2012 QCCS 749, 2012 QCCS 749

Droit de la famille — 12390 2012 QCCS 749 JC0B37 SUPERIOR COURT CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL No: 500-04-050742-098 DATE: March 1 st , 2012 ______________________________________________________________________ BY: THE HONOURABLE DAVID R. COLLIER, J.S.C. ______________________________________________________________________ S. M. Plaintiff v. C. K. Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ INTRODUCTION [ 1 ] In 2008, the plaintiff briefly held a job in a [...] bar-restaurant.

The defendant met her there. A brief relationship ensued which produced an unexpected pregnancy and the birth of a boy, X, on [...], 2009. [ 2 ] Monsieur initially denied paternity, until the results of a test confirmed his fatherhood. He does not want custody or visiting rights. [ 3 ] By motion dated July 7, 2009, Madame seeks the sole custody of X, the payment of child support by Monsieur, and a provision for costs. [ 4 ] Since the original motion in July 2009, the parties have been before this Court on numerous occasions.

As noted by the Court on September 16, 2011, this case is characterized by a high degree of conflict. [ 5 ] Among other things, Madame has filed three contempt of court motions against Monsieur, alleging his failure to pay interim child support as ordered by the Court and his refusal to produce documents confirming his revenues. [ 6 ] Monsieur contends that he has respected his obligations.

He has filed a motion seeking to have Madame declared a vexatious pleader, which will be dealt with in a separate decision. [ 7 ] On February 8, 2012, the undersigned informed the parties that the Court could not concurrently hear all of Madame's motions.

The Court explained that Monsieur's right to remain silent in response to the contempt charges would be compromised if he were required to testify in the context of the custody and child support motion. [ 8 ] In light of this, Madame postponed her contempt motions and proceeded with the motion for custody, child support and provision for costs. [ 9 ] Madame was not represented by legal counsel at the hearing. She has appeared without counsel on numerous occasions, despite being eligible for legal aid. Madame produced no evidence of her legal costs.

Accordingly, there are no grounds to grant her request for a provision for costs. [ 10 ] The only issue to be decided by the Court in these reasons is the amount of child support that should be paid by Monsieur for

the benefit of X. Madame argues that Monsieur has considerable financial resources, while he pleads financial hardship. THE FACTS [ 11 ] The Court heard evidence over four days regarding the personal situation and financial affairs of the parties. (

i) Madame's situation [ 12 ] X is now two and a half years old. He lives with his mother in a rented two-bedroom condominium on Town A. [ 13 ] This condominium was repossessed by the TD Bank in 2010, when its owner defaulted on his mortgage payments. The owner is Madame's friend and benefactor. Before defaulting on his mortgage, the owner signed a five-year lease with Madame that reduced her rent from $475 a week to $475 a month. As might be expected, this lease has been a source of conflict between Madame and the bank since it repossessed the property. [ 14 ] Madame has been receiving welfare since 2009.

She says she cannot work because she cannot afford the cost of daycare for her son, who she must care for at home. According to Madame, she had to remove X from a private daycare facility in 2010 when Monsieur refused to pay the fees. Madame claims that she is unable to find a place in a cheaper, subsidized daycare. [ 15 ] Until 2007, Madame worked for the [Company A]. Since giving birth, she has worked for only a few days and has not declared any income. [ 16 ] Madame is an intelligent woman who speaks four languages.

She expressed an interest in pursuing studies or vocational training in order to find a good job. [ 17 ] Madame receives approximately $1,250 a month in social assistance payments. On several occasions, she has received financial help from her mother, who lives in Bulgaria. Madame testified that she has had to sell some of her personal belongings and furniture to pay for her son's needs. [ 18 ] Monsieur has provided only a modest amount of child support since X's birth. [ 19 ] Under a consent agreement between the parties, Monsieur paid monthly support of $200 from August 2010 to May 2011.

He also made one payment of $880 towards X's daycare expenses. [ 20 ] Since September 2011, Monsieur has been making monthly support payments of $790 following an interim order issued by the Court. [ 21 ] On December 16, 2011, Madame presented an urgent safeguard motion, claiming that she faced eviction from her condominium in January if she did not pay overdue rent totalling approximately $17,000. Based on these representations, the Court ordered Monsieur to pay her alimentary support of $20,000 within ten days.

This sum was paid in January. (ii) Monsieur's situation [ 22 ] Monsieur is half owner of a well-known language school in Montreal. His father, who founded the school 54 years ago and still teaches there, owns the other half of the business. [ 23 ] Monsieur has three children from a previous marriage, who are 19, 17 and 15 years old. They live with him 80% of the time.

