Court File and Parties

COURT FILE NO.: FC-20-00001850 DATE: 20220114

ONTARIO SUPERIOR COURT OF JUSTICE FAMILY COURT

BETWEEN:

Anna Di Sabatino Applicant

– and –

Mirko Di Sabatino Respondent

COUNSEL: Belinda Rossi and Hannah Rich, for the Applicant Areesha Zubair, for the Respondent

HEARD: November 19 and December 2, 2021

REASONS FOR DECISION

J. DI LUCA J.:

Overview

[1] This is a motion for interim spousal support. The parties were married on June 17, 1994, though they began cohabiting in 1991. They were separated on October 28, 2019. The applicant is now 56 years of age. The respondent is 58 years old. They have three adult children, who are between the ages of 24 and 26.

[2] Ms. Di Sabatino seeks $45,000 per month for spousal support from January 1, 2021 onward. She also seeks retroactive spousal support from November 1, 2019 to December 31, 2020, in the amount of $630,000 gross or $474,864 net of tax. The amount of monthly support sought is based on imputed income figures for Mr. Di Sabatino arrived at without the benefit of expert analysis.

[3] Ms. Di Sabatino argues that her request for interim support is amply supported on a “means and needs” analysis. Through the course of their approximately 30-year marriage, Ms. Di Sabatino occupied a traditional role within the family unit and raised the couple’s three children. She depended entirely on Mr. Di Sabatino for financial support and the couple lived a very well-funded lifestyle. Since separation, Ms. Di Sabatino has had to deplete her savings to support herself. For a period of time Ms. Di Sabatino was receiving voluntary support payments of $10,000 per month plus a leased vehicle, related vehicle expenses and insurance and a cell phone. Once she served her Application in December 2020, Mr. Di Sabatino cut off support payments entirely. Mr. Di Sabatino also stopped paying for the lease of Ms. Di Sabatino’s car when the lease ended in June 2021.

[4] Mr. Di Sabatino is a very successful businessperson who appears to have accumulated significant wealth during the course of his business dealings. He clearly knows how to turn a profit from a business venture and is involved in many such ventures. One recent venture involved the sale of a building for approximately $30 million, with approximately $4 million as his share.

[5] For reasons perhaps only known to him, Mr. Di Sabatino has engaged in a lengthy and protracted strategy of gaming of the disclosure process. As I will set out in detail below, Mr. Di Sabatino has repeatedly refused to provide a complete and accurate picture of his financial affairs. He now comes to court and argues that the motion for interim support is premature because the process of valuating his many business interests is incomplete despite his purported best efforts. He is wrong. The process is incomplete because of his efforts. He also argues that he has no money and cannot afford support at this time. He blames changing business circumstances and the strictures of a preservation order. Again, he is wrong. The limited financial picture available suggests that he has access to and control over significant amounts of money.

[6] Regrettably, the task of determining the parties’ true financial affairs based on an intentionally incomplete picture now falls to the court. As I will set out below, I am prepared to impute annual income of $598,810, including gross-ups where appropriate, to Mr. Di Sabatino. As will be discussed below, this represents a three-year average of Mr. Di Sabatino’s income. As a result, I am prepared to order interim monthly support of $19,750.

[7] I must emphasize that this outcome is driven by the woefully incomplete picture that has been presented to the court. In the truest sense of the phrase, the court has been limited to dispensing “rough justice.” It seems likely that once the full, fair and frank financial picture is presented, Ms. Di Sabatino will be owed significant spousal support and a significant equalization payment, likely in the millions.

[8] On or about December 7, 2020, Ms. Di Sabatino commenced her application seeking, inter alia, a divorce, spousal support, equalization of net family property, exclusive possession of the matrimonial home, freezing of assets and sale of specific real property.

[9] On December 15, 2020, Jarvis J. heard an urgent motion seeking an order restraining the dissipation of assets by the respondent. In the supporting material, Ms. Di Sabatino detailed her efforts to obtain financial disclosure from the respondent and also noted that he appeared to be restructuring his affairs in a fashion that would prejudice her family law claims. The restructuring included steps to move certain assets offshore. Based on the material before the court, Jarvis J. concluded that the applicant “has cause for concern.” A preservation order was made.

[10] On December 29, 2020, the matter came back before Jarvis J. for a teleconference to address the respondent’s motion to set aside the preservation order made on December 15, 2020. Counsel for various third parties affected by the preservation order were also present. Jarvis J. made various administrative orders and scheduled the motion to be heard on January 5, 2021. He also clarified the scope of the preservation order and noted that it did not prevent the respondent from conducting normal personal banking activities. As well, the non-dissipation order was amended to permit the use of funds during the ordinary course of business.

[11] On January 5, 2021, Jarvis J. heard an urgent motion by the respondent seeking an order setting aside the initial preservation order. In his supporting affidavit, the respondent disclosed that he had interests in at least 10 companies, including a wholly owned company “150” that owned a quarter interest in a property (“Vickers Road”) that was subject to a sale agreement for $30 million. He refused to disclose details of the sale agreement, relying on the existence of a confidentiality agreement. The respondent also disclosed that he moved the corporate jurisdiction for “150” to the British Virgin Islands, which he asserted “could have beneficial impact for everyone, including [the applicant].” He did not provide particulars as to why this move could potentially benefit the applicant.

[12] The respondent’s affidavit included an assertion that he had agreed to transfer his entire interest in the proceeds of the sale of the Vickers Road property to the applicant. Jarvis J. had the following to say about this assertion, “Unless the husband swore falsely, his representation by counsel on this motion is puzzling but not inappropriate.”

