Court File and Parties

COURT FILE NO.: FS–16–20680 DATE: 20181017 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Peter A. M. Henderson Applicant – and – Kelly Ann Winsa Respondent

Counsel: Theresa MacLean, for the Applicant Kelly Ann Winsa, on her own behalf

HEARD: September 24-28, 2018 & October 1, 2018

P.J. Monahan J.

Reasons for Judgment

[1] These parties have been engaged in extensive litigation since 2015, in both Ontario and Hawaii, over the terms of their separation and divorce. However, the vast majority of matters in dispute were resolved prior to trial. The only remaining issues before me involve the obligation of the Applicant, Peter Henderson (“Pete”), to pay spousal support to the Respondent, Kelly Winsa (“Kelly”), and Kelly’s obligation to pay child support for the two children of the marriage, who currently reside with Pete.

[2] Pete has been paying spousal and/or child support to Kelly on an interim basis pursuant to various court orders dating back to September 2015. For reasons described below, I decline to order any retroactive adjustment in the child or spousal support previously paid.

[3] With respect to ongoing spousal support, I order Pete to make monthly spousal support payments of $3,010, commencing October 1, 2018. This takes into account Pete’s income of $216,000, an imputed income to Kelly of $40,000, and the fact that the two children of the marriage have resided with Pete for the past two years and are entirely supported by him. I further order Kelly to pay table child support to Pete of $597 monthly for OWH and CWH, and contribute $210 monthly for their s. 7 expenses.

[4] I then set off the child support payments from Kelly against the spousal support payable by Pete. The net spousal support payable by Pete to Kelly, on the basis that Kelly will not be required to actually pay child support to Pete, is $1900 per month.

Background

[5] Pete and Kelly were married on August 21, 1993. They separated on June 5, 2014 and were divorced on August 4, 2015. They have two children, OWH (born April 15, 1998) and CWH (born March 27, 2002).

[6] In the initial years of their marriage, Pete and Kelly resided in Toronto and both of the children were born here. In 2005 the parties purchased a home in Hawaii. Although they continued to maintain their primary residence in Toronto, Kelly and the two boys began spending significant amounts of time in Hawaii. In 2010, Kelly decided to move full-time to Hawaii with the boys and enroll them in school there. Pete continued to live and work in Toronto, although he would make frequent trips to Hawaii. Kelly and the boys would also return to Ontario every year to spend the summer months at a cottage they owned on Stoney Lake.

[7] These long-distance living arrangements proved increasingly difficult and challenging and, in June 2014, the parties agreed to separate. An interim separation agreement (the “Interim Agreement”) was signed in August 2014. It provided that Kelly would have sole custody of OWH and CWH on an interim basis, with Pete having regular access in either Hawaii or Canada. With respect to financial support, the Interim Agreement recited the fact that Kelly had not worked outside the home since OWH’s birth in 1998. Although the Agreement did not include a specific obligation to pay child or spousal support, it did indicate that “Peter will continue to provide as much financial support as he is able to do so.” It further provided that “Kelly will not commence litigation for support of the children or herself in Hawaii, USA during the academic year provided Peter is doing as much as he can to find and maintain regular income and that he is continuing to financially support the children and Kelly…” The Interim Agreement also noted that Kelly was renting out a guesthouse on the Hawaii property and that she would utilize the rental income to fund the children’s expenses. The Interim Agreement provided that it would remain in effect until June 30, 2015.

[8] Pete works as a director of commercials and films through a professional corporation, Black Box Films Inc. (“Black Box”). During the marriage, Kelly had access to Black Box’s corporate bank account and, despite the fact that they were separated as of June 2014, Kelly continued to have access to the Black Box bank account for some time thereafter. Between August 2014 and March 2015, Kelly withdrew approximately US$70,000 from that account to fund living expenses for herself and the two boys. Kelly also continued to derive income from the rental of the guesthouse on the Hawaii property.

[9] The separation arrangements between the parties began to break down in March 2015. Pete commenced an application in Ontario seeking a divorce, which was served on Kelly in mid-March 2015. He also removed Kelly as a signing officer on the Black Box bank account in April 2015, since her withdrawals from that account were such that he had insufficient funds to cover his business expenses. Kelly responded by commencing proceedings in Hawaii seeking a Temporary Restraining Order (TRO) against Pete, as well as an order for interim child and spousal support. On March 25, 2015, the Hawaii Family Court issued a TRO against Pete, prohibiting him from making contact with either Kelly or their two boys. In September 2015, the Hawaii Family Court ordered Pete to commence paying child and spousal support in the amount of US$3500 per month.

