ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: D1331/07
DATE: 2013-04-04
BETWEEN:
Anh Hoang Thi Trang
Applicant
– and –
Si-Quy Trang
Respondent
Self-Represented
Self-Represented
HEARD: March 19 and 21, 2013
The honourable mr. justice pazaratz
[1]. “This is what the court said I was earning then. This is what I say I’m earning now.”
[2]. At the risk of oversimplifying, that’s the analysis many support payors provide on motions to change, where they gloss over – or ignore – the reasons why income had to be imputed to them in the first place.
[3]. Does “imputed income” mean anything if, on a motion to change, a payor can simply rely on his current line 150 income?
[4]. That was the main issue at this two day trial.
BACKGROUND
[5]. This was the Respondent husband’s motion to terminate spousal support and rescind arrears of child and spousal support. The Applicant wife brought a cross-motion to increase spousal support.
[6]. The Applicant is 51 years old. The Respondent is 53. The parties have a 24-year-old daughter Beatrice who is now independent. The parties were married on December 26, 1985 and separated initially in 2002, and permanently in 2004.
[7]. There are two relevant orders:
SEPTEMBER 4, 2008 ORDER
[8]. On September 4, 2008 Justice Lafreniere granted a divorce judgment based upon affidavit evidence in an uncontested trial. The Applicant was represented by counsel. The Respondent did not have counsel; he did not file any documents or disclosure; and he did not participate in the court process; he never appeared. That final order included the following corollary relief:
a. Respondent to pay child support in the sum of $500.00 per month based on an imputed income of $59,000.00 per year.
b. Child support payments were to continue during the period March 1, 2004 to April 30, 2006.
c. Respondent to pay spousal support to the Applicant in the sum of $500.00 per month commencing March 1, 2004, without any specified duration.
d. Respondent to provide Applicant with a copy of his T4 or notice of assessment for the previous year, by March 31 annually.
JUNE 25/10 ORDER
[9]. On June 25, 2010 Justice Lafreniere dealt with a motion to change child support, brought by the Applicant who was again represented by counsel. As before, the Respondent did not respond to the court documents he was served with. The variation proceeded on an uncontested basis. The final order included the following:
a. Respondent to pay child support for Beatrice in the sum of $548.00 per month, again based on an imputed income of $59,000.00.
b. Child support to continue during the period May 1, 2006 to June 30, 2009.
c. Respondent to continue to make annual financial disclosure.
d. The spousal support order of $500.00 per month remained unchanged.
[10]. The Respondent has brought a motion to change – not set aside -- both orders, on the basis that he doesn’t earn $59,000.00 per year.
[11]. There is no dispute between the parties that the daughter Beatrice remained a dependent child entitled to support up to the June 30, 2009 termination date set out in the last order. But the Respondent denies having had the ability to pay child support. Similarly, he denies not only ability to pay but also entitlement with respect to spousal support. He has paid very little under either order. He seeks to rescind all arrears, and terminate ongoing spousal support.
[12]. The Applicant opposes any rescission of arrears. She asks that spousal support be increased as of June 30, 2009 when child support terminated.
ORAL HEARING
[13]. A number of procedural issues arose, relating primarily to language.
[14]. The Respondent initiated his motion in the usual manner: he filed a notice of motion to change; a change information form; an affidavit; and a financial statement.
[15]. The Applicant responded in the usual manner: She filed her own affidavit and financial statement.
[16]. The Respondent then filed a series of reply affidavits.
[17]. All of the lengthy written materials filed by the parties were in English – quite clear, articulate English. But when the parties first appeared before me on December 14, 2012, it immediately became evident that they are both Vietnamese and speak very little English. They both required interpreters. They obviously hadn’t written the materials they filed. It was unclear whether they understood what they read or signed, because there was no indication on any of the sworn documents that anyone assisted with translation.
[18]. I advised the parties that the motion could not be determined based upon their affidavits because:
a. There was significant doubt about the reliability of the sworn documents, and
b. In any event, each party’s case was based upon an allegation that the other party was lying about finances. Credibility could not be determined based on untested and completely contradictory affidavits, even if there had been no issue concerning their respective English language skills.
[19]. Accordingly, on December 14, 2012 I endorsed that a one day trial would have to be scheduled, with the parties giving oral evidence.
