DATE: May 7, 2021 COURT FILE NO. FO1931459
ONTARIO COURT OF JUSTICE
B E T W E E N:
THE DIRECTOR, FAMILY RESPONSIBILITY OFFICE, FOR THE BENEFIT OF NEGAR GHANEI
MAHA MASHHADI, for the APPLICANT
APPLICANT
- and -
MASOUD YOUSEFIGOHAR
ACTING IN PERSON
RESPONDENT
HEARD: MAY 4, 2021
JUSTICE S.B. SHERR
REASONS FOR DECISION
Part One – Introduction
[1] On May 4, 2021, the court conducted a default hearing pursuant to section 41 of the Family Responsibility and Support Arrears Enforcement Act (the Act).
[2] The applicant (the Director) seeks to enforce the temporary order of Justice Heather McGee, dated January 25, 2017 (the temporary order), made in the Superior Court of Justice – Family Court, in Newmarket (the Superior Court). See: Yousefigohar v. Ghanei, 2017 ONSC 502.
[3] The temporary order provides that the respondent (the payor) is to pay the support recipient child support of $1,792 each month, starting on September 1, 2016. This was the Child Support Guidelines table amount for one child, based on an imputed annual income to the payor of $221,490.
[4] The temporary order also provides that the payor is to pay the support recipient spousal support of $3,400 each month, starting on June 1, 2016.
[5] The Director seeks an order fixing the arrears that have accumulated pursuant to the temporary order at $286,423.06 as of April 28, 2021. It seeks an order that the payor pay the ongoing support payments set out in the temporary order, totaling $5,192 each month, failing which he be incarcerated for 3 days for each payment in default.
[6] The Director also seeks an order that the payor make lump sum payments towards the arrears as follows: $60,000 by August 4, 2021, $60,000 by November 4, 2021, $60,000 by February 4, 2022, and the remaining arrears of $106,423.06 by Aug. 4, 2022. The Director asks that the payor be incarcerated for 30 days for each default in payment.
[7] The Director relied on its Statement of Arrears (Exhibit 1 at this hearing) and the affidavit of Adam Kloosterhuis, sworn on January 25, 2021. This affidavit attached the reasons for decision for the temporary order and the financial statement filed by the payor in 2016 that was referred to at that motion.
[8] The payor filed a Default Dispute and a sworn financial statement. He attached his notices of assessment from 2015 to 2018, four pay stubs from 2019 and a residential tenancy agreement. He filed no other financial disclosure.
[9] The payor does not dispute the calculation of arrears that have accumulated pursuant to the temporary order, as set out in the Director’s Statement of Arrears. However, he does dispute the payment orders sought by the Director. He proposed to pay support of $500 each month.
Part Two – Brief background
[10] The payor is 41 years old. He was born in Iran. He used a Farsi interpreter at this hearing.
[11] The payor has one child with the support recipient. The child is 10 years old.
[12] The payor and the support recipient separated on or about June 1, 2016.
[13] The payor issued a claim in the Superior Court in 2016.
[14] The support recipient then brought a temporary motion that resulted in the temporary order being made on January 25, 2017.
[15] The payor was represented by counsel on the temporary motion. He did not appeal the temporary order or move to set it aside.
[16] No further steps appear to have been taken in the Superior Court case.
[17] The Director issued its Notice of Default Hearing in this court on December 3, 2019.
[18] The payor filed his Default Dispute on January 2, 2020.
[19] On February 4, 2020, the parties consented, at First Appearance Court, to an order for the payor to provide disclosure to the Director. The payor was required to prepare an affidavit setting out the nature and history of his business interests in Iran. The payor never did this.
[20] Due to the pandemic, the case did not come before the court until October 13, 2020. A date for the default hearing was scheduled. The Director was asked by the court to obtain evidence from the Superior Court case and a transcript of the reasons for decision for the temporary order. A temporary default order was made that the payor pay $300 each month and be committed to 3 days in jail for each payment in default. The payor has made those payments.
