COURT FILE NO.: FS-12-18319
Ontario Superior Court of Justice
Barry Nathan v. Wendy Hoare
Counsel:
Ross Macdonald for applicant husband
Robert Lawson for respondent wife
Trial heard March 13, 14, 17, 2014
Reasons for Decision of Backhouse, J. released March 20, 2014
[1] The issues that remain unresolved are the wife’s claim for unjust enrichment and spousal support.
[2] The wife is 48 years of age. The husband is 49 years of age. The parties met while they were each studying architecture at Carleton University in Ottawa. They began cohabiting in September, 1988 when both parties were 23 years of age. They separated on December 25, 2010 when the husband moved out of their residence. The parties cohabited over 22 years in a physically intimate, exclusive relationship. They visited each other’s families, celebrated special occasions together, went out together as a couple, travelled extensively together and filed income tax returns as “common law” spouses. Both contributed approximately equally to the domestic functions at home. They discussed marriage but chose not to marry because they were focused on their financial future and saw the cost of a wedding as delaying that future. They did not have children.
[3] The parties both obtained Bachelor degrees in architecture from Carleton University. Both parties found full-time jobs in Ottawa. Each contributed to their living expenses from their incomes. In 1990, the husband got a job offer in Toronto. The parties moved to Toronto so that he could accept the position and so that they could be near to their families. The parties have resided continuously in Toronto since they moved from Ottawa. The husband’s job ended up falling through. While they were both unemployed, the wife cashed in $18,000 in Canada Savings bonds to help support them. She also contributed a $30,000 advance on inheritance from her parents to their living expenses and savings. In 1991, the wife obtained employment with the City of Toronto. Her current position is Construction Coordinator for the City of Toronto. She testified that working for the City was not her dream job but that both parties were out of work for a year and she thought that it was important to get some stability and benefits for the couple. The husband has had 4 jobs during the period of cohabitation. At the date of separation, he was part of the management team at IBI Group. Apart from approximately one year of unemployment, both parties worked throughout the period of cohabitation.
[4] From the beginning of their relationship, the parties shared their expenses. From at least 1997, their incomes were deposited into a joint bank account and their living expenses and investments were paid out of their joint savings. They bought a residence together as tenants in common and made a joint investment in Costa Rica. During cohabitation, each party named the other spouse as the beneficiary of their RRSP. The wife named the husband as the beneficiary of her OMERS pension with the City of Toronto. For most of the period of cohabitation, the husband had no pension plan through his employment. Each party provided the other with extended medical and dental benefits through their respective employment benefit plans. They travelled together to Costa Rica, France, Spain, Dominican Republic, Israel and England. They pooled all of their resources. In 2000, the parties jointly decided to invest in the stock market and to use some of the equity in the 14 Ingham Avenue property to fund such investments. They took out a secured joint credit line to provide them a source of funds that they used for investment purposes. The wife testified that her expectation was that throughout the relationship the parties were working together to provide for their future together and that all of their resources would be available to meet their needs as a couple
14 Ingham Avenue, Toronto
[5] In 1993, the parties purchased 14 Ingham Avenue as tenants in common. The downpayment was made from the parties’ joint savings and with gifts from the husband’s and wife’s families. Both parties contributed toward the mortgage, property taxes, home insurance and utilities costs. They jointly financed extensive renovations which included putting in new windows, replacing the roof, finishing the basement, refinishing the flooring, opening up the walls, replacing the boiler, putting in a new kitchen, putting in a parking space and landscaping. They personally did the drywalling, painting, the parking space, and gardening. They worked hard to pay off the mortgage and were able to retire it within 6 or 7 years. The husband voluntarily left the property on December 25, 2010 and the wife has had possession since then. The husband continued to contribute to the housing costs until March 2011. Thereafter, the parties disagree as to any contributions made by the husband. The wife says there were none. The husband says that automatic deductions for cable, internet and alarm continued to be made on his credit card in 2011. In December, 2013, the wife bought out the husband’s half interest in the home for $356,250. The lender has provided a release of the husband’s covenant on the former joint secured line of credit. At trial, the wife was not seeking any adjustments to be made regarding the carrying costs of the home paid by her after separation and the husband was not seeking occupation rent.
