ONTARIO SUPERIOR COURT OF JUSTICE

COURT FILE NO.: FS-21-101830-00 DATE: 2024 03 18

B E T W E E N:

O. K Applicant Shawn M. Philbert, for the Applicant

- and -

M. H Respondent Self represented

HEARD: September 25 to 29, 2023

REASONS FOR DECISION

McGee J.

Overview

[1] This is a second Trial between the parties, who are former spouses and the parents of two daughters, who in the next five weeks will turn 17 and 13. In the first Trial, heard November 23, 24, and 25, 2022, I found that the parties’ Separation Agreement dated April 1, 2015 should be set aside pursuant to section 56 (4) of the Family Law Act, R.S.O. 1990, c. F.3, (“FLA”) and that the parties’ date of separation for FLA purposes was December 18, 2019.

[2] On the joint request of the parents, this second decision has been initialized to protect the identities of their daughters. I find this to be reasonable and warranted because the legal issues addressed in this second decision directly touch on the children’s privacy interests. The Applicant, O.K is the father/husband and shall be referred to herein as Dr. K. The respondent, M.H. is the mother/wife and shall be referred to as Ms. H. The parties also requested that the reasons for the first trial be initialized. I am no longer able to do so. Initialization was not requested within the first Trial and those Reasons for Decision are now in the public domain.

[3] This second decision determines child support, spousal support, the equalization payment owing to Ms. H. and the disposition of their Brampton townhome. The parties were able to resolve the parenting issues within Minutes of Settlement achieved just prior to Trial. On consent, Ms. H. shall have sole decision- making responsibility for the parties’ two daughters. A separate order as to parenting may issue, to be prepared by Ms. H.

[4] In these reasons, I will offer a brief recap of the proceedings to date. I then determine Dr. K’s income for support purposes which inform the table amount of child support and the claim for spousal support. Next, I grant Ms. H’s claim for a declaration that Dr. K holds one half of the home in trust for her by way of a resulting trust, and I calculate the equalization payment accordingly. Finally, I decline to grant Dr. K’s request for occupation rent, primarily in the face of the parties’ agreement that Ms. H pay $70,997.59 as a post separation adjustment, much of which is related to household expenses.

[5] In this second Trial, Ms. H declined the assistance of a translator, and the trial was entirely conducted in English.

[6] These reasons will not conclude the litigation between the parties.

[7] Ms. H asks for the vesting of Dr. K’s equity in the home as security for his past and ongoing support obligations. He left Canada at the end of May 2021 and has never returned. His only realizable asset in this jurisdiction is the Brampton home. To determine this final claim I require evidence of the present value of the home and a current mortgage statement.

[8] The matter may return to me for this final determination after the parties have attempted a resolution before a Dispute Resolution Officer (“DRO”.) The DRO Conference shall be conducted by videoconference.

Background

[9] Dr. K is a general physician who left Canada for Istanbul on May 30, 2021. He now resides and practises medicine in New Zealand. He left Canada before the parties had resolved any of the legal or financial issues arising from the end of their marriage. He issued this Application in October 2021 after initial settlement discussions broke down. He has maintained counsel throughout and has participated in these proceedings by videoconference.

[10] Ms. H. is a homemaker who has an administrative background. She and the parties’ two daughters continue to live in the matrimonial home which is titled to Dr. K alone. Ms. H has had the use of a vehicle which is also owned by Dr. K.

[11] Ms. H. is heavily dependent on each of her daughters, particularly the oldest, to navigate her way through daily life. Ms. H. has struggled to accept the end of the marriage. She has not returned to the workforce. The oldest daughter has taken on two jobs to help with the family finances. At the start of Trial, Ms. H asked for leave to have their oldest daughter attend the Trial to assist her with document management and submissions. Leave was denied.

[12] This is the second Trial for the parties. The first trial was heard by me from November 23, 2022 to November 25, 2022. In my reasons for decision released January 11, 2023, O.K. v. M.H., 2023 ONSC 303, I set aside the parties’ Separation Agreement dated April 1, 2015 because I found that it was a sham document, prepared for purposes outside Part IV of the Family Law Act R.S.O. 1990, c. F.3 (“the Act.”) In doing so, I made a finding that the parties’ date of separation was December 18, 2019, not the date of July 13, 2013 inserted into the sham Agreement by Dr. K. and then steadfastly sustained throughout this litigation, despite there being no factual basis for a 2013 separation.

[13] I then gave directions for the determination of child support, spousal support, equalization, and the sale of the property. In a later decision, costs were granted to Ms. H. in the amounts of $36,136.49 and $1,243. The amounts of costs recognized Dr. K’s “catch-me-if-you-can” approach to the litigation. As I wrote in paragraph 47 of the Costs Endorsement, O.K. v. M.H., 2023 ONSC 1643, Dr. K had never made an Offer to Settle, leaving M.H. little option but to proceed to Court.

[14] Despite the urgency of this matter proceeding to Trial, Ms. H asked for an adjournment when this second Trial was called in mid September 2023. She was panicked and frightened. She repeated her request that Dr. K be required to attend in person, despite an earlier ruling that he was permitted to participate virtually.

[15] On the first day of Trial I made three preliminary Orders. First, I amended the parties’ pleadings, adding Dr. K’s claim for occupational rent and Ms. H’s claim for the Mahr [^1], and her claim that joint title of the home be vested in her as a remedy for unjust enrichment and/or resulting trust. Second, I provided Dr. K. with an expanded right of reply, which ultimately proved unnecessary as Ms. H. did not call the eight witnesses that she had earlier asserted that she would call.

[^1]: Which was subsequently not pursued.

[16] However, there was one additional witness that Ms. H did call: Dr. B. Dr. B has never met either party and is not involved in this proceeding. Ms. H explained that she had researched Dr. B and believed that her medical practise, and the income that it generated would be similar to that of Dr. K, thus proving his income. For oral reasons given, my third preliminary Order was to quash the Summons and release Dr. B. No costs were sought against Ms. H.

Issues To Determine

[17] The following issues must be determined:

a) The amount of child support payable from December 18, 2019 to present, and ongoing. b) The amount of spousal support payable from December 18, 2019 to present and ongoing; with amounts owing prior to January 1, 2023 being reduced to a net of tax amount. c) Ms. H’s claim for a declaration that Dr. K holds a one-half interest in the home, in trust for her by way of a resulting trust. d) The equalization payment. e) The claim for occupation rent in the face of an agreement for post separation adjustments. f) Ms. H’s claim for security for the payment of child and spousal support. g) Dr. K’s claim for the sale of the home. h) The next steps in the proceeding, including any claim for costs.

