ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ELIZABETH WILTON
Applicant
– and –
KENNETH MYHR
Respondent
Self-represented
Kristin Whitley, for the Respondent
HEARD: September 18, 19, 20, 21, October 1, 2 and 3, 2018; Written Submissions: October 26, 2018 and November 2, 2018
REASONS FOR DECISION
DIETRICH j.
Overview
1The applicant, Elizabeth Wilton, and the respondent, Kenneth Myhr, were married on August 25, 2001. They separated after nearly 13 years of marriage on May 23, 2014. Ms. Wilton and Mr. Myhr have two children. A. is 14 years of age and C. is 10. Prior to this trial, the parties agreed on a parenting plan.
2They have not agreed on spousal support and child support. Their dispute is focused on Mr. Myhr’s income, including the treatment of his royalties, and on the value of certain individual net family property items.
Issues
3The issues in this matter are as follows:
- What is Mr. Myhr’s income for support purposes?
- What is Ms. Wilton’s income for support purposes?
- Is Ms. Wilton entitled to support?
- What child support is Mr. Myhr obligated to pay, including his share of the s. 7 (special or extraordinary) expenses?
- Is Mr. Myhr entitled to a credit for any support paid?
- What is the equalization payment owning?
Factual Background
4Ms. Wilton is now 50 years of age and Mr. Myhr is 60 years of age. Both are healthy. Ms. Wilton is university educated. Mr. Myhr terminated his post-secondary education to pursue a career as a musician.
5Their children are healthy and doing well in school. A. is in a program for gifted students.
6Ms. Wilton worked as a researcher and a producer at the CBC prior to and early on in the marriage. After the birth of A., she left her job at the CBC to stay home to care for the children. While at home, Ms. Wilton took on a few freelance writing jobs, which did not result in a lot of income. The family relied on Mr. Myhr’s income for support.
7Mr. Myhr is a composer and a musician. In the main, he composes music for films and television, including documentaries. He is the sole proprietor of Ken Myhr Music. Through this business he is hired as a contractor and is paid a commission for his work. In addition, he collects royalties from the Society of Composers, Authors and Music Publishers of Canada (SOCAN) and the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) based on his catalogue of works.
8For most of their marriage the parties lived in a jointly owned matrimonial home in Wychwood Park, Toronto. Upon separation in 2014, Mr. Myhr moved out of the matrimonial home. Until June of 2016, he continued to spend time at the matrimonial home. He kept his music studio there and that is where he spent time with the children.
9Until February 2016, Mr. Myhr paid all of the expenses of the matrimonial home much as he had done prior to separation. During this time, Mr. Myhr also made payments to Ms. Wilton to cover her credit card bills and to support the children and her.
10Between February and June 2016, Mr. Myhr paid Ms. Wilton spousal support in the amount of $1,762 per month, as agreed to by the parties at a mediation, and he paid one-half of the asset related house expenses. In June 2016, Ms. Wilton assumed responsibility for all of the expenses relating to the matrimonial home and Mr. Myhr ceased paying the agreed upon monthly spousal support.
11Commencing in 2016, Mr. Myhr began paying monthly child support in an amount determined by him with reference to the Federal Child Support Guidelines (the “Guidelines”) based on his income (as shown on line 150 of his tax return).
12In early 2016, Ms. Wilton’s sister, Jennifer, was diagnosed with cancer and passed away in August of that year. Ms. Wilton and the children benefited from the estate of Jennifer Wilton. Ms. Wilton received the death benefit from her late sister’s teacher’s pension. The pension had a value, net of withholding tax, of more than $1 million.
13In 2017, Ms. Wilton purchased Mr. Myhr’s interest in the matrimonial home for $1 million. Of the purchase price paid to Mr. Myhr, $75,000 remains in his lawyer’s trust account pending the outcome of this trial.
14Soon after the separation, to assist in valuing Ken Myhr Music and Mr. Myhr’s income for support purposes, the parties jointly retained Eric Jordan of PIN Services Ltd. Mr. Jordan prepared a report dated June 1, 2016. Mr. Jordan did not testify.
15Later, Mr. Myhr retained Pier Sperti, Chartered Professional Accountant and Chartered Business Valuator, of Marmer Penner Inc., Business Valuators & Litigation Accountants. Mr. Sperti included Mr. Jordan’s report in the scope of his review, and so it formed part of the record before the court. Mr. Sperti prepared two reports, each dated March 22, 2018: i) “Calculation of Mr. Ken Myhr’s Income Pursuant to the Federal Child Support Guidelines for 2014 to 2016 and Projected 2017 (the “Income Report”); and ii) “Calculation Valuation Report on the Fair Market Value of Mr. Ken Myhr’s Interest in Ken Myhr Music as at August 25, 2001 and May 23, 2014” (the “Valuation Report”). In Mr. Sperti’s reports, which were admitted into evidence, he came to different conclusions than Mr. Jordan did on Mr. Myhr’s income and the value of his business. Mr. Sperti qualified as an expert and testified at the trial.
Issue 1: What is Mr. Myhr’s income?
16The determination of Mr. Myhr’s income is essential to setting his ongoing and retroactive child and spousal support obligations. As a self-employed composer and a musician, Mr. Myhr receives income from two sources: contracts to produce musical scores and royalty income from his catalogue of works. During the marriage, much of Mr. Myhr’s income was derived from regular contract work supplied by the CBC.
17Mr. Myhr’s income from Ken Myhr Music, including royalties, is recorded on his personal tax return at line 150. For the years post-separation, 2014 to 2017, his income is shown on the table below.
| YEAR | LINE 150 INCOME |
|---|---|
| 2014 | $83,053 |
| 2015 | $119,575 |
| 2016 | $84,474 |
| 2017 | $84,116 (not confirmed by a notice of assessment) |
Ms. Wilton’s Position
18Ms. Wilton asserts that Mr. Myhr has enjoyed a very successful career as a composer and musician and now has a top agent promoting him. In her view, he is capable of earning a much higher income than he has earned in the last few years.
19Ms. Wilton does not accept Mr. Myhr’s explanation that his income has declined because of a reduction in the number of contracts he is able to secure. She asserts that Mr. Myhr has made a decision to work less as he transitions into retirement. Ms. Wilton asserts that, with the assistance of his agent, Mr. Myhr could be more diligent in finding contracts, but he is not doing so because he is intentionally lowering his income to shirk his responsibility to pay support. Ms. Wilton asks the court to impute an annual income of $120,000 to Mr. Myhr until their younger child completes high school. Ms. Wilton disagrees that Mr. Myhr’s royalty income should be capitalized and included in the value of Ken Myhr Music and not included in Mr. Myhr’s income for support purposes. She asserts that the royalty income should be both capitalized and included in Mr. Myhr’s income for support purposes.
20Ms. Wilton also challenges some of the business expenses that Mr. Myhr has been deducting from his income. She asserts that a number of these expenses should be added back into his income.
Mr. Myhr’s Position
21Mr. Myhr testified that the decline in his annual income, from approximately $200,000 in 2012, is attributable to the pre-eminence of internet streaming services. He testified that as a consequence of evolving technology affecting the music industry, his royalty income is more likely to decrease than increase. He also testified that one of his main sources of income is the royalty stream from the television program The Nature of Things, for which a new theme song has replaced the one he composed. This change, he testified, will have a significant impact on his income from that production.
22Mr. Myhr also testified that since 2012 the CBC has changed the way it does business (e.g., it no longer has an in-house production department). Going forward he expects to receive less work from the CBC. To address the impact of these changes at the CBC on his income, Mr. Myhr testified that in 2015 he hired an agent to assist him in sourcing new contracts.
23Mr. Myhr testified that he has been close to bankruptcy twice, including post-separation in 2016. He testified that the margins on contract work are tight because the valuable part of the contract is the future royalty stream.
24Mr. Myhr asserts that his royalty income should be capitalized and included in the valuation of Ken Myhr Music. Since the value of the business will be included in the equalization of the net family properties, he asserts that the royalty income should not be double counted as income available for support purposes.
Expert Evidence on Mr. Myhr’s income
25Mr. Sperti’s Income Report includes a determination of Mr. Myhr’s income in each of the years from 2014 to 2016 and projected 2017, including royalties.
26At trial, Mr. Sperti provided updated income calculations as a result of certain adjustments resulting from Mr. Myhr’s 2017 income tax return, which had not been completed when Mr. Sperti prepared the Income Report, and certain income splitting with Ms. Wilton that had not come to Mr. Myhr’s attention until the trial. These adjustments resulted in an increase in Mr. Myhr’s income for 2014 and 2017.
27In preparing the Income Report, Mr. Sperti relied on certain major assumptions, including an assumption that, when calculating Mr. Myhr’s income for support, it is appropriate to adjust the income for royalties from music works that have already been included in Mr. Myhr’s net family property. Accordingly, Mr. Sperti included a capitalized value for the royalties from Mr. Myhr’s music works in Mr. Myhr’s net family property and did not include the royalties in his income.
Mr. Myhr’s Income Adjusted per the Guidelines
28Mr. Sperti testified that, in accordance with s. 16 of the Guidelines, he began the calculation of Mr. Myhr’s income using the line 150 income from Mr. Myhr’s personal tax return for each of 2014 to 2016 and projected 2017. He then made adjustments to: i) deduct RRSP income for 2014 and 2015; ii) add $12,000 deducted from business revenue in 2016; and iii) add the estimated discretionary expenses deducted from Mr. Myhr’s income from 2014 to 2016 and projected 2017 (e.g., business-use-of-home expenses, motor vehicle expenses and telephone (50%)).
29Mr. Sperti testified that the Guidelines, at s. 19(1)(g), permit the court to impute additional income where a spouse gains an advantage from earning a portion of his income taxed at a lower rate, such as where a spouse deducts non-business expenses from his taxable income. Mr. Sperti accounted for the income tax advantage gained by deducting expenses for tax purposes, as he considered appropriate, and applied a gross-up adjustment in each of the years under review ($535 in 2015 and approximately $1,500 in each of the other years). Mr. Sperti’s calculations are set out in Schedule 1 of the Income Report.
30Mr. Sperti testified that Mr. Myhr’s business expenses were treated for accounting purposes in accordance with the Guidelines, including Schedule III. Ms. Wilton objected to certain of the expenses claimed by Mr. Myhr.
31Without any contradictory evidence on the calculation of Mr. Myhr’s expenses, I find that that the adjustments made to Mr. Myhr’s income by Mr. Sperti were made in accordance with the Guidelines. I do not find that Mr. Myhr made any unreasonable deductions from his business income with regard to s. 19(1)(g) of the Guidelines. Ms. Wilton admits that she has no particular expertise in accounting and expenses for tax purposes. She offered no expert evidence to challenge Mr. Sperti’s calculations in this regard. Accordingly, I make no additional adjustment to Mr. Myhr’s income on account of expenses deducted.
Royalties and the Principle against Double-Dipping
32Mr. Sperti testified that at the request of Mr. Myhr, he also made a “double-dipping” adjustment to Mr. Myhr’s income. The double-dipping adjustment would take into account the fact that if Mr. Myhr’s royalties were included in his income, and the value of future royalties were also capitalized and included in Mr. Myhr’s net family property, Ms. Wilton could potentially benefit from the same property twice.
