obtaining competing appraisal / valuation reports.

h. The applicant has leave to bring a 1-hour motion for 3rd party disclosure, which motion shall be heard on December 13, 2022. Parties shall seek to avoid this motion by providing as much disclosure within the parties’ control in response to the Request for Information.

The applicant’s position

[10] The applicant asserts that the respondent has depleted most of his savings and has pledged a massive amount of debt on the properties that he owns which is consistent with his vow that, if the parties separated, the applicant “would not get a penny of his money.” The applicant also alleges that the respondent has transferred large sums of money from his personal bank account into his mother’s bank accounts.

[11] In her factum, the applicant submits that:

Due to the complex web of activity between the respondent’s rental income, the family business that he runs [Greenleaf] and the other income earning businesses he operates coupled with this refusal to be transparent about his finances in this litigation, the Applicant will need to undertake a variety of steps in this litigation. This will include: this motion, amending her pleadings, disclosure motions against both the Respondent and his Mother, a possible motion to add his Mother to these proceedings, a possible partition motion of the home, a motion for an advance on equalization and/or support motions and questioning.

The Applicant will also need extensive valuations and income determinations. She has been given a quote by a valuator with almost 40 years’ experience. This will cost approximately $50,000 - $60,000 to value the Respondent’s businesses and income. A copy of the quote from Koger Valuations dated November 1, 2022 confirms this.

[12] The applicant alleges that the respondent owns 4 properties personally and Greenleaf owns 3 properties that she knows of. She will need to have those properties valued.

[13] The applicant points out that the respondent has been highly uncooperative in this litigation. She obtained an order for substitute service. The respondent was threatened with being noted in default before counsel responded on his behalf. Then, the respondent initially served an incomplete financial statement on October 12, 2022 with many values noted as “TBP.” An updated financial statement was only provided on October 28, 2022 following the parties’ Case Conference on October 19, 2022.

[14] Regarding her finances, the applicant deposes that her last year’s income was $23,000 and that she owes significant sums of money to friends, family, and credit cards. Her income is too low and her credit rating too poor to qualify for financing.

[15] In sum, the applicant anticipates hard fought litigation in respect of the parties’ parenting and financial affairs. She claims she has little to no funds. Without significant disbursements required to “level the playing field,” she claims that she will be unable to advance the litigation.

The respondent’s position

[16] The respondent deposes that the applicant’s narrative makes many false allegations and is unsupported by real evidence and corroboration. He is making reasonable efforts to obtain banking and other financial information to respond to the applicant’s RFI. He disputes the alleged impecuniosity of the applicant and suggests that her florist business is more lucrative than she claims.

[17] He felt compelled to insert “TBP” on his first financial statement because applicant’s counsel demanded that the parties proceed to a Case Conference on October 19, 2022 when he was still awaiting bank statements.

[18] The respondent also denies the applicant’s allegations of violence and abuse and suggests that the truth of these claims will be further explored in questioning.

[19] In sum, the respondent resists the motion and argues that:

a) The motion is premature at this early stage of the case;

b) The amount of the disbursements sought by the wife is excessive, unnecessary, and unsupported;

c) The husband does not have the necessary financial resources to pay the disbursements; and

d) The main claims advanced by the wife in this case have no merit.

The Law

[20] Rule 24(18) of the Family Law Rules (the FLRs) provides that a court may make an order for a party to pay an amount of money to cover part or all of the other party’s expenses of carrying on the case, including lawyer’s fees.

[21] In Samis v. Samis, 2011 ONCJ 273, the following principles for the awarding of interim disbursements were set out:

[100] The principles that courts have been applying to determine whether to order interim disbursements pursuant to this subrule are set out in Stuart v. Stuart, 2001 28261, 24 R.F.L. (5th) 188, [2001] O.J. No. 5172, [2001] O.T.C. 965, 2001 CarswellOnt 4586 (Ont. Fam. Ct.), as follows:

1. The ordering of interim disbursements is discretionary: Airst v. Airst, [1995] O.J. No. 3005; Hill v. Hill (1988), 1988 4710 (ON SC), 63 O.R. (2d) 618 (H.C.J.) and Lossing v. Dmuchowski, [2000] O.J. No. 837.

2. A claimant must demonstrate that, absent the advance of funds for interim disbursements, the claimant cannot present or analyze settlement offers or pursue entitlement: Hill v. Hill (1988), 1988 4710 (ON SC), 63 O.R. (2d) 618 (H.C.J.) and Airst v. Airst, [1995] O.J. No. 3005.

3. It must be shown that the particular expenses are necessary: Lossing v. Dmuchowski, [2000] O.J. No. 837.

4. Is the claim being advanced meritorious? Lynch v. Lynch (1999), 1 R.F.L. (5th) 309 and Randle v. Randle (1999), 1999 ABQB 954, 3 R.F.L. (5th) 139.