Child Support

Ms. H. is Entitled to Child Support from January 1, 2020

[18] The girls have been in Ms. H’s care since separation and have been in her exclusive care since their father left Canada on May 29, 2021. As at the date of this Trial, Dr. K has not been back to Canada. Ms. H asks for table child support since December 18, 2019, which for ease of reference I will grant as of January 1, 2020. Ms. H provided no evidence at Trial, nor sought an order at the start of trial for a proportionate sharing of section 7 expenses. [^2]

[^2]: Ms. H first asked for section 7 expenses in her closing submissions. Given the lack of notice of such a claim, and in the absence of any supporting evidence presented during the trial, I must disregard the request.

Dr. K’s Income for Support Purposes

[19] To determine table child support, I must first make a finding of Dr. K’s income for support purposes in each of the years of 2020, 2021, 2022 and 2023.

[20] Dr. K opened the trial asserting that his self employment income in 2020 and 2021, as received through his Canadian corporation, was minimal, and in any event, was artificially and unsustainably high due to the additional workload carried by physicians during the pandemic. His Canadian Notice of Assessment (NOA) for 2020 shows personal income of $42,550, his 2021 NOA sets out income of $82,319 and he declared $140,550 of income in 2022. The latter amount is his employment income in New Zealand: $141,000 in 2022 and $156,000 in 2023.

[21] Dr. K’s oral evidence did not accord with his opening position, nor did his corporate tax returns, or the opinion evidence of his expert. In his closing submissions Dr. K agreed to pay support based on income of $347,000 in 2020, $322,000 in 2021, $141,000 in 2022, and $156,000 thereafter.

[22] Ms. H asks that I find her former spouse’s income to be no less than $400,000 per year throughout. She describes him as ambitious, hard working, highly intelligent, and driven to achieve and maximize his income during their 14 years in Canada. She describes how he continued to upgrade his qualifications post separation, receiving a certificate in Dermatology.

[23] Ms. H sets out how Dr. K could have opened his own clinic in Ontario with a pharmacy (allowing her to also draw an income by managing the associated pharmacy) and that ultimately, he could double his income again by qualifying to practise in the USA. She finds it impossible to believe that he would accept a lower income in New Zealand.

[24] Dr. K states that he had no choice but to leave Canada due to the harassment campaign conducted by Ms. H, and at her instigation, through their daughters.

[25] He described how New Zealand was the only country that allowed for immediate qualification and the ability to practise medicine within three months. He stated during his evidence that he now earns $156,915 CAD, which he testified, is about the same as he would earn in Canada.

[26] I will address Dr. K’s income in two stages; the amount earned while he was in Canada, and the amount earned thereafter.

Income for 2020 and 2021 found to be $316,175.60 and $405,280.85.

[27] In July of 2019 Dr. K incorporated a number company, operating as [Dr. K] Medicine Professional Corporation (“the corporation.”) He is the sole shareholder. The corporate year end is July 31st. For the tax year of August 1, 2019 to July 31, 2020 the corporation reported $486,424 in total revenue which was netted to $194,722. In the next taxation year: August 1, 2020 to July 31, 2021, the corporation reported $623,510 in total income, netted to $459,568.

[28] Timing differences (i.e. a corporate year end July 31st, and a personal tax year end December 31st) account for difference in expenses deducted from the total revenue as it relates to personal income. Nonetheless, one can follow the flow of monies through the corporation. For example, in the first year of operation Dr. K paid himself a salary of $40,947, and in the second year it appears that no salary was paid, and instead, he issued himself a dividend of $108,582, with $37,000 being reported in his 2021 personal tax return, and $71,582 being reported in his 2022 return. Throughout, all of Dr. K’s personal expenses were deducted or captured as shareholder loans within his corporation, such as his rental accommodations, his vehicle lease, utilities, travel, and meals.

[29] In the year end report of July 31, 2021 there is a note to reader that Dr. K was cautioned of the risk in placing a “Due to Shareholder amount of $211,427.28” on his books per section 15(1) and (2) of the Income Tax Act. Included in the $211,427.28 was an acknowledged amount of $100,000 paid to Dr. K’s mother.

[30] Each party retained an expert to provide opinion evidence on Dr. K’s income for support purposes. Each report was problematic for different reasons. Dr. K’s expert, Mr. J-C . D was retained to prepare an analysis which proved to be perfunctory. Ms. H’s expert, D.S. was never allowed access to Dr. K’s source documents.

[31] Through my own questioning, I learned that Mr. D was given a nominal budget to review the Schedules attached to the Corporate Financial Statement that had been prepared by Dr. K’s accountant, who was not a witness at trial. Mr. D was told to assume that the Schedules were accurate, and he conducted no independent analysis. The result was a report dated January 31, 2023 with the imprimatur of a Certified Business Valuator, but with no added value or independence. The report served only to prorate corporate year end income to match a calendar year end: a calculation available to any reader by simply dividing by 12 and multiplying by 5 for 2020 (August 1 – Dec 31,) and by 7 for 2021 (January 1 – July 31.)

[32] Further difficulties appeared in questioning. Mr. D acknowledged that he had failed to carry forward the undrawn portion of the 2021 corporate year end net earnings of $459,568 into 2022. Neither had he carried income in the 2019 corporate year end into personal year end 2020. He did not differentiate between the receipt of dividends and employment income, treating the $108,585 in dividends spread over 2021 and 2022 as if it were employment income.

[33] As a result, Mr. D’s conclusions in his January 31, 2023 report: that Dr. K’s income for support purposes was $347,000 in 2020, $322,000 in 2021, and $141,000 in 2022, must be wholly disregarded.

[34] Finally, I noted a number of inconsistencies between the information that Mr. D testified to have been given to him in the course of preparing his report, and the evidence given by Dr. K at Trial. Of note,

a) the valuator was told that Dr. K did not work, but instead travelled abroad between June 2021 and January 2022. Dr. K’s employment contract stated a start date of November 1, 2021 and b) the valuator was told that Dr. K was planning to settle permanently in New Zealand, and would eventually cancel his Canadian licence and wind up his Canadian corporation. Dr. K testified that he intended to keep his Canadian licence and file Canadian tax returns for the foreseeable future.