[13] Jarvis J. ultimately found that a preservation order would have been issued even on the expanded record before him, though it would not have been structured as broadly interpreted by the parties. In reaching this conclusion, he made the following findings, inter alia:

a. The opacity of the respondent’s financial affairs which gave rise to the wife’s concerns is matched by the hyperbole he has used to condemn her actions.

b. The respondent’s post-separation financial strategy, particularly as it related to change in corporate jurisdiction and the proceeds of the sale of the Vickers Road property, had not been revealed to either the applicant or the court.

c. The respondent failed to provide details, perhaps redacted to address confidentiality issues, regarding the sale agreement for the Vickers Road property.

d. He failed to explain why none of his corporations had filed tax returns or prepared financial statements for the fiscal year ending 2019.

e. There was no evidence that the respondent undertook efforts to instruct his professional and personal accounting firms to retrieve and disclose meaningful financial information.

[14] Jarvis J. issued a revised preservation order which restrained the respondent from dissipating his business interests and assets, except in the ordinary course of business. He also ordered the respondent to produce, within 15 days, a redacted copy of the agreement of purchase and sale in relation to the Vickers Road property, and further ordered that the respondent’s share of the proceeds of the sale of the property be held in trust pending further court order or agreement between the parties. Lastly, Jarvis J. ordered the respondent to authorize access and provide to the applicant all financial and corporate records relating to Cali-Anna Inc., a company jointly owned by the applicant, respondent and their children.

[15] On January 11, 2021, the matter returned before Jarvis J. for what had been initially scheduled as a case conference. Jarvis J. gave case management directions and directed the parties to bring any such motions as may be advised. He also directed the parties to seek a further case conference ahead of any scheduled motions and ahead of the settlement conference, if it would be of any assistance.

[16] On April 15, 2021, the applicant requested a further case conference to address ongoing disclosure concerns. The request was opposed by the respondent. Jarvis J. seized himself as case management judge and gave directions aimed at narrowing the scope of the disclosure issues.

[17] On June 8, 2021, the matter returned before Jarvis J. to address outstanding disclosure issues. The respondent’s counsel were removed from the record as they had been discharged. The previously scheduled settlement conference was converted into a disclosure motion to be heard on July 9, 2021. The parties were ordered to collaborate on a comprehensive Disclosure Schedule Chart prior to the confirmation of the motion.

[18] On July 9, 2021, the disclosure motion was argued before Jarvis J. The motion sought disclosure from the respondent personally, as well as from twenty-two companies in which it was alleged that the respondent has a direct or indirect interest. In support of the motion, the applicant submitted a chart with approximately 90 items of disclosure sought, covering at least eleven separate areas of inquiry.

[19] In extensive and detailed reasons, Jarvis J. concluded that the respondent had failed to provide a significant amount of disclosure that was readily available to him. He ordered the production of significant disclosure with timelines for the production of the various items.

[20] In the portion of Jarvis J.’s reasons dealing with the court’s authority to appoint an expert, Jarvis J. made the following observations:

a. Family law litigants are required to credibly value their assets and debts. Where a litigant’s financial affairs are complex, it is incumbent on the litigant to retain expert assistance.

b. The respondent’s financial affairs are both complex and opaque. Despite this, and despite knowing that he would need to deal with division of property and support issues, the respondent had not yet retained an expert to assist with determining the true state of his financial affairs.

c. The respondent’s “abdication” of his valuation and income analysis obligations is “at its most generous, puzzling: viewed at its worst, it is (as the wife suspects) suspicious.”

d. It is not the applicant’s primary obligation to retain, and pay for, expert work that the respondent should have long ago authorized and undertaken.

e. The respondent has declined to retain an expert and has adopted a “wait and see” strategy, which in the circumstances, “is not a very smart strategy.”

[21] As a result, Jarvis J. ordered the respondent to retain his own expert, failing which the court would consider appointing the applicant’s expert as a court appointed expert.

[22] Lastly, in his concluding paragraphs, Jarvis J. noted that once the proceedings “erupted in court activity”, the respondent discontinued the monthly voluntary support payments of $10,000 he had been giving the applicant, asserting that she could use the equity in the matrimonial home if she needed to support herself. Jarvis J. cautioned, “The husband may wish to reconsider that approach.”

[23] On September 16, 2021, the parties appeared before Jarvis J. for a case management hearing. It appears that the respondent made some disclosure in the days leading up to the case management hearing. However, the applicant took the position that the disclosure provided remained significantly deficient.

[24] In an endorsement dated September 17, 2021, Jarvis J. noted that while the respondent had retained an expert to value his business interests, he refused to reveal the “level of report” he had commissioned. Jarvis J. found this position to be unacceptable and noted “What conceivable use are two reports based on different levels of assurance and which may not capture the same business interests.”

[25] In terms of the state of disclosure, Jarvis J. commented as follows:

While the Court is less than impressed with the husband’s failure to fully comply with the deadlines set out in the July ruling, that is a matter that can be addressed in costs. “Best efforts” is not a satisfactory answer to the disclosure ordered in the circumstances of this case (again). The goal is to get the disclosure completed, and meaningful evidence provided with respect to the value of the husband’s significant business interests (which to some extent involve the wife) and an income analysis. There is no question that the valuation undertaking will be complex. [emphasis in original]

[26] Jarvis J. went on to order that the applicant provide an updated disclosure schedule reflecting the disclosure provided up to the date of the case management hearing. He also made orders regarding the scope, nature and timeline for completion of the respondent’s expert report. In particular, he ordered that the respondent’s expert was to complete a business valuation and income analysis for 2017-2021 no later than December 31, 2021, failing which a motion could be brought to address whether appropriate reasons for extension had been established.

