NEWMARKET COURT FILE NO.: FC-22-1168-00 DATE: 20230824
ONTARIO SUPERIOR COURT OF JUSTICE FAMILY COURT
BETWEEN:
Xiaohua Yu Applicant
– and –
Zhiyuan Xiao Respondent
Counsel: Judith Holzman, for the Applicant Jason Huang, for the Respondent
HEARD: August 16, 2023
REASONS FOR DECISION on Spousal Support and disclosure
A. Himel J.:
Overview
[1] The Applicant wife brings a motion for temporary spousal support in the amount of $39,000 per month, retroactive lump sum spousal support in the amount of $243,507 (without prejudice), an order directing the Respondent husband to renew the mortgage and pay insurance on the matrimonial home, and seeking a response to the outstanding Request for Information dated January 25, 2023 (as well as the option of proceeding with a 14B motion to strike pleadings if the husband fails to comply). Until relatively recently, the husband was the sole or majority shareholder of various corporations (and the wife held shares in some of the corporations). The corporations hold valuable assets including those defined as the “7 projects” in this litigation. The husband has refused to voluntarily pay spousal support notwithstanding 19 requests from August to December 2022.
[2] The husband denies that the wife is entitled to spousal support and submits that there is insufficient evidence to make a spousal support award. The husband states that he has a low income and an inability to pay. The husband submits that the 7 projects (which include land, golf courses, and the related development projects) and other valuable assets in China (the “financial empire”) belong to his father, Huiran Xiao (the “father”). The wife disagrees stating that it is the parties who have supported the father (and other relatives).
[3] The husband states that the father, along with other relatives, gift him funds to cover his expenses. The husband alleges that the wife has undisclosed assets/income and has misappropriated funds belonging to the father. The husband admits that he has not provided full disclosure. He states that some information/documentation is no longer in his control as he is no longer a director or shareholder of the various corporations that form part of the financial empire.
[4] On the evidence before me today, it appears that the financial empire has a value of at least $100,000,000.
[5] This motion was heard immediately following the return of the wife’s urgent motion (relating to two non-dissipation orders). By way of a separate order, I granted the relief sought having found that one property was sold in breach of the June 19, 2022 and September 23, 2022 (consent) orders.
[6] The materials for both motions include affidavits from each of the parties, and one from Alice, the adult child (now age 31). The husband did not file an affidavit from the father.
[7] While the materials before the Court (which contain hearsay) and the oral arguments (which included statements that are not contained in the evidence) focused on each party’s undisclosed income and assets, and alleged criminal and deceptive behavior, the focus of this motion is on spousal support and disclosure.
[8] The wife is entitled to spousal support.
[9] Given the contradictory statements made by the husband in this litigation, to the Canada Revenue Agency (“CRA”) and on the Cameron Stephens Mortgage Capital LTD application dated June 29, 2022 (the “Mortgage Application”), the best available evidence supports a finding and that the husband’s annual income be imputed at $550,000. The husband is ordered to respond to the outstanding Request for Information within 30 days, failing which the wife may schedule a regular one-hour motion to strike out the husband’s pleadings. The husband is not required to renew the mortgage or pay the insurance.
Relevant Background and Procedural History
[10] Given the complicated and conflicting evidence that is before the Court, it is helpful to summarize the background and procedural history that I have pieced together. The summary provides the context that supports my findings and my determinations.
[11] I note that the family law and civil litigation matters involve multiples parties, and multiple Canadian and Chinese corporations. The Canadian entities are owned by Chinese companies. The structures and holdings of the various corporations are complicated and ever-changing.
[12] The parties were married in 1990, divorced in 2005, and remarried in 2007. They resided together throughout this period and their adult child had no knowledge of the divorce. The parties disagree as to why they divorced and why they remarried. [1]
[13] Although the husband’s Canadian Income Tax Returns listed his status as married until 2022, he states that the parties separated on June 27, 2019, due to the wife’s criminal actions in China. The wife states that the parties separated in October 2021, following a serious incident of family violence. The wife alleges a history of family violence and coercive power and control (that the adult child also describes). Each party denies the allegations made by the other.
