Court File and Parties

COURT FILE NO.: FS-13-388250-00 DATE: 20200227 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: Catherine Elizabeth Politis Applicant – and – Themistocles (Tim) Politis Respondent

Counsel: Herschel Fogelman/Erin Chaiton-Murray, for the Applicant James D. Singer, for the Respondent

HEARD: September 23, 24, 25, 26, 27, October 1 and 2, 2019 E.L. Nakonechny, J.

REASONS FOR DECISION

Overview

[1] The parties were married on December 30, 1982. They separated on August 28, 2008 after a 25-year marriage. At the time of separation, each party was 48 years old. The Applicant and Respondent are now 60 and 61 years old, respectively.

[2] The parties have three adult children: Christopher, aged 34, Alexandra, aged 31, and Elizabeth, aged 26. At the time of separation, Christopher had completed his first post-secondary degree. Alexandra and Elizabeth were still attending school full time.

[3] Christopher subsequently completed a master’s degree. He is now married and has twin boys. Alexandra completed a Ph.D. She lives and works in London, England. Elizabeth completed her undergraduate education at Queen’s University and St. Lawrence College. She resides with the Applicant and the Applicant’s common law spouse, Andrew Burleigh.

[4] After separation, the parties and the two younger children continued to reside in the jointly-owned matrimonial home known municipally as 80 Southdale Dr., Toronto (“the matrimonial home”). The Respondent paid the majority of the carrying costs of the home, the expenses of the parties, and the post-secondary education expenses of the children from the date of separation until the matrimonial home was sold.

[5] The matrimonial home was sold in October 2012 for the sale price of $1,138,520.09. The home was significantly encumbered. The net proceeds of sale were $113,263.05. This amount was initially held in trust. It was dispersed following an interim motion heard in July 2015, which will be discussed below.

[6] Other than the proceeds of sale of the home, the parties had no significant assets at the date of separation. Each of them had some consumer debt. There was no equalization paid by either party.

[7] The Applicant completed a high school education. It is her position that she was a full-time homemaker and caregiver to the children throughout the long traditional marriage. The Applicant has not been employed since separation. She says she has no ability to earn income or contribute to her own support.

[8] The Respondent is a civil engineer. He earns income through a professional corporation, Politis Engineering Ltd. The Respondent began operating his own business in 1992. He worked from an office in the basement of the matrimonial home. He now works from a home office in his rental condominium.

[9] The Applicant has cohabited with Andrew Burleigh since either 2009 (the Respondent’s evidence) or 2011 (the Applicant’s evidence). By either calculation, 10 years or 8 years, the relationship is lengthy and one of permanence.

[10] On January 1, 2015, the Respondent began paying interim spousal support to the Applicant in the amount of $5,288 per month based on an imputed income of $200,500, pursuant to the Order of Harvison Young J. (as she then was), dated November 13, 2015 (“the interim Order”). In calculating the quantum of interim support, Harvison Young J. took into account a monthly amount contributed by Mr. Burleigh to the Applicant’s expenses.

[11] The Respondent takes the position that Mr. Burleigh has both a legal obligation to support the Applicant as his common law spouse and the financial ability to do so. He argues that his own obligation to pay support to the Applicant should be terminated or suspended to a “dollar a year” in the event the Applicant and Mr. Burleigh separate in the future. He also seeks credit for overpayments of spousal support made since January 1, 2015, based on his income as calculated by Melanie Russell of Kalex Valuations.

[12] The Respondent argues that, after he began working from home in 1992, he was an equal caregiver to the children and assisted almost equally with the homemaking duties. It is his position that the marriage was not a traditional one and that the Applicant did not suffer economic detriment arising from the roles of the parties during the marriage or its breakdown. The Applicant could have worked outside of the home but preferred not to, although there were periods during the marriage when she was employed. He says she had and still has the ability to work and earn income to contribute to her own support.

[13] The Applicant seeks increased monthly spousal support from the Respondent for an indefinite period. She argues that the Respondent has underpaid support since January 1, 2015, as his income in those years was higher than the income imputed by Harvison Young J. in the interim Order.

[14] The Applicant states that the Respondent has shown bad faith in this proceeding by unilaterally terminating voluntary support in 2013, refusing to provide disclosure to experts retained to prepare income valuations (which delayed and lengthened this litigation), and refusing to acknowledge his financial obligation to her after their 25-year marriage. The protracted litigation has created a division in the family. The Applicant is now estranged from Christopher and her grandchildren and the Respondent is estranged from Elizabeth.

[15] The Respondent acknowledges that the children have taken sides in the dispute between their parents. He has attempted a rapprochement with Elizabeth, which she has rebuffed. He has encouraged Christopher to mend his relationship with the Applicant. The Respondent says, regrettably, the children are adults and the parties can only do so much to repair the outstanding rifts.

[16] At the conclusion of the seven day trial of this proceeding, I took my decision under reserve. These are my Reasons for Decision.

Issues at Trial

[17] The parties agree that the main issues for trial are:

1. Is the Applicant entitled to spousal support?
2. If she is, what is the Respondent’s income for the purpose of calculating the quantum of spousal support?
3. What is the effect of the Applicant’s cohabitation with Mr. Burleigh on her entitlement and the quantum and duration of spousal support?

The Relevant Law

[18] In making a spousal support Order under s. 15.2(4) of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp) (“Divorce Act”), the court shall take into consideration the condition, means, needs, and other circumstances of each spouse, including

1. The length of time the spouses cohabited;
2. The functions performed by each spouse during cohabitation; and
3. Any order, agreement or arrangement relating to support of either spouse.

