Court File and Parties
COURT FILE NO.: FS-16-408712 DATE: 20170228 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: VESNA JOVANOVIC Applicant – and – DRAGAN JOVANOVIC Respondent
Counsel: Maia Rabinovitch, for the Applicant Dragan Jovanovic, In Person
HEARD: February 16, 2017
GILMORE J.
Overview
1The moving party applicant (“the wife”) seeks temporary spousal support in the amount of $3,164 per month. This amount represents the high end of spousal support based on the Spousal Support Advisory Guidelines (SSAG) formula with an income of $91,277 imputed to the respondent (“the husband”) and a 50/50 “NDI”. The wife seeks payment of this amount retroactive to January 1, 2017, and seeks to preserve her right to pursue additional retroactive support at trial.
2The husband offers to pay $500 a month to the wife. His position is that he earns no more than $44,000 per year with a monthly net income of $3,045. He cannot afford to pay the amounts sought by the wife and still have sufficient funds for his basic needs.
Background Facts
3The parties were married for 32 years. They immigrated to Canada from Serbia in 1994. They separated on August 1, 2015. The parties’ marriage was a traditional one with the husband being the financial provider and the wife performing all of the household duties including raising the parties’ now adult son. The husband is now 61 and the wife is 60.
4The husband was served with this application on March 7, 2016. Shortly thereafter he commenced a divorce in Serbia, thereby attempting to defeat the wife’s claims for corollary relief. The wife was successful in obtaining an ex-parte order for a declaration that Ontario was the proper jurisdiction for her application. She obtained another order in June 2016, to restrain the husband from taking any further steps in the divorce proceeding commenced abroad as well as confirmation of her right to pursue corollary relief against the husband regardless of any proceeding commenced by him outside of Ontario. The husband was ordered to pay $1,500 in costs.
5The wife receives financial assistance from the Ontario Disability Support Plan (“ODSP”). Her annual income in 2016 was $12,195. This is not disputed by the husband.
6The wife now lives with her 81 year old mother in order to reduce her living expenses. During the marriage, the wife held some low paying factory jobs. She is no longer able to do work which requires physical labour. Further, the wife lacks Canadian training and education and her English skills are limited. When the marriage ended, the wife was diagnosed with clinical depression and high blood pressure.
7The parties began to work together as apartment building superintendents in 2004. The husband insisted the wife quit the job she had at the time in order to pursue this opportunity. They were fired from that job in 2009. The wife alleges they were fired because the husband drank excessively on the job and was socializing inappropriately with tenants. The husband denied these allegations in his Answer but not in his affidavit. The wife has not worked at all since 2009.
8The wife alleges that her marriage was plagued by the husband’s gambling addiction, alcoholism and marital infidelity. She was financially controlled by the husband and fearful of the consequences of leaving the marriage. The husband did not deny these allegations in his affidavit although such allegations are denied in his Answer.
9The husband made two or three cash payments of $600 to the wife since August 1, 2015, but has otherwise paid no spousal support.
The Parties’ Financial Circumstances
10The wife’s financial circumstances are mostly summarized above. Her ODSP payment remains her sole source of income. She has not worked since 2009 and is unable to be gainfully employed based on her medical conditions. The wife was financially dependent on the husband throughout their lengthy marriage.
11The husband’s income is in dispute. The wife’s position is that the husband has three sources of income; his income from his superintendent job at a condominium on Lakeshore Boulevard in Etobicoke, self-employment income from delivering newspapers for Classified Media, and undisclosed cash income. The wife alleges that these three sources of income totaled $91,000 in 2015. She seeks spousal support based on that amount.
12The wife also alleges that the husband’s lifestyle is consistent with this income. Since separation the husband has gone on three lengthy vacations to Serbia. The wife contends he has gone to Serbia to visit a woman he met on line. The husband insists he has gone to visit his mother.
13The husband has disclosed banking and income tax information for 2015. His T4 for Toronto Standard Condominium for 2015 was $47,352.96. He also declared business income of $27,058 for 2015. However, after deductions for car expenses, capital cost allowance, travel, advertising and office expenses his declared net income for tax purposes was $960.86.
