DATE: 20051130
DOCKET: C35654
COURT OF APPEAL FOR ONTARIO
McMURTRY C.J.O., LASKIN and LANG JJ.A.
B E T W E E N :
THOMAS PIRNER
Milton Bernstein for the respondent
Applicant (Respondent)
- and -
DIANE MARION PIRNER
John Legge for the appellant
Respondent (Appellant)
Heard: October 17, 2005
On appeal from the judgment of Justice Hugh M. O’Connell of the Superior Court of Justice dated December 1, 2000.
LANG J.A.:
Overview
[1] This is an appeal by Diane Pirner (the wife) and a cross-appeal by Thomas Pirner (the husband) from the December 1, 2000 judgment of Justice O’Connell.
[2] That judgment dismissed the husband’s application to vary child support, except to bring child support into conformity with the Federal Child Support Guidelines, S.O.R./1997-175. In doing so, the trial judge attributed income to the husband and fixed child support arrears in accordance with the Guidelines. He also dismissed the wife’s application to extend spousal support beyond the limited term provided in the divorce judgment.
[3] For the reasons that follow, I would dismiss both the husband’s appeal and the wife’s cross-appeal.
Background
[4] After almost six years of marriage, the Pirners separated in 1990. Their two children, now aged 16 and 14, lived with the wife. The husband sought a divorce, which was granted, together with corollary relief, by Jennings J. in 1994. In 1995, the husband applied to vary the divorce judgment and the wife cross-applied. In 2000, after an unusually high number of interim proceedings and failed attempts at settlement, the variation applications proceeded to trial.
[5] At the 1994 divorce trial, the divorce judge had found Mr. Pirner to have an annual income of $175,000 to $185,000, depending on the amount of his bonus. On the basis of that income, he awarded child support of $2,200 per month per child to the wife. In addition, he awarded the wife limited term spousal support to allow her to obtain a Bachelor of Science degree in nursing. He also awarded her an equalization payment and lump sum amounts.
[6] The husband’s 1995 variation application was based on an alleged material change in his circumstances since the 1994 divorce. In 1995, the husband left his employment in part, he alleged, due to the stress of the litigation with the wife and back problems that continued after his late 1994 back surgery. On the basis of his resulting decrease in income, he sought to reduce child support, terminate spousal support, and rescind support arrears. The wife cross-applied to increase child support and to extend the duration of her spousal support.
[7] In 1997, Master Linton conducted a reference to report on the quantum of support arrears. He determined that those arrears stood at $99.231.92, inclusive of interest, as of July 31, 1999. The husband continued to default on support, the payment of lump sum orders, the equalization payment, and the payment of costs awards. Despite the parties’ numerous attempts at resolution, they were unsuccessful and finally proceeded to trial in 2000, a trial that lasted over eight days.
[8] In December 2000, the trial judge released his reasons. He dismissed both parties’ applications to vary child support, except to bring child support into conformity with the Guidelines. He calculated Guidelines support on the basis of an annual income he attributed to Mr. Pirner of $175,000, the same amount that the husband was found to earn at the time of the divorce, and ordered Guidelines support retroactive to the time the Guidelines came into force in May, 1997. He also dismissed the wife’s application to extend the duration of her spousal support and determined that there were no spousal support arrears.
[9] As a result of this judgment, child support was reduced from the taxable/deductible support of $2,200 per month per child to the non-taxable/non-deductible amount of $1,010.50 per month per child retroactive to May 1, 1997. Child support arrears were fixed as of April 14, 2000 at $59,146.65, plus interest. The trial judge also ordered the husband to reimburse the wife for additional expenses that she had incurred for the children.
Issues
[10] The wife’s appeal challenges the variation judgment on five main grounds. She argues that the trial judge erred, first, by imputing an income to the husband of only $175,000; second, by varying child support retroactively to 1997; third, in refusing her application to extend the duration of spousal support; fourth, in failing to order lump sum spousal and child support; and fifth, in setting child support arrears at only $59,146.65.
[11] The husband’s cross-appeal raises two issues. First, the husband argues that the $175,000 income imputed to him was excessively high. Second, the husband alleges that the trial judge showed bias by referring to evidence that was not properly part of the trial evidence, by intervening in the conduct of the trial, and by making negative remarks to the husband during his testimony.
The Wife’s Appeal
1. Attributed Income
[12] I turn first to the income attributed to the husband by the trial judge.
[13] In addition to a Masters of Business Administration, Mr. Pirner completed other post-graduate training. He developed an expertise in general management, high technology marketing, systems development, consulting, and product management. Extensive evidence was led at the trial about his past success, his current income and his capacity to earn income.
