SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Pathmalingam Panchalingam, Applicant
AND:
Surajee Pathmalingam, Respondent
BEFORE: Justice Croll
COUNSEL: B. Jesudasan, for the Applicant
Surajee Pathmalingam, self-represented
HEARD: May 27, 28, 29, 2013
REASONS FOR JUDGMENT
Background
1The Applicant, Pathmalingam Panchalingam, and the Respondent, Surajee Pathmalingam, were married on February 26, 1993 in Sri Lanka. They separated on October 29, 2006. They have three sons, Garshen, born August 6, 1994 and currently 18 years old, Rehann, born October 19, 1997 and currently 15 years old, and Aruxshen, born January 5, 2001 and currently 12 years old.
2The children have lived with the Applicant since May 2007. Pursuant to an order of Justice Sherr of the Ontario Court of Justice, dated February 24, 2010, the Applicant was granted sole custody of the three children. Pursuant to another order of Justice Sherr, dated June 15, 2011, the Respondent is to have access to the two younger sons twice monthly, or as agreed upon, to be supervised by and arranged through Judy Piccione, a friend of the Respondent. It appears that the Respondent does not exercise access on a regular basis. According to the Applicant, the Respondent last saw the two younger sons on October 19, 2011, the day of Rehann’s birthday. The Respondent also occasionally meets her eldest son Garshen at a local mall.
3The Applicant has lived in the matrimonial home since separation in late October 2006. There are liens on the home, which are discussed below. The Applicant seeks an order that the amount of the liens be paid from the Respondent’s share of the home.
4The Applicant also seeks retroactive and ongoing child support and proposes that retroactive support be satisfied by a transfer to him of any remaining interest which the Respondent may have in the matrimonial home.
5The Respondent seeks spousal support.
The Matrimonial Home
6The parties purchased the matrimonial home at 20 Bon Echo Court in Toronto as joint tenants in March 2003 for a purchase price of $272,769. At that time, there was a mortgage in favour of ING Mortgage Broker Services Inc. for $213,742.50.
7On March 18, 2010, a Writ of Seizure and Sale of Lands was issued by the Superior Court of Justice against the home in favour of the Toronto-Dominion Bank. This Writ was based on an amount owing of $10,036.61 together with interest of $1,589.63 to March 18, 2010, and accruing daily thereafter.
8In March 2011, Legal Aid Ontario advised that it placed a lien on the home in the amount of $19,210.50.
9These two encumbrances were unknown to the Applicant. His evidence was that he only became aware of the Toronto-Dominion debt when he came home from work one day and found the letter on his door from the Bank’s agent indicating that he would be evicted and the house sold unless the matter was resolved. He had no knowledge of the Legal Aid lien before March 2011. As a result, the Applicant brought a motion to this court, and on April 26, 2011, Perkins J. ordered, among other things, that:
i. The matrimonial home at 20 Bon Echo Court vest in the Applicant, subject to further order;
ii. The Applicant discharge all existing charges, liens and encumbrances and place a new first charge on the home not exceeding $225,000; and,
iii. The Applicant deposit all proceeds of the new first charge after payment of existing charges, liens and encumbrances, and costs of registration of the new charge and the order, in a separate interest bearing account to be held by his lawyer.
10The Applicant refinanced the home as ordered by Perkins J. He obtained a new mortgage from the Toronto-Dominion Bank in the amount of $225,000 and paid off the existing first mortgage to ING Direct in the amount of $168,450.67. The Applicant paid the debt owing to the Toronto-Dominion Bank, which had been settled at $10,000. He also paid the lien to Legal Aid Ontario and the legal, registration and other costs of the refinancing. This left equity of $20,327.77 to be held in trust by the Applicant’s lawyer. The details of the refinancing are as follows:
Received from 1st mortgagee – the Toronto-Dominion Bank $225,000.00
Paid to discharge previous 1st mortgage – ING Direct
- $168,450.67
Paid to discharge the liens – Legal Aid Ontario
- $19,491.14
Paid legal fees and disbursements
- $3,622.92
Paid broker fee
- $ 3,107.50
Paid to line of credit and loan from the Toronto-Dominion Bank
- $ 10,000.00
Balance in separate interest bearing account = $ 20,327.77
11Subsequently, the Legal Aid debt was renegotiated and reduced by $4,000, and this amount is also being held in an interest bearing account by the Applicant’s lawyer.