[14] The wife worked as a physician in China from 1987 to 2002, and as an administrative staff in the parties’ businesses in China from 2002 to 2010. The husband owned a supermarket that was initially funded by the father in 1995 (for $500,000 RMB). The supermarket was successful, the husband expanded the business to six locations. He sold the chain in 2000 (for $13 million RMB). The husband started working at the father’s construction and development business.
[15] Commencing in 2002, the husband incorporated various corporations in China that own buildings and shopping malls. The wife holds approximately 50% of the shares in some corporations and states that the husband has removed her control and responsibilities.
[16] The family immigrated to Canada in July 2010, with a declared net worth of $5,000,000 CAD. The wife states that their global net worth was well beyond that amount. The husband purchased 30 Hunters Glen Road, Aurora (the “matrimonial home”) in 2011. It has a current value of approximately $3,000,000. The parties disagree as to whether the matrimonial home was purchased from joint funds.
[17] The husband states that commencing 2010, the father began transferring funds from China to Canada and to other countries for the purposes of diversifying risk and for potential future investments. A portion of the funds were held in a joint account (held by the husband and the father). He states that the wife proposed investing the father’s money in financial products and real estate, and that the wife took the lead in managing the entire scheme. The wife disagrees stating that the initial investment funds and the financial empire are derived from the parties’ joint labour, joint monies, and over 30 years of joint effort.
[18] After immigrating to Canada various corporations were created. The husband was the sole or majority shareholder and the sole director. The wife owns a 45 % – 55% interest in one golf course development project commonly known as the Front 9 (“Project 1”). However, it is less valuable than anticipated as residential development will be delayed until 2041.
[19] The husband works for one (or more) of the 7 projects and the family empire. He consistently declares a low employment income to CRA (which he states is similar to the income paid to other employees).
[20] The Canadian financial empire is primarily involved in the purchase, sale, financing and development of golf courses, and land earmarked for residential development. Properties are purchased using available investment funds, third party mortgages and vender take-back loans (“VTB”). Project 3, the Trehaven Golf and Country Club (“Trehaven Golf”), is an operational golf course, with annual revenues of $1,000,000 (according to the wife).
[21] The wife was a stay-at-home spouse from 2010 to 2018. At that time, she started working full-time in an administrative role, primarily for Trehaven Golf. The wife earned an income of approximately $20,000 (2020), $8,000 (2021), and $1,300 (2022). The husband maintains that the wife benefitted from assets and other funds, in addition to her income. As stated in the wife’s affidavit, she left the employment in June 2022, due to the husband’s verbal abuse and an intolerable work environment.
[22] After the husband re-married the wife in 2007, he had two children (born in 2009 and 2011) with his new partner (“Flora”). The wife states that she first learned about the second family in 2017/2018.
[23] Flora and the children immigrated to Canada in 2021 and reside in Barrie. Flora is employed at Trehaven Golf Course and earns an annual income of $37,000 (as per the husband) or $90,000 (as per the wife).
[24] The husband had no sole banking account until February 2022. It is the wife’s uncontradicted evidence that the parties’ joint account was used to fund the matrimonial home and the parties’ expenses, as well as some living and other expenses incurred by Flora and his two children.
[25] On January 19, 2022, the adult child transferred her corporate shares to the husband (statedly, against her will). He subsequently transferred the shares to Flora (1%) and to De Ming Chen (the “husband’s cousin”) on March 15, 2022.
[26] By May 2022, the husband also transferred shares in the Canadian and Chinese corporations and re-organized the corporate structures. On paper, the husband is no longer a shareholder of any of the Canadian entities.
[27] In February 2022, the wife sold an investment property that was held in her name alone (379 Palister Crescent). The husband received $200,000 and the wife $420,000. She has used these funds towards her expenses and legal fees. The husband states that the investment property was purchased using the father’s funds, which the wife denies.
