ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Ian Hugh Curry
Applicant
– and –
Cathy Ann Greene Curry
Respondent
H. Hunter Phillips, for the Applicant
Leonard Levencrown, for the Respondent
HEARD: January 18, 19 and 20, 2016
REASONS FOR JUDGMENT
Justice A. doyle
Overview
1The Applicant, Ian Hugh Curry, is requesting a divorce, a determination of his ongoing and retroactive financial obligations for his wife and four children, and an equal division of the household items. The husband is 50 years old and is currently a strategic advisor with DNA Genotek Inc. (DNA). In 2015, he earned a total income of $647,000 and in 2016 his income will consist of a salary of $315,000 and restricted stock units (RSU) in the approximate amount of $118,621 for an estimated annual income of $433,621.
2The Respondent, Cathy Ann Greene Curry, is requesting spousal and child support based on the husband’s 2015 income. She submits that the husband’s change in projected income for 2016 occurred on the eve of trial and was orchestrated by the husband to minimize his support obligations. She is also requesting joint control of the children’s trust funds used to pay for certain of the children’s expenses. The husband currently manages these funds. She is 47 years old and works part-time as a supply teacher and her 2015 employment income was $2,087.47.
3The divorce is not contested. The parties have resolved all parenting and property issues (except for the division of household items).
4The parties agree that the wife is entitled to spousal support on an indefinite basis on compensatory and non-compensatory principles.
5The issues are as follows:
What is the husband’s income for the purposes of determining support?
What is the ongoing amount of child support?
Should income be imputed to the wife?
What is the ongoing amount of spousal support?
Should there be a review of support payable on December 31, 2016 when the husband’s current employment comes to an end?
Was there an overpayment or underpayment in support from the date of separation?
Who should control the children’s trust funds?
How should the household items and antiques located in the matrimonial home and at the cottage be divided?
Background
6The parties were married on June 27, 1992. They have four children: Julie, born April 14, 1997; Johnathan, born March 5, 1999; Courtney, born May 10, 2001 and Michael, born April 14, 2003. The three younger children reside with their mother and have access to their father. Julie is on a one-year program abroad and, at the time of trial, she was in Peru and expected to return to her mother’s residence in June 2016. The children have been residing with the mother in the matrimonial home since separation.
7The parties separated on July 2, 2012 when the husband announced his desire to separate at the family cottage. After the husband left, the wife and the children remained at the cottage for their summer vacation for a further six weeks.
8The husband’s position with DNA as a strategic advisor will end on December 31, 2016.
9The wife has been working as a supply teacher on a part-time basis since May 2012. She is also fully involved in caring for the three children who currently reside with her.
Parties’ Agreements and Court Orders
10Immediately after the separation, the husband paid certain expenses, provided cash when requested by the wife and paid Visa bills. In addition, the wife was able to withdraw funds in the amount of $88,441.21 from investment accounts.
11Commencing October 1, 2012, the husband voluntarily paid $9,532 per month to the wife as support. This was an amount recommended by his lawyer at the time. He was not provided any tax relief for payments made in 2012 as the wife would not sign an acknowledgement of the receipt of the payments.
12An interim without prejudice separation agreement dated April 9, 2014 (the “2014 interim agreement”) provided the following:
Commencing January 1, 2013, the husband would pay child support in the amount of $5329 per month based on an annual income of $275,103.
The children’s trust funds of approximately $175,000 for each child were initially placed into trust accounts to pay for children’s activities, their post-secondary education and future adult needs. The amount of $1,250 per child every quarter for a total of $5,000 per quarter, or $20,000 annually was allocated to the wife for these expenses.
If the husband incurred legitimate extra expenses for the children, he would be reimbursed from these trust funds. Commencing January 2015, the reconciliation of these extra expenses would occur by the end of each January for the prior calendar year. Each parent was to provide a detailed list of extra expenses with the receipts.
The definition of “Extra expenses” mirrors the definition of section 7(1) of the child support guidelines. “Extraordinary expense” is defined as an expense that takes into consideration the parties’ income, the amount and nature of the expense, the special needs and talents of children, the overall cost of the program and any other relevant factor.
Commencing January 1, 2013, the husband would pay spousal support in the amount of $4,203 per month.
The wife would have exclusive possession of the matrimonial home and be responsible for the expenses relating to the matrimonial home.
13The parties executed an amended interim separation agreement dated January 18, 2015 (the “2015 interim agreement”) which changed the financial arrangements of the payments from the children’s trust funds as follows:
By June 1st of each year, the amount of $6,000 for each child was allocated to the wife to be used for the children’s expenses from June of that year to May of the following year.
The definition of “Extra expenses” mirrors the definition of section 7(1) of the child support guidelines. “Extraordinary expense” is defined as an expense that takes into consideration the parties’ income, the amount and nature of the expense, the special needs and talents of children, the overall cost of the program and any other relevant factor.
The parties agreed that these amounts would not be covered by the children’s trust funds:
a) the children’s portion of the costs of the wife’s home or cottage;
b) food, including meals and snacks while participating in extracurricular activities;
c) clothing, including outerwear and footwear;
d) transportation, including costs related to the wife’s vehicle or any vehicle operated by the children (other than the children’s portion of vehicle insurance) and bus passes;
e) ordinary costs of primary or secondary education, including, without limiting the generality of the foregoing, ordinary costs of equipment, gifts for teachers and minor expenses for school activities(“minor” being expenses of less than $100 per activity);
f) minor costs with respect to extracurricular activities;
g) grooming;
h) internet charges;
i) pet related expenses, including pet food, veterinary costs or the costs of boarding a pet while on vacation;
j) a parent’s portion of vacation expenses while on vacation with the child;
k) passports;
l) home security system; and
m) children’s drivers’ licenses.
14In addition, the 2015 interim agreement provided that the husband would pay to the wife the amount $36,235.75 being 21.36% of the bonuses totaling $169,643 which he received in 2014. This would be considered non-taxable child support.
15The parties signed partial minutes of settlement (2015 Minutes) on January 14 and 15, 2015 in which they resolved property and parenting issues. The terms were incorporated into the final order of Justice De Sousa dated February 12, 2015. Correspondence from counsel confirmed that the issue of the division of household items (including antiques) remained outstanding.
16The 2015 Minutes provided for joint custody, a parenting schedule, a holiday schedule and mobility issues. The parties also settled the property issues including the division of various trusts, investment accounts, stock options and real properties. The husband transferred his interest in the matrimonial home located at 8 Wildacre Lane, Ottawa and the Otter Lake cottage to the wife. The other cottage at Otter Lake was to be sold with the sale proceeds to be divided equally between the parties. The husband was required to pay the wife the sum of $538,218.34 as an equalization payment.
17As a result of the property settlement and upon the equalization payment being made, each party had $2.3 million worth of assets as at valuation date.
18The parties’ partial Minutes of Settlement (2016 Minutes) dated January 14 and 15, 2016 revoked the parenting issues set out in paragraphs 1 to 35 in Justice De Sousa’s Order as follows:
The wife would have sole custody of the children with no requirement that she consult with the husband with respect to major decisions affecting the children.
There were clauses dealing with the conduct expected of the parents including a stipulation that communication between the parties was to be only via e-mail and only with respect to children’s issues.
Paragraph 13 stipulated that “neither party shall harass the other with frequent emails and no requests, by any means, shall be sent requesting child or spousal support payments, including payments for Extra expenses, beyond those provided for in any agreement or court order.”
19In June 2015, the husband received an increase of salary to $315,000 retroactive to January 1, 2015. Although child support was adjusted, the husband would not agree to an increase of spousal support. He was paying $4,203 per month pursuant to the 2014 interim agreement.
20In the July 3, 2015 motion before Justice Warkentin, the court noted that the husband’s annual income had significantly changed from $291,433 at the time of the parties’ separation in 2012, to an estimated income of $527,000 in 2015. Her Honour found that the husband was paying a reasonable rate of child support at the equivalent of $9,816 per month for 2015, which included a lump sum payment of $36,235.75 for child support payable pursuant to the 2015 interim agreement.
21Justice Warkentin found that the support payable pursuant to the 2014 interim agreement was based upon the husband’s income of approximately $343,000 per annum. On a temporary basis, she ordered an increase of spousal support to $7,300 per month retroactive to January 1, 2015. This support provided the wife with approximately 62.5% of the parties’ Net Disposable Income (NDI). The court found that this amount was reasonable taking into account that the wife was the primary caregiver for the four children and some of the children’s expenses were paid from the children’s trust funds.
