Ontario Superior Court of Justice
COURT FILE NO.: 251/17 DATE: 2019/01/04
Parties
B E T W E E N:
CHRISTOPHER MARK LYLE SMITH Applicant
– and –
CHRISTA MAE SMITH Respondent
Counsel
Lucienne MacLauchlan, for the Applicant
Peter Robertson, for the Respondent
HEARD: August 20, 2018 (Napanee)
RULING ON INTERIM MOTION
CORTHORN J.
Introduction
[1] The parties separated in January 2016, after 19.5 years of marriage. They continued to live separate and apart under the same roof until March 2016. In that month, Mrs. Smith and the parties’ three children moved out of the matrimonial home.
[2] Mrs. Smith and the children moved to a home that she purchased. They have continued to live in that home since the spring of 2016. Mrs. Smith required a mortgage to facilitate the purchase of the home.
[3] Mr. Smith has continued to live in the matrimonial home, which is mortgage-free. At times, subsequent to the date of separation, the parties shared expenses related to the matrimonial home (i.e., property taxes and insurance). More recently, Mr. Smith has been fully responsible for expenses related to the matrimonial home.
[4] There is a significant disparity in the parties’ respective incomes. Mrs. Smith earns a six-figure income from and has a 49 per cent ownership interest in a pharmacy. Mr. Smith works on his family farm and as a volunteer firefighter. He earns a five-figure income. His ownership stake in the family farm is an issue in the parties’ dispute.
[5] No child support, spousal support, or occupation rent have been paid since the date of separation. Mr. Smith brings a motion for interim spousal support. In response, Mrs. Smith brings a motion for (a) interim child support, (b) occupation rent, and (c) an order for the sale of the matrimonial home owned by the parties as joint tenants.
[6] At the conclusion of argument on the motions, counsel indicated that they anticipated proceeding with a settlement conference within a number of weeks (i.e., in late September 2018). As a result, it was agreed that a decision on the motions would be deferred, pending the outcome of the settlement conference. The settlement conference did not proceed as had been anticipated. The parties require a decision on the motions.
The Issues
[7] The issues to be determined are:
Is Mr. Smith entitled to interim spousal support and, if so, in what amount?
Is Mrs. Smith entitled to interim child support and, if so, in what amount?
Is Mrs. Smith entitled to occupation rent from Mr. Smith and, if so, in what amount?
Is the matrimonial home to be sold and, if so, on what terms?
Issue No. 1 – Spousal Support
a) Positions of the Parties
[8] Mr. Smith relies on the depletion of his Tax-Free Savings Account (“TFSA”) as evidence of a needs-based entitlement to spousal support. He cites the depletion of that account from $43,700, at the date of separation, to $6,870, as of August 2018. Mr. Smith also points to the significant disparity in the parties’ respective incomes: Mrs. Smith earns between eight to ten times Mr. Smith’s annual income (depending on the figures used). Mr. Smith submits that he is entitled to $5,800 per month in interim spousal support.
[9] Mrs. Smith argues that entitlement to spousal support is a live issue. She submits that Mr. Smith’s lifestyle has been unaffected by the parties’ separation. If Mr. Smith is entitled to spousal support, then Mrs. Smith submits that it falls at the low range ($2,394 per month).
b) The Law
[10] In his application, Mr. Smith seeks spousal support retroactive to the date of separation. Given this request, the court has jurisdiction pursuant to s. 15.2(2) of the Divorce Act, R.S.C. 1985, c. 3 (the “Act”), to make an interim order for support. The factors that must be considered by the court on a motion for interim support include those set out in s. 15.2(4) of the Act:
(a) the length of time the spouses cohabited;
(b) the functions performed by each spouse during cohabitation; and
(c) any order, agreement or arrangement relating to support of either spouse.
[11] The objectives of either a final or an interim spousal support order are identified in s. 15.2(6) of the Act. The objectives include:
(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
(b) 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;
(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
c) Analysis
[12] Mr. Smith commenced his application in November 2017, just shy of two years subsequent to the date of separation. As already noted, a request for spousal support is included in the application. In November 2017, Mr. Smith brought a motion for leave to pursue this motion prior to a case conference being conducted.
[13] The notice of motion in which Mr. Smith requests an order for interim spousal support is dated April 2018. The motion was originally returnable in May 2018. The return date for the motion was adjourned to permit Mrs. Smith to deliver certain documents and responding materials and for questioning. The motions were ultimately heard in August 2018.