[19] The objectives of a spousal support order under s 15.2(6) of the Divorce Act are as follows:

a. recognize any economic advantages and 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 hardships of the spouses arising from the breakdown of the marriage; and d. in so far as is practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

Issue 1: Entitlement

[20] The Respondent states that the Applicant may be entitled to spousal support depending on the answer to the “Burleigh question”. That is, if Mr. Burleigh has the statutory obligation to support the Applicant as a “spouse” under s. 29 of the Family Law Act, R.S.O. 1990, c. F.3 (“Family Law Act”), and should the responsibility for Applicant’s financial need be transferred from the Respondent to him?

[21] The Respondent argues that Mr. Burleigh has much greater financial means to contribute to the Applicant’s support than the Respondent ever had. The lifestyle the Applicant enjoys with Mr. Burleigh far exceeds the parties’ lifestyle during the marriage.

[22] There are three conceptual bases for entitlement to spousal support, as outlined in Bracklow v. Bracklow, [1999] 1 S.C.R. 420:

1. Compensatory: this is grounded in the factors and the objectives in s. 15.2(6) (a) and (b) of the Divorce Act. In considering the means, needs, and circumstances of the spouses, the court must recognize that a spouse’s inability to support him or herself may relate to foregoing career opportunities during the marriage to care for home and family;
2. Contractual: this is grounded in s. 15.2(4) (c) whereby the parties may have made an agreement before or during the relationship, which creates or negates a support obligation; and,
3. Non-compensatory: this is a need-based claim, which is grounded in the objectives in s. 15.2(6)(c) and (d) in the Divorce Act.

The Applicant’s Evidence Regarding Entitlement

[23] The Applicant states that she was essentially the sole parent and was responsible for all of the children’s care from their birth. She took them to all medical and dental appointments, walked them to school, attended all school events and parent/teacher interviews, and arranged playdates, tutoring, and all of the children’s activities.

[24] The Applicant says that she asked the Respondent to be a more involved parent. He pushed back and said he did not have the time. The Respondent worked long hours, sometimes in the home and sometimes away at job sites. He left as early as 6 a.m. and was not always home for dinner with the family. He often worked on weekends. She denies that he had anything more than a peripheral role in the children’s care, school events, homework, and extracurricular activities.

[25] In addition to being a full time parent, the Applicant states she was also responsible for all of the homemaking, including shopping, cooking, laundry, lawn and garden work. She “took the family burden” so that the Respondent could work full time and grow his business. Initially, the Applicant did not know how to drive. The Applicant’s father would help her by driving, or she would walk with the children in a stroller. When Elizabeth was born, the Applicant obtained her driver’s licence and the parties purchased a second vehicle for her use.

[26] The Applicant worked in clerical positions at the University of Toronto from about 1981 to 1989. After Alexandra was born, the parties agreed that it was better for her to leave work and stay home with the children.

[27] Thereafter, Applicant had a few jobs in retail and at a veterinary office for short periods. She left those positions when the Respondent complained that her being away from the home interfered with his ability to work. He was unable to assist with the children and her income was not enough to make a difference to the family. It was more beneficial for the Respondent to split his income with the Applicant to save taxes.

[28] In 1997, the Respondent purchased the assets of a company, Sable Furniture Restoration (“Sable”), for a purchase price of $7,500. Sable was owned by a friend of the Applicant and was on the verge of bankruptcy. The Applicant did furniture restoration and bookkeeping work for Sable from about 1997 to 1999. She was not paid any compensation for her work. The Applicant did not work outside of the home after Sable ceased operating.

[29] The Applicant strenuously denies that the Respondent had any role at all in the care of the home and family. In cross examination she became very defensive and would not agree that the Respondent attended any medical appointments, got up with the children in the night, helped them with their homework, took them to tutoring or other activities, did any house cleaning, yard work, or anything else for the children or the home.

The Respondent’s Evidence Regarding Entitlement

[30] The Respondent’s evidence was that both parties were working when Christopher and Alexandra were young. During the day the Applicant’s parents assisted with child care. The parties shared parenting duties, including diaper changing, feeding, bathing, and reading. For a while, the Respondent drove the children to doctor’s appointments because the Applicant did not drive. The parties often did a big grocery shop together and they each picked up things for the family day to day.

[31] At some point the parties discussed the Respondent leaving his employer, opening his own business, and working from home. The Applicant did not like the long hours the Respondent was working and wanted him to be home more for her and the children.

[32] The Respondent began working from home in 1992. He had more a more flexible work schedule and was more available for the children and home chores. He assisted with cleaning (especially bathrooms and cat litter because the Applicant had allergies), laundry, snow clearing, and pool and yard maintenance.

[33] The Respondent states he took the children to almost all of their activities, including T-ball, softball, swimming, and skating. He was a coach of Christopher’s softball team. He did homework with the children, particularly math and science, as those are his area. He and the Applicant drove the children to tutoring on Saturday mornings.

[34] When the Applicant began operating Sable, the Respondent took over more duties at home. On weekends he sometimes went in to assist her. He said that the Applicant’s work hours created “chaos” for the family.

[35] The Respondent would not agree that the Applicant was the primary parent. He states that the parties were equal partners in parenting the children and running the home.

Is the Applicant entitled to spousal support?

[36] As the trier of fact, I am charged with making findings of fact and determining the truth. This task can be difficult when both sides of a dispute are motivated to offer evidence designed to “fit” within their specific theory of the case.

[37] On this issue, I had difficulty believing the Applicant’s insistence that the Respondent was virtually uninvolved in the raising of the children and the care of the home. She would not concede he participated even minimally to the point where she stated she had raked leaves in the yard while pregnant.

[38] I found the Respondent’s evidence on this issue to be direct and specific to events, places, and timeframes. The Respondent acknowledged the Applicant’s work as a stay at home parent and homemaker but took the position that he also had a role in the running of the home and family.

