CITATION: Dickson v. Wright, 2016 ONSC 833
COURT FILE NO.: FS-13-1769-00ML
DATE: 2016 02 03
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Linda Dickson and James Wright
BEFORE: Fragomeni, J.
COUNSEL: Jane Alexandra Connon, for Ms. Linda Dickson
William C. Fanjoy, for Mr. James Wright
HEARD: Leave to appeal in writing
E N D O R S E M E N T
[1] The appellant, James Wright, brings a motion for leave to appeal to the Divisional Court from the interlocutory order of the Honourable Mr. Justice David Price, dated September 4, 2015.
[2] The two aspects of Justice Price’s order that are the subject matter of appeal are the following:
Para 1: That James Wright shall pay temporary spousal support to Linda Dickson in the amount of $8,500.00 per month commencing June 1, 2015.
Para 4: That James Wright shall forthwith obtain and produce the valuation of his interest in Wright Instruments Limited from a Chartered Business Venture and shall, additionally, obtain a Chartered Income Valuator to obtain a valuation of his income since January 1, 2012 to the present, and provide proof to Linda Dickson’s counsel that he has done so. He shall bear the cost of the valuation, subject to re-apportionment by the trial judge.
[3] The appellant sets out the following grounds for the motion for leave to appeal:
The learned motions judge erred in making findings of fact;
The learned motions judge erred in making the temporary spousal support order in the amount of $8,500.00 per month based on an income that he does not currently earn. The learned motions judge used James Wright’s average income for the past three years of $294,019 to calculate spousal support instead of his most recent line 150 income of $150,381 for the year 2014.
The learned motions judge not give weight to the fact that James Wright’s company is in receivership and is in dire financial circumstances. The appellant and his employer, Wright Instruments Limited, are in serious financial debt and do not have the ability to meet the financial obligations imposed by the order.
The learned motions judge erred by ordering James Wright to produce a valuation of his income from a qualified income valuator in order to rebut the presumption of his income based on the three year average. He was not given an opportunity to provide further evidence to rebut this presumption. The applicant wife had not requested this relief in her Notice of Motion heard by Justice Price.
Test for Leave to Appeal
[4] The test for granting leave to appeal under Rule 62.02(4) is well-settled. It is recognized that leave should not be easily granted and the test to be met is a very strict one. There are two possible branches upon which leave may be granted. Both branches involve a two-part test and, in each case, both aspects of the two-part test must be met before leave may be granted.
[5] Under Rule 62.02(4)(a), the moving party must establish that there is a conflicting decision of another judge or court in Ontario or elsewhere (but not a lower level court) and that it is, in the opinion of the judge hearing the motion, “desirable that leave to appeal be granted.” A “conflicting decision” must be with respect to a matter of principle, not merely a situation in which a different result was reached in respect of particular facts: Comtrade Petroleum Inc. v. 490300 Ontario Ltd. (1992), 1992 7405 (ON SC), 7 O.R. (3d) 542 (Div. Ct.).
[6] Under Rule 62.02(4)(b), the moving party must establish that there is reason to doubt the correctness of the order in question and that the proposed appeal involves matters of such importance that leave to appeal should be granted. It is not necessary that the judge granting leave be satisfied that the decision in question was actually wrong – that aspect of the test is satisfied if the judge granting leave finds that the correctness of the order is open to “very serious debate”: Nazari v. OTIP/RAEO Insurance Co., 2003 40868 (ON SC), [2003] O.J. No. 3442 (S.C.J.); Ash v. Lloyd’s Corp. (1992), 1992 7652 (ON SC), 8 O.R. (3d) 282 (Gen. Div.). In addition, the moving party must demonstrate matters of importance that go beyond the interests of the immediate parties and involve questions of general or public importance relevant to the development of the law and administration of justice: Rankin v. McLeod, Young, Weir Ltd. (1986), 1986 2749 (ON SC), 57 O.R. (2d) 569 (H.C.J.); Greslik v. Ontario Legal Aid Plan (1988), 1988 4842 (ON SCDC), 65 O.R. (2d) 110 (Div. Ct.).
