Court File and Parties

COURT FILE NO.: FC-18-FS-53508 DATE: 2020/03/11 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: PETER MICHAEL PROBST, Applicant AND: TASMEEN SHAH, Respondent

BEFORE: Madam Justice J. Breithaupt Smith

COUNSEL: Harley E. Bernard, Counsel for the Applicant. Glenda D. McLeod, Counsel for the Respondent

HEARD: February 24 and 28, 2020

Reasons for Decision

[1] Two companion motions, called together as a long motion for argument, were heard on February 24 and 28, 2020. Both motions focus on two issues: disclosure and spousal support. Ms. Shah’s original motion was served October 11, 2019 (at Volume 2, Tab 1 of the Continuing Record) and amended to be made returnable during the week of December 2, 2019 in accordance with the practice of the Unified Family Court at Kitchener. The amendments directed the court to additional affidavit material filed during the intervening period and changed the spousal support request to seek interim, without prejudice payments of $4,500 monthly to Ms. Shah based upon an imputed annual income to Mr. Probst of $250,000. The amendments also removed a request that Mr. Probst advise as to the status of the business valuation and income-for-support report being prepared by his retained expert. This request was removed as, by that time, Ms. Shah had retained her own expert. Mr. Probst’s cross-motion, at Volume 3, Tab 1 of the Continuing Record, sought to impute an annual income to Ms. Shah of $50,000 with a corresponding spousal support obligation by Mr. Probst at the rate of $360 monthly on an interim basis. Certain items of disclosure were also sought from Ms. Shah but, at the hearing of argument, Mr. Probst’s counsel confirmed that there was nothing outstanding as all materials requested had been received to his satisfaction.

[2] Thus, the four broad issues remaining are: (1) outstanding disclosure to be made by Mr. Probst; (2) the imputation of income to both spouses; (3) the quantum of spousal support; and (4) an advance of interim fees and disbursements to Ms. Shah.

Background Facts

[3] The parties agree that they were married on July 10, 2008 and that they have no children together. Presumably, they each acknowledge the other’s date of birth as accurate. Otherwise, all basic facts associated with the determination of spousal support are in dispute. Ms. Shah says that she and Mr. Probst started living together in June of 2005; Mr. Probst says that they did not start cohabiting until March 18, 2010, some twenty months after the date of marriage. Ms. Shah says that the date of separation was February 7, 2018. Mr. Probst says that the parties separated on November 18, 2013. The duration of cohabitation is a relevant consideration in the application of the Spousal Support Advisory Guidelines (“SSAG”) in determining ranges of spousal support, as is the age of the recipient at separation. In this case in particular, the “rule of 65” is engaged if Ms. Shah’s dates are used but does not become a factor if Mr. Probst’s dates are used, resulting in an actual difference between the figures generated by the SSAG calculations.

[4] It is here where the nature of Ms. Shah’s request for relief first becomes significant. She wisely asks for spousal support to be ordered on a temporary, without prejudice basis. It is therefore open to this court to make a finding regarding the length of the relationship and Ms. Shah’s age at separation on the affidavit evidence, despite its conflicting nature and the credibility issues that arise. A judge at trial, or even on subsequent motion brought once disclosure is complete and the experts’ opinions regarding Mr. Probst’s income for support purposes are known, will be free to make any other finding of fact in reviewing the spousal support issue. [1] Therefore, and for the purposes of this motion only, on a without prejudice basis, I reach the following conclusions:

a. The commencement date of cohabitation for the purposes of determining the length of the relationship, on a without prejudice basis, is the date of marriage (namely July 10, 2008); and

b. The date of separation for the purposes of determining the length of the relationship, on a without prejudice basis, is February 7, 2018, based upon Mr. Probst’s testimony under oath before Justice of the Peace Ziegler on October 4, 2018, when he stated: “Then when we separated in February of 2018…” [2].

[5] For the purposes of this motion, then, the parties’ cohabitation was 9.5 years in duration. Ms. Shah having been born October 5, 1964, means that she was 53 years of age on the date of separation. Again, I would underscore that these findings are made on a without prejudice basis.

Disclosure

[6] Firstly, a comment about a pattern connected with disclosure that appears to have developed in this litigation. The pattern appears to be that Mr. Probst has been unable to produce relevant documents for many months, only to suddenly make them available at the last moment.

