NEWMARKET COURT FILE NO.: FC-14-45935-00

DATE: 20200610 CORRECTED DATE: 20201113

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Kamelia Iacobelli

Applicant

– and –

Mario Iacobelli

Respondent

Michael J. Stangarone and Stephen Kirby, for the Applicant

Frank Mendicino, for the Respondent

HEARD: November 29, December 2, 3, 4, 5 and 12, 2019

Corrected Ruling: The text of the original Decision was corrected on November 13, 2020 and the description of the correction is appended.

REASONS FOR DECISION

McDermot J.

INTRODUCTION

1Mario Iacobelli, the Respondent Husband in this proceeding, told the court at this trial that he has had a difficult five years since he separated from his wife. At one point, he testified that he had lost his health, suffered through the death of his sister, lost his home and family and lost his children. He said that, on some mornings, he is amazed by the fact that he gets himself out of bed to go to work.

2For much of this, he blames his wife, the Applicant, Kamelia Iacobelli. He says that his three younger children were coached to detest him by the oldest child, Alexandra, who is now 20 years of age. He says that, in order to have him removed from the home, his wife fabricated allegations of sexual abuse against him brought by the parties’ youngest daughter, Julianna, which ended this 19 year marriage abruptly in May of 2014. It is important to him that no charges were ever laid and the local Children’s Aid Society failed to verify those allegations. He also asserts that he has laboured under an unfair temporary support order made by Nicholson J. on August 13, 2014 which he says he cannot possibly afford at the income that he earns; he suggests that this unfair award, and not his own behaviour, is the major reason why he has defaulted in the payment of the amounts owing under this order on at least five different occasions. Mr. Iacobelli says that his inability to pay was exacerbated by the death of his sister in the same year that his marriage ended and that he had suffered from a cancer in his muscles resulting in surgery and partial disability in his left arm which also impaired his ability to earn an income. He says that his wife should immediately become self-sufficient, and that the home should be sold so that he can realize his equity in the home and recover funds owed to him resulting from the marriage breakdown.

3Not unsurprisingly, Ms. Iacobelli’s narrative differs from her husband’s. The parties were married on July 22, 1995 and Ms. Iacobelli says that the marriage quickly became abusive and that she had to cope with this throughout. She says that the stress of living with her angry and abusive husband resulted in alopecia, and that she has needed a wig in order to deal with hair loss since about 2004. She notes that this was a traditional marriage and that she stayed home to assist with the children and she is unable to obtain employment today. She also notes the 2014 disclosure of sexual interference made by Julianna, now aged 17, was made to a teacher, and that both the police and the C.A.S. workers believed Julianna’s disclosures. She suggests that she and the children have suffered under a campaign brought on by Mr. Iacobelli to harass and hurt them financially; if he cannot have his family on his terms, he will make them all pay.

4These parties had a 19-year marriage. There are four children, Alexandra (who is 20), Joseph (18), Julianna (17) and Michael (12). The marriage broke down when Julianna complained to her teacher about being sexually touched by Mr. Iacobelli in May, 2014; at that time, Ms. Iacobelli and the children moved out of the matrimonial home and moved in with her parents. It took them until August to return home after Ms. Iacobelli brought a motion; at that time Mr. Iacobelli finally agreed to move out.

5The children have refused to have anything to do with Mr. Iacobelli since then. As noted, the parties blame each other for this.

6Ms. Iacobelli commenced these proceedings soon after separation, on June 3, 2014. The children’s issues were settled by final order on November 17, 2017 wherein Mr. Iacobelli gave up his custody and access rights to the children, retaining only the right to continue his claim for reconciliation counselling with the youngest child, Michael. He agreed to pay costs of the custody and access issues; those costs have yet to be assessed. The remaining issues are financial in nature.

7The first major issue in this trial was to set the amount of income available to Mr. Iacobelli to pay support for both Ms. Iacobelli and the children. All of this arises from the fact that Mr. Iacobelli is a partner (with his mother) in a partnership called Creative Quilting & Window Designs. Mr. Iacobelli acknowledges that he had undeclared cash income from that business during marriage; he says that has stopped and his income is now in the range of $50,000 per annum. Ms. Iacobelli says that Mr. Iacobelli has significantly understated his income throughout and that his income is significantly higher than as declared. Both parties have filed competing income reports and there was expert evidence at trial from both Chartered Business Valuators (CBVs) whose reports were filed.

8The second issue was the equalization of assets. The major equalization issues concerned both the value of assets (Mr. Iacobelli’s business) on the date of marriage, and on the date of separation. The major controversy on the date of marriage property value involved the timing of a draw taken by Mr. Iacobelli from the business: was it taken before or after the date of marriage? The answer to that question may lessen the value of Mr. Iacobelli’s business on the date of marriage.

9The date of separation values are also affected by significant payments of funds by Mr. Iacobelli to his mother in the two years prior to separation: during this time, he paid off a $200,000 mortgage given to his mother when the parties purchased the matrimonial home in 1995 as well as a further distribution of $149,000 to his mother which he testified was to repay cash payments received by him from the business in the amount of $114,000 in the previous six years that he owed her. After these payments, Annunziata Iacobelli, Mr. Iacobelli’s mother, paid $350,000 towards the purchase of a $700,000 home which was placed in the name of Mr. Iacobelli’s dying sister; that home eventually ended up in Annunziata’s name. Ms. Iacobelli maintains that the totality of the transactions removed that amount of $350,000 from the assets available for equalization, and that they were intended to reduce Mr. Iacobelli’s liabilities arising from the breakdown of the marriage and to put these cash assets out of reach of the Applicant for equalization or support purposes.

10Finally, the Applicant has raised the issue of whether the matrimonial home should be vested in her name, partly to pay lump sum spousal support in place of a periodic award.

11This latter claim arises, at least in part, from Mr. Iacobelli’s failure to honour the support obligation imposed on Mr. Iacobelli by Nicholson J. on August 13, 2014 after argument on a motion brought by Ms. Iacobelli. That order states that the award is intended to “preserve the financial status quo” and provided that Mr. Iacobelli was to pay, commencing August 1, 2014:

a. $2,000 per month (uncharacterized) directly to the Applicant;

b. Approximately $475 per month on account of the Applicant’s vehicle costs including insurance, license and gas;

c. All of the carrying costs of the matrimonial home in an approximate amount of $1,100 per month; and

d. $1,500 per month for the children’s activities.

12There have been numerous defaults under this order which have thrown Ms. Iacobelli and the children into financial crises from time to time. Included were incidents where Mr. Iacobelli failed to pay the hydro, resulting in a power shutoff and the spoilage of food. That occurred when the children were in the home alone when Ms. Iacobelli was on a holiday. On another occasion, Mr. Iacobelli failed to pay the full amounts payable under para. a above, again when Ms. Iacobelli was on a holiday to Florida. As well, close to the date of trial, Mr. Iacobelli failed to pay the taxes on the home, resulting in a near municipal tax sale. The repeating pattern is a default under the order, a resultant crisis, a motion to strike pleadings, and then Mr. Iacobelli bringing the defaulted payment into good standing on the eve of the motion along with the costs of the motion. These incidents cause slow torture to Ms. Iacobelli and the children who continue to be financially dependent upon Mr. Iacobelli, and who have suffered extreme financial insecurity since this proceeding began.

13Mr. Iacobelli blames the order for these defaults. He says that he has had to borrow from family and friends to keep the order in good standing and that the bank will not provide any credit to him. He says that if the order had been in a reasonable amount, he would have paid the support ordered without question. He expects this court make such an order, which would result in no further defaults.

14Not so, says Ms. Iacobelli. She asserts that Mr. Iacobelli has defaulted in the order because of malice, and not because he cannot afford the support. She says that a lump sum award is necessary because Mr. Iacobelli does not respect court orders and because he will never voluntarily pay spousal support. She asks for an order vesting the matrimonial home into her name to satisfy her claim for spousal support.

ISSUES

15Therefore, the issues to be considered in this matter are as follows:

a. What is Mr. Iacobelli’s income for child and spousal support purposes?

b. What child support is payable (including payments towards s. 7 expenses)?

c. What equalization payment is owing by Mr. Iacobelli? To determine this amount requires the court to decide on the following:

i. What is the date of marriage value of Mr. Iacobelli’s partnership interest in Creative Quilting?

ii. Did Mr. Iacobelli make a fraudulent conveyance of funds to his mother by payments of $149,000 to her from the joint account (through payment of the business Visa from the parties personal funds while paying the same amounts out of the business to his mother)?

iii. Was Mr. Iacobelli obliged to repay the mortgage registered against the matrimonial home in favour of his mother?

d. What spousal support is payable by Mr. Iacobelli?

e. What, if any, retroactive child and spousal support is payable including Mr. Iacobelli’s share of the children’s s. 7 expenses?

f. Should the matrimonial home be vested into the name of Ms. Iacobelli in partial satisfaction of the spousal support and equalization payment owing by the Respondent?

Result

16For the reasons set out below, I have answered those questions as follows:

a. The Applicant’s income was imputed at minimum wage, and the Respondent’s income was imputed in the amount of $142,000 per annum;

b. The Respondent is to pay child support to the Applicant in the amount of $3,066 per month.

c. The Respondent to pay 74.6% of the children’s s. 7 expenses including competitive dance, Kumon, swimming, tutoring and post-secondary expenses not covered by RESP payments and the children’s reasonable contributions through OSAP or summer employment.

d. The Respondent shall pay lump sum spousal support in the amount of $335,465.

e. The Respondent to pay an equalization payment of $342,070.

f. The Respondent’s equity in the matrimonial home to be vested in the Applicant to satisfy the equalization payment firstly and lump sum support secondly.

g. The amount outstanding for lump sum spousal support to be paid within 30 days, failing which it may be enforced by the Director FRO as a support obligation.

h. SDO to issue.

A NOTE ON WITNESS CREDIBILITY

17This case was largely an income case. As can be seen by the issue list and the background to this matter, Mr. Iacobelli’s cash and real income was a major issue to be determined for support purposes. As well, payments by Mr. Iacobelli to his mother loomed large throughout this trial, as well as the reasons for his numerous defaults under the order.

18Mr. Iacobelli’s evidence as to all of these issues was therefore crucial. It was his case to make, largely because evidence as to his income, the cash transfers, the reasons for the numerous defaults under the order and the situation concerning his business was in his hands alone. Ms. Iacobelli had no way to determine her husband’s income or his assets because she was not privy to that information other than through the pre-trial questioning, disclosure or evidence given by Mr. Iacobelli at trial. Therefore, Mr. Iacobelli’s evidence was crucial in the determination by the court as to all of the financial issues which were before the court.

19Unfortunately, there were serious problems with Mr. Iacobelli’s credibility. He provided evidence inconsistent with previous sworn testimony, including as to whether he made cash income in 2014, stating at one point he did not, but at another point saying he did. He could not explain the repayment of funds to his mother or reconcile his version of how much cash income he said he made with the amount paid to his mother. He could not adequately explain his poor conduct, including defaults in payment of support resulting in financial hardship to his wife and children. He said that he had kept records regarding cash income but that they were lost; he never produced his cash income records. He acknowledged having received cash income, but said that it stopped immediately upon separation. In short, Mr. Iacobelli’s evidence on his income and conduct was inconsistent and unreliable and was therefore not credible.

20As well, his conduct in this litigation was extremely concerning. There were numerous defaults in his support obligations under the Nicholson J. order, resulting in continuous motions to strike pleadings as a result. Whenever those motions were brought, his pattern was to repay the arrears on the eve of the motion, sometimes on the day of, and then pay the costs of the motion thrown away. He always had an excuse when there was a default, but after four or five defaults, those excuses wear thin. He never proved exactly how he was able to pay the arrears and the costs whenever he brought the order into good standing: he would state that he found a new source of funding but failed to disclose what those sources were. At the time of the interim order, he was living at his mother’s home, and the support award was intended by Nicholson J. to reflect the expenses that he was paying for this family during the marriage; yet he continually stated that he was unable to pay that support. At one point the power was shut off because he failed to keep the hydro bill in good standing; on another occasion, the house came close to being sold for taxes. He arbitrarily, without adequate explanation, removed educational funds from the parties’ RESP leaving the parties’ oldest daughter without funds to pay her tuition. When the marriage broke down, he refused to move out of the home leaving Ms. Iacobelli and the children crowded into her parents’ home for the last months of the 2014 school year. The only conclusion appears to be that this was most probably malicious, intentional or uncaring treatment of his wife and children who were financially dependent upon him, and would accordingly suffer severe anxiety as a result of his actions.

21Mr. Iacobelli called his mother, Annunziata Iacobelli, to corroborate his evidence concerning the financial transactions which concerned significant transfers of funds to her. Her evidence was similar, if not identical to that of Mr. Iacobelli.

22I had concerns about the veracity of Annunziata’s testimony. She was brought to Mr. Mendicino’s office by Mr. Iacobelli during trial and he sat in the conference room (a distance away) when Mr. Mendicino interviewed Annunziata. She has as much to lose as does Mr. Iacobelli as the home belonging to his deceased sister was placed in her name, and she was the recipient of about $350,000 in payments by Mr. Iacobelli leading up to the separation. She admitted in cross examination that she trusted her son to manage the finances of the business and that he prepared her income tax returns and that she signed them without reading them. She knew that there was $114,000 in cash paid to Mr. Iacobelli over the six previous years, but only because Mr. Iacobelli told her that. She testified that she loved her son, and admitted that she would do anything for her son, and did not deny the suggestion in cross examination that she would also say anything for her son.

23Interestingly, the only inconsistency with Mr. Iacobelli’s evidence was her suggestion that the refiling of the income tax returns through counsel retained by them was dependent upon the outcome of this case, and that she and Mr. Iacobelli were awaiting that outcome prior to refiling their income tax returns with CRA.

