Krzewina v. Beaumont, 2021 ONCJ 351

ONTARIO COURT OF JUSTICE CITATION: Krzewina v. Beaumont , 2021 ONCJ 351 . DATE: 2021·06·18 COURT FILE No.: Woodstock D35/19 BETWEEN: Katarzyna Krzewina Applicant — AND — Chad Beaumont Respondent Before Justice S. E. J. Paull Motion Heard on February 8 and June 2, 2021 Reasons for Judgment released on June 18, 2021 Grant E. Rayner.............................................................................. counsel for the applicant(

s) Thomas M. MacKay .................................................................... counsel for the respondent(

s) PAULL J.: [ 1 ] Should Mr. Beaumont have to post security for costs and/or pay towards the interim expenses of Ms. Krzewina before his motion to change child support is permitted to proceed? [ 2 ] Ms. Krzewina submits that he should and has brought motion at Tab 6 seeking this relief. [ 3 ] In addition to the submissions of counsel I have reviewed and considered the factums and the affidavits and attachments filed at Tabs 7, 8, and 9 of the Continuing Record. Background and Evidence [ 4 ] The parties are the parents of one child, M.B. born […], 2006.

They are the subject of the final order of McSorley J. dated September 22, 2008 which included, among other things, an order that Mr. Beaumont pay support for the child in the amount of $375 per month based on his income at the time of $29,000. [ 5 ] The current proceeding is a Motion to Change served March 29, 2019 brought by Mr. Beaumont seeking to vary the child support to $184 per month commencing January 1, 2018 and fixing arrears owing at $10,000 based on his current income of $23,000.

The FRO Statement of Arrears indicates arrears totaling $27,044.94 as of January 1, 2020, which amounts to approximately 6 years of child support payments. He has two other children from separate prior relationships and acknowledges significant arrears owing to both which are the subject of separate enforcement and variation proceedings in another jurisdiction. The variation proceedings regarding his other children have been resolved by final orders fixing arrears. [ 6 ] Ms.

Krzewina’s Response to the Motion to Change served May 21, 2019 seeks an increase in child support to $792 per month based on an income of $85,138 retroactive to January 1, 2015.

[ 7 ] Mr. Beaumont’s position is that there has been a material change in circumstances based on his loss of employment and that he started a new business building fences and decks. He also alleges health issues with his stomach and knees which have impacted his ability to work. He indicated his income has dropped from $29,000 when the previous order was made to $23,000 as a result of these changes in his circumstances. [ 8 ] Ms. Krzewina’s motion was originally scheduled for argument on April 1, 2020.

As a result of the pandemic and the suspension of regular court operations the motion did not proceed on that date and the matter was not back before the court with counsel present until November 4, 2020. [ 9 ] On that date the motion was scheduled to proceed on February 8, 2021. Argument on the motion began on that date but was not completed. The matter was adjourned for continuation and was completed on June 2, 2021. [ 10 ] Mr. Beaumont deposes that he has lived with his new partner, Kathy Therrien since March 2018 and that he keeps his finances separate from hers. His previous employer was Essex Kent Fence.

He continues to live and work in Kent County and started his own fence and deck business called Maple City Centre Fence. [ 11 ] Mr. Beaumont’s business started as a partnership with another individual in or about 2018 with that partnership lasting approximately a year before he began operating it is a sole proprietorship with the significant financial support of Ms. Therrien. [ 12 ] The applicant served the within motion on January 6, 2020 seeking various relief including, among other things, significant additional disclosure from both Mr.

Beaumont and his partner, an order adding his partner and her daughter as parties to the proceeding, and orders for security for costs and interim disbursements. [ 13 ] Mr.

Beaumont’s responding affidavit of February 26, 2020 outlines and attaches confirmations of service of the disclosure he was ordered to provide at the case conference stage and from the multiple requests made by the applicant leading up to the motion. [ 14 ] His responding affidavit also points out that he had provided the disclosure regarding himself and his spouse requested in the motion, including detailed printouts of all their credit card and bank accounts.

