ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: FS-12-76062-00
DATE: 2015 11 18
B E T W E E N:
ANETTA KUZEMCZAK-COSTA
Mark Trenholme, for the Applicant
Applicant
- and -
HENRIQUE COSTA
(“EDDIE COSTA”)
Steven McCutcheon, for the Respondent
Respondent
HEARD: June 9, 11 and 12, 2015
REASONS FOR JUDGMENT
FRAGOMENI, J.
[1] The applicant Anetta Kuzemczak-Costa (“Anetta”) and the respondent Henrique Costa (“Eddie”) were married on April 22, 1996. There are three children of the marriage, namely: Julian Lee Costa, born June 28, 1998; Adrian Michael Costa, born October 13, 2000; and, Tristan Rene Costa, born September 14, 2013.
[2] The parties separated on February 7, 2012. They lived separate and apart but under the same roof until the matrimonial home was sold on June 28, 2013.
[3] The trial before me dealt with three issues: child support, spousal support, and equalization of property. I will deal with each issue and the evidentiary record relating to each issue separately.
Child Support
[4] Anetta seeks child support for the three children retroactive to the date of separation.
[5] Eddie filed an Income Brief setting out the following incomes:
2009 Line 150 total income $40,189
2010 Line 150 total income $38,356
(of that total $6,244 is RRSP income)
2011 Line 150 total income $46,700
(of that total $18,744 is RRSP income)
2012 Line 150 total income $45,646
(of that total $9,356.36 is RRSP income)
2013 Line 150 total income $47,309
2014 T4A shows gross commission and
fees for services of $68,533
[6] Eddie testified with respect to his employment background and provided a context within which to view how he derives his income. Eddie testified that he sells insurance policies as a broker. As a broker he works for a brokerage company which contracts with various insurance companies. His job is strictly sales and he sells different lines of policies, both personal and commercial. He stated that most of his Book of Business relates to personal lines. He also stated that most brokers do not want personal lines.
[7] He was employed at Unison Insurance from January 2000 to November 2010. He was terminated from Unison by letter dated November 5, 2010. In order for his Book of Business to be returned to him he had to clear an errors and omissions claim. He borrowed the funds from his mother and paid Unison $4,383.03. Upon making that payment on December 10, 2010, his Book of Business was to be released to him by Unison.
[8] In December 2010 he was hired at Regional Insurance. Unison, however, refused to give Eddie his Book of Business. As a result of that refusal he sued Unison in Small Claims Court. He agreed to settle the case for $2,750.
[9] Eddie explained to the court that a Book of Business is a client list. After Unison would not return his Book of Business to him he had to contact his clients all over again for his work at Regional, although he did not get all of his clients back.
[10] At Regional he sells insurance. Regional is a brokerage company. Eddie is a producer selling insurance for Regional. The obligations and duties of a producer are to find clients and obtain rates for them. He derives a commission from this. He receives 50 percent and Regional receives 50 percent. The producer owns the Book of Business. Eddie, in this arrangement, was an independent contractor. At Regional there are four producers, including him.
[11] Tab 5 of the Trial Record is Eddie’s Financial Statement sworn July 18, 2014. He shows a total commission income of $6,000 per month.
[12] Exhibit 20 is the income for support report for 2014. This report was prepared by Mr. Trevor James Hood, at S.B. Partners Limited. Mr. Hood was qualified as an expert with respect to business valuations and income for support purposes. In his trial testimony Mr. Hood set out how he determined the 2014 income for support purposes as follows:
A. Correct. We used the exact same process in this case. And, again, so easiest to turn to Appendix A. In - in that appendix, again, we started off with line 150 on his personal tax return. And on his tax return the only source of income in 2014 was the self-employment income related to his Book of Business, which was $45,439. We then made three adjustments which, again, were similar to the ones made in the previous report where we deducted the Canada Pension Plan, the employer portion of that Canada Pension Plan. We deducted the meals and entertainment expenses, the 50 percent that were not deductible. And then we added back the home office expenses that he deducted on his return. And so that brought us to a level income for support which, again, rounded was $45,000.
