Boulanger v. Hebert-Boulanger, 2017 ONSC 482
CITATION: Boulanger v. Hebert-Boulanger, 2017 ONSC 482
COURT FILE NO.: FS-14-79740-00
DATE: 20170125
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ANDREW BOULANGER
Applicant
– and –
JEANNINE MARIE HEBERT-BOULANGER
Respondent
COUNSEL:
Kevin G. Caspersz, for the Applicant
W. Ross Milliken, for the Respondent
HEARD: January 3, 4 & 5, 2017
REASONS FOR JUDGMENT
van melle J.
[1] The Applicant, Andrew Boulanger and the Respondent, Jeannine Hebert-Boulanger, commenced cohabitation in 1982 and were married on April 30, 1988. There were two children of the marriage, Celine born January 1, 1993 and Sophie born November 4, 1996. Andrew and Jeannine separated on October 7, 2012.
[2] The issues for determination by me are:
- The equalization of net family property, specifically:
(a) the value of Andrew’s limited partnership shares/units in FirstOnSite Restoration;
(b) the value of a Promissory Note connected to the acquisition of the limited partnership shares/units; and
(c) the value of Andrew’s stock options at the date of separation.
Spousal support, namely quantum and duration.
Retroactive support.
Post-separation credits, specifically:
(a) Are Andrew and Jeannine entitled to any credits for post-separation use of joint accounts, credit cards or lines of credit or payment of expenses;
(b) Is Andrew entitled to credits for amounts paid to Jeannine or on her behalf prior to the commencement of court ordered child and spousal support.
[3] To the credit of the parties they were able to agree to a number of outstanding issues between them. In that regard, three pre-trial agreements were prepared and signed by the parties in February, 2016. The parties also entered into a statement of agreed facts. The most relevant agreed to facts are:
Andrew is at present the CFO of Nova Argent Canada Inc.
Jeannine is an elementary school teacher. She started teaching in 2007.
Andrew vacated the matrimonial home on the date of separation.
Andrew continued to fund household expenses from October 7, 2012 to August 29, 2013, and made monies available to Jeannine after vacating the home, but paid no formal child and spousal support until December 2013, when he started paying child support of $1,689.00 per month.
Sophie resided in the matrimonial home from October 2012 to September 2013 and with Jeannine thereafter until September 2014.
Celine resided in the matrimonial home during the summer of 2013, May through August.
A case conference resulted in the consent (and without prejudice) Order of Justice Price dated March 4, 2014. The Order required:
(a) Andrew to pay child support of $1,818.00 per month for Sophie who was at that time residing with Jeannine at the matrimonial home, based on income of $225,000.00, and commencing March 1, 2014. At that time, Celine resided in Ottawa and attended Carlton University.
(b) a 63% (Andrew) and 37% (Jeannine) sharing of special or extraordinary expenses.
(c) Andrew to pay spousal support of $3,737.00 per month, commencing March 1, 2014.
- The Price Order dealt with some of the net proceeds of the sale of the matrimonial home, which had been sold August 13, 2013;
a. $50,000.00 was paid to each party.
b. $28,666.86 paid off a joint line of credit.
c. $6,249.00 was to pay off Jeannine’s credit card. This was never completed and the parties have since agreed that this debt should be part of the Respondent’s Net Family Property, as she solely discharged the debt.
d. The balance of $434,306.00 remains in trust.
Gross proceeds of sale were $1,255,000.00, (real estate fees were $63,633; interest penalties on mortgage were $3,991.00; legal fees were $1,978.00). Net proceeds were $1,255,398.00. The outstanding mortgage (including secured lines of credit) on the date of separation was $689,619.00. The outstanding mortgage (including secured lines of credit) was $714,843.00 on August 29, 2013, the closing date.
The Applicant owes the Respondent $12,612.00 from draws on the parties’ lines of credit, between the date of separation and the sale of the home. Both parties received an advance of $50,000.00 on March 2014 from the proceeds held in trust was also applied to the parties’ joint credit card debt on March 2014, $3,125.00 of which is the Respondent portion, but paid of the entirety herself.
Accordingly, the Respondent is entitled to $228,289.69 from the remaining proceeds of the home, while the Applicant is entitled to $206,016.31.
The parties have agreed to a Net Family Property Statement with ownership and values of the property and debts set out there are agreed.
The parties have filed a Net Family Property Statement which identifies property and debt, the values for which remain in dispute.
The ownership of the parties’ jointly owned Florida timeshare property is credited to Jeannine. The parties agree title was to be transferred to her forthwith.
