ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
INGRID MARIA GOLEMIEC
Applicant
– and –
MARTIN JAMES STOVER
Respondent
COUNSEL:
Theresa J. Van Luven, for the Applicant
J. David Crowe, for the Respondent
HEARD at Kingston: October 13, 2017
BEFORE: Hurley J.
REASONS FOR DECISION
Introduction
1On April 10, 2014, the respondent, Martin Stover, commenced a Motion to Change the Final Order of Abrams, J. dated July 20, 2011 seeking sole custody of the child of the marriage, Tye Payton Golemiec Stover born August 22, 2001, termination of child support, and appointment of the Children’s Lawyer.
2The applicant, Ingrid Golemiec, in her response to the Motion to Change made a claim for a review of the respondent’s income for child support purposes, including s.7 expenses, and a review of the respondent’s income for spousal support purposes in accordance with the Spousal Support Advisory Guidelines, and for a variation of child and spousal support as may be appropriate.
3The parenting issues have been resolved, and a Final Order was issued June 9, 2016. The parties continue to have equal shared parenting on a week-about basis.
4The remaining outstanding issues on this Motion to Change relate to the proper determination of the respondent’s income for child support and s. 7 expenses, spousal support and whether or not spousal support should continue beyond the termination date of December 31, 2017 as specified in the Final Order of Abrams, J.
Positions of the Parties
5The position of the applicant is that the respondent mislead her about the amount of his true income both at the time the Final Order was made on July 20, 2011 and since that date and that she is entitled to increased and ongoing child and spousal support beyond the agreed upon termination date for spousal support of December 31, 2017. The applicant further claims that she is now totally disabled and unable to work and submits that the respondent has purposefully and significantly misrepresented his income to her and to the court to limit his child and spousal support obligations which she now seeks to remedy.
6The position of the respondent is that he has not mislead the applicant as to his true income, that his sources of income have not changed since the Final Order and that there has been no major or material change in circumstances sufficient to extend spousal support beyond December 31, 2017. The respondent further claims that his support obligations should be determined based upon his line 150 income in his income tax returns for the relevant years in question. He contends that the applicant has chosen not to work even though she is capable of employment.
Background
7The parties were married November 24, 1995 and separated April 25, 2008. They are both 55 years of age. The respondent is a self-employed financial advisor and has a significant income. The applicant is currently unemployed and receives Worker’s Compensation benefits of approximately $3,876.00 per annum. Child support has not been varied since 2011.
8Shortly before the commencement of a scheduled week long trial, the parties entered into a comprehensive settlement that was incorporated in the Final Order of Justice Abrams on July 20, 2011 that provided the respondent pay child support of $526.00 per month to the applicant based on his line 150 income of $65,756.00 per annum. The applicant at that time was unemployed and enrolled in a retraining program at St. Lawrence College as a result of a workplace injury. She was represented by counsel. Spousal support was ordered at $1,000.00 per month based on compensation and need, and “subject to a major change in circumstances, will cease by December 31, 2017”. The Final Order further provided that “spousal support paid to the applicant is subject to variation until it terminates” and included a definition of what constituted a “material” change of circumstances.
9On August 26, 2014, Robertson, J. made a consent Temporary Order that, as of that date, there were no child or spousal support arrears. On June 9, 2016, Robertson, J made another consent Temporary Order increasing spousal support to $2,000.00 per month, and child support remained at $526.00 per month. On October 25, 2016, Robertson, J. made a consent Temporary Order increasing spousal support to $2,926.00 per month. The child support continued at $526.00 per month.
10The July 20, 2011 Final Order was based upon the respondent’s stated line 150 income for 2010 of $65,756.00. In 2011, the applicant was not working as, soon after the parties’ separation, she suffered a workplace injury for which she was, and still is, receiving Worker’s Compensation benefits. She has not worked in any significant way since her injury and does not intend to work in the future. Her work situation has not changed since the 2011 Final Order. The applicant does have significant assets.
Analysis
11As a result of the Order of Robertson, J. dated August 26, 2014 that there were no child and spousal support arrears, I find that the period of income analysis for this Motion to Change begins on September 1, 2014 and following. This was agreed upon by counsel.
12The parties argued this matter on the basis of a variation of support made under the Divorce Act. However, neither party sought a divorce in their pleadings. The support Orders therefore appear to have been made under the Family Law Act. I do not find on the facts of this case that the analysis is substantially different as between s. 37 of the Family Law Act and s. 17 of the Divorce Act: Gray v. Rizzi, 2016 ONCA 152 at paras. 35-36.
13The respondent took the position that the issue of extending spousal support beyond the December 31, 2017 termination date was not expressly pleaded. I find that the terms of the applicant’s pleadings in paragraph 20 of her response to the Motion to Change are sufficient to permit this claim for relief to be considered.
