Lafazanidis v. Lafazanidis, 2020 ONSC 5496
CITATION: Lafazanidis v. Lafazanidis, 2020 ONSC 5496
DIVISIONAL COURT FILE NO.: 366/19
DATE: 20200915
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
D.L. CORBETT, MATHESON and KRISTJANSON JJ.
B E T W E E N:
THEODORA GEORGIA LAFAZANIDIS
Respondent
- and -
KONSTANTINOS LAFAZANIDIS
Appellant
Counsel:
Sage Harvey, for the Respondent
Jacqueline M. Mills, for the Appellant
Heard by Videoconference: August 26, 2020
REASONS FOR DECISION
The Court:
[1] On August 26, 2020, we dismissed this appeal with these reasons to follow.
[2] The appellant appeals from the final order of Moore J. dated May 23, 2019 (2019 ONSC 3108), dismissing his motion to change the spousal support ordered by Mesbur J. in a trial decision dated May 29, 2014 (2014 ONSC 3287).
[3] As Mesbur J. stated at para. 4 of the trial judgment: “[a]s is often the case, the legal principles are neither contentious nor complex. The outcome will depend on the particular facts of the case.” The same could be said for the decision of Moore J. Apart from one factual error, which is not material, we conclude that the decision below discloses no error of law and that the factual findings were available to the motion judge on the record before him. The motion judge concluded that the appellant had not met his burden to show a material change in circumstances. The appellant has not demonstrated any basis for us to interfere with that conclusion.
Jurisdiction and Standard of Review
[4] Jurisdiction for this appeal lies in this court by virtue of s. 19(1)(a) and 19(1.2) of the Courts of Justice Act, R.S.O. 1990, c. C.43.
[5] The order under appeal, a spousal support order, is entitled to deference in this court. We should only intervene where there is a material error, a serious misapprehension of the evidence, or an error in law: Pustai v. Pustai, 2018 ONCA 785 and Hickey v. Hickey, 1999 691 (SCC), [1999] 2 S.C.R. 518, para. 11. As an appellate court, we are not entitled to overturn this support order just because we would have made a different decision or balanced factors differently: Pustai, para. 30.
Analysis
[6] In oral argument, Ms. Mills focused on the following grounds for appeal:
(1) The respondent is not entitled to compensatory support any longer, having now been paid spousal support for eleven years after an eight-year marriage.
(2) The motion judge should not have found that the respondent’s efforts to contribute to her own support and achieve self-sufficiency have been reasonable and he should therefore have imputed more income to her.
(3) The motion judge should not have imputed an income of $100,000 per year to the appellant when the financial disclosure establishes that he now earns much less than this and there is medical evidence to explain this reduction in income.
(4) The increase in child support was a material change in circumstances that should have led the motion judge to reduce spousal support.
Issue #1: Compensatory Support
[7] We see no error in the motion judge’s analysis and conclusions on this issue. In particular, we note as follows:
a. In the trial judgment, Mesbur J. found that compensatory support was warranted. She did so on the basis that the respondent’s career had been interrupted as a result of the role she played in the marriage and in respect to child-rearing. Mesbur J. did not find that the effects of the interruption were transitory or would be eliminated by the effluxion of time. The trial decision was not appealed.
b. It is the moving party’s onus to show a material change of circumstance warranting variation. The appellant argued before the motion judge and before us that continued entitlement to compensatory support was something the respondent had to prove before the motion judge. That is simply not correct. The respondent proved that entitlement before Mesbur J. The onus on the motion to change was upon the appellant, as the moving party, to show that something had changed to end the respondent’s entitlement to compensatory support. See R.P. v. R.C., 2011 SCC 65, [2011] 3 S.C.R. 819, para. 25.
c. The moving party argued at some length, on the basis of considerable authority, that an order for compensatory support is not invariable or necessarily permanent. We accept that argument. The motion judge did not conclude otherwise. The motion judge concluded that the appellant had not meet the burden under s.17(4.1) of the Divorce Act, R.S.C. 1985, C. 3 (2d Supp.) to establish a material change of circumstances since the making of the spousal support order. In continuing the order for indefinite support, the motion judge did not order “permanent” or “invariable” support. Nor does the respondent submit that the spousal support order is permanent or invariable.
d. The parties separated in 2008. The family law proceedings were commenced in 2009. The trial judgment awarding indefinite spousal support was rendered in May 2014. The variation motion was commenced in September 2018, four years later. After a five-year process leading to the trial judgment in which indefinite support was ordered, without evidence of material change since then, and the parties’ one child is still a child of the marriage, in high school, the motion judge considered it premature to order an end to support ordered by Mesbur J.
