NEWMARKET COURT FILE : FC-00-8387-00 DATE : 20160923 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Kim Mark Garnet Applicant Jaret N. Moldaver, for the Applicant

• and -

Sharon Garnet Respondent Howard E. Warren, for the Respondent

HEARD: June 20, 21, 22, 23 and 24, 2016

DECISION

MCGEE J. :

Introduction

[1] This is the trial of an application issued sixteen years ago, on January 24, 2000. Property division and equalization claims were settled in a Separation Agreement dated February 25, 2000. On July 14, 2000 Mrs. Garnet was awarded temporary spousal support in the amount of $4,000 per month. This trial determines whether that temporary order ought to now terminate, and whether Mrs. Garnet is entitled to a retrospective increase.

[2] The parties were married for 18 years: October 9, 1980 – December 27, 1998. At the time of trial they were ages 58 and 61 respectively. They were 40 and 43 when they separated. The parties were divorced effective September 3, 2012. Their three independent children are now ages 35, 32 and 28.

[3] Formal spousal support has been in pay for sixteen years. Although payment was not always consistent, there are no arrears. Mrs. Garnet is presently indebted to Mr. Garnet in the amount of $40,500 plus interest: a loan of monies to assist her in funding this litigation. She is also indebted to the CRA in an amount of approximately $60,000. Neither amount can be easily realized. She has deliberately organized her affairs in a manner designed to defeat creditors.

[4] Shortly after the conclusion of trial I issued a short endorsement and support deduction order temporarily staying the payment of ongoing spousal support. For the reasons that follow, I make a final order terminating the payment of spousal support effective April 30, 2017, and dismiss Mrs. Garnet’s claim for a retrospective increase. I deem support owing from July 1, 2016 to April 30, 2017 paid by the loan advance of $40,500.

The Relationship

[5] The pleadings state that 23 year old Kim Garnet, born in the City of Toronto, married 26 year old Sharon Wall, born in Durbin, South Africa on October 9, 1980. Neither set of pleadings indicate that the parties lived together prior to marriage. During this trial, a prior period of cohabitation was bitterly contested, no doubt, because it is relevant to a Spousal Support Advisory Guidelines calculation. Because I have terminated the entitlement to support, there will be no further reference the Guidelines. [1] Nor is it necessary to determine the exact length of cohabitation.

[6] In 1980 Ms. Wall, now Mrs. Garnet was an honour roll college graduate who held a responsible position with Gulf Oil. Twenty-three year old Mr. Garnet was in every respect her opposite. He was a drug addict who spent the first 30 days of their marriage in rehab. He continued to cycle through a series of jobs, losing each one in turn to drug related behaviours. He was in trouble with the law. In his own words, he had used “every type of drug going until I was 18, and then I discovered heroin.”

The Family Business

[7] Finances were tight during the early years of the marriage. The couple relied heavily on Mrs. Garnet’s stable employment with Gulf Oil in which she earned $50,000 a year plus benefits as a telephone analyst. Mrs. Garnet testified at trial that she introduced her husband to the home renovation business because “there were a lot of drug addicts in that business.” She hoped that it would give him a chance to make some money by scoring deals between his urges to score drugs.

[8] She was right. Mr. Garnet quickly learned the nature of the business, the product lines and the services available through various installers. In fact, he was really good at it. He was soon canvassing door-to-door, generating leads and closing home renovation contracts. He and a partner operated under the name of Select Building Products for over five years before they had a falling out.

[9] The Garnets decided to focus on creating their own home renovation business. The decision made even more sense when Mrs. Garnet’s employment position was transferred out west following the sale of Gulf Oil to Petro Canada. Mr. and Mrs. Garnet incorporated K-Net, and issued two shares, one for each of them. Respondent’s counsel referred to K-Net as a “Tin Man” business. Mrs. Garnet did all the administrative work, such as bookings, arranging for suppliers, banking and accounting. The parties employed a fulltime, live-in housekeeper and nanny, allowing them to run the business from home.

[10] K-Net canvassed Hamilton, Toronto and Oshawa. A license was required to go door-to-door in Hamilton, a lucrative area for prospects. Mr. Garnet was precluded from applying for a license - he had a criminal record. Mrs. Garnet wrote the test, scoring 84% and earning the license.

[11] Mr. Garnet’s role was to go door-to-door generating leads. When he got a contract, he connected available trades and services. As the business grew, he managed a sales crew. He divided the teams’ roles into canvassers and closers, each receiving one-third of the contract, with the company performing the services receiving the remaining third. The business tended to be seasonal, and involved some very high pressure sales. The clientele was generally, elderly.

[12] The business did well, but it really took off when Mrs. Garnet expanded sales through telemarketing. She brought in three additional women to assist her. They started to make some serious money. She set up a family trust for tax purposes. Mrs. Garnet recalls driving nice cars, buying a cottage, jewelry, eating out and taking trips. She loved keeping a beautiful home. She constantly renovated and decorated, required exacting standards of cleanliness from the housekeeper. She drove a cycle of buying and selling homes funded by the business account.

[13] Mrs. Garnet controlled all the money for the business and the home. Mr. Garnet did not object. During this period he was still cycling in and out of rehab, and did not trust himself to handle money. He never had his own credit card, except for a gas card. He had no signing authority. He once used Mrs. Garnet’s credit card to buy cigarettes, which he later sold for drugs. He accepted his wife’s control of all their personal and business finances and continued to try to get clean.

