Correa v. Demke, 2011 ONCJ 666

Toronto Registry No. DFO 06 11166 A2 DATE: 2011·VI·24 CITATION: Correa v. Demke , 2011 ONCJ 666 ONTARIO COURT OF JUSTICE BETWEEN: EURIDICE CORREA Applicant — AND — JAN DEMKE Respondent Before Justice Ellen B. Murray Heard on 16 June 2011 Reasons for Judgment released on 24 June 2011 Euridice Correa ................................................................................................ on her own behalf Jan Demke ........................................................................................................ on his own behalf [ 1 ] JUSTICE E.B.

MURRAY:— This is my decision on a motion brought by the Applicant mother asking that the Respondent father’s pleadings in his motion to change the final order Of October 27, 2008 for child and spousal support be struck because of his non-compliance with the temporary order of December 21, 2010. [ 2 ] The December 21, 2010 order was made in response to the Respondent’s motion to suspend payments of child and spousal support for eight months.

This order suspended payment of a portion of what owed under the original support order of October 27, 2008, thereby reducing the amount payable by the Respondent to $801 monthly. This order was based on my assessment of the Respondent’s income and his ability to earn income. The order was not appealed. The order adjourned the Respondent’s motion to change the final order to April 27, 2011. [ 3 ] On April 27, 2011, when the parties returned to court, it became evident that the Respondent had paid nothing towards this order.

I scheduled the Applicant’s motion to strike, and gave directions that the Respondent should serve and file a fresh financial statement, with particulars as to his job search since January 2011 and any income earned, with supporting documentary evidence. [ 4 ] At the hearing of the motion to strike on June 16, 2011, the Respondent advised that the he paid $600 sometime in May, 2011 as a result of pressure from the Family Responsibility office. This is his total payment towards support since the December order. It is clear that the Respondent has not complied with the order.

The issue is whether I should strike his pleadings as a result. [ 5 ] On the hearing of the motion, at the Respondent’s request, I considered all the material filed by him and the Applicant since the commencement of his motion to change. Background [ 6 ] A review of the history of this case up to and including the hearing of December 21, 2010 is in order. [ 7 ] The parties separated in 2002. Property issues were litigated in Superior Court.

The parties agreed that the issues of custody, access and child and spousal support would be determined in the Ontario Court of Justice. [ 8 ] The Applicant brought her application for child and spousal support in this court in 2007. On May 31, 2007, the Applicant obtained a default order of child and spousal support. The Respondent deposed later that he did not defend the case because he assumed that only a child support order would be made. He brought a motion to change the May 31, 2007 order.

He agreed that he should pay child support, although the quantum was in dispute; he did not agree that he should pay spousal support. [ 9 ] Ultimately, the parties consented on October 27, 2008 to an order which provided that the Respondent would pay to the Applicant child support of $601 monthly and spousal support of $867 monthly. The child support order was based on the Respondent’s estimate that his 2008 income would be $65, 000 annually, although during the two prior years his income had been in the $70,000-

$75,000 range annually. The order contained an annual income disclosure clause. [ 10 ] In February 2010, the Respondent was terminated from his employment in IT as a network engineer at Deluxe, receiving a 5-month severance package. He immediately commenced a motion to change the October 27, 2008 order, asking that child support be suspended until he found new employment, and that spousal support be terminated permanently. He said that he had paid spousal support long enough, and that the Applicant should be able to support herself.

The Respondent’s tax returns and notices of assessment showed that his income had been greater than that upon which the October 2008 order was premised; in 2008 it was $91,000 and in 2009 it was $69,000. He had not previously forwarded this disclosure to the Applicant. [ 11 ] In March 2010 the Respondent obtained new employment in the IT field at Visionmax at a salary comparable to his previous salary. In late July, 2010, the Respondent was laid off from that employment for a projected 11 weeks.

The layoff was later extended to March 2011. [ 12 ] The Respondent began receiving employment insurance payments of $1800 monthly in August 2010. [ 13 ] The Respondent stopped paying any amount towards child or spousal support in August 2010. [ 14 ] At the hearing on December 21, 2010 of the Respondent’s motion to suspend support for eight months, The Respondent’s evidence indicated that he had not been called back to Visionmax, and that he was unsuccessful in finding work.

