COURT FILE NO.: FS-19-96766
DATE: 2021-10-29
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: M.K.-C. v. C.C.
BEFORE: Mandhane J.
COUNSEL: Ben Hahn and Jessica Hewlett, for the Applicant/Mother Oren Weinberg, for the Respondent/Father
HEARD: October 15, 2021
AMENDED ENDORSEMENT
[1] The parties were married in June 1999 and have five children. They separated sometime in 2017 or 2018, but both continued to live in the jointly-owned matrimonial home with their five children. The Applicant/Mother commenced this application in November 2019. The Respondent/Father left the home in October 2020 after being charged with assaulting the Mother. The Father’s criminal charges remain outstanding.
[2] The children continue to live in the matrimonial home with the Mother. Three of the children are minors and attend private school in Oakville. The eldest two children are enrolled in full-time post-secondary education. The children each have identified special needs and disabilities that require educational accommodation and each child benefits from ongoing therapeutic support. The Mother is not currently working. She employs a full-time nanny.
[3] The Father is currently living in a rented condo for $4000 per month. He has parenting time with the eldest child at his discretion. He sees the three youngest children every weekend from Friday through Sunday. The second eldest child refuses to see the Father.
[4] Pursuant to a temporary, interim arbitral award dated August 4, 2020, the Father is paying $4540 per month in support. Before me, the Mother asks me to order that the Father pay ongoing and retroactive child support pursuant to the Federal Child Support Guidelines, SOR/97-175, pay for the children’s private and post-secondary education, and contribute towards their therapies. She asks for interim spousal support.
[5] The Father is agreeable to paying the Table amount of child support but says that it should be based on his pandemic income of $111,000. The Father also seeks an order selling the matrimonial home. Two of the three mortgages are in default, and one of the mortgagees has commenced power of sale proceedings in Milton.
[6] The issues I must determine are as follows:
• What is the Father’s income for the purposes of interim child support?
• What should the Father contribute towards the children’s s.7 expenses?
• Should income be imputed to the Mother for the purposes of interim spousal support?
• Should the matrimonial home be sold?
[7] For reasons that follow, I order the following on an interim basis:
• The Father shall pay the Table amount of child support for five children based on an estimated income of $300,000;
• That the Father shall provide $3000 in lump sum monthly support for the Children’s s.7 expenses;
• The Father shall pay spousal support at the mid-range of the Federal Spousal Support Advisory Guidelines, based on his estimated income of $300,000 and the Mother’s imputed income of $100,000.
What is the Father’s income for the purposes of interim support?
[8] The Father shall pay interim child support at the Table amount, totalling $6,631 for five children based on an estimated income of $300,000.
[9] The Father is a cosmetic dentist whose income is in dispute. He owns his own business with two dental chairs in downtown Toronto. He employs a receptionist and two dental hygienists (including one who is currently on maternity leave). The Father admits that his Notices of Assessment do not reflect his actual income because he received dental fees that he did not report to the Canada Revenue Agency (“CRA”), and because he ran personal and household expenses through the business.
[10] According to ss. 15 to 20 of the Federal Child Support Guidelines, when determining income for support purposes, I can look beyond the Father’s tax filings to account for his pattern of income over the past three years, as well as considering the money that he might have available to him through his dental corporation.
[11] Between 2017 and 2019, the Father’s average reported income based on his Notices of Assessment from the CRA was $174,924. The Father relies on the second expert report of Stephen Kertzman dated September 28, 2021, which estimates that the Father’s actual income from 2017 to 2019 averaged $306,171. Kertzman estimates that, due to COVID-19 lockdowns, the Father’s 2020 income was $153,508, including the personal expenses that he ran through the business.
[12] The Mother says that the Father should pay ongoing support based on a much higher income, approaching $500,000. She says that level of income is more consistent with the family's lifestyle over the course of the marriage. Even during COVID-19, the Mother says that the Father was earning at least $364,088.
[13] The Mother relies on an expert report prepared by Mitchell Ornstein. Ornstein analyzed bank statements from the dental practice and identified approximately $230,000 in unaccounted-for cash deposits into the Father’s business account between January 1 and April 30, 2021. Ornstein says that the nature of the payments (i.e. their size and pattern) suggest that they are cash payments for dental services and should be treated as income for support purposes. The Father says that the cash deposits are either loans from his parents, COVID-19 government relief loans (which need to be repaid) or proceeds from the sale of his accounts receivable to Capital Solutions.
[14] Overall, on a temporary basis, I am prepared to find that the Father’s income for child support purposes is $300,000. First, I note that dentists have not been under any significant pandemic-related restrictions in 2021 such that it is reasonable to assume that the Father’s income this year will be more consistent with his 2017-2019 income rather than his 2020 income. Second, I note that the Father owns luxury vehicles and household goods totalling nearly $130,000, which he has yet to sell. His continued possession of these items is inconsistent with his claim that he is earning just over $100,000.
