Court File and Parties
COURT FILE NO.: F210/11 DATE: November 26, 2013
SUPERIOR COURT OF JUSTICE – ONTARIO FAMILY COURT
RE: Lori Simon, applicant AND: Stephen Nicolas Geza Simon, respondent
BEFORE: MITROW J.
COUNSEL: Sharon Hassan for the applicant William R. Clayton for the respondent
HEARD: November 15, 2013
ENDORSEMENT
1The applicant had commenced a motion in September 2012 seeking various relief some of which has been granted by previous order.
2Some of the relief claimed by the applicant was not pursued and the parties agreed that on the special appointment motion before me the remaining issues are as follows: the applicant’s claims for interim child support, interim spousal support, and security for interim child support and/or spousal support.
3Although not expressly claimed in various motions filed by the applicant, the applicant also requested an order that neither party be able to further encumber the matrimonial home pending trial. The applicant was prepared to have this order made mutual. The respondent was opposing such an order.
4In relation to interim support, there is an issue whether income should be imputed to the respondent.
5It was also the applicant’s position that any interim child support and spousal support should start effective November 1, 2012.
6The respondent’s position can be summarized as follows: the claim for interim spousal support should be dismissed; and, that although the respondent has no income at the present time, the respondent is prepared to pay child support in the amount of $600 per month which would translate to an income of $41,200 for the purpose of the tables. The respondent further submits that the child support payment should be prospective only commencing November 15, 2013. The respondent submits that this is not an appropriate circumstance to make any order to secure interim child support and or interim spousal support. It was also the respondent’s position in relation to spousal support that some income should be imputed to Ms. Simon as she does not work on a fulltime basis.
BRIEF BACKGROUND AS TO UNDISPUTED FACTS
7The applicant (“Ms. Simon”) and the respondent (“Mr. Simon”) were married in August 2002. They have two children Kaycie age 10 and Kyle age 8.
8Although there was initially a dispute as to the date of separation given that the parties continued to reside together separate and apart in the matrimonial home, Ms. Simon has agreed to use Mr. Simon’s valuation date of November 2010. On September 28, 2012 Marshman J. made an interim order that Ms. Simon shall have interim exclusive possession of the matrimonial home until trial or resolution of this matter or until the sale to the matrimonial home if so ordered, and further that Mr. Simon was to have interim care and control of the children on alternate weekends and such other times that parties may agree and that Ms. Simon was to have interim care and control of the children at all other times.
9Accordingly, the parties physically separated shortly after the interim exclusive possession order.
10Mr. Simon currently resides with his parents in Rodney Ontario. Ms. Simon and the children continue to reside in the matrimonial home in London, Ontario.
11On December 31, 2011 Mr. Simon lost his employment. Ms. Simon continues to be employed at the London Health Sciences Centre.
DISCUSSION
A. Should Income be Imputed to Mr. Simon?
12Mr. Simon had been employed a number of years at Electro-Motive Canada Inc. (“Electromotive”) until he lost that employment on December 31, 2011 as a result of a plant closure.
13In 2012 Mr. Simon received a severance payment from Electromotive in the amount of $91,357.25. The net amount received by Mr. Simon was $63,950.07 on March 15, 2012 and is verified by copies of his bank account statements.
14The severance payment to which Mr. Simon was entitled was subject to applicable statutory deductions. Mr. Simon had not produced details of those deductions.
15Ms. Simon submits that income should be imputed to Mr. Simon for the purpose of both interim spousal support and interim child support and she urges the court to impute income at $90,000, said amount representing an approximate average of the income Mr. Simon earned during his last three years at Electromotive, as follows:
- 2009 - $95,208
- 2010 - $88,955
- 2011 - $87,553
16For 2013, Mr. Simon’s most recent financial statement sworn November 13, 2013 discloses that near the end of October 2013 he received a net payment of $38,539.59 from his Electromotive pension.
17Mr. Simon deposes that in the spring of 2012 he incorporated a company with another individual to manufacture agricultural accessories. Mr. Simon’s business plan was appended as an exhibit to one of Ms. Simon’s affidavits.
