COURT OF APPEAL FOR ONTARIO
CITATION: Wharry v. Wharry, 2016 ONCA 930
DATE: 20161213
DOCKET: C61297
Strathy C.J.O., Pardu and Brown JJ.A.
BETWEEN
John Wilson Wharry
Applicant (Respondent in Appeal)
and
Karen Wharry
Respondent (Appellant)
Elli Cohen, for the appellant
Ross C. McLean and John W.E. Gilbert, for the respondent
Heard: November 10, 2016
On appeal from the judgment of Justice Michael G. Emery of the Superior Court of Justice, dated October 16, 2015.
Pardu J.A.:
[1] Karen Wharry appeals from a judgment rendered in matrimonial proceedings. She submits that the trial judge erred in the following respects:
Limiting her monetary compensation for unjust enrichment to an amount representing one half the value of a bungalow on the Drumcrow farm property at the date of trial, rather than basing his award for her contributions to the joint family enterprise on the value of the whole farm;
Concluding that the Drumcrow farm transferred to the respondent was a gift and therefore excluded from his net family property;
Limiting retroactive child support to a three-year period;
Limiting retroactive spousal support to a three-year period;
Terminating spousal support as of December 2016, just two years after trial; and
Allocating responsibility for various post-separation obligations.
[2] For reasons that follow, I find that the trial judge erred in limiting retroactive child support to a three-year period and terminating spousal support in December 2016. In my view, the balance of the appeal should be dismissed.
A. Background
(1) Relationship History
[3] The parties were married on August 25, 1992 in Northern Ireland. This was a 14-year relationship. They have two children, Scott (age 21) born May 13, 1995 who is now independent, and Rebekah (age 20) born September 11, 1996 who is continuing her post-secondary education.
[4] The appellant was working full time at the date of the marriage, but never returned to work full time after the children were born. She suffered from post-partum depression after the birth of each of the children. The respondent spent long hours working; she looked after the household and the children.
[5] The respondent’s father, Mr. Wharry Sr., operated a dairy and cattle farming business with the respondent at the “Drumcrow” farm in Northern Ireland. Mr. Wharry Sr.’s own father had transferred the farm to Mr. Wharry Sr., the oldest son. Mr. Wharry Sr. in turn transferred the farm and related property to the respondent, his oldest son, in 1997 during the parties’ marriage.
[6] The deed of transfer to the respondent for Drumcrow farm reserved a “right of residence” so that the respondent’s parents, Mr. Wharry Sr. and Mrs. Wharry, could live in a bungalow located on the property for the rest of their lives.
[7] The parties moved to Canada in 2002 and purchased the “Kincardine” farm in Ontario.
[8] The parties separated on November 26, 2006. After separation, both children primarily resided with the appellant. However, Scott moved in with the respondent in March 2013.
(2) Procedural History
[9] The respondent brought his Application on January 23, 2007. The appellant filed her Answer on March 13, 2007, seeking, among other things, equalization, child support, and spousal support.
[10] Shortly thereafter, the respondent was ordered to pay interim monthly child support in the amount of $360 for the children, effective July 11, 2007. The interim child support order was based on an imputed annual income of $25,000 to the respondent. No interim spousal support was ordered.
[11] The respondent unilaterally reduced his child support to $200 per month without seeking to change the interim order when Scott moved in with him in March 2013.
[12] The parties settled a number of issues in 2008, including the appellant’s equalization claim regarding the Kincardine farm. The respondent paid the appellant $85,000 to purchase her interest in the farm.
[13] The remaining issues were heard by the trial judge in November 2014.
[14] At trial, the appellant claimed that the respondent had been unjustly enriched and sought a remedy in relation to the Drumcrow farm and other property in Northern Ireland.
[15] The respondent argued that the transfer of the Drumcrow farm and other property was a gift from his father, Mr. Wharry Sr., during the marriage. He submitted that it was therefore excluded property under s. 4(2) of the Family Law Act, R.S.O. 1990, c. F.3.
[16] The appellant further claimed retroactive table child support and spousal support. She also sought retroactive payment toward the children’s special or extraordinary expenses of $16,891.30 incurred since separation, under s. 7 of the Federal Child Support Guidelines, SOR/97-175 (the “CSG”).
[17] Both parties requested that the trial judge allocate various post-separation responsibilities.
B. The Drumcrow farm
(1) The Trial Judge’s Reasons
[18] In assessing the appellant’s claim for compensation for unjust enrichment the trial judge referred to the test set out in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at paras. 106-107 of his reasons:
The Court held in Kerr v. Baranow that the joint family venture is a concept that should be introduced at the remedy stage of the unjust enrichment analysis. The key ingredients in a joint family venture remedy are identified through the use of four criteria:
The mutual effort made by the parties;
the economic integration of the parties to result in the economic interdependence and natural resources that characterized the relationship of the parties;
intention exhibited by the parties;
the priority of the family given by the parties.
[19] He concluded at paras. 118-121 that the appellant was entitled to a monetary award amounting to one half of the value, as of the date of trial, of the bungalow on the Drumcrow property:
I find as a fact that the bungalow was built with the income stream generated by John through the operation of the dairy business. There is evidence that the funds to build the bungalow came directly from the farm account, or indirectly when funds in that account was used to repay the loan borrowed from the Northern Bank for its construction.
I make reference to three pieces of evidence to support a finding that the bungalow was the product of a joint family venture between John and Karen. First, the bungalow was built prior to the transfer of Drumcrow Farm to John while he worked diligently to provide for his family by operating the dairy business with his father and brother. Second, Karen made contributions to the joint family venture by caring for the children, helping with farm work when needed, and by foregoing a better lifestyle so that John’s wages could be applied to, or used to repay the financing to build the bungalow. Third, Karen testified that John told her that someday the bungalow would be theirs. That statement was not contested.