[20]. As it happens, despite that endorsement the Respondent husband filed a further lengthy affidavit dated March 12, 2013 together with an updated financial statement. Again, his sworn materials were in clear English, even though in his affidavit he specifically stated “I can read some English, but cannot write this affidavit without assistance with translation.” However, there was no certification or indication that anyone had actually assisted with the preparation of the documents or translated them for the Respondent.
[21]. As result, the motion and cross-motion proceeded by way of an oral trial on March 19 and 21, 2013. Both parties were assisted by translators throughout the proceeding. Both parties testified, and were cross-examined.
RESPONDENT’S INCOME
[22]. The essence of the Respondent’s case is that he disputes the income twice imputed to him:
a. He testified that he did not earn $59,000.00 in either 2008 or 2010 when the existing support orders were granted, in his absence.
b. He said he has never earned anywhere near $59,000.00 since the parties first separated in 2002.
[23]. However, the Respondent had some difficulty establishing exactly what his income has been over the years:
a. The Respondent testified the parties purchased their family printing business in about 1987. For many years they operated it jointly.
b. He said he was knowledgeable about the printing industry because he was employed by another printing company for approximately five years prior to deciding to open his own print shop.
c. Despite this extensive background, he testified that he always left finances to the Applicant, and he had no idea how little income their printing business was generating until 2004 when the Applicant left the business. He said at that point he suddenly had to start paying attention to the numbers.
d. (The Applicant testified she was forced out of the business. The Respondent said she left voluntarily. Either way, they agree their initial separation was in 2002, and by 2004 the Respondent assumed complete control of the business.)
e. At the hearing the Respondent filed personal and corporate tax returns showing the following income:
2002: $4,470.00 net personal income, from $21,865.00 gross business income.
2003: $4,440.00 net personal income, from $21,181.00 gross business income.
2004: $4,400.00 net personal income, from $39,850.00 gross business income.
2005: $4,430.00 net personal income, from $36,988.00 gross business income.
2006: $4,250.00 net personal income, from $39,545.00 gross business income.
2007: $8,670.00 net personal income, from $37,360.00 gross business income.
2008: $6,523.00 net personal income, from $37,685.00 gross business income.
2009: $7,125.00 net personal income, from $36,030.00 gross business income.
2010: $7,100.00 net personal income, from $38,582.00 gross business income.
2011: $7,225.00 net personal income, from $25,130.00 gross business income.
f. Under cross-examination the Respondent admitted these tax returns were not filed on an annual basis. He said he filed 10 years of tax returns in a batch, within three months prior to this hearing. The Respondent said he hadn’t been filing tax returns on an annual basis because he couldn’t afford an accountant.
g. The Respondent had difficulty explaining why he only realized in 2004 – after 17 years operating his own business -- that the print shop wasn’t profitable. At one point he said gross sales were declining over the last decade of operation – but this pattern is not reflected in his disclosure.
h. The Respondent also had difficulty explaining why he continued to operate the business year after year, even after he realized it wasn’t profitable.
i. He insisted he was committed to supporting his family after separation. But he continued with a purportedly money-losing endeavour, knowing it would mean he would be unable to pay support.
j. He was unable to explain how he could meet basic living expenses, working many years for less than $100.00 per week. He said he lived a very frugal lifestyle – at times actually residing in the print shop.
k. He testified he stayed with the printing business because he loved it – even though he realized that advances in the computer world were dramatically reducing the need for print shops.
l. He denied the Applicant’s suggestion that he deliberately allowed the printing business to become unprofitable, so that he could avoid having to pay support. He said to the contrary, he begged the Applicant to loan him $2,000.00 to help him keep the printing business going. He said she not only refused to help – she actually redirected $2,000.00 worth of printing orders from a pizza store to a competing print shop.
m. He testified business was so bad that they tried to sell the print shop. At one point they found a buyer willing to pay $125,000.00, but the deal fell through when the buyer couldn’t arrange financing. Again, the Respondent had difficulty explaining why anyone would pay $125,000.00 for a printing business which was as unprofitable as he portrayed it to be.
n. He had no explanation as to why Canada Revenue Agency says he owes $68,691.20 in GST payments. He speculated that just like the Applicant, the government may have been mistaken about his actual income and cash flow.
