Court of Appeal for Ontario
Date: September 10, 2019
Docket: C63245 & C64550
Judges: Hoy A.C.J.O., Trotter and Jamal JJ.A.
Between
Robert Gerrard Anthony Faiello Applicant (Appellant/Respondent by way of cross-appeal)
and
Patricia Faiello (aka Patricia Greco) Respondent (Respondent/Appellant by way of cross-appeal)
Counsel
Gary S. Joseph and Kristy A. Maurina, for the appellant/respondent by way of cross-appeal
Michael Freeman, for the respondent/appellant by way of cross-appeal
Heard: July 17, 2019
On Appeal
On appeal from the orders of Justice Sutherland of the Superior Court of Justice, dated December 16, 2016, with reasons reported at 2016 ONSC 7950, October 13, 2017, with reasons reported at 2017 ONSC 6120, and July 17, 2018, with reasons reported at 2018 ONSC 4385.
Hoy A.C.J.O.:
A. Overview
[1] This appeal and cross-appeal arise from a decision to award spousal support in the face of a support waiver in the parties' Separation Agreement (the "Agreement"), but to honour the Agreement's provisions in relation to property. The trial judge concluded that there was no basis to set aside the Agreement under s. 56(4) of the Family Law Act, R.S.O. 1990 c. F.3 ("FLA"). Applying Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303, however, he found that it was nevertheless appropriate to order some support payable to the father because the spousal support waiver did not substantially comply with the objectives of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), as amended ("DA").
[2] The father appeals from the trial judge's order that the Agreement's provisions in relation to property remain of full force and effect. The mother cross-appeals from his order awarding the father spousal support, arguing that the Agreement should be honoured in its entirety. The father also seeks leave to appeal from the trial judge's order on costs.
[3] For the reasons that follow, I would dismiss both the father's appeal and the mother's cross-appeal and deny the father leave to appeal the trial judge's order on costs.
B. Background
[4] The parties separated on December 31, 2008, after an 18-year marriage and 26-year relationship, and executed the Agreement on January 21, 2009. A lawyer the father was involved in choosing drafted the Agreement, but the father did not receive independent legal advice.
[5] Pursuant to the Agreement, the father was responsible for a significantly greater portion of the substantial debt accumulated by the parties during their marriage and released any interest in the matrimonial home. Because of this, the parties agreed the father would not be responsible for child support for their two children, now in their twenties (born in 1993 and 1995), who continued to live in the matrimonial home with the mother.
[6] By the time of separation, the parties had separate investment accounts. Under the Agreement, each retained his or her own investments.
[7] The father's investments had not performed well. Under the Agreement, the father assumed responsibility for debts the total of which exceeded his assets by over $500,000. The mother, on the other hand, had net assets worth over one million dollars, including the matrimonial home that she valued at $770,000 at the time of the Agreement.[1]
[8] Although historically, the parties had been self-supporting and the father had earned a significant income, his Investment Dealers Association of Canada registration was suspended and he was unemployed at the time the parties executed the Agreement. The parties released all rights to spousal support. The father also agreed to vacate the matrimonial home within 30 days.
[9] Within a year of executing the Agreement, the father stopped paying the joint debts he had agreed to assume (lines of credit identified in the Agreement as in the amounts of $169,000, $49,000, and $128,000). The mother, who had already assumed the mortgage debt on the matrimonial home in the amount of $315,000 under the Agreement, assumed responsibility for these additional debts. In the result, the mother ended up assuming financial responsibility for both children and over half of the parties' accumulated net debt at the date of separation.
[10] The father never became gainfully re-employed. He ultimately settled his debt to the Bank of Montreal ("BMO"), indicated in the Agreement as being in the amount of $600,000, for $20,000.
[11] Thereafter, on January 3, 2012, the father started an application challenging the validity of the Agreement and seeking an equalization payment. He later amended his application to also seek lump sum spousal support under s. 15.2 of the DA. After a six-day trial, the trial judge concluded that there was no basis to set aside the Agreement under the FLA, but that the Miglin analysis justified an order under s. 15.2 of the DA for spousal support. He ordered the mother to pay the father lump sum spousal support in the amount of $143,933.
C. Issues
[12] The appeal and cross-appeal raise the following issues:
Did the trial judge err in not setting aside the Agreement in its entirety under s. 56(4) of the FLA?
