ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: (Kingston) 351/12

DATE: February 20, 2013

BETWEEN:

Jodie Leigh Juma

Applicant

– and –

Rahime Juma

Respondent

Lulama M. Kotze, for the Applicant
Mary-Jo Maur, for the Respondent

HEARD: December 20, 2012

RULING ON MOTION

PEDLAR, J

[1] This motion was argued on December 20, 2012. Some matters relating to the passport and birth certificate of the child of the marriage, Christmas access, and ongoing access were part of an order made at that time. The issue of interim spousal and child support was reserved for ruling. There have been a number of court appearances and orders made since an action was commenced in June, 2012, by the applicant.

[2] The parties began cohabiting in May, 1993. They were married on April 18th, 1998. There is one child of their marriage, namely, Hana Hussen Juma, born July 25, 2000.

[3] The parties made the decision to separate in mid-March or early April of 2012. Both parties are Canadian citizens. They lived in Kingston, Ontario from 1995 until December, 2011, at which time the parties agreed the child would be removed from her school in Kingston and registered at a private school in Bradenton, Florida, to commence school there in January, 2012.

[4] Through various companies, the parties own seven businesses in Kingston, Ontario and Florida. They own a home, a cottage, and a rental house in the Kingston area. They own two residences in Florida and sixteen vacation rental units there, as well.

[5] Since December, 2011, the parties have been back and forth between Kingston and Florida and there were a series of issues regarding the child’s residence, attendance at school, and a Hague Convention application that were eventually resolved between the parties in a series of court orders. Those issues have now been resolved and are settled, at least on an interim basis. The child and the applicant are currently residing in Florida with plans to remain there until May. The child has been residing with each parent on a week-about arrangement and the current plans are for the respondent to travel to Florida as frequently as possible to attempt to keep that arrangement in place over the coming months.

[6] During the course of the marriage, the parties started several companies in Canada. The major income-producing corporation is the business, “Soft-where to Learn” (hereinafter called “SWTL”). In his affidavit filed at Tab 28 of the Continuing Record, at paragraph 9, the respondent describes that business in the following terms:

“The main work that the business, “Soft-where to Learn”, does is implementing and instructing on the use of technology, specifically software, in the classroom as a whole and for students with special needs. Its main customer is the Upper Canada District School Board. SWTL has a contract with the Board. We hire fully qualified teachers to go into the classroom on a contract basis to help the classroom educators integrate computers, smart boards, and other technological aids, into the existing curriculum. The business has always been quite rewarding both financially and in our contribution to the education system. Unlike our other businesses, SWTL is very much dependent and reliant on me as its leader and visionary. All the intellectual property and techniques were created by me.”

[7] The applicant describes SWTL in much the same terms, stating that it was started in approximately 2005 and has been the main source of the family income from 2005 up to the date of the starting of this action. She states that much of the gross income earned to date has come from Canadian government grants. Tax returns were filed in Canada by both parties, as declared income was earned solely from SWTL, which they own and operate and is located in Kingston, Ontario.

[8] Both parties agree that the other businesses owned by them have not earned any income or had very little profit and neither has taken a salary from those businesses.

[9] The other businesses that the parties identify in their material as being owned by them through different companies that they have incorporated, include businesses known as, “Bogeys to Birdies”, “Say It Ain’t Snow”, “Rise to the Occasion”, “Facing Forward Graphic Design”, “Hotel Homes Florida Vacation Rentals”, and “Jazra Enterprises Inc.”.

[10] “Bogeys to Birdies” is an indoor golf facility, “Say it Ain’t Snow” is a snow-plowing service, “Rise to the Occasion” is a tent and party supply rental business, “Facing Forward” is a graphic design business, and “Hotel Homes Florida Vacation Rentals” is a series of rental properties for vacationers, and “Jazra Enterprises Inc.” is described a form of umbrella corporation and there is also a “Jazra Enterprises USA Inc.”, which is reported to be the entity that owns the vacation properties used as rentals in Florida.

[11] I must note that there has been no disclosure at the time of this motion as to the financial status of any of these businesses, including SWTL. I will deal with that issue later, but it is worth noting that at paragraph 4 of his affidavit, dated June 14, 2012, filed at Tab 6 of Volume 1 of the Continuing Record, the respondent describes himself as working for the umbrella corporation, Jazra Enterprises Inc. There is very sketchy material about the way in which these businesses are connected, if at all. There are no financial records from that corporation or SWTL, which both parties state has been the major source of income for this family, or from Jazra Enterprises Inc., and in particular, no sworn documents or evidence of any kind as to the retained earnings in either corporation.

