OVERVIEW

[1] When Shawn and Rachel Galea separated in March 2015, they disagreed over the amount of spousal support that Mr. Galea should pay to Ms. Galea and the amount of child support he should pay for the support of their 9-year-old son, Chase Galea, (“Chase”), who suffers from cerebral palsy.

[2] Ms. Galea asserts that Mr. Galea did not produce the financial disclosure she requested from him. She tendered a report from a Chartered Business Valuator, Anna M. Barrett, which outlines the deficiencies in Mr. Galea’s disclosure and provides an estimated valuation of the income he derives from a business, Advanced Taxidermy, based on the information he did provide. Ms. Galea asks the court to accept Ms. Barrett’s opinion of Mr. Galea’s income, and to draw a negative inference from Mr. Galea’s failure to provide the remaining financial disclosure that Ms. Galea requested.

[3] Mr. Galea sought to introduce a report of his own Chartered Business Valuator, Melanie Russell. The court refused to accept Ms. Russell’s report, as it was not served on Ms. Galea within the time prescribed by the Rules, and Ms. Galea did not have a fair opportunity to respond to it. Mr. Galea therefore relied on preliminary schedules that Ms. Russell prepared, which were served previously on Ms. Galea, and on his own affidavit, in which he asserts that his income has declined owing to recent circumstances beyond his control. These include the ill-health of his business associate in Advanced Taxidermy, James McGregor, the loss of a large client of the business, and a recent theft of trophies from the business, which he says has reduced customer confidence.

[4] The dispute between the parties over Mr. Galea’s income arises, in part, from the fact that Mr. Galea alleges that he and his business associate, James McGregor, own equal shares of their business, and are entitled to equal management fees. Whereas the records of the business, according to Ms. Barrett, suggest that Mr. Galea owns 70%, and that there are undeclared earnings on which Mr. Galea has not paid taxes.

[5] The parties additionally disagree over the income to be imputed to Ms. Galea. Mr. Galea initially argued that a $50,000 income should be imputed to her. This is based on a job he says a friend of his offered Ms. Galea to work as a chef. At the hearing of the motion, he argued that this amount should be increased to $95,000. He additionally alleged that Ms. Galea misappropriated funds from a trust account that was to benefit Chase, and failed to account for the funds. He argues he should be given credit for these funds against his support obligation.

[6] For the reasons that follow, I impute an income of $488,000 to Mr. Galea by apportioning 70% of the business’ undistributed management fees to him, and grossing-up his proportion of the undistributed earnings to take account of the fact that he has not paid taxes on these fees. I impute an income of $40,000 to Ms. Galea, being the salary of a sous-chef. On that basis, Mr. Galea will be ordered to pay spousal support to Ms. Galea. Additionally, he will be ordered to pay child support on that imputed income, and a proportional share, which I calculate to be 97%, of Chase’s section 7 expenses.

BACKGROUND FACTS

[7] Mr. and Ms. Galea are both 48 years of age. Mr. Galea was born on August 19, 1969; Ms. Galea on June 14, 1969. The parties began living together in 1990 when they were about 21, and married six years later on August 4, 1996. They separated briefly in the summer of March 27, 2014, and later reconciled. They finally separated on March 16, 2015, after 25 years together. They have agreed to use this date as their valuation date for purposes of equalizing their net family property.

[8] There are three children of the marriage:

a) Brittney, who is 31 years old (born April 25, 1986). Mr. Galea adopted Brittney, who is not his biological child, when she was 5;

b) Paige, who is 23 (born July 6, 1994), who is Mr. Galea’s biological child, and who is now largely independent;

c) Chase, who is 10 years old (born March 24, 2007), who is also Mr. Galea’s biological daughter, and has Quadriplegic Cerebral Palsy and severe hearing loss.

[9] The parties and their lawyers attended a full-day mediation/arbitration with Philip Epstein on September 2, 2015, to determine where Chase would attend school that year. Mr. Epstein determined that she should continue attending school in Caledon where the parties resided before they separated. On September 30, 2015, the parties signed an interim separation agreement in which they agreed that Mr. Galea would pay Ms. Galea $620,000. $500,000 of this amount represented her interest in the matrimonial home in Caledon, which Mr. Galea retained. The balance represented an advance on Ms. Galea’s entitlement to support and equalization of net family property.

[10] Following the mediation/arbitration, Ms. Galea moved to Georgetown, Ontario, which is an approximately 15-minute long drive from Caledon. She currently in a house she purchased in Georgetown with the funds she received for her interest in the matrimonial home.

[11] Mr. Galea began the present proceeding on September 8, 2016. He filed an Application seeking a divorce, custody of Chase, child support, and equalization of net family property. He delivered a Financial Statement in which he acknowledges earning an annual income of $73,955.28 in 2016, a small decrease from his reported earnings of $78,312.51 in the previous year. He states that his annual expenses were $162,309.36, and that his net family property when the parties separated was $1,096,994.46. This included the matrimonial home, which he said was worth $1,000,000.

[12] On October 24, 2016, Ms. Galea delivered her Answer, in which she also sought a divorce, custody of the children, spousal and child support, and equalization of net family property. She delivered a Financial Statement that states she has no income although she acknowledges having earned $34,638 in 2015. She states that her expenses are $74,270.64, and that her net family property when the parties separated amounted to $28,640.72.

[13] Justice Donohue conducted an early case conference on December 19, 2016. She noted that for Ms. Galea the central issue was support. For Mr. Galea, the central issue was access and parenting time. Justice Donohue granted the parties leave to proceed with motions to determine those issues on a temporary basis. She also requested the involvement of the Children’s Lawyer, and scheduled a Settlement Conference to take place on April 13, 2017.

[14] By Order by Donohue J., the parties consented that Mr. Galea’s motion for temporary access to Chase would be heard on February 7, 2017, and that Ms. Galea’s motion for temporary support would be heard on February 24, 2017.

[15] Ms. Galea delivered her Notice of Motion on February 17, 2017, requesting an order for child support for Chase, and spousal support for herself, based on an income of at least $400,000 to be imputed to Mr. Galea, and an income of $35,000, which she proposed be imputed to her. She requested an order requiring Mr. Galea to contribute in proportion to his income to the payment of Chase’s s. 7 expense, and directing that Chase’s conductive education therapy be paid from trust funds controlled by Mr. Galea.

[16] On February 17, 2017, Mr. Galea delivered his own Notice of Motion for an order that income be imputed to him in the amount of $81,000, and that income be imputed to Ms. Galea in the amount of $50,000, and that each of the parties contribute to the payment of Chase’s s. 7 expenses in proportion to those incomes. On February 22, 2017, Mr. Galea delivered an Amended Notice of Motion in which he asked the court to impute an income of $95,000 to Ms. Galea, and to require Ms. Galea to repay him the costs of the parties’ mediation/arbitration in the amount of $12,903.05.

[17] At the hearing on February 24, 2017, a day reserved for motions that could be heard within an hour, Mr. Galea sought an adjournment of the motion for temporary support, arguing that the hearing would require a full day. Mr. Galea withdrew his request for an adjournment when advised that the court could not offer the parties a date for even a 3-hour motion until the fall of 2017, and could not offer a date for a full-day motion until 2018. He was also advised that if the motion was adjourned, the court would likely grant terms requiring support to be paid until the motion was heard.

ISSUES

[18] The court must determine the following issues on this motion:

a) What is Mr. Galea’s income for purposes of child and spousal support?

b) What amount of temporary child support should Mr. Galea pay to Ms. Galea?

c) Is Ms. Galea entitled to receive spousal support from Mr. Galea?

d) What is Ms. Galea’s income for purposes of spousal support and the parties’ respective contributions to Chase’s special and extraordinary expenses?

e) What amount of temporary spousal support should Mr. Galea pay to Ms. Galea?

f) What contribution should Mr. Galea make to the payment of Chase’s special and extraordinary expenses?

PARTIES’ POSITIONS

Ms. Galea’s position

[19] Ms. Galea argues that Mr. Galea should pay her child support for the support of Chase Galea in the table amount based on income which the court should impute to him. She submits his income is no less than $400,000. She argues that he should additionally pay a proportionate share of Chase’s special and extraordinary expenses pursuant to s. 7 of the Federal Child Support Guidelines based on his income of at least $400,000. She submits than an income of $35,000 may be imputed to her.

Mr. Galea’s position

[20] Mr. Galea argues that income of $81,000 should be imputed to him, and $95,000 should be imputed to Ms. Galea. He submits that the parties should contribute to the payment of Chase’s s. 7 expenses in proportion to their incomes as stated above.

ANALYSIS AND EVIDENCE

a) What is Mr. Galea’s income for purposes of support?

The legislative framework

[21] The Family Law Act[^1] and the Divorce Act[^2] provide that the amount of child support and spousal support shall be determined based on the spouses’ incomes, in accordance with the Federal Child Support Guidelines (“FCSG”).[^3]

[22] The Spousal Support Advisory Guidelines (“SSAG”) provide:

The starting point for the determination of income under both formulas is the definition of income under the Federal Child Support Guidelines, including the Schedule III adjustments...

The Advisory Guidelines do not solve the complex issues of income determination that arise in cases involving self-employment income and other forms of non-employment income. In determining income it may be necessary, as under the Federal Child Support Guidelines, to impute income in situations where a spouse’s actual income does not appropriately reflect his or her earning capacity.[^4]

[23] The SSAG, though advisory, are a useful starting point when determining the appropriate amount of spousal support to be paid.[^5] Once the court establishes entitlement to spousal support, it must take the SSAG into account when determining the amount.[^6]

[24] Section 2 of the FCSG provides that a payor spouse’s income is his or her annual income, as determined by reference to the methodology set out in sections 15 to 20 of the FCSG. Those sections provide the Court with a series of alternative methods for determining income in order to rely on the fairest amount.

[25] Section 15 of the FCSG provides that where spouses do not agree in writing on a spouse’s annual income, the Court shall determine the income by considering the remaining methods, set out in sections 16 to 20. Section 16 provides that the Court should, first, consider a parent’s or spouse’s income to be the “Total Income” as set out in Line 150 of his or her Income Tax Return:

Calculation of annual income. -- of Subject to sections 17 to 20, a parent’s or 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. [Emphasis added.]

[26] Section 17(1) of the FCSG provides that if, because of significant fluctuations in a spouse’s income, his or her total income for the previous year would not be the fairest way of determining income for the purposes of support, the Court may average his or her income over the last three years to determine an amount that is fair and reasonable. This amount takes into account any pattern of income, fluctuation in income, or receipt of a non-recurring amount during those years. Section 17(1) provides:

(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.

[27] Section 19 of the FCSG provides that the court may impute income to a parent or spouse as it considers appropriate in the circumstances.

Imputing income

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

(d) it appears that income has been diverted which would affect the level of child support to be determined under these guidelines;

(e) the parent’s or spouse’s property is not reasonably utilized to generate income;

(f) the parent or spouse has failed to provide income information when under a legal obligation to do so;

(g) the parent or spouse unreasonably deducts expenses from income;

O. Reg. 391/97, s. 19 (1); O. Reg. 446/01, s. 6.

Reasonableness of expenses

(2) For the purpose of clause (1) (g), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act (Canada). O. Reg. 391/97, s. 19 (2).

Jurisprudence

[28] An interim support order is, by its nature, a temporary determination. It may be superseded by an order made at trial, which would be based on a more complete evidentiary record.

