Grande v. Sciacca, 2021 ONSC 1625

NEWMARKET COURT FILE NO.: FC-20-549-00 DATE: 20210308 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Nicolina Grande, Applicant – AND – Claudio Sciacca, Respondent

Counsel: Alison Dennis, Counsel for the Applicant Paul Daffern, Counsel for the Respondent

HEARD: February 17, 2021

RULING ON MOTION

JARVIS J.

1The applicant (“the wife”) has brought a motion for spousal support payable by the respondent (“the husband”). She seeks an order for $34,297 monthly starting April 12, 2020: this is based on a yearly income imputed to the husband of $1,076,844 and $10,540 imputed to her. The husband proposes that he pay $6,750 a month.

2The parties rely on the following evidence:

(a) Affidavits of the wife sworn February 1, 2021 and February 12, 2021 (reply) and their exhibits; (b) Affidavit of Roberta Burdi sworn January 29, 2021 and its exhibits; (c) Affidavit of Michael Ferreira sworn January 31, 2021 and exhibit; (d) Financial Statements of the wife sworn April 24, 2020, November 6, 2020 and February 3, 2021; (e) Affidavit of the husband sworn February 11, 2021 with exhibits; (f) Financial Statements of the husband sworn July 13, 2021 and November 13, 2021.

3Each party also filed a factum, with authorities.

4The wife says she has been a stay-at-home mother for most of the parties’ twenty-six years of married cohabitation and that the husband and his siblings (including his mother) own and operate at least fifteen companies, most inter-related. The family has enjoyed a high-end lifestyle funded by the husband through his various business interests. His income tax returns do not reflect his actual income or cash flow available to him.

5The husband disclaims meaningful knowledge of his business interests and challenges the wife’s income and her expenses (actual and proposed) as “extravagant and unreasonable”. He admits to a 2020 income of $251,000 for temporary spousal support purposes.

6Roberta Burdi is a friend of the parties. She worked for a company (“Balmoral”) that undertook renovations to the parties’ matrimonial home in late 2017/early 2018 and was directed by the husband to send the invoices for payment to a family company (“JCL Group” or “JCL”). The invoices, totalling $6,577.77, were paid by JCL.

7Michael Ferreria is the owner of a renovation company (“Rose Gold Homes”) that also did renovations to the parties’ matrimonial home in late 2017/early 2018. He was instructed by the husband to send the invoices for payment to JCL. The total paid was $212,142.02.

8The husband has not disclosed any interest in JCL.

Relevant background

9The following evidence and procedural background are relevant:

(a) The parties were married on December 3, 1996 and separated on April 11, 2020; (b) There are three children of the marriage, ages ranging from 27 to 21 years of age, none of whom qualified as a dependant child of the marriage when the motion was argued although all continue to reside in the matrimonial home. The oldest works part-time; the younger two are not employed due to the pandemic but the middle child is intending on returning to full-time studies this month; (c) About five years before the parties separated the mother started a Laser Hair removal business that she says (and the husband disputes) earned her a nominal income. In 2019 she started a teeth-whitening business with her sister that has not been profitable (also disputed by the husband). He claims that the wife has earned cash income not declared to the tax authorities and the court; (d) The wife’s gross income in 2019 was $2,846. In 2020 she earned no income; ¹ (e) The wife’s April 24, 2020 financial statement indicated expenses of $380,687. In her February 3, 2021 financial statement, she disclosed yearly expenses of $158,583 which she said represented her current expenses; her lifestyle having been “significantly impacted” by the husband’s refusal to pay appropriate support; (f) The wife claims that the parties enjoyed a “luxurious lifestyle with expensive vacations, luxury vehicles, designer clothing, jewellery, a large house with a swimming pool, vacation property, housekeepers, landscapers, laundry lady, etc.” ² Cash was used to pay the parties’ housekeeper, laundry lady, property taxes, post-secondary expenses for the children, designer clothing, jewellery, other items described as “luxury” by the wife ³ and restaurants and other entertainment. Nine vacations in 2019 included California (four times), the Dominican Republic (twice), Italy, Japan, and London U.K.; (g) The purchase of the wife’s December 2018 Tesla was facilitated through a $62,500 deposit made by the husband’s company, Ontario Trucking and Disposal Ltd. (“OTD”) and the automobiles for the parties’ three children (a BMW, Range Rover and Mercedes) through one or more of the Sciacca family companies (see (j) below). The husband’s 2020 Jaguar automobile was leased through a company (JCL) allegedly owned by his mother having a $1,452 monthly cost; (h) The matrimonial home is owned jointly and, when the motion was argued, had been listed for sale for $2,934,000. There is about $465,000 owing on a mortgage registered on title. The parties also owned a condominium when the motion was argued: it was subject to a sale agreement having a February 25, 2021 completion date. Subject to realtor commissions and other expenses relating to the sale, the parties have estimated that each will receive about $180,000 from the sale. The court is unaware of the status of the sale and whether there has been agreement between the parties as to the distribution of the net sale proceeds; (i) Accompanying the wife’s February 3, 2021 affidavit were copies of excerpts from the husband’s income tax returns. The 2017 excerpts indicated total income of $217,189.50 ($60,000 employment income/$157,189.50 dividend income). The 2018 excerpts disclosed a total income of $233,546 ($3,500 employment income/$229,905 dividend income). In his July 13, 2020 financial statement, the husband said that his 2019 income was $284,393.92 (no breakdown provided) and that he would earn $192,000 in 2020. He reaffirmed these figures in his November 13, 2020 financial statement but said in his February 11, 2021 affidavit that he expected to draw $240,000 in 2021 which, together with work-related benefits, would result in a going-forward income for support purposes of $251,000; (j) The wife claims that the husband and his two siblings own and operate JCL, an extremely successful multi-million-dollar family enterprise engaged in the construction industry (JCL is an acronym for the first initial of each of the three sibling’s given names). JCL owns or is affiliated with about fifteen other corporations or limited partnerships, collectively referenced by the wife as the Sciacca Family Corporations (“SFC”), one of which is OTD; (k) In each of his financial statements filed for 2020, the husband’s yearly expenses exceeded his income. The expenses were $403,572 and, more recently, $411,976. It is not possible from a review of those statements to see how the excess expenses were funded because in neither case did the husband complete the “Today” column in the prescribed form of financial statement. There was no difference in his debt. He did not file an updated financial statement for the motion preferring (as he was entitled under the Family Law Rules) to file an affidavit indicating that there had been no material change when the motion was argued from the financial position he represented in his November 2020 financial statement; (l) In his November 13, 2020 financial statement, the husband swore that his only business interest was in a company, Ontario Trucking and Disposal Ltd. (“OTD”), and that his mother had gifted him the entirety of his shareholding interest. He claimed that the value of this interest was excluded property. In his February 11, 2021 affidavit he swore that he owned “shares in several companies and I am advised that from time to time I have received certain benefits from other company’s (sic) owned by mother (sic) members of my family”; ⁴ (m) In both of his financial statements, the husband disclosed that he had a financial interest in a marijuana grow-op company in Nevada called Vegas Valley Growers LLC (“VVG”), but had suffered a huge financial loss; he had to guarantee a portion of a $5,000,000 mortgage on one of his mother’s properties. A bond was needed to appeal a $4,000,000 judgment against VVG in Nevada; (n) In response to the affidavits of the wife, Ms. Burdi and Mr. Ferreira who attested to renovation work done in late 2017/early 2018 to the matrimonial home invoiced to, and paid by, JCL the husband claimed that these were monies loaned to the parties by his family and that they needed to be repaid. There is no evidence that anyone ever regarded the payments made by JCL as “loans” before the parties separated two years later in April 2020. The wife was informed about this alleged debt in a letter from the husband’s lawyer sent after the parties separated and the wife had started these proceedings. The husband’s July 13, 2020 financial statement makes no reference to any such debt; the November 2020 financial statement does, but says that the materials were purchased through an OTD account; (o) In a June 19, 2020 Linkedin Profile screenshot, the husband is identified as a Co-owner of the JCL Group of companies since January 2004; ⁵ (p) More telling is the following excerpt from a November 2019 family law trial involving a former employee of SFC, in which the husband’s sister (Laura) testified (she is answering a question about the Sciacca companies),

Jimmy, and then my middle brother’s name is Claudio.