Did the trial judge err in ordering spousal support in the face of the spousal support waiver?
If spousal support were warranted, did the trial judge err in calculating the amount of spousal support?
Should the father be granted leave to appeal the trial judge's costs order?
[13] Before turning to the issues raised by the parties, it is helpful to briefly set out the relevant legal context.
D. The Legal Context
[14] Where a married or formerly married spouse seeks spousal support in the face of a separation agreement waiving such support, either or both of two statutes may be engaged: the provincial FLA, which addresses domestic contracts as a provincial property and civil rights matter; and the federal DA, which confers authority on the court to award support as corollary relief to a divorce: Myers v. Hawco, 2005 NLCA 74, 252 Nfld & PEIR 121, at para. 15; Zimmerman v. Shannon, 2006 BCCA 499, 62 B.C.L.R. (4th) 255, at para. 36.
[15] Where a spouse seeks to set aside provisions in a separation agreement regarding the spouses' property, s. 56(4) of the FLA is engaged. Section 56(4) of the FLA provides that,
A court may, on application, set aside a domestic contract or a provision in it,
(a) if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;
(b) if a party did not understand the nature or consequences of the domestic contract; or
(c) otherwise in accordance with the law of contract.[2]
[16] The DA, for its part, does not confer authority to set aside agreements per se, but does confer authority to make spousal support orders as corollary relief to a divorce. Under s. 15.2 of the DA, as interpreted in Miglin, a valid separation agreement is but one factor to consider in determining whether the court should exercise its authority to award corollary spousal support:
15.2 (1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse.
(4) In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including
(a) the length of time the spouses cohabited;
(b) the functions performed by each spouse during cohabitation; and
(c) any order, agreement or arrangement relating to support of either spouse.
[17] Section 56(4) of the FLA deals with intrinsic flaws in the formation of a contract that nullify the apparent consent between the parties and invalidate the agreement, allowing a court to set aside the contract. Section 15.2 of the DA permits a court, looking at both the formation of the contract and all the circumstances at the time of the application, to override the support provisions of an agreement and order support contrary to the agreement: see James McLeod's annotation on Murray v. Murray (2003), 66 O.R. (3d) 540 (S.C.) (W.L.), rev'd (2005), 79 O.R. (3d) 147 (C.A.).[3]
[18] In this case, since the father sought relief under both the FLA and the DA, the trial judge appropriately conducted both analyses.
[19] While the trial judge's analysis could perhaps have been conceptually clearer, as I will discuss in greater detail below, I see no reversible error in the trial judge's application of the analyses to the facts of this case.
E. Issue 1: Section 56(4) of the FLA
(1) The Trial Judge's Reasons
[20] In his application, the father invoked s. 56(4) of the FLA. Accordingly, the burden was on him to show that there were grounds to set aside the Agreement: Doughtery v. Doughtery, 2008 ONCA 302, 89 O.R. (3d) 760, at para. 11. Even if a party satisfies one of the criteria in s. 56(4), the contract is not automatically a nullity. The trial judge must still determine whether it is appropriate, in the circumstances, to set the contract aside: LeVan v. LeVan, 2008 ONCA 388, 90 O.R. (3d) 1, at para. 33.
[21] As discussed below, the trial judge rejected the father's arguments that the mother had failed to disclose significant assets, that the father did not understand the nature or consequences of the Agreement, and that the Agreement should be set aside under the law of contract as unconscionable. The trial judge also concluded that even if he had found that the father had satisfied one of the criteria in s. 56(4), he would not have exercised his discretion to set the Agreement aside.
[22] The father was the sole debtor to BMO for approximately $600,000, secured by his stock portfolio with a then-net-worth of $100,000. The father brought his application only after he was able to settle that debt with BMO for $20,000.
[23] The trial judge wrote, at 2016 ONSC 7950[4] (the "2016 decision"), at para. 81:
This sequence of events, in the mind of this court, brings into doubt the equities of this court exercising its discretion in favour of the [father]. Again, it seems to this court that the [father] knew very well what he was doing and when to do it.
