minicounsel

COURT FILE NO.: FC-13-1830 DATE: 20200108 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

BRIAN GREGORY NIXON Applicant – and – CATHARINE LINDA LUMSDEN Respondent

COUNSEL: Philip W. Augustine, for the Applicant Gregory Ste. Marie, for the Respondent

HEARD: December 2, 3, 4, 5, 6, 9 and 10, 2019

Audet J.

1In this trial, I was asked to decide two main issues: the equalization of the parties’ net family property and Ms. Lumsden’s request for spousal support.

2With regards to the issue of equalization, the parties were able to come to an agreement on the value of most of their assets and debts except for fifteen specific items. It is not disputed that if Mr. Nixon’s position on all those items is accepted by the court, his net family property value is minus $2,280,474 (thus, by virtue of s. 4(5) of the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”) it is deemed to be zero), which would result to Ms. Lumsden owing him an equalization payment of $3,651 (which he agrees to waive). It is also not disputed that if Ms. Lumsden’s position on all these disputed items is successful, Mr. Nixon will owe her an equalization payment of $62,378.

3With regards to spousal support, the parties have agreed that if I find entitlement to spousal support on the part of Ms. Lumsden, it is appropriate in the circumstances of this case for any spousal support award to be paid by way of a lump sum payment. The main issue in contention in this regard, other than entitlement, relates to the determination of the parties’ respective income for the purpose of support. It is not disputed that if Ms. Lumsden’s position prevails at trial, she will be entitled to a lump sum spousal support in the amount of approximately $70,000. If Mr. Nixon’s position prevails, Ms. Lumsden will not be entitled to spousal support.

4This trial required seven full days.

Background

5The parties started living together on July 1, 2003 and married on January 21, 2005. This was a second marriage for Mr. Nixon and a third marriage for Ms. Lumsden. They each have two children from their prior relationships, all of whom were still dependent at the time of the parties’ marriage. All children are now adults and no claims are asserted by either party with regards to these children. The issue of divorce was severed from the other issues in the case and the parties were divorced in 2016.

6The evidence makes it clear that the parties experienced a lot of difficulties in their relationship which was characterized by significant conflict, a general lack of efficient communication and a few brief separations. The parties separated for a final time on December 5, 2010, at which time Ms. Lumsden moved out of the matrimonial home.

7This application was filed by Mr. Nixon on August 2, 2013, almost three years after the parties’ separation and after settlement efforts failed. Initially, Mr. Nixon was seeking spousal support for himself, and alleged the existence of a valid domestic contract entitling him to an unequal division of the parties’ net family property. These claims were withdrawn on May 23, 2019.

8It took six years for this matter to finally be adjudicated by way of a trial.

The Parties’ Employment and Business Interests

9It is appropriate at this junction to give an overview of the parties’ respective employment background, particularly Mr. Nixon’s, because his employment income and various business interests are intertwined with the property issues in dispute.

Mr. Nixon’s employment and business interests

10Mr. Nixon has a university degree in commerce, and until 1996, was certified as an accountant. Thereafter, he became a business owner and investor. Over the years, he has been involved in various business endeavours, alone and with others. At the relevant time, Mr. Nixon had an interest in the following businesses:

NetPCS: Between 1997 and 2002, Mr. Nixon was a shareholder and the CEO of this company that had developed a particular software. It was winded down in 2002 but Mr. Nixon continued to be involved with the corporation’s liquidation process until early 2005;
Vernon Systems Inc.: at the time of the parties’ marriage, and to this day, Mr. Nixon was a minority shareholder in this company located in the British Virgin Islands. It owns the intellectual property rights of a technology referred to as an “Internet Telephony Service”, and in the early 2000, it was selling and distributing this technology to clients world-wide. The particulars of Mr. Nixon’s involvement in this corporation will be discussed later in these reasons;
Telnexia Telecom Ltd. (“Telecom”): The sole purpose of this company, which was set up in September 2004, was to provide a mechanism for the administration of expenses with respect to technology research and design services provided by Mr. Nixon in Canada to a single client based in the United States. Mr. Nixon owns 100% of the shares in Telecom and he is the sole director of the company. During the course of the parties’ marriage, this company was (and continues to be) one of Mr. Nixon’s main sources of income;
Telnexia Networks Inc. (“Networks”): This company was set up by Mr. Nixon to work in conjunction with the Vernon business opportunity, in Canada. He is the sole owner and director of this corporation which essentially ceased its operations when Telecom was created, on or about 2010;
Quintero Escapes: Mr. Nixon is self-employed through this sole proprietorship by way of which he acquires real estate and vacation opportunities, rents them out and provides other associated services to his tenants/customers.

Ms. Lumsden’s employment and business interests

11Ms. Lumsden is a registered psychotherapist. She has two university degrees in psychology from Western University and Carleton University, as well as a Masters’ degree in psychology from Carleton University which she completed in 1990. She has worked continuously as a psychotherapist since at least 1990. Before 2015, psychotherapists did not have to register with a professional body to be recognized as such in Ontario. Since 2015, registration is required, and Ms. Lumsden provides her services as a registered psychotherapist since that date.

12At the time of her marriage to her second husband, Mr. John Boulet, Ms. Lumsden was providing her services as a psychotherapist through the Adlerian Centre in Ottawa until the family moved to Pennsylvania as a result of Mr. Boulet securing and employment opportunity there. Ms. Lumsden continued to work in the field of psychotherapy for various employers while living in the United States, until she and Mr. Boulet separated in 1999. At that time, she returned to Ottawa with her two daughters.

13Since she returned to Ottawa on or about 1999, Ms. Lumsden has resumed working as a psychotherapist through the Adlerian Center, rebuilding her clientele and eventually expanding her services to providing workshops, writing books and providing personal coaching.

The Equalization of Net Family Property

14As stated above, there are fifteen points of contention between the parties as it relates to the equalization of their net family property. Some of the disputed issues are part of larger issues and will be discussed under each of the following main headings.

15The date of separation value of the parties’ matrimonial home, located at 7 Cowichan Way, in Nepean (“the matrimonial home”), is disputed.

16This property was purchased by Mr. Nixon in his sole name on June 16, 2003, a few weeks before the parties began living together. Prior to the parties’ cohabitation, they each had their own residence; Mr. Nixon lived in his own home north of Kanata (“the Northwood property”), which was mortgage free. Ms. Lumsden was the owner of a property located in Barrhaven (“the Barrhaven property”), where she resided with her two children.

17On or about July 1, 2003, after Ms. Lumsden sold her Barrhaven property, she and her daughters moved in with Mr. Nixon at his Northwood property. The uncontested evidence reveals that Ms. Lumsden did not want to uproot the children again from their current school and it was agreed that the parties would start looking for a home in her children’s school catchment in the city. After visiting several homes in that area, the parties decided to put an offer on the property located at 7 Cowichan Way, in Nepean (referred to alternatively as “the Cowichan property” or “the matrimonial home”). Although, originally, the home was to be purchased jointly, it was Mr. Nixon’s evidence, which on this point I accept, that a few weeks before the closing, Ms. Lumsden advised that she was no longer prepared to invest the net proceeds from the sale of her Barrhaven property in the Cowichan property.

18Given that the closing was to occur in only two weeks, and not wanting to expose himself to legal proceedings, Mr. Nixon proceeded to purchase the home in his sole name. The property was purchased in June 2003 for $534,000 with a mortgage in the amount of $400,000. The balance of the purchase price in the amount of approximately $134,000 was funded by Mr. Nixon.

19It is important to note that an appraisal obtained shortly before the date of closing by Mr. Nixon’s mortgage broker for financing purposes assessed the fair market value of the property as of March 2003 at $544,000. After the closing, Mr. Nixon invested a significant amount of money to renovate this home. To fund the costs of the renovations, Mr. Nixon procured $686,000 from Vernon Systems Ltd., paid to him in four separate payments between June 11, 2003 and November 2, 2004.

20The nature of these payments is disputed by the parties and will be discussed later. However, for the purpose of deciding the value of the Cowichan property on the date of the parties’ separation, the fact that Mr. Nixon received $686,000 from Vernon to fund the renovations costs is not disputed.

21As the renovation costs exceeded the monies advanced to him by Vernon, Mr. Nixon also borrowed against his Northwood property which was listed for sale at the time but was not sold until a year later (in November 2004).

22In the Fall of 2004, Mr. Nixon re-financed the Cowichan property which freed up sufficient funds to repay the mortgage secured against the Northwood property. In the context of that re-financing, Mr. Nixon obtained a new appraisal confirming a (then) current value of $1,100,000. The increase in the value of the home was directly related to the extensive renovations completed by Mr. Nixon.

23In the context of this re-financing, Ms. Lumsden paid to Mr. Nixon the amount of $78,960 representing the net proceeds received by her following the sale of her Barrhaven property.

a) Alleged loan in the amount of $78,960 by Ms. Lumsden to Mr. Nixon

24Ms. Lumsden alleges that the net proceeds from the sale of her Barrhaven property was paid to Mr. Nixon as a loan and that it was agreed that this amount would be repaid to her if the parties separated. She seeks a date of marriage deduction representing that amount (although she fails to also include it as an amount payable to her on the date of the parties’ separation) and seeks its re-payment by Mr. Nixon. Mr. Nixon denies that this was a loan and alleges this amount was paid to him by Ms. Lumsden to acquire an interest in the Cowichan property, having by then changed her mind as to her ownership status in that property.