Household Contents
[6] The wife testified that she sold certain joint chattels after separation because the bailiff was threatening to distrain them due to unpaid property taxes. The husband testified that the items sold had a replacement value of approximately $27,000. The wife testified that she received $8000 for the items and that the husband had an inflated idea of their value. Approximately 60 additional joint items remain in the wife’s possession. Neither party obtained a professional valuation of any of the chattels. The parties have not been able to agree how to divide them. The wife proposes that they be divided by alternate selection. The husband seeks certain items (Items 4,7,15,16,18,21,25,29 and 33 to 36 as set out on Exhibit 2, Tab 6, the return of his personal items, half the family photos, his degrees, his portfolio and the Led table lamp).
Costa Rican Investment
[7] In 2007, the parties invested $137,709 in a Costa Rican investment opportunity by increasing their joint line of credit secured against the matrimonial home. In December, 2013, the husband bought out the wife’s one-half interest for $45,500. The wife testified that this was less than one-half of what the parties had paid. The husband testified that this was one-half of what the parties had paid. This difference in understanding between the parties appears to have something to do with the difference in exchange rates at the time the investment was made and when the buyout occurred.
2004 Acura motor vehicle
[8] At separation, the parties jointly owned a 2004 Acura motor vehicle. The wife purchased the husband’s half-interest in the 2004 Acura by a payment of $3500.
RRSPs, LIRA and OMERS Pension
[9] During cohabitation, the parties each contributed from their joint funds the maximum allowable to an RRSP. Their contributions were based on a joint decision made with the advice of their accountant. The contributions during cohabitation to the husband’s RRSP were $86,836 and to the wife’s RRSP were $26,505. The amounts contributed to the husband’s RRSP were greater because for most of his employment during cohabitation, he did not have a pension with his employer and had a higher income. At the date of separation and accumulated during cohabitation, the wife had an RRSP worth $106,148 and an OMERS pension valued at $295,752. The husband had an RRSP worth $500,834 and a LIRA account worth $8553. These values were pretax and no tax calculations were provided.
BMO Investorline Accounts
[10] At the date of separation there was a BMO Canadian Investorline account with $53,660 and a U.S. account with $14,105 (converted to Canadian) accumulated during cohabitation. In his financial statement sworn January 23, 2012, the husband showed this as his sole asset. Due to a decline in the market value of the stocks held in the account, by the time of trial, the values had reduced by $37,503 to $18,530 Canadian and $11,732 (converted to Canadian). At trial, the husband took the position that although the accounts were in his sole name, these were always considered to be joint and showed one-half of the value in his financial statement instead of 100%. He testified that the wife’s position throughout was that this account should be frozen until trial.
Transamerica Life Insurance Policy #1372545
[11] In 2006, the husband’s parents asked the parties and the husband’s sister if they wanted to take over the parents’ Transamerica life insurance policy #1372545 with a face value of $450,000 on the parents’ joint lives on which the parents could no longer afford to pay the premiums. The husband’s sister was not interested in this. The parties consulted with their financial advisor and their accountant and concluded that this would be a good investment for them. They agreed to take over the policy. The wife understood that she would be a named beneficiary together with the husband. The husband denied that this was the understanding. In 2006, they began making the premium payments on the policy from their joint account in the annual amount of $6186.96. After separation, the wife made the premium payment from the joint account on February 25, 2011. In total, the parties jointly made 6 payments totalling $37,013.76. The wife testified that she only found out after making the February, 2011 payment that she was not named as a beneficiary together with the husband. The husband has maintained the premiums from 2012 and takes the position that he is the sole beneficiary. The wife testified that since making the February, 2011 premium payment, the husband has excluded her from contributing to the premiums. At trial, he took the position that the wife should be compensated for one-half of the 6 joint premium payments. The husband’s parents are 80 and 78 years of age. The husband testified that his mother has stage 4 cancer and that the father’s health is “not great”. The husband testified that there was no cash surrender value and that the meaning of $3024.65 shown on Exhibit 9 as the cash surrender value as of February 24, 2012 is the unused amount of the premium for that year.