He attached as an exhibit the Certificate of Financial Disclosure and affidavit of service confirming that the Certificate along with three volumes of the listed documents were served on counsel for the applicant on January 9, 2020, less than a week after the motion was served. [ 15 ] Mr. Beaumont’s Notices of Assessment outline income levels for tax purposes as follows: 2015- $85,138 2016- $56,747 2017- $46,583 2018- $22,299 [ 16 ] His financial statement indicates annual income for 2019 continued to be $22,299. He is in the process of filing the 2020 tax return for his business. Mr. Beaumont’s partner, Ms.

Therrien also filed an affidavit dated February 26, 2020 addressing each of the requests for disclosure in the notice of motion, and provided the requested disclosure along with explanations for each of the bank accounts and transactions. [ 17 ] The applicant did not file a reply affidavit. During argument on February 8, 2021 counsel for the applicant indicated that he had not received the document briefs outlined in the Certificate but later acknowledged that he had received them and that they had been misplaced at his office. [ 18 ] The applicant acknowledges that currently there is no outstanding disclosure.

She takes the position that the financial arrangements between Mr. Beaumont and his girlfriend are “hopelessly entangled” and that he has earning much more than he alleges. [ 19 ] The applicant’s position is that Mr. Beaumont has not provided full and frank disclosure, but rather what amounts to a voluminous and entangled mess that is a deliberate attempt to mislead her and the court. From her perspective the numbers just do not add up. [ 20 ] The applicant points to several areas in the disclosure that illustrate the significant and confusing intermingling of funds between Mr.

Beaumont, his partner, and his business. She points out that the volume of funds being transferred between the various bank accounts exceeds the level of income he claims he is earning. For example, in 2018 Mr. Beaumont transferred approximately $54,000 out of his various business accounts into the personal accounts of himself and Ms. Therrien. [ 21 ] Ms. Therrien acknowledges helping Mr. Beaumont financially with his business because he did not have the resources or the credit rating to qualify for financing.

She acknowledged she has allowed him to use her credit cards and that she applied for a Home Depot credit card in the name of Mr. Beaumont’s business. All of the credit cards appear to be maxed out. [ 22 ] Ms. Therrien, a retired bank employee, provided a detailed spreadsheet purporting to explain the transfers of money between herself, Mr. Beaumont, and his business, and that the transfers were to reimburse her for materials and other costs for the business which she paid for. [ 23 ] Mr.

Beaumont asserts that he has provided all the documents required by the Guidelines and the Rules, and the substantial additional disclosure requested, including from his partner. He takes the position that he has gone over and above providing all the documents requested including bank account and credit card statements for himself and his partner. Should Mr. Beaumont be required to post security for costs?

[24] Orders for security for costs are an exercise in judicial discretion based on circumstances specified by section 24(13) of theFamily Law Rules which reads as follows: ORDER FOR SECURITY FOR COSTS

(13) A judge may, on motion, make an order for security for costs that is just, based on one or more of the following factors: 1. A party ordinarily resides outside Ontario. 2. A party has an order against the other party for costs that remains unpaid, in the same case or another case. 3. A party is a corporation and there is good reason to believe it does not have enough assets in Ontario to pay costs. 4. There is good reason to believe that the case is a waste of time or a nuisance and that the party does not have enough assets inOntario to pay costs. 5. A statute entitles the party to security for costs. O.

Reg.114/99, r. 24(13). [25] In Izyuk v. Bilousov, 2015 ONSC 3684 (S.C.J.), Pazaratz J. noted the purpose of an order for security of costs is to protect aparty from nuisance or irresponsible litigation, conducted without regard to the merits of the case or the costs likely to be incurred. Itrequires the court to apply the following analysis: a. The initial onus is on the party seeking security for costs to show that the other party falls within one of the enumerated grounds. b. If the onus is met, the court has discretion to grant or refuse an order for security. c.

If the court orders security, it has wide discretion as to the quantum and means of payment of the order. Clark v Clark 2014 ONCA175 . d. The order must be “just” and be based on one or more of the factors listed in subrule 24(13). Hodgins v Buddhu [2013] O.J. No.1261 (OCJ). [26] Orders for security for costs are a blunt instrument. They are not intended to act as a roadblock to genuine claims: Izyuk v.Bilousov, supra, at para. 37.

