Smith v Noel, 2023 ONSC 6682

NEWMARKET COURT FILE NO.: FC-12-42004

DATE: 20231128

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Rose Smith Applicant

– and –

Aschley Noel Respondent

Alnaz I. Jiwa, Counsel for the Applicant

Elizabeth Julien-Wilson, Counsel for the Respondent

HEARD: May 23, 24, 25 and 26, 2023

reasons for decision

JARVIS, J.

[1] This decision involves outstanding financial issues (equalization, income imputation, and child and spousal support) arising from the 2012 breakdown of the parties’ marriage. A 2018 trial was bifurcated to deal with parenting issues (three children) with the financial issues to be tried later. A final Ruling dealing with parenting (“the Parenting Ruling”) was made in 2021.[^1] In this trial, the Applicant (“Smith”)[^2] claims that the Respondent (“Noel”) owes her an equalization payment of $77,134.85, whereas Noel claims that he is owed an equalization payment of $131,308. Smith claims child support in an undetermined amount retroactive to August 1, 2012, with credit to Noel for child support paid ($15,533, as agreed). Noel seeks an Order for spousal support from Smith in the amount of $6,635 a month from September 1, 2012, to December 31, 2017, based on a $350,000 income attributable to Smith.

[2] Both parties testified. In addition, the court heard from Englhieberth (“Bert”) Smith, Smith’s spouse, and Nabil Jetha. Mr. Jetha, who testified for Noel as an expert, provided his opinion about the value of Smith’s business interests on the valuation date and her income then and for several years afterward.

[3] For the reasons that follow, Noel owes Smith a modest equalization payment and child support arrears, and Smith owes Noel time-limited spousal support. These obligations can be set off and paid from funds held in trust from the 2013 sale of the parties’ matrimonial home.

Background

[4] This case has a prolonged and complicated history. The following evidence and procedural history are relevant:

(a) The parties were married on June 12, 1999.

(b) There are three children of the marriage, ranging in age from 16 to 24 years of age, all of whom have lived with their mother since their parents separated and all of whom are estranged from their father.

(c) Smith claims that the parties separated on May 21, 2012, whereas Noel claims that they separated on August 2, 2012. The parties agree that the choice of separation/valuation date is immaterial to the property and support issues to be determined; therefore, August 2, 2012, will be adopted as the valuation date.

(d) After the parties separated, Noel was charged with five domestic violence counts under the Criminal Code, all involving Smith and alleged to have been committed before the valuation date.

(e) When the parties separated, Smith was self-employed as a lawyer, operating her own named law firm. It was a general practice offering civil, criminal and family services, with a focus on providing immigration services in its latter years of operation. Noel worked for the law firm performing administrative functions.

(f) Smith started these proceedings on November 14, 2012. The parties exchanged pleadings. The issues involved parenting, equalization, and support. Much of the focus in the early years of this case concentrated on the parenting issues. The case was (and has remained) what may be described as high conflict. Noel had a reasonably good relationship with the children before August 2, 2012; he had little to none afterwards.

(g) On January 4, 2013, McGee J. made two case conference Orders. One Order dealt with counselling and mediation, and the other Order dealt with parenting time and the parties’ disclosure obligations. Both Orders were made on consent.

(h) On February 13, 2013, Rogers J. heard a motion and made an Order which, among other things, ordered the sale of the matrimonial home (there remains $26,504.74 in trust), Smith to pay $2,000 to Noel to enable him to complete courses and registration for his real estate license, and Noel to pay $317 monthly child support based on an annual income of $18,000. Rogers J. dismissed Noel’s motion for spousal support.

(i) McGee J. held a settlement conference on March 26, 2013. There continued to be financial disclosure issues. The Office of the Children’s Lawyer (“OCL”) was requested to provide counsel for the children, and it accepted the appointment. McGee J. gave directions for a further settlement conference.

(j) McGee J. held a second settlement conference on August 26, 2013. As the OCL had not had sufficient time to advise about the views and preferences of the children and disclosure remained outstanding, McGee J. gave directions for a further conference to be held after the father’s criminal charges had been determined.

(k) On February 26, 2014, a disciplinary panel of the Law Society of Upper Canada (“the Society”), as it was then known, determined that the mother was ungovernable and revoked her licence to practice law (there had been a series of proceedings involving different allegations starting in 2009). Three separate panels of the Society ordered three sets of costs totalling $65,391 to be paid by the mother, but nothing was ever paid.

(l) On March 18, 2014, the parties were divorced by Order of Healey J..

(m) On April 3, 2014, Brunet J. of the Ontario Court of Justice dismissed all the criminal charges against the father. In reaching its decision, the Court contrasted the parties’ credibility, ultimately concluding that Smith’s “testimony was not reliable or credible enough to prove a case beyond a reasonable doubt.”[^3]

(n) Ms. Smith (then still Ms. Noel) married Mr. Smith on April 26, 2014.

(o) Apart from issues relating to parenting in 2015, neither party took any steps to move this case along until early 2018.

(p) On March 5, 2018, McGee J. scheduled the case for trial during the May sittings of the court. As financial disclosure from Smith remained outstanding, McGee J. directed that if Smith did not provide relevant disclosure by April 15, 2018, then Noel could move for an Order bifurcating the trial so that the parenting issues could proceed without further delay.

(q) On April 26, 2018, Noel moved pursuant to the Order of McGee J. to bifurcate the parenting and financial issues so that the parenting issues trial could proceed. This court granted the Order. The parties then disputed whether Smith had produced the disclosure ordered. Further directions with respect to Smith’s disclosure were given.

(r) The evidentiary part of the parenting trial (including submissions) was not concluded until November 20, 2018. By this time, the OCL only represented the parties’ two younger children because the oldest child had aged out. During their closing submissions, the parties agreed to explore reconciliation therapy/counseling.

(s) On December 7, 2018, this court dismissed a motion by Noel to strike Smith’s pleadings on the non-parenting issues (“the Disclosure Ruling”).[^4] The court reminded Smith of her obligation to credibly advance a value for her business interests. Noel had sufficient information with which to advance a position about those interests and Smith’s income. The court noted that nothing prevented Noel from retaining his own expert.

(t) Despite the court’s prolonged involvement with the parties throughout 2019 and into late 2020, no reconciliation therapy/counselling ever proceeded.

(u) On May 12, 2021, Czutrin J. held a settlement conference dealing with the outstanding non-parenting issues. Among other terms of the Order made that day, Czutrin J. directed Noel to deliver his expert’s financial report on income and property by July 30, 2021 (which was done). The case was targeted for trial in November 2021.

(v) On September 29, 2021, the Parenting Ruling was released. This court determined that Noel’s conduct was responsible for the family therapy never starting and that Smith had engaged in alienating behaviour. The court made a final parenting Order in Smith’s favour. Noel was entitled to parenting time as the children wished. The court also made credibility findings.[^5]

(w) The trial of the non-parenting issues did not proceed in November 2021. The illness of Noel’s counsel (Ms. Julien-Wilson) and other trial commitments of Smith’s lawyer (Mr. Jiwa) prevented the trial from proceeding, respectively, during the May and November 2022 sittings.

Admitted facts

[5] In the Trial Scheduling Endorsement Form (“TSEF”) for this trial that was reviewed, signed by the parties and made into an Order, the parties agreed to collaborate on a Statement of Agreed Fact (“SAF”). The TSEF, dated March 2, 2022, targeted a May 2022 trial. The parties informed the court that while there were some discussions between them about an SAF, there was no agreement. Smith delivered a Request to Admit dated April 22, 2022, which Noel acknowledged receiving and to which he never delivered a formal response. The Request sought admissions of facts and other admissions involving mixed fact and law. It did not involve documents. Smith had also delivered an earlier Request to Admit dated February 20, 2020, to which Noel responded on March 10, 2020.

[6] Rule 22 of the Family Law Rules deals with the admissions of facts and documents:

22. (1) An admission that a document is genuine is an admission,

(a) if the document is said to be an original, that it was written, signed or sealed as it appears to have been;

(b) if it is said to be a copy, that it is a complete and accurate copy; and

(c) if it is said to be a copy of a document that is ordinarily sent from one person to another (for example, a letter, fax or electronic message), that it was sent as it appears to have been sent and was received by the person to whom it is addressed.

Request to admit

(2) At any time, by serving a request to admit (Form 22) on another party, a party may ask the other party to admit, for purposes of the case only, that a fact is true or that a document is genuine.

Copy of document to be attached

(3) A copy of any document mentioned in the request to admit shall be attached to it, unless the other party already has a copy or it is impractical to attach a copy.

Response required within 20 days

(4) The party on whom the request to admit is served is considered to have admitted, for purposes of the case only, that the fact is true or that the document is genuine, unless the party serves a response (Form 22A) within 20 days,

(a) denying that a particular fact mentioned in the request is true or that a particular document mentioned in the request is genuine; or

(b) refusing to admit that a particular fact mentioned in the request is true or that a particular document mentioned in the request is genuine, and giving the reasons for each refusal.

