Gordon v. Kanyere, 2011 ONCJ 751

Sudbury Registry No. C 544-05 DATE: 2011·X·24 CITATION: Gordon v. Kanyere , 2011 ONCJ 751 ONTARIO COURT OF JUSTICE BETWEEN: ) ) ) BECKY LYNN GORDON ) In Person ) ) -AND- ) ) ) VENGUAYI KANYERE ) In Person ) ) J. Blanchard, Agent for Ontario Works ) ) HEARD: 28 and 31 March 2011 ) [ 1 ] JUSTICE J.D. KEAST:— This matter reminds me of the old adage: “What a tangled web you weave when you set out to deceive.” 1: NATURE OF THE APPLICATION [ 2 ] The Respondent brings a change motion in relation to a final order issued by McLeod J. on June 16th. 2008.

Income was imputed to the Respondent in the amount of $65,025.00 annually. Based on this income and the child support guidelines, the Respondent was ordered to pay to the applicant, on account of support for one child, Todd Gordon, born June 2nd, 2007, $601.00 per month commencing January 1st, 2008. [ 3 ] The Respondent requests this amount be varied to zero. 2: HISTORY [ 4 ] The matter before McLeod J. proceeded as an uncontested hearing.

Though responding documentation was filed, including a financial statement, the Respondent did not appear. [ 5 ] The crucial evidence was the fact the Respondent purchased a residential property in Brampton, Ontario in the amount of $240,400.00. Against that property there was registered a mortgage in favour of the Royal Bank of Canada in the sum of $233,653.50. [ 6 ] The Royal Bank has a formula to determine the amount to lend on a mortgage. This formula is fairly standard throughout the banking industry. The amount a bank is prepared to lend is governed by the income level.

The monthly payment of the mortgage, plus taxes and utilities, cannot exceed 32 percent of a person’s gross annual income. To support this particular mortgage, including an estimate for taxes and utilities, would require an income of $65,025.00. McLeod J. concluded the Royal Bank would not have approved a mortgage of $233,653.50 without this income level. Accordingly, the income was imputed.

[ 7 ] Part of the record before McLeod J. was a financial statement of the Respondent showing an income of zero. The reasons provided on the record by McLeod J. did not form part of this proceeding, however, the representative of Ontario Works, the assignee of the support order, advised the court of the rationale of McLeod J.

Inferentially, McLeod J. rejected the income portion of the Respondent’s financial statement, which was in conflict with the income level required for approval of a mortgage of this magnitude. 3: THE CHANGE MOTION [ 8 ] The change motion was filed five months after the final order, in November, 2008. [ 9 ] In support of the change motion the respondent presented an affidavit outlining the particulars of the alleged material change in circumstances. He indicated he had no income at the time of the final order. He was living on loans from friends.

He disagrees with the assumption upon which the support order was made. To his affidavit he attaches notices of assessment from Revenue Canada from the tax years 2005, 2006 and 2007, showing gross incomes of $3,204.00, $1, 423.00 and $441.00, respectively. In the year he purchased the residence (2006) his notice of assessment with Revenue Canada shows an income of $1,423.00. [ 10 ] The materials on the change motion included a proposal of employment with an annual income of $40,000.00, which was the intended income in the year of the purchase of the residence, being 2006.

He was employed for three weeks but was terminated because of immigration issues. He claims it was this document which was provided to the Royal Bank as support for his income level to qualify for the mortgage. [ 11 ] Two and a half months after the final order, the Respondent commenced a full-time four year postsecondary educational program at York University.

To fund this education he qualified for a student loan in the amount of $18,500.00, for the first year of the program. [ 12 ] On the financial statement attached to his change motion, the Respondent indicates a net monthly income of $1,773.00 and monthly expenses of $3,770.00, with a monthly deficit of approximately $2,000.00. He shows substantial expenses relating to the home. He occupies the home with his daughter (from another relationship) along with a tenant, who resides in a self contained unit in the house.

In his affidavit he indicated he did not defend the application for child support any further (beyond filing his documents) because he assumed such would not be necessary because he had no income. [ 13 ] He has various bank accounts, lines of credit, credit cards and personal loans with friends. What he would do is transfer monies from these various sources of funds, including OSAP, in order to finance his deficit. His so called income is an ever increasing amount of debt from various sources.

As if his financial picture was not complex enough, he indicates in his affidavit, the purchase of a second house in the amount of $280,000.00 wherein there is a first mortgage with the Bank of Nova Scotia in the amount of $272,947.35. This is a residential income property. It was purchased in April, 2008 – two months before the hearing that led to the final order.

