Court File and Parties
Court File No.: 439/12 Date: 2014-01-09
Ontario Court of Justice
Re: Anu Lahar (Applicant) And: Manish Kumar Lahar (Respondent)
Before: Justice S. O'Connell
Counsel:
- Maria N. Sirivar, for the Applicant
- A. Saroha, for the Respondent
- Rajunder Singh, Punjabi Interpreter
Endorsement
Motions heard on October 1, 2013 and December 4, 2013
Background
[1] This is a motion to set aside or change the final order of the Honourable Justice Zisman dated December 5, 2012, brought by the respondent father, Mr. Manish Kumar Lahar.
[2] On December 5, 2012 Justice Zisman made an order granting the applicant mother custody of the child of the marriage and an order that the respondent father should have no access or contact to the child without the prior written consent of the applicant mother and on terms agreeable to the applicant mother without prejudice to the respondent's right to apply for access on notice to the applicant.
[3] Justice Zisman also ordered that the respondent father (hereinafter "Mr. Lahar") shall pay child support for the child to Mrs. Lahar in the amount of $546.00 per month. This amount was based on Mr. Lahar's imputed income of $60,000 per annum from his employment as a truck driver. Further Justice Zisman ordered Mr. Lahar to pay spousal support in the amount of $1,189.00 per month commencing May 1, 2012.
[4] This final order was made on an uncontested basis after Mr. Lahar had been noted in default. According to the affidavit of service filed with the application and the form 23C affidavit for an uncontested trial, Mr. Lahar was personally served by a professional process server on November 4, 2012. Mr. Lahar did not file an answer or respond. The first appearance in court regarding the application was on December 5, 2012. Mr. Lahar did not attend court on that day or provide any explanation for his absence.
[5] Having reviewed the affidavit of service sworn November 5, 2012, and finding that Mr. Lahar was served by special service on November 4, 2012 and had not filed an answer or participated in the proceedings, Justice Zisman noted Mr. Lahar in default and the application proceeded on an unopposed basis.
[6] The applicant mother provided evidence in the application and in her sworn affidavit materials that Mr. Lahar was employed as a long haul truck driver throughout the parties' marriage and that based on her knowledge and information, he earned approximately $60,000 per annum. Based on the evidence filed and the fact that Mr. Lahar failed to provide any income information, although under a legal obligation to do so, Justice Zisman determined that it was reasonable to impute income to Mr. Lahar in the amount of $60,000 per annum from his employment as a truck driver.
The Motion to Set Aside the Final Order
[7] On May 16, 2013, approximately five months later, Mr. Lahar brought his motion to set aside the order of Justice Zisman after the Family Responsibility Office commenced enforcement proceedings. Mr. Lahar deposed that Justice Zisman's order was issued in his absence and without any notice to him. He submitted that it was in the interest of justice that the order of Justice Zisman be set aside and changed so that the application could be decided on its merits.
[8] In his affidavit supporting the motion, Mr. Lahar acknowledged that by profession he is a truck driver and that he commutes between Canada and the United States on a regular basis. On average, each trip takes between five to six days. He deposed that as such he was out of town during the party's relationship due to work obligations and had less time to spend with the child and the applicant.
[9] Mr. Lahar further deposed that he has never earned $60,000 per annum as a truck driver and that his annual income is $20,000. He further deposed that the applicant mother is a "stubborn, arrogant and demanding lady. From day one of her arrival in Canada, she demanded that I should move out of my parents' house and get a separate residence for her." Mr. Lahar denied all of the evidence of violence that was set out in the application and affidavit by the applicant in her affidavit for an uncontested hearing.
[10] Mr. Lahar further deposed that he had a "strong bonding" with his parents and that he did not want to abandon them which offended the applicant mother and led to the breakdown of their relationship. He further accused her of making false allegations of abuse against him and his father, leading to criminal charges against him.
[11] The first appearance in the motion came before me on May 13, 2013. When asked specifically to address why the affidavit of service from the professional process server indicated that Mr. Lahar was personally served on November 5, 2012. Mr. Lahar's counsel at the time stated that the process server may have given the court documents to Mr. Lahar's father whose last name is also Lahar, although his first name is not Manish.
