COURT FILE NO.: FC-20-80 DATE: 2024/07/17 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Denise A. Haelzle Applicant – and – Konrad Jorg Glauer Respondent
Counsel: Hilary Goodman, for the Applicant Self-represented Litigant
HEARD: Trial dates June 17 to June 21, 2024
Leroy, j.
Reasons for Judgment
Background sufficient to contextualize the issues
1The parties began cohabiting in July 2014. They are not married. The Applicant is 43 years of age, and the Respondent is 37. In 2014, they were 33 and 27 respectively.
2Barrie is the Applicant’s hometown. Her mother and brother remain resident there. The Respondent emigrated from Germany to Canada in or about 2006 when he was 19. His family remains there. German heritage is important in his life.
3The Applicant has a BA in English together with a diploma in hotel management. The parties met on an online dating platform. At the time, the Applicant was living and working in Ottawa as an event planner for a veterinary hospital. She owned a townhouse.
4When the parties met, the Respondent owned the parcel of land near Finch where they started their family. The Respondent continues to occupy. He carried on a self-employment business offering tow truck services. The residence was rudimentary; however, the 5-acre parcel together with the outbuildings were a good fit for the tow truck/impound business. At the time, he was basically a one-man show with the necessary equipment. Over the last ten years, notwithstanding the Pandemic and the exigencies of a difficult separation, he accumulated used equipment and now employs another operator full time.
5The Applicant moved into the Finch residence. She retained the residence in Ottawa and became a residential landlord and her own property manager. Over time, the Applicant assumed responsibility for the Respondent's self-employment bookkeeping.
6They have two children: namely, Gretchen Pepper Glauer, born December 8, 2015(8) and Konrad Elton Glauer, born July 24, 2017(7). Gretchen is special needs.
7The Applicant maintained employment in Ottawa until Elton’s birth. She said the employer dismissed her for reasons attributed to the pending maternity leave. Litigation may have resulted. Details were not disclosed. The Applicant has not worked gainfully since.
8In the meantime, the parties undertook a substantial renovation to the family home. Although the details are unclear, they financed construction from the proceeds of mortgages on the home property itself and the Applicant’s townhouse. The parties own the family home and surrounding property as joint tenants.
9The Applicant’s foray into the role of property manager became problematic, particularly after registering a refinance mortgage against title to free funds for the improvement to the family home. The Applicant sold the townhouse in December 2019.
10The relationship failed and the date of separation, not in issue, is September 1, 2019. The family continued to reside separately in the same home until January 23, 2021. The Applicant moved out of the home and relocated to Barrie, where she continues to reside with the children with her mother.
11The Application was filed with the court on March 10, 2020, days before the Pandemic shutdown. Her plan then was to relocate to Barrie.
12The Applicant and children spent 15 days over Christmas 2020 in Barrie. The relocation came shortly after the return home.
13The actual relocation involved contested drama. That morning, the Applicant was encountering pushback from Elton (2) who was playfully uncooperative with the morning routine. The Respondent intervened and removed Elton to the garage. He says he tapped Elton over his diaper to make a point. The Applicant asserts that the Respondent was over-zealous, and he beat the infant leaving contusions over a large portion of Elton’s right buttock and lumbar area. The contusions are uncontested. The Respondent vehemently denies that those contusions were in any way attributable to his actions that morning. He believes they were the result of sledding bouncing about from the day previous.
14The Applicant reported her version to the OPP and CAS. The resulting investigation was inconclusive. There were no charges. The Applicant, however, was advised to remove herself and children from the home to let emotions settle. The Respondent did not disagree.
15The Applicant had long determined to relocate to Barrie on a permanent basis. The Respondent agreed to the removal as a temporary measure. It did not occur to him until much later that his family would not return to this area voluntarily.
16There was delay of many months before the Respondent initiated steps to negotiate a return. The Applicant attributes the delay to indifference. The Respondent attributes this to Pandemic travel restrictions in place at the time. Hostilities between the parties made effective voluntary initiative futile.