5. The exercise of discretion should be limited to exceptional cases: Organ v. Barnett (1992), 1992 7433 (ON SC), 11 O.R. (3d) 210 (Ont. Gen. Div.).

6. Interim costs in matrimonial cases may be granted to level the playing field: Randle v. Randle (1999), 1999 ABQB 954, 3 R.F.L. (5th) 139.

7. Monies might be advanced against an equalisation payment: Zagdanski v. Zagdanski, 2001 27981 (ON SC), 55 O.R. (3d) 6, 2001 CarswellOnt 2517.

8. The court must consider which of these principles adhere to the primary objective of the Family Law Rules.

9. The court interprets the new Family Law Rules to require the exercise of the discretion in rule 24(12) on a less stringent basis than the cases that call for such only in exceptional cases. The discretion should be exercised to ensure all parties can equally provide or test disclosure, make or consider offers or possibly go to trial. Simply described, the award should be made to level the playing field.

10. An order under subrule 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 licence to litigate.

11. Certainly, the proof of the necessity of interim disbursements would be critical to the successful claim. The claimant must clearly demonstrate that the disbursements are necessary and reasonable given the needs of the case and the funds available. In particular, if an expert is the subject of a requested disbursement, the claimant must demonstrate there is a clear need for the services of said expert.

12. The claimant must demonstrate that he or she is incapable of funding the requested amounts.

13. The claim or claims being advanced 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.

14. The order for interim disbursements should not be limited to cases where it would be taken out of an equalisation payment. There are cases where there would not be an equalisation payment. The litigants could be a child suing a parent, an elderly parent suing an adult child or a family that has not acquired assets. It may be that a party with a minimal income stream and no liquid assets needs disbursements to test evidence that might lead to him or her resisting an equalisation order. The levelling of the playing field should not be limited to those with an expected equalisation payment.

Discussion

[22] Regarding the costs of business valuations and income analysis reports, the applicant relies on a written estimate from Koger Valuations dated November 1, 2022, wherein Koger estimates a cost of $50,000 to $60,000 for an income assessment for the respondent for the years 2016 to 2021, and business valuations for the companies owned by the respondent and/or parties closely related to him.

[23] I find that this item lacks the specificity required by the caselaw on disbursements and, at this point, it is not clear that the valuation is necessary: Ludmer v. Ludmer, 2012 ONSC 4478 at paras. 17, 57, 58, 61 and 62. The quotation confirms that the expert was only provided with the application. As correctly pointed out by the respondent, financial disclosure has not been completed by him. He has yet to answer the applicant’s RFI. The respondent’s ownership of Green Leaf was assumed by the expert but that may not turn out to be the case. There is no evidence offered by the applicant that she requested specific further information from the proposed expert about the proposed fees set out in the quotation. There is no submission about whether a critique of a business valuation would cost the same as, or less than, a full business valuation as proposed in the quotation. I also note that Sharma J. directed that “[P]rior to [the disbursements] motion being filed, parties shall discuss agreeing upon a property appraiser and an income valuator, rather than each side obtaining competing appraisal / valuation reports.” It would appear to fly in the face of Sharma J.’s order to include in a disbursements order payment for the applicant obtaining her own appraisal / valuation reports at this stage.

[24] With respect to the $10,000 for the cost of real estate appraisal report, the applicant’s material does not indicate any basis for the requested amount other than the applicant’s assertion that she is “sure it will be at least $8-$10,000.” This is far from the level of specificity required by the law in respect of requesting interim disbursements.

[25] Moreover, I agree with the respondent’s critique of this request, as stated in his factum:

41. More importantly, the email confirms that counsel wants to obtain, “a quote for 7 properties, both on the date of marriage and date of separation.” Only 5 properties are identified by municipal addresses. One of the 5 properties is the joint matrimonial home, which does not require a valuation, both on the date of separation or date of marriage. Two other properties of the 5 identified in counsel’s email are owned by Green Leaf, not the Husband. Once again, until the issue of ownership of Green Leaf is determined, there is no immediate need to appraise the company’s real estate assets.”

[26] With respect to the request for disbursements of $70,000 for “anticipated legal fees”, the applicant deposes that she already owes her current counsel $10,000. Further, she deposes that motions are “typically around $15,000 depending on the nature of the motion” and she anticipates needing to pay for the within motion for interim disbursements, a motion to compel financial disclosure, a non-dissipation motion, and a motion to add the respondent’s mother to the proceeding, and finally a motion for partition of the home, or exclusive possession.

[27] While an affidavit from applicant’s counsel to confirm how much legal time is expected for future steps is generally required, I disagree with the respondent that the absence of such an affidavit is fatal on an interim disbursements motion. While such affidavits are important and highly desirable, ultimately the test is a discretionary one. Further, I would distinguish the cases on interim costs (Pakka v. Nygard, 2002 62431) from cases such as this one on interim disbursements.

