NEWMARKET COURT FILE NO.: FC-15-49677-01
DATE: 20190121
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Harvey Elliott Milgrom, Applicant AND: Debbie Joan Milgrom, Respondent
BEFORE: The Honourable Madam Justice H. McGee
COUNSEL: Mark Greenstein, for the Applicant Nancy Deskin, for the Respondent
HEARD: January 16, 2019
Ruling on Motion
Applicant’s Rule 15 Motion to Change
[1] This action is Mr. Milgrom’s April 19, 2018 Motion to Change spousal support terms set out in a Separation Agreement executed October 13, 2015. His pleading asserts a material change in circumstances since October 13, 2015 sufficient to a finding that spousal support of $2,400 a month should terminate on October 31, 2017; despite the Agreement term at paragraph 8.1 that Ms. Milgrom’s entitlement to spousal support is not time limited.
[2] Ms. Milgrom seeks no relief in her Response to Motion to Change but for a dismissal of the action.
[3] There are two obstacles to Mr. Milgrom’s success. The Separation Agreement does not identify the incomes upon which the parties relied when setting the amount of $2,400 per month. This was not inadvertent. The parties declare in their Agreement that each was satisfied with their opportunity to obtain disclosure from the other.
[4] The second obstacle is that the Spousal Support Advisory Guidelines are not binding on a variation. Although frequently referenced, the legal test on a variation is not a pro forma application of the SSAG range on current income, but a far more nuanced assessment.
[5] A review does not have the same obstacles. A review permits parties to bring a motion to alter support awards without having to demonstrate a material change in circumstances.[^1]
[6] The parties’ October 13, 2017 Separation Agreement prevents a review until February 1, 2021. Any change[^2] in spousal support prior to that date must be precipitated by a material change in circumstances. These are identified in paragraph 8.1 as “a material change in either party’s personal living situation (i.e. Debbie enters into a relationship permanence) or either party’s financial situation.”
Two Motions Within Applicant’s Rule 15 Motion to Change
[7] Each party served a motion to be heard on today’s busy list. Only Mr. Milgrom’s motion was filed in the Continuing Record. He asks for extensive disclosure of Ms. Milgrom’s banking statements, assets and credit cards from January 1, 2016 to December 31, 2018. Ms. Milgrom has already provided significant disclosure, but only for a more recent period, as her counsel objects to the relevancy of certain disclosure for 2016 and 2017.
[8] Mr. Milgrom also seeks an order requiring Ms. Milgrom to have a Certified Business Valuator assess her self-employment income for support purposes.
[9] Not filed is Ms. Milgrom’s motion for interim disbursements of $75,000. In the course of submissions I learned that there may have been some administrative misadventure, not attributable to counsels. But because the materials were not before me today, I cannot decide her motion.
[10] In an effort to save time and expense,[^3] I expressed a view as to the motion for interim disbursements. My view should be understood as a conferenced recommendation. Ms. Milgrom is free to reschedule her motion before another justice through the trial coordinator. The motion should be booked for a full hour. She is at leave to refashion the relief sought, given my recommendation and today’s outcome.
Mr. Milgrom’s Motions dated November 26, 2018
[11] Both parties are self-employed. Each has income for support purposes different from the income upon which they pay tax. Mr. Milgrom is commended for obtaining an income assessment at such an early stage. One can understand his request that Ms. Milgrom do the same. But his motion to compel Ms. Milgrom to do so is neither proportionate nor reasonable.
Motion that Ms. Milgrom Retain an Expert to Value Her Income for Support Purposes Dismissed
[12] There is no comparison in the scope of the parties’ respect incomes. Ms. Milgrom’s self-employment income has never resulted in taxable income in excess of $30,000.[^4] Her gross business sales from 2015 to 2017 average about $80,000. During the same years, Mr. Milgrom’s average gross business sales were $2,330,194.
[13] I also find that the costs of an income valuation for Ms. Milgrom is not a reasonable expense. Her income is not complex on the current evidence. She may mix personal and business income and/or debt, but her gross sales provide an adequate foundation for the adding back and grossing up of additional benefits after deduction of legitimate business expenses. This is a task that can be performed by counsel.
[14] Ms. Milgrom may find that it is cost effective to have an expert perform that task rather than counsel, or her counsel may prefer to lead such evidence from an expert rather than her client; but I am not satisfied that the court should order a valuation in the current circumstances.
[15] The motion to compel Ms. Milgrom to have an expert assess her income for support purposes is dismissed.
[16] Mr. Milgrom may revive his motion in the event that the disclosure ordered below results in new evidence for which the court will require expert assistance to determine Ms. Milgrom’s income for support purposes.
Motion that Ms. Milgrom Provide Extensive Disclosure from January 1, 2016
[17] I am unclear what purpose Mr. Milgrom places on this disclosure. Is it to determine whether there has been a material change, or to argue that spousal support should end because of the material change?
[18] A finding of material change depends on the incomes of the parties at the time of the Separation Agreement or the final Order.[^5] Absent that evidence, there is no basis for the finding.
[19] Securing a variation on imputed income, or as in this case, unstated income, is challenging. As explained by Justice Pararatz in Trang v. Trang,[^6] when support is not based on a specified income, a more comprehensive analysis is required. A payor must “go beyond establishing [his or her] subsequent “declared” income”. A payor must show significantly changed circumstances and that a variation is necessary to achieve a fair result.
