Court File and Parties

COURT FILE NO.: FS-20-43025 DATE: 2023 10 18 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Agnieszka Graczyk Applicant – and – Martin George Ivach Respondent

Counsel: Eric Freedman, counsel for the Applicant No one attending

HEARD: October 3, 2023

Reasons for Judgment

Chozik J.

[1] This matter was set to proceed to trial on the October 2023 blitz list in Milton, Ontario. It proceeded as an uncontested trial before me. The Respondent, though he had notice of the trial date, did not attend. No one attended on his behalf. No materials were served or filed on his behalf.

[2] The Respondent also did not attend at the settlement conference on May 23, 2023 or the exit trial management conference (“TMC”) on September 25, 2023.

[3] I am satisfied that the Respondent had notice of the trial date because:

a. He initially participated in the proceedings, filed an Answer and a Financial Statement dated May 27, 2020, attended at the case conference on June 8, 2021 and a settlement conference on September 23, 2021. Until February 2023, he was represented by Laura Oliver, an experienced lawyer.

b. In February 2023, when Ms. Oliver got off the record, Mr. Freedman (the Applicant’s lawyer) wrote to her and asked her to ensure that the removal order contained an email address for the Respondent.

c. Before Ms. Oliver got off the record, she emailed the proposed settlement conference dates to the Respondent. Therefore, he knew that a settlement conference was the next step and was being scheduled.

d. On May 15, 2023, Mr. Freedman mailed a copy of the Applicant’s settlement conference materials to the Respondent at the former matrimonial home. The Respondent was living at the property then. The evidence establishes that he was evicted from that property on May 17, 2023 in the course of an unrelated mortgage enforcement action against him.

e. Mr. Freedman also phoned the Respondent and left him a voice message to confirm the settlement conference.

f. After the settlement conference, Mr. Freedman mailed the Respondent the endorsement. That endorsement set out the TMC date and that this matter was set for trial on the October 2023 blitz list. It also set out the issues for trial.

g. In June 2023, Mr. Freedman emailed a copy of the settlement conference endorsement to a law firm that contacted him on behalf of the Respondent. Email correspondence from that law firm states that they were in touch with the Respondent and that the firm might be retained by him. Mr. Freedman advised the law firm of the TMC date and that the matter was scheduled for the October trial blitz list in Milton for a one-day trial.

h. The settlement conference endorsement was also emailed to an address associated with the Respondent’s business by the registrar.

i. Mr. Freedman read me an email he received from the trial coordinator’s office, confirming that the trial coordinator had telephoned the Respondent and left him a detailed message about this matter proceeding to trial on October 3, 2023. The telephone number the trial coordinator called is the same one that Mr. Freedman used to call the Respondent: it has an outgoing voice message identifying the Respondent and his business by name.

[4] Given the above, I am satisfied that the Respondent had adequate notice of today’s trial. The trial proceeded in his absence. The Applicant’s evidence was unchallenged. Her evidence consisted of two affidavits, sworn on October 1, 2023, and viva voce testimony before me.

[5] At trial, the Applicant sought orders in respect of equalization, spousal support, occupation rent and costs. She also sought orders aimed at facilitating enforcement, including an extension of a Certificate of Pending Litigation (“CPL”) in respect of the former matrimonial home, an order that any award to her be paid from the net proceeds of the power of sale of the matrimonial home, and that her shares in the jointly owned business be transferred to the Respondent.

Equalization

[6] The Applicant sought $400,000 for equalization. The equalization turns on the value of the parties’ business, Green Ace Landscaping Inc. The parties started and operated this landscaping business during their marriage. They both worked for the business full time. It was incorporated in 2012. The unchallenged evidence before me is that each party owned 50% of the shares. The Applicant’s undisputed evidence is that after their separation in April 2019, the Respondent effectively cut her out of the business.

[7] At the outset of this litigation, in 2021, the Respondent was ordered to produce a business valuation. He had agreed to the order. He did not do it. He was also ordered to disclose corporate financial records. He did not do that either.

