NEWMARKET COURT FILE NO.: FC-09-033709-00

DATE: 20130102

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Mahmoud Bargout Applicant

– and –

Jane Bargout Respondent

Applicant in default

Sue Paterson, for the Respondent

HEARD: November 29, 2012

McDERMOT J.

Introduction

[1] This matter began as a simple divorce application filed by the Applicant, Mahmoud Bargout, on October 8, 2009. The Respondent, Jane Bargout (now Jane Muller), did not file an answer and Mr. Bargout attempted on several occasions to obtain a divorce; on each occasion, he was unable to satisfy the court that he had made satisfactory arrangements for the support of the children as required by s. 11(1)(b) of the Divorce Act.[^1] He last tried to obtain a divorce through an affidavit sworn May 27, 2010 and filed in July of that year. In that affidavit, Mr. Bargout swore that he lived in Egypt and that he had “no regular income” and accordingly should not be required to pay child support other than tuition and educational expenses which he stated that he was already paying. When Rogers J. requested proof of payment of these expenses in her endorsement dated August 16, 2010, Mr. Bargout appears to have abandoned the divorce proceedings; he has taken no steps to finalize the divorce since that time.

[2] Since then, the Respondent sought leave to file an Answer and Claim by Respondent by way of 14B motion filed in June, 2011. Pursuant to an order of Nelson J. dated August 9, 2011, she filed and served her answer and claim; Mr. Bargout is now in default of appearance. Ms. Muller has requested equalization of property and retroactive and ongoing spousal support. She has also requested an order setting aside a separation agreement signed by the parties on September 24, 2009; that agreement released the Respondent’s right to spousal support and equalization of property. She further requests an order vesting the matrimonial home in her name as well as an order giving her conduct of the sale of the home. Finally she requests a divorce, which may be granted upon the Respondent filing the requisite affidavit required under Rule 36 of the Family Law Rules.[^2]

[3] As the Applicant did not file an answer, the Respondent filed a Form 23C Affidavit requesting the relief noted above. Kaufman J. reviewed the affidavit and endorsed on June 21, 2012 that the retroactive claims for support required further evidence to be given at a long motion; the uncontested trial was eventually adjourned to the November, 2012 sittings. Ms. Muller and her counsel, Ms. Paterson, attended before me on November 29, 2012. Ms. Muller was the sole witness at the hearing. It is to be noted that Mr. Bargout was served with the Form 23C affidavit as well as a factum, the affidavit of Linda Mackeiwicz and the casebook indexes. No responding material was filed by Mr. Bargout. Apparently, Mr. Bargout was also notified of the date of the hearing of this matter; he was paged prior to the calling of evidence without response.

[4] At the hearing of the matter, Ms. Muller adjourned her claim for equalization of property sine die. It appeared that there was insufficient evidence of the assets or debts of Mr. Bargout to calculate an equalization payment. In particular, there was little evidence about Mr. Bargout’s Canada Revenue Agency (CRA) debt of approximately $80,000, about which Ms. Muller could not obtain any information, but which has been filed against Mr. Bargout’s interest in the matrimonial home.

[5] Accordingly, the only issues which were dealt with at the uncontested trial were the claims for retroactive spousal support and child support, the vesting order in respect of the matrimonial home and the conduct of the sale of the home. For the reasons set out below, I make the following final order:

a. Notwithstanding the releases in the separation agreement, there shall be an order for retroactive and ongoing spousal support;

b. Arrears of child and spousal support are fixed in the amount of $156,873;

c. These arrears will be satisfied, in part, through the vesting of Mr. Bargout’s interest in the matrimonial home into the name of Ms. Muller;

d. The Applicant shall pay ongoing spousal support in the amount of $l.00 per annum;

e. The Respondent shall have sole conduct of the sale of the home, and will be entitled to sign all documents, including documents for the listing of the home for sale, any agreement of purchase and sale, as well as any documents required to close the sale of the home to a third party: see para. 74 of the within reasons for details of the terms of the sale of the property.

f. Upon the filing of the affidavit as required under Rule 36, the Respondent may obtain a divorce on an uncontested basis.

g. The Respondent’s claim for equalization of property shall be adjourned sine die.

Background Facts

[6] These parties married on October 23, 1987. There are two children of the marriage namely Remy Nabeel Bargout, born […], 1989 and Claire Margaret Bargout, born […], 1992. When the parties separated, the children remained in the care of Ms. Muller until they each left home to attend their respective post secondary programs of education. Remy, who is now 23, left Ms. Muller’s care in January, 2008; he is now in his fourth year at the University of Guelph. Clair is 20; she began her post-secondary education at McGill University in Montreal and is presently at San Francisco State University on an exchange program; she left home, according to the Respondent, in August, 2010. According to Ms. Muller, her husband pays most of the children’s university expenses, but she has neither asked the children about nor been told the details of the financial arrangements between him and the children. As far as she knows, the children may have OSAP loans and she also continues to provide them with financial assistance from time to time.

[7] In testimony, Ms. Muller described the marriage as both “abusive” and “terrible.” She described Mr. Bargout as someone who did not function under the rules of society; she said that he had a strong personality and that he responded negatively to any sort of challenge to his authority. When discussing the signing of the separation agreement, she stated that she had to leave the marriage because she was giving her daughter the message that a woman could stay in a marriage while having “no rights.” She said that she felt powerless in the marriage, and had no knowledge of her husband’s financial circumstances; she now feels that he manipulated his financial affairs throughout to her disadvantage. She described several incidents of physical abuse; two were earlier in the marriage and the last occurred in 2003 when the Respondent told Mr. Bargout that if he did that again, she would call the police. He was not physically abusive after that date; however, she says that there were continuing cultural differences which effectively created a power imbalance between the parties which continued after the marriage ended. In essence, she described her husband as an authoritarian and manipulative individual who maintained his control of Ms. Muller and the finances of the family until well after separation.

