Court File and Parties

NEWMARKET COURT FILE NO.: FC-20-1850-00 DATE: 20230515 SUPERIOR COURT OF JUSTICE – ONTARIO – FAMILY COURT

RE: Anna Maria Di Sabatino, Applicant AND: Mirko Di Sabatino, Respondent

BEFORE: The Honourable Madam Justice A. Himel

COUNSEL: Belinda Rossi/Hannah Rich, Counsel for the Applicant Areesha Zubair, Counsel for the Respondent

HEARD: May 15, 2023

Case Management Ruling

[1] As stated in my endorsement dated May 11, 2023, today’s attendance (a long motion and long cross-motion) was converted to a Case Management attendance with directions. The breadth of materials and relief sought was excessive, and case management was required.

[2] The wife complied with my endorsement, while the husband did not: (1) the husband failed to provide a new sworn Financial Statement, relying on an affidavit stating that there have been no material changes to the April 2021 Financial Statement. That Financial Statement is not reliable or credible, it is dated and lacks the required detail for a matter that has now been before the court for three years, and makes no refence to a significant inheritance that he received; (2) the husband failed to provide evidence that he is in compliance with various court orders; and (3) the husband’s memo was provided at Court this morning (rather than as directed by Friday).

[3] The attendance lasted for most of the day, and the parties had the opportunity to meet with Mr. Martin Pont, in respect of the valuation and tracing issues.

[4] Both counsel made submissions on the various issues (and the husband provided his perspective on certain matters, notwithstanding that I directed only counsel speak on his behalf).

[5] As stated by various judges who have addressed this matter, the husband’s conduct in this litigation and non-disclosure is highly concerning. I echo the concerns. Prior representations that the husband had retained an expert to value his 25 +corporate interests and to assess his income, and that expert reports would be forthcoming (as ordered by Jarvis J. in 2021), were clearly misrepresentations.

[6] Justice Jarvis previously advised the parties that the Court would appoint Mr. Pont to be the Court’s expert, if the husband failed to engage his expert and produce a report. Given the delay, the game-playing and costs currently being incurred by the wife in her attempts to move this matter forward, a court-appointed expert is required. That is the most cost and time effective measure, and accords with the Family Law Rules and Practice Directions (which have been blatantly disregarded until now).

[7] The court-appointed expert shall make disclosure requests to the non-parties (which may include Clean Soils, Portlands Redi-Mix Inc., 85 Vickers Road Holding Corp and/or other entities) by Wednesday May 17, 2023, with a requested delivery date of May 31, 2023 for all requested documentation in their power, possession. If the court-appointed expert is not satisfied that he has sufficient material to move forward with the business and income valuations, and the tracing, he shall advise both parties, in writing, by June 1, 2023. In that case, the wife’s third-party disclosure motion shall proceed. The husband states that he does not intend to object to the relief sought in that motion.

[8] The wife has produced a chart of stated breaches of various court orders, including: disclosure, breach of the non-dissipation order, costs and otherwise.

[9] The husband admitted today that the Clean Soil funds previously held in trust by Sutherland Law, which were to be used to pay the wife’s spousal support (as per the Di Luca J. order), have been dissipated.

[10] The Clean Soil funds were used to fund the husband’s legal fees (including his ill- conceived and unsuccessful attempts at leave to appeal various court orders), and for his accounting and expert fees (although I note that the husband does not have a CBV on retainer, nor has he produced any reports).

[11] The wife states that the funds were dissipated prior to the leave to appeal application and an incomplete tracing was provided (in violation of my May 11, 2023 order). The wife points to the various court orders in support of her position that no funds were to be used by the husband without further order, and no such order was ever made.

[12] The husband states that Jarvis J. provided permission by way of a letter from November 2021, enabling him to use the funds for the above purposes. The wife disputes same.

[13] Given that the Di Luca J. directed that the funds held by Sutherland Law be used to make the wife’s periodic spousal support payments ($19,750 per month), it would surprise me to learn that Jarvis J. intended to permit the husband to dissipate these funds (which would have covered the wife’s support for four years).

[14] Moreover, I do not accept that Jarvis J. would have permitted the dissipation funds, if he understood that the husband would later attend at Court and advise that he is in financial distress, (which he attributes to this litigation), that he has been forced to start a new company and to complete various tasks as he cannot afford to hire staff.

[15] The husband states that the restriction of the use of funds for any purpose other than spousal support was only made by Jarvis J. on February 22, 2022. Pursuant to that order, the husband was required to trace the funds. The husband produced a letter dated March 3, 2022. I note that from the Clean Soil funds received by Sutherland law, the husband paid approximately $240,000 in legal invoices from July 2, 2021 to February 18, 2022, and a further retainer of $150,000 on that date.

[16] Given that the retainer was paid on February 18, 2022 and the restriction was made on February 22, 2022 (or earlier), I asked for a tracing of these retainer funds.

[17] Since retainer funds are, by their nature, funds held in trust in anticipation of legal fees not yet incurred, and given Jarvis J.’s directions on February 22, 2023, the entirety of these funds should have been directed to the wife’s spousal support. Instead, I learned today that the husband has used the funds to pay for legal fees incurred after February 22, 2022. This is highly problematic, and arguably a breach of the Jarvis J. directions. I strongly suggest that the husband pay the sum of $150,000 into Court well before the motion to strike out his pleadings.

