Background

This case involved two spouses who were both born in Cuba. They married there on November 12, 1999, and later had one child, born April 4, 2003. In March 2005, the family immigrated to Canada and later became Canadian citizens. After arriving in Canada, the mother worked steadily as a housekeeper at a hotel. The father initially worked at a winery and later became involved in the restaurant industry. The parties separated on May 19, 2014.

By the time the matter reached trial, much of the parenting and corollary relief had already been resolved. At the outset of the trial, the parties entered a comprehensive consent dealing with parenting arrangements and other related issues. The mother was granted custody, and the father’s parenting time was limited to one Sunday per month. The consent also authorized the mother to renew passports and travel internationally with the child without requiring the father’s consent. The parties agreed to share section 7 expenses equally, subject to prior written consent. Spousal support claims were dismissed, and the divorce was severed and allowed to proceed uncontested.

As a result, the trial proceeded only on the remaining financial issues. Those issues were the father’s income and whether income should be imputed, child support including retroactive support and arrears, and equalization particularly allegations about property in Cuba and the value of the father’s business, Mojito’s House Ltd.

The Law

How does the court determine the husband’s income for child support when the husband has unreported cash business income? When the payor’s reported income does not reflect reality, particularly where self-employment, cash benefits, or in-kind advantages exist, the court may impute income based on earning capacity and the best evidence available.

Does the value of foreign property form part of net family equalization in Ontario? Yes. Where a spouse alleges foreign property exists and has value, the burden is on the claimant to prove ownership and value with credible evidence. Thus, you may obtain the property deed then appraise it as of the date of separation.

How does the court determine the value of a business? The court could order a business valuation. Where a business is sold, the court will often treat the actual sale price as the best evidence of value, especially where the sale is supported by documents and credible third-party testimony, and where the business history shows losses rather than profits.

 

 

 

Analysis

When will the court impute income where a payor reports very low income after separation?

In this case the court imputed income because the father’s Line 150 income and tax reporting did not reasonably reflect his true earning capacity. The mother’s income was stable and undisputed, but the father’s income position was highly contentious because his tax returns showed very low or even nil income in some years. The court did not accept that the father’s reported income told the full story.

The evidence showed that the father was operating Mojito’s House Ltd. full-time during 2013 and 2014. His sworn financial statements reflected income around $24,990, which did not align with the low income shown on his tax returns. The court also considered that he received cash tips, in-kind benefits, and advantages associated with running the business, including food and drink and access to a vehicle. In addition, the father’s historical Canadian income before the business period tended to fall within a range of roughly $30,000 to $35,000.

Rather than adopting either extreme position, the court selected an income figure supported by the most credible and consistent indicators. It rejected the father’s low-income position as unrealistic but also rejected the mother’s proposed imputation at $45,000 because the record did not support that number. The result was imputed income of $35,000 per year for 2014, 2015, and 2016, reflecting earning capacity and the evidence of his work and benefits.

How does the court treat irregular child support payments when there is no existing order after separation?

The court treated child support as an obligation that must be quantified and enforced even where payments were inconsistent and informal. Here, there was no child support order immediately following separation. The court reviewed evidence of the father’s irregular payments over the period from June 2014 to June 2016 and then applied the Guidelines using the imputed income figure.

Once the court calculated the guideline amount owing from June 2014 to August 31, 2016, it compared that total to what the father had actually paid during the same time. The court found that guideline child support owing over that period was $8,181, that the father had paid $5,677, and that arrears of $2,504 remained outstanding. Importantly, the arrears were not treated as optional or negotiable. They were ordered to be paid out of the father’s share of the net proceeds of sale from the matrimonial home.

Going forward, the court fixed ongoing child support at $303 per month beginning September 1, 2016, and imposed annual financial disclosure requirements on the father. The disclosure condition mattered because the court was clearly concerned about the reliability of the father’s income reporting and sought to ensure child support remained responsive to actual income.

Can one spouse obtain unequal division of the proceeds of the matrimonial home just because they contributed more?

No. The father sought unequal division of the remaining sale proceeds from the matrimonial home, arguing he had contributed more. The court rejected that request. The decision reinforces a common point that parties often misunderstand unequal contribution alone is not enough. The legal threshold for unequal division is unconscionability, which is a high bar and requires more than a sense that one person paid more or “deserves” more.

The matrimonial home had been sold in February 2015 and after deductions and partial releases, $26,794 remained in trust. The court ordered the remaining proceeds to be divided equally, subject only to the adjustment required to satisfy the child support arrears from the father’s share. The message was straightforward: equal division remains the default, and it takes much more than differing contributions to depart from it.

What kind of evidence is required to include foreign property in equalization?

The foreign property issue was one of the most contentious parts of the case. The mother alleged that an apartment in Villa Clara, Cuba was built during the marriage, held in trust for the parties, and worth about $45,000 CAD. The court rejected this claim and assigned the alleged Cuban property a nil value for equalization purposes.

The reason was evidentiary. The court found that the property was constructed before the marriage and that it had been transferred back to the father’s father in compliance with Cuban law. Crucially, there was no persuasive evidence that the father owned the property at separation and no reliable evidence establishing a trust arrangement. In a case like this, the court requires proof of ownership and proof of value. Without those pillars, the claim cannot support an equalization adjustment.

This portion of the decision is especially useful in practice because it shows how courts approach foreign property allegations: they are not dismissed because they are foreign, but they will fail if they are supported only by assertion rather than documentation and credible corroboration.

Why did the court refuse to make orders about household contents and jewelry?

The court declined to make any order about household contents or jewelry because the evidence was too weak to support a meaningful result. There were no appraisals, the parties’ evidence was conflicting about possession and value, and the court emphasized that equalization focuses on monetary calculations rather than redistributing specific items “in specie,” especially where the items would not materially affect the overall net family property picture.