COURT FILE NO.: 6213/12 DATE: 2017/07/04
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
Charlene Danita Ritchie Applicant
Herschel I. Fogelman and Jennifer Samara Shuber, for the Applicant
- and -
Philip William Ritchie Respondent
Kevin H. Robins, for the Respondent
HEARD at WELLAND, Ontario: November 15, 16, 17 & 18, 2016 (with last written closing submissions delivered January 20, 2017)
The Honourable Justice T. Maddalena
JUDGMENT
The Issues
[1] The parties executed partial final minutes of settlement dated November 10, 2016. The issues remaining for adjudication by the court at the trial were as follows:
(1) The duration and quantum of spousal support (entitlement was conceded); (2) Child and spousal support arrears from June 2012; (3) What amounts, if any, the respondent owes to the applicant on account of the increase in value of her 20% interest in Keefer Developments Limited from the valuation date to November 2016; (4) The determination of the respondent’s income for support purposes; (5) Issues surrounding the Allegheny Mountain Resort trailer. (It was conceded during the trial that the respondent should pay to the applicant $16,557.50 representing her one-half interest in the trailer which was sold by the respondent); (6) Whether the court should consider granting the oppression remedy sought by the applicant; (7) Costs.
Brief Background Facts
[2] The parties were married September 20, 1991 and separated November 27, 2009. The applicant states cohabitation commenced in 1989 and the respondent states it was 1990. The applicant was born May 6, 1963 and the respondent was born November 22, 1962. The parties have two children of their marriage, namely, Cole Christian Ritchie born June 10, 1992, and Madison Elizabeth Ritchie born July 2, 1995.
[3] As of the date of trial, neither of the children was defined as a child of the marriage.
[4] As a result of final partial minutes of settlement dated November 10, 2016, the respondent has transferred his interest in the matrimonial home, situated at 112 Carleton Street North, Thorold, Ontario, to the applicant.
[5] Further, as a result of the minutes of settlement, the applicant has transferred her interest in the condominium municipally described as 7 Gale Crescent, Unit 507, St. Catharines, Ontario, to the respondent.
[6] Further, as a result of the partial minutes of settlement, the respondent owes to the applicant an equalization payment of $93,394.63, calculated in accordance with an agreed upon net family property statement dated November 9, 2016.
[7] Further pursuant to the aforesaid minutes of settlement, the applicant will transfer her 20% interest in Keefer Developments Limited (“KDL”) to the respondent upon receipt of those payments referenced therein.
Corporate Organization
[8] The respondent operates a real estate development, general contracting and real estate rental business. The applicant owns 20% of the shares of KDL. The respondent owns 80% of the shares of KDL.
[9] KDL is the owner of:
- 100% of the common shares of 2009104 Ontario Inc. ( “2009”);
- 100% of the common shares of MSANF Inc. (“MSANF”) and this refers to property situated at 425 Morrison Street, Niagara Falls, Ontario;
- 62% of the common shares of Keefer Mansion Inc. (“KMI”).
[10] In February 2012 KDL increased its ownership percentage to 81% of KMI when it bought an additional 19% of the common shares from other existing shareholders.
[11] 2009 holds rental property situated at 20 Pine Street North, Thorold, Ontario, which includes commercial tenants as well as subsidized low-income rental units. These units were operational in 2007. In exchange for offering low rent housing, 2009 received $858,718 of forgivable government loans. None of the forgivable loan is expected to be repaid.
[12] According to the agreed statement of facts, 20 Pine Street North, Thorold was “worth” $2,075,000 at the date of separation. Further, according to the agreed statement of facts, at the date of trial it was “worth” $2,351,000.
[13] MSANF holds rental property at 4525 Morrison Street, Niagara Falls, Ontario. This project was completed in March 2010. MSANF also offered low rental housing and also received forgivable government loans in exchange for offering low rental housing.
[14] According to the evidence, as at December 31, 2015, MSANF had received $532,000 of forgivable government loans.
[15] According to the agreed statement of facts, MSANF was “worth” $1,587,000 at the date of separation. MSANF is presently worth $2,100,000.
[16] Keefer Mansions Inc. operated a restaurant and inn at Keefer Mansion in Thorold, Ontario. This opened in May 2006. The restaurant had 55 seats, as well as 10 rooms.
[17] The real property is owned by the City of Thorold. Leasehold improvements were carried out by KDL.
[18] From a historical perspective, this was the old Maplehurst Hospital in Thorold. KDL carried out major renovations and converted it to the Keefer Mansion. This was an old Victorian stone building located on a hill in Thorold. The restoration commenced in fall of 2002 with the inn opening in May 2006. The inn is approximately a 10,000 square foot facility which has three floors, 12 bathrooms, and surrounded by substantial grounds.
