COURT FILE NO.: FC-17-2483

DATE: 2022/09/08

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

SUSAN FAYE DAVIDSON

Applicant

– and –

JAMES DOUGLAS DAVIDSON

Respondent

Peter S. Mirsky, for the Applicant

Ron Paritzky, for the Respondent

HEARD: May 17-21, 25-28, 2021, June 21-25, 30, 2021 and July 12, 16, 20, 2021.

REASONS FOR JUDGMENT

LABROSSE J.

Overview.. 3

Background. 5

Analysis of Issues. 9

A Divorce Order 9

Equalization of Net Family Property. 9

i. Ownership of 3115 Paden Road. 10

Analysis. 12

ii. Ownership of the Model Home (Hunt Camp) 14

Analysis. 15

iii. Value and Sale of the Joint Property – 3145 Paden Road. 16

iv. Value of 1618203 Ontario Inc. 18

Background on 1618203 Ontario Inc. c.o.b. as J. Davidson Excavation. 18

Value of 1618203 Ontario Inc. on the Valuation Date. 20

(a) Value of the Malakoff Road Property. 20

(b) Value of Equipment 24

(c) Accounts Payables. 25

(d) Embedded Tax. 26

(e) Sale of Excavator in May 2017. 27

Conclusion on Value of 1618203 Ontario Inc. 28

v. Debts and Liabilities. 28

HST Liability: 28

Taxes on Cedar Beach Road. 30

vi. Ownership of Credit Card Debt 31

vii. Due to Shareholder 32

viii. Miscellaneous Items. 33

ix. Conclusion on Equalization. 33

Child and Spousal Support 34

i. Income Available for Support Purposes. 34

Subcontractor Expense: 38

Material Expenses. 39

Shareholder Loan Interest Benefit 39

Gross-Ups. 41

Adjustment to Amortization Expense. 41

2019 Professional Expenses. 43

Compensation to Emma McLaughlin. 43

Personal Expenditures. 45

Imputed Income: Amortization Expense and Unreported Income. 45

(a) Amortization of Business Equipment 46

(b) Evidence of Unreported Income. 46

ii. Child Support 51

Income available for Child Support Purposes. 51

Duration of Child Support 51

iii. Spousal Support 54

Entitlement 54

Quantum of Spousal Support 56

iv. Child and Spousal Support Arrears. 57

v. Life Insurance. 57

vi. Arrears from Temporary Orders of Justice Shelston and Justice Blishen. 57

Medical Expenses. 61

Restraining Order 61

Charging Order 64

Summary. 65

Costs. 67

Overview

[1] The parties, Susan Davidson (“Susan” or the “Applicant”) and Jaime Davidson (“Jaime” or the “Respondent”), cohabited for 30 years. They were married for 21 years and have three adult children, all girls. The matrimonial home was located on a property adjacent to the shed Jaime used in conjunction with his excavation business and is at the source of this high conflict case.

[2] As of the August 1, 2017 date of separation, the parties embarked on a series of intentional actions meant to hinder, harm or embarrass the other. Their actions divided the children to the extent that one child has little or no contact with the mother and two children have little or no contact with the father.

[3] Has one party been more active in adding fuel to the fire of the dispute? It is likely that Jaime initiated much of the conflict, as he continued to attend the matrimonial home where most of the conflict transpired despite only being authorized to do so for business purposes. He bears an important share of the blame for the post-separation conflict. At the same time, Susan certainly played a role in trying to limit Jaime’s use of the shed and this resulted in Jaime moving most of his equipment away. There were various other acts of vandalism, turning off utilities, termination of medical coverage and intimidation surrounding the use of the matrimonial home that have caused this relatively straightforward matrimonial dispute to become hotly contested high-conflict litigation.

[4] Also relevant is Jaime’s excavation business. This is a business that Jaime has operated for years for essentially no profit and from which he rarely received any significant taxable income. Jaime’s way of operating the business pre-existed the date of separation. However, Susan now aggressively pursues the manner in which Jaime has continued to operate the business as a result of its obvious impact on the value of the business and on his income available for child and spousal support purposes.

[5] In the end, a relatively modest excavation business operated by Jaime and previously supported by Susan has seen its finances mismanaged to the point where the legitimacy of all facets of the business is in doubt. Both parties retained accountants to value the business and determine the income available for support purposes. The Court is left with vastly diverging opinions on the finances of the excavation business that require a number of findings in order to determine the value of this important asset and the amount of income that the business generated or could generate for support purposes.

[6] The issues for this trial are as follows:

a. A Divorce Order;

b. Equalization of Net Family Property;

i. Ownership of 3115 Paden Road;

ii. Ownership of the Model Home (Hunt Camp);

iii. Value and Sale of the Joint Property of 3145 Paden Road;

iv. Value of 1618203 Ontario Inc.;

v. Debts and Liabilities;

vi. Ownership of Credit Card Debt;

vii. Due to Shareholder;

viii. Miscellaneous Items;

ix. Conclusion on Equalization

c. Child and Spousal Support;

i. Income Available for Support Purposes;

ii. Child Support;

iii. Spousal Support;

iv. Child and Spousal Support Arrears;

v. Life Insurance;

vi. Arrears from Temporary Orders of Justice Shelston and Justice Blishen;

d. Medical Expenses;

e. Restraining Order;

f. Charging Order.

[7] At the end of the trial, Jaime brought a motion to reopen the trial and amend his pleadings to seek a resulting trust over a property owned by Susan. My Endorsement dated November 10, 2021 denied that request but this additional step delayed the completion of the trial and consequently, this decision.

Background

[8] At the time of trial in the late spring 2021, Susan was 48 years of age and Jaime was 50 years of age.

[9] The children of the marriage are:

a. Shelby, born August 20, 1998. She is residing independently. Following the separation, she lived briefly with Jaime and now resides in a home in Petawawa with her partner.

b. Brooke, born September 27, 1999. At the time of separation, she began a nursing program at Trent University and moved back with Susan in April 2018. She returned to Ottawa and continued her studies at the University of Ottawa in nursing. She is now living independently. She resided with Jaime for a period of time following the separation. Susan claims that Brooke was under her care from January 1, 2018 until September 1, 2020. Jaime says that she moved out of Susan’s home as of July 1, 2019, at the time of the sale of the matrimonial home.

c. Chloe, born May 12, 2003. Chloe initially resided with Susan until Christmas of 2017 and then resided with Jaime until October 13, 2019.

[10] The parties met in high school and began cohabitating on August 1, 1987. Susan was 16 years of age and Jaime was 18 years of age. The parties married on August 10, 1996 and separated on August 1, 2017. The parties agree on the date of separation.

[11] From a young age, Jaime became involved in his father’s excavation business. He completed grade 11 and did part of grade 12 but did not graduate. He then went to work full-time with his father. While working with his father, Jaime started doing his own landscaping work on the side as his father’s business did not do that type of work. As part of his own business, he slowly started to acquire equipment; however, he mostly rented at the start. After about ten years, he had acquired his own heavy equipment for his excavation business.

[12] After graduating from high school, Susan worked at the Robert Smart Centre for four years and then in a group home. After the birth of the children, in 2002, she returned to work at a group home and then for a school board as a child and youth worker and then as an educational assistant. She was initially hired as a supply worker and then full-time in 2004.

[13] Susan had heart surgery in 1995 and was diagnosed with a heart condition known as Wolff-Parkinson-White syndrome. She also suffered a series of traumas, including a car accident while living with Jaime, an injury from falling off a trailer in or about 2007 and a skiing accident. By 2007, she had surgery on her shoulder and was diagnosed with frozen shoulder. She could not lift with her shoulder and had issues with her spine in the C5 and C6 area that progressed to degenerative disk disease. In 2007, she went on long-term disability. At that time, she was making $38,000 per year working for the school board.

[14] Susan was then diagnosed with fibromyalgia and was approved for Canada Pension Plan disability benefits in 2012. She is under the regular care of a psychiatrist who provides Attending Physician Statements to CPP confirming that she is unable to work. She is prescribed Wellbutrin for depression, Ativan for sleep and anxiety and Constella for irritable-bowel syndrome. She takes Nexium for reflux and Topamax for migraines. She is also prescribed Tylenol 3 and Hydromorphone for pain.

[15] The parties initially resided with Jaime's parents and then rented before Jaime purchased a vacant lot in 1991 at 3377 Paden Road in North Gower. That property was purchased solely in Jaime’s name and then transferred to both parties just before they started to build their first home. At the time of the purchase of 3377 Paden Road, Susan was still in school and Jaime was working with his father. Susan made a small equity contribution to this first property in the amount of $7,000.

[16] The parties built their first home at 3377 Paden Road with Jaime doing as much of the work as he could and hiring trades for the balance. Jaime is clearly very skilled in construction and has been able to save costs over the years in doing work himself.

[17] In 1998, the parties bought a larger property at 3161 Paden Road. The property was purchased in joint names. There was an existing home on the property and the parties moved into that home as the matrimonial home and lived in that home for roughly four to five years.

[18] In 2003, the property at 3161 Paden Road was severed to create four additional lots known as 3125, 3135, 3145 and 3155 Paden Road. The title to these four new properties was put in Jaime’s name. The lot known as 3155 Paden Road included the matrimonial home. At that point, 3161 Paden Road, which was a vacant lot of approximately 64 Ha, remained in joint names.

[19] In 2005, the parties undertook the construction of a new home on 3161 Paden Road. During that same year, there were a series of transactions that resulted in the following:

a. Following a lot line adjustment application, the rear portion of 3155 Paden Road merged with 3161 Paden Road;

b. 3155 Paden Road was sold to a third party;

c. The parties constructed the new matrimonial home on 3161 Paden Road;

d. 3161 Paden Road was transferred from both parties to Susan Davidson as sole owner. A mortgage was granted on 3161 Paden Road to fund part of the construction costs for the new home and that mortgage was solely in Susan’s name.

[20] The parties constructed the matrimonial home in 2005 in a similar fashion as the first house, with Jaime doing as much of the work himself with family members and with trades completing the balance of the work. The parties also constructed a large shed at 3161 Paden Road, which was used for the storage and maintenance of Jaime’s heavy equipment, although the parties disagree as to what extent Jaime used the shed for his business. The vacant land was used for some farming and hunting.

[21] The sale of 3155 Paden Road resulted in a profit of roughly $180,000 to $200,000. The profit from that sale was used to finance part of the construction of the matrimonial home on 3161 Paden Road.

[22] Jaime did the legwork associated with the severances. He dealt with the surveyor and the lawyer. Jaime also did the excavation work to create the entrances by installing culverts. Much of the costs associated with the severances were covered by Jaime’s brother and in exchange, title to 3125 Paden Road was placed in his name.

[23] Later, in 2017, the area surrounding the matrimonial home and the shed on 3161 Paden Road was severed, leaving a vacant parcel of roughly 61 HA which is now known as 3115 Paden Road, as shown on Exhibit #20. Following that severance, Susan continued to be the sole owner of both 3161 and 3115 Paden Road. The parties’ original plan prior to separation was to eventually build on 3115 Paden Road.

[24] Surrounding the use of 3161 and 3115 Paden Road is a body of conflicting evidence about the behaviour of the parties. Susan, Brooke Davidson and Tommy Owens (Susan’s father) each testified to various actions taken by Jaime that were purportedly intended to harass or intimidate Susan. Conversely, Jaime and Emma McLaughlin testified as to a number of actions taken by Susan, Brooke, Tommy and Dennis Hart that were meant to aggravate Jaime. Jaime claims that little or nothing came from Susan’s roughly 40 complaints to the police. There was at least one prosecution and a criminal trial. However, the evidence of Jaime’s attendances at the matrimonial home or at 3115 Paden Road, as well as his actions of removing the firewood, spray-painting the ground near the matrimonial home with the word “LIARS”, parking his heavy equipment to block passage, dumping construction material on Susan’s land, shouting insults at Susan, ignoring a court order to pay expenses and leaving Susan alone with all the expenses has been established. Susan’s evidence as corroborated in part by others is largely accepted.

[25] This evidence supports a finding that Jaime was the aggressor in the conflict.

[26] While I have considered the various actions alleged to have been taken by a party to aggravate the other, I find these to be of marginal relevance to most of the issues in this litigation. Simply put, this case turns almost exclusively on financial issues. All the nasty things that the parties did to each other does little to advance my analysis with the exception of my consideration of the claim for a restraining order. Essentially, the record speaks for itself and there is little merit in drudging through all the various allegations, as it will not assist me in arriving at conclusions on the financial issues. I will, however, touch on some allegations that become more relevant to an issue. Also, where credibility is at the heart of my analysis, some of those issues may or may not become relevant, as further set out herein.

Analysis of Issues

A Divorce Order

[27] I find that the parties separated on August 1, 2017, and there is no chance of reconciliation. I grant a divorce order. As part of her closing submissions, an Affidavit of Divorce was to be filed by Susan. Further communication with the court has confirmed that Susan is waiting for the issues surrounding this decision to be decided before submitting the Affidavit for Divorce. There may also be an issue on outstanding insurance claims by Jaime. The Marriage Certificate was filed as Exhibit #2 and the Clearance Certificate is in the electronic court file. The parties may forward the required documentation to my attention at their convenience.

Equalization of Net Family Property

[28] The law on the equalization of net family property begins with sections 4 and 5 of the Family Law Act, R.S.O. 1990, c. F.3, which provide the framework for settling property issues between married persons. The steps involved in this framework were summarized by Justice Barnes in Perri v. Perri, 2016 ONSC 5833 at para. 90:

Step 1: Determine the net family property of each spouse under section 4. To determine the net family property these questions must be answered:

• What property did each spouse own on valuation day?

• What is the value of that property after making deductions and allowing exemptions permitted under section 4?

Step 2: Determine whether one spouse’s net family property is greater than the other. Under section 5(1) this difference is equalised by ordering that one half of the difference must be paid to the spouse with the lower net family property. This is subject to Step 3

Step 3: Before making an order under Step 2, the court must determine whether it will be unconscionable to equalize the net family properties. Considerations to consider in making this determination are listed in section 5(6)

[29] In the present case, neither party argued any law in respect of the equalization process and no argument was made about any issues of unconscionability. As such, step 3 does not apply. This case involves a simple process of equalization and both parties submitted their respective Net Family Property Statements along with various Comparisons of NFP Statements.

