NEWMARKET COURT FILE NO.: FC-17-53812-00
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROCHELLE STEINFELD
Applicant
– and –
GEORGE KOENIGSBERG
Respondent
Ken H. Nathens, for the Applicant
S. Lawrence Liquornik, for the Respondent
HEARD: May 24, 27, 28, 29 and 31, 2019
REASONS FOR JUDGMENT
DiTOMASO J.
INTRODUCTION
1The trial of this matter took place on May 24, 27, 28, 29 and 31, 2019, with written submissions to follow.
2The Applicant wife, Rochelle Steinfeld (“Rochelle”) sought the following orders:
(a) The dismissal of the Respondent husband’s claim for spousal support and for reimbursement of 50% of the joint funds that Rochelle withdrew from the parties’ Meridian joint bank account in November 2016;
(b) Child support for the child, Alex Koenigsberg, born May 8, 2000, in the amount of $69 per month;
(c) That the parties may proceed to obtain a Divorce Order through the normal administrative process; and,
(d) Costs.
3The Respondent, George Koenigsberg (“George”), sought the following orders:
(a) That Rochelle pay him $500,000 in lump sum spousal support both compensatory and otherwise, under the Family Law Act and the Divorce Act out of assets;
(b) Alternatively, for an order for periodic spousal support in the amount of $8,360 per month out of assets;
(c) An order compelling Rochelle to repay him $35,000, being 50% of the joint funds she unilaterally withdrew from the parties’ Meridian joint bank account in November 2016 as an incident of support;
(d) A Divorce Order, being content that the divorce be dealt with administratively over the counter following completion of the trial; and,
(e) Costs.
4The main issue at trial is one of spousal support. There is also the issue of child support. These are my reasons for judgment.
THE PROCEEDINGS
5Rochelle is currently 59 years old and George is 67 years old. They were married on December 10, 1995.
The Marriage Contract
6Prior to their marriage, the parties signed a Marriage Contract, dated October 31, 1995. The Marriage Contract (the “Marriage Contract”) was filed as Exhibit 3 at trial1. Both parties had independent legal advice and made financial disclosure with respect to the Marriage Contract.
7The Marriage Contract provides at paras. 9 and 10 that there shall be no division of property, other than according to ownership (including the matrimonial home, which is in Rochelle’s name). The Marriage Contract further provides at para. 15 that the family residence (which definition includes the matrimonial home) is owned by Rochelle, and George shall have no claim to same, save for those based on Part II of the Family Law Act that deals with possession and disposition.
8Paragraph 8 of the Marriage Contract provides that each party shall have such rights to receive financial support from the other, and shall be under such obligations to provide financial support to the other as are given or imposed upon each party by the Family Law Act or the Divorce Act.
9According to the financial disclosure attached to the Marriage Contract, at the time of the execution of the Marriage Contract, Rochelle had a stated income of $63,000 per annum. She had assets totalling $347,000, including sole ownership and equity in the property located on Florence Avenue in Toronto where the parties resided at the time of marriage.
10At the time of the execution of the Marriage Contract, George had a stated income of $45,000 per year. He had total debts in the amount of $605,000 and nil assets. At trial he admitted that subsequent to the marriage, he declared bankruptcy in order to clear his debts that he had on the date of marriage.
11The Marriage Contract does not preclude either party from claiming spousal support or child support.
12Initially, George claimed that the Marriage Contract be set aside and that he was entitled to equalization of net family property. He further claimed that Rochelle held a 50% trust interest in the matrimonial home for him, and lump sum spousal support.
13George then amended his Answer. In this first amendment to his Answer, he withdrew his claim for the equalization of net family property and a trust interest in the matrimonial home. He claimed a lump sum spousal support award and a monetary award in his favour on account of unjust enrichment.
14By way of letter dated April 27, 2018, George’s counsel amended his Answer for the second time (without the consent of Rochelle or by court order), advising that George was abandoning his claim for unjust enrichment, and that the “main claim in this proceeding at trial is going to be for spousal support.”
15The issues at trial were solely that of spousal support for George and child support for the parties’ adult son, Alex. George abandoned his claims to set aside the Marriage Contract, equalization of net family property, an equitable interest in the properties owned by Rochelle and unjust enrichment.
16The parties separated on September 30, 2014 (according to Rochelle) or on April 30, 2016 (according to George). The discrepancy regarding the date of separation is not relevant, as the issues in dispute are spousal support, child support, and not equalization of net family property.
17According to Rochelle, for close to four years post-separation, George resided in the basement of the matrimonial home. It is not disputed that he did so for a period of time post-separation, depending on what date one accepts. Rochelle and George lived separate lives.
18Pursuant to the Order of McGee J., dated August 22, 2018, George was required to vacate the matrimonial home located at 224 Autumn Hill Boulevard, Vaughan, Ontario (“Matrimonial Home”) effective January 15, 2019 and possibly earlier, if the trial judge orders exclusive possession at an earlier date. George vacated as he was required to do so and no longer lives in the Matrimonial Home.
Overview and Undisputed Evidence at Trial
19Only Rochelle and George testified at trial. A number of Exhibits were filed on consent. Exhibit 4, George’s Medical Brief, together with a letter of Dr. Shim Felsen, dated August 16, 2018 and MRI Diagnostic Imaging Report, dated May 13, 2019, from Markham Stouffville Hospital were tendered in evidence on consent for the truth of their contents.
20As the trial progressed, there was much undisputed evidence. The following is a summary of the overview and undisputed evidence a trial.
21Rochelle is 59 years of age and is in good health overall. Rochelle had a background in internet technology (IT) and was a retired mortgage broker. She left employment outside the home to have children and care for her family. She has not worked outside the home since 2002. She was laid off from her IT job in 2001 after her maternity leave for their son, Alex. She had short temporary work for Elections Canada. Although she has sought employment, she has not worked, nor has she been actively engaged in any retraining program.
22George is 67 years of age. He is seriously ill. He suffers from a variety of health issues. George has a background in accounting and he also was a mortgage agent and investor. He was trained as a cantor and performed Jewish services in synagogues. Also, he offered bar mitzvah lessons.
23The parties were married on December 10, 1995 and separated on September 30, 2014 (according to Rochelle), or April 30, 2016 (according to George). They were in a long-term marriage of approximately 25 years.
24There are two adult children of the marriage; Dana Koenigsberg, born March 13, 1998 and Alex Koenigsberg, born May 8, 2000. Rochelle accepts that Dana is not in need of child support or payment towards s. 7 expenses. However, such a claim is being advanced on behalf of Alex.
25The parties’ son, Alex, who is now 19 years of age, has just completed his first year of an undergraduate program at Ryerson University where he is a full-time student. He lived in residence during his first year of studies but will live in downtown Toronto in a rented accommodation during his second school year. While he does not reside primarily in the matrimonial home, he does return home from time to time, such as weekends, vacations and holidays.
26Rochelle is not seeking contribution for Alex’s first year of studies completed at Ryerson. She concedes that he obtained OSAP funding for first year of grant and loan totalling $14,000. She has contributed to a bank account in Alex’s name for educational purposes into which she deposited Government cheques for many years. Currently, the amount in the account is $40,000 and this sum has not been depleted. Rochelle testified there is no need for post-secondary expenses for Alex next year (2020) and there may be enough money to fund his third year of studies as well.
27George has three children from a previous relationship. They are all independent adults. He has lived with his eldest daughter from that relationship, Jody, together with her family since January 2019. He has accommodation in the basement of that home.
28Rochelle is the sole owner of the matrimonial home, which has been owned and occupied by the parties since 2005 (until George left in January 2019). For the purposes of trial, both parties agree that the home is worth $1,600,000. This house is encumbered by a collateral mortgage securing a line of credit with a current balance of approximately $522,000. Rochelle also is a one-third owner of a commercial property located in Richmond Hill (the “Beaver Creek Property”). This property is also encumbered by a mortgage. George is a guarantor in respect of both the matrimonial home secured line of credit and the mortgage on the Beaver Creek Property.
29George is 67 years of age and in accordance with Exhibit 4 is seriously ill. At trial, he asserted he was disabled and did not have the ability to earn income, given his poor health. He is relying upon the Canada Pension Plan (“CPP”), Old Age Security (“OAS”) and the Guarantee Income Supplement (“GIS”) in the combined amount of $2,143.21 per month. Rochelle acknowledged at trial that all of George’s serious medical issues occurred during the marriage. However, his congestive heart failure condition originated before they married.
30Rochelle has been residing in the matrimonial home with three tenants since January 2019 and with 2 tenants for a period of time before then. At trial, she asserted that she would earn approximately $23,500 in gross rental revenue. She would continue to expense a portion of her property taxes, utilities and mortgage interest against her rental income and she would likely not show any net rental income. She acknowledged that she had approximately $1,277.80 of additional investment income per month as per her Financial Statement, sworn May 8, 2019. She also owns substantial assets as disclosed in her Financial Statement.
FURTHER EVIDENCE AT TRIAL AGREED BY THE PARTIES
31Through examination and cross-examination of each party, the following was agreed upon:
32The parties were in a long-term marriage.
33George is almost 10 years older than Rochelle.
34George is very seriously ill with congestive heart failure and a history of strokes, heart attack and bypass surgery.
35Rochelle acknowledged the distinct possibility that George will not be able to earn a meaningful livelihood on a go-forward basis to assist his own support. She agreed that his health condition was worsening.