18Mr. Simon’s business plan for this venture included sales projections that by February of 2013 anticipated over $1 million dollars in sales and an operating profit of just over $340,000. The business plan described Mr. Simon as a tool maker for 19 years with experience working in construction, steel fabrication and working in agriculture. By February 2014, the business plan projected annual sales of just over $2 million dollars and a projected profit just over $900,000.
19As this new business venture was unfolding, Mr. Simon borrowed $77,000 from his parents to purchase a large recreational vehicle in August 2012. This recreational vehicle, as appears from copies of photos attached to Ms. Simon’s material, is a large motor home. The approximate $10,000 for HST was paid by Mr. Simon from his own resources and traceable to the approximate $63,000 net severance payout from Electromotive. Mr. Simon also applied $15,000 from the severance package towards start-up and other expenses for the newly incorporated manufacturing company.
20The idea behind the motor home purchase, to use Mr. Simon’s words (see paragraph 12, his affidavit sworn February 5, 2013) was “…as an investment to make money.” Income would come in the form of renting out the motor home during summer months.
21Mr. Simon confirmed that he had recall rights at the CAMI plant in Ingersoll, and at the General Motors Oshawa plant. He had those rights as a skilled trade worker having worked at Electromotive. Mr. Simon does not dispute Ms. Simon’s evidence that he is a qualified welder and tool and die maker and that he is licensed to drive commercial trucks.
22In November 2012, Mr. Simon signed the General Motors of Canada Ltd. preferential hire application for the Oshawa and CAMI plants. No explanation was proferred by Mr. Simon as to why he waited until November 2012 to file this application.
23The undisputed evidence is that Mr. Simon’s two business ventures have generated no income to date. In his affidavit sworn February 5, 2013, Mr. Simon deposes that the manufacturing company generated $37,000 to $40,000 in sales, yielding a gross profit before expenses of about $20,000, and that this gross profit “probably” will not cover expenses to date. The motor home “business” has generated no income.
24The only income that Mr. Simon discloses in his last financial statement is the Electromotive payout received at the end of October 2013. Beyond that one-time payment, Mr. Simon urges the court to accept that his current income is zero.
25Regarding the Electromotive pension payout, Mr. Simon’s financial statement discloses that he applied $15,000 towards his RBC line-of-credit that he had opened in May 2013, $10,616 was paid to his parents to “repay debt of diesel fuel for truck” (is not clear if this was a business or personal expense), $2,000 was paid to Ms. Simon for court ordered support, and approximately $7,680 was paid to his parents “for room and board owing”. Mr. Simon deposes the remaining funds were used to “pay for matrimonial home and personal expenses”.
26It is apparent that Mr. Simon spent the severance payment he received from Electromotive fairly quickly. His financial statement sworn September 25, 2012 shows that he had a little under $20,000 remaining in liquid assets and his current financial statement discloses modest cash assets of under $700.
27Mr. Simon deposes that in addition to the $15,000 paid towards the start-up expenses for the corporation, plus $10,000 HST on the motor home, the balance of his severance was used to pay various debt payments that included, according to Mr. Simon, a payment towards various household expenses for the benefit of Ms. Simon and the children, including monthly interest on the line of credit secured by the matrimonial home.
28It is undisputed that since the date of separation Mr. Simon’s indebtedness has increased substantially. He now owes his parents $77,000 for the motor home, and there is the business-line-of credit of $36,000 (approximately) for the manufacturing company guaranteed by Mr. Simon. Further, Mr. Simon does not dispute that he has accessed the line-of-credit secured by the matrimonial home to the extent of $50,000 post separation.
29There is undisputed evidence that in the early part of April 2013 Mr. Simon received an offer of employment from the General Motors plant in Oshawa. There was a voice mail message left at the matrimonial home which was retrieved by Ms. Simon. The message was inviting Mr. Simon to apply for employment at the General Motors Oshawa plant. The timing of this message, as confirmed in correspondence attached to Ms. Simon’s affidavit, and which was uncontradicted, was that the message was received April 4, 2013 and this was communicated in a letter from Ms. Simon’s counsel to Mr. Simon’s counsel dated April 8, 2013.