[19] In March 2012 the respondent purchased a number of real estate development companies, referred to as Historic Niagara Development LP (“HNDL”). There are approximately 36 corporations in HNDL of which the respondent controls 100%.
[20] The respondent also owns 100% of the shares of P.W. Ritchie & Associates Ltd. The respondent has stated in the evidence that while P.W. Ritchie and Associates Ltd. still exists, it no longer has revenues.
[21] At some point in time, the respondent opened a new corporation, 2030688 Ontario Inc. It is unclear when this was opened by the respondent. It is clear that this is entirely controlled by the respondent.
[22] All the companies are under the sole direction and control of the respondent. Monies move between various companies as needed and directed by the respondent.
Current Value of KDL
[23] Steve Ranot (“Ranot”) was the expert retained by the applicant to determine the current value of KDL. He was accepted as an expert by both parties. Ranot used the date for valuation current to December 31, 2015.
[24] The parties agreed that the fair market value of the shares of KDL, net of tax, effective the date of separation, was $600,000. The agreed upon gross-up value is $688,350.
[25] Ranot provided a report dated March 24, 2016. The respondent provided no expert report on this issue. In order to determine the fair market value of KDL, it would be necessary to value KDL’s interest in 2009, MSANF, and KMI. Ranot in his report, and also in evidence, provided both a low and high value for KDL:
The low value is $94,184; The high value is $947,039.
[26] The difference between the high and low values is essentially the inclusion or exclusion of the losses of KMI after the date of separation.
[27] The high value of $947,039 assumes only the December 31, 2009 loan to KMI is not recoverable and the loan of $201,117 to P.W. Ritchie & Associates is not recoverable.
[28] KMI losses from 2009, the date of separation to the time of trial, are approximately $1,129,384. The low value acknowledges the debts owed and the loss of $1,112,719 is included. Also the loss on the loan to P.W. Ritchie & Associates is included.
[29] In the high value, the loss of $1,112,719 is not included for KMI.
[30] The financial statement of KMI is not in dispute. The December 31, 2015 financial statement shows cumulative losses for KMI at $2,137,054. According to the December 31, 2015 financial statement, KMI has assets of $58,992 with which to pay a deficit of $2,137,054.
[31] Additionally, both 2009 and MSANF are showing large loans which are forgivable. However, it is agreed that these loans are not to be repaid, which is significant. 2009 is showing a loan of $607,081 as a forgivable government loan. MSANF is showing a loan of $425,103 which also is a forgivable government loan and not to be repaid.
[32] It is undisputed in the evidence that in exchange for offering this low-rent housing, both 2009 and MSANF received substantial forgivable government loans.
[33] As Ranot stated in his evidence, the loans are recorded as a liability on the balance sheet of the corporations and amortized over the term of the loan. However, none is expected to be repaid.
[34] Therefore, I accept the evidence that forgivable loans are not to be repaid and are not a true liability as a fully repayable loan. Therefore, I accept the calculations and values of Ranot without the inclusion of the incremental loans.
[35] Secondly, the losses of KMI are not included by Ranot for the purposes of his “high” calculation.
[36] KMI cannot repay its debt. The Mansion’s debt has continued to escalate since the date of separation. The Mansion continues to exist as a personal benefit for the respondent which I will also deal with later herein. The Mansion debt has continued solely for the benefit of the respondent.
[37] The respondent is funding the continued and ongoing losses in KMI, where he now lives, with income from 2009 and MSANF. Under the circumstances, the losses in KMI ought to be ignored for purposes of determining the post-separation increase in value.
[38] Therefore, I accept the high value as calculated by Ranot and in his report. I conclude that the value of KDL post-separation is $947,039. The respondent owes to the applicant 20% which is $189,407. Therefore, the respondent shall pay to the applicant $189,407 as the increase in value of KDL. This may be rolled into a holding company created for the applicant for such purposes.
Applicant’s Income
[39] According to the evidence, prior to the marriage and early in the marriage the applicant had a nursing background. She had attended at the Mack School of Nursing and was employed in the early years as a registered nurse. However, I accept the evidence of the applicant that in order to continue in this field at the current time she would be required to obtain a full Bachelor of Science in Nursing (BScN) since she has been out of nursing for a period greater than 10 years.
[40] I also accept her evidence regarding the lifestyle of the parties during marriage. The applicant indicated that they enjoyed a good lifestyle which included nice vehicles and regular vacations. They entertained family and friends two to three times per week. In addition, the family was out for dinners two to three times per week. The applicant was able to shop for clothes at nice boutiques.
[41] When the parties opened the Keefer Mansion, they entertained at the inn with family and friends on a regular basis. They were then able to have dinners at the Mansion two to three times per week. In addition, they brought meals home with them.
[42] After the separation and up to approximately February 2012 the applicant worked on a part-time basis at the Mansion inn. However, she stopped work at the Mansion in February 2012. She continued to reside in the matrimonial home. However, by June 2012 the respondent had stopped paying all the expenses for the home. The applicant stated in her evidence that the respondent paid at that time no child or spousal support so she was compelled to commence a court action in 2012.