(2) Analysis
[24] In his appeal, the father argues that the trial judge made three errors in finding that the father had not satisfied any of the criteria in s. 56(4). As I will explain, I am not satisfied that the trial judge made any errors in so finding. As indicated above, the trial judge was clear that even if he had found that the father had satisfied one of the criteria in s. 56(4), he would not have exercised his discretion to set the Agreement aside. In all of the circumstances, that would have constituted a reasonable exercise of discretion.
(i) Mother's Failure to Disclose Significant Assets
[25] The first argument the father makes is that the trial judge made a palpable and overriding factual error in finding that the mother had not failed to disclose significant assets or debts to the father when the Agreement was made even though she did not include the value of her business (between $77,000 and $154,000) and her jewelry ($6,380) on her unsworn financial statement.
[26] The trial judge accepted the mother's evidence that the parties sat down at the kitchen table and discussed how to complete their financial statements. The father was a trained accountant and investment advisor who did very well financially. The mother was a chartered accountant. The trial judge found that the father was aware of the mother's business, which was a "flow through company that did not have significant assets or retained earnings" and was used for income and tax advantages: 2016 decision, at para. 30. And he knew the mother had jewelry.
[27] The trial judge wrote, at para. 29 of the 2016 decision:
I find that the [father] was aware of the financial information of the [mother]. He was aware of her assets and debts. He did not seek further information on the values because he made the decision, I find, that he did not require the values due to his knowledge.
[28] Further, he found that the values of her business and of her jewelry were not sufficiently significant to warrant setting aside the Agreement.
[29] In the result, he concluded that the father had not satisfied him that the mother failed to disclose significant assets when the Agreement was executed. I am not persuaded that there is any basis to interfere with the trial judge's conclusion.
(ii) Father's Understanding of the Nature and of the Consequences of the Agreement
[30] Second, in his oral submissions, the father argues that the trial judge erred in law by failing to engage in the disjunctive analysis required by s. 56(4)(b) of the FLA to consider whether the father did not understand either the nature or the consequences of the Agreement. Rather, the father argues that the trial judge throughout his reasons refers to the "nature and consequences" of the Agreement, indicating that he treated "nature and consequences" as a single requirement and did not ascribe separate and distinct meaning to "nature" first, and "consequences", second. "Nature", he says, relates to a failure to understand the fundamental nature of the Agreement, whereas "consequences" relates to a failure to understand the effect or impact of the Agreement. He refers to Grant-Hose v. Grant-Hose (1991), 32 R.F.L. (3d) 26 (U.F.C.), at para. 34, for this proposition.
[31] I reject this argument.
[32] In his factum, the father, like the trial judge, uses conjunctive language. At para. 65 of his factum, he describes the test as "whether [the father] understood the nature and consequences of the Agreement".
[33] The father's evidence, and his argument at trial, was that his mental or emotional state at the time he executed the Agreement was such that he could understand neither the nature nor the consequences of the Agreement. The trial judge's focus was, therefore, appropriately on the father's mental or emotional state at the time that he executed the Agreement. The trial judge was also alive to the different meanings inherent in the words "nature" and "consequences". At para. 44 of the 2016 decision, after acknowledging the father's position, the trial judge wrote:
To determine if the applicant did not understand the nature and consequences of the Agreement, the court must examine the circumstances at the time of the execution of the Agreement to conclude whether or not the applicant understood the fundamental nature of the Agreement and the effect or impact of the terms of the Agreement.
[34] In this paragraph, the trial judge explicitly articulates the very definitions the father now argues must be considered. The trial judge's use of the phrase "nature and consequences" conjunctively was entirely understandable in articulating that he was not persuaded that the father failed to understand either of these.
[35] I see no merit in the father's argument on this point.
(iii) Unconscionability of the Agreement
[36] Finally, the father argues that, in concluding that the Agreement was not unconscionable, the trial judge failed to properly consider the lack of substantive (as opposed to procedural) integrity of the Agreement, as it related to the father's rights under the relevant legislation.
[37] Again, I am not persuaded that there is any basis for this court to interfere with the trial judge's conclusion that the Agreement was not unconscionable.
[38] The father does not take issue with the trial judge's findings about the circumstances of the negotiation and execution of the Agreement, including that: the use of the lawyer to prepare the Agreement was the father's idea; the father could have obtained independent legal advice had he so wished; and the mother did not prey upon the father or take advantage of him.
