Court File and Parties
COURT FILE NO.: FC-11-38879-00 DATE: 20130108
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
BUNNY ENCARNACION SUTCHY Applicant
– and –
DAVID JAMES SUTCHY Respondent
Counsel: T. Morganstein, for the Applicant Respondent not appearing
HEARD: January 4, 2013
REASONS FOR JUDGMENT
HEALEY J.
[1] On November 14, 2012 Timms J. heard the trial of this application on an uncontested basis via basket motion, the respondent having been noted in default.
[2] Timms J. granted the relief sought in part, making various orders on a final basis, which included:
That the applicant will have sole custody of the three children of the marriage;
That the respondent will have access to the children on terms, notably, in the discretion of the applicant acting reasonably and subject to a prohibition on alcohol consumption;
Based on an imputed income of $150,000, the respondent is to pay child support to the applicant for the three children of the marriage in the amount of $2,611 per month starting on October 27, 2010, without prejudice to the applicant's right to seek a different amount of support when the respondent provides proper income disclosure; and
Child support arrears were fixed in the amount of $62,664 as of October 27, 2012, to be paid by lump sum.
[3] Timms J. also order certain other claims were required to be considered on the hearing of oral evidence those, being the claims for add-on expenses, spousal support, equalization and related property claims, and costs.
[4] The applicant seeks the following orders:
That the respondent pay 61% of the children’s extraordinary expenses in the monthly amount of $828, retroactive to the date of separation;
That title to the matrimonial home be transferred to her, with her to assume all debts secured against the property;
That the respondent make an equalization payment to her in the sum of $206,000;
Repayment of half of the carrying costs of the matrimonial home paid by the applicant from the date of separation to the date that title is transferred;
A divorce; and
Cost of this proceeding.
[5] This trial proceeded with a significant lack of information created by the respondent’s clear and deliberate failure to provide any financial disclosure, despite two orders requiring that he do so. On February 17, 2012 McKelvey J. ordered the husband to produce extensive financial information. He has failed to comply with any aspect of that order. The final order of Timms J. also requires the respondent to produce all disclosure ordered by McKelvey J., together with a professional income analysis and business analysis of all entities in which he has an interest or had an interest on the date of separation. This order has also been ignored also. It is noted that the respondent was served with the 23C affidavit that was before Timms, J., but did not file any responding material. The applicant gave evidence that the respondent has told her that he will not comply with any orders made by the Court, that he will ignore all documents issued by the court, that he will not provide her with any financial assistance, and that it was his intention ensure that she ended up living in her parent's basement. Early in the separation the respondent provided nominal contribution to the children's expenses, which will be detailed further in these reasons, but no money has been paid by the respondent to the applicant on behalf of the children since April 2011.
[6] The applicant and her lawyer were diligent in attempting to give the Court as much information as they were able to with regard to the respondent's financial situation. This was no small feat given that the applicant had been inadequately informed about her husband's financial affairs throughout the marriage. She was unaware of his bank accounts or activities therein, unaware of his credit facilities, unaware of the full extent of his business activities, and although aware of some aspects of the purchase and sale of investment properties throughout the marriage, she was largely unaware of her husband’s assets and debts on that date of separation.
[7] The applicant was able to give evidence concerning the lifestyle that the parties lived during the marriage. At the time of their marriage the parties lived in Toronto and eventually moved to Thornhill, and then Maple. The matrimonial home has been appraised to have a value of approximately $1 million. The family went on vacations where they stayed in luxury resorts and the respondent made regular trips to Las Vegas with business associates. The applicant was able to shop at stores such as Holt Renfrew and the children wore designer clothing. Their first child attended Montessori school at a cost of $11,000 per year. The parties frequently entertained in their home and the applicant described that the respondent spent lavishly on expensive wines and alcohol. The children’s baptisms were elaborate, and they hired a nanny after their third child was born to assist in their home three days per week. Money was also spent on household cleaning services and childcare, as the applicant worked throughout the marriage. They both drove luxury Audi vehicles, and in addition the respondent purchased a Dodge Viper at a cost of $68,000. The applicant is aware that the respondent purchased at least four condominiums throughout the marriage, and at one point the parties rented a property in Wasaga Beach. An expired residential insurance policy for the period July 2008 to July 2009 indicates that they had coverage of approximately $800,000 covering the dwelling, personal property and additional living expenses of their Thornhill home, and $20,000 for a boat.