25I find that the payment of $78,960 was made by Ms. Lumsden because she had a change of heart about being a co-owner of the Cowichan property. It became important to her to feel as though she was a true owner of the home and her way to do so was to invest the money available to her in the property. While I accept that she felt pressured by Mr. Nixon to show her commitment to the marriage and to the family by contributing to the home financially to the extent of her ability, it does not change the fact that her monetary investment was not a loan: it was a contribution made by her to acquire an interest in the property.

26It was Mr. Nixon’s evidence that Ms. Lumsden’s change of heart was problematic for him since up until that point, all the money invested in the property had come from him alone. I accept Mr. Nixon’s evidence to the effect that the parties had discussions around how Ms. Lumsden’s interest in the property would be quantified, given the significant difference in the parties’ contributions to its purchase, upkeep and renovation. A detailed summary of the money invested in the property by Mr. Nixon, which was prepared by Mr. Nixon’s bookkeeper to support his application for a new mortgage, was adduced into evidence. This summary contains a detailed calculation proposing that Ms. Lumsden’s contribution to the property would afford her a 6.33% interest.

27Ultimately, the parties never came to a formal agreement on Ms. Lumsden’s ownership interest because, although she wished to become an owner, she did not want to become jointly liable under the mortgage. Since she would not accept the liability associated with the home, Mr. Nixon was not prepared to change the title to include her as an owner. He remained the sole owner of the property and the only debtor on the mortgage throughout, and to this day.

28Ms. Lumsden’s claim that her monetary contribution into the matrimonial home was a loan, completely lacks credibility for many other reasons. Firstly, there is no documentary evidence supporting the existence of a loan, or an expectation on her part that it would be repaid (other than by the equal sharing of the eventual net proceeds from its sale). Over the course of the parties’ marriage, there was never any payment made by Mr. Nixon to Ms. Lumsden on account of this alleged loan. On the bank draft prepared by Ms. Lumsden and by way of which she paid him the amount of $78,960.84 on October 27, 2004, Ms. Lumsden wrote that it was for “Home Purchase”. The evidence before me makes it clear that following the parties’ separation, Ms. Lumsden was kept appraised of Mr. Nixon’s efforts to sell the Cowichan property (their matrimonial home), and that she fully expected to share the net proceeds with Mr. Nixon.

29In addition, and much more importantly, Ms. Lumsden never alleged the existence of this loan throughout this litigation. It was raised for the first time one month before the commencement of trial. It was not pled in her Answer and it was never mentioned in any of the financial statements filed by her in the context of this proceeding, until it was raised for the first time in her financial statement sworn in November 2019. Her pleadings also make it clear that she had paid that money and “asked to go on title to the property but he refused”.

30Based on all the above, Ms. Lumsden’s claim that the amount of $78,960 paid by her to Mr. Nixon was a loan is dismissed.

b) Date of separation value of the matrimonial home

31The fair market value of the matrimonial home on the date of the parties’ separation in December 2010 is disputed. Both parties have retained real estate appraisers who both performed retrospective assessments of its value. Mr. Ron Kozan, the expert retained by Mr. Nixon, is of the view that the property was worth $985,000 in December 2010. Mr. Robert Boudreau, the expert retained by Ms. Lumsden, appraised its December 2010 value at $1.1 million. The discrepancy between the two values is $115,000.

32The balance of the mortgage registered against the matrimonial home on the date of the parties’ separation was $1,077,695. That particular mortgage (the matrimonial home was refinanced on a number of occasions by Mr. Nixon during the parties’ marriage) was granted by the Scotiabank on June 15, 2009 for a principal amount of $1,120,000. It is not disputed that the real estate market crashed in late 2008. According to Mr. Nixon, it was believed that the market crash would not have a long-lasting effect on the value of luxury homes, and as a result, the market value of the Cowichan property was overestimated at the time of this refinancing.

33It is to be noted that Mr. Nixon did not provide a copy of the appraisal obtained by his mortgage broker for the purpose of this re-financing. However, the appraisals obtained by each of the parties’ own experts lend credibility to Mr. Nixon’s assertions about the market conditions that existed in 2008, as both arrived at values in the range of one million dollars (roughly the outstanding amount owing on the mortgage) some 18 months later.

34Mr. Nixon’s evidence on this point is also corroborated to a large extent by his failed attempts, throughout the nine years that followed, to sell the matrimonial home. It is not disputed that the Cowichan property was continuously listed for sale since May 2011. It was first listed at $1,680,000, and gradually reduced from time to time to its current listing price of $1,395,000 (it was last re-listed in April 2019). No offers matching or approaching the listing price were ever received.

35The main difference between the two appraisers’ opinions is the comparable properties that each has used to arrive at their suggested value. It is not disputed that the Cowichan property is rather unique in its neighborhood and is one of its nicest homes. Mr. Kozan was of the view that one of Mr. Boudreau’s comparable properties was in a completely different neighborhood, and therefore, should not have been used. He was also of the view that another comparable property had sold shortly after the retrospective valuation date, and as such, ought not have been considered either.

36It was Mr. Boudreau’s view that the comparable properties used by Mr. Kozan were not truly “comparable” as the net/gross adjustment ratios exceeded 20% (two were as high as 37.9% and 44.9%). If comparable properties require that much adjustments, in Mr. Boudreau’s view, they are not comparable at all.

37I find that there is value to both opinions. In the end, I note that both experts used the property located at 12 Craigmohr Court, located in the same neighborhood, as a comparable. Whereas Mr. Kozan made net adjustments of 10.4%, arriving at an adjusted value of $1,092,500, Mr. Boudreau made net adjustments of 11.6% and arrived at an adjusted value of $1,105,000, for an average value of $1,098,750.

38This almost exactly mirrors the estimated fair market value attributed by Mr. Nixon to this asset throughout this litigation ($1,100,000) before Mr. Kozan finally provided him with an opinion in the Fall of 2018. In the end, I conclude that the fair market value of the matrimonial home as of December 5, 2010 was $1,100,000.

c) Current value of the matrimonial home

39Both parties have also obtained appraisals of the current fair market value of the Cowichan property. The discrepancy between Mr. Boudreau’s opinion and Mr. Kozan’s opinion is not that great; Mr. Boudreau appraised it at $1,200,000 whereas Mr. Kozan appraised it at $1,115,000.

40The current value of the Cowichan property is only relevant for the purpose of assessing the parties’ respective means, needs and other circumstances in the context of Ms. Lumsden’s spousal support claim. I am of the view that Ms. Lumsden’s entitlement to spousal support, if any, and its quantification will not turn on whether this property is worth 1.2 or 1.1 million dollars. For that reason, I decline to make a finding in that regard.

41Mr. Nixon seeks to deduct from the date of separation value of the Cowichan property the contingent disposition costs associated with its future sale. These comprise of legal fees (estimated at $1,000), real estate agent commission (5% of $1,100,000, being $55,000) and mortgage penalties ($9,845), which amount to $65,845 in total (the amount claimed by Mr. Nixon, $60,095, is slightly lower because he used $985,000 as the fair market value of the home).

42In Bortnikov v. Rakitova, 2016 ONCA 427, 83 R.F.L. (7th) 289, our Court of Appeal offered the following guidance with regards to disposition costs:

11 As a general rule, in determining whether disposition costs should be deducted from an asset's value, the analysis should take into account evidence of the probable timing of the asset's disposition. It is appropriate to deduct disposition costs from net family property "if there is satisfactory evidence of a likely disposition date and if it is clear that such costs will be inevitable when the owner disposes of the assets or is deemed to have disposed of them": Sengmueller v. Sengmueller (1994), 17 O.R. (3d) 208 (Ont. C.A.), at pp. 216-17. An allowance for disposition costs from net family property should not be made in the case "where it is not clear when, if ever, a sale or transfer of property will be made": McPherson v. McPherson (1988), 63 O.R. (2d) 641 (Ont. C.A.), at p. 647. However, it is not necessary for the court to determine whether the disposition of the assets is inevitable; rather, the court should determine on the basis of the evidence whether it is more likely than not that the assets would be sold, at which point disposition costs would inevitably be incurred: Buttar v. Buttar, 2013 ONCA 517 (Ont. C.A.), at para. 20.

43It is not disputed that the matrimonial home has been listed for sale since May 2011. Mr. Nixon has made it clear as early as January 2011 (one month after the parties’ separation) that he intended to sell the property. The home was in fact listed for sale within months of the parties’ separation, with Ms. Lumsden’s full knowledge and agreement (although I acknowledge that Mr. Nixon failed to secure her written consent for the purposes of the listing as he ought to have done given that this was a matrimonial home).

44Ms. Lumsden argues that Mr. Nixon never had a real intention to sell this property, from which he has been earning significant rental income since 2014. She claims that this is demonstrated by the fact that he has consistently listed for an amount substantially exceeding its fair market value.

45I do not accept Ms. Lumsden’s position in that regard for a number of reasons. Firstly, the parties did not obtain appraisals confirming the value of the matrimonial home until late 2018 for Mr. Nixon, and April 2019 for Ms. Lumsden. It is clear to me that Ms. Lumsden always believed, up until April 2009, that the home was worth much more than $1.1 million, and that its sale would free up enough money with which she would be repaid (at least) her monetary investment.

46Secondly, documentary evidence produced by Mr. Nixon makes it clear that Ms. Lumsden was kept appraised of the various listing agreements signed by Mr. Nixon, and of the price at which the property would be listed for sale during the course of the past eight years. I have no evidence before me that would suggest that Ms. Lumsden has ever challenged Mr. Nixon’s intentions in that regard, or that she ever expressed her view that the asking price was too high.

47I find that Mr. Nixon has continuously made efforts to sell this property since shortly after the parties’ separation and that he has agreed to gradually reduce its listing price in an effort to sell it, based on his agent’s recommendations. I find that this is satisfactory evidence of a likely disposition date and that disposition costs will be incurred once the property is finally sold.