Withdrawing admission

(5) An admission that a fact is true or that a document is genuine (whether contained in a document served in the case or resulting from subrule (4)), may be withdrawn only with the other party’s consent or the court’s permission.

[7] In Serra v. Serra,[^6] the Court of Appeal observed that the rules involving admissions are a “useful practice” purposed “to dispense with proof at trial and to minimize the cost of litigation and the areas of dispute between the parties. For legitimate policy reasons, these objectives are to be encouraged.”[^7]

[8] A fact deemed true may, in certain circumstances, be withdrawn. The scope of the court’s discretion over the deemed admissions to which effect should be given will vary according to the circumstances giving rise to a party’s failure to respond and whether the admission involves fact, mixed fact and law, or a question of law. Where, for example, the failure to respond is due to satisfactory evidence of inadvertence, a mistake, or there is a reasonable explanation for the change in a party’s position, a deemed admission may be withdrawn.[^8] Where a Request involves minute details of marginal value to the larger issues in the case, a court may refuse to consider the Request or any deemed admissions arising from it.[^9] Serial Requests may amount to an abuse of process, being neither cost effective nor advancing the interests of the case. Admissions involving mixed fact and law (such as, in this case, admitting that a certain child-related expense is a s. 7 special or extraordinary expense) or questions of law are generally of little weight.[^10]

[9] Smith’s March 2022 Request to Admit dealt with the background to this case, the parties’ marriage details, the matrimonial home and related expenses, the parties’ business interests (including Smith’s law practice), the parties’ incomes, child support, and the value of Noel’s assets and liabilities on the valuation date. Noel ignored a formal response to Smith’s Request. He never sought an extension of time to move for relief from the consequences of the rule at any time before trial and did not move at the start of trial for that relief either. This is unacceptable and impacts both the court’s factual findings in this case and, ultimately, costs.

Credibility

[10] In the Parenting Ruling, this court addressed the parties’ credibility and, overall, preferred Noel’s evidence to that of Smith. The authorities cited in that Ruling[^11] will not be repeated here. However, the court’s comments in that decision mirrored those of Brunet J. in the 2014 criminal proceedings involving the parties where Noel was acquitted of several domestic violence charges. The court found that Smith’s evidence was “unreliable, often evasive and argumentative even when confronted with [contradictory] documentary evidence.”[^12] This court also commented on Noel’s general lack of candour and unsatisfactory explanation for not complying with a communication Order of the court. He was a more reliable witness than Smith, but his post-trial behaviour was counterproductive.

[11] The court’s concerns about the parties’ credibility in the earlier proceedings remain and are, in some respects, amplified in these proceedings. Some examples are listed below:

(a) Smith misrepresented her financial circumstances in 2013 when applying for a mortgage to purchase her current residence. To one lending institution on February 11, 2013, she represented that her income from her law firm was $350,000 a year and that she had an additional income of $150,000 from a “staffing company”. Neither of these representations was true. In cross-examination, Smith stated that she used her gross business income from her law firm and that she never earned $150,000 in additional income. That was her future husband’s income from a recently incorporated company in which she disclaimed any interest.

(b) More concerning is that Smith’s assessed income in 2011 was $53,140, and her assessed income in 2012 was $8,718. With respect to the latter year, her gross law firm income was $254,448.50.

(c) Smith represented to the same lending institution that her net worth was $885,000 (i.e., assets worth $1,325,000 less $440,000 in liabilities). Her trial financial statement claimed that her net worth on the valuation date less than seven months earlier was $95,388 (her marriage date net worth is not included in this calculation).

(d) Smith repeated that her income was $350,000 in a second mortgage application to another lender less than two months later.

(e) Despite owning a law firm that, in part, offered family law services, Smith took no steps to have her interest in that firm valued or an income analysis prepared, even after Noel delivered his expert reports in July 2021. In this court’s 2018 Disclosure Ruling, Smith was reminded of her “obligation to credibly value her assets for equalization determination purposes” and “to provide sufficient information to enable… this court to determine her income” noting that “should the court be persuaded that she has either not complied, or insufficiently complied, with her disclosure obligations then the court may draw inferences adverse to her financial interests.”[^13] It is not unreasonable to infer that Smith was not prepared to pro-actively deal with her disclosure obligations. She tailored her financial representations to Noel, third parties, and this court with a cavalier disregard for their accuracy or truth.

(f) As for Noel, he chose to disregard court Orders when it suited him. For example, in the Parenting Ruling, this court noted that Noel ignored an Order that he only communicate with Smith through OFW (an internet application for parental communications often used in parenting disputes). He had left the court with the impression in those proceedings that he had complied with payment of child support arrears in a more timely fashion, which was misleading.[^14] This occurred when he was earning more than the $18,000 income a year attributed to him by Rogers J. in early 2013 and was ordered to pay $317 a month in child support. None of his financial statements (2018, 2020, 2022, and 2023) disclose anything being paid for child support. He never brought a motion to vary the support Order. In fact, between 2012 and the trial, over an eleven-year period, he only paid $15,533 in child support.

(g) In (most likely) an effort to enhance his financial claims, Noel described the parties’ financial efforts by the valuation date as their having built “an empire”, a “legacy”, while, in reality, Smith was engaged in at least two serious disciplinary proceedings in 2011 and 2012 (there were three in total). These proceedings had started several years earlier, and there were at least four years’ realty taxes owing on the matrimonial home. Noel made bald allegations about Smith having undisclosed bank accounts and other assets but was unable to provide any evidence in support of those allegations. Mr. Jetha commented in his testimony that in seeking information from Noel for his engagement, responses from Noel were “extremely one-sided” and rejected in favour of what the documentary evidence disclosed.

(h) This court noted that during his testimony, particularly during cross-examination, Noel frequently avoided directly answering questions relating to his disclosure by deflecting to his previous counsel (i.e., that he provided the disclosure to them) or he was unable to recall whether the disclosure had been provided. When given an opportunity during a break near the end of the trial to examine the disclosure that had been provided to Smith (the suggestion being that he had not produced over ten years of personal bank statements), Noel declined the opportunity.

[12] The assessment of witness credibility is concerned with witness honesty and sincerity. Reliability concerns the accuracy of the testimony. Courts have frequently catalogued the non-exhaustive list of factors influencing credibility assessment.[^15] However, while a witness who is credible may be unreliable because, for example, the witness made an honest mistake, a witness who is not credible is unreliable and little to no value can be given to their evidence.

[13] Both parties in this case have serious credibility problems. Each tailored their evidence to suit their preferred narrative, even when that narrative was unsupported (and contradicted) by documentary evidence. Smith’s third-party representations about her net worth and income shortly before and after the valuation date were deliberately false and her explanations risible. As a lawyer whose practice involved family law, it would be expected that she had a greater duty to be honest. She wasn’t honest. As for Noel, as aggrieved as he was by the situation in which he found himself after the valuation date, he had no excuse for ignoring court Orders, failing to pay child support, ignoring his disclosure obligations, and advancing and maintaining exaggerated claims about the parties’ financial “empire” in the absence of corroborative evidence.

[14] Extreme caution will be exercised with the parties’ evidence. Wherever possible, reliance will be placed on the documentary record.

Equalization

[15] The principal issue disputed by the parties was the value of Smith’s business interests. Peripheral to this were values to be attributed to furniture (including electronics) in the matrimonial home retained by Smith after the valuation date, an Infinity automobile owned by Smith in Noel’s possession until he returned it, a Registered Educational Savings Plan for one of the parties’ children, debts claimed by Smith (a personal loan) and by Noel (Canada Revenue Agency) on the valuation date, realty taxes for the matrimonial home before and after the valuation date and whether Noel had common shares in a life insurance company on the marriage date.

[16] As already noted, Smith claims that Noel owes her an equalization payment of $78,384.85, whereas he claims that she owes him $131,308, both amounts together with pre-judgment interest.

[17] Each of the disputed valuation issues will be considered.

Valuation date

General household items (including electronics) and vehicles

[18] Smith attributed no value to the household goods, furniture and electronics in the matrimonial home, no value to a 2003 Infinity automobile owned by her but operated by Noel until shortly after the parties separated, and $72,500 for the value of her 2011 Mercedes Benz automobile. Noel claimed that all these assets had value and were collectively worth $116,500.[^16] Neither party tendered any independent evidence of value.

[19] Noel claimed that the household goods and furniture were worth $25,000, the Infinity was worth $9,000 and electronics were worth $10,000, and that those values should be attributed to Smith. With respect to the household goods and furniture, Noel admitted that he had been asked in May 2013 on two occasions whether he wanted any of the contents of the matrimonial home before it was sold. He never responded.[^17] Smith said that they were of little value anyway and most were thrown out when the home was sold. The Infinity was returned to Smith in September or October 2012. It had transmission problems; the repair cost and the fact that Bert Smith had an automobile led Smith (who also had a car) to scrap the car through a local garage. As for the electronics, Smith testified that these comprised a large screen television purchased in 2007 for between $2,000 to $3,000 (that was also discarded after the sale of the home), a radio, a Blue Ray device and an old VHS device, none of which she valued and for which Noel expressed no interest. There was no evidence that Noel ever sought any of the contents in this category. Nor was he questioned about these chattels or their values.

