Court File and Parties
COURT FILE NO.: FS-19-010408 DATE: 20220530
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Tomy Stavropoulos Applicant
– and –
Betty Stavropoulos Respondent
COUNSEL: William H. Abbott, for the Applicant Emilio Bisceglia, for the Respondent
HEARD: May 18, 2022
Reasons for Decision
J. steele J.
1This is a motion by the respondent, Betty Stavropoulos (“Betty”), for an order finding the applicant, Tomy Stavropoulos (“Tomy”), in breach of the Orders, dated January 9, 2020 (“January 2020 Order”) and November 19, 2020 (“November 2020 Order”) of Justice Boucher. Betty’s position is that Tomy is in breach of the January Order for dissipating his assets and in breach of the November Order for failure to provide complete disclosure.
2Betty further seeks an order imputing Tomy’s income at $120,000.00 per year. Betty seeks child support and section 7 expenses calculated on the basis of this imputed income. She also seeks an order for Tomy to reimburse her for certain household expenses, which were incurred while the parties were still residing together in the matrimonial home after separation.
3Tomy asks that Betty’s motion be dismissed.
4For the reasons set out below, Betty’s motion is dismissed.
Background
5The parties were married on May 19, 1991. The parties have agreed that the date of separation is October 16, 2011. Notwithstanding the separation date, the parties continued to live in the same home with the children (though separate and apart) until they sold the matrimonial home on July 6, 2021.
6They have two children: N.S., born October 16, 1997, and M.S., born January 29, 2006.
7Betty does not claim child support for N.S.
8M.S. is currently living with Betty on a full-time basis and has since the matrimonial home was sold. M.S. has an estranged relationship with Tomy.
9Tomy currently pays $290 per month in child support. He has declared his 2022 income as $26,000.00.
10Tomy owns a small restaurant in Yorkville called Scollard Variety and Deli (“Scollard Deli”).
11Tomy also owns 25% of the preferred shares of Nipeto Inc. (“Nipeto”). Nipeto is a holding company, the preferred shares of which are owned by Tomy (25%), his brother Peter Stavropoulos (25%) and his mother (50%). Under Nipeto’s articles of incorporation, the preference shares have priority over the common shares for dividends and for the return of capital on the wind up or dissolution of the company.
12The Nipeto common shares are owned by Tomy (50%) and his brother (50%). There is also a shareholders’ agreement in place between the common shareholders, Tom and his brother, for Nipeto.
13105 Scollard Street, where Scollard Deli is located, is owned by Nipeto. Nipeto is the commercial landlord for Scollard Deli.
14Betty is employed by the Toronto Catholic District School Board as a human resources administrator. Her income is more than $130,000.00 per year plus benefits and pension.
Analysis
Alleged Breach of the January 2020 and November 2020 Orders
15The January 2020 Order, made on consent, provided:
On a temporary and without prejudice basis, pending the return of the Respondent’s motion or further order of the court, the Applicant Tomy Stavropoulos shall not dissipate or further encumber his business interests, namely 489755 Ontario Inc., o/a Nipeto Inc., and 1420591 Ontario Inc. o/a Scollard Variety and Deli Inc., and the Respondent, Betty Panagiota Stavropoulos, shall not deplete her assets.
16There was no evidence before me that Tomy has dissipated or further encumbered his business interests. Tomy listed Scollard Deli for sale in 2018 and 2019, but it did not sell. The January 2020 Order was made subsequently. The fact that Tomy was in a position where he had to close his business for a period of time during the pandemic does not equate to a dissipation of his assets.
17The November 2020 Order was a disclosure order. Tomy’s position is that he has fully complied with this order by providing extensive disclosure and a sworn affidavit on February 17, 2021. He has since provided additional documents and updated disclosure.
18At the time of the November 2020 Order there had not been a determination on the date of separation. Accordingly, at that time it was not known whether equalization would be an issue or whether it was statute barred. In her Answer, Betty states, at para. 48: “The date of separation is October 2011. [Tomy’s] claim for equalization of net family property, or an unequal division of net family property has been brought outside of the permitted limitation period of six years after the date of separation.” As noted above, the parties have now agreed on the date of separation (October 16, 2011) and accordingly, equalization is not an issue. Support continues to be an issue. As noted by Justice Boucher in the Order:
[T]he nature of most of the documents sought by the respondent in this motion would be clearly relevant only after determination of the equalization date at summary judgment. Some of the items sought, like the business and income valuation would come at a significant cost to the applicant…
The applicant’s responses to the disclosure requests speak to the parties’ understanding of the approach to resolve the issues, and the need to determine first the date of separation.
