Court File and Parties
Court File No.: FS-20-19412 Date: 2022-03-01 Superior Court of Justice - Ontario
Re: DONNA JODI ALBAUM And: LORNE HOWARD ALBAUM
Before: Madam Justice Papageorgiou
Counsel: Avra Rosen and Kelly Eckert, for the Applicant Cheryl Goldhart and Michelle Sample, for the Respondent
Heard: February 3, 2022
Endorsement
Endorsement
1The Respondent Lorne Howard Albaum (“Lorne”) brings a motion to vary the interim spousal support order of Justice Monahan dated April 26, 2021 which provided the Applicant Donna Jodi Albaum (“Donna”) with monthly spousal support in the amount of $65,625 (the “Support Order”). He seeks an order reducing his monthly support payable to $24,340, on an interim basis.
2Lorne did not appeal the Support Order.
3He asserts that there has been a catastrophic change to his income since the motion was heard.
Decision
Decision
4While the amount of the Support Order is admittedly quite large, Lorne’s motion must fail for the following reasons.
The Applicable Legal Principles
The Applicable Legal Principles
5The Court has the jurisdiction to vary interim support orders.
6In Lipson v. Lipson, [1972] 3 O.R. 403, the Court of Appeal directed that motions to vary interim spousal support orders “were not to be encouraged and that it would take a substantial change in the circumstances before such an application would be permitted.”
7As explained by the Supreme Court of Canada in Willick v. Willick, [1994] 3 S.C.R. 670, a motion to vary is neither an appeal nor an opportunity to re-litigate the prevailing Order. A motion to vary proceeds on the basis that the prevailing order was correct when it was made.
8The parties provided case law setting out a variety of considerations which should be taken into account in determining whether a variation of an interim support order should be made including: a) whether the failure to vary the Order would cause the payor to suffer undue hardship; and b) whether continuation of the Order would be incongruous or absurd; Ciarlariello v. Iuele-Ciarlariello, 2012 ONSC 6636 at para 30 citing Pakka v. Nygard, [2004] O.J. No. 100 (Ont.S.C.J.) at para 5. The test is not whether I would have made the same Order.
9As stated by Justice Chappel in Damaschin-Zamfirescu v. Damaschin-Zamfirescu, 2012 ONSC 6689 (Ont.S.C.J.):
20 The test that applied on a motion to vary a temporary spousal support order has evolved within the parameters of the general principle that parties in matrimonial proceedings should be encouraged to advance their case to trial as soon as possible. Using this foundational principle, the Ontario Court of Appeal determined in Lipson v. Lipson that proceedings to vary interim support orders should not be encouraged. It held that in order to succeed on a motion to change a temporary spousal support order, a party must establish that there has been a substantial change in circumstances since the previous temporary order was made. Variation proceedings relating to temporary orders should not become the focus of the parties’ litigation. The onus on a party who seeks to vary a temporary support order rather than waiting until trial is a heavy one.
10I do not agree that the case Roberts v. D’Amico, 2021 ONSC 707, relied upon by Lorne is applicable. That case involved a final support order which had been made on consent. The payor had brought a motion to change several years later and Justice Kimmel heard an interim motion within that proceeding to vary the final support order pending final determination of the motion to change. These are not the facts here. Lorne’s motion is to vary an interim order which was made after thorough consideration by a Judge on a contested motion less than a year ago. The policy considerations outlined above were not in play before Justice Kimmel.
Justice Monahan’s Order
Justice Monahan’s Order
11Justice Monahan took into account the following in making the Support Order:
a. The fact that the parties enjoyed a privileged and lavish lifestyle;
b. Lorne’s arguments that his income varied significantly from year to year and that his income had declined in 2020. Justice Monahan stated that one must “use caution in determining [Lorne’s] income on a motion for interim support, particularly where the court has not had the benefit of a complete record including cross-examination”;
c. Lorne’s position that he had not yet earned income in fiscal 2021. Justice Monahan stated: “I see little risk of harm to the Respondent’s ongoing business operations, or of hardship to him personally, in determining the Respondent’s income for support purposes on an interim without prejudice basis to be $1.8 million. This is his average over the past three years as determined by his own expert, who has proceeded cautiously and accepted the need to build up substantial working capital in TRC Investment.”
d. Lorne’s and Donna’s expert income reports calculating Lorne’s income for support purposes for the years 2017 to 2020;
e. Lorne’s argument that he requires reserves of capital to conduct his business through TRC Investment which purchases “mini-tenders”. The details of this business are set out in Justice Monahan’s reasons and need not be repeated for the purposes of these reasons;
f. Lorne’s argument that if he was required to make a substantial spousal support payment based upon his prior years’ income, he may be required to encroach on capital resulting in killing the goose that lays the golden egg;
g. Lorne’s position that Donna had income for support purposes based upon payments she received from corporations she owns; and
h. Donna’s expenses and Lorne’s ability to pay the Support Order.
