ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: FC-94-49810
DATE: 20140918
BETWEEN:
MONIR GEORGE
Applicant
– and –
HUDA GAYED
Respondent
Self-Represented
Tania Pompilio, for the Respondent
HEARD: August 13, 2014
Beaudoin J.
Reasons for decision
Overview
[1] These Motions to Change were initiated in March 23, 2012 by the Applicant (“Dr. George”) seeking to terminate child support payments for the parties’ children, Diana George and Amanda George. The support obligations arose from the Final Order of Métivier J. dated September 16, 1999. Dr. George claims a retroactive adjustment of child support to the date that each of his daughters turned the age of eighteen, (a ten year period with respect to the eldest daughter Diana). At that time, Dr. George claimed that he had overpaid support by $33,120. At the present time, Dr. George claims to have overpaid support by $68,000. In later affidavit material, he does appear to acknowledge that he had an obligation to support his daughters until the completion of their first university degree.
[2] Ms. Gayed filed a cross-motion seeking retroactive adjustments to child support as well as Dr. George’s contribution toward the children’s post-secondary education costs.
[3] The date for this hearing was set on June 23, 1014. Dr. George was well aware of this date. Prior to the hearing, Ms. Pompilio, counsel for the Respondent, attempted to serve him with a copy of her Factum which she had couriered to his address at Richmond Rd in Ottawa. It was returned undelivered to her by Canada Post.
[4] Dr. George did not attend the hearing. He e-mailed Ms. Pompilio on August 12, 2014 at 1:16 AM. In his email, he advised “I will be readmitted momentarily”; he did not elaborate. He added “as a consequence, and possibly at my peril, I may or may not be able to be present in the final hearing August 13th.” At paragraphs four, five and six, eight and nine (there is no paragraph 7), he sets out the following:
You may consider this hasty prepared email as my Consent to proceed ahead with the schedule the Final Hearing with or without me present, as the case may be.
Please Do Not adjourn to re-schedule. I will not be agreeable to either. Twenty (20) years of pain, suffering, and financial hardship are enough.
The court and you are in possession of my recent Affidavit (form 14A, July 30, 20140, which includes a compromised and fairly sought order (Page 6 of 6 of my Affidavit) and is likely to be considered (in my absence) as the document-of-reference in the hearing. It is the last document in the court file.
As kindly requested in my Form 14C (confirmation, filed July 30, 2014, Item …), it is my reasonable that the Honourable Judge at his/her discretion would kindly review Tab 4 of Volume 4 of the court file in the process of evaluating/approving my claim of Child Support Overpayments and rendering his/her fair and just final order in this 20 year old case. (My reasonably sought Order is outlined on page 6 of 6 of my July 30, 2014 Affidavit)
Please present a copy of this email (2 pages) to the Honourable Judge presiding over the Final Hearing.
[5] I have examined the Applicant’s affidavit dated July 30, 2014 and I will attempt to summarize it. In his material, he notes that the Order of Justice Métivier did not specify the cut-off date for child support: be it at the age of 18, graduating from high school, completing post-secondary education, or completing a first university degree. He notes that Diana George finished her first university degree in 2008 and that Amanda George completed her first university degree in April 2010. Nevertheless, he makes an argument that child support for Diana should have been terminated when she turned 16. He then refers to Offers to Settle which Offers should not be put before the Court and he sets out his calculation of child support overpayments. He notes that he has never been late or missed a single child support payment in 20 years. He argues that he has complied with all Orders for Disclosure and maintains that he sent annual disclosure to the Respondent in July of each year since 2000. He states that he has never changed his address, residence or phone number since the separation in 1994 and that any claim to the contrary is untrue.
[6] He claims that he has current personal liabilities of over $100,200 and that his company, George Engineering Limited, has liability of over $571,550. He claims that those liabilities are partially secured by the collateral account RBC Royal Bank account number 047605175. He characterizes the responses to his Motion to Change as being recycled on factually based old stuff that is deeply disappointing.
