Court File and Parties

Court File No.: FS – 12 - 379966
Date: 20130923

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Lily Ann McMillan Muruve, Applicant

AND:

Richard Gabriel Muruve, Respondent

BEFORE: Kiteley J.

COUNSEL:
Henry C.R. Krol, for the Applicant
Valois Ambrosino, for the Respondent

HEARD: August 27, 2013

ENDORSEMENT

[1] The Applicant brought a motion for temporary child support and a contribution to the children’s s. 7 expenses. The Respondent brought a motion dealing with custody, residential schedule and other relief.

[2] On July 23rd, Horkins J. had adjourned the motions on conditions. Counsel for the Respondent delivered an affidavit sworn August 23rd to which counsel for the Applicant objected. I agreed that, as a result of the timetable she imposed, paragraphs 33 – 35 of that affidavit ought not to have been included. I struck those paragraphs and I will consider that affidavit without reference to them.

[3] The parties were married on June 21, 2003. They have three children: Sofia and Jasmine born December 11, 2005 and Marc born July 1, 2009. The parties separated on May 24, 2011 at which time the children were 5½ years old and 2 years old. The parents agree that an order should be made for temporary joint custody. They disagree as to whether the children are primarily resident with the Applicant and as to the schedule of time that the children spend with their father.

[4] The Applicant asks that I impute income in the amount of $182,000 per year to the Respondent and then I fix temporary child support in the amount of $3072 per month retroactive to December 2012. In her notice of motion, the Applicant had also asked for an order for temporary spousal support. The parties have reached an agreement as to lump sum spousal support and accordingly the issue of temporary spousal support is no longer before me.

[5] The issue is the income of the Respondent. He has a Masters of Business Administration degree and he had been employed as a trader with the Bank of Montreal until 2004. In 2005, he accepted a position as a trader with another firm but was terminated after six months for non-performance. He did not receive any income from that firm. Since that position terminated, the Respondent has not been employed but has worked from a home office. Since 2006, the Respondent has been involved with Arch Biopartners (and its predecessor) and he is currently the CEO, Director and Co-founder of Arch Biopartners Inc., a publicly traded biotechnology company, established to develop products and technology to sell to pharmaceutical and industrial companies. The Respondent said that his inability to earn an income from Arch Biopartners is due in part to the Applicant’s refusal to move to Calgary or to the United States which would have brought him closer to the research and development team or the technology infrastructure in the company. The Applicant disagrees with that evidence.

[6] The Respondent is hopeful that his work with Arch Biopartners Inc. will provide an income in the future and that this investment of his time is the best option for generating income in the foreseeable future. The company undertakes research for cures for certain types of cancer. He takes the position that it has provided a meaningful and worthwhile career. He asserts that the Applicant was content for him to make a substantial investment of his time in Arch Biopartners and there is no reason to alter that course of action since it is the most viable option for him to continue to work with this company.

[7] The Applicant and Respondent have both owned shares in Arch Biopartners. In 2012, the Applicant sold her shares and realized approximately $80,000.

[8] The Respondent currently has no salary and his sworn financial statement shows $0 income. His affidavit contains the following summary:

Date
Line 150
Explanation

2005
$1,097

2006
$80,000
Included deferred income earned before marriage and paid
in 2006.

2007
Nil

2008
$80,501
Comprised of $60,000 of deemed dividends attributed to the
Respondent but not received. Actual earnings $20,000.

2009
$286,975
Respondent had liquidity and traded in the stock market and
enjoyed huge gains. Respondent has no liquidity and will
not be able to replicate those gains.

2010
$67,523

2011
$26,911
Includes $23,000 of interest accrued but not received.

2012
$13,714

2013
No income to date

[9] The Applicant asserts that the Respondent receives stock options and shares in lieu of salary and that his income at line 150 is not an accurate reflection of the financial benefits he receives. The Respondent denies that he is compensated with shares or options and insists that he has purchased whatever shares he has owned. The Applicant takes the position that the Respondent chooses to take no salary and that he is intentionally underemployed. She asserts that he is highly educated and is capable of retaining employment positions with significant income.

[10] To substantiate that claim, the Applicant retained Marc Belaiche, president of TorontoJobs.ca to conduct a formal income assessment. He created and conducted a survey of current Chief Executive Officers within the Greater Toronto Area which was designed to survey individuals with knowledge of the compensation that someone with the Respondent’s experience and skills would earn. In his report, Mr. Belaiche concluded that a salary of approximately $182,000 was the most accurate reflection of the current labour market compensation packages in the GTA for someone with the Respondent’s skills, experience and background. The Respondent pointed out reasons why that conclusion ought not to be relied on.

