Court File and Parties

COURT FILE NO.: FS-18-6226 DATE: 20190418 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Benoit Pelchat Applicant – and – Suzanne Elizabeth Chisholm Respondent

Counsel: Adrienne Lee, for the Applicant Judith M. Nicoll, for the Respondent

HEARD: April 16, 2019

C. Gilmore, J.

RULING ON MOTION

Overview

[1] This is the respondent mother’s motion for child and spousal support. She seeks Guideline support for the parties’ two children S.P aged 17, and D.P. aged 13. The children live full time with the mother in Toronto. The applicant father travels to Toronto from Montreal twice a month to exercise access.

[2] The mother also seeks disclosure, a contribution of the applicant/husband’s proportionate share of s.7 expenses and spousal support. Temporary support is requested to commence on May 1, 2019.

[3] The issues of retroactive child and spousal support, a Voice of the Child Report and interim custody are to be put over to a long motion on a date to be agreed upon by counsel.

Background

[4] The parties were married in 2004 and separated on September 2, 2015 according to the wife. The husband’s position is that the date of separation was in 2014. Little turns on that dispute in the context of this request for temporary support.

[5] The father is an equity partner at the law firm of DeGrandpré Chait in Montreal. The mother has always worked outside of the home. She is currently on long term disability due to a car accident and a fall and expects to return to work within the next few months. The mother’s grossed up disability income for 2018 is $111,000.

[6] The father’s income in 2015 was $881,455 and $947,416 in 2016. Based on his financial statement sworn February 5, 2019, the father’s 2017 income was $989,207 as per his 2017 Notice of Assessment. Prior to this motion, the father had been paying uncharacterized support to the mother of $9,000 to $14,000 each month. This has been based on bi-weekly set amounts, plus payment of the wife’s credit card and certain other bills. This is the first time since separation that the wife has sought a fixed amount of support.

[7] At the time of hearing this motion, the father was in the process of completing his 2018 tax return. A letter dated April 3, 2019 from the Director of Finances at his law firm confirms that based on his performance in 2018, his draws in 2019 will be $24,591 bi-weekly. His T4 and T5 from 2018 indicate employment income of $600,000 and dividends of $221,566 for a total income of $889,204.

The Support Issues

[8] The father agrees to pay temporary child and spousal support on a without prejudice basis based on his monthly draw for 2019 which will total $639,366. This would equate to child support of $7,949 for child support and $10,261 in mid-range spousal support. He will also agree to pay 66% of the children’s extraordinary expenses. When the husband receives additional distributions of equity from his firm, he will share those with the mother based on an agreed upon proportion.

[9] Entitlement to support is not in issue on this motion, nor is the range of support. The parties agree that mid-range spousal support is appropriate on a temporary basis.

[10] The mother’s position is that support should be payable based on the father’s 2017 total income of $989,207, being child support of $12,147 and $20,000 per month in spousal support. The father argues that this would result in the mother receiving an amount of support in excess of her declared expenses and leave him with about $6,000 per month on which to live.

[11] The mother insists on a consistent payment. Her position is that she should not have to wait for additional amounts depending on what the law firm’s administrator deems appropriate. The father’s income over the last three years has averaged more than $900,000 per year.

[12] The father recently incorporated a new company into which some of his income is paid. The mother is concerned that this corporation contains income which has not been disclosed to her. The father’s response is that financial statements are not yet available for the corporation given that it is new. In any event, his income simply flows through the corporation and is not a vehicle for retained earnings.

Analysis and Legal Issues

[13] In Poirier v. Poirier, 2010 ONSC 920, at para 55, the court set out the principles to be considered on an interim motion. These principles are not disputed but the one to be emphasized is the requirement that the father’s ability to pay assumes greater importance, and the mother’s need to achieve self-sufficiency assumes less importance on an interim motion. In terms of appropriate quantum, the support should be sufficient to allow the mother and children to live a reasonable lifestyle pending trial and spousal support should be within the ranges suggested by the SSAGs.

[14] The most current information available with respect to the father’s income indicates he will receive draws totalling $639,366 in 2019. Based on this draw amount and his DivorceMate calculation, the mother would receive total support of $218,520 per year. This is what the mother would receive before she receives any additional amounts from firm equity distributions or her own income. It should also be noted that this exceeds the mother’s yearly expenses as set out in her financial statement. It should be added that some of the expenses in the mother’s financial statement are questioned by the father, including a babysitting expense of over $30,000 for two teenage children. However, he accepts the mother’s expenses as stated for the purposes of this motion.

[15] In Easton v. Coxhead, 2018 ONSC 4784, the father received a draw and 50% of his income by way of two bonuses per year. The court held that the father’s bonus should be shared when it was received. I agree with and adopt the reasoning in Easton at paragraph 124 as follows:

a. Paying the mother additional equity distributions when they are received ensures that the mother is not being paid too little or too much and avoids significant adjustments later on. As well, given the financial structure of the firm, there is no guarantee that the father will receive any additional amounts. It is completely dependent on the father’s performance and that of the firm.

b. The father’s cash flow is not irrelevant. Even if the tax rate he projects is not accurate (53% in Quebec) the amount of monthly income being received by the mother would be grossly disproportionate to the amount available to the father. The father is required to remit quarterly instalments to CRA failing which he is charged interest and penalties. It is not realistic to expect him to incur tax penalties because he has to pay significant monthly support based on amounts of income he has not and may not receive.

c. There should be no argument about the father cooperating with respect to both disclosure and payment of additional equity distributions when received. He has always paid the mother agreed upon amounts.

d. The father worked at this law firm throughout the marriage. The parties lived a lifestyle whereby their monthly budget was dictated in large party by the father’s draws. The additional distributions were enjoyed when and if they were received. Therefore, the answer to the question posed by the mother’s counsel as to who should bear the burden of when and if the father is paid extra amounts by his firm is that both of the parties should bear that burden.

e. There is no demonstrated need by the mother for the additional amount of support each month to meet her expenses. She will have more than enough to meet her needs and those of the children.

