CITATION: Sagat v. Sagatova, 2015 ONSC 2750
COURT FILE NO.: 205-14
DATE: April 27, 2015
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Stefan Teofil Sagat
Applicant
– and –
Dagmar Sagatova
Respondent
Pamela Biron, for the Applicant
Mark A. Fendley, for the Respondent
RULING ON MOTION
PEDLAR, J
[1] This is a Motion brought by the Applicant for an Order for the sale of the matrimonial home under the Partition Act and Family Law Act and for a reduction of interim child support and spousal support based on a material change of circumstances, being the Applicant’s income reduction and the Respondent’s increased income.
[2] The parties were married on August 18, 2002 and separated July 31, 2013, although the Applicant did not move out of the matrimonial home until early November 2013.
[3] There are two children of the marriage, Noah Sagat born July 28, 2004 and Isabella Sagat born December 10, 2008. The children reside approximately equal time with each parent and have done so virtually since their separation.
[4] Following the commencement of this Application the parties obtained an Order on July 3, 2014 relating to access and the matter was adjourned to August 8, 2014 at which time they entered into a Consent Order which provided for the Respondent to continue to reside in the matrimonial home with the Applicant paying identified expenses in lieu of child support and spousal support.
[5] Another term of that August 8, 2014 Order stated as follows “the house shall be listed for sale no later than February 1, 2015, unless the Respondent is in a position to refinance the mortgage and purchase the Applicant’s interest in the home prior to that date. Determination of the Applicant’s interest in the home shall be based on a value of $285,000.00.”
[6] That Order also provided that if there is a dispute with respect to the sale of the matrimonial home after February 1, 2015, either party may apply to the Court for directions on short notice. The Respondent agreed to pay the Applicant $1,500.00 as costs for that Motion.
[7] The Respondent has arranged financing, in the form of a Mortgage Commitment that is marked as Exhibit “A” to her Affidavit sworn April 2, 2015. That financing allows her to take over the existing mortgage but does not provide funds to “purchase the Applicant’s interest in the home.”
[8] The Respondent’s proposal is that she pay for the Applicant’s interest in the home through a suitable adjustment to her entitlement to her portion of interest in the Applicant’s pension.
[9] The Applicant seeks to have the home sold, noting that trading off his interest in the home as against the Respondent’s interest in his pension would result in him not being able to have the advantage of his portion of the equity that remains in the home as well as leaving him with the full responsibility for the line of credit which amounted to $26,222.76 at the date of separation. The Applicant’s position is not seriously contested by the Respondent that those debts are joint family debts, even though the loan is in the name of the Applicant only.
[10] In dealing with this portion of the Motion I find that the August 8, 2014 Order is clear and unambiguous. The Respondent has failed to obtain the necessary financing to comply with paragraph 4 of that Order.
[11] The Respondent raises the question of the children’s best interests, as this has been their home since it was purchased by the parties in 2008. Since the parties’ separation in November 2013, the children have been residing approximately equally with each parent. This does not appear to be a situation where the Court would take the position that the children’s best interests have been demonstrated as being so strongly intertwined with that particular residence that the home should be retained and the Applicant not be able to have access to his equity in that property. The children appear to be doing well and spending approximately half their time with the Applicant in a home which he has purchased since separation, with the assistance of his family.
[12] The position of the Respondent that she should be allowed to purchase the Applicant’s interest in the home by trading off against her entitlement to a portion of his pension could have been an arrangement arrived at between the parties when the matter was before the Court in August of 2014, if the Applicant consented to that arrangement. The Order clearly does not contemplate such a term in paragraph 3. She was entitled to a portion of his pension at the time of the Order. The Order clearly requires her to obtain financing which would include her capacity to buyout his interest in the property rather than have a trade-off as against his pension value, which he will not be eligible to receive until he begins drawing his pension.
[13] I therefore order that the joint matrimonial property municipally located at 8 Drummond Street East, Perth, Ontario shall be listed for sale forthwith. The Applicant shall list the property for sale at a price of $289,000.00, without the consent of the Respondent and is entitled to accept all reasonable offers, for a selling price of no less than $285,000.00, without her consent provided she is given a reasonable time to vacate the property prior to closing. The Applicant is authorized and entitled to sign all necessary documentation to complete the sale under these terms.