1) What is the husband’s income for the purposes of determining support?
Wife’s Position
22The wife submits that the court should draw an adverse inference against the husband for two reasons: i) there has been a drastic change of income on the eve of trial; and ii) the husband has failed to provide financial disclosure.
23Firstly, the wife alleges that the husband’s dismissal from his employment was contrived to reduce his obligation to pay spousal support. The wife submits that his change of income had been strategically set up by the husband and that he actually negotiated the agreement regarding his salary to benefit him.
24The husband failed to mention that he was having issues with his employer at the motion before Justice Warkentin.
25The husband gave no indication whatsoever that his job was at risk and, only one month before this trial, he advised the wife that he had been negotiating a package since early 2015.
26The wife was advised of the husband’s termination when she received a copy of the notice of termination from employment dated December 16, 2015 and a transition agreement which confirmed that the husband would be terminated effective December 31, 2016.
27In effect, the transition agreement would significantly reduce the husband’s total income of $647,000 that he earned in 2015 according to his last paystub. His 2016 income is projected to be an annual salary of $315,000 plus RSU’s which could provide an approximate total income of $433,621. The husband would not be entitled to bonuses. This projected income for 2016 is a reduction of 1/3 of his income from the previous year.
28She states that the facts defy logic that he would be terminated at the end of 2016. In 2015, he received a full salary plus $220,000 in bonuses and $200,000 in RSU units. He also received a $22,000 raise.
29Secondly, she submits that the court should draw an adverse interest as the husband had not been forthright with financial disclosure including a failure to produce current bank statements. In addition, there was also an unexplained transfer to Sheldon Stevens at the time of the sale of the DNA shares.
Husband’s Position
30The husband asks that the court use current income in determining support. He provides various reasons for his termination which are set out below. In fact, the trial was originally scheduled to occur in September 2015 and was adjourned on the wife’s request. The events leading to his termination developed to fruition at the end of 2015.
31His transition agreement provides that he can continue to receive a significant salary of $315,000 per annum, the granting of RSU’s and the ability to exercise stock options. Although he would not be eligible for bonuses, he would still be able to provide for his family.
32The transition agreement affords him the opportunity of one year to find alternative employment.
33The husband denies that he has failed to provide financial disclosure. Regarding the December 29, 2011 payment to Sheldon Stevens, the husband alleges that the wife was aware that this payment was made pursuant to an agreement between the husband and Mr. Stevens that he would provide him the value of 80,000 shares if DNA was sold.
34Below is a brief history of the husband’s education and work experience.
35The parties met at the University of Western Ontario where the husband graduated with a degree in computer science in 1988. After he graduated, he worked at Bell Northern Research (BNR) where he wrote software. He worked at BNR for four years until he entered a two-year program for a Masters of Science and Master in Business Administration (MBA) at Massachusetts Institute of Technology (MIT) in Boston. It was partially paid for by BNR.
36The wife joined him there in the second year of the program. She had been teaching in Scarborough for the first year of his program at MIT.
37After his graduation in 1994 from MIT, he returned to work as a product manager for a small group named Entrust within BNR (also known as Nortel). He later obtained an executive position and worked there until June 2003.
38In 2004, he commenced working at DNA which was a small start-up company focussing on DNA sample technology. As its president and Chief Executive Officer (CEO), his tasks included raising funds from investors and developing a strategic plan.
39In 2011, OraSure Technologies Inc. (OraSure), an American company, bought out DNA. The husband sold his shares for approximately $3 million.
40At the time of the takeover, the husband’s annual salary with DNA was $220,000 with the occasional bonuses and stock options. The payment of bonuses depended on DNA’s performance, meeting growth targets with new customers and product releases. The granting of RSU’s became part of the OraSure incentive plan and was not available at DNA before the takeover.
41As an executive, the husband was granted a percentage of his salary in stock units on an annual basis. When the shares are vested, that amount is included as income for that year. RSU’s are vested over three years, i.e. one third each year.
42An individual may experience a gain or a loss at the time that they dispose of the shares depending on the market price at the time the disposition of the shares in relation to the price at the time of the vesting of the shares.
43In 2011, the husband’s annual income was $1,699,808 consisting of employment income of $1,145,576 plus capital gains of $520,336.
44In 2012, his employment income was $275,103 and with dividends and interest, his total income was $326,855.
45In 2013, his total income was $343,786; in 2014, he earned $508,828; and in 2015, he earned $647,848.
46The husband indicated that in 2015 there were three issues with OraSure that led to his termination at DNA: i) the differences in bonus payments between OraSure and DNA employees, ii) the lack of disclosure to the Securities and Exchange Commission (SEC) and iii) misinformation disseminated regarding the performance of OraSure.
47Firstly, regarding the difference in the bonus pool between the OraSure and DNA employees, he learned that in 2015, the OraSure executives were receiving large bonuses which were driven by DNA performance, yet the DNA employees would not be awarded bonuses.
48Essentially, he understood that the DNA employees would not be receiving their fair share of performance bonuses compared to the OraSure employees. The granting of bonuses is based on profitability by reviewing revenue and operating expenses.
49The Board of Directors establishes the objectives. In order for executives to qualify for bonuses, the company would have to meet the target from the previous year. According to the husband, OraSure did not meet targets and took into consideration certain findings that were not relevant in determining performance. He cited an example of the fact that they cut the advertising expense budget in half so that the books would reflect a gain.
50Secondly, he was concerned that the proxy documents submitted to the SEC were not accurate which would result in investors not been properly informed. The documents came to his attention in April 2015, as a member of the disclosure committee.
51Finally, the budgetary plan showed a one-time payment of $5.5 million from Roche. This would have the effect that OraSure had over performed entitling the executives to a bonus. Therefore, OraSure did not meet its revenue target yet their executives were receiving bonuses. In addition, the fact that DNA had over performed by $3.8 million (US) was not disclosed to the SEC.
52In April 2015, he retained an employment lawyer to discuss these issues. He took steps to work with OraSure to ensure that the Board allocated appropriate bonuses to DNA employees. This was a time of a high level of stress and conflict for him.
53He was also concerned that between January 2015 and March 2015 OraSure decreased its revenue target by $18 million, an approximate 15% to 16% of total revenue, which is a not a “normal” business practice. This was highly disturbing to him and discussions with the CEO did not produce any change.
54His lawyer negotiated with OraSure over a number of months and eventually they negotiated a transition agreement. The agreement would allow him additional time to find another employment.
55The terms of the transition agreement included the following clauses:
The agreement was for a period of one year ending December 31, 2016.
The husband’s new role was strategic advisor reporting to the President and CEO of OraSure.
He had to tender his resignation as director of DNA.
He was not to work at the company’s office unless there was an express request to do so.
He could terminate the contract upon providing two weeks’ prior written notice.
His income was $315,000 per annum, with no bonuses.
He would be entitled to receive RSU’s that would have vested during the year: the amount depends on the price of OraSure stock, when they vest, and the Canadian currency exchange rate on that date.
He had five additional years to exercise his stock options.
Legal Principles
56In determining income, the court is guided by the Federal Child Support Guidelines, S.O.R./97-175 (Guidelines), ss. 15 - 20.
57Section 15(1) of the Guidelines provide that subject to subsection (2), a spouse’s annual income is determined in accordance with sections 16 to 20.
58Section 16 provides that “Subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with Schedule III.”
59Schedule III adjustments to income pursuant to section 16 include the right to deduct a number of applicable employment expenses, carrying charges and interest expenses and the requirement to declare the actual amount of capital gains realized by the spouse.
60Section 16 does not stipulate that the court is required to use the previous year’s total income as found in the T1 General form. Section 2(3) of the Guidelines states that, “Where, for the purposes of these Guidelines, any amount is determined on the basis of specified information, the most current information must be used”.
61As stated in Coghill v. Coghill (2006), 2006 28734 (ON SC), 30 R.F.L. (6th) 398 (Ont. S.C.), the most current information must be used in determining support.
62The cases provided by the wife, indicate that, in certain circumstances, the court will not look favourably towards a payor who voluntarily retires, does not provide financial disclosure and is not forthcoming in information regarding his employment. Also, although section 17 of the Guidelines provides that “If the court is of the opinion that the determination of a spouse’s annual income under section 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”, the averaging of the last three years’ income should be restricted to certain cases.