[21] The default hearing did not proceed as scheduled on February 19, 2021 as the Farsi interpreter did not attend. At this point, the court had received Justice McGee’s reasons for decision. The court made strong recommendations to the payor that he obtain counsel for the default hearing and that he should also be taking steps in the Superior Court to change the temporary order if he felt that the support ordered was too high. The court informed the payor it had no jurisdiction to change that order.
[22] The court gave the payor until April 26, 2021 to file any additional affidavit or financial statement that he wished to rely upon for the default hearing.
[23] The payor represented himself at the default hearing. He filed no further material. He was permitted to give additional oral evidence at the hearing.
Part Three – The temporary decision
[24] Justice McGee set out in considerable detail, in her reasons for decision, why she imputed annual income of $221,490 to the payor. She set out the following findings:
a) Since separation, or perhaps in anticipation of it, the payor had created a situation of much confusion and contradiction. b) The payor had removed all his Canadian assets and obscured those in Iran. c) The payor claimed to have been the victim of a fraud, within changeable and unsubstantiated claims. d) The payor was operating a wholesale business in cell phone accessories and applications with his brother. The business operated out of Iran, possibly Dubai and on-line through social media. e) The payor’s pattern of travel for business and pleasure defied his claims of being impecunious. f) The payor’s evidence was riddled with inconsistencies. g) The payor’s explanations of decreases in assets and increases in debt were not substantiated and made little sense. h) The payor’s explanations about how he could maintain very high monthly expenses on minimal income made little sense.
[25] Justice McGee referred in her reasons for decision to the joint application of the payor and the support recipient to enter Canada from Iran, dated January 25, 2014. That application stated that the payor was the 50% owner and manager of Yousefi Shop in Iran and a 25% owner of Radin Electronic. The payor had represented that the book value of the businesses was $200,000 Canadian. He also represented that he had over $250,0000 in savings, $700,000 in real property and had placed a deposit of over $130,000 on an apartment in Dubai. The application indicated that he had a total net worth of $1,286,606, of which $600,000 was available for transfer to Canada. He claimed in the application to have no debt.
[26] Justice McGee found that the payor had given no explanation about why (according to his financial statements filed) his net worth had declined to $630,000 as of February 1, 2016 and his debts had increased to $2,339,622.
[27] Justice McGee queried how it was possible that the payor’s net worth did not decline after the date of separation in 2016 (June 1st), despite the significant monthly shortfall that resulted when comparing his income to his expenses. In fact, she pointed out that his assets had increased by $208,273 between October and December 2016. She said that the payor had failed to explain how this had happened based on his minimal declared income.
[28] Justice McGee found that the payor’s lifestyle far exceeded his stated income. She took his declared annual expenses of $125,000 and added $15,000 to this for additional credit card payments and travel expenses. She treated $20,000 as taxable income and $100,000 as non-taxable income. She then grossed up the non-taxable portion of his income to arrive at the amount imputed to him.
Part Three – The payor’s evidence
[29] The payor claims that he has never earned anywhere close to the income imputed to him by Justice McGee. He deposed that he was earning about $25,000 annually at that time running his cell phone business with his brother.
[30] The payor stated that his income was imputed at such a high level because his case was not properly presented to the Superior Court by his lawyer at that time.
[31] The payor filed notices of assessment indicating that his annual income has been as follows:
- 2015: $20,779
- 2016: $20,779
- 2017: $20,582
- 2018: $12,762
[32] The payor testified that he stopped operating his business because it was no longer profitable.
[33] The payor said that he has been working for Sbarro since March 2019. He filed an unsworn letter from the Sbarro food manager, dated April 23, 2019, stating that he works 35 hours each week and is paid $14 per hour. This rate of pay was verified by four pay stubs from 2019.
[34] In his financial statement sworn on January 2, 2020, the payor stated that he still had a business interest in a shop in Iran. He valued this interest at $25,000. He testified that this is a family business. He deposed in his financial statement that he has no other significant debts or assets.