Q. All right. Now, I find it interesting, and I want you to comment on this, the difference that you testified that his Book of Business was showing an attrition...
A. Correct.
Q. ...and now his income is going up?
A. Right.
Q. Do you know what that - the reason for that is?
A. And that’s because he’s able and he is still working on building that Book of Business. And so since that point in time, he continues to market, he continues to get new client relationships and so that Book of Business is - is growing at this point in time. However, if he were to sell it and immediately stop then that business - Book of Business is no longer going to increase and grow. It’s going to start to decline.
[13] Mr. Hood also stated that in the 2014 report he did put a scope limitation because of the timing of the report. He did not have time to go through the expenses in detail to verify that they were for business purposes. He relied on the tax returns provided by Eddie that those expenses were valid business expenses.
[14] On the strength of Mr. Hood’s testimony, Eddie’s testimony and the report filed as Exhibit 20, I am prepared to set the amount of child support based on Eddie’s income at $45,000. For three children the amount of child support is $858.00 per month.
[15] Eddie paid the expenses for the matrimonial home and the children until June 28, 2013. Eddie started paying child support of $900 per month pursuant to the consent order of Justice Edwards dated April 12, 2013. The order set out the following at para. 13:
On a without prejudice basis, the husband shall pay child support of $900 per month commencing March 1, 2013. The applicant/wife has received payment for March and April of 2013 already.
[16] The $900 support order was based on Eddie’s 2012 Line 150 income of $45,646. That income included $9,356 of RRSP income.
[17] Eddie submits that he has overpaid child support since that order of Justice Edwards. He submits that the support was calculated on his 2012 Line 150 income of $45,646 but this included $9,356 of RRSP income. He argues that it should have been calculated on an income of $35,000 which would have resulted in an amount of $685 per month. On that basis Eddie submits that he has overpaid child support of $215 per month since the order of Justice Edwards.
[18] I am not prepared at this time to make an adjustment with respect to the amounts paid by Eddie. On the basis that I have found that during the relevant time period Eddie’s income is reasonably set at $45,000, the overpayment would be $42 per month (900 less $858 = $42). The total adjustment would be $42 per month from April 12, 2013, which equals $1,302.
[19] Eddie was paying the $900 on consent, and to now order Anetta to pay back these funds would create an undue hardship to her.
Spousal Support
Anetta’s Testimony
[20] Anetta was born on May 21, 1970. She is presently 45 years of age. She has engaged in various employment and courses including the following: dental assistant; a hairdressing course; a laser technician course at Sheridan College; since April 1, 2014, she has been employed at Lufthansa Airlines at Pearson Airport Terminal 1 as a check-in agent. She presently works 5 days per week, 4 to 4 1/2 hours per day or 6 to 6 1/2 per day. She earns $11 per hour and she also receives $40 per month for parking.
[21] At present she does not engage in work as a hairdresser. She does so only for family and some friends. In April 1996 she was working in a hair salon and for herself.
[22] During the marriage Eddie paid all of the expenses including the mortgage, property taxes, credit cards, and groceries. He paid all of the household expenses. She was responsible for the children. If she had money from her hairdressing work she would give it to Eddie to help out with the expenses.
[23] In cross-examination Anetta stated that she is working toward becoming a flight attendant. Eddie paid for her training in that regard. In further cross-examination Anetta acknowledged that from the journals she kept relating to her hair salon from 1998 to 2003 her gross income totals were as follows:
1998 - $29,058
1999 - $25,608
2000 - $27,002
2001 - $23,755
2002 - $18,592
2003 - $16,682
[24] She did not keep journals for the years 2004 to 2012. The 1998 to 2002 journal entries were for self-employment income she earned from her hairdressing business at home.
[25] Anetta acknowledged that she is now available to take on full-time employment, even at minimum wage if necessary. At present she is not working full time hours. She acknowledges that she spends a great deal of time at the gym and calls the gym her second home. Anetta stated that she is only part time now while she looks for full time employment at the airport.