[7] The first example that arises in the context of the materials filed in support of these motions is the letter allegedly written by Ms. Shah to the Canada Revenue Agency in support of the parties’ date of cohabitation. The letter is addressed To Whom It May Concern and dated June 1, 2009. It references Ms. Shah’s Social Insurance Number and reads: “I married Peter Michael Probst on July 10, 2008. We did not live common-law before the marriage.” Ms. Shah was asked about this letter during her Questioning on November 8, 2018 and denied authoring it. She further attested that Mr. Probst had been in the habit of forging her signature on documents associated with the management of their (now sold) retirement home business. Only an unsigned copy of the letter was produced during Questioning, and the Canada Revenue Agency confirmed that no signed copy exists in their files. No signed copy was produced at any time until a document appeared as Exhibit “C” to Mr. Probst’s Affidavit sworn November 5, 2019 as part of these motion proceedings. A full year passes between the date upon which the parties were questioned by one another’s lawyers and the date upon which Mr. Probst is finally able to produce the document that he alleges is definitive on the earliest possible date of cohabitation.

[8] As the nature of Ms. Shah’s motion and Mr. Probst’s eventual response thereto demonstrates, disclosure of relevant documentation by Mr. Probst has clearly been an on-going concern. Having regard to the resolution of this issue on consent at the hearing of these motions, set out in detail at the conclusion of this section below, Mr. Probst has conceded that the documentary disclosure requested is relevant to the matters in issue. It is therefore unnecessary for me to review the specific items sought by Ms. Shah other than to point out that the observable pattern of late or last-minute disclosure by Mr. Probst includes all items requested in Ms. Shah’s motion.

[9] Importantly, two more examples of this pattern came to light during the hearing of these motions themselves. On Friday, February 21, 2019, after the motion had been called by the Trial Coordinator for argument commencing Monday, February 24, 2019, Ms. McLeod received an email at 4:58 p.m. attaching a report by Mr. Brad Lund, Mr. Probst’s retained valuation expert, regarding Mr. Probst’s income for spousal support purposes. Needless to say, Ms. Shah was unable to address this report in advance of the hearing of the motion argument, and on February 24, 2019 I issued an endorsement declining to admit the report for use on the motion. Then, between the conclusion of argument on February 24th and its resumption on February 28th, Mr. Probst was suddenly able to produce a significant quantity of the disclosure sought relating to the three corporations from which his income is generated, and to agree upon a reasonable timeline for the production of the balance of the items. Almost none of this disclosure had been forthcoming before February 28, 2020.

[10] Without evaluating the entire history of the litigation in this matter, I have no difficulty concluding that Mr. Probst’s failure to make disclosure in a timely fashion was intended to prejudice Ms. Shah’s ability to address the substantive issues raised in this motion, and specifically spousal support.

[11] Regarding the disclosure sought at paragraphs 6 through 11 of Ms. Shah’s Amended Notice of Motion at Volume 4, Tab 1 of the Continuing Record, I confirm the following arrangements (made on consent of the parties):

6 (a): Financial Statement for 1879613 Ontario Inc. for the fiscal year ending September 30, 2018 has been provided, corresponding document for the fiscal year ending September 30, 2019 is available to be produced forthwith;

6 (b): Financial Statement for Safeguard Business Systems by Probst Corporation (German company) for the fiscal year 2018 to be produced by March 31, 2020, corresponding document for the fiscal year ending 2019 to be produced by May 31, 2020;

6 (c): Corporate Income Tax Return for 1879613 Ontario Inc. for 2018 to be produced by March 31, 2020, corresponding document for 2019 to be produced by May 31, 2020;

6 (d): German equivalent of Corporate Income Tax Returns for Safeguard Business Systems by Probst Corporation (German company) for 2016 and 2017 have been produced, corresponding document for 2018 to be produced by March 31, 2020, and for 2019 to be produced by May 31, 2020;

6 (e): General Ledger details for 2027417 Ontario Inc. for 2014 through 2018 are available to be produced forthwith, corresponding document for 2019 to be produced by May 31, 2020;

6 (f): General Ledger details for 1879613 Ontario Inc. for the fiscal year ending September 30, 2018 are available to be produced forthwith;

7 & 10: By way of letter between counsel dated November 29, 2019, Mr. Probst confirmed that he had authorized his accountant, Ms. Susan Tunstall, to provide information directly to Ms. Shah’s retained expert, Mr. Tim Rickert. At the hearing of argument, counsel provided a letter dated February 14, 2020 attaching an Authorization and Direction to allow Mr. Rickert and Mr. Lund (Mr. Probst’s retained expert) to discuss Mr. Lund’s income for support report;

8 & 9: At the hearing of argument, Mr. Bernard confirmed his client’s agreement to providing responses in writing to the refusals and to further questions arising therefrom, subject only to proper refusal on the ground of privilege; and

11: At the hearing of argument, Mr. Bernard advised that producing appraised values of Mr. Probst’s musical equipment was “not an issue” and could be forthcoming shortly.