[14] Mr. Pirner alleged that his 1995 resignation from his employment resulted from his back problems, the stress of his divorce litigation, and his wife’s allegedly disruptive conduct that, he argued, negatively impacted on his employment. The trial judge, however, found as a fact that Mr. Pirner was not justified in abandoning his employment. Moreover, he found that the husband had persistently minimized his income for the apparent purpose of reducing his support obligations.
[15] The wife led evidence about the husband’s use of consulting contracts, contracts which he had personally and directly negotiated with employers. After reviewing the various third party arrangements, the trial judge concluded that “Mr. Pirner personally devised employment arrangements and drew extensive advantageous contracts, even as to termination payments” in order to reduce his income. Further, “it is almost difficult to believe Mr. Pirner would go to the extent he has to deprive his children of the ordered support.”
[16] On this conclusion, it was necessary for the trial judge to attribute income to Mr. Pirner. In determining the appropriate amount, the trial judge considered the evidence of Jack Marmer, a forensic accountant retained by the wife. For 1997, Mr. Marmer estimated Mr. Pirner’s base income at $210,624.50, plus additional compensation, bringing his total 1997 earnings to a range between $254,306 and $272,886. From that starting point, Mr. Marmer estimated Mr. Pirner’s future annual earnings to be in the range of $266,651 to $285,771.
[17] The trial judge also heard evidence from Mr. Pirner and from Mr. Arnold, Mr. Pirner’s accountant. Mr. Pirner reiterated that, due to many factors, his income was nominal and testified that he only earned $20,700 in each of 1999 and 2000.
[18] The trial judge was alive to all this evidence when he attributed an annual income of $175,000 to Mr. Pirner, the same amount found by the divorce judge some six years earlier.
[19] Accordingly, the wife’s evidence establishing Mr. Pirner’s use of consulting contracts to minimize his income persuaded the trial judge not to accede to the husband’s application to decrease his attributed income. However, it is also clear that the wife did not persuade the trial judge that the husband’s circumstances had changed to the extent necessary to warrant a higher attribution of income to Mr. Pirner.
[20] The quantum of income attributable to the husband is a finding of fact made by the trial judge on the basis of the evidence adduced by both parties. In Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, the Supreme Court of Canada has clearly told appellate courts not to interfere with a factual finding of a trial judge in the absence of palpable and overriding error, including a misapprehension of the evidence.
[21] In my view, the trial judge made no such error and did not misapprehend the evidence. The trial judge was not obligated to accept either the husband’s evidence about his minimal income or the wife’s expert evidence as to the husband’s 1997 and projected income. The trial judge was entitled to attribute income based on his review of the whole of the evidence. On the evidence called at trial, he was entitled to his determination that neither party had persuaded him of a material change in the husband’s income since the divorce. There is no reason to interfere with his conclusion.
2. Variation of Child Support
[22] Although the wife does not take issue with the prospective variation of child support in the amount set out in the Guidelines, she does challenge its retroactivity to May 1997, the date when the Guidelines came into effect. She makes this challenge on two grounds. First, she argues that, since the husband’s variation application was dismissed, the trial judge made the variation retroactive on his own motion. Second, the wife argues that, because she had already declared child support for the relevant years and had paid income tax on that support, a retroactive award would be contrary to public policy.
[23] On the first point, the husband applied to reduce child support in 1995. At the variation trial -- held after the Guidelines came into effect -- he argued that his support obligations should be set in conformity with the Guidelines. No issue was taken with this argument. In the circumstances of this case, and in the absence of any prejudice to the wife, I see no error in the trial judge’s decision to accede to that request.
[24] On the second point, apart from the quantum of income attributed to the husband, the wife’s objection appears to be based on the complexities she foresees in refiling her income tax returns for the three years in issue. This argument fails for two reasons.
[25] First, the wife has alleged that the husband has not paid most of this child support. Accordingly, it seems unlikely that the wife would have claimed in her income support that she did not receive.
[26] Second, in any event, I see no public policy argument and no unusual hardship arising from any need to refile. Although the wife claimed she did not know what amounts of child support to attribute to each of the three years, clearly the amount ordered was $1,010.50 per month per child. In addition, the wife has a prepared chart and her own expert to assist her with any re-filing.
[27] I would not give effect to this ground of appeal.
3. Variation of Spousal Support
[28] The wife appeals the dismissal of her application to extend the duration of her spousal support.
[29] The original divorce judgment provided for the termination of spousal support on October 1996, with a conditional extension to October 1997 if the wife was enrolled in a Bachelor of Science nursing degree.
[30] At the time of the variation trial, the wife had completed her Bachelor’s degree; was enrolled in a Master’s degree; and had been accepted into a Ph.D. programme. The wife did not rely on these ongoing studies to extend spousal support because, by the time of trial, she was earning over $40,000 annually and received a further $10,000 of grant income. Accordingly, the wife’s pursuit of further education had no impact on her income.