[39] Moreover, contrary to the father's submission, the trial judge considered the substantive effect of the Agreement on the parties' rights to equalization under the FLA. He noted that, at first blush, the Agreement seemed improvident because the assets of the marriage stayed mainly with the mother while the father agreed to pay the parties' joint debts (other than the mortgage) and his debt to BMO in the amount of $600,000: 2016 decision, at paras. 70–72. He went on to observe that while the father did not receive spousal support, he received a significant benefit under the Agreement in the form of the release from any requirement to pay child support.[5],[6]
[40] The trial judge then engaged in a contextual assessment of the circumstances. He considered that at the time the Agreement was executed, the father was being investigated by the Ontario Securities Commission, there was a possibility of claims against him from his clients, and he owed BMO $600,000. Further, the father testified that he wanted to protect the welfare, financial and otherwise, of his children: 2016 decision, at paras. 72–74.
[41] These considerations all pointed to an entirely rational decision to place assets in the mother's hands, where the parties' children, rather than the father's creditors, could benefit from them. The trial judge found, and the record supports that, in this way, the decision to give the parties' most valuable assets to the mother ensured that both parties got "exactly what they both wanted": 2016 decision, at para. 74.
[42] The trial judge concluded that, in all these circumstances, the Agreement did not rise to the level of unconscionability.
[43] That finding was supported by the record and I see no reason to interfere.
F. Issue 2: Section 15.2 of the DA
(1) The Miglin Test
[44] Miglin articulates a two-stage inquiry in the face of an application for spousal support that is inconsistent with a pre-existing agreement between the parties. The first stage looks at the time the agreement was formed. The second considers all the circumstances at the time of the application.
[45] At the first stage, the court must look at two things. First, it must consider "the circumstances in which the agreement was negotiated and executed to determine whether there is any reason to discount it": Miglin, at para. 80. Circumstances less than "unconscionability" may be relevant, but a court should not presume an imbalance of power.
[46] Second, once satisfied that there is no reason to discount an agreement due to conditions under which it was negotiated, the court must then inquire whether the substance of the agreement substantially complies with the overall objectives of the DA. Here, the court must look at the agreement in its totality, bearing in mind that all aspects of the arrangement are inextricably linked and that the parties have a large discretion in establishing priorities and goals for themselves: Miglin, at para. 84. If the court is satisfied that the circumstances under which the agreement was negotiated were satisfactory and the agreement was in substantial compliance with the general objectives of the DA at the time of creation, the court should defer to the parties' wishes and give the agreement great weight: Miglin, at para. 87.
[47] The second stage of the inquiry focuses on the circumstances surrounding the agreement at the time of the application for spousal support. If, and only if, the circumstances at the time of the application represent a significant departure from the range of reasonable outcomes anticipated by the parties, in a manner that puts them at odds with the objectives of the DA, the court may be persuaded to give the agreement little weight: Miglin, at para. 91.
(2) The Trial Judge's Reasons
[48] In this case, the trial judge applied Miglin's two-stage inquiry.
[49] As discussed above, he was persuaded that the circumstances under which the Agreement was negotiated and executed were satisfactory.
[50] At the second step of the first inquiry under Miglin, however, he concluded that the release of spousal support did not substantially adhere to the factors and objectives of the DA: see 2016 decision, at para. 98.
[51] The trial judge found that the father "gave up his division of the assets accumulated during the 18-year marriage": 2016 decision, at para. 93. He did so willingly, but the waiver of spousal support did not comply with ss. (a), (c) and (d) of s. 15.2(6) of the DA.
[52] Those provisions provide as follows:
An order … that provides for the support of a spouse should
(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
[53] The trial judge found that the Agreement was predicated, to a certain extent, on the father's confidence in achieving what was written on his unsworn financial statement at the time of the Agreement – "Pay off all debts and achieve financial independence": 2016 decision, at para. 28.
[54] The trial judge found that it was improbable that the father would be able to support himself without some support from the mother. Further, the trial judge found that the mother was well aware that the father did not have the financial means to pay the debts that he had agreed to pay. However, the mother did. She was making a substantial income and had retained the assets. The trial judge also found that the Agreement did not provide relief of economic hardship for the father or for the father's ability to become self-sufficient. Given these circumstances, the Agreement did not substantially adhere to the factors and objectives of the DA.
