COURT FILE NO.: FC-16-52403
DATE: 20200211
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
Bonnie Ho Yee Cheng
Applicant
– and –
David Chan Sau Sze
Respondent
Ken Nathens, for the Applicant
Roger Gosbee, for the Respondent
HEARD: January 16, 20, 21 and 28, 2020
REASONS FOR DECISION
CHARNEY J.:
Introduction
[1] The primary issue in this case is the date of separation of the parties.
[2] In this case the parties have proposed three possible dates of separation. The applicant, Bonnie Cheng, argues that it is September 5, 2013. The respondent, David Sze, argues that it is not until nearly four years later, on March 15, 2017. As an alternative, the respondent proposes January 5, 2015. The date of separation has a significant impact on the equalization of net family property.
[3] Marriages are like balloons. Sometimes they deflate immediately with a single puncture. But often the air escapes slowly as one or both parties withdraw physically, emotionally and financially. In these latter situations, separation is a process rather than an event, and it is difficult to assign a single date as the “date of separation”. Nevertheless, the law requires that a date be chosen for the purposes of valuation and equalization of net family property.
[4] A number of secondary issues arise in this case. They include the value of the respondent’s property on the date of marriage, and the respondent’s income for the purposes of child support.
- Date of Separation
Facts
[5] Each of the parties swore affidavits prior to the trial, and were cross-examined at the hearing.
[6] The parties were married on October 1, 2000. There are three children of the marriage. The first child was born in 1990, when the parties were both teenagers. She is now independent. The two younger children were born in 2004 and 2006. The younger children remain in the primary care of the applicant, and the parties have agreed to a parenting schedule for the respondent.
[7] In the summer of 2013, the respondent discovered that the applicant was involved in an affair. This led to an altercation on September 5, 2013, in which the applicant called the police, who asked the respondent to leave the matrimonial home. This is the applicant’s proposed date of separation.
[8] Also on September 5, 2013, the respondent went to the bank where he and the applicant had a joint line of credit and withdrew $80,000, which he deposited in his own account. The respondent testified that he used $7,000 of this money to pay household expenses and then obtained a bank draft payable to himself for $73,000 to “preserve” the money. He has provided an accounting of how he claims that money was spent.
[9] The next day, the respondent returned to live at the matrimonial home. The applicant testified that she asked him to move out numerous times, but he refused to do so, claiming he could not afford to leave. The applicant testified that the respondent slept on the couch or in a spare room or office after September 2013, and that they did not share a bedroom after September 5, 2013. The respondent stopped attending family functions, including the applicant’s cousin’s wedding, after September 2013. The respondent testified that he did not attend family functions because of continued tension between him and the applicant’s mother.
[10] The parties began to attend marriage counselling together. The applicant contended that the purpose of the counselling was to see if there was any chance of reconciliation, but it soon became obvious that there was not, and counselling ended by July 2014. The applicant testified that they stopped having sexual relations in 2014, after the marriage counselling failed.
[11] The applicant acknowledges that she continued to claim she was “married” on her income tax returns for the years 2013 – 2016, and that she claimed the respondent as a dependant on those returns. She did not check off “separated” until her 2017 tax return. She explained that, at the time, she thought that they could not be “separated” if they resided in the same home. She has since filed amended income tax returns to indicate that she was separated.
[12] The respondent testified that after he found out about the applicant’s affair, the applicant was uncertain whether she wanted to stay in the marriage or leave the respondent for the man she was having the affair with. The respondent and the applicant continued to have sexual relations, went to marriage counselling, and continued to do things as a family. The respondent testified that he used some of the remaining $73,000 he had removed from the joint line of credit to pay for the applicant’s trip to San Francisco and Edmonton, and to purchase expensive gifts for the applicant.
[13] In March 2014, on the advice of the marriage counsellor, the applicant and the respondent went on a trip to Tokyo together to try to re-establish trust in the relationship. The respondent testified that they were intimate on that trip to Tokyo, but the applicant denies this. The respondent testified that he paid for this trip out of the remaining $73,000 he had removed from the joint line of credit.
[14] The parties took two trips to Disney World with their children, one in May 2014, and the second in March 2016. The applicant takes the position that the parties went to Disney World together for the sake of the children; the respondent contends that these trips were family vacations that confirm the spousal relationship. Again, the respondent testified that he paid for these trips from the joint line of credit withdrawal.
[15] The parties also took the children to Montreal in 2015 to attend a soccer tournament. The applicant testified that she went because her daughters asked that she join them, and that she stayed in a separate room from the respondent.