[43] The applicant stated in evidence that on the occasion of Madison’s graduation, she and the children had to shower at the home of friends since the utilities were turned off in the matrimonial home for nonpayment by the respondent.
[44] Shortly after the date of separation, the applicant’s evidence was that there had been a dramatic change in her lifestyle and in that of the children from during the marriage. Her evidence is that she managed to survive during this time by cashing in of RRSPs, help from family and friends, and she started using community food banks. At this time she started to clean houses on a part-time basis.
[45] The parties’ son Cole at one stage while living with the applicant bought groceries with his debit card, but the respondent had to check the card before Cole was reimbursed by the respondent.
[46] The applicant’s evidence is that she held a variety of jobs from approximately 2012 after she left the Keefer Mansion. Her jobs included the following:
- Front desk at homeopath’s office and cleaned building and people’s houses;
- Went to work for a doctor as a nurse and also front desk receptionist;
- Healthcare aide for Sandra’s Home Healthcare;
- October 2015 she became self-employed caring for an elderly gentleman in his home for approximately 25 hours per week. Her evidence is that she is paid $25 per hour and averaging 25 to 26 hours per week.
[47] At the time of trial, the applicant advised that she was looking at the school board for employment as a clinical supervisor with the District School Board of Niagara to assist personal support workers that are at the school.
[48] I accept her income as stated by her, and in accordance with her income tax returns which indicate as follows:
| Year | Income | Notes |
|---|---|---|
| 2009 | $57,183 | (income splitting with respondent) |
| 2010 | $22,275 | |
| 2011 | 0 | No return filed |
| 2012 | 0 | |
| 2013 | $10,253 | |
| 2014 | $15,312 | |
| 2015 | $72,780 | (includes $45,000 RSP income and $12,000 room and board from two students) |
| 2016 | $25,000 to $30,000 | (approximately) |
[49] The respondent submits that the applicant’s income should be imputed at $49,000 for 2015 and 2016.
[50] The applicant only approached such levels in 2015 when her income included, of necessity, an RSP withdrawal of $45,000. In addition, to assist with finances, she rented the home to two Brock students.
[51] Based on her evidence, it is reasonable to expect in the future that her income could be approximately $30,000 - $35,000 annually.
[52] In addition, spousal support should commence effective June 2012 when the respondent stopped paying all of the expenses for the family. The only issue that remains is the quantum, which will be dealt with herein.
Respondent’s Income
[53] The determination of the respondent’s income has been problematic given all the conflicting evidence which I will outline.
[54] All of the conflicting evidence during the trial regarding the income of the respondent raises huge credibility issues with respect to the respondent’s evidence.
[55] Firstly, the respondent has presented into evidence income tax returns from 2009 through to 2015. The line 150 income has been acknowledged by the respondent to actually not represent his true income.
[56] The line 150 income according to the respondent’s income tax returns is as follows:
| Year | Line 150 Income |
|---|---|
| 2009 | $72,783 |
| 2010 | $33,375 |
| 2011 | $43,300 |
| 2012 | $64,372 |
| 2013 | $46,118 |
| 2014 | $51,293 |
| 2015 | $43,929 |
[57] For 2016 the respondent stated in evidence that his income will likely be the same as 2015.
[58] Secondly, the respondent’s financial statement sworn November 9, 2016 shows an annual income of $43,929. The respondent also included other benefits paid through KDL and P.W. Ritchie & Associates of $20,887.83. Thus, the respondent’s total income in accordance with the sworn financial statement is $64,816.83.
[59] Further, in his sworn financial statement, the respondent confirmed that he resides with his new wife, Debbie Tweeney. He deposes that she is employed at KMI/KDL and earns $2,500 per month.
[60] Thirdly, at trial, the respondent stated that after adjusting his income for living at the KMI, as well as benefits received through expenses paid by KDL, his income is actually $80,000. The respondent stated this is made up of $54,000 plus benefits received to equate $80,000 of income. In his evidence, the respondent noted that he has never earned more than $80,000 annually. At trial this was his position.
[61] Fourthly, questioning of the respondent took place on March 30, 2016. At that questioning, the respondent admitted that his income could be $147,000.
[62] Question 716 of the questioning transcript indicates as follows:
Q. --- your income in 2013, according to your own expert is $147,000.00? A. If that’s what they note in there, that’s what they noted, correct.
[63] Despite the evidence of the questioning, the respondent stated in his evidence at trial that while he had agreed that his own expert noted his 2013 income as $147,000, he does not accept that he ever made $147,000 as income.
The Carnegie Report
[64] Michael Carnegie (“Carnegie”) of Taylor Leibow LLP was retained by the respondent to prepare an income analysis report. For reasons unknown to the court, the report dated May 18, 2016 did not include an analysis of 2015 or 2016 income.