[24]. The Applicant gave an entirely different description of the printing business:
a. She said she accurately conveyed to Justice Lafreniere in 2008 and 2010 that the Respondent was generating at least $59,000.00 of net income, based on her direct knowledge of the business operation over the course of many years. She agreed with the Respondent: she used to do the books and handle the finances. She knew the numbers better than he did.
b. She said the print shop was always profitable -- from the moment they bought it in 1987. Every year the volume of business activity grew. They kept expanding. They bought new machinery. Moved to larger quarters. At every stage the business was a success – until separation, when suddenly the Respondent tried to pretend it wasn’t making money.
c. She emphasized how hard they both worked to nurture the business. Very long hours, servicing a constantly growing customer base. She said it wouldn’t have made sense for them to stake their lives on this family business – for almost two decades prior to separation – if it wasn’t financially worthwhile and profitable.
d. She said the business always generated enough income for the parties to live a good life. They had two homes. The Respondent was able to travel to Vietnam, taking money to his many relatives back home. They built a bright future, based on the steady and reliable cash flow from the print shop.
e. She noted that according to the Respondent’s own materials during the years 1990 to 1997 the average annual net income from the business was $120,000.00 (which they income-split between them). She said contrary to the Respondent’s allegations, the business actually grew bigger and more profitable in the years following 1997.
f. And she testified tax returns only told part of the story. The print shop routinely did cash deals, to avoid paying taxes. In some years prior to separation their undeclared sales were as much as $100,000.00. Toward the end, after their accountant told them they had to declare all income, their cash deals were only about $10,000.00 per year.
g. The Applicant said the nature of the small family business allowed them to decide how much of their actual income they chose to declare to the government. She speculated that if the Respondent is now saying the business activity and income dropped dramatically – immediately after the parties separated – it can only mean that he is again manipulating the numbers: hiding income, and doing cash deals.
h. She said the business was still thriving on the last day she was allowed to work in it. She said he forced her out – with threats of violence – because he had a new girlfriend. It was inconceivable that the print shop’s significant profitability would instantly disappear.
i. She recalled the long hours they used to put in together. She recalled the Respondent’s evidence that even after separation he continued to put in extremely long hours – so much so that he testified he was too busy in the print shop to respond to either of the 2008 and 2010 court Applications.
j. She said the Respondent’s explanation makes no sense. If the volume of business dropped off dramatically, there would have been no need for him to continue to work long hours every day. And if the income dropped off so dramatically, there would have been no reason to keep a failed business going.
k. She alleged bad faith and deception by the Respondent. He didn’t voluntarily pay any child or spousal support during the four years leading up to the first order on September 4, 2008. Even after two orders were made in 2008 and 2010, he didn’t pay. She said he has ignored the court process and manipulated his income in a transparent attempt to avoid paying support.
[25]. Notably, the Respondent did not present any evidence in response to the Applicant’s testimony. He did not dispute her evidence that in the years leading up to separation net business income was at least $59,000.00. He did not dispute her specific evidence about historical under-reporting of income.
PIZZA BUSINESS
[26]. A side issue arose in relation to a pizza store:
a. Both parties agreed that in approximately 2002 a pizza store was purchased. They couldn’t agree on who bought it, or why.
b. The Respondent testified the parties purchased it together to supplement their income from the print shop. He said following separation the Applicant didn’t need spousal support because of all the income she was earning selling pizzas. He alleged she has now given the pizza store to her mother, to hide this source of income.
c. The Applicant testified her mother purchased the pizza store in 2002, primarily to establish some independence for herself because she had been living with the parties and wanted to get away from the Respondent.
d. The Respondent alleged the parties paid for the pizza store with their money. The Applicant said her mother used her own money and financing.
e. Under cross-examination the Applicant produced documentation clearly showing that in 2002 her mother owned the pizza store and in 2009 her mother sold it to a third party.
f. The Applicant admitted she sometimes worked in her mother’s pizza store. More recently she has been working part-time for the new owner, strictly as an employee. She denied hiding any income.
[27]. After hearing the Applicant’s evidence and reviewing her disclosure, the Respondent did not press his argument that she had undisclosed income from a pizza store she secretly owned.
[28]. I accept the Applicant’s evidence on this topic.
RESPONDENT’S CAR ACCIDENT
[29]. On July 27, 2010 – about a month after the last court order -- the Respondent was involved in a car accident. He testified he suffered debilitating injuries which precluded him from devoting proper attention to the printing business.
[30]. He produced two medical reports from Dr. Beharry.
