NEWMARKET COURT FILE NO.: FC-15-048597-00 DATE: 20191002 CORRECTED DECISION RELEASED: 20191003 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: ) Marina Gail Feigin ) ) D. Frodis, for the Applicant Applicant )

• and - ) Rafael Alter ) ) Self-Represented Respondent ) ) Heard: May 14 and 15, 2019

CORRECTED: Paragraph 29 sub 3 has been corrected to add the amount of $1,461 and $348, and the total amount has been corrected from $16,723.70 to $18,532.70. Paragraph 40 sub 7, the total amount has been corrected from $18,184.70 to $18,532.70.

Reasons on Motion

Overview

[1] There are two final orders in this matter. The order of December 14, 2017, which was made on consent, dealt with parenting issues. The second order dated June 22, 2018, an order not entirely made on consent, dealt with support and property issues.

[2] The motion before the court is conducted pursuant to paragraph 10 of the Final Order dated June 22, 2018 which provided; "the issue of continued monthly contributions to s. 7 expenses will be reviewed by myself at a date to be set in consultation with the trial co-ordinator during the May 2019 sittings".

[3] At the outset of the motion, I indicated to the parties that I was prepared to address the following additional issues:

a) Reconciliation of rent revenues b) Allocation of debt of 1029 Holdings Ltd., which included the following: i) carpet repair; ii) a lien; and iii) HST. c) The passport penalty

Management of s. 7 Expenses

[4] The two issues raised with respect to s. 7 expenses are:

i) whether the existing management scheme is working; and ii) whether or not expenses relating to the children's acting should be considered a proper s. 7 expense and included as part of the s. 7 budget.

[5] I intend to deal with the second issue first.

Should the Children’s Acting Expenses be Considered a s. 7 Expense and Included as Part of the s. 7 Budget?

[6] Marina submits that the acting expenses should be included.

[7] Raf submits that the acting expenses should not be considered a s. 7 expense for budget purposes, and that the children’s income generated from acting activities ought to be used to pay any expense incurred by them in connection with acting.

[8] The children have all participated in acting. This activity was specifically referenced in the order of December 14th, 2017. In fact, save and except “acting”, all of the other identified activities have been expensed in the budget. I further note that of the $61,000 budgeted, $6,000 is allocated to each child for unspecified extracurricular activities. I find that “acting” is a s. 7 expense and is to be budgeted on an annual basis.

[9] The acting activity does, however, provide the children with income. Accordingly, any income generated from acting is to be accounted for and set aside for future post-secondary expenses or used to pay ongoing expenses relating to “acting”.

[10] If the parties choose to set aside the acting income for future post-secondary expenses, then the parties will be required to contribute to the acting expense as part of the annual budget.

Is the Existing Management Scheme Working?

[11] The relevant portions of the Final Order read as follows:

[6] The parents’ annual section 7 budget shall not exceed $61,000, the details of which are projected as follows:

a. therapy at $2,500; b. extra-curricular activities for each child at $6,000 for a total of $24,000; c. Snowhawk ski lessons for all four children at $4,500; and d. overnight and day summer camp at $30,000.

[7] On an annual budget of $61,000, father’s obligation on account of section 7 expenses shall be $3,750 per month, and mother’s obligation shall be $1,333 per month.

[8] The father shall pay to the mother $3,750 per month commencing January 1st, 2018, and on the first day of each month thereafter, subject to credit for any section 7 expenses that the father has contributed to as of the date of this judgment.

[9] The mother is to prepare an accounting as to the funds that have been paid with respect to the identified section 7 expenses. The accounting is to be provided to the father, on or before January 31st, 2019.

[12] The applicant mother (hereinafter referred to as “Marina”) submits that there should be no change to the current process. She testified at the hearing that all expenses have been properly accounted for and relate entirely to expenses incurred on behalf of the children.

[13] The respondent father (hereinafter referred to as “Raf”) asks the court to alter the existing process. He submits that the process should be as follows:

That his contribution to s. 7 expenses should be placed in a joint s. 7 expense fund, and that each parties’ monthly contribution to the joint account should be as follows:

i) father's monthly contribution $3,750; and ii) mother's monthly contribution $1,333.33.

