COURT FILE NO.: FS-14-399478-00
DATE: 20230206
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
KATE ALEXANDER
Applicant
– and –
ERICH GENSEBERGER
Respondent
Self-Represented
Vincenzo Ruso, for the Respondent
HEARD: In Writing
REASONS FOR JUDGMENT
M. Kraft, J.
[1] The Applicant (“wife”) and the Respondent (“husband”) were married in Las Vegas, Nevada on September 22, 2001, and separated on May 10, 2014, after a 13-year marriage.
[2] There is one child of the marriage, a daughter, age 20, who resides in Vancouver, independently of both parties.
[3] This uncontested trial is to determine the equalization claims in this matter. It is proceeding pursuant to my Endorsements, dated June 17, 2021 and August 22, 2022, in which I granted the husband leave to bring a motion to strike the wife’s pleadings and proceed with his claims by way of an uncontested trial in writing. Although my order provided a schedule for the delivery of responding material from the wife, the husband was served with notice that the wife had filed an assignment in bankruptcy that was accepted by the Official Receiver on July 22, 2021. The husband then moved to annul the bankruptcy in commercial court. On March 30, 2022, Gilmore, J. dismissed the husband’s motion and lifted the stay of the wife’s bankruptcy to enable this court to determine the equalization claims of the husband in the family law proceeding.
[4] The Trustee in Bankruptcy for the wife, Fuller Landau Group Inc., has prepared a report on the equalization.[^1] The husband has filed a Form 23C, Affidavit in Support of the Uncontested Trial, setting out his position on the equalization.
Issue to be Determined
[5] The issues to be determined at this uncontested trial are as follows:
a. Which party owes the other an equalization payment (“EP”) and in what amount?
b. Are there any post-separation adjustments to the EP that need to be made and if so, in what amount.
c. Is the husband entitled to spousal support and if so, in what amount and for how long?
Litigation History
[6] This case has a long and protracted history. The parties have been embroiled in litigation since 2014 and a review of the litigation history is necessary to understand how this case has persisted for so long without resolution.
[7] On December 8, 2014, the wife filed her Application, Form 35.1 and Financial Statement. Among other things, the wife sought a divorce, custody, child support, spousal support, equalization, exclusive possession of the matrimonial home and a restraining order.
[8] On January 16, 2015, the husband filed his Answer and Financial Statement. The husband’s Answer did not check off the claims he was seeking nor was the Answer written as a pleading. In any event, the husband, among other things, sought custody, an interest in the matrimonial home, spousal support and costs.
[9] On March 16, 2015, the wife amended her Application.
[10] On July 13, 2015, a Settlement Conference (“SC”) was conducted by Harvison-Young, J., at which she made the following order (“2015 non-dissipation order”):
a. The parties were to appraise the matrimonial home as at the date of separation, the costs of which were to be shared equally;
b. The wife was to provide the husband with a copy of the contract of purchase sale for the company EcoMedia Direct Inc. by July 21, 2015, the terms of which the husband and his counsel were to keep confidential;
c. Neither party was to dissipate any family assets pending agreement or further court order;
d. The wife was permitted to have two visits to the matrimonial home in order to identify and photograph items. Thereafter, the wife was to prepare a list of the items she wished to retrieve for the review of the husband and his counsel to return on the second visit to retrieve the items. This was to take place within 30 days; and
e. On consent, the Office of the Children’s Lawyer was to be appointed to represent the parties’ child.
[11] The husband has resided in the matrimonial home, located at 21 Keily Crescent, Bolton, ON L7E 0R3, since the wife was charged with assault at the time of separation. Title to the matrimonial home is in the wife’s sole name. At some point after separation, the wife relocated with the parties’ daughter to Vancouver, British Columbia. She continues to reside there.
[12] On November 23, 2016, Harvison-Young, J. made a further order as follows:
a. The wife was to respond to the husband’s Request to Admit on or before January 23, 2017 and the parties were to attend questioning by February 13, 2017, peremptory on the wife.
b. The husband was free to bring a motion to strike the wife’s pleadings and move for an undefended trial; and
c. The wife was ordered to pay costs to the husband in the sum of $2,500 forthwith.
[13] The wife did not respond to the Request to Admit, attend the questioning or pay costs in accordance with the November 23, 2016 order.
[14] On February 17, 2017, the husband made a Division I Proposal under the Bankruptcy and Insolvency Act (BIA”). His Proposal was accepted by the Insolvency Trustee and his creditors. According to the husband, the wife retained counsel and submitted a Proof of Claim in the sum of $2 million for her equalization claim as well as $12,000 as a preferred claim pursuant to s.136(1)(d.1) of the BIA for child support arrears. The husband deposed that the Trustee did not allow the wife’s Proof of Claim on the grounds that there was not sufficient evidence establishing the debt owing in the amounts claim. The wife appealed the proposal Trustee’s decision by way of a motion on April 18, 2018. The disallowance motion was adjourned.
[15] On March 6, 2018, the husband caused a Matrimonial Home designation to be registered on title to the matrimonial home, as Instrument Number PR3293162, pursuant to s.20 of the Family Law Act, R.S.O. 1990, C.F.3 (“FLA”).
[16] Unbeknownst to the husband, on January 14, 2019, the wife registered a charge against title to the matrimonial home in favour of National Holdings Inc. in the amount of $600,000, notwithstanding the matrimonial home designation and the 2015 non-dissipation order.
[17] To obtain the National Holdings mortgage, the wife swore a false Statutory Declaration by deposing on January 11, 2019 that:
a. She was not a spouse within the meaning of the FLA, even though the parties were separated, not divorced;
b. The home would be owner occupied, even though only the husband had resided there since separation; and
c. There had not been any civil or matrimonial matters which may have court orders pending to be registered which might affect the property or security being granted, even though the 2015 non-dissipation order in place.
[18] As a result of the wife’s fraudulent Statutory Declaration, LawPRO is now defending the real estate lawyer who assisted the wife in obtaining the mortgage.
[19] In October 2019, the bankruptcy Trustee for the husband brought a motion seeking an order to dismiss the wife’s appeal of the disallowance since the wife had not taken any steps to set a court date.
[20] On November 26, 2019, Associate Judge Jean heard the matter and in her Endorsement set out that the wife’s motion sought relief for a number of family related issues including the completion of the debtor’s NFP; that it seemed that these issues might be properly addressed in the context of the matrimonial proceedings; but she was told by the applicant’s counsel that his client has decided not to pursue same.
[21] On January 12, 2020, National Holdings issued a Notice of Sale Under Charge for the matrimonial home and served this notice on the wife since she had defaulted on the National Holdings mortgage. The wife did not disclose the Notice of Sale from National Holdings to the husband even though he was living in the matrimonial home.
[22] In late January 2020, while the husband was in Europe, he received a telephone call from his neighbour, Craig Marwood, who told him that the police were there to seize the matrimonial home on behalf of the mortgagee because the mortgage had fallen into default. The husband had no knowledge, at that time, that a mortgage had been registered on title to the matrimonial home in favour of National Holdings.
[23] The husband was forced to bring a motion to invalidate the mortgage in an attempt to stop the sale, pursuant to s.21 of the FLA.
[24] The husband obtained consent from National Holdings to re-occupy the matrimonial home after he brought the issue of the fraudulent mortgage to their attention. However, the wife refused to consent to the husband entering the matrimonial home, which necessitated the husband bringing an urgent motion for exclusive possession. Before the husband’s motion could be heard, the parties were required to have a case conference.
[25] On September 4, 2020, the parties attended a case conference before Nakonechny, J. This was the very first step taken to advance the family law case since 2016. The parties agreed to exchange updated net family property statements and financial statements so the equalization and property issues could be determined. If it was determined that the wife owed the husband an EP in excess of the equity in the matrimonial home, National Holdings would have to decide whether to expand its claim to include the real estate lawyer who acted for the wife in registering the mortgage on title.
[26] On March 11, 2021, I heard the husband’s urgent motion for temporary exclusive possession of the matrimonial home. On a temporary, without-prejudice basis, I granted the husband temporary exclusive possession of the matrimonial home without prejudice to the enforcement rights of National Holdings. Among other things, I ordered that the Questioning of both parties was to be scheduled and conducted within 45 days; a combined SC/Trial Management Conference (“TMC”) was to be held on July 13, 2021; and that if either party wished to bring any motions not listed in my Endorsement they were to seek leave of the court before bringing such a motion.
[27] When the husband re-entered the matrimonial home after having received my order, dated March 11, 2021, he deposes that he was shocked that the home had fallen into disrepair since National Holdings had taken possession of it. The husband consulted with a contractor who estimated that the required repairs as a result of water damage would be in excess of $453,000.
[28] Despite my order of March 11, 2021 that the parties were to attend questioning within 45 days, the wife declined to question to the husband. The wife’s questioning was scheduled for April 26, 2021. On the morning of April 26, 2021, the wife advised the husband through counsel at 8:51 a.m., that she had just been released from the emergency room and would not attend the questioning. The husband’ counsel had already prepared for the questioning at a cost of $15,000 to the husband.
