CITATION: Michaud v. Kasali, 2021 ONSC 6847

DIVISIONAL COURT FILE NO.: 1174/19

DATE: 20211015

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

Swinton, Lederer, and Kristjanson JJ.

BETWEEN:

BILL KASALI

Appellant (Respondent)

Self represented

– and –

KATHLEEN MICHAUD

Self represented

Respondent (Applicant)

HEARD at Toronto by videoconference: April 13, 2021

REASONS FOR JUDGMENT

Kristjanson, J.

[1] This is an appeal from the order of G.A. MacPherson J. dated July 4, 2019 following trial on a motion to change child support: 2019 ONSC 4095. Mr. Kasali appeals on the grounds that the trial judge made errors of fact and law and asks that the trial judge’s order be set aside and remitted for a new trial, or that this Court reduce his support to its previous levels. Ms. Michaud requests dismissal of the appeal and seeks other relief.

[2] The trial judge’s decision involved mixed questions of fact and law. He faced an evidentiary record that was less than perfect, due to the failure of the appellant to make full, frank, accurate and timely disclosure of his income in three successive trials. Even the integrity of documents was in issue. Yet the trial judge had to resolve difficult issues about the appellant’s income to secure the rights of the children to appropriate child support. The trial judge was entitled to and did consider the entirety of the evidence in coming to his decision. It is not the role of an appellate court to second-guess the weight assigned to various items of evidence. The appellant has demonstrated no palpable and overriding error in the trial judge’s assessment of the evidence, and his determination of the factual issues is entitled to deference. Nor is the award clearly wrong, except that the trial judge applied the 2017 Federal Child Support Guidelines, SOR/97-175 (“Guidelines”), for the period 2012 through November 2017 rather than the 2011 Guidelines. The Court substitutes the corrected monthly support figures for the period prior to November 22, 2017 and amends the trial judge’s order accordingly.

[3] No relief is awarded in respect of Ms. Michaud’s claims.

BACKGROUND

Family Background and Earlier Proceedings

[4] The parties married in 1993 and separated in 2006. They entered into a comprehensive settlement agreement in 2009. The children are now adults; entitlement to support for the eldest ended on January 1, 2017 and the youngest on May 1, 2018. Notwithstanding this, the parties have had three trials on the issue of child support since separation. Mr. Kasali’s failure to disclose significant financial information has been an issue in all three.

The First Trial

[5] McGee J. presided over the first trial in 2013. Ms. Michaud sought to increase the amount of child support retroactive to 2009. McGee J. found that Mr. Kasali was in “significant breach” of orders for disclosure and struck his claims and ordered child support based on imputed income: Michaud v. Kasali, 2013 ONSC 7475. Ms. Michaud successfully appealed the 2013 order to the Divisional Court: Michaud v. Kasali, 2015 ONSC 2961 (Div. Ct.). The question of imputed income for 2012 onwards was remitted to McGee J. for the second trial, discussed below.

The Second Trial

[6] A second trial on Ms. Michaud’s Motion to Change took place in 2015, during which McGee J. again found Mr. Kasali “evasive” and in breach of disclosure obligations: Michaud v. Kasali, 2016 ONSC 443 and 2016 ONSC 4356. McGee J. found that Mr. Kasali had submitted a false 2012 Notice of Assessment in evidence in the 2013 trial, and that Mr. Kasali had falsely represented his address in the trial. McGee J. determined on a final basis that Mr. Kasali’s income for child support purposes was $136,679 for 2012. McGee J. imputed income based on Mr. Kasali’s failure to provide financial disclosure, setting income at $54,909 for 2013 on a temporary basis. Following submissions, on July 4, 2016 McGee J. issued a final order that Mr. Kasali pay child support from January 1, 2014 forward in the amount of $800 per month, the table amount for two children on imputed income of $54,909.

The Third Trial

[7] In February 2017, Mr. Kasali filed a motion to change the July 4, 2016 Order of Justice McGee to reduce child support to $300 per month retroactive to January 1, 2013. Ms. Michaud, in response, sought to increase child support and vary and reapportion section 7 expenses retroactive to 2013, later amended to 2009.

[8] MacPherson J. presided over a one-day trial on June 25, 2019. The trial judge ruled that he would not be re-litigating all issues before Justice McGee in the first two trials, but that “any new or additional information that was unavailable at the time of the first two trials was all that I would consider.”

