Court File and Parties
COURT FILE NO.: FS-22-30726 DATE: 2023-03-21
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
LAWRIE HOPKINSON Applicant – and – DAVID HOPKINSON Respondent
Counsel: Richard Niman/Hayley Cairns for the Applicant Ruth Roth/Sonya Pfeiffer for the Respondent
HEARD: December 6, 2022
SHORE, J.
Endorsement
1The Applicant Wife brought this motion seeking an order for spousal support and child support retroactive to September 1, 2021, interim disbursements of $100,000, and costs.
2The parties agree that the Applicant is entitled to compensatory spousal support and to child support. The issue in dispute is the quantum of support to be paid. To determine the quantum of support, this court must:
a. Determine the Respondent’s income for support purposes;
b. Once the Respondent’s income has been determined, the Court must determine the proper quantum of support in these circumstances.
c. Additional considerations specific to this case include:
i. whether this is an appropriate case to order an amount different than the Guideline amount having regard to the high income earned by the Respondent;
ii. the tax ramifications, if any, of the Respondent living in New York; and
iii. the effect of the special and extraordinary expenses being paid by the Respondent and not being reapportioned in this case.
3The court must also consider whether to order support retroactively and to what date, if any.
4Finally, the court must consider whether this is an appropriate case to order interim disbursements.
Brief Background Information:
5The parties met in 1997. The Applicant was working at CIBC and training to be an actor. In 2000, the Respondent was appointed as a Director at Maple Leaf Sports and Entertainment (MLSE). The parties married in 2001.
6The parties have two children, C., now age 18, and M, now age 14. After the birth of the second child in 2008, the parties decided that the Applicant would leave the workforce to care for the children and the home.
7During the marriage, the Respondent was promoted first to vice president, then senior vice president, executive vice president and eventually, chief revenue officer at MLSE. His salary and income increased accordingly with each promotion.
8When the children started school full time, the Applicant tried to restart her acting career. As she was starting to see some success, the Respondent obtained a job running global partnerships for Real Madrid CF, a professional Spanish football club. Therefore, in 2018, the family moved to Spain and lived there for the next two years. The Applicant again gave up her career so the Respondent could pursue his career in Spain. By this time, the Respondent was earning $1 million EU annually.
9In February 2020, as the pandemic was starting to shut down travel, the Applicant and children flew to Toronto to attend her father's funeral. With restrictions on travel beginning, the parties decided the Applicant and children would stay in Toronto. The children finished their school year online. Meanwhile, the Respondent continued living and working in Spain.
10The Applicant and children returned to Madrid in August 2020. In October 2020, the Respondent was offered a position as President of business operations at Madison Square Gardens. He moved to New York in January 2021, where he remains living today. The plan was for the Applicant and children to move to New York to join the Respondent at the end of the school year. Before the move, the Applicant discovered the Respondent was having an affair with his co-worker and he had moved her into the ‘family’ apartment in New York. Instead of moving to New York, the Applicant and children returned to Toronto in July 2021. The parties separated shortly thereafter.
11In September 2022, the Respondent was promoted to President and COO of Madison Square Gardens. His compensation increased again.
12There is no dispute that the Applicant gave up her career to care for the children and the home, which allowed the Respondent to work long hours and advance his own career. There is no dispute between the parties that the Applicant is entitled to compensatory and non compensatory spousal support. As set out above, the question is the quantum of support.
Determination of Income:
13In determining the quantum of support, the first question is what is the income of the parties? The Applicant does not earn an income. The real issue is determining the Respondent’s income for support purposes.
14As set out in Driscoll v. Driscoll, at para. 14, the court does not engage in an in-depth analysis of the parties’ circumstances in an interim support motion. It is “rough justice at best”: Driscoll, citing Robles v. Kuhn, 2009 BCSC 1163, [2009] B.C.J. No. 1699, at para. 13. However, to determine the Respondent’s income for this motion, some analysis is required, albeit not at the same level that will done by the trial judge.
Position of the Parties
15There was some disagreement between the parties as to whether support should be based on the Respondent’s 2021 income or 2022 income. Given that the motion was heard in December 2022, and the Respondent’s income for 2022 was fairly certain at that stage, I see no reason to order ongoing support based on 2021 income. Section 2(3) of the Federal Child Support Guidelines, SOR/97-175 (“the Guidelines”). is clear that the most current information must be used.