[28] The wife states that the husband removed more than $480,000 from the parties’ joint account in February 2022, as confirmed by bank statements. The husband disputes that he withdrew the funds. The wife acknowledges that she removed the balance of the funds, $80,000, in May 2022.
[29] On June 19, 2022, the Court granted a non-dissipation order on an urgent basis. The terms were re-confirmed by way of a consent order in September 2022. The husband was (and is) restrained from the use, depletion, or encroachment of the 7 projects, including their sale and financing, without the wife’s consent. She has since consented to certain requests, which has enabled the business to buy and sell certain properties.
[30] This Application was issued on June 30, 2022.
[31] In his sworn Financial Statements dated October 12, 2022 and August 9, 2023, the husband lists his residence as (9 Nicole Marie Avenue, Barrie). It is not contradicted that the husband resides with Flora and his children. The wife states that the husband vacated the matrimonial home in early 2023.
[32] In February 2023, the husband ceased paying the mortgage, insurance, other expenses relating to the matrimonial home, the wife’s expenses, and car lease. The wife’s car (a Mercedes) was towed away in April 2023 (at the initiative of the husband or the father). The bank is disposing of the matrimonial home by way of a power of sale. The wife states that the husband has threatened to leave her penniless, which he denies.
[33] The husband attests that he was/is unable to afford to continue to pay the wife’s expenses, and that the car (and the other corporate assets) belong to the father. He also alleges that the wife misappropriated the father’s funds and engaged in criminal behavior in China. The wife denies the same. With respect to the alleged criminal charges, the wife produced a Police Clearance Certificate confirming that she has no criminal record in China (as of September 7, 2022).
[34] In March 2023, the husband ceased being a director of the various corporations and was replaced by the husband’s cousin and Yubo Lin (“Flora’s brother”) who both reside in China. They are also shareholders of various corporations.
[35] In April 2023, the husband commenced a Divorce Application in China, notwithstanding this 2022 Application, nor the fact that the parties reside in Canada. The wife explains that spousal support is not awarded in China, while the husband provided no explanation for this concerning behaviour.
[36] On June 28, 2023, certain corporations (controlled by the father, the husband’s cousin, and Flora’s brother) brought a 14B motion for the release of approximately $1,700,000 held in trust by the husband’s former counsel, Capp Sgro LLP. Bennett J. dismissed the motion on the basis that it was not a proper 14B motion.
[37] On or about June 28, 2023, Trehaven Golf Course was sold without the wife’s consent, and below market value (according to her). The sale proceeds have been deposited into an unknown account. The sale necessitated the urgent motion which was heard in writing by Bruhn J. on August 2, 2023. The requested relief was granted on a without prejudice basis, and the motion was adjourned.
[38] The wife states that the husband has attempted to sell/has sold other projects at below market amounts, and with additional funds being paid to him “under the table.” She believes that the husband has taken these funds to China.
[39] At the return of the urgent motion, I granted the requested relief sought, having found that the non-dissipation orders were breached. I also ordered costs. The reasons are released as a separate decision.
[40] The next step in this litigation is the appointment of a Court-appointed expert pursuant to Family Law Rule 20.3. The wife and the husband (on behalf of the father and on his own behalf) take contradictory positions as to who is the owner of the various corporations and the 7 projects. They also dispute whether the investment funds are attributable to the father or the parties. It is unclear if consideration was paid when the shares were transferred to the husband’s cousin and Flora’s brother in 2022. It is also unclear whether there are shareholders agreements, and what is recorded in the corporate minute books and any properly executed corporate documents. I require an expert to conduct a forensic review of the relevant documentation and to produce a report that addresses these issues.
[41] The following step is a Case Management Conference, which may also include the father and/or the adult child.
[42] I am advised that the wife may bring motion(s) requesting that the civil matter(s) be consolidated with the family litigation. In my view, these motions are premature.