30In his affidavit (sworn May 16, 2013) Mr. Simon confirms that he was offered a position at the General Motors Oshawa location but that he turned the position down for two main reasons. First, he did not wish to relocate because he felt this would be detrimental to his relationship with his children.
31The second reason is that the employment would be of short duration because the plant is scheduled to “permanently close in 14 months”.
32However, the genesis for Mr. Simon’s evidence that the Oshawa plant is scheduled to close goes back to his affidavit sworn November 27, 2012 (paragraph 10) where Mr. Simon stated as follows:
Furthermore, my understanding is that there are only 40 jobs available at the Oshawa plant to start some time next spring, although the plant is scheduled to close in 2014 so there is a limitation to how long employees would be needed.
33Mr. Simon’s evidence regarding the closing of the plant is based on what he alleges to be his “understanding”. He fails to identify the source of this information. This evidence contravenes r. 14(19)(a) and amounts to inadmissible hearsay.
34There is also uncontradicted evidence that Mr. Simon works at his parents’ farm for which he receives no pay. Mr. Simon agrees with that but submits that was always the case throughout the marriage. What this demonstrates is that Mr. Simon, who has earned no employment income since January 1, 2012, believes he has the time to provide free labour to his parents’ farm operation.
35In Drygala v. Pauli, 2002 41868 (ON CA), 61 O.R. (3d) 711 (C.A.), the Court of Appeal for Ontario examined the principles in determining whether a parent is intentionally under-employed or unemployed, and whether income should be imputed to a parent within the meaning of s. 19(1)(a) of the Federal Child Support Guidelines (“Guidelines”). Although that case dealt with an appeal from a final order on the issue of child support payable pursuant to the Divorce Act, I find that the analysis is applicable in determining interim child support. The Court of Appeal for Ontario provided the following guidance on the issue of imputation of income:
a) In determining whether a parent is intentionally under-employed or unemployed within the meaning of the Guidelines, the word “intentionally” means a voluntary act. A parent is intentionally under-employed if the parent chooses to earn less than he or she is capable of earning. A parent is intentionally unemployed when he or she chooses not to work when capable of earning an income. There is no requirement of bad faith nor is the language of the section suggestive of such a requirement (paragraphs 28, 29,36);
b) The court must consider what is reasonable in the circumstances when imputing income based on intentional under-employment or unemployment. The factors to be considered can include age, education, experience, skills and health of the person paying support. It is also appropriate to consider availability of job opportunities (paragraph 45);
c) Section 19 of the Guidelines is not an invitation to arbitrarily select an imputed income. There must be a rational basis underlying the selection of any figure and the amount selected as an exercise of the court’s discretion must be grounded in the evidence (paragraph 44);
d) In situations where a parent does not provide the court with adequate information on the type of jobs available, the hourly rates for such jobs and the number of hours that could be worked, the court can consider the parent’s previous earning history (see paragraph 46).
36This is a divorce proceeding. The claim for interim spousal support and child support are to be determined pursuant to the Divorce Act.
37I find on the facts that Mr. Simon is intentionally under-employed within the meaning of s. 19(1)(a) of the Guidelines. Despite Mr. Clayton’s forceful and able submissions to the contrary, I find, with respect, that Mr. Simon’s position claiming he is not under-employed is a position not sustainable on the evidence.
38Mr. Simon’s position that spending $87,000 on a motor home is a reasonable way of generating business income is, frankly, nonsense. It is a reckless expenditure that has little to do with a genuine reasonable course of action to generate income. Regarding the manufacturing business venture, the reality is that this venture (along with the motor home venture) has generated no income. Further Mr. Simon has failed to file any financial statements for the manufacturing business venture. Assuming for the purpose of these reasons that Mr. Simon, and his business partner, entered into this business venture in good faith hoping to earn a reasonable income, the reality is that the business venture has fallen markedly short of the lofty expectations contained in the business proposal. Even discounting those lofty projections, and assuming that Mr. Simon had used realistic projections, the situation is that Mr. Simon continues to make no money, he continues to incur debt because of the business, and he provides no evidence as to how long his spouse and children should expect him to keep losing money or at best making no money before he acknowledges his obligation to take reasonable steps to earn an income to support his family.
