Court of Appeal for Ontario

Date: 2019-06-28 Docket: C64355 Judges: Sharpe, Trotter and Harvison Young JJ.A.

Between

Dipikaben Makwana Applicant (Appellant/Respondent by way of cross-appeal)

and

Sewsankar Bishnu Respondent (Respondent)

and

Surujpaul Bishnu Respondent (Respondent/Appellant by way of cross-appeal)

and

Howard Melvin Wasserman Intervener and Trustee in Bankruptcy for Sewsankar Bishnu

Counsel

Gary S. Joseph and Michaela Newman, for the appellant

Abba Chima, for the respondent, Sewsankar Bishnu

Jameel Madhany, for the respondent, Surujpaul Bishnu

Howard Melvin Wasserman, in person

Heard: May 29, 2019

On appeal from: the order of Justice Thomas A. Bielby of the Superior Court of Justice, dated August 23, 2017, with reasons reported at 2017 ONSC 4916.

Reasons for Decision

Background

[1] The parties, Dipikaben Makwana and Sewsankar Bishnu, had a romantic relationship and lived together for a relatively short period of time in the 1990s. They had a daughter who was born in January 1995. Following the breakdown of their relationship, the appellant sought custody, as well as child and spousal support. In a judgment rendered in October 1999, the appellant was awarded sole custody and child and spousal support. The trial judge made adverse findings as to the credibility of the respondent and found that he had attempted to conceal his true income. The trial judge awarded spousal support at $1,750 per month and child support at $733 per month based upon the income he imputed to the respondent of $100,000. The trial judge also ordered that the spousal support could be reviewed in three years without the necessity of proving a material change in circumstances.

[2] The respondent did not appeal the judgment but failed to comply with the support orders and the order for costs. He filed for bankruptcy in 2003 and remains undischarged.

[3] The appellant moved with her daughter to the United States in 2000, and remarried in 2003. She worked as a computer programmer until 2009.

[4] The respondent brought this motion to vary the spousal and child support in October 2011. He brought an earlier motion to vary in 2002 but he was not permitted to proceed with any such motion until he paid the outstanding costs from trial. Evidence from a CRA audit showed that the respondent's income for 1996, 1997 and 1998 was $110,346, $220,706 and $211,040 respectively but it declined to $59,541 in 1999. From 2002 to 2009, his disclosed income was essentially zero. He led evidence indicating that he has suffered from physical and mental health issues since 1999 and that he is living on social assistance.

[5] The appellant sought an order setting aside certain conveyances made by the respondent as fraudulent. As a result of that application, both Surujpaul Bishnu and the respondent's trustee in bankruptcy were added as parties.

[6] The motion judge made adverse findings of credibility against the respondent but did find that as time passed he developed medical problems that impacted upon his ability to earn income. The motion judge found that given the appellant's employment and remarriage, there had been a material change in her circumstances and that spousal support should terminate as of December 31, 2002. He refused to vary the amount of spousal support ordered by the 1999 judgment up to that point.

[7] The motion judge ordered that child support terminate as of June 30, 2013, at which date the daughter was 18 years old and was no longer in full-time attendance at school. He continued the amount ordered by the 1999 judgment until December 31, 2003. However, due to the respondent's health issues and declining income, he reduced the amount of child support from 2004 to 2009 to $303 monthly, and from 2010 to 2013 to $176 monthly.

[8] The motion judge dismissed the fraudulent conveyance application.

Issues

[9] The appellant submits that the motion judge erred by varying the orders for child and spousal support. The appellant, supported by the trustee in bankruptcy, also appeals the decision of the motion judge dismissing the fraudulent conveyance application.

[10] Surujpaul Bishnu cross-appeals the application judge's refusal to award him costs despite the dismissal of the fraudulent conveyance application.

Analysis

1. Child Support

[11] The motion judge appears to have simply fixed child support on the basis of what he found the respondent's income had likely been. He did not consider the factors mandated by D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231. In our view, that amounted to an error of law.