[20] In the absence of any evidence from Noel and given his admission that he never wanted any of the household contents, the court will accept Smith’s evidence. No value will be attributed to the parties’ general household items (including electronics) or the Infinity vehicle.

Savings

[21] Noel attributes a $8,782.14 value to a Registered Education Savings Plan (“RESP”) set up for the parties’ oldest child (SN). Smith testified that the funds in this account were all spent (and more spent by her without contribution from Noel) on the child’s education. Noel never testified about his position on this issue.

[22] Although the cases on whether a RESP forms part of a party’s net family property or is a trust to be administered for a child as beneficiary have been inconsistent,[^18] the unchallenged evidence in this case is that all the funds were, in fact, applied for the child’s education.

[23] The value of the RESP will not be included in calculating Smith’s net family property.

Business interests

[24] As noted, the value of Smith’s business interests on the valuation date is the principal issue disputed by the parties. Smith tendered no expert evidence of value; Noel did.

Nabil Jetha

[25] Mr. Jetha is an accredited member of the Institute of Chartered Business Valuators (CBV) with ancillary accreditations as a Certified Management Accountant (CMA), Chartered Accountant (CA), Chartered Professional Accountant (CPA) and a certification in financial forensics (CFF). He was tendered by Noel as an expert in the field of litigation and forensic accounting. He had practiced in these areas doing business and income valuation analysis for almost ten years before trial. He had never testified as an expert witness but had provided expert opinion reports in other court proceedings. He signed the required Acknowledgement of Expert’s Duty. His reports are dated July 30, 2021. A calculation value approach (the lowest level of reader assurance or reliability) was used to value Smith’s business interests.[^19] Despite the fact that she did not tender expert evidence, Smith did not challenge Mr. Jetha’s qualifications. After further questioning by the court, Mr. Jetha was qualified as an expert to give opinion evidence on the value of Smith’s business interests and her income between 2012 to 2020.

[26] Smith’s business interests comprised her law firm and her ownership of Premium Staffing Services Ltd (“PSSL”), a business incorporated in 2004 by Smith to provide staffing services for Smith’s immigration practice needs. Mr. Jetha valued Smith’s law practice as ranging in fair market value between $172,000 and $258,000 with a $215,000 midpoint. The practice had a $55,000 tangible asset backing. A significant component of value (after backing out the tangible assets) was goodwill (or a transferable client list) which Mr. Jetha estimated to be worth between $103,000 and $203,000. PSSL had no fair market value.

[27] A multiple of gross fees approach of between 0.5x and 0.75x was applied to a four year (2009 to 2012) maintainable gross fees average ($344,000), to value the law practice and the tangible assets backed out to arrive at a range of values.

[28] While Mr. Jetha impressed the court with his candour, this court can place little reliance on his opinion for the following reasons:

(a) Appendix B to the report listed the significant information relating to the law practice which was not provided such as:

i. Complete financial statements for the year ended December 31, 2009;

ii. Financial statements as at the Valuation Date;

iii. The complete general ledgers for the calendar years ended December 31, 2009, 2010, 2011 and 2012;

iv. Bank statements and related supporting documentation for the calendar years ended December 31, 2009, and 2010;

v. Supporting documentation for bank transactions contained in Schedule 9 and Schedule 10 (these Schedules comprised what were labelled as Unreconciled Deposits for 2011 (Schedule 9) and for 2012 (Schedule 10));

vi. Detailed accounts receivable listing as at the Valuation Date;

vii. Summary of work in progress as at the Valuation Date;

viii. Summary of contingent compensation/fees and as at the Valuation Date, if any;

Premium Staffing Services

ix. Minute book and articles of incorporation;

x. Financial statements, general ledgers, and other financial data for the fiscal years ended 2009, 2010, 2011 and 2012; and

xi. Corporate tax returns for the fiscal years ended 2009, 2010, 2011 and 2012.

(b) Mr. Jetha testified that he wrote to Noel’s lawyer requesting this information but, as Ms. Julien-Wilson acknowledged to the court, this request was never communicated to Smith or her lawyer.

(c) The report notes (at para. 41) that Mr. Jetha was unable to interview Smith (then Ms. Noel) to receive her input on some of the information in the report. In response to questions from the court, Mr. Jetha testified that “I do not believe that we made a written request for that, but it is very possible I made a verbal request with Ms. Julien-Wilson.”

(d) To arrive at the law firm’s gross fees, Mr. Jetha added unreconciled bank deposits from Smith’s personal bank account in 2011 and 2012. This could not be done for 2009 and 2010 because this information was not provided. In cross-examination, Mr. Jetha was directed to numerous examples where, in fact, the deposits to Smith’s personal bank account came from the law firm’s account. He acknowledged that “From what you have shown, it looks like we had an error in our report…I am saying that based on what you (referring to Mr. Jiwa) are showing, it appears as though we made a mistake and I’m willing to correct that mistake”. There was more than a handful of mistakes. Mr. Jetha also acknowledged that personal loans allegedly made by Mr. Smith and deposited to his wife’s personal account and other monies (such as other loans) could have formed part of what he determined were the law firm’s fees.

(e) Mr. Jetha was unable to determine whether the law practice was profitable because personal expenses were intermingled with the business expenses. As noted above, he attributed a goodwill value to the practice between $103,000 to $203,000. With respect to this value, his report noted (at paras. 6, 11, and 14 of his report) that “[i]n April 2012 Rose Noel faced a disciplinary hearing before the Law Society of Ontario for professional misconduct. The penalty portion of the hearing was to be heard on August 8, 2012”. This was one of the factors considered in determining the capitalization multiple. This information was materially deficient and only partially correct. In fact, investigations involving Smith’s law practice had been on-going since 2009. One involved almost 6 days of evidence being heard between April 20 to June 27, 2011, and a finding of professional misconduct on May 6, 2012, for failing to respond to and cooperate with an investigation by the Society. Another proceeding (the proceedings having started well before the valuation date) led to hearings on December 3, 2012, and April 1, 2013, in which a finding of professional misconduct was also made. Noel was a witness and involved in both proceedings. The second hearing resulted in a twelve-month licence suspension and the earlier hearing (the penalty hearing held after the second hearing) resulted in another one and a half months suspension. Ultimately, a third proceeding in early 2014 resulted in revocation of Smith’s licence to practice law. Smith never paid costs aggregating over $65,000. Mr. Jetha testified that “a relatively low multiple compared to what other law practices would have sold for was used” when estimating what a potential purchaser might pay knowing that there was serious wrongdoing associated with the target practice, but no evidence was led about comparable law firm multiples.

(f) Mr. Jetha was made aware that in 2007, Smith and her law practice (she was then using her maiden name, Legagneur) were the subject of unfavourable media reports from CTV dealing with her immigration practice. In mid-September 2012, both were sued for breach of contract and professional negligence.[^20] There was no evidence whether Mr. Jetha considered this information as it was not referenced anywhere in his report.

(g) Mr. Jetha agreed that he had never been provided with the law firm’s service agreements, a copy of the law firm’s database backup with emails, or a copy of the firm’s 2012 client list. All three of these would have been “very important” factors to take into account.

(h) Although Mr. Jetha was engaged to value PSSL and, in the end, attributed no value to this company, Noel never alerted Mr. Jetha to the fact that the company’s charter was cancelled in 2008, and he couldn’t recall that its’ account with Canada Revenue Agency had been closed in 2011.

[29] In Barn v. Dhillon[^21], one of the issues on appeal involved a trial judge’s decision not to “net down” a lump sum spousal support award. The Court of Appeal observed that it is a party’s duty to provide the guidance, and implicitly the evidence, that the trial judge needs to reach a determination; it is not the court’s task to intuit an outcome and undertake suo motu its own investigation. That is the challenge in this case involving Mr. Jetha’s evidence. While there was a deadline (July 31, 2021) for filing his expert report, it was clear to Mr. Jetha, and should have been clear to Noel, that there were material information deficiencies impacting the reliability of Jetha’s report. Contextually, Czutrin J.’s Order was made with a view to the case being heard in the November 2021 sittings of the court which, for various reasons, was delayed for almost two years. Surprisingly, Noel’s counsel never forwarded Mr. Jetha’s disclosure request that implicitly if not actually, grounded the qualifications expressed in Mr. Jetha’s report. There is no evidence that Noel brought any motion to vary Czutrin J.’s Order. There is no evidence that he even considered bringing a motion to obtain more necessary disclosure. Additionally, there is no evidence that Noel considered Rule 20.3 of the Family Law Rules, empowering a court to appoint an expert, possibly even Mr. Jetha. None of this, of course, excuses Smith’s failure to provide her own credible evidence about the value of her business interests. However, where a party engages an expert, they risk the opinion being rejected as unreliable if there are material deficiencies not cured by reasonable disclosure efforts. Noel was content with Mr. Jetha’s report. That was a mistake. Given the important nature of the missing information and the report’s factual and account reconciliation inaccuracies, this court cannot accept Mr. Jetha’s opinion of value for Smith’s business interests. Nor will the court speculate or engage in a guessing game about value. Simply because Smith chose to disregard her disclosure and valuation obligations does not, by default, relieve the court from its duty to satisfy itself that that the opinion expressed is reliable. Neither party provided any guidance to the court about alternative values.

