COURT FILE NO.: FS-18-0294-00
DATE: 2023 02 06
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Lauren Allisia Parente (Stewart) v Nunzio Joseph Parente
BEFORE: Fowler Byrne J.
COUNSEL: Janet Miliaris, for the Applicant
Stephen P. Kirby, the Respondent
HEARD: January 20, 2023
E N D O R S E M E N T
[1] The Applicant Wife Lauren Allisia Parente (“the Wife”) has brought a motion seeking an order that the Respondent Husband Nunzio Joseph Parente (“the Husband”) pay to her the sum of $250,000 towards her interim disbursements, and a further sum of $500,000 to be credited against a judgment in her favour.
I. Background
[2] The parties were married on September 9, 2006 and separated on November 12, 2018. The Wife was 17 years old when they started dating. There are three children of the marriage who are now 14, 11 and 9 years old.
[3] The Wife has alleged that the Husband is emotionally and financially manipulative. He has caused undue stress to the children and has organized his affairs to either hide his assets or avoid payment to the Wife.
[4] The Wife is now in real estate but has not yet been able to earn any income. In her most recent financial statement, sworn January 11, 2023, she claims her only income is monthly spousal support of $8,000, monthly child support of $8,000, plus $2,000 per month for the children’s tutoring. She claims she lost $71,000 in her business in 2020.
[5] The Husband is an electrical contractor and operates the electrical contracting business Salson Electric Limited (“Salson”). He focuses on major institutional contractors and has between 30 and 50 employees. It appears uncontested that the Husband owns assets personally and is a beneficiary of the Angelo Parente Family (2014) Trust (“the Family Trust”). A corporate organization chart, prepared by a certified business valuator retained in these matters, shows a complex corporate structure indicating that the Husband has an ownership interest in at least four separate corporations, one of which has an interest in at least three other corporations. One of the corporations in which the Father has a 50% ownership is Salson. The Family Trust, of which he is one of three beneficiaries, has an interest in close to 20 other corporations. While it is not clear, some of these corporations own real properties – namely industrial properties from which they may earn income.
[6] The difficulty lies in the fact that the Husband has yet to value these assets. The Wife maintains that she has had to bring five separate motions for support, disbursement of funds, and disclosure. On at least two occasions, the Husband did not even file responding materials, but simply agreed to what she wanted at the last minute. The Wife states the Husband takes no steps to provide disclosure or support until the Wife undergoes the time and expense to obtain a court order. She claims that it is the Husband’s plan to delay disclosure of his assets, cause her financial distress and avoid paying her anything.
[7] Some examples of the Husband’s disclosure obligations include:
a) On July 11, 2019, an order was made that the Husband provide an expert evaluation report with respect to the value of his business interests and an income report stating his last three years income for support purposes;
b) On February 5, 2021, an arbitral order was made that the husband deliver the necessary financial disclosure so that the income report and valuation could be completed by March 8, 2021. This arbitral award was made into an order of this Court dated June 15, 2021; and
c) The Wife was required to return to the arbitrator for non-compliance with disclosure orders in December 2021. This became an order of this Court, dated October 27, 2022. This included an order that company ledgers be forwarded to the valuator to assist with the valuation of two separate corporations and ordered that eight separate real properties be appraised. The Wife’s share of these appraisals was to be paid from the equalization payment to be made to her, showing that the arbitrator was of the opinion that an equalization payment would be forthcoming.
[8] As of this date, only a draft income report has been provided, and nothing more. While disclosure has been trickling in, there has been significant action on the part of the Husband in the last four months since new counsel was appointed. The parties previously agreed to move the matter to arbitration, so the Wife has had to undergo the expense of obtaining her disclosure orders in the arbitration, and when the Husband does not comply, she must undergo the expense of having the arbitral awards made into court orders.
[9] The Husband has no real explanation for the delay in providing the income and valuation reports ordered, except that he is looking for a more affordable property appraiser. He was advised of a suitable property appraiser over a year ago by the valuator, but the Husband decided to look around for a more affordable option. He has not been successful in that regard. The Husband has recently delivered significant disclosure, which has resulted in the valuator requesting follow up disclosure on January 11, 2023. The outstanding disclosure is two and a half pages long. Had the Husband delivered the necessary disclosure when ordered over the last several years, the disclosure would be complete by now and the reports done. The original order for an income report and a corporate valuation report is now three and a half years old. A long motion to address non-compliance has been scheduled for July 6, 2023.
