NEWMARKET COURT FILE NO.: FC-14-47204-00

DATE: 20180711

CORRIGENDA: 20180813

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Snezana Milutinovic, Applicant

AND:

Radmilo Milutinovic, Respondent

BEFORE: The Honourable Mr. Justice J.P.L. McDermot

COUNSEL: R. Switzer, for the Applicant

Respondent, Unrepresented

HEARD: May 24 and 25, 2018

REVISED ENDORSEMENT

The text of the original endorsement has been corrected with the text of the corrigendum.

(released today’s date)

1The respondent in this case, Radmilo Milutinovic, (“Radmilo”) is an ungovernable litigant. When the parties separated on November 7, 2014, Radmilo was arrested for mischief and in respect of an historical assault on his wife, Snezana Milutinovic (“Snezana”). Upon his release from jail, he immediately removed $1,550,000 from the joint account, leaving $92,000 for Snezana, his joint account holder.

2Throughout this litigation, he has breached court orders requiring financial disclosure and there were three motions to strike his pleadings as a result. In 2014, he was ordered to pay the expenses of the matrimonial home in which Snezana and the children lived; in June, 2016, he breached this order too, and Snezana has since lived on funds received by way of interim disbursements from Radmilo’s bank and investment accounts. Snezana had received $455,000 at the commencement of the trial; another $50,000 disbursement after the uncontested trial that took place increased that amount to $505,000. Snezana acknowledges that she owes this money back to Radmilo.

3The parties had previously settled their custody and access issues, and the parties’ twin 13-year-old daughters, Simona and Anastasia, live with their mother and refuse to see their father. Radmilo’s pleadings were struck at the beginning of trial and I presided over an uncontested trial in respect of the financial issues concerning the parties, none of which had been resolved. Snezana seeks child support, including section 7 expenses, spousal support, a retroactive support award and equalization of property. Radmilo’s pleadings are struck and accordingly there are no claims by him considered in this uncontested trial; in any event, he did not file an updated financial statement, an NFP statement or any evidence by way of affidavit as directed by McGee, J. at the trial scheduling conference. Other than his historical financial statements, the last of which was filed in 2016, there was no evidence of Radmilo’s financial situation.

4However, the failure to disclose resulted in another indirect consequence. Much of the information about Radmilo and his income is dated. The last year for which we have any tax information for Radmilo is 2014 and he did not file his 2015, 2016 or 2017 tax returns; indeed, on February 26, 2018, Bennett J. had ordered that funds be advanced to Radmilo to complete these returns, and Radmilo failed to request these funds from the bank until the first day of trial.

5Moreover, Radmilo was supposed to have filed an updated financial statement and net family property statement for trial under the trial scheduling endorsement of McGee J. dated November 14, 2017. He did not, and his last financial statement was sworn on September 30, 2016.¹

6Because of all of this, the court is very much in the dark concerning Radmilo’s income and assets. It was also apparent that Radmilo was not willing to disclose to the court his past and present income. This was an uncontested trial concerning complicated support and equalization issues and the court was forced to rely upon speculation and to draw adverse inferences in making findings of fact because of Radmilo’s failure to disclose.

7The major issues in this matter are as follows:

(a) What child support is payable by Radmilo in respect of the two children of the marriage who have resided with Snezana throughout?

(b) What section 7 expenses are there?

(c) What retroactive child support, including section 7 expenses is payable by Radmilo?

(d) What equalization payment does Radmilo owe Snezana?

(e) What spousal support is payable by Radmilo?

(f) Is retroactive spousal support owed by Radmilo to Snezana?

ANALYSIS

8For the purposes of both child and spousal support I must determine Radmilo’s income for support purposes. As noted above, there are serious difficulties in doing so, as Radmilo has not disclosed his income for 2015, 2016 or 2017. He has also failed to provide any of the documentation for trial explaining his financial position as required by the trial scheduling endorsement of McGee, J. dated November 14, 2017. Accordingly, there is a dearth of financial information concerning Radmilo’s income.

9Once Radmilo’s income is determined, then the Court must determine ongoing child support as well as retroactive child support. There are also section 7 expenses claimed by Snezana in respect of the children. Prior to determining section 7 expenses, the court must determine spousal support as this affects the percentage share of each party for these expenses.

10Radmilo’s income for child support purposes will, of course, be the same as his income for spousal support. Finally, the Court must determine how the support is to be paid as Snezana requests that the advances in this matter totalling $505,000 be set off against Radmilo’s ongoing support obligation. The request is therefore that retroactive support be paid from Radmilo’s share of the net proceeds of the matrimonial home.

Income Issues

11Radmilo is an electrical engineer. He was trained in Serbia from where the parties emigrated in May 1993.

12Since coming to Canada, Radmilo has been extremely successful. In 2011, the last year for which Radmilo disclosed income from employment in his tax return, his income was $329,592.

13In 2011, Radmilo was laid off by his employer, Hammerschlag and Joffe Inc. He sued them and received a settlement of $2,040,000. This settlement was partially reflected in an $800,000 capital gain reported to the Canada Revenue Agency in Radmilo’s income tax return from 2014. Otherwise, Radmilo’s income tax returns are not particularly informative. His 2011 income tax return showed employment income of $319,930.29; business losses reduced Radmilo’s income to $298,494.

14Radmilo’s 2012 and 2013 income tax return showed no income whatsoever. In 2014, Radmilo reported the capital gain noted above, resulting in a line 150 income of $415,226.74. It is to be noted that Radmilo’s professional income during that year was less than $14,000. After that, in his financial statements, Radmilo said that his annual income was $18,000 per year.

15Notwithstanding this, Radmilo’s lifestyle remains undiminished. His annual expenses disclosed in his financial statements exceed $300,000. At one point in time and notwithstanding orders freezing his accounts, he found $65,000 for a deposit for the purchase of a $1,300,000 home. Although that transaction fell through, Radmilo never explained how he came up with that deposit. Moreover, Radmilo drives a Mercedes; Snezana reported at trial that she saw the vehicle in the parking lot. Radmilo had confirmed in his financial statement that the payments on this vehicle were more than $2,000 per month which he says were made by his company.