14The wife points to cash deposits into the husband’s account in 2015 totaling $17,000. This amount combined with the self-employment and T4 income is the basis for her claim that support should be paid based on the husband’s income of approximately $91,000.
15A review of the husband’s bank account statements for 2015 verifies the cash deposits to the husband’s account totaling $17,279 (see exhibit “G” of the wife’s affidavit sworn February 8, 2017). The husband protested that these amounts were not cash income but other items such as money his brother loaned to him.
16The husband did not produce bank statements for 2016. His 2016 T4 shows income of $44,057 as superintendent for the condominium corporation. The husband’s position is that he has never earned cash income and that his job with Classified Media ended in March 2016. The wife is suspicious about this timing because she served her application on March 7, 2016 and the husband applied for his Serbian divorce on March 8, 2016.
17The husband also provided income information for 2013. In that year he earned $42,737 as superintendent. He claimed gross business income of $18,709 which was reduced to taxable income of $4,863 after expenses. The full income tax return was not produced. As such, the wife was unable to determine what business expenses were deducted.
18The husband’s income information for 2014 showed employment income from his superintendent job of $46,229. Gross business income was $20,337 which was reduced to taxable income of $1,731 after expenses. As with his 2013 income information, the entire T1 was not produced and therefore the type of business expenses deducted by the husband is not known.
19The husband has sworn three financial statements in this proceeding. The first one, sworn April 6, 2016, shows annual gross income of $71,292. The second statement sworn June 21, 2016, shows annual gross income of $48,406. In the most recent statement sworn February 9, 2017, the annual gross income is down to $45,924.
20The financial statements show a dramatic drop in income over an eight month period. However, the wife points out that the expenses are similar. The husband submitted that he provided three separate financial statements to ensure the court had a realistic picture of his income as his circumstances have changed since he stopped working for Classified Media.
Analysis and the Law
21In this case, entitlement is not an issue. This is conceded by the husband. After a lengthy marriage in which the wife fulfilled a traditional role and provided only a small part of the household income, the only issue on this motion is the amount of spousal support the husband should pay on a temporary basis.
22The authority for awarding interim spousal support is found in section 15.2 of the Divorce Act. The objectives of an interim spousal support order which are relevant to this case are found in section 15.4 and include the recognition of economic advantages/disadvantages arising from the marriage, relieving economic hardship arising from the marriage breakdown and promoting the self-sufficiency of each spouse within a reasonable period of time.
23The legal principles which govern interim spousal support awards are set out in Driscoll v. Driscoll citing Robles v. Kuhn. The relevant considerations for this motion as opposed to trial considerations for spousal support are:
(a) The wife’s needs and the husband’s ability to pay assume greater significance; (b) The award should allow the wife to live at the same standard as she did during the marriage if the husband has the means; (c) This is not an in-depth analysis of the parties’ circumstances. That is left to the trial judge; (d) No statutory consideration should be emphasized more than another; (e) The support award should be within the range suggested by the SSAGs unless there are exceptional circumstances; (f) The support award may only be made where there is a prima facie case for entitlement.
24With respect to the above-mentioned principles, the wife’s counsel raises the point that the husband was solely supporting the wife from the date she retired in 2009. Further, his Answer sets out that the wife lived a life of luxury during the marriage which included trips abroad and expensive dinners paid for by the husband.
25With respect to the husband’s ability to pay, the wife submits that there is ample authority to allow this court to apply the income imputation provisions in s. 19(1) of the Child Support Guidelines (“the Guidelines”) to spousal support calculations. See Ludmer v. Ludmer.
26Other legal principles which should guide the court in awarding interim spousal support include the following:
(a) The court has a wide discretion in awarding interim spousal support which may ultimately be varied by the trial judge; (b) Income may be imputed to a party even without a finding that the party has acted in bad faith; Drygala v. Paul (c) The burden of proof is on the payor to establish his or her income and the deduction of reasonable expenses from that income; (d) When inferences are to be drawn from income disclosure, they should be favourable to the spouse trying to make sense from such disclosure. Dickie v. Dickie
27Applying all of the above principles and factors to the case at bar, the court is left with some unanswered questions and concerns about the husband’s income. As a starting point, however, it is clear that the husband was earning self-employment income in 2015. Including the full gross amount of that income for determining support would be an error. Some expenses should be reasonably deducted. I therefore reject the wife’s position that the husband’s income for 2015 should include $23,000 in gross self-employment income and that his income for support purposes should be $91,277.