16There was no income tax return completed for 2022 (as the year was not over yet), so the court cannot start with looking at the Respondent’s tax return for 2022.
17In his affidavit, the Respondent took the position that he should pay ongoing spousal support and child support based on an income of $1.2 million. However, he provided no legal or factual basis for arriving at this income. The Respondent’s representation as to his true income has been inconsistent, except that it has consistently been greater than $1.2 million.
18The Respondent acknowledged earning income significantly higher than $1.2 million in both 2021 and 2022. He has made various representations throughout the motion and in his motion material:
a. The Respondent’s base salary for 2022, was $1.1 million USD until September 2022 and then it increased to $1.25 million USD.
b. The respondent’s income on his last sworn financial statement was $3.79 million with personal expenses of $3.167 million.
c. During the motion, the Respondent acknowledged an income of $2.63 million USD in 2022.
d. The Respondent also filed a letter from his employer setting out his compensation in 2021 and 2022, which exceeded $1.2 million in either year.
e. His year-to-date earnings on his October 13, 2022 paystub was $2,469,518 USD, which does not include other sources of income or his income for the remainder of 2022.
19According to the Respondent’s financial statement, his net worth increased by approximately $1 million since separation, only a year ago. Having regard to all of the above, there is no basis for this court to order child support and spousal support based on an income of $1.2 million.
20The Applicant submits that the Respondent earned in excess of $5.5 million USD in 2022. However, the Applicant assumes that the Respondent will reach all of his targets and earn his entire eligible bonus, which he will need to do to arrive at an income close to $5.5 million USD. The court does not have adequate information to arrive at this conclusion. The Respondent’s contract provides that “[t]he calculation of any Management Performance Incentive Plan (MPIP) bonus depends on a number of factors including….The decision as to whether or not a bonus is paid, and as to the bonus amount, if any, is made by the Company at its sole discretion.” I do not accept that his target income is his actual income.
Respondent’s Income For Support Purposes
21So, what is the Respondent’s income for support purposes? The Respondent earned a base salary of $1.1 million USD until he was promoted on September 9, 2022. His base salary is now $1.25 million USD. This is the starting point in determining his income for ongoing support. His income must then be converted to Canadian dollars. The court must also consider the Respondent’s bonus.
22The Respondent argued that the bonus he received in 2022 was declared by his employer in 2021, and therefore his 2022 bonus is not known and should not be added to his 2022 income. However, his approach is contrary to the current law in Ontario, which provides that an employment bonus is included in income for the year in which it is received: see Tauber v. Tauber (2001), 18 R.F.L. (5th) 384 (Ont. S.C.). The Respondent’s 2021 employment bonus of $1.24 million USD was received in September 2022, and therefore is properly included in his 2022 income.
23So, the Respondent’s undisputed income for 2022, so far, is his base salary of $1.25 million USD plus the bonus he received in 2022 (MPIP), of $1.24 million USD for a total of $2.49 million USD, which is consistent with his October 2022 paystub.
24The Respondent also earned a stipend of $140,000 USD from his position on the Board of Tilray Brands Inc. (it increased to this amount as of June 1, 2022). This too needs to be added to his income, for a total income of $2.63 million USD or $3,476,202 CND [1]. This is how the Respondent arrived at his position of 2.63 million USD during the motion. But the analysis does not end here.
25The Respondent received additional benefits from his employment, including a company match program for his 401k and a savings plan. The Respondent calculates this income as $80,000 CND, on his financial statement. No argument was made as to whether this amount should be grossed up for tax purposes. On an interim basis I am not going to gross the benefits up. This can be addressed by the parties at trial. The gross up amount is nominal having regard to the total income in question. Therefore, the total income for the Respondent so far is $3,556,202 CND.
26To conclusively determine the Respondent’s income, the only additional question is how to treat the Respondent’s long-term incentive plan compensation (LTIP) and RSUs (restricted stock units). The Respondent is granted RSUs each year as part of his compensation from employment and from his position on the board at Tilray Brands. The RSUs from employment vest over a period of three years, starting the year after they are granted. In 2022, $360,451 USD of RSUs vested according to the disclosure from his employer. The Respondent was also granted PSUs, but the PSUs granted only vest at the end of three years. No PSUs vested in 2022.
27The Respondent also earned RSUs from his position on the board at Tilray Brands. He was granted $200,000 USDs of RSUs in 2021, which vested in its entirety in 2022. He received a second grant in the sum of $200,000 USD of RSUs, one third of which also vested in 2022. The remaining RSUs do not vest until 2023 and beyond. Therefore, the total value of RSUs that vested in 2022 from the two sources is $627,118 USD or $828,893.21 CND.