Monsieur pays $600 a month in child support to his former wife. [ 24 ] Monsieur administers the language school and travels abroad several times a year in order to promote the school to foreign students. [ 25 ] According to the school's unaudited financial statements, it had average annual revenues of $1.3 million from 2008 to 2010. It paid dividends of $122,500 in 2010 on net after tax earnings $162,500. Shareholder equity in the company after the payment of the 2010 dividend was $231,000. [ 26 ] The school operates from leased premises owned by Monsieur. The building has a mortgage of $900,000.

The school pays rent to Monsieur, although the amount is unclear. The school's accountant testified that the annual rent is $54,000, and that Monsieur's revenue is offset by property taxes and maintenance expenses. However, according to loan documents prepared in July 2011 by a mortgage lender, the school pays an annual rent of $122,400 (exhibit PR-4). [ 27 ] According to the accountant, the school pays Monsieur an annual salary of $25,000 and annual dividends of $75,000. The school has also extended shareholder loans to him over the past several years. Some of these loans were repaid in 2009.

At the end of 2010, Monsieur owed $216,000 to the school. [ 28 ] Monsieur drives a car that is paid for by the school. [ 29 ] Monsieur declared to Revenue Canada that his income was $119,000 in 2008, $118,600 in 2009 and $104,600 in 2010 (exhibits D-18, D-19). [ 30 ] Monsieur lives in a large (7,000 sq. ft.) home in Town B that has a municipal evaluation of $2.2 million. In January 2010, the house was listed for sale at $2.75 million (exhibit P-13).

There is a mortgage of approximately $1.4 million on the home. [ 31 ] In a balance sheet prepared by Monsieur in 2007, (exhibit P-14) he valued his interest in the school at $750,000 and attributed a value of $450,000 to his personal art, home furnishings and fixtures.

[ 32 ] In September 2011, Monsieur re-mortgaged his home and the school building in order to pay off some of his debts, including part of the shareholder loan. In his loan application to the bank (exhibit PR-2) Monsieur declared that his annual income was $315,000. [ 33 ] At the time, the bank estimated Monsieur's net worth to be $1,839,000 (exhibit PR-1). [ 34 ] Monsieur claims that he cannot afford to pay more than the $790 per month in child support, as ordered by the Court on an interim basis in September 2011. He produced a list of his living expenses for 2012 to show his dire situation (exhibit D-19).

According to Monsieur, his 2012 expenses will amount to $142,500. This includes his annual mortgage payments totalling $64,800, school expenses of $13,000 for his three other children, and insurance, hydro and municipal taxes totalling $43,000.

Monsieur also claims expenses for clothing ($1,500), travel ($4,500), food ($9,000), telephone ($504), cable ($702), and an alimentary allowance of $17,004. [ 35 ] The statement that Monsieur has an alimentary obligation of $17,004 cannot be reconciled with the evidence that he pays no support to his former wife and monthly support of $600 for his three other children (exhibit D-17). This adds up to $7,200 per year.

ISSUES TO BE DECIDED [ 36 ] Should Madame have sole custody of X? [ 37 ] What is the appropriate amount of child support to be provided by Monsieur? [ 38 ] In setting child support payments, how should the Court treat the $20,000 lump sum payment by Monsieur in January 2012? [ 39 ] Are there grounds to award a provision for costs to Madame? ANALYSIS (

i) Custody [ 40 ] There is no reason to believe that Madame is not caring well for X. Ms. Patti Chan, a home-care worker from A CLSC who assists Madame at home, testified that the boy is well looked after. [ 41 ] Monsieur does not ask for the custody of his son or for visiting rights. [ 42 ] For these reasons, the Court grants Madame the sole custody of X. (ii) Child support payments [ 43 ] Madame argues that Monsieur is hiding the true extent of his income. Monsieur denies this. [ 44 ] Monsieur filed a child support determination table ("Schedule 1") that set his income at $110,000 and that of Madame at $30,000.

This would result in monthly child support payments by Monsieur of $784.55, which is close to what he pays under the September 2011 interim order. [ 45 ] Madame's attributed income of $30,000 is based on pure conjecture.

There is no evidence that she has any income beyond what is provided by social assistance and occasional loans from family and friends. [ 46 ] Monsieur's representation that his annual income is approximately $110,000 is based on his Revenue Canada filings and the accountant's testimony that Monsieur receives an annual salary of $25,000 and annual dividends of $75,000. [ 47 ] While there was no other evidence concerning Monsieur's income, the Court is of the opinion that his real income is considerably higher than he declares. [ 48 ] When Monsieur applied for a mortgage loan in August 2011, he declared to the bank that his annual income was $315,000. [ 49 ] Monsieur's lifestyle also suggests that his annual income is much greater than $110,000.