[27] Lastly, Jarvis J. directed that the applicant could bring a motion for spousal support and he set out timelines for the exchange of materials. He also directed that “no other issue than spousal support and costs will be considered.”

[28] Despite the direction that the only issue to be determined would be spousal support, the respondent filed a cross-motion seeking release of funds for interim disbursements. In his factum, the respondent notes that approximately $4 million are currently held in trust by two separate law firms subject to the terms of the non-dissipation order. He asserts that he operated his businesses “as a house of cards” which has crumbled as a result of the preservation order. He further claims that the preservation order has caused him to need to either sell off or wind down his various companies as none of his busines partners wishes to continue doing business with him.

[29] At the hearing of this motion, the court indicated that it would not consider the cross-motion and counsel did not pursue the matter further.

[30] In terms of the current state of disclosure, the applicant has filed an updated 39-page chart setting out the status of items that were ordered to be disclosed by Jarvis J. The updated chart includes comments by the applicant’s expert, Martin Pont from AP Valuations Limited, setting out his views on the completeness of what has been provided to date. Mr. Pont’s comments on the state of disclosure are replicated in his affidavits, also filed on the motion.

[31] As set out in specific detail in the chart, the vast majority of the disclosure ordered remains outstanding. A significant portion of the outstanding disclosure involves information that should be readily available to the respondent or his bookkeepers/accountants. Some of the disclosure has apparently been available for months and has simply not been provided (see for example, the BMO bank statements referred to in correspondence from former counsel, Julie Hannaford, dated April 15, 2021, and see the financial information discussed in the affidavit of Arnold Diker, as discussed below).

[32] The respondent argues that he has provided significant amounts of disclosure. In his sur-reply affidavit dated November 3, 2021, he includes a chart that purports to address the outstanding disclosure issues. It is curious that this chart was not included or referenced in his initial responding affidavit of October 27, 2021. In any event, even on his version of events, disclosure remains very much a work in progress.

[33] I pause to note that his chart contains repeated references to answers he provided in his August 16, 2021 affidavit, filed at the direction of Jarvis J. The sufficiency of the answers contained in that affidavit appears to be a live issue as those answers have not been accepted as satisfactory by the applicant or her expert, Mr. Pont.

[34] The respondent further argues that to the extent that he has been unable to provide certain requested items, the fault lies with the applicant who adopted an overly aggressive litigation style that has resulted in the souring of his formerly positive business relationships and, thus, made it significantly more difficult for him to obtain disclosure from his various business partners. Despite this assertion, he has refused to name the business partners or other third parties who are refusing to cooperate in the provision of disclosure.

[35] As well, despite his assertions that much of the sought-after disclosure is now in the hands of uncooperative third parties, he has filed scant evidence detailing what efforts he has made to obtain that disclosure. This is telling.

[36] Interestingly, the applicant has filed an affidavit from Arnold Diker, one of the respondent’s business partners in the Acme Group of Companies, who advises that he has no objection to releasing requested financial and other information for the purpose of these proceedings. He also asserts that as far as he is aware, the preservation orders made by Jarvis J. have had no impact on the ordinary banking activities for the busines he operates with the respondent. Lastly, Mr. Diker confirmed that the respondent received $600,000 in 2020 from the Acme Group of Companies.

[37] Finally, the respondent asserts that many of the disclosure requests are “phishing [sic] expeditions.” Despite this complaint, the respondent has taken no steps to review, set aside or vary the disclosure order made by Jarvis J. It remains extant. The respondent remains in breach.

Legal Principles

[38] Section 15.2(1) of the Divorce Act grants the court jurisdiction to order the payment of spousal support. Section 15.2(2) of the Act permits an interim order for spousal support “as the court thinks reasonable.” In making such an order, section 15.2(4) of the Act directs the court to consider the condition, means, needs and other circumstances of each spouse including (a) the length of times 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.

[39] Section 15.2(6) of the Act sets out the general objectives of a support order. In accordance with this section, an order for support, either final or interim, 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.

[40] On applications for interim support orders, the court does not engage in a comprehensive review and analysis of the parties’ respective circumstances. That is a task best left for trial. Instead, once the applicant establishes a prima facie case for entitlement, the court aims to achieve “rough justice” through a “holding order” that seeks to maintain the accustomed lifestyle, if possible, pending final determination of the issues at trial. In this regard, support should be based not on a budget of expenses of the recipient but on income sharing, see Cassidy v. McNeil, 2010 ONCA 218 at para. 68.

[41] In determining spousal support on an interim basis, the parties’ needs and means take on greater significance and the need to achieve self-sufficiency is of lesser significance, see: Kowalski v. Grant, 2007 MBQB 235, Knowles v. Lindstrom, 2015 ONSC 1408, at paras. 7-8, Driscoll v. Driscoll, 2009 CanLII 66373 (ON SC), at para. 14, and Grande v. Sciacca, 2021 ONSC 1625, at paras. 11-12.

[42] The term “means” is given an expansive interpretation so as to include “all pecuniary resources, capital assets, income from employment or earning capacity, and other sources from which the person receives gains or benefits”, see Leskun v. Leskun, 2006 SCC 25 at para. 29.

[43] The term “needs” includes a consideration of the lifestyle to which the recipient spouse was accustomed to when the marriage ended. A lavish lifestyle may support the imposition of a significant interim support order, see Majumder v. Rahman, 2018 ONSC 6587 at para. 39.

[44] Interim support should generally be ordered within the range of the Spousal Support Advisory Guidelines, unless circumstances dictate otherwise, see Blatherwick v. Blatherwick, 2012 ONSC 2456, at paras. 28-30.