[10] The conflict between the parties escalated over the summer of 2015. The Stoney Lake cottage was sold in June 2015 and the net proceeds (approximately $460,000) were divided equally between Pete and Kelly. Kelly and the boys returned to Ontario at the end of June 2015, and Kelly rented a cottage on Stoney Lake for the summer. Kelly took steps to prevent contact between Pete and the boys, relying on the terms of the TRO that had been issued by the Hawaii court. This drew OWH and CWH squarely into the increasingly acrimonious conflict between the parents, as the two sons sought to communicate with their father without Kelly’s knowledge. Conversely, Pete attempted to contact the boys on the basis that the TRO did not have effect in Ontario (and, in any event, had been issued based on incorrect information). [1] This eventually led to a contested hearing over CWH’s custody in Peterborough, Ontario before MacLeod J. in September 2015, who issued an order for temporary custody of CWH to Pete. Following that hearing, Kelly returned to Hawaii, where she and OWH resided for the 2015–16 academic year. (OWH had returned to Hawaii on his own in August 2015 to commence his senior year of high school.)

[11] Over the next year, the parties disputed which court had jurisdiction over their matrimonial litigation; Kelly maintained that Hawaii had jurisdiction and attempted to move forward with the litigation she had commenced there, while Pete commenced an application in Ontario in July 2015. There were a number of contested jurisdictional hearings in both Ontario and Hawaii. The jurisdictional issue was ultimately resolved in August 2016 when the Hawaii court declined to exercise jurisdiction, except in respect of property issues relating to the matrimonial home in Hawaii, and vacated its previous order for spousal and child support. All subsequent litigation with respect to custody, spousal and child support occurred in Ontario, with Kelly filing her answer to Pete’s July 2015 application in October 2016.

[12] Even though the parties were initially contesting court jurisdiction, in September 2015 Pete began paying support of US$3500 per month to Kelly, in accordance with the September 2015 Hawaii court order. Pete also made a voluntary payment to Kelly of US$15,000 in December 2015. Kelly utilized these funds to pay the mortgage and other carrying costs associated with the Hawaii home, as well as fund living expenses. She also continued to receive rental income from tenants in the guesthouse on the Hawaii property. However in March 2016, following a dispute between the parties over the repossession of a Jeep that Kelly had been using, Kelly indicated to Pete that she was no longer willing to fund the mortgage and line of credit for the Hawaii property. At that point, Pete assumed responsibility for the payment of those expenses, which were approximately US$2500 per month. He deducted that payment from his US$3500 court-ordered support obligation, with the result that he reduced his monthly support payment to Kelly to approximately US$1000 per month. He continued to make these payments (i.e. a payment of approximately US$1000 per month to Kelly after funding the mortgage and line of credit on the Hawaii property) until he began paying monthly spousal support of C$2500 pursuant to an Ontario court order issued in May 2017. [2]

[13] CWH has continued to reside with Pete since September 2015. In June 2016, OWH completed his senior year of high school in Hawaii, returned to Toronto, and also began residing with Pete. Thus as of June 2016, Pete has had custody of both OWH and CWH and has funded their living expenses, without contribution from Kelly.

[14] Kelly rented a cottage on Stoney Lake in the summer 2016 and spent the fall of 2016 in Toronto. In early December 2016, Kelly returned to Hawaii on her own and resided at the Hawaii house until the end of May 2017. Although the parties had agreed that the Hawaii property needed to be sold, they were unable to work effectively together toward that common goal. This resulted in a contested hearing before the Hawaii Family Court in March 2017, which found that Kelly had misrepresented certain of her actions in relation to the sale of the property. Accordingly, the Hawaii Court awarded Pete sole exclusive occupancy of the property and authorized him to take all steps necessary to effect the sale of the house without Kelly’s consent. The proceeds from the sale of the property were to be split equally between the parties, after taking into account the fact that Pete had been funding the carrying costs since April 2015.

[15] The Hawaii property has still not been sold. Unbeknownst to Pete, Kelly had entered into an 18 month lease of the guesthouse on the Hawaii property. It took approximately six months for Pete to legally evict the tenant and to undertake the repairs necessary to enable the property to be offered for sale. Pete has recently been advised by the listing real estate agent that the property cannot be sold until a new roof has been installed, at a cost of approximately US$25,000. Pete has been unable to fund the roof repair out of his existing resources and has been attempting to refinance the mortgage to free up additional funds. However Kelly has refused to provide her consent for the refinancing of the property, which means that the roof repairs have not been done. The property is currently listed for sale at US$650,000 and has been vacant since May 2017.