14On the evidentiary record before me, I draw the inference that the applicant is capable of gainful employment but chooses not to work. At the time of the July 20, 2011 Final Order, the applicant was disabled from working and, in her view, continues to be so disabled which I do not accept as being credible or reliable. The applicant now submits that she is completely disabled from any form of gainful employment but has not submitted any medical evidence to support any such disability finding or any deterioration in her ability to earn income. The inference I draw from the lack of medical evidence is that the applicant is not disabled from seeking and obtaining gainful employment but that she chooses not to do so. There is also no evidence that she has ever tried to work since 2011 and failed.
15The respondent’s evidence about the applicant’s alleged inability to work is supportive of this finding. The respondent’s evidence is that she successfully completed her retraining program, travelled to Africa with her church twice in 2016 to do volunteer work, including the construction of houses, and that she is an avid runner.
16Given these facts, I find that the applicant has failed to establish, on the balance of probabilities, that she incapable of working.
17I find that the applicant has also failed to establish that the respondent mislead her as to his income in 2011 and since that time. The respondent’s income and sources of income at the time of the 2011 Final Order and until the present have remained relatively consistent. This is not a case of the respondent suppressing income that was only recently discovered. Rather, this is one where new counsel, on review of the available financial documents, undertook a more comprehensive assessment of the income of the respondent by analysing his business records and attributing back funds deducted by him as business expenses to establish income beyond his line 150 income for spousal and child support purposes.
18I find that there has not been a “major” change in circumstances of these parties, which I interpret to mean a “material” change in circumstances as defined in the July 20, 2011 Final Order, sufficient to extend the spousal support beyond the December 31, 2017 termination date to which the parties previously agreed and a Final Order was issued. There has been no material change such that if known at the time would likely have resulted in different terms of the Order: Willick v. Willick 1994 CanLII 27 (SCC), [1994] S.C.J. No. 93. See also Gray at paras. 26-28.
19The applicant’s request to continue spousal support beyond the termination date is dismissed. Spousal support shall therefore terminate effective December 31, 2017 as stated in the Final Order of Abrams, J.
20I do find, however, that the respondent’s true income is more than his line 150 income on his income tax returns and that the applicant is entitled to the benefit of the respondent’s true income for the relevant years in question for both past child and spousal support and for ongoing child support after December 31, 2017.
21Support payments commencing September 1, 2014 are based upon the respondent’s 2013 income. On the evidentiary record before me, I find that the breakdown of the respondent’s income for the years in question is as follows:
2013
2014
2015
2016
Gross commission income
$ 312,295.47
$ 315,756.01
$ 301,983.75
$ 369,912.91
Net business income
$ 17,771.36
$ 57,394.33
$ 72,697.04
$ 57,469.00
Overhead percentage
94.31%
81.82%
75.93%
84.56%
Line 150 income
$ 66,892.64
$ 58,279.72
$ 73,389.18
$ 57,835.24
22The respondent is the sole shareholder of a corporation, Mohave Sierra Holdings Ltd., and has been since 1992. Under the Insurance Act, commission income is required to be paid directly to the respondent. The purpose of this management corporation is to allow the respondent to claim additional expenses under the Income Tax Act to reduce his taxable income. Importantly, this corporation does not earn income separate and apart from the respondent.
23The applicant produced a preliminary report of Robert Deacon, a chartered accountant, dated August 7, 2015. No final report was obtained. In that report, Mr. Deacon opined that a three year average annual income between the years 2011 and 2013 would be at least $121,000.00. However, he acknowledged that the business expenses claimed appeared to “include large amounts in categories that could have an element of personal benefit”.
24The applicant submits that the respondent’s income should be attributed as his line 150 income on his personal tax return plus 50% of his pre-tax corporate income. Using this analysis, the respondent’s income in 2014, including a management fee, was $299,682; in 2015 $198,397; in 2016 $147,535. I do not find that this is the most reasonable and appropriate method of imputing the respondent’s income. The management fee was, according to the respondent, a notional accounting entry and not an actual payment to him.
25I find a preferable approach is the one taken in Ludmer v. Ludmer, 2014 ONCA 827 at paras.15-20 where the Court of Appeal approved the trial judge’s determination of the payor’s income as being 50% of his gross professional income. The respondent’s circumstances as a sole financial planner are analogous to the sole legal practitioner in that case.
26The respondent has been in the financial planning business since 1986 and has a well-established business. He does not have significant start-up costs to explain his high overhead. The respondent’s business expenses as a percentage of gross professional income in 2013 were 94.31%; in 2014 were 81.82%; in 2015 were 75.93%; in 2016 were 84.56%. I find that many of the business expenses claimed had a personal benefit and that these expenses are extremely high. I find the purported business expenses to be unreasonable for determination of income for support purposes. The respondent’s reported income level does not fairly and reasonably reflect the compensation available to him to pay support. In addition, the respondent’s lifestyle, as disclosed in his financial statements, supports the finding that he enjoys a much higher income than is reported in his line 150 income.