They should be used sparingly and carefully because they may well have the effect of barring a party fromaccess to the court process for a proper review of existing orders – something, for example, to which a party is entitled respecting childsupport orders if there has been a change in circumstances. See: Gauthier v. Gauthier, 2019 ONCA 722. [27] In most instances the merits of a case should not be determined by a party’s inability to post security for costs. Bragg v.Bruyere, 2007 ONCJ 515. But litigants should not be permitted to use the court as a playground.

Court proceedings are expensive, timeconsuming, and disruptive. They should not be launched frivolously or without due regard to the impact on the responding party.McGraw v Samra, 2004 ONCJ 164 , [2004] O.J. No. 3610 (OCJ). [28] The mere satisfaction of the criteria in Rule 24(13) is not sufficient to merit an order for security for costs. It must also be justto make the order and generally in family law proceedings courts do not wish to see proceedings determined on their merits by aninability to post security for costs. Hodgin v. Buddhu, 2013 ONCJ 137 , [2013] O.J.

No.1262 (O.C.J.) [29] When proceeding under Rule 24(13) the opposing party need only prove that there is “good reason to believe” the action is awaste of time or is a nuisance. In the case of Wreggbo v. Vinton, 2013 ONCJ 250, 2013 CarswellOnt 5833, Justice Katarynych stated atparagraph 11: In relation to the latter basis, the subrule allows either a showing of good reason to believe that there is either nuisance afoot or a wastingof the court’s time. As a matter of common sense, a nuisance claim is one so devoid of merit that it is a waste of the court’s time.

Itwholly undercuts the primary objective of the Rules to allow a “nuisance claim” that is by its nature a waste of time, to go forward totrial with a security for costs order “hobbling” the trial court, as Superior Court Justice Quinn characterized the dilemma in the Stefureakcase. See Stefureak v.

Chambers, (ON SC). [emphasis omitted] [30] Further, the court in Wreggbo noted that whether an order for security for costs is “just” in any particular case is an objectivedetermination, based on the record before the court, set in the context of the procedural law established by the Rules and the substantiallaw governing the claims for which the security is sought (para.11).

The court stated that whether a claim has merit is not a litigant’s“take my word for it” type of consideration but rather that: [13] Merit is unfolded – or not – in the quality of the disclosure of information provided about the claim to the other party. It is aninformation sharing that, as part of a party’s “just dealing” responsibility, positions the other party to make a responsibly informedresponse to the claim.

It is an information-sharing that flows into the judicial conferencing process, as a matter of “just dealing” toinform the court’s opinion on the merits of competing claims, and the means by which the parties make visible their attempt to workwith the case management judge to meet the primary objective of the Rules. [14] Withholding of information reasonably needed by the other party or the court itself to take a responsible stance on the likelymerits of any particular claim is unjust, within the meaning of the Rules. [15] It skids the claim into the mischief zone.

Once in the mischief zone, it is nuisance and wastes not just the court’s time andresources, but also the time and resources of the other party. ….

[20] So it is that the state of information disclosure between the parties and to the case management court over the course of thelitigation is relevant to the adjudication of a security for costs motion. The underlying question is whether the claim needs a trial. [31] With respect to the application of the law to this case, the first question is whether the applicant has satisfied the initial onus ofshowing that Mr.

Beaumont falls within one of the enumerated grounds of section 24(13). [32] Subsection (3) deals with corporate parties and is not applicable, and neither is there a statute which entitles the applicant tosecurity (subsection(5)). [33] Mr. Beaumont does not ordinarily resides outside Ontario (subsection(1)), and there was no evidence the applicant has an orderagainst him for costs which remain unpaid. Counsel for Mr. Beaumont pointed out that in fact the applicant has an outstanding cost orderagainst her in this proceeding. [34] The only basis for an order for security of costs is under subsection (4). Under this

section the applicant must establish thatthere is “good reason to believe” that the Mr. Beaumont’s claims are a waste of time or a nuisance. [35] An analysis under subsection(4) necessarily requires the court to embark on an inquiry into the merits of the case, includingconsideration of the level of disclosure. [36] In assessing the merits of the parties positions, it is important to note that the court does not have the benefit of viva voceevidence and cross-examination, and there has not been questioning in this matter although an order was made granting leave forquestioning on August 12, 2019.