[16] In May 2017, Wilson J. of this court ordered Pete to pay spousal support to Kelly of $2500 a month, on a temporary without prejudice basis. Pete made these payments through the end of December 2017. Effective January 1, 2018, the parties agreed that Pete’s monthly support payments should be increased to $3000 a month, and a court order was issued to that effect. Pete has made all required support payments and has also continued to fund payments on the mortgage and line of credit for the Hawaii property.

[17] He continues to work as a film director although, as will be detailed below, his income fluctuates significantly from year to year. Kelly has not earned any employment income since the parties’ separation in June 2014. She lists her occupation as a self-employed writer. She self-published a novel some years ago, which she sold at cost to a few dozen friends and relatives. She is currently undertaking research for a second novel but the timelines for the completion of that manuscript are unclear. She is also working on a script for a film, but has thus far been unsuccessful in raising any funds for the film project. Kelly did not describe any plan whereby that project could be brought to fruition.

[18] OWH enrolled at Ryerson University in September 2016 and is entering his third year of undergraduate studies, while CWH is entering grade 11. CWH struggled academically when he returned to Toronto in September 2015. However over the past few years Pete has arranged extensive tutoring and counselling for CWH, which has resulted in a significant improvement in his grades. He is currently progressing well academically and hopes to study design at the postsecondary level.

Issues

[19] The following issues arise in this litigation:

a. is Kelly entitled to spousal support?; b. what are the respective incomes of the parties?; c. assuming Kelly is entitled to spousal support, what quantum and duration of support should she receive?; d. what is Kelly’s obligation to pay child support for OWH and CWH?; and e. what adjustments, if any, should be made to Pete’s spousal and/or child support payments on a retroactive basis?

[20] I consider each of these issues in turn.

Entitlement to Spousal Support

[21] It is common ground between the parties that Kelly is entitled to spousal support. At the time of the marriage she had developed a successful career as a fashion designer. Her work was widely recognized and featured in numerous fashion publications. The parties agreed that she would give up this work in 1998 at the time of OWH’s birth, and she remained out of the paid workforce with primary responsibility for the care of the two children until the parties’ separation in 2014.

[22] As the Supreme Court of Canada noted in Bracklow v. Bracklow [3], the compensatory basis for spousal support can be grounded in the Divorce Act requirement to consider the “condition, means, needs and other circumstances” of the spouse, [4] which may encompass the lack of ability to support oneself due to foregoing career opportunities during the marriage. Kelly’s career and ability to support herself were clearly impacted by the marriage and in my view she is entitled to spousal support on a compensatory basis.

Incomes of the Parties

[23] In order to determine the quantum of spousal and child support payable by the parties, it is necessary to first determine their respective incomes.

[24] As noted above, Pete earns income as a film director through Black Box, his professional corporation. In order to assist the court in determining his income, Pete tendered evidence from an expert witness, Mario Sgro (“Sgro”). Sgro is a chartered accountant with more than 25 years’ experience providing accounting, tax and business advisory services to closely-held businesses. He is the accountant for Black Box and has prepared the financial statements for the corporation. He has also prepared both Pete and Kelly’s personal income tax returns for the past number of years. After reviewing his qualifications and experience and questioning him regarding his independence, I qualified him as a participant expert with respect to the determination of Pete’s income for support purposes.

[25] Sgro provided the court with financial statements for Black Box for the last four years, the most recent being for the year ended July 31, 2018. He also provided Pete’s personal income tax returns for the 2015, 2016 and 2017 tax years. Pete’s Line 150 income in each of these tax years reflects the dividends paid to him by Black Box. However, in Sgro’s opinion, Pete’s income for support purposes should equal Black Box’s earnings before income taxes, rather than Pete’s Line 150 income, since Black Box’s earnings reflect the level of income available to Pete for his personal use.

[26] I note that Kelly also tendered evidence from a chartered accountant, Karen Jacobson. Jacobson reviewed the general ledger for Black Box for the period January 1, 2015 to July 31, 2015, focusing in particular on the shareholder draws during that seven-month period. However, Jacobson was not provided with the financial statements or bank accounts of the corporation, nor was she aware of the fact that Kelly had access to Black Box’s corporate bank account for part of the period she considered. Neither did she have any communication with either Sgro or Pete in order to gain an understanding of the financial circumstances of Black Box. Jacobson further advised the court that she was not aware that Kelly intended to call her as an expert witness in this proceeding.

