Rina Rudky v. Serdal Kaybaki
COURT FILE NO.: FS-14-00019549
DATE: 20151020
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
RINA RUDKY Applicant
– and –
SERDAL KAYBAKI Respondent
Counsel: Leroy A. Crosse, for the Applicant Lubomir Poliacik, for the Respondent
HEARD: Sept. 14 – 18, 2015
REASONS FOR JUDGMENT
JUSTICE W. MATHESON
[1] This trial arises from the breakdown of a common law spousal relationship between the parties. They have cooperated with respect to custody of and access to their two children, resulting in a final order dated September 21, 2015, with only travel unsettled between them. The issues that remained for trial were as follows: (1) the process that will be required in relation to travel and obtaining passports and government documents for their children; (2) trust claims regarding two real properties; (3) the quantum of spousal support claimed by the respondent; and, (4) child support.
Background
[2] The applicant Rina Rudky is 48 years old. She was born in Riga, Latvia, and immigrated to Canada in 1984 at the age of 17. After completing high school, the applicant attended the University of Toronto and completed her qualifications to practice dentistry.
[3] The applicant practised dentistry from 1990 to 1994, when she decided to apply to medical school. In 1994, Dr. Rudky began in medical school at the University of Toronto. She graduated in 1998, and completed her psychiatry residency in 2003. She has been in practice as a psychiatrist since that time.
[4] The respondent Serdal Kaybaki is 41 years old. He was born in Turkey. He attended university in Turkey where he studied mechanical engineering, but he did not complete his degree. He also studied French at a university in France but did not obtain a degree. He came to Canada in September 2000 as a refugee. He then obtained permanent residency and is now a Canadian citizen.
[5] The parties met within a few weeks after Mr. Kaybaki arrived in Canada in 2000. At that time, Dr. Rudky was in the process of completing her psychiatry residency.
[6] Dr. Rudky purchased a condominium at 233 Beecroft Avenue in Toronto in 2001. She was working in her psychiatry residency and earning the money needed to purchase the property. Mr. Kaybaki made no financial contributions to the purchase of the Beecroft condominium. Mr. Kaybaki had arrived in Canada with only $1,500.
[7] The parties began cohabitating in 2001, living in the Beecroft condominium until 2005. When the parties first began to live together, Mr. Kaybaki contributed some money toward groceries and cleaning supplies, and did some repairs and upgrades on the Beecroft condominium, but it was Dr. Rudky who paid the mortgage and most of the expenses.
[8] In each of 2002 and 2003, Mr. Kaybaki worked for about six months of the year in construction. However, he preferred the idea of being a self-employed entrepreneur to being an employee. In an effort to support him in this goal, Dr. Rudky financed a new business in 2004. The concept was to manufacture shawarma, a food product, and sell it to restaurants. A company was incorporated called Diyar Donair Production Inc. Dr. Rudky was the sole shareholder and Mr. Kaybaki was a director. Commercial space was leased and equipment and a truck were purchased. Both the parties worked to find customers, and it was Dr. Rudky who got the biggest customer the business had in its short existence. The business lasted only a few months, and closed after the one big customer decided that it did not like the product.
[9] That year, Mr. Kaybaki also took some construction work in order to continue the lease payments until the business could be sold. Other than those lease payments, the business was financed entirely by Dr. Rudky. The parties were lucky to find a purchaser who needed the same kind of space and equipment, and was prepared to take an assignment of the lease. The purchaser paid $36,000 for the equipment and the truck. In the end, Dr. Rudky had at least an $82,000 loss on this business venture.
[10] Dr. Rudky became pregnant and felt that she was ready to consider moving to a house. In early 2005, the first property at issue in this application was purchased – a house at 215 Churchill Avenue in Toronto. Dr. Rudky made all the financial payments required for the purchase other than bank financing; Mr. Kaybaki made none. The Churchill property was registered in Dr. Rudky’s name.
[11] The parties’ son Julian was born in April 2005. Their daughter Ella was born in 2007. Beginning not long after Julian was born, a live-out nanny was hired. There were a number of different nannies that followed over time. External childcare was also used from time to time. Dr. Rudky was significantly involved in caring for the children. Mr. Kaybaki also helped with the children, although more so in the early years. Mr. Kaybaki testified that shortly after Julian was born, he came to realize that he needed to change his perception that children would usually be with the mother and nanny and he needed to continue to be more involved.
[12] The family moved to the Churchill property in 2005 and lived there until 2013. Mr. Kaybaki did some work on the Churchill house, although there were no major renovations.
[13] Mr. Kaybaki’s sister also lived at the Churchill property for about two years. She assisted in taking care of the children. In addition, one of Mr. Kaybaki’s brothers stayed at Churchill for two periods of about six months.
[14] The Beecroft condominium was not sold after the move – it became a rental property until it was sold in 2011. The management of the rental property was straightforward, with minimal work required. That work was shared by the parties.
[15] After Julian was born, Mr. Kaybaki decided that he wanted to go back to school. Dr. Rudky helped him get admitted to the University of Toronto, and she paid his tuition, but again he did not graduate.
[16] In 2006, Dr. Rudky set up a professional corporation – Rina Rudky Medicine Professional Corporation (“Rudky Medicine”). She did so both to achieve some tax savings and in another effort to give Mr. Kaybaki a role. He received a salary. He did some work in the early years, maintained the home office and initially worked with the accountant, but in later years his involvement was fairly minimal. He was also a shareholder and received dividends.
[17] In 2007, Dr. Rudky set up and funded an RRSP. Mr. Kaybaki also established an RRSP with $10,000 he had access to from Turkey. However, the funds in both RRSPs were lost in a bad investment in the stock market.
