SUPERIOR COURT OF JUSTICE - ONTARIO

BARRIE COURT FILE NO.: FC-08-225-0001
DATE: 20120827

RE: MARVIA LYNNE KHAN, aka MASSEY KHAN, Applicant Mother

AND:

MOHAMMAD ALI KHAN, Respondent Father

BEFORE: M. P. EBERHARD

COUNSEL:
T. Owen, Counsel, for the Applicant Mother
A. Cassolato, Agent, for the Respondent Father

HEARD: August 23, 2012

ENDORSEMENT

[ 1 ] This is in the context of the Respondent Father’s Motion to Change the temporary order of Wildman J. January 27, 2011. The Applicant Wife seeks (according to the confirmation):

(a) Order setting aside December 2011 Ex Parte Order of Justice Olah which restores Order of Justice Wildman of January 2011 (arising from argument);

(b) Allowing Applicant/Mother to authorize RESP monies for usage of children as oldest starts university in September at University of Guelph;

(c) Allowing a lien to be placed on the farm property formerly owned by Respondent/Father but now owned by the Respondent/Father’s common law spouse, Daniela Frasson, who has been added as a third party July 26/12 by Court Order and has been ordered to provide disclosure;

(d) Rule 13(17) finding that the Respondent/Father has yet to provide all of his financial disclosure as per the January 2011 Justice Wildman Order and also has not provided disclosure as per Request for Information which leaves the sanction up to the Court as to what to do with him (e.g. – costs, striking pleadings, etc);

[ 2 ] The Respondent Father moves for:

(a) An order that commencing August 1, 2012 and continuing on the first day of the month thereafter, the Respondent shall pay to the Applicant child support of $926.00 per month for four children based upon his income of $40,000.00 per year.

(b) An order declaring that effective July 31, 2012, the Respondent has overpaid child support to the Applicant, in the amount of 38,430.41 (hereinafter referred to as the “Overpayment”).

(c) An order that commencing August 1, 2012 and continuing on the first day of the month thereafter, that the Respondent’s child support obligations be reduced by $300.00 per month until the Overpayment is reduced.

(d) An order that commencing August 1, 2012, the Respondent’s child support obligations to the Respondent shall be $626.00 per month ($926.00 per month less $300.00 per month).

(e) An order that the Applicant provide the Respondent with the listed disclosure within 30 days,

[ 3 ] The children are: Madelaine (April 11, 1994), Caleb (July 20, 1997), Elijah (August 18, 2000), and Gabriel (May 31, 2004).

[ 4 ] The issues are more basic than suggested by these pleadings.

[ 5 ] Firstly, child support to this date must be addressed. There was a January 27, 2011 temporary order made by Wildman J. after argument on notice and costs order released on March 18, 2011 after written submissions. This was followed by a Refraining Order of Olah J. made when the Respondent Father moved without notice to the Applicant Wife for a Refraining Order on December 14, 2011. Notice is not required to the recipient but it is axiomatic that FRO has no mandate to comment on the quantum of the support order and the presiding judge would not change a support order in such circumstances without hearing from the recipient. Rather, an order for a quantum is the negotiated monthly payment that FRO negotiates and the presiding judge finds necessary for the payor to obtain the Refraining Order. It is made on the information presented by the payor, untested by the recipient and based on FRO policies regarding Refraining Order entitlement. Indeed, the order made by Olah J. includes the requirement to bring a Motion to Change within 20 days. It cannot be imagined that she purported to change the support order on the spot.

[ 6 ] I find on the evidence before me, based on the material in the file presented by the payor to support a motion for a Refraining Order, that what he provided to Olah J. was very selective. It amounts to material non-disclosure. I am satisfied that had she, or FRO, known that the child support had been routinely, and by court order, paid from proceeds in trust and that the Respondent Father had refused to authorize the steps that would allow continuation of those payments, together with the more fulsome material now filed by the Respondent Father as to his income during that period, she would not have granted the Refraining Order at so modest a monthly payment. [1]

[ 7 ] Next, there is the issue of ongoing child support. The Respondent Father did bring a Motion to Change on January 11, 2012. With some further disclosure recently provided by new counsel acting as agent for the Respondent Father, it is argued I should fix support, both before today and ongoing from today in accordance with this evidence of income. Although the Applicant Mother’s motion to rescind the Olah J. order was brought January 30th and has made its way through other issues to the Applicant Mother’s motion now before me filed July 31, 2012, the Respondent Father brought his cross motion for the desired change of ongoing support on August 17, 2012. Supporting material was available for analysis only then. A reply affidavit was filed by the Applicant Mother and I permitted a late affidavit of investigations by her friend to test the Respondent Father’s assertion of employment and then the Respondent Father’s late affidavit containing a letter from the employer was permitted on consent.

