Kelly v. Kelly, 2017 ONSC 7609

COURT FILE NO.: 11917/12

DATE: 20171219(Chatham)

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Willow Elizabeth Kelly

Applicant

– and –

Thomas James Kelly

Respondent

Jonathan M. Quaglia, for the Applicant

Self- Represented

HEARD: March 20, 21, 22, 23, 24, 2017 and June 9, 2017

Raikes J.

[1] There are few things more difficult than the breakdown of a marriage and the resulting impacts on all family members. This case is no different. The parties were married 22 years during which they had three sons each of whom, according to their parents, is a remarkable young man.

[2] I will refer to the parties in this decision by their given names: Thomas and Willow. I do so for ease of reference and because this decision deals with issues personal to them. Simply referring to them by “applicant’ and “respondent” is antiseptic. The trial took six days and throughout, this court appreciated their civility, respect toward one another and their candour.

[3] Thomas and Willow married May 20, 1989 and separated on November 26, 2011. They are the biological parents of three sons:

• Austin Alexander Kelly born January, 1991 (“Austin”)

• Liam Mitchell Kelly born June 11, 1995 (“Liam”), and

• Drue Benjamin Kelly also born June 11, 1995 (“Drue”).

[4] At the date of separation, Thomas and Willow resided in the matrimonial home at 84 Hedge Maple Path in Chatham, Ontario. Willow moved out of the matrimonial home on December 30, 2011 while Thomas and the boys were in Florida on vacation.

[5] Thomas and the children continued to reside in the matrimonial home post-separation. Thomas became the primary caregiver for the children from the date of separation onward. The children had access with Willow in accordance with their wishes. Initially, those visits were few and far between. With the passage of time, their relationships with Willow have improved.

[6] The trial addressed issues relating to child support, spousal support, equalization of net family property and divorce. Save for divorce, each of these broad categories raise related issues that require findings of fact for their determination.

Divorce

[7] The parties have lived separate and apart since November 26, 2011. There is no prospect of reconciliation. This decision determines all collateral issues between them including child support and s. 7 expenses. I am satisfied that there is no collusion between the parties in relation to the application for divorce.

[8] Accordingly, an order is made granting the parties a divorce effective 31 days from this date.

Child Support

(i) Willow’s Income

[9] It is undisputed that Willow is required to pay child support but has not since the date of separation. At that date, Liam and Drue were 16 years old and in grade 11 in high school. They resided in the matrimonial home. Austin was then 20 years old and was attending university at Miami of Ohio on a golf scholarship. He was home for four months in the summer of 2012 but spent much of it working at a local golf club and competing in golf tournaments.

[10] At the date of separation, Willow was employed by Union Gas in Chatham. In 2010, the year before separation, Willow’s line 150 income was $59,450.44 which included employment income from Union Gas of $54,219.87. At that point, Willow was working three days per week.

[11] Willow’s income from all sources for 2011-16 was as follows:

2011: $74,494

2012: $80,461

2013: $74,417

2014: $83,812

2015: $83,040

2016: $94,373.

[12] The above figures include her employment income, profit sharing, dividends, interest income and capital gains. The 2015 and 2016 incomes include a rental loss ($7,882) and rental income of $3,511, respectively. Willow used money received from the Thomas’ purchase of her interest in the matrimonial home and other joint assets in 2014 to purchase her current home and a rental property close by. The rental losses in 2015 relate to various maintenance expenditures made to the rental property.

[13] Willow is employed as a travel and aviation coordinator at Union Gas. Her income increased in 2011-13 over what she earned in 2010 because she was involved in a special project that required that she work extra days above her normal three day work week.

[14] In 2014, Willow agreed to work four days per week. That works out to 30 hours per week. In addition, she is on stand-by every day to deal with travel emergencies for executives usually related to weather. She is paid extra for being on stand-by. She job shares the stand-by role with another employee.

[15] Willow’s job is classified at a grade 7 level. It is above administrative/clerical jobs but below supervisory and management jobs. A grade 7 position has the following income range:

Minimum: $64,300

Mid: $83,500

Maximum: $102,700.

[16] Willow’s employment income in 2015 and 2016 places her roughly at the mid-range for that job classification. She testified that she has not been told that if she does certain things, she can increase her income to get to the maximum.

[17] To get to a higher job classification, Willow needs either different job experience than she has and/or a different degree. If she worked a five day week in her current role, her income would increase approximately $5-6,000 taking into account that she would not be doing stand-by and would lose that income.

[18] Willow has an undergraduate degree which she obtained in 1985. She worked at a CIBC branch in Chatham for roughly 18 months after she graduated university. She worked for Union Gas on a casual basis for 18-24 months starting in 1986. She became a full-time employee in 1988. She reduced her hours to part-time when Drue and Liam were born in 1995.

[19] Willow took three courses toward her Bachelor of Commerce degree between Austin’s birth and the birth of the twins. She was then working full-time. Thomas watched Austin while she went to class one night each week. Ultimately, she did not complete that degree because life was “too busy”.

[20] Thomas asserts that additional income should be imputed to Willow post-separation. He argues that she could have and should have earned more. He contends that, instead, she has preferred life-style including travel to advancement of her career. He maintains that she has accumulated and used extra days off to pursue personal interests. The amount payable for child support should be higher based on imputed income.

[21] Willow testified that she gets 28 personal days each year – vacation. She is at the maximum vacation entitlement for her position because she has 25 plus years seniority. She can accumulate extra time worked up to two days per an understanding with her manager. She agrees that she has travelled since separation but notes that they travelled as a family before then. She looks for travel bargains.

[22] I observe that before separation, Thomas was content with the hours worked by Willow at Union Gas. They enjoyed a comfortable life-style with their combined incomes. The evidence does not show that her part-time hours was a source of disagreement. To the contrary, he was prepared to go along with whatever work arrangements she had with Union Gas.

[23] Section 19(1) of the Federal Child Support Guidelines permits the court to impute such income as it considers appropriate in the circumstances. Section 19(1) provides a non-exhaustive list of circumstances that may appropriately give rise to the imputation of income. Based on the arguments advanced in this case, it appears that Thomas relies on (a) and (g) which state:

(a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable education or health needs of the spouse;

(g) the spouse unreasonably deducts expenses from income;

[24] Dealing first with s. 19(1)(a) - intentionally under-employed - the leading case is Drygala v. Pauli, 2002 CanLII 41868 (ON CA), [2002] O.J. No. 3731 (ON CA). In Drygala, the court set out, inter alia, the following principles:

• There is no need to find a specific intent to evade or reduce child support obligations before income can be imputed (paras. 24-26);

• The word “intentionally” means a voluntary act. A parent required to pay is intentionally under-employed if that parent chooses to earn less than he or she is capable of earning (para. 27);

• Section 19(1)(a) does not apply to situations in which a parent is given fewer hours of work through no fault or act of his or her own (para. 27); and

• A parent is not excused of his or her support obligations to pursue an unrealistic or unproductive career aspiration (para 39).

[25] The purpose of s. 19 is to ensure the parent’s obligation to support his or her children is met. To that end, a parent must earn what he or she is capable of earning: Drygala, para. 32.

[26] When imputing income on the basis of intentional under-employment, a court must consider what is reasonable in the circumstances. The age, education, experience, skills and health of the parent are factors to consider in addition to the availability of work and other obligations: L. (N.) v. P. (B.), 2000 CanLII 22516 (ON SC), [2000] O.J. No. 2574 (S.C.J.); Premi v. Khodeir, 2009 CanLII 42307 (ON SC), [2009] O.J. No. 3365 (S.C.J.).

[27] Thomas argues that Willow could and should be earning significantly more than she does. He points not only to the reduced hours worked but also to the lack of any apparent effort to move up at Union Gas. He notes that she has taken no educational initiatives in or outside of Union Gas since separation to improve her chances of higher paying employment.

[28] Thomas adduced very little evidence to show that Willow could advance at Union Gas or elsewhere. He does not point to specific job postings that she could have sought and obtained but did not. He did not tender evidence as what specific courses she should have taken but did not, nor how that failure reduced her income and by how much. In short, he asks me to speculate that she could have earned significantly more income by working more hours, by pursuing more education and by seeking higher positions.

[29] While Willow’s income in 2011 is approximately $20,000 more than she earned at Union Gas in 2010, I note that the parties separated near the end of 2011. Her 2012 and 2013 income is comparable to that earned in 2011. During that period she was working three days a week with some extra days for the project. Her income jumps in 2014 when she started working four days per week with stand-by. It jumps again in 2016 although there is no specific reason for same.

[30] In my view, it is appropriate to impute a modest increase in Willow’s income for 2012 and 2013 when she was working three days per week albeit with some extra days for the project. She was earning less than she was capable of earning in that period. She did so voluntarily.

[31] It is reasonable to expect that the change to increased hours would take a reasonable period to happen. Accordingly, the amount imputed in 2012 should be less. I find that Willow’s income should be increased by the following amounts:

2012: $5,000

2013: $7,500.

[32] I do not agree that income should be imputed for the period commencing 2014 onward. I am satisfied that Willow’s employment efforts were reasonable and appropriate to her age, education, experience and opportunities. After 25 years at Union Gas and in the absence of evidence otherwise, it makes no sense that she would seek employment outside Union Gas. There is a dearth of evidence to establish that but for some course(s) or further education, her income would have been any greater.

[33] While it is arguable that Willow’s income could be increased by approximately $5-6,000 if she worked a five day week, there is no evidence that full-time hours were or are available to her. She is and has been employed full-time for all practical purposes since 2014.

[34] I turn now to the reduction in her 2015 income for rental losses which Thomas disputes. Willow testified that after she acquired the rental property in 2014, she expended monies for repairs needed. I accept her evidence. There is no evidence that these expenses were excessive, inappropriate or overstated. In the circumstances, I do not agree with Thomas’ submission that Willow’s income should be adjusted to recapture these deductions.

(ii) Support Time Period

[35] Another issue in dispute is the number of children in each year for which support is payable.

[36] In 2012, Liam and Drue completed grade 11 and started grade 12. Austin was in university full-time. He was home for four months in the summer. Thus, there were two children for whom child support was payable for the entire year and a third child for whom child support was payable for four months.

[37] In 2013, Liam and Drue completed high school. The boys then took slightly different education paths.

[38] Drue attended Laurier University for business in September 2013. He completed first year in the Spring of 2014. He returned to Laurier for the Fall 2014 term but then took a break from school between January and August 2015. Drue returned to school at the University of Windsor in September 2015. He attended the University of Windsor for the Spring and Fall terms in 2016. He completed the third year of his program in the Spring of 2017 and is expected to graduate in the Spring of 2018.

[39] Liam attended the University of Western Ontario for each of the 2013-14, 2014-15 and 2015-16 school years. In May 2016, he began a work term at Celistica in Toronto for which he was paid roughly $37,000 per annum. The work term ended in August 2017. Liam is back in school at Western and is expected to graduate in the Spring of 2018.

[40] Austin was attending school in Ohio at the date of separation. He graduated in June 2014. He has been independent since then. He was home during the summer of 2012 and spent much of the summer of 2013 playing various tournaments. Thomas acted as his caddy and accompanied him for many of these tournaments.

[41] Section 3(2) of the Federal Child Support Guidelines governs child support payable for children over the age of majority. That subsection states:

(2) Unless otherwise provided under these Guidelines, where a child to whom a child support order relates is the age of majority or over, the amount of the child support order is

(a) the amount determined by applying these Guidelines as if the child were under the age of majority; or

(b) if the court considers that approach to be inappropriate, the amount that it considers appropriate, having regard to the condition, means, needs and other circumstances of the child and the financial ability of each spouse to contribute to the support of the child.

[42] Neither party argued or adduced evidence that the Guideline amount was inappropriate during months when the children were living at home after they reached the age of majority. Further, there is nothing in the evidence that leads me to conclude that the Guideline amount is inappropriate during such periods.

[43] However, Thomas also seeks payment of Guideline child support or some contribution from Willow for months when the children were away at school on the basis that he maintained a home to which they could return.