33“Double-dipping” and “double recovery” are terms that have come to describe a situation in which one spouse claims continued support from previously divided or equalized assets of the other spouse. Mr. Sperti testified that the principle against double-dipping should apply to Mr. Myhr’s royalties. However, he also conceded that, ultimately, it would be for the court to make the legal determination as to whether the principle against double-dipping applied in this case.
34Mr. Sperti testified that his double-dipping calculation resulted in deductions from Mr. Myhr’s income comprised of the pre-tax SOCAN and SODRAC royalty income expected to materialize in 2014, 2015, 2016 and 2017. The calculation is based on historical royalty statements provided by SOCAN and SODRAC and discussions with Mr. Myhr.
35The table below shows Mr. Myhr’s annual income for 2014 to 2018 (rounded), as adjusted by Mr. Sperti in accordance with the Guidelines, with and without the royalty income.
| Year | Adjusted Annual Income Without Royalty Income | Adjusted Annual Income With Royalty Income |
|---|---|---|
| 2014 | $38,000 | $100,044 |
| 2015 | $86,000 | $124,055 |
| 2016 | $83,000 | $106,312 |
| 2017 | $76,000 | $92,651 (reported income not confirmed by a notice of assessment) |
| 2018 | $69,049 (projected) | $85,700 (projected) |
36Mr. Sperti’s evidence was that an appropriate double-dipping adjustment based on the capitalization of Mr. Myhr’s royalty stream, going forward for the years 2018 to 2020, would be $16,651 per year. He testified that after 2020, there would be no double-dipping adjustment because the capitalized value of the future royalty stream would by then have fully accounted for the adjustments to the royalty income.
Analysis re Royalties
37Mr. Myhr’s position is that the royalty stream cannot be both property and income. Otherwise, he asserts, it would be unfair to him as he would be required to share the capitalized royalty stream in the equalization of net family property and further share the royalty income in support payments. He submits that Ms. Wilton and the children would benefit more from capitalizing the royalty income and including that value in the equalization payment because his royalties from The Nature of Things will drop off significantly in the future, thereby reducing his income.
38Mr. Myhr further asserts that the royalties are properly characterized as property because his catalogue of work is property that could be transferred when he attains 65 years of age in accordance with his agreement with SOCAN. He also submits that his royalty stream is like a stock option, pension, or book of business. As such, he asserts, it is an interest, present or future, vested or contingent, in personal property that has the dual nature of also being income in the future.
39In her opening statement, Ms. Wilton took the position that Mr. Myhr’s income should include his royalties and that the capitalized value of the royalties should not be included in the value of Ken Myhr Music for the purposes of determining the equalization payment owing. During the trial, Ms. Wilton retreated from this position and asserted that the royalty payments should be considered income for support purposes and also capitalized and included in the value of Mr. Myhr’s business for the purposes of equalization of net family properties.
40Ms. Wilton relies on Senek v. Senek, 2014 MBCA 67, in which reference is made to MacQuarrie v. MacQuarrie, 2012 PECA 3, where McQuaid J.A. stated that the challenge is to avoid double recovery when it is fair to do so, which is not to say that in all cases double recovery will be eliminated because, in some cases, double recovery may be the only way to continue support.
41Neither Mr. Myhr nor Ms. Wilton disputes the fact that the royalties that Mr. Myhr receives are income. Mr. Myhr testified that the royalties comprise a significant portion of his remuneration. He reports the royalties as income on his tax returns. The question in this case is whether the royalties also represent a capital asset for the purposes of equalization of net family properties.
42For the reasons that follow, I find that the principle against double-dipping or double recovery does not apply in this case. The inclusion of the capitalized value of the future royalty stream in Mr. Myhr’s net family property does not affect Mr. Myhr’s ability to generate a royalty stream similar to that which he generated during the marriage and on which the family depended for support. Mr. Myhr’s catalogue of work is a business asset that produces royalty income. That income can be spent without affecting the catalogue itself. It is not diminished by producing income. The catalogue of work could, in fact, increase in value over time.
43The Family Law Act provides as follows:
4(1) Definitions – In this Part, …
"property" means any interest, present or future, vested or contingent, in real or personal property and includes,
a) property over which a spouse has, alone or in conjunction with another person, a power of appointment exercisable in favour of himself or herself,
b) property disposed of by a spouse but over which the spouse has, alone or in conjunction with another person, a power to revoke the disposition or a power to consume or dispose of the property, and
c) in the case of a spouse's rights under a pension plan, the imputed value, for family law purposes, of the spouse's interest in the plan, as determined in accordance with section 10.1, for the period beginning with the date of the marriage and ending on the valuation date.
5(1) Equalization of net family propertiesWhen a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them.
44Royalties are traditionally understood as a form of remuneration, rather than a form of intangible property (such as a copyright or patent), the value of which would be subject to equalization. However, the royalties could also be considered a contingent interest for the purposes of the Family Law Act and therefore property for the purposes of equalization. In the case of Clarke v. Clarke, 2014 BCSC 1617 (“Clarke”), royalties were included in the division of family property consideration. However, the royalties arose from an oil and gas lease rather than a catalogue of original work, such as a musical composition, as is the case here.
45At trial, Mr. Myhr and his expert, Mr. Sperti, used the term “royalties” to reference both the husband’s income and the property that generated the income. Mr. Sperti provided two calculations of Mr. Myhr’s income. One includes the royalty income earned in the year and the other does not. In valuing Ken Myhr Music, Mr. Sperti capitalized the more lucrative royalties and included this capitalized amount as property for the purposes of calculating the equalization payment (as discussed in more detail below).
46Whether royalties qualify as property is not a straightforward analysis. It is well-established in the jurisprudence that royalties qualify as income: Mobin v. Stephens, 2013 ONCJ 53 at para. 52. The parties were not able to point to any jurisprudence in which royalties from musical composition qualified as property for the purpose of s. 5(1) of the Family Law Act. Likewise, I was not provided with any jurisprudence in which the inclusion of such royalties as property for the purposes of equalization of net family properties is specifically rejected. As noted, in the Clarke case, royalties were included in the property division calculation, though, in that case, the royalties arose from a lease and not from musical composition.
47In Clarke, the husband’s royalties were conceptualized as the capital asset rather than the income deriving from the asset. The wife had her own pension. Justice Voith stated at para. 54:
The royalties generate income. The fact that only the income of an asset, rather than the capital asset itself, is used for a family purpose is not determinative of whether the asset is a family asset.
48Relying on the British Columbia Court of Appeal in the case of Evetts v. Evetts, 1996 CanLII 2712 (BC CA), [1996] B.C.J. No. 2614 (B.C. C.A.), Justice Voith continues to explore the distinction between a capital asset and the income it generates:
23I think it would be unwise to try to establish any rules for the determination of whether a capital asset will be considered to be a family asset. However one or two guidelines are readily revealed from the cases. The fact that income from a capital asset is used occasionally for a family purpose does not of itself make the capital asset a family asset (Stuart v. Stuart). The fact that capital from the asset is used from time to time, when required, for a family purpose may be an indication that the asset is a family asset (Brainerd v. Brainerd). But the distinction between income being used for a family purpose and capital being used for a family purpose is not, in itself, determinative (Starko v. Starko). So the fact that only income is used for family purposes does not necessarily mean that the capital asset itself is not used for a family purpose. The use of the asset to provide financial security and protection against erosion of income or other family misadventure in the future may constitute a present ordinary use for a family purpose (Tezcan v. Tezcan; Folk v. Folk).
49In the end, Justice Voith decided to include the husband’s royalties as a family asset available for division as well as a source of income for the purpose of spousal support (see paras. 19-20).
50The concern with treating royalties as both income (for spousal support) and property (for equalization) is that it arguably offends the principle against double-dipping or double recovery. This concept has received considerable attention in the pension context. In Shadbolt v. Shadbolt (1997), 1997 CanLII 12250 (ON SC), 32 R.F.L. (4th) 253 (Ont. Gen. Div.), Justice Czutrin describes the problem at para. 16:
The “double dipping” conundrum can be articulated in the following manner: Where an equalization payment takes into account the value of the payor’s pension, can the recipient then seek further support where the source of the ability to pay is the same pension whose value was previously used to determine a portion of the equalization payment?
51The Supreme Court of Canada addressed this issue in Boston v. Boston, 2001 SCC 43. At para. 64, Justice Major provided the following guidance when determining whether to incorporate a party’s pension into the calculation of spousal support as well as equalization payments:
To avoid double recovery, the court should, where practicable, focus on that portion of the payor's income and assets that have not been part of the equalization or division of matrimonial assets when the payee spouse's continuing need for support is shown (see Hutchison, supra, at para. 9). In this appeal, that would include the portion of the pension that was earned following the date of separation and not included in the equalization of net family property.
52However, it is critical to note that this discussion of double recovery in Boston was tailored to the pension context. At para. 57, Justice Major states:
Pension income is obviously different from business income or income from an investment. See T. Walker, in The Best of Money and Family Law, Vol. 9, No. 12, 1994, "Double Dipping: Can a Pension be Both Property and Income?" in which the author argues that pensions should not be treated as other assets subject to equalization consideration. When a pension produces income the asset is being liquidated. The same capital that was equalized is being converted into an income stream. By contrast, when a business or investment is producing income, that income can be spent without affecting the asset itself. In fact, the business or asset may continue to increase in value. The value of the business or investment can be equalized, but neither are depleted solely by producing income.
53The extension of the double-dipping principle outside the pension context has had limited success. It has generally been rejected in the business context. For example, in Litton v. Litton, 2006 BCCA 494, the principle of double dipping was held inapplicable to the husband’s income earned from his business after a court-ordered division of property involved a trade-off of the matrimonial home and the business. In Mason v. Mason, 2014 ONSC 4290 (“Mason”), the husband's business, which he retained following separation, was the source of the family's income. The court concluded that equalization of the value of this asset did not disentitle the wife to spousal support. It was only the parties' respective incomes, not the divided asset, which were considered for the purposes of fixing spousal support. In Cosentino v. Cosentino, 2016 ONSC 4021, the husband’s business interest was included in the family’s net family property amount for equalization. However, this did not prevent the court from including the husband’s business income in his total income for the purposes of spousal support (see paras. 169-175).
54In the case at bar, based on the evidence before the court, I find that, in addition to generating income, Mr. Myhr’s royalties are a business asset, or property, that is subject to net family property equalization.
55I also find that the principle against double recovery or double-dipping does not apply in this case. Following the separation, Mr. Myhr retained his business in its entirety and it remains the principal source of the family’s income. As in Mason, an equalization of the value of this asset should not disentitle the spouse to support; and it should not, in this case, reduce the amount of support that might otherwise be available to her. Accordingly, I find that Mr. Myhr’s total income, including the royalty income, shall be taken into account for the purposes of spousal support.
Analysis re Income Imputation
56Ms. Wilton testified that Mr. Myhr’s income grew from approximately $40,000 at the time of their marriage to approximately $200,000 around 2012 when the marriage became strained.
57Ms. Wilton adduced evidence to show that Mr. Myhr had a line 150 income in 2001 of approximately $36,500, which grew steadily, and that by 2011 to 2014 the gross sales from his business were in the range of $113,000 to $218,000. She asserts that gross income in this range would result in net income in those years that is considerably higher than Mr. Myhr’s net income in recent years.
