



COURT OF APPEAL FOR ONTARIO

CITATION: Froehlich-Fivey v. Fivey, 2016 ONCA 833

DATE: 20161104

DOCKET: M47041 (C62623)

Lauwers J.A. (In Chambers)

BETWEEN

Carolina Froehlich-Fivey

Applicant (Appellant/Responding Party)

and

Jeffrey Richard Fivey

Respondent (Respondent/Moving Party)

Bonnie C. Oldham, for the moving party

D. Andrew Thomson, for the responding party

Heard: October 28, 2016

ENDORSEMENT

[1]

The respondent (the moving party on this motion) moves for an order
    under r. 61.06 of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194 for
    security for costs of the appeal. He submits that there are good reasons to
    believe the appeal is frivolous and vexatious and that the appellant (the
    responding party on this motion) has insufficient assets in Ontario to pay the
    costs of the appeal.

[2]

For the reasons that follow, I agree with the respondent and order that
    the appellant post security for costs in the amount of $20,000.

Background

[3]

The factual background is extensively set out in the reasons for
    judgment of Koke J. of the Superior Court of Justice (with reasons reported at
    2016 ONSC 4729), which is under appeal.

[4]

The parties began living together in February 1992 and were married on
    February 23, 1993. They moved to the Parry Sound area around 2000 and started a
    heating and air conditioning business in which they were equal owners. They
    separated on August 16, 2011 after about 18.5 years of marriage. They had two
    daughters, Christine and Stephanie. At the time of their separation, the
    appellant was 49 years-old, the respondent was 42, Christine was 17, and
    Stephanie was about to turn 15.

The Trial Judges Decision

[5]

Before their separation, the parties both drew income from the business
    and used the business to pay many of their personal expenses. The appellant
    continued to access company accounts after their separation and ran up debts.
    The trial judge noted, at para. 20, on the evidence that:

[T]he parties lived well beyond their means prior to the
    separation. The purchased a number of expensive boats and personal watercraft,
    ATVs, snowmobiles, and vehicles and they travelled regularly. Many of the
    purchases were made using funds and credit from the business. As will be seen
    below, they accumulated substantial debt at the time of separation.

[6]

Appendix A to the judgment sets out the amounts owing on the various
    amounts in dispute. I attach it as an appendix to these reasons. The amounts in
    dispute and the trial judges determinations of those issues are set out there.
    The list of expenses shows the financial effects of a number of determinations
    of fact and credibility made by the trial judge, which he carefully explains in
    his reasons. The net result was that the appellant was obliged to pay to the
    respondent about $114,000.

[7]

The trial judge issued his costs decision on September 2, 2016, reported
    at 2016 ONSC 5541, in which he awarded the respondent the sum of $63,940.80 for
    fees and $14,093.64 for disbursements, plus HST where applicable.

The Appeal

[8]

In the notice of appeal, the appellant asks that the judgment be set
    aside in part and a judgment be granted as follows:

1.

That the respondent pay to the appellant the sum of $3,490 per month
    spousal support indefinitely;

2.

That the respondent pay to the appellant the sum of $98,295.68 to
    equalize the parties Net Family Property in exchange for her interest in the corporation.

3.

That the respondent pay to the appellant her costs of the trial and this
    appeal.

[9]

The notice of appeal lists thirteen grounds of appeal, all of which take
    issue with factual determinations made by the trial judge. I address some of
    them below.

Discussion

[10]

The respondent submits that an order to post security for costs is
    justified under r. 61.06 which governs security for costs on appeal:

(1) In an appeal where it appears that,

(a) there is good reason to believe that the appeal
    is frivolous and vexatious and that the appellant has insufficient assets in
    Ontario to pay the costs of the appeal;



a judge of the appellate court, on motion by the
    respondent, may make such order for security for costs of the proceeding and of
    the appeal as is just.

...

(2) If an appellant fails to comply with an order
    under subrule (1), a judge of the appellate court on motion may dismiss the
    appeal.

