Court File and Parties
Court File No.: D54126/11
Ontario Court of Justice Toronto North Family Court
Between:
Dylan Jones Applicant
- and -
Johan Hugo Respondent
Counsel:
- Alex Finlayson, for the Applicant
- Acting in Person (Respondent)
Heard: April 12, 2012
Justice: S.B. Sherr
Endorsement
Part One – Introduction
[1] The primary issue before the court is the applicant's claim for temporary spousal support against the respondent.
[2] On June 2, 2011, Justice Marvin Zuker made a temporary order that the respondent pay the applicant spousal support of $1,333 per month starting on April 1, 2011. This order was based on an imputed income to the respondent of $100,000 per annum. No income was attributed to the applicant. The respondent did not attend on the motion.
[3] The respondent brought a motion to set aside Justice Zuker's order, claiming that he had not been properly served with the applicant's notice of motion. His position is that the applicant is not entitled to spousal support. He also claims to have little ability to pay spousal support.
[4] The applicant asks that the terms of Justice Zuker's order continue. He has also asked that the respondent's pleadings be struck due to the respondent's failure to pay the temporary support ordered by Justice Zuker and his failure to comply with subsequent financial disclosure orders made by the court. He also asks the court to make the following orders: that the respondent comply with undertakings given on out-of-court questioning, that the respondent not deplete his property pending trial and that the respondent deposit his passport with the court as security for his support obligations.
[5] The merits of the respondent's motion to set aside Justice Zuker's order were very thin. He claimed that the court papers were left with a roommate when he was out of town and that he did not read the court papers until after the motion was heard. However, the applicant had an independent process server swear that he had personally served the respondent.
[6] Instead of focusing on this issue, I determined on August 8, 2011 that we would take a fresh look at the temporary support issue, from the date of separation, with a more complete evidentiary record. However, given the suspect explanation given by the respondent for not attending before Justice Zuker, I ordered that his temporary support order would continue, without prejudice, until the return of the applicant's motion. I also made a financial disclosure order at that time.
[7] The applicant's motion has subsequently been adjourned on consent to permit further financial disclosure and out-of-court questioning of the respondent. On this motion I will determine the following issues:
a) Is the applicant entitled to temporary spousal support?
b) If so, what are the incomes of the parties and should income be imputed to either of the parties for the purpose of the spousal support calculation?
c) What amount of temporary spousal support should be ordered?
d) What should be the start date for spousal support?
e) How should any spousal support arrears be treated?
f) Should there be security for support and if so, what form should it take?
g) Does the court have jurisdiction to order the respondent to deposit his passport with the court as security for his support obligations?
[8] There was a significant evidentiary record presented to the court to address these issues. The parties filed voluminous material on the motion (six continuing records), as well as the transcripts of the out-of-court questioning of the respondent. I reviewed and relied upon all of the material filed, the portions of the transcripts of questioning that I was referred to and the submissions of the parties.
Part Two – Background Facts
[9] The applicant is 32 years old and the respondent is 33 years old.
[10] The applicant is originally from British Columbia. He has a Bachelor of Science degree from the University of British Columbia. He moved to Taiwan in 2003 to teach English.
[11] The respondent is originally from South Africa. He has a high school education. He worked for his father's transportation company in South Africa for two years. He also travelled back and forth in his early twenties between South Africa and the United Kingdom, working in various hotels. He moved to Taiwan to teach English in 2003.
[12] The parties met in Taiwan in 2003. They began cohabiting there on November 19, 2003.
[13] The parties decided in 2006 to move to Canada. The applicant moved to Canada in late 2006 and sponsored the respondent to join him. The respondent came to Canada in January of 2007 and resided with the applicant.
[14] The parties attempted to establish cleaning and real estate businesses shortly after their arrival in Canada. Neither business was successful. During this time, the parties lived off of their savings as well as the applicant's student line of credit and credit cards. The parties pooled their financial affairs.
[15] The parties also agreed that the applicant would attend the Canadian College of Naturopathic Medicine and obtain a degree in this field. The applicant began this four-year program in September of 2007.
[16] In 2008, the parties formed a moving business called Hugo Transport. The business was in the respondent's name. This business performs both residential and commercial moves. The parties used the applicant's remaining credit to finance the business and their joint living expenses.
[17] The business was primarily operated by the respondent, but the applicant provided considerable administrative assistance. He would also sometimes physically help with the moves. During this time he also attended school.
[18] The applicant went bankrupt on April 16, 2008. He was discharged from bankruptcy on January 16, 2009.
[19] In December of 2009, the parties invited a third man, Darijan Bodi (Darijan) to join their relationship. Darijan moved in with the parties in December of 2009 and became part of their family unit.
[20] The parties married on May 19, 2010.[1] Darijan continued to live with them. However, the parties did not tell Darijan that they had married.
[21] In 2010, the parties formed Angel Movers and Storage, another moving business. The parties obtained an investor for the business. Their intention was that the third party investor would have a 10% ownership interest in the business and the parties would each have a 45% interest. It appears that no shares have ever been issued for this business and that it was never incorporated.
[22] The moving business operated under the name Angel Movers and Storage in 2010 and in early 2011. Both the Hugo Transport and Angel Movers and Storage bank accounts were used for this purpose. The parties continued to pool their finances. They both had access to the business bank accounts and used the revenue from the business to support themselves.