[44] I pause to note that the next issue addressed below is s. 7 expenses including the quantum of contribution by Willow to their sons’ university and living expenses. As will be evident, the expenses claimed by Thomas for university related expenses are extensive and, in some aspects, over-reaching in nature.

[45] In most cases, where a child is away at university and is receiving s. 7 support from both parents, Guideline support is awarded for those months the child is not attending university and is at home: Bond v. Bond, [2007] O.J. No. 3677 (Div. Ct.), rev’d on other grounds [2008] O.J. No. 2775 (ON CA). In other words, courts generally reduce the amount of child support during the academic year where the child is not living at home in accordance with s. 3(2)(b): Park v. Thompson, 2005 CanLII 14132 (ON CA), [2005] O.J. No. 1695 (ON CA) at para 28.

[46] In Park, the court quoted the following passage from the decision of Heeney J. in Merritt v. Merritt, [1999] O.J. No. 1732 (S.C.J.) at para. 73 for the rationale for that approach:

Where, however, a child is residing in another place for the bulk of the year, it seems inappropriate to apply tables that are not designed with living arrangement in mind. Furthermore, the table approach assumes that the recipient parent discharges her obligation by being physically in the same household and providing the family home and other amenities for the child. Where a child is at college, this assumption does not hold true. It therefore seems more appropriate to calculate the actual costs of providing for the needs of the child in his other residence, factoring in a contribution toward the cost of maintaining the family home to return to on weekends and school breaks where appropriate, and apportion that between the spouses on a Paras approach after considering the child’s own ability to contribute. [Emphasis added.]

[47] Thomas testified that he would always have a home for his sons to stay. Throughout, Thomas resided in the matrimonial home; in fact, he acquired Willow’s interest in it. At the date of separation, Thomas was employed in nearby Michigan as a vice-president of a company in the automotive industry. In June 2012, he became municipal engineer at the Municipality of Chatham-Kent. He was well-compensated in both jobs.

[48] This is not a case where suspension of child support while the children are away at university will work a significant financial hardship on Thomas. It is unlikely that he would have sold the matrimonial home in any event. I find that no contribution to the cost of the home is payable by Willow for those periods where the children were away attending university.

[49] I find that Guideline child support was payable for Drue and Liam for all of 2012, and for Austin for four (4) months in 2012; for Drue and Liam for eight (8) months in 2013, and for Austin for four (4) months in 2013; for Drue and Liam for four (4) months in 2014; for Liam only for four (4) months in 2015; for Drue only for four (4) months in 2016; and for Drue only for four (4) months in 2017. I do not attribute any child support payable for Liam while he was employed by Celistica because it was a paid position.

[50] Therefore, I calculate Table child support payable by Willow as follows:

2012: On income of $85,461 for two children for eight months ($1267/mth) and three children for four months ($1615/mth) - $16,356

2013: On income of $81,917 for two children for eight months ($1195/mth) and three children for four months ($1560/mth) - $16,800

2014: On income of $83,812 for two children for four months ($1217/mth) - $4,868

2015: On income of $83,040 for one child for four months ($746/mth) - $2,984

2016: On income of $94,373 for one child for four months ($834/mth) - $3,336

2017: On income of $94,373 for one child for four months ($834/mth) - $3,336

2018: Nil

Section 7 Expenses

[51] Section 7 of the Federal Child Support Guidelines governs “special or extraordinary expenses”. The applicable portions of s. 7(1) state:

(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 expense 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:

(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;

(e) expenses for post-secondary education; and

(f) extraordinary expenses for extracurricular activities.

[52] The term “extraordinary expenses” is defined in s. 7(1.1) to mean:

(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 our 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 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] According to para 13 of the Agreed Statement of Facts and Issues (Ex. 1), Thomas received $25,664.71 from RESP’s and $44,288 from monies “in trust” to be used toward the children’s education. Both parties agree that those figures are to be deducted from the gross s. 7 expenses and indicate that each has already done so in their calculations.

[54] Exhibit 20 is a four page spreadsheet that summarizes the expenses for each son by category. I am advised that the spreadsheet was initially prepared by Thomas and modified by Willow. The initial figures shown are Thomas’ cost estimates. Where Willow disagrees entirely with any obligation to pay, she has simply stroked out Thomas’ number. Where she feels that a lesser amount is warranted, she has stroked out Thomas’ figure and indicated her position as to amount in the line below. Where she feels a credit is due, she likewise has indicated same.

[55] I observe that there are many items on Exhibit 20 about which there is no dispute. Willow has accepted the figures generated by Thomas. I will, therefore, focus on items of disagreement.

Lasik Procedure

[56] Exhibits 56, 57 and 58 are invoices compiled by Thomas to verify various expenses including post-secondary expenses for each of Austin, Liam and Drue, respectively. One of the expenses incurred is $4,100 for a Lasik eye procedure for Austin. Willow does not dispute that expense. However, Thomas has budgeted and included in his s. 7 expenses a claim for $4,500 for each of Liam and Drue on the basis that what they as parents do for one, they do for the others. There is no medical evidence that either Liam or Drue require a Lasik eye procedure. I find that item is unreasonable and unnecessary as it relates to Liam and Drue.

MBA Tuition

[57] Thomas also seeks to have Willow contribute to the cost of tuition for an M.B.A. for each son which he estimates at $20,000 per child. Thomas has an M.B.A.. He obtained it after he and Willow married. Thomas considers an M.B.A. to be a very helpful and marketable degree that would benefit their sons. However, there is no evidence that any of the three boys has applied to enter an M.B.A. program or will do so in the future. This item is an example of over-reaching by Thomas.

[58] I do not agree that these parents should be required to contribute to the cost of a second post-secondary degree given their incomes, assets and the needs of the children. This item is not a proper s. 7 expense in these circumstances.

Laptops/Software

[59] Thomas also estimates that each of Liam ($1,500) and Drue ($1,000) will require a new laptop and software before their programs are complete. The evidence does not establish they need this equipment, or that there are any issues with their existing laptops. Rather, Thomas has budgeted to replace their existing laptops out of an abundance of caution. In my view, this is not a proper s.7 expense in these circumstances.

Residual Value of Vehicles

[60] Thomas purchased vehicles for each of Austin and Drue. He seeks to have Willow contribute to the cost of a vehicle for Liam ($20,000) on the same rationale as the Lasik procedure expense; viz. they should buy Liam a vehicle because they bought vehicles for the other two sons.

[61] Willow disputes entirely the purchase of a vehicle for Liam. She also seeks a credit for the residual value of the vehicles purchased for Austin and Drue upon completion of their schooling. Thomas gifted the vehicle to Austin when he graduated and will likely do the same for Drue.

[62] I do not agree that Willow is obliged to contribute to the cost of a vehicle for Liam. He is able to make do without a vehicle. The needs assessment must be specific to the child. As much as a parent may wish to do the same for each child, their needs may differ as they do in this case. Accordingly, the claim for $20,000 for a vehicle for Liam is rejected.

[63] I observe that it is one thing for a parent to gift something that belongs to him or her to a child; it is quite another to do so and expect the other parent to pay for it. Thomas wants Willow to contribute to the cost of the purchase of the vehicles for Austin and Drue. She agrees to do so but takes the position that upon graduation, those vehicles still have value. That value should be credited back against the original cost.

[64] I agree with Willow. Unless the parties agreed in advance that the child would keep the vehicle after school was completed, the vehicles should be sold and the proceeds divided proportionately. Austin finished school in June 2014. Drue will finish in May 2018. Willow estimates the value of Austin’s car at $8,566 and Drue’s car at $5,422. Neither party called any expert evidence nor did they agree on the residual values. The information before me allows me to do no more than estimate. I fix the residual values at $7,500 and $4,500.

Vehicle Insurance and Maintenance

[65] Thomas paid the insurance and maintenance costs for Austin and Drue’s vehicles. I note that Willow agreed that the vehicles and related costs were proper s. 7 expenses. She disputes the amounts claimed by Thomas as excessive. The expenses are not broken out by calendar year; instead, they are by school year - for an 8 month period.

[66] For vehicle insurance for Liam and Drue, Thomas estimates $938 each for Dec. 2011-12. The amount increases each year by differing amounts until it reaches $1,727 for 2017-18. Willow proposes a flat $500 for each of Drue and Liam for each time period.

[67] Likewise, for vehicle maintenance, the amount estimated by Thomas is $1,200 which rises steadily to $1,433 by 2017-18. Willow suggests that $200 for Drue only for each time period is adequate.

[68] It is impossible to say with mathematical certainty what the exact amounts incurred for insurance and maintenance have been, nor to forecast them for 2017-18. Willow’s figures strike me as too low while Thomas’ seem to me too rich. The best I can do is estimate bearing in mind the ages of the boys and distances involved for travel while attending school. I estimate the aggregate cost of vehicle insurance and maintenance at an average of $2,000 per school year for Drue and Liam combined.

Austin’s Tuition

[69] Thomas estimates Austin’s tuition for December 2011-2012 as $14,111 (U.S.). For the 2012-13 and 2013-14 school years, he estimates Austin’s tuition at $29,192 and $29,823, respectively. In support of those estimates, Thomas has provided a U.S. tax form - Form 1098-T - for each calendar year for 2011 to 2014.

[70] Dealing first with the tax forms provided, I note that:

• Box 1 is entitled “Payments Received” and no information is recorded in any year.

• Box 2 is entitled “Amounts Billed for qualified tuition and related expenses”. The amounts recorded by year are:

2011: $28,221.80

2012: $29, 192.80

2013: $29,823.24

2014: (blank)

• Box 5 is entitled “Scholarships or Grants”. The amounts recorded by year are:

2011: $24,065.60

2012: $11,943

2013: $27,888

2014: $15,945

• Box 7 directs that an X be placed in the box provided if the amount in Box 2 includes amounts for the academic period January – March of the next calendar year. The box is marked with an X for each of 2011-13.

[71] I infer from these forms that:

• Austin was required to pay an aggregate of $87,237.84 for tuition and related expenses for the 2011-14 school years.

• Austin received scholarships or grants of $79,841.60 for the same period.

• The difference is $7,396.24.

[72] Both parties testified that Austin is a gifted golfer. He grew up playing golf with Thomas who shared his passion for the game with Austin. Thomas and the family were members at Maple City Golf and Country Club in Chatham. Austin attended school in Ohio on a golf scholarship. It was Willow’s understanding that the more Austin played on the school team, the greater amount of money he received by way of scholarship.

[73] Thomas claims the full amount payable for Austin’s tuition and related expenses as shown on the tax form without any deduction or credit for scholarship monies paid. At trial, Willow produced a six page document that she obtained by going on the university account for Austin that details the amounts charged and paid. The expenses billed on the account are not limited to tuition. Willow estimates the amount payable for tuition and related expenses for Austin from the date of separation net of scholarship monies credited to be $16,696 (U.S.) based on the figures provided in Exhibit 22.

[74] Thomas asked for an opportunity to contact the university to check Willow’s figures and the accuracy of Exhibit 22. He was given that opportunity but did not contact the university; in fact, it appears that he did nothing to try to verify the amount actually expended for tuition net of scholarships and grants.

[75] I do not accept Thomas’ figures for Austin’s tuition as amounts which he actually paid on Austin’s behalf. His selective use of the information in the tax form is disingenuous. I accept the amounts calculated by Willow for the purpose of determining Austin’s university tuition post-separation.

Incidentals

[76] Thomas claims incidental expenses for food, clothing, moving costs, and books as s. 7 expenses. Again, Willow does not entirely reject these expenses as non-s. 7 or assert they are not extraordinary expenses. She simply asserts that the documentation provided by Thomas is too “opaque” to derive an accurate and reasonable amount for each son. I agree.

[77] The information provided by Thomas is simply bundled together. In some cases it is not apparent why the expense was incurred and how it relates to post-secondary education and/or extraordinary expenses.

[78] The totals for Liam and Drue are approximately $12,500 each, and for Austin $31,000. Willow proposes $15,000 for Austin and nothing for either Liam or Drue.