[30] The analysis begins with the issues surrounding equalization and ownership given that the support issues are dependant on my conclusions on Jaime’s income available for support purposes. That determination will require the court to first look at the valuation of Jaime’s company, 1618203 Ontario Inc., operating as J. Davidson Landscaping, before considering support issues.

i. Ownership of 3115 Paden Road

[31] In my decision dated November 10, 2021, I addressed Jaime’s attempt to reopen the trial and amend his pleading to claim a resulting trust. That request was denied.

[32] Jaime has made a claim for a constructive trust interest in the property at 3115 Paden Road. This is a 61 HA piece of vacant land that the parties used for hunting, Jaime’s brother used in part for farming corn and soya and Jaime used for transporting his mobile home/hunt camp, which remains on the property.

[33] 3115 Paden Road was appraised, and the parties have agreed to a value of $450,000. Susan claims that she holds a 100 percent interest in the property and although the Jaime initially took the position that he was entitled to a 100 percent interest, he has changed his position and now seeks a 50 percent interest by way of a constructive trust and an order for the property to be sold.

[34] In respect of the property at 3115 Paden Road, the evidence at trial was as set out in my November 10, 2021 decision:

a. On June 19, 1998, the parties acquired 3161 Paden Road as joint tenants. There was a residential home on the property and the parties moved into that home and occupied it as their matrimonial home;

b. On April 3, 2003, the parties created four new lots by way of severance – 3125, 3135, 3145 and 3155 Paden Road (see Exhibit #19). The four new lots were placed in Jaime’s for zero consideration. The retained parcel kept the municipal address of 3161 Paden Road and was in joint names. The new lot created as 3155 Paden Road included the then matrimonial home.

c. On May 5, 2005, 3155 Paden Road (with the then matrimonial home) was transferred from Jaime to Susan for zero consideration. The rear portion of 3155 Paden Road was severed from the front portion where the then matrimonial home was located. That rear portion of 3155 Paden Road merged with the larger parcel 3161 Paden Road (see Exhibit #19).

d. The parties built a new matrimonial home on 3161 Paden Road as joint owners at some point prior to September 1, 2005 and occupied it as a matrimonial home.

e. On September 1, 2005, 3155 Paden Road was sold to a third party by Susan.

f. In September 2005, mortgage instructions were obtained to place a new mortgage on 3161 Paden Road with Susan as the sole owner and borrower. 3161 Paden Road was transferred from joint names to Susan’s name for zero consideration.

g. In 2017, Susan applied for a severance of the 3161 Paden Road property, but all the legwork was done by Jaime. The property was severed creating two properties, which included the then matrimonial home at 3161 Paden Road (approximately 7 acres) and the balance became 3115 Paden Road (approximately 129 acres) – see Exhibit #20. Susan continued to own both properties.

[35] The relevant principles surrounding a claim for constructive trust were succinctly set out in Stec v. Blair, 2021 ONSC 6212, at paras. 79-81:

[79] In order to succeed in her request for an interest in the Property, Hana must first show that Shawn was unjustly enriched. Unjust enrichment is found when the claiming party can show that the other party is enriched by his or her contributions, that he or she has suffered a corresponding deprivation, and there is no juristic reason for this result: Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 32.

[80] If an unjust enrichment is established, the court must then determine the appropriate remedy. The first remedy the court should consider is a monetary remedy. A monetary remedy can be calculated not only on the basisofavalue received or a quantum meruit calculation, but where a joint family venture is found, the “value survived” approach may be used. In the later case, the unjust enrichment is the retention of an inappropriately disproportionate amount of wealth by one party when the parties have engaged in a joint family venture and there is a clear link between the claimant’s contributions to the joint venture and the accumulation of wealth. The monetary award for unjust enrichment should be assessed by determining the proportionate contribution of the clamant to the accumulation of the wealth: Kerr, paras. 47, 55, 80-87, Lesko v. Lesko, 2021 ONCA 369, 57 R.F.L (8th) 305, at para. 14, Martin v. Sansome, 2014 ONCA 14, 118 O.R. (3d) 522, at para. 52.

[81] Finally, if and only if monetary damages is inappropriate or insufficient and here is a sufficient substantial and direct link or casual connection between the contributions and the acquisition, preservation, maintenance or improvement of the property, the court may make a proprietary award by impressing the property with a constructive trust. The onus is on the claimant to show that the monetary award is insufficient. The constructive trust interest should be proportionate to the claimant’s contributions: Lesko at para. 14, Martin at para. 58, Kerr at paras. 50- 51, Moore v. Sweet, 2018 SCC 52, [2018] 3 S.C.R 303, at para. 91.

[36] Hence, a claim of unjust enrichment can be established when the following three elements are found: (i) an enrichment of or benefit to Susan; (ii) a corresponding deprivation of Jaime; and (iii) the absence of a juristic reason for the enrichment. The remedy for unjust enrichment is a monetary award, before imposing a constructive trust: Martin v. Sansome, 2014 ONCA 14, 118 O.R. (3d) 522.

[37] As set out in McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401, at para. 66, "in the vast majority of cases, any unjust enrichment that arises as a result of the marriage will be fully addressed through the operation of the equalization provisions of the Family Law Act" and that mechanism is by way of an equalization payment.

Analysis

[38] Jaime’s claim for a constructive trust interest in 3115 Paden Road, where he seeks a 50 percent ownership interest, is based on the fact that he would have made a number of improvements to the property, such as organizing the severance process, constructing the laneway and culvert and placing his hunt camp on it and using it for recreational purposes. It was described as a labour of love. While he did not specifically state it, it would seem that he will be seeking to purchase the property if the court orders that it be sold with the sale to be supervised by an Associate Judge. However, he does not have a right to purchase it nor does he have a right to require that it be put on the open market and sold. Furthermore, Susan has not provided evidence that she intends to list the property for sale in the near future, although she previously did this at the height of the conflict.

[39] The first issue to determine if Jaime should have an interest in 3115 Paden Road is to consider if there has been an unjust enrichment. It is relevant to consider that the first property at 3377 Paden Road was purchased in 1991 and was solely in Jaime’s name. It was transferred into joint names in 1992. Susan made a small capital contribution to the purchase of that property.

[40] Turning to 3115 Paden Road, the evidence is that the property was part of a plan to create individual lots for future use or transfer. The original lot purchase was made in 1998. The property then known as 3161 Paden Road was put in joint names and the parties occupied the existing house on the lot. This was 11 years after the start of their cohabitation and two years after they married.

[41] As new lots were created in 2003, 2005 and 2017, some were put in Susan’s name, some in Jaime’s name and some were retained jointly. During much of that time, Susan was paying the mortgages on the properties. Jaime did not object to Susan’s 50 percent ownership of 3145 Paden Road although that property followed the same severance process and Susan did not dispute that Jaime was the sole owner of 3135 Paden Road. That property was sold for $90,000 and Jaime retained the full amount of the proceeds of sale.

[42] Although I could make various comments on the property development scheme for the group of lots created from the original parcel known as 3161 Paden Road, there is no legitimate argument that can be made to support a contention that Susan was enriched, and that Jaime suffered a corresponding deprivation. They both contributed, with Jaime doing the legwork for the severances and making physical improvements to the various lots and with Susan providing mortgage financing security and making most if not all the mortgage payments. During some years, Susan was working full-time and was the higher income earner for the family. There is no enrichment or corresponding loss and, in any event, the value of the properties has been equalized.

[43] Furthermore, the various transfers, even those to sole ownership, were completed for valid juristic reasons given that the transfers were done as part of the development scheme that they followed, with Susan being the sole owner of some properties to allow for mortgage financing. Jaime himself admitted that there was a juristic reason when he indicated that some properties were put in Susan’s name to avoid merger at the time of severance.

[44] It is worthwhile to note that Jaime’s counsel did not argue the principles surrounding a constructive trust and simply identified the efforts made by Jaime and his role with the development scheme. In argument, Jaime’s counsel distanced himself from the constructive trust claim and argued that it was more a resulting trust. At every stage, the constructive trust analysis fails.

[45] In any event, had an unjust enrichment been made out, I would still not have granted a 50 percent constructive trust interest as requested by Jaime. Here, the parties are married and equalization is the proper remedy to cure a finding of unjust enrichment. It is noteworthy that Jaime did not argue this issue. Examples of when equalization is not a sufficient remedy can occur when there is risk that the deprived party would not be paid their equalization payment. Jaime has not advanced any such argument in this case.

[46] Jaime’s claim for a 50 percent interest in 3115 Paden Road is dismissed.

ii. Ownership of the Model Home (Hunt Camp)

[47] The evidence surrounding the model home/hunt camp now located on 3115 Paden Road is that Jaime originally moved it from a job site and placed on 3135 Paden Road. His evidence is that he did not pay for it. Then, when Jaime sold that property in 2018, the hunt camp was moved onto 3115 Paden Road by Jaime and some of his friends.

[48] The model home/hunt camp claim has been valued by Susan’s appraiser at $20,000 as part of 3135 Paden Road.

[49] Exhibit #44 is a quote from Smart Homes Ottawa Inc. on the cost to relocate the hunt camp from 3115 Paden Road to Jaime’s residence at 6788 Third Line Road, Ottawa, a distance of roughly 17 km. The cost of relocation is $17,204. The estimate is not broken down between the labour and transportation factors.

[50] The appraisal for 3115 Paden Road references the hunt camp as follows: “Mr. Tommy Owens reports that there is a small structure on the property used as a hunt camp. The building reportedly contributes minimal value or utility to the property and therefore will not be considered in this appraisal. The hunt camp was not accessible and therefore was not inspected.”

[51] In her argument, Susan stated that she wishes for Jaime to remove the hunt camp from her land.

Analysis

[52] When considering the appraised value of the hunt camp at $20,000 and the relocation costs to Jaime’s home at $17,204, it leaves a net value of $2,796 if Jaime is credited for the full moving costs. I agree with Jaime that its value is as then located on 3135 Paden Road and now on 3115 Paden Road, after Jaime moved it. The value of the hunt camp as appraised by Susan is as it lies, but it does not consider the cost of relocation and what an arm’s length third party would pay if that person had to move the hunt camp.

[53] Fair Market Value is based on a sale to a willing arm’s length purchaser. One must assume that it would require a relocation unless the purchaser is the owner of the land where it sits.

[54] Much was made of the fact that Jaime unilaterally relocated the mobile home on Susan’s property without permission. However, there is no evidence that she took steps to require him to remove it when this was done in 2018.

[55] I question Susan’s argument that she is being forced to pay the cost to relocate the trailer because of the obvious associated cost of moving it to a willing third-party purchaser. This would have been the same at 3135 Paden Road. To benefit from the fair market value, the potential purchaser cannot be limited to the existing landowner where the model home lies. The property would have to be exposed to the market. At the same time, a relocation of 17 km to Jaime’s new residence is excessive. There is no evidence by Jaime as to how the distance of the relocation may impact the relocation costs or if he is able to move it again using his own resources.

[56] I am of the view that the value of the hunt camp is clearly impacted by the relocation costs, regardless of the property on which it is located. I appreciate that a purchaser may have his or her own equipment to do the move, which would reduce third-party costs for relocation. Also, I appreciate that the relocation by a willing purchaser may be much less than 17 km and that the cost would then be lower. There is no evidence that Jaime even plans to have the mobile home placed on his property at 6788 Third Line Road. Where would the mobile home go on this property and what would be its use? The appraisal for his home shows a property of only 1.94 acres and there is no evidence that it would be used as a hunt camp on such a small property. However, the reality is that the best available evidence is that there is a cost associated with the relocation and that cost has an impact on the fair market value for equalization purposes.

[57] Given all of the above, I find it unreasonable to assume that the hunt camp would be moved some 17 km to a 2-acre property. I am of the view that the relocation costs should be reduced to $10,000 to account for these contingent factors.

[58] Thus, the net value of the hunt camp is $20,000 less the $10,000 estimated cost to relocate the model home. I come to this conclusion fully cognizant that it may not cost Jaime the same amount to relocate the hunt camp if he does it with his own equipment or possibly the equipment of people he knows. However, as previously stated, to attain a value of $20,000, the sale cannot be limited to the owner of the property where the mobile home/hunt camp sits. The net value is $10,000.

[59] Jaime shall be provided with a reasonable opportunity to attend at 3115 Paden Road to remove the hunt camp. This should include a requirement to reinstate any damage caused to the land and he shall avoid leaving trash or other remnants that would be inconvenient to Susan and may cost her additional amounts. I will remain involved in resolving any ongoing disputes in this regard.

iii. Value and Sale of the Joint Property – 3145 Paden Road

[60] The property at 3145 Paden Road is purported to be jointly owned. An appraisal was prepared by Affiliated Property Group Inc. stating that Jaime was the owner and that the value was $90,000. That appraisal indicated that there was no verification of title documents. The parties have maintained throughout this trial that the property was jointly owned and have shown it as such on all the NFP Statements. I will accept their position on joint ownership for the purposes of this decision.

[61] By Endorsement dated March 4, 2020, Justice MacEachern stated that the parties had agreed to a value of $90,000. However, on her end of trial NFP Statement, Susan shows a value of $125,000. As this property was jointly owned on the date of separation and has yet to be sold, the value will be that which the market brings. For the purposes of resolving the disputes on the Comparison of NFP Statements filed as Exhibit #22, the value shall be as stated by MacEachern J. at $90,000, but the parties will share equally in the eventual net proceeds of sale.

[62] In her evidence in chief, Susan stated that she believed that the value was $125,000 but she could not recall where she got that figure. However, it is unclear to the court why Susan maintains that the value is higher than the amount set by Justice MacEachern.

[63] In the parties’ respective draft orders, they seek slightly different relief. Susan seeks the following:

5. The property known as 3145 Paden Road, North Gower, Ontario jointly held by the parties shall be listed for sale forthwith with a licensed real estate agent and exposed to the market for sale. The Master at Ottawa shall supervise and decide any issues arising from the process including acceptance of any offer. Neither party shall have a first right of refusal or any option to purchase the property except with the consent of the other.

[64] Furthermore, Susan seeks a charging order as against Jaime’s interest in 3145 Paden Road and other properties to secure the payment of equalization, arrears of child and spousal support and arrears from the temporary order of Justice Shelston.

[65] As for Jaime, he seeks the following:

14. The property known as 3145 Paden Road, North Gower, Ontario jointly held by the parties shall be listed for sale forthwith with a licensed real estate agent and exposed to the market for sale. The Master at Ottawa shall supervise and decide any issues arising from the process including acceptance of any offer.