[26] Anetta’s total income for 2014 is made up of the following:
- $900 per month from child support
- $1,300 per month from the government
- $8,657 from employment income
[27] Eddie submits that during the years from 1998 to 2003 Anetta was able to earn on average $25,000 from her hairdressing business at home. In 1997, before they had children, she earned $35,000.
[28] It is clear that Anetta is a hard worker and she acknowledges that now that the children are older, she is able to work full time.
[29] I am not satisfied on the testimony given by Anetta that she cannot work full time. She is presently working less than a full day at the airport and is waiting to hear about employment as a flight attendant. Eddie asks the court to impute income to Anetta in the sum of $25,000.
[30] Eddie filed a DivorceMate calculation on the basis of his income at $45,000 and Anetta’s income at $25,000 with a child support payment of $858 as follows:
[31] I am satisfied that Anetta is able to work full time. There is no evidence to indicate that she cannot continue to engage in her hairdressing work, even to a modest level while she is employed part time at the airport.
[32] I am satisfied that even at minimum wage of $11.25 per hour for 40 hours per week she could earn $23,400 per annum. On that basis alone the amount in the DivorceMate calculation adjusted to include that amount would result in a spousal support amount of:
Low: 0
Mid: 0
High: 0
[33] If Anetta was paid for only 37 ½ hours of work per week for 50 weeks at minimum wage this would result in a spousal support range of
Low: 0
Mid: 0
High: 0
[34] Even on this scenario I am not satisfied that a spousal support order is warranted.
[35] I agree with the husband’s position that an imputed income for the wife of $25,000 per year is reasonable. In those circumstances and according to the DivorceMate calculations spousal support would be nil.
Property
[36] The significant issue with respect to property relates to the value of Eddie’s Book of Business. I will deal with this issue last as many of the other assets are not in serious dispute as set out in their Net Family Property Statements.
Matrimonial Home - Jointly Held - 3266 Lonefeather Crescent, Mississauga
[37] The home was sold on June 28, 2013, for $805,000. There remains in trust the sum of $289,926.63.
Home - 4314 Greybrook Crescent, Mississauga
[38] This home was owned by the parties jointly as of the date of marriage. It was purchased for $180,000 with Eddie providing a $75,000 deposit. The home was sold prior to the date of separation.
Investment Property for Eddie – 25% 87 Shaw Street
[39] Eddie gave evidence on this property. He had an interest in an investment property at 87 Shaw Street on the date of marriage. He was partners with Mike Raposo. Eddie received $64,742.90 as his share of the property upon sale in the year 2000. As a result Eddie showed $60,000 in his NFP for the value of his interest as at the date of marriage. The $60,000 was used to round off the amount.
Investment Property for Anetta - 25% 16A Owen Drive
[40] Anetta states that this was a gift to her and Eddie concedes that issue. There is no dispute on this issue.
Bank Accounts, Savings, Securities and Pensions
[41] There is no issue with respect to these values. On the valuation date Eddie had a total of $4,547.27. Anetta had a total of $743.71.
Household Goods and Furniture
[42] Anetta did not provide any evidence relating to these items. Anetta did admit in cross-examination that she sold certain items before the date of separation. She acknowledged purchasing a new refrigerator and taking it with her. She acknowledged selling the riding lawnmower but not dividing the proceeds. She also sold a trampoline. She valued the fridge at $1,100. She sold the lawnmower for $656. She needed these funds to buy car insurance. She also took the snow blower.
[43] Eddie testified that the riding lawnmower had a value of $1,000 and the snow blower was worth $400.
[44] Anetta testified that Eddie owned a signed Gibson guitar and 150 boxes of model cars. No values were provided to the court for these items.
