COURT FILE NO.: FS 18-0081 DATE: 20181001 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Cheryl Lynn Angst, Applicant (Moving Party) AND: Michael James Angst, Respondent (Responding Party)
BEFORE: M. G. Ellies J.
COUNSEL: Melissa Young, for the Applicant William Abbott, for the Respondent
HEARD: September 28, 2018
Endorsement
[1] In the motion at tab 10 of the continuing record, the applicant wife seeks an order for temporary support in accordance with the Spousal Support Advisory Guidelines (the "SSAGs"). Entitlement is conceded by the respondent husband. The issue is quantum.
Background
[2] The parties separated in August 2017 after a 24 year relationship. They were married for the last 17 of their years together. They have three children. The youngest is 17. She lives with the respondent. The others are independent.
[3] During their relationship, both parties worked outside of the home. The applicant has a degree in Mental Health and Addiction Counselling and is a licensed travel agent. At the time the parties separated, she had relatively recently lost a job, as a result of which she received a settlement of $20,000. After the separation, she worked until February 2018, when she was fired according to her evidence. She is not presently employed. However, on her behalf, counsel concedes that her client is capable of working and earning as much as $43,109, which is the amount of income she showed at line 150 of her 2017 tax return. I will come back to this concession shortly.
[4] The respondent has been quite successful as the owner of a number of Service Ontario outlets and as a private mortgage lender. Although his line 150 income for 2017 was $108,063, his two corporations had after-tax net income of over $610,000. The parties have commissioned reports concerning the respondent's actual income and the value of his business interests.
[5] The respondent acknowledges that the corporations have substantial retained earnings, in the amount of approximately $3,000,000. Since the separation, he has made advance equalization payments in the total amount of $160,000. He has made additional payments, the exact amount of which is in dispute. The applicant acknowledges that the respondent has paid approximately $35,000. In addition, the respondent has paid spousal support in the amount of $5,000 per month since April 2018. I am told that this is the amount payable by a payor earning $250,000 per year.
[6] The applicant now seeks more. Her recent financial statement shows monthly expenses in the amount of approximately $5,800. Thus, the applicant has a monthly shortfall of only $800. Nonetheless, she argues that she should receive support based on the SSAGs in the amount of between $21,104 and $28,138. This is the range of support payable for a payor earning $718,426 per year and a recipient earning $43,109.
[7] The respondent argues that the motion is premature. He submits that it should either be dismissed or adjourned until after the reports are prepared about his actual income and the value of his business, which he says will happen in about a month. He also contends that the $5,000 monthly he is voluntarily paying is more than sufficient to meet the applicant's monthly expenses and that the amount she seeks instead would vastly exceed not only her present monthly expenses, but would be about four times the amount that the parties lived on prior to separation.
[8] For the following reasons, I have concluded that the respondent should pay the applicant temporary spousal support in the amount of $8,500 per month, commencing October 1, 2018.
Analysis
[9] The applicant seeks temporary spousal support based on the SSAGs. However, the SSAGs are not mandatory: Mason v. Mason, 2016 ONCA 725, at para. 115. I do not believe that the SSAGs are an appropriate way to quantify temporary spousal support in this case for three reasons.
[10] First, we do not yet know the respondent's income for support purposes, which is the starting point for using the SSAGs: Mason, at para. 118. This is a fact upon which both parties agree, and justifiably so. For example, the respondent's income is derived largely from dividends. These must be appropriately grossed up under s. 19 (h) of the Federal Child Support Guidelines, SOR/97-175, which are incorporated into the SSAGs: Mason, at para. 50. As well, both the applicant and the respondent admit that some of their personal expenses were paid through the corporation. This will also affect the calculation of the respondent's income.
[11] Second, early indicators are that, once the respondent's income for support purposes is determined, the SSAGs may not be a useful guide. As the SSAGs state, once a payor's income exceeds $350,000, the formulas no longer operate (s. 11.1).
[12] Finally, using the SSAGs would result in a spousal support award that would give the applicant a radically different lifestyle than the one enjoyed by the parties during their cohabitation. The respondent deposes that the parties lived a modest lifestyle in order to save for retirement and to provide something to give to their children one day. His evidence in this respect is conflicting, but only to a small degree. In his May 21, 2018 affidavit, he deposed that the parties lived on an average of $6,000 per month (para. 19). In his September 24, 2018 affidavit, he deposed that it was less than $5,000 (para. 31). In his earlier affidavit, he also admits that the family paid for personal expenses through the corporations, but deposes that it could not be more than $20,000 per year (para. 16).
[13] In her reply affidavit of September 25, 2018 the applicant challenged the respondent's characterization of their lifestyle as modest, but provided no hard numbers. Instead, she offered what I would call circumstantial evidence. She deposed that they travelled about four times per year to places as far away as Europe and South America, and that they spent about $6,000 per month on their "personal credits" (which I assume means their personal credit cards) in addition to using the business credit cards for such things as food, gas and alcohol.
[14] Even if I accept the applicant's evidence, it falls far short of establishing a basis upon which to award her the amount of support she seeks on a temporary basis. If the SSAGs were used to determine the amount of temporary spousal support in this case, the applicant would probably be able to take as many trips in one or two months as she deposes the parties took in one year.