Law and Analysis
Spousal Support
[43] In Di Sabatino v. Di Sabatino, 2022 ONSC 334, [2] Di Luca J. summarized the relevant legislation and caselaw:
38 Section 15.2(1) of the Divorce Act grants the court jurisdiction to order the payment of spousal support. Section 15.2(2) of the Act permits an interim order for spousal support “as the court thinks reasonable.” In making such an order, section 15.2(4) of the Act directs the court to consider the condition, means, needs and other circumstances of each spouse including (a) the length of times the spouses cohabited, (b) the functions performed by each spouse during cohabitation, and (c) any order, agreement or arrangement relating to support of either spouse.
39 Section 15.2(6) of the Act sets out the general objectives of a support order. In accordance with this section, an order for support, either final or interim, should:
(a) Recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
(b) Apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
(c) Relieve any economic hardship of the spouses arising from the breakdown of the marriage; and,
(d) In so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
40 On applications for interim support orders, the court does not engage in comprehensive review and analysis of the parties’ respective circumstances. That is a task best left for trial. Instead, once the applicant establishes a prima facie case for entitlement, the court aims to achieve “rough justice” through a “holding order” that seeks to maintain the accustomed lifestyle, if possible, pending final determination of the issues at trial. In this regard, support should be based not on a budget of expenses of the recipient but on income sharing, see Cassidy v. McNeil, 2010 ONCA 218 at para. 68.
41 In determining spousal support on an interim basis, the parties’ needs and means take on greater significance and the need to achieve self-sufficiency is of lesser significance, see: Kowalski v. Grant, 2007 MBQB 235, Knowles v. Lindstrom, 2015 ONSC 1408, at paras. 7-8, Driscoll v. Driscoll, at para. 14, and Grande v. Sciacca, 2021 ONSC 1625, at paras. 11-12.
42 The term “means” is given an expansive interpretation so as to include “all pecuniary resources, capital assets, income from employment or earning capacity, and other sources from which the person receives gains or benefits”, see Leskun v. Leskun, 2006 SCC 25 at para. 29.
43 The term “needs” includes a consideration of the lifestyle to which the recipient spouse was accustomed to when the marriage ended. A lavish lifestyle may support the imposition of a significant interim support order, see Majumder v. Rahman, 2018 ONSC 6587 at para. 39.
44 Interim support should generally be ordered within the range of the Spousal Support Advisory Guidelines, unless circumstances dictate otherwise, see Blatherwick v. Blatherwick, 2012 ONSC 2456, at paras. 28-30.
[44] The parties were married for at least 29 years [3] and raised one child together. The wife ceased her employment as a doctor and worked with the husband in China and later in Canada. She did not work outside of the home from the time that they immigrated to Canada in 2010, and until 2018. She was then employed by the husband’s corporations and worked primarily at Trehaven Golf. The wife states that Trehaven Golf has an annual net income of between $400,000 and $500,000, yet her employment income was approximately $20,000 (2020), $8,000 (2021), and $1,600 (2022).
[45] Notwithstanding that the wife had no/nominal income, the parties enjoyed a nice lifestyle. They resided in a home with a current value of $3,000,000, they drove luxury vehicles, and both parties travelled to China. The wife has evidence that the parties (and others) enjoyed expensive restaurant meals and incurred significant expenses at the LCBO.
[46] The husband ceased paying the mortgage, taxes, insurances, and other expenses on or about February 2023. At that time, he also cancelled her credit card. She attests that the amount of $243,000 is outstanding for unpaid bills for the matrimonial home and other living expenses. In addition to the family law litigation, the wife is the named defendant in two related civil litigations matters. She has, and will, incur significant legal fees in respect of these matters. The wife’s monthly expenses include critical care insurance, at an approximate expense of $2,000 per month, due to her health issues.
[47] The wife continues to own an investment property. It was not tenanted from June 1, 2022 onwards, as the wife intended to relocate there (with the adult child) if she was unable to continue to reside in the matrimonial home. Given that the home will likely be disposed of shortly by way of power of sale, the wife’s backup plan was not unreasonable. In any event, the wife recently found tenants (due to rising interest rates and affordability issues). The rent does not cover the mortgage and related expenses.