[14] I do not consider either the timing of issuance of the notice of application or Mr. Smith’s motion to amount to delay on his part that would, in and of itself, preclude entitlement to an order for interim spousal support.
i) Entitlement to Spousal Support
[15] I turn to Mrs. Smith’s argument that, leaving aside potential delay, Mr. Smith does not meet the threshold for entitlement to spousal support. Mr. Smith identifies the post-separation depletion of his TFSA account as evidence of his need for spousal support. In response, Mrs. Smith argues that (a) the depletion occurred within a short period subsequent to the date of separation, and (b) the balance in Mr. Smith’s TFSA has remained level since that time. There is, however, no specific evidence in the record in support of that argument.
[16] The motion was initially adjourned from May to July 2018, to permit completion of financial disclosure, cross-examination of Mr. Smith, questioning, and the exchange of materials on the motion. Mrs. Smith did not meet the deadlines with respect to the delivery of her financial disclosure and responding materials. As a result, the motion was adjourned from July to August 20, 2018.
[17] The evidence upon which Mrs. Smith relies is set out at para. 62 of her June 28, 2018 affidavit (Vol. 1, Tab 17 of the Continuing Record (“CR”)). She therein states:
The applicant claims financial hardship and points to his diminished TFSA. However, he does not state he spent the TFSA money within 6 or 7 weeks of separating (over two years ago). The balance has remained unchanged for months now, he confirmed in his questioning it had remained the same since the litigation started. For some reason he went and bought a $20,000 jet ski after separation, but he complains he has not money to pay support for his children.
[18] Mrs. Smith did not file a copy of the transcript from either the questioning or, if conducted, cross-examination of Mr. Smith. She identifies Mr. Smith as the source of some of the information in the paragraph quoted immediately above. Mrs. Smith does not, however, state whether she was present when questioning of Mr. Smith occurred. If she was present, then the relevant portion of para. 62 is based on “information and belief”. It is not identified as such, nor is it stated that Mrs. Smith believes the information to be true. Mr. Smith’s financial status is a contentious issue. As a result, the relevant portion of para. 62 does not rise to the level of evidence properly before the court.
[19] If Mrs. Smith was not present when Mr. Smith was questioned, then the relevant portion of para. 62, quoted above, is hearsay upon hearsay. As such, it is not evidence properly before the court.
[20] For the purpose of the motion for interim spousal support, I accept that subsequent to the date of separation, the balance in Mr. Smith’s TFSA was depleted by approximately $37,000. Evidence of the depletion is found in Mr. Smith’s financial statement dated September 7, 2017 (Vol. 1, Tab 2 of the CR).
[21] I find that the depletion of Mr. Smith’s TFSA is some evidence of need for spousal support.
[22] With respect to s. 15.2(6) of the Act, Mrs. Smith’s evidence is that (a) prior to separation Mr. Smith worked seven days per week on his family’s farm, and (b) Mr. Smith has continued to work at that pace since the date of separation. Mrs. Smith’s evidence in that regard is uncontradicted. For the purpose of Mr. Smith’s motion, I draw an inference from that evidence and find that the separation did not result in a significant change to Mr. Smith’s lifestyle. His day-to-day life continued as it was prior to the separation.
[23] I find that Mr. Smith is entitled to interim spousal support on a needs basis and at the low range. Mr. Smith is not advancing a claim for interim spousal support on a compensatory basis.
ii) The Parties’ Respective Annual Incomes
[24] The parties do not agree upon the figures to be used in calculating interim spousal support. Whatever figure is determined for Mr. Smith’s income will also serve as the basis for his child support obligation addressed in Issue No. 2 below.
[25] For the following reasons, I find that Mr. Smith’s annual income for the purposes of these motions is $28,000:
• Mr. Smith’s historical Line 150, Total Income was a negative amount in 2014 (-$155.33) and 2015 (-$1,325.03). In 2016, his Line 150, Total Income was $1,180.65;
• Mr. Smith’s Line 150, Total Income is the result of various write-offs applied to gross farming income ranging from $32,250 in 2014, to $22,800 in 2015, and $25,000 in 2016. (I note that the average of those amounts is $26,683.);
• In his August 13, 2018 financial statement (Vol. 2, Tab 22, CR), Mr. Smith reports employment income (from farming) of $22,000 per year;
• Mr. Smith previously did snowploughing for the county. He did not retain that contract for the winter of 2017-18; and
• In his April 30, 2018 affidavit, Mr. Smith’s evidence is that his gross income from farming is fairly consistently $25,000 per year. He also earns approximately $3,000 annually as a volunteer firefighter.
