Court File and Parties

Date: 2012-09-21 Docket: FS-10-360886 Superior Court of Justice - Ontario

Re: Daniel Atkin, Applicant And: Margaret Atkin, Respondent

Before: Czutrin J.

Counsel: Avra Rosen, for the Applicant Respondent – In Person

Heard: August 21, 2012

Endorsement

[1] The motion heard by me on August 21, 2012 is largely a replay of the motion heard by Goodman J. on September 27, 2011, resulting in her lengthy reasons dated February 29, 2012.

[2] This endorsement addresses the issue of the Applicant father’s support obligations since Goodman J.’s order of February 29, 2012 and pending trial which is now scheduled for February 7, 2013.

[3] Goodman J. set out the following facts in paragraphs 4 and 5 of her Endorsement:

[4] The parties were married on August 28, 1993. They separated on or around September 20th, 2009.

[5] There are two children of the marriage, namely, Justin Atkin, age 16, and Amanda Atkin, age 14. Justin resides with his father; Amanda, with her mother (the Respondent). There have been serious issues regarding the children’s relationships with the parent with whom he/she does not live. The parties each hold the other and/or the marital dispute between the parents responsible for the estrangement. Each parent has made serious allegations about the other. Mr. Atkin alleges that Ms. Atkin was so filled with rage toward the children during the marriage that at the time of separation, Justin would not countenance the possibility of living with his mother. He also claims that Ms. Atkin has alienated Amanda from him. In order to further his position in the case, he made very serious allegations such as that Ms. Atkin had attempted to commit suicide and had broken into his home. He referred to involvement of the police and child protection authorities that had been necessitated by Ms. Atkin’s extreme conduct. For her part, Ms. Atkin made allegations against Mr. Atkin such as that during the marriage, he was substantially uninvolved with the children; that since the separation, he has not provided appropriate nutrition for Justin; that as a result of his parenting, Justin has missed or been late for school to an inordinate extent; and perhaps most importantly, that he has failed to ensure that Justin maintain a relationship with her. (Ms. Atkin has made serious suggestions of deceitful conduct on Mr. Atkin’s part in the financial context of this case, which allegations he disputes. I will refer to some of those allegations below.) Although each party has a right to put forward the facts that support his/her position, after reading the voluminous material, it seems clear that each party lacks objectivity and insight into his/her role in the estrangements that have developed in relation to the children. It matters not at this stage who is more to blame than the other for the situation; it is very clear that at this point, each parent has played some role in the deterioration of the relationship that each child has with his/her estranged parent.

[4] The Respondent seeks to enforce payments provided for by Goodman J.’s endorsement and to continue as undifferentiated support, $4,400 per month, to continue after the June payment ordered by Goodman J. (spousal and child support) until trial.

[5] Goodman J. ordered the Applicant to pay $4,400 for March, April, May and June 2012. The Respondent alleges that only three of these payments were made (March 20, 2012; April 9, 2012; and, May 2, 2012). The Applicant asserts that the June 2012 payment was made as well, through his lawyer. He has provided as evidence, a May 31, 2012 letter from his lawyer to the Respondent, indicating that payment is attached. I am unable to resolve this issue, unless the cheques as processed through the bank are produced by the Applicant or the four payments are acknowledged by the Respondent.

[6] Additionally, Goodman J. ordered the Applicant, father, to pay a lump sum of $22,200 ($4,400 due immediately), and a further lump sum of $25,000 due June 1, 2012. The Applicant failed to pay the amounts totaling $47,200. He now seeks relief from paying any unpaid amounts and a reduction retroactively of support, based on the Respondent’s employment as of April 1, 2012 and what he asserts as her 2011 income. He maintains that he had no income in 2011. He also maintains that while he sold one house in 2012 (54 Manor Haven Rd.) he has derived no income from this sale. The Applicant explains that while he bought the residence for $555 000 and sold it for $736 000 – an increase of $191 000 – this increase did not result in income because the funds went toward renovations, paying the previously increased mortgage, various fees associated with the sale, and paying down the carry-forward loss of Next Phase Developments I am unable to resolve this issue on the material filed. This will be left for trial and should be considered by the Applicant’s expert, assuming she receives verifiable and credible evidence.

