Horowitz v. Nightingale

Ontario Reports

Ontario Superior Court of Justice,

Douglas J.

January 9, 2015

123 O.R. (3d) 772 | 2015 ONSC 190

Case Summary

Family law — Support — Income — Annual $50,000 gift to husband from his parents being income imputed to husband for purposes of child and spousal support — Average of husband's RRSP withdrawals over three-year period (excluding very large one-time withdrawal for specific purpose) also being income imputed to husband for child and spousal support purposes — No additional income from increases in value in husband's investments attributed to husband for support purposes.

The parties separated after 16 years of marriage. They had three children. The wife brought an application for temporary spousal and child support.

Held, the application should be allowed.

The husband had received an annual gift of $50,000 from his parents for at least eight years. Those funds were part of the family income and contributed to the lifestyle they came to enjoy. The amount of $50,000 should be imputed to the husband as income under s. 19 of the Federal Child Support Guidelines, SOR/97-175 for the purposes of child support. While s. 19 of the Guidelines applies only to child support, the framework of s. 19, as judicially interpreted by the Court of Appeal, offers a helpful context for determining income for spousal support purposes. The $50,000 should also be imputed to the husband as income for spousal support purposes. The average of the husband's RRSP withdrawals over a three-year period (excluding one very large withdrawal used to complete the purchase of a new home after separation when the husband's father's promise of funding fell through) should also be imputed to the husband as income. The increase in value in the husband's investments should not be attributed to him as income for support purposes in the circumstances of this case. Using income for the husband [page773] of $403,044, the husband was ordered to pay $6,255 per month in child support and $6,696 per month in spousal support.

Fraser v. Fraser, [2013] O.J. No. 5347, 2013 ONCA 715, 311 O.A.C. 351, 40 R.F.L. (7th) 311, 235 A.C.W.S. (3d) 163; R. (C.M.M.) v. R. (R.W.A.), [2011] N.B.J. No. 423, 2011 NBQB 159, 381 N.B.R. (2d) 45, 342 D.L.R. (4th) 210, 15 R.F.L. (7th) 72, 210 A.C.W.S. (3d) 206; Stevens v. Boulerice, 1999 14995 (ON SC), [1999] O.J. No. 1568, 49 R.F.L. (4th) 425, 88 A.C.W.S. (3d) 153 (S.C.J.), distd

Other cases referred to

Bak v. Dobell (2007), 86 O.R. (3d) 196, [2007] O.J. No. 1489, 2007 ONCA 304, 281 D.L.R. (4th) 494, 224 O.A.C. 10, 38 R.F.L. (6th) 7, 156 A.C.W.S. (3d) 1127; Driscoll v. Driscoll, 2009 66373 (ON SC), [2009] O.J. No. 5056, 2009 CarswellOnt 7393 (S.C.J.); Foley v. Weaver, [2010] O.J. No. 2741, 2010 ONSC 3305 (S.C.J.); Ludmer v. Ludmer, [2014] O.J. No. 5565, 2014 ONCA 827; Whelan v. O'Connor, 2006 13554 (ON SC), [2006] O.J. No. 1660, 28 R.F.L. (6th) 433, [2006] O.T.C. 409, 148 A.C.W.S. (3d) 92 (S.C.J.)

Statutes referred to

Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) ss. 15.1, (2), (3), 15.2, (2), (4), (6)

Rules and regulations referred to

Federal Child Support Guidelines, SOR/97-175, ss. 7 [as am.], 16 [as am.], 17, (1), 19, (1), (a), (d), (e), (g), (h), Sch. III [as am.]

APPLICATION for temporary child and spousal support.

Brahm Siegel, for applicant.

Lorne H. Wolfson, for respondent.

[1] DOUGLAS J.: — The applicant moves for the following orders:

(a) Under s. 15.1(2) of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), an order for temporary child support in the amount of $14,851 per month commencing December 1, 2014, with the applicant paying the mortgage on the matrimonial home and tuition costs for the children.

(b) Under s. 15.2(2) of the Divorce Act, temporary spousal support in the sum of $21,290 per month commencing December 1, 2014, with the applicant paying the mortgage on the matrimonial home and tuition costs for the children.