48For those reasons, Mr. Nixon’s claim for a date of separation deduction representing contingent disposition costs on the home in the amount of $65,845 is allowed.

2- Property located at 95 Benson Park Road, Lansdowne, Ontario

a) Date of separation value

49At the date of the parties’ separation, Mr. Nixon was the sole owner of a property located at 95 Benson Park Rd., on Hill Island, in the Thousand Islands (“the Benson property”). The value of this property at the valuation date is disputed. Both parties retained their own expert to provide an opinion as to the fair market value of that property as of December 5, 2010. Mr. Nixon’s expert, Mr. Steve Liberty, valued the property at $730,000. Ms. Lumsden’s expert, Ms. Donna Bain, valued the property at $981,000.

50The Benson property is a one-story cottage, built in 1985 on a 0.96-acre lot located on Hill Island, a subdivided island in the St. Lawrence River. Its waterfront opens onto the river, and there are many adjacent properties on the island. It was purchased by Mr. Nixon in August 2008 (during the marriage) for $800,000. To fund this acquisition, Mr. Nixon withdrew $108,000 from his RRSPs, secured a mortgage in the amount of $640,000 in his sole name and paid the balance of the down payment with his own savings.

51As was the case for the Cowichan property, despite significant investments into the renovation of the Benson property, its value remained relatively stagnant over the course of the marriage, which appears to be due to the timing of Mr. Nixon’s purchase of these properties in relation to the strong fluctuation in the Ontario real estate market at that time.

52Both experts provided a retrospective market value estimate as of December 5, 2010 based on an inspection of the property conducted much later; Mr. Liberty inspected the property in October 2018 whereas Ms. Bain inspected the property in January 2019. While Mr. Liberty obtained information as to the condition of the cottage back in 2010 from Mr. Nixon, Ms. Bain’s information was provided solely by Ms. Lumsden.

53The following are the main reasons for the discrepancy between the two opinions:

The site dimensions: Mr. Liberty is of the view that the property is 1700 ft.² whereas Ms. Bain is of the view that it is 1904 ft.²;
The size of the waterfront: Mr. liberty used 194.76 feet wide, using a linear measurement as per the site survey, whereas Ms. Bain used 212 feet, the actual length of the waterfront when one follows the irregular shoreline, which is also the measurement used by MPAC and Geowarehouse;
The two experts have used different comparable properties, except for one (located at 68 Benson Park). The experts have adjusted the value of the comparable properties differently as it related to their age and their waterfront quality/improvements;
Whereas Mr. Liberty has averaged the value of his three comparable properties to obtain the estimated value of the Benson property, Ms. Bain has chosen to use the value of her median comparable.

54On the issue of the site dimension and the size of the waterfront, I prefer the evidence of Mr. Liberty over that of Ms. Bain for the following reasons.

55Mr. Liberty actually measured the building. During his testimony, he produced a detailed sketch showing all the measurements of the property he had taken during his inspection in October 2018. Ms. Bain did not produce a sketch confirming her measurements. Further, Ms. Bain inspected the property in the middle of January 2019 when there was significant snow on the ground. It is not contested that Ms. Bain did not go inside the house on the day of her inspection.

56In his evidence, Mr. Nixon testified that two walls in front of the building where the inground pool was located are not accessible from the outside; one needs to access the exterior patio from the inside of the house to be able to measure those walls. In addition, the west side of the building was completely excavated at that time and was not accessible unless one climbed down in the excavated hole with a ladder to measure that part of the building. Ms. Bain did not mention having been required to do so, and Mr. Nixon confirmed that he did not see her climb down on that side of the building to take measurements.

57For those reasons, I conclude that Mr. Liberty’s measurements are more accurate than Ms. Bain, and I accept Mr. liberty’s conclusion that the property has 1700 ft.² in dimension.

58With regards to the waterfront, Mr. Nixon testified that there were significant renovations made to the landscape on the front of the building to install new retaining walls as well as new docks. This is confirmed by pictures of the waterfront adduced into evidence by the parties, which show the significant improvements made on that part of the land. It was Mr. Nixon’s evidence, which I accept, that as a result of these changes, the waterfront was, by December 2010, following a straight line and was no longer irregular as shown on the 2008 site survey. For that reason, I conclude that the size of the waterfront was 194.76 feet wide as opposed to 212 feet.

59Even if that had not been the case, I would have used Mr. Liberty’s waterfront measurement in any event. It seems logical to me that what is important to a prospective purchaser is the extent of their access to the property’s waterfront, as opposed to the actual length of the shoreline, which when irregular, does not provide an owner with any greater access to the water or any better view of it.

60With regards to comparable properties, I find that both experts used certain properties that should have been disregarded. Mr. Liberty used a property located at 108 Black Snake Lane which was sold by the Bank of Montreal by way of power sale within two days of its listing. It is common knowledge that properties sold in distressed conditions are often sold for much less than their fair market value.

61Another of Mr. Liberty’s comparable properties, located at 40 Main Short Point Lane, was not located on Hill Island but rather on the main land. This, in my view, is a significant difference.

62Finally, three of the four real estate appraisers who testified during this trial confirmed the importance of “bracketing”, which means that when selecting comparable properties for analysis in the direct comparison approach, comparable properties should present a range of values and attributes both superior and inferior to the subject property. All the comparable properties used by Mr. Liberty were of inferior value.

63For all these reasons, I find that the comparable properties used by Mr. Liberty resulted in a lower value for the Benson property than its true fair market value as of December 2010.

64On the other hand, acknowledging that there was a limited pool of comparable properties available on the island itself, I conclude that Ms. Bain’s selection of comparable properties resulted in a higher value for the Benson property than its true fair market value as of December 2010. In particular, she used a comparable property which sold two years before for almost twice the appraised value of the Benson property (1.6 million). All three of the comparable properties used by Ms. Bain resulted in gross/net adjustment ratios exceeding 25% (and up to 40%), which brings the question as to whether they were comparable properties in the first place.

65Both experts used the property located at 68 Benson Drive as a comparable property. I find that this property was the most useful in the direct comparison approach considering their similarities, and despite the fact that this property sold 1.5 years after the valuation date. During his testimony, Mr. Boudreau confirmed that in certain circumstances, it is appropriate to use hindsight or after-the-fact evidence in the context of a retrospective valuation. For instance, when the market conditions have not substantially changed and when the subsequent data is consistent with data as of the effective date. Since both experts have used the 68 Benson as a comparable property, I find that this was the case here.

66While Mr. Liberty came to an adjusted value of $711,000 for that property, Ms. Bain arrived at an adjusted value of $934,000. The main differences (there were many) between the two adjusted values are the following:

Ms. Bain did not make any downward adjustment to reflect the fact that 68 Benson was a six years old property whereas 95 Benson was 25 years old. I was not satisfied by her expressed reasons for not making a significant adjustment in that regard;
Ms. Bain’s adjustments were based on an incorrect size for the building and the waterfront footage (as stated above);
Ms. Bain made an upward adjustment of $100,000 based on her finding that the waterfront condition and improvements were greater on 95 Benson than on 68 Benson. While I agree that an adjustment was justified, Ms. Bain has not explained how she came up with $100,000. On the other hand, Mr. Liberty’s failure to make any adjustment at all on this account was an error, in my view. The evidence before me makes it clear that 68 Benson is located in a narrow channel where the water is very fast. This makes it impossible for its owners to put anything more than a wooden dock on the shoreline (more robust docks that go out in the water, such as those on the 95 Benson property, cannot be installed there). Pictures of the two very different waterfronts make it clear that the quality of the waterfront and the view of the water at 95 Benson are far better than at 68 Benson.

67In the end, I have used Mr. Liberty’s adjusted value as a base and added a reduced adjustment of $75,000 to account for the better waterfront conditions at 95 Benson, for a rounded value of $785,000, which I find was the fair market value of the Benson property as of December 5, 2010.

b) Current value

68Both parties have also obtained appraisals to confirm the current value of the Benson property. Although the parties’ experts disagree on its current value, the discrepancy between their respective opinion is not that great either. Mr. Liberty appraised it at $1,315,000 whereas Ms. Bain appraised it at $1,504,000.

69As was the case for the matrimonial home, the current value of the Benson property is only relevant for the purpose of assessing the parties’ respective means, needs and other circumstances in the context of Ms. Lumsden’s spousal support claim. Ms. Lumsden’s entitlement to spousal support, or its quantum, will not turn on whether this property is worth 1.3 or 1.5 million. Consequently, I find it irrelevant to make a finding as to which opinion I accept.

c) Disposition Costs

70Relying on the legal principles set out in Bortnikov, I conclude that there should be no date of valuation deduction allowed to Mr. Nixon on account of contingent disposition costs related to this property.

71There is no evidence whatsoever before me that Mr. Nixon intends to dispose of this property any time soon, or that he ever had the intention to do so during the nine years that followed the parties’ separation. There is no evidence whatsoever as to when, if at all, Mr. Nixon will dispose of this property and I find that contingent disposition costs related to this property, at the date of the parties’ separation, are far too remote and unforeseeable to be subject to quantification.

3- Mont-Tremblant Condominium Units

72In November 2004, approximately two months before the parties’ marriage, Mr. Nixon purchased two condominium units located in the Westin Hotel in Mont-Tremblant, Québec. These two condominium units were purchased by Mr. Nixon as rental properties to provide him with a source of passive income.

