Court File and Parties

COURT FILE NO.: FC-18-56488-00 DATE: 20190227 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Mahsa Mizrahi, Applicant AND: Jan Mizrahi, Respondent

BEFORE: Nicholson J.

COUNSEL: Meghan Lawson, for the Applicant Jan Mizrahi, Self-Represented Respondent

HEARD: February 20, 2019

Endorsement

[1] The Applicant, Mahsa Mizrahi (“Applicant Mother”), brought this motion for temporary child and spousal support. The parties were married for almost 8 years and separated July 7, 2017. The Applicant Mother contends cohabitation commenced in 2006. The Respondent, Jan Mizrahi (“Respondent Father”), maintains that the cohabitation did not start until a few months prior to the marriage in 2008. Two children were born of the relationship namely Yasmin, who is 9 years old and Ayla, who is 6 years old. At 2.5 years of age Ayla was diagnosed with Autism.

[2] This was a traditional marriage. The Applicant Mother has not worked outside of the home for up to 10 years and has provided the primary care of the children both before and after separation. She maintains that she has been economically dependent upon the Respondent Father for more than 10 years. He concedes that she has been out of the workforce for a least eight years.

[3] The Respondent Father supported the family financially. The Applicant Mother had little knowledge of the family’s finances. As of the date of separation, the Applicant Mother had less than $7,000 in liquid assets, $19,000 worth of jewelry and total debt of approximately $60,000 comprised of student and credit card debt. The Respondent Father at separation had $7,380,084 in assets and debts of $1,370,210 which consists of a $1 million notional debt to the CRA.

[4] On October 30, 2017 the parties agreed to an interim without prejudice support arrangement which was to remain in place until the Respondent Father provided proper disclosure of his income. At that time the Respondent Father had not disclosed any details regarding his income or assets. This arrangement, which has remained in place until the date of this motion, was that the Respondent Father would pay to the Applicant Mother $11,500 per month in uncharacterized child and spousal support, he would pay all of the children’s section 7 expenses and he would pay the maintenance costs associated with one of the two homes owned by the parties in which the Applicant Mother and children were residing.

THE LAW

Jurisdiction

[5] The jurisdiction to award child and/or spousal support here is from sections 15.1 and 15.2, respectively, of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.). Section 15.1(3) provides that child support is to be awarded in accordance with the Federal Child Support Guidelines (SOR/97-175). Section 15.2 addresses spousal support orders, both interim and final. Section 15.2(4) sets out a number of factors the Court must consider when making an interim or final order for spousal support. It provides as follows:

(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 cohabitated;

b) the functions performed by each spouse during cohabitation; and

c) any order, agreement or arrangement relating to support of either spouse.

[6] The objectives of a spousal support award apply to both interim and final orders. They are summarized at s. 15.2(6) of the Divorce Act, which provides as follows:

(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.

Contextual Approach

[7] Boswell J. in Colivas v. Colivas, 2013 ONSC 168 helpfully stated:

The significance of each of the factors to be applied and objectives to be considered will vary from case to case. Each case is different of course and, as a result, a contextual approach is required. In Driscoll v. Driscoll, 2009 ONSC 66373, 2009 CarswellOnt 7393 (S.C.J.), Lemon J. enumerated a list of principles governing interim support motions. Citing the British Columbia case of Robles v. Kuhn, 2009 BCSC 1163, [2009] B.C.J. No 1699, he listed the following:

1. On applications for interim support the applicant's needs and the respondent's ability to pay assume greater significance;
2. An interim support order should be sufficient to allow the applicant to continue living at the same standard of living enjoyed prior to separation if the payor's ability to pay warrants it;
3. On interim support applications the court does not embark on an in-depth analysis of the parties’ circumstances which is better left to trial. The court achieves rough justice at best;
4. The courts should not unduly emphasize any one of the statutory considerations above others;
5. On interim applications the need to achieve economic self-sufficiency is often of less significance;
6. Interim support should be ordered within the range suggested by the Spousal Support Advisory Guidelines unless exceptional circumstances indicate otherwise;
7. Interim support should only be ordered where it can be said a prima facie case for entitlement has been made out; and,
8. Where there is a need to resolve contested issues of fact, especially those connected with a threshold issue, such as entitlement, it becomes less advisable to order interim support.

