Lawrence v Lawrence, 2017 ONSC 431

BARRIE COURT FILE NO.: FC-13-526-00 DATE: 20170127

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Theresa Lawrence Applicant – and – Christopher Lawrence Respondent

Counsel: Carol A. Allen, Counsel for the Applicant Jodi L. Feldman/Jas Dhaliwal, Counsel for the Respondent

HEARD: November 21, 22, 23, 24, 25 and December 13, 2016

Reasons for Decision

JARVIS J.

1The trial in this matter involves custody, equalization of spouses’ net family properties and child and spousal support, retroactive and prospective. During the course of the trial, the parties resolved all matters relating to the parenting of their 11-year-old daughter, SL, and a final Order was made, as was a Divorce Order. The outstanding issues are financial.

2Notwithstanding their divorce, the applicant shall be referred to as “the wife” and the respondent as “the husband.”

3The wife claims that she is owed (a) $20,160.78 for an equalization payment, (b) $105,061.19 for retroactive child and spousal support from 2013 to 2015 and (c) on-going child and spousal support.

4The husband contends that if an equalization payment is owed to the wife it is no more than $5,517.88, and that there are no arrears of child and spousal support. He acknowledges his child support obligation. He maintains that the wife is not entitled to spousal support.

The Issues

5To be decided are the following:

(a) the amount of the equalization payment, if any, and by whom payable; (b) the parties’ qualifying incomes for support determination purposes; (c) the wife’s entitlement to spousal support and whether income should be imputed to her; (d) the amount of child support payable by the husband; (e) if the wife is entitled to spousal support, the amount payable by the husband; and (f) whether the husband owes retroactive child and spousal support.

Background Facts

6The parties met in 2003. The wife was working as a director of administration for a real estate developer. She earned about $55,000 a year. The husband was working odd jobs as a labourer. Before meeting the wife, he had an alcohol and drug abuse history but had been clean and sober since 2000. He also had custody of a three year old son, ML, from a prior relationship.

7At some point before they married, the parties began to cohabit in an apartment in which the husband and his son were living. Shortly before their marriage on July 25, 2004, the parties signed a Marriage Contract. It was dated July 24, 2004 and, in essence, provided for separate property regimes and waived the provisions of the Family Law Act, R.S.O. 1990, c. F.3 (“the Act”) that deal with equalizing spousal net family properties. The contract also contained modified spousal support releases dependent on employment loss as a result of pregnancy or childbirth. These provisions impliedly affirmed each party’s obligation to obtain employment: spousal support entitlement was reviewable if a party’s ability to work was compromised by the assumption of mutually agreed childcare responsibilities.

8The contract also dealt with a family trust settled by the husband’s parents, of which the father and his two older siblings were beneficiaries. He was recipient of (then) a non-taxable $6,000 monthly distribution. The husband’s interest in the trust was also excluded from any property and spousal support claims in the event of marriage breakdown. Financial disclosure was made by the parties before the contract was signed and reflected in sworn Schedules appended to it. Each party acknowledged receiving independent legal advice; their solicitors’ Certificates to that effect were attached. Experienced family law counsel were involved. The wife has not challenged the validity of the contract.

9Shortly after the marriage, the wife was laid off from her employment. The husband was then working more regularly as a contractor and, from time to time, the wife helped the husband in his work when able, even after discovering that she was pregnant with SL.

10SL was born November 14, 2005. After SL’s birth, the wife had some post-partum health issues. She assumed primary caregiving responsibility for SL and for ML, because that child’s mother was not actively involved from either a caregiving or financial standpoint.

11In August 2006, less than a year after SL was born, the parties moved their family to Calgary, Alberta. The husband was trying to break into the construction business. The parties bought a home using funds from their wedding and were able to finance its carrying costs and their living expenses from the husband’s monthly trust distributions and his work income. The husband renovated the home, and for about eight months the mother ran an unlicensed daycare from it to help pay the family’s expenses.

12The parties experienced marital and financial problems in Calgary. The wife did not like living there and the husband’s construction business was not prospering as hoped. The family accumulated significant debt. Adding to the family’s challenges was ML’s behaviour. He had been diagnosed with ADHD and this resulted in the wife being called often by ML’s school to remove him for disruptions.

13In August 2009 the parties sold their Calgary residence and returned to Ontario. They bought a home in Wasaga Beach because the family could not afford Toronto housing prices. The husband hoped to find work in the construction industry in the area but, as he soon discovered, there simply was not enough work to make ends meet. The family continued to struggle financially. The husband testified that he often asked the wife to find outside employment but that her response was that she already had a job-looking after their daughter, who had been diagnosed with a learning disability. The husband suspected that SL was dyslexic, like him.

14Unbeknownst to the wife the husband opened a line of credit and began using it to fund the family’s expenses. These included a nine month course in addiction counselling for which the husband enrolled at a local community college. He hoped to pursue this kind of work instead of construction. The line of credit was paying “for everything.” But, after graduating from the course, the husband discovered that he was not able to manage the amount of administrative work needed.

15By 2012, the husband realized that he had to explore other vocational options because he was not earning enough to support the family, even with his monthly trust income. He went to Alberta to obtain a truck-driver’s licence and after training was able to find employment driving for an oil company in Red Deer. He had sent what he earned to the wife after paying his living expenses. She also had the husband’s bank card to purchase groceries. The family’s housing costs were otherwise paid from the line of credit. In December 2012, the husband’s parents paid for a Caribbean cruise for the family after which the husband returned to Alberta.

