COURT FILE NO.: FS-14-19641
DATE: 20230207
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
I.S.
Applicant
– and –
M.S.
Respondent
– and –
T.O.E. Added Party
Andrew Feldstein and Rachel Zweig, for the Applicant
Martine Ordon, for the Respondent and the Added Party
Sheru Abdulhusein, for the Family Responsibility Office
HEARD: February 2, 2023
M.D. Faieta j.
AMENDED REASONS FOR DECISION
[1] A brief description of the background of this case in required in order to have some context for the issues, most of which are relatively small, that are before this court.
[2] M.S. commenced an extra-marital affair with I.S. in 2010. In December 2013, M.S. purchased a house in Toronto. I.S. became the sole registered owner of the house subject to a two-year interest free mortgage held solely by T.O.E., another company solely owned by M.S., in the amount of the purchase price.
[3] The parties’ relationship ended sometime in 2014. On August 23, 2014, the parties’ child, J., was born. This Application was commenced a few days later for, amongst other things, child support and spousal support. A few days later, M.S. commenced paying child support of $3,500 per month on a without prejudice basis. On October 2, 2015, the parties entered a domestic contract (“the Agreement”). The Agreement provides that M.S. would cause T.O.E. to extend the interest-free period of the mortgage to June 30, 2018 whereupon I.S. would have the option of either purchasing or selling the house.
[4] On January 11, 2017, the Agreement was filed with the Ontario Court of Justice. Shortly thereafter, the Agreement was filed with the Director, Family Responsibility Office, for enforcement.
[5] On September 1, 2017, M.S. advised that she had obtained a commitment from a bank to provide mortgage financing for the house and that she wished to redeem T.O.E.’s mortgage.
[6] On October 16, 2017, M.S. commenced a further application in this Court (FS-17-21818) to set aside the Agreement on the grounds that I.S. had repudiated the Agreement by failing to comply with its term.
[7] In November 2017, in this proceeding, I.S. brought a motion to compel T.O.E. to allow her to redeem the mortgage. This motion was dismissed on the basis that there were significant factual and legal issues regarding the enforceability of the Agreement: I.S. v. M.S., 2017 ONSC 7160.
[8] In May 2021, following a 17-day trial, Nishikawa J. found that I.S. had breached the Agreement (specifically the access and confidentiality provisions and the provision requiring that notice be given to M.S. before filing the Agreement with the Financial Responsibility Office) but dismissed M.S.’s application to set aside the Agreement on the basis of repudiation: See M.S. v. I.S., 2021 ONSC 3715 (“the Trial Decision”). The Order provides, amongst other things, that:
(1) The Agreement remains in full force and effect.
(2) I.S.’s claim for breach of the Agreement is dismissed.
(3) T.O.E.’s claim for default on the mortgage is dismissed.
(4) M.S. and I.S. shall adhere to all the terms of the Agreement and shall at all times perform their obligations in good faith and in J.’s best interest.
[9] On October 7, 2021, Nishikawa J. found that no damages flowed from I.S.’s breach of the Agreement.: See M.S. v. I.S., 2021 ONSC 6685 (“the Supplementary Decision”) However, the court found that I.S. was entitled to be reimbursed: (1) $10,479.28 which represents two-thirds of the property taxes and insurance on the house from the date that M.S. ceased paying them to June 30, 2018; (2) $12,497.56 which represents the amount owed for inflation on child support. In addition, M.S. was to make a contribution of $9,000.00 to an RESP for J. No order for costs was awarded in respect of the family law proceeding. T.O.E was ordered to pay costs of $60,000 in respect of its unsuccessful mortgage enforcement proceeding.
[10] At paragraph 17, Nishikawa J. reminded the parties that “… it would be in everyone’s interest to resolve ongoing disputes, such as the RESP contributions and ongoing section 7 expenses, without the need for further motions or proceedings”. The parties have been unable to do so with the result that this motion was brought by the Applicant along with a cross-motion by the Respondent for relief that largely relief relates to the Applicant’s motion.
ISSUE #1: OUTSTANDING COSTS AWARD
[11] By Order dated October 7, 2021, T.O.E. was ordered to pay costs of $60,000.00 to I.S. in respect of the mortgage enforcement proceeding. T.O.E. has not done so.
