N.H. v. J.H., 2017 ONSC 6607
CITATION: N.H. v. J.H., 2017 ONSC 6607
COURT FILE NO.: 12-3056-0
DATE: 2017/11/03
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
N.H.
Applicant
– and –
J.H.
Respondent
COUNSEL:
Brian Ludmer, for the Applicant
Richard P. Bowles, for the Respondent
HEARD: February 13-17, 21-24, 27, 28; March 1-3, 6-10, 13-17; May 23-26, 29-31; June 1-2 ; August 2- 4, 9-10, 2017
REASONS FOR JUDGMENT
PART Two: ProPerty and Support
J. Mackinnon J.
Introduction
[1] Part One of these reasons, determining the parenting issues in the case, was released on August 15, 2017 (2017 ONSC 4867). Part Two addresses the remaining property and support issues. These include determining net family property, calculating the equalization payment owing, addressing claims for child support, section 7 expenses, spousal support and occupation rent. There were also claims for post separation credits and a request that the court reallocate responsibility for some of the expenses occurred during the litigation, in particular, the costs of supervised access.
[2] The parties were married on June 29, 1997. They separated on December 27, 2011. On that day the applicant left the matrimonial home, in which the respondent and children continued to reside. The spouses were divorced on May 1, 2013. Corollary issues were severed for future determination.
[3] The applicant is 46 years old. He has a Bachelor and a Masters degree in Electrical Engineering, and a Masters of Business Administration. His current employment is with Bell Canada in the area of network planning.
[4] The respondent is 47 years old. She too has a Bachelor degree in Engineering, plus a law degree. She is currently employed as a corporate in house legal director. She is employed full time but works mostly out of her home.
[5] During cohabitation and after separation the respondent had been the lead parent. She had more of the hands on care and took charge of the organizational aspects of parenting. Both parents have always been involved in parenting their children.
[6] The children resided primarily with the respondent mother until April, 2017. Their son, A.S.H. continues to reside primarily with her. On April 6 their daughter A.K.H., went to the applicant’s home for a period of respite following a serious argument between her and her mother. The court maintained her primary residence with the applicant until August 15, 2017 when the final order provided for week about shared residential time with each parent.
[7] The applicant commenced paying child support on March 1, 2013. The respondent has paid all of the children’s extraordinary expenses without contribution from him. The respondent has continued to reside in the matrimonial home throughout. Neither an order for exclusive possession or sale was sought on an interim basis. The matrimonial home has been mortgage free since prior to separation.
[8] The applicant is the spousal support claimant. Entitlement, quantum and duration are all in issue. The applicant also seeks an award of occupation rent in relation to the matrimonial home.
Equalization of Net Family Property
[9] Many of the values in the parties’ net family property statements were agreed to. The disputed values have been determined as follows.
Value of the Matrimonial Home
[10] The matrimonial home is jointly owned. It is and has been unencumbered since prior to the date of separation. Each party has had an appraisal completed, but neither was done as at the date of separation, or at the current date. Insofar as the title is joint, the value will not impact on the equalization payment.
[11] The applicant’s appraisal as of September 7, 2016 was for $455,000.00. The respondent’s appraisal as of June 22, 2016 was for $450,000.00. Neither appraiser testified. Rather, each appraisal was filed in evidence on consent.
[12] I reviewed the appraisal reports. I accept the value of $455,000.00 for two reasons: the comparables used in that report are more current and are closer in location to the matrimonial home, in comparison to the other report.
[13] The parties have agreed to a 30 day period after receipt of these reasons to try to agree to a purchase and sale transaction between themselves. If they do not reach an agreement within that time frame, the house shall be listed for sale with an agent and on terms agreed to by the parties. Failing agreement the terms of sale shall be determined by a master.
Contents, Jewellery and Vehicles
[14] I have accepted the appraisal of contents submitted by the applicant, and the jewellery valuations submitted by the respondent. There were no other appraisals. I accepted the respondent’s estimated value for the applicant’s watch and wedding band in the absence of an appraisal of them.
[15] I valued the Honda Odyessy at $11,400.00, which is the mid-point Black Book value at the date of separation. The appraised value provided by the respondent was prepared in March 2013. It showed a lower value based on the estimated cost to repair damage to the front end, but I did not know when these damages occurred in relation to the date of separation.
[16] The 2008 Audi was purchased on October 14, 2011 for $31,890.00 plus taxes. The applicant financed the entire cost by a loan of $36,432.00. By the date of separation he had reduced this balance to $31,878.00. The applicant submitted the mid-point Black Book value of $23,025.00 for the vehicle at the date of separation. The respondent submitted the vehicle should be valued at the same amount as the loan outstanding at the date of separation. I was not persuaded that the vehicle, which was purchased as a pre-owned vehicle less than three months before separation would depreciate by almost $9,000.00 in that space of time. The retail price listed in the Black Book is some $2,000.00 lower than what the applicant had paid for his vehicle. I concluded that going to the high end book value, plus $2,000.00 was appropriate in these circumstances.
Bank Account, Savings, Pensions
[17] I accepted the value of the RBC U.S. Dollar account as stated by the applicant. He had converted it to Canadian dollars, whereas the respondent had not.
[18] I valued the applicant’s Nortel pension at $14,000.00 net of a discount for future income tax. The applicant did not provide a valuation of this pension. He claimed to have been unable to do so, even though the respondent was able to obtain a valuation of her Nortel pension, a copy of which the applicant had, including contact information he could have used. In June, I advised the applicant that he could submit a valuation up until the release of my decision. Even with this indulgence, no valuation was forthcoming.
[19] The applicant provided a “guesstimate” of his Nortel pension by a rough proration in relation to the years of employment he had worked at Nortel in comparison to the respondent. His calculation also assumed that she had earned 1.5 times more than him during her employment at Nortel, and that her pension would have compounded or grown by exponential increases based on her longer term of employment. In this way, he submitted his Nortel pension should be valued at $7,212.17.