[16] On January 5, 2015, the applicant again called the police following an altercation with the respondent. The respondent was charged with one count of assault. One of the bail conditions was that he not return to the matrimonial home. This is the respondent’s alternate date of separation.
[17] Following this incident, the respondent moved to an apartment and lived away from the matrimonial home for approximately one year. In December 2015, the respondent entered into a peace bond and moved back into the matrimonial home, where he resided with the applicant until the matrimonial home was sold in April 2019.
[18] The respondent contends that he and the applicant resumed their spousal relationship when he returned to the matrimonial home in December 2015. They continued to be intimate, and went on a family vacation with the children to Disney World in March 2016.
[19] The respondent alleges that the parties continued to live together in a spousal relationship until March 2017, when he was first advised of these matrimonial proceedings. The evidence indicates that the applicant commenced this application on December 6, 2016, but the respondent was not served with the application until March 15, 2017. On that date the applicant sent the respondent an email telling him to go to her lawyer’s office to pick up some documents. The respondent attended at her lawyer’s office that same day, and was given a copy of the application. There is no evidence that any effort was made to serve the respondent prior to March 15, 2017. That is the respondent’s proposed date of separation.
[20] As indicated, both parties resided in the matrimonial home until it was sold in April 2019, and the parties continued to have a joint bank account until that date. They shared in the household expenses (although there is some dispute regarding who paid for what).
[21] Neither party has received any funds from the sale of the matrimonial home, and $551,255 from the proceeds of sale remains in trust. The parties agree that this amount should be divided evenly, subject to adjustments for equalization payments and any other post-separation adjustments owing.
[22] The applicant filed the notes taken by the parties’ marriage counsellor during their counselling sessions. While the marriage counsellor was not called as a witness, the parties consented to the notes being admitted as evidence and agreed that I could rely on the notes for the truth of their contents. These notes were helpful; in addition to providing accurate dates for certain events, the notes provided an objective context for the parties’ subjective recollections. Not surprisingly, the parties themselves were often confused or uncertain about certain dates or chronologies in their respective cross-examinations.
[23] The parties were referred to a marriage counsellor by the applicant’s doctor. They attended 15 sessions together between December 2013 and June 2014. The marriage counsellor’s initial assessment, dated December 3, 2013, states that their goal was to “give each other a chance to rebuild their marriage”. The counsellor indicates that “both parties have started to gather information to file for divorce” and that “it seems that the couple want to give each other a chance to rebuild the relationship.”
[24] The counsellor’s notes, read as a whole, indicate a series of ups and downs in their efforts to maintain their relationship, and that, notwithstanding continued mistrust and tension, the parties were “willing to continue spending time together to nurture the relationship”. For example, the note for April 15, 2014, states: “the couple is planning to have a family vacation with the 2 younger daughters at the end of May”.
[25] The applicant continued to have communications with the man with whom she had the affair. This exacerbated the tension and mistrust between the applicant and the respondent. The counsellor’s note from May 27, 2014 states: “The couple…plan to move to live in another area” in an effort to get away from the man. The couple’s intention to move away together is repeated in the counsellor’s June 17, 2014 progress notes.
[26] Joint counselling came to an end on July 3, 2014, when the respondent advised the marriage counsellor that “the couple has decided not to continue their marital relationship”.
[27] In January 2015, following the respondent’s arrest for the domestic incident on January 5, 2015, the applicant began meeting with the counsellor on her own. The counsellor’s final note, dated July 16, 2016, indicates that the respondent had returned to the matrimonial home, but was sleeping in a separate room. The counsellor notes that the applicant did not know what to do: “To end the marriage? Stay the same while it is not working?”
Analysis
[28] Section 4(1) of the Family Law Act, R.S.O. 1990, c. F.3, defines “valuation date” as the earliest of five different events. The event applicable to this case is “The date the spouses separated and there is no reasonable prospect that they will resume cohabitation”.
[29] Numerous cases have dealt with the indicia of separation when partners continue to cohabit. In Al-Sajee v. Tawfic, 2019 ONSC 3857, at para. 26, Chappel J. provided a comprehensive list of 26 factors that might be considered:
Ascertaining when spouses begin to live separate and apart requires a careful analysis of the unique realities of their relationship, routines, social and other habits and practices and living arrangements over time. In deciding how much weight, if any, to give to any particular factor, the court must carefully assess whether there have been any real changes in regard to that factor since the parties were clearly together in a conjugal relationship. In addition, because of the particular dynamics of each relationship, no one factor will be determinative of whether spouses are living separate and apart; a global analysis and weighing of all factors is required. Subject to these caveats, the relevant principles and considerations that emerge from the case-law can be summarized as follows:
There are two aspects to spouses living separate and apart. First, they must live apart from each other, and second, there must be an intention on the part of one or both of them to live separate and apart from the other (Oswell; Greaves).