[8] The husband operates at least two businesses, one being Circuit Inc., and the other operating under the name Ultra Doors. The applicant is aware that the respondent owns 100% of the first company and believes that he is a partner in the latter. At some point during the marriage the respondent told the applicant that he had been offered the amount of $800,000 for Circuit Inc. but had told her at that time that he would only sell the business if he received an offer of $1 million. Circuit Inc. carries on the business of the supply of various construction materials and services, and employs up to 15 individuals. The applicant testified that the respondent had discussed the identity of some of his major customers over the years of their marriage, which included major builders developing throughout the GTA. She testified that one of the respondent’s major clients was Aspen Ridge Homes, owned by one of the respondent’s childhood friends.
Section 7 expenses
[9] Timms J. made a finding that the respondent’s income is $150,000 per annum based on the applicant's best estimate, which included information that she had been given by the respondent. As the respondent has provided no financial information under that order or the terms of the order of McKelvey J., I draw an adverse inference that his income is at least $150,000 per annum for the purpose of calculating the proportionate sharing of add-on expenses.
[10] The applicant is employed as a teacher through the York Region Roman Catholic school board and is at the top of the salary range. She testified that there is no raise expected for her in 2013 due to a freeze on raises for at least two more years under the terms of their collective agreement. The applicant’s Notice of Assessment for 2011 indicates that her line 150 income was $95,796, comprised of employment income of $93,397 and childcare benefit of $2,400. Based upon the statement of earnings filed by the applicant at tab 3(b) of Exhibit 2, the applicant's gross income for 2012 will be $94,908. Adding to that the childcare benefit, I find that the applicant's total income for 2012 will be approximately $95,308. Accordingly, the applicable add-on expenses shall be shared on a 61%/39% basis.
[11] During the marriage and since separation, the children have been involved in various extracurricular activities. Wynter is involved in competitive dance, at a cost of $4,817.13 per annum. All children have taken swimming lessons, at a cost of $976.32 per year. They each attend summer camp for four weeks, at a cost of $1,970 in total for all three. Luke and Noah have taken skating lessons through National Training Rinks at a cost of $720.94. These expenses total $8,484.39, or $707 per month. It is reasonable that these expenses continue post-separation, given the incomes of the parties and their spending habits prior to separation, and it is important that the children have these healthy interests.
[12] The issue is whether these expenses can be categorized as “extraordinary” given the size of the child support payment and the income of the applicant. If the applicant was required to pay this monthly sum from the child support received she would be left with $1,904 to cover the remainder of the children’s expenses, in addition to her own income. I find that this is a case where only some of these costs can be characterized as extraordinary, in relation to the amount of the expense and the incomes of the parties. Both the competitive dance cost and the summer camp are costs that should be absorbed by both parties. However, the skating and swimming lessons average only $141.44 per month, and it must be remembered that a portion of the child support payments are anticipated to cover such routine expenses for children’s activities. It is only where the expense is so great in relation to the incomes of the parties that they can be characterized as “extraordinary”. Accordingly the cost of Wynter's competitive dance and the children's summer camp costs, totalling $6787.13 per annum or $565.59 per month, shall be borne by the respondent based on his proportionate share of 61%, in the amount of $345 per month.
[13] The applicant has also had to obtain day care for the children because she works full-time. Their day care provider has been the same since separation. Evidence was given at trial that the applicant has paid the day care provider the amount of $10,300 in 2011 and $6,850 in 2012. These costs average $714.58 per month. The respondent's proportionate share of 61% totals $435.90 per month.