[8] Ms. Muller works for World Vision; her present income according to her financial statement is about $81,000 per annum. She began working at that job in 2005; however, during the summer of 2008, Ms. Muller resigned that position, rented the matrimonial home and moved to Nanaimo, British Columbia with her daughter to take a job there. She says that she did this because her daughter had been picked up for shoplifting and was troubled at the time; she felt it best to remove her daughter from Ontario as well as the friends she was hanging around with. The job in British Columbia did not work out and she returned to Ontario during the spring in early 2009; she successfully sued the firm in British Columbia for wrongful dismissal and was rehired by World Vision, where she continues to work.

[9] Mr. Bargout works in the telecommunications field. According to the evidence provided by Ms. Muller, his income was always in the range of about $150,000 per annum. In 2001, Mr. Bargout accepted a position as vice president of operations with a privately held corporation, Future Way Communications. He had to leave that job in 2003 when a family member was made president with whom Mr. Bargout did not get along. Mr. Bargout was paid a settlement of $250,000.

[10] The Applicant was unemployed for several years and the parties sold their home in Thornhill for $835,000 presumably due to Mr. Bargout’s unemployment; they purchased the home that they own now at 30 Walkerton Drive, Markham, Ontario for $620,000. That home is owned jointly and Ms. Muller still resides in that home.

[11] In 2005, Mr. Bargout was offered a three year contract position in Dubai which he accepted. Since then, Mr. Bargout has continuously lived in the Middle East. Mr. Bargout is secretive about his actual address; he used the matrimonial home as his address for service in his divorce materials and he stated in one affidavit that he lived in Egypt, but various other sources show him working in either Dubai or Saudi Arabia; Ms. Muller states that she was told that he moved in 2008 to Saudi Arabia to take another position. The children visited Mr. Bargout for holidays in Egypt in 2008 and 2011; he told the children during the last visit that he was going to Dubai to work. Mr. Bargout was served by e-mail because Ms. Muller deposed that she did not have any idea of where he resides.

[12] Mr. Bargout has also been less than forthcoming about his income. He told Ms. Muller that his salary was in the range of $250,000 per annum U.S.; Ms Paterson also notes that in attempting to obtain a divorce, Mr. Bargout filed various bank statements from June, 2006 to May, 2010 which show deposits by the Applicant of approximately $168,000 per annum which Ms. Muller presumes to be his minimum gross income. Other than as above, she has no direct knowledge of Mr. Bargout’s financial circumstances.

[13] Other than the bank statements, there is little direct evidence from Mr. Bargout regarding his income. In response to one of the endorsements asking him to confirm the arrangements made for support of the children, Mr. Bargout filed a financial statement sworn on April 7, 2010, in which stated that he had no income and that he had been unemployed since 2005. He said in his affidavit sworn May 27, 2010 (which had the bank statements noted above attached as an exhibit) that he is “retired” and that he has “no regular income.” He says that he receives a small rental income and also lives off of his savings or the charity of family members.

[14] Ms. Muller has filed evidence to the contrary. It is her evidence that Mr. Bargout left Canada for a position in Dubai in 2005 (which is the year the Applicant states in his financial statement that he became unemployed). Apparently when the children last visited Mr. Bargout in Egypt during Christmas, 2011, he told them that he had to return to Dubai for work; he also told the children on another occasion that he had moved to Saudi Arabia for work. In his Yatedo page from May, 2012, it states that he is presently a consultant for Altheeb Telecom Consortium in Saudi Arabia; his Linked In page states that he is presently working as a Program Manager and Executive Telecom Advisor at Etisalat (the Emirates Telecommunications Corporation located in Abu Dhabi).

[15] Ms. Muller states that although Mr. Bargout left Canada in 2005, she did not believe the marriage to be over until July, 2006; she accepts Mr. Bargout’s evidence that July 1, 2006 was the date of separation. Indeed, this is the date of separation set out in the separation agreement eventually signed by the parties as well as in Mr. Bargout’s application for a divorce.

[16] After separation, Mr. Bargout provided ongoing financial assistance to the family. He paid for private schooling for the children as well as the mortgage and the other expenses of the home. Ms. Muller states that she thought Mr. Bargout was paying the property taxes on the home; however, after arriving back from British Columbia in 2009, she discovered that the property taxes had not been paid for years. According to correspondence from the Town of Markham dated November 3, 2010, the outstanding taxes then totalled $23,201.56. Although Mr. Bargout eventually paid the taxes, he did so at the last possible minute prior to a tax sale and after pleas from the Respondent.

[17] The history of the financial assistance provided by the Applicant bears out the assertion by Ms. Muller that Mr. Bargout was intent upon maintaining control over the parties’ finances. Ms. Muller stated that whenever she needed something done, such as a broken appliance or repairs on the home, she would have to contact Mr. Bargout; he would sometimes take control of the repair itself and in event he only paid Ms. Muller on an as needed basis and then only one half of the cost of the repair.

[18] Moreover, Ms. Muller discovered in due course that Mr. Bargout was not as generous as he made himself out to be. She eventually determined that when Mr. Bargout made a mortgage payment of $1,400, he would often also draw out $1,200 from the Line of Credit registered against the home in order to reimburse himself for most of the payment that he made; this appears to have been done with the intention of maintaining the balance on both the line of credit and mortgage at the same amount as on the date of separation, with Mr. Bargout paying only the interest payment due on those obligations. It was the evidence of the Respondent that throughout the 50 month period of time during which Mr. Bargout made contributions of $2,361 per month in household expenses (July, 2006 to September, 2010, when the Applicant’s child support obligation ceased), he was reimbursing himself on average from the line of credit in the amount of $1,072 per month. Therefore, although he paid during this time a total of $118,050, his actual net contribution to the family’s expenses was $64,450. It was Ms. Muller’s evidence that Mr. Bargout ceased paying for the household expenses in September, 2010, when Claire left the matrimonial home for university.

