Court File and Parties

Court File No.: FC-17-53889-00 Date: 2018-07-20 Superior Court of Justice – Ontario

Between: Lisa Anita Tsilker, Applicant And: Steve Tsilker, Respondent

Before: G.A. MacPherson J.

Counsel: Robert Halpern and Jessica Brown, for the Applicant Donna Wowk and Stephanie Yuen, for the Respondent

Heard: July 13, 2018

Ruling on Motions

Introduction

[1] The Applicant brings a motion seeking the following relief: (a) an order, commencing January 1, 2018 and on the first of every month thereafter, for temporary spousal support in the amount of $28,342; (b) an order, commencing January 1, 2018 and on the first of every month thereafter, for temporary child support in the amount of $11,582; (c) a temporary order for retroactive spousal support in the amount of $156,555; (d) a temporary order requiring the Respondent to pay 100% of the children’s section 7 extraordinary expenses under the Child Support Guidelines commencing November 15, 2017; (e) an order that the Respondent pay $51,626 per month on account of retroactive extraordinary expenses incurred between May 12, 2017 and November 15, 2017; (f) an order requiring the Respondent to designate the Applicant as irrevocable beneficiary of his life insurance policy with a face value amount of $1,000,000; (g) a temporary order granting the Applicant exclusive possession of the matrimonial home; (h) an order requiring the Respondent to immediately pay $370,000 to the parties’ joint line of credit; (i) an order requiring the Respondent to be responsible for all interest payments on the parties’ joint line of credit, which is secured against the matrimonial home, until the full amount is paid; (j) an order requiring the Respondent to pay to the Applicant an interim disbursement in the amount of $100,000; (k) an order that the Respondent sign any document required for the Applicant to list the boat for sale; (l) an order preventing the Respondent from transferring, assigning, pledging, disposing of, depleting, or otherwise dealing with any significant assets in his sole possession including inter alia business interests or real property, pending further written agreement or court order; (m) an order requiring the Respondent to comply with the disclosure order of Justice Nelson dated May 4, 2018 within 10 days failing which the Applicant may bring a motion to strike his pleadings without notice; and (n) an order permitting the Applicant to amend her Application to address inter alia relief based on the Respondent’s pre and post valuation date activity which may impinge upon the Applicant’s financial entitlement.

[2] The Respondent brings a motion seeking the following relief: (a) an order to strike paragraphs 78, 84 and 85 of the Applicant’s affidavit sworn December 14, 2017; and (b) an order compelling the Applicant to deliver the Undertakings from her Questioning on February 13, 2018.

Background Facts

[3] The parties were married on May 24, 1997 and separated on May 12, 2017. There are two children of the marriage, namely, Tiffany Tsilker born June 16, 1998 and Lauren Tsilker born December 1, 2002.

[4] Tiffany attends Queens University in Kingston and has completed the second year of her Bachelor of Science degree. Tiffany will return to Queens in September 2018 to commence her junior year.

[5] Lauren completed grade 10 at Country Grade School and will enter grade 11 in September 2018.

[6] The Respondent owns 50% of two business interests, namely, Donut Time and 2145919 Ontario Inc. Donut Time sells wholesale baked goods to large grocery stores. 2145919 Ontario Inc. holds two properties related to Donut Time. The Respondent is active in the operation of the businesses.

[7] In 2015 an unrelated party expressed an interest in purchasing the shares in Donut Time for $8.25 million although the offer did not pass disclosure and there was, ultimately, no binding offer nor was there a sale.

[8] At the time of the separation the Applicant worked for the Respondent’s business, Donut Time, although her employment was terminated on August 28, 2017.

[9] The Applicant states that during their marriage the parties enjoyed “an extravagant lifestyle”. The Respondent states that the parties enjoyed a “comfortable lifestyle” but not an extravagant lifestyle. The Respondent further states that the Applicant’s parents provided significant funds to the family which assisted in their lifestyle and, he states, the lifestyle of the parties was funded, in part, by debt.