73The date of marriage and date of separation values of these units, as well as the balance of the mortgage attached to them on both dates, is not disputed. What is disputed is the existence, at the date of the parties’ separation, of a contractual liability on the part of Mr. Nixon to renovate these two units, at a cost of $35,677.91 each, which costs Mr. Nixon financed at a total cost of $77,560 inclusive of interests. Whether disposition costs should also be deducted from Mr. Nixon’s family property as of the date of the parties’ separation is also disputed.

74The evidence provided by Mr. Nixon to support the existence of this liability at the valuation date is clear and conclusive. The owners of condominium units in the Westin Hotel are bound by a Licence Agreement and other contractual arrangements which require them to renovate their units from time to time. If an owner fails to advance the funds necessary to complete the renovations, the property manager has the right to deduct from the rental pool revenues payable to that owner any amount owing pursuant to property improvement programs triggered by the property manager, at the prime interest rate + 6%, and until all renovation costs are fully repaid.

75Pursuant to a Property Improvement Program (“PIP”) triggered by the property manager in April 2010 and sent to the condominium owners at that time, they were advised of their obligation to fund significant renovations of their units. While the estimated budget initially was in the range of 10 million dollars, it was eventually reduced to somewhere in the range of $3.6 million.

76The total renovation costs payable by Mr. Nixon on account of each of his two condominium units amounted to $35,677.91. While the quantification of the renovation costs was only formalized in 2012, the owners’ obligation to pay the renovation costs pursuant to the PIP was confirmed in April 2010, almost one year before the parties’ separation.

77Since Mr. Nixon did not have the funds necessary to pay the renovation costs as per the payment schedule imposed by the property manager, he elected to have his share of the costs set-off by his rental revenues over time. This resulted in interest charges being imposed by the property manager, and ultimately, the total cost to him for each of his units was $38,780.07 (or $77,560.14 in total). The renovations which were performed over the course of three years were finally completed by the spring of 2014, and Mr. Nixon’s portion of the renovation costs were gradually repaid by the withholding of his rental revenues from 2011 until they were fully repaid, with interests, in January 2016.

78I accept that the owners’ liability associated with the PIP came into existence during the marriage and was crystallized by the time the parties separated. It was Mr. Nixon’s evidence, which I accept, that the contractual obligation to contribute to the improvement of those units has a significant impact on their fair market value, since the liability is attached to the condominium unit’s ownership and cannot be avoided by a prospective purchaser. The parties agreed that the units had a fair market value of $200,000 each in December 2010. The evidence reveals that Mr. Nixon sold both units in 2018 for $255,000 and $265,000 respectively. In 2018, Mr. Nixon had paid off any outstanding renovation liability owing under the PIP, and therefore, it is not surprising that their fair market value had, by then, significantly increased due to the absence of any foreseeable PIP in the next several years.

79I am of the view that the liability associated with the husband’s contractual obligation to renovate under the PIP was considered when assessing the fair market value of the condominium units in December 2010. For that reason, Mr. Nixon’s claim for a further deduction from his net family property at the valuation date on this account is denied.

b) Disposition costs

80As was the case for the Benson property, I have no evidence before me that would suggest that Mr. Nixon had any intention of disposing of his condominium units on the date of the parties’ separation or shortly thereafter. It was Mr. Nixon’s evidence that as a result of the liability flowing from the PIP, he chose to hold onto these assets until after the renovation costs were paid off to maximize any profit he might realize on their sale. As his counsel suggested, it was a reasonable decision for a prudent investor to make at the time.

81However, the question is not whether Mr. Nixon made a reasonable decision to hold onto these assets until he could expect a reasonable profit from their sale. The issue is whether, based on the evidence before me, it was more likely than not at the date of the parties’ separation that the assets would be sold in the near future. It is not disputed that once sold, disposition costs would inevitably be incurred from the sale of the condominium units. However, there is no evidence before me to suggest that at the time of the parties’ separation, Mr. Nixon had any intention to part with his two condominium units. They were only listed for sale some eight years after the parties’ separation.

82For these reasons, Mr. Nixon’s claim for a valuation date deduction equal to the disposition costs flowing from the sale of his two condominium units is dismissed.

4- Vernon Systems Inc.

83On or about February 2002, Mr. Nixon and other partners set up Vernon Systems Inc., a company registered in the British Virgin Islands. According to Mr. Nixon, prototypes of a particular technology had been developed by a group in Singapore and he was approached by a business affiliate to invest in this company that would own the intellectual property of the technology and be responsible for selling and distributing it throughout the world. At the time of its incorporation, Mr. Nixon invested $250,000 and retained a 50% ownership.

84Mr. Nixon testified that the technology was, in fact, sold throughout the world. At one point, on or about 2002, a number of Vernon’s major clients sought to acquire a majority interest in the company. Mr. Nixon explained that the corporation was the subject of an estate freeze which crystallized the value of the existing shareholders’ equity in the company as of that date, and from thereon, Mr. Nixon’s interest in the company was reduced to 10%. This all occurred before the parties’ marriage.

85As a result, it was Mr. Nixon’s evidence that on the date of his marriage in January 2005 and at the time of the parties’ separation in 2010, he was, and remains, a minority shareholder with a 10% interest subject to a voting trust, which leaves him entitled to 50% of the proceeds of the dissolution of Vernon Systems Corp. on a fully diluted basis.

86It was Mr. Nixon’s evidence that, throughout the years, he would, from time to time, borrow money from Vernon which he would repay with interest. While no such money was owing by Mr. Nixon to Vernon on the date of the parties’ marriage, Mr. Nixon alleges, as explained above (in the matrimonial home section), that the amount of $686,000 that he received from Vernon and with which he funded part the costs of the extensive renovations on the matrimonial home, had been lent to him by Vernon.

87The four monetary advances paid by Vernon to him in 2003 and 2004 are reflected in four Promissory Notes signed by him in favour of Vernon. According to Mr. Nixon, he is required to pay compounded interest of 3.17% over a 20-year term. At the time of the parties’ separation, the loan balance would have been $844,833.51, which included roughly $158,000 worth of (compounded) interests.

88As stated earlier, as a shareholder with a 50% interest in the proceeds of the dissolution of Vernon, he is presumably entitled to the proceeds of the dissolution of Vernon. Since the alleged loan to Mr. Nixon is, according to his evidence, the only remaining asset of Vernon (in addition to smaller bank balances), Mr. Nixon also includes in the equalization calculations the value of his interest in Vernon on the date of the parties’ marriage and separation, which is equal to 50% of the value of Vernon’s alleged loan to Mr. Nixon at either date (plus the two bank balances mentioned above).

89Ms. Lumsden’s disputes both the alleged loan and Mr. Nixon’s alleged interest in this company. She takes the position that Mr. Nixon has provided no credible documentary evidence confirming the existence of this debt and corollary asset, and which he was ordered to provide on several occasions.

a) Loan payable by Mr. Nixon to Vernon at the date of the parties’ separation

90The onus is on the party asserting the value of an asset or debt that he controls to provide credible evidence as to its value (Homsi v. Zaya, 2009 ONCA 322, 65 R.F.L. (6th) 17, at para. 38). In Flatters v. Brown (1999), 48 R.F.L. (4th) 292, Robertson J. had the following to say about the parties’ onus of proof on the balance of probabilities (at para. 13):

I find the wife was generally truthful in her evidence. She tried to muster her best recollection. Being truthful is only one necessary branch of credibility. Reliability is the other branch. Her evidence about premarital property lacked credibility because of a lack of reliability on points, not because she was untruthful. The court can only consider the presented evidence. The court cannot consider documents, facts or corroborative witnesses, which might exist but are neither disclosed nor tendered at trial. At law, evidentiary weight cannot be gained simply by enjoying the enticing aroma of proof.

91The evidence adduced by Mr. Nixon to prove the existence and value of his interest in, and liability towards, Vernon did not meet the evidentiary burden described above. Not only did Mr. Nixon’s evidence in that regard lack credibility, it also suffered from a significant lack of reliability.

92First of all, it is important to note that despite several court orders requiring him to provide disclosure of his interest in Vernon and of these alleged loans payable by him to that company, the only disclosure provided by Mr. Nixon in the context of this litigation comprised of an email exchange between Mr. Nixon and Vernon’s director, Mr. Edward Petre-Maers, dated August 13, 2014, copies of the four Promissory Notes signed by Mr. Nixon in favour of Vernon in 2003 and 2004, as well as one letter from Mr. Hollander, counsel for Vernon, confirming the amounts disbursed to him.

93Mr. Nixon claims that because he is only a minority shareholder, he did not have possession of, or access to, any of the corporate documents ordered to be produced. Exchanges of emails between him and Mr. Petre-Maers were adduced to support his assertion that he attempted to obtain those documents but that the majority shareholders had refused to allow their disclosure based on confidentiality covenants binding them.

94Mr. Nixon was able to produce a significant number of historical documents related to the various issues in dispute in this trial including significant documentary and financial evidence dating back to the early 2000 (which included a bank statement for one of Vernon’s bank accounts dating back to 2002). I do not accept that Mr. Nixon did not have in his possession copies of highly important documents related to his significant interest and involvement in Vernon. I do not accept that the only evidence in Mr. Nixon’s possession of a significant liability approaching 1 million dollars and an equally valuable corporate ownership interest worth close to half a million dollars is limited to a total of five or six random pages which appear to have been carefully selected. I draw an adverse interference from the fact that Mr. Nixon failed to produce significantly more evidence than what he has provided despite his professed inability to access more, which in my view, completely lacks credibility.

