The Ontario Court of Appeal in Persaud v. Garcia Persaud 2009 ONCA 782 found at http://www.ontariocourts.on.ca/decisions/2009/november/2009ONCA0782.htm is an important reiteration of the requirement of Judges to find a material change in circumstances when varying a Final Order.
In this case, the Motions Judge changed his own Final Order and flipped custody between two parents. This court has made clear, jurisdiction to vary a custody and access order is dependent on an explicit finding of a material change in circumstances since the previous order was made. If an applicant fails to meet this threshold requirement, the inquiry can go no further: see Litman v. Sherman (2008), 52 R.F.L. (6th) 239 (Ont. C.A.).
A material change in circumstances is one which: (1) amounts to a change in the condition, means, needs or circumstances of the child and/or the ability of the parents to meet the needs of the child; (2) materially affects the child; and, (3) was either not foreseen or could not have been reasonably contemplated by the judge making the original order: see Gordon v. Goertz, [1996] 2 S.C.R. 27, at para. 13.
The Court found that none of these factors are addressed in the brief reasons of the motion judge nor can they be found on a broader reading of the record as a whole, including the exchanges that the motion judge had with counsel.
Another important factor is that it was not clear to the Court how these factors could have been determined, given the significant conflict in the affidavit evidence of the parties. In such circumstances, a variation motion cannot be properly determined on affidavit material. As this court has stated, resolution of conflicting evidence on critical matters requires a trial of the issues, in which viva voce evidence is called. See this court’s decision in Schnarr v. Schnarr (2006), 22 R.F.L. (6th) 52.
For the preceding factors, the Court took the position that the original custody Order and did so over time.
All in all a good decision from the highest Court in Ontario.
Friday, January 15, 2010
Thursday, February 19, 2009
Fresh air breathed into post-separation declines on assets
Well the Ontario Court of Appeal has finally taken a serious look at the question with respect to what happens to individuals whose assets take a bath post-separation. The traditional approach has been that the parties to a separation must equalize their assets on valuation date or more commonly known as the date of separation. But the question, especially during these economic times is what happens if the asset or assets decline in value? Is it really fair for a person to have to equalize an asset by the time a trial has occurred that has severely declined in value? One would think that the easy answer is "no of course that is not fair"; well, in most cases, the person equalizing is out of luck.
That being said, the Ontario Court of Appeal in Serra v. Serra, has come to the rescue. It is possibly the most important case since Levan, that deals with post-separation declines in asset values. The case can be found at:
http://www.ontariocourts.on.ca/decisions/2009/february/2009ONCA0105.htm
Counsel would be advised to look at this case very seriously because it may be of significant use in negotiations when coming to a resolution on asset values.
The basics of the case involve a business that was valued at 9.5 million and $11.25 million on separation but by the time of trial, however, the value had decreased to somewhere between $1.875 million and $2.6 million – a drop of approximately $8 to $9 million. At trial, Mr. Serra argued that equalizing his and his wife’s net family properties on the basis of the separation-date value of his assets would be “unconscionable” as contemplated by s. 5(6) of the Family Law Act. It required him to make an equalization payment of $4,129,832.50 – an amount that exceeds his total net worth. The trial judge ruled, however, that she could not take a market-driven post-separation date decline in the value of a spouse’s assets into account under s. 5(6) and ordered the large equalization payment.
The Ontario Court of Appeal thought the trial judge erred and set the record more clear on how to use section 5(6) of the Family Law Act.
The steps to be taken when s. 5(6) is engaged are well-established. The court must first ascertain the net family property of each spouse, by determining and valuing the property each owned on the valuation date (subject to the deductions and exemptions set out in s. 4). Next, the court applies s. 5(1) and determines the equalization payment. Finally – and before making an order under s. 5(1) – the court must decide whether the equalization of net family properties would be unconscionable under s. 5(6), having regard to the factors listed in paragraphs 5(6)(a) through (h).
The Court opined that it may take into account a post-separation date change in the value of a spouse’s assets, and the circumstances surrounding such a change, for purposes of determining under s. 5(6) of the Family Law Act whether equalizing net family properties would be unconscionable. An order for an unequal division of net family properties is exceptional, however, and may only be made on such a basis (i) where the circumstances giving rise to the change in value relate (directly or indirectly) to the acquisition, disposition, preservation, maintenance or improvement of property (s. 5(6)(h)), and (ii) where equalizing the net family property would be unconscionable, having regard to those circumstances (taken alone or in conjunction with other factors mentioned in s. 5(6)).