[18] In 2009, a property at 102 Harlandale Avenue in Toronto was purchased, again to give Mr. Kaybaki an occupation. A company was incorporated to purchase the Harlandale property – Urban Villa Homes Inc. The parties were the directors and shareholders. The plan was to tear down the existing house, build a new house and then sell the property. The Harlandale property is the second property at issue in this application.
[19] The parties worked together to get the Committee of Adjustment’s approval needed for the new building on the Harlandale property. In the meantime, the property was rented out and both parties dealt with the rental process and tenants, which was more difficult than it had been for the Beecroft condominium.
[20] Around this time, Mr. Kaybaki completed the requirements to become a real estate agent. This too was funded by Dr. Rudky. It also meant that a real estate commission from the sale of the Beecroft condominium could be directed to Mr. Kaybaki, which was then deposited in their joint account. Mr. Kaybaki has not done any other transactions as a real estate agent or earned any commissions in that regard. He testified that he obtained the licence because real estate agents hear about properties coming on the market, for potential re-builds, before the general public.
[21] The old house on the Harlandale property was demolished in 2011. Before the newly-built Harlandale house was finished, Dr. Rudky decided that she would like to move into the property. The Churchill property had deteriorated. In July 2011, the Harlandale property was transferred into the parties’ names, as joint tenants. Dr. Rudky testified that this was done to give Mr. Kaybaki identity and self-esteem. The mortgage was also put in both their names, but the payments were entirely made from funds originating from Dr. Rudky’s professional income.
[22] Mr. Kaybaki testified that he went along with Dr. Rudky’s wish to move in to Harlandale rather than sell, but that he resented it. He testified that his resentment never went away.
[23] The construction of the new house on the Harlandale property took some time. Mr. Kaybaki performed the role of general contractor in connection with the construction project. He also did some of the work himself. He had never built a house before. Dr. Rudky also participated in the building project by dealing with subcontractors as needed and, in that she and the family planned to move in, she became more involved in changes to the design of the house and the selection of finishings.
[24] There was a dispute at trial about to what extent Mr. Kaybaki was actually working on the Harlandale project in the years leading up to their occupancy in December 2013. It was Dr. Rudky’s impression that he was not working hard on that project, but she admitted that she was not at home during the day to know when Mr. Kaybaki was home at the Churchill property, or when he was working at the Harlandale property. Based upon the testimony of Erna Janedomingo, the nanny from about 2011-2013, it does appear that Mr. Kaybaki spent most weekdays away from the Churchill property other than coming home for lunch. Bearing in mind all of the trial evidence, I find that Mr. Kaybaki did work full-time on the Harlandale property once the construction of the new house began.
[25] The family moved into the Harlandale property before all of the work was finished because of the ice storm in Toronto in late December 2013. The storm damage to the Churchill house made it necessary to move early. In that same month, the parties agreed to separate. They resided separately at Harlandale until May 2014.
[26] Mr. Kaybaki testified that in December 2013, in the course of discussing separation, the parties discussed dividing property by him having the Churchill property and Dr. Rudky having the Harlandale property. However, it was not suggested at trial, nor is it established in the evidence, that this conversation amounted to any sort of legal agreement.
[27] Mr. Kaybaki moved back into the Churchill property in May 2014 after two incidents involving the police. In April 2014, he arrived at Harlandale after midnight and found a friend of Dr. Rudky’s, a former nanny for their children, sleeping in the home office. She had come for dinner and had been invited to stay overnight after it got late. Mr. Kaybaki said he did not want her in what he regarded as his office. It was apparent in Mr. Kaybaki’s testimony that he did not have a good relationship with that former nanny. He called the police. Not surprisingly, the police did not remove the house guest. Not long after that incident, in about May 2014, Mr. Kaybaki had an altercation with the then-nanny in the kitchen, in Julian’s presence. The nanny, Zaitun Khan, testified about the incident, saying that they argued and he yelled at Julian and pushed Julian. He admits that he was yelling at the nanny and may have pushed her as well. After hearing about the incident from the children, Dr. Rudky went to the police, who then interviewed Mr. Kaybaki. No charges were laid, but Mr. Kaybaki voluntarily turned in his key to the Harlandale house to the police and took up residence at the Churchill house.
[28] Mr. Kaybaki continues to reside at the Churchill property. Dr. Rudky and the children continue to reside at the Harlandale property.
[29] The Harlandale property has not been entirely finished. A City of Toronto inspector inspected the property in August 2015 and identified ten items that required completion or repair. In addition, the landscaping has not been done. At trial, there was considerable emphasis on a problem with the garage door in or around June 2015. However, the trial evidence reflects the fact that the garage door has been repaired for a modest sum.
[30] Before 2015, the house on the Churchill property was already in bad shape. Even Mr. Kaybaki, who has been living in the house, agrees that it was and continues to be in unlivable condition. Over the last year or more there have been disputes between the parties about who is responsible for paying utility bills and re-connecting utilities. As a result, the gas, for example, has not been re-connected. With some exceptions, Dr. Rudky has continued to pay the bills for Churchill.
[31] The parties disagree about when the breakdown in their relationship began. Dr. Rudky testified that from an early stage she began to fear Mr. Kaybaki’s temper, and took numerous steps to facilitate his education and work opportunities in the hopes that he would be happier as a result of being more successful. There is ample evidence that she financially supported him in numerous endeavours. Dr. Rudky testified that in the period of the Harlandale project she wanted to separate but was afraid to do so because she did not think Mr. Kaybaki should have unsupervised access to the children, who were then very small.
