ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: FC-13-339
DATE: 2014/04/28
BETWEEN:
Margaret Annette Cork
Applicant
– and –
David William Cork
Respondent
H. Hunter Phillips and Rachel Laforge, for the Applicant
Pam MacEachern and Alice Weatherston for the Respondent
HEARD: January 31, February 4, 5, 6 and 7, 2014
REASONS FOR JUDGMENT
Madam Justice B. R. Warkentin
[1] The Applicant, Margaret (Peggy) Cork (“the Wife”), commenced these proceedings on February 11, 2013. The Respondent, David Cork (“the Husband”), has opposed some of the Wife’s claims. This was a long term marriage of almost 25 years. The parties were married on July 25, 1987 and have three adult daughters: Emily, Meagan and Julia.
[2] The parties disagreed on the date that they separated. There is little that turns on the date of separation; nonetheless, I have been asked to make a finding as to the date of separation. The Husband claims they separated on January 1, 2012 and the Wife claims they separated on March 18, 2012.
[3] The evidence of the parties was that the Husband first broached the prospect of separation on January 1, 2012. He left the matrimonial home on March 18, 2012. Between those two dates, the parties continued to hold themselves out to their family, friends and to each other as still living together as partners. They attended marriage counselling and attempted to address the issues that had arisen between them. On March 18, 2012, the Husband informed the Wife that he was moving out of the matrimonial home. Having considered the evidence of the parties, I find that the separation date, and therefore the valuation date was March 18, 2012.
[4] At trial, counsel for the parties advised the Court that they had reached agreement on most of the issues, and where they disagreed, they had narrowed the areas requiring proof. The materials presented at trial were well organized, clear and focused on the issues. It was apparent from the record that this proceeding has been a difficult and at times, acrimonious, litigation. I commend the lawyers for both parties for their professionalism and their management of the issues in conducting this trial.
[5] The issues at trial were limited to the quantum of spousal support owing, including retroactive spousal support and life insurance to secure support, child support, ownership of the family cottage and an equalization of the parties’ Net Family Properties (“NFP”) as well as the timing of the parties’ divorce.
[6] The parties had few disagreements as to the value of their assets. Their primary disagreement centred on the ownership of the family cottage and whether or not disposition costs for the sale of the matrimonial home were a reasonable deduction from the Wife’s NFP.
[7] It was acknowledged that the Wife would owe an equalization payment to the Husband and the parties agreed to certain adjustments to that payment once my reasons regarding the outstanding issues were delivered. Similarly, the Husband acknowledged his obligation to provide spousal support to the Wife. It was the quantum of support that was in dispute including whether or not some income should be imputed to the Wife.
Background
[8] This was a long term marriage of almost 25 years.
[9] The Husband was always the primary income earner for the family. Throughout the marriage he was employed in the financial services industry. At the time of separation and trial he was an investment counselor with ScotiaMcLeod. His average income between 2009 and 2013 was $478,878.00. In 2009 he earned a low of $358,980.93 and in 2013 he earned a high of $561,949.21.
[10] The Wife has two Master’s Degrees and until the end of 1996 was employed with the federal government. When she quit working she was an Acting Director with Revenue Canada, Customs and was considered a rising star within the federal government. The Wife has not worked for a salary since the end of 1996, however she has volunteered with various organizations for fundraising projects and committee work.
[11] The parties’ three children are all adults. The youngest, Julia, attends the Fashion Institute in New York City. The parties have agreed that they will share her expenses until her programme is finished in proportion to their respective incomes. For the purposes of paying these expenses, it was agreed that the Wife’s income includes the support paid to her by the Husband. Additionally, this would include any income I might impute to her or other income she earns.
[12] The parties also agreed that the Husband will pay child support for Julia for the summer period when she is not in school (a period of approximately 3.5 months) at half the rate of the usual child support that would be owing under the guidelines with no corresponding reduction in spousal support. The Wife also seeks child support at the same rate for the six-week period that Julia is not in school on the Christmas/holiday break.
Spousal Support
Wife’s position
[13] The Wife is seeking the sum of $19,000.00 per month in spousal support with no income imputed to her. Her counsel argued that this amount is reasonable for a number of reasons:
(a) The Wife was emotionally devastated by the Husband’s decision to leave the marriage;
(b) She has been the primary emotional support person for the parties’ daughters since the separation;
(c) She is currently 54 years of age and because of the long period she has been out of the workforce (now approximately 17 years), it will be more difficult to obtain employment and her employment prospects are limited; and
(d) The demands of this litigation and the need to prepare the matrimonial home for sale have had a negative impact on her ability to seek and obtain employment post separation.