[29] In Morey v. Morey, (2009), Justice Gray declined to depart from the payor spouse’s Line 150 income for 2008 for purposes of a motion for interim support by including in his income a bonus he had received in 2008 but which he said he had earned in 2007 and would not earn in 2008. Justice Gray stated:

While the same criteria are to be considered, under s. 15.2 of the Act, with respect to both final and interim orders for spousal support, it is clear, as I have noted previously, that a motion for interim support is to be assessed differently from an application for a final order; see Weber v. Weber (2007), 2007 38583 (ON SC), 42 R.F.L. (6th) 263 (Ont. S.C.J.); and Lewis v. Lewis (2008), 2008 27178 (ON SC), 55 R.F.L. (6th) 454 (Ont. S.C.J.). A trial judge, with the benefit of a full record, will be in a much better position to assess the factors set out in s. 15.2 of the Act, and the evidence relevant to those factors. The trial judge will be in a position to make retroactive adjustments, if necessary, in order to accommodate and, where required, vary the somewhat “rough justice” that may be reflected in an interim order. A motions judge, who determines the matter based on affidavits, usually without the benefit of cross-examination, and without all of the documentary material that may be relevant, is only in a position to impose an imperfect solution pending trial. As I noted in Lewis, supra, at para. 17, a motions judge should approach the issue with some caution.[^7][Emphasisadded]

[30] Mr. Galea’s presumptive income for support purposes, pursuant to s. 16 of the FCSG, is his Line 150 income for 2015 based on his Notice of Assessment for that year. The onus is on Ms. Galea, as the recipient spouse, to justify imputing a greater amount of income to him.[^8]

[31] Like the Child Support Guidelines, the SSAG permits the court to impute income to a spouse for the purpose of determining the amount of spousal support to be paid. These Guidelines do not expressly provide for how income should be imputed. However, the courts, in applying the SSAG to determine income, apply the methodology set out in sections 15 to 19 of the FCSG.[^9]

[32] In Rilli v. Rilli (2006),[^10] Justice Olah noted that the test for imputing income for child support purposes applies equally to claims for interim spousal support.[^11] In Pagnotta v. Malozewski (2008),[^12] the Divisional Court set aside a final order of spousal support on the ground that a motions judge has no jurisdiction to make a final support order on a motion for interim spousal support. The Divisional Court continued the interim order for spousal support appealed from, which was based on income imputed to the payor spouse using the methodology in the FCSG.

Applying the legal principles to the present case

Mr. Galea’s Line 150 Income

[33] Mr. Galea’s income for the purposes of both child support and spousal support is presumptively his Line 150 income based on his most recent Notice of Assessment. Mr. Galea produced his Notices of Assessment for 2013 to 2015. They disclose the following Line 150 income:

• 2013 $121,128

• 2014 $82,477

• 2015 $78,311

Ms. Galea’s reliance on the Income Valuation

[34] Mr. Galea’s Line 150 income for 2015 is presumptively his income for support purposes, but it is not conclusive. If the evidence discloses that the amount reported at Line 150 of his Notice of Assessment would not be the fairest basis for determining his income, the court may either average his last three years of his income pursuant to s. 17 of the FCSG, or impute an income to him pursuant to s. 19.

[35] Section 19 of the FCSG provides that, in appropriate circumstances, that is, where the methods set out in section 16 and 17 do not produce the fairest result, the Court may decline to base its determination of the spouse’s income on his most recent Line 150 income, or on the average of his most recent three years of Line 150 income. Instead, the Court may impute an alternative amount of income to him pursuant to s. 19.

[36] In particular, the court may impute a greater income to Mr. Galea under s. 19(1)(f) of the FCSG where, “the parent or spouse has failed to provide income information when under a legal obligation to do so”. The court may consider a qualified Income Valuator’s report in determining whether the payor spouse’s failure to provide financial disclosure pursuant to s. 19(1)(f) makes it unfair for the court to base its determination of the spouse’s income for support purposes on his Line 150 income.

[37] Ms. Galea asks the Court to impute a greater income to Mr. Galea. The amount she submits is based on the report by Anna M. Barrett, BSc, CPA, CA, CBV, of Marmer Penner, the Chartered Business Valuator Ms. Galea retained to value Mr. Galea’s business and the income he derives from it. Ms. Barrett’s report also sets out the particulars of Mr. Galea’s failure to make full financial disclosure.

Admissibility of Ms. Barrett’s Report

[38] Mr. Galea disputes the admissibility of Ms. Barrett’s report on the grounds that it was not served in a timely manner and in accordance with the Family Law Rules. I find that Ms. Barrett’s report complied with the Rules. Ms. Galea delivered a draft of the report as Exhibit “F” to her affidavit sworn February 16, 2017. This affidavit was served on Mr. Galea on February 17, 2017.

[39] Ms. Galea attached the formal report as exhibit “A” to her affidavit sworn February 22, 2017. In accordance with Rule 14(11) of the Family Law Rules, the report was served on Mr. Galea four days before the hearing, and was filed with the Court two days before the hearing. The formal report differs from the draft only in that it is signed, and includes the acknowledgement of expert witness which Ms. Barrett signed on February 9, 2017, as required by Rule 20.1.

Did Mr. Galea fail to provide full financial disclosure?

[40] Rule 13 sets out a spouse’s obligation to provide financial disclosure. Rule 13 provides, in part:

13(1) If an application, answer, or motion contains a claim for support, a property claim, or a claim for exclusive possession of the matrimonial home and its contents,

(b) the party against whom the claim is made shall serve and file a financial statement within the time for serving and filing an answer, reply or affidavit or other document responding to the motion, whether the party is serving an answer, reply or affidavit or other documents responding to the motion or not.

(3.3) A party who is required under sub-rules (1) to (3) to serve and file a financial statement in relation to a claim under Part I of the Family Law Act shall, no later than 30 days after the day by which the financial statement is required to be served, serve on the other party the following information, unless the court orders otherwise:

The statement issued closest to the valuation date for each bank account or other account in a financial institution, pension, registered retirement or other savings plan, and any other savings or investments in which the party had an interest on that date.
If the party had an interest in a sole proprietorship or was self-employed on the valuation date, for each of the three years preceding that date,

i. the financial statements of the party’s business or professional practice, other than a partnership, and

ii. a copy of every personal income tax return filed by the party, including any materials that were filed with the return.

If the party had an interest in a corporation on the valuation date, documentation showing the number and types of shares of the corporation and any other interest in the corporation that were owned by the party on that date.
If the corporation in which a party had an interest was privately held, for each of the three years preceding the valuation date,

i. the financial statement for the corporation and its subsidiaries, and

ii. if the interest was a majority interest, a copy of every income tax return filed by the corporation.

Documentation showing the value, on the valuation date, of any property not referred to in paragraphs 1 to 9 in which the party had an interest on that date. [Emphasis added.]

[41] Mr. Galea is a shareholder of two corporations, Paige’s Enterprise Ltd. (“Paige’s”) and Advanced Taxidermy and Wildlife Ltd. (“Advanced Taxidermy”). Ms. Galea’s lawyer requested full financial disclosure from Mr. Galea as early as July 24, 2014. She followed up on February 26, 2016, following the parties’ final separation. Mr. Galea did not respond until May 2016, on the eve of a mediation session with Mr. Epstein. Full disclosure was not provided at the mediation.

[42] Mr. Galea failed to produce a valuation of his interest in Advanced Taxidermy within the time prescribed by Rule 13(10). He did not produce the documentation upon which his valuation was based. Ms. Barrett’s report dated February 9, 2017 details Mr. Galea’s failure to provide documents that support the income he reported on his Income Tax Return. In particular, he failed to produce the General Ledger for Advanced Taxidermy, and records of the management fees that the business paid to Mr. Galea and Mr. McGregor, which would have been filed with its tax return.

Deficiencies in disclosure

[43] Ms. Barrett’s report dated February 9, 2017, states, in part:

We have not been provided approximately half of the information and documentation requested in our letters as follows (Exhibit A):

(a) Second Production Letter dated June 29, 2016; and

(b) Addition to Second Production letter dated August 15, 2016.

The opportunity to review the outstanding information we have requested may or may not have a material effect on our calculations.

In determining Shawn [Galea]’s Guidelines income, we attempted to reconcile the management fees expensed by his business, Advanced Taxidermy & Wildlife Design Ltd. (“Advanced”) to the management fees reported by Shawn on his personal income tax returns. During the period of our review, Advanced expensed between $280,000 and $370,000 per year of management fees. During this same period, Shawn reported approximately $80,000 to $100,000 per year of management fees on his personal income tax returns. Considering that Advanced has two shareholders and we have been advised that finances are equally directed by the two shareholders, we would expect that the management fees for each shareholder would be approximately equal in each year. In order to complete our analysis, in our Second Production Letter, we requested but have not been provided, with complete general ledgers for Advanced (we were provided with partial ledgers for 2010, 2012 and 2014 only) or details of remuneration to the shareholders from Advanced.

[44] Mr. Galea’s counsel, Mr. Flak, stated at the hearing of the motion that Mr. Galea produced 20,000 pages of disclosure, and that the information in those pages should have enabled Ms. Galea to verify Mr. Galea’s income. I do not agree. This court in Sarafinchin v. Sarafinchin, (2000) described the duty of a self-employed spouse to make meaningful financial disclosure. Sachs J. stated:

I mention the disclosure process at this point for two reasons. First, because under Section 19(1) of the Guidelines, the Court can impute income to a spouse who fails to provide income information when he or she is under a legal obligation to do so. Second, because in my view, what happened by way of disclosure in this case is precisely what the Guidelines are trying to prevent.

Mr. Sarafinchin seemed to think it was appropriate to engage his ex-wife in a game of “catch me if you can”. He deluged her with documents that had not been pre-sorted in a meaningful way. When the expert she retained asked for particular documents, his response was to the effect that he had already given her that document in the 20,000 pages previously provided. Proper disclosure would have consisted of the statement required under Section 21(1)(f)(ii) of the Guidelines and then a copy of all documents needed to back up that statement. Further, proper disclosure would have entailed locating the particular documents requested in the follow-up questions posed by Ms. Brent.[^13]

[45] In Henderson v. McLean, (2015), Justice Starr of the Ontario Court of Justice further elaborated on a self-employed spouse’s disclosure obligation:

[46] … A party who is self-employed cannot simply put forth numbers for alleged income and business expenses with no justification or evidence to support those numbers, and then put the other party to the expense of disclosure motions and questioning in an effort to obtain proof regarding the specifics and actual amounts of the income and expenses. Rather, in such cases he must explain his income and expenses including the reasons for the amounts claimed as income or expenses and how they were calculated.

[48] Third, such an individual cannot simply put forth documents, and in particular, documents that might be unique to the type of business the self-employed payor is engaged in and/or its accounting practices, such as the Respondent has done in this case by putting forward the Vendor Ledgers and Legal Aid Summaries, as evidence of income with no explanation of the document or information shown on it, and then put the Applicant to the expense of disclosure motions and questioning in an effort to obtain the information and explanation necessary to understand the nature of the document and what it shows.

[49] Fourth, the party making disclosure has an obligation to provide documentary proof (be it of income, expenses, the nature of his employment or other information) in an organized manner so that the Applicant and the Court can make a proper determination of the Respondent’s income and as to the reasonableness of the expense from the standpoint of the child support calculation.

[50] Finally, providing this more expansive and meaningful disclosure is particularly important in situations where a party’s income for child support purposes is not based upon Line 150 of the previous year’s income tax return but, rather, based upon additional income imputed to that party. In cases where the financial needs and wellbeing of children are at stake the duty to provide meaningful, timely and understandable disclosure is heightened. A party whose disclosure has fallen short in any one of the ways I have identified, has failed to comply with his financial disclosure obligations.[^14] [Emphasis added]

[46] Starr J. cited Meade v Meade, (2002), in which Kitely J. stated:

.... It is inherent in the circumstances of those who are self-employed or who have irregular income and expenses, that they have a positive obligation to put forward not only adequate, but comprehensive records of income and expenses. That does not mean audited statements. But it does mean a package from which the recipient spouse can draw conclusions and the amount of child support can be established. Where disclosure is inadequate and inferences are to be drawn, they should be favourable to the spouse who is confronted with the challenge of making sense out of financial disclosure, and against the spouse whose records are so inadequate or whose response to the obligation to produce is so unhelpful that cumbersome calculations and intensive and costly investigations or examinations are necessary. Nardea v. Nardea (heard March 5, 1998); MacLeod v. MacLeod, [1998] O.J. No. 3076 (Ont. Gen. Div.); Reyes v. Rollo, 2001 CarswellOnt 4541 (Ont. S.C.J.).[^15]

[47] I find that Mr. Galea did not provide all of the financial disclosure that Ms. Galea’s lawyer requested on August 13, 2015, and June 29, 2016. Most important, he failed to produce the complete General Ledger for Advanced Taxidermy, or the documents that could be used to verify the apportionment of management fees between Mr. Galea and Mr. McGregor.

