COURT FILE NO.: FS-18-2260 DATE: 20230221 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
DEBORAH CONSTANCE NOBLE Applicant – and – RUI LUIZ GATO CURVEIRA Respondent
Dana Cohen, for the Applicant Jessica Brant, for the Respondent
HEARD: January 30, 2023 to February 3, 2023 and February 6, 2023.
fl myers j:
Reasons for Decision
Background
[1] The parties were married in 1996. They separated on April 30, 2014. They were both born in 1969. So, they were 26-27 when they married; 44-45 when they separated; and both are 53 today.
[2] The parties have three children. Eldest child, born January 24, 1999, is 23 today. Middle child, born November 25, 2002, is 20 today. And Youngest child, born May 18, 2005, is 17 today.
[3] To their credit, the parties have resolved their parenting issues. Since the time of separation, the parties have shared parenting time equally on a week-about basis.
[4] The Eldest child is now an independent adult who lives with the respondent. Middle child is in university. Youngest child is still in school and lives with her parents on their agreed schedule.
The Issues
[5] The applicant seeks a modest equalization payment, contribution towards s. 7 expenses already paid by her, and contribution towards the post-secondary expenses of the two younger children going forward.
[6] The applicant’s role in this trial is principally defensive. She would likely be happy with a dismissal of all her claims provided that all of the respondent’s claims are dismissed.
[7] The respondent seeks: retroactive spousal support, retroactive child support, and contributions toward s. 7 expenses, if any, to be based on the parties’ relative incomes. For all income-based claims, he asks the court to impute income to the applicant and to decline to impute income to him.
[8] The respondent also seeks an order requiring the applicant to pay him 50% of the carrying costs of the jointly owned matrimonial home from the date of separation to the time that he bought the applicant’s interest in 2019. In the equalization calculation, the respondent asks for recognition of a negative valuation for his business, recognition of a $150,000 loan from his mother, and exclusion of his Facebook shares as a birthday gift from his mother.
The Respondent’s Income
[9] In 2008, the respondent was laid off from his job as a graphic designer with TVO. In that position, he had been earning between $73,000 and $84,000 per year.
[10] The respondent has not applied for a job since being laid off from TVO in 2008.
[11] To replace his income, the respondent received and continues to receive regular gifts from his mother. The respondent is an only child. It is admitted in the parties’ affidavits and in their cross-examinations, that the gifts started shortly after the respondent lost his job. They were received regularly and were used, and were intended by all to be used to replace the respondent’s contribution of earnings to pay the family’s expenses.
[12] In her affidavit evidence in chief, the respondent’s mother testified:
I provided the Applicant and Respondent with various amounts of monthly deposits to help them with their daily living (more so for my grandchildren) because they were struggling financially.
[13] As to quantum, the respondent calculated that from the beginning of 2010 to the date of separation 3 1/3 years later, the respondent received about $330,000 from his mother. The amounts were forwarded in small but regular transfers of a few thousand dollars several times per month as the respondent approached his mother with household and family-related bills that he needed to pay.
[14] Conveniently, $330,000 paid over 3.3 years amounts to almost exactly $100,000 per year on average.
[15] The respondent quickly discovered that he could make more from his mother than by working. Moreover, as the respondent’s mother provided him with gifts, the funds were received tax free. The respondent would have had to earn something closer to $200,000 to yield the $100,000 in after-tax income that he was receiving from his mother. [1]
[16] In 2009, the respondent decided to try his hand at business. He bought a truck and decided to haul junk and waste. It is 14 years later, and he has yet to earn any material net income from his “business”. As the truck is no longer operational, the respondent conceded at trial that his business has probably now failed.
[17] The respondent says that the applicant agreed and encouraged him to start the business. She volunteered that a start-up business could take three to five years to become established. Yet, he laments that after four years, she left him and, he says, by doing so, she permanently defeated his ability to succeed in the business.
[18] In actuality, the respondent never really started a business as far as I can tell. He had no employees. He had no plan. He put magnetic ads or name plates on the truck doors to advertise his business name. But they fell off on the highway. He spoke to workers at construction sites, he says, and put pamphlets on cars at Home Depots. But none of that worked to drum up business.
[19] From 2009 to the date of separation (and since then as well) the respondent made no sustained effort to develop a business, to find customers, or to earn regular income.
[20] The respondent says that he hoped to do one or two jobs a day. He gave no evidence of the economics of that hope. It does not sound like a business that could ever make material profit on that low volume.
[21] But the respondent also says that he did not advertise on the internet because he did not want to attract more business than he could handle. He says that if he got too busy, it would impair his ability to provide customer service and succeed.