For one thing, his estimated living expenses of $142,496 significantly exceed his declared annual income of $110,000. [ 50 ] The mortgage payments alone ($64,800) make up 60% of Monsieur's income. After the payment of his mortgage and income taxes, nothing would remain to pay the other expenses if his annual income were $110,000. The books simply do not balance. [ 51 ] Moreover, the evidence indicates that Monsieur's annual living expenses may actually be higher than $142,496. [ 52 ] Monsieur testified that he gambles at the casino.

In the last three years, his credit card statements (exhibits PR-10, PR-11 and PR-12) show several cash advances from casinos in Montreal and the Dominican Republic amounting to several thousand dollars. [ 53 ] Monsieur's bank statements from December 2007 to May 2011 (exhibit PR-7) show numerous cash deposits and withdrawals, each in a rounded amount of several thousand dollars.

These cash transactions indicate a lifestyle that is far more extravagant than an annual income of $110,000 would permit. [ 54 ] Based on the evidence, the Court is of the opinion that Monsieur's real annual income is $315,000, as he declared to the bank in August 2011. The Court attributes this income to Monsieur for the calculation of child support. [ 55 ] Monsieur's net worth is also taken into account in setting child support. The Court concludes that his net worth is at least $1.9 million, as the bank concluded after its credit investigation in September 2011 (exhibit PR-1).

This net worth confirms that Monsieur has the financial means to pay the child support set by the Court.

[ 56 ] In

Schedule 1, Monsieur declared his net worth to be $1,552,000. However, he valued his school shares at $100,000, which is significantly less than the value of $750,000 he attributed to them in 2007 (exhibit PR-14) and again in August 2011 (exhibit PR-3). [ 57 ] Furthermore, Monsieur did not include his art, furniture and fixtures valued at $450,000 in his list of assets. [ 58 ] According to

Schedule 1 completed by the Court and deposited into the court file, Monsieur's annual child support obligation is $20,523. This is based on his attributed annual income of $315,000, Madame's annual income of $12,500, and annual daycare expenses of $10,560 ($880 per month) for X, which have been converted to net expenses of $2,610.

Although Madame will have to pay the gross daycare expenses, she should be reimbursed the difference between the gross and net expenses when she completes her annual tax returns. [ 59 ] The Court considers that it is important to provide daycare for X so that Madame can find gainful employment and begin contributing financially to her son's needs. The amount of the child support payable by Monsieur may be modified when that occurs. [ 60 ] Given Monsieur's income and net worth, the Court believes that the annual child support award of $20,523 will not cause him excessive hardship.

This conclusion does not change in light of the fact that Monsieur is also paying child support for his three other children. [ 61 ] Although the support awarded in this case is higher than that which Monsieur pays for his three other children ($600 per month), the children are of different ages and have different needs. Moreover, the three other children live with their mother only 20% of the time, which partly explains the lower support payments. [ 62 ] Given that Madame has the sole custody of X in this case imposes an additional financial burden on her.

There are no economies of scale in providing for a single child. (iii) The treatment of the lump sum payment of $20,000 [ 63 ] Monsieur made a lump sum payment of $20,000 in January 2012. He has also paid some child support to date. These payments should be taken into account. [ 64 ] Child support may be retroactive to the date of the motion, in this case to July 2009. In such a case, the present judgment would result in a retroactive payment of $54,730 (32 months x $1,710.32 per month). However, Monsieur paid child support of $6,892 during that time (exhibit D-3). He has also paid $20,000.

These amounts should be applied to reduce the retroactive liability. In addition, although Madame instituted her action in July 2009, the court record indicates she did nothing to advance the file before June 2010.

In light of these factors, the Court will not award retroactive child support. [ 65 ] FOR THESE REASONS, THE COURT: [ 66 ] GRANTS sole custody of X to Madame; [ 67 ] ORDERS Monsieur to pay Madame child support, for the benefit of X, in the amount of $1,710.32 per month, beginning on March 1, 2012, which is to be paid in two equal instalments of $855.16 on the 1 st and 15 th of each month as long as Monsieur has not received a notice from the Minister of Revenue to pay otherwise; [ 68 ] ORDERS that child support be indexed annually in accordance with

article 590 C.C.Q.; [ 69 ] ORDERS the parties to exchange copies of their annual tax returns prior to June 1 st of each year; [ 70 ] DISMISSES Madame's motion for provision for costs. [ 71 ] WITHOUT COSTS, given the nature of the case. __________________________________ DAVID R. COLLIER, J.S.C. Mrs. S. M. For herself Mtre. Roxane Hardy Mtre. Véronic Meunier Attorneys for Defendant Date of hearing: February 7, 8, 9 and 10, 2012