[27] During trial I reserved on the issue of whether to qualify Jacobsen as an expert. Having considered the matter fully, I would not qualify her as an expert. She had access to a very limited range of documents selected entirely by Kelly and was not provided with a reasonable opportunity to gain an understanding of the financial circumstances of Black Box. Moreover, she was unaware of Kelly’s intention to call her as an expert witness in these proceedings. In any event, the extremely limited range of documents she considered meant that her evidence was of no real assistance in determining Pete’s income for support purposes.

[28] I accept Sgro’s evidence and find that Pete’s income over the past four years equals Black Box’s earnings before income taxes in those years. Black Box’s earnings for the past four years are as follows: [5]

2015 $125,735 2016 $244,462 2017 $304,439 2018 $101,677

[29] It is evident that Black Box’s earnings are subject to significant fluctuation from one year to the next. This fluctuation results from the fact that Pete’s ability to earn income depends on his success in “pitching” his services as a film director. For example, Black Box doubled its earnings between 2015 and 2016, while earnings declined by over two thirds between 2017 and 2018. I therefore find it appropriate to calculate Pete’s income for support purposes based on the three year rolling average of Black Box’s earnings, in accordance with s. 17 of the Child Support Guidelines (the “Guidelines”). This means that Pete’s 2018 income for support purposes should reflect Black Box’s average earnings before tax for the 2016 to 2018 period, which is approximately $216,000.

[30] Turning to Kelly’s income, as previously noted Kelly has not earned any income since the parties’ separation in June 2014. Kelly claims her income for Guidelines purposes is zero.

[31] Pete argues that I should impute income to Kelly on the basis of s. 19(1)(a) of the Guidelines, which provides that the court may impute such amounts of income to a spouse as it considers appropriate in the circumstances, including where 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 by the reasonable educational or health needs of the spouse”. The Court of Appeal has held that in order to impute income on the basis of s. 19(1)(a), it is not necessary to establish bad faith or an attempt to thwart support obligations. A parent is intentionally underemployed within the meaning of this subsection if they earn less than they are capable of earning having regard to all the circumstances: Drygala v. Pauli [6]. Imputing income in such a case is appropriate given the policy objective underlying the Guidelines, namely, that spouses have “a joint financial obligation to maintain the children of the marriage in accordance with their relative abilities to contribute to the performance of that obligation.” [7]

[32] In determining whether to impute income to a spouse, the court must consider what is reasonable in the circumstances, taking into account the age, education, experience, skills and health of the party, the party’s past earning history and the amount of income that the party could reasonably earn if they worked to capacity. The onus is on the party requesting the court to impute income to establish the grounds for the request: Drygala [8]. The court will not excuse a party from their child support obligations or reduce those obligations where that party has persisted in un-remunerative employment, or where they have pursued unrealistic or unproductive career aspirations. A self-induced reduction of income is not a basis upon which to avoid or reduce child support payments: Lawson v. Lawson; Thompson v. Thompson [9].

[33] Although Kelly characterizes herself as a “self-employed writer”, she acknowledges that she has not earned any income from this activity over the last four years. She self-published her first novel some years ago, but the book did not generate any sales apart from two or three dozen copies that were sold for $25 each (i.e. the cost of printing) to friends and relatives. She has spent the last two summers in France undertaking which she describes as “research” for her second novel, but it is unclear what stage she is at in the actual writing of the manuscript. She indicated that her computer crashed prior to her departure for France in June 2018 and she has not been able to repair it, which presumably limits her capacity to make any progress on the book, or any other writing project. Her plans for a movie script hit a roadblock when her attempt to crowd-source funding for the project through the Internet failed to raise any money. Based on Kelly’s own evidence, I find that there is no reasonable prospect that she will earn any income from her writing activity in the foreseeable future.

[34] In fact, Kelly has never earned income as a professional writer. At the time of her marriage, Kelly was a successful designer of women’s fashion. In the early 1990s, her fashion design work was featured in various design publications. However she gave up that line of work at the time of OWH’s birth in 1998 and has not pursued design work since then. She and Pete worked together on a film project in 2012, but the film cost them $40,000 to produce and earned no income.