36The parties agreed that George was the primary income earner during the marriage and that Rochelle did not work outside the home after 2002.
37The parties agreed that George earned a significant income during the course of the marriage which allowed the family to enjoy a very comfortable, if not luxurious lifestyle. This included numerous holidays, fancy meals, luxury cars, expensive clothing and furnishings of the matrimonial home, among other things.
38Rochelle agreed that George’s income allowed her to exercise the option of not working outside of the home after 2002. She also had received a sizeable inheritance upon the death of her father in the amount of approximately $800,000.
39The educational needs of the children have been and continue to be met by savings and RESP for Dana accumulated during the marriage.
40George contributed to the improvement, renovation and maintenance of all of the matrimonial homes and, in particular, the current home by paying sums of money towards items such as upgraded flooring, built-in cabinetry, hot tubs and artwork. This is not an exhaustive list.
41George paid the monthly mortgage payments on all four of the matrimonial homes occupied by the parties during the course of the marriage. However, regarding the current matrimonial home, George had paid only the interest component of the monthly mortgage instalment, leaving a mortgage balance on the matrimonial home of over $500,000.
42Rochelle has benefited from a rising real estate market over the years of the marriage, resulting in the purchase of the current matrimonial home for approximately $575,000 but resulting in its current value of $1,600,000 in a span of 13 years.
43George contributed financially with his income to pay for much of the ongoing carrying costs of the matrimonial home until November, 2016.
44Assets accumulated during the marriage, in particular, the matrimonial homes and the commercial property were registered in Rochelle’s name for liability purposes.
45George used his funds to purchase the Rochelle’s one-third interest in the Beaver Creek property and that property was registered in her name for liability purposes.
46The parties are bound by a marriage contract entered into a few weeks (at most) prior to their marriage in 1995 which provides for a separation of property. The marriage contract does not preclude either party from claiming support.
47Rochelle acknowledged and agreed with George that both parties participated together in going on numerous holidays during the marriage to locations such as Las Vegas, Niagara Falls, where they both gambled. Rochelle further acknowledged that George’s gambling was not an issue of any consequence in her mind during the entire marriage until 2016 after she had definitively decided to seek a divorce. She acknowledged that she herself gambled.
48Both parties agreed that George brought to Rochelle mortgage investments during the course of the marriage upon which she earned income.
49Both parties agreed that Rochelle voluntarily invested in ventures such as Swiss Chalet in St. Catherines, Firkin pub/restaurants and an EggSmart restaurant, which did not turn out to be wise investments. George also invested (in part) in some of these unwise investments which did not yield a positive outcome financially. Both parties agreed that Rochelle entered into these investments voluntarily without any duress.
50Both parties agreed, and Rochelle acknowledged, that George does not have any assets upon which he can rely upon to support himself. George asserted, as per his Financial Statement, and Rochelle acknowledged, that he is carrying significant credit card debts. Furthermore, George testified that even though he is not the owner of the matrimonial home or the Beaver Creek property, he is liable as a co-signer and a guarantor on the mortgages attached to those properties. Both parties agreed that Rochelle has not taken any steps to refinance those mortgages so as to relieve George of those significant obligations which impact on his credit and debt load.
51Rochelle agreed that George only has Government assistance as his sole source of income.
52Rochelle acknowledged that she might, in the future, have rental income from the Beaver Creek property, but that she is in a legal dispute with her two co-owners in this regard.
53The parties agreed that Rochelle withdrew $70,000 from their Meridian joint bank account in November 2016 ($68,000 plus $2,000) and that Rochelle has not returned half of that sum to George thereafter.
54The parties agreed that George stopped contributing to the expenses of the matrimonial home in or around November 2016 and that he moved out of the matrimonial home in January 2019.
55The parties agreed that George was a “good husband” during the marriage, in that he supported the family financially and allowed the family to maintain a very comfortable lifestyle. The parties agreed that George was and continues to be a loving father to the children of the marriage.
56Rochelle asserts that the date of separation was September 30, 2014. George asserts that the date of separation was April 30, 2016, when Rochelle advised him for the first time that she wanted a divorce.
57George asserted that the actual date of separation is immaterial in this particular case, having regard to the fact that:
(a) The parties agreed that they continued to cohabit in the matrimonial home until George moved out in January 2019;
(b) The parties agreed that they were in a long-term marriage;
(c) The parties agreed that most, if not all of the husband’s serious medical issues arose during the course of the marriage prior to separation; and,
(d) The equalization of net family property is not in issue.
58I accept all the agreed upon facts.
ISSUES
59The following issues are to be determined:
(a) Is George entitled to spousal support?
(b) If so, is he entitled to spousal support on a compensatory basis or on a non-compensatory (needs) basis?
(c) Is he entitled to payment of spousal support payable either by way of lump sum or periodic payments?
(d) How is spousal support quantified?
(e) Should Rochelle repay George the sum of $35,000?
(f) Is Rochelle entitled to child support, including s. 7 expenses for Alex? If so, what would be the quantum?
(g) Shall the Divorce Order be dealt with administratively?
(h) Costs
POSITION OF THE PARTIES
Position of the Applicant, Rochelle Steinfeld
60Rochelle seeks dismissal of George’s claim for spousal support and for reimbursement of 50% of the joint funds ($35,000) that Rochelle withdrew from the parties’ Meridian joint account in November 2016.
61She also seeks child support and s.7 expenses for Alex Koenigsberg, born May 8, 2000, in the amount of $69 per month.
62Further, she claims costs and a Divorce Order to be obtained through the normal administrative process.
63Rochelle submits that George has no entitlement to spousal support, given his conduct and fiscal irresponsibility during the marriage.
64She further claims he has no need for spousal support, as his tax-free income consists of CPP, OAS and GIS, which amounts to $27,500 per year. She states this is more than her income, which until recently was no more than $15,000 per year.
65Rochelle contends that George has only himself to support. He pays no child support or s. 7 expenses, aside from paying the children’s cell phone bills. Whereas, Rochelle has been supporting herself, her children, their school costs and the costs of operating the matrimonial home.
66She further asserts that George depleted a significant portion of the parties’ funds through gambling and reckless lost investments. Rochelle contends that George invested approximately $125,000 of her inheritance funds in a company called Fast Access Finance. George then sold Rochelle’s investment for 50% of what had been invested (ie: $62,500). Rochelle alleges that George fraudulently appropriated these funds, rather than returning them to her, although he did return a small portion to her later.
67It is Rochelle’s position that George did not provide for his own savings. He is in the position that he finds himself due to his own fiscal irresponsibility and mismanagement. She has not worked since 2002, although she has diligently and actively sought employment since separation. Rochelle submits that she requires her home, her assets and her minimal income to support herself during her retirement and Alex as he completes his education.
68Further, Rochelle submits in the circumstances of the case, there is no entitlement to spousal support; there is no need for spousal support; and she does not have the ability to pay spousal support to George as Alex and his education must take priority. She denies George’s assertion that she has the “means” to pay him spousal support out of her assets. Further she denies she acted in bad faith and there is no evidence on which to impute income to her of $100,000.
69Rochelle maintains that George is indirectly trying to do what he could not do directly. George seeks to obtain a division of assets in the guise of spousal support, which he is not permitted to do in law. Property division and support are different instruments in law, designed for different purposes.
70Lastly, Rochelle asserts George should be paying child support and s. 7 expenses, rather than claiming support for himself.
Position of the Respondent, George Koenigsberg
71George asserts that the court has jurisdiction to order a lump sum of spousal support payable out of Rochelle’s assets even though she does not currently have an income which would otherwise result necessarily in an order for periodic support. This approach would be preferable for the following reasons:
(a) A lump sum payable to George would constitute a “clean break” which is often promoted by the courts as a basis, in part, for ordering lump sum support;
(b) Rochelle has shown a callous disregard for the well-being of George after a long-term marriage and therefore the court should be concerned that if an order is made for periodic support, Rochelle will relitigate the issue with George in the future by way of a Motion to Change; and,
(c) A periodic spousal support order may result in a claw-back to George of some or all of his OAS benefits.
72George takes the position that the court does not necessarily have to arrive at an obligation by Rochelle to pay a monthly amount of support before it can consider an order for lump sum support.
73George asserts that, in the alternative, the court can order Rochelle, in law, to pay a periodic amount of support to address his proposed monthly budgetary deficit even if that monthly payment comes out of assets. A Divorcemate calculation was provided in his written submissions demonstrating what Rochelle would need to pay to George to assist him to meet his monthly deficit on a net basis.
74George asserts that the order for lump sum support which he seeks does not constitute a request for a division of net family property under the guise of an order for support. George would have had a far greater entitlement had he been capable of claiming a division of net family property.
75George asserts that he has a monthly deficit of $5,416.79, as per his proposed “reasonable” budget.
76George submits that although nobody knows how long he will live, it is not unreasonable to provide for his support on a lump sum basis over a ten-year period. The $500,000 which is being requested would not even cover a full ten years of his monthly deficit.
77Alternatively, George asserts that an order for monthly spousal support out of assets in the amount of $8,360 on a gross basis would address his monthly deficit on a net basis. See his Divorcemate calculation. The income ascribed to Rochelle in the calculation is immaterial because the monthly payment would be paid primarily out of assets as opposed to out of income. The calculation demonstrates that an approximate payment of $8,360 per month would result in a net to the husband of an amount which would approximately address his proposed budget.