[35] The latter is important because in Dr. K’s Financial Statement sworn August 10, 2023, he shows $369,993.37 as a personal loan (under Part 5 Debts and Other Liabilities) from the corporation as of July 31, 2022. When questioned, he stated that when he left Canada, he took $320,000 from the corporation on which taxes had not yet been paid. That amount must be paid back to the corporation before it can be wound up. I will address this point further, below, when I consider the request for a vesting order.

[36] With respect to income in 2020 and 2021, Mr. D’s report was more generalized because his retainer did not include a review of the source documents that informed the Schedules to the Corporate Tax Returns. Neither were they made available to him. He was left to focus on the overall reasonableness of the expenses set out in the Schedules which reduced Dr. K’s income for tax purposes.

[37] In Mr. D’s view, Dr. K’s expenses were inflated and inappropriate. For example, the deduction of all of Dr. K’s meals costs, automobile expenses, (without a confirming mileage log, or travel to and from work being deductible) legal fees, and other hybrid or personal fees appeared excessive, and most unlikely to survive an audit.

[38] Mr. A also noted the absence of any add-backs for personal expenses within the D’s report, even those that were plainly obvious.

[39] For example, the payroll deduction in corporate year 2020 of $40,947 (paid to Dr. K) was not added to Mr. D’s calculation of Dr. K’s 2020 income. Neither was any portion of his motor vehicle expenses, rent, utilities, travel, or legal fees. The latter was acknowledged by Dr. K as including his defence counsel fees on the assault charges laid on December 18, 2019.

[40] When Mr. D was asked about this discrepancy, he answered that he had asked Dr. K whether he had any personal expenses after January 1, 2020. Because his client said that he did not, he had added nothing back.

[41] I find that I am left with reliable amounts for total revenues in the years of 2020, 2021 and 2022 arising from the receipt of “Sales,” “Hospital Income,” OHIP Income,” and “Sales of Product Income” as reported by Dr. K’s accountant in his income statement. Those amounts are $486,424 in 2020, $623,509 in 2021 and $80,502 in 2022.

[42] I find that I do not have reliable evidence as to the actual expenses necessary to generate that income, properly deducted from total revenue when calculating available income for support purposes. In Mr. A’s opinion as set out in his June 12, 2023 report, Dr. K’s 2020 income for support purposes was $428,000 and in 2021 it was $345,625.

[43] Mr. A spoke to the Ontario average income of physicians being $303,000 and that of GTA physicians in the higher range of $356,000, which range can be significantly increased should the physician have hospital privileges or a specialization. Dr. K sets out in his C.V. that he assists with surgeries. Although he has a certificate in dermatology, I did not accept that it qualifies as a specialty as defined by Mr. A.

[44] Mr. A provided an average of incurred expenses in a medical practise of 35% of gross income, being 20-25% overhead at a clinic and 10% personal overhead. He opined that during Covid when many physicians were working from home the clinic percentage tended to be lower. Dr. K testified that he worked extensively from home for Telehealth both during the pandemic and thereafter.

[45] If I use the globalized deduction of 35% from each of total revenue figures set out in paragraph 41 above, the pre-tax net earnings are $316,175.60 in 2020, $405,280.85 in 2021, and $52,326.30 in 2022. I find that these amounts are a fairer determination of income for support purposes for two reasons:

a) They better accord with the evidence of generalized earnings for a physician in the GTA, and reflect Dr. K’s acknowledgement of working from home and having increased earnings during the pandemic, and b) They leave Dr. K with the tax benefits of earning income through a corporation, as the monies available can be drawn as dividends rather than employment income. (I will note here the possibility that Dr. K will never pay taxes on the $320,000 taken from the company in 2021 or return to Canada. He qualified to be a resident of New Zealand in April 2023.)

Income for 2022 and Ongoing Set At $300,000

[46] Dr. K started with the Tuakau Health Centre on November 1, 2021. I was provided with no evidence of the currency exchange between the New Zealand dollar and the Canadian Dollar but for Dr. K’s February 15, 2023, and April 27, 2023 Financial Statements. Each sets out a chart using an average exchange rate of 0.8266, resulting in the 2022 New Zealand salary of $191,360 converting to $156,916 CAD. If I add the amount of $52,326.30 calculated in para 39 above, I reach a total of $209,242.30.

[47] In 2022, Dr. K filed a Canadian Tax Return with international income, and he testified that he expects to do the same for 2023 and, for the time being, he states that it is his intention to remain a tax resident of Canada.

[48] I am alive to Ms. H’s submission that Dr. K has deliberately reduced his income by leaving Canada, and that there is little reason why he cannot earn in the range of $400,000 CAD on an ongoing basis. If a party voluntarily reduces income, the court should examine whether this choice was a reasonable one in all the circumstances and may impute an income it is determines that the decision was not appropriate having regard for the parent’s child support obligations: Norris v. Riley, 2023 ONCJ 121, at para. 98 (b)-(c).

[49] Dr. K gave the following evidence:

a) He left Canada upon the criminal charges being withdrawn. He holds Ms. H fully accountable for his decision to leave Canada. At the same time, he acknowledges that there were no legal or financial reasons why he had to leave Canada. b) When he first left Canada, he spent six months travelling. He gave no reason for doing so. c) He eventually chose to land in New Zealand because it had the fewest number of barriers to certification. He could begin work almost immediately in New Zealand, whereas most other countries required that he work for two years before being certified. d) He believes that once he is established, his income in New Zealand should not be materially different from what was available to him in Canada.

[50] The 2022 corporate income that I have netted to the amount of $52,326.30 and to which I have added the CAD equivalent of the New Zealand salary for 2022 is from the corporate taxation year of August 1, 2021 to July 31, 2022. It is therefore exclusive of the income that Dr. K would have ordinarily earned during his six- month period of travel. I find that his income for support purposes ought not be reduced by this chosen period of travel.

