Court File and Parties
Newmarket Court File No.: FC-23-41-00 Date: 2024-04-19 Superior Court of Justice – Ontario – Family Court
Re: Cliff McDowell, Applicant And: Dong-Ju McDowell, Respondent
Before: The Honourable Mr. Justice G.A. MacPherson
Counsel: M.H. Tweyman, Counsel for the Applicant C. Adams, Counsel for the Respondent
Heard: April 17, 2024
Ruling on Motion
Relief Requested
1The Applicant advances a motion requesting an Order that the divorce be severed from the corollary relief with leave to proceed with the divorce uncontested.
2The Respondent advances a cross-motion requesting an Order for extensive disclosure as set out in the Notice of Motion.
Very Brief Background
3The parties were married November 6, 1999.
4It is unclear if the date of separation is in dispute. I do not think it is. The Applicant states that the parties separated February 1, 2020. The Respondent states that the parties separated February 1, 2020 and they continued their relationship ‘on and off’ until February 2022.
5There are two children of the relationship namely, C.M. (#1) born in 2002 and C.M. (#2) born in 2006. C.M. (#1) is independent. C.M. (#2) is a dependent.
6On February 18, 2021 and February 19, 2021 the parties executed a Separation Agreement which referred to the content of the agreement as a “full and final settlement of all issues.”
7It is noteworthy that pursuant to the Separation Agreement, C.M. (#2) resides with the Applicant who provides financial support for C.M. (#2) without contribution from the Respondent. It is also noteworthy that the Separation Agreement includes a spousal support release, a division of the parties’ net family property, and a provision that either party may proceed with setting down the divorce on an uncontested basis. Pursuant to the Separation Agreement, the net family property has been divided.
8In her pleadings, the Respondent requests an Order setting aside the Separation Agreement on the basis that:
(a) there was undue influence;
(b) there was no financial disclosure; and
(c) there was no independent legal advice.
9The parties have attended two DRO Case Conferences.
Severing the Divorce
10Pursuant to Rule 12(6) of the Family Law Rules, the court may, on motion, make an order splitting a divorce from the other issues in a case if:
a) neither spouse will be disadvantaged by the order, and
b) reasonable arrangements have been made for the support of any children of the marriage.
11Severance of the divorce is discretionary by use of the word ‘may.’
12Accordingly, I address the three questions that follow: a) Will either spouse be disadvantaged by a severance? b) Have reasonable arrangements been made for the support of C.M. (#2)? c) Should I exercise my discretion to sever the divorce or should I decline to do so?
Will Either Spouse be Disadvantaged by a Severance?
13The issue of disadvantage under section 12 has been addressed by the court to mean ‘legal disadvantage.’ Obvious legal disadvantages include a loss of access to medical and/or dental benefits plans following a divorce or an inability to advance a claim for exclusive possession of the matrimonial home.
14The Respondent advances the position that there could be a ‘potential’ legal disadvantage to the Respondent if the Applicant dies intestate before the issues are adjudicated as the Respondent would lose her ability to elect to proceed under the Family Law Act or under the Succession Law Reform Act.
Current Claims
15The Respondent has made a spousal support claim under both the Divorce Act and the Family Law Act and she has made an equalization claim under the Family Law Act. All claims, of course, are premised on the Respondent being successful setting aside the Separation Agreement.
16If the Applicant were to pass away before adjudication, an Order may be made for the continuation of the claims advanced under the Divorce Act and the Family Law Act pursuant to Rule 11.02 of the Rules of Civil Procedure.
Succession Law Reform Act
17The Respondent argues that despite her ability to continue the matrimonial litigation, a divorce will potentially disadvantage her because she would lose the ability to elect to obtain relief under the Succession Law Reform Act or the Family Law Act if the Applicant passes away intestate.
18There is no evidence that the Applicant is ill. There is no evidence the Applicant has not prepared a will.