[7] The Respondent received $21,345.99, as provided for in paragraphs 112 - 113 of Goodman J.’s endorsement. This amount was being held by the lawyers who had acted in the sale of the parties’ former matrimonial home, 60 Forest Park Crescent. It was paid to the Respondent and she endorsed the cheque to her previous counsel. It appears that Goodman J. directed these funds to be used by the Respondent for the purpose of disbursements including retaining an expert to critique the Applicant’s expert report, which is not yet complete. Of the $21,345.99 she received it appears as though Goodman J. thought $10,672.99 would be used for an expert, retained by the Respondent or her then counsel, to critique the Applicant’s expert whose report was available for Goodman J. to review. The expert was not retained and the funds Goodman J. thought would be used for this purpose appear not to have been so used. I am troubled by this. This will also need to be clarified at trial.

[8] As I will outline later, before a critique may be prepared, the Applicant’s expert should be in a position to satisfy the court as to the Applicant’s income for child and spousal support guideline purposes. Neither Goodman J. nor I can be satisfied as to the reliability of the expert’s opinion as provided to date, as Goodman J. outlined.

[9] In paragraphs 112 to 121, Goodman J. explained why she granted the relief she did and her expectations:

[112] Ms. Atkin produced a letter from her proposed valuator, Ohran Gobrin, indicating that they estimated their fees for the provision of a critique report of Ms. Alterman’s report to be in the range of $5,000 to $10,000. Ms. Atkin seeks an order for interim disbursements in the amount of $25,000, to enable her to proceed with her claim. In my view, she is entitled to such amount, based on her financial circumstances as at the date of the hearing of the motion. As of October 19th, 2011, Mr. Lerner’s firm was holding $21,345.99 in trust for the parties in relation to the sale of the matrimonial home, which had been owned jointly by the parties. Ms. Atkin seeks payment out to her of the amount, plus any further accumulated interest, as an interim disbursement. [Emphasis added.]

[113] Given that as of September 27th, 2011, Ms. Atkin still did not have a reliable picture of the income over which Mr. Atkin had reasonable access and control; given that in my view, his July 21st, 2011 affidavit regarding his financial position did not adequately update the values of his assets and debts owned at that date; given my view that as at the time of the motion, there was no evidence that Mr. Atkin had provided the complete accounting regarding the sale of the Prince Charles Drive property, and given my specific concern regarding the lack of a detailed explanation as to what happened to the funds disbursed to Loma Vista International Inc. on both June 23rd, 2010 and September 15th, 2010, an order that effectively releases to Ms. Atkin her one-half share of the balance of the funds left in trust and requires Mr. Atkin to pay about $10,672.99 of his own money to her to assist her in retaining professionals in this case is eminently fair, particularly if the order is made without prejudice to Mr. Atkin’s right to seek reimbursement for this amount at trial or a credit for it as against any other amount he might owe to her on account of other claims in the case. I order that immediately, the law firm holding any funds remaining from the sale of the matrimonial home, known as 60 Forest Park Crescent, Thornhill, be paid to Margaret Atkin, the amount to be used by her for legal and accounting fees, as she alone sees fit. [Emphasis added.]

[114] Mr. Atkin did not take any issue with the request that he produce an Equifax report. If he has not yet done so, then he shall immediately obtain and provide an Equifax report within the next 10 days.

[115] While Ms. Atkin has now received substantially all of the items ordered by Harvison Young, J., it is clear from Mr. Atkin’s expert’s letter that there may well be further requests for disclosure. He shall provide answers to any further reasonable requests for financial disclosure Ms. Atkin makes in this case within 10 days of the request. If he fails to provide an item(s) requested in 10 days, he shall provide a written, detailed explanation as to the reason for his not producing the information/item(s) (as, for example, that he requested the item from a third party on a particular date and the date upon which he expects to receive the information/document).