[45] Disclosure is the backbone of the family law process, see Colucci v. Colucci, 2021 SCC 24 at paras. 4, 50 and 51. The legislative provisions and Rules have created a process that is heavily reliant on full disclosure at the earliest possible opportunity. The parties have an obligation to make full and timely disclosure in order to promote the fair and early resolution of family litigation.

[46] As a corollary, the absence of full disclosure is a cancer on the process, see Leitch v. Novac, 2020 ONCA 257 at para. 44. As Jarvis J. states in Grande v. Sciacca, supra, at paras. 16 and 17:

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

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

[17] Financial non-disclosure haunts family law, especially at important early stages of a case. Timely and meaningful disclosure is “the most basic obligation in family law”. Yet echoes of Clarke J.’s observations about the importance of meaningful financial disclosure and the malignancy of non-disclosure are still prevalent, thirty-five years later.

[47] A spousal support applicant is entitled as of right to have the support claim determined on the basis of full, fair and frank financial disclosure. An applicant should not be required to forensically uncover and/or reconstruct the respondent’s true financial affairs by engaging in a series of costly motions and negotiations. While keeping one’s cards “close to the vest” is a shrewd tactic in business (as it is in poker), it is not so in family law. To the contrary, it is not only unwise, it is also prohibited and can result in a loss of standing in the proceedings, see Manchanda v. Thethi, 2016 ONCA 909 at para. 13.

[48] The starting point for determining a party’s income for support purposes is Line 150 of the party’s Income Tax Return. Where income reported on a party’s Income Tax Return does not fairly, completely or credibly reflect the money that is available to the party, it is open to the court to impute income.

[49] The test for imputing income for child support purposes applies equally for spousal support purposes, see Christodoulou v. Christodoulou, 2021 ONSC 6538 at para. 27. When determining income for support purposes, the court may consider a range of factors as set out in s. 17 to 20 of the Child Support Guidelines, including the spouse’s pattern of income over the last three years, any non-recurring losses, pre-tax corporate income, and the unreasonable deduction of expenses from income. Evidence of a lavish lifestyle does not, in and of itself, equate to proof of a level of income. However, evidence of a lavish lifestyle provides a basis upon which inferences about a party’s access to undisclosed income may be drawn, see Bak v. Dobell, 2007 ONCA 304.

[50] As well, where prior to separation, an income has been paid to one spouse by the other, it is generally accepted that post-separation, the court can impute income by adding back any income that would have been paid to the other spouse, see Strassburger v. Strassburger, 2010 ONSC 1026 at para. 59.

[51] In instances where a party has intentionally withheld disclosure or has provided less than candid and/or complete disclosure, the court may, in imputing income, draw an adverse inference against that party, see Meade v. Meade, 2002 CanLII 2806 at para. 81 and see also s. 23 of the Child Support Guidelines. The policy rationale behind this rule is that a party should not be allowed to benefit from the deficient record they have created or caused by their failure to comply with disclosure obligations. This rationale is all the more pressing where a spouse is self-employed, and a determination of the spouse’s true income is directly contingent upon the completeness and accuracy of the financial disclosure.

The Position of the Parties

[52] The applicant argues that she has been manifestly disadvantaged as a result of the breakdown of the marriage. This was a decades long marriage where the applicant left her chosen profession to stay home and raise the children. While the parties did not live an extravagant lifestyle, they did enjoy many luxuries including regular fine dining, expensive and frequent vacations and a collection of motorcycles. The respondent earned the money to fund this lifestyle. He has now cut off all support, including the $10,000 per month (net) and the car lease, related auto expenses and insurance that he was voluntarily paying after the end of the relationship. While the applicant has savings which she has encroached on, she argues that it would be entirely unfair to require her to deplete her savings to support herself, while the respondent enjoys the fruits of the couple’s efforts.

[53] The applicant submits that as a result of the respondent’s wilful and ongoing failure to provide full, fair and frank disclosure, she has been placed in the unenviable position of seeking interim spousal support on the basis of an incomplete and potentially misleading record. Despite the state of the record, the applicant has adopted a conservative approach to estimating the true state of the respondent’s financial affairs. This approach involves using the baseline of the couple’s Line 150 income and adding on various amounts for personal benefits received from the corporations, as well as amounts relating to available corporate income. Based on this conservative approach, the applicant has created income charts for 2019-2021 setting out estimated figures representing the respondent’s income over those years. Based on these figures, the applicant argues that she is entitled to support in the amount of $45,000 per month (gross).

[54] The respondent’s central position is that this motion is premature as neither side’s expert has provided an analysis of the respondent’s income. He argues that in the absence of such expert analysis, the court “would be required to conduct guess work.”

[55] In terms of his income, the respondent suggests that he operated his businesses as a “house of cards.” As a result of the preservation order and due to the impact that the litigation has had in terms of his partners’ continued willingness to do business with him, the respondent suggests that he has suffered a significant downturn in his income-earning ability. He claims that the preservation order was a “triggering event” that caused him to have to sell the shares in Clean Soils. He has needed to borrow money at high interest rates and borrow from family in order to keep his businesses afloat and to fund his day to day expenses. He claims his income comes from only one of his companies, Mudman Construction, and amounts to less than $10,000 per month after expenses. None of the respondent’s other businesses is currently paying him an income.

[56] In response to the applicant’s proposed amount of imputed income, the respondent argues that he no longer receives the corporate advantages he used to receive. He claims that in 2021, he has only written off $15,000 in personal expenses through his companies. He also argues that the applicant has failed to substantiate many of the “add-backs” she seeks to impute as part of his income. Lastly, he objects to the inclusion of non-recurring capital gains arguing that there is no evidence that these capital gains are likely to recur and therefore they should not form part of his imputed income going forward.