[29] On April 27, 2021, the husband obtained a Certificate of Non-Attendance for this questioning.
[30] On April 27, 2021, the husband served an Offer to Settle all issues in this matter on the wife through counsel. On April 28, 2021, the wife’s lawyer emailed the husband’s counsel that the wife “is in agreement (in principle) with your client’s offer.” However, the wife resiled prior to formal acceptance.
[31] On May 6, 2021, the husband’s lawyer gave the wife’s lawyer notice that he would proceed with a Motion to Strike the wife’s pleadings.
[32] On May 18, 2021, the husband brought a 14B motion requesting that he be permitted to proceed with a Motion to Strike the wife’s Pleadings; a Motion for an Uncontested Trial and a Motion for Costs by way of written submissions. On June 7, 2021, Pinto, J. denied the husband’s 14B motions on the basis that my order dated May 11, 2021 required the parties to obtain leave to bring any motion not referred to in my Endorsement.
[33] On June 17, 2021, I conducted a conference, at which I made the following orders:
a. The husband was granted leave to bring a motion to strike the wife’s pleadings and proceed by way of uncontested trial;
b. The husband was to serve and file his motion material by July 20, 2021; the wife was to serve and file her responding material by August 4, 2021 and reply, if any, was to be served and filed by August 11, 2021;
c. Each party was to file a Factum; and
d. The motion was to proceed in writing.
[34] In accordance with my June 17, 2021 Endorsement, the husband served and filed his motion material to strike the wife’s pleadings and proceed by way of an uncontested trial on or about July 20, 2021. Instead of receiving the wife’s responding material, the husband was served with the wife’s Notice of Bankruptcy dated July 22, 2021. The husband had not been given notice of the wife’s impending bankruptcy.
[35] On July 22, 2021, the wife filed an assignment under s.49 of the BIA. The Trustee was appointed.
[36] On July 26, 2021, the husband received the Notice of Bankruptcy and of Impending Automatic Discharge of Bankrupt and First Meeting of the Creditors in the Matter of the Bankruptcy of Kate Alexander.
[37] The wife’s Statement of Affairs, dated July 21, 2021, lists her assets at $1,505,007. The principal asset of the wife is the matrimonial home, title to which is in her sole name. The Statement of Affairs also discloses that the wife has debts of $1,480,000. National Holdings had a secured proof of claim for the mortgage registered on title in the sum of $712,000. CRA had also filed a secured proof of claim for $845,000. There were also disclosed credit card debts, legal fees owing to the matrimonial lawyer and other debts of $60,000. The wife’s interest in the matrimonial home vested in the Trustee who registered its interest on title to the home on July 26, 2021.
[38] The Monthly Income and Expense Statement of the wife, Form 65, filed in connection with her bankruptcy, lists the wife’s income as zero. Her monthly expenses total $7,157.
[39] On August 11, 2021, the first meeting of the creditors took place. The husband did not file a proof of claim prior to the first meeting, but his counsel did attend and participate at the meeting. The husband subsequently filed a proof of claim for the equalization payment.
[40] The husband then brought a motion in the commercial court to annul the wife’s bankruptcy on the grounds that she was solvent and her bankruptcy, in and of itself, was an abuse of process. On March 31, 2022, Gilmore, J. denied the husband’s motion. Her order, however, provided that the stay of proceedings imposed by s.69.3 of the BIA be lifted to allow the determination only of the equalization of the NFP and that the Trustee, the CRA, National Holdings and the proposal Trustee for the husband shall be permitted to file responding materials for the trial of the equalization.
[41] This is the uncontested trial in which the husband is proceeding with his claims for equalization by way of an uncontested trial. In addition, Gilmore, J.’s order provided that the Trustee market and sell the matrimonial home, hold the net proceeds of sale in trust, pending the determination of the EP and that the husband should give up vacant possession of the matrimonial home to the Trustee.
[42] On August 3, 2022, the parties attended a case conference before me to seek directions as to how the trial relating to the EP should proceed. The Trustee in Bankruptcy for the wife prepared a report with respect to the EP and the division of the parties’ net family properties. The Trustee is required to accurately calculate the equalization of the NFP as between the husband and wife since either the EP is an asset of the bankruptcy estate if the husband owes the wife an EP or it is an unsecured claim against the estate if the wife owes the husband an EP. The parties agreed that the trial should proceed in writing and that oral evidence would not be needed.
The Equalization Claim
Issue One: Which party owes the other an EP and in what amount?
[43] Pursuant to s.5(1) of the FLA when spouses are separated, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them. This is also known as the equalization payment (“EP”).
[44] The purpose of the EP is to recognize that childcare, household management and financial provisions are the joint responsibilities of spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection 5(6): s.5(7) of the FLA.
[45] Net family property (“NFP”) means the value of all the property that a spouse owns on the valuation date, after deducting a spouse’s debts and other liabilities on the valuation date and after deducting the value of property, other than a matrimonial home, that the spouse owned on the date of the marriage, less a spouses debts and other liabilities, other than debts or liabilities related directly to the acquisition of significant improvement of a matrimonial home, calculated a of the date of marriage. In addition, if a spouse has excluded property as defined in s.4(2) of the FLA, that property would not form part of a spouse’s NFP, such as a gift or inheritance, other than a matrimonial home, that was received by a spouse from a third party after the date of marriage.
[46] On July 20, 2022, the Trustee in Bankruptcy for the wife prepared a report on equalization. All of the wife’s assets, including the contingent right to an EP, have vested in the Trustee by operation of the BIA. In support of its report on equalization, the Trustee relies on the following documents:
a. The husband’s financial statement sworn on December 3, 2020;
b. The wife’s financial statement, sworn on November 16, 2016;
c. The husband’s NFP statement, undated ; and
d. The wife’s NFP, dated December 3, 2020.
[47] According to the Trustee, the creditor claims in the wife’s bankruptcy will be greater than the available assets, which means that all creditor claims will be compromised to some degree. The Trustee’s role in the matrimonial proceeding is as an Officer of the Court and as an insolvency professional to give its views about the evidence on record before the court.
[48] Although the debts disclosed in the wife’s Statement of Affairs totalled approximately $1.48 million, subsequent proofs of claim were filed with the Trustee totalling approximately 1.75 million. The largest claim filed in the bankruptcy was received by the CRA in the sum of $845,687.92. This debt relates to the husband’s unpaid income taxes that have been attributed to the wife under the attribution rules of the Income Tax Act because the husband owed the CRA significant taxes when he transferred the matrimonial home to the wife in 2005 and in 2008. The CRA issued assessment under s.160(1) of the Income Tax Act, assessing the wife for the estimated value of the transfers.
[49] The Trustee also received a secured claim filed by National Holdings Ltd. in the sum of approximately $712,390 plus interest and costs, relating to the mortgage place on the matrimonial home by the wife in January 2019. As a result of the husband’s position on the National Holdings mortgage, the Trustee has not admitted the mortgage as a secured claim. The determination of whether the claim is a valid secured claim is an issue to be determined prior to a distribution to creditors.
Overview of the EP owing by the Wife to the Husband
[50] The husband attached as Exhibit “V” to his Form 23 Affidavit in Support of this uncontested trial, sworn on June 29, 2022, a NFP statement that he prepared. In this NFP statement, the husband’s NFP is listed as zero and the wife’s NFP is listed at $7,105,400.55.[^2] According to the husband, the wife owes him an EP of $3,552,700.28.
[51] The Trustee’s position is that the wife owes the husband an EP of $487,000.
[52] The Trustee submits that there are some fundamental flaws and discrepancies in the information put forward by the husband, namely his unsupported views of the likely value of EcoMedia Direct Inc. (“EcoMedia”); his position on ownership and value of the matrimonial home and the effect of the National Holdings mortgage. Further, the Trustee raised issues about the husband’s allegations that the wife stole significant valuable property and cash, which allegations it submits are not supported by any evidence.
[53] In addition to the husband’s NFP statement, the husband relies on his most recent sworn financial statement, dated December 3, 2020; and the wife’s financial statement, sworn on November 16, 2016; the wife’s financial statement, sworn on September 3, 2015 and a NFP statement he prepared on June 17, 2022. In these proceedings, the wife filed four sworn financial statements, dated December 4, 2014; March 12, 2015; September 3, 2015; and November 16, 2016, respectively.
Summary of Findings
[54] For the reasons set out below, I have determined that the husband’s NFP is $859,830.89; the wife’s NFP is $1,855,718.92 and accordingly, the wife owes the husband an EP of $497,944.02.
What is the value of each disputed item in each party’s NFP?
(a) Matrimonial Home value
[55] The husband places 50% of the value of the matrimonial home on the wife’s side of the ledger and 50% on his side of the ledger, regardless of title. He estimates that the fair market value of the matrimonial home on the Valuation date (“V-date”) was $1,000,000.