[116] Certainly, Mr. Atkin ought to within the next 21 days provide a full and detailed accounting regarding the sale of 33 Prince Charles Drive. That accounting shall include details of the purchase price; details of all amounts incurred to improve the property and the specific sources of the funds incurred to cover those costs; and shall specifically identify what Loma Vista International Inc. did with the funds it received from Mr. Lerner’s firm on June 23rd, 2010 and September 15th, 2010, with proof of any payments made to any person or entity from those funds.

[117] Further, within the next 7 days, Mr. Atkin shall provide copies of any listing(s) currently in place in relation the proposed sale of any of the following properties: 68 Roberta Drive; 6, 10 and 12 and 54 Manor Haven Drive, all in Toronto. If any of these assets have been sold, he shall provide full particulars of such sales, including the closing date (scheduled, if not yet closed, or past closing date). If or when any such property has sold or is sold and closed, then he shall provide a complete accounting of the cost of acquisition of the property, the costs incurred to improve the property prior to its sale; the source of the funds used to improve the property and a complete accounting, with proof, as to distribution of the proceeds of sale. [Emphasis added.]

[118] If any property referred to in this Endorsement is listed for sale at any time, Mr. Atkin shall immediately provide a copy of the listing and if sold, shall provide a copy of the Agreement of Purchase and Sale within 72 hours after the agreement is entered into. [Emphasis added.]

[119] Within the next 21 days, Mr. Atkin shall provide all QuickBooks records and copies of any general ledgers in existence for the five companies (including Ridgevale Inc.) for the period starting at the date that he last produced them in this case and ending at the records last made in relation to each company. In the case of Ridgevale Inc., the books and ledgers shall be for the fiscal years 2008 to date. If he does not provide an item(s) referred to in this paragraph, then he shall provide a detailed, written explanation as to the reason for his not having done so.

[120] For the months of March through June, Mr. Atkin shall on the first day of each month pay to his wife the sum of $4,400 (which is a net figure), which will ultimately be applied to any child and spousal support order made in this case. In addition, for the period October 1st, 2011 to today, he shall pay to Ms. Atkin a lump sum of child and spousal support in the amount of $22,200.00. He shall pay $4,400 of this amount within the next 10 days and the balance of $17,800.00 within thirty days from today. If a property referred to in this Endorsement is sold and closes earlier than the times set out for payment under this paragraph, then the amounts shall be paid immediately upon closing out of the sale proceeds after payment only of amounts required to be paid in order to close the sale transaction.

[121] In addition, on or before June 1st, 2012, Mr. Atkin shall, pay to Ms. Atkin a further lump sum payment of $25,000 on account of child and spousal support payable for the period December, 2010 to September, 2011. If a property referred to in this Endorsement is sold and closes earlier than the time set out for payment under this paragraph, then the amount shall instead be paid immediately upon closing out of the sale proceeds after payment only of amounts required to be paid in order to close the transaction and the amounts to be paid under paragraph [120] above. [Emphasis added.]

[10] Goodman J. concluded, at paragraph 113, that as of “September 27th, 2011, the Respondent still did not have a reliable picture of the income over which the Applicant had reasonable access and control” and that “there was no evidence that the Applicant had provided the complete accounting regarding the sale of the Prince Charles Drive property.” Goodman J. was concerned about the lack of detailed explanation as to what happened to the funds left in trust.

[11] Goodman J. was concerned about the adequacy and reliability of the Applicant’s disclosure for the purposes of determining his income. Her reasons at paragraphs 114-119 address those issues.

[12] Goodman J. anticipated that I would case conference the issues once the Respondent’s expert completed a critique of the Applicant’s expert report.

[13] The Respondent first sought financial and disclosure relief in December 2010 and the motions were adjourned to allow the Applicant to have his expert prepare an income report. A report was delivered at the end of July 2011.

[14] The Applicant’s income is derived from buying older homes and renovating and selling them. As a self-employed person in this business, determining his income can be challenging. It was and remains his responsibility and obligation to satisfy the court as to his income for support purposes. To date he has not done so.