[ 8 ] Next, there are continuing issues of disclosure already ordered of the Respondent Father and further disclosure requested by each party. At the close of argument I announced that counsel will be invited to address costs in writing on the issues I can decide. At that time they are to submit a chart of the disclosure ordered but not yet made as well as further disclosure requested upon which they seek a disclosure order. I have heard argument on the relevance today. I particularly indicated my expectation that the process of preparing a chart should generate much of the disclosure sought and it should become unnecessary in the intervening time for me to have to adjudicate on this issue.

[ 9 ] Next, there is an issue of post secondary education expenses for Madelaine who is scheduled to commence first year at the University of Guelph in a few days. Time did not permit detailed argument about whose was the contribution of any payment from an RESP of some $63,000. That can wait for another day. Madelaine cannot. Evidence indicates first term expenses of $9,031.68. I order that to be paid forthwith from the RESP. If parties have not come to agreement or obtained an order by December 15, 2012 I order the second term to be paid from the RESP (assuming Madelaine is still attending University for a second term). I find that the financial uncertainty of the parties is at its peak. With Mr. Cassolato as his agent, the Respondent Father has finally begun the process of meaningful disclosure and marshalling of evidence signalling that the parties should soon be able (if they are trying in good faith) to move on to resolution or final adjudication. The RESP, though intended to benefit all the children, is best used now. Appropriate responsibility for further post secondary education expenses can be calculated on principle in due course.

[ 10 ] Finally, there is a history of payment of support from proceeds of sale of the matrimonial home. There is no evidence of child support being paid from any other way since the Wildman J. order. As that fund diminishes, the Applicant Mother looks to property in which the Respondent Husband has resided with two individuals who are said, without adequate supporting documentation, to have paid all purchase and maintenance costs. There is good evidence that these individuals are not arm’s length from the Respondent Father and circumstances very suspicious of their being his mere nominees to shield his property from his child support obligation. The Applicant Mother seeks a lien on the property to secure child support.

[ 11 ] Daniella Frassan, the individual who now holds title to the property, was named a Third Party on July 26, 2012. She was served with these motions. Local counsel, Ms. Annand, not yet on record, last night contacted counsel for the Applicant Mother seeking an adjournment on behalf of the Third Party but no agreement was obtained. I was intending to proceed cautiously in the absence of the Third Party but Ms. Annand did respond to a 10am page around midday (she was not expecting to appear) and, having been apprised of my tentative views on how I would proceed, she obtained instructions. Minutes of Settlement between the Applicant Mother and the Third Party were signed. The Respondent Father does not consent or oppose. Order to go in accordance with the Minutes of Settlement which provide for a non-dissipation order and a timetable for disclosure.

[ 12 ] So, in effect, that leaves me with the question of child support quantum.

[ 13 ] When Mr. Cassolato was retained (as agent) he unquestionably required an adjournment to ready the Respondent Father’s response to pending motions and to prepare. The term of the adjournment was the continued payment of support in the quantum ordered by Wildman J. of $1,855 for 4 children based on imputed income of $83,000. Because of the previous order to pay this from proceeds in trust, an arrears issue is not before me.

[ 14 ] The Respondent Father claims overpayment.

[ 15 ] Although the order of Wildman J. was temporary, and, as revealed by the disclosure orders she made that day, without the benefit of the most basic and crucial disclosure from the self-employed Respondent Father, I am not persuaded that the Respondent Father can rely on his own failure to disclose to complain that the order was too high and he should be reimbursed.

[ 16 ] His Motion to Change was brought January 11, 2012 as a consequence of his having moved for a Refraining Order. The disclosure situation had not been remedied. He had a motor vehicle accident in June 2011 and a previous motor vehicle accident in July 2008. I am troubled by the proof from health care practitioners: the family doctor’s report seemed based on self reporting as the clinical investigations appear to be negative. Moreover the opinion of compromised ability to work is in June 2012. This gives the impression that the litigation rather than the asserted symptoms prompted the visit to the doctor. Other reports from RMT and Chiropractor do speak of challenges attributed to the motor vehicle accident but again the timeliness is remote. Since the Respondent Father has reported working in the past while for friends and now for an employer Architectural Electric Inc., a claim of inability to work is brought into question. I accept that the consequences of the two motor vehicle accidents may have had some impact on work but the evidence does not persuade me that he cannot or could not work at all.

[ 17 ] I must assess what happened to his self employment in Acapella Electric Inc. then Acapella Electric Ltd. I am satisfied that the Respondent Husband changed corporate entities on sound advice at the time of separation. The slight change in corporate name would have no impact on business from a customer standpoint.

