Colivas v. Colivas, 2016 ONSC 715

CITATION: Colivas v. Colivas, 2016 ONSC 715

COURT FILE NO.: FC-11-038492-00

DATE: 20160128

SUPERIOR COURT OF JUSTICE – ONTARIO – FAMILY COURT

RE: Rosa Maria Colivas, Plaintiff

-and-

Stivens Colivas, Defendant

BEFORE: The Honourable Mr. Justice R. Charney

COUNSEL: Harold Niman and Sarah Strathopolous, for the Plaintiff

James D. Singer, for the Defendant

HEARD: December 17, 2015

ENDORSEMENT

Introduction

[1] This motion is brought by the respondent, Stivens Colivas, for an order to reduce interim spousal support from $16,848 per month, as ordered by Boswell J. on January 11, 2013 (Colivas v. Colivas, 2013 ONSC 168, 2013 CarswellOnt 193), to $7,000[^1] per month retroactive to January 1, 2014.

Background

[2] The parties were married in 1999, and separated in June 2011. They have two children, ages 11 and 8.

The Interim Support Order

[3] On October 24, 2012, the court heard a motion for interim support brought by the applicant, Rosa Colivas. Boswell J. considered the evidence before him on that motion, and, in accordance with the legal principles set out in ss. 15.1 and 15.2 of the Divorce Act, R.S.C. 1985, c.3 (2^nd^ Supp.), he awarded child and spousal support on an interim basis. It was an unusual order that was tailored to fit the unusual circumstances and evidence before him. Boswell J. recognized that his order was not meant to be a long term solution. He stated (at para. 15):

It must always be kept in mind that interlocutory orders in family proceedings are not meant to be long term solutions. They are meant to provide “a reasonably acceptable solution to a difficult problem until trial”: see Chaitas v. Christopoulos, 2004 CanLII 66352 (ON SC), [2004] O.J. No. 907 (S.C.J.), per Sachs J. They are, by their nature, temporary, imperfect solutions. They are based on limited and typically untested information. Nowhere is this more true and apparent than in the case at bar.

[4] In order to appreciate the issue presented before me on this motion, it is important to set out, in some detail, Boswell J.’s analysis.

[5] In arriving at his conclusion, Boswell J. made the following findings of fact:

a) “[T]he parties lived a reasonably lavish lifestyle during the marriage and… Mrs. Colivas’ current needs, based on the continuation of the standard of living enjoyed during the marriage, amount to at least $20,000 per month” (at para. 19).

b) “The Colivas’ spending habits do not appear to have changed much following the separation” (at para. 20).

c) “Mr. Colivas has provided no disclosure in relation to his income for the years 2011 and 2012.” (at para. 22).

d) “Mr. Colivas utilizes a complex corporate and trust structure to hold and manage his assets” (at para. 22).

e) “Mr. Colivas has obtained, served and filed an expert’s report regarding the state of his income...[T]he report [is] complex and cumbersome, but also incomplete, because information surrounding the activities of Lucosta Investments Inc. and any associated corporations is missing for 2011 and 2012” (at para. 22).

f) “[Mr. Colivas] has been, at least since Extreme Fitness was sold in 2006, funding the family’s standard of living through a combination of income and capital. I accept his statement that erosion of the proceeds of sale of Extreme Fitness has been “the lifeblood of [the] family’s standard of living…”(at para. 23).

g) “How much of the family’s lifeblood has come from income, as opposed to capital erosion, is impossible to know from the Court’s present vantage point. Absent from the evidentiary record are the annual financial statements of Lucosta for fiscal years ending in 2010, 2011 and 2012…In the absence of such information, the Court is simply unable to come to any satisfactory conclusions about the mix of income and capital being utilized to fund the family’s standard of living” (at para. 24).

[6] As a result of the incomplete disclosure by Mr. Colivas, Boswell J. was not able to fix his annual income for the purposes of the spousal support order, and stated, at para. 29: “Inevitably, in order to maintain a reasonable approximation of the standard of living enjoyed during the marriage, resort to capital, as well as income, will be required.”