[12] When questioned by the court why Mr. Lahar's father did not notify the respondent that he had received court documents on his behalf, or give him the documents, Mr. Lahar replied in open court that after his separation, he had no contact with his father and no longer has any relations with him. His statements in court directly contradicted his affidavit wherein he deposed at paragraph 11 that: "I have a strong bonding with my old parents."
[13] Nevertheless, I was prepared to consider the financial issues on their merits and to give Mr. Lahar an opportunity to provide further evidence regarding his income in the interest of ensuring that the support ordered by Justice Zisman accurately reflected Mr. Lahar's ability to pay. However, it was apparent that the sworn financial statement filed by Mr. Lahar contained a number of deficiencies. Mr. Lahar deposed that he was self-employed carrying on a business under the name of 1870706228 Ontario Inc., yet he did not provide any corporate income tax returns, individual income tax returns, business financial statements or supporting documentation.
[14] In court, his counsel and Mr. Lahar advised that his accountant prepared both his individual and his corporate tax returns and also prepared the financial statements for the business, which included the business expenses that he deducts from his income. None of this was provided.
[15] Mr. Lahar further stated in open court that his company was also known as Manish Transport Limited and that he was also employed by United Star trucking company as a truck driver. He explained that he set up a numbered corporation in his name and then the trucking company would pay him under his corporation so that he could deduct the appropriate business expenses from the income that he receives.
[16] It was apparent that significant financial disclosure was required by Mr. Lahar as a self-employed person. The motion was therefore adjourned to permit Mr. Lahar to provide the following financial disclosure, which was ordered on consent of both parties:
- Mr. Lahar's personal and corporate bank statements for the past twelve months;
- His personal and corporate income tax returns and notices of assessment for 2009, 2010, 2011 and 2012;
- Information regarding all of the companies that he worked for during the past 12 months;
- The constituting documents of his incorporated businesses;
- A revised form 13 financial statement with details of his real estate, his loans, his RRSPs, his savings and disclosure of all assets and personal loans.[1]
[17] The matter returned to court on July 18, 2013. At that time Mr. Lahar had fired his previous counsel. He then filed a new affidavit claiming that the affidavit prepared by his previous counsel was incorrect and that it did not contain crucial information. He further stated that he did not understand what had happened in court at the last court appearance and that he now required the assistance of a Punjabi interpreter. A copy of the transcript of the appearance on May 13, 2013 was obtained by counsel for the mother. It was apparent from reviewing that transcript that several questions were posed to Mr. Lahar in English to which he appeared to respond easily to in English and he appeared to understand the questions correctly. Nevertheless, out of an abundance of caution, the court ordered that a Punjabi interpreter be appointed for Mr. Lahar.
[18] Mr. Lahar also did not provide the disclosure that had been ordered at the last proceeding except for some documents which he handed to counsel for the mother on the day of court. Mr. Lahar was granted a further opportunity to obtain and provide the disclosure that had been ordered on May 13, 2013. A further disclosure order was made. The matter was adjourned to August 14, 2013 to address the outstanding financial disclosure and Mr. Lahar's motion.
[19] On August 14, 2013, Mr. Lahar had yet to provide his 2011 and 2012 corporate and individual income tax returns pursuant to the order of May 16, 2013 and July 18, 2013. He also failed to provide the corporate bank statements that he was ordered to produce and the supporting documentation that was requested for his 2009 and 2010 corporate tax returns.
[20] This was Mr. Lahar's motion to set aside child and spousal support order made. The onus was clearly on him as a self employed person to provide the required financial disclosure ordered to determine whether or not Justice Zisman's final order should be aside on its merits, notwithstanding the fact that he provided little or no evidence that he had not been personally served with the originating application.[2]
[21] The motion was therefore adjourned to October 1, 2013 to permit Mr. Lahar a further opportunity to produce the financial disclosure ordered. The motion date was made peremptory on Mr. Lahar and the cost order of $250 was made against him on that day for the wasted court appearance.
[22] The matter returned to court on October 1, 2013. Mr. Lahar had by then retained new counsel. At that time Mr. Lahar produced a document disclosure brief which contained the following:
- His 2009, 2010, 2011 individual and corporate tax returns,
- His business accounts statements for 2009, 2010, and 2011.