[35] Kelly was asked in cross-examination whether she has made any meaningful effort to secure paid employment over the past number of years. She provided an email dated December 2017 from the owner of a clothing store in Toronto, who indicated that Kelly had applied for a retail position at her store but that there was no position available. Kelly also made vague references to having applied for one or two other positions in retail stores over the past year, but did not provide any documentation in support of her claims in that regard. Moreover, given the fact that she has spent the last two summers in France working on her writing projects, she has not been available to seek or accept any paid employment during these periods of time. I find that she has not made any significant efforts to secure paid employment for at least the past two years.

[36] Kelly did not indicate that she has any plans to undertake training or other educational programs that would enable her to reintegrate into the paid workforce. In her evidence, she made reference to the fact that she was recovering from “trauma” associated with the breakdown of the marriage, but did not provide any medical documentation indicating that she is not capable of working. She acknowledged that she was not suffering from PTSD. In short, I find that there are no educational or health needs that would prevent Kelly from working.

[37] I note that it has now been over four years since the parties separated, and Kelly has been living on her own for the past two years without any childcare responsibilities. She has taken virtually no steps to re-enter the paid workforce and instead has chosen to devote her time to writing projects which have no reasonable prospect of earning income. In the circumstances I find that Pete has met his burden of establishing that Kelly is intentionally under-employed or unemployed for purposes of s. 19(1)(a) of the Guidelines, and there are no educational or health needs preventing her from working. It is therefore appropriate to impute income to her.

[38] The question that arises is what level of income should reasonably be imputed to Kelly. As the Court of Appeal in Drygala noted, section 19 of the Guidelines is not an invitation to arbitrarily impute income to a spouse. There must be a rational basis and a grounding in the evidence for the level of imputed income selected. [10]

[39] In this case, the challenge in determining the appropriate quantum of imputed income arises from the fact that Kelly has not worked in the paid workforce for approximately 20 years. Pete argues that it would be reasonable to impute income to her in the range of $50-$60,000, given her expertise and talents as a fashion designer.

[40] In my view, that level of imputed income would be unreasonable. Kelly is now 56 years old and has not worked as a fashion designer for two decades. It is reasonable to expect that she would need to pursue some form of retraining or skills development before she could reasonably find work in the fashion design field. Kelly expressed some interest in seeking employment with a clothing retailer, although the exact nature of the work that she would be qualified to undertake was unclear. She provided the court with documentation that had been submitted to the US Department of Homeland Security in connection with a visa application, which indicated that in February 2016 she had been offered a part-time position as a consultant at a salary of US$25 per hour. [11] In the circumstances, I believe it is reasonable to impute income to Kelly of $40,000 per year, which is somewhat above the minimum wage in Ontario, but should be attainable by Kelly with reasonable effort on her part.

Spousal Support

[41] Based on these income levels and support obligations, and taking into account Kelly’s child support obligations, the Spousal Support Advisory Guidelines (SSAG) suggest a range of spousal support from a low of $2580 per month to a high of $3441 per month, with a midrange of $3010 per month. [12] Since Kelly does not have any childcare responsibilities and has had limited contact or involvement with OWH and CWH over the past year, [13] I find the upper range of spousal support would be inappropriate in this case. Subject to my findings in paragraphs 45-48, Pete has an obligation to pay spousal support effective October 1, 2018 in the amount of $3010 per month.

[42] In light of the fact that the parties were married for over 20 years, combined with the fact that the years of marriage plus Kelly’s age at the time of separation exceeds 65 (the “rule of 65”), I would not fix a termination date for spousal support, subject to a material change in circumstances in accordance with the Divorce Act.

Child Support

[43] Based on Kelly’s imputed income of $40,000, subject to paragraphs 45-48 below, she is responsible to provide table child support of $597 per month for OWH and CWH. Although OWH is over the age of majority, I find that table support remains appropriate in his case, in accordance with s. 3(2)(a) of the Guidelines, since he is residing with Pete and is in full-time attendance at university.

[44] With respect to s. 7 expenses, the parties set aside an amount from the sale of the Stoney Lake cottage to cover OWH’s postsecondary expenses. That fund has been significantly depleted but it remains sufficient to fund OWH’s tuition and other extraordinary expenses for at least the next year. On the other hand, CWH has significant s. 7 expenses in the form of tutoring costs, which are approximately $6300 per year, and counselling costs of approximately $1500 per year. In addition, he has attended a summer design camp at a cost of approximately $750 annually. All of these costs have been funded by Pete. On this basis, I find CWH’s s. 7 expenses to be $8500 annually. Given the parties’ respective incomes, these expenses should be shared 70% by Pete and 30% by Kelly. Subject to paragraphs 45-48, this results in a monthly payment by Kelly to Pete of $210 in respect of s. 7 expenses.

