Maltese v. Choghri, 2016 ONCJ 48

COURT FILE NO. D70219/14 DATE: 2016-01-26 CITATION: Maltese v. Choghri , 2016 ONCJ 48 ONTARIO COURT OF JUSTICE B E T W E E N: ) ) VALERIE MALTESE ) ) ) ACTING IN PERSON ) APPLICANT ) ) - and - ) TALAL CHOGHRI ) DOUGLAS A. JOHNSON, for the RESPONDENT RESPONDENT ) ) COLLEEN CHARBONNEAU, AGENT, for the ASSIGNEE, REGIONAL MUNICIPALITY OF PEEL ) ) ) ) HEARD: JANUARY 20 and 22, 2016 JUSTICE S.B. SHERR REASONS FOR DECISION Part One – Introduction [ 1 ] The respondent (the father) has brought a motion to change the support order of Justice Juliet Baldock dated November 14, 2002 (the existing order).

In his motion to change, he asked the court to rescind all of his child support arrears. He modified that position at

trial and asked the court to fix his arrears at $15,000, to be repaid at the rate of $100 per month. He asked that his ongoing support obligation be fixed at $40 per month. [ 2 ] The applicant (the mother) asked the court to dismiss the father’s motion to change. [ 3 ] The mother was on public assistance from March 1, 2002 until September 29, 2003 and from January 15, 2008 until July 31, 2008.

She assigned her interest in support for these periods to the assignee, the Regional Municipality of Peel (the assignee). [1] [ 4 ] The assignee also asked the court to dismiss the father’s motion to change. [ 5 ] The existing order was made after a default hearing.

Justice Baldock imputed the father’s income at $150,000 per annum and ordered him to pay child support for the parties’ child (now age 12) of $1,108 per month, starting on March 31, 2002. [ 6 ] With the exception of one lump sum payment of $8,931.30 in December of 2004 that was obtained from the proceeds of the sale of a property owned by the father, no support has been paid by him to the mother since the existing order was made. [ 7 ] The father is presently $175,375.51 in arrears of child support.

The sum of $159,965.40 is owed to the mother and the sum of $15,409.81 is owed to the assignee. [ 8 ] The parties and the assignee filed affidavits as their direct evidence at this trial. The mother and father were both cross-examined. The mother participated by teleconference from her home in British Columbia. The mother delegated the cross-examination of the father to the agent for the assignee. She made submissions at the close of the evidence. Part Two – Background [ 9 ] The father will be turning 65 years old in February of 2016. [ 10 ] The father was married prior to meeting the mother.

He separated from his wife in 1988. He had two children from that relationship who are now adults. The father testified that he paid over $2,000 per month in support and paid for many additional costs for his family, including housing and automobile costs. He said that he made these payments until 2004. [ 11 ] The father had a child with another woman (Ms. La Rochelle). That child is now 26 years old. [ 12 ] The parties had a brief relationship in 2001.

They had the one child together. [ 13 ] The father was operating an Auto Auction and Sales Business through a corporation controlled by him when he met the mother. [ 14 ] Ms. La Rochelle started an action for custody and child support against the father in the Superior Court of Justice in Oshawa in May of 2001 (the Oshawa case). This matter proceeded on default. On January 23, 2002, Justice Scott ordered the father to pay Ms. La Rochelle child support of $3,453 per month and fixed support arrears in the sum of $24,171 (the Oshawa order).

Costs of $1,500 were ordered against the father. [ 15 ] The mother started an action for custody and child support in the Ontario Court of Justice in Brampton on January 15, 2002. This action was also undefended, resulting in the existing order.

[ 16 ] The father deposed that his business collapsed in 2002. His interest in two properties were sold, he said, to satisfy creditors. [ 17 ] In December of 2004, the Director of the Family Responsibility Office (the Director) collected $36,000 for Ms. La Rochelle and $8,913 for the mother from the sale proceeds of the father’s condominium. [ 18 ] No further money has been collected for the mother. [ 19 ] The father moved to change the Oshawa order in 2004. On August 4, 2005, his motion to change was dismissed. He was ordered to pay costs of $3,000.

He has not paid these costs. [ 20 ] The father brought a second motion to change the Oshawa order in February of 2014. This motion to change was dismissed by Justice Salmers of the Superior Court of Justice (Family Branch) on July 28, 2014. Costs of $3,500 were ordered against the father and he is required to post security for costs of $25,000, before he can start another motion to change in that court. [ 21 ] The court was advised that the father owes Ms.

La Rochelle over $475,000 of child support arrears and is not making any payments to her. [ 22 ] The mother lives with the child in British Columbia. [ 23 ] The father has not had contact with the child, despite efforts made by the mother. [ 24 ] The father went on social assistance in June of 2006. [ 25 ] The father has been in receipt of Ontario Disability Support payments (ODSP) since February 1, 2012. He receives $998 per month. This will terminate when the father turns 65 years old in February of 2016.

