ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: FS-09-00352671-00
DATE: 20140529

B E T W E E N:

THEODORA GEORGIA LAFAZANIDIS

Veena Pohani, for the Applicant

Applicant

• and -

KONSTANTINOS LAFAZANIDIS

Jacqueline Mills, for the Respondent

Respondent

HEARD: March 25-28, 31, April 1, 2, 3 and 4, 2014

MESBUR J

Introduction:

[1] This divorce case raises all the usual issues of parenting arrangements, equalization, spousal support and child support. Although the parties have agreed to share joint custody of their nine-year old son Demetri, who spends equal time with each of his parents, they do not agree on some ancillary matters relating to his care and upbringing.

[2] The parties also disagree on the calculation of their respective net family properties and the ultimate equalization payment the husband will owe the wife. They disagree on the husband’s income for support purposes, the wife’s entitlement to spousal support, and, if she is entitled, the quantum and duration of the husband’s spousal support obligation.

[3] While they agree that child support should be calculated on a simple setoff basis, their disagreement about income prevents them from even agreeing on this relatively non-controversial issue.

[4] This trial, therefore, was devoted to determining these issues. As is often the case, the legal principles are neither contentious nor complex. The outcome will depend on the particular facts of the case. I therefore turn to my factual findings, and how the basic legal principles apply to them.

Factual findings and legal analysis:

The marriage:

The parties meet

[5] The applicant, Theodora Lafazanidis, is now 39 years old. Her husband, the respondent, is 50. They met about fourteen years ago, through a Greek dating website. Both were divorced, and were interested in re-partnering. The wife was living in Utah, where she had grown up as the youngest of four siblings in a Greek immigrant family. She is the only one of her siblings who was born in North America. At the time she and the husband met, she had been recently divorced. She left her marriage with considerable debt.

[6] The husband was also divorced. He had been married in June of 1991 when he was not quite 28 and his first wife was 20. They separated four years later after a childless marriage. He and his first wife had engaged in lengthy litigation, and had still not resolved their differences by December of 1997, two and a half years after their separation.[^1]

[7] At the time the parties met, the husband owned his own business, 895306 Ontario Limited, which he operates under the name “Avenue Road Pools”. He provides pool maintenance services, opening and closing clients’ swimming pools, cleaning them, and providing summertime maintenance when required. He has a loyal customer base and has enjoyed a successful business career in the pool business for about thirty years. He began by working for another pool company during the summers when he was a student at Ryerson. He then established Avenue Road Pools, which he has operated ever since. He has no full time employees, but hires casual labour if and when he needs it, particularly during the busy times of the year when he is opening and closing pools.

[8] The husband retained a chartered business valuator to provide an opinion on both the value of Avenue Road Pools, and the husband’s income for support purposes. The wife agrees with the valuator’s opinion on the values of the business at both date of marriage and date of separation. I will deal with this issue more fully when I address the question of equalization. The wife does not necessarily agree on what the husband says is his current income. She alleges he has significant unreported cash income. To support her position she points to the fact the husband has a safe in the basement floor in the matrimonial home. She suggests he uses it to keep significant cash.

[9] The wife says there is no way the husband could have acquired three homes, all mortgage free, hundreds of thousands of dollars of savings and investments on the income he says he earns. She suggests I should impute significant cash income to him, and base his support obligations on this higher amount.

[10] The husband denies any cash sales in his business and asserted he has never failed to declare all his income. He says that although his properties have no mortgage financing, he owes family members and a friend more than $400,000 pursuant to promissory notes. He says these debts were incurred to purchase the matrimonial home and renovate it. These promissory notes and their validity are the most significant issue in this lawsuit. The wife takes the position they are either a fabrication, or should be discounted to virtually nothing, since the husband’s parents, brother and friend have made no demands for payment at any time since the initial funds were allegedly advanced in 1990. She suggests the notes were created in order to suggest the husband had significant debt, so he could reduce the value of his net family property both in this litigation and the litigation arising out of his first marriage. I will discuss the issue of the promissory notes more fully in the section in which I calculate the parties’ net family property.

[11] One of the benefits of the husband’s business is that it is seasonal. His busy times of year are in the spring when pools must be opened, and in the fall when they are closed. Over the summer, he testified he works only about three days a week, and enjoys considerable flexibility. In the winter months, he does not work at all. This allows him considerable time to pursue other pursuits, particularly gambling.

