CITATION: Silver v. Silver, 2015 ONSC 3816
DIVISIONAL COURT FILE NO.: DC-13-1938-0000
DATE: 2015-06-12
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
HEENEY R.S.J., LOFCHIK AND MATHESON JJ.
BETWEEN:
STEPHEN SILVER
Appellant
– and –
SIMI SILVER
Respondent
Richard Bowles, for the Appellant
Michael Rappaport, for the Respondent
HEARD: June 10, 2015 at Ottawa
The judgment of the Court was delivered by,
HEENEY R.S.J.:
[1] The Appellant appeals the decision of McLean J. delivered orally on June 3, 2013, dismissing his claim for spousal support. He also appeals the decision endorsed on July 24, 2013 which awarded no costs.
The Facts:
[2] The parties had a religious marriage ceremony on September 2, 1991, and a civil marriage ceremony on April 26, 1996. They separated in 2010. There are five children of the marriage.
[3] The Appellant is a self-employed mechanical engineer and the Respondent is a self-employed dentist.
[4] At the time of trial the following issues were in dispute:
custody and access to the children;
child support;
division of net family property;
spousal support; and,
costs.
[5] The trial lasted 8 days. On June 3, 2013, the trial judge awarded joint custody to both parties, with the children’s primary residence to be with the Respondent, and the Appellant having access. The Appellant was ordered to pay child support in the amount of $1,750 per month based on an annual income of $60,000, commencing June 3, 2013. The Appellant was also ordered to pay 26% of s. 7 expenses.
[6] The Respondent was ordered to pay an equalization payment of $493,000 to the Appellant. Additional joint property was to be divided or transferred in kind, but otherwise would be sold in the normal course with directions to be given by the Master.
[7] Then-counsel for the Respondent, Ms. Marshall, asked that the equalization payment be made payable over ten years. The trial judge’s initial reaction was that it should be payable immediately, but he sought submissions from then-counsel for the Appellant, Mr. Sullivan. Mr. Sullivan stated that the Act permits the court to extend payment for up to ten years, but made no other submissions opposing such an order. The trial judge acceded to the request, and ordered that the equalization payment be paid within ten years.
[8] As to the Appellant’s claim for spousal support, the trial judge quoted the objectives for a spousal support order as set out in s. 15.2(6) of the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.). The trial judge stated that, considering the Appellant’s capital property, equalization payment, educational background, and the fact that he was paid for the work he did in the Respondent’s dental practice, he was not satisfied, on a balance of probabilities, that support was applicable, and dismissed the claim.
[9] As to costs, a one-line endorsement was made by the trial judge on July 24, 2013 following written submissions, which reads: “results were mixed, no costs”.
Standard of Review:
[10] The Supreme Court in Housen v. Nikolaisen, [2002] 2 S.C.R. 253 established that pure questions of law are to be reviewed on a correctness standard. Questions of fact are entitled to a high level of deference, requiring that a palpable and overriding error be demonstrated. Questions of mixed fact and law fall on a spectrum: if the questions of fact and law cannot be separated, the “palpable and overriding error” standard applies unless it is clear that the trial judge made some error of law or principle that can be identified independently, but correctness applies if the question of law is extricable.
[11] In the support context, the parties agree that the appropriate standard of review is set out in Hickey v. Hickey, 1999 691 (SCC), [1999] 2 S.C.R. 518. Appellate courts must give considerable deference to the findings of trial judges, and should only intervene if there is a “material error, serious misapprehension of the evidence, or an error in law”, and not simply because it would have weighed factors differently.
The Spousal Support Issue:
[12] The trial judge dealt with the Appellant’s claim that he was entitled to spousal support on a compensatory basis. The Appellant had argued that he helped with his wife’s education through dental school, and helped both physically and financially in setting up her dental practice. However, the trial judge noted that the Appellant was paid for the work he did for the dental practice. Accordingly, he concluded that “the court is of the view that his contribution was taken care of by receiving that salary”.
