NEWMARKET
COURT FILE NO.: FC-11-038473-00
DATE: 20130916
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ALEKSANDRA MALUSHAJ, Applicant
AND:
HYSNI MALUSHAJ, Respondent
BEFORE: THE HON. MADAM JUSTICE S.E. HEALEY
COUNSEL: B. Tseitlin, for the Applicant
E. Gamus, for the Respondent
HEARD: August 22, 2013
Endorsement on Motion
Nature of the Motions
[1] In her motion the applicant seeks an order imputing an annual income to the respondent of $65,596, an order for child support for their two children in the amount of $975 per month, and an order for spousal support in the amount of $1,046 per month, both support orders to commence on January 1, 2013.
[2] In his motion the respondent seeks an order imputing an annual income to himself and to the applicant of $26,000 each, and an order requiring him to pay child support in the amount of $386 per month in accordance with the Guideline table amount based on such amount. He further seeks an order that all section 7 expenses that are agreed upon in writing be shared on a 50/50 basis, an order that he no longer be responsible for providing for a car for the applicant, an order permitting the release to him of monies held in trust from the sale of 123 Burndale Road, Toronto, an order restraining the applicant from depleting her property, and an order lifting the non-dissipation order made against him.
Background facts
[3] The applicant is 50 and the respondent 49 years of age.
[4] The parties had a marriage lasting close to 10 years, having been married in July 2001 and separating in February 2011.
[5] They have two children, Adrian, born February 2, 2004 and Tristan born December 6, 2006.
[6] Tristan has been under the care of a paediatrician, having been diagnosed as having severe development delays. In a consultation note from July 2011, the physician describes Tristan as having significant speech delay as well as poor social skills and fine motor skills, making everyday life difficult and his school performance poor. In addition, he is described as having significant behavioural issues in social environments such as school, which does not allow him to thrive or perform up to age appropriate levels. Tristan underwent a developmental assessment in the fall of 2012 and was diagnosed with Autism Spectrum Disorder with delays in several areas of development. He is entering grade 2 this month in a special needs program.
[7] Pursuant to a final order made on consent, the applicant has sole custody of the children and the respondent is to exercise access each Wednesday from 6:00 to 8:00 p.m., and on alternating weekends from Fridays at 6:00 p.m. to Sunday at 6:00 p.m..
Imputation of Income
[8] The respondent’s income, both currently and during the marriage, is comprised of three sources. One is rental income from investment properties, and another is income from a car wash and detailing business operating under the name Madison Auto Groom. It operates from the garage of three office buildings including the Madison Centre in Toronto. The respondent is the business owner and sole employee, and travels between locations during the week. His last source of income is from working as a building superintendent, where he works on alternate weekends. His material indicates that he now earns approximately $10,000 per year from this source.
[9] The respondent takes the position that his income for child support purposes is $26,000, but has also asserted that it is typically $20,000. The applicant points to several indicators of greater income. First is the fact that his financial statement shows expenses of $40,000 per year, which does not include the court ordered payment to the applicant of $250 per week. Accordingly, his real expenses, she asserts, total $53,000 per year, leaving $33,000 unaccounted for. Grossed up, this figure is $65,596, which is the income that she asks to have attributed to the respondent. She asserts that a large portion of the respondent’s income is cash earned through Madison Auto Groom. She also argues that his personal credit facilities have only increased $10,000 over a period of two years since the separation. Although all disclosure requests have now been satisfied, she deposes that financial disclosure from the respondent was delayed and initially inadequate. Finally, she argues that the respondent could not have amassed the assets that he has acquired on his stated income.
[10] With respect to her own income, although the applicant is an aesthetician she states that she has not worked in that capacity, or any other paid capacity, since 2006. Further, she takes that position that she is not able to pursue employment of any sort because of the demands placed on her by Tristan. One of the difficulties she is having with him is that he refuses to take his lunch at school, according to the applicant, unless she is present to give it to him. Because of his needs and medical appointments, she is not able to be available either to an employer or to pursue her own clients. Additionally, she alleges that the respondent is not reliable when it comes to access, either returning the children earlier than scheduled or not exercising access at all, so that her own availability becomes further compromised. She deposes that her 2012 income was $1,200 comprised solely of the child care benefit plus $409 from RRSP income.