(c) In the alternative, under s.15.1(2) of the Divorce Act temporary child support in the sum of $12,000 per month commencing December 1, 2014, with the respondent paying the mortgage on the matrimonial home and tuition costs for the children.

(d) In the alternative, under s.15.2(2) of the Divorce Act, temporary spousal support in the amount of $19,000 per month [page774] commencing December 1, 2014, with the respondent paying the mortgage on the matrimonial home and tuition costs for the children.

(e) An order preserving all rights to retroactive child and spousal support from separation to present.

(f) Costs of the motion.

[2] There is no issue as to the applicant's entitlement to spousal support. The primary issue on this motion is the income to be attributed to the respondent and determination of child support and spousal support.

Background Facts

[3] The following facts are not in dispute:

(a) The parties were married on January 19, 1997 and separated on June 25, 2013 after 16 years of marriage.

(b) There are three children of the marriage, namely, Hannah Rose Nightingale born June 11, 2001; Avital Nightingale born September 10, 2003; and Dinah Rachel Nightingale born December 11, 2005.

(c) All three children have special needs. They each have ADHD. Avital also has strabismus in her eyes (i.e., a condition preventing the eyes from aiming at the same point in space).

(d) The matrimonial home is located at [address omitted] in Thornhill. The property is jointly owned by the parties. It was purchased in March 2011 for $840,000 and is currently worth between $1 million and $1.1 million subject to a mortgage of approximately $345,000.

(e) The applicant is a chiropractic doctor. She worked full time in this capacity from 1992 to May 2001, the month before the parties' first child was born. The applicant has been out of the work force for approximately 13 years.

(f) In 1998, the applicant's net income was $4,000; in 1999, it was $4,800; and in 2000, it was $17,000. She sold her practice in 2001 for $15,000.

(g) In 2011, the applicant rewrote her board exams and registered with her professional organization. She commenced advertising her chiropractic services in mid-2012. She currently sees three to four patients a week, charging $50 per treatment out of the matrimonial home. [page775]

(h) The respondent is a lawyer and one of three partners of Lee, Bowden, Nightingale LLP ("LBN"), a specialty law firm which primarily practices in collections for financial institutions.

(i) The children reside primarily with the applicant.

(j) The respondent retained a chartered business valuator, Mr. Doug Craig of Equity Transvaluations Inc. Mr. Craig's report dated April 30, 2014 estimated the respondent's income for support purposes for 2013 at $382,000 (including the Registered Retirement Savings Plan withdrawals) and $216,000 (excluding RRSP withdrawals). The Craig report recommended using the adjusted income calculation excluding the RRSP withdrawals as such withdrawals are not income earned by the respondent and the withdrawals were for family finances and not an ongoing occurring source of his income.

(k) The applicant retained Mr. Jonathan Hames of S.L.F. Financial Services Inc. to prepare a "preliminary expert report" on the calculation of income available to the respondent for support purposes for 2013. Mr. Hames' report is dated October 20, 2014. The report summarizes its findings regarding the respondent's 2013 income as follows:

(i) $1,342,100 (including income earned in registered investment accounts)

(ii) $359,100 (including registered investment withdrawals)

(iii) $192,700 (excluding registered investment withdrawals).

(l) The Hames report summarized estimates of the respondent's 2014 income as follows:

(i) $1,422,600 (including income earned in registered investment accounts)

(ii) $2,109,000 (including registered investment withdrawals)

(iii) $192,700 (excluding registered investment withdrawals).

(m) In his report, Mr. Hames notes that the respondent "has consistently supplemented his income with annual withdrawals from his RRSP account since 2009". [page776]

(n) Mr. Hames had not been provided a final financial statement for the respondent's law firm for 2013 as, according to the respondent, they had not been finalized; as a consequence, Mr. Hames was unable to determine the appropriateness of the respondent's income allocation from his LBN for 2013 and the resultant net professional income included the respondent's income tax return.