[30] Accordingly, the only value that will be attributed to Smith’s business interests is $55,000, being the tangible assets reported by Mr. Jetha, even though that figure likely represents book value and is probably too high.

Debts

[31] Smith alleged that she owed $57,000 to her parents on the valuation date. There was no evidence how this amount was calculated, or whether this comprised one or several advances over a period of time (itself not framed by any dates). Smith said that these funds were borrowed and were to be repaid when the matrimonial home was sold. Even though she received $195,000 when the house was sold, she said that her future husband paid this debt.[^22]

[32] Pursuant to s. 4(3) of the Family Law Act[^23], Smith bears the onus of proving this deduction. It is clear that she had sufficient funds to repay this debt when the matrimonial home was sold.[^24] While she testified that her future husband paid this debt when she was unable to pay it, she provided no further details about her impecuniosity. Given her third-party representations to mortgage lenders about her net worth (as above) and her overall credibility in these proceedings, this court is not prepared to accept Smith’s evidence.

[33] No deduction will be made for this debt.

[34] Noel claimed that he owed $2,500 in payroll taxes for a company (ARS Construction Inc) owned by him which he incorporated in 2004 and which, according to Smith, discontinued operations in 2008. It was never profitable. No corroborative evidence of this debt was tendered in evidence by Noel nor was there any evidence that he was being held personally liable. No deduction will be made for this claimed debt.

[35] Smith claimed that she paid the realty tax arrears owing on the matrimonial home. This included taxes owing shortly before the valuation date totalling $32,103.25, and another $5,769.97 in taxes incurred between then and the sale of the home on June 16, 2013. Smith claimed that she paid this total ($37,873.22, which includes interest on the arrears). Noel acknowledged during his questioning (which was read into the record by Mr. Jiwa) that he never contributed to payment of the realty taxes. He never sought to resile from that admission in his testimony and, in any event, admitted to this fact too when he failed to respond to Smith’s RTA (although the amount was slightly higher in that document). As the property was jointly owned and all the payments before and after the valuation date were made by Smith, she will be allowed a $37,873.22 deduction for this joint debt.

Date of marriage

[36] The parties disputed the existence and values of two assets.

General household items and vehicles

[37] Both parties claimed a $25,000 deduction for the value of a BMW automobile. They both agreed the automobile was owned by Smith but they dispute whether she gifted it to Noel. Both used the vehicle after it was purchased. Despite the passage of almost eight years since the parties separated (during many of which Smith was represented by a lawyer), and several sworn financial statements, Smith claimed that she had forgotten about the vehicle until Noel disclosed it in a 2020 financial statement (his fifth in these proceedings). Noel claimed that the vehicle had been purchased for him in cash and was only registered in Smith’s name to take advantage of insurance discount rates (this was never explained at trial).

[38] Neither party’s evidence was wholly satisfactory about the circumstances surrounding the purchase of the vehicle. While the court has reservations about Noel’s evidence, Smith’s late recollection about it is also puzzling. Given the court’s skepticism of the parties’ credibility, each will be attributed a $12,500 value for the vehicle of the date of marriage.

Savings

[39] Noel acknowledged that Smith owned shares in a life insurance company (Manulife), and that the shares had a $5,000 value. Noel claimed that he either had shares or savings of equivalent value, though his evidence was not corroborated. Thus, the requested deduction of $5,000 on the marriage date will not be allowed.

Net family property/Equalization payment

[40] Before trial, the parties agreed the identity of many of their assets and their associated values. Adjusting for the disputed assets and values as determined above, Noel owes Smith an equalization payment of $10,769.83, rounded to $10,770.

Support

[41] Each party disputed the other’s 2012 to 2022 incomes and sought to impute significantly higher incomes than admitted. Smith claimed an average annual income of $16,700 and attributed a $124,367 annual income to Noel. She also claimed that she had incurred $282,573.95 in special or extraordinary expenses for the children between 2012 to 2022 for which she sought an undetermined contribution from Noel. Noel claimed that his annual 2012 to 2017 income should be $18,000 based on the 2013 temporary support Order made by Rogers J. For 2018 to 2022, he claimed that his average annual income was $20,670. Mr. Jetha opined that Smith’s average 2012 to 2020 income ranged between $171,222 and $274,625 depending on whether she had an interest in a business owned by Bert Smith and which had been incorporated after the valuation date. Noel attributed a $350,000 average annual income to Smith. On this basis, he claimed that he was entitled to spousal support from and after September 1, 2012.

[42] Neither party provided calculations for the support they claimed was owed by the other but left it to the court to undertake those calculations.

[43] Neither party’s claims have an air of reality.

Statutory framework

[44] The determination of child and spousal support in this case is governed by the Divorce Act[^25], the Child Support Guidelines[^26] (the “Guidelines”) and consideration of the Spousal Support Advisory Guidelines[^27] (“SSAG”).

Child support

[45] Sections 15.1(1) and (3) of the Divorce Act deal with child support:

15.1 (1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to pay for the support of any or all children of the marriage.

Guidelines apply

(3) A court making an order under subsection (1) or an interim order under subsection (2) shall do so in accordance with the applicable guidelines.

[46] The Guidelines relevant in this case include s. 3(1)(a), (b), 7(1), 7(1.1), 7(2) and 7(3):

Presumptive rule

3. (1) Unless otherwise provided under these guidelines, the amount of an order for the support of a child for children under the age of majority is,

(a) the amount set out in the applicable table, according to the number of children under the age of majority to whom the order relates and the income of the parent or spouse against whom the order is sought; and

(b) the amount, if any, determined under section 7.

Special or extraordinary expenses

7. (1) In an order for the support of a child, the court may, on the request of either parent or spouse or of an applicant under section 33 of the Act, provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child’s best interests and the reasonableness of the expense in relation to the means of the parents or spouses and those of the child and to the spending pattern of the parents or spouses in respect of the child during cohabitation:

(a) child care expenses incurred as a result of the employment, illness, disability or education or training for employment of the parent or spouse who has the majority of parenting time;

(b) that portion of the medical and dental insurance premiums attributable to the child;

(c) health-related expenses that exceed insurance reimbursement by at least $100 annually, including orthodontic treatment, professional counselling provided by a psychologist, social worker, psychiatrist or any other person, physiotherapy, occupational therapy, speech therapy, prescription drugs, hearing aids, glasses and contact lenses;

(d) extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child’s particular needs;

(e) expenses for post-secondary education; and

(f) extraordinary expenses for extracurricular activities.

Definition, “extraordinary expenses”

(1.1) For the purposes of clauses (1) (d) and (f),

“extraordinary expenses” means

(a) expenses that exceed those that the parent or spouse requesting an amount for the extraordinary expenses can reasonably cover, taking into account that parent’s or spouse’s income and the amount that the parent or spouse would receive under the applicable table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate, or

(b) where clause (a) is not applicable, expenses that the court considers are extraordinary taking into account, (i) the amount of the expense in relation to the income of the parent or spouse requesting the amount, including the amount that the parent or spouse would receive under the applicable table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate,

(ii) the nature and number of the educational programs and extracurricular activities,

(iii) any special needs and talents of the child,

(iv) the overall cost of the programs and activities, and

(v) any other similar factors that the court considers relevant.

Sharing of expense

(2) The guiding principle in determining the amount of an expense referred to in subsection (1) is that the expense is shared by the parents or spouses in proportion to their respective incomes after deducting from the expense, the contribution, if any, from the child.

Subsidies, tax deductions, etc.

(3) Subject to subsection (4), in determining the amount of an expense referred to in subsection (1), the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense.

[47] Sections 15(1), 15(2), 16, 17 and 18 of the Guidelines are also relevant:

Determination of annual income

15.(1) Subject to subsection (2), a parent’s or spouse’s annual income is determined by the court in accordance with sections 16 to 20.

Agreement

(2) Where both parents or spouses agree in writing on the annual income of a parent or spouse, the court may consider that amount to be the parent’s or spouse’s income for the purposes of these guidelines if the court thinks that the amount is reasonable having regard to the income information provided under section 21.

Calculation of annual income

16. Subject to sections 17 to 20, a parent’s or spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with Schedule III.

Pattern of income

17.(1) If the court is of the opinion that the determination of a parent’s or spouse’s annual income under section 16 would not be the fairest determination of that income, the court may have regard to the parent’s or spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years.

Non-recurring losses

(2) Where a parent or spouse has incurred a non-recurring capital or business investment loss, the court may, if it is of the opinion that the determination of the parent’s or spouse’s annual income under section 16 would not provide the fairest determination of the annual income, choose not to apply sections 6 and 7 of Schedule III, and adjust the amount of the loss, including related expenses and carrying charges and interest expenses, to arrive at such amount as the court considers appropriate.