95Further, while I accept that Mr. Nixon received $686,000 from Vernon over the 18 months preceding his marriage to Ms. Lumsden, and that he used that money to renovate the matrimonial home, the uncontested evidence before me also confirms that no payment was ever made by Mr. Nixon towards this alleged debt over the 16 years which followed the money advances. While the limited evidence provided by Mr. Nixon confirms that the monetary advances were supposed to be secured by a mortgage on the Cowichan property, it is undisputed that no such mortgage was ever registered in favour of Vernon. I find it unconceivable that Vernon’s shareholders would consent to a loan of this magnitude to a shareholder who lives abroad and has no assets in the British Virgin Islands (other than his interest in the company) without any form of guarantee whatsoever.

96The evidence before me confirms that Mr. Nixon is an astute business owner and investor, and that while he has made some questionable investment decisions in the past, I do not accept that he would take on such a massive debt and let it grow (with compounded interest) over 20 years to invest in a property, which as confirmed by the evidence, has not significantly increased in value over the past 16 years and has virtually no equity.

97For all those reasons, Mr. Nixon’s claim for a date of marriage and date of separation deduction representing the balance owing on this alleged loan is denied. I find it more likely than not that the amounts paid to Mr. Nixon by Vernon prior to the parties’ marriage were payments owed to him as a shareholder, and not a loan as alleged.

b) Account receivable by Mr. Nixon from Vernon (DOS)

98Since I concluded that the alleged loan from Vernon was not a loan, it follows that Mr. Nixon’s professed entitlement to a 50% interest in Vernon (which interest would be equal to 50% of the value of the alleged loans to himself) at the date of the parties’ separation was nil. To the extent that Mr. Nixon’s interest in Vernon at the date of the parties’ marriage and separation had any value at all, Mr. Nixon has failed to prove such interest and the value thereof on a balance of probabilities.

5- Telnexia Networks and Telecom

99Telnexia Networks (“Networks”) was initially set up by Mr. Nixon as Vernon’s Canadian arm, so to speak. Networks was a domestic company meant to employ the individuals working in Canada but in conjunction with the Vernon business opportunity. By the Fall of 2004, Mr. Nixon’s interest in Vernon had significantly changed, and so had his personal investment strategy. Since he was no longer going to be doing what Networks had been set up for, Mr. Nixon began to unwind that company and transfer the monetary investments he had made into Telnexia Telecom Inc. (“Telecom”) and into investing in Quintero Escapes.

100At some point in 2004, Mr. Nixon was offered an opportunity to provide technology research and design services to a major project based in the U.S. and owned by U.S. based groups led by a Command Office (“C.O”). Mr. Nixon had no ownership in this project, and he was essentially becoming the C.O.’s employee. However, since the U.S. based project had no office in Canada, the C.O. needed a way of paying Mr. Nixon his salary. Telecom was therefore set up as a flow-through company by way of which Mr. Nixon would be paid for his services, and later, he would receive monetary advances to fund operating expenses.

101While Mr. Nixon is the sole shareholder and director of Telecom, I accept that this corporation is effectively a Canadian subcontractor operating under the umbrella and control of the C.O. As such, the C.O. has effective control over all of Telecom’s income and expenses, including the way any monetary advances made to Telecom to cover operating expenses is spent. In other words, Mr. Nixon’s income and use of corporate funds to pay for expenses is within the control of, and is overseen by, the C.O. This is further supported by the fact that both experts retained by the parties to assess Mr. Nixon’s true income for support purposes have reported no personal use by Mr. Nixon of Telecom’s money to cover personal expenses (as will be seen later).

102When this corporation was initially set up by Mr. Nixon, he had to advance important sums of money to cover its initial and ongoing operating expenses. When Mr. Nixon became unable to do so over the years, Telecom was provided access to a revolving line of credit of up to a maximum of $500,000, which is guaranteed by the C.O. and under its control. Via this revolving line of credit, Telecom has access to monetary advances to cover its expenses and cash flow shortfalls. However, at the time of the parties’ separation, these advances were made by Mr. Nixon with the use of his own funds.

a) Date of marriage value of Mr. Nixon’s interest in Telecom and Networks

103Unlike for Vernon, in the case of Telecom and Networks’ affairs, the documentary evidence produced by Mr. Nixon was extensive, thorough and very credible. He produced all the corporate records confirming and quantifying his interest in these two corporations for all relevant years, including yearly financial statements, general ledgers, bank statements and other requested information. That extensive documentary and financial evidence was fully tested in court and reviewed thoroughly by both parties’ experts. Mr. Nixon’s testimony on all matters surrounding his corporate and financial affairs regarding the Telnexia companies, which included lengthy testimony and tracing exercises, were compelling.

104In addition to the above, Mr. Nixon submitted to a voluntary disclosure process with the Canadian Revenue Agency in 2004-2005. Both corporations’ tax filings as well as Mr. Nixon’s personal tax filings (which included Quintero Escapes) were the subject of an extensive review by the CRA, who positively assessed them.

105I do not feel the necessity to provide a lengthy account of the various financial transactions that took place in 2004 and 2005 in the financial affairs of these two corporations. Suffice it to say that the detailed evidence provided by Mr. Nixon satisfies me that at the time of his marriage, he was owed the sum of $330,797 by Networks and $100,000 from Telecom, which amounts were personally advanced by him to the two corporations before the parties’ marriage.

106The evidence before me also makes it clear that both companies had enough assets and liquidities at the date of the parties’ marriage with which to repay these shareholder advances to Mr. Nixon, had he requested payment at the time.

107As a result, Mr. Nixon is entitled to include the value of these two shareholder loans as assets owned by him at the time of the parties’ marriage.

b) National Bank receivable

108It was Mr. Nixon’s evidence that in 2004, the National Bank of Canada (the “NBC”) retained him in his personal capacity to assist it in recovering a tax credit refund from the CRA with a value of approximately 1.5 million. Between 1997 and 2002, Mr. Nixon was a shareholder and the CEO of NetPCS (discussed in “Background” above). NetPCS had developed a software and was in the process of going public on both the Toronto Stock Exchange and the NASDAQ. As a result of the worldwide effect of 9/11 and the dot-com crash of 2000, this process came to a halt and eventually led to NetPCS stopping all its operations.

109By 2002, as the CEO of the corporation, Mr. Nixon had shut down NetPCS, was liquidating its assets and paying off its creditors. The company had a line of credit for a little over 2 million dollars in favor of the National Bank of Canada (“the NBC”), which was secured by a tax credit refund from the Canadian government owing to the company as a result of the research and development it had completed. At the time the company shut down, the CRA had not yet approved that tax credit and the NBC seized the assets of NetPCS in an effort to collect on its loan.

110Given Mr. Nixon’s extensive knowledge of the company’s affairs, the NBC sought his assistance in recovering the tax credit, which Mr. Nixon agreed to provide in exchange for receiving 25% of any amount he would collect from the CRA. The evidence before me confirms unquestionably that the sum of $320,412.54 was in fact paid to Mr. Nixon by the NBC on March 24, 2005, two months after the parties’ marriage. An invoice from Mr. Nixon to the NBC dated January 5, 2005 (about two weeks before the wedding) confirms that the CRA had approved the tax credit by that time and that the payment was owing to Mr. Nixon by the NBC, which it did pay shortly thereafter.

111The fact that this payment was not included in Mr. Nixon’s 2005 income tax return as income earned that year and the fact that Mr. Nixon later advanced that sum of money to Telecom as alleged by Ms. Lumsden and as confirmed by the evidence, does not detract from the conclusion that Mr. Nixon owned this contingent asset on the date of the parties’ marriage. Based on the clear evidence before me, I find that Mr. Nixon is entitled to a date of marriage deduction in the amount of $320,412, representing the payment owing to him by the NBC on that date.

6- Mr. Nixon’s Vehicles

112Mr. Nixon alleges that he owned two vehicles on the date of the parties’ marriage; a 2003 Lincoln Navigator and a (2001) Porsche 911 Coupe. Although Ms. Lumsden acknowledges that he was in possession of these two vehicles at the time, she takes the position that Mr. Nixon has failed to prove that he owned these vehicles at the time.

a) 2003 Lincoln Navigator

113In support of his allegation, Mr. Nixon produced a bank statement from Vernon confirming that on August 19, 2002, Vernon purchased a Lincoln Heights Ford for 25,000 British pounds (the currency in the British Virgin Islands). Mr. Nixon’s testimony is that he purchased this vehicle from Vernon shortly thereafter, in 2002. Extracts from the Redbook confirms that the vehicle was worth $46,375CAN on the date of the parties’ marriage.

114In addition to the above, Mr. Nixon presented in evidence a copy of his ownership for that vehicle, confirming that he owned it personally. While the effective date of the registration is “05-08-12”, which could mean the 5th day of August 2012 just as much as it could mean the 12th day of August 2005, the undisputed evidence confirms that Mr. Nixon was driving that vehicle when the parties were only dating back in 2002.

115Other than denying Mr. Nixon’s ownership of this vehicle, Ms. Lumsden has adduced no evidence that would make me question Mr. Nixon’s assertion that he owned that vehicle in January 2005. She admits, however, that Mr. Nixon owned it at the time of their separation.

116I find that Mr. Nixon has met the burden of proving on a balance of probabilities that he owned that vehicle on the date of the parties’ marriage. He is therefore entitled to a date of marriage deduction in the amount of $46,375.

b) Porsche 911 Coupe

117Mr. Nixon also states that he purchased a 2001 Porsche 911 Coupe in Ottawa in the summer of 2000 for $110,000, which he owned at the time of the parties’ marriage. He produced documents which confirm that he sold this vehicle in November 2011 for $10,000. Excerpts from the 2005 Red Book confirm that this vehicle was worth $62,000 in 2005.