58Ms. Wilton submits that, in accordance with s. 19 of the Guidelines, which permits the court to impute income to a spouse under certain circumstances, including if a spouse is intentionally under-employed, an income of $120,000 should be imputed to Mr. Myhr. To arrive at this number, she uses $110,000 as the income she believes Mr. Myhr could earn from his business if he worked more hours, and then adds $10,000 on account of discretionary business expenses deducted from his income.
59Ms. Wilton further submits that if, between his agent and him, Mr. Myhr cannot garner new contracts to increase his income, then he should supplement his income by teaching music or offering guitar lessons. Alternatively, she submits that Mr. Myhr could increase his income by renting out his residence in Collingwood when he is not using it. Ms. Wilton asserts that Mr. Myhr’s failure to improve his income earning potential in any of these ways demonstrates that he is intentionally under-employed to avoid paying higher support.
60Ms. Wilton also submits that Mr. Myhr has unreported income but offered no concrete evidence in support of this submission. Mr. Sperti testified that in his review of Mr. Myhr’s income and the valuation of his business he saw no evidence of unreported income.
61Mr. Myhr attributes the recent decline in his income to changes in the music industry, which, he asserts, have resulted in fewer available contracts thereby reducing his potential to earn royalty income. He asserts that there is no factual basis for the imputation of an annual income of $120,000 or any other amount to him. He relies on his line 150 income only.
62Mr. Myhr testified that he is a composer and musician and not a music teacher. He also testified that he looked into the possibility of renting out his Collingwood residence, but the rules governing rentals in the neighbourhood in which it is located prevent him from renting out his home, other than on a long-term basis.
Determination of Mr. Myhr’s Income
63Section 15.1 of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), states that a court may, on application of either or both spouses, make an order requiring a spouse to pay for the support of any or all of the children of the marriage. Section 15.1(3) states that a court making an order under subsection (1) shall do so in accordance with the applicable guidelines.
64Section 19(1) of the Child Support Guidelines, O. Reg. 391/97, as amended, allows the court to impute income to a parent or spouse if it considers it appropriate in the circumstances. Section 19(1) lists certain enumerated examples as follows:
a) the parent or spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse;
b) the parent or spouse is exempt from paying federal or provincial income tax;
c) the parent or spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
d) it appears that income has been diverted which would affect the level of child support to be determined under these guidelines;
e) the parent or spouse's property is not reasonably utilized to generate income;
f) the parent or spouse has failed to provide income information when under a legal obligation to do so;
g) the parent or spouse unreasonably deducts expenses from income;
h) the parent or spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and
i) the parent or spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.
65As set out in Riel v. Holland (2003), 2003 CanLII 3433 (ON CA), 67 O.R. (3d) 417 (C.A.) at para. 36, the wording of s. 19(1) is open-ended and the categories listed in the section are merely examples of situations in which income may be imputed.
66The seminal Ontario case on the issue of intentional under-employment and imputing income is Drygala v. Pauli (2002), 2002 CanLII 41868 (ON CA), 61 O.R. (3d) 711 (C.A.) (“Drygala”). There, at para. 23, the court held that a trial judge must consider the following three questions in addressing s.19(1)(a):
Is the spouse intentionally under-employed or unemployed?
If so, is the intentional under-employment or unemployment required by virtue of the spouse's reasonable educational needs?
If the answer to question #2 is negative, what income is appropriately imputed in the circumstances?
67The court then went on to consider what is meant by “intentional under-employment or unemployment.” At para. 24 Gillese J.A. says:
The meaning of the word "intentionally" in s. 19(1)(a) has received inconsistent application in the courts. On the one hand, there are the so-called bad faith cases in which the word "intentionally" has been interpreted as meaning a deliberate course of conduct for the purpose of undermining or avoiding the parent's support obligation. These cases act on the explicit assumption that a court should not impute income in the absence of such a motive, as to do so results in an onerous financial obligation on a parent who chooses to make a career change. [Citations omitted]
68At para. 28 Gillese J.A. goes on to say:
Read in context and given its ordinary meaning, "intentionally" means a voluntary act. The parent required to pay is intentionally under-employed if that parent chooses to earn less than he or she is capable of earning. That parent is intentionally unemployed when he or she chooses not to work when capable of earning an income. The word "intentionally" makes it clear that the section does not apply to situations in which, through no fault or act of their own, spouses are laid off, terminated or given reduced hours of work.
69Finally, at para. 45, the court addresses what to consider when imputing income, and states:
When imputing income based on intentional under-employment or unemployment, a court must consider what is reasonable in the circumstances. The factors to be considered have been stated in a number of cases as age, education, experience, skills and health of the parent.
70Before the court can impute income to a party, it must be satisfied the payor has met the criterion of "intentional under-employment". In doing so, the court must look at two general factors. The first is intentionality. The second is whether under-employment or unemployment is required by virtue of his or her reasonable educational or health needs or the needs of a child.
71The onus is on the person requesting an imputation of income to establish an evidentiary basis for such a finding: Homsi v. Zaya, 2009 ONCA 322 at para. 28. Ms. Wilton must therefore prove that Mr. Myhr has voluntarily chosen to work less.
72I find that Ms. Wilton has not met the evidentiary burden to show that Mr. Myhr is intentionally under-employed. Mr. Myhr testified that changes in the music industry necessitated the hiring of a top agent to assist him in finding new contracts. He hired an agent in 2014 and by 2015 his income improved by 25 percent over the previous year’s income. It would be reasonable to conclude that some of this increase is attributable to the agent’s efforts. Ms. Wilton could not challenge Mr. Myhr’s evidence that changes at the CBC have had a negative impact on Mr. Myhr’s ability to secure contract work. Similarly, there is no concrete evidence of Mr. Myhr’s intention to work less, for example, evidence of contracts or jobs offered to Mr. Myhr that he turned down.
73I accept that the music industry is somewhat speculative and that advances in technology described by Mr. Myhr, like internet streaming, would likely have a negative impact on his royalty income beyond his control. Having found that Mr. Myhr is not intentionally under-employed, I do not need to consider the second part of the test in Drygala.
74In reviewing Mr. Myhr’s income from employment over the last several years, it is apparent that it does indeed fluctuate. This would seem to suggest volatility in the music industry could make it difficult to predict Mr. Myhr’s income from year to year.
75Because of this fluctuation and the vulnerability of Mr. Myhr’s income to technological changes in the way music is produced and enjoyed, I find that using his line 150 income to determine his income for support would not be the fairest determination of income. In this case, s. 17 of the Guidelines is useful. It allows the court to have regard to the spouse’s income over the last three years and to determine an amount that is fair and reasonable in light of any pattern of income or fluctuation in income. Mr. Myhr did not provide a notice of assessment for his 2017 income, as he is required to do. As a result, his 2017 income, as calculated by Mr. Sperti, cannot be relied on for this purpose. For the years 2014 to 2016, based on Mr. Sperti’s income calculation (including royalty income), Mr. Myhr was earning, on average, $110,000 (rounded). Accordingly, I find that an appropriate amount of income to impute to Mr. Myhr for each of 2016, 2017 and 2018 is $110,000 (inclusive of royalties).
76Mr. Myhr did not have his notice of assessment for 2017 at the time of the trial. This suggests that he files his tax returns in arrears. Under these circumstances, I find it reasonable to impute an income of $110,000 to him for 2019 as well.
77While Ms. Wilton urged the court to impute an income to Mr. Myhr for the next six years, I decline to do so. Predicting Mr. Myhr’s ability to work and the impact of possible further changes in the music industry over that period of time could create unfairness for Mr. Myhr. Commencing with the year 2020, Mr. Myhr’s income will be determined in accordance with the Guidelines. If the parties are unable to agree on Mr. Myhr’s income, either party has the option to bring a motion to change support without being required to establish a material change in circumstances.
78With regard to Mr. Myhr’s income for the years 2014 and 2015, I make no income imputation calculation. For the period following separation in 2014 and in 2015, the evidence is that Mr. Myhr and Ms. Wilton continued to deal with household expenses and support of the family much as they had prior to separation, as one single economic unit. Mr. Myhr was covering the bulk of these expenses out of his income. Ms. Wilton had very modest income from her freelance work and from her investments.
79During this time, the parties took no mutual steps to enter into an agreement on expense sharing or to formalize support payments. Ms. Wilton and the children continued to live in the matrimonial home and Mr. Myhr continued to use the matrimonial home as his place of business and to spend time with the children there. Associated with that business use, Mr. Myhr claimed home office expenses on his tax return until June 2016.
Issue 2: What is Ms. Wilton’s income?
80Ms. Wilton testified that Mr. Myhr and she agreed that following the birth of A., she would stop working at the CBC and stay home to care for their children while he continued to work to support the family. Ms. Wilton’s freelance work, done while caring for the children, brought in about $40,000 over the course of the nearly 13-year marriage.
81Ms. Wilton also testified that she was unable to seek full-time work post-separation in 2014 and 2015 because she needed to be available to the children to support them and coach them as they adjusted to the separation. In 2016, Ms. Wilton became very involved in the care of her sister Jennifer as she battled, and eventually succumbed to, breast cancer. Ms. Wilton testified that both she and the children were grief-stricken by the death of Jennifer Wilton and they needed time to deal with their grief.
82Notwithstanding, Ms. Wilton did take on some work in 2016 as a tutor and she was placed on the “approved tutor list” for the University of Toronto Accessibility Department. She also secured work through the University of Toronto as an academic coach. She has also been able to find work editing grant proposals and doing research. She testified that she is looking to take on more grant editing work to fill in the gaps when tutoring work, which is seasonal, is not available. She applied for a higher paying job at the University of Toronto but was unsuccessful.
83Ms. Wilton’s notices of assessment and tax returns for 2014 to 2017 reflect her line 150 income as shown in the table below.
| YEAR | INCOME |
|---|---|
| 2014 | $6,045 |
| 2015 | $1,939 |
| 2016 | $14,735 (including support payments of $10,000 and gross business income of $3,610) |
| 2017 | $1,766,035 (including support payments of $7,200, a death benefit from her late sister’s estate, and gross business income of $7,260). |
Mr. Myhr’s Position
84Mr. Myhr asserts that in addition to the above noted income, Ms. Wilton received a retroactive child tax benefit in 2016, which is not reflected in her line 150 income. Mr. Myhr points to other inconsistencies in Ms. Wilton’s reporting of her income. For example, in her opening statement at trial, she claimed to have earned approximately $12,500 in 2017 in business income, yet her 2017 tax return shows $7,260 in gross business income.
85Mr. Myhr asserts that Ms. Wilton has not been forthcoming regarding her financial situation. In this regard, he asserts that Ms. Wilton was secretive about having inherited a significant death benefit following her late sister’s death, that she failed to disclose the retroactive child tax benefit, and that during her testimony she was at a loss to explain how she could meet her expenses as set out on her sworn Financial Statement dated September 7, 2018 based on her declared income.
86Mr. Myhr also submits that post-separation, in June 2018, Ms. Wilton acquired an RRSP with a value of $63,665, a TFSA with a value of $35,156.70 and a GIC with a value of $15,000. In addition, she now owns the former matrimonial home appraised at $2,010,000 in 2017.