19One of the items that Betty sought disclosure of was a private mortgage given to Nipeto for 105 Scollard Street in exchange for a promissory note. The evidence is that Tomy’s counsel previously communicated to Betty’s counsel that Tomy has agreed to characterize the promissory note as a void debt. Further the $600,000.00 promissory note would only be relevant to property division issues.
20Some of the disclosure Betty argues ought to have been provided by Tomy is relevant to the issue of equalization, which is no longer an issue between the parties now that the date of separation has been agreed upon. The other items Betty raises have been largely addressed or are not relevant to the remaining issues between the parties, including:
a. Betty states that Tomy has not provided an updated Financial Statement with values for Nipeto and Scollard; Tomy has provided the most recent financial statements for both companies. He states that he is not obtaining valuation reports for the companies as there is no issue related to property division.
b. Betty states that Tomy has not explained why he contributed to Nipeto’s legal fees; Tomy states that he and his brother each loaned $7,000.00 to Nipeto because the company was defending a lawsuit in 2019 and 2020. The loaned money was used to retain a lawyer to defend the lawsuit.
c. Betty states that Tomy withdrew money from his RRSP without any explanation; Tomy states that he was forced to withdraw money from his RRSP in 2019 to contribute to the family expenses and to cover the legal costs of this litigation.
d. Betty states that Tomy has not provided a valuation for his silver bullions and it does not show up on his financial statements; Tomy acknowledged that when he initially swore the first financial statement he had forgotten about the silver bullions, which were purchased in 1981 or 1989. He has since provided Betty with the receipts and certificates for the silver bullion.
e. Betty states that the rent paid by Scollard Deli is not the same amount as reflected in Nipeto’s records; Tomy explains that Nipeto has two sources of rental income, Scollard Deli and a residential tenant. Accordingly, the rent amount paid by Scollard Deli would not be the same as the total rental income received by Nipeto.
f. Betty questions the adequacy of the rent paid by Scollard Deli to Nipeto; Tomy states that Scollard Deli pays a fair market rent to Nipeto. Without expert evidence on this issue, I cannot make a finding that the $32,000.00 per year rent paid by Scollard Deli is adequate or inadequate.
g. Betty states that Tomy has not provided details of a $96,000.00 mortgage his parents hold on Nipeto; Tomy states that this is a loan in favour of his parents. He has provided her with the details of the loan, including the monthly principal and interest payments.
h. Betty states that Scollard Deli employs two people other than Tomy and that Tomy is making less money than his employees; Tomy states that Scollard Deli has four full time employees and one seasonal employee. In some years Scollard Deli has employed more than five employees.
i. Betty states that Tomy has not provided affidavit evidence regarding the share structure of Nipeto and the shareholders agreement; Tomy explained the ownership structure of Nipeto by way of letter from his counsel dated April 15, 2021. He repeats details in his affidavit on this motion.
21Tomy also argues that Betty’s claim that he has not provided adequate disclosure is ironic as Betty has not provided certain disclosures sought by him, including her bank account statements.
22On the record before me, I find that Tomy has not breached the January 2020 Order or the November 2020 Order.
Tomy’s Income
23Betty asks the court to impute income to Tomy. Betty says that Tomy has been deliberately attempting to avoid making appropriate payments for their daughter. Her position is that his contribution of $290 as monthly child support is ridiculous given his actual income and his personal net worth.
24Under section 19(1) of the Federal Child Support Guidelines, SOR/97-175 the court may impute income to a spouse in circumstances where “(a) the parent or spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonably educational or health needs of the spouse”. Section 18 of the Guidelines provides that the court may pierce the corporate veil and impute a greater income where appropriate.