The principles referenced by Lemon J. are not exhaustive, nor could they be when a contextual analysis is required in each case. Nevertheless, reference to them does assist in the contextual analysis to be undertaken.

Formulation

[8] The key issue on this motion is the income to be attributed to the Respondent Father. He is the owner and fund manager of JM Fund Management. He earns income as the portfolio manager and owner of this company and receives dividend and other investment income from a second company that he owns.

[9] The Respondent Father’s income as reflected in his income tax returns on line 150 was as follows:

2014 - $463,303 2015 - $530,783 2016 - $512,122 2017 - $863,006

[10] The Respondent Father retained Mr. Andrew Freedman to prepare an income report for Support purposes. The report together with form 20.1 Acknowledgment of Experts Duty was filed by the Applicant Mother with the motion and reported the following income of the Respondent Father:

2014 - $1,507,000 2015 - $1,415,000 2016 - $1,549,000

[11] Counsel for the Applicant Mother has argued that she plugged in the most recent disclosure of the Respondent Father’s corporate financial statements to the methodology used by Mr. Freedman and arrive at an income estimation for 2017. She proposes that her calculation establishes that the Respondent Father’s income for support purposes for 2017 was $2,203,466.

[12] Based upon this proposed income of $2,203,466, the Applicant Mother request that she be paid $26,719 per month for child support and $32,020.55 per month for mid-range spousal support. This would result in an equal sharing of the Respondent Father’s net disposable income (NDI). Based on the 2016 income report (Respondent Father’s income of $1,549,000) the Respondent Father would pay child support of $18,865 per month and spousal support at the mid-range level of $36,665.

[13] The Respondent Father indicates, not surprisingly, that he does not wish to rely upon Mr. Freedman’s report. However, he failed to file any evidence to challenge the conclusions reached by the expert retained by him. At the time Mr. Freedman was retained to prepare the report and as of the date of the report, the Respondent Father was represented by counsel. On January 9, 2019 the Respondent Father filed a notice of change in representation indicating that he had decided to act in person.

[14] He contends that his base income is only $360,000 and that should the fund that he manages fail, he would have to take employment based upon his education and experience at a salary of between $100,000 and $200,000 per year. He says that although his line 150 income for 2017 was $863,006, he estimates his 2018 income will be $558,000. He argues that the Applicant Mother will not be entitled to compensatory support and she will receive a large equalization payment over $1 million.

[15] He argues that the $350,000 ceiling should be used such that child-support be based upon the table amount for incomes of up to $1 million per year and the spousal support be based upon $350,000. Using this formula and imputing income to the Applicant Mother of $40,000 he argues that the spousal support payable is between $5,300 and $7,300 per month. Total support, he contends, should be about $16,000 per month, the bulk of which is tax-free.

[16] The Applicant Mother has filed a financial statement which includes an expenses of approximately $16,000 per month, which exceeds the monthly payment received from the Respondent Father by about $4,500. She contends that the parties maintained a very lavish lifestyle prior to separation. They own two homes mortgage free, one of which has been substantially renovated. One of the two children is in private school which cost $17,000 per year and the family took several vacations each year.

[17] She has filed a proposed budget, which includes total monthly expenses of $33,164.55.

[18] The Respondent Father contends that the Applicant Mother has exaggerated the parties’ lavish lifestyle. He says that the vehicle he drives is nine years old and valued at $10,000, and the matrimonial home was purchased in 2009 for $421,000. He maintains that the fact that the two homes are mortgage free is evidence that they lived a modest lifestyle. He says that the $16,000 current monthly expenses claimed by the Applicant Mother is approximately two times as much as the parties spend during the marriage. This budget does include $3,600 per month for travel and approximately $3,000 per month for clothing and personal grooming. He also alleges that the nine trips that the Applicant Mother has taken in 15 months since the date of separation is a substantial increase compared to the amount of travel done during the marriage.