87Mr. Myhr submits that Ms. Wilton is intentionally under-employed. He asserts that, conservatively, Ms. Wilton only worked about 2-3 hours a week at tutoring and research in 2016 and 2017. He further submits that this effort is insufficient and that she should be making more of an effort to promote her tutoring services.
88Mr. Myhr further submits that Ms. Wilton should be renting out the basement in her home to increase her income to meet her expenses.
89In addition to income imputation based on Ms. Wilton’s alleged failure to make timely financial disclosure and her alleged intentional under-employment, Mr. Myhr seeks imputation of income to Ms. Wilton based on the value of assets she received post-separation. He refers specifically to the inheritance from her late sister. Mr. Myhr submits that Ms. Wilton made the decision to invest this substantial inheritance in real property that is not, at this time, being used to generate income and that she did so to intentionally shield the inheritance from generating income and thereby increase her need for spousal support.
Ms. Wilton’s Position
90Ms. Wilton testified that she was not secretive about her assets. Regarding the inheritance specifically, she testified that it took time to determine whether she was the rightful heir to her late sister’s pension because her late sister’s common law partner had a prior claim. Time passed while he decided whether he would waive his entitlement, which he eventually did. With regard to the investments made post separation, Ms. Wilton testified that they were made using inherited funds and that some would need to be liquidated to pay the tax owing by her on the pension death benefit she inherited from her late sister.
91Ms. Wilton’s evidence was that she hoped to earn between $10,000 and $12,000 in 2018. She also testified that she would like to rent out the basement in her home but that the basement will require extensive renovation before it would be suitable for tenants. The evidence is that there is currently no kitchen, the bathroom is unfinished and the second exit, now a large window, should be replaced by a door.
92Ms. Wilton accepts that some income imputation to her is appropriate. In two separate sworn affidavits leading up to the trial, Ms. Wilton admitted to an income imputation to her for support purposes of $12,500 and of $20,000, respectively. In her closing submissions, she suggested that her income for support purposes should be set at $20,000 per year commencing in November 2018.
Determination of Ms. Wilton’s income
93Mr. Myhr relies on ss. 19(1)(a), (e) and (f) of the Guidelines with respect to income imputation to Ms. Wilton. With respect to s. 19(1)(a), he also relies on the Drygala case. According to the test set out in that case, as noted above, I must determine whether Ms. Wilton is intentionally under-employed and if so, whether the intentional under-employment is required by virtue of Ms. Wilton’s reasonable educational or health needs, or the needs of a child. If the answer to the second part of the test is negative, I must determine the income that is appropriately imputed in the circumstances.
94I find that Ms. Wilton is intentionally under-employed. Ms. Wilton does not disagree that she is under-employed. In her own submissions, she agrees that going forward, the court should impute an annual income to her of $20,000 despite the fact that she adduced little evidence to suggest that she will actually have earned income in this amount in 2018.
95Ms. Wilton is university educated. She has both a B.A. and an M.A. and has experience as a writer, a tutor and a researcher. She also worked as a producer for the CBC for a number of years. She testified that she no longer has any contacts at the CBC and does not feel confident that she could find work as a producer. To her credit, she has found employment through the University of Toronto as a tutor and an academic coach. She is looking for other opportunities at the University of Toronto, such as additional grant editing. She is clearly capable of finding gainful employment and, in fact, she has done so. However, her income from this employment is modest as she does not yet spend a great deal of time at it. Ms. Wilton chose to work fewer hours to devote more time to her children and to her sister’s care.
96Having found that Ms. Wilton is intentionally under-employed, I must now consider whether she is so by virtue of her own reasonable educational or health needs or those of her children.
97Ms. Wilton testified that she has been out of the workforce for more than thirteen years and may need some retraining. Retraining could have an impact on the time it will take her to make a significant improvement to her income. Ms. Wilton also testified that she devoted a considerable amount of time to this litigation and preparing for the trial at which she represented herself, which she has found stressful. While engaged in the litigation, she was unable to pursue additional gainful employment.
98In cross-examination, Ms. Wilton agreed that she did not actively pursue employment immediately following separation or for a few years thereafter. During this time, Ms. Wilton testified that she needed to be available to her children to coach them through the separation and their grief following the death of their aunt with whom they were very close. Also, until 2016, both children were coming home from school for lunch, which prevented Ms. Wilton from taking on work that would prevent her from being at home during the lunch hour. Ms. Wilton testified that she also needed to be available to take C. to school and pick her up.
99I accept that the needs of the children, especially immediately following the separation, prevented Ms. Wilton from pursuing employment in addition to the freelance work that she was doing. It is understandable that the children would benefit from her emotional support following the separation and the death of their aunt. It is reasonable that she would not make significant changes to the children’s routine around their school day on the heels of the separation. However, in her testimony, Ms. Wilton admitted that her work as a tutor could be scheduled around the children’s needs. She could, therefore, have taken on some additional tutoring work while attending to their needs. Effective September of this year, C. will be able to walk to her new school and neither of the children will be coming home from school for lunch so Ms. Wilton will have even more flexibility in the type of work she can take on.
100Ms. Wilton is not yet working at her full capacity. She is, however, taking steps towards that end. Some retraining may be required. Flexibility in her work hours will become less of an issue once both children can get themselves to and from school and they do not come home for lunch. These factors are relevant in determining the amount of income to be imputed to her.
101Ms. Wilton represented herself at trial and prepared her own written submissions. She was effective in her self-representation and skillful in marshalling evidence and documents. These efforts would have reduced the time available to her to seek employment as well as the time available to plan and undertake the necessary renovations to the basement in her home with a view to attracting tenants.
102The evidence of both Ms. Wilton and Mr. Myhr is that A. and C. are thriving. They are no longer in need of the same emotional support and coaching that they were at the time of separation and immediately following their aunt’s death. With the trial behind her, Ms. Wilton should now be able to focus on becoming self-sufficient.
103With regard to Mr. Myhr’s reliance on s. 19 (1)(e) of the Guidelines as a means to impute income to Ms. Wilton, I am not persuaded by Mr. Myhr’s submission that Ms. Wilton invested the inheritance from her late sister in her residence to shield it from earning income and thereby increase her need for child support. It is clear from Ms. Wilton’s evidence that she has a strong emotional and psychological attachment to the matrimonial home, which was her childhood home, and to the neighbourhood in which she and the children are very comfortable. They have many friends and neighbours who live in the area with whom they are close and who serve as surrogate family members. The residence does have the advantage of being in downtown Toronto, which could, as Ms. Wilton submits, make it very convenient for the children to have an easy commute to universities and colleges should they pursue post-secondary education in Toronto. Costly accommodation expenses could thereby be avoided. I agree with Ms. Wilton’s submissions; however, even while the residence serves this purpose, with some modification to the basement, a rental unit could be created to generate income for Ms. Wilton.
104It is relevant that Ms. Wilton made the choice to keep the matrimonial home by investing her significant inheritance in it as opposed to selling it, redeploying her equity in it to another, less costly, residence and thereby freeing up at least part of the inheritance to be invested in income-producing investments. In R. (J.) v. R. (N.), 2017 BCSC 455, the court estimated the equity in the property available to the spouse and imputed to the spouse an income based on a 3% reasonable return on the available equity.
105With regard to Mr. Myhr’s reliance on s. 19(1)(f) of the Guidelines as a means to impute income to Ms. Wilton, I am not persuaded that Ms. Wilton deliberately failed to disclose material financial information in a timely way. She was self-represented at trial and admitted to making an error in stating her income for 2017 in her opening submission. Her explanation for the delay in disclosing the details of her inheritance from her late sister makes sense.
106Mr. Myhr submits that income should be imputed to Ms. Wilton for support purposes as set out in the table below.
| YEAR | MS. WILTON’S LINE 150 INCOME | PROPOSED IMPUTED INCOME |
|---|---|---|
| 2014 | $6,045 | $8,000 |
| 2015 | $1,939 | $15,000 |
| 2016 | $14,735 (including $10,000 in support payments) | $18,000 |
| 2017 | $1,766,035 (including $7,200.00 in support payments) | $25,000 |
| 2018 and going forward | The lesser of $35,000 or her actual income for support purposes |
107I do not accept Mr. Myhr’s proposed imputed income for Ms. Wilton as set out above. However, I do find that income must be imputed to Ms. Wilton based on her choice to work fewer hours than she was capable of working in 2016, 2017 and 2018 notwithstanding her child care responsibilities during those years. I also find that Ms. Wilton made the choice to invest the inheritance she received from her late sister into her home, a non-income producing asset, when some or all of it could have been invested to produce income to support herself and her children, and that the home could be used to generate rental income. Accordingly, I impute to Ms. Wilton an income of $18,000 for 2016. For each of 2017 and 2018, I impute to Ms. Wilton an income of $25,000, and for 2019, I impute to Ms. Wilton an income of $35,000.
108This income imputation to Ms. Wilton will allow her to take some time to retrain, if necessary, and to seek employment that will afford her the flexibility to be available to the children, as required. Ms. Wilton is relatively young, healthy, highly educated and has skills that should allow her to find employment that will provide her with an annual income of at least $35,000 per year. In addition, Ms. Wilton has the option of finishing the basement in her home and making it available to tenants to earn rental income. Ms. Wilton has an obligation to contribute to her own support and that of her children, and must do so in a timely way: Moon v. Moon, 2011 ONSC 1834, at para. 3.
109As is the case with Mr. Myhr, Ms. Wilton’s ability to earn the imputed level of employment income into the future is difficult to predict. Accordingly, I make no income imputation calculation for her past 2019. Commencing with the year 2020, Ms. Wilton’s income will need to be determined in accordance with the Guidelines. If the parties are unable to agree on Ms. Wilton’s income, either party has the option to bring a motion to change support without being required to establish a material change in circumstances.
Issue 3: Is Ms. Wilton entitled to support?
Spousal Support
110The Divorce Act contains specific provisions regarding spousal support. In making an order for spousal support, in accordance with s. 15.2(4) of that Act, the court is required to take into account the condition, means, needs and other circumstances of each spouse, including:
i) the length of time the spouses cohabited;
ii) the functions performed by each spouse during cohabitation; and
iii) any order, agreement or arrangement related to support of either spouse.
111Section 15.2(6) deals with the objectives of any spousal support order, and states that any such order should:
i) recognize any economic advantages or disadvantages to the spouse arising from the marriage or its breakdown;
ii) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
iii) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
iv) in so far as is practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
112In Bracklow v. Bracklow, 1999 CanLII 715 (SCC), [1999] 1 S.C.R. 420 at para. 33, the Supreme Court of Canada described the three bases for entitlement to spousal support as: i) compensatory; ii) non-compensatory (needs-based); and iii) contractual. The parties have no ongoing contractual agreement regarding spousal support. Accordingly, only the first two bases are relevant.
113The compensatory basis involves an examination of economic sacrifices, such as forgone career opportunities and forgone pensionable earnings, to the benefit of the other spouse during the marriage. Compensatory support is aimed at relieving hardship suffered by reason of the marriage or its breakdown.