The General Ledgers of Advanced Taxidermy

[48] Mr. Galea’s counsel asserted that the general ledgers were produced. However, Ms. Barrett outlines the deficiencies in the disclosure at page four of her report. She states that some of the general ledgers were provided, but not all of them. She states in paragraph 10 of her report:

In order to complete our analysis, in our Second Production Letter, we requested but have not been provided, with complete general ledgers for Advanced (we were provided with partial ledgers for 2010, 2012 and 2014 only) or details of remuneration to the shareholders from Advanced. [Emphasis added]

[49] I find that Mr. Galea failed to provide the general ledgers for 2013, 2015, and 2016, and provided only partial ledgers for 2010, 2012, and 2014.

[50] Mr. Galea relies on an affidavit of his lawyer’s law clerk, Lisa Greer, sworn February 17, 2017. It states:

In the Affidavit that was served by Rachel a valuation report was included that is grossly incorrect. It states in the report that they produced it while missing over half of the documentation that they requested from Shawn. I attach as Exhibit “B” a copy of all the disclosure indexes that were provided to Ms. Kadoory.
To date we have not received an updated list with further disclosure that they were requesting from Shawn [Galea] nor did they provide a list of what was still outstanding from Shawn prior to producing their income report. [Emphasis added]

[51] Ms. Greer attaches an index of the documents that were produced, but makes no statement that all of the ledgers were produced. Mr. Galea submits that the ledgers were provided on a USB, but did not tender the USB, or any evidence to support his assertion that he produced the ledgers that Ms. Barrett says she did not receive.

[52] I do not accept Mr. Galea’s argument that Ms. Galea’s lawyer, Ms. Kadoory, received the ledgers and did not forward them to Ms. Barrett. There is no indication that Mr. Galea, upon receiving Ms. Barrett’s report, setting out the deficiencies in disclosure, wrote to either Ms. Kadoory or Ms. Barrett, stating that he had produced the ledgers, or sending a further copy of them.

Records of the apportionment of management fees between Mr. Galea and Mr. McGregor

[53] Ms. Greer’s affidavit dated February 17, 2017, includes as an Exhibit B, a letter from Mr. Flak dated December 6, 2016. This letter contains Mr. Galea’s answer to Ms. Galea’s requests for the disclosure of records of the management fees paid to Mr. McGregor. The letter states, in part:

Details of non-arm’s length remuneration, such as salaries to James and his family members from Advanced from 2010 to date by fiscal year;

Answer: James is the only person that is being paid from Advanced. Mr. McGregor does not which [sic] his income to be provided. [Emphasis added]

[54] Mr. McGregor is a part owner of Advanced Taxidermy. The weight of the evidence suggests that Mr. Galea owns 70% of the business. Mr. Galea disputes this, and says that he owns only 50%. Even as a 50% owner, he was entitled to produce the documents disclosing the management fees that were paid to each of the owners. These records are corporate documents, not proprietary information belonging to, or controlled by, Mr. McGregor.

[55] Mr. Galea was required to disclose the documents recording the apportionment of management fees between himself and Mr. McGregor. He failed to do so. He did not provide any explanation other than stating that Mr. McGregor did not wish them to be provided. I draw an adverse inference from Mr. Galea’s failure to produce these records. I conclude that the information they contain, if disclosed, would not be helpful to him. In particular, I conclude that the records would not support his position that he and Mr. McGregor were each paid 50% of the management fees.

[56] Based on Mr. Galea’s failure to make complete financial disclosure within the meaning of s. 19(1)(f) of the FCSG, I find that relying on his Line 150 income would not be the fairest way of determining his income for support purposes. I therefore find that imputing income to him pursuant to s. 19(1) is justified.

Income valuation as a basis for imputing income to Mr. Galea

[57] Where a recipient spouse has established, as Ms. Galea has, that the payor spouse failed to make full financial disclosure, and that basing a determination of his income on his Line 150 income is not the fairest method of determining his income for support purposes, the Court may rely on the opinion of a Chartered Income Valuator, among other evidence, in imputing an income to him pursuant to s. 19(1) of the FCSG.[^16] In these circumstances, the inference to be drawn from the spouse’s Line 150 income is subject to better evidence from the Income Valuator.

[58] In Younghusband v. Younghusband, (2013), Stevenson J. held that the payor’s Line 150 income for the previous year should have been used until such time as an income valuation was completed. Justice Stevenson stated:

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.[^17] [Emphasis added]

[59] Whether at trial, or on a motion for interim support, the Court relies on the best evidence available at the time to determine the spouses’ incomes for support purposes, in accordance with section 15 to 19 of the FCSG. The Court in the present case is mindful of the fact that Ms. Barrett has not been cross-examined on the conclusions she reached in her report, and that Mr. Galea was not permitted to introduce the report from his Income Valuator. The Court must therefore approach Ms. Barrett’s report with caution. I find, however, for the reasons that follow, that Ms. Barrett’s analysis is sound, and that Mr. Galea’s challenges to it lack substance.

[60] In the case of a spouse who is self-employed, such as Mr. Galea, the starting place in determining his income is the wage or salary that was paid to him. In Y. v F.T., (2017), McGee J. stated:

[173] Where an individual is self-employed, the starting place to determine his or her income for support purposes is the wage or salary paid to that individual from the business.[Bekkers v. Bekkers, 2008 864 (ON SC), 2008 CarswellOnt 173, [2008] W.D.F.L. 1514, para. 17] The court will then turn to the pre-tax corporate income and assess whether any portion of that income should be added back to the individual’s income. This step refers only to the pre-tax corporate income, and not gross sales of the business.[Ibid, para. 18.] Finally, the court will look to the reasonableness of any business expenses deducted.[Ibid, paras. 20-21.]

[174] If an individual who is self-employed and the sole shareholder in his or her business withdraws for income purposes all reasonably available resources from the business, those withdrawals will be a “good indicator” of the individual’s “real income for child support purposes.”[Ford v. Shuter, 2011 ONSC 4229, 2011 CarswellOnt 7019, para. 20]

[175] In the absence of an income valuation report, the court is not required to conduct an accounting analysis or reconcile all the discrepancies in the analyses provided by the parties.[McCombe v. McCombe, 2014 ONSC 2399] The court will choose the “most reliable number” with respect to the payor’s income for support purposes.[Ibid, para. 36.][^18] [Emphasis added]

Mr. Galea’s interest in Advanced Taxidermy

[61] Ms. Barrett states that the records of Advanced Taxidermy and Paige Enterprise that were produced to her support the conclusion that Mr. Galea owns 70% of the business and that James McGregor owns 30%. Ms. Barrett relies on the following records in support of an initial 70/30 split:

a) A letter dated October 4, 2004, from McBride Wallace Laurent & Cord LLP Barristers & Solicitors indicates that the shareholding of Advanced Taxidermy was as follows: 7 common shares held by Mr. Galea, and 3 common shares held by Mr. McGregor;

b) A property purchase agreement dated February 2007 indicates that the 3630 King Street Property was held 70% by Mr. Galea and 30% by Mr. McGregor;

c) The Income tax form filed with Canada Revenue Agency in 2008 for Paige Enterprises indicates that Mr. Galea held 7 common shares after the 3630 King Street property was rolled into the corporation;

[62] Mr. Galea argues that the draft showing a 70/30 split was prepared by the corporate lawyer but was never signed. He asserts that there was an initial mistake in the issuance of shares, and that when the mistake was discovered, it was corrected in the summer of 2015. The following documents were produced with regard to the purported change in the allocation of shares between Mr. Galea and Mr. McGregor on July 24, 2014:

i) A document entitled Shareholders Register and Resolutions of the Board of Directors for Advanced Taxidermy indicates that there was a change on July 24, 2013 with respect to Mr. Galea’s and Mr. McGregor’s shares, changing their holdings from 7 common shares and 3 common shares, respectively, to 5 common shares each;

ii) A Memorandum of Agreement and Resolution of the Board of Directors of Paige Enterprises dated July 24, 2013, indicates that the 3630 King Street Property is held 70% by Mr. Galea and 30% by Mr. McGregor;

iii) A Share Purchase Agreement dated July 24, 2013, indicates that Mr. Galea owns 77 common shares and Mr. Galea owns 33 common shares of Paige Enterprises, and that Mr. Galea is to sell 22 of his common shares to Mr. McGregor for $2.20.

iv) A handwritten note by Ms. Julia Stavreff dated April 5, 2016, indicates the shareholding of Advanced Taxidermy and of Paige Enterprises is 50% held by Mr. Galea and 50% held by Mr. McGregor.

[63] No shareholder register was produced for Paige Enterprises. In response to the question of how Mr. Galea’s interest potentially changed from 70% to 50%, Ms. Barrett was advised that “no shares were transferred to Shawn [Galea]”. In response to Ms. Barrett’s request for how Mr. Galea was compensated for potentially transferring two of his common shares of Advanced Taxidermy and Paige Enterprise to Mr. McGregor, she was advised that “no shares were transferred to Shawn”.

[64] No share certificates were produced, and no affidavit from the corporate lawyer was provided to support Mr. Galea’s explanation that there was an initial error in the allocation of shares. Mr. Galea’s assertion that there was an initial mistake in the issuance of shares, and that when the mistake was discovered it was corrected in the summer of 2014, is rendered improbable by the following:

a) The share transfer purportedly took place on July 24, 2014. Mr. and Ms. Galea separated on summer of March 27, 2014, later reconciled briefly, and finally separated on March 16, 2015. The purported share transfer therefore occurred when the Galea’s matrimonial problems were intensifying;

b) There is no evidence to support Mr. Galea’s assertion that the initial allocation of shares between him and Mr. McGregor was an error, and no acknowledgment of such an error by the lawyer who made the allocation;

c) A property purchase agreement dated February 2007 indicates that the 3630 King Street Property was held 70% by Mr. Galea and 30% by Mr. McGregor. It is improbable that if there was an error made in the initial allocation of shares in 2004, that error would not have been discovered three years later, when the property purchase agreement was signed;

d) The Income tax form filed with Canada Revenue Agency in 2008, for Paige Enterprises indicates that Mr. Galea held 7 common shares after the 3630 King Street property was rolled into the corporation;

e) Ms. Greer states in her affidavit that Mr. McGregor is very ill with a number of ailments, and that his productivity is a fraction of what it once was. She states that he is morose and despondent and that around the time of the alleged theft from Advanced Taxidermy, he became almost completely dysfunctional, vomiting, and unable to leave his bed. It is unlikely, in these circumstances, that Mr. Galea would have transferred more shares of Advanced Taxidermy to Mr. McGregor than were initially issued to him;

f) Advanced Taxidermy has made shareholder loans to Mr. Galea with no comparable loans to Mr. McGregor. This further supports the conclusion that Mr. Galea had control of the corporation and control over what was done with its income.

[65] For the foregoing reasons, I find, on a balance of probabilities, that Mr. Galea owns 70% of Advanced Taxidermy and Paige Enterprise. I further find the re-allocation of shares on July 24, 2014, which followed the initial separation of Mr. and Ms. Galea, was calculated to enable Mr. Galea to shelter his interest in the business from Ms. Galea.