27In Ludmer, the Court of Appeal found that the trial judge’s conclusion that “the fairest and simplest expedient in these circumstances was simply to find that Mr. Ludmer’s business expenses, for support purposes, cannot reasonably exceed 50 per cent of gross revenue” was the appropriate approach. Likewise, I conclude that, on the facts of the case before me, this is the fairest and most reasonable method of calculating the respondent’s true income for support purposes.
28In the result, I find that the respondent’s income shall be imputed for support purposes and calculation of support arrears as follows:
2013 – 50 % of $312,295.47 = $156,147.74
2014 – 50 % of $315,756.01 = $157,878.01
2015 – 50 % of $301,983.75 = $150,991.86
2016 – 50 % of $369,912.91 = $184,956.46
29The applicant’s income for support purposes and calculation of support arrears shall be imputed to be her line 150 income, excluding all support payments, and excluding any funds received from her RRSPs. To include the applicant’s RRSP withdrawals is not the fairest determination of her income as her withdrawals were non-repeating encroachments on her capital. The applicant is entitled to reasonable support without having to deplete her capital resources even though she has chosen not to work. The respondent’s RRSP withdrawals have also not been included as his income for the same reason: Ludmer at paras 21-26.
30For ongoing support, the respondent’s income shall be imputed at 50% of his gross professional income (i.e. his commissions).
31Counsel for the applicant is directed to serve and file on or before January 15, 2018 a draft Order and calculations as to the arrears. The draft Order shall contain a separate schedule of calculations of arrears of child support and arrears of spousal support from September 1, 2014 to and including December 31, 2017, on the basis that the respondent shall continue his current level of payments for ease of calculation. The schedule shall show the monthly amounts as calculated, the monthly amount paid, the monthly amount owing and then an annual total owing.
32The spousal support shall be calculated at the mid-level range in the Spousal Support Advisory Guidelines. I find that the mid-level range of spousal support is appropriate in all the circumstances of this case. The original settlement and Final Order did not identify the strength of compensatory versus needs based aspects of the spousal support award. The parties are older. No further education or retraining is appropriate. All property issues have been determined and they have previously divided all their property including investments.
33The Order shall specify that, commencing January 1, 2018, the respondent shall pay ongoing child support in accordance with the Child Support Guidelines based on the respondent’s 2016 imputed income of 50% of his gross professional income (i.e. $184,956.46) to be adjusted up or down retroactively to January 1, 2018 when the respondent’s income tax return and his notice of assessment for 2017 are available. The respondent shall pay child support based on his imputed income of 50% of his gross professional income going forward.
34Extraordinary expenses shall be shared in proportion to the parties’ incomes. The incomes shall be imputed on the same basis as has been imputed for support purposes. The percentages shall be calculated by counsel for the applicant as part of the draft Order.
35In the event that any portion of the spousal support arrears cannot be deducted by the respondent for income tax purposes, the quantum of the arrears shall be adjusted so that the net effect is the same as if they were deductible to the respondent and taxable to the applicant. I shall remain seized of this matter if it requires further determination should the parties be unable to agree. Counsel may obtain a date from the Family Court Trial Co-ordinator in Kingston to re-appear before me to address any areas of disagreement as to the quantum of spousal support arrears and they shall file written materials as to their respective positions 5 days in advance of any hearing.
36The Final Order in this case shall be signed directly by me.
37The insurance provisions of the Final Order of Abrams, J. remain in full force and effect. I am satisfied that the security provided in it remains sufficient to ensure the respondent’s support obligations.
Conclusion and Order
38The claim to extend spousal support beyond the termination date is dismissed. Spousal support shall terminate as at December 31, 2017 as previously ordered by Abrams, J. on July 20, 2011.
39The claim for increased retroactive spousal and child support is allowed. Child support and spousal support shall be varied retroactively from September 1, 2014 to December 31, 2017 based on the imputed income of the parties as determined in these reasons. Arrears are to be calculated as determined in these reasons.
40A Final Order shall issue in accordance with these reasons varying the child support provisions in paragraph 3 of the Final Order of Abrams, J. and varying the spousal support provisions of paragraph 9 and fixing all arrears as outlined in these reasons.
Costs
If counsel are unable to agree on the issue of costs, I will set timelines for the delivery of brief written submissions on costs after the Final Order is issued.
The Honourable Mr. Patrick Hurley
Released: December 15, 2017
CITATION: Golemiec v. Stover, 2017 ONSC 7552
COURT FILE NO.: FC-08-00000612-0001
DATE: 2017Dec15
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
INGRID MARIA GOLEMIEC
Applicant
– and –
MARTIN JAMES STOVER
Respondent
REASONS FOR DECISION
Hurley J.
Released: December 15, 2017