Aeroplan Miles
[12] During cohabitation, the husband was the primary cardholder on a credit card on which the wife had a second card. They both made purchases on the card which was paid from joint funds. Any aeroplan miles redeemed during cohabitation were used for family travel. At the date of separation, there were 469,194 aeroplan miles accumulated in the husband’s name as the primary cardholder. By the time of trial, the husband had used all but 68,235 aeroplan miles for his own purposes. He testified that in his view, his corporate expenses were responsible for 90% of the aeroplan miles accumulated. No documentation was produced to support this. He testified that the value of the aeroplan miles was 1 cent/mile.
Other Assets Acquired with Joint Funds
[13] At separation, in addition to the above assets the parties had accumulated during cohabitation a joint investment account with the CIBC in the amount of $375,756, a joint chequing account of $6261.48 and a joint business account in the amount of $1784. Each party had a TFSA account with the CIBC in the amount of $9198. In the husband’s name there was a U.S. chequing account in the amount of $604.
Income of the Parties
[14] The husband filed as Exhibit 7 a summary comparison of the parties’ incomes as reported on their income tax returns from 2003 to 2010 as follows:
Year Husband Wife Percent of Wife’s income to Husband’s Income
2003 $81,503 $66,697 81.83%
2004 $81,647 $62,496 76.54%
2005 $85,432 $68,258 79.9%
2006 $82,223 $63,043 76.67%
2007 $91,038 $85,073 93.45%
2008 $100,875 $93,765 92.95%
2010 $99,972 $71,395 71.41%
[15] The wife testified that this chart was misleading because the parties engaged in income splitting and the husband’s arrangement with his employer allowed him to deduct business expenses as though he was self employed. The wife testified that the husband was reimbursed for mileage and travel and meal expenses by IBI. The husband confirmed in his testimony that when he was working for IBI clients, his expenses were reimbursed. In the 5 years leading up to the parties’ separation, the husband income split the following income with the wife :
2006-$5000
2007-$5000
2008-nil
2009-$10,752
2010-$12,000
[16] In 2010, the year of separation, the husband declared income net after business expenses of $100,157 made up as follows. The husband’s sole proprietorship, Arketypes Design, was paid $124,819 by IBI Group. He testified that when he was working for IBI, IBI paid his expenses, including travel and entertainment. When declaring his income with CRA, he deducted from his IBI income $25,507 in business expenses including car($3110), capital cost allowance($1447), advertising($1665), office expenses($510), supplies ($257), entertainment($3585), travel($3030)and subcontract fees($12,000 paid to the wife as an income split). In addition to the $124,269 the husband earned from IBI, he earned $4684 from freelance design and deducted a further $2419 made up of office expense ($57.35), rent ($1331), vehicle($410) and capital cost allowance ($620). There was no evidence that the husband paid any business rent. Rather, the “rent” was a portion of his residence expenses. He testified that his principal place of business is the IBI Group’s offices. He also acknowledged that the portion of his home that he used for work purposes was also used for other purposes.
[17] In 2010, the wife declared income of $82,957 made up of her T4 income from the City of Toronto ($70,957) and the $12,000 income split she received from her husband’s sole proprietorship. While both parties testified that the wife shared in some of the freelance work that was done, the wife testified that the determination of what she was paid was based on what was most tax efficient, not the value of the work and that she was not paid the amount of the income split (other than that the parties’ joint income continued to be deposited into the joint account). Although the husband testified that what the wife paid was based on her contribution to the freelance work, at least for the year 2010, he filed a separate Statement of Business Activities for his income from IBI and his income from freelance work. The $12,000 income split came from his income from IBI and could not have come from the freelance work as the gross profit was only $4684 .