The parties had automobiles and debt related to those automobiles. The parties have agreed to assume ownership of their respective automobiles and the related debt and have not included these in the Net Family Property statements.
The parties owned no other property at the date of separation or the date of marriage.
The parties owed no other debts at the date of separation or the date of marriage.
Sophie commenced attending the University of Guelph in September 2014. The parties agreed to change child support, on a without prejudice basis, which was incorporated into the temporary Order of Justice Donohue, dated October 2, 2014, as follows:
a. Andrew was required to pay child support for Sophie, in the amount of $606.00 per month based on Sophie residing with Jeannine during the summer months (May to August); and
b. Andrew was required to pay spousal support in the amount of $4,000.00 per month.
Celine completed her undergraduate degree in April 2015.
Andrew’s total annual incomes (excluding net partnership losses) have been:
a. 2010 - $251,158.00 (Base salary of $200,000, discretionary bonus of $50,000 and medical benefits of $1,158)
b. 2011 - $349,522.00 (Including termination payment from FirstOnSite Restoration of $213,000)
c. 2012 - $225,930.00 (Base salary of $200,000 and discretionary bonus of $25,930)
d. 2013 - $372,931.00 (Base salary of $200,000, bonus of $48,565, and $124,366 from the exercise of share options.
The Parties have agreed to use $230,000 as the Applicant’s income for purposes of determining support. The Respondent reserves her right to determine and include the value of any share options paid to the Applicant in 2013.
Jeannine’s total incomes (excluding spousal support) have been:
a. 2012 - $59,111.00
b. 2013 - $59,091.00
c. 2014 - $64,766.00
d. 2015 - $67,686.92
Equalization
Promissory Note
[4] On April 23, 2007 Andrew borrowed $100,000.00 from EW Disaster Kleenup L.P. (currently FirstOnSite Restoration L.P.), which was then re-invested into the company as a condition of his employment, in order to purchase units of the limited partnership. The loan was non-interest bearing. The principal amount of $100,000 was to be repaid upon the occurrence of the earlier of:
(i) an IPO;
(ii) a sale of all or substantially all of the assets of the Lender; or
(iii) a sale by 2123101 Ontario Inc. of all the units of the Lender.
[5] Andrew submits that the Promissory Note, executed in exchange for the transfer of the partnership shares, is a genuine debt and should be treated as a debt with a face value of $100,000.00.
[6] The only evidence at trial in regard to the expectation of repayment was the evidence given by Andrew. Andrew signed the non-interest bearing Promissory Note in 2007 and stopped working for FirstOnSite Restoration L.P. in 2011. He then went to work for Nova Argent Canada Inc. as Group Chief Financial Officer.
[7] Andrew testified that, because he was a partner with FirstOnSite, he was entitled to receive the annual financial statements. He testified that in 2013 FirstOnSite had a net loss of $16,000,000.00. According to Andrew, FirstOnSite went into bankruptcy protection in April of 2016.
[8] According to Andrew, the income statements for the company show huge losses. According to Andrew, there was no opportunity to redeem the units. However, despite the fact that FirstOnSite has been doing poorly for the last years, so far no call has been made on the Promissory Note. No evidence was adduced as to the likelihood of a call being made on the Promissory Note.
[9] During cross-examination Andrew acknowledged that he had been able to profit through income tax from the units that he held in FirstOnSite. From 2012 onward he has been able to deduct his net partnership losses relating to the units. From 2012 to and including 2016 he has been able to deduct more than $102,000.00 from his income. He acknowledged that his benefit from deducting those losses would be between 40% and 45%.
[10] Andrew said he expected to have a call on the Promissory Note because the assets have been sold, but he did not divulge the source of that information.
[11] The case of Poole v. Poole, 2001 CanLII 28196 (ON SC), [2001] O.J. No. 2154 (Ont. S.C.J.) outlines a two-step process to determine how to handle a party’s claim for a promissory debt as part of their net family property:
a. Determine whether the note constitutes a genuine debt or a gift; and
b. If a debt, what value should be assigned to the debt based on the expectancy of repayment and should it be inserted in the calculation of net family property.
[12] Jeannine submits that the failure to call expert evidence regarding the likelihood of repayment; the value of the asset against which the Promissory Note was issued and the value to Andrew of the income tax treatment should be fatal to this claim. She invites me to make an adverse inference due to this failure to call expert evidence. The inference she submits that I should find is that the value of the units of the limited partnership at least equals the debt evidenced by the Promissory Note.