[7] On this basis, Boswell J. arrived at the following conclusion (at para. 30):

I am prepared, in the circumstances of this case, to make an interim award of support that, in all likelihood, will require Mr. Colivas to encroach upon capital to meet…In assessing “means”, a party’s capital resources are relevant. That said, it is not my intention to trample on the general and well-settled rule that support is generally payable from income and not capital. I consider this case to be exceptional, in that Mr. and Mrs. Colivas have a significant history of utilizing a combination of income and capital to fund their lifestyle. It would be artificial and, in my view, grossly unfair, in the circumstances, to suddenly expect Mrs. Colivas and the children to make the severe adjustment to their lifestyle that would be required if support were paid on income only – at least on the income figures produced by Mr. Colivas. Such an unfairness would be particularly acute in view of Mr. Colivas’ failure to make sufficient disclosure of his financial circumstances.

[8] In making this decision, Boswell J. took into account the fact that Mrs. Colivas had significant savings and capital of her own, and, in particular, was the sole owner of the matrimonial home. He rejected the argument that a support order should “put the onus on Mrs. Colivas to utilize her own capital to fund the bulk of her day-to-day living expenses” (at para. 32).

[9] Boswell J.s decision in this regard clearly indicates that the interim support order is to continue until trial, which, he recognized in 2013, could be some time off. The trial is now listed for the May/June 2016 trial sittings, peremptory to both sides. With regard to the need for a trial to resolve the financial issues is in dispute, Boswell J. stated (at para. 33):

This is clearly a case where the full appreciation of the evidence and issues that is required to make dispositive findings can only be achieved by way of a trial. In other words, the full forensic machinery of a trial will be necessary to do justice between these parties. A trial will be necessary to accurately assess Mr. Colivas’ income and to determine the equalization of net family property. Only after a trial will it become clear whether Mr. Colivas has overpaid or underpaid support, or whether his capital has been unfairly encroached upon. Only after a trial will it be possible to address any double-dipping issues or set-offs/adjustments for over-payments or under-payments. It will undoubtedly be some time before a trial can be concluded. In the meantime, it is necessary to fashion an order that permits at least a reasonable approximation of the pre-separation financial status quo to continue, without unduly prejudicing one or the other of the parties.

[10] Fixing spousal support at $16,848 per month, Justice Boswell indicated that he was not, for the purposes of spousal support, fixing any particular income to Mr. Colivas. In contrast, the order requiring Mr. Colivas to pay child support (which is not the subject of the present motion to vary) was based on an annual income of $250,000.

[11] The court was live to the fact that support is generally paid from income and not capital, and crafted an order that expressly allowed the trial judge to re-characterize some of the spousal support payments if appropriate. Boswell J. concluded as follows (at para. 37):

This is an extraordinary situation where the support payable is based on a mixture of income and capital. As such, I want to ensure that the trial judge has as much flexibility as possible to re-adjust and/or re-characterize any amounts paid, in order to justly allocate the economic consequences of the marriage between the parties. According, the support orders made today are without prejudice to: (1) the trial judge’s discretion to retroactively vary the allocation of child and spousal support once Mr. Colivas’ income is more accurately determined; and, (2) the trial judge’s discretion to re-characterize some portion of the spousal support payments made by Mr. Colivas pursuant to this order as transfers of capital, or an advance on an equalization payment, as the case may be, so as to fairly equalize the parties’ net family property and to address any issues of double dipping that the trial judge considers appropriate.

[12] Mr. Colivas sought leave to appeal from this decision, and leave was denied on July 18, 2013 (2013 ONSC 4777). In seeking leave, Mr. Colivas argued that Boswell J. had erred in law by requiring the payment of support from capital, and placing undue weight on maintaining Mrs. Colivas’ marital standard of living. These arguments were considered and rejected by the judge dismissing the motion for leave.