78George also seeks an order compelling Rochelle to repay him $35,000, being 50% of the joint funds that she unilaterally withdrew from the parties’ Meridian joint bank account in November 2016, as an incident of support.
79George submits evidence of his need for spousal support is overwhelming. Also, he submits evidence of his significant illness is acknowledged and is overwhelming. He asserts that he does not have any meaningful ability to support himself, given his age and medical challenges. Effectively, he claims he is disabled.
80Further, George submits that income of $100,000 should be imputed to Rochelle. He alleges bad faith on the part of Rochelle in attempting to mislead the court about ownership of $300,000 of savings concerning the RBC investments (Rochelle claims this money belongs to her sister, Millie, who lives in Israel). There is a conflict in Rochelle’s financial statements. George asserts this impacts her credibility. He contends that Rochelle could pay $300,000 out of these savings to assist him without any impact on her day-to-day standard of living.
81George asserts he is at the centre of a “perfect storm” where a number of factors have combined to leave him seriously ill, disabled, unable to work and without the financial means to support himself, absent spousal support.
82Given the long-term nature of the marriage, he claims that he is entitled to spousal support based on both need and support compensatory in nature.
83George submits the compensatory aspect of this case arises from the arrangement which the parties agreed to during the course of the marriage. Rochelle was not disadvantaged by being out of the work force and caring for children. Rather, the parties agreed to an arrangement whereby George’s income, which was significant, was used to support the family in a very luxurious lifestyle while allowing Rochelle to save and accumulate significant assets. This division of labour, so to speak, resulted in George becoming economically disadvantaged as a result of the marriage. This was not an arrangement which left Rochelle economically disadvantaged, but by way of contract, left George economically disadvantaged.
84Further, George asserts spousal support is to be analyzed by looking at the “means” of the parties, including capital assets. He contends that assets can be considered in the payment of spousal support by one spouse to another. The discretion of the court to satisfy need based on a lump sum spousal support award is extremely broad and discretionary in nature.
85George submits that while he has great and desperate financial need, Rochelle has the ability to pay spousal support given her “means” which includes significant assets to satisfy George’s needs.
86Regarding child support, George asserts there is no entitlement as Alex’s educational needs are provided by his education funds and OSAP.
ANALYSIS
(a) Is George entitled to spousal support?
Principles and Approach
87This is the essential question at issue. In this regard, some comment regarding principles and approach would be useful.
88The parties agree that the Marriage Contract does not bar George’s claim for spousal support or child support. This being said, the Marriage Contract in all other respects remains binding on the parties. The parties agree that this court has jurisdiction to make lump sum support orders.
89However, an issue has arisen as to jurisdiction – whether the Divorce Act, (R.S.C., 1985, c. 3 (2nd Supp.)), or the Family Law Act, R.S.O. 1990, c. F.3, applies. Rochelle submits that the Divorce Act applies. George submits that both acts apply.
90The Trial Record discloses that in her Application, Rochelle sought a divorce and support under the Divorce Act as well as support under the Family Law Act. In his Answer, George agreed with Rochelle’s claim for a divorce. He also sought a divorce and support under the Divorce Act and spousal support under the Family Law Act.
91George relies upon the following statutory provisions granting the court jurisdiction to order lump sum spousal support pursuant to the Family Law Act and the Divorce Act.
92Section 33(1) of the Family Law Act provides that “[a] court may, on application, order a person to provide support for his or her dependants and determine the amount of support.”
93Section 33(8)(c) of the Family Law Act provides that a court may “make fair provision to assist the spouse to become able to contribute to his or her own support.”
94Section 33(8)(d) of the Family Law Act provides that a court may “relieve financial hardship, if this has not been done by orders under Parts I (Family Property) and II (Matrimonial Home).”
95Section 33(9) of the Family Law Act provides that,
“in determining the amount and duration, if any, of support for a spouse… the court shall consider all the circumstances of the parties, including,
(a) the dependant’s and respondent’s current assets and means;
(b) the assets and means that the dependant and respondent are likely to have in the future;
(c) the dependant’s capacity to contribute to his or her own support;
(d) the respondent’s capacity to provide support;
(e) the dependant’s and respondent’s age and physical and mental health;
(f) the dependant’s needs, in determining which the court shall have regard to the accustomed standard of living while the parties resided together;
(g) the measures available for the dependant to become able to provide for his or her own support…
96Section 33(10) of the Family Law Act provides that, “[t]he obligation to provide support for a spouse exists without regard to the conduct of either spouse, but the court may in determining the amount of support have regard to a course of conduct that is so unconscionable as to constitute an obvious and gross repudiation of the relationship.
97Section 34(1) (b) and (c) of the Family Law Act provides that:
34(1) In an application under section 33, the court may make an interim or final order,
(b) requiring that a lump sum be paid or held in trust;
(c) requiring that property be transferred to or in trust for or vested in the dependant, whether absolutely, for life or for a term of years;
98Section 15.2(1) of the Divorce Act provides that:
A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse.
99Section 15.2(4) of the Divorce Act provides that:
In making an order under subsection (1) … the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including
(a) the length of time the spouses cohabited;
(b) the functions performed by each spouse during cohabitation
100Section 15.2(5) of the Divorce Act provides that “In making an order under subsection (1) … the court shall not take into consideration any misconduct of a spouse in relation to the marriage.”
101Section 15.2(6)(a) and (c) of the Divorce Act provides that:
(6) An order made under subsection (1) … that provides for the support of a spouse should
(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage;
102Rochelle submits the Divorce Act provisions regarding divorce and support apply. They are paramount and George’s claims under the Family Law Act are stayed.
103Section 36(1) of the Family Law Act provides that:
Effect of Divorce Proceedings
36(1) When a divorce proceeding is commenced under the Divorce Act (Canada), an application for support under this Part that has not been adjudicated is stayed, unless the court orders otherwise.
104I find the pleadings disclosed that Rochelle is seeking spousal and child support as corollary relief pursuant to the Divorce Act. Similarly, George also seeks a divorce and spousal support as corollary relief pursuant to the Divorce Act. This means that any application for support under the Family Law Act remains stayed under s. 36(1) of the Family Law Act. The Divorce Act (federal legislation) is paramount to the Family Law Act (provincial legislation) as a result, ss. 15.2(1), (4), (5), (6) apply and not the Family Law Act provisions cited by and relied on by George2.
105In Fisher v. Fisher, 2008 ONCA 11, 2008 CarswellOnt 43, ONCA, the Ontario Court of Appeal addressed the objectives of spousal support – needs and compensation, and the use of the Spousal Support Advisory Guidelines (“SSAGs”).
106At paragraph 103, the court stated:
In my view, when counsel fully addresses the Guidelines in argument, and a judge decides to award a quantum of support outside the suggested range, appellate review will be assisted by the inclusion of reasons explaining why the Guidelines do not provide an appropriate result. This is no different than a trial court distinguishing a significant authority relied upon by a party.
107In the SSAGs, the Revised Users Guide, Professors Carol Rogerson and Rollie Thompson discuss the principles of entitlement as follows:
Entitlement (SSAG Chapter 4)
(a) The principles of entitlement
- Compensatory claims are based either on the recipient’s economic loss or disadvantage as a result of the rules adopted during the marriage or on the recipient’s conferral of an economic benefit on the payor without adequate compensation.
Common markers of compensatory claims include: being home with children full-time or part-time, being a “secondary earner”, having primary care of children after separation, moving for the payor’s career, supporting the payor’s education or training; and working primarily in a family business.
- Non-compensatory claims involve claims based on need. “Need” can mean an inability to meet basic needs, but it has also generally been interpreted to cover a significant decline in standard of living from the marital standard. Non-compensatory support reflects the economic interdependency that develops as a result of a shared life, including significant elements of reliance and expectation, summed up in the phrase “merger over time”.
Common markers of non-compensatory claims include: the length of a relationship, the drop in standard of living for the claimant after separation, and economic hardship experienced by the claimant.
(b) Is George entitled to spousal support on a compensatory basis or on a non-compensatory (needs) basis?
Is George entitled to spousal support on a compensatory basis?
108In his written submissions, George seeks an order that Rochelle pay him $500,000 in lump sum spousal support, both compensatory and otherwise under the Family Law Act and the Divorce Act out of assets. George advances both a compensatory and non-compensatory claim for spousal support paid out of Rochelle’s assets. I have found that the provisions of the Divorce Act are paramount, and in particular, ss. 15.2 (1), (4), (5) and (6).
109For the following reasons, I find that George is not entitled to spousal support on a compensatory basis. Rochelle and George have a long-term marriage of some 25 years. I find clear and undisputed evidence that George was able to work as a mortgage agent using Rochelle’s mortgage broker’s licence since 2004 to benefit his career, with Rochelle maintaining the parties’ home and caring for the children as a homemaker. This living arrangement was agreed to by the parties who enjoyed a high lifestyle. There were no discussions about the need for Rochelle to return to work outside the home and at the same time, undertake the role as homemaker at any time before the birth of the children, particularly Alex.
110I find George suffered no economic disadvantage as a result of the marriage. He was able to work as both a mortgage agent and cantor. He pursued employment and business opportunities as he wished.