[10] On the date of separation, the parties resided in a mortgage free, 4,000 square foot home valued at between $1,690,000 and $1,900,000. The matrimonial home is registered in the name of the Applicant. The parties owned luxury assets including a 54 foot yacht valued at $600,000; and an Aston Martin valued at $120,000. Both parties owned expensive jewellery including several expensive watches. There were regular family vacations.

[11] The children attended private schools and enjoy horseback riding on the two horses, Lex and Vic, owned by the parties. Tiffany received an Audi A4 for her 16th birthday.

[12] Following the separation, the Respondent moved out of the matrimonial home. The Applicant continues to reside in the matrimonial home. Lauren resides with her. Tiffany resides in the matrimonial home when she is not at University.

[13] Tiffany rents an apartment with friends in Kingston, Ontario. She will commence the third year of her Bachelor of Science program at Queens in September 2018.

[14] Without the Applicant’s knowledge, the Respondent withdrew $370,000 from the parties’ joint line of credit in or around the date of separation to purchase a condo and furniture for himself as he was moving out of the matrimonial home.

[15] The Applicant states that the Respondent also withdrew $15,000 from the joint bank account. The Applicant also states that the Respondent removed $100,000 in cash from the safe located in the matrimonial home. This is denied by the Respondent.

[16] Since separation the Respondent’s lifestyle includes vacations and a new condo. He has provided the Applicant with child and spousal support in the amount of $4,000 per month since December 2017. The Respondent has also paid for the children’s school expenses and has advanced the Applicant $160,000 since separation.

Respondent’s Income

[17] A significant portion of the materials filed addresses a determination of the Respondent’s income for the purpose of support. The materials filed compose 9 volumes of the continuing record.

[18] The Applicant argues that the Respondent’s income for support purposes cannot be determined based on the lack of disclosure provided. She also argues that there is a significant cash component to the of the Respondent’s business. In support of the allegation that the Respondent has a cash component, she identifies several cash deposits into the parties’ joint bank account as well as several other deposits. In 2015 these combined deposits (excluding salary), she states, were in the range of $269,945. In 2016 these combined deposits (excluding salary), she states, were in the range of $494,898. The Applicant states that during the relationship the Respondent insisted on making cash payments for the majority of the expenses and large purchases including private school tuition, horses and designer clothing.

[19] The Applicant also states that the Respondent earns income related to his private lending ventures.

[20] Finally, the Applicant states that the Respondent’s income is significantly higher than reported as a result of a ‘fake invoice’ scheme. Essentially, the scheme is alleged to include the company, Donut Time, receiving invoices that are not real. The invoices serve to increase the expenses of the company and, as I understand the Applicant’s argument, permits the owners to remove the funds from the company for their own personal use, free of tax.

[21] The Applicant requests an order imputing income to the Respondent, annually, in the amount of $1,289,000 in pre-tax income. In support of this she relies on the arguments aforementioned, the lifestyle the parties enjoyed during the marriage and she relies on the income valuation completed by her valuator, Neil Maisel, and referred to as the “Crowe Report”.

[22] In 2017 the Applicant retained Mr. Maisel to complete an income valuation for the Respondent and his business interests. The Crowe Report suggests that the Respondent’s income is in a range, from a low of $380,000 to a high of $1,289,000. Three of the four scenarios include attributing cash income, in various amounts, to the Respondent. The high scenario includes cash income of $400,000.

[23] The Applicant is seeking a temporary order for spousal support and child support. She requests spousal support in the amount of $28,342 per month and child support in the amount of $11,582 per month.

[24] The Respondent states that his income, not including his investment income, is $178,000. The Respondent denies receiving any cash payments and states that the nature of his business is not conducive to receipt of cash. Rather, the Respondent states that he owns two businesses. The first is a business that sells baked goods to large retailers and the second is a business that holds two properties related to the first business. There is no retail store component to revenue. The cash deposits referenced by the Applicant, he states, were simply loans to and the subsequent payment of loans from Donut Time and 2145919 Ontario Inc.

[25] The Respondent acknowledges that he receives income from private lending ventures.