The role Karen played to allow for the bungalow’s construction meets with the requirements to find a joint family venture set out in Kerr v. Baranow. I find that:
Both John and Karen made their respective contributions to enable the construction of the bungalow. This was a mutual effort on their part.
At the time of the bungalow’s construction, John and Karen were economically integrated not only as a couple, but also with the operation of the farm. This is demonstrated through the use of the farm account to fund personal as well as farm expenses. The fact that the farm account was used to pay for the construction of the bungalow or to repay the mortgage to Northern Bank makes this all the more relevant.
Karen’s evidence that John told her that “someday the bungalow would be theirs” is a declaration of intent that he and Karen were working towards a shared future together, and that the bungalow would be theirs to share at that future time. No doubt Karen would have experienced frustration and disappointment to learn after paying off the mortgage to purchase Deerpark Farm for David that she would then have to forgo an improvement to the standard of living she and John could expect with extra disposable income that John’s share of farm income would be used to build and pay for the construction of the bungalow for the next seven years. The promise that the bungalow would someday be theirs was a declaration by John of an actual intent that he and Karen would someday receive that value.
The priority of the family was relevant to the acquisition of wealth in the form of the bungalow as Karen looked after home and family thereby enabling John to build the bungalow and pay for the cost of its construction. I therefore find that there was a joint decision to prioritize the family in order to realize the objective constructing the bungalow at Drumcrow Farm.
John would be unjustly enriched if he were to retain the bungalow without recognizing Karen’s contribution. While Karen did not contribute directly to its construction, the bungalow was built as a joint family venture that would work to Karen’s detriment if she were not compensated for the efforts made and the sacrifices she endured for the bungalow’s construction. The product of her contribution together with John’s industry allowed income to stream through the farm account and to pool as capital in the construction of the bungalow, thereby creating a capital asset. This capital is an accumulation of wealth in which they both should share.
[20] The trial judge concluded at paras. 100-103 that the appellant was “essentially detached from the farm” operation on the land transferred to the respondent in 1997, apart from her efforts to the joint family enterprise which enabled construction of the bungalow in 1995:
The assets at issue in this case consist of the farm on Drumcrow Road, the milk quota, the cattle herd and related equipment and machinery that were transferred from Mr. Wharry Sr. to John in 1997. John’s role in the marriage involved operating the farm on Drumcrow Road and the Deerpark Farm for the purposes of operating the dairy business consisting of the production and sale of dairy products under milk quota, and the sale of cows and calves. The court heard evidence that all income from the dairy business went into the farm account. The court also heard evidence that while Karen would help out when asked, her role was concentrated on caring for the children where she and John lived in the house at Deerpark Farm.
The parties universally acknowledged at trial that John did “the lion’s share of the work” as between them to operate the dairy and cattle business.
Karen was essentially detached from the farm on Drumcrow Road. Karen only interacted with the dairy business John would operate with his father and brother on those occasions when she was asked to help out. The court also heard evidence that Karen was asked to forgo further income to benefit her family from John’s efforts in the dairy business when the farm account and the assets of the dairy business for used to borrow for the purposes of building the bungalow on Drumcrow Farm.
Karen gave evidence that she was told, and had every reason to believe that foregoing income from John’s efforts was worthwhile because the bungalow would someday be theirs. It was on this basis that Karen continued to contribute her time and energy to care for the children and the home she made for John and herself. This enabled John to concentrate on the construction of the bungalow, and to operate the dairy business that would systematically pay off the mortgage taken to build it.
[21] In assessing the respondent’s claim that the farm had been gifted to him, the trial judge at para. 111 relied on McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401 to identify the essential elements of a gift:
In McNamee v. McNamee, the Court of Appeal noted Justice McLachlan’s observation in Peter v. Beblow, 1993 CanLII 126 (SCC), [1993] 1 S.C.R. 980 that, “the central element of a gift [is the] intentional giving to another without expectation of remuneration”. From that observation, the court confirmed the three ingredients essential to find a legally valid gift are:
An intention to make a gift on the part of the donor, without consideration or expectation of remuneration;
an acceptance of the gift by the donee; and
a sufficient act of delivery or transfer of the property to complete the transaction
[22] Only the first element was in issue at trial.
[23] The Drumcrow farm had been owned by the respondent’s family for generations:
John’s great grandfather had come from Scotland. He had purchased Drumcrow Farm and handed it down to his son, John’s grandfather, who added more land to it. John’s grandfather then transferred it to John’s father, Mr. Wharry Sr., with right of resident to allow John’s grandfather and grandmother to live on the farm during their lifetime. (reasons for judgment para. 34)
[24] At paras. 37-40, the trial judge explained that Mr. Wharry Sr. gave the Drumcrow farm to his son, the respondent, in 1997:
In December 1997, Mr. Wharry gave the Drumcrow Farm and house located at 28 and 30 Drumcrow Road to John, which included the bungalow. He also transferred the milk quota, calf and cow herd, machinery and the farm account to John. He made this transfer because the taxation laws in Northern Ireland had changed in 1997 to allow the transfer of property having a value of £300,000 or less without having to incur a capital gain. John explained in his evidence that Mr. Wharry Sr. made this transfer during his lifetime to avoid death taxes.
John’s father transferred Drumcrow Farm to John in 1997 with a “right of residence” reserved to him in the transfer deed so that he and Mrs. Wharry could live in the bungalow for the rest of their lives.
John relies upon the deed of transfer from his father as beneficial owner to himself entered into evidence through Mr. Richard Rountree, a solicitor in Ireland who gave evidence at trial by Skype. This deed of transfer shows the consideration for the transfer to be the natural love and affection. John states that he paid no money for this transfer and that his father placed no conditions on the transfer of land, machinery, quota or livestock, nor were there any “side deals” or collateral agreements. The right to residence for Mr. and Mrs. Wharry to reside in the bungalow was an interest reserve by Mr. Wharry Sr. in the deed of transfer itself.