24All in all, it was Mr. Iacobelli’s job to explain his income and the business transactions as he was in possession of all of the evidence to prove those issues, crucial to the determination of the financial issues. He failed to do this in any sort of coherent or consistent manner. His evidence on the financial issues at this trial was inconsistent, and was not credible. As a result, it is apparent that Mr. Iacobelli’s evidence was untrustworthy: if he was willing to lie to the tax authorities and leave his wife and children in extreme circumstances, how can he be seen as a witness or litigant that the court can trust? As a result, I find that his evidence given at trial to be unreliable and without credibility.

25This is not to say that Ms. Iacobelli’s evidence was perfect. She was prone to exaggeration, overstating transactions and expenses.

26Her evidence as to the expenses of the children was confusing to me. She gave evidence that these children had always been involved in numerous and expensive activities and, as well, benefited from tutoring concerning the children. After separation, she received, when Mr. Iacobelli complied with the court order, $1,500 per month towards the children’s activities, $2,000 per month towards household expenses and $475 per month towards vehicle expenses. At trial, Ms. Iacobelli filed a list of expenditures which she stated were expenses not covered by the payments made by Mr. Iacobelli.¹ Those lists purported to show household, vehicle and s. 7 expenses not covered by the support payments made by Mr. Iacobelli, largely in good standing by the time the trial began. Summarized, these exhibits stated that Mr. Iacobelli had left unpaid some $82,396.05 in expenses between 2014 and 2019.

27Ms. Iacobelli was unclear, however, as to how the actual payments made by Mr. Iacobelli under the Nicholson J. order fit into this list. Other than the vehicle expenses,² she did not testify as to whether these were net totals, and then credit back in the payments made by Mr. Iacobelli. Nowhere did she total all of the expenses and then calculate the shortfall.

28However, she also said in cross examination that these actually consisted of s. 7 expenses which remained unpaid over and above the $1,500 per month that Mr. Iacobelli was paying. For example, she said that the purchase of a vehicle was necessary to convey the children to activities. She testified that, taking into account the payments made by Mr. Iacobelli over the years, that there were about $170,000 in section 7 expenses for the children since separation or a staggering amount of more than $28,000 per year. It would be difficult, however, the characterize all of these expenses, such as the replacement of a furnace, as s. 7 expenses and she later changed her testimony to state that these expenses were all of the expenses covered by the Nicholson J. order. The list can only be seen as an attempt to exaggerate her child related expenses since separation and her evidence concerning these expenses was inconsistent and made no sense.

29Ms. Iacobelli’s evidence as to the cash left around the home can also only be seen as an exaggeration. Ms. Iacobelli testified that she had found numerous bundles of cash left around the home by Mr. Iacobelli during the marriage. She said that these bundles were in a safe that Mr. Iacobelli had in the basement, as well as in hiding places constructed in closets throughout the home, including the children’s closets. The cash had disappeared by 2014, the year of separation. The fact that Mr. Iacobelli had stores of cash was corroborated by the fact that Mr. Iacobelli advanced significant amounts of cash to Ms. Iacobelli’s parents and her sister when they borrowed money from him to purchase vehicles or to pay for renovations.

30What she clearly exaggerated was her estimates of the amounts of cash that Mr. Iacobelli had available. She testified in cross examination that she observed four bundles of cash, each of which she estimated to be about $500,000 for a total of $2,000,000. Considering the nature of the business, this appears to be a clear exaggeration of the amount of cash at Mr. Iacobelli’s disposal. We are not dealing with alleged money laundering; we are only cash income from a window covering and drapery business.

31All of this being said, although I had doubts as to some of her testimony, I assess her testimony as being significantly more reliable and credible than that of Mr. Iacobelli. There were significantly less inconsistencies than those of Mr. Iacobelli She attempted to provide clarity as to the household expenses supplied to Mr. DeBresser, and testified, along with her sister, as to how those expenses were paid. Her exaggerations were simply that, exaggerations, and her evidence was significant only so far as it went concerning household expenses and she had little evidence to provide other than what was within her knowledge, which was little. Significantly, a vigorous cross examination did little to shake her position that she was not in charge of the money, and that she had no idea of the things that Mr. Iacobelli did with the parties’ funds both before and after separation.

32Therefore, where Mr. Iacobelli’s testimony differs with that of Ms. Iacobelli, I prefer the evidence of Ms. Iacobelli.

ANALYSIS

33I will firstly address the parties’ income issues. The next item to be addressed will be child and spousal support including the Applicant’s claim for lump sum spousal support. Finally, I will address equalization of assets.

34Once those issues are all examined, I will then address the issues of remedies, including the Applicant’s claim for a vesting order and the Respondent’s request for a sale of the matrimonial home.

Parties’ Income Issues

35A major issue at trial was Mr. Iacobelli’s income. I will deal with this first.

36I will then examine whether income should be imputed to Ms. Iacobelli as requested by Mr. Iacobelli.

Respondent’s Income for Support Purposes

37There is a vast range of incomes assessed to Mr. Iacobelli both by himself, his two income valuators and the Applicant’s income valuator. Below is a chart containing the various suggestions for Mr. Iacobelli’s income for support purposes as put forward in this trial:

Year

Income as per Notices of Assessment

Income as per SF Valuations Report³

Income as per First Kalex Report

Annual Family Expenses as per Marmer Penner Report⁴

Income as per Kalex Critique and Addendum Report

2008

$39,518

$88,883

2009

$22,232

$84,875

2010

$42,387

$152,544

$78,000

2011

$43,449

$93,133

2012

$46,349

$56,000

$77,000

$105,197

2013

$32,896

$40,000

$55,000

$94,355

$100,000

2014

$25,877

$29,000

$26,000

$162,222

2015

$40,608

2016

$34,945

2017

$39,657⁵

2018

$51,183⁶

38As can be seen by this table, there is a vast range of reported income which may be attributed to Mr. Iacobelli. The range is essentially between the average income attributed by Mr. DeBresser in his report of about $187,000 per annum and Mr. Iacobelli’s assertion that he is only earning, and only earned in the past, about $51,000 per annum more or less based upon the income, including cash, that he reports earning. He asserts that he reports all cash income at present, and that he has done so since 2014. He says that the amount reported in his income tax return for 2018, $51,183, as well as the income reported in the previous years following separation, accurately reflect his income for support purposes.

39The issue is whether income is to be imputed to Mr. Iacobelli beyond the declared amounts of income in his income tax returns.

40A good guideline as to the basis for imputation of income is set out in s. 19(1) of the Child Support Guidelines⁷, made under the Divorce Act⁸ (“CSGs”). That section reads as follows:

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.

41Spousal support is in issue in this case. The CSGs are only applicable to child support. However, it would obviously not be best to use inconsistent income figures for child support and spousal support. As well, the s. 19 criteria have, in the past, been applied to spousal support: see Rilli v. Rilli, 2006 34451 (ON SC), 2006 CarswellOnt 6335 (S.C.J.) at para. 28.

42This does not mean that the Applicant has no work to do. She has an obligation to lay some sort of evidentiary foundation as to imputation of income; however, once this is done the onus shifts to the party responding to the imputation claim to provide evidence to refute that claim: see Barbini v. Edwards, 2014 ONSC 6762 at para. 78, Homsi v. Zaya, 2009 ONCA 322 at para. 28 and Bekker v. Bekker, 2008 CarswellOnt 173, 49 R.F.L. (6th) 119 (S.C.J.) at para. 25.

43In my view, Ms. Iacobelli has laid that evidentiary foundation. She and her sister carefully examined the parties’ expenses over a good portion of the marriage, and they supplied this information to Mr. DeBresser, Ms. Iacobelli’s income assessment expert. He produced a report which indicated what Mr. Iacobelli’s income would have had to be to pay those expenses. Ms. Iacobelli provided evidence about cash being hidden throughout the home, including in a safe in the basement. She also led evidence from family members who testified as to substantial amounts of cash provided to them by Mr. Iacobelli by way of loans to purchase vehicles and to renovate her parents’ home.

44I would question in any event how much work she really had to do to lay that evidentiary foundation. Mr. Iacobelli has always acknowledged receiving cash income prior to separation. He says that he removed funds from the joint account to repay his mother for the cash income that he received (which she did not receive). He acknowledges cash income; the only issue before the court is how much.

45I have already noted above that this was Mr. Iacobelli’s case to make. I noted this because Mr. Iacobelli is self-employed, he acknowledged cash income and only he had intimate knowledge of what his income was made up of and as to how much he actually made. Only he knows how much cash income was actually received; the rest of us can only estimate the amount. No one else has this knowledge, only Mr. Iacobelli. He therefore has a positive duty to provide clear and cogent evidence to the court as to what his income is: see Reyes v. Rollo, 2001 28260 (ON SC), [2001] O.J. No. 5110, 24 R.F.L. (5th) 120 (S.C.J.) at para. 44 and Roberts v. Roberts, 2015 ONCA 450, 65 R.F.L. (7th) 6 at paras. 11 – 13.

46Mr. Iacobelli testified as to his cash income on the witness stand. He said that he no longer receives income by way of cash and is in the process of making a voluntary disclosure to the Canada Revenue Agency (“CRA”) in order to settle the tax that he and his mother owe for cash income over the years. He says that he has hired a lawyer to assist him in this.

47He also attempted to meet his onus by providing an income assessment report prepared by his expert, Melanie Russell of Kalex Valuations Inc. When the Applicant obtained a report to show how much income Mr. Iacobelli would have had to make to pay the family expenses, Ms. Russell provided a critique of that report. The issue of cash income was largely a debate between the two experts, both of whom testified at trial.

48There are two major evidentiary issues which must be considered in determining Mr. Iacobelli’s income. Firstly, the court must examine Mr. Iacobelli’s evidence with regard to his income; has he adequately addressed the imputation issues in this matter? Secondly, there are three experts who have opined on Mr. Iacobelli’s income. Those reports have different approaches and must be reconciled to come to an income figure.

Mr. Iacobelli’s Evidence

49I have already commented on Mr. Iacobelli’s evidence as given at trial. He was not a believable witness. As most of his evidence concerned his income, the major issue in this trial, he did not adequately prove his income through his own testimony.

50Firstly, his evidence was, at times, largely inconsistent with earlier sworn testimony. He was unable to explain this on cross-examination. For example, he stated during testimony and in his Response to Request to Admit (no. 1)⁹ that he did not earn cash income after 2014, thereby confirming that he earned cash income in 2014. However, as reflected in the Kalex Income Valuation, he did not disclose any cash income in 2014.¹⁰ He testified that he retained a tax lawyer to seek an amnesty and refile his income tax returns, only for the years 2008 to 2013, implying that there was no cash income taken in 2014. Yet in a previous income report, he told Marnie Silver, the income valuator, that he did earn cash income in 2014.¹¹ As Mr. Iacobelli’s cash income is a crucial issue in this proceeding, this calls into question the veracity of the Respondent’s evidence on this subject as well as the information provided to the income valuators retained by him.

51There were further serious inconsistencies regarding Mr. Iacobelli’s annual income. He testified at trial that 2013 and 2014 were bad years income-wise because he had been diagnosed with cancer and his sister was found to be terminally ill with cancer. He acknowledged at one point that he had suggested that 2013 be chosen for the critique income analysis because this was a poor income year while 2010 was a better year.¹² He said this was because of health issues suffered by him in 2013 as well as his sister’s illness. Notwithstanding this, Mr. Iacobelli’s expert, Melanie Russell determined that, taking into account lifestyle issues, Mr. Iacobelli’s 2010 income was $78,000 and that he made $100,000 in 2013, a supposedly bad year. Further, Mr. Iacobelli testified that, although his health has since improved, that he declares all cash income and that his income tax returns reflect all of his income; yet his income has now significantly reduced and is now in the range of about $50,000 per annum. He has provided no analysis of his income since 2014 for support purposes.

52He was also unable to adequately explain significant cash advances made to his mother during the last two years of the marriage, when he admitted that things were not going well between himself and Ms. Iacobelli, and during which Ms. Iacobelli said that the marriage was breaking down.

53During those years, Mr. Iacobelli testified that he paid off in full a mortgage that was registered against the matrimonial home in favour of his mother in the amount of $200,000. Mr. DeBresser discovered as well, while doing his report, that Mr. Iacobelli had paid a further $149,000 to his mother in the guise of Visa payments posted to the business account. During 2012 and 2013, Mr. Iacobelli made payments on the business Visa account of $149,000 from a personal joint account of the parties. At the same time, he was posting the same payments in the same amount in the business ledger as being paid to the business Visa; however, the payments from the business account were actually being paid to his mother, Annunziata Iacobelli. Mr. Iacobelli paid about $149,000 to his mother in this manner.

54When questioned about this, Mr. Iacobelli testified that he was repaying his mother for cash that he had taken from the business over the past six years which she had not received. However, he also testified that the amount that he owed her was $114,000 as this was the cash income that he had received. He was unable to explain why his mother was repaid $149,000 when she was only owed $114,000. He was also unable to explain why the cash that was taken by him was only $114,000: if he had received $114,000 through the business, Annunziata Iacobelli would only be entitled to repayment of one half of that as Mr. Iacobelli and his mother were partners. She was owed $57,000 and should have been paid that amount. But if she was actually owed $114,000, that would mean that Mr. Iacobelli received $228,000 from the business through cash receipts, of which she was owed one half. Mr. Iacobelli was unwilling to admit that the business generated $228,000 in cash income over the previous six years; yet that was the only explanation for his mother being owed $114,000. Only in his final trial submissions does Mr. Iacobelli acknowledge that he had actually overpaid his mother and that she should have only received $57,000.¹³

55He was also unable to explain the discrepancy between the amount paid to his mother, $149,000, and the amount that he owed her for cash receipts, $114,000. He said it was adjusted later, but he never proved that adjustment. His expert testified that she assumed that the difference was money that he otherwise owed her, presumably for the mortgage that he repaid, but she was unable to say what actual debt was repaid, relying upon Mr. Iacobelli for that information. Yet Mr. Iacobelli earlier testified that he repaid his mother for the mortgage from a joint business account that he had with his mother, and he explained the delay in repayment by stating that he only paid her once there was $200,000 in that account to repay her. He never provided bank statements to prove that account. This evidence would exclude the suggestion that the difference between the $114,000 owed to his mother and the $149,000 paid to her was repayment of the mortgage to his mother. The discrepancy even becomes worse if Annunziata was only owed $57,000 as suggested in the Respondent’s final submissions.