The father will be eligible to receive Canada Pension Plan (CPP) and Old Age Security (OAS) payments at that time. [ 26 ] The father issued his motion to change the existing order on February 7, 2014. Part Three – The father’s evidence [ 27 ] The father deposed that he had a very brief relationship with the mother in 2001. He concedes that he is the child’s father. He said that the mother asked him for child support shortly after the child was born. He deposed that he gave her $3,600 (in separate payments) and a car worth $2,500 after the child was born.

He said that he didn’t hear from her from 2002 until 2004. [ 28 ] The father claimed that he was never served with the application for support in the Oshawa case or when the mother applied for child support in Brampton. [ 29 ] The father claimed that he never earned anywhere near the $150,000 per annum imputed to him in the existing order or the much higher income imputed to him in the Oshawa order. [ 30 ] The father deposed that he was a shareholder of three numbered corporations. He said that he operated his business through only one corporation (Corporation #1).

He said that he formed a second corporation (Corporation #2) on the advice of his accountant in case it was needed for tax reasons, but this corporation was inactive. He said that he formed a third corporation (Corporation #3) to be eligible for a small business loan of $150,000. He said that Corporation #3 was also inactive.

[ 31 ] The father said that he initially ran a Donut City franchise through Corporation #1. He deposed that Corporation #1 sold Donut City in 1997. He concentrated on the Auto Auction and Sales Business. [ 32 ] The father said that his brother became an equal shareholder in Corporation #1 in 1996. Together they operated related businesses called “City Motors” and “Metro Auto Auction” through this corporation. The brothers bought, sold and auctioned cars. Many of these cars were sold on consignment.

The father deposed that this was a reasonably successful business. [ 33 ] City Motors and Metro Auto Auction was an active business with multiple employees. The financial statement for Corporation #1 as of December 31, 1999 was filed. It showed net revenue in 1999 of $738,656. [2] It declared expenses of $692,421, leaving net income of $46,235. Management salaries were $120,000. [3] The retained earnings in the business as of December 31, 1999 were $194,362. [ 34 ] This financial statement also set out the 1998 figures for the business.

In 1998, the net revenue was $776,222. [4] The declared expenses were $683,458, leaving net income of $92,764. The management salaries were the same as in 1999. The retained earnings for the business at the end of 1998 were $159,187. [ 35 ] The financial statement reveals that $168,673 was advanced to shareholders in 1999. The father and the brother were the only shareholders of Corporation #1.

The statement does not indicate who the advances were made to and the father was unable to provide any explanation about what the advances were for, or to whom they were paid. [ 36 ] The father deposed that he and his brother took salaries of $60,000 per annum from 1996. He said that they stopped taking salaries in 2000 due to problems with the business. [ 37 ] The father deposed in an affidavit that his brother stole $200,000 from the business in 2000. [5] He also testified that sales in the business fell over the years 2000 to 2002. This combination, he said, placed considerable pressure on the business.

The business stopped paying retail sales taxes and ran into problems with creditors. [6] [ 38 ] The father also filed an unaudited financial statement for Corporation #1 as of August 31, 2001. If accurate, this statement shows a decline in business. If the figures are projected over the full year, the net revenue of Corporation #1 is down to $373,510 – almost a 50% decline from 1999.

The corporation shows a significant loss after expenses. [ 39 ] The August 31, 2001 financial statement also reveals that the shareholder advances in Corporation #1 had increased to $491,796. [7] This means in the 19 months since the end of 1999, the brothers had taken $323,123 as shareholder advances - $491,796 since the end of 1998. The father’s attempts to explain these advances will be dealt with in more detail later. [ 40 ] The father deposed that the bank called his loan in February of 2002 and everything fell apart for the business and himself very quickly.

He said that he was locked out of his business in July of 2002 and evicted from his condominium. He said that his condominium was sold for far less than market value [8] in 2003 and the money went to creditors (including the mother and Ms. La Rochelle). He testified that he was forced to sell the property he jointly owned with his wife in 2004. His entire share of the proceeds, he said, went to pay off his bank loans. [ 41 ] The father deposed that the banks froze his accounts for Corporation #1.

He transferred the lease from Corporation #1 to Corporation #2 in January of 2002 (about one month before the bank demanded the full amount of its loan from Corporation #1). He said that he sold the balance of the cars on his lot and paid employees through Corporation #2. He said that this process was completed by July of 2002 and Corporation #2 did not operate again. [ 42 ] The father deposed that he did not work after his business went under. He said that he lived off his savings and the charity of friends and that he slept many nights in his car. He repeatedly said that he had “high depression”.

[ 43 ] The father said that he was on social assistance from June of 2006 until he was approved for ODSP on January 30, 2012. The ODSP application said that the father was taking medication for diabetes, high blood pressure and depression. His ODSP approval letter said that his eligibility for benefits was based on hearing loss and tinnitus. The father deposed that he is deaf in one ear. [ 44 ] The father testified that he took a three month course to become a security guard in 2010.