[26] On the return of the motion, Mr. Smith consented to the use of $28,000 as his annual income for the purpose of determining interim spousal and child support.
[27] Mrs. Smith argues that a more appropriate income for Mr. Smith would be $40,000, and that amount should be grossed up because Mr. Smith receives that amount tax-free (June 28, 2018 affidavit, para. 41). Mrs. Smith’s argument or belief in that regard is based on cash income Mr. Smith is said to have received throughout the marriage. The court is not in a position to consider matters such as imputation and gross-up of Mr. Smith’s annual income absent (a) more detailed evidence as to Mr. Smith’s cash income during the years the parties were together, and (b) expert evidence with respect to taxation of income from farming.
[28] I turn to Mrs. Smith’s income. Mr. Smith requests that spousal support be based on Mrs. Smith’s Line 150, Total Income in the year of separation ($332,887 in 2016). He submits that what appears to be a decline in Mrs. Smith’s income in subsequent years is the result of deliberate conduct on Mrs. Smith’s part.
[29] As a part-owner of the pharmacy at which she works, Mrs. Smith’s income is subject to fluctuation from year-to-year. Mrs. Smith argues that the decrease in her income since 2016 is the result of changes in the business; it is not the result of any deliberate conduct on her part. Included as exhibit “B” to Mrs. Smith’s August 13, 2018 financial statement is a copy of an Estimate Valuation Report, dated January 2017 and prepared by Wilkinson & Company LLP—Chartered Accountants. The report was prepared at the request of Mrs. Smith’s counsel for the purpose of the matrimonial litigation.
[30] I do not rely on the Wilkinson report as expert evidence for the purpose of the motion. I note, however, that the author of the report predicted that a number of changes made by the provincial government in 2015 with respect to the pricing of prescription medication would have a “net effect of … [reducing] sales and fees and therefore gross profits and incomes” (see p. 5 of the report). Mrs. Smith submits that the changes in her income over time are a reflection of that prediction coming true; the audited financial statements for the pharmacy are said by Mrs. Smith to provide additional evidence in that regard.
[31] In determining interim spousal support payable, it is not the role of the court to undertake the type of analysis required under s. 15.1 of the Act when determining long-term spousal support. An order for interim spousal support is intended to provide a reasonably acceptable solution to a difficult problem until trial.
[32] For the purpose of Mr. Smith’s motion I accept, as accurate and fair, Mrs. Smith’s Line 150, Total Income in her 2017 Income Tax Return—$264,000. That figure is relied on under Issue No. 2 when determining the parties’ respective shares of s. 7 expenses.
d) Summary
[33] For the purpose of calculating interim spousal support, I find that (a) Mr. Smith’s income is $28,000, and (b) Mrs. Smith’s income is $264,000 in accordance with her Line 150, Total Income from her 2017 Income Tax Return.
[34] The parties shall carry out the appropriate Divorcemate calculations. If the parties are able to agree upon the amount for interim spousal support, they shall deliver to the court to my attention a copy of the Divorcemate calculation and a list of the parameters entered in support of that calculation. A further endorsement can then be issued, which sets out the amount of interim spousal support from June 1, 2018 forward.
[35] In the event the parties are unable to agree upon the amount for interim spousal support and the amount owing from June 1, 2018 forward, they may make further submissions to me in writing. The submissions, if made, shall include the Divorcemate calculations and a brief explanation of the parameters for the calculations
Issue No. 2 – Child Support
a) Child Support Generally
[36] There are three children of the marriage: Hannah (born, March 26, 1999); Shelby Elizabeth (born, April 16, 2001); and Lauren Lucille (born, December 1, 2004). On the consent of the parties, a final order with respect to custody and access was made in June 2018 by Swartz J. The terms of the order include:
• The parties have joint custody of the girls;
• The girls shall reside in the primary care of their mother;
• In the event the parties are unable to agree, Mrs. Smith has final say with respect to education and extra-curricular activities; and
• Mr. Smith is to have parenting time with the girls on alternate weekends and at alternate or additional times in accordance with the girls’ respective wishes.
[37] Mrs. Smith’s uncontradicted evidence on this motion is that since the date of separation (and her subsequent departure from the matrimonial home):
• She has continued, as she was prior to separation, to be the girls’ primary caregiver;
• The girls have resided with her;
• She has paid all of the s. 7 expenses;
• The girls have been seeing their father for a few hours every couple of weeks; and
• Only Shelby has visited with Mr. Smith on an overnight basis—at most every couple of weeks and only if Mr. Smith is available.