12To be conservative, Justice Monahan used Lorne’s expert’s calculated income and concluded that Lorne’s income should be determined by averaging his income for the last three years, resulting in income for support purposes in the amount of $1.8 million and be awarded at the mid-range of the SSAG’s. If Justice Monahan had relied upon Donna’s expert, Lorne’s average income and the support ordered would have been significantly higher.
13As well, Justice Monahan did not award Donna any retroactive spousal support even though Lorne had not paid any spousal support prior to the motion and Donna asserted that she had had to deplete capital. Donna has determined that she will address her claim for retroactive support in the amount of $1,485,918 at the trial.
Lorne’s Position
Lorne’s Position
14The main bases for Lorne’s motion to vary is that: a) the COVID-19 pandemic and its impact on the stock market have had a catastrophic impact on Lorne’s ability to earn income. In his affidavit dated January 17, 2022 he references his income in 2020 which was less than 1/3 what he earned in 2018 and 2019. He also asserts that this decline has continued and that for the fiscal year ending 2021 his company TRC Investment only earned net income of $320,197; b) Donna has income from the corporations she owns and it should be taken into account; and c) Analysis of Donna’s Financial Statement dated March 9, 2021 reveals that Donna’s representations regarding her expenses were overstated before Justice Monahan.
Changes to Lorne’s Business TRC Investment
Changes to Lorne’s Business TRC Investment
15While Justice Monahan did not specifically reference the impact of COVID-19 on Lorne’s business, Lorne raised it in his affidavit materials before Justice Monahan, and in my view he implicitly took it into account. If Lorne was concerned that he had not, he could have sought leave to appeal.
16With respect to Lorne’s assertion that he is facing a catastrophic change to his income because of TRC Investment’s earnings in 2021, although TRC Investment’s financial statement was not available as yet for the motion before Justice Monahan, Lorne provided evidence before Justice Monahan that TRC Investment had not yet earned income for 2021 and was operating at a loss. This did not persuade Justice Monahan. TRC Investment’s income for 2021 before me, in the amount of $320,197, is better than it was before Justice Monahan when it was operating at a loss.
17However, I acknowledge that Justice Monahan qualified his consideration of TRC Investment’s 2021 income in the following manner: “As for the fact that the Respondent has not yet earned any income in fiscal 2021, he was in a similar position in March of 2020 and yet ended the year with pre-tax corporate income of nearly $2.2 million”. At this stage, it is known that TRC Investment’s corporate income is only $320,197 which is well below what it has earned in previous years. Nevertheless, there are significant issues with Lorne’s assertion that his personal income for 2021, and indefinitely for the future, has been substantially impacted for the reasons set out below and that he is suffering hardship.
Changes to Lorne’s Income
Changes to Lorne’s Income
18Lorne has failed to provide any updated expert evidence as to his 2021 income. I note that TRC Investment’s calendar year runs from August to July and its year-end Financial Statement was available shortly thereafter. Therefore, he would have been aware of TRC Investment’s financial situation many months ago and should have had time to obtain an updated analysis on the impact on his personal income. Indeed, he advised Donna, as early as July 2021 that he intended to proceed with a motion to vary.
19Donna adduced evidence that TRC Investment’s financial statement for the year ending July 31, 2021 (which was not available for the motion before Justice Monahan) reveals that Lorne paid himself a dividend of $1,540,000.
20In Lorne’s Reply affidavit, he acknowledges for the first time that he received the dividend but takes the position that the funds were earned in calendar year 2020 instead of 2021.
21If Lorne earned the dividend in 2020, then the figures which Justice Monahan based his decision on are understated. In that regard, Justice Monahan accepted Lorne’s expert’s position that only $496,000 of TRC Investment’s 2020 income was available for spousal support purposes.
22If the funds are ultimately held to be earned in 2021, then Lorne cannot assert any material change in circumstance or hardship for 2021.