Motion To Reduce Spousal Support

[13] On March 1, 2015, Mr. Colivas brought this motion to reduce the spousal support ordered by Boswell J. The motion was originally scheduled to be heard on March 12, 2015, but was adjourned for three reasons: i) to give Mrs. Colivas an opportunity to file a responding expert’s critique of an expert opinion regarding Mr. Colivas’ income, ii) to require Mr. Colivas to file a proper financial statement in support of his motion, and iii) to permit questioning of Mr. Colivas prior to the motion.

[14] The motion was then scheduled to be heard on July 2, 2015, but was derailed by a cross-motion brought by Mrs. Colivas for further disclosure. The court found (at paras. 17, 31 and 34) that “the requested disclosure is…necessary for a fair determination of the issues in the case”, one of which is Mr. Colivas’ income for support purposes. Accordingly, further disclosure was ordered and the motion to reduce support was rescheduled to December 17, 2015.

[15] As indicated above, the trial of this matter is now listed for the May/June trial sittings, peremptory to both parties. Any findings or interim orders that I make on this motion will have to be reassessed by the trial judge and may be short-lived. One wonders whether the game is worth the candle at this point.

Position of the Parties

Mr. Colivas

[16] Mr. Colivas takes the position that there has been a substantial change in circumstances since Boswell J.’s order. His expert reports indicate that his income in 2014 was $258,000 and the 2014 financial statements of his investment corporation, Lucosta, reflect actual losses of $958,799. As of December 1, 2015 the total value of the Lucosta stock portfolio is $20,904.54, as compared to two years earlier when the book value of Lucosta stock was $2.8 million.

[17] Over the past 24 months, Lucosta has lost $674,122 in the stock market while paying out $480,000 in support to Mrs. Colivas. In 2014 Mr. Colivas liquidated the full amount of his cash account RRSP ($120,240) to make his support payments.

[18] His yearly expenses in fiscal 2014 were approximately $550,000. Of this amount, $240,000 was paid as support (spousal and child). After child care expenses, such as private school tuition and legal fees of $126,000 relating to this proceeding, he lives on approximately $150,000.

[19] Mr. Colivas states that it is not possible for him to sustain the support order until trial.

[20] He also takes the position that Boswell J.’s order was a “harsh rebuke” for his failure to make proper disclosure, and that this failure has now been cured. He takes the position that Justice Boswell’s decision should be treated as an “interim interim” order because that order was “made virtually by default, due to the lack of any reliable or timely financial information filed by [Mr. Colivas] at that time”. He states that the temporary order has “fulfilled its purpose” and induced complete disclosure.

[21] Finally, Mr. Colivas takes the position that Mrs. Colivas has done nothing to seek employment or become self-sufficient in the three years since that order. Her capital has increased by approximately $500,000 over the four years by virtue of the increased value of the matrimonial home, which is now worth more than $2 million. He argues that the increased value of the home should be attributed to her income at $125,000 per year.

[22] Mr. Colivas submits that spousal support should be calculated on the basis of his annual income of $258,000 and income of $125,000 imputed to Mrs. Colivas based on the tax-free appreciation of the matrimonial home.

Mrs. Colivas

[23] Mrs. Colivas takes the position that there has been no substantial change since Boswell J.’s order of January 12, 2013, and that any changes to the spousal support order at this stage should await the determination of the trial judge who will have the advantage of the full evidentiary record considered necessary by Boswell J.

[24] Mr. Colivas’ position is based exclusively on his 2014 income. Mrs. Colivas argues that evidence of his 2013 income (the year following Boswell J.’s decision) indicates that in 2013 Lucosta had revenue of $2.4 million and paid Mr. Colivas a tax-free capital dividend of $1 million. If this dividend is grossed-up it is worth approximately $1.8 million. On this income, Mr. Colivas’ child support alone would have been $20,000 per month. Accordingly, Mrs. Colivas takes the position that all adjustments to support should await the full assessment of the trial judge and not proceed in a piecemeal fashion a few months before trial.