[31]. In the first report dated November 30, 2012, Dr. Beharry described the Respondent as “not completely unable to carry on with his activities…” but “he may have difficulties returning to his work as a painter.” This was inconsistent with the Respondent’s testimony that he was completely disabled following the accident. (As well – obviously – there must have been a language barrier, because the Respondent was a “printer”, not a “painter”.)
[32]. In his second report dated February 25, 2013 Dr. Beharry concluded the Respondent “is currently totally disabled from working due to his physical and psychological condition.” This again was inconsistent with the Respondent’s evidence that by 2013 he was feeling well enough to return to work. Indeed, the Respondent stated he had actually been working at low paying cash jobs. He remained unemployed not because of his injuries, but because he couldn’t find suitable employment.
[33]. Notwithstanding the irregularities in the two medical reports, the Applicant did not challenge the Respondent’s basic assertion that:
a. In July 2010 he was seriously injured in a car accident.
b. Thereafter he was unable to work for a period of time.
c. He was not feeling well enough to fully return to the workforce until sometime in 2012.
d. In the meantime his inability to devote proper attention to the print shop caused the business to decline and ultimately fail.
e. By September 2011 he was finally forced to close the struggling business when the landlord locked him out because of unpaid rent.
[34]. The Applicant speculated that the Respondent is likely to obtain a significant financial recovery from the lawsuit he is pursuing in relation to the car accident. In my view it is premature to speculate about this.
RESPONDENT’S CIVIL ACTION
[35]. The Respondent testified he has hired a lawyer to pursue damages in relation to the July 2010 car accident:
a. He has spoken to his lawyer four or five times.
b. So far he has received about $3.000.00 in unspecified compensation together with $5,000.00 for the damage to his car.
c. His lawyer is trying to recover lost income. But he said he never discussed with the lawyer how much income he has lost. He said the lawyer was seeking lost wages based upon a minimum wage rate of pay.
d. He speculated his lawyer might be trying to recover $10,000.00 for lost wages, but he really wasn’t sure.
e. He didn’t know when his civil action would be settled.
[36]. In the meantime, the Respondent says he has been unemployed and reliant on Ontario Works since September 1, 2012.
FAILURE TO PARTICIPATE
[37]. The Respondent testified he now realizes he should have paid more attention to the previous court orders:
a. He admitted he knew the Applicant was alleging he had an income of $59,000.00 when he was served with the initial Application leading to the September 4, 2008 order.
b. He said he didn’t respond because he couldn’t afford a lawyer, and he was also extremely busy running the business.
c. He admitted after he learned of the September 4, 2008 order imputing income of $59,000.00, he didn’t do anything about it.
d. He admitted he similarly ignored the 2010 motion to change. Again he said he was too busy in the business, and couldn’t afford a lawyer.
e. He admitted that even after learning of the June 25, 2010 order imputing $59,000.00 income for a second time, he still waited two years to bring this motion. He waited until long after he had completely shut down the business.
CASH PAYMENTS
[38]. The Respondent testified that even though he did not make the court ordered child and spousal support payments, he frequently gave the Applicant and their child money on a cash basis. The Applicant denied this. The Respondent had no proof of any payments, nor could he explain where he could have generated any significant amount of cash, given the bleak financial picture he portrayed.
THE LAW
[39]. This is a motion to change child and spousal support in two orders – not a motion to set either of those orders aside. That distinction is relevant to the evidence required for the motion to succeed.
[40]. The starting point for any motion to change support is that the party seeking the change must establish that some important facts or circumstances have changed since the date the order was made. A “material change in circumstances” must be established. This generally entails some new facts or circumstances which, if known at the time, would likely have resulted in different terms in the order.
[41]. Quite often, motions to change can entail complex and countervailing allegations that more than one thing has changed. Entitlement, need, and ability to pay can all get thrown into the mix.
[42]. But almost invariably, an alleged change with respect to the payor’s income becomes a central issue. Often it is the only real issue. Simplistically, this part of the analysis might be summarized:
a. What was the payor earning then?
b. What is the payor earning now?
c. When did the payor’s income change – and why?
[43]. The first question – “what was the payor earning then?” – requires a fundamental (and often overlooked) determination:
a. Was the support order based upon the court accepting the payor’s “declared” income?
Or,
b. Was the support order based upon the court “imputing” income to the payor?
[44]. This preliminary determination is vital to an analysis of whether there has been a material change in circumstances relating to ability to pay. It will affect the onus on the moving party. It will prescribe what new or changed facts the party will have to establish, to convince the court that support should be changed.
