Court File and Parties
COURT FILE NO.: FS-17-00420436-00 DATE: 20181026 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: DEWA PATANG Applicant – and – AKMAL MIRAL Respondent
Counsel: Jeff Rechtshaffen for the Applicant Gary Joseph for the Respondent
HEARD: October 25, 2018
BEFORE: C. Gilmore, J.
RULING ON MOTION
OVERVIEW
[1] This is a motion for interim spousal and child support and interim disbursements.
[2] The issue of interim disbursements was resolved during the course of submissions and will be addressed briefly below.
[3] The parties were significantly apart on what income should be used to determine interim support given the disclosure available and the third party payments being made by the respondent (“Mr. Miral”).
BACKGROUND
[4] The parties cohabited for eight years. They have one son, namely MM born March 18, 2014. The marriage ended when Mr. Miral was charged with assaulting the applicant (“Ms. Patang”) on April 8, 2017. The parties have lived apart since that date. The criminal charges were resolved by way of Peace Bond and a requirement that Mr. Miral attend the PARS program.
[5] The parties are the joint owners of a home located at 121 Forest Heights Boulevard in Toronto. Ms. Patang and MM continue to reside in the home.
[6] Since the date of separation Mr. Miral has been paying the mortgage, taxes, insurance, heat, hydro, internet, the child’s private nursery school fees and Ms. Patang’s car payment and car insurance.
[7] In addition to the third party payments, Mr. Miral paid uncharacterized support to Ms. Patang of $3,000 per month from January to December 2017. Mr. Miral reduced the support payment to $2400 per month from January to March 2018. Mr. Miral further reduced the support payment to $1800 per month from April to June 2018.
[8] Upon receiving a letter from Ms. Patang’s lawyer in early June 2018 that a motion would be brought for support, Mr. Miral delivered cheques for $3000 for the months of July, August and September 2018. He also paid off Ms. Patang’s credit card which had a balance of over $12,000.
[9] The parties lived a lavish lifestyle while together. Mr. Miral owned a Maserati, they sent their son to an expensive private nursery school, they lived in a house valued at approximately $4 million and they both spent significant amounts on clothing, vacations and entertainment. In her financial statement sworn shortly after separation, Ms. Patang estimated her personal expenses at approximately $11,000 per month.
[10] Mr. Miral has been paying his own expenses, many of the Ms. Patang’s household expenses and monthly support. His position is that his expenditures exceed his monthly income by about $8,500. His debt continues to increase. He wants to sell the jointly owned home. He will reluctantly agree to increase support based on his sworn income of $120,000 per year, but is unable to pay more given that he continues to maintain many third party payments related to the home.
[11] Ms. Patang is university educated but does not work and did not work during the parties’ cohabitation. She submitted that Mr. Miral has provided insufficient disclosure. However, what has been provided so far demonstrates that Mr. Miral has the ability to pay support far in excess of what he is paying now. She seeks mid-range spousal support of $9,071 and child support of $2,739 per month based on an imputed income to Mr. Miral of $350,000 per year. Given that the income sought to be imputed to Mr. Miral is modest in comparison to the disclosure provided, he should also continue to pay the third party expenses for the home.
INTERIM DISBURSEMENTS
[12] Ms. Patang sought interim disbursements of $100,000 being $50,000 for a Certified Business Valuator and $50,000 for legal fees. The business valuator submitted a letter indicating he would require a retainer of $50,000 to prepare a valuation of Mr. Miral’s income and businesses.
[13] Ms. Patang has no assets other than her interest in the jointly owned home. During the course of Mr. Miral’s counsel’s submissions it was suggested that a line of credit be placed on the home in order to finance Ms. Patang’s litigation costs. Mr. Miral acknowledged and agreed to this request and told the court he would provide his consent to the further encumbrance on the home.
[14] Ms. Patang’s counsel was agreeable to this resolution of the interim disbursements issue. He was, however, frustrated that this resolution had not been proposed when he initially wrote Mr. Miral’s counsel on June 4, 2018 and indicated the need for interim disbursements and the possibility of a motion in that regard.
[15] An order dealing with the line of credit and interim disbursements will therefore form part of the orders set out at the end of this ruling.
INTERIM SPOUSAL SUPPORT
[16] The parties acknowledge that Mr. Miral has covered certain third party payments related to the jointly owned home and Ms. Patang’s car since separation and that he continues to do so.
[17] Those monthly payments are as follows: Mortgage $6,400.00 Taxes 1,417.30 Property Insurance 391.70 Heat and Hydro 800.00 Cable and Internet 160.00 Car insurance 241.67 Car payment 440.00
[18] Mr. Miral seeks credit for the payments that fully benefit Ms. Patang and 50% of the credit for those that jointly benefit them (mortgage, taxes and insurance). The total credit sought would therefore be $5,746.17.
[19] Mr. Miral’s submission is that this credit plus the $3,000 in uncharacterized support would equate to $8,746.17. He seeks to continue the status quo and adjourn the motion until his income valuation report is ready (estimated to be completed in December 2018).