To live “apart” requires a physical separation between the parties (Oswell, at para. 13). This means that the parties cannot be cohabiting in a conjugal relationship (Greaves). However, the fact that they continue to reside in the same home together does not necessarily mean that they are not living apart. Spouses can be living separate and apart under the same roof. The determination of whether parties who reside in the same home are living separate and apart involves a consideration of all relevant factors, including whether they are occupying separate bedrooms and/or areas of the home and any stated reasons for remaining in the same residence (Oswell, at para. 12; Greaves, at para. 34; Neufeld, at para. 6; S.(K.L.) v. S.(D.R.), 2012 NBCA 16 (C.A.), at para. 20).
By the same token, the fact that the spouses have two residences and spend significant periods apart in the two homes is not determinative of whether they are living separate and apart. As the Ontario Court of Appeal stated in Lachman v. Lachman, 1970 CarswellOnt 122 (C.A.), at para. 12, spouses in these circumstances will only be considered to be living separate and apart if at least one of them intends to end the marital relationship. Where the parties live primarily in separate residences, the court must examine all of the other circumstances surrounding their relationship to determine whether they were, in fact, living separate and apart…
In order to establish the requisite intent to live separate and apart, there must be a withdrawal by one or both spouses from the matrimonial obligation with the intent of destroying the matrimonial consortium or of repudiating the matrimonial relationship (Oswell, at para. 14; Greaves, at para. 34). The term “consortium” does not have a precise or complete definition, but refers broadly to the companionship, love, affection, comfort, mutual services and support, and sexual relations typically involved in the marital relationship (Kungl v. Schiefer, 1960 CanLII 22 (ON CA), [1961] O.R. 1, (C.A.), at para. 11; Molodowich v. Penttinen, 1980 CarswellOnt 274 (Dist. Ct.), at para. 16).
The law does not require a meeting of the minds regarding the intention to separate; a physical separation, coupled with the intention of one party to live separate and apart, is sufficient (Strobele v. Strobele, 2005 CarswellOnt 9201 (S.C.J.), at para. 30; S.(H.S.) v. D.(S.H.), 2016 CarswellBC 1975 (S.C.), at para. 40); Nearing v. Sauer, 2015 BCSC 58 (S.C.), at para. 54). As McDermot J. stated in O’Brien v. O’Brien, 2013 ONSC 5750 (S.C.J.), at para. 50:
Unlike the decision to marry, the decision to separate is not a mutual one. It is a decision which is often made by one party over the objections of the other. Those protestations matter not; once one party has decided to permanently separate and has acted on it, the other party has no ability to stop the process or object to it.
A clear statement or unequivocal act by one of the parties of their desire to terminate the relationship will be very relevant to the determination of whether parties are living separate and apart (O’Brien, at para. 52; S.A.H. v. I.B.L., 2018 BCSC 544 (S.C.), at para. 17). However, the intention to separate need not be unambiguously relayed to the other spouse by way of a verbal expression of settled intention. In the context of both common law relationships and married couples, the courts have held that a relationship has come to an end when either party regards it as being at an end, and that party by their conduct has demonstrated in a convincing manner that their state of mind on this issue is a settled one (Sanderson v. Russell (1979), 1979 CanLII 2048 (ON CA), 24 O.R. (2d) 429 (C.A.), at para. 432; Hodge v. Canada (Minister of Human Resources Development), 2004 SCC 65 (S.C.C.), at para. 42; S.(H.S.), v. D.(S.H.), at para. 43; Naegels v. Robillard, 2019 ONSC 2662 (S.C.J.), at para. 37).
In assessing whether there is an intention on the part of one or both parties to live separate and apart from the other, the court must strive to determine their true intent and not simply their stated intent at the time of hearing (Oswell, at para. 18; Greaves, at para. 34; R.(T.) v. K.(A.), 2015 ONSC 6272 (S.C.J), at para. 47).
A party’s intention to live separate and apart will not necessarily be broken by brief references by that party to the possibility of reconciliation where no serious steps were taken to move towards such a goal (Nearing, at para. 59).
