COURT FILE NO.: FS-19-8963
DATE: 20190903
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MEGAN DE GENNARO
Applicant
– and –
SHAUN GALLAGHER
Respondent
W. Ross Milliken, lawyer for the Applicant
Toni E. Wharton, lawyer for the Respondent,
HEARD: August 20, 2019
ENDORSEMENT
DIAMOND J.:
Overview
[1] On July 9, 2019, the applicant and the respondent each brought a motion to be argued before me on the regular motions list. The numerous issues raised in both motions could not possibly have been heard in the allotted one-hour window, and as such I adjourned both motions to be heard by me for a half day hearing on August 20, 2019. I also granted the parties leave to proceed with questioning of any affiants prior to the return of the motions.
[2] Prior to the new return date, the parties were able to resolve the issue of interim custody of the one child of their relationship, Hope Mary Gallagher (“Hope”). At the outset of the hearing on August 20, 2019, I signed a consent order granting both parties temporary joint custody of Hope, along with some other unrelated terms agreed to between the parties.
[3] The issues of parenting scheduled, child support, spousal support, interim costs and a request for drug screening test results remained in dispute and were argued before me on August 20, 2019. At the conclusion of the hearing, I took my decision under reserve.
Summary of Relevant Facts
[4] The parties began cohabitating in late July 2015, but were never married. Hope was born on December 9, 2017. The parties separated on October 20, 2018. Their cohabitation lasted approximately 3.5 years.
[5] The applicant earns approximately $30,000.00 in income. The respondent is employed by Galcon Marine Limited (“Galcon”), a company carrying on business in the marine construction project industry. Galcon was founded and is solely owned by the respondent’s father, Dave Gallagher (“Dave”).
[6] According to excerpts from Galcon’s website, Dave has owned and operated Galcon for over 30 years. The respondent is represented as part of the “Galcon team” with over 25 years of experience, and as being actively involved in the pursuit of all projects including project management and development of project specific management and work plans.
[7] For each of the 2016, 2017 and 2018 years, the respondent’s total employment income was $216,771.00, $278,998.00 and $427,725.00 respectively. However, Dave gave evidence on this motion providing further particulars of the respondent’s annual renumeration, and specifically why his 2019 income is and will remain much lower than previous years (to be described hereinafter). Dave, who was not cross-examined on his affidavit, explained that until recently the respondent was a full-time Galcon employee earning a base salary of approximately $74,000.00 with a large annual discretionary bonus (decided by Dave) and usually paid within the first three months of the calendar years. There are Galcon internal financial documents in the record confirming that in each of 2016, 2017 and 2018, the respondent received discretionary bonuses of $140,000.00, $220,000.00 and $300,000.00 respectively.
[8] Dave’s evidence is that the respondent’s $74,000.00 salary is commensurate with the market salary for someone in the respondent’s position, and that the standard industry salary for that position ranges between $60,000.00 - $120,000.00 annually.
[9] With respect to the respondent’s annual discretionary bonus, Dave testified that these were his “discretionary gifts to his son”, added to the respondent’s T4 income for financial planning reasons. The discretionary bonuses were not directly related to the respondent’s job performance, but rather gifts based upon Galcon’s performance, and “the stage the respondent was at in his life”. Dave paid the respondent those discretionary bonuses so the respondent would use the money to pay down his mortgage and save for retirement.
[10] The reasons for Dave unilaterally terminating the respondent’s annual discretionary bonus for 2019 (and causing Galcon to pay the respondent his $74,000.00 base salary only) are based upon a recurrent theme in the record before me, namely the parties’ alleged alcohol and drug abuse lifestyle. According to the respondent, he and the applicant would “party at least twice a week and consume alcohol and cocaine a few times per week”, with the applicant only stopping her consumption of cocaine and alcohol when she became pregnant. The respondent admits continuing his alcohol and cocaine use throughout the balance of the parties’ relationship, though he insists he was always sober when he attended to Hope’s care or spent time with her. The respondent would typically consume alcohol or cocaine after he left the home when he sought to avoid both the applicant and further conflict as their relationship deteriorated.