[10] It is also agreed that the Husband is in arrears with his support obligations in the approximate sum of $108,000 (which is lower than the FRO statement given that some payments have been made directly to the Wife). The Husband’s current support obligations are based on a draft income report that shows his income to be $500,000 to $600,000 for the years 2016 to 2018, which the arbitrator accepted in a motion for interim support. Nonetheless, the Husband disputes that this is his income.
[11] The Husband opposes the relief sought by the Wife for several reasons. First, he has already advanced the Wife significant funds. In particular, since separation, the Wife has received the following:
a) After the separation, the Husband transferred a condominium to her. The Wife eventually sold the condominium which, after payment of the mortgage, netted her approximately $101,000. She used this sum to pay debts and make a deposit towards a condominium still under construction;
b) The matrimonial home sold in November 2018. Her share of the proceeds was disbursed to her in the approximate sum of $284,000, but only after she had to bring a motion;
c) By way of the Order of Justice Harris dated June 15, 2021, the Husband was ordered to pay to the Wife two payments totaling $50,000, which were to be used towards her disbursements; and
d) In October 2022, the Wife had to bring an urgent motion for an advance on equalization as she was purchasing a home which was about to close. She did not recoup sufficient funds on another property which she sold, so she had insufficient funds to close. After bringing an urgent motion, the Husband agreed to pay $330,000 as an advance on her equalization.
[12] Obviously, the Wife’s interest in the matrimonial home cannot be considered an advance, as those funds belonged to her. Accordingly, prior to this motion, the Wife has received $50,000 towards disbursements, $330,000 as an advance on equalization, and a further $101,000 to be credited to her, for no specific claim.
[13] The second ground of the Husband’s opposition is that there is no evidence that his assets will be valued at a sufficient value to warrant a further advance of equalization. When the Husband made this claim, the Wife, in her reply materials, provided two documents in support of her estimation of the Husband’s net worth. A real estate broker did a “drive-by” estimation of the value of several properties in which the Husband had some interest. He estimated a value of $61,000,000 in total, without consideration of any registered encumbrances or the percentage ownership of the Husband. The Wife also provided some information from the CBRE Q3 2022 Toronto Industrial Market Report. Adopting the values per square foot as set out in this Report, she has valued the same properties at $44,700,000, again without considering any debt attached to the properties or the Husband’s percentage ownership interest.
[14] The Husband opposes the Wife’s evidence on the basis that it is hearsay and cannot be considered. The Husband provided no estimate of the value of his properties, despite the relief sought in the Wife’s Notice of Motion.
[15] Thirdly, the Husband claims that when he agreed to advance $330,000 in November 2022, it was his understanding that this would be the last sum requested. It was on this basis, he says, that he consented to the order. He argues that to seek additional funds so soon afterwards amounts to an abuse of process.
[16] Finally, the Husband claims he does not have the funds to pay the Wife what she seeks. He owes over $100,000 in support arrears. He is obligated to pay for the rest of the income, valuation and appraisal reports, which he estimates will cost him $53,000 to $60,000. His income is significantly less, he claims, than what the draft income report states. He was only able to pay the Wife $330,000 because he borrowed it from his own father, who refuses to advance any more.
[17] The Wife claims to be in financial distress. As indicated, she receives $18,000 per month. From that she pays $4,000 per month for private school for her two youngest children and $8,800 per month in private mortgages. When she pays income tax on her spousal support, there is little left for utilities and property taxes and to support the household.
[18] With respect to the private school, the Wife argues that this is the only school the children have known and wants to provide that stability. She has kept the two youngest in private school but has moved the eldest child to a public high school.
[19] The Wife also claims that she was forced to finance the purchase of her home with two private mortgages, which are more expensive than a conventional mortgage. The Wife argues that while the Husband bears no fault for the fluctuating real estate market, had the Husband complied with his disclosure and provided the reports, she would have been in a more secure financial position and been able to secure a conventional mortgage at a more affordable rate.
II. Issues
[20] The following issues must be decided in this motion:
a) Is the Wife’s request for disbursements or an advance an abuse of process?
b) Is the Wife entitled to an advance towards her disbursements?
c) If so, what is the appropriate amount?
d) Is the Wife entitled to an advance on her equalization payment?
e) If the Wife is entitled, what is the appropriate amount? In determining this amount, can I rely on the Wife’s evidence of the value of the Husband’s assets?