[20] I did not have evidence of the parties’ specific annual incomes during their Nortel years. The applicant did testify that he had earned more than the respondent during the first few years of marriage, which would have included at least some of these years. Nor was there evidence to support the 15% reduction he used in his calculation to offset her alleged compounding/exponential increases. I concluded that it was appropriate to draw an inference against the applicant in relation to his failure to have his pension properly valued. I inferred that his income matched hers for the 2.5 years he was employed at Nortel, (1998-2001). I did not allow the proposed 15 % reduction.
[21] In this way, adopting his pro-rated method, I achieved a value before tax discount of $16,317.00. The tax discount established in the respondent’s Nortel pension valuation was 22 %. Given the difference between the respondent’s pension value of $55,478.00 and his of $16,317.00, I also inferred that a lower tax rate should be applied to his Nortel pension.
[22] In so doing I specifically rejected the 26% tax discount rate suggested in the valuation of his much larger Bell Canada pension. A reduction of 22% would have produced a net value of $12,727.00. Having inferred that his rate should be lower than that, I decided to accept $14,000.00 as the net value of the applicant’s Nortel pension, being the amount proposed by the respondent.
Bonuses
[23] Both parties received bonuses in 2012 on account of work performed in 2011. It was agreed that the respondent’s bonus was $23,172.01. The applicant testified that his was $7,000.00. He submitted he had no entitlement to it on the date of separation because, had he quit his employment, he would not have received it. It is a known fact that the applicant had not quit on the date of separation. Accordingly, I included his stated value of his bonus in his net family property.
Children’s Trusts and RESP
[24] Two bank accounts held in trust for the children have already been divided equally between the parents. They also agreed that the RESP with a balance of $40,898.36 on the date of separation shall be equally divided between them, together with the accrual to this balance to the date of division. Each parent will manage his/her own RESP for the children and will have the benefit of their own post separation contributions to it. This provision shall be included as a term of my order.
[25] Given this agreement, it was also agreed that the values of the bank accounts and RESP shall have no impact on the net family property determination.
Tax Rates
[26] The respondent’s Nortel pension valuation report posited a 22 % discount on account of the future income taxes associated with the pension. I accept the respondent’s proposal that the same discount rate should be applied to her other registered accounts.
[27] The applicant’s Bell Canada pension valuation report posited a discount rate of 26% on account of the future income tax associated with it.
[28] The applicant submitted he should be entitled to a higher discount rate, such as 35% for his other registered accounts. He had no evidence to support any rate other than 26%. Nor did he testify with respect to potential disposition dates of any of these assets. In my view, his submission was without merit. Accordingly I have applied 26% to all of his registered accounts.
Date of Marriage Deduction
[29] The value of the applicant’s RRSP was in dispute. I find he established the value to a date close enough to the date of marriage to constitute a reasonable value. Although disputed during the trial the respondent did provide statements establishing the cash surrender value of her life insurance policy and the amount her student loans prior to trial completion. I accept those values.
[30] For these reasons, I have determined the parties net family properties as set out below. In the result, the respondent shall pay the applicant an equalization payment of $54,023.39.
NET FAMILY PROPERTY STATEMENT
| ITEM | Applicant | Respondent |
|---|---|---|
| 1. Assets | ||
| Matrimonial Home | $227,500.00 | $227,500.00 |
| Household Items | $9,420.00 | |
| Jewellery | $1,000.00 | $6,130.00 |
| Vehicles | $26,725.00 | $11,400.00 |
| Bank Accounts | $15,396.90 | $56,456.68 |
| $14.25 | $14.25 | |
| $2,942.32 | $2,942.32 | |
| $1,159.98 | ||
| USD Account | $1,194.64 | |
| $225,294.14 | $225,294.14 | |
| RRSP | $17,383.29 | $1,029.51 |
| $10,753.50 | $17,402.95 | |
| $61,036.98 | $11,217.03 | |
| $87,020.06 | ||
| Sunlife/Avaya DCPP | $29,847.39 | |
| TSFA | $11,756.00 | $11,690.37 |
| Nortel Pension | $14,000.00 | $43,273.00 |
| Bell Canada Pension | $134,797.00 | |
| Bell Stock | $10,478.32 | |
| Life Insurance, Sunlife CSV | $21,449.87 | |
| Receivables | ||
| Kanata Montessori | $13,267.00 | |
| Bonus | $7,000.00 | $23,172.01 |
| TOTAL 1. | $763,947.80 | $803,011.10 |
| 2. Debts and Liabilities | ||
| Tax on RRSP’s at 22% | $37,015.31 | |
| Tax on RRSP’s and Bell Pension at 26 % | $58,233.31 | |
| Audi Loan | $31,878.00 | |
| TOTAL 2. | $90,111.31 | $37,015.31 |
| 3. Date of Marriage Deduction | ||
| Assets | ||
| Household items and vehicle | $8,000.00 | |
| RRSP/Savings | $4,450.80 | $2,111.00 |
| Sunlife CSV | $5,270.09 | |
| Engagement Ring | $1,800.00 | |
| Debts | ||
| Student Loans | $4,854.40 | $17,472.18 |
| TOTAL 3. | $7,596.40 | ($8,291.09) |
| Total 1 | $763,947.80 | $803,011.10 |
| -Total 2 | $90,111.31 | $37,015.31 |
| -Total 3 | $7,596.40 | ($8,291.09) |
| Net Family Property | $666,240.09 | $774,286.88 |
| EQUALIZATION PAYMENT OWED TO APPLICANT | $54,023.39 |
Miscellaneous Property
[31] By agreement, the respondent shall retain the VIA points and the Aeroplan points accumulated during cohabitation.