e. The respondent moved to Canada from Utah to form a household with the appellant. She was out of the work force for about eight years, but upon separation she had never worked in Canada, and her closest family and supports were back in Utah, as found by Mesbur J. in the trial judgment. She had done well to find employment paying her $35,000 per year by the time of trial, the income figure used by the trial judge. By the time of the variation motion, she had lost that employment and was earning less money, but income was still imputed at $35,000 per year.
f. Entitlement to compensatory support was one of two reasons Mesbur J. awarded spousal support.
g. On the basis of the parties’ history since trial, based on the findings of the motion judge, the respondent’s income had not increased since the trial decision despite her reasonable efforts, and this itself was a basis for concluding that the economic consequences of the marriage continued to be felt by the respondent.
Issue #2: Imputing Income to the Respondent
[8] In response to the motion to change, the respondent put forward detailed evidence about her job search and efforts to return to work after she lost the job that she had at the time of the trial before Mesbur J. Moore J. considered this evidence in detail, as set out in his reasons for decision. He found that given her age, lack of significant work experience in Canada and her eight years out of the job market for the betterment of her husband and child, it was understandable that she was unable to find suitable employment opportunities despite her vigilant searches. The motion judge found that the respondent acted reasonably toward becoming financially self-sufficient. The recent tax documents showed a line 150 income of $32,359 for 2017 and $24,966 for 2018. Based on the evidence, the motion judge concluded that it was still appropriate to impute an income of $35,000. The appellant has not established any error based on which we would interfere with this finding.
Issue #3: Imputing Income to the Appellant
[9] At the motion to change, the appellant argued that for medical reasons he was unable to work at the pace he used to work, and that he has suffered a reduction in income as a result. The motion judge rejected this argument for lack of evidence. The appellant’s medical evidence was weak. The motion judge was not convinced, and that was a decision that was his to make. In making it, the motion judge noted that the appellant’s diabetes had existed at the time of trial before Mesbur J. The medical evidence did not establish progression of that illness in a manner material to the appellant’s ability to work.
[10] The motion judge further noted that the appellant’s failure to provide a persuasive record respecting his financial affairs and noted how the appellant had made almost identical income claims before Mesbur J., claims that were rebutted by his own expert’s evidence. And finally, the motion judge noted the lifestyle evidence, including some extensive leisure travel, the expense of which was inconsistent with the appellant’s claimed income.
[11] This brings the analysis to the one error the appellant has identified that we conclude was an error on the part of the motion judge. The motion judge held at paras. 16-17 of his decision that:
[16] Returning now to the evidence at trial on the Motion to Change, the respondent again insisted that he does not receive cash payments in his business but he did not fully produce his business books and records, the source contracts and customer billings and payment receipts. He produced unaudited business tax returns, balance sheets and statements of annual business earnings and retained earnings together with Notices to Reader confirming that his accountants compiled these documents solely on the basis of information provided by the respondent and there is nothing in the accountant’s materials produced at this trial to suggest that the source documents sought by the applicant were ever produced to the accountants..
[17] Despite the applicant’s repeated demands for disclosure of source documents, the respondent produced no receipts for business expenses he claimed, thereby defeating any attempt to test expense claims for reasonableness. The respondent bears the onus of demonstrating his net income from his business and failure to adduce appropriate documentation can, as is the case here, lead to an adverse inference being drawn against him. I must conclude that the missing productions would not favour the respondent’s claimed incomes for support purposes in the interval between 2014 and 2018.
[12] The motion judge drew an inference against the appellant based on failure to produce “source documents” sought by the respondent, and specifically found that the failure to produce receipts for business expenses defeated any attempt to test the reasonableness of those expenses. In the respondent's trial management conference brief, she requested an order that the appellant provide proof of all business expenses from 2016 to 2018. Although she declined to grant the Order, in her Trial Management Conference Endorsement of February 27, 2019, Justice Horkins held that if the appellant failed to provide the disclosure as requested by the respondent in her Trial Management Conference brief, the respondent could request the trial judge to draw an adverse inference against the appellant.
[13] We accept that not all the “source documents” may have been requested by the respondent in her Trial Management Conference Brief or been the subject of document requests by the Applicant. However, it was still open to the motion judge to place weight on the absence of those documents, as he did, to draw an inference in the circumstances of this case.