39Mr. Simon has failed to assess realistically the viability of his business ventures. There is no evidence from Mr. Simon that he has applied for employment elsewhere where he could receive a pay cheque in exchange for his obvious expertise as a person with skilled trades.
40I find it was unreasonable for Mr. Simon to reject the offer of employment at the GM Oshawa plant received by him in or about April of 2013. Mr. Simon submits that the employment would have interfered with his relationship with the children. However, the reality is that Mr. Simon sees his children on alternate weekends. He lives with his parents in Rodney while the children reside primarily with Ms. Simon in London. Mr. Simon did not explain why his weekend access could not continue.
41On the issue of the potential GM Oshawa plant closure, the fact that the employment may have been transitory is not a valid reason, on an interim basis, to refuse employment. This assumes that evidence of the potential Oshawa plant closure was properly before the court. It may be that, in the long-term, when dealing with support on a final basis, that long-term employment in Oshawa may prove not to be viable – but this is not the case on an interim basis.
42In the circumstances, I find that the best measure of income to impute to Mr. Simon on an interim basis is what he could have earned at the GM Oshawa plant. Mr. Simon argues that there is no evidence as to what he would have earned. However, that information is entirely within the knowledge of Mr. Simon. He did not address that issue, only telling the court that he rejected the offer. He could have advised the court as to what that offer was. Mr. Simon’s entitlement to priority hiring, according to his own evidence, was based on his position as a skilled trade with Electromotive. I draw an adverse inference against Mr. Simon for failing to advise the court as to what his income would have been. I find in the circumstances, and in the absence of other evidence from Mr. Simon, that it is appropriate to impute income on the basis of his earning capacity at Electromotive.
43I impute an income of $90,000 to Mr. Simon for the purposes of interim child support. There is in my view no reason to use a different imputed income for the purpose of interim spousal support. This amount represents the average of his last three years at Electromotive.
44I am not prepared to deal with child support on a retrospective basis back to November 1, 2012. There is evidence that Mr. Simon made some payments for the benefit of Ms. Simon and the children including payments in respect to the matrimonial home. Any credits owing to Mr. Simon for those payments should be left to the trial judge.
45The child support and spousal support shall commence effective November 1, 2013. I am not adjusting the $90,000 imputed income by any additional amount based on the receipt of the Electromotive pension plan payout in October 2013. The issue of whether Mr. Simon’s income for 2013 should be adjusted further to take that amount into account is left for the trial judge. A further reason not to make the payments retrospective is that Mr. Simon has in fact made a number of support payments as terms of various adjournments (counsel were not able to agree on the amount but it appears that this amount is either $10,000 or $11,000) and it should be left up to the trial judge to credit those payments against any support payable prior to November 1, 2013.
B. Should Income be Imputed to Ms. Simon
46Ms. Simon works for four out of five days each week. I agree with Mr. Simon’s submission that income should be imputed to Ms. Simon as to what her earnings would be if she worked five days rather than four days each week.
47While I accept that Ms. Simon has some obligations regarding Kyle’s special needs, I am not satisfied that this is a sufficient reason to reject imputing of income to Ms. Simon. I was referred specifically to evidence from Ms. Simon on oral questioning, and considering in particular the evidence from questions 332 to 338 (pages 65 and 66 of the transcript), I find Ms. Simon has not made a sufficient effort to increase her income to fulltime. There is no dispute that Ms. Simon’s current income as reported is $32,160. Increasing that by 25 percent would provide the equivalent income for working five days each week. That results in $40,200 which I round to $40,000.
AMOUNT OF CHILD SUPPORT AND AMOUNT OF SPOUSAL SUPPORT
48The table amount for child support based on Mr. Simon’s imputed income of $90,000 is $1,293 per month and he shall pay that amount.