[13] The trial judge considered the capital position of the Appellant. He noted that he has a 1/3 interest in a cottage property on Lake Rosseau in Muskoka. This interest had been inherited by the Appellant prior to the marriage, and had a valuation date value of $300,000. Title is held through a corporation, and the other two owners are his siblings. The Respondent had argued that it was a matrimonial home but was unsuccessful, and as a result the Appellant was entitled to a date-of-marriage credit for it. The evidence was that, while it was rented almost continuously during the warm weather months, all of the rent was plowed back into the property by way of upkeep and taxes, so that the Appellant did not earn any actual income from it. Nevertheless, the trial judge concluded that this extremely valuable property carried great potential for capital appreciation.
[14] The trial judge noted that the Appellant will be the recipient of an equalization payment of approximately $493,000, which will also be a substantial capital benefit to him.
[15] He noted that the Appellant has a Master’s degree in mechanical engineering, and is currently employed with a control device company dealing with water treatment and related control mechanisms. He stated that the Applicant had, over the history of the marriage, been involved in a large number of enterprises with respect to various business interests, some of them successful, some less so, but held that it is clear that the Appellant has “a great capability to amassing a suitable salary”.
[16] The court concluded as follows:
The court finds therefore that, with the capital available to him with his economic background, such as his Master’s degree in mechanical engineering and also the fact that, with respect to the setting up of the dental practice of his wife, that he was for a period of time an employee, such that he received a stipend for that work. Therefore the court is of the view that his contribution was taken care of by receiving that salary.
So, for those reasons, the court is not satisfied on a balance of probabilities that support for Mr. Silver is applicable on these facts.
[17] The concept of compensatory support arises from a consideration of the economic advantages or disadvantages arising from the marriage or its breakdown, as set out in s. 15.2(6)(a) of the Act. No reversible error is evident in the trial judge’s findings in that regard. Not only was the Appellant paid for the work he did for the dental practice, but the value of the dental practice represented the largest single item in the net family property calculation, which led to an equalization payment to the Appellant of almost half a million dollars. We find no basis to interfere with the trial judge’s finding that the Appellant had already been compensated for his contribution to the dental practice, such that it did not form the basis for an award of spousal support.
[18] With respect to needs-based support, the trial judge considered the Appellant’s interest in the Muskoka property. While it is correct that the property represents a valuable asset, it was not producing any income that could contribute to the Appellant’s support. However, it could presumably be sold by the Appellant and converted into an income-producing asset at some point in time.
[19] The trial judge also appropriately considered that the Appellant is accruing a capital benefit in the jointly-owned rooming house. At the time of trial, he was receiving rent of $5,000 per year from that asset. It is one of the joint assets that has now been sold under the direction of the Master, although we are told that the proceeds are being held in trust.
[20] In considering the Appellant’s capacity to earn income, the trial judge concluded that, from his education and background, he had a “great capability” to earn a suitable salary. However, counsel were unable to point to anywhere in the record that the Appellant’s historical earnings from his business enterprises were put into evidence. There were, therefore, no historical benchmarks to indicate what he was capable of earning.
[21] The trial judge correctly observed that the Appellant would be receiving the substantial capital benefit of the equalization payment of $493,000. This asset could normally be invested to generate income to contribute toward the Appellant’s own support. However, in making his final endorsement it was ordered that this payment did not have to be paid for ten years. It is, therefore, an error to treat this as an asset that could contribute to the support of the Appellant. As it stands, the payment earns post-judgment interest at 3% per annum, which I am advised amounts to only about $14,000 per year.
[22] Conspicuous by its absence is any mention of the current income of the parties, or any discussion of the economic hardship that the Appellant has experienced from the breakdown of the marriage, and the consequential loss of access to the income stream generated by the Respondent’s dental practice.
[23] The Appellant’s income at the time of trial was agreed to be $60,000 per year. The Respondent’s income was agreed to be $172,664. Over the 18-year duration of the marriage, the Appellant would have benefitted from the parties joint incomes, and would have suffered a substantial decrease in his standard of living as a result of the breakdown of the marriage. Such a large difference in the income of the spouses cries out for an award of spousal support, and even more so when one factors in the impact of the child support order.