[56] The Trustee’s position is that the entire value of the matrimonial home ought to be listed on the wife’s side of the ledger based on title. In terms of the value of the matrimonial home on V-date, an appraisal had been commissioned of the home as of May 10, 2014 and it was found that its fair market value on V-date was $850,000. A copy of that appraisal was attached as Exhibit “V” of the Trustee’s report.
[57] Initially, title to the matrimonial home was in the name of the husband. During the marriage, in 2005, the husband transferred 50% of his interest in the matrimonial home to the wife. Three years later, on June 18, 2008, the husband transferred his remaining interest (50%) in the matrimonial home so the wife held a 100% interest in the home. As part of the second transfer, the husband took a mortgage back in the amount of $367,500 (which was registered on title to the home on June 18, 2018) as well as a promissory note for $367,500, dated May 5, 2008, payable on demand. On September 20, 2018, Wilton-Seigel, J. issued an order declaring that the mortgage had been satisfied and the promissory note had been paid in full.
[58] At the time of both the 2005 and 2008 transfers, the husband owed a substantial debt to the CRA. As a result, the CRA issued tax assessments against the wife, in response to the matrimonial home transfers, under the attribution rules in the Income Tax Act. The assessments were for $295,000 in 2014 and $330,000 in 2015, totalling $625,000.
[59] I find that since title to the matrimonial home was in the wife’s sole name on the V-date, the entire value of the home is an asset to be listed on her side of the ledger. The best available evidence on the record before me is the appraisal that the fair market value of the matrimonial home on V-date was $850,000.
(b) Jewellery and Cash
The Husband’s Position
[60] The husband claims that on the date of separation the wife had watches and Jewellery that had a total fair market value of $342,000. Specifically, the husband deposes as follows:
a. The wife stole two pocket watches from him which he had inherited prior to marriage. These were a Schaffhausen gold pocket watch and a silver pocket watch with a silver horse attached (c. 1886). He estimates the value of each to be $100,000 on the date of separation.
b. The wife also stole his inherited gold Ring of Honour from the Province of Styria, the value of which he estimates to be $100,000 on the date of separation.
c. He was provided a wristwatch made by Martinrea, the value of which he estimates to have been $7,000 on the date of separation.
d. He gave the wife with a Piaget watch valued at $35,000.00.
e. He gave the wife a Rolex watch valued at $7,000.
[61] According to the husband, all of these items and jewellery were in the safe and removed by the wife on the date of separation. Accordingly, the husband places the two stolen watches worth $200,000; the ring worth $100,000, the Piaget watch worth $35,000 and the Rolex watch worth $7,000 on the wife’s side of the ledger as assets she owned on the V-date, totalling $342,000. The husband provides no proof that these items existed on V-date or were stolen by the wife; and no evidence as to these values.
[62] In the wife’s 2016 financial statement, she discloses the Piaget watch and Rolex watch as her assets on V-date. She values the Piaget watch at $100 and the Rolex watch at $100. In the wife’s NFP statement, she lists the Piaget watch at $100 and the Rolex watch at $500. In the wife’s December 4, 2014, and the wife’s March 15, 2015 financial statement, she lists a watch worth $5,000 as her asset on V-date. Neither the wife nor the Trustee provided any evidence of these values.
[63] The husband also alleges that the wife stole cash of $100,000 from the safe and attributes her with this asset on the V-date.
The Trustee’s Position
[64] The husband does not list the cash on his 2020 Financial Statement. He does list two pocket watches and a ring with a value of “TBD”, one wristwatch with a value of $7,000 and two rings with a value as at the date of marriage of $10,000. The husband does not note on his Financial Statement that these items are in the possession of the wife.
[65] The husband has produced no documentation to support the existence or value of these items. No photographs, appraisals, insurance certificates, receipts, or other documentation has been produced to support this. He has not produced any police reports regarding the alleged theft.
[66] Based on the above, the Trustee takes the position that the husband has provided no evidence as to the value of these items of jewellery and therefore the entire $342,000 should be removed as assets on the wife’s side of the ledger. Similarly, The Trustee takes the position that there is no evidence as to the existence of cash in a safe on V-date and therefore, the $100,000 should be removed as an asset on the wife’s side of the ledger from the calculation of her NFP.
Analysis
[67] I find that the items of jewellery the husband claims were stolen by the wife should be removed from her side of the ledger as assets she owned on the V-date. There is no evidence on the record to verify what items the wife had or to prove the value of these items. In terms of the Piaget watch and the Rolex watch, I find that the wife owned both these items on V-date. She disclosed them on all four of the financial statements, she filed in these proceedings. The issue is whether I accept the wife’s evidence that the collective value of both watches was $5,000; $600 or $200 or whether I accept the husband’s evidence that the Piaget watch was worth $35,000 and the Rolex watch was worth $7,000 on the V-date.
[68] When determining the value of assets on the V-date for NFP purposes, it is fair market value, meaning what someone would pay for the wife’s used Piaget watch and her used Rolex watch. The nominal values placed on these two items by the wife is not supported. Neither are the values placed on the Piaget watch by the husband. In the circumstances, I find that a value of $1,250 be ascribed to both watches owned by the wife on V-date, which is roughly 25% of the $5,000 value the wife used in her first two financial statements filed in this proceeding.
[69] I find that the cash of $100,000 should be removed as an asset from the wife’s side of the ledger. There is no evidence on record to verify that the cash existed on the V-date or that the wife took the cash. I am not persuaded that this item should form part of the wife’s NFP.
(c) Household Contents and Cars
[70] In their claims to property in the bankruptcy, both parties have claimed that the garage items (ATV, snow blower, lawnmower, lawn tractor, etc.) are jointly owned. The Trustee’s report outlines a plan to auction these items off and allocate fifty percent of the net proceeds to the husband. The Trustee has received a liquidation appraisal of these items, which shows that they do not have significant resale value.
[71] Both parties have made some claim to the furnishings in their claims to property in the bankruptcy.
[72] Both parties made claims to the artwork in the bankruptcy (it is in the house and therefore in the possession of the Trustee). The Trustee has obtained an appraisal of the artwork, and the Trustee has determined that there is no value to the estate.
[73] The Trustee will be instructing the parties to remove the furnishings and the artwork claimed, however the Trustee will not be determining how to divide them as between the parties.
Analysis
[74] There is no finding that needs to be made about these items and they shall be removed from the calculation of each party’s net family property, with the exception of the husband’s electric car. On the husband’s financial statement, he lists an electric car with a value of $3,000 on the V-date. On his Statement of Affairs in his bankruptcy, three years later, the husband lists the value of the car at $1,500. I accept the husband’s value for his electric car of $3,000 on the V-date.
(d) Bank Accounts, Savings, Investments and Pensions
The Husband’s Position
[75] In terms of bank accounts, savings, investments and cash, the parties differ as follows:
a. The parties dispute the balance of their joint account **2070 with Bankhaus Krentschker in Austria. The husband’s record in his financial statements has been that his 50% interest in this account was $731,08.85 at the date of separation. The wife claims that the husband drained the entire balance of this account following separation. He denies this allegation and argues that it was the wife who depleted this account. The husband deposes that this was the basis of the 2015 non-dissipation order, which was made pursuant to his request in his motion of same date. Accordingly, the husband has placed the entire value of this bank account on the wife’s side of the ledger.
b. The parties also held a joint account **4430 with Capital Bank Austria. The husband deposes that his 50% interest in this account was $102,225 at the date of separation and the wife completely drained this account, save for approximately 500 Euro, following the date of separation. The wife claimed that this amount was divided post-separation, which is denied by the husband. The husband argues that this issue was also the subject of the 2015 non-dissipation order. Accordingly, the Husband has placed the entire value of this bank account on the wife’s side of the ledger.
c. The wife transferred significant assets to Rizou Panagiota, a friend of hers who lives in Greece. The husband attached to this Form 23A, a statement from Capital Bank which shows that the wife made a withdrawal of 145,000 Euro from the wife to Rizou Panagiota just after the date of separation from the parties’ Capital Bank joint account. Capital Bank confirmed that this transaction was ordered by Kate Alexander on May 20, 2014.
The Trustee’s Position
[76] The Trustee’s report confirms that it has not undertaken any effort to audit or verify the balances of the bank accounts. Notwithstanding that several Net Family Property Statements have been filed without supporting evidence, the parties’ financial statements show the balances of the more substantial bank accounts to be as follows:
a. Bankhaus Krentschker Joint Account: The husband claims the balance at the date of separation was $1,462,175.70 and claims that the wife depleted the account following the separation. The wife claims that the balance was $1,317,300.00 and that the husband depleted the funds and deposited them into other accounts (these other accounts are not disclosed or explained by the husband), as discussed below. The husband has also admitted under oath to transferring large sums of money out of joint bank accounts and “squandering it” in his Bankruptcy proceeding
b. Bankhaus Krentschker Sole Account: Although the husband claims the balance in the wife’s sole account was $1,214,818.65, the Trustee states that the wife claims the balance on the V-date in this account was $704,099.93.
c. Capital Bank Austria: According to the Trustee, both parties agree that there was an account here with approximately $204,450 that was divided post-separation (shown on the NFP statements at a balance of $102,225 for each party).