17The Respondent through the relationship dedicated himself to the business. He was on call 24/7. Both knew what this self-employment required when they embarked on being parents. They knew that the primary parenting role would fall to the Applicant. The children look to their mother for nurture first. That doesn’t mean the breadwinner’s love for their children is any less valuable to them or he doesn’t occupy a special place in their psyches. The legislators know this and recognize the imperatives around managed and benign relocation terms.
18While the passage of time inevitably leads to a new status quo for the children in terms of security and stability within the new community, it does little, in the absence of effective terms promoting the relationship between the children and distant parent, to mitigate the loss of a most important attachment.
19Notwithstanding the relationship breakdown, the Applicant continued her role as bookkeeper to the tow truck business until June 2022. The Applicant does not assert a constructive trust claim to an interest in the business; however, as a joint tenant owner of the lands and premises, home to the business, she is, on the sale, going to receive an equal share of the main asset thereof.
20Instead, the Applicant asserts that the financial records for the business filed with the CRA do not reflect disproportionate undeclared cash revenue and overstated deductions on the form T2125 so that the Respondent’s line 150 income reported year to year is significantly less than what is available for child and spousal support calculations. She, in reliance on records she compiled, relies on the income adjustment opinion from her expert to advance enhanced claims for child and spousal support.
21The Respondent doesn’t deny the fact of unrecorded cash revenues and acknowledges them to be in the range of $20,000 per year. He disagrees with portions of the add-backs for expense claims. He is prepared to pay child support based on line 150 plus $20K, adjusted for tax avoidance. He, in reliance on his estimate of the value of unreported cash transactions per year, relies on the income adjustment opinion from his expert.
22Neither expert undertook an audit of the financial recording. Both experts relied on the litigant who retained them for the assumptions made and noted in the reports.
23The Applicant, as bookkeeper, did not maintain a general ledger. She maintained that she kept one set of records for tax filing purposes and another for her own purposes which she says are the more accurate of the two.
24The Applicant and children continue residence with the Applicant’s mother rent free. The Applicant wasn’t available for gainful employment for the first year after relocation as she dedicated her time to Gretchen's adjustment at school and connecting her with the necessary community resources. The Applicant aspires to gainful employment. She acknowledged that her time over the last year was dedicated to marshalling the evidence adduced at trial.
25The Respondent continues residence in the jointly owned home. He has covered all property expenses which run in the range of $30,00 per year.
26Issues surrounding sale of the home property were resolved by minutes of settlement. Both parties are expected to facilitate sale.
Issues
i. Decision making ii. Parenting time iii. Child support and arrears iv. Spousal support v. Occupation rent
Decision Making/Parenting Time
27The resolution of these issues is contingent on the relocation ruling.
28It is common ground that the children love both parents and that love is reciprocated unconditionally. The evidence is that when he was present, Mr. Glauer did his part with child-care and although there may be differences in their respective parenting styles, he is capable of parenting Gretchen and Elton.
29The second common ground is that Mr. Glauer’s opportunity for a more participatory parental role was frustrated by the toll exacted by the nature of self-employment itself and particularly one that involves spontaneous response any time of day or night.
30That distraction from equal parenting was a source of angst in the relationship. It is a common predicament. The breadwinner married to the job. The mother alone in the home alone with two young children in an unfamiliar community. It takes maturity and cooperation to survive the early years.
31The result is that in this case, it is the mother who was with two very young children a disproportionately longer time than the father and was accordingly much more involved in their lives – CLRA s. 39.4(3). The mother was and is the primary parent figure for the children.
32The Respondent’s position is that the mother surreptitiously hatched the plan to relocate the children to Barrie by the date of separation – September 1, 2019.
33They were not getting along, and the issues were intractable. He wanted her out but wasn’t going to voluntarily assist with finances. The Applicant was mired in Landlord Tenant issues with the townhouse. There were serious mortgage payments, so she needed the rental income. She knew that the Respondent viewed the townhouse as a potential convenient residential option for Applicant and children. The Applicant sold the townhouse in December 2019 thereby resolving the cashflow issue and closing off an unappealing relocation option.