(o) There are private school tuition fees payable with respect to the children amounting to $36,000 per year and summer camp fees of $4,000 per year. The parties appear agreed that these are proper s. 7 expenses under the Federal Child Support Guidelines, SOR/97-175 ("Child Support Guidelines").

Positions of the Parties

[4] The applicant's position is that the parties had a "traditional" marriage with the applicant acting as homemaker and mother to the parties' children. Any income reflected in her recent income tax returns were solely as a result of income splitting with the respondent's income. The respondent is an active "day trader" and has generated significant increases in his investments through his considerable efforts in this regard, at the expense of his law practice. The respondent's withdrawals from his RRSPs, the increases in value of his investments, regular gifts received from his parents, and income from the Nightingale Family Trust must all be included in the respondent's income in determining the child and spousal support.

[5] It is the position of the respondent that throughout the marriage the family lived a lifestyle beyond its means, funded by consuming capital, including debt and occasional gifts from the respondent's parents. This lifestyle is no longer maintainable. The respondent's 2013 income for support purposes was $216,000 per year and his 2014 income will be less. The applicant is able to earn considerably more than imputed income of $20,000 per year. The funds withdrawn by the respondent from his RRSP do not constitute income for support purposes. The value of the respondent's RRSPs will be equalized as property. Based on the respondent's income of $216,000 and the applicant's imputed income of $20,000, and assuming the respondent pays 100 per cent of the private school tuition ($36,000 per year) and summer camp ($4,000 per year), the table amount of child support is $3,561 per month and the mid-point of the Spousal Support Advisory Guidelines ("SSAG") range is $452 per month. There is no income flowing to the respondent [page777] from the Nightingale family trust. The gifts from the respondent's parents are not income for support purposes, nor is an increase in value of the respondent's investments in either registered or non-registered accounts.

Legal Principles

[6] Child and spousal support in this matter flow from ss. 15.1 and 15.2, respectively, of the Divorce Act.

[7] Section 15.1(3) provides that child support is to be awarded in accordance with the Child Support Guidelines.

[8] Section 15.2 addresses spousal support orders, both interim and final. Section 15.2(4) sets out factors the court must consider when making an interim or final order for spousal support. It provides as follows:

15.2(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.

[9] The objectives of a spousal support award apply to both interim and final orders. They are summarized in s. 15.2(6) of the Divorce Act, which provides as follows:

15.2(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 of time.

[10] As each case is different, the significance of each of the factors outlined above will vary from case to case. This necessitates a contextual approach. In Driscoll v. Driscoll, 2009 66373 (ON SC), [2009] O.J. No. 5056, 2009 CarswellOnt 7393 (S.C.J.), Lemon J. enumerated a list of principles governing interim spousal support motions. He listed the following [at para. 14]: [page778]

(1) On applications for interim support the applicant's needs and the respondent's ability to pay assume greater significance;

(2) An interim support order should be sufficient to allow the applicant to continue living at the same standard of living enjoyed prior to separation if the payor's ability to pay warrants it;

(3) On interim support applications the court does not embark on an in depth analysis of the parties' circumstances which is better left to trial. The court achieves rough justice at best;

(4) The courts should not unduly emphasize any one of the statutory considerations above others;

(5) On interim applications the need to achieve economic self-sufficiency is often of less significance;

(6) Interim support should be ordered within the range suggested by the Spousal Support Advisory Guidelines unless exceptional circumstances indicate otherwise;

(7) Interim support should only be ordered where it can be said a prima facie case for entitlement has been made out; [and]

(8) Where there is a need to resolve contested issues of fact, especially those connected with a threshold issue, such as entitlement, it becomes less advisable to order interim support.

[11] The above principles are not exhaustive, but they are of assistance in conducting a contextual analysis.

The Respondent's Means

The Nightingale family trust

[12] The applicant has deposed that the respondent promised to provide Mr. Hames with an authorization to speak with the accountant regarding the Nightingale family trust but ultimately the respondent did not do so; as a result, any income distributions paid to the respondent from the trust have not been included in his income for purposes of Mr. Hames' report.