[19] As noted, the parties signed a separation agreement which was dated September 24, 2009; although the Respondent stated that the agreement was “ill advised”, she also admits that the agreement was prepared at her instigation. Ms. Muller stated that she asked Mr. Bargout for a separation agreement because she wished to “stand up” to Mr. Bargout and have the separation formalized. However, she allowed Mr. Bargout to prepare the agreement with little or no input from herself. The agreement was prepared by Mr. Bargout’s lawyer, and Ms. Muller did not seek out or obtain independent legal advice. She picked it up from Mr. Bargout’s lawyer’s office on the way home from work, signed it using a neighbour as a witness and returned it the next day. She said that she did not understand the ramifications of the agreement and she wished to extricate herself from “a terrible marriage”. She felt that the agreement confirmed that Mr. Bargout could not touch her savings and that the agreement would confirm that the children were safe with her. She stated that it was her impression that the agreement would separate the parties’ property and allow her to obtain a divorce and separate her property from that of Mr. Bargout.

[20] In fact, the agreement did nothing of the sort. The agreement appeared to have been premised upon custody of the children being shared, which, based upon the parties’ history, was a somewhat absurd assertion. Although the agreement implies that care of the children is equally shared (paragraph 8 of the agreement states that “the parties share joint custody and time with the children” and accordingly no child support is payable by either party to the other), this was patently impossible as Mr. Bargout had, by the time the agreement was signed, resided in the Middle East for years. Other than some brief visits in Canada, and one visit by the children to Egypt during 2008, it was obvious that the children had resided with the Respondent since separation; to suggest anything else was an obvious falsehood.

[21] During her testimony, Ms. Muller acknowledged that she understood that the net effect of the agreement was that she would not receive child support from Mr. Bargout. However, the agreement provided for this along with releases of spousal support and property without any sort of financial disclosure or independent legal advice. At the time of entering into the agreement, that there was no financial disclosure by the Applicant of his income and Ms. Muller still has no real idea of the amount of his income for support purposes. There was no disclosure of property or debts or an exchange of financial statements between the parties. Notwithstanding this, and based upon the false assumption of shared custody of the children, the agreement provided that there would be neither spousal support nor child support payable, and also provided for absolute releases as to both spousal support and property. Ms. Muller also stated that she had thought that no spousal support was payable because she was working as was Mr. Bargout. The Respondent also stated that she felt that if she did not sign the agreement, she would lose the small amount of financial assistance being paid by Mr. Bargout to her. Notwithstanding the fact that Ms. Muller appeared to understand the nature and effect of the separation agreement, it appears to rest on very shaky foundations.

[22] As well, it is apparent that, as alleged by Ms. Muller, the Applicant’s financial affairs were problematic. I have already noted the misuse of the line of credit, which is now being paid by the Respondent. Moreover, the Applicant did not pay tax on the settlement that he received from Future Way Communications. Because of his failure to pay that tax, he has a tax bill of $80,000 registered by way of lien against his interest in the home. The actual amount of this debt is unknown as Ms. Muller cannot obtain this information from CRA and it has been bearing compound interest since being registered against Mr. Bargout’s interest in the matrimonial home on January 17, 2006. Mr. Bargout still uses the matrimonial home for an address for his creditors; at trial, Ms. Muller filed recent correspondence sent to the matrimonial home from TD Canada Trust and a credit card bill noting a past due amount was sent to the home from RBC Visa on March 16, 2012 (it was Ms. Muller’s evidence that this was opened by her in error; most mail is left unopened). Ms. Muller stated that both she and Remy continue to receive calls from CRA. Ms. Muller states that she needs to sell the home and remove herself from harassment from Mr. Bargout’s creditors.

[23] Ms. Muller says that she attempted to settle this matter by retaining counsel and employing the services of a mediator in 2010 and 2011. She states that the mediator attempted to have Mr. Bargout come back to Canada in order to meet and settle issues on a final basis. It is her evidence that Mr. Bargout reacted badly to this attempt at settlement; he sent threatening e-mails stating that she should cooperate with him “or else”; finally in April, 2011, he sent an e-mail to Ms. Muller stating that he had “no plans to come to Canada”. Ms. Muller states that she has had no contact with Mr. Bargout since that date. As noted above, it is Ms. Muller’s evidence that her husband stopped any financial assistance after her daughter entered McGill in September, 2010.

Analysis

[24] There are several issues raised by the claims of the Respondent, including the following:

a. Are the releases as to spousal support contained in the September 24, 2012 separation agreement binding on Ms. Muller?

b. Is the Respondent entitled to spousal support and child support retroactive to the date of separation?

c. Is the Respondent entitled to a vesting order in respect of the matrimonial home and/or an order for the sole conduct of the sale of the home?

[25] I will consider each of these issues in turn.

(a) Are the releases as to spousal support contained in the September 24, 2012 separation agreement binding on Ms. Muller?

[26] Although the claim of Ms. Muller is to set aside the separation agreement dated September, 24, 2009, there is no need to actually set the agreement aside in the present case as the claim for equalization of property has been adjourned sine die and we are only considering the issue of entitlement by the Respondent to spousal support. As will be discussed below, as we are dealing with a claim for both child and spousal support under the Divorce Act, the separation agreement is not binding on the court but is generally deferred to except under certain particular circumstances. The inquiry is not whether the agreement should be set aside, but whether the court will have regard to the separation agreement in determining whether the Respondent is entitled to child and spousal support.