[32] Mr. Kaybaki did cause some discord, especially toward the end of the relationship. The two incidents involving the police were provoked by his temper. Further, there was an incident in an international airport that was provoked by Mr. Kaybaki saying, “so stupid” when going through security. He testified that he was saying that under his breath and about the situation, not the officer. But it was overheard and resulted in significant disruption to the trip. Other acrimony was mentioned in the testimony. Mr. Kaybaki downplayed these incidents and placed the problems in the relationship at a later stage than Dr. Rudky.
[33] Since the separation, Dr. Rudky has continued to work full-time as a psychiatrist. Dr. Rudky testified that all of her efforts to help Mr. Kaybaki develop a business or career have hindered the development of her career by consuming a lot of her time and energy in addition to her financial resources. Further, after putting all of her liquid financial resources into the Harlandale property, she now has no savings, no retirement fund, no RESP and significant debt.
[34] Since the separation, Mr. Kaybaki has made limited efforts to work. He was at risk of losing his real estate licence in 2014, so he did enough construction work to earn about $6,000 needed to renew his licence. However, he has made no effort to actually earn an income as a real estate agent. He testified that he needs a proper car, and drives a truck, and that his personal hygiene living a Churchill is inconsistent with that work. It does not appear that he has taken any steps to solve those problems, nor has he taken other steps to find any other employment including in construction. He testified that he was emotionally drained, he could not get access to his computer, he was busy with this court case and he felt attacked from every direction. What he wants to do is renovate the Churchill property and continue to live there.
Income
[35] Throughout their relationship, Dr. Rudky has been the primary income-earner in the family. Dr. Rudky’s income as a psychiatrist has varied over the years, but the amount of her current income earning capacity is not the subject of significant dispute. The parties have used similar figures for her income in the support calculations that are at issue in this trial. Dr. Rudky has used $250,000 in her support calculations and Mr. Kaybaki used $253,860 in his support calculations, the latter figure being an estimate income put forward by Dr. Rudky at an earlier stage of this lawsuit.
[36] The use of Rudky Medical to receive the revenue from Dr. Rudky’s professional work has meant that her line 150 income has been based upon distributions to her from that corporation rather than payments for her professional work. The line 150 amounts are therefore not the best measure of her income earnings in any one year. Last year, her line 150 was especially low due to accounting for income and liabilities resulting from the consequences of the Harlandale project. Her income the prior year was artificially high for the same reason. A better measure is the revenue of Rudky Medicine, less business expenses other than income splitting through payments to Mr. Kaybaki, which averaged about $242,000 over the past three years.
[37] In the early part of the relationship, Mr. Kaybaki did earn some income working in construction. In 2002, the first full year the parties lived together, Mr. Kaybaki earned income of about $40,700 for about six months of work in construction. In 2003, he earned about $39,000 for about six months work in construction. He did not earn any income in 2004 or 2005. In 2006, there was only $8,800 of income.
[38] From 2007 to 2013, Mr. Kaybaki received employment income from Rudky Medicine averaging about $30,400 a year. He did a small amount of work for Rudky Medicine; it was certainly not full-time. He also received dividend income as follows: 2007 - $37,500, 2008 - $45,000, 2009 - $25,000, 2011 - $77,902, 2012 - $75,000, 2013 - $50,000. All of this employment and dividend income originated from Dr. Rudky’s professional earnings. All of the payments were made to the parties’ joint bank account and the funds were used for their living expenses and, in the later years, also for the construction of the new house on the Harlandale property.
[39] In 2014, Mr. Kaybaki earned about $6,000 doing enough construction work to pay the amounts needed to renew his real estate licence. He did not seek out more work, let alone full-time work. This year, he has not earned any income, nor has he been actively looking for work. At trial, he put forward no medical evidence suggesting that he is unable to work.
Tax consequences
[40] In the course of the Harlandale project, the family’s expenses were stable at about $80,000, but large amounts of money were drawn out of Rudky Medicine to fund the construction. Ultimately, all of the monies within Rudky Medicine not already needed for living expenses were drawn out to pay for the Harlandale construction project, with tax consequences. As well, the change of use of the property had tax consequences. Originally, the property had been purchased as a business venture, to be rebuilt and sold, but ultimately, the family moved in to the new house.
[41] Dr. Rudky incurred additional taxes of about $133,000 up to 2015, and will incur an estimated $80,000 of additional taxes caused by Harlandale for this year. Dr. Rudky acknowledged that she did experience some tax savings through income splitting before 2015, but those savings do not fully offset the adverse tax consequences arising from the Harlandale project. She was able to borrow $50,000 to begin to pay this debt, but she has been turned down for a further loan. There are other debts as well.
Value of properties at issue
[42] The Churchill property was purchased in February of 2005 for $395,000. The title was registered in the name of Dr. Rudky. Mr. Kaybaki suggested in his evidence that this was done because of the lease obligations on the Diyar Donair lease. Considering the trial evidence about that business, its lease and the Churchill property, I do not accept that suggestion.
[43] The Harlandale property was purchased in the spring of 2009 for $518,000. The title was initially registered in the name of the corporation Urban Villa Homes Inc. and then transferred to the parties, as joint tenants.
[44] Each party called an expert real estate appraiser to provide an opinion on the market value of the Churchill and Harlandale properties. Marco Cupido was called by the applicant. Tony Di Tosto was called by the respondent. I found both individuals properly qualified to give expert opinion evidence. Both experts used the same methodology – the direct comparison approach.
[45] The appraisals of the Churchill property are not substantially different from one another – Mr. Cupido appraised it at $1,050,000 and Mr. Di Tosto appraised it at $1,100,000. Both experts appraised it as a tear-down. I accept their evidence that given that the house is old and given its poor condition and the location, it should be valued in that way.
