Court File and Parties

COURT FILE NO.: FC93/18-01 DATE: November 16, 2023 SUPERIOR COURT OF JUSTICE – ONTARIO FAMILY COURT

RE: Rebecca Hess, Applicant AND: Garry Wayne Hess, Respondent

COUNSEL: Monique Rae Bennett, for the Applicant Mark A. Simpson, for the Respondent

BEFORE: SAH J. HEARD: October 25, 2023

Endorsement

Overview

[1] Within her Motion to Change, the applicant moves for an order, per ss. 12 and 40 of the Family Law Act, R.S.O. 1990, c. F.3, (the “FLA”), freezing various assets belonging to the respondent. In addition, the applicant asks for a vesting order, per s. 9(1)(d)(i) of the FLA, so that the frozen funds are preserved to pay the outstanding amounts owed by the respondent to the applicant, such that half of the funds in the accounts belong to the applicant.

[2] The respondent requests that the motion be dismissed.

Legal Principles Considered

[3] The jurisdiction to grant a non-dissipation order in the context of family law is found at s. 12 (family property) and s. 40 (support obligations) of the FLA, as follows:

12. In an application under section 7 or 10, if the court considers it necessary for the protection of the other spouse’s interests under this Part, the court may make an interim or final order, a) restraining the depletion of a spouse’s property; and b) for the possession, delivering up, safekeeping and preservation of the property.

13. The court may, on application, make an interim or final order restraining the depletion of a spouse's property that would impair or defeat a claim under this Part. [Part III]

Section 12

[4] The principles governing the making of non-dissipation orders pursuant to s. 12 of the FLA were summarized in the case of Popat v. Popat, 2021 ONSC 5194. See also Altman v. Altman, 2021 ONSC 6610; Bronfman v. Bronfman, (2000), 51 O.R. (3d) 336, at paras. 19-31. These principles include the following:

a) The purpose of s. 12 is to ensure that if the court does determine that an equalization payment is owing, there are sufficient assets available to satisfy that payment. b) A s. 12 preservation order is not a Mareva injunction and accordingly, the very high legal threshold necessary to obtain such an injunction is not the standard to apply under section 12. c) The court does not issue orders restraining parties from dealing with property without some evidence, as opposed to bare allegations. d) Any restraining order under s. 12 should properly be restricted to specific assets, and there should be an onus on the party seeking the restraining order to show prima facie that he or she is likely to receive an equalization payment equal to the value of the specific assets. e) The Court will want to consider how likely it is that the moving party will receive an equalization payment and the effect that granting, or not granting, such an order will have on the parties. The objective is to protect the spouse’s interests under the Family Law Act so that if a spouse is successful in obtaining relief under the Act, there are assets available to satisfy that relief. Relevant to this exercise is an assessment of the risk of dissipation of the assets in existence prior to trial. f) There are certain cases where the factual record and the applicable legal principles make it very clear that a spouse will be entitled to an equalization payment in a particular amount. In such cases, considerable weight will be given by the court to this factor and perhaps less weight to the other factors. g) There are other cases where the facts and the law are disputed and complicated and, in addition, the record may not be fully developed as both sides may not yet have been in a position to obtain their experts’ reports on some of the more difficult valuation issues. Even if the reports have been obtained, it may be impossible for a court on an interim motion to assess with any degree of certainty which expert’s report will prevail at trial. In such cases, the Court will want to go on and give serious consideration to the other factors, being the balance of convenience and the risk of dissipation prior to trial.

[5] In the case of Fraser v. Fraser, 2021 ONSC 1900, the court held that the onus lies on the party asserting that a preservation order is necessary to protect his or her interests under Part I of the FLA, or that his or her claim for support under Part III of the Act would be impaired or defeated unless a preservation order was made, to demonstrate that on the balance of probabilities. See also Price v. Price, 2016 ONSC 728.

Section 40

[6] A non-depletion order under s. 40 of the FLA allows a dependent to apply for an order preventing a spouse from depleting his or her property. An interim order may be made pending trial, in situations where a party has not complied with previous orders for support and the recipient is in need.