[19] The Respondent Father also argues that the Applicant Mother has exaggerated expenses in her proposed budget including housing costs of $8,250 per month. The home in which she currently resides he argues has expenses of about $2,700 per month, which he currently pays. If she ultimately purchased this property from him it is and would likely remain mortgage free. She includes debt payments of $2,000 per month (although the evidence indicates her debts were paid off with a $100,000 payment in April 2018 from the Respondent Father) and savings of $2,000 per month, clothing for herself and beauty supplies etc. of $3,400 per month, and Travel costs of $3,600 per month.

[20] The best evidence available to me at this point regarding the Respondent Father’s income is the valuation prepared by Mr. Freedman. Although this provides a report on up to 2016 only, I am not prepared to accept extrapolations and speculation proposed by counsel for the Applicant Mother regarding the 2017 income. I am also not prepared to accept the Respondent Father’s submissions regarding his 2018 income. A further expanded valuation will be required for trial if the parties cannot reach an agreement.

[21] Based upon this finding, the Respondent Father clearly has an ability to pay both child and spousal support at guideline levels. However, the purpose of a temporary order, as expressed by Lemon J. above, Is to achieve rough justice at best. The court does not embark on an in-depth analysis of the parties circumstances. This is better left to trial. The order is meant to allow the Applicant Mother to continue living at or near the same standard of living she enjoyed prior to separation if the payor’s ability to pay warrants it.

[22] I am satisfied that the Applicant Mother has established a prima facie entitlement to spousal support given the length of the relationship and the roles assumed by the parties during and after the relationship, especially in regard to the children.

[23] To determine both the need of the Applicant Mother and the standard of living she experienced prior to separation here I am guided by the combination of the expenses currently claimed by the Applicant Mother and the proposed budget included in her financial statement.

[24] Although the Respondent Father alleges that the family was significantly more frugal than the Applicant Mother claims, I find that his income and the accumulation of assets having a net value of over $7 million dollars by the date of separation suggests that the expenses she proposes are within the realm of reality.

[25] Even though I find that the Applicant Mother has overstated some of her anticipated expenses, the order below includes further obligations regarding the children’s expenses she did not include in her budget.

[26] Therefore, I find the proposed budget will be the guideline to set the spousal support as opposed to an arbitrary percentage of the Respondent Father’s NDI at this interim stage of the proceedings. The Applicant Mother proposes that the Respondent Father’s NDI be divided equally between them now. This would result in the Applicant Mother receiving a combined total of about $58,000 per month in support which exceeds her monthly proposed budget by $25,000. Such a result at this stage is neither fair nor reasonable.

[27] The trial judge may see fit to retroactively adjust the support in the future to provide for a different division of the NDI. The trial judge will then have the benefit of more fulsome and current disclosure. For the time being I am satisfied that the needs of the children and the Applicant Mother are met and their pre separation standard of living is preserved by this temporary order.

[28] This order is not intended at this point in time to encourage self-sufficiency. However, the Applicant Mother’s budget does include $3,000 per month towards savings and her own education. I anticipate therefore that she will be making a concerted effort to prepare for a time when she will be contributing toward her own support. It is premature to include any income to her at this point in time given that she’s been out of the workforce for at least eight years and caring for the children, including Ayla with special needs, for approximately 85% of the time.

[29] For these reasons I make the following temporary orders:

1. Based upon his 2016 income of $1,549,000, the RF shall pay to the AM the sum of $18,800 per month for child support pursuant to the CSG starting March 1, 2019,
2. The RF shall pay to the AM the sum of $15,000 per month for spousal support starting March 1, 2019,
3. Commencing March 1, 2019 the AM shall assume all costs in relation to the Theodore home, and
4. Commencing March 1, 2019 the parties will divide all of the children’s s. 7 expenses equally between them. These expenses are Yasmin’s private school costs of approximately $16,785 annually, Ayla’s Psychologists fees of approximately $4,400 per year, summer camp for both children in the amount of approximately $7,371 per year, swimming of approximately $1,270 per year, gymnastics of approximately $2,300 per year and such other expenses as the parties agree upon.

[30] If the parties cannot agree upon costs for this motion, the Applicant Mother is to file her cost submissions within 14 days, the Respondent Father shall file within 14 days thereafter and any reply of the Applicant Mother within seven days thereafter. Submissions will be no more than three pages (reply will be no more than one page) plus offers to settle and bills of costs.

The Honourable Mr. Justice P. W. Nicholson Date: February 27, 2019