Court of Appeal for Ontario
Date: 2017-12-19 Docket: C62765 Judges: Pepall, Lauwers and Pardu JJ.A.
Between
Margaret Perri Applicant (Respondent)
and
Enzo Perri Respondent (Appellant)
Counsel
Andrew Kania, for the appellant
Karen Cunningham and Athena McBean, for the respondent
Heard
December 11, 2017
Appeal
On appeal from the judgment of Justice Kofi N. Barnes of the Superior Court of Justice, dated September 16, 2016, with reasons for judgment reported at 2016 ONSC 5833.
Reasons for Decision
Issues on Appeal
[1] The appellant husband argues that the application judge erred in awarding lump sum support for the respondent wife on the following grounds:
He awarded compensatory support although the wife's career prospects were in no way diminished by the marriage; there was no economic disadvantage which flowed from the marriage.
He failed to consider the impact of the child of the marriage residing with the husband on the amount of Spousal Support Guideline support which he used as a basis for the calculation of lump sum support.
Factual Background
[2] This was a 22 year marriage. The parties had two children. The older daughter was no longer a child of the marriage within the meaning of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) at the time of trial, but was living with her mother. Just two or three weeks before trial, the son moved from his mother's home to reside with his father. He was 19 years old at the time of trial. He was halfway through completing a three year community college program. The wife was earning about $63,300 a year as a legal secretary. The husband's annual income was about $100,000. The wife was 49 years old at the time of trial; the husband is the same age as the wife.
Application Judge's Decision
[3] The application judge found that the wife was entitled to compensatory support. He found that she had suffered economic hardship from the breakdown of the marriage at paras. 62, 77, and 82 of his reasons:
I conclude Ms. Perri suffered economic hardship as a result of the breakdown of the marriage. She was employed at the time of the marriage breakdown and remains employed. However, her decision to put the needs of the children first impacted the selection of the type of organization where she could work, effectively stifling her upward mobility and corresponding ability to increase her earnings.
I have explained that Ms. Perri has suffered economic hardship arising from the breakdown of the marriage. She has lost the intra spousal financial and other support she enjoyed during the marriage. Her standard of living has deteriorated as a result of the marriage breakdown.
The fact that Ms. Perri sacrificed her ability to earn a higher income was mitigated by the financial support and contributions of Mr. Perri. The marriage breakdown has left Ms. Perri without access to that support. Hence, her reduced earning potential has become a liability. She has suffered economic hardship from the breakdown of the marriage. In these circumstances, Ms. Perri's entitlement to ongoing spousal support arises on a compensatory basis.
[4] At the hearing below, both parties said they preferred a lump sum spousal support order rather than periodic payments. There was a high degree of animosity between the parties. The application judge accepted that a clean break would be appropriate. He calculated the support payment according to the mid-point of the Spousal Support Advisory Guidelines' ("Support Guidelines") amount, $1,194.00 per month, and selected a 10 year duration for the support payment, to arrive at a lump sum spousal support order of $143,280 – which he indicated was to be adjusted for tax consequences. Periodic support payments would be taxable in the hands of the wife, and tax-deductible for the husband, while lump sum support payments did not have these tax consequences.
[5] The application judge declined to make any order that the son continued to be a child of the marriage. The son had only moved to his father's home within a few weeks of the trial. The application judge indicated that there were many unanswered questions about the son at para. 55 of his reasons:
such as how Matthew is paying for his education, whether his parents are contributing, if he is going to be working during school, whether he is paying for his education from savings or student loan; and if he still needs financial support from his parents, et cetera.
Standard of Review
[6] The standard of review of spousal support decisions is deferential. As this court observed in Halliwell v. Halliwell, 2017 ONCA 349, at para. 88, "[a]ppellate courts should not interfere with support orders unless the reasons disclose an error in principle, a significant misapprehension of the evidence, or the award is clearly wrong".
Analysis
[7] We would dismiss this appeal, except with respect to the narrow issues discussed below which are not controversial.
