Earlier this year, the Superior Court rendered a decision in a very bitterly contested motion and cross-motion, one that gained the attention of the Financial Post, and featured an excellent lesson for those involved in family law disputes:

“If you claim you’re so poor you can’t afford a penny of child support, best not to be driving a red Ferrari convertible. In addition to two Mercedes-Benzes. In addition to…well, we’ll get to that.”

The case dealt with the issues of child support and spousal support. The husband in question argued that he was too poor to pay child support, despite very clear evidence to the contrary, including multiple luxury cars and an otherwise extravagant lifestyle.

What Happened?

The couple started living together in late 2011, and married in 2012. They had one child together in 2012. The couple was approximately 19 years apart in age. They separated in early 2016.

The wife came to Canada from Morocco on a student visa, the husband had previously emigrated to Canada and was separated from his first wife, with whom he had 4 children. The wife was entirely dependent on the husband.

The husband was diagnosed with serious mental health issues in 2008: including schizophrenia, for which he was prescribed medication for but did not take. He claimed, throughout the proceedings, that he was essentially unable to work, and that at all material times, his only visible income was a modest pension from the Ontario Disability Support Program (“ODSP”), which amounted to $10,000.00 a year. Despite this, the evidence showed that he had assumed full responsibility for taking care of and supporting the wife and the child. Both the wife and the husband acknowledged that they lived a luxurious lifestyle.

The separation occurred when the wife discovered an array of weapons, bullets, and guns in the vanity in the powder room where their child could have easily access these items. The wife called the police and informed them of assaults and criminal threats that had been made by the husband over a 4-year period. The husband was charged with 24 criminal offences and was initially incarcerated. He was released and was to live with his brother while awaiting trial. What led to the separation was the discovery of the weapons.

The Wife’s Requests for Support

At trial, the wife’s motion for child and spousal support included the following requests:

  • The husband’s income should be imputed at $150,000 for 2016 and 2017;
  • Child support for 2017 should be $1,263.00 per month starting January 2017;
  • Retroactive child support for 2016;
  • Spousal support from 2016; and
  • Costs (including interim disbursements for legal fees and retaining a business valuator).

The husband argued that the wife’s claim should be dismissed and cross-motioned for access to the child, a request for the Office of the Children’s Lawyer (“OCL”) to become involved on behalf of the child, and costs.

This case was not only highly contentious but it also complicated and lengthy given the husband’s labyrinth of business dealings.

The wife’s account can be summarized as

  • The husband had a well-established history (even prior to this relationship) of having vast amounts of undeclared money.
  • While the parties were together, the husband hid income and assets to qualify for ODSP. Things were rarely put in his name (example: the home was put under the girlfriend’s name), yet the parties lived a luxurious lifestyle that included luxury vehicles, fancy vacations and spent money freely.
  • The husband was the owner of a complex network of corporations and business from which he regularly accessed large amounts of money. Both parties also had unlimited use of credit cards issued through these corporations.
  • The husband’s refusal to provide financial disclosure supports the wife’s contention that he was doing everything he could to hide his money and make things difficult for her.
  • He was an angry, aggressive and mentally unstable man who did not have any actual interest in his child: he just wanted to make things difficult for her.

The husband’s position was quite simple: it was a denial of everything.

Husband’s Income

The only thing that the parties agreed to was that the husband was the sole owner of one corporation.

The wife alleged that the husband owned or had interest in properties in Mississauga, Cambridge, and Windsor, all of which the husband denied. The wife also alleged that he was the beneficial owner of what she said was the matrimonial home.

The wife further claimed that in addition to the agreed corporation, the husband also owned or controlled 6 other corporations, which the husband denied. He claimed some were owned by his brother.

At the time of separation, the husband had 3 luxury vehicles: a Ferrari and 2 Mercedes-Benzes. He had also given the wife a Cadillac Escalade during their relationship. The ownership of these vehicles, as with everything else in this case, was complicated: one was registered in the name of a company the husband allegedly did not own, and the other was in the name of a company the husband owned but claims were not active. Finally, there did not seem to be much in the husband’s name, while he was still able to afford a lot.

The court looked into the brother’s finances as well. The husband and his brother characterized any significant monetary transfers as “loans.” However, they did not provide supporting documentation and the numbers presented did not make sense. There were huge sums of “debt” with no explanations. And when some were given, they did not make sense.

The Decision

The court went on to impute the husband’s income at $150,000. Section 19 of the Federal Child Support Guidelines allows the court to impute income in certain circumstances. It goes on to outline a non-exhaustive list, which includes:

  • Where the support payor has failed to provide income information when under a legal obligation to do so;
  • Where it appears that income has been diverted which would affect the level of child support payable; and
  • Where a support payor is intentionally under-employed or unemployed.

The burden is on the party seeking to have the income imputed to establish an evidentiary basis for two determinations: whether the income should be imputed, and if so, how much. Once a case has been made for imputing income, the burden shifts to the payor to justify the position they are taking with regards to income.

The court held that the husband had failed to comply with the most basic obligation in family law and that is to disclose financial information. This obligation is immediate and ongoing, and failure to comply with this obligation impedes the progress of the action, causes delay, disadvantages the opposing party, and impacts the administration of justice.

While the wife’s request was based on evidence of a lavish lifestyle and not necessarily income, it is evidence from which an inference can be drawn that the payor has undisclosed income that may be imputed. Imputing income based on lifestyle is not an exact science, and is much like a guess.

The court found that the husband had received large sums of money, which he classified as “loans” over many years. The suggested imputed income was a lot of money; however, it was not beyond the range of income the court regularly sees, nor was it outside the range that is consistent with the husband’s ongoing spending and lifestyle. The court also found that the wife had established an entitlement to spousal support. The court had concerns about allowing contact and access to the child, and did not request the involvement of the OCL.

The temporary order was made and the following terms were put in place:

  • Income for 2016 and 2017 would be imputed at $150,000.00 per year
  • Child support was granted of the sum of $1,263.00 per month starting from January 2016;
  • Spousal support was granted in the sum of $3,500.00 per month starting from January 2016.
  • The husband shall pay interim disbursements for the business valuation expenses and legal fees;
  • The husband’s motion for access and request for the OCL to become involved was dismissed; and
  • All other orders shall continue.

What did we learn?

It is quite simple: if you make a claim about any sort of inability to pay support that your child or spouse is entitled to, you best have evidence to back up that claim. The court does not take lightly the misleading and dishonest attempts to hide income. In family law, you have obligations that you are required to meet. Lying, hiding assets, delaying court time, or otherwise purposely making a case complicated will not help you. It is always best to be forthcoming, honest, cooperative, and diligent in following court orders. Even if you ultimately dispute a decision or an order, it is still best to allow for everything to be in the open, and make your case.

Sometimes, getting child support or spousal support can be very difficult. If you believe your spouse may be hiding income or altering their financial statements to show less income, you will need guidance from a knowledgeable and experienced family lawyer to argue your case. The experienced and compassionate team of family lawyers at Borden Family Law is ready to help. We assist clients and advise on all sorts of complicated support issues. Our focused area of practice means our clients benefit from our in-depth knowledge of the ins and outs of the family law system, the technical legal rules governing family law matters, and trial strategy. We serve clients in Oshawa, Brooklin, and the surrounding areas. To see how we can help you call us at 905.576.6090 or contact us below. Ask us about flat fees.