[38] In her answer, Mrs. Smith claims entitlement to child support from the date of separation. For the purpose of her motion, the claim for interim child support is from July 1, 2018 forward. Mr. Smith acknowledges his responsibility to pay child support. He admits that he has not made any child support payments.
[39] The interim child support is based on Mr. Smith’s income of $28,000. The support changes from that for three children in July and August 2018, to that for two children from September 1, 2018 forward.
[40] On an interim basis, for July and August 2018, Mr. Smith’s child support obligation is $582 monthly, and thereafter commencing in September 2018, is $428 per month.
[41] When the motion was heard, it was anticipated that Hannah would, in a matter of weeks, be attending college away from home. I have no evidence as to whether she did so. As a result, this endorsement is without prejudice to Mrs. Smith seeking child support, at a later date, for three children from September 2018 forward based on evidence with respect to Hannah’s circumstances.
b) Section 7 Expenses
[42] It is undisputed that Mrs. Smith has paid all s. 7 expenses incurred since the date of separation. She estimates that the s. 7 expenses averaged $12,000 per year in 2016 and 2017. No figures have been provided for Hannah’s post-secondary education expenses. As a result, that component of extra-ordinary expenses is not considered for the purpose of Mrs. Smith’s motion.
[43] Mr. Smith questions the validity of the s. 7 expenses claimed. He argues that some of the expenses relate to a lavish lifestyle. He complains that he was not consulted with respect to any of the expenses incurred.
[44] Based on the terms of the final order with respect to custody and parenting time, Mrs. Smith had the final say with respect to extra-curricular activities.
[45] Once again, it is not the court’s role to conduct a detailed analysis, as it would for the purpose of a final order. I find it reasonable and fair to base Mr. Smith’s interim contribution to s. 7 expenses on a figure of $9,000 per year ($250 per month for each child; for an annual total per child of $3,000; and three children).
[46] With Mrs. Smith’s income at $264,000 and Mr. Smith’s at $28,000, their respective pro-rata shares of s. 7 expenses are roughly 90 and 10 per cent. Mr. Smith’s pro-rata share of s. 7 expenses is $75 per month (($9,000 x 0.01) /12). That amount is in addition to the interim child support.
Issue No. 3 – Occupation Rent
[47] A claim for occupation rent is made at para. 8 of Mrs. Smith’s answer dated December 7, 2017. A request for an interim order requiring Mr. Smith to pay occupation rent is made at para. 3 of Mrs. Smith’s notice of motion dated June 29, 2018. When that document was prepared, the return date for the parties’ respective motions was July 9, 2018.
[48] Rent paid for similar properties in the area in which the matrimonial home is located is one of the factors to consider when determining the amount of occupation rent. Counsel for Mrs. Smith acknowledged no evidence in that regard was filed by Mrs. Smith. Counsel advised the court that the evidence could not be filed “in time”. It was incumbent upon Mrs. Smith to file the requisite evidence in time.
[49] The only evidence before the court in support of Mrs. Smith’s claim for occupation rent is set out in her June 28, 2018 affidavit. In that affidavit, Mrs. Smith expresses what she acknowledges is her belief that the matrimonial home could be rented for “a substantial amount”. She provides no basis for her belief in that regard other than the value of the matrimonial home.
[50] In requesting that occupation rent be set at $600, Mrs. Smith relies on the monthly amount she currently pays towards the mortgage on the home she purchased subsequent to the date of separation ($1,200). She divides that amount in half to reach the figure of $600.
[51] The value of the matrimonial home is another factor to consider when determining a reasonable figure for occupation rent. The parties disagree as to the fair market value of the property they own as joint tenants. Mr. Smith places a value of approximately $510,000 on the property. Mrs. Smith’s evidence is that the property is worth in excess of $765,000.
[52] Mrs. Smith had ample time to review how household expenses, such as property taxes and insurance, have been shared between the parties since the date of separation. The parties’ respective contributions towards those expenses is a factor to consider in support of a request for occupation rent. That arithmetic was not done by Mrs. Smith and provided to the court.
[53] The evidence before the court is insufficient to support an order for payment of occupation rent on an interim basis.
[54] Mrs. Smith’s request for occupation rent is dismissed without prejudice to Mrs. Smith renewing her request for same on better evidence. If, however, Mrs. Smith requires leave of the court to bring a further interim motion, then she must seek leave to do so. This order is “without prejudice” only to the extent that the dismissal, at this time, of the motion for occupation rent is not an absolute bar to Mrs. Smith’s entitlement to interim occupation rent.