56Add to this was the fact that during 2011 to 2013, in the same years he was paying his mother these funds, he emptied a joint investment account held with Ms. Iacobelli of approximately $300,000. Those funds went into a joint bank account, which was similarly empty when the parties separated. He used those funds to pay his mother the $149,000 mentioned earlier. In those years, Mr. Iacobelli testified that he paid his mother about $350,000, a similar amount to a payment that Annunziata made on the home owned by Mr. Iacobelli’s sister, who died months after that home was purchased. That home eventually ended up in Annunziata’s name.

57I admitted during trial to the witness that I was confused by this set of transactions and that I could not make sense of it. I told him that I could not reconcile the amount that he said he took in cash with the amount he paid his mother. He attempted to explain in reply but his explanation made no sense to me. Even his expert, Melanie Russell, admitted confusion over the set of transactions and as to the discrepancy between the amounts paid and the amounts owed to his mother. She acknowledged that she never spoke with Annunziata or verified the amounts actually paid to his mother.

58Mr. Iacobelli was also not a trustworthy individual, as shown by his actions throughout. He did not hesitate to defraud the Canada Revenue Agency, and took, to all accounts, even his own, significant undeclared cash income from the business without disclosing these amounts to CRA. He acknowledged in testimony that his purpose to the payment of the $149,000 by payment of the Visa account was to create a deduction which would reduce his business income while repaying a draw account or personal expense. He said that in 2014 he realized the error of his ways and ceased to take cash income; he only retained tax counsel to seek an amnesty and refile in June of 2019, five years later; that evidence, including the evidence that he was now reformed, can be seen as self-serving and contrived.

59This was a trial about cash income. It was well known to everyone that Mr. Iacobelli was alleged to have made cash income; it was mentioned on several occasions in the Applicant’s Claim, where she says that Mr. Iacobelli’s “company deals mainly in cash transactions and he declares nominal income to the CRA as a result.” She later says in that Application that Mr. Iacobelli “kept large sums of money in cash around the house, in the safe and in the basement” which was later removed.¹⁴ Mr. Iacobelli knew that cash income was a major issue in this litigation, and that he would have to answer those allegations.

60Surprisingly, Mr. Iacobelli never provided his records showing the cash that he received throughout the years. He told Mr. Stangarone when questioned prior to trial that he had tallied up his cash income, and then threw the previous month’s calculation out the following month, leaving only a cumulative tally. He said that he ended up with a yearly figure, which he had given to his business valuator to prepare the report. He had no record of how that was tallied for the court or for Mr. Stangarone. Although he said that after 2013, he tallied it up on his phone, he said that he had disposed of the phone in 2015 after the litigation had commenced and after undertaking through counsel not to destroy or dispose of any evidence. When that was brought to his attention, he then said that his phone had crashed and the contents of the hard drive was lost. Although he testified that he took it to Apple to unsuccessfully retrieve his data, he had nothing proving that. It was similar to a child telling his teacher that the dog had eaten his homework and as believable. His explanation as to his lost tallies and as to proof of his cash income was not credible and did not ring true.

61Finally, at the end of his testimony Mr. Iacobelli entered as exhibits all of the income statements for his business from 2014 to 2019; he also entered all of his business invoices for the same period. I don’t know what the basis for this was; certainly, there was no allegation that there were improper expenses charged to his business income, and the only issue was the undeclared cash income that Mr. Iacobelli supposedly made. He never testified that the invoices supplied for those years were the only money that the business billed, although he said that all cash income for the years after 2014 was declared. If he is throwing a pile of raw data at the court, and asking me to analyze those figures, that is not helpful as I am not a business valuator and the reason the court permitted the expert testimony was because both valuators presumably had the expertise to analyze Mr. Iacobelli’s income.

62Mr. Iacobelli’s mother, Annunziata Iacobelli, testified that her son had paid her $149,000 to repay her for cash income he had taken prior to the money being repaid in the last years of the marriage. She also testified as to the repayment of the mortgage and as to the circumstances concerning the purchase of the home in Mr. Iacobelli’s sister’s name, partially using these funds.

63Her testimony echoed almost exactly the evidence of Mr. Iacobelli. Unfortunately, her evidence was similarly unreliable for several reasons:

a. She drove to meet with Mr. Iacobelli’s lawyer with him and would have had ample opportunity to discuss her evidence with him. Although Mr. Iacobelli was well aware of the fact that he was not permitted to discuss evidence with another witness, his actions show that he was, throughout, contemptuous of the court proceedings and rulings of this court. I would not be surprised if he had discussed the evidence with his mother.¹⁵

b. She testified in cross examination that all of the information about the business came from Mr. Iacobelli. If he had said that he had received $114,000, or $77,000 or whatever other amount of cash income that he said that he received, she would have accepted that to be true. Her evidence about the business income is his evidence.

c. She acknowledged that the $350,000 that was used to pay for the down payment on her daughter’s home was the same amount that was received from Mr. Iacobelli, and in fact may have been the same money.

d. She acknowledged in cross examination that she would “do anything” for her son. When asked if she would say anything for her son, she did not say that she would not.

64In any event, my conclusion is that Mr. Iacobelli has failed to meet the onus on him to explain his own self-employed income or to avoid imputation of income in this case. His evidence, and that of his mother, are both unreliable and fail to explain exactly how much cash income Mr. Iacobelli actually received in the years leading up to separation, and at present. I specifically do not find that Mr. Iacobelli’s evidence about the cash income that he received in 2012 and 2013 was proven adequately due to his lack of records, and his failure to keep those records in place when he was involved in litigation about exactly those issues. To fail to keep those records to present to the court was both a failure to keep evidence crucial to a finding of Mr. Iacobelli’s income, and a breach of an undertaking given to counsel in this litigation. Because of all of this, I make a negative inference against Mr. Iacobelli in making an income finding in this case.

65Moreover, without reliable evidence from Mr. Iacobelli as to his income, I am left only with the income reports from the experts in this case to assess against one another.

Income Reports

66There were three income reports filed in this proceeding. Firstly, Mr. Iacobelli obtained an income report from Marnie Silver at SF Valuations.¹⁶ The results of that report were set out in the income chart for Mr. Iacobelli above. Ms. Silver did not testify and no expert’s acknowledgment was produced. She was not qualified to testify at the trial or to provide expert evidence. I was not asked to rely upon this report; neither do I rely upon it in any way in determining Mr. Iacobelli’s income. The report is only important to confirm inconsistencies in Mr. Iacobelli’s evidence.

67On February 9, 2015, Mr. Iacobelli produced the first of three income reports from Melanie Russell from Kalex Valuations Inc.¹⁷ Ms. Russell’s qualifications were admitted, and she testified at trial. That report provided a value for Mr. Iacobelli’s business both at the date of marriage as well as at separation, and as well provided the first valuations of Mr. Iacobelli’s income for the years 2012, 2013 and 2014. The report concluded that Mr. Iacobelli’s income as set out in his tax returns should be adjusted for non-business expenses and as well should be adjusted for unreported cash income. The report concluded that because of the death of his sister and his illness in 2013 and 2014, that Mr. Iacobelli’s income decreased substantially in those years, from a high of $77,000 in 2011 to $26,000 in 2014.

68On August 13, 2014, Nicholson J. in deciding on an amount of interim support, stated that “there appears to be a gap between the reported income of the RF and the expenses the family has incurred to maintain a comfortable lifestyle for many years.” In response to this statement, Ms. Iacobelli obtained an income report based upon the family’s standard of living from James DeBresser at Marmer Penner which was dated February 14, 2017.¹⁸ She testified that she, her sister and her mother, once they obtained the credit card and bank statements, had undertaken an exhaustive list of the family expenses over the years which she supplied to Mr. DeBresser. Mr. DeBresser prepared a “lifestyle” income analysis from this data which addressed the difference between the family expenses and the amount of declared income that Mr. Iacobelli said that he had earned. He then grossed up the difference between the declared income and the income available to pay family expenses, and did two averages, a seven-year average and a three-year “guidelines” average.

69Mr. DeBresser concluded that Mr. Iacobelli’s income, taking into account the cash income and a gross up for taxes, was $170,000 if averaged over seven years (2008 – 2014) and $187,000 if averaged over three years (2012 – 2014).

70Mr. DeBresser testified that he considered whether capital could have been used in maintaining these expenses from Mr. Iacobelli’s declared income. He said that would be addressed by a longer term study of Mr. Iacobelli’s average income, as it would consider capital spent from year to year: if Mr. Iacobelli saved some money the prior year, it would be accounted for in expenditures in the following year. As well, he noted that if Mr. Iacobelli was paying his mother $350,000 over the three years prior to separation, capital would not have been a factor in meeting those expenses as it was being used to make capital payments to his mother.

71Mr. Mendicino attacked Mr. DeBresser’s impartiality because he accepted instructions from the Applicant’s solicitor to treat the $149,000 transferred to Annunziata Iacobelli as a fraudulent conveyance. However, Mr. DeBresser was clear that this determination was actually in the hands of the court, and he had to characterize the transaction as something. It was not Mr. DeBresser’s determination of the nature of the report which governed; he was instructed to premise his report on this being a fraudulent conveyance in order to arrive at conclusions based upon that assumption. He agreed that the report might change if the court did not find a fraudulent preference and he did not ask the court to come to that conclusion.

72Mr. Iacobelli responded with two further reports prepared by Melanie Russell, a critique of the DeBresser report dated October 10, 2017¹⁹ and Mr. Iacobelli’s own lifestyle income analysis dated October 31, 2017.²⁰

73The first report, the critique, attacks Mr. DeBresser’s report on a number of fronts. Ms. Russell attacked the premise that the payment to Mr. Iacobelli’s mother was a fraudulent conveyance, and stated that this premise affected the income of Mr. Iacobelli. If the transfer of funds was characterized as something other than a fraudulent conveyance, this would allow for a conclusion that more capital was used for household expenses than as assumed by Mr. DeBresser.

74Ms. Russell said that the gross up for taxes was at the highest marginal rate, which was inappropriate. She said that the renovations paid for by Mr. Iacobelli were actually less than suggested by Mr. DeBresser ($75,000) and that a portion of those renovations was paid for by cheque and a portion by cash; as well Mr. Iacobelli did a lot of work on his own. Ms. Russell suggested that a number of the household expenses used by Mr. DeBresser were unsubstantiated and unsupported by hard evidence.

75Finally, in her own lifestyle income report, covering only two years, 2010 and 2013, Ms. Russell concluded that Mr. Iacobelli’s income for those two years were $78,000 and $100,000 respectively (the DeBresser report pegged the annual income for those years as being $263,000 and $163,000 respectively).

76What are the net effects of these reports?

77The first Kalex report, other than the add-backs of non-business expenses, is really based upon Mr. Iacobelli’s self-reporting as to his cash income. As with his evidence given at trial, that reporting to the income valuator is similarly unreliable. At trial, it was confirmed that the amounts of cash income were based upon undocumented “tallies” of cash income for the years reported on, 2012 and 2013. Mr. Iacobelli was unable to provide any evidence of those tallies, although Ms. Russell testified that she received a written document outlining the cash income for each year. She testified that this document was prepared by Mr. Iacobelli. As well, Mr. Iacobelli’s evidence about his cash income was unclear as outlined above, and was inconsistent insofar as he reported to Marnie Silver cash income in 2014 and said he had no cash income “after 2014” on several occasions.

78I find Mr. DeBresser’s report to be much more compelling for a number of reasons. In a situation where unclear and unreliable evidence is provided as to a support payor’s income, often the lifestyle of a family is the only place where an accurate finding of that income can be determined. In the present case, that is definitely the situation. Mr. Iacobelli failed to fulfill his duty to provide a clear picture as to his income. Therefore, as he was the only wage earner, his income can only be determined from the family’s lifestyle. Did they live as if he made about $50,000 per year as he asserts his income to be at present?

79According to Mr. DeBresser, they did not. But he did not prepare his report without assistance. The Applicant gave evidence that she, her sister and her mother all worked on a comprehensive spreadsheet as to the expenses of the family over the years beginning in 2008 up until 2014. Mr. DeBresser used those spreadsheets in preparing his report as to the parties’ lifestyle and the income needed to support that lifestyle.

80Ms. Iacobelli, her sister and her mother all gave evidence as to the preparation of these spreadsheets. They stated that, in preparing these documents, they used the Visa statements as well as his bank accounts provided by Mr. Iacobelli by way of disclosure. They said that they relied upon the $2,000 per month that Mr. Iacobelli provided to Ms. Iacobelli to address cash expenditures such as groceries.

81Melanie Russell was critical of this. She said in her critique that Marmer Penner had not provided backup documents for cash expenses including groceries and instead relied upon Mr. Iacobelli’s suggestion that Statistics Canada information be relied upon for groceries.²¹ Apart from the fact that it is a bit rich for Mr. Iacobelli’s expert to complain of a lack of backup documentation when Mr. Iacobelli failed to account for any of his cash income while purporting to repay his mother $114,000 for cash income received by him, Mr. DeBresser was entitled to rely upon the allowance that Ms. Iacobelli received during marriage to estimate those expenses. Nicholson J. certainly relied upon that in determining the interim support payments to be made by Mr. Iacobelli pending trial. Finally, Mr. Iacobelli never made it clear to Ms. Russell that he had little or nothing to do with the purchase of groceries; that was the province of Ms. Iacobelli throughout. Ms. Russell’s criticisms are therefore ill founded.

