COURT FILE NO.: FS-15-404529
DATE: 20210514
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Behzad Babazadeh-Olari, Applicant
AND:
Amanda Villares-Reyes, Respondent
BEFORE: M. Kraft, J.
COUNSEL: No one appearing for the Applicant
Georgina L. Carson, for the Respondent
HEARD: In Writing
REASONS FOR DECISION
[1] An uncontested trial of the Respondent’s (“the wife”) claims proceeded before me, as per the Order of Hood, J., dated December 8, 2020. The Applicant’s pleadings had been struck by the Order of Goodman, J., dated April 30, 2018, for the Applicant’s (“the husband”) breaches of a number of court orders in this action.[^1] The husband subsequently brought a motion to have his pleadings re-instated. On October 12, 2018, Goodman, J. dismissed the motion.[^2]
[2] According to the wife’s Form 23C, Affidavit in Support of Uncontested Trial, sworn on December 18, 2020, the wife seeks the following orders:
a. An order that the husband pay her a total of $555,563, on account of retroactive child support, spousal support, equalization of property, prejudgment interest and costs, broken down as follows:
i. $124,745 on account of “arrears” of child support;
ii. $215,142 on account of “retroactive” and prospective spousal support;
iii. $163,504 on account of the equalization of net family property;
iv. Prejudgment interest on the equalization payment of $14,799; and
v. costs of this uncontested trial in the sum of $37,373, inclusive of HST.
b. An order that commencing January 1, 2021, the husband pay her prospective table child support in the sum of $4,812 a month for the three children of the marriage, based on an imputed income for him of $295,000 a year;
c. An order that the husband pay 75% of the children’s special and extraordinary expenses prospectively; and
d. An order that the wife’s shares in the company, 1162266 Ontario Inc. (Ontario Power Air Duct Cleaning and Dry Wall Depot) (“ODC”), be vested in the husband for valid consideration; alternatively, an order that the business be wound down with the husband being solely responsible for any debts and liabilities with respect to the business; and/or alternatively, an order that the wife’s shares vest in the husband and he to be solely responsible for all liabilities related to the company and fully indemnify her in their regard, and the wife to receive no consideration for relinquishing her interest in the company to him.
[3] I have considered the wife’s amended Answer, dated May 10, 2018; the wife’s financial statement, sworn on November 19, 2020; the wife’s affidavit in support of the uncontested trial, sworn December 18, 2020 (“the wife’s “first affidavit”); the wife’s supplementary affidavit, sworn on January 11, 2021 (the wife’s “second affidavit”); the wife’s affidavit, sworn on April 23, 2021 (the wife’s “third affidavit”); and the wife’s Statement of Law, dated January 11, 2021.
Litigation History
[4] The husband started this case on August 8^th^, 2015. The wife served an Answer, dated September 17^th^, 2015. The husband served a Reply, dated September 30^th^, 2015.
[5] On October 26, 2015, the parties attended a case conference before Paisley, J., at which they agreed on terms to be incorporated into an order. As part of the Consent order, the primary residence of the three children was to be with the wife. The portion of the consent order, which addressed child support, spousal support and property matters, provided as follows:
a. On a temporary “without prejudice” basis, commencing November 1, 2015 and on the first day of each following month, the husband was to pay child support to the wife in the sum of $3,331.00 a month based on him earning an annual income of $200,000 and the Federal Child Support Guidelines. The quantum of child support was to be adjusted once the husband’s income for support purposes was determined by his expert;
b. The wife was to immediately return the 2013 Audi Q7 and its ownership to the husband (the lease penalty was to be considered upon a determination of the property issues) and in exchange, the husband was to provide the wife with his leased 2013 Honda Crosstour.
c. On a temporary “without prejudice” basis (pending further order or agreement), commencing on November 1, 2015 and on the first day of each month thereafter, the husband was to pay spousal support to the wife in the amount of $1,700 per month taxable to the wife and tax deductible to the husband). In consideration of the quantum of support, the husband was to pay for the lease and insurance for the Honda vehicle driven by the wife, not deductible or taxable;
d. Commencing on November 1, 2015, and each month thereafter, the wife was to be solely responsible for all of her household expenses (i.e. rent, utilities, gas, etc.) which were personally paid by the husband. There was to be no retroactive/arrears of child or spousal support owing by the husband to the wife;
e. The property municipally known as 10349 Lakeshore Road, Port Colbourne Road was to be jointly appraised by McCurrie Appraisal. The husband was to pay for the cost of the appraisal and the wife was to compensate him for one-half of the cost upon a determination of the property issues or the sale of any property, whichever is earlier;
f. Within 60 days of receiving the appraisal, if the parties were unable to agree on terms of the sale of one party’s interest in the property to the other party, the Port Colbourne property was to be immediately listed for sale and sole on mutually agreed upon terms or court order;
g. The property municipally known as 3735 Lakeshore Blvd. West, Toronto, Ontario was to be jointly appraised by Terrain Appraisal Group. The husband was to pay for the cost of the appraisal and the wife was to compensate him for one-half of the cost upon a determination of the property issues or the sale of the property, whichever is earlier;
h. Within 60 days of receiving the appraisal, if the parties were unable to agree on terms of the sale of one party’s interest in the property to the other party, the investment property was to be immediately listed for sale and sold on mutually agreed upon terms or court order;
i. The ODC was to be valued by Kalex Valuations Inc. – Melanie Russell was to provide the fair market value of the Business. The husband was to pay for the cost of the valuation of the Business and the wife was to pay him 45% of the cost (proportionate to her shareholding) upon the sale of any property or the determination of the property issues (whichever was earlier); and
j. For as long as child support was to be paid, the parties were to provide updated income disclosure to each other annually, within 30 days of the anniversary of the order, in accordance with section 24.1 of the Child Support Guidelines.
[6] Between May 24, 2017 and January 31, 2018, the parties attended several conferences, at which the Court dealt primarily with the husband’s continued non-disclosure. [The details of the history of the non-disclosure are included in the Endorsements of Goodman, J., dated April 30, 2014 and October 12, 2018.]
[7] The wife ultimately brought a motion to strike the husband’s pleadings. On April 30, 2018, Goodman J. ordered that the husband’s pleadings be struck in relation to financial issues in this case only and permitted the wife to file affidavit evidence for an uncontested trial on the financial issues.
[8] The husband subsequently brought a motion to have his pleadings reinstated. Goodman, J., dismissed the motion on October 12, 2018. On December 10, 2018, Goodman, J. ordered the husband to pay costs of the motion in the sum of $14,000. The husband did not pay these costs as ordered.
[9] On June 13, 2019, Diamond, J. ordered the real estate agent who was holding the net proceeds of sale from the sale of 3735 Lakeshore Blvd. West, Toronto, Ontario. in trust, to release the wife’s 50% share of the net sale proceeds to the wife and ordered the husband to pay the wife costs of $14,000, plus $4,925, for a total of $18,924 in costs, out of his 50% share of the net sale proceeds. The balance of his share remained in trust.
[10] On December 8, 2020, Hood, J. ordered the wife’s uncontested trial to proceed in writing on January 7, 2021.
[11] On January 7, 2021, I was asked to make a temporary order, releasing to the wife, the entire balance of the net proceeds of sale from the sale of the Lakeshore property, being held in trust by the real estate solicitor (essentially, the husband’s notional half-share of $342,220.71 remaining after he satisfied the order of Diamond, J.), with the portion to be credited to the husband, to be quantified and characterized by further order of the court. This temporary order was sought, to enable the wife to close the purchase of her new home in Kitchener, which was scheduled to close on January 14, 2021.
[12] On January 8, 2021, I ordered the wife to immediately provide a copy of the draft Statement of Adjustments in connection with the purchase of her new home, which was scheduled to close on January 14, 2021; to determine what funds were needed by her to close the transaction; produce a copy of Paisley, J.’s order made in November 2015, under which the husband began paying child support to the wife of $3,331 a month; provide confirmation as to whether the CRA liens, registered on title to the Lakeshore property, had related to the husband’s debts alone or were corporate debts, and if they were corporate debts, whether they had been considered by Melanie Russell in her draft valuation report of the company; provide confirmation as to whether the debt owing to Garfinkel Biderman of $19,218.85 and to Gordin & Tarr LLP of $654.15, were debts that had been incurred by the husband or whether they were debts of the company; provide confirmation as to whether the judgment owing to Michael A. Katzman of $10,111.23 was the husband’s debt or was corporate-related; and particularize for how many months the husband had paid spousal support to her, and calculate the total amount of third-party payments the husband had made on her behalf in lieu of spousal support under the Order of Wilson, J., dated May 24, 2017, the net benefit of which was $2,300 a month to her.
[13] In response to my order, the wife filed the second affidavit and the Statement of Law. The wife’s second affidavit provided further clarification and satisfied me that the husband owed the wife a sum of money on account of all of her claims, which exceeded the balance of the Lakeshore property proceeds being held in trust.
[14] Accordingly, on January 12, 2021, I made a temporary order, releasing the remaining proceeds of sale from the Lakeshore property to the wife, in the amount of $342,220.71, the sum to be credited to the husband against the wife’s claims, which were to be quantified and characterized by further order.
[15] On January 21, 2021, I released a further Endorsement, seeking further evidence in relation to the wife’s claims. I asked that the wife to clarify the basis on which she seeks to impute income to the husband in the sum of $295,000 a year for support purposes on a prospective basis; clarify whether the lump sum spousal support she seeks in the sum of $215,412, provides the husband with credit for support he had paid to her in the total sum of $88,900, which was a combination of direct monthly payments and third-party payments paid on her behalf between November 1, 2015 and August 2019; provide evidence as to the value of ODC, as at the date of marriage, for net family property purposes, and, if there was no such evidence, to provide copies of the husband’s corporate financial statements filed in this case.
[16] On April 23, 2021, the wife filed the third affidavit, in response to the inquiries set out in the above Endorsement.
[17] The final order resulting from this uncontested trial and my reasons for it follow below.
Factual Background:
[18] The parties were married in Cuba on July 4^th^, 2003. They separated on May 1^st^, 2014, a period of just under 11 years. On February 21^st^, 2017, Paisley, J. granted a divorce.
[19] The parties have three children, namely, Daniel Olari Villares, born on November 12^th^, 2003 (age 17); Dennis Olari Villares, born on April 18^th^, 2006 (age 15); and Darian Olari Villares, born on January 30^th^, 2009 (age 12). The children have resided solely in the wife’s care since the separation. Pursuant to the final Order of Monahan, J., dated August 29, 2018, the wife has primary care and sole custody of the children.