[48] With respect to the wife’s ability to become self-sufficient, she is currently mid-way through a re-training program in traditional Chinese medicine and acupuncture. The wife anticipates that she will complete the full-time program in December 2023. However, she must pass an English fluency exam, and she currently speaks nominal English. [4] It will be some time before the wife can return to the workforce. I note that she is 57 years of age.
[49] The wife is in dire financial circumstances. The wife has dissipated her mutual funds and obtained loans to pay her legal fees, tuition, bills, and living expenses. Her situation has deteriorated materially since the husband ceased paying the mortgage, taxes, and insurance, ceased contributing funds to the joint account, removed funds from the joint account, cancelled with wife’s credit card and towed the car away (at his own or the father’s initiative).
[50] I decline to accept that the wife has undisclosed assets in China relating to litigation (in 2011) [5] that she should dispose of for her own support.
[51] The wife is unable to maintain the standard of living she was accustomed to and has encroached upon her savings and capital. There is no requirement for her to fund her lifestyle by encroaching on her savings and capital. [6]
[52] The wife has financial needs and was disadvantaged by the marriage. She is entitled to spousal support. For the purposes of this motion, and on a without prejudice basis, the appropriate start date is March 1, 2023. The husband stopped paying the mortgage and other expenses in February 2023.
[53] The issue of retroactive spousal support shall be left for trial, as it is better addressed coincident with the wife’s claims for equalization, constructive trust, and resulting trust.
[54] The remaining issue to be resolved is the quantum of spousal support.
[55] The husband admits that he has failed to provide full financial disclosure. This is particularly problematic given the transfer of the valuable corporate shares since separation (whether it is determined to be 2019 or 2021), and the misrepresentations set out below about his income and expenses.
[56] It is well established that the absence of disclosure is a cancer on the process. A recipient should not be required to reconstruct a payor’s financial affairs. Non-disclosure may result in the loss of standing in the proceeding. [7]
[57] Where income reported on a party’s Income Tax Return does not fairly, completely or credibly reflect the money that is available to the party, it is open to the court to impute income. [8]
[58] The test for imputing income for child support purposes applies equally for spousal support purposes. [9]
[59] Evidence of a lavish lifestyle provides a basis upon which inferences about a party’s access to undisclosed income may be drawn. [10]
[60] In instances where a party has intentionally withheld disclosure or has provided less than candid and/or complete disclosure, the court may, in imputing income, draw an adverse inference against that party. [11] The policy rationale behind this rule is that a party should not be allowed to benefit from the deficient record they have created or caused by their failure to comply with disclosure obligations. [12]
[61] The husband’s evidence as to his income and inability to pay spousal support is contradictory and not credible, as follows:
(a) In the Mortgage Capital LTD personal net worth statement signed June 29, 2022, the husband states that his 2022 income is $1,660,000. The husband also declares that he owns $3,240,000 in cash, marketable securities, and stocks as well as real estate valued at $98,400,000 (before VTB and loans of $16,335,000). Moreover, the husband notes (in handwriting) that he holds a 100% interest in 300 acres of land and a 70% interest in 29 acres of land.
I decline to accept his counsel’s oral argument that the husband does not read English and did not understand this document. The husband swore an affidavit in English and attended the motion without an interpreter. Also, the Mortgage Application is predominantly numeric.
The Mortgage Application is a representation of the husband’s net worth which is been relied upon by lenders. The husband certified “that the information provided above is accurate and complete.” He must be held accountable for the application, which he signed and noted to be true.
(b) In his affidavit sworn August 9, 2023, the husband attests that his 2022 income is $210,000 RMB (approximately $40,000 CAD) inclusive of a bonus, and that he earned no other income. He states that his 2023 income will be less, as the annual bonus will be lower.
(c) In his 2022 Income Tax Return, the husband declared an employment income of $27,000. In 2021, he declared no employment income but a business income of $29,000. These amounts are less than minimum wage. I decline to accept the husband’s evidence that it was the wife (after his 2019 separation date, and who speaks nominal English) who prepared his Income Tax Returns. The husband must be held accountable for what he submits to CRA.