[8] At trial, the Applicant initially claimed that the value of the business was $800,000. This figure was based largely on the replacement cost of the equipment accepted by an insurance company effective January 1, 2019 (a few months prior to separation). At that time, the replacement cost of the equipment insured was $647,900.

[9] At trial, the Applicant conceded that the value of the equipment for the purpose of equalization is not its replacement cost but its actual value.

[10] The Corporate Financial Statements for Green Ace Landscaping Inc. dated October 31, 2017 show that the assets of the corporation were valued $216,470 in 2017 and $185,311 in 2016. These assets consisted of cash on hand ($14,322 in 2017 and $24,755 in 2016), accounts receivable ($12,187 in 2017 and $8,980 in 2016), inventory ($3,325 in 2017 and $4,150 in 2016) and “property, plant and equipment”. The “property, plant and equipment” made up most of the corporate assets: $186,636 in 2017 and $147,426 in 2016.

[11] These statements are the only financial records for the corporation the Applicant was able to adduce. The Respondent did not make the financial disclosure he was ordered to. Therefore, the value of the corporation must be inferred based on this, which is the best evidence before me.

[12] I am not prepared to infer that the value of the corporation at the time of separation was $800,000.

[13] I find that the value of the corporation on the date of separation was more likely around $450,000. I make this finding based on the unchallenged evidence and because I draw an adverse inference against the Respondent for failing to make the required financial disclosure.

[14] I infer that the corporation had a value of $450,000 because:

a. The Corporate Financial Statements show that in 2017, the assets were $216,470. In 2016, the assets were $185,311.

b. The Corporate Financial Statements show that in 2017, revenue was $969,510, whereas in 2016 it was $830,762.

c. The Applicant’s unchallenged evidence was that in 2018 and 2019 the business was doing well, and its assets increased. Her evidence that the value of the business was increasing is supported by the Corporate Financial Records, which show growth from 2016 to 2017.

d. The growth was about 15% from 2016 to 2017. On the unchallenged evidence that the business continued to grow, I am of the view that it is reasonable to impute growth from 2017 to 2018 and 2018 to 2019 of at least 15%. Assuming this growth, I find that the value of the corporate assets was probably in the range of $286,281 in 2019 at the time of separation.

e. There were dividends paid: $48,000 in 2017 and $52,000 in 2016, and $140,000 annually for the parties to draw.

[15] I therefore find, on a balance of probabilities, that the corporation had a value of $450,000 at separation in April 2019 ($286,000 in assets and an additional amount of collected dividends). Out of an abundance of caution, my estimate of the value of the corporation is at the very low end.

[16] None of the other items claimed by the Applicant in her Net Family Property Statement dated May 15, 2023 are challenged. The items ascribed to the Respondent come from his Financial Statement filed with his Answer. The only item at issue for the purpose of calculating equalization is therefore the value of the corporation.

[17] I agree with the Applicant that entire value of the corporation should be put on the Respondent’s side of the ledger on the Net Family Property Statement. He seized the corporation. He kept all its assets for himself. He ousted the Applicant from the business even though she was an equal partner. He did not treat her as an equal share holder. I therefore make a declaration, under s.10 of the Family Law Act, R.S.O. 1990, c. F.3. that the Respondent was, as of separation, the owner of the corporation.

[18] Using $450,000 as the value of the corporation, I accept the Applicant’s calculation that the Respondent owes her an equalization payment of $320,697.15.

Spousal Support

[19] The Applicant sought an order requiring the Respondent to pay her $100,000 as spousal support in a lump sum. Their marriage was 8.5-years long. They also lived together for 9 months prior to the marriage. There are no children of the marriage. At the time of separation, the Applicant was 42 years old.

[20] While I accept that the Applicant is entitled to spousal support and that a lump sum payment is appropriate, I find that the quantum to be paid is $57,745, not $100,000.