[79] Whenever a child goes away to school, there are a myriad of extra expenses that add up quickly. Exhibit 22 shows that each of Drue and Liam contributed to their education costs. That is not so where Austin is concerned. Austin worked at the local golf course when he was back in town and when he was not playing in tournaments. His contribution appears to be the scholarship that he obtained that largely offset his tuition costs.

[80] I have reviewed the various and numerous receipts and statements that make up exhibits 56, 57 and 58. I am not in a position to itemize the expenditures that are appropriate from those which are not. Suffice to say, expenses were incurred incidental to each child’s attendance for post-secondary education and a modest contribution is reasonable. I fix the amount for Drue and Liam at $1,600 for each for each school year. With respect to Austin, I accept Willow’s estimate of $15,000 as reasonable.

Golf Expenses

[81] There is one final item that bears discussion: Thomas claims $6,946 for golf tournaments in the summer of 2012 and 2013 for Austin. These costs include his registration fees, travel and accommodation. In many cases, Thomas accompanied him. The amounts claimed include Thomas’ costs.

[82] Thomas argues that it is a term of his scholarship and schooling that Austin play as much golf as possible when not in school. He is expected to play tournaments. Willow argues that she should not have to pay anything toward Thomas’ travel and participation with Austin. Moreover, she disagrees that there is any requirement that Austin participate in tournaments for scholarship reasons.

[83] As indicated earlier, Austin is a young man who gifted in golf. Both parents have encouraged his development and participation in golf from the earliest stages. This excellence in the sport produced a valuable scholarship to an American university. It makes sense to me that in the summer months when not in school, Austin would be expected to play in amateur tournaments. He is, after all, on a golf scholarship and is a member of the golf team at the university.

[84] However, it is not appropriate to expect that Willow will bear and contribute to Thomas’ attendance at these tournaments. There is no doubt a very special bond between Thomas and Austin. They share a deep common interest. I have no doubt that even if Austin’s participation in a tournament was not required, Thomas would nevertheless want to be there to support Austin in any way that he could. In short, I am not convinced that Thomas’ travel and attendance at these tournaments was necessary. Accordingly, I discount the amount to $3,500.

Summary – s. 7 Expenses

[85] The totals calculated by Willow in Ex. 20 as amounts properly falling under s. 7 for each son are:

Drue - $86,247

Liam - $79,258

Austin - $46,654.

The total of these three amounts is $212,159.

[86] As indicated above, I disagree with some of the adjustments made by Willow in Ex. 20. It is necessary to add back the following amounts:

1. Austin golf expense - $3,500

2. Drue incidentals - $6,400 [$1,600 x 4 years]

3. Liam incidentals - $6,400 [same]

4. Drue/Liam insurance and vehicle maintenance - $3,200 [$2000 – $1200 estimated by Willow x 4 years].

The revised aggregate with these adjustments is $231,659.

[87] There is no dispute as to the amounts contributed by the children to their education expenses as set out in Ex. 20. That shows contributions as follows:

Drue - $23,264

Liam – $18,052

Austin – $800.

The aggregate amount contributed is $42,116.

[88] Willow argues that it is difficult to discern whether Thomas, Drue and Liam maximized their use of the available tuition tax credits. She asserts that as a result, she may be over-contributing to s. 7 expenses. I am not satisfied on the paucity of evidence at trial that any adjustment is warranted for tuition tax credits.

[89] Therefore, the net s. 7 expenses are $189,543.

[90] Because the amounts claimed are not neatly parsed by calendar year and follow school years, I apportion responsibility for these expenses between the parties by using the average of their respective incomes since the date of separation.

[91] I calculate Willow’s average income between 2012 and 2017 inclusive as $87,162. This figure includes the adjustments to 2012 and 2013 set out above.

[92] Willow asks that $36,000 U.S. be added to Thomas’ income for each of 2013-2016 for child support calculation purposes. The source of income is a retirement allowance received by Thomas after he left Valeo. I will deal with the retirement allowance (409A – Defined Contribution Pension) in more detail below under Equalization.

[93] Briefly, Thomas left his employment at Valeo in June 2012. In November 2012, he applied for early payout of his 409A – Defined Contribution Pension which then stood at $798,876.87 U.S.. The company approved the payout with a 6% penalty for early withdrawal. He reported that income on his 2013 U.S. tax return although the amount was paid in instalments over time.

[94] He withdrew the monies from the account because he perceived risk that might jeopardize future payment. The monies stayed in another account in the U.S. for retirement savings purposes.

[95] Ordinarily, RRSP and pension monies received are included as income for the calculation of child support: Fraser v. Fraser, 2013 ONCA 715 at para. 97. The inclusion of such income is not mandatory and the court may exercise its discretion to exclude all or part of the amount in appropriate circumstances: Ludmer v. Ludmer, 2014 ONCA 827 at para. 23.

[96] In my view, this is an appropriate case to exercise my discretion to except or exclude all of the payment received from the early termination of this pension as:

1. This was a one-time event that is extraordinary having regard to Thomas’ prior and subsequent pattern of income;

2. Whether or not truly necessary to preserve and protect the value of the asset, the withdrawal was made in good faith to protect against risks that Thomas felt were real;

3. Per Thomas, the funds have not been utilized and continue to be held for their original purpose – retirement income.

[97] Accordingly, I decline to attribute a notional $36,000 U.S. or any amount to Thomas’ income for child support purposes as a consequence of the early termination and withdrawal of the pension.

[98] I calculate Thomas’ average income during the period 2012-2017 to be $171,369.

[99] Thus, using these averages, Thomas shall bear 66.3 % and Willow shall bear 33.7 % of the aggregate net s. 7 expenses above. Thomas’ share is $125,667, and Willow’s share is $63,876.

[100] The total child support payable by Willow, both Table and s. 7 expense contribution, is $111,556.

Equalization of Net Family Property

[101] Section 5 of the Family Law Act, R.S.O. 1990, c. F.3, as am., governs the equalization of net family property upon a divorce being granted. Section 5(1) establishes a presumption of equal division unless a variation is warranted to redress an unconscionable result pursuant to s. 5(6).

[102] Section 5(7) sets out the purpose of this section as follows:

The purpose of this section is to recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6).

[103] This is not a case where one party seeks an unequal division; rather, the issues on equalization relate to the values of various assets in Thomas’ name as well as adjustments claimed by Thomas. Paragraphs 20 and 21 of Issue #1 of the Agreed Statement of Facts (Ex. 1) set out the points of disagreement between the parties on line items on the Comparison of Net Family Property (Ex. 2). Issue #3 on Ex. 1 sets out the points of disagreement over other adjustments sought by Thomas.

[104] As was the case with s. 7 expenses, there are several line items on the Comparison of Net Family Property which are not in dispute. I will therefore deal only with those matters in dispute in these Reasons. I will deal first with the disputed valuations as of the date of separation, then with disputed valuations as of the date of marriage. I will lastly address post-separation claims by Thomas.

[105] According to Ex. 2, Willow estimates that Thomas owes her an equalization payment of $365,383.94. Thomas estimates the amount of the equalization payment to Willow to be $102,443.51.

Disputed Values – Date of Separation

(i) 409A Sole Defined Contribution Pension

[106] The first item of disagreement is found at page 5 of Ex. 2 which is the value of Thomas’ Mullin TBG/Osram Sylvania Deferred pension. The parties agree that the value of this pension on the date of separation was $798,876.87 U.S.. The first issue is the exchange rate to be applied to convert that value from U.S. dollars to Canadian dollars.

[107] As mentioned, the parties separated on November 26, 2011. That was a Saturday. The next business day was Monday, November 28, 2011. The Canadian dollar was trading higher against the American dollar in November 2011 than it is today.

[108] The Bank of Canada did not post exchange rates on Saturdays and Sundays in 2011. The Bank of Canada did post on its website a noon wholesale exchange rate on each business day, and a second exchange rate that added a notional 4% to the wholesale exchange rate for what a commercial bank will charge its customers to convert U.S. currency to Canadian dollars.

[109] The posted noon wholesale Bank of Canada rate on Friday, November 25, 2011 (the day before separation) was 1 U.S. dollar = 1.0487 Cdn.. The same posted Bank of Canada rate on Monday, November 28, 2011 was 1 U.S. dollar = 1.0327 Cdn.. According to the expert called by Willow, Mr. Wolgelerenter, the average noon wholesale exchange rate in November 2011 was 1 U.S. dollar = 1.0258 Cdn..

[110] Willow argues that the applicable exchange rate should be the average noon wholesale exchange rate in November 2011. This is the rate used by Ms. McKeating, an expert who was retained by Thomas’ former counsel and whose reports were served on Willow’s counsel. Ms. McKeating was not called as a witness by either party. Instead, Willow called Mr. Wolgelerenter who was qualified as a pension valuation expert. He reviewed and commented on the McKeating reports and opined about the methodology she used and the appropriateness of the figures derived. Ms. McKeating’s reports were made exhibits at trial.

[111] Thomas seeks to apply the Bank of Canada rate on Monday, November 28, 2011 with the additional 4% charge. This approach was referred to during the trial as the “cash rate” approach. Thomas argues that to transfer the monies from this pension to Willow, he would have to convert the funds to Canadian dollars at a Canadian bank. There is a fee or charge to do so which should be included in the conversion.

[112] There is no evidence that Thomas can transfer a portion of this pension account to a separate pension account in Willow’s name to pay all or part of his final equalization obligation as is commonly done in Ontario. As discussed, the original pension account has been terminated since separation.

[113] Neither party provided any law on the applicable exchange rate. Both agreed that ultimately, the rate selected should be fair to the parties but they disagree as to what “fair” means.

[114] There is no provision in the Family Law Act that applies. The Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”) is similarly silent. Section 121 of the CJA deals with conversion of foreign judgments to Canadian dollars. In that circumstance, the person who obtains the order to enforce the foreign judgment is entitled to an order in the amount that a Schedule I Bank would charge in Canadian dollars to purchase an equivalent amount in the foreign currency.

[115] In my view, the situation contemplated by s. 121 is materially different than what is involved in an Ontario matrimonial proceeding where an asset is held in a foreign currency.

[116] First, the valuation of all assets for the determination of net family property is done in Canadian dollars. There is no foreign judgment applicable.

[117] Second, there is no obligation on Thomas to convert his U.S. dollars to satisfy his equalization obligation to her. He could pay her from other Canadian monies or borrowings against Canadian assets thereby leaving the U.S. funds intact. I observe that the Canadian dollar has substantially diminished in value as against its U.S. counterpart since the date of separation, making that U.S. dollar asset even more valuable. The increase accrues solely to Thomas according to Willow’s counsel. He was asked and advised that Willow does not seek an adjustment based on the principles in Serra v. Serra, 2009 ONCA 105 or otherwise.

[118] Finally, I note that the court may decline to use the approach in s. 121(1) of the CJA where it would be inequitable to the other party (see s. 121(3)). This is a case where I would exercise such discretion if necessary because:

a. The lengthy delay and refusal to resolve valuation issues has allowed Thomas to reap a windfall by the much higher exchange rate on the whole of this asset;

b. Willow has been deprived of the opportunity to invest her equalization payment including the purchase of U.S. currency. Prejudgment interest is unlikely to adequately compensate for that loss;

c. I am not satisfied that Thomas will have to convert the monies previously held in this account to Canadian funds in order to pay Willow.

[119] The fundamental question here is one of fairness. I find that the applicable exchange conversion rate is 1 U.S. dollar = $1.0407 Cdn, which is the mid-point between the posted wholesale exchange rates by the Bank of Canada at noon on Friday and Monday of the November 26, 2011 weekend. This rate does not include the 4% upcharge by a commercial bank for conversion.

[120] Therefore the value for the 409A Deferred Contribution Pension is $798,876.87 U.S. x. 1.0407 = $831,391.16 Cdn..