16Radmilo has not produced any sort of report on his income prepared by an income valuator as would normally have been done in a case such as this.

17This would have been especially helpful where Radmilo claims limited income in his financial statements filed in 2015 and 2016 of $18,000 per year. His annual expenses were shown as being $325,000 in Radmilo’s September 30, 2016 financial statement, the last one filed in these proceedings. There was again, no explanation as to how these expenses were being met, considering that all of Radmilo’s accounts were subject to freezing orders and were inaccessible by him except by way of court order.

18Ms. Switzer, on behalf of Snezana, suggests that I impute income to Radmilo of $300,000 per year, based upon his 2011 income tax return. She further suggests that I draw an adverse inference against Radmilo because of his failure to provide financial disclosure as ordered by the court on numerous occasions and as Radmilo was obligated to do under the Family Law Rules.²

19Under s. 19(1)(f) of the Child Support Guidelines,³ income may be imputed to a party where the party “has failed to provide income information when under a legal obligation to do so”.

20Moreover, there is ample case law confirming that the court may draw an adverse inference against a party where he or she has failed to make financial disclosure as required by either court order or by the Rules: See Bagheri-Sadr v. Yaghoub-Azari, 2011 ONSC 611 at para. 13, and Bardouniotis v. Trypis, 2010 ONSC 4466 at paras. 7 to 9.

21The reason for this is clear. The income information for Radmilo is only available to him, and he therefore has a duty to provide full disclosure of his income in order to provide clarity to the court as to what he earns. If a payor fails to do so, he runs the risk of income being attributed to him, in the words of the Court of Appeal in Crosbie v. Crosbie, 2012 ONCA 516 at para. 20, “accurately or otherwise”. This is especially so where the payor’s lifestyle is inconsistent with his reported income without good explanation: See: Bak v. Dobell, 2007 ONCA 304 at paras. 41 to 43.

22All of these factors may be found in the present case. Radmilo is a successful electrical engineer. Snezana testified that his services were in heavy demand and that he was able to effectively write his own ticket in the later years of the marriage. She testified that head-hunters were after Radmilo, even when he was employed at Hammerschlag and Joffe Inc. In his last year of employment with that company, his income was over $314,000. Snezana testified that Radmilo had, at one point, agreed to work for a company which set up a nearby office for him in anticipation of his employment with them; Radmilo thought he could do better and decided to look elsewhere.

23Accordingly, it is clear that Radmilo has an ability to earn a substantial income with his electrical engineering skills. This factor is combined with his lack of financial disclosure and his failure to pay for and obtain his 2015, 2016 and 2017 income tax returns, all of which he was obligated to provide under the Rules requiring ongoing financial disclosure. Radmilo said that he could not afford to pay for his income tax returns; yet he was able to make a $2,000 per month payment on a Mercedes Benz which is acknowledged in his own financial statement. Although funds were made available to him to pay for the preparation of these documents, Radmilo failed to take advantage of this order and did not even bother to send for the money from the bank until the first day of trial.

24In addition, it is clear that Radmilo has an unexplained and luxurious lifestyle. He drives a Mercedes Benz. At one point, he thought that he was in a position to buy a home for $1,300,000; although the deal fell through, he came up with $65,000 as a deposit. He spends over $300,000 per year on his lifestyle and never explained how he managed to do this.

25Radmilo has claimed throughout that he has no money and earns almost nothing. If this was the case, he had a duty to explain how he lives the lifestyle that he lives and to prove that he was, in fact, living in poverty. Again, he failed to do so and failed to provide the disclosure necessary to explain the inconsistencies between his lifestyle and his reported income in his financial statement.

26When a party’s lifestyle is inconsistent with his reported earnings, that individual has a duty of explanation. Radmilo has failed to provide that explanation. He failed to follow the provisions of Rule 13 requiring ongoing financial disclosure, and was negligent in providing the disclosure that he was ordered to provide. His pleadings were struck as a result. In light of all of this, it is clear that income should be imputed to Radmilo under s. 19(1)(f) of the Child Support Guidelines.

27I note that imputation of income under the Child Support Guidelines can used in imputation of income for spousal support purposes: see Rilli v. Rilli, 2006 CanLII 34451 (ON SC), [2006] O.J. No. 4142 (F.C.J.) at para. 28. In the last year for which Radmilo reported income from employment, that income was in the range of $314,000. The applicant’s request to impute income to Radmilo in the amount of $300,000 per year is reasonable. I find Radmilo has income in the amount of $300,000 at present for support purposes and that he has earned similar income from the date of separation to the present.

Ongoing Child Support

28Since separation the parties’ twin daughters, Simona and Anastasia have continued to live with the applicant Mother. They are estranged from their father. He says that he has not seen them in two years, and I believe that Snezana would confirm this as well.

29The children appear to be happy and well adjusted, other than the fact that they are not seeing their father. They are involved heavily in tennis and have orthodontic expenses.

30As well, since June of 2016, when Radmilo ceased paying the household expenses as ordered by Nicholson J. on December 10, 2014, he has paid little or no support. Snezana has lived on advances from her husband’s accounts. At the time of trial, these advances totalled $455,000. At the end of the trial, on consent, a further $50,000 was advanced to Snezana, bringing the total advances to $505,000. Snezana acknowledges that she must return this money to Radmilo, but claims a number of countervailing obligations, including ongoing child and spousal support, s. 7 expenses and retroactive child and spousal support.

31I have found Radmilo’s income to be $300,000 from 2015 to the present.

32Ongoing child support for two children is $3,877 per month. So ordered, commencing July 1, 2018.

