Cash

Ex-Spouse Hiding Income to Avoid Child Support and Spousal Support Payments

Cash

Is your ex-spouse hiding income to avoid child support and spousal support payments. Or alternatively, is your ex-spouse falsely accusing you of hiding income to avoid child support and spousal support payments. Unfortunately these are common issues. Ex-spouses can turn routine divorce proceedings into a complete circus.

For example, the Ottawa Citizen recently reported on an Ottawa businessman who went to Court and said he burnt $1 million in cash. Allegedly, he had a bonfire with no witnesses and no video. The Judge didn’t believe him and sent him to jail for 30 days, with more to come if he continued to thumb his nose at the Court.

Earlier this summer, the Ontario Superior Court of Justice issued a harsh decision against a father who refused to co-operate. Clearly this was a bitter dispute and the husband had not co-operated over a period of time. The decision was for a trial in which the father was allowed to observe, but couldn’t participate.

 

My Ex-Spouse’s Lifestyle Doesn’t Match His Tax Returns

The couple married in 2000 and had three children together, who are now all teenagers. The couple separated in 2014 in circumstances that led to criminal charges against the father. Court proceedings have been ongoing until this decision was issued in June 2020.

The father operated a small construction and tree business, which primarily generated revenue through contracts with municipalities. The father claimed approximately $30,000 in income each year.

While claiming minimal income, in a separate Court proceeding, the father claimed to have given a family member $22,000 to purchase a property. The father then spent $230,000 for improvements to that property. In reviewing the credit card statements of the business, there were interesting purchases over a four-month period in 2017, including:

  • $6,000 for a resort in the Turks and Caicos;
  • $12,000 in spending in Las Vegas;
  • $24,000 for a travel agent; and
  • $4,000 at a local casino.

Effectively the father had spent approximately two-years of alleged income on travel and casino over short period of time. These type of expenditures didn’t match what the business was involved in and therefore were not legitimate business expenses.

 

My Ex-Spouse is Hiding Income and Assets in a Corporation

The wife hired an accountant to review the financial records of the husband and his business. Since the husband was not co-operative in this process, very little in the way of financial records were disclosed. The husband refused to answer any questions and would not provide any information to assist in the financial analysis.

The accountant completed his work and noted the gaps in the information. The biggest issue was the potential to keep profit in the corporation for capital spending. For example, for a construction and tree business, there may be a need to purchase significant equipment to assist the business. There was no evidence that the business had made any capital purchases and because the husband was not co-operating, the Judge did not find any legitimate reason to allow profit to remain within the corporation.

The Judge also found that the profit reported by the business decreased substantially immediately after separation. Typically, income can be imputed over a five-year period, but there is broad discretion for the Court. In this case, because the five-year period did not include amounts pre-separation, the Court found that extending this five-year period was appropriate.

In this case, the Judge found that the husband’s income ranged from $234,000 per year to $404,000 per year, with and average of $294,000. As there was no evidence available that this amount would change, the Judge fixed this amount as the husband’s income going forward. The only way that the amount would change is if the husband brought an application to review child support and spousal support.

 

Retroactive Child Support and Spousal Support When an Ex-Spouse is Hiding Income

In this case the father had not paid any support between separation in 2014 and trial in 2020. The Judge reviewed the law on the availability of retroactive child support and spousal support and found that the husband needed to pay retroactive support.

The children were splitting time between the mother and father, resulting in a set-off of child support. This means that the father would pay child support based on his income and the mother would pay child support based on her income. Even with this set-off, the Judge ordered the father to pay $115,000 in retroactive child support.

Spousal support was also reviewed and the Judge found that the husband owed the wife over $548,000 in spousal support. Ongoing spousal support of $8,800 per month was also ordered.

 

My Ex-Spouse is Falsely Accusing Me of Hiding Assets and Concealing Income

Sadly, this is also a common issue and one in which you need legal advice. Simply holding a corporation can mean ex-spouses believe you are earning far more than you actually are. Without a true appreciation for the legitimate expenses a corporation incurs, this becomes an unnecessarily contentious issue.

Defending yourself from these false accusations will mean effective and meaningful disclosure. It also means that you will need to effectively cross-examine any so-called expert your ex-spouse has found to attribute additional income to you.

If you find yourself in this situation, you need a lawyer who understands the issues.

 

How to Hide Income From Child Support in Ontario

Understanding how income is hidden is important in determining whether or not your ex-spouse is deliberately hiding or concealing income. Much like hiding assets, income is concealed through the use of corporations or by earning cash income.

Cash income is particularly difficult to establish. While cash is becoming more uncommon as a form of income, it is still an option for many. Determining cash income requires a dedicated approach through a thorough examination of all financial records and an analysis of assets obtained and expenses paid for.

Similarly, if you earn a cash income and your ex-spouse is accusing you of making far more than you do, you will want to actively defend yourself. Hiring a lawyer who understands these issues is essential in getting a fair income for everyone involved.

 

How to Find Hidden Assets and Concealed Income

The only way you will find hidden assets and concealed income is through an aggressive litigation approach. This can become very expensive and there is no guarantee that there will be any success.