III. Analysis
A. Abuse of Process
[21] Before determining whether any order for an interim disbursement or an advance should be made, I must address the Husband’s argument that this has already been determined and it is an abuse of process to hear the matter again.
[22] To be clear, the issues of interim disbursements has not been adjudicated since 2021. The advance of $330,000 in November 2022 was an advance on equalization.
[23] The Husband correctly states that it may be an abuse of process for a party to relitigate a claim which the court has already decided: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63 at paras. 35-38.
[24] That being said, the abuse of process is a fairness doctrine that is characterized by its flexibility. It engages the inherent powers of the court to prevent the misuses of its procedures in a way that would be manifestly unfair to a party in the litigation: Behn v. Moulton Contracting Ltd., 2013 SCC 26, at para. 40; Canam Enterprises Inc. v. Coles (2001), 2000 CanLII 8514 (ON CA), 51 O.R. (3d) 481, at paras. 55-56 (CA) (in dissent, which was approved by 2002 SCC 63).
[25] In this case, I find no abuse of process. A request for an interim disbursement is meant to cover only a period of time. A court will not grant an order for interim disbursements right up to trial when a case is only at its early stages.
[26] As for the request for an interim advance, the Husband is hard pressed to claim it is unfair that the Wife asks for additional advances when he has delayed his disclosure and the progress of this litigation. Had the Husband produced the reports as he was ordered to in 2019 and complied with any other disclosure orders in a timely manner, the Wife may not have been forced to take this step. The equities in this scenario do not support a finding of abuse of process.
B. Advance for Disbursements
[27] Rule 24(18) of the Family Law Rules allows the court to order that a party pay an amount of money to another party to cover part or all of the expenses of carrying on the case, including a lawyer’s fees.
[28] This rule should be read in conjunction with the primary objective, as set out in subrules 2(2)-(5) which require the court to actively manage cases and ensure that the procedure is fair to all parties. For a procedure to be fair, both parties should be able to request and give disclosure and tackle complex valuation issues equally. One party should not be disadvantaged by being unable to test the evidence. The power to grant costs is discretionary in order to obtain these objectives: Stuart v. Stuart, 2001 CanLII 28261 (ON SC) at paras. 3, 5-7.
[29] It is not necessary for the Wife to show that this is an exceptional case, as set out in British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, at para. 36. In family law cases, the judge has discretion in deciding whether to award costs under r. 24(18), and this discretion has been expanded to include the practical consideration of leveling the playing field between the parties. This means allowing the parties an equal opportunity to obtain disclosure, make offers and proceed to trial: Ma v. Chao, 2016 ONSC 585 (Div.Crt.), at para. 4; Agresti v. Hatcher, 2004 CanLII 8311 (ON SC), at paras. 17-18; Woodburn v. Woodburn, 2016 ONSC 6694, at para. 17; Stuart at para. 9.
[30] That being said, an order under rule 24(12) should not immunise a party from costs awards. This type of order is to permit the case to proceed fairly. A large advance on disbursements should not give a party a license to litigate without the need for proportionality between the issues at stake and the costs incurred, and without regard to likelihood of success: Stuart at para. 10; Ludmer v. Ludmer, 2008 CanLII 42426 (ON SC), at para. 8(b).
[31] In addition, as set out in Stuart, at paras. 11-14,
a) Proof of the necessity of the requested interim disbursements is required; it must be demonstrated that the disbursements are necessary and reasonable given the needs of the case and the funds available;
b) The claimant must demonstrate that he or she is incapable of funding the requested amounts;
c) The claims being advanced in the case must be meritorious as far as can be determined on the balance of probabilities at the time of the request for disbursements; and
d) The order for interim disbursements should not be limited to cases where it would be taken out of an equalisation payment.
[32] In this case, the Wife has asked for an advance of $250,000 to cover her anticipated disbursements:
[33] I agree with the Husband’s submission that these anticipated fees are excessive. The estimate does not include a Bill of Costs with a summary of time and hourly rates. This list should also not include past legal fees, but only legal fees going forward. In addition, there is already a court order in place that the Husband is to pay for the appraisals and the business valuator. Should the Wife feel it necessary to test these reports, she is granted leave to bring another such motion to request those disbursements, with evidence of the cost of the rebuttal reports.