The degree to which the parties were intimate with each other is a relevant consideration (Oswell, at para. 15; Rosseter, at para. 38; Anthony v. Anthony, 2019 ONSC 650 (S.C.J.), at para. 42). However, the absence of sexual relations is not a conclusive indicator that the parties are living separate and apart (Newman v. Newman, 1970 CarswellOnt 123 (C.A.); Cooper v. Cooper (1972), 1972 CanLII 1901 (ON SC), 10 R.F.L. 184 (Ont. H.C.); Oswell, at para. 15). Similarly, the fact that the parties have engaged in sexual relations is not determinative of whether they remain separate and apart or have reconciled. Parties who are generally living separate lives in separate homes may be found to be living separate and apart despite occasional incidents of sexual intimacy and discussions of reconciliation (Greaves, at para. 36; S.(K.L.), at para. 23; Wells. v. King, 2015 NSSC 232 (S.C.), at para. 23). However, the presence of sexual relations while the parties are still physically living with each other will be a strong indicator that they continue to cohabit in a conjugal relationship (Tokaji v. Tokaji, 2016 ONSC 7993 (S.C.J.), at para. 26).
Whether the parties have been involved romantically with other people (Rosseter, at para. 39). However, the fact that they have had relationships with other people is not determinative either, particularly if the other party was unaware of the other relations (Neufeld, at para. 75).
Whether the parties have continued to discuss family issues and problems and communicate about daily issues (Greaves, at para. 34; Cooper, at para. 12; Oswell, at para. 16).
Have there have been any changes in expectations regarding their accountability to each other for daily activities? (Oswell, at para. 37).
The extent and nature of their contact with each other, including whether they have continued to participate in joint social activities (Cooper at para. 15; Oswell, at para. 16; Greaves, at para. 34; Torosantucci; Rosseter, at para. 26; Anthony, at para. 42). In assessing any contacts, the court should consider whether the events were evidence of an ongoing relationship or reconciliation or simply “rare moments of friendliness or civility” (Torosantucci; Daley v. Gowan, 2015 ONSC 6741 (S.C.J.), at para. 66).
Whether the parties spent vacations together (Oswell, at para. 26; Rosseter, at para. 34; Henderson v. Casson, 2014 ONSC 720 (S.C.J); Neufeld, at para. 75; Anthony, at para. 42 ).
Attendances by both parties with their children for family events, activities and even family vacations is relevant but not determinative, as these may simply reflect the parties’ efforts to co-parent in the best interests of the children post-separation (Volcko v. Volcko, 2015 NSCA 11, at para. 10-11; Neufeld, at para. 75(j)).
Have the parties continued to share and participate in each other’s daily routines as in the past, such as eating meals together and sharing household chores? (Cooper, at paras. 13 and 14; Oswell, at paras. 16 and 17; Rosseter, at para. 20; Henderson; Anthony, at para. 42).
Whether they have celebrated special occasions together (Oswell, at para. 37; Rosseter, at para. 29)
Whether they have purchased gifts or exchanged other tokens of affection with each other (Oswell, at para. 29; Rosseter, at para. 29; Neufeld, at para. 75).
Whether they have supported each other with respect to extended family obligations, through difficult times and with each other’s personal issues (Rosseter, at para. 31; Henderson v. Casson, 2014 ONSC 720 (S.C.J)).
How the parties referred to each other and held out their relationship to third parties (Anthony, at para. 42; R.(T.) v. K.(A.), at para. 46).
Documentary evidence respecting their relationship status is also relevant. For example, the manner in which the parties described their status in important documents, including Income Tax Returns, and whether they have claimed any benefits that are conditional on their relationship status are important considerations (Czepa v. Czepa (1988), 1988 CanLII 8647 (ON SC), 16 R.F.L. (3d) 191 (Ont. H.C.J.), at para. 13; Oswell, at para. 18; Greaves, at para. 34; Joanis v. Bourque, 2016 ONSC 6505 (S.C.J.), at para 25; Rosseter, at para. 47; Henderson, at para. 35; Tokaji, at para. 25). Once again, however, these considerations are not determinative, and the court should consider any explanations which either party may proffer before determining the weight, if any, to accord to them (Morin v. Morin, 2011 ONSC 1727 (S.C.J.), at para. 27; Anthony, at para. 42).
If the parties have retained a counsellor or mediator, the purpose for which the mediator was consulted may also be of assistance in determining whether the parties have separated (Oswell, at para. 28).
Whether there have been any changes in the way the parties manage their financial affairs, including whether they have taken steps to separate their financial dealings (Newton v. Newton, 1995 CanLII 17875 (ON SC), 1995 CarswellOnt 84 (S.C.J.); Rosseter, at para. 41; Tokaji, at para. 24; Anthony, at para. 42).
Have the parties continued to share the use of assets? (Rosseter, at para. 43).
The parties’ behaviour towards each other in the presence of third parties (Rosseter, at para. 44).