[11] I am not persuaded that the Respondent is intentionally underemployed. The Applicant and Respondent disagree on many historical facts. They do agree that the Respondent has been fully engaged in his responsibilities as CEO. I accept his explanation for the circumstances under which he continues as CEO albeit with no day to day salary. He is clearly expecting the substantial effort to pay off in the future. Although he is earning now much less than what he is capable of, that does not mean he is intentionally underemployed.[^1]

[12] But that does not end the matter. He has three children to whom he has an obligation to provide child support. S. 19 of the Federal Child Support Guidelines provides that the court may impute such amount of income as it considers appropriate in the circumstances and lists nine specific circumstances. That list is not exhaustive. In this case, while the Respondent does not have income for purposes of line 150, he has consistently provided a high standard of living for his family. I consider that as a circumstance in which I should impute income.

[13] In his evidence, the Respondent reviews in some detail how he and the Applicant made decisions recently that have been very costly and that have resulted in considerable debt. At the time of the separation in May 2011, the family was living in a rental home on Lonsdale with six bedrooms. He said that following the separation, he was persuaded in October 2011 to purchase the Belsize property with the prospect of reconciliation. The purchase price was $895,000. He borrowed virtually the entire amount. The Respondent moved into the Lonsdale rental home. In October 2012, the Respondent took the position that the Belsize property had to be sold because it was unaffordable. He used the net proceeds to reduce but not eliminate debt. I need not decide why such decisions were made and the cost consequences.

[14] On this record, the proper approach to the determination of the Respondent’s income is by looking at his expenses. In his financial statement sworn August 29, 2012, his monthly expenses totaled $15,856 or $190,280 annually. That included mortgage payments on the home on Belsize in which the Applicant and children resided and on the Muskoka property as well as his own rental accommodation. His liabilities at valuation date were approximately $390,000 and had risen to $1.3 million at the date of that statement including a mortgage on the Belsize property in the amount of $620,000.

[15] In his financial statement sworn July 18, 2013 he showed total monthly expenses of $10,260 or $123,120 annually.[^2] In the interval, the property on Belsize had been sold. The Applicant and children moved to a house which she says is owned by her father which is disputed by the Respondent. The Belsize mortgage has been discharged and his total debts were at that date approximately $726,000 of which approximately $650,000 derived from lines of credit and approximately $73,000 was on credit cards. The Respondent has remained in the same six bedroom home and that recent financial statement shows that he is paying rent on that property in the amount of $4000 per month as well as paying utilities and phones. The Respondent has a standard of living that costs him, net of taxes, $123,000 per year. I am satisfied that, for purposes of determining his child support obligation, income should be imputed to him in that amount. I am mindful that, to net $123,000, it is arguable that that amount should be grossed up. Since the issue is non-deductible child support and since the Respondent may have losses that would have an impact on his tax position, I decline to gross it up for purposes of this motion. I will apply the child support guidelines table as if $123,000 was a gross amount.

[16] The Respondent is very critical of the expenditures allegedly made by the Applicant. He also does not accept her evidence that she is receiving social assistance. He asserts that she should be working full-time. If spousal support were still an issue, I would have to weigh all that evidence and, to the extent possible on a motion for temporary child support, make findings of fact. Since the parties have reached an agreement on lump sum spousal support I need not address the anomaly that her expenses in her financial statement clearly exceed her visible means of support.

[17] The issue before me is child support. Having found that his income ought to be imputed at $123,000, based on the federal child support guidelines, the Respondent is required to pay $2206 per month.

[18] As for the commencement date, I am reluctant on this motion to order the payment prior to the first of the month in which service of the notice of motion was effected which was on June 10, 2013. In due course, his non-contribution from December 2012 when the Applicant and the children moved out of Belsize until and including May 2013 will be considered.

[19] The Applicant completed her law clerk diploma in March 2005 and obtained full time employment as a legal assistant in May 2005. She worked full time for six months and then left her employment when five months pregnant with the twins. From 2005 to 2012, the Applicant was a stay-at-home mother. In her financial statement sworn June 25, 2012, she said she was on social assistance and received $1,107 per month. In her financial statement sworn September 12, 2012, she indicated she was in receipt of social assistance in the amount of $1,128 per month. In the fall of 2012, the Applicant re-entered the workforce as a part time law clerk/assistant. In her financial statement sworn June 4, 2013, she said she earns approximately $9,600 annually as a part-time legal assistant and she receives $1,128 from social assistance. She assists as a lunch room supervisor at the children’s school and in 2012 received $200 from the Toronto District School Board.

[20] On this motion, the income of the Applicant is relevant only to the ratio of sharing of s. 7 expenses. In her affidavit sworn June 4, 2013, she asks for an order that the Respondent pay his proportionate share of the children’s s. 7 expenses. She did not identify any such expenses. In his affidavit sworn July 18th, the Respondent said that the Applicant had enrolled Marc in daycare without his knowledge or consent and that she was paying $885 per month. During submissions there was reference to a child care expense. The Applicant’s factum was silent on the issue. I am not prepared to make an order in the absence of evidence as to the reason for the expenditure and proof of the cost. Furthermore, in this case, the Respondent takes the position that he is available and willing to be responsible for child care before and after school and strongly resists making any contribution to child care.