[11] The respondent submits that the applicant is down playing her substance abuse use issues, as the applicant has allegedly taken cocaine when Hope was in the parties’ care (but asleep in her bed). For her part, the applicant does not deny having used cocaine occasionally and in a social setting but denies she ever had a cocaine habit. The applicant has specifically stated that in the event the Court maintains any concern regarding her behaviour intentions, she is “prepared to undergo drug testing as the Court finds appropriate”.
[12] On March 9, 2019 the respondent was charged with assaulting the applicant. As part of his bail conditions, the respondent is prohibited from attending the residence (owned by the respondent) where the applicant continues to reside. Of note, these criminal charges may or may not have been resolved by way of a peace bond but such a conclusion was unclear from the record before me.
[13] The applicant does not advance a property claim to the residence, and both parties submitted that the residence is to be sold shortly. After being charged with assault, the respondent borrowed approximately $100,000.00 from Dave and attended a rehabilitation program in Arizona for approximately one month.
[14] The respondent successfully completed that rehabilitation program, and then moved back into his parents’ home due to his bail conditions. The respondent produced a series of negative drugs screening test results since completing his rehabilitation program, but the applicant notes that no such test results have been forthcoming since June 2019.
[15] In addition to lending the respondent $100,000.00 for the cost of the rehabilitation program, Dave takes the position that Galcon will not be paying the respondent “one penny more than his base salary”. Dave further testified that in late 2018 Galcon received a garnishment of the respondent’s income from Canada Revenue Agency (“CRA”), and once Dave looked into it further, he learned that the respondent had used the annual discretionary bonus payments to fund his “party lifestyle”, taxes were owing from RRSP withdrawals made by the respondent, and the respondent’s mortgage was not being paid off as Dave had intended through the discretionary bonuses. Dave, who was in the courtroom during the hearing and offered to be cross-examined, gave further evidence that he was livid with his son as Dave had worked hard his entire life to be in the position that he could help the respondent get ahead in life, and his son “had blown it all”.
[16] The respondent is paying the mortgage and utilities for the residence while the applicant resides there. The applicant gave evidence that she is in financial hardship, in particular since the respondent left the residence in March 2019. The applicant says she only has $5,000.00 in the bank, and has borrowed $19,000.00 from her mother to fund her legal costs in this proceeding. As stated above, both parties wished to have the home sold but the applicant says that she will need approximately $3,000.00 per month to spend on rent and utilities for her own new residence. The respondent takes issue with the applicant’s position, and has given evidence that there are two and three bedroom apartments within 30 minutes of the respondent’s home priced from $1,100.00 - $1,500.00 per month. According to the respondent, these apartments do not “meet the applicant’s desire to continue to live a luxury lifestyle beyond her means”.
[17] Finally, with respect to access to Hope, prior to the respondent’s criminal charges, the applicant had offered an equal 2-2-3 parenting schedule for Hope (as part of a larger offer to settle containing numerous terms addressing other issues in this proceeding). I do not find that the proposed parenting schedule terms were severable from the balance of the offer, and to the extent that the respondent takes the position that an agreement between the parties had been reached, I reject this argument. In any event, the respondent’s criminal charges and apparently successful stint in a rehabilitation program amount to a material change in circumstances from the events which pre-dated the purported settlement.
[18] Since the respondent’s completion of the rehabilitation program, there is a fixed parenting schedule in place, with the respondent having access to Hope on alternating weekends from Friday after daycare until Monday drop off at daycare, as well as Tuesday evening overnights each alternating week, and Tuesdays and Wednesday evening overnights each other alternating week. The applicant seeks to continue this fixed access schedule, while the respondent renews his request for an equal 2-2-3 parenting schedule.