[12] The Applicant seeks the following order:
If T.O.E or M.S on behalf of T.O.E does not pay the $30,636.85 plus interest in full satisfaction of the costs order of October 7, 2021 within 15 days, then T.O.E shall be unredacted/uninitialized for the purpose of enforcing the costs order dated October 7, 2021.
If T.O.E or M.S on behalf of TOE pay the $30,636.85 plus interest in full satisfaction of the costs order within 15 days of this order, there shall be no monies owing from the Applicant to the Respondent towards the $29,363.15 the Applicant overpaid to the Family Responsibility Office for child support.
This Order shall be placed in a new court file with a new court file number, containing no reference whatsoever to the initialized file. A copy of the Endorsement containing this direction was to be included in the file, placed in a seal envelope and marked “Sealed by the Order of _______” with the appropriate date.
[13] At the hearing of the motion, the parties (I.S., M.S. and T.O.E.) agreed that the amount outstanding in respect of this costs is $25,800.00. T.O.E. shall pay that amount directly to the Applicant by February 16, 2023. Should T.O.E. fail to do so then neither T.O.E. nor M.S. shall not commence or respond to another step in this proceeding without leave of this Court.
ISSUE #2: COST OF LIVING ADJUSTMENT
[14] Paragraph 39 of the Agreement states:
On the first day of the first month following the anniversary of the execution of this Agreement and on each anniversary thereafter, the $5,000.00 amount or the $2,500.00 amount, whichever is applicable, will increase in accordance with the Consumer Price Index for All Items Canada by the indexing factor for the third month immediately before the indexing date in that year. For example, if the indexing date is April 1, the indexing factor applicable on April 1, 2015, will be the indexing factor for January 1, 2015.
[15] The Applicant seeks the following order:
M.S. shall pay $18,304.22 towards inflation owing on child support from June 2, 2021 to February 28, 2023 to be enforced through the Family Responsibility Office within 15 days of this order.
M.S’s ongoing monthly table support due on the first of each month commencing March 1, 2023 shall be $6,045.60 until further adjustment to be enforced through the Family Responsibility Office.
M.S shall provide the Applicant with his position on the proper inflation amount to commence as of the anniversary of the Agreement by September 1 of each year. The Applicant shall provide her position within 14 days. If the parties cannot agree, they shall submit a 14B for the court to determine the proper amount as of October 1, of each year.
[16] Counsel for FRO advises that FRO will not enforce the COLA portion of a child support order. Accordingly, the proposed enforcement mechanism sought by the Applicant will not be granted.
[17] The Applicant relies upon the affidavit of Jen Capuno, sworn January 3, 2023, which attaches a report of the same date, that provides her analysis of the cumulative cost-of-living analysis for child support purposes.
[18] By Order dated October 7, 2021, Nishikawa J. ordered that “M.S. shall pay $12,497.56 to the Respondent [I.S.] for inflation on child support”.
[19] At paragraph 114 of the Supplementary Decision, Nishikawa J. accepted the submissions of M.S. and found that $12,497.56 was owed for inflation on child support. Given M.S.’s submissions to Nishikawa J. on this point [see paragraph 5 and Tab c of M.S.’s submission dated July 9, 2021], I interpret the Supplementary Decision to find that that $12,497.56 was owed for inflation on child support as of June 30, 2021, and that the amount of child support, adjusted for inflation, payable during the period November 2020 to June 30, 2021 was $5,473.60.
[20] Unfortunately, Ms. Capuno’s affidavit does not calculate the amount of inflation on child support using the approach adopted by the Supplementary Decision as the starting point nor does it reference the child support figures described in that decision. Using the above adjusted child support figure, I direct that the parties calculate the amount of child support, adjusted for inflation, payable for the period from: 1) November 1, 2021 to October 31, 2022; and 2) November 1, 2022 to October 31, 2023. Counsel for I.S. and M.S. shall work together, using the assistance of Ms. Capuno or another CPA if necessary, to determine these amounts. As well, I suggest the parties may wish to consider replacing paragraph 39 of the Agreement with a provision with simpler terms, for instance, an approach that adjusts child support on January 1 of each year using the Consumer Price Index as shown on the Ontario Pension Board’s website (which is posted one month earlier). See https://www.opb.ca/news/your-2023-cost-of-living-adjustment. This approach should greatly simplify the calculation of child support for each year adjusted for a cost-of-living allowance.