[18] In 2011, the husband declared income net after business expenses of $196,674. This included a capital gain that each party declared on their joint investment in the amount of $78,337. The husband’s sole proprietorship was paid $131,807 by IBI Group from which he deducted $16,444 in expenses. In addition to the $131,807 the husband earned from IBI, he earned $9560 from freelance design and deducted a further $3746 in expenses.
[19] The wife’s employment income was $73,787, making a total income with the taxable capital gain of $153,017.
[20] In 2012, the last year for which full information was produced, the husband declared total income of $124,787. This was made up as follows. His sole proprietorship was paid $131,807 by IBI. He earned $3500 from freelance design. He also had $66 taxable Canadian dividends, $726 interest investment income and $220 other taxable income making a gross income without deductions for business expense of $136,562. He deducted $13,228 in business deductions including $5,457 in business use of home expenses and further expenses of $7771 which included, among other things, $2068 for travel and $913 for entertainment.
[21] The wife’s total income was her employment income of $73,138 made up of $71,496 in employment income, $220 in other income and $1,422 in investment income.
[22] The wife’s T4 for 2013 disclosed a total employment income of $71,792.53. The husband testified that in 2013, his income from IBI increased by 2%.
Analysis
Wife’s Claim for unjust enrichment
[23] In Elkaim v. Markina, 2011 Carswell Ont 6600, Justice Sachs summarizes the framework to be used in assessing property claims in common law relationships as follows:
9 The law surrounding the resolution of property claims in common law relationships has recently been clarified by the Supreme Court of Canada in Kerr v. Baranow, 2011 SCC 10. In that case the Court found that the "common intention" approach to resulting trust has no "useful role to play" in the resolution of property claims by domestic partners on the breakdown of their relationships: at para. 29. The Court also found that the role of the parties' reasonable or legitimate expectations in the unjust enrichment analysis was a limited one. Rather, the framework to be used can be summarized as follows:
(a)First, the court must determine if there has been an unjust enrichment.
In doing so, the questions are:
• Has the defendant been enriched?
• Has the plaintiff suffered a deprivation?
• Is there "no reason in law or justice for the defendant's retention of the benefit conferred by the plaintiff?": at para. 40.
It is in the consideration of the third stage"if the case falls outside the existing categories" of juristic reasons for the retention of the benefit, then the court may consider looking to "the reasonable expectation of the parties and public policy considerations to assess ... whether particular enrichments are unjust": at paras. 43-44.
(b) If the court finds that there is a basis for the unjust enrichment claim the court must then turn its mind to the question of what remedy is appropriate to "reverse the unjustified enrichment." This may include either a "monetary or proprietary remedy": at para. 46.
(c) On the question of remedy, the first remedy to consider is "always a monetary award. In most cases it will be sufficient to remedy the unjust enrichment": para. 47.
(d)A proprietary award may be required if:
(i) the plaintiff has demonstrated a sufficiently substantial and direct link between his or her contributions and the property in which case "a share of the property proportionate to the unjust enrichment can be impressed with a constructive trust in his or her favour": at para. 50; and,
(ii) the plaintiff has established that a monetary award would be insufficient in the circumstances. This involves considering the probability of recovery of such an award and considering whether "there is a reason to grant the plaintiff the additional rights that flow from recognition of property rights": at para. 52.
(e) If a monetary award is appropriate, the question then becomes how to quantify that award.
• To do so, the court must first characterize the nature of the unjust enrichment claim. Is the basis of the "unjust enrichment ... the retention of an inappropriately disproportionate amount of wealth by one party when the parties have been engaged in a joint family venture and there is a clear link between the plaintiff's contributions to the joint venture and the accumulation of wealth": at para. 81.
• If so"a monetary award for unjust enrichment should be calculated according to the share of the accumulated wealth proportionate to the claimant's contributions": at para. 87.