[8] The husband argues that the wife could have, and could still, opt to work in downtown Toronto as a legal secretary and thereby earn more income. On this basis, the husband submits that no compensatory support should have been ordered. This, however, is not conclusive of the support issue. The application judge specifically found that after separation, the husband enjoyed much the same standard of living that he had before separation, but that the same was not true for the wife. The Divorce Act, ss. 15.2(6)(a) and (c), mandate consideration of not only economic disadvantage flowing from the marriage, but also economic disadvantage flowing from the breakdown of the marriage. The application judge's order was not simply an award based on the disparity of the parties' incomes. It was also a recognition of a 22 year marriage during which the parties had two children.
[9] The husband also argues that the application judge ought to have factored into the Support Guideline figure, which formed the basis of his lump sum calculation, recognition that the wife was obliged to contribute support for their son. The husband submits that this would have resulted in a base monthly Support Guideline figure of $917.00 per month for the entire 10 year spousal support period, subject to a variation application by the wife when the son ceased to be a child of the marriage. As it turns out, the son finished school some 16 months after the trial. He now lives with his grandmother.
[10] Given that the son had moved into his father's home within a few weeks of the trial, and the absence of full information about the son's circumstances, the application judge did not err by refusing to treat the son as a child of the marriage for the purposes of calculating spousal support. More information was required to make a finding that the son was a child of the marriage. See, for example, the factors dealing with the determination of whether a child continues to be a child of the marriage within the meaning of the Divorce Act listed in Pepin v. Jung (2003), 39 R.F.L. (5th) 383 (Ont. S.C.), at para. 15. The proposed fresh evidence is of no utility because it still does not deal with the gaps in the evidence about the son identified by the application judge.
[11] The application judge did not foreclose consideration of this issue. He indicated that the issue of whether the son was still a child of the marriage could "be revived with a proper evidentiary record." Neither party attempted to do so.
[12] The wife agrees that an adjustment should be made to reflect the non-taxable nature of the lump sum spousal support ordered. The application judge ought to have calculated that adjustment or invited written submissions on that issue.
[13] The parties are not in substantial disagreement as to the marginal tax rates applicable to the husband and the wife as at the date of trial: 41.8% for the husband and 30.2% for the wife. We would apply an amount equal to the halfway point between these two figures, or 36%.
Revised Order
[14] Paragraphs 3 and 4 of the divorce order dated September 16, 2016, specifying lump sum support amounts subject to adjustment for tax consequences shall be set aside and replaced as follows:
The Respondent, Enzo Perri, shall pay the Applicant, Margaret Perri, retroactive lump sum spousal support in the amount of $14,840.32, payable within 30 days of September 16, 2016.
The Respondent, Enzo Perri, shall pay the Applicant, Margaret Perri, lump sum spousal support in the amount of $91,699.20, payable within 30 days of September 16, 2016.
[15] The application judge also ordered the husband to designate the wife as the sole irrevocable beneficiary on the life insurance policy available through his employer at para. 5 of the divorce order. This paragraph shall be varied as follows:
- The Respondent, Enzo Perri, shall designate the Applicant, Margaret Perri, as sole irrevocable beneficiary on his life insurance policy available through his employment until the lump sum spousal support is paid and as security for payment of the lump sum spousal support.
[Emphasis added indicating variation.]
[16] Paragraph 13 of the divorce order requires the husband to provide ongoing financial disclosure so long as spousal support is paid, each year, within 30 days of the anniversary of the divorce order, in accordance with s. 24.1 of the Child Support Guidelines. We are told that this paragraph was inserted at the insistence of counter staff in Brampton, ON. This paragraph is not appropriate where only lump sum spousal support is ordered. There is no need for ongoing disclosure. This paragraph is deleted from the order.
[17] The divorce order should also provide that any amounts in default should bear post-judgment interest in accordance with s. 129 of the Courts of Justice Act, R.S.O. 1990, c. C.43, and is varied to add this proviso.
Costs
[18] In oral argument, the husband did not pursue the portion of the appeal advanced in his factum against the costs awarded against him by the application judge. We see no basis upon which to grant leave to appeal costs and leave to appeal costs is denied.
Disposition
[19] The appeal is allowed to the extent described above. The wife may make brief written submissions as to costs, due within 30 days after the release of this decision. The husband's submissions are due 30 days thereafter.
"S.E. Pepall J.A."
"P.D. Lauwers J.A."
"G. Pardu J.A."