[46] The appraisals of the Harlandale property are somewhat more divergent – Mr. Cupido appraised it at $1,725,000 and Mr. Di Tosto appraised it at $1,850,000.
[47] After considering the testimony of both experts, I conclude that I prefer the evidence of Mr. Di Tosto. His expertise included a significant focus on newly built higher class homes in Toronto, which is especially relevant to the Harlandale property. And for Harlandale, he used comparables that were all on the same street, with appropriate adjustments. As well, Mr. Di Tosto had significant experience in the specific area within Toronto that was relevant to both properties.
[48] Mr. Di Tosto was cross-examined about the list of deficiencies prepared by the City of Toronto after an inspection of the Harlandale property. I accept Mr. Di Tosto’s evidence that the cost to repair or complete the items on the list was taken into account by him and that a number of the items were small and not material to market value.
[49] I note that all of the figures I have used are as of July of 2015. In that regard, I accept the evidence of Mr. Di Tosto that there has not been a significant change in market values in the relevant geographic area between that time and the time of trial.
[50] I therefore find that as of the time of trial, the Churchill property had the value of $1,100,000 and the Harlandale property had the value of $1,850,000.
[51] In 2010 the Churchill property was refinanced. There is presently approximately $464,000 owing on the mortgage. Dr. Rudky is the sole mortgagor. The Harlandale property was also refinanced, and there is presently approximately $555,000 owing on the mortgage. Both parties are mortgagors on the Harlandale property.
Financial contributions to Harlandale
[52] There is no dispute on the evidence that the funds used to purchase and build a new house on Harlandale came from only these original sources: funds from the sale of the Beecroft condominium, funds that originated from Dr. Rudky’s professional work, a gift from her parents and bank financing.
[53] The proceeds from the sale of the Beecroft condominium used for the Harlandale property were $92,800.
[54] The amount of funds from Rudky Medicine used for Harlandale is disputed. Dr. Rudky’s accountant, Ryan Kagan, CA, CPA, testified at trial. He testified as a fact witness, rather than as a Rule 20 expert witness. He has provided accounting services to both parties, commencing in 2011. He did the accounting and made the payments for Rudky Medicine. He testified about the funds in the company and historical payments that had been made out of those funds.
[55] Mr. Kagan testified that the amount in the corporate bank account prior to the start of the Harlandale project was $118,950. He testified that in 2014, Rudky Medicine repaid a loan of $373,215 in relation to the Harlandale construction. Mr. Kagan also testified about how much additional money had been disbursed from Rudky Medicine in the time period of the Harlandale project, less that amount for living expenses, totaling $177,020. He further testified that all the funds in Rudky Medicine were depleted in that period.
[56] I accept Mr. Kagan’s testimony about these historical facts. He was not offering an opinion and obviously could not say precisely what all the disbursed funds were used for, although he did monitor the parties’ bank account and expenditures in the ordinary course of providing them with accounting services.
[57] Dr. Rudky testified that all the funds disbursed from Rudky Medicine in the relevant period, apart from those used for living expenses, were used for Harlandale. I accept this evidence, which is consistent with the other trial evidence.
[58] In addition to these funds, $50,000 from Dr. Rudky’s parents was used for Harlandale. Dr. Rudky testified that her parents gave “us” the money, and I therefore find that it was not a gift exclusively to her. It was used to buy the appliances for Harlandale.
[59] Mr. Kaybaki testified that he had reviewed the expenditures for the construction in preparation to testify and they totaled to $650,000, leaving aside mortgage payments and the other funds used for the original purchase of the property. It was apparent during his testimony that this figure is also not exact. He said, for example, that it could also be $680,000. No spreadsheet or invoices were put forward to support the figure.
[60] Both mortgages, on Harlandale and on Churchill, were refinanced to assist with the construction costs as well.
[61] Bearing in mind all of the trial evidence regarding the Harlandale property, and allowing for some imprecision in connection with the amount of living expenses, I find that $680,000 originating from Rudky Medicine was used for the construction of the new house on the Harlandale property. This does not include the cost of acquiring the property, mortgage financing, or the gift used to purchase appliances.
[62] A portion of the funds from Rudky Medical was disbursed to Mr. Kaybaki. The total amount disbursed to him, after tax, less half of the family living expenses, is about $195,000. During the relationship, neither party treated those funds as if they were Mr. Kaybaki’s own money that he was free to use as he pleased. It all went into the joint bank account. What was not used for living expenses was used for the Harlandale construction project. However, from a legal standpoint, those funds were disbursed to Mr. Kaybaki and I have taken that into account in considering the trust claims.
[63] I further find that the $92,800 from the sale of Beecroft belonged to Dr. Rudky and was used for Harlandale.
[64] Funds from refinancing the Harlandale and Churchill properties were also used for the construction project. The specific amounts of loans and other financing used for Harlandale have not been separately quantified except to indicate the amounts outstanding on the mortgages and the one loan repayment attested to by Mr. Kagan.
Issues
[65] There are four issues to be determined in this case:
(1) the process that will be required in relation to travel and obtaining passports and government documents for the children;
(2) trust claims focused on the Churchill and Harlandale properties;
(3) the amount of spousal support to be paid to the respondent; and,
(4) the amount of child support to be paid by the respondent.
(1) Travel
[66] Under the consent final order regarding custody and access, Dr. Rudky has sole custody of the children and the respondent’s access is set out in the order in detail. However, the parties could not agree on two matters related to travel.