[51] I therefore set 2022 income for support purposes in the rounded amount of $300,000 per annum. In doing so, I balance Dr. K’s historical income, the calculated income of $209,242, the average GTA Canadian physician’s income of $356,000 and Dr. K’s own evidence that his New Zealand income should not be markedly different from that available to him in Canada. It was not appropriate for him to leave Canada given his responsibilities as a parent. If he decides to remain in New Zealand, the parties’ daughters should not have a markedly lower standard of living in Canada.

Calculation of Table Child Support

[52] Orders to issue as follows:

a) Dr. K shall pay table child support of $4,071 in each of the 12 months from January 1, 2020 to December 31, 2020, based on income of $316,175.60. b) Dr. K shall pay table child support of $5,140 in each of the 12 months from January 1, 2021 to December 31, 2021, based on income of $405,280. c) Dr. K shall pay monthly table child support of $3,877 based on imputed income of $300,000, commencing January 1, 2022 until further court order or agreement. d) Section 7 expenses upon which the parties agree in advance in writing, shall be paid in the proportionate, rounded shares of 75% by Dr. K and 25% by Ms. H. (The amounts of the proportionate shares are calculated after the receipt of spousal support, see below.) e) Support Deduction Order to Issue.

Credits to the Payment of Child Support

[53] Pursuant to the temporary order of February 15, 2022, commencing February 1, 2022, Dr. K was to pay monthly child support of $2,977 based on imputed income of $225,000.

[54] His child support payments are in good standing. The amounts paid to date shall be a credit to the monies ordered above.

Spousal Support

Ms. H is Entitled to Compensatory Spousal Support

[55] Section 15.2 (6) of the Divorce Act, R.S.C. 1985, c.3 (2nd Supp), sets out the objectives of a spousal support order, to:

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.

[56] The Supreme Court of Canada in Moge v. Moge, [1992] 3 S.C.R. 813, sets out that the primary purpose of a spousal support order is to redress the economic consequences of the “marriage or its breakdown” on the parties. The focus of the inquiry must be on “…the effect of the marriage in either impairing or improving each party’s economic prospects” (para. 258).

[57] In reviewing the statutory objectives, no one objective is of overriding importance. Trial judges have a significant discretion as to the weight to be placed on each objective depending on the circumstances of the parties, see Moge, and Bracklow v. Bracklow, [1999] 1 S.C.R. 420. The factors the court must take into consideration include 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.

[58] In Bracklow, McLachlin C.J.C. outlines three types of support:

a) compensatory; b) non-compensatory; and, c) contractual.

[59] In D.A.S. v. P.S., 2021 ONSC 7358, Justice Horkins summarizes these bases as follows at para. 259:

As stated in Moge v. Moge and Bracklow v. Bracklow, there are three conceptual bases for entitlement to spousal support. First, a spousal support obligation may arise on a compensatory basis, in recognition that upon marriage breakdown, there should be an equitable distribution between the parties of the economic consequences of the marriage. Entitlement can also arise in appropriate circumstances on a contractual or consensual basis, as a result of express or implied agreements between spouses that purport to either create or negate a spousal support obligation. Finally, entitlement may exist on a non-compensatory basis, as a result of the needs of a spouse. This ground for spousal support establishes that a spouse may be obliged to pay support based on the other spouse’s economic need, even if that need does not arise as a result of the roles adopted during the marriage. This basis for spousal support is founded on the view that “marriage is a relationship involving mutual obligations and interdependence that may be difficult to unravel when the marriage breaks down.” Moge, at pp.864-865; Bracklow, at pp.444, 448; C.Z., at para. 241.

[60] Here, the parties were married for 15 years, had two children, and throughout, operated as an economic partnership, making joint immigration, education, retraining and career decisions.

[61] As set out in my reasons from the first Trial, Ms. H sponsored Dr. K to Canada and then supported him while he worked and studied towards his Canadian qualifications to practise medicine. She worked sporadically to help supplement the family’s income, but her primary role during the marriage was in the home, caring for the children and supporting her husband’s long study hours. The marriage ended shortly after he obtained his qualification.

[62] The parties also operated as a couple for financial gain. For example, Ms. H stood as a titled owner of real property for a beneficial owner who was a family friend. As set out in greater detail below, she agreed not to go on title for their home, believing that they could save her first home buyer status for another property. She was a named shareholder within one or more companies controlled by her father and/or her husband to secure tax advantages. The parties entered into a sham separation agreement, risking a great deal, in the mistaken belief that they would mutually benefit.

[63] Post separation, Ms. H is without any income of significance, and Dr. K, now fully qualified, has chosen to leave the country and earn his income elsewhere. He acknowledges that there is no reason that he cannot work in Canada.

[64] As the court emphasized in Bracklow, at pp. 450-451, “[a]t the end of the day….courts have an overriding discretion and the exercise of such discretion will depend on the particular facts of each case, having regard to the factors and objectives in the Act.”

[65] The goal of compensatory support is to ensure that the post separation economic consequences of the roles adopted by spouses during a relationship are not disproportionately borne by one spouse alone, but instead, are shared equitably.

[66] I find that Ms. H is entitled to compensatory spousal support.

Ms. H’s Income for Support Purposes Set at $16,500 per year

[67] To set spousal support, (and the proportionate sharing of any future section 7 expenses) I must also determine Ms. H’s income for support purposes.

[68] Dr. K asks that I impute $53,000 to his former spouse for each of 2020, 2021, 2022, and 2023. He calculates this amount as the medium between a job that she did not accept ($44,969) because she felt that it would interfere with her parenting obligations, and an admission that she believes she is capable of earning $30 per hour ($62,400.) Neither are incomes that Ms. H has ever earned. Her income in the early years of the marriage, before the children were born, never exceeded $24,206, and her most recent Notices of Assessment show earnings of $20,024 for 2020, $18,667 for 2021, and $7,501 for 2022: all of which were from the CERB.

[69] Ms. H asks that no income be imputed to her.

[70] A court can impute income to a party pursuant to Rule 19(1) of the Federal Child Support Guidelines (“FCSG”) as it considers appropriate. The test for imputing income for child support purposes applies equally for spousal support purposes: Di Sabatino v. Di Sabatino, 2022 ONSC 334, at para. 49, leave to appeal refused 2022 CarswellOnt 7089 (Div. Ct.) .

[71] When determining whether to impute income, the court should consider:

a) Is the spouse intentionally under-employed or unemployed? b) If so, is the intentional under-employment or unemployment required by virtue of his reasonable educational needs? c) If no, what income is appropriately imputed in the circumstances?

