The recent Ontario Superior Court of Justice decision of Malik v. Malik dealt with an incredible set of facts and ultimately the issue of retroactive child support and imputation of income for the purposes of calculating retroactive child support. The parties were married in India in April 1988 and immigrated to Canada in June of 1989. They had one child that was born in India and the other was born in Canada in 1994. The wife stayed at home with the children until 1999 at which time she obtained employment with the City of Toronto.
The Husband's employment was interspersed with periods where he did not work because he was injured in a number of accidents from 1992 to 2003 and then again from 2006 to 2007. During the time off, where he collected accident benefits, he continued to work from home selling insurance with his business partner. The husband would solicit mortgages and sell them through his partner's license and the commissions were shared by both of them. According to the husband the parties accumulated savings "touching $3 million" during that time. During the marriage the husband controlled the finances and would leave an envelope of cash in the kitchen which routinely had upwards of $4,000.00 cash in it.
In 2008 the husband took an extended trip to India. When he arrived back he was distant and aloof. On Saturday June 21, 2008 he came downstairs with a suitcase. He announced to the family that he was leaving and that they should go to ScotiaBank because a mortgage would be waiting for them. After he left the wife attended at the branch only to find that the husband had drawn two mortgages, one for $451,000.00 and the second for $300,000.00. The interest was due and payable. The husband had also wiped out the joint bank account and the children's education savings account. $20,000.00 gone.
Mr. Malik had gone to Switzerland. He put the money in a Swiss bank account.
The wife retained a lawyer and brought an emergency application to have the funds returned. The husband ultimately returned and the funds were returned and divided between the parties. The parties lived separate and apart, however, when the wife took a trip to New York in January 2009, she returned to find the husband living in the basement. He refused to leave and lived in the basement for four months until he was removed by the York Region Police.
The wife brought an application for retroactive child support child support. The husband swore a Financial Statement that indicated his income ranged from $16,000 to $65,000 from 2008 to 2011. However, this was not the reality. In February 2012 mail arrived at the wife's home and it was the husband's T4A and she opened it. She found that his self-reported employment income was $521,000.00 for 2011. A new round of disclosure disclosed that the husband had a company that had never been disclosed.
How was he earning $521,000.00? In his own words he was using a "scheme."
Effectively, he was selling insurance policies which earned a significant commission paid in two parts. The larger part is only payable if the policy is maintained for two years. The purchaser of the policy is a "straw man" who does not pay the premiums on the policy, but benefits from having the coverage. The first part of the commission is used to pay the premiums for two years. At the end of the two years the balance of the commission is received and the policy lapses. The husband would profit equal to the difference between his commission and the cost of the premiums for two years. The husband referred to this as "the scheme" during the trial.
The court looked at his finances and determined he had not told the truth about his income. In looking at his income they advised, after taking into account his costs, he actually earned the following:
2008 $222,000
2009 $366,423
2010 $239,000
2011 $362,000
2012 $266,000
2013 $95,000
2014 $95,000
He also advised he had savings of $250,000.00 with the State Bank of India. However, the court commented that the true value of what was held outside the country could not be calculated because full disclosure was not provided. As a result of the income findings the court determined that the husband owed $221,548.00 of child support to the wife from 2008 to 2014.
The parties had a home and the sale of that home resulted in a significant sale proceeds. In order to satisfy his obligation for child support the court ordered that $221,548.00 of the husband's share of the sale proceeds should be directed to the wife to pay the retroactive child support.
The Husband's employment was interspersed with periods where he did not work because he was injured in a number of accidents from 1992 to 2003 and then again from 2006 to 2007. During the time off, where he collected accident benefits, he continued to work from home selling insurance with his business partner. The husband would solicit mortgages and sell them through his partner's license and the commissions were shared by both of them. According to the husband the parties accumulated savings "touching $3 million" during that time. During the marriage the husband controlled the finances and would leave an envelope of cash in the kitchen which routinely had upwards of $4,000.00 cash in it.
In 2008 the husband took an extended trip to India. When he arrived back he was distant and aloof. On Saturday June 21, 2008 he came downstairs with a suitcase. He announced to the family that he was leaving and that they should go to ScotiaBank because a mortgage would be waiting for them. After he left the wife attended at the branch only to find that the husband had drawn two mortgages, one for $451,000.00 and the second for $300,000.00. The interest was due and payable. The husband had also wiped out the joint bank account and the children's education savings account. $20,000.00 gone.
Mr. Malik had gone to Switzerland. He put the money in a Swiss bank account.
The wife retained a lawyer and brought an emergency application to have the funds returned. The husband ultimately returned and the funds were returned and divided between the parties. The parties lived separate and apart, however, when the wife took a trip to New York in January 2009, she returned to find the husband living in the basement. He refused to leave and lived in the basement for four months until he was removed by the York Region Police.
The wife brought an application for retroactive child support child support. The husband swore a Financial Statement that indicated his income ranged from $16,000 to $65,000 from 2008 to 2011. However, this was not the reality. In February 2012 mail arrived at the wife's home and it was the husband's T4A and she opened it. She found that his self-reported employment income was $521,000.00 for 2011. A new round of disclosure disclosed that the husband had a company that had never been disclosed.
How was he earning $521,000.00? In his own words he was using a "scheme."
Effectively, he was selling insurance policies which earned a significant commission paid in two parts. The larger part is only payable if the policy is maintained for two years. The purchaser of the policy is a "straw man" who does not pay the premiums on the policy, but benefits from having the coverage. The first part of the commission is used to pay the premiums for two years. At the end of the two years the balance of the commission is received and the policy lapses. The husband would profit equal to the difference between his commission and the cost of the premiums for two years. The husband referred to this as "the scheme" during the trial.
The court looked at his finances and determined he had not told the truth about his income. In looking at his income they advised, after taking into account his costs, he actually earned the following:
2008 $222,000
2009 $366,423
2010 $239,000
2011 $362,000
2012 $266,000
2013 $95,000
2014 $95,000
He also advised he had savings of $250,000.00 with the State Bank of India. However, the court commented that the true value of what was held outside the country could not be calculated because full disclosure was not provided. As a result of the income findings the court determined that the husband owed $221,548.00 of child support to the wife from 2008 to 2014.
The parties had a home and the sale of that home resulted in a significant sale proceeds. In order to satisfy his obligation for child support the court ordered that $221,548.00 of the husband's share of the sale proceeds should be directed to the wife to pay the retroactive child support.