The Court clearly stated that the threshold of “unconscionability” under s. 5(6) is exceptionally high. and that the circumstances which are “unfair”, “harsh” or “unjust” alone do not meet the test. To cross the threshold, an equal division of net family properties in the circumstances must “shock the conscience of the court”.
It is worth emphasizing that the legal issue in Serra is whether a market-driven decline in value of a spouse’s assets post-separation may be considered as a factor in determining whether an equalization of net family property is unconscionable under s. 5(6). Concluding that it may be considered as a factor does not lead necessarily to a finding on the facts that an equalization order would be unconscionable.
The remedy once the unconscionable threshold has been met is that the Court may award a spouse “an amount that is more or less than half the difference between the net family properties” if “equalizing the net family properties would be unconscionable”. In short, the threshold that an applicant must cross in order to open the door to an unequal division is exceptionally high. That is because of the policy underlying the Act encouraging finality, predictability and certainty and minimizing the exercise of judicial discretion to the extent possible, also referred to earlier. Once the threshold has been crossed, however, and the rare resort to judicial discretion under the Act is in play, the court should exercise its discretion as it normally does: by doing what is just, fair and equitable in the circumstances.
In the end, the Court found that it was just, fair and equitable in these circumstances to reduce the equalization award downward.
This is a definite must for ALL FAMILY LAW LAWYERS.
That being said, the Ontario Court of Appeal in Serra v. Serra, has come to the rescue. It is possibly the most important case since Levan, that deals with post-separation declines in asset values. The case can be found at:
http://www.ontariocourts.on.ca/decisions/2009/february/2009ONCA0105.htm
Counsel would be advised to look at this case very seriously because it may be of significant use in negotiations when coming to a resolution on asset values.
The basics of the case involve a business that was valued at 9.5 million and $11.25 million on separation but by the time of trial, however, the value had decreased to somewhere between $1.875 million and $2.6 million – a drop of approximately $8 to $9 million. At trial, Mr. Serra argued that equalizing his and his wife’s net family properties on the basis of the separation-date value of his assets would be “unconscionable” as contemplated by s. 5(6) of the Family Law Act. It required him to make an equalization payment of $4,129,832.50 – an amount that exceeds his total net worth. The trial judge ruled, however, that she could not take a market-driven post-separation date decline in the value of a spouse’s assets into account under s. 5(6) and ordered the large equalization payment.
The Ontario Court of Appeal thought the trial judge erred and set the record more clear on how to use section 5(6) of the Family Law Act.
The steps to be taken when s. 5(6) is engaged are well-established. The court must first ascertain the net family property of each spouse, by determining and valuing the property each owned on the valuation date (subject to the deductions and exemptions set out in s. 4). Next, the court applies s. 5(1) and determines the equalization payment. Finally – and before making an order under s. 5(1) – the court must decide whether the equalization of net family properties would be unconscionable under s. 5(6), having regard to the factors listed in paragraphs 5(6)(a) through (h).
The Court opined that it may take into account a post-separation date change in the value of a spouse’s assets, and the circumstances surrounding such a change, for purposes of determining under s. 5(6) of the Family Law Act whether equalizing net family properties would be unconscionable. An order for an unequal division of net family properties is exceptional, however, and may only be made on such a basis (i) where the circumstances giving rise to the change in value relate (directly or indirectly) to the acquisition, disposition, preservation, maintenance or improvement of property (s. 5(6)(h)), and (ii) where equalizing the net family property would be unconscionable, having regard to those circumstances (taken alone or in conjunction with other factors mentioned in s. 5(6)).
The Court clearly stated that the threshold of “unconscionability” under s. 5(6) is exceptionally high. and that the circumstances which are “unfair”, “harsh” or “unjust” alone do not meet the test. To cross the threshold, an equal division of net family properties in the circumstances must “shock the conscience of the court”.
It is worth emphasizing that the legal issue in Serra is whether a market-driven decline in value of a spouse’s assets post-separation may be considered as a factor in determining whether an equalization of net family property is unconscionable under s. 5(6). Concluding that it may be considered as a factor does not lead necessarily to a finding on the facts that an equalization order would be unconscionable.