ISSUE #3: NANNY EXPENSES
[21] Paragraph 30 of the Agreement states:
For a period of five years from the date of the execution of this Agreement or until the date when J enters full time day care or school, whichever is the first to occur, and provided that IS| employs a fulltime nanny, MS will pay 100% of the cost of a fulltime nanny to a maximum of $2,500.00 per month inclusive of all payroll taxes and/or benefits provided that MS can pay the nanny on an automated basis through his company’s payroll. In the alternative, IS may elect to pay the nanny directly and MS shall contribute $500 per week toward the cost payable in the amount of $2000 per month with an adjustment on the anniversary date of this Agreement in the amount of $2000 to cover the remaining 4 weeks. IS shall select the nanny. After the expiration of the 5 year period from the date of the execution of this Agreement or the date when J enters fulltime day care or school, whichever is the first to occur, MEE shall pay 100% of the costs of reasonable afterschool care or the costs of a part time nanny for a maximum of four hours per day at an hourly rate not greater than more than 20% of the prevailing minimum wage until J obtains the age of 12.
[22] J. is 8 years old. Under paragraph 30 of the Agreement, for the period while J. is in school and until he becomes 12 years old, M.S. is responsible for certain after school costs – either a daycare or a nanny – incurred by I.S. If I.S. hires a nanny to care for J., then M.S. is responsible for those costs incurred by I.S. to have a nanny care for their son for up to four hours per day, up to five weekdays, at a maximum hourly rate that is not greater than more than 20% of the prevailing minimum wage – which is currently $15.50 in Ontario.
[23] I.S. seeks the following order:
Paragraph 30 of the Agreement is clarified/ interpreted as the Respondent, M.S. owing $1,599.60/ month towards child care/ a nanny. This clause shall be enforceable by the Family Responsibility Office.
The Applicant shall provide, upon request, the names and contact information of any caregiver that the Applicant submits receipts for and is reimbursed for by the Family Responsibility Office. The Respondent’s communications with the caregiver’s shall be limited to obtaining basic information to corroborate the claimed employment terms.
The Applicant shall provide the Family Responsibility office with the below information when seeking reimbursement for caregiving expenses and what is submitted shall be made available to the Respondent upon request.
Name of Caregiver Period of employment eg. (Jan 1 – Jan 31) #of hours worked Hourly Rate Total paid Signature of caregiver. Receipt COLA/ Inflation on Child Support.
[24] M.S. has not paid these expenses primarily because he takes the position that I.S. is not entitled to a full-time nanny. That is correct but there is no reason why IS cannot hire a full-time nanny and M.S. be responsible only for the cost of four hours per day as per the Agreement.
[25] M.S. also speculates that the nanny hired by I.S. has been working for room and board and thus has not been paid by I.S. There is no evidence to support this conclusion.
[26] M.S. also challenges the truthfulness of some of the receipts submitted by I.S. in respect of her claim for reimbursement of her nanny expenses. For instance, MS does not explain why she has submitted two receipts for the month of November 2021 signed by Savitiri Rampersad with one receipt signed on November 1, 2021 and another on November 2, 2021.
[27] Nishikawa J. stated, at para. 223 of the Trial Decision:
The issue regarding the existence of the nanny is a further example of how a relatively straightforward matter became fraught with conflict and acrimony. Given that M.S.’s obligation to contribute to the nanny expenses was conditional on I.S.’s employment of a full-time nanny, it was incumbent on her to prove that she employed a nanny full-time. This could have been done by providing an employment agreement and/or proof of payment. Instead, there was unnecessary and costly communication between the parties and counsel over a lengthy period of time.
[28] At the hearing of this motion, M.S. did not seriously dispute that I.S. had a nanny during the relevant period. Having reviewed the evidence, I find that it is just to fix the arrears for the payment of nanny expenses for the period from November 1, 2021 to February 28, 2023 at $20,000.00 rather than $24,000.00 as claimed.