Like many other countries, Canada does permit the use of a type of “civil search warrant” called an Anton Piller Order. This allows for an Order to be granted by a Judge, without hearing from the defendant. It is used when there is actual evidence that what you are looking for will be at the place you want to search. Though more than that, you also need to prove that the evidence you are looking for will be destroyed if you request it in the usual manner.

Ex-Spouse is Hiding Income to Avoid Child Support and Spousal Support Payments

If you believe your ex-spouse is hiding income and assets to avoid paying child support and spousal support, seek legal advice. Addressing this issue takes a careful approach and if successful, is of tremendous benefit to the children.

Peter Hearty of Hearty Law brings twenty-years of policing experience primarily in the area of money laundering. There is significant overlap between money laundering investigations and parents avoiding support payments. In both situations, the person is trying to benefit by deliberately trying to hide income.

Contact Hearty Law with any questions on financial issues during your divorce, including: hidden assets, concealed income, child support, spousal support, retroactive support, division of property or any other family law financial need.

Email toronto@heartylaw.ca or ottawa@heartylaw.ca to get more information.

Hearty Law serves Toronto, Ottawa and surrounding communities.

The Cost of Divorce in Ontario

When couples find that their relationship is coming to an end, there is often stress over finances. This leads to the question: “What is the cost of divorce in Ontario?”. The simple answer is that the cost of a divorce is directly related to how reasonable each person is and how hard they want to work to find reasonable solutions to their problems after marriage. The unfortunate reality is that if even one party is being unreasonable, the costs of divorce will skyrocket.

This blog post looks at the story of one Ontario couple of average means who spent $500,000 in legal fees for their divorce. With that much money spent, the parents risked both of their futures financially.

How do you Spend $500,000 on Legal Fees in a Divorce

The Ontario Superior Court of Justice had four different written decisions on this lengthy divorce proceeding. The father worked for the Toronto Police Service and earned $100,350 per year. The mother was unemployed at the time of separation and for the year of the trial, estimated she would earn $17,000. The trial judge found that the mother was underemployed and imputed her income at $60,000.

The couple met in 1997 or 1998, married in 2004, had one child together in 2007 and separated in 2011. After four years of animosity, the trial was held in 2015. Both parents insisted that what they were doing was in the best interests of the child. After 36 days of trial, hearing from 20 witnesses, the father had spent over $300,000 in legal fees and the mother had spent $200,000 in legal fees.

The witnesses at trial included teachers, principal, vice-principal, children’s aid workers, a family doctor and a custody/access assessor. The judge had this comment: “Custody trials are supposed to be about children. But 36 days – that speaks volumes about the parents“.

While the father was mostly successful and was awarded full custody, the sad reality was that the couple spent almost five years of gross salary on legal fees to get to that point. This means they have effectively destroyed their financial future and that of their child, by continuously arguing about the best interests of the child.

 

Cost of Divorce in Ontario

In the subsequent decision on costs, the father was quoted in a letter sent to the mother prior to the legal battle starting: “We are both reasonable people and I really think we can work this out without spending 40 to 50 thousand dollars a piece in lawyer fees only to have a judge tell use something we could arrange ourselves. Please I’m begging you to be reasonable.”

After the trial and in her argument against having costs awarded to the father, the mother was quoted as saying: “This trial has been financially disastrous for both parties.” Had the parties employed a little bit of reasonableness years before, they could have saved themselves half of a million dollars.

How to be Reasonable During Separation?

This couple separated in 2011. In 2012, the mother began to restrict the father’s access to the child. The father responded by sending a letter to work things out. With no response, the father obtained a lawyer to send the mother a letter. The father offered to go to mediation to get all of their matters resolved. The mother refused mediation and said it wouldn’t have worked.

These actions are what leads to a higher cost of divorce in Ontario. If you want to keep legal fees low in your divorce proceeding, try and work things out yourselves or go to mediation. Not only go to mediation, but go with an open mind. While the initial separation may be an emotional time, after one year has passed and there is conflict, reflect on your own actions prior to looking to blame the other. Going to mediation with an open mind is a good opportunity to demonstrate that you are trying to resolve matters in the best interests of the child.

The best thing that can happen from mediation is that all of your issues are resolved and your child will have certainty of what their future will look like. The worst thing that can happen by offering mediation, is that it will look to others that you are trying to be reasonable and looking to resolve the issues on your own.

Continuous calls to police and continuous litigation over trivial things, while providing some short-term satisfaction doesn’t actually help. Being 5-minutes late to drop a child off is not something to call the police over. Going to court to resolve who should have a car-seat, or blankets, is not being reasonable.

What to do After Spending so Much on Legal Fees?

After spending $500,000 on legal fees and calling it financially disastrous, you would think it would end the litigation between the parties. Shockingly, only two-years after 36-days of trial, the parties were back in Court. The father sought supervised access, the mother said the father was alienating the child from her.