114The non-compensatory basis for support involves an examination of the changes in a person’s financial circumstances after a marriage. The theory is that former spouses have a basic obligation to one another following the breakdown of the relationship. The appropriate quantum and duration of spousal support is to be determined with reference to the Spousal Support Advisory Guidelines (“SSAG”): Fisher v. Fisher, 2008 ONCA 11.
115Ms. Wilton claims compensatory and non-compensatory spousal support based on an imputed income to Mr. Myhr of $120,000 per year post-separation and an income for herself of $12,000 per year.
Compensatory Support
116Ms. Wilton submits that the court should ignore her asset base and the inheritance she received from her late sister on the basis that her claim is largely for compensatory support.
117Ms. Wilton further submits that the strength of her claim for compensatory support entitles her to support at the high-end of the range of the SSAG. She submits that the length of the marriage is a significant consideration and in this regard relies on Brisson v. Brisson, 2012 BCCA 396. She also asserts that the fact that she left the workforce for over a decade to become a full-time mother and to assume household responsibilities lowered her earning potential and resulted in fewer prospects for financial success. In this regard, she relies on Moge v. Moge, 1992 CanLII 25 (SCC), [1992] 3 S.C.R. 813. She seeks monthly support of $1,679 per month (based on the high-end of the range of the SSAG) retroactive to the date of separation and for an indefinite duration.
118Ms. Wilton prefers a system of spousal support that does not require an annual review so as to reduce the tension between the parties that arises in this context and could lead to more litigation. She recommends that a level of support be set until the younger child finishes high school (six years from now). After that time, she suggests that support would be based on actual income earned with an add-in to Mr. Myhr’s income based on discretionary expenses (e.g., business-use-of-home, motor vehicle, and phone).
119Mr. Myhr submits that Ms. Wilton has not made her case for compensatory spousal support based on her evidence at trial. He submits that her economic disadvantages have not been disclosed. He also submits that his career was established prior to marriage and Ms. Wilton made no sacrifice to allow him to build his career and that she did not contribute to it. He asserts that his most lucrative works were created prior to marriage.
120Mr. Myhr further submits that even if Ms. Wilton were successful in her claim for compensatory support, her entitlement would end once she has been compensated for economic disadvantage as a result of the marriage. Mr. Myhr asserts that by his calculations, he has already overpaid spousal support by at least $40,000 thereby eliminating any economic disadvantage.
121Mr. Myhr also submits that Ms. Wilton is able to return to work as a researcher and that she has already started to do some freelance research work. He is critical of her efforts to find work and notes that she has only applied for one job post-separation and is not taking active steps to market her tutoring business. He further submits that if she worked more than a few hours a week, she would earn significantly more money and could support herself.
Non-compensatory Support
122Ms. Wilton supports her claim for non-compensatory support by asserting that she is attempting to maintain the standard of living for herself and her children that the family enjoyed during the marriage and that keeping the matrimonial home is consistent with this objective. She relies on Chutter v. Chutter, 2008 BCCA 507, in support of her position that the value of the matrimonial home is irrelevant to calculating her support, which is to be determined based on income alone and not asset value.
123Mr. Myhr submits that Ms. Wilton’s need, if any, arises principally because she elected to invest over $1 million in her residence as opposed to income producing assets. He asserts that Ms. Wilton’s asset base post-separation is twice his.
124Mr. Myhr further submits that Ms. Wilton’s self-sufficiency is best promoted by an award of support that factors in her asset accumulation (significant equity in her home and a post-separation increase of over $100,000 in her liquid investments) as well as her capacity to earn an income from employment and investments.
125Mr. Myhr asks the court to impute to Ms. Wilton the income set out in paragraph 106 above. For his own income, he relies on the calculations provided by Mr. Sperti that do not include royalty income. He further submits that based on his income calculations, Ms. Wilton should be entitled to spousal support at the mid-point of the range of the SSAG for a period of ten years post-separation.
Analysis
126Following the separation in 2014, Mr. Myhr continued to support the family much as he did immediately prior to the separation. He paid $147,127 to or for the benefit of Ms. Wilton and the children in the four years following the separation.
127The equalization payment owing to Ms. Wilton is $37,095.57 (as set out below in paragraph 202). As a result of the equalization of net family properties, each of the parties is left with matrimonial assets of approximately $1 million. Some of Ms. Wilton’s bank accounts were excluded from the net family property equalization calculation because they were sourced with inherited funds; and, post-separation, she inherited property from her late sister’s estate with a net value of over $1 million, which allowed her to purchase Mr. Myhr’s interest in the matrimonial home and make some investments. As a result, Ms. Wilton’s current net worth is approximately twice Mr. Myhr’s net worth, but Mr. Myhr continues to have a much higher income.
128I find that Ms. Wilton is entitled to prospective compensatory spousal support from Mr. Myhr. She gave up her career at the CBC to care for the children. For nearly ten years, she devoted herself almost exclusively to their care, to her economic disadvantage, while he pursued his career as a composer. As noted above, it may take her some time to retrain and to find employment that will lead to self-sufficiency. Ms. Wilton testified that the investments she made post-separation will be applied to the tax owing by her on the pension death benefit she received following her sister’s death. Ms. Wilton estimates the tax liability to be approximately $200,000.
129I do not find that Ms. Wilton is entitled to non-compensatory, or needs-based, support. I do not agree with Ms. Wilton that her decision to purchase the matrimonial home is irrelevant. The court must not lose sight of the fact that Ms. Wilton’s standard of living is now higher than Mr. Myhr’s. Her assets are worth twice his and she resides in a house with a value in excess of $2 million.
Determination of Amount and Duration
130The result of Mr. Myhr’s DivorceMate calculations for 2018, as submitted to the court (using an income for himself of $69,049, which includes an adjustment for double-dipping, and an imputed income to Ms. Wilton of $35,000), is that there is no spousal support payable to Ms. Wilton. Even with no adjustment for double-dipping, based on his calculations, there would be no spousal support payable to Ms. Wilton at the low-end or mid-point of the range of the SSAG.
131As noted above, I do not accept Mr. Myhr’s calculation of his own income as advanced by Mr. Sperti. I impute to Mr. Myhr an annual income for support purposes of $110,000 for each of 2016, 2017, 2018 and 2019. I impute to Ms. Wilton an annual income of $18,000 for 2016, $25,000 for 2017 and 2018, and $35,000 for 2019.
132Using these imputed incomes and applying the DivorceMate software, the SSAG provide for support for Ms. Wilton for an indefinite (unspecified) duration, with a minimum duration of 6.5 years and a maximum duration of 13 years from the date of separation.
133In the circumstances of this case, considering Ms. Wilton’s asset base, her educational training and ability to work, her age and good health, the ages and wellness of the children, and the date on which Mr. Myhr’s will turn 65 years of age (at which time, he testified, he will retire), I find that prospective spousal support should be paid at the low-end of the range of the SSAG and should continue for nine years from the date of separation, ending on May 31, 2023.
134Using the above-noted imputed income for Mr. Myhr and applying the low-end of the range of the SSAG, I find that Mr. Myhr is required to pay monthly spousal support to Ms. Wilton in the amount of $590 for 2016, $288 for 2017, $374 for 2018 and $17 for 2019. The DivorceMate calculations in support of these findings are attached hereto as Schedule A.
Reimbursement for Expenses
135Ms. Wilton also seeks retroactive spousal support in the form of reimbursement for expenses relating to the matrimonial home that she paid in 2016 and in 2017 prior to purchasing Mr. Myhr’s one-half interest in the home. She makes this claim on the basis that, during that time, the home appreciated in value significantly, and Mr. Myhr benefited from that gain on the ultimate sale of his interest without making any contribution during the same period.
136Mr. Myhr denies that Ms. Wilton is entitled to any reimbursement for expenses she paid relating to the matrimonial home during that time because she has not produced any documentary evidence in support of those expenses. Further, he asserts that, in making this request, Ms. Wilton ignores the fact that she refused to sell the matrimonial home when he asked her to do so and she does not take into account the fact that Mr. Myhr paid the expenses for the matrimonial home for 2014 and 2015 without any contribution from Ms. Wilton.
137I make no award for retroactive spousal support in the form of reimbursement for expenses relating to the matrimonial home paid by Ms. Wilton in 2016 and 2017. During these years Mr. Myhr was paying expenses relating to his own accommodation elsewhere. Further, Ms. Wilton has not provided evidence of the actual expenses paid by her in this regard.
Issue 4: What child support is Mr. Myhr obligated to pay, including s. 7 expenses?
138Because I have found that the parties continued to function as a single economic unit during 2014 and 2015, despite the separation in 2014, I make no adjustment to the child support (including any s. 7 expenses) paid by Mr. Myhr during that time post-separation. For the years 2016, 2017, 2018 and 2019, Mr. Myhr is obligated to pay table child support as set out below. The obligations of the parties with respect to s. 7 expenses are also set out below.
Table Child Support
139The parties agree that both children are entitled to support from Mr. Myhr based on the child support tables set out in the Guidelines. Based on Mr. Myhr’s income of $110,000, the table amounts, as shown in Schedule A, are $1,538 per month for 2016 and $1,594 per month for each of 2017 to 2019, inclusive.
Section 7 Expenses
140Section 7 expenses are articulated in paragraphs 7(1) (a) to (f) of the Guidelines. They include child care, medical and dental insurance premiums attributable to the child; health-related expenses; extraordinary school or educational expenses; post-secondary expenses; and extraordinary expenses for extracurricular activities. For the court to award any such expense, it must be: i) necessary in relation to the child’s best interests; ii) reasonable in relation to the means of the spouses and those of the child; and iii) reasonable in relation to the family’s spending pattern prior to the separation.
141The parties are agreed that post-separation Mr. Myhr paid $6,003.20 in s. 7 expenses, and Ms. Wilton paid $9,186.70 in s. 7 expenses, as set out in the table below.
| Year | Mr. Myhr | Ms. Wilton |
|---|---|---|
| 2014 | $1,243.20 | |
| 2015 | $2,086 | |
| 2016 | $2,210 | $2,615 |
| 2017 | $464 (includes $390 for 2018 music lessons) | $4,078 |
| 2018 (to the date of the trial) | $2,493.70 |
142For the reasons noted above, no adjustment will be made for the s. 7 expenses paid by Mr. Myhr in 2014 and 2015 while the family was functioning as a single economic unit. Adjustments will need to be made for 2016, 2017 and 2018.
143The DivorceMate calculations at Schedule A for 2016 and 2017 take into account the respective s. 7 expenses paid by each of Mr. Myhr and Ms. Wilton, including the applicable tax deductions. Because Ms. Wilton paid a greater share of the s. 7 expenses in 2016 and 2017, Mr. Myhr is required to pay her an additional monthly child support amount of $131 for 2016 and $214 for 2017 on account of these expenses. For 2018, based on the incomes imputed to each of Mr. Myhr and Ms. Wilton, respectively, and applying the low-end of the range of the SSAG, Mr. Myhr is responsible for 78.2%, and Ms. Wilton is responsible for 21.8%, of the s. 7 expenses. For 2019, using the incomes imputed to each of Mr. Myhr and Ms. Wilton, respectively, and applying the low-end of the range of the SSAG, Mr. Myhr is responsible for 75.7%, and Ms. Wilton is responsible for 24.3%, of the s. 7 expenses. To the extent that either party is entitled to tax relief in respect of the payment of s. 7 expenses for 2018 or 2019, the parties shall use the DivorceMate software to bring into account any relevant tax consideration.