[9] Disclosure issues persisted. The trial judge recognized that Mr. Kasali’s lack of disclosure had been a consistent challenge in all the child support proceedings. He found that “despite the lengthy list of disclosure requested and the number of court orders meant to effect same, Mr. Kasali did not provide full disclosure.” Indeed, the trial had commenced on May 16, 2018, and was adjourned by Justice DiTomaso due to Mr. Kasali’s failure to provide Ms. Michaud with signed Internal Revenue Service (“IRS”) authorizations (for determining U.S. income). Mr. Kasali had been ordered to provide the IRS authorizations on December 20, 2017. The authorizations were ultimately signed on May 25, 2018, but retracted by Mr. Kasali, without proper reason, on July 3, 2018.

[10] The trial judge found that during the trial “it became clear that Mr. Kasali’s sworn financial statements were completely defective.” The trial judge found that the expenses listed on Mr. Kasali’s financial statement were questionable as they were not complete. Although Mr. Kasali conceded he owned a Mercedes, there were no vehicle repairs for the Mercedes. There were no expenses for rent, mortgage, or utilities. Although Mr. Kasali conceded he had paid rent for certain periods, those payments were not listed as expenses on the financial statements. The trial judge found that Mr. Kasali did not provide disclosure for his three businesses. There were no bank accounts listed on the financial statements, which the trial judge found very difficult to believe. The trial judge found Mr. Kasali’s evidence to be misleading and identified discrepancies with Mr. Kasali’s sworn evidence given before Justice McGee. He found that Mr. Kasali had failed to provide accurate financial disclosure while under an obligation to do so pursuant to s. 19(1)(f) of the Guidelines.

[11] The trial judge accepted Ms. Michaud’s evidence that Mr. Kasali failed to disclose significant U.S. income. In particular, the trial judge accepted that IRS tax returns of Bill L. Kasali were those of Mr. Kasali, and that during the brief period when Ms. Michaud had his IRS authorization, she was able to obtain IRS information about U.S. income. The trial judge found that Mr. Kasali and Bill L. Kasali (for whom the IRS authorizations provided income information) were the same person. He drew inferences from the evidence based on Mr. Kasali’s birth date and other evidence that Mr. Kasali resided at addresses associated with the IRS accounts.

[12] As he summarized at para. 55:

On a balance of probabilities, I conclude that Mr. Kasali was working in the US as either an employee or operating a business. Mr. Kasali has a graduate degree in finance and worked in the banking field in a senior capacity for many years. His testimony that he applied for many positions without success and that he continues to apply for positions was not supported by an updated résumé nor a list of businesses and locations that he applied for work. It seems that after 8 years of search an individual with his experience and education should have been able to find a position in some capacity. Mr. Kasali is 65 years old. His financial statement does not reflect any CPP or OAS. It is counter-intuitive to think that someone on such a modest pension would not avail himself of the opportunity to collect his CPP. This explains the evasiveness in his financial documentation, the hiding of his US residence, the uncertainty over any Canadian residence, the closing of his bank accounts, the New Jersey license plate on his Mercedes, and his daughter's text about their location.

[13] In assessing credibility, the trial judge accepted Ms. Michaud’s testimony, finding it to be straightforward, believable, and supported by documentary evidence. On the other hand, the trial judge found:

[58] By contrast, throughout his testimony, Mr. Kasali was vague and evasive. He could not answer even the simplest questions in a manner that was straightforward and candid.

[59] Further, Mr. Kasali's evidence at trial was inconsistent with his sworn testimony in earlier trials. In particular his evidence about his residence and the ownership of the Mercedes with New Jersey plates was contradictory.

[14] The trial judge then reviewed and adjusted the income of Mr. Kasali based on the evidence before him. The trial judge adjusted Mr. Kasali’s income upwards for the years 2012 through 2014 based on new information, and adjusted Mr. Kasali’s income downwards for the years 2015 and 2016. No change was made for the years 2009 to 2011 and 2017 to 2018, as the trial judge found there was no new or additional financial information for those years. The trial judge declined to order a variation of the s. 7 expenses because Ms. Michaud failed to file supporting documentation.

[15] The trial judge found that Ms. Michaud was the most successful party and was presumptively entitled to costs. However, she failed to provide details as to amounts spent, and so he declined to award costs.