[39] It appears to me that the parties’ relationship was one where the Applicant had a primary role in child and home care and the Respondent assisted her as he could. He participated in the children’s care and activities. Each party had tasks they were solely responsible for: the Applicant primarily the children and home and the Respondent primarily his work and the finances of the family and assisting the Applicant with the children and the home.

[40] It is a concern that the Applicant made no effort to look for employment or do any retraining after separation to return to work to contribute to her own support. Her evidence was that she never had a career and at age 48 (her age at the date of separation) it was “too late” to begin.

[41] In October 2012 the Applicant was diagnosed with Lyme Disease. There was minimal evidence on this point, but it appears the symptoms of this illness continue to impact her health and ability to return to the workforce.

[42] Considering all of the above, I am satisfied that the Applicant has established a prima facie entitlement to spousal support, both need-based and compensatory. The parties had a long marriage during which Applicant was substantially a stay at home parent. Her age, health concerns, and lack of post secondary education, employment experience, and training made it difficult for her to enter the workforce after separation.

[43] The Applicant had some capital from her share of the proceeds of sale of the home and a $91,000 inheritance from her mother. She has used that capital to contribute to her support, but it is now mostly depleted.

[44] The Applicant relies on the interim spousal support paid by the Respondent and the contributions made by Mr. Burleigh to her living expenses. She continues to carry consumer debt through credit cards and a line of credit. She will not return to the workforce. She cannot be self-sufficient based on her own income or assets.

Issue 2: The Respondent’s Income for Support Purposes

[45] The Applicant is not seeking support retroactive to January 1, 2015.

[46] The parties agree that the starting point in determining the Respondent’s income is his line 150 income as set out in his income tax returns. The meaning of “income” set out in s. 16 of the Federal Child Support Guidelines, SOR/97-175 has generally been used for the calculation of income for spousal support: Gallagher v. Gallagher, 2012 ONSC 6321, 27 R.F.L. (7th) 361, at para. 31.

[47] The Respondent produced two expert reports from Melanie Russell of Kalex Valuations: one dated August 11, 2016 for the years 2013 to 2015 and one dated June 14, 2019 for the years 2016 to 2018. Ms. Russell has provided her opinion on the Respondent’s income for support purposes in the relevant years as follows:

2015 - $196,258 2016 - $203,612 2017 - $147,209 2018 - $190,716

[48] The Applicant argues that adjustments to Ms. Russell’s calculation of the Respondent’s income are required to take into account expenses paid by Politis Engineering Ltd., which are the Respondent’s personal expenses. If I find all or part of these expenses should be attributed to the Respondent as income, then they must be grossed up for tax.

Non-Business home office expenses

[49] In estimating the value of the discretionary/non-business portion of the Respondent’s home office expense, Ms. Russell took the rent and occupancy costs set out in the annual financial statements of Politis Engineering Ltd. and deducted a “reasonable business portion” based on assumed rent of $1,000 per month for office space in a commercial building. She then added back the excess rent and occupancy costs with a gross-up in calculating the Respondent’s income for support purposes.

[50] The Applicant argues that this is not correct and that the amount of rent chosen by Ms. Russell is arbitrary. She states I should apply the reasons of Croll J. in Riel v. Holland, [2002] O.J. No. 5609 (S.C.J.) and the relevant provisions of the Income Tax Act, R.S.C. 1985 (5th Supp), c. 1, when considering the home office: “An individual who works from his or her home is entitled to deduct expenses relating to the work space in that home if that work space constitutes the individual’s principal place of business or if that work space is used exclusively for the purpose of earning income from business and used on a regular and continuing basis for meeting clients, customers or patients of the individual in respect of the business.”: at para. 32.

[51] The Respondent does not meet clients in his home. He uses his home office to make phone calls, use his computer, send email communication and do administrative work for the operation of his business. He meets with clients at their offices, on job sites and in coffee shops. He admits that, because he lives alone, his work product sometimes “spills out” from the office to other areas of his home.

[52] The Respondent has had a home office since 1992. It is the primary site of the operation of his business. If he did not work from home, he would have the expense of rent and other costs of leasing a commercial space. I agree with Ms. Russell’s treatment of the home office expenses in her income calculations. The amount of rent chosen in the calculation is based on her professional knowledge, research and expertise. I do not dispute her figure. I make no adjustment to Ms. Russell’s calculations for this item.

Meals and Entertainment Expenses

[53] In estimating the value of the discretionary/non-business portion of the Respondent’s meals and entertainment expense, Ms. Russell used the annual figures set out in a schedule prepared by the Respondent. Ms. Russell did not ask for, nor was she provided with, any back up receipts or other documents confirming the figures.

[54] The Applicant argues that I should add 100% of the Respondent’s actual meals and entertainment expenses with a gross-up to his income in each year. In each of his Financial Statements filed in this proceeding, the Respondent has sworn he spends $250 per month or $3,000 per year on meals outside of the home. The annual amounts of meals and entertainment expenses set out in the Detail Trial Balance of Politis Engineering Ltd. shows totals of $3,669 to $4,750 per year. I am asked to conclude from this that the Respondent runs all of his personal meals outside the home through his business and that entire amount should be added back and grossed up.

[55] In cross examination, the Respondent was taken to some line items in Exhibit 65, the Detail Trial Balance for November 1, 2016 to October 31, 2017. He agreed that some of the meals listed were him “taking himself” to dinner or ordering dinner in when he was working late. The Respondent did identify one charge for The Keg in Richmond Hill which he states was related to a business dinner.

[56] The Respondent’s evidence of how he calculated the figures in the schedule he provided to Ms. Russell was vague. The personal amounts used by Ms. Russell were $2,755 in 2015, $1,434 in 2016, $953 in 2017, and $656 in 2018. I agree that, based on the evidence, these amounts are likely low. However, I do not have evidence to prove that 100% of the meals and entertainment expenses are personal to the Respondent. Without better evidence, it is difficult to know with certainty what the exact non-business portion of this expense is in each year.