[23] During submissions at the hearing of the motion, although Mr. Lahar had maintained in his three sworn affidavits and sworn financial statement that his annual income was $20,000, through his new counsel, he revised that position and stated that his income was actually between $40,000 and $50,000 per annum as a professional truck driver. Mr. Lahar further admitted that he owns a condominium although this was not in any of his previously sworn financial statements. He also admitted that he had co-signed a mortgage for the condominium, also not disclosed on any of his financial statements. It is noted that the three sworn affidavits and sworn financial statements are all prepared in English even though Mr. Lahar stated that he did not understand English and required the assistance of an interpreter.
[24] In the 2012 corporate tax return for the tax year ending December 31, 2012, Mr. Lahar's gross revenue was listed at $49,243. The operating expenses deducted included an expense of $20,205 for "office expenses" although no supporting documentation or explanation was provided. This was the same for all of the expenses deducted. For the corporate tax years ending 2010 and 2009 and 2011, Mr. Lahar provided corporate tax returns which indicated his gross revenue was $58,345 in 2011, $55,985 in 2010 and $55,985 in 2009, after deduction of business expenses, none of which had supporting documentation attached or available for the court's review.
[25] Mr. Lahar provided portions of some of his bank statements for 2012 which indicate the following deposits into one account:
| Month | Amount |
|---|---|
| June 2012 | $3,454.67 |
| July 2012 | $5,102.62 |
| August 2012 | $3,431.65 |
| September 2012 | $4,483.43 |
| October 2012 | $7,095.69 |
| November 2012 | $4,695.91 |
| December 2012 | $1,228.89 |
[26] The bank statements provided by Mr. Lahar also indicated that in March of 2013 he deposited $3,600 into his personal chequing account or primary chequing account. In April of 2013 and in May of 2013, after he served his motion to set aside the final order of Justice Zisman, deposits of $1,000 monthly were made. He further provided some bi-weekly receipts for cash payments from a Mr. Raaz Syed in August and July of 2013 in the amount of $1,500 each which he indicated were for wages.
[27] Mr. Lahar also stated in a sworn affidavit that, effective August 4, 2013, he owed $52,867 to a Mr. Raaz Syed for a personal loan. He deposed that Mr. Syed is his ex-business partner and that the loan was the result of the business loss that he incurred while conducting a clothing store business with Mr. Syed. He deposed that he and Mr. Syed had decided to open a clothing store. Their agreement was that the business would be under Mr. Lahr's name and that he would run the store once it had opened. Mr. Syed would invest his money into the business and during this period Mr. Lahar would apply for a bank loan. Once the bank loan was approved Mr. Lahar would use the loan money to share the costs of starting the business and expenses and would share the profit annually with Mr. Syed. He deposed that Mr. Syed invested a total of $140,000 in the business.
[28] According to Mr. Lahar, he is bound by a promissory contract with Mr. Syed and that he was legally obligated to pay him a total of $70,450. This amount was now reduced to approximately $52,000.00, as indicated earlier since he has managed to pay $17,000.00 towards this loan. He further deposed that he has directed United Way to make his pay cheques to Mr. Syed, under Mr. Syed's corporation 1870706 Ontario Inc. and that Mr. Syed then in turn only writes a cheque to Mr. Lahar in the amount of approximately $1500 every two weeks, or a total of $3,000.00 monthly to recoup the loan amount, while the balance of his earnings go to Mr. Syed.
Mr. Lahar's Further Motion, dated December 4, 2013
[29] Since the hearing on October 1, 2013 and just prior to my reasons for decision were to be released, the court has learned that Mr. Lahar's financial circumstances have apparently changed. On December 4, 2013, Mr. Lahar brought a 14b motion to suspend the enforcement of the support order made by Justice Zisman by the Family Responsibility Office. In his affidavit in support of his motion to suspend enforcement of his support obligation, Mr. Lahar deposed that on October 3, 2013, two days after the hearing of his motion to set aside the support order, he was terminated from his employed Untied Way Transport. He deposed that United Way Transport terminated him because he was unable to attend work on a regular basis as a result of the company's policies and expectations.
[30] Mr. Lahar deposed that because of the onerous obligations placed on him by the court to provide financial disclosure in support of his motion, he was terminated from his work. Mr. Lahar deposed that he has been unable to find work since October 3, 2013 and that as a result of his unemployment and having no source of income to survive; his only resort was to rely on social assistance or Ontario Works. He deposed that on November 15, 2013 he attended Ontario Works and has now been eligible for and in receipt of Ontario Works and that his total annual income now is only $8,160. He further deposed that he is currently looking for employment in the trucking business and any other jobs available in the market.