[77] The wife claims that the husband depleted the joint account and deposited the funds into one or more accounts owned solely by him, including two accounts at Raiffeisen Bank and one at Bankhaus Krentschker. The husband has not disclosed any details of these accounts. As well, during his examination under oath by the Official Receiver (in connection with his bankruptcy proposal), the husband admitted to having transferred approximately $1.2 million from joint accounts to accounts under his control and then to “squandering” the funds. The Trustee has not allocated any value for this joint account to the wife as a result.
[78] For the wife’s sole account at Bankhaus Krentschker, the Trustee argues that the wife has admitted that there was $704,099.93 in the account at the date of separation and that the husband has not provided any evidence to support the higher balance. Accordingly, the Trustee argues that only a balance of $704,099.93 should be listed on the wife’s side of the ledger on V-date.
[79] The Trustee has accepted the bank account values for the accounts upon which the parties agree for the purposes of its NFP Statement. The Trustee has disregarded the other accounts as there is no evidence to support these balances or to assist in determining the correct values. Similarly, the Trustee has not seen any evidence to dispute the balances shown on NFP statements of the parties for the amounts of Property, Debts and Other Liabilities on the date of Marriage and has accepted these balances for the purposes of the NFP Statements.
Analysis
[80] The husband attests to allegations that the wife squandered large amounts of money following the separation. Similarly, the wife claims that the husband transferred large sums of money out of their joint accounts to three separate accounts.
[81] In the husband’s sworn examination by the Official Receiver in connection with his bankruptcy proposal, he admitted under oath to transferring approximately $1.2 million from joint accounts to accounts under his control and then to “squandering” the funds. The report of the Official Receiver’s examination of the husband was attached as Exhibit “BB” to the Trustee’s report on equalization.
[82] Accordingly, I find that the entirety of the joint account at Bankhaus Krentsekher account #2070 should be listed on the husband’s side of the ledger of $1,200,000 on V-date.
[83] In terms of the wife’s sole account at Bankhaus Krentschker, #2009, the wife lists the balance in this account at $1,214,818.65 on her November 16, 2016 financial statement. The Trustee Report states in para. 63 that the wife has admitted that there was $704,000 in her sole account on the date of separation and the husband has not provided any evidence to support the higher balance of $1,214,818.65. I find that it was not the husband’s onus to provide evidence as to the balance in the wife’s account. The wife’s most recent sworn financial statement, dated November 16, 2016, lists this specific balance at $1,214,818.65 and, accordingly, I find that that is the appropriate balance for this account on the wife’s side of the ledger on V-date.
[84] In terms of the parties’ joint account at Capital Bank Austria, on the wife’s financial statements, sworn on December 4, 2014 and March 12, 2015, she deposed that she received 145,000 Euros from this account and the husband was left with 5,000 Euros, which corresponds with her listing a balance of $204,450 CAD on V-date for her and $7,050 for the husband, using the exchange rate of 1.41. In the wife’s financial statement, sworn on November 16, 2016, she uses a slightly higher exchange rate of 1.5001, thereby increasing the V-date balance for her to $217,514.50. The husband’s NFP confirms that the wife took the majority of this account. The wife’s NFP statement, attached to the Trustee’s Report, lists $150,000 for this account on the wife’s side of the ledger and $67,514.50 on the husband’s side of the ledger. The NFP statement is not sworn nor does it explain why it differs from the wife’s three earlier sworn financial statements.
[85] Based on the statement from Capital Bank which shows that the wife made a withdrawal of 145,000 Euro to Rizou Panagiota just after the date of separation, which the husband attached as an Exhibit to his Form 23C, and based on the fact on every sworn financial statement filed by the wife in these proceedings, she acknowledges having taken 145,000 Euro from this account, leaving the husband with a far lower amount, 5,000 Euro, I find that the figure of $204,450 should be listed on the wife’s side of the ledger for this account and a figure of $7,000 should be listed on the husband’s side of the ledger for this Capital Bank Austria account.
(e) Corporate Interests
[86] The biggest area of difference between the parties in terms of the NFP for the wife is the value of her corporate interests. On V-date, the wife was the sole shareholder in Pro-Kyoto International Inc., which was a holding company with the sole function of holding shares in EcoMedia Direct Inc. and subsidiaries (namely EcoMedia (Caribbean) Inc.).
[87] About a year after separation, the wife sold this corporation on June 3, 2015 and represented that the sale was for $1 (which was in reality approximately $200,000), more or less.
[88] The June 3, 2015 Share Purchase Agreement of EcoMedia was attached as Exhibit “GG” to the husband’s Form 23C.
The Husband’s Position
[89] The husband submits that he was the founder of EcoMedia and had transferred the corporation to the wife, by transferring the holding company to her name. While she was the sole shareholder (through Pro-Kyoto), director, and officer on V-date, the husband still conducted some business on behalf of the company. The husband deposes that he had corresponded with Garry Cooper, president of Curbex, a potential purchaser of EcoMedia, after separation.
[90] In an email of May 23, 2015 (a year after separation), Mr. Cooper sent the husband a proposal to purchase EcoMedia. The details of his proposal outlined that the business itself would be sold for $1 million plus a consulting fee of 15% of revenue, less a guaranteed $10,000 per month. This amounted to a total of $1.8 million over the course of 4 years, with continued revenue sharing and/or consulting opportunities indefinitely. This proposal is attached as Exhibit “HH” to the husband’s Form 23C.
[91] Based on this proposal, and in consideration of future earning opportunity from the proposal, the husband argues that EcoMedia was worth approximately $3 million on the V-date. This appears to also be based on other discussions the husband claims to have had with Gary Cooper of Curbex and with the eventual purchaser, David Gray. The husband deposes that his subsequent discussions with Curbex proposed the following arrangement:
a. $600,000 in lump sum;
b. $100,000 per year for five (5) years; and
c. 20% of all sales from ECO and Rio-Can for five (5) years.
[92] Nevertheless, less than a month after the husband received the proposal from Mr. Cooper, the wife sold EcoMedia to David Gray and company for about $200,000. The husband believes that the wife continues to receive revenue from the EcoMedia sale, more or less consistent with the proposal he received from Mr. Cooper. He also believes that the wife has diverted these funds and has failed to disclose these funds and/or the related accounts in this proceeding. The husband, however, provides no evidence for these beliefs.
[93] In addition to what the husband claims EcoMedia was worth on V-date, he argues that the wife was owed a shareholder loan from Pro-Kyoto on the V-date in the sum of $1,005,124, as per the September 30, 2014 Financial Statement of Pro-Kyoto.
Trustee’s Position
[94] The Trustee disputes the husband’s submission that the wife’s interest in Pro Kyoto International Inc., which was the shareholder for EcoMedia Direct Inc., was worth $3,000,000 on V-date. One year after the separation, Pro-Kyoto sold EcoMedia in a market-value transaction for approximately $200,000. The husband bases his claim that it was worth $3,000,000 on a “proposal” given to him by Mr. Garry Cooper, a potential purchaser, to purchase Pro Kyoto’s interest in EcoMedia, which the husband agrees he did not own. The proposal is an email with an attached spreadsheet, which the husband attached to his Form 23C affidavit as Exhibit “HH”. The Trustee takes the position that this proposal was not negotiated, there is no evidence that the discussions went any further than this single email, and Mr. Cooper did not provide any direct evidence in this proceeding.
[95] Upon review of the Share Purchase Agreement as well as documentation relating to the transaction that was provided to the Trustee by the wife, including emails to the wife from the purchaser, and a memo prepared by the wife’s former lawyers, the Trustee submits that the actual purchase price for EcoMedia was $201,806.15, and the proceeds of sale were applied to reduce the outstanding shareholder loan owing to her.
[96] The Trustee’s review of the sale documents did not find any evidence to support the husband’s allegation that the proceeds of sale exceeded what was reported, or that any additional amounts were paid directly to the wife.
[97] The Trustee argues, therefore, that the value of Pro-Kyoto, at the date of separation, should be limited to the estimated realizable value of the shares and shareholder loans owing to the wife.
[98] The financial statements of Pro-Kyoto for the fiscal year ended September 30, 2014, show that there was a shareholder loan balance of $1,011,124, and a shareholder’s deficiency of $50,964. The financial statements of Pro-Kyoto for the fiscal year ended September 30, 2019, 5 years later, show a shareholder loan balance of $811,163 and a shareholder’s deficiency of $808,956. The reduction in the shareholder loan balance is approximately $193,000. The Trustee submits that Pro-Kyoto have been dormant and insolvent for many years, and the loan is more than seven years old, and is well past being collectible. On this basis, the Trustee argues that the value of the wife’s shareholder loan as an account receivable on V-date is nil.