82I note as well that Ms. Russell advised Mr. Iacobelli to obtain the source documents used by Mr. DeBresser in the preparation of his report.²² There is no evidence that he requested this information of either Mr. DeBresser or Ms. Iacobelli’s counsel or that it was provided to Ms. Russell.

83Mr. DeBresser’s report presented averages of seven years and three years in the determination of Mr. Iacobelli’s income. His evidence was that these averages addressed the issue of capital expenditures for family expenses which could have otherwise inflated the yearly cash income estimates based on lifestyle. He said that even where capital was saved over the previous years, that cash would have been used in subsequent years, and over a lengthy period cash saved in previous years would have been accounted for by expenditures in subsequent leaner years.

84Mr. DeBresser also analyzed the family’s net family property over those years in order to determine whether there was a change in the value of the property over the years analyzed. He did this partly because he found, in the preparation of the report, that Mr. Iacobelli had transferred in a fairly convoluted manner about $149,000 to his mother, Annunziata Iacobelli. His conclusion was that, assuming the $149,000 payment to be a fraudulent conveyance liable to be set aside, there was no change in the net family property of these parties over the years analyzed.

85Ms. Russell criticized Mr. DeBresser for a couple of issues on the capital expenditure issue. Firstly, she says that the fact that Mr. DeBresser’s characterization of the $149,000 payment to Annunziata Iacobelli as a fraudulent conveyance affected Mr. Iacobelli’s income estimates. Secondly, she maintained that, as per her final report, that reporting on individual years was as effective as was an averaging of a number of years.

86I find that both of these criticisms are similarly ill founded. Firstly, whether or not the money went to Mr. Iacobelli’s mother as a fraudulent conveyance or as a repayment of a debt owed to her, the money was not used in maintaining the family’s lifestyle. It was used for either an attempt to dissipate assets or to repay a legitimate debt. In fact, the evidence is that, other than the piles of cash that Ms. Iacobelli says were lying around the home, Mr. and Ms. Iacobelli were able to accumulate a cash account which in 2010 totalled about $300,000 and all of those funds disappeared over a three-year period of time just prior to separation. As well, it is common ground that Mr. Iacobelli was able to pay a total of $350,000 to his mother in those same years. None of those funds were used for family expenses but were used for capital repayments or otherwise; in fact, even Mr. Iacobelli acknowledges that a portion of the repayment was to repay cash funds used in maintaining the family’s lifestyle. I cannot see how the characterization of the payment as a fraudulent conveyance would affect the conclusions of the income report as the funds were not used for family expenses in either event.

87As well, Ms. Russell acknowledged that she was only asked to do two years of “lifestyle” analysis by Mr. Iacobelli although she says that she suggested the two years, 2010 and 2013. She said that only two years were analyzed because of the cost of a more comprehensive report and financial constraints. She maintained in cross-examination that a report on two years was as compelling as was a report over a lengthy period of time, as, if the intention was to look at one particular year, that year should be examined in detail.

88With respect, the intention of the trial is to arrive at an income amount for Mr. Iacobelli, both in the past and for ongoing support. The intention is not to find out what his income was only in 2010 and 2013. There was no evidence given by Ms. Russell as to why those years were chosen other than, perhaps, to address the reduction in income that Mr. Iacobelli alleged took place in 2013 because of his illness and his sister’s death.

89I agree with Mr. DeBresser that to average the income over a number of years is much more useful to that determination than would be an analysis of only two particular years which were the years leading up to separation when major capital transfers were taking place in the context of a troubled marriage. The latter approach only provides a couple of snapshots while the former allows for a determination of an average income both in good and bad times. It provides evidence as to what Mr. Iacobelli’s income probably was in the past, and leading up to the future.

90There were, however, a couple of issues in Mr. DeBresser’s report which were not addressed by his report. The first is the renovations issue. Mr. DeBresser estimated the costs of the renovations, which took place in 2007 and 2010, as costing $75,000. Based on advice from Ms. Iacobelli, he assumed that the renovations were paid for by way of cash from Mr. Iacobelli’s income.

91In fact, there was evidence that because of a fire which took place in 2007, the family received insurance proceeds of $45,000. As well, there was also evidence that some costs were paid by cheque, and not cash. Certainly, Chamb Theodorou, one of the contractors for the renovations, testified that, at his request, he was paid about $17,000 of a $21,000 cost, by cheque and not by cash. Not all of the renovations were paid for in cash.

92This being the case, that may reduce the family lifestyle costs for the years 2007 (not included in the DeBresser analysis) and 2010. This would have the effect of reducing the undeclared income attributed to Mr. Iacobelli for 2010 at least.

93Finally, there is the issue of Mr. DeBresser’s gross-up for income tax on undeclared income. Mr. DeBresser used a 42% across the board gross-up for taxes. Ms. Russell said that this was too much and that the tax rate which should have been used is a lesser tax rate being 33%. According to Ms. Russell, the inflation of the notional tax rate resulted in Mr. Iacobelli’s income being about $21,000 too high on average.

94I note that there is a certain compelling logic in the Kalex critique insofar as it states that the tax rate should be a weighted amount averaged throughout the years for which the average income is obtained. If I accept that an averaged income is a more accurate means of determining the Respondent’s imputed income, the same must apply to the gross-up for income taxes. Mr. DeBresser should have calculated the marginal tax rate from year to year to determine what should have been attributed year to year. Instead, he just applied a 42% marginal income tax rate to the averaged income and failed to explain the logic behind this percentage amount. He did not testify as to how he chose the 42% marginal rate or explain his methodology in grossing up Mr. Iacobelli’s income for taxes.

95I therefore find that Mr. Iacobelli’s income as set out in the DeBresser report should be reduced by $21,000 as suggested by Ms. Russell in her critique.

96Otherwise, I prefer the DeBresser report over those prepared by Ms. Russell for the following reasons:

a. Ms. Russell acknowledged in the preparation of her original income report that she relied upon representations from Mr. Iacobelli and did not question or review that evidence in any way. She acknowledged in the first report that it was “calculation valuation report” based upon “minimal review and analysis and little or no corroboration of relevant information”.²³ Ms. Russell confirmed in cross examination that this was the lowest level of report she could provide as an expert. Considering the fact that I have found that the evidence from Mr. Iacobelli was untrustworthy, the assertion by Ms. Russell that she relied mostly upon representations from Mr. Iacobelli, an acknowledged tax evader, taints all of her reports.

b. Regarding the lifestyle issues, there was no testimony from Mr. Iacobelli as to how he prepared the documents relied upon by Ms. Russell in her “lifestyle” report. On the other hand, Ms. Iacobelli led extensive evidence from herself, her mother and her sister as to the care they took in preparing the report. Apart from her tendency at times to exaggerate, I prefer the evidence of Ms. Iacobelli to that of Mr. Iacobelli. The care that Ms. Iacobelli took in preparing the spreadsheets relied upon by Mr. DeBresser goes a long way to confirming that the report was more accurate as to the results than those of Ms. Russell.

c. Ms. Russell did not prepare the reports entered in her name. She acknowledged that the report was prepared by an individual named Scott Schnurr, who did 75% of the work and drafted the reports. Mr. Schnurr could not, himself, author the reports because he did not have his Chartered Business Valuator designation when the report was prepared and Ms. Russell acknowledged that Mr. Schnurr interviewed Mr. Iacobelli, drafted the report and reviewed the documents relied upon in the reports. Ms. Russell reviewed the reports and signed off on them. The individual who was cross-examined did not prepare the report and case law suggests that the result is that the report be given very little weight: see Kashnir v. Macari, 2017 ONSC 307 at para. 30 and 34 and Children’s Aid Society of London and Middlesex v. B.(C.D.), 2013 ONSC 2858, 36 R.F.L. (7th) 124 at para. 38-39.

Conclusion

97The DeBresser report is based upon an analysis of the spending of this family over seven years. The report attributes income to the Respondent, the sole wage earner for this family, based upon the household expenses that were submitted by Ms. Iacobelli, her mother and sister.

98It is common ground that Mr. Iacobelli received cash income over the years. He admitted to this. He also purported to repay his mother for the cash income received by him over the years by transfers to her which totalled $149,000 from the parties’ joint account. He acknowledged undeclared cash income over the years on the witness stand.

99There is therefore no question that Mr. Iacobelli received cash income over the years. The issue is the amount of his income; Mr. Iacobelli says that he is now declaring all of his cash income, and that his real income is now reflected by his income tax returns. His most recently filed return shows income in the amount of about $50,000 for 2018.

100The problem is that Mr. Iacobelli’s own evidence as to his cash income requires the court to take him at his word. There are no records other than his own evidence as to his cash income. I have already stated why I do not trust Mr. Iacobelli’s evidence as to his income or as to other issues: I found his evidence to be unreliable throughout and without credibility for reasons I will not go into again. I therefore do not accept Mr. Iacobelli’s evidence as to his undeclared cash income as outlined in Ms. Russell’s first income report.

101In the absence of clear evidence from Mr. Iacobelli as to his cash income, including the loss or destruction of his records of his cash income, the only accurate means to determine his cash income over what was declared in his returns was through an analysis of his lifestyle. This method of income assessment has been sanctioned by the courts in numerous self-employed situations where there is no other means of reliably determining a payor’s undisclosed cash income. Where lifestyle does not match income, that lifestyle may call the court to infer “that the payor must have a greater income than he or she has disclosed”: Bak v. Dobell, 2007 ONCA 304, 86 O.R. (3d) 196 at para. 41.

102However, as stated in Bak, “lifestyle is not income, but rather evidence from which an inference may be drawn that the payor has undisclosed income that may be imputed for the purpose of determining child support” [para. 43]. In that case, the lifestyle of the parties was funded by capital transfers from the payor’s father rather than any hidden income source, and the court declined to characterize those capital transfers as income for support purposes.

103On the other hand, where there is no other source of funds from which lifestyle can be maintained, then the reasonable inference must be that a family’s lifestyle was funded by the income of the payor, especially where, in the present case, the sole wage earner was that payor and the expert has examined whether the lifestyle could have been otherwise funded through capital expenditures. As Kitely J. put in Reyes v. Rollo, supra, at para. [62], “If he spends it, he must have it.”

104Lifestyle is especially important in assessing income where the payor has admitted to evading taxes through cash receipts and yet has failed to provide corroborating written evidence from which his income can be determined other than what he claims to be the case. Where an income earner has failed to provide adequate disclosure or evidence regarding his income, an adverse inference must be drawn against that party: see Meade v. Meade, 2002 2806 (ON SC), [2002] O.J. No. 3155, 31 R.F.L. (5th) 88 (S.C.J.) at para. 81 and Barbini v. Edwards, 2014 ONSC 6762.

105Based on the family expenses, Mr. DeBresser came to an average income figure for the seven year period from 2008 to 2014 as being $170,000 including a gross-up for taxes. As determined above, Mr. DeBresser failed to explain the rationale for a 42% gross-up, the highest marginal rate across the board, and I agree with Ms. Russell that the average income should be reduced by $21,000 per year to address the taxation issue.

106The other concern is the renovation issue. Mr. DeBresser added in a total of $84,741 for renovation costs in 2010 and 2011 based upon an estimate by a contractor that the renovations would have cost about $75,000.

107There was not much clarity as to the timing of and the actual renovations conducted on the home. Apparently, there was a fire that occurred in the kitchen in 2007 and, according to Mr. Iacobelli, some $45,000 was paid to the parties by the insurance company for the damage to the home. Ms. Iacobelli said this was nothing other than a small fire, but she was not aware of what exactly was paid by the insurance company. Mr. Iacobelli said that “some” of the renovations were paid for by the insurance proceeds, which would imply that not all of the $45,000 was used for the renovations. Mr. Iacobelli had no evidence on the costs of the renovations other than the fact that he refused to characterize the renovations as “major” and that the costs did not take into account his own “sweat equity” in doing the renovation work.

108Chamb Theodorou completed some of the renovations on the home. He said that he did work on the kitchen and opened up a passage between the living room and the kitchen which was complicated by the fact that the wall that was opened up was a load bearing wall. He also did hardwood floors in the home and installed a fireplace in the master bedroom. He denied that the renovations were paid for in cash as asserted by Mr. DeBresser and Ms. Iacobelli; he said that he only got about $4,000 in cash and the remainder of the cost was paid for by cheque at his insistence. He said that he charged $21,000 more or less for the work he did and received a $17,000 cheque from Mr. Iacobelli.

109However, he said that he had completed his renovations by 2007, which was outside of the period of time averaged by Mr. DeBresser. He said that, in reviewing the photographs from the home appraisal, that the island that is now in the kitchen was not there when he left; neither were the cabinets or the countertops; these were done later.

110Mr. Theodorou also testified that Mr. Iacobelli was not much help at all in completing the renovations. He said that all that Mr. Iacobelli did was to assist in the installation of the range hood; otherwise, he did no work that Mr. Theodorou observed. There is no independent evidence that Mr. Iacobelli made any significant contribution to the renovations and I discount this as a factor in the costs of the renovations.

111For these reasons, I am doubtful that $75,000 in renovations were completed in 2010 and 2011. Only a portion appears to have been completed in those years, with substantial work being done in 2007 prior to the period of income averaging covered in the DeBresser report. There is evidence that insurance proceeds were available for a portion of the renovations in issue.

112As I have no evidence as to the actual costs of the renovations, I have to be somewhat arbitrary about a reduction in the estimated renovation costs set out in the DeBresser report. Taking these factors into account, I am going to reduce the renovations cost by one half, to $42,370.50. Averaged into the seven-year period covered by Mr. DeBresser’s report, this would reduce Mr. Iacobelli’s annual income by a further $6,053. Rounded out, I will further reduce Mr. Iacobelli’s income by another $6,000 per annum.