[29] At the motion, the parties agreed that the nanny hired by I.S. shall submit her weekly invoice for her services (up to 4 hours per day, up to 5 weekdays, at up to $18 per hour based on the current minimum wage in Ontario) by email to M.S. and I.S., and then M.S. shall pay the nanny by e-Transfer, and send a copy of such e-Transfer to I.S. M.S. expressed concern that he does not wish to be viewed as the nanny’s employer. Counsel for I.S. acknowledged that such direct payments do not make M.S. the nanny’s employer as I.S. is the nanny’s employer.
ISSUE #4: EXTRACURRICULAR ACTIVITY EXPENSES
[30] Extracurricular expenses are to be reimbursed in accordance with paragraphs 32 and 34 of the Agreement described above.
32 Other agreed upon (such agreement not to be unreasonably withheld) special and extraordinary expenses for J will be paid 100% (of the after tax cost) by MS until such time as IS obtains full time employment or until January 1,2017, whichever is the earlier, at which time MS will pay 90% of the after tax cost and IS will pay 10% of the after tax cost. MS will reimburse IS for his share of any such expenses within 30 days of being presented with proof of payment after the expense.
33 With respect to special and extraordinary expenses, the parties agree that private school will not be a special and extraordinary expense for J unless the parties jointly agree to this expense in writing in advance,
34 J’s other current special or extraordinary expenses may include:
a. Extracurricular activities, but to a maximum cost (not contribution) of $5,000.00 per annum without prior approval from MS;
b, Uninsured medical and dental expenses, including orthodontics;
c. Post-secondary expenses including tuition, residence, books, food, reasonable travel and a reasonable living allowance for a Canadian University or equivalent; and
d. Tutoring.
[31] At the motion, the parties agreed that M.S. owes $9,000.00 to I.S. for expenses incurred up to October 1, 2022 in respect of J.’s extra-curricular activities.
ISSUE #5: TUTORING EXPENSES
[32] Tutoring expenses are to be reimbursed in accordance with paragraphs 32 and 34 of the Agreement described above.
[33] I.S. seeks an order that M.S. shall pay $1,019.25 towards counselling as his 90% share of outstanding tutoring expenses from October 7, 2021 to January 3, 2023. There is no dispute by M.S. other than that I.S. has not paid her 10% share of tutoring expenses incurred by M.S. Her share is $1,314.93. Accordingly, a net payment of $304.68 in respect of tutoring expenses is owed to M.S.
ISSUE #6: THERAPY /COUNSELLING
[34] I.S. claims the cost of therapy for J. She submits that such costs represent “uninsured medical expenses”.
[35] I.S. seeks the following order:
Therapy and counselling for J.S. shall be deemed a section 7 expense without advance consent required and shared proportionately pursuant to paragraph 34(b) of the Agreement to be enforced through the Family Responsibility Office.
M.S. shall pay $1,867.50 towards his share of outstanding therapy/counselling expenses from October 7, 2021 to the date of this motion to be enforced through FRO.
[36] In response to a concern raised by M.S. about cancellation fees, I.S. agreed that in the future there shall be no reimbursement claimed for cancellation fees charged by a therapist.
[37] I order that M.S. pay $1,867.50 towards his share of therapy/counselling fees.
ISSUE #7: LIFE INSURANCE
[38] M.S. is required to maintain life insurance so long as he is obliged to pay child support.
[39] In particular, paragraphs 53-60 of the Agreement provide:
- As long as MS is obligated to pay child support to IS pursuant to the terms of this Agreement, MS will:
a. Keep a life insurance policy enforced;
b. Not borrow against the policy and will ensure that the policy remains unencumbered; and
c. irrevocably designate and maintain IS as the beneficiary of $1,750,000.00 of the proceeds of the policy in trust for J as security for MS’s child support obligations outstanding as at the date of MS’s death pursuant to this Agreement.
The policy amount or the amount of the policy allocated to I.S. as the irrevocable beneficiary in trust for J that MS is required to maintain pursuant to the terms of this Agreement will be automatically reduced every three years on the anniversary date of this Agreement by $180,000.00.
Upon the payment of the life insurance proceeds, pursuant to the terms of this Agreement, MS’s estate will be discharged from any further obligations with respect to the support of J.