[27] As noted above, the separation agreement states that no child support is payable because custody of the children is shared. I have no hesitation in finding that this was, in essence, a falsehood. During the relevant time periods noted above, the children were in the care of Ms. Muller; as such and subject to the claims for retroactivity, whatever was said by the agreement, child support should have been paid by Mr. Bargout and would be ordered notwithstanding the terms of the domestic contract. Child support is a presumptive obligation, and is the entitlement of the child rather than the recipient spouse; as such the agreement that neither party pay child support to the other is without weight or merit.

[28] Regarding spousal support, the agreement contains full releases of spousal support. Paragraph 9(1) of the agreement states that, “Neither party is entitled to spousal support from the other, either now or in the future.” That paragraph also states that both parties have considered the factors set out in s. 15.2 of the Divorce Act in determining that no spousal support is payable; it goes on to outline those specific factors. Paragraph 9(2) states that the release of support is “final and binding” notwithstanding any changes in circumstances, “whether foreseeable or unforeseeable and whether within or without their control”.

[29] The issue of spousal support is different from that of child support which is mandatory under the Child Support Guidelines[^3] notwithstanding the terms of a separation agreement. With regard to spousal support, a freely negotiated domestic contract should generally be adhered to by the court and if I was to do so in the present case, Ms. Muller would be disentitled to spousal support based upon the comprehensive release of spousal support contained in the separation agreement. To vitiate the agreement there is a two step process: First I must determine whether the agreement regarding spousal support was freely and properly negotiated; if so, the second step is to determine whether the agreement substantially complies with the objectives of the Divorce Act: see Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303 at para. 80 and 84.

[30] In my view, I do not have to go beyond the first part of the process; as will be discussed below, there is no possible way that I could determine that the agreement was negotiated in an “unimpeachable” fashion as required by Miglin, supra.

[31] The majority in Miglin stated that although a party attacking an agreement need not prove unconscionability, a finding vitiating a separation agreement, requires a “fundamental flaw” in the negotiation process: see para. 82 of the decision. I am directed to be “alive to the conditions of the parties, including whether there were any circumstances of oppression, pressure, or other vulnerabilities, taking into account all of the circumstances, including those set out in s. 15.2(a) and (b) and the conditions under which the negotiations were held, such as their duration and whether there was professional assistance”: para. 81. Moreover, “where the power imbalance did vitiate the bargaining process, the agreement should not be read as expressing the parties’ notion of equitable sharing in their circumstances and the agreement will merit little weight.” [para. 83]

[32] As stated, I have little difficulty in determining that this agreement, and specifically the release of spousal support, should be accorded little or no weight in determining spousal support. The agreement was prepared by the husband’s counsel and Ms. Muller was unrepresented in the negotiations. In fact, there were no negotiations; Ms. Muller requested an agreement and the Applicant told his lawyer to draft one and told her what to include. Ms. Muller did not see the specific terms of the agreement until she picked up the agreement at the lawyer’s office; she signed it that evening and returned it to the lawyer the next day. The agreement is premised on a set of facts that simply did not and could not, exist; it is based upon the custody of the children being shared which was, even according to the evidence of the Applicant (who swore in May, 2010 that he resided in Egypt but returned “to Canada every few months in order to see my children”) absurd. Moreover, the Respondent’s evidence was that she only discovered the Applicant’s failure to pay the realty taxes and that he was drawing down funds from the line of credit to set off the expenses paid by him after she signed the agreement. In other words, the facts upon which the agreement was premised, both on its face, as well as the Respondent’s understanding of the situation, were false. The agreement is, on the whole, without foundation.

[33] Accordingly, I find that, based upon the facts and evidence as provided to me at the uncontested trial, the separation agreement dated September 24, 2009 is to be given no weight whatsoever, and the release of spousal support contained in the separation agreement is not a bar to the Respondent’s claim for spousal support in the within proceedings.

(b) Is the Respondent entitled to spousal support and child support retroactive to the date of separation?

[34] There are several issues within this topic. The first is the determination of the income of Mr. Bargout; the second the issue of entitlement to spousal support; the third, retroactivity and the fourth, assuming the support to be retroactive, the quantum of arrears. It is to be noted that Ms. Muller has acknowledged that child support did come to an end as of the dates her respective children left her care or went to university (for Remy, January, 2008 and for Claire, September, 2010) and that on an ongoing basis, she requests only an order for nominal spousal support of $1.00 per annum. Ms. Muller seeks no section 7 contributions towards the expenses paid by her for the children for their education, either retroactive or prospective.

(i) Mr. Bargout’s Income

[35] Ms. Paterson urges me to impute income to Mr. Bargout in the amount of $281,195 per annum. She states that she came to this figure through an examination of Mr. Bargout’s bank accounts as attached to his affidavit sworn May 27, 2010; she states that those statements show the Applicant to have deposited $168,000 per annum on average into his account. She states that the Applicant does not pay taxes on his income in the Middle East, and accordingly, when grossed up for taxes, the Applicant’s income can be imputed at $281,195: see the DivorceMate calculation of the grossed up amount set out at Ex. B of the Form 23C Affidavit for Uncontested Trial.

[36] The Applicant has taken the position that he is “retired” and that his expenses are paid through some modest rental income from several properties owned by him as well as the charity of his wealthy family. He stated in his financial statement that he has little or no income and that he had been unemployed since 2005.

[37] It is apparent to me that the evidence provided by the Applicant is designed to hide his true income; the fact that he refused to provide particulars of the expenses he was paying when requested to do so by Rogers J. is telling. Since going to the Middle East, and since separation in July, 2006, the Applicant has not made any sort of clear disclosure of what his income is. As with the premise of shared custody in the separation agreement drafted from his instructions, his position respecting his income is patently disingenuous.