[35] The payor said that the value of his Iranian assets has significantly diminished and his income from Iran has stopped completely because of the economic situation in Iran and the devaluation of the Iranian currency. The payor claimed that all the documentation proving this was provided to the Superior Court. No documentation substantiating any of this was filed in this court.
Part Four – Legal considerations
[36] The current statutory scheme governing default hearings is section 41 of the Act and rule 30 of the Family Law Rules. The Director may initiate the default proceeding. The Director prepares a statement of arrears. The payor files a financial statement and, if so inclined, a Default Dispute. The court may hear oral testimony, direct the production of other relevant documentation and add parties to the default proceedings. See: Fischer v. Ontario (Family Responsibility Office), 2008 ONCA 825, paragraph 17.
[37] At the hearing, the amount of arrears owed and the payor's ability to pay are the central issues. Subsection 41 (9) of the Act puts the onus on the payor, as follows:
Presumptions at hearing
(9) At the default hearing, unless the contrary is shown, the payor shall be presumed to have the ability to pay the arrears and to make subsequent payments under the order, and the statement of arrears prepared and served by the Director shall be presumed to be correct as to arrears accruing while the order is filed in the Director’s office.
[38] The presumptions set out in subsection 41 (9) of the Act are rebuttable.
[39] Subsection 41 (10) of the Act sets out the powers of the court on a default hearing as follows:
Powers of court
(10) The court may, unless it is satisfied that the payor is unable for valid reasons to pay the arrears or to make subsequent payments under the order, order that the payor,
(a) pay all or part of the arrears by such periodic or lump sum payments as the court considers just, but an order for partial payment does not rescind any unpaid arrears; (b) discharge the arrears in full by a specified date; (c) comply with the order to the extent of the payor’s ability to pay; (d) make a motion to change the support order; (e) provide security in such form as the court directs for the arrears and subsequent payment; (f) report periodically to the court, the Director or a person specified in the order; (g) provide to the court, the Director or a person specified in the order particulars of any future change of address or employment as soon as they occur; (h) be imprisoned continuously or intermittently until the period specified in the order, which shall not be more than 180 days, has expired, or until the arrears are paid, whichever is sooner; and (i) on default in any payment ordered under this subsection, be imprisoned continuously or intermittently until the period specified in the order, which shall not be more than 180 days, has expired, or until the payment is made, whichever is sooner.
[40] Subsection 41 (11) of the Act states:
No effect on accruing of arrears or other means of enforcement
(11) An order under subsection (10) does not affect the accruing of arrears, nor does it limit or otherwise affect any other means of enforcing the support order.
[41] Subsection 41 (17) of the Act reads:
Imprisonment does not discharge arrears
(17) Imprisonment of a payor under clause (10) (h) or (i) does not discharge arrears under an order.
[42] At a default hearing, the payor must show an inability to pay due to valid reasons. A valid reason is an event over which the payor has no control which renders the payor totally without assets or income with which to meet his or her obligations, such as disabling illness or involuntary unemployment. See: Ontario (Director, Family Responsibility Office) v. Carney 2004 ONCJ 11. The payor must also show that he or she has accepted their responsibilities and placed the child’s interests over their own and has provided frank disclosure to the court. See: Ontario: (Director, Family Responsibility Office) v. Labrash, 2002 CarswellOnt 90 (OCJ). Lastly, the payor must show that he or she has provided full and frank disclosure to the court. See: Ontario (Director, Family Responsibility Office) v. O’Neill, 2018 ONCJ 343.