[57] The Respondent’s Financial Statements sworn in this proceeding state that he spends $3,000 per year for personal meals outside the home. This is a reasonable amount to attribute and add back to his income in each year with the appropriate gross-up.

Benecaid Expenses

[58] Ms. Russell did not add back the amounts paid by Politis Engineering Inc. to Benecaid in 2016 ($8,513) and 2017($5,000) for the Respondent’s health coverage. The Respondent became an employee of Politis Engineering Inc. in 2016 and began receiving a T4 slip. Prior to that he reported self employment income. The health premiums paid by the company on the Respondent’s behalf were not included in the Respondent’s T4s in 2016 or 2017.

[59] The Applicant argues that the Benecaid payment is personal to the Respondent. It is money paid into a fund to pay future insured health expenses for the Respondent alone. Unused funds in the account can be carried forward to pay for health care expenses in future years.

[60] Ms. Russell agrees that if I find that these amounts are personal benefits to the Respondent, they should be added back to his income and grossed up in each year. This is a matter for the court to decide in each case.

[61] In my view, the payments made by Politis Engineering Ltd. to Benecaid in 2016 and 2017 were for the Respondent’s sole personal benefit. He can draw on those funds to pay health expenses in that year and possibly future years. These amounts should be added to the Respondent’s income in 2016 and 2017 with gross-up.

Corporate Pre-Tax Income

[62] Ms. Russell did not attribute any pre-tax income of Politis Engineering Ltd. to the Respondent in the years 2013-2018. In reaching this conclusion, Ms. Russell considered the following factors:

1. Politis Engineering Ltd. realized/earned adjusted pre-tax income in fiscal 2013 and 2015 and had a pre-tax loss in fiscal 2014. During this period the company realized a net amount of $47,000 of adjusted pre-tax corporate income in addition to the management fees that were paid to the Respondent. As of October 31, 2015 (the corporate year-end), Politis Engineering Ltd. had only a nominal amount of retained earnings ($9,000).
2. Politis Engineering realized/earned adjusted pre-tax income in fiscal 2018 ($13,000) and had pre-tax losses in fiscal 2016 and 2017 ($3,000 and $12,000 respectively). During this period, the company realized an adjusted net loss of $2,000 of adjusted pre-tax corporate income in addition to the management fees that were paid to the Respondent. As of October 31, 2018, Politis Engineering Ltd. had only a nominal amount of retained earnings ($16,000).
3. Politis Engineering had insufficient working capital to distribute any of the company’s adjusted pre-tax earnings in the relevant years.
4. The Respondent is the sole shareholder of Politis Engineering Ltd. He had sole voting control over the company and access to the company’s finances.
5. No dividends were paid to the Respondent during the period 2013-2018. Management fees were paid annually to the Respondent.

[63] The Applicant argues that I should attribute corporate pre-tax income to the Respondent in the amount of $58,882 in 2015 and $12,495 in 2018. She states that there was no business reason, debts, or other outstanding financial restriction requiring retained earnings to be kept in the company. All of the funds were available for the Respondent’s use. The amounts should be deemed to be available to him for the payment of spousal support.

[64] Section 18 of the Federal Child Support Guidelines, SOR/97-175 (“Guidelines”) provides that the court has discretion to include all or part of the pre-tax income of a corporation where it determines that the amount of the payor’s annual income, as determined under s. 16 of the Guidelines, does not “fairly reflect all the money available to the spouse for the payment of child support”.

[65] In Koester v. Koester, [2003] O.J. No. 5406 (S.C.J.), Stayshyn J. stated, at para. 35: “As I see it s. 18 of the Federal Child Support Guidelines is designed to address the unfairness which would result if a spouse was to artificially manipulate his income through a corporate structure for the purpose of avoiding child support obligations. The use of the word “may” makes it clear that this is a discretionary tool. The use of the word “fairly” denotes recognition that corporations and businesses must operate in the real world and that there may be valid and legitimate business reasons for maintaining retained earnings in a corporation and not making them available to shareholder owners, either by way of salary or dividend.”

[66] In reaching her conclusion on whether to attribute pre-tax corporate income to the Respondent, Ms. Russell analyzed the relevant factors and the documents in the scope of review. She considered the minimal levels of cash in the business, the minimal levels of annual capital expenditure amounts, and the insufficient working capital ratios. Based on this, Ms. Russell concluded that no additional pre-tax corporate income of Politis Engineering Ltd. was available to attribute to the Respondent beyond his employment income and non-business expenses.

[67] I found Ms. Russell’s evidence on this issue to be helpful and clear. I accept her opinion that it would not be appropriate to attribute pre-tax corporate income to the Respondent.

Conclusion on income

[68] Based on the above, I find the Respondent’s adjusted income for support purposes is the following:

2015 – $196,353 2016 – $220,188 2017 – $156,834 2018 – $193,816

[69] In the interim Order, Harvison Young J. found the Respondent’s income to be $200,500 per year and calculated spousal support on that basis. Except for 2017, the Respondent’s income as calculated by Ms. Russell, with the adjustments made by me above, was not far from that amount.

[70] Both parties ask the court to make a retroactive adjustment to the spousal support that the Respondent has paid since January 1, 2015. The Applicant seeks an adjustment upward. The Respondent seeks credit for an overpayment.

[71] Based on the Respondent’s income in the relevant years as found by me, there could be an increase in support in 2016 and a decrease in support in 2017. On balance, and taking into account the means, needs, and circumstances of the Applicant and the financial support she received from Mr. Burleigh in the relevant years, neither an increased payment nor a credit for overpayment is appropriate in this case. The Applicant’s financial needs were met by the support paid by the Respondent, supplemented by the financial contributions made by the Applicant’s partner. The Respondent did not have greater ability to pay support except in one year, which is offset by his decreased ability to pay in the following year.