In Schedule 2 of the transfer of land, the right of residence in the bungalow was stated as follows:
SUBJECT TO
(1) A right of residence in the dwelling house on the lands in Folio 13996 County Antrim in favour of the Transferor and his wife Mary Elizabeth worry for the terms of their natural lives.
[25] The trial judge was ultimately not satisfied that the transfer of machinery, livestock and the quota were gifts, but held that the transfer of land was a gift, at paras. 133-138:
I do not agree that the evidence shows that the construction of the bungalow and the right of residence given by Mr. and Mrs. Wharry was consideration in exchange for the transfer of Drumcrow Farm to John. The bungalow was built before the land was transferred. The transfer deed specifically identifies a right of residence in the dwelling house at 30 Drumcrow Road to set it apart. There was no evidence of an agreement between John and Mr. Wharry that one was provided for the other. The transfer deed states that the only consideration given was the natural love and affection which Mr. Wharry has for John as the transferee. Mr. Rountree testified that this would be consistent with his interpretation of that document.
The Court of Appeal in McNamee held that a transfer where strings are attached by the transfer or alone do not form a bargain. If a bargain is not formed, there cannot be consideration for the transfer of property.
I consider the right of residence reserved by the transfer document to represent similar strings to the transfer of shares by the father in McNamee. The right of residence relates only to the dwelling house and not to the entire farm made up of three folios. The right of residence was imposed by Mr. Wharry as the transferor. It was not something that John and his father bargained about, or something that was given back by John in exchange for the farm. The Farm was a gift that John would have received in any event upon his father’s death.
The evidence is consistent with the explanation given by John that Mr. and Mrs. Wharry gifted property to all of their children during their lifetime. David received Deerpark Farm in 1991 as a result of the sale of a block of 15 acres carved off from Drumcrow Farm, and the payment of a loan for the balance of the purchase price through the farm account. Each of John’s sisters received money from their parents when they got married. One sister received a mobile home. Drumcrow Farm was conveyed to John in 1997 when the tax laws in Northern Ireland changed to allow capital gain exemption for the transfer of a property having a value of less than £300,000. John explained that his father made this conveyance during his lifetime to avoid death taxes.
I do not draw an adverse inference against John for failing to call Mr. Wharry to testify as a witness over Skype. I accept the explanation that Mr. Wharry is not well. I do not know what benefit the court would have received from having Mr. Wharry testify by Skype when I could not observe him testifying in person, or how he responded with counsel directly. The transfer deed was not challenged as to its authenticity, admissibility or the truth of its contents. The document provided specific evidence of the donor’s intent to transfer the described lands to John, subject to the right of residency in the dwelling house reserved by his parents.
I consider on all of the evidence that the transfer of the Drumcrow Farm was made without the intention of either John or Mr. Wharry for John to pay consideration, and without expectation of remuneration for it. I therefore find that the transfer of the lands making up Drumcrow Farm to have been a gift John received from his father. The proper and fair market value of Drumcrow Farm is therefore excluded from the calculation of John’s net family property under section 4(2) of the Family Law Act.
(2) The Parties’ Submissions
[26] The appellant submits that the trial judge erred by limiting her monetary compensation for unjust enrichment to an amount representing one half the value of the bungalow on the Drumcrow farm property at the date of trial, rather than basing his award for her contributions to the joint family enterprise on the value of the whole farm. She further submits that he erred in concluding that the Drumcrow farm transferred to the respondent was a gift and therefore excluded from his net family property.
[27] The respondent maintains his position that the Drumcrow farm and related property were a gift. He accepts and relies on the trial judge’s decision.
(3) Analysis
[28] The appellant does not suggest that the trial judge articulated an incorrect test for assessing her claim for compensation for unjust enrichment in relation to the Drumcrow farm, or the respondent’s claim that the farm had been gifted to him.
[29] The trial judge’s conclusion that the transfer of Drumcrow farm to his son was a gift was based on findings of fact that are entitled to deference: see Buttar v. Buttar, 2013 ONCA 517, 116 O.R. (3d) 481, at para. 34.
[30] On appeal, the appellant submits that the facts of this case are very similar to Buttar, that is to say, the transferor reserved the right of parents to occupy the property during their lifetime, and the transferee continued to provide his parents with income from the farm to assist with their living expenses after the transfer. As in Buttar, the appellant submits that there must have been consideration or an expectation of remuneration for the transfer.
[31] While this case has similarities to Buttar, the trial judge was not obliged to come to the same conclusion. He accepted that the transfer was “for natural love and affection” as recited in the deed, and accepted the respondent’s evidence that his father was too fragile to testify. The appellant has not identified any palpable and overriding error in the trial judge’s reasoning.
[32] The trial judge’s assessment of the appellant’s claim to unjust enrichment is similarly entitled to deference: Simonin Estate v. Simonin, 2010 ONCA 900, 329 D.L.R. (4th) 513, at para. 13. He assessed all of the circumstances surrounding the acquisition of the Drumcrow Farm, the construction of the bungalow, and each party’s contributions. Absent palpable and overriding error, there is no basis to intervene.
C. Child Support & Section 7 Expenses
[33] The following chronology is relevant to the appellant’s claims:
November 26, 2006
Separation
March 13, 2007
Appellant files Answer claiming child and spousal support.
July 11, 2007
Effective date of interim child support order, based on imputation of $25,000 annual income to the respondent. No interim spousal support was ordered.
November 28, 2011
Retroactive date to which trial judge ordered child and spousal support payable.
March 2013
Scott goes to live with the respondent.
November 2014
Trial
(1) The Trial Judge’s Reasons
(a) The Respondent’s Income
[34] The trial judge calculated that the respondent’s income for 2013 was $44,870, after disallowing expenses claimed against gross farm income, pursuant to ss. 19(1)(f) and (g) of the CSG because they had not been broken down between personal and business expenses.