16The parties first separated on or about February 15, 2013. The husband testified that ML had several days earlier called him and said that the wife was mistreating him. The husband quit his job and drove home. The wife was unaware of these events. When she returned home after SL’s school, she found a note from the husband informing her that he had taken ML with him to Ottawa where the husband’s older brother resided. According to the wife, there had been no prior discussion about the parties separating. No money was left in the family’s bank account, the wife was not working and her only source of income was her government Child Tax Benefit. She had no idea whether the mortgage was being paid (it was) and, shortly afterwards, the residence’s telephone and internet accounts were cancelled by the husband. Several weeks later, the husband returned with a trailer and removed his belongings. He also took the family automobile. The wife was left with no other means of personal transportation than a bicycle.

17In early March, the wife received a letter from a lawyer (Ms. Feldman). She had represented the husband when the parties’ Marriage Contract was made and had been retained to negotiate a separation agreement. She encouraged the wife to consult a lawyer.

18The wife retained Ms. Allen. The subsequent negotiations between the lawyers were unproductive and led the wife to starting these proceedings in mid-April 2013. A Case Conference was held on August 8, 2013. This resulted in Minutes of Settlement, the terms of which were incorporated into an Order of Olah J. This Order, among other things, provided for the husband’s access to SL at a local YMCA, ordered an assessment pursuant to section 30 the Children’s Law Reform Act, R.S.O. 1990, c. C.12, directed that the matrimonial home be sold and that, pending the completion of any sale, the wife have its exclusive possession. The husband was ordered to maintain in good standing the home’s mortgage, property taxes and interest-only payments on a secured line of credit.

19The following day, August 9, 2013, the Children’s Aid Society of the County of Simcoe (“the Society”) was informed by an Ontario Works family support worker, who was present at court on the previous day, that the court pleadings disclosed incidents of disturbing sexualized behaviour in the matrimonial home involving the husband. A Society investigation was started.

20The husband and ML began living at a nearby hotel. While the Society was arranging to interview them, the wife was exploring alternate shelter options for SL and her. But in the days after the Society’s interviews of the parties and the children, the husband and wife agreed to resume cohabitation. The Society’s records filed at trial indicate that both parties reported that they were trying to reconcile, although the wife disclaimed the accuracy of those records, testifying that she felt pressured by the husband. Even so, the parties sought out marriage counselling through their local church. The Society reported that the wife was less certain about what she had earlier reported about the husband’s sexualized behaviour and that she was no longer concerned about the children’s safety in the home.

21Marriage counselling was unsuccessful. On October 22, 2013, the wife took SL with her to a local shelter where they remained until subsidized housing could be found later the following month. The wife and SL lived in this housing until May 31, 2014.

22On December 12, 2013 McDermot J. made an Order based on Minutes of Settlement which replicated in several respects, and slightly expanded, the access terms of the Order made by Olah J. earlier in August. The husband was ordered to ensure that the children were supervised at all times while SL was in his care, and he was directed that SL was not to be left alone with ML.

23On January 17, 2014, Vallee J. ordered the husband to pay monthly child support of $825, based on the husband earning an income of $93,000 a year. Overnight access was ordered for SL and her father, and the supervision terms of McDermot J.’s Order continued. In addition, the provision in Olah J.’s Order for an assessment was vacated and an Order was made requesting the involvement of the Children’s Lawyer to undertake an investigation pursuant to Section 112 of the Courts of Justice Act, R.S.O. 1990, c. C.43. This appointment was accepted, but cancelled a few months later after the parties decided to attempt another reconciliation in May 2014. The wife and SL returned to the matrimonial home on June 1. The husband acknowledged at trial that he did not pay the support ordered.

24Reconciliation was unsuccessful. By November 2014, the parties were residing separately in the matrimonial home. While the parties’ evidence is unclear whether they finally separated for valuation date purposes on October 15, 2014 (which is what the wife contends) or sometime in November 2014 (which is what the husband contends), no issue of any financial importance is otherwise apparent, and so, November 1, 2014 will be the valuation date. The husband continued to pay all the expenses for the home.

25On November 12, 2015, Olah J. made a further interim Order reinstating, among other things, the $825 monthly support first ordered by Vallee J. in January 2014. This was based on Minutes of Settlement and specifically provided that “[t]he issue of retroactive support to be reserved, if any.”

26The wife resided in the upstairs area of the home with SL, and the husband lived in the basement, initially with ML, then ML later returned to sleep in his main floor bedroom. The husband bought a small refrigerator for the basement and a hot plate. The parties kept their distance in the kitchen, their food separate and their times encountering the other there few.

27The wife testified that from time to time she freelanced as a painter doing small jobs. This earned her very little, no more than about $3,000 a year, cash. She also received Child Tax Benefits. Her goal was to find work as a public school teaching assistant and for that reason she had taken a training course and was volunteering at SL’s school when she wasn’t painting. The husband had found work as a driver in the waste disposal business paying him about $55,000 a year with benefits.

28In October 2016, the husband and his siblings were informed that future trust distributions were being suspended indefinitely but that their parents would personally provide each of their three children with $5,000 a month for the next three months in order for them to forward plan their budgets accordingly.

29The evidence is not contradicted that only the husband managed the family’s financial affairs.

Law and Analysis

30Each of the issues will be separately reviewed.

(a) Property/Equalization

31No issue was raised by the wife about the validity of the parties’ Marriage Contract. It was primarily intended to shield the husband’s interest in his family’s trust and to otherwise preserve the parties’ equalization rights. In certain circumstances, trust funds distributed to the husband could become subject to equalization. This would happen where the funds were used to acquire “Domestic Assets”, a term unique to the parties’ contract but not a generally accepted legal term or concept.

32It is unclear from the contract why, apart from excluding the husband’s interests in the trust, the more limited definition of “Domestic Assets” was adopted since, in the end, the contract also adopted the Act’s definition of “net family property.” Together with the proceeds of sale from the Calgary property, distributions from the trust were used to help purchase the matrimonial home.

33Appended to the contract were sworn Schedules setting out each party’s income, assets and debts. The wife disclosed a $55,000 yearly income and a modest net worth of $2,452. The husband disclosed an $80,000 yearly income and a net worth of $32,000, consisting mostly of a RRSP.

