Delongte v. Delongte, 2019 ONSC 6954, reviewed earlier this week for the issue of a sale of a matrimonial home is again the focus of the blog today. However, today's issue revolves around whether the respondent father's monthly support payment of $9500 is excessive and deserves reduction.
Facts:
The applicant is the owner and the sole shareholder of two renovation businesses. The value of the businesses is in dispute. The applicant has served a report that says the businesses have little value. The respondent is currently in the process of having the businesses valued by BDO, a certified business valuator. The report was not available when I heard this motion but the respondent anticipates the businesses will be valued between $1.5 and $2.5 million.
[27] The respondent also has a number of business interests. It is not clear if the values of those interests are in dispute.
The respondent works for Fibremetics Corporation and the applicant says he is vice president. (It is not clear if that is it dispute.) He claims that his base salary is $100,000. He earns commission income which varies each year. His evidence is that his income since 2014 has been as follows:
2014 $210,957
2015 $275,914
2016 $197,281
2017 $210,684
2018 $250,251
He claims his 2019 income will be $162,000.
[31] According to the respondent’s income tax returns, his 2018 income was $307,695, which included $55,000 as a capital gain.
[32] The applicant’s position is that additional income ought to be imputed to the respondent, including income earned from various rental properties and other businesses he owns. She alleges that his lifestyle suggests that he earns far more income than he declares. It is anticipated that when I hear the income and support motion, the parties will have completed their 2019 income tax returns and will have made full financial disclosure to each other, including disclosure of any additional income earned by the respondent through any other business interest or rental income that he receives.
Why the Court rejects the respondent's submissions:
[51] I will now address why I reject the husband’s assertion that he is “drowning in debt” and cannot maintain the monthly payment of $9,500 he has been making since March 2018.
[52] A review of the most recent financial statement he filed is inconsistent with his assertion that he is drowning in debt. According to the respondent’s most recent financial statement sworn July 8, 2019, his total debts on the date of separation were $752,937. Of that amount, approximately $603,659 was in connection with mortgages owing on the matrimonial home and cottage property and a line of credit on the matrimonial home. The balance of the debt was for notional taxes and disposition costs of various assets. There was no credit card debt.
[53] As at July 8, 2019, his total debt had grown by approximately $50,0000 to $804,229. The only increase in debt was for a line of credit owing for his new home which totalled $220,838 – he did not include the notional and tax disposition costs that he had as of the date of separation. Again, there was no credit card debt as at July 28, 2019. According to the respondent’s sworn financial statement, there was little (if any) change in his debt situation between the date of separation and July 28, 2019, other than the new line of credit for the home he purchased post-separation.
[54] In the respondent’s financial statement, he swears that the monthly shortfall between his income and expenses is $23,209. Given that sizeable monthly deficit, one would expect to see a significant increase in debt to fund that deficit. As indicated above, this has been little if any change in his debt load, other than the increased debt due to his purchase of a home after the date of separation.
[55] Based on a review of his financial debt listed in his financial statement, the respondent is not “drowning in debt” and suffering financial hardship as a result of these monthly payments.
[56] The respondent acknowledges that, six months before the parties separated, he withdrew $424,500 from a joint line of credit that was secured against the matrimonial home and made an investment that was put in his name. According to his financial statement (sworn July 8, 2019), on the date of separation he had investments and bank accounts that totalled $1,105,715.54. On July 8, 2019, his investments totalled $429,504. The largest investment change was an investment at the Royal Bank of $566,917 on the date of separation that had a value of $60 on July 8, 2019. What is not clear is if that was the investment used to finance the purchase of his new home. When the value of the respondent’s new home is considered, there is no change in his investment position between the date of separation and July 8, 2019.
[57] I also note that the respondent has business interests in various corporations that he valued at $656,000 on the date of separation that have increased in value to $728,500 by July 9, 2019.
[58] In support of his position concerning his dire financial circumstances, the respondent relied on an email from the TD Bank dated May 28, 2019, in which it states he was not approved for any new credit because his current debt levels exceeded the required debt-servicing thresholds. That does not appear to be consistent with the respondent’s sworn financial statement. I prefer the evidence from the respondent’s sworn financial statement to the email.
[59] If the respondent is having difficulty meeting his debt obligations at this time, perhaps he should have considered that before he purchased a new home prior to selling the matrimonial home.
Court conclusion:
[64] Pending the sale of the home, the respondent shall maintain the current status quo payment of $9,500 per month.
Blog Analysis:
This is yet another example as to how important and critical it is the parties be transparent, thorough and extremely careful in filling up the financial statement. The financial statement is the foundational disclosure point for any family law discussion or litigation. These forms are sworn and need to be filled out extremely carefully.
As this case shows not only will the other lawyer scrutinize the document, so will the judge. It’s the skill of the lawyer to carefully analyze the financial statement and point out inaccuracies and prepare thoroughly for arguments. This is where we can help you at Shankar law.
At Shankar Law, we are happy to assist and guide you through whatever challenges you have in your spousal, matrimonial life or divorce. We work mainly in three counties: Huron, Bruce, and Grey and span several cities (Southampton, Kincardine, Goderich, Wiarton, Hanover, Dundalk, Walkerton, Meaford, Markdale, Chatsworth), through our two locations in Port Elgin and in Owen Sound.
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