COURT FILE NO.: FS-14-109 DATE: 2016-05-20 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Erin Marie Bousfield, Applicant AND: Jaret John Bousfield, Respondent

BEFORE: The Honourable Mr. Justice D.J. Gordon

COUNSEL: Sondra O. Gibbons, Counsel for the Applicant Jaret John Bousfield, Respondent Appearing in Person

HEARD: April 19, 2016

ENDORSEMENt

[1] In her motion, Erin Bousfield seeks a temporary order requiring Jaret Bousfield to pay child and spousal support, sale of cottage property, interim disbursements or an advance against the equalization payment, and other relief. The parties previously resolved the parenting issues and Mr. Bousfield has been paying a lower amount for child support than Ms. Bousfield feels is appropriate. The support claims are dependent upon imputing a higher income to Mr. Bousfield than reported by him. As hereafter discussed, a finding as to his income for support purposes is complicated by his failure to provide proper disclosure despite a previous agreement to do so and a consent court order.

Background

[2] The parties commenced cohabitation in 2003. They married on June 20, 2009 and separated on April 21, 2014. Ms. Bousfield is presently 35 years of age. Mr. Bousfield is 34. The parties have two children born to their relationship: Cohen is 5 and Brynn is 3 years of age.

[3] Ms. Bousfield is employed as an instructor therapist at Haldimand Reach. She currently works approximately 21 hours weekly, generating an annual income of $26,449. Full time hours are anticipated in September 2016, when Bryann commences attending school, with annual income estimated to be $44,389.

[4] Mr. Bousfield is the sole shareholder, director and officer of Haldimand Commercial Maintenance Inc. He also has a 50 per cent interest in a laundromat. Mr. Bousfield is the owner of rental property and also purchased a farm after separation. Mr. Bousfield’s 2014 Line 150 income was reported at $68,250. He is currently paying child support based on an annual income of $82,800.

Litigation History

[5] The application was issued on September 5, 2014. Ms. Bousfield presented claims for custody of the children, child support, spousal support, equalization of net family properties and other related items. Mr. Bousfield’s answer is dated September 30, 2014. He opposed all relief sought by Ms. Bousfield, other than an equalization of net family properties, and presented claims for custody and access and other matters.

[6] A case conference was held on November 4, 2014. I directed disclosure, requested the involvement of the office of the Children’s Lawyer and granted leave for questioning.

[7] Mr. Bousfield’s motion for shared custody was first returnable on November 12, 2014. As a term of the adjournment, Lofchik J. granted specified periods of access in favour of Mr. Bousfield. The motion was ultimately heard by Harper J. on February 17, 2015. He granted an order providing that the children primarily reside with Ms. Bousfield with access or periods of residency with Mr. Bousfield.

[8] On November 24, 2015 I granted two orders, on consent:

(a) a final order regarding custody and periods of residence of the children involving a comprehensive shared parenting plan; and

(b) a temporary order on the following terms:

(i) Mr. Bousfield to pay child support of $1,206.00 monthly on income of $82,800, commencing December 1, 2015, on a without prejudice basis;

(ii) extraordinary expenses pertaining to daycare;

(iii) Mr. Bousfield to pay mortgage and taxes for cottage;

(iv) appraisals of property;

(v) disclosure by Mr. Bousfield of matters set out in a lengthy and detailed schedule attached;

(vi) Mr. Bousfield’s expert, Steven D. Rayson, to provide documents pertaining to the company valuation, as specified; and

(vii) Mr. Rayson and Ms. Bousfield’s expert, Christine Minelli, to exchange information and meet within 30 days to discuss their reports, methodology and conclusions.

[9] On February 17, 2016, I adjourned the within motion to be heard as a long motion on April 19, 2016, directing counsel to serve and file factums and to confer with respect to disclosure to be provided by March 4, 2016 and any reports to be served by April 12, 2016.

[10] A different motion came before Arrell J. on March 8, 2016. He permitted Mr. Bousfield to take the children to Florida from April 1 to 9, 2016. Arrell J. declined to sever the divorce from the corollary claims as had been requested by Mr. Bousfield.

[11] On February 19, 2016, two days after appearing in court with respect to the within motion, Mr. Bousfield served a notice of change in representation, having decided to now appear in person.

Expert Reports

[12] Each of the parties retained a chartered business valuator to opine as to the income of Mr. Bousfield for support purposes. Several reports were generated by each of the experts.

