Court File and Parties
Court File No.: FC-22-2112 Date: 2024/04/22 Superior Court of Justice - Ontario
Re: Judy Petra Maria Van Stralen Applicant And: Rajah Durai Rasalingam Respondent
Before: Justice Engelking
Counsel: Carol Craig, For the Applicant Ronan Blake, For the Respondent
Heard: April 2, 2024
Reasons for Decision
[1] This is a motion brought by the Applicant for an order regarding the sale of the parties’ matrimonial home (« MH »), known municipally as 43 Hyde Park Way, Ottawa, Ontario.
[2] The Respondent does not oppose an order for the sale of the home, but disputes that certain terms of the sale requested by the Applicant be ordered. Specifically, he opposes the real estate agent proposed by the Applicant and proposes another or proposes a process for the selection of same, and he opposes that the proceeds of the home be held in trust.
[3] The parties were married in February of 2008 and separated in December of 2022. One child, Lauren, was born of the marriage in December of 2008.
[4] The Applicant is a pediatrician and runs a private clinic. The Respondent is the owner and president of a consulting company, Protocol Plus Incorporated.
[5] Between them, the parties own the following three corporations: a. Protocol Plus Incorporated (« PPI »), of which the Respondent is the sole shareholder; b. Medical Professional Corporation (« MPC »), of which the Applicant is the sole shareholder and director; and, c. 2148173 Ontario Inc. (« 214 Inc. »), a holding company of which the Applicant is the sole shareholder.
[6] The Applicant’s evidence, which is not disputed by the Respondent, is that the parties’ financial holdings and circumstances are complex. The Applicant indicates that prior to separation, the Respondent used 214 Inc. to divert income from PPI, and that he also used it to invest in real estate, which investments were funded via inter-company loans from MPC and PPI as well as with monies borrowed against the equity in the MH.
[7] At the date of separation, 214 Inc. owned three residential properties as follows: a. 9 Crofton Road, Ottawa. b. 21 Carlton Street, Unit 4201, Toronto, and, c. 38 Grenville Street, Unit 4506, Toronto.
[8] Additionally, the parties jointly own the MH at 43 Hyde Park Way, Ottawa. Registered against the property is a joint RBC Homeline Plan totalling approximately $539,528, set out in three parts: a. Mortgage loan (181- 001) for $329,215.57 b. Mortgage loan (181- 002) for $85,312.98, and, c. Credit line (830-001) for $125,000.
[9] On consent, Justice T. Waters granted an order on August 31, 2023 providing for the three investment properties owned by 214 Inc. to be listed for sale, with the net proceeds of the sales to be held in trust pending further order of the court or agreement of the parties.
[10] The order required the Applicant to provide a list of three realtors for each of Ottawa and Toronto and for the Respondent to select one of the three in each location. The Applicant did so, and the Respondent choose Carol Traversy, Coldwell Banker First Ottawa Realty Brokerage, to sell the Ottawa property at 9 Croften Road.
[11] Ms. Traversy indicated to the parties that if she was retained to also list and sell the MH, she would reduce her commission to 4% from 5%. The Applicant seeks to have Ms. Traversy list and sell the home.
[12] The Respondent wants to engage another agent, Ms. Scribnock, to list and sell the MH. The Applicant does not agree with engaging Ms. Scribnock as she had previous involvement with the Respondent, including by providing a valuation on the MH to both parties, and by selling one of the Respondent’s properties held by PPI, located at 10 Allendale Private.
[13] The Applicant prefers Ms. Traversy as prior to being selected by the Respondent from the list provided by the Applicant as per Justice Waters order, she had no involvement/relationship with either party. To the Applicant, she is a more neutral agent.
[14] The Respondent’s position is that Ms. Schibnock is the agent who will get the best price for the property, having just recently sold a neighbouring property. She has, additionally, agreed to match the 4% commission rate offered by Ms. Traversy.
[15] Given the process entered into by that parties as per Justice Waters order of August 31, 2023, and given that Ms. Traversy was the agent chosen by the Respondent, I can see no reason to not have Ms. Traversy list and sell the MH. There will, thus, be an order for same.
[16] The Respondent also opposes that MH being listed for sale without first being repaired for flood damage which occured, and which the parties’ insurance company is prepared to cover. The Respondent’s position is that the repairs are necessary and will improve the value of the home.
[17] The Applicant’s position is that if the repairs are intended to delay the sale of the home, they may not be necessary. She is not opposed to them, but wishes to understand their necessity via the real estate agent prior to agreeing to them being undertaken.