[23] The parties lived a very comfortable lifestyle. They frequently went on vacations (Costa Rica, Mexico, Cuba and the United States) and often dined out, spending up to $400 per week on food and $400 per month on pet expenses. Darijan participated in this lifestyle after December of 2009 and went on vacations with the parties. The applicant prepared a chart showing that the parties spent between $70,000 -$100,000 per year between 2007 and 2010. The respondent told the court in submissions that: "We lived beyond our means. No question."[2]
[24] In the summer of 2010, the parties and Darijan discovered that they were all HIV positive. The applicant was very upset about the diagnosis and withdrew from school. He did not attend for the 2010/2011 school year.
[25] The relationship between the parties became fractious. The parties separated on March 23, 2011, but remained together in the family residence. Around this time, Darijan was advised that the parties had married. After an altercation between the parties and Darijan, the applicant and Darijan were charged with assaulting the respondent on April 5, 2011. A term of the applicant's release was that he could not return to the family home.[3]
[26] The parties have not reconciled. The applicant and Darijan have cohabited since the parties separated.
[27] The respondent took active steps to exclude the applicant from the business after the separation. He operated the Angel Movers and Storage business through the Hugo Transport bank account, as only he had access to this account. He cut up the applicant's credit card. The applicant had no income and had to apply for social assistance. Darijan also went on social assistance. The applicant and Darijan moved in with Darijan's parents in Toronto.
[28] The respondent continued to run the moving business on his own.
[29] The applicant was able to access $2,360 from the Angel Movers and Storage bank account on May 25, 2011.[4] This was the last time that he was able to do this.
[30] The applicant started this case on May 31, 2011. Justice Zuker made his temporary order on June 2, 2011.
[31] On October 17, 2011, on consent, I adjourned the applicant's motion and ordered the respondent to provide further financial disclosure.
[32] The respondent did not pay any spousal support until March of 2012, notwithstanding Justice Zuker's order.
[33] The applicant has not functioned well since the separation. He has engaged in counseling and has been on social assistance. He has struggled financially. He did not have sufficient funds to go back to school and finish his schooling. He was able to find some part-time work in 2011 modeling and walking dogs.
[34] In December of 2011, the applicant and Darijan moved to British Columbia and resided with the applicant's parents. The applicant wants to resume his education at the Boucher Institute of Naturopathic Medicine in September of 2012, but still needs funds to complete his education.[5] Student loans will only finance about 50% of his anticipated educational costs (about $25,000 per year). He expects that he would be able to become self-sufficient by the end of 2014, if he is able to finish this program. He is working on a part-time basis running a day-care for dogs with Darijan and doing some tutoring. He also intends to apply for social assistance to supplement his income.
[35] In February of 2012, the applicant and Darijan obtained their own rental residence in British Columbia.
[36] On February 9, 2012, the respondent brought a motion to refrain the Family Responsibility Office from suspending his driver's license. This motion was granted by Justice Robert Spence, conditional on the respondent paying $1,200 per month, starting on March 1, 2012.
[37] The respondent made the March 1, 2012 payment of $1,200. He advised the court that his April cheque to the Family Responsibility Office bounced.
[38] On February 21, 2012, on consent, I adjourned the motion and ordered out-of-court questioning. The questioning of the respondent was completed on March 6, 2012.
[39] The respondent has only partially complied with the court's financial disclosure orders. He also has a number of outstanding undertakings that he provided on questioning.
Part Three – Entitlement to Spousal Support
[40] The applicant's claim for spousal support is framed under section 33 of the Family Law Act (the Act). Subsection 33 (8) of the Act sets out the purposes of spousal support and subsection 33 (9) of the Act sets out how to determine the amount of spousal support as follows:
Purposes of Order for Support of Spouse
(8) An order for the support of a spouse should,
(a) recognize the spouse's contribution to the relationship and the economic consequences of the relationship for the spouse;
(b) share the economic burden of child support equitably;
(c) make fair provision to assist the spouse to become able to contribute to his or her own support; and
(d) relieve financial hardship, if this has not been done by orders under Parts I (Family Property) and II (Matrimonial Home).
Determination of Amount for Support of Spouses, Parents
(9) In determining the amount and duration, if any, of support for a spouse or parent in relation to need, the court shall consider all the circumstances of the parties, including,
(a) the dependant's and respondent's current assets and means;
(b) the assets and means that the dependant and respondent are likely to have in the future;
(c) the dependant's capacity to contribute to his or her own support;
(d) the respondent's capacity to provide support;
(e) the dependant's and respondent's age and physical and mental health;
(f) the dependant's needs, in determining which the court shall have regard to the accustomed standard of living while the parties resided together;
(g) the measures available for the dependant to become able to provide for his or her own support and the length of time and cost involved to enable the dependant to take those measures;
(h) any legal obligation of the respondent or dependant to provide support for another person;
(i) the desirability of the dependant or respondent remaining at home to care for a child;
(j) a contribution by the dependant to the realization of the respondent's career potential;
(k) Repealed: 1997, c. 20, s. 3 (3).
(l) if the dependant is a spouse,
(i) the length of time the dependant and respondent cohabited,
(ii) the effect on the spouse's earning capacity of the responsibilities assumed during cohabitation,
(iii) whether the spouse has undertaken the care of a child who is of the age of eighteen years or over and unable by reason of illness, disability or other cause to withdraw from the charge of his or her parents,
(iv) whether the spouse has undertaken to assist in the continuation of a program of education for a child eighteen years of age or over who is unable for that reason to withdraw from the charge of his or her parents,
(v) any housekeeping, child care or other domestic service performed by the spouse for the family, as if the spouse were devoting the time spent in performing that service in remunerative employment and were contributing the earnings to the family's support,
(v.1) Repealed: 2005, c. 5, s. 27 (12).