[7] In Samis (Litigation Guardian of) v. Samis, 2011 ONCJ 273, the recipient sought a restraining order to prevent the payor from depleting assets. The judge found the payor had exhibited blameworthy conduct and there was a prima facie case for spousal support made out by the recipient, who was in need. In Samis, the parties had been in litigation for four years and no spousal support was paid since separation.

[8] In Jones v. Hugo, 2012 ONCJ 381, the respondent had failed to comply with a previous temporary spousal support order. On application, the Court ordered support and found that there were many factors present to indicate that enforcement measures were necessary. The payor was in substantial arrears, had not complied with previous orders or undertakings, had failed to provide accurate financial disclosure, operated an underground business, had threatened to go bankrupt to avoid support orders, and was highly mobile and at risk of absconding from the Court’s jurisdiction.

[9] An order under s. 40 is usually made, therefore, when there is evidence that the payor is not complying with a support order or there is evidence of blameworthy conduct. Where the recipient has produced no evidence that their rights would be at risk without making a non-depletion order, and where there is no evidence sufficient to conclude that the payor intends to deplete their assets or those of their company, such an order should not be made. The recipient cannot rely on their bare allegations or assumed beliefs. There must be more than an unsupported “concern”. See Keyes v. Keyes, 2015 ONSC 1660, at para. 76; Hadara v. Patten, 2019 ONSC 4574.

Section 9(1)(d)(i)

[10] Under this subsection, the Court may, to facilitate an equalization payment under s. 5, order a specific property transfer to, or in trust for, or vested in, a spouse, whether absolutely, for life or for a term of years.

[11] In Lynch v. Segal, (2006), 82 OR (3d) 641, the Court of Appeal for Ontario explained the jurisdiction of the Court to grant a vesting order at paras. 27-29:

In Ontario, the court’s broad general power to grant a vesting order is found in section 100 of the Courts of Justice Act. In the specific context of family law claims, sections 9(1)(d)(i) and 34(1)(c) of the Family Law Act confer an equally broad power to grant a vesting order on an application for equalization of net family property or support, respectively. Vesting orders are discretionary and have their origins in the court’s equitable jurisdiction. In addition, the court should be satisfied that there is some reasonable relationship between the value of the asset to be transferred and the amount of the targeted spouse’s liability.

[12] Whether or not the Court will make a vesting order depends on the particular circumstances of each case. In Thibodeau v. Thibodeau, 2011 ONCA, 104 O.R. (3d) 161, the Ontario Court of Appeal confirmed that the onus is on the party seeking such an order, and, as a general rule, the Court's discretion will only be exercised in favour of a s. 9(1) order where it is established, based on the targeted spouse's previous actions and reasonably anticipated future behaviour, that the equalization payment order granted will not likely be complied with in the absence of additional, more intrusive provisions. See also Keyes; Fortier v. Lauzon, 2017 ONSC 7503.

[13] Vesting orders under s. 9(1) should only be made where there is a real need for them, after all relevant considerations have been taken into account. They are not granted as a matter of course. See Ludmer v. Ludmer, 2013 ONSC 784.

Evidence and Analysis

[14] The parties were married for 34 years. They have been separated for 11 years.

[15] The applicant was 56 years old at the date of separation and submits that the rule of 65 for indefinite spousal support applies.

[16] At the time of separation, the respondent was working as a pilot with Air Canada and the applicant was a part-time administrative assistant.

[17] The respondent is a member of the Air Canada pilots’ pension plan—this plan consists of the Registered Pension Plan (RPP) and the Supplemental Retirement Plan (SRP).

[18] A final order was issued on October 9, 2019 based on final minutes of settlement signed between the parties on July 19, 2019. The terms of the order and the final minutes of settlement provided that the applicant was to receive half of the respondent’s RPP by lump sum payout.

[19] To date, the applicant has not received her share of the value of the pension. Effective March 31, 2018, the applicant was no longer in receipt of spousal support. The terms of settlement and the court order provided for a release of support.