[14] The day before September 5, 1991 Mr. Garnet used for the last time. September 5th has become his “clean date” and he continues to celebrate it annually.

[15] I accept Mr. Garnet’s evidence that their relationship began to change once he stopped using; even though Mrs. Garnet continued to be in control of the finances. In his words, “she was good at it,” and he was busy with the business. Nonetheless, the power dynamic had shifted. He testified that “Sharon was a strong woman who made her own decisions and tried to make mine as well.”

[16] The parties separated on December 27, 1998. Mrs. Garnet proudly admits to freezing his gas card on that day by calling and pretending to be “Kim.” She had just learned that her husband had surreptitiously taken a young woman to Montreal for the weekend. When he returned home, he packed his bags.

[17] The parties continued to operate K-Net. Mr. Garnet moved in with his mother who resided on Albany Street in Toronto. He testified that during the early part of 1999 he attended the bank and learned that the K-Net accounts had been cleaned out. He discovered that Mrs. Garnet and his former partner in Select Building Products had called all the K-Net customers. In response, he incorporated a new company under the name of Albany. He started selling through the new company, working as hard as he could to recapture the market. To this day, he believes that Mrs. Garnet took at least $100,000, possibly as much as $500,000 from the business in unaccounted earnings. But he has no real idea, because he was never involved in the finances.

[18] Mrs. Garnet testified to a very different series of post separation events. She acknowledges retaining all the business files, but says that Mr. Garnet had already contacted the customers and the contractors long before she got going. She agrees that she lived off the business proceeds for the first year, or so, and admits that she used the business funds generously. She travelled, purchased luxury items and indulged in cosmetic surgery. When funds started running low she began redeeming RRSPs, retained counsel and ultimately obtained an order for support on July 14, 2000.

[19] It is neither possible, nor necessary to reconcile the parties’ disparate accounts of K-Net’s fate. Equalization has been settled. The parties do agree that by the summer of 2000 K-Net had lapsed into inactivity. The corporation was never properly wound up. No evidence was tendered at trial on the disposition of the Family Trust.

The Corresponding Family Years

[20] The Garnets became a family in the fall of 1981. Their son was joined by a sister two and a half years later, and a second son was born four years after that. They took a great deal of pride in their children, making certain that they had a good nanny, proper school placements, summer camp and the benefit of extracurricular activities. Mrs. Garnet did almost all the driving, except for the youngest son’s hockey schedule in which Mr. Garnet delighted. Mr. Garnet acknowledges that his parenting was erratic during those early years when he was “chasing drugs.”

[21] The kids were 17, 15 and 10 when their parents separated in December 1998. The oldest was soon residing with his father, the youngest with his mother, and the middle child, their daughter moved between residences.

[22] The seven years following separation were in a word, – chaotic. Neither parent pursued any child related remedies, so the matter appeared to go into legal abeyance. But at home, the children were in high distress. It was a terrible time for them. The daughter had a poor relationship with her mother, and struggled with her father’s new partner. The youngest did not do well in his mother’s care and left for his father’s at the age of 17, where he remained.

[23] Mr. Garnet covered all the children’s expenses and never sought, nor received child support. He paid for the oldest child’s education at York and Ryerson after their small RESP account was extinguished. He provided accommodation for the oldest, paid for an apartment for the daughter, and her school, rehab and living expenses. He paid for sports, school and post-secondary expenses for the youngest. He has paid for all the dental, health and medical expenses for the children. Mrs. Garnet assisted with vehicle expenses for two of the adult children.

[24] The kids did eventually stabilize and are now doing well. The oldest two have children of their own. Their youngest joined his father’s company in July 2015.

Mrs. Garnet’s Post Separation Income

[25] Immediately after separation, and not disclosed within the affidavit materials filed in support of her July 2000 motion, Mrs. Garnet worked four days a week from home as a telemarketer, with a friend. She operated K-Net with a closer. She gave no evidence at trial as to why she did not continue to operate K-Net. There was no evidence that the Greater Toronto Area could not have supported two such businesses.

[26] Instead, Mrs. Garnet decided to start a new business. In 2001 she bought a clothing store for approximately $200,000 using part of the $780,000 that she had received from her share of the house sale proceeds and her equalization payment. She testified that “she thought that she could be successful since she had run their business successfully.” She operated the store for the next two years, and gave no credible or even coherent explanation of how or why it failed.

[27] When questioned, she gave contradictory answers. Eventually, she blamed the end of the business on her teenage daughter, claiming that she was responsible for two break-ins, causing the business to be ineligible for ongoing insurance. The assertion made no sense within the context of her testimony. Mr. Garnet’s evidence was more credible. He didn’t know why the business failed, but he suggests that at least one break-in was staged by Mrs. Garnet to recover her investment in inventory when sales were lower than expected.

[28] This conflict in the evidence marked the start of a pattern in Mrs. Garnet’s oral evidence: maddeningly contradictory, evasive, dismissive and incredible statements that changed with the press of each question. She frequently shrugged her shoulders, made a hand gesture, or rolled her eyes when confronted with inconsistent answers.