12There is no issue that the lien registered by Legal Aid Ontario related to legal aid services rendered to the Respondent. Although the Respondent appeared to suggest that it was the Applicant who withdrew the funds from the Toronto-Dominion Line of Credit, there is no evidentiary basis to support this suggestion. The Writ of Seizure and Sale is in the name of the Respondent alone. The order directing the Sheriff to seize and sell the home was made on December 1, 2008. While her evidence was not clear, the Respondent seemed to know that the Line of Credit was in default in 2008 or 2009, but her position was simply that she had no money to pay it and thus took no steps to deal with it. I am satisfied that the Toronto-Dominion lien related to a line of credit that was used solely by the Respondent.
Equalization of Net Family Property
13The matrimonial home is the most significant asset that the parties had at the time of separation.
14Besides his interest in the home, the Applicant has a business, Top Quality Diaper Inc. This business was valued by a business analyst at Public Business Accounting Services Inc. who determined that its value as at the date of separation was $9,500 and that as at April 10, 2013, its value had fallen to $4,500.
15The Applicant asserts that the Respondent has some $20,000 of jewellery that he gave to her at the time of the marriage. On this issue, I accept the evidence of the Applicant that she does not have this jewellery; rather, that she left the home and went directly to a shelter with the children and took nothing from the home.
16There was no valuation day value prepared for the matrimonial home, although there was a valuation that valued the home at between $330,000 and $340,000 as at February 9, 2011. As indicated, the purchase price in March 2003 was $272,769. When the 2003 purchase price and February 2011 mid-point value of $335,000 are compared, it shows an annual appreciation of approximately $7779 per year. Using this annual appreciation, the Applicant has valued the matrimonial home at the date of separation in October 2006 at $296,106. The Respondent asserts that the value on valuation day was $330,000, which is the value in February 2011, more than four years after separation. In my view, the Applicant’s value is the more rational amount and is the one that should be used in calculating net family property on the valuation date.
17I have used the value of $296,106 for the home and accepted the other values on the Applicant’s Net Family Property Worksheet (included in the Applicant’s Exhibit Book), except for the $20,000 jewellery figure attributed to the Respondent. This calculation results in an equalization payment owing from the Applicant to the Respondent of $52,679.77, before considering the Applicant’s claim for an unequal division.
Unequal Division
18The Applicant submits that no equalization should be paid and that the home should be vested in him absolutely. His position is two-fold: the circumstances merit an unequal division pursuant to section 5(6) of the Family Law Act, R.S.O. 1990, c. F.3 and the only means by which an order for child support can be satisfied is through a transfer of the Respondent’s interest in the matrimonial home to him.
19Section 5(6) allows for an unequal division of net family property if it would be unconscionable to equalize the net family properties, having regard to a number on factors set out in s. 5(6). The party asserting unconscionability has the heavy onus of proving that equal division would “shock the conscience of the court”: Serra v. Serra, 2009 ONCA 105, [2009] O.J. No. 432, at para. 47, and cases cited therein. In this case, the Applicant relies on s. 5(6)(d), “the spouse’s intentional or reckless depletion of his or her net family property”, and s. 5(6)(f), “the fact that one spouse has incurred a disproportionately larger amount of debts or other liabilities than the other spouse for the support of the family”.