[22] In fact, being too busy was never a real risk. The respondent gave no evidence and provided no documents to show that he ever took any steps to truly make the proposed business a going concern. Apart from the baldest of contradictory assertions, he did not prove that he invested any money in the start-up of the business (as will become relevant below). In fact, his testimony in cross-examinations is that when he did earn some revenue, it was typically through other pet projects in which he dabbled at different times rather than from hauling junk.
[23] In her affidavit, the respondent’s mother testified:
I am currently 89 years of age. I am originally from Portugal and moved to Canada permanently in 1972 with my husband, namely, Vasco, the Respondent's father. My husband passed away when he was 91 years of age.
When we moved to Canada, we both had worked very hard for what we had. It was not always easy but we did not give up. We have always instilled in our son to stick to the plan and hard work will pay off.
Aside from our career and life goals, our son always came first. Now that I have grandchildren, they come first. [Emphasis added.]
[24] Unfortunately, the plan instilled by his parents’ devotion to which the respondent sticks and works hard is to live off his mother’s generosity and her unlimited financial commitment to him and the children. He has no other plan and does not work hard at anything else.
[25] The respondent’s mother gave evidence at the trial. She says that she believes her son works hard at the business. That is what he tells her, and she believes her son unreservedly. She blames his business failure on the applicant’s profligate spending, a lack of spousal support from the applicant, and the economy – principally COVID-19. She was forced to concede under cross-examination, that neither the applicant’s spending nor spousal support had any bearing on the respondent’s ability to invest time and effort to earn revenue in his business had he wished to do so. While she does not see herself as enabling her son’s indolence, she did accept that she has and continues to provide funds for him to meet his business and personal expenses at his request.
[26] As to COVID-19, it comes far too late in the day to think it had any real impact on the success or lack of success of the business. I find that the period from 2009 to March, 2020 was far more than enough time for any reasonable person to conclude that a fledgling junk business had not succeeded. It had no plan, no advertising, no employees, and, of greatest significance, no owner committed to establishing a successful enterprise. I do not see any evidence that the respondent was willing to work an honest day’s work let alone put in the sweat equity and effort to actually develop a business in a notoriously competitive industry with minimal barriers to entry.
[27] The respondent was not deliberately under-employed, however. He was employed at his highest and best use. He had no way to earn nearly so much money by working at a conventional job as he could earn by taking funds from his mother. So that is what he was incented to do; and it is what he did and still does. It is no surprise that financial incentives drive economic behaviour.
[28] The imputation of the mother’s gifts to the respondent’s income is obvious on this case. Before the parties separated, all involved, including the respondent’s mother, knew and intended her generous gifts to be used to replace the respondent’s contribution of job earnings to the family’s coffers to meet living expenses.
[29] The respondent submits that the applicant should have cut her spending by 50% when he lost his job. He blames her continuing to lead the same lifestyle as “requiring” him to borrow from his mother. It seems to me that he has the cause and effect backwards.
[30] While the parties certainly could have and probably did have discussions about the quantum of their spending, the applicant maintaining the family’s lifestyle did not “require” the respondent to borrow from his mother. As but one alternative, the respondent could have looked for a job. But, as I have already found, it does not take a math whiz to conclude that the respondent never had a realistic prospect to earn the $200,000 before tax in the marketplace that he was effectively being paid by his mother’s non-taxable gifts of $100,000 per year. So, he made his choice and to the parties’ great good fortune, Mrs. Curveira allowed it and continues to do so to this day.
[31] I will deal below with the respondent’s submission that some of his mother’s advances were business loans that are to be repaid. I reject that characterization as it is inconsistent the actions of the respondent and his mother over the past decade and with their evidence under cross-examination.
[32] The support received by the respondent from his mother readily meets the tests for imputation as income in the case law. See: Bak v. Dobell, 2007 ONCA 304 and Korman v Korman, 2015 ONCA 578.
[33] The parties’ line 150 incomes since separation and the amounts of the gifts that the respondent admits to receiving from his mother are:
| Year | Line 150 Respondent | Gifts Admitted | Line 150 Applicant |
|---|---|---|---|
| 2014 | $13,457 | $51,511 | $123,941 |
| 2015 | $18,928 | $7,750 | $70,034 |
| 2016 | $20,855 | $24,000 | $210,222 |
| 2017 | $13,388 | $69,500 | $213,562 |
| 2018 | $42,357 | $61,900 | $120,416 |
| 2019 | $19,170 | $111,000 | $92,308 |
| 2020 | $14,481 | $90,000 | $120,416 |
| 2021 | $7,325 | $100,000 | $120,000 |
| 2022 | $11,315 | $80,000 | $120,000 |
[34] It is immediately apparent that if one doubles the amounts in the “Gifts Admitted” column to gross up the amounts for taxes, the respondent earned more than the applicant from and after 2018. He acknowledges this and limits his claims for retroactive child support and spousal support to the years 2014 to 2017. [2]
[35] In closing argument, counsel for the respondent advised that, on reviewing bank statements, it appears that the respondent received from his mother an amount closer to $38,000 in 2015 rather than the $7,750 to which he repeatedly swore his oath in successive financial statements and during the trial.