McLeod J. did not have evidence of the purchase of the second residence. [ 14 ] He indicates he bought the second house using the first house as security for the mortgage on the second house (the equity is a very small fraction of the overall value of the first house)! [ 15 ] Though he purchases the second house in 2008 he shows no taxable income for 2008. 4: NO MATERIAL CHANGE BASED ON FILED DOCUMENTS [ 16 ] The documents filed in support of the change motion do not demonstrate a material change in circumstances. Nothing of a material nature was added to what Justice McLeod already knew.

The affidavit and financial statement confirm the contents of the financial statement filed in the original hearing – Mr. Kanyere had no income at the time the final order was made or in the calendar period of 2008. He provides some more detail as to why there was no income but the bottom line is the same, there is no income. He provides circumstances surrounding the purchase of the house and the mortgage but Justice McLeod already knew the salient details of the transaction. The fact he became a student in September, 2008, two and a half months after the final order, is not a material change.

He is simply continuing his status as having no income post June 16th, 2008, but now for a different reason. [ 17 ] Justice McLeod knew he had no income at the time of the default hearing but chose not to accept Mr. Kanyere’s materials demonstrating no income. The court preferred the evidence that a mortgage of $233,653.50 would not be approved without verifiable income of approximately $65,000.00 per year. The logic was inescapable.

A bank would not approve a mortgage of this magnitude to someone with no or negligible income. [ 18 ] Since Justice McLeod preferred one line of evidence over another, the appropriate approach should have been to appeal the decision, as opposed to bringing a change motion which simply reiterates what was already known and what did not change – there was no income. Now what Mr. Kanyere is attempting is to re-litigate the final order. [ 19 ] I could have disposed of this matter based only on the materials filed in the change motion. Because of the unusual nature of Mr.

Kanyere’s evidence in this hearing, I choose to go further in elaborating on my reasons. 5: EVIDENCE AT HEARING [ 20 ] The tangled web woven by Mr. Kanyere in his viva voce evidence adds to the intrigue and mystery of his finances. He

continues his theme of essentially being financially broke though he has now purchased a second property with a substantial mortgage! [ 21 ] During the process leading up to this trial, Ontario Works was persistently pursuing Mr. Kanyere for production and disclosure of the circumstances surrounding the two mortgages. In my view he was resistant to pre-trial efforts to provide information and documents as part of the production and disclosure process. [ 22 ] During the production process Mr.

Kanyere ‘discovered’ new information, which he claims he was not aware of at the time of the application process for the two mortgages. He now alleges the two mortgages were based on fraud as to the income levels the two banks utilized to approve the mortgages. He is requesting this court make a change to the final order under Rule 15 (14a) which reads:

(14) Changing Orders – fraud, mistake, lack of notice – The court may, on motion change an order that, (

a) was obtained by fraud. [ 23 ] In relation to the two mortgages, he retained a mortgage broker to submit the mortgage applications on his behalf. He executed mortgage application documents which he understood were presented by the broker to the two banks. [ 24 ] In relation to the mortgage on the first property with the Royal Bank, Mr. Kanyere now claims the broker fabricated the evidence to support the employment income required by the bank to qualify the mortgage.

This fraud included the preparation of a fictitious letter and employer, as well as paystubs, in order to demonstrate the requisite level of income required. He also says the Royal Bank paid the broker a commission. This increasingly byzantine tale unfolds with his very predictable evidence, that of course, he had no knowledge of the significant fraud and fabrication intended to mislead the bank. Indeed, it worked – a person with no income qualifies for a $233,653.50 mortgage! [ 25 ] I suppose if something works once and a benefit is received, why not try again? Mr.

Kanyere now describes the circumstances surrounding the purchase of the second residential property in April, 2008, wherein it is the Bank of Nova Scotia’s turn to be a victim of fraud and forgery. He states he used the same broker, executed a mortgage application; the broker presented an employment letter along with paystubs. Mr. Kanyere makes it clear the alleged employer, income level and paystubs were all fabricated by the broker – of course, without the knowledge of Mr. Kanyere. In court, Mr.

Kanyere feigned great indignation at these two frauds on two banks, and portrayed himself as much as a victim as the banks. [ 26 ] In searching cross-examination he was asked a question he should have anticipated – the name of the broker! He could not name the broker. I guess the name of the individual who constructed two significant frauds, is a minor detail, which is easy to forget. At a recess in the trial he made a phone call and did come up with a name. Naturally, this fellow is nowhere to be found, at least not in this country. Mr.