He said that he found employment as a security guard, but it only lasted a short time because of his hearing issues. [ 45 ] The father testified that he filed his personal tax returns from 2001 to 2013 in 2014. He paid someone $50 per tax year to do this. The only employment income reflected in these returns is for the short period that the father worked as a security guard in 2010. His 2001 and 2002 returns show no employment income. The 2003 return shows that the father cashed in about $30,000 in RRSP’s. The returns reflect the annual receipt of social assistance and ODSP declared by the father.

Many of the returns show minor dividend income. This was from a life insurance policy owned by the father. In 2011, the return shows income of slightly over $14,600. This, the father said, came from cashing in some of the cash surrender value of this policy.

He said that he immediately used this money to pay off loans to friends. [ 46 ] None of this money was applied to his child support obligations. [ 47 ] The father said that he has not had the ability to pay child support in either this or the Oshawa case. [ 48 ] The father testified at one point that if he had money he could start the car business again – he would like to do this.

He later couched this answer by saying his hearing problems would restrict his ability to earn income. [ 49 ] The father explained that it had been difficult to provide the required financial disclosure because he lost access to his records when he was locked out of his business. He said that many years later he learned that many of these records had been delivered to his mother’s home. He explained he had been estranged from his mother and did not know that she had them. He said that he and his mother have now reconciled.

However, many of the records, he deposed, were destroyed due to raccoons and rats getting into the boxes. [ 50 ] The father testified that in 2005 he moved into his current residence. He said that the residence belongs to the wife of one his friends. He deposed that since 2010 he has had an “on/off relationship” with her, but they have had no physical involvement since 2012. He vehemently denied that they have ever cohabited. He said that he lives in the basement of her home – “they are far apart”. Part Four – The mother’s evidence [ 51 ] The mother is 49 years old. She is single.

She has lived with the child in British Columbia since 2008. [ 52 ] The mother works as a Show Home Hostess and earns about $22,000 per year. [ 53 ] The mother testified that she has been solely responsible for raising the child. She was justifiably proud that the child is thriving in her care. [ 54 ] The mother deposed that she met the father in 2001 and they had a casual dating relationship for about three months. The child was born as a result of that relationship. [ 55 ] The mother said that she continued to have contact with the father after the child’s birth.

She said that the father told her that he did not want to have a relationship with the child and would resist any efforts by her to collect support. She acknowledged that shortly after the child’s birth the father gave her an envelope with some cash. She denied receiving anywhere close to $3,600 from the father. She said that the father also gave her an old car, which she said broke down quickly.

[56] The mother testified that the father evaded service of her court application. He boasted to her that he would never pay childsupport and defied her to find him. She eventually obtained an order for substituted service. [57] The mother said that she visited the father’s business in the spring of 2002 and observed a busy operation with many employees. [58] The mother also observed the father living a lavish lifestyle while they dated. He owned a special edition Mercedes Benz, aluxury condominium in Toronto and a farm in Uxbridge.

She went to expensive restaurants with the father. [59] The father advised the mother in 2002 that he owed CCRA a lot of money, had a nervous breakdown and was left in ruin. [60] The mother said that in 2002 the father expressed concern about his assets being seized and that he would be selling hisbusinesses, properties and cars and putting his money and assets in the names of other people. [61] The mother said that she is very familiar with the car auction and sales business as that was her father’s occupation – “she grewup with it”.

She said that it is widely known in this industry that many operators buy and sell cars for cash without a licence. Thesepeople are known as curbsiders. She had little doubt that the father was capable of operating in this manner. [62] The mother claimed that the father has been in a common-law relationship since 2001.[9] She said that the father’s partner calledher in 2002 to warn her to “stay away from her man”.

The father’s partner told her that she had been stupid and irresponsible to have thechild. [63] The mother said that the child’s present and past circumstances have been adversely affected by the father’s failure to pay childsupport. Her income is very modest and the child has lived a restricted lifestyle. Part Five – Legal considerations [64] The father’s motion to change support is governed by subsection 37 (2.1) of the Family Law Act which reads as follows: Powers of court: child support

(2.1) In the case of an order for support of a child, if the court is satisfied that there has been a change in circumstances within themeaning of the child support guidelines or that evidence not available on the previous hearing has become available, the court may, (

a) discharge, vary or suspend a term of the order, prospectively or retroactively; (

b) relieve the respondent from the payment of part or all of the arrears or any interest due on them; and (

c) make any other order for the support of a child that the court could make on an application under

section 33. [65] In DiFrancesco v. Couto, (ON CA), 2001 O.J. No 4307 (C.A.) the Ontario Court of Appeal stated that thediscretion to reduce arrears must be exercised judicially and set out the following factors to be considered:

a) The nature of the obligation to support, whether contractual, statutory or judicial.

b) The ongoing financial capacity of the payor.

c) The ongoing need of the custodial parent and the dependent child.

d) Unreasonable and unexplained delay on part of the custodial parent in seeking to enforce payment of the obligation, tempered,however, in the case of child support with the fact that such support exists for the child’s benefit, is charged with a corresponding

obligation to be used by the custodial parent for the child’s benefit and cannot be bargained away to the prejudice of the child.

