Siegel's Family Court Calendar

“There is nothing in the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”) or the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (“BIA”) that specifically prevents a spouse from making a claim for equalization of net family property after she has declared bankruptcy. However, the interaction of the two statutes requires further examination.

Property of a bankrupt person vests in the trustee. Once the assignment in bankruptcy is filed, a bankrupt can no longer dispose of or otherwise deal with their property: see BIA, s. 71.

A right to claim an equalization payment falls within the broad statutory definition of “property” in s. 2 of the BIA which defines “property” as: “any type of property…and includes money, goods, things in action, land and every description of property, whether real or personal, legal or equitable, as well as obligations, easements, and every description of estate, interest and profit, present or future, vested or contingent, in, arising out of or incident to property.”

The right to claim an equalization of net family property arises when the triggering event of a marriage breakdown occurs. The right to enforce an equalization claim is not exempt from the reach of the trustee, even though it is described as being “personal” between the spouses under s. 7(2) of the FLA: see Blowes v. Blowes (1993), 1993 CanLII 8521 (ON CA), 16 O.R. (3d) 318 (C.A.); Liddell v. Liddell, 2011 ONSC 586.

A discharged bankrupt has no capacity to assert an equalization claim because all of her property has already vested in the trustee on her assignment to bankruptcy: see Green v. Green, 2015 ONCA 541.

The bankrupt spouse has no capacity to pursue an equalization claim that has vested in the trustee. Unless the trustee joins in the proceeding, or has executed an assignment of these rights, the bankrupt has no cause of action. An abandonment of the cause of action is not sufficient, nor is the trustee’s consent to continue the claim. The bankrupt’s discharge or the discharge of the trustee, does not re-vest in the bankrupt any rights which have previously accrued to the trustee: see Robert A. Klotz, Bankruptcy, Insolvency and Family Law, 2nd ed. (Toronto: Carswell, 2001), at 6-36.

In this case, the wife argues that she is still entitled to equalization because the matrimonial home and the husband’s RRSPs were exempt from bankruptcy. She also submits that the husband’s business properties were in his name alone, and therefore were not swept into her bankruptcy. She claims that she is entitled to “equalization to assets”.

It is true that certain property of a bankrupt is excluded from bankruptcy, including a principal residence with less than $10,000 equity, and RRSPs (except for contributions during the last year): see BIA, s. 67; Execution Act, R.S.O. 1990, c. E.24, s. 2.

However, the wife’s submissions fail to take into account the fact that separating spouses are not entitled to a proprietary or beneficial interest in the other’s assets. Instead, separating spouses are entitled to receive one-half the value of the property accumulated during the marriage. If the spouses did not own assets of equal value, one spouse must make an equalization payment and a monetary debt is owed: see Schreyer v. Schreyer, 2011 SCC 35, [2011] 2 S.C.R. 605.

When one spouse declares bankruptcy, the claim for that monetary debt vests in the trustee. Whether or not any assets are exempt from the bankruptcy is irrelevant.”

            Kinsella v. Mills, 2017 ONSC 7093 (CanLII) at 19-28

“In Skinner v. Skinner, the Court described the following principles respecting the variation of a consent order citing the Supreme Court of Canada in L.M.P. v. L.S. (paras. 172 to 174):

(a)     The Court must be satisfied that there has been a change of circumstance since the making of the prior order (or in this case the Agreement);

(b)     The “change of circumstances” must be “material” meaning that “if known at the time, would likely have resulted in different terms”;

(c)     The focus is on the prior order (or in this case the Agreement) and the circumstances in which it was made;

(d)     The Court should not depart from it lightly.  The test is whether any given change “would likely have resulted in different terms”;

(e)     What will amount to a material change will depend on the actual circumstances of the parties at the time of the order; and,

(f)      The subsequent conduct of the parties may provide an indication.

L.M.P. v. L.S also stands for the general provision that where there is a material change in circumstances clause in an agreement, the Court must examine the terms of the separation agreement and the circumstances of the parties at the time of the agreement to determine what amounts to a material change.”

            Zawahreh v. Alkhoury, 2021 ONSC 7956 (CanLII) at 43-44

“The respondent relies on the status quo and argues that there must be a material change in circumstances in order for the current parenting arrangement to be changed.   The applicant submits that there is no status quo, as the current order was made on consent on an interim without prejudice basis.  The applicant also submits that there has been a change now that the CAS has made a report on the allegations against Olena.