[20] Throughout the parties’ relationship, the wife fulfilled the roles of full-time homemaker and primary caregiver to the children. She looked after all domestic duties, shopping, cooking, cleaning, laundry, childcare and housekeeping. In addition, she deposed that she took care of all managerial activities for the husband. The husband did not meaningfully assist with the household or the children’s care. According to the wife, she bore a disproportionate share of the family’s responsibilities during the marriage, freeing the husband to pursue his own interests and advance his career. [When the parties separated the wife was 29 years old. Daniel was 11; Dennis was 8; and Darian was 5 years old.]
[21] The husband operated ODC during the marriage. ODC was incorporated under the Business Corporations Act (Ontario), R.S.O. 1990, c.B.16 (“OBCA”) on December 29, 1995. Although he owed it (or part of it with other third parties) at the time of the marriage, at some later point, the wife came to have a 45% share of the company. ODC is thus held jointly by the parties, with the husband having a 55% share and the wife having a 45% share. ODC offered a range of residential, commercial and industrial cleaning services for furnace, air ducts and other related services in Toronto. Its focus was mostly on commercial and industrial business. Although the wife owns 45% of this corporation, she submits that the husband operated the company as though it was his and her rights as a minority shareholder have been oppressed by the actions of the husband.
[22] According to the consent order of Paisley, J., dated October 24, 2015, ODC was to be valued by Kalex Valuations Inc. (“Kalex”), as at the date of marriage, July 4, 2003, and was also to provide the fair market value of the business as at the date of separation. The husband would pay for the cost of the valuation and the wife was to pay the husband 45% of the cost of the valuation upon the sale of any property or the determination of the property issues, whichever was earlier.
[23] A draft, “without-prejudice” valuation report of the value of ODC, as at the date of separation, was prepared by Kalex, dated April 20, 2016. The draft Kalex report estimates that the fair market value of ODC, as at the date of separation, was $177,000. The wife submits that the entire value of the corporation ought to be listed on the husband’s side of the ledger on the valuation date for equalization purposes since he always operated this company to her exclusion, both before and after the separation. The wife seeks an order vesting her shares in ODC in the husband.
[24] Despite the consent order of Paisley, J., dated October 26, 2015, a valuation report was never completed regarding the value of ODC as at the date of marriage, July 4, 2003.
[25] From February 2017 until August 2019 (when the Lakeshore property closed), the wife resided with the three children in Unit 301 of this jointly owned commercial property. ODC paid for the mortgage expense ($1,700 a month) and the wife’s vehicle ($600 only until August 2019), which amounted to $2,300 net a month in lieu of spousal support.
Husband’s Breaches of Court Orders
[26] On October 4, 2017, Gilmore, J. had ordered that, within 10 days, the husband retain an expert, to prepare an income analysis and confirm that the income report would be completed promptly. The husband breached his court-ordered obligation to provide an income analysis.[^3]
[27] Upon being pressed for the report and after the court struck his pleadings, on May 10, 2018, the husband engaged Krofchick Valuations to complete an income report for him, for 2017 only. When the wife’s counsel advised the husband’s counsel that a broader income analysis was required, on May 24, 2018, the husband signed a further engagement letter with Krofchick Valuations, dated May 24, 2018. Neither the husband nor expert confirmed that the report would be delivered promptly. Further, no income report was ever produced.
[28] The last meaningful income disclosure produced by the husband in these proceedings is derived from the draft 2017 ODC corporate financial statements, which are attached as Exhibit “T” to the wife’s first affidavit, and as Exhibit “N” to the wife’s second affidavit. There is also information in the husband’s Statements of Real Estate Rentals, attached as Exhibit H” to the wife’s second affidavit.
[29] The ODC financial statements represent that in 2017, a) the company had revenues of $1,064,427; b) the husband withdrew a management salary of $214,500; c) the company had pre-tax corporate profit of $69,615 (retained earnings); and d) the company had substantial vehicle, telephone and other “administrative expenses”.
[30] According to the wife, although Kalex (specifically Melanie Russell) did not complete an income analysis for the husband, she found that there were “other management benefits” that the husband received in the sum of $15,170 in 2014 and other excess expenses approximating $20,000 per year. Personal expenses that the husband had ODC pay for on his behalf and which he claims were corporate expenses, according to the wife well exceed the $10,000 a year add-back she seeks.
[31] The wife submits that the husband earned additional income from the Lakeshore property as net rental profit, which he had failed to disclose in his financial statement, sworn on May 14, 2018 (the most recent financial statement filed by the husband in these proceedings). For child support purposes, the wife submits that the husband’s 2017 net rental income was $35,110, bringing his 2017 total income for support purposes to $340,792.
[32] The wife acknowledges that the husband made child support payments to her in accordance with the Order of Paisley, J., dated October 26, 2015, commencing November 1, 2015, and continued to do so in accordance with the order of Wilson, J., dated May 24, 2017. The husband did not pay child support through the Family Responsibility Office and, instead, met his child support obligations by paying the wife directly. The wife acknowledges that the husband ought to be credited with having paid child support in the sum of $3,331 a month to her from November 1, 2015 to January 1, 2021.
Issue One: Adjustments to Sale Proceeds Paid to the Wife and Equalization of Net Family Property
[33] The wife seeks an equalization payment from the husband in the sum of $163,504, plus prejudgment interest of $14,709, pursuant to s.5 of the Family Law Act, R.S.O. 1990, c.F.3. In her Amended Answer, the wife also seeks an Order for an unequal division of net family property in her favour, if necessary, to secure a just resolution of this matter, pursuant to s.5(6) of the Family Law Act. As set out in paragraph 2 above, she also seeks relied under the OBCA, as amended.
[34] As mentioned above, the jointly-owned commercial property, (the “Lakeshore property”) was sold; the transaction closed on August 21, 2019.
[35] The Lakeshore property sold for $2,020,000. The balance due on closing was $1,839,012.87.
[36] According to the wife, the husband had incurred substantial debts post-separation and judgments had been rendered against him, which had significantly reduced the net proceeds of sale. The wife submits these debts ought to be attributed to him solely so that they are deducted from his half-interest in the Lakeshore property.
[37] Again, on June 13, 2019, Diamond, J. ordered that 50% of the net sale proceeds, along with the husband’s unpaid costs, be paid to the wife on the real estate closing and the balance be held in trust. Given the husband’s substantial debts deducted “off the top”, essentially, out of the proceeds of sale, the wife only received $309,444.67 on closing. The husband’s “notional” 50% share ($309,444.67) remained in trust. The real estate agent had also held back a residual fund of $32,886.03, leaving the total balance held in trust by the real estate lawyer at $342,330.71.
[38] While the wife did receive 50% of the net proceeds (except for her ½ share of the residual fund), as per the order of Diamond, J., dated June 13, 2019, she did not receive the $18,925 in costs that he had ordered.
[39] As outlined above, on January 12, 2021, I made an order releasing the balance of the sale proceeds that had remained in trust with the real estate lawyer, Brian Kwan, of $342,330.71 to the wife, because the evidence on the record before me was clear that the husband would owe the wife a sum on account of child support, spousal support and an equalization payment, in excess of $325,887.69 (calculated as $342,330.71-$16,443.02 = $325,887.69) and the wife had deposed that she needed these funds to close the purchase of her new home a week later.
[40] Again, the wife seeks a number of adjustments in her favour in terms of the Lakeshore property sale proceeds, on account of the fact that the husband’s sole debts and judgments post-separation were paid “off the top” of the sale proceeds, effectively out of both parties’ net sale proceeds. She submits that they ought to be have been paid out of the husband’s half-share and she should be reimbursed for one-half of the amounts paid “off the top” out of the husband’s proceeds.
[41] The wife produced a chart of debts in her first affidavit attributing the debts to the party to whom she asserts they should be attributed. Again, I ordered the wife to provide further explanation and documentation, to evidence that the debts the wife sought to be attributed to the husband alone were, in fact, the husband’s alone and not corporate debts already considered in the valuation of ODC.
[42] In the wife’s second affidavit, she produced further evidence, to prove that these debts were the husband’s alone.
[43] The reporting letter, statement of adjustments and supporting documents relating to the sale of the Lakeshore property and debts paid out of the sale proceeds provide as follows:
a. A letter from CRA, dated August 16, 2019, confirms that the husband personally owed the sum of $310,583 to CRA. Two CRA liens had been in the husband’s sole name registered on title to the Lakeshore property, the first lien registered on August 28, 2018 for $120,422, and the second lien registered on February 14, 2019 for $75,217. With interest and penalties, the husband owed CRA $310,583 at the time of closing, which sums were paid “off the top”. The wife submits that the husband ought to be solely liability for this debt;
b. A letter from CRA, dated August 1, 2019, confirms that the wife personally owed the sum of $19,412.36 to CRA. The wife submits that the husband ought to be held solely responsible for this tax debt as it arises from the husband’s sole decision to engage in income splitting with her and attributing corporate income from the ODC to her, which was done without her consent and, most importantly, which income she never received. As a result, the wife asserts that the husband ought to be solely responsible for this CRA debt, which was also paid from both parties’ shares of the Lakeshore property proceeds;
c. A fax cover sheet from CRA, dated August 16, 2019, confirms that the updated amount owing to CRA on the parties’ Lakeshore property partnership account is $13,985.55. On January 8, 2021, counsel for the wife obtained a CRA Requirement to Pay notice from the real estate lawyer, which she attached to her second affidavit as Exhibit “G”. The wife submits that the husband fully controlled the parties’ Lakeshore property “partnership”, which she claims was a partnership in name only, since only the husband alone received all of the rental income, including cash income, from the tenants of the Lakeshore property, which was a six-plex. The wife attached the husband’s 2017 Statements of Real Estate Rentals as Exhibit “H” to her second affidavit, which showed total net income from the various units in the Lakeshore property of $35,110, after deduction of substantial alleged expenses. Although the husband alone received the rental income, the wife included 50% of this income in her taxable income at the husband’s insistence and the husband then said he would pay her associated tax, as a result of her doing so. The wife submits that the husband should thus be solely attributed with the accumulated HST of $13,985.55, which was outstanding when the Lakeshore property transaction closed, especially since the husband solely received all of the income from the partnership and paid all associated liabilities.
d. The husband had failed to pay $18,592 in municipal taxes on the Lakeshore property prior to closing, although, according to the wife, he had been responsible for paying these taxes out of the rental income he alone had received. The Lakeshore property remained tenanted up to and following closing. Notwithstanding that the husband had deducted municipal taxes from the rental income received, as confirmed by the Statements of Real Estate Rentals attached to the wife’s second affidavit as Exhibit “H”, he had not paid these municipal taxes, and as a result, they were paid out on closing from both parties’ shares of the Lakeshore property proceeds. Yet, he had alone had the benefit of the Rental income. Nonetheless, given that the Lakeshore property was jointly owned, the wife has agreed to share the municipal tax arrears debt equally.