[15] That all being said, I refuse to find that the Father’s income for interim support purposes is anywhere approaching $500,000. It is abundantly clear that the parties lived way beyond their means for years. They are now in dire financial straits precisely because their spending patterns and lifestyle do not match their financial means. In my view, the Mother’s insistence that the Father pay support commensurate with an income of half a million dollars reflects her ongoing refusal to accept that the parties’ lifestyle never matched their earnings. When viewed in this context, the Ornstein report raises more questions than it answers; it would be premature to rely on the report at this early junction.
[16] Finally, I refuse to order retroactive support to November 2020. Given that the Father’s income during 2020 remains in dispute, calculation of retroactive support is best left to trial. I also note that the Father has been making monthly contributions of varying amounts pursuant to two arbitral awards, which may require a set-off.
What should the Father contribute towards the Children’s s.7 expenses?
[17] According to s.7(1) of the Federal Child Support Guidelines, as part of my child support order, I may provide an amount to cover all or a portion of the children’s educational and post-secondary tuition, and the children’s health, dental, and medical expenses. In exercising my discretion, I must consider the necessity of the expense in relation to the child’s best interests, and the reasonableness of the expense in relation to the means of the spouses and those of the child, and to the family’s spending pattern prior to the separation.
[18] The Mother says that the parties always agreed on private education given their children’s accommodation and support needs. On an interim basis, I accept the Mother’s affidavit evidence regarding the children’s identified needs. She says that each of the children have medical, education, mental health, or developmental disabilities that benefit from ongoing support by various doctors and therapists, from the use of various assistive devices, and through enrollment in private educational institutions.
[19] While it is generally in the children’s best interests to maintain the status quo pending final resolution of this matter, I cannot ignore the parent’s current financial means: s.7(1) of the Federal Child Support Guidelines. That factor weighs heavily against an onerous s.7 award.
[20] On the evidence before me, I have no trouble finding that the parties are equally responsible for their current ruinous state. Both parents feel entitled to a lifestyle they cannot afford. At a superficial level, this entitlement included luxury homes and cottages, multiple Porsches and boats, extravagant vacations, and over-the-top birthday parties for their children. However, at a deeper level, it includes the children’s expenses such as a live-in nanny, private schools and universities, and private therapies offered by optometrists, psychologists, tutors, nutritionists, dentists, oral surgeons, orthodontists, prosthodontists, and therapists.
[21] On an interim basis, the Father shall continue to pay the children’s educational expenses. In the short term at least, it is important to maintain some stability in the children’s academic and social lives, pending final resolution of the parents' financial issues. It is very likely that the children will be moving out of their childhood home soon, and it will be too disruptive to change their home and schools in the same year.
[22] The Father shall also contribute a lump sum of $3000 per month towards the children’s health, medical, and other expenses. This is based on the estimate set out in the Mother’s most recent Financial Statement.
[23] I refuse to order proportionate sharing of expenses because this will not create the appropriate incentive: for the parents to decrease their overall spending. Going forward, hard choices will need to be made. I encourage the parents to immediately apply for available government programs and services to support their children’s needs, to encourage the children to avail themselves of accommodations and academic supports offered through their educational institutions, and to maximize the therapies covered by any benefits plans. It may be that the family can no longer afford a full-time nanny as well as private education for their younger children.
Should income be imputed to the Mother for interim spousal support purposes?
[24] The Father shall pay spousal support at the mid-range based on the Mother’s imputed income of $100,000 and the Father’s estimated income of $300,000.
[25] The Mother has established prima facie entitlement to interim support based on her need, the Father’s relative ability to pay, and the length of the marriage: Driscoll v. Driscoll, 2009 66373, at para. 14. The Mother says that, while she had worked in advancement in the healthcare field from time to time during the marriage, her primary and overriding responsibility was always to care for the children. As the children have grown older and after the Father moved out, the children have needed more extensive therapies which she says often requires her to be in two places at once.
[26] The Mother asks for spousal support at the mid-range of the Spousal Support Advisory Guidelines. The Mother’s income for spousal support purposes is in dispute. The Mother says that she receives approximately $75,000 in trust income annually. The Father argued that I should impute income of at least $100,000 to the Mother.
[27] According to s. 19(1) of the Federal Child Support Guidelines, I may impute income in appropriate circumstances, including where a spouse is intentionally under-employed or where she has not provided proper disclosure regarding the income she receives as a beneficiary of her family trust. The imputation of income for support purposes is discretionary and fact-specific: Levin v. Levin, 2020 ONCA 604, at para. 12.
[28] The Father says that the Mother is purposefully underemployed. He notes that her income has fallen dramatically since he moved out of the home in 2020 (from approximately $159,000 in 2017 to $48,000 in 2020). On an interim basis, I accept the Mother’s explanation for her fall in income immediately after the Father moved out of the home. I also accept that it was unrealistic for her to obtain employment in her field during the pandemic when the children were engaged in virtual learning at home. However, I would expect that she would be successful in obtaining at least part-time employment by the time this matter proceeds to trial.
