Alvaro v. Alvaro, 2016 ONSC 7467
NEWMARKET COURT FILE NO.: FC-14-46826-00
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
Leandro G. Alvaro Applicant
– and –
Eleanor Anthea N. Alvaro Respondent
COUNSEL:
James Jagtoo, Counsel for the Applicant
Rono A. Baijnath, Counsel for the Respondent
HEARD: November 14, 2016
RULING ON MOTIONS
JARVIS J.
1The applicant (“the husband”) and the respondent (“the wife”) have brought motions to vary and to enforce temporary Orders made by Kaufman J. on December 8, 2015 and February 12, 2016.
2The parties were married on January 4, 1993 and separated on February 5, 2013.
3There are two children of the marriage, only one of whom qualifies as a dependent for the purposes of the parties’ motions.
4When the parties separated, the husband was employed as a construction project co-ordinator. He was 51 years old. The wife did not work outside the home, and had not for many years. She was 56 years old. Almost four years have passed since the separation.
5After the husband started these proceedings in September 2014, the parties agreed to sell, and did sell, their jointly-owned matrimonial home. That transaction was scheduled to be completed, and was completed, on or about December 17, 2015.
6The parties were unable to agree about the distribution of the net proceeds of sale of the matrimonial home. The wife brought a motion before the completion of the sale for, among other things, child and spousal support and directions with respect to the distribution of the net proceeds of sale of the matrimonial home. That motion was returnable on December 8, 2015.
7On the return date of the wife's motion, the husband declined to instruct his solicitor to file any material in response, and he chose not to attend. An Order was made discharging the husband’s solicitor of record.
8The wife’s motion was heard by Kaufman J. Those terms of the Order made relevant to the motions now before the court are:
(a) commencing December 1, 2015 and monthly afterwards, the husband was ordered to pay child support for one child in the amount of $2,130 a month and spousal support of $3,467 a month. The amount of spousal support was based on the mid-range for spousal support with child calculated in accordance with the Spousal Support Advisory Guidelines (“SSAG”). These amounts were based on an annual income of $160,000 attributed to the husband;
(b) 50% of the net proceeds of sale of the matrimonial home, anticipated to amount to about $319,000, were ordered to be paid to the wife. The husband's presumptive share was ordered to be retained in trust by the parties’ real estate solicitor pending further Order of the court; and
(c) future section 7 expenses for the children were to be addressed at the next scheduled court event on February 12, 2016.
9The matrimonial home sale was completed and its net proceeds totalling about $320,000 were paid to the real estate solicitor. The wife was paid about $160,000, representing 50% of the net proceeds, and the balance was retained in trust.
10At a Conference held on February 12, 2016 Kaufman J. made a further Order, on consent, which varied his December 8, 2015 Order. The husband had re-engaged the services of his former solicitor. The new Order directed that 60% of the matrimonial home sale proceeds, or approximately $93,000, be paid out to the husband and that the balance, currently amounting to $55,800, be retained in trust. The husband's 2015 income, on which the earlier court Order was based, was noted as being $125,583 (not $160,000) “subject to proof and on a without prejudice basis” and child and spousal support were varied to, respectively, $1,728 and $2,648 monthly, payable commencing February 1, 2016, also on a without prejudice basis. The parties were ordered to contribute to section 7 expenses “in proportion to income” without prejudice to later adjustment.
11The husband was paid the funds ordered.
12Despite both support Orders and his receipt of the approximately $93,000 of house sale proceeds, the husband paid nothing for support afterwards.
13On June 10, 2016 the husband was told by his employer that his employment was terminated effective that day and that, in accordance with the terms of his employment contract, he would be paid two week’s severance. The husband claims, and the wife disputes, that since then he has been seeking employment, but without success. He applied for, and has been receiving, Employment Insurance since August 4, 2016. Together with what he earned from his former employment, the husband will earn about $85,000 in 2016 unless he is able to find work before year end.