[13] The respondent's evidence confirms that every monetary gift he received was from his parents' personal bank account and his father's accountant, James Winter, confirmed that the Nightingale family trust does not and has never had any income, any bank accounts or any financial statements and has never filed a tax return. The respondent denies having promised the authorization as alleged by the applicant.

[14] The evidence is not conclusively supportive of either party's position on this issue. It is trite to say credibility usually cannot be assessed on the strength of affidavit evidence alone. On the evidence before me on this motion, I cannot conclude that there is any income flowing to the respondent from the Nightingale family trust for the purposes of support; nor can I conclude [page779] that the respondent has resiled from an undertaking to authorize his accountant to share information with Mr. Hames regarding the trust.

Gifts to respondent from the respondent's parents

[15] The applicant's evidence in support of her motion indicates that the respondent receives significant gifts from his parents, who are wealthy. During the marriage, the applicant alleges the respondent received a regular gift of "$50,000 per year". It is also alleged that the respondent's parents paid for the respondent's previous vehicle and for the family van ten years ago. The applicant also relies upon an e-mail from the respondent to the applicant dated September 22, 2014, in which he states:

It's a good thing my father gave me $50,000 each year to help with all your expenses (my parents have the cancelled cheques). Don't expect to see that anymore. And the money many years I had to take out of my RRSP to pay for everything. Don't expect that to happen anymore.

[16] The respondent's evidence is that the moneys received from his parents were not regular gifts and that they were never more than $10,000 to $20,000 in any one year until 2006. Since then, his parents have shared with the respondent and his siblings more of their wealth, although the precise details in this regard were not included in his affidavit. It also appears that although the cancelled cheques are available, such have not been provided for consideration on this motion.

[17] The respondent does not deny the applicant's evidence of regular gifts of $50,000 per year, at least after 2006, and in fact his e-mail of September 22 quoted above would appear to support this as well.

[18] The respondent's father passed away on November 29, 2014. There is no evidence as to the impact of this event upon the respondent's expectation of future gifts. In his evidence, he characterized the gifts as emanating from both parents, and not from either individually.

[19] The applicant's evidence regarding the respondent's expected inheritance from his father's estate is too speculative to be of assistance on this motion.

[20] For child support purposes, gifts received are not included in a spouse's presumptive annual income as defined in s. 16 of the Federal Child Support Guidelines; however, s. 19(1) of the Federal Child Support Guidelines does provide the court with the discretion to impute income to a party as it considers appropriate in the circumstances. Section 19(1) goes on to list, non-exhaustively, circumstances where it may be appropriate to [page780] impute income to a spouse. The receipt of "gifts" is not included in this non-exhaustive list.

[21] In Bak v. Dobell (2007), 2007 ONCA 304, 86 O.R. (3d) 196, [2007] O.J. No. 1489 (C.A.), the Court of Appeal for Ontario stated [at paras. 62 and 74]:

Since the legislature did not include gifts within the ambit of imputed income, it can be presumed, in the normal course, that the legislature did not intend the receipt of gifts to be "appropriate circumstance" in which to impute income. For this reason, usual gifts such as those given to mark a special occasion are not included as income.

Although it seems the legislature intentionally did not include the receipt of gifts given in the normal course in presumptive income, or as an example of an appropriate circumstance under s.19(1), a court will consider whether the circumstances surrounding the particular gift are so unusual that they constitute an "appropriate circumstance" in which to impute income.

[Emphasis in original]

[22] The Court of Appeal went on to list the factors which ought to be considered in considering whether it is appropriate to include the receipt of unusual gifts in income [at para. 75]:

(a) the regularity of the gifts;

(b) the duration of their receipts;

(c) whether the gifts were part of the family's income during cohabitation that entrenched a particular lifestyle;

(d) the circumstances of the gifts that earmarked them as exceptional;

(e) whether the gifts do more than provide a basic standard of living;

(f) the income generated by the gifts in proportion to the payor's entire income;

(g) whether the gifts are paid to support an adult child through a crisis or period of disability;

(h) whether the gifts are likely to continue; and

(i) the true purpose and nature of the gifts.

