Court File and Parties

Court File No.: FS-15-407165 Date: 2018-06-29 Superior Court of Justice - Ontario

Re: Marlene Bedzow-Weisleder And: Louis Moshe Weisleder

Before: J.T. Akbarali J.

Counsel: Roslyn M. Tsao for the Applicant Dani Z. Frodis and Charley Levitan for the Respondent

Heard: June 25, 2018

Endorsement

[1] On April 18, 2018, I released reasons in the trial of this family law matter. I determined that the applicant, Ms. Bedzow, owed an equalization payment of $451,385.99 to the respondent, Dr. Weisleder, and ordered that it be paid over ten years. I made determinations with respect to retroactive and prospective child and spousal support, and directed the parties to complete the calculations of those amounts. I asked the parties to address whether interest should accrue on any amounts owing under my decision, and whether any amounts owing by one party should be set off against amounts owing by the other.

[2] The parties have provided me with further written and oral submissions on the outstanding issues. They disagree about the calculations of retroactive and prospective support. In these reasons I consider the following:

a. What is the proper calculation of retroactive spousal and child support? In particular, how should my determination that the legal responsibility for the children’s s. 7 expenses be placed solely on the respondent be reflected in the calculations? b. What is the proper calculation of prospective spousal and child support? This question also engages the question of the appropriate treatment of s. 7 expenses in the calculation. In addition, it requires me to consider whether there should be an automatic adjustment to spousal and child support when Z.W., the youngest child of the marriage, begins university in September 2018 at an American university (“USU”) where he will reside away from home. c. Should the retroactive support owed by Dr. Weisleder to Ms. Bedzow be set off against the equalization payment owed by Ms. Bedzow to Dr. Weisleder? d. Should interest accrue on the equalization payment that is owed?

Calculation of Retroactive Support

[3] The determination of this issue depends on how the children’s s. 7 expenses factor in to the calculation of support.

[4] There are three children of the marriage. At the time of trial, the older two children, J.W. and L.W. were students at USU. Z.W. was living at home, attending a private Jewish day school, and had been accepted to USU. It had not finally been determined that he would attend USU, but the family had been working towards securing his acceptance there since he began high school.

[5] J.W. was expected to complete his university education at the end of April 2018. L.W. has one year left at USU, with an expected completion date of April 2019. It has now been determined that Z.W. will attend USU starting in September 2018 for a four year program.

[6] The s. 7 expenses associated with the children’s university education are significant. At trial, Ms. Bedzow argued that a discretionary trust in respect of which the children are the sole beneficiaries should meet their s. 7 expenses.

[7] In my reasons, I took note of the manner in which the parties had arranged their financial affairs in the past. In particular, Dr. Weisleder had deposited his non-OHIP income into a corporation, 1286972 Ontario Ltd. (“128”), that is wholly owned by the trust. Dr. Weisleder is the sole officer and director of 128 and is the sole trustee of the trust. During the parties’ marriage, Dr. Weisleder withdrew sums from 128 to fund the parties’ lifestyle and expenses. These funds were withdrawn at a lower marginal tax rate than that which he would have paid had he taken the funds into his personal income. In my decision, I determined that the funds withdrawn constituted a bona fide non-interest bearing debt of some $824,000 that Dr. Weisleder owes to 128.

[8] In large part driven by that finding, I concluded that Ms. Bedzow owes an equalization payment to Dr. Weisleder of approximately $451,000. I made the equalization payment payable over ten years to alleviate hardship to Ms. Bedzow, noting that the repayment of the debt to 128 is entirely within the control of Dr. Weisleder who may not choose to use Ms. Bedzow’s equalization payment to repay what is, in effect, her half of the debt or to repay the remainder of it at the same time. I noted that some of the inequity about which I was concerned was also addressed by the manner in which I considered the assets of 128 in the context of the s. 7 expenses.

[9] I noted that J.W. and L.W. have had their education funded through Dr. Weisleder’s non-OHIP income, through loans that Dr. Weisleder took from 128 and through dividends from a personal corporation (“PC”) that Dr. Weisleder set up and began using in 2016 and 2017, after separation. I also noted that J.W. and L.W. benefitted from an R.E.S.P. set up for the children that is now exhausted.