[14] Additionally, the parties contributed to registered education savings plans for the children throughout the marriage. The respondent paid for the RESP contributions for the first five months after separation, but the applicant has continued doing so on her own since April 2011. The RESP contribution is $370 per month; the respondent's proportionate share is $222 per month.
[15] Accordingly, the respondent will be required to make payments to the applicant for s.7 expenses for the children in the amount of $780.90 from October 27, 2010 to March 27, 2011. Commencing April 27, 2011, the respondent will be required to make payments to the applicant for s.7 expenses in the increased amount of $1,002.90 per month, which includes his share of the RESP contribution.
Equalization
[16] The Net Family Property statement filed as Exhibit 1 sets out the applicant's assets and liabilities. In her document brief filed as Exhibit 2 she has provided supporting documentation for each of the values. She has also proposed through her calculations that she will assume responsibility for all joint debts, including the encumbrances registered against the matrimonial home and a car loan that she co-signed for the respondent's vehicle. She asks that this court transfer the respondent’s share of the net equity in the matrimonial home to her in order to satisfy the equalization payment that appears to be owed to her. Based on such an assumption, her net family property is calculated to be $540,133. I find as a fact that the values set out on the applicant's side of the Net Family Property statement have been proven.
[17] I am satisfied that the net family property amount that has been calculated for the respondent, being $952,928, is based on the best evidence available at the time of trial. Further, that amount is likely to be an underestimate, given that no amounts have been included for any bank accounts or investments owned by the husband, no value has been ascribed to the company operating as Ultra Doors, and no information is known about the disposition of real property owned by the respondent either during the marriage or after separation. Further, the respondent currently owns a condominium at 35 Balmuto Street in Toronto. Even though there are no mortgages registered on title, the applicant gave evidence that she has information that the respondent owes the amount of $323,000 to his childhood friend, Freddie DeGasperis, for the purchase of that property. In her Net Family Property statement, she gives the respondent a deduction for such a liability. Accordingly, I find is a fact that the respondent’s net family property is $952,928.
[18] If the Net Family Property statement had been prepared on the basis of actual, rather than proposed, ownership of assets and debts, the net family property of the applicant would be $334,180, and the net family property of the respondent would be $1,158,873, resulting in an equalization payment from the respondent to the applicant in the amount of $412,377.50.
[19] At Tab T of Exhibit 1, the applicant's counsel has set out a calculation of the liabilities secured against the matrimonial home, totalling $582,054.18. Also included at Tab T is a calculation of the equity in the home which is approximately $398,186. Accordingly, I am satisfied that the transfer to the applicant of the respondent's equity in the home, and requiring that she assume all joint debts will leave an equalization payment still owing in the amount of $206,397.50.
[20] Although the applicant requests an order that the respondent pay for one half of the carrying costs of the property incurred since the date of separation, I find that to do so would be inequitable given that an award of child support is being made in part to assist with such housing costs, and the applicant has had the benefit of exclusive use of the property since separation.
[21] This is an appropriate case to order transfer of property in partial satisfaction of an equalization payment, pursuant to s. 9(1)(d)(i) of the Family Law Act, R.S.O. 1990, c. F.3. The respondent's actions to date have demonstrated that he will not voluntarily comply with any court processes and is unwilling to recognize his obligations arising from the separation. In order that the applicant's rights not be thoroughly frustrated, I find that granting her full ownership of the matrimonial home is a just outcome. See Kuzmanovic v. Kuzmanovic 2001 28195 (ON SC), 2001 CarswellOnt 1340, 16 R.F.L. (5th) 300, [2001] O.J. No. 1450; Kim v. Kim 2001 CarswellOnt 502; Kennedy v. Sinclair 2001 28208 (ON SC), 2001 CarswellOnt 1634, 18 R.F.L. (5th) 91; Webster v. Webster 1997 12119 (ON SC), 1997 CarswellOnt 815, 32 O.R. (3d) 679, 37 R.F.L. (4th) 347, 28 O.T.C. 81; and Leckie v. Leckie 2003 CarswellOnt 643.