Issue No. 4 – Matrimonial Home
[55] Mr. Smith’s evidence is that the matrimonial home is situated on a piece of property that was severed from his parents’ family farm. As a result, the home has value to Mr. Smith beyond its monetary value.
[56] It is undisputed that Mrs. Smith relied on the matrimonial home as security when financing her share of the purchase price of the pharmacy of which she is a 49 per cent owner. The issues of net family property and an equalization payment are significant issues to be determined in this litigation. Not only is the value of the pharmacy business a factor in determining those issues; Mrs. Smith raises Mr. Smith’s potential ownership of or ownership stake in the family farm as relevant to those issues.
[57] The possibility exists that (a) an equalization payment is owed by Mrs. Smith to Mr. Smith, and (b) Mrs. Smith’s obligation in that regard may be satisfied, in whole or in part, by the transfer from Mrs. Smith to Mr. Smith of her interest in the matrimonial home.
[58] I find that it would be unreasonable to require Mr. Smith to move from the matrimonial home before the issues of net family property and an equalization payment are determined.
[59] Mrs. Smith’s motion for an order that the matrimonial home be sold is dismissed.
Disposition
[60] I order as follows:
Mrs. Smith shall pay interim spousal support to Mr. Smith on the first of each month commencing June 1, 2018.
The interim spousal support referred to in paragraph 1 shall be based on an annual income of $28,000 for Mr. Smith and $264,000 for Mrs. Smith.
The parties shall carry out the appropriate Divorcemate calculations.
In the event the parties are able to agree upon the figure for interim spousal support, they shall deliver to the court a copy of the Divorcemate calculation and a list of the parameters entered in support of that calculation.
In the event the parties are unable to agree upon the figure for interim spousal support, they shall make further submissions in writing. The submissions, if made, shall include the parties’ respective Divorcemate calculations and a brief explanation of the parameters for those calculations.
For each of July and August 2018, Mr. Smith shall pay interim child support of $582 per month (a total of $1,164).
Commencing on September 1, 2018, and on the first of each month thereafter, Mr. Smith shall pay interim child support of $428.
Commencing on July 1, 2018, and on the first of each month thereafter, Mr. Smith shall pay $75 per month towards s. 7 expenses. That amount is in addition to the interim child support in subparagraphs 6 and 7, above.
Mrs. Smith’s motion for an order requiring Mr. Smith to pay occupation rent on an interim basis is dismissed, without prejudice to Mrs. Smith renewing her request for same on better evidence.
If Mrs. Smith requires leave of the court to bring a further interim motion for occupation rent, she shall seek leave as required.
Mrs. Smith’s motion for an order that the matrimonial home be sold is dismissed.
Costs
[61] Success on the motions is divided. Mr. Smith was successful in obtaining an order for interim spousal support. On the other hand, it was not until he brought that motion and was faced, in return, with a motion for interim child support that he consented to pay child support. Mrs. Smith’s success on the issues of interim child support and s. 7 expenses is tempered by her lack of success on the two issues related to the matrimonial home.
[62] I am inclined to order that there shall be no costs awarded in relation to the motions. I understand, however, that the parties may wish to make submissions with respect to costs. In the event no submissions are delivered to the Napanee Courthouse by 4:00 p.m. on Friday, January 18, 2019, there shall be no order as to costs.
[63] Should either party make costs submissions, they shall be made in accordance with the following terms:
a) The submissions shall be limited to a maximum of four pages, exclusive of a bill of costs;
b) Written submissions shall comply with Rule 4 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194;
c) Hard copies of any case law or other authorities relied on shall be provided with the submissions and shall comply with Rule 4 of the Rules of Civil Procedure with respect to font size;
d) The submissions, the documents referred to therein, and case law and other authorities shall be on single-sided pages;
e) In the event either party wishes to deliver a reply to the costs submissions of the other party, the reply submissions shall be delivered to the Napanee Courthouse by 4:00 p.m. on Friday, February 1, 2019. Reply submissions shall comply with paragraphs (a) to (d) above.
Madam Justice Sylvia Corthorn
Released: January 4, 2019
COURT FILE NO.: 251/17 DATE: 2019/01/04
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
CHRISTOPHER MARK LYLE SMITH Applicant
– and –
CHRISTA MAE SMITH Respondent
RULING ON INTERIM MOTION
Madam Justice Sylvia Corthorn
Released: January 4, 2019