e) Unreasonable and unexplained delay on the part of the payor in seeking appropriate relief from his obligation; and

f) Where the payment of substantial arrears will cause undue hardship , the exercise of the court’s discretion on looking at the totalpicture, weighing the actual needs of the custodial parent and child and the current and financial capacity of the respondent, to grant ameasure of relief where deemed appropriate.

g) Whether the payor made any voluntary efforts at compliance with the order. [66] The mere accumulation of arrears without evidence of a past inability to pay is not a change in or special circumstance. Presentinability to pay does not by itself justify a variation order. It should only be granted if the payor can also prove a future inability to pay.Otherwise, the option is to suspend, or order repayment of arrears. See: Haisman v.

Haisman (1994) 1994 ABCA 249 , 157 A.R.47 (C.A). [67] In paragraphs 51-60 of Trang v.Trang, 2013 ONSC 1980, the court discussed how courts should address support change motionswhen income was imputed to a payor in the existing order as follows: 51. When a court imputes income, that’s a determination of a fact. It’s not an estimate. It’s not a guess. It’s not a provisional orderawaiting better disclosure, or further review. It’s a determination that the court had to calculate a number, because it didn’t feel it wasappropriate to rely on – or wait for -- representations from the payor. 52.

A party who argues that an imputed income level is no longer appropriate must go beyond establishing their subsequent “declared”income. They must address why income had to be imputed in the first place. They must present evidence of changed circumstanceswhich establish that either: a. It is no longer necessary or appropriate to impute income. The payor’s representations as to income should now be accepted, even ifthey weren’t accepted before. Or, b. Even if income should still be imputed, changed circumstances suggest a different amount is more appropriate. 53.

If “declared income” automatically prevailed on a motion to change support, it would defeat the purpose of imputing income in thefirst place. It might even be a disincentive for payors to participate in the initial court process. They could simply ignore supportApplications – as they often do. They could wait to see if the court imputes income, and how much. If dissatisfied with the amount, thepayor could later return to court waving their tax returns, to suggest that the original judge got it wrong. 54. Support claimants should not be forced to go through this two-step process.

Our family court system certainly can’t afford it. 55. Similarly, the onus should not fall on the support recipient to establish why income should still be imputed on a motion to change. That determination has already been made. The onus is on the support payor to establish that there should be a change in the way theirincome is to be calculated. 56.

If for example the original support order imputed income because the court concluded an unemployed payor should have beenworking, it would be illogical to allow the payor to extinguish that determination by returning on a motion to change, with proof that hewasn’t working. That wouldn’t constitute a change in circumstances.

57. If a trial judge imputed income to a self-employed person on the basis that their tax return didn’t reflect cash sales and excessivewrite-offs, there should be a presumption that so long as the payor maintains the same business activities and accounting practices,subsequent tax returns will be equally unreliable. 58. Imputed income matters. The reason why income had to be imputed matters. 59. If an aggrieved party feels income was wrongly imputed, they can take timely steps to correct the original determination. They canappeal.

They can bring a motion to set aside the order based on mistake or misrepresentation. 60. But if a payor proceeds by way of motion to change, they must face the presumption that the original order was correct – and theoriginal imputation of income was correct. If they want to rely on their declared income, they must establish why this time theirrepresentations should be accepted by the court. [68] Parents have a joint and ongoing obligation to support their children. In order to meet this obligation, the parties must earn whatthey are capable of earning. See: Drygala v. Pauli (ON CA), [2002] O.J. No. 3731(Ont.

CA). [69] The court must have regard to the payor’s capacity to earn income in light of such factors as employment history, age, education,skills, health, available employment opportunities and the standard of living earned during the parties’ relationship. The court looks atthe amount of income the party could earn if he or she worked to capacity. See: Lawson v. Lawson, (Ont. C.A.). [70] A self-employed person has the onus of clearly demonstrating the basis of his or her net income.

This includes demonstratingthat the deductions from gross income should be taken into account in the calculation of income for support purposes. See Whelan v.O’Connor, (ON SC), [2006] O.J. No. 1660, (Ont. Fam. Ct.). This principle also applies where the person’semployment income is derived from a corporation that he or she fully controls. See: MacKenzie v. Flynn, 2010 ONCJ 184 . [71] The self-employed have an inherent obligation to put forward not only adequate, but comprehensive records of income andexpenses, from which the recipient can draw conclusions and the amount of child support can be established.

See: Meade v. Meade (2002) (ON SC), 31 R.F.L. 5th 88 (Ont. SCJ). [72] Cogent medical evidence in the form of detailed medical opinion should be provided by the payor in order to satisfy the courtthat they will be unable to work. See: Cook v. Burton (ON SC), [2005] O.J. No. 190 (SCJ) and Stoangi v. Petersen (ON SC), [2006] O.J. No. 2902 (SCJ). [73] Support payors must use reasonable efforts to address whatever medical limitations they may have to earn income. This meansfollowing up on medical recommendations to address these limitations. See: Cole v. Freiwald, [2011] O.J. No. 3654, per Justice MarvinA.