[45]. If support was initially calculated based on the court’s acceptance of a payor’s “declared” income, then changes in declared income in subsequent years may be persuasive. If the court was prepared to rely on things like T4 slips and tax returns when it made the original order, T4 slips and tax returns for subsequent years may be sufficient evidence of changed circumstances. This of course would be subject to other considerations, such as the possibility that employment levels or income were deliberately manipulated by the payor.
[46]. But if the original support order was based upon “imputed” income, a more comprehensive analysis is required on a motion to change. The court must consider:
a. Why did income have to be imputed in the first instance? Have those circumstances changed? Is it still appropriate or necessary to impute income, to achieve a fair result?
b. How exactly did the court quantify the imputed income? What were the calculations, and are they still applicable?
[47]. Section 19 of the Child Support Guidelines allows the court to impute such income to a spouse as it considers appropriate in the circumstances, which circumstances include:
(a) the parent or spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse;
(b) the parent or spouse is exempt from paying federal or provincial income tax;
(c) the parent or spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
(d) it appears that income has been diverted which would affect the level of child support to be determined under these guidelines;
(e) the parent's or spouse's property is not reasonably utilized to generate income;
(f) the parent or spouse has failed to provide income information when under a legal obligation to do so;
(g) the parent or spouse unreasonably deducts expenses from income;
(h) the parent or spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and
(i) the parent or spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.
[48]. The list of categories set out in section 19 is not exhaustive. The court has the discretion to impute income in circumstances that are not only analogous but also those in which imputation would be consistent with legislative intent. Bak v. Dobell (2007) 2007 ONCA 304, 86 O.R. (3d) 196 (C.A.)
[49]. The wording of section 19 of the Guidelines is open-ended (“which circumstances include”), indicating that the categories listed in that section are merely examples of situations in which income may be imputed. There are, therefore, other potential scenarios in which income can and should be imputed. Riel v. Holland (2003) 2003 3433 (ON CA), 67 O.R. (3d) 417 (C.A.)
[50]. In most variation proceedings, it should be possible to establish why (and how) income was imputed in the original order. Those factual findings and calculations are usually set out in affidavits or transcripts (in uncontested proceedings) and written endorsements or judgments (in contested proceedings). This is relevant information which should be presented to the court on a motion to change. It is essential to an understanding of what factors the court considered when the previous order was made – and whether those factors have changed.
[51]. When a court imputes income, that’s a determination of a fact. It’s not an estimate. It’s not a guess. It’s not a provisional order awaiting better disclosure, or further review. It’s a determination that the court had to calculate a number, because it didn’t feel it was appropriate to rely on – or wait for -- representations from the payor.
[52]. A party who argues that an imputed income level is no longer appropriate must go beyond establishing their subsequent “declared” income. They must address why income had to be imputed in the first place. They must present evidence of changed circumstances which establish that either:
a. It is no longer necessary or appropriate to impute income. The payor’s representations as to income should now be accepted, even if they weren’t accepted before.
Or,
b. Even if income should still be imputed, changed circumstances suggest a different amount is more appropriate.
[53]. If “declared income” automatically prevailed on a motion to change support, it would defeat the purpose of imputing income in the first place. It might even be a disincentive for payors to participate in the initial court process. They could simply ignore support Applications – as they often do. They could wait to see if the court imputes income, and how much. If dissatisfied with the amount, the payor could later return to court waving their tax returns, to suggest that the original judge got it wrong.
[54]. Support claimants should not be forced to go through this two-step process. Our family court system certainly can’t afford it.
[55]. Similarly, the onus should not fall on the support recipient to establish why income should still be imputed on a motion to change. That determination has already been made. The onus is on the support payor to establish that there should be a change in the way their income is to be calculated.
[56]. If for example the original support order imputed income because the court concluded an unemployed payor should have been working, it would be illogical to allow the payor to extinguish that determination by returning on a motion to change, with proof that he wasn’t working. That wouldn’t constitute a change in circumstances.
[57]. If a trial judge imputed income to a self-employed person on the basis that their tax return didn’t reflect cash sales and excessive write-offs, there should be a presumption that so long as the payor maintains the same business activities and accounting practices, subsequent tax returns will be equally unreliable.
[58]. Imputed income matters. The reason why income had to be imputed matters.