Where a status quo is in place, courts are reluctant to interfere with such arrangements prior to trial.  As noted in Coe v. Tope, 2014 ONSC 4002, at paragraph 25, “[t]he status quo should ordinarily be maintained until trial unless there is material evidence that the children’s best interest demands an immediate change.”  However, the applicant says that there is no status quo that has been established in the circumstances here.

The court order in place, made by Justice Faieta on October 13, 2020, was made on an interim without prejudice basis.  The applicant submits that as the order was made on an interim without prejudice basis, then no material change must be shown.  This is similar to the question considered in Verma v. Di Salvo, 2020 ONSC 850, where the court stated (at paras. 38-40):

[38]     The mother argues that my temporary order of October 17, 2019 establishes a parenting status quo, which should not be changed absent a material change in circumstances.  I disagree.

[39] My order set out parenting orders as terms of an adjournment of the motion that, among other things sought custody of J, parenting time for the mother in accordance with the advice of a parenting coordinator, and delivery of J to the father.  Without having heard that motion on the merits, the order setting out terms of the adjournment cannot be considered an order creating a status quo that cannot be varied.

[40] The mother also argues that the current arrangement is a de facto status quo.  I disagree again.  The current parenting arrangement was established by my order setting out the terms of the adjournment and, for the reasons I explain above, is not an order that creates a status quo.”  (emphasis added)

Similarly, in Al Tamimi v. Ramnarine, 2020 ONSC 4558 temporary measures had been put in place by the court on December 19, 2019 when the motion before the court was adjourned.  On the return of the matter, heard on July 17, 2020, the court determined that there was no status quo, as there had been a temporary order put in place as a “temporary response to an evolving situation”.

The current “status quo” in this case arose from an interim without prejudice order made on consent at a case conference.  The parenting time issue was not considered on its merits.  The temporary arrangement for parenting time with the applicant was put in place until the allegations against Olena could be investigated.  This is not the type of order that creates a status quo which would require a material change in circumstances in order for the arrangement to be changed.”

            Nekoz v. Nekoz, 2021 ONSC 8040 (CanLII) at 8-12

“The test for adducing additional evidence after a Court has reserved its decision is very high.  The test is set out in 671122 Ontario Ltd. v. Sagaz Industries Canada Ltd. (2001 SCC 59, [2001] 2 S.C.R. 983).  In that case, the Court set out the following test:

a)   Would the evidence have affected the outcome of the hearing?

b)   If so, was the evidence discoverable prior to the hearing?”

Rana v. Rana, 2019 ONSC 7048 (CanLII) at 39

“Where the parties wish to engage a joint expert but do not agree on a matter relating to the engagement, either of them may apply to the court for directions: Family Law Rules, r. 20.2(9). In my view, that provision includes disagreements that arise after the expert has been engaged and before his or her report is complete.

To ensure the efficacy and reliability of the jointly retained expert evidence, the parties are required to “cooperate fully with the expert and make full and timely disclosure of all relevant information and documents to the expert”: r. 20.2(12). The court may draw any reasonable inference against any party that fails to do so: r. 20.2(12).

The predominant purpose of retaining a joint expert is to avoid the battle of competing experts. That usually means a savings of time and expense, and often aids in resolution of some or all issues.

A neutral, independent, jointly retained expert investigates the issue(s), sets forth the facts on which his or her opinion is based, sets out the documents he or she relied on, and provides an opinion and the rationale for that opinion: r. 20.2(2),(3), and (5). The expert owes a duty to the court to be fair, objective and non-partisan. That duty to the court trumps any obligation owed by the expert to a party: r. 20.1(3).

Where the parties have engaged a joint expert, no other litigation expert may present opinion evidence on that issue unless the court orders otherwise: r. 20.2(13). Thus, once the expert report is finalized and absent a supplementary report, the parties are not permitted to adduce other expert evidence on the issue without leave of the court.”

            Zantingh v. Zantingh, 2021 ONSC 7959 (CanLII) at 72-76

“In Children’s Aid Society of Toronto v. G.P., 2019 ONCJ 365, Zisman J. lays out the following applicable legal principles with respect to a finding of need of protection at paras. 71-75:

The society has the onus, on a balance of probabilities, to establish that the child is at risk of harm.

