Court File and Parties

COURT FILE NO.: FS-23-00035222-0000 DATE: 07172024 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Vargas-Hernandez v. Graff-Guerrero

BEFORE: Maxwell J.

COUNSEL: E. Mazinani, for the Applicant J. North, for the Respondent

HEARD: July 16, 2024

REASONS FOR JUDGMENT ON MOTION

Issues

[1] The Applicant, Juan Carlos Vargas-Hernandez, brought a motion for an advance equalization payment of $100,000 payable within 30 days or, in the alternative, an interim disbursement of $100,000 payable within 30 days. The Applicant further seeks an order that the Respondent provide all outstanding disclosure as per the order of Kristjanson J. dated February 16, 2024 and all outstanding disclosure, undertakings, and refusals pursuant to a consent order issued by me on February 1, 2024.

[2] The Applicant submits that he requires these funds to pay his outstanding legal fees to Mazinani and Associates which total approximately $60,000 and to fund a 5-day trial, scheduled to be heard in early 2025.

[3] Regarding disclosure, the Applicant asserts that the Respondent has been avoiding his disclosure obligations and that notwithstanding that he was served with Requests for Information on May 15, 2023 and October 15, 2023, the Respondent took few to no steps to answer the requests until counsel was retained in May of 2024. The Applicant asserts that there continues to be substantial disclosure outstanding.

[4] The Respondent, Dr. Graff-Guerrero, submits that the Applicant has failed to meet the test for granting either an advance on equalization or an interim disbursement. He submits that the Applicant is capable of funding his defence, as he has already received $100,000 in uncharacterized payments pursuant to the Order of Diamond J. dated May 15, 2023 and he has been receiving spousal support in the amount of $12,000 per month since February of 2024. The Respondent submits that the applicant has surplus income and further, that the Applicant is incurring significant discretionary spending which could be reduced to help fund the litigation.

[5] On the issue of disclosure, the Respondent asserts that a further order is unnecessary as the Applicant is requesting disclosure which is already the subject of two court orders and which has been substantially provided. Where there is disclosure outstanding, the Respondent submits that he has made requests and is awaiting records and/or responses.

Background Facts

[6] The Applicant and the Respondent are both originally from Mexico. They met in 2003 when they were both full-time post-secondary students. The Applicant was studying communications at a university in Mexico and working for the Ministry of Security. The Respondent was in medical school. The Respondent graduated in 2002 and obtained his PhD in 2004.

[7] The parties moved to Canada in late 2004 when the Respondent was offered a post-doctoral fellowship in Psychiatry at the Centre for Addiction and Mental Health in Toronto.

[8] The parties were married on August 12, 2005. They separated in January of 2023.

[9] The Respondent obtained full time employment as a psychiatrist at CAMH in 2009 and became an Assistant Professor. In 2009, the Applicant decided to return to Mexico to complete his undergraduate degree. The Applicant completed his degree in 2010. He returned to Canada.

[10] The Respondent is currently a staff psychiatrist at CAMH and an Associate Professor of Psychiatry at the University of Toronto. He has a medical professional corporation “Graff Guerrero Professional Corporation”.

[11] The Respondent produced an expert income valuation report from Brandon Lewis of White and Lewis dated June 9, 2023. The Applicant accepts the expert’s conclusions that the Respondent’s income in 2022 was $557,000. Based on his 2023 Financial Statement sworn July 12, 2024, the Respondent’s income for 2023 was $570,000.

[12] During the 18-year marriage, the Applicant did not work outside the home and was supported financially by the Respondent.

[13] The matrimonial home is in the Respondent’s name only. The parties lived together in the matrimonial home from the date of separation (January 7, 2023) until August of 2023. The Applicant commenced the Application on March 31, 2023.

[14] On May 15, 2023, the Applicant scheduled a TBST attendance before Diamond J. seeking to schedule an urgent motion for interim spousal support. The matter was resolved on an interim, without prejudice basis on May 15, 2023, when the parties agreed that the Respondent would pay the Applicant a $100,000 advance. A consent order was issued on May 15, 2023.

[15] The Applicant served a Request for Information on May 15, 2023.

[16] On August 14, 2023, the Applicant called the police after the Respondent allegedly assaulted him. The Respondent was required to leave the matrimonial home as a result of criminal charges being laid. The Respondent rented accommodations for himself following the criminal charges. He continued to pay for all expenses related to the matrimonial home where the Applicant continued to reside. He retained a lawyer to assist him with the criminal charges.