Management fees

[66] Ms. Barrett begins her analysis with Mr. Galea’s Line 150 income as reported on his personal income tax returns for 2013 to 2015. She then makes the following adjustments:

a) She deducts the taxable dividends, and add the actual dividends received;

b) She deducts the taxable capital gains, and adds the actual capital gains received;

c) She deducts the carrying charges claimed in 2013; and

d) She adds the home storage expenses that Advanced Taxidermy deducted for Mr. Galea each year, as these amounts did not represent an incremental cost to him.

[67] In determining the corporate income available to Mr. Galea from Advanced Taxidermy, Ms. Barrett notes the following:

a) Accounts payable in each year appeared to be composed of mostly management fees payable. They did not represent trade payables to third parties. The management fees appeared to be regularly reversed in the year after they were expensed, which had the effect of understating pre-tax corporate income and overstating liabilities;

b) Deferred income appeared to be created by year-end adjustment, which estimated the revenues to be earned on projects not yet completed. That liability suggests that work-in-process should appear on the balance sheet, but they did not. Accordingly, the liabilities on the balance sheet appeared to be overstated each year;

c) There appeared to be no inventory recorded on the balance sheet, despite indicators that Advanced Taxidermy has held significant inventory at times. Accordingly, the assets appeared to be under-stated for inventory each year.

d) On December 31, 2015, cash and short-term investments were approximately 1.5 million; and

e) During the period reviewed, approximately $170,000 was withdrawn from Advanced Taxidermy in the form of shareholder loans.

[68] Ms. Barrett concluded that all the pre-tax corporate income could be distributed to the shareholders during the period reviewed. Based on the evidence referred to above, Ms. Barrett allocated 70% of the available pre-tax corporate income to Mr. Galea each year based on his apparent share of ownership. In each of the 2013 to 2015 fiscal years, Advanced Taxidermy expensed the following management fees:

• 2013: $325,712

• 2014: $365,801

• 2015: $280,970

[69] For the same period, Mr. Galea reported the following management fees from Advanced Taxidermy on his personal income tax return:

• 2013: $113,000

• 2014: $78,000

• 2015: $78,000

[70] Based on the foregoing, it is likely that Mr. Galea and Mr. McGregor did not report some of the management fees as income on their personal income tax returns. Ms. Barrett requested supporting documents to confirm whether or not the fees were properly recorded, but did not receive this information from Mr. Galea. She therefore assumed that the reported management fees for both Mr. Galea and Mr. McGregor were the same, and added 50% of the unreported portion to Mr. Galea’s income for 2013 to 2015 for Guidelines purposes.

Mr. Galea’s discretionary expenses paid by Advanced Taxidermy

[71] Ms. Barrett noted that Advanced Taxidermy paid certain discretionary expenses for Mr. Galea each ear. For example, Advanced Taxidermy paid all of his credit card balances. In response to Ms. Barrett’s request for a summary of discretionary expenses paid for by Advanced from 2013 to 2015, Ms. Barrett was advised that “any amounts that were paid by Advanced that were of a personal nature were charged against Mr. Galea’s shareholder loan”. Her review of Mr. Galea’s shareholder loan account disclosed virtually no adjustments made for personal expenses. She assumed that approximately 20% of the credit card payments on only the Canadian VISA, which included significant expenses for restaurants, jewelry, private investigation services, and family law professional fees, were discretionary. She therefore included the remainder as Mr. Galea’s income in each year.

[72] Ms. Barrett made no addition to income for unreported cash received by Advanced Taxidermy, although Ms. Galea, who was employed by the business during the parties’ marriage, stated in her affidavit that it received significant cash payments.

[73] Ms. Barrett calculated Mr. Galea’s estimated unreported management fees and estimated discretionary expenses as follows:

Unreported mgmt fees Discretionary expense

• 2013: $47,500 $26,706

• 2014: $102,475 $26,706

• 2015: $60,005 $56,070

Income tax gross-up

[74] Ms. Barrett added an income tax gross-up on Mr. Galea’s estimated unreported management fees and discretionary expenses as follows:

• 2013: $62,248

• 2014: $119,745

• 2015: $99,303

[75] Based on the foregoing additions to Mr. Galea’s Line 150 income, Ms. Barrett values his income in the relevant years as follows:

• 2013: $310,000

• 2014: $575,000

• 2015: $488,000

[76] Regarding the income gross-up, Ms. Barrett states:

An adjustment for amounts received on which lower tax or no income tax is paid is referred to as a gross-up. A gross-up adjusts amounts to a level that, after income taxes, leaves the earner with an equivalent amount of after-tax income. We believe that the applicability of a gross-up is a legal issue. You have instructed us to calculate the applicable gross-up on the amounts of the above benefits [Mr. Galea] received from estimated unreported management fees and discretionary expenses during the period of our review based on our findings and assumptions. Accordingly, we determine the applicable gross-up amounts in each year.

[77] Mr. Galea’s counsel did not make submissions as to what gross-up was appropriate. Where counsel do not make such submissions, the court may use the DivorceMate calculation of the gross-up, whereby CPP, Employment Insurance, and income tax are added to income based on the next dollar of earnings to arrive at the gross income. In Hudson v. Simoni, (2017), McGrath J., of the Newfoundland & Labrador Superior Court (Trial Division) (Family Division) stated:

[274] Ms. Hudson provided me with no calculations as to how she would gross up Mr. Simoni’s income but merely asserted that his income should be treated as approximately $150,000.00 a year on the basis that approximately $120,000.00 of income was not subject to tax. She estimated that this was a conservative figure. In light of my findings with respect to the adjustment required to her calculations, I cannot agree with the gross-up of income to $150,000.00. What I must do to calculate this gross up is to account for the fact that Mr. Simoni did have some reported Line 150 income in each year and treat the remainder of the $77,500.00 as income on which he does not pay tax. I have calculated this gross-up using the DivorceMate software for each year and on the assumption that Mr. Simoni will follow the same pattern of reporting income as he did in 2014 when CRA included income associated with his motor vehicle use. I have used 2014 as this was the year both parties used to estimate Mr. Simoni’s income. Due to changes in both provincial and federal taxes and brackets throughout the years, there are resulting minor differences with respect to imputed incomes for 2013 to 2016.[^19]

[78] In Boateng v. Totsio, (2013), Daley J. declined to apply the DivorceMate gross-up where counsel provided written submissions on the calculation of gross up, but without any supporting material or evidence. Counsel for the applicant made no specific submissions on the issue of whether the applicant’s income should be grossed up. Justice Daley directed counsel to arrange a further appearance before him to offer evidence on the issue. Justice Daley stated:

[88] …I find that the applicant has, in fact, arranged his business affairs to pay substantially less tax on income that would otherwise be payable and as a result the income as determined must be grossed up before the support amount is determined: Riel v. Holland, 2003 3433 (ONC).

[89] I have concluded that the applicant’s income, as it has been determined in the sum of $65,643.16, must be grossed up. No evidentiary basis has been offered as to the calculation of the applicable gross up.

[90] While DivorceMate does provide calculation for gross up with respect to income, the parties have not advised me through their counsel that they are content that the gross up calculation within DivorceMate be applied in these circumstances.

[91] Having no means of calculating gross up on the applicant’s income and no evidentiary record regarding this, counsel shall arrange to schedule a half day appearance before me to offer evidence with respect to the gross up of the applicant’s income.[^20]

[79] In the present case, Ms. Galea has provided Ms. Barrett’s report as evidence from which the gross-up can be calculated. Mr. Galea precluded himself from offering similar evidence by failing to deliver Ms. Russell’s report within the time prescribed by the Family Law Rules. The earliest date that the Trial Office can provide for a half-day appearance is in June 2018. I will, therefore, work with the evidence before me to determine the appropriate gross-up. Justice Snowie took that approach in Kozo v. Ahmen, (2015). In that case, income that the respondent husband earned in Dubai had to be grossed-up to arrive at an equivalent amount of Canadian income. Justice Snowie states:

[27] As such his income needs to be grossed up for a Canadian equivalent: Federal Child Support Guidelines, S.O.R./97-175 as s. 20(1), as amended. The respondent’s bonus in 2013 was approximately $32,000. He has chosen to take leaves of absences over the last two years in lieu of his bonus. That is his choice but it should not affect his income amount for the purposes of his child support obligation: Marquez v. Zapiola, 2013 BCCA 433. As such, I impute a modest gross-up of 30% tax on his base salary ($152,000) and bonus ($32,000) being $55,200 for an imputed gross income of $239,200 per year.[^21] [Emphasis added]

[80] Where evidence of the payor spouse’s income and income tax rate are available, the Court has used the average tax rate and adjusted it to the circumstances. In Joy v. Mullins, (2010), Justice Nolan states:

[85] It is necessary to gross-up the annual amount contributed each year by Mr. Mullins to take into account that these annual amounts represent after-tax dollars. In a series of decisions, judges of this court have “grossed up” a payor’s income to take into account the striking differences in tax consequences between salaried employees and persons in receipt of other forms of income. Orser v. Grant, [2000] O.J. No. 1429 is a leading case in Ontario in which Benotto J. analyzed the issue at paragraphs 10 to 13:

Gross-up for Tax

Mr. Grant has arranged his financial affairs so that he paid only $7,362.31 in income tax, substantially less than he would pay were he a salaried employee. It means that he enjoys a net income after tax of $55,405.67.

The Child Support Guidelines base support on the payor’s gross taxable income. One of the objectives of the guidelines is to ensure “consistent treatment” of those who are in “similar circumstances”. Thus, there are provisions to impute income where a parent is exempt from paying tax, lives in a lower taxed jurisdiction, or derives income from sources that are taxed at a lower rate.

Where, as here, a parent arranges his or her affairs to pay substantially less tax on income, the income must be grossed up before the table is applied. This is the only way to ensure the consistency mandated by the legislation.

Here, I have been asked to use a 36% average tax rate. This is reasonable. If I apply that gross-up to his net after tax income, his gross income would be over $85,000. Thus, Mr. Grant would have to earn this gross amount to net $55,405 for himself. This greater amount is what the table amount of support should be based on.

[86] I have applied those principles to the amount of after-tax income I have found Mr. Mullins made in 2007 and 2008 and the income I found he will have made in 2009. Because he initially paid no income tax in 2007 or 2008 on account of business losses, I have applied a 26 percent tax rate given Mr. Mullins’ personal deduction and current circumstances to the $46,502.00 I found he made in 2007 and 2008 and the $49,000.00 I found he would make in 2009. As a result, I find his adjusted line 150 income for 2007 and 2008 to be $58,592.00 and $61,740.00 for 2009. This is consistent with Mr. Mullins’ testimony that he expected to make more income in 2009 than in 2008. Accordingly, his child support for 2007 and 2008 is $544.00 per month based on an annual income of $58,592.00. For 2009, it is $573.00 per month based on an income of $61,740.00.[^22]

[81] The DivorceMate calculation of Mr. Galea’s income, with gross-up of the non-taxed income, is as follows:

2015 2014 2013

Line 150 Income 78,313 82,848 121,129

Taxable CDN dividends (all) 6 1,080 1,846

Actual CDN dividends (eligible) 4 783 1,338

Taxable capital gains 105 3,072 4,976

Actual capital gains 210 6,143 9,951

Other non-taxable income (auto gross-up) of mgmt. fees And discretionary expenses) 116,075 139,348 74,206

Other non-taxable income 194,592 230,595 48,732 (no gross-up – home storage and pre-tax corporate income) _______ ______ ______

TOTAL INCOME incl. GROSS-UP $498,689 607,695 342,734

[82] Ms. Barrett calculates Mr. Galea’s income, with gross-up, as follows:

2015 2014 2013

Line 150 Income $78,313 $82,478 $121,129

Taxable dividends (6) (1,080) (1,846)

Actual dividends 4 783 1,338

Taxable capital gains (105) (3,072) (4,976)

Actual capital gains 210 6,143 9,951

Carrying charges - - (726)

Storage at home 1,042 5,000 5,000

Pre-tax corporate income

Advanced Taxidermy 180,301 212,346 31,879

Paige Enterprises 13,249 13,249 11,853

Estimated unreported mgmt fees: 60,005 102,475 47,500

Estimated discretionary expenses 56,070 36,873 26,706

Income gross-up on unreported Mgmt fees & discretionary expenses 99,303 119,745 62,248

TOTAL INCOME incl. GROSS-UP: $488,386 $574,939 $310,057

[83] In comparison, Ms. Barrett’s assumptions as to the applicable gross-up are more favourable to Mr. Galea than those of the DivorceMate software. I therefore accept Ms. Barrett’s calculation of the gross-up, and her conclusion as to Mr. Galea’s income from 2013 to 2015.

