ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: FS-11-71203-00
DATE: 20120910
B E T W E E N:
Susan Marina D’Egidio
C. Struthers, for the Applicant
Applicant
- and -
Daniele D’Egidio
R. Stone, for the Respondent
Respondent
REASONS FOR JUDGMENT
K. van Rensburg J.
Introduction
[1] Daniele D’Egidio ("Danny”) and Susan D’Egidio (“Susan”) were married for eight years and have three children. They separated in July 2009, but lived together in the matrimonial home until it was sold in October 2009. The parenting issues were mostly resolved by minutes of settlement they signed in November 2009, which also provided for spousal and child support and equalization. Susan started these proceedings in 2011 after Danny had unilaterally reduced support.
[2] The issues at trial were the following:
Danny’s income for support purposes;
Child support and s. 7 expenses payable by Danny;
Duration and amount of spousal support, and whether a lump sum amount is justified; and
Susan’s claim for equalization of cash she alleges Danny removed from the matrimonial home at the time of separation.
[3] The witnesses at trial were Susan and Danny, as well as Susan’s sister, Diane Delicata, and her mother, Anita Carina, and Danny’s mother, Nicolina D’Egidio.
Background Facts
[4] The parties were married on March 17, 2001. They have three children; the eldest was born in September 2001 (now 11) and twins were born in December 2002 (now age nine). Danny is 37 years of age and Susan is 35.
[5] The parties had a traditional marriage. Susan was employed when they married, but left the work force prior to the birth of their first child. She returned to work early from her maternity leave so that she would qualify for employment insurance benefits following the second pregnancy. The three children were born in a period of 16 months.
[6] Susan had some occasional employment during the marriage, and after separation she obtained part-time work in 2010. At the date of trial she was not employed outside the home.
[7] Danny worked during the marriage as a server, and he has continued this occupation post-separation.
[8] By all accounts Danny and Susan achieved a very good standard of living during their marriage. Danny worked long hours as a server at Copper Creek Golf Club (“Copper Creek”) starting in 2002, and in other venues, earning a substantial part of his income in cash. He was an active investor. The couple had assistance from their respective parents. By the time they separated in July 2009, they owned their home outright, they had no debt, and they had an investment portfolio and savings for their children’s education.
[9] Danny and Susan separated in July 2009; however they physically separated when the house sale closed on October 30, 2009. Initially after separation Danny lived with his parents, however he bought his own home in December 2010. In January 2011, Susan purchased a home with her new partner, where they live with the children.
Minutes of Settlement
[10] With the assistance of a mediator, and at a time when they were not represented by counsel, the parties entered into a written agreement called “Minutes of Settlement, Parenting and Financial Plan” dated November 27, 2009 (the “Minutes of Settlement”).
[11] The Minutes of Settlement provided for the care of the children, which was described in the agreement as “shared parenting”. The custody and access arrangements were modified by the parties, on consent, just before the trial commenced. The children live primarily with their mother and stay with their father every second weekend. The arrangements respecting the children are agreeable to the parents and are working well for the children. The only issues at trial concerning the children were financial.
[12] The Minutes of Settlement provided for child support based on Danny’s anticipated income for 2008 of $39,000 and stated:
b. The table amount of child support under the Child Support Guidelines payable by Daniele for two children is $753.00 per month while he is employed. Both parties understand that this amount is based on present income only and could change as employment changes.
[13] The Minutes of Settlement provided with respect to s. 7 expenses:
c. The parties will contribute 80/20 toward special or extra-ordinary expenses incurred by either party for the children, in accordance with s. 7 of Child Support Guidelines, including medical expenses not covered by an insurance plan, costs associated with school, extracurricular activities, and post-secondary education. They acknowledge that currently those proportions are 80% payable by Daniele and 20% payable by Susan. Each party shall only contribute to the cost of extracurricular activities provided they both have agreed that the expense be incurred, such agreement not to be unreasonably withheld. If Susan obtains a full-time job the proportions will change proportional to income.
d. Each party shall provide documentary proof of the special or extraordinary expenses he or she incurs on behalf of the children at the other’s request.
[14] The Minutes of Settlement required the parties to provide copies of their income tax returns annually by July 1, commencing 2009, and stated:
f. Either party may require that the amount of basic guideline child support paid by Daniele or the proportions of special and extraordinary expenses, be adjusted in light of a change in the annual income of either Daniele or Susan. Any change shall be effective July 1st of the year in which the change is disclosed.