[26] The Respondent denies the ‘fake invoice’ scheme suggested by the Applicant.

[27] The Respondent hired a business valuator, Mr. Andrea Pontoni, to complete a business and income valuation, hereafter referred to as the “Pontoni Report”. The income valuation was completed using three scenarios as follows: a) An adjustment for foreign exchange with no financial covenant restrictions, b) Unadjusted foreign exchange with no financial covenant restrictions, and c) Shareholders Income considering Financial Covenants. Under the three scenarios the estimated income for 2016 ranged from $91,445 to $344,427. The Respondent states his income was $177,139 in 2015 and $178,109 in 2016, and that his average income over the last three years was $170,210.

[28] The two income valuation reports have a significant range, as a result of a number of different assumptions and different methodology.

[29] For example, the experts do not agree on the allocation of depreciation, the amount of income historically available to the family, the impact of changes to the foreign exchange rate, the impact of the minimum wage increase, nor the impact of the restrictive financial covenants on income.

[30] Further, the experts differed over how to properly account for the different year ends from the related companies, Donut Time and 2145919 Ontario Inc. It is recommended that the parties have both valuators meet to discuss and clarify their different approaches in advance of trial. The experts will be subject to cross-examination at trial.

Applicant’s Income

[31] The Respondent claims that the Applicant worked for her parents’ security businesses and continues to do so now. The Applicant’s parents own several businesses that provide security at major trade shows and concerts. The Applicant is the registered Vice-President and Chief Financial Officer for one of her parents’ businesses, Target Investigation & Security Limited. The Respondent states that for the past year, the Applicant predominantly spends time on her parents’ business. The Applicant argues that her position is nothing other than a title. She receives no paycheques or T4s as a result of the title.

[32] The Respondent states that the Applicant’s parents provided significant funds to assist the family and these should be included in her income.

[33] The Applicant worked at Donut Time, operated by the Respondent, but was terminated August 31, 2017. The Respondent argues that the Applicant has an obligation to work, has not provided evidence of her attempts to find work. Further as a result of regular payments from her parents, the Respondent argues that income should be imputed to the Applicant in the amount of $69,000 per annum.

[34] The Applicant states that she has not worked since being terminated by the Respondent and that she has no skills that would give rise to a court imputing income to her. She states that although she historically worked at the Respondent’s business, it was more of an income splitting arrangement. She denies receiving regular contributions from her parents and minimizes the contribution that she provides to their companies as helping out. Further, the Applicant states that the funds now provided to her by her parents are loans.

[35] The financial statement of the Applicant claims basic expenses in the amount of $4,100 per month. The Applicant states that these expenses do not reflect her expenses during the relationship or the lifestyle that the parties enjoyed during the marriage. For example, the amount of the total monthly expenses does not include a gardener which the parties hired to cut the grass during marriage or a personal trainer.

[36] The financial statement of the Respondent claims expenses in the amount of $15,296 per month. These expenses include $2,500 per month for the children’s schooling and $3,400 per month in debt payments (including $1,200 per month interest on the line of credit).

Spousal and Child Support Analysis

[37] There is agreement that the Applicant is entitled to spousal support at this interim motion. There is agreement that the Applicant is entitled to child support for Lauren as she resides with the Applicant. There is agreement that child support is payable to the Applicant for Tiffany during the summer months only. The only issue to be determined is quantum.

[38] There is a duty on both parties to disclose all of the sources of their income and to estimate their expenses. Where support is an issue, both spouses must put before the court a credible record upon which a court can rely to determine support obligations in accordance with the statutory objectives.

[39] Section 15.2 of the Divorce Act, R.S.C. 1985 c. 3 (2nd Supp), states:

Spousal support order

15.2 (1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse.

Interim order

(2) Where an application is made under subsection (1), the court may, on application by either or both spouses, make an interim order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse, pending the determination of the application under subsection (1).

Terms and conditions

(3) The court may make an order under subsection (1) or an interim order under subsection (2) for a definite or indefinite period or until a specified event occurs, and may impose terms, conditions or restrictions in connection with the order as it thinks fit and just.

