Court File and Parties

COURT FILE NO.: FS-19-8688-0000 DATE: 20191205 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Munaza Chaudhry AND: Reza Meh

BEFORE: J.T. Akbarali J.

COUNSEL: Harold Niman and Mark DeGroot for the Applicant W. Abbott and A. Tabhaz for the Respondent

HEARD: November 21, 2019

Endorsement

Overview

[1] The parties originally attended before me on September 26, 2019, when the applicant brought a motion for exclusive possession of the matrimonial home and support orders. The motion had to be adjourned to allow the respondent to file responding materials. It returned before me on October 15, 2019, by which point the respondent had brought a cross-motion seeking parenting orders.

[2] The motions were, in fact, long motions that had been brought on the regular list. At the hearing in October 2019, I dealt with the parenting issues and exclusive possession of the home only. I adjourned the support issues to be dealt with before me on November 21, 2019. The parties agreed to interim terms which, among other things, required the respondent to maintain the costs of the matrimonial home and make a one-time without prejudice payment of $25,000 pending the return of the financial issues.

[3] On October 22, 2019, I released reasons in which I granted the applicant exclusive possession of the matrimonial home until the parties otherwise agree or until further order of the court. I also ordered a temporary, without prejudice shared parenting schedule: Chaudhry v. Meh, 2019 ONSC 6101.

[4] The parties argued the support issues before me on November 21, 2019. In addition, they sought other orders on consent, and on consent, placed before me a question relating to a s. 30 assessor that they have asked I deal with. In these reasons, I address the remaining issues stemming from the parties’ motions and the additional issues they have raised before me.

Issues

[5] The issues that I must determine are:

a. What is the respondent’s income for support purposes? b. What child support order should be made? c. What spousal support order should be made? d. Who should conduct the s. 30 assessment?

[6] As I noted, the parties also seek certain orders on consent which I address at the end of these reasons.

[7] I turn to the analysis of these issues.

Child and Spousal Support

The Parties’ Positions

[8] In her Notice of Motion, the applicant seeks interim child support of $5,999 per month and interim spousal support of $12,691 per month. In her written argument, she seeks spousal support at the mid-range of the Spousal Support Advisory Guidelines (Ottawa: Dept. of Justice, 2008). She suggests the respondent may have earned as much as $1.8 million so far in 2019, although this figure appears to reflect a currency conversion error. She also argues that income should be imputed to the respondent.

[9] At oral argument, the applicant argued that the respondent had failed to put sufficient evidence of his income before me. She now seeks an order that the respondent make a one-time without prejudice payment of $100,000, to be a credit to him in the action. She estimates her share of equity in the matrimonial home at $900,000, and argues that, if the amount she seeks is an overpayment, she will be able to repay any amount found to be owing to the respondent through her equity.

[10] In written argument, the respondent argued that the applicant did not establish entitlement, however he did not seriously contest entitlement to spousal support in oral argument at the motion. He disputes the quantum of support sought. He provided me with Divorcemate calculations suggesting mid-range spousal support of $0 and set-off child support of $633 owing to the applicant. However, he notes the significant s. 7 expenses for the child, including independent school tuition, which he pays. After accounting for the s. 7 expenses the applicant pays, the respondent states she owes him $742 monthly in s. 7 expenses. The net effect, based on the respondent’s calculations, is that the applicant owes him $109 monthly.

[11] The respondent also noted that he has been paying the expenses of the matrimonial home, of approximately $1700 monthly. He argued that meeting those expenses is sufficient spousal support, and it should be characterized as such in my order so that he will get the benefit of the tax relief for support paid.

[12] The respondent argued that the applicant’s request for a one-time payment was not appropriate, and he raised a question as to whether the applicant would be able to repay any overpayment through her share of equity in the matrimonial home, based on his claim to an equalization payment from the applicant of over $400,000, and other post-separation adjustments.

Background

[13] The parties were married on July 31, 2005, and have one child, born in June 2008. They separated on October 30, 2017.

[14] After separation, the parties continued to live separate and apart in the matrimonial home until my order for exclusive possession took effect on November 21, 2019, the same day the motion for support was argued. The parties are now living in separate residences. They share parenting time with the child equally.

[15] In August 2018, the applicant was diagnosed with stage 2 breast cancer. During her treatment she was off work and on long-term disability. By the time the motion was argued before me in November 2019, she had begun a gradual return to work. Although the evidence before me does not disclose the exact timing for her to complete a full return to work, counsel agreed that by some point in December 2019, she will have returned to work full time and will be receiving 100% of her salary - $119,193 per annum.

What is the respondent’s income for support purposes?