The remedy once the unconscionable threshold has been met is that the Court may award a spouse “an amount that is more or less than half the difference between the net family properties” if “equalizing the net family properties would be unconscionable”. In short, the threshold that an applicant must cross in order to open the door to an unequal division is exceptionally high. That is because of the policy underlying the Act encouraging finality, predictability and certainty and minimizing the exercise of judicial discretion to the extent possible, also referred to earlier. Once the threshold has been crossed, however, and the rare resort to judicial discretion under the Act is in play, the court should exercise its discretion as it normally does: by doing what is just, fair and equitable in the circumstances.
In the end, the Court found that it was just, fair and equitable in these circumstances to reduce the equalization award downward.
This is a definite must for ALL FAMILY LAW LAWYERS.
Saturday, March 15, 2008
Questioning in family law cases
Many family lawyers like to do Quesioning under the Family Law Rules. It is akin to doing an Examination for Discovery under the Rules of Civil Procedure.
The question for practioners is whether it is really worth it considering the expense associated with it? What are the parameters? Can not documentary disclosure be sufficient as are affidavits in the action? Is it really necessary to put the parties to the expense or can the information be elucidated at trial.
So let us say for argument sake we need to do the Questioning..how to conduct an effective questioning is the key.
I have done some that take more than a day and I still do not feel like I have all of the necessary information to move forward.
It seems to this writer that the Questioning really falls into 2 categories; the custody/access issues and of course the dreaded financials. I find that counsel needs all of the financials before going into the examination especially a sworn financial statement and a net family property statement.
If we are talking about a business owner I need on top of the personal returns the corporate returns with all of the schduelds, slips and attachments.
It is important to note that the schedules are particulalry important to question on for the purposes of determining what assets are being deducted because they should be added back for income purposes.
I find the most diffculy questioning is trying to peg a farmer down for income purposes...it seems as though the income is often tailored to meet the fiscal years income statement as opposed to real income earned. One needs to find out what assets are being depreciated, when the crops are sold, whether there are futures contracts or whether the crops are stored to be sold on consignment terms.
The other difficult income earner to peg down is the sales person or independant contractor who gets to deduct a lot of expenses from their income. Determining these expenses are important and asking for an undertaking to get the information.
Undertakings are key to the effective use of questioning. Without getting an undertaking for key information a very important reason to question is lost.
I find that older more experienced lawyers often try to deny providing an undertaking for information that I know I am entitled to. I found if you ask the opposing side for their reason for a refusal you will be given the information.
In the end, the effectiveness of the questioner will determine whether it goes well or is a complete waste of time.
Anyone with a war story to post, it is always appreciated.
The question for practioners is whether it is really worth it considering the expense associated with it? What are the parameters? Can not documentary disclosure be sufficient as are affidavits in the action? Is it really necessary to put the parties to the expense or can the information be elucidated at trial.
So let us say for argument sake we need to do the Questioning..how to conduct an effective questioning is the key.
I have done some that take more than a day and I still do not feel like I have all of the necessary information to move forward.
It seems to this writer that the Questioning really falls into 2 categories; the custody/access issues and of course the dreaded financials. I find that counsel needs all of the financials before going into the examination especially a sworn financial statement and a net family property statement.
If we are talking about a business owner I need on top of the personal returns the corporate returns with all of the schduelds, slips and attachments.
It is important to note that the schedules are particulalry important to question on for the purposes of determining what assets are being deducted because they should be added back for income purposes.
I find the most diffculy questioning is trying to peg a farmer down for income purposes...it seems as though the income is often tailored to meet the fiscal years income statement as opposed to real income earned. One needs to find out what assets are being depreciated, when the crops are sold, whether there are futures contracts or whether the crops are stored to be sold on consignment terms.
The other difficult income earner to peg down is the sales person or independant contractor who gets to deduct a lot of expenses from their income. Determining these expenses are important and asking for an undertaking to get the information.
Undertakings are key to the effective use of questioning. Without getting an undertaking for key information a very important reason to question is lost.
I find that older more experienced lawyers often try to deny providing an undertaking for information that I know I am entitled to. I found if you ask the opposing side for their reason for a refusal you will be given the information.
In the end, the effectiveness of the questioner will determine whether it goes well or is a complete waste of time.
Anyone with a war story to post, it is always appreciated.
Saturday, March 8, 2008
Spousal Support Advisory Guidelines the new norm?
The recent Ontario Court of Appeal decision in Fishers v. Fisher, 2008 ONCA 11 (C.A.) is in this writer's opinion a ground breaking family law case.