[12] Regarding the disclosure sought in Mr. Probst’s Notice of Motion at Volume 3, Tab 1 of the Continuing Record, Mr. Bernard confirmed that all disclosure had been received or that his client had otherwise satisfied himself regarding all matters raised, with the sole exception being around the appraisal of Ms. Shah’s jewellery. In that regard, Mr. Bernard asked that Ms. Shah confirm in writing that she has no jewellery other than the items for which appraisals had been provided. Ms. McLeod indicated that this was the case (i.e. that Ms. Shah had no other jewellery).

[13] Thus, while the motion for disclosure was necessary, this Court’s actual decision regarding the issue is not, and part of the order will issue on consent on the terms set out at the conclusion of these reasons.

Imputation of Income

A. To Ms. Shah

[14] The analysis of income for spousal support purposes is akin to the approach taken to determine income for child support purposes in accordance with sections 15 through 19 of the Federal Child Support Guidelines. [3]

[15] Section 19(1) [4] provides the broad authority for the imputation of income, and subsection (a) addresses intentional underemployment specifically. The analysis takes two steps: (1) the individual must be intentionally underemployed; and (2) if so, the underemployment can be excused due to childcare obligations or to the individual’s educational or health needs. [5]

[16] Much was made by Mr. Probst of the circumstances of the conclusion of Ms. Shah’s last full-time employment with the Region of Waterloo where she had worked for sixteen years. Mr. Probst argues both that Ms. Shah was untruthful in her contention of on-going disability and that she was capable of working long days despite her disability. He takes the position that she continues to be intentionally underemployed without excuse and asks the court to impute an annual income of $50,000 to her.

[17] Ms. Shah’s last position at the Region of Waterloo was as Case Manager in the Social Services Department where she earned $53,392 annually. She had obtained her Social Service Worker diploma from Conestoga College during two leaves of absence granted by her employer for that purpose in 2006 and 2007. In 2010, she took a medical leave of absence and was on long term disability benefits until late 2012. At some point during that period, she successfully appealed an attempt by the insurer to deny coverage for her disability benefits. In November of 2013, the Region of Waterloo terminated Ms. Shah’s employment, providing her with a severance package inclusive of a payment net of statutory deductions in the amount of $15,687.63. These facts demonstrate not only that Ms. Shah initially qualified for disability benefits through her employer, but also that she defended an attempt to claw-back such benefits and, when the employer decided to fill her vacant position, it acknowledged that it did not have cause for dismissal without severance.

[18] In November of 2012, the parties purchased Countryside Retirement Residence through a numbered company. The parties were vacationing in South Africa during the first month following the purchase of the business. Upon their return, the then-existing staff remained in place and the parties began the steep learning curve leading to their eventual operation of the business. By the end of 2013, Ms. Shah deposed that she was working 12 to 14 hours per day, and Mr. Probst deposed that he slept at the retirement residence and managed the night shift staff on-site. The business was never actually profitable, and by 2014 or 2015 the parties decided to put it up for sale. They appear to have continued to divide the operations duties between them until the business sold in September of 2017.

[19] Voluminous medical records have been produced by Ms. Shah in the course of this litigation to date, and in the context of this motion specifically. Her condition has been documented since early 2010, and on August 20, 2012, one Dr. Chaimowitz prepared an independent medical examination report at the request of the insurer, Sun Life Financial. The report is dated August 31, 2012. In it, Dr. Chaimowitz writes:

a. In my opinion her subjective complaints correlate well with my objective observations of Ms. Shah during the examination. There did not appear to be any inconsistency between her subjective complaints and my observations objectively.

b. Based on her mental status examination and diagnosis, this is an individual who cannot engage in any occupation where she needs to deal with members of the public. She would have difficulty doing a social work type assessment and exercising higher cognitive function.

c. In my opinion she cannot at this point in time return to her current position.

d. Starting a return to work program would at this point in time likely exacerbate her current symptoms.

[20] In August of 2017, Ms. Shah was referred to Dr. Mulder, psychiatrist “for psychiatric consultation regarding treatment resistant depression.” Ms. Shah had been a candidate for transcranial magnetic stimulation, but her eligibility ended when an MRI scan revealed a hemangioma and possible colloid cyst in her brain. By way of letter dated May 17, 2018, her treating psychiatrist set out her diagnosis as follows:

Ms. Shah’s diagnosis is bipolar disorder, type II, depressed phase. She also suffers from an anxiety disorder. She currently has been experiencing severe anxiety in addition to the moderate symptoms of depression. She indicates having low energy, low interest and low levels of motivation. She also reports insomnia. She indicates that her concentration has been poor due to her high level of anxiety. She denies any suicidal thoughts or thoughts of harm towards others.