[23] In my view, the sum of $50,000 per year (grossed up)

ought to be imputed to the respondent for the purposes of both

child and spousal support for the following reasons: [page781]

(a) The evidence is fairly clear that since at least 2006, the respondent received the annual sum of $50,000 from his parents. I am drawn to this conclusion by a combination of his September 22, 2014 e-mail to the applicant and his failure to make clear in his evidence the quantum of the gifts received after 2006, especially when it appears the cancelled cheques are available (see Whelan v. O'Connor, 2006 13554 (ON SC), [2006] O.J. No. 1660, 28 R.F.L. (6th) 433 (S.C.J.), at para. 21, where the court defined failure to make full disclosure one of the bases for considering imputing income). He deposed that after 2006, his parents shared with him and his siblings "more of their wealth", and the context suggests "more" than the "$10,000 to $20,000" received annually up to that time.

(b) The foregoing suggests a duration of a consistent sum of $50,000 per year for at least eight years.

(c) The respondent deposed that "every dollar" he received from his parents was applied to his "family and upholding the charitable obligations" of their faith. Thus, it can be concluded that these funds were part of the family income and contributed to the lifestyle they came to enjoy.

(d) While I appreciate that there is no obligation on the part of the donor(s) to continue making the gifts in the same amount, with the same regularity, or at all, on balance, given the history of the payments, it is safe to conclude that they are likely to continue into the immediately foreseeable future.

(e) While not all of the indicia outlined by the Court of Appeal in Bak are present here, there are sufficient indicators for me to conclude that these circumstances are sufficiently unusual to constitute appropriate circumstances in which to impute the additional sum of $50,000 per annum to the respondent. It should be grossed up as it is received on a tax-free basis by him.

(f) While s. 19 of the Guidelines applies only to issues of child support, the same principles may be applied in determination of income for spousal support purposes. The Divorce Act defines no mechanism for income determination and thus a motion judge is left to find a figure that makes the most sense based on the necessarily imperfect and incomplete record available at this early stage. The framework of s. 19, as judicially interpreted by the Court of Appeal, offers [page782] a helpful context for consideration of this issue. For the same reasons as for child support, I also find an additional $50,000 per annum ought to be imputed to the respondent for spousal support purposes, again grossed up as it is received on a tax-free basis.

RRSP withdrawals

[24] The applicant says the respondent made the following withdrawals from his RRSPs in the following years:

(a) 2009 -- $35,000

(b) 2010 -- $39,972

(c) 2011 -- $15,000

(d) 2012 -- $99,859

(e) 2013 -- $166,373

(f) 2014 -- $1,699,944

[25] The respondent does not dispute these withdrawals. He argues that he made substantial payments to the applicant or to her benefit after separation in late June 2013, totalling almost $246,000 through September 2014, and in order to make those payments he cashed out his tax-free savings account and made substantial withdrawals from his RRSP. He says that the RRSP withdrawal in 2012 was at the applicant's insistence and the moneys were used for home expenditures including remodelling. He indicates that prior to 2012, his average annual RRSP withdrawal was $28,000. He further indicates that the substantial withdrawal of $1.6 million in 2014 was necessitated as a consequence of his father failing to fall through with a promise to purchase the respondent's new residence in July 2014 for $804,000.

[26] Section 16 of the Child Support Guidelines provides that a spouse's annual income for child support purposes is determined using the sources of income set out under the heading "total income" in T1 General form issued by the Canada Revenue Agency as adjusted in accordance with Schedule III.

[27] In Fraser v. Fraser, [2013] O.J. No. 5347, 2013 ONCA 715, the Court of Appeal for Ontario that RRSP income is presumptively part of a spouse's income for child support purposes since RRSP income is included as part of "total income" on the T1 General form.

[28] In Ludmer v. Ludmer, [2014] O.J. No. 5565, 2014 ONCA 827, the Court of Appeal for Ontario held that the inclusion of [page783] RRSP proceeds in income is not mandatory; rather, the court has discretion in appropriate circumstances to do otherwise. This discretion is derived from s. 17(1) of the Federal Child Support Guidelines, which states as follows:

17(1) If the court is of the opinion that the determination of a spouse's annual income under s.16 would not be the fairest determination of that income, the court may have regard to the spouse's income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years.

