Court File and Parties

COURT FILE NO.: FS-15-402438 DATE: 20151123 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Veronika Sokolsky, Applicant AND: Dmitry Sokolsky, Respondent

BEFORE: Kiteley J.

COUNSEL: Lyna Perelman, for the Applicant Leonardo Mongillo, for the Respondent

HEARD: October 22, 2015

ENDORSEMENT

[1] The Applicant had brought a motion for various orders but submissions for all of them could not be accommodated on the regular motions list. Ms. Perelman and Mr. Mongillo made submissions on the issues of child and spousal support and submissions on the remaining issues were adjourned to be heard on December 7, 2015. The key issue on this motion is the income of the Respondent.

[2] The Applicant is 39 years old and the Respondent is 41 years old. The Applicant asserts that they started living together in April 1997 while the Respondent takes the position they did not cohabit until 2000 because he was out of Russia attending school. In 2004, they moved to London Ontario so that the Respondent could complete his MBA degree. They married on June 26, 2007 in Toronto and they have a child born November 30, 2011. At the time of separation on October 6, 2014, the Applicant and the child left the jointly owned condominium and moved to an apartment which the Respondent rented for them.

[3] Each spouse is critical of the other in many respects. Each alleges that the other has failed to make timely and comprehensive disclosure. Each makes allegations against the other, some of which are irrelevant to the motions before the court. Many of those that are relevant are advanced in a “she said, he said” environment without corroboration. In arriving at the order with respect to temporary child and spousal support, I rely as much as possible on those facts that are not controversial. The Respondent concedes that the Applicant is entitled to spousal support. The issue is the amount which is largely a function of the Respondent’s income.

[4] In 2004 the Respondent started operating an internet travel business which organized tours in Russia. In 2010 the Applicant became the sole shareholder of a Russian company, called Insider Tour and they were both shareholders of a Canadian company, called Concierge City Corporation. For purposes of this motion, I accept the evidence of the Respondent that the businesses have suffered significantly on account of the political turmoil, the economy in Russia and the changing market dynamics and I do not attribute income to him from those sources.

[5] At the time of separation, the Respondent was employed by a national bank as a vice president responsible for developing relationships with clients globally in the fertilizer industry. His base salary was $125,000 and he was eligible for a discretionary bonus paid in December of each year.

[6] According to the Respondent, they had accumulated significant debt at the time of the separation, much of which he attributed to decisions by the Applicant and her insistence on living a standard of living which they could not afford. Given his management of their finances (as is reflected in exhibits to his affidavit including Exhibits C and F), I accept his evidence that before the separation, the Applicant attended with him at the bank at the time of the consolidation of their mortgage in anticipation of purchasing a home in Oakville and the sale of the Toronto condominium, and that the new advance paid a joint line of credit which was used to purchase the $79,000 diamond ring for the Applicant; to provide the down payment on the Oakville home in the amount of $60,000 (which was subsequently lost when they could not close); and to pay for renovations to the condominium to prepare it for sale at a cost of $40,000. For purposes of this motion, I accept that they had incurred significant debt and that the Respondent has been challenged to juggle the indebtedness combined with the crisis around his parents and then the termination of employment. At this stage, on contradictory evidence, I do not make findings as to who is responsible for the indebtedness.

[7] In December 2014, the Respondent paid to the Applicant $60,000 which represented 2/3rd of the net balance of his 2014 bonus. He says that they agreed that she would use the $60,000 to pay hers and the child’s expenses and to pay her rent but she subsequently refused to pay the rent and he had continued to do so until the hearing of this motion. In her September 29, 2015 affidavit, the Applicant said she had about $10,000 left. While she raised the spectre that her lease was coming to an end, the evidence is that she is on a month to month tenancy.

[8] Because the Respondent has managed their finances, I accept his evidence that, including the $60,000 paid in December, the total payments to the Applicant or on her behalf since separation is $126,186 net of tax. As Mr. Mongillo pointed out in submissions, if the share of debt repayment attributed to her is deducted, the Respondent paid to her or on her behalf $105,780 net of tax.