Retroactive Base Child Support

33Snezana claims retroactive child support from June 1, 2016 on. It is to be noted that the basis for retroactive child support commencing June 1, 2016 is the fact that at that time, Radmilo went into default of the Order of Nicholson J. dated December 10, 2014, requiring him to pay the expenses of the home and the children’s expenses. That breach of the Order is blameworthy conduct and a basis for retroactivity to that date. I note, as well, that this does not cause a hardship to Radmilo, as he has equity in the matrimonial home and substantial cash assets from which to pay the retroactive award of child support. Finally, as noted in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, [at para. 208], there is a presumptive entitlement to child support from the date of separation, which is described as “automatic”. There was no issue that a retroactive award for base child support should go.

34Child support prior to December, 2017 is based upon the 2011 tables. Base child support at $300,000 per year for two children under the 2011 tables is $3,722 per month (not $3,877 per month as set out in the latest version of the child support tables and as used by applicant’s counsel in her calculations). Applying this to this monthly figure to the calculation of retroactive child support set out in Exhibit K to Snezana’s Affidavit, for 2016 and 2017, the arrears of base child support would total up to the end of November, 2017, the sum of $66,996⁴. After this, from December 1, 2017, child support is payable under the new most recent tables in the amount of $3,877 per month. The child support payable up to the end of June 2018 is $27,139.⁵ Therefore, from June 1, 2016 to the end of June 2018, the total amount of base child support owing by Radmilo to Svezana is $94,135.⁶

35To determine the parties’ proportionate shares of s. 7 expenses, I must first determine the spousal support obligation of the respondent as spousal support must be accounted for in calculating the parties’ proportionate share of those expenses.

Spousal Support

36There are, of course, two issues under the heading of “Spousal Support”. The first is entitlement; the second is quantum.

Entitlement to Spousal Support

37Entitlement to spousal support is either compensatory, non-compensatory or contractual in nature: see: Bracklow v. Bracklow, 1999 CanLII 715 (SCC), [1999] 1 S.C.R. 420.

38There are no contractual issues concerning spousal support in this case. Snezana’s entitlement to spousal support must therefore be either compensatory or non-compensatory.

39The basis for compensatory and non-compensatory spousal support arises from s. 15.2(6)(a) of the Divorce Act,⁷ which states that a spousal support order should “recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown.” Compensatory spousal support recognizes advantages and disadvantages arising from the marriage; non-compensatory support recognizes consequences of the breakdown of the marriage to the claimant spouse.

40In the present case, there are both compensatory and non-compensatory grounds for the support claim by the applicant. The compensatory claims arise from the twenty-four year length of the marriage as well as the disadvantages which accrued to Snezana from her move from Serbia to Canada in May of 1993. That move was partially because of instability in Serbia when the parties moved (the Bosnian War was underway then) but the move was largely to the benefit of Radmilo’s career.

41In Serbia, Snezana was a trained as and was qualified as a dentist; in her oral evidence given at trial, she confirmed that she was unable to qualify as a dentist in Canada and was eventually forced to work as a clinical research associate, earning about $45,000 per year. In 2003 when the parties’ daughters were born, they decided that Snezana stay at home with the children full time. She did not work until the parties separated in 2014. Since separation, Snezana has been taking in children for home day care and now works for Wee Watch Day Care earning nearly $8,000 per year.

42In contrast, the move to Canada has been entirely beneficial to Radmilo. His income has been found to be in the $300,000 range and has a successful career as an electrical engineer. Snezana testified that he was in high demand in the last years of the marriage and was picking and choosing his opportunities. It is clear that there is a resulting compensatory entitlement to spousal support in favour of Snezana.

43There was also a non-compensatory element to the claim for spousal support. Snezana and Radmilo lived a luxurious lifestyle up to the date of separation. Their children participated in tennis lessons, which were private and expensive. The matrimonial home is worth nearly $2,000,000. Much of this has or will come to an end as a result of the breakdown of the marriage.

44Should income be imputed to the applicant at minimum wage? The respondent’s pleadings have been struck and the respondent was therefore unable to make a claim for imputation of income. He was also not permitted to lead evidence to show an evidentiary foundation for imputation of income beyond Snezana’s actual income of $7,039 per annum which is required as a starting point to a claim for imputation of income: see Homsi v. Zaya, 2009 ONCA 322, 2009 CarswellOnt 2068 (C.A.) at para. 28. I therefore decline to impute income to Snezana, as to do so would be effectively making the respondent’s claim when his pleadings were ordered to be struck for the reasons previously given.

Ongoing Spousal Support

45The calculation under the Spousal Support Advisory Guidelines, as set out in Exhibit J to the applicant’s Affidavit shows a range of spousal support from $4,498 to $5,931, with a mid-point of $5,213 per month. The applicant’s counsel suggests the mid-point amount for spousal support.

46Considering the strong compensatory claim, this is an entirely reasonable suggestion. Normally with a strong compensatory claim, spousal support should be between the mid-point and the upper-range of the Guidelines: see Rogerson and Thompson, Spousal Support Advisory Guidelines: The Revised Users Guide (2016) at p. 45. The mid-point range is actually a conservative estimate of the amount of support that the respondent would obligated to pay. Ongoing spousal support shall be ordered in the amount of $5,213 per month.

47As this is a twenty-four-year marriage, considering the age of the recipient, spousal support would normally be indefinite and is confirmed to be so under the SSAG calculations. Ms. Switzer suggests a review. I shall address the issue of the review of spousal support when I discuss the means of payment of the spousal support award.

Retroactive Spousal Support

48I cannot see any reason why retroactive spousal support would not be imposed in this matter. There is no issue of delay; there is blameworthy conduct and based upon the findings above, Radmilo has an ability to pay. There would be little or no hardship to Radmilo considering his equity in the matrimonial home, as well as the cash and other resources at his disposal once this matter is finalized: see Kerr v. Baranow, supra and Bremer v. Bremer, 2005 CanLII 3938 (ON CA), [2005] O.J. No. 608 (C.A.).

