COURT FILE NO.: FS-14-19285

DATE: 20180508

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: JENNIFER SANDRA TURK, Applicant

AND:

STUART BERNARD TURK, Respondent

BEFORE: C. Horkins J.

COUNSEL: Harold Niman, Katharine Rajczak and Hayley Cairns, for the Applicant

Heather Hansen, Stephen Grant and Jenna Beaton, for the Respondent

HEARD at Toronto: In Writing and heard on May 1, 2018

REASONS FOR DECISION

introduction

[1] On November 28, 2017, I released my Reasons for Judgment (the “Judgment”) after a lengthy trial between the applicant Jennifer Turk (“Jennifer”), and the respondent, Stuart Turk (“Stuart”). These reasons for decision must be read together with the Judgment (2017 ONSC 6889). I rely on the facts set out in the Judgment.

[2] In the Judgment, I made various orders. Jennifer’s request to declare the April 26, 2010 Separation Agreement (“Separation Agreement”) null and void and to set it aside was dismissed. Stuart’s request to vary the Separation Agreement was dismissed, except for the termination of child support. Child support for Jordan was terminated effective April 30, 2013. Child support for Sydney was terminated effective September 1, 2016.

[3] The Separation Agreement requires Stuart to pay Jennifer $10,000 net a month for child and spousal support. The Separation Agreement does not delineate how much of the $10,000 is child support versus spousal support.

[4] In the Judgment, I found that the termination of child support and Stuart’s continuing obligation to pay spousal support raises the following questions:

(i) How is the $10,000 amount for support in the Separation Agreement divided between child support and spousal support?

(ii) What amount did Stuart pay for child support for Jordan after the termination date of April 30, 2013?

(iii) What amount did Stuart pay for child support for Sydney after the termination date of September 1, 2016?

(iv) Should Jennifer be required to reimburse Stuart for the amounts in (ii) and (iii) above?

(v) After each termination date for the child support what does Stuart owe Jennifer for spousal support going forward?

[5] The written submissions filed at the end of the trial did not address the above questions that arose from termination of child support. As a result, the parties were provided with an opportunity to file further written submissions and have done so. This was supplemented with oral submissions to address questions that the written submissions raised.

[6] The termination of child support requires me to make further decisions based on the evidence that was presented at the trial. First, I must identify the quantum of spousal support that Stuart owes Jennifer following the termination of child support and going forward. Pursuant to a court order, Stuart has continued to pay Jennifer $10,000 net under the Separation Agreement. Second, the court must decide if Stuart has overpaid or underpaid spousal support after each termination date, the amount of the overpayment or underpayment and whether there should be a retroactive adjustment.

the factual foundation

[7] The factual foundation is set out in the Judgment. For ease of reference, I start with a review of some key facts.

[8] The starting point is the Separation Agreement that provides as follows:

• Section 5.1 requires Stuart to pay Jennifer $10,000 net a month for child and spousal support combined. The “intention being that Jennifer will have $10,000 per month of support on an after tax basis”.

• Section 5.4 requires Stuart to pay for all of the children’s special and extraordinary expenses without contribution from Jennifer.

• The child and spousal support amount is non-variable until January 1, 2013, after which either party may seek a variation if there is a material change in circumstances, foreseeable or unforeseeable.

• Commencing January 1, 2013, section 5.9 of the Separation Agreement requires the monthly support to be increased every January in accordance with the Consumer Price Index.

• Under s. 5.8 if a variation of spousal support is granted, there are two limitations on the variation. First, Jennifer's entitlement to spousal support will never exceed $11,000 gross a month, with cost of living adjustments. Second, until January 1, 2015, Jennifer will receive spousal support of at least $5,500 gross a month.

[9] The agreement to pay Jennifer $10,000 net was based on an income for Stuart of $421,000. The figure was chosen because it was a three year average of Stuart’s past income. He was no longer earning this income when the Separation Agreement was signed because his businesses had failed.

[10] The parties executed the Separation Agreement without agreeing on how the $10,000 net support payment was divided between child support and spousal support. While the parties and counsel may have discussed the allocation, there was no fixed agreement on allocation of the $10,000 between child support and spousal support (Judgment at paras. 379-382 and 405-410).

[11] The parties did agree to apportion the $10,000 net support payment between child and spousal support each year when filing income tax returns. This was required in the Separation Agreement as follows:

5.2 The parties will co-operate to apportion the support (between child support and spousal support) on a year by year basis in a tax effective manner. The parties will co-operate to execute, on a yearly basis and by no later than March 1, a separation agreement, which agreement will properly set out the payments of spousal support paid by Stuart and received by Jennifer for the preceding taxation year.

5.3 Stuart will be responsible for paying any income tax liability that Jennifer incurs as a result of the support paid and received (on the basis of the support being the last dollars in) and he will promptly make such payment to Jennifer upon a review of her draft income tax return for the preceding taxation year. Jennifer will provide Stuart with her Notice of Assessments once received.