[20] Periodic spousal support was paid until March 31, 2018. The responding claims he paid approximately $460,000 in spousal support, first in the monthly amount of $3,000, then $6,000, and then $7,000.

[21] The applicant claims that she would not have agreed to release her claim for spousal support had she known she was not going to receive her half share of the RPP.

[22] According to the respondent, the applicant was aware of his intention to retire in April 2018. He claims she signed the release of spousal support knowing of his retirement plan and she received the sum of $180,000, tax free, from a company they owned between August 2019 and March 2020.

[23] According to the applicant, the RPP accrued during the parties’ marriage and was valued at $1,587,937, before tax. The premarital portion of the RPP was 99.25%. The before-tax value of the pension reduced by 0.75% is $1,576,027. She claims her half share amounts to $788,013.74.

[24] According to the applicant, the value of the SRP was $336,497. Given the premarital portion of 99.25%, the value is therefore $333,973, half of which amounts to $166,986. The SRP was to be paid monthly in the amount of $836.74, which amount could be indexed. The applicant has not received any portion of the SRP. She claims the respondent has kept 100% of her portion since the date of his retirement.

[25] The applicant claims she is entitled to half of the funds the respondent received since April 1, 2018, when his pension payment started.

[26] Under the court order, both parties were to cooperate in the preparation of documentation to give effect to the agreement between them respecting pension division.

[27] The applicant claims she has not received her equalization. Her spousal support was terminated on the basis that she was to see a portion of the respondent’s Air Canada pension—a lump sum amount plus monthly payments.

[28] She claims she would not have released spousal support if she knew that she would not receive the funds. She seeks payment of the lump sum that she claims the respondent has solely been in receipt of.

[29] The applicant deposes the respondent received 100% of his pension, instead of 50%, and she estimates that $943,843.49 is owing, inclusive of interest. She provided no proof from the Air Canada plan administration that the respondent is solely in receipt of the lump sum payment that was to go to her.

[30] Instead, she relies on the respondent’s financial statement from August 2018 and a more recent one from June 2023. These financial statements reveal that, despite his retirement on April 1, 2018, the respondent’s savings increased from $664,881 to $1,994,723, an increase of $1,329,841. She seeks to freeze the respondent’s funds in the amount of $943,843.49, the amount she claims is her portion of the pension funds.

[31] The applicant claims there are too many complications with obtaining funds from Air Canada, particularly given the five-year delay, and she is seeking enforcement from the respondent.

[32] According to the respondent, there was extensive letter correspondence exchanged between the parties’ then counsel in early 2018. He claims the applicant delayed completing and signing the pension election forms and did not comply with directions from the respondent’s counsel and Air Canada on how to fill out the forms.

[33] As a result of this delay, the respondent submits there was an 18-month delay in his receipt of his pension income. He claims his pension payments began on November 1, 2019.

[34] In March 2020, the applicant was informed by Air Canada that the lump sum payment option was no longer available.

[35] An April 2021 letter sent by the applicant’s previous counsel states that the applicant’s previous expert concurred with the opinion of the respondent’s expert, in that the applicant would receive the sum of $4,141.98 per month from the RPP and the SRP.

[36] The respondent deposes that the Air Canada pension administrator informed the parties that it could not proceed to distribute the RPP as stated in the court order, namely through a lump sum; and the options for pension transfer after retirement must be on the basis of a monthly division.

[37] The plan administrator indicated that it is presumed the pension division will be on the basis of a converted pension approach. Once the plan administrator has a signed agreement, monthly pension payments may flow based on a post-retirement division.

[38] The applicant was hoping the respondent to make voluntary payments, outside the administration of the pension plan, and believes this would have been appropriate as soon as it became clear that Air Canada would not pay a lump sum.

[39] The applicant claims that the respondent knew she would not be eligible for a lump sum payment at the time that the minutes of settlement were signed in July 2019. She claims he knew this five years before the settlement was reached—that if she was over 55 years old, the option for a lump sum was not available. She claims he knowingly agreed to an unenforceable term.

[40] The limitation period for the applicant’s claim for an equalization period expired before the parties settled in 2019.