28The Respondent submits that his RSUs are property and not income for support purposes. The cases the Respondent relies on to support his position are cases that discuss RSUs received prior to or in the year of separation, and the cases explore whether the RSUs are treated as property for equalization purposes or as income for support purposes, or, in some cases, whether the concept of “double dipping” applies. For unexplained reasons, the Respondent did not include his RSUs as an asset in his financial statement on separation, not even a TBD. Further, it has been six months since he filed his Answer and, despite alleging he was having the RSUs valued as of the DOS, he has failed to do so. It remains unclear whether this is an indication of the Respondent’s intention to include the RSUs as income.
29On the material before this court, it appears that most of the RSUs were granted just prior to separation but vested after separation. I agree with the Respondent that the law in the area is still unclear. While support on $828,893 of income is not insignificant, as set out below, it will not affect my decision on quantum of spousal support on an interim basis. Ultimately, the RSUs will be included as either income or property, or both, at trial.
Applicant’s Entitlement to Increase in Income Post-Separation
30Finally, the Respondent submits that the Applicant is not entitled to share in the increase in his income post-separation. The issue of post-separation increase in income is a fact-based issue determined on the circumstances of each individual case, the particular financial history of the parties during their marriage and their likely circumstances in the future: see Fisher v. Fisher, 2008 ONCA 11, 88 O.R. (3d) 241, at para. 96, and Hartshorne v. Hartshorne (2009), 2009 BCSC 698, 70 R.F.L. (6th) 106 (B.C.S.C.). When there is a finding of a compensatory basis for the spousal support claim, the recipient may be entitled to share in the post-separation increases in the payor's income: see Howard v. Howard, 2021 ONSC 7784, 69 R.F.L. (8th) 356 and Thompson v. Thompson, 2013 ONSC 5500, at para. 103.
31The treatment of post-separation increases in income is a matter of discretion for the court. In this case, the parties agree there is a strong compensatory entitlement to support. It is not hard to see the link between the Respondent’s current position and contributions by the Applicant. The Respondent was recruited based on the employment history he developed throughout the marriage. This history is linked to the role played by the Applicant in that marriage. I find that on an interim basis the Applicant is entitled to share in the post-separation increase in the Respondent’s income.
Conclusions on Respondent’s Income
32For the reasons set out above, I find the Respondent’s income for interim support to be at least $3,556,202 CND without prejudice to the Applicant’s position at trial that the RSU’s should be treated as income.
Quantum of Support:
33The Respondent submits that he should continue paying $20,000 net of combined child and spousal support per month and that this amount will meet the needs of the Applicant and the children. However, $20,000 is the equivalent of what the Respondent is paying in rent alone each month and could be considered a low amount in these circumstances when compared to the Respondent’s own budget. Again, there is no dispute that the Applicant has a strong compensatory claim for support. Even on a temporary basis, I find $20,000 per month in support to be too low, for reasons expanded on below.
34Before I can calculate the quantum of support, I need to consider the tax treatment of the support in this case.
Tax Ramifications
35The Respondent lives in New York and pays taxes in New York. The Respondent submits that his support obligation should be based on his net after tax income, because in New York, his taxes are remitted at source, and therefore he does not receive his gross income. But this is no different than any other employee in Canada who earns a gross income but receives their income net of taxes. I am cognizant that adjustment may need to be made to the quantum of support because there may be different tax treatment of support payments for American residents.
36The Respondent filed an affidavit from Sharon Conrod, a CPA, CGA and EA, with over 20 years of experience providing U.S. and Canadian income tax services. Ms. Conrod was retained to provide expert opinion on the tax implications to a support payor living in New York with the recipient living in Ontario. However, the retainer is clear that she was not asked to address the tax treatment of child support, which may be different in the US. I do not have any conclusions on this issue.
37It appears that although the Applicant may not have to pay tax on the spousal support received, the Respondent may be permitted to deduct the payments from his income for tax purposes. I find the report unclear and vague in its conclusion.
38The report ends with the following:
The state of New York has not conformed to the federal tax changes contained in Pub. L. 115-97 with respect to alimony. In accordance with N.Y. Tax Law§ 612(w), alimony payments are deductible in the computation of New York taxable income regardless of when the divorce decree is executed. As New York City taxable income equals New York State taxable income, alimony payments are also deductible in the computation of New York City income taxes.