[66] I agree with the wording proposed by Susan as it is slightly more comprehensive. Issues arising from the sale of this property may also be brought back to me if the parties so desire or left with an Associate Judge.

[67] As for the request for a charging order, Susan’s request is dealt with later in this decision. The result is that there will be a charging order on Jaime’s interest in the property at 3145 Paden Road pursuant to ss. 9 and 34 of the Family Law Act.

iv. Value of 1618203 Ontario Inc.

[68] The parties dedicated much of the trial to the value of 1618203 Ontario Inc. (“1618203”) and the income available for support purposes. These issues focussed in large part on the evidence of the two accountants who both had extensive experience in business valuation.

[69] During the qualification of Mr. Evans, Susan’s expert, an issue arose that he had not completed his Chartered Business Valuator’s exams in Canada and thus did not possess that designation in Canada. He testified that he had the equivalent designation in the United States, where he worked for several years. The Court made a ruling in respect to his ability to provide opinion evidence in accordance with the practice and standards of the Canadian Institute of Chartered Business Valuators regarding the value of the shares of Jaime’s corporation and the income available for support purposes. That ruling was based in large part on Mr. Evans’s experience conducting such evaluations both in the US and in Canada. However, the door was left open for Jaime to argue that less weight should be attributed to Mr. Evans’s evidence in the event that there was a link between the lack of a chartered business valuator designation and the evidence provided. In the end, Jaime made no such argument.

[70] Consequently, both business valuators were qualified to provide opinion evidence in accordance with the practice and standards of the Canadian Institute of Chartered Business Valuators regarding the value of the shares of Jaime’s corporation and the income available for support purposes.

[71] On behalf of Susan, Mr. Evans values Jaime’s interest in the company at $495,000. On behalf of Jaime, Mr. Clarke values Jaime’s interest at $155,000. Both accountants agree to a further amount of $61,300, as set out below.

Background on 1618203 Ontario Inc. c.o.b. as J. Davidson Excavation

[72] As alluded to in the Background section of this decision, it is important to note that leading up to the date of separation and for a number of years thereafter, Jaime’s excavation business had been operated in a consistent manner: poorly, from an accounting perspective. The Court is cognizant that this is not uncommon for small businesses that are “one-person operations” and seasonal in nature with revenues that can vary from year to year.

[73] I need not review all the evidence provided by various witnesses on the cash component surrounding Jaime’s business. Jaime has admitted that his annual income is between $40,000 to $60,000 per year. When considering his reported income since 2014, this could mean that his income is some $20,000 to $60,000 more than as reported on his personal tax returns. Despite that admission, Jaime continuously tried to justify various poor accounting practices and the resulting effect of understating his income. His evidence at trial on his income lacked credibility. However, this is how he operated his business for years, prior to the date of separation, and for a number of these years, Susan would also have benefited from these poor accounting practices and the cash received by the business.

[74] Specifically, I do not agree with Susan’s approach of qualifying Jaime’s accounting practices as dishonest, as intentionally trying to reduce the value of 1618203 in the context of the matrimonial dispute or as trying to avoid the payment of child or spousal support. Jaime’s actions are, in my view, the result of his long-standing doubtful accounting practices rather than any motive related to the matrimonial dispute. However, the result is that he misrepresents the value of his company and the income available for support purposes through his accounting practices. Adjustments are required.

[75] In terms of the cash component of Jaime’s business, I accept Susan and Brooke’s evidence that they would frequently be involved in various transactions where they would receive cash or transfers that were not intended to be reflected on the books of the business. At the same time, I accept Emma McLaughlin’s evidence that described the expenses involved in the installation of a septic system and how this does not leave significant room for profitability. However, when expenses are put through the company and cash is received for a sceptic installation, the benefits to Jaime can still be significant as the value of the cash would also have to be grossed up. The bottom line is that the practice of accepting cash was not denied. Jaime testified that when he did receive cash, he spent it on the business. At the same time, he agreed that he likes to carry large amounts of cash on him. The financial impact of that practice still needs to be assessed.

[76] Also, I accept Jaime’s evidence that much of his work is done for builders and that builders are less likely to transact in cash.

[77] In the end, Jaime has quantified the portions of his business that are not reflected in his personal income tax returns as being in the range of $20,000 to $60,000 and I conclude that this is the product of the receipt of unreported cash, his accounting practices and putting personal expenses through the company.

Value of 1618203 Ontario Inc. on the Valuation Date

[78] When considering the approaches taken in determining the value of 1618203 as of August 1, 2017, both accountants Mr. Clarke and Mr. Evans took similar approaches and the areas where they differ are fairly limited.

[79] Both accountants agreed that the accounting practices of the business do not allow for an income-based approach to be followed. Both agreed that the proper valuation method is an asset-based approach. Also, they seemed to agree generally on the valuation approach used by Mr. Evans with the exception of the following main areas of dispute, which are set out in Exhibit #63:

a. The value of the Malakoff Road property;

b. The value of the equipment;

c. The accounts payables;

d. The Embedded Tax;

e. The sale of excavator in May 2017.

(a) Value of the Malakoff Road Property

[80] In assessing the value of the Malakoff Road property, Mr. Evans used the value provided by Rivington and Associates. This value relies on the highest and best use as being vacant farmland with 50 acres improved with tile drainage. Rivington and Associates’ appraisal finds that the actual sale of the Malakoff Road property for $200,000 in July 2018 was not a proper comparable due to the circumstances of that sale and the lack of exposure of the property on the open market. In reliance on the Rivington Appraisal, Mr. Evans concluded that the value of the Malakoff Road property was $390,000 as of August 1, 2017.

[81] Mr. Clarke’s approach to the fair market value for accounting purposes was to rely on the actual sale of the property from Jaime to Mr. Schouten’s company in July 2018, being 11 months after the valuation date. That agreement of purchase and sale was entered into on July 3, 2018, with a closing date of July 13, 2018 – ten days later. Mr. Clarke was not influenced by the Rivington Appraisal at $390,000, the appraisal of Affiliated Property Group Inc that assessed the value at $250,000 as a single-family residential use or by Jaime’s own estimate of $300,000 in a mortgage application dated January 15, 2018. Essentially, Mr. Clarke deemed the transfer as being arm’s length and that he needed to look no further.

[82] When considering the evidence of Ms. Leamen and Mr. Murphy, the two appraisers called to opine on the fair market value, the analysis begins with the highest and best use of the property. In this regard, I prefer the evidence of Ms. Leamen that the highest and best use is as vacant farmland. Mr. Murphy’s conclusion that residential was the highest and best use was based on his opinion that the Rural Countryside Zoning did not permit an agricultural use. However, exhibit #36 clearly demonstrates that an agricultural use is permitted in the Rural Countryside Zone (subject to certain limitations that were not addressed as relevant). Thus, Mr. Murphy’s evidence on highest and best use and the resulting land value is rejected. With that said, it is interesting to note that Mr. Murphy’s opinion that the fair market value of the land was $250,000 is still evidence that the court can consider in its ultimate conclusion as a conservative value which was not based on the correct highest and best use. That value is still in excess of the sale price.

[83] Turning now to the issue of tile drainage, the evidence of Ms. Leamen was that a tile drained agricultural field costs between $1,000 to $1,500 per acre. Here, that would apply to the 50 acres of agricultural use land which was deemed to be tile drained by Jaime. She concluded that the presence of tile drainage on the subject property would increase the value by $50,000 “at most”.

[84] The evidence of tile drainage relied upon by Ms. Leamen was from Tommy Owens who witnessed Jaime putting down two rows of tile drainage with his friend Jacques. When questioned on this, Jaime’s evidence was that he could not recall. He lacked credibility on this issue. The evidence of Jeff Murphy was that Jaime told him that the field at Malakoff Road was randomly tile drained.

[85] Following the sale of the Malakoff Road property, evidence was tendered that Mr. Schouten would have clear-cut additional areas and that he would have done a full-tile drainage of all the areas being farmed. As such, I am left with doubt as to the extent to which any drainage runs installed by Jaime should properly be considered as tile drainage and have an impact on the valuation.

[86] In the end, the evidence of the extent of tile drainage for the Malakoff Road property as at August 1, 2017 does not allow me to conclude that the 50 acres of fields used for farming was properly tile drained. As such, an adjustment must be made to the Rivington Appraisal to account for the limited evidence of tile drainage. In considering all the evidence provided by Ms. Leamen together with the evidence that Mr. Schouten had to tile drain the field some years later, I conclude that the Rivington appraised value should be reduced by $50,000 to account for the lack of full-tile drainage. This results in a value of $340,000.

[87] Turning now to Mr. Clarke’s position that the arms-length sale from 1618203 to Mr. Schouten is the only relevant information to consider when assessing the sale of the property for a value of $200,000, I disagree. It may be sufficient to rely on an arm’s length transaction where no other circumstances exist that could raise concern. However, where there is evidence that a sale may not reflect the proper fair market value of a property, the valuator is obligated to look into the transaction and assess its legitimacy for business valuation purposes.

[88] I am of the view that the evidence is overwhelming that it would be inappropriate to value the Malakoff Road property at $200,000 for the purposes of determining the proper value of that property on August 1, 2017. I provide the following rationale:

a. I appreciate that there is no evidence that Mr. Schouten’s company, 1230381 Ontario Inc., is not an arm’s length purchaser. Also, the sale of land to an arm’s length purchaser 11 months following the valuation date is certainly a relevant consideration when assessing the fair market value of land.

b. However, the $200,000 value for the property flies in the face of two appraisal reports and Jaime’s own opinion on the value of the property. The first appraisal done by Affiliated Property Group Inc. concludes a value of $250,000 as at January 30, 2018 and that appraisal was completed on February 2, 2018. That first appraisal was based on a residential land use. The second appraisal by Rivington was done for litigation purposes on March 20, 2019 and looks back at the value as at August 1, 2017. It was based on a farmland use. I have concluded that the appraisal based on a farmland use is the appropriate way of valuating the property. Finally, Jaime estimated the value of the property at $300,000 as part of a mortgage application dated June 15, 2018 (Exhibit #18).

c. I am of the view that Mr. Clarke erred in failing to pause and look into the following circumstances of the sale to 1230381 Ontario Inc.:

i. The evidence is that Jaime was under pressure to close the sale for his house on Third Line Road. The Agreement of Purchase and Sale was entered into on July 3, 2018 and the transaction closed 10 days later on July 13, 2018. While Jaime denied any such pressure, I reject that evidence as he was not credible. He vaguely referred to the fact that it was not his plan to borrow funds from the company but gave no details. He gave no direct evidence as to how he was proposing to finance the purchase of the property on Third Line Road. The court is left with important questions about how he planned to finance the purchase.

ii. The court can only conclude that funds from the closing of the Malakoff Road property were needed to complete the purchase of the Third Line Road property. There is evidence from Jaime that the finances of the business did not allow him to qualify for standard mortgage financing.

iii. The property was not listed for sale through a real estate agent and the transaction was a private sale. As such, the property was not exposed to the open market. I accept Ms. Leamen’s evidence that exposure to the market is important to fairly determine the fair market value of land for valuation purposes.

iv. I accept Ms. Leamen’s evidence that the fair market value is the most probable price that a property would sell for after reasonable exposure in a competitive market, assuming no duress. Mr. Murphy also agreed with the need to expose the property to the open market. This is an important absent feature that casts significant doubt on what the property could have sold for had it been put on the open market.

v. The evidence leads me to conclude that at $200,000, Jaime proceeded with an improvident sale below the fair market value. This may have been as a result of a mistake by Jaime, he may have been misinformed on the value or he may have been under duress to complete the sale as quickly as possible to raise funds for his Third Line Road purchase. Regardless, the fair market value was not and cannot be $200,000 as at August 1, 2017 for the purpose of the valuation of the company.

[89] In the end, the sale of the Malakoff Road property to 1230381 Ontario Inc. is not determinative of the value of that property for the purpose of assessing the value of the 1618203 on August 1, 2017.

[90] I accept the valuation of Rivington Associates at $390,000 less $50,000 for the absence of full-tile drainage to arrive at a proper value of $340,000. I agree with Jaime that in following that approach, the commission that would have been paid on the open market must be factored in. As such, I would deduct the commission of $17,000 that would be paid if the property had been put on the open market at a 5 percent commission rate. The value of the property as at August 1, 2017 is therefore $323,000.

(b) Value of Equipment

[91] This area of dispute between Mr. Evans and Mr. Clarke is much easier to address. When assessing the value of the equipment owned by 1618203 as at August 1, 2017, Susan relies on the assessment of Tommy Owens to arrive at a fair market value and Jaime relies on the assessment of Ken Henry Equipment Sales & Service Limited (“Ken Henry”).

[92] Mr. Owens’ assessment arrives at a value of $362,400 and the assessment of Ken Henry amounts to $290,027.

[93] While I accept that Mr. Owens is knowledgeable in the heavy equipment industry, he is still Susan’s father and not employed in the sale of heavy equipment. This cannot replace an arm’s length assessment obtained from a company actively involved in the purchase and sale of heavy equipment.

[94] I conclude that the fair market value of the equipment owned by 1618203 as at August 1, 2017 was $290,027.

(c) Accounts Payables

[95] The issue surrounding accounts payables is that Mr. Evans was told that the $104,525 was attributable to a debt owing to Westerra Homes. This debt was disallowed based on an unsigned letter from Westerra Homes indicating that 1618203 did not owe Westerra any money. As such, Mr. Evans reduced the accounts payables to zero.

[96] The evidence surrounding the accounts payables turns on the document filed as Exhibit #56, which sets out a number of accounts payables as at December 31, 2017. That exhibit was a working document provided by Mr. Clarke. It includes a notation that the items highlighted were unchanged from December 2016.

[97] In his testimony, Mr. Evans was under the impression that the amount of payables at $104,525 was due to Westerra Homes. However, Exhibit #56 was later produced and it shows no amounts owing to Westerra Homes. The list of payables at Exhibit #56 does not seem to have been provided to Mr. Evans.

[98] In addition, Jaime relies on Exhibit #45, which are a series of ongoing accounts payable at the end of 2016. Jaime testified that it is common for him to have ongoing accounts payables with suppliers. This supports that it would be unlikely that the company would have zero accounts payables on August 1, 2017, which is the result of Mr. Evans’s approach.

[99] Much was also made of another payable shown as Misc A/P in the amount of $250,215 that was deemed to be a bookkeeping error and should not have formed part of the account payables. From an accounting perspective, if there is an overstatement of $250,000 on one side of the ledger, this suggests that there are equivalent corrections to be made on the other side of the ledger. The evidence was that it would likely take years to correct. For that and other reasons, Mr. Evans deemed the bookkeeping of 1618203 as being unreliable.