At the time of this decision, the mother hadn’t seen the child in over one year. The mother argued that since she wasn’t seeing the child, she shouldn’t have to pay child support. (That is the topic for another post) So effectively, after spending $200,000 in legal fees on a 36-day trial doing what she said was in the best interests of the child, the mother didn’t want to have anything to do with the child.

One Party Refuses to be Reasonable

After 36-days of trial, it is difficult to identify the reasonable party. The fact that the father was almost entirely successful is a good indicator, but it isn’t the deciding factor. The actions of the parties after the trial is what really shows reasonableness. A mother walking away from her child because she was not happy with the outcome of the trial, is the very definition of unreasonable.

What do you do when one-party isn’t being reasonable? The first step is to look in the mirror and see if there is something you could be doing different. After that, it becomes a very difficult situation and there is no easy answer. Having a lawyer that will explore all avenues prior to litigation is a good start.

What is the Cost of a Divorce in Ontario?

What is the cost of divorce in Ontario in 2020? The answer is, “whatever you want to spend”. If both parties are reasonable, everything can be solved in short order and for very little cost. If even one party is being unreasonable, it increases costs. The couple here demonstrated you can spend five years in salary on legal fees and still not be satisfied.

Get legal advice early in the process and that may help save some cost later on. Contact Hearty Law for a free one-hour virtual consultation to discuss your family law matter.

Hearty Law serves Toronto, Ottawa and surrounding communities. Email toronto@heartylaw.ca or ottawa@heartylaw.ca for more information.

Mother and Father Arguing

Divorce is Expensive in Ontario Because of Unreasonable Parents

Mother and Father Arguing

Why is divorce so expensive in Ontario? While the popular answer is that lawyers make it so, but divorce is expensive in Ontario because of unreasonable parents. Earlier this summer, there was yet another decision from the Ontario Superior Court of Justice, where the parents spent over $100,000 on a 10-day trial. This trial was to interpret the final order from the last trial, five-years ago.

Divorce is Expensive in Ontario Because of Unreasonable Parents

This couple separated in 2012 and went to trial in 2015, which was to resolve all of their outstanding issue. For the past five-years, both the mother and the father have continued to argue over everything. Now eight years apart and with children, ages nine and eight, they went back to Court.

These were the major issues: first, the Court Order said that the March break would split in half. The mother thought the half-way point would be at 5pm, while the father thought the half-way point would be noon.

Second, the Court Order provided that each parent would have two continuous weeks in July and August. As this only covered 28 out of the 31 days in the month, they couldn’t agree what to  do with the extra three-days.

Third, the Court Order provided that the father would have the children for three weekends each month. He wanted the first, second and third weekends. The mother wanted the second weekend each month, not the fourth weekend.

The father picked up the children from school at 3pm, to start his access weekend. The mother wanted the father to pick up the kids from her house at 5pm to start the access weekend. The father wanted to end his access weekend at 6pm and the mother wanted to pick-up the children at 5pm.

These were just some of the issues that frequently resulted in police being called to enforce the Court Order. After five years of constant fighting, they have yet another Court Order which now interprets the first.

Why Does a Divorce Cost so Much in Ontario?

A quick review of some Ontario Superior Court decisions demonstrates that this couple is not unique. See my blog-post on a middle-class couple that spent over $500,000 on legal fees. It is difficult when emotion runs high, but in this instance, the couple has been separated for eight-years.

The Judge pointed this out by saying that each parent refused to look at the issues from the perspective of the other. And more importantly, neither parent was acting in the best interests of the children. There is no way you argue that calling the police to resolve an issue over a pick-up time is in anyone’s best interest.

The role of the lawyer is to represent the client and often times the client won’t listen to reasonable advice. The cost of a divorce rises exponentially with the level of unreasonableness with each parent.

How to Reduce the Cost of a Divorce in Ontario?

It is very difficult to do at the time, but take a step back and think about what you are trying to accomplish. In this instance, the parents could have put together a list of all the issues. Then flip a coin and go back and forth resolving each issue.

Look at this another way. The father ended up spending over $95,000 in legal fees. This is after he was ordered to pay costs of $58,000 because the mother was successful at the 2015 trial. The mother was then ordered to pay costs of $37,000 on this trial because the father was successful.

While I don’t have the costs from the first trial in 2015, this couple has spent at least $200,000 on lawyers over the past five years. If each person looked at by saying, I will save myself $100,000 and give in on a few hours over March break, that may resolve some of the issues.

$100,000 over the past five years could have been spent far more effectively on an investment property, an RESP for the children, vacations or boats. Or anything else you want to spend money on.

Some Advice to Lower Costs of Divorce

Divorce is expensive in Ontario because of unreasonable parents. To reduce the cost, first, reduce the level of animosity. This may be hard but it can be accomplished by not calling police over every little issue.

Second, prior to making yet another Court application, ask yourself if there is a better way to spend that money.

Third, if you still want to make that Court application, ask yourself if the children will be better off with you spending your energy on another trial.

Contact Hearty Law for a free one-hour virtual consultation. Hearty Law will represent you on any family law matter and will answer all your questions on divorce, separation, custody, access, child support, spousal support and property distribution.