(f) To determine whether a joint family venture exists, the court should have regard to the following factors as set out in Kerr v.Baranow at paras. 87-99:
(i) Mutual Effort: Did the parties pool their efforts and work together towards common goals?
(ii) Economic Integration: This involves considering how extensively the parties' finances were integrated.
(iii) Actual Intent: What did the parties actually intend? Did they intend to have their lives economically intertwined or did they make the choice not to? This intent may be expressed or inferred from conduct.
(iv) Priority of the Family: This factor asks the court to consider to what extent the parties gave priority to the family in their decision making. "A relevant question is whether there has been in some sense detrimental reliance on the relationship, by one or both of the parties, for the sake of the family."
If the monetary award should not be quantified on a "joint family venture" basis, then the court should consider a "fee for service" or quantum meruit calculation. It is generally at this stage that the court will consider whether the claim should be discounted because of a mutual conferral of benefits.
Has There Been Unjust Enrichment
[24] The wife submits that the husband was unjustly enriched by having $178,963 more of the jointly acquired assets than the wife at the date of separation as set out in Exhibit 6. In addition, the wife submits that the husband has been unjustly enriched by being the only named beneficiary on the Transamerica life insurance policy and by the airmiles he is solely entitled to because he was the primary cardholder on the joint credit card on which 469,194 air miles were accumulated during cohabitation which were retained by him on separation.
[25] Because the difference in the parties’ assets arises primarily from their RRSPs and BMO Investorline accounts, I analyze them separately below.
RRSPs and Pension
[26] The parties each had their own RRSP. In addition, the wife had a pension through her employment and the husband had a small LIRA. The parties used joint funds to contribute to the RRSPs. The contributions to the RRSP in the husband’s name exceeded that of the wife’s ($86,836 to the husband’s compared to $26,505 to the wife’s), in part because of her pension. To allow each to keep the RRSP assets in his or her own name would result in the husband having almost $100,000 more in retirement assets than the wife accumulated during cohabitation. While the husband did not make direct contributions to the wife’s pension, it is conceded by the wife that this should be considered on the wife’s side along with the husband’s LIRA when considering unjust enrichment.
[27] The evidence at trial in regard to the RRSPs and pension was their value at separation before tax. There was no evidence as to the notional income tax attributable to these assets. Counsel agreed that if an order was to be made on account of the inbalance between the retirement assets, a rollover in specie was the appropriate remedy.
BMO Investorline Accounts
[28] In Exhibit 6, $67,765 of the amount included by the wife in her analysis of unjust enrichment related to the BMO investorline accounts which were in the husband’s name. Due to a decline in the market value of the stocks held in the account, by the time of trial, the values had reduced by $37,503. At trial, the husband took the position that the account was joint and the parties were equally entitled to the reduced values.
[29] Both parties testified that everything they did financially was joint. Although these accounts were in the husband’s name, the losses which occurred were as a result of the loss in the market value of the stocks. There was no negligence, bad faith or gross dereliction of duty by the husband. There was no evidence that the wife sought to have these accounts dealt with in a different way. Rather, her evidence was that she did not want to settle things piecemeal. Accordingly, I find that there was no conduct on the husband’s part that would require him to be responsible to the wife for the losses that occurred. I conclude that the fair way to characterize this asset is as a joint asset and accordingly do not include its value in the analysis of unjust enrichment. However, in reaching this conclusion, I bear in mind that it is inconsistent and there is no principled basis for the husband to take the position on the one hand that the BMO Investorline was joint, although in his name alone, while on the other hand the RRSPs, Transamerica Life Insurance policy and airmiles which were also in his name alone and to which they also jointly contributed, were his sole assets.