[21] This condition continues to date. In July of 2019, Ms. Shah’s family doctor confirmed the on-going nature of her situation, writing: “Please note above patient is unable to work at this time indefinitely. Patient is suffering from major depression and anxiety. Patient is currently under the care of a psychiatrist.” The court was advised that Ms. Shah was unable to attend the argument dates for this motion as a result of treatment appointments for her medical condition.

[22] As compared with late 2013 when Ms. Shah was ill but working long hours, she is currently ill and not working. She is therefore arguably choosing not to work and thus is intentionally underemployed, but I find that her unemployment is excused by her medical diagnosis. From the vantage point of this court, Ms. Shah’s lengthy medical history does not detract from her position that she cannot work. Instead, it supports the conclusion that she very much wants to work and has made efforts to do so which, due to the nature of her condition, may well have delayed her healing progress. Back in April of 2010, Ms. Shah’s family physician noted that she was “fully co-operative” with her treatment plan and that she “wants to be treated and return to full-time work.” There is no evidence before me suggesting that this does not continue to be the case and that Ms. Shah is malingering in her presentation of illness. Again, I would emphasize that the trial judge ultimately disposing of this issue will have the benefit of a complete evidentiary record inclusive of the ability to evaluate credibility.

[23] A final point regarding Ms. Shah’s income was raised by Mr. Probst, namely that the funds being provided to her by her brother, Dr. Mohamed Shah, or Mr. Fabrizio Prevdel [6] should be interpreted by this court as income. Ms. Shah receives approximately $2,800 monthly from her brother. She has further received a total of $52,126.41 from Mr. Prevdel, inclusive of a payment of $1,000 monthly, which she says is a debt to be repaid to him. No loan documentation has been provided. The leading case on the characterization of repetitive gifts is Bak v. Dobell [7], in which the Court of Appeal provided the following guidance on the issue:

[74] Although it seems the legislature intentionally did not include the receipt of gifts given in the normal course in presumptive income, or as an example of an appropriate circumstance under s. 19(1), a court will consider whether the circumstances surrounding the particular gift are so unusual that they constitute an "appropriate circumstance" in which to impute income.

[75] In considering whether it is appropriate to include the receipt of unusual gifts in income, a court will consider a number of factors. Those factors will include the regularity of the gifts; the duration of their receipt; whether the gifts were part of the family's income during cohabitation that entrenched a particular lifestyle; the circumstances of the gifts that earmark them as exceptional; whether the gifts do more than provide a basic standard of living; the income generated by the gifts in proportion to the payor's entire income; whether they are paid to support an adult child through a crisis or period of disability; whether the gifts are likely to continue; and the true purpose and nature of the gifts.

[24] In Bak v. Dobell, monthly payments were received by the husband from his father. The payments were consistent, increased over time, and had been in place for almost five years prior to trial. The trial judge declined to characterize such payments as imputed income, despite the clear intentions of the party’s father to contribute consistently to the husband’s living expenses by providing such regular payments. Mr. Probst cited the more recent case of Horowitz v. Nightingale [8], in which the court included gift payments received by a party in that party’s income where they consistently amounted to $50,000 annually for at least eight years prior to trial, including several years before separation, and where the funds were used to support the family as a whole.

[25] Without reviewing each of the guiding principles set out in Bak v. Dobell, I find that this case is distinguishable from Horowitz v. Nightingale. The payments advanced by Dr. Shah and Mr. Prevdel arose as a result of Ms. Shah’s inability to support herself post-separation. Therefore: (1) such payments did not support the household’s lifestyle prior to separation; (2) they cannot be expected to continue once the financial issues in this litigation are resolved; and (3) they are for the limited purpose of assisting Ms. Shah through this period of financial instability. For the purposes of this motion, I decline to include the amounts received by Ms. Shah from Dr. Shah and Mr. Prevdel as income.

[26] Based on all of the foregoing, I decline to impute income to Ms. Shah.

B. To Mr. Probst

[27] The starting point of the analysis regarding Mr. Probst’s income for support purposes is his $60,000 annual draw as described in his Financial Statement and throughout his evidence.

[28] The evidence is undisputed that Ms. Shah was paid $2,000 monthly by “Safeguard” (being Safeguard by Probst) until the final payment in February of 2018. Ms. Shah was taxed on these funds, and the Record of Employment issued to her on April 18, 2018 is found in the Continuing Record. Despite the contention in Mr. Probst’s Affidavit, this money could not have been sourced from any work done by Ms. Shah associated with the retirement home, as that business had been sold in September of 2017. There is no evidence to suggest that Ms. Shah earned this amount doing work connected with Mr. Probst’s businesses such that Mr. Probst has had to hire someone to replace her. In his Questioning, Mr. Probst connected the $2,000 monthly with income splitting, calling it “support.” Thus, I conclude that the $24,000 per year which was historically paid to Ms. Shah remains available to Mr. Probst, and thus is added to his income in before-tax dollars.