[14] We conclude that this error in the description of the respondent’s requests for “source documents” was not material to the motion judge’s conclusions on imputing income, and was not a palpable and overriding error of fact. The motion judge was not persuaded that the appellant had shown that his income had changed materially. The appellant is self-employed in his own small pool-maintenance business. He materially understated his income for support purposes at trial. Justice Mesbur had rejected the appellant's testimony at trial in 2014 that he did not accept cash income and imputed the appellant's income at $100,000 a year because he likely had additional undisclosed cash. Further, his own expert at trial concluded that his income had been significantly understated. In the motion below, the appellant did not provide any expert evidence. He provided raw financial documents. He did not fully produce business contracts. He then essentially took the position that the respondent had to accept what he had to say about those documents and his income, and if she did not accept his evidence, it would be for her to produce an expert report.
[15] The appellant did not produce an expert report in the Motion to Change proceedings attesting to appropriate, documented, adjusted annual incomes for support purposes. The appellant is correct that, as a matter of law, he is not required to produce expert evidence respecting his income. However, that does not mean that, as a matter of fact, he will be able to discharge his burden without expert evidence, or without more complete financial production. While a self-employed party does not have an obligation to produce an income analysis if their income is called into question, a self-employed party has an obligation to satisfy the court of their true income: Sargalis v. Sargalis, 2019 ONSC 530 (Sup. Ct.), para. 11. And the motion judge found here that the respondent did not meet his burden.
[16] The motion judge specifically reviewed the appellant’s declared income on his income tax returns, finding that even based on his personal tax returns, the appellant had not established a material change in his financial circumstances. The motion judge found there was no evidence demonstrated through the appellant’s business and personal accounts of a decline in annual deposits of money or increasing expenses since the time of the 2014 trial. He also found that the appellant’s lifestyle – including travel and claimed living expenses - was not consistent with his claimed level of income.
[17] Given the history of this issue between the parties, the frail medical evidence and the lifestyle evidence inconsistent with the appellant’s claims, the motion judge found that the appellant’s evidence, supported only by his own testimony and the documents he chose to produce, was not enough to discharge his burden of proof in this case. The decision on income was open to the motion judge on the record before him. These findings are underscored by the litigation history between the parties. Mesbur J. did not believe the appellant’s account of his income at trial, for reasons she explained in detail in her reasons.
[18] Even on the appellant’s own account of things, he has understated his income. During argument, in addressing a lengthy trip to Las Vegas, appellant’s counsel noted that the appellant was able to pay for his travel with “points” he accumulated purchasing supplies for his business. These “points” were not valued and included in income. Appellant’s counsel also acknowledged that the appellant won money from gambling. These winnings were not taken into income. The motion judge was also not satisfied that the appellant did not do material amounts of business on a cash basis – a finding also made by the trial judge.
[19] Contrary to the submission of the appellant, the motion judge did not impute income of $100,000 to him. That was done by Mesbur J. The motion judge concluded that he was not satisfied that there had been a material change in circumstances. The appellant did not produce an expert report for the variation motion, nor did he make the type of financial production that may have allayed the issues of concern to Mesbur J. at trial and to the motion judge: lifestyle, regular gambling, the probability of cash transactions. The conclusion of the motion judge was a finding of fact, and we see no basis to interfere with it.
Issue #4: Increased Child Support
[20] Child support has increased for one reason: the child is now living 100% of the time with the respondent. Thus, there is no s. 9 offset to reflect joint parenting time. Of course, the respondent now incurs 100% of the expenses for the child. We see no basis for the argument that increased child support has reduced the respondent’s need for support. The increase in child support is about $333 per month, from $577 to $910, and the appellant has not demonstrated that this money is not needed for expenses related to the child.
[21] A material change in child support could ground a variation motion for spousal support, but not automatically. Whether the change in child support is a material change for the purposes of calculating spousal support is a fact-driven issue. We see no basis to interfere with the motion judge’s conclusion that increased child support was not a material change of circumstances in this case.
Order and Costs
[22] For these reasons the appeal is dismissed. Costs of the appeal shall be payable by the appellant to the respondent fixed at $8,900, inclusive, payable within thirty days.
D.L. CORBETT J.
MATHESON J.
KRISTJANSON J.
Released: September 15, 2020
CITATION: Lafazanidis v.Lafazanidis, 2020 ONSC 5496
DIVISIONAL COURT FILE NO.: 366/19
DATE: 20200915
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
D.L. CORBETT, MATHESON and KRISTJANSON JJ.
BETWEEN:
THEODORA GEORGIA LAFAZANIDIS
Respondent
- and -
KONSTANTINOS LAFAZANIDIS
Appellant
REASONS FOR DECISION
D.L. Corbett J.
Released: September 15, 2020