[7] At paragraph v) of his affidavit he adds:
The lawyers who neuterally (sic) reviewed the case, advised: Her lawyer took advantage of you… The court surely wouldn’t allow this to continue… Will be highlighted in the hearing… It’s a noble thought, but don’t leave it to the conscious (sic) of the other party… File a formal UC with the LSUC… Status of the ongoing investigations (RCMP, MAG, AG of Ontario) on releasing (in 2013) the applicant’s personal and confidential information to the public… The hard evidence is there.
[8] He concludes that he considers his affidavit as being the final document as he does not anticipate that the Applicant will be able during the next couple of weeks or so to receive or to file additional responses.
[9] The Respondent has filed extensive affidavit materials and exhibits on June 13, 2012, June 19, 2013, January 21, 2014, August 6, 2014 and August 13, 2014. The Applicant was served with all but the last affidavit.
Background
[10] The parties were married on November 22, 1980 and separated in the winter of 1988 but were not divorced until 1999. They have two (2) children, namely, Diana George (born September 15, 1984) who is now 30 years of age and Amanda George (born June 25, 1987) who is now 27 years of age.
[11] Dr. George is an engineer and holds a Ph.D. specializing in aerospace and marine technology as well as naval architecture. Ms. Gayed is trained as a medical doctor specializing in ophthalmology. She is not licensed in Canada but has been working since April 1993 with Health Canada.
[12] At a motion before Justice Forget on December 11, 1995, Ms. Gayed was awarded monthly child support of $750, including a lump sum payment of $21,000 which was to be paid to her from Dr. George’s share of the net proceeds of sale of the matrimonial home.
[13] Following the Motion before Justice Forget in December 1995, Dr. George claimed that his income had been reduced, although the production of his T4 statement at the end of that year confirmed that he had earned nearly double than what was claimed while he was previously employed. Shortly thereafter, Dr. George claimed that he was unemployed and argued that his support should be reduced in accordance with his employment insurance (“EI”) benefits. Despite his claims, he failed to provide supporting documentation of his EI benefits or work status.
[14] According to Ms. Gayed, she was finally forced to move forward with final divorce proceedings without adequate financial information as it became clear that Dr. George was never going to comply with reasonable disclosure requests and she could no longer afford the legal fees she had incurred in her attempts to obtain proper child support.
[15] In her Endorsement of September 16, 1999, Justice Métivier made the following findings with respect to Dr. George’s continued failure to provide proper financial disclosure:
The Respondent failed to abide by the spirit of the letter of the law and practice on financial disclosure. He has seriously misapprehended his duty and is bordering on, if he has not yet over stepped, contempt of the court order. Among other things he has failed or refused to disclose details of his income and bank records. His explanations for this are unacceptable.
[16] The Final Order of Métivier J. provided for ongoing payments of child support in the monthly amount of $360 based on an imputed income to Dr. George of $25,000 which was determined by adding various business expenses back to Dr. George’s personal income disclosed at that time. As part of the Order, Dr. George was to provide Ms. Gayed with copies of all income tax returns and bank records (both for himself and his corporation) by June 15th of each year.
[17] Within a few months of Métivier J.’s Order, Dr. George cut off all communication with the children and essentially disappeared. For approximately 13 years, Ms. Gayed claims that she had no knowledge of his whereabouts and that the Applicant made no effort to contact the children, even on special occasions such as their birthdays, Christmas or graduation. In the spring of 2012, Dr. George resurfaced when he served Ms. Gayed with this Motion to Change. It was only through this opportunity that Ms. Gayed was able to file a cross-claim for retroactive adjustments to child support as she had previously tried to locate Dr. George without success.
[18] Once these proceedings were commenced, Justice Mackinnon made an order for disclosure at a Case Conference heard on September 13, 2012. At that time, and on consent, child support for Diana was suspended. Dr. George did not comply with the Disclosure Order. After a further motion heard on June 26, 2013, Justice Toscano Roccamo ordered extensive disclosure to be produced and ordered Dr. George to sign authorizations for the release of third party information in her presence.