Whether the parties have taken legal steps to legally terminate their relationship and resolve issues relating to their separation (Oswell, at para. 35; Tesfatsion v. Berhane, 2013 CarswellOnt 213 (S.C.J.), at para. 53; Rosseter, at para. 49). However, this factor is not determinative and may be given little weight if no further steps were taken and other factors point to a continuation of their involvement with each other as a couple (Rosseter, at paras. 49-51).
[30] With respect to the determination of the valuation date for the purposes of equalization of net family properties, Chappel J. states, at para. 37:
The identification of the valuation date involves the determination of two issues. First, the court must decide when the parties separated. Second, it must determine the point at which there was no reasonable prospect that the parties would resume “cohabitation.”… [A]t the second phase of the analysis, the task is to determine the point at which there was no reasonable prospect that the parties would resume living together in a conjugal relationship. The notion of “reasonableness” is at the heart of this analysis. Half-hearted suggestions or discussions about possible reconciliation will not necessarily move the valuation date forward in the absence of sincere action by the parties to put their relationship back on track (Strobele, at para. 32)… A sincere desire on the part of one party to resume cohabitation and efforts by that party to advance this objective will not generate a reasonable prospect of resumed cohabitation if the other party has no mutual interest in exploring this possibility. In the words of Corbett J. in Strobele, at para. 32, “groundless hopes of reconciliation should not extend the valuation date where one spouse has been clear in his or her intentions to end the relationship” (see also O’Brien, at para. 50).
[31] There are significant factual disputes in relation to the date of separation. For example, the applicant claims that she and the respondent did not share a bedroom after September 5, 2013, while the respondent disputes this. The applicant claims that they did not have sexual relations after June 2014, while the respondent disputes this.
[32] There are, however, a number of undisputed facts that assist in determining the date of separation.
[33] Certainly several of these factors support the applicant’s position that the date of separation was September 5, 2013. The fact that the respondent took $80,000 from the parties’ joint line of credit on that day, money over which he maintained sole control regardless of how he used it, indicates an intention to separate his financial future from the applicant. This is further supported by the fact that the respondent repaid his mother’s pre-marriage loan of $200,000 by withdrawing funds from his investment account in September and October 2013. This strongly suggests that the respondent was preparing for separation and that the parties were no longer an economic unit.
[34] On the other hand, whether the parties shared a bedroom (a fact in dispute), there is no dispute that the parties continued to have a sexual relationship until sometime in 2014.
[35] It is also clear from the notes taken by the marriage counsellor that there was, at least in the first six months of 2014, a reasonable prospect that the parties would resume cohabitation (assuming that cohabitation had stopped). The parties attended marriage counselling together and were “willing to continue spending time together to nurture the relationship”, went on vacation to Tokyo together in March 2014 and on a family vacation to Disney World in May 2014. The parties considered moving to a different location together.
[36] I am satisfied, based on this evidence, that the valuation date cannot be fixed as early as September 5, 2013. By that date neither party had given up on the marriage.
[37] I am also satisfied that by the time joint counselling had come to an end in July 2014, there was no longer any reasonable prospect that the parties would resume cohabitation. Joint counselling did not end because they had reconciled, it ended because there was no reasonable prospect of reconciliation. By this point all conjugal relations between them had ceased, and although they continued to cooperate when it came to their children, they no longer interacted like a family on a day to day basis.
[38] I have considered the fact that the applicant continued, in 2015 and 2016, to file her income tax returns as “married” and to claim the respondent as a dependant. I am not persuaded that this was an innocent error on her part, but I am persuaded that it was done to obtain a tax deduction and was not an accurate reflection of the status of their relationship. She has since amended her returns, and any financial advantage has been negated.
[39] In my view, both of the dates proposed by the respondent are well past the date when cohabitation had ceased and there was no reasonable prospect that the parties would resume cohabitation. The respondent was removed from the matrimonial home on January 5, 2015, and did not return for almost a year. Even when he did return, I am satisfied that he did so for financial reasons and never returned to the same bedroom as the applicant. As such, the latest possible separation date would be January 5, 2015.
[40] That said, even though they still lived in the same home, nothing significant changed between July 2014 (the date when joint counselling ended) and January 2015, such that I would choose the latter date over the former. Matters continued to deteriorate between those dates, which finally led to police intervention and a restraining order in January 2015, but all the significant elements were already in place by July 2014.
Conclusion re: Separation Date
[41] Accordingly, I conclude that the date of separation for the purposes of the valuation date in Part I of the Family Law Act is July 3, 2014. This is not the date proposed by either the applicant or the respondent, but, in my view, is the date most strongly supported by the evidence.
- Respondent’s Assets on Date of Marriage
Facts
[42] The respondent takes the position that he had an investment account worth $200,000 on the date of marriage.