Shareholder, director or officer

18.(1) Where a parent or spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the parent’s or spouse’s annual income as determined under section 16 does not fairly reflect all the money available to the parent or spouse for the payment of child support, the court may consider the situations described in section 17 and determine the parent’s or spouse’s annual income to include,

(a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year; or

(b) an amount commensurate with the services that the parent or spouse provides to the corporation, provided that the amount does not exceed the corporation’s pre-tax income.

Adjustment to corporation’s pre-tax income

(2) In determining the pre-tax income of a corporation for the purposes of subsection (1), all amounts paid by the corporation as salaries, wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arm’s length must be added to the pre-tax income, unless the parent or spouse establishes that the payments were reasonable in the circumstances.

Spousal support

[48] Sections 15.2(1), (4) and (6) of the Divorce Act set out the court’s jurisdiction to make a spousal support Order, the non-exhaustive list of factors to consider and the objectives of the Order:

Spousal support order

15.2(1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse.

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.

[49] It is within this statutory framework, mindful too of the SSAG, that the parties’ qualifying support incomes and claims will be assessed.

Income

Smith income

[50] Mr. Jetha prepared an analysis of Smith’s income from 2012 to 2020. This analysis provided two scenarios for Smith’s income. Scenario 1 assumed that Smith had no business interest other than her law practice whereas Scenario 2 assumed that she had an 100% interest as beneficial owner of Premium Staffing Ltd (“PSL”; not to be confused with PSSL), a company incorporated in January 2013 by Bert Smith. PSL operated as an immigration staffing agency that facilitated bringing workers to Canada (not unlike PSSL). In addition, the analysis included Smith’s interest in a numbered Ontario company (“Rolling Hills”) that she incorporated in 2013 and whose primary activity was purchasing, selling, and training horses, an activity that neither Smith nor Noel had been involved before their separation, but which Bert Smith had. Under both scenarios, Jetha concluded that Smith’s annual income declined from $473,000 to $64,000. However, Smith’s income tax returns suggest a very different picture.

[51] As with his business interest valuation, Mr. Jetha’s evidence was significantly qualified with similar scope restrictions. Throughout his evidence, his calculations were often noted as missing relevant information. Many of this court’s observations about reconciliation errors and incorrect factual assumptions (for, example, about the viability of the law practice) are relevant here. Some of the observations and evidence are as follows:

(a) Apart from the parties’ interest in the matrimonial home and the value of their business interests, the parties’ net worth was modest on the valuation date. They had many debts: realty taxes for the matrimonial home owing from before 2009 ($32,103.25) were unpaid, Smith owed Canada Revenue Agency $36,968.01 for income tax arrears (agreed by Noel), and Smith owed in excess of $96,000 for credit cards and loans, only $61,180 of which was secured by her car (also agreed by Noel), not including the disputed debt to her family ($57,000). The parties had negligible savings or other liquid assets. Noel testified that the parties enjoyed a very good lifestyle. In fact, it is abundantly clear to this court that the parties’ lifestyle exceeded their ability to pay for it.

(b) It is clear from the evidence that Smith’s income tax returns did not reflect her available income for support purposes.

(c) The valuation date is August 2, 2012. Mr. Jetha’s opinion captures the entirety of the year without a more nuanced breakdown of revenue and expenses before and after that date. While that would not be ordinarily expected, the law firm billings of $254,853 in 2012 decreased to $77,949 in 2013, then to $29,994 in 2014.

(d) Mr. Jetha was never provided with Noel’s personal bank statements for any year after 2012.

(e) Mr. Jetha noted that Noel claimed that Smith (not her husband Bert) was PSL’s owner. Mr. Jetha had not been provided with copies of the company’s minute book, share ledger or corporate tax returns (to verify common share ownership), or the information that PSL had never prepared financial statements or filed corporate tax returns. Apart from a bald allegation that Smith was the beneficial owner of PSL, Noel was never able to provide any documentary link between the two, although the similarity in company names and activities is suspicious. However, suspicion is not evidence. In 2013, PSL had transferred $57,500 to Smith’s law firm and $86,500 to her.

(f) Except for 2013, the year in which Rolling Hills was incorporated by Smith and earned a net income of $18,045, the company was never profitable.

(g) For all three companies, Jetha commented that it appeared as though “a significant amount of discretionary expenses were [sic] incurred,” the implication being that personal expenses were being expensed through the companies, a view shared by this court.

[52] While the court has doubts about the reliability of Mr. Jetha’s conclusions as to Smith’s income, the fact is that Smith has had his report since July 31, 2021, and chose not to tender rebuttal evidence from a comparably qualified expert. She spent little time addressing any of Mr. Jetha’s conclusions at trial and chose instead to challenge those conclusions as deficient due to disclosure she had not provided. As noted below, Noel was suspicious of the ownership of PSL but was unable to prove that linkage on a balance of probabilities. Although perhaps counterintuitive based on this court’s rejection of his evidence about the value of Smith’s business interests, the court will accept (with some hesitation) Scenario 1 of Mr. Jetha’s report. Over the period for which Noel is claiming spousal support (2012 to 2017), Smith’s average annual income was $225,500. For 2012 to 2014 it was $299,333.33, rounded to $299,000 (as adjusted: see Noel Spousal Support Claim below).

Noel income

[53] Not unlike the unsatisfactory nature of Smith’s evidence about her income, Noel’s evidence about his employment history and earnings resemble a “Where’s Waldo” puzzle. Taking into account his affidavit sworn on January 30, 2013, that was considered by Rogers J. when she dismissed Noel’s request for temporary spousal support and attributed to him an $18,000 income, his decade of income tax returns (most of which suggest an income less than the prevailing annual minimum wage), his Response to Smith’s 2020 Request to Admit (“the Response”), his failure to respond to Smith’s 2022 Request, his redacted resume and his trial testimony, the best that this court can discern about his work, earnings history and ability to earn income are the following:

(a) He is bilingual (French and English).

(b) He graduated from a college in Montreal and worked as a computer technician in that city until he moved to Toronto in 1998 and worked full-time as a contract technician for four different organizations.

(c) In 2003, he began working as an office manager in Smith’s law practice. His duties involved a broad range of managerial and supervisory responsibilities including accounting, marketing and clerical support. This ended in July 2012 around the time that the parties separated.

(d) In 2004, ARS Construction Inc. was formed to employ skilled workers/recent immigrants. This related to Smith’s immigration practice. Noel was identified as the firm’s administrator and director. The company did little work, was unprofitable, and ceased operations a few years later.

(e) Between July 2007 and April 2008, Noel took mortgage broker courses from Seneca College and received accreditation in that field on October 31, 2008. He surrendered this licence effective March 18, 2013.

(f) Noel claimed in his resume filed at trial (Exhibit # 27) that he earned his real estate agent’s licence in July 2012 and worked in that field until July 2014. Yet, in his 2020 Response, he admitted that he obtained his licence in 2011 and worked as an agent until 2015. He claimed that he earned nothing from this line of work.

(g) As a self-employed mortgage broker from November 2008 to June 2014, Noel claimed that he either earned nothing or very little ($13,920 in 2014).

(h) Noel worked as a mortgage broker for CIBC from July 2014 to January 2016 and as a mobile mortgage specialist with TD Bank until August 2021, in a full-time commission-based position.[^28]

(i) For reasons which he says related to restructuring at TD Bank, Noel was laid off in August 2021 and since then has been unable to find work despite his efforts. He did not respond to Smith’s Request admitting that he continued to work for the bank. The evidence of a Mortgage Manager, TD Bank Group (admitted on consent), was that the median earning of a mobile mortgage specialist for the period ending June 2021 was $87,058, significantly more than Noel acknowledged ever earning.

(j) In his 2020 Response, Noel declined to acknowledge that he had any disability that prevented him from working full-time or part-time.[^29]

(k) Despite being deemed to have admitted taking numerous sick leaves from TD Bank which would have reduced his income, Noel tendered no evidence about his health at trial.

(l) Noel was unemployed at trial.

[54] Excepting 2020, a year in which he earned $30,676, and 2021, a year in which he earned $38,874 (both as assessed), Noel’s income, whether as imputed by Rogers J. or as otherwise disclosed (and assessed), never exceeded the annual minimum wage. It is puzzling that despite having claimed to have played so instrumental a part in the financial empire that Noel attributed to the parties during their cohabitation, he was so unsuccessful so consistently in his post-separation years in his employment efforts. This was despite him working in the fields of computer technology (about five years before 2003), real estate (either two or five years according to the evidence), and as a mortgage broker or specialist (for about seven years) earning significantly less than the median income earned by his colleagues. Given his language skills, education, work experience and acknowledged skillset, this stark difference cannot be reconciled by poor health (of which there is no evidence). When cross-examined as to why he had continued to work so long in a job that earned him less than the minimum wage, Noel responded that it was the “opportunity” to earn more. But that never happened.