[100] Interestingly, rather than accept that there were obvious problems with his bookkeeping as reflected by the $250,000 overstatement of accounts payables, Jaime attempted to blame Susan for the accounting error as he stated that she was doing the books at the time. This suggestion was completely unfounded and was indicative of Jaime trying to deflect blame when it clearly lay with him.

[101] In the end, Mr. Clarke testified on his approach with the list of account payables. While he accepted certain propositions put to him that some may be dated and certainly over a year old, he maintained his position that the balance of $104,525 was properly part of the valuation of 1619203 from an accounting perspective.

[102] I appreciate that over $40,000 in payables were over one year old and that this suggests that the supplier’s ability to recover from Jaime may be in doubt. However, I also accept Jaime’s evidence that many of his accounts payables were running amounts that he paid down from time to time. I also accept the evidence of Mr. Clarke that from an accounting perspective, there is no evidence to bring the court to disregard the list of payables. I specifically reject Mr. Evans’s approach of setting the amount at zero, although this may be the result of a lack of information.

[103] I was not provided with any rationale to disregard payables that were over a year old. There are a significant number of payables from that list that are within 12 months, and I am not convinced that the amount of payables over 12 months should be disregarded. I accept the evidence of Mr. Clarke and conclude that no adjustment is required.

(d) Embedded Tax

[104] Both accountants have different values for the Embedded Tax. There was not much evidence about this difference during the trial, as it was described as an item driven by other values on the real estate and equipment. The difference is a product of the different values attributed to each of those items by the valuators. Mr. Clarke advised that the court could not recalculate the Embedded Tax and that once final figures were determined by the court for real estate and equipment, the Embedded Tax could be recalculated. I will remain seized of this issue if it continues to be in dispute.

(e) Sale of Excavator in May 2017

[105] The evidence at trial demonstrated that on May 24, 2017, a deposit of $124,300 was made into Jaime’s personal bank account. The source of that deposit was the sale of a Komatsu excavator, which was an asset owned by 1618203.

[106] Jaime provided various reasons why the sale proceeds from the excavator were deposited into his personal account. The main reason claimed was because the purchaser was obtaining his funds from a finance company and the cheque was made payable to Jaime Davidson. Jaime testified that he could not deposit the cheque to the business account because it was made out to him personally. This evidence was not convincing and not corroborated.

[107] Jaime then alleged that the proceeds of sale were then promptly paid back to the business. Upon further review, it appears that certain cheques were written by Jaime to cover business expenses, but the full amount of the proceeds were never paid back and never properly accounted for. Jaime’s accountant, Mr. Mehlman was not aware of the sale of the excavator. Jaime’s evidence lacked significant credibility on this issue.

[108] In addition, Mr. Clarke was unaware of the sale of the excavator in May 2017. However, he stated that if such a sale transpired, it was a corporate asset and would have to be reflected in the financial statements. The result is that if a shareholder appropriates a corporate asset, the value of that asset should be added back to the value of the corporation.

[109] In the end, Mr. Clarke completed his evidence by opining that Jaime had retained a personal benefit from the proceeds of sale of the excavator and the parties agreed that the value of 1618203 should be increased by $61,300 to account for the proceeds of sale retained by Jaime.

[110] This approach was not disputed by Susan, but Susan took the position that it was indicative of the unreliability of Jaime’s accounting practices. I agree with this position. This is particularly evident in how Jaime tried to immediately state the funds were paid back to the company promptly. This was false and I conclude that Jaime was trying to mislead the court in his initial answers to say whatever was most favourable to him. This is simply another example of a situation where bald statements were made by Jaime that cannot be corroborated and needed to be scrutinized.

[111] In the end, the adjustment of $61,300 to the value of the company seems appropriate and is accepted.

Conclusion on Value of 1618203 Ontario Inc.

[112] I therefore conclude that the value of 1618203 should be based on the column marked “BTO” on Exhibit #63 of the Summary of Differences in McCay Duff and BTO Valuations, which provides a total $155,000 subject to the following changes:

a. FMV Land: increased to $323,000;

b. Embedded Tax: to be recalculated;

c. Accounts Payables: no change;

d. The total value shall be increased by $61,300 to account for the proceeds of sale of the excavator.

v. Debts and Liabilities

HST Liability:

[113] The Endorsement of MacEachern J. dated June 2, 2020 indicates that the parties agreed that the Net Family Property calculation should reflect that Susan paid a debt of $142,712 owing to CRA and that Jaime paid two debts being $90,000 and $15,000.

[114] Those amounts are listed on the Comparison of NFP Statements filed at Exhibit #22 with the Amended Statement of Agreed Issues and Facts for Trial. There was no suggestion of any appeal of the Endorsement of MacEachern J..

[115] At the commencement of trial, Susan’s NFP Statement reflected the amounts in MacEachern J.’s Endorsement and listed the HST debt as being $142,712 for Susan and $90,000 and $15,000 for Jaime.

[116] During the trial, Susan filed Exhibit #9, which suggests that the total amount of the debt was $219,160.48 based on two CRA documents stamped August 10, 2017. In Susan’s NFP statement submitted at the conclusion of the trial, she takes the position that the debt should be $142,712 for Susan and $76,448.48 for Jaime (see Exhibit “D”). In argument, Susan’s counsel stated that Jaime’s two debts to CRA for $90,000 and $15,000 were erroneous figures that included additional interest and penalties incurred by Jaime leading up to when he eventually paid the remaining debt.

[117] In cross-examination, Jaime stated that he had never seen Exhibit #9 but agreed that it was his social insurance number. This is odd given that it was also addressed to his counsel at Brazeau Seller LLP. He did not agree that the proper amount of the debt as at August 1, 2017 was $219,160.48. He first tried to suggest that the figure may not be right and that it could be the amount applicable to a later date in time. His response here made no sense. He then tried to rely on purported hearsay information received from an unknown individual at CRA. Finally, he took the position that it was a joint debt. He agreed that he paid the amount two years later but felt that the proper figure should include the interest and penalties incurred until the amount was paid. Jaime’s evidence and his position on the correct amount made no sense. The only real explanation in Jaime’s favour is that the amounts of $90,000 and $15,000 were agreed to in error and incorporated into the Endorsement of MacEachern J.

[118] There was no clear evidence as to how the two debts of $90,000 and $15,000 came to be accepted by Susan. The Agreed Statement of Fact properly reflects the amounts set out in the Endorsement of MacEachern J., which are shown to be agreed upon. However, it is clear from Jaime’s evidence that those amounts include the interest and penalties up to the date the debt was paid, being two years after the date of separation. It may have been an oversight, an error by Susan’s counsel or as a result of Jaime misleading Susan on the correct amount owing at separation because Jaime seemed to be fully aware that the amounts included interest and penalties after the date of separation. There was no challenge to the authenticity of Exhibit #9.

[119] Consequently, the information that formed the basis of the Endorsement of MacEachern J. was erroneous and it would be unfair to penalize Susan for this. I have the opportunity to correct this error. Rule 25(19) of the Family Law Rules, O. Reg. 114/99 allows a court to change an Order that contains a mistake. While such a motion is not before me, the effect is the same if I correct the mistake by including the proper amount in the NFP Statements. If the value of the HST Debt was $219,160.48 on or about August 1, 2017, it would be unfair to allow Jaime to benefit from the incorrect information and be able to claim the post-separation increase to his debt. Jaime had the opportunity to fully explore this issue at trial and as such, there is no prejudice from the fact that the error was not identified as an issue until trial.

[120] Consequently, Jaime’s HST debt as at the date of separation is confirmed at $76,448.48.

Taxes on Cedar Beach Road

[121] Jaime was the sole owner of vacant land known as the Cedar Beach Road property. The March 4, 2020 Endorsement of MacEachern J. identifies that the amount of the arrears of taxes owing on that property was in dispute. Jaime was to provide the documentation to support this debt within 15 days.

[122] The Comparison of Net Family Property Statements shows that both parties included a value of $3,369.00 for this debt. Susan’s NFP Statement dated May 12, 2021 shows the amount as being $980.

[123] At trial, Susan relies on the amount shown on the account of the Municipality of North Grenville (Exhibit #14) as being 980.12 as of July 6, 2017, being three weeks before the valuation date.

[124] Document 163 does not appear to have been entered as an exhibit at the trial but it seems to be the document relied upon by Jaime as showing arrears of $3,369.55 as at April 4, 2019. No evidence was provided to explain the April 4, 2019 statement which suggests that there were past due amounts for 2017 and for previous years.

[125] Although the Comparison NFP Statements has both parties listing this debt as $3,369.00 as of the date of valuation, the documentation suggests otherwise. I am of the view that the best available evidence is Exhibit #14, and that notwithstanding the Comparison NFP Statements, the outstanding taxes were identified as an item in dispute prior to trial. As such, the amount outstanding on the valuation date, being August 1, 2017, is $980.12. As with the HST issue, if a matter was agreed upon by mistake and the evidence is clear that it was a mistake, Susan should not be punished for a mistake that can be corrected. This issue was explored at trial and Jaime had the opportunity to clarify why he felt his figure was correct in the face of Exhibit #14. He failed to do so.

[126] Based on the evidence before me, the debt associated with the vacant lot on Cedar Beach Lane is $980.12 as per Exhibit #14.

vi. Ownership of Credit Card Debt

[127] Jaime’s NFP statement shows two Mastercard credit cards – one ending in #9452 in the amount of $11,587.83 and the other ending in #7474 in the amount of $1,024.13.

[128] Mr. Evans relied on information provided by Brooke Davidson to conclude that the credit cards were actually attributable to 1618203. There was no evidence on the impact of having those debts become business debts and their effect on the valuation of 1618203. Mr. Evans simply disallowed the debts regardless of them being personal or business debts.

[129] However, neither party filed the actual credit card statements to allow the court to consider the expenditures included therein. There were references that some statements showed the purchase of gravel and equipment that would not be for personal use. However, these are personal credit cards in Jaime’s personal name. If some amounts were debts of the company, one would assume that it would have an impact on the value of the company. If Susan was challenging the amounts on the statements, those statements should have been filed in evidence.

[130] Mr. Clarke testified on the credit card and addressed the topic in his report at Exhibit #68. In that report, he concluded that it is unlikely that any credit card balances are carried on the balance sheet at the valuation date and noted that the personal credit cards would not be included in his valuation conclusions.

[131] In balancing the evidence about the credit card debt, I am unable to accept the evidence of Brooke Davidson, as she has been estranged from her father for some time. She has not been involved in his expenses, whether business or personal, and provided no direct evidence on this claimed personal debt. I accept Mr. Clarke’s evidence that it is unlikely that the credit cards formed part of the business accounting records, and as such, they remain a personal debt.

[132] There was discussion in argument that some amounts should be deducted but I was unable to find that specific reference in the evidence. I wrote to the parties while this decision was under reserve, and neither could direct me to an agreed upon deduction from this personal debt that formed part of the evidence. Consequently, the full amount of the credit card debt which is in Jaime’s name will be allowed in the amount of $11,587.83 plus the amount of $1,024.13.

vii. Due to Shareholder

[133] The Comparison of NFP Statements shows different amounts for the shareholder debt of 1618203 to Jaime as of the valuation date of August 1, 2017.

[134] Susan relies on the amount in the 2016 year end Financial Statements of $105,594. Jaime relies on the amount in the subledger (Exhibit #79), indicated as being “As of 1 August 2017”. It is unclear if the amount for August 1, 2017 is the opening balance of $82,456.52 or the figure marked “Total Loans from shareholders” of $81,621.52. Jaime’s counsel argues that the amount should be $82,000.

[135] In her Endorsement dated June 2, 2020, Justice MacEachern ordered Jaime to provide, “evidence on the changes to the due to shareholder account during 2017, and produce supporting documents, if not already provided (i.e., ledger statements for the due to shareholder account in 2017) within 60 days.”

[136] Susan took the position that Jaime failed to do this. In her evidence, Emma McLaughlin presented Exhibit #79, being the subledger for Loans from Shareholders for 1618203, which shows the amount of $81,621.52. In cross-examination, she was challenged on whether she had provided all the subledgers as ordered by Justice MacEachern. She maintained that she did.

[137] I disagree. The order of Justice MacEachern clearly requires Jaime to provide evidence on the evolution of the Due to Shareholder Account for all of 2017. It is insufficient to simply pull out a one-page document dated August 1, 2017 and expect the court to rely on this in the face of Justice MacEachern’s order. Jaime is attempting to have the court rely on an incomplete picture of the Due to Shareholder Account without providing any supporting document as to how it went from $105,594 on December 31, 2016 to $43,550 on December 31, 2017.

[138] Jaime has therefore failed to properly substantiate the value of the Due to Shareholder Account on the valuation date and the best available evidence is the amount shown in the December 31, 2016 Financial Statements.

[139] It should be noted that Exhibit #63 produced by Mr. Clarke shows that both valuators accepted that the Due to Shareholder Account was $105,594. I agree.

viii. Miscellaneous Items

[140] There were a few remaining disputed items on the Comparison of NFP Statements filed as Document 102. These items were mainly dealt with in argument or in subsequent communications between the court and the parties:

a. Susan’s credit card debt is shown as disputed, whereby Susan claims it to be $8,534.68 and Jaime shows it as being $7,984. Jaime has accepted Susan’s figure.

b. The notional commission for the sale of 3145 Paden Road is shown by Susan as being $2,750 for both parties whereas Jaime shows the debt as solely belonging to Jaime in the total amount of $5,500. In argument, Jaime conceded that this was a shared debt given that this property is jointly owned.

c. In argument, Jaime’s counsel accepted the figure of $171,817 as the amount of the mortgage on 301 Firlane Road.

d. The notional tax on the RDSP as shown on Susan’s end of trial NFP Statement as $775.49 was not addressed in evidence. It does not form part of the Comparison of NFP Statements included at Exhibit #22 setting out the issues for trial. Jaime has opposed the inclusion of this amount at this late date. I agree. The amount of $775.49 is refused.

e. The notional commission and legal fees for the sale of 3115 Paden Road are shown by Susan as being $24,000 and Jaime shows no such debt. There was no evidence on the potential sale of 3115 Paden Road by Susan. To the contrary, Susan resisted Jaime’s request to sell this property. Although there was evidence that Susan put 3115 Paden Road for sale at the height of the conflict, it was then taken off the market. There is no evidence as to if and when the property will be listed for sale and if it will be done through an agent. That purported notional debt for Susan is denied.

ix. Conclusion on Equalization

[141] The court’s findings in this section must now be provided to the accountants for a recalculation, including the Embedded Tax. If there are issues that were not addressed that require further adjudication, I will make myself available to meet with the parties.