(vi) the effect on the spouse's earnings and career development of the responsibility of caring for a child; and
(m) any other legal right of the dependant to support, other than out of public money.
[41] Spousal support is not merely a consideration of needs and means. In determining the appropriate amount of spousal support, compensatory and non-compensatory considerations should be taken into account in an effort to equitably alleviate the economic consequences of the breakdown of the relationship. Rioux v. Rioux 2009 ONCA 569, [2009] 97 O.R. (3d) 102 (OCA). Entitlement can be based on compensatory, non-compensatory or contractual grounds. Bracklow v. Bracklow.
[42] In Kowalski v. Grant 2007 MBQB 235, 2007 CarswellMan 422 (ManQB), the court set out the following principles in dealing with temporary spousal support motions:
Interim support is to provide income for dependent spouses from the time the proceedings are instituted until trial.
The court need not conduct a complete inquiry into all aspects and details to determine what extent either party suffered economic advantage or disadvantage as a result of the relationship. That is to be left to the trial judge.
Interim support is a holding order to maintain the accustomed lifestyle if possible pending final disposition as long as the claimant is able to present a triable case for economic disadvantage.
Interim support is to be based on the parties' means and needs assuming that a triable case exists. The merits of the case in its entirety must await a final hearing.
[43] In Robles v. Kuhn 2009 BCSC 1163, the court added the following considerations:
On interim support motions, needs and ability take on greater significance.
On interim motions, the need to achieve self-sufficiency is of less importance.
Interim support should be ordered within the Spousal Support Advisory Guideline (SSAG) range unless exceptional circumstances dictate otherwise.
Interim support should only be ordered where a prima facie case for entitlement has been set out.
[44] The applicant has established a strong prima facie entitlement to spousal support on both a compensatory and non-compensatory basis. Although the parties were married for less than one year prior to separating, they cohabited for seven and one-half years. They operated as a joint family unit, pooled their monies, made joint decisions to form and operate businesses and made a joint decision that the applicant should go to school and obtain his degree in Naturopathic Medicine.
[45] The applicant has clearly contributed to the respondent's ability to earn income. He sponsored the respondent to come to Canada. The parties lived off mutual savings and the applicant's access to credit when they came to Canada. This was critical in allowing the respondent the time and opportunity to build his business. Business assets were obtained with the applicant's funds, including two trucks that are still used by the business. The applicant assumed the debt (and eventually went bankrupt), while the respondent retained the assets that were obtained with the applicant's credit. The applicant participated significantly in the moving business, without being paid, and helped grow it. He has now been excluded from it. The applicant has been significantly disadvantaged by the breakdown of the relationship.
[46] The applicant also has a need for support, although the need may be short-term. He has been on public assistance and is financially struggling. He needs support to complete his education. His proposed career path is reasonable and will make him self-sufficient. The respondent, as will be set out below, has the ability to pay support.
[47] The respondent submitted that the applicant is disentitled to support because he chose to leave the parties' relationship to live with Darijan. I disagree. At this point I consider Darijan to be a non-factor in the support analysis. The economic dependency of the applicant arose out of his relationship with the respondent. He has suffered significant economic consequences arising out of the breakdown of that relationship. For reasons set out below, the evidence before the court indicates that it has been the respondent and not the applicant who has acted improperly upon the breakdown of their relationship. Further, Darijan has never financially supported the applicant and has been on social assistance himself. He is not able at this time to defray the economic consequences of the breakdown of the applicant's relationship with the respondent. This issue can be examined in more detail if the matter proceeds to a trial.
Part Four - The Respondent's Income
[48] The applicant's position is that the respondent has manipulated his financial records to declare taxable income which is far less than what he really earns. He claims that the respondent earns substantial unreported cash income and is deducting unreasonable expenses from his business which should be added back to his income for calculating his support obligations. The applicant states that the respondent is earning at least $100,000 per annum.
[49] The respondent has given several different estimates of his income. He has prepared two different sets of income tax returns for the years 2008-2010, but hasn't filed any of them with Revenue Canada. He has claimed at times that he earns annual income of $31,000, $35,000, $50,000 and $70,000 per annum. On the motion, he asked the court to fix his income at $50,000 per annum for the purpose of calculating spousal support.
[50] The test for imputing income for child support purposes applies equally for spousal support purposes. Rilli v. Rilli, [2006] O.J. No. 2142 (SCJ); Perino v. Perino, [2007] O.J. No. 4298 (SCJ).
[51] A self-employed person has the onus of clearly demonstrating the basis of their net income. This includes demonstrating that the deductions from gross income should be taken into account in the calculation of income for support purposes. See: Whelan v. O'Connor, 2006 CarswellOnt 2581 (SCJ).
[52] The evidence at this point is that the respondent is playing a game of "catch me if you can".
[53] Despite the financial disclosure orders made, the respondent has only provided partial disclosure. Much of the disclosure provided was provided late. The outstanding disclosure includes:
a) Half of his 2011 business ledgers.
b) His 2008 and 2009 business ledgers from Hugo Transport.
c) His Scotiabank credit card statements.
d) Financial statement for Hugo Transport.
e) Last three income tax returns and notices of assessment. The court has only received draft returns, as they have not been filed with Revenue Canada.