e. A mortgage statement for discharge purposes, prepared by Garfinkle Biderman LLP, demonstrates that the husband obtained a private mortgage from 1109373 Ontario Inc. for his own purposes after separation, which he registered against title to the Lakeshore property on September 12, 2018. The husband caused a Charge to be registered against the property on September 12, 2018, for $18,309 in clear breach of the non-depletion/preservation Order of Justice Gilmore, dated October 4, 2017. This charge was registered without the wife’s knowledge or consent and only came to her attention when a copy of the title abstract/parcel register for the property was obtained by her on December 14, 2018. The Chargee is a corporation in which the husband himself held an interest; namely, 1109373 Ontario Ltd., although he had not disclosed this asset on his financial statement, sworn May 14, 2018. As noted by Goodman, J. at paragraph 47 of her Endorsement, dated October 12, 2018, the husband had revealed that he had acquired a 1/3 interest in a numbered company. The husband failed to provide details or any further disclosure despite the wife’s counsel’s request on December 14, 2018. The wife attached the abstract and charge as Exhibit “J” to her second affidavit, which confirms that the husband alone was the Chargor. Since the husband alone benefitted from this mortgage, the wife submits that he ought to be solely responsible for this debt which, again, had been paid out on closing “off the top”;
f. On January 8, 2021, the wife’s counsel obtained a copy of a statement from Gordon & Tarr LLP, from Brian Kwan, the real estate lawyer, showing the amount owing of $654, representing fees required to discharge a private mortgage held by Rubin and Elaine Todres on the Lakeshore property, which had already been paid off. The wife submits that these fees ought to be shared by her and the husband, since this mortgage was discharged before the closing of the Lakeshore property and the fees related only to that discharge; and
g. An email from Michael A. Katzman to Mr. Kwan, dated August 21, 2019, references a partial judgment against the husband, dated January 22, 2018, and subsequent costs and interest ,totalling $141,158.88, of which the husband had already paid $125,000, leaving a balance of $10,105.69 owing. Attached as Exhibit “M” to the wife’s second affidavit is the Writ issued by Michael Katzman against the husband alone, dated May 27, 2019. The order of Goodman, J., dated October 2018, references this post-separation debt, which the husband had failed to disclose previously, as well as his interest in the numbered company referred to in paragraph e. above. Accordingly, the wife submits that this debt of $10,105.69 ought to be attributed to the husband solely as it is his debt alone and she should be reimbursed in the amount of $5,502.85 (1/2 x $10,105.69 ) out of the husband’s proceeds that are being held.
[44] The wife prepared a chart detailing the above-listed debts/judgments which she submits ought to be attributed to the husband, reproduced below:
| Debt Paid | TOTAL | Wife | Husband |
|---|---|---|---|
| 2,020,000 | 1,010,000 | 1,010,000 | |
| Adjustments including credit for deposit, etc. | $180,987.20 | $90,493.60 | $90,493.60 |
| Alterna 1st Mortgage | $806,132.19 | $403,066.10 | $403,066.10 |
| Alterna payment based on error in mortgage calculation. | $20,103.46 | $10,051.74 | $10,051.74 |
| KRMC LLP – re: CIBC judgment | $15,723.66 | $15,723.66 | |
| Michael A. Katzman (judgment) | $10,111.23 | $10,111.23 | |
| Garfinkle Biderman | $19,218.85 | $19,218.85 | |
| Gordin & Tarr LLP | $654.15 | $327.01 | $327.01 |
| City of Toronto | $18,592.09 | $9,296.04 | $9,296.04 |
| CRA | $310,837.17 | $310,837.17 | |
| CRA | $19,412.36 | $19,412.36 | |
| City of Toronto | $1,306.91 | $653.45 | $653.45 |
| CRA | $13,985.55 | $13,985.55 | |
| RE lawyer’s fees | $4,149.36 | $2,071.68 | $2,071.68 |
| Justice Diamond’s costs order dated June 13, 2019 to be paid from the Respondent’s net proceeds | $14,000 plus $4,925 = $18,925 | ||
| The Applicant and Respondent also received back $52,989.50 from their Real Estate Agent Sam McDadi $20,103.43 of this went to Alterna above. | ($32,886.03) (credit) | ($16,443.03) *Note: the wife mis-calculated this item. The parties received back $52,989.50 from the agent, $20,103.40 of which went to discharge the 1st mortgage in favour of Alterna (listed above). The balance of $32,886.30 is to be shared equally which = $16,443.03, not $26,494.75 each). | ($16,443.03) |
| Subtotal of debts attributed to each party | $515,340.25 | $892,006.75 | |
| Parties’ share of the net proceeds after adjustment for debts | $1,010,000 less $515,240.25 = $494,759.75 (wife’s adjusted share) | $1,010,000 less $892,006.75= $117,993.25 (husband’s adjusted share) |
[45] After adjustments are made to ensure that the husband has paid his debts/judgments out of his share of the net proceeds only, the balance of the husband’s 50% share of the Lakeshore property sale proceeds amounts to $117,993.25, which, the wife claims is not sufficient to satisfy the equalization payment owing to her, let alone arrears of child support and the lump sum of spousal support she seeks. It was essentially on this analysis that I decided that it would not prejudice the husband if I ordered the release of the balance of his share of the net sale proceeds to the wife prior to completing the trial. The sum of $117,993.25 is to be treated as a credit against the amounts, which I have determined that the husband owes to the wife on account of the equalization of property, “arrears” of child support that will effectively arise on the granting on this judgment, and spousal support and interest.
Equalization Payment Owing by the Husband to the Wife
[46] The wife attached a net family property statement (“NFP statement”) as an exhibit to her first affidavit. The NFP statement provides that the husband owes her an equalization payment of $163,504, plus prejudgment interest of $14,799 (1.3% x $163,504 / 365 x 2,448 days from May 1, 2014 (date of separation) to January 11, 2021).
[47] Again, the husband’s most recent financial statement, filed in this case, was sworn on May 14, 2018 (“husband’s financial statement” from this point forward in these Reasons). According to his financial statement, his net family property is $0.
[48] To highlight the differences between the calculation of the husband’s NFP in the wife’s NFP statement and the husband’s financial statement, I make the following observations:
a. On his evidence, the value of the husband’s total assets on the date of separation (May 1, 2014) totalled $1,330,400.45, comprised of his half-interest in the Lakeshore property; his half-interest in 2177 Burnhamthorpe Road, which he jointly owned with his sister (and which he subsequently transferred to his sister and mother); savings and savings plans; and his 55% interest in ODC;
b. On his evidence, the value of his debts on the date of separation (May 1, 2014) totalled $1,710,909.88. There is a significant and, likely, inadvertent error in the husband’s financial statement, in that he deducted the sum of $1,077,250.00 as notional disposition costs associated with the Lakeshore property. This sum exceeds the value of his half-share of the property. The correct figure for the notional disposition costs is $78,181.87 (1/2 x (value of Lakeshore x 4.25% plus HST and 2.5% plus HST));
c. The husband listed date of marriage deductions, which totalled $617,500, comprised of Persian rugs valued at $10,000; $10,000 in an RSP; and $600,000, representing the alleged value of his interest in ODC at the date of marriage. The husband did not fulfil his onus of proving these date of marriage deductions. He provided no supporting documentation to evidence any of the values provided. Not only had the husband never claimed a date-of-marriage deduction for ODC in the two financial statements he swore before May 14, 2018, but (a) he never produced the disclosure that might have assisted the wife to consider the reasonableness of the assertion. His blatant failure to provide documents relating to ODC for the period of 1995-2012, which he had been ordered to produce by Gilmore, J. in October 2017 and effectively refused to provide even in order to obtain an order re-instating his pleadings deprived the wife any opportunity to challenge this bald assertion of value; and (b) In an NFP statements that the husband had apparently attached to an affidavit, sworn on June 21, 2018, which he had filed on the motion to re-instate his pleadings, he claimed that the value of ODC on the date of marriage was $360,000 and claimed that a debt of $120,000 related to the asset. There is simply no basis upon which the court can possibly determine the value, if any, of the company as of the date of the marriage. The onus was on the husband to provide it. He did not provide the wife with any proof of either position he took about it;
d. The husband listed notional capital gains tax associated with 10349 Lakeshore Road in Port Colbourne; 3735 Lakeshore Blvd. West in Etobicoke and the Burnhamthorpe Road property, as debts on the date of the separation in his three financial statements, filed in these proceedings. However, the husband never provided a calculation of what the notional capital gains taxes were, nor did he cooperate with providing any information necessary for the wife or the Court to determine the capital gains tax, if any. The onus was on the husband to prove this debt on the date of separation. He did not do so. The wife is not seeking notional capital gains tax as a debt on the date of separation, associated with her share in the Lakeshore property which, if she had sought such a deduction, would have reduced her net family property; and
e. The husband listed exclusions in his financial statement, which total $120,000, comprised of $10,000 of Persian rugs (possibly treated as both owned on the date of marriage and gifted to him after the marriage if the rugs are the same rugs) and $110,000 representing the value of 2177 Burnhamthorpe Road, he claimed he purchased with inherited funds. The husband did not discharge his onus and prove these exclusions. He had never provided financial disclosure evidencing that he owned rugs worth $10,000 on marriage or had received an inheritance of rugs during the marriage or money, which he traced to the purchase of Persian rugs or the Burnhamthorpe Road property.