[28] A review of the applicant’s financial statement indicates that:

a) Her gross income last year was $22,131.

b) Her anticipated annual income is $16,800, whereas her yearly expenses are $33,576.

c) The respondent pays all family expenses.

d) She has $12,776.65 in various bank accounts, albeit she does not put a value on her new florist business “Posies by Gigi.” and

e) She has debts of about $35,000 which does not include $200,886.75 on a line of credit and the jointly held mortgage.

[29] On the limited evidence before me, I find that it is unlikely that the applicant can obtain financing as her income is relatively low, and her credit rating is weak.

[30] I agree with the applicant that it is contradictory for the respondent to claim that he has no liquid assets to pay for interim disbursements, yet state that he is prepared to make the necessary arrangements to purchase the applicant’s interest in the matrimonial home.

[31] There is a dispute between the parties as to who will owe the other funds in respect of their equalization of net family properties. The respondent claims the applicant will owe him $538,569.30 whereas the applicant states that she will be owed an equalization claim. She also submits that the NFP equalization is difficult to calculate due to the lack of disclosure. For instance, the respondent fails to acknowledge his ownership of a Lamborghini. In any event, an order for interim disbursements should not be limited to cases where it would be taken out of an equalization payment: Samis, at para. 100.

[32] I find that it is likely that the applicant will imminently need to pay for legal services in respect of:

a) Preparing for and attending the within disbursements motion;

b) Preparing the applicant’s answers to the respondent’s RFI due December 9, 2022;

c) Reviewing and following up on the respondent’s answers to the applicant’s RFI;

d) Preparing for and attending the 3rd party disclosure motion and/or a motion seeking disclosure from the respondent; and

e) Preparing for and attending questioning.

[33] I note that applicant’s counsel estimated that a motion typically costs $15,000. Even accounting for only two motions and additional time spent on the above steps, I find that disbursements of $40,000 are warranted in respect of legal fees.

[34] I find that the respondent has sufficient funds to pay. For instance, the respondent’s mother confirmed that Green Leaf paid him $110,000 in 2022 on account of “personal expenses.” Further, the applicant provided evidence that the respondent’s Scotia Total Equity Plan, a credit facility, provides him with ability to borrow a further $282,377.88.

[35] I find that, absent the advance of funds for interim disbursements, the applicant will not be able to present or analyze settlement offers or pursue entitlement and such an award is necessary to level the playing field.

[36] I would also add that my decision does not preclude the applicant, at a later time, from bringing another motion for interim disbursements at which time her counsel should provide a fulsome affidavit specifying the anticipated costs of various legal fees and disbursements.

Order

[37] I order that the respondent pay the applicant $40,000 in interim disbursements as follows:

(a) $20,000 within 7 days of the release of these Reasons; and

(b) a further $20,000 by December 30, 2022.

[38] The parties shall provide me with a draft Order approved as to form and content, and a clean version in WORD format for signing. The parties may direct the draft order to AnnaMaria.Tiberio@ontario.ca.

Costs

[39] I consider success on this motion to be divided even though I have ordered disbursements to be paid by the respondent. I find, notwithstanding the applicant’s partial success on the motion, that the applicant’s motion materials were not focused and needlessly lengthy. They exceeded the page limits specified in the Province-wide Notice to the Profession Regarding Family Law Cases effective September 13, 2021. The narrative portion of the applicant’s primary affidavit was 9 pages which is acceptable as it is within the 12-page limit, however the primary affidavit included 260 pages of exhibits (the page limit is 10). The narrative portion of the applicant’s reply affidavit was 8 pages (the page limit is 5 on reply). The applicant’s factum was single-spaced when it should have been double spaced. It was 26 pages, which exceeds the 20-page limit specified in the Consolidated Practice Direction Concerning Family Cases in the Toronto Region. If the applicant wanted to include additional material, leave of the court should have first been sought.

[40] I indicated at the hearing of the motion that these page limit rules are not just technicalities. As the Province-wide Notice to the Profession states:

Focused materials help facilitate a focused, hearing. Unfortunately, many filings include unfocused material with unnecessarily voluminous attachments. Litigants are directed to prepare material that is focused and incudes only the supplementary documents that are needed to facilitate a resolution of the outstanding issues.

[41] If, notwithstanding these comments, the parties are unable to resolve the issue of costs, they shall make written costs submissions by December 16, 2022. Such written submissions are to be directed to Ms. Tiberio, the judicial assistant and shall not exceed two 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. Tiberio. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs.

Pinto J.

Released: December 2, 2022

COURT FILE NO.: FS-21-25095

DATE: 20221202

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Gislene Aiello

Applicant

– and –

Francesco Aiello

Respondent

REASONS FOR DECISION

Pinto J.

Released: December 2, 2022