Analysis
[99] Both parties are using hindsight to value the wife’s interest in EcoMedia and the value of her shareholder loan in Pro-Kyoto. Essentially, the Trustee submits that the price that the purchaser paid for EcoMedia, which sale occurred one year after the date of separation, should be used as the value of EcoMedia on V-date. Similarly, the Trustee proposes that a nil value be used for the shareholder loan owing to the wife by Pro-Kyoto on the V-date by relying on corporate financial statements for Pro-Kyoto for the year ending September 30, 2019, showing the same shareholder loan balance five years after the V-date. The husband uses an email exchange that took place between him and potential purchaser of EcoMedia a year after V-date, as the basis for his claim that its value was $3,000,000 on V-date.
[100] In Dababneh v. Dababneh, 2003 1959 (ON SC), the court declined to use hindsight evidence to determine a V-date debt and confirmed that a court should not take into account and assign value to property based upon events that occurred subsequent to the valuation date.
[101] The court in the Debora v. Debora, 2006 40663 (ON CA), 83 O.R. (3rd) 81 (C.A.) considered a valuator’s use of hindsight or events post separation to determine value. The court held that hindsight information is generally inadmissible and cannot be used as part of the process of establishing the value of an asset, shares in that case, at a particular date in both civil and family law cases. The court recognized an exception to this principle, namely that hindsight or the actual results achieved after the valuation date may be compared against the projected or forecasted results made by the evaluator to test the reasonableness of his or her assumptions: paras. 46 and 47.
[102] In MB v. SBB, 2018 ONSC 4893, McGee, J. reviewed the use of hindsight and foreseeability in the determination of NFP values on V-date. As McGee, J. explains in paragraphs 299-302:
[299] What amounts, if any of debt to CRA ought to be placed at date of marriage and date of separation for each of the parties? The answer will turn on the applicability of hindsight, and to a lesser extent foreseeability. In Zavarella v. Zavarella,2013 CarswellOnt 16187 (Ont. C.A.) the ONCA grappled with a date of separation debt that was subsequently eradicated by a bankruptcy. The minority view was that hindsight could not be used in any circumstance. The majority allowed a measure of hindsight as the wife had made a prior proposal under the Bankruptcy Act and it was foreseeable that the debt would be reduced.
[300] Shortly thereafter, Justice Campbell released Jackson v. Jackson, 2013 ONSC 7884, which dealt with the same issue: the reduction of a debt post-separation. He reviewed the case law to date,[^3] exclusive of Zavarella (which was not yet available to him) and came to a similar conclusion: it is appropriate to use hindsight evidence only to confirm predictions available at the date of valuation but not on evidence that arises later. The NFP value must be calculated with information available at the valuation date unless the subsequent change was reasonably foreseeable.
[301] Not provided to me by counsel was the case of Cosentino v. Cosentin, 2015 ONSC 271, in which Justice Perkins dealt specifically with tax liability arising from a post-separation reassessment. In that case, the husband argued that he should be allowed to deduct this liability in calculating his net family property on the valuation date because it was a contingent liability as of that date, though it had not yet been quantified. At paragraph 38, Justice Perkins decided that it could not.
It would be stretching the meaning of "liability" to include an obligation that arose later, merely because it was calculated in relation to a year when the parties were still living together. Not only had the reassessment not come into existence on the valuation date, but also there was no suggestion that it was coming. Taking a financial snapshot of the husband on that date, no one would have suggested he was subject to any contingent liability for income tax.
[302] Zavarello, Jackson and Cosentino speak to a balanced use of hindsight that allows the court some flexibility without disturbing the integrity and certainty of a fixed date methodology. One is to rely exclusively on information available at the time of valuation (whether date of marriage or date of separation), but that information may include realistic outcomes of future events already in the process of unfolding.
[303] In this case, neither party at the time of marriage had any information, nor reason to believe that tax arrears would be later found to be owing to the CRA. I decline to set a date of marriage deduction for CRA arrears for either party.
[103] Based on the above cases, I find that hindsight evidence can be used to support the wife’s position at V-date that her shareholder loan from Pro Kyoto was not likely realizable, and therefore, I find that a nil value be placed on this account receivable as at the V-date, as proposed by the wife.
[104] In terms of the value to be attributed to EcoMedia, at the date of separation, it was clear that the parties were going to sell the company. This is why both the husband and wife were engaging in negotiations to sell the company. The best available evidence of the value of the shares of EcoMedia was the market value sale of the business in 2015. Accordingly, I find that the value of EcoMedia was $201,806.15 to be listed as an asset of the wife on V-date. Despite the husband’s estimate that the wife’s corporate interest was worth $3,000,000, there is no evidence on the record to support this figure. The email the husband attaches from Garry Cooper, was simply an email and no proof of an actual offer that was capable of being accepted. Although hindsight generally is not to be used, the monies paid for the corporation are the best evidence the court has on the record.
(f) Homes in Austria
Husband’s Position
[105] The husband has deposed in his sworn financial statement that he owned a home in Austria worth $350,000 on the V-date and submits that he inherited this home from his uncle during the marriage and, therefore, it is excluded under section 4(2) of the FLA. The husband offered no evidence to prove this property was inherited nor did he provide any evidence as to the value of the home on the V-date.
[106] Neither the wife nor the Trustee dispute that the husband inherited property in Austria. However, the Trustee claims that the husband owns two properties in Austria; a home (18 Kapellenstrase, 8071 Vasoldsberg, Austria) worth $350,000, and a rental property (4 Gardenstrase, 8071 Vasoldsberg, Austria) worth $233,767.
[107] The husband’s Bankruptcy Proposal dated February 17, 2017, was attached as Exhibit “Z” and the Trustee’s Report on the Proposal was attached as Exhibit “AA” to the Trustee’s report on equalization. The proposal trustee’s report discloses the existence of two properties in Austria (not one as the husband lists in his 2020 financial statement).
Analysis
[108] I find that the husband owned two homes on V-date in Austria. Although the husband only lists one home in Austria worth $350,000 on the V-date in his sworn financial, during his examination by the Official Receiver on December 4, 2017, he explains he owns two homes in Austria; one home at 4 Garten Street was inherited by him from his uncle and was worth $233,767 and his sister has the right to live there; and the second home on 18 Kapellen Street is owned jointly with his mother and he lists his share as worth $340,207. I am persuaded that the values listed in by the husband in his examination by the Official Receiver shall be used as the husband’s assts on V-date, with the inherited home being excluded under s.4(2) of the FLA.
(g) Debts and Liabilities in the Wife’s Name
Husband’s Position
[109] In terms of debts in the wife’s name on the date of separation, the husband submits that the wife’s debts to CRA of $620,000 should be removed as her debts and placed on his side of the ledger.
[110] Initially, title to the matrimonial home was in the husband’s sole name. In 2005, during the parties’ marriage, the husband transferred his 50% interest in the home to the wife. In 2008, the husband transferred his remaining interest in the home to the wife. She remained the sole titled owner from 2008 until the date of separation. At the time the husband transferred his interest in the matrimonial home to the wife, he owed CRA unpaid taxes. As a result, CRA issued income tax assessments against the wife for $295,000 in 2014 and for $330,000 in 2015, pursuant to s.160(1) of the Income Tax Act under the attribution rules. These debts existed on the date of separation however, the husband claims they were not debts of the wife, but of his on the V-date.
[111] The husband argues that the debt attributed to the wife of $625,000 on account of the husband’s transfers to her of the matrimonial home should be entirely attributed to him because she did not know until January 30, 2015, when the CRA first reassessed her in the amount of $295,000 and the second assessment which was issued on September 4, 2015, in the amount of $330,000, that she would be liable for these taxes.
Trustee’s Position
[112] The Trustee’s position is that as soon as the husband transferred his interest in the matrimonial home to the wife, under the attribution rules the wife became liable for his CRA debt. This debt, therefore, should appear on the wife’s side of the ledger as her debts.
[113] There is no dispute that the CRA has filed a claim in the wife’s bankruptcy for $845,687.92. The initial debt was $625,000 but with interest and penalties, CRA’s claim is $845,687.92. The Trustee argues that the husband improperly includes a debt to the CRA of $1,170,048.00 on his ledger in the NFP Statement. Of this debt, the CRA has assessed $625,000 plus penalties and interest as against the wife because of the attribution rules in the Income Tax Act. A copy of the CRA’s Proof of Claim submitted in the wife’s bankruptcy was attached to the Trustee’s Report as Exhibit Y.
Analysis
[114] While the formal CRA assessments post-dated the separation of the parties by 8 months, both parties were aware that the husband owed the CRA monies at the time of separation on account of him having transferred 50% of the matrimonial home to the wife in 2005, and in 2008 when he transferred the remaining 50% of the matrimonial home to the wife. In the Examination of the husband as a bankrupt by the Official Receiver on December 4, 2017, the husband deposed that in early 2000 he participated in a program called CHT-Canadian Humanitarian Trust, in which he donated money and received a tax receipt for these donations. He submitted that he was assured by CHT that it was a charitable organization and he understood this was a legitimate tax shelter. During his Examination, the husband deposed that he donated either $250,000 or $400,000 in 2004, 2005 and 2007, which CRA challenged and, as a result, he owed CRA significant taxes.