Support Claim
19In respect of support, pursuant to section 57 of the Succession Law Reform Act, a spouse is defined as including two persons who were married to each other by a marriage that was terminated by divorce. Accordingly, a divorce would not preclude pursuing a support claim under the Succession Law Reform Act. In addition, the spousal support claim under the Divorce Act and the Family Law Act could continue if there is a continuance. There is no legal disadvantage here.
Property Claim
20In respect of property, the claim under the Family Law Act could continue if there was an Order for a continuance.
21Pursuant to section 43.1 (1) of the Succession Law Reform Act, any provision in Part II that provides for the entitlement of a person’s spouse to any of the person’s property does not apply with respect to the spouse if the spouses are separated at the time of the person’s death.
22Pursuant to section 43.1(2) of the Succession Law Reform Act, a spouse is considered to be separated from the deceased person at the time of the person’s death for the purposes of subsection (1), if,
(a) before the person’s death,
(i) they lived separate and apart as a result of the breakdown of their marriage for a period of three years, if the period immediately preceded the death,
(ii) they entered into an agreement that is a valid separation agreement under Part IV of the Family Law Act,
(iii) a court made an order with respect to their rights and obligations in the settlement of their affairs arising from the breakdown of their marriage, or
(iv) a family arbitration award was made under the Arbitration Act, 1991 with respect to their rights and obligations in the settlement of their affairs arising from the breakdown of their marriage; and
(b) at the time of the person’s death, they were living separate and apart as a result of the breakdown of their marriage. 2021, c. 4, Sched. 9, s. 6.
23Under this section, a separation, and not a divorce, is the critical feature.
24However, there is a transition provision for section 43.1(1) and it states that the section applies in respect of a separation only if an event referred to in clause (2) (a) occurs on or after the day section 6 of Schedule 9 to the Accelerating Access to Justice Act, 2021 came into force, except that in the case of subclause (2) (a) (i), the spouses must also have begun to live separate and apart on or after that day. 2021, c. 4, Sched. 9, s. 6. As the parties separated in 2020, and this amendment came into force on January 1, 2022, the amendments to the Succession Law Reform Act do not apply to them.
25The Succession Law Reform Act, before the amendments in 2022, would apply to these individuals. Prior to the amendments, “spouse”, was defined, except in Part V, as having the same meaning as in section 1 of the Family Law Act and that is: two persons who are married to each other or who have entered into a marriage that is void or voidable, in good faith.
26Prior to the amendments, section 45(1) of the Succession Law Reform Act stated: Subject to subsection (3), where a person dies intestate in respect of property having a net value of not more than the preferential share and is survived by a spouse and issue, the spouse is entitled to the property absolutely. 1994, c. 27, s. 63 (1).
27Prior to the amendments, section 45 (2) stated: Subject to subsection (3), where a person dies intestate in respect of property having a net value of more than the preferential share and is survived by a spouse and issue, the spouse is entitled to the preferential share absolutely. 1994, c. 27, s. 63 (1).
28Prior to the amendments, section 45 (3) stated: Despite subsection (1), where a person dies testate as to some property and intestate as to other property and is survived by a spouse and issue, and, (a) where the spouse is entitled under the will to nothing or to property having a net value of less than the preferential share, the spouse is entitled out of the intestate property to the amount by which the preferential share exceeds the net value of the property, if any, to which the spouse is entitled under the will; (b) where the spouse is entitled under the will to property having a net value of more than the preferential share, subsections (1) and (2) do not apply. 1994, c. 27, s. 63 (1).
29I do not see a legal disadvantage in severing the divorce for the reasons that follow. If the Applicant passes testate, and leaves nothing to the Respondent, she may proceed with her claims under the Family Law Act.
30In respect of an intestacy, the parties have divided their property pursuant to a Separation Agreement that has not yet been set aside. Even if the agreement is set aside, which is speculative, the claims under the Family Law Act could continue if a continuance was requested.
