Court File and Parties
Court File No.: FS-15-49916 Date: 2018/11/28 Ontario Superior Court of Justice
Between: Melissa Kerr, Applicant – and – Massimo Panaccione, Respondent
Counsel: Chad Rawn, for the Applicant Massimo Panaccione, in person
Heard: September 17, 18, 19, 20, 2018
The Honourable Mr. Justice G.E. Taylor
Reasons for Judgment
Introduction
[1] The parties were married on July 16, 2005. There is one child of the marriage, namely Nathan Nicolo Panaccione who was born on January 1, 2008. The parties were divorced on June 11, 2015 with the divorce being severed from the corollary relief. The applicant has custody of Nathan and the respondent has Nathan in his care on alternating weekends and at other times.
[2] The issues to be decided are:
a) The amount, if any, to be imputed to the respondent for the purpose of determining child support;
b) The amount of base child support;
c) Section 7 expenses and the respondent’s contribution to those expenses;
d) The date of separation;
e) Whether the parties settled the issue of equalization of net family property in December 2011;
f) If the parties did not settle the issue of equalization of net family property, the calculation of the parties’ net family property and the resulting equalization payment.
Trial Management Conference
[3] A trial management conference was held on May 17, 2017 before The Honourable Justice G.A. Campbell. Campbell J. made a number of orders at the trial management conference as set out in the Trial Scheduling Endorsement Form. He ordered that the Trial Record be filed by August 24, 2017. The Trial Record was not filed until April 6, 2018. He ordered that the parties exchange Requests to Admit by June 15, 2017 and deliver a Statement of Agreed Facts by the same date. Neither party served a Request to Admit and a Statement of Agreed Facts was never produced. It was ordered that the evidence in chief of each party be presented by affidavit. The applicant’s affidavit was ordered to be served by July 21, 2017 and the respondent’s affidavit was ordered to be served by August 11, 2017. The applicant’s trial affidavit was not sworn until April 12, 2018 and the respondent’s trial affidavit was not sworn until April 5, 2018. The respondent served a second trial affidavit sworn the morning of the first day of trial.
[4] The failure of the parties to comply with the orders made at the trial management conference made it difficult to address a number of issues at trial which could have been simplified had the parties complied with the orders and in particular the requirement that parties agree on facts which should have been uncontroversial.
Background
[5] The applicant is 39 years of age having been born on January 2, 1979. The respondent is 47 years of age having been born on June 7, 1971. The parties were married on July 16, 2005. The parties were divorced on June 11, 2015.
[6] There is one child of the marriage, namely Nathan Nicolo Panaccione who was born on January 1, 2008. The issue of custody and access was resolved prior to trial.
Imputation of Income
[7] The respondent has a degree in civil engineering from McMaster University. The respondent’s income from 2011 to the present is as follows:
2011 $76,725 2012 $76,692 2013 $75,476 2014 $77,743 2015 $17,459 2016 $29,436 2017 $8
[8] The respondent was employed until 2014. His employment was terminated in that year and his income is a combination of employment income, employment insurance income and the settlement of his lawsuit based on the termination of his employment. The respondent’s income from 2015 forward is from its various government programs and self-employment.
[9] The Application was issued on February 27, 2015. In my view, it is not coincidental that the respondent’s significant decrease in income begins in the year when this proceeding was started. At a case conference held on December 14, 2015 the respondent was ordered to produce a copy of his resume and a job search history showing jobs applied for, rates of compensation and the results of the applications. At a settlement conference held on August 26, 2016, the respondent was ordered to produce by September 30, 2016 income and expense statements for his consulting business, accounting records for the consulting business including tracking of hours billed and accounts receivable and copies of bank records for the consulting business. At a trial management conference held on October 16, 2017 the respondent was ordered to produce within 30 days copies of all invoices sent to his customers and copies of all materials supporting his claim to have searched for another job. The respondent did not comply with any of these production orders.