[54] The respondent also provided undertakings to the applicant on his questioning. Important undertakings remain outstanding, including:
a) To produce the balance of his 2011 business ledgers.
b) To produce his business receipts for 2011.
c) To produce his loan agreement for the Ford Escape.
d) To produce the odometer readings for the business vehicles starting in 2008 and ending in 2010 in order that fuel expenses can be properly calculated.
[55] The respondent's business grossed over $200,000 per year, according to a 2010 Statement of Business Affairs that he presented, yet he refused to pay any spousal support as ordered by Justice Zuker until he moved to refrain the Family Responsibility Office from suspending his driver's license. When asked why, he said that he didn't have a good reason to give to the court.
[56] The respondent has structured his affairs to put his assets outside of the applicant's reach. He operates as Angel Movers and Storage (where the applicant has a legal interest), but all monies are processed through Hugo Transport (in which the applicant has no legal interest).
[57] The respondent admitted that the Statements of Business Affairs that he has prepared are merely guesstimates and that he randomly assigned expenses to the different expense categories in the statements.[6] On questioning, he claimed to have prepared his business ledgers from a review of cheques he looked up on his bank statements. However, he failed to disclose any of those cheques to the applicant. He also claimed to have destroyed his notes that he kept while preparing these ledgers. The ledgers were created only after this litigation started. They cannot be considered reliable in these circumstances. The respondent provided receipts that document less than 50% of the expenses that he has claimed. The evidence is pretty clear that he is mixing personal and business expenses in his accounts. The documentary evidence he has provided is incomplete. The respondent acknowledged in submissions that his record keeping is a disaster.
[58] The respondent has been running an "underground business". He has not paid any income or sales taxes. The respondent deposed in one affidavit that he owes personal income taxes in excess of $10,000, including penalties, and close to $40,000 in sales taxes (despite not filing any returns yet). On questioning, the respondent could not explain how he arrived at this liability (including the calculation of penalties), saying that he was relying on his accountant. The court received no evidence from this accountant. It is questionable, given his history, whether the respondent will ever file these tax returns, pay income taxes or remit sales taxes that he has collected.
[59] The applicant deposed that there is a substantial cash business carried on by the respondent's business - that the respondent will offer a 10% discount if his customers pay in cash. The applicant deposed that the respondent kept a "black book" with accurate records of the business, including cash. The respondent undertook to produce his 2011 black book,[7] but failed to do so. Based on how the respondent has operated his business, it appears likely that he has not reported significant cash income. The respondent denied currently operating in cash,[8] but in submissions (for the first time) estimated that the business takes in cash of about $800 per month.
[60] The following exchange on the March 6, 2012 out-of-court questioning of the respondent (starting at question 2231) was revealing:
Q: So how did you do that for '08 and '09?
A: My tax return is incorrect. That's not my true income.
Q: Okay. What's your true income?
A: Well, I don't know. We'll let the judge decide that.
Q: Well, what do you think it is?
A: Well, I don't know. I can guess. I can guess between 50 and 70. I'm not sure.
[61] The respondent appears to be determined not to reveal his true income to the government, the applicant or the court. His Statements of Business Affairs have little value. He has not provided meaningful financial disclosure. His estimates of income cannot be trusted. I have drawn an adverse inference against him.
[62] The respondent provided little evidence of his 2011 income despite court orders to do so. The best evidence of his actual income comes from an analysis of his 2010 documentation.
[63] The applicant conducted a thorough analysis of the respondent's 2010 income. It was attached to his factum. This was not evidence, but rather an analysis of the evidence presented to the court, including documentation from the business and portions of the transcripts of the out-of-court questioning of the respondent. I accept the applicant's analysis as being fair. I will not go into it in detail, but will comment on some of the more important line items as follows:
a) The respondent declared gross income of $202,000 (and net income of about $34,000) in his Statement of Business Affairs attached to his draft 2010 income tax return. He admitted that this did not include deposits of about $3,400 that were made that year into the applicant's bank account and the $9,600 (being about 4.7% of reported gross income) of cash that he admitted to earning in his submissions. This totals $215,000 of gross income. The respondent's estimates of cash income are unreliable. I find it more probable than not that the cash amount claimed by the respondent is understated, perhaps by as much as another 10% (about $20,000) of gross income. I find that the business grossed somewhere between $215,000 and $235,000 in 2010.
b) The respondent set out subcontractor expenses of $48,475 in his draft return, but the applicant pointed out that this included a $4,000 expense to a person who was not a contractor.
c) The respondent included an interest expense of about $2,200 in his draft return, but could not provide documentation to support it or explain what it was for.
d) The respondent allocated over $10,000 in salary to the applicant in his draft return, although nothing was paid to him. A review of the business ledger reveals that the expenses claimed were for personal trips taken by the parties and expenses for other personal items.[9]
e) The respondent deducted over $1,400 for uniforms in the draft return. However, no documentation was provided for this expense and the business does not have uniforms.
f) The respondent claimed convention expenses of $735 in the draft return that had nothing to do with the business.
g) The respondent attempted to aggressively write off his home residence expenses in the draft return. However, he shares this residence with another person and only uses a small portion of the home for business purposes.
h) The respondent deducted expenses and capital cost allowance for a Ford Explorer in the draft return. The evidence strongly indicates that this vehicle has been for personal, not business use.
i) The respondent deducted over $60,000 for truck expenses in the draft return. This included about $13,000 of cash withdrawals for which the respondent admitted that he was uncertain whether these withdrawals were for the stated purpose. The respondent undertook on questioning to provide travel logs for the vehicles. An accurate estimate of fuel costs could have been calculated from these logs. The respondent did not comply with this undertaking.