34The issue of Respondent’s income adjustment under the child support guidelines was not lost on the Applicant at least one year before relocation. The Applicant began making entries on slips of paper stored in her desk which she says evidence unreported cash revenue, thus generating the genesis for the material financial issue between the parties.
35The Respondent argues that the events of January 19, 2021 were contrived. The Applicant and children had only recently returned from Barrie after a 15-day over- Christmas visit to the home she and children reside in now. He denies the allegations made, offered his own opinion as to the cause of the contusions and said he was mortified to think he tapped Elton on an area of his body already bruised from sledding.
36The OCL social worker, at the time, recommended that the Applicant return to this area pending judicial oversight. The Applicant declined that recommendation and filed objections to the report. The issue as to whether the relocation coincided with the best interests of the children was not addressed in court on an interim basis in timely fashion.
37The mother's plan involves continued residence in Barrie.
38In terms of children’s needs, given their ages and stages of development, nature and strength of children’s relationship with each parent, grandparents and extended family, history of care, the balance favours approval of the relocation as it stands.
39The children were very young at the time – 5 and 3. There was no meaningful connection to the community. Gretchen was home-schooled due to the Pandemic. Elton was not school age. They were familiar with the maternal grandmother’s home. Gretchen has benefitted from the array of community resources available in the larger urban center. The Respondent recognizes the Applicant as a great mother, notwithstanding his relationship experiences with her. As noted earlier, the fact is that even though the Respondent performed his diligence when available, the exigencies of self-employment served to shift the primary care to the mother before separation.
40The issue as to whether the Applicant recognizes the importance of allowing the development and maintenance of the father/children relationship is a live one. Her commitment is at best passively benign, proportional to the perceived inconvenience involved. If only for self interest in the longer term, it behooves the Applicant to make real efforts at inclusive parenting with the Respondent.
41On the other side, the Respondent benefits from recognizing that he does not have to win every battle or have the last word. As much as the loss of daily in-person tactile contact with the children has hurt, even with the distance, if he steps up, he can experience fulsome input in their lives and the benefits therefrom.
42The Respondent said that he experienced significant depression after the relocation to the extent that he stopped working for a few months in 2021. It doesn’t serve the best interest of the children to replace depression with anger or petulance. Those displays generate pointless parental conflict that, unchecked eviscerates the value of a cooperative joint decision-making model.
43The parties were before the Court many times prior to trial. Mr. Glauer realized by trial date that a new status quo was in place for the children. There is no doubt that Mr. Glauer did not consent to a permanent relocation and that he consistently expressed his objection. What may have been seen as more consistent with the best interests of the children in early 2021, dissipated in the ensuing 3 years. The children are now connected to their new community.
44That the children were removed from ready daily contact with their father with all that it entails has to be the most impactful effect of the relocation. That the parents have been less than facially cooperative exacerbates the impact. One would think that when Mr. Glauer makes the trip to Barrie asking for time with the children, Ms. Haelzle would take all steps required to facilitate no matter the momentary inconvenience. Ms. Haelzle dropped the ball. She is central to any strategy to allow Mr Glauer to get past his perspective that the removal of the children from his community without his consent was audaciously selfish and insensitive to his and the children’s sensibilities.
45Children exposed to high conflict parents suffer lifelong psychological deficits. The parents risk losing them to greater forces if they persist with the behaviours relating to decision making and parenting time depicted at trial. The Court is well suited to making orders that may dissolve an in-the-moment logjam but is manifestly unable to infuse into parental relations the preferred spirit of maturity, respect and consideration.
46Although the sense is that by date of trial the relocation was a fait accompli, how it came to be is not one the Court condones. Two wrongs have never made a right. The bottom line is that after three years the uprooting involved in compelling return to this community is inadvisable for both the children and their mother.
47Accordingly, the Applicant’s claim for Court approval of the relocation to Barrie with the children is approved.
Decision Making
48The Court aspires to disposition that does not cause more harm to the children than has already ensued consequent to the relationship failure.
49This file has been ongoing since early 2020 – 4.5 years. Metaphorically, that is a long time to tread water. As noted, the evidence reveals that the parties have been less than cooperative with one another in matters involving the children. The strain and anxiety derivative to the separation is hard enough; litigation drift is known to exacerbate the emotional effect. The goal is to give the children an outcome that is best for them in the circumstances.