[20] Alternatively, Mr. Miral is prepared to pay support based on his current sworn income of $120,000. However, any increase in support must take into account the after tax benefit to Ms. Patang of the third party payments being made on her behalf.
[21] Mr. Miral submitted that his income has decreased dramatically, that he owes over $800,000 to family members and that his debt is increasing due to his monthly shortfall of $8500 to meet expenses.
[22] He admits that the parties did have a high standard of living prior to separation but they were living beyond their means. He agreed that he bought a used Maserati for cash prior to separation but sold it and deposited the proceeds into the parties’ joint bank account to pay expenses.
Disclosure Issues
[23] Ms. Patang’s counsel was concerned about the length of time it has taken to receive proper disclosure from Mr. Miral. He was ordered to produce extensive disclosure in January 2018 but important items are still missing including all of his corporate tax returns and statements for five credit cards and three personal accounts.
[24] Mr. Miral admits that some disclosure is still missing but more has recently been produced and the balance will be produced shortly.
[25] Ms. Patang’s counsel pointed out the discrepancies in Mr. Miral’s material which bear some examination: a. Mr. Miral has reported employment income of $48,000 to CRA for the 2015, 2016 and 2017 tax years. That would seem irregular at best given that it would not even be enough to cover his yearly mortgage obligations. b. Mr. Miral’s financial statement sworn July 11, 2018 reports income of $120,000 per year. If he reports $48,000 in employment income but actually earns $120,000, where is the balance of $72,000 reported for tax purposes? This was not explained. c. The bank statements provided by Mr. Miral show that he deposited over a million dollars into his business account in 2017. He deposited $709,615 in his personal account in 2017. Mr. Miral does not address this issue in his material or dispute that he had access to those funds.
[26] Given the discrepancies outlined above, counsel for Ms. Patang suggested that the court impute income to Mr. Miral of $350,000. He would pay child and spousal support based on that income plus he would continue to cover the third party expenses (including the nursery school fees) on the basis that the imputed income was modest in comparison to the evidence that he actually earns considerably more.
[27] Counsel for Ms. Patang pointed out that Mr. Miral’s failure to produce disclosure has put him in a difficult position. He does not want to question Mr. Miral without having access to all of the disclosure. He has done what he could based on what Mr. Miral has chosen to disclose. Any delays in bringing the motion relate solely to Mr. Miral’s failure to comply with the January 2018 disclosure order. Finally, it was only in the course of opposing counsel’s submissions that Ms. Patang’s counsel learned that an income valuation was underway.
[28] Mr. Miral countered that this solution would be completely unfair and that, using the Ms. Patang’s theory, the court would merely be guessing at what his income was. The fairest approach is either a modest imputation of income ($120,000) or waiting until the income valuation is completed.
Should Income be Imputed to Ms. Patang?
[29] Ms. Patang has a university degree and additional courses. She wants to start her own interior design business. She cannot do so at this time as she has no accessible capital. She submits that she did not work during the eight year cohabitation or after the date of separation. It would not be reasonable to impute income to her on an interim basis.
[30] Mr. Miral argues that Ms. Patang is young (29) and talented. There is no reason she cannot be working given that their son is in school part time. She has made no effort to become employed or gain even marginal self-sufficiency. As such, income in the range of $30,000 should be imputed to her.
Analysis
[31] Samis v. Samis, 2011 ONCJ 273 is a seminal case on the issue of the considerations to be made by the court when determining an award of temporary spousal support. I would summarize those considerations as follows: a. Interim support is intended as a place holding measure in order to maintain the applicant’s accustomed lifestyle (if possible) until trial. b. A complete enquiry is not required. c. Need and ability to pay take on a greater importance on temporary support motions. d. The need to achieve self-sufficiency is of less importance. e. Temporary support should only be ordered where a case for entitlement has been made out. f. Support should be ordered within the range of Spousal Support Advisory Guidelines unless there are exceptional circumstances.
[32] On the issue of imputation of income, I rely on the case of Drygala v. Pauli, 2002 CarswellOnt 3228. In that case, the Ontario Court of Appeal warned that imputing income to a payor may only be done on a rational basis, grounded in the available evidence (para 44).
[33] In this case there is no issue regarding entitlement to support by Ms. Patang. The issue relates solely to what income should be imputed to Mr. Miral based on the available, but contradictory evidence.
[34] It is this court’s view that caution must always be exercised when making temporary support awards. While they are intended as place holders, most often the place holding goes on far longer than intended. That is, ordering an unreasonably high support amount which is not grounded in evidence can result in more litigation or non-compliance.
[35] Alternatively, support awards that are too low may result in unreasonable financial hardship for the recipient spouse and child who are deprived of their previously accustomed standard of living.
[36] In this case, there is a concern about Mr. Miral’s actual debts. He claims they are increasing but he does not provide any proof that he is actually receiving loans from his family or repaying them.