[24] It is now well-established that the Spousal Support Advisory Guidelines are a useful tool in assessing the quantum and duration of spousal support, and should be “routinely consulted”: Gray v. Gray, 2014 ONCA 659 at para. 44. While the trial judge noted that SSAGs calculations had been filed, he made no reference to them. While the SSAGs do not determine entitlement to support, they are a useful tool to assist the court in tackling that issue, because they calculate the net disposable income (NDI) available to each party on various scenarios, including the scenario where no spousal support is paid. Had they been consulted, it would have been abundantly clear that the Appellant was in need of spousal support.
[25] Counsel have been able to reconstruct the SSAGs calculations that were put before the court. In addition to inputting the income figures of the parties as noted above, the Divorcemate calculation also reflects the fact that the Appellant must pay child support of $1,750 out of after-tax earnings. Furthermore, the Appellant must pay his pro-rata share of s. 7 expenses. Since the oldest child is now at university, a figure of $20,000 was used in that regard.
[26] The calculation reveals that if no spousal support is paid, the Respondent will end up with 86.4% of the total NDI available to the parties, amounting to $10,143 per month. The Appellant will receive only 13.6% of the NDI, in the amount of $1,603 per month. Clearly, that is far below the amount he requires to provide for his own needs. Equally, $10,143 per month is far in excess of what the Respondent reasonably requires, even given the fact that the four youngest children reside with her.
[27] In our view, the trial judge wholly failed to conduct an analysis of the means and needs of the parties, and the impact of the child support order on the ability of the Appellant to provide for his own support. Such a failure amounts to an error of law, such that the order dismissing the Appellant’s spousal support claim must be set aside. We are satisfied that he is entitled to spousal support on the basis of need.
[28] This gives rise to the question as to whether we should fix the amount of support to be paid, or order a new trial.
[29] In Gray at para. 24, Lauwers J.A., made the following comment:
In the circumstances, using the logic of Lang J.A. in Cassidy v. McNeil, 2010 ONCA 218, 99 O.R. (3d) 81, at para. 39, in my view"the record is sufficient to permit this court to arrive at an appropriate result without the need to order a new trial with its resulting costs and delay."
[30] Here, the record before us is lacking, in that the Financial Statements of the parties have not been included. However, we have been invited by counsel for the Appellant to fix spousal support based on the SSAGs. We are inclined to accept that invitation, for several reasons. First, the parties have already expended enormous resources conducting an eight day trial. This has been followed by further expenditures on this appeal, as well as frequent and lengthy appearances before other judges and masters dealing with the sale and division of their jointly-owned property. Furthermore, as will be seen below, the order we make will very likely be in effect for a fairly short period of time until it is varied. For all of these reasons, we are reluctant to require the parties to return to a trial court to litigate this issue again.
[31] The SSAGs calculation filed on this appeal, based on the figures noted above, suggest a range of spousal support from a low of $877/m to a high of $1,169/m, with a mid-point of $1,023/m. Counsel for the Appellant asked that we fix support at the mid-point.
[32] However, that would fail to take account of the income accruing to the Appellant of $14,000 per year in post-judgment interest. A good argument could also be made for imputing income to the Appellant from his other assets. He is, at present, sitting on net worth of approximately $1 million. Approximately half of that is his equalization payment. $300,000 of that is tied up in his interest in the Muskoka property. Since it is not actually generating any income for the Appellant, we are not considering it for purposes of fixing support as of the date of trial. However, the Appellant is not entitled to tie up his money in an asset that produces no income, while demanding that the Appellant contribute to his support. His duty to become self-supporting requires that he convert that asset into one that generates income. If he fails to do so within a reasonable time, it would be open to the Respondent to argue that income should be attributed to him and that support should be varied accordingly.
[33] The other main assets that make up his net worth are the rental property and the matrimonial home. Rent of $5,000 from the rental property is already accounted for in the annual income figure of $60,000, so no additional income should be attributed to that asset in fixing support as of the date of trial. That asset and the matrimonial home have, as already noted, been sold but the parties are still fighting about what to do with the money. Once the Appellant receives his entitlement, that money will be available for investment so as to contribute to his own support. However, that would be relevant to a motion to change, not to the quantum of support that should have been ordered at trial.