[57] In response to the applicant’s “needs”, the respondent submits that the applicant has not shown a disadvantage as a result of the breakdown of the marriage. She resides exclusively in the mortgage-free matrimonial home. She had approximately $700,000 in personal assets and investments at the time of separation and still has approximately $500,000 remaining. The respondent argues that the applicant can use her savings to support herself. He also argues that she should be able to earn investment income of at least 5% on her investments, for a total of $2,083 per month. In view of her initial Financial Statement which lists monthly expenses of $5,745, the applicant’s “needs” are approximately $3,600 per month. In addition, the respondent asserts that he has redirected a loan of $240,000 owed to him from his cousin over to the applicant so that she “is made whole” until trial.

Analysis and Findings

[58] There is no real issue that the applicant has established entitlement to support. The respondent asserts in his factum that the applicant has failed to demonstrate a disadvantage as a result of the marriage or its breakdown. I disagree. On any objective assessment of the evidence, the applicant has more than amply established entitlement to spousal support.

[59] The remaining issues are quantum and the appropriate start date for the support order.

[60] Prior to separation the parties enjoyed a very comfortable lifestyle. While not living very extravagantly, the family was not wanting. The family appears to have enjoyed a stream of high-end cars and motorcycles. They went on many vacations, regularly ate at expensive restaurants and generously provided for their friends and family. I find that the parties’ accustomed lifestyle is not supported by their stated income for tax purposes. In other words, I am satisfied that their lifestyle was funded by means beyond those declared in tax returns.

[61] The applicant asserts that since separation she has been unable to maintain the standard of living she was accustomed to. She has had to encroach upon her savings and capital. On this issue, I reject the respondent’s suggestion that the applicant should be required to fund her lifestyle by encroaching on her savings and capital. There is no requirement for her to do so, see Goeldner v. Goeldner, 2005 CanLII 455 (ON CA) at para. 8.

[62] In her initial Financial Statement, the applicant stated that her monthly expenses were approximately $5,745, exclusive of certain expenses that were being paid through the respondent’s companies. Given the resources available to the family, this budget appears relatively modest.

[63] She has since filed a revised Financial Statement that reveals increased expenses. She explains that one reason for the increase is that her initial statement was filed during the height of the COVID pandemic and as such, reflected a reduced level of spending. She also explains that she has had to assume a number of expenses that had been once paid through the respondent’s companies. These assumed expenses were not reflected in her original Financial Statement. Lastly, she has added a monthly expense in relation to the cost of retaining an expert to determine the respondent’s income. According to her current Financial Statement, her monthly expenses are approximately $10,679 plus $12,500 for expert’s fees, for a total of approximately $23,180.

[64] Leaving aside the monthly expense for the expert’s fees, the increase in monthly expenses seems to be primarily related to expenses that had been originally paid by the respondent. That said, it appears that some expenses have increased despite the fact that we remain in the midst of the COVID pandemic. On this issue, I agree with the respondent that there appears to be a mild element of exaggeration at play.

[65] In terms of the monthly expense for the expert’s fees, while I accept that the applicant has incurred these costs, I am not prepared to find that it should be considered as monthly living expenses on the means and needs analysis. The applicant has not sought the payment of interim disbursements as discussed in Stuart v. Stuart, 2001 CanLII 28261 (ON SC). Ultimately, in the absence of such a request, this expense will be dealt with as an issue of costs during the litigation.

[66] In terms of her means, I note that the parties decided early in their relationship that the applicant would forego her chosen field of employment in order to raise the couple’s children and manage the home. As a result, she has been out of the workforce since 1999. She also currently suffers from some health issues, including sciatica and respiratory issues. It is unlikely that she will re-enter the work force any time soon.

[67] To the extent that she received a taxable income during the marriage, it was a form of income splitting arranged with the respondent through his various companies. That income splitting is at an end.

[68] Lastly, the respondent asserts that the applicant should be imputed with investment income in relation to her savings. He argues that should be 5% per annum based on savings of approximately $750,000. In making this submission, the respondent neglects to suggest that he should also be imputed with investment income on the basis of his, at best, partially disclosed savings and investments. In any event, I am prepared, on a temporary basis, to impute some income to the applicant in relation to her investments. While neither the Financial Statements nor the affidavits filed by the applicant suggest that she is earning any investment income, the Divorcemate calculations she submitted in support of the motion include investment income of $5,963 for 2019 and $4,211 for 2020. As such, I am prepared to impute $5,000 of annual income to the applicant.

[69] I turn next to the central dispute in this matter which is determining the respondent’s income.

[70] A determination of the respondent’s income is significantly complicated by the nature of the respondent’s various businesses and also by the state of disclosure provided to date. The respondent has or had interests in approximately 22 companies. The financial affairs of these companies were structured so as to maximize earnings and minimize taxes. Unsurprisingly, the corporate structures are, as Jarvis J. noted, not only complex but also opaque.

[71] That opaqueness has not been alleviated in the months that have followed Jarvis J.’s rulings. While the respondent provided a chart setting out his respective interests in the various companies, the chart he prepared is inaccurate. For example, he is listed as the sole owner of Mudman Construction Services, though now asserts that he holds a 50% interest in trust for a silent partner who he is unwilling to name. Similarly, while the chart shows the respondent as holding a 50% interest in Rhino Group of Companies, he now asserts that his friend, Rick Peressini, actually has a 25% interest which has been held in trust by the respondent. On this issue, he has now produced a document dated August 6, 2021, purporting to be a rectification of the company’s minute books to reflect this trust agreement. The agreement post-dates Jarvis J.’s preservation order.

