Savoia v. Santaera, 2015 ONSC 95

Savoia v. Santaera, 2015 ONSC 95

COURT FILE NO.: FC-10-717-01

DATE: 20150109

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ANTONIO SAVOIA

Applicant

– and –

ROSE SANTAERA

Respondent

B. Lynn, for the Applicant

Respondent, Self Represented

HEARD: August 28, November 17, 25 and December 1, 2014

HEALEY J.

Nature of the Motion to Change

1This is a Motion to Change the final Divorce Order of Justice Eberhard dated May 31, 2012. The parties were separated in September, 2010. The Divorce Order was made following an uncontested trial after Mr. Savoia’s pleadings were struck. The Motion to Change was commenced by Mr. Savoia, with leave, on September 6, 2012.

2The provisions of the Divorce Order require Mr. Savoia to pay child support for the three children of the marriage in the amount of $2,238 per month, and spousal support in the amount of $1,900 per month, both commencing June 1, 2012, based on an income of $125,000 per year. Lump sum payments totalling $8,014.91were also ordered to be paid by him, to reimburse Ms. Santaera for past medical and dental expenses. He is also required to pay 75% of all s. 7 expenses, including post-secondary education expenses. Ms. Santaera’s income was found to be $17,362. A sole custody order was granted to Ms. Santaera for the three children, whose ages at the time of the hearing of this Motion to Change are 21, 18 and 13. Justice Eberhard ordered that costs were to be paid by Mr. Savoia in the amount of $25,000.

3Mr. Savoia seeks an order:

1. reducing the amount of child support to $572 per month based on an annual income of $28,729.48, commensurate with the table amount listed in the Child Support Guidelines, commencing August 1, 2012;

2. fixing the parties’ respective contributions toward s. 7 expenses in accordance with and upon disclosure of their respective annual incomes;

3. terminating the payment of spousal support effective August 1, 2012;

4. mitigating the costs and lump-sum support owed to Ms. Santaera to alleviate financial hardship; and

5. restraining Ms. Santaera from attending within 200 m of any place of employment or business, or from contacting, directly or indirectly, any known or prospective employer.

4Mr. Savoia’s Change Information Form notes that the total arrears of periodic and lump-sum support owed as of May 25, 2012, was $38,743.90.

5The primary basis for the motion to change is a change in employment status of Mr. Savoia, from a self-employed business owner operating Men’s Zone Barber Shop Inc., to being an employee working for other barbers. This change in employment status corresponded to a personal, but not corporate, bankruptcy.

The Test on a Motion to Change

6As the order sought to be varied was made pursuant to the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), the provisions of s.17 of that Act apply to this proceeding.

7The applicable sections are:

17. (1) A court of competent jurisdiction may make an order varying, rescinding or suspending, prospectively or retroactively,

(a) a support order or any provision thereof on application by either or both former spouses; or

(b) a custody order or any provision thereof on application by either or both former spouses or by any other person.

17.(4) Before the court makes a variation order in respect of a child support order, the court shall satisfy itself that a change of circumstances as provided for in the applicable guidelines has occurred since the making of the child support order or the last variation order made in respect of that order.

17.(6) In making a variation order, the court shall not take into consideration any conduct that under this Act could not have been considered in making the order in respect of which the variation order is sought.

17.(6.1) A court making a variation order in respect of a child support order shall do so in accordance with the applicable guidelines.

The Child Support Guidelines (Ontario), O.Reg. 391/97, as amended, also address the making of a variation order pursuant to subsection 17(4) of the Divorce Act, as follows:

Circumstances for variation

14. For the purposes of subsection 37(2.2) of the Act and subsection 17(4) of the Divorce Act (Canada), any one of the following constitutes a change of circumstances that gives rise to the making of a variation order:

15. In the case where the amount of child support includes a determination made in accordance with the table, any change in circumstances that would result in a different order for the support of a child or any provision thereof.

16. In the case where the amount of child support does not include a determination made in accordance with a table, any change in the condition, means, needs or other circumstances of either parent or spouse or of any child who is entitled to support.

17. In the case of an order made under the Divorce Act (Canada) before May 1, 1997, the coming into force of section 15.1 of that Act, enacted by section 2 of chapter 1 of the Statutes of Canada, (1997).