[29] The conflict in her evidence was set upon a backdrop of three mantras: she has never worked after separation, she was devastated by the separation, and her health has been in serious decline since separation.

[30] Has she been working? Dr. Greenberg’s medical notes [2] of February, March and April 2005 record Mrs. Garnet’s contemporaneous statements to him that she was working. Her Financial Statements covering the same period state categorically that she was not working. How does she explain this? She says that she lied to Dr. Greenberg, or she forgot what she said, or that she didn’t think it was any of his business so she just “made something up to get out of the office,” or, “maybe she did lie on her Statements.”

[31] Counsel led her through subsequent medical notes of June and July 2005. The note of June 23rd states that “she may soon have another job, one offer and waiting on another.” The note of June 30th says “working fulltime.” A note from January 2006 states that she was working fulltime, with no problems. The February 2, 2006 note states that she was not working, “in Israel fulltime, wonderful visit with son, feeling great.” The visit was 2 to 3 weeks. The notes then demonstrate that she was back to work in March 2006. The April 26th note states that “working fulltime helping boyfriend’s friend. The friend was identified in questioning as “Manny” [Mr. Olszynko] of Credit Repair.

[32] She acknowledged that she began her habit of working under an alias in 2005, primarily as “Anna Kelly.” When questioned on the pseudo name, she stated that “she did not want anyone to know her name when she was working,” and that “it was Manny’s idea.” She also used the name of Anna Fontana. She testified that she “didn’t want people to find her name on the computer or phone.” She added that she could only be paid in cash when using a pseudo name as “Anna Kelly has no Social Insurance Number.”

[33] Mrs. Garnet’s Income Tax Returns and Notices of Assessment “NOA” filed in this proceeding are summarized below. They are highly unsatisfactory. Where no figure is provided, no document was ever disclosed, despite Mrs. Garnet being ordered to do so. The Returns marked with an asterisk “*” are handwritten and appear to be drafts. That of 2012 is clearly a draft. Mrs. Garnet writes questions on the signing pages, and overwrites figures from her 2011 Return.

Year Status T1 Line 150 Source Tax Arrears if NOA provided

1998 married $46,348 $24,276 dividends and $20,000 commission from K-Net, $2,072 other

1999 separated $22,376 $20,000 K-Net dividends and other 2000 2001 2002

2003 divorced $48,000 spousal support

2004 divorced $48,000 spousal support

2005 divorced $48,000 spousal support 2006* separated $48,000 spousal support

2007 divorced $48,000 spousal support 2008* separated $48,000 spousal support

2009 separated $48,000 spousal support $198,396

2010 divorced $48,000 spousal support $217,190

2011 divorced $64,092 $48,000 spousal support $243,617 $16,092 business income from “Garnet Consulting” 100% owned 2012* divorced $61,500 $48,000 spousal support $13,500 business income from “Garnet Consulting”

2013 divorced $48,000 spousal support $8,914

2014 $52,130

2015 divorced $59,497 $48,000 spousal support $11,497 other income-no Slip attached

[34] Evidence of income earned in 2007 and 2008, but not reported on her Income Tax Return was put to Mrs. Garnet in cross examination. She recalled working for a company called Direct Lines, but there is no T4 for either year. When confronted with this information, she changed her testimony to say that she was paid in cash that was reported to the CRA. When it was pointed out that no amount was claimed, but for spousal support, she blamed her accountant. When it was pointed out that the handwriting on the 2008 Return was hers, and that the accountant did not prepare her Return, she shrugged her shoulders.

[35] The Returns that incorrectly show Mrs. Garnet as divorced (she was not divorced until 2012,) are prepared on the same computer generated form, and show only spousal support as income. The pervasive lack of NOAs and the inexplicable jumps in tax arrears suggest that the documents tendered are not the Returns actually filed with the CRA.

[36] In a letter dated October 30, 2012, Mr. Olszynko of CRE Bookkeeping Inc., otherwise known as Credit Repair Experts of 372 Rideau Street #402 Ottawa, writes that Mrs. Garnet is an independent contractor for their firm and has earned to date for the year: $13,250. He explains:

Currently, she is being paid a flat rate of $500 per week for the weeks that she works in full. Some weeks she only works ½ the week in which case she is paid half that amount. I pay her by depositing her earnings on her credit card.

Sharon works on a very flexible schedule due to her frequent medical issues and requirements to go to doctor’s appointments etc. Each day we interact by phone, text, or email and determine what time to put the ads on. Later on that same day, she will contact me and let me know when to switch the ads off.

[37] The stated income to date of $13,500 exactly matches the handwritten Return for 2012, despite it not being a year-end figure. There is no NOA for 2012. Mr. Olszynko does not mention in his letter that Mrs. Garnet has been working for him since 2005. [3]

[38] I cannot reconcile Mrs. Garnet’s handwritten, draft 2012 Return, which shows the exact figure of $13,250 as received by “Garnet Consulting” with the letter’s statement that her income was deposited directly to a credit card. Her credit card statements were not in evidence. And she has never disclosed a bank account in her own name – a precondition to having a credit card.

[39] Her LinkedIn page confirms 2012 employment with Credit Repair until December of that year. It also shows employment with YYZ Logistics from 2005 to 2009 and 2013 self-employment at S & S Furniture & Design.