Zuker, paragraphs 140 and 141. [74] In Mao v. Zhao, [2007] O.J. No. 4587 (SCJ) the court did not rescind arrears of a payor in receipt of ODSP, because the medicalevidence filed did not indicate that the disability would prevent the payor from working in the future. Part Six – Credibility [75] The court found the mother to be a very credible witness. She had a clear recollection of events and answered questions in a directmanner.

Her characterizations of the father were consistent with the court’s observation of him. [76] The mother was candid in admitting that she had no direct knowledge of the father’s affairs after 2002. [77] The father was not a credible witness. He was evasive, argumentative and frequently contradicted himself. Much of his oralevidence contradicted documentation he had provided or statements made in his own affidavits. He would quickly revert to blaming hislawyers and accountants when faced with contradictory evidence. He presented as a profoundly dishonest person.

The court gavevirtually no weight to any of his evidence that was not supported by independent evidence.

[ 78 ] Examples of the father’s dishonesty include:

a) The father and his brother siphoned funds from Corporation #1 to avoid creditors and the father’s child support obligations. This will be discussed in more detail below.

b) The father transferred all of his operations from Corporation #1 to Corporation #2 early in 2002, when his creditors were demanding payment.

c) The father initially deposed that Corporation #2 had minimal involvement with his business. However, a statement from the Minister of Finance revealed that Corporation #2 owed over $46,000 in retail sales taxes by the end of 2012 – reflective of significant business operations.

d) The father went on public assistance and ODSP and failed to report that he had a life insurance policy with a cash surrender value of (he says) $30,000. This would likely have made him ineligible for assistance.

e) The father cashed in over $14,600 from his life insurance policy in 2011 and failed to report this to public assistance.

f) It appears that the father did not report his employment income as a security guard to public assistance in 2010.

g) On November 1, 2003, the father transferred his ownership in his Uxbridge home to his spouse in what appears to have been an attempt to avoid subsequent creditors. The father’s claim that he never signed this transfer and that the lawyer must have done it on his own was absurd.

h) The father claimed that he never cohabited with the woman who owns the home where he presently resides. However, the father and this woman were co-plaintiffs in a 2010 lawsuit arising from a dog-bite case. The statement of claim states that the father and the woman are common-law partners. She makes a claim for damages as a spouse in this action pursuant to the Family Law Act . The father blamed his lawyer for this mischaracterization of the relationship. His evidence was not believable.

i) The father failed to report his common-law relationship when he went on social assistance. This would have required a full examination of his partner’s financial affairs to determine if the father remained eligible for assistance. He provided no evidence of her financial circumstances in this case. [10]

j) The father revealed in cross-examination that he had obtained a $30,000 judgment in the dog-bite case but had been unable to collect it. [11] He did not report this judgment to public assistance or report this judgment in his financial statement. [ 79 ] The father gave inconsistent evidence about the role of his brother in his business as follows:

a) It appears from the December 31, 1999 financial statement (prepared on June 30, 2000) that between January 1, 2000 and June 30, 2000, Corporation #1 used its line of credit to buy back the shares of one of the shareholders. This had to have been the brother, since the father continued to operate the business.

b) The father deposed that it was in late 2000 when his brother emptied the corporation’s bank account and ran up the company’s line of credit. He deposed that his brother stole $200,000. [12] How could he have done this when his shares had already been bought back and he was no longer involved with the business?

c) In a subsequent affidavit, the father deposed that his brother took $187,000 from the business in the summer of 2001.

d) At trial, the father claimed that he no longer felt that his brother had stolen the money. Rather, his brother had become concerned when he learned of the child support claim by Ms. La Rochelle and had thought he was legitimately entitled to pull out his 50% interest in Corporation #1. This version of events made little sense, since the records show the brother had no interest in Corporation #1 as of June 30, 2000. When faced with these inconsistencies, the father attributed fault to his accountant.

e) The documentation showed that the brother was still using a company credit card in 2002. This makes no sense when the father was operating (at that time) on an assumption that his brother had stolen money from him.

f) Corporation #1 owned a property in Lebanon. The August 31, 2001 financial statement valued this property at $130,800. The father deposed that he sold this property to his brother in 2002 for $30,000. Again, it makes no sense that the father would be dealing with his brother so generously when he purportedly thought that his brother was stealing from the business.

g) The August 31, 2001 financial statement of the business shows that the brothers were almost equally taking funds from the business. This contradicted the father’s story that the brother had created the collapse of the business by unilaterally removing funds. [ 80 ] The evidence strongly points to the brothers colluding to avoid creditors. [ 81 ] The father’s evidence about the shareholder advances made little sense. He started out by insisting that his brother and he were only taking $60,000 per annum from the business.

