ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: FS-64-08
DATE: 2013-12-23
BETWEEN:
Patricia Marie Goetz
Applicant
– and –
James Donald McConnell
Respondent
Brian R. Kelly, Counsel for the Applicant
Pamela Hebner, Counsel for the Respondent
HEARD: September 24, 25, 26, 27, 30
October 1, 2, 3 and 4, 2013
The Honourable Mr. Justice Patrick J. Flynn
reasons for JUDGMENT
1This nine day trial was about the child, Olivia Elizabeth Goetz-McConnell, born May 8, 2006.
2Her mother, the Applicant, wanted sole custody of the child and increased child support from her father, the Respondent.
3Her father sought joint custody and week-about residential care.
4The parties never married. The Applicant was an employee in one of the Respondent’s businesses. They entered into a relationship. The Applicant became pregnant. At best, the parties lived together for two or three months and then separated.
5Since the birth of the child, the Applicant has never worked outside the home. She remains unemployed.
6The Respondent is a businessman. He owns or has significant shares in dozens of companies with complicated corporate structures. He has in my view, “stepped up to the plate” since the child was born. This has included him purchasing a home worth more than $400,000, in which the Applicant and the child and her sister have lived since the purchase. The home is registered in both parties’ names. It is mortgage free. The Respondent also furnished it.
7The Respondent bought the Applicant a 2006 Cadillac SUV, which is registered in her name.
8Not only did the Applicant receive a one year maternity leave for the birth of the child, but the Respondent arranged for her to receive a two year severance package so that she could stay home with the child for a total period of three years. That severance package was extremely in excess of the employer’s obligation under Ontario law.
9As well, the Respondent has voluntarily been paying child support since Olivia’s birth. The voluntary payment has ranged from $2,000 to $5,000. Over the years since the child’s birth, the total amount of support paid is in excess of $330,000. The Respondent currently pays $3,289 per month.
10In addition to support which he pays every month, the Respondent deposits $500 per month into an account as an education fund for the child.
11Almost one-half of the time at trial was spent on witnesses dealing with the issue raised by the Applicant: determining the appropriate amount of the Respondent’s income for support. The corporate controller of the Respondent’s companies, Henrique Godhino, testified for approximately one and a half days setting out the path through the corporate empire and dealing with all of the accounting issues. He is really the Respondent’s voice in these matters. While Mr. Godhino had a fantastic handle on the Respondent’s fiscal affairs with a great memory for details and exhibiting an extensive involvement in the Respondent’s personal finances, the Respondent himself had difficulty with details. He must rely on Mr. Godhino to tell him what’s what and where things were at.
12And then the Plaintiff’s expert, Robert Hehl, testified for almost two days and the Respondent’s expert, Rinaldo Sciannella, testified for most of a day.
13So, almost half the time at trial was spent in sorting out the amount of the Respondent’s income for support purposes.
14The parties never married. Spousal support is not in issue.
15And while the Respondent may have some issues about adherence to access orders and his own views on the court’s involvement in his family’s life, he has been responsible on the financial side as a parent.
16I should like to deal with the matter of the amount of child support required to be paid by the Respondent first.
17As can be seen by the chart at Exhibit 21 (1), contained within the July 19, 2013 report of Millard Financial Consulting Inc., the Respondent has holdings in over 30 corporations. He has invested in different non-transportation investments, though his principal business interests revolve around trucking, as is manifest by the BLM Group Inc.
18The Respondent is 53 years old and left formal education before the end of high school to begin trucking. He is a trucker.
19There is a large disparity between the views of the two experts as to the income that ought to be attributed to the Respondent. Where those views diverge or differ, I prefer the opinion of the Respondent’s expert, Ron D. Sciannella to that of the Applicant’s expert, Robert Hehl.
20In cross-examination, Mr. Hehl was sometimes stumped by the questions posed to him by Ms. Hebner. In fact, her very first question in cross-examination stumped him. There were times he could not explain the discrepancies between his various reports, especially dealing with discretionary investments. He had difficulty in justifying some of his calculations.