[10] I concluded that I did not have jurisdiction to make the order Ms. Bedzow sought, that the trust’s assets be exhausted to pay for the children’s s. 7 expenses because to do so would require me to fetter Dr. Weisleder’s discretion as trustee of the trust and as sole officer and director of 128. However, I found that the trust’s assets were contingent means of the children available to meet their special and extraordinary expenses. I concluded that, given the funding of J.W.’s and L.W.’s education to date, I would assume that Dr. Weisleder would continue to exercise his discretion to make the assets of 128 available to fund the children’s s. 7 expenses in whatever manner he, as sole officer and director of 128 and sole trustee of the trust, determines. Accordingly, I placed the legal obligation to fund the children’s s. 7 expenses solely on him.

[11] I then gave directions with respect to the calculation of retroactive support, including that, “in recognition of the manner in which the parties have always funded the children’s s. 7 expenses, the calculation must assign full responsibility for the s. 7 expenses to Dr. Weisleder”.

[12] The parties differ in their views as to how to calculate retroactive support in view of my determination of the treatment of s. 7 expenses. Originally, Ms. Bedzow sought to calculate spousal support as if there were no s. 7 expenses at all. Dr. Weisleder objected, arguing that s. 7 expenses must be taken into account, otherwise he will pay too much spousal support. He relies on the Spousal Support Advisory Guidelines: The Revised User’s Guide at p. 4, and an article by Rollie Thompson, The Chemistry of Support: The Interaction of Child and Spousal Support, 25 C.F.L.Q. 251. Dr. Weisleder’s position is that the s. 7 expenses ought to reduce his income for purposes of determining spousal support on a “with child support formula”, and that the s. 7 payments should not be apportioned. This results in a spousal support award at the high end of the SSAGs of $9,832 monthly plus table support for Z.W. of $6,283.

[13] At the hearing dealing with these issues, Ms. Bedzow suggested that the best way to account for the section 7 expenses in the calculation to ensure that Dr. Weisleider does not overpay spousal support and yet bears the full responsibility for the children’s s. 7 expenses is to include the section 7 expenses as a calculation input that reduces Dr. Weisleider’s income, conduct the calculation in such a way as to apportion the s. 7 expenses between the parties according to income, and then ignore Ms. Bedzow’s proportionate share by not setting it off against the amounts owed to her. In the retroactive calculation, Ms. Bedzow also receives a credit for the s. 7 expenses she paid pursuant to the temporary order of J. Wilson J. dated November 10, 2016.

[14] Dr. Weisleder argues that Ms. Bedzow’s proposal artificially inflates spousal support because the calculation assumes that Ms. Bedzow is contributing her proportionate share to s. 7 expenses when she is not. He states that a better approach is to back out of the s. 7 expenses the proportion the trust is expected to make – he suggests 33% - and ascribe 100% of the balance to Dr. Weisleder. The problem with this approach is that I have no evidence to assume what the trust’s contribution will be. Its contribution is solely in the discretion of Dr. Weisleder.

[15] In my view, Ms. Bedzow’s proposal best accords with the intent of my reasons. It considers Dr. Weisleider’s contribution to the children’s s. 7 expenses when calculating his income for support purposes. I do not agree that the calculation necessarily inflates Dr. Weisleder’s spousal support obligation; it does not take into account the trust assets which, in Dr. Weisleder’s sole discretion, can be made available to meet the children’s s. 7 expenses. At the same time, it places full responsibility for funding the s. 7 expenses on Dr. Weisleider. This result is consistent with my decision that the assets of the trust have to be considered as contingent means available to the children to fund their s. 7 expenses and that, as sole officer and director of 128 and as sole trustee of the trust, Dr. Weisleider can exercise his discretion to make available assets of the trust to meet the children’s s. 7 expenses in whatever manner he chooses.

[16] I thus conclude that Ms. Bedzow’s calculation of support arrears owing is the correct one. On this basis, for the year 2016, Dr. Weisleider owes Ms. Bedzow $43,005 in child support and $120,387 in gross spousal support. For 2017, Dr. Weisleider owes Ms. Bedzow $52,344 in child support and $73,392 in gross spousal support. The parties agree that the gross spousal support should be netted down to reflect the tax consequences that each would have borne had the spousal support been paid in the appropriate amount in 2016 and 2017, deductible to Dr. Weisleider and taxable to Ms. Bedzow. The parties agree that the appropriate rate to net down spousal support is 31%. By my calculation, the total support arrears payable for 2016 and 2017 are $229,056.51.