[35] Sections 19(1)(f) and (g) of the CSG provide:
The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following:
(f) the spouse has failed to provide income information when under a legal obligation to do so;
(g) the spouse unreasonably deducts expenses from income;
[36] Neither party takes issue on appeal with the trial judge’s calculation of the respondent’s income. His reasoning is set out in paras. 156-160 of the reasons for judgment:
The court heard evidence that John’s gross income from the sale of lambs born and raised on the Kincardine farm, and his custom off farm work totals $49,000, being $23,236.25 in farm income and $25,941.97 in off farm work. From this must be deducted allowable deductions in the amount of $19,306.95, leaving an income from Ontario sources of $29,693.
Karen submits that there are deductions from John’s income that are not allowable in the amount of $19,567.09 pursuant to section 19(1)(f) and (g) and Scheduled III of the Federal Child Support Guidelines because they have not been broken down between personal expenses and those incurred for business.
To the Ontario sources of income must be added the business profit allocated to John from the dairy business he operates with his brother David in Northern Ireland in the amount of $7,726.68 each year. John also receives, or could receive £350 a month for the rental of the old farmhouse still standing on Drumcrow Farm under section 19(1) of the Guidelines. That rent translates into $7,518 a year as income from property.
Karen also seeks to include the difference of £1,644 each year between what John could obtain for land rent at Drumcrow Farm and what he receives from the partnership with his brother that operates the family dairy business.
I accept the submission Karen has made with respect to the evidence before the court of all sources of John’s income, and those deductions that should not be made upon the application of section 19 of the Federal Child Support Guidelines. The only exception I would make is for the difference in what John could obtain for renting the land at Drumcrow Farm to a third party and what he receives from the operation of the dairy business with his brother David. I consider it to be double counting to impute a source of income based on this difference while at the same time including the income he receives from the dairy business each year as income. Therefore, I impute an income to John for 2013 in the amount of $44,870.
[37] I calculate the respondent’s income for 2013, based on the trial judge’s reasons as follows:
Off farm work
$25,941.97
Profit from farm in Northern Ireland
$7,726.68
Potential rental income from farmhouse
$7,518.00
Gross farm income from Ontario
$23,236.25
Total
$64,422.90
[38] I infer that the trial judge concluded that $19,552.90, or about 50%, of the expenses the respondent claimed against his Ontario farm income were properly deducted, leading to his conclusion that the respondent’s income was $44,870.
(b) The Appellant’s Income
[39] The appellant’s income over the years since separation was as follows:
Appellant
2008
$15,646
2009
$1,600
2010
$1,109
2011
$1,030
2012
$1,360
2013
$7,935
[40] The trial judge imputed annual income of $8,000 to the appellant. He indicated that the appellant elected to operate an equestrian business rather than seek paid employment. He imputed $8,000 to her on the ground that her personal choices reduced her income from what she might reasonably earn.
[41] As will be discussed in more detail below, the trial judge awarded spousal support of $239 per month, or $2,868 per year.
[42] Therefore, the appellant’s total income for the purposes of s. 7 expenses under the CSG is $10,868, which is about 20% of the parties’ combined total income.
[43] Neither party takes issue with the trial judge’s determination of the appellant’s income.
(c) Retroactive and Ongoing Child Support
[44] The trial judge noted that the 2007 interim support order was based on $25,000 annual income imputed to the respondent, nearly $20,000 less than the annual income determined at trial. He noted that the appellant had claimed child support in her Answer of March 13, 2007 and concluded that the appellant was entitled to retroactive child support.
[45] The trial judge held at para. 165 of his reasons that D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231 provided for a “judicially imposed three-year limitation on retroactive child support” and awarded that amount, less credit for amounts paid pursuant to the interim order.
[46] He allocated the table support amount for two children of $662 per month at $405 for Rebekah and $257 for Scott. He credited the interim child support order at $200 for Rebekah and $160 for Scott. Support for Scott terminated when he went to live with the respondent in March 2013.
[47] Therefore, the trial judge ordered retroactive child support of $7,380 for Rebekah, being the retroactive monthly amount of $405 for 36 months, less the monthly $200 the respondent had been paying pursuant to the interim order. The trial judge ordered retroactive child support of $1,552 for Scott, being the monthly amount of $257 for 16 months, less the monthly $160 the respondent had been paying pursuant to the interim order. The retroactive amounts totalled $8,932, payable for the period November 28, 2011 to November 30, 2014.
[48] Effective December 1, 2014, the trial judge ordered that the respondent pay ongoing monthly table child support of $405 for Rebekah while she completed her post-secondary education.
(d) Retroactive and Ongoing Section 7 Expenses
[49] The trial judge found that s. 7 expenses for the children between April 4, 2007 and February 23, 2014 totalled $16,891.30. Based on the appellant’s counsel’s submissions, he ordered that these be shared equally, although s. 7 of the CSG provides that these expenses be shared by the parents “in proportion to their respective incomes.” The respondent acknowledges that equal division of these expenses cannot be justified under the CSG.
[50] On a go forward basis, the trial judge ordered that the respondent pay 80% and the appellant pay 20% of Rebekah’s s. 7 expenses, which is proportionate to their respective incomes.
(2) The Parties’ Submissions
[51] The appellant submits that the trial judge erred in interpreting D.B.S. as imposing a three-year limit to retroactive child support claims from the trial date. She contends that she ought to have received support retroactive to the date of separation, or at least to the date she filed her Answer on March 13, 2007.
[52] The respondent submits that the trial judge did not err. His reasons and conclusions were supported by the evidence.
(3) Analysis
[53] The trial judge erred when he concluded that D.B.S. mandated a three-year limit from the trial date for retroactive child support.
[54] The Supreme Court in D.B.S. at para. 118 provided that, having determined that a retroactive award is appropriate, the court must choose a date of retroactivity. Among the four main options are (i) the date of effective notice and (ii) the date of formal notice.