[14] Raf goes further and suggests that the joint account will require both of the parties’ signature before an expense can be paid. I note that this submission was the same submission made at the initial hearing of this matter, and in part, was the reason behind requesting the matter be reviewed by myself following the initial determination.

[15] A s. 7 summary accounting chart (see attached Tab A) was filed by Marina at the hearing. The chart indicated that the total paid towards s. 7 expenses was $60,541.76.

[16] Raf challenged several of the s. 7 expenses that were paid by Marina.

[17] During the hearing, Raf conceded that activities paid for in 2017, that related to activities scheduled for 2018, were properly included in Marina’s summary accounting.

[18] Raf further acknowledged that the expenses relating to Bahmitzva and Barmitzva lessons were also properly included.

[19] Marina initially challenged the “Medcan” expenses paid by Raf on behalf of the children. During the hearing, Marina agreed that this medical expense ($600) should also be considered as part of the s. 7 expense budget.

[20] The additional payment by Raf to Medcan resulted in the total costs for 2018 being $61,140.79. Accordingly, the parties contributed the following:

1. Raf contributed $45,140.79 (a surplus of $140.79); and
2. Marina contributed slightly less than $16,000.

The parties have complied with the order as it relates to the quantum of their annual contribution to the s. 7 budget for 2018.

[21] The accounting matter is complicated by the fact that Marina has included in the 2018 budget expenses that were paid in 2019 for 2019 activities. Those activities were skiing and drum lessons totaling $4,587.40. Those activities should properly be accounted for in the 2019 budget. Accordingly, there should be a surplus of funds in the amount of $4,587.40 remaining in the 2018 budget. The issue is, how to treat any annual surplus. I do not find that Marina needs to return $4,587.40 to the s. 7 account. As noted, both parties made their full contributions for 2018. One would think that if the 2019 expenses were identical to those incurred in 2018 (save and except Marina will not be expensing to the 2019 budget items paid for in 2020 in connection with 2020 activities) then there should be a surplus of $4,587.40 remaining in the account as of December 2019, which presumably could be utilized to pay agreed upon s. 7 expenses that would otherwise not be accommodated within the budgeted $61,000.

[22] As I have previously indicated, the parties have demonstrated that by and large they effectively communicate on s. 7 matters. Both parties acknowledged that the children’s s. 7 expenses will continue to grow and will shift to different activities and events over time. Further, it is clear that the contributions to post-secondary expenses are not that far off.

[23] The evidence of the parties indicates that other than the “acting expense” the parties were able to effectively communicate on what activities should be part of the annual s. 7 budget.

[24] At the outset of this proceeding, the parties made it clear that they wished to have a “seven-year” litigation vacation”. In keeping with the stated intention, Marina shall create a separate bank account into which the required monthly s. 7 contributions of each party are deposited, and from which the s. 7 expenses are paid. Raf is to be provided with monthly bank statements which set out the deposits and the expenditures for s. 7’s.

[25] The order of June 20, 2018 requires a review of spousal support in December of 2024. I see no reason why a review of the treatment of any surplus funds remaining in the s. 7 bank account ought not to occur at the same time, and accordingly, I make such an order.

[26] In the event that the parties cannot agree upon future s. 7 expenses, they must first attend for mediation before returning the matter to court for a ruling.

Additional Issues

a) Reconciliation of Rent Revenues

[27] This issue arises as a result of the following paragraphs of the order dated June 2018.

Mother’s Properties

[33] Mother shall retain 1 Elm Drive, Suite 707, Mississauga, Ontario; 1 Elm Drive, Suite 2603, Mississauga, Ontario; and 8 Charlotte Street, Suite 205, Toronto, Ontario, free of any claims of any kind by father. She shall continue to make efforts to remove father from the joint liabilities on those three properties, and provide him with written releases from the financial institutions. Until such time as father is removed from these liabilities, mother shall indemnify him and save him harmless for all expenses in relation to these properties. She shall provide father with monthly reports regarding her efforts to do so. Mother shall discharge these mortgages or provide a release from the lender in relation to father’s liability by August 31st, 2018 and provide proof that she has done so.