[65] Carnegie was accepted as an expert in the field of business valuation by both parties.
[66] Carnegie concluded that the respondent’s earnings for support purposes are as follows:
| Year | Earnings |
|---|---|
| 2012 | $-346,820 |
| 2013 | $-3,288 |
| 2014 | $-324,633 |
| 2015 | no calculations provided |
| 2016 | no calculations provided |
[67] The calculations presented by Carnegie take into consideration the necessary adjustments to line 150 of the income tax return, including adjustments such as:
- Interest expenses and carrying charges incurred by the respondent to earn investment income;
- The respondent’s, together with his new family’s, personal use of Keefer Mansion Inn (calculated at $1,200 per month);
- A gross-up on the respondent’s personal expenses that were paid by the various corporations;
- The respondent’s earnings which accrue to him as a shareholder of various corporations.
[68] Carnegie also noted that in arriving at his conclusions he took into consideration s.18 of the Child Support Guidelines Legislation which allows the court the discretion to bring in pretax income of shareholders as pretax income.
[69] The calculations provided by Carnegie include all losses for both KMI and HNDL.
Re: Management Fees Paid to the Respondent
[70] The Carnegie report shows management fees paid by KDL to the respondent as follows:
| Year | Management Fees |
|---|---|
| 2014 | $13,000 |
| 2013 | $71,000 |
| 2012 | $62,337 |
| 2011 | $48,170 |
[71] When the respondent was asked about the management fees and to whom they were paid, the respondent stated in evidence that the management fees were “possibly” paid to him.
[72] The respondent was asked regarding the management fees paid by 2009 corporation. The Carnegie report indicates a management fee of $30,800 paid in 2015.
[73] In 2014 the management fee is $27,450. There was $9,000 of management fee in 2013. When the respondent was questioned as to whom the management fee for these years were paid, he indicated he was “not sure” to whom the fees were paid.
[74] Page 28 of the Carnegie report indicates management fees paid by MSANF for 2013 of $88,924 and management fees in 2014 of $72,164. Again, the respondent stated in his evidence that he was “unsure” who received the management fees.
[75] The Carnegie report shows the corporation P.W. Ritchie & Associates Limited as having net income as follows:
| Year | Net Income |
|---|---|
| 2015 | $93,274 |
| 2014 | $102,640 |
| 2013 | $56,149 |
| 2012 | $35,184 |
[76] Unfortunately, the respondent has left it vague and uncertain as to who is receiving the management fees referenced by the corporations above and who is receiving the income from P.W. Ritchie and Associates Limited.
Re: 2030688 Ontario Inc.
[77] It is clear from the cross-examination evidence of the respondent that the respondent has formed yet another corporation, 2030688 Ontario Inc. The respondent owns 100% of the shares of this corporation.
[78] When it was suggested to the respondent that the new corporation referenced above now receives all of the management fees that used to be funnelled through P.W. Ritchie and Associates Limited, the respondent’s answer in evidence was that he was “not sure”.
[79] Further, it is clear from the evidence that the respondent did not tell his own valuator, Carnegie, that he had incorporated 2030688 Ontario Inc., as it is clearly not listed as one of the documents reviewed by Carnegie for the preparation of his report dated May 18, 2016.
[80] This fact is concerning, since it is now clear that money previously put through P.W. Ritchie & Associates Limited is now funnelled through 2030688 Ontario Inc. Carnegie did not deal with this as he was purposely not provided with the information. This could not have been an oversight on the part of the respondent.
[81] The respondent did admit in evidence that the management fee for 2015 of the corporation 2009 was $30,800. He did admit that this was paid to 2030688 Ontario Inc., but the respondent did not tell his valuator this important fact. This, therefore, calls into question the credibility of the Carnegie report (through no fault of Carnegie) and, more seriously, into question the entire credibility of the respondent.
[82] Further, the respondent admitted, only in cross-examination, that 2030688 is the “clearing house entity” and “everything funnels” into that corporation. Evidence from the questioning is as follows:
859 Q. 2030688 is really the clearing house entity. Is that correct? A. Correct
860 Q. Everything funnels up into there? Is that correct? A. Currently, that’s correct.
861 Q. All right, so when you get this cheque for $5,000.00, it’s drawn on an account in the name of 2-0-3-0? A. Correct.
862 Q. All right, all of the various Historic Niagara companies have their own banking facilities or they just go through 2-0-3-0? A. Most go through 2030688. There are a couple of additional bank accounts that aren’t ---
[83] Further the respondent was asked whether income was moved from P.W. Ritchie to 2030688 in 2013. The respondent noted “possibly”. Transcript questions 673 to 674 state as follows:
673 Q. And, if you flip over to page 21, you’ll see towards the bottom of the page, how – what entities are contributing to your income, and there’s a list of them: Keefer Developments, P.W. Ritchie, 2009104 Ontario, MSANF, and Keefer Mansions, correct? A. Correct.