[41] According to the respondent's financial statement sworn June 2, 2023, he has significant funds available, including $87,354.83 in a chequing account, $192,049.92 in a savings account, $606,288.31 in a self-directed RRSP, and $760,736.79 in a TD Waterhouse account.

[42] The applicant wishes an order freezing the above-noted accounts.

[43] On the issue of risk of depletion, the following evidence was tendered.

[44] The applicant submits that the respondent acted unfairly and inequitably. She deposes that he sold their shares in a company without telling her, despite the fact that she was a 35% shareholder of the corporation, they were in litigation as a result of their separation, and they were trying to equalize their net family property.

[45] She alleges that he sold the shares for $619,625.50 and that he solely received the funds. According to the applicant, the deal closed on March 20, 2019 and the shares were sold to the respondent’s accountant who was already part owner of the corporation. This is not disputed by the respondent.

[46] She claims she is entitled to her 35% share of those funds in the approximate amount of $216,650.

[47] The respondent deposes that he sold shares in the numbered company at the recommendation of the corporate accountant. He denies that the applicant is entitled to any money, alleging she has already received funds. He claims the applicant received $20,000 in each of September 2018 and September 2019, $175,000 in February 2022, and $6,000 in a cheque not yet cashed.

[48] According to the respondent, the applicant received $215,000 in tax-free money and she currently has $77,838 overdrawn in the shareholder account.

[49] The respondent further deposes that the applicant historically removed funds from a joint account.

[50] The applicant’s RRSP, TFSA, and other investments have all increased since separation.

[51] The respondent submits that there is no evidence to support he would dissipate assets or abscond without honouring any decision of the court.

[52] The respondent submits that the applicant received a financial benefit from the sale of the matrimonial home. The home was sold in October 2021 for $750,000 but in the parties’ minutes of settlement, they agreed to a separation value of $357,000.

Section 12

[53] There is no dispute that:

• The parties settled equalization of their net family property on the basis that the pension would be divided.
• When the parties settled, the applicant released all claims to ongoing and retroactive spousal support.
• The respondent’s pension was not divided.
• The applicant did not receive a lump sum payment or monthly payments from the pension plan administrator.
• At this time, a lump sum payment to the applicant from the pension plan administrator is not an option.
• The respondent’s net worth has increased from 2018 to present.
• The respondent acknowledges that the applicant is owed funds.

[54] I find the applicant has demonstrated that she has a relatively strong case for the enforcement of the terms of the parties’ previous settlement, which included an equalization of net family property, in part, by way of payout by the pension plan administrator.

[55] For the purpose of this motion, I find the applicant has an arguable case that the respondent will be ordered to make a payment to her or otherwise have funds directed to her in satisfaction of the parties’ previous settlement terms.

[56] The applicant has met her onus of establishing a prima facie case in her favour.

[57] However, the current record does not make it clear that an equalization payment will be owed in a particular amount, or how the payment will be satisfied.

[58] Turning now to the balance of convenience or inconvenience.

[59] The respondent has specific assets in sufficient funds to satisfy what the applicant argues is owing to her.

[60] These assets will likely protect the applicant’s interests.

[61] The respondent presented a potential solution in his material. The court needs to determine if this solution adequately satisfies his obligations set out in the court order and minutes of settlement. He claims that the pension plan administrator provided guidance and instructions on how to ensure payments can flow to the applicant at this time.

[62] The applicant’s argument relating to the balance of convenience stems from equity and fairness.

[63] What is clear is that the applicant is owed something. What is unclear is how much is owed from the respondent personally.

[64] I take the view in the current circumstance that the court is required to weigh additional factors in its analysis, including the risk of dissipation prior to trial.

[65] Four years post settlement and 11 years post separation, the applicant brought her motion to change, and the within motion, to recover funds owed to her.

[66] Her motivation on this motion is to ensure that she can collect, ensure that she is not further prejudiced, avoid any further delay in payment, and correct a course gone astray.