[15] The Minutes of Settlement provided for spousal support payable to Susan by Danny in the amount of a maximum of $224 monthly. The amount was expressly based on Susan’s past income of “zero” dollars, Danny’s anticipated 2008 income of $39,000, and the parties’ eight years of marriage. Since Susan had started a part-time job at the time, the amount was to be reviewed in July 2010. Spousal support was to continue indefinitely or until the last child reaches the age of 18 or until Susan remarries, and was to be reviewed yearly or not later than the month after the last child turns 12.
[16] The Minutes of Settlement went on to state:
Susan understands this amount is being paid in order to help her become financially independent. After the last child turns 18 years of age Susan will no longer be able to claim spousal support and [will] be financially independent from Daniele forever.
[17] The Minutes of Settlement dealt with equalization of the proceeds of sale of the matrimonial home and other assets, consisting of an investment portfolio. Essentially Susan received from the net proceeds of sale of the matrimonial home an additional amount representing one half of the value of the parties’ investment portfolio (other than monies held for the children), and Danny retained the investments.
[18] The agreement stated that “equalization is complete; therefore Daniele and Susan relinquish any rights to each other’s pensions now and forever.”
[19] In June 2010, only seven months after they had signed the Minutes of Settlement, Danny unilaterally reduced child support to $691 and spousal support to $9.00 per month. As of July 1, 2010, Danny provided Susan with an envelope containing 12 post-dated cheques for $700. One year later Danny reduced the support even further, to $534 per month in child support only.
[20] At trial, Danny explained that he had reduced support to be consistent with the income reported on his tax returns ($35,682.33 in 2009 and $26,475 in 2010). Nonetheless, neither reduction was discussed in advance with Susan or justified by providing her with copies of tax returns or notices of assessment.
[21] Susan commenced these proceedings in February 2011. By order dated July 15, 2011, which was without prejudice pending trial, Danny’s income was imputed at $35,680 and he was required to pay $691 per month child support commencing August 1, 2011 and $200 per month spousal support commencing February 1, 2011.
[22] At the date of trial, the arrears under the order of July 15, 2011, were $2,227.56, according to a FRO statement dated February 23, 2012.
Issue 1: Danny’s Income for Support Purposes
[23] Danny’s income for support purposes was the central issue at trial. This presented some challenges, in part because he has earned undeclared cash income as a server for many years, and there is no question that he is working less and earning less now than he did during the marriage.
[24] Danny’s position at trial was that his 2011 income was approximately $27,832.38, including rental income for three months; however, he is prepared to have an imputed income for 2012 of $35,032.38 for child support purposes. In the course of the trial, he testified that he would have “no problem” paying child support of $858 per month based on an annual income of $45,000. He testified that he does not want to pay spousal support. According to his counsel, Danny does not deny his obligation for spousal support and is agreeable to paying spousal support for another three years for a total of five years, however the real issue is the amount of income to be imputed to both parties. With income at the level contended by Danny’s counsel, there would be no or minimal spousal support payable.
[25] Susan contends that Danny’s annual income should be imputed at $70,000 to $75,000 and grossed up to almost $90,000, as part of his income is not declared for income tax purposes. Her counsel argues that a reverse lifestyle analysis would confirm that the income Danny earned during the marriage was significantly more than was reported in his tax returns. If he is in fact earning less now than he did during the marriage, he is deliberately under-employed.
[26] Susan testified that she knew that Danny’s projected income in 2008 of $39,000 for support purposes in the Minutes of Settlement was inaccurate. She agreed to this amount because the mediator told her that she would never be able to prove that Danny earned cash in the amount that she alleged, and Danny threatened that, if she went after him for more, he would take steps to decrease his income, which is exactly what he did. Danny testified that he had “no idea” of the source of the $39,000 figure for his projected income in 2008 that was stated in the Minutes of Settlement.
[27] In preparation for trial, Susan’s counsel received documents from Copper Creek respecting Danny’s declared and undeclared employment earnings. As a result of the information provided (which is discussed in detail below), Danny testified that he will be filing amended income tax returns to include the gratuities disclosed by his employer that had not previously been reported. The information from Copper Creek, together with other documentary evidence in this trial, makes it clear that Danny’s actual annual income when he signed the Minutes of Settlement exceeded $50,000.
(continued verbatim…)
K. van Rensburg J.
Released: September 10, 2012
COURT FILE NO.: FS-11-71203-00
DATE: 20120910
ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: Susan Marina D’Egidio Applicant - and – Daniele D’Egidio Respondent REASONS FOR JUDGMENT K. van Rensburg J.
Released: September 10, 2012