[55] In Ojigho v. Burge,[^30] one of the issues at trial involved imputation of income. Kurz J. helpfully summarized the leading case law, which this court adopts, at paras. 21-27:

[21] The leading case regarding the imputation of income to a support payor remains the decision of the Ontario Court of Appeal in Drygala v. Pauli, (2002), 2002 CanLII 41868 (ON CA), 61 O.R. (3d) 711 (Ont. C.A.). At paragraph 32 of that decision, the court described the imputation of income as:

... [O]ne method by which the court gives effect to the joint and ongoing obligation of parents to support their children. In order to meet this legal obligation, a parent must earn what he or she is capable of earning.

[22] The Mother asks the court to impute income to the father on the basis of both intentional underemployment and failure to provide income information when under a legal obligation to do so.

[23] In Szitas v. Szitas, 2012 ONSC 1548, Chappel J. explained the meaning of intentional underemployment, citing Drygala v. Pauli, as follows:

The Ontario Court of Appeal has held that in determining whether to impute income on the basis that a party is intentionally underemployed or unemployed pursuant to section 19(1)(a) of the Guidelines, it is not necessary to establish bad faith or an attempt to thwart child support obligations. A parent is intentionally underemployed within the meaning of this section if they earn less than they are capable of earning having regard for all of the circumstances. In determining whether to impute income on this basis, the court must consider what is reasonable in the circumstances.

[24] In reviewing the case law at para. 57 of Szitas, Chappel J. cites the seven following principles that apply to the imputation of income to a support payor:

1. There is a duty on the part of the payor to actively seek out reasonable employment opportunities that will maximize their income potential so as to meet the needs of their children.

2. Underemployment must be measured against what is reasonable to expect of the payor having regard for their background, education, training and experience.

3. The court will not excuse a party from their child support obligations or reduce these obligations where the party has persisted in un-remunerative employment, or where they have pursued unrealistic or unproductive career aspirations. A self-induced reduction of income is not a basis upon which to avoid or reduce child support payments.

4. If a party chooses to pursue self-employment, the court will examine whether this choice was a reasonable one in all of the circumstances, and may impute an income if it determines that the decision was not appropriate having regard for the parent's child support obligations.

5. When a parent experiences a change in their income, they may be given a "grace period" to adjust to the change and seek out employment in their field at a comparable remuneration before income will be imputed to them. However, if they have been unable to secure comparable employment within a reasonable time frame, they will be required to accept other less remunerative opportunities or options outside of the area of their expertise in order to satisfy their obligation to contribute to the support of their children.

6. Where a party fails to provide full financial disclosure relating to their income, the court is entitled to draw an adverse inference and to impute income to them.

7. The amount of income that the court imputes to a parent is a matter of discretion. The only limitation on the discretion of the court in this regard is that there must be some basis in the evidence for the amount that the court has chosen to impute.

[Italics added. Citations omitted.]

[25] Amplifying on Chappel J.'s seven points, while I have broad discretion to impute income to a payor, that discretion is not absolute. As Gillese J.A. wrote for the court at para. 44 of Drygala v. Pauli:

Section 19 of the Guidelines is not an invitation to the court to arbitrarily select an amount as imputed income. There must be a rational basis underlying the selection of any such figure. The amount selected as an exercise of the court's discretion must be grounded in the evidence.

[26] In Drygala v. Pauli, the Ontario Court of Appeal set out the following three questions which should be answered by a court in considering a request to impute income under s. 19 (1) (a) of the CSG:

1. Is the party intentionally under-employed or unemployed?

2. If so, is the intentional under-employment or unemployment required by the needs of any child or by the reasonable educational or health needs of the parent or spouse?

3. If not, what income is appropriately imputed?

[27] In Lavie v. Lavie, 2018 ONCA 10, the Court of Appeal for Ontario seems to have gone a step further in the test for imputing income to a spouse based on intentional underemployment. There, Rouleau J.A., speaking for the court, set out a very clear black line test for intentional underemployment. It is one in which the subjective reasons for the underemployment, (and by extension, unemployment) are not relevant. He wrote at para. 26:

26. There is no requirement of bad faith or intention to evade support obligations inherent in intentional underemployment: Drygala v. Pauli, at paras. 24-37. the reasons for underemployment are irrelevant. If a parent is earning less than she or he could be, he or she is intentionally underemployed.

[56] While this court does not need to find that Noel was intentionally unemployed or underemployed, it is not satisfied that he acted reasonably in persisting in a career path that earned him, for most years between 2012 to 2022, significantly less than the minimum wage (even the poverty line) or that he sought out reasonable, alternative employment options to maximize his income potential. The court is additionally troubled by Noel’s decade long non-disclosure of his personal bank accounts, which could have shed a more informative light on his living circumstances. The impression is that Noel unwisely viewed his disclosure obligations as transactional in that he believed (and this court agrees) that Smith had never fully honoured her disclosure obligations. In Jayawickrema v. Jayawickrema,[^31] this court observed that a party treating disclosure as a quid pro quo did so imperilling their credibility.

[57] Given the financial circumstances which Noel faced when the parties separated (i.e., out of the matrimonial home, no employment income from the law practice and dealing with criminal charges) this court is prepared to accept, and to impute to him, an income of $18,000 for 2013 and 2014 but nothing for 2012. For 2015 to 2022, excepting 2020 and 2021, there shall be imputed an income equivalent to the annual minimum wage. For 2020 Noel’s assessed income was $30,676 and for 2021 it was $38,874.

Table child support

[58] There are three children of the marriage (SN born August 27, 1999; KN born November 10, 2004; and RN born July 9, 2007). All were entitled to table child support between 2012 and 2014. The table amount of support determined by Rogers J. was $317 a month effective May 1, 2013, based on an income of $18,000. As child support is a child’s right, the Order was temporary, the valuation date was disputed and no reference was made in the Order to the earlier period from which Noel’s obligation should be calculated, Noel owes child support calculated in accordance with the Guidelines from August 1, 2012 (the agreed valuation date was August 2, 2012).

[59] As neither party provided the court with annual minimum wage calculations, the court accessed the federal government’s database.[^32] The following are the results:

(a) 2012-a yearly average of $19,987.50 results in a monthly guideline support payment of $403 for a total of $2,015 for the five months post-separation to the end of the year (three children);

(b) 2013- a yearly wage of $19,987.50 results in a monthly guideline support payment of $403 for a total of $4,836 for the year (three children);

(c) 2014- a yearly wage of $20,840.63 results in a monthly guideline support payment of $435 for a total of $5,220 for the year (three children);

(d) 2015- a yearly wage of $21,571.88 results in a monthly guideline support payment of $451 for a total of $5,412 payable for the year (three children);

(e) 2016- a yearly wage of $22,010.63 results in a monthly guideline support payment of $459 for a total of $5,508 payable for the year (three children);

(f) 2017- a yearly wage of $22,327.50 results in a monthly guideline support payment of $465 for the first eleven months and $451 for December 2017 for a total of $5,566 payable for the year (three children);

(g) 2018- a yearly wage of $27,300 results in a monthly guideline support payment of $459 for a total of $5,508 payable for the year (three children). Even though SN graduated from High School in June 2018 he began attending a Centennial College. There is no evidence that he lived away from home;

(h) 2019- a yearly wage of $27,300 results in a monthly guideline support payment of $459 for a total of $5,508 payable for the year (three children);

(i) 2020- a yearly wage of $27,421.88 results in a monthly guideline support payment of $459 for three children and then $415 for two children from and after June 2020 when SN no longer qualified as a financially dependant child of the marriage for a total of $5,244 (i.e., ([6 x $459] plus [6 x $415]);

(j) 2021-a yearly wage of $27836.25 results in a monthly guideline support payment of $425 for a total of $5,100 payable for the year (two children);

(k) 2022-a yearly wage of $29,493.75 results in a monthly guideline support payment of $452 for a total of $5,424 payable for the year (two children);

(l) 2023-based on the 2022 yearly wage to June 30, 2023, for a total of $2,712 (two children) and then $251 (one child) to December 31, 2023 ($1,506) for a total of $4,218. Smith testified that KN would graduate from high school in June 2023. There is no evidence about his post-secondary schooling plans. RN attends a private boarding school located outside of Toronto for which Bert Smith pays.

[60] The court recognizes that while Rogers J. imputed an income of $18,000 to Noel, the evidence suggests that he had no other employment immediately after the parties’ separated so no child support obligation shall be attributed to him for 2012. Accordingly, table child support presumptively payable by Noel from January 1, 2013, to December 31, 2023, is $57,544. This does not take into account special or extraordinary expenses, or credit for child support paid.

Special or extraordinary expenses

[61] In her Request, Smith itemized $282,573.95 in special or extraordinary expenses which she claimed that she had paid for the children between 2012 and 2022, but which she also acknowledged would be subject to evidence and argument at trial. Under “Education”, these expenses included private school and college. “Extracurricular activities” included (mostly) football, (some) piano for SN and RN, and occupational therapy and an assessment for KN (KN has special needs).