[10] On the third day of trial, following the completion of all of the evidence, the respondent sought leave to introduce copies of invoices for his business and details of his job search efforts. This request was denied.
[11] Section 19 (1) of the Child Support Guidelines provides that income may be imputed to a spouse/parent in such amount as is considered appropriate in circumstances in which the spouse/parent is intentionally under-employed or unemployed.
[12] The Ontario Court of Appeal in Drygala v. Pauli held at paragraphs 28 and 29 that a parent is intentionally underemployed if that parent chooses to earn less than he or she is capable of earning and that there is no requirement of bad faith before income can be imputed.
[13] I have no hesitation in concluding that the respondent attempted to withhold information from the applicant and the court for the purpose of making it difficult, if not impossible, for a determination to be made about his actual income or his ability to earn an income. During the course of being cross-examined, the respondent volunteered that if it were not for his marriage he would be earning an income in the vicinity of $90,000 annually. This is a significant admission. In the years 2011 to 2014, the respondent earned employment income in the approximate amount of $75,000 annually. He earned a similar amount in the year in which his employment was terminated.
[14] It is my opinion that the respondent is either intentionally underemployed or is misrepresenting his actual income in order to avoid his obligation to pay child support. I therefore impute income to the respondent in the amount of $75,000 annually. This is roughly the amount he earned in the years immediately prior to separation and is less than he stated he would be earning were not for his marriage to the applicant.
Child Support – Quantum and the Commencement Date
[15] Based on the imputed income of $75,000 per year, the respondent’s child support obligation as of December 1, 2017 is $700 per month. On December 14, 2015 the parties consented to an order on a temporary, without prejudice basis that the respondent pay child support in the amount of $175.94 per month based on an annual income of $21,944. Very little if any evidence was presented about whether the child support order should be made retroactive to a date prior to trial. I understand that the respondent is current with his support obligations pursuant to the outstanding order. Allowing a generous period of time for the respondent to either complete a job search or build his consulting business to a successful level, it is my view that a reasonable commencement date for payment of child support in the amount of $700 per month is December 1, 2017. The respondent is to receive credit for all child support payments made subsequent to that date.
Section 7 Expenses
[16] At a settlement conference which took place on August 26, 2016, an order was made on consent that $10,000 be paid to the applicant “as without prejudice payment toward section 7 expenses”.
[17] In his trial affidavit sworn on September 17, 2018, the respondent asserted that he had prepared a precise accounting of section 7 amounts. In cross-examination he acknowledged that he had not included his reconciliation with respect to section 7 expenses in his trial affidavit and no evidence was presented by the respondent other than a bald assertion that he had overpaid his share of the section 7 expenses.
[18] In her trial affidavit, the applicant stated that as of the date of the order for payment of the $10,000 without prejudice payment toward section 7 expenses, the amount owing by the respondent was $10,973. The applicant also submitted a spreadsheet showing how she calculated the amount owing for section 7 expenses. The applicant presented receipts for the section 7 expenses. The applicant calculated that the amount owing at the date of the trial for section 7 expenses was $3,954. She was not cross-examined on either the spreadsheet or the receipts. She was also not cross-examined about her calculation of the net amount owing.
[19] Therefore I find that the amount owing by the respondent for section 7 expenses to the date of the trial is $3,954.
[20] Nathan is no longer tending daycare. In her trial affidavit the applicant stated that Nathan is registered in Cubs, soccer and swimming lessons. The expenses for these activities are modest. I find that on a go forward basis they do not qualify as section 7 expenses.
[21] According to the applicant’s most recent financial statement, her annual income is $57,600. This is less than the income imputed to the respondent. The applicant seeks an order that the respondent contribute 50% of any proper section 7 expenses that are incurred after the date of trial. I find this position to be reasonable and accordingly order that the respondent pay 50% of all proper section 7 expenses upon presentation by the applicant of receipts for amounts paid.