[49] The differences between the figures listed in the husband’s financial statement, sworn on May 14, 2018, and the wife’s NFP statement are listed below:
| Husband’s Assets | Wife’s NFP statement of the Husband’s assets and debts | Husband’s FS sworn May 14/2018 |
|---|---|---|
| 3735 Lakeshore Blvd. West | $1,025,000 | $1,025,000 |
| 50% interest in 2177 Burnhamthorpe Road | $125,000 | $110,000 |
| Persian Rugs | $10,000 | $10,000 |
| Savings and Savings Plans | $88,030.46 | $88,030.46 |
| ODC | $177,000 (the wife attributes 100% of the corporate value to the husband) | $97,350.000 (the husband attributes 55% of the corporate value to himself) |
| Value of Assets on V-day | $1,425,000 | $1,330,400.45 |
| DEBTS | ||
| LoC TD #3250205 | $28.35 | $28.35 |
| BMO Mastercard #7288 | $5,573.52 | $5,573.52 |
| BMO Mastercard #8944 | $2,223.34 | $2,223.34 |
| CIBC Mastercard #1043 | $6,215.02 | $6,215.02 |
| Costco Amex #23006 | $3,115.30 | $3,115.30 |
| CIBC Aerogold Visa | $28,214.98 | $28,214.98 |
| RBC credit card | $15,231.34 | $15,291.34 |
| CRA debt as per 2014 NoA prorated to May 1 2014 | $8,029.53 (the wife takes this figure from the husband’s NoA) | Nil |
| Costs of Disposition on 3735 Lakeshore Blvd. West | $78,181.87 (1/2 x $2,050,000)x 4.25% plus HST and 2.5% plus HST)) | $1,077,250.00 (The husband clearly miscalculated the costs of disposition as being in excess of his share in the property) |
| Capital Gains Tax | The wife is not seeking a deduction for equalization purposes | Nil (The husband sought a deduction for notional capital gains tax on the gains of the Lakeshore property and the Burnhamthorpe property. However, the husband never provided his calculation of what the notional capital gains taxes would be, nor did he cooperate with providing any information necessary for the wife or the Court to determine the capital gains tax, if any. |
| RRSPs notional tax at 25% | $19,265.34 | $19,265.34 |
| Value of Debts & Liabilities on V-day | $619,204.59 | $1,710,909.88 |
| Date of Marriage Assets | ||
| Persian rugs | Nil | $10,000 The husband did not prove this as a DoM deduction |
| RSP TD Canada Trust | Nil | $10,000 The husband did not discharge his onus to prove this DoM deduction |
| ODC | Nil | $600,000. [He later claimed in the NFP statement that ODC had a value of $360,000 as of the date of marriage]. The husband did not discharge his onus to prove this DoM deduction. However, ODC was incorporated in 1995 and the parties were married in 2003. |
| Subtotal of DoM Assets | Nil | $617,500.00 |
| Debts on Date of Marriage | In an NFP statement, which was attached to his June 21, 2018 affidavit, filed on the motions Goodman, J. heard on June 29, 2018, one of the husband’s assertions was that he had incurred debt in relation to the ODC, which debt existed at the date of marriage. He did not discharge his onus of proving this debt. Further, in none of his financial statements did the husband deduct notional capital gains tax on the date of marriage in relation to ODC. | |
| Total of Value of Assets on the Date of Marriage minus Total Value of Debts on Date of Marriage | $0 | $617,500.00 |
| Exclusions | ||
| Persian rugs gifted to H from mother | Nil | $10,000 The husband also possibly attempts to exclude the value of rugs as inherited after the marriage and also treat them as property he owned when he married. The Court cannot speculate as to whether the rugs are the same rugs or different rugs. In any event he does not discharge his onus to prove or trace this exclusion. |
| 2177 Burnhamthorpe Road – H claims he used inherited funds to purchase this property | Nil | $110,000 The husband did not discharge his onus to prove or trace this property back to an inheritance he received after the marriage. |
| Total Exclusions | Nil | $120,000 |
| Net Family Property Assets minus Debts on V-day, minus DoM deduction, minus Exclusions = NFP | $805,826.37 | 0 ($1,118,009.43) |
[50] According to the wife’s NFP statement, reflected in the above chart, which is premised on the fact that the husband did not prove the date-of-marriage deductions or the exclusions he claimed in his financial statement, the husband’s net family property is $805,826.37, as opposed to ($1,118,009.43), which would be deemed to be zero, pursuant to the Family Law Act, s.4(5).
[51] Should the Court not order an equalization payment along the lines being sought by her (that is, after the adjustments to her one-half share of the net sale proceeds referred to in the chart at para. 44. above being made and the equalization payment being determined along the lines of the chart at para. 49. above, then she seeks an order increasing the equalization payment to be made to her, pursuant to s.5(6) of the Family Law Act.
Vesting of Corporate Shares in the Husband
[52] The wife also amended her Answer, to seek relief under the OBCA, in order to ensure that she achieves a fair result in this case, given the actions of the ODC and/or the husband’s conduct as a director and/or officer of ODC.
[53] The specified relief that the wife seeks is set out in para. 2(d) above. It is clear from her evidence that, in addition to obtaining the adjustments to the distribution of the net sale proceeds, to which I find she is entitled, and an order for an equalization payment in the sum of $163,504, what she also seeks is an order vesting her shares of ODC in husband and an order that he indemnify her from any liability relating to ODC.
[54] The wife deposes that the husband operated ODC in a highhanded manner, without an regard for her interest as a 45% shareholder of the company. As a result, the acts and omissions of ODC were oppressive to, unfairly prejudicial to, and unfairly disregarded her interest as a shareholder, as were the business and affairs of ODC. Further, she assets that the powers of the husband as director and officer of the Corporation were exercised in a manner which was oppressive of, unfairly prejudicial to, and unfairly disregarded her interests.
[55] According to the wife, examples of the husband’s and/or ODC’s conduct in relation to her include the following:
a. The husband caused ODC to issue false T-4 slips to the wife, which resulted in CRA claiming that she owed significant income taxes to CRA. Those taxes were paid from the sale proceeds of the Lakeshore property. Again, she did not receive the funds attributed to her from ODC. She asserts that the husband took these actions to reduce his own taxable income.
b. The husband caused ODC to pay costs to the wife, which had been ordered against him by Justice Gilmore on October 4, 2017, without her knowledge or consent;
c. The husband withdrew large management fees from the corporation and had access to substantial income from ODC, without any regard for the wife’s 45% interest in the company; and
d. In the course of this case, the husband incorporated a company which was involved in the same business as ODC. He then failed to produce the bank statements for the new company depriving the wife of the right to verify whether he had been re-directing business income into a new company.
[56] Again, the wife submits that although she is notionally a 45% shareholder of ODC, Goodman, J. had found that the husband “considered the business his business and had complete control over it” (paragraph 97 of her Endorsement striking the husband’s pleadings, dated April 30, 2018). The wife maintains that the husband operated ODC to her exclusion both before and after the separation.
[57] The wife submits that in the 6 ½ years after the parties’ separation, the husband has continued to operate the company as his own, controlling it and directing its activities without her. She asserts that the husband has kept her in the dark and failed to produce court-ordered disclosure about the company, including, but not limited to, the financial statements of the company for the years 1995-2012. As a result, the wife seeks, if necessary, an unequal division of net family property to ensure that she had been treated fairly in terms of the property acquired as a result of the parties’ marriage and events which occurred after the separation, and relief as an oppressed shareholder, pursuant to the OBCA, s.248(3).
[58] Again, the wife essentially asks that the Court attribute the husband with the full value of ODC for net family property purposes. Additionally, she seeks an Order that her shares in ODC be vested in the husband. The wife submits that, provided that her shares are vested in the husband and he is solely responsible for all liabilities related to the company and fully indemnifies her in their regard, she will relinquish her interest in the company for no consideration “at this time”. To be clear, the wife has proceeded with the trial of her claims. I infer that she means “on a final basis”.
[59] The draft 2017 financial statements for ODC demonstrate that the company was a viable going concern three years after separation and the husband was withdrawing and borrowing funds from the company for his own benefit, although I note from the Endorsement of Goodman, J., dated April 30, 2018 (at para. 98) in 2017, the husband had opened the new company and ODC’s gross income in 2017 was about $200,000 lower than it was in 2016. By vesting her shares in ODC to the husband, the wife will achieve a clean break from the husband and the company in terms of their property. She does not wish to be exposed to any further liabilities associated with ODC, a company over which she has had absolutely no control.
Analysis of Debts, Equalization and OBCA Issues
[60] First, I have considered the wife’s submissions respecting the debts that were paid “off the top” – that is, out of the sale proceeds before the wife received 50% of the remaining proceeds. I am satisfied that the debts referred to in paragraphs 43., a, b, c, d and g, above are debts that the husband alone incurred and should thus be paid by him out of his share of the net sale proceeds.
[61] If I am wrong in determining that any one of more of the debts in the paragraph above are the husband’s sole debts, then I find that it would be unconscionable for the equalization payment to be made in the amount determined by me above in paragraph 62 below and would adjust it by one-half of any of the amounts referred to in paragraph 43. a, b, c, e and g, which are debts for which the wife is 50% responsible, pursuant to the Family Law Act, s.5(6)(h). In the context of the husband’s highhanded conduct in relation to the incurring of debt for which the wife is responsible, it would be grossly unfair and shock the conscience of this court for the wife to, effectively, be responsible for such debts out of her own net family property.
[62] Having considered the wife’s position respecting the husband’s net family property, I find that the husband did not fulfil his onus under the Family Law Act to prove the date of marriage deductions and exclusions he claimed in his financial statement. As a result, I find that the husband owes the wife an equalization payment in the sum of $163,504.
[63] The wife is required to provide the value of her assets on V-day in her financial statements and NFP statements. She asked that her shares in ODC by valued, effectively, at zero, and the husband’s shares be valued at $177,000, being the entire value of ODC, because he has had full, de facto control over the corporation. Alternatively, if the court does not see fit to impute the husband with the entire value of ODC on the date of separation, she submits that the court ought to vest her shares in ODC to the husband because he has oppressed her as a minority shareholder of the company.
[64] In the case at bar, the husband has treated the company as his own, to the wife’s detriment. While exposing the wife to liabilities of the company, the husband has retained all company benefits for himself. It was he alone who determined that funds he would use for the benefit of the wife and children not only before but after the separation. As an example, when the company vehicle used by the wife was in a serious accident, the husband kept the insurance proceeds and left her without a vehicle, despite his court-ordered obligations. Further, the husband made loans from the company without the wife’s consent and failed to pay taxes due. In addition, the husband attributed a salary to the wife, which ODC did not pay her. Even if he used funds earned by the business to support the family, he would have known that the wife did not have the income from which she could pay the income tax on the notional salary, which was treated as an expense of ODC. On June 16, 2017, during the course of this case, while the wife was actively pursuing disclosure, the husband opened a new and similar business, apparently with the view of transferring the company’s goodwill to him alone for no consideration.
[65] The value of the wife’s shares of ODC on V-day was zero and the value of the husband’s shares was $177,000. The wife had no control over the shares and the company, though the husband did not deal with her interest in the company in a way, which fairly considered her interests as a shareholder. I note from Goodman, J.’s Endorsement, dated October 12, 2018, at para. 48, that during the course of the hearing before her, the husband acknowledged that he had transferred a small amount of money from ODC to his new company. However, again, he did not produce any bank statements, which would have allowed the wife to assess the extent to which business was redirected to the new company.
[66] The wife seeks an order vesting her shares in ODC in the husband. The wife refers the court to s.248(3) of the OBCA as authority for a vesting order. Section 248(3) does not expressly mention a vesting order. However, the remedies that are specifically mentioned in s.248(3) are not exhaustive. The Court may make any final order it thinks fit.