[13] There are a number of cases reflecting the requirement pursuant to the Family Law Act, that the onus is on the party asserting a value of an asset or liability under his or her control to provide credible evidence in support and if such a value cannot be readily determined, an independent valuation must be obtained. At paragraph 15 of Conway v. Conway, 2005 CanLII 14136 (ON SC), [2005] O.J. No. 1698:
Similarly, failure to present relevant evidence, in support of a position advanced by a party, may result in an adverse inference. This, for example, pertains to disclosure not made or a necessary witness not called to testify.
[14] In the case at bar I am not satisfied that the note represents a genuine debt and I am not satisfied that there is an expectancy of repayment.
[15] On the evidence before me it appears that the units have some value and there is no indication that the Promissory Note will be called upon. I am therefore not prepared to find that the Promissory Note should be shown as a debt on the financial statement.
Wilkinson Stock Options
[16] Prior to the date of separation, Andrew was granted stock options in a company called Wilkinson Steel and Metals Inc. by way of an incentive program as an employee of Nova Argent Canada Inc. These stock options existed at the date of separation but Andrew testified that he had no entitlement to these options at separation as they had not vested.
[17] According to Andrew, Nova Argent had experienced great difficulty in finding buyers for Wilkinson because Wilkinson had a significant defined pension liability on its books; and the market demand and value of steel had declined significantly in recent years. Andrew testified that fortunately Nova Argent was able to find a buyer for the company and it was sold on April 30, 2013, six months after the date of separation. Andrew received $124,366.00 for the options which, after tax, was $95,572.22.
[18] According to Andrew, vesting and exercise of the options were contingent on the sale of Wilkinson for which there existed no prospective buyers or prospect of sale at the date of separation as a result of various market conditions. Andrew submits that the options were only exercisable when they vested upon the sale of Wilkinson and that the value of the options could only be determined on the sale date and based on the price that a buyer was willing to pay. According to Andrew, at the date of separation there were no prospects of a sale and the options had not vested. Andrew submits the options should be excluded from his net family property.
[19] Jeannine seeks to assign a value to the options. Andrew submits that Jeannine is using hindsight in order to assign the value to the options and submits that this is not permissible.
[20] Pursuant to the Family Law Act, options fall within the definition of property, which means any interest, present or future, vested or contingent, in real or personal property.
[21] Buttrum v. Buttrum, 2001 CanLII 28187 (ON SC), [2001] O.J. No. 1390 at para. 42 stands for the proposition that even though stock options cannot be exercised at the valuation date, that does not necessarily mean that their value is zero.
[22] Unfortunately, in the case at bar we have no evidence, other than Andrew’s testimony, as to the value of the options; vested or not. Andrew decided not to call expert evidence in this regard. Valuing unvested stock options requires an expert. Being an accountant, Andrew would have known this. As such, I agree with Jeannine’s counsel that I can again draw an adverse interest.
[23] In Murray v. Murray, [2010] O.J. No. 3276, Milanetti J., at para. 55, addressed a similar situation. She said:
In a choice between utilizing an adverse inference to punish a litigant for his failure to have his business valued, albeit at the risk of a somewhat inaccurate business valuation, and allowing such a litigant to directly profit from his disobedience of a direct court order through the filing of an incomplete financial statement that will lead to him receiving a larger equalization payment than to which he should be entitled, the Court is obligated to select the former.
[24] Andrew testified that Wilkinson Steel was sold for its assets and therefore it was the sale of the assets that had the material relationship to the options. At the date of separation the value of the assets would have been the same as they were when the deal was finalized. There is no evidence that the value of assets had changed between October when the discussions regarding sale were commenced and April when the deal was finalized. As such, I am ordering the inclusion of the value that Andrew received from the stock options with a deduction for the income tax liability, on Andrew’s net family property statement.
Spousal Support
[25] For the purposes of spousal support the parties have agreed that Andrew’s income is $230,000.00 and Jeannine’s income is her Line 150 income net of spousal support payments.
[26] As I have ordered that the Wilkinson options form part of Andrew’s net family property, that amount should not be included in his income for 2013.
[27] Andrew submits that Jeannine has a limited entitlement to spousal support, primarily on a non-compensatory basis, which should be awarded only to reduce the financial disadvantages resulting directly from the breakdown of the marriage, which he submits are minimal.
[28] It is acknowledged that the parties cohabited for 30 years and were married for 24 of those years. Andrew submits that the entire period of cohabitation is not property included, given that the parties resided with various third parties on at least two occasions. The evidence supports a finding that the residential arrangements with third parties were made solely for financial reasons and it is thus appropriate to include the entire 30 years as the length of the cohabitation.