34On the valuation date, the wife owned nothing of value: her net family property was zero. The husband disclosed a net family property of $11,035.76. This comprised his wholly-owned interest in the matrimonial home and a motorcycle less the mortgage, a home equity line of credit, credit card debt, notional disposition costs relating to the matrimonial home and his marriage date net worth. No value was attributed to the husband’s interest in the family trust.

35With three exceptions, the parties agreed about the value of the assets and debts comprising the husband’s net family property. Those exceptions were the value of a marriage date debt claimed by the husband, the value of the mortgage on the matrimonial home and the notional disposition rate to be applied to any realtor’s commission on the home’s sale.

Home Buyers Plan

36Before the parties met, the husband had owned a residence in which he and ML’s mother had lived. As a first time buyer, the husband had borrowed $20,000 from his RRSP. Despite reflecting the Home Buyers Plan as a $20,000 debt in Schedule ‘A’ to the 2004 Marriage Contract, the husband testified that his father had repaid this for him before the contract was signed. The husband also argued that even if the repayment obligation existed when the parties married, the husband would only have been responsible to repay the tax owed on the plan, not the amount actually borrowed. Neither on the evidence nor the law do these arguments succeed.

37Tendered in evidence were two notes dated July 5, 2000 and January 8, 2001 from Jones Collumbin Investment Counsel. These were sent to the husband by a Jaana Sousa. The first note identified “RRSP Account” as its subject and stated that it was enclosing a cheque from the husband’s father for deposit to the husband’s RRSP account. The husband was told that the cheque could also be applied towards repayment of the husband’s Home Buyers loan or towards part of that loan and a RRSP contribution. The second note was apparently in response to an inquiry by the husband about an RRSP withdrawal, which happened in 1998. It is unclear whether that related to the home purchase. In any event, the note informed the husband that Ms. Sousa no longer had those files in office and that the husband should contact Canada Revenue Agency. Ms. Sousa sent to the husband “a copy of a cheque which was deposited to your RRSP…”

38In J.B. v. D.M., 2014 ONSC 7410, Horkins J. accepted that a Home Buyers Plan debt corresponded to a party’s RRSP asset which reflected that debt as a receivable. In this, she noted that her treatment was consistent with Antemia v. Divito, 2010 ONSC 578 and Grassie v. Grassie, 2013 ONSC 1198. A more nuanced analysis would value the RRSP inclusive of the remaining payment obligation less that remaining payment obligation as a deduction and less a notional tax deduction for the gross value of the RRSP. [1] That analysis was not done in this case and there was no evidence as to the appropriate notional tax rate to be applied.

39Section 4 (3) of the Act mandates that the onus of proving a deduction is on the person claiming it. That onus captures the value of the Home Buyers loan on the parties’ marriage date as that forms part of the husband’s overall deductible net worth. It is the husband’s obligation to satisfy the court that the loan had no value, the effect of which would increase the value of his deduction and reduce his equalization payment exposure.

40The notes tendered in evidence go no farther than demonstrating that the husband’s father sent him money to invest as the husband wished, or to repay debt. Moreover, the husband’s evidence that the loan was repaid from funds given to him by his father is inconsistent with Schedule ‘A’ to the Marriage Contract made four years later, in which the husband swore that debt was owed. The husband’s lawyer then, as now, is the same.

41The husband’s claim that the Home Buyers Plan debt should be ignored in determining the value of his deductions on the marriage date is denied.

Matrimonial Home Disposition Costs

42The matrimonial home was appraised on March 12, 2015 as being worth $285,000. Notwithstanding the passage of time between then and trial, both parties were content with that value for the purpose of determining the husband’s net family property and the amount of the equalization payment owed. Where the parties differed was in the value of the mortgage debt on the valuation date and the notional disposition costs relating to a sale of the matrimonial home.

43A mortgage renewal statement for February 2015 filed by the husband disclosed an outstanding mortgage principal of $176,112.35. This was three months after the valuation date. The wife suggested a lower value but offered no evidence. Given that the monthly mortgage payments likely comprised principal and interest payments and that on the valuation date there would have been several principal payments made before February 2015, it is not unreasonable to conclude that the mortgage principal owed on the valuation date was $176,500.

44As for notional disposition costs relating to the sale of the matrimonial home claimed by the husband, the law is clear that those costs may be taken into account when determining spousal net family property, depending on the circumstances of a case and the asset involved: Sengmueller v. Sengmueller, 1994 ONCA 8711. The husband suggested a 4% notional disposition cost plus HST: the wife suggested 2%. He testified that given his debt load and the likelihood of his owing the wife something on account of an equalization payment, and possible support arrears, the home needed to be sold. The only reason why he and ML continued to live in the matrimonial home was because it was less expensive for the parties to continue residing there than one of them and a child residing elsewhere. He could not manage any more expense.

45The husband’s suggested rate is reasonable. Given that there will be an equalization payment owing to the wife, and taking into account the family’s financial circumstances, it is probable that the home will need to be sold. Since any realtor commission will likely be closer to the husband’s figure than that of the wife, a notional commission rate of 4% calculated on a value of $285,000 plus HST shall be applied.

46Schedule ‘A’ attached to these Reasons sets out the parties’ net family properties.

47The husband shall pay to the wife as and for an equalization payment the sum of $13,680.

(b) Income

48Two issues arose with respect to the parties’ incomes, the first more contentious than the other.

49The principal income dispute between the parties involved the wife’s income – in particular, whether income should be imputed to her and, if so, its amount over the 2013 to 2016 period, and on a going forward basis.

50The statutory objectives of spousal support are set out in the Divorce Act, R.S.C. 1985 c. 3 (2nd Supp). Also relevant are the imputing income provisions of the Federal Child Support Guidelines, SOR/97-115 (“the Guidelines”).