When shown the shareholder advances in the August 31, 2001 financial statement of Corporation #1, the father explained that they reflected the salaries that he and his brother had taken from the business since 1996. [ 82 ] This was clearly not the case. [ 83 ] The December 31, 1999 financial statement reveals that $168,673 was advanced to shareholders in 1999. [13] The management salaries of $120,000 paid to the brothers are recorded as expenses on this financial statement for both 1998 and 1999.

They are not recorded as shareholder advances. [ 84 ] The August 31, 2001 financial statement shows a significant increase in the shareholder advances – it appears that the brothers were pulling money out of Corporation #1. The statement showed that the advance to the father’s brother was $280,539.69, less an advance payable by him of $62,566, leaving a net shareholder advance to him of $217,973. The advance to the father was $211,257. [ 85 ] The father provided no explanation of where the shareholder advances to him went.

He claimed that this was an “accounting trick” to avoid taxes. [ 86 ] At a minimum, the net shareholder advances of $429,230 and the Lebanon condominium, valued at $130,000 were taken out of Corporation #1 and not repaid by the brothers. [ 87 ] It is likely that more funds were taken from the business by the brothers. [ 88 ] The evidence indicates that Corporation #1 stopped paying retail sales tax in 2000. It did not pay about $158,000 in retail sales tax between March of 2000 and July of 2001. [14] There is no indication where that money went.

In 2002, when Corporation #2 took over the operations, it too did not pay retail sales tax. There is no evidence about what happened to these monies. [ 89 ] The father claimed that he was locked out of his business in July of 2002. He provided no evidence of this. He provided no notices of eviction. To the contrary, the father said that he had a very good relationship with his landlord, who agreed to transfer the lease

from Corporation #1 to Corporation #2 in January of 2002 and who agreed to a surrender of the lease in August of 2002, without penalty. There was also no documentary evidence led of a creditor locking the father out of the business. [ 90 ] The question arises, what happened to the significant inventory of Corporation #1 and where did the money from the sales go? Some information is provided by the retail sales tax notice for Corporation #2 in 2002, showing $46,031 of tax owing.

This reflects a substantial amount of sales by Corporation #2 in 2002. [ 91 ] The father could not provide a reasonable explanation for why he required three corporations. All of these corporations operated under the name of Metro Auto Auction at some time. The reasonable inference is that the father used the companies to manipulate his finances and avoid creditors. [ 92 ] The father could not provide a credible explanation for the drastic drop in revenues for Corporation #1 in 2001, as reflected in the August 31, 2001 financial statement filed.

The court is left with the suspicion that some revenues from his operations went through the other two corporations controlled by the father. [ 93 ] The father claims that he did not work after July 31, 2002. This is unlikely. The father claimed that he continued to pay his wife and children $2,000 per month and paid their housing and automobile costs until 2004.

He deposed in one affidavit that he did not learn about the existing order until he was notified by the Family Responsibility Office at work in 2004. [15] He also completed a form with ODSP in 2011 telling them that he was self-employed from 1985 until 2004. The father said that he made mistakes on both occasions by stating that he was working in 2004. The court does not believe him. He was likely working under the table until at least 2004. [ 94 ] The father’s lack of financial disclosure seriously impaired his credibility. Examples of this lack of disclosure included:

a) He provided no personal tax returns prior to 2001.

b) He only provided the December 31, 1999 financial statement and the August 31, 2001 financial statement for Corporation #1.

c) He did not provide any financial statements for Corporations #2 and #3.

d) He did not provide any business ledgers for all three corporations.

e) He did not provide any corporate tax returns for all three corporations.

f) He did not provide meaningful bank statements for all three corporations.

g) He did not provide any credit card statements for the three corporations. [ 95 ] The father’s explanations for his failure to provide appropriate financial disclosure were not believable. [ 96 ] The lack of financial disclosure prevented the court from tracking how funds flowed between the three corporations he controlled. [ 97 ] The father filed a report about his corporate affairs from an accounting and tax service. The financial disclosure provided to the persons preparing the report was so paltry that it rendered it meaningless.

[ 98 ] The court finds that the financial non-disclosure was deliberate to obscure the father’s financial affairs. [ 99 ] It is also curious why the father did not refinance his personal and business assets to satisfy his creditors in 2002. A review of his December 31, 1999 financial statement shows a stable and profitable business. He had equity of almost $500,000 in three properties in which he personally held an interest. No evidence was given of attempts to refinance Corporation #1’s operating line of credit. [ 100 ] The court did not believe the father’s evidence about being homeless and living in a car.

It is more likely than not that he has been in a common-law relationship since at least 2002. [ 101 ] The father’s claim that he was not served with the original applications in either this or the Oshawa case was also not believable. The evidence shows that the documents in this case were first delivered to an employee at his business. It also shows that the process server left his business card at the condominium where the father was living and he did not respond.

Justice Baldock had ample evidence to find that the father was evading service. [ 102 ] The court did not believe the father’s statement that he was unable to work after 2002. The father claimed that he had “high depression”. He provided a scribbled note from 2006 by his family doctor that he had major depression in support of this. The court gave this evidence little weight. It was highly inadequate evidence of medical disability. There was no information provided about how the doctor reached this conclusion or whether he even had the credentials to make such a diagnosis.