Factors

(4) In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including (a) the length of time the spouses cohabited; (b) the functions performed by each spouse during cohabitation; and (c) any order, agreement or arrangement relating to support of either spouse.

Spousal misconduct

(5) In making an order under subsection (1) or an interim order under subsection (2), the court shall not take into consideration any misconduct of a spouse in relation to the marriage.

Objectives of spousal support order

(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should (a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; (b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage; (c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and (d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time. 1997, c. 1, s. 2.

[40] The general principles guiding the exercise of the court's discretion when dealing with support pending trial were summarized by Penny J. in Knowles v. Lindstrom, 2015 ONSC 1408,

It is well-established that interim support motions are not intended to involve a detailed examination of the merits of the case. Nor is the court required to determine the extent to which either party suffered economic advantage or disadvantage as a result of the relationship or its breakdown. These tasks are for the trial judge. Orders for interim support are based on a triable or prima facie case. An order for interim support is in the nature of a “holding order” for the purpose of maintaining the accustomed lifestyle pending trial, Jarzebinski v. Jarzebinski, 2004 CarswellOnt 4600 (ONSC) at para. 36; Damaschin-Zamfirescu v. Damaschin-Zamfirescu, 2012 ONSC 6689, 2012 CarswellOnt 14841 (ONSC) at para. 24.

[41] In Cassidy v. McNeil, 2010 ONCA 218, at para 68 the Ontario Court of Appeal stated that spousal support should be based not on a budget of expenses of the recipient but on income sharing. Further, in the absence of the opportunity to carry out an in depth analysis of the parties’ circumstances, which is better left to trial, the court tries to achieve "rough justice".

[42] In assessing the Applicant’s need, regard must be made to not just necessaries but to the lifestyle enjoyed during the relationship. There is no doubt that the parties enjoyed a very comfortable lifestyle.

[43] There is no question the Respondent has the ability to pay support.

[44] The significant challenge is determining the Respondent’s income for the purpose of support. Despite questioning of both parties, and two expert reports (Crowe Report and Pontoni Report) there is a significant variation in the evidence as to what the Respondent’s actual income is.

[45] The Applicant argues that there is a discrepancy when comparing the income the Respondent acknowledges was available during the marriage, approximately $170,000, and the lifestyle of the parties. The Applicant argues that the cash payments and fraudulent invoices explain the discrepancy.

[46] The Crowe Report took into account the cash payments in determining income although there appears to be, currently, a dearth of information upon which to accept the proposition. For this reason, for the purpose of determining an appropriate level of child and spousal support pending trial, I did not take into account the alleged cash payments. This will be tested at trial and adjustments can be made should the trial judge ultimately determine a cash component to income.

[47] When the cash payments are removed from the Crowe Report the Respondent’s salary is estimated to be between $380,000 and $428,000.

[48] In the Pontoni Report, the three scenarios estimated the Respondent’s income for 2016 anywhere between $91,445 and $344,427. Under scenario B, which does not include an adjustment for the foreign exchange and no adjustment for the financial covenant restrictions, the average income for 2015 and 2016 is estimated to be $321,754.

[49] The Respondent states the discrepancy between the income claimed and the lifestyle the parties enjoyed during the marriage is easily explained. The parties lived beyond their means, purchasing with borrowed funds and through the regular gifts from the Applicant’s parents.

[50] In terms of the contributions from the Applicant’s parents, there is a significant dispute. An example of the dispute in the evidence relates to the horses. The horses were purchased for $22,000 (Lex) and $27,500 (Vic). The Applicant states that the horses were paid with cash provided by the Respondent. The Respondent states that the Applicant’s parents paid for the horses. Similarly, the Respondent says that during the marriage the Applicant’s parents paid for the significant monthly horse-related expenses. The Applicant states this is not true and that the parties assumed the costs. This will be determined at trial and should be easily determined. When determined it will speak to credibility.

[51] Similarly, the Respondent states that the cost of travel that funded the family vacations came predominantly from points. The Applicant states that is not true.