144Future s. 7 expenses shall be shared in proportion to Mr. Myhr’s and Ms. Wilton’s respective incomes, provided that both parties agree, in writing, to the s. 7 expense before it is incurred. Proof of the expense and proof of payment must be submitted to the other party when the request for payment is made. A request for payment must be made within 30 days, in writing, with accompanying supporting documentation. Any payment owing shall be made by the party indebted to the party who paid within 14 days of receipt of the supporting documentation.
145The child support awarded below shall include the cost of orthodontic care for each of A. and C., which I find to be necessary in relation to each child’s best interests, and reasonable in relation to the means of Mr. Myhr and Ms. Wilton and the family’s pattern of spending prior to the separation. However, to ensure that the contribution between the parents remains reasonable, the orthodontic treatment and payment plan for each such child must be approved in writing by both Mr. Myhr and Ms. Wilton before the treatment is undertaken.
146The parties do not disagree that it is in the best interests of the children for each of them to have a cell phone. A cell phone is necessary so that the children can communicate easily with either parent and with each other. Carrying a cell phone enhances their safety. Soon, both of them will be walking to school unaccompanied by a parent. Monthly cell phone plan charges for each of A. and C. shall be included in the s. 7 child support amount until each such child attains the age of 18 years. To guard against a child’s excessive usage of a cell phone, Mr. Myhr’s contribution to this expense shall be capped at $50 per month per child unless otherwise agreed by Mr. Myhr and Ms. Wilton or ordered by the court.
Issue 5: Is Mr. Myhr entitled to a credit for any support paid?
147The evidence is that Mr. Myhr paid $147,127.31 to or the benefit of Ms. Wilton and the children between June 2014 and September 2018 as set out in the table below.
| YEAR | PAYMENT |
|---|---|
| 2014 | $30,963.08 |
| 2015 | $47,290.23 |
| 2016 | $31,282.00 |
| 2017 | $24,992.00 |
| 2018 | $12,600 (as at the date of trial for January to September, inclusive) |
| TOTAL | $147,127.31 |
148Ms. Wilton disputes that payments made in the years immediately following separation were support payments. She submits that Mr. Myhr made these payments as if the family were still functioning as a single economic unit. As noted above, I accept Ms. Wilton’s submission for the years 2014 and 2015.
149Mr. Myhr received tax deductions for spousal support payments of $10,000 in 2016 and $7,200 in 2017, but he did not receive tax deductions for payments made in 2014 and 2015. Mr. Myhr did seek Ms. Wilton’s co-operation in allowing him to claim a tax deduction in those years. However, Ms. Wilton’s testimony was that she was advised by her tax consultant that the payments were not eligible for a deduction because they were not made in accordance with a formal separation agreement between the parties as required by the income tax rules. Accordingly, Ms. Wilton declined Mr. Myhr’s request.
150Mr. Myhr submits that he has overpaid his support obligations and further submits that his perceived overpayment should be factored into or offset against future support or the equalization payment owing. He factors into his calculation expenses he paid relating to the matrimonial home post-separation in 2014 to February 2016, Ms. Wilton’s credit card bills paid by him during that period, car insurance and repairs, and cheques he provided to Ms. Wilton for the support of the children and herself during that period.
Analysis
151For the reasons noted above, I reject Mr. Myhr’s claim for reimbursement or a credit for any amount paid to Ms. Wilton as support for herself or the children in 2014 and 2015. Mr. Myhr had the use of the matrimonial home as his studio (for which he claimed a tax deduction) and a convenient place for him to spend time with the children from May of 2014 to June of 2016.
152Based on the DivorceMate calculations at Schedule A, and using the low-end of the range of the SSAG, Mr. Myhr’s child and spousal support obligations for the years 2016, 2017 and 2018 are as set out in the table below.
| YEAR | CHILD SUPPORT (TABLE) (Monthly) | CHILD SUPPORT (S. 7) (Monthly) | SPOUSAL SUPPORT (Monthly) | TOTAL (Annually) |
|---|---|---|---|---|
| 2016 | $1,538 | $131 | $590 | $27,108 |
| 2017 | $1,594 | $214 | $288 | $25,152 |
| 2018 | $1,594 | TBD | $374 | $23,616 |
| TOTAL | $75,876 |
153In terms of actual payments made by Mr. Myhr, between February 2016 and June 2016, the evidence is that he paid Ms. Wilton $1,762 per month in spousal support for a total of $8,810. He ceased paying regular monthly spousal support to her after June 2016.
154In 2016, the evidence is that Mr. Myhr paid monthly child support in the amount of $1,507 for the months of January to June ($9,042), $1,538 from July to September ($4,614), and $1,648 from October to December ($4,944), for a total of $18,600.
155In 2017, the evidence is that Mr. Myhr paid child support of $14,992 from January to September and $1,400 per month from October to December ($4,200) for a total of $19,192.
156In 2018, the evidence is that Mr. Myhr paid child support of $1,400 per month from January to September (when the trial commenced).
157Based on Mr. Myhr’s records, the evidence is that the total amounts paid by him from 2016-2018, which he attributes to support, are: $31,282.00 in 2016, $24,992 in 2017, and $12,600 in 2018 (until the end of September).
158The following table compares the total child and spousal support owing by Mr. Myhr to the amount paid by him in each of 2016, 2017 and 2018. It also shows the difference as either an amount owing by, or a credit owing to, Mr. Myhr.
| YEAR | TOTAL OF ALL SUPPORT OWING | TOTAL AMOUNT PAID BY MR. MYHR | SUPPORT (CREDIT)/ AMOUNT OWING |
|---|---|---|---|
| 2016 | $27,108 | $31,282.26 | ($4,174.26) |
| 2017 | $25,152 | $24,992 | $160 |
| 2018 | $23,616 | $16,800 (based on child support of $1400/ month x 12 months) | $6,816 |
| TOTAL | $75,504 | $73,074.26 | $2,801.741 |
159Accordingly, Mr. Myhr owes $2,801.74 to Ms. Wilson in retroactive unpaid support plus his share of s. 7 expenses for 20181.
Issue 6: What is the equalization payment owing?
160As noted, the Family Law Act provides that when a divorce is granted or when spouses are separated with no reasonable prospect that they will resume cohabitation, absent any contract to the contrary, the spouse whose net family property is less than the net family property of the other spouse is entitled to one-half of the difference between the two net family property amounts.
161The Act provides that a person’s net family property is the value of all property owned on the date of separation, after deducting the spouse’s debts and liabilities on that date; and after deducting the value of all property, other than a matrimonial home, that the spouse owned on the date of marriage, less debts and liabilities, other than those related to the purchase or improvement of a matrimonial home, calculated as of the date of marriage; and after excluding certain property such as gifts and inheritances.
162“Property” is defined broadly in section 4(1) of the Family Law Act to include any interest, present, future, vested or contingent, in real or personal property.
Valuation Issues
163The parties disagreed on the value of Ken Myhr Music both as at the date of marriage and as at the date of separation.
164The parties disagree on the value of the following property owned by Mr. Myhr at the date of marriage: i) his residence at 481 Dovercourt Road, Toronto; ii) his 1988 Isuzu Trooper LS truck (and whether he owned it on the date of marriage); iii) his savings account at the TD Bank; and iv) his RRSP (and the contingent taxes associated with their respective RRSPs). The parties also disagree on the contingent taxes associated with the disposition costs of the RRSPs as at the date of marriage.
165Likewise, they disagree on: i) whether child tax benefits owing to Ms. Wilton on the date of separation should be included in her net family property; and ii) which spouse is entitled to deduct the debt related to an RBC Visa credit card, which Mr. Myhr paid post-separation.
Valuation of Ken Myhr Music
166Mr. Jordan, who was not a Chartered Business Valuator, valued Ken Myhr Music, as requested by the parties jointly, shortly after the separation. Mr. Jordan’s report does not provide distinct values for the business as at the date of separation and the date of marriage, but he concludes that at the date of separation, the business would have had a value of $241,000 (based largely on the business income over and above what Mr. Myhr would earn at a similar job as an employee). Notwithstanding that Mr. Jordan’s report cannot be relied on because he did not testify at the trial, Ms. Wilton uses this date of separation value for Mr. Myhr’s business in calculating his net family property.
167Mr. Sperti’s Valuation Report includes a valuation of Mr. Myhr’s interest in Ken Myhr Music as at the date of marriage and as at the date of separation. Mr. Sperti testified that he was engaged to prepare a “Level 1 Calculation Valuation Report”, which, he explained, means that he would undertake little to no independent corroboration of information provided to him by Mr. Myhr and Mr. Myhr’s counsel. As part of his scope of review, Mr. Sperti reviewed Mr. Jordan’s report and testified that he disagreed with Mr. Jordan’s method of valuation for Ken Myhr Music.
168Mr. Sperti’s Valuation Report provides a fair market value of Mr. Myhr’s interest in his business as at the date of marriage of $126,000 and as at the date of separation of $198,000. According to the Valuation Report, the difference, being $72,000, is the value to be equalized between Mr. Myhr and Ms. Wilton.
169Mr. Sperti’s Valuation Report is premised on a series of major assumptions, including the fair market value of the equipment owned by the business as at the date of marriage, as provided by Elana Harte of Steve’s Music Store in an appraisal dated November 24, 1999; the fair market value of the equipment as at the date of separation, as provided by Mr. Myhr; certain assumptions about the future royalty revenue streams expected at the date of marriage and at the date of separation; and the rate at which Mr. Myhr would pay tax on the royalties on each of those dates.
170The Valuation Report shows that from 1999 to 2001 the SOCAN royalties ranged from approximately $5,000 to $9,000 each year. They increased to a high of approximately $104,000 in 2011 and averaged approximately $80,000 between 2012 and 2014. Royalties from SODRAC ranged from a low of approximately $1,400 in 2010 to a high of approximately $10,000 in 2014.
171Mr. Sperti testified that he determined that the appropriate method of valuing the business was to calculate the adjusted book value of the business and to add it the value of the future royalty stream based on a discounted cash flow analysis.
Value of Ken Myhr Music at the Date of Marriage
172Mr. Sperti arrived at a date of marriage value for Ken Myhr Music of $126,000. He did so by adding: i) the fair market value of the business’ equipment as at November 24, 1999 based on the appraisal by Elana Harte ($95,610); ii) the value of all equipment purchased between November 24, 1999 and the date of marriage ($10,841); iii) the value of the company’s accounts receivable as represented by Mr. Myhr ($8,025); and iv) the present value of the business’ expected future royalty revenue stream ($13,000); and then by subtracting the company’s estimated accounts payable ($1,465) (assuming that these amounted to approximately one month of operating expenses, based on 2001 results). Mr. Sperti did not include any amount for a business bank account at the date of marriage because Mr. Myhr had no records from the bank for this account, though Mr. Myhr testified that he would regularly have approximately $10,000 in the company bank account.
173In her closing submissions, Ms. Wilton confirmed that she accepts Mr. Sperti’s date of marriage value for Ken Myhr Music.
