NEWMARKET

COURT FILE NO.: FC-10-35372-00

DATE: 20130801

SUPERIOR COURT OF JUSTICE – ONTARIO – FAMILY COURT

RE: Soledade Cardoso, Applicant

and

Adelino Cardoso, Respondent

BEFORE: The Honourable Mr. Justice C. Boswell

COUNSEL: Gordon F. Allan, for the Applicant

Fay A. McFarlane, for the Respondent

HEARD: July 31, 2013

ENDORSEMENT

[1] In this motion the applicant seeks interim exclusive possession of the matrimonial home, interim spousal support and interim disbursements of $60,500 to enable her to obtain experts’ reports on valuation issues. The respondent opposes all of the relief sought and in turn, seeks his own order for exclusive possession of the matrimonial home. I will address each issue in turn, beginning with the possession of the home.

Exclusive Possession

[2] The parties cohabited for 14 years. They formally married in December 2003 and eventually separated in 2010. The applicant claims the date of separation was in May 2010 and the respondent October 2010. The discrepancy does not affect any of the issues involved in this motion.

[3] The applicant is 58 years old. The respondent is 63. Each has been married before and each has adult children from their prior relationships. The respondent is a businessman and operates, amongst other businesses, a company that sells masonry and other building materials. The applicant is essentially a homemaker and has been, for all intents and purposes, supported entirely by the respondent throughout their cohabitation.

[4] Each of the parties has described in their affidavit material, a volatile relationship. The applicant asserts that the respondent is the source of the volatility and that he has been abusive – mainly verbally but sometimes physically – throughout their relationship. The respondent asserts that the applicant is the cause of the volatility and that she has a bad temper that erupts with regularity.

[5] The parties separated in 2010 after an incident that occurred while they were driving to their home in Queensville after a dinner out in Bradford. The applicant’s mother was with them. The applicant and respondent got into an argument. The respondent, according to the applicant, threatened to smash her face, then forced her and her elderly mother out of the vehicle, leaving them stranded on the side of the road at midnight. She called the police and reported the threat made against her. The respondent was charged with uttering a threat and removed from the matrimonial home. The respondent’s version of events is markedly different than that of the applicant, but it ends the same way: he is charged with uttering a threat and removed from the home.

[6] The utter threat charge was resolved in July 2010. The applicant asserts that the respondent entered a guilty plea and was placed on probation for a year. The respondent says that the charge was withdrawn and that he entered a peace bond for one year. In either case, there is no dispute that whatever the resolution, it involved a restraint against the respondent from attending at the matrimonial home for a year. Nevertheless, the respondent moved back to the matrimonial home a short time later.

[7] By October 2010 the parties’ relationship had deteriorated again. They began to live separate and apart in the same residence. The respondent again left the home in March 2011, but returned in July 2011 after the one year restraining provision ended. The parties continue to live in the home together to the present. Each seeks exclusive possession. Each agrees that the current living arrangements are intolerable and that one of them must go.

[8] In December 2012, the applicant’s adult daughter, Dorinda, arrived at the applicant’s doorstep with her three children, ages 12, 16 and 17. Dorinda had separated from her spouse and had nowhere to go. The applicant took her and the kids in. The respondent wants them out.

[9] The matrimonial home is a 100 year old farmhouse. It has two levels. The applicant, her 92 year old mother and her daughter share a room on the main floor. There are two bedrooms on the second floor that the grandchildren use. The respondent sleeps in the dining room, which has been converted to a bedroom.

[10] The matrimonial home is owned by a company owned by the respondent known as Lopes Holdings Limited. There is no dispute, however, that it is a matrimonial home and that the Court has jurisdiction to make an order for exclusive possession.

[11] The respondent is also the owner of a business known as Kar-Los McMurray Masonry Ltd., which sells landscaping, aggregate and building materials from a location on Yonge Street just outside of Bradford. The respondent is the registered owner of the lands on which the business operates. Adjacent to the business premises is a 4000 square foot residence, also on the lands owned by the respondent. At present, one of the respondent’s sons is the only occupant of that residence.

[12] Section 24 of the Family Law Act, R.S.O. 1990 c. F.3, as amended, provides the jurisdiction for an order for exclusive possession of a matrimonial home, regardless of its ownership. The Court is directed to consider the criteria set out in s. 24(3), but I do not read that section as being a limiting provision. In other words, there may be factors not enumerated in s. 24(3) that are relevant considerations.

[13] In this instance, both parties agree that the current living arrangements are entirely intolerable and that one of them must go. The respondent is in a far better position to be the one to go. His financial resources are vastly superior to those of the applicant. He has other accommodation readily available, which is immediately adjacent to his main place of business. An exclusive possession order in favour of the respondent would force not only the applicant, but her elderly mother, her daughter and three grandchildren from the home. Once it was agreed between the parties that one of them had to go, in my view there is only one reasonable, if not inevitable result. The respondent must vacate the home.