Q. And their surnames? A. Oh, all Sciacca. Q. All Sciacca. Okay. And can you tell me, at the time that [the former employee] came to work for you, what was the name of the company? A. Ontario Ready Mix. Q. All right. And what changes took place along the way with Ontario Ready Mix? A. So in 2004 we ended up opening a pump division. So [the former employee] used to be a dispatcher for Ontario Ready Mix, and we move him to be – to run the pump division of JCL. Q. All right. And does JCL have more than one type of business entity? A. Yes. Q. And could you describe what those business entities are for the record, please. A. So there’s JCL, which my brothers and I own, and there’s 21 pumps in there. There’s JCL-2 which have the cranes, the overhead cranes, and there’s maybe three or four in there. And then there’s JCL-3 which are with a partner. Q. Okay. And could you tell us, is there another company called Ontario Trucking and Disposal? A. Yes. Q. And is that a related company as well? A. Yes. Q. Are there any other related companies that your family owns or operates? A. Yeah. There’s the – a few number companies. My mom has the number company which owns the properties and the equipment. And there’s probably like 13. ⁶ (bolding added).

(q) Some of the businesses in which the wife has alleged the husband is involved include limited business partnerships (i.e. JCL Highrise I, JCL Highrise II and JCL Highrise III (2405039 Ontario Inc)), not a hint of which can be found in the husband’s financial statements but about which he disclaimed any meaningful knowledge as can be seen from his affidavit;

38. I am advised by my corporate lawyer…that there are some trust agreements related to the companies owned by other members of my family. I don’t know or understand all of the details of these trust agreements. I understand that there are some terms in these agreements that affect my rights related to the companies and the real estate my mother owns. I don’t know how these agreements may affect me in the future but they do not make much difference to me and my income at this time. [The lawyer] will be providing further information to the business and income expert when these reports are done.

(r) On November 16, 2020 Bruhn J. held a case conference and made an Order, to which the parties consented, appointing an expert to be mutually agreed by the parties to conduct a valuation of the husband’s business interests and his income. Three months later, when the wife’s motion was argued, the parties had not been able to agree upon an expert (although the list was down to two candidates, both Chartered Business Valuators) or the type of Valuation Report. In response to a question from the court on February 17th, Mr. Daffern advised that the husband’s corporate accountant had not yet prepared an organization chart (“Org.chart”) relating to the husband’s business interests. The wife replied that the husband had not agreed to anything about the valuation in terms of its scope or type, even failing to produce to her and the prospective valuators year-end financial statements for the companies involved; (s) The wife alleged that during their marriage the husband would receive “bags of cash as a bonus” just before Christmas. In his Answer the husband pleaded that his mother had “given gifts of cash on numerous occasions to the [husband]”. ⁷ Exhibit “J” of the wife’s February 1, 2021 affidavit comprised photographs labeled, respectively, “December 2018 and 2019 Cash Bonus/Cash in Bedroom closet”. Bundles of cash, some unpackaged, showed wads of $100 bills. The husband alleged (and the wife admitted) that leading up to and shortly following their April 2020 separation the wife took this money, totalling almost $130,000 ⁸. The husband said that the money was a gift from his mother. The wife used the money to support herself and the children because the husband had taken steps when they separated to limit her access to the parties’ bank account and credit facilities; (t) As of February 12, 2021, the husband has paid to the wife $70,489.04 mostly comprising $6,500 for support from July 2020 to January 2021 and $10,000 Ordered by Bruhn J. at the parties’ November 2020 case conference. To this must be added the money that the wife took from the bedroom closet in the matrimonial home in early 2020 totalling almost $130,000. There is no support order in place, hence the wife’s motion.

10A Settlement Conference is scheduled for July 23, 2021.

Discussion and Law

11Temporary spousal support orders are “holding” orders. The application of compensatory, non-compensatory and contractual principles to the objectives of a support order under the Divorce Act are best reserved to trial where the court will have a more robust evidentiary record and the impact of any property division on support can be considered. In Knowles v. Lindstrom, 2015 ONSC 1408 ⁹ Penny J. summarized the governing principles,

[7] There are three issues which underpin the motion for interim spousal support: (1) Entitlement; (2) Commencement date; and (3) Quantum.