51Section 15.2(6) of the Divorce Act sets out the objectives of a spousal support Order,

Objectives of spousal support order

(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should

(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; (b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage; (c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and (d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

52No objective is more important than any of the others although, depending on the facts of a case, each may be weighed differently. Where children are involved, there is an evidentiary overlap with the imputing income provisions of the Guidelines:

19. (1) The court may impute such amount of income to a parent or spouse as it considers appropriate in the circumstances, which circumstances include,

(a) the parent or spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse.

53The husband contended that the wife refused to actively consider employment outside of the home long before the parties separated and that her efforts to earn an income after separation were inadequate. She purposely remained under-employed or unemployed in order to create a status quo that never existed, or should not have existed anyway. She had a statutory, and contractual, self-sufficiency duty. There should be imputed to her an income of $25,000 a year.

54In Zigris v. Foustanellas, 2016 ONSC 7528, Shelston J. summarized the principles guiding any analysis for imputing income,

31The Court of Appeal in Drygala v. Pauli (2002), 61 O.R. (3d) 771 (C.A.), at para. 23, set out a three-part test for determining whether income should be imputed on the basis of intentional under-employment or unemployment as follows:

1. Is the spouse intentionally under-employed or unemployed?
2. If so, is the intentional under-employment or unemployment required by virtue of his reasonable educational needs?
3. If the answer to question #2 is negative, what income is appropriately imputed in the circumstances?

32A spouse is intentionally under-employed if he or she chooses to earn less than he or she is capable of earning having regard to all of the circumstances (Drygala, at para. 28). There is no requirement that the under-employment or unemployment be undertaken in bad faith or with the intention of avoiding support payments (Drygala, at paras. 29-36).

33The onus is on the party seeking to impute income to establish an evidentiary basis that the other party is intentionally under-employed or unemployed (Homsi v. Zaya, 2009 ONCA 322, 65 R.F.L. (6th) 17, at para. 28).

Step one

34When considering the spouse’s capacity to earn income, the court should consider, among others, the following principles:

(a) There is a duty on the spouse to “actively seek out reasonable employment opportunities that will maximize their income potential so as to meet the needs of their children” (Thompson v. Thompson, 2014 ONSC 5500, at para. 99); (b) A spouse’s capacity to earn income can be influenced by his or her age, education, health, work history, and the availability of work that is within the scope of his or her capabilities (Marquez v. Zaipola, 2013 BCCA 433, 344 B.C.A.C. 133, at para. 37);

Step two

35The second step of the Drygala test is generally treated as an overall test of reasonableness. In Jackson v. Mayerle, 2016 ONSC 72, at para. 702, the court held that:

Once intentional underemployment is established, the onus shifts to how one of the exceptions of reasonableness.

36Justice Pazaratz notes in Jackson v. Mayerle, at para. 715:

Parents are required to act responsibly when making financial decisions that may affect the level of child support available. They must not arrange their financial affairs so as to prefer their own interests over those of their children.

Step three

37Where the spouse is intentionally and unreasonably under-employed or unemployed, the court has a large range of discretion to impute as income an amount founded on a rational basis, as detailed in the Court of Appeal case of D.D. v. H.D., 2015 ONCA 409, 335 O.A.C. 376.

38The main factors a court should consider are the age, education, skills, and health of the spouse, along with the number of hours that can be worked in light of competing obligations and the hourly rate the spouse could reasonably obtain (Drygala, at para. 45).

55The wife was 39 years old when the parties met. While there was no evidence about her work history before then, she appears to have enjoyed a position of some responsibility as an office administrator when the parties married even though she had no post-secondary degrees or certificates. Apart from an eight month stint operating a daycare from the parties’ Calgary home, some clerical and light physical work helping the husband in his business from time to time, a short-time bookkeeping job for an accounting firm and selling timeshare units for a local resort, she worked very little outside the home before the parties’ first separation in February 2013. She was 48 years old. There was no evidence that the wife had health issues that would have affected her employability.

56Although the evidence is unsatisfactory, it appears that after February 2013 the wife did some small painting jobs. In 2015, she drove a school bus. She also upgraded her qualifications by taking an online course to become a teaching assistant and was volunteering as an unpaid intern in that role at SL’s school in the hope of being offered employment by the school board.

57The law is clear that a support claimant must make a reasonable effort to explore employment opportunities when a relationship ends, particularly where a child is involved. In this case, the wife was well aware before February 2013 that the family was struggling financially. She certainly knew afterwards that she had to earn money to help support SL and her. Viewed in its entirety, the wife’s evidence in this case falls short of persuading the court that her efforts were reasonable, or even responsible. Volunteering at SL’s school in the absence of a future hiring commitment was unreasonable.

58Even should this view about whether the wife was intentionally under-employed or unemployed be wrong, though, the husband’s effort to impute a $25,000 income to the wife must fail. In Zigris, as in Drygala and Jackson, there was an evidentiary basis supporting the court’s decision to impute income. In D.D., at para. 101, the Court of Appeal affirmed that a bald assertion about a spouse’s employability and level of possible income were “insufficient to meet the legal test for imputation of income.” In that case, the Court pointed to its earlier admonition in Drygala (at para. 45 of that decision) that “[t]here must be a rational basis for the amount selected and it must be grounded in evidence” (at para. 101). There was no rational, evidentiary basis made out in this case. Unlike in Zigris, there was no evidence of employment postings for a person having the wife’s modest skillset and no evidence about hourly wage rates or ranges. There was also no evidence about when, if ever, the wife might be offered a teaching assistant position or, if that were to happen, what she might reasonably be expected to earn.