The increase in Mr. Galea’s net worth since the parties’ separation

[84] During the marriage, Mr. and Ms. Galea resided in a custom built home that Mr. Galea valued at $1,000,000. The home was unencumbered by any mortgages. The couple sent Chase to a private school.

[85] Ms. Barrett notes that Mr. Galea reports $162,309.36 as expenses in his financial statement. He reports that his assets increased by $1,760,000 from the date of separation in March 2015 to September 7, 2016, the date of his financial statement.

[86] Mr. Galea’s net assets appear to have increased by $1,135,585.29 from the date of separation to the date of his financial statement. His financial statement records that his assets increased in value by $1,756,345.30. The records also show that his debts increased by $620,759.40, from nil on the date of separation to $620,760.18 on the date of the financial statement. His assets and debts increased as follows:

Increase in assets by $1,756,345.30:

Matrimonial home: No change Mr. Galea values the home at $1,000,000, both on the date of separation and on the date of his financial statement.

Household items: No change Mr. Galea values household contents at nil both on the date of separation and on the date of his financial statement.

Bank Accounts: $1,756,345.30 Mr. Galea states that the balance in his bank accounts increased from $324,994.46 on the date of separation to $2,081,339.78 on the date of his financial statement, an increase of $1,756,345.30. The increase is explained by the increase in the value of the Nesbitt Burns RRSP (account #37118361) from $264,655.00 on the date of separation to $2,054,093.00 on the date of the financial statement, and by the increase in the balance of Mr. Galea’s CIBC chequing account from nil on the date of separation to $27,182.13 on the date of the financial statement.

Increase in amount of Mr. Galea’s debts by $620,760.18:

Mortgage: $500,000 Mr. Galea reports that his mortgage on 747 King Street increased from nil on the date of separation to $500,000 on the date of his financial statement.

Legal fees: $40,709.40 Mr. Galea reports that his legal fees increased from nil on the date of separation to $40,709.40 on the date of the financial statement.

Expenses: $80,050.78 Mr. Galea states that his legal fees and personal expenses, which he says Advanced Taxidermy paid against his shareholder’s account, increased from nil on the date of separation to $80,050.78 on the date of the financial statement.

[87] Part of the debt that Mr. Galea acknowledged in his financial statement dates September 7, 2016, is accounted for by the additional $500,000 that he incurred after the date of separation to buy out Ms. Galea’s interest in the matrimonial home.

[88] The increase of $1,135,585.29 in Mr. Galea’s net assets over the 19 months from the date of separation to the date of his financial statement reflects a surplus income of $59,767.64 per month.

[89] Mr. Galea has not accounted for the increase in his net worth during the 19 months following the parties’ separation. In 2015, when Mr. and Ms. Galea separated, Advanced Taxidermy paid Mr. Galea and Mr. McGregor management fees of $280,970. From the date of separation on March 16, 2015 to September 7, 2016, when Mr. Galea swore his financial statement, his reported income declined, but his net assets increased by over a million dollars.

[90] Mr. Galea has provided no evidence refuting the inference, to be drawn from this evidence, that he had a greater income than he reported to the Canada Revenue Agency. Therefore, I find no facts detract from Ms. Barrett’s conclusion that Mr. Galea had a greater income than reported in the relevant years.

Alleged decline in Advanced Taxidermy’s profitability

[91] In his affidavit sworn February 22, 2017, Mr. Galea asserts that Advanced Taxidermy’s revenues have recently declined. He offers the following explanations for this decline:

a) Loss of customer confidence as a result of a theft on August 12, 2016 of a trailer full of unique and irreplaceable trophies, which Mr. Galea values at over $1.5 million, and a trailer with two ATV’s. These items were stolen from Advanced Taxidermy’s premises. Mr. Galea states that at “recent trade show” Advanced Taxidermy secured only $20,000 of business this year. He says the company typically records $70,000 or more of business at the show. He attributes the recent decline to the loss of customer confidence resulting from the theft.

b) A decline in the productivity of his partner, James McGregor, as a result of Mr. McGregor’s illness and a number of ailments. Mr. Galea supports this explanation with a letter dated January 23, 2017 from a family physician. Dr. Anita Roy states that Mr. McGregor suffers from diabetes mellitus, hypertension, a mild atherosclerotic heart disease, sleep apnea, obesity, hypercholesteremia, a left kidney cyst, and contact dermatitis of his hands, as well as keratoconus of both eyes. The letter from Dr. Roy does not comment on the effect, if any, of those conditions on Mr. McGregor’s capacity to work. Mr. Galea states that Mr. McGregor is visibly morose and despondent. He says that around the time of the theft from Advanced Taxidermy, Mr. McGregor became nearly dysfunctional; he was vomiting and unable to leave his bed. Mr. Galea notes that Advanced Taxidermy uses many toxic chemicals that impact negatively on the health of its employees and owners, and that two years ago, one of its top taxidermists died in his 30’s.

c) Advanced Taxidermy’s recent loss of its largest client, Cabela, as a result of that company’s acquisition by Bass Pro Shop. Bass Pro Shop has its own taxidermy shop and does not require Advanced Taxidermy’s services.

[92] Mr. Galea does not offer any records to substantiate the decline in revenues that he alleges, apart from the decline in orders at a single trade show. Attribution of a decline in revenue to a decline in customer confidence resulting from a theft is highly speculative. In the absence of long-term figures, and figures regarding the proportion of business that Advanced Taxidermy derives from the orders placed at the trade show Mr. Galea refers to, I am not prepared to extrapolate a permanent loss of profitability, or decline in annual income on the basis of the decline of $50,000 in the orders placed at that trade show.

[93] Similarly, in the absence of records of the proportion of its income that Advanced Taxidermy derived from Cabela, I am unable to calculate an amount by which to discount Advanced Taxidermy’s income, much less the amount by which to discount the income that Mr. Galea derived from it.

[94] With regard to Mr. McGregor’s decline in productivity, Ms. Galea, in her affidavit also sworn February 22, 2017, notes that Mr. McGregor’s health has been declining for a decade, and that the parties’ daughter, Paige Galea, is now painting and, over time, has taken on Mr. McGregor’s duties. Without records supporting a decline of income attributable to Mr. McGregor’s declining health, I am not prepared to conclude that Advanced Taxidermy’s income has, in fact, declined since the period of Ms. Barrett’s review.

[95] The changes in the income Mr. Galea derived from Advanced Taxidermy from 2013 to 2015, according to Ms. Barrett’s report, do not support a finding that Advanced Taxidermy’s profitability declined substantially over that period, coincident with a decline in Mr. McGregor’s health. The income that Mr. Galea derived from the business increased by 85.4% from 2013 to 2014 (an increase of $264,882 from the 2013 level of $310,057), and declined only 15% from 2014 to 2015 (a decline of $86,553 from the 2014 level of $574,939). Mr. Galea’s pre-tax corporate income from Advanced Taxidermy increased by 566% from 2013 to 2014 (by $180,467 from its 2013 level of $31,879), and declined by only 15% from 2014 to 2015 (a decline of $32,045 from its 2014 level of $212,346).

[96] For these reasons, I am not prepared to reduce the income to be imputed to Mr. Galea based on the recent events he alleges have diminished Advanced Taxidermy’s profitability.

The Schedules to Ms. Russell’s report

[97] In the absence of a final report from Ms. Russell, or the information required by Rule 23(25), or the acknowledgement of expert required by Rule 20.1 of the Family Law Rules, I am not prepared to rely on the information in Ms. Russell’s Schedules. In any event, I would find the Schedules to be unreliable for the following reasons:

a) At Schedule 1, Note 2, Ms. Russell indicates that management salaries of $198,000 that were expensed in 2015 would be reversed in 2016. This appears to reflect a yearly pattern of management fees being expensed, reducing pre-tax corporate income, not being paid to the shareholders, and not reported on Mr. Galea’s personal income tax returns. These fees were then reversed in the following year, resulting in income shifting.

b) There is no information for January and February of 2016, as is evident from Exhibit “E” of Lisa Greer’s affidavit sworn February 17, 2017;

c) At Schedule 1, Note 5, Ms. Russell indicates that pre-tax corporate income must be retained in case Advanced Taxidermy must cover client deposits/deferred income. The general ledgers provided for 2010, 2012, and 2014, which were the only ones provided, disclose refunds of only $845 in 2014 and $1,753 in 2012, which suggests that the retaining of pre-tax corporate income to cover all of the deposits/deferred income is unnecessary.

d) The 2016 corporate projections based on management’s excel sheets are not final and do not reflect year-end adjustments, which may be substantial. The projections are also not based on a filed income tax return.

e) Work-in-process appears to be omitted from Ms. Russell’s calculations. As Ms. Galea points out in her affidavit sworn February 22, 2017, customers provide Advanced Taxidermy with a 50% deposit with the balance paid at the completion of the work. As a result, it is expected that a significant value should be attributed to work-in-process. As of December 31, 2016, for example, Advanced Taxidermy would have had to receive $680,000 of deposits from customers without beginning a single job, which is highly unlikely.

f) Ms. Russell does not attribute any corporate income from Advanced Taxidermy to Mr. Galea. Yet Schedule 4 shows a shareholder loan of $354,129 payable by him as of December 31, 2016 and no shareholder loan to Mr. McGregor. This suggests that Mr. Galea made substantial withdrawals from the business that were in the nature of income, but which are not reflected as such in the Schedules.

[98] For the foregoing reasons, I impute income to Mr. Galea in the amount of $488,000 arrived at by Ms. Barrett. The temporary support amount that follows from this amount will be ordered paid on a without prejudice basis. This is so adjustments can be made by a trial judge based on a more complete evidentiary record, if necessary. This may be required, for example, if a final report from Mr. Galea’s expert, in admissible form, does in fact disclose that Advanced Taxidermy has suffered a genuine decline in its profitability, and that there has been a corresponding decline in Mr. Galea’s income.

b) What amount of temporary child support should Mr. Galea pay to Ms. Galea?

[99] According to the parties’ Interim Separation Agreement dated September 30, 2015, apart from holidays, Chase is to spend the first two weekends out of three with Mr. Galea, from Friday at 2:30 p.m., after school, until Monday, at the start of school at 8:20 a.m. or, if Monday is a holiday, until Tuesday at 8:20 a.m. Chase is in therapy on weekdays from 2:30 p.m. to 5:30 p.m., which according to the Agreement, is “neutral parenting time”. Based on this schedule, I deduct the 15 hours of therapy (3 hours per day x 5 days) from each week’s total of 168 hours (7 days x 24 hours x 3 weeks) to arrive at a total parenting time of 459 hours during each three week period.

[100] Assuming that a long weekend falls on each of Mr. Galea’s two-week access periods, which is unlikely, Chase would spend 32.7% of his time with Mr. Galea (that is, 63 hours, from Friday at 5:30 p.m. to Monday at 8:30 a.m. on the week that does not have a long weekend, and 87 hours on the week that does have a long weekend. This is assuming that Chase has no therapy on a holiday Monday). If there is no long weekend on either of Mr. Galea’s two access weekends in a three-week period, Chase would be with him 27.4% of the time.