The father never sought further treatment or counseling for his alleged depression. No evidence was provided about what restrictions the alleged depression had on his ability to earn income. [ 103 ] The doctor’s note from 2006 also said that the father had type 2 diabetes, but it was under control with medication. There is no evidence that this precluded the father from working. [ 104 ] The father was able to obtain ODSP based on his family doctor stating in 2011 that the father had hearing loss and tinnitus.

The doctor reported that the father had total hearing loss in his left ear. [ 105 ] The court accepts that the father’s hearing issues have adversely impacted his ability to earn income after 2010. However, it does not accept that it limited his ability to earn income before 2010. The father did not present sufficient medical evidence to establish any limitation to working from 2002 until 2010. [ 106 ] The court does not accept that the father’s hearing issues have totally precluded him from earning income since 2010.

The ODSP form completed by his family doctor sets out that the father is limited in finding employment that requires hearing - specifically using a telephone. [16] The father has not provided an updated report about his condition or about his present employment limitations. There is no report from a specialist or evidence of any attempts by the father to see one. There is no evidence of any treatment taken by the father to try and ameliorate the impact of this condition. No report has been provided about what occupations the father could perform, even if only on a part-time basis.

The court notes, that although he had some struggles, the father was able to hear and respond to questioning during this hearing. [ 107 ] The father provided little evidence of efforts to find work after 2002. The court does note that in his 2010 dog-bite lawsuit, the father indicates that he was on the defendant’s premises to apply for a job driving an ice cream truck. Part Seven – Findings of fact [ 108 ] The court makes the following material findings of fact:

a) The father was running a successful business with his brother up until 2000.

b) The father and his brother siphoned monies from this business to avoid creditors, the mother and Ms. La Rochelle. It is more likely

than not that they worked together to accomplish this.

c) The father and his brother took at least $500,000 out of the business from 1999 to 2002.

d) The father has likely placed the money taken from the business in the names of other persons or corporations.

e) The father was determined to pay no child support to the mother or to Ms. La Rochelle.

f) The father received notice of the mother’s application for support.

g) The income imputed by Justice Baldock in the existing order was appropriate.

h) The father had the ability to earn this level of income for many years after he closed his business.

i) The father, for several years after he closed his business, was likely working for some cash and living off the funds he had taken from the business.

j) The father deliberately did not provide adequate financial disclosure to avoid an examination of his money trail.

k) The father has been in a common-law relationship since 2002.

l) The father did not disclose accurate financial information or report monies received in order to obtain and remain on public assistance.

m) The father has been able to successfully use his receipt of public assistance to shield himself from enforcement of his support obligations.

n) The father did not provide a reasonable excuse for his delay in bringing this motion. He had already brought a motion to change in Oshawa, so he was well aware of the procedure. [17]

o) The father’s age and physical disability mean that he has likely had a declining ability to earn income. Realistically, his ability to earn income has been declining for the past 5 years.

p) The father’s age and physical disability have not precluded him from earning any income. Part Eight – Analysis [ 109 ] The father’s pervasive dishonesty makes it difficult to assess the merits of his claim. [ 110 ] In assessing the father’s claim, the court has kept in mind that the onus is on him to demonstrate a change in circumstances. It is also his obligation to provide credible evidence upon which to support his motion for relief.

[ 111 ] The court finds that there have been changes in circumstances since the existing order was made. The father is no longer operating his business. He has been on public assistance since 2006. He has some physical disabilities –hearing loss and tinnitus. He is about to become eligible for CPP and OAS. [ 112 ] The issue is whether the court should grant the father partial relief because of these changes in circumstances. [ 113 ] The court recognizes how unfairly the mother has been treated by the father. She has had to raise the child alone without support from the father.

The father bragged to her that he would never pay support and has been true to his word. It is understandably galling to her how the father has been able to avoid his child support obligations through his manipulation and deceptions and now seeks relief from the court. [ 114 ] The court is also very aware that any reduction of the father’s support obligation in this case will reduce the proportion the mother receives from any amounts collected by the Director, as any monies collected will be distributed pro rata with the amounts owing to Ms. La Rochelle.

Once the father goes on CPP and OAS, the Director should be able to collect some support. The mother will receive a smaller share if the father obtains relief in this case. [ 115 ] The court recognizes that the father is responsible, to a great extent, for his own economic circumstances. This is a factor in determining whether to rescind arrears or change ongoing support. See: Rogers v. Rogers , 2013 ONSC 1997 . It is apparent that in 2001 and 2002, the father felt economic walls closing in on him. He was already paying support to his wife and their children. His business owed money to creditors.

There had been a reassessment of his business’ taxes. He was now facing child support claims from two more mothers. The father had options. He could have refinanced his personal and business assets and met his support obligations. Instead, the father chose to close the business and actively avoid his obligations. [ 116 ] The father has preferred his own interests to those of his children at every turn. He has not voluntarily paid any child support to them.