[15] His expert did not review source documents. To date, the only reliable information provided has been the purchase and sale documents of the above-mentioned renovated homes. The documentation submitted to prove the cost of renovations, however, has not satisfied even the Applicant’s own expert. While the Applicant provided some computer statements suggesting the costs associated with renovations and carrying the properties pending sale, there has not been any review of invoices and source documents. Based on the limited information to date, the Applicant’s expert’s report suggested income of $71,000 in 2008, $89,000 in 2009, and $2,000 in 2010. There were no sales of homes in 2011.

[16] According to the Applicant, he has been borrowing from his parents at an increased rate without repayment since separation. While he claimed no outstanding debt to his parents as of separation, he now claims $1 800 952.50 owing to his parents. He appears to have continued to purchase properties post separation to continue his business. It appears that the Applicant may be using his parents to fund his business venture.

[17] Goodman J. recognized the inadequacies in the Applicant’s expert’s report:

[21] In her report, Ms. Alterman (Applicant’s expert) stated as follows in respect of the scope of her work:

We have not had access to all of the information we would normally review in this matter including, but not limited to, financial statements of Next Phase for fiscal 2011 [which has a January 31st year end], detailed accounting records (i.e., general ledgers) for LV International, LV Homes and LVH Holdings, complete detailed accounting records for Next Phase for fiscal 2011, lending agreements, etc. We cannot comment on the impact, if any, that a review of such information may have on our findings. [Emphasis added by Goodman J.]

[18] The onus of establishing income is on the Applicant. Any critique that may be obtained by the Respondent, through an independent expert, is not meant to be an income report, but a critique of the adequacy of the information relied on by the expert forming the assumptions or the method applied to determine income for guideline purposes in the Applicant’s expert report and providing perhaps an alternative calculation of income. I agree with Goodman J. that the expert report to date cannot satisfy the court. I find that the Applicant’s expert requires access to all of the information from 2008 to 2012 (inclusive) that she needs to review her initial report and be satisfied that she can meet her obligations to the court. She also requires access to all other documentation and information that she would insist on obtaining and reviewing if she was preparing a report for the Respondent, and not the Applicant. After all, the expert’s obligation is to the court.

[19] I am in no better position than Goodman J. was to determine the Applicant’s income and the value of assets at separation and currently.

[20] Although the Applicant claims that there has been a material change in circumstances since the hearing of the motion before Goodman J. on September 27, 2011, the only new information I have is a sale of another property and the Respondent’s new employment as of April 2012 at $41,000 per annum and disclosure of her 2011 income of $16,489 which included a $10,000 RRSP withdrawal.

[21] The Applicant filed an affidavit dated August 28, 2012 in response to my request for supplementary information regarding a chart prepared by the Respondent in her affidavit dated August 2, 2012. The chart outlined five properties that were purchased and sold by the Applicant. The Applicant’s August 28, 2012 affidavit purports to respond to the Respondent’s chart of properties purchased prior to separation. Three properties have been sold since separation: 33 Prince Charles Drive was sold May 31, 2010 for $1.2 million dollars ($600,000 more than its purchase price in 2008); 60 Forest Park Crescent, the matrimonial home, was sold for $980,000 ($536,000 more than its purchase price); and lastly, 54 Manor Haven Road was sold for $750,000 ($195,000 more than its purchase price).

[22] In her August 2, 2012 affidavit, the Respondent submitted her own calculations of the profits from sale. In his August 28, 2012 affidavit, the Applicant attaches new and additional information to support his position on profits from sales. For now, it would be unfair for me to consider these documents prior to receiving the Applicant’s expert’s report, as described above, and before the Respondent has had the opportunity to consider the report and make submissions.