[40] The 2013 Return is a UFile. The 2013 tax balance due of $8,914, shown on a poorly photocopied NOA, does not match the previous account balance on the following year’s 2014 NOA of $52,130. The 2014 Income Tax Return has never been provided.

[41] There is no slip explaining her income on the draft 2015 Income Tax Return, and no proof that it was ever filed with the CRA. In her Financial Statement deposed just prior to trial she states,

In 2015 I earned approximately $11,000 in cash income in part time work on the weekends. I was paid $75 a day plus commissions. It is not steady and there is no way to project how much I will receive and when. In 2016 I have earned less than $1,500 and I was paid in cash.

[42] How did Mrs. Garnet incur $243,617 in tax arrears by 2011, and then see them reduced to $8,914 in 2013? And then why did they jump up again to $52,130 in 2014? She has no idea. It is a mystery. In cross-examination she referred to the arrears alternatively as “a mistake,” and “Mr. Garnet’s doing….somehow.” She can’t recall when the arrears first were accrued. She can’t recall if the clothing store was owned personally, or within a corporation. She says that she will be talking to CRA when this trial is finished.

[43] How does Mrs. Garnet reconcile her expenses with her stated income? She really can’t say. She was pressed on particular expenses, such as travel. She testified under oath that she had never vacationed in Las Vegas. When shown the transcript from her questioning in which she speaks of the trip, she corrected her answer, and then explained that Mr. Fine had paid for the trip and her many other trips, including those to Israel.

[44] Mr. Fine is also the person, she testifies, who helped her draft her court materials, and told her that she did not have to disclose her banking records, or her medical records, each in the face of court orders that she was required to do so. She testifies that she has no idea what he does for a living. She knows that he lives in Israel, and runs a company here in Toronto. She states that she was unaware that he has two convictions from 1996, and a 2008 charge arising from the use of a fake credit card.

[45] She testified that when she was paid by cheque at one of her jobs, she deposited the cheque to an account held by a numbered company, the particulars of which she has tenaciously refused to disclose. What she will state, is that her friend Mr. Fine – a person on her witness list, who was not called as a witness, and who has been intractably intertwined in all her affairs and attended at trial – helped her set it up, to avoid the CRA.

[46] Who controls the numbered company and its bank account? She thinks that it is Mr. Fine – but she is not certain, “it could be one of his brothers.” Upon this court’s direct inquiry, Mrs. Garnet identified the company as 2193767 Ontario Limited.

[47] Her spousal support has been deposited to this corporate account since June 2010.

[48] Has her health been in serious decline since separation? Mrs. Garnet testified during trial that she suffers from severe anxiety, obsessive compulsive disorder, restless leg syndrome, asthma, arthritis, vomiting, agoraphobia, high blood pressure, germaphobia, depression, grand mal seizures, and chronic cluster migraines. She states that she is on a long list of various medications, and spoke to her and a friend’s regular use of marijuana.

[49] Mrs. Garnet has never applied for any disability benefits. She has not applied for CPP. She has never listed a single medical expense on any of her disclosed Income Tax Returns. None of her treating physicians were called at trial, despite her primary care physician being listed as a witness in the trial management endorsement.

[50] She called two friends and her brother as witnesses. Each had much to say about Mr. Garnet, and the parties’ lifestyle during their marriage, but none spoke to any limitations on Mrs. Garnet’s present ability to be self-supporting.

[51] Mrs. Garnet testifies that she is now working in trade shows, and that she is feeling much better, despite asserting in a December 2014 affidavit that she would never work again. Specifically, she testified that she did not call her present physician, Dr. Bross as a witness because she is well now, and confident that she can earn a minimum wage.

[52] In closing submissions, applicant’s counsel filed four pages of single line contradictions and lies heard during Mrs. Garnet’s day and a half of testimony. The notes match those of the Bench. Mrs. Garnet was not a credible witness. Since 2000 she has deliberately obscured her income for reasons that are her own. She diverts her spousal support to an account over which she states that she has no control. She cannot reconcile her expenses with her income She leads no evidence to support extensive claims of disability.

Mr. Garnet’s Post Separation Income

[53] Mr. Garnet described the years between 2000 and 2016 as years in which he has “worked like an animal.” He was able to get a pardon of his criminal conviction which allowed him to obtain a license to operate in Hamilton. He sold his condo, bought a home, paid down the mortgage and has lived sensibly. He puts $20,000 a year away in a RRSP funded by his company line of credit. He acknowledges $5-10,000 a year in cash earnings.

[54] He kept the family cottage in the property settlement, and has improved it with funds expensed through Albany. He regularly travels with his new partner. She has a responsible full time employment position and two children, one of whom works fulltime and lives with them.

[55] Now that the parties’ youngest has joined Albany, Mr. Garnet hopes to slow down and assist his son to take over. It is a physically demanding business and he finds that he has diminishing capacity. He has had two heart attacks, the first at age 50, when he spent two weeks at South Lake Hospital. He has had two angiograms. He was unable to drive for a period and continues on medication. Although retiring at age 60 is likely unattainable, he still hopes to semi-retire over the next period. He does not believe that it is realistic to work in his business past age 65.