[20] Mr. Milgrom’s certified valuation of income for the years 2014 to 2017 concludes that he earned:
2014: $301,000
2015: $254,000
2016: $128,000
2017: $108,000
[21] The 2014 and 2015 incomes[^7] are a surprise to the court. Those amounts are not at all commensurate with $2,500 a month of spousal support for a 60 year old recipient after a 15 year relationship.[^8]
[22] Two prospects emerge. Either Mr. Milgrom misrepresented his income at the time the Agreement was being negotiated, or the parties made a deliberate decision to base the amount of spousal support, and its terms of payment and review on non-financial factors, i.e. not on the SSAG range for their actual respective incomes.
[23] Both spell trouble for Mr. Milgrom’s Motion to Change. The former prospect supports a claim to set aside the terms for spousal support in the October 13, 2015 Separation Agreement; though it bears reminding the parties that absent misrepresentation, the Agreement will not be set aside. Parties are free to settle on terms for spousal support on whatever basis they agree to be bound, and as a general principle, they will be held to their bargain, even if it was a poor one.
[24] The latter prospect removes any basis for a material change based on Mr. Milgrom’s income, or for that matter, on Ms. Milgrom’s income.
[25] In reserving this decision, I have spent some time considering the likelihood of each prospect and possible outcomes. However, these are not reasons for judgment on the trial of the Motion to Change. This is only a motion for disclosure. I encourage the parties to speak candidly with their case management justice. In the race to cast aspersions on the other party, and perhaps, in the midst of a difficult relationship between counsels; it appears that these two prospects have been overlooked.
[26] I return to the question at hand. What is a necessary and proportionate level of disclosure relevant to these issues?
[27] Mr. Milgrom seeks to terminate[^9] spousal support as of October 31, 2017: almost three and a half years prior to the agreed review. To be successful, he must lead evidence of a terminating event. A reduction in his income – temporary or long term – is not likely to achieve that end, so he also looks for a terminating event in Ms. Milgrom’s disclosure.
[28] Disclosure is not a fishing expedition. Disclosure cannot be used to cause delay, deliberately burden an opponent with unnecessary costs or to reap tactical advantage.[^10] It cannot be used to confuse, mislead or distract the trier of fact’s attention from the main issues - even if done inadvertently.[^11]
[29] At the same time, Ms. Milgrom has an obligation to put a full case before the court. I balance these considerations by requiring her to provide the following.
Order for Disclosure on Applicant’s Motion
[30] I partially grant Mr. Milgrom’s request for an Order for disclosure, but only of the following documents from August 1, 2017 to December 31, 2018. The documents are to be provided to counsel by March 1, 2019.
Monthly statements for the four personal and business banking accounts listed on page 5 of her September 18, 2018 Financial Statement.
Monthly Statements for ishopforyou.ca account #2808 and #8929.
All monthly personal and business credit card statements.
[31] Should Ms. Milgrom amend her Response to Motion to Change to seek an increase in spousal support from a date earlier than October 31, 2017,[^12] then Mr. Milgrom can renew his motion that she provide income disclosure for an earlier period. Should Ms. Milgrom issue an Application to set aside the Separation Agreement, disclosure will be separately addressed in that proceeding.
Costs
[32] If the parties cannot resolve the issue of costs, the respondent shall serve and file her costs submissions on or before January 31, 2019. The applicant’s response is to be served and filed by February 15, 2019. The respondent may reply by February 28, 2019.
[33] All costs submissions are to be filed in the Continuing Record. Costs submissions are limited to 2 pages, double spaced, exclusive of a Bill of Costs, any Offers to Settle and/or a Comparison of Offers. Upon filing the costs submissions, counsels are asked to confirm the filing by email to the judicial assistant.
Justice H. McGee
Date: January 21, 2019
[^1]: Choquette v. Choquette (1998), 1998 CanLII 5760 (ON CA), 39 R.F.L. (4th) 384 (ONCA) [^2]: I deliberately use the word “change” because the Agreement itself (para 8.1) uses the word “review’ which has the potential to confuse the legal test. Either a party is seeking a variation based on a material change in circumstances that if know at the time the agreement was entered into, would have altered the bargain; or, a party is seeking to review the terms of support on the current circumstances of the party, irrespective of the situation at the time of the Agreement. [^3]: And the risk of a costs award… [^4]: Exclusive of income splitting with Mr. Milgrom during the years in which they were together. [^5]: Cohen v. Matlofsky, 2016 ONCA 29 [^6]: 2013 ONSC 1980 [^7]: The Separation Agreement would have relied on 2014 income. [^8]: Ms. Milgrom’s counsel now suspects that his income was, and is, even higher. [^9]: Not reduce. Terminate. [^10]: Chernyakhovsky v. Chernyakhovsky 2005 CanLII 6048 (ON SC), 2005 CarswellOnt 942 [^11]: Boyd v. Fields 2006 CarswellOnt 8675 [^12]: If this is contemplated, please first consider my earlier concern that if the parties agreed on spousal support terms unrelated to their actual income, it is possible that neither would be able to assert a material change based on financial circumstances.