113This would mean that Mr. Iacobelli’s income would be reduced by a total of $27,000. I therefore find that Mr. Iacobelli’s income for support purposes is $142,000 per annum.²⁴

Applicant’s Income

114Although much of the time and effort at trial was concentrated on the Respondent’s income, there is also the issue of the Applicant’s income. The Respondent seeks to impute income to the Applicant because he says that she has failed to conduct and adequate or meaningful job search, and she could be earning income at this point in time.

115The Applicant was a lab technician when she married the Respondent. She worked at this occupation for the first years of the marriage until she gave birth to her first child, Alexandra, in May of 1999. She never went back to lab work and was a homemaker throughout the remaining 15 years of the marriage.

116She is still not working full time. Mr. Mendicino suggests that she be imputed with minimum wage income which would be about $30,000 per year. He suggests that her failure to obtain work over the five years since separation constitutes “intentional underemployment” within the meaning of s. 19(1) (a) of the CSGs.

117Ms. Iacobelli has registered with an employment agency. She says that she looked into upgrading her education but she found that this was going to be too expensive considering her financial circumstances. Since February, 2019, Ms. Iacobelli has worked as a supply Italian teacher at her children’s school and has continued to volunteer in the school. She is applying to be a supply secretary with the school board but at the moment subsists on the support ordered by Nicholson J. in 2014 as well as about $238 per month that she earns as a supply teacher.

118When asked on cross-examination as to why she did not requalify as a lab technician, she said that it only paid minimum wage, and it was not worthwhile retraining in that area. She said she checked with her former employer, but they only had evening work available. She said that her work with the family and her children prevented her from working during much of the time that the parties had separated.

119We are now more than five years after the spouses have separated. Although Ms. Iacobelli has explored plans for re-education, she has commenced none of them. She dismissed retraining in her former area of expertise, lab technician, because all that she could make was minimum wage. Ms. Iacobelli has also decided to move into the secretarial/administrative area without explaining how she updated her computer skills or as to how long she has been attempting to work in this area. The only work she is doing is as an occasional supply Italian teacher making less than $300 per month.

120An exception to the intentional underemployment rule is set out in s. 19(1)(a), which is “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”. However, on cross-examination, she was unable to explain how the children have prevented her from working. Although she said that Julianna remained troubled about the abuse she suffered at the hands of the Respondent, she said that Julianna was in therapy and did not explain how Julianna has prevented her from working. She has left the children alone when going on holidays (when Mr. Iacobelli failed to pay the hydro bill) and these children appear to be fairly self-sufficient.

121I therefore find that Ms. Iacobelli has not adequately explained her lack of employment nearly six years into the separation. I therefore impute minimum wage income to her for support, specifically spousal support purposes, to her.

Child Support

122I have found Mr. Iacobelli’s annual income to be $142,000 for support purposes. Base child support is therefore fixed in the amount of $3,066 per month for the four children of the marriage, all of whom are still residing with the Applicant in the matrimonial home, and all of whom remain dependent on the parties and remain “children of the marriage” within the meaning of the Divorce Act.

123I will address the proportionate share of the parties once spousal support has been addressed.

Spousal Support

124The Respondent acknowledges in his submissions Ms. Iacobelli’s entitlement to spousal support. Although he suggests a nominal amount, Mr. Iacobelli acknowledges his obligation to pay spousal support in the amount of $129 per month.

125This application is brought under s. 15.2 of the Divorce Act. The factors and objectives of a spousal support award are set out in that section as follows:

15.2(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 cohabited;

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

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

15.2(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.

126Spousal support may be either compensatory, non-compensatory or contractual: see Bracklow v. Bracklow, 1999 715 (SCC), [1999] 1 S.C.R. 420 at paras. 15 and 18. Compensatory support is support based upon “economic advantages or disadvantages to the spouses arising from the marriage” under s. 15.2(6) (a) of the Divorce Act. Non-compensatory spousal support arises from disadvantages to the spouses arising from the “breakdown” of the marriage and is intended to address “economic hardship …arising from the breakdown of the marriage” (s. 15.2(6)(c)).

127There are no contractual issues in the present case.

128Regarding non-compensatory grounds, it is clear that Ms. Iacobelli is entitled to support. This family had a comfortable middle-class lifestyle and the sole wage earner was Mr. Iacobelli. Without his assistance, Ms. Iacobelli’s lifestyle along with that of the children deteriorates significantly. There is clear economic disadvantage resulting from the breakdown of the marriage.

129There are, however, compensatory factors in the entitlement analysis of spousal support. This was a traditional marriage. Ms. Iacobelli gave up her job as a lab technician upon the birth of her first child. She had four children and managed the home. She never went back to work outside the home and remains at sea as far as career aspirations go. Although Mr. Iacobelli says that he wished that she would have gone back to work, it is apparent that she was a homemaker for most of the marriage, and gave up career opportunities as a result. I find that the Applicant has a compensatory claim for spousal support as well as non-compensatory grounds. This could easily be classified as a “strong” compensatory case for spousal support.

130This basis for support affects the amount of support that would otherwise be payable. The court does not just default to the midpoint in the Spousal Support Advisory Guidelines (the “SSAG”). The nature of the entitlement for support dictates, at least to some extent, where the support ends up in the SSAG ranges: see Monahan-Jourdrey v. Jourdrey, 2012 ONSC 5984 at para. 56. Where there is a compensatory basis for spousal support, the calculation of support goes to the upper end of the SSAG rather than the mid or lower end of the calculation. The stronger the compensatory claim the higher in the ranges the spousal support falls: see the Revised Users Guide to the SSAG.²⁵

131A SSAG calculation based on my findings is attached to this endorsement as Schedule “A”. The ranges in this calculation are $446 per month at a lower range and $1,298 per month at the higher end. The mid-range is $870 per month. In Fisher v. Fisher, 2008 ONCA 11, 88 O.R. (3d) 241 the court confirmed that although the SSAG are not mandatory, they are a useful tool to calculate spousal support. The Court of Appeal in that case goes as far as to suggest that, where a court departs from the guidelines, appellate review requires an explanation by the trial judge as to the reasons why.

132As I have found this to be a strong compensatory case for spousal support, I would normally find this to be a case for periodic spousal support in the range of $1,200 per month for spousal support.

Lump Sum Spousal Support

133Ms. Iacobelli has asked for lump sum spousal support. She is concerned that Mr. Iacobelli will not pay support voluntarily and as much of his income is in cash, there will be little ability to enforce payment of spousal support except through the one hard asset of the parties, the equity in the matrimonial home. However, apart from the Respondent’s motivation, there must be an independent and legally defensible basis for the court to find that spousal support be paid by way of a lump sum.

134Section 15.2(1) of the Divorce Act permits the court to order lump sum spousal support. However, the Ontario Court of Appeal has stated that lump sum support is the exception rather than the rule, and should only be ordered where there are issues of conduct which may result in periodic support not being paid.

135In Mannarino v. Mannarino, 1992 14022 (ON CA), 1992 CarwellOnt 308, 43 R.F.L. (3d) 309 (Ont. C.A.), the court confirmed that lump sum support should never be used to effect a property division, for example in the case of a bankruptcy. However, the court determined that lump sum spousal support could be ordered “where there is a real risk that periodic payments would not be made.”

136This was confirmed in Davis v. Crawford, 2011 ONCA 294, 106 O.R. (3d) 221 where the court reiterated that lump sum support could not be used to address property division issues, but that it was a tool that could be used under certain limited circumstances [paras. 67 and 68]:

The advantages of making such an award will be highly variable and case-specific. They can include but are not limited to: terminating ongoing contact or ties between the spouses for any number of reasons (for example: short-term marriage; domestic violence; second marriage with no children, etc.); providing capital to meet an immediate need on the part of a dependant spouse; ensuring adequate support will be paid in circumstances where there is a real risk of non-payment of periodic support, a lack of proper financial disclosure or where the payor has the ability to pay lump sum but not periodic support; and satisfying immediately an award of retroactive spousal support.

Similarly, the disadvantages of such an award can include: the real possibility that the means and needs of the parties will change over time, leading to the need for a variation; the fact that the parties will be effectively deprived of the right to apply for a variation of the lump sum award; and the difficulties inherent in calculating an appropriate award of lump sum spousal support where lump sum support is awarded in place of ongoing indefinite periodic support.

137There is further appellate authority that lump sum spousal support may be ordered where there is a history of abusive behaviour, refusal to pay support or past non-compliance with support orders: see Zenteno v. Ticknor, 2011 ONCA 722 at para. 5 and Racco v. Racco, 2014 ONCA 330, 44 R.F.L. (7th) 348 at para. 31.

138In the present case, the Applicant complains that the Respondent was abusive during marriage, and there were allegations of sexual abuse of the children. More importantly, however, is the abysmal history of the Respondent’s non-compliance with the support award made by Nicholson J. in October, 2014. Mr. Iacobelli has failed on a number of occasions in complying with that order. He defaulted on up to five occasions, including a failure to pay the hydro bill, leaving the children without power when the Applicant was away on holidays, and failing to pay the property tax bill, resulting in the municipality coming close to a tax sale of the property. On each occasion, a motion was brought to strike pleadings, and the Respondent remedied the default and the motion was withdrawn with costs. On each occasion, excuses were made and the Applicant and the children were yet again thrown into financial chaos.

139In hindsight, one of the problems with the Nicholson J. order was the fact that only a portion of that award was enforceable as support. However, if we leave today with a periodic award, the remedy of striking pleadings will no longer be available. All that the Applicant and children will be left with will be the Respondent’s excuses as to why he cannot pay. This is especially so where I have found that much of the Respondent’s income comes from cash, which is not available to the Director FRO through a support deduction order. The Respondent is self-employed, resulting in further enforcement difficulties. A periodic award will be difficult to enforce and will probably immediately go into default if the Respondent’s history is reflective of his compliance in the future.

140Therefore, because of the Respondent’s failure to comply with the interim support order, and the lack of a clear remedy for repayment, a lump sum award is appropriate in the present case.

141As shown in Schedule A, a lump sum award based on spousal support of $1,200 per month is $335,465. That amount will be ordered by way of lump sum spousal support.

Section 7 Expenses for the Children

142The proportionate share of the children’s expenses to be paid under s. 7 of the CSGs is set by reference to the spousal support payable. Although I have ordered lump sum spousal support, it was based upon a payment of $1,200 per month and the fact that it has been or will be received by way of lump sum does not change the fact that the receipt of this spousal support should be accounted for in calculating the parties’ respective proportionate share of these expenses.

143Pursuant to the guideline calculation attached as Schedule “A”, at $1,200 per month, the Respondent’s share of the s. 7 expenses is 74.6% of those expenses.

144Based upon the draft order submitted by the Applicant, she is requesting that the Respondent contribute a proportionate share of Kumon, hockey, swimming, tutoring, dance, Greek school, post-secondary expenses of the children not covered by RESP accounts or the children’s contributions and uninsured medical and dental expenses.

145The evidence confirms that the Kumon, swimming, tutoring, Greek school and post-secondary expenses are legitimate educational expenses to be shared by the parties under s. 7(1) (d) and (e) of the CSGs. The health and dental expenses are also reasonable under s. 7(1)(c) of the Guidelines.

146The hockey expenses are for house league hockey that is played by Michael and Joseph. The cost is $675 per year plus equipment.

147This is not an “extraordinary” extracurricular expense as this involves house league hockey only and it is not a great expense under the circumstances. It is generally covered through the base child support that Mr. Iacobelli is paying. That expense is not included in the s. 7 expenses payable in this matter.

148The dance costs are different. The Applicant gave evidence that Alexandra, Julianna and Michael were in competitive dance, which cost up to $7,000 per year. If the dance is competitive, the expense is extraordinary; if not it is not extraordinary and should be covered by the base guideline support payable by the Respondent.

149Otherwise, the Respondent shall pay 74.6% of the children’s expenses as outlined above.

Equalization of Property

150There are several issues respecting equalization of property:

a. What is the date of marriage value of the Respondent’s business?

b. Was the payment of $349,000 more or less to Annunziata Iacobelli a fraudulent conveyance of matrimonial funds to the Respondent’s mother?

c. Should there be an unequal division of net family property under s. 5(6) of the Family Law Act, R.S.O. 1990, c. F.3?

Date of Marriage Deduction

151On the date of marriage, Mr. Iacobelli owned a partnership interest in Creative Quilting and Designs with his mother. Ms. Russell valued Mr. Iacobelli’s interest that business on the date of marriage as being worth $39,000.

152These parties were married on July 22, 1995. On the day after the parties were married, they set out on a three-week honeymoon in the Mediterranean, travelling to Cyprus, Italy, Monte Carlo and Santorini.

153Mr. Iacobelli testified that he obtained a $30,000 draw from his business but only after the date of marriage. As with much of his evidence, this appears to be disingenuous. The Respondent could not have withdrawn this after the date of marriage, as they left for their honeymoon on the day after they were married. It was unlikely that a sizable draw would have or could have been taken by Mr. Iacobelli while the parties were abroad. Therefore, the funds must have been withdrawn prior to that date. This means that the value of the business would be reduced to $9,000, which would have been reduced by the cash withdrawn by the Respondent prior to marriage.

154The concerns about the Respondent’s valuation of his business are exacerbated by his failure to provide his business’s income statement for July, 1995, which would have shown exactly when the draw was taken. Other monthly income statements surrounding that month were provided. There was no reason given for this omission. Again, typically, crucial disclosure which might have been prejudicial to the Respondent went missing without explanation.

155However, if Mr. Iacobelli drew down $30,000 from his business prior to the marriage to pay for the honeymoon trip, then those funds had not been spent on the date of marriage. Whether the $30,000 is in the business or cash in his hands on the date of marriage, it is still a date of marriage asset to be deducted from Mr. Iacobelli’s net family property.

156I therefore accept Mr. Iacobelli’s value of his interest in the business as being $39,000 on the date of marriage as set out in Ms. Russsell’s report.