118However, unlike the Lincoln Navigator, Mr. Nixon did not provide the ownership for that vehicle. Evidence adduced before me confirms that when he sold his 2001 Porsche in 2011, Mr. Nixon leased a new Porsche Cayenne from Mark Motors, a Volkswagen, Lexus and Porsche dealership in Ottawa. In his cross-examination, Mr. Nixon confirmed that he got his 2001 Porsche from the same dealership.

119During his cross-examination, Mr. Nixon was presented with his January 2005 CIBC bank statement which revealed that at that time, he was making pre-authorized monthly payments to Volkswagen (“VW Credit”) in the amount of $1,390.82. When confronted with this evidence, Mr. Nixon could not offer an explanation.

120With regards to the 2001 Porsche 911, Mr. Nixon has not met his burden of proving that he owned that vehicle on the date of the parties’ marriage. In fact, the evidence before me (or lack thereof) suggests that on that date, that vehicle was likely leased or financed. In the first case, it would not be an asset owned by Mr. Nixon on the date of marriage, and in the latter case, there would be an outstanding loan on the vehicle, which has not been disclosed and which would reduce its net value.

121As a result, this deduction claimed by Mr. Nixon is denied.

7- Ms. Lumsden’s Engagement Ring

122It is not disputed that at the time of the parties’ separation, Ms. Lumsden was the owner of an engagement ring and wedding band and that the estimated value of both rings was $9,000. Both parties claim that the other has retained possession of these rings post-separation.

123In all truth, I found both parties’ testimony credible on that point, and I am unable to come to any conclusion as to where these rings are currently located. For all I know, they might simply have been lost when Ms. Lumsden moved out of the matrimonial home, or they might simply have been misplaced in the matrimonial home.

124For that reason, I decline to attribute their value to either party on the valuation date.

8- December 1, 2010 Rent Cheque

125Although the parties have agreed to use December 5, 2010 as their separation date for the purpose of the equalization of their net family property, it is not disputed that on November 18, 2010, Ms. Lumsden signed a residential lease for the property located at 34 Covington Place, in Ottawa, where she intended to relocate with her two children come December 1, 2010. She did, in fact, move into that residence on December 1.

126As part of the lease, Ms. Lumsden was required to pay first and last month’s rent. She signed a check in the amount of $1,700 dated December 1, 2010 made out to her landlord, which only cleared in her bank account on December 7, 2010, two days after the parties “chosen” date of separation.

127Ms. Lumsden’s wishes to include this amount as a debt owing by her on the date of separation, since the payment was owing as of December 1, whereas Mr. Nixon takes the position that since it covers Ms. Lumsden’s rent for the entire month of December, which was only seven days in at the time the cheque cleared, it was essentially an asset, in the form of a pre-paid rent payment, of equal value to the alleged liability (with one cancelling the other and resulting in no adjustment to Ms. Lumsden’s net family property).

128I was provided with no caselaw allowing me to determine how courts might have treated such payments in the past. Further, Ms. Lumsden did not once mention this alleged liability throughout this litigation. This alleged debt was raised for the first time only days prior to the commencement of this trial. In those circumstances, I am not prepared to allow Ms. Lumsden’s claim for a deduction in that amount.

9- Conclusions on Equalization

129My conclusions with regards to the disputed property issues have been incorporated in the Net Family Property Statement attached to this decision as Schedule “A”, which includes the various debts and assets agreed upon between the parties.

130As shown therein, both parties had a negative net family property value at the date of their separation. By virtue of s. 4(5) of the FLA, each party is deemed to have a zero net family property value and, as a result, there is no equalization payment owing by either party to the other.

Spousal Support

131The parties have agreed that for the purpose of calculating any spousal support award, I am to use the average of their respective annual income for the years 2010 to and including 2017. As mentioned earlier, the parties also agree that any spousal support awarded to Ms. Lumsden should be in the form of a lump sum.

132Ms. Lumsden seeks a lump sum spousal support in the amount of $71,693 (net), which represents the mid-point between the mid-range and the high-range of support suggested by the SSAG (duration is 7 years 6 months – the mid-point between Mr. Nixon’s after-tax cost and Ms. Lumsden’s after-tax benefit is used), based on her assertion that Mr. Nixon earns an income of $162,650 and that she earns an income of $47,800.

133Mr. Nixon denies that Ms. Lumsden is entitled to spousal support. He is of the view that Ms. Lumsden has no entitlement to compensatory or non-compensatory support, and that even if this Court was to find entitlement, the fact that both parties have a similar income would essentially negate the need for any spousal support at all. Mr. Nixon takes the position that he earns an annual income of $85,171 and that Ms. Lumsden earns an annual income of $76,883. If I were to find entitlement nonetheless, based on these incomes, the mid-range lump sum support award suggested by the SSAG would only be $4,187.

134Since the discrepancy between the parties’ respective income is relevant to the issue of whether Ms. Lumsden might be entitled to needs-based spousal support (if I were to find that she is not entitled to compensatory support), I will begin my analysis with an assessment of the parties’ income.

1- Mr. Nixon’s Income for Support Purposes

135Throughout the relevant years, Mr. Nixon received an annual salary of $105,000 for the work he performs for Telecom. During some of the years relevant to my analysis (2010 and 2011), Mr. Nixon also earned taxable dividends, interest income and capital gains. For each of the years from 2014 to and including 2017, Mr. Nixon received “other employment income” in the amount of $50,000 per annum with the exception of 2014 during which he received $125,000 (this included a retroactive payment for the years 2012 and 2013). This other income relates to what Mr. Nixon called “the Homestead Program”, the details of which will be discussed more fully below. The amounts received by Mr. Nixon from these sources during the relevant period is not disputed by the parties.

136As Mr. Nixon is the sole shareholder of Telecom, and since he is self-employed through Quintero Escapes, which is a sole proprietorship, the quantification and treatment of his business income and losses from these sources is disputed from a support perspective. Mr. Nixon had no other sources of income during the eight years that this trial focused on.

137Each party has retained an expert to provide them with an opinion with regards to Mr. Nixon’s income for spousal support purposes; Ms. Lumsden retained the services of Mr. Dave Clarke and Mr. Nixon retained the services of Mr. Richard Evans. While Mr. Clarke concluded that the average of Mr. Nixon’s income for those years was $162,650, Mr. Evans concluded that it was $85,171.

138There are four – and only four – differences in the two experts’ reports which affect their conclusions in that regard, namely:

Whether Mr. Nixon should be entitled to deduct from his employment and other income the net business loss of Quintero Escapes;
Whether Telecom’s pre-tax corporate income should be attributed back to Mr. Nixon as income available to him for support;
Whether an interest benefit should be added to Mr. Nixon’s income as a result of the shareholder loan he receives from Telecom;
The exact value of the personal benefit that Mr. Nixon receives from Telecom in the form of the use of a cell phone and, more specifically, the grossed-up value of this benefit. This is not really an issue in dispute because both experts agree that Mr. Nixon’s use of a cell phone paid by Telecom should be added to his income. However, since Mr. Clarke arrives at a much higher income for Mr. Nixon, the gross-up value of this personal benefit is higher in his report due to a higher tax rate being applied.

139To illustrate Mr. Nixon’s line 150 income during the relevant years, the following summary is helpful:

	2010	2011	2012	2013	2014	2015	2016	2017
Employment income	$105,000	$105,000	$105,000	$105,000	$105,000	$105,000	$105,000	$105,000
Other employment income					$125,000	$50,000	$50,000	$50,000
Taxable dividends	$19,758	$9554
Interest income	$8349	$6570	$15
Capital gains	$8899	$46,506
RRSP income								$1700
Business loss	($376,624)	($90,736)	($71,360)	($72,114)	($137,271)	($134,527)	($142,622)	($134,421)
Line 150 income	($234,618)	$78,594	$33,655	$32,886	$92,729	$20,473	$12,378	$20,579

a) Quintero Escapes

140The main difference between the two experts’ conclusions results from the fact that one allows the business loss of Quintero Escapes and the other adds it back to Mr. Nixon’s income. This turns on whether Quintero Escapes is a legitimate business enterprise or personal endeavour (or discretionary investment) which has no expectation of profitability.

141Mr. Nixon testified that Quintero Escapes was set up by him in the early 2000 as part of his strategy to secure a lasting source of passive income for his retirement. His strategy was twofold; building a solid source of passive income from vacation rental properties and investing in the stock market.

142According to Mr. Nixon, the main function of Quintero Escapes, at its inception, was to acquire vacation properties that would be rented out to the public. It is as part of the Quintero Escapes’ business operations that Mr. Nixon purchased his two condominium units in Mont-Tremblant, which yielded annual gross rental revenues (before expenses) ranging between $27,000 to $44,000 during the years 2010-2017.

143In 2005, Mr. Nixon purchased a luxurious charter boat (a 2001 54” Neptunus Commuter boat). The boat was renovated by Mr. Nixon in 2005 and was put in service in 2006, generating some rental revenues from 2006 until it was sold in 2010 (at a significant loss, which resulted in the important capital loss observed in Mr. Nixon’s tax return for that year).

144As was already explained above, in August 2008, Mr. Nixon purchased the Benson Park property in the Thousand Islands. It was Mr. Nixon’s evidence that he had been actively looking for a cottage property to add to his Quintero Escapes’ operations, to use as a short-time vacation rental property. Extensive renovations were completed by Mr. Nixon inside the building, which was not habitable at the time of its purchase as well as on the land itself (rock retaining walls, landscaping, docks, etc.).

145While Mr. Nixon initially intended to offer this property as a short vacation rental, in 2009, the opportunity to rent it to non-resident construction employees working on the remodeling of the Canadian Customs (located nearby) presented itself. Mr. Nixon agreed to rent the Benson property (at that time only the upper unit was habitable) to these workers at the rate of $2,500 per month, for two years. However, shortly after the lease was signed something went wrong with the Canadian Customs project and all workers were sent home. Nonetheless, rent continued to be paid as per the lease and the workers only returned much later that year.