[12] The income tax returns reveal that the allocation required under s. 5.2 of the Separation Agreement, varied yearly as set out in paras. 409-410 of the Judgment:

[409] I have reviewed the parties’ income tax returns to see if they reveal how the parties treated the $10,000. In 2010, Jennifer declared $30,000 in support payments. It is not known if Stuart claimed a deduction that year because his full income tax return for 2010 was not produced. In 2011, Jennifer did not declare any support income and Stuart did not claim a deduction. In 2011, Jennifer declared income of $37,612 that she withdrew from her RRSP. No support income was declared and Stuart claimed no deduction. In 2012, Jennifer declared $30,000 in support payments and Stuart claimed a deduction for the same amount. In 2013, Jennifer did not declare any support income and Stuart did not claim a deduction. In 2013, Jennifer declared $41,698 that she withdrew from her RRSP. In 2014, Jennifer declared $36,000 of support income and Stuart claimed a deduction for the same amount. In 2015, Jennifer claimed $30,000 in support income and Stuart claimed a deduction for the same amount.

[410] In summary, the income tax returns show that the amount allocated to spousal support varied and was never close to 70% of the total support. In 2010, 2012 and 2015, Jennifer declared $30,000 which is 25% of the total $120,000 yearly support payment. In 2014, Jennifer declared $36,000 which was 30% of the total support payment. In 2011 and 2013, 0% was allocated to spousal support.

[13] Stuart’s request to vary the Separation Agreement (including a decrease in his income for the purpose of calculating spousal support and termination of spousal support as of December 31, 2021) was dismissed. In this section of the Judgment, I reviewed the financial circumstances of the parties. The following excerpts from the Judgment are relevant:

[349] When the Separation Agreement was signed, Jennifer was unemployed and had not worked outside the home for many years. She had a high school education and minimal work experience. None of this has changed. Instead, Jennifer’s financial position is worse than it was when the Separation Agreement was signed. Jennifer’s debts have increased and her savings have diminished.

[350] There is nothing in the Separation Agreement to indicate that Jennifer was expected to upgrade her education, live according to a budget and/or try to work. There is no evidence that Stuart ever proposed such terms during the mediation.

[351] Stuart agreed to pay $10,000 net without any suggestion of a termination date for spousal support or an expectation that Jennifer look for a job.

[352] If Stuart expected Jennifer to try and become self-sufficient, he could have insisted that this be included as a term in the Separation Agreement, but he did not do so. He could have requested a review of the spousal support that was not tied to a material change. He did not do so. Instead, Stuart continued to do Jennifer’s banking, pay her bills and feed her money and gifts even after the Separation Agreement was signed. He made no real effort to help her become financially responsible. Having allowed her to live married life with no financial skills or responsibility, he obviously knew that she was going to have trouble adapting to living alone and managing money.

[353] In these circumstances, he knew full well that her need for spousal support would be ongoing. In my view, this is why the Separation Agreement has no termination date for spousal support, does not include a review clause for spousal support that is not tied to a material change and expresses no requirement that Jennifer work.

[354] Stuart was unemployed when he signed the Separation Agreement. He was dependant on the money his father gave him. This has not changed. In addition to the money that Harry continues to pay monthly to Cellular Connection, Stuart receives a significant stream of monetary gifts from Harry. Some he chooses to call loans that are not documented as such. Living off this regular stream of monetary gifts from Harry, Stuart has been able to lease expensive cars and purchase and renovate a large home in central Toronto where he lives with his new wife and family.

[355] Stuart’s entrepreneurial efforts since the Separation Agreement have produced very minimal income. When Stuart signed the Separation Agreement and agreed to pay $10,000 in support to Jennifer, he was not earning any income and this remains the case. There has been no material change in his financial circumstances to support his variation requests.

[14] I will now consider the parties’ positions and deal with the remaining decisions that must be made.

Position of the parties

Points Not Disputed

[15] There is no dispute that termination of child support is a material change in circumstances. The parties have very different views on what flows from this change. Both agree that spousal support should continue but disagree on the quantum.

[16] Initially, there was some confusion in counsel’s written submissions as to whether this court should decide the spousal support issue through a variation order. Section 5.8 of the Separation Agreement talks about the right to seek a “variation” of spousal support. However based on the undisputed facts of this case, there is no spousal support order to vary.

[17] On May 1, 2018 counsel confirmed their agreement on the following points. It is agreed that the Separation Agreement was never filed with the Ontario Court of Justice or the Family Court of the Superior Court of Justice pursuant to s. 35 of the Family Law Act, R.S.O. 1990, c. F.3.

[18] It is also agreed that no court has issued a spousal support order between the parties. The order of Justice McWatt dated May 20, 2015 was not a spousal support order but a temporary order directing Stuart to continue paying the $10,000 a month pursuant to the Separation Agreement.

[19] Finally, it is agreed that the order I make will be the first spousal support order between the parties. It is not a variation order. As a result it is an order made under s. 15.2 of the Divorce Act (R.S.C., 1985, c. 3 (2nd Supp.)) and a support deduction order shall be issued.

Stuart’s Position

[20] Stuart’s position is based on assumptions that were not proven at trial.

[21] At trial, Stuart testified that 70% of the $10,000 was allocated to spousal support. This was not supported by the evidence. Stuart now argues that when they signed the Separation Agreement “and based on the quantum of s. 7 expenses at that time”, $5,136 was allocated for child support. He says that this left $4,864 for net spousal support or $6,077 gross for spousal support in 2010. Stuart relies on the evidence of Ms. Kraft to support this allocation. I reviewed this evidence at para. 137 of the Judgment.