Set Off of Child Support Against Spousal Support

[45] Kelly has not been contributing to the support of the children over the past two years, and is not in fact earning any income. Further, as described below, in 2016 she refused to continue making payments for the mortgage and line of credit on the Hawaii property. This gives rise to a concern that she may not make the child support payments due to Pete in a timely manner, which would result in further conflict and costly litigation and would not be in the interest of either party.

[46] In my view, the most appropriate and practical way to address this issue is to proceed on the basis that Kelly will not be required to make child support payments, and Pete’s spousal support payments will be reduced to take account of the fact that he will not be receiving child support from Kelly. The complicating factor that this introduces is that Pete’s spousal support payments are tax deductible to him, and taxable income of Kelly, while child support is paid and received on an after-tax or non-taxable basis. Thus in order to determine the appropriate reduction in Pete’s spousal support payments it is necessary to apply an income tax gross up on the child support payments that Pete would have received, such that the parties will be left in the same after-tax position they would have been in had all required support payments been made.

[47] Pete is entitled to child support of $807 monthly, taking into account both table child support and s.7 expenses. Given his tax rate of approximately 50%, this would gross up to approximately $1600 per month. In other words, he would have to earn approximately $1600 per month to have after-tax disposable income of $807 per month. Assuming Kelly is not paying child support, it could be argued that Pete’s spousal support payments should be reduced by $1600, namely, to $1410 per month.

[48] In my view, this would produce an unduly low spousal support payment, taking into account that Kelly is not actually earning any income and has been receiving spousal support of $3,000 per month. In light of Kelly’s circumstances, means and needs, I find that a monthly payment of $1900 spousal support would be more appropriate. Accordingly, Kelly’s child support obligation will be set off against Pete’s spousal support, with the result that Kelly will not actually pay child support and Pete will make a monthly spousal support payment to Kelly of $1900.

Retroactive Child and Spousal Support

[49] Kelly is seeking a retroactive increase in her spousal support dating back to the parties’ separation in 2014, and a retroactive increase in child support for the periods between June 2014 and June 2016 when one or both of OWH or CWH were in her care.

[50] As the Supreme Court of Canada held in Kerr v. Baranow [14], where the court is asked to order support for a period before the date of the order, it is appropriate to take a flexible and “holistic” view of each matter on its own merits. Relevant considerations include the conduct of the payor, the circumstances of the spouse seeking support, and any hardship occasioned by the award. The focus of concern about conduct should be on conduct broadly relevant to the support obligation, for example, concealing assets or failing to make appropriate disclosure: Kerr; D.B.S. v. S.R.G. [15].

[51] Ontario Courts have also held that a party who wishes to advance a claim for child or spousal support for a period predating the date when proceedings were commenced must specifically include a claim for retroactive relief in their pleading: Thompson [16]. This proceeding was commenced by way of Pete’s application (the “Application”) issued on July 28, 2015. Neither the Application nor Kelly’s answer (filed October 2016) included a specific claim for child or spousal support for the period predating the Application. In any event, the parties had entered into the Interim Agreement which dealt with issues of child and spousal support for the period between June 2014 and June 2015. I therefore find that it is not open to either party to make a claim for child or spousal support for the period prior to the commencement of these proceedings in July 2015.

[52] Turning to a consideration of the parties’ circumstances since July 2015, Pete began paying spousal support of US$3500 per month commencing September 2015, in accordance with a Hawaii Court order. This was the level of support requested by Kelly. Kelly was also at this time receiving significant income from the rental of the guesthouse on the Hawaii property, which income was not disclosed to the Hawaii court when it issued the support order. It is not possible to determine the exact amount of rental income received by Kelly, since she failed to provide complete and accurate documentation regarding the various rental contracts and income received in respect of the Hawaii property. [17] However, based on the documentary evidence provided and Kelly’s own viva voce testimony, it appears that she earned an average of approximately US$1650 per month (or just under US$20,000 per year) from the rental of the guesthouse from June 2014 to May 2017. Pete also made a voluntary payment of approximately US$15,000 to Kelly in December 2015. As such, I find that Kelly had substantial resources available to her from these various sources and there is no basis or justification for this Court to now order spousal and/or child support for the period dating back to September 2015.