Jurisdiction

[16] The notice of appeal is dated July 5, 2019. Accordingly, the transitional provisions in s. 19(5) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”), apply. The Divisional Court has jurisdiction under ss. 19(1)(a) and 19(1)(1.2), as they read before the Moving Ontario Family Law Forward Act came into force on March 1, 2021. Those sections provide that the Divisional Court has jurisdiction to hear an appeal from a final order of a judge of the Superior Court of Justice if the periodic payments ordered are less than $50,000 in the first 12 months.

Standard of Review

[17] The correctness standard applies to pure questions of law. The standard of palpable and overriding error applies to questions of fact and to questions of mixed fact and law: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.

Issues

[18] Mr. Kasali raises four issues:

1. Did the trial judge make a palpable and overriding error in finding that Mr. Kasali was the same Bill L. Kasali as the one listed on the IRS returns?

2. Did the trial judge fail to consider any factors for retroactive child support?

3. Did the trial judge err in the calculation of imputed income for 2017 and 2018?

4. Did the trial judge apply the wrong version of the Guidelines?

[19] Ms. Michaud requests additional relief: that Mr. Kasali be declared a vexatious litigant; costs of the appeal on a full indemnity basis; punitive damages; and costs of the trial below. This Court has no jurisdiction to declare Mr. Kasali a vexatious litigant, nor to award punitive damages.

[20] Ms. Michaud originally sought to appeal the trial judge’s decision not to award costs. She neither sought nor obtained leave to appeal the trial judge’s costs order, as required by Rule 61.03(7) of the Rules of Civil Procedure. In all the circumstances, I would not have allowed leave to appeal, and do not consider Ms. Michaud’s claims for trial costs.

Did the trial judge make a palpable and overriding error in finding that Mr. Kasali was the same Bill L. Kasali as the one listed on the IRS returns?

[21] Mr. Kasali submits that the trial judge made palpable and overriding errors of fact in finding that he and the Bill L. Kasali on the IRS returns were the same person. Mr. Kasali submits that the trial judge erred by allowing internet search results into evidence, without conducting a voir dire into their admissibility. Mr. Kasali submits that they were hearsay, unauthenticated, and should not have been admitted and relied on.

[22] In essence, Mr. Kasali seeks to have this Court reassess the evidence considered by the trial judge and come to a different conclusion. There was ample evidence before the trial judge on which he was entitled to rely to find that Mr. Kasali was Bill L. Kasali. The internet search evidence was supported by and consistent with Ms. Michaud’s oral testimony and a significant amount of other evidence: there was no palpable and overriding error in admitting the documents. The trial judge’s assessment of the evidence was also clearly anchored in his assessments of credibility.

[23] The trial judge’s decision involved mixed questions of fact and law. The appellant failed to make full, frank, accurate and timely disclosure of his income in three successive trials. Even the integrity of documents was in issue. Yet the trial judge had to determine the appellant’s income to secure the rights of the children to appropriate child support. While the appellant seeks to isolate the admission of specific documents as errors of law, the trial judge was entitled to and did consider the entirety of the evidence in coming to his decision. It is not the role of an appellate court to second-guess the weight assigned to various items of evidence. The appellant has demonstrated no palpable and overriding error in the trial judge’s assessment of the evidence, and his determination of the factual issues is entitled to deference.

Did the trial judge fail to consider any factors for retroactive child support?

[24] Mr. Kasali submits that the trial judge failed to consider the factors set out in D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231 in awarding retroactive support and did not provide adequate reasons. This mischaracterizes the issue. All issues relating to child support had been settled. Income was imputed by Justice McGee under s. 19(1)(f) of the Guidelines because of Mr. Kasali’s failure to provide adequate and credible financial disclosure. Ms. Michaud’s claim for adequate child support has been ongoing since 2009. The only issue has been Mr. Kasali’s income. In the face of claims by Mr. Kasali for downward adjustment of child support based on his income and for upward adjustments sought by Ms. Michaud, the trial judge ruled he would consider new information about Mr. Kasali’s income.

[25] As the Supreme Court of Canada held in Colucci v. Colucci, 2021 SCC 24, at para. 46, the child’s interest in a fair standard of support commensurate with income is the core interest to which all rules and principles must yield. Frank disclosure of income information by the payor lies at the foundation of the child support regime; the duty to disclose financial information is the most basic obligation in family law.