[43] The respondent testified that in 1995 he began to invest in the stock market, and has continued to invest since that time. Between 1995 and 1999, his mother lent him a total of $200,000 for this purpose. He has provided a copy of a loan agreement, signed by him and his mother, and dated September 6, 1999, which states:
I, David Sze…hereby promise to pay back in full the borrowed amount of $200,000 from (his mother). The money will be used for the purpose of investing in stock market with TD Waterhouse account, all stocks can be sold at any time with the direction of (his mother) to pay back in full as requested.
[44] As indicated, the money was lent over a period of five years, and there is no evidence how much was lent at any time during those five years.
[45] The respondent testified that there was no fixed date for the repayment, but he repaid his mother from his TD Waterhouse account in September and October 2013. He stated that these dates had nothing to do with the events of September 5, 2013, but just happened to be when his mother asked for repayment of the loan.
[46] The respondent also testified that on the date of marriage he had $200,000 in his TD Waterhouse investment account, but he has no bank records to confirm this. He testified that he asked the bank for records, but the bank told him that they cannot obtain any records prior to 2008. He does not, however, have any affidavit or even any correspondence from his bank to confirm his efforts to obtain records or to confirm that he was informed by the bank that the records from 2000 are not available.
[47] The applicant points out that in the respondent’s first Financial Statement dated May 25, 2017, the respondent swore that on the date of marriage the estimated value of the TD Waterhouse account was $120,000. This was repeated in his sworn Financial Statement filed with the court and dated November 10, 2017. There was no reference to the $200,000 TD Waterhouse account on the date of marriage in the respondent’s sworn Financial Statement dated October 22, 2019.
[48] When asked to explain why, in 2017, he swore that there was only $120,000 in the TD Waterhouse account on the date of marriage, the respondent explained it was because he had already paid back $80,000 to his mother before the marriage.
[49] This evidence was entirely inconsistent with the evidence in the respondent’s affidavit, where he testified that that he took $200,000 from that account in September and October of 2013 to pay back his mother. It was clear on cross-examination that the respondent was generally confused about his financial affairs. His story kept changing. He could not explain many of his financial documents, answering that he did not prepare the financial information and the questions should be directed to his accountant.
[50] The respondent also explained that he had two investment accounts with TD Waterhouse, an investment account, and a margin account. The margin account was money borrowed to purchase stocks, and in order to calculate the value of his investment account you have to know what is owed in the margin account.
[51] While the applicant accepts the fact that the respondent’s mother lent him $200,000 over a five year period prior to the marriage, and that the loan was paid back in September/October of 2013, she disputes the respondent’s claim that he had $200,000 in his investment account as of the date of marriage.
Analysis
[52] Pursuant to s. 4(3) of the Family Law Act, the onus is on the respondent to prove the value of his assets on the date of marriage. See: Jacobs v. Jacobs, 2011 ONSC 2699, at paras. 41 – 43; May v. May, 2013 ONSC 4819, at paras. 103 – 110; Colivas v. Colivas, 2017 ONSC 4730, at para. 177. The respondent has provided no documentary evidence to confirm the value of his investment account in 2000. He has provided no evidence from his bank that they are unable to access bank records from the year 2000. The evidence that he provided at the hearing is inconsistent with his sworn financial statements from 2017. He has provided no evidence as to what he owed in his margin account in October 2000, which would have to be deducted from the amount in his investment account.
Conclusion re: Assets on Date of Marriage
[53] Given the unreliability of the respondent’s testimony on this point, I am not prepared to accept his evidence of value, or his evidence that the bank is unable to access records from 2000, without some corroboration from the bank. As such, I find that the respondent has not met his onus under s. 4(3), and assign no value to the TD Waterhouse investment account on the date of marriage.
- Child Support
[54] Since April 2019, the respondent has been paying child support of $532 per month based on an income of $35,000 per year.
[55] The respondent’s Line 150 income for the years 2012 to 2018 are:
2012: $31,279
2013: $23,301
2014: $22,027
2015: $21,098
2016: $39,361
2017: $25,498
2018: $15,395
[56] The applicant submits that the respondent should be paying child support on the basis of an imputed income of $75,000.
[57] The respondent earned between $60,000 and $70,000 per year as an employee until 2009. In that year he started his own business as an IT consultant, working for various clients. He acknowledges earning approximately $35,000 per year until 2014, when he was involved in an automobile accident, which, he alleges, severely curtailed his ability to work. He has provided no medical evidence to support this position. Moreover, his income tax returns do not, in fact, show any decline in income after 2014; in fact, 2016 was his best reported year.