[36] I accept neither number. In a financial statement from November, 2014, just months after separation, the respondent swore to an annual budget of expenses for himself and the children of $133,000 for the upcoming year 2015. The respondent complains bitterly that the applicant left him to pay the full mortgage, taxes, and utilities on the matrimonial home. Plus, he concedes that he continued to eat at restaurants often as much as once or twice per day after separation. His credit card bills bear this out. Despite bearing additional costs on the house himself, the respondent’s standard of living remained the same after separation as before.
[37] The respondent says that he swore to the budget in late 2014 for the upcoming year of $133,000 because his lawyer told him to do so. He has had nearly a decade and at least three new lawyers since that time to correct his sworn evidence under oath. He has not done so. Moreover, there is no reason to believe that the respondent decreased his draws from his mother after separation. They were tracking at about $100,000 annually right up to the date of separation as I noted above. Moreover, his annual sworn budget for expenses was $92,000 in 2018 and $123,000 in 2020.
[38] During the trial, the respondent several times tried to blame prior inconsistent evidence on his lawyers. While lawyers’ might be expected to give advice to clients to budget generously if they hope to be net recipients of support, I do not accept that the respondent was told to and agreed to lie under oath to grossly exaggerate his expenses beyond his reasonable expectation. I find this not only because the allegations against prior counsel were first made at trial, but because the allegedly incorrect information was never corrected before trial, and it is not at all out of whack with the amounts of money the respondent routinely received from his mother for several years both before and after.
[39] The respondent had to meet his expenses in 2014 to 2017. His only source of income was his mother (apart from some relatively small sporadic drawings from his business reflecting non-hauling revenue received from specific projects). Even if budgeted expenses at $133,000 were on the high side and given that the respondent had some modest draws from his corporation in those years, he still needed at least $100,000 from his mother a year to make ends meet. Therefore, for the years 2014 to 2017, I impute income to the respondent of $200,000 annually in addition to his line 150 income for all the foregoing reasons.
No Imputation of Income to the Respondent
[40] After the parties separated, the applicant needed financial help. She borrowed $147,000 in the aggregate from her father during the period from mid-2014 to the end of 2016. She needed help setting up a new household for herself and the children. She had to pay first and last month’s rent. She needed furniture. Her father provided funds for capital expenditures in setting up her new place. He also provided additional funding for living expenses.
[41] There is no doubt that the respondent chose to live at an expensive location. It was near to the matrimonial home and commensurate with the parties’ prior standard of living. She too did not cut back. And she too was blessed with family who could help.
[42] But, unlike the respondent’s situation, the applicant’s father made only some time-limited advances until the applicant became self-sufficient in 2016. He kept track of all the advances. Moreover, the money was always to be repaid from the applicant’s inheritance. She has siblings. Her father required that his estate be equalized among his children. When her father passed away in 2020, the applicant’s share of the estate was reduced to account for the funds she had already received.
[43] The applicant had two extraordinary years in her commissioned sales job in 2016 and 2017. So, she did not need to borrow from her father after 2016. The respondent tries to make a point that the applicant bought some expensive art thereafter. However, as he is not entitled to support for those years, how she used her funds is not relevant.
[44] This situation between the applicant and her father was nothing like the relationship between the respondent and his mother. The respondent’s mother contributed to the family for five years before separation. Her funds were not tracked or accounted for. She knowingly provided income to the respondent to replace his regular employment earnings for the family.
[45] The loans from the applicant’s father were not income to the family or intended to preplace her earnings for family expenses. They were limited advances to help the applicant address the dislocation of separation and as she strove to fulfil her obligation to become self-sufficient. They ended in 2016 and were repaid.
[46] The respondent submits that the applicant failed to make adequate disclosure to prove the facts surrounding her relationship with her father. The respondent says that the applicant failed to produce bank statements and credit card statements despite court orders and even a costs order against her for dilatory disclosures. Moreover, the respondent says that the applicant did not produce her father’s will or the codicil to show that the funds she borrowed were actually required to be repaid.
