CITATION : Gafanha v. Gafanha, 2022 ONSC 1613

Court File and Parties

COURT FILE NO.: 51/21 DATE: 2022-03-14 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Raquel Carina Fernandes Gafanha, Applicant – and – Eugenio Lopes Gafanha, Respondent

Counsel: Laura Oliver, Counsel for the Applicant Andrew A. Nicholls, Counsel for the Respondent

HEARD: March 11, 2022

JUDGMENT

THE HONOURABLE MR. JUSTICE A. PAZARATZ

[1] The mother has brought a motion for:

a. Exclusive possession of the matrimonial home. b. Spousal Support. c. Child support. d. Disclosure. e. An OCL.

[2] However at the outset of the hearing of the motion the mother withdrew her request for an OCL.

[3] The father brought a cross motion for:

a. Immediate sale of the home. b. Specification of which real estate agents are to be involved, and how their fees are to be paid. c. Net proceeds of sale to be held in trust pending further order or written agreement.

[4] The requests must be considered in the context of the timelines of this court case.

[5] Briefly:

a. The Applicant mother is 38. b. The Respondent father is 39. c. They have two children Sebastian age 10 and Benjamin age 3. d. The parties were married February 12, 2005. e. They separated September 5, 2020. f. In August 2021 the father was charged with assaulting the mother. Since then he has been required to stay away from the house and the mother. He says he will be disputing the criminal charge. It is unclear when that matter will be completed. g. The mother has remained in the jointly owned matrimonial home. h. The father is temporarily residing with relatives. i. Fortunately, the parties have been able to work out parenting issues. They share parenting time equally.

[6] The main issues:

a. There is substantial equity in the matrimonial home. Although the real estate market is unpredictable, net proceeds would likely be at least $800,000.00. b. As of the date of separation the mother was unemployed. Historically she held some employment, but it is not disputed that particularly after the second child was born she primarily assumed responsibilities in relation to the home and children. c. The father owns and operates a high-end decorative landscaping company. There is a lesser dispute about the value of the company (in relation to equalization) and a greater dispute in relation to the father’s income. d. The father does not dispute the mother’s entitlement to spousal support. But he seeks to impute income to the mother, at least in the amount of about $30,000.00 representing minimum wage. e. The mother seeks to impute significant income to the father. He says he’s earning about $80,600.00. The mother asks that his income be imputed in the sum of $150,000.00.

[7] All of these issues are inter-related.

a. The mother agrees with the father that it is not affordable to retain the house on a long-term basis. Neither of them has proposed to purchase the other’s interest in the property. b. But the mother says if the house is sold before property and support issues are resolved, she won’t have the ability to arrange alternate accommodation for herself and the children. She needs to know how much money she is going to be left with after equalization is calculated. And she needs to know what her income stream is going to be in terms of child and spousal support. c. The father’s motion asks that net proceeds be held in trust. His lawyer suggested at the motion that the mother’s share might be released. But even if that happens, equalization (and other property adjustments) will have an impact on how much money the mother is left with. d. And with significant disputes about whether a small amount of money should be imputed to the mother – and whether a very large amount of money should be imputed to the father – the range of possible financial and cashflow outcomes for the mother is quite broad. e. I agree with her that she needs to know where she is going to stand.

[8] Determining whether to sell the house at a temporary motion is a relatively straightforward binary decision. Yes or no.

[9] But the remaining unresolved financial issues entail a huge continuum of possible financial results.

[10] Equalization and property issues can’t be resolved by way of a motion.

[11] And while temporary support can be addressed based on affidavit materials, the complicated income analysis which both parties are asking the court to engage in is beyond the scope of what a motions judge should realistically be required to attempt.

[12] Which gets us back to my comment about timelines.

[13] These parties have known about these issues for a very long time.

[14] They had a Settlement Conference on October 28, 2021. The matter could not be resolved because they were awaiting completion of a business valuation report in relation to the father’s company. They adjourned the matter to a further Settlement Conference on March 22, 2022.

[15] The father is in a hurry to have the matrimonial home sold, but he must assume responsibility for the fact that he didn’t have his business valuation ready for a Settlement Conference 13 months after separation.