[58] The respondent has not applied for any employment since 2016. He testified that he has not looked for a job since 2016 because he has been taking care of his now 16 year old and 14 year old daughters since that date.
[59] The respondent acknowledges that, as an IT consultant, he charges his clients $70.00 per hour.
[60] The applicant points out that, at $70.00 per hour, the respondent billed less than 5 hours per week in 2017, and less than 4 hours per week in 2018. The respondent testified that his hours worked in 2018 were particularly low because that was the year that they had to sell the matrimonial home, and he stayed home to clean the house for the showings. He expected a significant increase for 2019, because he has picked up new clients.
[61] The applicant also points to documents signed by the respondent where he has claimed an annual income of $48,000 (his rental application) and $70,800 (a car loan application dated May 1, 2015). The respondent testified that he did not fill in these amounts, but only signed the applications after they were filled in by others.
[62] Sections 19 of the Child Support Guidelines, O. Reg. 391/97 addresses imputing income to a spouse and sets out a non-exhaustive list of circumstances in which income may be imputed. These circumstances include intentional under-employment or failure to report income from sources such as cash payments.
[63] In this case, the applicant alleges that the respondent earns a substantial portion of his income in cash, which is not reported, and therefore, his notices of assessment do not accurately reflect his income.
[64] The onus is on the party seeking to impute income to the other party to establish an evidentiary basis on which this finding can be made. As noted by the Court of Appeal in Drygala v. Pauli (2002), 2002 CanLII 41868 (ON CA), 61 O.R. (3d) 711 (C.A.), at para. 44, when considering the proper basis for imputing income under s. 19 of the Guidelines, there must be “a rational basis” underlying the figure selected and the exercise of the court’s discretion must be “grounded in the evidence.” See also: Mason v. Mason, 2016 ONCA 725, at para. 127.
[65] The applicant’s position on this issue is, in my view, entirely reasonable. The respondent is an educated individual who earned between $60,000 and $70,000 until 2009. He acknowledges that he bills his time at $70.00 per hour. His explanations for working only 4 or 5 hours per week strain credulity. The $75,000 annual income proposed by the applicant would equal only 22 billable hours per week based on a 48 week year. The respondent has provided no explanation to justify an income of only $35,000 per year.
[66] Accordingly, the respondent’s child support for two children is $1139 per month, calculated on the basis of an imputed income of $75,000 per year, retroactive to May 2019.
[67] The respondent did not dispute the validity of the s.7 expenses claimed by the applicant, only his pro rata share based on his income. Based on the imputed income of $75,000, s.7 expenses will be shared equally by the parties since the applicant’s income is approximately the same as the respondent’s imputed income.
- Equalization and Adjustments
[68] The parties have provided alternative calculations for the equalization of net family property based on the various proposed valuation dates and the validity of the respondent’s claim to a $200,000 investment account asset on the date of marriage.
[69] I have chosen a different valuation date than that proffered by the parties, however, it is my understanding that the equalization for a valuation date of July 3, 2014 is substantially similar to the January 5, 2015 valuation date. Accordingly, I will base this decision on the calculations provided for the January 5, 2015 valuation date. If either of the parties is of the view that these calculations require further adjustment on that basis, they may file a 14B motion seeking an adjustment.
[70] The parties agree that if the January 5, 2015 valuation date is chosen, and the alleged $200,000 date of marriage asset is not included, then the respondent owes the applicant an equalization payment of $79,796.86.
[71] The applicant also contends that there should be an adjustment of at least $30,000 for the respondent withdrawal of $80,000 from the parties’ joint line of credit on September 5, 2013.
[72] The respondent has provided an accounting of the $80,000. Based on this accounting it is clear that at least $20,000 of this money was spent after the July 3, 2014 valuation date on matters that were personal to the respondent, including legal fees, counselling, furniture, living expenses in 2015, and a down payment on a car in May 2015.
[73] To the extent that the respondent spent the money prior to the July 3, 2014 valuation date, it is money that was spent prior to separation and will not appear in the respondent’s net family property on that date. The respondent deposited the $80,000 in his own bank account on September 5, 2013, and claims to have spent approximately $7,000 on household expenses. He then took out a bank draft for himself for the remaining $73,000 on September 30, 2013. He testified that he used that money to pay for certain family expenses, including the trips to Tokyo and Disney World. There is no evidence that traces the payment of these various expenses to the $73,000 bank draft.
[74] The applicant notes that between October 21, 2013 and January 31, 2015, the respondent deposited $110,000 into his investment account from other bank accounts, and alleges that the $73,000 bank draft found its way into the respondent’s investment account. Given the fungibility of money, however, it is impossible to determine whether the $73,000 bank draft was the source of any of these funds or was used for other purposes.