[14] The Wife acknowledged her obligation to seek employment and to upgrade her skills in order to improve her employment opportunities. She proposed that the quantum of spousal support be reviewed in two years which would provide her with the time she felt she required to deal with the post separation issues, to retrain if necessary and to obtain suitable employment. It was her position that the review would take place earlier should she obtain employment before the end of the two-year period.
[15] There was a temporary order made on May 16, 2013 for spousal support in which the Husband was required to pay $18,361.00 per month of spousal support. In her endorsement Madam Justice M. Métivier made the following findings with respect to temporary spousal support (paras. 7-9 and 26-32):
In determining the husband’s income for calculation of child and spousal support, he raises an issue as to whether the current income should be used or an average of income over the last three years; whether child support should be less than the Family Child Support Guidelines, S.O.R./97-175 (“Guidelines”) amount because Mr. Cork earns more than $150,000 per year and if a cap of $350,000 should be used as a basis for the calculation of spousal support.
The husband’s argument for averaging his income is that his income fluctuates from year to year and so some years it might be lower. However, the trend over the last four years has merely been upwards and in my view this is not a proper case for averaging the incomes as set out in s. (17)(i) of the Guidelines. No factors exist that would justify a departure from the application of s. (16) which provides a starting point for the determination of income as “the sources of income set out under the heading “Total income” on the tax return. The objective is to determine the payor’s current income (Coghill v. Coghill (2006), 2006 28734 (ON SC), 30 R.F.L. (6th) 398 (Ont. Sup. Ct.); Howe v. Tremblay (2007), R.F.L. (6th) 140 (Ont. Sup. Ct.)).
The proper income for use in this case is the husband’s current income for 2012 which is $536,674.
I believe the Spousal Support Advisory Guidelines (“SSAG”) are a useful tool in assessing the temporary spousal support to be paid here.
Those SSAG do not impose a cap at $350,000 but state that for incomes over $350,000, the formula should not be “automatically” applied. Elgner v. Elgner (2009), 2009 68827 (ON SC), 85 R.F.L. (6th) 51 (Ont. Sup. Ct.), at para. 34.
I find the wife is entitled to temporary support. I have chosen the high end of the SSAG to assist at a time when Ms. Cork is unemployed and dealing with the economic fallout from the marriage breakdown.
The husband shall pay temporary spousal support as of May 1, 2013 which I set at the amount of $14,991 per month and this shall be retroactive to May 1, 2012. Arrears therefore exist for 13 months ($14,991 x 13) and are $194,883.
It was agreed by counsel that credit to Mr. Cork shall be given in the amount of $44,816 leaving a balance of $150,067 owing.
However, as of September 1, 2013 no further child support will be payable. I award a spousal support amount of $18,361 per month, which takes into account ongoing expenses to be paid by Mr. Cork for Julia and also reflects the fact that this is a temporary order.
This order for spousal support is without prejudice to a later determination of support, both child and spousal, from the date of separation to May 1, 2012.
[16] The Wife justified the request for an increase from the temporary order of May 16, 2013 to $19,000.00 because the Husband’s income in 2013, after deducting $9,000.00 of business expenses, had increased to $552,949.00 from $536,674.00.
[17] Counsel for the Wife argued that there was no basis to consider an average of the Husband’s income over a period of years when calculating spousal support for the same reasons as had been advanced and found by Justice Métivier in the temporary order. The Husband has been continually employed in the same field throughout the marriage and since separation. While his income is dependent somewhat on various market factors, a review of his income for more than 10 years demonstrated that his income has gradually increased, albeit, with occasional declines in income.
[18] The Wife also argued that the Husband’s post separation income increases must be included in his income for the purposes of calculating spousal support.
[19] Finally, counsel for the Wife argued that there was no basis to reconsider the quantum of temporary support paid by the Husband to the Wife pursuant to the Métivier J. order.
Husband’s position
[20] It was the Husband’s position that ongoing spousal support of $15,000.00 per month is the appropriate quantum and that this amount is generous in all of the circumstances. The Husband seeks that there be a corresponding reduction in spousal support to the date of separation.
[21] In support of his position counsel for the Husband made the following arguments:
(a) The Wife has the ability to contribute to her own support and has failed to take any reasonable steps to do so;
(b) The Wife is well educated with two Master’s degrees, she is bilingual with many academic awards and before leaving her employment in the federal government was seen as a rising star;
(c) The Husband had offered to fund employment and/or retraining coaching for the Wife in July 2012 but the Wife ignored this offer;
(d) The Wife has only applied for one job since separation and that was in the summer of 2012;
(e) The Wife has taken no steps to improve her skills, nor has she utilized her network of influential friends to assist her with employment opportunities;
(f) Her claim that she was emotionally devastated by the separation was not backed up by clinical records or a report from a medical or therapeutic professional;
(g) The Wife has demonstrated her ability to work by becoming involved in very large charitable projects, including chairing those projects after the parties’ separation; and
(h) The Wife is in a new and significant relationship with a man who lives in Kingston, as a result of which, her motivation to obtain employment has been substantially reduced because working would prevent her from travelling and spending time in her new relationship.
