COURT OF APPEAL FOR ONTARIO
O’Connor A.C.J.O., Cronk and Watt JJ.A.
BETWEEN
Janna Pomozova
Applicant (Appellant)
and
Howard Mann
Respondent (Respondent on Appeal)
Janna Pomozova, appearing in person
Aaron M. Franks and Roslyn Tsao, for the respondent
Heard and released orally: March 17, 2010
On appeal from the order of Justice Barbara Ann Conway of the Superior Court of Justice, dated December 31, 2008.
ENDORSEMENT
1The appellant appeals from the order of Conway J. of the Superior Court of Justice regarding support for her daughter, Georgia, born as a result of her extra-marital relationship with the respondent.
(1) Retiring Allowance
2In support of her appeal, the appellant argues that the application judge erred by finding that the sum of approximately $8.6 million received by the respondent from his former employer was not a severance payment and that, consequently, it did not form part of the respondent’s income for the purpose of calculating on-going child support. The appellant relies, in particular, on various documents authored by the respondent or his solicitors in which the funds in question were described as a “severance payment” or “severance package”.
3There are several difficulties with this argument. First, the power of this court to interfere with an application judge’s factual findings is limited. Absent palpable and overriding error, appellate interference with such findings is precluded.
4In this case, the application judge found that the respondent was not terminated by his employer but, rather, that he elected to voluntarily retire from his position and negotiated a retirement package with his employer. This key factual finding, which was amply supported by the evidence, attracts considerable deference from this court. We are not persuaded that it is tainted by palpable and overriding error so as to justify appellate intervention.
5Second, the application judge also concluded that: “The evidence is equally consistent with [the respondent’s] explanation that he wanted to retire from the company, that he received a retiring allowance in appreciation for his years with the company and his contribution to its profitability, and that he agreed to stay on until a successor was found.” As with her factual findings, the application judge’s appreciation of the evidence attracts great deference from a reviewing court. It was open to the application judge to reach this conclusion on the evidence in this case.
6Third, we note that the challenged payment was negotiated by the respondent with his employer, and confirmed by written agreement, about seven months before he met the appellant and almost two years prior to the birth of their daughter. Further, on all the evidence, the payment at issue was a one-time, non-recurring payment that was paid before Georgia was conceived.
7Finally, although it is true that the respondent and his lawyers referred to the funds in question as “severance” or a “severance package” in various documents from time to time, we agree with the application judge that this characterization of the funds is not dispositive of their legal nature. There was considerable evidential support for the application judge’s conclusion that the funds did not constitute, and were not intended by the respondent and his employer to constitute, replacement income. Consequently, the application judge was fully justified in allocating the funds at issue to the respondent’s income in the year of receipt, rather than future years.
(2) Long Term Incentive Plan (“LTIP”) Payment
8The appellant also challenges the application judge’s treatment of the LTIP payment made to the respondent by his employer in November 2003. The evidence at trial was that on execution of the retirement agreement between the respondent and his employer, the respondent’s unvested options were cancelled in accordance with the company’s usual practice on the departure of a senior executive. The agreed LTIP payment represented the value of the respondent’s vested options.
9In these circumstances, the application judge correctly recognized that s. 13 of Schedule III of the Child Support Guidelines, O. Reg. 391/97 was engaged. That provision requires that the profits on the exercise of a stock option are to be brought into the recipient’s income in the year of exercise. This is dispositive of the income allocation issue relating to the LTIP payment.
(3) Impugned Property Transfers
10At trial, the appellant argued that certain property transfers made by the respondent to his wife were designed to divert income which would affect the level of child support to be paid by the respondent under the Guidelines. She therefore sought to impute income to the respondent in respect of the transferred funds and other assets.
11The application judge rejected this claim on two grounds. First, some of the impugned property transfers were carried out before the respondent learned that the appellant was pregnant. Thus, these transfers could not have been made for the improper purpose alleged by the appellant.
12Second, with respect to the remaining transfers, the application judge accepted the respondent’s evidence that they were effected to meet the demands of his wife after she learned of his relationship with the appellant and of the appellant’s pregnancy. The application judge concluded that the respondent had provided a reasonable explanation for the impugned transfers. This finding, as well, was open to the application judge on the evidence.
(4) Other Issues
13The appellant’s remaining grounds of appeal may be dealt with summarily. She maintains that the application judge erred by failing to “gross up” the respondent’s income to take account of the differential in the applicable top marginal tax rates between Canada and the United Kingdom, where the respondent now lives.
14We disagree. The fact of a differential was undisputed. However, the application judge found that no evidence had been adduced by the appellant regarding the difference in the effective tax rates between the two countries. Section 19(1)(c) of the Guidelines permits the imputation of income to a payor, as the court considers appropriate, if the payor “lives in a country that has effective rates of income tax that are significantly lower than those in Canada” (emphasis added). Thus, evidence on the differential in the effective tax rates between Canada and the United Kingdom was required to trigger s. 19(1)(c). In the absence of such evidence, it was not incumbent on the application judge, nor, in our view, would it have been appropriate for her to conduct the applicable calculations.
15The appellant further argues that the application judge erred by declining to direct that the respondent contribute to private school expenses for Georgia, as an extraordinary expense under s. 7 of the Guidelines. We would not accede to this argument.
16At the time of trial, Georgia was three years of age. The application judge was not persuaded that private school was “necessary in relation to Georgia’s best interests” at the time of the application. She therefore declined to make the requested s. 7 order. However, she also ruled that this did not preclude the appellant from seeking contribution for private school expenses at a later date on proper evidence.
17On the record before her, we see no error in the application judge’s approach to this issue. We recognize and agree with the appellant that Georgia’s proper education is a matter of considerable importance. Based on the application judge’s decision, it is open to the appellant, if so advised, to seek an appropriate sharing of private school expenses under s. 7 of the Guidelines on application to the Superior Court of Justice, supported by proper evidential materials.
(5) Disposition
18For these reasons, the appeal is dismissed. The respondent is entitled to his costs of the appeal, fixed in the amount of $10,000, inclusive of disbursements and G.S.T.
“Dennis O’Connor A.C.J.O.”
“E.A. Cronk J.A.”
“David Watt J.A.”