[26] This is particularly important given that Mr. Kasali’s motion to change was brought following imputation of income in the 2016 trial. As stated in Colucci at paras. 62-63:

[62] The payor must have disclosed sufficient reliable evidence for the court to determine when and how far their income fell, and to ascertain whether the change was significant, long lasting, and not one of choice. A decision to retroactively decrease support can only be made based on “reliable, accurate and complete information” (Earle, at para. 28). The payor cannot ask the court to make findings on income that are contrary to the recipient’s interests “while at the same time shielding information that is relevant to the determination of their income behind a protective wall” (Templeton, at para. 67; see also Tougher v. Tougher, 1999 ABQB 552, at paras. 14‑15; Terry, at para. 9).

[63] Of course, a payor whose income was originally imputed because of an initial lack of disclosure cannot later claim that a change in circumstances occurs when he or she subsequently produces proper documentation showing the imputation was higher than the table amount for their actual income. The payor cannot rely on their own late disclosure as a change in circumstances to ground a variation order (Gray, at paras. 33-34). This would “defeat the purpose of imputing income in the first place” and act as “a disincentive for payors to participate in the initial court process” (Trang v. Trang, 2013 ONSC 1980, 29 R.F.L. (7th) 364, at para. 53).

[27] McGee J. imputed income to Mr. Kasali in 2013 and 2014 based on lack of financial disclosure. Any motion to change seeking a retroactive decrease based on a material change in income must be based on full, frank, accurate, and timely financial disclosure. In the absence of such disclosure then the payor will be unable to establish a material change in circumstances, which is what implicitly the trial judge held here.

Did the trial judge err in the calculation of imputed income for 2017 and 2018?

[28] The trial judge declined to vary McGee J.’s support order for 2017 and 2018 because no new additional financial information was presented that would warrant a different amount. Mr. Kasali submits that the trial judge made two errors. First, Mr. Kasali submits that McGee J. made no order for 2017 and 2018, and the trial judge had no power to continue an order never made in the first place. Mr. Kasali’s first submission is incorrect. McGee J.’s final order of July 4, 2016, ordered that Mr. Kasali pay child support “from January 1, 2014 forward in the amount of $800”, which was a continuing obligation until child support terminated.

[29] Second, Mr. Kasali submits that there was evidence of his 2017 income before the trial judge which was ignored. The trial judge acknowledged Mr. Kasali’s evidence that his sole income since 2013 has been pension income of less than $13,000. The trial judge carefully reviewed all the evidence. The trial judge’s assessment of the evidence was clearly anchored in his assessments of credibility. He did not alter the imputed income set by Justice McGee, based on his assessment of the credibility and cogency of the financial information before him and Mr. Kasali’s failure to make appropriate disclosure. I see no error in principle or palpable and overriding error of fact. It is not the role of an appellate court to second-guess the weight assigned to various items of evidence. The appellant has demonstrated no palpable and overriding error in the trial judge’s assessment of the evidence, and his determination of the factual issues is entitled to deference.

[30] I conclude there is no merit to this submission.

Did the trial judge apply the wrong version of the Guidelines?

[31] Mr. Kasali submits that the trial judge erred by applying the November 22, 2017 version of the Guidelines to his support payments from 2011 to November 2017. Rather, those years should have been governed by the December 31, 2011 Guidelines. Had the trial judge applied the proper tables, Mr. Kasali argues that it would have resulted in a significant reduction in support payments. Ms. Michaud took no position on this issue.

[32] The failure to calculate child support in accordance with the applicable Guidelines is an error of law. The wrong legal standard was applied.

[33] Subsection 134(1) of the CJA sets out the powers of a court hearing an appeal. Generally, unless otherwise provided, the court can make any order or decision that ought to or could have been made by the court or tribunal appealed from, order a new trial, or make any other order or decision that is considered just. A new trial should not be ordered unless some substantial wrong or miscarriage of justice has occurred (ss. 134(6) and (7)).

[34] This type of error is one which should have been brought to the attention of the trial judge for correction. It could have been corrected before the order was finalized. After the order was finalized, it could have been the subject of a consent change or a Family Law Rule 25.19(b) motion. It is notable that Ms. Michaud took no position on the issue of rectifying the order in accordance with the 2011 Guidelines. Fixing this issue did not require the delay and expense of an appeal to the Divisional Court, nor does it require a new trial: once the proper Guidelines are selected, appropriate support merely requires a calculation that is easily corrected. Although the appellant raised this as an issue, he did not provide any calculation that would assist the Court.