111Rather, I find Rochelle sacrificed her career ambitions of working in IT in order to maintain the parties’ home and care for their children. On the date of the marriage, it is clear that George had debt of approximately $600,000. After marriage, he declared bankruptcy, the effect of which was to eliminate that debt.
112In arriving at the conclusion that George is not entitled to a compensatory claim, for spousal support, I have considered s.15.2(4)(a) of the Divorce Act, the length of time the spouses cohabited; and s. 15.2(4)(b), the functions performed by each spouse during the cohabitation.
113I have considered the relative economic advantages and disadvantages to the spouses arising from the marriage or its breakdown. See Divorce Act s. 15.2(6)(a) and (b).
114I have also considered the relief of any economic hardship of the spouses arising from the breakdown of the marriage. The evidence establishes that Rochelle and George both suffered economic hardship arising from the marriage breakdown.
115I am not persuaded in these circumstances that George suffered economic loss or disadvantage as a result of the roles he and Rochelle adopted during their marriage. Neither am I satisfied that George conferred an economic benefit on Rochelle without adequate compensation in return. While it is true that he was the primary breadwinner who provided the family with a high lifestyle, he would not have been able to do so without Rochelle’s assistance and contribution.
116Accordingly, I find George is not entitled to spousal support on a compensatory basis.
Is George entitled to spousal support on a non-compensatory (needs) basis?
117George submits that he is entitled to lump sum spousal support on a non-compensatory basis payable out of Rochelle’s assets. He asserts that he has need and Rochelle has the ability to pay out of her assets.
118Rochelle submits that George is not entitled to lump sum spousal support payable out of her assets. She had originally taken the position that George was not disabled and could work to earn income. However, in her cross-examination, she did acknowledge that there was a distinct possibility that he would not be able to work in a meaningful manner in the future on a go-forward basis and that his ill health was worsening.
119As for the ability to pay, Rochelle maintained that George’s income was greater than hers, that his own bad investment decisions and gambling put him in the condition he now finds himself and his proposed budget is inflated. She denies he is entitled to lump sum support payable out of her assets. She agrees this would be nothing more than re-distributing assets in the guise of spousal support, which is impermissible.
120Rochelle submits that should the court find George is entitled to spousal support, it should be on a non-compensatory basis alone. Based on this entitlement, she contends that quantum should be determined based on income generated from income producing assets and, further, based on the low range of the SSAGs.
Has George established that he is in need of spousal support?
• George’s Health
121For the following reasons, I find that George has established that he is in need of spousal support.
122George’s Medical Brief (Exhibit 4) was admitted for the truth of its contents, on consent, together with Dr. Felsen’s letter, dated August 16, 2018 and the MRI Image Report, dated May 13, 2019.
123I find the documentary evidence establishes the significant medical challenges faced by George and confirmed by Dr. Felsen, who signed off on a disability certificate for Canada Revenue Agency. All of this evidence is uncontroverted and undisputed.
124With the exception of George’s congestive heart failure, which had its possible origins before the parties married, almost all of his illnesses occurred during the course of the marriage. He suffered from a number of strokes which left him with residual disability. He suffered from cardiac disease, requiring heart surgeries. He suffered from diabetes and congestive heart failure. He has suffered from cancer and continues to suffer from vertigo/balance issues.
125I find that George’s medical condition has deteriorated over the years of the marriage. I find he is disabled and can no longer work as a mortgage agent or cantor. Further, I find that on the basis of the documentary evidence, his evidence and the evidence of Rochelle, George is disabled and cannot work.
126I accept George’s evidence that he cannot work as a cantor. He has now lost hearing in his left ear. To sing in a synagogue, he is required to stand, which he cannot do for more than 10 or 15 minutes. I accept that he cannot work as a mortgage agent. He has lost contact with lenders and he now experiences problems. He experiences fatigue and feels exhausted all the time. He cannot drive for more than an hour at a time and he cannot sit for more than a couple of hours. I find he is impacted by his medical issues with the result that he sleeps a lot.
127In her cross-examination, Rochelle acknowledged that George’s medical condition was worsening. She conceded that there was the distinct possibility that he would not be able to work in a meaningful manner in the future on a go-forward basis. I reject entirely Rochelle’s position that George currently can work or that he will be able to work in the future.
128I find that the evidence is overwhelming that George’s medical condition, the majority of which occurred during the marriage, has left him disabled, unable to work and consequently in need.
• George’s Financial Need
129I have also considered George’s financial circumstances and further find that he is in financial need. I make this finding based upon George’s evidence as it related to his Financial Statement sworn May 9, 2019.
• Allegations of George’s Financial Mismanagement and Gambling
130Much time was spent at trial by the parties regarding George’s risky failed investments and excessive gambling at casinos with the effect that this conduct depleted the family’s income. More to Rochelle’s point, George finds himself in the position that he is in because of his own financial and personal failings.
131In response, the evidence discloses that George brought investments to Rochelle. She voluntarily invested her own money from her investments or inheritance and suffered losses. George also suffered losses from these investments, and not just Rochelle alone.
132As for George’s gambling, the evidence discloses that he was more than a recreational gambler. He gambled substantial amounts of money at various casinos in Ontario and Las Vegas. He had lost significant amounts of money. Notwithstanding his evidence that he often won, he admitted to having lost money in the end, although not as much as Rochelle alleges. George also testified (which was confirmed by Rochelle) that she also gambled with him and never protested about his gambling or their many trips to various casinos (where they were “comped”) until after separation. He testified that Rochelle voluntarily made losing investments and also gambled during the course of the marriage. I find this negates her contention that George depleted assets without her consent and participation.
133While Rochelle contends that George is the author of his own financial misfortune and is the creator of his own need, I reject this position based upon s. 15.2(5) of the Divorce Act, which provides that “[i]n making an order under subsection (1) … the court shall not take into consideration any misconduct of a spouse in relation to the marriage.”
134As directed by the mandatory provision of s. 15.2(5) of the Divorce Act, I have not taken into consideration any evidence of George’s alleged misconduct as it pertains to financial mismanagement and gambling.
• George’s Income
135Rochelle accepts that George’s income is approximately $27,500 per year, or about half of the income he earned while he was working, as set out in his 2010 to 2014 Income Tax Returns. This income comes from CPP, OAS and GIS. George’s Income Tax Returns can be found at Exhibit 5 and a schedule of George’s Line 150 income for 2005 to 2017 can be found at Exhibit 13, Tab 3.
136I accept that his pension income is his sole source of income and that he has no savings.
137Rochelle’s income for her support is derived from investments, rental income and, as at the beginning of 2019, RRSP withdrawals to survive on a day-to-day basis. Rochelle’s income, according to her 2018 Income Tax Return, is the sum of $15,263.96. Her Financial Statement, sworn May 8, 2019, discloses income in the amount of $15,333.60.
138One of Rochelle’s claims is that as George’s income is greater than hers, she is not obliged to pay him any spousal support. To the contrary, he owes her child support for Alex. She challenges his inflated budget in his Financial Statement. She disputes his claim for accommodation, that credit card debt ought to be restructured and reduced, and that he should not be paying the children’s phone bills or that he should be paying insurance premiums for all of his children, not just for Dana and Alex.
139George testified he cashed in his tax-free savings account and a refund from a condominium transaction. He lives off these funds and currently lives off his numerous credit cards. His evidence was that his current budget is not sustainable to meet his monthly needs and that he finds himself in a monthly deficit position. He has no investments of any value and no savings.
140I am satisfied on all the evidence that George has proven that he is in financial need of spousal support.
• Rochelle’s Ability to Pay
Rochelle’s Income
141Rochelle testified about the Marriage Contract which made provision for family property and assets in her favour. She testified about her income from investments and rental income from the matrimonial home, further detailed in her four Financial Statements filed. Her last Financial Statement, sworn May 8, 2019, can be found in the Supplementary Trial Record at Tab 5.
142In respect of rental income, her total monthly income in accordance with her Financial Statement, sworn May 8, 2019, is the sum of $15,333.60. She also derives income from the withdrawal of RRSPs in the amount of $1,500 per month, along with small interest and investment income.
143Currently, she rents three rooms in the matrimonial home to students – two units at $750 per month each and one unit at $825 per month (available only as of the spring 2019), for a maximum gross rent in the amount of $27,900. Assuming an occupancy rate of 60%, and based on her 2018 occupancy rate of the same figure, and her 2018 Income Tax Returns, maximum rent for the year for two $750 units was $18,000.
144The estimated rent for 2019, based on 60% of maximum yearly rent of $27,900, is the sum of $16,740.
145She testified that she has deducted mortgage interest attributable to rental expense at 33%, in the amount of $7,824. Also, she has deducted utilities attributable to rental expenses ($1,090 allocated to rentals in 2018). Further, she has deducted property taxes allocated to rentals ($2,529 in 2018 as per her Income Tax Statement and the same amount is used for 2019 calculations).
146Rochelle maintains that her net rental income for 2019 is expected in the amount of $4,887.
147In addition to the net rental income of $4,887, Rochelle may be expected to have the following income in 2019, based on the figures set out in her 2018 Income Tax Return:
Dividends
$4,856.39
Interest and other investment income
$2,118.33
RRSP Income (assuming $1,500 per month as she has just commencing withdrawing from her RRSPs to meet day to day expenses commencing in the winter of 2018)
$18,000
Other income
$6,875
Total Expected Income:
$36,736
148In the event that RRSP withdrawals are not to be included in Rochelle’s income for the purposes of support calculation as argued below, Rochelle submits that she has an estimated income of $18,736.