[11] The respondent disputes these allegations, and states that the applicant has worked both in and out of the home as an aesthetician, both pre-and post-separation. He does not provide evidence to support his claim that she continues to earn money from this source, and in fact deposes that she stopped working even before the separation. He argues that the amount of support being requested by her does not cover her monthly living expenses, so that she must have an extra source of income. Additionally, after their separation she purchased a home for $598,000 with a mortgage in the amount of $388,000, on which she is required to make monthly payments of almost $2,500 (including taxes and insurance). That being the case, he argues that she must have financial security from some source not being disclosed. Although ordered to do so, she has not yet produced the application that she provided to the bank to secure the financing for her present residence. The respondent asserts that the applicant is capable of working and should be required to contribute to the family’s finances.
[12] With respect to his own income and the funding for the assets accumulated during their marriage and after separation, the respondent has provided an analysis prepared by Marnie Silver of SF Valuations Inc. (the “Silver Report”). He spent $30,000 for the report, as he found that it was necessary in order to refute the applicant’s ongoing allegations that he earns a much higher income than his actual income. He relies on this report on this motion to explain his financial position. He also states that he has been assisted by his mother, who has provided him with a loan of $76,000. The respondent’s evidence is that $36,000 of this has been loaned since separation, and offers a T4A(OAS) as evidence that $25,607.66 came from his mother’s Old Age Security supplement in 2011. No other loan documentation has been provided.
[13] The respondent’s line 150 total income has historically been declared to be as follows:
2007 - $28,272
2008 - $4,456
2009 - $13,555
2010 - $18,039
2011 - $15,961
2012 - $20,572
[14] With these income figures, the respondent qualified for a mortgage in the amount of $334,750 in relation to an investment property in 2007 (the “Burndale Property”). While still owning the Burndale Property, he then qualified for a $400,000 mortgage for the matrimonial home in 2010, and a refinancing in 2011 that increased that same mortgage by $104,000. The Burndale Property was sold in July 2011. While still owning the matrimonial home, in June 2011 he also obtained a mortgage in the sum of $440,990 for another investment property (the “Golden Orchard Property”). The purchase price of these properties was as follows: Burndale Property - $$515,000; matrimonial home - $637,060; Golden Orchard Property - $542,951.
[15] The respondent has produced his application to TD Canada Trust dated May 16, 2011, to obtain the mortgage for the Golden Orchard Property, on which he declared a combined gross annual income of $68,000 from Madison Auto Groom and rental income. That application also reveals that he had secured liabilities of approximately 936,500, and credit card and consumer debt of approximately $50,000 in May 2011.
[16] The respondent has provided two financial statements during this proceeding, the first sworn January 16, 2012 and the second sworn on July 26, 2013. In the 2012 financial statement, he has listed his debts as being $766,063 on the date of separation, and $762,300 in January 2012. In July 2013 his total debt is listed as being $607,539, the reduction the result of the disposition of the matrimonial home and the Burndale property. These amounts do not include his Scotiabank business Visa debt, which increased from $12,983 on the valuation date to $26,970 in July 2013.
[17] The respondent’s evidence is that he charges $20 per vehicle for an exterior cleaning and $30-$40 for interior, that he does not get tips, and that on a very good day he can have 10 clients, but averages about 5 per day, mostly exterior. Based on these calculations he would earn $650 per week or $31,200 annually before expenses. He states that he does not receive anything but small amounts of cash, and has accounted for that amount. He denies having undisclosed income. The Silver Report confirms that his average income is $26,000 per annum (two-year average for 2011 and 2012). The applicant has not provided a critique of the report.
[18] The Silver Report also details how the respondent was able to finance the purchase of his properties, which was equity financing and not dependent on his income. It also states that the respondent has been living on credit, which is how he has been able to fund his living expenses. These monthly expenses include $1,083.33 for child support, and $524 for the applicant’s vehicle lease and insurance.