[22] As stated in the Judgment, discussions that the parties and counsel had about the allocation did not result in an agreement on a fixed apportionment of the $10,000. Instead, the parties agreed in s. 5.2 of the Separation Agreement to meet yearly and “co-operate to apportion the support (between child support and spousal support) on a year by year basis in a tax effective manner”. If Jennifer was required to pay tax, as a result of spousal support being allocated to her, Stuart agreed to pay Jennifer’s tax liability. I found that the income tax returns showed that the s. 5.2 apportionment of the $10,000 to spousal support varied from 0% to 30% ($0 to $3,000).

[23] Using an unproven allocation, Stuart now states that out of the $10,000, he paid Jennifer gross monthly spousal support of $6,077 until January 1, 2013. As of 2013, the Separation Agreement required an increase in the monthly amount in accordance with the Consumer Price Index. In the table set out below, Stuart sets out the spousal support he says he paid prior to termination of child support and what he should have been paid to date after termination of child support. The table reflects termination of child support for Jordan on April 30, 2013 and for Sydney on September 1, 2016:

Spousal Support

Year	Months	Child Support	Net Benefit to Recip.	Gross
2010	Jan to Dec	$5,136	$4,864	$6,077
2011	Jan to Dec	$5,136	$4,877	$6,077
2012	Jan to Dec	$5,136	$4,875	$6,077
2013	Jan to Apr	$5,101	$5,130	$6,432
2013	May to Dec	$3,268	$5,130	$6,432
2014	Jan to Dec	$3,268	$5,246	$6,593
2015	Jan to Dec	$3,268	$5,291	$6,693
2016	Jan to Aug	$3,268	$5,452	$6,833
2016	Sep to Dec	$0	$5,266	$6,833
2017	Jan to Dec	$0	$5,374	$6,977
2018	Jan forward	$0	$5,473	$7,124

[24] The increases in spousal support in the above chart are solely due to the Consumer Price Index increase that commenced on January 1, 2013 as required by s. 5.9 of the Separation Agreement. Stuart’s table does not allow for any increase in spousal support when child support is terminated.

[25] Using the unproven allocation, Stuart calculated the child support that he paid after the two termination dates. For Jordan, Stuart says that he overpaid child support by $89,833 and for Sydney he says that he overpaid by $47,322 for a total overpayment of $137,155.

[26] Stuart filed Divorcemate calculations (also called Spousal Support Advisory Guidelines "SSAG"). Relying on his SSAG calculations, Stuart argues that the gross amount that he has allocated to spousal support is more favourable to Jennifer than the range of spousal support in his SSAG calculations. I note that only in 2018, does Stuart’s allocated spousal support fall within the SSAG range. Stuart’s comparison table is set out below:

SSAG Spousal Support

Year	Months	Indexed Spousal	Low	Mid	High
2010	Jan to Dec	$6,077	$2,606	$5,739	$6,303
2011	Jan to Dec	$6,077	$1,249	$4,456	$4,900
2012	Jan to Dec	$6,077	$909	$3,990	$4,402
2013	Jan to Apr	$6,432	$1,262	$4,348	$4,777
2013	May to Dec	$6,432	$4,712	$5,200	$5,694
2014	Jan to Dec	$6,593	$4,080	$4,526	$4,980
2015	Jan to Dec	$6,693	$2,385	$2,685	$3,012
2016	Jan to Aug	$6,833	$4,160	$4,608	$5,067
2016	Sep to Dec	$6,833	$4,041	$4,715	$5,388
2017	Jan to Dec	$6,977	$3,996	$4,662	$5,328
2018	Jan forward	$7,124	$6,302	$7,353	$8,403

[27] Stuart’s SSAG calculations produce a range of spousal support that is much lower than Jennifer’s SSAG calculations. The difference is attributable to the fact that Stuart has included the s. 7 expenses that he has paid for Jordan and Sydney and Jennifer has not. I will address this difference below and explain why I reject Stuart’s inclusion of the s. 7 expenses.

[28] While Stuart states that he has overpaid spousal support by $137,155, he is not seeking repayment effective April 30, 2013 when child support for Jordan was terminated. He does not want the court to make an order that would require the parties to refile their income tax returns reaching back to 2013. In Stuart’s view this is unnecessary because he has already filed income tax returns and paid the tax that Jennifer owed. He did this pursuant to s. 5.2 and s.5.3 of the Separation Agreement.

[29] Stuart asks the court to make the spousal support order retroactive to September 1, 2016. Since no child support was owed from this date forward, Stuart states that he should be entitled to the full tax deduction for what was solely spousal support.

[30] Stuart also seeks an order that Jennifer reimburse him for any spousal support overpayment as of September 1, 2016 to date.

[31] Stuart argues that while Jennifer’s means are limited, this should not be a factor against ordering reimbursement because Jennifer’s frivolous spending is to blame for her circumstances. Stuart also states that Jennifer should not be entitled “to stand behind her poor judgment” as an excuse for not reimbursing him.

Jennifer’s Position

[32] Jennifer states that the court must make a spousal support order under s. 15.2 of the Divorce Act that takes into account the factors in s. 15.2 (4). The Separation Agreement is one of the factors. The order should also recognize the objectives of spousal support as set out in s. 15.2 (6). As noted, the parties agree that these sections govern the spousal support order I will make.

[33] In the written submissions that I requested after release of the Judgment, Jennifer’s counsel states in para. 11 that after each child support termination date, Jennifer’s spousal support should increase. She states that “the absolute lowest amount of spousal support that should be ordered” is $11,000 gross (the amount in s. 5.8 of the Separation Agreement).