[16] In 2013, the respondent inherited significant wealth from his father. He holds his investments through accounts in Switzerland. He also holds debt in his Swiss accounts which must be accounted for when determining the respondent’s net equity. The respondent is engaged in actively managing his investments. His income derives primarily from the investments he holds [1]. However, there is conflicting evidence about the respondent’s income in the record.

[17] In the consent the parties entered into on October 15, 2019, they agreed that no further evidence would be filed on the support motion except for the respondent’s income report, if available. In fact, the respondent subsequently filed three expert reports to assist with understanding his income for support purposes: an income report and two reports concerning the rate of return on his investments. The applicant noted the discrepancy between the consent and the evidence that was filed, but she did not object to the court receiving all three reports.

[18] From the evidence filed I note the following:

a. As of the end of December 2018, the respondent’s net equity in his investments was CHF 3,287,999. The parties agree that an appropriate exchange rate as at December 30, 2018 is 1 CHF:1.39 CAD. Thus, the respondent’s net equity as at the end of December 2018 was $4,570,319 CAD. b. The respondent’s current net equity, according to two of his expert reports, is approximately $5,000,000 CAD. c. The rate of return the respondent has earned in the last three years is as follows: 27.9% in 2016, 8.7% in 2017 and -16.8% in 2018. The average of these three rates is 6.6%. His rate of return in 2019 cannot be calculated exactly as the evidence before me only describes the approximate value of his net equity, but it appears to be in the neighbourhood of 9.4%. d. The respondent’s line 150 income for the last three years is as follows: $216,296 in 2016, $205,706 in 2017, and $205,679 in 2018. e. The respondent’s proposed income expert, Mr. Moroney, concludes that the respondent’s income can be calculated by subtracting, from his line 150 income, the carrying charges and interest expenses he incurred on the debt he holds in his investment accounts, and by adding back some accounting fees. He concludes the respondent’s income for support purposes is $176,000 in 2016, $135,000 in 2017 and $145,000 in 2018. f. Mr. Coldiron, a proposed expert engaged by the respondent, opines that the annual income that can be expected from a portfolio of publicly traded stocks and bonds of similar value to the respondent’s is just above 2% annually, or $102,000. g. Mr. Jarvis, another proposed expert engaged by the respondent, opines that the respondent could reasonably expect to earn between 3.25% and 3.6% on his investible assets based on a low to low-medium risk income-oriented portfolio.

[19] The applicant argues that the respondent’s line 150 income may not accurately reflect his available income to pay support. Under s. 19(1) of the Child Support Guidelines O. Reg. 391/97, the respondent has an obligation to reasonably utilize his property to generate income. She argues that a rate of return of 5% on his investments is supported by recent case law: Plese v. Herjavec, 2018 ONSC 7749, at para. 276.

[20] She also argues that the respondent is intentionally unemployed. He has two degrees and has previously worked in banking, but he now prefers to manage his investments. She relies on Drygala v. Pauli, [2002] 61 O.R. (3d) 711 (C.A.).

[21] The respondent argues that the imputation of income is a triable issue and should be left to trial: see, for example, MacIntyre-McAlear v. McAlear, 2018 ONSC 1395, at para. 55.

[22] I have concerns about embarking on a full analysis of imputation of income at this stage, not least of which is that the expert evidence I have is limited, because there are no responding reports. Moreover, the respondent’s experts were not present to be qualified or cross-examined. On the face of the reports filed, I have questions, both about the experts’ analysis and in some cases, about their expertise, which are unanswered.

[23] I am prepared to assume that the data reported by the experts about the respondent’s rate of return and net equity is correct. Beyond that, I am not prepared to embark on a full-scale enquiry on this limited record into the respondent’s income.

[24] For the purposes of this interim motion, I conclude that the respondent’s income can be assessed based on the value of his current net equity and the historical rate of return he has achieved over the last three calendar years. At $5,000,000 CAD in net equity, and an average rate of return of 6.6% from 2016-2018 – a figure lower than the evidence suggests his rate of return is for 2019 so far – his income for support purposes is $330,000.

What child support provisions should be made?

[25] The court has jurisdiction to make an order for interim child support under s. 15.1(2) of the Divorce Act, R.S.C., 1985, c.3 (2nd Supp).

[26] I have noted that the parties have equal shared parenting time with the child. Section 9 of the Federal Child Support Guidelines, SOR/97-175 thus applies. The court must consider the amount of child support taking into account the amount set out in the applicable tables for each of the spouses, the increased costs of shared custody arrangements and the condition, means, needs and other circumstances of each parent or spouse and of any child for whom support is sought.

[27] In my view, it is appropriate that interim set-off child support be ordered. I see no basis to depart from a set-off approach to child support, especially when the applicant has exclusive possession of the matrimonial home, valued at $1.8 million.