[14] In the result, I grant exclusive possession of the home and its contents to the applicant, effective August 3, 2013 at 5:00 p.m.

Spousal Support

[15] The matter of entitlement to spousal support is not in issue. Clearly the applicant has an entitlement. The only issue on this interim motion is quantum. The respondent has voluntarily been paying the applicant $300 per week. In addition, his company has been covering all of the expenses of the matrimonial home.

[16] The principal dispute surrounds the level of income earned by the respondent from his businesses. He claims his income is in the range of $53,000 per year. He has filed a report prepared by Grant Thornton, chartered accountants, which supports that level of income.

[17] The applicant urges the Court to impute income of at least $100,000 to the respondent.

[18] For the reasons that follow, I do not accept that the respondent’s income is limited to $53,000 and I impute to him an income of $100,000 for the purposes of establishing interim spousal support.

[19] The respondent owns significant assets. He is the sole owner of two parcels of land on Yonge Street near Bradford, from which Kar-Los McMurray Masonry Ltd. operates. One parcel has been appraised at $975,000. I have no evidence as to the value of the second parcel. He owns a third property in Bradford, at 87 Barrie Street, appraised at $337,000.

[20] He owns 100 percent of Lopes Holdings Inc. which, at March 31, 2010, had assets listed at $1.8 million.

[21] He owns directly or indirectly through Lopes Holdings Inc., Kar-Los McMurray, which at March 31, 2010 had assets listed at $1.3 million.

[22] He owns 50% of Adecar Properties, which in turn owns a 100 acre parcel of land valued at $750,000.

[23] He and the applicant are joint owners of a cottage in Orillia valued at $220,000 and which they made a downpayment of $50,000 towards when it was acquired in 2005.

[24] He owns, through Kar-Los Developments General Contractors, a parcel of land in Georgina valued at $43,000.

[25] Virtually all of his living expenses are paid through one or another of his companies.

[26] He receives $30,000 per year in rent from Kar-Los McMurray for the rental of the business premises. He receives $1,800 per month in rent from 87 Barrie Street.

[27] To be fair, there are mortgages against most of the properties in which he has an interest. Moreover, there are expenses incurred in earning rent from the properties in which he has an interest. In addition, it is clear that some of the values listed in terms of corporate assets are duplicated. For instance, Kar-Los McMurray lists assets of $1.3 million and Lopes Holdings Inc. lists assets of $1.8 million as at March 31, 2010. A significant part of Lopes Holdings’ assets are shares it owns in Kar-Los McMurray, so there is some overlap in terms of gross asset value.

[28] A fulsome picture of the respondent’s financial circumstances is not available at the time of this motion, given a lack of complete disclosure. The respondent, for instance, has not filed a financial statement in these proceedings since February 2011. The assessment of his income by Grant Thornton was not based on up-to-date income information.

[29] The respondent has not disclosed the existence of any personal bank account(s).

[30] He has two children working in Kar-Los McMurray but has not provided an indication of their wages, which may be very telling in terms of the amount of money he draws himself from that company.

[31] The standard against which disclosure is to be measured is reasonably well settled. The disclosure requirements of a party in Mr. Cardoso’s circumstances were described by Kitely J. in Meade v. Meade, 2002 2806 (ON SC), [2002] O.J. No 3155 (S.C.J.). at para 81,

It is inherent in the circumstances of those who are self-employed or who have irregular income and expenses, that they have a positive obligation to put forward not only adequate, but comprehensive records of income and expenses. That does not mean audited statements. But it does mean a package from which the recipient spouse can draw conclusions and the amount of child support can be established. Where disclosure is inadequate and inferences are to be drawn, they should be favourable to the spouse who is confronted with the challenge of making sense out of financial disclosure, and against the spouse whose records are so inadequate or whose response to the obligation to produce is so unhelpful that cumbersome calculations and intensive and costly investigations or examinations are necessary. (internal citations omitted)

[32] In the circumstances of this case, I draw a negative inference against the respondent in view of his incomplete disclosure. I appreciate that he has had an income valuation done, but that does not discharge his burden of providing fulsome and current source documents supporting his income and expenses. There is simply not enough information present upon which to conclude what the total income of the respondent is.

[33] I am satisfied that his acquisition and maintenance of an inventory of valuable real estate is not something that he would be capable of doing on an annual income of $50,000. A reasonable inference is that he earns significantly greater than $50,000 per year and that he has failed to disclose information that would enable the Court to accurately conclude what his real income is.