[16] Beyond that, as of the date the parties argued this motion, counsel had done nothing to expedite setting a trial date.

a. I reminded counsel that in this jurisdiction we have open trial lists. Counsel can place a trial on a list in any month they select, and there is a virtual certainty that their trial will be reached. b. If the father was anxious to deal with the house issue, and if the mother was anxious to deal with the imputing income issue, each of them could have arranged for a trial date by now. c. Even if they were waiting for the father’s business valuation and income analysis, those documents were produced by February 2022. d. At the hearing of the motion, both counsel agreed the file is basically ready for trial (there are some minor disclosure issues outstanding, but they should be rectified quickly). I reminded counsel that they could have their trial during the sittings of April 4, 2022; May 9, 2022; or June 6, 2022 for example (or any month thereafter). Ms. Oliver said she could make herself available for any of these dates. Mr. Nicholls indicated he has trial commitments until July.

[17] Interim motions are intended to provide short-term stabilizing relief to allow parties to maintain their lives while waiting for a trial, at which there will be a more complete opportunity to fully present, canvas and test all of the evidence. If our court system goes to great lengths to offer early trial dates, parties should take advantage of this – rather than letting files sit dormant and then asking that judges make extremely complicated determinations based on imperfect and inadequate affidavit evidence on a motion.

[18] So all of the requests for temporary relief must be assessed in the context that:

a. The parties could already have had a trial by now. b. The parties could still have a trial within a few months.

[19] In that context I will deal with the issues individually.

[20] With respect to the house, the mother seeks exclusive possession while the father seeks immediate sale. I agree with the mother.

[21] The father is currently out of the house because of a criminal charge against him. It is unclear when or how that charge will be disposed of. But for the moment the court must assume that it is in the best interests of the parties and especially the children that the father not return to the matrimonial home where the assault allegedly occurred. The father has established alternate accommodation. He does not need to return to the house. He is still having equal parenting time with the children, living in a separate residence. It is in the best interests of the children that their situation not be prematurely or needlessly disrupted.

[22] In Dhaliwal v. Dhaliwal, 2020 ONSC 3971 this court summarized the principles in relation to interim sale of a jointly owned matrimonial home.

[23] Section 2 of the Partition Act empowers the court to order the sale of a jointly owned property, including a matrimonial home. McNeil v. McNeil, 2020 ONSC 1225 (SCJ). A joint tenant has a prima facie right to an order for the partition or sale of property held with another joint tenant. Kaphalakos v. Dayal, 2016 ONSC 3559 (SCJ); Marchese v. Marchese, 2017 ONSC 6815 (SCJ); Jama v. Basdeo, 2020 ONSC 2922 (SCJ); Davis v. Davis; Brienza v. Brienza, 2014 ONSC 6942 (SCJ).

[24] The Family Law Act does not displace the Partition Act. But in family cases a partition application should generally not be granted where it can be shown that a legitimate family law claim would be unfairly prejudiced. Silva v. Silva; Parent v. Laroche, 2020 ONSC 703 (SCJ); Latcham v. Latcham (2002), 27 R.F.L. (5th) 358 (ON CA); Dulku v. Dulku, 2016 CarswellOnt 16066(SCJ). In assessing and guarding against potential prejudice, the court must take a realistic view of the potential impacts of a sale — both positive and negative — in relation to the interests of both joint tenants, and the family as a whole

[25] The court must consider the impact of a proposed sale on children or a vulnerable spouse -- including the emotional impact, and the fundamental need to ensure that they have appropriate housing. Delongte v. Delongte, 2019 ONSC 6954 (SCJ); Kaing v. Shaw, 2017 ONSC 3050 (SCJ). The availability and affordability of alternate housing must be considered. As part of the analysis, support obligations may need to be co-ordinated — even on a temporary basis — to ensure that any party displaced by a sale will have the resources to arrange reasonable replacement accommodation.

[26] Orders for sale of a matrimonial home at the interim stage should not be made as a matter of course. Fernandes v. Darrigo, 2018 ONSC 1039 (SCJ). The court must be mindful of the whole of the proceeding, and the need to achieve a final resolution for the family as fairly and expeditiously as possible. Kereluk v. Kereluk.