28On a go forward basis, there are other concerns. For example, the husband claims he is no longer working for Classified Media. This employment ended in March 2016. I agree that the timing of this is curious given the service of the wife’s application on March 7, 2016, and the husband applying for a Serbian divorce the next day. He produced no bank statements for 2016 and no other evidence of his income except his 2016 T4 from the condominium corporation. There is no letter from Classified Media confirming he no longer does work for them. There is no explanation in his affidavit material about the cash deposits in 2015.
29I find that the husband has not met his onus of properly establishing his income. The lack of disclosure corroborating his sudden decline in income in 2016 is disconcerting. The timing of events as described above may not reach the threshold of bad faith but it certainly raises questions. I find that some income must be imputed to the husband based on both his historical earning pattern and the circumstances surrounding the sudden decline in his income.
30Reviewing his self-employment income in 2015, he deducted a total of $22,149.54 in expenses from gross business income of $27,058.95. Of the many expenses deducted, the only reasonable deductions would be his vehicle expense of $6,370 and some miscellaneous supplies and office expenses of approximately $2,000. Deductions for items such as capital cost allowance, meals and entertainment and advertising are not realistic based on the type of employment. This court is not bound by income deductions which may be acceptable to the Canada Revenue Agency for tax purposes.
31Therefore, a reasonable amount of additional income to impute to the husband in 2016, based on both his historical self-employment earnings and the deduction of expenses commensurate with that type of employment would be $18,688 ($27,058 – ($6,370 +$2,000)).
32The above calculations would result in the husband’s income for support purposes being his employment income of $44,057 plus $18,688 in notional self-employment income, or $62,745. I do not impute any cash income to the husband. There was only one year’s worth of bank statements on which to base these amounts. There was no history to rely on as there was with both his employment and self-employment income. The trial judge may have access to a more fulsome set of bank documents and be in a better position to assess this as another possible source of income on which to base support.
33Based on the SSAG calculation using $62,745 as the husband’s income for 2016 and the wife’s income at $12,195 this would result in a range of support as low as $1,580 and as high as $1,825 per month. Attached as Appendix “A” to this ruling is a copy of the calculation. Given the length of the marriage and the wife’s dependency, I see no reason not to base support on a 50/50 NDI calculation.
Order
34Based on the above considerations, the husband shall pay interim spousal support to the wife in the amount of $1,825 per month commencing January 1, 2017.
35This support award is made without prejudice to the wife’s claim for retroactive spousal support to the date of separation.
Costs
36The wife served an offer to settle on February 8, 2017. She offered to accept spousal support of $2,029 per month based on an imputed income to the husband of $64,000. If the offer was accepted prior to February 14, 2017, at 12:00 p.m. each party would pay their own costs. If it was accepted after that the husband would pay the wife her costs of the motion on a substantial indemnity basis.
37The wife’s offer was remarkably close to what was ordered to be paid by the husband. The amount of income which the wife offered to base the support payment on was only $1,255 more than the imputed income found by the court.
38While this is not a case involving a finding of bad faith, there are several aggravating factors which must be considered in deciding an appropriate amount of costs:
(a) The husband offered to pay $500 per month. The SSAG calculations provided by the wife demonstrate that even if support was based solely on the husband’s employment income, his spousal support obligation at the low end would be $996 per month. (b) The husband failed to provide appropriate corroborating documents with respect to the end of his employment with Classified Media or any bank statements for 2016. (c) The husband has failed to provide anything close to adequate support since separation. (d) The husband’s actions following the issuing of the application illustrate a resistance to dealing with his support obligations to the wife.
39The wife seeks $1,500 in costs. Given the aggravating circumstances and the offer to settle, I see no reason not to order the full amount of costs sought by the wife plus HST for a total of $1,695. As these costs were incurred solely for the purpose of obtaining support, they shall be enforced and collected by the Family Responsibility Office.
Gilmore J.
Released: February 28, 2017