Arcuri-Gunasekaram v. Gunasekaram
Ontario Judgments

Ontario Superior Court of Justice
F.P. Kiteley J. Heard: November 28, 2013.
Judgment: December 31, 2013.
Docket: FS-10-363621

[2013] O.J. No. 6483 | 2013 ONSC 8017 | 237 A.C.W.S. (3d) 715 | 2013 CarswellOnt 18706
Between Crocetta Arcuri-Gunasekaram, Applicant, and Kishanthan Gunasekaram, Respondent (22 paras.)

Michael Zalev, for Applicant. James Edney, for Respondent.


1 The Applicant brought a motion returnable November 28, 2013 for an order striking the Respondent’s pleadings if he failed to pay arrears of child and spousal support in the amount of $125,000; an order requiring the Respondent to pay $400,000 as an advance on the equalization payment; in addition to or in the alternative to those two claims, an order vesting the Respondent’s interest in the matrimonial home and hank accounts etc in the name of the Applicant with the net value of the assets to be credited against the support arrears and or the equalization payment; if the Respondent’s interest in the matrimonial home is transferred to the Applicant, then an order confirming that the property is no longer a matrimonial home; an order requiring the Respondent to provide information attached in Schedule A; if he failed to provide the information in Schedule A, then an order requiring him to pay the Applicant $500 per day until all of the information has been provided; an order requiring the Respondent to provide proof that he is maintaining the children and the Applicant as beneficiaries of medical and dental insurance as required by the order made August 26, 2011; and costs.

2 The Respondent brought a motion returnable November 28, 2013 to address access issues; to vary the order of Aston J. dated August 26, 2011 which requires the Respondent to pay spousal support in the amount of $10,000 and child support in the amount of $4,000 and to replace it with an order that he pay spousal support in the amount of $1,359 per month and table child support for two children in the amount of $1,386 per month based on income of
$97,545; an order for the immediate partition and sale of the matrimonial home.

3 At the outset, counsel made submissions as to which matters should proceed. The Respondent did not oppose an order requiring him by January 8, 2014 to produce information in accordance with Schedule A, However, both

counsel took the position that some or all of the balance of the motions should be adjourned to a long motion date. I made a preliminary ruling adjourning much of the Applicant’s motion including the request to strike pleadings as well as the Respondent’s, motion for access, to vary child and spousal support and to sell the matrimonial home. I heard submissions only on the Applicant’s motion for an advance on the equalization payment and for a vesting order.

4 Attached as Exhibit V to the affidavit of the Applicant sworn November 19, 2013 is a net family property statement which is described as incorporating assumptions favourable to the Respondent. The matrimonial home was jointly owned at valuation date which is March 31, 2009. Since then, the Applicant has severed the joint tenancy. Assuming 50% of the value and of the liabilities associated with the matrimonial home are allocated to each of the Applicant and the Respondent, the calculation leads to the conclusion that the Respondent owes the Applicant an equalization payment in the amount of $717,025. At paragraph 51 of her affidavit, the Applicant noted that even with adjustments that the Respondent sought, he still owed her $663,500.

5 At paragraph 54 of the Applicant’s affidavit she calculated the net value of the matrimonial home at $792,646 and if he were to transfer his one-half interest to her, he would receive a credit of $396,323 against the equalization payment he owes to her, subject to a possible further adjustment on account of principal payments she had made on the mortgage since the date of separation. At paragraph 81 of the Respondent’s affidavit he referred to paragraph 54 and he said that he agreed that that was a reasonable estimation of the equity in the matrimonial home, At paragraph 9 of his affidavit, he asserted that he was entitled to credits amounting to approximately