Equalization Payment and Date of Separation
[22] The position of the applicant is that she and the respondent separated in July 2011 when she informed the respondent that she wanted a divorce. The parties continued to reside in the matrimonial home until the end of November, 2011 which was the date of the closing of the sale of the matrimonial home. The respondent’s position is that the date of separation is December 1, 2011.
[23] The applicant testified that she and the respondent began the steps to list the matrimonial home for sale in July 2011. The respondent testified that he entered into an agreement for the purchase of a new home in September 2011 and the applicant submitted an offer for the purchase of a new home in October 2011. Also in October 2011, the parties entered into an agreement for the sale of the matrimonial home. The closing date for the sale of the matrimonial home was December 1, 2011. The closing date for the purchases of new homes by the applicant and the respondent was November 30, 2011.
[24] In order to complete the purchase of her new home, the applicant was required to arrange for bridge financing in the amount of $45,446.85. The respondent needed bridge financing in the amount of $98,228.80 to complete the purchase of his new home. Accordingly, on the completion of the sale of the matrimonial home the respondent received a greater share of the sale proceeds than the applicant. The parties jointly instructed the lawyers handling the three real estate transactions regarding distribution of the sale proceeds. This instruction was dated November 30, 2011 and stated as follows:
Regarding the net proceeds related to the sale of 10 Lily Lane, Georgetown, Ontario; after discharging the President’s Choice line of credit account, and after paying the bridge loans to ING Direct and to HSBC Bank Canada, and after paying legal fees and disbursements; it is our instruction that the net proceeds be issued as one lump sum payment issued to both of our names. We will divide the proceeds after performing our own reconciliation of other accounts.
The balance of the proceeds from the sale of the matrimonial home was deposited into the parties’ joint bank account on December 7, 2011. The evidence of the respondent was that he deposited one cheque for $5,033.15 being the refund from the real estate agent regarding the sales commission and a second cheque in the amount of $21,520.09 from the lawyer being the balance of the sale proceeds. On December 12, 2011 the applicant withdrew from the same account $14,884.27 and on January 31, 2012, the applicant withdrew a further $9,920 from the joint account.
[25] The respondent says that the applicant “seized control of the proceeds from the sale of the Matrimonial Home” by withdrawing the funds from the joint account as set out in the previous paragraph on December 12, 2011 and January 31, 2012. The evidence of the applicant is that she and the respondent discussed the division of the proceeds from the sale of the matrimonial home. The respondent was the one who did the calculations about how much each party should receive. She signed the direction to the real estate lawyer so that the proceeds could be dispersed according to the respondent’s calculations. The applicant testified that after the surplus proceeds were deposited into the joint account the respondent instructed her to withdraw the balance in order to partially equalize the difference in the amount of their respective bridge loans which were paid from the proceeds as well.
[26] Neither party took any steps to seek a formal equalization of net family properties until this application was commenced in February 2015. In the Application the applicant sought a determination of what equalization payment was appropriate based on an exchange of Financial Statements. Although the respondent, in his Answer stated at paragraph 54 that he did not agree with the applicant’s assertion that “The parties divided their remaining assets to their mutual satisfaction”, he also stated at paragraph 60 that he did not agree with an equalization of net family property. The respondent also claimed in his Answer that an equalization of net family property would be unfair to him.
[27] By the time of the trial, the positions of the parties were significantly different from that asserted in the Application and Answer. The applicant’s position was that division of property and equalization had been settled as a result of the method of allocation of the proceeds from the sale of the matrimonial home in December 2011 and January 2012. The respondent’s position was that there should be an equalization of net family property.
[28] I do not accept the respondent’s position that it was never his intention to resolve property issues between he and the applicant by way of the division of the proceeds from the sale of the matrimonial home. I do not accept his evidence that he did not understand the nuances of the calculation of the equalization of net family properties. The respondent impressed me as intelligent and capable of asserting what he believed to be his rights. I also accept as accurate the applicant’s description of the respondent as “forceful, controlling, demanding and overpowering”. I accept that the respondent calculated and dictated the disbursement of the proceeds from the sale of the matrimonial home. I accept that the respondent instructed the applicant to remove from the joint account the balance of the net proceeds from the sale of the matrimonial home which he had deposited on December 7, 2011. I find that he did so because of his awareness that he had received a significantly greater portion of the sale proceeds by reason of his bridge financing loan being more than twice the amount of the applicant’s bridge financing loan.