When he sold his property in Lebanon to his brother, cashed in RRSP’s and life insurance, none of these monies went to his children. [ 117 ] A review of the father’s credit cards show regular expenses for gas and the LCBO. The father defiantly asked, “When is it against the law to enjoy a good bottle of whiskey once a month”? [ 118 ] The father’s behaviour means that he does not get any benefit of the doubt from the court, but it does not mean that he is not entitled to any relief. [18] It is important that courts make fair decisions, based on the evidence, that reflect the reality of a situation.

It is also important for the court that will be asked to enforce this order that it have a realistic order to enforce. [ 119 ] It appears that the father’s motion to change support in Oshawa was dismissed in 2014 primarily for technical reasons. He had unpaid costs orders. Also, he had claimed impecuniosity in his first motion to change in 2005, so the court found that there was no change in circumstances. A full trial of the father’s circumstances was not conducted.

This court had the benefit of substantial evidence that was not before that court. [ 120 ] The court finds that the father should get no relief prior to the period before 2010 because:

a) He was capable of earning significant income and chose not to do so. He was deliberately unemployed without excuse.

b) Substantial funds that he had taken from his business were available for his use.

c) His physical limitations were still minor.

[ 121 ] The court finds that the father should obtain some relief from arrears from 2010 because:

a) He was developing hearing loss and tinnitus that affected his ability to work. This didn’t mean that the father couldn’t work at all, just that he could no longer earn the amount imputed to him in the existing order.

b) It is likely that he had used up most of the monies he had taken from the business by then. The fact that he was applying to work as an ice cream truck driver in 2010 supports this finding.

c) He is aging, which adversely impacts his ability to deal with ailments and earn income. [ 122 ] The court will reduce the arrears outstanding to $135,000. Since the reduction period doesn’t affect the periods where support was assigned to the assignee, this means that arrears will be fixed at $15,409.81 to the assignee and $119,590.19 to the mother. [ 123 ] The court holds no illusion that all of these arrears will be collected from the father. It does not find that he has the ability to pay all of these arrears at this time.

However if the father ever receives monies from lottery or prize winnings (or any other source), the mother might be able to collect some of the money owing to her. [ 124 ] The court will not make an order providing for monthly repayment of the arrears. The existence of the Oshawa order creates too many complications. [19] The Director will determine how it enforces these orders. [ 125 ] The court will adjust the ongoing support payment. It is no longer realistic. [ 126 ] The court finds that the father remains deliberately under-employed.

He has not provided adequate medical evidence to support his position that he is not capable of earning income. He is a smart, capable and experienced businessman. He is capable of earning some income, even if it is just part-time income. [ 127 ] The father has not provided evidence of job searches. He is not trying to earn income. [ 128 ] The court does not accept the proposition that the father is entitled to retire and earn no income at age 65, for the purposes of child support.

He had a child later in life and has a responsibility to structure his own life to support that child. [ 129 ] The father will be eligible for CPP and OAS payments in February of 2016. [ 130 ] The father’s annual income will be imputed at $35,000 (this includes his CPP and OAS payments). He will be required to pay the mother the table amount of child support, pursuant to the Child Support Guidelines (the guidelines), for one child, in the amount of $303 per month, starting on February 1, 2016. Part Nine – Conclusion [ 131 ] A final order shall go on the following terms:

a) The father’s child support arrears are reduced to $135,000. The sum of $119,590.91 is owing to the mother and $15,040.21 to the

assignee.

b) The father’s ongoing child support payment is changed to $303 per month, starting on February 1, 2016. This is based on the father’s imputed income of $35,000 per annum, being the guidelines table amount for one child.

c) The father will be required to provide the Director of the Family Responsibility Office, the mother and the assignee with: 1. Copies of his income tax returns and notices of assessment by June 30 th each year. 2. Notification about when he will receive any insurance proceeds, within 5 days of his becoming aware of this. 3. Details of any employment within 5 days of being hired, including the name, address and phone number of the employer and his rate of pay. 4. Details of amounts received from Old Age Security and Canada Pension Plan within 5 days of being in receipt of these funds. 5.

Details of amounts received from his judgment against Amo Blazys and the Ice Cream Man (also known as the Ice Cream Driver) within 5 days of becoming aware that he will receive funds. 6. Details of amounts he will receive from any other source, including but not limited to lottery or prize winnings or inheritances, within 5 days of becoming aware that he will receive such funds.

d) A support deduction order shall issue.

e) The Director, Family Responsibility Office, is requested to adjust its records in accordance with this order. [ 132 ] If either party or the assignee seek costs they may make written submissions by February 19, 2016. The responding party may respond by March 3, 2016. Submissions shall not exceed 3 pages, not including Offers to Settle or Bills of Costs. The submissions shall be sent to the trial coordinator on the second floor of the courthouse. [ 133 ] The court thanks counsel for the father and the agent for the assignee for their excellent advocacy at this hearing. Released: January 26, 2016 ________________________ Justice S.B. Sherr