See Drygala v. Pauli (2002), 61 O.R. (3d) 711 (C.A.), at para. 23.

[72] A court cannot arbitrarily select an amount as imputed income. There must be a rational basis underlying the selection of any such figure that is grounded in the evidence, see Drygala, at para. 44.

[73] Ms. H leads no evidence of a disability or any barrier to participating in the workforce. At the same time, her presentation at Trial strongly suggests that she struggles with mental health issues, attention deficits, and disordered reasoning. I place little weight on her belief that she can earn $30 an hour. Neither is there a sufficient basis to find that the job she turned down was fulltime, sustainable, or even available.

[74] Dr. K bears the onus to “establish an evidentiary foundation for the intentional unemployment or under-employment: employment”: McNeil v. Dunne, 2019 ONSC 2528, at para. 50. Once established, the burden shifts to the other party “to satisfy the court as to their income level and that income should not be imputed”: A.E, at para. 258. The court has a “wide discretion”: A.E, at para. 262(2)(c), to impute income, and when selecting an amount, “must consider what is reasonable in the circumstances”, looking at, for example, “age, education, experience, skills and health of the parent,” per Drygala, at para. 44-45.

[75] I find that Ms. H has an impressive language facility and an educational background sufficient to participate in the workforce in some manner. Both parents are financially responsible for their daughters economic security, and I do not accept Ms. H’s submission that her time is better spent driving her daughters to school and driving her older daughter to her two jobs. The girls have access to safe public transportation, and Ms. H has the ability to negotiate flexible, part time hours. I find that the latter is a reasonable accommodation given that Ms. H is truly a single parent. With their father out of the country, the girls have no other parent to support them.

[76] As of January 1, 2020, for the singular purpose of determining the range of spousal support, I impute part time annual income to Ms. H of $16,500, being approximately 20 hours a week at minimum wage. This imputed amount ignores her actual receipt of CERB which was for a different purpose – supporting families during the pandemic.

Amount of Spousal Support Set at Mid-Range of the SSAGs

[77] Dr. K asks that I order spousal support at the low range of the Spousal Support Advisory Guidelines for two reasons: (a) it will incentivize his former spouse to become self sufficient, and (b) he now has significant costs of exercising access. I reject both submissions. Ms. H has a limited ability to become self sufficient, having invested all of her time and energy during this marriage in increasing Dr. K’s earning potential. The increased costs of access, per section 10 of the FCSG are not in evidence, and moreover, Dr. K has not to date made a return trip to see his daughters.

[78] I choose the mid range for spousal support, not as a default, but because it divides Net Disposable Income in the range of 45% to Dr. K and 55% to Ms. H. This recognizes that she has no parenting assistance and increased costs in caring for the children because their father is unavailable. It also recognizes that she has agreed to pay Dr. K back – through a post separation adjustment – much of the monies used to maintain the home, such as the condo fees for the home.

[79] Attached to these reasons as Schedules A, B and C are the DivorceMate calculations for 2020, 2021 and 2022. The mid range for each of the years is:

2020: $6,097 per month 2021: $8,071 per month 2022: $5,774 per month

[80] These amounts are pre-tax, that is, they were to have been included in Ms. H’s taxable income and deducted from Dr. K’s taxable income. However, the ability to claim a tax deduction for spousal support in each of 2020, 2021 and 2022 is now lost. With exceptions not available in these circumstances, tax deductibility is only available for spousal support payments attributable to the period since the beginning of the last taxation year.

[81] I must therefore net the above spousal support amounts for tax, recognizing that Dr. K’s net cost of paying spousal support would have been less than the amount retained by Ms. H. For example, using the mid-range values for 2020, Dr. K’s after-tax cost of paying spousal support would have been $3,264 per month ($6,097 - $2,833) and Ms. H’s after-tax benefit would have been $4,434.

[82] Here, I am not satisfied that a blended approach would be appropriate (averaging the net cost/benefit) because Dr. K took no steps to pay temporary spousal support, nor did he fully or accurately disclose his income. As a result, I will use the net of tax benefit to Ms. H found at the bottom right-hand corner of the mid range charts: 2020:$4,434, 2021: 5,639 and 2022 $4,255.

[83] Order to issue that Dr. K shall pay Ms. H. net of tax spousal support totalling $171,924 for the period of January 1, 2020 to December 31, 2022 calculated as follows:

a) Spousal support of $4,434 in each of the 12 months from January 1, 2020 to December 31, 2020. ($53,208) plus b) Spousal support of $5,638 in each of the 12 months from January 1, 2021 to December 31, 2021.($67,656) plus c) Spousal support of $4,255 in each of the 12 months from January 1, 2022 to December 31, 2022. ($51,060.) d) M.H. shall not be required to include these amounts in her income for tax purposes and Dr. K cannot deduct the amount from his income for tax purposes.

Is Ongoing Tax Deductibility Available ?

[84] In her closing submissions, Ms. H has provided a link indicating that spousal support paid by a taxpayer resident in New Zealand, pursuant to the New Zealand Income Tax Act 2007 is not deductible. If correct, it would mean that Ms. H need never include the payment of spousal support in her income if Dr. K files his Returns in New Zealand.

[85] I have conflicting information on this point, as Dr. K has testified that he intends to continue to have his New Zealand salary paid to his Canadian Corporation and to file Canadian tax returns, but he informed his valuator that he intends to reside permanently in New Zealand.

[86] As set out below, the parties are to make further submissions to me with respect to Ms. H’s claim for a vesting Order, at which time, they may also make submissions as to whether a net amount of spousal support should be in pay rather than a pre-tax amount.

[87] Until the issue is determined, spousal support will be paid in the ordinary course as a pre-tax payment. Order to issue that commencing January 1, 2023, Dr. K shall pay spousal support to Ms. H in the amount of $5,774 per month. This shall be a temporary order until such time as the tax deductibility is determined.

[88] Support Deduction Order to issue.

Claim of Resulting Trust Granted

[89] In 2010 the parties began their search for an affordable family home. Their daughter was three and there was soon to be another child on the way. The couple’s finances were very limited, even though they were both working and drawing an income from a family business. Each of their respective families assisted them as they could.