Child and Spousal Support

i. Income Available for Support Purposes

[142] When determining a party’s income for support purposes, the analysis begins with the provisions of the Federal Child Support Guidelines, SOR/97-175 (“the Guidelines”) and the determination of income under sections 15 to 20. Section 15 states that a spouse’s annual income is determined by the court in accordance with sections 16 to 20.

[143] Section 16 states that subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out in the heading “Total income” in the T1 General form issued by CRA and is adjusted in accordance with Schedule III.

[144] When the court is of the view that the determination of a party’s income under Section 16 would not be the fairest determination of that income, section 17 allows the court to have regard to a party’s income over the last three years in determining an amount that is fair and reasonable in light of any pattern of income, fluctuation of income or receipt of non-recurring amount during those years.

[145] Where a party is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the party’s annual income as determined under section 16 does not fairly reflect all the money available to the spouse for the payment of child support, section 18 permits a court to consider the party’s situations described in section 17 and determine the party’s income to include all or part of the pre-tax income of the corporation.

[146] Section 19 permits a court to impute such amount of income to a spouse as it considers appropriate in the circumstances, including a situation where a spouse is intentionally underemployed or unemployed. The list of circumstances set out in section 19 is not exhaustive: Bak v. Dobell, 2007 ONCA 304, 86 O.R. (3d) 196.

[147] In Korman v. Korman, 2015 ONCA 578, 126 O.R. (3d) 561, the Court of Appeal for Ontario provided the following comments about imputing income under s. 19 of the Guidelines:

[51] However, whether income should be imputed to a payor spouse does not depend solely on the determination of that spouse’s presumptive income. The courts retain discretion to impute income to a payor spouse in excess of that spouse’s presumptive income where the imputed income is supported by the evidence and is consistent with the objective of establishing “fair support based on the means of the parents in an objective manner that reduces conflict, ensures consistency and encourages resolution” [Citations omitted.]

[148] Most of this trial focussed on the issue of income for support purposes, together with the valuation of 1618203. Both parties called their accounting experts who opined on the manner in which the business has been managed and the impact on Jaime’s available income for the purpose of support. The experts also applied various sections of the Guidelines. There is no dispute that it is not the fairest determination of Jaime’s income for support purposes to base it on the personal tax returns filed by Jaime. Jaime accepts that adjustments to his personal income must be made as suggested by Mr. Clarke. Susan takes the position that those adjustments, even in accordance with Mr. Evans’s opinion, are not enough and that income must still be imputed over and above the adjustments to Jaime’s income.

[149] As previously indicated in the introduction of this decision, there is no dispute that Jaime has had very poor accounting practices over the years that raise numerous questions about the company’s corporate income. Also, Jaime has had a practice of writing off certain expenses that are not proper business expenses and this has impacted the accuracy of his reported income.

[150] Furthermore, given the nature of Jaime’s work, it was not disputed that his income can have significant fluctuations depending on the nature and profitability of engagements/contracts worked on in any given year. As can be seen from 2018, the sale of equipment and realization of profit from that equipment can also have a significant impact on the income available for support purposes. Accordingly, both accounting experts applied s. 17 of the Guidelines and relied on three-year averages.

[151] Jaime’s tax returns show the following income from his personal income tax returns:

a. 2015: $18,406

b. 2016: $20,250

c. 2017: $110

d. 2018: $2,766

e. 2019: $25,956

f. 2020: $40,923

[152] Notwithstanding Jaime’s reported line 150 income, Jaime’s accounting expert determined the following income available for support purposes:

a. 2015: $38,100

b. 2016: $40,000

c. 2017: $25,800

d. 2018: $172,400 (Exhibit #65)

e. 2019: $59,100

f. 2020: $40,900.

[153] From those amounts, Jaime’s accountant then applied s. 17 of the Guidelines to arrive at a three-year average of $68,100. However, while the court’s decision was under reserve, the court wrote to the parties and confirmed that the three-year average set out in the report at Exhibit #65 was an error and that the proper three-year average was $90,800.

[154] Mr. Clarke highlighted the previously described overstatement of accounts payable of $250,215 and as such, he qualified his report to identify the possibility of other deficiencies in the accounting records of 1618203. Furthermore, his analysis is limited by the information provided to him. Mr. Clarke was clear that he did not audit, review or attempt to verify the information provided and set out in his report at Appendix A – Scope of Review (Exhibit #65).

[155] The main areas where adjustments are made to Jaime’s reported line 150 income surround the attribution of pre-tax income from 1618203 in 2018, the personal expenses paid for by 1618203, the gross-up for the personal expenses and the imputed interest attributable to a shareholder loan from 1618203.

[156] Conversely, Mr. Evans did his own assessment of Jaime’s income available for support purposes. He provided the following amounts based on his reports filed as Exhibits #31 and #32:

a. 2018: $291,000

b. 2019: $140,000

c. 2020: $73,000

[157] From those amounts, Mr. Evans applied s. 17 of the Guidelines to arrive at a three-year average of $168,000. To this amount, Mr. Evans leaves open the option to impute additional income to reflect cash received that was not declared.

[158] Exhibit #67 is a Limited Critique Report prepared by Mr. Clarke that addresses the differences in the conclusions for income available for support. The issues as raised in that critique report will be used as guidance for the court’s findings on Guideline income for the years 2018 – 2020. The areas of contention are as follows:

a. Subcontractor Expenses:

b. Material Purchased for Personal Use;

c. Shareholder Loan Interest Benefit;

d. Calculation of Gross-Ups;

e. Adjustment to Amortization Expense;

f. Professional Expenses;

g. Compensation paid to Emma McLaughlin;

h. Personal Expenditures.

Subcontractor Expense

[159] This difference originates from evidence received by Mr. Evans from Brooke Davidson that indicated that renovations were done to Mr. Davidson’s personal home and paid for by 1618203. NG Bear is a company operated by Jaime’s brother Tom Davidson.

[160] Emma McLaughlin testified about the relationship between 1618203 and NG Bear and confirmed that NG Bear was retained on some jobs by 1618203. She also testified that Tom Davidson did work for Jaime on the Third Line Road property renovation but was less clear if the work was done by Tom Davidson personally or if it was done through NG Bear.

[161] She testified that some work was done by NG Bear for Jaime’s home on Third Line Road and estimated off the top of her head that the value would be $40,000.

[162] Conversely, Mr. Clarke challenged the characterization of the subcontract expenses as personal expenses as a result of information he received from Jaime. Hearsay evidence was provided through the report at Exhibit #67 that NG Bear had been retained to perform a demolition on one of Mr. Davidson’s job sites and that Mr. Davidson engages NG Bear under the same terms as he would engage any third-party subcontractor.

[163] During his evidence in chief, Mr. Clarke testified that Jaime advised him that he regularly hires his brother’s company as a legitimate third-party contractor and thus it was not added as a personal expense. Curiously, Jaime did not testify on this issue.

[164] When considering the hearsay evidence of Brooke Davidson provided to Mr. Evans and the hearsay evidence from Jaime to Mr. Clarke, the court is mainly left with the evidence of Emma McLaughlin that NG Bear did approximately $40,000 of work on Jaime’s personal residence on Third Line Road. There is no evidence that Jaime paid 1618203 for this work. There is also no direct evidence that the amount of $26,549 was a subcontract for another client. Consequently, the Court is left to conclude that NG Bear did work on Jaime’s personal residence, and there is no evidence to suggest that NG Bear was paid directly by Jaime. As such, the Court finds on a balance of probabilities that the subcontractor expense of $26,549 is part of the roughly $40,000 of work done by NG Bear to Jaime’s residence and that this is not a proper business expense. That amount should be added back as a personal expense recorded in the corporation.

[165] As for the $1,000 expense related to First Place Renovations, no direct evidence was provided that this was not a proper subcontractor expense and as such, that amount requires no adjustment.

Material Expenses

[166] Brooke Davidson also provided information to Mr. Evans about material expenses purchased from Canadian Tire, Rona, Home Depot and Chad Construction. The only evidence provided that these were personal expenses was hearsay evidence provided by Brook Davidson to Mr. Evans. Brooke Davidson did not address this issue in her evidence in chief. In cross-examination, while she said she was familiar with all her father’s suppliers, she agreed that she could not say that Jaime never went to Rona. Her response was “I have not seen it”. She agreed that she was not with her father every time he ordered materials and that she had been estranged from him for some time.

[167] The evidence on the material expenses is lacking. There is no basis to conclude that these material expenses are not properly part of the business. While the court appreciates that there may be some materials purchased for personal use, the evidence does not allow the court to determine an amount. Brooke Davidson does not have the knowledge to specifically challenge any purchases. It is impossible for the court to conclude that any specific purchase was a personal expense paid for by the Corporation. There is no basis to challenge these expenses.

[168] As such, no adjustment is made to the 2018 income for the $23,096 of material expenses.

Shareholder Loan Interest Benefit

[169] The issue relating to Shareholder Loan Interest Benefit turns on Jaime’s Shareholder Loan from 1618203 and the interest rate applicable thereto. Mr. Clarke has identified that the shareholder loans were attributed to funds borrowed from 1618203 by Jaime because he could not obtain a standard mortgage as a result of the litigation. He utilized the rate of 2.25 percent as he found it comparable to advertised mortgage rates.

[170] Mr. Evans applied a borrowing rate of 5.9 percent, being the MCAP rate plus 1 percent.

[171] I have considered the evidence of both accounting experts on this issue. On the applicable interest rate, I prefer the evidence of Mr. Clarke. Mr. Clarke’s analysis of the interest rate was focussed on the purpose of the borrowing as a source to obtain mortgage financing. The applicable interest rate should be similar to the available mortgage rates at the time. The difference is not significant, and it is reasonable to give Jaime the benefit of the most favourable terms for this loan that is akin to a mortgage. Mr. Clarke’s evidence does this and as such, I accept his rate of 2.25 percent.

[172] However, the analysis does not end there. The basis of Mr. Clarke’s opinion is that Jaime could not qualify for a mortgage due to the ongoing matrimonial litigation. When further questioned by the court, he stated that he was told that it was because Jaime’s assets were tied up in the litigation. He agreed that if the reason Jaime could not get a mortgage was due to his poor credit history, then his opinion would change. The basis of Mr. Clarke’s evidence was that he was told that the mortgage could not be obtained due to Jaime’s assets being tied up as a result of the litigation.

[173] However, no evidence of this was given by any witness at the trial and, specifically, Jaime testified that he could not get a mortgage because of the manner in which the corporation was operated. He did not reference issues about the matrimonial dispute. No documentation was filed in terms of a mortgage application refusal or anything to support that Jaime could not qualify for a mortgage due to the ongoing matrimonial litigation. Also, what assets were tied up? There was no evidence of Jaime’s assets being tied up although there was a non-dissipation order. The court has no record of evidence being led that Jaime could not get a mortgage for the Third Line Road property because his assets were tied up in the litigation. Surely a court would have provided some relief if it was required. No such request was made. Mr. Clarke agreed that if Jaime’s inability to qualify for a mortgage was due to his poor credit, he would reconsider this item.

[174] In the end, Jaime has failed to support the need for this shareholder loan for reasons beyond his control. If anything, the court is left with the impression that Jaime can simply not qualify for a mortgage. In 2017, his personal income tax return showed an income of $110 and then $2,766 in 2018. It is difficult to imagine that he could have qualified for a mortgage given those amounts.

[175] Consequently, both the interest on the shareholder loan and the gross-up of the shareholder loan interest should be added back to Jaime’s income for 2018, 2019 and 2020. However, although the loan does not qualify as a proper financing exercise, I am still persuaded that the rate of interest at MCAP plus 1 percent is too high and not based on available rates at the time. I prefer Mr. Clarke’s interest rate at 2.25 percent.

Gross-Ups

[176] In terms of gross-up for the value of personal expenditures paid by 1618203, these are simply calculations to be made based on the business expenses that have been refused. In the case of 2018, the court has refused the claimed expense of $38,949 for professional fees, which is agreed upon. Also, the court has refused the subcontract expense attributable to NG Bear of $26,549. Jaime’s income can be adjusted accordingly.

[177] In terms of gross-up for the benefit of the shareholder loan, that adjustment must be made based on Mr. Clarke’s interest benefit calculations.

Adjustment to Amortization Expense

[178] When considering the amount of amortization expense, Mr. Evans reduced the amount of amortization expense to $45,000, arguing that it is more consistent with the average for 1618302 over the past five years. He opined that it was a reasonable adjustment considering its impact on corporate income. Mr. Evans makes the point that there is no logic in a corporation spending close to one million dollars in equipment purchases only for the owner to be making less than minimum wage at the end of the year. This is not a reasonable return on the corporate investment. Mr. Evans’ report states that corporate income was adjusted for all years under review.

[179] The amortization expense is also viewed as being unreasonable by Mr. Evans given that the 2018 sale of much of the equipment realized returns that were much higher than the book value. Thus, Jaime’s income for 2018 is significantly higher.

[180] Mr. Clarke disagrees. He has opined that the rate of amortization is consistent with the maximum amounts permitted by Revenue Canada. He also points to the fact that the Guidelines prohibit amortization for real property but not for equipment. In terms of the specific amortization expense amounts, Mr. Clarke testified that the amount of amortization was lower than what CRA allows for 2018 but it was higher for 2019 and 2020. However, based on Exhibit #67, it seems that the dispute only applies to 2019.

[181] Jaime’s accountant, Mr. Mehlman also felt that Jaime’s depreciation is common for similar businesses that have significant assets that can be depreciated. He felt it was common for other similar businesses.

[182] I agree in large part with Mr. Clarke. While I accept that the impact of the amortization expense effectively shelters Jaime from his support obligations, the reality is that the Guidelines specifically prohibit amortization in relation to real property and not for equipment. This is clearly not an oversight. To make an arbitrary reduction in the amortization expense to $45,000 does not find any support in s. 19 of the Guidelines. I am of the view that it is not a principled way of addressing the impact of the amortization expense.