[67] These issues arise because Mr. Kaybaki is requesting more involvement in those arrangements.
[68] First, Dr. Rudky seeks an order in the form made in the interim custody order of Goodman J. dated December 18, 2014, regarding the ability to obtain travel and other government documents for the children. The interim order provided as follows:
[The applicant] shall be able to obtain travel and other standard, government produced documents (such as health cards) from the applicable authorities, without first having to obtain the written consent of [the respondent].
[69] Under this order, Dr. Rudky has obtained passports for the children, for example. She asks that this order continue. The respondent submits that documents should be obtained without consent only where consent is not forthcoming within 30 days of notice of the request for consent.
[70] Given that Dr. Rudky has sole custody of the children, I conclude that the process contemplated by the interim order continues to be appropriate, with some changes to allow Mr. Kaybaki to be more involved. Although the need for consent appears unnecessary for what is ordinarily a routine process of obtaining and renewing government documents, Dr. Rudky shall notify Mr. Kaybaki by email or text when she applies for or seeks to renew government documents for the children and provide him with copies once the documents are received.
[71] Second, there is a dispute about the procedure to be followed when either parent wishes to take the children on a trip. In the recent past, for example, Dr. Rudky has taken the children to the Caribbean over the Christmas holidays. She wishes to do so again this year. Earlier on, the parties travelled as a family to Turkey although there is no specific plan to go to Turkey at this time and both parents agree that safety and security are significant issues that would have to be considered in relation to any potential trip to Turkey.
[72] Dr. Rudky requests an order that would permit her to travel with the children for up to two weeks without the consent of Mr. Kaybaki if she provides him with an itinerary, address and contact number at least 30 days in advance and makes up any access missed immediately on return. In support of this request, Dr. Rudky submits that it has been difficult to get Mr. Kaybaki’s consent to travel in a timely way. However, on the evidence before me it appears that consent to trips has been given without any major difficulty in the past. I am also concerned that this approach too easily interferes with the equal sharing of special holidays and occasions with the children that is provided for in the final custody and access order. I conclude that a more balanced order is appropriate.
[73] I therefore order that if either parent wishes to take the children on a trip outside of Ontario or any trip that will affect the access rights of the other parent, they must give the other parent a minimum of 30 days written notice, including an itinerary, all addresses where the children will be during the trip and a contact phone number or numbers for the children during the trip, and obtain the other parent’s written consent to the trip. The other parent shall provide his or her written consent within seven days of receiving notice, or, within that same seven days, provide a written explanation of why he or she will not consent. If there is no consent, the parent who wishes to take the children on the trip must bring a motion for an order dispensing with the need for consent.
[74] The detailed order regarding all of these matters is set out below.
(2) Trust claims
[75] Both parties seek orders in regard to the Churchill and Harlandale properties as well as, in Mr. Kaybaki’s case, a payment of money, based on trust principles. Since they are not married, there is no automatic division of property.
[76] Dr. Rudky asks that the title to Harlandale, which is currently a joint tenancy, be vested solely in her name, and that the respondent vacate Churchill, which is already in her name. Dr. Rudky submits that these orders should be made because of a resulting trust arising from the fact that she was the original source of most of the funds used for both properties, and, in the case of Harlandale, put more money into the property than it is worth. In full satisfaction of any property claims, Dr. Rudky submits that she will pay the sum of $100,000 to Mr. Kaybaki. This lump sum was put forward in final argument without supporting calculations but was said to be recognition that Mr. Kaybaki did make a contribution.
[77] Mr. Kaybaki submits that the relationship between the parties was a joint family venture and they should therefore share equally in the total equity in the Churchill and Harlandale properties. Based on the appraised value of the Churchill and Harlandale properties, less the amounts outstanding on the mortgages, the equity in Churchill is $636,000 and the equity in Harlandale is $1,295,000. The respondent asks for half of the total equity, and asks that it be paid to him by way of a vesting order putting title to the Churchill property in his name, subject to the existing mortgage, and by a cash payment. Based on the above values, the cash payment would be $329,500. The figures advanced by Mr. Kaybaki disregard Dr. Rudky’s extra tax liabilities and loans, among other things.
[78] The trust claims and related question of whether or not there was a joint family venture must be considered under the principles set out by the Supreme Court of Canada in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269. By looking at a common law spousal relationship in terms of a joint family venture, the Court rejected the prior use of a common law spouse resulting trust, which required a common intention when assessing restitutionary claims by a former common law spouse.
[79] To determine whether the parties were, in fact, engaged in a joint family venture, the particular circumstances of their relationship must be taken into account. This must be assessed having regard to all the relevant circumstances, including these factors: mutual effort, economic integration, actual intent and priority of the family: Kerr, at para. 100.
[80] Mutual Effort: In this case, there is significant evidence of mutual effort. Over the twelve-year relationship, the parties worked together toward common goals including the decision to have and raise children together and a series of income-focused endeavours. The applicant repeatedly helped the respondent with possible ways to fulfill his wish to be self-employed, and financed those initiatives. The respondent also made contributions, although they were primarily through labour rather than financial contributions. While the funds came mainly from Dr. Rudky, the respondent did contribute financially in a small way in the early stages, and all of the monies directed to him from Rudky Medicine went into the joint account and were used for family expenses and the Harlandale project. The parties also both contributed time and effort to various tasks such as raising their children, dealing with Beecroft as a rental property, dealing with Harlandale as a rental property and dealing with the Harlandale construction project.