63In Hickey v. Princ, 2015 ONSC 5596, 127 O.R. (3d) 356, the Divisional Court confirmed that spousal support can continue past retirement. At paragraph 60, the court noted that a recipient does not necessarily have to accept that a voluntary retirement will give rise to an automatic right to change the support order. In that case, the payor was 51 years of age, in good health and was not forced to retire. The court referred to Cossette v. Cossette, 2015 ONSC 2678, 58 R.F.L. (7th) 12, at para. 13, where the Divisional Court stated that the parties are not permitted to sidestep support obligations by “unilaterally deciding to leave the workforce”. In that case, the court imputed income to Mr. Cossette, from which support was payable.
64In Marshall v. Marshall, 2011 ONSC 5972, the court found that the husband chose to retire to avoid or minimize his support obligations to his wife. The court found his evidence vague and evasive and considered the time of the retirement, along with the late disclosure and cessation of benefits. The court found that his decision to retire four months before his job position ceased to exist was not reasonable and ordered support based on his employment income rather than his pension income.
65In MacLanders v. MacLanders, 2012 BCCA 482, 39 B.C.L.R. (5th) 255, the British Columbia Court of Appeal frowned on the husband’s failure to disclose that he was planning to retire at the trial. The court states that his non-disclosure of his upcoming retirement limited the wife’s ability to ask for a substantial re-apportionment of the family assets. She had relied on indefinite spousal support being available to offset the economic consequences of the marriage breakdown.
66In Gagne v. Gagne, 2011 ONCA 188, 99 R.F.L. (6th) 1, the Ontario Court of Appeal ordered the high end of the SSAGs range in view of the payor’s failure to make fair disclosure of his resources.
67The court in Earnshaw v. Earnshaw, 2011 ONSC 4386, chose not to average the last three years’ income as the court found that the recent increase in the husband’s income should benefit the wife and children.
68In addition, in Lebovic v. Lebovic (2001), 2001 28183 (ON SC), 15 R.F.L. (5th) 115, the court ordered a significant interim spousal support order where the recipient’s budget demonstrated need and the husband had extensive assets and had not provided the court with the appropriate financial disclosure.
Analysis
69In the determination of income, the cases demonstrate that the most current information should be used.
70Here, there has been a significant change to the husband’s income just prior to trial and the husband has provided his explanation for the change.
71The Court considers the following facts in the determination of the husband’s current income. Firstly, the Court wishes to express some of the shortcomings of the evidence.
72No other witness was called to corroborate the husband’s evidence regarding his termination of employment. The court notes that the husband was given an opportunity to adjourn the hearing to allow his employment lawyer to provide evidence at a time suitable to her schedule. This was declined. His lawyer could have shed light on the details of the negotiation, how compensation was determined, details of the circumstances leading to the termination and the real meaning of “the relationship is no longer sustainable”. None of the husband’s colleagues testified.
73Certainly, corroborating evidence would have solidified the husband’s untenable position with his employer. The court is left with the uncertainty of how much the husband had a hand in the negotiation of his transition agreement.
74No documentary information was provided leading up to the termination and transition agreement. It is not clear whether he was actually “dismissed” or whether he resigned. The wording in the termination letter and transition agreement speaks of “the relationship [being] no longer sustainable”. This is certainly ambiguous language and the court cannot infer who initiated it.
75One is uncertain whether the husband could have continued working there; however, it is clear that the recent events were quite troubling to him.
76Where a payor has a substantial change of circumstances on the eve of trial which will impact on his support obligations, the court will inquire into the circumstances.
77Despite the above concerns, the court accepts that, on the balance of probabilities, a credible explanation was provided.
78The court accepts the husband’s evidence as to his reasons for leaving OraSure. The court finds that the husband genuinely felt that he could no longer work in an environment which did not deal with DNA employees fairly, submitted inaccurate documents to the SEC and where executives received undeserved bonuses based on misinformation.
79It is understandable that he had concerns with respect to inaccurate documents being presented to SEC as he was on the disclosure committee. It is reasonable that, as an individual who was involved with DNA since 2004, he would have a degree of loyalty to his former colleagues at DNA.
80The court finds that the husband was credible with respect to the circumstances leading to his termination for the following reasons:
i) In his testimony, the husband showed genuine concern regarding the treatment of the DNA employees.
ii) As a member of the disclosure committee, he certainly felt at odds with the information being provided to the SEC and the risk it posed for him as being part of that committee.
iii) He provided a letter of termination from the company.
iv) The transition agreement corroborates his income and bonuses.
v) The husband did not leave without a good financial package which included a year of salary and the granting of RSU’s.
vi) The husband will have the right to exercise stock options within 5 years. This term secures the right to both parties to exercise options. Pursuant to the 2015 agreement, the husband holds stock options in trust for the wife and the wife could ask in writing at any time to sell some or all of the stock options.
81Unlike the Hickey, Marshall, Gagne and MacLanders cases, the husband is not retiring. He negotiated a package to allow him to work for a further year. He negotiated a salary which is sufficient to permit him to continue to support his family. He continues to be a high income earner as he was throughout the marriage. The transition agreement allows him to continue to meet his financial obligations to his wife and children.
82The court notes that his 2015 income was extraordinary compared to previous years as he received substantial bonuses. The family will benefit from this income in retroactive support as discussed below.
83For 2016, the husband will no longer be eligible for a bonus. The projected 2016 income with the RSU will be approximately $433,621. This is not a paltry sum when compared to previous years’ earnings. In 2012, the year of separation, he earned total income of $326,855, in 2013, $343,786 and in 2014, $508,828. Needless to say, 2015 was an exceptional year and should not be the measuring stick by which we impute income to the husband.
84In all of the circumstances, the court finds that the husband’s current financial remuneration reasonable. He had a number of issues with OraSure which proved unacceptable to him and the transition agreement allows him to earn a significant income for the next year. He has not jeopardized his children’s financial needs by his choices.
85Secondly, the wife alleges that the husband has failed to provide financial disclosure.
86Regarding the payment to Mr. Stevens, the documents filed confirm that the payment made to him was part of an agreement that the husband would provide him the value of 80,000 shares if DNA was sold. According to the equivalent value of $1.50 per share, he paid him $120,000. He alleges that the wife was aware of this payment and, after separation, she acknowledged it and did not take issue with it.
87The Court accepts the husband’s explanation. If there had been an issue regarding diverted funds that would have affected the equalization payment the issue would have been dealt with at the time that the equalization payment was determined as a term of the 2015 partial agreement.
88Recent bank statements were requested by the wife and were not provided. When asked under cross-examination why he did not produce them, he indicated that his lawyer said he did not have to. Certain documentation was provided in January 2016 which included details of the payment to Mr. Stevens, the children’s trust funds, stock options, and the documents pertaining to the sale of DNA to OraSure.
89The wife had some lingering concerns with respect to income. The letter from counsel dated June 3, 2015 to the husband’s counsel states that the wife is concerned with the husband’s income and benefits from employment. No details were alleged. The wife states that recent bank statements are relevant for her to determine if the husband had other sources of income and revenue that should be considered in determining support.
90It must be noted that the parties settled the property issues in January 2015, but in June 2015 the wife’s counsel requested credit card statements and bank statements from “the date of separation to date” and the husband’s accounts at Richardson GMP since the sale of DNA.
91Disclosure was provided in preparing and resolving the equalization payment. The attached NFP statement to the agreement sets out detailed figures for investments and accounts. Experienced family law lawyers were involved in the final negotiation of the division of property. The court finds that on the balance of probabilities, disclosure was exchanged to satisfy both parties that the figures in the net family property were accurate. There is no motion before me to set aside the 2015 partial agreement on the basis of non-disclosure.
92The court questions the necessity of disclosing the sale documents and determining what happened at the time of the takeover if the property issues have been resolved. Included in the sale was the husband placing $640,000 of the proceeds towards the children’s trust funds, thereby taking that money away from her in an equalization payment.
93The court is mindful of Justice Benotto’s comments in Roberts v. Roberts, 2015 ONCA 450, where she indicates that financial disclosure should be assumed not ordered.
94Is the income received by the husband from his employer complicated and intertwined? The answer is no. The husband is an employee with benefits and bonuses and stock options. He has a taxable allowance for incidentals. His income is as it is declared on his tax return.
95Are the above statements necessary to determine his income and benefits? The answer is no.
96There is no motion before the court for production of these documents; rather, the wife is alleging that due the husband’s failure to produce the documents, the court should draw an adverse inference.
97He is an employee who is granted a salary, bonus, stock options and RSU’s and receives investment an interest income manifested by T5’s that are declared in this T1 annual return. No expert was hired to make a determination of his income. Nor was one needed.