Prior to the signing of this Agreement, or as soon as possible thereafter:
a. MS will provide IS with a copy of the policy and the irrevocable beneficiary designation; and
b. MS will have signed a Direction permitting IS to confirm directly with MS’s insurer that the policy is unencumbered and enforced.
Within 14 days of each anniversary date of the policy, A will give IS proof that he has paid the premium.
When M.S.’s obligation to pay child support to IS terminates in accordance with the provisions of this Agreement, M.S.’s obligation to maintain the policy and to maintain IS as the irrevocable beneficiary of the policy ends. IS will execute any documents necessary to release the irrevocable beneficiary designation at the time. If I.S. refuses to release the irrevocable beneficiary designation, M.S. may obtain a Court Order directing the insurer to do so. IS will be responsible for the costs M.S. incurs in obtaining the Order.
If M.S.’s policy cannot be maintained for any reason, he will immediately obtain replacement coverage at a reasonable cost, insuring no gap in coverage. If M.S. learns that there may be a change in insurance coverage, he will advise IS of the proposed change in coverage and the reason for the change. If the change results in a decrease in the amount of insurance beyond what is contemplated by this agreement, then the parties will engage in further negotiations to ensure that there is adequate security in place to secure M.S.’s obligations.
If the policy or the full amount of the policy is not enforced on M.S.’s death, then M.S. authorizes a lien and first charge against his estate for the full amount of the policy proceeds less any reduction contemplated above. In this event, all of |IS’s rights and remedies against M.S.’s estate will be preserved. [Emphasis]
[40] I.S. seeks the following order:
M.S shall provide proof of the Applicant as an irrevocable beneficiary of a life insurance policy in the amount of $1,390,000 within 30 days of this order in accordance with the terms contained in paragraphs 53-60 of the Agreement.
M.S shall owe the Applicant $1,000 per day for every day that the Applicant fails to provide proof of the above insurance following 30 days of this Order.
Alternatively, M.S shall produce a sworn Form 13 Financial Statement and proof of applications for life insurance and amounts offered/ rejections received as well in support of a claim that he cannot afford/ obtain life insurance.
[41] Under the terms of the agreement, the amount of life insurance required to be held decreases over time. At present, M.S. is obliged to hold $1.39 million in life insurance. M.S. states that he has a policy of $400,000.00. He states that IS’s remedy is a first charge against his estate as per paragraph 60. However, paragraph 59 of the Agreement requires more. It states that:
… If the change results in a decrease in the amount of insurance beyond what is contemplated by this agreement, then the parties will engage in further negotiations to ensure that there is adequate security in place to secure MS’s obligations.
[42] I order that the parties enter negotiations to ensure that there is adequate security in place to secure M.S.’s obligations under the Agreement. M.S. has refused to explain the reason for the change. The Agreement requires that he do so. The parties and counsel shall meet for negotiations to ensure that there is adequate security in place. The Agreement requires that he do so. Such negotiations shall be held in person or by videoconference one day during the period of March 13, 2023 – March 31, 2023. In the interim, M.S. has the opportunity to explore other ways of providing the security required by the Agreement.
ISSUE #8: RESP
[43] Paragraph 31 of the Agreement states:
MS shall contribute not less than $3,000.00 per annum to an RESP to assist in paying for J’s costs of post-secondary education. I.S. shall also contribute to an RESP once she has secured fulltime employment in an amount not less than $1,000.00 per annum. The parties’ respective contributions will be individually credited towards his and her contributions to post-secondary education. For clarity, M.S.’s contributions to the RESP will be a credit to his contributions towards J.’s postsecondary education and this will apply mutatis mutandis to I.S. Each party shall provide proof to the other party that their annual contribution to the RESP has been made.
[44] I.S. seeks the following order:
An Order that the Respondent shall disclose the details of the RESP for the child and provide proof that he has deposited a total of $24,000 in accordance with the Agreement;
An Order that permits the Applicant to request information and documentation from the RESP provider as if she was the Respondent.
[45] Each party seeks information, on annual basis, about the contributions made by the other party to their son’s RESP. Neither party has done so. Both parties agreed to an order with greater specificity on this point.