It is an important read for all of those counsel that practice family law in Ontario and deal with spousal support cases.
The Court reviewed the trial decision on spousal support including the time-limited nature of the Order, failing to take into account the Spousal Support Advisory Guideline (SSAG), not making the award of support retroactive to the interim order and reducing the quantum of support on account of the husband's obligations to his second family.
There is a very good review in this case of the principles of spousal support including : (1) compensatory support; (2) needs-based support; (3) time limited versus indefinite support: (4) review Orders and their scope and appropriateness; and (5) most importantly the applicability of the SSAG.
It now appears law in Ontario to use the SSAG as the starting point in the normal, run-of-the-mill spousal support case. All practitioners are well advised to get the software which allows for running the calculations as you can bet your bottom dollar that the opposing counsel will very likely have their numbers. It would in this writer's opinion tend towards negligence if one is not running the numbers early on in a case to see the client's exposure to pay or the recipient's spouses entitlement.
The Court does advise that the SSAGs are not appropriate in every case and provides a whole host of situations when they would not apply. But for the most part, the Court adopts that the SSAGs provide an appropriate range so as to provide stability and predictability of support awards that are in line with the jurisprudence in Ontario and the Divorce Act.
On the one hand the Court of Appeal in Fisher makes the road way easier for family law lawyers; but on the other hand, if the calculations are not really apt for the situation at hand, it could be more difficult to convince the bench to move away from the SSAG in the circumstance.
I would appreciate anyone's comments on their experience with the SSAG.
The Fisher case may be found at
http://www.ontariocourts.on.ca/decisions/2008/january/2008ONCA0011.pdf
Monday, December 17, 2007
Adult child away for school
There is often contention on the issue of child support being paid while a child is away at school and other children remain in the home.
I have posted earlier on the issue of determing the appropriate amount see the case of Albert v Albert.
For a clear view on this issue, see the recent case of Barr v. Cudney (2007), 2007 CanLII 54075 (S.C.J.) The Honourable Mr. Justice B. H. Matheson did an excellent review in this writer's opinion on how to anaylze the issue during the times when the child is at home from post-secondary school and when away.
Essentially, the apppriate view according to Justice Matheson is to look at the Table amount for when all the children are at home; reduce it for the children remaining at home when one or more is away at school and the determine what is a reasonable amount for the child or children that are away and then return to the full table amount during the months when they are at home again.
A quick read and good review for counsel who are dealing with multiple children at different stages of their academic life.
I have posted earlier on the issue of determing the appropriate amount see the case of Albert v Albert.
For a clear view on this issue, see the recent case of Barr v. Cudney (2007), 2007 CanLII 54075 (S.C.J.) The Honourable Mr. Justice B. H. Matheson did an excellent review in this writer's opinion on how to anaylze the issue during the times when the child is at home from post-secondary school and when away.
Essentially, the apppriate view according to Justice Matheson is to look at the Table amount for when all the children are at home; reduce it for the children remaining at home when one or more is away at school and the determine what is a reasonable amount for the child or children that are away and then return to the full table amount during the months when they are at home again.
A quick read and good review for counsel who are dealing with multiple children at different stages of their academic life.
Is parallel parenting making a come back?
It seems since 2006, when the Court of Appeal ruled that parties that can not get along the results will often favour one parent being granted custody and the other labelled the access parent. Numerous courts, including the Ontario Court of Appeal, have ruled that joint custody is a viable option only in circumstances where the parties are able to communicate and cooperate with each other.
The thought being that one parent must ultimately make the day-to-day decisions and in high conflict cases. When the parties can not get along, how is the best interests of the child going to be met? The answer - sole custody to one, access to the other.
A recent Ontario Superior Court of Justice case, Hensel v. Hensel (2007), 2007 CarswellOnt 7010 (S.C.J) tests the water with parallel parenting. Is it making a come back?
The Court opined that parallel parenting orders have historically been made by a court in circumstances where a high degree of conflict exists between two otherwise capable parents.
Although there is some dispute in the academic literature about the definition of what parallel parenting is for the purpose of this case the presiding justice adopted the following comments of the authors Birnbaum and Fidler:
Parallel parenting as defined by the social science literature is not a manifestation of joint legal custody in the sense of the parents making major decisions jointly, but rather; parallel parenting involves each parent making the final decision about a different domain. In other words, each parent has sole custody, only over a different domain of decision-making.
An unusual Order handed out in unusual circumstances according to this writer.