[34] In oral submissions on May 1, 2018, Jennifer’s counsel argued that the Separation Agreement is only one factor to consider. Counsel states that the order I make does not have to be capped at the $11,000 gross monthly maximum.

[35] The Separation Agreement states in s. 5.8 that “in the event of a variation” Jennifer’s entitlement to spousal support and Stuart’s obligation to pay spousal support will never exceed the monthly sum of $11,000 gross, with cost of living adjustments”. As I have explained, the order I will make is not a variation order. I am not varying the Separation Agreement. I will make a stand alone spousal support order. The Separation Agreement, including the cap, will be a factor I consider in arriving at an amount for spousal support. If I were to find that imposing the cap does not meet the objectives in s. 15.2(6), then a higher award could be awarded.

[36] Jennifer’s position on the allocation of the $10,000 net payment between child and spousal support is based on the findings of fact in the Judgment. Specifically, there was no fixed allocation agreement. Instead, the parties agreed in s. 5.2 of the Separation Agreement to meet yearly and “co-operate to apportion the support (between child support and spousal support) on a year by year basis in a tax effective manner”. The amount allocated each year to spousal support was not consistent and varied from 0% to 30%.

[37] Jennifer relies on ss. 15.3(1) and (3) of the Divorce Act. Section 15.3(1) codifies the jurisprudence requiring the court to give child support priority over spousal support. Section 15.3(3) confirms that the termination of child support is a material change in circumstances for the purpose of varying spousal support.

15.3 (1) Where a court is considering an application for a child support order and an application for a spousal support order, the court shall give priority to child support in determining the applications.

(3) Where, as a result of giving priority to child support, a spousal support order was not made, or the amount of a spousal support order is less than it otherwise would have been, any subsequent reduction or termination of that child support constitutes a change of circumstances for the purposes of applying for a spousal support order, or a variation order in respect of the spousal support order, as the case may be. [Emphasis added.]

[38] On the facts of this case, ss. 15.3(1) and (3) of the Divorce Act are not directly applicable. Instead of the court considering orders for child support and spousal support, the parties agreed to prioritize child support and this was done to benefit Stuart.

[39] It is fair to say that what the parties agreed to (monthly spousal support at a low of zero and a high of $3,000) is clearly less then what otherwise would have been paid to Jennifer for spousal support, had child support not been given priority under s. 5.2 of the Separation Agreement.

[40] When child support was terminated for each child, Jennifer says that she was entitled to have her spousal support increased. She argues that with each termination, her spousal support would have been fixed at no less than $11,000 gross. As a result, Jennifer states that Stuart has not overpaid child support.

[41] Jennifer relies on her SSAG calculations to support her position. She has provided two different SSAG calculations. One approach is based on $419,093 (I refer to this as $421,000 because this is the amount the parties agreed to use for the Separation Agreement and the small difference is not significant). The alternative approach uses an increased income of $504,093. This is the average of Stuart’s reported income for 2005, 2006 and 2007 plus the income that Stuart attributed to Jennifer in those years to achieve income splitting. I reject this approach. I found in the Judgment that the parties settled on an income for Stuart of $421,000 for support purposes and the Separation Agreement.

[42] The SSAG calculation using $421,000 without child support shows the following range for spousal support (gross): $9,430 (low) $11,001 (mid) and $12,573 (high). On an after tax basis the low is $6,814, the mid is $7,703 and the high is $8,570.

[43] Jennifer states that the mid-point of this range is consistent with the $11,000 gross cap in s. 5.8 of the Separation Agreement.

[44] Jennifer does not seek a retroactive spousal support order for the years 2013-2016. She wants the spousal support order to be effective January 1, 2017. She sees no point in requesting an order that would require the parties to amend their income tax returns to allocate some new amount for spousal support because the court has terminated child support. She adds that the allocation of the $10,000 in those years was always an arbitrary amount that Stuart chose for his tax planning.

[45] It seems that Jennifer’s position on fixing the variation as of January 1, 2017 is premised on her submission that the parties have not filed their 2017 income tax returns and Jennifer’s position that Stuart owes her money for spousal support. I have no information as to whether 2017 income tax returns have been filed.

analysis

[46] First, I will identify the quantum of spousal support that the court order will require Stuart to pay Jennifer. I will then consider the effective date of the order.

[47] Neither party seeks a retroactive order back to the termination of Jordan’s child support. However, it is important to look at the amount of the overpayment or underpayment effective April 30, 2013. This is a relevant consideration in fixing the effective date of the spousal support order and considering reimbursement of any overpayment of spousal support.

[48] The spousal support order is made under s. 15.2 of the Divorce Act and considers the factors in s. 15.2 (4) and the objectives of a spousal support order in s. 15.2 (6) as follows:

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

(a) the length of time the spouses cohabited;

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

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

(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should

(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;

(b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;

(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and

(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

[49] Child support has been terminated as set out in my Judgment. There is no dispute that this is a material change that triggers the need to make a first time spousal support order under s. 15.2 of the Divorce Act.

[50] It is clear from my Judgment that entitlement to spousal support is no longer an issue. I dismissed Stuart’s request to vary the Separation Agreement. He was seeking to terminate spousal support on December 31, 2021. There is no termination date for spousal support in the Separation Agreement and there is no justification for setting a termination date now.