20There is no issue that, since separation, the Applicant has paid all the household expenses, and that since the boys came to live with him in May 2007, he has paid all the family expenses. The Respondent has made no contribution to the mortgage or to any expenses in relation to the home in which her sons reside, such as food, laundry or cleaning. She has not paid any child support or contributed to any other expenses of the children, such as their soccer fees or the eldest son’s college expenses.
21The Applicant’s evidence was that he has loans and credit card debt in excess of $120,000 and a very low credit rating. His financial statement shows personal debt in the amount of $14,000 in addition to the mortgage liability. The business valuation evidences significant corporate liabilities and shows that the business is running at a loss and barely viable, which the Applicant attributes, at least in part, to being unable to compete with the large, big box stores. The Applicant is trying to run a small business in order to support his family and has incurred significant debt. The Respondent indicates that she too has debts, and while I accept that her financial situation is difficult, her financial statement filed June 20, 2011 does not indicate any debts or liabilities. I also note that the Respondent travelled to Sri Lanka for two weeks in 2010. She testified that the cost of the ticket was $1,600 and that she borrowed this money from friends.
22The test for unconscionability is a high one and, as stated in Serra v. Serra at para. 58:
There is no principled reason that I can see, given the language of the Act and its purpose or objects, to confine the word “unconscionable” in s. 5(6) only to circumstances arising from fault-based conduct on the part of one of the spouses. Although unconscionable conduct is obviously an appropriate consideration in determining whether equalizing the net family properties would be unconscionable, in my opinion the true target of the limited exception to the general rule is a situation that leads to an unconscionable result, whether that result flows from fault-based conduct or not. [Emphasis in original.]
23In this case, I do not find that the Respondent’s act of incurring the Legal Aid Ontario lien or the Toronto-Dominion debt was an intentional or reckless depletion of her net family property. This is not a case like R. (A.) v. R. (H.), 2000 CarswellOnt 4844, where Olah J. found that the wife had recklessly depleted the family assets by squandering over $14,000 in bingo over a four year period: see also Laing v. Mahmoud, 2011 ONSC 4047, [2011] O.J. No. 3060, at para. 84.
24The evidence establishes that the Respondent was in rather desperate circumstances after separation, working shifts at Tim Horton’s and relying, in part, on the generosity of her friends and her church to meet her basic needs. She needed to borrow money for necessities of life, and she needed the assistance of Legal Aid to address the custody issues arising from the marriage breakdown.
25These debts, however, are the Respondent’s alone, and despite being aware of her obligations, the Respondent failed to take any steps to deal with them. This is especially the case with the respect to the Toronto-Dominion loan. The Respondent was apparently aware of this debt in 2008 or 2009, yet her failure to take any responsibility for the loan allowed the situation to escalate such that the family home – the home in which her three sons live – was in jeopardy. It was only because of the Applicant’s motion to refinance that a loss of the family home was avoided.
26In my view, the Respondent’s indifference and unresponsiveness to the servicing of her debts, leading to the situation where liens were imposed and the home was at risk, constitute reckless depletion of her net family property.
27The Respondent also demonstrated a failure to take responsibility with regard to child support. She owes $27,180 on account of retroactive child support from May 10, 2007 to May 13, 2013. Her position is that because she earns only about $19,000-$20,000 per year, she does not need to pay child support. This is despite the fact that both parents have an obligation to support their children, and despite the fact that she continued to benefit from the child tax credit of about $6,200 in the years 2007, 2008 and 2009, when she did not have custody of the children. Notwithstanding that she has not contributed to the mortgage or any other expenses, and that it is her debts that have reduced the equity in the home, the Respondent’s position is that she should share equally in the equity.
28I also find that the Applicant has done essentially all the parenting and paid for everything for the three sons, and in doing so, has incurred disproportionately larger debt than the Respondent. These post separation circumstances can be taken into account in considering whether an equalization would be unconscionable: Laing v. Mahmoud, at paras. 91-94. In this regard, I also note, as was stated in Davies v. Davies, 1988 CanLII 8664 (ON SC), [1988] O.J. No. 458, when considering grossly disparate contributions to the family unit, all contributions, not just financial ones, are germane. In this case, it is clear that the Respondent has made very little contribution to the lives of her sons since separation.