[121] Staying with this asset, Thomas seeks a post-separation adjustment of 6% which is the amount charged by the company for the early withdrawal of the funds from the plan. This item is found at page 9, item #7 of Ex. 2. Thomas seeks to deduct the 6% early withdrawal penalty that he incurred from his family property.

[122] Thomas testified that he decided to remove the funds early because he feared that the funds could be lost if the company went bankrupt. The funds were held by the company and not by an independent pension administrator. Accordingly, the funds were not secure against the risk of financial calamity before retirement and payment in full. Thomas maintained that the automotive industry, of which his employer was part, is one which was risky. The company was financially troubled.

[123] Thomas applied to the company in November 2012 to withdraw the funds. The monies were then paid out in instalments after the deduction of 6% for early withdrawal. All payments were made to an account held by Thomas in the United States in U.S. funds.

[124] I am not satisfied on the evidence that Thomas’ unilateral decision to withdraw funds from the plan was either necessary or prudent. There was no evidence apart from that of Thomas as to the degree of risk to the funds in the plan. There was no expert evidence adduced, nor any evidence that a professional advisor at the time suggested that he should withdraw early. He did not consult Willow before withdrawing the funds, yet he asks that she effectively bear one half the 6% deduction. I find that is not an appropriate deduction and disallow it.

[125] Thomas could have argued in the alternative, but did not, that a contingency should be applied to the value of this pension account on the date of separation for the risk of future non-payment. Even if that approach is considered, there is scant evidence to support a discount of any amount for the alleged risk of future non-payment. The mere fact that a hypothetical risk existed on the date of separation does not automatically transform that risk into a discount on the value absent evidence that the risk was real.

[126] Finally, this asset is one which attracts future tax liability which must be estimated as a credit against its face value. At trial, the parties eventually agreed that the applicable tax rate is 46% which amounts to $382,439.93 [$831,391.16 x .46].

(ii) Valeo 401K Defined Contribution

[127] At page 5 of Ex. 2, the second last item on the page refers to a 401K Defined Contribution Plan invested with Fidelity which arises from Thomas’ employment by Valeo. The parties agree that the value of that plan on November 26, 2011 was $254,404.74 U.S..

[128] Again, the first issue is the applicable conversion rate to Canadian dollars. There is no reason to differentiate this plan from the approach taken to the 409A plan above; in fact, the parties argued the conversion rate applicable to the various plans on the same footing.

[129] Accordingly, the value of the Valeo 401K Defined Contribution Plan is $254,404.74 U.S. x 1.0407 = $264,759.01 Cdn..

[130] Once again, there are additional adjustments sought by Thomas to reduce the net value of this asset. First, he seeks a 10% reduction for an early withdrawal penalty per IRS rules. Second, he asks that the value be reduced by 46% to reflect future tax liability when this asset is withdrawn.

[131] Dealing first with the 10% penalty, this adjustment is denied because:

a. Although Thomas filed as an exhibit a 401K Guide from the IRS to show that a 10% penalty applies for early withdrawal before age 59.5 years, there is no evidence that IRS penalty would apply to this account in these circumstances. The Guide specifies a number of exceptions to the penalty including where payment is made to an alternate payee under a qualified domestic relations order. No evidence, expert or otherwise, was adduced to assist me in determining whether the penalty applied or was excepted.

b. In any event, the funds have not been withdrawn nor was there any reason on the date of separation to expect that he would do so before age 59.5 years.

c. This is a speculative adjustment that does not affect the value of the account on the date of separation.

[132] Turning to the tax adjustment, Mr. Wolgelerenter testified that in Ms. McKeating’s report, she applied a 25% tax rate on some retirement assets and 45% on the above 409A pension to reflect that as Thomas received this income from different sources, some of it would be taxed at lower rates while other parts would attract higher tax rates because of the aggregate amount received in each year.

[133] Mr. Wolgelerenter testified that he would have taken a different approach but the result would be substantially the same: a blended tax rate of 35-39%.

[134] Thomas seeks an across the board deduction for tax liability on all of these plans at 46%. He argues that he will have other income earned post-separation which will use up the lower tax rates on a graduated basis. Therefore, he will pay 46% tax on this deferred income when received.

[135] Thomas is now employed by the Municipality of Chatham-Kent as manager of infrastructure and engineering. He took that position in June 2012. He presently earns in excess of $160,000 annually. According to his tax returns for 2012-2015 (Ex. 32), he has monies deducted annually for pension plan contribution. In 2015, the deduction was $20,448. Previous years’ tax returns show similar amounts deducted. Thomas is now 57 years old. If he works to age 65, he will have contributed to his municipal pension for 13.5 years.

[136] It is likely that Thomas will receive a pension benefit from his municipal employee pension upon retirement but the estimated amount payable is not part of the evidence. Similarly, there is a dearth of evidence as to other anticipated non-registered investments which may produce taxable income. Thus, while I expect that Thomas will have income from other sources than the U.S. pensions and retirement allowances at issue here, I have no meaningful evidence to assist me in estimating what that income will be.

[137] In any event, it does not follow that income earned post-separation must be treated as the first monies received on retirement which attracts the lower tax rate. It could be argued that the earliest retirement benefits accrued should be accorded the lower tax rate. It is not necessary to determine that issue in this case because the evidence as to other retirement income is too sparse to engage in such an analysis.

[138] The approach taken by Ms. McKeating, as endorsed by Mr. Wolgelerenter, is a reasonable method to estimate the applicable tax liability that attaches to this asset of the marriage. Accordingly, the tax rate applicable to this asset is 25%.

[139] Exhibit 8 is an email from Ms. McKeating attaching various retirement allowance statements for Thomas. The Valeo statement dated November 25-26, 2011 indicates the value of the account to be $254,404.74. On page 4 of 6 of that statement, there is a contribution summary which breaks out the contributions between “After-Tax”, “Before-Tax” and “VS Match”. The statement indicates that $85,976.81 of the $254,404.74 is “After-Tax” contributions.

[140] Therefore, the tax liability must be calculated only on the non-“After-Tax” portion of the plan which is $168,427.93 U.S.. That amount converted to Canadian dollars is $175,282.95. The applicable tax deduction is: $175,282.95 x .25 = $43,820.74.

[141] There is one further issue to address concerning this retirement account. It is raised by Mr. Wolgelerenter in his report; namely, a “Sylvania transition” payment of $31,031.30 U.S. reflected on a statement dated December 31, 2011. This item and amount are not present on the statement provided by Thomas’ employer, Valeo, for the period November 25-26, 2011. Ms. McKeating did not address this payment in her report and Mr. Wolgelerenter merely flagged it for consideration in his report.

[142] Thomas testified that he received a payment of $31,031.30 U.S. to this retirement account as part of a stay package given to key employees. The company had lost some senior employees. To reward and encourage others to stay, the company made a payment in late December 2011. If Thomas left before then, he would receive nothing. He maintains that as of November 26, 2011, he had no entitlement to this payment. Accordingly, it is not an asset of the marriage on separation.

[143] In cross-examination, Thomas conceded that although asked to do so by Willow’s lawyer, he did not obtain a letter from his employer to confirm the cut-off date by which he would be entitled to this payment. He indicated that he first learned of this incentive from the company in July 2011. Willow argues that she is entitled to a share of this payment on the basis that it is a contingent interest in a remunerative benefit that was earned in part before the date of separation.

[144] I pause to note that both sides approached this item as an asset, not income for spousal support purposes. Thomas maintains that it was not “earned” until after separation and as such it is not an asset of the marriage.

[145] Section 4 of the Family Law Act defines “property” to mean,

…any interest, present or future, vested or contingent, in real or personal property and includes,

(a) property over which a spouse has, alone or in conjunction with another person, a power of appointment exercisable in favour of himself or herself,

(b) property disposed of by a spouse but over which the spouse has, alone or in conjunction with another person, a power to revoke the disposition or a power to consume or dispose of the property, and

(c) in the case of a spouse’s rights under a pension plan, the imputed value, for family law purposes, of the spouse’s interest in the plan as determined in accordance with section 10.1, for the period beginning with the date of the marriage and ending on the valuation date; …

[146] Section 4(3) of the Family Law Act places the onus of proving a deduction under the definition of “net family property” or an exclusion on the person claiming it.

[147] Neither side provided any case law addressing this issue. A quick review of the case law in the annotated 2018 Ontario Family Law Practice text by David Steinberg, Craig Perkins, Esther Lenkinski and Andrew James reveals the following:

1. Perron v. Perron, [2010] O.J. No. 6053 (S.C.J.) – several months after the parties separated, the Canadian military instituted a pension plan for reservists. The plan had a buy back option which the wife exercised to buy back pension benefits for eight years of service while the parties were married. The court held that because the plan did not exist on the date of separation and the buyback option only came into existence post-separation, there was no need to include this asset in net family property.

2. Blais v. Blais, 1992 CanLII 13999 (ON SC), [1992] O.J. No. 3772 (Gen. Div.) – an early retirement program which did not exist at the date of separation was not a present or future, vested or contingent interest.

3. Flynn v. Flynn, 1989 CanLII 4241 (ON SC), [1989] O.J. No. 398 (Dist. Ct.) – a pension made up entirely of employer contributions which had not vested is “property” and subject to valuation by discounting for the contingencies that might prevent vesting.

4. Buttrum v. Buttrum, 2001 CanLII 28187 (ON SC), [2001] O.J. No. 1390 (S.C.J.) – stock options, whether or not vested, are property for equalization purposes.

5. Green v. Green, 2007 CanLII 2939 (ON SC), [2007] O.J. No. 454 (S.C.J.) – a spouse’s entitlement in an executive retirement plan could fail to vest where she was terminated with or without cause or demoted to non-officer status before age 55. That entitlement was a future contingent interest capable of ownership which should be valued with appropriate discounts for the contingencies.

[148] These cases reflect a two staged analysis:

1. Does the plan or incentive exist at the date of separation?

2. If there are contingencies that might negate receipt of all or part of the benefit, what is an appropriate discount for those contingencies?

[149] In this case, the stay package existed and was known to Thomas before the date of separation. This is not a case where the employer created a benefit post-separation or surprised him post-separation with a purely discretionary payment to which he would have had no entitlement. Here, he knew that if he stayed to the end of the year, he would be entitled to participate in a bonus like program tied to the company’s performance.

[150] I find that the stay package payment is a future contingent interest to be valued as of the date of separation. This is very much akin to the executive plan in Green.

[151] There is no evidence of any significant risks to entitlement as at the date of separation. So long as Thomas continued to work the final month (December), he would be entitled to participate. Thomas was at all material times in good health. Nevertheless, a modest discount should be applied to reflect the unknown chance that Thomas might not have worked to the end of the year and thereby earn the payment. These risks have to be considered as of November 26, 2011 without the benefit of hindsight. For example, what if one of Drue or Liam were sick or injured and Thomas had quit to stay home to care for him? What if Thomas was fired? What if Thomas became ill or died before entitlement vested? I fix the discount at 10%.

[152] It is also clear, however, that a portion of the payment received in December 2011 is attributable to Thomas’ work at the company post-separation. It is appropriate to apportion the payment to reflect that fact. The program was announced in July with payment in December – six months. Accordingly, only 5/6’s of the payment should be included as property by Thomas. The amount to be included is $25,859.42 U.S..

[153] That amount must be discounted by the 10% contingency above. The net figure to be included as property is $25,859.42 less $2,585.94 which equals $23,273.48 U.S..

[154] That figure must be converted to Canadian dollars using the same exchange rate as above ($23,273.48 x 1.0407 =$24,220.71 Cdn.). That net amount will attract tax upon withdrawal and a corresponding deduction must be given for the tax liability. The applicable tax is calculated at 46% giving rise to a deduction of $11,141.53. (In selecting a 46% rate for this item, I am following the approach of Ms. McKeating as endorsed by Mr. Wolgerenter.)

VS Pension Plan

[155] This asset is the first item on page 6 of Ex. 2. It relates to a defined benefit pension plan by Thomas through his employment in the United States. Here, the parties are substantially apart on the value. Willow asserts the asset is worth $449,185; Thomas estimates the value at $191,735. Both figures are in Canadian dollars.