Kanyere alleges the broker was charged with fraud, went off to prison and then was deported from Canada. [ 27 ] Christine Perras, a mortgage specialist with the Royal Bank of Canada in Sudbury, provided evidence. She has over 30 years experience in the banking business. [ 28 ] She made it clear the Royal Bank does not use mortgage brokers, as such described by Mr. Kanyere, largely because of the risk of fraud. Though she was not involved in this mortgage application she did review the file profile which indicated an employment letter and paystubs, which information was verified by the bank. [ 29 ] Mr.

Kanyere denies he ever worked for the employer indicated in the letter in the possession of the Royal Bank. He further denies the validity of the paystubs. What I find amazing is how could the bank, if this was a fraud, verify the contents of the letter and paystubs? Ms. Perras indicates the bank did not simply rely on the supplied documents but took the added step to verify the provided information. This would have involved a third party who would have confirmed to the bank the authenticity of the provided documents. Such third party would have to be part of the fraud.

So the fraud would not just involve the so called broker but another individual would have to be involved in the fraud. [ 30 ] Ms. Perras also commented on the Bank of Nova Scotia mortgage on the second property. She was not privy to documents in that transaction but did state the chartered banks have similar lending protocols for transactions of this nature. She indicates, in order to qualify for the mortgage with the Bank of Nova Scotia, they would have to take into account the situation with the first residence and the mortgage on that property. To qualify for the Bank of Nova Scotia mortgage Mr.

Kanyere would require a verifiable income of between $85,000.00 to $90,000.00 per year plus rentals. [ 31 ] For his part, Mr. Kanyere strongly denies the validity of the employment letter and paystubs provided to the Bank of Nova Scotia. Naturally, he goes further and adamantly states he had no knowledge and was in no way complicit in this second fraud. [ 32 ] Mr. Kanyere continues to reiterate not only did he not have income in 2008, he has no or negligible income since then. He does have revenue coming in from tenants in the two residences.

Outside of that, all funds to pay expenses and live on for he and his daughter come from an elaborate structure of debt sources. These include the OSAP loan (which continues to grow by the year), bank lines of credit, credit cards and private loans through friends or family. He cycles monies through these various debt sources in order to meet deadlines for the payment of various expenses and bills, whether personal or associated with the two residences.

Some bills were in arrears, in particular as such relates to the second property, caused by tenant issues, but over the past four to five years, for the most part, all expenses were current including the mortgages. The only expense not being paid is the child support. Everything else is relatively current. [ 33 ] Mr. Kanyere now asserts the material change in circumstances are the two frauds, conducted without his knowledge. He submits, had Justice McLeod known about the frauds, he would not have imputed the income. The request is I make a finding of fact the frauds were committed without the knowledge of Mr.

Kanyere and the actual income is zero. Thus, the child support order should be reduced to zero. 6: DISCUSSION AND ANALYSIS

[ 34 ] Was fraud committed on the two banks? Is such a material change? What is the impact on the imputed income? Was Mr. Kanyere implicated in the frauds? 6.1: Credibility of Mr. Kanyere [ 35 ] The central issue in this hearing is the credibility of Mr. Kanyere. He was not a credible witness. He was evasive, contradictory, resistant, testy and defensive. For example, he was asked probing questions as to the contents of the mortgage application forms (which were not produced in this hearing). He said he read only those parts which he considered necessary.

However, to determine what was necessary, he would still have to read everything in order to assess and separate the necessary from the unnecessary.

He was being selective as to what he thought was necessary – which was an evasive manoeuvre to avoid answering the pivotal question, whether the application stated his gross income from employment. [ 36 ] At first he said the application to the Royal Bank stated he had an employment income of $30,000.00, but then he retracted this and said he did not recall the details of his employment income in the Royal Bank mortgage application, as well as the Scotia Bank mortgage application. He had to have known his employment income was the most crucial factor in whether the mortgage application would be approved.

Thus, this was very important information from the point of view of the bank. He trivializes this information by implying it was unnecessary, and therefore not read or remembered. [ 37 ] He claims he did not know the Royal Bank formula to determine qualification for the mortgage. I don’t believe him. He is a reasonably intelligent individual. He is doing well in a postsecondary education program. He portrays an image of naivety and lack of sophistication. Obtaining a mortgage is a routine financial transaction.

It is widely known by the public that the income level is the limiting factor in how much one can borrow. [ 38 ] Both house purchases indicated down payments, which infer cash equity in the transaction. He admitted the apparent equity was actually borrowed, thus there was no actual equity. He was asked if the banks knew this. In the face of clear questions he gave evasive and vague answers. [ 39 ] He claims the banks paid the commissions to the mortgage broker. He was clear about this.