Issue 3: “The Burleigh Question”: The Effect of the Applicant’s Cohabitation with Andrew Burleigh on Quantum and Duration of Spousal Support

The Applicant’s Position

[72] The Applicant states her relationship with Mr. Burleigh began in January 2009. At the time, Mr. Burleigh was living separately and apart from his spouse in their home. He moved to his own residence in Markham in about July 2009.

[73] Thereafter, the Applicant began residing in Mr. Burleigh’s home. She would stay overnight in Markham 2 to 3 times per week. She continued to reside in the matrimonial home the balance of the time.

[74] At this time the Respondent, the Applicant’s mother, Alexandra, and Elizabeth were all residing in the matrimonial home. The Applicant agreed that she and the Respondent worked together to look after her mother, the children, and the home.

[75] The Applicant conceded that her recollection of events in the period 2009 to 2011 was “not clear”. However, she strenuously denied that she had a key to the home in Markham or that the Respondent ever drove the children to Markham to stay with her at Mr. Burleigh’s home.

[76] In 2011, Mr. Burleigh moved his engineering business from Markham to Vaughan. He purchased a home in Caledon Village (“the Caledon home”). Alexandra returned to England in 2010 to begin her master’s degree. The Applicant’s mother passed away in March 2011. Elizabeth moved to Kingston to attend university in September 2011. The Applicant moved to Caledon to cohabit with Mr. Burleigh full time beginning July 2011.

[77] The Applicant did not expect to live with Mr. Burleigh without contributing to the home expenses. She and Mr. Burleigh discussed what a fair amount would be. He went through the expenses for the Caledon home and advised her that a fair amount would be $1,561 per month for rent and $462 per month as her contribution to utilities.

[78] The Applicant does not know how Mr. Burleigh calculated the amount of her contribution, nor did she ask him. She felt the amount was fair at the time and she was “fine with it”.

[79] The Applicant had no income in 2011. She was not receiving spousal support. She had not been employed outside of the home since about 1999.

[80] The Applicant used funds from her joint account with the Respondent, her joint credit cards, which were paid by the Respondent, and drew from her inheritance to pay her expenses and the monthly rent to Mr. Burleigh. What she could not pay she notionally “borrowed” from Mr. Burleigh.

[81] The Applicant and Mr. Burleigh had no cohabitation agreement or “loan” agreement for the amounts the Applicant states she owes Mr. Burleigh. The Applicant did not see the bills for the Caledon home. She states she has no knowledge of Mr. Burleigh’s financial circumstances. She thinks Mr. Burleigh may have a ledger of the amount she owes him, but she has never seen it. She has not kept her own ledger. It is unclear how the amount she swears she owes Mr. Burleigh has been calculated.

[82] The matrimonial home was sold in October 2012. The Applicant believed that the market would improve and that the parties could have obtained a higher sale price if they had waited. The Applicant states she felt “bullied” by the Respondent into agreeing to the sale, despite the fact that she was no longer residing in the home.

[83] The sale price of the home was $1,187,500.00. There was a first mortgage in the amount of $1,006,670.42. The net proceeds of sale, $113,263.05, were held in trust by the vending solicitor.

[84] The Applicant continued to use the parties’ credit cards and accessed money from the joint account until March 2013, when the Respondent took his name off the parties’ credit cards as a secondary holder. He stopped making payments into the parties’ joint bank account for the Applicant’s use. The Respondent continued to pay for the Applicant’s car loan payments of $453.14 per month until 2014.

[85] The situation between the parties deteriorated and the Applicant commenced this Application in July 2013.

[86] The Applicant’s Financial Statement sworn July 5, 2013, shows total monthly expenses of $7,911.68. This includes the $1,561 for rent, $462.71 for utilities in the Caledon home, and $1,572.65 for credit card payments. It states Mr. Burleigh’s income as $7,500 per month and that he contributes $5,500 per month toward the household expenses. The Applicant had credit card debt of $79,841. The Statement does not show a debt to Mr. Burleigh for payments made on the Applicant’s behalf between July 2011 and July 2013.

[87] In April 2014, the parties agreed to jointly retain Stacie Glazman to prepare a report of the Respondent’s income. Ms. Glazman’s fees were to be paid for from the proceeds of sale of the home. Letters from Ms. Glazman to counsel in 2015 show that the Respondent and his accountant did not respond to her disclosure requests promptly and, as a result, she could not complete her report.

[88] This failure to provide disclosure prompted the Applicant to bring a motion for interim spousal support, which resulted in the interim Order. The Applicant’s Financial Statement, sworn June 17, 2015, was filed for the interim motion. The Statement set out total monthly expenses of $8,062. This includes rent of $1,561 and utilities of $528.85.

[89] The interim Order requires the Respondent to pay monthly support of $5,288 per month commencing January 1, 2015. The Respondent paid the support arrears of $52,880 outstanding at the time of the interim Order by paying the Applicant his share of the net proceeds of sale of the matrimonial home, $56,631.50. Therefore, the Applicant received all the proceeds of sale of the home, part as division of property and part as spousal support.

[90] When the Applicant began receiving monthly spousal support, she increased her monthly rent payment to Mr. Burleigh to $2,500. This was based on her increased income, not an increase in the costs of the Caledon home.

[91] The Applicant also made large payments to the children to assist them with their expenses. She gave $5,000 to Christopher for his wedding. She transferred $18,305 in 2016 and $3,700 in 2017 to Alexandra for her Ph.D. tuition and living expenses in England. She paid $1,350 for Elizabeth’s tuition and books at St. Lawrence College and she continues to pay $200 per month toward her student loans.