Credits to Child Support Owing for 2012 to February 2013
[32] The applicant claims a credit against child support owing for 2012 and for the first two months of 2013. The credit he seeks is equal to the difference between his deposits and his withdrawals to and from the joint account up until May 2013, namely $22,149.44.
[33] During testimony the applicant agreed with the respondent that this should be reduced by $5,156.00 being his share of the CIBC credit card debt at the date of separation. He also agreed to or did not dispute a reduction of $296.94 for his share of an AMEX bill and $652.44 for his share of three cheques written on the account before separation but not cashed until after it. These reductions produce a credit to him of $16,044.06.
[34] The respondent raised other points in response to the applicant’s calculation of the credit due to him. Contrary to her submission, I find he did establish that he deposited the amount of $7,739.02 to their joint account. Property taxes and roof repairs that she paid for will be addressed under the claim for occupation rent. There were other amounts the respondent claimed as debts at the date of separation with a view to reducing his credit by one half of those amounts. These were not shown as debts on any of her financial or net family property statements. Nor were they admitted. I find that these items were not proven.
[35] For these reasons, I find the applicant is entitled to a credit of $16,044.06
Other Litigation Expenses
[36] The applicant submitted schedules outlining payments made to the parenting co-ordinator, to Dr. Leonoff and for access supervision. The parties’ contract with the parenting co-ordinator governs their obligations to her, and is not an issue in the case. The fees payable to the assessor are properly considered as disbursements in the case, and may be dealt with as part of any award of costs at the conclusion of the trial.
[37] Temporary orders were made by Kershman J directing which parent should pay which portion of the fees associated with access supervision. Primarily, his April 16, 2015 order required the applicant to bear this expense based on the Justice’s finding that supervision was required due to the father’s unresolved anger issues, which were becoming more prevalent and were affecting both children to the point they did not want to see their father unless access was supervised. Subsequently Justice Kershman required the respondent to contribute to supervision costs above the rate of $15 per hour because she was insisting on a replacement supervisor.
[38] As the trial judge I have jurisdiction to reallocate the motion judge’s distribution of the expenses of supervised access if appropriate to do so, based on relevant findings I may have made in my reasons for judgment. For this reason, and to enable both parties to make informed submissions, they may also do so as part of their submissions on the costs of the action.
Child Support
[39] From January 2012 to early April 2017, the children’s primary residence was with the respondent. The applicant was responsible to pay her table child support throughout. His line 150 incomes and the applicable table support are set out here:
| Year | Line 150 Income | Child Support Payable | Total |
|---|---|---|---|
| 2012 | $131,648.00 | $1,800.00 x 12 | $21,600.00 |
| 2013 | $139,235.00 | $1,887.00 x 12 | $22,644.00 |
| 2014 | $146,544.00 | $1,972.00 x 12 | $23,644.00 |
| 2015 | $149,789.00 | $2,010.00 x 12 | $24,120.00 |
| 2016 | $128,280.00 | $1,760.00 x 12 | $21,120.00 |
| 2017 (estimate) | $148,196.00 | $1,990.00 x 3 | $5,970.00 |
| Total: | $119,118.00 |
[40] It is agreed that the applicant has paid a total of child support during this period of $82,340.60. Together with the credit I have found he is entitled to, he has paid $98,384.66, leaving a balance due from him of $20,733.34.
[41] Starting April 6, 2017, A.K.H.’s primary residence was with the applicant until it became shared equally between the parents pursuant to my order dated August 15, 2017. A.S.H.’s primary residence continued to be with the respondent. Accordingly, from April 6 to mid-August, each parent owed the other parent child support for one child. The respondent’s line 150 income for 2016 was $280,278.00. Therefore, the set off amount is calculated as follows:
• Respondent owes child support for 1 child of $2,227.00 per month • Applicant owes child support for 1 child of $1,249.00 per month
[42] The set off amount of $978.00 per month is owed by the respondent to the applicant for April (from April 6), for May, June, July and for one half of August. I have calculated this as four months plus one week for a total owed by the respondent of $4,138.00. The applicant would still owe the respondent for the first week of April for both children, calculated at $460.00. This reduces her obligation to him for April to mid-August to $3,678.00.
[43] Since mid-August, A.S.H. continues in primary residence with the respondent and A.K.H. resides for equal periods of time with each parent. For child support purposes this is sometimes called a “hybrid” arrangement. The most common approach used to determine child support in this arrangement is called the “economies of scale” approach. See for example Hofsteede v. Hofsteede, 2006 CarswellOnt 428 (SCJ); Murphy v. Murphy, 2012 ONSC 1627.
[44] Pursuant to this approach, the “ hybrid set off ” is calculated by setting off the child support for one child against the child support for two children as follows:
• Support for two children payable by the applicant is $1,990.00 per month • Support for one child payable by the respondent is $2,227.00 per month
[45] By this approach, the respondent owes child support of $237.00 per month to the applicant. Accordingly the respondent is ordered to pay the applicant $109.47 child support on August 15, 2017 and $237.00 on the first of each month thereafter until further order of the court. To bring these payments up to date to the end of November 2017, she will owe the applicant $820.47.
[46] I know that during the weeks from June 24 until August 18 the child, A.K.H. was at her mother’s home. This was in contravention of temporary orders I had made prior to the release of the parenting decision. During these weeks efforts were being made by the Children’s Aid Society and by the applicant father to secure the child’s return to him. I also know that child support is for the benefit of the child and that an access denial does not entitle the denied parent to withhold child support. I am unaware of any case awarding child support to a parent who has a child in her residence for a short period contrary to the terms of the applicable court order. Nor does it seem appropriate that the applicant should be denied child support when at any time during these weeks he might have been successful in securing the child’s return to him in accordance with the outstanding order. For these reasons I have addressed the child support obligations in accordance with the terms of the residential court order in place at the time.