[9] In early 2015 the Respondent’s parents were involved in a motor vehicle accident and his mother experienced catastrophic injuries (including a severed neck) and his father was also injured. The Respondent took a paid leave of absence to attend in Virginia to assist his brother in the care of their parents.

[10] When he returned to work in August 2015, his employment was terminated “because of structuring”. At the hearing of this motion, he was still negotiating the terms of his severance. Paragraphs 75 to 77 of his affidavit sworn October 19, 2015 contain an explanation for his line 150 income in 2014 in the amount of $389,834 which included withdrawal of RSP and DPSP. His line 101 reflected earnings of $377,000 in that year including base salary and a bonus. He also explained his income for 2015 and, based on that analysis, he deposed that, for purposes of this motion, his income should be found to be $229,721 for 2015. Subject to the ongoing negotiations, after December 31, 2015 he expected that he would have no employment income but hoped to have a possible bonus which he would receive in January. He holds four degrees sequentially from Russia, Hungary, Austria and Ontario. He deposed that his specialty in fertilizer had been a niche area and that it will be unlikely for him to obtain employment in that same commodity specialization. He also deposed that it will be difficult to find lucrative high-paying jobs in the banking industry because he will be subject to a credit review which he anticipates will be negative given the significant debts he is trying to manage. I understand his pessimism, but I infer that he has marketable financial and language skills.

[11] The Applicant takes the position that the court should find that the Respondent is deliberately unemployed and underemployed and that for purposes of this motion, his 2014 line 101 income of $377,763 should be imputed to him for 2015. The Applicant has not been employed since the move to Canada. Her counsel has provided divorcemate calculations where her income is shown as $0 and as $25,000. For purposes of this motion, counsel for the Applicant relied on the calculation that attributed income in the amount of $25,000 and accordingly she asked for an order for child support in the amount of $2,948 per month and spousal support in the amount of $10,137 per month. (I note that in the notice of motion, the Applicant asked for child support in the amount of $2,948 and spousal support in the amount of $9,192 subject to later re-adjustment.)

[12] I do not accept the submission that the Respondent is deliberately unemployed and underemployed. The evidence is clear that the Respondent’s employment was terminated for reasons beyond his control. It is unrealistic to use his 2014 earnings for this year when his circumstances have changed so dramatically. It appears that he worked January to March, was on paid leave for April to July, and his employment was terminated in August. If he is able to negotiate a bonus for 2015, I expect that it will reflect that he actively participated in the work of the organization for only about 3 months. Whatever bonus he does achieve will be considered at that time. This is not a situation in which income should be imputed to him based on a prior year. For purposes of this motion, I accept his evidence that his income for 2015 is $229,721.

[13] The Respondent has provided two divorcemate calculations that includes income in the amount of $229,722. In one calculation, he has deducted child care expenses of $18,000, payments in the amount of $27,600 that he expects he will be required to make to assist his parents in their ongoing health care needs, and debt payments in the amount of $27,533. In the other, he did not deduct the debt payments.

[14] Counsel has advanced two scenarios. In scenario A, if he deducted the child care expense and the assistance to his parents but not the debt payments, and if he were required to pay spousal support in the amount of $5,136 and child support in the amount of $1,442, the Applicant would receive 61% and he would receive 39% of the Net Disposable Income (NDI).

[15] In scenario B, if the Respondent paid spousal support in the amount of $880 per month, child support in the amount of $1,853 per month and s. 7 expenses in the amount of $81 per month, that would result in a 50/50 split of the NDI. In his submissions, counsel for the Respondent took the position that an order should be made in accordance with scenario B. Counsel acknowledged that if the court departs from the child support guidelines and from the spousal support advisory guidelines, an explanation is required [Fisher v Fisher 2008 ONCA 11, [2008] O.J. No. 38 O.C.A. at para 103]. To rationalize the departure, counsel has referred to the actual needs of the Applicant.