18. In the case of an order made under the Act, the coming into force of subsection 33 (11) of the Act.

8These legislative provisions give jurisdiction to the court to alter the amount of support payable retroactively, and to relieve against arrears, by setting the proper amount in accordance with the Child Support Guidelines.

9The leading cases on the interpretation of subsection 17(4) of the Divorce Act continue to be Willick v. Willick, 1994 28 (SCC), [1994] 3 S.C.R. 670 and G.(L.) v. B.(G.), 1995 65 (SCC), [1995] 3 S.C.R. 370. Willick sets out the approach to be taken by the court when faced with an application to vary a previous support order. First, the court should determine whether the conditions for variation exist, being a material change in circumstances, and if such conditions do exist, what variation of the existing order should be made in light of the change in circumstances. Willick leaves no doubt that a payor spouse may use subsection 17(4) to address a drop in income that prevents him or her from maintaining the existing level of support payments.

10The issue of what sort of change is sufficient to grant variation was addressed in both Willick and G.(L.) v. B.(G.). A “change” was explained by Sopinka, J. in Willick to mean (at p. 680):

In deciding whether the conditions for variation exist, it is common ground that the change must be a material change of circumstances. This means a change, such that, if known at the time, would likely have resulted in different terms. The corollary to this is that if the matter which is relied on as constituting a change was known at the relevant time it cannot be relied on as the basis for variation.

11In order to be material, the change must not have been known to the parties or to the judge at the time the final support order was made: Poulter v. Poulter, 2005 BCCA 227, 2005 B.C.C.A. 227 at para. 11, [2005] B.C.J. No. 895 (B.C.C.A.); D.(K.) v. D.(N.), 2011 BCCA 513, 2011 B.C.C.A. 513, [2011] B.C.J. No. 2406 (B.C.C.A.) at paras. 31 and 32.

Analysis

12On January 18, 2012, Eberhard J. made a temporary order fixing the parties’ incomes and for payment of child and spousal support on almost the same terms as those contained in the final order, but with a slightly lower child support payment of $2,109. Mr. Savoia 's pleadings were struck on February 16, 2012 for failure to comply with three interim orders. Thirteen days after that order was made, Mr. Savoia filed for personal bankruptcy.

13By the date of Mr. Savoia’s bankruptcy hearing on September 20, 2013, significant support arrears had accumulated. Master Short ordered Mr. Savoia to pay the sum of $25,000 to the trustee on account of the Family Responsibility Office indebtedness, to be paid toward the existing arrears. He suspended Mr. Savoia’s discharge for a period of one month, to run consecutively from the date of payment of the $25,000. That lump sum has not been paid, even partially.

14The Reasons for Decision of Master Short include the following findings of fact:

9The Proof of Claim filed by FRO dated October 24, 2012 reflected an outstanding balance of $120,618.59, made up of a number of elements including arrears of periodic payments, interest on those arrears, a lump-sum support amount and unpaid court costs.

10The evidence of the trustee some 11 months later, at the hearing before me, suggested that the current FRO balance outstanding is more in the order of $160,000 at this time.

15The key issue in this case is whether there has been a change of the nature that would satisfy this court, as required by section 17(4), in the condition, means, needs or other circumstances of Mr. Savoia.

16The Continuing Record in this matter shows that Justice Eberhard was aware of Mr. Savoia’s bankruptcy in 2012 at the time that she made the final order. In a lengthy affidavit sworn May 10, 2012 filed in support of that order, Ms. Santaera’s evidence included the following:

45Attached hereto to this my Affidavit and marked Exhibit “D” is my Net Family Property Statement. As can been seen from that statement, if I retained the matrimonial home I would have owed the Applicant an equalization payment of $5,739.45. On February 29, 2012 the Applicant filed for personal bankruptcy. Attached hereto to this my Affidavit and marked as Exhibit “E” is a true copy of the Applicant’s bankruptcy notice. As can be seen from the Statement of Affairs, the Applicant indicates that he ceased operating his barber shop business as of February 17, 2012. The day after his pleadings were struck in this proceeding. I have driven past his business on numerous occasions since then and he is clearly still operating his business. The business name has changed from “The Men’s Zone” to “A Man’s Zone” and there is a sign there that reads “Under New Management. Same Barbers”. I have no doubt that the Applicant continues to run the barbershop, but that he has changed the ownership to try to protect his business and income from his creditors and me.