8It is well-established that interim support motions are not intended to involve a detailed examination of the merits of the case. Nor is the court required to determine the extent to which either party suffered economic advantage or disadvantage as a result of the relationship or its breakdown. These tasks are for the trial judge. Orders for interim support are based on a triable or prima facie case. An order for interim support is in the nature of a “holding order” for the purpose of maintaining the accustomed lifestyle pending trial, Jarzebinski v. Jarzebinski at para. 36; Damaschin-Zamfirescu v. Damaschin-Zamfirescu, 2012 ONSC 6689 at para.24.

12The range of considerations (often also described as principles) is broad as is the highly discretionary nature of a spousal support decision, all framed by the individual circumstances of each case. Counsel relied on several cases, some more comprehensive than others in listing those considerations most relevant to a temporary order where entitlement was not seriously disputed (as here). ¹⁰ Contrasted with a final hearing, the primary, interim support considerations in this matter include:

(a) Maintaining the same standard of living or accustomed lifestyle enjoyed before separation; (b) A general sense of the wife’s capacity to contribute to her own support, a consideration often less significant than the husband’s ability to pay; (c) The parties’ presenting means and needs, particularly the wife’s needs and the husband’s ability to pay; (d) The understandably inexact nature of the amount awarded, a more in-depth analysis of the parties' circumstances being best left to a trial. Some authorities have described this as “rough justice”; ¹¹ (e) Testing the evidence for an award, mindful of the SSAG.

13There is no dispute in these proceedings that the wife is prima facie entitled to spousal support: the issues are the commencement date and quantum of support. How then to determine those where the parties’ evidence conflicts? Notwithstanding the caution that credibility findings on significant matters in dispute should ordinarily be reserved to trial ¹² “…issues of credibility may be properly resolved by the motion judge where it is clear that statements made in affidavits are inaccurate or unreliable…”. ¹³ In this case, the wife’s evidence, detailed and corroborated, is more credible and reliable than the husband’s evidence which is inconsistent with the publicly-available information about his business affairs, his representations to the court and the lack of meaningful responses to the document-corroborated evidence of the wife (such as the 2019 trial evidence excerpt of his sister). Noteworthy is the following:

(a) The husband’s declared income has ranged from $217,189.50 (2017) to $251,000 (2021), most of which consists of dividends. He controls how much he draws from his business (or businesses); (b) The husband acknowledged in his Answer and stated in his evidence that his mother, who he said was wealthy, regularly gifted the family cash. He alleged that cash totalling almost $130,000 was taken by the wife around the time that the parties separated and that this amount comprises money gifts from his mother. He did not answer the wife’s allegation that the cash was located in a bedroom closet at the matrimonial home; (c) The husband’s two financial statements stated that the family’s 2020 expenses ranged between $403,572 (July 13, 2020) to $411,975.96 (November 13, 2020). Neither statement nor his affidavit explained how the family’s excess expenses over revenue (more than $150,000 in 2020) were funded. Many expenses included the parties’ children; (d) In contrast to his apparent understanding of the wife’s business affairs, the husband demonstrated a remarkable lack of familiarity with his own business interests declaring in his financial statements, for example, that his only shareholding was in OTD but stating in his affidavit that he owned shares “in several companies” (names not disclosed) and was ignorant of how his rights were affected by “some trust agreements related to the companies owned by other members of his family… I don’t know how these agreements may affect me in the future but they do not make much difference to me and my income at this time.” (see 9 above); (e) As of February 17, 2021 the husband had not provided an Org.chart, surely a disclosure obligation since the parties’ April 2020 separation and a prerequisite to any valuation of his business interests; (f) Despite the wife including as exhibits to her February 1, 2021 affidavit the husband’s LinkedIn Profile about his co-ownership in JCL and his sister’s late 2019 testimony that he and his siblings co-owned JCL, a statement made under oath and directly contradictory to his financial statements, the husband’s affidavit was silent; (g) The wife claimed that the JCL website stated that the husband was the Chief Executive Officer and that SFC’s accountants disclosed in November 2020 that the husband was the sole shareholder of Ontario Concrete Pump Sales Parts & Services Inc. No further disclosure about that interest had been provided. None of this information can be found in any of the husband’s disclosure to the wife and the court. The husband’s affidavit did not respond to this allegation; (h) In contrast to the husband’s evidence about his income and its sources, the wife’s reply affidavit contained a detailed rebuttal of his allegations about her business and her income; (i) Few of the wife’s allegations about the family’s lifestyle were rebutted by the husband; (j) The husband dismissed Ms. Burdi’s evidence as being compromised by her friendship with the wife even though he intimated that she was his friend too who could testify about how the wife was able to purchase high-end clothing and accessories with cash; (k) The husband dismissed Mr. Ferreira’s evidence as compromised because he was a former boyfriend of one of the parties’ daughters. In his affidavit, Mr. Ferreira stated that the husband instructed him to describe the renovation work to the matrimonial home in his invoice to the JCL Group as “water damage repairs” even though there was none and no such repairs were ever undertaken. Subcontractors (one of which was Balmoral, the company for which Ms. Burdi worked) were instructed to invoice the JCL group too. This is what the husband directed Mr. Ferreira to tell them. The husband chose not to respond to this allegation.