98A spouse may be entitled to disclosure of bank statements where it appears that the spouse is concealing income. In Eva v. Eva, 2010 ONSC 2088, the court ordered disclosure of corporate bank statements as the payor spouse claimed he was impecunious. In Hanna v. Hanna [2009] 26924 (Ont. S.C.), the court ordered disclosure of bank statements as it was alleged that the payor spouse was hiding income in a family business.
99Certainly, the court can draw an adverse inference for failure to disclose bank and/or credit card statements that are not produced when the payor is concealing income. See Orlow v. Tully, 2010 ONSC 3545 and Poirier v. Poirier, 2010 ONSC 920.
100In Kochar v. Kochar, 2015 ONSC 6650, Justice Aston described the proportionality principle at paragraph 4:
… The proportionality principle was already enshrined in the Family Law Rules by Rule 2. Rule 2 encourages courts to downsize the procedure in any given case so long as the court is still able to justly deal with the issues raised. Comprehensive or exhaustive oral examinations or production of documents may make access to justice unnecessarily expensive or protracted. Merely proving the relevance of a document may be insufficient to warrant production. To order production the court must be satisfied that it would be “unfair” to the party seeking production to go on with the case without the document or information. In essence the document must be found to be important to a party’s case, especially in relation to the amount at stake.
101Justice Aston goes on to aptly quote the principles set out in leading cases on the issue of financial disclosure in para. 5:
5The disposition of these motions must temper full disclosure of relevant information with the proportionality principle. In Saunders v. Saunders 2015 ONSC 926, Kiteley J. addressed motions very similar to those now before this court. I agree with, and adopt, her general comments in Saunders and in particular paragraphs 13 and 14 of that decision which read as follows:
Fourth, disclosure is not a weapon and is not intended to overreach. As is clear in this case and too many others before the court, the process of disclosure has become an independent battle within the overall litigation campaign. As Perell J. held in Boyd v. Fields:
Full and frank disclosure is a fundamental tenet of the Family Law Rules. However, there is also an element of proportionality, common sense, and fairness built into these rules. A party’s understandable aspiration for the utmost disclosure is not the standard. Fairness and some degree of genuine relevance, which is the ability of the evidence to contribute to the fact finding process are factors. I also observe that just as non-disclosure can be harmful to a fair trial, so can excessive disclosure be harmful because it can confuse, mislead or distract the trier of fact’s attention from the main issues and unduly occupy the trier of fact’s time and ultimately impair a fair trial.
I agree as well with the observation by Harper J. in Berta v. Berta.
102In Kovachis v. Kovachis, 2013 ONCA 663, 367 D.L.R. (4th) 189, at para. 34, the court held:
… Although full and frank disclosure is a necessary component of family law litigation, exhaustive disclosure may not always be appropriate. Courts and parties should consider the burden the disclosure request bring on the disclosing party, the relevance of the requested disclosure to the issues at hand, and the cost and time to obtain the disclosure compared to its importance.
103The husband provided his agreements, his complete tax returns and notices of assessment. His income is significant, but it is not complex.
104If the wife believed it was relevant to the issue of support, she should have requested the same at the hearing before Justice Warkentin in July 2015 and the court could have considered the relevance of the requested disclosure.
105The wife is now asserting that the husband’s refusal to provide statements without elaborating on the details of the necessity of the production. He is not a self-employed individual and there is no allegation that he earns undisclosed income, makes cash sales, or that his line 150 does not properly reflect his income.
106The wife is suggesting that he did not treat her fairly in not providing the appropriate documentation. The court accepts that she may not have been completely informed regarding the details of the sale of the shares to OraSure. The court accepts that she was not privy to the setup of the children’s trust funds. On this issue, I accept the wife’s evidence over the husband’s evidence for the following reasons:
Her evidence on the meetings with the professionals regarding the setup of these funds was given in a candid and forthright matter.
Her level of financial sophistication regarding financial matters is less than the husband’s and she lacks of knowledge and understanding regarding the mechanics of setting up trust funds.
Throughout her testimony, it was clear that she left the financial matters and organization to her husband and trusted him to take care of the family.
She was compliant with his requests throughout the marriage regarding the tax savings measures and minimizing tax consequences.
The husband played the lead role in setting up meetings with respect to the various professionals.
There was a change of advisors and she was not involved when it was set up.
I accept that there was another meeting and she was not present.
She was upset that she was not a trustee.
She learned about the setting up of the children’s trust accounts during the mediation sessions which occurred after separation.
107Despite accepting that the wife was not fully informed regarding the sale of the shares to OraSure or the set-up of the children’s trust funds, I do not find that this provides the necessary grounds to demonstrate that production of the husband’s records is necessary to determine his income.
108Therefore, I find that the husband’s income for the purpose of determining support is the current estimated income for 2016: i.e. $433,621.
2) What is the ongoing amount of child support?
Wife’s Position
109The wife is requesting child support for all four children, claiming they are all dependents, based on the husband’s total income.
110Julie will be returning home in the near future and is still financially dependent on her parents.
Husband’s Position
111The husband states that Julie stopped being a child of the marriage as of July 1, 2015 when she finished high school. She turned 18 in April 2015. She was employed in the summer.
112She is not at school and not residing with mother and her expenses are paid from the children’s trust funds while she is abroad.
113The husband proposes $4,987 per month be paid for child support for three children based on his base salary of $315,000 plus 17.28 % of the gross amount of anything above that received from any other income source including RSU, bonuses, investment or the exercise of stock options.
114If Julie is still a child of the marriage, then the amount for four children would be $6,039 per month, which he is currently paying, plus appropriate 21.63% of the gross amount of any additional income.
Legal Principles
115The applicable legislation with respect to the determination of the issue of child support is the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), s. 15.1, which provided the court the power to order support for the children of the marriage.
116“Child of the marriage” is defined under section 2 of the Divorce Act, and means “a child of two spouses or former spouses, who at the material time, (a) is under the age of majority and who has not withdrawn from their charge, or (b) is the age of majority or over and under their charge but unable, by reason of illness, disability, or other cause, to withdraw from their charge or to obtain the necessaries of life”.
117Child support is determined under section 3 of the Guidelines, which sets out the presumptive rule that the amount of a child support for a child under the age of majority is as set out in the applicable tables, according to the number of children under the age of majority and according to the income of the payor spouse.
118Section 3(2) deals with children over the age of majority and sets out that the amount applicable for a child over the age of majority is as per the table, or, where “the court considers that approach to be inappropriate, the amount that it considers appropriate, having regard to the condition, means, needs and other circumstances of the child and the financial ability of each spouse to contribute to the support of the child.”
Analysis
119There are currently three children of the marriage residing with the wife. Julie is not at home and her financial needs have been met through the trust funds. There are no significant expenses to the parents for Julie while she is overseas.
120Julie does not currently fit the definition of “a child of the marriage” within the meaning of the Divorce Act.
121Therefore, commencing January 1, 2016, the husband will pay the table amount for three children based on his anticipated 2016 annual of $433,621 which is $6,695 per month.
122The children should benefit from regular monthly support based on his current income rather than waiting for other income to be received during the year. The court does not see a need to deviate from the structure of the Guidelines. The husband will need to budget his support payments and the court finds he has the means to be able to do so.
123Commencing the first day of the month that Julie returns to the mother’s residence, child support will be payable for four children in the amount based on the annual income of $433,621, i.e. $8,150 per month.
124Commencing June 1, 2016 and on annual basis, the parties will be ordered to complete their annual exchange of disclosure of T1 annual General returns and Notices of Assessment at which time child support will be adjusted in accordance with income changes.
3) What income should be imputed to the wife?
Husband’s Position
125The husband submits that the income of $50,000 should be imputed to the wife. She is skilled and has two degrees yet she has not made best efforts to become self-sufficient.
126He submits that her desire to transport the children to sporting events is not a sufficient reason not to earn an income.
Wife’s Position
127The wife indicates that the children have been an impediment from her working more hours. She is committed to taking children to their activities and ensuring their needs are met.
128Her 2015 income was approximately $2,000. In part, her low income is attributable to the teachers’ reduced work week in the fall 2015. However, in 2016 she anticipates to be able to work more days as she is now placed on lists for French schools. Even though she is not bilingual, she is eligible to oversee the classes of French students. In addition, the children’s activities have decreased.
129At this time she does not have French qualifications and it would take years for her to become a principal.
Legal Principles
130Pursuant to section 19, the court can impute income if the court considers it appropriate in the circumstances listed in that section. Section 19(1)(a) sets out one scenario where income can be imputed “the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse.”