[115] I am persuaded that since the husband’s indebtedness to CRA arose as a result of the CHT tax shelter donations, in which the husband participated during the marriage, and CRA assessed the husband, these debts to CRA were known by the parties at the V-date. Given that the husband transferred the matrimonial home to the wife prior to V-date, it would reasonably have been foreseeable that the wife would be attributed with the husband’s debts pursuant to the Income Tax Act due to property transfers he made to the wife during the course of the marriage. The debt, therefore, of $625,000, should properly be accounted for in the calculation of the wife’s NFP as a debt of the wife on V-date.
[116] The Trustee explains that this debt ($625,000) to the CRA has now increased to $845,687.92 on account interest and penalties and that this entire amount should be listed as a debt of the wife on V-date. I do not agree. The value of the debt as at the V-date was $625,000. It was not known that the wife would have declared bankruptcy at the time of separation nor was it foreseeable that these debts would not be paid and interest and/or penalties would accrue for 8 years post separation.
[117] I find that a debt of $625,000 owing to the CRA should be listed as the wife’s debts on V-date. The remainder of the husband’s CRA debt on the V-date, being $545,048 (calculated as $1,170,048 - $625,000) can be listed as the husband’s debt.
(h) Notional Costs of Disposition
[118] The wife applied notional disposition costs (NDC) to her RRSPs and investment accounts at a rate of 21% as at the V-date and the date of marriage. She also applied NDC to the matrimonial home on the V-date.
[119] The husband did not apply any NDCs to his RRSPs or investments as at the V-date or the date of marriage.
Analysis
[120] When disposition costs are in issue, courts apply three rules: (i) the overriding principle of fairness applies, i.e., that costs of disposition as well as benefits should be shared equally; (ii) each case should be decided on its own facts, considering the nature of the assets involved, evidence as to the probable timing of their disposition, and the probable tax and other costs of disposition at that time, discounted as of valuation day; and (iii) disposition costs are deducted before arriving at the equalization payment, except in the situation where "it is not clear when, if ever," there will be a realization of the property: Lambert v. Peachman, 2017 ONSC 7450, at para. 21(x); and McPherson v. McPherson, 1988 4732 (ON CA), 63 O.R. (2d) 641, 13 R.F.L. (3d) 1 (Ont. C.A.).
[121] To determine the appropriate notional RRSP tax rates—where the parties disagree—the court’s analysis must rely on evidence supporting the expected time of disposition; Virc v. Blair, 2016 ONSC 49. If the evidence is lacking, the court may consider both agreed upon rates for other assets as well as hindsight evidence of post-separation text rates and actual disposition costs incurred upon sale of RRSPs: Ibid at para. 198.
[122] Neither party adduced any evidence as to the correct tax rates. However, I am prepared to accept the wife’s 21% tax rate on the present value of the future tax rate as at the V-date for her RRSPs and investments and I have applied the same NDC to the husband’s savings as at the V-date.
(i) Date of Marriage Deductions
[123] The husband’s position is that the wife did not prove her date of marriage deductions and, therefore, ought not to be permitted to deduct $287,089.34 as her net worth on the date of marriage.
[124] The Trustee’s position is that the husband did not provide any evidence to dispute that the wife did not have a date of marriage net worth of $287,089.34.
[125] It is the onus of each party to prove his/her date of marriage deduction: s.5(3) of the FLA. Since there is no evidence on the record before me with respect to the wife’s date of marriage deductions for the wife shall be removed, except for the wife’s RRSPs and the cash surrender value listed for her two life insurance policies, since I am persuaded that given the very specific amounts listed and the fact that these items have appeared on every sworn financial statement she filed in this proceeding, they are legitimate date of marriage deductions. Accordingly, I find that it is reasonable to include these limited amounts as her date of marriage net worth. For items, however, where there were no specific amounts listed they have been removed from the wife’s date of marriage assets.
(j) Exclusions
[126] The husband’s position is that the wife did not prove her exclusion of $19,719.30 and, therefore, ought not to be permitted to exclude this account from the calculation of her net family property.
[127] The Trustee’s position is that the husband did not provide any evidence to dispute this exclusion and therefore, it should be allowed.
[128] It is the onus of each party to prove his/her exclusions from the NFP if such exclusions are being claimed: s.5(3) of the FLA.
[129] In terms of the husband’s claim to exclude the property he inherited from Austria; the Trustee’s position is that it accepts this exclusion. Further, the wife never disputed that the husband inherited this property in Austria from his uncle. Accordingly, I have excluded the value of the inherited property of the husband at a value of $233,767.
Adjusted Net Family Property Statement
[130] Based on my findings above, the chart below sets out each party’s position as to his/her NFP; including the Trustee’s position on each of the figures and my findings. Adjusted assets for the wife are underlined; adjusted assets for the husband are double underlined; and debts are listed in red:
| Assets/Debts in each Party’s name | Husband Value on V-date – May 10, 2014 |
Wife Value on V-date – May 10, 2014 |
The Court’s Findings – the Adjusted NFP |
|---|---|---|---|
| Land | |||
| Matrimonial Home *title to the home was in the wife’s sole name on V-date |
$500,000 50% belongs to him |
Should remain on the W’s side only at $850,000 | This should be removed from the H’s side of the ledger and should be on the W’s side only at $850,000 |
| 50% of an Inherited home in Austria at 18 Kapellen St. | $350,000 | W agrees Trustee argues this should be included and then deducted or should come off entirely |
Evidence from the H’s examination from the Official Receiver during his bankruptcy, dated February 17, 2017 is that he owns this property jointly with his mother His Statement of Affairs lists his 50% interest at $340,207. I find that this item should be listed on the H’s side of the Ledger at $340,207 |
| 100% Rental Property in Austria at 4 Garten Street | H does not include this asset. | W claims this property located at 4 Garten Street exists and was worth $233,767 | Evidence from the H’s examination from the Official Receiver from his bankruptcy, dated February 17, 2017 lists this property as having been valued at $233,767 and having been inherited by his uncle. H acknowledges that his sister has a right of first refusal This asset should be listed at $233,767 on H’s side of the ledger and then Excluded. |
| General Household Items & Vehicles | |||
| Dining room contents | TBD | To be divided in specie no value | To be divided in specie no value |
| Electric Car | $3,000 | No position | Agreed |
| Motorcycle | $4,000 | TBD | This should be removed from H’s side No evidence |
| Wristwatch | $7,000 | No position | I find that a reduced value of $1,750 should be used for this item, being 25% of the $7,000 initially listed by the H |
| Schaffhausen Gold pocket watch | H said W stole this from him and its worth $100,000 and should be on her side of the ledger | W did not include | Remove from W’s side of Ledger No evidence |
| Silver pocket watch ca. 1886, with chain and silver horse | H said W stole this from him and its worth $100,000 and should be on her side of the ledger | W did not include | Remove from W’s side of Ledger No evidence |
| Inherited Gold Ring of Honour from the Province of Styra | H said W stole this from him and its worth $100,000 and should be on her side of the ledger | W did not include | Remove from W’s side of Ledger No evidence |
| Piaget Watch | H argues this was worth $7,000 on V-date and should be on W’s side of ledger | $100 | I find that a reduced value of $1,250 be listed as the value of both the Piaget and Rolex watch at V-date, being 25% of the $5,000 listed by the W initially |
| Rolex | No position as to value | $100 | Subsumed in the above item |
| ATV | H does not include W says it was worth $3,240 |
Remove from H’s side of Ledger No evidence |
|
| Bank Accounts and Savings | |||
| Joint Bank account at Bankhaus Krentschker #2070 | $731,87.85 H places 50% on each party’s side |
W says this should be $1,317,300 on H’s side because all funds were withdrawn by H and placed into an account in his name | Evidence is that the H transferred $1.2 million from this joint account into an account under his control which he then cashed and squandered it on “crazy things”. This evidence is from the H’s sworn examination by the Official Receiver taken on December 4, 2017. Therefore, 100% of this account should be on H’s side of the Ledger at $1,200,000 |