[34] Within 15 days of mother’s execution of all Schedules referred to in this Order and her removal of father from the joint liabilities, mother shall assume responsibility for and management of all the properties and collect the rent revenues. Within 7 days thereafter, father shall pay her the rent revenues received from January 2018 to the transfer of management date. Such revenues are currently calculated by father to be $10,153.78. Mother shall include all rental revenue on her income tax return.

1029 Holding Inc.

[36] Father shall be responsible for paying the approximate amount of $51,000 owing to the Receiver General on account of 1029 Holding Inc. (“1029”) and shall indemnify mother and save her harmless for all costs, including penalties and interests, in relation thereto.

[37] Mother shall resign as a Director of 1029 by executing the documents provided to her by father on December 5, 2017, no later than July 15, 2018. The Respondent shall be responsible for paying to the Receiver General the entire debt owing (in the approximate amount of $50,549.34) on account of 1029 Holding Inc. Within 30 days of the date of this Order, the Respondent shall reimburse the Applicant for any payments that were made by the Applicant, or garnished from her account, against this debt at any point after December 1st, 2017, in the amount of $5,431.21. The Respondent shall forthwith provide to the Applicant all necessary paperwork to remove the Applicant as director of 1029 Holdings Inc. and the Respondent shall indemnify the Applicant and save the Applicant harmless from any and all liabilities relating to 1029 Holdings Inc. The Respondent shall be responsible for all costs associated with the preparation of these documents and the Applicant shall cooperate in signing all reasonable documents prepared by the Respondent to give effect to this paragraph.

Other

[38] The joint bank accounts shall be severed and closed once the joint mortgage liabilities on mother’s properties are removed pursuant to paragraph 33. Mother shall retain the balance in the joint TD account, and father shall retain the balance in the joint HSBC account.

[39] Except as addressed above, there is no joint debt. The parents shall be responsible for their own debt.

Post-Separation Adjustments

[40] There shall be no post-separation adjustments or off-sets owing to or payable by either parent. More particularly, father shall not be entitled to be compensated for his payment of capital and carrying charges on 143 Thornridge, deposits made post-separation on the pre-construction condominiums, and the payment of mother’s debt post-separation. Mother shall not be entitled to be compensated for any rental income father received on her behalf, while managing her properties post-separation to the date of settlement.

Rent Adjustments

[28] I accept Raf’s evidence that in calculating the amount of rent he collected on Marina’s behalf, the court must take into account not only the gross amount, but the expenses associated with each rental unit on a monthly basis. In other words, the court has to calculate the net rent owing to Marina.

[29] Raf submits that the net rent owing over the period in which he was “guardian of Marina’s money” is $15,251.70. From this sum, Raf deducts the sum of $1,808 being the cost of floor repairs for unit 2603-1 Elm Drive. Raf submits that the total he owes for rent reconciliation to Marina is $13,443.70. This amount does not, however, take into account several other amounts which Marina claims compensation for. Those amounts were set out in Exhibit #4, a copy of which is attached hereto.

[30] Marina began collecting the rent on 1 Elm Drive, number 2603 on May 1, 2018. The tenants last month of occupation was October 2018. They did not pay Marina for their last month of occupation. They had previously paid this sum to Raf. As Raf indicated at the hearing, he felt that he was “the guardian of Marina’s funds” while he was managing the properties prior to Marina taking over the collection of rents. I find that the payment of last month’s rent to Raf, in fact, is an adjustment that should be made in favour of Marina as otherwise she would be responsible for the carrying expenses for that month without having the benefit of the rental income. The adjustment for last month’s rent is $1,461.

[31] Marina began collecting the rent on 1 Elm Drive, number 707, on September 1, 2018. In addition to receiving last month’s rent, Raf also received two cheques from the occupant for the same month. Raf cashed both of those cheques. The tenant refused to pay Marina for one month because of the cashing of the two cheques. In addition, the tenant had provided a $200 key security deposit previously to Raf. This was reimbursed to the tenant by Marina. For the same reasons as set out above, Marina is entitled to an adjustment for last month’s rent, the double cheque and the key security deposit. These sums total $3,280.

[32] Marina began collecting the rent on 8 Charlotte Street, number 205 on August 1, 2018. Raf was paid last month’s rent. Marina is entitled to an adjustment, taking into account the amount of the rent Raf was paid and reducing it to the expenses for maintenance fees and mortgage fees results in Marina being entitled to an adjustment in the sum of $348.