[29] There is authority for the proposition that where the RRSP income was received on a one-time basis for a specific purpose, it should not be included in a spouse's income for the purposes of child support (see Foley v. Weaver, [2010] O.J. No. 2741, 2010 ONSC 3305 (S.C.J.), in which RRSP income of approximately $5,000 withdrawn to cover the cost of a broken sewage pipe was excluded from the payor's income of approximately $63,000).

[30] In Stevens v. Boulerice, 1999 14995 (ON SC), [1999] O.J. No. 1568, 49 R.F.L. (4th) 425 (S.C.J.), Aitken J. declined for two reasons to exclude RRSP withdrawals from income simply because the RRSP had been the subject of an equalization calculation. First, she noted that s. 16 of the Guidelines requires that RRSP withdrawals be included as income for child support purposes. Schedule III to the Guidelines, which provides some special rules for adjustments to income for child support purposes in certain cases, does not make any special provision for RRSP income. Second, Aitken J. observed that equalization was a matter between the parents while the issue before her was a question of child support. She could see no reason why an available source of income to fund child support should be excluded because of dealings between the parents. The child support was not being paid to increase the mother's lifestyle.

[31] The Ontario Court of Appeal in Fraser found this reasoning persuasive (see para. 103 of Fraser v. Fraser).

[32] In Fraser, the payor withdrew approximately $153,000 from an RRSP in order to assist in purchasing a home. In circumstances where the payor was not working and his first obligation was to ensure that his children were properly supported, the Court of Appeal did not consider inclusion of the RRSP withdrawals in the payor's income as creating unfairness. The Court of Appeal in Fraser also indicated that the view that non-recurring withdrawals from RRSPs should essentially be automatically excluded from income for child support purposes [page784] has been superseded by amendments to the s. 17 and by case law such as Stevens v. Boulerice.

[33] In my view, additional income of $93,744 ought to be included in the respondent's income for both child and spousal support purposes for the following reasons:

(a) RRSP income is presumptively part of calculation of income for child support under the Guidelines, subject to the discretion under s. 17(1).

(b) The sum of $93,744 represents the average of RRSP withdrawals in the last three years for which complete income tax information is available (i.e., 2011, 2012 and 2013). Section 17(1) of the Guidelines contemplates consideration of the last three years' income where there is fluctuation in a party's income and proceeding otherwise would not produce the fairest determination of this issue. I am restricting this analysis of the three-year average to the fluctuations in RRSP income given the history of consistent RRSP withdrawals but in dramatically inconsistent amounts.

(c) The substantial RRSP withdrawal in 2014 is explained by the respondent in his material as being designed solely to complete the purchase transaction of a new home post-separation after his father's promise of funding unexpectedly fell through. I am satisfied on the strength of the reasoning in Foley that this is a one-time withdrawal for a specific purpose and including it in the respondent's income would unfairly distort his actual income and thus his support obligations. I also distinguish this case from that before the Court of Appeal in Fraser in that in Fraser the payor did not have any other sources of income and not including his substantial RRSP income would have resulted in no support being paid. Also, the 2014 withdrawal is dramatically inconsistent in quantum with all prior RRSP withdrawals, serving to confirm its characterization as "one-time".

(d) This same reasoning is applicable to determination of spousal support, although not within the context of s. 17 of the Guidelines (which of course have no application to spousal support). The objective nevertheless remains the same: to find a number that most fairly reflects the respondent's income at this early stage. For the reasons outlined above, additional income of $93,744 will be imputed to the respondent for spousal support purposes as well. [page785]

(e) The respondent's argument that including his RRSP withdrawals in income for spousal support purposes represents "double dipping" is premature. Equalization has not yet occurred and thus the inequity which might result from equalizing the RRSPs and then including the proceeds therefrom as income for the purposes of spousal support does yet reveal itself. Furthermore, any double-dipping argument would presumably be restricted to the respondent's RRSP holdings as of the valuation date; in this case there have been substantial increases in those holdings post-separation that may not be subject to this argument.