[13] Steven D. Rayson of SDR Valuations Inc., was retained by Mr. Bousfield. In his final report, dated December 7, 2015, Mr. Rayson concluded Mr. Bousfield’s 2014 income for support purposes was $83,700. In his final report, dated April 11, 2016, Mr. Rayson concluded Mr. Bousfield’s 2015 income for support purposes was $81,200.

[14] Christine Minelli, of Vine Valuations Inc., was retained by Ms. Bousfield. Ms. Minelli has presented several preliminary reports. Ms. Minelli also provided several affidavits outlining the disclosure from Mr. Bousfield that was required, but not received, to complete her assignment. In her most recent preliminary report, dated February 10, 2016, Ms. Minelli estimates Mr. Bousfield’s 2014 income for support purposes was $211,281, composed of Line 150 income reported of $68,250 plus loans and advances from the company of $143,031. This latter item was received on a tax-free basis and, Ms. Minelli says, ought be grossed up to determine the pre-tax equivalent amount. Ms. Gibbons, in reference to SSAG calculations, indicates $143,031.00 grossed up is the equivalent of $272,514.00 and, therefore, says Mr. Bousfield’s 2014 income for support purposes was $340,764.00.

Legal Principles

[15] The legal principles that apply to the issues on this motion have long been settled and may be summarized in the following manner.

(i) Disclosure

(a) each party is required to serve a financial statement and make full and frank financial disclosure (Rule 13, Family Law Rules, and section 21, Child Support Guidelines);

(b) the onus is on the support payor to accurately disclose his income, not on the support recipient to obtain the relevant information (Cass v. Dyke, [2003] O.J. No. 288, at para. 8 (Ont.S.C.J.));

(c) the failure to provide disclosure may lead to severe sanctions (Biddle v. Biddle, [2005] O.J. No. 337, at para. 23 (Ont. S.C.J.));

(d) the court may draw an adverse inference against a party who has failed to comply with the obligation to provide disclosure and may impute income to him as considered appropriate (Section 23, Child Support Guidelines).

(ii) Imputing Income

(a) the court may impute corporate pre-tax income to a support payor where it is of the opinion the disclosed income does not reflect all of the funds available for the payment of child support (Section 28, Child Support Guidelines);

(b) the court may also impute income as it considers appropriate where the support payor has failed to provide full and frank disclosure as to his income (Section 19 (f), Child Support Guidelines);

(c) the purpose of section 18 is to enable the court to conduct a fair accounting of the money available for the payment of child support (Wildman v. Wildman (2006), 2006 ONCA 708, 33 R.F.L. (6th) 237, at para. 27 (Ont.C.A.));

(d) piercing the corporate veil for the purpose of imputing income under section 18 is for the purpose of settling the appropriate level of child support (Wildman, supra at paras. 31, 41 and 49); and

(e) the court may impute corporate pre-tax income to the support payor for child support purposes after considering the following issues:

1. Because of the separate legal entity of the corporation, should there be general reluctance to automatically attribute corporate income to the shareholder?
2. Is there a business reason for retaining earnings in the company?
3. Is there one principle shareholder or are there other bona fides arm’s length shareholders involved?
4. What is the historical practice of the corporation for retaining earnings?
5. What degree of control is exercised by the spouse over the corporation?

(iii) Expert Opinion Evidence

(a) It is the duty of an expert to provide opinion evidence that is fair, objective and non-partisan and to provide additional assistance as the court may reasonably require (Rule 20.1, Family Law Rules);

(b) The expert must be neutral and objective in providing opinion evidence, seek out relevant documents and diligently review those documents and arrive at a considered opinion based on a thoughtful analysis (Berta v. Berta, 2014 ONSC 3919);

(c) The expert’s report cannot merely state a conclusion but must set out the opinion and the basis for the opinion (Marchand (Litigation Guardian of) v. Public General Hospital Society of Chatham (2000), 51 O.R. (3d) 97 (Ont.C.A.)); and

(d) Issues of independence and objectivity are normally addressed as a matter of weight rather than admissibility; however, the court has the discretion to reject the expert’s report when satisfied it is tainted by bias or partiality (Carmen Alfano Family Trust v. Piersanti, 2012 ONCA 297);