[55] D.B.S. at paras. 121-122 established that the date of effective notice will generally serve as a default option when choosing a date of retroactivity; this serves as a fair balance between certainty and flexibility. The date of effective notice refers to any indication by the recipient that child support should be paid or renegotiated. It does not require the recipient to take any legal action; all that is required is that the topic be broached.
[56] Despite this general default to effective notice, the Supreme Court in D.B.S. added at para. 123 that it will usually be inappropriate to make a support award retroactive to a date more than three years before formal notice was given: see also Gray v. Rizzi, 2016 ONCA 152, 129 O.R. (3d) 201, at paras. 45 and 61. One of the reasons for this general rule was to ensure that recipients move discussions forward after providing effective notice. The Supreme Court stated at para. 123:
Once the recipient parent raises the issue of child support, his/her responsibility is not automatically fulfilled. Discussions should move forward. If they do not, legal action should be contemplated. While the date of effective notice will usually signal an effort on the part of the recipient parent to alter the child support situation, a prolonged period of inactivity after effective notice may indicate that the payor parent’s reasonable interest in certainty has returned. Thus, even if effective notice has already been given, it will usually be inappropriate to delve too far into the past. The federal regime appears to have contemplated this issue by limiting a recipient parent’s request for historical income information to a three-year period: see s. 25(1)(a) of the Guidelines. In general, I believe the same rough guideline can be followed for retroactive awards: it will usually be inappropriate to make a support award retroactive to a date more than three years before formal notice was given to the payor parent. [Emphasis added.]
[57] On March 13, 2007, the appellant filed her Answer, claiming child support for the children. This appears to be the date of both effective and formal notice. Therefore, the three-year rule in D.B.S. is not at issue in this case, as the appellant gave effective and formal notice at the same time, and less than four months after separation.
[58] However, as the trial judge noted at para. 162 of his reasons, the issue of retroactive support is complicated by the interim order effective July 11, 2007 for child support of $360 per month based on an imputed income to the respondent of $25,000. In D.B.S., the Supreme Court distinguished between situations in which there is an existing support order versus situations in which there has not already been a court order for child support to be paid. A payor parent’s interest in certainty is more compelling in the former situation, where he has been following a court order.
[59] Nevertheless, as the Supreme Court stated in D.B.S. at para. 64, “parents should not have the impression that child support orders are set in stone.” A court should consider four main factors before making a retroactive child support order: (i) the reason for the delay by the recipient parent; (ii) the conduct of the payor parent (e.g., any blameworthy behaviour); (iii) the circumstances of the child; and (iv) any hardship occasioned by a retroactive award: D.B.S., at paras. 94 to 116. The Supreme Court cited Tedham v. Tedham, 2003 BCCA 600, 20 B.C.L.R. (4th) 56 for the proposition that “[n]one of the factors is decisive. For instance, it is entirely conceivable that retroactive support could be ordered where a payor parent engages in no blameworthy conduct”: D.B.S., at para. 99.
[60] In Tedham, the British Columbia Court of Appeal ordered retroactive child support where an interim support award was based on incorrect financial information, even though the initial underestimate was honestly made. The court provided the following reasons for their decision at paras. 59-60:
An interim order is just that – one made pending trial, with the expectation that the full financial circumstances of the parties will be forthcoming and available to the trial judge. In most cases, interim orders are made in circumstances where there has not been full financial disclosure and the parties are well aware that some adjustment may have to be made once all of the relevant financial information is available. In this case, for example, Mr. Tedham’s income was heavily dependent on bonuses, and determining his yearly income for Guidelines purposes was not simply a matter of multiplying his monthly paycheque by 12…
Children cannot be deprived of their entitlement to the Guidelines provisions for child support simply because the judicial officer making the interim order was not in possession of all of the relevant facts at the time the interim order for support was made. Similarly, the parent with day-to-day care of the children should not be made to bear more than her/his proportionate share of their support simply because the payor does not have, or has not produced, all of the information required to make a final determination of that issue.
[61] The British Columbia Court of Appeal continued at para. 62:
Nor, in my view, was Ms. Tedham required to go to the time and expense of one or more variation applications as Mr. Tedham’s financial picture unfolded pending trial in order to succeed on an application for retroactive support. Had she done so, any gains she may have made in obtaining an increase in child support may well have been offset by the expense to her of so doing, even if she were awarded the costs of such applications. In my view, she was entitled in these circumstances to make do with the support payable under the interim order in the short-term until she had the opportunity to canvass the parties’ full financial picture before the trial judge. The interim order, although deemed to be correct at the time it was made (in the absence of an appeal or a variation), was not the final word on the amount of child support payable by Mr. Tedham pending trial.
[62] As stated by the British Columbia Court of Appeal, an interim order is often no more than a rough estimate of a payor’s income. This is particularly true in this case, where an accurate calculation of the respondent’s income depended on various sources of self-employment income, and adding back a personal component of expenses he had deducted from his income for tax purposes. The respondent should have been aware that retroactive adjustments could occur at trial once all of the financial information was available and fully canvassed.
[63] While the interim support period in Tedham was shorter than this case, the appellant cannot be faulted for failing to try to vary the interim support as more information became available about the respondent’s income, given the cost and difficulty associated with such a step. The appellant was on public assistance for a time following separation. She has earned limited income over the years. Both children resided with her after separation and beyond November 28, 2011, the date to which the trial judge made support retroactive.
[64] The appellant should not have to bear more than her proportionate share of support for the children simply because the respondent did not have, or had not produced, all of the information required to make a final determination of that issue when the interim order was made in 2007. This is particularly true given the significant disparity between the parties’ incomes and assets. The respondent submitted that the Drumcrow farm was worth $984,500 at the date of trial.[^1] The appellant had received $85,000 to purchase her interest in the Kincardine farm, pursuant to the 2008 consent order.