[18] The Respondent indicates that he communicated both the need for the repairs as well as the insurance company’s willingness to cover it in November of 2023, and did not hear back from the Applicant in this regard. His position is that the repairs could have been completed by now, had the Applicant responded positively to his communication.
[19] This issue does not seem insurmountable to me. The agent listing the home should be provided an opportunity to see the damage done and determine if repairs need to be done prior to the home being listed for sale. If so, then a timeline should be established for the repairs to be done in advance of the listing. If not, the home may be listed within 30 days as requested in the Notice of Motion.
[20] The third problematic issue for the Respondent is the Applicant’s request that the proceeds of the sale, after encumbrances and real estate fees have been paid, be held in trust pending final order or agreement in this matter.
[21] The Applicant had initially also requested that MPC be repaid an alleged outstanding balance on a loan for the purchase of the home from the proceeds of sale, but she has deferred that request to trial.
[22] The Applicant’s position is that the parties’ finances, which are intertwined with the corporations owned by each of them and through which money has been constantly moved, are exceedingly complex. As a result of this reality, and because the Respondent has not to date provided any corporate financial disclosure, there are a number of issues which must be considered before the release of proceeds from the sale of the MH can be contemplated. These include the value of the corporations as of the valuation date, the appropriate income of the Respondent for support purposes, and child support arrears based on that income.
[23] The Applicant’s view is that proceeds of the sale of the MH should not be released until such time as some determination can be made or conclusions drawn about these issues. Her position, moreover, is that these determinations have the potential to be in the millions of dollars, at least as it relates to the parties’ NFP values, and that releasing any funds in advance risks either delay in payment or non-payment of sums eventually found to be owing.
[24] The Respondent’s position is that, although he has not agreed to the release of funds from the proceeds of sale of their investment properties, he is entitled to access his share of the equity in the MH. The Respondent also accuses the Applicant of accessing $650,000 from PPI without his consent; he states it would be unfair to prevent him from accessing his share of the equity in the MH while the Applicant has at the same time removed his access to this money. The Applicant does not dispute that she accessed $650,000 from PPI, but disagrees that it was without the consent of the Respondent; indeed, she suggests that it was at his direction. Like the loan the Applicant says is owning for the down payment on the MH, this is a highly disputed issue which will need to be settled on the factual record at trial.
[25] Finally, the Respondent submits that the MH is not the only asset from which payment of any eventually determined equalization payment may be made. The Applicant relys on Batler v. Batler, and other like cases, wherein Justice Granger indicated at paragraph 7: “If jointly owned property is sold prior to trial, prima facie the net proceeds of sale should be held in trust pending the determination of equalization to avoid prejudice to either spouse arising from the sale.” However, Justice Granger went on to state in that paragraph: “If the parties agree or if there are sufficient assets to satisfy the potential equalization payment the funds coud be dispersed.”
[26] The Respondent’s position is that there are sufficient assets to satisfy any potential equalization payment in this case and there is no reason for the proceeds of the sale of the MH to be held in trust. He relies on a line of cases which support the proposition that the onus is on the Applicant to demonstrate otherwise, and that such an order (a preservation order under s. 12 of the Family Law Act or a non-dissipation order under s. 40 of the Family Law Act) cannot be made on bare allegations. Relying on Taus v. Harry, 2016 ONSC 219 at paragraph 35, the Respondent submits that: “The question to be asked is whether there is a real risk that the applicant’s equalization claim and claim for retroactive support could be defeated if the preservation/non-dissipation order is not made.”
[27] The Respondent submits, as per Bronfman v. Bronfman at paragraph 28, that the court is required to consider: (a) the relative strength of the plaintiff’s case, (b) the balance of convenience (or inconvenience), and (c) irreparable harm. As per paragraph 45 of Altman v. Altman, 2021 ONSC 6610, moreover, where the court is not able to estimate the value of the equalization payment, it is to place greater weight on the balance of convenience and risk of dissipation prior to trial.
[28] Although the Respondent relies on the principles enunciated in Altman, in that case a non-dissipation order was granted. In this case, as in that one, the Respondent has not made timely financial disclosure. He has not yet provided tax returns for his corporation; nor has he provided expert reports regarding the value of his corporation at the date of separation or his income available for support purposes. The Respondent, additionally, runs many personal expenses through his corporation. The Applicant submits that his income for support purposes may be as much as five times highter than that upon which he is currently paying child support. Arrears of child support could, thus, be substantial.