59In Whalen-Byrne v. Byrne, 2016 ONSC 1172, another case upon which the husband relies, the wife had a diploma in Chemical Pharmaceutical analysis. In Zigris, the wife had been qualified, and had worked, as a medical lab assistant. In Jackson, at para. 716, the court observed that the wife was, by her own evidence, a “…talented, well-educated person with an excellent employment history and marketable skills.” None of these attributes applies to the wife in this case. The husband did not speculate as to what work the wife might realistically be expected to do now, or in the foreseeable future, beyond her occasional painting and unpaid teaching assistant duties. The wife’s evidence was unhelpful.

60Beyond the modest income of about $3,000 earned in each of 2015 and 2016, and as otherwise disclosed in her Income Tax Returns for the 2013 to 2016 period, it is too speculative to select an income to be imputed to the wife for those years. All this court can do given the unsatisfactory state of the evidentiary record is to average the wife’s income for the years for which she is claiming retroactive support. Her failure to have acted more reasonably in complying with her statutory and contractual duty to become more economically self-sufficient and to maximize her income potential will be taken into account when considering her retroactive spousal support claim.

61The less contentious income issue involved the husband’s income from the family trust.

62Susan Maynard was called as a witness by the husband. She is a partner with Collins Barrow, a national association of chartered accounting firms. Ms. Maynard specializes in consulting and tax advice to entrepreneurial and private company clients. In this capacity, she became involved with the husband’s parents around 2006 and took over responsibility for handling their accounting and tax preparation needs. One of her responsibilities has involved a family trust established by the husband’s parents before he and the wife married. That trust was funded from the proceeds of sale of an auction business owned by the husband’s parents. The husband and his siblings are discretionary beneficiaries of that trust.

63The trust assets comprise interests in two corporations: (a) a holding company owned by the husband’s mother and a spousal trust and (b) a management company itself owned by the holding company and the trust. The evidence was unchallenged that the husband was at no time an officer, director or shareholder of either of the companies.

64Prior to 2012, the husband and his siblings each received monthly distributions from the trust funded through the holding company’s paid-up capital dividend account, although not always in equal amounts. These distributions were not taxable in the recipient’s hands. From 2009 to 2011, the monthly amount paid to the husband was $6,000.

65In 2012, the distributions were comprised of funds from the paid up capital dividend account and dividends. In 2013, the trustees decided that, as the capital dividend account had been exhausted, future distributions were to comprise dividends taxable in the recipient’s hands. Ms. Maynard said that the trustees also decided that it was necessary to reduce monthly distributions to $5,000 because the trust was distributing more than was being earned. This was done to conserve the trust’s assets and to maintain as near as possible the same level of monthly distributions.

66In 2014 and 2015, the husband received dividend income of $5,000 monthly, or $60,000 each year from the trust. This continued into late 2016.

67Ms. Maynard testified that the largest asset of the trust was a $3,000,000 life insurance policy payable on the last to die of the husband’s parents, both elderly. The annual premium cost in excess of $42,000 a year and was being paid by the trust. As of December 31, 2015, the trust assets had been reduced to $224,000, and it appeared likely that there would be insufficient funds to maintain both the premium payments and monthly trust distributions within a matter of a few years. Consequently, the trustees decided in late 2016 to suspend all future distributions, effective November 2016. The parents informed their children that they would personally send them $5,000 each for a period of three months to allow them to budget their affairs accordingly. There was no evidence, nor any suggestion, that the trustees’ management of the trust’s affairs was improvident or in any was influenced by this litigation.

68In Marrello v. Marrello, 2016 ONSC 835, Matheson J. imputed income to a party in circumstances where that party’s parents regularly gifted money to pay the party’s living expenses. It is a reasonable inference that the husband’s parents in this case intended the same in transitioning the husband and his siblings from their reliance on distributions from the trust to themselves. Accordingly, there will be added to the husband’s qualifying income for support purposes the sum of $5,000 for the months of November and December 2016 and for January 2017.

69The husband testified that his work requires him to leave very early each morning, anywhere between 5:30 a.m. to 6:30 a.m., depending on the season. 11 hour work days are common. His employer monitors employee time – the husband works overtime whenever possible.

70There was no evidence that the husband’s employment income will materially change in the future from what he was earning at trial ($55,686 per year). Considering his estimated 2016 earned income of $55,586, the $10,000 from his parents for November and December 2016 and his final receipt in January 2017 of $5,000 from them, the husband’s estimated annual income as of January 1, 2017 is $63,974 (the $5,000 being grossed up for tax equivalency purposes). This results in a monthly child support obligation for one child of $583.

71Taking the foregoing and the wife’s modest painting income into account, the chart below sets out the parties’ qualifying incomes for the 2013 to 2016 period (Schedule ‘B’ to these Reasons details how the parties’ incomes were calculated):

YEAR	WIFE’S INCOME	HUSBAND’S INCOME
2013	$4,530	$119,319
2014	$6,601	$125,280
2015	$7,674	$130,216
2016	$6,268 (2013-2015 average)	$111,490
2017	$6,268	$63,974

(c) Child Support

72The Guidelines’ table presumes that housing, food and related expenses payable by one parent to the other for a child are captured in the amount of support listed. Even though, the parties continue to reside in the same premises and the husband funds all of its expenses, the amount of Guideline support otherwise payable is unchanged unless the wife earns more than $10,800 a year, which is unlikely at this time.

73The basic monthly amount payable for a payor earning $63,794 for one child is $583. Accordingly, the husband shall pay to the wife child support for SL in the amount of $583 a month, starting January 1, 2017. The husband shall be given credit for any payments made in excess of that amount pursuant to the temporary Order of this court from and after January 1. These payments shall continue until varied.

(d) Spousal Support

74Paragraph 9 of the Marriage Contract deals with spousal support.