[38] The evidence is fairly clear that the Applicant is fully employed. He told the Respondent at least once that his income was $250,000; his Linked In page indicates that he is fully employed as a Program Manager and Executive Telecom Advisor at the Emirates Telecommunications Corporation located in Abu Dhabi. His Yatedo page states that he works as a consultant for Altheeb Telecom Consortium in Saudi Arabia. He told the children during a visit in 2011 that he had to leave Egypt to go to Dubai for work. He is apparently working and the only thing undisclosed is his income.

[39] The Applicant was obliged to file an updated financial statement in response to the Respondent’s Answer and Claim by Respondent and he did not do so: see Rule 13(1)(b) of the Family Law Rules. The failure to provide financial disclosure when obligated to do so allows me to impute income to that party: see s. 19(1)(f) of the Child Support Guidelines. As well, as in the present case (see the articles in ExpatFocus attached to the Respondent’s Form 23C Affidavit for Uncontested Trial) there is no income tax levied against foreign worker’s incomes in either Dubai or Saudi Arabia; in that case under s. 19(1)(c) of the Guidelines, income can be grossed up for the purpose of determining the proper income for child support purposes.

[40] It is to be noted that the criteria used for imputation of income for child support purposes under the Guidelines may also be applied to imputation of income for spousal support purposes: see Rilli v. Rilli, [2006] O.J. No. 2142 (S.C.J.) and Perino v. Perino, 2007 CanLII 46919 (ON SC), [2007] O.J. No. 4298 (S.C.J.).

[41] Although the Applicant filed a financial statement in 2010, that statement, as with the separation agreement, is based upon facts which are completely unbelievable. It is apparent from the evidence that the Applicant went to the Middle East for work purposes; that is what he told his family when he left in 2005. He is clearly not retired; that information is belied by the information on the various business networking web pages filed by the Respondent which indicate the Applicant to be working. He told his children that he was working in Dubai in 2011. At one point he told his wife that his income was $250,000 per annum, and he was able to make deposits to his bank account which totaled $168,000 over the course of a year. This appears to be more than the charity of a wealthy family.

[42] Finally, the Applicant did not file a financial statement in response to the Respondent’s Answer, which he was required to do. He was served with the Answer, Affidavit for Uncontested Trial and other documentation and was aware that the Respondent was stating that income should be imputed to him and made no response to that claim.

[43] Accordingly, I find that the Applicant’s income is, as suggested by Ms. Paterson and as calculated through DivorceMate, $281,195 per annum for child and spousal support purposes.

(ii) Entitlement to spousal support

[44] There are two basic headings under which a claim for spousal support may be established. The first is based upon compensatory grounds; the second is based upon contractual or other non-compensatory grounds.

[45] Regarding the issue of compensatory spousal support, this arises out of s. 15.2(6)(a) of the Divorce Act which states that a spousal support order should “recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown.” The inquiry must be whether Ms. Muller has suffered a disadvantage from the marriage, as well as whether Mr. Bargout has ended the marriage to his advantage as a result.

[46] I firstly note that there is little issue that Ms. Muller was the primary caregiver of the children. She was left to deal with the children when Mr. Bargout went to the Middle East, and was the one left to deal with Claire’s problems which caused Ms. Muller to move to Nanaimo, British Columbia. Within the marriage, there were control issues which resulted in Ms. Muller in having no knowledge of the family’s financial circumstances. As I have found above, Mr. Bargout continued to control the finances of the family well after separation in July, 2006. The circumstances of the signing of the separation agreement are reflective of the parties’ respective positions within the marriage and the control exercised by the Applicant.

[47] Even were there no compensatory grounds for support, support may also be based upon contractual or non-compensatory grounds: see Bracklow v. Bracklow, 1999 CanLII 715 (SCC), [1999] 1 S.C.R. 420 at para. 15 and 18. Such non-compensatory grounds may well simply include the means and needs of the parties. As set out in Bracklow, at para. 49,

But where need is established that is not met on a compensatory or contractual basis, the fundamental marital obligation may play a vital role. Absent negating factors, it is available, in appropriate circumstances, to provide just support.

[48] In the present case and based upon the findings that I have made, Mr. Bargout presently has income of more than three times that of Ms. Muller. He is able to do this partly because Ms. Muller was the person who was left in Canada dealing with the children. Ms. Muller has also been placed at a severe disadvantage due to Mr. Bargout’s financial dealings, which have left Ms. Muller in a home with a substantial lien against it resulting from Mr. Bargout’s failure to pay his taxes in Canada. Although there is little evidence establishing need, Ms. Muller has satisfied me that her lifestyle did suffer after separation; she has been unable to go on holidays and has just been able to break even. For all of these reasons, Ms. Muller both has a compensatory and non-compensatory entitlement to spousal support.

(iii) Retroactivity of child and spousal support

[49] Regarding child and spousal support, different considerations apply.

[50] With regard to child support, normally the right to child support accrues at the date of separation; the needs of the children are to be met partly by the non-custodial parent from that point onward, and child support is normally payable from the date of separation.

[51] However, it is unfair for a party to “wait in the weeds” and hoard their support while not making a claim within a reasonable time. Accordingly, the claim for child support may only accrue from the date of notice of the claim, i.e. when the subject was broached by the claimant. The criteria for the retroactivity of child support were considered by the Supreme Court of Canada in D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231. In that case, which dealt with motions to vary child support, Bastarache J. stated, at paras. 121 and 122, that the date of “effective notice” is generally the date from which retroactive support will be ordered. Based upon s. 25(1)(a) of the Child Support Guidelines, the recipient cannot delay matters more than three years from the date of effective notice; accordingly, that notice period cannot be more than three years prior to the claim being made or the recipient will be limited to no more than three years of retroactive support. That would mean in the present case that child support could not be retroactive prior to the date of effective notice (2010 when the Respondent retained counsel) or three years prior to the date of that notice, which would be 2007.