[53] In April 2016 Pete began paying the mortgage and line of credit for the Hawaii property and deducted these payments from the US$3500 support ordered by the Hawaii court. The question that arises is whether Pete’s decision to divert a portion of the US$3500 support payments in order to keep the mortgage and line of credit in good standing should entitle Kelly to an order of retroactive spousal support dating back to April 2016.

[54] Pete’s decision to begin making the mortgage and line of credit payments himself resulted from a dispute relating to the repossession of a Jeep that had been used by Kelly. In March 2016, Kelly decided that she wanted to travel to Indian Wells, California to attend a professional tennis tournament. She estimated the cost for the trip would be approximately US$2500. However, she was aware of the fact that she was behind on her payments for the Jeep and would not be able to make the next required payment if she attended the tennis tournament. After discussing the matter with a friend, she concluded that it was unlikely that the Jeep would be repossessed for nonpayment for at least another month and decided to attend the tennis tournament. Unfortunately the Jeep was in fact repossessed for nonpayment. When she returned to Hawaii, she asked Pete to pay for the rental of another vehicle to replace the Jeep. When Pete refused, she indicated that she was “going on strike” with respect to the mortgage payments for the Hawaii house. Pete was therefore required to take over responsibility for these payments.

[55] In her evidence, Kelly acknowledged that she had told Pete she was “going on strike” but denied that she had specifically told him that she was not going to continue paying the mortgage and line of credit for the Hawaii property. I do not find this denial to be credible since there is no other reasonable interpretation of her declaration to the effect that she was “going on strike”. Moreover, the uncontested evidence is that commencing April 2016, although Kelly continued to reside in the Hawaii property, she ceased making any payments for the mortgage and line of credit. Pete was required to assume responsibility for such payments to avoid the property going into default. In short, I conclude that Pete’s decision to divert a portion of Kelly’s support payments to fund the mortgage and line of credit was prompted by Kelly’s own unreasonable refusal to continue making those payments, and cannot now provide a basis for an award of retroactive spousal support in her favour.

[56] A final possibility to consider is whether Kelly is entitled to a retroactive increase in spousal support for the period between May and December 2017, when she was receiving $2500 per month on a without prejudice basis pursuant to the order of Wilson J. This level of support is slightly below the $3000 monthly spousal support payment that I have found appropriate commencing October 1, 2018. I also note that as of May 2017, Kelly was no longer deriving rental income from the Hawaii guesthouse.

[57] The difficulty with retroactively increasing Kelly’s spousal support for the May to December 2017 period is that in early 2018, Kelly secretly withdrew a total of $21,700 from an RESP that had been set aside to fund CWH’s postsecondary education. She deliberately failed to disclose these withdrawals on any of her financial statements filed prior to trial, and waited until the end of her oral evidence to advise the court that she had accessed these funds for her personal use in early 2018. [18] She was unsure of the exact dates or amounts involved but indicated that she had withdrawn a total of $21,700 through three separate withdrawals. She explained that she withdrew the money in order to pay for the extraction of a wisdom tooth, although she provided no evidence with respect to the costs associated with this dental work. She further indicated that all of the funds she withdrew have now been spent to fund various living expenses, including the three months she spent in France in the summer 2018.

[58] It appears that additional funds from the RESP had to be returned to the Government of Canada, since the money withdrawn by Kelly was not being used to fund postsecondary education. The result is that the funds available for CWH’s postsecondary education have been reduced from approximately $35,000 to approximately $7500. Kelly indicated that her withdrawals were merely “loans” that she intended to pay back to CWH at some point in the future. I do not find this claim to be credible for a variety of reasons, including the fact that Kelly had previously borrowed money from OWH which was never repaid. [19] Nor is there any documentation to support Kelly’s claim that she had intended to merely borrow money from CWH’s RESP.

[59] As discussed above, the filing of misleading or false financial disclosure by a party is a relevant consideration in determining whether to make an order for retroactive spousal support. [20] Moreover, the withdrawal of over $21,000 in RESP funds meant that Kelly had substantial financial resources at her disposal, over and above the $2500 per month support payment ordered by Wilson J. In these circumstances, I conclude that it would be inappropriate to now retroactively adjust her spousal support for the May to December 2017 period.

[60] As for the period commencing January 1, 2018, Kelly has been receiving monthly spousal support of $3000 per month, which is the same amount I have found to be appropriate on an ongoing basis. Thus no retroactive adjustment is required or appropriate for the post January 1, 2018 period.