| Joint account at Capital Bank Austria #4430 | $102,225 | W says it is $67,514.50 on the H’s side of the ledger and $150,000 on her side of the ledger | I find that the figure of $204,700 should be on the W’s side of the ledger and $7,000 should be on the H’s side of the ledger. |
| Sole Account at Bankhaus Krentschker, #2009 | W says this account has $704,099.93 on V-date H says the balance is $1,214.818.65 on W’s side |
I find that the balance of this account should be $1,214,818.65 as listed by the wife in her November 2016 fs. | |
| RRSP at Manulife Financial | $64,330.63 | Agreed | |
| Cash in safety deposit box | H says W stole after V-date and it should be on her side of the Ledger | Remove from W’s side of the Ledger no evidence | |
| RRSP Royal Bank | $1,774.99 | Agreed | Agreed |
| RBC Chequing #9625 | ($3,692.77) | H agrees to this balance | |
| TD Chequing #0468 | $7.26 | H agrees to this balance | |
| RBC Savings #3344 | $26.33 | H agrees to this balance | |
| US Chequing RBC #6358 | $603.84 | H agrees to this balance | |
| Us Chequing TD #4997 | $1,156.89 | H agrees to this balance | |
| RRSP RBC #6208 | $30,554.28 | H agrees to this balance | |
| RRSP Manulife #0201 | $19,241.58 | H agrees to this balance | |
| RRSP Manulife Spousal #8894 | $45,569.31 | H agrees to this balance | |
| European Chequing Scotia #4823 | $45,003.00 | H agrees to this balance | |
| Life and Disability Insurance | |||
| Manulife Policy #848 | $5,374.79 | I find this reasonable given the specific amounts and consistency in W’s prior FS | |
| Manulife Policy #753 | $659.95 | I find this reasonable given the specific amounts and consistency in W’s prior FS | |
| Manulife Policy #095 | $210.24 | I find this reasonable given the specific amounts and consistency in W’s prior FS | |
| Manulife Policy #637 | $8,619.24 | I find this reasonable given the specific amounts and consistency in W’s prior FS | |
| Business Interests | |||
| Pro Kyto International Inc. This is the holding company which owned the shares of EcoMedia Direct Incorp which was sold on June 3, 2015. |
$0 | ||
| EcoMedia Direct Inc. This is listed as an active business which was sold to Creative Outdoor Advertising on June 3, 2015 |
H says the value should be $3,000,000 Trustee submits the figure of $201,806.15 should be used since that was what was paid for it after the V-date. |
$201,806.15 should be included on W’s side of the Ledger | |
| Money Owed to You | |||
| Pro Kyto international Inc. Monies owed to sh $1,005,124 as per Sept. 30, 2014 FS |
H says the value should be $1,004,124 as per the corporate financial statement dated September 30, 2014. Trustee says this was not realizable and should be removed |
Nil should be included on W’s side of the Ledger | |
| Total of all property owned on V-date | $1,868,418.47 | $2,294,132.95 | H’s assets = $1,851,829.50 W’s assets = $2,053,635.77 |
| Debts on V-date | |||
| CRA tax Liability | $1,170,048.00 | $625,000 Trustee claims $625,000 of this is a debt that should be listed on the W’s side of the ledger because of the MH transfer or that they entire debt at the current amount with penalties and interest |
$545,048 should be listed on Hs side of the Ledger $625,000 should be listed on the W’s Side of the Ledger (not current value because V-date is what matters) |
| Property Tax Arrears on MH | $5,385.35 | Agreed Evidence from W’s Statement of Affairs |
|
| Homeowner’s Insurance to Chubb on MH | $2,474.28 | Agreed Evidence from W’s Statement of Affairs |
|
| Credit card | $2,402.75 | Agreed Evidence provided at Exhibit “EE” to H’s Form 23C |
|
| RBC Visa #3823 | $3,591.37 | I find this reasonable given the specific amounts and consistency in W’s prior FS | |
| TD Emerald Bisa #0609 | $1,296.47 | I find this reasonable given the specific amounts and consistency in W’s prior FS | |
| MBNA MasterCard #7708 | $107.36 | I find this reasonable given the specific amounts and consistency in W’s prior FS | |
| Notional Disposition Costs (“NDC”) on MH 5% commission plus HST | $42,500 $5,525 |
Agreed | |
| NDC on W’s Investments RBC RRSP at 21% Manulife RRSP at 21% Manulife spousal RRSP at 21% |
$6,416.40 $4,040.73 $9,569.56 |
Agreed 21% for NDC used for both parties |
|
| NDC on H’s Investments Manulife RRSP RBC RRSP |
$13,509.43 $372.75 |
Agreed 21% for NDC used for both parties |
|
| Private Loan V-date $30 USD x 1.09 | $32,700 | Remove from W’s side of the Ledger. No evidence | |
| Total Debts on V-date | $1,172,450.75 | $738,606.52 | H’s debts = $561,332.93 W’s debts = $705,906.46 |
| Date of Marriage Net Worth – Sept. 22, 2001 | |||
| Matrimonial home | $400,000 | This is not a permissible DoM deduction given that it is the MH on DoM and V-date and should be removed from H’s side of the Ledger | |
| Dining room contents | $15,000 | Remove from H’s side of Ledger no evidence | |
| Household contents | $20,000 | Remove from W’s side of Ledger no evidence | |
| Jaguar | $55,000 | Remove from H’s side of Ledger no evidence | |
| 2001 Mercedes SUV (erst. Per Cdn Black Book) |
$50,000 | Remove from W’s side of Ledger no evidence | |
| Motorcycle | $35,000 | Remove from H’s side of Ledger no evidence | |
| 2 general rings | $10,000 | Remove from H’s side of Ledger no evidence | |
| Rolex Watch | $500.00 | Remove from W’s side of Ledger no evidence | |
| Artwork | $2,500 | Remove from W’s side of Ledger no evidence | |
| Investment Account at Royal Bank #6310 | $1,705,556.90 | Agreed Evidence provided Exhibit Y to H’s Form 23C |
|
| USD Royal Bank #6310 $25,782.91 USD at 0.6468 | $39,862.10 | Agreed Evidence provided Exhibit Z to H’s Form 23C |
|
| RRSP Royal Bank #7011 | $9,787.14 | Agreed Evidence provided Exhibit AA to H’s Form 23C |
|
| Investment Research Capital Corp | $166,675 | Agreed Evidence provided Exhibit BB to H’s Form 23C |
|
| RRSP Manulife Financial account ending *343 | $134,849.03 | Agreed Evidence provided Exhibit CC to H’s Form 23C |
|
| RRSP Manulife Financial account ending *770 | $20,168.63 | Agreed Evidence provided Exhibit DD to H’s form 23C |
|
| RBC Cash and Equity Acct #98-17 | $127,565 | Remove from W’s side of Ledger no evidence | |
| Investment on marriage | $20,000 | Remove from W’s side of Ledger no evidence | |
| RRSP RBCDS | $9,994 | I find this reasonable given the specific amounts and consistency in W’s prior FS | |
| RRSP Manulife #0201 | $49,393.30 | I find this reasonable given the specific amounts and consistency in W’s prior FS | |
| RRSP Manulife Spousal #8894 | $10,212.09 | I find this reasonable given the specific amounts and consistency in W’s prior FS | |
| Manulife policy #5848 CSV | $7,557.90 | I find this reasonable given the specific amounts and consistency in W’s prior FS | |
| Manulife policy #8753 | $3,982.92 | I find this reasonable given the specific amounts and consistency in W’s prior FS | |
| NDC on RRSP | Nothing listed | $17,399.98 | I find that ($17,399.85) are the NDCs associated with the two Manulife RRSPs owned by the W on date of marriage. I find that ($42,302.30) are the NDCs associated with the H’s RRSPs owned on date of marriage ( $164,804.80 x25%) |
| Total DoM net worth | $2,190,898.80 | $319,105.19 | H’s DoM net worth = $1,926,898.80 W’s DoM net worth = $63,740.36 |
| Excluded Property | |||
| Home in Austria | $340,000 | Although the H excluded a property he claims was worth $340,000 on V-date, his Examination taking by the Official Receiver taken on December 4, 2017 explains that the property he valued at $233,767 was inherited. | |
| Money gifted from brother | $19,719.30 | Remove from W’s side of Ledger no evidence | |
| Total Exclusions | $340,000 | $19,719.30 | |
| NFP of the husband | $0 ($1,834,931.09) |
$1,216,701.94 | H’s NFP = $859,830.89 W’s NFP = $1,855,718.92 |
| EP | W owes H $497,944.02 |
Issue Two: Are there Post-Separation-Adjustments that need to be Made and if so, In What Amount?
The Husband’s Position
[131] The husband submits that he is owed post-separation adjustments in the amount of $1,483,312.85.
[132] According to the husband, following the date of separation, the wife depleted substantial assets including:
a. The entire amount of $1,462,175.70 from the parties’ joint account with Bankhaus Krentschker;
b. Approximately $204,450 (less 500 Euro) from the parties’ joint account and Capital Bank Austria;
c. Her sole account Bankhaus Krentschkner Account **2009: $1,214,818.65 CAD at the date of separation to $80,000 CAD at November 16, 2016;
d. The entirety of her RRSP accounts; and
e. The equity in the matrimonial home, by taking out a fraudulent mortgage in the amount of $650,000 in favour of National Holdings.
[133] The majority of the depletion of the wife’s RRSP accounts, and the mortgage against the matrimonial home, were subsequent to the 2015 non-dissipation Order. As a post-separation adjustment, the husband submits that he is owed his 50% equity in the joint accounts, being $833,312.85. He also asserts that he is entitled to a post-separation adjustment in the full amount of the mortgage, as the wife absconded with the entirety of these funds and this reduced his interest in the home following the date of separation. He argues that this is the equivalent of removing equivalent monies from a bank account in which he has an interest. The husband submits that he is owed post-separation adjustments in the amount of $1,483,312.85.