[81] Economic integration: There was significant economic interdependence and integration in this common law spousal relationship. Diyar Donair was a joint business venture, with both parties as shareholders and directors. After the creation of Rudky Medicine, all of the funds disbursed from Rudky Medicine, whether dispersed to Dr. Rudky or Mr. Kaybaki, went into a joint bank account that was used as a “common purse.” There was not an equal contribution to that common purse. Indeed, Mr. Kaybaki’s contribution was small in comparison to Dr. Rudky’s contribution, but their economics were certainly integrated. The conveyance of the Harlandale property from its corporate ownership to its current joint tenancy also reflects an intention to share some of the wealth within the spousal relationship.
[82] Actual intent: Neither party suggested that they did not marry in order to keep their property separate. However, the evidence also does not support the suggestion that Dr. Rudky intended that the properties prior to Harlandale be shared from an economic standpoint. The Churchill property and related mortgage have remained, throughout, in Dr. Rudky’s name. I find on the trial evidence that Dr. Rudky did not intend Churchill to become jointly owned. However, there is evidence of actual intent to share in relation to Harlandale, given its conveyance into a joint tenancy.
[83] Priority of the family: With respect to priority of the family, it was mainly Dr. Rudky who placed detrimental reliance on the spousal relationship for the sake of the family. On numerous occasions, she set her own priorities aside and supported Mr. Kaybaki in various initiatives in an effort to get him started in a career that would make him happy and, in turn, make a more happy family. In contrast, while Mr. Kaybaki accepted those numerous opportunities, he has not made best use of them. As well, it was Dr. Rudky who bore the brunt of the financial problems in the relationship, including the failure of Diyar Donair and the high costs and tax consequences flowing from the Harlandale project.
[84] The determination that there is a joint family venture does not require an equal contribution by each party. That is relevant to the second step – considering whether there has been unjust enrichment. I conclude that there was a joint family venture. All the hallmarks of that type of relationship are present.
[85] Where there is a joint family venture, the next question that must be asked is whether or not there has been unjust enrichment: Kerr at para. 62. If so, a monetary remedy of the value of the property or the “value survived” is just.
[86] There is no presumption of equal sharing of the assets accumulated during a common law relationship. In Kerr, Justice Cromwell held as follows, at paras. 84 – 85:
It is not the purpose of the law of unjust enrichment to replicate for unmarried partners the legislative presumption that married partners are engaged in a joint family venture. However there is no reason in principle why remedies for unjust enrichment should fail to reflect that reality in the lives and relationships of unmarried partners.
I conclude, therefore, that the common law of unjust enrichment should recognize and respond to the reality that there are unmarried domestic arrangements that are partnerships: the remedy in such cases should address the disproportionate retention of assets acquired through joint efforts with another person. This sort of sharing, of course, should not be presumed, nor will it be presumed that wealth acquired by mutual effort will be shared equally. Cohabitation does not, in itself, under the common law of unjust enrichment, entitle one party to a share of the other’s property or any other relief. However, where wealth is accumulated as a result of joint effort, as evidenced by the nature of the parties’ relationship and their dealings with each other, the law of unjust enrichment should reflect that reality. [Emphasis added.]
[87] Where the unjust enrichment is most realistically characterized as one party retaining a disproportionate share of assets resulting from a joint family venture, and a monetary award is appropriate, it should be calculated on the basis of the share of those assets proportionate to the claimant’s contributions: Kerr at para. 100.
[88] Bearing in mind all of the trial evidence, in this case I conclude that there is no unjust enrichment giving rise to the various remedies requested by either side. Again, those claims focus on the Churchill and Harlandale properties.
[89] Beginning with Churchill, all of the funds used to purchase and maintain that property came originally from Dr. Rudky’s professional income. Mr. Kaybaki suggests that the sale of the equipment from the failed Diyar Donair business should somehow be treated as a financial contribution by him. Considering all of the evidence, it was not. That payment was not profit from the business distributed to Mr. Kaybaki. It only served to reduce the losses suffered by that company, which were still substantial and entirely financed by Dr. Rudky. I have, however, taken into account the income Mr. Kaybaki received from Rudky Medicine. And Mr. Kaybaki did contribute some labour by doing some work on the house when they originally moved into it, which I have also taken into account. However, I also accept the evidence from both sides that the property is currently in very poor condition and is valued as a tear down. It has not been continually maintained by Mr. Kaybaki. Its current value has not been increased by anything previously done to the house.
[90] In relation to Harlandale, Dr. Rudky submits that her total financial contributions to that property, including capital, loans and debts, total approximately $1,820,000. However, that figure includes the parental gift, which I have found was made to both of them, and does not account for the income paid to Mr. Kaybaki that was used for Harlandale. I conclude that although all of that income originated from Dr. Rudky’s work, it was dispersed to Mr. Kaybaki and should be taken into account. Mr. Kaybaki also contributed significant labour as general contractor and by doing some of the work himself. His contribution did add to the value of the property.
[91] As well, Dr. Rudky relies on her own career prospects being held back by all of her resources being depleted, including funds in an RRSP and RESP that she would reasonably have accumulated as of now if all her resources were not needed for the Harlandale construction project and related debt.
[92] Again, Dr. Rudky asks for sole title to both Churchill and Harlandale, removing Mr. Kaybaki from title to Harlandale, and submits she will pay him a total of $100,000 for his past contributions. Mr. Kaybaki asks that the total equity in the two properties be equally split, and he should receive his 50% through the vesting of Churchill in his name and a lump sum payment for the balance, specifically $329,500.
[93] Bearing all of the evidence in mind over the course of the whole relationship, I do not find that there has been an unjust enrichment in favour of either party. The existing state of title, with Dr. Rudky holding legal title to the Churchill property and the parties as joint tenants on the Harlandale property, does not give rise to the unjust conferral of a benefit on one party or the other.