(d) In the Financial Statement sworn October 12, 2022, the husband swears that:
i. His 2021 gross income is $31,715.
ii. His 2022 gross income is $ 31,715; and
iii. His annual expenses are $201,641. He does not list any spouse/partner, nor does he acknowledge any contribution, although he lists Flora’s address on the form.
(e) In the Financial Statement sworn August 9, 2023, the husband swears that:
i. His 2022 gross income is $31,715.
ii. His 2023 income is $59,000.
iii. His annual expenses are $201,641, and that Flora contributes $42,000 per year (although her before tax income is purportedly $37,000).
(f) The husband’s two sworn Financial Statements list identical expenses, which include those respecting the matrimonial home (although he stopped paying these expenses in February 2023).
(g) Given the husband’s evidence that Flora earns only $37,000 annually and given that her living expenses do not appear to be included in the two Financial Statement, I find that the husband has failed to disclose the entirety of his contributions towards the two households in 2022.
(h) The husband does not declare ownership (or leases) of any vehicles, nor does he acknowledge any expenses for loans, gas, parking or maintenance. It is the wife’s uncontradicted evidence that the husband owns a Dodge Ram truck, that he drives a Toyota TRO truck (leased at $1,023 per month), and that Flora drives an Audi SUV (leased at $1,500 per month). In 2019, the parties drove a Mercedes SUV and a BMW SUV.
(i) The husband states that he cannot afford to pay the mortgage, insurance, taxes or the wife’s other expenses, yet he pays $300 per month in gifts, $550 per month in children’s activities and summer camp and $1,500 per month in child support.
(j) The husband admits that he pays $4,209 per month in life insurance, which is more than his stated income.
(k) In 2023 the husband has travelled to China (perhaps two or three times) but lists no travel expenses in his Financial Statement.
[62] I find that the husband requires a gross annual income of at least $550,000 to pay the expenses listed in the husband’s sworn Financial Statements, and those he has omitted to include.
[63] The husband states that his relatives and, particularly the father, gift funds to enable him to pay expenses. He argues that as there is no pattern of gifts, the funds cannot be treated as income for support purposes. I disagree.
[64] It is true that the husband failed to provide evidence to enable me to determine the regularity of the alleged gifts. However, the Ontario Court of Appeal (and many subsequent cases) make it abundantly clear that where the circumstances surrounding the gifts are so unusual that they constitute an “appropriate circumstance”, an income can be imputed pursuant to section 19(1) of the Child Support Guidelines. [13] The father’s failure to provide sufficient disclosure cannot be a bar to a finding of gifts as income.
[65] The father’s receipt of gifts as a form of income is supported by Bak v. Dobell: [14]
(a) The gifts pre-date and post-date the parties’ separation and enabled and are entrenched in their lifestyle.
(b) The gifts do more than provide a basic standard of living.
(c) The income generated by the gifts grossly exceed the husband’s stated income to CRA and in his sworn financial statement.
(d) The gifts are likely to continue (as the father is otherwise unable to support himself, Flora, and his children).
[66] For the purposes of this motion, it is irrelevant whether the husband earns the significant income required to pay his expenses, or whether he receives gifts. Either way, the husband can pay support in accordance with the Spousal Support Guidelines, in an amount that will enable the wife to cover many of her stated expenses. [15]
[67] The husband’s annual income shall be imputed at $550,000. The father’s misrepresentations and contradictory evidence support an adverse inference about his stated inability to earn at least this amount (through employment, gifts or otherwise). The wife’s request to impute the husband’s income at $1,600,000 (as declared in his mortgage application) or $840,000, is best left to the trial.
[68] Given that the father claims to have no income, the spousal support shall be paid from the funds (approximately $2,000,000) held in trust by the husband’s former family law firm following the sale of a property.
Mortgage and Insurance
[69] I decline to order the husband to pay the mortgage on 30 Hunters Glen Road, Aurora.
[70] The matrimonial home is held in the husband’s name, and he is solely liable for any expenses. The lost equity and other expenses that may flow from a power of sale proceeding are post-separation date issues and his losses to bear.