Reasons of Price, J.
[7] In order to give context to the discussion that follows I wish to refer to some of the reasons given by Justice Price with respect to the two orders that are the subject matter of this leave motion.
[8] At paragraph 13 of his reasons Justice Price sets out the position of the parties as follows:
Ms. Dickson submits that she is entitled to continued support based on Mr. Wright’s past income, on the grounds of her need for support and Mr. Wright’s presumptive ability to pay, based on his past income. Mr. Wright submits that he has demonstrated his current inability to pay spousal support by the financial disclosure he has made to this point and the fact that his company is seeking bankruptcy protection.
[9] Justice Price notes at paragraph 19 that the last year for which income is available for Mr. Wright is 2014 and his line 150 income for that year was $150,381. Mr. Wright’s line 150 income for previous years has been as follows:
$144,907 in 2009
$356,970 in 2010
$292,026 in 2011
$407,947 in 2012
$323,729 in 2013
$150,381 in 2014
[10] At paragraphs 22-25 Justice Price sets out the following:
Mr. Wright asserts that averaging his total income in the past three years would not be the fairest way of determining his income for the purpose of support because his income fell substantially from 2013 to 2014 (from $323,729 to $150,381) owing to the failing fortunes of his company, and he now calculates his income to be only $38,600.04. I reject this argument for the following reasons.
Mr. Wright has not made financial full disclosure. On August 13, 2013, he was ordered to provide a valuation of his business from a chartered business valuator. He has not done so. He has asserted that he has sought bankruptcy protection for his company but has not produced the documentation. He has not complied fully with the undertakings given at his examination on January 31 and February 18, 2014. In particular, he has not provided the information regarding the advertisements he has posted for a replacement technician, or a copy of his shareholder loan account. He has delivered an amended financial statement, sworn on June 24, 2015, but has not agreed to a date when he will attend to be cross-examined on this statement.
I draw an adverse inference from Mr. Wright’s failure to provide full disclosure. While it is fair to average his income over the past three years, to take account of the substantial drop in his income from 2013 to 2014, it would be unfair to Ms. Dickson to reject the average of his Line 150 income for the past three years in favour of the income he asserts to be his present income, which is less than half the income he has reported to the Canada Revenue Agency for any of the past six years, while he has failed to produce the full financial disclosure necessary to substantiate his reduced current income.
Mr. Wright’s presumptive income, based on method three as set out in the Child Support Guidelines, should prevail until he establishes that this would not be the fairest method, for reasons analogous to those set out in s. 19 of the Guidelines, after giving Ms. Dickson full financial disclosure, thereby enabling her to respond fully to his position. Mr. Wright has been ordered to produce a business valuation and has failed to do so. In the circumstances, he needs to produce a valuation of his income from a qualified income valuator in order to rebut the presumption of his income based on the average of his Line 150 income over the past three years for which he filed income tax return.
[11] After reviewing Ms. Dickson’s income status over the past three years Justice Price conducts an analysis of the amount of support payable. At paragraphs 37 and 38 Justice Price notes the following:
Taking Mr. Wright’s income based on his Line 150 income of $150,381 in 2014, and Ms. Dickson’s income of $47,233.96 for the same year, Mr. Wright’s spousal support obligation would range from a low of $3,223 to a high of $4,277, with a mid-point of $3,761.
In his financial statement dated June 24, 2015, Mr. Wright reports annual expenses of $169,190.16. However, it is apparent that he has deducted substantial personal expenses from his income by charging them to Wright Instruments Ltd. For example, he indicated in his questioning on January 31, 2014, that he operates a 2011 Frontier automobile that is owned by Wright Instruments (Q. 137 to 140), as well as a 1997 Subaru that he owns, the expenses of which are paid by the company and applied to Mr. Wright’s draw account (Q. 142 to 148). The company pays the insurance on these vehicles.