[47] In cross-examination however, the applicant said that she had produced all credit card statements. This was not contradicted by evidence put to her. She says that the one bank account she did not fully disclose was dormant and inactive for years. She was not successfully contradicted on this point either.
[48] I am not prepared to disbelieve the applicant’s evidence about repaying her siblings or her father’s estate based on non-disclosure of the codicil. In fact, the best evidence would have been some form of accounting from the estate trustee(s) showing the actual flow of funds regardless of what a will or codicil might say. In any event, the parties told the trial management judge that there was no more disclosure required for the trial. The respondent had ample time to move if he wanted to try to go behind the applicant’s evidence on this point. He knew from an email between the applicant and her father that this was the position taken by the father while he was alive. Whether the email was admissible as evidence at trial or not, the respondent knew its contents and was not surprised at trial.
[49] The respondent expected the applicant to fund her share of family expenses from her work. None of the parties looked to the applicant’s father for family funding before separation. Post-separation temporary funding of a child in transition is not a basis to impute income before or after.
[50] I note that I do not believe every word of the applicant’s testimony. Her credibility was particularly challenged when it was suggested that she should pay funds to the respondent and her disdain for the respondent came to the fore. She flatly denied that a post-separation draw from the parties’ joint line of credit went to pay her credit card debt when it plainly did. Her memory proved inaccurate (to say the least) when she was asked to bear responsibility to pay for things she left with the respondent (like the joint line of credit and the post-separation matrimonial home costs). I have already mentioned her evidence that the respondent made no contemporaneous claim for support on separation when he did do so.
[51] But, nothing about the applicant’s evidence of repayment of her father’s loans strikes me as at all incredible. It was not challenged on cross-examination except by the assertion that she did not produce her father’s codicil. The substance of her evidence was not challenged and it is consistent with the common sense of the situation. In a multi-child family, with parents of limited means, I would expect there to be a reckoning where extraordinary advances are made to one adult child who is in need for a finite period after separation.
[52] Accordingly, based on the Bak and Korman criteria, these loans should not be imputed to the applicant as income.
[53] There could be one exception to allow imputation of funds provided before separation by the applicant’s father to pay one-half of the Eldest child’s private school fees. This looks much more like a regular gift to contribute to the family’s expenses. However, as discussed below, it would not make a material difference.
No Net Set-off Child Support or Retroactive Spousal Support
[54] I find that the respondent’s income for support purposes was the same at the applicant’s income in 2017 and well above her income from 2014 to 2016.
[55] It follows then that there was no net set-off child support payable to the respondent for any year under s.9 of the CSG.
[56] I understand that the respondent submits that he should not be charged with any imputation of income for funds that paid what he views as the applicant’s share of matrimonial home expenses post-separation. Similarly, if an imputation is made for the applicant’s father’s funding of the private school (as it already is for the respondent’s mother), perhaps the applicant’s income would be slightly larger than his in 2017. But even if that were true and these adjustments were made, the respondent would owe far more in set-off child support to the mother over the four years in issue from 2014 to and including 2017. A reduction from imputation for the applicant’s “share” of matrimonial home expenses and a private school fees would not make a material difference in at least two of the four years in which the respondent’s imputed income dwarfs the income of the applicant.
[57] In any event, there is no circumstance in evidence in which it would be fair or reasonable to reach back to 2014 to 2017 to require payment of child support. The reality is that the respondent could have had any income he chose over those years. To make fine adjustments in 2023 to drive a mechanical calculation to retroactively require payments now ignores the reality of the situation. The applicant was borrowing from her father for three of the four years. To retroactively find that she should have borrowed a bit more so the respondent could have taken less in gifts from his mother serves no purpose under the Divorce Act. The children were well looked after in both homes.
[58] As to spousal support, while I accept that a spouse should not be required to look to family where the other spouse ought to be obliged to pay support, that is not what happened here. As discussed above, the respondent dealt with his economic relationship with his mother as if she was his source of livelihood for the family well before separation. He continued thereafter. Separation caused him no need for spousal support as compared to the day, month, year, or five years before separation. He lived in the same house, managed (or did not bother to manage) his business the same as before, treated himself, his mother, and the children to food at restaurants after separation as before. His standard of living did not change appreciably while drawing his income from the same source for his livelihood.
[59] Neither has the respondent shown that he suffered any deprivation in his earning capacity as a result of the marriage. The applicant took maternity leaves with all three children. The respondent may have split the leave with the Middle child. After ceasing full-time employment, the respondent picked up the children from school. He testified that he arranged business meetings around his childcare. He resisted the applicant’s desire to put the children in daycare after school. He was not able to show that he lost a single piece of business due to any family responsibilities. Given his very limited goals of hauling one or two loads per day, the respondent had ample time to spend on other pursuits without affecting his business at all.