Section 7 Expenses
[47] The respondent seeks an order that the parties shall share s. 7 expenses incurred for the children proportional to their respective incomes, provided neither parent shall be obliged to contribute to any such expense unless his or her consent to do so is first obtained in writing, consent not to be unreasonably withheld. This order is made on a go forward basis.
[48] The respondent also claims a retroactive contribution towards s.7 expenses incurred from 2012 to date.
[49] The breakdown by year is:
| Year | Activities | Child Care Portion | Total |
|---|---|---|---|
| 2012 | $10,930.46 | $23,889.49 | $34,819.95 |
| 2013 | $12,959.67 | $21,739.28 | $34,698.95 |
| 2014 | $11,297.31 | $17,989.67 | $29,286.98 |
| 2015 | $7,037.82 | $12,261.38 | $19,299.20 |
| 2016 | $7,444.79 | $8,363.23 | $15,808.02 |
| Grand Total: | $133,913.10 |
[50] The applicant concedes these amounts for each year:
| Year | Activities | Child Care Portion | Total |
|---|---|---|---|
| 2012 | $8,496.46 | $12,136.15 | $20,632.61 |
| 2013 | $8,867.19 | $7,282.50 | $16,149.69 |
| 2014 | $8,891.59 | $7,293.50 | $16,185.46 |
| 2015 | $4,767.00 | $10,718.18 | $15,485.18 |
| 2016 | $7,444.79 | $7,843.23 | $15,288.02 |
| Grand Total: | $83,740.96 |
[51] These figures are before taking into account the available income tax deductions and child tax credits.
[52] Section 7 of the Child Support Guidelines states:
Special or extraordinary expenses
7 (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.
Definition of “extraordinary expenses”
(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
[53] I have reviewed the expenses claimed for extracurricular activities in relation to s. 7 (1.1) and the position of the parties. Most of the activities and expenses were not disputed. I have disallowed individual expenses equal to or less than $100.00. In the context of the respondent’s income and the table amount of child support she can reasonably be expected to cover those amounts. The expenses allowed are set out below by year:
| Year | Total | Father’s Percentage Before Tax Credits |
|---|---|---|
| 2012 | $9,860.46 | $4,032.92 |
| 2013 | $11,788.37 | $4,679.98 |
| 2014 | $9,859.16 | $4,121.12 |
| 2015 | $6,304.82 | $2,584.97 |
| 2016 | $7,003.04 | $2191.95 |
| Total: | $44,815.85 | $17,613.94 |
[54] The parents employed a nanny for child care since 2008. The respondent continued this practice after separation. Since separation the nanny has also done housework. In calculating her claim for child care the respondent included only hours in the week when at least one child was in the home. She has reduced the hours claimed when A.S.H. started school and again with his full time attendance at school. At an appropriate age she reduced the hours claimed to before and after school care. In this way, the respondent submits she has only claimed the child care part of the salary.
[55] The respondent has also included after school programs, and summer camps that replaced home care during the summer.
[56] The key issue with respect to child care is whether the proportion of the expense allocated by the respondent for her nanny/housekeeper to child care is appropriate. The applicant submits that the hours actually related to child care are less than claimed.
[57] I agree generally with the approach taken by the respondent. I have reduced the amount of her claim pertaining to the weeks of the year when the children are not attending school. It appeared that the nanny did not take her holidays to overlap with the mother’s during the children’s vacation. The timing of the employee’s vacation is an issue between the respondent/employer and her employee. If their arrangement is that they do not overlap the respondent’s vacation, that should be the respondent’s expense, not the applicant’s.
[58] I have also reduced the child care hours per week to 5 hours per day when A.S.H. was in senior kindergarten, and to 3 hours per day when both children were in full time school attendance.
[59] In this way, I have determined a reduction in the amount of child care expenses claimed of $12,083.00 allocated over the years as follows:
| Year | Reduction to child care claim | Allowable Child Care | Father’s % Before Tax Deduction |
|---|---|---|---|
| 2012 | $2,303.00 | $21,586.49 | $8,828.87 |
| 2013 | $3,452.40 | $18,286.88 | $7,259.89 |
| 2014 | $3,255.35 | $14,734.32 | $6,158.94 |
| 2015 | $2,552.25 | $9,709.13 | $3,980.74 |
| 2016 | $520.00 | $7,843.23 | $2,454.93 |
| Grand Total: | $12,083.00 | $72,160.05 | $28,683.37 |
[60] The applicant’s percentage share of the combined section 7 expenses for child care and extraordinary activities totals $46,297.31 before taking into account the after tax amount. Counsel shall calculate the net amount owing for each of the calendar years of 2012-2016 inclusive. If they do not agree, arrangements should be made through the trial coordinator’s office to address the disagreement with me.
Spousal Support
[61] The applicant seeks a lump sum award of spousal support calculated to equalize the net disposable income in the two households for the period 2012 to and including 2016. Based on his Divorce Mate calculations this would total $236,628.00. This amount far exceeds the upper end of the net present value suggested by the Spousal Support Advisory Guidelines. Additionally, in all of those years the respondent was the custodial parent with primary residential care of both children. The submission that the custodial payer formula suggested by the SSAG results in a lower percentage of NDI to the applicant is an insufficient reason to deviate from that formula.
[62] The SSAG range in 2012, based on the applicant’s Divorce Mate is $670.00 per month at the low end, $782.00 per month at the mid-point and $894.00 per month at the high end.
[63] The respondent denies entitlement to spousal support. If the court finds the applicant is entitled to spousal support, then, the respondent submits the court should consider an 18 month time limited, non-compensatory award, in accordance with the custodial payor formula, and based on the parties incomes at the date of separation.
[64] The Divorce Act, (R.S.C., 1985, c. 3 (2nd Supp.)), section 15.2 (4)(5) and (6) states as follows:
Factors
(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.
