ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: FS-11-367247 DATE: 20131210

BETWEEN:

Lynda Marshall

Applicant

– and –

Craig Marshall

Respondent

Harold Niman for the Applicant

Kenneth Cole for the Respondent

Motion heard December 5, 2013

Reasons for Decision of Backhouse, J. released December 10, 2013

[1] The applicant seeks temporary spousal support in the amount of $12,766/month retroactive to January 1, 2013.

[2] The parties were married for 27 years and had 2 children together. They separated on April 25, 2009. The applicant is 52 years of age. The Respondent is 53. The parties are divorced. The respondent has remarried and the applicant intends to do so in April, 2014.

[3] The applicant commenced her application claiming spousal support on March 11, 2011. In September, 2012, the parties entered into a without prejudice voluntary agreement whereby payments in an undisclosed amount were made by the respondent to the applicant. The agreement expired as of February 1, 2013. The applicant brought a motion for temporary support on February 27, 2013 which was adjourned a number of times as set out in the chronology at Tab 1 of the Applicant’s Brief of Documents filed for the motion. The respondent extended payments until August, 2013 and then discontinued them. On October 12, 2013, Justice Czutrin ordered that the applicant’s motion for temporary support proceed today over the objections of the respondent who argued that the motion should be adjourned to the trial set for June 20, 2014.

[4] During the marriage and continuing after separation until 2012, the parties were equal shareholders of various corporations involved in real estate development with the main operating company being Marshall Homes Corporation. At the beginning of the marriage, the applicant worked and supported the couple while the respondent completed his MBA. Marshall Homes was started in 1992. The respondent ran the company. The applicant did not work for the company for the first 5 years. She went to design school but according to the respondent, was not able to complete the course and obtain her degree because of the responsibilities of looking after the children. The parties income split during this time. She began to do some bookkeeping for the company and then worked part-time, helping purchasers pick colours and selling upgrades. The applicant’s income from the company was historically half that of the respondent’s.

[5] In 2011, the matrimonial home was sold with both parties receiving approximately $500,000. Until June, 2011, the applicant had access to the joint account where both parties deposited their income from Marshall Homes. She received income from the business until her 50% interest was bought out in 2012 for $1.75 million.

[6] The applicant’s position on the motion was that her claim for retroactive support prior to January 2013 should be determined by the trial judge.

[7] In September, 2012, the applicant enrolled in the Academy of Design, a 4 year online and in-class course. She deposes to having had initial discussions with a U.S. company to work on a development venture with them without yet receiving any payment. If this proceeds, she asserts that she may need to decrease the number of courses she is taking and complete her course over a longer period of time.

[8] The applicant’s income in 2012 was $75,385 which included $15,385 of income she received while working at Marshall Homes until February 15, 2012 which has now ceased, and a one time dividend related to the sale of her 50% interest in Marshall Homes. She earned approximately $7000 in interest income in 2012.

[9] The applicant deposes that she has depleted her capital by $500,000 because she has not been getting support and because of the high cost of the legal, professional and accounting fees which she has incurred since 2009. The applicant asserts that she has been advised to keep her capital in liquid investments until she knows what support she will have. It is her position that her income for the purposes of this motion should be fixed at $10,000/year based on the interest she can earn on her capital which is invested in GICs earning approximately 1½%/year. This is consistent with the opinion of her valuator, Wayne Rudson, set out in his preliminary report dated September 23, 2013.

[10] There are disclosure issues outstanding with respect both parties. The respondent has launched a Cubacruise venture in a separate company with a separate corporate tax return. The leasing, marketing, and promotion expenses for this company however have been paid out of Marshall Homes ($204,712 in 2012), thereby reducing the net income which the respondent says should be considered available for support. The applicant has for months been seeking disclosure of the Letter of Intent, projections, business plans etc. for this venture which is launching its first cruise this month. For the first time at the hearing of the motion, the respondent’s counsel submitted that the Letter of Intent has now been overtaken by an Agreement between the partners and that if the applicant will sign a confidentiality agreement and a sealing order is made, the respondent will make efforts to produce it.

[11] The respondent initially took the position that his income was straightforward and an income valuation was unnecessary for himself although he did one on the applicant. His financial statement sworn January 23, 2013 disclosed an annual income of $300,000 and expenses of $373,958. His November 25, 2013 financial statement disclosed an income of $195,000 plus other benefits paid by his company of $24,412. While it stated on page 2 that the $195,000 included the salary paid to his current wife of $25,000 net, when he was questioned, he stated that the $195,000 did not include the income splitting. The applicant retained Wayne Rudson to do an income report on the respondent. He assessed the income splitting to the respondent’s current wife by grossing it up to $55,981 which would make a total income of $275,393.

[12] Because of the outstanding disclosure, Mr. Rudson’s opinion is preliminary. He formed the following opinion of the respondent’s income:

2010-$956,000

2011-$579,000

2012-a range from $269,000 to $1,857,000.

[13] The respondent eventually retained a valuator, Fuller Landau, to do an income report on himself who opined that in 2013, he had income available to him (before any income splitting) of $266,000. The applicant submits that although she believes the respondent’s income to be much higher, for the purposes of temporary support, taking $266,000 as the respondent’s income and the applicant’s income at $10,000, the SSAG produce the following:

Low-$8000

Mid-$9,333

High-$10,485

[14] The applicant proposes a second scenario where $55,981 in income splitting is added to the Fuller Landau amount, making an income to the respondent of $321,981. With the applicant’s income at $10,000, the high range of the SSAG produces support of $12,766 which would leave the parties in an equal position.