49Finally, spousal support was made an issue in 2014 early on when this application was commenced by Snezana in late 2014, soon after the parties separated. The only reason there is a retroactive claim is Radmilo’s failure to adhere to the December 10, 2014 order of Nicholson J. requiring him to pay the matrimonial home expenses; retroactive support would not be an issue had Radmilo obeyed that court order.

50In her affidavit, the applicant explains that she has calculated the after-tax benefits to her of a spousal support award based upon her income since June 1, 2016, the date from which the applicant seeks retroactive support.⁸ Using SSAG calculations for each year for which arrears are claimed (from June, 2016 on) which include an after-tax deduction as the spousal support for previous years is not deductible, the total claim for retroactive spousal support is $291,756. The only difference between the figures provided by the applicant and the figures in this Judgement would be to add one further month of after-tax spousal support amounts as spousal support under this order commences July 1, 2018. Accordingly, there will be an award of retroactive spousal support in the amount of $295,944.⁹

Expenses Under s. 7 of the Child Support Guidelines

Calculation of s. 7 Expenses

51Since prior to separation, these children have been active in both tennis and music. They had music lessons and they also play tennis at an advanced level. Tennis has been in their lives since age 7 and they spend at least 11 hours per week at this activity. Snezana testified that both children had been traumatized by the separation, especially Simona, who witnessed incidents of abuse and has been diagnosed with a learning disability. Snezana testified that the tennis was a benefit to the children and provided normalcy in the midst of a difficult separation. Moreover, the tennis is competitive and the children are obviously talented in tennis. They have been involved in tennis since well prior to separation and at the income that I have found for Radmilo, the expense is not disproportionate to his income, even though expensive. I therefore find that the tennis is an extracurricular expense that is “extraordinary” within the meaning of s.7(1.1) of the Child Support Guidelines, and properly shared between the parties under s. 7(2) of the Guidelines.

52Based upon the evidence in Snezana’s affidavit, the expenses for the tennis are $19,448 per annum.

53As well, Snezana deposed that since September 2017 for Anastasia, and since April 2018 for Simona, both children have needed orthodontic work. The initial deposit for each child for the orthodontic work was $1,080.16, with payments of $257.91 per month per child. The orthodontic expenses are expected to come to an end by 2020. The annual expense for the orthodontic work in 2018 and in ongoing years would not include the deposits (as these were paid in 2017) would be the monthly amount above which annualizes out to $3,094.22.

54Finally, there are music lessons which cost $230.55 per month for both children. The annual expense for music lessons are $2,766.60. There are, as well, dental expenses of $727 per annum for both children.

55I find that all of these expenses are reasonable and should be shared proportionately between the parties pursuant to the provisions of s. 7 of the Child Support Guidelines.

56Based upon the mid-range spousal support as requested and ordered, Radmilo should be paying 77% of the special expenses which total $26,036.52 annually. In particular, based upon Radmilo’s income as found by me, the expenses are reasonable, even though they are over $26,000 per year. This is especially so as the children appear to have been particularly troubled by the separation and require the stability of their activities.

57All of this being said, this makes for a s.7 ongoing payment of $1,671 per month. This would, as well, commence July 1, 2018.

Retroactive s. 7 Expenses

58In her affidavit¹⁰, the applicant claims retroactive s. 7 expenses again commencing June 1, 2016. She seeks retroactive s. 7 expenses of $8,988 (based upon 7 months at $1,284 per month) for 2016 and $19,092 ($1,591 per month for 12 months) for 2017 on top of the expenses for the first six months of 2018.

2016

59I can find from the evidence provided by the applicant that the children were participating in tennis in 2016 and 2017, as Snezana deposed that they had begun their tennis activities at age 7. There was no other evidence as to special expenses in 2016 and the only expense that I can properly include as a retroactive s. 7 expense for 2016 is the tennis expense and this is the only expense claimed. The applicant has suggested using the $19,448 expense found for 2018 for the 2016 year, and this amount is the best evidence that I have of the children’s expenses for tennis for prior years. Based upon the calculation in that affidavit, which I find to be accurately based upon the retroactive spousal support ordered for 2016, Radmilo’s 76.4% share of that expense is $14,974.96. Radmilo’s share of the expense would be $1,284 per month. As set out in the affidavit, Radmilo’s share of the children’s s. 7 expenses for 2016 from June 1, 2016 onward would therefore be $8,988.

2017

60For 2017, there is much more complete information. Receipts were provided for the children’s dental expenses, for the children’s music expenses and details were also provided of the orthodontic expenses for Anastasia in 2017.

61Therefore, for 2017, there are the tennis expenses of $19,448. There are also orthodontic expenses for Anastasia of $1,080.16, plus three monthly payments of $257.91, for a total of orthodontic expenses of $1,853.85 for 2017.

62Snezana has provided evidence for music lessons in 2017 of $230.55 per month. The total for music lessons is therefore $2,766.60. Dental expenses of $727 for 2017 were also proven in the applicant’s materials. The total of special expenses for 2017 therefore round out to $24,796.

63Based upon the calculation contained in the applicant’s materials, which I find to be accurate, Radmilo’s 77% share of s. 7 expenses for 2017 would be $19,092.

2018

64In 2018, Radmilo is to pay $1,877 per month for s. 7 expenses. In addition, there is a deposit for Simona’s orthodontic work of $1,080.16, for which Radmilo owes 77% of that amount or $832. As this support is to commence on July 1, 2018, Radmilo owes retroactive s. 7 expenses for the first six months of 2018 in the amount of $10,858.

Total Retroactive s. 7 expenses.

65Based upon the applicant’s annual calculations of s. 7 expenses, and the findings made above, the total of s. 7 arrears are $38,938.¹¹

Expenses of Home

66Snezana requests an order that the respondent bear one-half of the expenses of the home from June 1, 2016 to the date of the sale of the home.

