COURT FILE NO.: FS-20-00017896-0000 DATE: 20240628 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
NOMAN ALI Applicant – and – MELIKE SAYILGAN Respondent
Counsel: Christine Vanderschoot, for the Applicant Aida Pasha, Agent for the Respondent
HEARD: April 8, 9, 10 and 11, 2024
HOOD J.
REASONS FOR DECISION
Introduction and Background
[1] The parties married in February 2008. They separated in January 2016 and divorced in 2017. They have two children: Sophia, who is currently 15 years old, turning 16 in October, and Samira, who is currently 13 years old, turning 14, also in October.
[2] The parties entered into a Separation Agreement dated October 20, 2016. The Agreement provides, at paragraph 4.2, that for the purposes of determining child support, the average of the applicant’s last three years of annual income was to be used. This was because the applicant’s income fluctuated from year to year. The Agreement provided that at the time of execution, the average was $270,000 and the applicant was to pay table support of $3,380 for the two children. The income amounts used for the purposes of this calculation in paragraph 4.2 were the applicant’s T4 employment income amounts as shown on box 14. The parties have continued to use the T4 income amount for the child support calculations rather than the applicant’s line 150 income.
[3] The applicant commenced this application in August 2020 seeking increased parenting time over what was provided for in the Separation Agreement and for a set schedule and holiday time. The respondent testified that the applicant started the application in order to avoid paying child support.
[4] Currently, Sophia lives with the applicant and Samira lives with the respondent. Sophia has been with the applicant since June 2023 and refuses to see the respondent.
[5] While the parties have an ongoing dispute concerning parenting and decision making, including issues of travel and allegations of parental alienation, this trial was meant to be focused on financial issues alone. The question for determination was meant to be the applicant’s income for child support purposes.
[6] Both parties gave evidence. Most of the respondent’s evidence had little to do with the applicant’s income. Instead, it had to do with the applicant’s alleged bad parenting, his alleged financial and physical intimidation both prior to and after the signing of the Separation Agreement, his alleged sporadic exercise of his parenting time, his alleged disinterest in the children, and the constant police involvement in the parties’ marriage.
[7] The respondent also called Brent Smith, Vice-President, Head of Executive Compensation for Manulife Financial, the applicant’s employer. He gave evidence as to the applicant’s income. The applicant called Karen Kidikian, who was accepted by me as an expert in income analysis in the family law context. She gave an opinion on the applicant’s 2021 income for support purposes.
Previous Court Proceedings
[8] The issue of the applicant’s income for support purposes has been somewhat of an obsession for the respondent. As set out in Justice Sharma’s endorsement of April 1, 2022, wherein he tracked the disclosure the applicant had provided, the respondent has been challenging the applicant’s income since he started this application in 2020. Before Justice Kimmel in November 2021, the respondent raised “concerns that there are non-taxable income components to his remuneration that are not captured in his T4 and other reported income”. The respondent did so again before Justice Lococo in February 2022, and once again before Justice Sharma in the motion brought by her for further disclosure. As stated by Justice Sharma, “[T]he respondent remains of the view that there are stock awards or stock bonuses that the applicant receives which do not appear in his T4 income, or that the applicant has exercised an option of deferring receipt of income to future years which he would otherwise be entitled to receive sooner.” The respondent was convinced that the applicant received “equity-based compensation” that he failed to disclose.
[9] Justice Sharma dismissed the respondent’s motion for further disclosure but did order the applicant’s counsel to write to Manulife Financial, requesting a letter breaking down all the compensation received by the applicant.
[10] As far as the respondent was concerned, Justice Sharma got it wrong. However, she did not appeal because, according to her, there was no transcript due to the fact that the motion was erroneously scheduled as a case conference with there being no court reporter present.
[11] Clearly the respondent was incorrect. The hearing was a motion. In the first line of his endorsement, Justice Sharma says that the hearing was a motion brought by the respondent. There was no reporter because both parties had counsel and transcripts are not typically available for motions in any event.
[12] Before Justice Sharma, the applicant took the position, as he did before me, that all of his income is included within his T4 and that all sources of income, including his salary and bonus, are fully disclosed. His evidence before Justice Sharma, again as before me, was that he had no stock options, he had no discretion to defer the receipt of any bonus from Manulife Financial, and the amount of any bonus was determined solely by Manulife Financial.