[19] The information provided to Ms. Silver and on which she based her report was provided by the respondent, including the cash income received, without audit or verification other than the following. SF Valuations Inc. leases space within the Madison building, and Ms. Silver’s report indicates that the creators of the Silver Report “held discussions with staff members which independently supported information provided by Mr. Malushaj”. The respondent himself identified those customers from whom he receives cash (14 in total), and estimated that $1,860 of cash was not included in his 2012 statement of business activities. The Silver Report increases that sum to $2,500 for reasons stated in the report as “to allow for possible additional customers”.
[20] The Silver Report notes that the respondent comingled his personal and business accounts. In order to examine the relationship between revenue, expenses and debt, Ms. Silver reviewed all of his bank and credit card statements for 2011 and 2012, and found a correlation between the amount of excess spending and the increase in debt in these two years. As the Silver report shows, the minor debt increase shown in the respondent’s financial statement is inaccurate, and supports the conclusion that he has been funding most living expenses through borrowing.
[21] The income of $68,000 shown by the respondent on his credit application of May 2011 is consistent with the gross income estimated in the Silver Report, which determined that his income was approximately $69,000 in 2011 and $58,000 in 2012. As stated above, this is a case where the debt has been demonstrated to have risen since separation as the respondent has attempted to meet his obligations. More importantly, at the time of separation the respondent owed debts, some of which he was jointly obligated on such as the matrimonial home, of over $900,000. From the evidence presented on this motion, the respondent has satisfied me that his income is modest, and that he has maintained the monthly payment of expenses through borrowing. This appears to be the case both before and since separation. Further, his acquisition of real estate, and the financing for it, is shown in the Silver Report as resulting from prudent investment, market increase and equity lending. And it is noted that when Mr. Malushaj was able to pay $170,000 in cash funds toward the acquisition of the parties’ first home, he was 39 years old and had had no dependants prior to that date.
[22] In summary, I accept the analysis in the Silver report for the purposes of this motion and impute income to Mr. Malushaj of $26,000 per annum for the purpose of his child support obligations.
[23] I do not reach the same conclusion with respect to the applicant. The best evidence provided by Mr. Malushaj is that she continued to work part-time after Tristan was born at Rosa’s Spa in Oakville, and that she also worked from home and was paid cash. There is no detail about how long she sustained this work, other than that her decision to stop working occurred prior to the separation. She now has the primary responsibility for a child with special needs, and because of whom a regular workday is not currently feasible. Although Mr. Malushaj has offered to spend more time with the children so that she is free to work, he is the primary income earner for income much needed by this family, and his failure to exercise his three weeks of summer access belies his offer to be more available to give assistance. This is not to say that Mrs. Malushaj has no obligation to be earning income, but any job will have to be one that can be flexible enough to be carried out within the few hours that she has available to her each day. She offers no sound reason why she cannot carry on a home-based business, or do part-time or occasional contract work for a spa, and she shows no proof that she has attempted to undertake such endeavours. But Mr. Malushaj has not shown proof that she has ever earned $26,000, and such figure is in my view unrealistic given her constraints. At this temporary stage, given that I have no proof from either party as to the likely level of income for the applicant, I am not prepared to impute income to her, although a trial judge may do so retroactively with better evidence, particularly of her attempts to secure employment or income. Her purchase of an expensive property, and the assumption of such a large mortgage also suggests one of two things: she has no sense of Mr. Malushaj’s real financial picture, or she has additional income available to her. At this stage she is being given the benefit of the doubt.
Quantum of Child Support
[24] The applicant seeks an order for table support in the sum of $975 per month based on an imputed income of $65,596, commencing January 1, 2013. Based on my determination of the respondent’s income as $26,000 for 2012, the Guideline amount of support that he is required to pay is $386 per month, to commence January 1, 2013.