Email toronto@heartylaw.ca or ottawa@heartylaw.ca for more information.

Hearty Law serves Toronto, Ottawa and surrounding communities.

 

Shaking Hands

Divorce Costs in Ontario Rise With Refusal to Negotiate

Shaking Hands

In the past, I have posted articles on a decision from the Ontario Court of Appeal. The previous posts looked at the impact of false allegations of domestic violence and the impact of RRSP withdrawals on child support. This post will look at the legal costs incurred for this 12-day trial. This is an example of how divorce costs in Ontario rise with refusal to negotiate. The father spent $249,000 on legal fees, while the mother spent $231,000. These high costs were the direct result of the mother refusing to negotiate in good faith.

 

Why Does Divorce Cost so Much in Ontario?

The couple in this decision married in 2006. They had one child together in 2014 and separated in 2015. As discussed in a previous post, the mother made false allegations of abuse, which created a high conflict environment. These allegations were used to support her position that the father could only have supervised access.

The trial Judge in 2018 found that the father made three separate reasonable offers to settle. In each case, the offer made by the father would have left the mother in a better position than she was in after trial. The first offer was made shortly after separation. Had that initial offer been accepted, combined the couple would have saved nearly $500,000.

The first offer from the father was for joint custody and equal parenting time. Unless there is some significant reason to keep a parent from being involved in decision making, joint custody is a typical result. Since the father ended up with sole custody and equal parenting time, the offer was at the very least a reasonable starting position.

 

Continue to Negotiate Through the Proceedings

In early 2017, the father made another offer. This time, in an effort to demonstrate his desire to negotiate in good faith, he offered to reduce his parenting time. The goal was to engage the mother in negotiation to resolve the matter without trial. This offer also included a resolution proposal on spousal support, child support and division of property. After trial, the father ended up in a better position on each issue.

In late 2017, the father made one further settlement offer in an effort to avoid an expensive trial. The father offered to waive all of his rights to equalization of property and waived occupation rent the mother needed to pay. In all, he offered to accept $21,000 from the mother to resolve all property matters. After trial, the mother was ordered to pay over $140,000 to the father. In addition to resolving the property matters, the father offered a reduction in his access and child support.

The most important aspect of the fathers offers was that every item was severable. This means that the mother could have picked individual offers to settle to reduce the time needed in court. Offering to sever any issues in an effort to resolve something, is an important aspect of reasonable offers.

 

What Is an Unreasonable Offer?

In this case, the Judge found that the mother acted in bad faith throughout the process. This included:

  • making false allegations of domestic violence;
  • Calling 911 to falsely report the father was abducting the child;
  • Limiting the father’s access to the child;
  • Requiring the father to have supervised access with the child;
  • Refusing to provide the father with medical information on the child;
  • Making all decisions about the child unilaterally;
  • Delaying proceedings by changing lawyers.

All of these things combined painted the mother in a bad light. With all of this in mind, the Judge looked at the mother’s offers to settle. Every offer the mother made included the provision that the mother was to have sole custody and sole decision-making authority. All of her offers were not severable, which meant that the only way the father could accept anything in the offer, was to grant sole custody to the mother.

The mothers position was unreasonable because there was no evidence of domestic violence. Withholding a child from a parent is serious and must only be done in the clearest and most serious of cases. If there are criminal charges, or a criminal conviction, that is a good indicator of the potential of violence. If you have called 911 and the police don’t do anything, take a critical examination of your position, before insisting that you are right.

 

Refusing to Negotiate Makes Divorce in Ontario Expensive

The Judge reviewed the law on ordering costs. There is a presumption in family law proceedings that costs are awarded to the successful party. The purpose of this is to force both participants to negotiate in good faith. In this case, the Judge ordered the mother to pay $249,000 in costs, a very expensive lesson.

The mother attempted to take this decision to the Ontario Court of Appeal. Her argument was that she wouldn’t be able to properly care for the child if she had to pay the father $249,000. In dismissing her appeal, the Court of Appeal noted that her income was approximately $79,000 per year and that she had just received $100,000 from the sale of the matrimonial home.

 

How to Reduce the Cost of Divorce in Ontario

Divorce costs in Ontario rise with the refusal to negotiate. If you want to keep divorce costs down, negotiate in good faith. The more that you can resolve without the need of a Judge, the cheaper your divorce will be.

Contact Hearty Law with any questions on your divorce and what good faith means in your case. Hearty Law provides legal services on divorce, custody, access, child support, spousal support, division of property and any other family law financial matter.

Schedule an appointment by completing the contact form or by emailing toronto@heartylaw.ca or ottawa@heartylaw.ca.

Hearty Law serves Toronto, Ottawa and surrounding communities.

Shaking Hands

How Do I Change Spousal Support Payments in Ontario

Shaking Hands

Spousal support can be one of the most contentious topics in any divorce. A question I am often asked is “how do I change spousal support payments in Ontario?” Typically the answer is only when there is a material change in circumstance, such as a retirement. If you are paying spousal support and you have found yourself in a situation where you can’t afford to keep paying, continue reading.