149Therefore, Rochelle submits the range of her income for purposes of the calculation of spousal support would be $18,736 to $36,736.
150I accept and find that the range of Rochelle’s income for the purpose of calculating spousal support is between $18,736 and $36,736.
Rochelle’s Assets
151Rochelle’s Financial Statement, sworn May 9, 2019, provides an accurate and up to date reflection of her financial assets at the time of trial. This is located at the supplementary trial record, tab 5.
152In total, Rochelle has a net worth of $1,698,471. This includes the equity in the matrimonial home of about $1,078,000 (Home value of $1,600,000 less $521,250 Home Equity Line of Credit). She has liquid assets of approximately $636,990, $375,000 which are in the form of RRSPs.
153George claims that Rochelle has assets totalling $2,600,000. I find this is wrong. This does not take into account the sizeable mortgage debt held by Rochelle of over $500,000 (George testified that he paid the mortgage, in fact he only paid mortgage interest, and there has not been a reduction in the mortgage capital) and George attempts to impute assets to Rochelle which are not hers.
154Rochelle testified that the current matrimonial home was purchased initially with her funds, both from the equity she held in her home that she brought into the marriage, and from inherited funds. This is consistent with the evidence presented that on the date of marriage; according to the Marriage Contract, George had a negative net worth of ($605,000). George’s arguments regarding his contributions to the matrimonial home at or about the time of purchase are inconsistent with the evidence.
155Rochelle has not committed to selling the matrimonial home. She has three renters that provide a source of income for her. The parties’ son, Alex, as well as their daughter, Dana, still return home during weekends, vacations and holiday periods from time to time.
156Rochelle testified that most of her liquid assets held on the date of separation, aside from RRSPs that she held on marriage, may be traced to her inheritance from her father. This is consistent with the evidence whereby Rochelle testified she had not worked since 2002. She would not have had funds of her own to contribute to her savings after she stopped working. In fact, according to Rochelle, much of her inheritance was lost in investments recommended to her by George.
157George argues that Rochelle has not traced her current investments to the inheritance. This is not a case of equalization of net family property. I find, Rochelle had no obligation to trace her investment funds to her inheritance, nor at any time during this lengthy proceeding was she requested to do so.
158George has not requested that Rochelle provide a formal appraisal for the Beaver Creek property. None was requested, nor did Rochelle believe any was required, as this is a support case, and not an equalization of net family property case. Rochelle stands by her estimated value of $200,000 for her share, and there is no evidence presented by George that this is not the correct value.
159George makes much of the fact that he remains as a debtor on loans/mortgages attached to the matrimonial home and Beaver Creek property. I find George could have requested an order that he be removed from these obligations, but he did not. This issue was not mentioned prior to trial and was not listed as an issue for trial. Further, George has no assets and minimal income. His exposure to liability as a result of these debts is nil.
160There was an issue presented at trial with respect to ownership of Millie's money. Millie is Rochelle’s sister. Rochelle testified that she holds an investment in trust for Millie in the amount of $301,835 with RBC that results from Millie’s inheritance from Rochelle’s father. Rochelle testified that other than placing Millie’s money in investments recommended by George (that were lost) she has not used any of Millie’s money for her own purposes.
161Mr. Liquornik argues that Rochelle has mislead the court regarding the nature of this investment, as in prior financial statements Rochelle neglected to put down that the funds were held in trust for Millie.
162Rochelle vehemently denies that the funds in question are hers, and not Millie’s. I find the funds belong to Millie. Rochelle has no reason to misrepresent the ownership of the funds, as this is a support case, and not an equalization of net family property case. The fact that the funds were held in trust for Millie was stated on Rochelle’s Financial Statements as of May 2018. George requested no disclosure on this issue and admitted for purposes of the Trial Scheduling Conference that there was no disclosure outstanding. For George to argue at this late date that Millie’s funds actually belong to Rochelle is disingenuous.
163In any event, I do not question Rochelle’s credibility. I find that she had been honest throughout and fairly represented evidence to the Court.
164However, there is some question as to George’s conduct. George admitted under oath to forging Rochelle’s signature on the waiver of independent legal advice form for the Fast Access investment, and then picking up Rochelle’s share of the return on the investment ($62,331.76) and forging her name on the receipt of the funds. This evidence of George’s forgery of documents is located at Exhibit 13, tab 48.
165According to Rochelle, it is this dishonesty and arguably criminal behaviour on the part of George and failure for him to come clean on the parties’ financial situation, that led to the breakdown of the marriage, and not George’s illness or so called “perfect storm” as alleged by George.
166Rochelle testified that she had lost a good part of her inheritance investing in investment schemes presented to her by George, as did her sister, Millie. According to her evidence, she lost $415,553 in principal from 2008 to present in investments suggested to her by George. George admitted that he in fact lost more. Rochelle agreed that she voluntarily placed her money in the investments; however, she also admitted that she believed in George’s advice on the investments and risks associated with the investments, and invested accordingly. Evidence of Rochelle’s losses in investments is set out at Exhibit 13, Tab 7.
• Allegations of Rochelle’s Lack of Compassion and George’s “Perfect Storm”
167Put to Rochelle was the “perfect storm” characterization by George’s counsel – the “perfect storm” in which George now finds himself. During the trial, Rochelle was questioned repeatedly by George’s counsel about her lack of compassion for George. Put to her was the proposition that if she had compassion, this would lead to a moral obligation to pay George spousal support. She repeatedly denied any obligation to pay George any spousal support and definitely not pay him spousal support out of her assets.
168Rochelle’s counsel submitted that based on the evidence at trial, Rochelle had shown compassion and that George’s predicament and the depth of that predicament was characterized as a “predictable storm”.
169The following points were advanced for consideration regarding the issue of Rochelle’s compassion for George:
(a) Rochelle lost a significant amount of her inherited savings ($415,000.00) as a result of risky investments that George recommended, that were brought to her attention by George and she testified that she trusted George and his advice. Rochelle admits that she voluntarily made these investments, but also that she had trust in George to explain all the risks to her, which he did not. Her sister, Millie, also lost a sizeable portion of her investments, as did other members of Rochelle’s family. (Exhibit 13, Tab 7)
(b) Rochelle has been named in lawsuits along with George for business matters in which George had been involved. Whereas George has no assets to realize upon, Rochelle has the matrimonial home that could satisfy a judgment debt against her. She had to pay counsel at her own cost to defend the claims including a motion for the certificate of pending litigation to be placed on the matrimonial home.
(c) George forged Rochelle’s signature on the Fast Access investment documents in 2015, and denied her the right to obtain independent legal advice when he admittedly signed her signature on the waiver of independent legal advice form. As a result, Rochelle lost $96,000.00 on this investment, and George pocketed the $62,331.00 that was supposed to be returned to her. (Exhibit 8, Tab 48)
(d) Rochelle alleged that George depleted funds from the joint savings account in 2016 at which time she was left with the financial responsibility to care for the home and children alone. George used the funds gambling and attending at casinos.
(e) Rochelle testified that the separation was precipitated in large part by George not being honest with Rochelle about their financial situation, nor the debts that he held.
(f) Rochelle was denied potential rental income after separation as George refused to obtain a clearance check necessary for Rochelle to take part in the student housing program.
170With respect to the issue of the "perfect storm" as stated by George, Rochelle takes the position that the financial position in which George now finds himself was entirely predictable for the following reasons:
(a) George has suffered from illness for many years, and the fact that he would reach retirement age and not be in good health was entirely predictable,
(b) George preferred risky investments and a high life style which included gambling, and rejected modest returns from RRSPs and GICs in favour of big risk/big returns, which were colossal failures.
(c) George made no effort to account for his earnings or income. He co-mingled his personal and business accounts. He handled his money as if he had no concern for his future at all. Rochelle asserts it is impossible to determine what George did with his money, and one cannot conclude on the evidence that George spent almost all of his earnings to provide Rochelle and family with an excellent standard of living.
(d) George signed the Marriage Contract voluntarily. At the time of the execution of the Marriage Contract, he was on the verge of bankruptcy and in fact declared bankruptcy shortly thereafter. The intent of the Marriage Contract was to preserve Rochelle’s financial well-being and property in the event of further financial mismanagement by George. Rochelle contends that George cannot now state that the Marriage Contract works against him, so he is entitled to property division disguised as a spousal support claim.
171While context is important in order to fully understand the parties on the spousal support issue, the obligation to pay spousal support on compassionate grounds out of Rochelle’s assets is not one of the enumerated grounds that form the basis of spousal support pursuant to s. 15.2(6) of the Divorce Act.
172I find, for legal purposes, the notion of compassion based either on the “perfect storm” or “predictable storm” characterizations is not relevant. To introduce compassion as a moral obligation on which to found spousal support entitlement is not what is intended by the Divorce Act. I find the Divorce Act specifically excludes compassion as a basis upon which to order spousal support.
173To be clear, I am not obliged to make any finding as to whether or not compassion or lack of it, “perfect storm” or “predictable storm” have any bearing on the entitlement of spousal support claimed by George. I find these arguments are ultimately of no assistance to the court in determining spousal support for George.