67I was surprised at this request. Snezana had the benefit of the home as she was in possession of the matrimonial home with the children from the date of separation. Had the respondent been paying support, Snezana would normally have been expected to pay the expenses of the home from that support. As the respondent is being ordered to pay retroactive support, it stands to reason that Snezana would bear the costs of the home and to claim both expenses and support would appear to be double compensation.

68However, as noted by applicant’s counsel, her client’s claim is not necessarily without merit. The expenses of the home are, of course, joint as Radmilo is a joint owner of the home, and will eventually reap the benefits of one-half of the net equity in the home. The expenses of the home, including the mortgage, taxes and insurance would therefore all go to maintain a home in which he has an interest. Snezana’s counsel says that it is unfair for her to bear the entire costs of the home when Radmilo will eventually gain the benefit of that equity.

69As well, Snezana’s claim for one-half of the expenses of the home would normally be set off against the regular claim for occupation rent for the home. Apart from whether occupation rent would normally be payable, Radmilo’s pleadings had been struck and because of this he cannot maintain his claims for occupation rent and for the applicant to pay all of the expenses of the home as claimed in his Answer. The requirement that the applicant pay the entire cost of the home are largely based upon the respondent’s set off claim for occupation rent, which is no longer before the court. It is also to be noted that the respondent was removed from the home because of criminal charges and this would normally not be an ouster from the home permitting a claim for occupation rent.

70A non-occupying spouse’s responsibility for one-half of the payments on the home has been confirmed by the courts on a number of occasions: See: Meza v. Lavie, 2014 CarswellOnt 5158 (S.C.J.) at para. 9, 47 and 48; Ostapchuk v. Ostapchuk, 2003 CanLII 57399 (ON CA), 2003 CarswellOnt 1661 (C.A.); and Newstead v. Hachey, 2018 CarswellOnt 3167 (S.C.J.) at para. 232 to 234. The basis for these decisions is that the payment of these expenses confers a benefit on the responding party of his or her equity in the home, and the non-occupying spouse may therefore be held liable for half of the payments needed to maintain that equity.

71Accordingly, I find the respondent to be responsible for one-half of the payments on the matrimonial home, including mortgage, taxes and insurance. To the date of this judgment, the respondent’s obligation is quantified as set out in the applicant’s Affidavit at Exhibit K, as being $52,624. He shall bear one half of the actual monthly costs of the home, including mortgage, taxes and insurance, estimated at $2,194 per month, from his share of the home to the date of sale of the home.

Total Retroactive Claim

72The respondent therefore owes the applicant retroactive arrears of support and expenses of the home of $481,641¹².

Equalization of Property

73Regarding the property issues in this matter, we are again operating at a disadvantage, largely because the respondent failed to comply with his trial scheduling obligations as ordered by McGee J. Specifically, the respondent failed to provide a net family property statement confirming his position on the property issues. In contrast, the applicant provided a detailed net family property brief, as well as a net family property statement.

74Equalization of property is a process whereby all of the parties’ property is valued and then equalized according to the provisions of the Family Law Act. Therefore, the striking of the respondent’s pleadings does not mean that his property and the applicant’s property will not be valued or that proper exclusions are not determined as based upon the facts. In other words, equalization of property depends upon the valuation of the property owned by both of the parties on the date of separation so that a remedy can be given, and that valuation is not subject to claims made in the respondent’s pleadings, which have been struck.

75Counsel for the applicant, bearing that in mind, presented the major arguments that were made by the respondent throughout these proceedings and presented her client’s position on those issues. The issues raised by the respondent and his former counsel are outlined in para. 54 of the applicant’s Affidavit. Those issues are as follows.

Respondent’s Withdrawal of Funds from the Joint Account

76These parties separated on November 7, 2014, after an altercation which occurred in the matrimonial home. Radmilo was removed from the home by the police and was charged with mischief and a historical assault against Snezana.

77Radmilo was released on November 12, 2014. On that date, he unilaterally withdrew $1,550,000 from the joint account and deposited it into his own TD account. This left about $92,000 in the joint account. The balance of the $1,550,000 remains in the hands of Radmilo.¹³

78Throughout this litigation, Radmilo has taken the position that the joint account was held equally by the parties on the date of separation (November 7, 2014), with each party having $822,810.95. This would mean that the joint account would not affect the equalization of property as it was equally owned by the parties and all that Snezana would have is an entitlement to repayment of her share of the joint account removed by Radmilo.

79Snezana’s position was that the amount removed by Radmilo of $1,550,000 be equalized and treated as an asset in his hands. The remaining $92,000 would be equalized as an asset of Snezana.

80The difficulty with Radmilo’s position is that there have been a number of withdrawals from the TD account. As noted above, $505,000 of those funds have been paid to Snezana. As well, at another point in time, $100,000 was advanced to Radmilo, which he claimed was dealt with by his lawyer without any benefit to himself. Another $7,000 was to be released to Radmilo’s accountant and lawyer to allow him to obtain tax returns pursuant to the Endorsement of Bennett J., dated February 12, 2018.

81These various withdrawals complicate the issue of equalizing property as suggested by Radmilo, as the court would then have to calculate significant post-separation adjustments for the court ordered withdrawal of funds from the joint account and there is no suggested evidence from Radmilo as to how to deal with these advances. Other than a review of the court orders, I have no evidence of the specific withdrawals made respecting that account. Snezana has agreed to repay Radmilo the money that was withdrawn from the account for her benefit, and that amount can be quantified. As well, based upon the net family property statement of the applicant, to deal with the funds as suggested by Snezana does not result in either of the parties having net family property of zero, which would obviously work an injustice as it would skew the figures as no party can have a net family property of less than zero.