50The Applicant aspires to a disposition that vests sole decision making with her; subject to first consulting on any important issues with the Respondent. The Respondent aspires to a joint regime. From his perspective, the Applicant, after relocating with the children to Barrie, implemented an insensitive imperious take-or-leave-it approach to the exercise of her discretion in dispensing parenting time/terms in his favour. The result has been a repetitive escalation in wasted vitriol between them.
51One expects the relocating parent to demonstrate sincere commitment to supporting the relationship between the stay behind parent and the children. It tends to build or erode confidence in relocation motivation. That includes facilitating exchange details. One small example involves the dispute over the exchange location. A timely return motion could have exposed the Applicant to very different outcomes. She could have been ordered to transport the children both ways twice monthly. She could have been ordered to return the children to residence in this area pending fulsome judicial oversight.
52The Applicant determined to exacerbate already poor relations. She was fully apprised of the Respondent’s resentment and resistance to the relocation. She would have known of what was needed to demonstrate a commitment to strengthening the father/children bonds. Yet, in early 2022 she arbitrarily changed the exchange location to the McDonald’s in Brighton, approximately 33 kilometers on the Barrie side of halfway instead of the McDonald’s in Belleville. At trial, the Applicant relied on Gretchen’s need for consistent familiarity as basis for her position. That was disingenuous. Given the cookie-cutter floor plan for McDonald’s franchises, consistency is achieved by the store not the city.
53To the mother: Even with sole decision-making authority it can never be absolute. There are always alternatives to one parent’s perspective. Effective parenting inherently requires constant dialogue, discussion and listening between the parents. Please respect that the father’s love and affection for the children is sincere.
54To the father: A relationship breakdown in a family with children inherently entails changes. As the non-primary parent, you lose daily tactile contact with those you love the most. For the children, they are removed from the toxicity of the relationship failure but lose daily tactile contact with the non-primary parent. The burden falls to you to let go of your separation/relocation angst so you can move forward with a meaningful relationship with your children. Please respect that the mother’s love and affection for the children is sincere.
55The Court’s conclusion is that the parents’ communication skills are tainted by immaturity derivative to relationship and life inexperience. That said, both love the children. Both are going through life trying to be the best they can and to do the best they can for their children. Neither respects that the other parent holds to that premise.
56For example, as one of her arguments against including the Respondent in decision making, the Applicant characterized the Respondent as an anti-vaxxer. When given the opportunity, the Respondent explained that his issue was not with voluntary vaccinations per se; rather, he contests the right of the state to compel them. The Court does no more than suggest that there was room for respectful discussion.
57The Applicant is estranged from the Respondent’s family – parents and siblings. Gretchen – 8 and Elton – 6 should be allowed to experience their father’s cultural heritage. It ought not to be a struggle. There will be times when the mother will have to change her schedule or the children’s schedules to facilitate opportunities presented when the father’s family travel to Canada to see them or even when special occasions present in Europe.
58Every family is complicated and there is no one resolution. A modified joint decision- making regime is best for the children.
59The decision making/parenting time protocol for this family moving forward shall be:
The Applicant’s relocation with the children to Barrie, Ontario is approved.
Decision Making 2.1.1 The parent having parenting time with the children will make the day-to -day decisions affecting the children during that time. 2.2 The parties will have joint decision-making responsibility for Gretchen and Elton and will make important decisions about the children’s welfare, including decisions about their health, including major non-emergency health care, as well as emergency health care as long as both parties can be reached immediately in the event of an emergency, failing which the parent with parenting time will make the emergency decision; education, culture, language, spirituality and significant extra-curricular activities. 2.3 If after consultation, the parties cannot agree, the Applicant mother will be at liberty to make the decision. Notwithstanding opposition or disagreement by the father with respect to the mother’s decision, the mother’s decision will prevail. 2.4 If this protocol itself becomes a source of ongoing conflict between the parties either party may return to the Court to review the decision-making protocol.