[52] In determining the Respondent’s income for the purpose of a temporary order, I have considered the parties’ lifestyle during the marriage. Private schools for the children, a yacht, expensive jewellery, an Aston Martin, and two horse costing thousands of dollars a month is not possible on the Respondent’s income of around $200,000 per annum.

[53] There must have been significant resources coming into the household from elsewhere. On the evidence before me it is hard to accept that their lifestyle during marriage was significantly supplemented by debt. It is contrary to the evidence that the parties paid off the matrimonial home and did not ‘move up’ in terms of new homes.

[54] At an interim motion I cannot determine if there is a cash component to the business as a result of a fake income scheme. I cannot determine the extent of the contributions from the Applicant’s parents. I cannot determine if the lifestyle was supplemented as a result of debt or some combination of these factors.

[55] In attempting to achieve ‘rough justice’, I have considered the parties’ sworn financial statements. I have considered the significant range of income in the Crowe and Pontoni Reports and the assumptions upon which the Reports were based. I did not take into account the alleged cash payments as the evidence before me is insufficient. I did not take into account the financial covenant restrictions for the purpose of determining income at this interim stage.

[56] In determining the Respondent’s income for the purpose of an interim order on support, I have also considered the Respondent’s evidence that business activity has declined since the Crowe and Pontoni Reports were completed.

[57] With respect to the Applicant, she has not worked outside of the matrimonial home except, she states, helping her parents from time to time and working at Donut Time which she describes as more income splitting. The Applicant’s employment was terminated by the Respondent from Donut Time in August 2017. The Applicant has a high school education and is not trained in a vocation. She is 45 years old. She is looking after Lauren, who resides in the home. It is counterintuitive to terminate the Applicant’s employment and then ask the court to impute income to her based on her ability to obtain work. The Applicant has an obligation to become self-sufficient within a reasonable period of time. I do not think that 10 months is a sufficient period of time based on her education, age, and skill level. Sufficient time may have elapsed between separation and trial for the trial judge to determine otherwise.

[58] In Teitler v. Dale, 2017 ONSC 428, an interim support case, Harvison Young J. considered whether parental financial assistance, which the husband in that case argued were loans rather than gifts, could be included in a payor's income. Following the Ontario Court of Appeal decisions in Bak v. Dobell, 2007 ONCA 304 and Korman v. Korman, 2015 ONCA 578, the Court observed that section 19(1) of the Federal Child Support Guidelines did not exhaust the circumstances in which a court could impute income where appropriate.

[59] The relevant factors for the court to consider are no different from those identified in Bak,

“In considering whether it is appropriate to include the receipt of unusual gifts in income, a court will consider a number of factors. Those factors will include the regularity of the gifts; the duration of their receipt; whether the gifts were part of the family's income during cohabitation that entrenched a particular lifestyle; the circumstances of the gifts that earmark them as exceptional; whether the gifts do more than provide a basic standard of living; the income generated by the gifts in proportion to the payor's entire income; whether they are paid to support an adult child through a crisis or period of disability; whether the gifts are likely to continue; and the true purpose and nature of the gifts.” supra #4, para. 75

[60] From the evidence before me, I cannot conclude if the financial contributions from the Applicant’s parents were gifts or loans. If the contributions were gifts, I cannot determine on the evidence before me whether they were with sufficient regularity and of sufficient amount to entrench the lifestyle. The evidence is contradictory as to the nature of the contributions. This will be determined at trial.

[61] I have concluded that genuine issues of credibility exist with respect to the Respondent’s income. I have concluded that genuine issues of credibility exist with respect to any income to be imputed to the Applicant as a result of her parents’ financial contributions. Further, I have concluded that the experts will need to be cross-examined for the court to complete a more thorough examination of the merits of each case.

[62] However, in obtaining ‘rough justice’, for a temporary award, I have determined that an income shall be imputed to the Respondent in the amount of $300,000 which includes $30,000 per annum in investment income. I have imputed no income to the Applicant. On an interim basis, based on all of the reasons aforementioned, I have determined this is both fair and reasonable.

