CITATION: Nella v. Nella, 2015 ONSC 1898
COURT FILE NO.: FS-13-79281-00
DATE: 2015 03 25
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MacKENZIE J.
BETWEEN:
NANCY ANN NELLA
Lisa I. Bombardieri, Counsel for the Applicant
Applicant
- and -
ANTONY AUGUSTUS NELLA
Rachel Pulis, Counsel for the Respondent
Respondent
ENDORSEMENT
Background
[1] The Respondent moves under R. 62.02(1) for leave to appeal to the Divisional Court under s. 19(1) of the Courts of Justice Act, R.S.O. 1990, Ch. c.43, as amended, from an interlocutory order of January 28, 2015, made by Trimble J. of the Superior Court of Justice (the Order).
[2] The Order provided for, among other things, spousal support payable by the Respondent (husband) to the Applicant (wife) in the amount of $25,894.00 per month, premising the Respondent’s income at $1,064,000.00 per annum. This award was to be effective as of December 14, 2012.
[3] In his endorsement giving rise to the Order, Trimble J. prefaced his award of monthly spousal support and his finding as to the Respondent’s annual income with the words “For the purposes of this interim-interim order” and completed the substantive part of his Endorsement with the words “The foregoing shall remain in force until further order of the court or until altered by agreement”.
Analysis
[4] The grounds on which leave to appeal an interlocutory order are set out in sub-rule (4) of R.62.02, as follows:
Leave to appeal shall not be granted unless,
there is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or
there appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.
[5] Counsel for the Respondent (moving party) focuses her argument on the terms of sub-clause (b) of the sub-rule (4), viz
“…good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that … leave to appeal should be granted.”
[6] On the first branch of sub-clause (b) i.e. good reason to doubt the correctness of the order in question, counsel for the Respondent points out that Trimble J. in the Order made no provision for tax treatment of a retroactive support order. Counsel contends that the Income Tax Act does not permit a spousal support payor to deduct spousal support payments that were ordered retroactively but not previously paid in periodic amounts. Accordingly, where a court orders retroactive spousal support, it should factor in a notional income tax deduction for such payments.
[7] In support of this position, counsel cites Murray v. Murray, 2003 64299 (ON SC), [2003] O.J. No. 3350 S.C.J. In that case, Croll J. applied a notional tax rate to the retroactive spousal support lump sum award. She observed that
“…in the interest of fairness, it is important that the retroactive spousal support award be tax-neutral, that is, that it have roughly the same consequences for the parties as would have been the case had the support payments been made on a periodic basis during the years in question.”
See also Patton-Casse v. Casse, 2011 ONSC 4424.
[8] In response, counsel for the Applicant takes the position that the Respondent in his leave motion has failed to establish there is good reason to doubt the correctness of the decision (Order) and has not met the test of showing the decision is open to serious debate. To obtain leave to appeal an interlocutory order (decision) it is insufficient to show two courts have exercised their discretion to produce different results; it is necessary to show a difference in the principles chosen as a guide to the exercise of such discretion. See Judson v. Mitchelle, (2011) 2011 ONSC 6004, 108 O.R. (3d) 129, (SCJ); Ash v Corp of Lloyds, 1992 7652 (ON SC), [1992] O.J. No. 894 (Gen Div.); Comtrade Petroleum Inc. v. 490300 Ontario Ltd., (1992) 7 O.R. (3d) 592 (Gen Div.)
[9] The Applicant’s position on the failure of Trimble J. to consider the tax implications of a retroactive spousal support interim order is that such failure does not constitute a reason to doubt the correctness of the Order in that regard.
[10] In support of this position, counsel for the Applicant cites the case of Elgner v Elgner, 2010 ONSC 1578 (Div. Court).
[11] In Elgner, the Respondent moved for leave to appeal an interim order requiring him to pay retroactive spousal support, one of the grounds on the motion for leave being the motion judge failed to consider the tax implications of the retroactive spousal support order.
[12] Sachs J., hearing the motion for leave in dealing with the requirement that there be good reason to doubt the correctness of the Order, made the following findings:
first, Mr. Elgner never raised this tax issue before the motion judge even though it was clear that his wife was claiming retroactive interim support.
second, there is no evidence before this court that the retroactive spousal support order will not be deductible to Mr. Elgner.
third, the Ontario Court of Appeal has held that where there is a change in circumstances or evidence that is significant and may cause a change in the order, it should be raised by way of an application to the trial court to vary the order rather than on an appeal (Dumas v Dumas (1990), 1990 12337 (ON CA), 30 R.F.L. (3d) 127 (Ont. C.A.); C. (S.R.) v. S.(R.H.), 2009 ONCA 273 (Ont. C.A.)) see para 18
[13] It is appropriate at this point to note that the decisions in Murray and Patton-Casse were final decisions whereas the Order is interim. In this regard Sachs, J. referred to the holding nature of interim orders in the following terms:
It is important to note that an interim order does not in any way limit the discretion of the Trial Judge on a trial on the issue of support: (Burke v. Poste [1996] O.J. 2725 (Gen Div.)) A trial judge can, in effect, readjust the amount ordered, either upwards or downwards (see para 18).
[14] There is another aspect relating to the tax implications inherent in this motion for leave. In the course of argument, I directed counsel to supply me with the sections of the Income Tax Act, Income Tax Act Regulations and/or any Interpretation Bulletins issued by CRA that would support or give weight to the proposition that the Respondent would suffer unfair tax consequences, i.e. non-deductibility of retroactive spousal support payments prescribed in an interim order, as opposed to a final order.
[15] Both counsel have supplied me with a copy of s. 56.1 of the Income Tax Act dealing with the tax treatment of support payments. The section does not address the issue before this court; the discretion in the trial judge to adjust the amount of support upwards or downwards addresses the Respondent’s concerns regarding the tax treatment of the retroactive spousal support obligation under the Order.
[16] For the above reasons, I am not persuaded that:
- there is a conflicting decision by another judge or court in Ontario or elsewhere on the issue sought by the Respondent to be given leave to appeal;
or
- there appears to be good reason to doubt the correctness of the Order and the proposed appeal involves matters of such importance (general or public) transcending the interests of the parties.
[17] In the result, the Respondent’s motion for leave to appeal the Order is dismissed, with costs to the Appellant.
[18] If the parties are unable to agree on the quantum of costs, I will entertain written submissions, not to exceed 4 pages (exclusive of supporting materials) according to the following schedule:
By the Applicant, within 21 days from the date of this Endorsement;
By the Respondent, responding submissions, within 14 days from the date of receipt of the Applicant’s submissions; and
Reply, if any, by the Applicant, within 7 days of receipt of the responding submissions.
MacKenzie J.
DATE: MARCH 25, 2015
CITATION: Nella v Nella, 2015 ONSC 1898
COURT FILE NO.: FS-13-79281-00
DATE: 2015 03 25
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MacKENZIE J.
BETWEEN:
Nancy Ann Nella
Applicant
- and -
Antony Augustus Nella
Respondent
ENDORSEMENT
MacKenzie J
Released: March 25, 2015