[17] A Case Conference was held before Czutrin J. on September 27, 2023. Pursuant to the Order of Czutrin J., the Applicant was questioned on December 13, 2023 and the Respondent on December 20, 2023. Czutrin J. ordered that there be no motions prior to questioning.

[18] The Applicant served a further Request for Information on the Respondent on October 15, 2023. The second Request for Information contained the same disclosure requested in the Request for Information dated May 15, 2023, with two additional requests – 2023 corporate financial statement and an updated 2023 income valuation report.

[19] The Applicant brought his motion for interim spousal support on February 1, 2024. The Respondent was unrepresented. The parties entered into a consent order with the Respondent agreeing to pay the Applicant interim spousal support in the amount of $12,000 per month. The Respondent also agreed to provide all outstanding disclosure and answer all undertakings and refusals by February 15, 2024.

[20] Following the issuance of the consent order on February 1, 2024, the Applicant moved out of the matrimonial home in February of 2024 and began renting a condominium for $2300 per month.

[21] The criminal charges have since been withdrawn against the Respondent. The Respondent retained counsel for the family proceedings in or around May of 2024.

Advance Equalization Payment

[22] Under s. 9(1) of the Family Law Act, R.S.O. 1990, c. F.3, the Court has discretion to order advances on equalization payments: See Zagdanski v. Zagdanski; Mikhail v Mikhail, 2023 ONSC 5289. The factors to consider are summarized in Mikhail at para. 20 as follows:

• Whether there will be little or no realistic chance that the amount of the contemplated advance will exceed the ultimate equalization amount;
• Whether there will, therefore, be some considerable degree of certainty about the right to, and likely minimum amount of, an equalization payment;
• Whether there is a need, not necessarily in the sense of poverty, but a reasonable requirement for funds in advance of the final resolution of the equalization issue, including funds to enable the continued prosecution or defence of the action; and
• Whether there may be other circumstances such that fairness requires some relief for the applicant; frequently, but not necessarily, there will have been a delay in the action, deliberate or otherwise, prejudicing the applicant by, for example, running up the cost.”

[23] There is a presumption in place that parties will fund their own litigation. It is for the Applicant to demonstrate that the conditions for an advance payment are met.

[24] There is disagreement between the parties as to the quantum of an equalization payment owing, but there appears to be no serious dispute that the Respondent will be required to pay a substantial equalization payment to the Applicant. In all likelihood, the equalization payment will exceed the $100,000 advance the Applicant is requesting.

[25] However, I am not satisfied that the Applicant has demonstrated a need for funds in advance of a final resolution of the equalization issue, or to have a trial in this matter.

[26] First, the Respondent has already advanced a sum of $100,000 to the Applicant pursuant to the consent Order of Diamond J. dated May 15, 2023. Diamond J. directed that, on a without prejudice basis, the Respondent pay the Applicant $50,000 within 7 days of the order payable to Mazinani & Associates in Trust and the remaining $50,000 within 30 days payable to the Applicant. The payment was uncharacterized, unallocated, and without prejudice to the Applicant’s right to bring a motion for interim spousal support.

[27] The Applicant’s affidavit in support of the motion is void of any evidence to explain what happened with the funds or how this money was spent. Based on the submissions of counsel, only $30,000 of the funds went to outstanding legal fees. Therefore, the Applicant had between $50,000 and $70,000 in his possession following the order of Diamond J. In the period between May 15, 2023 and February of 2024, the Applicant resided in the matrimonial home and all expenses related to the home were paid for by the Respondent. There has been no explanation offered as to what happened with these funds.

[28] Second, based on the Applicant’s 2023 financial statement filed on the motion, he has a surplus of income of approximately $26,500 per year with income of $144,000 per year (from spousal support) and expenses of $117,535.20 per year. The Applicant will continue to receive $12,000 per month as per my order for interim spousal support dated February 1, 2024.

[29] Third, according to his financial statement, the Applicant incurs significant discretionary spending including $1500 per month in “entertainment”, $1500 per month in vacation expenses, and $1430 per month in meals outside of the home. It would appear that the Applicant is spending over $50,000 a year in discretionary, non-essential expenses.

[30] Fourth, it is of some note that notwithstanding the fact that the parties have been separated since January of 2023 and the Applicant has a university degree, his affidavit is silent as to any efforts he has made to obtain employment since the date of separation.