Value of Ken Myhr Music at the Date of Separation
174To arrive at the date of separation value for Ken Myhr Music of $198,000 (rounded), Mr. Sperti added: i) the balance of the business’ bank account ($25,604); the fair market value of the equipment ($48,925), which was based on Mr. Myhr’s research; and the present value of the future expected royalty stream ($125,000), and then subtracted the estimated accounts payable ($1,604) (assuming that those amounted to approximately one month of operating expenses due but not paid on the valuation date). Mr. Sperti testified that the value of the business without the royalty stream at the date of separation would be $73,000.
175Based on Mr. Sperti’s Valuation Report, the royalties represent $13,000 of the $126,000 valuation of the business as at the date of marriage, and $125,000 of the $198,000 valuation at the date of separation.
176In her closing submission, Ms. Wilton accepted most of the date of separation values determined by Mr. Sperti but objected to the value of the equipment, which she asserted was higher than stated in Mr. Sperti’s Valuation Report.
177Notwithstanding Ms. Wilton’s acceptance of some of Mr. Sperti’s valuations, she is critical of the Valuation Report generally and challenges Mr. Sperti’s qualifications to prepare it because he testified that his experience in preparing valuations for musicians relates to bands as opposed to composers. Ms. Wilton did not challenge the admissibility of Mr. Sperti’s Valuation Report.
178Principally, Ms. Wilton challenges the value of the business’ equipment as determined by Mr. Sperti as of the date of separation. The equipment includes many musical instruments, recording equipment and computer hardware and software. The evidence is that Mr. Myhr asked Steve’s Music, a Toronto music store, which had provided the date of marriage value, to provide a date of separation value. It declined and suggested that Mr. Myhr use online searches to determine the value of the used equipment. Mr. Myhr testified that he used Reverb.com, an internet site where used equipment is bought and sold in Canada and the United States, to value the equipment owned by Ken Myhr Music at the time of separation. His testimony was that he searched for each piece of equipment owned by the business and when he found a comparable piece on Reverb.com, he assigned a price to the piece owned by the business, in Canadian dollars, based on the condition and history of the piece owned by the business as compared to the similar piece of equipment listed for sale on Reverb.com. Mr. Myhr provided his list of prices to Mr. Sperti who relied on it exclusively in assigning the equipment a value of $48,925.
179While Mr. Myhr’s list of values is not an independent third party appraisal, which would have assisted the court, his is the only appraisal available to the court. Ms. Wilton herself did some online searching of the value of the musical instruments owned by the business by accessing internet sites where instruments are bought and sold. However, she admitted in cross-examination that she had no experience in appraising equipment used to make music. She deposed that she made what she believed to be a reasonable assumption that the equipment would appreciate in value over the period of time between marriage and separation. Mr. Myhr challenged this assumption and testified that the equipment would not have appreciated in value in part because the way in which music is created has changed significantly over time. He testified that what he could have done in a large studio filled with equipment around the time of his marriage could now be done on a laptop with appropriate software. Mr. Myhr testified that there was a limited market for used musical instruments at the time of separation and no reason to believe that any of his used equipment had appreciated in value. Mr. Myhr also testified that at the time of separation he no longer owned about three-quarters of the equipment he had owned at the date of marriage.
180Ms. Wilton’s own research on Reverb.com resulted in her discovering a listing for a guitar similar to one owned by Ken Myhr Music, which was listed for sale at a value greater than the value that Mr. Myhr had assigned to it based on his research. In cross-examination, Mr. Myhr testified that he could not comment meaningfully on the listing introduced into evidence by Ms. Wilton because it was incomplete. It did not include enough information about the guitar for Mr. Myhr to determine whether it was the same guitar as the one owned by Ken Myhr Music.
181Ms. Wilton also suggested that an appropriate method to value the equipment would be with reference to the capital cost allowance of the equipment that Mr. Myhr was permitted to deduct from his business income each year for tax purposes. Mr. Sperti testified that, for tax purposes, it is generally accepted that such equipment depreciates over time and decreases in value. The capital cost allowance amounts run contrary to Ms. Wilton’s suggestion that the equipment would have appreciated in value.
182Ms. Wilton also suggested that a review of the capital cost allowance of the equipment would show the amount of equipment that Mr. Myhr had purchased during the marriage and prove that not all of it had been included in Mr. Sperti’s Valuation Report. This argument is not persuasive on the facts of this case. Mr. Sperti’s evidence, which I accept, was that not all of the equipment was depreciated for tax purposes. Some of it was expensed and some of it, like software, would have been fully depreciated in a very short period of time. Mr. Sperti testified that the capital cost allowance does not represent fair market value in most cases and would usually result in overstating or understating the value of a capital asset.
183Given that Ms. Wilton is not a musician or a valuator of musical instruments and recording equipment used to make music for commercial purposes, her evidence on the value of the equipment is of little utility. While Mr. Myhr’s evidence is not independent, he did make an effort to obtain a valuation from an independent third party that declined to provide the service. Between the evidence of Mr. Myhr and Ms. Wilton on the value of the business equipment, given Mr. Myhr’s profession, knowledge of the industry, and the extent of his research, I prefer his evidence.
184I find that that the value of Ken Myhr Music on the date of marriage was $126,000 and on the date of separation was $198,000 as supported by Mr. Sperti’s Valuation Report.
185The best evidence available to the court of the value of Ken Myhr Music at the date of separation is Mr. Sperti’s assessment of value. It would have benefited from an appraisal of the equipment by an independent third party, but none was provided. Ms. Wilton’s attempts at establishing a value of the equipment that is contrary to the value presented by Mr. Myhr and relied upon by Mr. Sperti fall short of the mark.
Date of Marriage Values
i) 481 Dovercourt Road, Toronto
186Mr. Myhr owned real property at 481 Dovercourt Road in the City of Toronto at the time of the marriage. He purchased the property in January of 2000 for $262,500 and sold it on August 15, 2007 for $630,000. The evidence is that both transactions were conducted as private sales so there is no data on the Multiple Listing Service (“MLS”) for either. Mr. Myhr’s evidence is that he attempted to obtain a value of the property as at the date of marriage from qualified appraisers but was told it would be difficult to do so reliably without historic MLS data.
187Mr. Myhr calculated the value on the date of marriage to be $341,250 by pro-rating the appreciation between his purchase and his sale of the property equally over the years between his purchase and the date of marriage. To test his calculation, Mr. Myhr provided evidence from a website, known as Listing.ca, which uses historical MLS data over time to estimate property values. The Listing.ca site showed the Dovercourt property as having a value of $417,574 around August 28, 2001 (a date very close to the date of marriage). Listing.ca showed the value of the property in April 2007, when Mr. Myhr sold the property, to be approximately $637,463, which is very close to the $630,000 for which Mr. Myhr sold the property in 2007.
188Mr. Myhr submits that his proration calculation of the value at the date of marriage, being $341,250, is reasonable given the lack of MLS data available with respect to his specific purchase and sale of the property. He observes that the amount he calculated for the date of marriage amount is less than the estimated date of marriage value as set out on Listing.ca, which is to Ms. Wilton’s advantage.
189Ms. Wilton asserts that the property would not have appreciated at all during the 18 months prior to marriage. She submits that the date of marriage value would be the purchase price paid by Mr. Myhr. Ms. Wilton offers no corroborative evidence in support of her theory.
190While an appraisal from an accredited valuator would have been useful in determining the date of marriage value of the property, there was none in evidence. I am satisfied that the best evidence of the value of the property at the date of marriage is that which is offered by Mr. Myhr and I accept his pro rata calculation. The use of pro rata calculations is not uncommon in the family law context. See: Best v. Best, 1999 CanLII 700 (SCC), [1999] 2 S.C.R. 868 at para. 87; Ward v. Lucis, 2018 NSSC 131 at para. 133; and Staudt v. Staudt, 2009 SKQB 7 at para. 45.
ii) 1988 Isuzu Trooper LS Truck
191Mr. Myhr includes among his date of marriage assets a 1988 Isuzu Trooper vehicle with a value of $3,000 based on the Canadian Blackbook value in August 2001. For 2001, the Blackbook does not list a 1988 Isuzu Trooper but does list a 1989 Isuzu Trooper at a value of $3,300. Because no 1988 value was available, Mr. Myhr discounted the 1989 value by $300. Mr. Myhr also produced a certificate of automobile insurance in his name for this vehicle for the period July 20, 1998 to July 20, 1999.
192Ms. Wilton disputes Mr. Myhr is ownership of the vehicle on the date of marriage. She testified that the vehicle broke down during their cohabitation prior to marriage, and that Mr. Myhr disposed of the vehicle then, not after the marriage.
193While the certificate of insurance provides proof that Mr. Myhr owned this vehicle in 1998, it does not prove that he still owned it on the date of marriage in 2001. Mr. Myhr did not produce any documentation relating to a sale or other disposition of the vehicle after the marriage. Given that Mr. Myhr has not proven that he owned the vehicle on the date of marriage, I find that he is not entitled to a deduction for the value of the vehicle as at the date of marriage.
iii) Savings at TD Canada Trust
194At trial, Mr. Myhr testified that he had a savings account at the TD Bank at the date of marriage. He produced statements from his ING account showing that close to the date of marriage there were a number of transactions between his TD Bank account and his ING bank account. Cheques to Mr. Myhr from Ms. Wilton for expenses relating to the Dovercourt property around the time of the marriage were deposited into Mr. Myhr’s TD Bank account. The evidence at trial included a statement showing a transfer by Mr. Myhr of $6,000 from this TD Bank account to his ING account just six days following the date of marriage. Ms. Wilton has produced no evidence to suggest that this $6,000 amount was acquired post marriage. Mr. Myhr has therefore proven that it is more likely than not that this $6,000 was in his TD Bank account on the date of marriage. I find that Mr. Myhr is therefore entitled to a date of marriage deduction in the amount of $6,000 for his TD Bank account.
iv) RRSPs
195Mr. Myhr produced evidence to show that on the date of marriage he had contributed to his RRSP for the years 1994 to 2001 as reflected in his tax returns for those years. The contributions were adjusted to reflect the amount withdrawn through a Home Buyers Plan to purchase the Dovercourt property. The evidence supports a total contribution of $18,356.82 for this period and a withdrawal of $10,598 in 2000 leaving $8,402, as reflected on Mr. Myhr’s net family property statement. No interest was added to this amount for appreciation between 1994 and 2001. If Mr. Myhr had withdrawn additional amounts from his RRSP prior to marriage, other than the withdrawal made in 2000, one would expect the withdrawals to be reflected on his notices of assessments for those years in which the withdrawals were made, but no such withdrawals were reflected. Mr. Myhr is therefore entitled to a pre-marriage deduction of $8,402 with regard to his RRSP as claimed by him.
196Ultimately, the parties agreed that the same percentage deduction for disposition costs should be applied to their respective RRSPs on each of the date of marriage and the date of separation. Mr. Sperti testified that contingent taxes on RRSPs were a usual deduction on either the date of marriage or the date of separation. A deduction for taxes at both the date of marriage and the date of separation is consistent with the Family Law Act and the cases on disposition costs: Mondino v. Mondino (2004), 2004 CanLII 21293 (ON SC), 9 R.F.L. (6th) 170 (Ont. S.C.) at para. 40. I find that Mr. Myhr’s approach in deducting a lesser percentage on the date of marriage (15%) (owing to lower tax rates then) than on the date of separation (25%) is an acceptable approach. This approach was supported by Mr. Sperti whose evidence I accept on the point.