174I return to the critical question of whether Rochelle has the ability to pay spousal support to George. He has demonstrated need. Is she obligated to pay spousal support, if at all, out of her income or assets. She asserts that she is not obligated to pay spousal support out of assets. George claims that she ought to pay him lump sum spousal support or, in the alternative, periodic support out of her assets. This is the fundamental dispute at trial.
175In considering s. 15.2(4) of the Divorce Act, George argues that the court shall consider the means of Rochelle and these means include her assets, which are available to satisfy spousal support. On the other hand, Rochelle argues that her income and income derived from assets and not the assets themselves ought to be considered by the court in determining spousal support. Rochelle further contends (which George denies), that George seeks to transfer her assets/capital in the guise of support and accordingly, his relief is barred for want of jurisdiction.
Discussion – Rochelle’s Ability to Pay
176Chapter 6 of the Revised User Guidelines – SSAGs provides:
The starting point for the determination of income under the Spousal Support Advisory Guidelines is the definition of “income” under the Federal Child Support Guidelines. For the most part, the income issues are the same as those for child support purposes, i.e. interpreting the provisions of sections 15 to 20 of the Child Support Guidelines and Schedule III.3
177The determination of annual income is set out in the Federal Child Support Guidelines at s. 15 as follows: “Subject to subsection (2), a spouse’s annual income is determined by the court in accordance with sections 16 to 20.”4
178The calculation of annual income can be found at section 16, as follows: “Subject to sections 17 to 20, a spouse’s annual income set out under the heading “Total Income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with Schedule III.”5
179Under the Divorce Act, there is no authority to support the transfer of assets/capital in the guise of support.
180The law treats income producing assets versus non-income producing assets differently in view of calculating spousal support as follows:
(a) There is a difference between considering capital/assets in determining a payor’s means (ie: ability to pay support) and using capital/assets to determine the quantum of support payable; and,
(b) Non-capital producing assets are not considered income for the purposes of calculating spousal support - only income producing assets are relevant.6
• Imputation of Rochelle’s Income
181George seeks to impute income to Rochelle of $100,000.
182I find that George’s claim that Rochelle’s income should be imputed in the amount of $100,000 is incorrect. George alleges that because Rochelle once made $100,000 per year early in their marriage, that she is intentionally under-employed and income should be imputed to her under s. 19(1)(a) [of the Federal Child Support Guidelines]. As stated in the Ontario Court of Appeal case of Homsi v. Zaya7, “the onus is on the person requesting an imputation of income to establish an evidentiary basis for such a finding.” George provides no other evidence to support his claim except for the historic income information.
183I disagree with George’s claim, which is not supported by the evidence.
184I accept the evidence of the parties that Rochelle has not worked for 20 years. She provided her mortgage broker licence to George when he worked as a mortgage agent. For a very short time, she worked for Elections Canada. I find there was no evidence presented by George that Rochelle was not using her capital in a reasonable manner to generate income. At age 59, she is drawing down on her RRSP to survive, which is not unreasonable. There was no evidence presented by George as to what the rental income was, is or could be derived from the Beaver Creek investment. This very issue is in dispute between the co-owners of this investment, including Rochelle.
185I find George’s income imputation in the amount of $100,000 per year for Rochelle is wholly unfounded on the evidence before the court.
186There is no evidence that she was intentionally under-employed or unemployed. Rather, I accept Rochelle’s evidence that she applied for positions since the date of separation but has not been successful in obtaining a position in line with her skills and capacities.
187The evidence before the court was that the only position Rochelle could secure to date was based on a 100% commission-based pay. Considering Rochelle’s advanced age, long absence from the workforce during the parties’ marriage and limited experience in sales, I find it is extremely unlikely that such a position would allow Rochelle to earn $100,000 per year.
• Income Producing Assets v. Non-Income Producing Assets and Their Role in Spousal Support
188The Supreme Court case of Leskun v. Leskun defines the term “means” in s. 15.2(1) of the Divorce Act to include, all pecuniary resources, capital assets, income from employment or earning capacity, and other sources from which the person receives or gains benefits”. Rochelle submits that the court will consider a payor’s capital/assets as part of their means, when assessing the ability to support.8
189The facts in Leskun are distinguishable from the parties’ matter on a very critical level. Leskun dealt with a motion to change by the payor to terminate his spousal support obligations on the basis that he no longer had an income. It did not deal with a de novo application for support as is the case here where quantum is an issue.
190In this case, George is asking the court to calculate quantum based on the value of Rochelle’s capital/assets, rather than on her income. I find there is no basis in law for calculating the quantum of support payable based on capital rather than income. The Supreme Court in Leskun never relied on the value of the payor’s assets to determine the amount of support payable.
• Non-Capital Producing Assets are NOT Considered Income for the Purposes of Calculating Spousal Support
191The Superior Court of Justice in Laurain v. Clarke, 2011 ONSC 7195 makes the following helpful comments regarding Leskun and how the definition of “means” relates to income and determining spousal support9:
44The Supreme Court of Canada in Leskun v. Leskun, in 2006, held that a capital asset is part of a payor spouse’s “means.” The court may therefore base the amount of support which a payor must pay on the income that an asset, such as money in the bank, a pension, trust, or annuity, is capable of generating.
45I interpret the Court’s decision in Leskun to mean that a capital asset that a person receives in the form of periodic payments should not itself be treated as income for the purpose of calculating support, but should be treated as part of his means, so that the income which it is reasonably capable of generating should be included in his income for the purpose of calculating his support obligation. [emphasis added]
192Following the reasoning in Leskun and Laurain, I find that Rochelle’s assets are not considered income for the purpose of calculating spousal support. Income and capital are different concepts and have different rules within the spousal support regime. The capital asset itself is not treated as income for support purposes10.
193I have previously referred to s. 16 of the Federal Child Support Guidelines (Guidelines) regarding the calculation of income. Both the Family Law Act and the Divorce Act direct the court to base its determination as to the quantum of spousal support on a payor’s income.11
194Section 19(1) of the Guidelines provides the court with a list of circumstances in which income can be imputed outside of the definition in s.16.
195Section 19(1)(e) of the Guidelines allows the court to impute income when a payor’s property is not reasonably utilized to generate income. As I have found, there is no evidence that Rochelle did not reasonably utilize her property to generate income. By way of example, she rents rooms in the matrimonial home to students. She also earns interest from her assets and investments.12
• The Court Should Not Require Rochelle to Deplete her Capital to Pay Support
196George’s argument in paragraph 73 of his submissions that the court need not be concerned regarding how Rochelle could pay the spousal support amount. Rochelle disagrees. I accept her position supported by the following authorities. The Court in Laurain stated: “While the court is entitled to take into consideration the means of the parties, including their capital assets, a party should not be required to pay spousal support out of his savings or to deplete his capital for that purpose.”13 [Emphasis Added].
197The court has stated in Rivard v. Hankiewicz, 2011 ONSC 2988: “The guidelines scheme does not presume that parties are obligated to use capital for support purposes, although it does allow income to be imputed to a payor who does not make appropriate use of capital to generate income.”14
198Additionally, the Ontario Court of Appeal in Bak v. Dobell, 2007 ONCA 304 clearly states that “A payor is not expected to sell capital assets, such as a house and car, for the purpose of generating income from which to pay support, unless the “property is not reasonably utilized to generate income…”15
• Rochelle’s Income Producing Capital
199Rochelle respectfully submits that her assets are being reasonably utilized to generate income:
(a) Her home is rented out to tenants which produces a rental income;
(b) She earns reasonable income on her investable assets;
(c) The Beaver Creek property would be producing rental income. However civil litigation amongst her co-partners have made this difficult - this is largely out of Rochelle’s control; and
(d) Rochelle is drawing on her RRSPs as income even though she is only 59 years of age.
200I find Rochelle is utilizing her capital assets to generate income.
201Ultimately, I conclude that George is entitled to spousal support on a non-compensatory (needs) basis.
202While I have found George has financial need, upon consideration of all the evidence concerning Rochelle’s finances, she has the ability to pay spousal support, given her means. Ultimately, I conclude that George is entitled to spousal support. His support is based upon Rochelle’s income and income derived from her assets and is not based on the value of the assets themselves.
(c) Is George entitled to spousal support either by way of periodic or lump sum payment?
203Rochelle submits that an award of lump sum spousal support is not appropriate.