[23] As a result of the recent sale of 54 Manor Haven Rd. (a property purchased prior to separation), the Applicant deposed that he anticipated a profit of $29,000. According to the statement of receipts and disbursements related to the sale of this property, the law firm of Steinman and Lerner is holding $241,531.47 in trust after paying tax arrears, funds due to pay off the mortgage, real estate commission, legal fees, and reimbursing the Applicant $5,067.72 for mortgage payments (as I assume this was the corporate owner’s mortgage responsibility). Next Phase Developments Inc. owned the property and the Applicant deposed that he is the sole owner of this company. The Respondent claims that the parties owned two companies, one of them being Next Phase Developments Inc. This will need to be determined on complete evidence. Based on the information provided and the form in which it was provided, I am not in a position to determine either the profit made on this sale, or who the balance now held in the trust account of Steinman and Lerner should be paid to except to the extent I now order.

[24] The Applicant or his solely owned companies (Loma Vista Homes and LVH Holdings) continue to own four properties purchased in 2010. These properties are: 6 Manor Haven Rd.(owned by Loma Vista Homes); 10 Manor Haven Rd. (owned by Loma Vista Homes); 68 Roberta Dr. (owned by LVH Holdings); and, 12 Manor Haven Rd (owned by the Applicant alone and used as his residence). I do not have an understanding as to what is happening with these properties. These would appear to be an inventory of properties that would be renovated and sold. It appears that the Applicant may be using his parents to fund his business venture. The Applicant’s expert will need to receive documentation to provide an opinion as to the Applicant’s potential for income.

[25] The only change that I can rely on is the Respondent’s income of $41,000 per annum of as April 1, 2012. This does not change the reasons for Goodman J.’s orders and the requirement that the payments be made as she ordered.

[26] It is unfortunate that the goals of Goodman J. were not met. I agree with Applicant’s counsel that because the support was undifferentiated, any ability to fix spousal support and provide for relief or payments for 2011 appears to be lost. I am uncertain who should bear the responsibility for that given previous delays, disclosure and the inadequacy of the Applicant’s income report to date.

[27] It appears that the only preliminary untested expert information I have is that in the last year of cohabitation, the Applicant earned $89,000 at minimum. I must emphasize that I am unable to conclude that this is his income for support purposes. I also know that the Respondent, as of April, has income of $41,000.

[28] No one appealed Goodman J.’s order. The order needs to be complied with. The balance owing to the Respondent pursuant to Goodman J.’s order is to be paid forthwith from the funds held in trust by Steinman and Lerner. Any undisputed amount to be paid forthwith and any remaining dispute over one month’s payment I can resolve or it may be left for trial. I see no basis for making any adjustment to Goodman J.’s order otherwise, nor am I prepared to continue the $4,400 per month payments past the dates she provided for. The Applicant shall also receive an amount equal to the funds that he must now pay to the Respondent (amount remaining owing to the Respondent pursuant to Goodman J.s order). The balance of the funds shall remain in trust pending further order and as security for any support or amount that may be owed to the Respondent as a result of the judgment at trial.

[29] While a better and more reliable income report may help settle this case, I intend to use income values of $89,000 for the Applicant and $41,000 for the Respondent as of July 1, 2012. (This is the month after the last payment provided for by Goodman J. for the $4,400 per month payments from March to June). In addition to the outstanding payment due to the Respondent pursuant to Goodman J.’s order, commencing July 1, 2012, the Applicant shall pay set off child support of $423 per month, and spousal support of $908 per month on a temporary basis. Any amount owing as a result of this additional order shall also be paid from the funds held in trust by the law firm. With respect to the Respondent’s apparent section seven expenses, that will be left for trial.

[30] Any adjustment and re-allocation of the undifferentiated amounts paid may be addressed at trial when a better expert report should be available.

[31] The Applicant’s expert is to be provided a copy of this Endorsement so as to know how to proceed.

[32] My expectation is that the Applicant’s expert report will be produced by September 30, 2012, and that counsel and the parties shall arrange a case conference before me or Goodman J. to set next steps in October so as to work towards trial readiness for the trial scheduled.

[33] I have not addressed any of the parenting issues as I am unclear as to how the parties wish to proceed and this is also to be addressed at the conference which is to be set.

[34] Costs reserved to trial.

Czutrin J.

Released: September 21, 2012