[46] I order that each party, once each year, shall provide proof of their annual contribution to their respective RESPs held for J’s benefit, as shown on a document issued by the administrator of their respective RESPs, by April 1, 2023 and by every April 1st thereafter.
ISSUE #9: PREVENTATIVE SECURITY ORDERS
[47] I.S. seeks the following orders:
An Order in accordance with section 34 (b) of the Family Law Act, that the Respondent shall pay a lump sum towards section 7 expenses on the anniversary of the Agreement (October 2) in the amount of $60,000 to be used towards all section 7 and nanny expenses once the Applicant provides the Respondent and FRO with proof of the expense. Any unused portion shall be carried into the following year and count towards the annual lump contribution. Any amount above the $60,000 incurred pursuant to the Agreement and this Order shall be enforced by FRO upon receipt of proper receipts.
In the alternative, an Order that for every day past the 30 days that the Respondent does not reimburse the Applicant for an expense under the Agreement or this Order after receiving proof of the expense, that the Respondent shall be penalized $500 per day to be enforced through the Family Responsibility Office.
An Order that if the Family Responsibility Office refuses to adhere to any of the Orders that are to be enforced by them, that the matter shall return to the court for a motion to address the issue.
[48] This point was not advanced on this motion. In my view these terms are unnecessary.
ISSUE #10: CIVIL DAMAGES
[49] I.S. seeks the following order:
- An Order for leave for the Applicant to bring an application for civil damages due to breach of the Agreement under court file number FS-14-19641 in the Family Court.
[50] This point was not advance on this motion. An expansion of the litigation between the parties is not in the interest of justice. Leave is denied on a without prejudice basis.
CONCLUSIONS
[51] At the hearing of this motion, I indicated to the parties that disputes regarding the enforcement of the Agreement could be determined by the court. Either party may bring a motion for such purpose and, if I am available, I will hear that motion. However, this is not an invitation for the parties to bring frivolous or numerous motions. The parties are expected to act reasonably in implementing the Agreement and to make every reasonable effort to avoid returning to ourt.
[52] Order to go as follows:
(a) The sum of $25,800.00 is outstanding in respect of the costs award granted by Order dated October 7, 2021. By February 16, 2023, M.S. shall pay the sum of $25,800.00 in respect of the October 7, 2021 costs award to I.S.
(b) By February 16, 2023, the parties shall calculate the amount owed for inflation on child support for each month from July 1, 2021 to February 28, 2023 on the basis that the amount of child support for June 30, 2021 was $5,473.60. By March 3, 2023, M.S. shall pay the sum of the above monthly amounts to I.S.
(c) By March 3, 2023, M.S. shall pay the sum of $9,000.00 to I.S. for expenses incurred up to October 1, 2022 in respect of J.’s extra-curricular activities.
(d) By March 3, 2023, M.S. shall pay the sum of $20,000.00 to I.S. for nanny expenses for the period from November 1, 2021 to February 28, 2023.
(e) By March 3, 2023, I.S. shall pay the sum of $304.68 to M.S. in respect of outstanding tutoring expenses.
(f) By March 3, 2023, M.S. shall pay the sum of $1,867.50 to I.S. for therapy/counselling fees.
(g) Unless the parties otherwise agree, by April 1, 2023, and within 14 days of April 1 of each following year, each party shall deliver proof of their annual contribution to their respective RESPs held for J.’s benefit, as shown on a document issued by the administrator of their respective RESPs.
(h) Unless the parties otherwise agree, during the period of March 13, 2023 – March 31, 2023, the parties and their respective counsel shall meet for the purpose of holding a negotiation with respect to ensuring that there is adequate security in place to secure M.S.’s obligations as required by paragraph 59 of the Agreement.
(i) Each party shall deliver their costs submissions within one week and their responding costs submissions within two weeks. Each costs submission shall be no more than three pages in length exclusive of any Offers to Settle and an Outline of Costs.
Mr. Justice M.D. Faieta
Released: February 7, 2023
COURT FILE NO.: FS-14-1641
DATE: 20230207
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
I.S.
Applicant
– and –
M.S.
Respondent
– and –
T.O.E. Added Party
AMENDED REASONS FOR DECISION
Mr. Justice M. D. Faieta
Released: February 7, 2023