[12] The respondent is referred to as a majority shareholder at the ratio of fifty-one percent versus the applicant’s forty-nine percent of ownership in the corporations owned by the family. It is not clear if that relates to all these corporations, including the two umbrella companies. There are several indications that he has the controlling interest in all of these businesses.

[13] It is agreed that for a few years prior to their separation, the applicant was employed in the family businesses. She did the bookkeeping, had access to, and apparently control over, financial records for all the businesses in order to complete her bookkeeping duties. She also carried out other duties, such as invoicing and managing, to some extent at least, rental properties in Florida, etc.

[14] It is agreed that the applicant was dismissed from her employment in June of 2012, by the respondent. She was cut off of all access to business or personal accounts. She is currently a resident of the United States and has no visa to allow her to be employed in the United States. It is clear that she is no longer an employee of any of these family-owned corporations and has no access to any income from those corporations except indirectly through support being paid to her, on a without prejudice basis, by the respondent, in the amount of $2,000 per month.

[15] In addition to the $2,000 per month being voluntarily paid to her by the respondent, the applicant has had access to other funds. There is some dispute as to the exact nature and use of those funds. Both parties acknowledge basically the same figures, but identify them as going to different purposes. The difference seems to be approximately $50,000 of RRSP funds taken from her TD Canada Trust account. The applicant acknowledges those funds were received and applied to legal costs of this action. The respondent, at paragraph 42 of his affidavit, at Tab 28 of Volume 2 of the Continuing Record, identifies all these funds being used for her daily living and that she is living an excessive lifestyle, well above her actual budget, and includes this $50,000 in his assessment of her lavish spending in the past six months prior to the motion being heard.

[16] For clarity, the amounts involved are set out at page 6, listed under Part 4(c) of her financial statement as Bank Accounts, Savings, Securities and Pensions, filed at Tab 25 in Volume 2 of the Continuing Record. She acknowledges that a Kawartha Credit Union joint account has been reduced by approximately $50,000 and a similar Kawartha Credit Union account reduced by almost $11,000. She also acknowledges a TD Canada Trust TFSA has been reduced by approximately $16,000, a further RRSP from TD Canada Trust has been reduced by just under $50,000, and an RRSP from Invesco Trimark has been reduced in an amount of just over $31,000. All those amounts are quite similar to the amounts referred to in paragraph 42 of the respondent’s affidavit as referred to above.

[17] The applicant does, however, indicate that the TD Waterhouse joint investment account in the amount of $120,000 was withdrawn by the respondent in June or July. At paragraph 52 of her affidavit dated June 14, 2012, filed at Tab 3 of Volume 1 of the Continuing Record, she also states that $15,000 cash had been removed from the safe from their home in Kingston when she arrived there in early June of 2012.

[18] Because this is an interim spousal support motion, I must make findings as to the respective incomes of both parties as of the date of the hearing of the motion. That is, of course, a very different issue than their capacity to earn income for the purposes of a final spousal support order. Some of the issues raised on this interim motion are more relevant to an order for spousal support once the dust has settled on a number of issues in this rather complicated story.

[19] For the purposes of this motion, I find that the applicant has no income. I make that finding recognizing that she has access to some funds, as outlined above, that have been withdrawn since the family breakup. I am not prepared at this time to attribute any of those funds to her income. They will ultimately have to be accounted for in any resolution of net family property between these parties, as will any similar withdrawal of joint resources by the respondent as alleged by the applicant.

[20] That is a very different issue than what her ongoing capacity to earn income will be as matters unfold. She clearly has the capacity to contribute in a significant way to the family businesses. The respondent has offered to allow her to run one of the businesses to earn an income. She has some credentials which have allowed her in the past to earn an income outside of those businesses as well. All of that will be resolved, hopefully, within the not-too-distant future. This order is made, however, on the circumstances with which I was presented at the hearing of this motion as best I can determine from the limited information contained therein.

[21] It is undisputed that she has been dismissed from her employment with the family businesses. It is undisputed that she is residing over the winter months in Florida until around May of 2013, when she plans to return to Ontario. Although it may be theoretically possible for her to work for one of the Ontario corporations from Florida, it is not a realistic possibility in the current environment within this family to expect that to be put in place. If it is put in place, it will obviously require that this order be reviewed. I am assuming no such arrangements will be made in the immediate future and this order is based on her current circumstances of no income.