82Otherwise, it makes little difference which way this is done. I am going to accept the suggestion of Ms. Switzer and deal with the issue as set out in Snezana’s net family property statement as found at Tab 12 of the Trial Record.

Radmilo Claimed a Deduction by way of Debt of $159,735 in Capital Gains Tax in Respect of the Sale of “HNJ Shares”

83The only capital gains that has been proven in this case as payable by the respondent was a $41,000 tax debt in respect of shares disposed of in 2014. That income tax debt was proven by the respondent’s income tax return for 2014. The respondent has filed no other financial statements and provided no other financial information in respect of the sale of the HNJ shares; nor has the respondent valued those shares.

84Under s. 4(3) of the Family Law Act, the onus to prove deductions and exclusions for equalization purposes is on the party claiming the exclusion. According to the evidence of the applicant, the respondent has provided no evidence whatsoever proving this capital gains deduction. Accordingly, that claim for a deduction is disallowed, subject to Radmilo being credited with a debt of $41,000 respecting the actual capital gains tax contained in his 2014 return as against his net family property.

Personal Loan Owing by Radmilo to his Mother, Branca Milutinovic

85Radmilo claims that he borrowed $265,165 from his mother and asks for a deduction in respect of this debt. No documentation has been provided by Radmilo proving this particular loan.

86Snezana testified about this. She said in her evidence that she did not recall any sort of loan arrangement between Radmilo and his mother. She said that she does recall that, at one point in time, his mother did give them about $10,000 per month because they needed the money. She did not know the exact amount advanced by Radmilo’s mother. As far as she understood, it was never a loan and that the money was gifted to Radmilo from the proceeds of a sale of a property in Serbia.

87Again, the onus is on Radmilo to prove this loan. This is especially so in respect of interfamily loans where there may very well be an incentive to gift the funds to children or close family members. As stated by the Court of Appeal in Barber v. Magee, 2017 ONCA 558 at paragraph 4:

A gift is a transfer in which the absence of an expectation of repayment tends to be reflected in the absence of security, recording, payments or efforts to collect payments. A loan often involves a formal, recorded transfer in which terms are set out and in which repayment is made or sought. In evaluating whether the presumption of resulting trust has been rebutted, a trial judge will naturally look at such indicia.

88In Chao v Chao, 2017 ONCA 701, the court suggested that an examination of whether there is a loan or a gift would involve determining a number of issues, including documentation, a specified method for repayment, security held for the loan, whether there were advances to one child and not others, whether there was any demand for repayment and whether there has been any partial repayment.

89There was no evidence of any repayments to the respondent’s mother. Certainly the respondent produced no loan documentation or proof of the advances from his mother.

90Based upon the lack of disclosure by the respondent and the lack of any documentation evidencing the loan, I find that any advances to the respondent by his mother were in the form of a gift and not a loan. There will be no deduction allowed for the putative loan by the respondent’s mother to him.

Damages for Wrongful Dismissal

91It may be recalled that the respondent received an award of more than $2,000,000 for wrongful dismissal from his former employers. That damage award was received prior to separation.

92Radmilo says that $430,000 of that award is on account of “general exemplary and punitive damages.” Radmilo has taken the position that this is an exclusion under 4(2)(3) of the FLA which allows for an exclusion of “[D]amages or a right to damages for personal injuries, nervous shock, mental distress or loss of guidance, care and companionship, or the part of a settlement that represents those damages.”

93Again, I am reminded that the onus to prove a deduction such as this lies with the party claiming the deduction, in this case the respondent.

94Even if these damages represent a punitive portion of the award, these are not damages excluded under the Family Law Act. They are not damages for personal injury, nervous shock, mental distress or loss of guidance, care and companionship. They are instead damages to punish the defendant in respect of the dismissal of Radmilo from his employment.

95In Dhillon v. Dhillon, 2014 ONSC 5608, the court determined that “damages for wrongful dismissal do not fall under the list of excluded property in section 4(2) of the FLA.” Later in that case, Andre J. states that, “[t]o the extent that the damages received by Mrs. Dhillon is on account of damages for wrongful dismissal, as opposed to personal injuries or psychological injuries, it must be included in her net family property.”

96The same would apply to this deduction claimed by Radmilo. All of the damages for wrongful dismissal must be included in Radmilo’s net family property and cannot be deducted or excluded from equalization.

Equalization Payment

97Based upon the applicant’s net family property statement, the respondent owes an equalization payment to the applicant of $717,393.98.¹⁴

Payment of Prospective Support

98Radmilo has advanced to Snezana the sum of $505,000, including the amount of $50,000 most recently advanced to Snezana at the close of this trial.

99Ms. Switzer, on behalf of Snezana, argues that this amount should not be deducted from the equalization payment and the retroactive support owing. She argues this amount should be effectively set off by the prospective support obligation owing by the respondent. She suggests that this would bring the parties to approximately 3.5 years after trial when the children would be preparing to go to university or college. Effectively, she suggests this debt be held as security for the child and spousal support ordered by the court above.

100Ms. Switzer suggests that this is in order due to the fact that the respondent is unlikely to comply with any child or spousal support order. Once the funds are paid and the freezing order is released against Radmilo’s assets, Snezana suspects he will pay nothing towards support and will disclose no income from which support may be garnished or seized.

101This would not be the first time this has occurred. In June 2016, Radmilo defaulted under an order requiring him to pay the expenses of the home and the children’s expenses made by Nicholson J., in these proceedings. When he ceased paying the expenses of the home, Snezana only found out when utilities were threatened to be cut off and when she was contacted by the home insurer to tell her that the home insurance payments were not being made.

102Section 15.2(1) of the Divorce Act permits an order “securing” spousal support. Although this specific provision is not contained in paragraph 15.1 of the Divorce Act (child support), s. 15.1(4) of the Divorce Act does permit “terms, conditions or restrictions in connection with the order” as the court “thinks fit and just”. In my view, both of these sections allow for security for child and spousal support. It is to be noted that lump sum child support has been ordered on numerous occasions where a payor has a poor payment history.