Entitlement

[21] The calculation of spousal support must be based on established principles, which requires that I determine entitlement to support, duration and quantum, and decide whether a lump sum payment is appropriate as opposed to periodic payments.

[22] Duration and quantum of support are separate and interrelated tools available to courts to best achieve the purposes of an order for spousal support, which, according to s. 15.2(6) of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), are to:

a. recognize any economic advantages or disadvantages to the spouse arising from the marriage or its breakdown;

b. apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;

c. relieve any economic hardship of the spouses arising from the breakdown of the marriage; and

d. in so far as practicable, promote economic self-sufficiency of each spouse within a reasonable period of time.

[23] These principles are consistent with the concept of marriage as a partnership. There is a presumption that spouses owe one another a mutual duty of support: Bracklow v. Bracklow, [1999] 1 S.C.R. 420, at para. 20.

[24] The threshold issue to be determined is entitlement. The Applicant did not argue this issue. Nevertheless, it is critical for the court to determine all grounds for entitlement because the basis for entitlement may significantly impact quantum and duration of spousal support: see Cassidy v. McNeil, 2010 ONCA 218, 99 O.R. (3d) 81, at para. 64. A strong compensatory claim will be a factor for a higher range in the Spousal Support Advisory Guidelines (SSAG): see s. 9.1 of the SSAG; see also Schulstad v. Schulstad, 2017 ONCA 95, 91 R.F.L. (7th) 84, at para 54.

[25] Having regard to all the circumstances of these parties, I am of the view that the Applicant does not have a compensatory claim for spousal support. No such claim is made. None is apparent on the evidence. Rather, her claim is needs-based.

[26] Entitlement can be based on need where a spouse experiences economic hardship resulting from the breakdown of the marriage, but not necessarily the roles assumed during the marriage. It may also arise when a spouse is unable to become self-sufficient or needs time to do so following the breakdown of the marriage, or where the spouse suffers a dramatic drop in the standard of living as a result of separation.

[27] In this case, the parties were equal partners in a business they grew together. After the separation, the Respondent took over the jointly-owned business and thwarted the Applicant’s ability to earn an income in that business. There is evidence that he diverted work and revenue from the jointly-owned business to another business he started with his friend. He took over the corporate accounts. He kept all the equipment for the business, and even took the truck the Applicant used from her driveway using a spare set of keys.

[28] The Respondent also effectively ousted the Applicant from their home. Her unchallenged evidence is that he started to track her movements and planted no less than 10 small cameras in the home to record her. He infiltrated her email and social media accounts. He put her clothes in garbage bags and put excrement on them. He barricaded her out of the home by nailing the doors shut with two-by-four lumber. He slashed the passenger back seat in her truck to insert a tracking device. He intimidated her. She moved out in June 2019 to live with her mother.

[29] After they separated, the Applicant tried to start her own landscaping company but could not finish projects because the Respondent took her truck.

[30] In January 2020, the Applicant was involved in a car accident. She then fell into a depression and suffered from migraines and insomnia. She relapsed in her recovery as an alcoholic.

[31] I accept that the Applicant experienced a great deal of stress because of the breakdown of the marriage and business she helped build, her health issues and depression, and then the on-set of the Covid pandemic. While the Applicant acknowledged when she testified that that she could have been earning a minimum wage income, I find that this was highly unlikely.

[32] I am satisfied that the Applicant experienced significant financial hardship because of the breakdown of the marriage and the Respondent’s conduct. She suffered a dramatic drop in her standard of living. I am satisfied that in the years after the breakdown of the marriage, the Applicant had a needs-based claim for spousal support. Her need is on-going.

Duration

[33] The SSAG suggest that the duration of support for a marriage of this length (8.5 to 9.0 years) is 4.5 to 9 years. Having regard to the circumstances of these parties, I find that the duration of the Applicant’s spousal support entitlement should be 6 years. There are no children of the marriage. There is no evidence that this was a traditional marriage. The Applicant was 42 years old at the time of the separation. It is reasonable to expect that she become self-sufficient. She has taken significant steps recently to do so. I have confidence that she will become self-sufficient.