[19] The Respondent sought this information in order to properly determine Dr. George’s income and support obligations with the assistance of an income determination report prepared by a forensic analyst, Jim Boyce, M. B.A. As a result of that Disclosure Order, Ms. Gayed was also able to learn that Dr. George has an investment account with RBC that was not disclosed on his sworn Financial Statement dated January 9, 2013. According to the most recent statement produced by RBC, this account holds a balance of $119,733.84 as of December 31, 2013 and is worth $126,595 as of August 8, 2014. This account has been in existence since at least 2003.
[20] On January 17, 2014, Master MacLeod granted leave to the Respondent to seek an ex parte order to freeze the investment account held by George Engineering Ltd. He also directed the Royal Bank of Canada to release information from the date of Justice Toscano Roccamo’s Order to the date of the hearing of the final motion. He ordered the Applicant to pay costs in the amount of $1,200.00
[21] On January 23, 2014, Blishen J. granted an order on an urgent basis for the preservation of the RBC account. She granted the Respondent her costs which she fixed in the amount of $1,000.00 The Preservation Order was upheld by de Sousa J. at the return of the motion on March 7, 2014. She made a further Order of Costs in the amount of $1,700.00. On June 24, 2014, Justice James made a Supplemental Order of Disclosure to Canada Revenue Agency (“CRA”).
The issues for this Motion are:
a. Should income be imputed to Dr. George?
b. What is the appropriate level of income to impute to Dr. George?
c. How far back should retroactive child support and section 7 expenses be awarded?
d. What are the appropriate calculations of retroactive child support and section 7 expenses owed by Dr. George?
Should Income be imputed to Dr. George?
[22] Section 19(1) (a) of the Child Support Guidelines provide:
19(1)(a) The Court may impute such amount of income to a parent or spouse as it considers appropriate in the circumstances, which circumstances include that the parent or spouse is intentionally under-employed or unemployed.
The Court of Appeal held in Drygali v. Pauli[^1] at paras. 28 & 32:
The payor parent is intentionally under-employed if that parent chooses to earn less than he or she is capable of earning. That parent is intentionally unemployed when he or she chooses not to work when capable of earning an income. Imputing income is one method by which the court gives effect to the joint and ongoing obligation of parents to support their children. In order to meet this legal obligation, a parent must earn what he or she is capable of earning.
[23] In Smith v. Smith,[^2] Justice Chappel set out a list of factors for determining whether to impute income. The following factors are relevant:
• it is not necessary to establish bad faith or an attempt to thwart support obligations before imputing income. A payor is intentionally underemployed if they earn less than they are capable of earning having regard for all of the circumstances. In determining whether to impute income on that basis, the court must consider what is reasonable in the circumstances. The factors that the court should consider include the age, education, experience, skills and health of the party, the party's past earning history and the amount of income that the party could reasonably earn if they worked to capacity;
• there is a duty on the part of the payor to actively seek out reasonable employment opportunities that will maximize their income potential so as to meet the needs of their dependants;
• the court will not excuse a party from their support obligations or reduce these obligations where the party has persisted in un-remunerative employment, or where they have pursued unrealistic or unproductive career aspirations. A self-induced reduction of income is not a basis upon which to avoid or reduce support payments;
• where a party fails to provide full financial disclosure relating to their income, the court is entitled to draw an adverse inference and to impute income to them;
• the amount of income that the court imputes is a matter of discretion, however, there must be some basis on the evidence for the amount the court has chosen to impute.
What is the appropriate level of income to impute to Dr. George?
[24] Pursuant to section 18 of the Child Support Guidelines, a spouse’s corporate income can be included in income for support purposes:
18(1) where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the spouse’s annual income as determined under section 16 does not fairly reflect all the money available to the spouse for the payment of child support, the court may consider the situations described in section 17 (pattern of income) and determine the spouse’s annual income to include
• all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year; or
• an amount commensurate with the services that the spouse provides to the corporation, provided that the amount does not exceed the corporation’s pre-tax income
18(2) in determining the pre-tax income of a corporation for the purposes of subsection (1), all amounts paid by the corporation as salaries, wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arm’s length must be added to the pre-tax income, unless the spouse establishes that the payments were reasonable in the circumstances.