131In Drygala v. Pauli (2002), 2002 41868 (ON CA), 61 O.R. (3d) 711, the Ontario Court of Appeal dealt with the factors a court should consider in determining if a parent is intentionally underemployed or unemployed within the meaning of s. 19(1)(a) of the Guidelines. At para. 23, the Court states that in applying section 19(1)(a) of the Guidelines, the court is required to consider the below three questions:
i) Is the spouse intentionally under-employed?
ii) If so, is the intentional under-employment or unemployment required by virtue of the children’s needs or educational needs?
iii) If the answer to question #2 is negative, what income is appropriately imputed in the circumstances?
132In Drygala, the payor spouse was underemployed by virtue of the pursuit of education and the court stated that once a court found that a spouse was intentionally unemployed or under-employed, the burden shifts to that spouse “to establish what is required by virtue of his or her reasonable educational needs”.
133There is no requirement of bad faith. The court found that a parent is intentionally under-employed if that the parent chooses to earn less than he or she is capable of working.
134The court will impute income to ensure that the parents fulfil their legal obligation to earn to their capacity in order to meet the children’s ongoing financial need. The court should consider their actual income and the amount of income they could earn if they were working to capacity (See L. (N.) v. P.(B.) (2000), 2000 22516 (ON SC), 7 R.F.L. (5th) 335 (Ont. S.C.); and Van Gool v. Van Gool (1998), 1998 5650 (BC CA), 166 D.L.R. (4th) 528 (B.C.C.A.).
135In L.(N.) v. P.(B.), Justice Blishen at paragraph 27 states:
In Hanson v. Hanson (October 15, 1999), Doc. New Westminster E006672 (B.C. S.C.). Madam Justice Martinson of the British Columbia Supreme Court, outlined the principles which should be considered when determining capacity to earn an income as follows:
There is a duty to seek employment in a case where a parent is healthy and there is no reason why the parent cannot work. It is “no answer for a person liable to support a child to say he is unemployed and does not intend to seek work or that his potential to earn income is an irrelevant factor.” (Van Gool at para. 30.)
When imputing income on the basis on intentional under-employment, a court must consider what is reasonable under the circumstances. The age, education, experience, skills and health of the parent are factors to he considered in addition to such matters as availability of work, freedom to relocate and other obligations.
A parent’s limited work experience and job skills do not justify a failure to pursue employment that does not require significant skills or employment in which the necessary skills can be learned on the job. While this may mean that job availability will be at the lower end of the wage scale, courts have never sanctioned the refusal of a parent to take reasonable steps to support his or her children simply because the parent cannot obtain interesting or highly paid employment.
Persistence in non-remunerative employment may entitle the court to impute income.
A parent cannot be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations.
As a general rule, a parent cannot avoid child support obligations by a self-induced reduction of income.
136In Cork v. Cork, 2014 ONSC 2488, 44 R.F.L. (7th) 276, Justice Warkentin imputed an income of $40,000 to the wife as she had taken virtually no steps to obtain employment since the parties’ separation. The court found that she had many qualifications which would be attractive to prospective employers, although she may be required to upgrade skills. The case involved a 25 year marriage and at the time of trial there were 3 adult children. The wife had two Master’s degrees and had worked full time with the federal government for 9 years of the marriage and was earning $60,000 at the time she left the employment there in 1996. Since then, she had worked for a number of organizations on a volunteer basis. For the two years following the separation, she had not taking any steps to find employment or upgrade her skills.
137Below is a brief history of the wife’s education and work experience.
138The wife obtained her Bachelors of Arts degree in English Literature in 1990 and obtained her Master’s degree in education in 1992. She has never been employed full-time throughout her adult life.
139At the time of the marriage, she was living with her parents in Scarborough and working part-time as an education assistant in a Scarborough school.
140After the marriage, she obtained a part-time teaching contract at the rate of .16 (i.e. one course), then moved up to another period of .33, and eventually she was teaching at .5 level (1/2 day). She was hoping to obtain a full contract as a secondary school teacher.
141As stated above, at the time of marriage, the husband worked at BNR in Ottawa. After the marriage, the wife moved in with him at his Kanata home. When he decided to go to Boston to study, she did not have a green card, so she returned to Scarborough to work and flew to Boston on weekends.
142After the completion of his course at MIT, the husband had an obligation to return to his Ottawa employer for three years. Since she could not take a leave of absence from teaching for more than three years, she was required to resign. She did so after being in Ottawa for one year.
143She lost her seniority and explained that she would have to work her way up in another school board.
144When she was in Ottawa, she took Librarian courses at the University of Ottawa and Special Education credit courses.
145One of the challenges at that time was that to be recommended to be on supply teacher’s list, she needed to know a principal. When she took the librarian course, a teacher’s husband was a principal and she was able to obtain supply teaching at Sir Guy Carleton secondary school.
146The Special Education course allowed her to teach there and she started at the .16 rate.
147Her hours were scattered and she taught every day at different times and it was her hope that if she competed additional work, she would obtain a long-term occasional teaching position.
148Prior to Julie’s birth, she worked Sir Guy Carleton High School (Sir Guy), then Sir Robert Borden High School, then back to at Sir Guy, then at West Carleton High School (West Carleton), then at AY Jackson High School (AY Jackson).
149After Julie was born, she worked shifts at AY Jackson and West Carleton.
150After the birth of Johnathan in 1999, she did not return to work and she became a full-time homemaker.
151At the time, the husband was Vice President of product management and would attend different shows and meet investors and was frequently away on business. On one occasion he was away for three consecutive weeks and, if working in California, he would be away a full week. His business travel decreased as the children became older. Her parents would come to visit from Scarborough once a month to lend her a hand with the children.
152Courtney was born on May 10, 2001 and Michael was born on April 14, 2003.
153The wife and children would spend the summer at the cottage and the husband would come up weekends.
154In 2003 she was the local council leader in the Ottawa Carleton District School. In 2006, she was elected a trustee of the Ottawa Carleton School Board and served one and half terms.
155Her employment income since separation is the following: 2012: $7,027; 2013: nil and 2014: $215.
156The wife indicated that, along with the regular day to day caring for the children and the household, she is involved in transporting the children to the myriad of activities. She described these activities in a list labelled “Children’s Activity costs per year for 2013”.
157Therein, the court observes that the children are involved in hockey, lacrosse, skating, guitar, dance, volleyball, horseback riding and summer camps. There is also a line item for kids’ phones and gifts for children’s birthday parties.
158Under cross-examination, she admitted that the children did not participate in as many activities as previously.
159In the her list labelled “Kids’ Activity schedule for 2014-2015 per week”, she outlines that Julie no longer plays hockey, and Johnathan no longer plays hockey but has volleyball three or four times per week.
160Courtney has two hockey practices or games plus “1 off-ice event per week and dance one night per week.” Both Michael and Johnathan have one guitar lesson per week. When hockey season ends, Michael and Johnathan play lacrosse. She states that every night Johnathan and Michael have an activity.
161She indicated that she was not able to take some supply teaching jobs if she had appointments or had to transport the children to activities such as hockey (competitive) or volleyball.
162Michael plays hockey and attends out of town tournaments. Pursuant to their 2015 partial separation agreement, paragraph 26, the husband was to take the children to one-half of the out of town tournaments. Last year, he took the children for ¼ of the total tournaments. In total, the children have 18 tournaments per year.
163She indicated that sometimes she only takes ½ day shift as the band morning practices commence at 8:15 a.m. and she is needed for transportation of the children.
164She can earn $200 per full day, and if she can work 2 or 3 times a week, she could earn $600 per week.
165When asked about her future plans she expressed an interest in running for office either on city council or the provincial legislature.
166Based on the evidence, the court imputes an income of $20,000. This is a reasonable amount that she can expect to earn in 2016. I find this appropriate for the following reasons:
i) It has been 3.5 years since separation and the wife should make efforts to earn more income.
ii) She has admitted that the children’s activities have decreased.
iii) She now has a recent history of increasing time with the boards.
iv) She has signed up for French core supply list.
v) One of the children is an adult and no longer living at home.
vi) The amount is approximately what an individual could earn if working full time at minimum wage.
vii) The wife admitted that she could potentially earn $600 per week. She has demonstrated confidence that with the reduction of the children’s activities and her increased ability to work in supply teaching, she will be earning more income in the future.
4) What is the ongoing amount of spousal support?
Wife’s Position
167The wife’s position is that she should receive the high range of spousal support according to the SSAGs. Given the compensatory elements as the basis for her spousal support claim, she is entitled to reap the benefits of the husband’s career advancements.