Lump Sum Payment

[34] The court has broad discretion to make an award of periodic or lump sum spousal support: Davis v. Crawford, 2011 ONCA 294 at para. 52-54. A lump sum support award should not be made for the purpose of redistributing assets, though this may be the effect. Nor should it be made if the payer does not have the ability to pay or it would undermine his self-sufficiency: Davis, at para. 60-65.

[35] In this case, a lump sum support payment is not a guise for redistributing assets. There are many factors that weigh heavily in favour of a lump sum award, rather than periodic payments. These factors include: Davis, at. para. 67.

a. Terminating any contact or ties between the parties;

b. Ensuring adequate support will be paid in circumstances where there is a real risk of non-payment of periodic support;

c. There has been a lack of financial disclosure by the Respondent;

d. The Respondent appears to have the ability to pay a lump sum award from any net proceeds from the sale of the matrimonial home whereas he seems to lack the ability to pay periodic support.

e. A lump sum award would satisfy an award of retroactive spousal support.

[36] In particular, I am of the view that if periodic support is ordered then it will not be paid. The Respondent did not comply with a number of court orders. He did not obtain the required valuation of the joint business, to which he had consented. He did not make financial disclosure. He has not paid two costs awards, each $2,000. He has also shown disrespect for the court process: he failed to attend for the settlement conference, trial management conference and the trial.

[37] The Respondent was also evicted from the matrimonial home. There is a judgment against him because he defaulted on the mortgage. It is unclear where he is or what he is doing. His financial circumstances are not known. There may be funds available to him now from the sale of the matrimonial home under power of sale to satisfy equalization and lump sum support owing, whereas he is not likely to pay any periodic support.

[38] For these reasons, I am of the view that a lump sum support order is appropriate.

Quantum

[39] In this case, the goal in setting the quantum of spousal support is to relieve economic hardship arising from the breakdown of the marriage and promote the Applicant’s economic self-sufficiency. The lump sum amount sought by the Applicant is $100,000. In my view, this amount is too high. Her method for calculating this proposed amount is not clear.

[40] To calculate spousal support, I must look at the Respondent’s income, the Applicant’s income and consider the SSAG guidelines.

[41] For the spousal support calculation, I am prepared to impute an annual income to the Respondent of $90,000 as suggested by Mr. Freedman. I agree with Mr. Freedman that this imputation is generously low. The Respondent’s income was likely much higher in the years immediately after separation. The figure of $90,000 is based on the undisputed evidence that each party drew $70,000 annually from the joint business as a salary during the marriage, and half of the net profits that were available to draw on in 2016 and 2017.

[42] The Applicant’s gross income (line 150 income) in 2018, when she and the Respondent worked full time running the joint business, was approximately $68,000. I do not have income tax assessments as to what her income was in 2019 or 2020. Based on her unchallenged evidence as to what she was doing at that time, I find that she had almost no income. In 2021, her line 150 income was $13,369. In 2022, her line 150 income was $1,369.

[43] As I set out above, for a short time after separation, the Applicant was trying to run her own landscaping company but was frustrated in this endeavour when the Respondent took her truck. She tried gardening. That did not work out. She took time to recover from the car accident at the beginning of 2020. She worked for Amazon for a few months at the end of 2020 but was fired after a short time when she sustained an injury and needed time off. For a time, she invested her time and energy into a new boyfriend’s venture, though that ultimately did not work out. These setbacks explain, in part, her low-income post-separation.

[44] Since April 2023, the Applicant has been working as a landscape technician earning approximately $2,300 of gross income every two weeks. However, the work is seasonal (April to end of October) and she is not likely to earn this much during the winter months.