In conclusion, it is our opinion that the spousal payments paid from the US will not be taxable to Lawrie, a resident of Canada, by virtue of the savings clause contained in the Treaty.
39While the report is clear that the Applicant does not pay tax on the spousal support received, it is unclear as to what tax relief is available to the Respondent from paying that support.
40It appears that spousal support would be deductible for New York City state taxes but not included by the Applicant in calculating her income in Canada.
41The confusion is addressed directly in the affidavit of Tim Martin, a CPA, CBV and partner at Verity Valuation Group. Mr. Martin confirms that the Applicant receives her support on a tax-free basis, and that the Respondent cannot deduct his support payments from his federal taxes. However, he can deduct his support payments from his state and municipal taxes. The marginal income tax rate for income between $1,077,550 and $5 million is 9.56% and 3.876% for income exceeding $50,000. Mr. Martin further clarifies that the Respondent submits he will pay a rate of 50.5% income tax in New York, whereas he would pay 52.4% average rate if the same income (using $3.5 million) was reported in Canada.
42It would be an error to ignore the different tax treatment of support payments between Canada and the U.S. However, I require further evidence/calculations from the parties to calculate the exact tax relief enjoyed by the Respondent, but this can be left for trial. While there will be some tax relief enjoyed by the Respondent, it will not be too significant and will not affect the benefit of support being received by the Applicant in this case, having regard to my findings below.
43The DivorceMate program has an option that allows the user to run a calculation where support is paid/received without tax consequences. The Respondent submits that an order should be made for an uncharacterized payment of support. Because there is no difference in the tax treatment of the spousal support and the child support, there is no practical effect of ordering an uncharacterized amount of support and not differentiating as to whether it is child support or spousal support at this time.
High Income Earners
44The Respondent submits that his income is so far above the ceiling ($150,000 for CSGs and $350,000 for the SSAGs) that the court should order an amount different than the Guideline amounts. Specifically, the Respondent asks the court to apply the formula set out in Halliwell v. Halliwell, 2017 ONCA 349, 138 O.R. (3d) 671. I agree that an amount different than the Guideline amounts should be ordered, but I do not agree that the court should apply the Halliwell ‘formula’.
45For child support, where the income of the payor exceed $150,000, a judge can order the Table amount or if the judge considers the Table amount to be inappropriate, the judge must make an order that is the total of at least the Table amount for the first $150,000, and in respect of the balance of the payor’s income, the amount the court considers appropriate, plus the amount determined under s.7: see s.4 (a) and (b) of the CSGs. Inappropriate means unsuitable. However, there is still a presumption in favour of the Table amount. There must be clear and compelling evidence to deviate from the Table amount. The court will have to consider the condition, means and needs and other circumstances of the children relevant to the determination of inappropriateness: Tauber v. Tauber (2000), 48 O.R. (3d) 577 (C.A.) at para. 35.
46For spousal support, the starting point in this analysis is the SSAGs, which provides a "ceiling" for use of the Guidelines being an annual income of $350,000. A “ceiling” should not be confused with a “cap”. The Revised User Guide for the SSAG, makes it clear that there is wide discretion once the payor's income rises beyond the ceiling.
47The User Guide suggests that the approach to be taken may depend upon how much beyond the ceiling the income is, adjusting the income amount more often depending upon how much beyond the ceiling the income is.
48In Halliwell, the Court of Appeal confirmed that in determining spousal support for incomes over $350,000, the court must enter into “[a]n individualized, fact-specific analysis” in fixing spousal support which must include an analysis of the effect of the equalization payment (para. 107). Taking this into account, the court determined that the husband's income should be set midway between his actual income of just over $1 million and the ceiling amount of $350,000, setting the husband's income at $675,000 per year.
49To simply follow the formula applied in Halliwell, as proposed by the Respondent, ignores the Court of Appeal’s direction to conduct an "individualized" analysis. This is supported by the recent Court of Appeal case, Plese v. Herjavec, 2020 ONCA 810, 49 R.F.L. (8th) 28. The Court of Appeal clarified and explained Halliwell, in that the approach to incomes beyond the ceiling should be individualized and fact specific. But more importantly, the Court stated that there is no "Halliwell principle" which requires that the payor's income over the ceilings should be set at a "triangulated" midpoint.