[55] The trial judge then turned to the second inquiry under Miglin and considered the circumstances at the time of the application. He found that there was a change in the circumstances of the parties from the time of the execution of the Agreement. The parties anticipated that the father would be able to become self-sufficient given his ability to earn income in the past. He had not become self-sufficient. In the trial judge's view, neither party really considered the ramifications of the termination of the father's career as an investment advisor at RBC Dominion Securities ("RBCDS").
[56] In the result, the trial judge found that, in addition to the Agreement's lack of substantial adherence to the factors and objectives of the DA, the circumstances at the time of the application warranted overriding the father's waiver of spousal support in the Agreement. He awarded the father a relatively modest lump sum amount of support.
(3) The Mother's Position
[57] The mother argues that the trial judge erred in law by failing to give due consideration to whether the father's economic disadvantage actually arose from the marriage or its breakdown. She argues it arose from financial decisions (including borrowing money to fund his investments and engaging in trading activity that by his own admission was "super-super-risky") and employment decisions he made before and after separation, and, had the trial judge properly considered whether the father's economic hardship arose from the marriage or its breakdown, the trial judge would have found that the Agreement complied with ss. 15.2(a) and (c) and was in substantial compliance with the DA at the time of its creation.
[58] The mother also argues that the trial judge's finding that the Agreement did not promote economic self-sufficiency within a reasonable time was plainly wrong. As the father notes in his pleadings, RBCDS terminated his employment more than 15 months before the parties entered into the Agreement. The father already had time to find employment. No period of transition was necessary. Further, the trial judge found that the father believed that his investments would come around and he did not need to work: 2017 decision, at para. 47. The mother argues that a provision for support would have encouraged him to continue to gamble on his financial future and diminished his incentive to become self-supporting.
[59] Finally, the mother argues that there was no "significant departure from the range of reasonable outcomes anticipated by the parties", as required by Miglin, at para. 91, except that the mother had assumed more than $300,000 of joint debt that the father had agreed to pay. In essence, she argues that the trial judge failed to consider all of the circumstances surrounding the Agreement at the time of the application, as Miglin requires, at para. 64.
(4) Analysis
[60] I am not persuaded that there is a basis to interfere with the trial judge's decision. He engaged in the appropriate two-stage inquiry under Miglin. It was open to him on this record to conclude that the spousal support waiver did not meet the objectives of ss. 15.2(6)(a) and (c) of the DA at the time it was made. It was also open to him to conclude that the circumstances at the time of the application departed significantly enough from the parties' original intention to warrant a modest lump sum spousal support award.[7]
[61] As noted above, the father's Investment Dealers Association of Canada registration was suspended, and he was unemployed at the time the parties entered into the Agreement. The Agreement required him to vacate the matrimonial home within 30 days. As a result of the breakdown of the marriage, he lost a place to live, which had been provided to him at the mother's expense. The trial judge's finding that the father suffered economic hardship as a result of the breakdown of the marriage is supported by the record.
[62] At the time of the application, the father was still unemployed and did not yet have his own living space. He testified at trial that, since signing the Agreement, he spent time sleeping on the floor of a stock room, followed by living with his sister and then with his parents. The father's actual income in the year prior to the commencement of his application was slightly less than $52,000, roughly $39,000 of which was income from RRSPs according to his 2011 Income Tax Return. While he had reduced his debt to BMO from some $600,000 to only $20,000, that was significantly more than his income from sources other than RRSPs that year.
[63] While it was open to the trial judge to attribute all these circumstances exclusively to the father's own poor decisions and intentional under-employment, after hearing evidence from both parties, that was not his conclusion. Instead, the trial judge attributed some of this misfortune to the breakdown of the marriage and also viewed the father's circumstances at the time of the application as a sufficient departure from what the parties had originally intended to warrant the award of some support.
[64] It is not the role of this court to interfere with such fact-driven conclusions.
G. Issue 3: Calculation of Spousal Support
(1) The Trial Judge's Reasons
[65] Having concluded that, under the Miglin test, the spousal support waiver should not be given much weight, the trial judge went on to consider whether and how much support to award. The trial judge found that the age of the parties, the father's need for support, and the mother's means to pay support made it clear to him that the father was entitled to spousal support: 2016 decision, at para. 112.