[31] In that motion, Mr. Lahar also sought a final order and a final decision based on his current financial circumstances. He also sought a final order for custody and access and sought access to his daughter, which he had not sought prior to this date. He stated that he intended to enrol in English language classes and attend college to find local employment so that he could remain in the community and be close to his daughter for access. His affidavit was sworn without the assistance of a Punjabi interpreter.
The Law and Governing Principles
[32] The father's evidence regarding whether he was personally served with the mother's application was very concerning to the court and raised some serious issues of credibility, which I appreciate cannot be tested on affidavit evidence alone. Nevertheless, there were some obvious contradictions and inconsistencies on the face of the father's affidavit, and based on his statements in court. However, I agree with counsel for both parties that this motion should be decided on its merits in the interests of justice. I will therefore not consider whether the father has met the legal threshold to set aside this final default order in accordance with the governing legal principles.
[33] I must therefore determine whether the imputation of the father's income by Justice Zisman for child and spousal support purposes, accurately reflects the father's income at the time the order was made now that I have all of the father's evidence. I have given Mr. Lahar ample opportunity to provide the disclosure that he is required to produce and have granted him a number of adjournments to do so.
[34] A self-employed person clearly has the onus of demonstrating the basis of his or her net income for child support purposes. This includes demonstrating that the business deductions from gross income should not be taken into account in the calculation of income for support purposes. See Whelan v. O'Connor, 28 R.F.L. (6th) 433, [2006] O.J. No. 1660, 2006 CarswellOnt 2581 (Ont. Fam. Ct.).
[35] It is also well established in the case law that the self-employed person has an obligation to put forward adequate and comprehensive records of income and expenses, so that a proper determination of the amount of child and spousal support can be established. The onus rests on the parent seeking to deduct expenses from income to provide meaningful documentation supporting those deductions, failing which an adverse inference can be drawn. See Meade v. Meade, (2002), 31 R.F.L. 5th, 88 (Ont. S.C.J.) and Orser v. Grant, [2000] O.J. No. 1420 (S.C.J.). As Justice Frances P. Kitely summarized in Meade v. Meade, supra:
[81] It is inherent in the circumstances of those who are self-employed or who have irregular income and expenses, that they have a positive obligation to put forward not only adequate, but comprehensive records of income and expenses. That does not mean audited statements. But it does mean a package from which the recipient spouse can draw conclusions and the amount of child support can be established. Where disclosure is inadequate and inferences are to be drawn, they should be favourable to the spouse who is confronted with the challenge of making sense out of financial disclosure, and against the spouse whose records are so inadequate or whose response to the obligation to produce is so unhelpful that cumbersome calculations and intensive and costly investigations or examinations are necessary.
[36] I am also directed by Section 19 of the Child Support Guidelines, which reads as follows:
19. Imputing income.
(1) The court may impute such amount of income to a parent or spouse as it considers appropriate in the circumstances, which circumstances include,
(a) the parent or spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse;
(b) the parent or spouse is exempt from paying federal or provincial income tax;
(c) the parent or spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
(d) it appears that income has been diverted which would affect the level of child support to be determined under these guidelines;
(e) the parent's or spouse's property is not reasonably utilized to generate income;
(f) the parent or spouse has failed to provide income information when under a legal obligation to do so;
(g) the parent or spouse unreasonably deducts expenses from income;
(h) the parent or spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and
(i) the parent or spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.
(2) Reasonableness of expenses. -- For the purpose of clause (1)(g), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act (Canada).
[37] In Duffy v. Duffy, 2009 NLCA 48, [2009] N.J. No. 245, the Newfoundland Court of Appeal summarized the general principles governing the issue of imputing income for child support purposes:
The fundamental obligation of a parent to support his or her children takes precedence over the parent's own interests and choices.
A parent will not be permitted to knowingly avoid or diminish, and may not choose to ignore, his or her obligation to support his or her children.
A parent is required to act responsibly when making financial decisions that may affect the level of child support available from that parent.