[60] Yet, while the applicant continued to work full-time and the respondent did not, it was still the applicant who took the children to medical appointments. The respondent says that it was her benefits plan that paid so she took them. Of course, no one pays for necessary medical care in Ontario. But even for partially covered or uncovered medical expenses, I fail to see how the identity of the party whose benefits plan covers the expense has any bearing on which spouse bears the childcare responsibility. In fact, in an old-fashioned single working spouse family, the stay-at-home parent would be expected to have childcare responsibilities while the employed parent carried the benefits plan. In other words, the respondent did not carry a traditional stay-at-home spouse’s load. That was not the role he filled.
[61] The marriage and break-up did not affect the respondent’s earning capacity at all. I do not see this as a case for spousal support even before considering whether retroactive support might be ordered for 2014 to 2017 at this late date.
Equalization
[62] The parties filed jointly a Comparison of Net Family Property Statements that was marked as Exhibit 10. They identified several items in dispute in red printing in the exhibit. I will resolve each dispute and leave it to counsel to run revised equalization numbers as a result.
(i) Leased vehicle
[63] The applicant sought to have the respondent include $4,995 for a car he was leasing at the date of separation. No evidence was presented as to the value of equity amassed by the respondent in the leased car, if any, at the separation date. I see a reference in Exhibit 10 to an attached document that bears on the issue. However, the applicant objected to the attachments being admitted as evidence without proof. Therefore, she cannot rely on those documents either and her counsel properly did not purport to do so.
[64] Accordingly, I find that no value is to be included by the respondent for a leased car.
(ii) RBC Shares
[65] The respondent valued his RBC shares at $72,032.90 based on advice he received from an advisor. The applicant did not provide any evidence for a different value that she alleged. I accept the respondent’s valuation.
(iii) The Value of the Respondent’s Corporation
[66] The respondent’s business had no proven value at the separation date. The business is in a corporation whose shares are wholly owned by the respondent. The value of his shares and any debts owing between the respondent personally and his corporation need to be recognized on his financial statement. However, the assets and liabilities of the corporation are its own. They do not belong on the respondent’s valuation of his property except to the extent that net equity, (the difference between corporate asset and liability values) should be part of the value of the respondent’s shares (assuming that a valuation was available at the relevant date).
[67] There is no basis in evidence to find that the corporation had any value as at April 30, 2014. The truck had immaterial value and the corporation had net debt to the respondent far in excess of any possible value of the truck. There is no valuation in evidence. While the burden was on the respondent to value the business, it is apparent from his testimony that the corporation had no goodwill (i.e. no value beyond its tangible assets net of liabilities based on trade connection, IP, reputation, or some identifiable ability to bring in revenue as a going concern that should be capitalized as an asset). I accept the nil value ascribed by the respondent.
[68] The $1,500 value for the truck/trailer should not be included in the respondent’s assets. It is not the respondent’s asset.
(iv) Business Debts
[69] The four business debts shown on page 6 of Exhibit 10 should be removed. They are not the respondent’s debts. They are debts of the corporation that factored into share value (of nil).
(v) The Shareholders’ Loan due to the Respondent
[70] The loan owing to the respondent of $78,665 set out in s. 1 (f) “MONEY OWED TO YOU” on Exhibit 10 is the quantum of the shareholders’ loan account owing to the respondent by the respondent’s corporation as at the valuation date. The respondent used the shareholders’ loan account to remove funds from the corporation with tax efficiency. Over the next year or two, the respondent did draw on the shareholders’ loan account. So, although the corporate shares had zero net value as at April 30, 2014, the shareholders’ loan was not a total write-off. A reasonable person looking at the corporation and its business, such as it was, would see that to the extent that the business limped forward and could earn a few dollars of net income in the foreseeable future, the shareholders’ loan account could be used to distribute funds to the respondent on a tax-free basis. In the absence of an expert providing a basis to discount the value of the shareholders’ loan as at the valuation date in whole or in part, it seems to me that it is properly recognized as an asset by the respondent as he claims at the bottom of page 6 of Exhibit 10.
(vi) The $150,000 Alleged Business Loan and Promissory Note
[71] The respondent claims that he personally owes a business loan to his mother of $150,000. This alleged debt first appeared in the respondent’s sworn financial statement prepared for the trial. He says that he disclosed the loan to his lawyers throughout, but they told him that until it could be proven in writing he should not mention it in his prior sworn financial statements.