49Exhibit one filed on behalf of Ms. Simon showed the Spousal Support Advisory Guidelines (“SSAG") calculation assuming an income of $90,000 for Mr. Simon and $32,160 for Ms. Simon.
50Using all the information as set out in Exhibit one, but substituting $40,000 in place of $32,160 for Ms. Simon’s income, results in SSAG ranges of zero dollars (low) - $369 (mid) and $783 (high).
51It was Ms. Simon’s submission that on the SSAG calculation the high range should be used. I reject this submission for the following reasons. Firstly, Ms. Simon continues to reside in the matrimonial home. She has the benefit of Mr. Simon’s equity in the matrimonial home. It is appropriate to view that as a contribution towards spousal support. This would tend to lower the spousal support payment. However, Mr. Simon has also increased by approximately $50,000 the line-of-credit secured against the matrimonial home which will increase the interest payments to service that debt.
52Ms. Simon will now be responsible for making all payments regarding the matrimonial home effective the date that the interim support payments commence. The additional interest expenses because of the $50,000 debt increase would tend to increase the amount of spousal support payable.
53I find that the appropriate amount for interim spousal support is $500 per month.
ISSUES RELATING TO SECURING CHILD AND SPOUSAL SUPPORT AND RESTRAINING FURTHER ENCUMBERING OF THE MATRIMONIAL HOME
54It is concerning that Mr. Simon has had a substantial increase in his debt since separation including the purchase of a very expensive motor home. Also this increase in debt has occurred notwithstanding the severance payout in 2012 and the pension payout in October 2013, totalling slightly over $100,000 net to Mr. Simon. Mr. Simon has little if any liquid assets. His manufacturing business venture is not making any money.
55In all the circumstances I find that it is appropriate to make an order that Mr. Simon’s equity in the matrimonial home stands as a security for his obligation to pay child support and spousal support as ordered.
56Also, there should no further encroachment on the equity on the matrimonial home by either party absent the written consent of both parties. An order will issue restraining either party from further encumbering the matrimonial home.
ORDER
57For reasons set out above an interim order shall issue incorporating therein the following:
a) Mr. Simon shall pay interim child support to Ms. Simon for both children in the amount of $1,293 per month based on imputed income to Mr. Simon of $90,000, commencing November 1, 2013, pursuant to the Divorce Act and Federal Child Support Guidelines;
b) Mr. Simon shall pay to Ms. Simon interim spousal support in the amount of $500 per month commencing November 1, 2013 pursuant to the Divorce Act;
c) The interim child support and interim spousal support payments ordered herein are binding on Mr. Simon’s estate;
d) Effective November 1, 2013 Ms. Simon is responsible for all ongoing payments regarding the matrimonial home including mortgage payments, or alternatively interest payments on any line-of-credit secured by the matrimonial home, property taxes, insurance and all utilities;
e) All mortgage payments or alternatively interest payments on any line-of-credit secured by the matrimonial home, and falling due prior to November 1, 2013, shall be Mr. Simon’s responsibility and shall be paid by him forthwith if not already paid;
f) Mr. Simon’s interest in the matrimonial home shall stand as security for his obligation to pay interim child support and interim spousal support as ordered herein;
g) The issue regarding Mr. Simon’s obligation to pay child support and/or spousal support for any period prior to November 1, 2013 is reserved to the trial judge;
h) Each party is restrained from further encumbering his or her interest in the matrimonial home except on written agreement of both parties;
i) If the parties cannot agree on costs of the motion, then the applicant shall forward her written costs submissions within 14 days, the respondent shall forward his responding submissions within 14 days thereafter and the applicant shall forward her reply submissions, if any, within 7 days thereafter. All costs submissions shall be forwarded to the trial coordinator. Costs submissions shall not exceed three pages plus any authorities, offers to settle or time dockets and the reply submissions, if any, shall not exceed two pages.
“Justice Victor Mitrow”
Justice Victor Mitrow
Date: November 26, 2013