Fraudulent Conveyance

157Between 2011 and 2013, as the marriage began to break down, Mr. Iacobelli began to transfer funds to his mother. I have already detailed these transfers above.

158In late 2011, these parties had a joint $300,000 investment account with TD Waterhouse. Mr. Iacobelli began to transfer money out of that account in December, 2011 and the account was emptied two years later in December, 2013. Mr. Iacobelli placed these funds into a joint TD savings account. From that account, Mr. Iacobelli paid $149,000 towards his business Visa, utilizing joint personal funds to pay what was, in effect, a business expense.

159At the same time, payments that matched the Visa payments were made to Annunziata Iacobelli, Mr. Iacobelli’s mother. These funds were paid from the business account, and were posted to the business Visa account in the partnership books. But the funds were actually paid to Mr. Iacobelli’s mother. The entries made by Mr. Iacobelli in the company books were false.

160The net effect was that Mr. Iacobelli paid $149,000 from joint personal funds to his mother during the last years of the marriage.

161The second fraudulent conveyance issue involved funds which were advanced by Annunziata Iacobelli for the purchase of the matrimonial home in 1995. Ms. Iacobelli testified that she had understood that Mr. Iacobelli had substantial cash assets to pay towards the purchase of the home in the amount of $200,000. She said that she had understood that he was saving money for a Corvette but instead were paid by him towards the purchase of the home. In fact, those funds were advanced by Mr. Iacobelli’s mother to the real estate solicitor and the parties signed a promissory note in favour of Annunziata in this amount when the matrimonial home was purchased.

162No payments towards these funds were made until 2012. Mr. Iacobelli says that he repaid the $200,000 owing to his mother from a joint business account in April, 2012, when Ms. Iacobelli was in Florida with the children. He said he always owed the money, but waited until it had accumulated a sufficient amount in the joint business account with his mother before repaying it.

163In her evidence, Annunziata Iacobelli acknowledged that, in the last years of the marriage, she received $350,000 more or less from her son. She also acknowledged in cross-examination that this money “may” have been the same funds that were used to purchase a home, located at 2189 Old Rutherford Road in Vaughan, in her daughter’s name in 2014. A handwritten note²⁶ indicates that Annunziata paid $290,911 toward the total purchase price of $707,000 for that home.

164That home was purchased when Annunziata’s daughter, Elena Iacobelli, Mr. Iacobelli’s sister, was dying of cancer. Although both Mr. Iacobelli and his mother gave evidence that this was a purchase to fulfill his dying sister’s wish to own a home, Elena Iacobelli never lived in the home; she was ill and lived with Annunziata. The home has sat empty since its purchase, and although it was left partly to Mr. Iacobelli and his brother in Elena’s will, both renounced their interest in the estate to enable the home to be transferred to Annunziata Iacobelli. Both Mr. Iacobelli and Annuziata Iacobelli testified that this was again based upon Elena’s dying wish to transfer the home to Annunziata and because she never had a chance to change her will.

165The Applicant alleges that the home really belongs to Mr. Iacobelli. She says he lives in the home. Mr. Iacobelli denies that he lives there, and says that he lives with his mother, paying rent sporadically in the amount of $1,000 per month. The neighbours believe that Mr. Iacobelli lives at 2189 Old Rutherford Road; however, a private investigator could not confirm that Mr. Iacobelli lives there. Mr. Iacobelli says that his mother rents the place, although there has never been a tenant in that home in the nearly six years since Elena died of cancer. Both Mr. Iacobelli and Annunziata testified that she eventually wants to move in there, although she has made no move to sell the home that she presently owns.

166The net effect is that $350,000 was transferred by Mr. Iacobelli to his mother during the dying years of the marriage which was then largely used to purchase an asset which ended up in his mother’s name. The result was that the parties’ joint funds were substantially diminished by the date of separation and the asset that those funds were used to purchase was not available to satisfy the equalization payment.

167The issue is whether this set of transactions were fraudulent transfers with the intent to defeat Ms. Iacobelli’s equalization claim against her husband. If so, is there a resulting trust in favour of Mr. Iacobelli in that home, bringing the $350,000 back into his net family property as of the date of separation?

The Legal Basis for the Claim

168A fraudulent conveyance is defined by s. 2 of the Fraudulent Conveyances Act²⁷ as follows:

Every conveyance of real property or personal property and every bond, suit, judgment and execution heretofore or hereafter made with intent to defeat, hinder, delay or defraud creditors or others of their just and lawful actions, suits, debts, accounts, damages, penalties or forfeitures are void as against such persons and their assigns.

169In other words, there must be:

1. A conveyance;

2. Made with the intent to defeat or defraud a creditor or others with legitimate claims against the settlor.

170Regarding the first requirement, s. 1 of the Fraudulent Conveyances Act defines a conveyance as a “gift, grant, alienation, bargain, charge, encumbrance, limitation of use or uses of, in, to or out of real property or personal property by writing or otherwise.” It is clear that there was a “conveyance” of property by Mr. Iacobelli to his mother. Mr. Iacobelli acknowledges having transferred about $350,000 to his mother during the years 2011 to 2013 and Annunziata agrees that she received it. Nothing could be clearer.

171The major issue is whether the transfer was made with fraudulent intent to defeat a “creditor or other”, namely Ms. Iacobelli.

172At the time of the transfers to Annunziata Iacobelli, the parties had not yet separated and no equalization payment or support was then owing. Ms. Iacobelli was not yet a creditor. However, notwithstanding this, there is authority to suggest that Ms. Iacobelli is protected under the legislation.

173In Beynon v. Beynon, 2001 28147 (ON SC), [2001] O.J. No. 3653, 21 R.F.L. (5th) 255 (S.C.J.), Kruzick J. examined an alleged fraudulent conveyance where a home was bought in the name of the debtor’s partner in the face of a child support obligation around the time that there was a default in that order. He points out that the wording in the act of “creditor or other” is capable of a wide interpretation. Kruzick J. cites Thompson J. in MacDonald v. MacDonald, 1957 420 (ON SC), [1957] O.W.N. 419 (H.C.) quoting from Armour C.J. in Oliver v. McLaughlin (1893), 24 O.R. 41 (C.A.) as follows:

Where it is shown that a settlor has executed a settlement with a fraudulent intent, it is unnecessary to prove the existence of any debt at the time the settlement was made.

174In Indcondo Building Corp. v. Sloan, 2014 ONSC 4018, 121 O.R. (3d) 160 as aff’d by 2015 ONCA 752, Penny J. noted [at para. 47] that it is “not necessary for a party, in attempting to impeach a conveyance, to demonstrate that it had an actual debt owing to it at the time of the on conveyance.” In fact, Penny J. interpreted Beynon to say that creditors and others can be defined as being “broad enough to contemplate a person who, while not a creditor at the time of the conveyance, may become one in the future.”

175In other words, if fraudulent intent is shown in making the property transfers, the fact that the equalization payment and support obligations in favour of Ms. Iacobelli were not yet crystallized fails to save the transaction. She still has the right to make the claim under the legislation.

176It is also apparent to me in this analysis that the marriage was breaking down when Mr. Iacobelli began transferring property to his mother. He knew that the GIC account with TD Waterhouse would be subject to equalization or division when the marriage came to an end. Ms. Iacobelli was clear in her evidence that the marriage was in trouble in 2011 when she became increasingly upset at the physical abuse she says she suffered at the hands of Mr. Iacobelli. She went for counselling at the Yellow Brick House women’s shelter in 2011. She was considering separating in early 2014 but Mr. Iacobelli got sick with subcutaneous cancer, and she held off.

177Mr. Iacobelli also admitted that he knew that there were problems in the marriage in 2011. He attributed this to problems between his brother and Ms. Iacobelli’s brother. He said that they had gone to counselling in 2011 and that “we had our differences.” Although he refused to admit at trial that the marriage was “in trouble” in 2011, he did admit this to be the case in his questioning that took place on October 19, 2016.²⁸ And there was evidence that the couples went to counselling together at Catholic Family Life in November and December, 2012, and Ms. Iacobelli refused to continue with joint counselling with Mr. Iacobelli, disclosing to her individual counsellor abuse and control issues in the marriage.²⁹

178I therefore find that, on the balance of probabilities, Mr. Iacobelli and Ms. Iacobelli both knew that the marriage was in difficulties by October, 2011 and that the payments to Annunziata Iacobelli were made by Mr. Iacobelli thereafter and with that in mind. I have no difficulty in finding that Ms. Iacobelli was a potential creditor of Mr. Iacobelli at the time of the conveyance of funds, and that Mr. Iacobelli knew that the family assets were at risk of being equalized in the foreseeable future due to the breakdown of the marriage that was well underway by late 2011 and 2012.

179I therefore find that Ms. Iacobelli is a “creditor or other” within the meaning of s. 2 of the Fraudulent Conveyances Act.

180The next question is whether these transfers of funds were made with the intent of defeating or defrauding the claims of Ms. Iacobelli in the matrimonial proceedings yet to be commenced.

181As pointed out in Indcondo, it is difficult to determine a party’s state of mind at the time he or she performs an action. That individual will most probably deny fraudulent intent, and there is little by which intention can be determined. It is therefore necessary to infer intent from the actions of the party when the conveyance was made.

182To assist, the court can review “badges of fraud” that have been long standing elements of English Law. These “badges” can raise an inference of intent resulting in a shift of the onus on the conveying party to explain himself. At para. 52 in Indcondo, they are outlined as follows:

The badges of fraud derive from Twyne's Case, Re (1601), 76 E.R. 809 (Eng. K.B.). As interpreted by modern courts, the badges of fraud include:

(a) the donor continued in possession and continued to use the property as his own;

(b) the transaction was secret;

(c) the transfer was made in the face of threatened legal proceedings;

(d) the transfer documents contained false statements as to consideration;

(e) the consideration is grossly inadequate;

(f) there is unusual haste in making the transfer;

(g) some benefit is retained under the settlement by the settlor;

(h) embarking on a hazardous venture; and

(i) a close relationship exists between parties to the conveyance.

183There were two transactions which are being called into question. The first is the payment of $149,000 by Mr. Iacobelli to his mother, Annunziata Iacobelli. He said that this was to repay her for cash that he had taken out of the business over the six previous years which he owed her. The second is the repayment of a $200,000 mortgage registered against the matrimonial home in favour of Annunziata Iacobelli in 1995.

Repayment of Cash Income

184The first conveyance to be considered is the set of transactions whereby Mr. Iacobelli paid $149,000 to his mother. His evidence was inconsistent in regards to this; in fact, it was incomprehensible to me. Mr. Iacobelli went through a convoluted set of transactions whereby he gradually withdrew funds from a joint investment account of some $300,000 between late 2011 to late 2013. By December, 2013, that account was emptied.

185Surprisingly, those funds were then placed into another joint bank account with TD Bank. Although there was little evidence as to the entire proceeds of the investment account, we do know that $149,000 or so was paid from that account towards a business Visa account used by Mr. Iacobelli in the operation of his business. However, the same amounts paid from the TD account towards the Visa were also paid from the business account to his mother. For example, on March 13, 2012 Mr. Iacobelli paid $13,914.45 from the TD Bank joint account towards the TD Visa. Two days later, Mr. Iacobelli paid $13,914.55 which was payable to “A. Iacobelli – Visa”. The payment actually went to Annunziata but was posted to the business Visa account (in the amount of $12,914.55) and to the HST account (in the amount of $1,600.90).

186James DeBresser reviewed the account transactions and his evidence was that $149,751.25 was transferred to his mother by the means of similar matching transactions.³⁰

187As mentioned, Mr. Iacobelli’s evidence was incomprehensible as to both why he did things in this manner and as to the amounts paid to his mother by these means.

188Mr. Iacobelli firstly said that he had received $114,000 in cash payments that he took out of the business and that he owed his mother that amount as his business partner as she did not receive anything from that cash income. He said that this amount was paid by means of these transfers. I pointed out to Mr. Iacobelli that, if he had taken out $114,000 in cash payments, he then owed his mother only $57,000. I also noted that if he was repaying her $114,000, then he had actually taken cash of $228,000 of which he would have owed half to his business partner. He denied having taken $228,000 in cash. He also could not explain these discrepancies to me. He maintained throughout the trial that these transactions had the purpose of repaying his mother $114,000 in cash that he had taken out and that he owed her the same amount.

189Ms. Russell analyzed this set of transactions. She confirmed that Mr. Iacobelli did what Mr. DeBresser said he did, paying the business Visa through personal funds and then paying the same amount to his mother. Ms. Russell admitted that the transactions were “confusing” but said that Mr. Iacobelli was “consistent in his explanation regarding the Indirect Transfers” in his examination for discovery.³¹ However, in cross-examination, Ms. Russell could not explain how Mr. Iacobelli could repay $114,000 that he took by payment of the same amount. She confirmed that Mr. Iacobelli had told her that he was repaying $114,000 as well as $35,000 for other debts “relating to a loan or mortgage”. But she again agreed on cross-examination that Mr. Iacobelli’s evidence as to the set of transactions was “confusing” and she admitted that she did not verify the amounts that Mr. Iacobelli said that he had to pay to his mother.

190It was only in his closing trial submissions that Mr. Iacobelli acknowledged that he should have only paid his mother back $57,000, or one half of the cash receipts of $114,000. This would leave $92,000 of the transfers to Annunziata unexplained. I note that he did say that he paid a portion of the mortgage from this account, but then he also testified that he had repaid the $200,000 mortgage from another joint account with his mother and not from the funds paid to his mother and characterized as business Visa payments.

191Therefore, Mr. Iacobelli gave three stories as to the $149,000 in transfers. As characterized in Ms. Russell’s report, Mr. Iacobelli said during his examinations for discovery that the $149,000 was a repayment of cash payments taken by him from the business. At trial (and to Ms. Russell), he said that he repaid $114,000 by these means, the same amount that he had been paid in cash through the business. In his own closing submissions, he acknowledged that he should have only paid $57,000 for his cash receipts of $114,000 that he had received in past years. He never provided an accounting to anyone of undeclared cash payments received by him, stating that this evidence was on a cell phone which lost its data and on tally sheets disposed of by him in the past.