[94] While there is no doubt that Dr. Rudky was the main source of the financing for both properties, Mr. Kaybaki also made contributions, which were especially focused on the Harlandale property. Indeed, considering the entirety of the relationship and all of the financial and other contributions of these parties during the approximately twelve-year period, I find that there is no overall enrichment and corresponding deprivation in favour of either side giving rise to the remedies requested here. In this case, the remedies requested by each side would create, rather than remedy, an unjust enrichment.
[95] In reaching this conclusion, I have followed the Court’s ruling in Kerr, recognizing the impracticality of trying to create a family balance sheet of goods and services provided after a relationship of many years.
[96] As a result, Mr. Kaybaki retains his joint tenancy in Harlandale, his equity in which, on the trial evidence, has the value of $647,500. He does not have significant debt other than as co-mortgagee on the Harlandale mortgage along with Dr. Rudky. Dr. Rudky retains her half interest in Harlandale with the same value, $647,500, as well as Churchill, which has equity of $636,000. She also has significant debt.
[97] I therefore dismiss the trust claims and the related requests for vesting orders and monetary payments arising from the trust claims. In that the title to Churchill shall remain in Dr. Rudky’s name, Mr. Kaybaki shall vacate the Churchill property and Dr. Rudky shall therefore have vacant possession of that property within a reasonable time, which I fix as the end of year, December 31, 2015.
[98] With respect to possession of Harlandale, the parties did not request specific relief in that regard. Dr. Rudky and the children have continued to live there. As well, the trial evidence demonstrated that there were significant problems when Mr. Kaybaki was also living there in 2014. Focusing on the best interests of the children, I conclude that there should be a temporary order for exclusive possession in favour of Dr. Rudky. I also anticipate the possibility of future proceedings brought under the Partition Act, R.S.O. 1990, c. P-4, and note that this temporary order is not intended to have an impact on proceedings under that Act.
(3) Spousal support
[99] The obligation to pay spousal support arises from s. 30 of the Family Law Act, R.S.O. 1990, c. F-3, and is determined under that section as well as ss. 33(1) (8) and (9) of that Act. The parties agree that Mr. Kaybaki is entitled to spousal support for four more years (which is in addition to the approximately one year period for which spousal support has already been paid under the interim support order). The only issue between the parties regarding spousal support is what amounts should be used in the calculation for each party’s income.
[100] Both parties made their submissions under Spousal Support Advisory Guidelines, using DivorceMate calculations.
[101] Dr. Rudky put forward DivorceMate calculations using $250,000 for her income. Counsel for Mr. Kaybaki put forward DivorceMate calculations using $253,860 for Dr. Rudky’s income. The difference is small, and given the range of income for Dr. Rudky demonstrated in the evidence, I find $250,000 is an appropriate amount for her income for support purposes.
[102] For Mr. Kaybaki’s income, Dr. Rudky submits that income should be imputed in the amount of $50,000 or, in the alternative, a minimum wage income. The figure of $50,000 is based upon the respondent’s ability to earn about $40,000 in 2003 and 2004 working for only six months in construction. Based on the $50,000 income figure, and using the midpoint of the Spousal Support Advisory Guidelines, Dr. Rudky submits the spousal support should be $2,440 per month.
[103] Mr. Kaybaki’s position is that his income for the four-year period should be zero dollars. In the alternative, he submits that only $6,000 should be imputed based on his income last year. Using $253,860 for Dr. Rudky’s income and zero for his own, and selecting the high end of the range, he submits that spousal support should be $3,586 per month.
[104] Section 33 (9) of the Family Law Act, R.S.O. 1990, c. F-3, sets out factors that the court should consider when determining the amount of spousal support to be paid. I have considered all of those factors and note that Mr. Kaybaki is only 41 years old, has some education, speaks English and French, has not established any disability that would prevent him from engaging in a range of employment and has shown the ability to at least work in construction. Mr. Kaybaki’s evidence about the stress of his situation and the lawsuit are unsupported by medical evidence suggesting any impact on his ability to work.
[105] Mr. Kaybaki testified that he does not have a car, which he needs to be a real estate agent. He drives a truck. He also testified that he does not have the proper utilities at Churchill to maintain his personal hygiene, although this was not apparent at trial and is solvable in any event. I find that Mr. Kaybaki has made his priority staying in the Churchill house even though it is unlivable, rather than on putting himself in the position to earn an income.
[106] A support recipient has a duty to take reasonable steps to become self-supporting. The extent of that duty will depend on the circumstances, such as whether the person has work experience and skills. They cannot sit back and make insufficient efforts to contribute to their own support: Thomas v. Thomas, 2003 CanLII 64346 (ON SC) at para. 74.
[107] Based on the trial evidence, I find that Mr. Kaybaki has not put forward any reason that would stop him from obtaining gainful employment. His preference is to work on the Churchill house. This preference does not relieve him of the obligation to become self-supporting. Nor does it justify his submission that he ought to be relieved of the obligation to earn an income for four more years, which is the result of his position that an income of zero dollars should be used in the support calculations.
[108] Section 19(1) of the Child Support Guidelines, Ont. Reg. 391/97, as amended, addresses imputing income. The test for imputing income for child support purposes applies equally for spousal support purposes: Spousal Support Advisory Guidelines, at p. 46; Rilli v. Rilli, 2006 CanLII 34451 (ON SC), [2006] O.J. No. 4142 at para. 14.