31There is no evidence that the Applicant does not have a will. There is no evidence that the Applicant is ill. There is no evidence that a claim under the Succession Law Reform Act, in the event the Applicant dies intestate, would be better than a claim under the Family Law Act. The Respondent could continue the litigation under the Family Law Act to obtain relief and will not be deprived of a calculation in the event the Applicant passes. The Respondent’s argument is speculative. Accordingly, I do not find that the severance of the divorce will lead to a legal disadvantage.
Have Reasonable Arrangements for the Support of C.M. (#2) Been Made?
32The Respondent argues that reasonable arrangements have not been made for the support of C.M. (#2) and, accordingly, the divorce should not be severed.
33The parties’ Separation Agreement executed in February 2021 has not been set aside. In it, the parties agreed that C.M. (#2) would reside with the Applicant and both parties would support C.M. (#2) without contribution from the other. The parties further agreed that these arrangements were reasonable and met the objectives of the Child Support Guidelines. Finally, in the agreement either party was permitted to proceed with a divorce uncontested.
34The Respondent is the parent that should be paying child support as C.M. (#2) lives with the Applicant in excess of 60% of the time. The Respondent is not paying child support.
35The Respondent’s Financial Statement sworn March 14, 2023 is the only Financial Statement filed by the Respondent that I could locate. In that statement, the Respondent states that her income was $6,923 per annum. This is below the threshold for paying child support. I do not accept that the Respondent’s non-payment of child support is sufficient to oppose the severance of the divorce particularly as her income is below the threshold. I am satisfied, on the evidence before me, that reasonable arrangements have been made for C.M.’s (#2) support.
Should I Exercise My Discretion?
36Severing a divorce is discretionary. A court may exercise discretion not to severe the divorce from the remaining issues if the moving party has a history of a lack of compliance with court Orders or statutory obligations or for some other reason in the interests of justice.
37I see no reason, in this matter, to exercise my discretion and refuse the severance. The parties have been separated for four years. The Applicant is in a new relationship and desires to move forward with the relationship. The Respondent did not ask to set aside the Separation Agreement until served with the Application for a simple divorce.
38The Applicant has provided much disclosure in respect of the Respondent’s claim to set aside the Separation Agreement. I am making a disclosure Order although it is noteworthy that additional disclosure was provided after the Notice of Motion was served and the received disclosure had not been vetted by the Respondent as of the hearing of this motion.
39In the Separation Agreement, that has not yet been set aside, the parties agreed that either party may proceed with a divorce uncontested.
Disclosure
40The Respondent requests an extensive disclosure Order.
41The duty to provide financial disclosure is incorporated into Rule 13 of the Family Law Rules, which requires a party to serve and file a sworn Financial Statement along with their Answer. It also requires a party who serves a Financial Statement to provide supporting financial disclosure and to update their Financial Statement at regular intervals. Rule 13 (3.1) of the Family Law Rules also requires parties, where support is requested, to provide the income and financial information contained in subsection 21 (1) of the Child Support Guidelines.