[56] It is not an easy business in which to earn income. As regulations change, so must business practises. There is a movement amongst certain municipalities to ban door-to-door sales. Mr. Garnet testified that HVAC can no longer be sold door-to-door, roofing has become more competitive and earnings for 2016 suffered when he lost a major installer. The business is economy dependent, and income is seasonal.

[57] Albany’s bookkeeper and accountant each gave detailed testimony on the nature of the business, and importantly, to the propriety and integrity of the business records.

[58] I found Mr. Garnet to be a credible witness. He was frank about evidence that did not assist his case. He acknowledged not insignificant bad behaviour, such as deliberately delaying support payments during periods of heightened animosity towards Mrs. Garnet.

[59] His income has been under the intense spotlight of the past four years’ litigation. The specifics are set out below, within the litigation history.

Litigation History

[60] The case management justice made a number of procedural orders to get this matter back on track during the conference of April 9, 2010. Then there was another period of non-activity. A Notice Approaching Dismissal was mailed on September 7, 2011.

[61] To maintain the proceeding, the respondent scheduled the settlement conference heard January 10, 2012. She filed a financial statement deposed January 4, 2012 showing only spousal support as income, and $56,232 of after tax expenses. That level of expenses has been consistently deposed in her Statements filed in this proceeding. As set out above, how she meets those expenses has never been explained. She has never sought an increase in spousal support.

[62] It was at this January 2012 attendance that the applicant gave notice of his claim to reduce, and ultimately to terminate spousal support. The parties consented to an order for the exchange of disclosure lists, questioning, production of Mrs. Garnett’s efforts to find employment, and the last three years’ worth of financial statements for Mr. Garnet’s business. Mrs. Garnett was to provide all clinical notes and records of Drs. Greenberg and Bross and any other physician upon whom she would be relying at trial.

[63] The medical records were essential to Mrs. Garnet’s assertion that she could not re-enter the workforce due to health reasons.

[64] It is clear from the record of endorsements, and Mrs. Garnet’s evidence at trial that she perceived risk in the litigation resuming. She had the order that she wanted. She did not give the disclosure. On July 10, 2012 the case management justice again ordered - not on consent - that Mrs. Garnet was to produce the medical evidence/records upon which she intended to rely at trial. She was to provide a Direction that would allow for Mr. Garnet’s counsel to obtain the decoded OHIP summaries and the clinical notes and records of Drs. Greenberg and Bross and any other physician upon whom she would be relying at trial; for the period of January 1, 2000 to the present. She was to attend for questioning.

[65] Again, Mrs. Garnet produced none of the disclosure and did not attend for questioning. Mr. Garnet brought a motion to strike pleadings on October 17, 2012. Mrs. Garnet was successful in obtaining an adjournment before Justice Nelson, so the motion was not heard until December 12, 2012.

[66] On December 12, 2012 Justice Rogers ordered that respondent comply with the orders of January 10, 2012 and July 10, 2012 by January 15, 2013; and she suspended Mrs. Garnet’s spousal support pending completion or further order of the court.

[67] Justice Rogers also required Mrs. Garnet to attend questioning on February 5, 2013 at a named location and time. If the disclosure was not complete or if questioning was not attended, Mr. Garnet could renew his motion to strike pleadings. Costs of $3,100 were awarded to Mr. Garnet.

[68] Following the suspension of spousal support, Mrs. Garnet substantially complied with Justice Roger’s order. A further order was required on June 12, 2013 for her to provide answers to certain of the February 5, 2013 questions. Costs of $1,850 were awarded to Mr. Garnet.

[69] The parties each made extensive motion claims in July 2013. On July 10, 2013 Mr. Garnet was ordered to pay $6,000 towards support arrears. A long motion was heard July 24, 2013. In reasons released July 26, 2013 Justice Rogers confirmed the list of disclosure that Mr. Garnet had agreed to produce and then turned her attention to Mrs. Garnet’s motion for interim disbursements.

[70] Justice Rogers observed at paragraph 11 that,

Ms. Garnet has not been forthcoming about her income. She has hidden her finances in a bank account that presumably belongs to a numbered company, the principal or principals of which she has been reluctant to disclose. She hides her income foremost from creditors and the CRA. Mr. Garnet has spent a good deal of money in legal fees getting her to be open about her finances. The sources of her income are not clear. However, today, the court does not see such income as would fund an expert or counsel.

[71] At paragraph 20 of the July 26, 2013 reasons Justice Rogers writes that, “Mr. Fine is the person who assisted [Ms. Garnet] to set up the hidden account that conceals her money from CRA.” And at paragraph 22, that “[Ms. Garnet] has not complied with court orders and has made the fact gathering enormously difficult.”

[72] Ultimately, Justice Rogers reinstated the July 14, 2001 order for spousal support as of January 1, 2013 and permitted Mrs. Garnet’s claim for interim disbursements, but in a lesser amount, proportionate to the only remaining issue: spousal support. She set exacting terms for the advance of $15,000 for legal representation, and $7,000 for an income valuation expert to be delivered by September 15, 2013.

[73] The advance was a loan repayable at a monthly rate of $800 per month with interest accruing at 3% per month. Justice Rogers wrote:

25. The repayment must be organized. The support payments of $4,000 allow repayment. The court shall not set-off the support payment by reducing the support but rather shall require monthly repayment by the respondent, failing which the applicant is able to move to strike her pleadings. The respondent has been at risk of having her pleadings struck several times earlier in this action, including when this judicial officer gave her the indulgence of complying with the disclosure order or losing support. Ms. Garnet should take note that the court expects absolute compliance with the repayment order. She should fashion her payment such that she has clear proof of her payments.