Retroactive Support

[63] I have considered the request by the Applicant for an order of retroactive support.

[64] The purpose of a temporary order is to make temporary provisions for the support of the Applicant and the children.

[65] The Respondent has voluntarily paid support since December 2017.

[66] As stated, there is significant disagreement over the income of the Respondent. There is significant disagreement over whether income should be imputed to the Applicant as a result of being unemployed or as a result of the argument that her parents make regular gifts.

[67] In some cases, and this is one, it would be inappropriate, on an interim basis, to make a support order retroactive to the date of separation. As a result of the many factual disputes and questions unanswered, the trial judge is in a much better position to assess what amount, if any, constitutes a retroactive award and there will be an accounting upwards or downwards as a result of this interim order.

[68] Further, as I have not imputed income to the Applicant for the purpose of this temporary order, this will result in the Respondent being 100% liable for the section 7 expenses including the horses and private school. As stated, there is significant dispute over whether or not the Applicant’s parents historically covered these expenses. I have determined that the Respondent will pay these expenses on a temporary basis as they were expenses that were present during the marriage. At trial, the court will determine if this was an actual family expense or if it was borne by the Applicant’s parents. The court will determine if it is reasonable. Accordingly, on an interim basis, I decline to award retroactive support.

Disbursement Request

[69] The Applicant seeks a disbursement to fund her litigation including the business / income valuation. She estimates the cost of legal counsel to be between $100,000 - $200,000. The estimated cost of the income valuation is $30,000 - $35,000. The Applicant is requesting a disbursement of $100,000.

[70] Rule 24(12) of the Family Law Rules, O. Reg. 114/99, as amended, (hereinafter referred to as the Rules) gives the court the discretion to make an order for interim disbursements to cover the cost of litigation.

[71] The leading authority in Ontario dealing with interim disbursements is Stuart v. Stuart a decision of Rogers J. In awarding a wife who had neither the liquid assets nor the disposable income to retain an expert a $25,000 “loan” from her husband to value his assets, which Rogers J. described as complex, the court identified seven “themes” in the Ontario case law concerning interim disbursements. These themes were considered in the context of the primary objective of the Rules to enable the court to deal with cases justly and to ensure that the procedure was fair to all parties. Predominant among the Stuart themes, and often repeated, is the principle that the award should be made to “level the playing field”.

[72] The Applicant is not working. The current file composes 9 volumes in the continuing record, and two expert reports. The cost of this litigation, for both couples, will be significant.

[73] The Respondent has already provided the Applicant with an uncharacterized advance of $160,000. She also has $200,000 in RRSPs. She acknowledges financial assistance from her parents, whether by loan or by gift.

[74] The litigation premise is that each party will pay their own legal fees. To assist in that, provision is made in this order, as noted below, to provide each party with a payment from the proceeds of the sale of the yacht.

[75] For these reasons I decline to make a further interim disbursement order.

Sale of the Yacht

[76] The parties own a yacht with an approximate value of $600,000. The yacht is registered in the name of the Respondent. Both parties agree that the yacht should be sold.

[77] The Applicant argues that the ‘loan’ of $400,000 US against the yacht is not real. The argument is an extension of the ‘fake invoice’ scheme.

[78] The Respondent states the loan against the yacht is real. The Respondent states that the yacht was purchased for $650,000 US and he traded in his previous boat for $295,000 with the balance of the purchase price financed with a loan.

[79] The yacht shall be sold.

[80] The loan against the yacht shall be paid.

[81] The issue of whether or not the loan is legitimate will be determined by the trial judge. The value of the business alone is significant. While it may not be worth $8.25 million (of which he owns 50%), there is no doubt it is worth a significant quantity of money that will factor into equalization. Further, the matrimonial home is mortgage free and will generate equalization funds. There will be sufficient equity, absent the proceeds from the sale of the yacht, to satisfy any equalization.

Lack of Disclosure / Undertakings

[82] The Applicant says that the Respondent’s undertakings have not been provided and there are outstanding disclosure requirements.