Objectives of spousal support order
(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should
(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
(b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
[65] The respondent relied on two cases in support of her position that the applicant is not entitled to spousal support. The first was Gray v. Gray, 2014 ONCA 659. In that case, the parties were married for 14 years, with four children. The claimant had arranged her work to accommodate child care responsibilities for four children, took frequent unpaid leaves from work to meet child care and household responsibilities, and had primary care of the children post separation. Her roles and responsibilities during the cohabitation enabled her husband to pursue his career without undue concern for day to day child rearing, during which time his income increased substantially. Further, the support claimant was prevented from working outside of the house by serious health issues arising just after the date of separation. The Court of Appeal agreed that she was entitled to support on a needs basis in relation to standard of living at separation:
27 One of the objectives of the Divorce Act is to relieve economic hardship. Need is not measured solely to ensure a subsistence existence, but rather should be assessed through the lens of viewing marriage as an economic partnership. As stated by this court in Marinangeli v. Marinangeli (2003), 2003 27673 (ON CA), 66 O.R. (3d) 40 at para. 74, in determining need, courts ought to be guided in part by the principle that the spouse receiving support is entitled to maintain the standard of living to which she was accustomed at the time cohabitation ceased. The analysis must consider the recipient's ability to support herself, in light of her income and reasonable expenses.
[66] It also found that she was entitled to spousal support on a compensatory basis based on the responsibilities undertaken by both parties during marriage and post separation:
38 The purpose of compensatory support is to share the economic advantages and disadvantages that accrued because of the marriage and its subsequent breakdown. In Moge v. Moge, at p. 861, para. 70, the Supreme Court explained the principle behind the compensatory model of support as follows:
Today, though more and more women are working outside the home, such employment continues to play a secondary role and sacrifices continue to be made for the sake of domestic considerations. These sacrifices often impair the ability of the partner who makes them (usually the wife) to maximize her earning potential because she may tend to forego educational and career advancement opportunities. These same sacrifices may also enhance the earning potential of the other spouse (usually the husband) who, because his wife is tending to such matters, is free to pursue economic goals.
[67] The respondent’s submission is that the applicant’s claim to entitlement on a compensatory basis is not supported by this case. But that is not the only basis of entitlement.
[68] The second case was Kerr v. Erland, 2014 ONSC 3555. In this case, the support complainant was found to have no entitlement to spousal support, after nine years of marriage, with 2 children. The Court recognized that the claimant had the lower income of the two spouses, but found at paragraph 127, that “there was no evidence to suggest he is, or was at any time post separation, in need of financial support from her, nor that his standard of living has deteriorated due to the breakup of the marriage.” In addition, the Court found that he was not entitled to spousal support on a compensatory basis. He had not forgone career opportunities. Rather the other spouse supported his career decisions and had made several sacrifices in her career for the sake of the family. Nor had the claimant contributed in any significant way to his spouse’s career.
[69] Again, this case is persuasive with respect to the applicant having not established entitlement on a compensatory basis.
[70] I find the applicant is entitled to spousal support. In Bracklow v. Bracklow, 1999 715 (SCC), [1999] 1 S.C.R. 420, the Supreme Court articulated three bases upon which entitlement to spousal support may be founded: compensatory, non-compensatory (needs based), and contractual. The Court stated at: paragraphs, 40, 41, and 43:
40 While the statutes contemplate an obligation of support based on the grounds of contract and compensation, they do not confine the obligation to these grounds. The "ability and capacity of, and the reasonable efforts made by, either or both spouses to support themselves" (Family Relations Act, s. 89(1)(d)), suggests a concern with need that transcends compensation or contract. Even if a spouse has foregone no career opportunities or has not otherwise been handicapped by the marriage, the court is required to consider that spouse's actual ability to fend for himself or herself and the effort that has been made to do so, including efforts after the marriage breakdown. Similarly, "economic circumstances" (s. 89(1)(e)) invites broad consideration of all factors relating to the parties' financial positions, not just those related to compensation. The same may be said for the broad injunction of the Divorce Act that the court consider the "condition, means, needs and other circumstances of each spouse". To be sure, these factors may support arguments based on compensation for what happened during the marriage and its breakdown. But they invite an inquiry that goes beyond compensation to the actual situation of the parties at the time of the application. Thus, the basic social obligation model may equally be seen to occupy the statutory provisions.
41 Section 15.2(6) of the Divorce Act, which sets out the objectives of support orders, also speaks to these non-compensatory factors. The first two objectives -- to recognize the economic consequences of the marriage or its breakdown and to apportion between the spouses financial consequences of child care over and above child support payments -- are primarily related to compensation. But the third and fourth objectives are difficult to confine to that goal. "[E]conomic hardship . . . arising from the breakdown of the marriage" is capable of encompassing not only health or career disadvantages arising from the marriage breakdown properly the subject of compensation (perhaps more directly covered in s. 15.2(6)(a): see Payne on Divorce, supra, at pp. 251-53), but the mere fact that a person who formerly enjoyed intra-spousal entitlement to support now finds herself or himself without it. Looking only at compensation, one merely asks what loss the marriage or marriage breakup caused that would not have been suffered but for the marriage. But even where loss in this sense cannot be established, the breakup may cause economic hardship in a larger, non-compensatory sense. Such an interpretation supports the independent inclusion of s. 15.2(6)(c) as a separate consideration from s. 15.2(6)(a). Thus, Rogerson sees s. 15.2(6)(c), "the principle of compensation for the economic disadvantages of the marriage breakdown as distinct from the disadvantages of the marriage", as an explicit recognition of "non-compensatory" support ("Spousal Support After Moge", supra, at pp. 371-72 (emphasis in original)).
43 In summary, nothing in the Family Relations Act or the Divorce Act suggests that the only foundations for spousal support are compensatory…But while the focus of the Act may have shifted or broadened, it retains the older idea that spouses may have an obligation to meet or contribute to the needs of their former partners where they have the capacity to pay, even in the absence of a contractual or compensatory foundation for the obligation. Need alone may be enough.