21He did concede that there was a marked decline in corporate revenues in recent years caused by the recession. And he conceded that he made some large mistakes in dealing with corporate revenues. He finally admitted that the Respondent’s only “income” is his Line 150 income. Mr. Hehl made large speculative assumptions, for example regarding the $1.8 million corporate loan to Rebel Creek Golf Course. The theory he was postulating there was that if Mr. McConnell’s corporation had not made the loan to the golf course, the funds would have been available for child support. However, the loan was made. It was a real loan and that is uncontradicted and it is also uncontradicted that the loan was made to save Mr. McConnell’s investment in the golf course.
22Much of the difference between the two experts comes from the treatment of the various corporate year-ends. There is good argument for both approaches, but I prefer Sciannella’s and Sciannella was more consistent throughout.
23I appreciated his use of relevant case law regarding the attribution of corporate income in determining income for support purposes.
24He seemed to understand the principles in Brophy v. Brophy where the courts have held that there should be a general reluctance by a court to automatically impute income to a shareholder. The question that had to be addressed head on was whether there was a business reason for retaining earnings in the company. Mr. Sciannella used that analysis from Brophy and Brophy to conclude that the debt financing requirements of the companies (mainly to buy equipment) amount to good business reasons for keeping the earnings in the companies and for not taking dividends.
25It is of note that the child here was born in 2006, but that Mr. McConnell had not taken any dividends since 2001. There is no effort here to secrete or salt away or hide income in the corporations so as to avoid support. As I said earlier, Mr. McConnell began the process voluntarily.
26I accept Mr. Sciannella’s conclusions. The McConnell group of companies is a complex entity requiring significant investment in capital. There has been a significant economic downturn during the last five years, but the company is financially healthy because of its conservative financial practices. The group of companies has a history of retaining profits to fund growth and capital acquisitions. Given the size of the business and its needs to replace its aging fleet, I agree with Mr. Sciannella’s conclusion that keeping approximately $3 million in corporate reserves is reasonable.
27I am prepared to accept Mr. Sciannella’s Scenario B as the most appropriate assessment of income. I agree when he says “while there are strong arguments for not imputing income, the group has repaid shareholder loans to Mr. McConnell indicating that cash was available for distribution”. Accordingly, I am prepared to accept the Sciannella conclusion that the Respondent’s annual income for support for 2009, 2010 and 2011 is $847,425, $508,456 and $726,475, based on Scenario B. While the Respondent’s Line 150 income for 2012 was $345,640, income should be imputed to him for that year at the rate of $477,165.
28If that is the case, then the average of the last three years income for support purposes is the amount of $570,699. In accordance with s.4 of the Guidelines the amount payable for the support of the child based on Line 150 is $1,263 per month, plus an additional amount the court considers appropriate.
29If the Guideline amount were applied to the average of $570,683 that table amount would amount to almost $4,400 per month. Based on the realistic needs and circumstances of the child, by my estimation, $3,750 is the appropriate amount for child support per month.
30I am very skeptical about the Applicant’s many financial statements showing her monthly expenses. They were “all over the map”. She lives rent free and has an automobile that has no capital cost. Moreover, her other daughter, Kabrina, who lives with her, is being supported by her father and support from both fathers is up-to-date. Accordingly, I am of the view that support in the amount of $3,750 is completely adequate in these circumstances.
31The Applicant seeks “arrears of child support”. I reiterate that the Respondent has been paying support voluntarily all along, without any court order to do so. Not only has he been paying what he considers appropriate based on his Line 150 amount, but he has been putting $500 aside into an education fund for the child. While I have no inkling that anything I do is going to change that generosity on the part of the Respondent, in my view, if there is to be any retroactive treatment, he must get credit for that amount that he has been paying or setting aside. Given that the Respondent has paid the following sums for child support in the following years:
2010 $41,703
2011 $39,468
2012 $39,468
I would not make a “retroactive award” for any year before 2013. But the amount of support for 2013, based on $3,750 per month, must amount to $45,000 and I will allow $6,000 for the deposit to the education fund. Therefore, the final amount for support owing must equate to $39,000. I understand from the evidence that $32,890 was paid for the first 10 months of 2013 and if the amounts are paid at the same rate of $3,289 a month, that will amount to some $39,468. So long as those amounts have been paid and the $6,000 has been set aside, with satisfactory evidence of that being given to the Applicant, then I am satisfied there ought to be no further order for retroactive support.