[101] On this basis, I will apply the support table from the Federal Child Support Guidelines, rather than a set-off formula, to determine the amount of child support due for Chase. Based on Mr. Galea’s income of $488,000 per year, the amount of table child support owed is $3,764 per month.

c) Is Ms. Galea entitled to receive temporary spousal support from Mr. Galea?

Legislative framework

[102] Both the Family Law Act[^23] and the Divorce Act[^24] confer a broad discretion on judges to make an award of periodic or lump sum spousal support, or to make an award comprising both forms of support.

(i) Jurisdiction for making spousal support order

[103] Sections 34(1)(a) and (b) of the Family Law Act provides:

34(1) In an application under section 33, the court may make an interim or final order,

a) requiring that an amount be paid periodically, whether annually or otherwise and whether for an indefinite or limited period, or until the happening of a specified event; [and]

b) requiring that a lump sum be paid or held in trust. [Emphasis added]

[104] Sections 15.2(1) and (2) of the Divorce Act provide:

15.2(1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse.

Interim order

(2) Where an application is made under subsection (1), the court may, on application by either or both spouses, make an interim order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse, pending the determination of the application under subsection (1). [Emphasis added]

(ii) Objectives of spousal support order

[105] Both Acts set out the purposes of an order for spousal support and the factors to be taken into account. Section 15.2(6) of the Divorce Act provides:

15.2(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. [Emphasis added]

[106] Section 33(8) the Family Law Act sets out the purposes of spousal support as follows:

33 (8) An order for the support of a spouse should,

a) recognize the spouse's contribution to the relationship and the economic consequences of the relationship for the spouse;

b) share the economic burden of child support equitably;

c) make fair provision to assist the spouse to become able to contribute to his or her own support; and

d) relieve financial hardship, if this has not been done by orders under Parts I (Family Property) and II (Matrimonial Home). [Emphasis added]

(iii) Factors to be considered in determining entitlement to spousal support

[107] The Divorce Act sets out the factors the court is to consider in determining a claimant’s entitlement to spousal support and, if entitled, the amount. It provides:

15.2(4) In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including

a) the length of time the spouses cohabited;

b) the functions performed by each spouse during cohabitation; and

c) any order, agreement or arrangement relating to support of either spouse.

Spousal misconduct

(5) In making an order under subsection (1) or an interim order under subsection (2), the court shall not take into consideration any misconduct of a spouse in relation to the marriage.

Jurisprudence

[108] In Moge v. Moge, (1992), the Supreme Court of Canada commented on the purpose of spousal support in relieving economic hardship resulting from the marriage or its breakdown. Justice McLachlin, as she then was, stated:

… [T]he judge’s order should…grant relief from any economic hardship arising from the breakdown of the marriage. The focus here, it seems to me, is not on compensation for what the spouses have contributed to or gained from the marriage. The focus is rather post-marital need; if the breakdown of the marriage has created economic hardship for one or the other, the judge must attempt to grant relief from that hardship.[^25] [Emphasis added.]

[109] The circumstances to be considered when determining the amount of spousal support in relation to need include; the spouse’s capacity to contribute to her own support[^26]; the measures available for her to become able to provide for her own support; and the length of time and cost entailed for the dependent to take those measures.[^27]

[110] The determination of entitlement to spousal support does not involve only a consideration of needs and means. In determining the appropriate amount of spousal support, compensatory and non-compensatory considerations should be taken into account in an effort to equitably alleviate the economic consequences of the breakdown of the relationship.[^28] Entitlement can be based on compensatory, non-compensatory, or contractual grounds.[^29]

Compensatory support

[111] Because marriage is a joint endeavor, spousal support orders are compensatory. They are designed to bring about an equitable sharing of the benefits and burdens of the relationship, having regard to all the circumstances, including the advantages each of the parties derived from their relationship. Justice L’Heureux-Dubé stated in Moge:

Essentially, compensatory support intends that both spouses profit from the joint venture of marriage. The question is not what the disadvantaged spouse would have achieved had he or she not entered into the marriage. Rather the question is what was that spouse’s contribution to the marriage and was the other spouse advantaged by that contribution. If so, does equity demand a sharing of any advantage gained should the benefits of an advantaged spouse be apportioned. In practical terms, the issue will generally revolve around whether one spouse has gained an advantage in his or her ability to earn income or acquire assets that should be shared for at least some period of time.[^30] [Emphasis added.]

Contractual entitlement

[112] Contractual entitlement flows from the express or implied agreement between the parties to the marriage.[^31]

Non-compensatory Support

[113] Non-compensatory support is a residual basis for ordering support “where it is fit and just to do so.” Non-compensatory support is generally based on the recipient’s need for support, and the payor’s ability to provide such support.

Interim spousal support

[114] In Robertson v. Hotte, (1996), MacDougall J. set out a four-step analysis for determining whether a claimant is entitled to interim spousal support. He stated:

In reviewing the needs of the Applicant, the motions judge was advised that Ms. Hotte was not employed and was receiving government assistance and that her ability to earn income was limited as she had not been employed outside the home for a considerable period of time.

The court should not, at an interim application stage, place too much emphasis on the submission by the payor spouse of the dependent spouse’s failure to pursue self-sufficiency. It is apparent that Ms. Hotte has an obvious need and her proposed budget is a relatively modest budget.[^32]

[115] The test established in Robertson has been followed by a number of cases, including by O’Connor J. in Ferreira v. Ferreira (1998),[^33] and by Platana J. in Wilson v. Wilson (2002).[^34]

[116] While self-sufficiency is an objective that must be considered whenever determining the appropriateness and amount of spousal support under the Divorce Act, Ms. Galea’s failure to achieve self-sufficiency should not be given much emphasis, especially at this interim stage.

[117] In Driscoll v. Driscoll, (2009), Lemon J. cited with approval the British Columbia case of Robles v. Kuhn, (2009)[^35] for the helpful list of principles it sets out governing interim support motions. These principles can conveniently be grouped as follows:

Onus and Burden of Proof:

(a) Motions for interim support are summary in nature. The Court will generally not conduct a detailed investigation into the merits of a case because, at the stage of a motion for interim support, there is insufficient evidence to enable the Court to do so.

(b) A claimant need only establish a prima facie case for relief.[^36]

(c) Where contested issues of fact need to be resolved, especially those connected with the threshold issue of entitlement, it becomes less advisable to order interim support.

Criteria for Entitlement:

(a) The Court on an application for interim support should not unduly emphasize any one of the statutory considerations above others;

(b) That being said, the applicant’s needs and the respondent’s ability to pay often assume greater significance. The respondent’s need to achieve self-sufficiency often assumes less significance on applications for interim support than they do at trial.

Appropriate amount of support:

(a) Interim support order should be sufficient to allow a dependent spouse money to maintain a reasonable lifestyle pending trial.

(b) Interim support should allow the applicant to continue living at the same standard of living enjoyed prior to separation if the payor’s ability to pay warrants it.

(c) Interim support should be within the range suggested by the Spousal Support Advisory Guidelines unless exceptional circumstances indicate otherwise. [Emphasis added.]

Applying the legal principles to the facts of the present case

Contractual spousal support

[118] While there was no express agreement between Mr. and Ms. Galea regarding spousal support, each had a reasonable expectation, based on the long duration of their marriage, that they would derive an equal benefit from their respective contributions to it.

Compensatory Spousal Support

[119] Ms. Galea’s 25-year marriage to Mr. Galea was of a long duration. It produced three children for whom Ms. Galea assumed primary responsibility. This resulted in an advantage to Mr. Galea. During those years that he spent developing his skills as a taxidermist and in the management of a business, Ms. Galea was the children’s caregiver. Ms. Galea’s contribution to Mr. Galea’s career resulted in an occupational disadvantage to her, owing to the parties’ co-habitation at an early age, followed by marriage and children, and the fact that Ms. Galea never equipped herself for an occupation outside the home.

[120] As noted above, Mr. and Ms. Galea resided in a custom built home, unencumbered by mortgages, and sent Chase to a private school. They lived a comfortable lifestyle. It cannot be disputed that Ms. Galea has suffered an economic disadvantage by reason of the parties’ separation, as she is now deprived of Mr. Galea’s income and the lifestyle they previously enjoyed.

[121] Ms. Galea is entitled to compensation for the advantage that Mr. Galea was able to gain by being able to devote himself to his occupation as a taxidermist and being able to manage his business. Ms. Galea’s help in the endeavor resulted in economic disadvantage to her as a result of the marriage.

Non-compensatory spousal support

[122] It is not realistic to expect that Ms. Galea, at the age of 48, will immediately become financially self-sufficient at a standard of living approaching that which the parties enjoyed during the marriage. I find that Ms. Galea’s current need has resulted, in part, from the following facts:

a) Ms. Galea assisted Mr. Galea in his business;

b) Ms. Galea’s role in the marriage impeded her from developing her own financial self-sufficiency;

c) Mr. Galea failed to provide adequate support spousal to Ms. Galea after the parties separated, at least until the parties entered into their Agreement;

d) Ms. Galea’s age and lack of experience have prevented her from securing gainful employment since the parties’ separation.

[123] Ms. Galea was financially dependent on Mr. Galea for most of the parties’ 25-year marriage. The economic disadvantage and hardship that she suffered was made worse by the marriage breakdown. After Ms. Galea confronted Mr. Galea about an affair in 2012, Mr. Galea changed the locks at his work, withdrew the company credit card from Ms. Galea, and prevented her from accessing funds in the bank accounts that had supported the family during the marriage. Mr. Galea continued to deposit funds into the joint account, but these funds were depleted by automatic payments linked to Mr. Galea’s account and to his withdrawals, leaving little or no funds for Ms. Galea to pay her expenses.

[124] During the two years preceding the parties’ separation, Ms. Galea’s daughter, Brittaney, who was 30-years old and living temporarily in California, contracted Lyme’s disease and was in intensive care for three weeks, where she incurred substantial medical bills. Mr. Galea forbade Ms. Galea from providing financial support to Brittany and discontinued her access to the parties’ joint line of credit. After Brittany’s medical crisis, Ms. Galea was diagnosed with cancer and underwent treatment for 8 weeks, including chemotherapy and radiation. She received little help from Mr. Galea and was forced to rely on family and friends to take her to the treatments.

[125] Ms. Galea is 48 years old. She is responsible for the care of Chase, who suffers from cerebral palsy, and is unable to devote herself as fully to commercial employment as a result of this responsibility. I accept Ms. Galea’s evidence that she has been unable, as yet, to secure gainful employment in the culinary field, for which she obtained training following the parties’ separation. She is making a realistic effort to start a business in that field.

[126] For the foregoing reasons, I find that Ms. Galea is entitled to receive temporary spousal support from Mr. Galea both on compensatory and non-compensatory grounds.

d) What is Ms. Galea’s income for purposes of spousal support and the parties’ contribution to Chase’s special and extraordinary expenses?