192Mr. Iacobelli also could not adequately explain why he paid his mother $149,000 by matching payments from two accounts. He said at one point in cross-examination that it was a means of paying his mother from personal funds, and yet expensing the amount through the business. If he was doing this, he was attempting to lessen his business income and thereby reduce his taxable income. If we take Mr. Iacobelli at his word, then he was, as with the income from cash, attempting to defraud the Canada Revenue Agency by reducing his business income. If we do not take him at his word, it was a means of hiding these transfers of personal funds to his mother from Ms. Iacobelli, who also had access to the TD joint account. Ms. Iacobelli testified that she was not aware that these funds were being directed to Annunziata and I believe her when she says this, especially in light of the convoluted means by which Mr. Iacobelli directed those funds to his mother, through false bookkeeping entries and parallel payments of business expenses from a personal account.

193Therefore, a number of the “badges” are present in respect of the payment of the $149,000 to Annunziata Iacobelli. These transactions were kept secret from Ms. Iacobelli and were set up to conceal the true nature of them. Mr. Iacobelli knew that there were “threatened legal proceedings” as he knew that the marriage was breaking down, and that he needed to protect these assets from Ms. Iacobelli’s equalization and support claims. The transfer documents were patently false and intended to deceive. And the consideration is “grossly inadequate”; Mr. Iacobelli said that he owed his mother $114,000 which was the cash that he had removed from the business over the previous six years; however, he acknowledged in his submissions that he had in fact over paid his business partner by $57,000 as he only owed Annunziata half of the cash payments that he had received. This leaves $92,000 in unexplained transfers to Annunziata; Mr. Iacobelli says that he repaid the mortgage from a joint business account.

194Finally, one of the badges of fraud is that the settlor of the funds retains the use or benefit of the monies after the transfer. In this case, it is probable that these funds received by Annunziata were used in the purchase of the home on 2189 Old Rutherford Road in Maple. That home has been placed in the name of Annunziata who appears to be the repository of most of Mr. Iacobelli’s assets.

195This home is, again, an enigma. According to Mr. Iacobelli and his mother, it was purchased because Elena Iacobelli, Mr. Iacobelli’s sister, had cancer and had always dreamed of owning a home. She purchased it, but never lived in the home, because she was being cared for in her last days by Annunziata in her home. Then the home was transferred to Annunziata because days before her death, Elena said that she wanted her mother to have the home. This was not reflective of her testamentary wishes as set out in her will and there is no documentation to support this transfer, effected by Mr. Iacobelli and his brother renouncing their claim in their sister’s estate.

196Annunziata Iacobelli as much as admitted that the funds that she used to purchase this home came from Mr. Iacobelli in various payments between 2011 and 2013. She admitted that the same funds were used, and then denied this to be the case. However, when asked if she had $700,000 to provide other funds for the purchase of the home, she became evasive and did not answer the question. In the absence of an answer to that question, I can only assume the same funds that were paid by Mr. Iacobelli to her between 2011 and 2013 were contributed to the home on Old Rutherford Road.

197Notwithstanding this, according to Mr. Iacobelli, the Old Rutherford Road home has sat unused and empty since Elena passed in 2014. Mr. Iacobelli explained this by saying that his mother wished to move into the Old Rutherford Road home, but had not sold her own place. He said that he could not live there because it was being rented; however, he admitted that no tenant had ever resided there because they had been unsuccessful at renting it. He said that he lived at his mother’s home and paid her $1,000 per month in rent when he could. Neighbours of the Old Rutherford Road property thought that Mr. Iacobelli was living there although the private investigator could not confirm this.

198As with much of Mr. Iacobelli’s evidence, I again find this completely unbelievable. I cannot believe that over the six years since the home was purchased and Elena Iacobelli died, the property could not be rented out. It may very well be that Mr. Iacobelli retains the use of the home; otherwise the facts surrounding the Old Rutherford Road property make no logical sense.

199I therefore find that the transfer of $149,000 by Mr. Iacobelli to Annunziata was done with the intent of defeating Ms. Iacobelli’s claims in these matrimonial proceedings. Mr. Iacobelli has not explained the transactions which were suspicious in both the method by which they were effected, and as to the purpose of the transfers. Therefore, I find that the transfer of these funds was a fraudulent conveyance within the meaning of s. 2 of the Fraudulent Conveyances Act.

Repayment of Demand Mortgage

200On July 6, 1995, the parties purchased the matrimonial home located at 54 Empress Road, Maple, ON. Annunziata advanced $200,000 towards the purchase, secured by a promissory note and mortgage. Mr. Iacobelli repaid it in 2012. This is the second part of the fraudulent conveyance that the Applicant seeks to set aside, and bring back into the equalization calculation.

201The property was purchased for $254,000. It was purchased with the assistance of a small private mortgage of $45,000. However, according to the report from the solicitor acting on the purchase, Don Parente, the majority of the cash to close, $200,000, was provided by Annunziata Iacobelli. A second mortgage collateral to a demand promissory note was registered in her favour in the amount of $200,000.³²

202Ms. Iacobelli testified that she was not aware of this mortgage. She says that she understood that the cash to close came from Mr. Iacobelli, but that he told her that he and his mother were going to “trade” and that she had to sign something to confirm this. She acknowledges that she signed the promissory note prior to closing and that the Respondent’s mother was present and was pleased that she signed the note. She says that after she signed, Annunziata gifted them with $25,000 that Mr. Iacobelli put into stocks and bonds.

203No payments were made on account of the mortgage for the years subsequent to the purchase of the home. However, Mr. Iacobelli paid off the mortgage in full in March or April of 2012, when Ms. Iacobelli was in Florida on a holiday with the children. He says that he had been accumulating funds in a joint business account throughout the marriage, and when there were sufficient funds in that account to pay his mother, he paid off the mortgage.

204This was a family debt. It is evidenced by a promissory note and mortgage. Mr. Parente notes in his trust statement that the $200,000 was paid to him by Annunziata Iacobelli. There is no doubt that both parties signed the promissory note. There is little doubt that Annunziata advanced the $200,000 to Mr. Parente towards the purchase of the home.

205The real issue is whether this was a loan that was expected to be repaid, or whether this was a family advance actually intended as a gift, without expectation of repayment. That finding will inform the issue of whether the repayment of the loan was, in fact, a fraudulent conveyance.

206The Court of Appeal has weighed in on family debts on a number of occasions. The court has reviewed the issue of family debts in light of the issue of whether there was any reasonable expectation of repayment of the debt: see Rados v. Rados, 2019 ONCA 627, 30 R.F.L. (8th) 374 at para. 14 following Zavarella v. Zavarella, 2013 ONCA 720, 117 O.R. (3d) 641 at para. 40.

207In Chao v Chao, 2017 ONCA 701, 99 R.F.L. (7th) 281 at para. 54, the court suggested that an examination of whether there is a loan or a gift would involve determining a number of issues, including documentation, a specified method for repayment, security held for the loan, whether there were advances to one child and not others, whether there was any demand for repayment or repayment prior to separation and whether there has been any partial repayment.

208Chao followed Barber v. Magee, 2017 ONCA 558 at para. 4 where the court stated:

A gift is a transfer in which the absence of an expectation of repayment tends to be reflected in the absence of security, recording, payments or efforts to collect payments. A loan often involves a formal, recorded transfer in which terms are set out and in which repayment is made or sought.

209If this debt was only analyzed on the basis of the loan documentation, then it would be found to be valid. A formal promissory note was signed, and the funds were advanced by Annunziata to the real estate lawyer. A second mortgage was provided to secure the promissory note. The loan as it was structured apparently required repayment.

210However, the history is concerning, as is the evidence of both the Respondent and his mother. There were no repayments made after the funds were advanced until March, 2012. I have already noted that by that point in time, Mr. Iacobelli knew that the marriage was in trouble; he testified to as much during previous questioning in 2016. Therefore, although the funds were repaid prior to separation, this was only when Mr. Iacobelli knew that he may have been confronting matrimonial proceedings for property equalization and support in the near future.

211This is supported by Ms. Iacobelli’s evidence that she was not told that Mr. Iacobelli repaid his mother until after the fact. Although Mr. Iacobelli said that she was aware of the repayment of the loan, I have already noted that his behaviour in payment of the $149,000 to his mother appeared to be designed to hide the payments from Ms. Iacobelli. It is common ground that Annunziata was only paid $200,000 when Ms. Iacobelli was out of the country. I believe it to be more probable than not that Mr. Iacobelli also did not disclose that he was repaying the mortgage to his mother.

212As well, the loan was repaid long after the limitation period for repayment of the loan had expired: see s. 23(1) of the Real Property Limitations Act³³ which provides that a mortgage cannot be enforced after ten years has elapsed from when action could be taken on the covenant. This is even so in the case of a demand mortgage, where, if no payments have been made, payment is due upon registration of the mortgage and the limitation period expires ten years after registration, again unless payment has been made in the meantime on account of the mortgage: see Scaduto v. Lodato, 2006 CarswellOnt 9711 (Ont. S.C.J.) at para. 2.

213Mr. Iacobelli also seemed to pay little attention to repayment of the mortgage throughout. He advanced nearly $90,000 to Ms. Iacobelli’s family for home renovations during marriage rather than repaying his mother’s mortgage. More importantly, in 2011, he paid about $40,000 on his credit card towards a crypt for his mother’s burial and then she repaid that amount to him rather than crediting that amount towards repayment of the loan. He does not seem intent upon repaying the loan in 2011.

214Annunziata also acknowledges that she never made demand under the demand promissory note or the mortgage. She says that she had asked about the loan from time to time, but that Mr. Iacobelli said that he would repay it when he had accumulated the funds.

215Finally, as with much of Mr. Iacobelli’s evidence, his evidence on the loan made little sense and was unsupported by documentation. Mr. Iacobelli said at trial that he had to use a portion of the TD Waterhouse investment account for repayment of the loan. Then he said that he did not repay the loan because he was accumulating money in a joint business account, and when he had $200,000 accumulated, he repaid his mother. He provided no account statements for that $200,000 business account or evidence of repayment. He provided no explanation as to how he repaid $200,000 from a joint account belonging to both himself and his mother that totalled only that amount, which would mean that he was really only paying his mother $100,000.

216I therefore find that, if there was ever an intent to repay the loan, that intent had long expired by the time the loan was paid by Mr. Iacobelli in March, 2012. This was, by the time it was repaid, an unenforceable debt, and Mr. Iacobelli failed to adequately explain how it was repaid or why it was repaid as the marriage broke down, and at the same time he was diverting funds to transfer $149,000 to his mother.

217For all of these reasons, I find that the payment of $200,000 to his mother was again a fraudulent conveyance within the meaning of s. 2 of the Fraudulent Conveyances Act.

Remedy

218Annunziata was not made a party to this proceeding and no one is asking that she repay the funds to the parties or that the Old Rutherford Road property be charged with repayment of the funds which were used to purchase it.

219The Applicant asks for a declaration that the Respondent has a resulting trust interest in that home, and that the amount of $349,000 be added to the Respondent’s net family property as money owed to him or “other property” for equalization purposes.

220I have already found that the transfer of $349,000 is effectively a gratuitous transfer to the Respondent’s mother without valid consideration.

221Where property is transferred to another person without consideration, explanation or other legal grounds, that property is said to be held by way of a resulting trust for the transferor; it “results” back to that person. Even between family members, there is a presumption of resulting trust for gratuitous transfers of funds or property; as stated in Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795 at para. 24:

The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers. When a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended. This is so because equity presumes bargains, not gifts.

222I have already found that the conveyances in this matter were intended to defeat the potential claims of Ms. Iacobelli. There was no gift intended; I have found that the intention was to remove family property from equalization and support claims in the expected matrimonial litigation. The transfers were for no consideration and Mr. Iacobelli’s evidence regarding these transfers of funds was inconsistent and without credibility. He has not disproven the presumption of resulting trust, as I simply do not believe his evidence regarding these transfers.

223Therefore, I find that the funds transferred to Annunziata, or any asset into which they were transferred including the Old Rutherford Road property, are held by Annunziata by way of resulting trust for the benefit of Mr. Iacobelli. The amount transferred to her, $349,000, is an asset held by the Respondent on the date of separation, and are included in his net family property.

Equalization Payment

224I have prepared a net family property statement which can be found at Schedule B to this endorsement. Other than the issues discussed above (date of marriage value of business and fraudulent conveyance) there was little trial evidence with regard to the values of the assets of these parties. Where possible, I have inserted values that are agreed to between the parties based upon the respective net family property statements filed. If there is no agreement and no evidence led at trial (for example concerning the vehicles), I have used the value provided by the party who owned the asset.

225The Applicant has inserted in her net family property statement attached to her submissions the value of the mausoleum purchased by the Respondent for his mother. In fact, the Applicant relied upon the mother repaying those funds to the Respondent as evidence of the lack of expectation for repayment of the mortgage on the matrimonial home. I assume this means that the Applicant agrees that Annunziata, and not the Respondent, owns the mausoleum.

226The Applicant had a chequing account on the date of separation. In the Applicant’s submissions, the solicitors for Ms. Iacobelli had inserted a value of $119.88. However, in the Comparison of Net Family Property Statements³⁴ as well as in the Respondent’s net family property statement attached to his submissions, the amount of $11,989 appears to have been agreed upon. No evidence was led on this account. I assume that the latter value was agreed upon by the parties and the amount of $119.88 was inserted in error.