[43] In Ontario (Director, Family Responsibility Office) v. De Francesco, O.J. [2012] 6338, Justice Carolyn Jones further explores the meaning of “valid reason” under subsection 41 (10) as follows at paragraph 21 of her decision:
21 Valid reasons, within the meaning of s. 41(10) of the Act, imply reasons for which the payor cannot be faulted or for which the payor does not bear responsibility in the culpable sense. The court would expect some evidence of circumstances where, despite reasonable, diligent and legitimate efforts by the support payor to comply with the support order, the support payor has been unable to do so for reasons that are not connected with an unwillingness to pay, a lack of effort, a failure to prioritize the support obligation or a deliberate neglect, failure or avoidance on the part of the payor. Evidence relating to the past and present circumstances of the payor, including his financial circumstances since the time of the first default under the order, the manner in which he has applied his available income and assets, and his efforts to secure employment or income during the time that the arrears have arisen will have some bearing upon the determination of the legitimacy of the reasons the payor puts forward for his default under the support order. Circumstances that are beyond the control of the payor, resulting in the payor's inability to pay, would be valid reasons. An illness on the part of the payor, including a mental disorder, rendering the payor completely unable to work on either a full or part-time basis, as in the case before the court, would amount to a valid reason for the payor's failure to pay.
[44] Clause 41 (10) (i) of the Act contemplates an order of imprisonment for failure to pay an amount owing at the time the order is made or a failure to make future payments required under the order: See: Saunders v. Saunders, at para. 11; Fischer, supra.
[45] Enforcement legislation should be viewed as remedial rather than punitive. See: Saunders, supra.
[46] Imprisonment is a last resort. Something more than non-payment is required. The payor’s conduct must demonstrate a willful and deliberate disregard for the obligation to comply with court orders. It is meant as a mechanism to enforce support and not as a means of punishing the payor. See: Fischer, supra.
[47] In Fischer, supra, the court writes at paragraph 25:
Further, the case law and the Act recognize that imprisonment for non-payment is meant as a means of enforcing the support order and not as a means of punishing the payor. The payor must be released upon payment of the amount owed: see s. 41(10) (i). A committal order, imposed as a term of either a temporary or final order in a default hearing, is intended to induce compliance with the payment terms of the order. The prospect of imprisonment hopefully focuses the payor's mind on the importance of making the required payments. The enforcement rationale for imprisonment upon non-payment makes sense only if the payor has the ability to make the payments required by the order: see Saunders, at paras. 11-13 …
[48] The maximum jail time should be reserved for the most severe cases. See: Ontario (Director, Family Responsibility Office) v. Kirkpatrick (2008).
[49] The court in Trang v. Trang, 2013 ONSC 1980, on a motion to change, emphasized that imputed income orders matter. A party who argues that an imputed income level is no longer appropriate must go beyond establishing their subsequent "declared" income. They must address why income had to be imputed in the first place and they must present evidence of changed circumstances which establish why their representations as to income should be accepted now when they weren’t accepted before or why it is no longer necessary or appropriate to impute income.
Part Five – Analysis
[50] The payor did not meet his onus to show that his inability to pay the support ordered was for valid reasons, or that the circumstances that have led to his failure to pay the required amounts were involuntary.
[51] Justice McGee’s analysis of the payor’s income was very detailed and based on far more extensive documentation than the payor produced in this case. She also had the benefit of evidence about the payor’s income from the support recipient that was not before this court.
[52] The payor failed to comply with this court’s order to provide an affidavit setting out the nature and history of his business interests in Iran. Perhaps, if he had done so, this would have answered many of the questions raised by Justice McGee.
[53] The payor did not file any further financial disclosure after filing his 2019 pay stubs. There is no documentary proof of his 2020 or 2021 income.
[54] In the default hearing, the payor did not address the multitude of questions about his financial affairs raised by Justice McGee in her reasons for decision. This court gave him an opportunity to provide answers to many of those questions during his oral evidence. No satisfactory explanations were provided. These questions included:
a) How was he able to support his lifestyle on his minimal income? How could he afford his frequent trips to Iran? b) Why did his assets drop by over $600,000 between 2014 and 2016 and his debts increase by over 2.3 million dollars? c) What happened to his interest in real property valued at $700,000 and the $130,000 deposit he had placed on an apartment in Dubai, that he had listed in his 2014 emigration papers? d) How did his assets go up by over $208,273 from October 2016 to December 2016?