[52] An important exception is, however, blameworthy conduct. In reviewing this issue, Bastarache J. stated (at para. 125):

The proper approach can therefore be summarized in the following way: payor parents will have their interest in certainty protected only up to the point when that interest becomes unreasonable. In the majority of circumstances, that interest will be reasonable up to the point when the recipient parent broaches the subject, up to three years in the past. However, in order to avoid having the presumptive date of retroactivity set prior to the date of effective notice, the payor parent must act responsibly: (s)he must disclose the material change in circumstances to the recipient parent. Where the payor parent does not do so, and thus engages in blameworthy behaviour, I see no reason to continue to protect his/her interest in certainty beyond the date when circumstances changed materially. A payor parent should not be permitted to profit from his/her wrongdoing.

[53] In the present case, even though we are not dealing with a change in circumstances, the elements of blameworthy conduct are present. As noted above, there was financial manipulation by the Applicant along with serious issues of non-disclosure which continue to the present. In sum, the Respondent has never known, and has never been made aware of the Applicant’s true income. The Respondent has been left to her own devices to determine the Applicant’s income, and had the Applicant not filed copies of his bank accounts, the Respondent would still be largely in the dark as to her husband’s income. This is compounded by the financial machinations which resulted in the Respondent continuing to deal with the Applicant’s creditors as well as the attempt by the Applicant to negotiate an advantageous separation agreement reciting a false set of facts regarding custody of the children. Moreover, the Respondent was not aware of the fact that the Applicant had not paid realty taxes or that he had been paying himself back payments from the line of credit until well after the separation agreement was signed in September, 2009. This may be an explanation why the Respondent did not make an earlier claim for child support. I do not have any hesitation in finding blameworthy conduct, and I find that child support is retroactive to the date of separation being July 1, 2006.

[54] Regarding spousal support, there are different criteria, although some overlap with the criteria for retroactivity of child support. The factors for a retroactive award of spousal support are summarized in Bremer v. Bremer, 2005 CanLII 3938 (ON CA), [2005] O.J. No. 608 (C.A.) and they are listed at para. 9 of the decision:

The considerations governing an award of retroactive spousal support include: i) the extent to which the claimant established past need (including any requirement to encroach on capital) and the payor's ability to pay; ii) the underlying basis for the ongoing support obligation; iii) the requirement that there be a reason for awarding retroactive support; iv) the impact of a retroactive award on the payor and, in particular, whether a retroactive order will create an undue burden on the payor or effect a redistribution of capital; v) the presence of blameworthy conduct on the part of the payor such as incomplete or misleading financial disclosure; vi) notice of an intention to seek support and negotiations to that end; vii) delay in proceeding and any explanation for the delay; and viii) the appropriateness of a retroactive order pre-dating the date on which the application for divorce was issued: see Horner v. Horner, 2004 CanLII 34381 (ON CA), [2004] O.J. No. 4268 (C.A.); Marinangeli v. Marinangeli (2003), 2003 CanLII 27673 (ON CA), 66 O.R. (3d) 40 (C.A.) and Price v. Price, [2002] O.J. No. 2386 (C.A.).

[55] In Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, the court considered, inter alia, the retroactivity of an award of spousal support which had been disallowed by the court of appeal. The court confirmed that the considerations regarding a retroactive award of child support are different from that of spousal support; for child support, there is a presumptive entitlement to child support which is described as “automatic” and therefore, the issues of notice and lack of diligence are less important in considering retroactivity; at para. 208, the distinction is made clear as follows:

In contrast, there is no presumptive entitlement to spousal support and, unlike child support, the spouse is in general not under any legal obligation to look out for the separated spouse’s legal interests. Thus concerns about notice, delay and misconduct generally carry more weight in relation to claims for spousal support:...

[56] In that case, the court applied the criteria under D.B.S. to a retroactive claim for spousal support; the issue being considered is whether the claim for retroactive spousal support would go back to the date of commencement of the proceedings as ordered by the trial judge, and as overturned by the British Columbia Court of Appeal. The court stated that there are two underlying interests at stake, being firstly the certainty of the payor’s legal obligations (as a retroactive award may obviously make it difficult to plan one’s affairs) and secondly placing proper incentives on the applicant to proceed with his or her claims promptly: see para. 209. The court stated that many of the criteria set out in D.B.S. are applicable to the retroactivity of a spousal support obligation: see para. 212. In other words, I am to look at the conduct of the payor, the circumstances of the spouse seeking support as well as any hardship which may be occasioned by the award in determining the retroactivity of the spousal support award in the present case.

[57] As noted above, this is both a compensatory claim, which crystallized on separation, as well as means and needs claim. As far as the burden of the retroactive award goes, I note that enforceability of a retroactive award of support will be problematic considering the fact that the Respondent does not even know where the Applicant is residing; it is probable that the enforcement of a retroactive award will be limited to any equity remaining to the Applicant in the matrimonial home. The Applicant has not provided any evidence in this proceeding as to how the burden of a retroactive award would adversely affect him and due to his actions in concealing his income and assets, the Respondent is unable to adequately address the issue of relative hardship which may be occasioned by a retroactive spousal support award. I have already spoken to the issue of blameworthy conduct in the context of the retroactivity of child support, as I also spoke of the reason why the retroactive award was not earlier sought out by the Respondent; it is apparent from the materials filed and the evidence given that there were abuse and power imbalance issues which resulted in the Respondent not taking steps until 2010, when she obtained counsel and attempted to negotiate a settlement.

[58] The major issue which is not addressed by the Applicant is the issue of her need post separation. There is little evidence as to the Respondent’s needs not being met during the years since separation. Although she states that her lifestyle suffered after separation, and she was only able to make ends meet after the assistance from the Applicant ceased, she does not prove any sort of encroachment on capital between the date of separation and the date of commencement of these proceedings. Her evidence that she could not go on holidays, or was unable to make capital repairs to the home does not constitute evidence of hardship occasioned by the Applicant’s failure to pay support which would warrant a retroactive award under the criteria set out in Kerr v. Baranow.