The Respondent filed evidence of his job search—notifications from potential employers or agencies of possible positions, and inquiries by him to employers. There was no documentary evidence about the outcomes of these inquiries, but the Respondent advised that he has not obtained new employment.

The Respondent s financial statement indicated that his only income was EI payments of $1800 monthly. [ 15 ] The Respondent’s December 2010 financial statement reported that he was paying expenses of $5093 monthly (exclusive of any payments owing under the support order—none were being made), leaving a deficit of $3293 monthly. He was clear in argument that these were “bare minimum expenses” that were actually being paid by him. His wife was contributing nothing financially, as she was unemployed.

This left the deficit of $3293 monthly that had to be covered, which totalled $16,465 since the date of his loss of employment with Visionmax. The Respondent’s statement showed no increase in debt since his commencement of his motion to change in February; the debt shown on the February and the December statements was the same. [ 16 ] This led to the question of how the Respondent was meeting this monthly deficit. The Respondent’s evidence was that his brother, Boris Kovalenko, had provided him with $35,000.

At my request to provide some documentary evidence of this claim, the Respondent provided a letter from Mr. Kovalenko saying that he had provided the Respondent with these funds, attaching bank records to demonstrate the transfers which had taken place. [ 17 ] The records showed transfers of approximately $25,000. However, the bulk of the transfers ($18,000) shown in those records covered the period 2005-2007, a period during which the Respondent was fully employed.

From November 2009 to December 2010, the records showed transfers of $500 monthly, made during months that the Respondent was employed as well as during the months he was allegedly unemployed. This still left a large monthly deficit for the Respondent, with no explanation of how that deficit was being met. I concluded that there was income available to the Respondent to meet these expenses. [ 18 ] There was another indicator of undisclosed income in the case at that point.

The Respondent’s evidence was that he had undertaken substantial renovation work on the home owned by him and his wife on Roseneath Avenue in Toronto. In my view, that was not the decision of an individual whose spending is constrained by long-term unemployment. [ 19 ] As indicated above, I found on December 21, 2010 that the Respondent was either earning or capable of earning income at a minimum in an amount of $65,000 annually.

The temporary suspension made of a portion of the spousal support owing was in recognition of the issues raised by the Respondent as to the sufficiency of the Applicant’s efforts to earn income, and whether there were grounds to impose time limits on the spousal support obligation, or to terminate the order. Analysis [ 20 ] I have the authority to strike the Respondent’s pleadings under Rules 14(23) and 1(8) of the Family Law Rules. Rule 14(23) allows a court to strike the pleadings of a party who does not obey an order made on motion. The order of December 21 st is such an order.

Rule 1(8) authorizes the court to dismiss a claim made by a party who has “wilfully” failed to obey an order. There is no requirement that the order result from a motion. [ 21 ] An order striking the Respondent’s pleadings would effectively result in the dismissal of his motion to change. He would have no right to participate in the case.

The striking of pleadings is a measure of last resort, which should only be used if default is deliberate and demonstrates a clear disregard for the court order. [1] When the basis for the motion to strike is non-payment of support, I must be satisfied that the payor has an ability to pay the order. [2] [ 22 ] I have concluded that the Respondent has shown a clear and deliberate disregard for the terms of the December 21, 2011 order, despite having the ability to comply with the order.

The basis for this conclusion is as follows. [ 23 ] I will start with my conclusions about the Respondent’s ability to comply with the order. The Respondent says that he has been unsuccessful in obtaining employment, although, as set out below, his does admit to occasional work. The Respondent claims that he has not been called back to work by Visionmax. As in December, the Respondent has filed evidence that employers have contacted him with potential opportunities and that he has contacted employers looking for work, but there is no documentary evidence about the outcome of these inquiries.

The Respondent in his evidence did not address the EI payments which he had been receiving in December, and I infer that they have terminated. [ 24 ] The Respondent deposes in his most recent financial statement that his income is $1900 monthly. Despite my order of April 27, 2011:

• the Respondent provided no particulars as to this income, except to a mention that he received $2000 from the Canadian forces at some time. His financial statement says that he is now self-employed. In submissions He made vague references to monies received from from short term assignments and from self-employment. • The Respondent provided no documentary evidence of his sources of income. [ 25 ] I am entitled to draw an inference negative to the Respondent based on this non-disclosure.