[83] The Respondent states the Applicant has not responded to or provided her undertakings.

[84] In Manchanda v. Thethi, 2016 ONSC 3776, Myers J. held that failure to provide timely, meaningful financial disclosure proportional to the issues in a case undermined the administration of justice, and could no longer be tolerated. The husband’s appeal from the Order made striking his pleadings was dismissed by the Court of Appeal in language which highlighted the consequential severity of financial non-disclosure,

[13] … after continual admonitions by the courts and the legislature that parties to a matrimonial proceeding must produce financial documentation, willful non-compliance must be considered egregious and exceptional. This court has stated that the most basic obligation in family law proceedings is the duty to disclose financial information. The requirement is immediate and ongoing: Roberts v. Roberts, 2015 ONCA 450, 65 R.F.L. (7th) 6, at para. 11.) In 2015, Family Law Rule 13 was amended to emphasize a party’s financial disclosure obligations. A party’s non-compliance must be considered in the context of this strict financial disclosure obligation. Rule 1(8) provides the court with the authority to strike claims. Those who choose not to disclose financial information or to ignore court orders will be at risk of losing their standing in the proceedings as their claims or answers to claims may be struck. Manchanda v. Thethi, 2016 ONCA 909

[85] Accordingly, both parties shall provide outstanding disclosure and outstanding undertakings within 14 days.

Non-Depletion / Preservation Order

[86] Section 12 of the Family Law Act, R.S.O. 1990, c. F.3, provides that, in an application under s. 7, if the court considers it necessary for the protection of the other spouse’s interests, the court may make an interim or final order restraining the depletion of a spouse’s property.

[87] There has been a preservation order in place since December 2017. This order has protected the Applicant’s interests while permitting the Respondent to carry on business from which his support obligations flow.

[88] The Respondent’s businesses, Donut Time and 2145919 Ontario Inc., are subject to financial covenants. Further, the businesses are significant assets that have historically funded the family. They will continue to do so during the period of this interim order. The Respondent must be free to arrange financing, including capital injections, if required, to safeguard the financial sustainability of the businesses.

[89] Although the businesses recently went through a corporate restructuring, the decision to restructure was made prior to the separation and was unrelated to the separation.

[90] The current order, in respect of preservation of assets, has been in place since December 2017. I shall incorporate those provisions into this order with the following addition: “The Respondent shall not encumber or sell his shares in Donut Time or 2145919 Ontario Inc. without first providing the Applicant with 45 days’ notice”.

Consent

[91] The parties agreed that the Applicant shall have exclusive possession of the matrimonial home and its contents subject to her not selling or otherwise encumbering the matrimonial home and contents.

[92] The parties have an RESP for the children. The balance in the RESP as of April 2018 was $57,037.65. The parties agree that Tiffany’s rent and living expenses while attending Queens shall be paid out of the RESP.

Request to Strike Evidence

[93] The Respondent requests an order striking certain paragraphs of the affidavit. In particular, he requests striking paragraphs 78, 84 and 85 of the Applicant’s affidavit sworn December 14, 2017.

[94] Paragraph 84 references an email that purports to be evidence of the Respondent’s ‘cash component’ of the business. Paragraph 85 references an email that purports to be evidence of the ‘fake invoice’ scheme. I have determined, for the purpose of this motion, to not factor into the Respondent’s income any cash component. Accordingly, I decline to strike the emails. The trial judge will be in a better position to determine the authenticity and reliability of this evidence.

[95] Paragraph 78 purports to be a recording of a conversation between the parties where the Respondent admits to removing $100,000 from the safe. I have not factored into my analysis the allegation that the Respondent removed $100,000 from the safe. The Respondent denies that he did. This is yet another example of an element of credibility best left to the trial judge. The trial judge will be in a better position to determine the authenticity and reliability of this evidence.