Support upon breakdown of Marriage

(1) Each party acknowledges that as of the effective date of this Contract, he or she is financially self-sufficient. (2) The parties intend that each of them will remain financially self-sufficient throughout the marriage. (3) Each party acknowledges his or her continuing obligation to be self-supporting to be the extent of his or her ability upon the breakdown of the marriage. (4) Neither party will have the right to receive spousal support from the other party or other’s estate, or be under any obligation to provide spousal support to the other personally or by his or her estate, upon the Breakdown of the Marriage and each party hereby:

(a) releases the other from all obligations to provide spousal support interim spousal support, maintenance or interim alimony pursuant to the Family Law Act or the Divorce Act; and (b) releases all rights to claim or obtain spousal support, interim spousal support, maintenance or interim alimony pursuant to Family Law Act or Divorce Act, from the other.

(5) Notwithstanding sub-paragraph (4) above (sic), in the event that one party dies while parties are married to one another and living together as spouses, the surviving spouse shall have such rights to receive financial support from the deceased spouses’ estate, as are provided under the Succession Law Reform Act and any other successor legislation. (6) The parties realize that their respective financial circumstances may change in future by reason of their health, cost of living, their employment, or otherwise. No change even a catastrophic, drastic, material profound or radical one, whether foresee or unforeseen, and whether or not the change is casually related to the marriage and whether or not such change arises from a pattern of economic dependency related to the marriage, will give either party the right to claim Spousal Support from the other. (7) In the event that Theresa and Chris have children together they agree that:

(i) If Teresa becomes unemployed as a result of pregnancy or childbirth, Chris, shall to the extent possible fully support the household until Theresa obtains employment; (j) If Chris becomes unemployed as a result of carrying out child rearing obligations, with Theresa’s consent then Theresa shall to the extent possible, fully support the household until Chris obtains employment; (k) Neither Party shall have the right to support during the marriage as a result of staying home with the children of their marriage, unless this is decision is undertaken with the consent of both parties; (l) If there is a breakdown of the marriage, and there are children of marriage and either party’s employment is interrupted by his or her withdrawal from the employment to care for any such child, then the parties agree that the issue of spousal support shall be reviewed having regard to the circumstances existing at that time. If the parties are unable to reach an agreement, then the dispute will be resolved in accordance with paragraph 20 of this agreement entitled Resolution of Disputes.

75Domestic contracts which try to link spousal support entitlement to family planning must be approached with caution, and with a healthy degree of skepticism that the object desired will ever be realized. In this case, the impetus for the parties’ Marriage Contract was the protection of the husband’s interest in the family trust created by his parents. Given the parties’ conduct after they married, it is highly probable that neither of them gave paragraph 9 of their contract any thought until after they first separated, if then. The wife testified that she “never really read” the contract: the husband testified that he never discussed it with the wife after it was signed. What they dispute is not so much the wife’s entitlement in principle to spousal support, but whether she made any meaningful effort after separation to comply with her contractual and statutory obligation to become financially self-sufficient.

76The husband maintains that, at the very least, his consent to the wife staying at home to care for SL was revoked when the child began attending school on a full-time basis. While that consent was implicitly renewed when the husband went to Alberta and the wife remained in Wasaga Beach to care for SL and ML, the wife must have reasonably expected that she had to seek out employment after February 2013.

77Neither party governed their affairs after they married mindful of the spousal support provisions of their contract. It was the wife, not the husband, who assumed the major, and often exclusive, responsibility for raising both children. He exclusively managed the family’s finances. There is no doubt that the parties’ relationship was financially interdependent. The wife is entitled to spousal support. Her three-year average income is $6,268.

78As observed by the Court of Appeal in Fisher v Fisher, 2008 ONCA 11, at para. 94, the objective of the Spousal Support Advisory Guidelines (July 2008), (“SSAG”) is “to bring certainty and predictability to spousal support awards under the Divorce Act” employing “an income-sharing model of support.” The ranges are suggestions, departure from which is permissible on a principled basis.

79This is a case where departure from the SSAG range is warranted. The suggested range of spousal support for a payor earning $63,974 a year with one child in the recipient’s custody is between $1,048 to $1,416, with $1,224 being the midpoint (see Schedule ‘B’ to these Reasons). This overlooks, however, the facts that the parties are sharing the same residence, the husband is solely paying the residence’s expenses and the husband is the only support of ML, a child whom the wife acknowledged in her evidence was like a son to her – until he wasn’t – after the parties separated.

80Viewed in their entirety, this family’s financial circumstances are grim. While the husband must accept most of the responsibility for this development, ordering him to pay much more than the $825 which was ordered by Olah J., and which he has done since November 2015, would jeopardize his ability to retain the matrimonial home and its expenses pending its sale. Accordingly, he shall pay to the wife effective January 1, 2017 and on the first day of each succeeding month until such time as the home is sold or otherwise varied as set out below, the sum of $500. This will be tax-deductible to the husband and included by the wife when reporting their respective 2017 incomes for tax purposes. Combining the tax deductibility of the spousal support and the lower child support should result in each party having a greater net disposable income than with the amount currently being paid under the temporary support Order, none of which is tax deductible.

Retroactive Support Claims

81Given the wife’s demonstrated knowledge of the financial circumstances of the family, and particularly those of the husband, there is a perplexing air of unreality to her claim for over $105,000 in retroactive child and spousal support. Neither in her evidence nor in argument did she suggest from where the husband would find this amount of money or, if not found but ordered anyway, how he could realistically pay anything on their account and still support ML, himself and contribute to the support of SL and the wife on his income.

82There is a qualitative difference between child support and spousal support which is reflected in the authorities, especially when dealing with retroactive support. The former is the right of the child, and unreasonable delay in enforcing that obligation is merely a factor to consider in the exercise of the court’s discretion: D.B.S. v S.R.G, 2006 SCC 37, at para. 104. There is no automatic entitlement to the latter. Retroactive spousal support claims require a more principled assessment of the evidence in light of the differences underpinning child and spousal support principles and objectives: Kerr v. Baranow, 2011 SCC 10, at para. 207.