[72] As well, the respondent disclosed two sets of Financial Statements for Rhino Machinery Services Ltd., both related to the same year end. The statements present significantly different pictures. The respondent’s explanation for this obvious inconsistency is that the statements were produced hastily under pressure of Jarvis. J.’s disclosure order. Needless to say, this explanation raises more questions than it resolves.

[73] The respondent has also transferred his interest in Clean Soils Services for $1 plus repayment of certain shareholder loans. The details of this transaction are unclear. It appears that the respondent entered into a new or revised shareholder’s agreement either giving or reviving his partner and close friend’s right to buy his shares for $1. The respondent claims that the share transfer was triggered by the preservation order of Jarvis J. and was undertaken in order to preserve his investment in Clean Soils. Regardless of the explanation, what is clear is that the respondent sold his interest in this company for the nominal amount of $1 after the preservation order was made.

[74] Efforts to clarify various issues regarding the structure and ownership of the various companies have not proven entirely fruitful given the respondent’s reluctance to provide disclosure. The result is problematic. It leaves the court in the unenviable position of having to “guesstimate” the respondent’s income without the assistance of informed and unbiased expert opinion.

[75] On this issue, I note the irony of the respondent’s assertion that the motion is premature because neither side’s expert has been able to complete a business and income valuation. The reality is that he only decided to retain his own expert once ordered to do so by Jarvis J. This is something he should have done at the outset of proceedings – perhaps even in advance of the commencement of the proceedings – as the issue of his business valuation and income was going to invariably and inescapably be an issue no matter how the case unfolded.

[76] The further reality is that he has engaged in a strategy of piecemeal and incomplete disclosure, which unsurprisingly, has thwarted the applicant’s ability to get a fair handle on his financial affairs. In these circumstances, to find that the motion is premature would be tantamount to rewarding the respondent’s tactics with victory.

[77] Against this regrettable backdrop, I turn to assessing the respondent’s income. As a starting point, I am satisfied that this is an appropriate case in which I should draw an adverse inference against the respondent when assessing the credibility and reliability of his claims.

[78] On his evidence, he is now earning less than $10,000 per month. His businesses are mainly winding up and/or shutting down. None of his business partners wants anything to do with him because, as he explains, they are now, as a result of the preservation order, “doing business” with his wife.

[79] The respondent argues that in view of the downturn in his businesses, it is unfair to examine three years of his income profile to determine what his current income is. Instead, the respondent suggests that his current income can be assessed by examining his Line 150 income for 2020 and his evidence about what he has earned in 2021.

[80] In my view, this is a text-book case for an adverse inference. The respondent has engaged in a litigation strategy marked by repeated and prolonged failures to comply with disclosure orders and basic disclosure obligations. He has maintained opaqueness over his business affairs, but now wants the court to accept that his “house of cards” has crumbled and he has no money. The respondent needs to understand that until and unless he shows his “cards”, the Court is unlikely to accept his claims about the dramatic downturn in profitability he has suffered.

[81] As such, I am not prepared, at this stage in the proceedings, to find that the respondent’s income for the purpose of calculating support is as he states. Further, I am also satisfied that the applicant has discharged her burden of demonstrating that the respondent’s Line 150 income does not provide a fair representation of his income, especially in view of the various benefits and expenses that have been conferred by or run through the various corporate entities. In my view, the respondent’s current income for support purposes is most fairly determined by examining his income profile over the three most recent years.

[82] I turn next to examining the respondent’s income profile from 2019-2021. I undertake this examination noting that I am not conducting a “deep dive” into the evidentiary record and further noting that at this stage, the evidence has not been the subject of expert analysis nor is it based on anything approaching the required degree of disclosure. To re-state the obvious, this is an unfair position to leave the court in. It runs the real risk of injustice as the numbers may not reflect the reality of the situation – both in favour of, but also potentially against the respondent.

[83] The applicant has helpfully produced income charts setting out her proposed figures for the respondent’s income. I accept that the methodology adopted is conservative. The applicant has not included significant capital gains, which totalled $5.8 million between 2017 and 2019, and which may have continued in more recent years. She has also not included: (a) rental income on a property that the respondent had rented to an employee; (b) undetermined personal spending through corporations other than the ones reflected in the charts, (c) pre-tax income available on adjustments to operating expenses, (d) unreported cash income, and (e) unreported income from management, consulting and other fees. As well, the charts list certain amounts which were treated as business expenses but should be viewed as income for the purposes of calculating support. In relation to these amounts, the figures provided are not grossed-up to account for income taxes.

[84] This conservative approach has likely resulted in a significant under-estimation of the respondent’s true income over the last three years. However, this approach very fairly recognizes the limited analysis that is done at the temporary order stage and also recognizes that a proper determination of these issues is best left to trial where the court will (presumably) have a more robust and complete evidentiary record, amplified by expert analysis.

[85] In what follows, I will review the income analysis set out in the revised income charts and Divorcemate calculations brief and will determine the respondent’s income for the purposes of spousal support. In doing so, I will indicate which amount should be subject to a gross-up, see Riel v. Holland, 2003 CanLII 3433 (ON CA) at paras. 32-35. Again, I am compelled to note that this analysis is entirely hamstrung by the state of disclosure provided to date. As a result, the numbers I arrive at will invariably involve an element of guess work rooted as best as possible in the available evidence. While I will address this issue further when I turn to crafting the appropriate order, this is a case where the financial picture may readily change the instant the required disclosure is provided.

2019 Income

[86] I accept that the total amount of the applicant’s and respondent’s T4 and other income tax reported income should be attributed to the respondent. The applicant received this income for tax purposes, and she was never employed in the respondent’s businesses. This amount is $280,260.