Increases in value in respondent's investments

[34] The applicant argues that increases in value in the respondent investments ought to be included in determination of his income for support purposes. In this regard, she notes that the respondent's investments increased from $546,380 as of December 21, 2012 to $1,624,385 on December 31, 2013, representing an increase of more than $1 million in one year. She further indicates that the respondent's portfolio increased another $1.1 million in the first eight months of 2014. She argues the use of his registered account allows him to shield his annual gains from income tax and should be included in his income for the purpose of calculating support.

[35] The applicant further argues that the respondent is solely responsible for this gain in the RRSP as he actively trades in the account. There were 570 transactions in 2012. In 2013, there were 550 transactions. In the first six months of 2014, the respondent made 575 transactions in RRSP accounts.

[36] In this regard the applicant relies upon R. (C.M.M) v. R. (R.W.A.), [2011] N.B.J. No. 423, 2011 NBQB 159. In that case, over 70 per cent of the value of the payor's assets were held in registered investments and the vast majority of the earnings and growth in his total investments did not result in earnings that were reported as income for tax purposes. The payor had no employment income and instead applied himself full time to working with investments. The New Brunswick Queen's Bench ultimately concluded that additional income ought to be imputed to the payor based on the conclusion that not only did his situation fall within one or more of the circumstances described in s. 19 of the Federal Child Support Guidelines but also, even if this were not the case, the circumstances are appropriate for the court to otherwise impute income pursuant to s. 19.

[37] The applicant argues that s. 19(1)(d), (e) and (g) are relevant considerations here. [page786]

[38] In R. (C.M.M) v. R. (R.W.A.), the New Brunswick Queen's Bench, in determining the payor's income for child support purposes, imputed to him 5 per cent of the value of his registered investments. This income was added to his additional Guidelines income as otherwise determined. The court found that the payor's investment increases attracted imputation of income under s. 19(1)(a), (d), (e) and (h).

[39] The respondent argues that R. (C.M.M) v. R. (R.W.A.) can be distinguished from the instant case in that in this case there is no evidence that the respondent is engaged in "full time" efforts at dealing with his investments. He argues that the number of transactions in which he is engaged on an annual basis is not reflective of the amount of time he has expended. His evidence is that this is something that he has found personally interesting and has found that he has some talent in.

[40] The applicant argues that the respondent must be expending considerable effort at educating himself about these transactions and implementing his investment decisions. She is supported in this regard to some extent by the report of Mr. Hames in which the author expresses a similar opinion.

[41] In my view, no additional income from increases in the respondent's investments ought to be attributed to the respondent for child or spousal support purposes at this stage for the following reasons:

(a) The evidence does not persuade me that the respondent is participating in the level of active trading before the court in R. (C.M.M) v. R. (R.W.A.). The applicant's evidence as to the amount of effort expended by the respondent in dealing with his investments, and the alleged detriment to his law practice income, is based purely upon supposition, as apparently is the opinion of Mr. Hames in this regard. The respondent is in the best position to define the amount of time he devotes to his trading activities and according to him it is not significant, the number of transactions notwithstanding. Without more cogent evidence on the issue, I cannot make the conclusions urged upon me by the applicant.

(b) There is no presumption that such increases in value ought to be included in income under the Federal Child Support Guidelines, including Schedule III.

(c) The respondent's investments represent capital and normally such assets are expected to yield a return in a reasonable amount, but the evidence at this stage is unclear as to what a reasonable amount is. [page787]

(d) R. (C.M.M) v. R. (R.W.A.) can be further distinguished on the basis that in that case the payor had no source of income other than investments and no occupation other than managing his investments. Here the evidence supports the conclusion that the respondent is self-employed on a full-time basis as a lawyer and that he manages his investments capably but hardly with the level of effort alleged by the applicant or contemplated by the court in R. (C.M.M) v. R. (R.W.A.).

(e) It is early in these proceedings and it appears disclosure is not yet complete. This may be an appropriate case for questioning but as neither party raised the issue I will not comment further. In any event my order will be without prejudice to the rights or obligations of the parties such that either will be free to return these issues on motion upon completion of disclosure and after questioning, if undertaken.