[65] Considering all these factors, and the early effective and formal notice of the claim for child support on March 13, 2007, the trial judge should have made support retroactive to that date.
[66] The trial judge’s denial of retroactive support put a premium on inaccurate calculations of income for CSG purposes, whether inadvertent or intentional. While the father may have relied on the interim order, this was based on a rough and inaccurate calculation of his income. Any prejudice resulting from expanding the time span of retroactive support can, where appropriate, be dealt with by denying interest on the payments that should have been made, and by allowing a payor to make up the payments over time. If a payor can show hardship, this may also factor into the decision whether to order retroactive payments.
[67] Neither party provided evidence of the respondent’s 2007 income. The table below illustrates what would have been payable from January 2008 to November 2014, based on the respondent’s Line 150 income, as adjusted by adding $7,518 for notional farmhouse rent and 50% of the farm expenses claimed, as done by the trial judge. Had he paid the table amounts based on his adjusted income, he would have paid $45,054 in child support from January 2008 to November 2014.
[68] Instead, based on the interim order and the trial judge’s retroactive order, the respondent was liable to pay only $35,612 from January 2008 to November 2014. He paid no support for the first six months after separation, when both children were in the appellant’s care.
Respondent
Line 150 Income (including N. Ireland income)
Adjusted income adding notional rental income of $7,518 & 50% of farm expenses deducted
Annual Table support payable
Annual support paid, including retroactive support ordered
2008
$21,135
$35,960
$6,444 ($537 x 12 months)
$4,320 ($360 x 12 months)
2009
$12,050
$36,492
$6,540 ($545 x 12 months)
$4,320 ($360 x 12 months)
2010
$11,624
$38,285
$6,876 ($573 x 12 months)
$4,320 ($360 x 12 months)
2011
$13,793
$42,286
$7,680 ($640 x 12 months)
$4,622 ($360 x 11 months & $662 x 1 month)
2012
$12,759
$42,295
$7,428 ($619 x 12 months)
$7,944 ($662 x 12 months)
2013
$44,870
$5,631 ($662 x 3 months & $405 x 9 months)
$5,631 ($662 x 3 months & $405 x 9 months)
2014
$44,870
$4,455 ($405 x 11 months)
$4,455 ($405 x 11 months)
Total
$45,054
$35,612
[69] The foregoing calculations are imprecise, but without assistance from counsel, no more than an approximation is possible, in light of the state of the record. For the purposes of calculating support payable, the above table applies the CSG in force at the applicable time.
[70] The retroactive support ordered by the trial judge ($8,932) should be increased by $9,442, representing the shortfall between what the respondent should have paid ($45,054) from January 2008 to November 2014 based on his adjusted income and what the respondent was liable to pay ($35,612) as a result of the trial judge’s order. Therefore, the respondent must pay $18,374 in retroactive child support to the appellant for the children.
D. Spousal support
(1) The Trial Judge’s Reasons
[71] The trial judge determined that the appellant had a compensatory entitlement to spousal support. She had sacrificed career opportunities in order to raise the children. Her time and attention to the home and children also enabled the respondent to concentrate on his farming business.
[72] The trial judge awarded 36 months of retroactive spousal support at the rate of $239 per month, to terminate on December 31, 2016. He stated the following at para. 172 of his reasons:
Karen has chosen the entrepreneurial path of pursuing a career to be self-employed in her own business. By definition, Karen has chosen not to upgrade her office or computer skills that formed the foundation of any claim for compensatory support. I therefore order John to pay spousal support to Karen in the amount of $239 a month until December 31, 2016 at which time she is expected to be self-sufficient.
(2) The Parties’ Submissions
[73] The appellant submits that the trial judge erred in two ways. First, he erred by imposing a three-year limit to her retroactive spousal support claim from the trial date. She contends that she ought to have received support retroactive to the date of separation, or in the alternative to March 13, 2007. Second, he erred by terminating spousal support on December 31, 2016. She submits that this termination date is unreasonable given the trial judge’s findings of her dependency.
[74] The respondent submits that the trial judge did not err. First, the duration of five years is appropriate given that this was a 14-year marriage. Second, the trial judge limited retroactive support to three years to offset the low imputed income to her of just $8,000. The respondent contends that the appellant has the capacity to earn a higher income. For example, in 2008 she earned $15,646. She has chosen to forego a higher income so she can operate her equestrian business. In limiting retroactive spousal support to three years, the trial judge properly recognized that the respondent should not be responsible for this choice.
(3) Analysis
(a) Retroactivity Date
[75] In limiting retroactive spousal support to three years, it is unclear if the trial judge mistakenly interpreted D.B.S. as imposing a three-year limit (as he did with retroactive child support) or if he was exercising judicial discretion. The trial judge simply stated at para. 172, “[t]he higher range for that support is $239 per month for a total of $8,604 for 36 months of retroactive spousal support to make it commensurate in time with the retroactive child support ordered.” There is no reference to D.B.S. in this section of the trial judge’s reasons.
[76] I consider it unnecessary to determine this issue, given the analysis below regarding the termination of spousal support. As will be explained in more detail, regardless of when spousal support commences, it should continue indefinitely for a period of seven to 14 years, in accordance with the duration provisions of the Spousal Support Advisory Guidelines (Ottawa: Department of Justice Canada, 2008) (the “SSAG”) by Carol Rogerson and Rollie Thompson.
[77] Without determining the issue, I will make two observations. First, in Kerr at para. 208, the Supreme Court stated that concerns about notice, delay, and misconduct will generally carry more weight in the context of a claim for retroactive spousal support. This is because there is no presumptive entitlement to spousal support and, unlike child support, the payor is generally not under any legal obligation to look out for the recipient’s legal interests. The 2007 interim order provided that no temporary spousal support was payable based on the respondent’s imputed income of $25,000. The respondent therefore had an interest in the certainty provided by the order.
