SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: FS-09-66667-00
DATE: 2012-08-31

RE: Sharon Chin v. Alfonso Chin

BEFORE: Justice M.J. Donohue

COUNSEL:
W.C. Fanjoy, for Mrs. Chin
M. Kurz, for Mr. Chin

HEARD: July 16 and 24, 2012

E N D O R S E M E N T

[ 1 ] Mr. Chin brought his motion to reduce child and spousal support to reflect that he has lost his job. He asks for arrears to be eliminated or set off against monies that Mrs. Chin owes him.

[ 2 ] Mrs. Chin brings her motion to impute an income of $212,486.00 to Mr. Chin and an order to pay a prospective lump sum child support amount of $210,660.00 which would cover the next five years and a prospective lump sum spousal support of $356,158.00. She proposes that this be paid from Mr. Chin collapsing his RRSPs, the sale of his book of business with CHC Financial Planning and from the cash surrender value of his life insurance policies.

Background

[ 3 ] The parties married in 1993 and separated in 2009. They have three children aged 9, 11, and 13. The matrimonial home has been sold and the net family property equalized. The parties consented to a temporary order for spousal support of $2,174.00 and child support of $1,826.00 per month on November 18, 2011. Mrs. Chin earns $32,400.00. In the past, Mr. Chin has earned approximately $200,000.00 as an investment advisor. He is now experiencing a reversal of fortunes. His current income is $18,000.00 gross of expenses.

[ 4 ] Mrs. Chin purchased a house for $450,000.00 following equalization. Mr. Chin is residing in his mother’s home and does not own a house.

[ 5 ] Upon receipt of Mr. Chin’s 2010 and 2011 Notice of Assessments, Mrs. Chin calculates that Mr. Chin owes retroactive child support at the table amount of $52,888.00 to June 2012.

[ 6 ] On April 26, 2012, his company’s mutual fund registration with London Life was terminated. London Life had been his major source of mutual funds. Mr. Chin is now selling the rest of his company’s book of business. Three lawsuits have been brought against him. One is by his mother and sister. The lawsuits claim damages against him for investment losses. Mr. Chin has filed defences in all three lawsuits. He awaits a determination on his licence to sell insurance products from the Financial Services Commission of Ontario.

[ 7 ] Mrs. Chin seeks the lump sum order as she is concerned that bankruptcy is imminent. Mr. Chin disputes the order as he argues that such order is more likely to ensure his bankruptcy occurs. He advises he wishes to avoid bankruptcy.

Is a Lump Sum Order for Child and Spousal Support Appropriate?

[ 8 ] The parties agree that the financial future of Mr. Chin is bleak at this time. Mrs. Chin argues that the Court should make the lump sum payment for the following reasons:

(1) Mr. Chin brought the financial crisis on himself. He invested in products not permitted by London Life.

(2) Mr. Chin has no prospective income of any significance from which he can pay periodic child or spousal support.

(3) Mr. Chin has debts and lawsuits pending that make him insolvent and bankruptcy is inevitable.

(4) Mrs. Chin will lose her newly purchased home as her monthly expenses exceed $10,000.00.

[ 9 ] Section 15 of the Divorce Act allows lump sum payments for support in appropriate circumstances. All but one of the authorities provided by counsel for Mrs. Chin were trial decisions. The one case where a lump sum was awarded on an interim basis is Evans v Donovan, Ontario Superior Court of Justice, Court File 00-FP-255209-FIS, February 16, 2000. It was on a motion without notice to the respondent. There are no facts provided or analysis to explain why the court found it necessary, on an interim basis, to take this step. In that case, there was a lump sum of $20,000.00. The balance of such orders results from trial decisions where the evidence is more fulsome.

[ 10 ] The allegations suggested against Mr. Chin in the lawsuits, proceedings in the insurance commission and the accusations by London Life are certainly serious. I am not persuaded on the affidavit evidence that there is sufficient merit in the allegations. The record has a letter from London Life stating their position on termination. The record shows Mr. Chin has defended the three lawsuits. I have no evidence about the strength of the claims at the insurance commission. There is not enough evidence to make a finding that Mr. Chin’s behaviour is such that he should be considered untrustworthy and unreliable. There is no suggestion that he is likely to leave the jurisdiction.

[ 11 ] Similarly, there is insufficient evidence that Mr. Chin is unable to earn prospective income of any significance as suggested by counsel for Mrs. Chin. The status of his licence to sell insurance products is in jeopardy but Mr. Chin is still a young man experienced in sales and may well find employment or other lucrative endeavours.

[ 12 ] Although this has been a high conflict divorce proceeding, there have been regular payments for support; an equalization; a willingness to participate in four-way meetings and consent orders; and a willingness to provide disclosure. Mr. Chin has not demonstrated behaviour in this litigation that would cause the Court to believe he does not honour the process and the needs of his family.