(iv) Interim Expenses

(a) The court may make an order that a party pay an amount of money to another party to cover all or part of the expenses of carrying on the case (Rule 24(12), Family Law Rules);

(b) The relevant conditions for an award for interim expenses include:

(i) the moving party must be impecunious to the extent that, without such award, she would be deprived of the opportunity to proceed with the case;

(ii) the moving party must establish a prima facie case of sufficient merit to warrant pursuit; and

(iii) there must be special circumstances to satisfy the court that the case is within the narrow class of cases where this extraordinary exercise of its powers is appropriate (British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, at para. 36); and

(c) The third criteria in Okanagan is modified by Rule 24(12), an award may be made to:

(i) level the playing field; and

(ii) exercising the court’s discretion to ensure all parties can equally provide or test disclosure, make or consider offers or go to trial (Agresti v. Hatcher (2004), 1 R.F.L. (6th) 1, at paras. 17 and 18 (Ont. S.C.J.)).

Discussion and Analysis

(i) Disclosure

[16] Despite the passage of time;

(a) Mr. Bousfield has not provided full and frank disclosure as required by the Rules and the consent order;

(b) Mr. Rayson did not deliver the documents as required by the consent order; and,

(c) Mr. Rayson and Ms. Minelli did not meet as directed by the court order as Mr. Rayson advised Ms. Minelli to direct all communication “to Mr. Bousfield until he advises you otherwise”.

[17] In his many affidavits, Mr. Bousfield speaks of his efforts to provide disclosure. Yet he has failed to complete the relatively simple task. In the court appearance before Arrell J. on March 8, 2016, Mr. Bousfield reported that some disclosure remained outstanding but he was diligently working to produce the remaining documents. Yet in correspondence to Ms. Gibbons, dated March 28, 2016, Mr. Bousfield attempted to add conditions for his disclosure, namely a confidentiality agreement. In his most recent affidavit, sworn April 15, 2016, Mr. Bousfield makes no mention of the outstanding disclosure.

[18] The outstanding disclosure is significant. A detailed schedule was attached to the consent court order. Ms. Minelli has also made numerous requests for documents so as to complete her report.

[19] Mr. Bousfield, in his submissions, was unable to explain his neglect. At this point, the only conclusion is that such has been a deliberate attempt to stall and defeat Ms. Bousfield’s claims in this case. Mr. Bousfield attempts to assert control and impose his own terms when such is not within his power.

[20] Mr. Bousfield wants to rely on the final report of Mr. Rayson and is critical of the preliminary report of Ms. Minelli. But Mr. Bousfield and Mr. Rayson are the cause of Ms. Minelli being unable to complete her report. Ms. Minelli has raised serious questions as to many financial transactions. Failing to respond to those questions by withholding disclosure is unacceptable.

[21] Mr. Bousfield’s disregard for the court process cannot be ignored. In these circumstances, and at this stage in the case, the appropriate result is to impute income by way of an adverse inference.

(ii) The Rayson Report

[22] For the following reasons, I attach no weight to Mr. Rayson’s report:

(a) he failed to provide the documents identified in the consent court order granted November 24, 2015;

(b) he declined to meet with Ms. Minelli, despite request and as required by the same consent order;

(c) his report simply offers a conclusion as to Mr. Bousfield’s income and, while schedules are attached pertaining to financial records, he fails to set out the basis for his opinion;

(d) he relies on information provided by Mr. Bousfield without any independent inquiry or analysis; and

(e) he does not adequately respond to the inquiries of Ms. Minelli.

[23] Mr. Rayson owes a duty to the court. Yet when called upon for assistance, he abdicated his responsibility and deferred to the instructions of Mr. Bousfield. That is unacceptable. Mr. Rayson’s response to Ms. Minelli reflects Mr. Bousfield’s control. An expert witness is not at liberty to ignore a court order. Mr. Rayson’s conduct brings into question his impartiality for Mr. Bousfield.

[24] In result, on this motion, I decline to rely on Mr. Rayson’s report in any respect.

(iii) The Minelli Report

[25] As Mr. Bousfield and Mr. Rayson have withheld disclosure of financial documents, Ms. Minelli has been limited to preparing preliminary reports. Yet these reports are thorough with the basis of her opinion well presented.