[90] On August 15, 2010, the parties jointly entered into an Agreement of Purchase and Sale for a townhouse unit in a newly developed are near the border of Brampton and Mississauga. The purchase price of $328,000 was to be satisfied through a series of five deposits, with the balance being due on closing. All five deposits: four for $5,000 dated August 27, September 27, October 27, and November 27, 2010, and the final one dated January 27, 2011 for $12,000 were tendered by way of sequentially numbered, post dated cheques drawn on the parties’ joint bank account. [^3] Records show that a further amount of $6,000 was paid to the builder from the joint account on December 13, 2010.

[^3]: It is possible that some of the post-dated cheques were returned NSF because records obtained by Ms. H. include TD bank draft receipts.

[91] Ms. H recalled that they received moneys from Dr. K’s mother to assist with their purchase of the home, and later funds from her family to help pay the mortgage. The monies from her mother-in-law were paid to Dr. K’s Royal Bank account from which he paid further amounts to the builder of $6,000 on January 20, 2011, and $6,000 on February 9, 2011. A money order for $6,000 of unknown origin was also paid to the builder on February 4, 2011.

[92] Throughout the fall of 2010, Ms. H planned for their home. She was now expecting their second child, due in April of 2011. However, when the purchase closed, she agreed that title be taken in Dr. K’s name alone because he told her that he had received advice from their mortgage broker that it would be better if the home went into his name alone. It is undisputed that he informed her – based on the broker’s advice - that there were benefits to preserving her status as a first- time buyer by placing title to their new home in his name alone. He promised her that “the next time [they] would buy a property it would go in my name so we could claim benefits of first owner on that property too.” Ms. H testified that she was upset by this, but that Dr. K assured her that it would make no difference whether their home was in their joint name or his name alone.

[93] At trial, Ms. H asks for a declaration that Dr. K is holding her one half interest in the home in trust for her.

[94] Dr. K vigorously opposes such a finding. He states that title was taken in his name alone because only he could qualify for the mortgage. He goes on to argue that title should remain undisturbed because he has always paid the mortgage. Moreover, he argues, Ms. H got what she bargained for when a subsequent home was purchased in her name alone.

[95] Before I review the applicable law, I will summarily reject this latter argument on its facts. The subsequently purchased property was taken by Ms. H as a bare trustee on October 16, 2013 and was sold on July 15, 2016. The beneficial owner was a person known to Dr. K. It is unclear what benefit, if any, was received. The reporting letter on the sale of that property does not show a net profit.

[96] The Supreme Court explained in Kerr v. Baranow, [2011] 1 S.C.R. 269, at para. 16, that the underlying notion of the resulting trust is to return property to the person who gave it and is entitled to it beneficially. This builds on the Supreme Court’s finding in Pecore v. Pecore, [2007] 1 S.C.R. 795, at para. 20, that a resulting trust arises where the property is in one party’s name but is impressed with an obligation to return the property either because the holder is a fiduciary or gave no value for the property.

[97] Justice Cromwell explained in Kerr at paras. 16-19, that resulting trusts may arise in domestic situations where one partner gratuitously transfers property to another partner despite both parties contributing to the purchase monies, or, where both spouses contribute to the acquisition of real estate, but title is taken only in the name of one spouse. The principle underlying resulting trust is that “contributions to the acquisition of a property, which were not reflected in the legal title, could nonetheless give rise to a property interest”: see Kerr, at para. 2.

[98] The analysis for a claim of resulting trust has been recently articulated by Justice Sanfilippo in Khaira v. Ghumman, 2022 ONSC 7165, at paras. 60-61. After citing the above authorities, he goes on the address the first step in a resulting trust analysis being “the determination of whether the party claiming the resulting trust has established that a financial contribution was made” (Khaira, para. 62). Additionally, “[t]he relevant time for assessment of a claim for a proprietary interest through resulting trust is at the time of the property acquisition” (para 64). This is sometimes called a “purchase money resulting trust.” See, for example: Do v. Do, 2022 ONSC 6679.

[99] A purchase money resulting trust is a specific type of resulting trust. It arises “when a person advances funds to contribute to the purchase price of property but does not take legal title to that property”: Nishi v. Rascal Trucking Ltd., [2013] 2 S.C.R. 438, at para. 1. Where the person taking title is not the minor child of the person advancing the funds, there is a presumption that “the parties intended for the person who advanced the funds to hold a beneficial interest in the property in proportion to that person’s contribution”:

[100] Where a resulting trust is presumed, the onus is on a party seeking to rebut that presumption to establish that the purchaser intended to make a gift: Lattimer v. Lattimer (1978), 18 O.R. (2d) 375 (H.C.), at p. 378 (H.C.). This is not a matter of constructive or deemed intention, but of establishing actual intention on the balance of probabilities: Schwartz v. Schwartz, 2012 ONCA 239, 349 D.L.R. (4th) 326, at paras. 42-43.

[101] M.H. has clearly demonstrated that the bulk of the purchase monies for their townhome came from their joint account. Most of the balance was gifted from her mother-in-law.

[102] It was not easy for her to obtain the necessary evidence. Dr. K has maintained throughout this litigation that the Agreement of Purchase and Sale was in his name alone and that all the deposit monies came from his sole account. She states that Dr. K took all their financial records when he left the country in May of 2021. Ms. H went to extraordinary lengths to get copies of the Agreement of Purchase and Sale and the cancelled cheques, ultimately having to summons records from the bank. Only upon receipt of the six cheques on the joint account in the week prior to Trial did Dr. K acknowledge that the deposits had come from the joint account.

[103] I find that these circumstances are similar to those within Launchbury v. Launchbury, 2005 CarswellOnt 1335 (ONCA), in which the Court of Appeal held that there was a presumption of a resulting trust due to the origin of the purchase being the parties’ joint account, and the presumption set out in section 14 of the Family Law Act, R.S.O. 1990, c. F. 3.

[104] To defeat the claim for resulting trust, Dr. K must prove that Ms. H intended her contribution to the house to be a gift (Khaira, para. 62) by proving on a balance of probabilities: (1) that M.H. intended to gift her one half interest in the home to him, (2) that he accepted the gift; and (3) that a sufficient act of delivery or transfer of the property occurred to complete the transaction: Falsetto v. Falsetto, 2022 ONSC 3701, at paras. 127-128, affirmed 2023 ONCA 469.