[12] Of particular concern is: (1) whether there is a reasonable excuse for the respondent's delay in applying for relief; and (2) the respondent's conduct, including whether he made any effort to comply with the order and his compliance with financial disclosure requirements. As we have noted, both the motion judge in 2017 and the trial judge in 1999 made adverse findings as to the respondent's credibility and compliance with disclosure requirements. He has a long history of non-compliance with the support order. While the respondent did launch a motion to vary in 2002, he failed to proceed with that application as he was unwilling or unable to satisfy prior costs awards. That, in our view, does not amount to a satisfactory excuse for failing to proceed more expeditiously with the application to vary. We are also mindful of the fact that the respondent's failure to make child support payments may have had an adverse impact on the child's wish to pursue post-secondary education. On the other hand, the ongoing financial capacity of the respondent, including his ability to make payments towards outstanding arrears is a relevant factor: see Gray v. Rizzi, 2016 ONCA 152, 129 O.R. (3d) 201, at paras. 57-60.

[13] The appellant argues that the motion judge erred by departing from the amount imputed for the appellant's income in the 1999 judgment, on the bases that there was no evidence to support the new imputation and that the motion judge failed to give proper weight to the imputation of income in the 1999 judgment.

[14] While the evidence of the respondent's income during the relevant period may have been limited, the motion judge was clearly aware of the unreliability of the respondent as a witness and of the gaps in the evidence and he took this into account when imputing income. Moreover, there was some evidence to support his findings as to the respondent's income for the years following 1999. While the motion judge described the figures he arrived at as "somewhat arbitrary", he did base the figures on the evidence before him which included the respondent's income tax returns, information from his occasional employer, and medical evidence. In our view, the motion judge also did not err in law by failing to pay adequate attention to the income imputed in the 1999 judgment. There was sufficient evidence that his income had changed significantly since that time.

[15] Taking all these factors into account, it is our view that the appropriate order is to maintain the motion judge's order terminating child support as of June 30, 2013. However, it is appropriate to vary that part of the motion judge's order reducing the $733 child support order from 2004 to 2009 to $303 monthly, and from 2010 to 2013 to $176 monthly. In our view, that would unduly reward the respondent for his failure to move more quickly, his failure to make any effort to comply with the 1999 order, and his failure to comply with disclosure. On the other hand, in view of the motion judge's findings as to the respondent's income and the need to fashion an order that is realistic in all the circumstances. For the purpose of fixing the arrears, we reduce the monthly child support from 2004 to 2013 from $733 monthly to $366 monthly.

2. Spousal Support

a) Alleged Error Interpreting the Review Clause

[16] We do not agree with the appellant's submission that the motion judge erred by treating the review clause in the 1999 judgment as a termination clause. As we read his reasons, he simply took into account that the order provided for review after three years with no need to show material change in circumstances. The parties were involved in a relatively short-term relationship and the appellant was capable of earning an income. The 1999 judgment clearly contemplated that the appellant would have become self-sufficient within three years and this turned out to be the case. By the end of 2002, she was earning a significant income and she had married someone who also earned a significant income. The detailed reasons the motion judge gave as to change in circumstances indicate that he did not simply treat the review clause as if it called for automatic termination of spousal support. It was simply a factor he took into account in assessing when to make the change.

b) Material Change of Circumstances

[17] While, as we have stated in relation to the issue of child support, the motion judge failed to refer to the D.B.S. factors, we do not agree with the submission that that failure infected his treatment of spousal support. While considerations similar to the D.B.S. factors are relevant to spousal support, spousal support has a different legal foundation than child support. There is no presumptive entitlement to spousal support: Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at paras. 207-208. The circumstances of the spouse seeking support is an important factor. The motion judge's variation of the arrears for spousal support did not rest upon the means or income of the respondent but rather on primary question of the appellant's entitlement to support and the material change of circumstances and to her means and needs. Ultimately the Supreme Court has emphasized the need for flexibility and a holistic view of each matter on the basis of its particular factual matrix: Kerr, at para. 12; D.B.S., at para. 99.