[51] The Separation Agreement is a factor to consider. Section 5.8 specifically provides for a minimum and maximum cap as follows:

5.8 On or after January 1, 2013, either party may seek a variation of the child support and/or spousal support amounts if there is a material change of circumstances since the making of this Agreement, whether the change was foreseen or unforseen or foreseeable or unforeseeable. However, in the event of a variation: 1) Jennifer's entitlement to spousal support and Stuart's obligation to pay spousal support will never exceed the monthly sum of $11,000.00 gross, with cost of living adjustments based on the consumer price index for items Toronto with a base year of 2010; and 2) until January 1, 2015, Jennifer will receive at least the gross monthly sum of $5,500 for spousal support. If there is a variation of child support on or after January 1, 2013, child support will be determined in accordance with the Guidelines, except that Stuart will guaranty a minimum base rate monthly payment to Jennifer for Sydney provided that Sydney resides with Jennifer for at least 40% of the time in the amount of $2,500.00, irrespective of special and extraordinary expenses and until January 1, 2015. The parties will mediate any disputes in terms of the support issues with Jaret Moldaver before resorting to arbitration or a court application.

[52] To address the other factors in s. 15.2 (4) and the objectives of a spousal support order in s. 15.2(6), I start with a summary of the relevant facts set out in the Judgment.

[53] The parties were married for almost 19 years when they separated. Jennifer has no post-secondary education and her employment history is sparse. For a short period of time, Jennifer worked with Stuart in his business. After Jordan was born, Jennifer was a homemaker and never worked outside of the home during the marriage.

[54] The following excerpts from the Judgment are relevant:

[38] During the marriage, Stuart looked after the family finances and paid all of the bills. Jennifer wrote cheques on the joint bank account. She never went to the bank and had no access to online banking or the credit card and bank account statements that were delivered to Stuart.

[39] They lived a life style that involved excessive spending. Before Metro One failed, money was readily available. Stuart regularly bought Jennifer many expensive pieces of jewellery. They owned a condominium in Miami. For several years they travelled to Miami, New York and other destinations by private plane. Jennifer enjoyed visits to Canyon Ranch, Blue Jays World Series tickets and membership at a private sports club. She bought clothes and purses at expensive stores with no limit on her spending.

[41] During the trial, Stuart was critical of Jennifer’s spending. Jennifer was and is financially naive and irresponsible about spending. The blame for this behaviour does not rest solely with Jennifer. Throughout the marriage, Stuart fueled and enabled Jennifer’s spending habits. Stuart never expected Jennifer to assume control for the family’s daily financial decisions. He took care of all of the family banking. Stuart never encouraged or helped Jennifer to acquire basic financial planning skills. He never expected her to create a budget and follow it. When they separated, Jennifer was not equipped to manage her own finances. While Jennifer could have learned how to manage her finances and restrain her spending, this did not happen.

[174] For several years after the Separation Agreement was signed, Stuart continued to manage Jennifer’s finances. He had access to her bank account and paid her bills online. Stuart and Jonah encouraged Jennifer to take an active role and start managing her own finances, but this did not happen.

[175] Jennifer remains unemployed. She has not pursued any courses or attempted to upgrade her education in any way. The steps Jennifer has taken to try and earn some income have been minimal and unsuccessful. Jennifer attended a commercial audition for ET Canada, but was not hired. Jennifer and a friend decided to start a skin care business. At best, this was just an idea. Her friend backed out before they even had a business plan and Jennifer decided it was not something she could do on her own.

[176] Jennifer testified that she has sold much of her jewellery and depleted her savings to survive. She continues to spend money without a budget. She has sold jewellery to buy expensive designer clothes and purses at Holt Renfrew and elsewhere.

[313] I appreciate that Jennifer was never in charge of family finances during the marriage and that her spending was for the most part uncontrolled. It is understandable that she would be concerned as they reached the end of the mediation. However, Jennifer had to assume responsibility for her financial future. Despite all of Ms. Kraft’s “reality checking” work, there is no evidence that Jennifer acknowledged responsibility for her financial future. Stuart continued to do all of her banking. Their son tried to help her prepare a budget on one occasion and this was a failure. Jennifer remains financially naive. She continues to spend without any apparent control. I attribute much of the concern that Jennifer voiced during the mediation to her own failure to become financially responsible.

[55] In the Judgment, I considered and dismissed Stuart’s request to vary the Separation Agreement. This failed variation request included his request to terminate spousal support at the end of 2021 and fix his income at a much lower amount. I found that in effect, Stuart was seeking to rewrite the Separation Agreement. In support of my decision to deny Stuart’s request, I made findings of fact that are set out in paras. 349-355 of the Judgment. These facts are quoted above in paras. 13 of these Reasons for Decision.

[56] In summary, the facts show that Jennifer suffered an economic disadvantage from the marriage and its breakdown. During the marriage, she acquired no work or life skills that would help her become self-sufficient. Stuart benefited from having Jennifer stay at home and take care of the children. It suited his entrepreneurial work life. Jennifer was allowed to spend money without responsibility and led a life filled with luxury. After separation, neither Jennifer nor Stuart took any meaningful steps to deal with Jennifer’s financial irresponsibility. And so the problem grew and today Jennifer has a home that is mortgaged, she has cashed in her RRSPs and has no meaningful assets to rely on.