[62] Excepting post-secondary education and therapy expenses, none of these expenses qualifies as a contributory Guideline expense in this case. Surprisingly, very little evidence was led or questioned about this claim or its components. In any event, they are either captured by the table amount for support or, in the case of private schools, unaffordable for a recently separated family whose primary income earner was embroiled in family and business litigation, including multiple professional disciplinary proceedings ultimately leading to disbarment. To give one example, SN was attending a local private school when the parties separated ($13,800 annual expense) and then a more expensive private school in 2014 and 2015 ($57,371 annual expense). Without financial assistance from her spouse, Smith could not afford this expense; Noel was certainly in no position to contribute nor was there any evidence that Smith ever sought Noel’s consent to incurring an expense of this magnitude.

[63] Smith’s evidence as to when SN completed high school and continued his post-secondary studies was also inconsistent. In her testimony, Smith said that SN completed high school in June 2018, but she tendered a Centennial College acceptance letter dated October 30, 2017, welcoming SN to its Electrical Engineering Technician course starting January 2018. SN worked as a labourer in the summer of 2018 and in 2019, but no evidence was provided to the court about his earnings. Smith claimed full year expenses for SN for the 2018-2019 and 2019-2020 academic years (i.e., 2 x $3,988.50) and another $3,200 for what she said was tuition for a later trade school. However, the only documentary evidence she produced was a December 2017 fees statement for Centennial College for 2018-2019.

[64] Smith was not cross-examined on these child-related expense claims by Noel.

[65] This court is aware of KN’s needs from the Parenting Ruling. However, the amounts claimed by Smith were either incurred before the parties separated (such as the March 28, 2012, Maximind Learning Centres Inc. invoice for $3,390 for specified neurodevelopmental exercises and related services) or, based on the post-separation invoices tendered in evidence, only totaled $1,470 ($2,740 claimed). Given Jetha’s evidence about Smith’s use of her law firm’s accounts to pay personal expenses, it is not an unreasonable inference that the Maximind account was paid from that account or formed part of the debt claimed by Smith (if unpaid) on the valuation date. There is no evidence about when this invoice was paid, how it was paid and by whom. Accordingly, only the proven therapy expense of $1,470 will be shared.

[66] Despite the less than satisfactory nature of the evidence, the court will accept that Smith incurred the Centennial College expenses for SN (total $7,977), and the documented therapy expense of KN ($1,470), for a total proven s. 7 expense claim of $9,377. Pro-rating the parties’ incomes and adjusting for the spousal support calculated below Noel shall pay to Smith $1,428.[^33]

Summary of child support payable

[67] The table and s. 7 expenses payable by Noel total $59,272. As the parties have agreed that Noel has paid $15,533 for child support, the total payable to December 31, 2023, is $43,449, rounded to $43,450.

[68] If either party disputes the annual minimum wage calculations set out in paragraph [59], the parties may make arrangements through the court office to speak to the matter.

Noel Spousal support claim

[69] To comply with the statutory objectives of a spousal support Order, the court is obliged to consider the non-exhaustive list of factors set out in s. 15.2(4) and (6) of the Divorce Act. Although expansively applied, entitlement is not presumed; it is still a threshold issue. Marriage, even a long marriage, does not automatically entitle a spouse to support.[^34] Nor does income disparity.[^35] Of the three recognized bases for entitlement: compensatory, non-compensatory (i.e., need), or contractual, only the first two are relevant in this case.

[70] In the Spousal Support Advisory Guidelines: The Revised User’s Guide,[^36] Professors Rogerson and Thompson reviewed the basic principles of entitlement, first addressing compensatory claims:

Compensatory claims are based either on the recipient’s economic loss or disadvantage as a result of the roles adopted during the marriage or on the recipient’s conferral of an economic benefit on the payor without adequate compensation.

Common markers of compensatory claims include: being home with children full-time or part-time, being a “secondary earner”, having primary care of children after separation, moving for the payor’s career, supporting the payor’s education or training; and working primarily in a family business.

[71] As for non-compensatory claims:

Non-compensatory claims involve claims based on need. “Need” can mean an inability to meet basic needs, but it has also generally been interpreted to cover a significant decline in standard of living from the marital standard. Non-compensatory support reflects the economic interdependency that develops as a result of a shared life, including significant elements of reliance and expectation, summed up in the phrase “merger over time”.

Common markers of non-compensatory claims include: the length of the relationship, the drop in standard of living for the claimant after separation, and economic hardship experienced by the claimant.

[72] The following factors are relevant in this case:

(a) The parties cohabited for slightly more than thirteen years.

(b) Smith was pursuing her law degree in Quebec, and Noel had been trained and employed as a computer technician. There is no evidence that he was not self-sufficient.

(c) The court accepts that after the parties relocated from Montreal to the Toronto area in the early 2000s and Smith was called to the Ontario Bar, she started a law firm where Noel began working in 2003. This employment lasted until the parties separated.

(d) Neither party spent much (if any) time in their trial evidence outlining their non-business-related functions during cohabitation (i.e., division of family responsibilities such as child-rearing and household management). The involvement of the OCL in the proceedings which led to the Parenting Ruling did not involve a s. 112 clinical investigation in which a report describing the family history would have been prepared. The OCL evidence (a clinician’s affidavits were relied upon by the court) was consistent that the children preferred to live with their mother and wished to have no or very little contact with their father. The Parenting Ruling also found alienation of the children by Smith. The court also found that Noel’s conduct was a contributing factor to the children’s estrangement from him and a significant factor in the abortive failure of reunification therapy.

(e) The primary source of family income came from the law practice (which included immigration-related services). In his Answer, Noel claimed that he undertook office management, human resources, and administrative assistant responsibilities. This was also his unchallenged evidence at trial.

(f) The parties drew funds from the law practice when needed; there were no fixed salaries. The evidence of the parties, confirmed by Jetha, is that there was a commingling of personal, family, and business expenses, which he acknowledged were poorly or inconsistently recorded and often irreconcilable from an accounting and tax perspective.

(g) Noel’s only source of income came from the law practice. When the parties separated, he left the matrimonial home (he was later charged with a series of domestic violence offences), was locked out of the law office premises, and had no immediate source of income. He went to live with his mother. Apart from his interest in the matrimonial home, Noel had a negligible net worth. Both parties’ 2012 financial statements disclosed expenses well exceeding their income, significant unpaid realty taxes on their matrimonial home and (at least in Smith’s case) over $36,000 in personal income tax arrears.

(h) When the parties separated, Smith remained in the matrimonial home with the children, continued her law practice, and paid all the family expenses without contribution from Noel.

(i) During the parties’ cohabitation, Noel earned a mortgage broker’s licence, was self-employed (Optimum Financial Services), and later obtained a licence as a real estate agent. This court is unable to determine how much income Noel earned from these activities or whether (if anything was earned) he contributed anything to the family expenses. He said he earned nothing, and Smith testified that he contributed nothing to the family’s expenses.

(j) As already noted, on February 13, 2013, Rogers J. made an interim Order that an income of $18,000 be imputed to Noel and that he pay table child support of $317 a month. He was awarded $2,000 payable by Smith to assist him in completing his real estate courses and registration (he also appears to have been a Century 21 sales representative since 2010). Rogers J. dismissed his request for spousal support. There is no evidence that he ever renewed his motion for temporary spousal support.

(k) Between May 1, 2013, and trial (a period of ten years), Noel paid only $15,533 for child support. In some years, he paid nothing, and in 2020 and 2021, he never adjusted the amount of support presumptively payable in accordance with the Guidelines when his income exceeded $18,000.

(l) Noel’s financial statements also suggest income or money received greater than his declared income. For example, he swore three financial statements (November 10, 2020; April 22, 2022; May 20, 2023) in which he disclosed that his mother and girlfriend who lived with him (they all resided in the mother’s home) contributed $5,500 a month to the household expenses (i.e., $66,000 a year). None of the statements disclosed those expenses. The girlfriend’s income was not disclosed as required. The mother’s contribution (unquantified) was not disclosed but Noel said that whatever she was providing in terms of financial assistance he was obliged to repay. In 2020 he said he owed his mother $200,000, an amount that was unchanged in his 2022 financial statement. For his 2023 financial statement, it appears that he simply moved around debt by increasing what he claimed he owed his mother by $50,000 to $250,000 and decreasing his claimed debts for unpaid legal fees by $50,000.

(m) Noel played no part in Smith’s change of vocation after she started Rolling Hills in 2013.

(n) There is no evidence that Noel had any medical or health issues that impacted his ability to work or to look for more remunerative work.

(o) There is no evidence that Noel undertook any vocational training for other, more remunerative employment.

[73] The evidence in this case falls far short of a compensatory-based entitlement. However, Noel has a non-compensatory needs-based entitlement, although modest and nowhere as extravagant as claimed. There was a negative impact on his standard of living when the marriage broke down. He had no immediate source of income and no savings, but he did receive his half-share of the sale proceeds from the matrimonial home in mid-2013. He also had to contend with the domestic violence criminal charges for which he was acquitted in 2014. He borrowed from his mother. There was economic hardship. On the other hand, Smith was only able to maintain a standard of living for the children and her somewhat comparable to what the parties enjoyed during cohabitation because of Bert Smith’s financial support.