75The Applicant’s business is thriving. His business is recession proof. Historically the state of the economy has had no effect on his business whatsoever. His current lifestyle certainly suggests that there has been no drop in his business whatsoever. He continues to be able to take vacations, purchase vehicles and spend lavishly on himself.

17Accordingly, the bankruptcy was a fact known to the judge making the final order. However, as a result of the evidence heard during the trial of this Motion to Change, I find that Mr. Savoia stop operating his business on March 7, 2012, being the date that the landlord terminated the corporation’s lease, and that he was not in fact working at his business in May, 2012. Following March 7, 2012 he held a series of part-time jobs as a barber until he was hired by Salon Andre on a full-time basis in September, 2012. In August, 2013, his employer changed to Gentleman’s Choice, where he remains working full-time.

18There are at least two compelling reasons for a potential finding that a variation is not warranted. First, Mr. Savoia’s decision to close his business was voluntary, and he has failed to prove that that decision, which triggered a reduction in income, was a reasonable one. The business was solvent. The evidence heard during this trial leads me to make the following findings of fact:

1. By February 15, 2012, Mr. Savoia was preparing to file an Assignment in Bankruptcy;

2. This was approximately one month after Eberhard, J. made an interim order fixing Mr. Savoia’s income at $125,000 and ordering him to pay spousal and child support in the amounts of $1,900 and $2,109, respectively;

3. Mr. Savoia’s pleadings were struck on February 16, 2012;

4. He signed the Statement of Affairs for a non-business bankruptcy on February 29, 2012;

5. He ceased operating his business on March 7, 2012;

6. He voluntarily left $5,000 worth of barbershop equipment in the leased premises, and refused payment for it even though it was offered. His evidence regarding declining to accept payment for his business equipment was “because of you”, in response to the respondent’s cross-examination question as to why he had not accepted the money offered;

7. The closing balance in the Men’s Zone business account at CIBC on January 31, 2012 was $3,155.63, and was $3,087.48 on February 14, 2012. On February 16, 2012, that entire balance was withdrawn. Cheques totalling $20,986.46 cleared the account in January, 2012;

8. Mr. Savoia’s explanation for withdrawing all of the money from the business bank account on February 16, 2012 was that he used the money to pay his employees in cash. He had earlier testified, as the cheques show, that he had paid his employees by cheque;

9. He paid himself $4,175.36 from the business in January, 2012 by way of salary;

10. Throughout February, 2012 his personal CIBC bank account carried a balance that never went below $1,019.56, and its closing balance at February 24, 2012 was $2,125.04. Total debits in that account in February, 2012 by cheque, pre-authorized payment or point of sale purchase totalled $4,953.68;

11. From November 24, 2011 to December 19, 2011 total debits from Mr. Savoia’s personal account were $7,340.56, and still the closing balance at December 23, 2011 was $1,769.77. In the business account, the closing balance at December 31, 2011 was $5,091.83. From December 1 to December 31, 2011, cheques totalling $15,607.40 were withdrawn from the account;

12. The business paid the rent in each of January and February, 2012, each payment being in the amount of $2,327.22;

13. Mr. Savoia opened two tax free saving accounts and one RRSP in December, 2011, depositing $346.33 into each. His evidence was that he opened these accounts for his children.

19From this evidence and findings of fact, this court draws the following conclusions:

1. Men’s Zone Barber Shop Inc. was not insolvent;

2. The Notice of Termination of Lease was either a sham or was a step taken by the landlord as a result of being served with Mr. Savoia’s Notice to Creditors, which listed the landlord as one of the creditors, to whom a liability of $1.00 was owed. Whichever is the case, the business had the financial solvency either to challenge the landlord, or to look for new premises, but no such steps were taken;

3. Mr. Savoia was being untruthful at his examination by the Official Receiver when he told the examiner that he had become aware that he was unable to meet his debts as they became due just before Christmas 2011, when he ran out of money; and

4. Mr. Savoia’s bankruptcy was contrived to avoid making an equalization payment to Mrs. Savoia, and to relieve himself from obligation for their joint debts. It was undertaken primarily as a reaction to the interim support order.