[22] The respondent’s financial circumstances are considerably less clear. As stated above, I have no detailed or accurate information as to the financial status of any of the family owned corporations. The information for all of those companies should be in the control of the respondent as the controlling director of these corporations and clearly the major force in the total family business empire. There is an ongoing issue between the parties as to how much of that information the applicant retained. She was fired for not continuing to perform her services and for keeping corporate records from the respondent. When those records were eventually turned over to the respondent, which had been in her possession, allegedly containing a computer that she kept for several months, the respondent’s stated concern is that many of those records had been removed from that computer and the corporations were in a difficult position regarding carrying on business and paying their numerous employees, etc.

[23] For the purpose of this motion, I cannot resolve many of these issues. The predominant concept of interim spousal support is to provide a reasonable level of interim support, based on the family’s history and standard of living, in accordance with the demonstrated need of the applicant and the capacity to pay of the respondent. The need in this case is self-evident in terms of creating an obligation for support. The question of the amount of that need is in dispute.

[24] The capacity of the respondent to contribute to support is very much in contention. The evidence discloses a history of significant incomes being earned by each of these two parties in recent years. I have reviewed both volumes of the Continuing Record. The applicant has sworn and filed a financial statement dated July 9, 2012, filed at Tab 15 of Volume 2 of the Continuing Record, and an updated financial statement dated December 7, 2012, filed at Tab 25 of the same volume.

[25] Although not filed in the Continuing Record yet, contained within the court file is a financial statement of the respondent dated December 13, 2012. The attachments to that financial statement disclose a notice of reassessment issued December 7, 2012 to the respondent by Canada Revenue Agency, fixing his taxable income for the year, 2011, at $897,862. Attached to that financial statement is also a notice of assessment for the taxation year, 2010, that was issued on December 7, 2012, fixing the respondent’s total taxable income for that tax year at $1,581,225. There is also attached to his financial statement a notice of assessment for the taxation year, 2009. That notice was issued December 7, 2012. It fixes his taxable income for that tax year at $829,554.

[26] Part of that financial statement includes references to bank accounts, savings, securities and pensions that relate to the figures mentioned above in terms of monies that have been available to each party since the separation. That will have to be all sorted out as part of the property settlement in this matter and I am unable to resolve any differences the parties have and need not do so for the purposes of an interim spousal support order.

[27] It is the respondent’s sworn evidence pursuant to the financial statement of December 13, 2012, that his total income for the year, 2012, will be $212,272.32. That is a rather shocking difference from his income for the years, 2009 through 2011, which, in round terms, has averaged approximately $1,100,000 per year. In support of that 2012 claimed income by the respondent, he has filed, as Exhibit B to his affidavit, dated December 18, 2012, filed at Tab 28 of Volume 2 of the Continuing Record, an employee pay stub from Soft-Where to Learn Inc. for the pay period from the 24th of November, 2012 to the 7th of December, 2012 disclosing a total year-to-date salary and benefits of $207,072.32 as of that date.

[28] Part of the reasons that the respondent presents in support of that drastic reduction in his income include the fact that he has suffered some health problems this year. They are detailed in the affidavits and include some medical information to support the fact that he is now physically fit to care for his daughter, but he has undergone surgery on at least two occasions in recent months since the separation. Not long after the separation, he had two stents inserted, which required hospitalization for a few days. Then in the fall, he underwent a quadruple by-pass surgery from which he appears to have fully recovered.

[29] The respondent also stated, through counsel, although there is no corroborative material filed, that the income of SWTL has been affected to some degree by the teacher labour action in Ontario. The major client of that company is the Upper Canada School Board. Just prior to separation, and after the parties had agreed to separate, the respondent took a business trip to China along with others, and representatives of that school board, which would indicate a very strong relationship between the school board and SWTL.

[30] In his affidavit dated December 18, 2012, filed at Tab 28 of Volume Two of the Continuing Record at paragraph 28, the respondent states that there were problems receiving payment from the school Board for service provided. He attributes the problem to the applicant failing to send purchase orders with the invoices to the Board. As a result, the Board refused to pay for all of the summer and into the late fall for work that had been done. He dates the problems back to the time of separation and even prior to that. His evidence is that over $400,000 in billed work was delayed in being paid for, but that most of that had been paid by late fall or at least the time the motion was heard.