[156] On the date of separation, Thomas was an active member of the Valeo Sylvania LLC Pension Plan for salaried employees. Exhibit 7 is a report prepared by Ms. McKeating for Thomas’ lawyer which valued Thomas’ interest in the pension plan “for purposes of the Ontario Family Law Act”. This report was provided to Willow’s lawyer who in turn provided it to Mr. Wolgelerenter for comment. Mr. Wolgelerenter agreed with the approach taken and value determined by Ms. McKeating.

[157] Both Mr. Wolgelerenter and Ms. McKeating valued the U.S. pension in accordance with the provisions of the Ontario Family Law Act and the Ontario Pension Benefits Act and associated regulations.

[158] Section 10.1(1) and (2) of the Family Law Act state:

(1) The imputed value, for family law purposes, of a spouse’s interest in a pension plan to which the Pension Benefits Act applies is determined in accordance with section 67.2 of that Act.

(2) The imputed value, for family law purposes, of a spouse’s interest in any other pension plan is determined, where reasonably possible, in accordance with section 67.2 of the Pension Benefits Act with necessary modifications.

[159] Ms. McKeating calculated the value of the plan as at the date of separation as $449,185. This figure was expressed in Canadian dollars and Ms. McKeating used the lower exchange rate, the average noon wholesale exchange rate for November 2011 (U.S. $1.00 = CAN $1.0258).

[160] Mr. Wolgelerenter testified at trial that in his experience as an actuary who values pensions under Ontario law, the common practice is to value U.S. pension plans using the same methodology mandated by s. 67.2 of the Pension Benefits Act and regulations because U.S. plans are generally very similar to Canadian pension plans.

[161] Section 10.1(2) of the Family Law Act permits the court to value pension plans which are not Ontario-based “with necessary modifications” where appropriate to do so. Thomas first asserts that because the pension plan is U.S.-based, it must be valued differently. However, Thomas offers no evidence to justify applying a different methodology to the valuation of this pension plan. He did not call an expert witness to explain why the application of the Ontario methodology would operate unfairly to Thomas, nor did he adduce evidence as to what the proper methodology should be and the result that would obtain.

[162] The onus rests on Thomas to justify a deviation from the presumptive rule for the valuation of this pension. He cannot merely assert that because it is a U.S. plan, it must be treated differently without showing why that is so. Simply put, Thomas has failed to satisfy me that any modification is necessary to the valuation of his interest in this pension plan.

[163] Second, Thomas did obtain a statement from his employer as to the lump-sum value of his interest on the date of separation on the assumption that he terminated and cashed out that interest on that date. The figure which he proposes is derived from that premature termination of the plan. Under that approach, there is a substantial penalty for early withdrawal.

[164] The approach advocated by Thomas is inappropriate. To start, there was no obligation or necessity that he terminate the plan on the date of separation. Second, he did not, in fact, terminate the plan on November 26, 2011 and did not realize the loss he now seeks to impute to Willow. Third, section 10.1 of the Family Law Act contemplates the valuation of the pension plan as a going concern. Using a valuation that artificially imposes an early termination penalty is punitive and unfair.

[165] As a result, I find that the value of the VS Pension Plan is $449,185 Cdn..

[166] During closing argument, the parties agreed that the tax liability is to be calculated at 25% on $449,185. This produces an adjustment for tax of $112,296.25.

[167] Finally, at page 10 of Ex. 2, Thomas seeks an adjustment of $51,768.65 which he calculated as 50% of the total estimated value of the VS pension plan net of tax. Thus, whatever the value of the VS plan, Thomas seeks to reduce that value by 50% because of the risk that it may never be paid.

[168] Once again, Thomas bears the onus to prove on a balance of probabilities that a discount is warranted. The evidence provided is wholly inadequate for that purpose; in fact, there is no reliable evidence at all. The requested discount is denied.

RRSP - Thomas

[169] At page 6 of Ex. 2, Thomas has included reference to RRSPs held by him at the date of marriage for which he seeks a credit of $22,369.50. He seeks the same credit a second time at page 11 (3d item). In short, Thomas seeks to double count the deduction for the RRSPs held by him at the date of marriage. This is not permissible and this item is denied.

Date of Marriage Values

[170] The values in dispute relate to the following assets and liabilities of Thomas at the date of marriage:

1. The home on Buckingham Rd. in Chatham that was purchased March 10, 1987 by Thomas;

2. General household items;

3. An automobile owned by Thomas;

4. The balance in Thomas’ bank accounts;

5. RRSPs held by Thomas; and

6. The amount of the mortgage owing on the Buckingham property.

Value of Buckingham Property

[171] Thomas purchased the home on March 10, 1987. Title was in his name alone. The purchase price was $72,000. The parties married May 20, 1989 and resided in that home until it sold on May 1, 1994 for $115,000.

[172] Thomas asserts the value of the house at the date of marriage was $84,900. He derived that figure by doing a straight line calculation of the increase in value between the dates of purchase and sale divided by the number of years owned to arrive at an annualized increase. He then multiplied that annual increase amount by the two years he owned the property before marriage and added that number to the original purchase price.

[173] Willow disputes the value estimated by Thomas and the methodology employed. Willow estimates the value at $78,570. She testified that after they married, they worked together to do extensive renovations/upgrades to the home which account for most of the increase in value. Thomas agrees they did make improvements after they married but contends that the renovations and upgrades started before marriage.

[174] Neither party has provided an appraisal of the property as of the date of marriage. The evidence, limited as it is, as to the Chatham real estate market in this period is anecdotal and provides no assistance in determining when and if general market forces increased the value, when and by how much.

[175] I am satisfied on the evidence that Thomas started doing improvements to the property soon after he purchased it. I am also satisfied that the approach taken by Thomas to estimating the value of the house at the date of marriage is reasonable and appropriate in these circumstances. I find the value of the home was $84,900 on the date of marriage.

General Household Items

[176] Thomas estimates the value of general household items at the date of marriage at $15,217. Willow estimates those items at $3,770.

[177] Thomas testified that prior to marriage he purchased some new appliances for the house. He also had his personal effects including his guitars and sports equipment. He filed as exhibits copies of advertisements for sales of new appliances comparable to those purchased to provide some guidance as to the estimated cost/value of those items.

[178] Willow disputes Thomas’ valuation of these assets. As she put it, they were just starting out and had hand-me downs from family. It was largely junk that they made work.

[179] Again, I have no independent valuation of these items. While some newer items may have been acquired before marriage for the house, it must be remembered that Thomas and Willow were like most young couples starting out. They cobbled together used furniture from family and friends.

[180] My sense is that Thomas’ estimate of value for these items is too high. I find the value of same to be $6,500.

Automobile

[181] Thomas purchased a car from his father in 1987 for $6,000. He estimates the value of the car at $10,000 almost two years later on the date of marriage. To bolster his estimate, Thomas provided an advertisement for the sale of a similar car which was selling for $10,200 in 1989.

[182] In cross-examination, Thomas agreed that the number of kilometers on his car was almost three times that of the advertised car. He never saw the vehicle advertised and so, could not testify as to its condition.

[183] Willow estimates the value of his vehicle at $4,500. Again, no one provided an appraisal or blue/black book values from 1989.

[184] I find it highly unlikely that a used vehicle purchased in 1987 would appreciate by $4,000 after two years of regular use. Vehicles typically depreciate in value as they age and as the kilometers go up. I see no reason on the evidence to deviate from that common sense view. I find that the value of the vehicle on the date of marriage was $4,500.

Bank Account Balance

[185] Thomas estimates the balance in his bank account at the date of marriage was $15,000. Willow candidly concedes that she has no specific recollection but estimates it was $10,000.

[186] Thomas testified that he was unable to get a statement from the bank that far back. However, he recalls that he had the money to pay for the wedding and their honeymoon in Hawaii for two weeks. He had good recall of the number of guests at the wedding (130); Willow did not. He paid for these expenses. I accept his recollection that there was approximately $15,000 in the account.

RRSPs - Thomas

[187] Thomas began setting aside money from his employment before they were married. His tax returns show contributions between 1985 and 1989 of $17,767. This is the amount asserted by Willow in Ex. 2.

[188] Thomas testified that he has always been prudent with money. He believes that he would have invested his funds conservatively in GICs or similar investment options. Interest rates were then much higher than today and rates of return on such instruments were greater. He maintains that some amount should be attributed for growth. He does not have any statements to evidence that growth but submits that is a reasonable approach.

[189] I agree that some growth on these funds would have occurred before marriage. I fix the value of his RRSPs at the date of marriage at $21,000.

[190] The parties agree that a deduction is required at 25% for tax liability on the RRSPs. That amounts to $5,250.

Mortgage Debt on Buckingham House

[191] There was a mortgage taken on the Buckingham property when purchased. The face amount of the mortgage was $50,000 with interest at 10%. The mortgage was discharged in June 1993. Payments were due biweekly.

[192] Ex. 45 is a schedule prepared by Thomas in which he sets out the payments he believes were made prior to marriage. He asserts that he made extra payments each year to the tune of 15% over and above the mortgage payments due. He continued this practice after marriage which is why the mortgage was paid out early.

[193] Thomas has no evidence to corroborate these additional payments. It is his recollection that he did so. It was consistent with his approach to financial matters – save and pay off debt as quickly as possible.

[194] Thomas estimates the debt owing on the mortgage as at the date of marriage was $30,517.74. Willow estimates the amount owing as $43,182.62 which is what would be owing if all payments were made in accord with the mortgage terms without extra payments.

[195] Thomas was largely responsible for financial management during the marriage. That is not to say that Willow was excluded or unaware of their finances; rather, he assumed primary responsibility in this area.

[196] The evidence satisfies me that Thomas was fiscally prudent and conservative from his earliest days. That said, his income was not unlimited. He was saving money for retirement through RRSPs and saving to pay for a wedding and honeymoon. He also had household and car expenses to deal with. I am not prepared to accept that he maximized the prepayment options before marriage in these circumstances.

[197] I fix the mortgage owing on the property as at the date of marriage at $41,000 which allows for a more modest extra payment regimen.

Summary

[198] Using the figures in Ex. 2 as modified by my findings above, I calculate Thomas’ net family property to be $1,326,773.88 which is comprised of property owned on the valuation date of $2,104,578.70 less the total of debts, liabilities, property owned on date of marriage and excluded property of $777,805.32.

[199] There is no dispute as to Willow’s net family property which is $659,695.55.

[200] The difference between Thomas’ net family property and Willow’s is $667,077.56.

[201] Therefore, the equalization payment payable by Thomas to Willow is $333,538.78 which is 50% of the difference in their respective net family properties. If payments have already been made to Willow on account of equalization, those payments should be deducted from the $333,538.78.

Post-Separation Expenses/Claims

[202] Before I turn to the issue of spousal support, I will address a number of claims by Thomas for reimbursement for expenses incurred on jointly held assets post-separation.

Growth in Joint Investment Account

[203] The first claim concerns a joint investment account at the CIBC (account 451-171771). This account was jointly held before and during the marriage. Verbeem J. ordered that the proceeds of the account at the date of separation be divided equally without prejudice to Thomas’ claim that he should be paid a greater share of the growth of the funds in that account since separation. He wants 65% of that growth.

[204] Thomas testified in-chief that the investments in the account are all stocks. He put in considerable effort including meeting with the broker who manages the account on several occasions. He approved the approach taken and feels that, ultimately, he directed the account. As at the date of separation, the account was worth $136,000. That amount is not in dispute. As of March 3, 2017, the account was worth $213,000. It is that growth of approximately $77,000 that he wants a greater share of.

[205] There was no agreement between the parties that Thomas be compensated by Willow for his efforts in managing the account. It is Willow’s position that section 14(b) of the Family Law Act applies. That subsection provides that money on deposit in the name of both spouses is deemed to be in the name of the spouses as joint tenants.

[206] Willow argues that there is a presumption of a resulting trust which applies to the whole of the monies in the account including those which have accrued post-separation. The onus rests on Thomas to adduce evidence that Willow intended to gift or pay Thomas for his efforts. There is no such evidence so his claim must fail.