Last fall the Supreme Court of Canada refused to hear an appeal of a change in spousal support. The facts of this case demonstrate a view of the extreme behaviour of one spouse.

 

Spousal Support Equals Pension For Life

The couple married in 1968 when they were both 24-years old. The husband was a dentist and the wife was in a PhD program at Queen’s University. They had two children, who both went to boarding school in the United Kingdom at age 12.

In 1985, after 17-years of marriage, the couple divorced. They were both 41-years old at separation. At the time of the divorce, the husband was earning approximately $275,000 per year. The final divorce judgement required the father to give the mother $40,000 in compensatory spousal support. Non-compensatory spousal support was set at $4,000 per month for life, and indexed with inflation. The Order did provide that the amount of spousal support could not be reduced unless the wife was earning more than $30,000 per year.

The wife moved to the United Kingdom where there is no tax on spousal support. By the time the husband asked for a review of this order in 2016, spousal support was over $70,000 per year tax-free. The wife continued to live in the United Kingdom, but had a summer house in France and a winter house in Panama. The wife never made any effort to obtain employment after divorce.

The husband summarized the wife’s activities as follows. Since the Divorce Judgement (the wife) has travelled extensively and led an active lifestyle throughout the world, going to Thailand, a Caribbean cruise, travelling the Silk Road, trekking in the Himalayas, travelling to New Zealand and Australia, skydiving, assisting with world cup sailing regattas in Spain, travelling throughout the Southern United States in a RV, skiing, scuba diving, spending several months in Africa, travelling the Middle East, northern British Columbia, a safari in the Serengeti and she has climbed Mount Kilimanjaro. The judge characterized these activities as enjoying the pension for life.

 

Can’t Afford Spousal Support in Retirement

By age 72, the husband had been paying spousal support for over 30 years. He was planning for retirement and estimated that his retirement income would be approximately $35,000 per year. He simply couldn’t afford to continue to pay over $70,000 per year in spousal support. The Court found that the husband seeking retirement at his age was completely reasonable.

The Judge reviewed the law on spousal support variation and found that the husband had to prove a “material change” in circumstance. The planned retirement in this case met the threshold and the initial spousal support order was reviewed. Importantly, reviewing a spousal support order does not mean the Judge starts the entire process over. The review is limited to how the change in circumstance impacted the initial order.

In reviewing the present circumstances, the Judge observed that the marriage was not long, the wife had a university education and was relatively young at the time of divorce. The wife’s unemployment was simply her lifestyle decision.

 

How to Change Spousal Support Payments

The Judge ultimately found that the husband’s retirement was justification to reduce spousal support to $1 per month. The wife appealed this decision and the Ontario Court of Appeal didn’t agree with the trial judge. The Court of Appeal found that the husband should have been paying more spousal support for a shorter period of time. In the end, the trial judge’s decision was changed and the husband will now continue to pay $850 per month in spousal support for the rest of his life.

 

How to Pay a Fair Amount of Spousal Support

In this extreme case, the husband has already paid millions of dollars in spousal support. This support has been paid for more than twice the duration of the marriage. The lesson learned here is that spousal support is very difficult to alter once the initial order has been made.

Previous Court decisions have established that voluntary early retirement will not be a sufficient reason to reduce your spousal support obligation. Any reduction in your income needs to reasonable and not voluntary.

If you are currently paying spousal support and are considering applying to have it changed, contact Hearty Law for legal advice. Or if you are currently involved in litigation over spousal support, either as the payor or recipient, contact Hearty Law. Email toronto@heartylaw.ca or ottawa@heartylaw.ca or fill out the contact form. Paying a little bit for legal advice now may have a significant financial impact in the future.

Hearty Law provides legal services on spousal support, retroactive support, hidden assets, concealed income, distribution of property and other family law financial issues.

Hearty Law serves Toronto, Ottawa and surrounding communities.

A Lock Representing Enforcement

Order for Costs Enforced by the Family Responsibility Office

A Lock Representing Enforcement

I previously wrote about a husband who took steps to hide income in an effort to avoid spousal support and child support payments. His actions cost him nearly $700,000 in support payments. You can read my comments about the trial here. Earlier this summer, these two were back in court for a decision on what costs, if any, were to be awarded. The issue to be resolved was whether or not an order for costs can be enforced by the Family Responsibility Office in Ontario.

 

Costs Awarded After Divorce Trial

Typically after a divorce trial, the losing party must pay the successful party their costs. This rule encourages negotiation and resolution without taking up precious public resources at the courthouse. When determining whether or not costs should be awarded, the Judge will look closely at the effort each side gave in the negotiation. Or put another way, how reasonable each side was being.

Rule 24 of the Family Law Rules is the legislation that governs this issue. This rule says there is a presumption that the successful party will be awarded costs. The amount of costs is dependent on these factors:

  • each party’s behaviour;
  • the time spent by each party;
  • any written offers to settle;
  • amount of legal fees paid;
  • expert witness fees; and
  • any other relevant matter.