[29] I also think it significant that both parties apparently were content with the property division which was completed at the time of or shortly after the completion of the sale of the matrimonial home and the purchases of their respective new homes. Neither party took any steps to review or recalculate the “reconciliation of other accounts” until more than three years after that reconciliation was completed. To me this is a clear indication that both parties thought that they had completed the equalization of their net family properties and were content with property division which was the result.
[30] Accordingly, I find that the parties resolved the issue of the division of their respective assets and the equalization of net family property. It is therefore unnecessary for me to resolve the issue of the date of separation. If it had been necessary to resolve that issue, I would find that the date of separation was July 1, 2011. That was the approximate date on which the applicant informed the respondent that she wanted to terminate the marriage. The parties then took active steps to sell the matrimonial home and purchase new residences. The applicant said that she and the respondent had not engaged in sexual relations since sometime prior to July 1, 2011. The respondent did not dispute this assertion. The respondent makes it clear in paragraph 3 of his Answer that in the period between July 1, 2011 and November 30, 2011 the parties lead separate lives.
[31] Neither party complied with the Family Law Rules with respect to serving and filing Net Family Property Statements. The respondent’s Net Family Property Statement was delivered on the first day of trial and the applicant’s Net Family Property Statement was not presented until the commencement of submissions on the final day of the trial. The evidence regarding values was far from satisfactory. The respondent calculated an equalization payment owing to him of approximately $35,000. The applicant calculated an equalization payment owing to the respondent at less than half that amount. The most significant component of both net family property calculations was the value of a condominium owned by the respondent on the date of the marriage. There was no proper valuation evidence presented to prove the value of that asset. A modest reduction in the value of the respondent’s pre-marriage condominium could potentially reduce or even eliminate the equalization payment claimed to be owing by the applicant to the respondent.
[32] The relatively small equalization payment as calculated by both parties reinforces the conclusion I have reached that the parties chose to settle their financial affairs aside from child support at the time of, or shortly after closing of the sale of the matrimonial home.
Conclusion
[33] For the foregoing reasons there will be judgment as follows:
a) the respondent shall pay to the applicant child support for Nathan Panaccione born January 1, 2008 in the amount of $700 per month commencing December 1, 2017 based on an imputed income of $75,000 per year and the respondent shall be credited for all child support payments made subsequent to that date;
b) the respondent shall pay to the applicant the sum of $3,954 for section 7 expenses pursuant to the Child Support Guidelines owing to the date of the trial;
c) the amount owning to the applicant for section 7 expenses and the balance owing on the cost award made against the respondent on February 7, 2018, shall be paid to the applicant from the moneys currently being held in trust by Jayson Schwarz, barrister and solicitor;
d) the respondent shall contribute 50% of all future section 7 expenses upon presentation by the applicant of receipts for amounts paid;
e) the claims of both parties for an equalization payment are dismissed.
[34] If the parties are unable to agree on the appropriate disposition as to costs, they may make written submissions. Cost submissions on behalf of the applicant are to be delivered to my office at 85 Frederick St., Kitchener, Ontario, no later than December 7, 2018. Responding submissions are to be delivered to my office no later than December 21, 2018. The written cost submissions are not to exceed three pages in length exclusive of Bills of Costs and Costs Outlines. Electronic copies of the cost submissions should be forwarded to Kitchener.superior.court@ontario.ca . If the submissions of the applicant are not received by December 7, 2018, there will be no order as to costs. If the submissions of the respondent are not received by December 21, 2018, costs will be fixed based on the applicant’s submissions.
G.E. Taylor, J. Released: November 28, 2018