[11]

For such an order to be granted, the motion judge must: (a) have good
    reason to believe the appeal has no merit and is therefore frivolous and
    vexatious, and (b) have good reason to believe the appellant has insufficient
    assets in Ontario to cover the costs of the appeal:
Schmidt v. Toronto-Dominion
    Bank
(1995), 24 O.R. (3d) 1 (C.A.). As this court observed in
Schmidt
, at para. 16
:

A judge hearing a motion for security for costs may reach the
    tentative conclusion that an appeal appears to be so devoid of merit as to give
    "good reason to believe that the appeal is frivolous and vexatious"
    without being satisfied that the appeal is actually totally devoid of merit.

Is the appeal frivolous and vexatious?

[12]

In my view, there is good reason to believe the appeal has no merit. It
    does not raise any arguable error in law. It only challenges the trial judges findings
    of fact and credibility that are sound on their face. Therefore, to succeed,
    the appellant must ultimately demonstrate that the trial judge made a number of
    palpable and overriding errors in his findings, such as failing to address a
    material issue, failing to take into account relevant evidence, or taking into
    account irrelevant evidence.

[13]

I have considered the major grounds of appeal and do not believe that
    the trial judge committed any palpable and overriding errors. The first ground
    of appeal is that the trial judge showed bias against the appellant. The trial
    started on December 14, 2015 and the appellant was present, representing
    herself. She was unable to attend the second day of the trial for medical
    reasons and had Mr. Thomson, who is counsel on this appeal, attend with her on
    her behalf. He made submissions for an adjournment and then left. The trial judge
    granted an adjournment on the following terms. First, he adjourned the trial to
    January 6, 2016. Second, he provided in his order that all arrears of child and
    spousal support are expunged, without prejudice to the parties to raise the
    issue of arrears during the trial. This had the effect of stopping the efforts
    of the Family Responsibility Office to collect the alleged arrears. Third, he
    terminated child support effective immediately again without prejudice to the
    parties to raise the issue of child support at trial, although it appeared
    that child support was no longer tenable in light of the childrens ages.
    Finally, he reduced spousal support to $1,500 per month, effective
    immediately, without prejudice to the parties to raise the issue of spousal
    support at trial. The appellant argues that the reduction of spousal support
    in particular shows bias.

[14]

Alleging bias against a judge is a very serious matter and it needs to
    be substantiated. In this case, the appellant has not done so. I am unable to discern
    in the endorsement of December 16, 2015, any hint of bias. The trial judge was
    simply attending to the situation as he understood it, given the appellants
    request for an adjournment and the prejudice it would cause to the respondent. Furthermore,
    the trial judges reasons for judgment exhibit a balanced approach to the
    issues. Counsel for the appellant does not point to any particular lines in the
    trial judgment as exhibiting bias.

[15]

The second ground is that the trial judge erred in fact and in law in
    finding that the appellant is not entitled to compensatory support given the
    length of the marriage and the circumstances of the parties. The trial judge
    faced this issue directly, at para. 43, noting:

Carolina has worked and was re-educated during the marriage.
    She has experience and a university degree in both education and computer
    science and she has the ability, skills and education to become financially
    independent. In my view she is not entitled to compensatory support.

[16]

He added, at para. 51:

Given that there is strong evidence that Carolina can become
    financially independent, a lump sum or step down of support is appropriate.
    Also, given the fact that this litigation alone has likely hampered Carolina's
    ability to become financially independent, and there is no basis for a
    compensatory award of support, a clear fixed termination of support is
    preferable to an obligation to return to court to re-litigate the issues.

[17]

The trial judge was alive to the issue and addressed it fully. The
    relevant law was set out by this court in
Gray v. Gray
, 2014 ONCA 659,

122 O.R. (3d) 337. In that case, this court increased
    the spousal support awarded to a former wife, whose health problems prevented
    her from securing work. The fact that the appellant can work in this case
    distinguishes it from the situation in
Gray
. This case and
Gray
are
    not comparable at all.