[183] However, the evidence is that Jaime’s amortization expense has not strictly followed the CRA guidelines, and that at least for 2019 and 2020, the amortization expense has exceeded the CRA amounts. I have no evidence to deal with the excessive amortization expense for certain years but I disagree with the approach of arbitrarily reducing the amount to $45,000.

[184] Some inequity is apparent in the fact that the amortization expense does not get added back to Jaime’s income since it is not related to real property. Amortization is a non-cash expense that positively impacts corporate cash flow but negatively impacts available corporate income to the shareholder. A cash flow analysis was done by Mr. Clarke for the years 2015, 2016 and 2017 as part of Exhibit #66. In that report, Mr. Clarke draws a parallel between the cash flow analysis and the level of income imputed by the court in the amount of $82,000.

[185] It is noteworthy that the cash flow analysis in Exhibit #66 provides a range of cash flow that is between $30,000 to $50,000 higher than Jaime’s reported income.

[186] The issue of positive corporate cash flow becomes more relevant when considering the question of imputed income as will be discussed below. In the end, I reject Mr. Evan’s approach to reduce amortization to $45,000.

2019 Professional Expenses

[187] In 2019, Mr. Evans has attributed certain professional fees from the 2019 General Ledger Detail as personal expenses and re-attributed them as income to Jaime. Mr. Clarke agreed with most of the fees except for those attributable to Laura Hands Designs and Revtech Electrical Services. Mr. Clarke is the only person who testified to these professional fees and he was satisfied from his discussions with Jaime that they were attributable to the business. There is no justification by Mr. Evans in his report at Exhibit #32 for attributing these fees as personal expenses and it was not addressed in his evidence.

[188] The evidence of Mr. Clarke, although based on some hearsay, is the best available evidence to suggest that those fees are proper business expenses. He inquired with Jaime and concluded that they were proper business expenses. Jaime did not testify on these expenses nor was he challenged on them. There is no basis to reject them.

[189] As such, the amount for 2019 professional fees to be added back to Jaime’s income is the amount identified by Mr. Clarke of $19,991 plus the applicable gross-up.

Compensation to Emma McLaughlin

[190] Mr. Evans rejects the sum of $8,843 paid to Emma McLaughlin in 2020 and qualifies it as income splitting. As such, the amount is added back to Jaime’s income for support purposes. Mr. Evans testified that the amount paid to Ms. McLaughlin was simply made as a year end entry and would have been consistent with a form of income splitting. Normally, such an amount would be paid to a third party and not simply added at the end of the year as a journal entry. However, Mr. Evans did not dispute that a third party would be paid a similar amount provided that the person’s skill set meets the requirements of the work.

[191] That amount is identified by Mr. Clarke as an amount paid to Ms. McLaughlin for bookkeeping for 1618203. Mr. Clarke opines that this amount represents market value for those services and that the expense should not be added back to Mr. Davidson’s income for support. Mr. Clarke was challenged with the fact that the amounts were paid to Ms. McLaughlin as a journal entry. Mr. Clarke maintained that the important element is that she performed the bookkeeping work and that the amount was not excessive.

[192] Mr. Mehlman testified as to his dealings with Ms. McLaughlin and indicated that Emma would assist Paula and organize documentation. He did acknowledge an improvement in the state of the books in recent years.

[193] Emma McLaughlin testified about her involvement in the operations of the company and indicated that her involvement had increased from what it was in 2018. She has become much more involved in 2019 and 2020. She testified that in 2020 she did most of the bookkeeping work. Previously, she had worked in two bookkeeping jobs and learned the Simply Accounting software. She explained the work that she does on the bookkeeping side along with administration, such as arranging for inspections, supply deliveries, job scheduling and doing fuel runs and moving the float around.

[194] Once again, the court is faced with an issue that stems from Jaime’s poor accounting and business practices. It is clear that recording Ms. McLaughlin’s work as an end of the year journal entry does not follow proper accounting process for an employee such as Ms. McLaughlin.

[195] However, I agree with Mr. Clarke that the issue turns on the value of the work performed and if it should really be deemed as income splitting by Jaime. I conclude that it is not income splitting. I have considered Ms. McLaughlin’s testimony, the fact that she has done bookkeeping work in the past, that she is trained on Simply Accounting, that she is involved on the administration side of the business and that she even drives a truck to assist with jobs. In the end, I reject the suggestion that this is simply an income splitting adjustment and I conclude that Ms. McLaughlin does provide services to the company that would otherwise have to be performed by a paid employee or by Jaime himself. The expense of $8,843 for 2020 is allowed.

Personal Expenditures

[196] In 2020, Mr. Evans has added back to Jaime’s income the fees paid to Baker Tilley in the amount of $11,980.

[197] However, Mr. Clarke points out that the general ledger identifies that the fees were posted to Mr. Davidson’s shareholder account and not paid as a company expense. As such, they should not be added back under the Guidelines.

[198] During his testimony, Mr. Clarke took the court to the 2020 Financial Statements and identified how the professional fees went down from $29,986 in 2019 to $4,027 in 2020. Accordingly, Mr. Clarke opined that the amount charged back by Mr. Evans of $11,980 was not included in the expenses of the company and as such there is no charge back. I accept Mr. Clarke’s evidence on this item and as such there should be no add back nor any gross-up for that amount.

Imputed Income: Amortization Expense and Unreported Income

[199] Two main issues arise from the analysis of Jaime’s income: the effect of amortization expense on the available corporate income from an income tax perspective and Susan’s allegations that Jaime received a significant amount of cash from his business that was not included in his annual income figures. I have touched on these two issues above. My conclusions on these two issues are essentially as follows:

a. The amortization expense has a significant effect on the corporate income available to be paid out to Jaime. However, Susan’s approach of adjusting the amortization expense to $45,000 is not accepted. This issue is best dealt with in the court’s overall determination of imputed income.

b. Cash forms a part of Jaime’s business, and this has always been the case. He has the ability to receive cash for certain jobs and he did not make a proper effort to show how the cash received is attributed to specific jobs, specific clients and specific deposits. Also, he has not shown where expenses have been deducted to account for unreported cash. The evidence is that the cash received is not recorded, as set out in the letter from his previous counsel (see Exhibit #10). While Jaime has argued that the letter at Exhibit #10 refers only to farming and wood sales, I conclude that it does not. The evidence from both Jaime and Emma was that there were some cash transactions but not as much as suggested by Susan. I accept this position to a certain extent but feel that an adjustment to the income available for support purposes is required, as Jaime has failed to demonstrate a proper system in place for recording cash payments, attributing those cash payments to individual clients and properly showing those deposits.

(a) Amortization of Business Equipment

[200] Long before separation, Jaime operated his business in a manner that saw him purchase new equipment and depreciate it at a rate not always consistent with that allowed by Revenue Canada. While the parties were married, there was no impact on Susan and, as part of the family unit, she would have benefited from Jaime’s accounting practices.

[201] However, the impact of this business practice becomes significant in the post-separation scenario whereby the amortization expense significantly reduces the corporate income but leaves the corporate cash-flow higher.

[202] When it comes to the amount of amortization expense, Exhibit #51 provides the amortization expense from 2014 to 2020 inclusive.

[203] Also, part of the work done by Mr. Clarke is an analysis of cash flow available to Jaime. That analysis showed cash-flow for the above years as follows:

a. 2015: $96,633;

b. 2016: $75,877;

c. 2017: $63,256.

[204] The impact of the significant depreciation is that it reduces the corporate income but it does not impact the corporation’s cash position.

(b) Evidence of Unreported Income

[205] The fact that Jaime has unreported income was not significantly disputed. Both Susan and Brooke Davidson testified that they had witnessed, at different times, cash payments being received by Jaime over the years. Susan testified that Jaime always kept large amounts of cash in his pockets and Jaime agreed. Susan and Brooke also testified as to their lifestyle that suggested that the family benefited from unreported income in terms of the children getting vehicles at age 16, having four-wheelers, skidoos, taking trips and having large amounts of cash available to travel and purchase clothing and recreational items. The parents’ combined declared incomes would not warrant that level of spending. I have already accepted Susan’s evidence in this regard.

[206] Even Jaime did not dispute that his income was more accurately in the range of $40,000 to $60,000 per year despite what is seen on his personal tax returns. However, I accept Jaime’s evidence that the cash component of his business is not as extensive as Susan purports it to be for the following reasons:

a. Jaime was able to demonstrate that for many years, the spending above declared income could be explained at least in part through lines of credit. This would provide some justification to Jaime’s contention that the family was living above its means.

b. The evidence of Susan and Brooke Davidson is accepted in terms of various cash payments witnessed over the years. There was also evidence of various instances where Jaime would barter services that he would otherwise have to pay for is also accepted. However, it does not appear that the cash payments or bartering would have provided a significant increase to the family’s pre-separation lifestyle or Jaime’s post-separation lifestyle to the extent suggested by Susan.

c. I accept the evidence that much of Jaime’s excavation business came from builders and that builders do not tend to be involved in cash transactions. However, it was admitted that work done for individual clients could give access to cash payments. When expenses are put through the company, the benefit of an unreported cash payment can still be significant and would otherwise have to be grossed up to account for the cash benefit.

d. There is evidence of employees or casual workers being paid in cash and, simply, Jaime would have to have cash to pay it out to employees. No evidence was offered to suggest that he would withdraw money from his bank account to pay employees or that there is a proper system in place to track withdrawals and attribute them to casual workers. When asked about certain cash withdrawals, he would guess that they were to pay employees or subcontractors, but nothing was properly accounted for. I am of the view that this is further evidence that he had access to cash payments from clients.

e. Finally, my assessment of the evidence of Jaime’s lifestyle does not suggest that he has lived a very lavish post-separation lifestyle that would warrant a finding that he has benefited from significant amounts of cash to allow him to live a life of luxury. The evidentiary record does not support such a conclusion.

[207] Notwithstanding these findings, there is no doubt that the nature of Jaime’s business allows him to do work for clients who are not builders and who pay in cash. I conclude that it has not been his practice to declare these amounts. While I have concluded that the cash component of Jaime’s business is not as significant as Susan would like me to conclude, it is a question of scale and it is certainly relevant from a support perspective.

[208] There were also significant credibility issues surrounding Jaime’s attempts to downplay the cash component of his business. Exhibit #21 contains a number of invoices that purport to show documented cash transactions. However, Susan demonstrated that while these documents were used by Jaime to show cash receipts in 2017, the invoice shows his address as 6788 Third Line Road, a property that he did not purchase until 2019. Jaime tried to justify that the new address was automatically populated when recently printed, but the available inference is that the invoice was created years later to try to defeat Susan’s claim of undocumented cash payments. In addition, Jaime testified that while he does not keep records of cash payments, his bookkeeper is able to identify cash payments from the bill book and properly record those transactions. His evidence on this point made no sense and added to the court’s view that he does not properly record cash transactions. The bookkeepers were never called to verify this evidence and he presented no examples of how invoices were paid in cash, properly recorded and corresponded with bank deposits.

[209] Further evidence of Jaime’s ability to avoid properly reporting all his transaction is seen in how he deposited the funds from the Komatsu excavator to his personal account and then failed to properly account for the funds. Neither his bookkeeper nor his accountant were aware that he deposited the sum of $124,000 to his personal account and the result was that $61,000 had to be readjusted back to the valuation of the company.

[210] Jaime’s lack of credibility in respect of the cash payments and poor record keeping can be seen in how he tried to justify the $124,000 deposited to his personal account. Various transactions from the bank account were put to him for explanation and he was simply guessing. One specific example related to a $5,000 withdrawal, where he stated that it was probably a payment to Dennis Hart as he was working with Jaime at that time. Rather than simply admit that he did not know, he tried to bring Susan’s boyfriend into the problem surrounding his poor record keeping. The entirety of his evidence surrounding the $124,000 deposit lacked credibility. This is similar to his evidence that the bank would not allow him to transfer more than $50,000 from his personal account to his business account or that the check was made in his personal name and that he could not deposit it to the business. Again, these were bald statements to justify his actions and no evidence was provided to corroborate his claims.

[211] I accept that under the Guidelines, an amortization expense of the nature seen in this case is a permitted expense. However, the Court is still allowed to consider under s. 19 of the Guidelines if income should be imputed to Jaime on an annual basis to account for factors that the court deems appropriate in the circumstances. In this case, the court deems that the nature of Jaime’s business, the corporate cash flow, his accounting and business practices and his access to unreported income (which would be grossed up) and practice of not recording it warrants that income be imputed to him.

[212] The Court is then left to determine what is an appropriate amount of imputed income that is warranted. While not meant to be exhaustive, I refer to the following evidence:

a. Jaime does not deny that there is a cash component to his business. The evidence of both Jaime and Emma was not convincing that the cash payments from clients have been properly deposited. They made bald statements to that effect without proper supporting documentation and suggested that the bookkeeper could simply identify and attribute cash deposits without direction. That evidence is rejected;

b. The evidence of spending habits leads the court to conclude that that ongoing lines of credit could not justify the level of spending, particularly on recreation. The evidence is that Jaime’s declared income could simply never have accommodated the family’s lifestyle prior to separation nor Jaime’s post-separation lifestyle. At the same time, the evidence is that Jaime has never led a particularly lavish lifestyle;

c. Jaime acknowledged that his income is more accurately between $40,000 to $60,000. This amount must be compared to declared income since separation:

i. 2017: $110

ii. 2018: $2,766

iii. 2019: $25,956

iv. 2020: $40,923;

d. Jaime indicated in a mortgage application that his income in March 2014 was $80,000 per year while his tax return for that year suggests $18,406 (Exhibit #13);

e. Similarly, in January 2018, Jaime indicated in another mortgage application that his income was $75,000 and that he received $15,600 in rental income whereas his personal income for 2018 suggests $2,766 (Exhibit #13). Jaime lacked significant credibility where he attempted to distance himself from the information he provided by saying that the mortgage applications were completed without his knowledge and suggesting that others filled out this information;

f. The corporate cash flow analysis from 2015-2017 set out in Exhibit #66 which illustrates the effect of significant amortization expense;

g. There is evidence that Jaime’s practice in determining the amortization expense has not followed the CRA guidelines. There has been no evidence on the impact of the excessive amortization expense, but I have disagreed with Susan’s approach of arbitrarily reducing it to $45,000;

h. No adjustment has been made by the accounting experts to account for the cash component of the business from 2018 to 2020. I note however that the analysis done by Mr. Clarke pursuant to s. 17 of the Guidelines, leads to an average income of $90,800. This amount already includes adjustments for certain personal expenses put through the company and there will be further adjustments to that amount as a result of this decision.