[31] Finally, the Applicant has provided no evidence to support his request for a $100,000 advance. The matter has been set down for a 5-day trial in early 2025. The Respondent has served an expert valuation report. The Applicant does not intend to call any expert. The Applicant has not provided a bill of costs outlining the amount of legal fees and disbursements for the anticipated trial, nor did he include information in his affidavit outlining the amount owed to counsel for services rendered to date that remain outstanding. There is simply a statement that the law firm is owed $52,477.87 for legal fees and disbursements and an implied assertion that the trial will cost $50,000.

[32] Having regard to all of these factors, I am not satisfied that the Applicant has met the test for an advance on equalization.

Interim Disbursements

[33] Nor am I satisfied that the Applicant has satisfied the test for an interim disbursement of $100,000.

[34] Rule 24(18) of the Family Law Rules, O. Reg. 114/99 permits the court to 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.”

[35] The test for interim disbursement provides that: a) The disbursements must be necessary and reasonable, considering the needs of the case and the available funds; b) The requesting party must be unable to fund the amounts themselves; c) The claim being advanced must appear meritorious based on the balance of probabilities at the time of the request: Stuart v. Stuart. Awarding interim disbursement is discretionary.

[36] For the reasons set out above, I am not satisfied that the Applicant has demonstrated that he is unable to fund the litigation himself, given the lack of accounting for the $100,000 payment he received in May of 2023 and the ongoing order for interim spousal support of $12,000 per month. Further, the Applicant is incurring significant vacation, entertainment and restaurant expenses. Moreover, the Applicant has remained unemployed since separation and has not produced any evidence of efforts to pursue employment. Finally, there is a lack of evidence of the expenses that have or will be incurred, necessitating the disbursement.

[37] Further, the Court must also consider the Respondent’s ability to pay. While it is true that the Respondent earns a sizable income of over $570,000 a year through his medical practice, his financial statements reflect that he has over $538,000 in expenses annually (including spousal support payments to the Applicant, maintenance costs related to the parties’ property in Mexico, and maintenance costs related to the matrimonial home). The parties are in a relatively similar position, in terms of available funds.

[38] In the circumstances, I am not satisfied that an interim disbursement is necessary to level the playing field.

[39] For these reasons, the Applicant’s motion for an advance on equalization or interim disbursements is dismissed.

Order for Disclosure

[40] It is fair to say that until the Respondent retained counsel, his responsiveness to the Requests for Information and later, undertakings and refusals, was lacking. He did not comply with the Court’s orders of February 1 and 16, 2024 timetabling his responses to disclosure, undertakings and refusals.

[41] However, since counsel was retained in May of 2024, disclosure has been forthcoming. Having reviewed the detailed history of the responses to disclosure requests set out in the disclosure charts filed on the motion and the Respondent’s detailed breakdown of his responses at paras. 14-21 of his affidavit, the Respondent has satisfied the vast majority of the Applicant’s disclosure requests, and where there is disclosure outstanding, the Respondent has made requests (sometimes multiple requests) to his bank for missing records and has undertaken to provide the bank’s responses as soon as they are received. In some instances, he has offered to sign authorizations to allow the Applicant to make certain inquiries himself, as a further route to satisfying disclosure requests. In some limited instances, he has asked the Applicant to clarify the request.

[42] Based on the current status of disclosure, it cannot be said that the Respondent continues to shirk his disclosure responsibilities such that a further blanket order directing all disclosure by a certain date is required.

[43] The only items in the chart which I will direct a further response be provided pertain to (1) the Applicant’s request that the Respondent “[make] best efforts to provide details of exactly how much the Respondent owed to Mr. Enrique Romero on the date of marriage”, and (2) to provide an estimated date when the Respondent signed an Agreement of Purchase and Sale in Tulum, Mexico”. The response to both of these items is that the Respondent is searching his records. A further response, providing the requested information, or confirming that the information is not available, should be provided within 30 days.

[44] I will also direct that the Respondent provide a further status update to the disclosure chart within 30 days.

ORDER

[45] The Applicant’s motion for an advance on equalization and/or interim disbursements is dismissed. The Respondent shall provide a further answer to the two items of disclosure noted in para. 43 of these Reasons and an update on the status of any outstanding disclosure within 30 days.

[46] The parties are urged to settle the issue of costs. If the parties are unable to agree, the parties may submit costs submissions of no more than 3 pages, double spaced, plus a bill of costs and any offers to settle to my assistant Mary Sibenik (mary.sibenik@ontario.ca). The parties shall agree on a schedule to serve and file written costs submissions.

R. Maxwell J. Date: July 24, 2024