674 Q. So, you’ll see on the line relating to P.W. Ritchie, 2013, only $261.00? A. Correct.
675 Q. So, that suggest to me that that’s the year in which you began to move income from P.W. Ritchie into another entity and which we’ve now identified as 2-0-3-0? A. Possibly.
[84] The applicant, in determining the respondent’s real income, seeks to exclude losses for both KMI and HNDL. Carnegie in his report noted that the losses for HNDL are not expected to run into the future and, thus, could be excluded in the calculation of income. Carnegie did state in evidence that HNDL was not purchased with the expectation of continual losses and thus the actual historical losses are not a proper indication of future performance. Therefore, HNDL is expected to stop losing money and start producing income. I adopt this approach.
[85] The losses for KMI should also be excluded according to the position of the applicant, as these losses are incurred entirely and solely for the benefit of the respondent, and without the consent or knowledge of the applicant.
[86] With regard to income I do not find the evidence of the respondent either clear or credible. He has provided various versions of what his income is. He has also failed to disclose a major corporation to which he has been funnelling monies, all the while, in the middle of litigation.
[87] HNDL is expected to start producing income and, for that reason, I would delete those losses in the calculation of the respondent’s income. I would also delete the losses of the Keefer Mansion. The Mansion is used to fund the lifestyle of the respondent. As well, the respondent has continued it to save face in the community. The respondent has admitted he did not close Keefer Mansion due to “perception in the community” and that bankruptcy is not an option for KMI.
[88] The continuation of the Keefer Mansion Inn makes no financial sense. It has cumulative losses of $2,137,054 and no way to pay that debt. KMI has lost money for 10 years in a row. Carnegie agreed it makes no sense to fund a losing venture. The Mansion Inn has been losing money since it opened in 2006. He also stated a prudent owner would “stop the red ink”.
[89] The respondent states that the applicant consented to fund the losses in KMI up to 2012. I do not accept this is credible. What I do find is that the respondent completely controlled KMI, and subsequently KDL, without consent or knowledge of the applicant.
[90] Carnegie also admitted in his evidence that there is no economic or commercial reason for losses to be continually funded, save and except for the personal benefit which they represent to the respondent.
[91] I conclude that where losses are included to support the respondent’s lifestyle and benefit only him, that it is fair and reasonable to deduct those losses from income. Therefore, it is reasonable to ignore the losses in KMI, as well as in HNDL when determining the income of the respondent.
Conclusions on Respondent’s Income
[92] The respondent continued to assert in his evidence that his actual income for support purposes is about $80,000. I find it is virtually impossible to determine his true income given all the inconsistencies in his evidence as well as the lack of relevant information. The applicant’s approach is to utilize the calculations prepared by Carnegie, but to back out of those calculations the losses for KMI and HNDL for reasons already provided.
[93] In the absence of reliable and cogent evidence of the respondent, as well as the absence of a properly instructed expert report, I adopt the approach of the applicant as reasonable in the circumstances.
[94] Therefore, I find the income of the respondent for support purposes as follows:
| Year | Income |
|---|---|
| 2012 | $326,716 |
| 2013 | $194,017 |
| 2014 | $230,530 |
| 2015 | same as 2014 |
| 2016 | same as 2014 |
[95] It remains the responsibility and obligation of the respondent to satisfy the court as to his real income for support purposes. The lack of a properly instructed report substantially hampers the decision-making process of the court. The evidence of the respondent with respect to finances has been vague and unclear. Family law proceedings are all about full and fair disclosure. Anything less is unacceptable and draws adverse inferences. In this particular case, it is clear that full particulars of the respondent’s finances have not been provided to his expert or to the court.
General Credibility Issues of Respondent: Losses of KMI Benefit to Respondent
[96] One week prior to the separation of the parties, the respondent purchased a new Audi vehicle, which he stated in evidence was valued at $80,000. This vehicle was purchased through KDL (without the consent or knowledge of the applicant), despite the fact that KDL already had a 2009 Toyota Highlander vehicle for use for corporate purposes. When pressed in cross-examination, the respondent did admit that he purchased the Audi “because he always wanted to drive an Audi”.
[97] Further, the monthly loan for the Audi was $1,400 per month which the respondent admitted is put through KDL for payment.
[98] The Mansion was intended to be operating as an inn and a restaurant, but effective May 2012 it became the personal residence of the respondent, his new wife, and stepdaughter, and eventually the residence of the parties’ two children.
[99] The respondent stated that he decided to move into the Mansion Inn out of sheer necessity. To assist with his finances, the respondent stated he moved out of the Gale Street condominium in which he was residing. He then rented the condominium and moved to the Mansion as a cost-saving measure. Despite the lack of money, the evidence, which is undisputed, is that when the respondent moved into the Mansion he immediately installed a hot tub and purchased a new piano.