[213] In the end, I am satisfied that s. 19 of the Guidelines allows the Court to take a global look at Jaime’s income for support purposes and I conclude that income must be imputed to him. I conclude that Jaime’s annual income for support purposes should be increased by $25,000 per year in order to properly reflect the benefit he receives from the cash component of his business which would be grossed up, his accounting practices and the increased cash flow from which the company benefits as a result of his amortization expense. This amount takes into account that Mr. Davidson’s practice of putting excessive personal expenses through the company will cease.

[214] I appreciate that for the purpose of calculating child and spousal support arrears for the years in question, the imputation of income is easy to calculate. The problem lies going forward when calculating spousal support if the relevant factors considered herein change. In such a situation, the imputed income may have to be revisited in the context of a Motion to Change.

ii. Child Support

Income available for Child Support Purposes

[215] Both parties had their accounting experts testify on Jaime’s income available for support purposes. The calculations now need to be adjusted to account for the findings made by this court on the adjustments proposed by the accountants. In addition, those adjusted income figures should be increased by $25,000 to reflect the imputed income. The parties will have 30 days to either agree on the adjustments to income available for support or write to the court to request a date for the matters in dispute to be adjudicated.

Duration of Child Support

[216] The issue is set out in the respective draft orders. Susan seeks support for the following periods:

a. From January 1, 2018 to October 1, 2019 based on a set-off with Brooke residing with Susan and Chloe residing with Jaime;

b. From October 1, 2019 to September 1, 2020, child support for Brooke residing with Susan.

[217] Jaime seeks for child support to be calculated as follows for the following periods:

a. For 2018, child support for Brooke and Chloe shall be calculated on the basis of Susan’s Guideline income and Jaime’s Average Guideline Income;

b. For 2019, child support for Brooke and Chloe shall be calculated on the basis of Susan’s Guideline income and Jaime’s Average Guideline Income with child support for Brooke being reduced by $300 per month as she earned $19,121 in 2019.

c. Susan’s obligation to pay child support for Chloe ends effective December 1, 2019;

d. Jaime’s obligation to pay child support for Brooke ends effective July 1, 2019 or in the alternative September 2020.

[218] When considering the duration of child support, this trial heard the competing evidence of Susan, Tommy Owens and Brooke Davidson pitted against the evidence of Jaime and Emma McLaughlin.

[219] There is no dispute that Chloe resided with Jaime from Christmas 2017 until October 13, 2019. While Emma McLaughlin suggested that Chloe resided with Jaime until 2020, Exhibit #1 was not challenged and was admitted on consent by both parties, although Chloe did not testify. That document confirms that Chloe moved out on October 13, 2019 and child support should be paid by Susan until October 31, 2019. I accept that as the best evidence.

[220] The real dispute turns on the date that Brooke Davidson was no longer residing under Susan’s care. Susan testified that after the sale of the matrimonial home, she did not have funds to purchase or rent her own property. She stated that she lived with a neighbour and with her parents and then with her boyfriend Dennis Hart but noted that Brooke was always under her care.

[221] Brooke testified that she resided in the matrimonial home under her mother’s care from January 1, 2018 until the sale of the matrimonial home in June 2019.

[222] Brooke testified that after the sale of the matrimonial home, she resided with her mother at her grandparents’ home from Monday to Friday and sometimes at her mother’s boyfriend’s residence. On weekends, she stayed with her boyfriend’s parents. It was her evidence that she did not reside there on a full-time basis as her boyfriend’s parents did not want her living there during the week. She testified that her home was her grandparents’ home.

[223] After the sale of the matrimonial home, Susan’s evidence was that Brooke resided with Susan mostly at her grandparents’ house and also at Dennis Hart’s residence.

[224] Tommy Owens testified that Susan and Brooke resided in his home 4-5 nights a week after the sale of the matrimonial home.

[225] Jaime’s evidence of where Brooke was residing after the sale of the matrimonial home was not convincing. He alleged that she resided with her boyfriend since the sale of the matrimonial home, but his evidence was based on generalities that everybody knows where she was living. Emma McLaughlin also testified in generalities that everybody knew that Brooke was residing with her boyfriend in Carleton Place. Jaime also testified to hiring a private investigator but no surveillance evidence was presented.

[226] When considering all the evidence on this issue, I accept Susan’s evidence that Brooke Davidson was under her care until September 2020 and that they resided where they could as a result of her difficult financial circumstances. The evidence of Susan, Brooke and Tommy Owens is far more convincing than the evidence of Jaime and Ms. McLaughlin. I accept that although Brooke may have stayed with her boyfriend’s parents and that Susan would stay with her parents or with Dennis Hart, Brooke continued to be in Susan’s care and Jaime has an obligation to pay child support during this period.

[227] It was also raised by Jaime in the draft order that Brooke earned income during the years that child support is payable for her and that the amount of child support should be reduced in some fashion. However, there was no proper analysis done in accordance with s. 3(2)(b) of the Guidelines to conclude that Guideline support is not appropriate. That analysis requires more than simply reducing child support arrears by an amount earned by the child as suggested by Jaime. In the end, I am of the view that the Guideline amount of support is reasonable for Brooke, particularly in the absence of proper evidence to analyze it otherwise.

[228] Finally, in argument, the parties agreed that table child support was appropriate.

[229] I conclude that Susan’s obligation to pay child support for Chloe ended on October 31, 2019 and that Jaime’s obligation to pay child support for Brooke ended on August 31, 2020.

[230] In respect of s. 7 expenses pursuant to the Guidelines, this matter was not pursued at trial with the exception of medical expenses paid for by Jaime on behalf of Chloe. My review of Exhibit #46 is that there are $1,330 of expenses incurred by Jaime prior to October 13, 2019, being the date that Chloe moved out of Jaime’s home. It is unclear what amounts were submitted, how much was received by Susan and how much was paid back to Jaime. There was no dispute that those expenses were incurred or that they qualify as s. 7 expenses. I conclude that the parties should share in those expenses on a proportionate basis, after adjusting for any amounts claimed by Susan through her insurer for which she has been paid or that have been paid to Jaime. She will have to obtain and provide this documentation. Any amounts received from the insurer and not paid to Jaime should obviously be adjusted for before sharing this expense.

iii. Spousal Support

Entitlement

[231] The issue of spousal support did not occupy a significant portion of this trial. It was treated more like an issue that flowed from other decisions the court must make. At the same time, Jaime was inconsistent in his approach to entitlement and neither party argued whether the spousal support entitlement was compensatory or non-compensatory.

[232] There are three bases for the entitlement to spousal support, being compensatory support, non-compensatory support and contractual support. Compensatory support is meant to acknowledge the contributions of a spouse to the relationship and any financial opportunities that the spouse has forgone for the sake of the family or other spouse. Generally, compensatory awards are seen where one spouse has sacrificed career opportunities, has made significant contributions to the household, and/or where one spouse has made significant contributions to the other spouse’s career. Kerr v. Erland, 2014 ONSC 3555. Non-compensatory support is based on need of the recipient and may include a reduction in the recipient standard of living in comparison to the marital standard of living. Switzer v. Switzer, 2021 ONSC 5760; Gray v Gray, 2014 ONCA 659, 122 O.R. (3d) 337.

[233] The Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) provides that in making an order for spousal support the court shall consider the following:

15.2 Factors

(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.

Objectives of spousal support order

(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should

(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;

(b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;

(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and

(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

[234] The list of issues for determination included Susan’s entitlement to spousal support as an issue to be decided by the Court. The court heard evidence of how Susan qualified for CPP disability benefits in 2012, as well as evidence on the history and extent of her disability. She was cross-examined on her ability to do certain activities and on her ability to work. Jaime also led evidence surrounding Susan’s mobility and made the bold statements that “She can go out and work every day” and “I can bring in all our family members who know that she can go to work”. As previously stated, Jaime admitted to hiring a private investigator for a “couple of weeks” but never produced any surveillance evidence to challenge Susan. More bald statements with no support.

[235] In Jaime’s argument at the end of the trial, his counsel stated that he was not taking an issue with Susan’s entitlement to spousal support.

[236] It is difficult to understand what Jaime was trying to accomplish with his evidence of Susan’s capacity to work. It may have simply been to attack Susan’s credibility. However, these comments came out in cross-examination and not as a result of direct examination by Jaime’s counsel. Jaime clearly wanted to make these comments to try to make Susan look bad, as if her qualification for CPP disability benefits was not warranted. Regardless, Jaime’s evidence about Susan’s ability to work was vindictive and mean-spirited. They were bald statements that were unsupported by any other evidence and were made with the intention to attack her credibility. There was no evidentiary foundation for them, and I conclude that any veiled challenge to the issue of entitlement to spousal support was not made out.

[237] As for the nature of that entitlement, the evidence is clear that Susan assumed the domestic responsibilities for the family, stayed at home with the children during their early years and that her continued employment with the school board was thwarted by her disability which clearly progressed as a result of incidents that occurred during the marriage. While there was no evidence of opportunities missed while staying at home, it is clear that Susan’s presence at home allowed Jaime to focus on his business. I find that Jaime received a direct benefit as a result of Susan assuming those roles. Furthermore, the evidence is overwhelming on Susan’s financial difficulties since separation given on her limited income and debts incurred to her father. She has not maintained the same lifestyle as enjoyed during the marriage. I therefore conclude that Susan’s entitlement to spousal support is both compensatory and non-compensatory in nature.

[238] According to the Spousal Support Advisory Guidelines (“SSAG”), based on 30 years of cohabitation and Susan being 45 years of age at separation, the duration of spousal support should be indefinite. Neither party suggested anything to the contrary. The court concludes that Susan is entitled to spousal support of an indefinite duration.

Quantum of Spousal Support

[239] The parties are in agreement that the calculation would be made in considering Susan’s taxable income of $9,312 and non-taxable income of $11,616.

[240] Although Susan has qualified the support payable prior to July 2021 as retroactive, this is not the case. The Application was issued on November 30, 2017 and as such the claims for support commencing on January 1, 2018 are prospective and not retroactive. However, there are arrears.

[241] The parties agree that spousal support would begin as of January 1, 2018 and would be calculated at the mid-range of the SSAG. The calculation would initially be with a two-child set off until October 31, 2019, after Chloe moved out of Jaime’s home. From November 1, 2019 to August 31, 2020, the parties agree that spousal support would also be at the mid-range of the SSAG considering child support is being paid for one child.

[242] When considering the range for spousal support under the SSAG, that assessment can only be done by the court once the revised DivorceMate calculations have been done and the updated information is assessed by the court, unless the parties agree otherwise, and the calculations proceed on consent.

[243] For each year since 2018, spousal support would be payable based on the findings made in this decision for Jaime’s income available for support plus $25,000 of imputed income for an indefinite term, subject to a material change in circumstance.

iv. Child and Spousal Support Arrears

[244] The determination of child and spousal support arrears must be recalculated based on the findings made in this decision. I will remain seized of the issue in the event that the parties are unable to agree.

v. Life Insurance

[245] This was not listed as an issue for trial and it was not requested by Susan in her issues or in her draft order. However, oddly, it was included in Jaime’s draft order. In his draft order, Jaime included a provision requiring Jaime to maintain life insurance.

[246] This was not pleaded by Susan. It was not part of Susan’s list of issues, it was not in the issues list (Exhibit #22), it was not part of the submissions, and it was not in Susan’s draft order. I decline to order life insurance and I conclude that it was not an issue properly raised in this trial.

vi. Arrears from Temporary Orders of Justice Shelston and Justice Blishen

[247] There were two temporary orders made within this proceeding that created various obligations on the parties.

[248] On December 12, 2017, Justice Shelston made a temporary order granting exclusive possession of the matrimonial home. It was a holding order which included:

a. Chloe’s principal residence was to be with Susan and Jaime had access with Chloe at Chloe’s discretion;

b. Susan was to pay the line of credit of $1,425 per month

c. Jaime was to pay the expenses for the matrimonial home being property taxes, property insurance, electricity, telephone, cell phone, internet, gas and oil, $70 per month for car insurance and licence related to the business totalling approximately $1,659 per month.

[249] Jaime went to great lengths to suggest that the Shelston J. Order only dealt with business expenses. This is specifically rejected. While it included the licence related to the business, it was not only applicable to business expenses. Jaime’s rationale for terminating payments under the Shelston J. Order is rejected up to the date of the order of Justice Blishen.

[250] On September 18, 2018, Justice Blishen made a temporary order that granted exclusive possession of the matrimonial home to Susan and ordered the sale of the matrimonial home. This order also included:

a. Spousal support payable by Jaime of $1,014 per month commencing September 1, 2018 based on an imputed income of $82,000;

b. Child support payable by each party based on a set-off for two children in the amount of $528, based on an imputed income of $82,000;

c. An order for disclosure;

d. Jaime was granted leave to amend his pleadings to claim a constructive trust interest in 3115 Paden Road;

e. The property at 3145 Paden Road was to be listed for sale.

[251] In her Endorsement, Justice Blishen acknowledges Jaime’s obligation to pay the expenses as set out in Justice Shelston’s Endorsement and how he failed to do so. Justice Blishen made no mention of terminating these obligations under the Shelston J. Order.

[252] Jaime takes the position that after Justice Blishen made her order in September 2018, Jaime no longer had an obligation to pay the expenses relating to the house. He takes the position that the Blishen J. Order for support supersedes the Shelston J. Order to pay expenses. However, Susan continued to make the mortgage payments on the line of credit.

[253] Susan provided a list of arrears under the Shelston J. Order (Exhibit# 7) together with a statement from FRO as to the arrears of child and spousal support (Exhibit# 8).

[254] Exhibit #7 demonstrates that Jaime clearly ignored Justice Shelston’s order. He basically made no payments for hydro, cell phone, insurance and taxes. He made a few payments for internet and propane. The outstanding balance is $25,187.68. However, during her evidence, Susan accepted that Jaime had made a payment of $2,542 in November 2017 and agreed that this should be applied to Jaime’s arrears.

[255] In terms of child and spousal support after Justice Blishen’s order of September 2018, Jaime’s payments have been inconsistent, to say the least. He has never paid on a consistent basis and arrears at the commencement of trial were in the range of $11,461.02.

[256] In reading Justice Blishen’s order, it is clear that she was aware of the Shelston J. Order and the fact that Jaime was in default of his payment obligations. Her Endorsement was also made in the context of the matrimonial home needing to be sold as soon as possible, as Jaime’s failure to comply with the Shelston J. Order caused most accounts to be in arrears.