[18] The husband has spent over $430,000 (inclusive of this litigation and perhaps related to Clean Soil) of funds held in trust by his solicitor. Some, or all, of these funds should have been paid to the wife. Given the husband’s use of funds and other concerning actions, such as the transfer/sale of shares/assets, the wife’s request for security is reasonable. Without same, and notwithstanding the existing preservation order and non- dissipation order, the husband may further deplete his assets and/or that an order in respect of equalization, support or costs may be unenforceable.

[19] I am satisfied that security towards the minimum quantifiable equalization ($4,300,000) payment is required. The equalization payment owed may be considerably higher than this amount once the Court attributes an actual (or imputed) value to the husband’s corporate interests and income. The Court currently holds funds in trust in the amount of $2,000,000, and will receive an additional $2.5 million upon closing of the sale 85 Vickers Rd.

[20] However, I am releasing approximately $150,000 to the wife as a pre-payment of her periodic spousal support payments through January 2023. I am also releasing the sum of $100,000 to the court-appointed expert as a retainer. Moreover, if the wife is successful at increasing the spousal support at trial (retroactive and/or ongoing) or in respect of costs, the amounts payable may exceed the funds held by the court.

[21] Even if I am incorrect in my decision to order security for the equalization payment, I would order security for costs. While the husband has spent at least $430,000 on his own legal, accounting and expert costs, he is in breach of a costs order in the amount of $7,500. Moreover, the husband represented at court today that he is experiencing financial distress and has no access to funds other than from the equity in his home. He also represented that third parties are making financial claims against him.

[22] In accordance with Family Law Rules 1 and 2, and given that the husband has been on notice of the wife’s request for security (as per her motion materials), I am making the requested order in the amount of $650,000 (rather than $1,000,000 as originally requested).

[23] The husband does not come to the Court with clean hands. His motion for interim disbursements is dismissed. Costs adjourned to the trial judge.

[24] No further motions without leave by me, by 14B (to my attention), with affidavits of no more than three pages double space. Response to the 14B shall be filed within 48 hours (exclusive of weekends/holidays). If leave is denied, costs will be ordered and payable within 48 hours. If matters are presented as urgent but are not deemed urgent, costs will be ordered and payable within 48 hours.

[25] If either solicitor wishes to be removed from the record, she may do so by Form 4 or 14B motion, within 30 days. Thereafter, I am unlikely to permit counsel to be removed, given the upcoming motion to strike and/or trial, which shall be heard in Fall 2023.

[26] The court-appointed expert shall provide the court with an update, in writing by the 15th day of each month commencing June 15, 2023. This shall include: status of the work; timing of the work; and, any obstacles.

[27] Costs of today’s attendance adjourned to the Settlement Conference.

[28] The next steps are: (a) third party disclosure motion brought by the wife, if required – June 23, 2023 (by Zoom at 9:30 a.m.). Wife shall serve and file by June 7 (12 pages and exhibits shall be the court-appointed experts’ charts) and 10 pages of other exhibits, third parties and husband shall respond by June 19 (12 pages and 10 pages of exhibits), and Reply (five pages including exhibits); (b) Settlement Conference – August 14, 2023 (in person at 2:00 p.m.); (c) Motion by the wife to strike out the husband’s pleadings and for the release of funds held by the Court – September 20, 2023 (by Zoom at 9:30 a.m.), (12 pages and 20 pages of exhibits) – timing as per below; (d) TSEF (if the husband is not struck out – TBD); and (e) Trial (if the husband is not struck out – TBD).

[29] Directions for a regular motion are as follows: (a) except as stated above, the form 14 and 14a shall be served and filed 30 days prior to the scheduled date. The Responding material shall be served and filed 14 days prior to the motion date. The reply, if any, shall be served and filed seven (7) days before the motion. In the event the motion materials are not served and filed 30 days before the event, the Trial Coordinator is authorized to vacate the date. No cross motion; (b) except as stated above, the parties are restricted to 12 pages of narrative contained in their affidavit and 10 pages of exhibits, plus a five-page reply (including exhibits) and/or five page third party affidavit (including exhibits). Certain documents do not count. Earlier affidavits cannot be relied upon unless they fall within the 12-page limit. All affidavits are 12 font, double space. (c) the Court may determine the motion on the written record, or by limiting submissions to the responses to questions. In the alternative the Court may opt for oral submissions. A one-hour motion provides: moving party 15 minutes; responding party 15 minutes; reply five minutes. The balance of time is used by the judge; and (d) a Bill of Costs and Offer to Settle should be emailed the registrar prior to the motion. Parties may be directed to argue costs orally at the motion (five minutes each side).

[30] Directions for a Settlement Conference are as follows: Currently the parties are restricted to 12 pages of narrative and permissible attachments. An Offer to Settle and updated Financial Statement (or sworn affidavit), DivorceMate calculations and NFP Statement are required.

[31] The parties shall comply with the Family Law Rules and with all relevant Central East and Ontario-wide Notices to the Profession. Parties are to comply with all page and time limits.

[32] Order to go as per the draft order signed by me this day.

The Honourable Justice A. Himel Date: May 15, 2023