[31] He also states at paragraph 37 of the same affidavit that he expects his income will likely drop at the beginning of January, 2013. He attributes this to the recent work action of Ontario teachers. He indicates that the secondary teachers’ union of the Upper Canada School Board has indicated that its teachers will be refusing to take training from SWTL. The elementary teachers, he states, are almost certain to follow suit. He claims that would mean that effective January, 2013, SWTL would have no income. There is no confirmation to corroborate that statement. The job action currently in place is not identified with any particularity and no statement of confirmation by the teachers’ union is filed. It does not appear from paragraph 37 of the affidavit that this proposed job action by the secondary school teachers had yet been put in place.

[32] Other issues raised by the respondent include the applicant’s capacity to earn an income. I dealt with that briefly earlier in this ruling. I find that under the circumstances that currently exist of her being fired from her employment, residing in Florida until May of 2013 with no capacity to work there, and the circumstances that led up to that decision, taken together with the animosity and understandable difficulties the parties would have in attempting to work cooperatively together at this point, it is not a reasonable expectation for her to obtain employment at least until she returns to Ontario. Even then, unless the parties are prepared to get together and work collectively and cooperatively on the financial issues, it will be a significant period of time before there is enough clarity surrounding the financial arrangements between them for her to possibly work within the family business structure. It is also unreasonable to expect that she will be able to immediately gain employment in which she was previously employed as a lab technician. She has a demonstrated capacity to earn a decent income in that employment for which she was fully trained in the past and has experience. I am unaware if she would have to requalify. It is clear that the applicant has the capacity to earn income and that she should be making all reasonable efforts to do so. This order is only made on the assumption that she has no income for a relatively brief period of time and she will be expected to contribute to her own support in the not-too-distant future as the financial matters resolve between the parties and she can seek suitable employment either within some of the family businesses, if that is reasonable, or seek employment for which she was clearly qualified in the past.

[33] The respondent also raises concerns about her lavish lifestyle since the time of separation. She obviously was not receiving adequate support from the respondent to allow her to engage in any lavish lifestyle. If she did so, she was using money from investments and bank accounts referred to earlier in these reasons. Those funds will all have to be accounted for as property in the property resolution between the parties. For the purposes of this order, the applicant is entitled to a reasonable level of support, taking into account the lifestyle of the parties prior to separation, in accordance with the capacity of the respondent to contribute to that support. Interim support is not a long-term solution to any of the financial issues between the parties and is directed towards immediate needs in the context of the standard of living and the capacity to provide that support.

[34] The critical issue in this case is to fix an income on which to base an interim order for spousal and child support, in view of the obvious need for same on behalf of both the applicant and the child. It is relevant to take into account the fact that the respondent will have the child with him for approximately equal time. One of the glaring issues is the lack of full and complete financial information about the income available to the respondent from the family businesses. In particular, the court was given no information as to retained earnings for SWTL or the umbrella corporations.

[35] On October 23, 2012, the respondent was ordered, by Justice Polowin, to provide proof of all income, assets, retained earnings and liabilities of all the companies held by the parties. That disclosure was to be made by December 10, 2012. He failed to do so. The income to date statement from SWTL showing the respondent’s earnings up until December 7, 2012, is not a sufficient basis on which make a finding that his taxable income for 2012 would be as low as he is claiming. That would be approximately one-fifth of his average earnings for the past three years.

[36] Even taking into account the health issues and all the disruption that has followed separation, with the resulting implications for the businesses, that disparity in income has not been explained in any meaningful way. His hospitalization to have the stents implanted in Florida was only for a few days. According to his evidence, he had surgery in Ontario at the end of October, 2012. He has filed a note from his doctor that he was healthy enough as of December 6th, 2012, to care for his daughter. Even taking into account the fact that he was becoming progressively less well prior to surgery and that he has been suffering some other medical issues in the past. I am unable to accept that the respondent’s income for 2012 is eighty percent less than the average of his last three years.

[37] The respondent has also detailed several expenses that he has paid, and is carrying, related to properties owned by the parties and other debts. Those are detailed at paragraph 48 of his affidavit of December 18, 2012 and include mortgages, property taxes, utilities, Credit Union payment of tuition for Hana’s school in Florida, which is a private school. Those payments do benefit both parties and most relate to assets that will have to be shared between them in resolving the property issues. The Glengarry Avenue property is identified as an income-producing rental property in the material and so any payments related to that would clearly not be offset for spousal support.