[29] Andrew testified that despite the length of cohabitation and the fact that Jeannine was out of the work force for a number of years as a result of child care responsibilities, theirs was a non-traditional marriage in that he wanted Jeannine to go back to work as soon as the youngest was in school full-time. Jeannine stayed home between 1993 and 2006 and did in fact do some part-time work including translation and voice over recordings. He acknowledged that Jeannine did quite a bit for the children but said that despite the fact he was working at two jobs, he shared equally in the household chores. There was no question that in his evidence he was minimizing whatever Jeannine might have done in the house. For example, he stated that the most revealing time was when he was in between jobs. Jeannine would get the children on the bus, read the newspaper, and go out with friends for lunch. She did chores, but not complete chores as there were always loads of laundry on the couch.
[30] He testified that after 2003 Jeannine responded to his employment suggestions in an indecisive manner. In 2005-2006 he encouraged Jeannine to go back to school. He did not want her to be an example to the children of a stay-at-home mother. In 2006 Jeannine did go back to school and qualified to become a teacher. Andrew testified that her decision to become a teacher was selfish because she wanted to stay at home during the summers.
[31] In all, I found Andrew’s testimony to be disturbing in this regard. To her credit, Jeannine did not respond in like manner. She was able to give her ex-husband a great deal of credit for his contribution to the marriage. She said he was a good husband and a good father.
[32] While Andrew is not arguing that Jeannine is not entitled to support, he submits that support should be on the low end of the Spousal Support Advisory Guidelines and time limited, namely $3,000 per month for 74 months. I do not accept this submission. The amount of spousal support to which Jeannine is entitled, has both compensatory and non-compensatory elements. Despite Andrew’s testimony, I find that Jeannine, in assuming the responsibilities connected with the children, particularly during their early years, enabled him to build his career in the way that he did. Carol Rogerson in the Spousal Support Advisory Guidelines: The Revised User’s Guide published by the Department of Justice Canada in April 2016, sets out common markers of compensatory claims as including being home with children, full-time or part-time; and being a secondary earner. She also says that compensatory entitlement can be based on the economic advantage of an uninterrupted career enjoyed by one spouse as a result of the other spouse’s assumption of a disproportionate share of child care responsibilities.
[33] Professor Rogerson also discusses non-compensatory claims. She acknowledges that claims that are based on need include an inability to meet basic needs, but also include those where there is a significant decline in standard of living from the marital standard. At page 6: “Non-compensatory support reflects the economic interdependency that develops as a result of a shared life, including significant elements of reliance and expectation, summed up in the phrase ‘merger over time.’” She says that common markers of non-compensatory claims include the length of the relationship, the drop in standard of living for the claimant after separation, and economic hardship experienced by the claimant.
[34] I have no hesitation in finding that the evidence at trial supports Jeannine’s entitlement to ongoing spousal support on both a compensatory and non-compensatory basis. The question becomes where in the range should the support fall. Jeannine seeks support of $6,000 per month which is at the high end of the Spousal Support Advisory Guidelines. I am not convinced that the high end is appropriate in this case. The mid-point of $5,200 per month yields a monthly net disposable income to Jeannine of $7,113 and 46% percent of the parties’ net disposable income. While I understand that the mid-point of the Guidelines should not be the default position, I am not persuaded by counsels’ arguments that either the low or the high points are appropriate. In my view, an award of $5,200 per month address both the compensatory and non-compensatory elements of the claim.
Other Issues
Overpayment or underpayment of support arrears
[35] Andrew says he maintained all carrying costs on the matrimonial home before it was sold, including the mortgage insurance, property taxes, utilities and the line of credit secured against the house, despite not living there. Andrew also paid Jeannine’s car loan payments, auto insurance for her car, provided $11,500.00 in cash advances during separation and paid for almost all the children’s special expenses.
[36] Andrew says that to date he has paid $69,249.00 in after-tax dollars of Jeannine’s expenses which he says amounts to $128,239.00 when grossed up by his tax rate of 46%. Jeannine has contributed $29,850.00 to those expenses. Andrew has therefore paid $98,389.00 to Jeannine for her expenses.
[37] Andrew says he has also paid $75,060.00 in child support and spousal support payments, $54,422.00 of which was for spousal support alone. Together with Jeannine’s expenses Andrew has paid $152,810.00 to Jeannine to date. According to Andrew, based on the medium range spousal support and taking into account credits he says are owing to him, Jeannine would owe him $20,075.05.