Travel If either party plans a vacation with the children, the travelling party will: 3.1 Give the other party a detailed itinerary at least 30 days before the vacation begins, including the name of the flight carrier and flight times, accommodations including address and telephone numbers and particulars as to how to contact the children during the travel; and 3.2 Obtain a travel authorization from the other party if the travel is outside of Canada, which authority shall not be unreasonably withheld, by providing the other parent with a travel consent form for signature and return. 3.3 The mother shall retain the children’s passports – German and Canadian. The mother will deliver them to the father as needed for international travel. On return, the father will return the passports to the mother.
Regular Residential Schedule and Holiday Schedule 4.1 The parenting time with the children will be as follows: (a) The children will live primarily with Denise and with Konrad one weekend per month, with best efforts to be made to schedule his weekend over a statutory holiday weekend, Professional Development Day or other opportunity for the children to enjoy a long weekend. 4.2 The following shall act as a template for Konrad's parenting time with the children and the parties holiday schedule with the children:
January (a) The children will reside with Konrad over the (expected) Professional Development Day in January and the adjoining weekend. If a Professional Development Day is not scheduled in January, the parties shall make arrangements for the children to enjoy a long weekend with Konrad.
February- Family Day Weekend (b) The children will reside with Konrad on Family Day Weekend from after school on Friday until Monday at 12:00 noon.
March- Spring Break (c) The children will stay with Konrad during the Spring Break in odd-numbered years from Saturday at 12:00 noon until the following Saturday at 12:00 noon. This shall reverse in even-numbered years.
April (d) The parties shall make arrangements for Konrad to have a long weekend in April with the children from Thursday or Friday at 6:15 pm until Sunday or Monday at 12:00 noon.
May- Victoria Day Weekend (e) The children will stay with Konrad on Victoria Day Weekend from Friday at 6:15 pm until Monday at 12:00 noon.
Summer Vacation (f) Each party will spend uninterrupted Summer Vacation time with the children as follows: (i) The children will stay with Denise for 3 consecutive or non-consecutive weeks, during which time Konrad's regular parenting time will be suspended. (ii) The children will stay with Konrad for 4 consecutive or non-consecutive weeks, during which time Denise's regular parenting time will be suspended. (iii) Denise will have first choice of Summer Vacation time in even-numbered years and Konrad will have first choice of Summer Vacation time in odd- numbered years. The party with first choice will advise the other, in writing, by February 1st of the chosen weeks, and the party with second choice will advise the other, in writing, by March 1st of the chosen weeks. (iv) If Konrad fails to request summertime with the children in accordance with the timelines above, Denise shall be at liberty to make arrangements for the children during the summer months.
September g) Labour Day Weekend The children will stay with Denise on the Labour Day Weekend each year to get the children settled for their return to school. h) The parties shall make arrangements for Konrad to have a long weekend in September with the children from Thursday or Friday at 6:15 pm until Sunday or Monday at 12:00 noon.
October (i) The parties shall make arrangements for Konrad to have a long weekend with the children from Thursday or Friday at 6:15 pm until Sunday or Monday at 12:00 noon.
November j) The parties shall make arrangements for Konrad to have a long weekend in November with the children from Thursday or Friday at 6:15 pm until Sunday or Monday at 12:00 noon.
December- Christmas Break (k) The parties will equally share the children's Christmas Break. The children will stay with Konrad for one week after Christmas.
Exchanges 4.3 To facilitate the parenting time, the parties shall meet at the McDonalds in Belleville, ON.
Caregiving Prohibition 4.4 Konrad's father, the paternal grandfather, shall not be left to solely care for the children at any time.
4.5 Facetime/Zoom/any other audio/visual platform Konrad may have reasonable opportunity to meet with the children on the audio/visual platform through the balance of the time when the children are not scheduled to be with him in person. Denise shall facilitate such contact.
In recognition of the effect that missing scheduled parenting time has on the children, Konrad shall honour the parenting time schedule as it is made up each week.