Considering aspects of his evidence that point strongly to undisclosed income, I have decided to draw that inference with respect to his ability to pay. I have concluded, as I did on December 21, 2010, that the Respondent is either earning or is capable of earning income in a minimum amount of $65,000 annually. [ 26 ] I find that the evidence establishes that the Respondent has undisclosed income, indicated by the fact that the Respondent has continued to pay substantial household expenses, despite an apparent financial deficit and a decrease in debt.

The Respondent insisted that the ”total expenses” shown on his financial statement of $4130 monthly are for expenses actually paid now , and that in fact his expenses are likely in excess of that – more like $5,000 monthly [3] . His recent financial statement shows of deficit of $2230 monthly. The statement did not include any payment for child and spousal support as an expense. This deficit has recently been reduced by $450 monthly, as the Respondent’s wife has started part-time work, and contributes her income to expenses. [ 27 ] However, there remains a deficit of $1780 monthly.

The Respondent shows no new debt on his financial statement that would explain how these expenses are paid. In fact, since the Respondent commenced this case in February 2010, his debt load has decreased, not increased, despite what he says have been ten months of unemployment. [ 28 ] By my calculation, the Respondent is paying expenses (after deducting his wife’s contribution) in an annualized amount of approximately $45,000. A pre-tax income of at least $65,000 would be required to make these payments, absent some other source of funds. The Respondent’s evidence on this motion did not assert that Mr.

Kovalenko had continued to provide $500 monthly to the Respondent, and when I questioned the Respondent about this he said that Mr. Kovalenko now helped out with the occasional bill. [ 29 ] The evidence indicates that the Respondent is also forgoing a significant source of income. The Respondent’s evidence on this motion is that he and his wife vacated the Roseneath home some months ago in order that renovations could be completed. He continues to pay all expenses on the Roseneath home. He and his wife are living, rent-free, in a home on Scarlett Road allegedly owned by Mr. Kovalenko.

The Respondent says now that he has no funds to complete the renovations. He is permitting a friend,“Yuri”, to live in the Roseneath house rent-free. [ 30 ] The fact that the Respondent has made only one payment of $600 in the five months since my December 21 st order indicates to me a deliberate refusal to comply with the order. The Respondent has paid all his other expenses during this time and has decreased his debt load. These expenses include items for meals out, alcohol and tobacco, entertainment, hairdressing, cable TV and pet expenses. The only expense he has not paid is for child and spousal support.

His behaviour does not indicate a willingness to comply with the order. [ 31 ] In adjudicating the motion to strike, it is also appropriate pursuant to Rule 1(8) for me to consider the Respondent’s non- compliance between August 2010 and the date of the previous motion hearing of December 21, 2010 with the original support order of October 27, 2008. The Respondent paid nothing for child or spousal support during this period, and, as set out above, I have found that he had the ability to comply with the order.

The facts which I have set out indicate a wilful refusal to comply with the October 2008 order, despite an ability to do so. [ 32 ] The Respondent may be right in asserting that the Applicant’s entitlement to spousal support should be terminated, or time-limited, or reduced. However, he is not entitled to have his claim heard while he is in deliberate non-compliance with the orders of this court. [ 33 ] I order that the Respondent’s pleadings be struck, unless by July 29, 2011 he pays to the Office of Family Responsibility a further sum of $9,000.

This represents payment of his child support obligation of $667 monthly owing since August 2010 up to and including July 2011, and an amount of $200 monthly towards spousal support for the same time period, with credit for the $600 paid in May 2011.

The lower amount imposed with respect to spousal support does not represent a variation of the October 27 2008 order for spousal support, but simply reflects my judgement as to what amount is appropriate for the Respondent to pay, given his breach of two court orders for support, in order that his litigation may continue. [ 34 ] The Respondent shall serve and file with the court documentary evidence from the Family Responsibility Office that he has made this payment in full by July 29, 2011. If this is not done, my order that his pleadings are struck will take effect, and his case will not continue.

The order of October 27, 2008 will continue, in full force and effect. If the Respondent does comply with my order, then the court will

schedule a trial management conference date, and notify both parties. Released: 24 June 2011 Signed: Justice Ellen B. Murray