6 The submissions advanced on behalf of the Applicant included the following. The Respondent agreed in December 2010 that pending the negotiations, he would pay temporary child support in the amount of $4000 per month, 60% of any agreed upon special and extraordinary expenses, temporary spousal support in the amount of
$10,000 per month, he would pay for the lease on her Mercedes and she would pay the mortgage on the matrimonial home. Since then there had been protracted proceedings including the Respondent’s failure to provide disclosure. On consent, an order was made by Aston J. dated August 26, 2011 that required the Respondent to continue those payments. The Respondent brought a motion to vary child support and spousal support but it was adjourned on consent by Greer J. on May 17, 2012 to be brought back after the Respondent had completed the income report. The prior order for child and spousal support was continued. Notwithstanding that order, beginning in October 2012, the Respondent unilaterally reduced the support to a total of $10,000 per month, $8,000 per month,
$6,000 per month, nil, $1500, $3000, $1500 and September 2013 to the hearing of the motion $3000 per month. Paragraph 5 of the affidavit of the Applicant sworn November 19, 2013 demonstrates that the Respondent had altered credit card statements in order to conceal the true extent of his income, from which the court should infer that his evidence is not reliable.

7 On behalf of the Respondent, Mr. Edney referred to his financial situation and in particular paragraph 4 of his affidavit sworn November 26, 2013 where he indicated that he was “on the brink of declaring personal bankruptcy”. At paragraph 8 he said that if all of the relief sought by the Applicant were granted, it would “effectively bankrupt me and make it impossible for me to participate any further in this litigation, or operate my business”. At paragraph 9 he said that the calculation of the equalization of net family property was predicated on a value of his business interests as valuation date yet the value had declined “precipitously” since separation and he intended to make a claim that the equalization of net family property was unconscionable. As indicated in paragraph 17, he considers it “abundantly obvious, having regard to our financial circumstances, that the matrimonial home needs to be sold”. Mr. Edney observed that while claiming an equalization of net family property, the Applicant is a creditor of the Respondent and he argued that a vesting order at this point would result in the Applicant obtaining a preference over other creditors. He asserted that the Respondent needed to hang on to as much equity as possible so that he could fulfill his obligations to his creditors. He also pointed out that a vesting order would not respond to the Applicant’s immediate financial needs. He did indicate that the Respondent would consent to the Applicant using her half interest in the matrimonial home as security to borrow either for day to day expenses or for professional fees associated with the litigation.

8 Mr. Zalev pointed out that the only claim asserted by the Respondent in his Answer is for an equalization of net family property. Mr. Edney raised the prospect that he might seek leave to amend to assert a claim that the value of the net family property be divided unequally.

9 On the issue of an advance on the equalization payment, Mr. Zalev relied principally on Zagdanski v. Zagdanski, 2001 CarswellOnt 2517 (Ont. S.C.J.); Firestone v. Pfaff, 2012 ONSC 4909 (Ont. S.C.J.) and on the issue of deciding the motion within the context of the existing pleadings, he relied on Rodaro v. Royal Bank, 2002 CarswellOnt 1047 (Ont. C.A.). On the issue of a vesting order, Mr. Edney relied on Ludmer v. Ludmer, 2013 ONSC 784 (Ont. S.C.J.).

10 Sections 4(1), 7(1) and 9 of the Family Law Act give the court inherent jurisdiction to award an advance on the equalization payment. Applying the “Zagdanski factors”, I am satisfied on the record as it stands (including the Answer) that there will be little or no realistic chance that the amount of the contemplated advance will exceed the ultimate equalization amount and there is some considerable degree of certainty about the right to and likely minimum amount of, an equalization payment. To the extent that the Respondent claims credits, they can be accommodated because the application of his equity in the home to the equalization payment still leaves a balance owing. The Applicant has a reasonable requirement for funds in advance of the final resolution of the equalization issue, including funds to provide for herself and the children and funds to enable her to continue to prosecute the action.

11 As indicated at paragraph 34 of Firestone v. Pfaff, the fourth Zagdanski factor is the consideration of fairness to the Applicant which should be extended to included fairness to the Respondent.