[100] The respondent moved into a 10,000 square foot facility (the respondent said it is 8,000 square feet), consisting of three floors with large grounds. At trial, he admitted that he and his new spouse occupy the second floor while his stepdaughter and the parties’ two children occupy the third floor. The respondent did also agree, though, that when no functions are ongoing, which is all but approximately 10 days of the year, they all have the free use of all three floors.
[101] According to the respondent, the proper rent to be allocated for his use of the Mansion is $1,200 monthly. While there was no evidence presented during the trial of what this rental accommodation could likely be, the court concludes that it is highly unlikely that a 10,000 square foot facility on large acreage, being a newly renovated historic building, could possibly rent for only $1,200 a month. This reinforces the view that the huge losses incurred are directly proportionately beneficial to the respondent and that any discussion with respect to the respondent’s income should not consider the losses which are practically recklessly incurred by the respondent. Thus, it is fair and reasonable to exclude such losses from the calculation of income.
Use of KDL to Purchase HNDL
[102] The respondent denied that he used KDL to purchase HNDL.
[103] Firstly, this is completely contrary to information posted on the website for KDL which stated:
“On March 26 2012, Keefer Developments Ltd. (KDL) successfully completed the acquisition of the real estate portfolio formerly known as Historic Niagara Development Inc. The portfolio including more than 40 sites holds approximately 200,000 sq. feet of retail and office spaces along with 60 living units.”
[104] When confronted with the information on the website for KDL, which is entitled “KDL Acquires HNDI”, the respondent noted, “It’s just marketing and not entirely accurate.”
[105] Secondly, the respondent was confronted with correspondence dated March 2, 2012 addressed to KDL by Royal Bank of Canada. In that correspondence the mortgagor was KDL. Further in that correspondence, the mortgagee was Royal Bank of Canada. That correspondence confirmed the loan amount of $4.1 million. Further, the security for the $4.1 million was described as the real properties comprising HNDL.
[106] The financial statement of KDL ending May 31, 2012 indicated for the year 2011 no long term debt. However, for the year 2012, it showed a mortgage payable to RBC of $4,000,089.73, as well as other loan amounts that total the long term debt effective 2012 of KDL at $5,652,203.
[107] While the evidence strongly suggests that the $5,652,203 was used by KDL to purchase HNDL, the respondent stated this was not the case. However, the respondent provided no other viable explanation for this debt or, alternatively, how HNDL was in fact purchased.
[108] These are substantial credibility issues which lead this court to findings of adverse inferences with regard to the evidence of the respondent.
Child Support
[109] Prior to June 2012, according to the evidence, the respondent was paying the expenses for the family. He stopped effective June 2012 and it is therefore appropriate to commence child support effective June 2012.
[110] Despite the disagreement with respect to their incomes, for the most part, the parties have agreed as to with whom their children were residing and for how long since June 2012.
Year 2012 (Start June 2012):
[111] For the year 2012, Cole was a fulltime student at Brock University effective September 2012. Cole was also residing with the applicant during this time. Therefore, the applicant is entitled to child support for Cole from September through to December 2012.
[112] For the year 2012, Madison was in high school and residing with the applicant. Therefore, there is child support for Madison owed by the respondent to the applicant from June through to December 2012.
[113] Therefore, for the year 2012, there is child support owned by the respondent to the applicant for one child for June, July and August, and child support for two children from September through to December 2012.
[114] The income of the respondent for 2012 is $326,716.
2013:
[115] In 2013 the income of the respondent is $194,017. For 2013, Madison was residing with the applicant and in grade 12. Cole was at university but residing with the respondent for 2013. Therefore, child support is owed by the respondent to the applicant for 12 months for Madison only.
2014:
[116] The income of the respondent is $230,530. Madison was attending Brock University fulltime from January to November 2014 and residing with the applicant. Madison stopped attending university fulltime in November of 2014.
[117] Cole was in university fulltime and residing with his girlfriend from January to August. Cole resided with the applicant from September to December. Therefore, the respondent owes child support to the applicant for one child for the months January through August, and the month of December. The respondent owes the applicant support for two children for the months of September, October and November. Therefore, nine months support is payable for one child and three months for two children.
2015:
[118] In 2015 I find that Cole was in fulltime university and resided with the applicant. Therefore, the respondent owes to the applicant 12 months support for one child. I find that Madison ended school on a fulltime basis in November 2014 and is no longer entitled to support.
2016:
[119] I find there is no further child support owed in 2016. By this time, Madison had been out of school since November 2014. Cole was in university since 2011 and with the combination of part-time and fulltime on and off. By 2016, he ought to have finished university. The evidence, in the court, which I accept, is that since March 2016 both Cole and Madison were living at the Keefer Mansion with the respondent and his new spouse and stepdaughter. Madison was employed at one of the respondent’s businesses at the Queen Street Café in Niagara Falls. Cole was presently working fulltime in his own business, although he still requires two to three credits for a fourth year marketing degree.