[18]

The third ground relates to the imputation of income to the appellant of
    $35, 000 to $40,000 annually. The trial judge explained his reasoning, which he
    based on the evidence. He grounded his finding, on the availability of work for
    the appellant, which he based on the evidence of a local high school principal.
    He did not assume that the appellant would be able to get full time employment.
    Rather, he stated, at paras. 45 and 46:

However, in my view, if properly focused Carolina could earn a
    reasonable income as a part time or supply teacher. In the case of
Sinclair
    v. Sinclair
, 2013 ONSC 1226, [2013] O.J. No 1150, 2013 CarswellOnt 2788,
    Parayeski J. held that the claimant has to get on with life and support
    herself. (at para 53), and he imputed an annual income to the mother of
    $40,000, being roughly 50% the average annual income for teachers despite the
    fact that she had not been working as a teacher for several years.

The evidence before the court indicates that Carolina should be
    able to earn at least $35,000 to $40,000 per annum from teaching given her
    qualifications at this time. In fact, once she is relieved of her court
    obligations and the distractions which come from being involved in this
    litigation it is likely that she can make significantly more through supply
    teaching, tutoring and providing computer related services.

[19]

In oral argument before me, the appellant pointed out that her income
    for the year before trial was about $27,000, which is less than the $35,000 the
    trial judge imputed to her. However, it became clear during the trial that she
    did not realize she was eligible to teach in both the elementary and secondary
    panels of the school board, as the principal explained in his evidence. The
    trial judges clear expectation was that the appellant would have more time, and
    more opportunity to work once the case was over. This is not, on the face of
    it, an unreasonable expectation.

[20]

The fourth, and related, ground of appeal concerns the trial judges
    limitation on the duration of spousal support. The trial judge addressed this,
    at paras. 51-52:

Given that there is strong evidence that Carolina can become
    financially independent, a lump sum or step down of support is appropriate.
    Also, given the fact that this litigation alone has likely hampered Carolina's
    ability to become financially independent, and there is no basis for a compensatory
    award of support, a clear fixed termination of support is preferable to an
    obligation to return to court to re-litigate the issues.

I am ordering that the existing order of $1500 per month for
    spousal support continue for a period of 12 months, from September 1, 2016
    through August 31, 2017. Thereafter, I am ordering that support continue at the
    rate of $1300 per month for a period of four and a half years, through February
    28, 2022.

The trial judges determination was firmly rooted in
    the evidence.

[21]

The fifth ground of appeal is that the trial judge failed to take into
    account the appellants health as a limiting factor in her ability to earn a
    greater income. In this respect, the appellant complains that the trial judge
    erred in excluding medical evidence and finding that there was no medical
    evidence to support her testimony. The excluded evidence was a letter from her
    doctor sought to be admitted for the truth of its contents in the appellants
    reply, without calling the doctor as a witness. The trial judge refused to
    admit the letter, as he was entitled to do. He addressed the medical issue, at
    para. 44:

There is some evidence to support Carolina's claim that she now
    suffers from depression and/or anxiety which has resulted in a couple of brief periods
    of hospitalization and possibly the need for medication. However, it would
    appear that her condition is at least in part due to the general stress of the
    breakdown of the relationship and her own reduced financial situation (which in
    my view results in part from her refusal to come to terms with the fact that
    she cannot maintain her pre-separation life style and standard of living).
There was no medical evidence presented during the trial that
    would indicate that Carolina has health issues which compromise her ability to
    work full time.
(Emphasis added.)

There is no obvious error in this finding.

[22]

The final ground of appeal concerns the fact that the respondent called Christine
    Larkin as an expert valuation witness. She is an accountant at the firm to
    which responsibility for maintaining the companys books and records was
    transferred after the parties separation. Her impartiality was challenged at
    trial. The trial judge rejected the challenge, at paras. 94- 95:

Carolina questions whether the court should accept Ms. Larkin
    as an expert. Although she agrees that Ms. Larkin is qualified to provide the
    value of a business, she points out that her association with the business
    disqualifies her as an expert.

I do not share these concerns. Ms. Larkin filed and confirmed
    an Acknowledgment of Experts Evidence. She was initially hired to provide a
    business valuation, which she completed on March 29, 2012 and thereafter she
    was retained to prepare the company's financial statements for 2011 and then
    performed the income analysis which was completed on November 2, 2012. Despite
    her subsequent association with the business, I find no basis that Ms. Larkin
    was not able or willing to provide the court with fair, non-partisan and
    objective evidence.