83The important facts in this case relevant to the wife’s retroactivity claim are as follows:

(a) all of the expenses of the matrimonial home have been paid by the husband since the parties first separated in February 2013; (b) despite starting her Application in April 2013, the wife never brought a formal motion for support. That issue was raised as part of the Case Conference process which resulted in the motion heard by Vallee J. who noted that child support was requested. There is no record of the wife ever bringing a motion for spousal support; (c) the husband never complied with the $825 monthly child support Order made by Vallee J. on January 17, 2014 before he and the wife resumed cohabitation at the end of May 2014 in an effort to reconcile. He earned $119,000 in 2013; (d) Vallee J.’s support Order was reinstituted in November 2015 at a Settlement Conference, on consent. The husband has complied with that Order; (e) there is no evidence, no suggestion in fact, that the debt incurred by the husband was used to fund expenses not related to the family or which solely benefitted him to the family’s exclusion or prejudice. The husband acknowledged in cross-examination that he had no ability to manage money; (f) the evidence of the wife’s efforts to achieve some measure of self-sufficiency was unsatisfactory, especially after she returned to the matrimonial home in mid-2014. While the wife did assume the primary caregiving responsibility for SL, that child was in full-time attendance at school. She hoped that the school board might hire her as a teaching assistant. There was no evidence about how realistic that hope was. There was no evidence about the board’s future needs. It was also unclear whether the wife had any idea of what a teaching assistant might earn; (g) there was no evidence or, again, any suggestion that the husband had any current ability or prospects to pay any amount of retroactive support remotely close to what the wife was seeking; and (h) there was evidence that the husband might benefit from the proceeds of the life insurance policy owned by the family trust but that depended on the trust’s future ability to fund the annual premium costs in excess of $44,670 a year in circumstances where the trust had less than $224,000 in assets as of December 31, 2015. Both of the husband’s parents, although elderly, were living at the time of trial;

84In Bremer v. Bremer, 2005 ONCA 3938, at para. 9, the Court of Appeal identified the relevant considerations governing an award of retroactive spousal support.

The considerations governing an award of retroactive spousal support include: i) the extent to which the claimant established past need (including any requirement to encroach on capital) and the payor’s ability to pay; ii) the underlying basis for the ongoing support obligation; iii) the requirement that there be a reason for awarding retroactive support; iv) the impact of a retroactive award on the payor and, in particular, whether a retroactive order will create an undue burden on the payor or effect a redistribution of capital; v) the presence of blameworthy conduct on the part of the payor such as incomplete or misleading financial disclosure; vi) notice of an intention to seek support and negotiations to that end; vii) delay in proceeding and any explanation for the delay; and viii) the appropriateness of a retroactive order pre-dating the date on which the application for divorce was issued: see Horner v. Horner, 2004 ONCA 34381; Marinangeli v. Marinangeli (2003), 2003 ONCA 27673, 66 O.R. (3d) 40 (C.A.) and Price v. Price, [2002] O.J. No. 2386 (C.A.).

85In Dufour v. Dufour, 2014 ONSC 166, Cornell J. denied a wife’s claim for retroactive spousal support even where the husband had failed to make timely financial disclosure because the husband’s circumstances were modest and he did not have, nor likely would he ever have, the ability to pay the award. The husband in that case was considerably older than the husband in this case.

86Viewing the evidence in its entirety, it is difficult to dispel the notion that this family was financially dysfunctional soon after the parties married and the wife lost her employment. Uncritical reliance on regular distributions from the family trust fostered a sense of financial security which masked the husband’s inability to both manage his and his family’s financial affairs and consistently pursue a more stable, remunerative vocation. The wife was well aware of the parties’ financial struggles before they returned to Ontario in 2009, and afterwards. While the husband took out a line of credit to help pay the family’s expenses without telling her, a regrettable but not malicious failure on his part, the wife must bear some responsibility for failing to become more proactively engaged in the family’s finances. Requiring the husband to pay retroactive support in the circumstances of this case would create undue financial hardship: the husband has neither the income nor the assets.

87Except for the husband’s failure to comply with the $825 monthly child support Order made by Vallee J. in January 2014 for the period from January to May 2014, the wife’s claim for retroactive child and spousal support is dismissed. That Order was, however, based on the husband earning a $93,000 income whereas, as shown in Schedule ‘B’ to these Reasons, it was $119,319 in 2013. The Guidelines mandate a $1,032 monthly payment for a payor earning that income. Where a payor’s actual income for a year is known, it is that amount that should be used to determine what should have been paid: Vanos v. Vanos, 2010 ONCA 876, at para. 14. Therefore, the husband will pay to the wife for the January to May 2014 period the sum of $5,160 for child support (i.e. 5 x $1,032). Court Orders are not suggestions.

Disposition

88The following Order shall issue:

1. The husband shall pay to the wife as and for an equalization of spousal net family properties the sum of $13,680 on the earlier of the completion date of any sale of the matrimonial home or July 31, 2017. Interest at the post-judgment rate prescribed by the Courts of Justice Act, R.S.O. 1990, c. C.43 (“the CJA”) shall only accrue from the date of default of payment.
2. The husband shall pay to the wife for child support the sum of $583 monthly. This is the amount payable pursuant to the Federal Child Support Guidelines, SOR/97-115 (the “Guidelines”) based on a payor earning $63,974 a year.
3. The husband shall pay to the wife for spousal support the sum of $500 monthly.
4. The child and spousal support payable by the husband shall be payable effective January 1, 2017 and shall be payable on the first day of each month afterwards until varied.
5. The husband shall be entitled to a credit for support paid in 2017 prior to the date of these Reasons.
6. The husband shall pay to the wife the adjusted amount of $5,160 for the child support not paid by him pursuant to the Order of Vallee J., with interest calculated at the post-judgment rate prescribed by the CJA in effect on the earlier of the completion date of the sale of the matrimonial home or July 31, 2017.
7. Provided that the husband had complied with his January 2017 payment obligation pursuant to the temporary support Order of Olah J., there are no arrears of support owed as of December 31, 2016.
8. The husband’s payment obligations pursuant to subparagraphs (1), (2), (3) and (5) above shall be a first charge on the net proceeds of sale of the matrimonial home, and shall survive any deficiency in the proceeds otherwise required to fully satisfy those obligations. Outstanding child and spousal support obligations (if any, apart from (f) above) shall be paid in priority to the equalization payment,
9. The child support amount shall be varied on July 1 of each year starting July 1, 2018.
10. The amount for spousal support may be reviewed by the wife taking into account the Spousal Support Advisory Guidelines (“SSAG”) on the earlier of the completion date of the sale of the matrimonial home or July 1, 2017.
11. Excepting SL’s YMCA or equivalent costs, the parties shall contribute to SL’s special or extraordinary expenses as set out in section 7 of the Guidelines in accordance with their incomes. For 2017 and until varied in 2018 or earlier depending on any review of the wife’s spousal support before July 1, 2018, the wife’s shall contribute 18% to those expenses and the husband shall contribute 82%.
12. SL’s YMCA or equivalent costs not to exceed in any calendar year the sum of $750 shall be paid by the husband without contribution from the wife.
13. Neither party shall incur an expense for the child for which a contribution will be sought from the other parent without the written consent of the other parent being obtained in advance.
14. The husband shall maintain extended medical and health coverage for SL as long as coverage is available through his employment and the child is eligible for support. This obligation shall extend to the wife but only if she otherwise remains eligible for coverage pursuant to the policy terms in light of the parties’ divorce.
15. The husband shall designate the wife as trustee for herself and SL as beneficiaries of any policy of life insurance available to him through his employment, and any successor employment if available as a benefit of that employment, in an amount equal to 2/3 of the amount payable and shall, within 45 days of the date of release of these Reasons or any change of employment in future, provide to the wife satisfactory proof of this designation. This obligation shall be a first charge on the husband’s estate. The rights of SL and wife shall survive the death of the husband if there remains a support obligation owing at that time and no policy of insurance is in effect or the proceeds are insufficient to adequately provide for the support of SL and/or the wife.
16. No later than June 30 of every year, commencing June 30, 2017 and for so long as the family trust has not been wound up, the husband shall provide to the wife a complete copy of the Financial Statement for the Lawrence Family Trust.

89The amount of spousal support set out in subparagraph [88] (3) is lower than the SSAG range because it is intended to maintain the family's financial status quo pending sale of the matrimonial home, which is what the husband proposed. The completion of that sale is when the wife's support claim shall be reviewed. This outcome is due to the unsatisfactory state of the parties’ evidence about the wife's gainful employability and reasonable earnings expectations. It is noteworthy that the wife failed to provide an updated financial statement for trial contrary to the Rules, or a proposed budget. Her testimony about where she proposed to reside once the matrimonial home was sold and her expenses was vague and left the court with the impression that she had given this important subject practically no thought. It would be substantially and procedurally unfair to both parties, particularly the wife, to determine the issue of her future support based on the party's trial evidence or to have that issue reviewed by another court. Therefore, the Order shall provide that the amount of spousal support payable shall be reviewed by me before August 31, 2017 on a date to be scheduled by the trial coordinator. By then the matrimonial home should have been sold and the husband’s debts extinguished. The provisions of subparagraphs [88] (1) and (8) are predicated on that expectation.

90The parties shall arrange a teleconference for directions with the trial coordinator. This teleconference is to be held not less than 21 days before the earlier of the completion date of any sale of the matrimonial home or June 2, 2017.

91A Support Deduction Order shall issue.

92Costs of the proceedings are reserved for disposition after the issue of spousal support has been determined in accordance with paragraphs [89] and [90] above.

Date: January 27, 2017 Justice D.A. Jarvis

Schedules

Schedule ‘A’

NFP Statement

1. Valuation Date Assets:

	Wife	Husband
Matrimonial Home		$285,000
Motorcycle		$3,000

Less

2. Debts:

	Wife	Husband
Mortgage		$176,500
Line of Credit		$36,806
Disposition Costs		$12,882

Less

3. Marriage Date (Schedule to Marriage Contract):

	Wife	Husband
Vehicles		$8,000
Bank Accounts and Savings	$10,452	$24,000
Business Interest		$20,000
Debt/Home Buyers Loan	$8,000	($20,000)

Net Family Property

	Wife	Husband
Net Family Property	$2,452	$29,812

$29,812 - $2,452 = $27,360 ÷ 2 = Equalization Payment = $13,680

Schedule ‘B’

YEAR	WIFE’S LINE INCOME	HUSBAND’S EARNED INCOME	LAWRENCE FAMILY TRUST (dividend income to October 2016 and $5,000 monthly from parents for November and December 2016 and January 2017)	HUSBAND’S INCOME as adjusted for dividend income as per Schedule III of the Guidelines, section 5, UCCB for ML in 2015 and funds from parents
2013	$4,530	$34,453	$72,000 (actual/non-eligible dividends)	$119,319
2014	$6,601	$54,130	$60,000 (actual/non-eligible dividends)	$125,280
2015	$7,674	$56,866	$60,000 (actual/eligible and non-eligible dividends)	$130,216
2016	$6,268 (2013-2015 average)	$56,866	$50,000 (actual/ non-eligible dividends assumption, and $10,000 non-taxable from parents)	$111,490
2017	$6,268	$56,866	$5,000	$63,974

1S. Ranot, “Common Tax and Valuation Mistakes”, 2012 Ontario Bar Association Continuing Professional Development Institute, at p. 10.