[67] Even though the husband transferred 45% of the shares in ODC to the wife, he continued to run the company on the basis that he owned it. He clearly views it as his business. He apparently operated the company in a way, which would reduce the income tax payable on monies withdrawn from it (such as through the notional salary “paid” to the wife). During the course of the litigation, he simply would not produce the financial statements and other documents for year during which the wife was a shareholder in the company prior to V-day. As at the date of the parties’ separation, there was little, if any, likelihood that the wife would ever benefit from her ownership interest in ODC. The husband’s decisions from time to time regarding the extent to which he would support the family out of the company’s income does not satisfy me that the wife’s interest in the company had any value to her. She was unable to benefit from her assets in terms of being able to alienate it or encumber it for her own reasons or benefit. The value of her 45% interest in ODC at V-date was zero; the value of the husband’s 55% interest in it was $177,000.
[68] Section 248 of the OBCA provides as follows:
248 (1) A complainant and, in the case of an offering corporation, the Commission may apply to the court for an order under this section.
248(2) Where, upon an application under subsection (1), the court is satisfied that in respect of a corporation or any of its affiliates,
(a) any act or omission of the corporation or any of its affiliates effects or threatens to effect a result;
(b) the business or affairs of the corporation or any of its affiliates are, have been or are threatened to be carried on or conducted in a manner; or
(c) the powers of the directors of the corporation or any of its affiliates are, have been or are threatened to be exercised in a manner,
that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer of the corporation, the court may make an order to rectify the matters complained of.
Court order
248 (3) In connection with an application under this section, the court may make any interim or final order it thinks fit including, without limiting the generality of the foregoing,
(a) an order restraining the conduct complained of;
(b) an order appointing a receiver or receiver-manager;
(c) an order to regulate a corporation’s affairs by amending the articles or by-laws or creating or amending a unanimous shareholder agreement;
(d) an order directing an issue or exchange of securities;
(e) an order appointing directors in place of or in addition to all or any of the directors then in office;
(f) an order directing a corporation, subject to subsection (6), or any other person, to purchase securities of a security holder;
(g) an order directing a corporation, subject to subsection (6), or any other person, to pay to a security holder any part of the money paid by the security holder for securities;
(h) an order varying or setting aside a transaction or contract to which a corporation is a party and compensating the corporation or any other party to the transaction or contract;
(i) an order requiring a corporation, within a time specified by the court, to produce to the court or an interested person financial statements in the form required by section 154 or an accounting in such other form as the court may determine;
(j) an order compensating an aggrieved person;
(k) an order directing rectification of the registers or other records of a corporation under section 250;
(l) an order winding up the corporation under section 207;
(m) an order directing an investigation under Part XIII be made; and
(n) an order requiring the trial of any issue. R.S.O. 1990, c. B.16, s. 248 (3).
[69] In BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, the Supreme Court of Canada outlined the following principles:
a. To establish a claim for the oppression remedy, a complainant must show that: (1) the evidence supports the reasonable expectation asserted by the complainant: BCE Inc., para. 68. (2) the reasonable expectation was violated by conduct that amounts to “oppression”, “unfair prejudice” or “unfair disregard” of a relevant interest: para. 68; and
b. The oppression remedy is an equitable remedy. As a result, the court may enforce not just what is legal but what is fair having regard for business realities. Further, what is fair is judged by the reasonable expectations of the stakeholders just and equitable and the relationship at play: paras. 58-59.
[70] In Marot v Marot, 2019 ONSC 866 (S.C.J), paras 46-48, Chozik, J. considered the status of minority shareholders in a closely-held family corporation:
48 The cases recognize to some extent that the status of minority shareholders in a closely held family corporation may differ from that of a minority shareholder in a widely held public corporation. For example, in a family run corporation, the shareholder may depend on the corporation to make a living, or the exclusion of the shareholder from the running of the business may render his or her shares worthless. If the corporation remains viable, then the appropriate solution is for the corporation to purchase the shares of one of the stakeholders at fair market value.
[71] The husband considered ODC to be his business and had had complete control over it. In the 6½ years since the separation, the husband clearly treated the business as his own. He kept the wife in the dark about ODC and willfully failed to produce court-ordered disclosure. I infer from the wife’s trial evidence that on becoming a shareholder in ODC, the wife reasonably expected that the majority shareholder of the company (her husband) would operate the company in a manner such that she would benefit from her shareholding (at a minimum to the extent of her 45% shareholding in it) and would not take steps for his sole benefit, which would result in a reduction of the equity in the company. In all of the circumstances, I find that the wife is entitled to relief under section 248(3) of the OBCA to rectify the effect of the acts of ODC, the business or affairs of ODC and the exercise by the husband of his powers as a director on her interests: s.248(2).
[72] Having treated the value of the wife’s shares in ODC at zero (worthless) and the husband’s shares in ODC at $177,000 as of the parties’ separation date for equalization purposes; the wife having received no disclosure, which would permit her to determine the current value of ODC or even whether it continues to operate for that matter, for the purposes an order under s.248(3) of the OBCA, that the husband or ODC itself buy her shares in the corporation; and the wife’s preparedness to share in the value of ODC by way of the equalization of the $177,000 in the determination of the equalization payment, which she asserts that he husband owes to her; and given the negligible chance that either the husband or ODC would co-operate in a post-separation accounting of the transactions within ODC or finalizing a purchase or transfer of the wife’s shares in OCD, in my view, the appropriate order under s.248(3) of the OCBA is the order to which I refer in the following paragraph.
[73] Given the manner in which the husband conducted the affairs of ODC after the wife became a 45% shareholder in the company, as described and referred to in these Reasons, I am satisfied that, in respect of ODC, circumstances referred to in s.248(2)(a)-(c) of the OBCA were “oppressive, unfairly prejudicial to and unfairly disregarded the interests of the wife (a security holder). In order to rectify the high-handed manner in which the husband conducted the affairs of ODC both before and after the separation, be it in his purported capacity as an officer, director or shareholder, an order will go:
a. vesting the wife’s shares in ODC, which I determined to zero value and be worthless, in the husband; and
b. the husband, in his capacity as a director or officer of ODC shall jointly indemnify and save the wife harmless from any debts or other liabilities of ODC for which the wife, in her capacity as a security holder, director or officer, may be liable, including not only from the principle amount of the debt or liability, but also from any penalties, interest and/or costs arising from the debt or liability.
Issue Two: The calculation of the Husband’s Income for Support Purposes
[74] The wife seeks an order imputing income to the husband of $294,115, rounded up to $295,000[^4] a year, based on the following calculation:
a. $214,500, being the management salary paid to him by ODC in 2017;
b. $69,615, being 100% of the pre-tax corporate income in ODC in 2017; and
c. $10,000, representing expenses paid by ODC, were personal in nature.
[75] It is the wife’s position that the husband should be imputed with 100% of the pre-tax corporate income in ODC, based on ODC’s draft 2017 corporate financial statements, for the following reasons:
a. The husband has had total control of ODC, despite the ownership structure on paper. He was solely responsible for the management of the company and decision-making;
b. Given that he has always been the controlling shareholder and effectively the only shareholder, it is reasonable and appropriate to attribute the full pre-tax corporate income of ODC to him;
c. There is no business reason that the husband put forward to my knowledge, to justify the tension of any income in ODC;
d. The husband had ample opportunity to explain ODC’s operations, but he failed to do so; and
e. Negative inferences ought to be made against the husband based on his failure to provide the court-ordered and the findings of breaches of prior Court orders.
[76] In terms of the additional $10,000 amount the wife seeks to impute to the husband (expenses deducted by ODC in the calculation of its income annually which the wife claims are personal in nature) to be included in the calculation of his personal income, her position is that although this $10,000 amount is likely lower than it ought to be, given Ms. Russell’s calculation, it is a reasonable amount to impute to the husband.
[77] From a review of the orders made in this case before this trial, it is clear that the husband engaged in wilful misconduct throughout this case which led to the sanction of his pleadings being struck and which severely undermined the wife’s ability to marshal evidence in this case for the benefit of the court. The wife relies on the facts relating to the husband’s non-disclosure and breaches of orders, several of which have already been referred to above in these Reasons.
[78] The husband harassed the wife to the point where Monahan, J. issued a permanent restraining order against him on August 29, 2018.
[79] I also note her specific references to the following:
a. The husband consented to a second order of Wilson, J., dated May 24, 2017, to take steps to produce an income report promptly, which he never did, despite orders of other judges that he do so;
b. In an attempt to have his pleadings re-instated in mid-2018, the husband signed a Direction for the wife to seek ODC-related documents from the husband’s accountant [not surprisingly, the wife signed the Direction and sent it to the accountant, but the accountant did not respond to it];
c. The husband neither produced any financial disclosure at all about his current income or his new business venture, other than to produce the articles of incorporation, dated June 16, 2017, which evidence that he established a new company, Next Generation Maintenance Inc. Notably, the husband did not disclose this business as an asset on his sworn financial statement, dated May 14, 2018;
d. In the husband’s financial statement, dated May 14, 2018, he discloses that he transferred a property which he had jointly owned with his sister, to his sister and his mother on May 5, 2018 for $1.00[^5], contrary to the non-dissipation Order of Gilmore, J., dated October 4, 2017. Notwithstanding that the husband transferred the property referred to in para. 50 above to his sister and his mother, his financial statement, sworn on March 14, 2018, lists an expense of $789 a month which he pays toward the mortgage or rent for this property. Goodman, J. found that he had transferred the property to put it out of the wife’s reach for purposes of the enforcement of the relief she would obtain at trial;
e. The husband listed expenses for a property, located at 57 St. Joseph’s Street, including property taxes in his May 14, 2018, financial statement;
f. The husband listed an expense of $4,166.66 a month for RRSP/RESPs in his financial statement sworn on May 14, 2018; yet he disclosed no RESPs or RRSPs, other than one RRSP worth $2,474; and
g. The husband received all of the rent from commercial units of Lakeshore property prior to its sale in 2019. He had also failed to include such income in his sworn financial statements.
[80] According to the wife, it is clear, based on the above facts in paragraphs 79 (a) – (g) and the other evidence before the court, the representations in the husband’s financial statement, sworn on May 14, 2018 are not credible, cannot be relied upon and are contradictory on the face.
Analysis of Income Imputation to the Husband
[81] According to the husband’s monthly expenses in the Budget section of his financial statement show that he had a monthly surplus even on his alleged line 150 income of $229,000, exclusive of any personal benefits, self-employment, or pre-tax corporate income, which should be included in the calculation of his income for support purposes.
[82] Section 15.2 of the Divorce Act authorizes a spouse to seek an order for child support for the children of the marriage. In accordance with s.15.1(3) of the Divorce Act, a court making an order for child support must do so in accordance with the applicable guidelines.