Imputing income to a parent on the basis that the parent is "intentionally under-employed or unemployed" does not incorporate a requirement for proof of bad faith. "Intentionally" in this context clarifies that the provision does not apply to situations beyond the parent's control.
The determination to impute income is discretionary, as the court considers appropriate in the circumstances.
Where a parent is intentionally under-employed or unemployed, the court may exercise its discretion not to impute income where that parent establishes the reasonableness of his or her decision.
A parent will not be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations or interests. Nor will it be acceptable for a parent to choose to work for future rewards to the detriment of the present needs of his or her children, unless the parent establishes the reasonableness of his or her course of action.
A parent must provide proper and full disclosure of financial information. Failure to do so may result in the court drawing an adverse inference and imputing income.
[38] The test for imputing income for child support purposes applies equally for spousal support purposes. See Rilli v. Rilli, 151 A.C.W.S. (3d) 1130, [2006] O.J. No. 4142, 2006 CarswellOnt 6335 (Ont. Fam. Ct.); Perino v. Perino, 46 R.F.L. (6th) 448, [2007] O.J. No. 4298, 2007 CarswellOnt 7171 (Ont. S.C.).
Application of these Principles to the Facts in this Case
[39] For the purposes of his motion, the father has produced some, although not all of the financial disclosure that was ordered. The father submitted that his income was $20,000.00 per annum at the time Justice Zisman made the final order. This figure is not borne out by the father's own evidence and indeed, his counsel conceded during submissions that a more accurate approximation of the father's income would be in the range of $40,000.00 to $50,000.00 per annum at the time of Justice Zisman's Order. However, even that estimation, in my view, is not accurate.
[40] The bank deposits alone in only one of the father's bank accounts for 2012, indicate that he was depositing, on average, over a six month period, $4,710.67 per month, or $56,527.93, if extrapolated over a twelve month period. As noted, this was for only one bank account.[3] The father did not provide any explanation for the business expenses deducted from his gross annual income in 2012, and the "office expenses" alone of $20,000.00, if clawed back into his income and grossed up for tax purposes, could well exceed $60,000.00. The father failed to disclose the condominium he owned for the mortgage he co-signed in any his sworn financial statements. Given the serious issues that I have with the father's affidavit evidence, the lack of adequate financial disclosure, and the fact that even on the disclosure provided, the father demonstrates at a minimum, an income of $56,000.00 at the time the order was made, I see no reason to interfere with the determination of income made by Justice Zisman.
Order
[41] Accordingly, I order that the father's motion to set aside the support provisions in the Final Order of Justice Zisman be dismissed, but that the matter be set for a motion to change hearing given the apparent change in circumstances now raised by the father regarding his financial situation, and to address the father's claim for access. The father shall now properly commence a motion to change the final order of Justice Zisman and serve and file his motion to change.
[42] I further order there be an immediate case conference scheduled before me regarding the recent changes in the Respondent's financial circumstances as well as his claim for access, as stated by him in his recent affidavit, dated December 4, 2013, filed. If these issues cannot be resolved at a settlement conference, then an immediate trial management conference should be scheduled. I am concerned that there are some serious credibility issues raised that can only be tested in cross-examination at a full hearing on the merits regarding the alleged change in circumstances.
[43] Cost submissions to be limited to three pages, in addition to a bill of costs, to be delivered no later than twenty days from the date of this order. Any response to be served and filed ten days after receipt of cost submissions.
Justice Sheilagh O'Connell
DATE: January 9, 2014
Footnotes
[1] None of this information had been provided in the financial statement filed, which contained sparse information.
[2] At the hearing on August 14, 2013, Mr. Lahar also produced documentation from the Canada Customs, called a "Response Release Notification Report" which indicated that he was crossing the border on November 5, 2012 while working as a truck driver for United Way Transport. The Report from Customs Canada indicates that Mr. Lahar entered Canada from the Windsor Ambassador Bridge at 6:49 AM on November 5, 2012. I am not sure how this proves that Mr. Lahar could not have been served with the court documents since the affidavit of service indicates that service was effected on November 5, 2012. Nevertheless, even if the court documents were served on Mr. Lahar's father and not him, it is still unclear to the court as to why his father would not have brought the court documentation to Mr. Lahar's attention.
[3] For the six months of bank statements provided for one account in 2012, the father deposited $28,263.97, or on average $4,710.67 monthly.