[71] The wife is now in receipt of spousal support. She can decide whether, or not, to continue to reside in the matrimonial home (subject to disposition by way of the power of sale), and whether, or not, to use her support payments to take steps to remain in the matrimonial home for the longer term.
Disclosure
[72] The husband has failed to fully respond to the wife’s Request for Information dated January 25, 2023.
[73] He has admitted his failure to provide full disclosure in a timely manner.
[74] I decline to accept that the husband (who was the sole shareholder and a director of the various corporations on the date of separation) is unable to respond. The shareholders and directors (the husband’s cousin and Flora’s brother), and the father are related parties. The husband cannot avoid his obligations by arranging his affairs to impede disclosure.
[75] The husband shall provide responses to paragraphs 15, 21, 22, 23, 24, 27, 29, 31, 35, 36 and 38 from the wife’s Request for Information dated January 25, 2023, to be provided within 30 days, or the wife may bring a regular one-hour motion (limited to 12 pages of evidence, double space, font 12 and 10 pages of exhibits, and in compliance with the Practice Directions and Family Law Rules) to strike out the husband’s pleadings.
Costs
[76] The wife has been successful on this motion, and she is presumptively entitled to costs as per Sections 24(1), (5) and (12)(a) and (b) of the Family Law Rules. I am required to consider whether the husband has acted reasonably in respect of this motion, and I must consider the following:
24 (5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,
(a) the time properly spent on the case, including conversations between the lawyer and the party or witnesses, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order;
(b) expenses properly paid or payable; and
(c) any other relevant matter.
[77] In arriving at an award of costs, I am mindful that this court must exercise a discretion based on principles of reasonableness and proportionality. [16]
[78] The principles guiding the court’s exercise of its discretion pursuant to the Rules are well-established. The primary objective, of course, is to enable the court to deal with cases in a fair and timely manner. Four fundamental purposes are served: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; (3) to discourage and sanction inappropriate behaviour by litigants; [17] and (4) to ensure that cases are dealt with justly. [18]
[79] The wife requests costs of $20,000, inclusive, which is considerable (and somewhat high) for a two-hour motion.
[80] However, the wife is represented by senior counsel, and she had no option but to bring this motion given the husband’s decision to terminate all financial contributions as of February 2023. This is a very important motion to the wife. She was required to expend significant legal fees to help me to better understand the parties’ complicated financial circumstances.
[81] As the husband has not filed his Bill of Costs, I have no knowledge as to the quantum of legal fees that he incurred to respond to the motion.
[82] Since the commencement of this Application (or before), the husband’s actions and attitude towards the wife and this litigation are offensive. As stated above, he terminated all forms of financial support, failed to provide full financial disclosure, transferred valuable shares out of his name, and misrepresented his income. His behaviour must be sanctioned.
[83] While the wife served an Offer to Settle on May 17, 2023, she did not beat her offer with respect to the issue of spousal support, which is the primary issue before the Court.
[84] In consideration of the above, I find that the amount of $15,000, inclusive, is reasonable and proportionate in the circumstances. This amount is between a partial and substantial indemnity scale. The costs shall be paid by the husband within 14 days and are otherwise enforceable by FRO as spousal support.
Concluding Thoughts
[85] The parties and the father are embroiled in conflict and disagree about many facts and many elements of this case. Significant legal fees have been incurred to date. The husband is currently represented by his fifth family lawyer. The adult child is estranged from the husband. In addition to the family law litigation, the father and certain corporations have commenced two civil matters against the wife.
[86] With respect to this matter, it appears that one or both of the parties have misrepresented their assets to the Court. As set out above, the Court does not necessarily accept someone’s evidence just because they make statements or produce documents that they claim are true. The Court does not necessarily accept that a party’s income is as declared to CRA just because that is what they declare on their Income Tax Return.
[87] I am keenly aware that some litigants are not forthright about their income and/or their assets. Some parties move assets between themselves and others, either in an attempt to defeat the other party’s claims, to save taxes, or for other purposes. The parties are cautioned that if a party (to any of the three cases) is found to act in bad faith, there will likely be serious financial consequences, including significant costs.