[22] The evidence before the Court showed that the Wife earned approximately $60,000.00 from her employment in 1996 when she left the federal government. The Husband asked that a similar amount of income be attributed to her when considering the quantum of spousal support payable.
[23] The Husband claimed that the Wife has exaggerated her monthly expenses and even if they are not exaggerated, they are excessive and significantly greater than the expenses the parties incurred during the marriage. He noted that her most recent financial statement disclosed an increase of $60,000.00 per year of expenses than she claimed in the financial statement she relied upon at the motion for temporary support.
[24] Counsel for the Husband also argued that the Wife should not be entitled to benefit from increases in his income post separation because she has not contributed to them. Counsel submitted that the Husband has all of the responsibilities associated with maintaining his employment, including but not limited to the time and effort and additional expenses incurred in maintaining full time employment.
[25] It was the Husband’s position that theirs was not the usual situation where a parent leaves gainful employment to stay home with children. He argued that the Wife left her employment for an extended parental leave, but had the opportunity after a six-year hiatus, which included her maternity leaves, to return to work at the same employment grade level as she had when she left, albeit not necessarily the same position. He claimed that he wanted the Wife to return to work, but she was not motivated to return and instead resigned.
[26] Counsel for the Husband then argued that an award of spousal support as calculated under the SSAG’s when the payor’s income is greater than $350,000.00 is discretionary and the SSAG’s should not automatically be applied.
Analysis
[27] Counsel directed me to a number of cases regarding spousal support orders, including authorities setting out when increases in income after separation should be considered as well as when income should be imputed to a spouse.
[28] Counsel provided me with their calculations including a variety of income scenarios for both parties. Both counsel agreed that when a spouse’s income is more than $350,000.00, even in long marriages such as this, the Court has more discretion in determining the quantum of spousal support.
[29] The SSAG’s are a useful indicator for determining spousal support regardless of the payor’s income. However, when incomes surpass $350,000.00 the objective becomes less about striving to equalize the parties’ incomes, even in a long term marriage. In these circumstances, the SSAG calculations are often considered as one part of the overall consideration of factors that determine spousal support.
[30] Two factors that tend to increase the quantum of spousal support to the higher end of the range of the SSAG calculations are the length of the marriage and the resulting concept of merger of the parties’ economic lives over the course of their marriage. In this case those factors include the fact that the Husband has always been employed in the same line of work, for the same company in its various formations for the entire marriage. The Husband continues in that same employment today. The parties structured their lives and lifestyle based upon the Husband’s income.
[31] Regardless of the Husband’s claim that he did not want the Wife to give up her career, the fact is that the Wife has not worked for a salary since 1996, a period of 15 years prior to their separation. Even when she was working, her salary was modest compared with the Husband’s.
[32] A significant factor that pushes the quantum of spousal support to the lower end or below the SSAG range is often referred to as a work incentive for the person earning the income that is funding the support payment. In other words, it is not necessarily appropriate to ensure both parties’ net disposable incomes are the same or similar when one spouse puts in a significantly greater effort in going to work each day and incurs expenses in order to do so – expenses that the non-working spouse does not incur.
[33] Finally, there is the additional factor that the higher the quantum of support paid, the lower the incentive for the non-working spouse to seek employment as is alleged by the Husband. The Husband seeks to have income imputed to the Wife due to her failure to seek employment or to take steps to upgrade her skills.
[34] In balancing these factors in a long-term marriage, when the payor’s income is above $350,000.00, the recommendation under the SSAG’s is that the payment of spousal support range between 37.5% and 50% of the gross income difference between the spouses.
Conclusion re: Spousal Support and Related Support Issues
[35] I accept that the separation was a difficult transition for the Wife and for that reason I do not intend to interfere with the temporary spousal support order of Justice Métivier up to the date of trial. The Wife was entitled to an adjustment period after the separation in which to consider her options and to plan for her future.
[36] The parties separated approximately two years ago. The evidence at trial clearly demonstrated that the Wife has taken virtually no steps to obtain employment since the parties’ separation. She has many qualifications that would appear to be attractive to prospective employers, albeit she may require some upgrading of her skills.
[37] Nonetheless, even if the Wife had obtained employment, it is unlikely she would have found employment with an income of greater than $50,000.00 per annum, particularly without having upgraded her computer and related skills. Income in this range would have only a modest effect on her spousal support entitlement.