[87] I accept that the expenses related to applicant’s vehicle, meals expensed by the applicant and cell phone should be added. These amounts were paid through the respondent’s corporations and were not business expenses. I reject the respondent’s submission that this number is based on “hearsay” as there is no evidence as to how the numbers were treated within the company. On the evidence before me, these were benefits paid to the applicant through the respondent’s companies. She did not earn them. They are properly attributed to the respondent as part of his income. This amount is $38,160 subject to a gross-up.

[88] I accept that the expenses related to the respondent’s three additional vehicles (which included the children), plus related expenses should be added. I note that the amount listed for the leasing of three vehicle is conservatively estimated at $24,000 annually. I accept that this may reflect the fact that at least a portion of the respondent’s personal vehicle was properly attributed as a business expense. This amount is $31,560 subject to a gross-up.

[89] I accept that 50% of the meals and entertainment found in the Trial Balance Ledger for “150” are likely a personal benefit to the respondent. “150” is a “consulting” company that has no employees. The evidence suggests that the parties regularly expensed their dining. The permissible tax treatment of meals and entertainment expenses within the corporate entity does not impact this analysis. This amount is $9,797 subject to a gross-up.

[90] In terms of the credit card expenses, net of meals and entertainment, it is likely that much of these expenses are not business related. That said, it is also likely that some of these expenses are business related to some degree. The applicant suggests that this amount should $32,367. I will add $16,000 subject to a gross-up.

[91] I decline to add in the $29,781 for the purchase of an appliance for an unidentified alleged client. While I agree with the applicant that this appears to be a benefit to the respondent, and further agree that the absence of disclosure on the issue supports an inference against the respondent, I am not satisfied that I should include it at this stage. There may be a simple explanation for this expense and it may be business related. This can be determined at trial.

[92] I accept that $117,300 was paid by Mudman Holdings for an insurance policy (or policies) for the respondent. However, on the record before me, it appears that this policy (or policies) named corporate entities as beneficiaries. It also appears that the respondent obtained this insurance, commonly referred to as “keyman insurance”, as it was required under the operative shareholder agreement. At this stage, I am not prepared to find that the insurance policy (or policies) should be viewed as a benefit that forms part of the respondent’s income. The situation might be different if the beneficiaries were the respondent directly and/or his family members. I defer to trial the issue of whether this type of insurance should be considered income even in circumstances where corporate entities are the beneficiaries.

[93] Lastly, I accept that pre-tax income of $66,984 from “849” Ont. Inc. should be attributed to the respondent. This figure is supported by the financial statements included in the respondent’s reply affidavit. On the state of the record before me, I am not prepared to gross-up this amount at this time.

[94] When these figures are added up, I find that for the purpose of this motion, the respondent’s income in 2019 was at the very least $442,761, though portions of this amount are subject to a gross-up for the purpose of calculating support.

[95] When these income figures are analyzed through Divorcemate, the grossed-up income is $552,785. The SSAG ranges for spousal support are as follows: LOW: $17,118 MID: $19,971 HIGH: $22,789.

2020 Income

[96] I accept that the combined T4 and other income tax reported income is $51,056. However, I deduct $3,200 which appears as dividend income on the applicant’s tax return. This leaves $47,856.

[97] I add to this amount $19,364 plus gross-up for personal expenses found on the RBC Visa. There is no evidence that these expenses are legitimate business expenses. The position advanced by counsel in submissions, which was not based in any evidence, was that the respondent gave a credit card to a long-standing client. If that is the case, the respondent is free to explain at trial why this is a legitimate business expense.

[98] I accept that $22,560 plus gross-up is an appropriate figure for vehicle related expenses and a cell phone for the applicant paid for by the respondent through his companies. This amount no longer includes meals expensed by the applicant as by this time, the respondent was no longer paying that expense.

[99] As well, I accept that $31,560 plus gross-up is also appropriate for the respondent’s multiple leased vehicles and their related expenses.

[100] I again decline to include $117,300 for the respondent’s insurance policy paid for by Mudman Holdings.

[101] In terms of pre-tax income from Rhino Machinery Services, I note that the Financial Statements disclosed reveal net income of $890,443 for 2020. This amount relates in part to profit from the sale of certain property belonging to the company which should have resulted in a capital dividend. The respondent initially suggested that he was a 50% owner of this company. He has since modified that position and now asserts that he only owns 25%, and that he holds the other 25% in trust for a partner. This is a late breaking assertion that raises a number of questions. Nonetheless, it will be tested at trial. At this stage, I am prepared to accept that only 25% of the pre-tax income should be attributed to the respondent’s income. This amount is $222,611. As I set out below, I accept the respondent’s evidence that in 2021 he took $160,000 out of this company. Further, it appears, at least at this stage, that the $160,000 taken in 2021 came from the $221,611 of pre-tax income in 2020. While I deal with the $160,000 in determining the respondent’s 2021 income, I am satisfied that in order to avoid double counting, I should not count this amount for 2020. As such, I will only include $62,611 for 2020. As well, on the state of the record before me, I am not prepared to gross-up this remaining amount.

[102] I also include $150,000 from “150”. The respondent accepts that these funds should be included in his income. This amount is subject to a gross-up.

[103] In terms of the loans attested to by Mr. Diker, I note that a company controlled by Mr. Diker and the respondent, “175”, advanced two loans, one to Cali-Anna for $400,000 and one to “150” for $200,000. I have no details as to the nature, purpose and final destination of these two loans. It may well be that they should be considered part of the respondent’s income, but it may also be that the loans are legitimate loans for investment or business financing purposes, see Ryan v. Scott, 2011 ONSC 3277. This will need to be an issue for trial.