The Judge will determine the reasonableness of each party by looking at how they handled the issues for trial. This means whether or not the settlement offers were reasonable and how the issue was resolved at trial. The legislation also states that if a party has acted in bad faith, the other party will receive the full amount of their costs.

Divorce trials can be very expensive. If you are not reasonable throughout the negotiation, losing a divorce trial is even more expensive. And if you refuse to be reasonable throughout negotiation and then lose a divorce trial, a Judge will not be kind to you.

 

Bad Faith During a Divorce Proceeding

A party who acted in bad faith throughout a divorce proceeding will be punished through a costs award. Bad faith is not simply being unreasonable. Rather, bad faith requires active steps to harm the position of the opposing party.

In this case, the Judge found the father acted in bad faith. For instance, the father refused to provide financial disclosure, which the Court of Appeal characterized as “willful disobedience”. This refusal to provide financial disclosure meant the wife needed to obtain two experts to give evidence on the father’s financial situation. After this evidence came out at trial, the Judge found that the father was deliberately attempting to conceal assets from the wife.

While hiding assets and refusing to disclose financial information can be bad faith on its own, there was more. The father refused to concede on a single fact or issue. He did not narrow any legal issue prior to trial. This meant that the wife’s lawyer had to argue every single point.

The wife also provided a number of offers to settle and made every issue severable. This means that the husband could have cherry picked any issue to resolve or to negotiate. He refused to do either. By the time of the trial, the husband was not permitted to participate. In the end, the Judge ordered the husband immediately pay $217,000 to the wife to cover her legal fees.

 

Order for Costs can be Enforced by the Family Responsibility Office in Ontario

While receiving a costs award is very common, enforcing that award is more difficult. Often time, the costs award comes after a very expensive divorce proceeding. The unsuccessful party may simply have no money left after paying their own legal fees.

In this case the wife requested an Order that the costs award be enforced by the Family Responsibility Office (FRO) in Ontario. That office is responsible for collecting support payments and they have broad powers to assist them in their duties. These powers include the ability to garnish wages, bank accounts and claim payments from the government.

The Judge reviewed the Family Responsibility and Support Arrears Enforcement Act. This legislation allows the FRO to use their powers to collect support payments or to collect on legal fees incurred in relation to support payments. In this case, the Judge agreed with the wife’s submission and with a few minor exceptions, ordered that the costs would be enforced by the FRO.

 

How to Be Reasonable in Divorce Proceedings

This ruling was very harsh against the husband. The reason for this was bad faith throughout the proceeding. If you are going through a divorce, it is in your best interest to act reasonably throughout and attempt to negotiate a reasonable resolution. This can be done by obtaining legal advice to have a thorough understanding of what your rights and obligations are.

Another aspect of being reasonable is to make offers to settle and respond to offers presented to you. Making issues severable in your offers will help you later. This can mean keeping custody and property matters separate.

Contact Hearty Law today to receive legal advice on your specific situation. Hearty Law can assist with hidden assets, concealed income, child support, spousal support, retroactive support, property division and other family law financial issues. Either fill out the contact form on this site or send an email to toronto@heartylaw.ca or ottawa@heartylaw.ca.

Hearty Law serves Toronto, Ottawa and surrounding communities.

Separated Couple

Date When Property is Valued in Divorce in Ontario

Separated Couple

A contentious divorce issue is often the date when property is valued in Ontario. This date is when the couple begins to live separate and apart with no realistic possibility of reconciliation. When there is a minor difference in the dates, there may be no impact on the property. Significant differences in the separation date can have a significant difference on the property value.

The reason this issue is important is because the Family Law Act in Ontario requires the property be equalized on the date of separation. All of the marital property is valued. Then the person with the higher property value gives half of the difference to the other person.

Earlier this summer the Ontario Court of Appeal upheld a trial decision and reviewed the law in this area. The earlier trial decision reviewed the background in detail and provides an interesting analysis when the husband and wife were 14 years apart on the date of separation.

 

The Importance of the Date of Separation in Ontario

The couple in this case married in 1993 and had two children. The husband was a farmer and the wife worked for the farm. Their house a main part which was two stories and had four bedrooms. There was a single story “in-law” suite attached to the main house. This suite had a single bedroom, kitchen, living area and bathroom.

Early on in their marriage, the couple often rented out the single story residence. When the last tenants left in 2000, the wife testified that she moved into that area of the house. Her evidence was that she had already been sleeping in a separate bedroom from her husband because she didn’t want to disturb him while caring for the young children.

The wife continued to live in the separate residence until an incident in July 2014. At that time, the wife left the residence after the husband had an argument with the daughter. The wife obtained legal advice and served the husband with her intention to obtain a divorce.

Effectively, the husband argued that the couple separated in 2000 after a seven year marriage. On the other hand, the wife argued that the couple separated in 2014 after a twenty-one year marriage. Depending on which party was believed, there would be a significant difference in spousal support as well as property. Spousal support for a twenty-one year marriage would likely be far greater than spousal support after a seven year marriage.