227There were also real discrepancies on the debt entries in the various net family property statements. Although the parties agreed to a deduction for real estate commission, the issue of capital gains on the Respondent’s industrial condominium and on his 1% residual interest in his mother’s home were not agreed to. They were also not proven during trial and in particular, there was no evidence provided as to the adjusted cost base of the industrial condominiums. The party seeking to claim a deduction is responsible for proving the deduction (FLA, s. 4(3)) and the Respondent did not prove the capital gains deduction on his industrial condominium units owned through the partnership. The capital gains deductions are therefore disallowed.

228Based on the NFP statement attached as Schedule B to this endorsement, the Respondent owes the Applicant an equalization payment of $342,070.

Post-Separation Adjustments

229Under this heading, there is one issue for the Respondent being his claim for occupation rent. As well, the Applicant raised pre-judgment interest in her opening submissions, but never addressed it in evidence or in her final written submissions.

Occupation Rent

230The Respondent states in his closing submissions that he has a claim for occupation rent. He does not quantify this claim and no evidence was led as to the fair rental that might be received for the matrimonial home. The Respondent testified that he paid $1,000 per month to stay at his mother’s residence at present.

231The Respondent was forced to leave the home because one of the children accused him of having sexually molested her. Although those claims were not verified by the Children’s Aid Society or the police, the counsellor certainly took those claims seriously, and it became impossible for the Respondent to reside under the same roof as the children. It was necessary for the Respondent to leave the home, and his responsibility for him leaving the home has yet to be determined and was not placed before the court for a finding.

232The Respondent did not ask for occupation rent in his Answer and Claim by Respondent. In the absence of any evidence supporting that claim, the Respondent’s claim for occupation rent is dismissed.

Pre-Judgment Interest

233This was mentioned in the Applicant’s counsel’s opening submissions, and never mentioned again either in her closing submissions or the draft order. There is a claim for pre-judgment interest in her Application.

234I assume that this claim has been abandoned as there were no submissions as to why the Applicant would be entitled to pre-judgment interest or evidence led as to that issue.

Vesting Order

235The Applicant requests an order vesting the matrimonial home in her name in partial satisfaction of her claims for equalization of property and lump sum spousal support.

236There is statutory jurisdiction to vest a property into the name of a claimant. Under s. 100 of the Courts of Justice Act,³⁵ the court may order that a property be vested into the name of a party. Under s. 9(1)(d)(i) of the FLA, the court may vest property into the name of a spouse to satisfy an equalization payment. Similarly, under s. 34(1)(c) of the FLA, the court may vest property into the name of a party to satisfy a support obligation.

237A vesting order is an enforcement order and the court has a broad discretion to order it to ensure that an order for payment of money is complied with. In Lynch v. Segal, 2006 42240 (ON CA), [2006] O.J. No. 5014, 82 O.R. (3d) 641 (Ont. C.A.), R.A. Blair J.A. confirmed this broad discretion, stating [at para. 32]:

As a vesting order — in the family law context, at least — is in the nature of an enforcement order, the court will need to be satisfied (as the trial judge was here) that the previous conduct of the person obliged to pay, and his or her reasonably anticipated future behaviour, indicate that the payment order will not likely be complied with in the absence of more intrusive provisions: see Kennedy v. Sinclair(2001), 2001 28208 (ON SC), 18 R.F.L. (5th) 91 (Ont. S.C.J.), affirmed (2003), 2003 57393 (ON CA), 42 R.F.L. (5th) 46 (Ont. C.A.). Thus, the spouse seeking the vesting order will have already established a payment liability on the part of the other spouse and the amount of that liability, and will need to persuade the court that the vesting order is necessary to ensure compliance with the obligation.

238Lynch v. Segal was followed by Emery J. in Mumtaz v. Suhail, 2019 ONSC 6234 where the court stated [at para. 44]:

The court should exercise its discretion to grant a vesting order if there is evidence based on the payors past and anticipated future behaviour that indicates it is likely unsecured orders for property or support will not be obeyed unless an order containing more intrusive provisions is made.

239I have already found that Mr. Iacobelli was guilty of misconduct on a number of fronts. He failed to pay the support ordered by Nicholson J. in 2014, throwing the family into chaos and uncertainty on a number of occasions. He removed RESP funds from the children’s RESP accounts, and then frustrated release of those funds to at least one of the children. He surreptitiously transferred funds to his mother with a view to removing those funds from claims by Ms. Iacobelli for equalization of property and support. His conduct was blatant, high handed and without regard to the harm it caused his wife and family.

240Under such circumstances, there is a legitimate fear that Mr. Iacobelli will not comply with the payment orders that I have made in this judgment. He has shown bad faith in the past, and there is no remedy that will work, as has in the past, when motions were brought to strike his pleadings for failure to comply with the Nicholson J. order.

241As well the payment order in this matter totals $677,535 in combined equalization and spousal support. The only major matrimonial asset is the home, which has a value of $1,060,000.³⁶ Mr. Iacobelli’s net equity is therefore $530,000.

242The matrimonial home is therefore vested into the sole name of the Applicant. The sum of $530,000 shall be credited to the amounts owing to the Applicant by the Respondent. The equity will be applied firstly to the equalization claim and then to spousal support because of the greater access to remedies for the spousal support award. This will leave owing the sum of $147,535 in lump sum spousal support and if unpaid after 30 days, judgement shall issue against Mr. Iacobelli in that amount along with a support deduction order.

Restraining Order

243Applicant’s counsel mentioned in his opening and closing submissions that she needed a restraining order, and the draft order contains a restraining order. The issue is not mentioned in the Applicant’s final closing submissions.

244Mr. Stangarone said that a restraining order was necessary because of altercations that have occurred over the years since separation. At one point the Respondent yelled at the Applicant and children from across the street which the Applicant says was the incident resulting in the temporary non-contact order made by Bennett J. on November 17, 2017. There were confrontations between Mr. Iacobelli and the children at both Michael’s first communion and Joseph’s confirmation. On one occasion a number of years ago, Mr. Iacobelli went to Michael’s school and forced Michael to come to the office so that he could force Michael to read a letter in front of him.

245In cross-examination, Ms. Iacobelli admitted that she has not had any direct contact with Mr. Iacobelli since November 27, 2016 and that the children have not had contact with him since 2015.

246The basis of a restraining order is set out in s. 45 of the Family Law Act; that section requires that the claimant have “reasonable grounds to fear for his or her own safety or for the safety of any child in his or her lawful custody.” The same test is set out in s. 35 of the Children’s Law Reform Act.³⁷

247According to Ms. Iacobelli, this was an abusive relationship throughout, and that this included physical abuse. She alleges that one of her children had been sexually abused by Mr. Iacobelli. However, he has relinquished all of his custodial rights against all of the children except Michael, with whom he has reserved his right to continue with his claim for reconciliation therapy which was not addressed at this trial. There has been no contact between Mr. Iacobelli and either the Applicant or the children in more than three years.

248Moreover, other than the incidents at the first communion and confirmation, there have been no serious altercations between the date of separation in May, 2014 and the incident where the Respondent stood across the road yelling at the Applicant and children. There was no restraining order necessary during the first three years of separation.³⁸ Other than a note pinned to the Applicant’s door by the Respondent about the gas card, there has been no breach of the no-contact order.

249A restraining order is a step beyond the non-contact order that was consented to by the parties in November, 2017. It is registered with CPIC and police enforceable. It is a remedy to be reserved to serious cases of ongoing abuse, threats, harassment or spousal control issues. The remedy of lump sum support and a vesting order is partly designed to ensure as clean a break as possible between these parties.

250I can find no present basis for either the Applicant or the children fearing for their safety from the Respondent. The application for a restraining order is dismissed without prejudice to being renewed in the event of further unwanted contact or threats.

ORDER

251There shall therefore be a final order as follows:

a. Commencing July 1, 2020, and monthly thereafter, the Respondent shall pay the Applicant base guideline child support in the amount of $3,066 per month for the four children of the marriage based upon income imputed to the Respondent in the amount of $142,000 per annum.

b. Based upon the Respondent’s income above, and the imputation of income to the Applicant at minimum wage and the spousal support awarded at this trial, the Respondent shall pay 74.6% of the children’s expenses payable under s. 7 of the Child Support Guidelines, including, but not limited to:

i. Kumon;

ii. Swimming;

iii. Competitive dance;

iv. Tutoring;

v. Greek school;

vi. Reasonable post-secondary educational expenses not paid for by the children’s RESP accounts;

vii. Health and dental expenses not covered by any medical and dental plan as available for the children.

c. The Respondent shall pay lump sum spousal support to the Applicant in the amount of $335,465 payable on the terms set out below.

d. The Respondent shall pay an equalization payment of $342,070 to the Applicant on the term set out below.

e. To satisfy the equalization payment and a portion of the lump sum spousal support payment, the Respondent’s interest in the matrimonial home located at 54 Empress Road, Maple ON shall be vested in the Applicant. The equity in the matrimonial home shall be applied firstly to the equalization payment and secondly to the lump sum spousal support which will leave $147,535 owing by the Respondent in lump sum spousal support.

f. The sum of $147,535 of lump sum spousal support left outstanding after the vesting of the matrimonial home into the Applicant’s name shall be payable within 30 days, failing which judgement shall issue in that amount against the Respondent and the director may take all reasonable enforcement steps to collect the said lump sum spousal support.

g. The claim for a restraining order is dismissed without prejudice.

h. SDO to issue.

252The parties may make costs submissions, including costs submissions as to the custody proceedings pursuant to the order of Bennett J. made November 17, 2017. Costs submissions shall be made to the judicial assistant firstly by the Applicant and then by the Respondent on a 15-day turnaround. Submissions to be no more than 10 pages in length, not including offers to settle and bills of costs.

McDermot J.

Corrected date: November 13, 2020

November 13, 2020 – Correction:

1. Para. 251 (e) now reads: To satisfy the equalization payment and a portion of the lump sum spousal support payment, the Respondent’s interest in the matrimonial home located at 54 Empress Road, Maple ON shall be vested in the Applicant…

“Q. But there was trouble in your marriage in 2011. Is that right?

A. 2011, correct.

Q. October of 2011?

A. October of 2011, correct.”

Footnotes

1. 1Trial Ex. 42 and 43.
2. 2There are gasoline expenses which note that they were incurred when the gas card did not go through.
3. 3[3] Trial Ex. 71. It was unclear as to whether Mr. Iacobelli was relying upon this report in calculating his income. The report was produced as part of his undertakings given on questioning, and the expert was not called at trial. The report did state that the business (not Mr. Iacobelli alone) had cash income of $18,000 in 2012, $12,000 in 2013 and $3,000 in the first six months of 2014. The report appears to have added about one half of the cash income to the reported income, without a gross-up for taxes.
4. 4From Schedule 1 of the Marmer Penner Report: Trial Ex. 49. That report calculated annual expenses, and the cash needed to pay for those expenses, considering the income reported by Mr. Iacobelli. Mr. DeBresser did not calculate annual income; he averaged out the deficit and then grossed up the income to account for the tax payable on the cash income. He found the 2008-2014 average to result in a guidelines income figure of $170,000 and the 2012-2014 average to result in an average income of $187,000. Because Mr. DeBresser did not calculate annual guidelines income, I have inserted the annual expenses for which income would have to be otherwise available taking into account declared income. This figure is set out in Schedule 1 of that report. To determine an annual income figure, the deficit would be grossed up by the suggested marginal tax rate of 42%.
5. 5Mr. Iacobelli testified that after 2014, all of his cash income was reported, and the Notices of Assessment are reflective of his cash income. See Trial Ex. 59. He was inconsistent on whether there was reported cash income in 2014.
6. 6Trial Ex. 58.
7. 7SOR/86-600
8. 8R.S.C. 1985, c. 3 (2nd Supp.)
9. 9Trial Ex. 3
10. 10See Kalex Income and Business Valuation Report (February 9, 2017) at p. 16 (Trial Ex. 86)
11. 11See para. 10(e) of the SF Income Valuation Report dated August 22, 2014 (Trial Ex. 71)
12. 12Although Melanie Russell testified that she chose 2010 and 2013 for the years to be analyzed for the income critique.
13. 13See para. 27 of the Respondent’s closing submissions. Unfortunately, that was not his evidence at trial.
14. 14Application filed by Ms.Iacobelli on June 3, 2014 at para. 17 and 19.
15. 15Mr. Iacobelli was in the boardroom with his mother and Mr. Mendicino when he interviewed her as a witness. This was done during the middle of the trial and there was an order excluding witnesses which prevented witnesses at the trial, including Mr. Iacobelli, from discussing the evidence with other witnesses. I believe Mr. Iacobelli when he says he was out of earshot during those discussions, not because I believe that he would tell the truth about that, but because I do not believe that Mr. Mendicino would have participated in any breach of the witness exclusion order made at the beginning of trial.
16. 16Trial Ex. 71
17. 17Trial Ex. 86
18. 18Trial Ex. 49
19. 19Trial Ex. 87
20. 20Trial Ex. 88
21. 21See Ex. 87, para. 39 and 40.
22. 22Ibid., para. 45.
23. 23Ex. 86, para. 5.
24. 24$170,000 – ($21,000 + $7,000) = $142,000. *
25. 25Rogerson and Thompson, The Spousal Support Advisory Guidelines: The Revised Users Guide (April, 2016) at p. 46.
26. 26Trial Ex. 69.
27. 27R.S.O. 1990, c. F.29
28. 28See answer to questions 103 and 104, as follows:
29. 29See Trial Ex. 80.
30. 30See chart prepared as Trial Ex. 50.
31. 31Report of Kalex Valuations Inc. dated October 10, 2017 (Trail Ex. 87) at p. 5.
32. 32See Trail Ex. 65 and 66.
33. 33R.S.O. 1990, c. L.15
34. 34Ex. K, Tab 2
35. 35R.S.O. 1990, c. C.43
36. 36See Trial Ex. 21.
37. 37R.S.O. 1990, c. C.12
38. 38If there was a restraining order prior to November 17, 2017, I was unable to locate it in the file.