204Rochelle submits that awarding lump sum spousal support is not appropriate in these circumstances. In order to determine whether such an order is appropriate, the court must “weigh the perceived advantages of making a lump sum award in the particular case against any presenting disadvantages of making such an order”16
205In Davis, the Ontario Court of Appeal lists such perceived advantages and disadvantages:
The advantages of making such an award will be highly variable and case-specific. They can include but are not limited to: terminating ongoing contact or ties between the spouses for any number of reasons (for example: short-term marriage; domestic violence; second marriage with no children, etc.); providing capital to meet an immediate need on the part of a dependent spouse; ensuring adequate support will be paid in circumstances where there is a real risk of non-payment of periodic support, a lack of proper financial disclosure or where the payor has the ability to pay lump sum but not periodic support; and satisfying immediately an award of retroactive spousal support
Similarly, the disadvantages of such an award can include: the real possibility that the means and needs of the parties will change over time, leading to the need for a variation; the fact that the parties will be effectively deprived of the right to apply for a variation of the lump sum award; and the difficulties inherent in calculating an appropriate award of lump sum spousal support where lump sum support is awarded in place of ongoing indefinite periodic support.17
206Rochelle submits that in this case requiring her to pay lump sum support has the following serious disadvantages:
(a) Rochelle will be required to deplete her assets to pay such an amount, and these assets are critical in that they are income producing for Rochelle (i.e. the matrimonial home produces rental income) and she relies on the income to meet on going expenses;
(b) Both Rochelle’s and George’s means and needs will likely change over time as they advance in age and depending on whether or not each secures employment;
(c) George has a history of financial mismanagement and bankruptcy, thus in the event a lump sum is paid to him, he is likely to deplete it, thus necessitating a further support application at a later date. The court cannot order a release of spousal support following the payment of a lump sum;
(d) Rochelle’s future self-sufficiency would be undermined by an order for lump sum support as she would be required to deplete capital which is the source of her income (the payor in Golton v Golton, 2018 ONSC 624518, had both significant assets and income in which to satisfy a lump sum obligation); and,
(e) The parties’ incomes and needs, particularly Rochelle’s may change in the future given her age and minimal income, and,
(f) Life expectancy for both parties is not known. It is difficult to establish an appropriate lump sum for a recipient who claims at the age of 67 that he has dire health problems.
207George submits that the court has jurisdiction to order a lump sum of spousal support payable out of Rochelle’s assets even though she does not currently have an income which would otherwise result necessarily in an order for periodic support. This approach would be preferable for the following reasons:
(a) A lump sum payable to George would constitute a “clean break” which is often promoted by the courts as a basis in part for ordering lump sum support,
(b) Rochelle has shown a callous disregard for the well-being of George after a long-term marriage and therefore the court should be concerned that if an order is made for periodic support, Rochelle will re-litigate the issue with George in the future by way of a Motion to Change; and
(c) A periodic spousal support order may result in a claw-back to George of some or all of his OAS benefits.
208George takes the position that the court does not necessarily have to arrive at an obligation by Rochelle to pay a monthly amount of support before it can consider an order for lump sum support.
209George asserts that, in the alternative, the court can order Rochelle, in law, to pay a periodic amount of support to address his proposed monthly budgetary deficit even if that monthly payment comes out of assets. A Divorcemate calculation was provided demonstrating what Rochelle would need to pay to George to assist him to meet his monthly deficit on a net basis.
210George asserts that the order for lump sum support that he is seeking does not constitute a request for a division of net family property under the guise of an order for support. George would have had a far greater entitlement had he been capable of claiming a division of net family property.
211George submits that although nobody knows how long he will live, it is not unreasonable to provide for his support on a lump sum basis over a ten-year period. The $500,000 which is being requested would not even cover a full 10 years of George’s monthly deficit.
212For the following reasons, I find that George is entitled to an order requiring Rochelle to pay him lump sum spousal support.
213Section 15.2(1) of the Divorce Act provides the authority for the court to make an order for lump sum spousal support.
214Section 15.2(4) of the Divorce Act provides that in making an order under ss. (1) the court shall take into consideration, the condition, means, needs and other circumstances of each spouse, including the length of time the spouses cohabited and the functions performed by each spouse during co-habitation.
215I have considered the condition, means, needs and other circumstances of a spouse, as previously cited in these Reasons.
216Rochelle is 59 years of age. George is 67 years of age. They lived in a long-term marriage of approximately 25 years. I have reviewed their backgrounds, their Marriage Contract, what each of them brought to the marriage, how their marriage relationship functioned and how their marriage broke down. I have not taken into consideration any misconduct of either spouse in relation to the marriage.
217Section 15.2(6) (a) and (c) of the Divorce Act provides as follows:
(6) An order made under subsection (1) … that provides for the support of a spouse should
(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage;
218I have recognized the economic advantages and disadvantages to the parties arising from the marriage or its breakdown in these Reasons.
219I find that a lump sum payment of spousal support to George is intended to relieve any economic hardship arising from the breakdown of the marriage and arriving at this conclusion, I find that in this case, an order for lump sum spousal support is not being made in the guise of redistributing the parties’ property.
220I further find that Rochelle is not required to deplete her capital to pay support.
221In her cross-examination, Rochelle testified that she could, in theory, sell the 4,000 square foot matrimonial home and downsize significantly so as to bank a sizeable portion of equity in the current residence. Part of this equity could be used to help support George on a lump sum basis given his need. The downsizing would provide Rochelle with the further ability to pay support without jeopardizing her ability to sustain herself. Nevertheless, Rochelle testified that she had yet to decide whether she would sell the residence and was not inclined to downsize as she was accustomed to living in a large residence.
222It was suggested to Rochelle in cross-examination that she could sell her one-third interest in the Beaver Creek property and yield equity capable of being paid to George to assist him financially. The sale of her interest in this property wold not impact any meaningful manner on her ability to sustain herself financially. Rochelle essentially responded that she could not say one way or the other hypothetically whether the sale of her interest in the Beaver Creek property or downsizing in her residence would impact on her ability to support herself even if she paid some or all of that yielded equity to George. Rochelle testified that she is unwilling to pay George any of the equity which she could realize by selling or downsizing. George asserts that an inference should be drawn against Rochelle that her standard of living or ability to support herself would not be jeopardized if she sold or downsized. Had that not been the case, she would have indicated that in her evidence in a definitive manner.
223I have weighed the perceived advantages of making a lump sum award in this particular case against any preventing disadvantages of making such an order.
224I do not agree that Rochelle’s self-sufficiency would be undermined by an order for lump sum support, as she would be required to deplete capital, which is the source of her income.
225Neither do I agree that given George’s history of financial mismanagement and bankruptcy, he would likely deplete any lump sum support award. His bankruptcy occurred once about one year after the parties married in 1995. As for George’s financial mismanagement and gambling, there is no evidence that this conduct continues or would likely continue.
226In Robinson v. Robinson, 2011 BCSC 148919, the court reviewed the present law as stated by the Ontario Court of Appeal in Davis v. Crawford, 2011 ONCA 29420. Davis remains the leading case on when a lump sum spousal support is appropriate.
227In summary, this decision is discretionary and is no longer limited to “very unusual circumstances”. Note “a lump sum award should not be made in the guise of support for the purpose of redistributing assets”21. “That being said, a lump sum order could be made to “relieve [against] financial hardship, if this has not been done by orders under Parts I (Family Property) and II (Matrimonial Home)”: Family Law Act, s. 33(8)(d)”22. The purpose of the award should be distinguished from its effect23. Another “important consideration…is whether the payor has the ability to make lump sum payment without undermining the payor’s future self-sufficiency”24. Advantages versus disadvantages should be weighed against each other25, with examples of potential advantages versus disadvantages set out26.
228Based upon my analysis of the evidence, having regard to the principles set out in Davis, I exercise my discretion in finding that lump sum spousal support is appropriate in the circumstances of this case. Entitlement has been established by George. He has demonstrated financial need and Rochelle’s ability to pay. I further find that the parties need a “clean break”. They need to get on with their lives. Their children are now adults. George can no longer work and is essentially retired. Rochelle has not worked outside the matrimonial home for many years. She was a homemaker who raised her children. She, too, is approaching her retirement years. They live separate lives and have done so for some time.
229I do not consider periodic payments to be appropriate in this case where a lump sum award would better suit the needs, means, conditions and circumstances of the parties.
(d) How is spousal support quantified?
230In calculating support, whether it be periodic or lump sum, I am guided by the principles set out by the Ontario Court of Appeal in Davis at paras. 75 and 76.
231In Davis, at para. 76, the Ontario Court of Appeal stated:
As part of this approach, where an award of lump sum spousal support is made as a substitute for an award of periodic support, it is preferable that, with the benefit of submissions from counsel, the judge consider whether the amount awarded is in keeping with the Spousal Support Advisory Guidelines (Ottawa: Department of Justice Canada, 2008) (the “Guidelines”). If it is not, some reasons should be provided for why the Guidelines do not provide an appropriate result: Fisher v. Fisher (2008), 2008 ONCA 11, 88 O.R. (3d) 241, [2008] O.J. No. 38 (C.A.), at para. 103.
232In Robinson, at paragraph 123, the court held, “an appropriate amount of monthly support is a starting point in the calculation of a lump sum.”
233In my view, the starting point takes into consideration the submissions by counsel and the SSAGs. In his written submissions, counsel for George submitted a Divorcemate calculation for spousal support based upon the “Without Child Support” Formula. In these calculations, Rochelle’s income is identified in the amount of $255,000. I have rejected imputation of income to Rochelle in the amount of $100,000. I find there is no evidentiary or legal basis to impute her income at $255,000 either, for the purposes of determining support. None of Rochelle’s assets are producing income at the rate of $255,000 per year. The only way she would be able to pay such an amount would be to deplete her capital, which she relies on as a source of income. I have found she is not required to do so.
234The SSAG calculation presented by George is unrealistic and, in my view, would indeed, if accepted, serve as a redistribution of assets under the guise of spousal support. This approach is not permissible. I entirely reject his calculations based on Rochelle’s income of $255,000 per year, which is non-existent and fanciful.
235Having so found, I turn to Rochelle’s submissions and her SSAG presentation found in her written submissions at Tabs 20 and 21.
236In this case, I find the “Without Child Support” Formula applicable. The Divorcemate calculations set out Rochelle’s income at $35,603 and identifies her annual income per the Guidelines at that same amount. George’s income is the sum of $25,714, established by the evidence.