[29] On an interim basis, I am prepared to impute an additional $25,000 of income to the Mother on account of the family trust. I agree with the Father that the Mother likely receives much more from her family trust than she reports. The Mother says that she has already provided fulsome disclosure including her personal tax returns, trust documents, and corporate documentation and financial statements regarding the trust and its holding company. The Father says that the Mother has not provided adequate/timely financial disclosure regarding the rental buildings owned by the holding company such that he is unable to ascertain the full extent of the Mother’s trust income. He says that there are unexplained deposits into the Mother’s account between January 2020 and June 2021, which average about $15,000 per month. The Mother submits that these amounts are loans from her family and/or payments from the trust to the two children who have obtained age of majority. There is no cogent evidence to support her claim.
Should the matrimonial home be sold?
[30] Before me, the Father says that, as a joint owner of the matrimonial home, he has a prima facie right to partition and sale of the property: s. 2 of the Partition Act, R.S.O. 1990, c. P. 4; McNeil v. McNeil, 2020 ONSC 1225, 37 R.F.L. (8th) 153; Dhaliwal v. Dhaliwal, 2020 ONSC 3971, 42 R.F.L. (8th) 321, at para. 16.
[31] The Father’s right is not absolute, and it must yield if the Mother can show that she will be prejudiced by a sale: Dear v. Kennedy, 2019 ONSC 4302, at para. 19. Here, the Mother says that any order to sell the home would effectively pre-determine the civil action and substantially jeopardize her rights in the property.
[32] As of January 2019, the matrimonial home was valued at $1,900,900. According to the Parcel Register, there are three mortgages registered on title, which total $2,050,000. The CRA has multiple liens registered on title because of the Father’s tax arrears totalling $278,936. The parties’ equity in the home is slowly dwindling.
[33] The matrimonial home is currently the subject of parallel power of sale proceedings commenced by one of the mortgagees in February 2021 in Milton (CV-21-471). Both parties are represented by counsel in the civil matter. The Mother has filed a defence and counterclaim in that proceeding seeking that the mortgage be deleted from title. She says that the Father obtained the subject mortgage without her consent either due to fraud or duress. The mortgagee has opened a fraud investigation.
[34] The Father has also filed a defence and counterclaim in the civil matter. He vehemently denies any fraud, duress or power imbalance and says that the Mother’s counterclaim is without merit. He adduces evidence from the solicitor who acted for the parties on the real estate transaction. He counterclaims against her for encumbering the home without his knowledge. Before me, the Father says that sale of the home is necessary to preserve the parties’ equity in the property and discharge the parties’ significant debts.
[35] In these circumstances, I am acutely aware of the potential abuse of process that could result from the two ongoing legal proceedings related to the same property. Given its substantial interest in the property, I am concerned that the Father did not serve his motion materials on the mortgagee in the power of sale proceedings. The mortgagee clearly has an interest in this proceeding. I am not, however, prepared to adjourn this motion to allow for proper service. This would not only waste further court resources on duplicative proceedings, but risk delaying timely resolution of the civil matter.
[36] I agree with the Mother that the issues related to the matrimonial home are best determined in the related civil proceeding. As a named defendant, the Father can respond to the Mother’s allegations of fraud and seek leave to file his own (amended) counterclaim seeking sale of the home. The mortgagee will have appropriate notice and the opportunity to respond.
[37] The Father’s motion for sale of the matrimonial home is adjourned sine die.
Interim order
[38] The Father shall pay the Table amount of child support, totalling $6,631 for five children based on an estimated income of $300,000.
[39] The Father shall continue to pay the children’s expenses for their private school and/or post-secondary education.
[40] The Father shall pay an additional $3000 per month as a contribution towards the children’s other s.7 expenses.
[41] The Father shall pay spousal support at the mid-range based on his estimated income of $300,000, and the Mother’s imputed income of $100,000.
[42] The Father’s estimated income of $300,000 is without prejudice to either party’s position at trial with respect to the income of the Father for the purpose of child and spousal support.
[43] The Mother’s imputed income of $100,000 is without prejudice to either party’s position at trial with respect to the income of the Mother for the purpose of child and spousal support.
[44] Any spousal support payable by the Father is without prejudice to the Mother’s position at trial with respect to the spousal support payable.
[45] On or before November 12, 2021, the parties shall endeavour to agree to the terms of the interim order, including any costs payable. If they cannot agree, they may each serve and file their draft order and supporting DivorceMate calculations with my assistant, Karen Bunbury, at karen.bunbury@ontario.ca. The parties shall not serve any further materials to support their request for costs.
Mandhane J.
DATE: October 29, 2021
COURT FILE NO.: FS-19-96766
DATE: 2021-10-29
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: M.K.-C.
- and - C.C.
COUNSEL: Ben Hahn and Jessica Hewlett, for the Applicant Oren Weinberg, for the Respondent
ENDORSEMENT
Mandhane J.
DATE: October 29, 2021