Jurisprudence

[127] In determining a party’s capacity to earn income, the Court applies the following principles, among others:

a) There is a duty on the part of the spouse to actively seek out reasonable employment opportunities that will maximize their income potential.[^37]

b) Under-employment must be measured against what is to be reasonably expected of the spouse, having regard for his or her background, education, training, and experience.[^38]

c) When a parent experiences a sudden change in income, he or she may be given a “grace period” to adjust to the change and seek out employment in their field at a comparable remuneration before income will be imputed to them. However, if a spouse has been unable to secure comparable employment within a reasonable time frame, he or she will be required to accept other less remunerative opportunities in order to satisfy the obligation to contribute to the support of the parties’ child.[^39]

d) The amount of income that the Court imputes to a parent is a matter of discretion. The only limitation on the Court’s discretion is that there must be some basis in the evidence for the amount that the Court chooses to impute.[^40]

[128] The imputation of income pursuant to s. 19 of the FCSG is intended to ensure that separated spouses comply with their obligation to support each other financially, where appropriate, and do not exaggerate their need, or avoid their obligations, by a self-induced increase or reduction of their income.[^41]

[129] The Supreme Court of Canada in Drygala set out a three-part test to determine whether income should be imputed to a payor spouse. The same principles can be applied to the imputing of income to the recipient spouse:

a) The first part of the test is to ask whether the spouse is intentionally under-employed or unemployed. The onus is on the party alleging intentional unemployment or under-employment to prove that fact. He/she must provide an evidentiary basis for this finding.[^42]

b) If a spouse has made an unreasonable choice to earn less than he/she is capable of earning, the spouse is deemed to be intentionally under-employed. The issue then becomes whether the fact that the spouse is earning less income than he/she is theoretically able to earn resulted from actions that were both voluntary and reasonable.

c) When an employment decision results in a significant reduction of support by the payor, or a significant increase in need for spousal support by the recipient, it needs to be justified by compelling evidence.[^43] It must be reasoned, thoughtful, and highly practical.[^44]

Ms. Galea’s income during the marriage

[130] It is not disputed that during the marriage, Mr. Galea supported the family from his business earnings, and gave Ms. Galea access to the business accounts for that purpose. I find that their marriage was a traditional one, with Mr. Galea devoting himself to earning income, and Ms. Galea assuming primary responsibility for the household and raising the parties’ three children.

Minimum Wage in Ontario

[131] It is reasonable to infer that Ms. Galea, who is 48 years old, is employable and able to earn at least the minimum wage. From the date of separation until October 1, 2017, the minimum wage in Ontario was $11.40 per hour. Based on 36.5 hours per week, or 1752 working hours per year, that wage amounts to $19,972.80 per year. Since October 1, 2017, the minimum wage in Ontario has been $11.60 per hour. Based on the same number of working hours per year, that wage amounts to an annual income of $20,323.20.

Ms. Galea’s actual earnings since the parties’ separated

[132] In October/November 2012, Ms. Galea’s eldest daughter, Brittany, became ill with Lyme Disease. At about the same time, Ms. Galea was diagnosed with cancer. She was treated with chemotherapy and radiation for 8 weeks.

[133] After Ms. Galea’s cancer treatment, she attended culinary school. She is now trying to establish a business, “Rachel’s Gourmet Gone Wild”, which sells wholesome and prepared foods to high-end grocery stores. Ms. Galea says that her efforts to establish her business were impeded by having to balance her work obligations with her responsibilities to Chase.

[134] Ms. Galea proposes that the Court impute an income to her in the amount of $35,000 per year.

[135] In her financial statement sworn October 24, 2016, she reports that in 2015, she earned $2,886.50 per month, or $34,638 annually. I attribute $27,421.75 ($2,886.50 x 9.5) of this income to the 9.5 months from the parties’ separation on March 16, 2015, to the end of that year.

[136] On April 22, 2016, Ms. Galea sent an affidavit to Mr. Galea outlining the steps she had taken to establish her business, the expenses she incurred, the invoices rendered, as well as the obstacles faced and her future plans.

The offer of employment by Roberto Florindi

[137] Mr. Galea alleges that Ms. Galea was offered employment by the Terra Cotta Inn, who were prepared to pay her $60,000. He tendered an affidavit from the manager of the Inn, Roberto Florindi, sworn December 14, 2016, in which Mr. Florindi states that he would “very much like to employ [Ms. Galea] starting at $50,000 annually”.

[138] I do not find Mr. Florindi’s affidavit to be reliable evidence of Ms. Galea’s income earning capacity for the following reasons:

a) Mr. Florindi is Mr. Galea’s good friend and has evidently aligned himself with Mr. Galea in the present proceeding. He states, for example, “I would consider it to be tragic if Chase did not spend the majority, or at least half of the time with Shawn.”

b) Ms. Galea sent an e-mail to Mr. Florindi on January 4, 2017, to advise him that she would happily accept his offer of employment. Mr. Florindi did not respond to her e-mail.

c) Mr. Florindi employed Ms. Galea at the Terra Cotta Inn in the past, for approximately two days per week. She was tasked with making salads and “plating” desserts (i.e., arranging desserts on plates). He paid her $12.00 per hour. That was $.60 per hour above the then-minimum wage of $11.40. Based on 36.5 working hours per week, or 1752 working hours per year, the $12.00 per hour that Mr. Florindi paid Ms. Galea amounts to an annual income of $21,024.

d) Ms. Galea’s limited experience qualifies her only for employment as a sous chef. This position would command an income of $35,000 if she worked evenings and most weekends, which her current responsibilities for Chase do not permit. The income of an executive chef would be higher, but Ms. Galea does not yet qualify for employment in that position.

Ms. Galea’s spending since the parties separated

[139] In her financial statement, Ms. Galea reports expenses of $74,270.64, or $6,189.22 per month. Over the 19 months from March 16, 2015 to October 24, 2016, this amounted to $117,595.18. Given that her 2015 income was $27,421.75, she would have had a shortfall of $90,173.43 in her budget.

[140] Ms. Galea received $500,000 as compensation for her share of the matrimonial home. She obtained a mortgage of $109,000, and values the home she purchased for herself at $530,000. I infer that she used the balance of the funds, $79,000 ($109,000 mortgage, less the $30,000 she required to finance the balance of the purchase price of her new home), to cover the shortfall between her income and expenses. This left her with a net shortfall of $11,173.43 ($90,173.43 - $79,000) as of October 2016.

[141] Ms. Galea reports that her overall debt increased by $94,382.06 from the date of separation to the date of her financial statement (from $71,248.86 on the date of separation to $165,630.92 on the date of the statement. Part of the increase consisted of her $109,000 mortgage, which I have accounted for above. After deducting the mortgage from the debt she had on the date of the statement, her debt on that date is $56,630.92, which represented a decline of $14,617.94. This decline in debt exceeds her net shortfall of expenses by $3,444.51.

[142] The increase of $3,444.51 in Ms. Galea’s net asset position is a relatively small amount, only $181.29 per month when extended over the entire 19 months from the date of separation to the date of the financial statement. Ms. Galea states in her affidavit dated February 16, 2017 that Mr. Galea paid her $60,000 by way of a spousal RRSP rollover, and $60,000 in cash. I infer that these payments made up the $120,000 which Mr. Galea paid to her, over and above the $500,000 for her share of the matrimonial home at the time of the mediation/arbitration. Ms. Galea states that these will be reconciled with Mr. Galea’s retroactive support obligation at trial.

[143] Ms. Galea states that she had to withdraw $30,000 from her own RRSP in order to pay her day to day expenses. It may be that these funds, and the $60,000 that Ms. Galea received in cash from Mr. Galea, are accounted for by Chase’s expenses, including occupational therapy, swimming, Kids Comm, and daycare/babysitting, which Ms. Galea did not itemize in her financial statement or affidavits.

[144] Mr. Galea alleges that Mr. Galea dissipated Chase’s trust funds and failed to properly account for her disbursements. He refers to the amount of $500,000. But it is unclear whether this was the amount of the trust fund, or the amount Mr. Galea alleges Ms. Galea withdrew from the fund.

[145] Ms. Galea states that she forwarded an affidavit to Mr. Galea in June 2016 in which she set out the funds spent from Chase’s account and the purposes of the expenditures. She acknowledges that she used $45,515.73 to cover daily living expenses from Chase’s account after Mr. Galea discontinued her access to his business accounts, and that she incurred $64,401.53 in credit card debt, which she later re-paid, together with a $16,401.53 balance of her car loan, from her mortgage financing when she purchased her own home.

[146] Overall, I find that the information Ms. Galea has provided concerning the funds she has received from Mr. Galea and from her credit facilities can be roughly reconciled with the information she has given as to her assets and debts in her Financial Statement, and is consistent with her stated income and expenses since the parties’ separation.

[147] Ms. Galea’s stated expenses are moderate. They include $800 per month in legal fees, and $100 per month for education expenses. There are some discretionary expenses that could be questioned, including $292 per month for vacations and $80 per month for alcohol and tobacco. But the $150 per month she says she spends for entertainment/recreation, and $150 per month for meals outside the home are moderate, in the context of the parties’ lifestyle before their separation.

[148] In assessing how much income to impute to a spouse, the Court must have regard to the payor’s, or payee’s, capacity to earn income in light of such factors as employment history, age, education, skills, health, available employment opportunities, and the standard of living earned during the parties’ relationship. The Court looks at the amount of income the party could earn if he or she worked to capacity.[^45]

[149] I find that, to this point, Ms. Galea has been unable to obtain gainful employment. Her capacity to secure employment is limited. Based on the $35,000 income she was able to earn in 2015, and the Canada Child Tax Credit she received, I impute income to her at $39,762, which I round up to $40,000. Her income will be reviewed at trial after the child support for Chase and spousal support for Ms. Galea are in place.

e) What amount of spousal support should Mr. Galea pay to Ms. Galea?

[150] The Family Law Act sets out, in s. 33(9) the factors that the Court should consider in determining the amount of spousal support. It provides as follows:

(9) In determining the amount and duration, if any, of support for a spouse or parent in relation to need, the court shall consider all the circumstances of the parties, including:

a) the dependant’s and respondent’s current assets and means;

b) The assets and means that the dependant and respondent are likely to have in the future;

c) The dependant’s capacity to contribute to his or her own support;

d) The respondent’s capacity to provide support;

e) The dependant’s and respondent’s age and physical and mental health;

f) The dependant’s needs, in determining which the court shall have regard to the accustomed standard of living while the parties resided together;

g) The measures available for the dependant to become able to provide for his or her own support and the length of time and cost involved to enable the dependant to take those measures;

h) Any legal obligation of the respondent or dependant to provide support for another person;

i) The desirability of the dependant or respondent remaining at home to care for a child;

j) A contribution by the dependant to the realization of the respondent’s career potential;

k) Repealed

l) if the dependant is a spouse,

(i) the length of time the dependant and respondent cohabited,

(ii) The effect on the spouse’s earning capacity of the responsibilities assumed during cohabitation,

(iii) Whether the spouse has undertaken the care of a child who is of the age of eighteen years or over and unable by reason of illness, disability or other cause to withdraw from the charge of his or her parents;

(iv) Whether the spouse has undertaken to assist in the continuation of a program of education for a child eighteen years of age or over who is unable for that reason to withdraw from the charge of his or her parents,

(v) Any housekeeping, child care or other domestic service performed by the spouse for the family, as if the spouse were devoting the time spent in performing that service in remunerative employment and were contributing the earnings to the family’s support,

(vi) Repealed;

(vii) the effect on the spouse’s earnings and career development of the responsibility of caring for a child; and

m) any other legal right of the dependant to support, other than out of public money.

(10) The obligation to provide support for a spouse exists without regard to the conduct of either spouse, but the court may in determining the amount of support have regard to a course of conduct that is so unconscionable as to constitute an obvious and gross repudiation of the relationship. [Emphasis added]

Applying the legal principles to the facts of the present case

[151] Ms. Galea assumed principal responsibility for the household and raising the parties’ children. Beginning in about 1992, she was also employed by Advanced Taxidermy.

[152] When Chase was born three months premature in 2007, Ms. Galea ceased her employment in Advanced Taxidermy to care for him. Chase had frequent seizures during which he would stop breathing. He required special feeding support and experienced limitations in his movement. He required various therapies to assist him with his challenges, which Ms. Galea supervised.

[153] Ms. Galea states that in recent years, she has attempted to re-enter the workforce as a chef. In 2013, she decided to attend culinary school. She later launched a business in the name of “Rachel’s Gourmet Gone Wild”, but it was operating at a loss at the time she brought the present motion.