[45] I considered whether to impute a minimum wage income to the Applicant post-separation. In theory, she could have been working and earning an income. As I have set out, she readily acknowledged this when she testified when I asked her about it. But theory and reality are not the same.

[46] I find that the Applicant’s reality post-separation rendered her incapable of earning even minimum wage. I accept her evidence and find that she genuinely tried to earn a living. As I have set out, she faced multiple setbacks. Those setbacks are not ones for which the Applicant should be faulted. The breakdown of a marriage is a challenging time. It is a time of many transitions. It took the Applicant a bit of time to find her new path. In the circumstances of this case, the Applicant was entitled to and needed spousal support during that time but got none.

[47] I decline to impute any additional income to the Applicant for 2019 to 2022 inclusive. In 2023 and ongoing, I am prepared to use $40,000 as her income for support purposes, as proposed by her. I am prepared to use an average of her income over the course of 6 years post separation for the purpose of calculating a lump sum award. My calculation of her average income is as follows:

Year	Respondent’s Income	Applicant’s Income
2019	$90,000	$0
2020	$90,000	$0
2021	$90,000	$13,369
2022	$90,000	$1,369
2023	$90,000	$40,000
2024	$90,000	$40,000

Average Income: $15,789

[48] Based on the DivorceMate calculation, using $15,789 as the Applicant’s income, the lump sum payable ranges from $40,928 to $60,683. Attached as Appendix “A” is a copy of the DivorceMate calculation.

[49] I find that lump sum support in the high range is appropriate in this case. Despite her significant need for spousal support post-separation, the Applicant was left to fend for herself without any means or access to means. She has a strong needs-based claim. Given all the circumstances, I am of the view that spousal support in the higher range is more appropriate. I find that an appropriate amount is $57,745.

[50] Therefore, I order the Respondent to pay to the Applicant $57,745 by way of lump sum spousal support.

Occupation Rent

[51] The Applicant claims that she is entitled to occupation rent in the amount of $26,000 from June 2019 (when she left the matrimonial home) until October 2021 (when the Respondent purchased her share of the interest in the home). She says that rent for comparable accommodations would be $2,000 per month. She also claims several post-separation adjustments because, she says, she paid for some of the maintenance of the home and contributed to the mortgage payments. She argues that occupation rent should be paid to her because of the Respondent’s unjust enrichment: he got to live in the home while she had to go and live with her mother.

[52] I do not accept the Applicant’s claim for occupation rent.

[53] The Applicant gave notice to the Respondent of her claim for occupation rent in a letter from her lawyer to his lawyer dated August 14, 2019. In that letter, she said that the home should be sold. She said that she would seek occupation rent if it were not sold and the Respondent remained in the home. However, she did not take any legal action for partition and sale. Had she done so, she would more than likely have been successful as there is really no defence to an action for partition and sale in a case like this, where title is in both spouse’s names and there are no children.

[54] There is a prima facie right to an order for the partition and sale of the matrimonial home. A judge is required to order the sale unless other party demonstrates that such an order should not be made and shows there was malicious, vexatious or oppressive conduct on the part of the respondent in relation to the sale itself: Marchese v Marchese, 2019 ONCA 116 at para 5.

[55] Where the property is a matrimonial home, a claim for occupation rent by one spouse against the other will only be granted in exceptional cases. To qualify, the spouse not in possession must show that the remedies to gain possession of the property, to receive payment from the spouse in possession, or support from him or her under the FLA, are either not available or insufficient to render justice between the parties: Foffano v. Foffano (1996), 24 R.F.L. (4th) 398 (Ont. S.C.), at para. 26; Jasiobedzki v. Jasiobedzka, 2023 ONCA 482 at para. 15.

[56] I am of the view that the Applicant’s claim for occupation rent must fail. While she gave the Respondent notice of her claim to seek occupation rent, she did not exercise her option to move for partition and sale of the property.