168In addition, the wife submits that since 75% of the husband’s assets can be liquidated, he has the ability to maintain a level of support based on $647,000 per year. The court is asked to consider his significant assets when determining the level of spousal support.
169This is a long marriage and hence there was a merger of the parties’ economic lives during the marriage. He was the main breadwinner and the wife sacrificed her career options to care for the household and children. He was often away working long hours and travelling on business. The parties’ lives were centred on the husband’s career. She took a leave from her job in Scarborough to join him in Boston for his second year of his MBA program. When she moved to Ottawa as he was working at a high tech company, she retired from her job with the Scarborough school.
170Her economic disadvantages continue after the separation as she cared for four school age children until Julie left in September 2015.
171She should enjoy the accustomed standard of living that the parties enjoyed during the marriage which including a mortgage free home, 2 Otter Lake cottages where the family spent summers, sizeable investments, and monies in family and children’s trusts. The parties had no debts at valuation date.
172She continues to be responsible for the children as they reside with her and she is involved in arranging for the children activities and their transportation.
Husband’s Position
173The husband submits that the wife should receive 55% of the NDI. Since the separation over three years ago, she has made nominal effort to become financially sufficient.
174He emphasizes one of the objectives of a support order under the Divorce Act is to promote economic self-sufficiency. Although it is conceded that she is not capable of becoming fully self-supporting, she does have an obligation make all reasonable efforts. The support order should provide an incentive for her to work and promote this objective.
175Although the SSAGs are a useful tool that provides ranges, the husband submits that if there a conflicts, then authorities prevail.
176In this case, a 55% NDI would be appropriate as there are 3 children who remain in the home, none with special needs, and the wife has access to the children’s trust funds that include money to pay for the children’s section 7 and other expenses
177Her filed financial statement was incorrectly completed as it did not accurately reflect her date of statement values, but rather showed the same values of assets that existed at the date of separation.
178It is conceded that this was an inadvertence on her part and it was not an effort by her to misrepresent her true financial circumstances to the court.
179Nevertheless, she had at least $2.3 million in assets, which includes the matrimonial home and investments, after the equalization payment was made.
Legal Principles
180In determining spousal support, the court is guided by the Divorce Act, section 15.2:
Factors
(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.
Objectives of spousal support order
(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.
181In Cassidy v. McNeil, 2010 ONCA 218, 99 O.R. (3d) 81, at para. 69, the court held that “Over the 23 years of their marriage, the parties' expectations and interdependency would have evolved into an economic merger of their interests… That merger, together with the wife's somewhat compromised career path, meets the threshold of entitlement to spousal support.” Support was based on both compensatory and needs basis and, given that the husband was the custodial parent, the court ordered the low range of the SSAGs.
182In addition, the husband relies on Cork v. Cork, for the proposition that the support should be in the lower end or below the SSAG range as a work incentive. He submits that he is the one working and putting the great effort into earning income and incurring employment expenses.
183In Shorey v. Shorey, 2009 66916, at para. 37 (Ont. S.C.), Justice Rowsell also ordered the mid-range instead of the high range of spousal support “because the Applicant has not exploited all opportunities to increase her income potential”.
184When considering the location of the quantum of spousal support within the range set out in the SSAGs, the court should consider the recipients’ compensatory claim, her limited income, earning capacity, her needs and standard of living, her age, if the recipient is undertaking retraining or education in the immediate future, her care of children, length of marriage, the division of property, and whether she is carrying significant family debts: see Christine Montgomery, “Beyond the Formulas–Additional SSAG Considerations” (March 2013).
185In Fisher v. Fisher, 2008 ONCA 11, 88 O.R. (3d) 241, at paras. 55-56, the Court of Appeal addressed the issue of support following a long-term marriage, noting that the spouses often become accustomed to a joint standard of living that the lower income spouse cannot “hope to replicate”. As a result, the court held that the analysis under the Divorce Act cannot prioritize the objective of self-sufficiency. The longer the relationship, the closer the economic union:
55In contrast, in most long-term marriages, particularly in traditional long-term ones, the parties' merger of economic lifestyles creates a joint standard of living that the lower-income spouse cannot hope to replicate, but upon which he or she has become dependent. In such circumstances, the spousal support analysis typically will not give priority to self- sufficiency because it is an objective that simply cannot be attained. See Linton v. Linton 1990 2597 (ON CA), 1990 O.J. 2267.
56The relevance of standard of living as a measure of dependency in long-term marriages is best encapsulated by L'Heureux-Dubé J. in the following passage from Moge (p. 870 S.C.R.):
Although the doctrine of spousal support which focuses on equitable sharing does not guarantee to either party the standard of living enjoyed during the marriage, this standard is far from irrelevant to support entitlement (see Mullin v. Mullin (1991), supra, and Linton v. Linton, supra). Furthermore, great disparities in the standard of living that would be experienced by spouses in the absence of support are often a revealing indication of the economic disadvantages inherent in the role assumed by one party. As marriage should be regarded as a joint endeavour, the longer the relationship endures, the closer the economic union, the greater will be the presumptive claim to [page257] equal standards of living upon its dissolution (see C. Rogerson, "Judicial Interpretation of the Spousal and Child Support Provisions of the Divorce Act, 1985 (Part I)", supra, at pp. 174-75).
186As stated in Bracklow v. Bracklow, 1999 715 (SCC), [1999] 1 S.C.R. 420, at para. 36, the court must review all the factors in light of the stipulated objectives of support and exercise its discretion that “equitably alleviates the adverse consequences of the marriage breakdown and strikes the balance that best achieves justice”.
187Since the decisions in Moge v. Moge, 1992 25 (SCC), [1992] 3 S.C.R. 813, and Bracklow, the authorities on the granting of spousal support, the SSAG have been enacted. Although advisory and not a replacement for the analysis under the Divorce Act, the SSAGs nevertheless provide the court with a helpful tool in providing ranges to consider in determining quantum. It provides the information of NDIs after payment of child support that the court can use as one of its factors when it exercises its discretion on the facts before it.
188In Marinangeli v. Marinangeli (2003), 2003 27673 (ON CA), 66 O.R. (3d) 40 (C.A.), the court said at para. 74:
In determining need, the court is to be guided by the principle that the spouse receiving support is entitled to receive the support that would allow her to maintain the standard of living to which she was accustomed at the time cohabitation ceased. In addition, there is jurisprudence to the effect that a spouse is entitled to an increase in the standard of living such as would have occurred in the normal course of cohabitation: see MacDougall v. MacDougall (1973), 1973 1940 (ON SC), 11 R.F.L. 266, [1973] O.J. No. 618 (QL) (H.C.J.) per Henry J. See also Linton v. Linton (1990), 1990 2597 (ON CA), 1 O.R. (3d) 1, 75 D.L.R. (4th) 637 (C.A.). At the same time the court must guard against redistributing the payor's capital in the guise of support.
Decision
189Clearly, the wife has suffered economic disadvantage and hardship. The parties cohabited 20 years, she worked part-time until the 2nd child was born and stayed home full-time until she was elected a trustee of the school board, earning minimal income. She assumed primary responsibility for the care of the children and household duties.
190The wife has suffered economic disadvantage as she lost opportunities for becoming a full-time teacher with a pension which she may have enjoyed had she not married, moved and stayed home with the children.
191The financial consequences of the care of the children post-separation must also be considered as she is continuing to oversee the majority of the children’s daily lives.
192She was unable to develop a full-time independent career and as only recently been able to return to work and obtain teaching shifts. She has been out of work force while the husband advanced his career. Also relevant, as per paragraph 41 of Bracklow, is that the wife has not only had career disadvantages, but also suffers economic disadvantages from the “mere fact that a person who formerly enjoyed intra-spousal entitlement to support now finds herself…without it”.
193The wife’s failure to become self-sufficient is not a breach of duty (see Leskun v. Leskun, 2006 SCC 25, [2006] 1 S.C.R. 90 at para. 26). As stated in Fisher, in long-term marriages, “the parties’ merger of economic lifestyles creates a joint standard of living that the lower-income spouse cannot hope to replicate”. The court states that in these circumstances, the ability to become self-sufficient in unlikely to be obtained, and hence this objective is not necessarily a priority. This is the situation here.
194The parties enjoyed an extravagant lifestyle during the marriage. She would join him on a business trips and the parties were able to travel to Turkey, Greece, France, New York Switzerland and go skiing in the Alps.
195The parties had a time-share and a ski chalet at Smuggler’s Notch. During March breaks, the family would ski and the children also had regular ski lessons at Pakenham. This is in addition to the numerous activities and other opportunities the family had due to the husband’s lucrative career.