Decision
[13] I find that in calculating the applicant’s income for support purposes, the parties are to use the applicant’s employment income as shown on his annual T4 to determine the three-year average as provided for in paragraph 4.2 of the Separation Agreement dated October 20, 2016.
[14] I also find that the respondent has an imputed income for child support purposes of $35,000.
[15] I find that s. 8 of the Federal Child Support Guidelines, SOR/97-175 (the “Guidelines”) applies so that the amount of child support currently payable by the respondent, of $304 per month, based upon the imputed income of $35,000, is to be set off against the amount of child support payable by the applicant to the respondent on a go-forward basis from today’s date.
[16] I order that the arrears of child support owing by the respondent to the applicant from July 1, 2023, in the amount of $304 per month, are to be paid within 30 days of today’s date.
Analysis
[17] The respondent acknowledged that she is not seeking to set aside the Separation Agreement. The respondent admitted this on cross-examination, as did her counsel when objections were raised by the applicant’s counsel to certain evidence being given by the respondent as to events leading up to and surrounding the Separation Agreement’s execution.
[18] Paragraph 4.2 of the Separation Agreement provides a mechanism for determining the applicant’s income for the purposes of calculating child support. From the Agreement itself, it is clear that the parties decided to use the applicant’s employment income from his annual T4s as opposed to using his line 150 income from his annual tax return. The numbers used reflect his T4 statements, not his line 150 income.
[19] However, the respondent was of the belief that the applicant was hiding stock options from Manulife Financial, which he had not exercised, of anywhere from $1,000,000 to $5,000,000. She had no evidence of this. The respondent’s belief appears to stem from her reading of the August 28, 2020 Offer of Employment from Manulife to the applicant and other Manulife public documentation, such as Manulife’s 2023 Management Information Circular and the comments in it about executive compensation, despite the fact that the applicant was not part of the Manulife executive compensation scheme.
[20] Mr. Smith, who was called as the respondent’s witness, stated emphatically multiple times that the applicant had never been granted any stock options and that stock options were reserved for the five highest paid employees at Manulife Financial, including the CEO and the CFO. While the applicant was a vice-president, he was not within this group and did not receive the same compensation package as the top five employees.
[21] The applicant acknowledged that he received Manulife restricted share units (“RSUs”) as part of his compensation package. The respondent seemed to be convinced that the RSUs were some form of stock option and that the applicant was deferring or hiding income through them.
[22] The applicant’s evidence was that the RSUs were merely a promise of income in the future and that if and when they vested in the future, they would be reflected on his T4.
[23] The applicant’s evidence as to the operation of the RSUs was corroborated by both Mr. Smith and Ms. Kidikian.
[24] Mr. Smith testified that the RSUs were not a payment in money when it was granted that would be reflected in that year’s T4 from Manulife. Rather, the payment itself was made after three years and what was then paid depended upon the then-current share price, not the share price when the RSUs were granted three years before. It was upon payment that it would be reflected in that year’s current T4. The payment was in cash, not further stock. There was no exercising of the RSUs. The person receiving it had to wait three years to see what the compensation actually was.
[25] Ms. Kidikian also testified that the applicant only received the benefit of the RSUs when they vested and they only showed up on the applicant’s tax documentation at that time. The potential amount of the RSU when granted was irrelevant; what mattered was the value when it vested. The applicant could not defer the vesting three years after the RSUs were granted and the RSUs when vested had to be taken in cash. She further testified that where the RSUs might be held by Manulife itself was irrelevant for the purposes of the applicant’s income.
[26] I accept the evidence of the applicant, Mr. Smith, and Ms. Kidikian with respect to the RSUs over the respondent’s mere speculation that there was more to them and that they were a vehicle to somehow hide substantial income. Mr. Smith was Manulife’s Head of Executive Compensation. If anyone would know how the applicant was paid, it would be him. Ms. Kidikian was accepted by me as an expert in income analysis. As an expert she had familiarity with RSUs, their use and how they were reflected in a recipient’s income.
[27] Moreover, Mr. Smith and Ms. Kidikian both testified that the applicant’s annual T4 reflected all of the compensation or remuneration received by the applicant during that year from all sources from Manulife Financial.
[28] Ms. Kidikian provided an expert report dated March 24, 2022, which was limited to the applicant’s 2021 income. In it she concluded that all the applicant’s income from employment was reported on his T4. In her testimony she stated that while she typically does not do an income analysis for T4 employees, as they are unnecessary, she had concluded that the applicant’s T4 reflected his income for support purposes.