The Trustee’s Position on Post-Separation Adjustments
[134] In his affidavit, the husband seeks “post-separation adjustments” of $1,483,312.85 due to the wife’s post-separation depletion of certain accounts. Of this amount:
a. $713,087.85 represents half the value of the Bankhaus Krentschker bank account, although this amount already appears on the husband’s side of the ledger in both his and the Trustee’s NFP statements;
b. $102,225.00 represents half the value of the Capital Bank Austria account, although this amount already appears on the husband’s side of the ledger in both his and the Trustee’s NFP statements; and
c. $650,000.00 is the full value of the post-separation mortgage which the wife took out on a house that was registered solely in her name.
[135] With respect to the wife’s use of the proceeds of the National Holdings mortgage, the Trustee discussed this with the bankrupt, who provided a detailed schedule of her use of the funds, which is attached as Exhibit “CC”. Both the mortgage and the expenditure of the mortgage proceeds occurred after the date of separation and have no bearing on the EP.
[136] The Trustee argues that there is no logical basis for any “post-separation” adjustment as claimed by the husband. The bank account balances are already accounted for, and the mortgage was a debt that was incurred after the valuation date and in any event was secured (or not as the case may be) against an asset that was solely the wife’s asset.
Analysis
[137] Post-separation adjustments are generally ordered to address circumstances that have occurred after the V-date with respect to joint assets and/or debts. I agree with the Trustee. There shall be no post-separation adjustments owing to the husband by the wife.
[138] The husband asks to receive the sum of $713,087.85 because he argues the wife depleted all of the funds from the parties’ joint account at Bankhaus Krentschker. As indicated above, I found that the husband, in fact, squandered the funds from the joint account, to which he admitted during his official examination in his bankruptcy. Accordingly, there is no separation adjustment for this account warranted.
[139] The husband asks to receive the sum of $102,225.00 which is one half of the parties’ joint Capital Account in Austria because the wife received the majority of the funds in this account. I agree with the husband in that the wife took 145,000 Euro from this account at the time of separation and, as a result, I only place 5000 Euro on his side of the ledger as an asset on V-date, representing what he actually received. As a result, there is no need for a post-separation adjustment, as the inequity in how this account was divided was addressed in the V-date values.
[140] Finally, the husband asks to receive the sum of $650,000.00 which is the value of the National Holdings mortgage because the wife utilized the proceeds of this mortgage. As reflected in the Adjusted NFP statement, I found that the entire fair market value of the matrimonial home was to be listed on the wife’s side of the ledger on V-date. The assets belonged entirely to the wife and the husband received the benefit of living in the matrimonial home rent free from the date of separation until the property was sold by the mortgagee. Further, the National Holdings mortgage was not taken out by the wife until after the separation and, therefore, has no bearing on the EP and a post-separation adjustment is not warranted.
Accordingly, I find that there are no post-separation adjustments that need to be made to the EP.
Spousal Support
[141] The husband seeks spousal support from the wife.
[142] The Trustee takes the position that the stay of proceedings imposed by the wife’s bankruptcy has only been lifted to permit the determination of equalization and, therefore, as a result, a further order lifting the stay to allow this Court to make a spousal support determination is necessary.
[143] The husband maintains that he is currently homeless. The wife has the means to pay spousal support. Given her bankruptcy, she has, or is in the process of successfully avoiding her obligation to pay her EP to him. He is currently relying on his elderly mother to support both him and his daughter.
[144] The husband acknowledges that he has no evidence about the wife’s income. However, he deposes she has somehow been able to maintain her lifestyle. The wife’s claimed expenses as set out in her statement of monthly income and expenses in her bankruptcy proposal, dated November 4, 2021, represent that she spent approximately $640,000 in approximately 2.5 years.
[145] He seeks spousal support in the monthly sum of $3,000 for a fixed period of 10 years.
The Law
[146] Pursuant to s.15.2 of the Divorce Act, the court can order the wife to pay the husband spousal support. Section 15.2(4) provides that the factors the court shall take into consideration in making an order for spousal support, which include the condition, means, needs and other circumstances of the spouse, including a) the length of the time the spouses cohabited; b) the functions performed by each spouse during cohabitation; and c) any order, agreement or arrangement relating to support of either spouse.
[147] The objectives of any spousal support order I make are too recognize any economic advantages or disadvantages to the husband arising from the marriage or its breakdown; 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; relieve any economic hardship of the husband arising from the breakdown of the marriage; and in so far as practicable, promote the economic self-sufficient of each spouse within a reasonable period of time.
Entitlement
[148] Before spousal support can be ordered I must first find that the husband has entitlement to spousal support. There are generally three bases for entitlement to spousal support: a) a compensatory basis; b) a non-compensatory or needs basis; or c) by contract.
[149] I find that the husband has not established entitlement on a compensatory basis. The husband has not put forward any evidence on the record about the roles played during the parties’ marriage or the economic disadvantages he suffered as a result of the marriage or its breakdown. There are no common markers of a compensatory claim in the facts of this case, such as the husband being home with the child full or part time; the husband being a secondary earner; or the husband moving for the wife’s career.
[150] At best, the husband may have a non-compensatory claim, also known as a needs-based claim for spousal support. The husband’s argument is that he has an inability to meet his basic needs without support from the wife. However, the husband has not led any evidence about the economic interdependency that developed as a result of the parties’ shared lives, including significant elements of reliance and expectation, to explain what has been referred to as “merger over time”. Further, in this case, the husband’s need for spousal support has arisen post-separation.
[151] The husband’s sworn financial statement dated December 6, 2020, indicates that he earned $82,828 in 2019. There is some indication in the evidence that the husband lost his employment position when the wife sold EcoMedia in 2015. However, the husband did not put forward any evidence as to his working circumstances since 2019 or if there was a period of time during which he was not working after separation. Further, the husband has not identified the quantum of rental income he receives from the home he owns in Austria jointly with his mother and what, if any, income he earns from investments beyond the December 2020 financial statement which is now outdated by over 2 years. Finally, the husband did not include his income tax returns and notices of assessment for 2019, 2020, 2021 or 2022 in his Form 23C.
[152] I am also mindful of the fact that the husband lived in the matrimonial home from the time of separation until it was recently sold by the Trustee in bankruptcy for the wife. The husband did not put forward any evidence as to the monthly expenses he paid toward the matrimonial home, title to which was in the wife’s sole name. As a result, there may be potential claims by the wife to set off against the husband’s spousal support claim, on account of matrimonial home expenses or common expenses paid for by her when the husband had exclusive use of the home. Further, the wife may have an occupation rent claim against the husband on account of the time he occupied the matrimonial home exclusively which would or could be set off against any spousal support claim the husband may have.
[153] Without evidence as to the husband’s income from all sources in 2021 or 2022; and/or evidence as whether there are any claims the wife may have against the husband which would be set-off against the husband’s spousal support claim, I am not in a position to determine spousal support at this time.
[154] Accordingly, the husband’s claim for spousal support is dismissed without prejudice to his right to return his claim with further and better evidence.
Costs
[155] The husband asks that costs of this uncontested trial be determined at a later date.
Disposition
[156] Order to go as follows:
(1) The applicant shall pay the respondent an equalization payment in the sum of $497,944.02 in satisfaction of his entitlement pursuant to Part I of the Family Law Act;
(2) The respondent’s claim for post-separation adjustments is hereby dismissed.
(3) The respondent’s claim for spousal support is dismissed without prejudice to his right to return the claim before the court on further and better evidence.
(4) The parties shall endeavour to try and agree with respect to the costs of this uncontested trial. If they cannot agree, the respondent shall serve and file written costs submission of no more than 3 pages, not including a Bill of Costs or Offers to Settle within 10 days of the release of this Endorsement. The Trustee shall serve and filed responding costs submissions of no more than 3 pages, not including a Bill of Costs or Offers to Settle within 7 days of being served with the respondent’s costs submissions. Reply submissions, if any, shall be served and filed within 3 days of being served with the responding submissions and shall be no more than one page in writing.
Released: February 6, 2023 ________________________
M. Kraft, J.
[^1]: Fuller Landau was appointed as the Licensed Insolvency Trustee of the Estate on July 22, 2021, when the Official Receiver accepted the wife’s assignment in bankruptcy.
[^2]: Pursuant to s.4(5) of the FLA, if a spouse’s NFP is less than zero, it shall be deemed to be equal to zero. According to the husband, his NFP = ($1,663,109.08) and is therefore, deemed to $0.
[^3]: Dababneh v. Dababneh, 2003 1959 (ON SC), 48 R.F.L. (5th) 55 (Ont. S.C.J.), Wood v. Wood, 2004 19028 (ON SC), 6 R.F.L. (6th) 441 (Ont. S.C.J.), Poole v. Poole, 2001 28196 (ON SC), 16 R.F.L. (5th) 397 (Ont. S.C.J.) Zavarella v. Zavarella was not yet available at the hearing.