Custody and Access
32It is evident to me that both of these parents love this child very much. And both of them testified before me that the case was all about Olivia. The Office of the Children’s Lawyer made a report on October 31, 2011 when the child was 5 years of age. That report was made pursuant to the order of Justice Sloan of April 7, 2011. It concluded that Olivia is a flourishing child, experiencing excellent child development. “During observation interviews and her personal interview, she presented as a warm, polite, intelligent child who radiates a love of life and a love of her family.” The report goes on to say that both parties have good parent capacity. And that both are able to provide Olivia with competent loving homes. While the Respondent advocated to the investigator for the Children’s Lawyer that he “must have joint custody and equal parenting time”, the Children’s Lawyer was not completely swayed. The clinical investigator opined that Olivia’s parenting plan should reflect the circumstances of her busy executive father and her stay-at-home mother. All the while still providing her with the time she needs with both parents to develop flourishing relationships. The Children’s Lawyer recommended that the Applicant remain Olivia’s primary parent during the school week while the Respondent becomes Olivia’s primary parent on weekends. He said “this parenting plan provides close to equal parenting time if the summer schedule remains alternate weeks, which will be recommended”. The Children’s Lawyer proposed joint legal custody, with some caution. And points out that there is no parental dispute about education, healthcare or religion.
33The Respondent was uncomfortable, indeed I would even say sometimes shaky in the stand. He had a hard time remembering details and answering some question with respect to the accounting and the numbers and his income. He relied exclusively on the evidence of Henrique Godhino. But, with respect to his parenting plan, it would be his wish to get week on, week off residential care of the child. He did admit that he hasn’t “stuck to” Justice Sloan’s access for Wednesdays and basically gave up that Wednesday access. Moreover, the Applicant was quick to point out the flaw in the parenting plan which comes from the mouth of the Respondent when he says “I don’t think I need to be governed by a court / I’m 53 and responsible and should be able to see my daughter when I want”.
34The Respondent has no complaints about the Applicant’s mothering and professes that he wants to get along with the Applicant for Olivia’s sake, but his parenting plan is quite deficient. He doesn’t know the child’s teacher’s name or her principal’s and has never spoken to the child’s teacher.
35There isn’t much real conflict between these parties which will derail a parenting plan. It is true that they have been to court many times and that temporary orders were made for access by Justice Reilly on May 20, 2009, by Justice Gordon on June 25, 2009, by Justice Gordon again on July 8, 2010 and most recently by Justice Sloan on April 7, 2011.
36The Respondent seeks joint custody of Olivia and wants here to reside with each of the parties equally in alternate weeks or that the residence of Olivia be consistent with the report of the Office of the Children’s Lawyer.
37I’m not of the view that these three are ready for the equal sharing regime. One must remember that the determination of the custodial and access regime for the child be based on the child’s best interests.
38The Respondent says he is a month away from retirement now and that he will have all the time to make that equal sharing regime work. But he wasn’t able to articulate a real parenting plan for the child. In my view, week about primary residential care is not the least disruptive place for the child.
39The Respondent is a capable businessperson and a competent parent when he has the child with him. But there is a huge difference in the lifestyle of the two parents and the expectations of the child because of that.
40However, where there isn’t conflict that would derail a regime, joint custody is to be preferred and I am prepared to make an order in that regard. Accordingly, there shall be an order for joint custody of Olivia Elizabeth Goetz-McConnell, born May 8, 2006.
41However, to create and maintain significant stability, the child’s primary residence shall be with her mother.