50At para. 57, Strathy C.J.O. (as he then was) stated:
Halliwell does not require the court to impute the payor's income at the mid-way point between the SSAGs "cap" and the payor's actual income. Rather, Halliwell, at para. 116, emphasizes what the SSAGs have always stated: "Above the $350,000 ceiling, an additional formula range is created: appropriate income inputs range anywhere from $350,000 to the full income amount. Entitlement is important to determine a location within that range."
51This individualized approach was made clear in the variety of income determinations over the ceilings: see Howard v. Howard, 2021 ONSC 7784, 69 R.F.L. (8th) 356, Dancy v. Mason, 2019 ONCA 410, 25 R.F.L. (8th) 93[2], Lefebvre v. Lefebvre, 2020 ONSC 310, 1 C.C.L.I. (6th) 246, Berta v. Berta, 2017 ONCA 874, 138 O.R. (3d) 81, Zapfe v. Zapfe, 2019 ONSC 4065, 29 R.F.L. (8th) 321, and B.S. v. B.W., 2019 ONSC 2769, 27 R.F.L. (8th) 360. So, I do not accept the Respondent’s position that the Court must follow the “formula” set out in Halliwell.
52Page 58 of the User Guide provides:
Individual high-income cases can attract considerable legal attention, but the wide discretion for these very high incomes will inevitably result in divergent and unpredictable outcomes. High income cases do not pose technical issues that can be solved by any set of guidelines, but raise fundamental theoretical questions about the rationale and purpose of spousal support. (emphasis added)
53So, I turn back to the Divorce Act, R.S.C. 1985, c.3, (2nd Supp.), which sets out the factors and objectives for spousal support at s. 15.2(4) and s.15.2(6):
(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.
(6) An order made under subsection (1) or an interim order under subsection (2) 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;
(b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
(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.
54A judge is required to consider all of the factors listed under the factors listed in s.15.2(4) and each of the objectives under s.15.2(6). I have considered that this is a long-term marriage (20 years), where the parties agree that the Applicant was the “CEO” of the family, allowing the Respondent to focus on work and rise up the corporate ladder to where he is today. The Applicant was financially dependent on the Respondent and the Respondent was dependent on the Applicant to care for the children, the house and their day to day lives. The parties agree there is a strong compensatory claim for spousal support. The Applicant suffered an economic disadvantage because of the marriage and its breakdown, the roles played during the marriage and thereafter. There is sufficient income to maintain that lifestyle, notwithstanding the separation and two households.
55There is wide discretion in determining support payable where the Respondent's income is beyond the ceiling. Unlike child support, the figures in the SSAG are no longer presumptive for income above the ceiling.
56On motions for interim support, the Applicant’s needs and the Respondent’s ability to pay assume greater significance: Driscoll, at para. 14, citing Robles, at para. 12. In the circumstances of this case, both the SSAGs and CSG dictate a closer analysis of the means, needs and other circumstances of the family.
57So instead of artificially altering the Respondent’s income to calculate support, I prefer to use the means and needs test and consider the budget and lifestyles of the parties to determine the appropriate amount of support in this case.
58Where a payor has the ability to pay, a dependent is entitled to maintain the lifestyle that he or she became accustomed to during cohabitation pending trial or resolution. The Respondent acknowledged in his affidavit that, “I further understand the Applicant is entitled to continue living at the same standard of living (or as close thereto as possible) enjoyed prior to the separation if my ability to pay warrants it.” His ability to pay is not in question. The Respondent proposes that the Applicant needs $37,000 tax free to maintain the same standard of living enjoyed prior to separation.
59The Respondent’s evidence is that while in Spain, they lived on approximately $20,000 Euros net per month, or $30,000 Canadian. The Applicant’s evidence is that they lived a more luxurious lifestyle because the cost of living in Spain is approximately 40% lower than in Toronto. Relying on this argument, the Applicant would need $42,000 net per month to live at the same lifestyle they did in Spain ($30,000 + 40%), plus the housing expenses in Toronto. The house was purchased in 2008 and maintained even while they were living in Spain. To maintain the lifestyle they enjoyed in Spain, the Applicant would need approximately $49,000 net. Her expenses will be somewhat lower because there is no second home in Spain. However, this does not give consideration to the increase in the Respondent’s income since living in Spain and the right of the children to benefit from the total family income.