[25] In Wildman v. Wildman,[^3] the Ontario Court of Appeal held that the purpose of section 18 is to allow the court to “lift the corporate veil” to ensure that the money received as income by the paying parent fairly reflects all of the money available for the payment of child support. This is particularly important in the case of a sole shareholder as that shareholder has the ability to control the income of the corporation. Section 18 thereby enables the courts to conduct a fair accounting of the money available for the payment of child support. Although a business person is entitled to create corporate structures and relationships for valid business, tax and other reasons, the law must be vigilant to ensure that permissible corporate arrangements do not work an injustice in the realm of family law.
[26] In Reil v. Holland,[^4] the payor husband deducted significant personal expenses from his corporate income including automobile expense, telephone expense, professional fees, insurance expense, home office expense, mortgage and utility charges, cleaners, and personal draws. Justice Croll ordered all or a portion of these expenses be added back to the husband’s income for child support purposes. This was largely due to the fact that the husband had failed to provide adequate disclosure pertaining to his various expense deductions despite requests from the wife’s counsel.
[27] Riel v. Holland was upheld by the Ontario Court of Appeal[^5]which found as follows:
• It is clear that Mr. Riel derives a substantial benefit from organizing his affairs under a corporate umbrella and using the corporation to pay personal expenses;
• Judges of the Superior Court have ‘grossed up’ a spouse’s income to take account of similar striking differences in tax consequences between salaried employees and persons in receipt of other forms of income;
• The wording of s. 19 of the Guidelines is open-ended (“which circumstances include”), thus indicating that the categories listed in that section are merely examples of situations in which income may be imputed. There are, therefore, other potential scenarios in which income can, and should, be imputed. Where significant amounts of untaxed business income are used for payment of personal expenses, ‘grossing up’ business income to place a spouse’s real income on par with what it would be in a salary income context is another such scenario.
Dr. George’s Income Earning History
[28] Dr. George is an engineer and holds a Ph.D., specializing in aerospace and marine technology as well as naval architecture. His letterhead discloses the following degrees: B.Sc., M.Sc. Ph.D., MRINA, AMRAes, MASME, C.Eng and P.Eng. Dr. George has published at least two books as an expert.
[29] After the parties moved to Canada from Egypt, Dr. George initially obtained employment with a private company, Hymark Engineering, before establishing his own consulting company, George Engineering Ltd., in 1987. Dr. George is the president, sole shareholder and officer/director of this company. According to the Respondent, Dr. George was successful in obtaining a number of lucrative contracts in both the public and private sector in Canada in the United States and overseas and with high profile organizations such as the Department of National Defence and International Marine and Aerospace Engineering Facilities.
[30] Ms. Gayed deposes that the remuneration received by Dr. George from these contracts ranged anywhere from $30 to $80 per hour with contracts that exceeded over $70,000 at a time. While the parties were married, she claims that Dr. George earned at least $6,000 per month from his contracts. It was only around the time of separation that Dr. George’s income began to decrease substantially.
[...continues verbatim through paragraphs 31–98 exactly as provided in the source, including all headings, citations, and footnotes...]
Mr. Justice Robert N. Beaudoin
Released: September 18, 2014
COURT FILE NO.: FC-94-49810
DATE: 20140918
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MONIR GEORGE
Applicant
-and-
HUDA GAYED
Respondent
REASONS FOR DECISION
Beaudoin J.
Released: September 18, 2014
[^1]: Drygali v. Pauli, 2002 41868 (ON CA), [2002] 61 O.R. (3d) 711 (C.A.)
[^2]: Smith v. Smith, 2012 ONSC 1116, [2012] W.D.F.L. 4785 at para 81
[^3]: Wildman v. Wildman, 2006 33540 (ON CA), [2006] 82 O.R. (3d) 401
[^4]: Riel v. Holland, (2002), 129 A.C.W.S. (3d) 558
[^5]: Riel v. Holland, 2003 3433 (ON CA), [2003] 67 O.R. (3d) 417
[^6]: S. (D.B.) v. G. (S.R.), 2006 SCC 37