[75] The question, however, is whether the $80,000 – or what remained of it by July 3, 2014 - appears in the respondent’s assets on the date of separation. If it does, then it is already included in the net family property for the purposes of equalization.
[76] Based on the evidence I have reviewed, I am satisfied that the $80,000 was either spent on family expenses prior to the valuation date, or, any money not spent by that date, had already found its way into one or more of the respondent’s other bank accounts, and has therefore already been included in the respondent’s net family property for the purposes of equalization. On this basis, there is no need to provide a further adjustment. This is not a case, like Al-Fatlawi v. Al-Bajawi, 2019 ONSC 7210, where the evidence indicated that the respondent withdrew money from the joint line of credit and sent it to his brother in Iraq in order to move the funds beyond the applicant’s reach after their martial relationship ended.
[77] The parties also dispute the adjustments that should be made with respect to the household expenses for the periods between 2015 – 2017, and 2017 – 2019.
[78] For the period January 2015 to September 2017, the applicant alleges that she paid $121,150 in expenses for: utilities and property taxes (approx. $33,000), mortgage (approx. $64,150), and the line of credit (approx. $24,000).
[79] During this same period the respondent contributed $14,800 toward expenses: $4,500 for the mortgage, $5,016 for Bell TV/Internet, $2,398 for house insurance and $2,881 for car insurance.
[80] I agree with the applicant that the respondent should not be credited for the $800 per month he claims to have spent on food and clothing for the children during that period. The respondent has not produced any receipts to verify this estimate, and the applicant could also claim similar amounts for food and clothing for the children during the same period. Moreover, the respondent was not paying child support during the period from January 2015 to December 2015 when he was not residing at the matrimonial home.
[81] Accordingly, I accept the applicant’s calculation for the adjustment for the January 2015 to September 2017 period (rounded for simplicity): $121,150 (paid by the applicant) minus $14,800 (paid by the respondent) = $106,350 divided by 2 = $53,175. Accordingly, the respondent owes the applicant $53,175 for the adjustments from January 2015 to September 2017.
[82] The applicant alleges that the respondent owes her an additional $17,609 for the adjustments for the period October 2017, when an interim agreement was signed, to April 2019, when the matrimonial home was sold.
[83] The respondent acknowledges that he owes $6,709 for that period for property taxes and penalties pursuant to the October 10, 2017 interim agreement between the parties. These were expenses for which he was responsible but failed to pay.
[84] As I understand the applicant’s position on this issue, the disputed amount ($10,900) is based on her understanding that the parties’ contributions to the matrimonial home expenses after the October 10, 2017 interim agreement would be subject to a further adjustment and equalization once the matrimonial home was sold. That is not how I read the agreement, which begins with the statement: “The parties shall be responsible for the following matrimonial home expenses”. The respondent has paid those expenses for which he is responsible (except the $6,709 referenced above) and there is nothing in the agreement to suggest that there would be a further adjustment if the expenses for which the applicant agreed to be responsible exceeded the expenses for which the respondent agreed to be responsible.
[85] Accordingly, for the period October 2017 to April 2019, I accept the respondent’s position that he owes the applicant $6,709.
- Conclusion
[86] In summary, I make the following orders:
(a) The date of separation for the purposes of the valuation date in Part I of the Family Law Act is July 3, 2014.
(b) The respondent’s child support for two children is $1,139 per month, calculated on the basis of an imputed income of $75,000 per year, retroactive to May 2019.
(c) Based on the imputed income of $75,000, s.7 expenses will be shared equally by the parties.
(d) No value is to be assigned to the respondent’s TD Waterhouse investment account on the date of marriage.
(e) The respondent owes the applicant an equalization payment of $79,796.86.
(f) The respondent owes the applicant $53,175 for the adjustments from January 2015 to September 2017.
(g) The respondent owes the applicant $6,709 for the adjustments from October 2017 to April 2019.
(h) The net proceeds from the sale of the matrimonial home will be divided in accordance with these findings.
[87] If the parties have any questions regarding the implementation of this Order, or any issues regarding calculations based on the valuation date (see para. 69 above), they may file a 14B motion to my attention.
[88] If the parties are not able to agree on costs, the applicant may file written submissions of no more than 3 pages, plus costs outline and any offers to settle, within 30 days of the release of this decision. The respondent may file reply submissions on the same terms within a further 20 days.
Justice R.E. Charney
Released: February 11, 2020
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
Bonnie Ho Yee Cheng
Applicant
– and –
David Chan Sau Sze
Respondent
REASONS FOR DECISION
Justice R.E. Charney
Released: February 11, 2020