Court File and Parties

Court File No.: FC-17-497 Date: 2024/07/03 Superior Court of Justice - Ontario

Re: Afrodity Aliferis, Applicant And: John Steve Aliferis, Respondent

Before: Anne London-Weinstein J.

Counsel: Valerie Akujobi/Richard Bowles, for the Applicant Shawn Duguay, for the Respondent

Heard: March 7, 2024, further submissions received in writing

Endorsement

[1] The Applicant and the Respondent married in September 1995 and separated in February 2015.

[2] The issues for trial include retroactive child support. The Applicant maintains the Respondent had access to millions in the years 2018 to 2021, however paid child and spousal support on earnings of $444,000 per annum. The Applicant claims at least $830,000 in child support/arrears/retroactive payments and at least $1,000,000 for spousal support.

[3] The Applicant seeks $150,000 in the way of an interim disbursement costs order in order to fund the financial experts required for trial, and to pay her counsel. The trial is scheduled for September 2024.

[4] The Respondent resists the Applicant’s position for a number of reasons, however broadly stated his position is that the Applicant is seeking to squeeze “blood from a stone.” The Respondent maintains that the downturn of the commercial real estate market has deprived him of income, to a degree that he is unable to pay his own counsel, much less that of the Applicant.

Background of the Parties

[5] The Applicant wife, hereinafter “the Applicant” and the Respondent husband, hereinafter the “Respondent” married in September 1995 and separated in February of 2015. The Applicant was a homemaker since the birth of their first child Liberty, born November 13, 1999. She briefly returned to work on two separate occasions for months at a time after Liberty’s birth. A second child, Xristopher was born December 14, 2002.

[6] The Respondent was busily engaged in the development of a successful career in commercial real estate, and the bulk of childcare responsibilities rested with the Applicant. The children are both now adults and no longer living with either parent. The Respondent pays 100 per cent of the s. 7 costs of the children and has done so since separation. In 2023, the Respondent paid approximately $110,000 in section 7 expenses for the children.

Background to this Motion

[7] On May 12, 2023, the Applicant and the Respondent appeared before this Court to determine this matter, which was the last outstanding matter that had not been settled ahead of the motion: a disbursement for trial in the amount of $150,000.

[8] On consent, the Respondent provided disclosure relating to his financial circumstances. As a result of that disclosure, the Applicant requested a hearing on June 23, 2023, to put fresh evidence before the court. The fresh evidence was the disclosure provided on consent by the Respondent as a result of the May 12, 2023, consent order.

[9] At the hearing on June 12, 2023, the Respondent successfully argued that the subject disclosure alone, without the full picture of his financial circumstances, provided no probative value to the court. I agreed and ruled that the materials were relevant to the issue before me on the reserved motion judgment, as denuded of context, the evidence was of limited value to the court. I ruled that the reserve motion would not be decided until the Respondent had time to file expert reports explaining his income.

[10] The consent order dated May 11, 2023 provided the following timeline, to which both parties consented:

1. Corporate financial statements to be completed by August 31, 2023
2. Delivery of the expert’s report in respect of 2022 by September 30, 2023
3. Completion of a Critique Report or Income Determination Report from the Applicant’s expert by October 15, 2023. The Applicant served the Critique Report on November 23, 2023 subsequent to her Affidavit sworn November 7, 2023 being sworn and filed. The Affidavit was not accompanied by expert reports at that time.

Position of the Parties

[11] The Applicant submits that the additional disclosure received, including new disclosure of bank and loan accounts absent from the Respondent’s sworn financial statements at the motion, indicate that the Respondent is able to pay the $150,000 she seeks as an interim costs order. She maintains that she is asking for $150,000 to help her fund a trial against the Respondent who has earned at least $2,000,000 in the last three years. She points to some of his claimed business expenses as evidence that the Respondent is misrepresenting his true financial picture, and his ability to pay the interim costs order.

[12] The Respondent maintains that he is financially destitute due to the demise of the commercial real estate market. He has no ability to pay his own lawyers, much less those of the Applicant. He argues that the Applicant has not established that the costs order is necessary in order for her to continue the litigation and that she has failed to adduce sufficient evidence justifying the amount claimed. He indicates the claimed business expenses are required to generate income.

[13] The matter was delayed due to the unavailability of counsel for the Respondent and then the unavailability of the court due to an ongoing homicide trial. As a result of the lack of availability of the court, I ordered that the motion be continued in writing in May of 2024.

Legal Issues: Should $150,000 in an interim costs award be payable to the Applicant?