20The bankruptcy having been a voluntary choice and not being carried out for the primary purpose of obtaining relief from creditors, but instead to create hardship for Ms. Santaera, this court would have sufficient justification to decline to reward Mr. Savoia’s actions through a downward variation.

21The other reason why the Motion to Change could be unsuccessful is the unavoidable conclusion that Mr. Savoia has not accurately disclosed his income from 2012 to present.

22Mr. Savoia gave evidence that he has been working at Gentleman’s Choice Hair Stylist, earning $200 per week. This is in fact his net pay after deductions and Family Responsibility Office garnishment. He earns $15.85 per hour and is typically paid for 44 hours per week for a gross weekly pay of $697.40. The issue is the amount of reported tips, which he recorded in his latest Financial Statement sworn July 21, 2014 as $105 per month. In his Form 15A in support of his Motion to Change, he indicated his tips as being $303 per month. In his Financial Statement sworn July 23, 2012, tips are likewise reported at $303 per month. No reasonable explanation was provided for the difference other than that the pleading was “wrong”.

23At some point Mr. Savoia prepared a chart showing the tips that he has earned since May, 2012. The chart contains no record of tips at the first job he held, being with 1853118 Ontario Inc., where he worked for approximately one week. According to the Record of Employment, between April 24, 2012 and May 5, 2012 he worked for Do or Dye. No tips are recorded for April. He recorded tips of $10 between May 8 to May 16, 2012, which does not correspond to the date shown on the Record of Employment. He then worked at Salon FX, where he testified that he worked on a commission basis. He seems to have begun that employment on approximately June 19, and was working there on July 3, 2012 at the time of an interaction between the parties and police. Tips are only recorded for June, and total $28 even though Mr. Savoia testified that he was working 40 hours per week, and testified that he kept all of his tips in that position.

24Mr. Savoia then went to Salon Andre, and worked Sundays only. He testified that he earned $4 in tips each day.

25He also worked at Franco’s Classic from July to September in 2012, earning employment income of $4,438.99. Tips are recorded as being $0 to $5 per day, never exceeding that amount. September’s tip earnings totalled $36, for example. When he began his full-time job at Gentleman’s Choice, he began to work 44 hours per week. He testified that men’s haircuts are $21 each. His reported tips as shown on his Financial Statement of $105 per month are the equivalent of approximately $5 per day.

26Ms. Santaera testified, and was not challenged on it, that Mr. Savoia’s tips during the time that he ran his own business funded his daily spending money, which included newspapers, coffees, restaurant meals twice per day, car washes and all of his personal spending money.

27While the court accepts that Mr. Savoia has consistently attempted to obtain higher paying jobs since the close of his own company to maximize his income, it does not accept that his testimony regarding tips is an accurate reflection of the truth. I find that the amounts provided to the court are undervalued and should not be relied upon to obtain a true value of Mr. Savoia’s income from 2012 to present. As he has failed to be fully candid in his testimony in this regard, this court would be justified to bar the relief claimed.

28In addition to the above reasons, Mr. Savoia made no voluntary payments following either of Justice Eberhard’s support orders until enforcement proceedings were taken against him. Support has come in small increments since then, never coming close to the amount ordered.

29Further, Mr. Savoia has paid nothing toward the $25,000 in support arrears required to discharge him from bankruptcy. Instead, he has borrowed what will be close to $30,000 by the end of trial from his brother-in-law for legal fees and loans for personal expenses. The legal fees alone are currently $22,229.

30Mr. Savoia is, therefore, a payor for whom this court should show little leniency, and whose conduct is undeserving of the remedies that he seeks. His resentment toward Ms. Santaera’s efforts to obtain financial assistance for their three dependent children and herself was clear to this court during his testimony.