23Either way, in the absence of updated expert evidence, it is unknown what Lorne’s average three year income is. Justice Monahan has already made the finding that the appropriate manner of addressing Lorne’s income, because of volatility, was a three year average and Lorne did not seek to appeal Justice Monahan’s order on the basis that this reasoning was flawed. Justice Monahan concluded: “Despite this income volatility, when viewed over the lens of a 3- or 4- year period, it is evident that the Respondent has consistently earned substantial income through the mini-tender business.”
24Lorne is seeking to have this motion heard before he must file his personal 2021 income tax statement with the CRA and before he receives his T3 in respect of the $1.5 million dividend which would clarify this issue. The onus on Lorne is a heavy one and the timing of this motion coupled with the absence of any updated expert analysis is fatal even though I acknowledge that Justice Monahan had proceeded on the basis that TRC Investment’s final year end business income was unknown at the time.
25Furthermore, Lorne has not provided any sufficient evidence as to how TRC Investment has been doing during the calendar year that runs from August 1, 2021 to July 31, 2022. Instead, he has provided the following chart at paragraph 41 of his January 17, 2022 affidavit which purports to show TRC Investment’s purchase and sale of mini-tenders and profits during its calendar years noted, except for 2021/2022 which is stated “to date” which I interpret to be as of the date of his affidavit which is January 17, 2022:
| 2019/2020 | 2020/2021 | 2021/2022 (To Date) | |
|---|---|---|---|
| Mini-tenders issued | 29 | 32 | 11 |
| Gross profit earned | $2,692,496 USD | $1,133,601 USD | $165,991 USD |
| Gross profit as at December | $761,975 | $447,357 as at December 2020 | $185,991.32 |
26First, there is absolutely no back-up for any of the figures which he has asserted which are supported only by Lorne’s homemade spreadsheets. This chart on its face shows that TRC Investment’s ultimate gross profit cannot be predicted until the year end. For example, TRC Investment’s gross profit for calendar year 2019/2020 was $2,692,496 USD but as at December 2020, its gross profit was only $761,975. As well, the number of mini-tenders issued for 2021/2022 is stated to be 11 as at January 17, 2022, whereas for prior years it shows TRC Investment issued 29 and 32 mini-tenders respectfully for the entire year.
27There are approximately six months left in TRC Investment’s 2021/2022 calendar year for Lorne to purchase more mini-tenders and earn income through his mini-tender business.
28Justice Monahan specifically found that although Lorne’s income fluctuates, over time he earns significant funds. His past earnings before me show the same thing, even if 2021 may not have been as successful as in the past.
29Because Lorne earns his personal income through a corporation which he controls, he is in the position to control both the flow of funds from TRC Investment to him as well as the timing of purchase of mini-tenders.
30Indeed while claiming he had no income before Justice Monahan and that significant retained earnings must be kept in TRC Investment, he proceeded to pay himself the $1.5 million dividend afterwards. I note that this payment is inconsistent with Lorne’s sworn evidence in his January 17, 2022 affidavit that “there is a real and pressing need to maintain working capital within TRC Investment.”
31Further, while he baldly states that TRC Investment’s mini-tender business has been affected by COVID-19 and the stock market, he does not provide any adequate explanation or evidence as to why that is the case. While certainly some businesses have been impacted, there is insufficient explanation or evidence as to why this is the case for TRC Investment, as opposed to potentially being deliberate decisions made by him as to its operations.
32In the absence of his 2021 income tax return which clarifies how the $1.5 million TRC Investment dividend will be treated, updated expert evidence as to his and TRC Investment’s income, or further clarification and evidence as to TRC Investment’s prospects for the calendar year 2021/2022, Lorne’s current position on his ability to earn income and pay support in accordance with the Support Order should be viewed with some caution, particularly because of past unreasonable positions he has taken as to his income.
33In that regard, the parties separated in August 2019 and despite Lorne’s acknowledgement that this was a traditional relationship where Donna stayed home, Lorne did not pay any spousal support up until the motion before Justice Monahan in April 2021, citing his inability to pay even though his own expert subsequently quantified his income for 2019 to be $2,333,000. On March 18, 2020 Lorne’s counsel wrote to Donna’s advising that he was unable to work due to COVID-19 and that the recent disclosure requests which related to his income were therefore moot. At the time, he was working and had made 10 mini-tenders which had earned him a pre-tax income of $2,191,061. At the motion before Justice Monahan, and in his factum he again argued that his “spousal support should be set at $0 based upon his 2021 income of nil” because his past income could be no prediction of his ability to earn income. Justice Monahan did not accept this argument. Before me, he has finally conceded that he must pay spousal support but at 1/3 the amount ordered by Justice Monahan.