14The wife paid $8,834 for the child’s post-secondary expenses without contribution from the husband.
Relief Sought
15Each party requested a broad range of temporary relief. Only those appropriate to pre-trial disposition will be considered.
16The husband seeks an Order varying, and relieving him from, the support Orders made by Kaufman J., imputing income to the wife and releasing to him the sum of $20,000 from the funds retained in trust.
17The wife seeks an Order maintaining the support Orders made (even though their amounts differ), retroactive support for the period from August 2015 to November 2015 and further disclosure.
Issues
18These are the principal issues raised in the motions:
(a) whether the husband's support obligation should be varied retroactive to December 8, 2015;
(b) whether the Order dated February 12, 2016 should be varied to allow the release of $20,000 to the husband from the balance of the trust proceeds from the sale of the matrimonial home; and
(c) disclosure from the husband.
Analysis
(a) Support
19The husband's $160,000 income on which Kaufman J. based a December 8, 2015 Order related to the 2014 taxation year. This was the best evidence then before the court. While the parties dispute the circumstances that precipitated the wife's motion, it is clear that the husband was maintaining the household expenses before its sale as had been earlier ordered at a Case Conference by Gilmore J. on March 9, 2015. Some element of those expenses would ordinarily be captured by a support Order but in light of the husband's deliberate failure to respond to the motion, I am not prepared to vary what might otherwise be payable to reflect them at this time - that can be done at trial. Kaufman J. was alert to this potential problem about the husband’s qualifying income when he ordered that the support payments were “without prejudice to quantum and commencement and any adjustments for payments made by [the husband], if any, prior to today.”
20The husband’s 2015 income tax return filed after the February Order disclosed a line 150 income of $138,519.34, although the wife has pointed to the remuneration statements from his employers as totalling $145,102.85. No attachments to the tax return or Notice of Assessment were filed.
21Two principles converge when considering how the husband's support obligations should be determined where there are income changes.
22The first is reliability of the amount of qualifying income. Often, but most certainly not always, that is the amount reflected in a taxpayer's Notice of Assessment. Section 16 of the Child Support Guidelines prescribes the sources of qualifying income and section 3 of the Guidelines requires that “the most current information must be used.”
23In Vanos v. Vanos, 2010 ONCA 876, 94 R.F.L. (6th) 312, the Court of Appeal dealt with the issue of reliability of a party’s qualifying income for child support determination purposes. There is no reason to apply any different standard for determining spousal support.
[13] In our view, where the amount of child support that should have been paid in a prior year is under consideration, the payor’s actual income for that year is the amount that should be used to calculate support for the prior period, so long as the payor’s actual income for the prior period is known.
[14] When calculating prospective child support, income from the previous year is used to calculate future support, essentially as a matter of convenience, because actual income for the upcoming year is incapable of exact determination. However, where, as here, the actual amount of income earned in a prior year is known, it is that amount that should determine the quantum of support that should have been paid. [Emphasis added.]
24The second principle engaged is income imputation or attribution. Both parties urge this court to impute/attribute income to the other.
25The husband contends that income should be imputed to the wife. That fundamentally misconceives the objective of temporary support motions. In Knowles v. Lindstrom 2015 ONSC 1408, 57 R.F.L. (7th) 402, Penny J. observed at para 8, (as most recently followed by MacKinnon J. in Bridge v. Laurence, 2016 ONSC 5075),
[18] It is well-established that interim support motions are not intended to involve a detailed examination of the merits of the case. Nor is the court required to determine the extent to which either party suffered economic advantage or disadvantage as a result of the relationship or its breakdown. These tasks are for the trial judge. Orders for interim support are based on a triable or prima facie case. An order for interim support is in the nature of a “holding order” for the purpose of maintaining the accustomed lifestyle pending trial, Jarzebinski v. Jarzebinski, 2004 CarswellOnt 4600 (ONSC) at para. 36; Damaschin-Zamfirescu v. Damaschin-Zamfirescu, 2012 ONSC 6689, 2012 CarswellOnt 14841 (ONSC) at para. 24.