Spousal Support
[22] This claim was not pursued by the applicant.
Costs
[23] At Tab S of Exhibit 1 the applicant's counsel has included a cost outline totalling $22,136.13 calculated on a full indemnity basis, using Mr. Morganstein’s hourly rate of $375.
[24] The respondent has been unreasonable throughout the course of this proceeding. In addition to failing to comply with court orders, he has paid no child support other than $400 toward swimming lessons in 2011. He has carried out his stated intent to ignore all court processes. Accordingly, this is a case where full indemnity costs are warranted. In addition to the amount set out in the cost outline, which was prepared for the hearing before Timms J. last November, Mr. Morganstein estimated conservatively that an additional 20 hours had been spent for preparation of material, preparation of the witness and the appearance for the oral hearing. Accordingly an additional $8,475 will be added to the amount set out in the cost outline.
Contempt
[25] There remains the issue of the fact that the respondent has failed to comply with two orders of this Court. Although the applicant seeks no relief for this delinquency, it is not behaviour that can or will be condoned by the Court. It appears clear both from the respondent’s conduct and the comments that he has made to the applicant, that he believes himself to be immune from any processes that may be imposed upon him by the Superior Court of Justice.
[26] Accordingly a date will be set for the respondent to appear before me in Newmarket to make submissions as to why he should not be found in contempt of this Court. Should he choose not to appear on the date scheduled, the court will proceed on its own initiative to make a determination as to whether the respondent should be found in contempt. Among the potential remedies that this court will consider will be a period of incarceration, with a bench warrant issuing immediately thereafter for the arrest of the respondent. In terms of the length of any period of incarceration, the court will bear in mind that the respondent had until March 10, 2012 to comply with the order of McKelvey J., and therefore appears to have been wilfully blind to the court order for almost 10 months.
Orders
[27] This court orders on a final basis:
The respondent shall pay to the applicant the sum of $780.90 per month for his proportionate share (61%) of the s.7 expenses of the children commencing October 27, 2010 to and including March 27, 2011, to be increased to $1,002.90 commencing April 27, 2011 and thereafter on the 27th day of each month, without prejudice to the applicant's right to seek a variation when the respondent provides proper income disclosure;
The respondent shall pay the sum of $412,377.50 to the applicant for an equalization payment. In partial satisfaction of such payment, title to the matrimonial home municipally known as 12 Alrob Court, Maple Ontario shall be transferred to the applicant forthwith, and any consent or authorization of the respondent to such transfer is hereby dispensed with;
The applicant shall assume or discharge all debts currently secured against the property including the mortgage, lines of credit and property tax arrears;
Following the transfer of title to the matrimonial home, the respondent shall continue to owe the sum of $213,284.50 to the applicant by way of equalization payment;
All other assets and liabilities in the parties' respective names shall be theirs alone without claim from the other;
The respondent shall pay the applicant her costs of the application fixed in the sum of $30,611.13 inclusive of taxes and disbursements, payable within 30 days;
The applicant shall serve a copy of this order on the respondent within five days of receiving the entered order;
For so long as child support is to be paid, both the applicant and the respondent, if applicable, must provide updated income disclosure to the other party each year, within 30 days of the anniversary of this order, in accordance with s. 24.1 of the Child Support Guidelines;
A support deduction order shall issue
The respondent shall appear in this court on January 24, 2013 at 9:30 a.m. for the purpose of showing cause why he should not be found to be in contempt of the orders of McKelvey J. dated February 17, 2012 and Timms, J. dated November 14, 2012. The court will proceed with the contempt hearing in his absence
[28] The divorce was granted on the date of the hearing, and shall take effect 31 days from that date.
HEALEY J.
Released: [Click and Type Date]