[207] Thomas’s claim is really in the nature of a quantum meruit assertion. He says that because he put in extra time and effort to manage the account, the value of that account has increased substantially and he should be compensated for that effort.

[208] I disagree with Thomas for the following reasons:

1. There is no evidence before me that demonstrates that Thomas’ efforts actually produced greater returns than would have been the case if managed solely by the broker;

2. The evidence of the efforts made by Thomas and the time expended is rather vague and unsupported by other evidence;

3. Thomas was clearly motivated to maximize return on investment which would benefit him as well; and

4. Willow was entirely in the dark that Thomas was expending any time in this manner and could not have known that Thomas would be asserting a claim to remuneration for those efforts until the matter came before Justice Verbeem. In any event, she did not agree to compensate Thomas.

[209] I am not satisfied on the evidence before me that an unequal division of the growth in the account post-separation is merited.

Condominium Carrying Costs

[210] Thomas and Willow owned a condominium in Fort Myers, Florida. Following separation and in 2012, Thomas converted the condominium to a rental property which allowed him to write off expenses on his U.S. tax return and to depreciate the asset.

[211] By consent order dated January 13, 2014, Justice Thomas ordered that the property and furnishings be sold and specified the steps to be taken to achieve that end. The parties were permitted to bid.

[212] Thomas submitted the successful bid to purchase the condominium. He paid $79,471 U.S.. His bid was made November 6, 2014 and he knew on that date that he was the winning bidder. The sale of the property closed on December 1, 2014.

[213] Between November 6 and December 1, 2014, Thomas purchased a new air conditioner for the property and had it installed at a cost of approximately $4,200. Thomas testified that the existing air conditioner was broken. He obtained a quote for repair and one for a new system. In his mind, the new system was the preferred method of proceeding. He seeks to charge that $4,200 account together with earlier expenditures. He maintains that Willow should pay 50% of those expenses.

[214] Ex. 50 is a schedule prepared by Thomas with the receipts for the condominium. These amounts have being converted from U.S. dollars to Canadian dollars using the cash rate. Thomas made three “proposals” to address these expenses as part of his evidence in chief:

1. The net actual expenses incurred amounted to $39,218.33 Canadian. Under proposal one, Willow would be responsible to pay him 50% of that amount.

2. As mentioned, he converted to the property to a rental in 2012 following their separation. He did so to reduce the ongoing costs and to permit deductions. He wrote off 35% of the expenses on his taxes which amounted to $19,901. That left a balance of $19,317.33 U.S. which he converts to $20,824.27 Canadian. Therefore, he asks that she paid to him 50% which amounts to $10,412.14.

3. Finally, the last proposal includes a deduction for rent received to offset the costs incurred. He received a $12,293.60 in rents. Under this scenario, he seeks $4,598 is Willow’s share of the net operating costs.

[215] I find that the conversion from personal use to a rental property was prudent in light of the parties’ separation and financial circumstances post-separation. However, the three proposals advanced by Thomas suffer from similar deficiencies.

[216] It is fundamentally unfair to ask that Willow pay 50% of the expenses while Thomas recoups 100% of the rental revenue and depreciation to offset his share of expenses (Proposal #1). It is only modestly less unfair that she pay 50% of the expenses net of depreciation with Thomas again using the rental income to cover part of his share of the expenses (Proposal #2).

[217] Finally, it seems to me entirely unfair that Willow be expected to pay 50% of the cost of a new air conditioner for the property less than a month before Thomas acquired title. There is no evidence that had the purchaser been an independent third party, Thomas and Willow would have been obligated under the agreement of purchase and sale to replace the air conditioner at their expense. This expenditure strikes me as one that should be borne by Thomas who will derive the benefit of the air conditioner.

[218] Willow argues that Thomas’ tax returns for 2012 – 2014 show that he was able to write off the full amount of the cost of maintaining the condominium. That was not conceded by Thomas nor is it clear to me that all of the costs claimed against Willow are the same as those deducted.

[219] In the result, I find that any loss suffered for the expenses for the condominium between the date of separation and December 1, 2014 should be shared in some fashion. I fix Willow’s share of that carrying costs at $2,500 which is roughly $4,598 less $2,100 (half the air-conditioning unit cost).

Time Share Expenses

[220] At the date of separation, Thomas and Willow also owned a Marriott timeshare. Ownership of the timeshare unit was in their names jointly. Both could access the timeshare post-separation although Thomas only did so once with Austin for a golf tournament in Florida. The boys may have used it once for a vacation.

[221] The order of Justice Thomas dated January 13, 2014 also dealt with sale of the timeshare unit. Thomas seeks 50% of the carrying costs of the timeshare unit from the date of separation to disposition in 2014. He estimates Willow’s share of those costs at $3,508. Ex. 52 is a schedule prepared by Thomas which shows the timeshare expense receipts and a schedule for conversion to Canadian dollars.

[222] Willow objects to payment of any amount toward the timeshare for the following reasons:

1. she did not use of the timeshare post separation;

2. the schedule prepared by Thomas includes the full cost of the timeshare for 2011 although the parties separated on November 26, 2011;

3. Willow repeatedly encouraged Thomas to dispose of the timeshare. Ultimately, she brought a motion for that purpose which resulted in the order of January 13, 2014;

4. Thomas did get use of the timeshare albeit only once.

[223] I find that Willow should share some of the cost of the timeshare post-separation. I fix that amount at $1,000. I do so at a lower amount because the property could have been sold sooner but for Thomas’ reluctance to do so, and the 2011 expenses should be reduced to take into account only that portion of the year when they were separated.

Summary

[224] In summary, Thomas’s claim for the greater share of the growth in the CIBC investment account since separation is denied. Willow shall pay to Thomas the amount of $2,500 for her share of the condominium carrying expenses and a further $1,000 for the timeshare carrying costs.

Spousal Support

[225] Willow seeks spousal support on a compensatory and non-compensatory basis. She also argues that the amount payable by Thomas for spousal support between the date of separation and the anticipated graduation of Liam and Drue in May 2018 is roughly equal to her child support obligations since separation. She asks that those amounts be treated as a complete set-off.

[226] She seeks ongoing spousal support for an indefinite term in the amount of $2,396 per month commencing May 1, 2018 based on Thomas’ income of $166,847 and her income of $92,179. Alternatively, she asks for a lump sum payment for spousal support in the amount of $123,671.

[227] Thomas disputes entitlement to spousal support on any basis at any time. He argues that Willow’s income is understated because she is underemployed (see above). He denies that there is any need for spousal support. She is financially independent. She travels a great deal. She enjoys a very comfortable lifestyle, and has sufficient monies to own her own home and a rental property. There has been no economic hardship suffered by Willow from the marriage or its breakdown.

[228] A court may make a final or interim order for spousal support in an amount it considers reasonable: s. 15.2(1) and (2) of the Divorce Act. In doing so, the court must 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 arrangements relating to support of either spouse: Divorce Act, s. 15.2(4).

[229] Misconduct of a spouse in relation to the marriage is irrelevant to spousal support: Divorce Act, s. 15.2(5).

[230] In Thompson v. Thompson, 2013 ONSC 5500, Madam Justice Chappel provides the following very useful summary of the principles that apply to a spousal support claim at paras. 46 – 52, 54 – 59:

[46] The court’s duty pursuant to section 15.2(4) of the Act to consider the parties’ “condition, means, needs or other circumstances” in carrying out the spousal support analysis is very broad and involves the exercise of a considerable amount of discretion. However, not every circumstance of the spouses will be relevant to the support analysis. The factors referred to must be interpreted in the context of the purpose of the spousal support provisions of the Act as articulated by the Supreme Court of Canada in Moge v. Moge, 1992 CanLII 25 (SCC), [1992] S.C.J. No. 107, and are circumscribed by that purpose. As L’Heureux-Dube J. emphasized in Moge, although marriage and the family provide an emotional and economic support system for family members, spousal support in the context of divorce “is not about the emotional and social benefits of marriage. Rather, the purpose of spousal support is to relieve economic hardship that results from the marriage or its breakdown,” and the focus of the analysis is therefore “the effect of the marriage in either impairing or improving each party’s economic prospects.” [para. 43] The condition, means, needs and other circumstances relied upon for the purposes of the support analysis must be relevant in some way to this purpose and focus.

[47] The “condition” of a spouse includes such factors as their age, health, needs, obligations, dependents and their station in life (Metz v. Metz, 2004 ABQB 528, [2004] A.J. No. 925 (Alta Q.B.); supplementary reasons, [2004] A.J. No. 1558 (Alta. Q.B.); Bennett v. Bennett, 2005 ABQB 984, [2005] A.J. No. 1824 (Alta. Q.B.); Bockhold v. Bockhold, 2010 BCSC 214, [2010] B.C.J. No. 283 (B.C.S.C.)). A spouse’s “means” encompasses all financial resources, capital assets, income from employment and any other source from which the spouse derives gains or benefits (Strang v. Strang, 1992 CanLII 55 (SCC), [1992] S.C.J. No. 55 (S.C.C.); Leskun v. Leskun, 2006 SCC 25, [2006] S.C.J. No. 25 (S.C.C.)). The assessment of the “needs” of a spouse should take into consideration the accustomed lifestyle of the spouse, subject to ability to pay. As the Ontario Court of Appeal stated in Rioux v. Rioux, 2009 ONCA 569, 2009 CarswellOnt 4077, para 42, “self-sufficiency is a relative concept, it relates to achieving a reasonable standard of living having regard to the lifestyle the couple enjoyed during their marriage”. In considering the extent of a spouse’s need from this perspective, the court should take into account the joint income which the parties anticipated they would be able to enjoy as of the time of their separation. …

[48] Section 15.2(6) of the Act sets out the objectives of a spousal support order as follows:

15.2(6) Objectives of spousal Support Order – 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) insofar as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

[49] The Supreme Court of Canada has held that all of the statutory objectives set out in section 15.2(6) of the Act must be considered, since no single objective is paramount (Bracklow v. Bracklow, 1999 CanLII 715 (SCC), [1999] S.C.J. No. 14; Moge). However, trial judges have a significant amount of discretion to determine the weight that should be placed on each objective, based on the particular circumstances of the parties (Miglin v. Miglin, 2003 SCC 24, [2003] S.C.J. No. 21 (S.C.C.). With respect to the objective of promoting self-sufficiency, set out in section 15.2(6)(d) of the Act, the Supreme Court of Canada commented in general terms on the extent of a former spouse’s obligation to work towards self-sufficiency in Moge v. Moge, Leskun v. Leskun and L.M.P. v. L.S.(2011 SCC 64). It noted that although one of the objectives of the spousal support provisions of the Act is to promote the economic self-sufficiency of the spouse within a reasonable time, the Act stipulates that this goal only applies “in so far as practicable”. The Court held that there is no presumed duty on former spouses to achieve financial independence, and the extent to which they are expected to do so depends on the circumstances of the parties and the dynamics of the marital relationship in each particular case. It concluded that the wording of sections 15.2(6)(d) and 17(7)(d) (relating to variation proceedings) reflects a recognition that self-sufficiency may not be possible or practicable in some circumstances.

[50] In considering the objective of self-sufficiency, the court must recognize that this concept is a relative one which must take into account the parties’ standard of living during the marriage (Rioux, para. 42). The Ontario Court of Appeal emphasized in Fisher v. Fisher (2008 ONCA 11, 2008 CarswellOnt 43) and Allaire v. Allaire (2003 CarswellOnt 1002) that self-sufficiency is not necessarily established when a former spouse is able to meet their basic needs; rather, it refers to a spouse’s ability to maintain a reasonable standard of living taking into account the lifestyle which the parties enjoyed during their relationship. Where one spouse has suffered economic disadvantage as a result of the marriage or its breakdown, the court must consider whether the other party can financially assist them so that the spouse can enjoy a lifestyle closer to that which they enjoyed during the marriage. As the Court stated in Fisher v. Fisher, self-sufficiency must be assessed “in relation to the economic partnership the parties enjoyed and could sustain during cohabitation, and that they can reasonably anticipate after separation.” (para. 53)

[51] The extent to which the court will consider the accustomed standard of living during the marriage in setting the benchmark for self-sufficiency post-separation will depend on the particulars of the marital relationship. L’Heureux-Dube, J. made this point in Moge v. Moge, where she stated that “the longer the relationship and worse, the closer the economic union, the greater will be the presumptive claim to equal standards of living upon its dissolution.(para. 84)

[52] The statutory objectives and factors referred to above inform the issues of entitlement, quantum and duration of spousal support. The issue of entitlement is the preliminary issue to determine in any spousal support claim.