[16] In her form 13.1 financial statement sworn October 1, 2015, the Applicant asserts that her expenses total $9,098 per month including rent in the amount of $1,800 which she will pay once the order for spousal support is made, groceries in the amount of $1,400 which I consider excessive for one adult and a 4 year old child and should be reduced by at least $700 per month, day care expense in the amount of $1,350 which the Respondent has been paying, and education expenses TBD (college and or university) in the amount of $1,800 per month which is not presently being incurred. If groceries are reduced to $700 per month and if rent effective December 1, 2015 is included but the expenses for child care and education are removed, the monthly expenses for the Applicant and the child total $5,300 which I round to $6,000.

[17] That needs based approach to the making of an order for child and spousal support was customary before the introduction of the guidelines and has been replaced by a more formulaic approach. However, the unusual circumstances of this case are the Respondent’s termination of employment and the significant debt that he is servicing and I am persuaded that those circumstances warrant the analysis and justify the departure. Notwithstanding their tragic circumstances, I do not accept that the moral obligation the Respondent has to assist in the care of his parents is a factor in this ruling as to temporary child and spousal support.

[18] In my view neither scenario A nor B achieves an appropriate result. Instead, I conclude that an appropriate order is one that meets the day to day expenses of the Applicant and the child. Of the payment of $6,000, I attribute 25% of the amount to child support ($1,500) and 75% of the amount to spousal support ($4,500) but I note that, since the order takes effect November 1, 2015, the amount of income tax payable by the Applicant for spousal support for 2015 will be negligible and will be taken into consideration in a future order.

[19] The motion was originally returnable October 8 and was adjourned to October 22. This endorsement will be released on November 23. The order I make will commence November 1, 2015 and will be subject to variation on the happening of a material change in circumstances including the commencement of employment by either party.

[20] As indicated above, at separation, the Applicant and the child moved into an apartment and the Respondent took steps to prepare the condominium for sale. The closing of the sale took place in April, 2015. The net proceeds of $182,975.68 remain in trust. Based on the submissions made on October 22, I infer that the issue of greatest conflict was whether income would be imputed to the Respondent. Having made that decision on a temporary basis, I encourage counsel to determine whether the issue of retroactivity and the requested advance might be resolved without hearing that aspect of the motion currently scheduled for December 7. It is regrettable that the conflict between the parties has meant that neither has had access to those funds notwithstanding the financial distress they are experiencing. It would be desirable for them to consider whether, on consent, each of them might access some part of those funds.

[21] Once an order for support is made, the court is required to make a support deduction order. However, I am optimistic that counsel will explore whether the Applicant will withdraw from the Family Responsibility Office because of the idiosyncratic order made below (in which I assume that he has paid the rent for November) which will no doubt confound enforcement and delay receipt of payment by the Applicant.

ORDER TO GO AS FOLLOWS:

[22] For the month of November 2015, the Respondent shall pay the following:

(a) directly to the landlord, rent for the Applicant and the child in the amount of $1,800;

(b) directly to the child care provider the actual amount estimated at $1,500;

(c) to the Applicant temporary child support in the amount of $1,500;

(d) to the Applicant, temporary spousal support in the amount of $4,500.

[23] The Respondent shall pay to the Applicant the arrears for the month of November, 2015, if any, immediately and no later than December 1, 2015.

[24] On December 1, 2015 and on the first of each month until further order, the Respondent shall pay the following:

(a) directly to the child care provider the actual amount estimated at $1,500;

(b) to the Applicant, temporary child support in the amount of $1,500;

(c) to the Applicant, temporary spousal support in the amount of $4,500 which includes rent.

[25] Support deduction order to issue.

[26] Balance of motions adjourned to Monday December 7, 2015 from 1:00 to 3:00 p.m. before me.

[27] Costs of this aspect of the motion are reserved to the hearing of the balance of the motion.

Kiteley J.

Date: November 23, 2015