[34] I do find though, that the Wife has established the necessity of an interim disbursement. The Wife’s sole source of income is her support payments. They are necessary to maintain the home for her and her children. Her sole significant asset is her current home which is leveraged to its capacity. Her other property, a condominium under construction, is not ready to be sold. She cannot fund the disbursements herself.
[35] On the other hand, the Husband concedes he owes the Wife over $100,000 in support arrears and that he must make arrangements to pay that. That is adding to the Wife’s financial distress. The Husband has $255,000 in savings today, compared to the $202,000 he had on the date of separation in November 2018, despite claiming to live at a deficit and transferring a condominium to the Wife. His only debt is what he owes to his own father as of November 2022. We know from the draft income report of White & Lewis of January 25, 2021 that the Husband holds a fifty percent interest in 2226670 Ontario Inc. which, at least during the last years of the marriage, owned four separate commercial or industrial type condominiums from which he earned rental income. We also know that he owns P3 Holdings Inc., which is an investment holding company. We have no idea at this point what investments he held.
[36] Also, the Husband acknowledges that he is one of three beneficiaries in a sizable Family Trust, as evidenced by the corporate organization chart. The Family Trust has a minority interest in fourteen other corporations. The trust is a discretionary trust, but it appears that some disbursements have been made to the Husband in the past, according to the draft income report. There is also the issue of the final matrimonial home that was put in the name of the Husband’s father. The Husband cannot argue that he does not have sufficient funds to pay any interim order for disbursements while having an ownership interest in a complex corporate structure of which, for over three years, he has failed to provide disclosure. There is a significant adverse interest that can be drawn against the Husband in this regard.
[37] I also have no difficulty in accepting that the Wife’s claims have merit. Clearly child support and spousal support will be paid. I also find a prima facie entitlement to an equalization payment. While the amount is not settled, that is only the result of the Husband’s inaction. If he is resisting the Wife’s request and claims that he will not owe the Wife any further equalization over and above what he has already paid, he should provide evidence of this position.
[38] I do recognize that an interim advance for disbursements was already granted in 2021, in the sum of $50,000. That was 1 ½ years ago. Since that time, there have been attendances before the arbitrator and then the court. Communications regarding ongoing disclosure continued. The Husband’s failure to provide disclosure in a timely manner is what has driven up the Wife’s costs. An additional sum is warranted.
[39] Having regard to the list put forth by the Wife, in the absence of a detailed Bill of Costs that would explain the necessity of the costs claimed, I will assess the costs myself. Accordingly, the following amounts are proper disbursements for legal fees that should be payable to the Wife:
This Motion $10,000
Amendment of Pleadings $1,500
Joint Settlement/Trial Management Conference $13,500
Long Motion – August 2023 $25,000
Questioning $25,000
Total: $75,000
[40] As indicated, the Husband is obligated to pay for the income report, valuation report, and property appraisals. If a rebuttal expert report is required, the Wife is at liberty to bring a motion, with the appropriate evidence, in support of an additional advance. If the matter progresses beyond questioning and the settlement conference, the Wife is at liberty to seek an additional disbursement to prepare for and attend trial, with the appropriate supporting evidence.
C. Admissibility of Wife’s Evidence of Value
[41] As indicated, the Husband has objected to the hearsay evidence of the value of the Husband’s properties.
[42] I agree. The information provided by the Wife is hearsay. She has adduced this evidence for the proof of its contents. The opinion of the real estate broker was attached to her affidavit as an exhibit. The broker himself did not swear the affidavit. No expert opinion evidence was proffered, nor a certificate of impartiality.
[43] In order to be admissible, this evidence must fall within a recognized exception to the hearsay rule or fall within the principled exception to hearsay rule, where the evidence must be both necessary and reliable: R. v. Khan, 1990 CanLII 77 (SCC), [1990] 2 S.C.R. 531.
[44] The Wife has no difficulty in meeting the requirement of necessity. The value of the Husband’s assets, and any possible equalization payment that may be owing, is necessary to determine whether the Wife should receive an advance. The Husband has failed to provide that evidence, despite the Wife clearly raising the issue in her Notice of Motion and supporting affidavit.