[29] Sections 19(1)(f) and (g) apply next. Particulars of the ongoing struggle to obtain proper financial disclosure from Mr. Probst regarding his various corporate holdings and sources of income are addressed above. Suffice it to say that this court has no difficulty concluding that he has “failed to provide income information when under a legal obligation to do so.” Proper disclosure includes a detailed explanation of expenses and their calculation – as Chappel, J. wrote in Monahan-Joudrey v. Joudrey [9], a case interpreting section 19(1)(g) in the child support context:

A party who seeks to deduct business expenses from their income for child support purposes has an obligation to explain the reasons for the expenses and how they were calculated, and must provide documentary proof of the expenses in an organized manner so that the court can make a proper determination as to the reasonableness of the expense from the standpoint of the child support calculation. It is not appropriate for a party to request a judicial determination of their income, fail to provide the information for the judge to do so, and then simply as the court to “take their word for it” or to “take a wild guess” based on minimal information and hope for the best. That is exactly what the Applicant has asked that I do in this case. If a party seeking to deduct business expenses from income fails to provide meaningful supporting documentation or other evidence in respect of those expenses, an adverse inference may be drawn by the court in making the income determination. I have drawn such an adverse inference in this case in reaching my determination regarding the Applicant’s income.

[30] Mr. Probst filed two Affidavits in response to Ms. Shah’s motion and in support of his cross-motion to fix spousal support at the rate of $360 monthly. On the question of expenses unreasonably deducted from income, the following is the evidence that Mr. Probst chose to place before the court:

a. From the Affidavit sworn November 5, 2019:

Write Offs

53. With respect to paragraph 129 of the Respondent’s affidavit, my business write-offs are for business purposes. I am required to have a business mobile telephone and there is no additional cost to use same on a personal basis. All driving expenses for business use are strictly for driving – I have a separate business vehicle for that purpose. I eat meals outside the home occasionally; however those are for business meetings with clients etc.

54. Since my last financial statement I have reviewed my budget and expenses, saving money where I can in order to support myself, though the amount of the expenses is approximately the same. That situation is outlined in my financial statement filed concurrently herewith.

b. From the Affidavit sworn December 18, 2019:

25. With respect to the amortization costs claimed by my corporation 2027417 Ontario Inc. o/a Safeguard Business Systems by Probst (“Safeguard by Probst”), the amortization costs were disclosed to the Respondent in or about September of 2018. I attended for Questioning after that event and was not questioned concerning those amortization costs. In this respect, I have to consult with my accountant whom, as outlined in the above-noted letter/authorization [dated November 29, 2019], I have allowed the Respondent’s expert to consult and/or ask precisely these types of questions.

26. With respect to my travel for business purposes: (a) Much of the business for Safeguard is done over computer and the phone. I have employees who operate the phones and enter orders into the computer. This allows me to go out, meet with customers, and generate new sales and leads. Without this, the business would decline. I am thus required to claim fuel and vehicle expenses, which are reflected in the corporate financial statements; (b) I have clients in Belleville and Windsor and will often drive up to four (4) hours to meet with the client. I have even driven up to six (6) hours to meet with a client in Montreal. Attending personally and having a personal relationship with my clients is critical to ensuring that my clients trust Safeguard and the products and services it delivers. While I do not have to do this for every single transaction/interaction, it is nonetheless very important that it be done.

27. The bulk of my personal travel is from my home to the grocery store and the laundromat in Elmira given that the Respondent will not permit me to use the washing machine and dryer in my own home.

28. The capital cost allowance is included in the amortization schedule and it is not included in the vehicle/travel expenses. With respect to meals and entertainment expenses that are deducted corporately, 100% of same are for business purposes, although I am only permitted to claim fifty percent (50%) thereof. With respect to this expense, same should be asked of my accountant. The Respondent could have asked these questions of me at Questioning but did not.

29. With respect to interest expenses claimed, same should be asked of my accountant. The Respondent could have asked these questions of me at Questioning but did not.

30. The portion of property taxes claimed by the business is based upon the square footage that it occupies in the home and includes mortgage interests, house insurance, property taxes and utilities.

[31] Mr. Probst argued that specific questions regarding expenses deducted from his income should have been put to him in Questioning, and that the alleged failure to do so offends the evidentiary rule in Browne v. Dunn [10]. This is not correct. There is simply no question that it is Mr. Probst’s positive obligation to make disclosure and to set out his case plainly with respect to the expenses he says are reasonably deducted from his income for support purposes. It is not Ms. Shah’s job to ferret out the details of what expenses may possibly be acceptable to a court in determining Mr. Probst’s income and make suggestions to him in Questioning – that would be asking her to make his case for him.