[83] Where parties are married, a spouse’s income for child support purposes is to be determined by the court in accordance with sections 16 to 20 of the Federal Child Support Guidelines, SOR/97-175, (the“Guidelines”). The determination starts under s.16 with a consideration of the sources of income which are included in the “total income” (line 150) of a payor’s tax return. Relevant to this case:
a. Where a spouse is a shareholder, director or officer of a corporation, and the court is of the opinion that the line 150 income does not reflect all the money available to the spouse for the payment of child support, the court may determine the spouse’s income to include pre-tax income of the corporation or an amount commensurate with services provided to the corporation under section 18; and
b. The court may also impute income to a spouse under a non-exhaustive list of circumstances referenced in section 19.
[84] Section 19(1)(f) of the Guidelines states that the court may impute income to a parent or spouse, if the parent or spouse has failed to provide income information when under an obligation to do so.
[85] Regardless of the basis upon which income is imputed, the amount of income that the court imputes to a party is a matter of discretion: Crowe v. McIntyre, 2014 ONSC 7106, at para. 29. However, the ability of a court to impute income is not an invitation to arbitrarily select an amount as imputed income: Drygala v. Pauli (2002), 61 O.R. (3d) 711 (C.A.), at para. 44. The primary limitation on the court’s discretion is that there must be some basis in the evidence for the amount that the court has chosen to impute: Crowe, at para. 29. There must be a rational basis underlying the selection of a figure: Drygala, at para. 44.
[86] The person seeking to impute income to a party has the initial onus to establish an evidentiary basis to support that claim. However, such an onus does not relieve the prospective payor from providing full and complete disclosure, so as to ensure that a court has full information. As there are many circumstances in which a party seeking to impute income will not have full financial knowledge or information, courts generally do not set the threshold too high as regards the existence of appropriate circumstances where imputation of income can be considered. Once the party seeking to impute income provides satisfactory evidence suggesting a prima facie case for the imputation of income, the onus shifts to the other party to satisfy the court as to his/her income level. (See McKenna v. McKenna, 2015 ONSC 3309).
[87] While a corporation’s retained earnings are not necessarily money that a shareholder can take out as income, the taking of money out of a company is a matter of choice made by the directors and shareholders: Halliwell v. Halliwell, 2016 ONSC 182, [2016] O.J. No. 62, aff’d 2017 ONCA 349 (Ont. C.A.).
[88] In this case, the only shareholder (other than the wife) of ODC is the husband. The husband had ample opportunity to provide the wife with evidence as to why all or a portion of OCD’s retained earnings ought to stay in the company: for example, for reasons such as banking covenants, economic upturns and downturns, the degree of capitalization that ODC required and future growth: (Halliwell, supra). The husband did not do so. Rather than try to move the case along through timely and organized disclosure, he chose to try and frustrate the wife’s attempts to obtain the information she wanted to have first in order to fairly settle the case.
[89] As determined in Whalen-Byrne v. Byrne, 2016 ONSC 1172 (Ont. S.C.J.), the attribution of corporate profits, also known as retained earnings, in a corporation controlled by the payor is permitted under s.18 of the Guidelines, where the court determines that the amount of the payor’s income does not fairly reflect all of the income available to him.
[90] In the case at bar, ODC is a company that was fully controlled by the husband, regardless of the ownership structure. In cases like this, where the payor can control the income of the company, section 18 has been held to enable the courts to conduct a fair accounting of the money available for the payment of child support.
[91] In deciding whether to exercise its discretion to impute corporate pre-tax income to a payor spouse’s income, the Court of Appeal set out in Brophy v. Brophy, [2002] O.J. No. 3658 (Ont. S.C.J.), aff’d 2004 25419 (ON CA), [2004] O.J. No. 17 (Ont. C.A.), that the following issues are to be determined by the court:
a. Whether there should be a general reluctance to automatically attribute corporate income to the shareholder, because the corporation is a separate legal entity;
b. Whether there is a business reason for retaining earnings in the company;
c. Whether there is one principal shareholder or other bonda fides arm’s length shareholders are involved;
d. The historical practice of the corporation for retained earnings; and
e. The degree of control exercised by the spouse over the corporation.
[92] In the case at bar, the husband is the only principal shareholder involved with ODC. This was clearly evidenced when the husband paid the wife costs, he was ordered to pay out of the company account, instead of from his personal bank account. He then determines what is to be charged back to himself personally. His failure to co-operate in this case and ultimately at this trial leaves the Court with little evidence upon which to analyze this issue. In light of the husband’s clear control of ODC, it is reasonable for the court to impute income to the husband on account of the retained earnings. The court cannot automatically attribute corporate income without an analysis of the company and its history: Bravo v. Pohl, [2008] O.J. No. 161 (Ont. S.C.J.). However, the husband effectively guaranteed that the Court would not be able to conduct a reasonable income analysis by failing to provide an expert’s analysis of his income for support purposes for any year at all. I draw an adverse inference from his conduct.
[93] In all of the circumstances, it is only fair and just that he be imputed income, with all of the retained earnings of ODC which adds an additional $69,615 to the husband’s income.
[94] In terms of adding the amount of personal expenses the husband had ODC pay on his behalf, to his income for support purposes, the relevant paragraphs of subsection 19(1) of the Guidelines, provide 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;
(d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines;
(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;
[95] The wife has provided an evidential foundation, which satisfies me that the sum of $10,000 should be added to the husband’s income in relation to expenses deducted from ODC’s gross income that are personal in nature. The best evidence of the income available to the husband is from 2017. Based on the salary the husband earned from ODC, along with corporate pre-tax income for the company and the modest $10,000 amount being added to the calculation of his taxable income, it is reasonable for income to be imputed to the husband in the sum of $305,682 a year and not the $295,000 a year as initially proposed by the wife. Again, as detailed in footnote 4 above, when the $10,000 of expenses unreasonably deducted from income are imputed to the husband, because these amounts are non-taxable the Divorcemate software automatically grosses-up these amounts to determine how much gross employment income the husband would have to earn at his marginal income tax rate in order to have this additional non-taxable income.
Issue Three: Determining the Quantum of Child Support and responsibility for s.7 Expenses
[96] The wife seeks a child support order, which starts as of February 1, 2021, in accordance with the Child Support Guidelines.
[97] Again, by order of Paisley, J., dated October 24, 2015, the husband began paying child support to the wife for the three children in the sum of $3,331 a month on November 1, 2015. This temporary order was based on the husband earning an income of $200,000 a year and was intended to be a temporary “without prejudice” child support arrangement, pending the receipt of the husband’s income report.
(i) Child Support Calculation for the Period of May 1, 2014 to and including January 1, 2021
[98] I agree with the wife that the husband’s ongoing breaches of the court orders respecting disclosure and his failure to produce an income analysis report justify negative inferences being made against him.
[99] According to the wife, the husband has been grossly underpaying child support. He has been paying child support based on an annual income of $200,000.[^6] The Court has no information regarding the husband’s 2018, 2019 or 2020 income because the husband failed to provide any disclosure and, as a result of this and other conduct on his part, his pleadings were struck and an opportunity to have them re-instated wasted. As such, the best evidence available on which the Court can rely is that from 2017.
[100] ODC’s revenues were in excess of $1,000,000 a year, according to the unaudited financial statements for 2014, 2015 and 2106. A copy of the draft 2017 corporate financial statement was attached as an Exhibit to the wife’s first affidavit, together with the 2017 T4 issued by ODC to the husband showing his 2017 management salary of $214,550. The corporation paid expenses of $79,584 in 2017, some of which the wife alleges are personal, and again, $10,000 of which she submits ought to be included in the husband’s income and grossed up for support purposes.
[101] Again, the wife seeks child support from the husband got this period, in the total sum of $124,745, calculated as follows:
a. No child support is owing from May 1, 2014 to October 1, 2015. The order of Paisley, J., dated October 26, 2015, arose from a signed consent by both parties. Paragraph 8 of the Consent order states, “[T]here are no retroactive child or spousal support arrears owing by the husband”. Given that the wife consented to this provision, she acknowledges that she is not eligible to and, is therefore, not seeking any retroactive adjustments to child support prior to November 1, 2015;
b. For November 1, 2015 to August 1, 2019, when the Lakeshore property was sold, a retroactive adjustment to child support based on an imputed income to the husband of $340,792. The Child Support Guidelines provide that the husband’s child support obligation based on an annual income of $340,792, for 3 children would be $5,484 a month, as compared with the $3,331 per month he paid for 45 months ($246,780-$149,895). The difference, therefore, for this time period amounts to $96,865; and
c. From September 1, 2019 to January 1, 2021, the wife seeks a retroactive adjustment to child support based on an imputed income to the husband of $305,682, taking into account the husband’s loss of the Lakeshore property rental income after it was sold. The Child Support Guidelines dictated that the husband’s child support obligation based on an income of $305,682 for 3 children would be $4,971 a month, as compared with the $3,331 per month he was paying for 17 months ($84,507-$56,627). The difference, therefore, amounts to $27,880.
(ii) Child support, starting on February 1, 2021
[102] In the material that she filed for purposes of the Trial, in terms of prospective child support, the wife sought an order that, starting on February 1, 2021, and on the first day of each following month, the husband pay the table amount of child support to her for three children, in the sum of $4,971 a month, based on an imputed income of $305,682 a year. Given the findings, I have made regarding the husband’s income – that is, that on the best evidence I have, it is $305,682 – the husband is obliged to pay child support in this amount.
[103] On an imputed annual income for the husband of $305,682 and an imputed annual income of $30,000 for her, she seeks an order that, starting on February 1, 2021, the husband pay 75% of the children’s s.7 expenses, including medical and dental expenses, extra-curricular activities, such as tutoring and post-secondary expenses. However, based on the support mate calculation the wife attached as Exhibit “O” to her second affidavit, the correct proportional sharing of the children’s section 7 expenses is that the wife pay 28.1% of the children’s further s.7 expenses and the husband pay 71.9% of these expenses.
[104] Although the wife is not working, she proposes that she be imputed with income equal to a full-time minimum wage. Given the findings that I have made below, respecting the wife’s entitlement to spousal support and the lump sum order that I have made, I accept this submissions as reasonable and order the husband to pay 71.9% of the children’s further s.7 expenses and the wife to pay the 28.1%.
Issue Four: Spousal Support
[105] The wife seeks lump-sum spousal support from the husband, in the sum of $215,142, after giving him credit for amounts paid by him post-separation.
[106] The wife has clarified for me that she is not seeking lump-sum spousal support from the husband for the mid-point of duration provided for the in the SSAGs. Rather, her claim for lump-sum spousal support is for the period from August 2019 to the completion of the 11-year duration, which would be equal to the maximum duration period provided for in the SSAGs in the circumstances of this case. In other words, the wife submits that she seeks no spousal support for the 5 ¼ period of May 1, 2014 to August 31, 2019 – about $88,900 in total was paid by the husband directly or on her behalf as discussed below in these Reasons. She is, however, seeking lump sum spousal support for the period from September 2019, inclusive, to May 2025, which is a further 5 ¾ years, totalling 11 years of spousal support.