[ 18 ] The Respondent Father asserts that the business failed because of the downturn in the economy in 2008; because the Applicant Mother removed funds from their line of credit and bank accounts which compromised the business cash flow and credit dried up; his motor vehicle accident; about $30,000 in uncollectable receivables and depression from his personal and litigation woes.

[ 19 ] I accept that some impact would arise from this collection of factors. I do not accept a drop to nothing.

[ 20 ] I must assess what income the self-employment could generate. In this, the corporate financial statement and tax records now amassed in three volumes are an excellent start. But just a start. The familiar analysis of gross revenue and business expenses now begins:

2004 gross: $124,345 after expenses: loss ($189) management fee: $18,270 reported income: $9,441 (T4 $9,135)

2005 gross: $186,235 after expenses: $14,505 management fee: $42,000 reported income: $20,326 ($21,000 business)

2006 gross: $224,348 after expenses: $20,199 management fee: $32,500 reported income: $33,254( T4 and business)

2007 gross: $240,767 after expenses: $5,463 management fee: $23,000 reported income: $42,437 (T4 and business)

2008 six months $87,475 after expenses: $29,233 management fee: $58,266; 2008 six months $65,800 after expenses: $3,936 management fee: $0; total reported income for 12 months $38,119

2009 gross: $45,517 after expenses: $515 management fee: $0 reported income: $19,783

2010 gross: $49,950 after expenses: $954 management fee: $3,000 reported income: $16,986

2011 gross: $24,651 after expenses: ($12,583) management fee: $11,500 reported income: $34,500

[ 21 ] It is also instructive to look at the nature of expenses claimed against revenues: the management fee was said to be the amount paid to the Applicant Mother which he says is for her work but she says was simple income splitting. She answered phones and did some books, yet the management fee is invariably higher than the net income. The advertizing and promotion, employee benefits, telephone, vehicle and depreciation all jump out as likely subjects for review under family law principles.

[ 22 ] Simply put, the reported numbers do little to clarify what portion of gross revenues from the businesses were used to benefit the family. I find that little if any of the management fee was anyone’s income except the Respondent Father who was the electrician generating the revenue. Unexplored, these numbers cannot support the Respondent Father’s assertion that his income was fairly consistently around the 40,000 that he now asserts as his income from his new employer.

[ 23 ] I listed business revenue, not business income and then reported personal income to demonstrate that the numbers simply do not make sense without much more analysis and explanation. Counsel for the Applicant Mother cannot be criticized because these detailed volumes of material were not produced until less than a week before the motion was heard. The Respondent Father’s assertion that the productions disclose an average income of $40,000 has no logic because nowhere in a look at net business income, at declared personal income do we see any numbers that match.

[ 24 ] Now the Respondent Father deposes he is employed by Architectural Electric Inc. The new employer is not an individual who set about to start an electrical company. He has “incurred all of the expenses associated with establishing a new business.” The Respondent Father, in his new employment which pays a wage of $40,000, is the only one generating revenue. His expenses will be reimbursed. I predict the expense sheet will look very much like the revenue expense statements from his own businesses.

[ 25 ] There are many models for obtaining financing. I make no finding or even consider if this one is improper. But the litigation process will require it to be transparent.

[ 26 ] I find that from 2009 to 2011 the Respondent Father did suffer some financial setback. Gross revenues from his business were down. Some portion of that was beyond his control. It was during that period that Wildman J. fixed temporary support.

[ 27 ] I have no reason even now to depart from her reasoning.

[ 28 ] Lifestyle evidence and a significant accumulation of assets simply belie the income figures that the Respondent Father put forward to Wildman J. and continues to assert.

[ 29 ] The motor vehicle accident in June 2011 is a significant factor to temporarily excuse maximum effort to achieve the revenues he was capable of generating until then. He should have some partial relief for 6 months.

[ 30 ] The order of Olah J. based on material non-disclosure must be varied. I do not rescind the Refraining Order but I vary the required payment to match what I intend to fix as support as follows:

(1) The order of Wildman J. is, and always did, remain in force. I vary the quantum of child support for the months of July 2011 to December 2011 to $1,000 per month. On January 1, 2012 it resumes at $1,855 per month. It remains a temporary order because the disclosure, so recently made has not yet been explored to lead to a determination of what the Respondent Father has made and can expect to make in his skill as an electrician, whether by self-employment or under an employment contract in which he generates revenue and has his expenses reimbursed.

(2) Support will continue to be paid from proceeds as previously ordered.

(3) The parties may address costs and the remaining disclosure issue by written submissions provided to the judicial secretary in Barrie. The Applicant Mother by September 10, 2012 the Respondent Father by September 17, 2012 and reply by September 20, 2012. Brevity is required.

EBERHARD J.

Date: August 27, 2012

[1] Hill v Hill 2009 Carswell 8796 McGee J.