[92] The Applicant recently moved with Mr. Burleigh and Elizabeth to a new home on a 108-acre rural property in Lansdowne, Ontario, near Kingston. The home is in Mr. Burleigh’s name alone.

[93] The Applicant’s Financial Statement, sworn August 19, 2019, shows monthly expenses of $8,532 per month. Her monthly expenses include rent to Mr. Burleigh of $2,180 per month, which includes the cost of repairs and maintenance; a personal loan repayment to Mr. Burleigh of $350; legal fees of $400; and Elizabeth’s OSAP payment of $200.

[94] The Applicant states that the debt owing to Mr. Burleigh for expenses he has paid on her behalf is $166,610. The Applicant provided no evidence of how the amount of the debt is calculated. There is no loan agreement or promissory note evidencing the debt or the obligation to repay.

[95] The Applicant argues that she is entitled to indefinite spousal support on both a need-based and compensatory basis at the high end of the Spousal Support Advisory Guideline (SSAG) range. The parties did not have assets at the time of separation, so the Applicant did not receive an equalization payment; she only received her one-half share of the net proceeds of sale of the matrimonial home, which was modest.

[96] The only financial benefit of the parties’ marriage to be shared is the Respondent’s income. The Applicant argues it should be shared equally due to the economic detriment she suffered as a result of the marriage and its breakdown, the economic consequences to her as a result of being the primary homemaker and caregiver to the children, and her inability to attain self sufficiency based on her age, her health challenges, her time out of the workforce, primary responsibility for home and childcare, and her contribution to the Respondent’s career advancement.

[97] The Applicant acknowledges she has re-partnered but says it is not determinative of her claim to ongoing indefinite support in accordance with “Rule of 65” in the SSAG.

The Respondent’s Position

[98] The Respondent produced a large sheaf of text messages between him and the Applicant as proof that the Applicant began cohabiting with Mr. Burleigh in July 2009. The messages detail the comings and goings of the parties, the schedules and needs of the children, and the schedule and care needs of the Applicant’s mother. At best, the text messages prove that the Applicant travelled back and forth between the two homes, spending some time overnight at each.

[99] The Respondent argues that his obligation to pay spousal support should be at an end for the following reasons:

1. The Applicant is in a relationship of permanence with a new partner who provides her with a better standard of living than the parties had during the marriage. Mr. Burleigh has significant wealth that the Respondent never had and will never have. During the marriage the parties were in a constant state of revolving debt to the Canada Revenue Agency (“CRA”) and other creditors. They re-financed their homes and used the equity to pay their ongoing expenses and debts;
2. The parties have been separated for almost 12 years. The Respondent has paid support for about 9 years: voluntarily from August 2008 to February 2013 and by interim Order from January 2015 to date. This, he says, fulfills the Applicant’s need-based support claims and achieves any compensatory support obligations he may have;
3. The Applicant did not suffer any economic determent as a result of the marriage or its breakdown. She did not forgo any educational or career opportunities. The Respondent states he encouraged and paid for the Applicant to take courses to equip her to return to the workforce, but she chose not to; and
4. The Applicant made no financial sacrifices due to primary childcare obligations. The Respondent was an equal participant in home and child care beginning in 1992 when he began working from home.

[100] In particular, the Respondent argues that Mr. Burleigh is a man of substantial wealth. Mr. Burleigh owned a share of an engineering firm that was sold to SNC-Lavalin in 2012. He received at least $1m on the sale and possibly other consideration. The Respondent sought disclosure of Mr. Burleigh’s income and assets, including a sworn financial statement, in this proceeding. While some disclosure was provided voluntarily, the Respondent was not successful in obtaining further disclosure through court orders.

[101] Mr. Burleigh sold his Caledon home for $1.9m in 2018. The property was encumbered at the time of the sale.

[102] Mr. Burleigh continued to receive employment income until at least 2017. He accessed his registered and unregistered investments to pay for his and the Applicant’s expenses.

Mr. Burleigh’s Evidence

[103] When the Applicant and Mr. Burleigh began cohabiting, she was still being supported by the Respondent. Mr. Burleigh began to contribute to the Applicant’s expenses, including paying for her legal fees in this proceeding, when the Respondent “cut her off” in 2013. He does not know how the Applicant paid her expenses, other than the household expenses that he paid on her behalf, when she stopped receiving money from the Respondent.

[104] Mr. Burleigh stated that he paid about $5,500 per month for the carrying costs of the Caledon home. To determine the amount to be paid by the Applicant as rent and her share of utilities, he went through the household bills, added them up, and told the Applicant what her one-half share was. The calculation was not adjusted for the disparity in their respective incomes or the fact that Mr. Burleigh owned the home in his name alone.

[105] After the interim Order was made, Mr. Burleigh decided that the monthly payment from the Applicant should increase to $2,500. This amount is based on the Applicant’s receipt of spousal support and included a monthly payment toward the “loan” amount outstanding to him.

[106] The monthly rent of $2,500 has not changed with the move to the new home in Lansdowne. Mr. Burleigh admits that the move to Lansdowne is a downsizing and that some costs may be less than the Caledon home. However, the monthly payment of $2,500, Mr. Burleigh says, is the Applicant’s rent payment owing to him “wherever they live”.

[107] Mr. Burleigh receives tax-free long-term disability payments from Manulife. He could return to work at SNC-Lavalin if he was well enough to do so, but he states that this is not imminent. He pays for his own expenses, the expenses of the Applicant not covered by the rent payment, Elizabeth’s expenses, who resides with them, from this income and his investments.