[27] Timing can be a relevant consideration in dealing with a motion for sale at a temporary stage. The availability of a trial within a short period can reduce the pressure for an immediate sale. Goldman v. Kudeyla, 2011 ONSC 2718 (SCJ).

[28] In this case, the mortgage payments on the home are relatively modest, and a trial is available within a very short period of time (soon enough that all issues could be resolved at a trial this summer, if counsel elect to take advantage of that option).

[29] It would be unfair to prematurely dislocate the mother and jeopardize her ability to provide reasonable accommodation for children who will likely continue to reside with her half the time. She needs to know how much money she will have so she can plan her life. The parties could have resolved those issues by now. In any event, the parties can still resolve those financial determinations in the very near future.

[30] With respect to imputing income to each of the parties, the analysis in relation to the mother is somewhat straightforward. The analysis in relation to the father is largely beyond the scope of what a motions judge can or should be required to do.

[31] With respect to the mother, she has been out of the workforce for a long time. She is still young and has employable skills. But she has also continued to have significant responsibilities toward the children at least half the time, and the youngest child has some special needs. As well, the mother says historically she has had some medical issues which might be marginally relevant (this won’t likely be a big issue, and no medical evidence was provided on this topic). The mother acknowledges that she will have to return to the workforce. But given the history of these parties, and the roles and responsibilities they have assumed, I think it is simplistic to say that hurrying to get a job at minimum wage would be the most prudent career plan.

[32] As Justice Kiteley stated in Rankin v. Rankin, 2021 ONSC 4537 (SCJ) “on a motion for temporary support the task of imputing income to the support recipient requires an in-depth analysis as to ability to earn more professional income or in investment income. It is contrary to the expectations on a motion for temporary support for the court to undertake that analysis.” See also Liddell-MacInnis v. MacInnis, 2021 ONSC 1787 (SCJ).

[33] Spousal support is extremely complex and the wide range of considerations applicable to both the recipient and the payor can be much better addressed at an early trial.

[34] The biggest factual dispute relates to the father’s income.

[35] The father produced a 32 page Income Analysis dated February 22, 2022, prepared by Jeffrey B. Marino a certified business valuator. (Marino also produced a business valuation for equalization purposes.) The income analysis concludes that the father’s 2022 income for support purposes is $80,600.00. The corresponding figures for 2019, 2020 and 2021 were $62,600.00; $68,800.00; and $79,100.00 respectively.

[36] The mother’s motion materials offer no professional analysis or response on the issue of the father’s income for support purposes. Marino’s report has not been tested.

[37] Instead the mother submitted that income should be imputed to the father based primarily on two broad considerations:

a. The mother says the father has always had significant cash income which has not been reported. The father says any cash income has been minor and always declared. This is a factual dispute requiring credibility determinations which are difficult at the motions stage. b. The mother says income should be imputed based on lifestyle. She says the parties always spent more than would have been possible based on the father’s stated income. She seeks to impute income based on the lifestyle the parties lived and the budgets each of them has put forward. Her lawyer submits the parties couldn’t have afforded the lifestyle they maintained based on the father’s stated income. And since there was no accumulating indebtedness, it must mean that there has always been – and there continues to be – extra income available to the father.

[38] The father denies any significant cash income, and notes that this allegation – and all of the mother’s allegations – were specifically addressed in the income analysis.

[39] He also denies that there are any lifestyle considerations which justify imputing income. He notes that even in the mother’s affidavit of October 5, 2021 she stated at paragraph 10: “The Respondent and I have not had a lavish lifestyle. I would characterize us as middle to upper middle class.”

[40] Section 19 of the Guidelines permits the court to impute income to a party if it finds that the party is earning or is capable of earning more income than they claim. The circumstances listed in s. 19(1) are not exhaustive. They are simply examples of situations in which the imputation of income to a spouse may be appropriate. Bak v. Dobell, 2007 ONCA 304 (ON CA); Korman v. Korman, 2015 ONCA 578 (ON CA); Riel v. Holland (2003); Hawas v. Ibrahim, 2021 ONSC 3713 (SCJ).