Issue #1 What is the appropriate parenting schedule?
[19] As stated, the parties have agreed upon interim joint custody of Hope. As I have already found that no settlement agreement exists between the parties, the question to be determined is whether the current fixed access schedule should remain, or an equal 2-2-3 parenting schedule be imposed.
[20] The respondent submits that the relevant status quo was the situation which existed prior to his criminal charges and resulting requirement to vacate the residence as part of his bail conditions. The respondent states that at that time the parties had equal, shared parenting of Hope and the Court should thus impose an equal 2-2-3 parenting schedule going forward.
[21] The applicant submits that the current fixed access schedule is working, and it is not appropriate to order an equal 2-2-3 parenting schedule at this time. An equal parenting schedule will render the applicant’s relocation efforts more difficult once the residence is sold. The applicant also argues that the respondent’s request for an equal 2-2-3 parenting schedule amounts to an effort to ultimately reduce the amount of child and spousal support sought by the applicant.
[22] The respondent relies upon the decision of Justice Spies in Wyszynski v. Brahan 2012 ONSC 4853 in support of his position, and in particular the following passages:
“The status quo changed dramatically on May 27, 2012 when the Mother was charged with assault pursuant to section 266 of the Criminal Code in connection with Nikita. She was released on a promise to appear and signed an undertaking not to communicate with Nikita or Vivienne. On May 29, 2012, the Father obtained an ex parte order granting him temporary sole custody of the younger three children until further order of the court. The Father had alleged that he was concerned not only about the children’s safety but his own safety and Justice Greer was satisfied that he required a restraining order be put in place against the Mother, that she granted.
It appears from the evidence that the Father has been alleging that the Mother has been physically abusive to the children for many years. As already stated, notwithstanding earlier and ongoing police involvement with this family, the police have never charged the Mother prior to May 27, 2012. At the time of that incident neither the Father nor Logan were present. There is no evidence that CAS has ever had any protection concerns with this family. Although I appreciate that the criminal charge against the Mother is outstanding, there has been no trial on the merits or any evidence of any physical harm to Nikita or Vivienne. Both Nikita and Vivienne want to return to live with their Mother which is the status quo they knew for five years. There are no reasonable grounds to conclude that any of the children or the Father have reasonable grounds to fear for their safety.
Living with their Mother was the status quo for Nikita and Vivienne since 2007. The evidence is clear that the Father chose not to exercise his right of access to his daughters and for some unknown reason he kept in contact only with Logan. Clearly it is in the best interests of Nikita and Vivienne to return them to their Mother. The concerns Justice Greer would have had when presented with the fact that the Mother had been charged have now been satisfied. The Father has presented no other evidence, apart from that charge, that would justify a change from what was the status quo for many years.”
[23] Unlike the facts in Wyszynski, on the record before me there is other evidence in addition to the respondent’s criminal charges that justifies a change from what he claims as the prior status quo, which in my view was a time when he was admittedly abusing alcohol and cocaine in a manner warranting a 30 day stint in a drug rehabilitation program. It is certainly arguable that in the weeks or months leading up to the respondent’s criminal charges, his addiction problems would never have resulted in an ordered equal 2-2-3 parenting schedule in any event. While I agree with the respondent that the existence of criminal charges in and of themselves respecting allegations of violence is not determinative of the issues of residence and parenting schedule, in my view the appropriate interim order under the current circumstances (inclusive of a consideration of the actual status quo during the first three months of 2019) is a continuation of the fixed access schedule as sought by the applicant.
[24] This continued fixed access schedule is in Hope’s best interest. If the parties continue to co-operate in accordance with their interim joint custody agreement, and the respondent maintains an alcohol-free and drug-free lifestyle, he may bring the appropriate motion to have the Court reconsider his request. However, for the time being, I grant the applicant’s request and order that the current fixed access schedule continue on an interim basis.
Issue #2 What is the appropriate amount of child support?