26Given the family’s dependency on the husband as its sole breadwinner, the traditional roles in the marriage that the parties assumed, the wife’s age and the unchallenged evidence that in the seven years before the parties separated the wife only worked outside the home for about four months doing clerical work, I am not prepared to impute employment income to her. The issue of the wife’s ability to contribute to her own support as assessed in the context of the statutory objectives for spousal support is to be determined at a trial where the court will have a more robust evidentiary record. The husband’s complaint that the wife should be obliged to encroach on her savings to fund her reasonable living expenses is ill-conceived and, in the circumstances of this case where he is non-compliant with outstanding support Orders, unworthy of consideration.
27The wife failed to file an updated financial statement which would have assisted the court in determining what income, if any, to impute to her arising from the $160,000 (approx.) which she received from the sale of the matrimonial home. It is likely that not all of the funds would have been available for investment or income-earning purposes, and some possibly used to repay family loans which the wife said that she had incurred, but none of that information was disclosed to the court. Indeed there was some suggestion, in argument, that the wife had $100,000 left from these proceeds, but it was her responsibility to provide current information, and she did not. Accordingly, the sum of $160,000 will be adopted in order to impute to her a notional income of 4% on that amount, or $6,520 for 2016.
28The wife contends that the husband is intentionally unemployed, that rarely since the parties immigrated to Canada in 2005 has there been such a long period of time as that now experienced where he wasn’t working. The husband’s evidence about his job-seeking efforts as disclosed from his questioning lends some credence to the wife’s allegations. Even so, and notwithstanding the husband’s refusal to acknowledge his support obligations in these proceedings and his dismissal of the wife’s contributions to the family, it is not possible to make this kind of determination without a trial.
29Accordingly, for the purposes of the motions now before the court the husband’s qualifying incomes for 2015 and 2016 shall be deemed to be, respectively, $138,519 and $85,000. The wife’s incomes for those years will be deemed to be $5,000 (comprising the sum of $5,000 from a RRSP redemption) and $6,250, respectively. These amounts are without prejudice to any adjustment as may be made by a trial judge.
30Applying the Child Support Guidelines and adopting the same mid-range SSAG assumption as Kaufman J, the husband should have paid the following for support:
(a) for the month of December 2015, the sum of $1,178 for child support and the sum of $3,676 for spousal support; and
(b) for 2016 to and including December 31, 2016, the monthly sum of $762 for child support and the monthly sum of $2,087.
31The foregoing totals $10,322 for child support (i.e. $1,178 plus [12 x $762]).
32Spousal support would have been tax deductible to the husband and included by the wife when reporting their total 2016 incomes had there been an outstanding Order for the above amounts. Since it is questionable whether this court has the jurisdiction to make a deductible spousal support Order having a retroactive effect in circumstances where no, or a different, payment was made and in light of the “without prejudice” qualification noted by Kaufman J. when the original Orders were made, some discount is appropriate. Subject then to the evidence at any trial and the discretion of the trial judge, the amount of spousal support that should have been paid to the wife on a tax effective basis shall be reduced by 40% to $17,232 (i.e.[$3,676 plus [12 x $2,087] x .4): Virc v. Blair, 2016 ONSC 49.
33The wife paid $8,834 for the son’s tuition and residence in January 2016. Although she claimed to have paid the son’s tuition for September 2016, there was no evidence as to the amount paid. The husband said in his questioning that he was contributing to the son’s rental expense for an apartment which the husband also said that he had rented but refused when asked to provide a copy of the lease agreement. Not a very wise refusal.
34Taking into account the 2016 spousal support presumptively payable, a 66% (husband)/ 34% (wife) Section 7 expense ratio is suggested by the SSAG. Based only on the amount paid by the wife in January 2016 (since there was no evidence as to what she paid in September 2016), the husband owes the wife for their son’s January post-secondary expenses the sum of $5,830. This amount is without prejudice to any adjustment which may be made at trial.