[72] In 2020, the respondent disclosed a form of promissory note dated May 25, 2010 between himself and his mother in which his mother is said to have loaned him $150,000 for business purposes. The respondent says that his mother had the note in her safe deposit box and then in a pile of materials at home. He only found it in 2020. But in his sworn financial statement of June 3, 2020, he still did not claim the debt. The closest he came was in his treatment of the shareholders’ loan account for which he swore:
The company owed a dividend of $69,722.00 for 2013 calendar year (listed as "due to shareholder" on the company's balance sheet). While [the respondent] is the company's only shareholder, these are funds to be payed [sic] to the Respondent's mother. She has been advancing funds to the company to keep it afloat.
[73] Again, the respondent blamed his lawyer for not claiming the debt even after the promissory note had been located. He also blamed his lawyer for mixing up the shareholders’ loan account that was due to the respondent and the fact that he had allegedly personally borrowed money from his mother to fund the company.
[74] Both the respondent and his mother gave testimony that in May, 2010, they agreed to a $150,000 loan evidenced by a promissory note to fund the respondent’s business start-up costs. Neither of them mentioned the loan to the applicant. The loan bore no interest and, by its terms, the loan was not due for ten years or until demand on 90 days’ notice.
[75] Both the respondent and his mother agreed in cross-examination that Mrs. Curveira did not advance $150,000 to the respondent when the promissory note was signed.
[76] There is no evidence of the respondent incurring any start-up costs for his hauling business apart from buying his used truck. I do not know what he paid for it. But in his Amended Answer from May, 2022, Mr. Curveira pleads that the start-up costs for the business that he paid were $10,000.
[77] It is apparent that there was no $150,000 loan for the business. The respondent’s evidence was that after May 25, 2010, he viewed the next $150,000 of regular transfers from his mother for family expenses as comprising the business loan evidenced by the promissory note. But the regular advances were gifts funding the family. Neither the respondent nor his mother kept track of any of the funds as may have been used for the business (if any). If money was funded into the business by the respondent that originated with his mother, the shareholders’ loan account does not show it. I was not shown proof of a single dollar of the respondent’s or the mother’s funds actually being paid to the company.
[78] When reminded that he pleaded that start-up costs for the business were $10,000 and not $150,000, the respondent testified that he regarded the $10,000 as an investment he made before the $150,000 was borrowed. Then he suggested that perhaps it was the first draw towards the $150,000 after the promissory note was signed. He had no idea how to reconcile his own evidence because there was no business loan per se. Mrs. Curveira gave her son the funds he asked for when he asked. He used them as he pleased.
[79] Even the June 20, 2020 sworn financial statement does not help the respondent in this regard. Instead of evidencing a $150,000 loan from mother to son in 2010, the respondent swore that the company is indebted to his mother because “[s]he has been advancing funds to the company to keep it afloat.” That sounds like there might have been some ongoing funds being advanced from mother to the corporation over time. It is not evidence or support for a $150,000 loan from mother to son in 2010 for business purposes.
[80] When the loan allegedly came due in 2020, Mr. Curveira says he asked for a five-year extension and his mother agreed. He says that he intends to pay her back as soon as this case is over when he will know what money he will be getting from the applicant.
[81] Both the respondent and his mother testified that it is fundamentally important to them that the respondent pay his mother back for his business loan. I do not accept that evidence. The respondent has over $500,000 in Apple Inc. shares. They split numerous times and have been a fantastic windfall to the respondent. He could have repaid his mother any time he wished to do so by selling some of his shares. But Mrs. Curveira confirmed in her evidence that she did not want the respondent to sell his Apple shares to pay her.
[82] Similarly, the respondent has insisted on staying in the matrimonial home. He increased his mortgage by more than $450,000 to buy out the applicant in 2019. He concedes that he knew that he could not possibly afford the new increased monthly mortgage payments except with more funds to be drawn from his mother. He could have sold the house to repay her instead of greatly increasing his reliance upon her. But neither of them wanted him to have to sell the house to repay the loan either.
[83] In making gifts to the respondent over the years, Mrs. Curveira agreed in cross-examination that she made no distinction between funds she gave to the respondent for business or for personal use. The various gifts are all indistinguishable.
[84] In fact, despite swearing to the importance of repayment of the $150,000, Mrs. Curveira agreed in cross-examination that she would never make demand on the alleged loan. The respondent is her only son. She would not do that to family. Moreover, she said she prefers to watch him enjoy her money with the children while she is still alive.