Donna’s Expenses
Donna’s Expenses
34As to Lorne’s assertion that Donna’s Financial Statement of March 9, 2021 contains inaccurate representations regarding her expenses and his new analysis of her spending based upon her credit cards, his evidence and calculations are not a substantial change. The underlying facts existed at the time of the motion before Justice Monahan; Lorne’s failure to raise this issue or pursue the kind of analysis he has now provided is not a substantial change even if Lorne’s analysis is based upon past credit cards from 2015 to August 2021, which is slightly beyond the time period when Justice Monahan heard the motion in April 2021. There was no evidence or argument before me that Lorne had only recently obtained production of Donna’s credit cards or that this kind of analysis could not have been done for the motion before Justice Monahan. As well, Donna has given evidence that her credit cards only reflect a fraction of her expenses and this issue cannot be determined on this paper record given the disputed evidence.
Donna’s Income From Corporations
Donna’s Income From Corporations
35As to Lorne’s assertions regarding Donna’s reported income for 2020, even if her income tax return for 2020 was not available, Justice Monahan addressed the underlying issue of whether income which Donna earned from corporations should be included for the purposes of her spousal support calculation. He concluded that they should not because they did not reflect income she earned from paid work and that this matter involved complicated issues which were better resolved by the trial judge. If Lorne was dissatisfied with this conclusion, he should have sought to appeal the decision.
Hardship and Alleged Absurdity if the Support Order is not Varied
Hardship and Alleged Absurdity if the Support Order is not Varied
36I add that Lorne’s position that the Support Order constitutes undue hardship in his current circumstances and that its continuation will thwart his ability to conduct his litigation, is not sufficiently supported on the record before me for the following additional reasons.
37First, there are many examples of Lorne continuing to enjoy a privileged lifestyle which are inconsistent with his hardship assertion. These include renting a private cabin at Bigwin Island Golf Club at a cost of over $40,000 per month in August 2021 and living in Florida for several months while his Toronto residence costing him $4,390 sits empty. None of these expenses are disclosed on his most recent Financial Statement. As well, Lorne’s personal investments have increased since separation.
38If the Support Order constitutes a significant hardship, then one would expect that Lorne would be attempting to move this matter forward expeditiously to trial where the issue of the support payable can be finally addressed on the merits.
39Instead, he has caused delay by refusing to answer questions during Questioning in August 2021 on the basis that Donna’s lawyer is in a conflict of interest and could no longer represent her. He has not brought any removal motion despite the fact that Donna’s lawyer has represented her for the last three and one half years and he has also refused to schedule a Trial Management Conference on the basis that his removal motion must proceed first.
40Had he completed questioning in August 2021, proceeded to a settlement conference and TMC conference immediately, or brought his removal motion long ago when he first raised the issue, the trial of this matter may have already been scheduled and be imminent.
41I add that Lorne complains that the marital agreements he executed have resulted in Donna having the lion’s share of the marital assets. If that is the case and he ultimately is successful in his claim that the Support Order is excessive, then he will be in a position to seek retroactive adjustments and the significant assets he complains are in Donna’s name alone, will be available for this adjustment.
Conclusion
Conclusion
42In my view Lorne is seeking to relitigate this matter as though it were being heard de novo which is not the applicable test. Lorne has not met the heavy onus required to vary an interim support order. There is insufficient basis to conclude that there has been a substantial change in Lorne’s circumstances as the issues raised by Lorne were already before Justice Monahan and/or existed at the time of the Support Order and Lorne did not raise them. As well, he has brought his motion before his 2021 income tax return must be filed and without any further expert analysis as to his income, which as I have said above, is fatal to his motion.
43Further, there is insufficient basis to conclude that Lorne would suffer undue hardship or that continuation of the Support Order would be incongruous or absurd. If Lorne was dissatisfied with Justice Monahan’s decision, he should have sought to appeal it.
44Therefore, the motion to vary is dismissed.
45I am directing that if Lorne wishes to bring a motion to remove Donna’s counsel from the record, he must do so by the end of March 2022.
46The parties shall complete questioning by the end of April 15, 2022.
47There is currently a settlement conference scheduled for March 3, 2022 which I am directing the parties still attend. At this settlement conference, the parties shall address the timing of scheduling a Trial Management Conference as soon as possible.
48I encourage the parties to settle their costs. If the parties cannot, they may provide submissions as follows: Donna within 5 days no longer than 4 pages and Lorne within 5 days thereafter no longer than 5 pages.
Papageorgiou J.
Date: March 1, 2022