[59]. If an aggrieved party feels income was wrongly imputed, they can take timely steps to correct the original determination. They can appeal. They can bring a motion to set aside the order based on mistake or misrepresentation.
[60]. But if a payor proceeds by way of motion to change, they must face the presumption that the original order was correct – and the original imputation of income was correct. If they want to rely on their declared income, they must establish why this time their representations should be accepted by the court
ANALYSIS
[61]. The Respondent has brought a motion to rescind significant arrears of child and spousal support, which result from two orders dated September 4, 2008 and June 25, 2010.
[62]. I find that he has not established a material change in circumstances which would justify any variation for the period prior to July 2010.
[63]. The same level of income was imputed to him in each of those orders: $59,000.00.
[64]. The Respondent elected not to participate in the court process on either occasion. He filed no documents. He made no disclosure. He knew how much the Applicant was alleging he was earning, before the first order was made. He knew how much he would be required to pay, after the first order was made. He went through the same process in relation to the Applicant’s 2010 motion to change which resulted in the second order. At every stage in the process the Respondent decided to do nothing; to produce nothing; to pay nothing.
[65]. I do not accept the Respondent’s explanations about why he ignored both court proceedings:
a. He said he was too busy at running his business – but at the same time he said his business was floundering, and had had very few customers.
b. He said he didn’t have enough money to hire a lawyer.
c. I believe he was indeed busy at work – busy earning significant funds. But not too busy to participate in the court process; to comply with the rules. Particularly since he wasn’t spending any of his undisclosed, untaxed income on support payments, he could have afforded a lawyer (just as many people who earn less than $59,000.00 still manage to hire lawyers).
d. In any event, when he finally decided to proceed with this motion many years after the fact, he was able to thoroughly advance his case – without a lawyer.
[66]. I do not accept the Respondent’s representations as to his income prior to July 2010:
a. The Respondent acknowledged under oath that the Applicant was much more knowledgeable about their print shop’s finances than he was.
b. He acknowledged that the print shop had been a viable operation for many years.
c. He did not contradict the Applicant’s evidence about the lifestyle the business was able to provide for the parties prior to separation; the specific income levels the business generated; or the very significant opportunities and benefits they enjoyed through undeclared income.
d. His evidence that he only, suddenly, realized the business was not profitable after the Applicant left, was not credible.
e. His evidence that the business remained unprofitable almost continuously, from 2002 to 2010, defies logic and common sense. How could the print shop suddenly become unprofitable, almost overnight, at the precise moment of separation?
f. Why would he keep putting in long hours – year after year – if the business wasn’t generating nearly enough even for himself, let alone his dependants?
g. I accept the Applicant’s evidence that prior to separation the business was generating net income of at least $59,000.00 per year.
h. I do not accept the Respondent’s income figures as set out on his various personal and corporate tax returns going back to 2002. The information in the returns is threadbare. The returns were not prepared contemporaneously – the Respondent prepared all of them just before trial. They are entirely self-serving. The Respondent was aware that the September 4, 2008 order required him to make annual disclosure – including his notices of assessment – but he failed to make any disclosure.
i. I agree with the Applicant: If the Respondent continued to be busy in the print shop but had no income to show for it, he must have been receiving undeclared income.
[67]. The Respondent should not be allowed to benefit from his delay and manipulation of the evidence. By waiting years to file his tax returns in a batch – by waiting until he has closed down his business and moved on, before making any disclosure – the Respondent has in many ways insulated himself from serious scrutiny. His business is gone. It can no longer be monitored. His representations as to income, customers, orders, inventory, cash flow, lifestyle, etc., can no longer be tested. Had the Respondent made contemporaneous, annual disclosure, the Applicant would have had various options in terms of gathering evidence; preparing her case. Now she – and the court – are asked to simply take the Respondent’s word for things.
[68]. I accepted the evidence of the Applicant on all critical matters:
a. She was a very clear witness.
b. She appeared to be knowledgeable about the family’s finances generally, and the printing business in particular.
c. She was able to provide specific information and examples relating to income and lifestyle in the years leading up to separation.
d. She was candid in acknowledging the significant history (and availability) of undeclared income relating to the business.