[74] The matter was first listed for trial in May 2014. A change in counsel resulted in a removal from the trial list. In October of 2014 Mrs. Garnet brought a motion for further interim disbursements, and for an order varying Justice Roger’s order. She wished to cancel the monthly repayment of $800. The motion was adjourned to January 15, 2015 with costs payable to Mr. Garnet in the amount of $7,500 plus HST.

[75] On January 15, 2015 Justice Nelson heard the long motion. He was persuaded to make an order for an additional $40,500 be paid to Mrs. Garnet’s counsel in trust, as a loan with interest payable under the Courts of Justice Act [4] . The costs were to cover various expenditures, including the remaining costs of her expert. Terms of repayment were to be set by the trial judge. Mrs. Garnet’s claim to cancel the monthly payment of $800 was dismissed. Given the positioning of the parties’ Offers to Settle, Mr. Garnet was ordered to pay costs to Mrs. Garnet in the amount of $8,000 including HST, which could be set off against any costs owing to him.

[76] A further settlement conference was held in September of 2015. Again, Mrs. Garnet was ordered to deliver any medical reports on which she was relying, now, by November 30, 2015. She was to deliver her expert’s report on the valuation of Mr. Garnet’s income by December 15, 2015. The trial management conference was held on April 18, 2016.

[77] Although included in her witness list, Mrs. Garnet’s valuator was not called at trial. He had prepared a report on Mr. Garnet’s income, which was not placed into evidence. Rather, Mrs. Garnet’s counsel indicated in his closing submissions that he relies upon the following column of assessed income values as set out in paragraph 58 of Mr. Garnet’s November 14, 2014 affidavit: [5]

2009 $147,000 2010 $176,000 2011 $167,000 2012 $102,000

[78] Income Tax Returns and Notices of Assessment filed by Mr. Garnet during the proceeding, indicated Line 150 income of:

2005 $155,924 2006 $131,824 2007 $167,708 2008 $145,423 2009 $137,507 2010 $118,067 2011 $151,451 2012 $112,070 2013 $154,877 2014 $150,959 2015 $194,375

[79] Mr. Garnet’s April 7, 2016 Financial Statement is detailed in its breakdown of expenses, some of which are shared with his new spouse, his assets and debts. His personal and corporate lines of credit are presently maximized. He testified that he is uncomfortable with his present debt levels, including a business line of credit, necessary to meet the terms of the loans to Mrs. Garnet ordered by Justices Rogers and Nelson, and to fund this trial. The significant increase in his 2015 income primarily results from redemptions necessary to offset those credit facilities.

Analysis

[80] Every spouse has an obligation to provide support for himself or herself and for the other spouse, in accordance with need, to the extent that he or she is capable of doing so, as provided for in section 30 of the Divorce Act [6] . Section 15.2(4) of the Divorce Act sets out the relevant statutory factors for the court’s consideration when it is called upon to adjudicate the entitlement to, quantum and duration of spousal support.

[81] In making an order under subsection (1) [of section 15.2] 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.

[82] This was a long term marriage, whether it consisted of 21 years of cohabitation, or 18. Mr. Garnet has the ability to provide support for Mrs. Garnet. The primary issue on this trial is whether Mrs. Garnet is entitled to ongoing spousal support in excess of sixteen years. I find that she is not.

Termination of Spousal Support

[83] Neither party raised entitlement to support as an issue on the July 14, 2000 motion for temporary support, and rightly so. Although it is now clear from the evidence that Mrs. Garnet has understated, lied and actively hid her income; it appeared at the time of the temporary order, and for many subsequent years, that she was the disadvantaged spouse.

[84] Mrs. Garnet’s failure to ever disclose her 2000, 2001 and 2002 Income Tax Returns is significant. Her income during this period is unknown, as is the manner in which she restructured her affairs. It is a reasonable inference, fueled by the unexplained and dramatic leap in her tax arrears, that her available income during those first three year exceeded his. We may never know.

[85] Mrs. Garnet has refused to produce her Notices of Assessment from 2003 to 2008. It is a reasonable inference that the T1 forms that she has filed in this proceeding do not accord with those filed with the CRA. It is certain that her Income Tax Returns howsoever filed do not include all her earned income.

[86] The Income Tax Returns for 2009 to 2012 contain another challenge: how to understand income from “Garnet Consulting.” Nothing has been disclosed or explained: a curious omission given the ferocity with which she has pursued a determination of Mr. Garnet’s business income during this proceeding.

[87] Mrs. Garnet’s 2014 Income Tax Return has never been disclosed. This too is significant. What did she earn in 2014 that moved her tax arrears from $8,914 to $52,130? And finally, how does the court view the reporting of her 2015 income, earned through a telephone debt recovery business operated by her boyfriend’s friend, Mr. Olszynko, in which she is supported in the use of an alias, and her pay is applied to an undisclosed credit card which may not be in her own name?