60A spouse is also entitled to an increase in the standard of living such as would have occurred in the normal course of cohabitation. I have considered the Applicant’s budgets, which include her current and her proposed budgets. The critical question is, what does the Applicant need to meet her expenses and the expenses of the children? On her current budget, the Applicant shows expenses of $36,451.49 net per month. This includes the expenses for Bishop Strachan, a private school, at $3,750, which are being paid by the Respondent. I appreciate the Applicant’s evidence that this reflects the budget she has had to live on given that she is receiving $20,000 of support per month at the moment and it does not accurately reflect the lifestyle enjoyed during the marriage.
61The Applicant’s proposed budget shows expenses of $75,478 per month net of tax for her and the two children. I do not find her budget to be unreasonable, considering the Respondent’s budget for his life in New York, and the fact that he managed to save over $1 million since separation. However, on an interim basis, I would still make some adjustments to the Applicant’s proposed budget.
62An example of an adjustment I would make on an interim basis is that the Applicant does not need a vacation home on an interim basis, especially because she shows a separate and generous budget for vacations. This alone reduces her budget by $10,000, to $65,000 per month.
63On an interim basis, her budget is somewhere between her current budget of $36,000 per month and her proposed budget of $75,000 per month.
64On a temporary basis, having considered the means and needs of the parties and the children, I find that $60,000 net per month is the appropriate amount of support in the circumstances. Both parties are responsible for 50% of the capital expenses of the jointly owned home, but otherwise, the Respondent shall no longer be responsible for the Applicant’s accommodation expenses.
Exchange Rate
65The exchange rate used by the Respondent in his financial statement was 1.2908, as of August 15, 2022, and 1.3730 as of October 17, 2022.
66The exchange rate used by Mr. Martin, the applicant’s expert is 1.2916 and 1.3316, which he submits is the average monthly foreign exchange rate used by the Bank of Canada. No submissions were made as to the rate to be used on the motion.
67I will use the average of the four rates provided, being 1.32175. Any differences in the actual exchange rates can be addressed at trial.
Section 7 Expenses
68The eldest child attends Concordia University. Her expenses are paid by her RESP. There was no evidence before this court as to any additional amounts paid by the Respondent.
69The younger child attends private school, at a cost of $36,000. The Respondent has been paying these fees without contribution by the Applicant. I need to consider this expense when determining the quantum of spousal support. This is also one of the reasons I lowered the Applicant’s needs. But I have also considered that the Respondent has had the benefit of the RSUs in the sum of over $800,000 and can afford to pay the private school on an interim basis without contribution from the Applicant. Any adjustments can be sorted out at trial.
70The Respondent has not provided proof of the total expense to the Applicant. I will address this problem in my order below.
Conclusions on Support
71Taking all of this into account, I am ordering uncharacterized (i.e. undifferentiated) support in the sum of $60,000 per month. This will leave the Applicant (and the two children) with net disposal income of approximately $60,796 (or 44% of the NDI) and the Respondent with $77,707 net per month (or 56% of the NDI), having taken into account the fees paid by the Respondent for Bishop Strachan. The calculations are based on the Respondent’s income of $3,556,202.
72The Respondent will have more than sufficient funds to cover his own expenses after paying support because:
a. It does not include any amount for his RSUs;
b. It does not take into account the tax relief he will receive, albeit less than if he was in Canada;
c. He no longer has to pay 100% of the expenses for the house. The house is jointly owned, so with receipt/payment of proper support, each party should be responsible for 50% of the capital expenses; and
d. He has managed to save approximately $1,000,000 since separation.
73The support will permit the Applicant to meet her expenses on an interim basis and allow her and the children to live a lifestyle similar to the one the family enjoyed prior to separation. The order does not place a financial hardship on either party, and will leave them both with sufficient funds to meet their ongoing expenses.
74While the calculation of income and support are not perfect, this is an interim order. Interim orders are meant as rough justice, a holding pattern until trial, when the court can embark on an in-depth analysis of the parties’ circumstances.
Retroactive Support:
75The Applicant and children have a strong prima facie entitlement to support. As stated above, entitlement is not in dispute. There has been no unexplained delay in the Applicant seeking spousal support that would mitigate against making a retroactive order for support.
76The parties separated in September 2021. Above, I have calculated the Respondent’s income for 2022. On an interim basis, support should be payable at least commencing January 1, 2022, with credit to be given to the Respondent for any support paid to the Applicant from January 1, 2022 to date. It is far more likely that the Respondent will be required to pay further retroactive support (if and when the RSUs are taken into income and the other adjustment not made on an interim basis) rather than the Respondent having to collect an overpayment of support.