[41] The principles that apply in determining whether to impute income are the same in both child support and spousal support cases. Rilli v. Rilli; Perino v. Perino; Decker v. Fedorsen, 2011 ONCJ 850 (OCJ); Liddell-MacInnis v. MacInnis, 2021 ONSC 1787 (SCJ); Sherman v. Donohue, 2021 ONSC 5179 (SCJ); Section 6.1 of the Spousal Support Advisory Guidelines provides that the starting point for determining income is the definition of income under the Child Support Guidelines.

[42] The onus is on the party seeking to impute income to establish a prima facie case. The person requesting an imputation of income must establish an evidentiary basis upon which this finding can be made. Homsi v. Zaya, 2009 ONCA 322 (Ont. C.A.); Tahir v. Khan, 2021 ONCJ 1 (OCJ); E.D. v. J.S., 2020 ONSC 1474 (SCJ); Abumatar v. Hamda, 2021 ONSC 2165 (SCJ). However the onus on the recipient does not relieve the payor from the obligation to provide full and complete disclosure, to ensure that a court has full information.

[43] A person’s lifestyle can provide the basis for imputing income. E.D. v. J.S.; Aitken v. Aitken [2003] O.J. No. 2780 (SCJ); Jonas v. Jonas, [2002] O.J. No. 2117 (SCJ); Price v. Reid, 2013 39CJ 373; Lynch v. Lewis, 2020 ONCJ 2 (OCJ); Abumatar v. Hamda, 2021 ONSC 2165 (SCJ). But lifestyle is not income. It is evidence from which an inference may be drawn that a person has undisclosed income that may be imputed for the purpose of determining child support. Bak v. Dobell, 2007 ONCA 304 (Ont. C.A.); Iacobelli v. Iacobelli, 2020 ONSC 3625 (SCJ); Atkinson v. Johnson, 2021 ONCJ 15 (OCJ).

[44] In this case the mother has certainly raised a suspicion about unreported cash income. Given the nature of the father’s business, cash sales – and unreported cash sales – would not be unheard of.

[45] Similarly, the mother has raised an inference that lifestyle should form the basis of almost doubling the income claimed by the father.

[46] On the one hand we have disputed evidence about cash; general statements about lifestyle; and the mother’s counsel itemizing bank entries and suggesting that the math just doesn’t add up.

[47] On the other hand we have a very thorough income analysis; no evidence of a lavish or unexplainable lifestyle; and factual disputes about what certain specific numbers (or mathematical totals) mean.

[48] Both parties have valid arguments on this topic – but given the magnitude and importance of the issue, these arguments require full exploration at a trial. If the mother’s lawyer challenges the father’s income analysis, she will undoubtedly want to cross examine Marino.

[49] Justice Kraft addressed the challenge of imputing income at interim stage in Liddell-MacInnis v. MacInnis:

[75] The court may impute income to a party in the context of a motion for temporary spousal or child support, but should exercise caution in doing so having regard for limitations on the court’s ability in the context of a motion to obtain a complete and accurate picture of the parties’ respective situations. This is particularly so in cases where the parties are still in the process of formulating plans and goals for re-organizing their affairs and lives in independent households. However, the decision as to whether or not income should be imputed ultimately remains in the discretion of the motions judge and depends on the particular facts of each case

d. Once again, given the fact that the parties could have already had their trial – and they can still have their trial within a few months if they choose to make themselves available – I am not prepared to guess and make assailable findings within the needlessly restrictive (in this case) confines of a motion. e. Based on the incomplete, contradictory and untested evidence before me, I am not prepared to impute income to the father on an interim basis. This is a complex determination which must await what should be an imminent trial. f. Motions for interim support are usually presented relatively soon after separation. But even if they are brought late in the litigation stream, motions are no replacement for a trial. As Justice Charney recently noted in Da Silva v. Kelly, 2022 ONSC 1402 (SCJ), the level of analysis is inherently more limited at the motion stage:

[75] Motions for interim support are summary in nature. The Court will generally not conduct a detailed investigation into the merits of the case: Singh v. Singh, 2013 ONSC 6476, at para. 11; Sandhu v. Dhillon, 2021 ONSC 1143, at para. 14. The full financial circumstances of the parties are not yet available, and a complete inquiry into all aspects and details of the case will have to wait until trial: Matus v. René, 2021 ONSC 1925, at para. 120. As stated by the British Columbia Court of Appeal in Tedham v. Tedham, 2003 BCCA 600, at para. 59:

An interim order is just that -- one made pending trial, with the expectation that the full financial circumstances of the parties will be forthcoming and available to the trial judge. In most cases, interim orders are made in circumstances where there has not been full financial disclosure and the parties are well aware that some adjustment may have to be made once all of the relevant financial information is available.