25In Duffy v. Duffy, 2009 NLCA 48, 289 Nfld. & P.E.I.R. 132, the Newfoundland and Labrador Court of Appeal set out a list of general principles to be considered when determining whether to impute income under section 19(1)(a), at para. 35:
The fundamental obligation of a parent to support his or her children takes precedence over the parent’s own interests and choices;
A parent will not be permitted to knowingly avoid or diminish, and may not choose to ignore, his or her obligation to support his or her children;
A parent is required to act responsibly when making financial decisions that may affect the level of child support available from that parent;
Imputing income to a parent on the basis that the parent is “intentionally under-employed or unemployed” does not incorporate a requirement for proof of bad faith. “Intentionally” in this context clarified that the provision does not apply to situations beyond the parent’s control;
The determination to impute income is discretionary, as the court considers appropriate in the circumstances;
Where a parent is intentionally under-employed or unemployed, the court may exercise its discretion not to impute income where that parent establishes the reasonableness of his or her decision;
A parent will not be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations or interests. Nor will it be acceptable for a parent to choose to work for future rewards to the detriment of the present needs of his or her children, unless the parent establishes the reasonableness of his or her course of action; and
A parent must provide proper and full disclosure of financial information. Failure to do so may result in the court drawing an adverse inference and imputing income.
26In Drygala v. Pauli, 2002 CanLII 41868 (ON CA), 61 O.R. (3d) 711 (Ont. C.A.) the Court of Appeal stated, at para. 45: “When imputing income based on intentional under-employment or unemployment, a court must consider what is reasonable under the circumstances.” The Court of Appeal set out three questions for the court to consider when asked to impute income, at para. 23:
a. Is the party intentionally under-employed or unemployed?
b. If so, is the intentional under-employment or unemployment required by virtue of his reasonable educational needs, the needs of the child of the marriage, or reasonable health needs?
c. If not, what income is appropriately imputed in the circumstances?
27The burden to show that Tomy is intentionally underemployed rests with Betty: Homsi v. Zaya, 2009 ONCA 322, [2009] O.J. No. 1552, at para. 28. As set out below, in my view Betty has not satisfied this onus.
28Tomy has been working at Scollard Deli for 30 years. He is in his 60s. He bought his parents’ shares in the restaurant in 2001. Prior to the pandemic, Tomy’s line 150 income was approximately $50,000.00 per year.
29Betty points to a search she conducted on Glassdoor and states that Tomy’s income from Scollard Deli should be around $80,000.00 based on the average salary for a restaurant owner. This information is not reliable data from which the court can extrapolate and assume that Tomy earns the average. The sample used is “401 salaries submitted anonymously to Glassdoor by Restaurant Owner employees.” First, it is unclear whether the impact of COVID-19 was considered. Second, there is not a breakdown regarding the types of restaurants. For example, are they franchises, small sole proprietor businesses, or large companies? Finally, Betty suggests the average as opposed to the median, where the results illustrate that the majority of the data points are heavily on the low range.
30Tomy states that his restaurant, along with thousands of restaurants across the province, was forced to shut down during the pandemic. His Line 150 income in 2020 and 2021 was $44,220 and $35,778. Tomy’s evidence is that Scollard Deli operated 6 days a week prior to the pandemic. When the pandemic hit, the provincial government mandated restaurants in Ontario to close on March 17, 2020. Those restrictions were sporadically lifted, and locked down again, on multiple occasions in 2020 and 2021. In 2020, Scollard Deli was open for 5 months. Tomy’s evidence is that Scollard Deli did not provide take-out and delivery service during the lockdown because its clients in the neighbourhood, mostly salons and offices, were closed. He states that the downtown core was a ghost town and it would have been akin to financial suicide to operate the business during this time. Tomy further states that due to the uncertainty during this time, Scollard Deli’s staff were not willing to work. Although Scollard Deli is now operating, the evidence is that sales in January 2022 were significantly less than what they were pre-lockdown.
31With regard to Nipeto, Tomy’s evidence is that it is a holding company, not a lucrative corporation that operates a business. During the lockdown months Nipeto received most of its rent from Scollard Deli, either directly or indirectly from the federal government’s rent relief program and the provincial government’s property tax assistance program.