[28] The respondent, with an annual income of $330,000, owes table support for one child in the amount of $2,595 monthly commencing December 1, 2019. The applicant, with an annual income of $119,193, owes table support for one child in the amount of $1,062 monthly commencing December 1, 2019. On a net basis, the respondent’s set-off table support is thus $1,533 monthly.

[29] The parties have also committed to significant extraordinary expenses for the child, including independent school tuition and expensive violin lessons. In my views, these expenses should be shared in proportion to income. I address the expenses in greater detail in my calculations of spousal support, to which I now turn.

What spousal support order should be made?

[30] The court can make an order for interim spousal support as it “thinks reasonable” under s. 15.2(2) of the Divorce Act.

[31] Section 15.2(4) directs the court to consider the condition, means, needs and other circumstances of each spouse, including the length of time the spouses cohabited, the functions performed by each spouse during cohabitation, and any order, agreement or arrangement relating to support of either spouse.

[32] The objectives of an interim spousal support order are set out in s. 15.2(5). An interim order 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.

[33] Case law recognizes the difficulties in meeting the requirements of the Divorce Act set out above on a motion for interim support. Jurisprudence indicates that the parties’ respective means and needs should assume the greatest significance, and the other objectives and factors be taken into account only so far as is practicable, leaving a full analysis for trial where a full review of the evidence can be made, and determinations of property divisions reached: see, for example, Turk v. Turk, 2008 CarswellOnt 512 (S.C.), at para. 60.

[34] On motions for interim support, the court will not conduct an in-depth analysis of standing or entitlement. Rather, the applicant need only make out a reasonable case for standing and entitlement before the court will proceed to assess the parties’ means and needs: Spence v. Sly, 2010 ONSC 6060, at para. 11.

[35] Temporary orders are designed to provide “a reasonably acceptable solution on an expeditious basis for a problem that will get a full airing at trial: Brown v. Brown, 1999 CarswellOnt 2245 (S.C.), at para. 34.

[36] In my view, on this interim motion, the applicant has established a reasonable case for entitlement. The parties have lived in a mortgage-free $1.8 million home and sent their child to an independent school. They lived a lifestyle that the applicant could not have afforded on her income, and especially not her income post-separation, while she was on long term disability and receiving cancer treatment. She is only now returning to full-time work. She has suffered economic consequences arising out of the marriage breakdown. As I noted, the respondent did not seriously contest entitlement at the hearing of the motion.

[37] The question is thus the appropriate quantum of support. In my view, the parties should regularize their financial arrangements as much as possible. I understand why a lump sum payment is, practically, a good solution for the applicant. In part, she wishes to access a lump sum in order to fund responding expert reports. However, this is not a motion for interim disbursements. I see no basis to depart from the usual approach of calculating monthly support based on the best determination the court can make as to the parties’ incomes at this stage in the proceeding.

[38] I have prepared a Divorcemate calculation, attached as Schedule A to these reasons, using the parties’ incomes as I have determined them to be. I am of the view that spousal support at the middle of the range is appropriate. I reach this conclusion because the applicant worked throughout the marriage, is returning to work full-time in the very near future, and she has the benefit of exclusive possession of the matrimonial home at present. I also note that the respondent argued in favour of 50/50 NDI. At the middle of the spousal support range, the applicant will receive 46.1% NDI, while the respondent will receive 53.9% NDI.

[39] At the mid-range, the respondent shall pay to the applicant monthly spousal support of $3,196, commencing December 1, 2019.

[40] Based on this calculation, the applicant will be responsible for 35.1%, and the respondent will be responsible for 64.9%, of the child’s s. 7 expenses.

[41] With these arrangements in place, the applicant shall take over the expenses of the matrimonial home which, I note, do not include a mortgage. The parties estimate these to be around $1,700 monthly.

[42] I make these financial orders on a temporary, without prejudice basis, subject to the parties’ rights to claim retroactive adjustments to child support, spousal support and s. 7 expenses at trial.

Section 30 Assessor

[43] At a case conference before Nakonechny J. on April 29, 2019, the parties entered into a consent in which they agreed to a s. 30 assessment. Among other things, the consent provided that “the parties will select an agreeable expert to conduct the s. 30 assessment within 7 days”.

[44] The parties agreed on Jan Schloss as assessor. The applicant paid her share of the fees and completed the intake. The respondent did not.

[45] At the hearing on October 15, 2019, the parties entered into a consent order that included the respondent’s agreement to pay the applicant’s costs thrown away that she paid to Jan Schloss. It also included the following provision:

Dr. Shely Polak shall complete the s. 30 assessment. If she is not available or unwilling to act counsel shall select an alternate assessor. If they cannot agree on an alternate assessor they shall ask the court, by way of regular motion, to select an assessor.