[104] Lastly, I am prepared to add $60,048 as a management salary for “849.” On the evidence before me, it seems likely that the respondent received at least a proportionate share of this fee. He has provided no evidence suggesting otherwise. This amount will be subject to a gross-up.

[105] When I add up these figures, I find that the respondent’s income for 2020 was at the very least $393,999, though portions of this amount are subject to a gross-up for the purpose of calculating support.

[106] When these income figures are analyzed through Divorcemate, the grossed-up income figure is $677,765. The SSAG ranges for spousal support are as follows: LOW: $20,065 MID: $20,065 HIGH: $20,065.

2021 Income

[107] The applicant continued to have her vehicle and vehicle expenses paid through the respondent’s business until the lease ended in June 2021. The applicant’s cell phone continues to be paid. These amounts add up to $15,960. The respondent’s vehicle lease and related expenses add up to $31,560. Both of these figures are subject to a gross-up.

[108] The respondent admits that he receives approximately $10,000 per month from a contract with Ellis Don. There may be legitimate expenses to be applied against this figure, but the respondent has not revealed what they are. This amount is $90,000 (prorated from April 2021). I decline to gross-up this amount at this time.

[109] The respondent also admits that as of October 27, 2021, he has run approximately $25,000 in expenses through his businesses. While there may be an element of double counting to this, the lack of disclosure prevents a proper assessment. This amount is subject to a gross-up.

[110] The applicant argues that the $96,942 in revenue for Mudman Construction should be added. This is an amount that Mudman had in cash as of July 30, 2021. It appears that this revenue may be, in part, a double counting of the Ellis Don income that started in April 2021. Accounting for the possibility of four months’ overlap, I add $56,942 not subject to a gross-up.

[111] The applicant suggests that the loan of $240,000 owed to the respondent by the respondent’s cousin should be added to the income profile. The details behind the nature of the loan and the source of the funds for this loan are not clear at this time. This is an issue that will need to be determined at trial. That said, it is interesting to note that the respondent claims to have redirected repayment of this loan to the applicant, although it appears none of the money has made its way to the applicant.

[112] The respondent admits that he has received $160,000 from Rhino. The applicant argues that this amount is actually $180,000. At this stage, I am prepared to find that the amount is $160,000, though I note that once the proper picture is placed before the court, the amount may be higher. That said, I accept that this $160,000 may be a double counting of the $222,611 in revenue attributed from Rhino in 2020. As a result, I reduced the $222,611 by $160,000 for 2020 and now include the $160,000 in income for 2021. This amount will be subject to a gross-up.

[113] When these numbers are added up, the respondent’s rough income for 2021 is at the very least $379,462, though portions of this amount are subject to a gross-up for the purpose of calculating support.

[114] When these income figures are analyzed through Divorcemate, the grossed-up income is $565,881. The SSAG ranges for spousal support are as follows: LOW: $17,528 MID: $19,339 HIGH: $19,339.

Orders To Go

[115] When the three years are averaged, the average annual income is $598,810. While this number is likely very conservative, I am prepared to use it to impute the respondent’s income for the purposes of an interim support order.

[116] In terms of the SSAGs, at this stage I am not satisfied that I should order spousal support at the high end of the range. While the applicant may have a very strong compensatory and non-compensatory basis for claiming support, that is an issue that will be determined at trial. At this stage, the mid-range of the SSAG is appropriate.

[117] As a result, considering the applicant’s financial needs as set out in her affidavits and financial statement and considering the respondent’s means, as supported by the currently available evidence, I order on a temporary basis, spousal support of $19,750, monthly. I arrive at this figure by averaging the Divorcemate mid-range result arrived at for each year using the income figures, with appropriate gross-ups.

[118] These orders have a start date of January 1, 2021. As such, there is a 13-month period owing in a lump sum of $256,750. This payment is tax deductible to the respondent and is to be included in the applicant’s income for reporting purposes.

[119] I decline to order retroactive support for the earlier time periods without prejudice to the applicant seeking that additional support at trial. On this issue, I note that from the date of separation until December 2020, the applicant was receiving $10,000 per month net, plus a vehicle and vehicle expenses. On a gross figure, this equates to support of roughly $18,000 per month before taxes.

[120] In the ordinary course, a temporary order is subject to variation only where there is a material change in circumstances as discussed in the case law. However, in this case, the applicant’s ability to properly and fairly advance her claim for temporary support has been thwarted by the respondent’s failure to provide full, fair and frank disclosure. In these circumstances, I order that the quantum of support ordered herein is without prejudice to the applicant seeking an upward adjustment based on further financial disclosure and without the necessity of establishing a material change in circumstances.

[121] I also order that the amount shall be payable on the first day of each month and thereafter. The amount outstanding as of the date of the making of this order shall be paid within 30 days, plus prejudgment interest.

[122] I also order that the respondent’s support obligation shall be paid from the funds held in trust by Sutherland Law in connection with the Clean Soils Services Ltd. sale transaction and repayment of the related shareholder loan, pending further court order or written agreement between the parties. If the amount held in trust by Sutherland Law is traced to an asset in which the applicant has/had an interest, in full or in part, the respondent shall not receive credit for such payment(s) towards spousal support.

[123] I decline to order indexing of the support order or prioritizing the support order in the respondent’s estate, though the applicant remains free to pursue these issues at trial.

[124] An S.D.O. shall issue.

[125] If the parties are unable to agree on costs, brief written submissions no longer than three pages exclusive of appropriate appendices may be filed. The applicant shall file her submissions within 14 days of the release of these Reasons. The respondent shall have 7 days following receipt of the applicant’s submissions. The submissions may be sent to my judicial assistant, Diane Massey, at diane.massey@ontario.ca.

Justice J. Di Luca

Released: January 14, 2022