[85] I can do nothing but appreciate Mrs. Curveira’s devotion and generosity. She is free to deal with her money as she wishes. But, assuming that the parties actually signed the promissory note in 2010, I find that it did not evidence bona fide indebtedness. There is no evidence of any funds ever being advanced under the promissory note for business start—up or other business purposes. Moreover, all funds advanced by Mrs. Curveira to her son from 2009 to date have been gifts. There is no binding agreement for there to be any loan advanced or repaid. There are any number of good business planning reasons why a promissory note could have been signed in 2010 (assuming that it was signed then). But creating an actual, legally binding debt, was not the parties’ intent or the result.
[86] No debt is to be recognized on the financial statements owing from the respondent to his mother at the valuation date.
(vii) Notional Costs of Disposition
[87] The applicant and respondent disagree by about $1,500 as to the likely disposition costs of the respondent’s RRSP and LIRA. I find that the respondent’s estimate is reasonable.
[88] The respondent claims 20% for notional costs of disposition for his RBC shares.
[89] I know that realizing on registered accounts runs into withholding taxes and can incur significant costs depending on the terms of the accounts. So, with the parties pennies apart on the notional costs of the registered accounts, I accepted the respondent’s estimate as reasonable.
[90] But I do not understand why the same 20% estimate would apply to notional disposition costs of the respondent’s RBC shares. They are just shares in his name. There may be broker commission I suppose. But I have no idea of what, if any, tax consequence there may be on the disposition. With the respondent’s line 150 income for the past two years being very modest indeed, the likely outcome of the taxation of any capital gains on the shares (if any) needs proof by evidence. I cannot just accept an arbitrary number that is not agreed by the applicant without any evidence or justification.
[91] Accordingly, I find that the notional costs of disposition of the LIRA and RRSP are properly claimed at $21,024.74. I find that the respondent did not prove any notional disposition costs for his RBC shares.
(viii) Facebook Shares
[92] The respondent and his mother testified that she expressly gave him $5,000 for his birthday to buy Facebook shares. The funds transited through a joint account between the parties before being used as intended to buy the shares by the respondent. I do not accept the applicant’s claim that just because the funds went through a joint account, the mother’s intent to gift the shares to the respondent was defeated.
[93] The transactions happened in a matter of weeks. The mother’s evidence was that this was the only time the respondent ever asked her specifically for shares as a birthday present. There was no basis to disbelieve her evidence. The applicant is being too opportunistic.
Post-Separation Adjustments on the Matrimonial Home
[94] The respondent seeks reimbursement for one-half the mortgage payments, taxes, and insurance that he paid on the matrimonial home from the date of separation until he bought the applicant’s share in 2019. He lived there after separation and paid no rent. The applicant says she had no money to pay towards the house, so she wanted to sell it. She claims the respondent held her share of the equity in the home captive while she had to set up a second home for herself and the children. She was therefore quite content leaving the respondent to pay her share of the costs of the house.
[95] This is an area in which I do not accept the applicant’s testimony. Her denial of responsibility was inconsistent with her recognition of her responsibility to contribute towards the house early on. As I noted above, the area in which I had the most problems with the applicant’s testimony was when her disdain for the respondent’s financial circumstances shone through. This was one such area.
[96] But, although I accept that the respondent likely had liability for her half of the house expenses post-separation, she also had a claim to sell the house or to impute some rent to the respondent. Regardless of the relative strength of these competing claims, the parties agreed to settle them.
[97] By letter dated Nov. 1, 2018, the respondent’s lawyer, at that time, made an offer on the house and added terms that the respondent would not pursue the post-separation house costs and the applicant would not pursue imputed rent. Although only the house sale terms were formalized in transaction documents, both parties agreed on the witness stand that they had agreed. The respondent said that he was pursuing the issue only because he understood the applicant to be pursuing imputed rent. Well, she agrees that can’t and she isn’t.
[98] Now is not the time to be re-opening done deals. It was not papered as it was apparently lost in the shuffle when the respondent changed counsel. I find that the parties settled the post-separation adjustment issue for consideration, so it is no longer a live claim.
Section 7 Expenses
[99] The applicant seeks reimbursement for a share of the s. 7 expenses that she incurred for the children for: orthodontics, dental care, eye care, YMCA after-school care, YMCA summer camp, mental health counseling, piano lessons, vocal lessons, Presto cards, and driving school.
[100] For the most part, the applicant did not give notice or seek consent of the respondent to programs in which she enrolled the children. For example, she ensured that piano lessons for the Middle child would only be held bi-weekly so as not to interfere with the child’s time with the respondent.
[101] When she did consult the respondent, the applicant expected to be turned down and the respondent did not disappoint. The respondent says he could not afford summer camp. He opposed after school care because he was available. The applicant proceeded as she wished without input from the respondent.