[33] Marina also requests an adjustment for a lien registered in connection with this property. That matter is addressed later in these reasons.

b) The Allocation of Debt of 1029 Holdings Ltd.

i) Carpet Repair

[34] Marina indicates that she ought not to be responsible for the carpet repair on 1 Elm Drive, unit 2603. I find that the repair was necessary and agree that this was a proper reduction made by Raf in his calculation.

ii) Lien

[35] Property management was notified of an outstanding account in October of 2018 for work done on 8 Charlotte, number 205. The amount of $2,342.94 was garnished from Marina’s account in December 2018 as a result of a lien being registered against this property. Prior to the lien being registered, and in accordance with the order, Marina had a responsibility to be in contact with property management. The lien had been registered some three weeks after property management had been notified. Accordingly, I find that it was Marina’s obligation to establish effective communication with property management, and as a result the lien is properly her responsibility and there will be no adjustment for this item in her favour.

iii) HST

[36] Marina submits that there is an error in the language as set out in paragraph 37 of the June 2018.

[37] Raf, by contrast, indicates that there was no error and that it was specifically within the contemplation of the parties. In these circumstances, I am not prepared to accept the position of Marina. A reading of s. 37 of the order places the onus on Raf to reimburse Marina the sum of $5,431 for any payments garnished after December 1st, 2017. There is insufficient evidence to satisfy me that the error, in fact, should have read “the date of separation” and not December 1st, 2017, and accordingly no adjustment will be made in favour of Marina in respect to this item.

c) Passport Penalty

[38] A passport penalty was set out under paragraph 25 of the December 14, 2017 order. Raf submits that Marina breached that provision on two occasions, and as a result, he is entitled to $15,000 which can be characterized as “the fine”. Paragraph 25 provides that: After hearing the evidence in this regard, it is clear that on one of the occasions Raf was not available during the 48-hour timeframe to receive the passports. In any event, the failure to receive the passports with 48 hours in no way adversely effected Raf or any of his travel plans. The position taken by Raf is not within the spirit and intent of the section, and I would not impose the penalty as against Marina.

[39] As a result, the following are the adjustments required in favour of each of party:

1. Net rental to Marina ($15,251.70 reduced by the payment of carpet repair $1,808); $13,443.70
2. Adjusted rent sums to Marina $3,080.00 + $1,461 + $348;
3. Key security deposit to Marina $200.00;

Entire amount owing from Raf to Marina is $18,532.70.

[40] Accordingly, order to go:

1. Within 30 days hereof, Marina is to open a new bank account into which the monthly s. 7 contributions of each party are to be deposited.

2. The parties will continue to make their monthly deposits to the s. 7 account. Raf’s contribution will be $3,750, save and except, the next monthly payment which shall be reduced by the sum of $140.79. Marina’s monthly contributions will continue in the sum of $1,333.33.

3. Marina is to provide to Raf monthly statements related to the s. 7 bank account which sets out the deposits made and the expenses paid.

4. Acting expenses on behalf of the children are to be included in the s. 7 budget.

5. For accounting year 2019, there shall be a deemed surplus rolled over from the 2018 accounting year in the sum of $4,587.40. The treatment of surplus funds in the s. 7 bank account will be determined in December of 2024 when the review of spousal support returns before the court.

6. Marina is to prepare an accounting as to the funds that have been paid with respect to the identified or otherwise agreed to s. 7 expenses. The accounting is to be provided to Raf on the 31st day of January 2020 and on the 31st day of January for each year thereafter.

7. Within 30 days hereof, Raf is to deliver to Marina the sum of $18,532.70 in full satisfaction of the adjustments set out in the Reasons on Motion.

8. This order bears interest at the rate of 3 per cent per year on any payment or payments in respect of which there is a default from the date of default.

9. On the issue of costs, the parties are to submit within 30 days hereof a two-page summary along with relevant offers to settle and the bill of costs being sought. Within 45 days hereof, the parties are to serve and file a reply to the other parties’ submissions on costs.

J.S. McLeod Corrected Decision Released: October 2, 2019