[154] Based on Mr. Galea’s income of $488,000, and Ms. Galea’s income of $40,000, the amount of spousal support to be paid, at the mid-point of the range suggested by the SSAG, is $11,374 monthly. Spousal support should commence November 1, 2016, which is one month after Ms. Galea delivered her Answer.

f) What contribution should Mr. and Ms. Galea make to the payment of Chase’s special and extraordinary expenses?

Legislative framework

[155] The contribution that parents are required to make to their children's education costs is governed by s. 7 of the Guidelines:

(1) In a child support order the court may, on either spouse's request, provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child's best interests and the reasonableness of the expense in relation to the means of the spouses and those of the child and to the family's spending pattern prior to the separation:

(a) Child care expenses incurred as a result of the custodial parent’s employment, illness, disability or education or training for employment;

(b) That portion of the medical and dental insurance premiums attributable to the child;

(c) Health-related expenses that exceed insurance reimbursement by at least $100 annually, including orthodontic treatment, professional counselling provided by a psychologist, social worker, psychiatrist or any other person, physiotherapy, occupational therapy, speech therapy and prescription drugs, hearing aids, glasses and contact lenses;

(d) Extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child’s particular needs;

(e) Expenses for post-secondary education; and

(f) Extraordinary expenses for extracurricular activities.

(1.1) For the purposes of paragraphs (1)(d) and (f), the term “extraordinary expenses” means

(a) expenses that exceed those that the spouse requesting an amount for the extraordinary expenses can reasonably cover, taking into account that spouse’s income and the amount that the spouse would receive under the applicable table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate; or

(b) where paragraph (a) is not applicable, expenses that the court considers are extraordinary taking into account

(i) the amount of the expense in relation to the income of the spouse requesting the amount, including the amount that the spouse would receive under the applicable table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate,

(ii) the nature and number of the educational programs and extracurricular activities,

(iii) any special needs and talents of the child or children,

(iv) the overall cost of the programs and activities, and

(v) any other similar factor that the court considers relevant.

Sharing of expense

(2) The guiding principle in determining the amount of an expense referred to in subsection (1) is that the expense is shared by the spouses in proportion to their respective incomes after deducting from the expense, the contribution, if any, from the child.

Subsidies, tax deductions, etc.

(3) Subject to subsection (4), in determining the amount of an expense referred to in subsection (1), the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense.[^46][Emphasis added]

[156] The well-established test for whether an expense is extraordinary is whether it is "reasonable and necessary", having regard to the parents' individual and collective means. The court must assess whether the expense is objectively sensible for this particular separated family. It considers a number of factors, including the parties' historic spending patterns.

[157] Once having determined that an expense is extraordinary, having regard to the parties' joint income, and that it is reasonable and necessary, having regard to the means and circumstances of the parents and child, the court must, pursuant to s. 7, apportion responsibility for the expense in proportion to the parties' incomes.

Jurisprudence

[158] In Titova v. Titov, in 2012, the Court of Appeal for Ontario set out the procedure courts must apply when determining whether to award special and extraordinary expenses pursuant to s. 7 of the FCSG, as follows:

Calculate each party’s income for child support purposes
Determine whether the claimed expenses fall within one of the enumerated categories of s. 7
Determine whether the claimed expenses are necessary “in relation to the child’s best interests”
Determine whether the claimed expenses are reasonable “in relation to the means of the spouses and those of the child and to the family’s spending pattern prior to the separation”
If the expenses fall under s. 7(1)(d) or (f) of the Guidelines, the trial judge determines whether the expenses are “extraordinary”.
Consider what amount, if any, the child should reasonably contribute to the payment of these expenses
Apply any tax deductions or credits.[^47] [Emphasis added.]

[159] Having completed this exercise, the court must then determine how the balance of the expenses should be apportioned between the parties.[^48]

Applying the legal principles to the facts of this case

[160] In the present case, the parties did not provide evidence or argument regarding Chase’s special and extraordinary expenses. If the parties are unable to agree on the amounts of these expenses, either party may apply to the court for this determination. In the meantime, they shall be guided by s. 7(2) and shall pay such expenses in proportion to their respective incomes.

[161] Based on Mr. Galea’s income of $488,000.00, and Ms. Galea’s income of $40,000.00, Mr. Galea shall pay 92% of Chase’s special and extraordinary expenses in the amounts which the parties shall agree upon or as the court may determine.

[162] Ms. Galea acknowledges that, in the absence of support from Mr. Galea, she withdrew $45,515.73 from Chase’s trust account, over which she had control, in order to pay Chase’s and her own day-to-day living expenses. She acknowledges that she must repay to the trust the amounts she withdrew for unauthorized purposes. This must be repaid from the amounts which Mr. Galea is required to pay her. Mr. Galea will therefore be credited with this amount against his contribution to the payment of Chase’s special and extraordinary expenses.

CONCLUSION AND ORDER

[163] For the reasons stated above, it is ordered, on a temporary basis and without prejudice to further adjudication:

Mr. Galea shall pay temporary child support to Ms. Galea in the amount of $3,764 per month, commencing April 1, 2015, based on his imputed annual income of $488,000.
Mr. Galea shall pay 92% of Chase’s special and extraordinary expenses, in such amounts as the parties shall agree or the court may determine, pursuant to s. 7 of the FCSG, in proportion to Mr. Gaela’s income of $488,000 and Ms. Galea’s income of $40,000.
Mr. Galea shall be credited with $45,515.73 against his obligation to contribute to Chase’s special and extraordinary expenses, for the amount that Ms. Galea acknowledges she withdrew from Chase’s trust account.
Mr. Galea shall pay temporary spousal support to Ms. Galea in the amount of $11,374 per month, commencing November 1, 2016.
Unless the Support Order and Support Deduction Order is withdrawn from the Office of the Director of the Family Responsibility Office, it shall be enforced by the Director and amounts owing under the Support Order shall be paid to the Director, who shall pay them to the party to whom they are owed.
If the parties are unable to agree on the costs of the motion, they may submit written arguments not to exceed four pages, plus a costs outline, by November 10, 2017.

Price J.

Released: October 23, 2017

[^1]: Family Law Act, R.S.O. 1990, c. F.3, as amended, section 31(1) [^2]: Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), as amended, [^3]: Federal Child Support Guidelines, O.Reg. 391/97 [^4]: Spousal Support Advisory Guidelines, (Ottawa: Department of Justice, 2008), by Carol J. Rogerson and D.A. Rollie Thompson, online at: http://www.justice.gc.ca/eng/pi/fcy-fea/spo-epo/g-ld/spag/p3.html#a332. [^5]: Fisher v. Fisher, 2008 ONCA 11, 88 O.R. (3d) 241. [^6]: Gagne v. Gagne, 2011 188 (ON CA), at para. 9. [^7]: Morey v. Morey, 2009 ONSC 12117, para. 18 [^8]: Fung v. Lin, 2001 28193 (ON SC), 2001 ONSC 28193, [2001] O.J. No. 456 [^9]: See, for example, Boston v. Boston, 2001 SCC 43, [2001] 2 S.C.R. 413, at para. 66. [^10]: Rilli v. Rilli, [2006] O.J. No. 2142. See also: Pellerin v. Pellerin, 2009 60671 (ON SC). [^11]: Drygala v. Pauli, 2002 41868 (ON CA), 61 O.R. (3d) 711. [^12]: Pagnotta v. Malozewski, 2008 14800 (ON SCDC). [^13]: Sarafinchin v. Sarafinchin, 2000 ONSC 22639, paras. 13 and 14 [^14]: Henderson v. McClean, 2015 ONCJ 244, paras. 46 to 50 [^15]: Meade v Meade, 2002 2806 (ON SC), 2002 CarswellOnt 2670, para. 81 [^16]: Jeffery Fine v. Janice Fine, 2013 ONSC 6816 [^17]: Younghusband v. Younghusband, 2013 ONSC 6550, paras. 38 and 39 [^18]: Y. v F.T., 2017 ONSC 4395, paras. 173-175, [^19]: Hudson v. Simoni, ‘2017] N.J. No. 46; 2017 NLTD(F) 6 [^20]: Boateng v. Botsio, 2013 ONSC 4922, paras. 88 to 91 [^21]: Kozo v. Ahmed, 2015 ONSC 3608, para. 27 [^22]: Joy v. Mullins, 2010 ONSC 1742, [^23]: Family Law Act, R.S.O. 1990, c. F.3. [^24]: Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.). [^25]: Moge v. Moge, 1992 25 (SCC), [1992] 3 S.C.R. 813. [^26]: Family Law Act, s. 33(9)(c). [^27]: Family Law Act, s. 33(9)(g). [^28]: Rioux v. Rioux, 2009 ONCA 569, [2009] 97 O.R. (3d) 102 (Ont. C.A.). [^29]: Bracklow v. Bracklow, 1999 715 (SCC), [1999] 1 S.C.R. 420. [^30]: Moge v. Moge, at para. 45. [^31]: See Bracklow v. Bracklow. [^32]: Robertson v. Hotte (1996), 1996 8083 (ON SC), 21 R.F.L. (4th) 452, at paras. 18-19 (Ont. Ct. J. (Gen. Div.)). [^33]: Ferreira v. Ferreira (1998), 41 R.F.L. (4th) 101, at para. 9 (Ont. Ct. J. (Gen. Div.)). [^34]: Wilson v. Wilson (2002), 116 A.C.W.S. (3d) 567, at para. 15 (Ont. Sup. Ct.). [^35]: Robles v. Kuhn, 2009 BCSC 1163. [^36]: Gibson v. Gibson, 2009 55342 (ON SC), at para. 13, citing McLeod and Mamo, Annual Review of Family Law, 2008, (Toronto: Thomson Carswell 2008), at p. 421. [^37]: Drygala, supra; L.(N). V. P. (B.), 2000 22516 (ON SC). [^38]: West v. West, 2001 28216 (ON SC). [^39]: Barta v. Barta, 2005 CarswellOnt 74 (Sup. Ct.); M.(S.D.) v. M.(K.F.), 2004 CarswellBC 70 (W.L. Can) (S. C.); Quintel v. Quintel, 1997 CarswellOnt 3213 (Sup. Ct. (Gen. Div.)). [^40]: Korwin v. Potworowski, 2007 CarswellOnt 6852 (W.L. Can.) (C.A.). [^41]: Thompson v. Gilchrist, 2012 ONSC 4137; DePace v. Michienzi, 2000 22560 (ON SC). [^42]: Homsi v. Zaya, 2009 ONCA 322. [^43]: Riel v. Holland, 2003 3433 (ON CA), at para. 23. [^44]: Hagner v. Hawkins 2005 43294 (ON SC), at para. 19. [^45]: Lawson v. Lawson, 2006 26573 (ON CA), 2006 26573 (ONCA). [^46]: Federal Child Support Guidelines, s. 7 [^47]: Titova v. Titov, 2012 ONCA 864, at para. 23. [^48]: Wawzonek v. Page, 2015 ONSC 4374, at para. 198.

Galea v. Galea, 2017 ONSC 6335

Case Summary

OVERVIEW

BACKGROUND FACTS

ISSUES

PARTIES’ POSITIONS

ANALYSIS AND EVIDENCE

a) What is Mr. Galea’s income for purposes of support?

b) What amount of temporary child support should Mr. Galea pay to Ms. Galea?

c) Is Ms. Galea entitled to receive temporary spousal support from Mr. Galea?

d) What is Ms. Galea’s income for purposes of spousal support and the parties’ contribution to Chase’s special and extraordinary expenses?

e) What amount of spousal support should Mr. Galea pay to Ms. Galea?

f) What contribution should Mr. and Ms. Galea make to the payment of Chase’s special and extraordinary expenses?

CONCLUSION AND ORDER

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Expert Witnesses

Issues

Statutory Provisions 7

Legal Tests 3

Legislation 3