[29] As I have indicated above, the Respondent’s financial picture is exceedingly complex, and funds have flowed through the parties’ corporations as well as the matrimonial home. Although there are indeed other assets from which an equalization payment could potentially be satisfied, I am uncertain whether they would be sufficient to do so. Until a clearer picture of the Respondent’s financial affairs is known, it would be imprudent, in my view, to disperse the funds from the proceeds of the sale of the matrimonial home to the parties.
[30] The Respondent suggests that it would be unfair to require him to withdraw funds from his RRSP’s, which exceed $300.000, and suffer the tax consequences thereof, in order to house himself post the sale of the MH, in which he has continued to reside. I am not satisfied, however, that the Respondent would not have other mechanisms available to him to purchase a new home, if he so choose. These include mechanisms he has used in the past, such as borrowing from PPI. He could also come to an agreement with the Applicant regarding some (or all) of the proceeds from the sale of their investment properties currently being held in trust at his insistence.
[31] There will, therefore, be an order that the proceeds of the sale of the matrimonial home will be held in trust pending further agreement by the parties or court order.
[32] For the above reasons, there shall be an order as follows:
Matrimonial Home
- The matrimonial home located at 43 Hyde Park Way, Ottawa, Ontario (“matrimonial home”) shall be listed on the following terms: (a) The matrimonial home shall be listed for sale on the MLS listing service within 30 days of the date of this order; (b) Carol Traversy shall be the listing agent for the matrimonial home; (c) If the parties are unable to agree on the list price, then the list price shall be set at the price recommended by Carol Traversy; (d) The listing agent will have access to the property on 24 hours’ notice to the Respondent, or such other shorter length of notice as agreed to by the Respondent, for the purpose of inspecting the home to determine the listing price, and conducting any necessary inspections and showings. Carol Traversy shall determine whether any further cosmetic work, minor repairs, major repairs, or painting is required before the home is listed for sale. If so, such repairs shall be completed within 30 days, and the home shall be listed within 30 days of the completion of the repairs. (e) In the event that the parties do not receive a reasonable offer to purchase within 30 days of being listed, the parties shall reduce the listing price if and as recommended by Carol Traversy; (f) The Respondent shall stage the home for sale, as directed by Carol Traversy; (g) The parties shall accept the first reasonable offer to purchase the matrimonial home and sign all required closing documents, inclusive of directions and authorizations as required to affect the sale; (h) If the parties cannot agree on whether an offer is reasonable, any offer that is within $50,000 of the list price will be deemed reasonable. In the event of a scenario where the parties receive more than one offer that is within at least $50,000 of the list price, the parties will accept the highest offer; (i) The parties shall direct the real estate lawyer acting on the sale of the matrimonial that she shall first pay the following from the sale proceeds: i. Real estate commission, legal fees, and closing costs; ii. The RBC Homeline plan, account 00666-8060347-001, in the approximate amount of $539,528. This Homeline plan includes Mortgage Loan, Conventional 00666-29900181-001, Mortgage Loan, Conventional 0066-29900181-002, and Credit Line 00666-28644830-001; iii. All other sale adjustments and encumbrances, as applicable at the time of closing. (j) After paying the amounts set out above, the parties shall direct the real estate lawyer to maintain the remaining proceeds of sale in trust until a final order or agreement is entered into dispensing with all outstanding issues in this matter. (k) Until the closing of the sale of the matrimonial home, the parties shall each be responsible for 50% of the following expenses incurred in relation to the property: i. Home insurance premiums; ii. Mortgage payments (RBC Homeline plan payments); iii. Property taxes; and iv. Emergency repairs, such as furnace, air conditioner, etc. (l) For so long as the Respondent continues to reside in the matrimonial home, he shall be solely responsible for any expense incurred in relation to the property, save and except for those listed in paragraph (k) above. (m) If that Respondent vacates the matrimonial home prior to the closing of the sale of the property, he shall give the Applicant 30 days’ notice of the date on which he will vacate the property and the parties shall be jointly responsible for all expenses incurred in relation to the matrimonial home from the date the Respondent vacates the home until the closing of the sale of the home.
Costs
[33] The Applicant has been the successful party on this motion and is entitled to an order for costs of the motion.
[34] If the parties are unable to agree on a quantum for costs of the motion by May 10, 2024, they may provide me with written submissions of no more than two double-spaced, 12-point font pages, along with Bills of Costs and Offers to Settle at 10-day intervals from that date and I will decide same.
Justice Engelking Date: April 22, 2024