35The foregoing amounts total $33,384.
36As for on-going support before trial, the August 23, 2016 financial statement sworn by the husband disclosed an Employment Insurance income of about $22,600 a year which, with his non-registered savings, would produce an annual income of about $23,000. Taking into account the same investment income for the wife of $6,250 and adopting the same mid-range SSAG approach, the husband’s basic child support obligation is $184 a month and his spousal support obligation is $374 a month. These payments shall commence January 1, 2017.
(b) Trust Proceeds
37It is regrettable that given the disclosure made and the questioning undertaken, neither party filed a Net Family Property Statement that, even if noted as being qualified or “without prejudice”, would have assisted the court, and no doubt the parties, in assessing the value of what they were disputing as owing as and for an equalization payment, and by whom. This information would be relevant to whether the trust proceeds should be accessed as proposed by the husband. Instead, much of the material that was filed for the parties’ motions, and the tenor of the exchanges between counsel during questioning, was replete with bad faith accusations and redolent of professional disrespect that has done no one any credit. And only escalated litigation noise and costs.
38The husband claimed that at or around the time in June 2016 when his employment was terminated he needed $20,000 from “his” funds held in trust “to pay living expenses and fund this litigation.” His affidavits and, in particular his financial statement sworn August 26, 2016, revealed the following:
(a) the husband received about $93,000 after the February 12, 2016 Order of Kaufman J. The exact amount was not disclosed. From these funds it appears that the husband paid debts of about $20,000 and made a $26,969.20 deposit to his RRSP. A net of about $23,000 was deposited to his tax free savings and bank accounts;
(b) the husband’s 2015 Income Tax Return, having a tax service preparation date of April 2, 2016, claimed a $23,687.48 tax refund. It is unknown what refund was actually paid to the husband because, as already noted, there is a discrepancy between the line 150 income reported and the sum of his two employers’ statements of 2015 remuneration paid and no Notice of Assessment was provided (nor any explanation for its absence). The husband did not disclose what refund amount that he had received; and
(c) the husband did not update the information contained in his financial statement. There was no evidence when his motion was argued that the husband had been obliged to access his savings to meet his expenses.
39The wife’s failure to file an updated financial statement was equally regrettable. No reasonable explanation was provided why this was not done. Parties will be held accountable for their failure to provide the evidence needed to enable the court to make the best determination possible. That is an additional reason why the wife will be attributed a $6,250 annual income.
40All the court can with any degree of confidence determine at this stage is what the husband should have paid and how, given his current employment circumstances, that should be paid.
41Counsel for the husband informed the court that due to changes in the support Order made by Kaufman J., the Family Responsibility Office (“F.R.O.”) was unable to implement enforcement of the Order before the husband’s employment was terminated. But that was in mid-June 2016 and the first Order made by Kaufman J. was made over six months earlier on December 8, 2015. The husband knew then that, even if he disagreed with the Order, he was obligated to pay support. He could have, but did not, make arrangements either personally or through counsel when he re-engaged his services, to pay the support ordered. That could have been accomplished, as is often done, by an exchange of letters between counsel confirming that once a file number was assigned to the support Order by the F.R.O., then the Director would be informed that support had been paid and the payor’s account would be adjusted accordingly. The husband could have, but did not, pay anything on account of support after Kaufman J. accepted the husband’s claims of a reduced 2015 income (subsequently determined to be inaccurate). The husband could have, but did not, use any of approximately $93,000 house sale proceeds to pay the support then outstanding. Unwisely he adopted the discredited legal position that the wife, his dependant, should have looked to her own savings to meet the expenses to which he was legally obligated to contribute.
42There is no reasonable explanation for the husband’s failure and/or refusal to pay child and spousal support and no reason why the funds held in trust should not be accessed to pay the support. Accordingly there shall be forthwith paid from those funds to the wife the sum of $33,384.