[57] In contrast, Stuart continues to receive money from his father and pursue whatever new business ventures he may be interested in, regardless of whether they generate income. He has been able to lease expensive cars and purchase and renovate a large home in central Toronto where he lives with his new wife and family.

[58] I turn now to consider the SSAG calculations. As the court stated in Gray v. Gray, 2014 ONCA 659 at para.42, “[t]he SSAG are neither legislated, nor binding. However they are a useful tool with which to measure the quantum and duration of spousal support.”

[59] As noted above, there is a difference between the SSAG calculations provided. Jennifer’s calculations are without child support. Stuart’s SSAG calculations factor in significant s. 7 expenses that he has paid. He seeks to include the s. 7 expenses for the purpose of calculating his net disposable income. I reject Stuart’s approach for the following reasons.

[60] The starting point is the Separation Agreement. The parties agreed on child and spousal support separate and apart from s. 7 expenses. In s. 5.1 of the Separation Agreement, Stuart agreed to pay Jennifer $10,000 net a month for child and spousal support, the “intention being that Jennifer will have $10,000 per month of support on an after tax basis”.

[61] Over and above the obligation to pay Jennifer $10,000 net each month, Stuart agreed in s. 5.4 to “pay for all” of the s. 7 expenses “without contribution from Jennifer”. There are no monetary or time limits on Stuart’s obligation to pay all of the s. 7 expenses (aside from the obvious fact that Stuart’s obligation ends when the child is no longer a child of the marriage).

[62] The Separation Agreement does not include a right to seek a “variation” of or any mechanism to change Stuart’s agreement to “pay for all” of the s. 7 expenses. This is in contrast to s. 5.8 of the Separation Agreement that allows either party to seek a “variation” of child support or spousal support. This section clearly addresses the variation of Stuart’s obligation to pay $10,000 net under s. 5.1. Section 5.8 sets a minimum and maximum for spousal support if varied, with no reference to Stuart’s obligation to pay all of the s. 7 expenses.

[63] The Separation Agreement does not allow Stuart to seek a credit for payment of the s. 7 expenses or review how they might affect his net disposable income for the purpose of calculating spousal support on a variation. Stuart agreed to “pay for all” of the s. 7 expenses without contribution from Jennifer.

[64] In effect, Stuart is trying to achieve the variation that I did not allow in the Judgment. His position uses his payment of the s. 7 expenses to lower his income, for the purpose of fixing an amount for spousal support in the court order.

[65] In summary, Stuart’s SSAG calculations ignore the Separation Agreement and they are not a “useful tool with which to measure the quantum and duration of spousal support” under s.15.2 of the Divorce Act.

[66] I appreciate that ordinarily, the payor’s payment of s. 7 expenses are considered in the SSAG calculations. However, this is not an ordinary situation. The parties signed a Separation Agreement with a $10,000 unallocated net support payment to Jennifer and Stuart agreed to pay 100% of all s. 7 expenses. The Separation Agreement is a relevant factor that cannot be ignored.

[67] Before leaving the issue of Stuart’s SSAG calculations, I wish to point out that Stuart has included in his list of s. 7 expenses, amounts that Jordan and Sydney received that do not fall within the definition of s. 7 expenses.

[68] For example, Stuart includes unidentified extravagant sums for e-transfers and credit card payments for both children. He also includes the children's school expenses. However, Harry Turk admitted at trial that he made gifts to Stuart specifically for the purpose of paying for the children's tuition. Furthermore, Harry stated that he was willing and able to continue to pay for his grandchildren's education.

[69] I terminated guideline child support for Jordan as of April 30, 2013. At this point, Jordan was living on his own and, in 2015, he moved into a condominium that Harry Turk paid for. I appreciate that Jordan started University in the fall of 2013. However, in 2013, Jordan was also earning income from Cellular Connection and he held investments. Stuart’s SSAG calculations include excessive so called s. 7 expenses for Jordan until 2018.

Monthly Spousal Support

(i) The Quantum of Spousal Support

[70] I have decided to set Jennifer’s monthly spousal support at $11,000 gross. The retroactive date of the court order will be January 1, 2018. I make no order requiring Jennifer to reimburse Stuart for the overpayment of spousal support that I have identified. My reasons follow.

[71] Monthly spousal support of $11,000 gross reflects what the parties agreed to. It is also an amount that is consistent with Jennifer’s SSAG calculation.

[72] Jennifer’s SSAG calculation has a low of $9,430 (after tax benefit of $6,814). The mid-point of $11,001 has an after tax benefit of $7,703. The high end of the range is $12,573 with an after tax benefit of $8,570.

[73] Based on the facts in the Judgment and in particular those that I have quoted, spousal support set at $11,000 (gross) is justified and necessary to fairly address the factors in s. 15.2 (4) and the objectives of a spousal support order in s. 15.2(6) of the Divorce Act.

[74] On a net basis ($7,703), Jennifer will receive $2,297 less a month than the $10,000 net payment under s. 5.1 of the Separation Agreement.

[75] Stuart again raises the argument that I should consider Jennifer’s irresponsible spending when fixing the quantum of spousal support. I dealt with this argument in the Judgment.

[76] In para. 41 of the Judgment I found that “Jennifer was and is financially naive and irresponsible about spending”. I also found that the “blame for this behaviour does not rest solely with Jennifer. Throughout the marriage and after separation, Stuart fueled and enabled Jennifer’s spending habits.”