[64] The income analysis done by the applicant sets out annual expenses of about $125,000 for the business. The applicant has been reasonable in granting the respondent credit for many of the expenses he claimed in his Statement of Business Affairs, even though they were not supported by documentation – it may be that the expenses of the business aren't even this high. However, even if I accept that the respondent may eventually be able to establish some of the additional expenses he claimed, they do not appear to be substantial. I estimate that the respondent's legitimate business expenses are somewhere between $115-135,000 annually.
[65] Based on the evidence provided to date, if the annual income range of the business is $215,000-235,000 and the annual expense range is between $115,000-135,000, the annual profit range of the business is between $80,000- $120,000. Due to the adverse inference drawn against him, the respondent will not be given the benefit of the doubt- I will not impute income to him at the lower end of this range.
[66] The income figure of $100,000 per annum submitted by the applicant is very reasonable, particularly since he has not asked to gross-up this figure as it appears that the respondent will be declaring and paying tax on substantially less income than he is actually earning (if he chooses to file and pay any taxes at all). Grossing-up of income is done to ensure consistency of treatment where a party is found to have arranged his affairs to pay less tax on income. Sarafinchin v. Sarafinchin, [2000] O.J. No. 2855 (Ont. S.C.J.).
[67] Income of $100,000 per annum will be imputed to the respondent for the purpose of the temporary spousal support calculation.
Part Five – The Applicant's Income
[68] The applicant deposed that he earned a little over $2,400 in 2011 doing part-time work, such as modeling and walking dogs. He projects that he will earn a little over $7,000 this year. He is working part-time running a day-care for dogs (together with Darijan) and doing some tutoring. He says that it is difficult to obtain full-time work when employers are told that he will be returning to school in the fall. The applicant acknowledges that there are currently no medical reasons preventing him from working.
[69] The respondent has asked me to impute minimum wage income to the applicant for the purpose of calculating temporary spousal support. I am not prepared to do that, at this point. The respondent is responsible in large part for the applicant's financial misfortune. He cut off his income source. He has refused to pay the temporary support order, making it extremely difficult for the applicant to fund the completion of his education. The applicant, due to his bankruptcy, cannot access private sources for loans. If the respondent had complied with the court order, the applicant might already be back in school and be closer to becoming self-sufficient. Further, the applicant provided medical and counseling records showing that he suffered considerable anxiety arising from his HIV diagnosis and the manner of the marriage breakdown that adversely affected his ability to earn income, particularly in 2011.
[70] I find the applicant's proposed plan to become self-sufficient to be reasonable. He should be self-sufficient by the end of 2014, if the respondent complies with the support order. I accept the applicant's submission that it does not make sense to work full-time at a minimum wage job when he has the opportunity to earn a substantial income once he completes his education. This was the plan that the parties had agreed was reasonable in better times between them. However, if the applicant receives the court-ordered support and still does not attend school in September of 2012, this analysis could become very different.
[71] I have also considered that the applicant has an obligation to take reasonable steps to become self-supporting. Taking into account his age, education, work experience and the circumstances of the marriage breakdown, the court finds that the applicant had the ability to earn $5,000 in 2011 and $10,000 per annum starting in 2012 for the purpose of the temporary support calculation. The applicant now has the opportunity to work more hours until September of 2011, when he would only be expected to work part-time while he completes his education.
Part Six – Support Award
[72] The Court of Appeal in Fisher v. Fisher 2008 ONCA 11 stated that the Spousal Support Advisory Guidelines, (SSAG), while only advisory, are a useful starting point to assess the quantum of spousal support once entitlement is established. They have been endorsed as ideal for use on temporary support motions. See: D.R.M. v. R.B.M., 2006 BCSC 1921.
[73] The SSAG calculation for 2011 based on the findings set out above produce a low-end range of $891 per month, mid-range of $1038 per month and high-end range of $1,188 per month. The suggested duration range is 3.75-7.5 years from the date of separation, subject to variation and possible review.
[74] The SSAG calculation for 2012 based on the findings set out above produce a low-end range of $844 per month, mid-range of $984 per month and high-end range of $1,125 per month.
[75] I find that an amount closer to the higher end of the SSAG range is appropriate in this case. The applicant needs maximum support now to finance his education. This will reduce his dependency, possibly to a point where it can be terminated by the end of 2014, or shortly thereafter.
[76] The respondent will be required to pay the applicant temporary spousal support of $1,125 per month.
[77] I am going to start the support obligation as of June 1, 2011, as the applicant was able to withdraw $2,360 from the Angel Movers and Storage bank account after the separation and before he started the court case. This amount was sufficient to cover any support obligation of the respondent during the period before the start of the claim.
[78] This order will create considerable support arrears for the respondent. This is the respondent's own fault. He has disregarded Justice Zuker's order. He had the ability to pay support on an ongoing basis. This order will provide that the arrears are to be repaid at the rate of $475 per month starting on May 1, 2012, with the provision that if the respondent is more than 20 days late in making any ongoing or arrears payment, the entire amount of arrears shall immediately become due and payable. I find that this arrears payment is affordable for the respondent.