[105] The balance of probability standard requires “clear, convincing, and cogent” evidence: F.H. v. McDougall, [2008] 3 S.C.R. 41, at para. 46.

[106] Here, Dr. K does not assert that his former spouse gifted her half of the home to him, (or the joint bank account) but even had he made the argument, I would find that on a balance of probabilities, he has failed to prove that his former spouse intended her contribution to the home to be a gift. At all times, Ms. H believed that she was a joint, beneficial owner of the home. In the same manner as she participated in the sham Separation Agreement signed April 1, 2015 to secure a benefit (the ability to continue to qualify for Child Tax Benefit), she agreed to “save” her first-time buyer’s status by not going on title.

[107] As was the case with the sham Agreement, her information was wrong. A person is ineligible for the first-time homebuyers’ credit when they live (or have lived) in a house purchased by their spouse as a first-time homeowner. There was no benefit to having only Dr. K’s name on the title. Perhaps the mortgage broker misinformed Dr. K, or he conveyed wrong information for his own purposes. Irrespective of the reasons for the misrepresentation, or whether it was inadvertent, a gift must be voluntary and fully informed. I can make no finding of gift on these facts.

[108] I grant the claim for a finding of resulting trust and declare that title to the home is held in the parties’ joint tenancy, nunc pro tunc to the date of purchase.

Equalization Payment of $23,947.40 Payable to Ms. H and Consent Adjustment Payable to Dr. K

[109] The parties have agreed to a payment of equalization [^4] that is subject to (a) determining whether title to the home remains with Dr. K alone, or is declared to be joint, and (b) whether a 2017 Honda Accord owned by Dr. K on the date of separation and left for the sole use of M.H. was a gift.

[^4]: In the same manner as the above note for section 7 expenses, Ms. H made a claim in her closing submissions, for the first time, that Dr. K also has hidden assets which are “left for the honourable court to decide.” In the absence of any evidence, and in the face of the consent on equalization, I can make no such determination.

[110] The first is decided above. To make certain that the equity in the home is divided equally, I also ascribe the balance owing on the mortgage on the date of separation as a joint debt for the purposes of calculating the equalization payment. [^5] For continuity, I will treat Dr. K’s payment of Ms. H’s one-half share of the mortgage as a credit to his claims.

[^5]: The mortgage is Dr. K’s name alone, but for these purposes I cannot separate the debt from the asset to which it is affixed.

[111] With respect to the 2017 Honda Accord, I will treat it as a gift to Ms. H on the date of separation because it was left for her exclusive use and the payments on the car loan and insurance ($21,961.58 on date of separation) are accounted for in the post separation adjustments. Gifts between spouses are not excluded from net family property, see section 4(2) 1 of the FLA, so the amount of $18,000 is hereby to be included in Ms. H’s NFP.

[112] With these three adjustments: (1) $300,000 for each parties’ approximate value of the home, rather than $600,000 placed in Dr. K’s name alone; (2) the Scotiabank mortgage of approximately $200,000 on date of separation being inserted as a $100,000 debt for each party, and (3) the 2017 Honda Accord value being transferred from Dr. K’s NFP to that of Ms. H, the parties respective NFP values are $106,159.45 for Dr. K and $154,054.25 for Ms. H, resulting in an equalization payment of $23,947.40 [^6] to her (being one half the difference between their respective NFP values.)

[^6]: I ruled at the start of trial that pleadings would include Ms. H’s claim for a Mahr, but then no evidence was led in this regard, and the parties settled the equalization payment (but for the three adjustments that I determined.)

[113] Orders to issue that:

a) Counsel for Dr. K is to prepare a revised NFP Statement that reflects the consent of the parties and the three findings on the disputed items, resulting in the equalization payment of $23,947.40. Order to issue accordingly. The revised NFP Statement shall be Schedule D to these reasons. b) On consent, Ms. H shall pay $70,997.59 to Dr. K as a post separation adjustment. c) Dr. K shall forthwith transfer ownership of the 2017 Honda Accord to Ms.H.

Claim of Occupational Rent Balanced by the Payment of Post Separation Adjustments.

[114] Although no longer restricted to exceptional cases, see Chhom v Green, 2023 ONCA 692, there is no automatic right to occupational rent. Occupational rent is merely a tool for balancing the equities, see Jasiobedzki v. Jasiobedzka, 2023 ONCA 482, at para. 15, citing Higgins v. Higgins, 2001 ONSC 28223. The remedy must be assessed in relation to the affairs of the whole family, including the claims for child and spousal support.

[115] Dr. K asks for $114,400 in occupation rent from December 18, 2019 to October 16, 2023 which he calculates at $2,600 per month based on his expert’s evidence of fair market rent.

[116] At the same time, the parties have agreed that Ms. H will pay Dr. K $70,997.59 in post separation expenses, being amounts that he has paid for the maintenance of the home since December 18, 2019 such as townhouse condominium fees, natural gas, electricity, home insurance, water, internet, car loan payments, car insurance, and half of her PC MasterCard, which Dr. K closed effective June 2021, a month after he left Canada.

[117] Occupation rent is a discretionary determination available to a trial judge when it is “reasonable and equitable” to do so: Griffiths v. Zambosco (2001), 54 O.R. (3d) 397 (C.A.), at para. 49. To be considered are: the timing of the claim for occupation rent; the duration of the occupancy; the inability of the non-resident spouse to realize on their equity in the property; any reasonable credits to be set off against occupation rent; and any other competing claims in the litigation: see Griffiths supra, at para. 49. The weight to be given to these and other relevant factors is a matter for the trial judge to determine.

[118] The remedy of occupation rent is discretionary and arises from the equitable jurisdiction of the court to remedy an injustice done to a property-owning (or co-owning) spouse unjustly deprived of the use of his capital.

[119] Here, I can find no injustice that calls for an award of occupational rent. Given my finding of resulting trust, half of the home maintenance expenses borne by Dr. K were ultimately for Ms. H’s benefit, and the payment of $70,997.59 in my view more than offsets any benefit that Ms. H enjoyed as the occupying spouse, independent of the use enjoyed by the children. Dr. K will jointly profit from the significant appreciation in value of the home (approximately $300,000) since the date of separation either through a purchase of his interest, the sale of the property or the vesting of some or all of his equity with Ms. H as payment of outstanding obligations.