14More than half of the husband’s evidence, and most of his submissions, focused on the wife’s income from her new businesses (statements she disclosed) and his challenge to her budget, something which, as already noted, was less than the budget he declared for the family shortly after the parties separated. Likely some valuation or analysis of the wife’s business interests and income will be needed but those results will most certainly pale compared to those of the husband given his central position as the family’s primary, historical breadwinner, a family that has enjoyed an enviable lifestyle for many years, and the as yet undetermined range of his business interests. The absence of meaningful evidence from the husband about the nature and extent of his business interests and what appears to be his deficit funding (without debt) of the family’s lifestyle is as remarkable as it is suspicious ¹⁴. To use a sports metaphor to describe the husband’s challenge to the wife’s disclosure where his is so lacking, when your best defence is a good offence, fielding the waterboy is rarely a winning strategy. Unless he’s Adam Sandler. Although this case is still in its early stages, I doubt that the husband is so oblivious to his financial affairs as he represents.

15The fact is that where a family law litigant is self-employed, the owner/operator of a proprietorship, involved in a partnership, a shareholder in a personal use corporation or has a shareholding interest in a tentacled corporate structure, much as the family-related companies in this case appear, the obligation to pro-actively and credibly value business interests is triggered when spousal parties separate, here in mid-April 2020. Yet almost ten months later little has been done by the husband: no Org.chart (how can a valuator proceed without one, let alone provide a fees estimate?); no retaining of a business valuator (even three months after a case conference Order was made); and no agreement on the scope (see Org.chart above) and type of the valuator’s engagement.

16Time and again, courts have stressed the duty of litigants to make timely and meaningful financial disclosure. Thirty-five years have passed since Clarke J. observed shortly after the Family Law Act came into effect,

The new Act imposes a positive duty on both parties to disclose. If the purpose of disclosure is not to be frustrated, disclosure must perforce embrace not merely the existence of significant assets but also their extent or value. The speedy and equitable resolution of domestic disputes mandates that this information be completely and accurately disclosed. ¹⁵ [bolding added.]

17Financial non-disclosure haunts family law, especially at important early stages of a case, even today. Timely and meaningful disclosure is “the most basic obligation in family law”. ¹⁶ Yet echoes of Clarke J.’s observations about the importance of meaningful financial disclosure and the malignancy of non-disclosure are still prevalent, thirty-five years later. In Leitch v. Novac, 2020 ONCA 257 at para. 44 ¹⁷, the Court of Appeal reaffirmed every family law litigant’s duty:

As the Supreme Court suggested in Leskun v. Leskun, 2006 SCC 25, at para. 34, nondisclosure is the cancer of family law. This is an apt metaphor. Nondisclosure metastasizes and impacts all participants in the family law process. Lawyers for recipients cannot adequately advise their clients, while lawyers for payors become unwitting participants in a fraud on the court. Judges cannot correctly guide the parties to a fair resolution at family law conferences and cannot make a proper decision at trial. Payees are forced to accept an arbitrary amount of support unilaterally determined by the payor. Children must make do with less. All this to avoid legal obligations, which have been calculated to be a fair quantification of the payor's required financial contribution. In sum, nondisclosure is antithetical to the policy animating the family law regime and to the processes that have been carefully designed to achieve those policy goals.

18So what amount of income should be imputed to the parties?