Transamerica Life Insurance Policy #1372545
[30] I find that during cohabitation, the parties made an agreement with the husband’s parents to take over payment of the premiums on the Transamerica Life Insurance policy owned by the parents in return for being beneficiaries on the policy having a face value of $450,000 which will be received tax free following the death of the last to die of the husband’s parents. The parties made 6 premium payments out of joint funds, the last one in February, 2011. I accept the wife’s evidence that she understood that she was a named beneficiary on this policy and only found out subsequent to February, 2011 that she was not. I accept her evidence that she was then excluded by the husband from making further premium payments which he has maintained. While of course one never knows with certainty, given the maintenance of the premiums in 2012 to 2014 and the husband’s evidence about the health of his parents, it seems likely that the premiums will continue to be made, the policy will be payable in the short term rather than the long term and that absent any order, the husband will receive $450,000.
Aeroplan Miles
[31] With respect to the aeroplan miles, there is nothing to corroborate the husband’s evidence that he contributed unequally to the miles accumulated to the date of separation nor is he qualified to give an opinion as to the value of the aeroplan miles. Both parties had a credit card which was used to acquire the miles. Both parties made purchases on the card and the balance was paid from joint funds. I find that the parties were using a joint card to acquire aeroplan miles for the benefit of the family and with the expectation that they would be enjoyed jointly. In my view this was part of the joint family venture and the parties are jointly entitled to the miles accumulated at separation.
[32] I accept the wife’s evidence that throughout their relationship, the parties worked together to provide for their future together on the understanding that all of their resources would be available to meet their needs. I find that the husband has been enriched in regard to the RRSPs/pensions, the Transamerica Life insurance policy and the airmiles, that the wife has suffered a deprivation and that there is no reason in law or justice for the husband’s retention of the benefit.
Remedy
[33] I find that a monetary award will not be sufficient to remedy the unjust enrichment. In the case of the RRSPs, it was agreed that a spousal rollover was the appropriate remedy. In the case of the Transamerica life insurance policy and airmiles, to make no award would be to allow the retention by the husband of an inappropriately disproportionate amount of wealth where the wife has made out a sufficiently substantial and direct link between her contributions and the assets and the parties were engaged in a joint family venture.
[34] In this case, the parties had a long-term common law relationship which lasted for more than 22 years. The parties pooled their incomes and shared their expenses. They were economically interdependent. The parties purchased a home together and renovated it together, performing some of the work themselves. I do not agree with the submission of the husband’s counsel that the fact that the home was taken as tenants in common is inconsistent with the parties being engaged in a joint family venture. In 2007, they jointly invested $137,709 in an investment opportunity in Costa Rica. They owned a vehicle jointly. These assets have already been equally divided. They operated the business account for the husband’s sole proprietorship, Arketypes Design, jointly. They had a joint savings account from which their living expenses were paid. They took out a joint credit line secured against their home which was used to purchase investments held in a large joint investment account. They had a joint Aerogold visa card which both parties used to pay various expenses and to accumulate airmiles. In 2006 they decided to take over responsibility for payment of the premiums on a joint “last to die” policy which will pay out $450,000 tax free following the death the husband’s parents. The parties income split. They each named the other as a beneficiary of their respective health and dental coverage and as a beneficiary on their RRSPs. Both parties had life insurance policies and each designated the other as beneficiary. Both parties testified that everything they did financially was joint. The parties pooled their efforts and worked towards common goals. Their finances were extensively integrated. It is clear from their conduct that they intended on intertwining their economic lives. It is clear that over the course of their relationship, they made decisions which prioritized the family as opposed to their personal interest. Some examples of this in the wife’s case were her contribution of Canada Savings Bonds and a family inheritance to support them and the joint agreement to contribute more from joint funds to the husband’s RRSP than the wife’s.
[35] The evidence in this case strongly supports that the parties were engaged in a 22 year continuous relationship equivalent to being married and were engaged in a joint family enterprise.
[36] Accordingly the current value of all of the joint assets including the BMO Investorline account shall be divided equally between the parties. The husband shall rollover $53,743 in RRSP funds to the wife which will equalize the values of the RRSPs and pension assets at the date of separation.