[67] The respondent claims the funds he holds are his retirement security. He deposes that he does not live a lavish lifestyle, he does not own real estate, he rents a condo, and he spends a portion of his net income on his daughter’s family expenses, including RESP contributions and tutoring for an autistic grandchild.

[68] He claims there is no prejudice to the applicant if the non-preservation order is not granted as they can sign an amending agreement and the pension plan administrator can start paying her periodic payments. There is no risk, therefore, of assets being lost before her claim is decided on its merits.

[69] Risk of dissipation prior to trial has a significant factor in this case because the record has not established what amounts will be ordered payable by the respondent and, if applicable, what amounts will be paid through the pension plan administrator.

[70] The applicant has not provided any tangible proof that the respondent would liquidate assets and if there is a risk of irreparable harm to her.

[71] The conduct she relies on in support of her perceived risk dates back to March 2019, four months prior to the parties signing their minutes of settlement and seven months prior to the order being made.

[72] There is no evidence of any current circumstances which perpetuate risk of depletion of assets.

[73] There is no evidence of any real risk the respondent will dissipate any assets, or that he has failed to disclose particulars regarding his financial situation.

[74] On a balance of probabilities, the applicant has not met her onus of establishing that her claim under Part I of the FLA would be impaired or defeated unless the preservation order is made.

Section 40

[75] I repeat and rely on my findings set out in paragraphs 53, 63, 64, 70-73 above.

[76] In this case, the respondent has not failed to comply with a previous temporary spousal support order.

[77] I cannot find that the applicant has established a prima facie case for spousal support on the record before me.

[78] The spousal support release was agreed upon. I recognize that the applicant’s position is that she would not have signed the spousal support release had she known that her equalization payment would not be satisfied through the division of the respondent’s pension. However, to revive her claim for spousal support, I take the view that the spousal support release first needs to be set aside. This is not the mark of a prima facie case.

[79] On the record before me, prior to settlement, the respondent was not in arrears of spousal support and made all payments in good faith.

[80] Similarly, the respondent is not in arrears of spousal support, he has not failed to provide accurate financial disclosure, and he is not actively avoiding support obligations in the current circumstance.

[81] There is no evidence that the respondent is highly mobile and at risk of absconding from the Court’s jurisdiction.

[82] I do not accept the applicant’s submission that the respondent engaged in blameworthy conduct. Both parties were to act promptly and sign all necessary paperwork for the division of the pension. They are both at fault for not doing so.

[83] The applicant has speculated that the respondent knew at the time of settlement that she was not eligible for a lump sum. There is no concrete evidence that he knowingly agreed to an unenforceable term. Her unsupported allegation is not conclusive proof of blameworthy conduct.

[84] The applicant may well believe that it is the respondent’s responsibility to start making interim payments to her on a voluntary basis, but that issue, along with others, is currently before the Court and remains undetermined. It is not an issue for the Court to determine on this motion.

[85] The respondent’s failure to make voluntary interim payments does not result in a conclusion that he intends to dissipate assets in order to defeat any spousal support claim owing.

[86] On a balance of probabilities, the applicant has not met her onus of establishing that her claim for support would be impaired or defeated unless the preservation order is made.

Section 9(1)(d)(i)

[87] For the reasons outlined above, this is not an appropriate case for the granting of a vesting order.

[88] The circumstances of this case do not establish, based on the respondent’s previous actions and anticipated future actions, that any equalization payment ordered will not likely be complied with.

[89] The amounts to be found personally payable by the respondent in satisfaction of the unfulfilled settlement are not known. I am not satisfied that there is a relationship between the value of the assets sought to be transferred and the amount of the respondent’s liability.

[90] I refuse to exercise my discretion in ordering that the respondent’s assets vest to the applicant.

Disposition

[91] For the reason outlined above, paras. 10 and 11 of the applicant’s notice of motion dated October 2, 2023 shall be dismissed.

Costs

[92] At the conclusion of submissions, and at the court’s request, the parties discussed the issue of costs of this motion. The parties agreed that there would be no order as to costs.

[93] Accordingly, there shall be no order as to costs of this motion.

“Justice Kiran Sah” Justice Kiran Sah Date: November 16, 2023