[107] The relevant statutory provisions are set out in ss. 15.2(4) and (6) of the Divorce Act. The relevant factors and objectives are 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.
(iii) Entitlement to Spousal Support, Quantum and Duration
[108] The evidence of the wife is that she sacrificed her ability to have a career during the marriage, as the husband would not allow her to work outside of the home and insisted that she stay home to look after the house and children. As well, according to the wife, the husband would not allow her to attend school or upgrade her education as a Cuban immigrant. The wife was 19 years old when the parties married. Although she was 29 years old when the parties separated, she was responsible for the care of three children aged 11, 8 and 5 at the time.
[109] During the 11 years of the parties’ marriage, the wife was fully responsible for all the household-related roles and all managerial activities for the husband. She was responsible for the cleaning of the home; preparing meals for the children and the husband; completing all of the laundry for the children and the husband; and shopping for all groceries and household items. The wife maintains that the husband wanted her to be a stay-at-home mother and rear the children of the marriage.
[110] The wife deposes that she was not permitted by the husband to go to school and upgrade her education during the marriage. However, he did pay for one make-up course, which she took after the separation, at a cost of $3,000.
[111] The wife submits that the children were young and needy when the parties separated. The husband was uninvolved in their care and, as a result, she was unable to look for employment outside the home. In May 2019, the wife started working part-time for Uber Eats. Her income was minimal. She then started to work part-time at a restaurant as a server, earning $14 an hour. This employment ended with COVID 19 in March 2020. The wife is currently not employed.
[112] The wife seeks compensatory spousal support, given the roles adopted during the marriage and after its breakdown. She has been the children’s primary caregiver to date, which enabled the husband to pursue his career and interests. The wife submits that she was economically disadvantaged by the marriage and its breakdown, while the husband has benefited from her sacrifices over the last 18 years.
[113] The wife submits that she has been substantially disadvantaged by her marriage to the husband and its breakdown. She deposes that the husband’s relationship with the children has been problematic since the separation, to the extent that the husband rarely sees the children. As a result, they rely on her solely to meet all of their physical and emotional needs.
[114] The wife is taking steps toward self-sufficiency, consistent with the fact that the husband was not agreeable to her working outside of the home during the marriage so that she could look after the household and children.
[115] I am satisfied that the wife is entitled to spousal support on both compensatory and needs bases, given the roles adopted during the marriage and the fact that she has clearly been disadvantaged by the marriage breakdown.
[116] In accordance with the order of Paisley, J., dated October 25, 2015, the husband agreed to pay spousal support to the wife on a temporary “without prejudice” basis in the sum of $1,700 month, pending the completion of an expert income report. In addition to this monthly support, the husband was paying the wife’s car lease and insurance, which sums were neither deductible by the husband nor taxable as income to the wife.
[117] In the wife’s second affidavit, she deposes that her bank records confirm that the husband paid her spousal support of $1,700 a month from November 1, 2015 until she moved into the Lakeshore property in February 2017, when the payments stopped. These spousal support payments of $1,700 a month for 16 months, totalled $27,200.
[118] The support provisions set out in the order of Wilson, J., dated May 24, 2017 were effective as of June 1, 2017. This order set out that the husband would contribute to the wife’s spousal support by making third party payments on her behalf in lieu of monthly spousal support payments, in particular, by permitting her to live in a unit in the parties’ Lakeshore property, and by paying for her vehicle, the total of which expenses approximated $2,300 a month on a net basis. The wife and children resided in the Lakeshore property from February 2017 until the sale of the property closed in August 2019. The wife acknowledges that she benefitted from notional third-party rental payments of $1,700 a month for the 27 months from the date of Wilson, J.’s order June 1, 2017 to August 2019.
[119] In terms of the wife’s vehicle expenses, which amounted to $600 a month, the husband was ordered by Wilson, J. to pay these amounts as third-party payments, in lieu of spousal support. Instead of paying these expenses personally, the wife deposes that these sums were expensed through ODC, without the wife’s knowledge or consent.
[120] Apparently, in August 2018, the husband stopped paying the wife’s vehicle expenses because her car was involved in an accident. After the accident, the insurance company paid the husband approximately $17,000, which proceeds he solely kept. Once the wife’s vehicle became unroadworthy in August 2018, the husband ceased paying her vehicle expenses. Accordingly, the $600-a-month in third party vehicle expenses were paid by the husband for 15 months, from the date of Wilson, J.’s order, June 1, 2017, to August 2018.
[121] Once the Lakeshore property closed in August 2019, the husband failed to pay any spousal support to the wife or contribute in any way toward her support by making third party payments on her behalf.
[122] From February 2017 until the sale of the Lakeshore property in August 2019, the wife received a monthly benefit in the form of rent-free accommodation of $1,700 a month. These third-party payments of $1,700, provided for a 31-month-period, totalled $52,700.
[123] Additionally, the wife received a monthly benefit in the form of vehicle expenses of $600 a month from June 1, 2017 until August 2018. These third-party payments of $600 for 15 months, totalled $9,000.
[124] In the wife’s third affidavit, she confirms that between November 1, 2015 and August 2019, the total spousal support paid to her by the husband either directly or on her behalf, was $88,900.
[125] In support of her position respecting quantum and duration that is, her request for lump-sum spousal support – the wife attached Support Mate calculations, to her second affidavit, based on an imputed income of $340,792 (which includes the T4 draw of $214,550 taken by the husband from ODC; adds the corporate pre-tax income of $69,615 to the husband; assumes he has the benefit of $10,000 of personal expenses through ODC; and attributes him with net rental income of $35,110 from the Lakeshore property), and an imputed income of $30,000 to her (even though she is unemployed). According to the SSAGs, on these incomes, spousal support at the low-range is $4,497 a month; at the mid-range is $5,288 a month; and at the high-range is $6,147 a month. The SSAGs formula produces calculations, which demonstrate that the spousal support would be payable for an indefinite (unspecified) duration, subject to variation, with a minimum duration of 5.5 years and a maximum duration of 11 years, from the date of separation. A net present value of lump sum spousal support at the mid-range of the SSAGs assuming a duration of 5 ¾ years amounts to $212,140. A net present value of lump sum spousal support at the high range of the SSAGs assuming a duration of 5 ¾ years amounts to $244,088.
[126] Once the Lakeshore property sold in August 2019, the husband no longer had the benefit of the net rental income of $35,110, reducing the calculation of his imputed income to $305,682 a year. Again, attached to the wife’s first affidavit as Exhibit “O”, are Support Mate calculations, based on an imputed income for the husband of $305,682 and an imputed income for the wife of $30,000 a year. On these incomes, the SSAGs produce spousal support figures at the low-range, of $3,889 a month; at the mid-range, of $4,612 a month; and at the high-range, of $5,366 a month. A net present value of lump-sum spousal support at the mid-range of the SSAGs, assuming a duration of 5 ¾ years amounts to $185,541. A net present value of lump sum spousal support at the high range of the SSAGs, assuming a duration of 5 ¾ years amounts to $215,142.
[127] For clarity, the wife had originally prepared lump sum spousal support calculations, which included an amount based on her receiving spousal support for 5 ¼ years (from the parties’ separation on May 1, 2014 to when the Lakeshore property sale closed in August 2019), despite the fact that the SSAGs demonstrate that the maximum duration of spousal support to which the wife may be entitled is 11 years. The wife’s lump sum spousal support calculation uses an imputed income of $305,682, which is the income figure she calculates for the husband without the benefit of the Lakeshore property rental income, and an imputed income for her of $30,000, even though the wife currently has no employment and relies on government subsidies.
[128] In her first and second affidavits, the wife did not give the husband credit for having paid spousal support (direct payments plus third-party payments) of $88,900 between May 1, 2014 and August 31, 2020, inclusive. It was for this reason, that my Endorsement, dated January 25, 2021, sought clarification from the wife.
[129] Attached as Exhibit “A” to the wife’s third affidavit are copies of the husband’s 2015-2017 income tax returns, which indicate that the husband did not deduct the spousal support he paid to the wife in those years. The wife deposes that she did not include these payments in the calculation of her taxable income.
[130] Although the wife deposes that she received materially less spousal support prior to August 31, 2020, than she ought to have received, as I have already mentioned above, she “waives” her claim for additional spousal support for the period May 1, 2014 to August 2019 which, as indicated in paragraph 128 above, was not clear from her first and second affidavits.
[131] Again, the wife seeks lump-sum spousal support for the maximum duration provided for in the SSAGs, which is equivalent to 11 years. [While the husband is being given credit for paying spousal support to the wife over a 5-year, 3-month period of time, the temporary orders in place were “without prejudice” and were based on an income of $200,000 a year, when in fact, over this time period, the husband was earning far more than $200,000 a year.]
[132] The wife has not had a sufficient opportunity to re-establish herself in the employment market, primarily due to her parental responsibilities for the three children. In making the temporary order that he did, Paisley, J. referenced the financial positions of the parties and his expectation that the wife would be able to obtain some employment within six months of the date of his decision.
[133] Unlike the Guidelines, the SSAGs have not been legislated and are advisory only. However, they and the jurisprudence supporting reference to them as a litmus test or rule of thumb are helpful: Fisher v. Fisher, 2008 ONCA aa.
[134] The wife was out of the workforce until about a year ago. She does not have any post-secondary education. She has no real marketable skills. She has taken steps toward self-sufficiency and demonstrated a willingness to work as a server in the food industry through Uber. Regrettably, with the Covid 19 health crisis, she has not yet been able to secure full time employment.
[135] Considering the wife’s age, the length of the relationship, the fact that she did not work outside of the home during the marriage, and the impact of the role she played during the marriage and its impact on her career and opportunity to re-establish herself in the work place, her compensatory entitlement to spousal support leads the Court to consider a longer duration of spousal support.
[136] Again, the wife’s support mate SSAG calculations attached to her first affidavit as Exhibit “O”, impute an annual income of $305,682 to the husband and impute an annual income of $30,000 a year to herself. The “with child formula” in the SSAGs results in a range of spousal support “for an indefinite (unspecified) duration, subject to variation and possibly review, with a minimum duration of 5.5 years and a maximum duration of 11 years from the date of separation.”
[137] Section 8.5 of the SSAGs addresses duration of spousal support under the “with child support formula” and provides the rationale for the duration range being sought by the wife:
8.5 Duration under the Basic Formula
In most cases where there are dependent children, the courts order “indefinite” spousal support, usually subject to review or sometimes just left to variation. Even when the recipient spouse is expected to become self-sufficient in the foreseeable future, courts typically have not often imposed time limits in initial support orders. Where the recipient spouse is not employed outside the home, or is employed part-time, the timing of any review is tied to the age of the children, or to some period of adjustment after separation, or to the completion of a program of education or training. As the recipient spouse becomes employed or more fully employed, spousal support will eventually be reduced, to top up the recipient’s employment earnings, or support may even be terminated. In other cases, support is reduced or terminated if the recipient spouse remarries or re-partners.