[32] Mr. Probst has provided effectively no assistance to the court in analysing what portion of the expenses deducted from his income are “unreasonable” for support purposes. Having regard to the paucity of evidence from Mr. Probst, I draw an adverse inference and accept the proposals for the inclusion of such expenses in his income suggested by Ms. Shah in her Factum at paragraph 59, with two adjustments:

a. I have not grossed up the $24,000 previously paid to Ms. Shah, as she had been taxed on that amount; and

b. I have not included any amount on account of the funds flowing through Mr. Probst’s corporation 1879613 Ontario Inc. described as “cost of sales” on the financial statements produced to date for 2027417 Ontario Inc. as the exact nature of these funds is unclear on the evidence.

[33] I make one final point regarding the funds available to Mr. Probst with which to pay spousal support. Mr. Probst is the sole shareholder of 2027417 Ontario Inc. The Financial Statement for that corporation for the fiscal year ending May 31, 2018 shows an amount of $137,803 as “loan due to shareholder” and an amount of $179,934 as “retained earnings.” Section 18 of the Federal Child Support Guidelines provides the court with the authority to find that retained earnings may be money that a shareholder can choose to withdraw as income, particularly where a business’ viability cannot be said to turn on the availability of a financial cushion for ongoing operations. [11] I would note here that the evidence is clear that Mr. Probst’s businesses do not obligate him to maintain any inventory or, other than his vehicle and home office expenses, to save funds for repairs and replacement of equipment. Ms. McLeod for Ms. Shah made a point of advising the court that her client is not seeking to impute income from dividends that could otherwise be payable to Mr. Probst from the retained earnings of the corporation. This was a significant concession, even in seeking without prejudice interim relief, and similarly it could have been open to Ms. McLeod to argue that Mr. Probst’s draw could be tax-free if it were to be characterized as the repayment of the loan due to shareholder. I did not include any adjustment to Mr. Probst’s income for either of these concepts at this stage, but I note that both will likely be up for further discussion and argument as this litigation progresses.

[34] Based on all of the foregoing and having regard to the calculations generated by the DivorceMATE Tools One calculation attached as Appendix “B” hereto, I find that Mr. Probst’ annualized income for support purposes is $217,326 on a without prejudice basis.

Spousal Support

[35] As indicated by the Notices of Motion, both parties seek a Temporary Order regarding the payment of periodic spousal support by Mr. Probst to Ms. Shah. The question before the Court is therefore the amount of spousal support payable on an interim, without prejudice basis. Using the following parameters, the SSAG calculation, attached as Appendix “B” hereto, show a range of spousal support of between $2,581 and $3,441 payable monthly:

(a) cohabitation of 9.5 years in duration;

(b) Ms. Shah being 53 years of age on the date of separation;

(c) Ms. Shah’s imputed annual income being $NIL; and

(d) Mr. Probst’s imputed annual income being $217,326.

[36] I find that the mid-point of the range is appropriate for this situation at this time, and therefore Mr. Probst will pay spousal support to Ms. Shah at the rate of $3,011 monthly commencing March 1, 2020 and on the first day of each month thereafter.

[37] Having regard to the fact that this is a motion for spousal support on an interim, without prejudice basis, there is no need to review the quantum of support that should have been paid to date, as that exercise is more properly done at trial. Should there be a prospect of settlement of support for the period from the date of separation, some of that support will be non-taxable. Therefore, for the sake of convenience, I set out the following:

a. The after-tax value of $3,011 monthly in Ms. Shah’s hands is $2,592 monthly.

b. The after-tax cost of $3,011 monthly to Mr. Probst is $2,092 monthly.

c. The mathematical mid-point between these two amounts is $2,342 monthly.

[38] For the same reason, namely that spousal support owed for the period from February 1, 2018 forward will be analysed in greater detail at trial, I decline to reduce the monthly amount to account for amounts paid by Mr. Probst regarding any expenses associated with the matrimonial home during this period. Simply stated, Mr. Probst has paid many of these expenses through his corporation, and therefore it could be double-counting to reduce spousal support to account for these expenses when their full amount has not been added back to Mr. Probst’s income for support purposes. Again, should the parties wish to conduct a complete analysis of the exact mathematics on this point, they are free to do so in the context of settlement discussions or at trial.

Advance for Interim Disbursements

[39] The authority to award an advance for interim fees and disbursements is found in Rule 24(12) of the Family Law Rules, which reads:

The court may make an order that a party pay an amount of money to another party to cover part or all of the expenses of carrying on the case, including a lawyer’s fees.