[71] Entitlement may arise from economic disadvantage arising from the marriage breakdown. Fisher v. Fisher, 2008 ONCA 11 is a case where the parties were married for 19 years and had no children. The husband’s annual income was $140,000.00; the wife’s was $30,000. The Court of Appeal noted that the parties had formed a relationship of financial interdependence. A consequence of the separation for the lower income earner was the loss of the standard of living enabled by their joint incomes. The appeal court substituted a support order for a term of seven years, without the possibility of a review. Although the marriage duration was 19 years, after a seven year period of support, the claimant, who was 41 at the time of separation, would either earn a higher income or adapt to a different life style. The Court stated at paragraphs 53 and 57:
53 Self-sufficiency, with its connotation of economic independence, is a relative concept. It is not achieved simply because a former spouse can meet basic expenses on a particular amount of income; rather, self-sufficiency relates to the ability to support a reasonable standard of living. It is to be assessed in relation to the economic partnership the parties enjoyed and could sustain during cohabitation, and that they can reasonably anticipate after separation. See Linton v. Linton (1990), 1990 2597 (ON CA), 1 O.R. (3d) 1 (C.A.) at 27-28. Thus, a determination of self-sufficiency requires consideration of the parties' present and potential incomes, their standard of living during marriage, the efficacy of any suggested steps to increase a party's means, the parties' likely post-separation circumstances (including the impact of equalization13 of their property), the duration of their cohabitation and any other relevant factors.
57 In this case, I have already noted that the appellant's claim is largely a needs-based one arising from the financial dependence that developed mainly in the latter years of the marriage when the respondent's income began to increase significantly. By the time of separation, the parties' anticipated sharing an average joint income of about $125,325.14
[72] Accordingly, in Fisher, the claimant’s entitlement to spousal support was primarily based on her inability to attain self-sufficiency in light of the martial standard of living. The Court went on to state that:
59 The question remains whether it is reasonable to expect the appellant to gradually adjust her standard of living to one commensurate with her own income. The answer depends on a balancing of all the objectives and factors, which I will address under quantum of support.
[73] Here, the parties’ cohabitated for 14.5 years. They have 2 children, now 13 and almost 11years of age. Aside from maternity leaves taken by the respondent, both spouses have been employed outside the home throughout the marriage. Prior to marriage, the applicant had a Bachelor’s and Master’s Degree in Electrical Engineering. During marriage he earned an EMBA. As noted previously, the respondent has engineering and law degrees. Starting in about 2000, her income began to exceed the applicant’s. In the last 3 years of marriage, her income exceeded his by more than $90,000.00 each year.
[74] The parties did very well financially during their marriage. Their house was paid off before separation. Their combined net family properties approached $1.5 million dollars. This included significant savings, investments and RRSP accounts. Clearly they lived well within their incomes and put significant priority on debt reduction and savings.
[75] The applicant did not forego any job opportunities during the marriage. He did not sacrifice his career to advance that of the respondent’s. He was an involved parent, but has not claimed that his parenting responsibilities detracted from his earning ability. He enjoys his employment with Bell Canada, which has been continuous since 2001. He has job security there and has not looked for work outside of Bell Canada.
[76] The respondent submits that he has lived at a lower standard of living since separation than before it, as well as in comparison to that of the respondent since separation. He also states a shortfall in income over expenses. Based on his expected income for 2017, of $148,196, he is short some $3,600.00 per month according to his financial statement. I note that his expenses include access supervision fees of $1,698.00 per month which he no longer incurs, plus $750.00 per month and $4,000.00 per month for the custody evaluation and legal fees. Hopefully he will no longer incur these expenses with the conclusion of this litigation. If so, he would show a monthly surplus of just under $3,000.00. His expense list does not include anything by way of savings.
[77] It is also modest in comparison to the respondent’s. Her expenditures for a non-child related “house assistant”, house cleaning, personal clothing, fitness, RRSP and RESP savings, and entertainment/recreation exceed his by $2,450.33 per month. This differential increased by an additional $500.00 per month when she increased her monthly vacation expense by that amount in her May, 2017 financial statement.
[78] Additionally, in that financial statement, she deposed her income had increased to $280,277.00 per year. In the result, even with increased expenses and a fresh entry of $10,000.00 per month for legal fees, the respondent still showed a monthly surplus of $2,318.00.
[79] I also note that the respondent has lived in the mortgage free matrimonial home since separation. By comparison, the applicant currently pays $1,037.00 per month for his mortgage.
[80] The applicant also submitted that the increase in the respondent’s net worth post separation had outstripped his. When disposition costs are removed from his list of debts (except for his Bell pension) in fact their net worth’s remain very comparable.
[81] That the applicant is entitled to spousal support based on need in relation to accustomed standard of living and economic disadvantage arising from the breakdown of the marriage is also supported by other decisions of the Ontario Court of Appeal. In Cassidy v. McNeil, 2010 ONCA 218, the Court said at paragraphs 68 and 69:
68 The husband points to his financial circumstances post-separation and argues that the wife is not in need of spousal support because her financial statement showed no shortfall between her income and her expenses. The husband is correct. The wife's financial statement simply matched her current budget to her current revenues. However, the wife testified that her post-separation lifestyle was actually lower than that of the husband. Moreover, I observe, under s. 3.3.2 of the SSAG, the formulae for spousal support are based not on budget, but on "income sharing as the method for determining the amount of spousal support".
69 Finally, the husband argues that the wife did not enjoy an elevated lifestyle because, as found by the trial judge, the parties lived frugally. However, this argument ignores the fact that the wife would have benefited from the parties' joint incomes, even if the parties gave priority to their children and their mortgage during the marriage. In addition, the husband's argument also ignores the obvious expectation that, once the children were grown, their joint incomes would benefit them both. Over the 23 years of their marriage, the parties' expectations and interdependency would have evolved into an economic merger of their interests.7 That merger, together with the wife's somewhat compromised career path, meets the threshold of entitlement to spousal support.