Part Seven – Security for Support
7.1 Non-Depletion of Property
[79] The applicant seeks security for the respondent's support obligations. He asks that the court provide security in two ways - first by making a non-depletion of property order and second, by requiring the respondent to deposit his passport with the court. The respondent opposes both requests.
[80] In Kumar v. Kumar, 1998 CarswellOnt 1075 (S.C.), the court set out in paragraph 6 criteria for the court to consider when determining whether to order security for support:
a) Where there is a history of dissipation of assets.
b) Where the payor is likely to leave the jurisdiction.
c) Where the payor has in the past refused to honour a support obligation.
d) Where the payor has a poor employment history, has threatened to leave employment, lacks income, or has been uncooperative with the payee in the past.
e) Where there are assets in Ontario capable of forming the basis of a security order or,
f) Where the payor has declared he will not pay a support order.
[81] This case cries out for aggressive enforcement. The respondent has shown no indication that he will comply with court orders. He is already in substantial arrears of support, having almost completely disregarded Justice Zuker's order. He has not properly complied with financial disclosure orders or undertakings given on examination. He has not provided accurate financial disclosure. He operates an underground business. He has threatened to go bankrupt if required to pay support to the applicant. He is highly mobile, having roots in South Africa and having worked in both the United Kingdom and Taiwan. In his closing submissions, the respondent asked the court not to order his passport deposited with the court and to reduce his temporary support obligation to $800 per month. He said that failing this, he will likely have his license suspended, have to close the company and will likely want to leave Canada and return to South Africa. There is a high-risk that the respondent will abscond from the jurisdiction in order to avoid his support obligations.
[82] I have no difficulty in making the non-depletion order sought by the applicant pursuant to section 40 of the Act, which reads:
Restraining Orders
- The court may, on application, make an interim or final order restraining the depletion of a spouse's property that would impair or defeat a claim under this Part.
7.2 Jurisdiction of the Ontario Court of Justice to Order the Respondent's Passport Deposited into Court as Security for His Support Obligations
[83] The respondent only has a South African passport. He does not have a Canadian passport. This means that the Family Responsibility Office is unable to suspend his passport as a means of enforcing the support order.
[84] This leads to whether this court has jurisdiction to order that the respondent deposit his South African passport into court.
[85] The applicant relies on clause 34 (1) (k) of the Act in support of this request. This clause reads:
Powers of Court
- (1) In an application under section 33, the court may make an interim or final order,
(k) requiring the securing of payment under the order, by a charge on property or otherwise.
[86] The deposit of a passport is not a charge on property. The issue is whether the deposit of the passport can qualify as "or otherwise" for requiring the securing of payment under the order. I find that it does.
[87] This clause of the Act should be considered and interpreted within the context of the entirety of the Act, as well as other legislation enforcing support orders. One of the objectives of the legislation is to ensure that payors pay support ordered by the court and not abscond from the jurisdiction in order to avoid their support obligation. This is reflected in section 43 of the Act which reads as follows:
Arrest of Absconding Debtor
- (1) If an application is made under section 33 or 37 and the court is satisfied that the respondent is about to leave Ontario and that there are reasonable grounds for believing that the respondent intends to evade his or her responsibilities under this Act, the court may issue a warrant for the respondent's arrest for the purpose of bringing him or her before the court.
Bail
(2) Section 150 (interim release by justice of the peace) of the Provincial Offences Act applies with necessary modifications to an arrest under the warrant.
[88] Section 43 of the Act permits the court, by warrant, to have a support payor arrested and brought to the court if it has reasonable grounds to believe that he or she will abscond from the jurisdiction in order to avoid his or her support obligations. The court is permitted under subsection 43 (2) of the Act to impose bail terms. In such situations, the deposit of a passport would likely be a critical term of release.[10]
[89] In Tatarchenko v. Tatarchenko, [1999] O.J. No. 2776 (SCJ- Family Court), the court dealt with whether a passport should be released to a support payor who was in default of a support obligation. The payor's passport had been ordered deposited with the court in 1998, arising out of a concern that he may abscond from the jurisdiction with his children. Subsequently, the payor asked for the release of his passport to travel to his homeland. The court exercised its discretion and refused to release the passport on the basis that the payor was over $7,000 in support arrears. The court refused to release the passport unless the payor either paid the outstanding support arrears or posted a sufficient bond to the credit of the support recipient. The payor argued that the denial of his passport violated the Canadian Charter of Rights and Freedoms, as his right to personal liberty was being infringed. The court relied on section 43 of the Act to reject this argument, and wrote that it was essential for courts to protect the integrity of the court process and ensure that payors do not abscond from the jurisdiction to avoid their support obligations. In essence, the court required the passport to remain deposited with the court to secure the payor's support obligation.
[90] The court should be cautious before ordering the deposit of a passport into court as security for support due to its restriction on a person's mobility rights. However it isn't an exceptional remedy. The Family Responsibility Office would have had the power to seek a suspension of the respondent's passport if he had a Canadian passport. Section 67 of the Family Orders and Agreements Enforcement Act, R.S.C. 1985, c. 4, as amended reads:[11]
Licence Denial Application
- (1) Where a debtor is in persistent arrears under a support order or a support provision, a provincial enforcement service may apply to the Minister that the following actions be taken against the debtor:
(a) that no new schedule licences be issued to the debtor;
(b) that all schedule licences held by the debtor be suspended; and
(c) that schedule licences held by the debtor not be renewed.