196In determining the quantum of spousal support, the court notes the Ontario Court of Appeal’s comments in Racco v. Racco, 2014 ONCA 330, 373 D.L.R. (4th) 240 at para. 44, the Court states that the SSAGs provide the court with a “certain level of predictability and consistency, once the basis for entitlement has been established, they are advisory only. The court cannot lose sight of the individual circumstances in determining both entitlement and quantum under section 15 of the Divorce Act.”
197The husband’s anticipated 2016 income is $433,621, which is over the $350,000 threshold as set out in the Spousal Support Advisory Guidelines, section 11.3. Therefore, the court’s determination of spousal support must ensure that it is fact has regard to the individual facts. The formula ranges in the SSAG are appropriately used as part of the decision making process.
198Therefore, considering the factors and objectives set out in the Divorce Act, the SSAG and jurisprudence, the court finds that the wife should receive 60% of the NDI for the following reasons:
The wife has compensatory claims.
It is a 20 year marriage.
She has been seriously economically disadvantaged by the role of being a full time homemaker.
At this time, she has four people in her household.
Her post-separation responsibilities have had an effect of her availability for employment.
The husband has greatly benefited from her role as a full time homemaker when he built up his career, travelling and being absent from the home.
She has a right to attain the same accustomed style of living as enjoyed during the marriage.
Her age and absence from the work force and never having worked full-time.
Both parties left the marriage after division of property with $2.3 million worth of assets. Both have similar assets at least as of the date of separation.
In this case, it is appropriate to adjust the spousal support amount based on the particular circumstances. I do not find it fair that the wife and 3 (possible 4 children) be left with 55% of the NDI as suggested by the husband. There are 5 mouths to feed in that household compared to one person in the husband’s household.
199The parties can complete the SSAG calculations, which include the incomes determined by this court, other income from all sources, including but not limited to investment income, interest and capital gains, and the appropriate deductions, including Schedule III adjustments.
200If there is an issue regarding the amount of spousal support for 3 children and then 4 children in the spring, the parties can provide submissions by April 15, 2016.
5) Should there be a review of support payable on December 31, 2016 when the husband’s current employment comes to an end?
Husband’s Position
201The husband submits that it would be natural for the parties to review the support payable at the end of the 2016 calendar year which is at the end of the contract. He has no position in place at this time and the parties will need to examine his employment status at that time.
Wife’s Position
202The wife opposes the proposed review suggested by the husband in December 2016 when his $315,000 salary and employment with OraSure comes to an end.
203She submits that review orders are exceptional and should be sparingly ordered.
Legal Principles
204The Divorce Act, section 15 (4) states: “The court may make an order under subsection (1) or an interim order under subsection (2) for a definite or indefinite period or until a specified event occurs, and may impose terms, conditions or restrictions in connection with the order or interim order as it thinks fit and just.”
205In Fisher, at para. 63, the court frowned on review orders unless restricted to a specific issue, as “it is generally equivalent to an initial application for support and necessitates a complete rehearing of every issue from entitlement to quantum. Thus, a review, particularly one relatively proximate to the time of the originating order, causes unnecessary and significant expense for the parties, not only emotionally but also financially.”
206The Court continued at paragraph 70:
Review orders in effect turn an initial order into a long-term interim order made after trial. Accordingly, they should be the exception, not the norm. They are appropriate when a specified uncertainty about a party's circumstances at the time of trial will become certain within an identifiable timeframe. When one is granted, it should include specifics regarding the issue about which there is uncertainty and when and how the trial judge anticipates that uncertainty will be resolved.
207In opposing the review, the wife refers to Choquette v. Choquette (1998), 1998 5760 (ON CA), 39 R.F.L. (4th) 384 (Ont. C.A.), where the Ontario Court of Appeal considered the husband’s concerns that the wife may not become self-sufficient as quickly as anticipated and would like a review. The court held that any concerns could be resolved in a variation application if necessary, stating at para. 5 that “The non-happening of an anticipated event can constitute a material change of circumstances within the meaning of the Divorce Act: Trewin v. Jones (1997), 1997 1105 (ON CA), 26 RFL (4th) 418 (Ont. C.A.).”
Decision
208There will not be a review at the end of 2016 for reasons articulated in the above cases. Reviews should be discouraged and it is too soon after the release of this decision. See Fisher, supra.
209To allow a review at the end of this calendar year, i.e. 9 months from the release of this decision, will embark the parties’ in further litigation and expense.
210Certainly, the husband has indicated that he will be exploring alternate employment and utilizing his expertise, skill and connections to find employment with remuneration commensurate with his abilities. If there has been a material change of circumstances, he may apply for a variation.
6) Was there an overpayment or underpayment in support from the date of separation?
Wife’s Position
211The wife is requesting the retroactive amount of approximately $150,000.
212She has calculated child support based on the husband’s annual income for each year plus spousal support at the mid-range level.
213Both parties confirm that the husband’s line 150 was as follows:
2012: $291,433
2013: $343,786
2014: $508,829
2015: $647,848
214The shortfall according to the summary along with SSAG calculations presented by the wife are as follows:
2012: $3366
2013: $29,676
2014: $38,784.25
2015: $78,444
Husband’s Position
215The Husband says that there has been an overpayment by him of $60,000.
216He has provided SSAG setting out the income earned by the parties after the Schedule III adjustments, and the support that should have been paid.
217He indicates that in the wife’s calculations:
she has failed to credit the husband with payments he made in 2012;
she has not made the Schedule III adjustments; and
she does not include the income that the wife received in each respective year, including employment, interest, investment income, etc.
218He has produced a statement setting out monies paid in 2012. Consideration should be made for the amount that the wife received from the children’s trust funds.
219From the date of separation until October 2012, the husband paid Visa bills and provided cash when the wife requested it. In October 2012, his lawyer at the time suggested that he pay $9,532 per month as spousal and child support which he did.
220The husband states that, despite his payments to the wife from July to December 2012, he did not receive any tax deduction for spousal support. His wife refused to sign an agreement allowing him to obtain a tax deduction for 2012.
Analysis
2012
221The husband’s calculations are based on the fact that the wife should receive spousal support based on 55% of NDI.
222Since she refused to sign an agreement by December 2013, she received amounts all tax free.
223He paid $64,240 in total (including 6 months at $6,724 per month for $40,344) and hence for 2012, the husband’s position is that there was an overpayment of $24,076.
224The wife states that he should have paid $5,620 per month for child support and $4,338 per month for spousal support. Therefore, the husband underpaid $291 per month for child support and $135 per month for spousal support and hence he owes $3,366 for 2012.
2013
225The husband paid $5,329 per month as child support and $4,203 per month as spousal support for 12 months, totalling $114,384.
226He underpaid child support as he was supposed to pay $6,808 per month.
227At 55% of NDI, spousal support would be $1,704 per month.
228Underpayment of child and overpayment of spousal support balances it out so that there was no overpayment or underpayment according to the husband.
229The wife calculates child support at $6,551 per month and $5,454 per month for spousal support. On this calculation, there was a shortfall of $1,222 per month for child support and $1,722 per month shortfall for spousal support for a total underpayment of $29,676.
2014
230The husband paid $5,329 per month for child support, plus a lump sum of $36,000 for a total of $100,000, plus spousal support of $50,436 for the year at $4,203 per month.
231He states he over paid by over $50,000.
232The wife states that at $508,829 the husband should have paid $9,489 per month in child support and $8733 per month in spousal support. There was a shortfall of $4,160 per month for child support and $4,530 per month for spousal support. The shortfall was $104,280 and he paid $36,235.75 as a lump sum. The calculation provided was $38,784.25. The proper calculation is $63,784.25.
2015
233Justice Warkentin found he was paying the appropriate amount of child support, and increased spousal support to $7,300 per month on the assumption that he was earning approximately $527,000 per annum and granted the wife 62.5% of NDI.
234The wife states that at $647,848, he should have paid $12,604 per month in child support and $13,837 per month in spousal. He has seriously underpaid spousal support by over $78,000.
Decision
235The court directs the parties to complete the appropriate fully completed SSAGs in order to determine the retroactive spousal and child support owing by the husband to the wife or whether he has overpaid. The assumptions are as follows.
236Firstly, the wife’s SSAG calculations cannot be relied upon as they fail to include any income information for the wife, nor does it make the Schedule III adjustments for the parties in accordance with the Child Support Guidelines. The SSAG calculations to be completed by the parties must include all income for all sources, Schedule III deductions and all appropriate tax deductions, e.g. union dues, carrying charges, etc.