[14] As pointed out in Ludmer v. Ludmer, 2012 ONSC 448, the law concerning orders for interim disbursements or interim fees and costs in family law cases has evolved over the years. Rule 24(18) of the Family Law Rules, O. Reg. 391/97 as am., is the relevant rule. It simply states: “The court may make an 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.” Orders may be required to “level the playing field” between the litigants. In exercising discretion under the rule, the court must maintain that the primary objective of fairness under the Family Law Rules is met.

[15] As the court said in Stuart v. Stuart, [2001] O.J. No. 5172:

The discretion should be exercised to ensure all parties can equally provide or test disclosure, make or consider offers or possible [sic] go to trial. Simply described, the award should be made to level the playing field.

An order under section [sic] 24(12) should not immunize a party from cost awards. The order is to allow the case to proceed fairly and should not be such that a party feels a license to litigate…

The claimant must clearly demonstrate that the disbursements are necessary and reasonable given the needs of the case and the funds available.

The claimant must demonstrate that he or she is incapable of funding the requested amounts.

The claim or 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.

[16] The Applicant must establish on a balance of probabilities that her claim is meritorious, that she is unable to fund the litigation, that the Respondent has the resources to pay, and that the fees and disbursements are necessary and reasonable for her to pursue her claims.

Has the Applicant demonstrated that her claim is meritorious?

[17] There has been no cross-examination on the documents submitted on this motion. No credibility assessments have been made. The court is limited to reliance on the documentation provided. The case does involve complex commercial financial arrangements. Neither side would dispute that the financial issues at play are complex. This is apparent even in the pleadings before me, and the fact that both parties have retained experts.

[18] Depending on the outcome at trial, it may be that the trial judge finds that the Respondent underpaid child and spousal support. The Respondent disputes that claim. At this stage of proceedings, the Applicant has satisfied her burden to establish that her claim is meritorious on its face. There are triable issues which will have to be determined at trial.

[19] I turn now to the issue of the Applicant’s ability to fund the litigation and the Respondent’s ability to pay.

Has the Applicant demonstrated that she is unable to fund the litigation and that the Respondent has the ability to pay?

[20] The Applicant’s materials and submissions largely focused on the ability of the Respondent to pay the interim costs award order.

[21] However, the Applicant must first establish that she is unable to fund the litigation. A related issue is that there must be evidence of what the proposed costs specifically entail in order to determine if the costs sought are reasonable.

[22] The Applicant has made a blanket assertion that she is unable to fund the litigation. However, there is no evidence that she is unable to secure the funds from another source, such as a family loan.

[23] The Applicant declared net business income of $20,766 in 2021. In that year she received $68,338 in child support, $94,393 in periodic spousal support and $50,000 in lump sum (tax free) spousal support. In 2022 she received $80,196 in child support and $196,698 in spousal support. The Applicant disclosed no business income for 2022.

[24] She receives $16,414 in spousal support on a monthly basis. In her financial statement, the Applicant has maintained that she has living expenses of over $380,000 per year. The Respondent’s position is that the Applicant has overstated her personal expenses by about $280,000. The Respondent pays 100 per cent of the section 7 expenses for both children and has done so since the parties’ separation. In 2023, the Respondent paid approximately $110,000 in section 7 expenses for the children. The Respondent claims to have debts in excess of $9,000,000.

[25] The Applicant has spent over $120,000 of her support payments preparing the matter for trial in the last 2.5 years. I have no doubt that the Applicant has expended those funds in the past, on this litigation. However, in order to justify making a costs order in her favour in the amount of $150,000, the court requires specific evidence supporting the costs claim going forward. That evidence is lacking in the application material before me.

[26] In other words, the Applicant bears the burden of establishing that the costs sought are reasonable in the circumstances. In Rosenberg v. Rosenberg, [2003] O.J. No. 2193, the court held that interim disbursements sought must contain sufficiently detailed information to indicate why the matter merits the expenses (emphasis added). In that case the Applicant sought an order of $75,000 to fund a forensic accounting/valuation of the other party’s business assets for equalization purposes.

The Claim for interim costs of $150,000

Has the Applicant provided sufficient evidence concerning her claim for interim costs?

[27] The Applicant maintains that she cannot pay her lawyers or retain experts going forward. I agree that a trial of this length and complexity could reasonably require an interim costs award of $150,000. However, the Applicant seeks not only projected costs, but reimbursement for costs already incurred. In Ludmer, Justice Douglas found that the motion was framed as payment of past due amounts, and not, as it should be, for future fees and disbursements: see para 60.

[28] The projected cost of the litigation in this case has only been roughly estimated. A more detailed trial budget would have been warranted. The list of anticipated expenses in the Applicant’s April 2024 supplemental factum is insufficient, especially since it is apparent elsewhere in the Applicant’s materials that some of the funds sought are to pay for services which have already been provided.