12 Fairness dictates that an order should be made in favour of the Applicant for an advance on the equalization payment for the reasons indicated in paragraph 6 above. The strong evidence that the Respondent has altered credit card statements to conceal the true extent of his income is a compelling factor in favour of the Applicant and against the Respondent. In addition, the fact that the Respondent is clear that bankruptcy is a realistic possibility means that it is understandable that the Applicant wants to realize on her claim as soon as possible.

13 The factors relevant to fairness to the Respondent are these. First, he intends to seek leave to amend his Answer to claim that the net family property ought not to be equalized. Second, he takes issue with the Applicant’s evidence that the delay has been attributable to him or that he is concealing his assets. Third, his financial situation is precarious and he needs to get access to his equity in the matrimonial home in order to avoid bankruptcy or to satisfy his creditors should he take that step or creditors force him into it.

14 I do not consider the first factor to be relevant. I agree that the motion must be determined on the basis of the pleadings as they exist. If the Respondent only recently woke up to a possible claim for an unequal division of the net family property, that ought not be a factor in his favour. Nor do I consider the second factor to be relevant. While no doubt he has a different perspective on the reasons for delay, the fact is that he acknowledged in paragraph 68 of his affidavit that he has not properly responded to requests for disclosure. He explained it on the basis of being preoccupied by trying to save his business but that does not negate that on this record, much of the delay is attributable to him.

15 Of all of those, the third factor tips the balance in his favour. As indicated above, at the outset of the motion on November 28th, counsel made submissions about which matters would proceed. I ruled that I would hear submissions on the request for an advance on the equalization payment and the request for a vesting order but I adjourned the Respondent’s motion for an order for sale of the matrimonial home. In retrospect, the submissions on all of the issues affecting title to the matrimonial home should be heard at the same time. If I grant the order requested by the Applicant, it will mean his motion for sale of the matrimonial home is moot. It may be that it fails. But he has a right to have the motion heard.

16 Before concluding, I raise a residual concern. As Mr. Edney indicated, if the order requested is made and the court directed that title to the matrimonial home be transferred to the Applicant, that may result in an unlawful preference over the Respondent’s other creditors. This legal issue was mentioned by counsel but was not developed. I hesitate about making an order in favour of the Applicant with that prospect. I am dismissing the motion with leave to bring it back after or simultaneously with the motion by the Respondent for sale of the matrimonial home provided that counsel ensure that the facta filed address this legal issue.

17 I have a wide discretion in making an order as to costs. The motion for an advance on the equalization payment and for a vesting order was not successful and in theory the presumption in rule 24(1) applies and the Respondent might be entitled to costs. I am not prepared to entertain submissions on the issue of costs for the attendance on November 28th for these reasons. First, both parties still have substantial other issues in their respective notices of motion. The preparation of the materials will be the basis of the long motions on January 13 or March 24. Second, the motion for an advance on the equalization payment and for a vesting order was justified given the circumstances described in paragraph 6 above.

18 Counsel filed material for the motions returnable November 28th that have not been properly incorporated into the continuing record. Counsel should arrange for it to be brought up to date. The continuing endorsement brief has no endorsements or orders which suggests that the original is missing and should be replicated by counsel.

Order to Go as Follows:

19 By January 8, 2,014, the Respondent shall provide the documents and information listed in Schedule A to the Applicant’s notice of motion.

20 The motion by the Applicant for an order for an advance on the equalization payment and for a vesting order with respect to title to the matrimonial home is dismissed without prejudice to the Applicant renewing that motion after or simultaneously with the hearing of the motion on behalf of the Respondent for an order for sale of the matrimonial home, provided that the facta relied upon at that time will address the question of whether the granting of an order as requested might result in an unlawful preference.

21 Balance of the motions returnable November 28, 2013 are adjourned to be heard as a long motion for 1/2 day at 10:00 a.m. on January 13, 2014 unless Mr. Edney is called for trial in Brampton, in which case, the long motions shall be heard on March 24, 2014.

22 Neither party shall recover costs of the attendance on November 28, 2013.