[31] Instead, the wife sought to extend her support on the basis of her husband’s non-compliance with his support and equalization obligations. In my view, such non-compliance, at least in the circumstances of this case, is not sufficient grounds to justify an extension of spousal support.
[32] In my view, support awards ought not to include a purely punitive component akin to the aggravated or punitive damages that might be awarded in a civil action. The wife is not without a remedy. The husband’s failure to comply with the various monetary orders entitles the wife to bring enforcement proceedings to collect those arrears.
[33] In these circumstances, the trial judge did not err in his determination that the wife was not entitled to an extension of spousal support.
4. Lump Sum Support
[34] On a similar argument, the wife argues that the trial judge ought to have recognized the husband’s persistent failure to pay support by ordering lump sum in lieu of ongoing periodic support. While this argument may have had merit, the wife did not request this relief in her variation application.
[35] Undoubtedly, it was for this reason, that the trial judge did not address lump sum support in his reasons for judgment.
[36] Further, when counsel for Mrs. Pirner did raise the issue of lump sum support for the first time in closing submissions, that request was not based on the above argument but, instead, it was presented as an attempt to enforce a failed settlement attempt from December 1997. In that proposed settlement, Mr. Pirner allegedly agreed to pay lump sum support. However, that settlement failed -- the wife cannot enforce indirectly a settlement that she was unable to enforce directly.
5. The Arrears
[37] Even before the variation trial, the quantum of arrears had been the subject of much litigation. The trial judge said this about the discrepancies on arrears:
The parties substantially disagree about the support arrears. As of March 2000, Mr. Pirner claims that the arrears are $128,389.74 (principal only) if the variation is not granted. Mrs. Pirner, however, believes that the arrears owed, as of May 1, 2000, are $156,358.34 (principal) and $29,158.42 (interest) for a total of $185,516.76. The difference may be related to the issue of indexing and whether Mr. Pirner paid an additional $8,332.62. This amount is dependent upon the spousal support terminating on October 1, 1997.
[38] In the 1997 reference, Master Linton concluded that, as at July 31, 1997, inclusive of medical and dental expenses, the arrears totalled $99,231.92, comprised of $91,756.29 in principal plus interest. Although arrears continued to accumulate since 1997, the husband did pay $101,320.02 over the time leading up to trial.
[39] At trial, Mr. Marmer submitted a calculation of arrears as an update to Master Linton’s calculation. In doing so, he catalogued the amounts payable under the divorce judgment, including medical and dental expenses, and credited the husband with payments made. For this purpose, he correctly assumed that spousal support ended in October 1997 and determined total arrears to be $163,556.16 as of April 1, 1999, exclusive of interest.
[40] The trial judge expressed confidence in Mr. Marmer’s evidence. The trial judge also considered the support schedule submitted by each of the husband and the wife. The only discrepancy between the two schedules for the period from April 1999 to March 2000 was $750, which the husband showed as a payment for October 1999, but which was not included in the wife’s schedule.
[41] After varying child support from $4,400 monthly to $2,021 monthly retroactive to May 1, 1997 the trial judge said:
Therefore, giving Mr. Pirner credit for the payments he made, the arrears, as of April 14, 2000, are to be set at $59,146.65 (principal only) plus interest at eight percent (8%). In addition, Mrs. Pirner is to be reimbursed for any medical, dental and speech therapy bills that Mrs. Pirner has incurred for the children, upon the production of the appropriate accounts.
[42] While it would have been helpful if the trial judge had elaborated on his calculation of arrears, it is apparent that he arrived at the figure by starting with Master Linton’s number of $91,756.29, excluding interest, at July 31, 1997. He would have reduced that number by $7,137 for the “overpayment” of child support for May, June and July 1997 included in Master Linton’s calculation.
[43] The trial judge then calculated support forward on the basis that child support would total $2021 monthly from July 1997, and that spousal support would end October 1997. The arrears would, therefore, be $84,619.29 at July, 1997.
[44] From August 1997 to April 2000, Mr. Pirner ought to have paid combined child and spousal support of $73,093. Together with the earlier Linton calculation of $84,619.29, Mr. Pirner would have owed $157,712.29. The trial judge would have credited the $101,320.02 paid by Mr. Pirner, leaving a balance owing of $56,392.27. While this figure does not completely accord with the $59,146.65 calculated by the trial judge, the judge explained there were discrepancies in the amounts at issue relating to indexing and the termination date for spousal support. Further, the trial judge’s calculation was current to April 14, 2000 and, accordingly, would have included the April payment.
[45] After the trial judge released his reasons on December 1, 2000, counsel appeared before him between January 2001 and September 2002 on no less than four occasions to clarify issues. Despite the trial judge’s repeated requests, neither counsel produced any tables calculating the arrears differently. In the absence of any reason to recalculate arrears, the trial judge simply clarified his reasons to note that his calculation had credited Mr. Pirner’s interim payments to child support arrears because spousal support had ended in October 1997.