32As discussed in Drygala, at para. 28, the use of the word “intentionally” in the Guidelines makes it clear that the provision is not applicable in circumstances where a spouse, through no fault of their own, is laid off or has reduced work hours and accordingly less income. That is the case here. Tomy’s business, like many small businesses, has been impacted by the pandemic. This has negatively affected his income. This was not, however, intentional.
33Based on the record before me, I find that Tomy is not intentionally underemployed.
34Betty argues that Tomy’s reported income is not reflective of his income. She submits that in 2021 Tomy claims to have earned $2,000.00 but he made a $19,000.00 contribution to his RRSP. However, Tomy made this contribution from his portion of the proceeds of sale from the matrimonial home, not from income earned.
35Betty also states that Tomy earns cash income from his business. However, Tomy’s evidence is that he does not earn cash income from his business. The evidence has not been tested. Despite an order that questioning could proceed, questioning has yet to take place.
36Tomy’s evidence is supported by the affidavit evidence of Cathy Bojcevksi, who is the manager and a waitress at Scollard Deli. She has been working there since 2005. She stated that “[t]he only people who were allowed to cash out customers and enter sales into the cash register at Scollard were Tom, his late father Mr. Nicholas Stavropoulos (“Nicolas”), and [Cathy]; Nicolas and Tom told [her] to ring all sales through the cash register.” She further stated: “[t]o the best of my knowledge, no cash has been removed from the business. Tom has, and Nicolas was, always direct and clear in instructing that all cash sales are to be recorded and go through the register.”
37Based on the record before me, I find that Tomy is not earning cash income from his business.
38Betty argues that Tomy has sole control over Scollard Deli’s finances and business practices. Further, she submits that he has the onus of proving that corporate monies from both companies are not available for support purposes. For Nipeto, the company that owns 105 Scollard Street, the shareholders’ agreement provides that the written consent of all common shareholders (i.e., Tom and his brother) is required for dividends to be declared or any management or consulting fees to be paid. To the extent that Nipeto has retained earnings or could pay a management fee to Tomy, written consent of both shareholders is required. Tomy cannot unilaterally make a decision to issue a dividend or pay a management fee. Accordingly, it is not available for support purposes. Further, there is no evidence of significant funds in that company. Nipeto has not distributed any salary, dividends, or management fees to Tomy or Peter from 2018 to 2021. For the fiscal year ended July 31, 2021, Nipeto had rental income of $61,139, but after expenses it had retained earnings of $3,116. Nipeto owns a valuable property, 105 Scollard Street, and is paid rental income by Scollard Deli and a residential tenant. However, Nipeto has ongoing expenses associated with that property, including maintenance, taxes and insurance.
39Betty hired an expert to produce a report, which suggests that Nipeto’s pre-tax profit plus depreciation ought to be treated as income. Betty’s expert assumes a level of unreported income. However, Tomy also hired an expert to produce a report. Tomy’s expert determined that his income for 2021 was $26,000.00, after adjusting for COVID-19 subsidies, for 2020, was $2,000.00 and for 2019, was $55,000.00. This is a motion. Neither expert has provided the court with evidence that has been tested. I have not given any weight to these reports.
40With regard to the CERB benefit that Betty says ought to have been included in Tomy’s income but was not, Tomy states that it was a loan and will have to be paid back. To the extent that it was a grant, not a loan, it ought to be included in income in the year of receipt.
41On an interim basis, Tomy’s child support payments for M.S. shall be based on his line 150 income.
Spousal Support
42Betty seeks to dismiss Tomy’s claim for spousal support. This is not a claim for interim support. This is essentially a claim for partial summary judgment. Betty has not brought a summary judgment motion pursuant to Rule 16 of the Family Law Rules, O.Reg. 114/99.
43Betty also failed to serve her updated financial statement on Tomy until late in the day immediately preceding this motion.
44Although Betty did not specifically seek summary judgment (full or partial), I have considered the issue (below) and determined that it is inappropriate to summarily dismiss Tomy’s spousal support claim.
45The Family Law Rules state:
16(1) After the respondent has served an answer or after the time for serving an answer has expired, a party may make a motion for summary judgment for a final order without a trial on all or part of any claim made or any defence presented in the case.
16(4) The party making the motion shall serve an affidavit or other evidence that sets out specific facts showing that there is no genuine issue requiring a trial.