[59] One factor which goes into this is the fact that the Respondent will not be seeking support on an ongoing basis other than a nominal amount of support. The other factor that goes into the predating of this award of spousal support is the fact that the Respondent did seek out settlement of the matter in 2010, which was rebuffed by the Applicant; that may have avoided this uncontested trial and allowed the parties to resolve their affairs in an ordered fashion.

[60] Under all of the circumstances, I find that an appropriate retroactive award of spousal support should be to September 1, 2010, the month after child support came to an end due to Claire leaving the matrimonial home for university. I find this to be an appropriate date for a number of reasons. Firstly, the subject of spousal support was broached by the Respondent when she retained counsel and obtained a mediator; her evidence was that this took place in 2010. Moreover, that was the date that all assistance from the Applicant ceased when child support came to an end; after that date the Respondent received no assistance whatsoever from Mr. Bargout. There are, as pointed out above, elements of misconduct by the Applicant which, in my view, allow the spousal support to be retroactive prior to the commencement of these proceedings by the Applicant when she filed her 14B motion to allow the filing of an answer in June, 2011. Had the Applicant even engaged with the Respondent’s counsel or the mediator in attempting to settle this matter in 2010, this uncontested trial may have been unnecessary; moreover the Applicant’s failure to provide meaningful financial disclosure made the prosecution of this spousal support claim problematic. There were also power imbalance and abuse issues which would have resulted in Ms. Muller delaying her commencement of proceedings for obvious reasons. I am also not going to penalize the Respondent for failing to bring a motion prior to trial for interim support; in my view that would have been a waste of money in light of the obvious enforcement issues concerning spousal support which may have been payable by the Applicant.

[61] Accordingly, I find that spousal support will be retroactive to September 1, 2010.

(iv) Quantum of Retroactive Award

[62] In coming to this award, I refer to the SupportMate calculation attached to the Respondent’s Form 23C affidavit. Those calculations are based upon the income of the Applicant which I have determined above, as well as the Respondent’s actual income during the relevant time periods during which support is being ordered. As suggested by Ms. Paterson, for spousal support purposes I am using the midpoint figure provided by the Spousal Support Advisory Guidelines (the SSAGs)

[63] Based upon the Applicant’s income as found above, child support would run for two children from July 1, 2006 to December 31, 2007. This is a period of 17 months, and child support would run at the rate of $3,514 per month for a total of $59,738.

[64] From January 1, 2008 to and including August 31, 2010, there was one child, Claire, residing with Ms. Muller. Child support during that period of time would be $2,225 per month for a period of 32 months or $71,200. After that point in time, there was no further child support payable and Ms. Muller seeks makes no further claim for child support beyond that stated period of time. Accordingly, the total amount of child support that should have been paid from the date of separation to the date that the last child left home is $130,938 ($59,738 + $71,200).

[65] Spousal support commences September 1, 2010 as noted above. From September 1, 2010 to the month preceding the trial (October, 2012), there were no children living at home. Ms. Muller’s common law spouse has been residing with her since 2010, but has only recently begun to earn a minimal income due to immigration issues. Accordingly, spousal support would accrue at $5,902 per month for 25 months for a total of $147,550.

[66] Because Ms. Muller will not pay tax on the spousal support payable, the amount of spousal support should be reduced by an appropriate amount: see Vanesse v. Seguin, 2008 CanLII 35922 (ON SC), [2008] O.J. No. 2832 (S.C.J.). In that case, the spousal support arrears were reduced by 30% and I see no reason why I should differ with that approach. Accordingly, spousal support arrears are fixed in the amount of $90,385 (70% of $147,550). Total child and spousal support arrears are accordingly $221,323 ($130,938 + $90,385).

[67] Ms. Muller has acknowledged receiving net payments from Mr. Bargout in the amount of $64,450: see ex. H to Ms. Muller’s Form 23C affidavit. Total net arrears of child and spousal support are therefore fixed in the amount of $156,873 ($221,323 - $64,450). So ordered.

[68] As requested by the Respondent, ongoing spousal support is fixed and payable at the rate of $1.00 per annum.

(c) Is the Respondent entitled to a vesting order in respect of the matrimonial home and/or an order for the sole conduct of the sale of the home?

[69] The Respondent argues that the Applicant’s share of the net equity in the home should be vested in her in order to satisfy all or part of his spousal support obligation. In her factum, the Respondent states that the Applicant is ungovernable and that he has hidden assets and income with the intention of being “unaccountable to the Respondent”.

[70] I have jurisdiction to make a vesting order pursuant to s. 100 of the Courts of Justice Act[^4] which states that I “may by order vest in any person an interest in real or personal property that the court has authority to order be disposed of, encumbered or conveyed.” As stated in Lynch v. Segal, 2006 CanLII 42240 (Ont. C.A.), I may vest property in order to enforce a court ordered obligation otherwise incapable or difficult to comply with:

As a vesting order -- in the family law context, at least -- is in the nature of an enforcement order, the court will need to be satisfied (as the trial judge was here) that the previous conduct of the person obliged to pay, and his or her reasonably anticipated future behaviour, indicate that the payment order will not likely be complied with in the absence of more intrusive provisions: see Kennedy v. Sinclair, 2001 CanLII 28208 (ON SC), [2001] O.J. No. 1837, 18 R.F.L. (5th) 91 (S.C.J.), affd 2003 CanLII 57393 (ON CA), [2003] O.J. No. 2678, 42 R.F.L. (5th) 46 (C.A.). Thus, the spouse seeking the vesting order will have already established a payment liability on the part of the other spouse and the amount of that liability, and will need to persuade the court that the vesting order is necessary to ensure compliance with the obligation.