[78] Second, there would be minimal spousal support payable, if any, for the period that the trial judge did not order retroactive support. Neither party provided their 2007 income information. The following table shows the SSAG ranges each year from January 2008 to November 2011, the month to which the trial judge made support retroactive. The SSAG ranges are based on the respondent’s adjusted income and the appellant’s Line 150 income in 2008 and imputed income of $8,000 thereafter, as ordered by the trial judge given her choice to operate an equestrian business.
Spousal Support
Respondent’s adjusted income
Appellant’s income
Monthly table child support payable for both children
SSAG range under “with child support” formula
2008
$35,960
$15,646
$537
Low: $0 Mid: $0 High: $0
2009
$36,492
$8,000
$545
Low: $0 Mid: $0 High: $75
2010
$38,285
$8,000
$573
Low: $0 Mid: $0 High: $112
2011
$42,286
$8,000
$640
Low: $0 Mid: $62 High: $186
[79] The trial judge ordered retroactive support of $239, effective November 2011, based on the parties’ up-to-date circumstances and 2013 financial information, rather than factoring in the parties’ circumstances in 2011 and 2012. Neither party takes issue with this approach. The retroactive monthly award of $239 exceeds the high end of the SSAG range for 2011 and 2012, which is $186 and $192 respectively.
(b) Termination Date
[80] The trial judge erred by terminating spousal support on December 31, 2016. He applied the SSAG in determining the amount of spousal support, but ignored the SSAG in establishing duration without explanation. There is nothing in the record supporting the conclusion that the appellant would be self-sufficient by December 31, 2016.
[81] I begin by reiterating ss. 15.2(4) and (6) of the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.) governing spousal support:
Factors
(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.
Objectives of spousal support order
(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.
[82] While a court is not required to apply the SSAG to determine spousal support, it appears that the trial judge chose to rely on the SSAG when he indicated that $239 was at “the higher range.”
[83] Although neither party takes issue with it, I am unable to replicate the trial judge’s calculation. As I explain in more detail below, on my calculations using the trial judge’s figures the monthly amount of spousal support should be significantly higher than $239.
[84] The SSAG are a useful tool in calculating the appropriate amount and the duration of spousal support. Neither counsel provided this court with that information. Nevertheless, as pointed out in Fisher v. Fisher, 2008 ONCA 11, 88 O.R. (3d) 241, at para. 98:
[The SSAG] suggest a range of both amount and duration of support that reflects the current law. Because they purport to represent a distillation of current case law, they are comparable to counsel’s submissions about an appropriate range of support based on applicable jurisprudence.
[85] This court in Fisher continued at paras. 102-103:
Now that [the SSAG] are available to provide what is effectively a “range” within which the awards in most cases of this kind should fall, it may be that if a particular award is substantially lower or higher than the range and there are no exceptional circumstances to explain the anomaly, the standard of review should be reformulated to permit appellate intervention.
[86] At para. 97 of Fisher, this court cautioned that the SSAG “must be considered in context and applied in their entirety”: see also Mason v. Mason, 2016 ONCA 725, at para. 121. At para. 109 of Fisher, this court pointed out that “[a]mount and duration are interrelated parts of the formula – they are a package deal. Using one part of the formula without the other would undermine its integrity and coherence.”
[87] In the recently released Spousal Support Advisory Guidelines: The Revised User’s Guide (Ottawa: Department of Justice Canada, 2016), Rogerson and Thompson again remind courts to remember duration. Section 3(e) states, “[d]uration is often forgotten in the SSAG analysis. The formulas generate ranges for amount and duration. Amount cannot be considered alone.”
[88] Here, although the trial judge seemed to rely on the SSAG to determine the amount of support, he ignored them when he limited duration to five years.
[89] While a recipient’s achievement of self-sufficiency could conceivably be a reason to depart from the SSAG duration provisions or restructure support, there was nothing in the record to indicate that the appellant would or should be self-sufficient by December 31, 2016. It is apparent that her ability to achieve self-sufficiency has been adversely affected by the role she played during marital co-habitation.
[90] The “with child support” formula applies while the respondent continues to pay table child support plus s. 7 expenses for Rebekah. Based on income of $44,870 for the respondent; imputed income of $8,000 to the appellant; 14 years of cohabitation; and monthly table child support for Rebekah of $405 while she is under the age of 18, the “with child support” formula indicates a spousal support range of $364 to $624, with a mid-range of $492 for a period of seven to 14 years.
[91] Based on the exact same figures, but after Rebekah turns 18 years of age, the “with child support” formula indicates a spousal support range of $716 to $979, with a mid-range of $849 for a period of seven to 14 years. The increase in quantum after Rebekah turns 18 is mainly because the appellant no longer receives child tax benefits and other child credits. These benefits had a significant impact on the appellant’s income for spousal support purposes while Rebekah was under the age of 18: see SSAG, s. 6.3.
[92] Rebekah is on the cusp of independence. At the time of trial in November 2014, she was embarking on a one-year educational program leading to qualification as a dental assistant which should be completed, or nearly completed by now. Once Rebekah is independent, the “without child support” formula will apply: SSAG, s. 14.5.
[93] Based on the respondent’s income of $44,870; the appellant’s income of $8,000; and the 14-year cohabitation, the “without child support” formula of the SSAG produces a range for spousal support of $645 to $860, with a mid-range of $753, for a period of seven to 14 years. This is a case where the SSAG suggest that spousal support be reduced when crossing over from the “with child support” formula to the “without child support” formula: see SAGG, s. 14.5.
[94] In addition to the factors and objectives listed under the Divorce Act above, s. 9 of the SSAG provides a number of considerations when choosing a location within the range. Given the trial judge’s unchallenged finding of a compensatory basis for support, the most relevant factors in this case are the strength of the appellant’s compensatory claim; the respondent’s needs and ability to pay; and self-sufficiency incentives.