[120] The chart enclosed as Schedule “A” outlines the payments for child support totalling $90,710.
[121] In accordance with the calculations set out in Schedule “A”, the respondent shall pay to the applicant on account of retroactive child support the amount of $90,710 less any amounts confirmed as paid by the Family Responsibility Office (“FRO”) pursuant to the order of July 11, 2014.
[122] I was provided no FRO statement nor any clear evidence of the amounts paid pursuant to the interim court order. The court order of July 11, 2014 required the respondent to pay child support of $700 monthly commencing September 15, 2013. Any payments made should be credited to the respondent as against amounts owing.
Spousal Support
[123] The respondent has conceded liability. At issue are quantum, duration and retroactivity.
[124] The applicant claims retroactive support to June 2012 when the respondent stopped paying all expenses for the matrimonial home and the family. The applicant commenced her application in December 2012. There is a temporary without prejudice order in place dated July 11, 2014, which requires spousal support to be paid. There has been no FRO statement provided by either counsel outlining the amounts recorded as paid through FRO for spousal support.
[125] For purposes of spousal support the court deems it appropriate to utilize the approximate midrange to the low range for the Spousal Support Advisory Guidelines, for an indefinite period.
[126] The applicant will receive a large equalization payment as well as a buyout representing her 20% share of KDL. She will also receive a large retroactive payment for child and spousal support. This will provide her with some additional capital with which to rely upon.
[127] In addition, the applicant will receive ongoing spousal support on an indefinite basis. To her credit, the evidence indicates she is not afraid of working and she will likely continue with employment in the future.
[128] The chart referenced herein outlines the spousal support to be paid by the respondent to the applicant. Indexing, in accordance with the inflation rate, shall occur, with the first adjustment effective July 1, 2018 and yearly thereafter.
| Year | Payor’s Income | # of Months | Monthly Amount | Total |
|---|---|---|---|---|
| 2012 | $326,716 | 6 (June –Dec) | $7,000 | $42,000 |
| 2013 | $194,017 | 12 | $4,600 | $55,200 |
| 2014 | $230,530 | 12 | $5,400 | $64,800 |
| 2015 | $230,530 | 12 | $5,400 | $64,800 |
| 2016 | $230,530 | 12 | $5,400 | $64,800 |
| 2017 | $230,530 | 6 (to June 30th 2017) | $5,400 | $32,400 |
| Total | $324,000 |
Orders
[129] The arrears to June 30, 2017 are fixed at $324,000 owed by the respondent to the applicant less any amounts paid in accordance with the order of July 11, 2014 and confirmed through the FRO statement or by way of any direct payments made by the respondent to the applicant.
[130] Commencing July 1st 2017 and continuing on the first day of each and every month thereafter, the respondent shall pay spousal support to the applicant in the amount of $5,400 monthly.
The Allegheny Mountain Trailer
[131] The parties agreed that the value of this jointly owned recreational trailer was $33,115. Both parties wished to purchase it. The respondent was the only party who used it after separation.
[132] The respondent conceded during the trial, in his evidence, that he sold the trailer without the consent of the applicant and used the proceeds to purchase a new trailer which was placed in the name of his current spouse.
[133] During the trial, the respondent agreed to pay the applicant $16,557.50 on account of the trailer. Therefore, the respondent shall pay to the applicant $16,557.50 on account of the Allegheny Mountain trailer.
[134] In submissions, occupational rent was claimed. I order no occupational rent for the respondent’s exclusive use of the trailer. I order no occupational rent for the applicant’s use of the matrimonial home. Further, I have been provided with no evidence regarding any occupational rent for exclusive use of either the trailer or the matrimonial home.
Life Insurance
[135] According to the respondent’s financial statement sworn November 9, 2016, the respondent has a Transamerica life insurance policy, #080154684. This policy has a face amount of $500,000. According to the financial statement the beneficiary is the applicant as well as Meridian Credit Union.
[136] In addition, the respondent has Transamerica life policy, #080154682, having a face value of $100,000. According to the sworn financial statement the beneficiary is the respondent’s new spouse.
[137] There is substantial spousal support owed to the applicant by the respondent (both in arrears and ongoing). It is important that life insurance be in place in order to secure the support. Therefore, the respondent shall irrevocably designate the applicant as beneficiary of both policies and shall, at the applicant’s request, provide proof at least on an annual basis, that the policies remain in good standing.
The Oppression Remedy
[138] The applicant claims an oppression remedy pursuant to s.248 of the Ontario Business Corporations Act, R.S.O. 1990, c B.16.