[45] Eddie submits that all of the household items had a value of $10,000 at the time of separation. His calculation of the individual items is set out at Tab 4 of his Document Brief. At para. 12 of the order of Justice Edwards dated April 12, 2013, the parties had agreed to exchange lists of chattels for division on the sale of the matrimonial home. Eddie testified that many of the household contents were slowly disappearing prior to the June 28, 2013, sale date of the home as was Anetta taking them contrary to their agreement. At para. 7 of the order it states:
Neither party will sell or remove any contents presently in the matrimonial home without the agreement of the other party or court order.
[46] In an email from Anetta to Eddie she writes:
I’m giving you 48 hours to pick stuff you want from the house, garage, etc. If you are not intended to take it’s means you want me to sell it.
You have time till Monday, 7:00 p.m. Thanks.
[47] On April 15, 2013, Eddie’s lawyer wrote to Anetta’s lawyer, in part:
Please remind Ms. Kuzemczak that our Consent Order stated at Paragraph 7 that “neither party will sell or remove any contents presently in the matrimonial home without the Agreement of the other party or court Order.” such that this does not need to escalate the conflict.
[48] Although there are no valuations provided for each of these items I am prepared to find that the household items had a value of $5,000.
Vehicles
Eddie’s Vehicles
1990 Mercedes-Benz 500SL - $8,000. Anetta agrees with this value.
1963 Chevy Nova II - $12,000. Tab 7 of the Document Brief is the Motor Vehicle Appraisal Record dated May 29, 2015, sets out the appraisal value of $12,000.
2000 Lincoln Navigator Base - $3,500. Anetta does not dispute this value as at V-Day. Eddie sold it in March 2015 for $2,500.
1988 BMW 735i - $800. This was a gift to him from when his father died so it is excluded property.
Anetta’s Vehicle
- 2005 Chrysler Town & Country - $8,000. This is in Anetta’s name and she had it on V-Day. The vehicle is 7 years old. It was purchased new for $60,000 so Eddie stated that an $8,000 value as at V-Day was fair. Anetta takes the position it was only worth $5,000 on V-Day.
[49] Eddie submits that he provided the dates, times and values for all the vehicles prior to trial and throughout the litigation these matters were not in issue. Both parties had all the same numbers on the NFPs prior to May 26, 2015. Eddie brought the Chevy Nova II into the marriage and as such submits that it can properly go in as an asset and then be deducted as an exclusion at the same value.
Loan from Eddie’s Parents
[50] Eddie testified that his parents, Jose and Madelena, loaned him a total of $45,000 in three installments: $10,000, $30,000 and $5,000. Tab 20 of the Document Brief is the draft money order for $30,000 from his father.
[51] At Tab 11 of the Respondent’s Document Brief, the mother’s will dated December 16, 2012, sets out the following at para. 3(b):
As of the date of this my Will, my children are indebted to me in respect to the following loans (the Loans):
Jose Simao Costa, is indebted to me in respect to a personal loan of approximately $30,000.
Eddie (Henrique) Costa, is indebted to me in respect to a personal loan of approximately $45,000.
Lucy Costa-Nyman, is indebted to me in respect to a personal loan of approximately $40,000.
[52] Eddie testified that the loan is still outstanding. He and his siblings paid interest to their father.
[53] I am satisfied that this amount is a loan. The documentary evidence filed supports Eddie’s position. Further, at her questioning, Anetta acknowledged that she thought the children were paying some interest. The following exchange is relevant on this point:
- Q. During your marriage did Eddie’s parents loan any money?
A. To all respect, Eddie’s father, he used to come to his work, I remember something, he came to his work and he give him money. Mr. Costa, his father, Mr. Costa had duplex in Etobicoke, he didn’t want to show it for taxes how much he made, he was always going to children, lending them money to – I guess the children were paying some interest. Once I made the comment about that, telling I don’t understand how you can pay, take interest from your own children. His mother responded, she said, oh because we have to make money to support other children. So always was done, everything between Mr. Costa and Eddie’s dad, I never knew what’s going on with the money, I’m just hearing first time this $30,000.
- Q. So you’re just hearing that for the first time?