[108] Mr. Burleigh did not produce any calculations or documents to corroborate the debt the Applicant claims she owes him. He did not say when or how he expects to be repaid, other than through a portion of the ongoing monthly rent. When asked if he would continue to financially support the Applicant if the court terminated support and she no longer had the ability to pay rent to him, he said he was not sure.

The Law and Analysis

[109] It is difficult to determine when cohabitation actually begins when one or both parties move between two homes. Section 29 of the Family Law Act defines a “common law spouse” as: “a spouse as defined in subsection 1(1) and, in addition includes either of two persons who are not married to one another and have cohabited (a) continuously for a period of not less than three years …”.

[110] In my view, the text messages do not prove that the Applicant and Mr. Burleigh cohabited continuously commencing July 2009. I do accept that as the date they began a committed relationship and when their personal and financial lives began to intertwine. Their co-habitation began when the Applicant moved to the Caledon home in July 2011.

[111] A spouse’s re-partnering in relationship of permanence post-separation does not disentitle them to spousal support. However, the re-partnering does impact the quantum and duration of spousal support: Conway v. Conway, [2005] O.J. No. 1698 (S.C.J.).

[112] Re-partnering has a greater impact on need-based support than on compensatory support. Re-partnering does not compensate for financial hardship experienced by a spouse as a result of the former marriage and its breakdown. But when a spouse who has financial need re-partners, the burden of meeting that need shifts over time from the former spouse to the new spouse. The longer the second relationship, the greater the obligation of the new spouse to meet that financial need: Kelly v. Kelly, 2007 BCSC 227, [2007] B.C.J. No. 324, at para. 49.

[113] The Applicant has been economically intertwined with Mr. Burleigh for almost nine years. I am satisfied that she enjoys a standard of living with Mr. Burleigh that is comparable or better than the standard of living the parties enjoyed during the marriage.

[114] However, this standard of living is supported almost entirely by Mr. Burleigh’s income and assets. The Applicant has not earned income since separation. She continues to carry large consumer debt and does not have any retirement savings. In my view, while a greater portion of the Applicant’s need should now be met by Mr. Burleigh, the economic loss from her marriage to the Respondent has not been completely compensated by the support paid by the Respondent to date.

The Application of the Spousal Support Advisory Guidelines

[115] Simply applying the ranges in the SSAGs may not be appropriate in a re-partnering case. The court must first analyze the specific facts of the case to assess what a reasonable quantum and duration of support should be: Gray v. Gray, 2014 ONCA 659, 122 O.R. (3d) 337, at paras. 44 and 45.

[116] The authors of the SSAGs, Professors Rogerson and Thompson, conclude that the outcomes in cases involving a recipient’s remarriage or re-partnering are not predictable enough to construct a formula to calculate what the effect on the ranges should be. However, the SSAGs can be a starting point in the discretionary analysis and an indicator of the reasonableness of a support award: Zacharias v. Zacharias, 2015 BCCA 376, 80 B.C.L.R. (5th) 54, at para. 62.

[117] The Applicant seeks go forward support commencing on November 1, 2019 in the amount of $9,151 per month based on an imputed income to the Respondent of $251,000. This figure is based on the Applicant’s argument for adjustments to the Respondent’s 2018 income, as set out in Ms. Russell’s report.

[118] Based on my adjustments above, the Respondent’s 2018 income is $193,816. Applying the SSAGs results in spousal support at the low end of the range of $6,057 and the mid and high range (a 50/50 split of NDI) of $6,926.

[119] The Applicant argues that the court should treat the financial benefits received by her from Mr. Burleigh as if it were income, gross it up for tax, and apply it to the SSAG formula. The Applicant concedes that the court may then revert to the mid or low range of the SSAGs to determine quantum, but that duration should be indefinite.

[120] The Respondent argues that support should be terminated now. He relies on the principle set out in M. (K.A.) v. M.(P.K.), 2008 BCSC 93, [2008] B.C.J. No. 121, that the obligation of the first spouse should be reduced, and at some point, terminated, the longer the relationship with the second spouse continues. In light of the length of the Applicant’s second relationship and Mr. Burleigh’s greater financial wealth, the Respondent states that the Applicant no longer has need and any compensation arising from the marriage and its breakdown has been met.

Appropriate Quantum and Duration of Spousal Support

[121] The Applicant’s entitlement to support is both need-based and compensatory. Her monthly expenses according to her Financial Statement are $8,531 per month. This amount includes rent of $2,150, contribution to repairs and maintenance of the Lansdowne home of $30, repayment of the debt to Mr. Burleigh of $350, and payment of Elizabeth’s student loan of $200.

[122] I do not accept the Applicant’s evidence that she has no knowledge of Mr. Burleigh’s financial circumstances. The Applicant and Mr. Burleigh have cohabited for almost nine years. In that time, Mr. Burleigh sold his business for a significant amount of money and began new employment until he suffered a serious health issue. He continues to receive long term disability benefits and may not return to work. He sold the home where the parties resided and purchased a new home near Kingston, a move of some distance, where they live with Elizabeth as a family.

[123] The Applicant suffered her own health issues in 2012. She was totally financially dependant on Mr. Burleigh for a period from 2013 to 2015 when she was not receiving support from the Respondent. In light of all of these events and over time, the Applicant and Mr. Burleigh must have discussed their financial circumstances and made decisions about their future and how they would fund their life together.

[124] I also do not accept the Applicant’s evidence that she is obligated to repay Mr. Burleigh monthly toward the “loan”. There was no evidence from either the Applicant or Mr. Burleigh as to how the figure of $166,610.74 was calculated. The Applicant may want to repay Mr. Burleigh for the financial assistance he has provided to her during their relationship, but I do not find there is an actual debt owing.