[26] Ms. Minelli reports the unaudited financial statements of Haldimand Commercial Maintenance Inc. to be misleading, for example:

(a) an “investment account” was reported in 2013 of $82,000 and in 2014 of $148,000, without a corresponding general ledger account, that were actually shareholder loans owing by Mr. Bousfield;

(b) the shareholder loan accounts show Mr. Bousfield withdrawing corporate funds for cash and using the corporate credit card for personal expenses, including legal fees in this case, but these benefits are not reported as income in his personal tax return as required by section 15, Income Tax Act;

(c) the general ledger account does not agree with the annual financial statements; and

(d) adjustments were made to the 2015 financial statement to eliminate debt owed by Mr. Bousfield.

[27] Ms. Minelli requested details regarding multiple transactions, the financial statements and ledgers. She received no reply.

[28] Revenue for the company was said to be as follows:

(a) 2013 $753,800;

(b) 2014 $1,360,000; and

(c) 2015 $2,610,000.

The company has significant retained earnings, in December 2014 and January 2015 in excess of $1,000,000, and in April 2015 averaging $700,000.

[29] Ms. Minelli determined that Mr. Bousfield received cash advances and other cash equivalent benefits, on a tax free basis, as follows:

(a) 2013 $31,947; and

(b) 2014 $143,031.

[30] Ms. Minelli rejects Mr. Bousfield’s assertion, one that Mr. Rayson accepted without inquiry, that a sufficient “buffer” needed to be retained to cover three months of business expenses and one year for long term debt for heavy equipment purchases. That position, she says, is inconsistent with the significant cash advances and other benefits Mr. Bousfield received from the company.

[31] Relevant to this matter is Ms. Minelli’s conclusion as to Mr. Bousfield’s 2014 income for support purposes, namely:

(a) line 150 income $ 68,250; and

(b) loans and advances from company $143,031

Total $211,281

As the $143,031 is received on a tax free basis, Ms. Minelli advises such must be grossed up for determining income for support purposes.

[32] In my view, Ms. Minelli’s reports are credible and reliable. She presents a detailed analysis. Through no fault of Ms. Minelli, her reports are preliminary. More work needs to be done when full and frank disclosure is made. Ms. Minelli’s opinion may require amendment. But what remains clear, and not denied, is that Mr. Bousfield has received significant financial benefit by use of corporate funds. This is income for support purposes.

(iv) Imputing Income – What Amount?

[33] In his submissions, Mr. Bousfield acknowledged using corporate funds for personal expenses. But he describes Ms. Gibbons’ description of his income at $355,000 to be a “fabrication”. Mr. Bousfield will only accept his income to be $82,000 with minimal addition to this line 150 amount.

[34] The evidence tendered on this motion shows otherwise. Indeed, the only evidence is Ms. Minelli’s report. Mr. Bousfield has withdrawn significant funds from his company for personal use. The company has excessive retained earnings that are not justified. In these circumstances, Ms. Minelli’s opinion of income at $211,281, grossed up to $340,764 may be correct. It is the only reliable evidence on this motion. Some allowance may be appropriate for averaging income over several years. Full disclosure would assist in that analysis.

[35] I have some reluctance in concluding income of Mr. Bousfield, as requested by Ms. Gibbons, only because Ms. Minelli’s report is preliminary. I am satisfied there is significant undisclosed income, as Ms. Minelli determined, and income must be imputed at this stage on a without prejudice basis. On the evidence presented, I conclude Mr. Bousfield’s 2014 income for child support purposes was at least $250,000, if not higher.

(v) Child Support

[36] Mr. Bousfield has been paying child support of $1,206 monthly, on his stated income of $82,800, but only since December 1, 2015. Separation was in September 2014. Mr. Bousfield is content to continue paying child support based on that income but now seeks a set-off for the shared custody regime. He says his monthly child support payment should be $604.

[37] Mr. Bousfield has structured his corporate and business affairs in such a manner, no doubt, to minimize income tax liability. However, he has been using corporate funds for his own personal needs, paying expenses and acquiring assets. In so doing, he puts himself ahead of his children. His priorities are misguided. Child support is the right of the child.

[38] Imputing income is necessary so that the children receive their entitlement. I have concluded Mr. Bousfield’s income should be imputed at $250,000. The guideline amount is $3,152 monthly. Payment should commence from November 2014, when Ms. Bousfield moved out of the matrimonial home.