[88] Mrs. Garnet’s oral evidence in this proceeding has been wholly unreliable. The documentary evidence – particularly of her medical reports and Income Tax Returns – and the pattern of her oral evidence lead me to a finding that Mrs. Garnet has taken steps to be self-sufficient, and is self-sufficient.

[89] In making this finding, I have considered the modest living and transportation budgets set out in her Financial Statement, which were not seriously contested by the applicant. In my view, Mrs. Garnet’s overall lack of candour during this trial, and more importantly throughout this sixteen year proceeding, suggest that these too have been sheltered from scrutiny. Just as her income has been diverted to an account controlled by Mr. Fine – or as she testified, “one of his brothers” – so too could her assets.

[90] It is troubling to me, and worthy of specific note that her spousal support has been diverted to the Fines since June of 2010. How can Mrs. Garnet be in need of spousal support if that support is redirected to a third party, the circumstances of which are not only unexplained, but hidden from the court?

[91] But self-sufficiency is only one objective of the Divorce Act . Entitlement to spousal support on either a needs or compensatory basis is also predicated on an equitable sharing of the economic consequences of marriage and its breakdown. Specifically,

(6) [a]n order made under subsection (1) [ Section 15.2 of the Divorce Act ] 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.

[92] It is not contested that the support of the children primarily fell to Mr. Garnet after the separation. There were no financial consequences to Mrs. Garnet arising from her role with the children during the marriage.

[93] This leaves for analysis the question of whether there has been an equitable sharing of the economic advantages and disadvantages of the end of the marriage in 1998, and if so, what amount is necessary to relieve that hardship. I find that there was an equitable sharing of those advantages and disadvantages, and if there was not, that any amount necessary to relieve the resulting hardship has been satisfied.

[94] At the time of separation, the parties were equal shareholders in a jointly operated business. Either could have carried on the business. There was no proprietary information, no long term contracts and no terms of dissolution of their operating company.

[95] Perhaps Mr. Garnet was faster out of the gate in 2000, and more motivated. There was no other type of work in which he had ever been successful. Losing access to K-Net was such a disadvantage that he immediately incorporated Albany. He is to be commended for working so diligently over the subsequent years, staying clean and providing for his children. He has paid his taxes. He has paid his spousal support. The business is prosperous and stable enough to bring in his youngest son and provide him with a future. There have been set backs. He has suffered two heart attacks and continues on a number of medications. But all in all, not a small set of accomplishments for a former addict.

[96] Mrs. Garnet could have carried on with the business. She retained control of its records and finances. She alone held the license for a major area of the business, she was the sole administrator, and she had the demonstrated ability to build the business through telemarketing. Indeed, she continued to operate the business with another closer and was able to support herself for at least 18 months after Mr. Garnet’s departure, enjoying not insignificant personal and discretionary expenses. Moreover, she had a stable employment history.

[97] Mrs. Garnet chose to start a new venture, buoyed by her success with K-Net. That business failed for reasons not credibly presented at trial, but clearly, unrelated to the marriage. Thereafter, her income went underground despite a demonstrated ability to earn a stable and visible income. She chose to earn income in a manner deliberately designed to evade the payment of tax. That decision was again, unrelated to the marriage.

[98] The interpretation given to sections 15.2(4) and 15.2(6) of the Divorce Act in the leading cases of Moge v. Moge [7] and Bracklow v Bracklow [8] recognize that, absent the situation where one spouse is irreparably economically disadvantaged by the marriage or its breakdown, or there is a legitimate need for continuing support that justice requires be addressed by a spouse with the means to do so; the basis for support entitlement can evolve and, that ultimately, spousal support may end after a reasonable time, even in a long marriage in which the parties were at one point financially interdependent. [9]

[99] Ongoing assertions of need and an ability to pay do not automatically entitle a spouse to indefinite support. [10] Spouses have an obligation to become self-sufficient and to make prudent financial decisions. Self-sufficiency does not mean future parity of income.

[100] In reviewing the relevant sections of the Divorce Act , and considering the applicable law ably supplied by counsel, I am satisfied that Mrs. Garnet was not irreparably economically disadvantaged by the marriage or its breakdown.

[101] I find that Mrs. Garnet’s entitlement to spousal support has expired. It is possible that it expired at a point prior to trial, but as the applicant seeks only a present date termination, further analysis is unnecessary.

[102] I am prepared to extend the termination date to April 30, 2017 to create some period of notice to Mrs. Garnet, and to relieve her of the loan obligation of $40,500 per Justice Nelson’s order of January 15, 2015. Specifically, the cumulative total of ten tax deductible, monthly support payments of $4,000 ($40,000) for the period of July 1, 2016 to April 30, 2017 shall be deemed paid by the $40,500 loan advanced to Ms. Garnet in early 2015.

[103] Final order to issue terminating spousal support payable to the respondent, effective April 30, 2017. Support deduction order to issue terminating enforcement of support as of June 30, 2016.

Claim for Retrospective Increase Dismissed

[104] As a secondary issue for trial, Mrs. Garnet seeks a retrospective increase in spousal support for the past five years. No motion has been brought for an increase since the July 14, 2000 award of $4,000 per month. That award was based on an imputation of $120,000 in annual income to the applicant, and no income for the respondent. The incomes set out at paragraphs 74 and 75 above demonstrate an increase in his income during each of the last five years except for 2012 ($112,070).