[18] We do not agree that the motion judge erred by finding that there was a material change in circumstances relating to the means of the appellant as of December 2002. There was evidence that the appellant was earning a significant income as a computer programmer and that she had remarried. The motion judge did not treat the appellant's remarriage as an automatic change of circumstances. Her tax assessments show an income rising from $29,000 in 2003 to $114,000 in 2011. By the time of the application, several years had gone by and the motion judge was in a strong position to assess the appellant's earnings and the significance of her marriage in relation to the respondent's support obligation. In our view, his order terminating spousal support on account of the appellant's changed circumstances as of December 31, 2002 was justified on this record.

3. Fraudulent Conveyance Application

[19] The application judge found that while the conveyance by the respondent of his interest in 89 Main Street to Danwantie Jaginarine in December 1999, was fraudulent, the subsequent transfer to Surujpaul Bishnu in 2002 was not. The basis for this conclusion was the factual finding that Surujpaul Bishnu acted in good faith and without any knowledge of fraudulent intent within the meaning of s. 2 of the Fraudulent Conveyances Act, R.S.O. 1990, c. F.29. Section 3 provides that s. 2 – voiding transfers "with intent to defeat, hinder, delay or defraud creditors" – does not apply where the transferee did not have "notice or knowledge" of the fraudulent intent.

[20] We see no merit in the submission that the motion judge erred in law by finding only that the transferee lacked "knowledge" but failed to consider whether the transferee had "notice". This proposition does not appear to be supported by the case law. Moreover, the motion judge's finding that Surujpaul Bishnu acted in good faith amounts to a finding that he lacked awareness, whether it be labelled "knowledge" or "notice", of any fraudulent intent.

[21] Nor are we persuaded by the trustee's argument that as there was no actual sale between Danwantie Jaginarine and Surujpaul Bishnu, s. 3 of the Act does not apply. The mortgage on the property was in default and subject to power of sale. Surujpaul Bishnu, acting in good faith, acquired the property by providing valuable consideration. He discharged the mortgage and two other charges. No valuation evidence was led to indicate that the consideration was grossly inadequate.

[22] We note as well the application judge's finding that while Surujpaul Bishnu is the respondent's brother, Surujpaul Bishnu has been in possession of the property and paid all mortgage and other expenses for over 15 years and there is no evidence to suggest that the respondent has or expects to have any interest in the property.

[23] The appellant and the trustee may have a remedy against the proceeds of the earlier conveyance that was found to be fraudulent, but as the property has been transferred to a good faith purchaser for value, they have no remedy against the property or the transferee.

4. Cross-Appeal Re Costs

[24] When he rendered his judgment on August 23, 2017, the application judge asked counsel to arrange a one-half day appearance to argue costs if they could not agree. No appearance was arranged and on October 11, 2017, the application judge advised counsel that unless he heard from them within 10 days, he would assume costs were not in issue. Surujpaul Bishnu's counsel (not counsel on this appeal) wrote on October 17, 2017 asking for more time to make costs submissions. No further submissions were made. Almost three months later, on January 15, 2018, the application judge issued an endorsement stating that as he had received no submissions and as "[m]ore than sufficient time has elapsed for submissions on costs", there would be no order as to costs.

[25] We do not accept the submission that Surujpaul Bishnu was denied procedural fairness and that the application judge erred by refusing to order costs. The application judge set out a clear procedure to be followed for making costs submissions. Months went by and counsel made no costs submissions. In these circumstances, the application judge was entitled to put an end to the matter and order that no costs award would be made.

Disposition

[26] Accordingly, the appeal against the variation of the child support order is allowed in part. The appeal against the spousal support order is dismissed, as is the appeal against the dismissal of the fraudulent conveyances application. The cross-appeal as to costs is dismissed.

[27] There has been divided success on this appeal. If the parties are unable to agree as to costs, they may make brief written submissions, from the appellant, within 15 days of the release of these reasons and from the respondents, within 10 days thereafter.

Robert J. Sharpe J.A.

G.T. Trotter J.A.

A. Harvison Young J.A.