[14] The Respondent is ordered to grant access to any real estate agent of the Applicant’s choice for the purposes of listing, staging, photographing and showing the matrimonial home to potential purchasers. If the Respondent refuses to do so the Applicant may attend at the matrimonial home on reasonable notice to the Respondent with the real estate agent for those purposes.
[15] Out of the proceeds of the sale the following expenses shall be paid:
a. Real estate commission;
b. Legal fees and disbursements necessary to complete the sale;
c. The amount required to discharge the mortgage to the Royal Bank of Canada;
d. The amount of $26,222.76 required to retire the balance of the Applicant’s line of credit as at the date of separation payable director to the creditor;
e. The outstanding Costs’ Order of $1,500.00 from the August 8, 2014 Order.
[16] The remaining proceeds shall be paid out equally to the parties following any adjustment for the cost of this Motion yet to be determined.
[17] With regard to the issue of spousal and child support this has been a most challenging Motion. There has been a great deal of confusion in attempting to establish a reasonable income to be attributed to the Respondent who is self-employed. There has also been a series of changes to the Applicant’s income, due to his health issues which has resulted in him being on short term disability for a period of time and currently on long term disability with a plan for him to return to full employment as of September 1, 2015.
[18] We now have the benefit of the Respondent’s latest Income Tax Return which states that her line 150 income is $17,332.94 for the taxation year 2014. Because her Income Tax Return is so recent there has not yet been time for a Notice of Assessment to be provided to the Court. In addition to that income she has, of course received the benefit of the direct payments to third party sources that are provided for in the August 8, 2014 Order. Those payments total in excess of $1,800.00 per month. She has also been receiving the Child Tax Credit in the full amount, even though the children have been residing equally with both parties. The Respondent’s initial Financial Statement filed in these proceedings at Tab 6 of Volume 1 of the Continuing Record stated her gross income was $10,407.59 for the year 2012.
[19] One of the challenges in this case has been trying to establish an accurate income for the Respondent and interrupting the impact of the disability benefits which the Applicant has received and will continue to receive until September 1, 2015 if everything goes as planned.
[20] The dilemma in resolving the question of the Respondent’s true income was heightened when her mortgage application for the financing she has received, was produced after the initial Motion was argued in March.
[21] On Page 1 of that document which is filed as Exhibit “B” to her Affidavit sworn April 2, 2015 she states that her self-employed annual income is $45,000.00 and under the heading of “other income” she lists child support as $21,960.00. She lists $18,000.00 in savings which was not reflected in her earlier Financial Statements.
[22] With regards to the savings she states that was based on an estimate of what would be available to her if her mother advances 10,000 euros to her which would be valued at approximately $13,000.00. Her mother is willing to do to help her make this purchase happen. The Respondent’s explanation for the amount shown on the mortgage application is that the $45,000.00 is inclusive of the $21,960.00 which she claims as child support rather than in addition to it. The document on its face does not read that way.
[23] In written submissions to the Court there are statements that the mortgage broker, who is named, confirms the Respondent’s position on that issue. There is no sworn evidence from that mortgage broker.
[24] That situation leaves the Court in a rather precarious position. It would seem rather unusual for a mortgage broker to not review income tax documentation before completing a mortgage application. It would then seem somewhere between negligent and fraudulent to triple or quadruple that amount being presented as income to the mortgage company without some explanation. The Respondent’s explanation is that the $21,960.00 is included in $45,000.00. If one where to modestly gross up the amount claimed on the Income Tax Returns as income, to take into account the usual issues surrounding self-employment, plus add the $21,960.00 then this mortgage application may make more sense than assuming that the mortgage company is being told the Respondent has an income of approximately $67,000.00 per annum. A plain reading of the application, however, seems to indicate that. No matter how you look at it, the numbers don’t really add up and it leaves me fairly uncomfortable in setting an income upon which both child support and spousal support can be established.
[25] When it comes to the Applicant’s income the situation is not so much what the numbers are and have been, but more whether the current plan for the Applicant to return to employment will play out as anticipated. I think it is reasonable to assume that it will and I will make that assumption in establishing his income for the purpose of this Interim Order.