[12] Finally, at paragraph 45 Justice Price concludes his analysis with the following:
Based on the foregoing, Ms. Dickson’s total monthly expenses amount to approximately $8,560.74. This is slightly less than the $8,997 amount which is the mid-point of Mr. Wright’s spousal support obligation, based on his three year average income and Ms. Dickson’s most recent employment income. I find this to be an appropriate amount of temporary spousal support based on the limited financial information currently available from the parties.
Issue: Is there good reason to doubt the correctness of the Order
[13] On this issue the appellant refers the court to the decision of Cork v. Cork, 2014 ONSC 2488 (Ont S.C.J.) which sets out the following at paras. 8, 9, 15 and 38:
This was a long term marriage of almost 25 years.
The Husband was always the primary income earner for the family. Throughout the marriage he was employed in the financial services industry. At the time of separation and trial he was an investment counselor with ScotiaMcLeod. His average income between 2009 and 2013 was $478,878.00. In 2009 he earned a low of $358,980.93 and in 2013 he earned a high of $561,949.21.
There was a temporary order made on May 16, 2013 for spousal support in which the Husband was required to pay $18,361.00 per month of spousal support. In her endorsement Madam Justice M. Métivier made the following findings with respect to temporary spousal support (paras. 7-9 and 26-32):
In determining the husband’s income for calculation of child and spousal support, he raises an issue as to whether the current income should be used or an average of income over the last three years; whether child support should be less than the Family Child Support Guidelines, S.O.R./97-175 (“Guidelines”) amount because Mr. Cork earns more than $150,000 per year and if a cap of $350,000 should be used as a basis for the calculation of spousal support.
The husband’s argument for averaging his income is that his income fluctuates from year to year and so some years it might be lower. However, the trend over the last four years has merely been upwards and in my view this is not a proper case for averaging the incomes as set out in s. (17)(i) of the Guidelines. No factors exist that would justify a departure from the application of s. (16) which provides a starting point for the determination of income as “the sources of income set out under the heading “Total income” on the tax return. The objective is to determine the payor’s current income (Coghill v. Coghill (2006), 2006 28734 (ON SC), 30 R.F.L. (6th) 398 (Ont. Sup. Ct.); Howe v. Tremblay (2007), R.F.L. (6th) 140 (Ont. Sup. Ct.)).
The proper income for use in this case is the husband’s current income for 2012 which is $536,674.
I believe the Spousal Support Advisory Guidelines (“SSAG”) are a useful tool in assessing the temporary spousal support to be paid here.
Those SSAG do not impose a cap at $350,000 but state that for incomes over $350,000, the formula should not be “automatically” applied. Elgner v. Elgner (2009), 2009 68827 (ON SC), 85 R.F.L. (6th) 51 (Ont. Sup. Ct.), at para. 34.
I find the wife is entitled to temporary support. I have chosen the high end of the SSAG to assist at a time when Ms. Cork is unemployed and dealing with the economic fallout from the marriage breakdown.
The husband shall pay temporary spousal support as of May 1, 2013 which I set at the amount of $14,991 per month and this shall be retroactive to May 1, 2012. Arrears therefore exist for 13 months ($14,991 x 13) and are $194,883.
It was agreed by counsel that credit to Mr. Cork shall be given in the amount of $44,816 leaving a balance of $150,067 owing.
However, as of September 1, 2013 no further child support will be payable. I award a spousal support amount of $18,361 per month, which takes into account ongoing expenses to be paid by Mr. Cork for Julia and also reflects the fact that this is a temporary order.
This order for spousal support is without prejudice to a later determination of support, both child and spousal, from the date of separation to May 1, 2012.
In considering the factors set out above, I make the following findings regarding spousal support:
(a) Increases in the Husband’s income post separation are relevant to the determination of spousal support;
(b) Income of $40,000.00 shall be imputed to the Wife in calculating the quantum of support payable by the Husband from the date of trial;
(c) There shall be no reduction in the spousal support paid from the date of separation to the date of this order;
(d) The Husband`s income shall not be averaged when considering ongoing spousal support, rather it shall be considered each year based upon the income earned in that year and adjusted accordingly at the end of each year.