The risk of harm must be real and likely and not speculative.

Harm caused by neglect or error in judgment can come within a finding of risk of physical harm.

With respect to the timing of the protection finding, I adopt the analysis of Justice Czutrin in the case of Children’s Aid Society of Hamilton-Wentworth v. R. (K.) (footnote omitted), wherein he states:

the court should be free to consider whether the child is in need of protection at the commencement of the proceeding or at the hearing date, or for that matter some other date depending on the circumstances. There cannot be an absolute rule as to the relevant date.

In adopting this “flexible approach” Justice Carolyn Horkins recently explained in the case on [sic] Children’s Aid Society of Toronto v. RM (footnote omitted):

The type of risk that can lead to a child protection order is set out in s. 74(2) of the CYFSA. It was also defined in the predecessor Act. It is obvious from the legislation that “risk” can be caused by a variety of different circumstances and conduct.

In many protections matters the risk that is identified at the outset changes as the application progresses. The risk may be under control or resolved when the protection hearing proceeds. Depending on the type of risk, it may return. Multiple factors may be responsible for the control or resolution of the risk. Every risk is different, and some are more serious than others. A risk that is not present on the hearing day may nevertheless justify a protection order. It all depends on the facts.

The finding that a child is in need of protection is an essential stage of a child protection proceeding, and if the court finds that the child is not in need of protection that is the end of the matter.”

Family and Children’s Services of Guelph and Wellington County v. A.M.P. and K.D.S., 2020 ONSC 7418 (CanLII) at 77-78

“Punitive damages are appropriate where the conduct of a defendant has been especially egregious and deserving of denunciation.  This would include conduct which is arbitrary, callous, contumelious, fraudulent, highhanded, malicious, outrageous, reprehensible, or wanton, shows a contempt of the plaintiff’s rights, departs significantly from ordinary standards of decent behavior, or offends the court’s sense of decency.

There are two basic principles guiding the quantification of punitive damages:

(1)    punitive damages must be assessed in an amount reasonably proportionate to such factors as the harm caused, the degree of the misconduct, the relative vulnerability of the plaintiff and any advantage or profit gained by the defendant having regard to any other fines or penalties suffered by the defendant for the misconduct in question; and

(2)      where compensatory damages are insufficient to accomplish the objects of retribution, deterrence of the defendant and others from similar misconduct in the future and the community’s collective condemnation or denunciation of what has occurred, punitive damages will be given in an amount that is no greater than necessary to accomplish these objectives rationally.

Underlying these principles must also be recognition of the exceptional nature of punitive damages and the need to be fair to both sides: Estate of Pate v. Township of Galway-Cavendish (2013), 2013 ONCA 669 (CanLII), 117 OR (3d) 481 (CA) at para 200.”

            Rutman v. Rabinowitz, 2016 ONSC 5864 (CanLII) at 266-267

“As to the Applicant’s argument that this is electronic information was surreptitiously obtained without the Applicant’s knowledge or consent, the case law directs that that relevant evidence, even improperly obtained, is admissible: Grech v. Scherrer, 2018 ONSC 7206 at paras 30 and 32-34; Garrett v. Oldfield, 2014 ONSC 508 at paras 29-34.

In Gonzalez v. Gonzales, 2016 BCCA 761 a computer was purchased for the family, the complainant used it only casually when in the matrimonial home and documents in question were readily accessible because the home computer did not have a password.  The Court of Appeal held that “any expectation of privacy” which the complainant would have would be slight.”

Similarly in Greenhalgh v. Verwey, 2018 ONSC 3535, the Court held that where a party takes no steps to resrict access to a computer and does not seek the computer’s return at any point, that party has a lessened expectation of privacy.”

            M.S. v. S.B., 2021 ONSC 6906 (CanLII) at 29-31

“In Davis v. Crawford (2011 ONCA 294), the Court of Appeal has held that lump sum awards of spousal support are not to be limited to only “very unusual circumstances”.  The Court of Appeal also observed that both the Family Law Act R.S.O.1990 c. F.3 and the Divorce Act R.S.C. 1985 c. 3 (2^nd Supp) permit lump sum awards of spousal support to be made.