[82] In Mason v. Mason, 2016 ONCA 725, the Court also held at para 201:
201 The issue of need is measured against the parties' marital standard of living. The wife will be able to convert some of her assets from equalization into income, but it will not compare to that produced by the business. As the trial judge stated, self-sufficiency during the wife's working life, measured against the marital standard of living, will be an elusive goal. On the whole, the wife's claim to support suggests a result towards the high end of the range.
[83] In Wawzonek v. Page, 2015 ONSC 4374, the Superior Court noted at paragraph 214 that spousal support has been awarded, “where an independent but financially weaker spouse required assistance transitioning to a lower standard of living.” In Wawzonek, a lump sum award based on three years of spousal support was ordered after 28 year marriage.
[84] In Racco v. Racco, 2014 ONCA 330, the Court of Appeal upheld a lump sum award to allow a spouse to adjust to a reduced standard of living:
40 A limited-term support award is generally designed to enable the recipient, after a short term marriage, to either achieve self-sufficiency or adjust to a lower standard of living. According to Moge, limited-term support should be rarely awarded in marriages of long duration. Where limited-term support is awarded after a long term marriage, particularly one with children, the term must be long enough to satisfy the objectives of the Divorce Act.
[85] The facts here support needs based entitlement, that is on a non-compensatory basis, related to the economic disadvantage flowing from the marriage breakdown. That disadvantage is primarily related to the applicant’s diminished ability to replicate the debt reduction and savings standard established during the marriage.
[86] His lack of contribution to the respondent’s career development and lack of sacrifices in respect of his own career arising from the roles and responsibilities assumed during marriage are factors moving the applicant’s claim away from the high end of the range. Similarly, the duration of time in which the applicant’s dependency on the respondent’s higher income existed was for some 11 of the 14 years of marriage. Accordingly, while a marriage of medium length duration, the period of dependency by the support claimant is of a shorter duration.
[87] As stated in the Spousal Support Advisory Guidelines: The Revised Users Guide”, Rogerson and Thompson, 2016, Chapter 3, page 10:
Non-compensatory claims involve claims based on need. “Need” can mean an inability to meet basic needs, but it has also generally been interpreted to cover a significant decline in standard of living from the martial standard. Non-compensatory support reflects the economic interdependency that develops as a result of a shared life, including significant elements of reliance and expectation, summed up in the phase “merger over time”.
Common Markers of non-compensatory claims include: the length of the relationship, the drop in standard of living for the claimant after separation, and economic hardship experienced by the claimant.
[88] Further, the applicant is able to meet his basic needs on his own income. His entitlement derives from “economic disadvantage” rather than “economic hardship.”
[89] If awarded, a lump sum based on a time limited award is a factor that would support an award in the mid to upper part of the range.
[90] The applicant does seek a lump sum. The leading Ontario case is Davis v. Crawford, 2011 ONCA 294, [2011] O.J. No. 1719 (C.A.), where it was held that a lump sum award need not be limited to situations of real risk of non-payment of periodic support or other very unusual circumstances. Rather the trial judge has a broad discretion in determining whether spousal support should be periodic, lump sum or a combination of both forms of support. The Court said at paragraphs 67 and 68:
67 The advantages of making such an award will be highly variable and case-specific. They can include but are not limited to: terminating ongoing contact or ties between the spouses for any number of reasons (for example: short-term marriage; domestic violence; second marriage with no children, etc.); providing capital to meet an immediate need on the part of a dependant spouse; ensuring adequate support will be paid in circumstances where there is a real risk of non-payment of periodic support, a lack of proper financial disclosure or where the payor has the ability to pay lump sum but not periodic support; and satisfying immediately an award of retroactive spousal support.
68 Similarly, the disadvantages of such an award can include: the real possibility that the means and needs of the parties will change over time, leading to the need for a variation; the fact that the parties will be effectively deprived of the right to apply for a variation of the lump sum award; and the difficulties inherent in calculating an appropriate award of lump sum spousal support where lump sum support is awarded in place of ongoing indefinite periodic support.
[91] In this case, the respondent does have the means to make a lump sum payment, even if this requires financing or selling the former matrimonial home. The award requested was on a retroactive basis. Ending this vestige of the spousal relationship is a strong advantage in this particular case. The nature of the entitlement, to short limited term support lends itself to expression as a lump sum. In Racco v. Racco, supra, the Court of Appeal said:
38 I turn now to address the trial judge's description of the award as "transitional" support. In my view, this description does not reflect what the trial judge actually awarded. For that reason, I address the concept of transitional support and its connection to limited-term support.
39 Transitional support is not a category of support. It is a word that is sometimes used to describe a spousal support award that is for a brief period of time, in other words, a short limited-term support award. It was the word "transitional" that appears to underlie the appellant's submission that the amount of the award was excessive. Since the phrase "transitional support" is vernacular rather than a recognized legal term, it is generally not advisable to use it.
40 A limited-term support award is generally designed to enable the recipient, after a short term marriage, to either achieve self-sufficiency or adjust to a lower standard of living. According to Moge, limited-term support should be rarely awarded in marriages of long duration. Where limited-term support is awarded after a long term marriage, particularly one with children, the term must be long enough to satisfy the objectives of the Divorce Act.
[92] Accordingly, I find that a lump sum award is appropriate, calculated with reference to a short, time limited award. The applicant’s request was for a lump sum to cover the five years of 2012-2016, albeit in an amount sufficient to equalize the parties’ net disposable income over those years. I also note that the SSAG durational range for periodic support is 7 to 14 years. The duration assumed by the Divorce Mate net present value calculation is 10 years, 6 months which is the mid-point duration.