[102] In light of the absence of assent, I view none of the expenses listed above as reasonable or necessary except dental, orthodontics, and eye care. Like it or not, the respondent knew the children needed health care. In all however, after recovering from her health plans, the amounts involved are both stale and immaterial. Moreover, I cannot give an accurate percentage split for the reasons discussed previously. I could do some math to add the imputed income and deduct out some pieces as claimed by the respondent and then compare year-to-year with the applicants’ line 150 income. But the result is still arbitrary because it turns on how much the respondent chose to ask his mother to give him at any given time.
[103] The reasonable outcome, subject to future university costs discussed below, is for there to be no reimbursement of past s. 7 expenses. Call it a wash with the post-separation adjustments on the matrimonial home.
[104] The Middle Daughter is still in university. The respondent says she is an adult and should be responsible for herself. While she took some time off to deal with mental health issues, she is now pursuing her first degree and I find that she is still a child of the marriage. Her expenses have been largely paid by OSAP and the parties’ RESP. However, the applicant incurred $2,555 moving her in for school this year. This is a s. 7 expense, and it should be split 50/50 as that is both fair and the way in which the parties have dealt with education expenses previously.
[105] Similarly, if the Youngest child goes to university, to the extent that her costs are not covered elsewhere, the parents are equally liable to split reasonable costs of education, room, and board. No costs may be claimed for reimbursement if notice of at least two weeks is not provided to the other parent to allow him or her to agree or to propose reasonable alternatives. If the parties cannot agree one parent may make a proposed payment without prejudice to her or his right to seek reimbursement from the other.
Order
[106] This Court orders:
a. The respondent’s claim for retroactive spousal support is dismissed; b. The respondent’s claim for retroactive child support is dismissed; c. Equalization is to be calculated from the agreed entries in Exhibit 10 and: i. no value for the respondent’s leased vehicle; ii. a value of $72,032.90 for the respondent’s RBC shares; iii. no value for the respondent’s shares in his corporation; iv. the respondent’s corporation’s truck and business debts are to be removed from the calculation; v. the corporation’s shareholders’ loan due to the respondent is to be included with a value of $78,665; vi. No loan due by the respondent to his mother is to be recognized or included in the calculation; vii. Notional disposition cost for the respondent’s LIRA and RRSP in the aggregate amount of $21,024.74 is to be recognized; viii. No notional disposition cost for the respondent’s RBC shares is to be recognized; and ix. The respondent’s Facebook shares are to be recognized as an excluded gift. d. The respondent’s claim for compensation for post-separation adjustments on the matrimonial home is dismissed; e. Except as set out in the next sub-paragraph, both parties’ claims for retroactive compensation for s. 7 expenses are dismissed; f. The respondent shall pay to the applicant $1,277.50 in respect of the costs to move and set up Middle child at university this school year. The parties will each be responsible for 50% of the remaining education costs, including room and board, to be incurred by both the Middle and Youngest children toward obtaining their first undergraduate post-secondary degree. This liability shall arise only after applying any available RESP amounts and any OSAP or other amounts contributed by each child respectively, if any. No costs may be claimed for reimbursement if notice of at least two weeks is not provided to the other parent to allow him or her to agree or to propose reasonable alternatives. If the parties cannot agree one parent may make a proposed payment without prejudice to her or his right to seek reimbursement from the other.
Costs
[107] The applicant may deliver costs submissions by February 28, 2023. The respondent may deliver costs submission by March 7, 2023. Costs submissions may be no longer than five pages. Pages must have regular margins and shall be double-spaced. A minimum of 12-point font shall be used for text. Each party shall also submit a Bill of Costs and a copy of any offers to settle on which they rely. No case law is to be provided. References to cases or statutory material shall be by hyperlink to. Materials are to be filed through the online portal and copied to my Judicial Assistant.
FL Myers Released: February 21, 2023
Footnotes
[1] For the purposes of this trial, both counsel used the rule of thumb to double gifts as an approximation of a gross-up for taxes. The amounts received as income and/or gifts by both parties put them into the highest marginal tax brackets. Doubling is probably excessive as it does not account for deductions. But it is also under-inclusive as the highest marginal tax rate in Ontario is more than 50%. As there will be no fine calculations being driven off the income numbers in any event, nothing turns on the gross-up being more accurately determined than rule of thumb approximations.
[2] Although the applicant swore in chief that the respondent made no claim for support until he delivered his Answer in this proceeding, she admitted in cross-examination that, in fact, he gave notice that he was claiming both child support and spousal support within weeks of the parties separating in 2014.