[74] Even so, this court has serious doubts about Noel’s post-separation efforts to become self-sufficient, especially with the resolution of the criminal charges. He impressed the court as intelligent and well-spoken (notwithstanding the court’s view about his overall credibility). He worked for two major banks between 2014 and 2021. The median earnings of his peers with his last employer well exceeded his earnings during all those years. Why? Noel gave no satisfactory explanation. It seems too that he was able to borrow substantial money from his mother to fund his living expenses and this litigation but applied very little (if any) of those funds to his children’s support.

[75] While Noel catalogued his job search efforts (Exhibit 22), he spent little to no time explaining why he had such a puzzling lack of success. His efforts related to areas in which he worked; there was no evidence of him exploring other kinds of remunerative employment. As observed by Chappel J. in Szitas, income can still be imputed when a parent pursues unremunerative employment or persists in pursuing an unproductive, aspirational career path inconsistent with their child support obligations. Quite simply, Noel didn’t demonstrate the kind of self-sufficiency, retraining initiative, or resolve that would be expected of someone with his language skills, qualifications and experience and whose ability to work was not compromised by health issues. He is only entitled to non-compensatory spousal support on a needs-basis from August 2, 2012 until December 31, 2014.

[76] Neither party provided the court with any child or spousal support calculations remotely capturing the determinations of this court. While the Jetha 2012 to 2014 three-year average is $299,000, this amount needs to be adjusted to account for the following: until August 2012, Noel had the advantage of family’s expenses being funded through the law practice; the reliability of Jetha’s conclusions were compromised by his reconciliation errors; and Bert Smith’s evidence about his financial assistance to Smith. Neither of the latter two considerations is capable of other than an estimation about their impact on Smith’s available income. However, as observed by Kiteley J. in Meade v. Meade[^37], a case upon which Noel relies, an adverse inference should be drawn against Smith because she failed to put forward “not only adequate, but comprehensive records of income and expenses” and, importantly, she failed to credibly respond to the Jetha report by tendering expert rebuttal evidence. Accordingly, Mr. Jetha’s opinion about Smith’s available 2012 income will be pro-rated to $275,600, and the three-year average modestly adjusted (by $15,000 a year) to account for reconciliation errors and support from Bert Smith.[^38] Considering the three-year average of $219,000 (rounded) available income to Smith and the two-year average at the minimum wage for Noel (excluding 2012) being $20,415, the SSAG suggest a monthly spousal support range from $1,794 to $2,392 (low to high), leaving Noel with a net annual income ranging from around $41,770 to $49,945.[^39] The range is slightly higher if no s. 7 contribution expense is considered. These calculations assume tax deductibility for Smith and inclusion of the support paid by Noel in their tax returns.

[77] It is fair and reasonable that Smith pay to Noel the average between the SSAG mid-point ($2,093) and high end of the range ($2,392) or $2,240 monthly from August 2, 2012, to December 31, 2014, a period of twenty-nine months. The resulting figure of $64,960 should be discounted by 30% to $45,472, rounded to $45,470, to reflect an estimated average between the parties’ tax rates.[^40]

Summary of equalization and child and spousal support calculations

[78] Noel shall pay an equalization payment of $10,770 to Smith. He shall also pay $43,450 for child support calculated to December 31, 2023. Noel shall pay the sum of $54,510 to Smith.

[79] Smith shall pay $45,470 to Noel for spousal support. This shall be a payment net of any tax.

[80] The net difference is $8,750 payable to Smith by Noel.

[81] As there remains $26,504.74 in trust from the 2013 sale of the matrimonial home, Smith is entitled to $22,002.37, rounded to $22,000 and Noel is entitled to the balance, or $4,504.74. The solicitor holding the funds in trust shall release these amounts to the parties.

[82] There shall be no pre-judgement interest award. The parties are equally culpable for the unacceptable delay in this case; their litigation conduct cannot be rewarded.

Disposition

[83] A final Order shall issue with respect to paragraphs 78 to 82.

[84] In addition, Noel shall pay to Smith table child support of $251 a month effective January 1, 2024, for RN based on an imputed income of $29,493.75. Either party may move after January 1, 2024, for an Order varying child support for KN and RN without having to start a Motion to Change. This court shall remain seized of any such proceeding.

[85] A Support Deduction Order shall issue.

[86] Each party shall also bear their own costs of these proceedings and those reserved from the Parenting Ruling. This litigation has taken over ten years. There have been unacceptable delays. Smith delayed or obstructed disclosure (as did Bert Smith in the parenting component of the parties’ litigation). Noel advanced suspicions in the absence of proof. There has been alienation, exaggerated claims about both parties’ incomes, and contributory expenses untethered to reality. In so many respects, the parties have conducted their part of these proceedings as a continuing legal vendetta against each other.

The Honourable Justice D.A. Jarvis

Date: November 28, 2023

[^1]: R.N. v. A.N., 2021 ONSC 6461. [^2]: The parties were divorced in 2014, and Smith remarried. [^3]: Exhibit # 4, Transcript of Judgment of the Honourable Justice J. Brunet, p.4. [R. v. Noel]. [^4]: 2018 ONSC 7315. [^5]: R.N. v. A.N., at paras 68-73. [^6]: Serra v. Serra, 2009 ONCA 105, 93 O.R. (3d) 161. [^7]: Serra, at para. 109. [^8]: Forget v. Forget, 2001 CarswellOnt 3271 (Ont. S.C.), at para. 17. [^9]: Splett v. Pearo, 2011 ONSC 5329, at paras. 4-9. [^10]: Serra, at para. 111. [^11]: R.N. v. A.N., at paras. 69-70. [^12]: R.N. v. A.N., at para. 72(e) citing R. v. Noel. [^13]: Disclosure Ruling, at para. 13. [^14]: R.N. v. A.N., at paras. 72(g)-(h). [^15]: Shen v. He, 2023 BCSC 1417, at paras. 67-69; Ouelette v. Uddin, 2018 ONSC 4520, at para. 30; Al-Sajee v. Tawfic, 2019 ONSC 3857, at para. 42. [^16]: The parties agreed at trial that there should be added to the $70,000 value of Smith’s Mercedes Benz, one-half of the difference between her value and Noel’s $75,000 estimated value. [^17]: Paras. 41-43 of Exhibit #1 (RTA). [^18]: See Labatte. v. Labatte., 2022 ONSC 4787, at paras. 50-56 for an excellent analysis by Faieta J.. [^19]: Pursuant to Practice Standard No.10 of the Institute of Chartered Business Valuators, paragraph 6, a “Calculation Value Report contains a conclusion as to the value of shares, assets or an interest in a business that is based on minimal review and analysis or no corroboration of relevant information, and generally set out in a brief Valuation Report”. [^20]: The claim was for $75,000 and related to events arising in July and September 2010. [^21]: Barn v. Dhillon, 2023 ONCA 654. [^22]: An income analysis report (Jetha, see below) identified a $57,500 payment to the law firm in 2013 by a company newly incorporated in that year by Bert Smith. [^23]: Family Law Act, R.S.O. 1990, c. F.3. [^24]: Paragraph 13 of the Rogers Order directed that Smith’s share of the matrimonial home sale proceeds be directed to her real estate lawyer for the purchase of her new residence. This debt was not disclosed in Smith’s mortgage applications either. [^25]: Divorce Act, R.S.C., 1985, c. 3. [^26]: Federal Child Support Guidelines, SOR/97-175. [^27]: Spousal Support Advisory Guidelines (Ottawa: Department of Justice Canada, 2008). [^28]: Noel testified that he had to surrender his real estate and mortgage broker licences to work at CIBC. [^29]: Requests 134-136 (Exhibit #1). [^30]: Ojigho v. Burge, 2023 ONSC 2029. [^31]: Jayawickrema v. Jayawickrema, 2020 ONSC 2492, at para. 27. [^32]: General Hourly Minimum Wage Rates in Canada since 1965-Canada.ca (services.gc.ca). [^33]: A Divorcemate calculation accompanies this Ruling. It uses the spousal support calculations found below. [^34]: Fyfe v. Jouppien, 2011 ONSC 5462. See Fisher v. Fisher, 2008 ONCA 11, 88 O.R. (3d) 241. [^35]: Dickson v. Dickson, 2021 ONSC 7180, at paras. 6, 7. [^36]: Carol Rogerson and Rollie Thompson, Spousal Support Advisory Guidelines: The Revised User's Guide (Ottawa: Department of Justice, 2016). [^37]: Meade v. Meade, 2002 CanLII 2806 (ON SC), 2002 CarswellOnt 2670 (Ont. S.C), at para. 81. [^38]: The pro-rated amount for 2012 is $260,916 (i.e., [$473,000 x 7/12] less $15,000) for 2012, rounded to $261,000; $218,000 for 2013 (i.e., $233,000 less $15,000); and $177,000 for 2014 (i.e., $192,000 less $15,000). The average is $218,666, rounded to $219,000. A similar calculation was made for Noel using the minimum wage for 2012 and the full 2013 and 2014 minimum wage figures. The average is $20,415. [^39]: The range may be marginally lower but only a one-time adjustment for the s. 7 expense is applied. [^40]: This figure is admittedly arbitrary but not inconsistent with the approach in Charron v. Carrière, 2016 ONSC 7523.