2. General Principles Respecting Entitlement

i. Overview of the Grounds For Entitlement

[54] The Supreme Court of Canada articulated the fundamental principles respecting entitlement to spousal support in the cases of Moge v. Moge and Bracklow v. Bracklow. In Moge v. Moge, the court summarize the overall goal of spousal support as being to ensure an equitable sharing of the economic consequences for both parties of the marriage or its breakdown. However, it also emphasized that the entire burden of these consequences should not necessarily fall on the shoulders of one party. The Supreme Court held in both Moge v. Moge and Bracklow v. Bracklow that entitlement to spousal support must be determined in accordance with the terms of the governing legislation, but that the issue should be considered keeping in mind the following three conceptual models upon which entitlement to spousal support may arise: (1) compensatory support, which primarily relates to the first two objectives of the Act; (2) non-compensatory support, which primarily relates to the third and fourth objectives; and (3) contractual support. As the British Columbia Court of Appeal emphasized in Chutter v. Chutter (2008 CarswellBC 2661), the court is not required to apply one conceptual model of entitlement over the other. In many cases, entitlement may be established on more than one ground.

ii. Compensatory Support

[55] The compensatory basis for spousal support entitlement recognizes that upon marriage breakdown, there should be an equitable distribution between the parties of the economic consequences of the marriage. The objective of a compensatory award is to provide some degree of compensation for the sacrifices and contributions which a spouse made during the marriage, for economic losses which they experienced and may continue to experience as a result of the marriage, as well as the benefits which the other spouse has received as a result of the sacrifices and contributions (Moge, paras. 68-70). A compensatory award recognizes that such sacrifices, contributions and benefits conferred often lead to interdependency between the spouses and merger of their economic lives (Cassidy v. McNeil, 2010 ONCA 218, [2010] O.J. No. 1158 (C.A.).

[56] Compensatory support claims arise most typically in situations where one spouse has suffered economic disadvantage and contributed to the other spouse’s income earning potential as a result of assuming primary responsibility for childcare and/or home management obligations. However, a compensatory claim can also be found on other forms of contribution to the other party’s career, such as supporting the family while the other party obtained or upgraded their education (Allaire), selling assets or a business for the benefit of the family unit (Jens v. Jens, 2008 BCCA 392, [2008] B.C.J. No. 1886 (C.A.), or assisting a party in establishing and operating a business that is the source of that party’s income (Chutter).

[57] In considering whether a compensatory claim exists, the court must undertake a broad and expansive analysis of advantages and disadvantages which each party experienced throughout the relationship as a result of the marital union. In some situations, a compensatory claim may be defeated or weakened by the fact that disadvantage suffered by the claimant spouse is offset by disadvantage of a different type experienced by the other spouse (Roseneck v. Gowling (2002), 2002 CanLII 45128 (ON CA), 35 R.F.L. (5th) 177 (C.A.); additional reasons at 2003 CarswellOnt 159 (C.A.)).

[58] A compensatory claim for spousal support may be established even where the recipient spouse is employed and reasonably self-supporting at the time of the parties separation. This situation can arise where, despite that spouse’s ability to meet their own needs, their financial advancement has been impaired as a result of subordinating their career to that of the other spouse, or from adopting a less lucrative career path in order to accommodate the needs of the family (Cassidy; Allaire).

iii. Non-Compensatory Support

[59] Spousal support entitlement can also arise on a non-compensatory basis, as a result of the needs of a spouse. The Supreme Court of Canada discussed this basis of entitlement in Bracklow v. Bracklow. It emphasized in that case that a spouse may be obliged to pay support based on the other spouse’s economic need alone, even if that need does not arise as a result of the rules adopted or sacrifices made during the marriage. Rowles, J.A. of the British Columbia Court of Appeal summarized the general concepts underlying this basis of entitlement in Chutter v. Chutter as follows:

Non-compensatory support is grounded in the “social obligation model” of marriage, in which marriage is seen as an independent union. It embraces the idea that upon dissolution of a marriage, the primary burden of meeting the needs of the disadvantaged spouse falls on his or her former partner rather than the state (Bracklow, at para. 23). Non-compensatory support aims to narrow the gap between the needs and means of the spouses upon marital breakdown, and as such, it is often referred to as of the “means and needs” approach to spousal support.

Roles During Cohabitation

[231] Thomas is an engineer. His first job after graduation was as a product engineer at Canadian Frame in Chatham in 1986 earning approximately $26,000 per year. He worked at Canadian Frame in Chatham until 1993 and while there he progressed through different roles including CAE systems engineer. He held the position of technical marketing representative when he left Canadian Frame.

[232] Thomas testified that while employed at Canadian Frame, his hours of work were 7:30 AM to 4:30 PM with modification from time to time. Any extra time worked was compensated by time in lieu. He did what he had to do to get promotions, which I understand included working overtime as needed. By the time he left Canadian Frame, he was earning approximately $55,000 annually.

[233] Thomas’ next job was at a company called Meridian as a sales account manager. He started at Meridian in July, 2013. There was an eight week gap between his departure from Canadian Frame and Meridian during which he built a deck on their home. He was earning $65,000 annually plus bonus when he started. His hours were similar to those worked at Canadian Frame, although he was based in Wallaceburg, approximately 20 minutes from Chatham. There was some overtime but according to Thomas, it was “not bad”.

[234] Thomas was promoted in 1996 and moved to the Meridian Magnesium Products Plant in Strathroy as the director of sales and marketing. His salary increased to $83,000 plus bonus. He had more responsibilities but felt that the hours were no more than he had been working. He held that job until 1997 when he left Meridian to join Valeo. I note that Thomas obtained his M.B.A. from Bowling Green University in 1996, the year before he joined Valeo.

[235] Thomas’ title at Valeo in 1997 was the same as that at Meridian. In 1999, he was promoted to sales director and, in 2001 he was promoted to vice-president of sales and marketing, a position he held until he resigned in 2012. When he started at Valeo, he was earning $120,000 plus bonus, payable in U.S. dollars. Although his title changed in 1999, his remuneration did not. When promoted to vice president, his income was bumped to approximately $150,000 plus bonus. His bonus depended on company performance. The norm was approximately $47,000 although it did get as high as $60,000.

[236] Valeo is an automotive company that had offices in Dearborn and later Troy, Michigan, as well as a plant in Indiana and one in Mexico. Thomas’ office was based in Michigan although an office was made available to him whenever he had to travel to Indiana.

[237] Although Thomas worked in Michigan, the parties continued to reside in Chatham where Willow worked at Union Gas and the boys attended school and participated in various community and sports activities. Thomas testified that he was offered an opportunity for advancement in Connecticut. That would have necessitated a move from Chatham. After discussing the opportunity with Willow and their sons, Thomas turned it down. In doing so, Thomas felt that he put family ahead of career.

[238] As a vice president of sales and marketing, Thomas had 10 people who were direct reports to him. He was responsible for business development with all customers. He explained that there are cycles in the automotive business that are approximately five years in duration. There is also a constant turnover of product. He was responsible for getting the next cycle of business. He would also deal with issues regarding supply and quality with company representatives in the Dearborn area.

[239] Willow testified that Thomas worked long hours throughout their marriage so that he could get ahead at work. This benefitted their family. He was able to do so because of the role and responsibilities she assumed at home.

[240] It is clear to me that Thomas’ positions throughout his career were demanding. Thomas strikes me as a person who devoted the time and energy necessary to do the job well which is reflected in the various promotions that he obtained over the course of his career. He agreed in cross-examination that he would, where necessary, take phone calls at home and on vacations with the family. While he tried to maintain some separation between work and home, that proved difficult at times.

[241] When they married, Willow had a Bachelor of Arts degree. She started working at Union Gas in 1986 and worked full-time until Austin was born when she took a maternity leave. She returned to full-time work after the maternity leave finished. Willow testified that she tried to upgrade her education to obtain a business degree from the University of Windsor after Austin was born in January 1991 and before the twins were born in June 1995. She was unable to do so because of her responsibilities at home with the children. She began working part-time at Union Gas after the twins were born.

[242] Willow testified that she was primarily responsible for the care of the children. She also ran the household and looked after arranging vacations for the family. She organized their social life. She does not claim that Thomas played no role in these spheres; rather, she indicates that she was primarily responsible. Thomas helped where and when he could.

[243] I find that during their marriage, Willow was the primary caregiver for the children. She was also responsible for household management. She did so while working mostly part-time. Her first priority was the children and the house. She had help in the form of a housekeeper who came weekly but, as she put it, “you couldn’t tell any cleaning have been done the next day” because of the children.

[244] Thus, Thomas was the primary breadwinner and Willow was the primary caregiver. These domains were not exclusive. Both contributed to the other. Both Thomas and Willow were good, caring, involved parents.

[245] While married and before separation, the parties enjoyed an active lifestyle. They were members of the local golf club where Thomas and the boys regularly played. Thomas and Willow socialized with other couples and Willow had her own circle of friends with whom she spent time. The boys were active at school and in sports. They had a typical busy household.

[246] Thomas and Willow and their sons also travelled most years for vacation. Generally, Willow made the arrangements. Most of their travel was to Florida where they had the timeshare and condominium. They travelled to Europe once and did other trips from time to time. As mentioned, even when away on vacation, Thomas was still accessible to work.

[247] Thomas maintains that Willow’s part-time employment was largely driven by her lifestyle choices. She took on the role in their marriage that she wanted. He supported her in those decisions. When she started a small business, he supported her in that activity as well. Willow agrees that Thomas was largely supportive of her decisions to work fewer hours at Union Gas and to pursue social opportunities, but notes that her decisions and work at home made it easier for Thomas to be successful in his career.

[248] On separation, Willow moved to a small two-bedroom apartment. Eventually, she purchased a home as well as a rental property with funds received from the sale of the matrimonial home. She agreed in cross-examination that she has been on several trips since separation. She has travelled to Europe five times. She is been to China. She has been to various points in the United States.

[249] Thomas points to this travel as evidence that she continues to enjoy the same or better lifestyle than she had before separation. He maintains that this is largely because the child rearing responsibilities were left to him and she was paying no child support. She earns a very good salary for the hours that she works. He submits that Willow suffered no hardship or disadvantage during the marriage or upon breakdown of the marriage. There is no economic disadvantage. There is no need for spousal support as she is economically independent.

[250] Willow argues that Thomas received a significant economic advantage from the roles the parties assumed during the marriage. He was able to get up early in the morning to drive to Michigan to work. He came home at 7-8 PM because he knew that the home and childcare responsibilities were done by Willow. He completed his M.B.A. yet she could not complete her Bachelor of Commerce. He was promoted to better paying positions because of the roles and responsibilities she took on at home.

[251] Willow points out that after they separated, Thomas left his position at Valeo to accept a senior position in management at the Municipality of Chatham-Kent. He took a reduction in salary to do so but is still very well-paid. She takes no issue with the reduction in income and does not seek to impute income to him as a result of that change.

[252] However, Willow argues that Thomas’s ability to change jobs and to move into such a senior position is a direct by-product of his ability to fulfil and maximize his growth in his career. By contrast, her career at Union Gas was stunted. She lacked the education needed to pursue higher opportunities. Her focus on the children and house limited the time and effort that she could put into her career. As a result, she has a good paying job but is not as advanced in her career as she otherwise would have been.