[46] This court was not given any different calculations or directed to any other evidence to establish any other basis for the calculation of arrears. In those circumstances, I am not persuaded that the trial judge made any reversible error.
The Husband’s Cross-Appeal
[47] I now turn to consider the husband’s cross-appeal, in which the husband alleges bias on the part of the trial judge. The husband raises three arguments in support of this ground of appeal.
[48] He first argues that the trial judge’s earlier involvement in case managing the proceedings compromised his partiality at trial. In advancing that argument before this court, the husband argues that the trial judge improperly considered evidence from an earlier proceeding in reaching his variation conclusions, specifically the evidence of a Mr. Gourd.
[49] The husband’s argument on this issue fails. Although Mr. Gourd did not testify at trial, he did testify at an earlier aborted arbitration. By agreement between the parties, Mr. Gourd’s arbitration evidence was filed on the trial and, therefore, was properly considered to be part of the trial evidence. Indeed, Mr. Gourd’s evidence is specifically referenced in the husband’s appeal factum. Accordingly, this argument cannot succeed.
[50] Second, the husband takes issue with the trial judge’s request, made at the conclusion of the wife’s case, that the wife’s counsel call a Mr. Lembo to give evidence. Mr. Lembo was the principal of a company that benefited from one of Mr. Pirner’s third party consulting agreements.
[51] There is no doubt that, at the conclusion of the evidence, the trial judge strongly suggested to the wife’s counsel that Mr. Lembo be called to testify. He apparently made this request as a reaction to Mr. Pirner’s admission that income he earned had been paid to Mr. Lembo’s company. Nonetheless, as he correctly later realized, the trial judge ought to have left the conduct of the trial to counsel. Indeed, when the trial resumed, the trial judge recognized this and withdrew his request.
[52] On this issue, the husband relies on Farrar v. Farrar (2003), 2003 15943 (ON CA), 63 O.R. (3d) 141 (C.A.). In that decision, this court allowed an appeal where a trial judge intervened and required one of the parties to call further evidence. The facts in Farrar, however, are quite different from those in this case. I say this for three reasons.
[53] First, the trial judge in Farrar maintained his insistence on the introduction of the further evidence. In this case, on the resumption of the trial, the trial judge made it crystal clear that he was not requiring Mr. Lembo to give evidence and that whether the wife’s counsel did so was totally within his control. Accordingly, the trial judge’s intervention did not amount to an impermissible usurpation of the function of counsel.
[54] Second, the evidence directed by the trial judge in Farrar was expert opinion evidence on the valuation of a pension. In this case, Mr. Lembo’s evidence, if anything, confirmed the evidence of the husband that Lembo’s companies received (and kept) large portions of income paid for Mr. Pirner’s work. Since this evidence merely confirmed the husband’s evidence, it played no more than a minimal role in the trial judge’s reasons and clearly did not impact on the result.
[55] Third, in Farrar, the further evidence was given by way of written interrogatories, thereby eliminating the other party’s ability to challenge that evidence through cross-examination. Here, when the wife’s counsel called Mr. Lembo, the husband’s counsel had every opportunity to cross-examine. Accordingly, in the end, no prejudice resulted.
[56] Moreover, in the circumstances of the interplay at this trial, the trial judge’s intervention cannot be said to have raised a reasonable apprehension of partiality on the part of the “reasonable, informed, practical and realistic person who considers the matter in some detail.” R.D.S. v. R., 1997 324 (SCC), [1997] 3 S.C.R. 484 at para. 36.
[57] Third, the husband challenges the trial judge’s partiality on the basis of negative remarks that the judge made to him during his evidence. Those comments did reveal the trial judge’s view that the husband was not responding to the questions asked. While, in hindsight, some comments were perhaps unnecessary, exhibited some impatience, and may have been seen as sarcasm, they cannot be said to evidence bias on the part of the trial judge who made every effort to ensure a fair but expeditious trial.
[58] This ground of appeal cannot succeed.
Disposition
[59] In the result, I would dismiss the appeal as well as the cross-appeal.
Costs
[60] Both appeals are unsuccessful. Neither counsel prepared bills of costs as is required by this court’s practice direction available on the court website at http://www.ontariocourts.on.ca.
[61] If, despite the divided success, either counsel wishes to pursue costs, they may do so by delivering written submissions not to exceed five double-spaced pages. Those submissions shall be made through the court’s executive legal officer within 30 days of the release of these reasons. The other counsel may respond within 10 days thereafter, with submissions no longer than three double-spaced pages.
RELEASED: November 30, 2005
“S.E. Lang J.A.”
“I agree: R.R. McMurtry C.J.O.”
“I agree: J.I. Laskin J.A.”