[25] Given my disposition of Issue #1, the respondent’s obligation to pay child support is not in question. What still needs to be determined is the amount of income to use for the purpose of calculating child support.
[26] Ideally, the Court strives to use the most up to date information in assessing a party’s income for the purposes of calculating child or spousal support. Of course, there must be a sufficient evidentiary basis upon which the Court can determine a party’s current income. In the absence of such an evidentiary basis, the Court typically relies upon past income from a party’s previous years of employment.
[27] The applicant urges me to reject the evidence of both the respondent and Dave in terms of Dave’s unilateral termination of the respondent’s annual discretionary bonus. The applicant submits that the respondent has taken different positions throughout 2019 as to his updated income. Originally, the respondent advised through counsel that he anticipated his 2019 base income to be $120,000.00. Dave then delivered a letter in late May 2019 advising that the respondent’s income would be reduced to $80,000.00. Subsequently in his affidavit, Dave stated that he reduced that income figure to $74,000.00.
[28] In an employment law context, an employer’s unilateral termination of an entitlement to a discretionary bonus could amount to a potential claim for constructive dismissal on the part of the employee, especially in the absence of consideration for the unilateral change. While I am obviously deciding this case in a family law context, it is apparent from Dave’s evidence that he wants his son to earn his base salary and no longer rely upon Dave to fund his (and for previous years, the applicant’s) “party lifestyle”. Dave no longer wants to enable the parties to continue to live beyond their means. The respondent has lost Dave’s trust, and is currently only working on a part-time basis. As a father, Dave seeks to teach the respondent “a hard life lesson regarding money” even though he loves his son. That said, Dave loves Hope and “does not want to see Hope need or want for anything”, as he intends to help with clothing, extra curricular activities and Hope’s education.
[29] The 2016-2018 annual discretionary bonuses were declared to CRA by the respondent. While those bonuses were technically income, I accept Dave’s evidence that those bonuses were in reality akin to gifts he provided to his son. Each bonus was received in or around the same time, all subject to Dave’s discretion, and for the explicit purpose of helping and encouraging the respondent to plan for his fiscal future.
[30] The applicant argues that Dave simply seeks to avoid Galcon’s money finding its way into the applicant’s hands. While that is a possibility, Dave was never cross-examined upon his affidavit and that position was never put to him, even though I explicitly adjourned both motions to allow for questioning. I am not prepared to use the respondent’s income figures from 2016-2018 for the purpose of calculating child support, as I find that doing so would simply set the respondent up for (perhaps further) failure.
[31] The obligation to fund child support does not lay at Dave’s feet. Dave’s intentions in granting the annual discretionary bonus were to give the respondent (and indirectly the applicant and Hope) a “head start” on saving for their future. Unfortunately, that opportunity was admittedly squandered by the respondent, and I accept Dave’s evidence that the respondent will need to work hard to regain Dave’s trust and show him a true sense of fiscal responsibility.
[32] Accordingly, the respondent’s income for the purposes of calculating child support should be $74,000.00, and I order the respondent to pay interim child support in the amount of $691.00 per month on October 1, 2019. This payment is over and above the respondent’s continued funding of the expenses associated with the residence which he has and will continue to pay.
[33] This order is made without prejudice to the applicant’s ability to re-visit the issue of child support upon the earlier of January 2020 or when the residence is eventually sold.
Issue #3 Should interim spousal support be ordered?
[34] While the parties were never married, the applicant submits that they were subject to a lengthy engagement, and always intended to be married. The applicant’s pregnancy was planned, and she argues that due to a loss of the standard of living she enjoyed during the relationship, interim spousal support should be ordered to maintain her lifestyle.
[35] The respondent submits that the applicant is not entitled to spousal support for two essential reasons. First, there are no traditional compensatory factors present as the applicant never supported the respondent’s career in any way or provided any economical benefit to him which resulted in her suffering an economical disadvantage. In addition, the respondent submits that on a “means and needs” analysis, the applicant does not have need as her living expenses are being paid for by her father/parents, and, more importantly, given the respondent’s current income he does not have the means to pay spousal support over and above the expenses associated with the residence and the child support which I have now ordered.