[253] Willow further submits that she would have preferred to buy a home immediately after separation so that the children could stay with her but she did not have access to sufficient income or assets to do so. She liquidated assets including RRSPs. She reduced her discretionary spending. This continued until Justice Thomas ordered the house to be sold. It is only then that she had funds sufficient to acquire a house.

[254] When Drue and Liam graduate University in the Spring of 2018, neither party will have any further child responsibilities or costs. Willow indicates that at that point, Thomas’ income will be almost twice hers. She maintains that since separation and on a go forward basis, she will enjoy a reduced standard of living compared to that which she enjoyed while she was married and cohabiting with Thomas. Her travel since separation is reasonable. She looks for bargains and travels on a budget.

[255] I find as follows:

1. During their cohabitation, Willow assumed greater domestic and child responsibilities which enabled Thomas to devote his time and energies to advancement of his career. In doing so, Willow sacrificed or limited her career path;

2. As a result, Thomas has employment at this point in his life which generates a significantly higher income than Willow;

3. Further, Willow has a lower income than she would have had but for her role in the marriage. Thus, Willow has experienced an economic disadvantage from the roles each held in the marriage while they were cohabiting;

4. In addition, while Willow was able to meet her basic needs and enjoy some travel upon separation, she did not enjoy the same standard of living as she did during the marriage. She had far less financial security and her resources were significantly diminished at least until she was paid for her interest in the matrimonial home;

5. Upon separation, Thomas continued to enjoy the fruits of the assets the couple had accumulated during the marriage, albeit with significant added responsibilities at home. He continues to have a significant economic advantage from the education and skills acquired during the marriage;

6. Some of the economic disadvantage Willow has experienced is addressed through the equalization of net family property. Willow will receive further monies in addition to those paid already for her interest in the matrimonial home and Florida condominium;

7. Willow has a good paying job earning in excess of $90,000 annually in a community with a modest cost of living. She has sufficient funds to acquire a second property as a source of income;

8. Willow’s standard of living is diminished since separation but at this point only modestly so;

9. Thomas’ standard of living post-separation has remained relatively unaffected by the breakdown of the marriage; and

10. In any event, economic disadvantage is established during and post-separation.

[256] I find that Willow is entitled to spousal support because she experienced a disadvantage to her career from the roles assumed during the marriage, and her standard of living relative to that enjoyed during the marriage is lower.

[257] I must now consider duration including whether to order a lump sum amount, and quantum.

Spousal Support – Duration/Amount

[258] As part of his closing submissions, Willow’s counsel filed various Spousal Support Advisory Guideline calculations (“SSAG’s”) for the period 2012-2018 inclusive. These calculations are based on Thomas and Willow’s reported taxable incomes (and estimated 2018 incomes) including child support payable where applicable. The calculations for 2012 and 2013 do not include the imputed income I have found above.

[259] According to the calculation provided by counsel for the period after graduation by Drue and Liam (May 2018), the range of spousal support is: low - $1,760, mid - $2,053, and high - $2,346. This calculation is based on a 22 year marriage and calls for spousal support of indefinite duration.

[260] As mentioned Willow seeks a lump sum spousal support payment of $123,000 which represents spousal support at the mid-range for 8 years (to age 65 for Thomas). If awarded, she submits that she would forego any post-retirement spousal support. She submits that a lump sum payment would provide a complete and clean break between the parties which would be best for the parties and their sons.

[261] The duration of support should reflect the support objective that a support order is intended to address: Bracklow v. Bracklow, para. TT. Where the economic disadvantage is of limited duration or effect, spousal support should also be of limited duration and effect: Bracklow v. Bracklow, para. RR.

[262] I find that spousal support is payable by Thomas to Willow for the period January 1, 2012 to April 30, 2018 using the “with children SSAG calculation”. I calculate the amounts payable as follows:

2012 – $1,800/month x 12 = $21,600

2013- $1,300/month x 12 = $15,600

2014- $2,200/ month x 12 = $26,400

2015- $1,900/month x 12 = $22,800

2016- $1,750/month x 12 = $21,000

2017- $1,750/month x 12 = $21,000

January-April 2018 -$1,750/month x 4 = $7,000.

[263] In determining the monthly amount of spousal support payable, I have differentiated between the period 2012-2014, and the period following. In my view, spousal support payable by Thomas for the period 2012-2014 should be at the higher end of the range because the economic disadvantage to Willow was most pronounced in that period. He had the use and control of their marital assets. She had lower income because she was transitioning from the hours traditionally worked during the marriage to longer hours. It was only in 2014 when she was paid for her interest in the matrimonial home that her standard of living improved. That coincided with her increased hours of work at Union Gas.

[264] For the period 2015 to April 30, 2018, I find that spousal support should be reduced to reflect the decrease in the hardship and economic disadvantage to Willow. Accordingly, I have selected a monthly spousal support payment between the low and mid-range according to the SSAG calculations provided.

[265] With respect to ongoing spousal support, I find that Willow is likely to continue to be disadvantaged although more modestly once she is paid the balance of the equalization payment. It is appropriate to continue periodic spousal support indefinitely but subject to review when Thomas retires. I fix the spousal support at $1,850 per month commencing May 1, 2018. The spousal support paid on and after May 1, 2018 shall constitute income for tax purposes for Willow.

[266] I decline to award a lump sum amount for spousal support. There is no indication that Thomas has failed in the past or will fail in future to abide by court orders. Austin is independent and resides in Ohio distant from his parents. Drue and Liam will soon finish their studies and be pursuing their working careers. They are likewise removed from and old enough to have adapted to their parents’ break-up. A lump sum award is something the parties can negotiate if they see fit, but I do not feel it is necessary or appropriate at this point.

Set-Off

[267] Finally, I will address the submission by Willow that her obligations for child support be offset by what she is entitled to recover for spousal support; that the figures are close enough to be “a wash”. That approach has the advantage of avoiding the need to file amended tax returns.

[268] The amount owing by Willow to Thomas for child support and post-separation expenses is $115,056. That figure covers s. 7 expenses until Drue and Liam graduate in April 2018.

[269] The amount owing by Thomas to Willow for spousal support is $135,400, although $7,000 of that amount is for spousal support calculated as payable in the first four months of 2018; viz. that $7,000 has not yet accrued.

[270] The difference between the two amounts is $19,344 but does not reflect any adjustment for the difference in tax rates payable by Thomas and Willow on the amount of spousal support during the period 2012 to April 30, 2018.

[271] Unlike child support, spousal support paid is generally taxable in the hands of the recipient spouse. At one time, Revenue Canada limited the ability of the parties to file amended returns to two years. In that case, where retroactive spouse support was paid for a period more than two tax years earlier, the payor spouse paid income tax on that amount and the recipient spouse received the payment tax free.

[272] Revenue Canada changed that policy following a decision in R. v. James (2013) TCC 164. Effective March 5, 2015, Revenue Canada has issued an Interpretation Bulletin that clarifies that a payor spouse may deduct the lump sum spousal support payment where the amount payable is pursuant to a court order that establishes a clear obligation to pay retroactive spousal support for a specific period prior to the order.

[273] Given this change, it is open to the parties to file amended tax returns going back to the 2012 tax year, or an adjustment can be made at this point to the amount payable for spousal support for that tax liability because,

1. It will eliminate the need and expense to the parties of re-filing their tax returns going back five years;

2. Thomas paid income tax on the amount due for retroactive spousal support at 46%, but the tax payable by Willow for that retroactive spousal support if received during that period would be lower.

[274] At para. 82 of his written closing argument, Willow’s counsel sets out a table which includes the estimated net benefit after tax to Willow on spousal support payable by Thomas. Unfortunately, the spousal support payable by Thomas is in amounts different than I have awarded. Accordingly, it provides limited assistance.

[275] In Charron v. Carriere, 2016 ONSC 7523, Justice Doyle summarized the law as it relates to the calculation of the appropriate tax deduction on retroactive spousal support. In analyzing what tax rate to use, the court must consider the position of the parties had the payments been made when due. The court must consider all of the surrounding circumstances including the recipient’s needs and the payor’s ability to pay. The court must take a balanced approach. Generally, the court will take the approximate mid-point of the parties’ respective tax rates.

[276] In this case, I note that:

1. Non-payment of spousal support occurred at the same time as non-payment of child support, thereby minimizing any hardship to the family;

2. Thomas continued to earn significantly more than Willow;

3. Throughout this litigation, the parties had an express or tacit understanding that child and spousal support would be ironed out and set-off at the end;

4. If spousal support had been paid when due, Willow would have had no reason not to pay child support which would have seen the parties exchanging cheques monthly;

5. If spousal support had been paid when due, Willow would have had to pay tax on that additional income;

6. Thomas’ tax rate was higher than Willow’s throughout;

7. Thomas’ income dropped significantly in 2012 and thereafter remained steady;

8. Willow’s income increased during this period but not precipitously; and

9. The amount payable by Willow for child support exceeded the amount payable for spousal support in some years.

[277] Earlier in this decision I used the parties’ average incomes to calculate their respective s. 7 contributions. The same approach strikes me as a fair and reasonable approach on this issue.

[278] Thomas’ average annual income between 2012 and 2017 was $171,369. During the same period, Willow’s average income was $87,162. Thomas is at the current top marginal tax rate (47.9%). Willow is at a lower tax (33.9%). There is a 14% difference between the two rates. Had he paid her the spousal support when due, the extra income would have been taxed at a higher rate in Willow’s hands. By the same token, had Thomas paid the spousal support when due, his taxable income would have been reduced and his tax lower.

[279] Therefore, I fix the deduction for tax at the mid-point between their respective tax rates and calculate the adjustment amount as 7% x $135,400 (the amount payable for spousal support to April 30, 2018) = $9,478. The net spousal support payable after adjustment for tax is $125,922.

[280] That reduces the difference between what is owed for spousal support net of what is owed for child support and post-separation adjustments to $9,866 ($19,344 less $9,478).

[281] I observe that according to the table at para. 82 of her closing submissions, Willow estimated that she still owed Thomas approximately $7,800 when spousal and child support were set-off against one another. In those circumstances, she asked that the two amounts be treated as a “wash”; that she not pay the difference to Thomas.

[282] The result here is almost a mirror opposite – he owes her $9,866.

[283] Had the numbers been as Willow projected, I was not prepared to simply disregard the difference. I would have ordered that she pay same. I come to the same conclusion on the findings here. Thomas shall pay the difference of $9,866 to Willow. None of the $9,866 is deductible for tax purposes by Thomas nor taxable to Willow as I have already adjusted for tax.

Conclusion

[284] Therefore, for the above reasons, I conclude as follows:

1. The amount payable by Willow for child support from January 1, 2011 to April 30, 2018 is $111,556.

2. The amount payable by Willow to Thomas for post-separation expenses is $3,500.

3. The amount payable by Thomas to Willow for equalization is $333,538.78 less any monies already paid toward equalization.

4. The amount payable by Thomas to Willow for spousal support for the period from January 1, 2012 to April 30, 2018 is $125,922.

5. The amounts payable by Willow to Thomas shall be set-off against the amount payable by Thomas to Willow for spousal support.

6. Thomas shall pay to Willow the difference after set-off of $9,866.

7. Thomas shall pay spousal support to Willow in the amount of $1,850 each month commencing May 1, 2018 for an indefinite period until reviewed upon Thomas’ retirement or other material change in circumstances.

[285] There were many calculations necessary in this decision. I have tried to ensure no arithmetic errors. If counsel for Willow or Thomas find any such errors, they may notify me and the other party. I will determine at that time the appropriate method of proceeding.

[286] If the parties cannot agree on costs, they may make written submissions not exceeding 5 pages within 21 days of the release of this decision.

Justice R. Raikes

Released: December 19, 2017

CITATION: Kelly v. Kelly, 2017 ONSC 7609

COURT FILE NO.: 11917/12

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Willow Elizabeth Kelly

Applicant

– and –

Thomas James Kelly

Respondent

REASONS FOR JUDGMENT

Raikes, J.

SCJ

Released: December 19, 2017