[95] The appellant has a strong compensatory claim that would suggest support in the higher end of the ranges for both amount and duration. During the marriage, she sacrificed career opportunities in order to devote her time and attention to the home and children. Her sacrifices enabled the respondent to concentrate on his farming business. The appellant suffered a disadvantage arising from her role during the marriage and its breakdown.
[96] Section 15.2(4) of the Divorce Act provides that, in making a spousal support order, “the court shall take into consideration the condition, means, needs, and other circumstances of each party” (emphasis added). The respondent’s means and ability to pay spousal support broadly include “all pecuniary resources, capital assets, income from employment or earning capacity, and other sources from which the person receives gains or benefits”: Leskun v. Leskun, 2006 SCC 25, 1 S.C.R. 920, at para. 29, citing Strang v. Strang, 1992 CanLII 55 (SCC), [1992] 2 S.C.R. 112, at p. 119. The respondent’s annual income is $44,870. The Drumcrow farm was valued at $1,863,905 as of the separation date in 2006, although there was evidence that it had decreased in value by the date of trial to $984,500.
[97] It is also relevant that the respondent has remarried, and his new spouse is contributing to his expenses: Underwood v. Underwood (1994), 1994 CanLII 7576 (ON SC), 3 R.F.L. (4th) 457 (Ont. Gen. Div.), varied (1995), 1995 CanLII 17840 (ON SCDC), 11 R.F.L. (4th) 361 (Ont. Div. Ct.). At the time of trial, his new wife, a veterinarian, was earning $76,293.46 each year and contributing about $2,000 per month towards their household expenses.
[98] Turning to self-sufficiency considerations, the appellant is now 46 years old. She has no up-to-date skills that would enable her to obtain significant employment. During the marriage, the appellant looked after the household and children and assisted on the family farm, skills that do not necessarily translate well to paid employment. Furthermore, she resides in a rural environment where finding a job may be more challenging.
[99] It must also be remembered that the trial judge imputed income to the appellant in an attempt to partially address self-sufficiency concerns, which is an approach recognized by ss. 9.7 and 13.2 of the SSAG. He awarded spousal support in an amount significantly less than suggested by the SSAG.
[100] Given the foregoing considerations, I would vary the trial judge’s spousal support order to eliminate the termination date of December 31, 2016, and to increase support to the mid to high range of the SSAG of $900 per month, effective January 1, 2016 until Rebekah is no longer a child of the marriage within the meaning of the Divorce Act. Given the respondent’s reliance on the existing orders, I do not correct the spousal support payable before that date.
[101] Beginning on the first day of the month following the last month in which the respondent is obligated to pay child support for Rebekah or January 1, 2017, whichever is the later date, spousal support will continue at a decreased monthly rate of $800, in accordance with the mid to high range of the “without child support” formula.
[102] It is important to clarify that the suggested duration of seven to 14 years includes the retroactive support period starting on November 28, 2011: SSAG, s. 3.2.5.
[103] Keeping in mind the suggested duration of seven to 14 years, it is not possible to assess on this record when the appellant will have had a reasonable opportunity to recover from the economic disadvantage resulting from the role she played during marriage, and resulting from the breakdown of the marriage. Accordingly, I do not fix a termination date for the support. That will have to be dealt with by a variation application at some future point which will take into account the duration of support suggested by the SSAG, and the amount of support paid by the respondent since November 28, 2011. The appellant’s child care responsibilities following separation and the insufficient spousal support paid when she was at an age more conducive to retraining, likely mean that support will have to be paid for the longer duration suggested by the SSAG, 14 years.
E. Post separation obligations
[104] The appellant also challenges the allocation of responsibility to her of $1,280 in tractor lease payments payable after separation, reimbursement to the respondent for one half the balance on a line of credit in the sum of $2,160, and payment for hay in the sum of $3,300 during a time when she operated the Kincardine family farm after separation. I see no error in the trial judge’s conclusions on these points.
F. Conclusions
[105] The order of the trial judge shall be varied to provide the following:
• Paragraph 4 regarding the respondent’s obligation to pay a total of $8,932.00 in retroactive child support to the appellant for both children shall be replaced as follows: “The Applicant, John Wilson Wharry, shall pay the Respondent, Karen Wharry, the sum of $18,374.00 in retroactive child support for the children, Scott Wharry and Rebekah Wharry.”
• Paragraph 5 providing that the respondent pay $8,445.65 for retroactive s. 7 expenses shall be varied to $13,512.80, which is 80% of those expenses.
• Paragraph 7 shall be amended to delete “up to December 31, 2016, at which time the respondent Karen Wharry has an obligation to become self-sufficient under section 17 of the Divorce Act.” The following shall be added to paragraph 7: “Commencing January 1, 2016, spousal support shall be increased to $900 per month. Commencing on the first day of the first month following the last month in which the respondent is obligated to pay child support for Rebekah or January 1, 2017, whichever is the later date, spousal support shall be decreased to $800 per month.”
• The following paragraph shall be added: “Any arrears created by this order on the date of release of this judgment for child or spousal support shall be paid at the rate of $300 per month without interest commencing on January 1, 2017 until the arrears are paid in full, and shall be applied first to arrears of child support and s. 7 expenses. In the event of any default in payment of these arrears, the whole balance shall become due and owing and shall bear interest in accordance with the Courts of Justice Act, R.S.O. 1990 c. C.43.”
[106] The balance of the appeal is dismissed. Counsel may make brief written submissions as to the costs of the trial and the appeal, within 30 days following the release of these reasons.
Released: “G.S.” December 13, 2016
“G. Pardu J.A.”
“I agree George R. Strathy C.J.O.”
“I agree David Brown J.A.”
[^1]: Respondent’s Written Submissions following Trial, Appellant’s Appeal Book and Compendium, Vol. 1, Tab 13, p. 141.