Further, the inquiry into the merits at this stage is not a detailed analysis akin to that at a trial orsummary judgment motion, but rather a general review of the evidentiary record to determine if there is a prima facie case, and asufficient evidentiary basis upon which the claims may reasonably be grounded. [37] What can be concluded from the materials filed is that in spite of Mr. Beaumont stating at paragraph 19 of his affidavit that hekeeps his finances separate from Ms.

Therrien’s, the finances of his business, himself, and his partner are highly entangled. [38] With respect to the level of disclosure the applicant acknowledges receiving all the required and requested disclosure at thispoint, but takes the position that because of the entanglement of finances the disclosure is a deliberate attempt to obfuscate and mislead, and that this amounts to inadequate disclosure. [39] As noted by the Ontario Court of Appeal in Roberts v. Roberts, 2015 ONCA 450 , the most basic obligation in familylaw cases is the duty to disclose financial information.

This requirement is immediate and ongoing. Failure to abide by this fundamentalprinciple impedes the progress of the action, causes delay and generally acts to the disadvantage of the opposite party. [40] The court will usually draw an adverse inference against a party for his or her failure to comply with their disclosureobligations as provided for in

section 21 of the guidelines. Smith v. Pellegrini, (ON SC), [2008] O.J. No. 3616, (Ont.S.C.); Maimone v. Maimone, (ON SC), [2009] O.J. No. 2140, (Ont. S.C.). [41] Further, a self-employed person has the onus of demonstrating clearly the basis of their gross and net income. This includesdemonstrating that the deductions from gross income should reasonably be taken into account in the deduction of income for supportpurposes. Whelan v.

O’Connor, (ON SC), 2006 CarswellOnt 2581 (SCJ). [42] A self-employed person has the inherent obligation to put forward not only adequate, but comprehensive records of income andexpenses, from which the other party and the court can draw conclusions and the amount of support can be established. Meade v. Meade,(2002) (ON SC), 31 RFL 5th 88 (Ont. SCJ). [43] For the following reasons, and in spite of the obvious challenges facing Mr.

Beaumont going forward with this claim, the courtcannot find that his claim is “so devoid of merit” that it amounts to a waste of the court’s time or a nuisance. [44] With respect to the issue of disclosure Mr. Beaumont has provided all the required and requested disclosure from himself andhis partner. As previously noted, Mr.

Beaumont’s responding affidavit of February 26, 2020 outlines and attaches confirmations ofservice of the disclosure he was ordered to provide at the case conference stage and from the multiple requests made by the applicantleading up to this motion, and all the documentary disclosure requested in the motion was provided in the three volumes of disclosureserved on the applicant’s counsel within a week of the motion being filed in January 2020, or was attached to the responding affidavitsserved in February 2020. [45] Mr.

Beaumont provided the medical documents he was ordered to provide that he intends to rely on to support his position. He is not in breach of any disclosure orders, and he provided the additional requested disclosure in a timely and organized manner. Adetailed spreadsheet was also prepared and attached to Ms. Therrien’s affidavit which purports to explain and “disentangle” thetransactions between herself and Mr. Beaumont. [46] It is clear from the various requests and responses attached to Mr.

Beaumont and his partner’s affidavit that the disclosurerequested was provided without undue delay and that efforts were made to provide it in tabbed, indexed, and organized volumes. He hasprovided the disclosure to support a prima facie case, and it appears his taxable income has gone down since 2018. [47] Further, without viva voce evidence and cross-examination and the fully tested evidentiary record that will be available at trial,I am unable to conclude that Mr.

Beaumont’s complex and tangled approach to finances are a deliberate attempt to mislead or rather theresult of a lack of sophistication or even incompetence on his

part concerning his approach to his personal and business finances. [48] However, in terms of the merits of his claim for a retroactive variation of child support, he faces not insignificant challengesgoing forward. Counsel for the applicant carefully reviewed the disclosure and pointed out numerous areas in Mr. Beaumont’s evidencewhich will likely be problematic for him. Some examples include potentially not paying the rent he swore to in his financial statement,

spending $400 a month on “gifts” when he is not meeting his child support obligations to the applicant, and the fact that before 2018 hewas earning considerably more money than the current child support is based on. Most importantly the lack of clarity about therespondent’s income resulting from the entanglement of his finances could support an adverse inference against him. In addition, quiteapart from these issues is whether an income should be imputed on Mr.