103Case law has also confirmed that an order may be made securing support where a party has a history of “dissipation of assets”, where the respondent has “in the past refused to honour a support obligation” or where the respondent has “declared that he will not pay an eventual support order”. As well, the conduct warranting the security for child and spousal support has included lying to the court, violating earlier court orders and removing assets in contravention of an agreement. See Boisvert v. Boisvert, 2007 CarswellOnt 4153 (S.C.J.) at para. 79.

104All of these factors are present in this case. The respondent surreptitiously removed over $1.5 million from a joint account immediately after separation. In June, 2016, he ceased paying the matrimonial home expenses and the expenses of the children, contrary to a Court Order made on December 10, 2014. He has breached a number of other court orders and failed to make disclosure as required. He has shown blameworthy conduct throughout and only discloses a nominal income in his financial statements. It is unlikely that the respondent will pay his child and spousal support as ordered.

105I am therefore going to accede to the applicant’s request that the funds advanced to her stand as security for child, spousal and payment of s. 7 expenses.

106To calculate the time for which this will be extant, I will take into account the amounts advanced by the respondent to the applicant, as well as the amounts of support ordered above. However, for the purposes of the spousal support to be secured, I note that there is case law that states that the full amount of support may be used, as this may be seen as being deductible: See: Charron v. Carriere, 2016 ONSC 7523. The applicant says that she is content that the full amount of spousal support be used to be set off against the advances. I note, however, it is up to the Canada Revenue Agency and not the courts as to whether a deduction may be claimed for spousal support and as to whether tax would be payable on spousal support where the periodic payment is secured by a lump sum amount. However, I am going to order that the debt to the respondent be repayable to the applicant on a periodic basis by monthly set off against the respondent’s monthly support obligations.

107The combined amount of spousal support, child support and s. 7 expenses is $10,967 per month. Setting this off against the advances made in this proceeding to Snezana, this would be set off against the support obligation over just over 46 months, nearly four years. By this time, the children will be entering university or college as they will be 18 at that time. That would be an appropriate point of time to order a review of child support and spousal support as the expenses and needs of the children will obviously be changing at that time; where there is a foreseeable change in circumstances, a review of support, the exception rather than the rule, may very well be appropriate: see Leskun v. Leskun, [2006] S.J.C. No. 25 and Fisher v. Fisher, 2008 ONCA 11, [2008] O.J. No. 38 (Ont. C.A.).

Sale of Home

108The applicant requests partition and sale of the matrimonial home. She is a joint tenant in the home, and there is no reason why this order should not go. So ordered.

109She also requests conduct of the sale. I have already commented on the respondent’s behaviour in this litigation, and although he demonstrated cooperation in the release of funds to the applicant at the end of the trial (after completion of the trial, he signed a consent that a further $50,000 be released to the applicant), there is no guarantee that he will cooperate in the sale of the home or obey a court order that he do so.

110The applicant shall have the conduct of the sale, and shall be entitled to choose the realtor, sign the listing agreement, any agreements of purchase and sale and any closing documents concerning the sale of the home. The realtor shall advise the respondent of the progress of the listing and of any offers received concerning the matrimonial home.

111Upon the sale of the home, the mortgage, real estate commission and legal fees for the sale shall be paid from the net proceeds of the home. Once these expenses are paid, the remaining net proceeds shall be divided in half. Radmilo’s one half share of the household expenses from the date of this judgment to the closing of the sale of the home, the CRA lien against Radmilo as well as the executions against Radmilo shall be paid from his share of the home along with any funds owing under this order not satisfied from Radmilo’s bank accounts.

Life Insurance

112I have no way of knowing whether Radmilo can obtain life insurance, or whether he is insurable. I am only willing to order that the existing policies of life insurance be made available to secure child support.

113In 2015, Radmilo confirmed that he had a policy with a face value of $1.6 million. I am ordering that he maintain that policy.

Medical Dental Insurance

114Radmilo is self-employed. As far as I know, there is no evidence that he has available a policy of medical and dental insurance.

115I am not willing to order medical and dental insurance without evidence that there is a policy in force.

Northern Vision Taxes

116There is evidence that taxes for a company owned by the respondent named Northern Vision were removed from the applicant’s account. This sum was $3,268 and has never been reimbursed.

117As the company belonged to the respondent, he is responsible for the payment of expenses, and in particular taxes, associated with that company. There shall be an order for return of these funds by the respondent to the applicant to be taken out of the respondent’s account.

118I am also ordering, as requested, that Snezana be indemnified in respect of any liabilities associated with the respondent’s corporations and business entities.

Pre-Judgment Interest

119Pre-judgment interest is available where the party owing the interest has the benefit of the assets being equalized in the litigation.

120In the present case, Radmilo had his accounts that are being equalized, but he is paying for a share of the home, and Snezana has had paid to her substantial funds from Radmilo’s accounts. Snezana had possession of the matrimonial home. I decline to award pre-judgment interest in this matter.

ORDER

121There shall therefore be a final order as follows:

(a) For the years 2016, 2017 and 2018 to date, Radmilo shall be imputed with an income for support purposes in the amount of $300,000.

(b) Radmilo shall pay to Snezana retroactive child and spousal support (including retroactive s. 7 expenses) as well as Radmilo’s one half share of the costs of the matrimonial home for the period from June 1, 2016 to June 30, 2018, in the lump sum amount of $481,641. This amount shall be paid first from the funds in his TD Wealth Account MP2880 and second from his share of the net proceeds from the sale of the matrimonial home.

(c) For the purposes of ongoing child and spousal support, Radmilo shall be imputed with an income in the amount of $300,000.

(d) Commencing July 1, 2018, and on the first day of each month thereafter, Radmilo shall pay Table child support to Snezana for two children, namely Simona Milutinovic, born August 10, 2003 and Anastasia Milutinovic, born August 10, 2003 ("the children"), in the amount of $3,877 per month.