[105] Spouses are not automatically entitled to share in post separation increases in income. To do so, one must establish a compensatory basis for the claim. Otherwise, spousal support is to be generally calculated on the basis of parties’ incomes as of date of separation. [11] This trial is unusual – a post separation increase in income is being considered within an original application – but the principles remain the same.

[106] Justice McDermid in Patton-Casse v. Casse [12] sets out at para. 136, the criteria to be considered on a claim to include a payor’s post-separation income increase in a determination of spousal support:

(a) Were the payor’s skills and credentials from which he earns the increased income obtained during marriage? (b) Does the income of the payor flow from a job that is different from that which he had during marriage? Is the reason for the increase a career continuation or a new venture? (c) Was this a long-term marriage with a “complete integration of the parties’ personal and economic lives”? (d) What is the time elapsed between the date of separation and the date of the income increase? (e) Is the support being awarded compensatory or non-compensatory?

[107] These criteria were significantly expanded by Justice Chappel in Thompson v. Thompson [13] in which she repeated and expanded upon the general principle that a spouse is not automatically entitled to share in post-separation income increases. Relevant to these circumstances, she included in her analysis a consideration of whether the increase can be linked to contributions made by the recipient spouse; whether the parties’ personal and financial affairs became completely integrated during the course of the marriage, and the extent of the recipient’s sacrifices and contributions to the family.

[108] In Kohan v. Kohan , [14] the Alberta Court of Appeal overturned a trial judges’ inclusion of post separation increases on the basis that they arose not from a skill set acquired during the marriage, but from unusual market conditions that were not connected to any contribution by the support recipient. In making their decision, the Court endorsed the opinion expressed by Professors Carol Rogerson and Rollie Thompson in their report on the Spousal Support Advisory Guidelines , at 14.3 wherein they state:

14.3. . . . Some rough notion of causation is applied to post-separation income increases for the payor, in determining both whether the income increase should be reflected in increased spousal support and, if it should, by how much. It all depends on the length of the marriage, the roles adopted during the marriage, the time elapsed between the date of separation and the subsequent income increase, and the reason for the income increase (e.g. new job vs. promotion within same employer, or career continuation vs. new venture). The extent of sharing of these post-separation increases involves a complex, fact-based decision.

[109] Most recently, the Ontario Court of Appeal in Hersey v. Hersey affirmed a trial judges’ decision not to increase spousal support to take into account significant post separation increases in the payor’s income, and a decrease in the wife’s income resulting from a reduction to part-time employment.

[110] I do find that there is a compensatory element to Mrs. Garnet’s claim for spousal support. She helped establish and grow a business which has the same organizational scheme as that continued by Mr. Garnet – albeit a scheme already practised by Select Building Products.

[111] In 2000 Justice Perkins generously imputed to Mr. Garnet an income in excess of that sought by the respondent, and far in excess of the applicant’s deposed income. His award was based on affidavit evidence that Mr. Garnet was carrying on the family business, just under a different name, and that Mrs. Garnet was wholly dependent on its income. The evidence heard during this trial, and the failure of Mrs. Garnet to ever disclose her 2000 - 2003 Income Tax Returns, and her subsequent shielding of income call for a reconsideration of the appropriate nature and quantum of support paid.

[112] In my view, the compensatory element within Mrs. Garnet’s claim was fully satisfied during the early years following the July 14, 2000 temporary order, and does not extend to the last five years’ increases in Mr. Garnet’s income.

[113] Albany’s earnings over the past period result from conditions largely unrelated to those in operation during the marriage, particularly the success (or in 2012 the failure) of new product lines or the availability of an installer. Some of the post separation increases result from Mr. Garnet simply working harder.

[114] Moreover, any retrospective increase in support payable over the past five years would require an assessment of Mrs. Garnet’s income, which she has chosen to obscure – or in the case of 2014, not even disclose. Mrs. Garnet’s claim for a retrospective increase in spousal support over the past five years is dismissed.

Life Insurance

[115] Given the above orders, any prior orders requiring Mr. Garnet to maintain policies of life insurance are terminated.

Costs

[116] The applicant has been the successful party. He is to serve and file in the continuing record his submissions for costs on or before October 7, 2016. Respondent by October 21, 2016, and Reply, if any, by October 28, 2016. Submissions are limited to three pages, exclusive of any Bill of Costs, and Offers to Settle.

Madam Justice H.A. McGee Released: September 23, 2016

[1] The Guidelines do not address entitlement. [2] The extensive steps that Mr. Garnet had to take to secure production of these notes is set out in paragraphs 62 to 69, and 76 of the litigation history. [3] The medical notes had not been produced at the time that this letter was delivered. [4] R.S.O. 1990, c C.43 [5] As summarized during the respondent’s closing submissions. [6] R.S.C. 1985, c 3 (2nd Supp ) [7] , [1992] 3 S.C.R. 813 (SCC) [8] , [1999] 1 S.C.R. 420 (SCC) [9] Kohan v. Kohan , 2016 ABCA 125 [10] Cavanaugh v Cassidy , [2000] O.J. No. 1658 (SCJ) [11] Hersey v. Hersey , 2016 ONCA 494 , [12] 2011 ONSC 4424 [13] 2013 ONSC 5500 [14] 2016 ABCA 125