Date of Separation Values
i) Child Tax Benefit
197On October 20, 2016, following separation, the Canada Revenue Agency paid Ms. Wilton $23,033.81 representing the Canada Child Tax Benefit and the Ontario Tax Benefit for 2012-2015. The benefits accrue monthly and are paid to the lower income spouse for the benefit of the family. The amounts for 2012-2014 (the latter pro-rated to April 2014, being the month before separation) total $13,323.21.
198Mr. Myhr submits that $13,323.21 should be included in Ms. Wilton’s net family property because this value accrued during the marriage for the benefit of the family and was owing to Ms. Wilton at the time of separation.
199Ms. Wilton submits that this amount should not be included in her net family property because she received the payment after the date of separation. Further, Ms. Wilton asserts that if she had received the benefit in each of the years for which it was owing, she would have spent it on the children and that, upon receipt of the benefits in 2016, she did spend the money on the children. No evidence was adduced to show how the payment was used for the benefit of the children.
200Courts have included retroactive disability tax refunds relating to the period prior to a couple’s separation in a spouse’s net family property: Folland v. Folland, 2014 PESC 26 at para. 12. In Ontario, in the case of Okel v. Misheal, 2007 CanLII 7409 (ON SC) at para. 36, the court found that a lump sum retroactive payment of $23,606.94 for the Child Tax Benefit for years prior to separation was a receivable to the mother at the valuation date and that there was no basis not to include it in her net family property. A similar decision was reached in Desjardins v. Desjardins, 2013 ONSC 2283 at para. 174, wherein the court pro-rated, to the date of separation, the amount of a tax refund received. I see no basis for deviating from the reasoning in these cases and therefore find that $13,323.21 of the Child Tax Benefit is to be included in the net family property of Ms. Wilton.
ii) RBC Visa Debt
201Mr. Myhr had an RBC Visa credit card on which Ms. Wilton was an authorized user. Mr. Myhr paid the balance owing of $2,289.73 as of June 6, 2014, post-separation. In his Comparison of Net Family Property Statements, he included this debt, in full, as his own for the purposes of the equalization of the net family properties. By contrast, Ms. Wilton divided the debt between them in her Comparison of Net Family Property Statements. Given that the credit card was owned by Mr. Myhr and he paid the debt in full, I find that he is entitled to a deduction in the same amount. Ms. Wilton proffered no persuasive evidence in support for her position that the debt was a joint debt at the time of separation.
Determination of the Equalization Payment
202Mr. Myhr submits that he owes Ms. Wilton $35,595.57 as an equalization payment as shown on his Comparison of Net Family Property Statements. Ms. Wilton submits that Mr. Myhr owes her an equalization payment of $115,278.37 as shown on her Comparison of Net Family Property Statements. Based on the foregoing analysis of the net family property items in dispute, the only adjustment to the net family property amounts as proposed by Mr. Myhr is the elimination of his deduction for the value of the Isuzu Trooper LS truck at the date of marriage. This results in an additional amount owing to Ms. Wilton of $1,500. Accordingly, I find that Mr. Myhr is required to pay Ms. Wilton an equalization payment of $37,095.57.
Order
203An Order shall issue on the following terms:
Parenting
- The Minutes of Settlement dated September 17, 2018 respecting parenting, a copy of which is attached as Schedule B hereto, and the amendment to the Minutes of Settlement, as agreed to between the parties following the trial, attached to my Order dated November 29, 2018, also attached hereto as part of Schedule B, are incorporated into this Order and shall form part of it.
Mr. Myhr’s Income
Mr. Myhr shall include his royalties in his income for support purposes unless the parties agree or the court orders otherwise.
Mr. Myhr’s income for support purposes (including his royalty income, the gross-up adjustments in accordance with the Guidelines based on the methodology used by Mr. Sperti in his report dated March 22, 2018 entitled “Calculation of Mr. Ken Myhr’s Income Pursuant to the Federal Child Support Guidelines for 2014 to 2016 and Projected 2017”, at Schedule 1, and income imputation in accordance with the Guidelines) shall be $110,000 for each of 2016, 2017, 2018 and 2019, inclusive.
Ms. Wilton’s Income
- Ms. Wilton’s income for support purposes imputed to her in accordance with the Guidelines is $18,000 for 2016; $25,000 for each of 2017 and 2018; and $35,000 for 2019.
Spousal Support
- Mr. Myhr shall pay prospective spousal support at the low-end of the Spousal Support Advisory Guidelines based on the incomes for each of Mr. Myhr and Ms. Wilton as set out in this Order for a period of nine years following separation, which shall terminate on May 31, 2023. Mr. Myhr shall pay monthly spousal support payments commencing on January 1, 2019 in the amount of $17 per month for 2019. Commencing June 1, 2020, the parties shall determine spousal support in June of each year based on the respective incomes of Mr. Myhr and Ms. Wilton from the prior year as determined in accordance with the Guidelines. The new spousal support amount shall commence on July 1 and be paid going forward on the first day of each month. Mr. Myhr shall be given a credit against spousal support for payments made during the applicable period and shall pay on July 1 any amount owing retroactive to January 1 of that year.
Child Support (including s. 7 expenses)
Based on an imputed income of $110,000 to Mr. Myhr for each of 2016, 2017, 2018 and 2019, Mr. Myhr’s table child support obligations for each of these years are as follows: i) for 2016, $1,538 per month or $18,456 for the year; ii) for 2017, $1,594 per month or $19,128 for the year; iii) for 2018, $1,594 per month, or $19,128 for the year; and iv) for 2019, $1,594 per month, or $19,128 for the year.
If Mr. Myhr has not made child support payments in the amount of $1,400 for each of October, November and December 2018, he shall make each outstanding payment within 10 days of this Order.
Mr. Myhr shall pay to Ms. Wilton retroactive child support in the amount of $2,801.74. Such payment may be made from the proceeds held in trust by his counsel Epstein Cole if both parties agree, in writing, to such payment. Otherwise Mr. Myhr shall make such payment within 30 days of this Order.
Commencing January 1, 2019 and on the first of each month thereafter, Mr. Myhr shall pay to Ms. Wilton child support for the two children of the marriage, whose full names and dates of birth shall be included in the Final Order, in the amount of $1,594 per month based on his 2019 imputed income of $110,000.
Commencing June 2020, the parties shall review and adjust child support in June of each year once each party’s income for support purposes is known and such income shall be adjusted in accordance with the Guidelines, if appropriate. Regarding Mr. Myhr’s income from Ken Myhr Music, if any, the royalty income shall be included in his income for support purposes. Otherwise, the methodology for calculating Mr. Myhr’s income from Ken Myhr Music as employed by Mr. Sperti in his report dated March 22, 2018 entitled “Calculation of Mr. Ken Myhr’s Income Pursuant to the Federal Child Support Guidelines for 2015 to 2016 and Projected 2017” shall be used in this regard unless the parties agree or the court orders otherwise.
In each such year (commencing June, 2020), the parties shall adjust child support back to January 1 in accordance with their respective incomes as determined in accordance with the terms of this Order. The new child support amount shall commence on July 1 and be paid going forward on the first day of each month. Mr. Myhr shall be given credit for payments made during the applicable time period and shall pay on July 1 any amount owing retroactive to January 1 of that year.
Mr. Myhr’s s. 7 child support obligations for 2016 are $131 per month or $1,572 for the year; and for 2017 are $214 per month or $2,568 for the year.
Mr. Myhr shall pay his proportionate share of s. 7 expenses for 2018, being 78.2% of such expenses, using the DivorceMate software to take into account any relevant tax consideration.
Ms. Wilton shall pay her proportionate share of the children’s s. 7 expenses for 2018, being 21.8% of such expenses, using the DivorceMate software to take into account any relevant tax consideration.
The party who owes the other the shortfall for 2018 s. 7 expenses shall pay to him or her such shortfall within 30 days of this Order.
The children’s current s. 7 expenses are music lessons, medical and dental expenses in excess of $100 per year, and orthodontic expenses in respect of which Mr. Myhr and Ms. Wilton have agreed, in writing, to a treatment plan. Mr. Myhr shall also contribute to the monthly cell phone charges of each child to a maximum of $50 per month per child until each child attains the age of 18 years unless the parties agree or the court orders otherwise.
Commencing January 1, 2019, the parties shall share the children’s s. 7 expenses in proportion to their respective incomes for support purposes as set out in this Order. For the expenses to be shareable between the parties, the parties must both consent to the expense in writing and in advance of the expenditure, which consent shall not be unreasonably withheld.
A Support Deduction Order shall issue immediately.
Mr. Myhr shall pay all premiums when due and shall maintain Ms. Wilton as the beneficiary of $250,000 of his term life insurance policy with RBC Insurance. This quantum of insurance may be reviewed and adjusted from time to time in accordance with Mr. Myhr’s remaining child and spousal support obligations.
Property
Mr. Myhr’s royalties shall be capitalized and included in his property for the purposes of determining his net family property.
Mr. Myhr shall pay to Ms. Wilton an equalization payment of $37,095.57. This payment shall be made within 60 days of the date of this Order. Such payment may be made from the proceeds held in trust by Epstein Cole if both parties agree, in writing, to such payment. Otherwise, Mr. Myhr shall make such payment.
Once all costs, retroactive support and the equalization payment have been paid, any remaining proceeds held in trust by Epstein Cole for Mr. Myhr shall be paid to Mr. Myhr. At that time, Mr. Myhr may collect his remaining household contents and personal belongings from the matrimonial home. Ms. Wilton shall fully cooperate in allowing Mr. Myhr to collect these items.
Divorce
- The parties, Elizabeth Wilton and Kenneth Myhr, who were married at Toronto, Ontario, on August 25, 2001, are hereby divorced, which divorce shall take effect 31 days after the date of this Order.
Interest
There shall be no pre-judgment interest owing on the equalization payment or the retroactive support owing by Mr. Myhr to Ms. Wilton.
This Order bears post-judgment interest at the rate established by Courts of Justice Act, R.S.O. 1990, c. C.43, from time to time, effective from the date of this Order. Where there is a default, the payment in default shall bear interest only from the date of default.
Costs
204Success in this matter is divided between the parties. I strongly encourage them to agree on the matter of costs. If by March 22, 2019 the parties have not agreed on costs, costs submissions may be made on the following schedule. Ms. Wilton may make written submissions, not exceeding three pages in length plus a costs outline or bill of costs and offers to settle, if any, within two weeks of March 22, 2019. Mr. Myhr may make written submissions not exceeding three pages plus a costs outline or bill of costs and offers to settle, if any, not later than April 19, 2019. Ms. Wilton may make reply submissions limited to one page in length not later than May 3, 2019.
Dietrich J.
Released: February 26, 2019
COURT FILE NO.: FS-16-412632
DATE: 20190226
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ELIZABETH WILTON
Applicant
– and –
KENNETH MYHR
Respondent
REASONS FOR DECISION
Dietrich J.
Released: February 26, 2019
1 This result is based on the assumption that Mr. Myhr paid $1,400/month in child support for each month in 2018, including October, November and December.