[15] I have no hesitation in accepting the respondent's evidence that their goal was not to spend as much as they earned, but to save as much as they could, while still living reasonably well. The parties are in their early 40s. Despite their relatively young ages, at the time they separated, they lived in a lakefront home worth over $500,000. They each had relatively new vehicles and they had no debt.
[16] So what, then, should the amount of temporary support be if not the amount suggested by the SSAGs? Given that the means of the respondent to pay significant support are not really in issue, I turn to a consideration of the needs and the means of the applicant. I will start with the latter.
[17] I do not view the submission of counsel for the applicant that the court should impute income to the applicant of $43,109 for the purposes of quantifying a temporary support order as anything other than that -- a submission. As such, I am free to accept or reject it. I would reject it. It is contrary to the evidence.
[18] Throughout her various affidavits, the applicant has consistently deposed that she is suffering from mental health issues. I agree with the respondent that the note from the applicant's doctor is of little or no evidentiary value in support of that evidence. But it also does not go so far as to undermine the applicant's evidence that she is suffering from stress-related mental health problems at the moment relating to these family law proceedings. Nor do the photos attached as exhibits to the respondent's most recent affidavit. All these photos show is someone I assume is the applicant out having fun with friends. I view all of the photos prominently featuring alcohol as neutral: they could support the applicant's evidence that she is stressed, or they could support the respondent's evidence that the applicant is anything but.
[19] While I think it is appropriate to impute income to the applicant in the long term, perhaps even in the near future, I do not see it as appropriate at present, in light of this evidence. My view, however, does not lead to a spousal support award of anything like the amount sought. The applicant's present needs of $5,800 per month are nearly entirely covered by the amount of support she is presently receiving, without any contribution from her. She does not need much more, even if she is unable to work at the moment. I turn now to a closer examination of those needs.
[20] The goal of a temporary support order is to maintain as much as possible the parties' pre-separation lifestyle pending trial: Fyfe v. Jouppien, 2011 ONSC 5462, at para. 38, citing Kowalski v. Grant, 2007 MBQB 235, 2007 CarswellMan 422 (Man. Q.B.). Since separation, the applicant has purchased a $455,000 waterfront home and spent $11,000 furnishing it. By trading in her previous vehicle and with help from the respondent, she is driving a 2016 luxury car. She even bought herself a $19,500 Donzi boat and trailer. Thus, the applicant is now living roughly the same lifestyle that she had before separation.
[21] The applicant complains that she had to cash in RRSPs to purchase some of these things, but the goal of a temporary spousal support award is not to rebuild the recipient's asset base. Nor is it to pay for the costs of imprudent purchases. The applicant also complains that she had to borrow funds for the purchase of her house at exorbitant interest rates that are costing her more monthly than they should. But this is entirely the applicant's fault. She purchased the home while the parties were still attempting to negotiate a resolution of their family issues. When that failed, she had to look to a mortgage broker to be able to close the deal. In any event, the applicant's present needs of $5,800 per month include her mortgage payments.
[22] The applicant's present needs also include costs associated with the house that she should not be bearing as much of as she is. She admits that she is now residing with a new partner and his son. She deposes that her partner is only contributing $300 per month to their common expenses of roughly $4,000 per month. That is too little, in my view. However, I am reluctant to factor this relationship into the applicant's needs without more evidence as to how long it might last.
[23] The respondent questions other items in the applicant's financial statement. For example, he questions the $50 per month claimed for laundry and dry cleaning when the applicant is not working. However, I also note that the applicant's financial statement does not contain any expense for vacations of the type she deposed the parties used to enjoy.
[24] I am satisfied that the applicant's monthly expenses to maintain a lifestyle roughly equivalent to that which she enjoyed prior to the separation are in the range of $5,800. However, her expenses are after-tax expenses, and she will pay tax on periodic support. For that reason, the amount she receives has to be grossed up. Unfortunately, I have no information on her potential tax liability. I am left to use my best estimate. My best estimate is that the applicant will pay tax at the rate of approximately 40%. This is almost a certainty once she resumes work and adds her own income to the mix.
[25] In addition to considering the applicant's means, needs, and other circumstances, in arriving at an appropriate amount for temporary spousal support in this case I have also considered the applicant's evidence about what she was prepared to settle for earlier in the process. In her May 16, 2018 affidavit, the applicant deposed that she was willing to settle first for $10,000 per month and then for $7,000 per month, "in an attempt to come to an amicable resolution until the businesses could be appraised" (paras. 21 and 22). In my view, the lower amount better reflects the applicant's true current needs and the lifestyle to which the parties lived pre-separation.
[26] Taking into account all of the foregoing, the respondent is ordered to pay to the applicant, on a temporary basis, spousal support in the amount of $8,500 per month.
Costs
[27] It seems to me that success on the motion was mixed. The parties may wish to consider agreeing on the amount of the costs and consenting to an order that they be paid in the cause. However, if necessary, written submissions may be made, limited to five typewritten pages, exclusive of attachments, as follows:
(1) by the applicant, within 20 days of the release of these reasons; (2) by the respondent, within 10 days of the receipt of the applicants submissions; (3) by the applicant in brief reply, if necessary, within 10 days after receipt of the respondent's submissions.
[28] Submissions delivered outside of these timeframes will not be considered.