[ 13 ] It is still early days in Mr. Chin’s situation. To order a lump sum of the support as asked could result in his being forced into bankruptcy without the ability to recover. The Court of Appeal noted this concern in Davis v. Crawford , 2011 ONCA 294 , 2011 Carswell Ontario 2512 , at paragraph 63 :

…it is well accepted that an important consideration in determining whether to make a lump sum spousal support award is whether the payor has the ability to make a lump sum payment without undermining the payor’s future self-sufficiency.

[ 14 ] I conclude that it would be premature to make a lump sum payment and not appropriate in these circumstances of an interim support motion.

[ 15 ] The parties already have a consent order from May 14, 2012 for preservation of assets and non-disposal of assets.

Mrs. Chin’s Tax Liability for 2010 of $14,866.42

[ 16 ] It was agreed in November 2011 that Mrs. Chin would re-file her 2010 tax returns to include the support paid to her. This caused her to owe $14,866.42 in tax. The parties had agreed that Mr. Chin would pay her the tax amount.

[ 17 ] By the consent order of May 14, 2012, it was confirmed that Mr. Chin was to pay Mrs. Chin’s income tax liability for 2010 of $14,866.42. It was also agreed that, if the funds were not paid within 90 days from the sale of his CHC book of business, she could seek to have the funds paid elsewhere. The 90 days passed on August 14, 2012.

[ 18 ] Her position was that, as Mr. Chin has $100,000.00 in his RRSP holdings, she was seeking an order that Mr. Chin collapse his RRSP to provide payment of the tax payment.

[ 19 ] Counsel for Mr. Chin did not argue why that would not be appropriate. In light of the circumstances where Mrs. Chin must make some immediate changes financially for her and the children, I find it appropriate to order that payment from Mr. Chin’s RRSP holdings.

[ 20 ] Mrs. Chin also claims resulting tax credit losses as she was not provided with this tax payment from Mr. Chin. I am not satisfied with the evidence provided as to the strength of those claims. Those claims are better dealt with at trial.

Child Support Arrears

[ 21 ] Mrs. Chin has calculated child support arrears of $52,888.00 that she seeks to be paid. In reply, Mr. Chin seeks payment of $801.00 in interest charges on a contempt order where he was successful; $9,122.25 (25%) of section 7 extraordinary expenses; and a number of mortgage and tax payments that Mrs. Chin had agreed to pay but did not. Neither party denied the arrears or the potential set offs. I do not have sufficient information to determine which party has been underpaid.

[ 22 ] This is a matter for trial.

Is it appropriate to vary the Support Order?

[ 23 ] In light of Mr. Chin’s financial changes, it is appropriate to consider varying the interim support order. His financial statement indicates that he is currently making approximately $18,000.00 gross of expenses. He proposes, however, to have an income imputed to him of $50,000.00. At this time, the evidence is that he would be paying support from assets. The Child Support Table amount would be $1,000.00 per month. As Mrs. Chin is now earning $32,400.00, he seeks the interim spousal support to be suspended.

[ 24 ] I find that Mr. Chin has had a material change in his circumstances that justifies varying the support order.

[ 25 ] The guidelines advise that the current income is to be considered when ordering support. (Section 2(3) of the Child Support Guidelines ).

[ 26 ] Continuing support orders based on imputing $120,000.00 or $212,486.00, as suggested by counsel for Mrs. Chin, does not reflect the reality of Mr. Chin’s circumstances.

[ 27 ] I order the spousal support suspended and the child support varied to $1,000.00 per month.

Further Orders

[ 28 ] Both parties had additional matters in their motion records. A number of items were withdrawn, agreed upon, or not argued. Time was limited in the motion but counsel urged the hearing to proceed to deal with the main issues. To the extent that I did not deal with other relief sought, it is open to the parties to renew their motions or raise the matter at trial.

[ 29 ] I order this matter be set down for trial forthwith. The parties are to contact the trial office for a trial management conference in December with a view to getting the earliest trial date as possible.

Costs

[ 30 ] If the parties cannot agree on costs, they may file written submissions of three pages or less within 14 days of this order.

Justice M.J. Donohue

DATE: August 31, 2012

COURT FILE NO.: FS-09-66667-00
DATE: 2012-08-31

SUPERIOR COURT OF JUSTICE - ONTARIO RE: Sharon Chin v. Alfonso Chin BEFORE: Justice M.J. Donohue COUNSEL: W.C. Fanjoy, for Mrs. Chin M. Kurz, for Mr. Chin ENDORSEMENT Justice M.J. Donohue

DATE: August 31, 2012