[14] The appellant also references the decision in Sheppard v. Perry, 2014 ONCJ 552. At paras. 10 – 13 the court states:
Section 15 of the Guidelines sets out how the income of the support payor is to be determined. Section 16 provides that the starting point is the line item “Total Income” (Line 150) in the payor’s tax return, adjusted under schedule III. That would indeed be $72,328.00. Section 17 (1) provides that where a court believes that the Section 16 calculation “would not be the fairest determination of that income”, the court may look to the last three years of the payor’s income to try and determine a fair amount. Here that would be years 2011, 2012, and 2013, because 2014 is not yet complete. The Guidelines do not restrict the discretion of the court in approaching section 17 (1), nor does the law require that the three years’ income be averaged although an average of those three years leads to an annual sum of about $65,600.00. The Applicant by his own evidence looks to a better year than that in 2014. There is no evidence as to whether the Applicant’s income is spread evenly over the calendar year as the employer’s production changes month to month or between model years.
Because the parties are very close on the issue of the Applicant’s annual income, and share custody, the actual difference in the amount paid between the Applicant’s calculation and that of the Respondent is about $60.00 per month.
Bak v. Dobell 2007 ONCA 304, [2007] O.J. 1489 (Ontario Court of Appeal) notes that the drafter’s decision to start with the presumptive Line 150 amount was intended to be a clear and easily accessed source of the payor’s income, with limited discretion given to the court to adjust that figure under section 17. In my view this is entirely in accordance with the overall aim of the Guidelines themselves: to provide a quick and relatively easy means to ascertain the amount of child support that a payor ought to pay based on gross income and the number of children. The Guidelines were never intended to be perfect, only fair and speedy. This intention favours a presumptive reliance on the section 16 default income determination.
The Applicant submits that the Line 150 income needs to be changed to reflect what his current October income suggests his 2014 year end income will be. By implication this would be the “fairest” determination of his income. As I have just observed however, the intent of the drafters of the Guidelines is simplicity and predictability. Essentially what the Applicant is asking me to do is to override the plain wording of section 16 because his income may not be as high this year as last. Annual income levels are rarely identical every year. I do not believe that section 17 is an invitation to the court to abandon the section 16 presumption every year based on a fairness assessment as this frustrates the presumptive reliance on section 16. Further, I do not believe that a difference of $15 dollars a week child support engenders a resort to a fairness analysis.
[15] The appellant also relies on Younghusband v. Younghusband, 2013 ONSC 6550 for the proposition that the 2014 line 150 income should have been used until such time as the income valuation ordered was done. In Younghusband the court stated the following at paras 38 and 39:
On the evidence before me, I am not prepared to determine child and spousal support on this motion on any income other than line 150 of the respondent's income as set out in section 16 of the Guidelines. As submitted by counsel for the applicant, the Ontario Court of Appeal in Bak v. Dobell, stated that income for support purposes is presumptively the payor's income as it appears on line 150 of his or her income tax return. The respondent has provided various documentation and tax calculations that he himself prepared with respect to his income and what he deems to be appropriate income for support purposes, but he has not provided any expert analysis in order to assist the Court with a determination of his income.
It is very difficult at this stage of the proceedings without the benefit of expert reports and cross-examination, to properly determine this issue. The best evidence before the Court at present is the respondent's Income Tax Return from 2012 which sets out the respondent's line 150 income as $217,007. I note that in previous years the respondent's income has been significantly higher and this may be attributable to the fact that a large part of the respondent's income is derived of commission income. There was no suggestion by the applicant's counsel that any income other than the respondent's line 150 income from 2012 should be used for the purposes of this motion. There was also no evidence from the respondent of a current income earned to the date of the hearing of the motion for the Court to consider.
[16] On this issue the appellant also submits that the temporary order impairs the financial survival of WIL and the appellant.
Issue: Should the proposed appeal involve matters of such importance that leave should be granted?