[34] The Court has the jurisdiction to impute income to the respondent. While this case involves spousal, not child, support, s. 19(1) of the Child Support Guidelines still provides helpful guidance about circumstances in which income ought to be imputed. Here, factors including: (1) the failure to provide fulsome income information; (2) the possible diversion of income; and, (3) the manner in which income is utilized for the respondent’s benefit through his corporate entities, all weigh in favour of imputing income to him.

[35] The quantum of income to be imputed is a difficult issue. There is insufficient evidence in the record on which one might reasonably say with any confidence that the respondent’s income is a particular amount, or even within a particular range. For the most part, the fault for this difficulty lies with the respondent, given the lack of fulsome disclosure. The applicant should not suffer because of disclosure shortcomings.

[36] In my view $100,000 is an appropriate figure to impute. There will inevitably be an element of arbitrariness in any amount imputed where the evidentiary record is so lacking. But the figure of $100,000 is not entirely arbitrary. It is clear to me that the respondent earns substantially more than he has disclosed as income. This figure can be adjusted upwards or downwards as the evidentiary record becomes more complete. It must be kept in mind that an interim support award is a temporary order only and inevitably imperfect. It is meant to provide “a reasonably acceptable solution to a difficult problem until trial”: see Chaitas v. Christopoulos, 2004 66352 (ON SC), [2004] O.J. No. 907 (S.C.J.) per Sachs J.

[37] Based on an income of $100,000 per year, the Spousal Support Advisory Guidelines suggest support in the range of $1,750 to $2,333 per month. The mid-point is $2,042 per month. Based on the fact that the respondent’s company is paying the carrying costs of the matrimonial home, and on the assumption that that arrangement will continue, given the ownership of the property, I am ordering the respondent to pay interim spousal support in the amount of $2,000 per month commencing September 1, 2013. Should the carrying costs of the home prove to be an issue of contention, the parties may return to Court on motion and the quantum of support may be revisited.

Interim Disbursements

[38] The applicant seeks $60,500 as interim disbursements, or an advance on an equalization payment, in order to obtain valuations of the respondent’s businesses, his income and his real estate holdings.

[39] Pursuant to Rule 24(12) of the Family Law Rules, the Court may order a party to pay an amount of money to another party to cover part or all of the expenses of carrying on the case. This is an extraordinary remedy to be exercised in special circumstances: British Columbia (Minister of Forests) v. Okanagan Indian Band, [2003] 3 S.C.R. 371, 2003 SCC 71.

[40] The Court also has the power to order an advance on an equalization payment. As Karakatsanis, J., as she then was, held in Laamanen v. Laamanen, 2005 50808 (ON SC), [2005] O.J. No. 5823, 25 R.F.L. (6th) 441, “the Court may use its discretion to do so where (1) there is a reasonable requirement for the funds; (2) there is little doubt that the person will receive an equalization payment of at least that amount; and, (3) it is just to do so in the circumstances, including the payor’s ability to pay.”

[41] Here, the respondent has obtained appraisals of his lands and a valuation of his income from experts. His counsel conceded that the valuation issues in this case are not ones readily resolved by common sense alone and that expert evidence will be necessary.

[42] There was some debate in oral argument about whether the experts retained by the respondent were jointly retained. I find that it is readily apparent that they were not.

[43] In the circumstances of this case, almost all of the net family property – which is considerable – is registered to the respondent or owned by companies controlled by him. The applicant’s only significant asset is her one-half interest in the cottage. There may not be significant equity in the cottage and, in any event, the respondent’s position is that he does not wish it to be sold at present.

[44] The respondent concedes in his Net Family Property Statement, that he will owe the applicant an equalization payment exceeding $300,000. He has the means to raise the funds sought by the applicant at this point to cover the cost of her experts.

[45] The applicant has not provided concrete evidence of the anticipated costs of the expert reports she wishes to obtain. In my view, however, the amounts anticipated, though conjectural, are not unreasonable. Moreover, the reasonableness of the quantum is less of a concern when they are characterized as an advance on an equalization payment, than when they are strictly an interim disbursement.

[46] At its heart this issue is about trial fairness, about levelling the playing field. The respondent has the means to retain experts and has done so. The applicant, absent an advance on the equalization payment owing to her, is without those same means and would be forced on to a trial without any of the expert evidence that the respondent’s counsel concedes will be necessary.

[47] In the result, I order that the respondent provide the applicant within 60 days, the sum of $60,500 as an advance on equalization.

[48] If the parties are unable to agree on the costs of this motion, they may address the issue in writing, on a 14 day turnaround. The applicant’s submissions are due by August 15, 2013 and the respondent’s by August 29, 2013. They should not exceed 2 pages in length and should be delivered via email through my assistant at jennifer.beattie@ontario.ca.

Justice C. Boswell

Released: August 1, 2013