[25] Mrs. Colivas points to the following information derived from Mr. Colivas’ disclosure:

a) In fiscal 2014 Lucosta had retained earnings of $1.2 million;

b) For the 10 month period ending September 30, 2015, Lucosta had revenue of $862,500, a net income of $591,382, and retained earnings of $1.85 million; a fiscal increase from fiscal 2014. Lucosta also paid Mr. Colivas a “management fee” of approximately $200,000;

c) In 2013 Mr. Colivas purchased a condominium in Miami for $400,000 and in 2015 he purchased a condominium in Greece for $320,000;

d) Mr. Colivas is in the same business - trading stocks - that he was in when Boswell J. issued his order in 2013. This is a volatile business;

e) Mr. Colivas continues to live an affluent lifestyle, travelling to Miami on a bi-weekly basis.

Analysis

[26] The jurisprudence relating to motions to vary a temporary or interim order for support indicates that there is a heavy onus on the party that seeks to vary such an order, and that it requires a prior finding of substantial change in circumstances since the previous temporary order was made. I am not a trial judge being asked to conduct a trial de novo to make a final support order, nor am I an appeal judge being asked to review the correctness of Boswell J.’s order. In Damaschin-Zamfirescu v. Damaschin-Zamfirescu, 2012 ONSC 6689, 2012 CarswellOnt 14841, Chappel J. summarized the law on a motion to change a temporary spousal support order as follows (at para. 20):

The test that applies on a Motion to vary a temporary spousal support order has evolved within the parameters of the general principle that parties in matrimonial proceedings should be encouraged to advance their case to trial as soon as possible. Using this foundational principle, the Ontario Court of Appeal determined in Lipson v. Lipson, 1972 CanLII 470 (ON CA), [1972] 3 O.R. 403-404 that proceedings to vary interim support orders should not be encouraged. It held that in order to succeed on a Motion to change a temporary spousal support order, a party must establish that there has been a substantial change in circumstances since the previous temporary order was made. Variation proceedings relating to temporary orders should not become the focus of the parties’ litigation. The onus on a party who seeks to vary a temporary spousal support order rather than waiting until trial is a heavy one. [Footnotes omitted]

[27] For further discussion on this topic, see also: Oxley v. Oxley, 2010 ONSC 1609, at para. 26; Biddle v. Biddle 2005 Carswell Ont. 731 at para. 18; Boissy v. Boissy, 2008 CanLII 35672 (ONSC) at para. 16.

[28] Firstly, I reject the argument that Justice Boswell’s order should be treated as an “interim interim” or “temporary temporary” order and therefore subject to a less onerous standard than the “substantial change in circumstances” test (Damaschin-Zamfirescu, at para. 22-23, and Oxley, at para. 27). Boswell J.’s analysis proceeded on the basis that he was making an interim order under s.15.2 (2) of the Divorce Act. There is no suggestion in his Reasons that he was treating this as an “interim interim” order, or that he “intended to cover an even shorter period than the time between the order and trial” (Oxley, at para. 27). Indeed, Boswell J. was quite clear that he intended his order to continue until the trial.

[29] In addition, a party cannot rely on his own failure to provide adequate disclosure to argue that the decision based on inadequate disclosure should be given less deference. Mr. Colivas’ disclosure is not a “substantial change in circumstances”, and he cannot ask for a “do-over” on a motion to vary because he has finally provided the relevant documents. My analysis on this point would be different if I had been persuaded that delays in proceeding to trial were the result of unnecessary or unreasonable conduct by Mrs. Colivas. As far as I can determine from previous endorsements, however, any delay has been the result Mr. Colivas’ failure to make full disclosure.

[30] As stated above, a review of cases dealing with motions to change interim or temporary spousal support orders indicates that they are subject to the “substantial change in circumstances” test. In contrast, cases dealing with motions to change final orders for spousal support under s.17 (1) and (4.1) of the Divorce Act use a “material change in circumstances” test (Hickey v. Princ, 2015 ONSC 5596, 127 O.R. (3d) 356, at para. 50). For a change to be “material” within the meaning of s. 17(10) (b) of the Divorce Act, it must be a change of circumstances that, “had they existed at the time…would likely have resulted in a different order” (Hickey, para. 49).