29In addition, section 5(6)(h) refers to “any other circumstances relating to the acquisition, disposition, preservation, maintenance or improvement of property”. In this case, it is only the Applicant who has maintained the family home since separation.
30Finally, I am mindful of s. 5(7) of the Family Law Act which states the purpose of equalization of net family properties as follows:
The purpose of this section is to recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6).
31When the Respondent’s apathy towards servicing her debts, and the risk that apathy has created, is considered together with the fact that the Applicant maintained the home, shouldered all child rearing and child rearing expenses, and assumed disproportionate liabilities in doing so, I am satisfied that pursuant to section 5(6), an equal division of net family property would be unconscionable.
32Accordingly, I find that the principal amount of the liens, together with the costs of discharging same, should be borne by the Respondent alone. This amounts to $32,221.56 (liens of $25,491.14 + costs of transfer and refinancing of $6,730.42). As such, her equalization payment is reduced to $20,458.21 ($52,679.77 - $32,221.56).
Child Support
Retroactive Child Support
33As stated, the Respondent has never paid child support. Pursuant to the Application dated May 25, 2010, the Applicant seeks retroactive child support from 2007 to date, in the amount of $27,180, based on the table amount for three children and the Respondent’s income of $21,662.06. This was the income figure provided by the Respondent in her June 2011 Financial Statement.
34As Bastarache J. stated in D.B.S. v S.R.G. 2006 SCC 37, [2006] 2 S.C.R. 231, at para. 97:
…I also want to emphasize that [retrospective awards] need not be seen as exceptional. It cannot only be exceptional that children are returned the support they were rightly due. Retroactive wards may result in unpredictability, but this unpredictability is often justified by the fact that the payor parent chose to bring that unpredictability upon him/herself.
35Parents have a free-standing obligation to support their children, beyond the obligation to provide mere necessities, commensurate with their income: D.B.S., at paras. 40, 48. The court confirmed that this obligation exists independently of any statute or court order and that retroactive child support can be ordered where there has not already been a court order for child support: D.B.S., at paras. 54 and 80. When there has not already been a court order for support, the court held at para. 80 that absent special circumstances, including hardship, it “becomes unreasonable for the non-custodial parent to believe (s)he was acquitting him/herself of his/her obligations towards his/her children.”
36I have considered the factors discussed in D.B.S., namely:
Whether there is a reasonable excuse for why the support was not sought earlier;
The conduct of the payor parent;
The circumstances of the child; and,
The hardship occasioned by the retroactive award.
37In this case, the Applicant sought retroactive support to May 10, 2007 in his originating Application. The Respondent simply ignored her obligations. The children do not appear to have suffered, although it is likely that extracurricular activities have been limited by the Applicant’s financial circumstances.
38While it is clear that the Respondent does not have the ability to pay the amount of $27,000 that is owed, a retroactive award will not impose any hardship on the Respondent because of how it will be satisfied. The Respondent’s share of the equity in the home is $20,458.21. In effect, an award of retroactive child support cancels any net family property entitlement of the Respondent. When all these circumstances are considered, I am of the view that retroactive child support is appropriate. It shall be satisfied in full by the transfer to the Applicant of equity in the house in the amount of $20,458.21, to which the Respondent would have otherwise been entitled.
39Given my findings, there is nothing owing by the Applicant to the Respondent on account of net family property. Accordingly, I make an order pursuant to s. 9(1)(d) of the Family Law Act that the property at 20 Bon Echo Court in Toronto be transferred to the Applicant.
Ongoing child support
40The table amount of child support for three children based on the Respondent’s income of $19,767 is $412 per month. That said, it is clear from the evidence of the Respondent and her friend Judy Piccione that the Respondent likely would struggle to meet her own needs and contribute this amount to her children.