[66] He concluded that, because the father's claim for spousal support was not compensatory, a fair and reasonable period of transition to alleviate the economic disadvantage from the breakdown of the marriage and to encourage the father to complete his transition to self-sufficiency was a period of eight years: 2017 decision, at paras. 65, 66.
[67] He accepted that the father would not have been able to make substantial income for the first three years after separation due to the lawsuits and the termination of his employment and did not impute any income to him for those years: 2017 decision, at paras. 69, 70. However, he concluded that, commencing January 1, 2011, the father was under-employed and should have been able to earn an income more in line with his education and experience: 2017 decision, at para. 71.
[68] He imputed income to the father for the remaining five years of the eight-year period, having regard to the father's age, his education, his work experience, his entrepreneurial spirit, his testimony that he believes his income will shortly be $150,000, and the mother's income: 2017 decision, at para. 72. He then calculated lump sum spousal support on a "custodial payor" basis, using the mid-point calculation of the Spousal Support Advisory Guidelines ("SSAGs") for the first three years, and the low-point calculation for the remaining five years.
[69] The trial judge rejected the mother's argument that in the calculation of lump sum spousal support she should be given credit for paying the lines of credit the father had agreed to be responsible for under the Agreement and had failed to pay.
[70] The trial judge found that the father stopped paying the lines of credit in October 2009 and the mother assumed responsibility for them in November 2009. In order to have a lower interest rate, she increased the mortgage on the former matrimonial home and paid the lines of credit: 2017 decision, at para. 87.
[71] However, he found that the mother's claim against the father on these lines of credit was statute-barred: 2017 decision, at para. 91. The father had stopped paying the lines of credit in October 2009 and she had not claimed against the father for his failure to pay the lines of credit until she amended her Answer in June 2013, after he amended his application. In addition, the trial judge found that "given the lack of evidence on the amount owed at the time of the breach by the [father] or the amount the [mother] included in her mortgage, the court cannot determine the amount the [mother] seeks": 2017 decision, at para. 92.
[72] The trial judge ordered the mother to pay the father a lump sum spousal support payment representing her obligation to pay spousal support to the father from the date of separation to December 31, 2015 in the amount of $143,933.
(2) Positions of the Parties
[73] The mother argues that the trial judge erred by failing to decrease the award to reflect the mother's assumption of the joint debt that the father had agreed to pay; failing to consider the father's delay in bringing his application; imputing too low an income to the father having regard to his reasonable earning capacity; and providing for too long a period of support.
[74] The father argues that the trial judge erred in calculating support on a "custodial payor" basis, given that the trial judge accepted that the father had met his obligation to pay basic child support by waiving his claim for an equalization payment: 2017 decision, at paras. 35, 36.
[75] He also argues that the trial judge made a clear error, at para. 23 of the 2017 decision, in stating that his employment ended in 2007 and he was earning an income up to the date of separation. In fact, his employment ended in 2006, his severance package was paid to him in 2007, and his income in 2008 was only $4,788.95. He argues that this is an overriding error, because if the trial judge had appreciated that his dependency on the mother began a year before separation, he would (or should) have ordered a further year of spousal support.
(3) Analysis
[76] An appellate court is not entitled to overturn a support order simply because it would have made a different decision or balanced the factors differently: Hickey v. Hickey, [1999] 2 S.C.R. 518, at para. 12. In this case, I see no material error, serious misapprehension of the evidence, or error in law in the trial judge's approach to determining the quantum of support that would permit this court to interfere with his decision. The trial judge was alive to the timing of the father's application, and there is no basis to interfere with the amount of income he imputed to the father. I will comment briefly on three of the other arguments raised.
(i) The Debt Issue
[77] The mother argues that she does not seek a set-off against the amount of spousal support that the trial judge determined is appropriate. Rather, she argues that, in determining both entitlement and what amount of spousal support is appropriate, the trial judge should have considered that she assumed and paid the joint debt that, under the Agreement, the father had agreed to assume. She argues that the trial judge did not have the benefit of Karlovic v. Karlovic, 2018 ONSC 4233, 12 R.F.L. (8th) 325, which was decided after the trial judge released his decision. The mother says that Karlovic makes clear that the trial judge could, and should, have considered that she had assumed the debt in determining the quantum of support to which the father is entitled.