146It was Mr. Nixon’s evidence, which is supported by Quintero Escapes’ statements of business activities, that beginning in the Winter of 2009, rental revenues generated from the lease of the Benson Park property have been significant and ongoing. When the renovations were completed on the lower level on or about 2013, each of the upper and lower levels were continuously rented to long term tenants (as opposed to short-term vacation rental), including to foreign workers under contract with Telecom. The property has generated gross revenues ranging from $30,000 to $157,500 for the years at issue in this case (between 2010 and 2017).

147I wish to make the following comments at this point in my analysis. During this trial, it was Ms. Lumsden’s position and evidence that the properties acquired by Mr. Nixon before, during or after the parties’ marriage were purchased by him essentially for personal purposes and enjoyment, and not in the context of a business venture. Her evidence was that she was not aware of the charter boat or the Benson Park property ever being rented out to third parties during the parties’ marriage, although she acknowledged that the Mont-Tremblant condominium units were part of a rental pool agreement and leased for an important part of the year, each year. In her view, Mr. Nixon’s evidence to the effect that he earned rental revenues from leasing the charter boat and the Benson property during the marriage was pure fabrication.

148To support her assertion in that regard, Ms. Lumsden attested to the extent of the family’s personal use of the charter boat, the Benson property and the Mont-Tremblant condo units during the parties’ marriage. Her testimony in that regard, especially in relation to the family’s use of the Benson Park property, was supported to a certain extent by the testimony of her (now adult) daughter.

149I find that Ms. Lumsden’s testimony with respect to the family’s personal use of these properties was credible. However, the fact that Ms. Lumsden was not aware of the details and extent to which these properties were put to good use by Mr. Nixon to generate passive income is not surprising in the circumstances of this case.

150The evidence clearly established that these parties lived their lives, from a financial perspective, completely separately. They did not share a common bank account, they did not pool their money together in any way, and each was solely responsible for their own and their respective children’s expenses. Each month, Ms. Lumsden’s sole financial contribution to the household expenses was the payment of $1,450 which she paid to Mr. Nixon every month that she and her children lived there. The parties also shared the cost of groceries.

151It is clear to me, based on the evidence as a whole, that there was significant mistrust between the parties, which mistrust led to a lot of disputes between them particularly on account of monetary issues. Neither had any specific knowledge of the other’s financial affairs, except that Ms. Lumsden was fully aware that her husband was a “self-made millionaire” who was involved in several business ventures and had significant financial means, and Mr. Nixon knew that his wife had limited means and little assets or debts (other than the net proceeds from the sale of her home).

152In those circumstances, Ms. Lumsden’s lack of knowledge about the extent to which Mr. Nixon used his various properties to generate income is not surprising to me and certainly does not exclude the possibility that Mr. Nixon did. As previously stated, two experts have had access to significant disclosure related to Quintero Escapes’ business operations, which included accounting records, detailed ledgers and monthly bank statements. Neither expert reported any irregularities or suspicious financial transactions related to the income and business expenses reported by Mr. Nixon in his tax returns each of the relevant years for Quintero Escapes. In addition, Mr. Nixon’s personal tax returns, which includes Quintero Escapes, was the subject of three different assessments by the CRA which took absolutely no issue with Quintero’s business activities, reported income or expenses.

153Also, the Benson property was purchased in August 2008, and given its inhabitable state at that time, was not used at all in 2008. It was Ms. Lumsden’s evidence that the family used the Benson Park property mostly during the summer, as the family would instead use the Mont-Tremblant condo during weekends in the fall and winter. Given that the construction crew was absent during a good portion of 2009, despite rental revenues being received under that lease, it is not impossible that the cottage was frequently used by the family during the Summer of 2009 and 2010, while the property was under significant repairs and while the workers were absent.

154Mr. Nixon explained that with time, the Benson property was rented out to other workers, including non-resident programmers working on business projects in which he was involved through Telecom. When Mr. Nixon found himself unable to sell the Cowichan property after the parties’ separation, he turned that property into an income-generating asset as well and began renting bedrooms to non-resident workers (mostly those working on Telecom’s project). Four out of the five bedrooms in the Cowichan property were rented out beginning in 2014, and to this day, have generated roughly $40,000 of rental revenues each year.

155Based on all the evidence before me, I find that Quintero Escapes is a legitimate business venture which is part of Mr. Nixon’s long-term investment strategy to build capital assets from which he will be able to earn passive income in his retirement. But this conclusion does not end the analysis.

156The courts have shown a marked reluctance to allow employees to deduct business losses from employment income for child support purposes and have frequently refused to deduct the loss from their income (see Proulx v. Proulx (2009), 2009 CarswellOnt 2189; Burrell v. Robinson, 2009 ONSC 3748; Luke v. Richards, 2018 ONSC 1695; Hargrove v. Holliday, 2010 ABQB 70; Thomas v. Thomas, 2019 NLCA 39 (N.L. C.A.)).

157I think that it is generally accepted that the income determination rules set out in ss. 16 to 20 of the Child Support Guidelines, S.O.R./97-175, as amended (“Guidelines”) is a helpful guide that is frequently used by lawyers and courts alike to assess a person’s income for spousal support, although the Guidelines do not apply to such claims. As an example, the starting point for the determination of income under the Spousal Support Advisory Guidelines (“SSAGs”) is the definition of “income” under the Guidelines.

158When doing so, however, courts must be mindful of the fact that the policies behind and the objectives of child support are different from those applicable to spousal support. For example, a child has an automatic right to share in a parent's post-separation success while a spouse does not: Willick v. Willick, [1994] 3 S.C.R. 670, (S.C.C.); Rozen v. Rozen, 2002 BCCA 537, 30 R.F.L. (5th) 207. As well, double dipping has no application to child support. Other important distinctions were also noted by the authors of the SSAGs, The Revised User Guide, at chap. 6.

159In most of the cases I was referred to by counsel for Ms. Lumsden, all of which involved the determination of the payor’s income for child support purposes, the courts’ refusal to allow a payor the benefit of business losses to reduce employment income was based on the conclusion that it would be unreasonable to ask the other parent to assist in financing a business venture by accepting a lesser amount of child support (Boak v. Boak, 1999 BCSC 1790, 93 A.C.W.S. (3d) 511 (B.C.S.C.)). When the deduction claimed by a payor relates to real property rental losses, courts have been generally reluctant to allow the rental loss to reduce the payor’s employment income because the payor will ultimately benefit from the increased value of the real estate property generating the rental loss. Justice Eberhard put it this way in Burrell, at para. 5:

The Respondent Father also argued that it would be unfair to disentitle his reliance on these losses since the income he may someday derive from these rental properties will certainly be required to be included. At such time as there may be such income, the cost of earning same may well become relevant but at the moment the rental properties are merely an investment into which he has decided to put his available resources. Once support is determined this court does not dictate how individuals spend their resources. The increase in equity is testament to the good sense of the Respondent Father's choice. That does not relieve him of the obligation to pay support in accordance with the income available to him.

160Ultimately, the determination of a party’s income for spousal support purposes is a matter of judicial discretion.

161While I agree that from an income tax perspective, Quintero Escapes is not profitable, having shown a net loss for every single year of its operation (ranging from $71,360 to $142,622, with an exceptional net loss of $376,624 in 2010 resulting from the sale of the charter boat), from an operational perspective (income minus operating expenses) it has in fact been quite profitable. Between 2010 and 2017, it has shown net operating profits ranging from $11,456 to $157,172, with an exceptional net operating loss of $6562 in 2011.

162In addition, I find that the “other employment income” that Mr. Nixon has reported in his income tax returns for the years 2014 to present is income that he derives from his business activities within Quintero Escapes, although during those years, it was not recorded as such in his personal income tax returns. Mr. Nixon explained, during his testimony, that over the years, the services offered by him (or through him) to the tenants who occupied the upper level of the Benson property and who rented rooms in the Cowichan property expanded to more than just rental housing. Most of these tenants are foreign workers who often do not even speak English and required assistance on various levels during their stay in Canada. Services provided by Mr. Nixon to these tenants included, for instance, garbage maintenance, laundry service, the provision of soft goods (beddings, towels) and furniture, property maintenance, housekeeping, firewood, transportation and food catering. This is what he referred to as “the Homestead Program”.

163From mid-2012 to present, Mr. Nixon received $50,000 per year as compensation for the services provided to these workers (negotiations with regards to the Homestead Program were completed at the end of 2014, and Mr. Nixon received a retroactive payment for the previous 18 months which were all included as income in the year 2014, for a total of $125,000 received that year). If one adds the revenue stream flowing from the Homestead Program to Quintero Escapes’ revenues during the years that they were earned, Quintero Escapes is indeed, quite profitable, although from an income tax perspective, Mr. Nixon was able to declare a significant business loss each year (due mainly to depreciation and interest expenses).

164In light of all this, the issue remains whether Mr. Nixon should be entitled to deduct from his employment income the business losses that he incurs each year while he grows his business and increases his net worth. As I have said earlier in this decision, Mr. Nixon is a very astute business owner and investor. He was trained and worked as an accountant and it was quite obvious during his testimony that he is extremely skilled in finances, investments, business and taxation. It is clear that he has organized his investments and business affairs in a way that shelters his employment income from income tax liability, and even negates it most year.