31And yet this court has a dilemma – the current order is well beyond what Mr. Savoia can pay. It is clear on the evidence that, in the absence of his own barbershop business, Mr. Savoia is no longer earning anything close to $125,000 per year. It is also clear that, given his bankruptcy and lack of personal assets, Mr. Savoia will never be able to catch up with the arrears and, certainly in his present circumstances, will face ongoing enforcement proceedings. He has already undergone a suspension of his driver’s licence. Incarceration is almost certainly a remedy that he will face if the current order is left in place. Such a remedy will have no effect; Mr. Savoia will still be unable to pay the arrears or the ongoing payments. As unsatisfactory as it is to this court and will be for Ms. Santaera, practicality must prevail and a variation occur. I caution that this ruling should not be relied upon as a precedent for the proposition that payors who are the authors of their misfortune will be entitled to a decrease in support orders, but instead is limited to the particular facts of this case.

32As I indicated to Mr. Savoia verbally at the conclusion of the trial, this is the final indulgence that he will be given by this court. While I cannot influence those judges who may consider his support obligation in the future, in the strongest terms I emphasise that this ruling is one that is made reluctantly, and with a view to creating an order that Mr. Savoia can pay. Should he fail to organize his financial affairs so that he is able to honour this order, it is my view that he should be required to live with the future repercussions of his conduct.

33Based on all of the evidence heard a trial, I find that Mr. Savoia’s income has been:

January 2012 $4,175

February 2012 $4,175

March 2102 $ 617

April 2012 $ 550

May 2012 $1,000

June 2012 $1,000

July 2012 $4,439

August to December 2012 $13,112

Total $29,068

34On the evidence heard, I roughly calculate that Mr. Savoia worked for 231 days in 2012, and find that his tips were $10 a day at a minimum, and accordingly add the sum of $2,310, grossed up to $2,934. Accordingly total income for 2012 was $32,002. I do not accept the amounts calculated by the trustee and submitted to Revenue Canada as pre and post-bankruptcy income, as they are flawed by failing to include several sources of income, including tips, in 2012.

35In 2013 Mr. Savoia’s line 150 income was $23,511. He continued to work full-time for three consecutive employers. Assuming that he worked 49 weeks in the year, or 245 days, I calculate his tips roughly at $2,450, grossed up to $3,112, for total income of $26,623.

36In 2014 Mr. Savoia continued to work at Gentleman’s Choice with gross monthly employment income of $3,022. Although $105 in tips is reported on his financial statement, I reject that figure for the reasons previously given and find that tips are roughly $10 per day for 22 work days per month on average, or $220 grossed up to $259 per month. Accordingly, current annual income for 2014 is $39,372.

37Accordingly the child support provisions of the Divorce Order are to be varied with respect to the table amount, such that Mr. Savoia shall pay the following:

i) Commencing August 1, 2012, $630 per month for three children;

ii) Commencing January 1, 2013, $538 per month for three children;

iii) Commencing January 1, 2014, $754 per month for three children.

38With respect to the sharing of s. 7 expenses, the evidence is that Ms. Santaera’s income for the three years at issue is as follows:

2012 $28,717

2013 $44,987

2014 $44,364

39Accordingly, Mr. Savoia’s proportionate share of s.7 expenses will be: 2012 – 53%, 2013 – 37%, 2014 – 47%. The average of these amounts is 46%.

40Spousal support will also be varied, but not terminated as requested by Mr. Savoia. This was a marriage of over nine years in duration, producing three children who remain dependant and living with Ms. Santaera. She was not employed outside the home during the marriage; the separation forced her to re-enter the work force and she has risen to the challenge at an age when employment opportunities become limited. She was saddled with joint family debt due to the bankruptcy. Further, the evidence at trial is that her present job is not fully secure. Despite the narrowing of their income levels, Ms. Santaera’s now eclipsing Mr. Savoia’s, this is not a case where spousal support should entirely cease given the compensatory component in the final order. Also, Ms. Santaera’s debts have grown due to Mr. Savoia’s delinquency in support payments over the past three years. Nominal spousal support shall continue to be paid, subject to review and variation in the event of a further material change in circumstance of either party, in the amount of $200 per month commencing August 1, 2012.

41The remaining issue is Mr. Savoia’s request for a restraining order. While I accept that Ms. Santaera has only ever approached Mr. Savoia’s places of employment for the legitimate purpose of gathering information about his work circumstances, the animosity existing between the two dictates that mutual conditions be put in place to ensure a level of peaceful existence.