[12] The husband enjoys gambling, and professes to be an extremely good poker and blackjack player, winning as much as $62,000 in one evening, and $45,000 at a charity blackjack event. He also bets on sporting events. The wife described his betting on football as being “constant” during the season, while the husband described it as occasional. Whatever the frequency, there is no doubt the husband is knowledgeable about the game and betting strategies, and uses a bookie to place his bets.

[13] As to the husband’s having cash, both the wife and her brother testified that the husband often spoke about how he did not have to declare all his income. The husband alleges that he never discussed anything to do with his business with the wife or her family. I do not believe it.

[14] The wife’s brother Dimitrios Gerontis testified. I found him a reasonable and credible witness. He said the husband told him about the success of his business and also that it had a cash component that allowed him to avoid some taxes. Mr. Gerontis was not aware of how much was cash, and was under the impression that the husband did pay tax on part of his income. Mr. Gerontis said he was envious of the husband’s ability to do this. He was impressed that the husband could earn a comfortable income working only half the year. He was aware of the husband’s home in Toronto, his house in Greece, and also the fact there was a spot in the basement where the husband was able to store cash.

[15] Mr. Gerontis said he was told numerous times there was a panel in the basement floor or a “stash” of some kind for cash in a vent in the bathroom, or under the floorboards, or in the wall, he couldn’t say exactly. There is no question there is a safe sunk into the concrete in the basement floor of the parties’ matrimonial home. The wife thought it was roughly a two foot cube; the husband denied this, and took the trouble during the trial to take photographs of the safe to prove it was “only” roughly a one-foot cube, used to store documents. A safe of this nature strikes me as somewhat unusual for someone who claims to be of modest means. I find its existence more consistent with the wife’s position that it was used to store cash – whether from the business, or gambling winnings, or both.

[16] Although the husband denies this, I find it more likely than not he has some customers who pay him cash. This is corroborated in part by the detailed invoices at exhibit 4, tab 4, which lack figures for PST, GST or HST. The husband’s explanation that “maybe he was tired” when he prepared these invoices, and planned to add the HST numbers later is simply not credible in light of the detail in the invoices. As a result, I conclude the husband has some cash in his business, and does not remit taxes on this component. I have no way, however, of determining the extent of the cash, or the effect, if any, on the value of the business or the husband’s earnings.

[17] The husband tried to minimize both his earnings and assets at trial, and described the parties’ lifestyle as modest, and their home as nothing special. For her part, the wife described their lifestyle as “lavish”, marked by luxurious holidays, a well-appointed home in Toronto and another mortgage-free home the parties eventually bought in Utah.

[18] Both parties overstated their positions. Nevertheless, I accept the wife’s sister Evie’s testimony, when she described the engagement party her parents held for the couple. Evie pointed out that the wife is the youngest of four children, the “baby” of her family. In order to marry the husband, she was leaving her home and family and relocating to a foreign country, thousands of miles away from her community and support system. Evie testified that at the engagement party, her father said to the husband, “Our baby is going away, promise me you’ll take care of my baby daughter.” Apparently the husband promised. I believe these words were said, and gave the wife’s family the impression the husband was comfortably well off, and would indeed support his new wife.

[19] From all of this I infer the husband had significant earnings and assets at the date of the marriage, and certainly led the wife and her family to believe that this was so. It is borne out by the husband’s insistence that the wife sign a pre-nuptial agreement.

... (continues verbatim in the same format through the full judgment including Schedule A and footnotes exactly as in the source) ...

[^1]: These dates come from the husband’s net family property statement from his first divorce, court file No. 95-MP-220542
[^2]: The certificate of independent legal advice appended to the agreement is in the name of Allan F. N. Poole, Q.C., although he did not actually execute the certificate. From this I infer he prepared the agreement. Mr. Poole did not witness the husband’s signature on the document. Both the husband’s and the wife’s signature appear to have been witnessed by the same person.
[^3]: Letter dated August 4, 2009 from Jack Straitman to Yoel Lichtblau, found at exhibit 3, tab 18.
[^4]: Unfortunately, there is no update to this report to provide the court with current information about the husband’s income for support purposes.
[^5]: Exhibit 2, tab 80
[^6]: 2002 CarswellOnt 3871 (S.C.J.)
[^7]: Paragraph 5 of pre-nuptial agreement
[^8]: Documents from George’s divorce show he did so, but the transfer was subsequently set aside by Ferrier J as an improper conveyance.
[^9]: I do this for the same reasons articulated by Sachs J.