[23]

The decisions on whether a witness is biased, and whether to accept
    expert evidence, are quintessentially within the trial judges mandate. In this
    case, the trial judge knew that Ms. Larkin was a participant expert witness. As
    this court held in
Westerhof v. Gee Estate
, 2015 ONCA 206, 124 O.R.
    (3d) 721 and
Gordon v. Canada (Attorney General)
, 2016 ONCA 625, at
    paras. 327-328, the evidence of participant experts is not subject to the
    strictures of r. 53 of the
Rules of Civil Procedure
. The Supreme Court
    in
White Burgess Langille Inman v. Abbott and Haliburton Co
., 2015 SCC
    23, [2015] 2 S.C.R. 182, at para. 49, stated that:

The trial judge must determine, having regard to both the
    particular circumstances of the proposed expert and the substance of the
    proposed evidence, whether the expert is able and willing to carry out his or
    her primary duty to the court.

[24]

That is precisely what the trial judge did.

[25]

Taken together, the grounds of appeal challenge the trial judge's
    findings of fact, the inferences he drew from the facts, and his assessments of
    credibility and reliability. He gave detailed and coherent reasons for all of
    these. As Strathy C.J.O observed in
Henderson v. Wright
,
2016 ONCA 89, [2016] O.J. No. 533, at
    para. 19: In such cases, there is almost no possibility of successfully
    overturning the result. In my view, the appeal has little if any merit.

Does the appellant have
    insufficient assets in Ontario to cover the costs of the appeal?

[26]

The appellants financial situation is difficult. As the respondent
    points out, the orders that have not been appealed require her to pay him about
    $158,000. Further, the matrimonial home, as of the date of separation, was
    valued at $294,000 and has a current first mortgage on it of about $142,000. The
    respondent acknowledges that, since he assumed the second mortgage on the house
    pursuant to the trial judges order, there is some equity in the house. In
    addition, the appellant has a LIRA worth about $185,000.

[27]

The respondent in his affidavit states:

Although she has these assets, she also had in excess of
    $60,000 in debt (in addition to the mortgage) in 2011. I know that her credit
    card and other debts have increased significantly since the date of separation
    from the information disclosed on her updated financial statements and because
    I have been contacted by creditors threatening to terminate services to
    Carolina (hydro, property taxes) for non-payment.

[28]

In response to this direct challenge, the appellant provides no
    substantive financial information. She states simply that I am informed by my
    bank that I will have access to a portion of my LIRA in April 2017, about
    $20,000. She adds that the creditors referred to by the respondent in his
    affidavit called him at a time when he was paying no support or was
    arbitrarily deducting amounts from the support he was ordered to pay leading to
    debt being accumulated by me. She does not, however, provide any evidence as
    to the amount of debt she is now carrying.

[29]

Taken together, the evidence on the appellants financial responsibilities
    and means gives me no confidence that she has sufficient liquid assets to cover
    the costs of the appeal. Indeed, if she is unsuccessful on appeal then the
    current state of her finances would leave the respondent with a formidable
    collection problem. Further, if the appellant actually has equitable room in
    her assets to pay a costs award, then she should be in a position to provide
    security for costs by, for example, posting a letter of credit: See
Perron
    v. Perron
, 2011 ONCA 776, 345 D.L.R. (4th) 513;
Baker v. Rego
,
    2013 ONSC 3309, O.J. No. 2590; and
Children's Aid Society of York Region v.
    G.S.
, 2010 ONSC 3804, 98 R.F.L. (6th) 179.

Disposition

[30]

Taking into account the lack of merit of the appeal, the respondents
    exposure to the costs of the appeal, and his prospective difficulty in
    collecting costs from the appellant, I find good reason to order the appellant
    to post security for costs in this case. I therefore order the appellant to
    post security for costs in the amount of $20,000 within 60 days of the date of
    this order, failing which a judge of this court may dismiss the appeal on
    motion.

[31]

I fix costs of the motion at $6,000 inclusive of disbursements and
    applicable taxes, payable by the appellant.

P. Lauwers J.A.