[55] At the default hearing, the payor could not provide satisfactory answers about:
a) Why he no longer had any debt, despite having had over 2.3 million dollars of debt in 2016. b) What had happened to his assets that he had valued at $630,000 in his 2016 financial statement. In that financial statement, the payor deposed that he had a $334,000 interest in his matrimonial home, $36,000 of watches and jewelry, a 50% interest in Yousefi shop #1 that he valued at $150,000 and in Yousefi shop #2, that he valued at $100,000. In his financial statement filed for this hearing, he only listed a $25,000 interest in Yousefi shop #1. c) How was he able to maintain a monthly debt payment of $730 that was listed in his 2016 financial statement. The payor testified that he had borrowed $50,000 from a friend and was able to pay it back in less than a year. Despite being given many opportunities, he was unable to explain at the default hearing where he was able to get the money to pay back this loan and how he could do this when he was earning minimal income.
[56] The payor’s answer to many of these questions was that all the documentary proof had been filed in the Superior Court. None of those documents (except the one 2016 financial statement that was filed by the Director) were filed in this case. In her reasons for decision, Justice McGee stated that the payor had filed a 191-paragraph affidavit for the temporary motion, to which he had attached extensive exhibits, subdivided into 24 tabs.
[57] Justice McGee had the benefit of assessing that evidence and she still imputed significant income to the payor. She did not accept his representations about his income or his ability to pay support. The payor filed no documentary evidence in this case that would have clarified the issues raised by Justice McGee. In fact, his financial affairs continue to be confusing, with huge unexplained gaps about his assets, debts and income.
[58] The payor provided no meaningful disclosure about the cell phone business he operated with his brother up until March 2019. He did not provide any statements of business or professional affairs. The self-employed have an inherent obligation to put forward not only adequate, but comprehensive records of income and expenses, from which the recipient can draw conclusions and the amount of child support can be established. See: Meade v. Meade (2002), 31 R.F.L. 5th 88 (SCJ). There was no way for the court to assess what the payor really earned from this business.
[59] The court finds that the payor did not provide full and frank financial disclosure in this case.
[60] The payor testified that his businesses have been family businesses. It appears that his financial affairs and those of his family are intertwined. The payor failed to provide any evidence that would assist the court in untangling this web.
[61] The payor provided no documentation showing how the economic situation in Iran specifically affected his economic interests or what steps he took to preserve his Iranian assets.
[62] The court reaches the same conclusion as Justice McGee – that the payor is arranging his financial affairs to place his assets outside the support recipient’s reach. He has been even more aggressive in doing this since the temporary court order was made. The court finds that the payor is likely able to borrow funds from family and friends (such as the friend who lent him $50,000, that was quickly repaid), if necessary, to meet his support obligations.
[63] The court finds that the payor’s employment income is not reflective of his ability to make his support payments and to pay the outstanding arrears.
[64] The payor represented to the Superior Court that he earned about $25,000 annually. He continues to maintain that position today. Justice McGee rejected the payor’s evidence and the payor led no meaningful evidence to make any different finding today.
[65] The payor was represented by counsel on the motion before Justice McGee and filed substantial material. This was not a case where an unsophisticated litigant either failed to come to court, or was unable to properly present their case, and an order imputing income was made that they clearly cannot afford.
[66] Imputed income matters, and not only on motions to change. It also matters when a court is being asked to enforce a support order where income was imputed. While the presumption that the payor continues to have the ability to pay the amount ordered is rebuttable, the payor did not come anywhere close to producing the evidence that would be necessary to do so this in this case.
[67] The payor did not appeal the temporary order. He has taken no steps to change it or move the Superior Court case on to trial. This is despite having had considerable time to do this after the Director started this enforcement proceeding in December 2019 and even after this court strongly urged him to take this step.
[68] Until the temporary default order was made on October 13, 2020, most of the funds collected by the Director came through federal diversions. The payor made few voluntary payments.