[38] It appears from Andrew’s testimony that some of the money paid on behalf of Jeannine was in the form of mortgage payments, which may or may not have included property taxes. In any event, I do not have to deal with this as Pre-Trial Agreement #1 indicates that Andrew is to receive a credit of $72,931.00 for money and third party payments on behalf of Jeannine. $11,500 of that amount was drawn from the parties’ joint Line of Credit.
[39] Jeannine’s position, using the mid-end range spousal summary, is that after all the credits have been taken into account, she would owe Andrew $3,851.00.
[40] Andrew seeks an Order that he has paid $2,084.94 more than his share of s. 7 expenses. Jeannine says that the s. 7 expenses have been shared 37% - 63% as ordered by Justice Price. Based on the evidence at trial, I am unable to determine if Andrew did in fact overpay. I can safely say that on the balance of probabilities, he did not.
[41] The Revised User’s Guide and the case law establish that if interim spousal support is found to be too low or too high, it can be adjusted at trial when of course more information would be available. However, when the interim support is set in accordance with the Spousal Support Advisory Guidelines and falls within the range of those Guidelines, absent evidence that the support was inadequate or too high, no adjustment has to be made. The spousal support set by Justice Price in March, 2014 was $3,737 per month. This amount was varied on consent according to whether either child was living with Jeannine. By January 2016 when neither child was at home, the support was $4,429 per month.
[42] It appears that the support was adequate to meet Jeannine’s needs on an interim basis. Given that I have found that spousal support should reflect the mid-range of the Spousal Support Advisory Guidelines, there will be no repayment by or to either party in connection with interim spousal support.
Adjustments Regarding Lines of Credit
[43] Jeannine submits that some of the Lines of Credit and credit card accounts paid from the proceeds of sale of the matrimonial home were solely for Andrew’s benefit. Andrew takes the position that most of these amounts were for Jeannine’s benefit as well. Pre-trial Agreement #1 contains an acknowledgement that $11,500 of the credit Andrew receives for pre-Court ordered support was drawn from the joint Line of Credit. As such, this amount should be repaid to Jeannine.
[44] It appears as well that of the $55,144 withdrawn by Andrew from the Lines of Credit, roughly $40,000 inured solely to his benefit. Thus Jeannine should receive an extra $20,000 from his share of the proceeds of sale of the matrimonial home. If however, the $55,144 includes the $11,500 from the previous paragraph there should not be a double recovery.
[45] Draft orders were provided by counsel as required by the Family Law Rules. I note here that counsel for both parties did an excellent job of presenting their clients’ cases. Both did a written Opening Statement which was enormously helpful. Any agreement that could be made in advance was in fact made.
[46] Andrew’s draft order provides for a tax-free rollover of $100,000.00 to satisfy some of the equalization payment. Jeannine has not agreed to such a rollover and in the absence of agreement, I cannot make such an order.
ORDERS
[47] The following orders will issue:
a. The applicant shall pay spousal support to the respondent in the amount of $5,200 per month commencing January 1, 2017.
b. The applicant shall maintain a life insurance policy, naming the respondent as irrevocable beneficiary, having an amount payable in the event of his death of not less than $250,000 as security for the payment of spousal support.
c. The applicant will not be permitted to include the Promissory Note in favour of EW Disaster Kleenup L.P. (currently FirstOnSite Restoration L.P.) as a debt on his Net Family Property statement.
d. The applicant has to include $95,572.22, the net value of the Stock Options, as property on his Net Family Property statement.
e. Jeannine is entitled to receive $11,500 and $20,000 to reflect advances from the Lines of Credit to Andrew which inured solely to his benefit.
f. There will be a recalculation of the equalization payment owing to the respondent with these numbers. The balance held in trust from the sale of the matrimonial home will be divided equally subject to paragraph 11 of the Agreed Statement of Facts. The equalization payment will be paid to the respondent from the applicant’s share of the proceeds from the matrimonial home. If there is any disagreement regarding this calculation, the parties may arrange to see me.
g. There will be no further credits or debits between the parties.
h. There will be no order regarding pre-judgment interest.
i. I will entertain written cost submissions, to be no longer than 3 pages double-spaced plus a costs outline and any applicable Offers to Settle. All submissions are to be received by me within 30 days.
Van Melle J.
Date: January 25, 2017
CITATION: Boulanger v. Hebert-Boulanger, 2017 ONSC 482
COURT FILE NO.: FS-14-79740-00
DATE: 20170125
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ANDREW WILLIAM BOULANGER
-and-
JEANNINE MARIE HEBERT-BOULANGER
REASONS FOR JUDGMENT
Van Melle J.
Released: January 25, 2017