[40] Viewed in the context of Rules 2(2), 2(3) and 2(4) of the Family Law Rules, the court has a positive obligation to ensure procedural fairness, particularly where one party may be disadvantaged by impecuniosity in attempting to analyse complex financial issues. Both parties should be able to tackle complex valuation issues equally, and both should be mindful of a potential costs award against them. In Stuart v. Stuart [12], Rogers J. set out the themes that have arisen in the caselaw to date and compared them against the primary objective of the Family Law Rules. The court’s conclusions are summarized below, and I have applied each directive to the facts of this case:

a. The court’s discretion in advancing costs to one party should be exercised to ensure all parties can equally provide or test disclosure, make or consider offers or possibly go to trial. The case need not be “exceptional” to qualify for relief.

As noted elsewhere in these reasons, the flow of funds through different corporations caused a measure of confusion even to experienced counsel and to the court. Ms. Shah has no sophisticated financial knowledge or training whatsoever. In his Affidavits, Mr. Probst deferred to his accountant for answers to questions raised by this motion and in Questioning. There can be no doubt that expert assistance is needed to ensure informed consent to a settlement proposal or the clear presentation of evidence at trial.

b. An advance of costs should not be such that a party feels a license to litigate.

The amount sought by way of an advance, namely $75,000, seems excessive having regard to the facts as presented. Certainly, Ms. Shah requires sufficient funds to allow Mr. Rickert to complete his work and to ensure that he and Ms. Shah’s counsel are able to work collaboratively together to present Ms. Shah’s case. Whilst one can appreciate Ms. Shah’s desire to reimburse Mr. Prevedel as soon as possible, the court notes that there is equity in the parties’ matrimonial home that has yet to be realized and should be available for that purpose.

c. The disbursements are necessary and reasonable.

As noted above, there is no doubt that at least one expert’s evidence is necessary to parse the financial situation. It is important to recall that Mr. Probst has had ample time in which to have his expert produce opinion reports. Indeed, during argument it became clear that such opinion reports had been expected by the end of December. Candidly, had the expert’s opinion on Mr. Probst’s income for spousal support purposes been made available to Ms. Shah’s counsel in December, this spousal support motion may well have been resolved without argument.

Thus far, Mr. Prevedel has loaned Ms. Shah $37,626.41 to cover legal fees plus a deposit of $6,500 for the services of Mr. Timothy Rickert of BDO as valuation expert. In his email dated December 24, 2018, Mr. Rickert provided an estimate of $10,000 - $15,000 as his fee to produce valuation reports of the two main corporations at play in this litigation, namely 20207417 Ontario Inc. and 1879613 Ontario Inc., and to determine Mr. Probst’s 2018 income for spousal support purposes. It is unclear whether this estimate includes the $6,500 already provided, but even if it does, such a range is not unexpected for cases of this nature.

d. The claimant must demonstrate that he or she is incapable of funding the requested amounts.

Ms. Shah is not “refusing to work” as argued by Mr. Probst. She has minimal liquid assets to draw upon to support herself, let alone to fund this litigation which has been protracted by Mr. Probst’s failure to make full and frank disclosure. The analysis must encompass more than a stringent budgeting exercise; in determining ability to fund matrimonial litigation, a comparative analysis should be undertaken if the goal is to level the procedural playing field. Mr. Probst has access to resources in the form of retained earnings in his corporation that he can draw out tax-free as repayment of loans due to him as shareholder. Ms. Shah has nothing comparable. I find that she is disproportionately burdened by the cost of hiring the expert she needs to address this litigation and, therefore, compared to Mr. Probst, she has a much lower ability to fund the requested amount.

e. The claim being advanced is meritorious.

Few would argue that an accurate determination of a business’ value or the income it produces is without merit. Both parties agree that spousal support is a live issue. Both parties agree that some form of net family property calculation must be undertaken. The claims for which Ms. Shah requires financial assistance is meritorious.

f. The advance need not be only against equalization.

As Rogers, J. hypothesized: “It may be that a party with a minimal income stream and no liquid assets needs disbursements to test evidence that might lead to him or her resisting an equalization order.” Such is effectively the case at bar.

[41] Ms. Shah has clear and reasonable claims for both spousal support and equalization. Because of the complexity of Mr. Probst’s assets, she cannot proceed without her own expert, even if he is only retained to analyse and critique the opinions of Mr. Probst’s expert. Having regard to the overall complexity of the financial issues and her own health challenges, it would be unjust for her to be compelled to continue without legal representation. While it seems to me that the amount sought, namely $75,000, could be seen as a prohibited “license to litigate,” there is no doubt that a considerable amount should be provided. In Stuart, Rogers, J. ordered an advance to be considered a loan from one party to the other, with the details regarding such loan to be addressed in the global resolution. A similar result will apply here. Mr. Probst shall advance the sum of $40,000 to Ms. Shah by May 1, 2020. That amount shall be reconciled against future costs awards, any equalization payment otherwise owing to Ms. Shah by Mr. Probst, the after-tax benefit of arrears of spousal support or any combination of these options on such exact terms as are agreed upon between the parties or ordered by the trial judge.