For a good review of another case which has been confirmed at two levels of Court is Cox v. Stephen (2002), 2002 CarswellOnt 2321 (S.C.J) and confirmed at [2003] O.J. No. 4371 (Ont. C.A.).
If any counsel or readers have their own experience with Court ordered parallel parenting models please write. This writer is curious as to the circumstances of how they arose and whether they actually work.
The thought being that one parent must ultimately make the day-to-day decisions and in high conflict cases. When the parties can not get along, how is the best interests of the child going to be met? The answer - sole custody to one, access to the other.
A recent Ontario Superior Court of Justice case, Hensel v. Hensel (2007), 2007 CarswellOnt 7010 (S.C.J) tests the water with parallel parenting. Is it making a come back?
The Court opined that parallel parenting orders have historically been made by a court in circumstances where a high degree of conflict exists between two otherwise capable parents.
Although there is some dispute in the academic literature about the definition of what parallel parenting is for the purpose of this case the presiding justice adopted the following comments of the authors Birnbaum and Fidler:
Parallel parenting as defined by the social science literature is not a manifestation of joint legal custody in the sense of the parents making major decisions jointly, but rather; parallel parenting involves each parent making the final decision about a different domain. In other words, each parent has sole custody, only over a different domain of decision-making.
An unusual Order handed out in unusual circumstances according to this writer.
For a good review of another case which has been confirmed at two levels of Court is Cox v. Stephen (2002), 2002 CarswellOnt 2321 (S.C.J) and confirmed at [2003] O.J. No. 4371 (Ont. C.A.).
If any counsel or readers have their own experience with Court ordered parallel parenting models please write. This writer is curious as to the circumstances of how they arose and whether they actually work.
Sunday, December 9, 2007
Ontario's top Court confirms Children's Lawyer's Discretion
A short decision will be sure to quell those clients who quip about the Office of the Children's Lawyer (i.e. OCL) not get involved in their case despite a Judge making an Order under sections 89(3.1) and 112 of the Courts of Justice Act.
A quick review by the Ontario Court of Appeal in Novoa v. Molero, 2007 ONCA 800 found at http://www.ontariocourts.on.ca/decisions/2007/november/2007ONCA0800.htm will help practitioners advise their clients that the legislation that gives life the OCL also gives it essentially unfettered discretion and what is even better from their perspective when they decline they do not have to give reasons.
I reproduce the sections below:
Sections 89(3.1) and 112 of the Courts of Justice Act, supra, read as follows:
89(3.1) At the request of a court, the Children’s Lawyer may act as the legal representative of a minor or other person who is not a party to a proceeding.
112(1) In a proceeding under the divorce Act (Canada) or the Children’s Law Reform Act in which a question concerning custody or access to a child is before the court, the Children’s Lawyer may cause an investigation to be made and may report and make recommendations to the court on all matters concerning custody of or access to the child and the child’s support and education. [emphasis added]
The word “may” is permissive, not imperative. Accordingly, the use of the word “may” in ss. 89 (3.1) and s. 112 of the Court of Justice Act makes it clear that the Children’s Lawyer has the discretion to decide whether to cause an investigation to be made and the discretion whether to report and make recommendations to the court on the matters of custody and access.
So that is that!
A quick review by the Ontario Court of Appeal in Novoa v. Molero, 2007 ONCA 800 found at http://www.ontariocourts.on.ca/decisions/2007/november/2007ONCA0800.htm will help practitioners advise their clients that the legislation that gives life the OCL also gives it essentially unfettered discretion and what is even better from their perspective when they decline they do not have to give reasons.
I reproduce the sections below:
Sections 89(3.1) and 112 of the Courts of Justice Act, supra, read as follows:
89(3.1) At the request of a court, the Children’s Lawyer may act as the legal representative of a minor or other person who is not a party to a proceeding.
112(1) In a proceeding under the divorce Act (Canada) or the Children’s Law Reform Act in which a question concerning custody or access to a child is before the court, the Children’s Lawyer may cause an investigation to be made and may report and make recommendations to the court on all matters concerning custody of or access to the child and the child’s support and education. [emphasis added]
The word “may” is permissive, not imperative. Accordingly, the use of the word “may” in ss. 89 (3.1) and s. 112 of the Court of Justice Act makes it clear that the Children’s Lawyer has the discretion to decide whether to cause an investigation to be made and the discretion whether to report and make recommendations to the court on the matters of custody and access.
So that is that!
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