42Although Mr. Savoia has succeeded in obtaining a variation, for the reasons previously outlined, his conduct in getting to this point has been most unreasonable. He will not receive recovery of his legal costs. Ms. Santaera, however, may have incurred some legal fees for assistance provided by her former counsel throughout this Motion to Change. Those expenses arise solely from Mr. Savoia’s decision to close the doors of his business. Accordingly, Mr. Savoia shall pay all costs that have been incurred by Ms. Santaera since being served with this Motion to Change, on a full recovery basis. Within 20 days of receipt of this Judgment, she is directed to provide such invoices as may have been rendered to her by lawyers in connection with legal services for this Motion to Change to Mr. Lynn, and the total amount, including HST, shall be included in the order as costs payable by Mr. Savoia.

43Accordingly, a final order shall issue in the following terms:

The May 31, 2012 order of the Honourable Justice Eberhard shall be varied as follows:

1. Paragraph 6 of the May 31, 2012 order shall be replaced with the following:

(a) Commencing on August 1, 2012 and on the first day of each month thereafter, the Applicant shall pay to the Respondent $630 for the support of Corina Maria Santaera (born June 16, 1993), Isabella Rosa Corradina Santaera (born May 26, 1996) and Gianluca Roca Giuseppe Santaera (born February 17, 2001), based on his 2012 income of $32,002.00.

(b) Commencing on January 1, 2013 and on the first day of each month thereafter the Applicant shall pay to the Respondent the amount of $538 for the support of the children, based on his 2013 income of $26,623.00.

(c) Commencing on January 1, 2014 and on the first day of each month thereafter, the Applicant shall pay to the Respondent the amount of $754 for the support of the children, based on his current income of $39,372.00.

2. Paragraph 7 of the May 31, 2012 order shall be replaced with the following:

(a) The Applicant shall pay to the Respondent spousal support in the amount of $200 per month commencing August 1, 2012.

3. Paragraph 8(e) of the May 31, 2012 order shall be replaced with the following:

(a) The Applicant shall pay to the Respondent as his contribution of s. 7 extraordinary expenses for the children, 46% of all such extraordinary expenses, including post-secondary education expenses.

4. The Respondent shall, prior to advancing any claim with respect to the Applicant’s contribution to the children’s post-secondary or other educational expenses to the FRO or otherwise, furnish the Applicant with documentation indicating the child’s program of study, the associated fees thereof, and accounting of monies including scholarships, bursaries, grants, student loans and contributions from the child to the costs to be claimed, and the child’s progress in and projected end-date of the program of study.

5. The arrears of support owing from the Applicant Antonio Savoia to the Respondent Rosa Santaera shall be fixed at the value as at, and calculated retroactively from August 1, 2012 in accordance with the terms of paragraphs 1, 2 and 3 of this order. This adjustment shall not prejudice any right of the Applicant to seek a court’s direction with respect to the validity of any Section 7 claims made by the Respondent.

6. Any overpayment in support made to date by the Applicant as result of the adjustments required by this order shall be retained by the Director of the Family Responsibility Office and credited toward future support payments.

7. Paragraph 8(d) of the May 31, 2012 order is deleted.

8. Paragraph 9 of the May 31, 2012 shall be varied to provide that the Applicant shall obtain a policy of life insurance having a face value of not less than $50,000 and shall name the Respondent as an irrevocable beneficiary for so long as he has either a child or spousal support obligation to the Respondent. He shall provide proof of such policy to the Respondent within 60 days of this order.

9. All other provisions of the May 31, 2012 order are in full force and effect.

10. Neither party shall enter any known place of employment, business or come within 100 meters of the residence of the other, nor shall harass, annoy or communicate with the other, except in writing for the exclusive purpose of facilitating access or pursuant to an obligation to produce disclosure pursuant to this or any other court order.

11. Costs of this Motion to Change shall be paid by the Applicant to the Respondent in the amount of $(to be determined), and collectable as support by the Family Responsibility Office.

44If the parties have difficulty agreeing on the amount of costs to be included in paragraph 11 in respect of costs, they make an appointment to settle the order by contacting the trial co-ordinator.