[77] Jennifer’s spending habits do not change the fact that she has no post-secondary education and a sparse employment history. As I found in para. 352 of the Judgment, Stuart “allowed her to live married life with no financial skills or responsibility, he obviously knew that she was going to have trouble adapting to living alone and managing money.”

[78] Based on the facts of this case, it is reasonable to set the monthly spousal support at $11,000. This gives Stuart 64.3% of the net disposable income and 35.7% to Jennifer.

[79] To be clear, this is a spousal support order and the amount of $11,000 is taxable in recipient’s hands.

[80] I make the following spousal support order pursuant to s. 15.2 (1) of the Divorce Act:

(i) Effective January 1, 2018, Stuart shall pay Jennifer monthly spousal support of $11,000.

(ii) Each year there shall be a cost of living adjustment on the $11,000, based on the consumer price index for items in Toronto with a base year of 2010.

(iii) A Support Deduction Order shall be issued.

(iv) If there is a conflict between these orders and any part of the Separation Agreement, the orders apply and govern the parties.

(ii) The Retroactive / Overpayment Issue

[81] I have decided to order spousal support as of January 1, 2018 because it is the most reasonable, fair and clean approach, given the unusual facts of this case.

[82] To explain the basis for the effective date, I start with a calculation of what is owed for spousal support considering each child support termination date. I appreciate that neither party seeks a spousal support order that is retroactive to May 1, 2013. To appreciate why Stuart’s retroactive date of September 1, 2016 is rejected, it is helpful to look at the overpayment/underpayment of spousal support from May 1, 2013 forward.

[83] There are two periods of time to consider: after termination of Jordan’s child support and after termination of Sydney’s child support.

[84] I start with the termination of Jordan’s child support. In January 2013, Stuart unilaterally reduced the $10,000 net payment to reflect his view that child support was no longer owed for Jordan. Justice McWatt later ordered Stuart to continue paying the full $10,000 net under the Separation Agreement plus what he had not paid due to his unilateral action. Pursuant to this court order, Stuart has been paying the full $10,000 net each month.

[85] In paras. 366-387 of the Judgment, I found that Stuart’s decision to unilaterally terminate child support for Jordan was contrary to s. 5.13 of the Separation Agreement that required Stuart to pay the $10,000 net until "adjusted by an amending agreement, court order or arbitration award Stuart will continue to pay the support".

[86] Jordan’s child support was terminated as of April 30, 2013. Stuart continued to owe child support for Sydney until September 2016. This is a total of 40 months.

[87] Of note, in 2013, the parties allocated 100% of the $10,000 to child support. Since no money was attributed to spousal support on Jennifer’s 2013 income tax return, Stuart’s obligation under s. 5.3 of the Separation Agreement was not triggered (i.e. to pay any tax liability that Jennifer incurred for receipt of spousal support).

[88] I first identify guideline child support for Sydney. Child support for one child on an income of $150,000 is $1,263. Stuart’s income under the Separation Agreement is $421,000. To determine the guideline child support for incomes over $150,000, I follow the direction in the Guidelines. The amount of Stuart’s income over $150,000 is $271,000. Guideline child support of $1,263 is increased by $2,005 which is 0.74% of $271,000. This results in guideline child support of $3,268.

[89] Therefore, after termination of Jordan’s child support, I attribute $3,268 to child support for Sydney and this leaves $6,732 of the $10,000 to be attributed to spousal support. This is $971 less than $7,703, the after tax value of the $11,000 in spousal support that Jennifer receives effective January 1, 2018.

[90] Assuming a $11,000 ($7,703 net) spousal support order effective May 1, 2013, Jennifer has received $38,840 less in spousal support during this 40 month period.

[91] I now turn to consider the time frame after termination of Sydney’s child support. As of September 2016, no child support was payable and Jennifer continued to receive the $10,000 net monthly payment. I compare this $10,000 net payment to the spousal support that I have ordered as of January 1, 2018 ($11,000 gross and $7,703 net). From September 2016 to the end of 2017 (16 months), Stuart has paid Jennifer $10,000 net. This is an additional $2,297 a month net for 16 months for a total of $36,752. In 2018, Stuart has continued to pay $10,000 net a month. Allowing for 5 months in 2018, is a further overpayment $11,485 for a total overpayment is $48,237.

[92] The underpayment and overpayment results in a net $9,397 overpayment of spousal support.

[93] Stuart wants the spousal support order to be effective as of September 1, 2016. Since he has only owed spousal support since September 1, 2016, he says he should be entitled to the tax deductibility of the spousal support paid from September 1, 2016 onwards. He wants the court to order Jennifer to reimburse him for the overpayment of spousal support and to fix a payment schedule.

[94] The parties’ 2016 income tax returns were not available during the trial. I have been provided with correspondence between counsel that reflects what happened to the treatment of spousal support in the 2016 tax year.

[95] On April 3, 2017, Jennifer’s counsel proposed to Stuart’s counsel, on a without prejudice basis, that the parties include and deduct the sum of $80,000 as spousal support in their income tax returns.

[96] On April 4, 2017, Stuart’s counsel wrote to Jennifer’s counsel to advise that for the 2016 income tax return, Stuart would “use the sum of $30,000” for spousal support paid to Jennifer. On April 19, 2017, Stuart’s counsel asked for confirmation that Jennifer would claim the $30,000 for spousal support as requested by Stuart. Jennifer agreed and claimed $30,000 for spousal support in her 2016 income tax return.