[37] With respect to the Transamerica Life Insurance Policy #1372545, a declaration shall issue that the husband holds one-half of the beneficial interest in the policy in trust for the wife. This declaration shall be sent to the Insurance Company and the husband’s parents. There shall be no changes in beneficiary of the policy from the husband (one-half of which is in trust for the wife) without first obtaining approval of the Court. The wife shall reimburse the husband for one-half of the premiums paid in 2012, 2013 and 2014, being $9279. The parties shall make such further premiums as are required equally. If one party fails to pay their one-half, the other party shall be given the opportunity to do so and will be credited upon payment of the policy. When the policy becomes due, subject to any aforesaid adjustments, the balance shall be divided equally between the parties.
[38] With respect to the aeroplan miles, the husband shall transfer to the wife the 68,235 remaining aeroplan miles. In my view, to order the husband to transfer miles to be acquired by him in the future would potentially require the court to supervise this ongoing requirement well into the future and is therefore not practicable for such a relatively small asset. The husband is not qualified to give opinion evidence about its value. However, it would not make sense to put the parties to the expense of a reference to determine value, again for what is a relatively small asset. Accordingly, as a practical resolution, and in addition to transferring the aeroplan miles still existing, the husband shall pay the wife $ .02 x 166,362 aeroplan miles = $3327.24 .
Household Contents
[39] The husband’s opinion that the $8000 price paid was too low is self-serving and has no probative value. In the absence of any expert evidence as to their value, there is no reason not to conclude that an arms length sale represents the best evidence of market value. The husband is entitled to $4000 on account of the $8000 the wife received for the sale of jointly owned chattels. As for the remainder, they shall be divided by alternate selection with the husband being entitled to the first choice and alternate choices thereafter. In addition, he is entitled to the return of his personal items, half the family photos, his degrees, his portfolio and the Led table lamp.
Spousal Support
[40] I find that after more than 22 years of cohabitation, the parties made joint financial decisions, had merged their economic interests and were economically dependent on one another. I find that they intended to have their lives economically intertwined. The wife testified and I accept that after the husband’s first job in Toronto fell through and they were both unemployed for a period of time, she felt it was in their interests that one of them have a secure position with benefits which meant a lower salaried income. The husband has had 4 different employers in the private sector since completing his post-secondary studies. When the parties’ incomes are adjusted at the date of separation for the income split and the business deductions which I consider should be added back to the husband’s income from IBI for purposes of the spousal support analysis (see analysis in paragraph 43 below), the wife was left with approximately 1/3 of the parties’ joint income. I do not accept the husband’s evidence that the income splitting reflected work done by the wife. The husband deducted the income splitting from his income from IBI. The revenues he received from his freelance work were comparatively small ($4,684 for 2010 for example) and would not have been sufficient to absorb the income split ($12,000 in 2010) plus the other deductions for business expenses. With the exception of a few months after separation where the husband continued to contribute his income to the joint account, the wife was left to pay the carrying costs of the home and found herself unable to pay them.
[41] The wife submits that the husband’s income should be fixed at $147,342 which disallows his business expenses on the basis that he has not proved them and has not met the provisions in the Income Tax Act relating to deductions for a workspace in the home. In this regard, the wife relies upon Sarafinchin, supra and Crisp v. Crisp 2012 Carswell Ont 9038(SCJ).
[42] I fix the wife’s current income at $74,780 (In making this calculation I have used her 2013 T4 of $73,138 plus $220 in other income and $1,422 in investment income (which I have assumed to be the same for 2013 as they were in 2012). I do not accept the husband’s counsel’s submission that the employer’s contribution to the wife’s pension should be added into the wife’s income for the reasons expressed in Ennis v., Ennis 2000 ABCA 33, 2000 CarswellAlta 79 (C.A.)and Weintz v. Weintz 2012 Carswell BC 120 (BCSC) with which I agree.