Disposition

[61] A final order will be issued as follows:

a. Subject to paragraph (c) below, commencing October 1, 2018, Pete’s spousal support obligation will be a monthly payment of $3010, based on Pete’s income of $216,000, an imputed income to Kelly of $40,000, and the fact that both OWH and CWH are residing with Pete and are financially dependent upon him; b. Subject to paragraph (c) below, commencing October 1, 2018, Kelly’s child support obligation for OWH and CWH is $597 per month table child support and $210 per month for s. 7 expenses; c. the amounts in paragraphs (a) and (b) will be set off against each other, such that Pete will pay Kelly $1900 per month in spousal support, and Kelly not make any child support payments; d. there will be no termination date with respect to Kelly’s spousal support, subject to a material change in circumstances; e. there will be no retroactive adjustment in child or spousal support for the period prior to October 1, 2018; f. For so long as Pete is self-employed through a professional corporation, his income for Guidelines purposes will be calculated on the basis of the three year rolling average of the earnings before income tax of the professional corporation; and g. both Pete and Kelly will provide by no later than September 15 of each year the financial disclosure required by s. 21(1) of the Guidelines.

[62] The parties shall file cost submissions in writing, with the submissions to be a maximum of 3 pages, not including offers to settle and costs outlines. The schedule for the costs submissions is as follows: Pete’s cost submissions are due by no later than November 7, 2018; Kelly’s responding costs submissions are due by no later than November 28, 2018; and Pete’s reply submissions, if any, are due no later than December 12, 2018.

P. J. Monahan J.

Released: October 17, 2018

Schedule 1

Footnotes

[1] Kelly's March 2015 application for the TRO incorrectly stated that Pete was residing at the family's home in Hawaii; in fact, Pete resided in Ontario and his most recent visit to Hawaii had been in January 2015. The TRO continued in place for six months only and was withdrawn in September 2015.

[2] In August 2016, the Hawaii court had vacated its previous support order on the ground that it lacked jurisdiction over the parties, but Pete continued to make support payments to Kelly on a voluntary basis.

[3] Bracklow v. Bracklow, [1999] 1 S.C.R. 420.

[4] Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), s. 15.2(4).

[5] Note that the years 2015-18 refer to Black Box's financial year-end, which is July 31 of each year.

[6] Drygala v. Pauli, (2002), 61 O.R. (3rd) 711 ("Drygala") at paragraphs 27 to 30.

[7] See the Divorce Act, s. 26.1(2).

[8] Drygala, at paragraph 38.

[9] Lawson v. Lawson, (2006), 81 O.R. (3rd) 321 (C.A.) at paragraphs 33 to 37; Thompson v. Thompson, 2013 ONSC 5500 (S.C.J.) ("Thompson") at paragraph 99.

[10] Drygala at paragraphs 44 to 52.

[11] The visa application was not approved by Homeland Security and Kelly was not able to take up the employment offer.

[12] See the Divorcemate calculations attached as a schedule to these Reasons.

[13] Kelly noted that she has not seen OWH since January 2018, and has not seen CWH since prior to her departure for France in June 2018.

[14] Kerr v. Baranow, 2011 SCC 10, [2011] 1 SCR 269 ("Kerr"), at paragraphs 205 to 212.

[15] Kerr at paragraph 212; D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 SCR 231 ("D.B.S.") at paragraph 106. Both Kerr and D.B.S. refer to the presence of blameworthy conduct on the part of "the payor", but the obligation to provide accurate financial disclosure applies to both parties, pursuant to ss. 21(1) and (2) of the Guidelines. It follows that, depending on the circumstances, the failure of a support recipient to accurately disclose his or her income or assets could similarly be relevant to the appropriateness of an order for retroactive spousal support.

[16] Thompson, at paragraph 77.

[17] I note that the May 17, 2017 order of Wilson J. required Kelly to provide an affidavit with supporting documents detailing the rental income received from the Hawaii guesthouse. Kelly failed to comply with this order.

[18] Kelly acknowledged that she had deliberately failed to disclose her withdrawal of funds from CWH's RESP on any of her subsequent financial statements, on the basis that she feared this might impact Pete's willingness to continue paying spousal support.

[19] Kelly borrowed $4000 from OWH in 2016 and refused to repay it. Pete reimbursed OWH for this money in December 2016. Kelly also claimed that in the summer of 2017 while she and OWH were in France, OWH voluntarily offered to loan her an additional $1000. Rather than repay him the money, Kelly later advised OWH to draw down on the educational fund that Kelly and Pete had established for OWH's postsecondary education.

[20] See note [14] above.