[21] I turn now to the parenting issues. The Applicant and Respondent do not agree on many historical facts. The Respondent asserts that they had agreed to jointly parent the children and not delegate their care to third parties. He takes the position that he was equally involved in their care and upbringing and that he was accessible because he worked from the home for most of the years they were together. The Applicant agrees that he was working from the home but insists that he was preoccupied with his business affairs which required him to travel extensively. She insists that she was the primary parent. For purposes of this motion, I need not assess the credibility of that evidence. They do agree that he was in the home on a daily basis.

[22] The Respondent asserts that while the Applicant and children lived in the Belsize home, he saw the children daily and that it was only after he took the position that that home had to be sold, that the Applicant started interfering with the schedule and resisted the continuation of his relationship with the children. The Applicant does not accept that and explains her position on the residential schedule.

[23] The Applicant proposes that the status quo be maintained, namely alternate weekends from Friday to Sunday evening (extended to Monday if a holiday) and Tuesday and Thursday evenings. The Respondent asks for a schedule that equally divides the time the children spend with each parent on 2-2-3 days schedule.

[24] The Application was issued in July 2012 when she and the children were living in Belsize. The file contains an endorsement from Paisley J. that indicates that on September 19, 2012, he held a case conference. The next event was on July 23, 2013, the original return date of the motion brought by the Applicant. There has been no case conference since the Applicant and children moved out of Belsize and into alternate accommodation; or since the Applicant took part-time employment. Counsel advised that they had scheduled a settlement conference to be held on October 18th at 10:00 a.m. In view of the considerable conflict in the evidence about the parenting issues, I am not prepared to order a 50/50 parenting schedule. While the Respondent takes the position that the current arrangement was forced on him by the Applicant, I am not prepared to dramatically alter the schedule. That will be the subject of discussion at the settlement conference. If the parenting schedule is not agreed upon at that time, the Respondent may renew his motion for a 50/50 parenting schedule.

[25] The Respondent also asks for an order with respect to travel with the children outside Ontario and an order restraining the Applicant from denigrating him in the presence of the children. I need not make an order with respect to the former and there is considerable factual dispute about the latter. I leave those for discussion at the settlement conference.

[26] The Respondent is opposed to an order that the children are primarily resident with the Applicant. I understand that his opposition is based on his belief that the Applicant has deliberately interrupted his relationship with the children in retaliation on financial issues. I need not make any findings of credibility on those issues. Suffice it to say that the children are now primarily resident with the Applicant.

[27] The Respondent has asked for an order directing the Applicant to provide an updated sworn financial statement. I decline to make an order since both parties will be required to provide financial statements in advance of the Settlement Conference. The Respondent has asked for an order requiring the Applicant to make full disclosure of her efforts to obtain full time employment and an accounting of the sale of her shares. It appears on the evidence that both of the parties need to pay greater attention to detail in their financial statements. Each still has disclosure to provide. I decline to make an order as to specific disclosure by the Applicant. I strongly encourage both sides to comprehensively disclose everything necessary to ensure that the Settlement Conference on October 18th is as productive as possible. It would promote resolution if they each served comprehensive offers to settle.

ORDER TO GO AS FOLLOWS:

[28] The Applicant and Respondent shall have temporary joint custody of the children, namely Sofia and Jasmine born December 11, 2005 and Marc born July 1, 2009.

[29] On a temporary basis, the children shall continue to reside primarily with the Applicant.

[30] On a temporary basis, the children shall reside with the Respondent as follows:

(a) Every other weekend, from Friday to Sunday evening (extended to Monday if a school holiday); and

(b) Tuesday and Thursday evenings from 3:30 to 7:30.

[31] Commencing on June 1, 2013 and on the first of each month, the Respondent shall pay to the Applicant temporary child support in the amount of $2206 for three children based on imputed income in the amount of $123,000 annually.

[32] The request for an order for temporary s. 7 expenses is dismissed on this record.

[33] Support Deduction Order to issue.

[34] If by September 30, 2013 the parties have not reached agreement as to the costs of these motions, then:

(a) By October 10, 2013, counsel for the applicant will serve and file submissions as to costs not exceeding 3 pages plus costs outline and offer to settle, if any;

(b) By October 22, 2013, counsel for the Respondent shall serve and file submissions as to costs not exceeding 3 pages plus costs outline and offer to settle, if any.

Kiteley J.

Date: September 23, 2013

[^1]: Drygala v. Pauli (2002) 2002 41868 (ON CA), 219 D.L.R. (4th) 319 (Ont. C.A.)

[^2]: Counsel pointed out that the Respondent pays $800 per month on car expenses for the Applicant which was omitted from the financial statement.