42Section 21 of the Child Support Guidelines, O. Reg. 391/97, states:
Obligation of applicant
- (1) A parent or spouse who is applying for an order for the support of a child and whose income information is necessary to determine the amount of the order must include with the application,
(a) a copy of every personal income tax return filed by the parent or spouse including any materials that were filed with the return for each of the three most recent taxation years;
(b) a copy of every notice of assessment and reassessment issued to the parent or spouse for each of the three most recent taxation years;
(c) where the parent or spouse is an employee, the most recent statement of earnings indicating the total earnings paid in the year to date, including overtime, or, where such a statement is not provided by the employer, a letter from the parent’s or spouse’s employer setting out that information including the parent’s or spouse’s rate of annual salary or remuneration;
(d) where the parent or spouse is self-employed, for the three most recent taxation years,
(i) the financial statements of the parent’s or spouse’s business or professional practice, other than a partnership, and
(ii) a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom the parent or spouse does not deal at arm’s length;
(e) where the parent or spouse is a partner in a partnership, confirmation of the parent’s or spouse’s income and draw from, and capital in, the partnership for its three most recent taxation years;
(f) where the parent or spouse controls a corporation, for its three most recent taxation years,
(i) the financial statements of the corporation and its subsidiaries, and
(ii) a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom the corporation, and every related corporation, does not deal at arm’s length;
(g) where the parent or spouse is a beneficiary under a trust, a copy of the trust settlement agreement and copies of the trust’s three most recent financial statements; and
(h) in addition to any information that must be included under clauses (c) to (g), where the parent or spouse receives income from employment insurance, social assistance, a pension, workers compensation, disability payments or any other source, the most recent statement of income indicating the total amount of income from the applicable source during the current year or, if such a statement is not provided, a letter from the appropriate authority stating the required information. O. Reg. 391/97, s. 21 (1) ; O. Reg. 446/01, s. 7; O. Reg. 25/10, s. 5.
Obligation of respondent
(2) A parent or spouse who is served with an application for an order for the support of a child and whose income information is necessary to determine the amount of the order, must, within 30 days after the application is served if the parent or spouse resides in Canada or the United States or within 60 days if the parent or spouse resides elsewhere, or such other time limit as the court specifies, provide the court, as well as the other spouse, an applicant under section 33 of the Act or the order assignee with the documents referred to in subsection (1). O. Reg.391/97, s. 21 (2) .
43Much of the disclosure requested by the Respondent consists of many standard disclosure items that should not be at issue.
44The breadth of the disclosure requested, however, is not proportionate.
45The parties separated in February 2020. The Application was commenced in 2023. Financial disclosure from 2017 through 2023 is not proportionate.
46The Applicant is self-employed with four corporations. As a starting point, standard financial documentation for each corporation from 2019 through 2023 is relevant and proportionate. Corporate and personal income returns for the same period are relevant and proportionate.
47As stated by the Court during the motion, the starting point is to obtain financial disclosure and then make a further disclosure request if required.
Order
The Applicant shall, within 30 days, provide the following disclosure to the Respondent: (a) personal Income Tax Returns with all schedules and attachments for the taxation years 2022 and 2023; (b) personal Notices of Assessment for the taxation years 2019, 2020, 2021 and 2023; (c) articles of incorporation and the shareholder’s register for P23 entertainment Inc., 2593533 Ontario Inc., 2360516 Ontario Inc. and McDowell & Associates Inc.; (d) corporate Income Tax Returns and Notices of Assessment for 2019, 2020, 2021, and 2022 for P23 entertainment Inc., 2593533 Ontario Inc., 2360516 Ontario Inc. and McDowell & Associates Inc; (e) a complete copy of all Applications for loans or lines of credit of any kind for which the Applicant has applied personally or jointly with another person or entity or through a corporate entity from 2020 and ongoing until settlement or trial along with a complete copy of the loan credit agreement or any rejection notices he received during this period; and (f) an up-to-date Equifax or Trans Union credit report.
When available the Applicant shall provide the Respondent with corporate Income Tax Returns and Notices of Assessment for the taxation year 2023 for P23 entertainment Inc., 2593533 Ontario Inc., 2360516 Ontario Inc. and McDowell & Associates Inc.
The divorce is severed from the corollary relief and the Applicant may proceed with a request for a divorce on an uncontested basis.
If the parties cannot agree on the issue of costs regarding this motion, I shall consider the request for costs. The Applicant shall serve written submissions on the Respondent and file them electronically, through the Trial Coordinator, within 20 days of this decision being released. The Respondent shall serve written submissions on the Applicant and file them electronically, through the Trial Coordinator, within 10 days of receipt of the Applicant’s submissions. Submissions shall be limited to three pages exclusive of the Bill of Costs and Offers to Settle. There shall be no right of Reply.
The Honourable Justice G.A. MacPherson
Date: April 19, 2024