[36] I agree with the respondent. On the record before me, I do not find that the applicant has suffered an economic disadvantage which would warrant a spousal support order. The relationship was approximately 3.5 years, and the respondent appears to be correct that the parties were not sufficiently economically intertwined during their cohabitation. Coupled with his child support obligation, the payments the respondent is making towards the residence are made on behalf of and for the benefit of the applicant, and in my view those payments outweigh any potential spousal support obligation in any event.
[37] Accordingly, I decline to order interim spousal support.
Issue #4 Should the respondent be ordered to pay the applicant’s interim costs?
[38] Rule 24(18) of the Family Law Rules permits the Court to make an order requiring a party to pay an amount of money to another party to cover some or all of the other party’s expenses of carrying the case, including legal fees. As set out by Justice McDermot in Ord v. Ord 2019 ONSC 1563, the exercise of the Court’s narrow discretion ought to take the following principles into account:
(a) a moving party must demonstrate that, absent the receipt of funds from the other party, he/she cannot present or analyze settlement offers or pursue entitlement to claims in the proceeding;
(b) the moving party must show that the legal fees and/or disbursements are necessary;
(c) the moving party’s claim must be meritorious;
(d) the advance of interim legal fees and/or disbursements are for the purpose of “leveling the playing field”; and
(e) the legal fees and/or disbursements may be advanced against an equalization payment.
[39] A common theme running through the relevant jurisprudence is that the exercise of the Court’s discretion ought to be limited to exceptional circumstances. As held by Justice Douglas in Rea v. Rea 2016 ONSC 382, “a party should not be required to erode capital in order to satisfy an award of interim disbursements.”
[40] I agree with the respondent that when assessing a claim under Rule 24(18), there must be a balancing of fairness including a consideration of each party’s means. While the respondent does have money remaining in his RRSP, his previous RRSP withdrawals (made to, at least in part, fund his party lifestyle) have resulted in tax liabilities owing to CRA, and his salary has already been garnished for that purpose.
[41] I am not inclined at this stage to require the respondent to access and deplete his capital to pay the applicant’s interim legal fees and/or disbursements. The respondent submits that the applicant is essentially asking him to assume the entire risk of the litigation as the applicant has no property that could be accessed to repay any funds payable under Rule 24(18). While I am not prepared to find at this stage that the applicant’s claims lack any merit, the applicant is not advancing a claim to the property, which is very likely going to be sold in any event.
[42] Accordingly, the applicant’s request for an interim order under Rule 24(18) is dismissed.
Issue #5 Should both parties submit to drug screening testing and exchange the results?
[43] In my view, the answer to this question is “yes”. While both parties take issue with each other’s accounts of the extent to which they participated in and/or potentially abused alcohol and cocaine, it is in Hope’s best interest that, given the ongoing fixed access schedule and the parties’ admitted history of at least some alcohol and drug abuse, each of the applicant and respondent submit to drug screening results, at least twice per month, for a period of six months. All drug screening results are to be shared between the parties.
[44] This issue may be revisited on further motion after the six month period expires.
Costs
[1] In my view, it is arguable that success has been divided between the parties. If they take a different view, they may serve and file costs submissions (totaling no more than five pages including a costs outline) in accordance with the following schedule;
(a) the applicant’s costs submissions within 10 business days of the release of this Endorsement; and,
(b) the respondent within 10 business days from the receipt of the applicant’s costs submissions.
Diamond J.
Released: September 3, 2019
COURT FILE NO.: FS-19-8963
DATE: 20190903
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MEGAN DE GENNARO
Applicant
– and –
SHAUN GALLAGHER
Respondent
ENDORSEMENT
Diamond J.
Released: September 3, 2019