46In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1. S.C.R. 87, the Supreme Court of Canada stated at para. 49 that “[t]here will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge the make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.”. In Hryniak the Supreme Court of Canada set out the roadmap to be followed for summary judgment motions, at para. 66:
[T]he judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that there use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.
47Although Hryniak was a civil matter, the Ontario Court of Appeal has held that the principles set out therein apply to summary judgment motions under the Family Law Rules: Chao v. Chao, 2017 ONCA 701, 2017 CarswellOnt 14050, at para. 28.
48Section 15.2 of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) is the applicable legislation when considering the issue of spousal support. It provides:
(1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse.
(2) ...
(3) The court may make an order under subsection (1) or an interim order under subsection (2) for a definite or indefinite period or until a specified event occurs, and may impost terms, conditions or restrictions in connection with the order as it thinks fit and just.
(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.
(5) In making an order under subsection (1) or an interim order under subsection (2), the court shall not take into consideration any misconduct of a spouse in relation to the marriage.
(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 form 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.
49At best, we have competing positions between Tomy and Betty. The parties had a long-term marriage. Historically Betty earned approximately $130,000.00 plus health and pension benefits and Tomy earned approximately $50,000.00. Tomy, who is in his 60s, now earns approximately $26,000.00 per year. He is living with his 94-year-old mother out of necessity. Betty argues that Tomy’s claim ought to be dismissed because he does not have any expenses to account for. Betty now states that she also needs support. Her income is $135,000.00 and she states that her expenses exceed this.
50The parties provided competing affidavit evidence that is untested at this point. As set out above, the parties have not undergone questioning. I cannot make the necessary findings of fact on this issue on the record before me.
51I am not prepared to summarily dismiss Tomy’s claim for spousal support.
Post separation adjustments
52Betty seeks repayment in the amount of $19,956.63 from Tomy. Her position is that prior to 2019 Tomy contributed equally to the household expenses by depositing $1163.00 biweekly. In 2019, Tomy reduced his contributions to the household expenses to 28% stating that his income was only 28% of the total income available to the family.
53Tomy continued to pay 50% of the carrying costs of the home until it was sold. This issue is about other household expenses incurred while the parties were living under the same roof. Tomy’s position is that equal contribution by the parties to these household expenses is unwarranted. He takes this position due to the discrepancy in the parties’ earning capabilities, the fact that Betty had forbidden him from eating the family’s food, and how Tomy was excluded from making major decisions for the family and having access to certain parts of the matrimonial home while they continued to live under the same roof. He submits that Betty’s accounting of what constitutes household expenses is questionable. He states that Betty has included items that were solely for her benefit, such as meals that she had on her nights out, as part of the family expenses she now claims. Tomy states that Betty unilaterally arranged for a paint job for the home, which was not recommended by their listing agent. Tomy did not consent to this paint job and Betty now seeks contribution for same. There is also conflicting evidence regarding certain insurance proceeds from a roof issue. Tomy claims that Betty has inappropriately retained the insurance proceeds and Betty states they were applied to household expenses.
54Betty is seeking a 50% reimbursement from Tomy for household expenses. As discussed above, there is an income discrepancy between the parties that became more heightened during the pandemic due to the forced closure of Scollard Deli. Even if the proportion that Tomy ought to contribute to the household expenses was known, Betty has not provided adequate supporting documentation. These issues are best left to the trial judge.
Disposition and Costs
55Betty’s motion is dismissed.
56In order to progress this matter, any questioning shall be completed by July 31, 2022. The applicant shall contact the court office forthwith to schedule a combined Trial Management conference/Settlement conference for August or September 2022 on a date that is mutually convenient for the parties.
57Tomy is entitled to his costs. If the parties are unable to agree on costs by June 10, 2022, Tomy shall notify my judicial assistant. Tomy may make costs submissions (limited to 3 pages, plus bill of costs) by June 24, 2022. Betty may make submissions (limited to 3 pages) by July 8, 2022. The parties shall upload their submissions to Caselines and send a copy by email to my judicial assistant.
J. Steele J.
Released: May 30, 2022
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Tomy Stavropoulos Applicant
– and –
Betty Stavropoulos Respondent
REASONS FOR JUDGMENT
J. Steele J.
Released: May 30, 2022