77I have not calculated the Respondent’s income for 2021. At most there would be an additional four months of support payable between the parties. However, the income calculation for 2021 is a little more complicated and I was not given sufficient information to make these calculations for 2021. The Respondent submits that from separation until August 8, 2022, he paid for the Applicant’s housing costs, the children’s expenses, the Applicant’s credit card bills and at least $6,000 per month in cash. There has been no breakdown provided by either party as to the credit the Respondent should receive for these payments. However, the order of Pinto J., dated October 26, 2022, provides that the without prejudice interim obligation is $27,000 ($20,000 per month plus the mortgage, property tax and insurance on the home in Toronto). The Respondent pays tuition on top of the payments.
78From August 2022 to date, the Respondent has been paying an uncharacterized amount of $20,000 per month. He also made a payment of $50,000 to be credited towards his support obligations. On a without prejudice basis, he paid approximately $7,000 directly towards expenses for the Toronto home. The Respondent should receive credit for these payments when calculating the arrears owing. The credit for the home should not include his 50% share of the capital expenses.
79Given that it is only four months away, the retroactive support payable for 2021 can wait to be determined at trial. I do not find that this will place a hardship on the Applicant.
Interim Disbursements:
80The Applicant is seeking interim disbursements in the sum of $100,000. She advises that the next steps in the case are questioning, and a review of the Respondent’s forthcoming expert reports regarding his income and the value of his property. Once the reports are completed, the parties will attend a settlement conference. The Applicant’s lawyer has estimated legal fees of approximately $110,000 for the next steps, as well as between $30,000-$35,000 for her expert.
81Rule 24(18) of the Family Law Rules, O. Reg. 114/99 permits the court to make an order that a party pay “an amount of money to another party to cover part or all of the expenses of carrying on the case, including a lawyer’s fees.”
82The test for interim disbursement, set out in Stuart v. Stuart (2001), 24 R.F.L. (5th) 188 (Ont. S.C.), provides that:
a. The disbursements are necessary and reasonable given the needs of the case and the funds available.
b. That the party requesting the disbursement is incapable of funding the amounts; and
c. That the claim being advanced is meritorious as far as can be determined on the balance of probabilities at the time of the request.
83In reviewing the Applicant’s financial statement, she shows liquid assets of approximately $265,000, but if you exclude her RRSPs and LIRA, she had approximately $140,000 minus the tax she would have to pay on her investments.
84However, the Applicant fails the second part of the test. As a result of the interim support order set out herein, the Applicant will receive support, retroactive to January 1, 2022. Even with the Respondent receiving credit for the support paid each month, the Applicant will still be owed significant retroactive support. As such, the Applicant will have the ability to fund this litigation.
Order:
85Order to go as follows:
a. On a without prejudice basis, commencing January 1, 2022, and on the first day of each month thereafter, the Respondent shall pay the Applicant combined interim spousal support and interim child support for the two children of the marriage in the sum of $60,000 per month. The Respondent shall receive credit for the $20,000 he has paid each month as well as the lump sum payment of $50,000. The combined support is based on the premise that the Applicant will not have to pay taxes on the support received and the Respondent will receive minimal tax relief on the support paid.
b. On an interim basis, the Respondent shall pay 100% of the tuition and associated fees and expenses for the youngest child to attend Bishop Strachan School, without reapportionment to the Applicant.
c. On an interim basis, the parties shall continue to use the eldest child’s RESP to pay for her post-secondary education and related expenses.
d. On an interim basis, the parties shall each pay for half of the capital expenses of the jointly owned property municipally known as 167 Boardwalk Drive, Toronto, ON.
e. Within 10 business days, the Respondent shall provide the Applicant with proof of the fees and expenses he paid for Bishop Strachan for the 2021/2022 school year and the 2022/2023 school year to date.
f. The Applicant’s motion for interim disbursements is dismissed.
g. If the parties are unable to resolve the issue of costs between them, they may each make written cost submissions, no more than three pages, plus any offers to settle before the end of March 2023. They have each already uploaded their Bills of Costs to Caselines.
Shore, J. Released: March 21, 2023
1Refer to the section below where I find that 1.32175 is the exchange rate to be used on this motion.
2It should be noted that the payor's income had substantially increased after separation and the court found it was within the court's discretion to use that income based upon the Applicant's compensatory support claim.