General Parenting Terms 5.1 The children shall attend Assikinack Public School or the local school in Denise's catchment area. 5.2 With respect to the parenting time schedule for the children set out above: (a) Both parties will provide each other with their email addresses, current addresses and a phone number where they can be reached at all times. (b) Unless there is an emergency, the parties shall communicate via the Talking Parents app. The audio/visual schedule should be settled weekly on this application. (c) The parenting time schedule will only be altered if both parties agree. (d) The party with whom the children are scheduled to be according to the parenting time schedule will be solely and financially responsible for making childcare arrangements during their parenting time, including making alternate childcare arrangements when unable to care for the children as a result of illness, employment responsibilities, etc. (e) There will be no make-up time for missed parenting time, unless the parties agree otherwise. (f) Both parties may attend extracurricular activities and scheduled school events regardless of the parenting time schedule. (g) If a child is sick, the transition from one party's care to the other party's care is to proceed according to the parenting time schedule unless the child is too sick to travel between the parties' homes according to the child's doctor. (h) Notwithstanding the above subparagraphs, the parties will at all times maintain a reasonable and flexible position respecting the parenting time schedule for the children and at all times the best interests of the children will prevail. Accordingly, if special occasions, extracurricular activities, excursions or other opportunities become available to the children, or to either party, the parent with whom the children are scheduled to be according to the parenting time schedule in place will have the discretion to accommodate. (i) The party with whom the children are not scheduled to be with shall not register the children in activity that will interfere with the other’s parenting time without the other’s written consent.
Denise and Konrad shall: (a) prefer the children's interests to their own and at all times keep the best interests of the children in mind; (b) encourage the children to have a good relationship with each other and with each party; (c) refrain from making disparaging or negative remarks to the children about the other party, and discourage others from doing so in the presence of the children; (d) exchange information and communicate about the children through the Talking Parents App, such communications to be private, respectful, related solely to the children, not shared with the children or third parties without the other's consent; (e) refrain from discussing with the children, or with a third party in the presence of the children, present or past legal proceedings, issues between the parties in any such legal proceedings or any conflicts between the parties; (f) ensure that all information or documentation pertaining to the parties’ separation, including all personal correspondence or email communications in respect thereof, is not accessible to the children. 6.1 Denise and Konrad may make inquiries and be given information by the children's teachers, school officials, doctors, dentists, health care providers, summer camp counsellors or others involved with the children. The parties intend this paragraph to provide each of them with access to any information or documentation to which a parent of a child would otherwise have a right of access.
Occupation Rent
60The parties own the family home property as joint tenants. The Applicant seeks occupation rent at the rate of $3K per month since February 1, 2021. The Respondent has paid all carrying costs since February 1, 2021, in the amount of $30K per year.
61Without digging down too much, the fact is that the family property is located in Finch. The region is and has been financially depressed. The sum of $2500 per month rents similar sized newer premises with St. Lawrence River frontage in the same region.
62The Applicant benefits from the Respondent’s mortgage payments as the principle balance has been reduced in accordance with the amortization schedule since leaving.
63The claim for occupation rent is an overreach having regard to market and the Respondent’s indemnity on behalf of the Applicant and is dismissed.
Child and Spousal Support
64The Applicant acknowledged that the relationship began to fail after the first three years of cohabitation and broke down after five years. The Applicant is 43 years of age. She has a university degree in arts and college diploma in hotel management. She worked until July 2017 following Elton’s birth when her position was terminated. She said that for the first year after relocating to Barrie, employment was not feasible as her time was dedicated to Gretchen’s needs. After Gretchen settled into life and community in Barrie, the Applicant briefly entertained work as a transcriptionist, concluded it did not generate sufficient reliable income and dedicated her time to this litigation. She suggests that her income should be imputed at $45,000 annually. She said she will actively search for employment now that the trial is over. She is focusing on positions offering medical benefits and a pension plan. The Applicant aspires to an order for spousal support in accordance with the SSAG until Elton becomes independent. The income expense portion of the Applicant’s financial statement suggests annual expenses of $90,403 and a proposed budget of $111,720.
65Between the date of separation and September 2022, the Applicant had full access to the parties’ joint credit card. The applicant paid for her and the children’s costs of living between January 2021 and June 1, 2022 with the credit card. The Respondent paid the credit card charges as they accrued.