237Secondly, the SSAG calculations should be completed in accordance with the parties’ respective line 150 incomes for 2012, 2013, 2014 and 2015. As stated above, the court is imputing income of $20,000 to the wife: prospectively only, i.e. commencing 2016.
238Thirdly, the retroactive calculation should be based on the wife receiving 60% of the NDI.
239Finally, for 2012, the husband should be credited for the following payments: October, November and December, he paid $9,532 per month. The court allows the following credits to the husband from his list of payments made in 2012 (Exhibit 1, Tab 4):
Support payments: $28,596 (October, November and December 2012 payments)
Monies provided as requested by wife: $17,000
Insurance bill coverage: $2,300
Bill payments $2,230.98
½ of the investments amount (as ½ belongs to the wife) $44,220.60
Visa bills: $23,645.08
Total = $78,165.66
240Of course, the husband will be credited for all support payments he made in 2013, 2014 and 2015 made pursuant to the parties’ agreements and Court order.
241The parties are to complete the retroactive calculations based on the above assumptions.
242In accordance with the provisions of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), the parties will have to take into account that there will be no tax treatment for payments representing spousal support for the years 2012, 2013, and 2014. Therefore, the parties will have to determine the net cost of those payments for spousal support in determining the retroactive amount of overpayment/underpayment.
243If the parties are unable to agree on the amount underpaid/overpaid, they can provide written submissions to me by April 22, 2016.
7) Who should control the children’s trust accounts?
Parties’ Positions
244The husband has requested that he continue to control the children’s trust funds, whereas the wife requests that the account be jointly controlled.
Analysis
245Children’s trust accounts were set up in 2011 at the time of the sale of DNA to OraSure. Based on tax advice, certain refunds were placed in an account for each of the children. The monies were to be used for activities of the children, post-secondary education and meeting any other reasonable expenses by the husband.
246The balance of the funds would be given to the child was they completed their first post-secondary degree or diploma. At the time of separation there was approximately $190,000 in trust for each child.
247The wife denies that she was consulted or aware of the setup of this account in advance.
248The current arrangement for the payment of the monies from the children’s trust funds is dictated in the parties’ 2015 interim agreement. The husband controls the fund and the parties agreed on what expenses were permissible to be paid from the children’s trust funds. The parties set up this framework in two agreements.
249In March 2012 he set up a trust for the children without advising the wife. He put $640,000 in trust accounts for the children, which essentially reduced her equalization payment by half of that amount i.e. $320,000.
250She states that he consciously placed $320,000 out of her reach. Out of the funds that OraSure paid for the takeover he paid $120,000 to an employee called Sheldon. His trust accounts would be set up and that this would be part of the tax planning.
251Given the conflict between the parties, and strained relationship as evidenced by their 2016 agreement, communication is difficult.
252There has been quite a bit animosity between the parties regarding the spending of these monies. They are unable to make joint decisions together as evidenced by the fact that they now have gone from a joint to sole custody arrangement and the wife does not even need to consult with the husband.
253This is indeed a troubling result as it does not permit co-parenting. Rather, the wife is clothed with the power to make all the major decisions with the children. She believes the funds should be jointly controlled.
254History also shows that the husband is an astute businessman who has been part of a large high tech takeover where his family benefitted greatly. He has sought the necessary tax advice to minimize the taxes in the granting of his shares when he joined DNA in 2004 and followed tax advice in initially setting up the children’s trust funds to avoid taxes. He certainly has financial acumen which is also recently evidenced by the fact that the interest on his mortgage payments are tax deductible as the home purchase was financed through a loan on investments which allows tax relief.
255Originally, the new amending agreement provided for approved expenses that could be paid out of this fund if the wife wishes to have control of this fund. The father is concerned with respect to some of the expenditures he believes are properly paid through the table amount of child support that he pays.
256Clearly, the husband has a skill in managing funds and these funds have been, from the outset in 2011, controlled and handled by the husband. He has succeeded in providing for the children. The current 2016 agreement now provides a reasonable framework to ensure that the children’s defined expenses are covered.
257The wife wants control of the account and she does not believe that she has enough money for the children’s activities.
258The history of the setup of the children’s accounts was discussed above, as has the wife’s desire to be a trustee of the accounts.
259The husband’s position is that the parties cannot communicate and jointly control the account. Mother would pay for expenses from the account that she should be paying for using the table amount of support she receives from the husband.
260The court finds that the trust funds should continue to be controlled by the husband subject to the wife receiving a copy of the quarterly reports of the investments. Upon written request, the wife is entitled to regular updates.
261The husband must keep the wife advised of any trading or changes to the investment accounts on a regular basis.
262The husband will sign a direction/authorization allowing the wife to view the accounts at her own discretion.
8) How should the household items and antiques located in the matrimonial home and the cottage be divided?
263There was no cross-examination by the husband on this issue nor any position put forward by the wife regarding this issue although the agreement did leave this issue of household items open for determination by this court .
264There is only one proposal before the court which remained unchallenged and was not subject to cross-examination.
265The court finds the husband’s proposal reasonable. However, the court will be extending the timelines to enable the parties to fully comply with the order.
Conclusion
266The court orders the following:
i) A divorce will issue based on one year of separation.
ii) On consent, Order to go in accordance with the parties’ Partial Minutes of Settlement executed January 14 and 15, 2016.
iii) The husband’s income for the purposes of determining support is estimated at $433,621.00 per annum.
iv) The wife’s imputed income is $20,000.00.
v) He shall pay child support for three children in the table amount based on an income of $433,621.00.
vi) When Julie returns to reside with the mother and provided that she is “child of the marriage” as defined under the Divorce Act, then the child support will increase to the table amount for four children based on an income of $433,621.
vii) The wife will receive 60% of the NDI in spousal support based on $433,621 per annum.
viii) The parties will exchange their respective SSAG calculations to determine the support overpaid or underpaid since the date of separation. If the parties cannot agree on the amount, then they can provide written submissions to me by April 22, 2016.
ix) Support may be varied upon a material change of circumstances.
x) Commencing June 1, 2016 and on an annual basis, the parties will exchange the most recent tax return and attachments, and Notice of Assessment/Re-assessment. Child support will be adjusted in accordance with the Guidelines as of June 1st of that year.
xi) The husband will continue to control the children’s trust funds subject to the wife receiving a copy of the quarterly reports of the investments. Upon written request, the wife is entitled to regular updates.
xii) The husband must keep the wife advised of the any trading or changes to the investment accounts on a regular basis.
xiii) The husband will sign a direction/authorization allowing the wife to view the children’s trust accounts at her own discretion.
xiv) The household contents will be divided as follows: within one month of this order, the wife shall obtain a legitimate, professional valuation on all household contents, including furniture, appliances and works of art at the matrimonial home and at the cottage located at 36 Clark Lake Road, other than the antiques. The cost of the valuation will be shared equally by the parties. The wife will pay the husband an amount equal to 50% of the appraised value of the household contents within two weeks of receiving the valuation, a copy of which will be shared with the husband within 5 days of the wife receiving the valuation.
xv) Within 90 days of this order, the parties shall produce an inventory of the antiques which each party owns, from which inventory the parties shall agree to an in specie division of the antiques. This inventory shall include pictures of the antiques so that identity of the antiques to be retained by each party is clear for all parties.
xvi) The husband may leave all or some of his antiques (husband’s antiques) at the home or the cottage subject to the following conditions:
(1) The wife will apply the same level of care to the husband’s antiques as applied to the other assets in the matrimonial home or the cottage.
(2) The wife shall not sell, loan, or dispose of the husband’s antiques.
(3) The husband may remove any or all of the antiques from the matrimonial home or the cottage upon 30 days’ notice to the wife.
(4) The wife may request that the husband remove the husband’s antiques upon providing 30 days’ notice.
(5) If the parties are unable to agree upon an in specie division of the antiques between themselves, the parties shall meet at a mutually convenient date and time within 30 days of either party requesting such a meeting, for the purpose of completing an in specie division of the antiques, provided that the parties shall divide the items on the inventory by selecting items alternately until the list has been exhausted, with a coin toss determining which party has the first choice of items.
xvii) On consent, an order will issue in accordance with the 2016 agreement.
xviii) If the parties cannot agree on the issue of costs, then the husband may provide a 3 page submission by March 31, 2016 and the wife will provide a 3 page submission by April 15, 2016 with a right of reply to the husband to be exercised by April 22, 2016.
Madam Justice A. Doyle
Released: March 17, 2016