Further, determining the value of property nineteen years prior to trial would be difficult. It is important to note that the there are provisions in the Family Law Act that potentially create a six-year statute of limitations. The Judge addressed this issue and found support for the notion that there was discretion on this point.

 

How to Determine the Date of Separation in Ontario

The trial heard evidence on how the family functioned. This meant a review of everything from household chores, to vacations, to family visits to sexual relations to how holidays were celebrated. The wife gave evidence that they were still a family, even though she did not share a bedroom with her husband. The husband testified that they had been living separate lives, even though the wife was still living in the same residence.

The Judge reviewed the law on separation and found that there is no “typical”marriage. For example, the Judge found that a couple could be separated while living in the same house. Conversely, a couple could still be married and not living in the same house.

Some indicia of separation was reviewed from a previous case. These were:

  • there must be a physical separation, though just because a spouse remains in the same house for reasons of economic necessity does not mean there isn’t a physical separation;
  • there must be a withdrawal by at least one spouse from the matrimonial obligation with the intent of destroying the marriage;
  • the absence of sexual relations is no conclusive but is a factor to be considered;
  • the discussion of family problems, presence or absence of social activities and the meal pattern;
  • household tasks are a factor, but must be viewed with their roles during marriage;
  • the true intent of the spouse must be determined and not simply the stated intent, such as identifying yourself as married on a tax return.

 

Sleeping in Separate Bedrooms But Still Married

In the end, the Judge found the date of separation to be in 2014. Though it is possible to be living separate and apart in the same house, in this case, the Judge preferred the evidence of the wife. Some of the important factors were the wife continued to make meals for the family, the family celebrated holidays together and exchanged gifts, the wife continued to do laundry for the family and the couple attended family functions together.

The important point to take away from this case is that no two families are the same. The entirety of the relationship and situation will be examined prior to determining the separation date.

Contact Hearty Law with any questions on separation, divorce, property distribution, spousal support, child support, custody, access or other family law financial needs. Either complete the contact form found here, or send an email to toronto@heartylaw.ca or ottawa@heartylaw.ca.

Hearty Law serves Toronto, Ottawa and the surrounding areas.

Destitute man on the street

Bad Faith and the High Cost of Divorce

Destitute man on the street

Earlier this summer, the Ontario Superior Court of Justice released on interim decision on a divorce proceeding. The actions of the father in that case demonstrate bad faith and the high cost of divorce. This is a story of what you can’t do when you initiate divorce proceedings. Nobody gets married and plans for divorce. At times, the highly emotional situation can lead to bad decisions that can turn costly.

 

First Steps to Initiate a Divorce Proceeding in Ontario

This Court decision is on the divorce of a mother and father who were married in 2018 and had one child together. The child was under 2 years old at the time of the separation. The father had two children from a previous marriage who he had access to. The mother was from Columbia and also had two children from a previous marriage. The mother moved to Canada in 2019 with her children. Both her and the child had medical issues.

The couple was living in a residence owned by the father’s family. At the time of separation in April 2020, the mother, father and three children were living in the home. The father’s children from his first marriage also stayed there every second weekend.

In April 2020, the father moved out of the matrimonial home and moved in with his parents. The mother continued to reside in the matrimonial home with the child from this marriage and her two children from a previous marriage.

On June 22, 2020, the father’s lawyer sent a letter to the mother which stated that the matrimonial home was rented and the lease was to be terminated. The mother was to vacate the home within three days.

This is an example of bad faith. The father was using his family to apply pressure to the mother to have her leave the matrimonial home. She had only lived in Canada for five months and had no income and no way to care for her children.

 

What is an Urgent Family Law Application in Ontario

This situation is exactly what an urgent family law application is for. The mother had just arrived in Canada and was completely dependent on the father for financial support. The mother had medical issues, including reduced immunity, which made her at risk during the ongoing pandemic in Ontario.

Typically motions are not heard until after a case conference, unless it is urgent. During emotional separations, it may seem like everything is urgent and needs to be resolved immediately. Urgent in this case means hardship if required to wait. Hardship would be to have no home and no income to care for three children.

The mother was successful in having her application heard prior to the case conference. She sought spousal support, and child support for the child of the marriage as well as child support for her children from her previous marriage.

 

Bad Faith and the High Cost of Divorce in Ontario

The father’s actions proved to be costly. In this instance his bad faith proved to be costly. The father reported his income as $92,000 per year. According to the online Canada Revenue Agency payroll calculator, his net income is approximately $5,500 per month. While the judgement is not clear, he would likely be paying $1,374 per month in child support for his two children from his previous marriage.

The mother sought child support for their child as well as her children from her previous marriage. The father argued against paying child support for these two children. The Judge found that since the children came to Canada to form a new family with the father, for the purposes of interim child support, they were children of the marriage. This decision could be looked at again with a full trial on the issue.

The father was ordered to pay child support for these three children, which according to the Federal Child Support Guidelines is approximately $1,795 per month. Just in child support alone, the father was ordered to pay more than 55% of his monthly salary.