Imputed income

19The wife contends that the husband should have a $1,076,844 income imputed to him and that he should pay her $34,927 monthly, although the Divorcemate calculation that accompanied her material suggests a $1,055,213 income. This claim exceeds the high end of the SSAG range, which is $32,646 to $33,725 monthly. The husband’s income comprises his 2019 acknowledged income of $284,394 to which the wife added and grossed-up for pre-tax equivalency a whole range of non-taxable items (eighteen in number) directly paid for the husband’s benefit by third parties (such as his Jaguar automobile and other related automobile expenses paid by JCL) or by him in cash that year.

20The wife acknowledged an income of $10,540. This reflects a notional cash income and is adjusted for unreasonably deducted expenses funded through the wife’s businesses (such as automobile and related expenses, food and entertainment).

21The husband contends that there should be a $140,000 income imputed to the wife. He claims that the $6,750 he has been, more or less, paying monthly since mid-2020 (and the other monies such as the cash allegedly gifted by his mother and the $10,000 ordered by Bruhn J.) represents an overpayment of spousal support for which the wife should be held accountable.

22While the wife’s evidence is more detailed and informative than the husband’s evidence, this case is still in its early stages and the court should be cautious about trying to predict how a trial judge, after a robust evidentiary hearing, will ultimately determine the parties’ assets and incomes. I am, therefore, unable to entirely accept either party’s position about the income to be imputed to the other. Even so, this court can look to the parties’ evidence about their lifestyle as reflected, in part, by their declared living expenses, what responsibilities the parties discharged during the marriage (such as household management and childcare about which the wife provided her evidence, not seriously disputed by the husband) and the SSAG range.

23In my view, it would not be unreasonable to impute to the wife an income of $10,540. As for the husband, the evidence, even at this stage of the case, is overwhelming that he enjoys an income and access to cash significantly greater than he is prepared to declare and acknowledge to the tax authorities and this court. In my view it is reasonable to impute to him a $750,000 income. The following are the principal reasons:

(a) The evidence of the wife, which I accept, is that the current pandemic has negatively impacted both her businesses. The laser hair removal business, begun several years before the parties separated, involves in-person services which were restricted in 2020 and remained so when her motion was argued. The teeth-whitening business, a 2019 start-up, sells products and training services, also impacted by the pandemic. By contrast, the husband acknowledged that 2020 “…did not turn out as badly as [he] feared…” ¹⁸ and consequently he increased his draw to $240,000 from the $190,000 he had initially planned for 2020; (b) To the husband’s allegations of unexplained e-transfer deposits and payments from her business and personal accounts, the wife provided a detailed explanation, credible on its face; (c) Part II of both of the husband’s financial statements claimed annual family expenses in 2020 exceeding $400,000. That is a net expense that on a pre-tax basis that would ordinarily require a gross income of about $850,000 but, as appears from the husband’s prior years tax returns, a significant of his declared income comprises dividends which are taxed at a lower rate; ¹⁹ (d) The husband’s evidence is silent about how the family’s expenses in excess of his (and even the wife’s) income are met in the absence of a corresponding increase in debt. It is clear to this court that, paraphrasing Kiteley J. in Montemarano v. Montemarano, 2018 ONSC 1481 at para. 27 ²⁰, the husband’s declared income “bears no relation to [the parties’] standard of living prior to separation”; (e) Some of the parties’ expenses included the children. For example, the wife’s food expense ($3,100 in her April financial statement) likely includes the parties’ children residing with her: the husband’s expense is $1,000 by comparison. The wife also included expenses for the children’s automobiles expenses, health, personal care and other expenses totalling about $5,000 monthly (this is a rough estimate only). The husband also included $2,000 monthly for the children’s automobile expenses and “additional monies” given to the children; (f) The husband claimed housing expenses are $5,850 monthly. Some of these include the condominium, presumably now sold, but neither party’s evidence disclosed those costs. Likely they are far more modest than the matrimonial home, in which the husband is residing; (g) Both parties declared annual vacation expenses in excess of $78,000 ($80,000 by the wife and $78,000 by the husband), some involving the children; (h) In her evidence the wife catalogued what she paid in cash for the family expenses, herself and what the husband paid in cash. The husband did not address most of these allegations in his evidence; (i) It is both appropriate to gross-up the husband’s untaxed income to a pre-tax equivalent amount and to add to his income money allegedly, but regularly, gifted to him by his mother; ²¹ (j) Considering that funding a net annual family expense of, say, $400,00 would require a pre-tax income or access to cash resources of about $750,000, the mid and high ranges for taxable spousal support are $24,604, this figure representing a 50/50 split of NDI; ²² (k) The wife claimed in her April 2020 financial statement a $31,724 monthly expense, reduced to $13,215 in her February statement, part of which (as noted) includes the children’s food. Neither total included anything for income tax. No vacations were taken after the parties separated; (l) The wife also stated that she had located a residence for herself and two of the children costing $5,000 a month starting April 1, 2020. She had to pay four months rent ($20,000) in advance for what she described were modest accommodations.

