Court of Appeal for Ontario
Before: Weiler and Sharpe JJ.A., and Mackinnon J. (ad hoc)
Between
Jennifer-Lynn Edgar
Applicant (Appellant)
and
Jeffrey Robert Edgar
Respondent (Respondent in Appeal)
Counsel:
Peter Callahan, for the appellant
Ian Mang, for the respondent
Heard and released orally: September 7, 2012
On appeal from the judgment of Justice Gisele M. Miller of the Superior Court of Justice, dated July 6, 2010.
ENDORSEMENT
1At the conclusion of oral hearing, we advised counsel that a written endorsement would be released in due course and would include these terms:
The trial judge erred in failing to impute any income to the respondent from February 2008 to August 2009;
Income of $30,000 per annum is imputed to the respondent as of February 1, 2008 to and including August 1, 2009;
The spousal support awarded to the respondent in the sum of $28,000 was not a lump sum rather a calculation of periodic spousal support payments due to him in the specified periods of time;
If the parties are unable to agree upon the recalculation of the amounts owing between them arising from the imputation of income, the dispute is referred back to the trial judge for determination;
The costs awarded below are set aside and there will be no costs of either the trial or of this appeal.
Background
2The parties married February 2, 2002 and separated October 1, 2007. The only issues in the trial below were child support, spousal support, and whether to base these amounts on the respondent’s actual income or on an imputed income. The trial judge imputed an annual income of $30,000 from August 25, 2009 onward. The appellant asked this court to set aside the trial judgment and instead impute a salary equal to the full amount the respondent earned before he left his job in October 2007 ($62,458.).
3Both parties worked full-time during the marriage. However, upon separation, the respondent took a leave of absence from his job and received short-term disability benefits equivalent to 100 percent of his salary until the end of January 2008. The respondent failed to take advantage of various forms of income replacement including employer benefits, CPP, EI and ODSP. His explanations for these failures ranged from complete oversight to procrastination. The respondent had not applied for any jobs since the date of separation. In 2008, and again in 2009, the respondent was ordered, on consent, to attend for an independent medical examination at the appellant’s expense. He did not do so and she did not pursue the matter. The respondent produced a letter from his doctor in 2008 indicating that he was incapable of working due to anxiety and depression.
4The trial judge expressed concern over the lack of medical evidence of the respondent’s inability to work but noted that the appellant did not compel him to attend for a medical exam despite having two orders allowing her to do so. The trial judge concluded that the respondent was not able to resume his former employment but was capable of some less taxing form of employment. She concluded that he would be capable of earning $30,000 and imputed this amount from August 25, 2009 onward. The trial judge found that from February 2008, when the respondent stopped receiving disability benefits, to August 2009, the respondent was incapable of resuming his prior employment, inhibited in his ability to seek other employment, and in need of support which the appellant was capable of providing. Applying the Spousal Support Guidelines, the trial judge found that the respondent was owed $28,000 in spousal support and applied that amount as a credit to the respondent’s ongoing child support obligations.
The Period Prior to August 25, 2009
5At paras. 50 and 51, the trial judge stated:
Despite the lack of medical evidence, I accept that Mr. Edgar was, for some time, incapable of working as a result of his anxiety and depression. It is clear, however, that while his condition may prevent him from resuming his former employment, he is either able to undertake some less taxing form of employment or he is so ill that he would qualify for disability benefits which would also assist in providing health care benefits to the children.
I am not satisfied, on the evidence before me, including my own observations as to Mr. Edgar's capabilities, that he continues to be incapable of earning some income. I am satisfied that it is his own inaction - but not an inability to act - which has resulted in Mr. Edgar's current unemployment. I am satisfied this has been the case from at least as early as August 25, 2009 when by final order of this Court the primary residence of the children was with Mrs. Edgar.
6We see no reason to interfere with the trial judge’s conclusion to impute income to the respondent in the amount that she did as of August 25, 2009.
7In our view, the trial judge ought to have considered whether she should impute an income to the respondent prior to that date. The trial judge referred to evidence showing that the respondent knew that long-term disability was available to him after January 2008. She noted that the respondent testified that his employer had told him it would reinstate his “sick pay” upon confirmation from a doctor that he was unable to work. She also found that he was aware of CPP benefits but had not followed through with his application for them. Nor had he applied for ODSP. The trial judge also referred to his failure to follow through with an application for Employment Insurance. On this evidence, it was error not to have considered whether income should have been imputed to him prior to August 2009 based on these available sources. In addition, the trial judge had evidence before her that, in 2009, the respondent withdrew $20,000 to $30,000 from his RRSP account. The trial judge did not consider whether that was income for support purposes.
8The appeal proceeded without a transcript of the trial evidence. The appellant did not challenge the findings of fact made by the trial judge and submitted that, based on those findings, this court could determine whether there was an error of law. If so, the appellant asked the court to go on to impute income to the respondent based on the trial judge’s findings.
9The record before us establishes that had the respondent proceeded in a reasonable way at least $15,000 annually was available to him through Canada Pension. He could have received that amount for 11 months in 2008, and for eight months in 2009. It does not appear from the reasons that the respondent led any evidence as to the amount of long-term disability that would have been available to him from February 2008 had he completed his application for it in a timely way. We also know that the respondent had RRSP income between $20,000 and $30,000 in 2009, but there is no indication that he could not have taken some or all of that in 2008. The trial judge also found that the respondent was capable of earning $30,000 annual employment income from August 2009 forward.
10The various sources of income available to the respondent commencing from February 2008 and the actual and imputed sources available to him in 2009 are evident in the unchallenged reasons of the trial judge. Having regard to those facts and in preference to sending the matter back for a new trial, we have imputed an annual income of $30,000 to the respondent commencing from February 1, 2008 to and including August 1, 2009. This amount is consistent with the minimum sources of income known to have been available to and withdrawn by the respondent during the period from February 2008 to August 2009 that were not included in the trial judge’s imputation of income. The trial judgment is amended accordingly, necessitating a recalculation of the amounts of child and spousal support payable between the parties.
Spousal Support
11The trial judge calculated arrears of periodic payments based on the Spousal Support Advisory Guidelines. She went on to provide that the credits due to the respondent for spousal and child support were to be set off against his obligation to the appellant for ongoing child support. The appellant submitted that the trial judge had thereby erred in failing to have regard to the different income tax treatments applicable to child support and spousal support.
12The tax treatment arises by virtue of the Income Tax Act which is not susceptible to change by court order. The fact that the periodic payments are quantified at a point in time and that a set off is ordered by the court as a collection mechanism does not change the nature of the underlying legal character of the periodic spousal support payments.: see C.(Y.J.) v. C.(Y.D.) (2001), 2001 CanLII 6637 (ON CA), 56 O.R. (3d) 150; 150 O.A.C. 247 (C.A.) and Sills v. Minister of National Revenue, 1984 CanLII 5347 (FCA), 1984 CarswellNat 514. Consequently, the fact that the trial judge did not explicitly discuss the inherent income tax law implications of an award of spousal support was not unreasonable nor was it an error. This ground of appeal is dismissed.
Result
13Income at the rate of $30,000 annually is imputed to the respondent effective February 1, 2008 to and including August 1, 2009. If the parties are unable to agree on the recalculation of the amounts owing between the parties for child and spousal support, the matter is referred back to the trial judge for determination. The recalculation should assume that no other changes would be made to the judgment other than with respect to the income imputation.
14The costs award below is set aside. Given the divided success, there will be no costs of the trial or of the appeal.
“K.M. Weiler J.A.”
“Robert J. Sharpe J.A.”
“J. MacKinnon J. (ad hoc)”