[109] This is not a case where the spouse seeking support has attempted to enter the job market without success. Nor is it a case where the spouse has no experience or skills. Mr. Kaybaki testified that in his time in construction he did not only general labour but he progressed as a carpenter’s assistant and then as a carpenter. He has the ability to earn an income. More than ten years ago, he earned about $40,000 doing construction for only half the year. Even a minimum wage job for the balance of the year would provide an additional $10,000, resulting in a total income of $50,000. He also has some education and a real estate agent’s licence. He should have taken steps to re-enter the work force already, and must do so now.
[110] I conclude that Dr. Rudky’s position that Mr. Kaybaki’s imputed income should be $50,000 is eminently fair.
[111] I have had regard for the relevant circumstances listed in s. 19(1), and, under s. 19(1)(a), conclude that Mr. Kaybaki has been intentionally under-employed and now is intentionally unemployed. Bearing in mind all the relevant factors, I impute an income of $50,000 to Mr. Kaybaki. I further conclude that the midpoint figure is appropriate.
[112] As a result, in applying the Spousal Support Advisory Guidelines, I conclude that Dr. Rudky must pay Mr. Kaybaki $2,440 a month as spousal support for a four-year period, commencing on November 1, 2015.
[113] Counsel for Dr. Rudky also raised Mr. Kaybaki’s conduct in relation to spousal support in this case. It is clear from s. 33(10) of the Family Law Act, that the obligation to provide support for a spouse exists without regard to the conduct of either spouse. However, the court may, in determining the amount of support, have regard to unconscionable conduct if it constitutes an obvious and gross repudiation of the relationship. The course of conduct must be exceptionally bad: Menegaldo v. Menegaldo, 2012 ONSC 2915, at para. 63, citing Morey v. Morey (1978), 1978 CanLII 772 (ON CJ), 8 R.F.L. (2d) 31 (Ont. Prov. Ct.). While the conduct of Mr. Kaybaki did create some difficulties in the family relationship, it does not meet the high threshold required to bear on the amount of spousal support under s. 33(10). Recourse to conduct is also not necessary to justify the amount of imputed income requested by Dr. Rudky – specifically, $50,000. I have, in any event, not taken conduct into account.
(4) Child support
[114] The parties agree that the quantum of child support flows from the income of the parties, now determined to be $250,000 for Dr. Rudky and an imputed income of $50,000 for Mr. Kaybaki. These figures lead to monthly child support in the amount of $743 being paid by Mr. Kaybaki.
[115] In final argument, counsel for Dr. Rudky raised, for the first time, a possible claim for s. 7 expenses under the Family Law Act. The evidence for that claim was not part of the trial evidence. As I indicated at the time, there is no determination being made regarding s. 7 expenses in this judgment. If Dr. Rudky wishes to pursue them, she must bring further proceedings.
Orders made
[116] I therefore make the following orders:
(1) The applicant shall be able to obtain travel and other standard, government produced documents (such as health cards) from the applicable authorities for the children, without first having to obtain the written consent of the respondent, provided that the applicant shall notify the respondent by email or text when she applies for or seeks to renew government documents for their children. The applicant shall also provide the respondent with photocopies of all of the standard government produced documents within ten days after receiving them.
(2) If either parent wishes to take the children on a trip outside Ontario or any trip that will impinge on the access rights of the other parent, they must give the other parent a minimum of 30 days written notice, including an itinerary, all addresses where the children will be during the trip and a contact phone number or numbers for the children during the trip, and must obtain the other parent’s written consent to the trip. Consent shall not be unreasonably withheld. The other parent shall provide his or her written consent within seven days of receiving notice of the proposed trip, or, within that same seven days, provide a written explanation of why he or she will not consent. If there is no consent, the parent who wishes to take the children on the trip must bring a motion for an order dispensing with the need for consent. Any access missed due to a trip shall be made up within two months after the trip.
(3) The trust claims and the related requests for vesting orders and monetary payments are dismissed.
(4) The respondent shall vacate the property at 215 Churchill Avenue on or before December 31, 2015, and the applicant shall have vacant possession.
(5) The applicant shall have temporary exclusive possession of the property at 102 Harlandale Avenue, which is not intended to have an impact on any proceedings that may be brought under the Partition Act.
(6) The applicant shall pay the respondent spousal support in the monthly amount of $2,440 on the first day of each month, for 48 months, commencing on November 1, 2015.
(7) The respondent shall pay the applicant child support for Julian Dennis Kaybaki (DOB: 09 April 2005) and Ella Morgan Kaybaki (DOB: 20 March 2007) in the monthly amount of $743 on the first day of each month commencing November 1, 2015.
(8) The interim order made by Goodman J. dated December 18, 2014, is terminated as of October 31, 2015, except that para. 5 of her order requiring that the respondent pay $1,108 per month as his contribution to the cost of maintaining the Churchill property shall continue until the respondent vacates that property.
(9) The payments under this order shall bear interest at the rate of 2% per year on any payment or payments in respect of which there is a default, from the date of default.
(10) Unless this order is withdrawn from the Family Responsibility Office, it shall be enforced by the Director and amounts owing under it shall be paid to the Director, who shall pay them to whom they are owed.
[117] If the parties are unable to agree on costs, the applicant shall make her costs submissions by delivering brief written submissions together with a costs outline and any offers to settle relied upon by November 2, 2015. The respondent may respond by delivering brief written submissions and any costs outline and offers to settle by November 16, 2015. Any brief written reply shall be made by Nov. 23, 2015.
Justice W. Matheson
Released: October 20, 2015
COURT FILE NO.: FS-14-00019549
DATE: 20151020
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
RINA RUDKY Applicant
– and –
SERDAL KAYBAKI Respondent
REASONS FOR JUDGMENT
Justice W. Matheson
Released: October 20, 2015