[37] There is also a concern about Mr. Miral’s actual income. I completely reject that the income he reported to CRA in the last three years is representative of his actual income. That is not possible based on the lifestyle the parties lead both before and after separation.
[38] That leaves a choice of imputing either $120,000 (as suggested by Mr. Miral) or $350,000 (as suggested by Ms. Patang). Ms. Patang’s counsel concedes that the $350,000 amount suggested by him is not scientific. The amount represents roughly half of the deposits into Mr. Miral’s personal bank account in 2017. However, what do the amounts in Mr. Miral’s bank statements represent? Are they dividends taken out of his companies? Is it gross business income on which tax and expenses were paid? Is it personal income which has not been reported for tax purposes? Is it funds transferred to him by relatives which must be paid back? None of these questions have been answered but hopefully will be once an income valuation is completed.
[39] Mr. Miral’s suggestion of basing support on $120,000 of imputed income is problematic. A SSAG calculation with accounting for his third party payments would actually result in Mr. Miral having a negative NDI. That is, 100% of his income is being paid to Ms. Patang.
[40] Ms. Patang’s suggestion of imputing $350,000 is also problematic. She would have Mr. Miral pay her $9,071 in spousal support, $2,739 in child support, maintain the cost of nursery school at $1800 per month and pay the third party payments at $5,746. Mr. Miral would have to earn over $400,000 a year to afford all of those expenses and pay spousal support in the range requested. That is significantly more than what he deposed he is actually earning.
[41] Since it is impossible to gauge credibility at this stage, and in the face of conflicting evidence related to Mr. Miral’s income, I am not persuaded there should be any increase in support. Indeed, based on the SSAG calculation attached as Schedule “A” with $120,000 of income imputed to Mr. Miral, his spousal support payment would be $1,603 per month. Trying to determine what his income is beyond this would simply be guessing or using a number which is not grounded in evidence.
[42] I do not attribute any income to Ms. Patang at this time. She should begin to make efforts to become self-sufficient knowing that this is something that the court will be asked to consider at trial.
[43] I urge counsel to settle the issue of costs. While Mr. Miral was successful on the support portion of the motion, he should have settled the issue of interim disbursements long ago and in any event by way of response to the applicant’s counsel’s letter of June 4, 2018.
ORDERS
[44] The respondent shall consent to a line of credit being placed on the jointly owned home at 121 Forest Heights Blvd., Toronto. The line of credit shall be for a maximum of $100,000.
[45] The respondent shall make the monthly payments on the line of credit with credit being given to him for those payments by way of post separation adjustment.
[46] The applicant shall have unimpeded access to the line of credit for legal fees and a retainer for her valuator. The respondent shall not close the line of credit, or inhibit any draws on the line of credit by the applicant up to the maximum.
[47] The respondent shall not be required to make more than the minimum monthly payments on the line of credit.
[48] The line of credit is intended to fully satisfy the relief sought on this motion by the applicant for interim disbursements.
[49] The respondent shall pay temporary child support of $1,068 per month commencing November 1, 2018 based on an imputed income of $120,000 per annum.
[50] The respondent shall pay temporary spousal support of $2,000 per month commencing November 1, 2018 based on an imputed income of $120,000.00.
[51] The respondent shall continue to pay the following monthly expenses: a. The child’s nursery school fees at $1,800 per month b. The mortgage of $6400 per month for the jointly owned home. c. Property taxes for the jointly owned home. d. Property insurance for the jointly owned home. e. The applicant’s car payment, car insurance payment and car licensing fees. f. Heat and hydro for the jointly owned home. g. Internet and cable for the jointly owned home.
[52] The respondent shall receive a credit of $5,746 (net) per month for the abovementioned third party payments. As this support order is predicated on the respondent making the abovementioned third party payments, failure to make such payments shall entitle the applicant to seek a further temporary increase in support.
[53] The respondent to maintain an accounting of all third party payments he has made (with proof of payments) and provide a copy to the applicant or her counsel once per quarter commencing December 31, 2018.
[54] The support amounts ordered are without prejudice to either party arguing that interim support should be higher or lower after receipt of the parties’ income valuations.
[55] After receipt of the parties’ income valuations, either party is free to schedule a motion before me to adjust support up or down pending trial, if such a motion is reasonable given the prospects of settlement and the proximity of any trial date.
[56] The respondent shall provide all outstanding disclosure, without exception, by November 30, 2018.
[57] If counsel are unable to settle the issue of costs, they shall provide written submissions of no more than two pages, exclusive of any Bill of Costs or Offers to Settle. Submissions are due on a seven day turnaround, seven days from the release of this ruling and starting with the applicant. Submissions are to be sent electronically to my family law assistant at Patrizia.Generali@ontario.ca. If no costs submissions are received within 35 days of the date of this ruling, costs shall be deemed to be settled.
C. Gilmore, J. Released: October 26, 2018
COURT FILE NO.: FS-17-00420436-00 DATE: 20181026 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: DEWA PATANG Applicant – and – AKMAL MIRAL Respondent