[15] The respondent’s position is that no temporary support should be awarded. His arguments can be summarized as follows:

(a) The applicant has been living with her wealthy boyfriend, Bill Daniell, since at least 2012 to whom she will be shortly married and he should support her;

(b) The SSAG should not be applied where the applicant is cohabiting and sharing expenses.

(c) The applicant has failed to disclose the details of the support she receives from Mr. Daniell, necessary information to determine spousal support;

(d) The applicant lives in a $2.2 million home provided by Mr. Daniell and travels extensively with him. The lifestyle she enjoys with Mr. Daniell exceeds the parties’ lifestyle during the marriage;

(e) The applicant has an obligation to support herself. She worked during the marriage but has no intention now of working. The applicant is in her 50’s. Her decision to go back to school should not fall on the respondent’s shoulders. It is reasonable to impute a salary of $60,000 to her for the kind of interior design work she did during the marriage;

(f) The applicant received $1.75 million in cash for her corporate shares while the respondent was left with the risk and a cash starved business. The spouses are in an equivalent position to support themselves;

(g) When valuing the business for the purpose of the buyout, $1.5 million was attributed to future income, one-half of which the applicant received as part of the $1.75 million buyout. As a result, the applicant has received a prepayment of future income which must be earned in the future through the respondent’s efforts. To award spousal support would be allow the applicant to double dip;

(h) The only way the respondent could fund the new venture, Cubacruise, is through the company. This is not using corporate funds for personal advantage.

(i) The applicant’s income should be assessed at between $155,000 to $323,000(the respondent’s valuator’s report of her income for 2012) to a range of $405,000 to $573,000(adding the so called advance profits she received as part of the corporate buyout;

(j) The interest rate earned by the applicant is unreasonably low. Investment income of $200,000/year on her capital should be attributed to her.

Analysis

[16] This was a longterm marriage where the applicant both contributed to the respondent receiving a masters business degree and gave up getting a degree herself because of the childcare responsibilities. The parties are not in an equal position post separation and the corporate buyout. During the marriage, the respondent ran the company. The applicant worked part-time in design. The respondent earned double what the applicant earned. I do not consider it unreasonable for the applicant who worked for many years for a family owned company to seek to upgrade her skills by taking an interior design course. Had it been the intention of the parties that $750,000 of the amount she received for her shares in Marshall Homes be considered as income to be attributed to her for purposes of support (which issue was pending at the time the share buyout was transacted) rather than as the capital value of the shares, I would have expected that they would have said so explicitly.

[17] The applicant has no legal right to be supported by Mr. Daniell. She is not obliged to deplete capital to support herself nor is it reasonable to require that she keep all of her capital invested. The respondent purchased an $800,000 home after the sale of the matrimonial home. In addition, although he claims to be in straitened financial circumstances, and although he retained a cottage which the parties used as a matrimonial home during the marriage, he bought a further lot for $230,000 which he proposes to develop. (Although his financial statement shows a corresponding mortgage in the same amount, there are no mortgage payments apparently being made).

[18] In my opinion, it is not reasonable to delay consideration of support until the trial. Prima facie the respondent has a support obligation which he honoured until September, 2013. In the absence of any reasonable explanation for why the payments ended at that time and when regard is had to all of the surrounding circumstances, I am driven to the conclusion that the respondent’s approach is tactical, designed to pressure the applicant into a favourable (for the respondent) resolution.

[19] The trial is expected to take place in 5½ months. The applicant concedes that it is appropriate that spousal support prior to January, 2013 should be determined by the trial judge. In my view, support should commence from September, 2013, the voluntary payments having been made for the prior 9 months of 2013. For purposes of determining temporary support for this relatively short period until trial, I make the following comments. The valuations are not final. I did not find the income report for the applicant obtained by the respondent helpful. The assumptions in regard to the applicant’s 2013 income are unreasonable and show an adversarial approach. In the circumstances where the applicant has been unsure of what support she will have and has therefore kept her capital in relatively liquid investments, I consider the $10,000 amount proposed by Mr. Rudson for her income until trial to be reasonable. I fix the respondent’s income in the range of $266,000 to $275,000 based on one of the scenarios of his valuator and his admission on questioning that he had not included the income splitting in his income on his financial statement. The respondent’s income is likely higher. This is not a final resolution of these matters which will ultimately be determined by the trial judge who will have the best evidence, a more complete record and who will be in a better position to determine the income of the parties, the extent to which the applicant is supported by her fiancé and the extent to which the SSAG apply. The trial judge may adjust the amount I have ordered if she or he thinks it appropriate. Both of these parties have significant assets so there is no risk that a subsequent adjustment will not be enforceable.

[20] Taking into account all of the circumstances, I find that the respondent shall pay temporary spousal support retroactive to September, 2013 in the amount of $10,000/month which may be adjusted by the trial judge if she or he thinks it appropriate.

[21] The issue of support prior to September, 2013 is adjourned to be heard by the trial judge.

[22] A motion date has been set in February, 2014 to determine the issue of the disclosure the respondent is seeking from Mr. Daniell who is represented by his own counsel. The respondent proposes that the disclosure that he is seeking from the applicant be adjourned to be heard at the same time. As there is no objection to this, I order accordingly.

[20] The applicant seeks an order that the respondent comply with the disclosure set out in Schedule A to Tab 2 of the Applicant’s Brief of Documents filed on the motion. With respect to the 2013 corporate tax return and financial statement, these have been produced for the corporate year end of 2013 (but essentially for calendar 2012). It is agreed that the 2014 return and statement will be produced as soon as they are available. With respect to the request for an interview with the respondent and his accountants, the respondent is not willing to agree to this but is willing to answer written requests for information and I so order. Otherwise, an order will issue as per the information sought therein.

Backhouse J.

Released: December 10, 2013