[97] Jennifer’s counsel provided a copy of Jennifer’s 2016 income tax return with her recent submissions. The income tax return confirms that Jennifer claimed $30,000 for spousal support, just as Stuart requested. Stuart’s 2016 income tax return was not produced.

[98] For 2016, the parties followed the same approach as they did in previous years. They agreed on an allocation as required under s 5.2 of the Separation Agreement. Jennifer simply did what Stuart asked. The spousal support allocation for 2016, like all of the previous years, was chosen to benefit Stuart. The allocation was never consistent except that it was always very low and for two of the years it was zero. This benefited Stuart because s. 5.3 of the Separation Agreement required him to pay the tax consequences of Jennifer claiming spousal support. As a result, it was to his benefit to keep the spousal support allocation low.

[99] Stuart relies on the factors in S(DB) v G(SR), 2006 SCC 37 at paras. 100-116 (“DBS”) to support his position:

1. Is there a reasonable excuse for why an increase was not sought earlier?

2. Has the conduct of the payor parent been blameworthy?

3. Do the circumstances of the child support the making of a retroactive order?

4. Would a retroactive order cause hardship to the payor parent?

[100] As the court stated in Kerr v. Baranow, 2011 SCC 10 at para. 207, when deciding whether to allow retroactive spousal support, the DBS factors must be “considered and weighed in light of the different legal principles and objectives that underpin spousal as compared with child support.”

[101] The DBS factors consider situations where the recipient of support is seeking payment for a retroactive time frame in which monies were not paid or more is owed.

[102] The factual context in this case is different. Since September 1, 2016, Stuart has overpaid spousal support and he as the payor seeks reimbursement. For this reason, the DBS factors do not fit.

[103] A retroactive spousal support order is discretionary. Based on the facts of this case, I refuse Stuart’s request for a retroactive order as of September 1, 2016 and an order that Jennifer reimburse him for the overpayment. My reasons for reaching this conclusion follow.

[104] The parties signed an unusual Separation Agreement that did not delineate between child and spousal support. Under the Separation Agreement, each year they allocated part of the $10,000 to spousal support. This varied from 0 to 30%. The percentage was never based on a realistic assessment of what should be paid for spousal support. Instead, Stuart chose the amount that was financially advantageous to him. In April 2017, when Jennifer’s counsel suggested that a more realistic amount be attributed to spousal support for the 2016 income tax return ($80,000), Stuart chose to allocate $30,000.

[105] Stuart does not want a spousal support order that would require him to refile income tax returns for the years 2013-2015 and yet he wants an order effective May 1, 2016 so that he can benefit from the deduction of spousal support starting with the 2016 tax year.

[106] The parties have already agreed that $30,000 was paid to Jennifer for spousal support in 2016. This was the amount that Stuart asked Jennifer to designate for spousal support. Having chosen a 2016 allocation of spousal support that benefited Stuart, he now wants the spousal support order to cover 2016. This would require the parties to refile their 2016 and 2017 income tax returns. I am assuming they have complied with the April 30 deadline for filing their 2017 tax returns.

[107] According to Stuart, Jennifer has tax deductible legal fees that will insure she is not impacted by the reallocation of spousal support in 2016, 2017 and 2018. That may be the case, but I have no reliable evidence from a tax accountant to support Stuart’s submission. The copy of Jennifer’s 2016 income tax return shows carrying charges of $210,416.31. The schedule for these expenses is not included and her Notice of Assessment is not available.

[108] A retroactive order would require Jennifer to reimburse Stuart for the overpayment of spousal support. Jennifer’s financial circumstances have deteriorated. As of January 1, 2018, her spousal support will drop and Jennifer must adjust.

[109] While Stuart continues to blame Jennifer for the decline in her financial circumstances, I have found that Stuart is also to blame for this decline. A retroactive order would benefit Stuart, while making it more difficult for Jennifer to adjust and become self-sufficient. I reject Stuart’s plea of financial hardship as a reason to make a retroactive variation. I rely on the many findings of fact in the Judgment (see para. 13 above).

[110] I also refuse to order Jennifer to reimburse Stuart for the overpayment in the 5 months of 2018 prior to the release of these Reasons for Decision. My reasons that justify refusal of a reimbursement order apply equally to the few months in 2018.

[111] In summary, effective January 1, 2018 Stuart shall pay Jennifer monthly spousal support in the amount of $11,000 pursuant to s. 15.2 of the Divorce Act. I make no order requiring Jennifer to reimburse Stuart for any overpayment of spousal support that is claimed.

conclusion

[112] I make the following orders:

(i) Effective January 1, 2018, Stuart Turk shall pay Jennifer Turk monthly spousal support of $11,000 pursuant to s. 15.2 of the Divorce Act.

(ii) Each year there shall be a cost of living adjustment on the $11,000, based on the consumer price index for items in Toronto with a base year of 2010.

(iii) A Support Deduction Order shall be issued.

(iv) Stuart Turk’s request for an order that Jennifer Turk reimburse him for any overpayment of spousal support, is denied.

(v) If there is a conflict between these orders and any part of the Separation Agreement, the orders apply and govern the parties.

(vi) If either party is seeking costs, they shall agree on a schedule for exchange of cost submissions including reply. All costs submissions shall be served and filed no later than May 31, 2018 and shall address entitlement and quantum.

C. Horkins J.

Date: May 8, 2018