When pressed he said he assumed payments by the banks and finally conceded he has no actual knowledge of payments by the banks to the broker. In my view, the so called broker becomes the scapegoat upon which to blame the frauds. Without a broker, there is only one person left to blame for the frauds – Mr. Kanyere. I don’t accept his evidence of the existence of a broker at all. The Royal Bank witness was clear, wherein the bank does not use mortgage brokers. [ 40 ] Many probing questions were asked of his recycling of various debt sources to pay expenses.

He was increasingly irritated with these questions and uncomfortable with attempts to probe beneath surface information. [ 41 ] Though I am sceptical if there was a fraud at all, I am sure, if there was a fraud, Mr. Kanyere was complicit in any such fraud. It is inconceivable a so called mortgage broker was acting independent of Mr. Kanyere. After all, Mr. Kanyere was the primary beneficiary of the frauds. [ 42 ] I am not prepared to make a finding of fact as to fraud. Mr. Kanyere’s evidence has been so discredited, it cannot support a fraud finding. There is some evidence outside of Mr.

Kanyere’s evidence which suggests there might have been a fraud. In the evidence of Ms. Perras, she refers to a notation in the Royal Bank file in October, 2006, wherein it is suggested there may have been a fraud in relation to the employment income and such should be investigated. However, there is no evidence as to the result of any such investigation. There is no evidence the Royal Bank concluded a fraud was ever committed. Further, there is no evidence at all by the Bank of Nova Scotia that there was any fraud in relation to its mortgage. [ 43 ] If frauds were committed by Mr.

Kanyere, such demonstrates his ingenuity and capacity to organize and structure his financial circumstances in such a way to meet his perceived needs. There is other evidence to support my thinking. He does not want to pay income tax. He owns two revenue producing properties and it strikes me he blurs the distinction between personal expenses and business expenses. The end result is no income taxes paid. He pleads with this court to make a finding of fact of fraud which conveniently may lead to the conclusion of falsified income and therefore no child support is paid, which is precisely what he wants.

He is the primary beneficiary of the two frauds and now wants to use the frauds to defeat child support. [ 44 ] Mr. Kanyere has presented a chaotic and convoluted financial picture. His main theme is almost all sources of payment of personal and business expenses (except for tenant revenue) comes from a variety of debt sources. Thus there is no income; there is only debt. This scenario has now existed for several years.

In my view, this picture is not sustainable without a substantial infusion of income from some other source. [ 45 ] Over the years all expenses have been relatively current, including the child support. The child support was paid up to December, 2010, at which time Mr. Kanyere unilaterally stopped sending cheques to the Family Responsibility Office. He said he could no longer afford to pay the child support, though all other expenses were current. He presents a picture the $601.00 per month of child support will break him financially. [ 46 ] It has been difficult to sort out Mr. Kanyere’s finances.

He came to court similar to the proverbial accountant’s client who brings a shoe box into the office and dumps such on the accountant’s desk and says, “sort it out.” Thus, it was difficult for either the court or Ms. Blanchard to question him. One would have to be a forensic accountant to unravel this financial structure. This is not the function of the court. Mr. Kanyere has the burden of proof and if he presents a convoluted and chaotic financial picture, then such burden of proof is not discharged because the court is unable to sort out the intricacies and subtleties of his financial world.

It is his burden to clarify this complex financial picture to the court, which he has not done. A court can only do so much when evidence is presented in this fashion. He has not discharged his burden of proof.

7: CONCLUSION [ 47 ] Accordingly, the change motion is dismissed. [ 48 ] The stay of enforcement of the arrears, issued on April 28th, 2009, is vacated. This order will instantly create arrears. Those arrears are to be retired at the rate of $50.00 per month commencing November 1st, 2011. [ 49 ] Near the end of the hearing Mr. Kanyere raised the issue of access. I have little evidence on this issue. The primary problem with access is the considerable distance between Mr. Kanyere and Ms. Gordon, who lives in Little Current, Ontario (on Manitoulin Island).

I would encourage the parties to meet at a midway point so the relationship between the child and father can be rekindled. It would have to be supervised for an interim period of time because the child does not know his father. There will be an order that Mr. Kanyere cannot remove the child from the Province of Ontario. If either party wishes to deal with the issue of access further they may contact the trial coordinator to setup a conference. _____________________ Justice John D. Keast Released: 24 October 2011