Calculation of Prospective Support

[17] It follows from my discussion above that the calculation of prospective support should account for s. 7 expenses in the same way that the calculation of retroactive support does. Based on the calculation provided by Ms. Bedzow, I find that prospective spousal support, on a with child formula taking into account the table support owing for Z.W., is $11,162 monthly. To be clear, this is the amount of monthly spousal support commencing January 1, 2018 and, consistent with my earlier reasons, Ms. Bedzow’s contribution to s. 7 expenses is ignored because the responsibility for the s. 7 expenses falls to Dr. Weisleder.

[18] Dr. Weisleider argues that table support for Z.W. should end in September 2018 when he moves to the United States to attend USU. He relies on my decision, at paragraph 173(e) where I found that table support should not be paid for J.W. or L.W. because their expenses were better considered under the analysis of s. 7 expenses.

[19] Ms. Bedzow argues that Z.W.’s departure for USU may be a material change necessitating a change in support, but that the evidence led at trial does not establish that to necessarily be the case. She argues that she did not lead all of the evidence that she might have led if a cessation of table support on ZW’s commencement of university studies was at issue. Some of that evidence may not yet be available.

[20] In making determinations of support, the court deals with the facts as they exist at present. At the time I made the order for table support in respect of Z.W. he was a minor child of the marriage living at home and attending high school. I am not prepared to make assumptions about table support for Z.W. based on evidence led about J.W. and L.W., especially where, as here, Ms. Bedzow disputes that Z.W.’s attendance at USU will necessarily be material change in circumstances. Moreover, even if I were to find that a cessation of table support would be appropriate come September 2018, the question about the appropriate quantum of spousal support would be live. In my view, it is not appropriate to deal with that question at this time. While it is regrettable that a motion to change may be necessary so soon after the release of these reasons, it is my hope that the parties will find sufficient guidance within my reasons to resolve the question of child support and spousal support going forward once Z.W. commences his post-secondary studies. If they do not, then Ms. Bedzow is entitled to adduce the evidence and make the arguments she wishes with respect to child and spousal support at the time any motion to change is brought.

Set-Off

[21] Dr. Weisleider suggests that setting off the arrears of support that he owes against the equalization payment that Ms. Bedzow owes to him is appropriate. In her submissions, Ms. Bedzow allows that set-off is a viable option.

[22] In my view, it is practical to set off the amounts owing. By my calculation, setting off the arrears of support owing as against the equalization payment owing leaves total owing on the equalization payment of $222,329.48. In accordance with my reasons at paragraph 110, this amount should be paid by Ms. Bedzow to Dr. Weisleider in 10 equal instalments, beginning 30 days after the judgment is signed, with the next nine payments to be made annually on the anniversary date of judgment.

Interest

[23] Dr. Weisleider argues that the equalization payments should accrue post judgment interest. He states that when equalization payments are made payable over a period of years, post judgment interest is awarded as a matter of course: Koiter v. Koiter, 1996 CarswellOnt 4893 (Ont. Gen. Div.) at para. 22. He argues that “to do otherwise effectively alters the amount of the equalization payment found owing in the first place, due to the time value of money”: LeVan v. LeVan, 2008 ONCA 388, 2008 CarswellOnt 2738 (ONCA) at para. 88.

[24] Ms. Bedzow argues that post-judgment interest is not appropriate in this case because equalization payment stems in large part from my determination of the validity of the debt that Dr. Weisleider owes to 128 which is non-interest-bearing. Ms. Bedzow does not seek interest on the support arrears.

[25] While I accept, as the Court of Appeal noted in LeVan, that it should be the rule rather than the exception that an equalization payment paid over time attracts interest, the jurisprudence admits for an exceptional case.

[26] Moreover, s. 130(1)(a) of the Courts of Justice Act, R.S.O. 1990, c. C.34, provides that the court may, where it considers it just to do so, in respect of the whole or any part of the amount on which pre-judgment or post-judgment interest is payable, disallow interest under either section.

[27] In my view, given that the equalization payment owing by Ms. Bedzow to Dr. Weisleider is driven by the engine that is Dr. Weisleider’s non-interest bearing debt to 128, it is just that no post judgment interest accrue on the equalization payment.

Costs

[28] There remains the question of costs. If the parties cannot agree on costs, I direct them to exchange costs submissions of no more than four pages plus bills of costs and any relevant offers to settle by July 18, 2018. The parties may exchange responding submissions of no more than two pages by July 25, 2018. Submissions may be delivered to my attention at Judges’ Administration at 361 University Ave.

Akbarali J.

Date: June 29, 2018