[35] I adjust monthly support payment from January 1, 2012 to November 2017 using the income established by the trial judge, as well as his determination that entitlement to support for the eldest ended on January 1, 2017 and the youngest on May 1, 2018. The following chart shows the support owed under the 2011 Guidelines until amended by the 2017 Guidelines:

Year

Income Found by MacPherson J.

Monthly Support Ordered (2017 Guidelines)

2011 Guidelines Monthly Support

2012

$288,283

$3,743

$3,588

2013

$314,498

$4,051

$3,887

2014

$261,010

$3,409

$3,277

2015

$43,659

$650

$641

2016

$25,072

$377

$374

2017 *1 child

$54,909

$506

$496 x11 mos. (2011 Guidelines) $506 x1 mo. (2017 Guidelines)

Costs

[36] Mr. Kasali was unsuccessful on almost all issues. While he succeeded on the issue of which version of the Guidelines apply, this could have been corrected at a much earlier stage without the delay and cost of an appeal. Costs of $2,500.00 inclusive are payable to Ms. Michaud by Mr. Kasali.

Order

[37] This Court make the following Order:

(1) The appeal is allowed to the extent only that the Order of Justice McPherson dated July 4, 2019 is amended by deleting paragraphs 1 through 6 and replacing them with the following paragraphs 1 through 6:

1. Commencing January 1, 2012 and payable on the first day of each month thereafter, Mr. Kasali will pay $3,588 per month for the support of Tina and Anthony in accordance with the Guidelines and on the basis of an annual income of $288,283 (CAD) which income was calculated using the average currency exchange rate of 1.0064 for 2012 and applied to Mr. Kasali's income of $276,497 (USD) plus his Canadian income of $10,556;

2. Commencing January 1, 2013 and payable on the first day of each month thereafter, Mr. Kasali will pay $3,887 per month for the support of Tina and Anthony in accordance with the Guidelines and on the basis of an annual income of $314,498 (CAD) which income was calculated using the average currency exchange rate of 1.0268 for 2013 and applied to Mr. Kasali's income of $296,009 (USD) plus his Canadian income of $10,556;

3. Commencing January 1, 2014 and payable on the first day of each month thereafter, Mr. Kasali will pay $3,277 per month for the support of Tina and Anthony in accordance with the Guidelines and on the basis of an annual income of $261,010 (CAD) which income was calculated using the average currency exchange rate of 1.11285 for 2014 and applied to Mr. Kasali's income of $224,866 (USD) plus his Canadian income of $10,768;

4. Commencing January 1, 2015 and payable on the first day of each month thereafter, Mr. Kasali will pay $641 per month for the support of Tina and Anthony in accordance with the Guidelines and on the basis of an annual income of $43,659 (CAD) which income was calculated using the average currency exchange rate of 1.2859 for 2015 and applied to Mr. Kasali's income of $24,554 (USD) plus his Canadian income of $12,085;

5. Commencing January 1, 2016 and payable on the first day of each month thereafter, Mr. Kasali will pay $374 per month for the support of Tina and Anthony in accordance with the Guidelines and on the basis of an annual income of $25,072 (CAD) which income was calculated using the average currency exchange rate of 1.35665 for 2016 and applied to Mr. Kasali's income of $9,674 (USD) plus his Canadian income of $11,948. Support for Tina ceases on January 1, 2017;

6. Commencing January 1, 2017 and payable on the first day of each month thereafter up to and including November 1, 2017, Mr. Kasali will pay $496 per month for the support of Anthony in accordance with the Guidelines and on the basis of an annual income of $54,909 (CAD), and commencing December 1, 2017 such amount shall be increased to $506 per month.

(2) Costs of $2,500.00 inclusive are payable to Ms. Michaud by Mr. Kasali.

___________________________ Kristjanson J.

I agree

Swinton J.

I agree _________________________

Lederer J.

Date of Release: October 15, 2021

CITATION: Michaud v. Kasali, 2021 ONSC 6847

DIVISIONAL COURT FILE NO.: 1174/19

DATE: 20211015

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Swinton, Lederer and Kristjanson JJ.

BETWEEN:

BILL KASALI

Appellant (Respondent)

– and –

KATHLEEN MICHAUD

Respondent (Applicant)

REASONS FOR JUDGMENT

Kristjanson J.

Date of Release: October 15, 2021