A. Yeah, I never knew he give him some $30,000. He came to his work something and he’s giving him 30,000? I didn’t even know how much money he give him, I know he was coming to work. So why he never came to the house and telling us? This is the $30,000 we lending to you. I’m not responsible for any of this, trying to hide the money from Revenue.
- Q. Well, with all due respect though, you saw this morning that there was a receipt for $30,000.
A. I never saw that before. I don’t know where this is coming from. This is the first time I’m seeing this here.
- Q. Do you remember that in June of 2005 was there anything in your life that was important at that time, that happened in that month, can you remember?
A. That was I guess the house, June 2005 we have house, we got a house, July, in July 15th we got a house.
- Q. And do you remember Mr. Costa Sr. lending Eddie $30,000?
A. No, I didn’t.
- Q. Can I ask you if you were trying to hide money would you transfer money would you transfer through a bank draft?
A. I never ---
MR. BELKIN: Don’t answer that. That’s a hypothetical question.
- Q. Now you said just a few minutes ago that Mr. Costa used to visit with his father and they had some arrangements to pay money back and they were paying for other children. So you’re aware that they loaned money back and forth between them, didn’t you?
A. I remember when I got married, that was the first year, in ’96, ’97, I don’t remember exactly, he came with $10,000 telling us why don’t you take this $10,000. So that was kind of I guess he was going to Eddie and discussing stuff and I don’t know what he was lending money for. Now it’s question for me, where the money?
Value of Eddie’s Book of Business
[54] As I indicated at the outset this asset is the most significant asset and the positions of the parties are quite different.
[55] Anetta values the Book of Business at $296,000. Eddie submits that the value is $95,000. It is important to review some of the testimony of the two experts called on this issue.
[56] I will start with portions of the cross-examination of Mr. Frye, the expert called on behalf of Anetta. Mr. Frye acknowledged that he did not deal with Unison or the Regional in the preparation of his report. Mr. Frye stated that he knew the number of policies and that it was marketed with standard markets.
[57] It is important note that Mr. Frye’s value is at February 7, 2012. Mr. Frye was not aware that Eddie had transferred to a new employer at that time. Mr. Frye was not aware that Eddie’s previous employer refused to release his books. Mr. Frye acknowledged he was not aware of Eddie’s circumstances.
[58] Mr. Frye testified that he has dealt multiple times with buying, selling and transferring of brokerages. Mr. Frye agreed that his earnings before taxes depreciation, and amortization (“EBITDA”) calculation or multiple that he assigned, is three times. This multiple, however, is used on a regular basis for insurance brokerages and Eddie is not a brokerage, he is a producer.
[59] Mr. Frye stated that the Book of Business has a proprietary component whether it is insurance brokerage or a Book of Business. Mr. Frye’s experience has been that he has dealt with brokerages 75% of the time and Books of Business 25% of the time. The following exchange is relevant with respect to the source of his information he had to prepare his report and value as at February 2012:
Q. Have you had any opportunity to look at his success after that date of separation?
A. I have not.
Q. So, in fact, when you did your report or - or not necessarily when you did the report, but when you looked at the - the information as at February of 2012, you were essentially looking at producer reports from Unison, correct?
A. You know what, I have to be honest, I don’t know what my source was. It was provided to me - to us. I am assuming it was a report. It was an Excel report, so I’m assuming it came from Mr. Costa or someone associated with Mr. Costa. I don’t think we delved into any further than that.
Q. All right. Do you recall, or can you tell from your schedule attached to your report, whether his business was flat lined, whether it was rising or whether it was dropping?
A. It appeared it was dropping.
Q. And one last question.
A. Yes.
Q. In your assumptions, at the end, at page six, you - your number one assumption is there were no significant changes in the Book of Business from January 31st, 2012, to February 7th. Can I ask you if that also extends to the information that you already received? Because apparently you don’t have all the information, or you didn’t get all the information?
A. If there’s additional information associated with the Book of Business that would influence my value that we didn’t receive – then sort of like talking in - in circles here, but...