42The Respondent shall have care and control of the child on alternate weekends from Friday at 4:30 p.m. to Sunday at 7:00 p.m. or to Monday at 7:00 p.m. in the event that Monday is a statutory holiday.
43During the school year, the Respondent shall have care and control of the child every Wednesday from school dismissal until arrival at school the next morning.
44In all cases, the Respondent shall be responsible for transportation of the child during exchanges.
45The parties may change the weekly Wednesday access or add such additional evenings of access if they agree beforehand in writing.
46The parties shall share Olivia’s birthdays on an alternating annual basis so that on May 8, 2014, the Applicant mother shall have the child with her and in every even numbered year thereafter and on May 8, 2015, the Respondent father shall have the child with him overnight on the same basis as the Wednesday overnight access in all the odd numbered years thereafter.
47The Respondent shall have care and control of the child every Father’s Day from 9:00 a.m. until school commences the next morning, regardless of whether or not that Father’s Day falls within his scheduled weekend time. The Applicant shall have the child with her every Mother’s Day from 9:00 a.m. until school drop off the following morning whether or not Mother’s Day falls within her regular scheduled residential time.
48Each of the parties shall be entitled to have the child with him or her for one-half of the Christmas school vacation, which may be scheduled by the parties together. If the parties are unable to agree, the Applicant shall have first choice of one-half of the Christmas school holidays in odd numbered years and the Respondent shall have first choice in even numbered years, which will supersede all other periods of care and control.
49The child shall be with the Applicant for the March break from the end of the school year to Sunday at 7:00 p.m. at the end of the break in even numbered years and the child shall be with the Respondent for March break in odd numbered years in similar fashion, which periods shall supersede all other periods of care and control.
50The child shall be with the Respondent for the Easter break from the end of school on the Thursday before Easter to the commencement of school in even numbered years and with the Applicant for Easter break in odd numbered years in similar fashion, which time shall supersede all other periods of care and control.
51The child shall be with the Applicant for Thanksgiving weekend and from the end of school on the Friday to the recommencement of school the following Monday in even numbered years and with the Respondent in odd numbered years, which period shall supersede all other periods of care and control.
52The parties shall equally share care and control of the child during the summer vacation period and may do this by agreeing to have the child for the month of July and/or the month of August each year as agreed between them. Failing that, the Respondent shall have care and control of the child during July in all even numbered years and the Applicant shall have care and control of the child during August in odd numbered years, provided that in all cases, the child shall be with the mother for the last five days preceding the commencement of school. The parties may alter this arrangement in writing.
53The parties agree that the child shall continue in and complete her French Immersion program through to the end of high school.
54Each parent shall have direct access to Olivia’s teachers, physicians, mental health professionals and others such as community activity leaders.
55In the event of a disagreement about healthcare or education, the parents shall follow the advice of the professional responsible for Olivia’s care in these areas.
56Emergency decisions regarding the child’s medical, dental or mental health shall be made by the parent in whose residential care she is at the time of the emergency.
57In the event of a disagreement that follows consultation between the parents and appropriate advice from professionals, the Applicant shall be allowed to make the final decision.
58Neither parent may communicate or behave in a negative or disrespectful way about the other parent when Olivia is present.
59I view this regime to be the least disruptive one for the child and in her best interests.
Costs
60If requested, I shall fix costs after receiving and reviewing the parties’ written submissions as follows:
(a) the Applicant on or before January 15, 2014, shall deliver to me her Costs Outline, together with her Bill of Costs and any relevant Offer(s) to Settle; and
(b) the Respondent shall serve and deliver his Costs Outline, together with his Bill of Costs and any relevant Offer(s) to Settle on or before January 30, 2014.
Neither one of these submissions should exceed four double spaced typed pages.
P. J. Flynn J.
Released: December 23, 2013
COURT FILE NO.: FS-64-08
DATE: 2013-12-23
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Patricia Marie Goetz
Applicant
– and –
James Donald McConnell
Respondent
REASONS FOR judgment
P. J. Flynn J.
Released: December 23, 2013
/lr