[139] The respondent has been and is the directing mind of KDL. The applicant claims the respondent treats KDL as his own personal bank account/lines of credit and moves money around as he sees fit and has done so without input from the applicant. The evidence confirms that the respondent has acted unilaterally, particularly since the date of separation, with respect to KDL. Further, there has been no explanation provided for the continued funding of KMI by KDL. The applicant pleads that the respondent’s conduct has been oppressive and seeks substantial damages.
[140] However, the parties entered into partial minutes of settlement dated November 10, 2016. These were executed a few days prior to the commencement of the trial.
[141] Paragraph 9 of the executed minutes of settlement clearly lists the outstanding issues for trial. Paragraphs 9 and 10 state as follows:
The following issues are left to be resolved at trial: a. spousal support; b. child and spousal support arrears; c. how much, if anything, the Respondent shall pay to the Applicant on account of the increase in value of her 20% of Keefer Developments Inc. between the date of separation and today; d. which party buys the other out of the Allegheny Mountain Resort site and trailer or whether its ownership remains joint; and e. costs.
Other than as set out herein at paragraph 9 above, the parties acknowledge that these Minutes of Settlement are in full and final satisfaction of all claims made by either of them in Court File No. 6213/12 in the Superior Court of Justice at Welland, Ontario.
[142] Paragraph 10 clearly states that other than what is set out in paragraph 9, the parties confirm that the minutes are in “full and final satisfaction”.
[143] It is procedurally unfair that a party should be able to add new issues during the trial.
[144] The oppression further was not referenced in the applicant’s opening address. While an opening address is not evidence, it does reference what the issues are, not only for the court but, more importantly, for the opposing party.
[145] Therefore, I conclude that the oppression remedy cannot proceed and, therefore, any claim for the oppression remedy is dismissed.
[146] Alternatively, the court has dealt with the conduct of the respondent by removing all the losses of KMI from the calculation of the value of KDL and also has removed the losses of KMI and HNDL from the determination of the income of the respondent. In the court’s view, this has sufficiently dealt with the conduct of the respondent.
Respondent’s Claim for Adjustments
[147] The respondent has claimed final adjustments for payment of property taxes, mortgage payments, and insurance with respect to the matrimonial home.
[148] Firstly, this was not provided for in the minutes as issues remaining for the trial. Secondly, there was no evidence presented at trial pertaining to any such adjustments. Therefore, any and all such claims are dismissed.
Summary of Orders made
[149] In summary, the following orders are made:
- The respondent shall pay to the applicant the sum of $189,407 which represents the 20% increase in the value of KDL to the date of trial. This amount may be rolled into a holding company created for the applicant.
- In accordance with the calculations set out in Schedule “A”, the respondent shall pay to the applicant on account of retroactive child support the amount of $90,710 less any amounts confirmed as paid by the Family Responsibility Office, pursuant to the order of July 11, 2014.
- The respondent shall pay to the applicant on account of spousal support arrears $324,000 less any amounts paid in accordance with the order of July 11, 2014 and confirmed through the Family Responsibility Office statement or by way of any direct payments made by the respondent to the applicant.
- Commencing July 1st 2017 and continuing on the first day of each and every month thereafter, the respondent shall pay spousal support to the applicant in the amount of $5,400 monthly. Indexing, in accordance with the inflation rate, shall commence July 1, 2018 and continue yearly thereafter.
- The respondent shall pay to the applicant $16,557.50 on account of the Allegheny Mountain trailer.
- All claims for occupation rent are dismissed.
- The respondent shall irrevocably designate the applicant as beneficiary of both Transamerica life insurance policies #080154684 and #080154682, and shall, at the applicant’s request, provide proof at least on an annual basis, that the policies remain in good standing.
- The claim of the applicant for the oppression remedy is dismissed.
- All claims of the respondent for any adjustments regarding the matrimonial home payments are dismissed.
Costs
[150] The parties may make written submissions as to costs. Submissions are limited to two pages, plus bills of costs, plus any applicable offers to settle. The applicant’s submissions are due by July 25, 2017. The respondent’s submissions are due by August 15, 2017. No reply is permitted.
Maddalena J.
Released: July 4, 2017
SCHEDULE “A”
CHILD SUPPORT
| Year | Payor’s Income | No. of Children | # of Months | Monthly Amount | Total |
|---|---|---|---|---|---|
| 2012 | $326,716 | 1 | 3 | $2,571 | $ 7,713 |
| 2 | 4 | $4,027 | $16,100 | ||
| 2013 | $194,017 | 1 | 12 | $1,589 | $19,068 |
| 2014 | $230,530 | 1 | 9 | $1,859 | $16,731 |
| 2 | 3 | $2,930 | $ 8,790 | ||
| 2015 | $230,530 | 1 | 12 | $1,859 | $22,308 |
| 2016 | No child support payable | ||||
| Total | $90,710 |