Q. Okay.
A. ...if there’s information that I should have had that I didn’t have, well, I would have to agree with you, yes, I would have to look at it and...
Q. All right.
A. ...see whether it would influence the value.
Mr. Trevor Hood’s Testimony
[60] Mr. Hood testified that he looked at the nature of the asset. He calls it a Book of Business, which is essentially the client list that Mr. Costa had for various property and casualty insurance clients. On that basis the approach he took was to value the business by way of a discounted cash flow model. The reason he used this approach is that a client list is something that existed at a particular point in time, namely February 7, 2012. At page 6 of the transcript of his testimony, the following exchange is relevant:
Q. And is that one of the distinctions between a brokerage and a Book of Business?
A. Yeah, that’s fair to say because with a brokerage there is a certain level of good will that that brokerage is going to have, and so because of the name and reputation of that, then there’s more of an indefinite period in which those client relationships are going to build or, you know, come to that business; whereas this is the relationships that an individual has with those clients. And so whether he leaves or even, you know, regardless of whether he continues to operate, certain clients are going to leave and transition over time.
Q. All right. Okay.
A. So from there we can go to Appendix B. And so with - with the model that we applied, it was also our view point that the most likely buyer of the Book of Business is going to be an insurance brokerage. And so we wanted to understand what the potential income that would be generated from the client list and those client relationships to the brokerage. And so our starting point for that was the net income that we had included - I actually notice there’s an incorrect reference, it should say Appendix A.
[61] The adjusted EBITDA was looked at over a three year period and he found a decline. This decline was attributed to a transition by Eddie from moving to Regional from Unison. He looked at certain averages and based on those averages he concluded the maintainable EBITDA that would be received form his Book of Business on a go-forward basis would be in the range of $90,000 to $100,000.
[62] With respect to the attrition rates, Mr. Hood testified as follows:
So basically what we did was, we created a low scenario and a high scenario. In the low scenario we used the $90,000 as our starting point, and in the high scenario we used 100,000. We then had to decide what the - what we’ll call attrition is of that. So how is that Book of Business going to diminish over the - the time period? And we concluded that a range of 20 percent to 25 percent was a reasonable attrition rate. We applied the 25 percent on our low scenario and a - the 20 percent on our high scenario.
In arriving at those attrition rates, a lot of that decision was based on our discussions with Mr. Costa. We did consider our experience and what we’ve seen in the past with these types of clients and, you know, whatever other industry research we would - could - could find. There is a wide range of attrition. It depends on a lot of factors, the name and reputation of the - even the brokerage that is kind of working with the - the producer to maintain that book. It depends on whether it’s personal lines of insurance, commercial lines of insurance, the size and just the nature of those relationships.
[63] Mr. Hood stated that the multiples for books of business ranged from between one to two times the commission income and this reflects the personal insurance nature of the Book of Business.
[64] Mr. Hood indicated as well that the values paid for brokerages are much higher. He noted that there is a high demand for brokerages because insurance companies are supporting other brokerages and buying up and expanding their book. His understanding is that those can be in the range of two and a half to three times the commission stream for brokerages. That is the distinct difference between a brokerage and a Book of Business. The further distinction was described by him as follows:
Q. All right. And in your mind, would it make sense that the multiplier be the same for a Book of Business as it is for a brokerage?
A. No, because, again, that brokerage is going to have a certain level of reputation and good will. That’s going to – again, the attrition rate isn’t going to be as high for a brokerage. It’s going to have - the brokerage is also going to have an infrastructure in place. And whereas the - the Book of Business is, again, it’s all based on the personal relationships that the producer has with the external client base.
[65] Mr. Hood then reviewed the issue of contingent disposition costs. Those contingent disposition costs consisted of professional fees with selling the Book of Business and some personal income taxes that would be paid as a result of a sale. As a result the initial range of $85,000 to $105,000 was reduced by $5,000 for the estimated professional fees. The personal income taxes on the capital gain would be between $19,000 and $22,000. The total disposition lost would be between $22,000 and $27,000.