[46] The parties agree that the following occurred. Dr. Polak indicated she is willing to act as s. 30 assessor, but she is unable to begin the assessment process until March 2020. As a result, the respondent proposed Dr. Ray Morris as an assessor. Before the applicant responded to the proposal, the respondent withdrew it and indicated he wished to proceed with Dr. Polak. The applicant wishes to proceed with Dr. Morris. Dr. Morris has indicated he is willing to act and is able to start right away.

[47] The respondent argues that, given the new living arrangements, it is more appropriate to wait to commence the process with Dr. Polak. The delay in commencing will allow the parties, and particularly the child, to settle in to the parties’ new circumstances. The applicant argues that the s. 30 assessment was originally consented to in April 2019, and there is no reason to delay the start of the process by ten months to wait for Dr. Polak, especially after the delays caused by the respondent agreeing to, and then refusing, Jan Schloss as assessor.

[48] The parties consented to Dr. Polak but the consent was conditional on her being available and willing to act. While she is willing to act, the question is whether she is available, especially when she cannot begin until about five months after the parties agreed to begin the process with her, and over ten months after they first agreed to do the assessment.

[49] In my view, having decided a s. 30 assessment is necessary, the parties need to get on with it. The parties’ living circumstances may be new, but there is no need to wait to commence the assessment. The assessment will take time and will necessarily reflect the child’s new reality of moving between her parents’ households. Dr. Morris was first proposed by the respondent and is available to start immediately. I am advised that Dr. Morris is willing to act. I see no reason for the parties to wait for Dr. Polak to become available. The sooner the report is started, the sooner it will be completed and the sooner the parties will be able to consider how best to meet the child’s needs in a family that is no longer intact.

Consent Orders

[50] On consent of the parties, I make the following procedural orders:

a. The respondent shall produce the scope of review documents for all expert reports served, specifically: Kevin Coldiron’s report dated November 6, 2019, Paul Moroney’s report dated November 13, 2019, and David Jarvis’s report dated November 18, 2019. b. The parties shall attend questioning within 60 days after the date of these reasons. c. The parties shall attend a settlement conference within 90 days after the date of these reasons.

[51] The applicant also sought an order that the respondent “shall engage a contracting or roofing company and ensure the necessary repairs to the roof of the matrimonial home are completed before December 31, 2019”. This requested relief relates to the parties’ consent dated April 29, 2019, where they also agreed that they would “complete the necessary and agreed-upon repairs to the matrimonial home as soon as possible. The respondent shall pay the cost for such repairs up front on a without prejudice basis. The applicant’s contribution or share of such expenses shall be agreed upon by the parties or ordered by this Honourable Court”. Subsequently, on October 15, 2019, the parties’ consent provided that “the respondent shall forthwith move to complete the home repairs ordered on April 29, 2019, including repairs to the roof and repairs to the stucco on the front of the house”.

[52] The relief the applicant sought with respect to the repairs was not on consent. The respondent advised me that he has signed a contract with a roofing company and is trying to get them to commence the repairs, but they have not started the work as of yet. He does not agree to a timeline because the timing of the roofing company is out of his control.

[53] I have no evidence on which to determine the timing of the roof repairs. While I have dealt with a number of procedural matters that were outside the scope of the parties’ Notices of Motion, I did so in furtherance of the primary objective under r. 2(2) of the Family Law Rules, and in particular, in furtherance of my duty, in r. 2(5)(f), to deal with as many aspects of the case as possible on the same occasion, in order to make the litigation process as efficient and cost-effective as possible for the parties. However, I cannot go so far as to order relief that is not on consent without some kind of basis in the evidence or the parties’ agreed-upon admissions of fact. Accordingly, I make no order with respect to timing of the roof repairs.

Costs

[54] There remains the question of costs of this motion, including costs of the motion for exclusive possession of the matrimonial home and parenting orders, which I reserved to be addressed once all the substantive relief sought on the motions had been determined. I understand there are offers that have been exchanged that may affect the parties’ claims to costs.

[55] I encourage the parties to agree on costs. If they are unable to do so, I will accept written submissions on costs as follows: (i) any party claiming costs shall deliver written submissions of no more than three pages plus bills of costs and offers to settle, if appropriate, (ii) any party disputing costs shall deliver written responding submissions of no more than three pages plus bills of costs and offers to settle, if appropriate, and (iii) any party claiming costs may deliver reply submissions of no more than two pages.

[56] I note that the timing for delivery of costs submissions would likely extend into the holiday break. Thus, I ask counsel to confer on a reasonable timetable for exchange of submissions and advise me in writing of their agreed-upon timetable within one week of the release of these reasons.

J.T. Akbarali J.

Date: December 5, 2019

Footnotes

[1] The respondent also earns some rental income, which has ranged between $9,142 and $13,133 in the last three years, according to the respondent’s expert income report.