[69] The court finds that the payor has willfully and deliberately disregarded his obligation to comply with support orders. He has preferred his own interests to those of his child and the support recipient and has not accepted responsibility for his non-payment of support.
[70] The court has considered the interests of the child and the support recipient in this case and the consequences to them of the payor’s failure to meet his support obligations.
[71] In Michel v. Graydon, 2020 SCC 24, at paragraph 121, the Supreme Court of Canada emphasized the importance of support payors meeting their support obligations and commented that the neglect or underpayment of support is strongly connected to child poverty and female poverty.
[72] It is imperative that courts not contribute to that hardship and to the feminization of poverty by failing to enforce valid and subsisting court orders when a payor does not establish a valid inability to pay and fails to provide adequate financial disclosure – as is the case here.
[73] This leads to the question of what default order is appropriate in these circumstances.
[74] The court finds that the Director’s request for a committal term of 3 days to attach to each default of the payor’s ongoing support payments, as set out in the temporary order, is appropriate in these circumstances.
[75] The court seriously considered ordering the aggressive lump sum payment schedule proposed by the Director for the arrears. However, the court has decided to take a more cautious and gradual approach to this payment schedule for the following reasons:
a) The order being enforced is temporary. There has still not been a full testing of the evidence about the payor’s ability to pay support. b) The payor was self-represented in this case. English is not his first language. He used a Farsi interpreter. The court is left with some lingering concern that the payor’s case has still not been properly presented. c) A more gradual schedule will give the payor the opportunity to completely present his case in the Superior Court. Hopefully, this order will give him the incentive to do this. If the support order should be adjusted, the Superior Court will do this. d) The court recognizes that it may take some time for the payor to obtain funds from Iran, or from his friends or family members, to make the payments that will be set out in this order. e) The payment schedule still requires the payor to pay all outstanding arrears by the end of 2023 to avoid incarceration.
[76] The lump sum payment schedule will be as follows:
a) $30,000 on or before August 31, 2021. b) $30,000 on or before December 31, 2021. c) $30,000 on or before March 31, 2022. d) $30,000 on or before June 30, 2022. e) $30,000 on or before September 30, 2022. f) $30,000 on or before December 31, 2022. g) $30,000 on or before March 31, 2023. h) $30,000 on or before June 30, 2023. i) $30,000 on or before September 30, 2023. j) The balance of $16,423.06 on or before December 31, 2023.
[77] The payor will be incarcerated for 18 days for each default of these lump sum payments (or until the outstanding amount is paid in full). The maximum length of time, cumulatively, that the payor can be imprisoned under the default order is 180 days (see: sub clause 41 (10) (i) of the Act). Once that limit is reached, a new default action would be required.
Part Six – Conclusion
[78] A final default order will go on the following terms:
a) The support arrears are fixed at $286,423.06 as of April 28, 2021, in accordance with the Director’s Statement of Arrears marked as Exhibit 1. b) The payor shall be required to pay these arrears on the following schedule: 1. $30,000 on or before August 31, 2021. 2. $30,000 on or before December 31, 2021. 3. $30,000 on or before March 31, 2022. 4. $30,000 on or before June 30, 2022. 5. $30,000 on or before September 30, 2022. 6. $30,000 on or before December 31, 2022. 7. $30,000 on or before March 31, 2023. 8. $30,000 on or before June 30, 2023. 9. $30,000 on or before September 30, 2023. 10. The balance of $16,423.06 on or before December 31, 2023. c) The payor will be incarcerated for 18 days for each default of these lump sum payments (or until the outstanding amount is paid in full). d) The payor will also be required to pay the ongoing child and spousal support payments in the total sum of $5,192 each month, starting on June 1, 2021. He shall be committed to jail for 3 days (or until the outstanding amount is paid in full) for each payment in default of ongoing support accruals. e) The maximum length of time, cumulatively, that the payor can be imprisoned under this default order is 180 days.
Released: May 7, 2021
Justice S.B. Sherr