[78] The parties' assets and debts can be relevant to determining both the entitlement to, and to a certain extent the quantum of, spousal support. This is because, while the parties' incomes are the relevant inputs in calculations under the SSAGs, the trial judge retains discretion in determining whether to award support at the low, mid, or high range of amounts suggested by the SSAGs, or in exceptional cases, even to justify departure from the ranges: Halliwell v. Halliwell, 2017 ONCA 349, 138 O.R. (3d) 671, at para. 110.
[79] The mother's argument that her assumption of additional debt should have been explicitly accounted for entirely overlooks that she also walked away from the marriage with significantly greater assets than did the father, including a house that appreciated significantly. Since the assumption of debt could not be considered without also accounting for the mother's asset position, I do not see this as operating to the mother's overall advantage.
[80] The trial judge knew the situation of the parties and his overall assessment attracts deference.
(ii) Duration of the Support Obligation
[81] The mother argues that the trial judge ordered support for too long a period; the father argues that the trial judge ordered support for too short a period. I am not persuaded that there is any basis to interfere with the trial judge's discretion in ordering a period of support for eight years. In particular, I am not persuaded that the trial judge's error in finding that the father's dependency began after separation, as opposed to a year before separation, affected the duration of the support that he ordered.
(iii) Calculation of Support on a "Custodial Payor" Basis
[82] I reject the father's argument that the trial judge erred in calculating the support he was entitled to using the "custodial payor" model. The trial judge's choice of the "custodial payor" model correctly reflects that the payor mother was fully responsible for supporting the children. Her net disposable income, which the SSAGs, at the highest, strives to equalize, was reduced by her obligation to support both children. The fact that the trial judge found that the father had satisfied his obligation to pay his share of their children's support by waiving his right to an equalization payment did not make the "custodial payor" model in any way inappropriate.
H. Issue 4: Costs
[83] The trial judge ordered the father to pay $23,921.83 in costs, set off from the amount owed to him in spousal support. The father's oral submissions on costs consisted of indicating that costs were not a significant issue. Considerable deference should be given to a trial judge's discretion in awarding and fixing costs. Leave to appeal costs orders should be granted only in obvious cases where there are strong grounds upon which the court could find that the judge erred in exercising his discretion: Carroll v. McEwen, 2018 ONCA 902, 143 O.R. (3d) 641, at para. 58.
[84] This is not such a case. I see no basis to interfere with the trial judge's order as to costs and would deny leave to appeal that order.
I. Disposition and Costs
[85] For these reasons, I would dismiss the appeal and cross-appeal and deny leave to appeal the award of costs below. In the circumstances, I would make no order as to costs of the appeal.
Released: September 10, 2019
"Alexandra Hoy A.C.J.O."
"I agree G.T Trotter J.A."
"I agree M. Jamal J.A."
Footnotes
[1] See the father's and mother's sworn financial statements prepared in connection with the father's application. See also the father's and the mother's unsworn financial statements prepared in connection with the Agreement, plus the values for the mother's jewelry and her business as found by the trial judge: 2016 decision, at para. 30.
[2] Section 33(4) of the FLA, which was neither argued nor considered by the trial judge in this case, provides additional circumstances under which the court may set aside a provision for, or waiver of, support: where the waiver leads to unconscionable circumstances, the waiver is by or on behalf of a dependant who qualifies for support out of a public allowance, or if there is a default in a payment under the contract at the time the application is made.
[3] Available online: https://nextcanada.westlaw.com/Document/I10b717d4b9d863f0e0440003ba0d6c6d/View/FullText.html?transitionType=UniqueDocItem&contextData=(sc.Search)&userEnteredCitation=66+O.R.+(3d)+540
[4] A subsequent decision in 2017 determining the quantum of spousal support (2017 ONSC 6120) is also the subject of this appeal and will be referred to as the "2017 decision".
[5] In the 2017 decision at para. 35, the trial judge found that the amount waived by the father included his obligation to pay basic child support.
[6] Note that under the FLA, s. 56(1.1), "the court may disregard any provision of a domestic contract pertaining to the matter where the provision is unreasonable having regard to the child support guidelines, as well as to any other provision relating to support of the child in the contract."
[7] The trial judge subsequently concluded that the father had satisfied his obligation to pay child support by waiving his equalization payment: 2017 decision, at paras. 34-35. That finding is not at issue in the appeal or cross-appeal.