[93] I have considered quantum having regard to the parties’ incomes set out in their Notice of Assessment for 2012 as an reasonable representation of income upon which to calculate a lump sum. I also note that the s. 7 expenses in 2012 were at their highest and declined each year thereafter. The lump sum should not, in fairness, be calculated based only on that year. Even though I find the award should reflect short term time limited periodic support, here, the quantum of spousal support suggested by the SSAG is impacted quite significantly by the amount and distribution of section 7 expenses between the parties. Accordingly, I have also considered the SSAG ranges at other time during the 2012-2016, when the section 7 expenses were lower, still in relation to the 2012 income. In this way, I have not relied on one particular calculation. Exercising my discretion in all of these circumstances, I fix the spousal support lump sum award at $45,000.00
Occupation Rent
[94] The applicant seeks an award of occupation rent for the period 2012 forward until the sale of the matrimonial home, net of major repairs paid by the respondent. The parties have agreed that the share of rent on which to consider this claim over the years in question should be taken as $1,000.00 per month.
[95] A good summary of factors to consider in relation to a claim for occupation rent is provided in Casey v. Casey, [2013] S.J. No. 308 (CA) at paragraph 48:
48 From the jurisprudence the following principles may be drawn regarding the awarding of occupational rent on a matrimonial home:
Occupational rent is a remedy which may be utilized to obtain justice and equity in appropriate circumstances.
The remedy is exceptional and should be used cautiously.
The following factors, where relevant, are appropriately considered:
The conduct of both spouses, including failure to pay support, the circumstances under which the non-occupying spouse left the home, and if and when the non-occupying spouse moved for a sale of the home (Peltier at paras. 16-17; Wilgoshat paras. 99 and 109; Good at para. 90).
Where the children are residing and who is supporting them (Good at para. 90; Peltierat paras. 16-17; Wilgoshat para. 108).
If and when a demand for occupational rent was made (Wilgosh at paras. 100 and 106, Good at para. 90, and Peltierat para. 16).
Financial difficulty experienced by the non-occupying spouse caused by being deprived of the equity in the home (Peltierat paras. 16-17; Wilgoshat para. 106).
Who is paying for the expenses associated with the home. This includes who is paying the mortgage and other upkeep expenses (maintenance, insurance, taxes, etc.). If there is no mortgage, occupational rent may be needed to equalize accommodation expenses (Good at para. 90; Peltierat paras. 16-17; Wilgoshat paras. 105-106 and 108).
Whether the occupying spouse has increased or decreased the selling value of the property (Peltierat paras. 16-17).
Any other competing claims in the litigation that may offset an award of occupational rent (Wilgosh at para. 108; Goodat para. 92).
- The remedy is a discretionary one requiring the balancing of the relevant factors to determine whether occupational rent is reasonable in the totality of the circumstances of the case.
[96] In Griffiths v. Zambosco, 2001 24097 (ON CA), [2001] O.J. No. 2096 (CA), the Court noted at paragraph 49:
49 Since Griffiths and Sloan owned the matrimonial home jointly, and since Griffiths occupied it for over six years after he and Sloan separated, the trial judge clearly had jurisdiction to order Griffiths to pay occupation rent if it was reasonable and equitable to do so. See Irrsack v. Irrsack (1979), 1979 1647 (ON CA), 27 O.R. (2d) 478 (C.A.). The relevant factors to be considered when occupation rent is in issue will vary from case to case. However, in a family law context some factors are consistently taken into account. They include:
The timing of the claim for occupation rent;
The duration of the occupancy;
The inability of the non-resident spouse to realize on her equity in the property;
Any reasonable credits to be set off against occupation rent;
Any other competing claims in the litigation.
[97] In considering these factors, I make the following findings:
• The claim was made by the applicant in February 2013. He moved out in December 27, 2011, leaving the respondent and children in the home. In the circumstances of this case, the concession of occupancy to her, with the children, until the claim was made, was fair, reasonable and appropriate. I decline to consider occupation rent prior to February 2013.
• The occupancy by the respondent commenced with the date of separation and continues to date. She had had mortgage free accommodation throughout.
• No motion for sale was brought during the litigation.
• The applicant did pay child support throughout (having regard to my findings for 2012) and although he did not contribute to s. 7 expenses over the years, he will now by reason of my final order.
• The respondent had a spousal support obligation to the applicant which was not met contemporaneously, but will be by reason of my final order.
• The applicant did not have access to his equity in the home. A consequence has been that in acquiring a new house he has incurred a mortgage debt of $244,000.00. Had he received his equity in a timely way, he would have been able to borrow a significantly lower amount.
• The respondent paid for the insurance and taxes throughout, and incurred $8,599.30 to replace the roof. The property taxes were approximately $5,000.00 each year. The insurance was $75.00 per month. Accordingly, she is entitled to a credit against occupation rent of one half of these amounts which amounts to $18,558.00 commencing from February 2013 calculated to the end of November 2017.
[98] I have also considered that the equalization payment is relatively small in comparison to the applicant’s equity in the house. An award of pre-judgment interest on the equalization payment would not address his inability to access his equity over the years. On the other hand, the applicant will benefit from any increase in value of the matrimonial home since the date of separation. And rental income received in the normal course is taxable.
[99] Based on these considerations and having regard to the spousal support the applicant will receive, I do conclude that it is reasonable and equitable to award the applicant $8,500.00 on account of occupation rent.
[100] The applicant is also entitled to prejudgment interest on the equalization payment.
Costs
[101] If the parties are unable to agree on costs, they shall contact the trial coordinator’s office to make the necessary arrangements to determine the issue.
Madam Justice V.J. Mackinnon
Released: November 3, 2017
CITATION: N.H. v. J.H., 2017 ONSC 6607
COURT FILE NO.: 12-3056-0
DATE: 2017/11/03
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
N.H.
Applicant
– and –
J.H.
Respondent
REASONS FOR JUDGMENT
Part Two:Property and support
J. Mackinnon J.
Released: November 3, 2017