[16] I recognize that Easton is a trial decision but I do not find that makes it less significant in this case. The fact is that this court will be making a temporary order for support. If a trial judge sees matters differently and wishes to order support based on last year’s income or on an average of the last three years, that option is still available.

[17] The father should therefore pay support based on his annual draw with spousal support in the mid-range. The mother’s income should be set at $111,000, given that she remains on a disability. The father will share firm distributions as they become available.

The Disclosure Issues

[18] The mother complains that the father has failed to provide all disclosure as requested. The mother requires this disclosure in order to fully make her arguments with respect to retroactivity at the upcoming long motion. The mother argues that she requires all of the disclosure requested in order to substantiate her position that the father has been living an affluent lifestyle while significantly underpaying support.

[19] The mother’s original request for disclosure was in 2016 and that was reiterated again in 2019.

[20] The father’s position is that he has provided a disclosure brief and all of his tax returns back to 2011 other than the return for 2018 which is not yet available.

[21] The main issues of contention with respect to disclosure relates to the commencement date of disclosure and the type of disclosure sought. The mother sought disclosure of bank, credit card and loan statements back seven years which is prior to either party’s date of separation. The father was not agreeable to providing statements going back that far given the lack of relevance of statements prior to the date of separation. He agreed to provide statements from 2014 forward.

Analysis

[22] Both parties agree that disclosure is required for them to defend their positions on the retroactive support claims.

[23] By way of letter to the mother’s counsel dated February 22, 2019, the father has agreed to provide all of the requested disclosure other than the bank, credit card and loan statements for the reasons set out above.

[24] I agree with the father that statements going back prior to the date of separation would not be relevant to either equalization or support issues. Therefore, statements from the father’s date of separation in 2014 should be provided with some exceptions as set out in my order below.

Costs

[25] The father has been almost entirely successful on the support issue and partially successful on the disclosure issue. He seeks full indemnity costs of $10,000 based on the following:

a. The father is paying undifferentiated support and been a cooperative payor. There is no reason why this motion had to be heard separately from the long motion.

b. The mother was unreasonable in relation to the Confidentiality Agreement issue and only signed it the evening before the motion.

c. The father was not unreasonable on the issue of disclosure. A Case Conference could have easily resolved this issue.

[26] The father served an Offer to Settle on April 12, 2019. The terms of this Offer generally matched what was ordered, other than the father’s offer to have the disclosure issue adjourned and heard with the long motion. As well, his support offer used the mother’s 2017 income of $137,783 rather than her current disability income. Using her current income results in a slightly higher spousal support amount. This will need to be adjusted upon her return to work.

[27] The mother argues that she should have her full indemnity costs of $9,000. The father was unreasonable on the disclosure issue and did not raise the issue of agreeing to produce statements back to 2014 until the motion was argued. The mother was not unreasonable with respect to the Confidentiality Agreement. Issues had to be worked out as to who would pay for the motion to seal the Confidentiality Agreement within the court file. That was not agreed upon until shortly before the motion date.

[28] Finally, the mother’s position on support was reasonable given the father’s high income and his previous underpayment of support.

[29] The mother also served an Offer to Settle. That Offer based support on the father’s 2018 total income of $889,204. Obviously, the support amounts were much higher than those ultimately ordered.

[30] The father’s success was somewhat tempered by the fact that his Offer to produce documents back to 2014 was not made in his Offer to Settle or until well into the argument of the motion. Further, his Offer used an income for the mother which was not her current income. He should therefore have his costs on a partial indemnity scale with some discount. Costs are therefore awarded in favour of the father in the amount of $5,500.

Orders

[31] On a temporary and without prejudice basis, commencing May 1, 2019, the applicant shall pay Table child support to the respondent for the two children of the marriage, S.P. born January 21, 2002 and D.P. born December 19, 2005 of $7,949 per month based on the applicant’s current (2019) monthly draw income of $639,366.

[32] On a temporary and without prejudice basis, commencing May 1, 2019, the applicant shall pay spousal support to the respondent of $11,358 per month, based on the applicant’s current month draw income of $639,366 and respondent’s current income (grossed up) of $111,000. These payments shall be taxable to the respondent and tax deductible to the applicant.

[33] When and if the applicant receives additional income (based on the firm’s results and his contributions) for 2019, he will pay a lump sum representing Table child support and spousal support on the amount within 10 days of receiving it.

[34] On a temporary and without prejudice basis commencing May 1, 2019, the applicant shall pay 67% of the children’s section 7 expenses and the respondent shall pay 33% based on the applicant’s draw of $639,366 in 2019 and the respondent’s current grossed up disability income of $111,000 within seven days of the respondent delivering proof of the section 7 expense. Section 7 expenses shall include counselling/therapy, medical/dental expenses not covered by insurance, tutoring and any other expenses the parties agree to in writing.

[35] The applicant shall provide the disclosure set out in paragraphs 3-6 of the letter from Deloitte dated January 30, 2019 commencing May 2, 2014 to date. The applicant is not required to produce statements for the joint bank account he owns with his partner.

[36] The respondent shall pay the applicant his costs of this motion in the amount of $5,500. The payment of costs is stayed pending the hearing of the long motion on retroactive support. If the applicant owes any retroactive support to the respondent, the costs may be set off against that amount. If no amount of retroactive support is owed to the respondent, the costs are due and payable immediately.

C. Gilmore, J. Released: April 18, 2019