[43] In my view, the expenses deducted from the husband’s IBI income in his income tax returns are tax driven and are not real expenses for the purpose of calculating spousal support. For example, he is provided with a place to work at IBI Group which is his principal place of business. There was no evidence that he paid any business rent. He also acknowledged that the portion of his home that he used for work purposes was also used for other purposes. He would have accommodation and vehicle expense in any event. IBI Group reimburses him for travel and entertainment expenses related to IBI clients. With respect to his freelance income, I accept that reasonable business expenses are appropriate. The business expense deduction that is related to his freelance income appears to be $2043 on $3500 of income which is 58%. While this appears to be a rather high percentage, I allow this deduction. Accordingly, to arrive at the husband’s current income, I make the following adjustments to his 2012 income: I add back the disallowed business expense of $11,185 grossed up by 1.92 (being $21,475) following the reasoning in Sarafinchin, supra and Orser v. Grant cited therein at para.64. Taking into account the husband’s evidence that his IBI income was 2% higher in 2013, I add an additional $2636 and fix his current income at $146,445.
[44] The wife submits that open ended spousal support in the midrange of the SSAGs should be ordered in the amount of $2381/month from the date of separation. The husband submits that the wife has not established either that she is in need or that she is entitled to compensatory support.
[45] I find that the wife has established that she is in need of support to enable her to adjust her lifestyle and expenses after separation and that the husband has the ability to pay. I order that the husband shall pay spousal support in the amount of $2,381/month for a 15 month period from the date of the wife’s claim to February, 2014 which shall be paid in a lump sum equivalent (net of tax) in the amount of $20,842. The division of insurance proceeds when payable will generate a large after tax payment to the wife which will compensate her for lifestyle diminution when it is received. But for the wife’s entitlement to receive one-half of the insurance policy proceeds which I have ordered, I would have required the husband to continue to pay ongoing support in the amount of $2381/month from and after March, 2014.
Prejudgment Interest
[46] Counsel agreed that it was appropriate to award prejudgment interest on the property award.
Conclusion
[47] Accordingly, I make the following order:
The current value of all of the joint assets including the BMO Investorline account shall be divided equally between the parties.
The husband shall rollover $53,743 plus pre-judgment interest at the rate of 3% per annum from December 26, 2010 in RRSP funds to the wife’s RRSP which will equalize the values of the RRSPs and pension assets at the date of separation.
A declaration shall issue that the husband holds one-half of the beneficial interest in the Transamerica Life Insurance Policy #1372545 in trust for the wife. This declaration shall be sent to the Insurance Company and the husband’s parents. There shall be no changes in the beneficiary of the policy from the husband (in trust as to one-half for the wife) without first obtaining approval of the Court. The wife shall reimburse the husband $9279, being one-half of the premiums he paid in 2012, 2013 and 2014. The parties shall make such further premiums as are required equally. If one party fails to pay their one-half, the other party shall be given the opportunity to do so and will be credited upon payment of the policy. When the policy becomes due, subject to any aforesaid adjustments, the balance shall be divided equally between the parties.
The husband shall transfer to the wife the 68,235 remaining aeroplan miles and shall pay the wife $3327.24 to compensate her for the balance of her one-half of the aeroplan miles.
The husband shall be entitled to a payment of $4000 on account of the $8000 in proceeds received by the wife for joint household contents.
The balance of the household contents set out on Exhibit 2 Tab 6 shall be divided by alternate selection with the husband being entitled to the first choice and alternate choices thereafter. In addition, he shall receive his personal items, half the family photos, his degrees, his portfolio and the Led table lamp.
The husband shall pay $$20,842 in lump sum support being the lump sum equivalent (net of tax) of $2,381/month for a 15 month period from the date of the wife’s claim to February, 2014.
Costs
[48] If the parties are unable to agree on costs, the wife shall have 21 days within which to deliver brief written submissions. The husband shall have 21 days thereafter to respond.
Released March 20, 2014 ____________________________
Backhouse, J.