Beaumont because he continues to pursue self-employment in abusiness that by his own evidence is not profitable and results in him earning less than minimum wage. [49] Mr. Beaumont faces a challenging task going forward advancing his claims particularly in light of the recent Supreme Court ofCanada case of Colucci v. Colucci, 2021 SCC 24. However, in spite of the uphill challenge, in the context of the claims, and theevidence and efforts at financial disclosure provided to date, I cannot conclude that his case is so devoid of merit that it amounts to anuisance or a waste of time.

In other words, he may have a relatively weak case on the evidence he provided, but not no case. [50] On the basis of all these considerations the claim for security for costs is dismissed. Should Mr. Beaumont be ordered to provide advance payment of expenses? [51] The jurisdiction to grant an order for the advance payment of the expenses of carrying on a case arises under Rule 24(18),formerly Rules 24(12) of the Family Law Rules which reads as follows: PAYMENT OF EXPENSES

(18) 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 carryingon the case, including a lawyer’s fees. [52] In the recent case of Milosevic v. Milosevic, 2021 ONSC 1213 Justice Kurz neatly summarized the principles outlinedin the case law for a consideration under Rule 24(18) as follows starting at paragraph 50: [50] In Stuart v. Stuart (ON SC), [2001] O.J. No. 5172 (Ont. S.C.), Rogers J. summarized a number of theprinciples that are relevant to a consideration of a motion for the advance payment of legal expenses. They include: 1.

The starting point in interpreting the rule is the FLR’s primary objective, set out in r. 2(2) – (5), which is to enable to court to dealwith cases justly (r.2(2)). 2. Among the ways that the court does so are active management of cases identifying the issues and setting timetables to control theprogress of the case (r. 2(5)). 3. Family law is no longer a guessing game where facts are concerned. The rules provide for full and complete disclosure. The partiesare to know the facts and use this knowledge to settle or proceed to litigation. Cases should proceed expeditiously through the disclosurestage. 4.

The duty in the court to ensure a fair procedure means that both parties should be able to request and give disclosure and to tacklecomplex valuation issues equally. One party should not be disadvantaged in the litigation by being unable to test the evidence of theother party. 5. Fairness in process also means that both parties should be equally wary about the potential of a cost order against them. The newregime of cost awards throughout the case should impact on both parties similarly. 6. Rule 24(12) is discretionary.

The discretion must be applied to further the primary objective of fairness. [51] To Rogers J.’s excellent

summary of relevant principles, I add that in making its determination under r. 24(18) the court mustensure that the process is fair to all parties (r. 2(3)(a)). It must also deal with the case in ways that are appropriate to its importance andcomplexity (r. 2(3)(c)). [52] After considering the principles she enunciated, Rogers J. turned to what she described as “themes” in the previous case lawregarding the application of what is now r. 24(18). She summarized those themes at para. 8 of Stuart as follows: 1) The ordering of interim disbursements is discretionary: Airst v. Airst, [1995] O.J. No. 3005 (Ont. Gen.

Div.); Hill v. Hill (1988, (ON SC), 63 O.R. (2d) 618 (Ont. H. C.) and Lossing v. Dmuchowski, [2000] O.J. No. 837 (Ont. S.C.J.). 2) A claimant must demonstrate that absent the advance of funds for interim disbursements, the claimant cannot present or analysesettlement offers or pursue entitlement: Hill v. Hill, (1988), (ON SC), 63 O. R. (2d) 618 (Ont. H.C.) and Airst v. Airst,[1995] O.J. No. 3005 (Ont. Gen. Div.). 3) It must be shown that the particular expenses are necessary: Lossing v. Dmuchowski, [2000] O.J. No. 837 (Ont. S.C.J.). 4) Is the claim being advanced meritorious? Lynch v.