[66] Mr. Hood was asked about whether there was any advantage to Eddie incorporating as it relates to the saleability of his Book of Business. The following testimony is relevant on that point:
Q. What would be the difference for a purchaser buying a Book of Business like a client list from somebody like Eddy Costa, versus from his company?
A. Well, so if - if he was to buy it - if they were to buy it personally from Mr. Costa, they would be able to depreciate that Book of Business for tax purposes and get a tax write off for that Book of Business; whereas if they were to buy the shares of a corporation that own that Book of Business, that cost base that they purchased, there’s no ability to write that off for tax purposes. It’s just an embedded cost base that...
Q. So....
A. ...they wouldn’t benefit from likely.
Q. Is it fair to say that the tax savings are going to be offset by the reduction of salability?
A. Correct.
[67] In questioning by the court Mr. Hood clarified the issue relating to disposition costs as follows:
THE COURT: I think there might have been one more, but hold on. I think that was it. So you’ve taken into account also a - a disposition cost on - on a sale. So if there is no intention to sell, or immediate intention to sell and - and you know, Mr. Costa was going to keep the business, that’s how he derives his income...
A. Correct.
THE COURT: ...and so he would - the intention being that he’s not going to sell it.
A. Yes.
THE COURT: He’s going to hang onto it because that’s his source of income.
A. Yeah.
THE COURT: Would those disposition costs – they would be notional at that point wouldn’t they?
A. Correct.
THE COURT: Yeah.
A. Yes. And that’s - we have factored in a 50 percent discount to - to deal with that...
THE COURT: So that’s where that 50 percent discount come into – this may just be notional?
A. Right.
THE COURT: Yeah. Thank you.
A. Okay.
[68] I agree with the position of Eddie with respect to the value to be attributed to his Book of Business. Eddie submits to the court that given the poor wording of the standard contracts in the industry his Book of Business has no value. However, Eddie does acknowledge there is a potential value and possibly goodwill attached to work he has put in to the business. As such he is prepared to accept the mid-point value reached by Mr. Hood, namely $95,000.
[69] I accept the testimony of Mr. Hood and his report and find that his analysis was detailed, thorough and properly sourced. He was able to accurately and clearly draw the distinction between a brokerage and a producer. I find Mr. Frye’s testimony on that area did not adequately acknowledge this distinction and as such it was not helpful on that point.
[70] With respect to the disposition costs, however, though I understand that Mr. Hood discounted this amount by 50% because of the possibility that Eddie may not sell his Book of Business. On the evidence before me there is no indication that it is Eddie’s intention to sell his Book of Business at this time or in the near future. In those circumstances, therefore, I am not prepared to attribute any amount to disposition costs.
[71] Eddie’s position on the property issue is as follows:
That the court should accept his NFP Statement found at Tab 7 of his Trial Record and order Anetta to pay him an equalization payment of $17,867.23.
That Anetta reimburse him for expenses he paid fixed at $33,371.03.
That the total of $51,238.26 be paid out of her share of the net proceeds of the sale of the home currently in trust. The net proceeds are $289,926.63. So her share is 1/2 of that amount less $51,238.26 and his share is 1/2 of that amount plus $51,238.26.
[72] The report sets out the mid-point contingent disposition costs at $12,500.00. I will add this amount to the $95,000 for a total value of the business being fixed at $107,500.00.
[73] Eddie states that the $33,371.03 in expenses he is entitled to is made up of the following for the period from February 7, 2012 to June 15, 2013:
Anetta increased the joint line of credit from $11,000 to $15,000 after the date of separation and he paid it off - $4,000
Eddie paid all of the household expenses. Anetta’s share is 1/2 x $37,413.99 = $18,707.20
Eddie paid for all children’s expenses including sports and summer camps. Anetta’s pro-rata share is 1/2 x $4,411.88 = $2,205.94
Eddie paid Anetta’s car insurance and expenses - $8,458.09
I am satisfied that the amounts set out at numbers 1, 2 & 4 are reasonable and Eddie should be reimbursed for those expenses. I am not satisfied that the s. 7 expenses at number 3 of $4,411.88 are reasonable on the evidentiary record before me. I cannot find and conclude that these expenses fall within the definition of s. 7 of the Child Support Guidelines which defines what constitutes special or extraordinary expenses. In these circumstances, therefore, the total claimed by Eddie for reimbursement, namely $33,371.03 will be reduced by $4,411.88 for a total of $28,960.15.