[71] In light of the residency of the Applicant in a jurisdiction or jurisdictions which are not reciprocal with Ontario, the enforcement of the child and spousal support is problematic at best. The Applicant has also concealed his location, his income and assets. Therefore, and considering the historical difficulties in obtaining cooperation or disclosure from the Applicant, the support obligation which I have ordered is, in my view, unenforceable except through the equity in the home belonging to the Applicant. Based on the evidence that I have heard, I have no difficulty in making a finding that the Respondent has met her onus of proving that a vesting order is necessary in order to enforce the support obligation herein. There shall be an order vesting the Applicant’s interest in the matrimonial home in the Respondent in order to satisfy part or all of the arrears of child and spousal support as fixed by me in this judgment.

[72] The major problem is not the vesting order itself, but determining how the within vesting order will affect the arrears of support in this matter. It is difficult if not impossible to determine the value of the Applicant’s net equity in the home. The Respondent has filed evidence that the home has a value of $598,000; that is set out in the MPAC Property Assessment notice filed by the Respondent at trial and which I accept as a reasonable value of the home. Subtracted from this would be the amount of the first mortgage on the property, being the Mortgage and the Line of Credit in favour of RBC; those had together a total amount outstanding of $270,286.75 on July 31, 2007; that had been reduced by December 31, 2011 (soon after the assistance from the Applicant ceased in August, 2010) to $261,339.21. Using that figure, the equity in the home is $336,660.79 ($598,000 - $261,339.21) and the Applicant’s one half share of this amount is $168,330.39.

[73] The one amount that remains to be quantified, however, is the lien against the Applicant’s interest in the property which was $80,025.73 on January 17, 2006 when it was registered. Because this was a debt in the name of the Applicant alone, Ms. Muller has no way of obtaining a discharge statement respecting this amount until and unless the property is being sold and a discharge statement required. Presumably, however, and based upon the actions of the Applicant to date, he has paid nothing on account of these outstanding taxes, and the amount has been bearing compound interest since 2006. It is impossible to speculate what amount is presently outstanding on this lien, but it may have severely diminished any equity that the Applicant has in the property depending on the interest calculation imposed by CRA.

[74] The Respondent is intent upon selling the home, and based upon the vesting order, the home may be sold at the option of the Respondent. It is also, however, up to the Respondent to register the within vesting order; by doing so, she may be accepting liability under the CRA lien noted above and she may accordingly elect not to register this order. Accordingly, I must provide for terms of the sale of the home which may apply in the event that the vesting order is not registered and the home sold. Accordingly, upon the Respondent electing to sell or dispose of the matrimonial home, it will be sold according to the following terms:

i. Whether or not the vesting order is registered transferring the Applicant’s interest in the home to the Respondent, she will have sole conduct of the sale of the home, and shall be entitled to do the following:

1. She may sign all documentation concerning the sale of the home including any listing agreements, agreements of purchase and sale and all documentation necessary to complete the sale of the home;

2. She may request and obtain discharge statements in respect of any encumbrances registered against the matrimonial home, whether in her name or not; and

3. The timing of the sale of the home is in the sole discretion of the Respondent;

ii. The consent of the Applicant to the listing or sale or transfer of the home under Part II of the Family Law Act is dispensed with;

iii. Upon the closing of the sale of the home, the net proceeds of the home shall be paid to the Respondent with the Applicant’s one half share of the proceeds of the sale net of real estate commission, legal fees, any mortgages or encumbrances against the home or the Applicant’s interest in the home as well as any amounts outstanding under any writs of execution against the Applicant to be credited against any and all support arrears owing under this order;

iv. In the event that there is an excess of net proceeds beyond that owing for arrears of support hereunder, that excess shall be paid into court and the Applicant will be forthwith notified of the payment of these funds into court;

v. The solicitor’s report on the sale of the property shall be forwarded to the Applicant which report shall include the statement of adjustments concerning the sale and the solicitor’s trust statement showing funds received and disbursed;

vi. The Respondent shall advise and provide any evidence necessary for the Director of the Family Responsibility Office to determine outstanding arrears after the application of the net proceeds to the support as set out above.

Order

[75] There will therefore be a final order to go as follows:

a. Notwithstanding the releases in the separation agreement, there shall be an order for retroactive and ongoing spousal support;

b. Arrears of child and spousal support owing by the Applicant to the Respondent are fixed in the amount of $156,873;

c. The Applicant shall pay ongoing spousal support in the amount of $l.00 per annum;

d. The arrears will be satisfied, in part, through the vesting of Mr. Bargout’s interest in the matrimonial home into the name of Ms. Muller;

e. Upon the Respondent electing to sell the matrimonial home, it shall be sold on the terms set out in para. 74, above;

f. Upon the filing of the affidavit as required under Rule 36, the Respondent may obtain a divorce on an uncontested basis.

g. The Respondent’s claim for equalization of property shall be adjourned sine die.

[76] Ms. Muller is entitled to her costs of this proceeding. In paragraph 39 of the Form 23C affidavit, she states that she is content with costs of $6,000 but that does not take into account, presumably, the costs of preparation for and attendance at the hearing on November 29, 2012. If the Respondent is only seeking $6,000 in costs, I will endorse that upon receipt of correspondence to that effect from Ms. Paterson; otherwise, I will require a bill of costs and costs submissions to be provided to me within 10 days of the date of this order.

[77] A copy of this endorsement shall be served on the Applicant pursuant to the order for substitutional service made in this proceeding.

McDERMOT J.

Released: January 2, 2013

[^1]: R.S.C. 1985, c. 3 (2nd Supp.) [^2]: O. Reg. 144/99 [^3]: SOR/86-600 [^4]: R.S.O. 1990, c. C.43