Orders To Go
- The husband shall pay spousal support in the amount of $20,000 per month commencing March 1, 2023. That is the mid-range of spousal support, recognizing that the wife’s claim for a higher amount of support on a compensatory basis may be impacted by the determinations in respect of her equalization and trust claims.
- Given the start date of support, the sum of $180,000 is payable forthwith. This payment is tax deductible to the husband and is to be included in the wife’s income for reporting purposes.
- The monthly payments of $20,000 shall commence September 1, 2023.
- I decline to order spousal support for the earlier time periods without prejudice to the wife seeking additional support at trial.
- The husband’s support obligations shall be paid from the funds held in trust by Capo Sgro LLP. If the amount held in trust by Capo Sgro LLP is traced to an asset in which the wife has/had an interest, in full or in part, the husband shall not receive credit for such payment(s) towards spousal support.
- Support Deduction Order to issue.
- The husband shall provide responses to paragraphs 15, 21, 22, 23, 24, 27, 29, 31, 35, 36, and 38 from the wife’s Request for Information dated January 25, 2023, to be provided within 30 days. Failing compliance, the wife may bring a regular one-hour motion (with 12 pages of evidence, double space, font 12 and 10 pages of exhibits, and in compliance with the Practice Directions and Family Law Rules) to strike out the husband’s pleadings.
- No further motions may be brought without leave of the case management judge, Daurio J.
- Any request by 14B shall be directed to Daurio J., unless the court directs otherwise.
- Any request for an urgent motion shall be directed to Daurio J., unless the court directs otherwise.
- Costs payable by the husband in the amount of $15,000, inclusive, and within 14 days.
- The costs are enforceable by FRO as spousal support.
- Order to go as signed by me.
The Honourable Justice A. Himel
Date: August 24, 2023
[1] The husband states that they divorced due to the irreconcilable differences and re-married to facilitate the wife’s desire to immigrate to Canada with their child. The wife states that they divorced for business purposes and re-married as it was always the plan to do so once there was no longer a reason to be divorced for business purposes.
[2] Di Sabatino v. Di Sabatino, 2022 ONSC 334, at paras. 38-44.
[3] This includes the two-year period of divorce when they continued to cohabit.
[4] The wife required the assistance of an interpreter during the motion.
[5] I have no evidence that this asset continues to exist.
[6] Goeldner v. Goeldner (2005), 15 R.F.L. (6th) 272, 194 O.A.C. 129 (C.A), at para. 8; Di Sabatino v. Di Sabatino, at para. 22.
[7] Colucci v. Colucci, 2021 SCC 24, at paras. 4, 50 and 51; Leitch v. Novac, 2020 ONCA 257, 150 O.R. (3d) 587, at para. 44; Di Sabatino v. Di Sabatino, at paras. 45-47; Manchanda v. Thethi, 2016 ONCA 909, at para. 13.
[8] Di Sabatino v. Di Sabatino, at para 48.
[9] Christodoulou v. Christodoulou, 2021 ONSC 6538, at para. 27; Di Sabatino v. Di Sabatino, at para. 49.
[10] Bak v. Dobell, 2007 ONCA 204, 86 O.R. (3d) 196; Di Sabatino v. Di Sabatino, at para. 49.
[11] see Meade v. Meade (2002), 31 R.F.L. (5th) 88, at para. 81 and see also s. 23 of the Child Support Guidelines.
[12] Di Sabatino v. Di Sabatino, at para. 51.
[13] see Bak v. Dobell, at para. 74.
[14] Bak v. Dobell, at para. 75.
[15] The wife claims monthly expenses of $21,338.
[16] see Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, leave to appeal refused, [2019] S.C.C.A. No. 82.
[17] Serra v. Serra, 2009 ONCA 395, at para. 8.
[18] Mattina v. Mattina, 2018 ONCA 867, at para. 10, leave to appeal refused, [2018] S.C.C.A. No. 392.