66In May 2022, the Court ordered interim monthly child support in the amount of $2,825 based on imputed annual income in excess of $200,000 commencing June 1, 2022. The Respondent is current.
67Based on those numbers, the Applicant claims the sum of $18,670 as the Respondent’s netted share of s. 7 expenses over the last three years.
68A significant amount of trial time was dedicated to the issue of how to adjust the Respondent’s income for support purposes. The Applicant kept the Respondent’s business records through the years 2019 – March 2022. She admitted to keeping two sets of records – one for the accountants and CRA and one for her own purposes. She did not keep a general ledger that would have identified transaction anomalies.
69The Respondent net income for income tax purposes calculated on the basis of the T2125 – statement of business income was as follows:
2019 $20,747 2020 $65,651 2021 $20,030 2022 $37,004 for the first 6 months
70There are seemingly opportunities for black market transacting in all income lines. Both parties admit to unreported cash revenue. The Applicant said unreported cash income derived from undocumented transactions. Everything documented was recorded.
71The Respondent’s evidence is that unreported cash revenue from all sources amounts to $20,000 annually. All sources include towing, impound, scrap metal and bin rentals.
72The Applicant asserts that the valuation of unreported cash revenue is much greater than the Respondent admits. She says that beginning in 2019 when it became obvious that the relationship was failing, she began tracking paperless unrecorded cash revenue.
73The Applicant created revenue summaries that depicted unreported cash income from all revenue streams as follows:
Year Unreported Revenue Reported Revenue Applicant’s Recording According to Applicant
2019 $47,661 $303,442 $340,117 2020 $40,891 $301,611 $322,702 2021 $34,806 $289,194 $302,525
74In 2020, the Respondent began a side bin rental business. In subsequent years, the Respondent invested in more and larger bins. He acquired a truck to haul them to the rental and landfill sites.
75The Applicant who was gone by January 2021 estimated that the bins were rented out between 40 and 50% of the time. She did not create a bin rental revenue source line in 2020. The recorded bin rental revenue falls far short of her estimates.
76The Respondent said that he documents most bin rental revenue and charges HST and that he would never indicate an HST charge and then not remit.
77Both experts began with the T2125 statement of business income and added back from there. Neither expert did an audit of the financial records. In any event, the failure to provide a general ledger tends to frustrate the efficacy of an audit. Both noted that it is impossible to put an exact number on the amount of unreported cash revenue for the very reason it is unreported. As noted, the general ledger would have uncovered anomalies raised by cash received and not reported.
Bin Rental issue
78The Applicant asserted and her expert assumed that the bin rentals were understated and posited rental rates of 40 and 50% of the time which would have generated unreported revenue of $11,154 and $32,371 in 2020 and 2021 respectively, based on the 40% assumption.
79The Applicant asserts and her expert assumed that the Respondent would not have invested in more bins and transportation equipment at the end of 2020 and in 2021 if the numbers were so low.
80With respect, the assumptions fail to account for the most significant event in generations. The Covid-19 Pandemic resulted in all but emergency services – such as towing and impound shutting down for two years. They don’t account for the Respondent’s emotional breakdown through the summer of 2021. That the bin income line has solid potential is uncontested. The Respondent is an opportunistic buyer. The financial records for the business suggest that the Respondent buys used equipment whether for parts or lower purchase prices.
81I appreciate that the Respondent offered conflicting bin rental records for 2022. The Applicant assumed mala fides. The Respondent erred. He was representing himself faced by relentless pressure to produce – so he found some papers with numbers and gave them over. I am satisfied he had no idea what the numbers – generated by the Applicant signified.
Other Adjustments
Payments to Related parties
82The Applicant’s expert added the wages paid to the Applicant and deducted an estimated market rate for the services provided.
83With respect, the wages charged to the Applicant and the estimated market value are equally arbitrary. The Respondent’s tax accountants are far better placed to estimate a reasonable market value of the Applicant’s services in this community in this business. Their number has to prevail.