[69]. In contrast, I did not find the Respondent to be a credible witness:
a. He was vague on many topics, and evasive under questioning.
b. When questioned about some dubious representations, he played dumb.
c. He abandoned some of his narrative during the course of the trial. At first he adamantly insisted the parties had purchased the pizza shop, and that the Applicant had inappropriately given the business to her mother in an effort to misrepresent her finances. He backed off when the Applicant produced paperwork showing he was wrong.
d. He portrayed himself as a loving father and husband who would do anything to live up to his responsibilities to support his family. But their daughter Beatrice was 16 when the parties separated for the last time in 2004. If he really wanted to help her financially – let alone fund his basic living expenses -- it wouldn’t have made sense to keep working in what he portrayed as a hopelessly unprofitable business.
e. The Respondent claimed he made cash support payments directly to the Applicant, but he had no proof. The Applicant denied this. The Respondent did not explain how he could have afforded to make cash payments, if his finances were really as bleak as he described.
[70]. Despite my general reservations about the Respondent’s credibility, I accept his evidence that in July 2010 he was injured in a car accident. I find that as a result of his injuries he was unable to devote proper attention to the printing business and eventually the business closed when the landlord seized the premises for unpaid rent. I find this event constitutes a material change in circumstances.
[71]. But even on this topic, the Respondent’s evidence is incomplete:
a. He has retained a lawyer to pursue compensation stemming from the accident.
b. He has received some minor sums. He is claiming more. He doesn’t know how much, or when he will likely receive it.
c. His income is in flux. The print shop is closed. For a while he couldn’t work at all. Then he did some unspecified cash jobs. Now he’s on public assistance, looking for work.
[72]. I find that effective July 2010 it is no longer appropriate to impute $59,000.00 – or any amount – as income for the Respondent. Indeed, even if I were to impute income to him at a minimum wage rate, his financial situation would be comparable to that of the Applicant. For this reason, I find that the Respondent had no ability to pay spousal support as of July 2010.
[73]. Spousal support may however be subject to further consideration:
a. If the Respondent resumes a more meaningful income level.
b. If the Respondent receives a significant wage loss award relating to his accident.
THE ORDER
[74]. The Respondent’s motion to rescind arrears of child support for Beatrice pursuant to the orders of September 4, 2008 and June 25, 2010 is dismissed. There is to be no ongoing child support, but all arrears remain fully payable.
[75]. The Respondent’s motion to rescind spousal support for the period prior to June 30, 2010 is dismissed. All arrears owing to that date remain fully payable.
[76]. Effective July 1, 2010, the Respondent’s obligation to pay spousal support to the Applicant is suspended. This is not a determination that entitlement has been terminated. This is a determination that since July 1, 2010 the Respondent’s financial circumstances have been transitional as a result of injuries sustained in a car accident in July 2010. Since July 2010 the Respondent’s income has been modest, and below a threshold which would give him any ability to pay spousal support.
[77]. However, the suspension of spousal support is without prejudice to redetermination (including redetermination back to July 1, 2010) if the Respondent receives a relevant wage loss award through civil proceedings he is currently pursuing relating to the July 2010 car accident.
[78]. The Respondent shall provide the Applicant with written verification of every sum of money he receives in relation to any aspect of his car accident claim (including property claims; wage loss; personal injuries; or any other heading) within 15 days of receiving any payment. He shall provide written verification of any monies received thus far, within 30 days. He shall provide her with brief written confirmation from his lawyer as to the status of the civil action, every six months, until all claims are completed.
[79]. The Respondent shall maintain a daily diary of any efforts to obtain employment or generate income, which shall include full particulars of any employment obtained (even part-time) or income produced. This shall include any work or services he performs even if they are without remuneration (such as helping a friend or relative). He shall provide the Applicant with a copy of this diary every 90 days, commencing August 1, 2013.
[80]. The parties shall file tax returns annually, and they shall provide one another with copies of their tax returns (and all notices of assessment or reassessment) by August 1st in each year, commencing August 1, 2013.
[81]. The Applicant’s motion for an increase in spousal support is dismissed, without prejudice to the aforementioned redetermination of spousal support which may arise after the Respondent’s car accident entitlements are ascertained.
[82]. Support Deduction Order to issue.
[83]. If any other issues need to be addressed, the parties should contact the trial co-ordinator to schedule an appearance before me.
Pazaratz, J.
Released: April 4, 2013
COURT FILE NO.: D1331/07
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Anh Hoang Thi Trang
Applicant
-and-
Si-Quy Trang
Respondent
REASONS FOR JUDGMENT
Pazaratz, J.
Released: April 4, 2013