(e) Commencing July 1, 2018, and on the first day of each month thereafter, Radmilo shall pay to Snezana $1,671 per month, representing his 77% share of the children's section 7 expenses, which are set out below:

(i) Orthodontic expenses for both children at a total cost of approximately $3,094 per year;

(ii) Tennis expenses for both children, including semi-private training, group high performance lessons, court booking fees, tournaments fees, equipment etc. at a cost of approximately $19,448 per year;

(iii) Music lessons for both children at a cost of approximately $2,766 per year; and

(iv) Dental expenses for both children at a cost of approximately $727 per year.

(f) Commencing July 1, 2018 and on the first day of each month thereafter, Radmilo shall pay spousal support to Snezana in the amount of $5,213 per month. This amount shall be taxable to Snezana and deductible by Radmilo.

(g) Radmilo shall receive a credit against his prospective periodic support obligations in the amount of $505,000 on account of the previous advances made by him to Snezana pursuant to the temporary Orders of Justice Bennett dated July 22, 2015, Justice Rogers dated September 3, 2015, Justice Vallee dated November 24, 2016, Justice Jarvis dated August 2, 2017, Justice Bennett dated February 12, 2018 and Justice McDermot dated May 25, 2018. This credit represents the acceleration of future support payable on a periodic basis for the sole purpose of securing funds for Snezana.

(h) The within credit shall last 46 months from July 1, 2018 at which point in time, the child and spousal support under this order shall become payable by Radmilo on a monthly basis, and either party may thereupon request a review of support payable under this order.

(i) Radmilo shall maintain his present policy of life insurance policy in the face amount of at least $1,600,000 and irrevocably designate Snezana as the sole beneficiary as security for the support payments owing to her under this Order. The said insurance policy shall be maintained so long as support is payable under this order.

(j) For as long as child support is to be paid, the payor (and recipient, if applicable) must provide updated income disclosure to the other party each year, within 30 days of the anniversary of this order, in accordance with section 24.1 of the Child Support Guidelines.

(k) Radmilo shall pay to Snezana an equalization payment in the amount of $717,393. This amount shall be paid first from the funds in his TD Wealth Account MP2880 and second from his share of the net proceeds from the sale of the matrimonial home.

(l) Radmilo shall pay to Snezana the amount of $3,268 as reimbursement for unpaid taxes of Northern Vision that was removed directly from Snezana's personal bank account and remitted to CRA. This amount shall be paid first from the funds in his TD Wealth Account MP2880 and from his share of the net proceeds from the sale of the matrimonial home second.

(m) Radmilo shall indemnify and save Snezana harmless from any and all liabilities associated with any of his corporate entities, including but not limited to Northern Vision Holdings Ltd., Rass- Op Ltd. and Northern Vision Partnership.

(n) Radmilo shall ensure that Snezana is removed as a shareholder, director and/or partner of any of his corporate entities, including but not limited to, Northern Vision Holdings Ltd., Rass-Op Ltd. and Northern Vision Partnership. Radmilo shall be solely responsible for any taxes, fees or other costs associated with Snezana's removal.

(o) The matrimonial home, located at 39 Grayfield Drive, Stouffville ("matrimonial home"), shall forthwith be listed for sale with Kimberly Balouchi of Keller Williams Realty Centres at the listing price recommended by the agent. Snezana shall have full control over the listing and sale and Radmilo's consent or signature on any documents relating to the listing or sale shall be dispensed with. Radmilo shall sign any documents necessary to give effect to this provision.

(p) Snezana shall continue to have exclusive possession of the matrimonial home pending the sale.

(q) Upon the sale of the home, the net proceeds of the home, after payment of the mortgage, legal fees and real estate commissions shall be divided in half, one half for the applicant and one half for the respondent. The respondent’s one-half share of the matrimonial home expenses from the date of this order, the lien against the matrimonial home in favour of CRA in the amount of approximately $45,928 and the executions against Radmilo in favour of CIBC totaling approximately $50,145, plus any applicable fees, interests, penalties and/or costs, shall be paid from Radmilo’s share of the net proceeds. Any amounts owing by Radmilo to Snezana under this order shall be paid first from the funds in his TD Wealth Account MP2880 and second from his share of the net proceeds from the sale of the matrimonial home.

(r) Snezana shall have her costs of this proceeding. She may make submissions as to the amount of costs payable within 14 days of the date of the date of this judgment. Costs submissions to be no more than 5 pages in length not including offers to settle and the applicant’s bill of costs.

(s) Any costs ordered against Radmilo shall be payable first from the funds in his TD Wealth Account MP2880 and second from his share of the net proceeds from the sale of the matrimonial home.

McDermot J.

Date: August 13, 2018

CORRIGENDA

Paragraph [118] – has been corrected to read: “...the respondent’s corporations and business entities.”

Paragraph 121 – has been corrected to read: “Commencing July 1, 2018…”

Paragraph 121 – has been corrected to read: “Commencing July 1, 2018…”

Paragraph 121 – has been corrected to read: “Commencing July 1, 2018…”

Footnotes

1. 1Trial Exhibit 4.
2. 2O. Reg. 114/99
3. 3SOR/97-175
4. 418 months @$3,722 per month
5. 57 months @ $3,877 per month
6. 6$66,996 + $27,139
7. 7R.S.C. 1985, c. 3 (2nd Supp.)
8. 8See Para. 45 and Ex. K
9. 9291,756 + $4,188
10. 10See Ex. K
11. 11$8,988 + $19,092 + $10,858
12. 12$94,135 (retroactive child support) + $295,944 (spousal support arrears) + $38,938 (s. 7 expenses) + $52,624 (matrimonial home expenses)
13. 13Subject to withdrawals as ordered by the court for both parties.
14. 14As set out in the applicant’s net family property statement.