[34] I have reproduced counsel’s Divorcemate calculation, similarly using a 2013 tax year. After adding $14,000 in interest or other investment income to the Appellant’s income, the SSAGs generate the following range of spousal support: low - $687/m; mid - $802/m; high - $916/m. In our view, the mid-range is appropriate.
[35] The appeal is allowed and an order will go that the Respondent pay spousal support to the Appellant in the amount of $800 per month. The commencement date will be January 1, 2015, in order to avoid the parties having to re-file their income tax returns. Entitlement, however, begins on the first day of the month following the judgment, which is July 1, 2013. We accede to counsel’s suggestion that arrears of support be dealt with by way of a lump sum.
[36] The after tax benefit to the Appellant of this award is approximately $529/m, while the after tax cost to the Respondent is approximately $430/m. The average of those two figures is $480/m. Multiplying that figure by 18 months to cover the period from July 1, 2013 to the end of December, 2014, amounts to $8,640. It is ordered that the Respondent pay lump sum support to the Appellant in that amount.
Costs:
[37] An order as to costs is a matter within the discretion of the trial judge, and is entitled to a great deal of deference. An appellate court should not intervene absent an error in principle.
[38] It is not an error in principle to award no costs where success is divided. Accordingly, we would not have been disposed to intervene on this issue, but for the fact that the degree to which success was divided has now been changed by the result in this appeal.
[39] Success can be determined by examining the positions taken at trial and offers to settle that have been exchanged. Both counsel concede that no offers were made by either party that met or exceeded the result at trial on all issues, but the offers do indicate which party was closer to the result.
[40] The Appellant had sought sole or joint custody, but wanted care and control of the children half of the time. The Respondent had sought sole custody, but instead received joint custody. However, she did receive primary care and control of the children, while the Appellant received access only. In our view, the Respondent was successful on the custody issue.
[41] The Respondent also recovered an order for child support and s. 7 expenses. Much was made in the Appellant’s factum about the Appellant succeeding on how special expenses were to be apportioned, but it is clear from a review of the transcript that counsel for the Respondent merely made a mathematical error in her initial calculations.
[42] The Respondent was successful at trial on the spousal support issue, but is now unsuccessful as a result of the appeal.
[43] As to property division, the Appellant had offered to accept an equalization payment of $505,000, while the Respondent’s proposal was $333,000. Clearly, the Appellant was much closer to the mark. It appears that the difference is largely due to the Appellant’s success on the issue as to whether the Muskoka cottage was a matrimonial home, which entitled him to claim a date-of-marriage credit. Thus, this counts as one area of success, not two.
[44] Softening the sweetness of that victory, though, is the Respondent’s success in having payment of the equalization payment deferred for up to ten years.
[45] On balance we conclude that, while success was divided, the Appellant was more successful than the Respondent, and is entitled to some costs. He has claimed substantial indemnity costs of $171,147 in his Supplementary Notice of Appeal. It is difficult to determine where that wildly disproportionate and excessive figure came from, particularly since the Bill of Costs dated July 3, 2013, which was submitted by his then-counsel, claimed partial indemnity costs of $32,143.28, substantial indemnity costs of $41,141.92 or full indemnity costs of $50,140.56.
[46] Having regard to that Bill of Costs, and recognizing that success was divided and that costs are being awarded only to recognize that the Appellant was somewhat more successful than the Respondent, the appeal as to costs is allowed, and the Appellant shall be awarded his costs at trial fixed at $15,000, all inclusive.
[47] Costs of the appeal are awarded to the Appellant fixed at the agreed-upon figure of $15,000 all inclusive.
T. Heeney R.S.J.
T. Lofchik J.
W. Matheson J.
Released: June 9, 2015
CITATION: Silver v. Silver, 2015 ONSC 3816
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
HEENEY R.S.J., LOFCHIK AND MATHESON JJ.
BETWEEN:
STEPHEN SILVER
Appellant
– and –
SIMI SILVER
Respondent
REASONS FOR JUDGMENT ON APPEAL
Released: June 12, 2015