The father was also ordered to pay the mother $343 in spousal support, in addition to this high level of child support. Further, as the mother still had nowhere to live, the Court ordered that she remain in the matrimonial home and the father was to pay all rent and utilities. While the father did not own the house, his family was represented in Court and were also subjected to the decision.

 

How to Initiate a Separation in Ontario

There is no information on this point in the decision, but if the father’s family expected to be paid rent each month, it would be very costly. Child support is approximately $3,169 per month and spousal support is $343 month. A very conservative estimate on market rent on the home would be approximately $1,500 per month and utilities would be an additional few hundred per month. These expenses are getting very close to the entirety of the father’s take home pay each month.

Whether or not to separate is always a difficult decision. Sometimes, living under the same roof, but separate and apart is an option. If you are at the point where you are going to leave the matrimonial home, ensure that each person has the financial resources to provide the necessities for the children.

It this situation, the father could have made a different decision. By ensuring the mother had financial resources to care for herself, there may have been a different outcome. Instead, the father is now paying almost his entire salary in support payments.

Contact Hearty Law if you are considering separation. Hearty Law provides legal services on spousal support, child support, retroactive support, hidden assets, concealed income, property distribution and other family law financial needs. Either complete the contact form here, or email toronto@heartylaw.ca or ottawa@heartylaw.ca.

Hearty Law serves Toronto, Ottawa and the surrounding communities.

Gavel

Appealing a Family Law Decision in Ontario? What You Need to Know

Gavel

Are you thinking of appealing a family law decision? If so, this article discusses what you need to know in Ontario. Since January 2020, the Ontario Court of Appeal has issued decisions on 16 family law cases. A review of these decisions is informative in determining whether or not you want to appeal your decision.

Before beginning it is important to note that this article is meant solely for informational purposes. This article is not meant to be a substitute for legal advice. I will also point out that I have excluded a few decisions that involve international divorces. These cases are very unique and are not representative of the vast majority of family law cases in Ontario.

 

How to Appeal a Custody Order in Ontario?

Appealing a custody order is very difficult. Since January, there have only been two decisions from the Ontario Court of Appeal concerning custody. The first one, I previously wrote about, which can be read here. In that case, the father was awarded sole custody and the mother was ordered to pay the father $250,000 in costs. The mother’s appeal was dismissed and she was ordered to pay a further $35,000 in costs.

The second case, I also wrote about previously, which can be read here. The father appealed every aspect of that decision. The custody decision was very short by the Court of Appeal. The decision of the trial Judge was reviewed and there were no errors found. The Judge simply found the mother in that case to be more credible and awarded her custody.

Though this is a limited sample restricted to this year, both decisions on custody are very informative. When determining custody, a Judge only looks at the best interest of the child. That determination typically requires a decision on the credibility of the parents. The Judge is in the best position to determine credibility and it would be rare for the Court of Appeal to change that. While you may not be happy with the decision of the trial Judge, be very cautious before spending another $30,000 or more to appeal the decision.

 

Successfully Appealing a Family Law Decision in Ontario

Since January, there have been three successful appeals of family court decisions in Ontario. The first decision was an appeal on the interpretation of a separation agreement. The importance of the decision had an impact on the value of the pension for property equalization. Briefly, the couple was married for two years and then separated. They signed a separation agreement which contemplated reconciliation. The couple reconciled seven years after separation and then divorced eight years after reconciliation. This was a unique situation and there were clear arguments on appeal.

The second decision was an  appeal on a very narrow issue of a larger decision. The trial judge ordered that the matrimonial home be sold, but there was an opportunity for one party to buy out the other party. The appeal was simply to allow for the sale of the matrimonial home at fair market value.

The third successful appeal was in relation to a decision on the limitation period for beginning an action under the Family Law Act. The husband and wife signed a marriage contract prior to their wedding. The contract expressly waived spousal support by either person. They divorced seven years later and it was five years after that when the husband initiated a request for spousal support. Again, this was a very unique situation and a novel argument.

 

Lessons Learned From Unsuccessful Family Law Appeal in Ontario

Every other appeal of a family law decision since January 2020 has been unsuccessful. There are a few lessons that can be learned from reading these decisions.

First, don’t let emotions make decisions. Your first reaction when you receive a decision that is not in your favour, may be to appeal. This is the emotional decision. You have thirty days to file an appeal, so at least spend a day or two thinking of what is in your best interests.

Second, appeals are expensive and unsuccessful appeals even more so. A review of the appeal decisions since January demonstrates that an average appeal is going to cost approximately $25,000. Even if you are representing yourself, an unsuccessful appeal will result in you owing your ex-spouse that much in legal fees.

 

Still Want to Appeal a Family Law Decision? Know This in Ontario

If after reading this article, you are still considering appealing your family law decision in Ontario, contact Hearty Law. Virtual consultations on any appeal are always free.

Hearty Law provides legal services on any family law financial issue. Contact Hearty Law for a consultation. Either complete the contact form here, or email  toronto@heartylaw.ca or ottawa@heartylaw.ca.

Hearty Law serves Toronto, Ottawa and surrounding area.