(2) An application must be in the prescribed form and must contain the prescribed information concerning
(a) the identity of the debtor; and
(b) the support order or support provision.
(3) An application must be accompanied by an affidavit in the prescribed form. The affidavit must be submitted by an officer of the provincial enforcement service and must contain the following statements:
(a) that the provincial enforcement service is satisfied that the debtor is in persistent arrears under the support order or the support provision;
(b) that the provincial enforcement service has made reasonable attempts to enforce the support order or the support provision before making the licence denial application; and
(c) that the provincial enforcement service has sent a notice to the debtor, at the debtor's last known address,
(i) stating that the provincial enforcement service has reasonable grounds to believe that the debtor is in persistent arrears under the support order or support provision,
(ii) stating that the provincial enforcement service intends to make a licence denial application in relation to the debtor,
(iii) informing the debtor of the consequences to the debtor of a licence denial application, and
(iv) advising the debtor that a licence denial application will not be made if the debtor enters into a payment plan that is acceptable to the provincial enforcement service or satisfies the provincial enforcement service that the debtor is unable to pay the amount in arrears and that the making of the application is not reasonable in the circumstances.
(4) An application may be made only after thirty days have expired after the notice referred to in subsection (3) was received by the debtor.
(5) A notice referred to in subsection (3) is deemed to have been received by a debtor ten days after it is sent to the debtor.
[91] The order requested by the applicant is necessary to ensure that the respondent complies with his support obligations. It is a proportional remedy. There is no evidence that the passport will be required by the respondent in the near future. The business does little work in the United States and the respondent can make other arrangements for such work. The respondent can ask to change this term in the future by being in good standing under the support order, or providing other security for his support obligation. As in the Tatarchenko case above, he will need to show good faith.
[92] The Ontario Court of Justice has very limited authority to make orders under clause 34 (1) (k) of the Act. The court has to find that the case falls within one of the exceptions set out within subsection 34 (2) of the Act, which reads as follows:
Limitation on Jurisdiction of Ontario Court of Justice
34 (2) The Ontario Court of Justice shall not make an order under clause (1) (b), (c), (i), (j) or (k) except for the provision of necessities or to prevent the dependant from becoming or continuing to be a public charge, and shall not make an order under clause (d).
[93] I find that this case falls within the permissive provisions of this subsection. The applicant has been a public charge and needs the support (and enforcement of the support) to avoid continuing as a public charge.
[94] I also find that the applicant requires the support for the provision of necessities. I agree with the comments of Justice Y.A. Renaud in Easton v. McAvoy, 2005 CarswellOnt 7379 (OCJ) where after he reviews the case law defining the expression "necessities" he finds that courts should liberally construe this term and writes at paragraphs 58 and 59:
58 Quite apart from the legislation that does confer on this court the power to grant orders under clause 34(1)(b), clause 34(1)(c), clause 34(1)(i), clause 34(1)(j) or clause 34(1)(k) within the considerations expressed in the limitation on jurisdiction in subsection 34(2), I would suggest that there are sound public policy reasons for reading this section broadly. Reference may be had to the declared purpose of the legislation, which includes strengthening the role of the family and providing for the orderly and equitable settlement of the affairs of spouses and to provide for other mutual obligations including the sharing by parents of responsibility for their children.
59 It is put that a liberal reading of the powers of the court under subsection 34(2) will also promote an easier access to necessary remedies and to justice in family matters. Travelling is expensive and is often a burdensome, difficult and risky endeavour. This is particularly so for families who are of modest means or who reside outside the larger centres. Commonly, these families have more ready access to the Ontario Court of Justice. In fact, in the present instance, yet again, litigants pleaded property issues only to be informed that, by reason of the legislation, such issues as property equalization and interim possession and listing of the matrimonial home for sale are not matters that this court has the jurisdiction to address.
[95] Although South Africa is a reciprocating jurisdiction under the Interjurisdictional Support Orders Act, the reality is that it will be far more difficult for the applicant to enforce this order if the respondent leaves the jurisdiction. The court requests that both the Canadian and South African governments cooperate in the enforcement of this order by not issuing, renewing or replacing any passport for the respondent, if requested by him, without further order of the court.
[96] The court suggests that the applicant send certified copies of this order to the Canadian Passport Office, Canada Border Services and the South African embassy and consulate.
Part Eight – Motion to Strike Pleadings
[97] The court has ample authority to strike the respondent's pleadings due to his breach of court orders. I have found that he had the ability to pay the support ordered by Justice Zuker and deliberately chose to disregard the order. He has not properly complied with financial disclosure orders. The court's authority is as follows:
Sub-rule 1(8) of the Family Law Rules (the rules) – The court may deal with failure to follow an order by making any order that it considers appropriate for a just determination of the matter, on any conditions that the court considers appropriate, including an order dismissing the claim of any party who has willfully failed to follow the rules or obey the order.
Sub-rule 14(23) of the rules – The court may strike pleadings, dismiss a case and order that no further proceedings can be brought without leave of the court as a sanction for failure to comply with an order on a motion.
Sub-rule 19(10) 4 of the rules – If a party does not follow a document disclosure order, then the court can strike that party's pleadings.