[29] In argument, the respondent asked the court to find that information was still missing with respect to the applicant’s income. In my view there was no evidence of anything missing or even a suggestion that anything was missing. This was more misplaced speculation by the respondent. The respondent herself called the evidence from Manulife Financial, which clearly showed that the applicant’s T4 reflected all the compensation received by him from his employer.
[30] While the respondent was focused on the applicant’s income from Manulife, during argument she made a slight pivot and asked for an order that the child support calculation include T3 and T5 income and that the applicant’s line 150 income be used rather than the T4 average over three years.
[31] Leaving aside the fairness of putting forward a new position in closing, the parties have followed the Separation Agreement since execution in 2016 and have used the three-year T4 average for the purposes of the child support calculation. The applicant testified and I accept that the respondent never asked to change the calculation from an average of the T4s to an average of the line 150 amounts. Also, as argued by the applicant, any T3 or T5 income has been nominal and the applicant has paid all s. 7 expenses and fully funded the children’s RESPs, in addition to paying child support. His income for child support is to be based upon a three-year average of his T4 income.
[32] The applicant, however, has provided and will continue to provide his T3s and T5s along with his T4s to the respondent going forward, so that if his line 150 income were to become materially different from his T4 income then the issue of child support might perhaps need to be revisited. But for the purposes of the trial before me this was not the case.
[33] The applicant asks the court to impute a minimum wage of $35,000 to the respondent for her child support.
[34] On November 26, 2021, the respondent agreed before Justice Kimmel at a case conference that she could be imputed with an annual income of $35,000 for child support and s. 7 expenses.
[35] Before me, the respondent took the position that she had been tricked into agreeing to this before Justice Kimmel and that the annual income figure for her was only for s. 7 purposes and not child support, despite what the endorsement might in fact say. She also said that this was an endorsement and not an order, so it was not enforceable. She also said that Sophia should be with her in any event, and not with the applicant so that there should not be any child support paid by her. Finally, she testified that she is unable to pay any support as she is $340,000 in debt and that it would be unjust to ask her to contribute anything for the support of Sophia when in debt.
[36] The respondent is trained as an economist. In the Separation Agreement, it was contemplated that she would soon be re-entering the workforce. She has not done so. Her evidence was that she has been unable to work or pursue a career because of numerous obstacles from the applicant, the “paper attack” from the applicant that she has been forced to endure, and the ongoing litigation. She did not expand on what the obstacles were.
[37] In my view, from the portion of the litigation that I have witnessed, it is the applicant who has been forced to endure litigation brought by the respondent, not the other way around. The respondent had all the disclosure from the applicant required in order to satisfy herself as to his T4 income and has had it for some time, but refused to accept it.
[38] In my view, the respondent is intentionally unemployed and under-employed. She has no job and no valid reason why not. While she could likely gain employment for more than minimum wage, having worked previously in a brokerage house, the applicant is only seeking to impute $35,000.
[39] For an income of $35,000, child support is $304. As I read the Guidelines, her payment for one child can be offset against the applicant’s payment of $3,404 for one child, for a net payment of $3,100 payable on July 1, 2024, and each month thereafter.
[40] The respondent ought to have been paying child support of $304 per month from July 1, 2023, when Sophia began living on a full-time basis with the applicant. She chose not to do so. To June 2024, this totals $3,648. Her debt is no excuse for the non-payment of child support. It would have been far better if the respondent, rather than incurring debt in pursuing pointless litigation, had accepted the evidence provided to her, including the expert report from Ms. Kidikian of March 24, 2022, which established that the applicant’s income was reflected on his T4. That she chose not to do so does not alleviate her from her child support responsibilities.
Costs
[41] Being the successful party, the applicant is presumptively entitled to costs. Both parties provided their Bill of Costs. I would hope that the parties will be able to reach an agreement on costs. If unable to do so, the applicant is to serve and file his cost submissions, not to exceed two typed double-spaced pages, together with any necessary documentation such as offers to settle by July 19, 2024. The respondent’s cost submissions, subject to the same directions, are to be served and filed by August 9, 2024. Both sets of submissions are to be uploaded to CaseLines and are also to be sent to my assistant at maria.kolliopoulos@ontario.ca.
Justice K. Hood Released: June 28, 2024