Lynch, (1999), 1 R.F.L. (5th) 309 (Ont. S.C.J.) and Randle v. Randle 1999 ABQB954 , (1999), 3 R.F.L. (5th) 139 (Alta. Q.B.). 5) The exercise of discretion should be limited to exceptional cases: Organ v. Barnett (1992), (ON SC), 11 O.R. (3d)210 (Ont. Gen. Div.). 6) Interim costs in matrimonial cases may be granted to level the playing field: Randle v. Randle 1999 ABQB 954 , (1999), 3R.F.L. (5th) 139 (Alta. Q.B.). 7) Monies might be advanced against an equalization payment: Zagdanski v. Zagdanski, (ON SC), 2001 CarswellOnt. 2517 (Ont. S.C.J.).

[53] Rogers J. added that some of those principles may no longer hold their previous weight. In particular, while the moving party must prove that the advance payment of expenses is necessary and reasonable, the order need no longer be exceptional. As I read her decision and find, the key factor is “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” (para. 8(9)). [54] The reasons of Rogers J. have been followed in a number of subsequent cases, including the decision of Mesbur J. in Ludmer v Ludmer , 2012 ONSC 4478 . Mesbur J.’s condensed four-part test for the court’s exercise of disclosure, adopted from Stuart, was further adopted by the Divisional Court in Peerenboom v. Peerenboom , 2018 ONSC 5118 (Div.

Ct.). [55] In Peerenboom , the court confirmed at paras. 25-26 that the moving party in a motion for the payment of advance costs has the evidentiary burden of proving: 1. the necessity and reasonableness of the fees and disbursements, given the nature of the case and the funds available; 2. the moving party’s claim is meritorious; 3. the moving party is unable to fund the litigation without the order; and 4. the responding party has the resources or access to resources to pay interim costs and disbursements requested. [ 53 ] Based on the circumstances outlined above regarding the challenges faced by Mr.

Beaumont in advancing his position, I accept that Ms. Krzewina’s claim has merit. Her position that Mr. Beaumont’s income is or should be imputed at a higher level than what Mr. Beaumont claims is capable in being grounded in the evidence before the court. As noted above, she has raised a number of concerns with the accuracy of Mr. Beaumont's purported personal and business income. [ 54 ] I also accept that Ms. Krzewina’s requests for disclosure were reasonable in the circumstances given the manner in which Mr. Beaumont organizes his finances.

Further, given the voluminous disclosure and the entangled nature of Mr. Beaumont's financial situation, it is reasonable to conclude that she would be put to significant additional costs for reviewing and assessing it. [ 55 ] Unfortunately, however, there was no evidence on the necessity or reasonableness of the fees and disbursements claimed, and no evidence provided upon which a finding could be made that without the order the applicant would be unable to fund the litigation. [ 56 ] The applicant provided no details of the fees she has incurred to date or an estimate of potential fees going forward.

She has not filed a financial statement and her personal situation is entirely unknown other than that she has lived for several years without the court ordered level of child support payments from Mr. Beaumont. [ 57 ] The only indication came in submissions when counsel stated that the applicant's legal fees to date have been significant, given the volume of disclosure.

The applicant has failed to provide an evidentiary basis for a finding that absent the advance of fees for interim disbursements, she cannot reasonably proceed with her claims. [ 58 ] In other words, in spite of the relative merits of her position, she has not established that she is unable to fund the litigation without an order or that an order is necessary to level the playing field between the parties. [ 59 ] On the basis of these considerations the claim for the advanced payment of fees is dismissed. [ 60 ] The parties have obviously gone to great lengths and likely great expense to address these matters.

As I have pointed out to counsel and the parties several times previously the mounting costs of this endeavor for both parties may be at risk of exceeding what is reasonable in the circumstances. These resources could be put to better use in these uncertain times. The parties are once again encouraged to renew their efforts to try to reach a negotiated settlement of this matter. [ 61 ] An order shall issue as follows: 1. The motion is dismissed. The parties are strongly encouraged to agree on the issue of costs in this matter, if any.

However, if the parties are unable to agree the party seeking costs shall serve and file written submissions, not to exceed three pages, excluding attachments which shall include any offers to settle by July 2, 2021, with the responding party filing written submissions, not to exceed three pages, excluding attachments which shall include any offers to settle by July 16, 2021. Both parties shall attach a Bill of Costs to date to their submissions . If no submissions are received from the party seeking costs by the deadline there shall be no order as to costs. Released: June 18, 2021 Signed: “Justice S. E. J.

Paull”