237Rochelle’s income is broken down as follows:
Taxable Canadian Dividends
$ 4,856
Interest and other investment income
2,187
Rental Income (net)
4,887
Other taxable income (RSP withdrawals)
18,000
Other taxable income
6,000
Total Income:
$35,603
238Based on the SSAG “Without Child Support” Formula, a spousal support range of monthly payments by Rochelle to George is set out as follows:
Low-Range
$247
Mid-Range
$288
High-Range
$330
239The Divorcemate software program also converts the monthly payment ranges into a lump sum range (net present value) as follows. After tax cost to Rochelle and after-tax benefit to George:
Midpoint at Low-Range
$39,222
Midpoint at Mid-Range
$45,809
Midpoint at High-Range
$52,396
240Counsel for Rochelle submitted the above Divorcemate calculations could produce a possible outcome based upon the “Without Child Support” Formula including RRSP income, if so found by the court.
241I accept the submission of Rochelle’s counsel based upon this approach (which includes RRSP income in accordance with the Divorcemate calculations provided by counsel for Rochelle). I make this finding based on realistic incomes of both Rochelle and George. I accept Rochelle’s monthly ranges of spousal support. Taking into account the formula and the totality of the circumstances, I would determine monthly spousal support at the midpoint of the range of $288 per month as the starting point for calculation of lump sum spousal support.
242Further, given the Divorcemate conversion of monthly spousal support payments to a lump sum payment, I would determine the midpoint for the lump sum calculation to be in the mid-range of $45,809, rounded to $46,000 payable by Rochelle to George.
243In all the circumstances, I determine this amount to be an appropriate lump sum payment payable by Rochelle to George. I find George is entitled to lump sum spousal support in the amount of $46,000.
244This sum is payable within 60 days of the date of this decision or arrangements for payment are to be made within that time period.
(e) Should Rochelle repay George the sum of $35,000?
245The evidence is that Rochelle withdrew $68,000 plus $2,000 for a total of $70,000 from the parties’ Meridian joint account. She explained she did so some time in November 2016 as she feared George would dissipate these funds. He was no longer paying anything for the household expenses or mortgage interest payments. For that matter, he stopped paying anything towards maintaining the matrimonial home. Neither was he making any child support payments for Dana and Alex. Dana was attending university on a co-op program. She lived at home from time to time. Alex was still at home for a time before attending Ryerson University full time last year, living in residence. He, too, continues to live at home from time to time.
246This evidence is uncontroverted. I accept Rochelle’s evidence that she used all of the funds to support herself and her children. George seeks repayments of one-half of the $70,000, namely $35,000.
247I find that Rochelle should not repay George the sum of $35,000. In the absence of his ceasing to pay for matrimonial home expenses (while he was still living in the basement of the matrimonial home until January 2019) and in the absence of paying any child support, I find Rochelle used George’s $35,000 to pay obligations that George ceased to pay.
248In all these circumstances, I find Rochelle need not repay $35,000 or any part of it to George.
(f) Is Rochelle entitled to child support plus s. 7 expenses for Alex, and if so, how is this support quantified?
249Alex is just now going into his second year of university. Rochelle submits he continues to need clothes, pharmaceuticals, transportation costs and food, as he will no longer be living in residence, even if his tuition and residency is covered. He prefers to return home during holidays and vacation times and the matrimonial home is the only home he has ever known. George has admitted at trial that he does not pay to support the children and by default it will be Rochelle and not George who will be assisting Alex financially.
250In Rochelle’s financial statement, sworn May 8, 2019, she lists as expenses, food for the children (both Dana and Alex), clothing for the children, eye care (for both Dana and Alex), and entertainment and recreation for herself and the children. George’s child support obligation based on an income of $25,700 and the reduced summer formula of the Guidelines is $69 per month for Alex. George should be expected to make some financial contribution to Alex, regardless how minimal.
251Rochelle’s claim for child support and s. 7 expense in respect of Dana was abandoned.
252Regarding Alex, Rochelle, in her cross-examination, testified that she created a bank account in Alex’s name. This was not referred to in her financial statement. She testified that there is $40,000 in the account. Because Alex did not have a RESP, all Government cheques for him went into that account. It was the joint decision of Rochelle and George to create this account for the benefit of Alex’s education.
253Rochelle admitted that Alex’s post secondary education is being met without ability to contribute by George. Alex obtained OSAP assistance this year in the total amount of $14,000. Rochelle agreed that she was not seeking contribution from George for the first year that Alex completed at Ryerson. The $40,000 amount has not been depleted. She agreed there was no need for post-secondary expenses for next year (2020) and that Alex may have enough money for his third year of studies as well.
254I find on the evidence at trial that Rochelle is not entitled to s. 7 expenses for Alex. Any such expenses are funded either though his “education” account, OSAP assistance or a combination of both. There was no evidence presented as to whether Alex earns any money through part-time employment, which could be applied towards his education.
255As for the payment of child support, I have found George does not have any meaningful ability to support himself, given his age and medical challenges. I have found that effectively he is disabled. I find that George neither has the financial means, nor the ability to pay child support. He has been awarded lump sum spousal support.
256Some of the expenses claimed by Rochelle in her financial statement are for both Dana and Alex. Those expenses are not accurate, as they do not pertain only to Alex. He is an independent adult, living at home occasionally. Rather, his activities are centered around his university and life where he lives in downtown Toronto. In any event, I find there is insufficient evidence upon which to award Rochelle child support for Alex. Accordingly, this claim is dismissed.
(g) Divorce Order
257The parties agree that they may proceed to obtain a divorce order through the normal administrative process. I accept their submissions and accordingly, I make such order.
CONCLUSION
258For these reasons, I make the following orders:
(a) George’s claim seeking an order that Rochelle pay him $500,000 in lump sum spousal support, both compensatory and otherwise, under the Family Law Act and the Divorce Act, out of her assets is hereby dismissed.
(b) George’s claim that Rochelle reimburse him 50% of the joint funds which he withdrew from the Meridian joint bank account in November 2016, in the amount of $35,000 as an incident of support, is also dismissed.
(c) Rochelle’s claim for child support for Alex Koenigsberg, born May 8, 2000, in the amount of $69 per month is dismissed.
(d) Rochelle shall pay George the sum of $46,000, representing lump sum spousal support on a non-compensatory (needs) basis, payable within 60 days of the date of this decision, or arrangements for payment are to be made within that time period.
(e) The parties may proceed to obtain a divorce order through the normal administrative process.
COSTS
259The parties agree that costs are to be determined by way of written submissions. If the parties cannot agree upon costs, within seven days from the date of these Reasons, the Applicant shall serve and file a concise two-page summary regarding costs, together with a costs outline, Bill of Costs and any authorities. The Respondent shall have seven days thereafter to serve and file the same materials. If any reply is required, the Applicant shall serve and file her reply within five days of Respondent’s submissions. All materials by the parties are to be filed with my judicial assistant at Barrie.
Mr. Justice G.P. DiTomaso
Released: October 16, 2019
Footnotes
- See Marriage Contract, Exhibit 3, paras. 3, 8, 9, 10, 13 and 15.
- Knight v. Knight, 2018 CarswellOnt 8440, OSCJ at paras 107 and 108; and, Droit de la famille - 111526, 2011 CarswellQue 10165, QCCS at para. 145.
- Tab 6 of Rochelle’s Binder of Closing Arguments.
- Tab 7 of Rochelle’s Binder of Closing Arguments.
- Tab 7 of Rochelle’s Binder of Closing Arguments.
- Laurain v. Clarke, 2011 ONSC 7195, at para. 55 - Tab 10 of Rochelle’s Closing Arguments Brief.
- Homsi v. Zaya, 2009 CaswellOnt 2068, at para. 28 - Tab 7 of Rochelle’s Closing Arguments Brief.
- Leskun v Leskun, 2006 SCC 25, at para 29 - Tab 1 of Rochelle’s Supplementary Book of Authorities.
- Laurain, supra, at paras. 44 and 45 – Tab 10 of Rochelle’s Closing Arguments Brief).
- Laurain, supra, at para. 79.
- Laurain, supra, at paras. 24 and 25.
- Bak v. Dobell, 2007 ONCA 304, at paras. 51 and 52.
- Laurain, supra, at para. 83 - Tab 10 of Rochelle’s Closing Arguments Brief.
- Rivard v. Hankiewicz, 2011 ONSC 2988, at paragraph 30 - Tab 8 of Rochelle’s Closing Arguments Brief.
- Bak, supra, 2007 ONCA 304, at para. 52 - Tab 3 of Rochelle’s Supplementary Book of Authorities.
- Davis v. Crawford, 2011 ONCA 294, at para. 66 - Tab 13 of Rochelle’s Closing Arguments Brief.
- Davis, supra, at paras. 67 and 68 - Tab 13 of Rochelle’s Closing Arguments Brief.
- Golton v Golton, 2018 ONSC 6245.
- Robinson v. Robinson, 2011 BCSC 1489, aff’d 2012 BCCA 497.
- Davis v. Crawford, 2011 ONCA 294, at para. 96.
- Davis, at para. 60.
- Davis, at para. 61.
- Davis, at para. 62.
- Davis, at para. 63.
- Davis, at para. 66.
- Davis, at paras. 67 and 68.