[257] At para. 43 of her Endorsement, Justice Blishen was also aware that the Shelston J. Order called for Respondent to make monthly payments in the range of $1,600 and confirmed that Jaime “continues to be able to pay approximately $1,600 per month in expenses.” She then ordered Jaime to pay $1,014 per month in spousal support and $528 per month in set off child support, all of which was based on an imputed income of $82,000 and on a without prejudice basis.

[258] The issue remains that the Justice Blishen Endorsement is silent as to Jaime’s ongoing obligation to pay $1,659 per month in monthly expenses. To assume that the Shelston J. Order continued would not be consistent with Justice Blishen’s finding that Jaime continued to be able to pay $1,600 in expenses. She certainly did not find that he could pay $3,200 in expenses. Justice Shelston’s order was a holding order pending further order of the court and that further order was the order of Justice Blishen.

[259] Conversely, the effect of Jaime’s position is that Susan would have to continue paying the mortgage payments on the line of credit and assume the $1,695 in monthly expenses while only receiving $1,542 in support. Such a result would leave Susan in a worse financial position that she was under the Shelston J. Order, which cannot be the effect of the Blishen J. Order as there would be nothing left to cover food, clothing or personal expenses, items that always form part of spousal and child support. In addition, child and spousal support are intended to include contributions to living expenses such items as hydro, insurance and taxes, which are common living expenses

[260] I come back to Justice Blishen’s clear intention that the parties were to sell the matrimonial home as soon as possible. Unfortunately, this did not happen for another nine months.

[261] The Court is left in the difficult position of trying to find a solution in the context of the Shelston J. Order and the Blishen J. Order. I conclude that the just conclusion is to calculate all arrears owing under the Shelston J. Order as of September 30, 2018. From that date onwards, child and spousal support was payable. I conclude that it was the intention of Justice Blishen to have the $1,542 in support replace Jaime’s payment of the expenses at $1,695 by expecting the house to sell as soon as possible. Given the long delay for the sale of the home, I conclude that both parties should be equally responsible for the expenses and mortgage payments under the Shelston J. Order for the nine months leading to the sale of the matrimonial home. Specifically, this applies to the $1,425 in mortgage payments and the $1,695 in expenses. I come to this conclusion accepting that there could be some overlap if Jaime is paying child and spousal support and also contributing to the expenses of the matrimonial home. In all the circumstances, it continues to be reasonable to have Jaime pay his equal share of those expenses but not on a proportionate basis. I find this approach to be reasonable in all the circumstances.

[262] When considering Exhibit #7 together with Exhibit #48 – being the List of Payments made by Susan on the line of credit – these documents suggest that Susan was in arrears on her obligation to pay $1,424 per month by $6,342.96. These arrears were not challenged by Susan. However, Susan’s arrears would only be relevant to September 2018. After that date, the parties will share in the liabilities associated with the matrimonial home. Both parties will receive a credit against their share of those expenses in line with the payments that they have made as shown on Exhibits #7 and #47. If the parties are unable to agree on those adjustments, I will remain seized of that issue.

Medical Expenses

[263] Jaime claims reimbursement for medical expenses for himself and Chloe. In respect of Chloe, it is unclear what was submitted, what coverage existed and for which claims Susan received reimbursement. These amounts have been dealt with above as s. 7 expenses.

[264] As for Jaime’s claim for medical coverage, he was taken off Susan’s family health coverage at some point. On June 20, 2019, Justice Maranger ordered that Susan reinstate Jaime on her health coverage provided that there was no cost to her or that he pay any costs. It is not clear from the evidence if there was any such cost or if he was reinstated, but I assume that he was. Also, it is unclear if the amounts listed on Exhibit #46 would have been covered by the health coverage or affected by the maximum annual amounts. As can be seen from the date of the claims, they begin in February 2018. However, the motion before Justice Maranger proceeded on June 13, 2019. I conclude that Jaime did not take reasonable steps to submit his claims to the insurer and find out early in 2018 that his coverage had been terminated. The issue could have been resolved much sooner. Also, he did not lead proper evidence to demonstrate what expenses would have been covered and in what percentage. I reject his blanket contention that Susan must pay 100% of those expenses.

[265] Given the questions surrounding coverage and Jaime’s inaction, these claims are dismissed.

Restraining Order

[266] Susan has requested a restraining order. No draft order was provided of the exact terms that are sought.

[267] The evidence surrounding Susan’s claim for a restraining order came principally from Susan and Brooke Davidson. They both testified about how Jaime would frequently come by the matrimonial home, shout obscenities and at times make threats. They also testified to Susan’s subjective fear of Jaime.

[268] Some of the evidence relied upon was Jaime’s use of construction-type spray paint and how similar spray paint was used to write a very obscene word on the side of Susan’s SUV (see Exhibit #6). Jaime denied doing this but said he thought he knew who did it, a cryptic answer. He denied ever referring to Susan as this derogatory term before. Exhibit #50 suggests differently.

[269] Although Susan was not able to establish on a balance of probabilities that Jaime was the person who spray-painted that word on Susan’s SUV and slashed her tires, Jaime’s behaviour during the matrimonial dispute and his lack of credibility in denying that he had ever referred to Susan in that way before leaves the court with the strong impression that he was somehow involved in the heinous act of spray-painting the side of Susan’s vehicle and slashing her tires.

[270] Susan relied on the numerous police complaints made by Susan against Jaime. This also included actions of Jaime driving by the matrimonial home and shouting obscenities and blocking in vehicles with heavy equipment. She agreed that there were no direct threats on her life.

[271] However, as previously stated in this decision, Susan was also involved in various steps to hinder or frustrate Jaime. I note the challenges that Jaime faced with heat and hot water to the construction shed, as well as the access issues with some areas being blocked off. While Susan’s actions were not as bad, she did play a role in the conflict.

[272] Susan testified that she and Brooke did not feel safe with Jaime being in proximity to the matrimonial home and that they took steps such as having Dennis Hart stay with them for two months.

[273] I also accept the evidence of Brooke Davidson who was credible in her description of the genuine fear felt by Susan in respect of the risk of violence by Jaime.

[274] When considering the judicial requirements for a restraining order, there is a need for both subjective and objective fear. I agree that prior to the sale of the matrimonial home, Jaime’s actions were unacceptable and fuelled the conflict. He attended at the property on numerous occasions in an attempt to intimidate Susan and I accept that Susan had a legitimate subjective fear that Jaime would harm her. That fear was objectively reasonable prior to the sale of the matrimonial home.

[275] However, a restraining order is a criminal order with serious consequences. Since the sale of the matrimonial home, the objective reasonability of the fear has diminished.

[276] Section 46 of the Family Law Act allows a court to make a final restraining order against Jaime if Susan has reasonable grounds to fear for her own safety or for the safety for a child. A restraining order may restrain a person from, in whole or in part, directly or indirectly contacting or communicating with Susan or from coming within a specified distance of Susan.

[277] As indicated above, the threshold for obtaining a restraining order is that the applicant “has reasonable grounds to fear for his or her own safety or for the safety of any child in his or her lawful custody”. In McCall v. Res, 2013 ONCJ 254, Spence J. granted the applicant’s request for a s. 46 restraining order after he reviewed prior cases from which he concluded that the fear must be reasonable; the fear may be entirely subjective so long as it is legitimate; and the fear may be equally for psychological safety, as well as for physical safety. This analysis has been supported by the Court of Appeal for Ontario in Tiveron v. Collins, 2017 ONCA 462.

[278] My review of the evidence of Susan and Brooke Davidson is that Susan’s fear of Jaime, while subjectively legitimate prior to the sale of the matrimonial home, has changed over time. The acts complained of that supported Susan’s subjective fear turned on Jaime’s accessing and returning to the matrimonial home, a property which is now sold. Furthermore, this decision will confirm that Jaime has no interest in the property at 3115 Paden Road. He will have the opportunity to remove the hunt camp provided that the timing and manner is agreed to in writing amongst the lawyers. After that, he will have no reason to return to that property. Finally, the jointly owned property at 3145 Paden Road will be sold and I will oversee any dispute in the sale process unless the parties agree to have this done by an Associate Judge.

[279] Consequently, the circumstances that brought Jaime to repeatedly return to the Paden Road properties have changed and my assessment of the evidence is that Susan’s subjective fear of Jaime has also changed. With the sale of the matrimonial home and confirmation of Jaime having no interest in 3115 Paden Road, contact between the parties should be significantly reduced. Also, there have been no recent or ongoing threats that would warrant a restraining order. My assessment of the evidence is that Susan’s fear is no longer objectively reasonable. Susan’s request for a restraining order is dismissed.

Charging Order

[280] Susan seeks a charging order but did not specify against what assets or property until she provided her draft order at the conclusion of the trial. She seeks the charging order against Jaime’s interest in 3145 Paden Road, 301 Firlane, Kemptville, Ontario and 6788 Third Line Road, Kars, Ontario.

[281] A charging order, under s. 9 of the Family Law Act, is meant to secure an equalization or other payment as determined on the property issues. In this case, the Comparison of NFP Statements has Susan claiming an equalization payment from Jaime of approximately $32,000. Conversely, Jaime is claiming an equalization payment of approximately $129,000 from Susan.

[282] Section 34(k) of the Family Law Act also allows for a charging order to secure a support payment. As under s. 9, the remedy is discretionary. There are several factors to consider, such as inability to handle money and improper conduct regarding support payments: see Kumar v. Kumar (1988), 63 O.R. (2d) 572 (H.C.J.).

[283] The evidence in these proceedings has demonstrated that Jaime is either unable or unwilling to comply with the support orders made to date. The order of Justice Shelston was a holding order and was meant to allow the parties to share expenses pending proper support being determined. Jaime essentially ignored this order and Susan was left trying to pay the expenses on her own. Next, the support orders of Justice Blishen have seen a significant lack of compliance with inconsistent payments and this is with Jaime being imputed an income that will be less than the amount imputed in this decision. Jaime has been unwilling to comply with the support orders and was in arrears of over $11,000 at the time of trial.

[284] I conclude that Jaime’s interests in 3145 Paden Road, 301 Firlane Road and 6788 Third Line Road should be subject to charging orders under both ss. 9 and 34 of the Family Law Act to secure Jaime’s possible equalization payment and his support obligations that are in default.

Summary

[285] As is evident from the findings made in this decision, the parties must now recalculate many items such as the equalization payment, the income available for support purposes, child and spousal support arrears and spousal support going forward. I shall remain available to resolve disputes. Also, it may be possible that some issues raised, particularly by the accounting experts, have fallen through the cracks. I may be addressed on any such item if required.

[286] I therefore summarize the matters on which I have adjudicated:

i. A divorce order shall issue upon filing of a proper Affidavit for Divorce;

ii. The areas of dispute in the Comparative Equalization of Net Family Property are resolved as follows:

1. Jaime’s cross-application for a 50 percent interest in 3115 Paden Road is dismissed;

2. The net value of the Hunt Camp presently located on 3115 Paden Road is $10,000 and Jaime will have the opportunity to remove the hunt camp from Susan’s property as agreed to in writing by counsel or as ordered by the court;

3. Jaime’s interest in 3145 Paden Road, 301 Firlane Road and 6788 Third Line Road will be subject to a charging order pursuant to ss. 9 and 34 of the Family Law Act.

4. The property at 3145 Paden Road shall be listed for sale and this court or an Associate Judge will be available in the event of a dispute.

5. The value 1618203 Ontario Inc. at the date of separation shall be determined as per the various decisions made by the court including:

a. The value of the Malakoff Road property is $323,000.

b. The value of the equipment of 1618203 is $290,027.

c. The value of the Accounts Payables is $104,525.

d. The value of the embedded tax will be recalculated by the accounting experts, and I will remain available to resolve any outstanding disputes.

e. The value of 1618203 shall be increased by $61,300 to account for the sale of the excavator in May 2017.

6. Jaime’s debt for HST is fixed at $76,488.48.

7. The outstanding taxes for Cedar Beach Road are $980.12.

8. Jaime retains the credit card debt as a personal debt on the valuation date.

9. The Due to Shareholder Account for the purposes of the NFP Statements shall be $105,594.

10. Susan’s credit card debt is fixed at $8,534.68.

11. The notional commission and legal fees for 3145 Paden Road is to be shared equally.

12. The mortgage for Firlane Road is $171,817.

13. There shall be no notional tax for the RDSP.

14. There shall be no notional commission and legal fees for 3115 Paden Road.

iii. Jaime’s income for support purposes shall be recalculated based on the various findings made by the court grounded in the differences noted in Exhibit #67 plus an imputed income of $25,000;

iv. Child support for Brooke Davidson shall be calculated from January 1, 2018 to August 31, 2020 as set out herein and child support for Chloe Davidson shall be calculated from January 1, 2018 to October 31, 2019;

v. Susan is entitled to spousal support of an indefinite period commencing on January 1, 2018, subject to a material change in circumstance;

vi. Income for support purposes is to be recalculated as per the findings made in this decision;

vii. Section 7 expenses (medical expenses) for Chloe shall be shared proportionately after deducting any amounts received directly by Susan from her insurer. Jaime’s share of any amounts already paid to Susan shall be paid to him;

viii. Child and spousal support arrears are to be recalculated.

ix. The arrears from the Temporary order of Justice Shelston shall be recalculated to September 2018 based on Exhibits # 7 and #48. After that date and until July 2019, the expenses for the matrimonial home shall be divided equally with each party being credited for the payments already made as per Exhibits #7 and #48.

x. Susan’s request for a restraining order is dismissed

xi. This court will resolve any disputes in the wording of the Final Order, as the parties have taken very different approaches in their respective drafts.

Costs

[287] The parties shall have the opportunity to make written submissions as to the costs of this trial and the costs thrown away following the commencement of the trial in December 2020 before Summers J. Those costs submissions should be made once the parties have dealt with the recalculation of figures, values and their respective NFP Statements and once the terms of the Final Order have been determined. This may or may not require the court’s intervention. If the parties are unable to agree on a timetable for the delivery of their costs submissions when the outstanding matters are complete, they may contact me for assistance.

Justice Marc R. Labrosse

Released: September 08, 2022

COURT FILE NO.: FC-17-2483

DATE: 2022/09/08

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

SUSAN FAYE DAVIDSON

Applicant

– and –

JAMES DOUGLAS DAVIDSON

Respondent

REASONS FOR JUDGMENT

Justice Marc R. Labrosse

Released: September 08, 2022