41However, both the Respondent and the Applicant have an obligation to support their children. So far, the Applicant has assumed this burden alone, and it is a burden that will increase in time as it is anticipated that the two younger sons, like their eldest brother, will attend college or university after high school. It is unfair and contrary to established jurisprudence to require the Applicant to assume sole responsibility for their current and anticipated expenses.
42In my view, it is reasonable to order that the Respondent pay ongoing child support. The Respondent is ordered to pay child support in the amount of $200 per month commencing July 1, 2013 for the children Garshen, born August 6, 1994, Rehann, born October 19, 1997, and Aruxshen, born January 5, 2001. Given that the child support ordered is less than the table amount, it shall continue to be paid in the amount of $200 per month for the benefit of Rehann and Aruxshen, even after Garshen has completed his college program.
43These child support payments are to be enforceable through the Family Responsibility Office.
Spousal Support
44The Respondent seeks spousal support. As has been stated, she earns approximately $20,000 per year. The Applicant’s total income in 2011 was $30,000, his business is faltering and has a current value of only $4,500. His evidence is that if it fails, he will be forced to seek social assistance. The Applicant has assumed all expenses relating to the children and I have ordered that the Respondent pay less than one-half of the child support set out in the Guidelines on a going forward basis.
45Pursuant to s. 15.3 of the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.), child support takes priority over spousal support. While child support and spousal support are separate concepts, they are connected, as the priority of child support can lead to a reduction in the amount of spousal support that would otherwise be ordered, even to zero: see, for example: Coady v. Coady, [1999] O.J. No. 2305; Hewitt v. Hewitt, 2002 SKQB 35, 205 Sask. R. 149.
46While the Respondent has clearly demonstrated need for spousal support, in these circumstances, the Applicant has no means to support the Respondent. I find that the Applicant’s obligation to provide for his children takes primacy over his spousal support obligation to the Respondent.
Divorce
47Both parties seek a divorce. The evidence indicates separation occurred on October 29, 2006, and there is no reasonable prospect of reconciliation. Accordingly, a divorce order shall issue, and unless appealed, it shall take effect, and the marriage is dissolved, on the thirty-first day following the release of these reasons.
Conclusion
48Based on the above, there is nothing owing to the Respondent on account of net family property. The following orders are made:
i. The sum of $24,712.98 (together with interest accrued thereon) being held in trust by the Applicant’s lawyer shall be transferred to the Applicant;
ii. The retroactive child support of $27,712.98 shall be satisfied by the transfer of the Respondent’s share of equity in the home, $20,458.21, to the Applicant;
iii. The property at 20 Bon Echo Court in Toronto shall be transferred to the Applicant. The Applicant is entitled to transfer joint title of this property from the Applicant and Respondent as joint tenants to vest solely in the Applicant. The Applicant may sign all documents required to give effect to this vesting order on behalf of both himself and the Respondent, and without the consent of the Respondent;
iv. The Respondent is ordered to pay child support in the amount of $200 per month commencing July 1, 2013 for the children Garshen, born August 6, 1994, Rehann, born October 19, 1997, and Aruxshen, born January 5, 2001. Child support in the amount of $200 per month shall continue to be paid for the benefit of the sons Rehann and Aruxshen, even after Garshen has completed his college program;
v. The order for child support shall be enforced through the Family Responsibility Office; and,
vi. A divorce order shall issue, and unless appealed, it shall take effect, and the marriage is dissolved, on the thirty-first day following the release of these reasons.
Costs
49If the parties are unable to agree on the issue of costs, I will receive brief written submissions of no more than two pages in length, plus any Offers to Settle and Bills of Costs, from the Applicant within two weeks of the release of this decision; from the Respondent within a further two weeks; and with a five day right of reply to the Applicant.
Croll J.
Date: June 20, 2013