In practice, where there are dependent children, few “indefinite” orders are permanent. Many intervening events will lead to changes or even termination. … By making initial orders indefinite, the current law simply postpones many of the difficult issues relating to duration and recognizes the fact-specific nature of these determinations.
The durational limits under this formula combine the factors of length of marriage and length of the remaining child-rearing period, under two different tests for duration. For longer marriages, it makes sense that a recipient spouse should get the benefit of the time limits based upon length of marriage that might be obtained under the without child support formula, as these will typically run well beyond the end of any child-rearing period.
[138] In the circumstances, it is reasonable, fair and appropriate that the wife to receive spousal support for a further period of 5 ¾ years, based on an imputed income of $305,682 for the husband and an imputed income of $30,000 for the wife. I further order that the husband is to pay a lump sum spousal support award to the wife in the sum of $215,142 which increases his making ongoing periodic payments at the maximum duration of 11 years, referred to in the SSAGs. Given that the wife did not seek an order for indefinite support – that is, an order without a termination date, I did not consider the possibility of making an indefinite order.
[139] An order for lump sum spousal support creates a clean break for the parties as spouses. Given the husband’s obvious animosity toward the wife shown in this litigation, a monthly spousal support order, which would be subject to review or variation, would be wholly inappropriate in this case. Hopefully, the order will reduce or eliminate the amount of future litigation between the parties.
[140] I accept the wife’s submissions that the sum should be based on the incomes referred to above. I appreciate that I have not reduced the amount of the lump sum of spousal support, which I am ordering the husband to pay to the wife, to take into consideration the possibility that negative changes may take place in the husband’s financial circumstances or possible positive changes may take place in the wife’s financial circumstances in the future. However, it also does not take into consideration the possibility of positive changes in the husband’s financial circumstances. The lump sum covers a 5 ¾ year period of future support, as opposed to a much longer period. Further, in my opinion, the benefit to the family of a lump sum spousal support order is that it will likely lessen the likelihood of further antagonistic and costly (financially and emotionally) litigation between the parties. may take place.
Issue Five: Costs
[141] The wife seeks costs on a substantial indemnity basis in the sum of $37,373, inclusive of disbursements and HST, for the period January 14, 2019 to December 17, 2020.
[142] The successful party in family law litigation has no automatic right to full recovery of their costs.[^7] However the Rules do provide for an entitlement to full recovery of costs in specific circumstances, including bad faith.[^8]
[143] The husband’s refusal to comply with his disclosure obligations rises to the level of bad faith. But for the husband’s conduct, the wife would not have had to proceed with an uncontested trial and incur the legal fees and disbursements that she did. She had to provide the court with the best information that she could, to enable the Court to consider the merits of her claims as objectively and fairly as possible in the circumstances. I therefore find that the wife is entitled to recovery of her costs incurred in relation to this trial, namely, those incurred from June 14, 2019, to January 11, 2021, on a full indemnity basis.
[144] I have reviewed the hourly rates of the lawyers and law clerks involved in this matter, as well as their docketed time for the relevant period, and find the rates and all of the time to be reasonable. The wife submitted a Bill of Costs with her first affidavit, which provided that her costs on a full-recovery basis for the period of June 14, 2019 to December 17, 2020, amounted to $16,630.87, inclusive of fees, disbursement and HST. After the attendance before me on January 8^th^, 2021, and a review of my Endorsement, dated January 8, 2021, the wife incurred further costs to prepare her second affidavit, to answer questions I had asked and to provide supplementary evidence to the Court, which was required for her to obtain the temporary order releasing the proceeds from the Lakeshore property, to enable her to close the purchase of her residence. Her fees increased from $16,630.87, to $37,373.63 between December 18, 2020 and January 11, 2021. The wife submitted an updated Bill of Costs, which I also find to be reasonable in the circumstances.
Total Amount Owing by the Husband to the Wife
[145] Based on the above, I find that, over and above any payments that the husband has made to the wife or on her or the children’s behalf since May 1, 2014, the husband owes the wife at least $555,563. As calculated above and totalled as follows:
$124,745, being child support for the period from May 14, 2014, up to and including January 31, 2021;
$215,142, being lump sum spousal support, in satisfaction of the balance of the husband’s spousal support obligation to the wife;
$37,373, being the costs incurred by the wife from June 14, 2019 to the end of the trial;
$163,504, being the equalization payment owing by the husband to the wife; and
$14,799, being pre-judgment interest on equalization payment.
Total = $555,563
The amounts are to be paid in the order set out above.
[146] Given that my order of January 12, 2021, released the remaining proceeds from the sale of the Lakeshore property solely to the wife in the sum of $342,331,[^9] the husband should only be credited with having paid the wife $117,993.25 (see analysis in para. 45 above) on account of the amounts he owes the wife on her calculations set out in paragraph 145 above. Accordingly, the balance of what is owing by the husband to the wife is $437,569.75, calculated as $555,563 – $117,993.25 = $437,569.75.
Final Order:
[147] In view of the above, I order as follows:
a. In accordance with s. 15.1 of the Divorce Act, commencing on February 1, 2021 and on the first day of each following month, the Applicant shall pay to the respondent child support in the sum of $4,971 for the support of the three children of the marriage, namely, Daniel Raul Olari Villares, born November 12, 2003; Dennis David Olari Villares, born April 18, 2006; and Darian Olari Villares, born January 30, 2009. This child support amount is the table amount for three children and is based on an imputed annual income of the Applicant of $305,682 and an imputed annual income of the Respondent of $30,000.
b. In accordance with s.15.1 of the Divorce Act, commencing on February 1, 2021, the Applicant shall pay to the Respondent 71.9% of the children’s special and extraordinary expenses she incurs on their behalf, as set out in section 7 of the Child Support Guidelines, including but not limited to the children’s medical expenses, including dental care/eyewear, their extracurricular activities, and their educational expenses, including tutoring and post-secondary expenses.
c. In accordance with ss.15.1 and 15.2 of the Divorce Act; s.5(1) of the Family Law Act, and s.128 of the Courts of Justice Act, the Applicant having owed the Respondent the sum of $555,563, and the Applicant having paid the Respondent the sum of $117,993.25 out of his share of the proceeds from the sale of their jointly-owed property on Lakeshore Road (after payment of debts of the Applicant out of his 50% interest in the sale proceeds), the Applicant shall pay the sum of $437,570.75 to the Respondent, calculated as follows:
i. $6,752.75, being the balance of child support for the period from May 14, 2014, up to and including January 1, 2021, the sum of $117,992.25 having been paid by the Applicant from the balance of his 50% share of the sale proceeds referred to above;
ii. $215,142, being lump-sum spousal support, in satisfaction of the balance of the Applicant’s spousal support obligation to the Respondent;
iii. $37,373, being the costs incurred by the Respondent from June 14, 2019 to the end of the trial, 2/3 of which shall be treated as support for purposes of enforcement by the Family Responsibility Office;
iv. $163,504, being the equalization payment owing by the Applicant to the Respondent; and
v. $14,799, being pre-judgment interest on the equalization payment.
TOTAL: $437,570.75 (+117,992.25 = $555,563)
d. In accordance with section 248(3)(f) of the Business Corporation Act (Ontario), the wife’s ownership interest in 1162266 Ontario Inc, carrying on business as Ontario Power Air Duct Cleaning (“1162255 Ontario Inc.”) is vested in the husband. The husband shall indemnify the wife and save the wife harmless from any debts or other liabilities of 11662255 Ontario Inc. or any successor corporation or entity, resulting from her status as a shareholder or should she have been an officer or director of 1162255 Ontario Inc.
e. For as long as child support is to be paid, the payor and recipient, shall provide updated income disclosure to the other party each year, within 30 days of the anniversary of this order, in accordance with ss. 21 and 22 of the Federal Child Support Guidelines.
f. Unless the support order is withdrawn from the office of the Director of Family Responsibility Office, it is to be enforced by the Director and amounts owing under the support order shall be paid to the Director, who shall pay them to the person to whom they are owed.
g. In accordance with s.129 of the Courts of Justice Act, this order is to bear interest at the rate of 2% per year on any payment or payments in respect of which there is a default, from the date of default.
M. Kraft, J.
Date Released: May 14, 2021
COURT FILE NO.: FS-15-404529
DATE: 202105014
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Behzad Babazadeh-Olari
Applicant
– and –
Amanda Villares-Reyes
Respondent
ENDORSEMENT
M. Kraft, J.
Released: May 14, 2021
[^1]: The husband was in breach of the consent orders of Paisley, J., dated October 15, 2016; Wilson, J., dated May 24^th^, 2017 and August 2^nd^, 2017: and two orders of Gilmore, J., dated October 4^th^, 2017. [^2]: Endorsement dated October 12, 2018. [^3]: See the Endorsement of Goodman, J., dated April 30, 2018, paragraphs [19]-[22], [57(7)]. [^4]: Although the materials filed by the wife in support of this uncontested trial indicate that she seeks an order imputing an annual income of $295,000 to the husband, the support mate calculations attached to her first affidavit, as Exhibit “O”, correctly demonstrate that, a) the corporate pre-tax income of ODC ($69,615) is included in the husband’s income as gross employment income; and b) when expenses unreasonably deducted from income ($10,000) are imputed to the husband, because these amounts are non-taxable the Divorcemate software automatically grosses-up these amounts to determine how much gross employment income the husband would have to earn at his marginal income tax rate, in order to have this additional non-taxable income. Therefore, when these two items are added to the husband’s annual T4 salary of $214,550, the annual income the wife seeks to be imputed to the husband is not $295,000 as she deposes but, actually, $305,682, once these adjustments are made. [^5]: Exhibit “N” to the wife’s December 28^th^ affidavit is a copy of the title abstract and transfer for 1312-2177 Burmanthorpe Road West, Mississauga, Ontario, dated May 5, 2018, in which the husband transferred his half interest in the property to his sister and mother for $1. [^6]: As found by Goodman, J., at paragraph 96 of her Endorsement dated April 30, 2018. [^7]: Beaver v Hill, 2018 ONCA 840, at para. 13. [^8]: See Rule 24(18). [^9]: This sum represents the wife’s ½ share of the residual fund held by the real estate lawyer in the amount of $16,443.01 (1/2 of $32,886.03) + the husband’s 50% share of the net proceeds of $325,887.71 ($309,44.68 + $16,443.01).