[45] The difficulty is reliability. In order to establish reliability, I should consider the circumstances in which the evidence was created, and whether there is any evidence that corroborates or conflicts with the evidence: R. v. Bradshaw, 2017 SCC 35, at para. 30. In this case, there is no other evidence. The broker did not gain access to the properties and did not know their actual state of repair. His opinion was his best guess as to value, given the market. The value of these properties is of critical importance in determining if there is sufficient money owing to the Wife that an advance is reasonable.
[46] Nonetheless, I am entitled to draw an adverse inference from the fact that the Husband did not call any evidence to support his position that there will not be a large enough equalization payment to cover the prior disbursements and the amounts now sought by the Wife: Sabanegh v. Habaybeh, 2010 ONSC 6572, at para. 73.
[47] The Wife’s position was clear on this motion. She maintained that she was entitled to an advance of $750,000. The Husband was aware that the Wife believed that she would receive at least this amount at trial. Unfortunately, the Husband did not call any evidence that would assist him in opposing that claim. He could have at least provided some evidence that the various corporations listed in the corporate organization chart are heavily encumbered, or not within his control – or anything of the sort. He maintains that the Family Trust was a gift and therefore could be excluded but provided no evidence in that regard. In fact, his latest financial statement does not list any gifts. Instead, the Husband takes the position that the Wife has already asked for an advance, and her equalization payment has not been determined. The sole reason that the Husband is unable to provide such evidence is because he has dragged his feet for over three years.
E. Should an Advance be Made?
[48] For the reasons set forth above, I do believe the Wife is entitled to an advance, but it is difficult to determine the amount. As indicated, the evidence of the value of the properties is hearsay. I also do not know if the properties are encumbered.
[49] The most recent request for productions from White & Lewis, the appointed valuator, was for appraisals of 13 separate real properties and corporate documentation from 11 separate corporations. Once the appraisals are completed, a more realistic assessment can be made of what payment may be owed to the Wife.
[50] The most important step that must be taken is for the Husband to provide his disclosure. Accordingly, I will grant the Wife a small amount at this time but will adjourn the motion for a number of months to provide the Husband with the opportunity to provide the disclosure that he claims he is trying to obtain. If he fails to do so, then an adverse inference will be drawn against him with respect to the amount the Wife has sought.
IV. Conclusion
[51] For the foregoing reasons, I make the following orders:
a) Within 30 days, the Husband shall provide to the Wife the sum of $75,000 as an advance towards her disbursements;
b) this advance is without prejudice to the Wife’s ability to move for additional disbursements to cover the cost of any rebuttal expert reports, should the need arise, and upon proof of the necessity of this disbursement; and without prejudice to her ability to seek additional disbursements to cover the cost of preparation and attendance at trial;
c) within 30 days, the Husband shall also advance to the Wife the sum of $50,000 as an advance on equalization;
d) This motion, with respect to a further advance on equalization, is otherwise adjourned to the morning of May 11, 2023 at 9:00 a.m., by Zoom, before me, where I will consider any further advance, on the following terms:
i. The Husband shall provide to White & Lewis, as well as to the Wife, each appraisal and document requested in the White & Lewis letter dated January 11, 2023, on or before April 14, 2023;
ii. On or before April 14, 2023, the Husband shall also provide to White & Lewis, as well as to the Wife, proof of his ownership interest in any company or property listed, and any encumbrances associated with the properties;
iii. If the Wife wishes to seek an additional advance on her equalization, she may serve and file any affidavit evidence on or before April 21, 2023; the Husband may file any responding evidence on or before April 28, 2023; the Wife may serve and file reply evidence on or before May 5, 2023;
iv. If the Husband does not deliver this documentation by the aforementioned date, I may draw an adverse inference that the Husband has the assets to cover the request of the Wife for $500,000, and make an order accordingly;
e) costs of this motion are adjourned to the attendance on May 11, 2023.
Fowler Byrne J.
DATE: February 6, 2023
COURT FILE NO.: FS-18-0294-00
DATE: 2023 02 06
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Lauren Allisia Parente (Stewart) v Nunzio Joseph Parente
COUNSEL: Janet Miliaris, for the Applicant
Stephen P. Kirby, the Respondent
ENDORSEMENT
Fowler Byrne J.
DATE: February 6, 2023