Spousal Support and Car Payments
[25] The applicant seeks an order for spousal support in the sum of $1,046 commencing January 1, 2013. Based on my findings that the husband’s income is $26,000, the Spousal Support Advisory Guidelines indicated that she may be entitled to an amount in the range of $0 to $161, for an indefinite (unspecified) duration, subject to variation and possibly review, with a minimum duration of 5 years and a maximum duration of 12 years from the date of separation.
[26] While she is in need of a much greater amount than that recommended, I am unable to find that the husband has the means to pay beyond the high end of the range. Commencing January 1, 2013, the spousal support paid will be $150 per month.
[27] Mr. Malushaj also seeks an order permitting him to cease payments for the applicant’s car. I am satisfied that to terminate such order would leave the applicant in a very difficult position with two children in her care. However, in recognition that she should be working towards contributing to both her own and the children’s financial needs, I am ordering that Mr. Malushaj be required to continue such payments for a further six months, with his obligations in this regard ceasing with the last payment made to cover the month of February 2014.
Section 7 Expenses
[28] Based upon the parties’ imputed incomes, their respective share of s.7 expenses is 95% and 5%. Neither party should be committing the other to payment of significant expenses without the consent of the other given their modest incomes, but all reasonable expenses that properly fall within the ambit of s.7 of the Guidelines that are agreed upon in advance in writing shall be shared on the above proportionate basis, the consent of each party not to be unreasonably withheld.
Non-dissipation Order
[29] McDonald & Partners LLP is currently holding in trust the sum of $170,000 from the Burndale Property.
[30] The applicant received the entire proceeds of sale of the matrimonial home, in the amount of $440,193 net of disbursements. Approximately one-half of this amount was used for the purchase of her new home, and the other amount was placed in a bank account and she states that she has been using it for living expenses.
[31] The applicant’s calculations appear to be based upon a claim, not yet formally made in this proceeding, that she has a trust interest in the Golden Orchard Property. The basis for such a claim is not apparent to the court at this time, and in any event has not presently been pled.
[32] Based on the Net Family Property calculation presented by the respondent, it is possible that the applicant has been overpaid on any equalization payment. I reach this conclusion even after taking the personal loans claimed by the respondent out of the equation, and reducing his premarital GICs to $68,000, being the figure for which it is admitted that proof exists. The only way that the respondent may recover some of those monies overpaid will be from the equity in the applicant’s current home. Accordingly, I am making an order that the applicant be restrained from further encumbering or otherwise depleting the equity in her property. If she is required to sell her home as a result of this order, the net proceeds shall remain in trust until the parties agree upon their use, or further order.
[33] The funds currently held in trust shall be released to the respondent, after payment of the orthodontic costs referred to in the Consent executed by the parties on February 20, 2013, but the non-dissipation order as it relates to him will otherwise remain in place.
Orders
[34] This court orders:
The respondent shall pay child support to the applicant for the two children of the marriage in the amount of $386 per month commencing January 1, 2013, based on the respondent’s 2012 income of $26,000.
The respondent shall pay spousal support to the applicant in the amount of $150 per month commencing January 1, 2013.
Proper s. 7 expenses agreed upon by the parties in writing in advance, the consent of each not to be unreasonably withheld, shall be shared on the proportionate basis of 5% and 95%.
The respondent shall pay all expenses associated with the applicant’s vehicle, including necessary maintenance, for a further six months, with his obligations ceasing after February 2014.
The applicant shall be restrained from further encumbering or otherwise depleting the equity in her real property. If she is required to sell her home as a result of this order, the net proceeds shall remain in trust until the parties agree upon their use, or further order.
The funds currently held in trust by McDonald & Partners LLP shall be released to the respondent, after payment of the orthodontic costs referred to in the Consent executed by the parties on February 20, 2013, but the non-dissipation order as it relates to him will otherwise remain in place.
Costs
[35] If the parties are unable to agree upon costs they may make brief submissions in writing not to exceed 2 typed pages, plus any offers, authorities and cost outlines that they wish to rely upon. The respondent’s submissions are due by September 27, the applicant’s by October 4, and any reply by October 9, to be submitted to the office of the Family Court judicial secretary in Newmarket.
HEALEY J.
Date: September 16, 2013