[125] The financial arrangement the Applicant alleges she has with Mr. Burleigh does not ring true. In my view, the $2,500 payment is an artifice constructed to inflate the Applicant’s expenses. Mr. Burleigh said he calculated the original rent on a 50% share of the expenses of the Caledon home. The rent of $2,500 is not related to or supported by evidence of the actual expenses of the Lansdowne home. There is no evidence it takes into account the fact that the Applicant has no title interest in the Lansdowne home and will not share in the equity, or that her income and assets (and her ability to contribute to the expenses) are not equal to Mr. Burleigh’s.

[126] The Respondent’s sworn Financial Statement sets out monthly expenses of $10,127. This amount includes the spousal support payment to the Applicant of $5,288. Backing out this payment, he has a monthly budget of $4,839. This includes rent of $2,410 for the condominium where he operates his home office. The Respondent also carries consumer debt, CRA debt, and owes a large debt to his sister, primarily for funding this litigation. The Respondent’s budget for his own living expenses is minimal compared to the Applicant’s budget.

[127] I am satisfied that the Applicant receives a net financial benefit from Mr. Burleigh in the amount of at least $3,100 per month: half of the $5,500 he contributes to the household expenses and the $350 alleged debt repayment. Grossed up for tax at 19%, this results in a notional income of $44,268 per year. The SSAG range for the Applicant’s income of $44,268 and the Respondent’s income of $193,816 is $4,673 at the low end, $5,452 at the mid range, and $6,185 at the high end. The amounts in this range contemplate both need-based and compensatory support.

[128] In determining the amount of support to be paid by the Respondent, I have considered the SSAG ranges, the partially compensatory nature of the Applicant’s entitlement, and the benefit she receives from her cohabitation with Mr. Burleigh. I have also considered the concept of “merger over time” set out in M.(K.A.), at para. 72. In my view, the time has not yet come when the Applicant has been fully compensated for her economic loss and the Respondent’s obligation to pay support to her can end. However, it is appropriate for the amount of support and the ranges themselves to be reduced, based on the increasing obligation of the Applicant’s second spouse to contribute to her need.

[129] The parties have been separated for almost 12 years. This litigation has proceeded for over six years. The Applicant is aged 60 and the Respondent is aged 61. They require some finality so that they can each move forward with certainty.

[130] Based on all of the factors referred to above, I have decided that commencing November 1, 2019, the Respondent shall pay spousal support to the Applicant in the amount of $3,000 per month up to and including October 1, 2024.

[131] Commencing November 1, 2024, the Respondent shall pay spousal support to the Applicant in the amount of $1,500 per month up to and including October 1, 2026. Thereafter, spousal support shall terminate.

Post Separation Debt paid by the Applicant

[132] The Applicant seeks a lump sum payment from the Respondent of $17,332 for payments she says she made after separation toward debts incurred by the Respondent alone. These amounts include credit card debt and taxes owing to the CRA.

[133] During the marriage the Applicant had credit cards in her name as the primary cardholder. The Respondent was the secondary cardholder. Both parties used the cards for their own and family expenses. At the date of separation, the credit card debt was $13,771. The Applicant argues that she paid this debt after separation, half of which ($6,885) was the Respondent’s responsibility.

[134] The Applicant owed a debt of $3,561 to the CRA for tax arrears for the 2009 tax year. The tax debt arose from income splitting done by the parties after separation. The Applicant says she paid this debt herself but did not receive any of the income split. The Respondent received the benefit by not paying tax on his income split with her.

[135] The Respondent did not challenge these amounts claimed or provide any evidence that he had paid these amounts owing or any part of them. The amount of $10,446.50 should be paid by the Respondent to the Applicant to reimburse her for these debts paid by her on the Respondent’s behalf.

Order

[136] Order to go as follows:

1. Commencing November 1, 2019 and continuing on the first day of each month thereafter up to and including October 1, 2024, the Respondent shall pay spousal support to the Applicant in the amount of $3,000 per month.
2. Commencing on November 1, 2024 and continuing on the first day of each month thereafter up to and including October 1, 2026, the Respondent shall pay spousal support to the Applicant in the amount of $1,500 per month. As long as there are no arrears of support outstanding, spousal support shall terminate with the October 1, 2026 payment.
3. Commencing November 1, 2020 (“the indexing date”) in each year beginning in 2020, spousal support shall increase by the indexing factor for the third month immediately before the indexing date in that year.
4. There will be no payment of retroactive spousal support and no credit for overpayment of spousal support made before this Order.
5. The Respondent shall designate the Applicant as a beneficiary of his life insurance policies, namely, the Ivari Whole Life Policy, the Ivari Term Policy, and the London Life Whole Life Policy. He shall, at the Applicant’s request, provide proof on an annual basis that the policies remain in good standing and the Applicant is named as the beneficiary. When the Respondent is no longer obligated to pay spousal support to the Applicant, he may change the beneficiary designation. The Applicant shall cooperate and sign any documents required to change the beneficiary designation.
6. The Respondent shall pay the Applicant a lump sum payment of $10,446.50 in satisfaction of post-separation debt payments made by the Applicant on the Respondent’s behalf.
7. The divorce may proceed on an uncontested basis.
8. All other claims in the Application and the Answer are dismissed.

[137] If the parties cannot agree on costs, the Applicant shall serve and file submissions on costs within 14 days from the release of these Reasons. The Respondent shall serve and file costs submissions 14 days thereafter. The submissions shall be no more than three pages, exclusive of any costs outline, case law, and offers to settle. The Applicant may serve and file Reply submissions of two pages seven days after the Respondent’s submissions have been served. Submissions may be served between the parties by email: hfogelman@fogelmanlaw.ca, echaiton-murray@fogelmanlaw.ca, and jamessinger@bellnet.ca, and sent to Patrizia.Generali@ontario.ca.

E.L. Nakonechny, J.

Released: February 27, 2020