[31] Section 17 of the Divorce Act has been held to apply only to a “spousal support order” under s. 15.2(1) and not an interim order under s. 15.2(2) (Damaschin-Zamfirescu, at para. 18). Arguably the “substantial change” test is intended to be a stricter standard, although that may be more a matter of context than substance. Either way, the indicia of a “material change” are also relevant to whether something is a “substantial change”. For changes to be substantial they must also be material in the sense that “had they existed at the time…would likely have resulted in a different order”.

[32] In fixing spousal support at $16,848 per month, Justice Boswell indicated that he was not, for the purposes of spousal support, fixing any particular income to Mr. Colivas. He also recognized that his interim award “will require Mr. Colivas to encroach upon capital” (at para. 30). Accordingly, even assuming that Mr. Colivas’ income in 2014 was $258,000, and he was required to encroach on capital to pay spousal support, this does not amount to a substantial change in circumstances for the purposes of Boswell J.’s order. It appears to be exactly the circumstances Boswell J. relied on to make his order.

[33] I note that in his analysis Boswell J. indicated (at para. 29) that Mr. Colivas’ income appeared to be somewhere between a low of $111,000 (claimed by Mr. Colivas) and a ceiling of $560,000 (claimed by Mrs. Colivas). “The truth” Justice Boswell stated “in all likelihood, falls somewhere in the middle.” An annual income of $258,000 is consistent with this assumption.

[34] I also agree with Mrs. Colivas that the court should not consider 2014 and 2015 in isolation, without also considering 2013. That is why courts have encouraged parties to focus on the trial, where final determinations of all issues can be made at once. Otherwise the court would be “essentially replacing one imperfect solution with another imperfect solution” (Oxley, at para. 26).

[35] As indicated above, Boswell J.’s decision expressly recognized that the trial judge could “retroactively vary the allocation of child and spousal support once Mr. Colivas’ income is more accurately determined” and “re-characterize some portion of the spousal support payments made by Mr. Colivas pursuant to this order as transfers of capital, or an advance on an equalization payment, as the case may be, so as to fairly equalize the parties’ net family property and to address any issues of double dipping that the trial judge considers appropriate”(at para. 37). If the evidence presented by Mr. Colivas on this motion (which is disputed by Mrs. Colivas) is accepted by the trial judge, then these re-allocations may well be the result. That issue, however, should await the trial scheduled for May, 2016.

[36] Finally, I note that even if I were to accept Mr. Colivas’ position that he met his burden of proving a substantial change in circumstances, I would not accept his position that the increased value of the matrimonial home should be attributed to Mrs. Colivas’ income at $125,000 per year. No authority was provided to support such a position. Counsel’s argument in this regard was based on the “sauce for the goose is sauce for the gander” principle: if Mr. Colivas’ capital in Lucosta Investments Inc. is to be treated as a source of income, so too should Mrs. Colivas’ capital in the house. Boswell J.’s decision, however, was based on the conclusion that Mr. and Mrs. Colivas had a “significant history of utilizing a combination of income and capital to fund their lifestyle”. There is, in this regard, a significant difference between the capital in Lucosta Investments Inc. and the capital in a matrimonial home.

[37] Accordingly, the motion to vary is dismissed with costs. If the parties are unable to agree on costs, the applicant may provide her cost submissions within 30 days of these Reasons, and the respondent may provide his submissions 20 days thereafter. Submissions on costs are limited to three pages, plus bills of costs and any offers to settle.

Justice R.E. Charney

Released: January 28, 2016

[^1]: While the respondent’s Notice of Motion requests that spousal support be reduced to $7,000 per month, his factum requests that spousal support be reduced to not more than $4,280 per month commencing January 2016. It is not clear from the respondent’s material whether the factum is intended as an amendment to his Notice of Motion, or as an alternative.