Section 24 of the Child Support Guidelines – If a party does not comply with an order to provide documents under section 22 of the Child Support Guidelines, the court can strike out that party's pleadings, proceed to a hearing, make an adverse inference and impute income.
[98] The case law is clear that striking pleadings is a last resort. See: Marcoccia v. Marcoccia, 2008 ONCA 866. However, pleadings can be struck where non-compliance with financial disclosure orders has been severe. See: Purcaru v. Purcaru, 2010 ONCA 92. It is also clear that court orders are not suggestions and should be enforced by courts – otherwise the administration of justice may fall into disrepute. See: Gordon v. Starr, 2007 CarswellOnt 5438 (SCJ).
[99] In submissions, the applicant indicated that he would be content if the court merely preserved his right to renew his request to strike the respondent's pleadings in the future. I don't think that this option adequately addresses the blatant default of the respondent. The respondent is expected to comply with the court's orders. If he continues to disregard them, he should lose the privilege of participation in this case. The applicant should not be put to the time or cost of preparing a new motion.
[100] I wish to make it perfectly clear to the respondent that he will be given one last chance to change his attitude and demonstrate that he will comply with court orders. The respondent has made this case much more complicated than it needs to be. The applicant's motion to strike the respondent's pleadings will be adjourned to monitor the respondent's compliance with the court's order.
[101] The respondent will be given 45 days to comply with the prior financial disclosure orders. He will also be given 45 days to comply with his outstanding undertakings given on examination. He shall deposit his passport with the court within 10 days, to be held pending further order. All time periods run from the date of this decision.
Part Nine – Conclusion
[102] A temporary order will go on the following terms:
a) The respondent shall pay the applicant temporary spousal support of $1,125 per month, on the first day of each month, starting on June 1, 2011.
b) This order varies the order of Justice Zuker dated June 2, 2011. Specifically, any arrears accumulated under the order of Justice Zuker prior to June 1, 2011 are rescinded.
c) The respondent shall be credited with the one support payment of $1,200 previously paid to the Family Responsibility Office.
d) The Family Responsibility Office is requested to adjust their records in accordance with the terms of this order.
e) The respondent shall repay the support arrears created by this order at the rate of $475 per month, on the first day of each month, starting on May 1, 2012. If he is more than 20 days late in making any ongoing support payment, or arrears payment, the entire amount of arrears shall immediately become due and payable.
f) The respondent shall provide the balance of financial disclosure previously ordered by this court on August 8, 2011 and October 17, 2011 within 45 days from the date of this decision.
g) The respondent shall comply with his outstanding undertakings given on his questioning within 45 days from the date of this decision. These undertakings are set out in the affidavit of Waldemar Gogacz, sworn on April 7, 2012, contained in Tab One, Volume Six of the Continuing Record. Specifically, the outstanding undertakings are listed in Exhibit H of his affidavit.
h) The respondent is to produce for inspection his 2011 business receipts within 45 days of the date of this decision.
i) The applicant has leave to further question the respondent regarding the disclosure to be produced, but not yet produced.
j) The respondent is to deposit his passport with the court no later than April 27, 2012 as security for support. This passport cannot be released without prior court order.
k) The Canadian government and the South African government (including any embassy or consulate) are requested not to issue, renew or replace a passport for the respondent without prior court order.
l) The respondent shall not deplete his property pursuant to section 40 of the Family Law Act.
[103] If the applicant wishes to seek costs, he may submit written submissions by April 30, 2012. The respondent will then have until May 14, 2012 to provide any written response. The submissions shall not exceed three pages, not including any offer to settle or bill of costs.
[104] The trial coordinator's office will contact the parties to set a date to address the return of the applicant's motion to strike the respondent's pleadings and to review next steps in this case.
Justice S.B. Sherr
Released: April 17, 2012
Footnotes
[1] In his affidavit of July 28, 2011, the respondent deposed that the parties were married on October 19, 2011 and asserted that the marriage lasted only five months. The applicant provided their marriage certificate showing the May 19, 2010 date of marriage.
[2] This statement was in stark contrast to his statements in his affidavit sworn on July 28, 2011, where the respondent claimed that the parties lived a modest, "student-esque" lifestyle in 2008 and 2009 and only started spending more in 2010.
[3] This charge was eventually resolved with the applicant and Darijan entering into a Peace Bond.
[4] The applicant believes that the respondent inadvertently deposited a customer cheque into this account, as opposed to the Hugo Transport account. The applicant still had access to the Angel Movers and Storage bank account.
[5] The applicant needs to complete most of his third year of this course, before entering his fourth and final year. He estimates that it will take him about 24 months to complete his education and then another six months to study for and write his qualifying board exams before he can enter the workforce.
[6] He submitted that the total amount of expenses claimed are accurate, it is just the allocations to the expense categories that are guessed at.
[7] He claimed that he no longer had these books for prior years and that the applicant may have taken them.
[8] See questions 1729-1733 of the respondent's out-of-court questioning.
[9] A review of the ledger shows expenses for dry cleaning, bookstores, charitable donations, ITunes, Lotto tickets, Ticketmaster, groceries, restaurants, pet expenses, pharmacy expenses and a trip to Mexico.
[10] A mirror provision to section 43 of the Act is contained in section 49 of the Family Responsibility and Support Arrears Act.
[11] The schedule of licences includes passports.