In Davis, the Court set out the advantages and disadvantages of a lump sum award of spousal support as follows (paras 67 and 68):

1. 1. 1. 1. 67. The advantages of making such an award will be highly variable and case-specific. They can include but are not limited to: terminating ongoing contact or ties between the spouses for any number of reasons (for example: short-term marriage; domestic violence; second marriage with no children, etc); providing capital to meet an imeediate need on the part of a dependant spouse; ensuring adequate support will be paid in circumstances where there is a real risk of non-payment of periodic support, a lack of proper financial disclosure or where the payor has the ability to pay lump sum but not periodic support; and satisfying immediately an award of retroactive spousal support.
            68. Similarly, the disadvantages of such an award can include: the real possibility that the means and needs of the parties will change over time, leading to the need for a variation; the fact that the parties will be effectively deprived of the right to apply for a variation of the jump sum award; and the difficulties inherent in calculating an appropriate award of lump sum spousal support where lump sum support is awarded in place of ongoing indefinite periodic support.

It is also appropriate for a judge to award a lump sum spousal support where there was a high level of animosity between the parties (Racco v. Racco 2014 ONCA 330), or where it was appropriate to facilitate a ‘clean break’ between the parties (Greenberg v. Daniels (1995) 2005 CanLII 456 (ON CA), 194 O.A.C. 115 (C.A.)).”

            Wardlaw v. Wardlaw, 2019 ONSC 6906 (CanLII) at 11-13

“The parents’ inability to engage in effective communications is a serious consideration. In Kaplanis v. Kaplanis (2005), 249 D.L.R. (4th) 620 2005 CanLII 1625 (Ont. C.A.), at para. 11, the court noted that “no matter how detailed the custody order that is made, gaps will inevitably occur, unexpected situations arise and the changing development needs of a child must be addressed on an ongoing basis”. Disagreements over decision-making can make life miserable for children and feed into their insecurities, disillusionment and unhappiness.

That said, even where joint decision-making is neither practical nor realistic, courts have examined various models of decision-making that would still promote the parents shared involvement in every aspect of their children’s lives.

One option is to identify one of the two parents as the final decision-maker coupled with a requirement that there be full information sharing between the parents on all matters relating to a child’s welfare and well-being and with a view to working towards an agreement.  Where the parents are unable to reach an agreement and the decision-making parent makes a decision, he or she must be able to demonstrate that the decision made took into account the concerns of the other parent. Depending of the nature of the decision at stake, the decision-making parent may also have to demonstrate the reasonableness of his or her preferred approach. That might require input from third-party arm’s-length advisors, as the case may be. Apart from the overriding concern that a child’s best interests be met, the rationale behinds such an approach is to avoid shutting one parent out of the overall parental relationship: see Leeming v. Leeming, 2015 ONSC 3650, 2015 CarswellOnt 8636; and Goyal v. Goyal, 2014 ONSC 3026 (CanLII).

A variation to the first option might be to separate out the decision-making subjects such that one parent has the final decision-making power over one aspect of a child’s life while the other has that authority over a different subject. Decision-making may also be linked to the parent with whom a child resides, or the decisions may be divided between day-to-day decisions and longer-term decisions: see: M.B. v. D.T., 2012 ONSC 840 (CanLII). These options lend themselves to situations where, although there might be conflict between the parents, one is not more responsible over the other, or one is not more prone to disagreement or unilateral action.

Underpinning these basic principles is the reminder from the Ontario Court of Appeal, in M. v. F., 2015 ONCA 277 (CanLII) that the Ontario legislation does not require a trial judge to make an order for custody. Section 28(1)(a) of the CLRA is permissive, not mandatory. At paragraph 39 of the same decision, the ONCA cautioned that the subject of custody not be considered in terms of winners and losers:

[39]      For twenty years, multi-disciplinary professionals have been urging the courts to move away from the highly charged terminology of “custody” and “access”. These words denote that there are winners and losers when it comes to children. They promote an adversarial approach to parenting and do little to benefit the child. The danger of this “winner/loser syndrome” in child custody battles has long been recognized.”

            Ahmad v. Ahmad, 2019 ONSC 6804 (CanLII) at 101-105