[38] I do find, however, that any property in which the applicant resides, which has a debt directly attached to it, such as a mortgage on the former matrimonial home, for instance, she should be responsible for after she begins to receive interim spousal support. If any portion of that support is retroactive and she has lived in one of those properties, then that should be accounted for at the time that the property issues are resolved. In the meantime, at least from the date of the making of this order for ongoing support, she should pay the mortgage for any residence at which she lives from her interim support, again, pending resolution of the property issues. I understand that she may be living in a mortgage free property that was obtained by leveraging other properties and, again, that is a matter to be resolved when all those issues are dealt with.

[39] For the purposes of this interim support order, I make the following findings. The applicant’s income, on a temporary basis, is fixed at zero. The respondent’s income, for the purposes of this order, is fixed at $600,000 for the year, 2012. I make that finding based on an approximately one-third reduction from his 2011 income to take into account his health issues, the disruption caused by the separation and the extreme complexities arising from the extra jurisdictional issues combined with having to replace, since June, the services previously performed by the applicant, for which she was paid over $150,000 last year. It is also approximately 54% of his average income for the years, 2009, 2010 and 2011.

[40] I understand that, to some extent, he brought the financial loss of the applicant’s services on himself by firing her, but under all the circumstances, it was probably unreasonable to expect her to continue to be employed. Collectively, the parties have put themselves in this position of her having currently lost her employment from the family business and not being able to just walk across the street and pick up another job paying her anywhere near that amount, at least until they get some things sorted out here.

[41] Pursuant to the Child Support Guidelines, once you are dealing with an income over $150,000 per annum, it is not a simple mathematical calculation anymore. There is a requirement that a reasonable order be made, taking into account a reasonable budget for the child expense. This child has some identified issues that mean that she benefits from the private school which she is attending in Florida. She had previously been in a school here in a publicly funded system. The parties will have to decide when she returns how that is to be managed but that would clearly be a section 7 expense and not considered in the regular Guideline support. I have looked at the applicant’s financial statement and there has been no separate child support budget prepared as such. Obviously, many of those expenses relate to the child, as well. It is also to be noted that the child is only in her care approximately half time, even though many of these expenses continue even when the child is not residing with her, such as providing a residence, etc. Given the standard of living of this family and the income attributed to the respondent, I find it reasonable to fix basic Guideline child support in the amount of $3,000 per month.

[42] Taking into account the findings for income set out above and noting that, of course, all spousal support payments are completely tax deductible to the respondent and must be claimed as income by the applicant, I find that a reasonable level of interim spousal support in this case is $18,000 per month. When the applicant pays tax on that and adds in the $3,000 per month tax free child support, she will be able to comfortably meet her ongoing budget as indicated in her financial statement. This is a relatively modest award and a relatively modest attribution of income to the respondent. It is in no way intended to be taken as an indication of what a final support order might be, but is based on the limited information provided at this time.

[43] The order is backdated to July 1st, 2012. The applicant was relieved of her employment on June 9th, 2012 and had adequate resources from her withdrawal of investments and savings to mean that she was not in a financial crisis.

[44] In view of the fact that the respondent has only been providing $2,000 per month, for some period of time, those payments should be attributed first to child support as that payment falls short of the child support ordered herein. He is to be given credit for those in establishing any retroactive payments due and the parties can do the math to work out that number. This order will be payable to the Director of the Family Responsibility Office, a Support Deduction Order is to issue.

[45] As indicated above, there are a number of complexities in this file. The parties are urged to take a cooperate approach to resolving their financial issues. The more complicated those issues become, the more expensive and frustrating and the longer it will take to resolve them. I would encourage the parties to consider using mediation or arbitration to take the financial issues out of the court process as much as possible or at least narrow the issues to minimize delay, expense and frustration.

[46] The applicant is entitled to her costs of this motion unless there is in existence a written offer by the respondent to pay an amount equal to, or greater than, the amount of this order. The order may be taken out by counsel for the applicant without approval as to form and content by the respondent, who is now self represented, according to the notice of change in representation form filed at Tab 29 in Volume 2 of the Continuing Record.

[47] I will receive written submissions as to costs from the applicant within thirty days, together with a draft Bill of Costs. The respondent will be given ten days to respond before ruling on costs is made.

MR. JUSTICE KENNETH E. PEDLAR

Released: February 20, 2013

COURT FILE NO.: (Kingston) 351/12
DATE: 20130220

ONTARIO
SUPERIOR COURT OF JUSTICE

B E T W E E N:

Jodie Leigh Juma
Applicant

– and –

Rahime Juma
Respondent

RULING ON MOTION

Pedlar, J.

Released: February 20, 2013