Temporary Order

[42] Based on all of the foregoing, the following Temporary Order shall issue:

1. On a without prejudice basis, the Applicant, Peter Michael Probst, shall pay support to the Respondent, Tasmeen Shah, at the rate of $3,011 monthly commencing March 1, 2020 and on the first day of each month thereafter.

2. The Applicant, Peter Michael Probst, shall advance to the Respondent, Tasmeen Shah, the sum of $40,000 toward interim fees and disbursements by May 1, 2020 via the parties’ respective solicitors. This amount shall be reconciled against future costs awards, any equalization payment otherwise owing to Ms. Shah by Mr. Probst, the after-tax benefit of arrears of spousal support or any combination of these options on such exact terms as are agreed upon between the parties or ordered by the trial judge. No interest shall be payable upon this amount unless otherwise agreed between the parties or ordered by the trial judge.

3. The Applicant, Peter Michael Probst, shall produce the Financial Statement for 1879613 Ontario Inc. for the fiscal year ending September 30, 2019 by March 31, 2020.

4. The Applicant, Peter Michael Probst, shall produce the Financial Statement for Safeguard Business Systems by Probst Corporation (German company) for the fiscal year 2018 by March 31, 2020, and the corresponding document for the fiscal year ending 2019 by May 31, 2020.

5. The Applicant, Peter Michael Probst, shall produce the Corporate Income Tax Return for 1879613 Ontario Inc. for 2018 by March 31, 2020, and the corresponding document for 2019 by May 31, 2020.

6. The Applicant, Peter Michael Probst, shall produce the German equivalent of Corporate Income Tax Returns for Safeguard Business Systems by Probst Corporation (German company) for 2018 by March 31, 2020 and for 2019 by May 31, 2020.

7. The Applicant, Peter Michael Probst, shall produce the General Ledger details for 2027417 Ontario Inc. for 2014 through 2018 by March 31, 2020 and the corresponding document(s) for 2019 by May 31, 2020.

8. The Applicant, Peter Michael Probst, shall produce the General Ledger details for 1879613 Ontario Inc. for the fiscal year ending September 30, 2018 by March 31, 2020.

9. The Applicant, Peter Michael Probst, shall provide responses in writing to the refusals given at his Questioning to date by March 31, 2020 and shall answer further questions arising therefrom, subject only to proper refusal on the ground of privilege, within ten (10) days of a written request for such responses.

10. The Applicant, Peter Michael Probst, shall produce appraised values of his musical equipment by March 31, 2020.

Costs

[43] If the parties are unable to agree upon costs, they shall serve and file written submissions not later than April 3, 2020. Such submissions will not exceed five pages in length, excluding attachments (Bills of Costs; authorities; etc.).

J. Breithaupt Smith J

Date: March 11, 2020

Appendix “A”

Federal Child Support Guidelines

SOR/97-175

19 (1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following:

(a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse;

(b) the spouse is exempt from paying federal or provincial income tax;

(c) the spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;

(d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines;

(e) the spouse’s property is not reasonably utilized to generate income;

(f) the spouse has failed to provide income information when under a legal obligation to do so;

(g) the spouse unreasonably deducts expenses from income;

(h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and

(i) the spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.

(2) For the purpose of paragraph (1)(g), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act.

[1] Galea v. Galea, 2017 ONSC 6335 at paragraphs 28 and 32. [2] Page 3 lines 29 and 30 of the transcript of proceedings found at Volume 2, Tab 4, Exhibit “E” (page 65 of the tab). [3] Galea v. Galea, 2017 ONSC 6335 at paragraphs 30 and 31. [4] See Appendix “A” hereto for legislative text. [5] Lavie v. Lavie, 2018 ONCA 10. [6] Mr. Probst says that Mr. Prevdel is Ms. Shah’s partner. Ms. Shah says that he is just a friend of hers. There is no question that Ms. Shah and Mr. Prevdel do not reside together. For the purposes of this motion, nothing turns on the nature of the relationship between Ms. Shah and Mr. Prevdel. [7] Bak v. Dobell, 2007 ONCA 304, 86 OR (3d) 196 at paragraphs 74 and 75. [8] Horowitz v. Nightingale, 2015 ONSC 190 at paragraph 23. [9] Monahan-Joudrey v. Joudrey, 2012 ONSC 5984 at paragraph 34. [10] Browne v. Dunn (1893), 6 R. 67, H.L. [11] Halliwell v. Halliwell, 2017 ONCA 349 Paragraphs 44 – 46. [12] Stuart v. Stuart, [2001] O.J. No. 5172 at paragraph 8.