24Imputing incomes to the wife and husband of $10,540 and $750,000, respectively, results in a monthly net disposable income to each party of $14,969. Adjusting for ineligible child-related expenses, vacations (not taken in the later part of 2020 but which otherwise factor into lifestyle), the husband’s payment of the housing expenses for the matrimonial home until its sale and the wife’s new accommodations as of April 1, 2021, “rough justice” would suggest a comparative lower support order for the first three months of 2021 and higher afterwards until the sale of the matrimonial home. The wife should expect to earn a modest annual interest or dividend income from the sale of the condominium which I will guestimate at $2,500 a year.

25In my view it would be fair and reasonable for the husband to pay $20,000 monthly for the first three months of 2021 and $25,000 a month afterwards. This will result in a net income to the wife of about $13,000 for the first three months of 2021 and slightly less than $15,000 monthly afterwards. I am not prepared to reduce the support for the period after April 1st because the sale of the home must be incentivized. Once it sells and the wife is paid her share, consideration may be given to adjusting the amount payable.

26I am not prepared to make the support Order retroactive to the parties’ date of separation or to make the tax-deductibility order requested by the husband for 2020 at this time. This can be left to be worked out once a clearer picture of the husband’s income and access to cash are determined, all the more reason to have an income analysis completed before the end of 2021 after which support deductibility may be lost. The court of final hearing can adjust for support overpaid or underpaid.

Disposition

27Although one of the issues in this case involves the enforceability of a domestic contract made during marriage, it is appropriate that other than raising it as part of their respective narratives, neither party spent much time arguing about it; the critical issues at this juncture are asset valuations irrespective of the terms of the domestic contract and income analysis for imputation purposes.

28The following is Ordered:

(a) The husband shall pay to the wife for spousal support $20,000 monthly starting January 1, 2021 to March 1, 2021 and, thereafter, starting April 1, 2021, $25,000 and monthly afterwards on the first day of each succeeding month; (b) All support payments shall be payable as of the first day of the month and shall be tax-deductible to the husband and included by the wife as income for tax reporting purposes; (c) The husband shall be given credit for all payments made on account of support (i.e. the $6,500 presumably being paid monthly) from and after January 1, 2021; (d) The support Order is based on an income imputed to the wife of $10,540 and an income imputed to the husband of $750,000; (e) The wife’s claim for spousal support re-dating January 1, 2021 and the husband’s claim for tax-deductibility of moneys paid to or obtained by the wife before that date are reserved to final disposition; (f) The sale of the matrimonial home and distribution of its net sale proceeds shall be a material change entitling the husband to seek a variation of this Order.

29A Support Deduction Order shall issue.

30In his evidence and submissions, the husband alluded to the wife’s receipt of sale proceeds from the condominium and, eventually, the matrimonial home as if that either excused him from paying adequate spousal support or requiring the wife to dip into her own capital to supplement her support needs. Neither is the law. The wife will be obliged to manage her assets appropriately and to the extent that some income may be earned from or attributed to those assets, the court can take that into consideration after the sale of the matrimonial home.

31The parties should attempt to resolve costs between themselves but if they cannot then the following directions shall apply:

(a) The wife shall deliver her submissions by March 22, 2021; (b) The husband shall deliver his submissions by April 1, 2021; (c) Reply (if any) by the wife by April 8, 2021; (d) All submissions shall be single page, double-spaced. In the case of (a), (b) and (c) the limit shall be four pages; reply shall be two pages. These submissions shall be filed in the Continuing Record; (e) Offers to Settle, Bills of Costs and any authorities upon which a party may wish to rely shall be filed by the above deadlines but shall not form part of the Continuing Record; (f) Counsel are to advise the judicial assistant when they have filed their material.