[39] I decline to reduce the child support payment by way of set off given Mr. Bousfield’s non-disclosure and the likelihood his imputed income should be higher.

[40] In result, a temporary order is granted directing Mr. Bousfield to pay child support in the amount of $3,152, commencing November 1, 2014. He is to be given credit for child support actually paid. This order is on a without prejudice basis.

(vi) Spousal Support

[41] Ms. Gibbons seeks a spousal support award for Ms. Bousfield, of $3,500 monthly, being less than specified in the Spousal Support Advisory Guidelines. Mr. Bousfield has never paid spousal support. He opposes any award.

[42] The same analysis applies here as with child support. In addition, the modest income of Ms. Bousfield is taken into account.

[43] In my view, Mr. Bousfield has improperly attempted to restrict Ms. Bousfield’s entitlement and control her finances for his own benefit. His litigation strategy fails.

[44] I agree with the position advanced by Ms. Gibbons. Spousal support of $3,500 is reasonable, likely low, on imputed income of $250,000.

[45] In result, a temporary order is granted directing Mr. Bousfield to pay spousal support in the monthly amount of $3,500, commencing November 1, 2014. This order is on a without prejudice basis.

(vii) Cottage

[46] The cottage at Kawartha Lakes is registered in the name of Ms. Bousfield. Mr. Bousfield saw fit to cause to be registered on title a designation as a matrimonial home. The property was purchased in 2009 for $270,000. The mortgage balance is said to be approximately $216,000. Mr. Bousfield is required to pay the monthly mortgage amount and taxes.

[47] Ms. Bousfield requests the cottage be sold. Mr. Bousfield would prefer to retain it but does not propose to acquire ownership at this time and, hence, does not strenuously oppose an order for sale.

[48] In result, a temporary order is granted directing the sale of the cottage property. The parties shall co-operate in all aspects, including selection of a realtor and the listing price. On sale, the net proceeds shall be held in trust by Ms. Gibbons’ firm, pending further agreement or court order. If necessary, leave is granted to seek further directions.

(viii) Interim Expenses

[49] This is not a difficult case. But it has been made unnecessarily complicated by Mr. Bousfield. Full and frank disclosure ought to have been completed at least a year ago. It remains outstanding. Mr. Bousfield has been put to considerable expense for her lawyer and business valuator. Further expense will be required.

[50] Mr. Bousfield controls most of the family resources. He has significant income and use of corporate funds. Ms. Bousfield has a modest income with no access to other funds. She has borrowed money from her parents to fund this litigation and will require further funds to complete the case. Of particular importance is the business valuation and income determination.

[51] I am also satisfied there is considerable merit in her claims, having regard to the preliminary reports of Ms. Minelli and my own review of the financial documents presented in evidence.

[52] I conclude it is necessary to level the playing field. As Mr. Bousfield has been using corporate resources for his own personal use, including payment of his litigation expenses, he can easily satisfy an order for interim expenses.

[53] The parties present different net family property statements. Given Mr. Bousfield’s failure to provide disclosure, and having regard to prior comments regarding the use of corporate funds and other matters, his net family property statement is not reliable. I am satisfied Ms. Bousfield will receive an equalization payment.

[54] Ms. Gibbons seeks an award of $40,000. In my view, the request is modest having regard to the work yet to occur.

[55] In result, a temporary order is granted, directing Mr. Bousfield to pay $40,000 to Ms. Bousfield, on or before June 30, 2016 for interim expenses. This amount may be set off against any future equalization payment.

(ix) Disclosure

[56] A further order for disclosure is not required. Such was dealt with, in detail, in the consent order granted November 24, 2015 along with other related matters. Mr. Bousfield and Mr. Rayson are expected to comply with the terms of that order, along with the further requests for information by Ms. Minelli, without further delay.

Summary

[57] A temporary order is granted on the terms outlined above. In addition, a support deduction order shall issue.

[58] If the parties are unable to resolve the issue of costs, brief written submissions shall be delivered as follows:

(a) Ms. Gibbons to serve her submissions on Mr. Bousfield within 15 days;

(b) Mr. Bousfield to serve his responding submissions on Ms. Gibbons within 15 days thereafter;

(c) Ms. Gibbons shall have a further 7 days for reply;

(d) thereafter, Ms. Gibbons shall deliver all submissions of both parties to my chambers in Kitchener.

D.J. Gordon J. Date: May 20, 2016