Order

[96] For reasons as set out above, there shall be an temporary order as follows: (a) Commencing July 1, 2018, and on the first day of every month thereafter, the Respondent shall pay to the Applicant temporary spousal support of $7,000 per month based on an income of $300,000 pending further order of the court or written agreement between the parties. This shall be subject to either party’s entitlement to take the position at trial that this constitutes an underpayment or overpayment based on the Respondent’s income for support purposes. (b) Commencing July 1, 2018 and on the first day of every month thereafter, the Respondent shall pay to the Applicant temporary child support of $2,878 per month based on an income of $300,000. This shall be subject to either party’s entitlement to take the position at trial that this constitutes an underpayment or overpayment based on the Respondent’s income for support purposes. (c) On a temporary basis, the Respondent shall continue to pay the carrying costs for the joint line of credit secured on the matrimonial home. (d) On a temporary basis, and commencing on July 1, 2018, the Respondent shall be solely responsible for the following section 7 expenses for the children: (i) Lauren’s private school tuition and reasonable school-related expenses; (ii) Tiffany’s post-secondary tuition and reasonable school-related expenses, excluding rent and living expenses away from home; (iii) Tiffany’s rent and living expenses living away from home shall be paid out of the RESP; (iv) Uninsured portion of medical and dental expenses; (v) All equestrian and horse-related expenses for the children; and (vi) Any other section 7 expenses agreed upon by the parties, such consent not to be unreasonably withheld. (e) The issue of retroactive support prior to July 1, 2018 shall be adjourned to the trial judge. The Respondent will receive credit for any payments made before the retroactive calculation is determined. (f) The Respondent shall secure his support obligation to the Applicant by designating her the irrevocable beneficiary of a life insurance policy with a face value of $1,000,000. (g) On a temporary basis, the Applicant shall have exclusive possession of the matrimonial home and its contents. The Respondent shall be entitled to attend the matrimonial home to remove items agreed upon in advance, in writing, by the parties; (h) There shall be no interim disbursement payable to the Applicant. However, as is noted below, she will receive proceeds from the sale of the yacht. (i) The yacht shall be listed for sale and, upon closing, any loans and liens owed to Baron Financing in respect of the yacht shall be paid. Following this, the net proceeds of the sale, after deducting the selling costs, shall be distributed in equal portions to the Applicant and the Respondent. (j) Both parties will provide outstanding disclosure as per the court order of Justice Nelson dated May 4, 2018 within 14 days of this order. Both parties shall provide answers to all undertakings or a detailed explanation as to the efforts made to answer the undertaking, along with an estimated date of completion, by affidavit, within 14 days of this order. (k) Neither party shall transfer, assign, pledge, dispose of, deplete or otherwise deal with any assets in his or her possession, save and except for the sale of the yacht, including inter alia business interests or real property, pending further written agreement between the parties or court order, subject to the following: (i) The Respondent shall be permitted to make transactions in the ordinary course of his business Donut Time or related businesses, including the corporations and trust created pursuant to the reorganization, without prejudice to the relief the Applicant may seek relating to any reorganization or trust; (ii) The Respondent shall be permitted to make transactions required to facilitate compliance with the terms of this order; (iii) The Respondent shall be permitted to make transactions to pay reasonable living expenses on his behalf, which includes the payment of professional fees. (iv) The Respondent shall not encumber or sell his shares in Donut Time or 2145919 Ontario Inc. without first providing the Applicant with 45 days’ notice. (l) Both parties shall have leave to amend their pleadings. (m) The Respondent’s request to strike certain evidence is dismissed. (n) Support deduction order to issue.

Costs

[97] If the parties cannot agree on the issue of costs, I shall consider the request for costs. The Applicant shall serve on the Respondent and file in the Continuing Record her written submissions, limited to ten pages, exclusive of the Bill of Costs and Offers to Settle within 20 days of the date of this decision. The Respondent shall serve on the Applicant and file in the Continuing Record his written submissions, limited to ten pages, exclusive of the Bill of Costs and Offers to Settle within 15 days thereafter. The Applicant’s Reply, if necessary, shall be within 5 days of the delivery of the Respondent’s written submission and limited to two pages. If no submissions are received within the time period set out herein, an order will be made that there will be no costs.

G.A. MacPherson J. Released: July 20, 2018