Personal discretionary expenses
84The Applicant asserted and the expert assumed that amounts expensed as subcontracts, vehicles, telephone and internet had a personal component and were not 100% business expenses. The person populating the Form 2125 usually appreciates the instruction at the beginning of the expense section to include only such portion of expenses where there is personal and business overlap as is incurred to operate the business.
85The expert added back 50% of the internet and telephone expense claims or $980 per year. I accept that add back. Telephone and internet are essential to the business. Ordinarily I would reduce the add back to 15%. For the time Gretchen was being home schooled either for behavioural or Pandemic reasons there was greater personal use.
86In relation to subcontracts, this line pertains to Lane Bilmer – shop hand. The expert opined that as Mr. Bilmer did not work for the Respondent after 2021, that Mr. Bilmer was not replaced, and the Respondent’s revenues increased by the sum of $100,000 in 2022 that Mr. Bilmer’s services were more personal than business related.
87Three compelling alternate reasons for the revenue increase were offered:
- The Pandemic shut down ended early in the year;
- The Respondent picked up a book of business and some equipment from a retiring competitor; and
- The Respondent said he reported all business transactions including paperless cash transactions in 2022 in an effort to build lender confidence so he could buy the Applicant’s interest in the home.
88The Respondent quantified the portion of Mr. Bilmer’s duties around the property unrelated to the business at 20 to 30% of his time. I accept that a calculation based on 25% personal is an appropriate add back. Mr. Bilmer was the shop hand. His task in the business was to be present and to care for the shop and property. Work around and in the personal home and home office was secondary to the main task – those numbers should be re-calculated.
Summary and Conclusion
89Although generally speaking, once the Court finds that the payor’s CRA records are not accurately reflective of what is available for support, the burden falls on the payor to illustrate what might be the most appropriate numbers, there are here extenuating circumstances. Mr. Glauer entrusted his business recording to the Applicant. She began the compilation of her own summaries in 2019 coincident with the end of the relationship. When asked about the decision to let her continue in that role, he said he hoped she felt there was possibility of return to the home, and this was an indicator of something positive in that regard. That he did not suspect she was building self-serving summaries is astounding.
90Both parties thought it was okay to lie to the CRA. Both parties were privy to not reporting paperless cash revenue. I cannot place unchallenged weight on the records the Applicant produced after the fact. There are no checks and balances to test the reliability of her reporting.
91Counsel for the Applicant challenged the Respondent in relation to unreported paperless cash revenue. He admits $20,000 per year in 2019, 2020 and 2021. I don’t know if he stopped the practice in 2022. Accurate quantification based on either of the expert reports is plagued by the self-interest of the protagonists and their influence on the experts' opinions.
92My conclusion, as much as it may be shot in the dark, is that Mr. Glauer’s line 150 income for support purposes should be in the amount depicted in his Statement of business income and expense summary, plus $35,000 plus tax gross up per year. This number accounts for the unreported cash income in relation to the tow, impound, scrap and bin rental revenue lines as well as the add backs for telephone/internet in 2019, 2020 and 2021 of $980, the Porsche personal use of $1,893 as well as the add back for Mr. Bilmer in the amount of $5,150 for the same years.
93Although there is little evidence before the Court on the issue of what income should be attributed to the Applicant for spousal support and s.7 apportionment, her proposal of $45,000 per year since January 2021 is reasonable pending future disclosures.
94I leave to counsel the task of recalculating child support base and s.7 over/under payment. If either party wishes to recalculate for the period during which the Respondent paid the family expenses through the credit card account, those numbers will have to be factored.
95Given the ruling, the accounting between the parties for unpaid/overpaid child support and section 7 disbursements together with the SSAG calculations needs to be adjusted before an actual quantification and order can be rendered. Paragraph 59 can be considered in place and the parents should act on it for the balance of the summer moving forward.
96The undeclared income and addbacks require the unpaid income tax bump. Either expert can do that - not both. Once those numbers are in place the DivorceMate calculations on a year-to-year basis should permit quantification of all accounts affected by the ruling.
97Counsel to have 60 days to marshal the calculations. Service on Mr. Glauer in accordance with the rules is required. Further attendance if required to be by Zoom on notice.
The Honourable Mr. Justice Rick Leroy
Released: July 17, 2024