[17] The appellant points to three factors to support the general importance of the proposed appeal:
It would bring the administration of justice into disrepute if a court made a decision based on erroneous findings of fact;
It is incorrect to state that the method of averaging income is presumptive and;
It is inappropriate to make an order for relief that has not been sought by a party, namely that Mr. Wright obtain an income valuation. Ms. Dickson did not request this relief in her Notice of Motion.
[18] With respect to factor 1, I am not satisfied those concerns bring this matter to a level of general importance.
[19] Justice Price sets out in his reasons why he made the findings he did. Absent palpable and overriding error in his findings of fact on the evidentiary record before him, deference ought to be afforded to the motions judge.
[20] I am not satisfied in these circumstances that the first factor involves matters of importance that go beyond the interests of the immediate parties or involve questions of general or public importance.
[21] With respect to the second factor I am satisfied that the learned motions judge’s analysis relating to the averaging of income as opposed to using the most recent line 150 income is of general importance and leave ought to be granted on that issue. It is open to “very serious debate” whether the approach taken was correct.
[22] Section 16 of the Federal Child Support Guidelines states:
- 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.
[23] As set out in Bak v. Dobell, 2007 ONCA 304, [2007] O.J. No. 1489, income for support purposes is presumptively the payor’s income as it appears on line 150 of his income tax return. This restricts the definition of presumptive “income” to income that is subject to taxation.
[24] Section 17(1) of the Federal Child Support Guidelines states:
- (1) 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.
Non-recurring losses
(2) Where a spouse has incurred a non-recurring capital or business investment loss, the court may, if it is of the opinion that the determination of the spouse’s annual income under section 16 would not provide the fairest determination of the annual income, choose not to apply sections 6 and 7 of Schedule III, and adjust the amount of the loss, including related expenses and carrying charges and interest expenses, to arrive at such amount as the court considers appropriate.
[25] The presumptive income for support purposes is the payor’s income as it appears on line 150 of his income tax return. The onus is on the payor to justify any deviation from the s. 16 method of determining income, such as by averaging the last three years (see Fung v. Lin, 2001 28193 (ON SC), [2001] O.J. No. 456. In this case Mr. Wright was not asking that the Court deviate from the s. 16 method.
[26] Justice Price, however, determined that Mr. Wright’s presumptive income was based on the three year average. Justice Price stated:
“… he needs to produce a valuation of his income from a qualified income valuator in order to rebut the presumption of his income based on the average of his line 150 income over the past three years for which he filed income tax return.”
[27] I am satisfied that leave ought to be granted on this issue.
[28] With respect to the third factor I am also satisfied that it does rise to a level of general importance. The court cannot on its own initiative, without one of the parties requesting the relief, make an order that no one has asked for.
[29] In support of this proposition the appellant refers the court to the decision of Park v. Park, 2011 ONSC 4234 at paras. 28 – 30, which sets out the following:
It is self-evident that the order granted by the motions judge was vastly different and significantly more invasive than the order sought, as disclosed in the notice of motion. It cannot be said that the notice of motion served on the defendants gave meaningful notice to the defendants of the order that the plaintiffs stated that they would seek or of the order that the motions judge granted.
If the notice of motion had described the order sought in the same language as the order that was granted, the defendants would have had an opportunity to consider it and, if so inclined, to assert their opposition to it differently.
This decision by the trial judge, as well, reflects an error of law and fails to meet the requisite standard of review, correctness.
[30] In Sobeski v. Mamo, 2012 ONCA 560 (OCA) Armstrong, J.A. set out the following at paragraph 21:
Counsel for Mr. Mamo submitted that on his motion he did not seek the relief requested in para. 2, and therefore it should not be included in the formal order. The motion judge rejected this submission and, in supplementary reasons, stated at paras. 5, 6, 7 and 8 [[2011] O.J. No. 3684, 2011 ONSC 4814 (S.C.J.)]:
It is true that Mr. Mamo did not ask specifically for the relief that was granted to him. He did, however, to quote from his notice of motion, seek "Such other Order as this Honourable Court may deem just."