Section 7 (1.1.)(b) directs the Court to determine whether the expenses are extraordinary having regard to five factors, as follows:
The amount of the expense in relation to the income of the spouse requesting the amount (including the child support amount);
The nature and number of the educational programs and extracurricular activities;
Any special needs and talents of the child or children;
The overall costs of the program and activities, and;
Any other similar factor that the court considers relevant.
[74] The evidentiary record is insufficient to find and conclude that the expenses claimed by Eddie for reimbursement by Anetta fall within these parameters.
[75] Anetta’s calculations, set out in her NFP chart dated June 11, 2015, with no exclusion attached to the Shaw Street home, are that Eddie owes her $149,158 along with her 1/2 share of the net proceeds of the matrimonial home.
Conclusion re: NFP
[76] The court assesses NFP as follows:
Asset Applicant Respondent
Wife Husband
Matrimonial Home $196,192.13 $196,192.13
Property owned on V-day $137,500.00
Household Contents $ 5,000.00
Refrigerator $ 1,386.14
Riding Lawn Mower $ 1,000.00
Snowblower $ 400.00
Vehicles
1990 Mercedes-Benz 500 SL $ 8,000.00
1963 Chevy Nova II $ 12,000.00
2000 Lincoln Navigator Base $ 3,500.00
1988 BMW 735i $ 800.00
2005 Chrysler Town & Country $ 8,000.00
Savings $ 743.71 $ 4,547.27
Book of Business $107,500.00
Totals $ 349,821.27 $332,539.40
Debts & Liabilities Applicant Respondent
Wife Husband
Credit Cards
Scotia Visa $ 726.25
PC Mastercard $ 5,032.36
Loan from Parents $ 45,000.00
Property on Date
of Marriage_____ Applicant Respondent
Wife Husband
87 Shaw Street
(25% of $240,000) $ 60,000.00
Chevy Nova II $ 12,000.00
BMW 735i $ 800.00
Gift to Applicant – 16A Owen Dr. $137,500
Net Applicant Respondent
Wife Husband
$ 212,321.27 $208,980.79
[77] Equalization Payment owing to Respondent = $1,670.24
[78] Total owing to Respondent is $30,630.39.
[79] Judgment to issue as follows:
An order for divorce.
The Respondent shall pay to the Applicant for the support of the three children of the marriage $858.00 per month pursuant to the Federal Child Support Guidelines based upon his current income of $45,000 per annum commencing July 1, 2015.
There shall be no spousal support payable by either party to the other.
The Applicant shall pay to the Respondent an equalization payment of $1,670.24 and reimbursement of expenses fixed at $28,960.15, for a total of $30,630.39 from her share of the proceeds from the sale of the matrimonial home, which remain in trust (currently $289,926.63). To be clear, the Applicant shall receive one-half of the proceeds less $30,630.39 and the Respondent shall receive one-half plus $30,630.39. An order shall issue requiring the real estate lawyer, Mr. Douglas M. Davidson, to pay out the remaining funds accordingly.
An order that the Applicant may make written submissions regarding costs within 30 days of the release of written Reasons for Decision. The respondent shall then have 15 days to respond. Written submissions shall be limited to three pages in length.
Fragomeni, J.
Released: November 18, 2015
COURT FILE NO.: FS-12-76062-00
DATE: 2015 11 18
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Anetta Kuzemczak-Costa
Applicant
- and –
Henrique Costa (“Eddie Costa”)
Respondent
REASONS FOR JUDGMENT
Fragomeni, J.
Released: November 18, 2015