Claim for a Security for the Payment of Child and Spousal Support

[120] As set out in Ms. H’s lengthy closing submissions, courts have a broad discretion to make vesting orders pursuant to s. 100 of the Courts of Justice Act.

[121] Sections 9(1) (d)(i) and 34(1) (c) of the Family Law Act confer equally broad powers to grant vesting orders with respect to an equalization payment and/or support payments.

[122] Vesting orders are discretionary and operate as an equitable enforcement remedy. A court may exercise its discretion to grant a vesting order where there is a real and substantial risk that a title holder is otherwise unlikely to comply with an order for the payment of support or equalization. The jurisdiction is quite elastic. Nothing in the language of either s. 100 of the Courts of Justice Act or s. 34(1) (c) of the Family Law Act operates to constrain the flexible, discretionary nature of the power: see Lynch v. Segal (2006), 82 O.R. (3d) 641 (C.A.), at paras. 27-31.

[123] Here, I find that there is a real and substantial risk that Dr. K will not comply with a final order for the retroactive and ongoing payment of child and spousal support. I am less concerned with the payment of equalization as there is an offsetting amount of $70,997.59, being the agreed post separation adjustment.

[124] Dr. K has obscured his actual income throughout this proceeding and withdrawn $320,000 of his Canadian corporation’s earnings by way of a (pre-tax) shareholder’s loan. He has left the country and not returned. Not even to participate in this trial.

[125] It is unknown if Dr. K genuinely intends to repay his 2021 shareholder’s loan, and then properly draw monies out of his corporation by way of (taxable) salary or dividend. To date he has not done so, and he has given conflicting information. He told this court that he was planning to maintain his Canadian corporation and tax filings. He told his valuator that he planned to wind up his corporation and permanently remain in New Zealand.

[126] Dr. K is to be credited for maintaining the costs of the Brampton home and a vehicle for Ms. H’s use since 2019, but he has done so secure in his belief that he owns both and will ultimately retain their sole benefit. That is no longer the case given the terms of this final order. In the past, he has attempted to avoid any significant payment of equalization by relying on a sham Separation Agreement, which included a spousal support release. Ms. H was forced to go to Trial to set aside the Agreement, only receiving an acknowledgement that the spousal support release was unenforceable in the period just prior to its hearing.

[127] The parties’ Brampton home is the only remaining asset left in Canada, and there is no security or source of garnishment should Dr. K fail to pay the retrospective and ongoing child and spousal support amounts.

[128] I am prepared to make an order partially or fully vesting Dr. K’s one-half interest in Ms. H’s ownership of the home to satisfy any outstanding or ongoing child and spousal payments. To do so, I require a current appraisal of the home, a current mortgage statement, and submissions from the parties as to the final figures; including whether support attributable to the period after January 1, 2023 is to be tax deductible.

Next Steps in the Proceeding

Attendance before a DRO

[129] On or before May 10, 2024, the parties are to obtain a present valuation of the home by a certified property valuator. They are encouraged to agree on a joint valuation, but if they cannot, they must each obtain their own valuation. In addition, Dr. K must provide Ms. H with current mortgage statement and municipal tax statement.

[130] The parties are to schedule a virtual Dispute Resolution Officer Conference through Calendly for any date after May 21, 2024. They must fully participate in at least one session to attempt to resolve terms of a vesting order, specifically the payment of past and ongoing child and spousal support and equalization, less the post separation adjustment; as it relates to one half of the current equity in the property. They are also to address the question of tax deductibility for spousal support payments after January 1, 2023.

[131] One week in advance of the DRO conference, both parties shall serve and file an outline of their position, which is not to exceed six pages, inclusive of any calculations necessary to support their position.

[132] Thereafter, if the matter does not resolve, a long motion may be scheduled before me through the Trial Coordinator to make a final determination on the claim for a vesting order and the tax deductibility of spousal support after January 1, 2023.

Ongoing Payment of the Mortgage, Taxes and Utilities for the Brampton Home

[133] Upon release of these reasons, Dr. K must immediately pay the monthly amounts for child and spousal support directly to Ms. H until such time as the FRO enforcement is in operation, after which he will be duly credited for the amounts paid directly.

[134] Ms. H must pay the mortgage, taxes, and utilities for the Brampton home from the support payments, even though the accounts are in Dr. K’s name.

[135] If Dr. K fails to pay child and spousal support on a monthly basis as of April 1, 2024 or Ms. H fails to pay the mortgage, taxes and utilities while receiving child and spousal support, I may be spoken to by way of a Zoom conference to be scheduled through my assistant.

Sale of the Home

[136] The sale of the Brampton home has been vexing for each of the parties for different reasons: for Dr. K because he has been asking for its sale since the launch of this Application on October 27, 2021, and for Ms. H who throughout, has been in constant fear of the loss of shelter for her and their daughters.

[137] In the ordinary course, an owner has a prima facie right to the sale of his property, but here, Ms. H has been successful in obtaining a vesting order that would be defeated by a sale.

[138] Dr. K’s claim for the sale of the Brampton home is deferred until the amount of his equity in the home to be vested in Ms. H is resolved or returned to me for determination.

Costs

[139] Ms. H has been the successful party in this second trial. Although a successful party is entitled to her costs, Rule 24(4) of the Family Law Rules provides that a successful party who has behaved unreasonably during a case may be deprived of all or part of her costs or ordered to pay all or part of the unsuccessful party’s costs.

[140] Much of Dr. K’s closing statement and reply references the unreasonableness of Ms. H’s litigation conduct. I agree that her closing statement referenced evidence that was not heard during the trial, was unhelpful and significantly increased the time necessary to complete these reasons.

[141] I encourage the parties to have frank discussions about any opportunity to resolve the remaining issues, including costs on a final basis. To that end, I implore Ms. H to retain experienced family law counsel.

[142] Should there be no resolution, I will receive costs submissions from Ms. H. on or before April 12, 2024, with a response due from Dr. K on or before May 3, 2024. No reply is permitted. Costs submissions are limited to five pages exclusive of a Bill of Costs or Offers to Settle. Caselaw is to be hyperlinked within the body of the submissions.

McGee J.

COURT FILE NO.: FS-21-101830-00 DATE: 2024 03 18

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: O.K Applicant

- and - M.H Respondent

REASONS FOR DECISION

McGee J. Released: March 18, 2024