32A Settlement Conference is scheduled for July 23, 2021. Given the foregoing problems with the timely engagement of a valuator, the prospect of a fulsome conference with even preliminary expert opinions about the value of the husband’s business interests (and, to a much lesser degree, those of the wife) and analyses of the parties’ incomes seems optimistic.

33Two last points.

34If the parties are unable to agree on the choice of valuator and the scope and nature of the valuator’s engagement in the near future, consideration may need to be given to Family Law Rule 20.3 dealing with the court’s ability, on its own initiative, to appoint experts.

35Lastly, this court holds no proxy for the Canada Revenue Agency but where, as certainly appears to be the case here, there appears to be unusual financial transactions whether those are family expenses funded through a myriad of related corporate entities (OTD, JCL SFC, to name just a few) or bundles of “gifted” neatly-bound cash hidden in a bedroom closet in excess of $100,000, consideration might be given to mediation/arbitration.

Justice David A. Jarvis Date: March 8, 2021

Footnotes

Footnotes

1. 1This information comes from the wife’s three financial statements. The husband disputes these figures.
2. 2Paragraph 8 of the wife’s affidavit sworn February 1, 2021.
3. 3Supra #3, Exhibit “M” receipts.
4. 4Husband’s affidavit sworn February 11, 2021, para. 36. The source of the husband’s advice is not disclosed.
5. 5Supra #2, Exhibit “A”.
6. 6Supra #2, Exhibit “B”.
7. 7Para. 4 of the husband’s Answer under Important Facts, p. 5.
8. 8The parties’ pleadings and evidence conflict as to the actual amount involved; the consensus is that it was higher than, but in the lower, $100,000 range. The $130,000 figure is an outside estimate by the court.
9. 92015 ONSC 1408.
10. 10Turk v. Turk at paras. 36 and 37; Benzeroual v. Issa and Farag, 2017 ONSC 3655 at para. 81; Hamam v. Mantello, 2020 ONSC 4948 at paras. 124-151; see also Driscoll v. Driscoll; Pothier v. Taillefer, 2014 ONSC 812; Racco v. Racco, 2014 ONCA 330; Hamdy v. Hamdy, 2015 ONSC 5605, at paras. 16-18; Huo v. Wang, 2015 ONSC 6989, at para. 117; and, Bridge v. Laurence, 2016 ONSC 5075, at paras. 16, 17 and 19.
11. 11Ibid, Driscoll, at para. 14.
12. 12Ierullo v. Ierullo, [2006] O.J. No. 3912 (Ont. C.A.) at para. 18.
13. 13O.M. v. S.K., 2020 ONSC 3816 at para. 27.
14. 14In his July financial statement, the husband disclosed savings of $3,962.80 on the valuation date. His November financial statement disclosed savings of $328,880.40 for the same valuation date, likely the inclusion of a TD Wealth account ($324,880.40). No savings at all were recorded in the “today” column. There is no explanation as to the disposition of these funds, some of which the husband categorized as being RRSPs.
15. 15Demchuk v. Demchuk (1986), 1 R.F.L. (3d) 176 (H.C.J.).
16. 16Roberts v. Roberts, 2015 ONCA 450, 65 R.F.L. (7th) 7 at para. 11.
17. 172020 ONCA 257 at para. 44.
18. 18Supra #4 (husband’s affidavit) at para. 40.
19. 19The top Ontario marginal tax rate is 53.53%.
20. 202018 ONSC 1481 at para. 27.
21. 21Riel v. Holland; Bak v. Dobell, 2007 ONCA 304; Korman v. Korman, 2015 ONCA 578; see also Benarroch v. Abitbol et al., 2017 ONSC 4967 at paras. 34 to 54.
22. 22Schedule A attached to this Ruling is a Divorcemate calculation prepared by the court. It assumes a $10,540 income for the wife and breaks down the husband’s imputed $750,000 income by accepting his 2020 income as estimated by him and adding non-taxable income of $225,000 grossed up to arrive at a net monthly disposable income of $34,326 or $411,912 annually. The husband’s November 2020 financial statement attested to annual expenses of $411,975.96.