[29] In my view, more than a general statement regarding the anticipated costs is required on a motion such as this one, where a sum in the amount of $150,000 is sought and the motion has been partially framed as seeking reimbursement for work already completed. The expenditures sought must be supported by evidence. That evidence is lacking on this motion. The Applicant indicates that she still owes money to one of her experts, however, how much is owed is not indicated. In addition, while the Applicant has asserted that she is unable to fund the litigation if the interim order is not granted, there is no evidence before me that the Applicant lacks the ability to borrow money to fund the litigation or obtain the funds from another source. She has been able to fund the litigation from some source to date. The Respondent indicates in his material that her family have assisted her financially in the past.

[30] An order for interim fees and disbursements is discretionary. The exercise of that discretion is limited to exceptional cases. The discretion is to be exercised in a manner consistent with permitting the parties to equally provide or test disclosure and assess offers to settle.

[31] In De Genaro v. Gallagher, 2019 ONSC 5005, the court stated:

A common theme running through the relevant jurisprudence is that the exercise of the Court’s discretion ought to be limited to exceptional circumstances. As held by Justice Douglas in Rea v. Rea, 2016 ONSC 382 (Ont. S.C.J.) “a party should not be required to erode capital in order to satisfy an award of interim disbursements.”

[32] The court in Rea noted that where the party in the past has demonstrated a pre-existing pattern of erosion of capital, that this prohibition may not apply. However, the request of the Applicant is not for the Respondent to erode capital, but to incur debt to fund an order for interim disbursements.

[33] I note as well, that interim costs awards are targeted at enabling both parties to evaluate the strengths and weaknesses of their case. As Justice Kitely noted in Turk v. Turk, 2016 ONSC 4210, at para 26 upon awarding an amount for interim fees at a preliminary stage of the proceedings:

The order I make takes into account what has been done and what it seems needs to be done to ensure that the parties attend a settlement conference and have the opportunity to evaluate the strengths and weaknesses of the positions they take.

[34] Thereafter, the Applicant will have to assess her future risk and determine her ability to continue.

[35] In this case, the Applicant has not provided evidence from her expert, or her lawyer’s firm related to the projected expenses. The evidence before the Court is a statement setting out estimated costs for her expert to complete the 2021 income report (which is completed), her expert to complete a further income report (which has been completed); and her counsel to prepare and attend a settlement conference and questioning of the Respondent (which have been completed).

[36] I am not satisfied that the Applicant has met her burden of providing sufficient evidence that she cannot pursue her claims without the interim costs award. It is incumbent on her to demonstrate that there are no other resources available to her to fund the litigation, thus necessitating the award. There is a dearth of evidence on that issue before me.

[37] Finally, I must be satisfied that the Respondent is capable of paying such an award.

[38] The Applicant argues that the nature of the Respondent’s expenses belies his claim that he has been rendered destitute by the state of the commercial real estate market. For example, he spent $130,000 on gambling at casinos in 2022 during a year when he claimed to have suffered catastrophic income collapse. He also expensed $100,000 to $200,000 each month on his Amex for travel, dining and entertainment, meeting Amex’s requirement to pay back at least $100,000 each month. Expenses included luxury yacht trips in Miami, women’s designer clothing and premium dining.

[39] Whether these expenses have reasonably been incurred for the purpose of gaining or producing income from business or property, and whether they give rise to an inference that the Respondent has access to greater income for the purpose of support than claimed, is a question for the trial judge to resolve. I am unable to reach the inference pressed on the court by the Applicant on the record before me at this stage in the proceedings.

[40] In conclusion, I am not satisfied that the Applicant is unable to fund this litigation either herself, or from another source such as a loan if the costs award is not made. There is also a lack of detail regarding the break down of costs. Costs should be awarded for future trial expenses, not past due costs.

[41] Therefore, while the Respondent’s income expert has set his income available for support from 2018 to 2022 as ranging from $1,399.50 in 2018, $1,618,200 in 2019, $2,364,400 in 2020, $1,295,800 in 2021 and $613,000 in 2022 where recurring income is included in the calculations, this does not resolve the claim made by the Applicant. Even if I were to find that the Respondent, despite his claims to the contrary, had the ability to pay and the funds available, the Applicant has not provided me with the evidence required to find that she has met her burden.

[42] The Application is therefore dismissed. If no agreement is reached on the issue of costs of the motion, counsel is to submit submissions no greater than 3 pages in length (plus attachments) by August 15, 2024.

Anne London-Weinstein J. Date: July 3, 2024