(f) While I am of the view that the respondent's increases in value of his investments should not be used in determining his income at this time, I am of the view that his vastly superior resources ought to be considered in determining who is in the better position to maintain payments regarding the matrimonial home mortgage and taxes.

Law practice income

[42] According to the Hames report, income from the respondent's law practice in 2013 is $192,700 and approximately equal in 2014. The wife noted concern that the husband had failed to produce his law practice financial statements for 2013. The Hames report notes that these financial statements were not made available for the purpose of completing his report.

[43] The respondent indicates that he produced his 2013 firm financial statements to Mr. Hames during the meeting with him. He notes that the ATVI report prepared by Mr. Craig confirms his income from his law practice in 2013 in the sum of $216,000. The respondent deposed that he expected he would be earning less in 2014.

[44] In the presence of contradictory evidence regarding whether the respondent has provided a copy of his 2013 law firm financial statements, I am not prepared to draw any conclusions one way or the other.

[45] While I have no reason to prefer either report to that of the other on this issue, the respondent in his submissions has utilized the figure of $216,000 in reference to quantification of [page788] the respondent's income from his law practice, even though this figure is higher than that ascribed to this source of income by the applicant's expert.

[46] Therefore, I find that the respondent's income in 2013 from his law practice is $216,000 for both child and spousal support purposes.

Summary re respondent's income

[47] For all of the foregoing reasons, I find the respondent's income to be $403,044, calculated using the DivorceMate software and based upon the following income inputs:

(a) Self-employment income (net) $216,000

(b) Other taxable income (RRSPs) $93,744

(c) Other non-taxable income, auto gross-up (gifts) $50,000

Applicant's Income

[48] The applicant's income is a more straightforward issue. The respondent submits that income of $20,000 per annum ought to be imputed to her. The applicant says she was out of the workforce for 14 years and does not see herself earning more than $5,000 to $10,000 per year, net of expenses, in her chiropractic practice. The applicant is entitled in these circumstances to take a reasonable amount of time to get back into the employment marketplace, but she is also expected to conduct herself reasonably in the choices she makes. These expectations must be tempered, however, [by] the demands placed upon her by virtue of having primary care of the children, all of whom have appointments to attend by in relation to their health issues identified above. Keeping these factors in mind, I find the applicant's income to be $15,000 for support purposes, being net self-employment income.

Conclusion

[49] Using income for the respondent of $403,044, income for the applicant of $15,000, s. 7 Federal Child Support Guidelines expenses maintained by the respondent of $36,000 (school tuition) and $4,000 (summer camp), and with the children residing primarily with the applicant, the DivorceMate software suggests the respondent should be paying base child support of $6,255 per month. The SSAG support scenarios suggest a range of $5,866 (low), $6,696 (mid) and $7,540 (high). At this stage in the proceedings, I will utilize the mid figure of $6,696 per month for [page789] spousal support payable by the respondent. Based on this, the applicant should be contributing $760 per month toward the children's s. 7 expenses as above.

[50] For all of the foregoing reasons, there shall be an order as follows, on a without prejudice basis:

(a) commencing December 1, 2014, the respondent shall pay to the applicant the sum of $6,255 per month in child support for the children Chana Nightingale, born June 11, 2001; Avital Nightingale, born September 10, 2003; and Dinah Nightingale, born December 11, 2005, based upon income of $403,044;

(b) commencing December 1, 2014, the respondent shall pay to the applicant the sum of $6,696 per month in spousal support;

(c) commencing December 1, 2014, the respondent shall maintain all mortgage and real property tax payments regarding the matrimonial home;

(d) commencing December 1, 2014, the respondent shall be solely responsible for paying the children's private school tuition fees (approximately $36,000 per annum) and summer camp fees (approximately $4,000 per annum), subject to contribution by the applicant of $760 per month;

(e) if the parties are unable to agree on costs, they shall make written submissions restricted to three pages in length within 30 days;

(f) SDO to issue.

Application allowed.

End of Document