(c) Disclosure
43The wife claims that she needs the following disclosure from the husband:
(a) proof of all employer allowances and reimbursements from 2012 including but not limited to food, gas and accommodation. The husband explained that he was only reimbursed for what he spent. While this explanation does not satisfy the wife, the husband has answered the request. If the wife remains unsatisfied, it will be open to her to summons at trial representatives of the husband’s former employers to testify;
(b) completion of all FSCO employer pension valuations for employment since 2005. The husband answered this request in his affidavit sworn November 9, 2016 and even earlier in August forwarded Directions for the wife to contact his former employers if she wished, and if she continued to dispute his evidence that there were no outstanding pension entitlements;
(c) production of the rental agreement and proof of payments for the child’s residence while attending university. Given that the issue of the parties’ respective section 7 expenses for their child is unresolved and that the husband has sworn that he contributed but has declined to provide corroborating evidence, this request must be answered;
(d) production of documentation dealing with the post separation sale by the husband of his Toyota automobile and related loan documentation. This information may be relevant to the equalization issue and the husband’s overall financial ability to pay support and must be answered; and
(e) production of copies of receipts and other evidence dealing with cash withdrawals between 2012 and 2015 from the husband’s Toronto-Dominion bank account ending in *5905. It is unclear exactly how the wife conceives that this kind of request could be satisfied. Even so, the husband ignored this request in his affidavit sworn October 4, 2016 and evaded directly answering it in his affidavit sworn November 10, 2016. Instead he provided a summary of what money he transferred to the wife and what credit card payments he made “not counting cash” (para. 16). This is unacceptable.
Disposition
44The following is ordered:
Paragraph 2 of the Order of Kaufman J. dated February 12, 2016 shall be varied as set out in subparagraphs (2) to (6) below.
There shall forthwith be released from trust and paid to the wife for child and spousal support the sum of $33,384 from the net proceeds of sale of the parties’ former matrimonial home.
The support ordered shall deal with the period December 1, 2015 to and including December 31, 2016 and is made without prejudice to either party’s claims for support and/or credits arising before December 1, 2015, to either party’s qualifying income as may be determined at trial and to any adjustments to the support payable, and paid, which may be made by the trial judge.
The balance of the funds in trust after payment of (2) above shall remain in trust pending further Order of this court or agreement between the parties.
The husband shall pay to the wife basic child support in the amount of $184 a month.
The husband shall pay to the wife spousal support in the amount of $374 a month.
The support pursuant to (5) and (6) above shall be payable on January 1, 2017 and on the first day of each succeeding month until varied and is based on an annual income attributed to the husband of $23,000 and an annual income attributed to the wife of $6,250. These amounts, and the incomes on which they have been calculated, are without prejudice to any adjustments which the trial judge may determine are appropriate.
The husband shall provide to the wife written confirmation of employment, together with its particulars to include start date, remuneration and benefits (if any) information within seven days of his accepting employment.
The husband shall provide to the wife by January 27, 2017 in affidavit format the disclosure ordered in subparagraphs [43] (c), (d) and (e) above. Attached to the affidavit will be the relevant disclosure and fulsome explanations where appropriate. If the husband is unable to provide the information, then he shall detail the timely efforts made to obtain the disclosure, and his continuing efforts.
This case shall be scheduled to be heard during the May 2017 sittings of the court, peremptory to both parties.
The parties shall schedule a Settlement Conference date to be held before March 31, 2017. Both parties are to fully comply with all settlement conference rules dealing with updated financial statement information, Net Family Property Statements and worksheets. Compliance failure may result in costs being awarded against the offending party.
All other claims for temporary relief raised by either party in their motions are dismissed.
45A Support Deduction Order shall issue.
46In the event that the parties are unable to resolve the issue of costs arising from this Order, they shall file with the court to be included in the Continuing Record their submissions limited to three double-spaced pages, together with (but not to be filed in the Record) any Offers to Settle made, Bills of Costs and case authorities upon which they may be relying.
Justice D.A. Jarvis
Date: December 2, 2016