[57] I also do not accept the Applicant’s claim that she contributed towards the maintenance and upkeep of the property and related expenses for the benefit of the Respondent. The Applicant produced a spreadsheet detailing payments she made. None of the underlying documentation is produced. I find that many of these payments were not related to the maintenance of the property. For example, I am not satisfied that payments to PetValu, Virgin Mobile for mobile phones, public storage and transfers to pay credit cards were necessary for the upkeep of the property or for the benefit of the Respondent.

[58] Of the total she claims, I find that the Applicant paid $1,366.02 towards household expenses. I accept her unchallenged evidence that she contributed $6,099.37 towards the mortgage. However, the dates of the transactions on her spreadsheet span May, June and July of 2019. The Applicant was still living in the home for most of this time. She moved out sometime in June 2019. I am not satisfied that these payments were for the exclusive benefit of the Respondent.

[59] In conclusion, the Applicant’s claim for occupation rent is dismissed.

Other Orders

[60] The Applicant seeks two orders to facilitate enforcement of this judgment. First, she seeks an extension of the CPL registered on title to the matrimonial home. She asks for an order that the CPL continue in her favour in aid of execution on this judgment. Second, she seeks an order that the net proceeds from the power of sale of the matrimonial home be paid directly to her in satisfaction of this judgment. Those funds are being held in trust by the bank’s lawyers. I decline to make either of these orders.

[61] A CPL is, by definition, an order that is made “pending litigation”. For a CPL to issue, the party seeking it must show an interest in the land. There is no litigation pending in this case. More importantly, the Applicant no longer has any interest in this land: the Respondent purchased her share of the matrimonial home two years ago. Therefore, she is not entitled to a CPL. I decline to make an order extending it.

[62] Rather, to enforce this judgment, the Applicant must obtain a writ of execution.

[63] An order directing the bank’s lawyers to pay this judgment from the net proceeds of the power of sale to the Applicant would be equally wrong. The order to sell that property was made in a separate civil proceeding over which I have no jurisdiction. It is a separate proceeding. It is not before me. There may be other creditors who have a claim to those funds. Once the Applicant obtains a writ of execution, she will stand as an execution creditor with a claim to those funds. There may be other creditors who take priority. I cannot order the funds to be paid directly to her as part of this Application as she requests.

[64] A copy of this endorsement may be forwarded to the bank’s lawyers, or who ever is holding the funds in trust, to put him or her on notice of the Applicant’s interest in those funds. A motion to pay those funds into court may be required on notice to all those who may have a claim. The Applicant, as an execution creditor, may then apply to the court to access those funds in the regular course.

[65] Other than a declaration under s.10 of the Family Law Act that the Respondent was the owner of the corporation at the time of the separation, I decline to make any order in respect of the Applicant’s shares in the jointly owned business. I did not hear any legal submissions about my authority to transfer shares in support of this request.

Costs

[66] The Applicant seeks costs of this Application totaling $20,000. I have reviewed the Bill of Costs. I am satisfied that this amount is fair, reasonable and proportionate in the circumstances. The Applicant made every effort to move this matter forward and to address the issues between the parties in a reasonable way. Her efforts were frustrated by the conduct of the Respondent during litigation: he did not make financial disclosure, failed to produce a business valuation when one was ordered, did not attend the settlement conference or the trial management conference and forced her onto trial in his absence. Full indemnity costs are justified in the circumstances.

[67] The Respondent shall pay costs of this application to the Applicant in the amount of $20,000 forthwith.

Conclusion

[68] There shall be an Order that:

a. The Respondent shall pay to the Applicant the sum of $320,697.15 for equalization;

b. The Respondent shall pay to the Applicant a lump sum in the amount of $57,745.00 for spousal support;

c. The Respondent shall pay to the Applicant $20,000 as costs, in addition to $2,000 costs ordered on May 23, 2023 and $2,000 ordered on September 25, 2023;

d. The judgment bears interest as prescribed in the Courts of Justice Act, RSO 1990, c C. 43.

Chozik J.

Released: October 18, 2023