[26] There is some urgency here in order to try and make sense of the financial crisis facing this family. The cost of marriage breakdown is always very high, both personally and financially. The Applicant has been carrying the costs required of him by the August 8, 2014 Order, with a reasonable expectation that matters would begin to move more quickly after February 1, 2015 than they have. We are now approaching the 1st of May and the listing of the house is just about to take place. This is a prime time of year to facilitate the sale and he has been given, by reason of this Order, the capacity to manage that sale and have it proceed in the absence of any consent from the Respondent. Once the house is sold and the Applicant is back at his full-time employment, there should be much more certainty for both parties. They will have a better ability to adjust their lives to fit the available resources. There will be a fixed amount of support being paid and each party will have some proceeds from the sale of the matrimonial home, the joint family debt through the line of credit will be paid off and the financial picture will be much clearer for the foreseeable future. The necessary division of pension can take place in the usual manner.
[27] For the purpose of calculating child support and spousal support, if any, I am relying on the following findings and applying the divorcemate calculations provided through counsel, based on the children continuing to reside with each party on approximately an equal basis.
[28] I have chosen to apply the divorcemate calculations, for the purpose of this interim motion only, listed as #2 set of calculations of 4 that were provided by counsel for the Applicant. I find that there has been a material change in circumstances in that the Applicant’s income has been reduced because of his health struggles and dealing with Lyme disease. I am assuming that he will be back to full-time employment as of September 1, 2015 and that these calculations take that factor into account.
[29] I find his employment income to be $52,826.00 and his non-taxable disability benefits to be $16,895.00.
[30] For the purpose of the divorcemate calculations, his annual guideline income was assumed to be $76,626.00 taking into account his non-taxable income and allowing a deduction for his union dues.
[31] Using the divorcemate calculation income for the Respondent to be $17,734.00, although that is a few dollars different than what her line 150 claim is on her 2014 Income Tax Return, I find that the most reasonable range of support on an interim basis is the middle range which results in a spousal support payment of $752.00 a month and child support of $857.00 a month for basic table child support. The splitting of extra ordinary expenses would be on the basis of 75.6% to 28.4%, Applicant to Respondent, based on these numbers.
[32] With regards to the commencement date of this Order, I have the option of delaying the commencement until the sale of the house is completed, and then commencing this Order on the first day of the month following completion of the sale, or commencing the Order as of May 1, 2015 leaving the Respondent with the obligation to pay all the expenses detailed in Paragraph 2 of the Order of August 8, 2014. That Order contemplates those expenses to be paid by the Applicant until the house is transferred or sold. Under all of the circumstances of this file I find it reasonable to continue Paragraph 2 of that Order until July 1, 2015 at which time the current variation that I am making with this Order will come into place. Obviously if the house is sold and a closing date arrived at before July 1, 2015, then this Order would come into effect on the 1st day of the month following the sale or transfer of the house. That is not very likely and the intention of this Order is that it is to encourage the sale of the house in an orderly fashion. The most logical date for selling the house would be after June 30, 2015, when the children have completed their school year and the move can be facilitated much more easily during the school vacation months.
[33] Under all the circumstances and with the challenges of trying to make relevant findings of fact and not being aware of any offers to settle that may have been exchanged between the parties I will not open the sealed envelope from the Applicant’s counsel regarding a costs’ claim until the parties have had a chance to discuss costs. If either party wishes to seek costs they may do in writing within thirty days with a ten day right of reply to the other party. I have chosen not to include in this Order the repair to the roof of the matrimonial home. The evidence is very unclear as to the state of the roof and the Applicant is in a position to get an estimate of the cost of such repairs that may assist in the sale or if he wishes to go ahead and have them repaired then that money will come out of the proceeds of the sale. He is authorized to go ahead with that repair by virtue of this Order, if he chooses to do so.
The Honourable Mr. Justice K.E. Pedlar
Released: April 27, 2015
CITATION: Sagat v. Sagatova, 2015 ONSC 2750
COURT FILE NO.: 205/14
DATE: April 27, 2015
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Stefan Teofil Sagat
Applicant
– and –
Dagmar Sagatova
Respondent
RULING ON MOTION
Pedlar, J.
Released: April 27, 2015