Rule 1.05 of the Rules of Civil Procedure provides that "when making an order under these rules, the court may impose such terms and give such directions as are just."
In my opinion, paragraph 2 of the draft order is both necessary and just for the fair resolution of the litigation, and, as I explain in my Reasons for Decision, this direction provides a means for Mr. Mamo to fulfill his professional obligations to Ms. Ionson, which I add include returning her property to her, and also defend himself in the litigation brought by Mr. Sobeski and also comply with the Rules of Civil Procedure.
Pursuant to the jurisdiction provided by rule 1.05, paragraph 2 is a direction that is just in the circumstances of this case.
[31] At paragraphs 36 – 38 Justice Armstrong deals with the issue relating to a motions judge granting relief that was not asked for as follows:
[36] The motion judge ordered that the documents should be returned to Ms. Sobeski as part of his plan to provide a means for Mr. Mamo to escape the dilemma of having to honour the deemed undertaking while, at the same time, having to disclose the documents in his affidavit of documents. The so-called "escape route" also provided Mr. Mamo with the possibility that he could bring a motion for production of the documents under rule 30.10.
[37] The return of the documents, as already noted, was not requested by Mr. Mamo in his notice of motion. Surprisingly, there was no cross-motion by Ms. Sobeski for the return of the documents. It was only when the motion judge devised the "escape route" that Ms. Sobeski, on the settlement of the order, sought an express provision for the return of the documents, which the motion judge granted. Counsel for Mr. Mamo, both [page639] before the motion judge and on this appeal, takes the position that the motion judge was not entitled to grant relief that was not asked for. He cites three cases of this court in support of that position: Kalkinis (Litigation Guardian of) v. Allstate Insurance Co. of Canada (1998), 1998 6879 (ON CA), 41 O.R. (3d) 528, [1998] O.J. No. 4466 (C.A.); Rodaro v. Royal Bank of Canada (2002), 2002 41834 (ON CA), 59 O.R. (3d) 74, [2002] O.J. No. 1365 (C.A.), at paras. 60-61; and Clarkson v. Lukovich, 1988 8776 (ON CA), [1988] O.J. 902, 14 R.F.L. (3d) 436 (C.A.).
[38] In my view, the motion judge was not entitled, of his own motion, to devise a remedy that was not requested by either party to this dispute. By doing so, the motion judge denied Mr. Mamo the fair opportunity to address that issue until the settlement of the order by way of written submissions, which in my view was too late: see 460635 Ontario Ltd. v. 1002953 Ontario Inc., 1999 789 (ON CA), [1999] O.J. No. 4071, 127 O.A.C. 48 (C.A.), at para. 9. I would therefore set aside the order requiring Mr. Mamo to return the documents in issue to Ms. Sobeski. However, in doing so I am mindful that Mr. Mamo's retainer has been terminated and the documents in issue are the property of Ms. Sobeski. I would therefore set aside the order of the motion judge, without prejudice to Ms. Sobeski's right to take the appropriate steps for the return of her documents, which to date she has not done, and without prejudice to Mr. Mamo's right to bring the appropriate motion under rule 30.10 for the production of the documents for the purpose of this action.
[32] I am satisfied therefore, that on this basis leave ought to be granted.
[33] Finally, I am not satisfied in all of the circumstances of this case that a stay of the order pending appeal is warranted. Justice Price made findings with respect to the husband not providing full disclosure. Although the husband disputes those findings the issue remains open to debate. Pending the hearing of the appeal the order shall remain in full force and effect.
Fragomeni J.
DATE: February 3, 2016
CITATION: Dickson v. Wright, 2016 ONSC 833
COURT FILE NO.: FS-13-1769-00ML
DATE: 2016 02 03
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Linda Dickson and James Wright
BEFORE: Fragomeni J.
COUNSEL: Jane Alexandra Connon, Counsel for Ms. Dickson
William C. Fanjoy, Counsel for Mr. Wright
ENDORSEMENT
FRAGOMENI J.
DATE: February 3, 2016