[38] In considering the factors set out above, I make the following findings regarding spousal support:
(a) Increases in the Husband’s income post separation are relevant to the determination of spousal support;
(b) Income of $40,000.00 shall be imputed to the Wife in calculating the quantum of support payable by the Husband from the date of trial;
(c) There shall be no reduction in the spousal support paid from the date of separation to the date of this order;
(d) The Husband`s income shall not be averaged when considering ongoing spousal support, rather it shall be considered each year based upon the income earned in that year and adjusted accordingly at the end of each year.
[39] Having made these findings, I order the Husband to pay spousal support to the Wife in the amount of $16,000.00 per month commencing April 1, 2014 and every month thereafter for a period of two years.
[40] As requested by the parties (albeit for different reasons) there shall be a review of spousal support on or before May 1, 2016. The Wife shall provide evidence of her attempts to obtain employment including efforts made with respect to upgrading her skills and details with respect to employment she has obtained. All income information from both parties shall continue to be disclosed on an ongoing basis.
[41] If neither party seeks a review of spousal support prior to May 1, 2016, spousal support shall continue to be paid in the amount of $16,000.00 per month together with increases/decreases each year based upon the percentage change in the Husband’s income (commencing May 1, 2015). Nothing in this order prevents either party from seeking a variation in spousal support based upon a material change in circumstances.
[42] With respect to child support, I accept the parties’ submissions that the Husband pay one half of the Child Support Guideline amount for the summer months should Julia return to Ottawa to reside with the Wife, with no reduction in the spousal support owing. I do not find that child support should be paid during the Christmas/holiday break.
[43] The parties shall both contribute to Julia’s expenses at the Fashion Institute in NYC in proportion to their respective incomes, after considering the payment and receipt of spousal support and the income imputed to the Wife.
[44] The Husband shall maintain his life insurance policies through his employment in favour of the Wife as security for his spousal support obligation. The evidence at trial was that the Husband’s policies totalled $750,000.00. The Husband agrees to maintain these policies as security for his spousal support but does not want the designation to be irrevocable.
[45] I find that the Husband shall name the Wife as his irrevocable beneficiary pursuant to s. 34(1)(i) of the Family Law Act until such time as spousal support is no longer owing or there has been a material change in circumstances or a court order or agreement revoking the requirement that the beneficiary designation be irrevocable. The Husband shall ensure that he maintain these policies in good standing and shall immediately advise the Wife if the policies that make up this insurance are no longer available to him for any reason.
[46] In making the designation irrevocable, I considered the quantum of spousal support owing each month and the length of time that support is likely to be paid as well as the gross value of the insurance policies to the Wife on the Husband’s death. I also recognize that as time passes, the amount of life insurance required to secure the Husband’s spousal support obligation will decrease. However, that is unlikely to happen for a number of years and that is why I have made the beneficiary designation irrevocable at this time.
[47] The quantum of life insurance required to secure the support obligation shall also be reviewed in two years or at the same time that spousal support is reviewed, or on any other application to vary spousal support based upon a material change in circumstances.
Cottage Property
[48] The Husband argued that this Court could not determine the equalization calculation because he had a proceeding before the Québec court to determine the ownership of the parties’ family cottage property. The cottage is located in Québec and the registered title is in the Wife’s name. The Husband has commenced proceedings in Québec seeking a declaration that it was the intention of the parties that he was the real owner of the property. The Husband has asked this Court to temporarily stay the calculation of the equalization of the parties’ net family properties pending a determination of ownership of the cottage before the Québec courts.
[49] It was the Husband’s position that once the issue of ownership of the Québec cottage has been determined by the courts in Québec, if the parties are then unable to agree to the equalization payment arising from their respective ownership interests in the cottage and its contents, the issue would then return to this Court to determine the effect of the ownership of the Québec cottage on the equalization calculation. The Husband also asked for an order providing both parties with a right of possession to the cottage, pending the determination of ownership.
[50] The Wife sought a declaration that she remains the registered and sole owner of the cottage and that the Husband’s only entitlement is to have the value of the cottage as at the valuation date included in her net family property for the purposes of the equalization calculation.
[51] On that basis the Wife submitted that there was no need to consider a stay of proceedings and that to grant a stay of proceedings would be prejudicial to her particularly in light of the timing in which the Québec action was commenced. She also claimed the Quebec action would unnecessarily delay this proceeding and result in significant additional time and expense to her to defend the Québec action.
(The judgment continues with the detailed analysis of jurisdiction, unjust enrichment, stay of proceedings, equalization adjustments, and the final summary orders exactly as reproduced in the source decision.)
Madam Justice B. R. Warkentin
Released: April 28, 2014