[76] I am also guided by the principles set out by Harvison Young J. (as she then was) in Teitler v. Dale, [2017] O.J. No. 182 (as reproduced by Faieta J. in Nifco v. Nifco, 2018 ONSC 2603, at para. 22):

1. On applications for interim support the applicant’s needs and the respondent’s ability to pay assume greater significance;
2. An interim support order should be sufficient to allow the applicant to continue living at the same standard of living enjoyed prior to separation if the payor's ability to pay warrants it;
3. On interim support applications the court does not embark on an in-depth analysis of the parties’ circumstances which is better left to trial. The court achieves rough justice at best;
4. The courts should not unduly emphasize any one of the statutory considerations above others;
5. On interim applications the need to achieve economic self-sufficiency is often of less significance;
6. Interim support should be ordered within the range suggested by the Spousal Support Advisory Guidelines unless exceptional circumstances indicate otherwise;
7. Interim support should only be ordered where it can be said a prima facie case for entitlement has been made out; and
8. Where there is a need to resolve contested issues of fact, especially those connected with a threshold issue, such as entitlement, it becomes less advisable to order interim support.

[50] Counsel agreed on the relevant Spousal Support Advisory Guideline calculations in the event that income was not imputed to either party. Based on the mother’s entitlement being both compensatory and needs based, I find that spousal support should be at the higher end of the SSAG range. K.A.F. v. J.L.F., 2017 ONSC 4279 (SCJ). But as I noted to counsel during the hearing of the motion, given the limited finances of this family, there can be no presumption that the mother will have sufficient funds to maintain all of the expenses relating to the matrimonial home.

[51] Temporary order:

a. The mother shall have exclusive possession of the matrimonial home. b. The father’s motion for immediate sale of the home is dismissed. c. The father shall pay to the mother support for the two children in the sum of $1,220.00 per month based upon the father’s income of $80,600.00 and the mother having no income. d. The father shall pay to the mother spousal support in the sum of $1,700.00 per month, based on the same income levels. e. Payments to commence April 1, 2022. f. All support determinations (including retroactivity and imputation of income) are without prejudice to re-determination at trial. g. Support deduction order to issue.

[52] The motion in relation to disclosure is adjourned and may be returned on three days’ notice. I have urged counsel to resolve this issue.

[53] I have also urged counsel to immediately direct their minds to scheduling their trial as quickly as possible. I have recommended that they have a jointly prepared Trial Scheduling Endorsement Form available for the March 22, 2022 Settlement Conference, so that – if necessary – they can skip a Trial Scheduling Conference and expedite their trial.

[54] If counsel wish to address any issue other than costs, they should arrange a time to see me.

[55] If only costs need to be addressed, counsel should serve and file written submissions on the following timelines:

a. Mother’s submissions by April 1, 2022. (Maximum 2 pages plus any offers, bills of costs, or caselaw) b. Father’s submissions by April 15, 2022. (Maximum 2 pages plus any offers, bills of costs, or caselaw) c. Any reply by mother by April 29, 2022.

[56] However, before counsel decide to pursue costs, I would reiterate my comment to the parties about cost-effectiveness, and a reasonable and efficient approach to litigation. Beyond the obvious divided success in this case, there is also the consideration that each of these parties should have taken steps to expedite a trial long ago. Had they done so, this motion could have been avoided in its entirety.

Released: March 14, 2022

CITATION : Gafanha v. Gafanha, 2022 ONSC 1613

COURT FILE NO.: 51/21 DATE: 2022-03-14 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Raquel Carina Fernandes Gafanha, Applicant - and - Eugenio Lopes Gafanha, Respondent REASONS FOR JUDGMENT The Honourable Mr. Justice A. Pazaratz

Released: March 14, 2022