165I am of the view that allowing him to deduct the business losses resulting from Quintero Escapes’ operations from his employment income each year, as suggested by his expert, would not result in a fair determination of his income available for the purpose of spousal support. Equally, adding back to his income the yearly business losses he has suffered, as suggested by Ms. Lumsden’s expert, would be to ignore that an important part of the amounts added-back to his income are not in fact available to pay support.

166In the end, I have decided that the fairest determination of Mr. Nixon’s available income for spousal support purposes should be to completely dissociate all of Quintero Escapes’ business affairs from all other sources of income available to Mr. Nixon, and to use only those other sources of income for the purpose of determining his spousal support obligations. By doing so, I proceed on the basis that Mr. Nixon may, if he so wishes, continue to pursue the Quintero business opportunity, increase his equity in his various real estate properties and minimize his income tax liability, but any resulting business loss will not serve to reduce his income from other sources, including his employment income, for support purposes.

167As the revenues earned through the Homestead Program are earned as a result of Quintero Escapes’ rental activities, and would not be earned otherwise, I consider them to be part of Quintero Escapes’ business income regardless of the way in which they were characterized in Mr. Nixon’s income tax returns. Such characterization had no impact on his total income for tax purposes, and Mr. Nixon explained that he chose to treat those revenues as “other income” in his tax returns as this was simpler. The uncontested evidence before me confirms that the services provided to generate this revenue stream is an integral part of the services offered by Mr. Nixon as part of Quintero Escapes’ business activities.

b) Pre-tax corporate income in Telecom

168Mr. Clark has attributed all the pre-tax corporate income earned by Telecom to Mr. Nixon’s income for support purposes.

169The evidence before me confirms that even though Mr. Nixon is the sole shareholder and director of Telecom, he has no discretion to withdraw funds unilaterally from that company. Any withdrawal must be authorized by the project’s C.O. The evidence makes it clear that this company is simply a flow-through for the purpose of allowing the U.S. based project to pay Mr. Nixon’s salary in Canada, and to cover operating expenses.

170Telecom’s financial statements confirm that while the company retains modest profits during some years, it has experienced modest losses in other years. Mr. Clark focused on those years where a profit was shown and ignored the years in which there was a deficit. It is clear that such profit/deficit was generated by outstanding expenses not yet paid by, or invoiced to, the C.O. As a result, any pre-tax corporate profits in Telecom should not be added back to Mr. Nixon’s income.

c) Benefit from shareholder loan received from Telecom

171The evidence before me confirms that Mr. Nixon paid yearly interest of 3% to Telecom for any money that he was authorized to borrow on the C.O.’s revolving line of credit. The payment of this interest on the shareholder loan is recorded in the general ledger of Telecom.

172It appears that Mr. Clark was unaware of this fact and his opinion in that regard was therefore factually mistaken.

d) Gross up value of the personal use of a cell phone from Telecom

173Both experts agree that the net value of this benefit provided to Mr. Nixon by Telecom is $2,400 per year, and that this amount must be grossed-up for support purposes. Given my conclusions on Mr. Nixon’s income below, which brings his income in the highest marginal tax rate as used by Mr. Clarke, the amount to be added to his yearly income is $4,500.

Conclusions with respect to Mr. Nixon’s income

174Based on the above, I find that Mr. Nixon’s income for spousal support purposes was as follows during the relevant years:

	2010	2011	2012	2013	2014	2015	2016	2017
Employment income	$105,000	$105,000	$105,000	$105,000	$105,000	$105,000	$105,000	$105,000
Taxable dividends	$19,758	$9554
Actual – eligible	$13,705	$6765
Actual – non-eligible	$18	$13
Less: taxable	($19,758)	($9554)
Interest income	$8349	$6570	$15
Taxable capital gains	$8899	$46,506
Actual capital gains	$17,798	$93,012
Actual capital losses	($30,814)
Less: taxable capital gains	($8899)	($46,506)
Cell expenses (grossed-up)	$4500	$4500	$4500	$4500	$4500	$4500	$4500	$4500
Total income for support purposes	$149,370	$185,046	$109,515	$109,500	$109,500	$109,500	$109,500	$109,500

For an average of $123,929 for the years 2010 to 2017.

2- Ms. Lumsden’s Income for Support Purposes

175As stated earlier, Ms. Lumsden is self-employed as a registered psychotherapist. Throughout the years of the parties’ marriage and to this day, she offers her professional services as a psychotherapist through the Adlerian Centre. The Centre has full control over the customers which it refers to Ms. Lumsden and other professionals who work in association with it. The Centre is responsible for, and has ownership of, all client files. It provides offices, meeting rooms and support staff and manages all the appointments, billings, collections and HST remittances (among other things). In exchange for those services, Ms. Lumsden pays one third of her gross professional revenues to the Centre.

176Over the years, Ms. Lumsden has deducted significant self-employment expenses from the remainder of her gross professional income (after the first 33% is taken off by the Adlerian Center). Those expenses include motor vehicle expenses, home office deductions, capital cost allowances, professional development, office expenses, advertising and promotion, and so on. Mr. Nixon takes the position that most of these expenses are personal in nature and ought to be added back to her income for support purposes.

177It is not disputed that Ms. Lumsden offers her services as a psychotherapist exclusively through the Adlerian Centre. As such, she is not required to travel to her patients’ homes. Aside from her services as a psychotherapist, Ms. Lumsden also offers coaching services, workshops and training programs. She has also written two books which she says is very important to enhance her credibility as a psychotherapist.

178During her testimony, Ms. Lumsden stated that all the expenses that she deducts from her gross professional income are legitimate business expenses. She says that she must maintain a home office from which she reviews and updates her patients’ files, writes her books, prepares her workshops and other advertising materials, and offers her coaching services. She states that her motor vehicle expenses relate to the need to travel to professional development courses, attending her workshops and public speaking engagements, and sell her books.

179While the business expenses deducted from Ms. Lumsden’s income are most certainly acceptable for tax purposes, I conclude that most of them are not reasonably deductible from her income for support purposes. The evidence as a whole makes it clear that Ms. Lumsden’s main source of income comes from her association with the Adlerian Centre and her work as a psychotherapist in private practice. While she has earned some nominal income from the sale of her books (less than $2,500), her coaching services and her workshops, the revenues earned from those sources were so insignificant that they cannot possibly justify the amount of expenses that Ms. Lumsden seeks to deduct from her main source of income generated through the Adlerian Centre.

180In fact, the legitimate business expenses related to Ms. Lumsden’s main source of professional income are already deducted from Ms. Lumsden’s income by the Adlerian Centre, who retains one third of her revenues for that purpose. I do not accept, as alleged by Ms. Lumsden, that she is required to maintain a home office to provide the balance of her services, although I accept that she does write, prepare her workshops and completes tasks related to her professional activities at home. This does not make the use of her own home a legitimate business expense for support purposes. Ms. Lumsden was incapable to confirm how much income she derived from her coaching activities, how many coaching clients she had actually received in her home, and how frequently. She acknowledged that she had few coaching clients. I have no evidence that would suggest that she rented a larger home for the purpose of accommodating a home-based office.

181Similarly, her vehicle expenses mostly relate to her commute to and from the Adlerian Centre. While I accept that from time to time, she has used her vehicle to go to local bookstores to try and sell her books, or that she has driven to a clients’ business location to provide a workshop, the nominal income she derives from those activities does not justify the considerable business expenses that she deducts from her professional income on that account.

182In my view, the starting point for the determination of Ms. Lumsden’s income for support purposes is her gross professional income (after one third is paid out to the Adlerian Center) each year as set out in her income tax returns. The only expenses I would allow her to deduct from her gross business income are the following expenses which in my view are true business expenses:

a) advertising and promotion expenses, most of which I understand is related to the writing and publishing of her books. I find that this is a legitimate marketing tool to promote her expertise as a psychotherapist regardless of the amount of sales Ms. Lumsden was able to realize from their sales over the years; b) Insurance, business tax, fees and licenses, which I understand relate to her ability to offer psychotherapy services; c) Legal and accounting fees; d) Professional development, which I understand relates to the various professional development and coaching courses taken by Ms. Lumsden over the years, and; e) Travel expenses, which I understand relates to professional development opportunities as well.

183In addition, it is not disputed that in 2010, some of Ms. Lumsden’s professional services as a psychotherapist were invoiced to the Adlerian Centre through Quintero Escapes. This was done by the parties in some years when there was little to no income in Quintero Escapes as a mean to reduce Ms. Lumsden’s taxable income. In 2010, the amount of $7,202 was “shifted” by Ms. Lumsden to Quintero Escapes, billed to the Adlerian Center, and included in Quintero Escapes’ income for tax purposes. It is not disputed that this amount related to services provided to the Centre by Ms. Lumsden, and that the payment received was repaid to Ms. Lumsden by Mr. Nixon.

184Finally, Ms. Lumsden has deducted from her gross taxable income “carrying charges and interest” totaling over $30,000 for the years 2013 to 2015. It is not disputed that all these charges relate to the legal fees that Ms. Lumsden has paid to her lawyer in the context of this family litigation, which are proper deductions for income tax purposes. However, they are clearly not business expenses and may not be deducted from Ms. Lumsden’s income for support purposes (S.B. v. V.H., 2019 ONCJ 694; Fielding v. Fielding, 2018 ONSC 5659).

185As a result, Ms. Lumsden’s income for support purposes for the years 2010 to 2017 is as follows:

	2010	2011	2012	2013	2014	2015	2016	2017
Gross professional income	$70,825	$78,069	$81,098	$71,260	$77,068	$69,798	$81,858	$77,408
Income shifting	$7202
Taxable dividends	$261	$214
Interest income	$134
Minus :
- Advertising and promotion	$1128	$6107	$7379	$7795	$2130	$175	$5364	$2421
- Insurance, fees etc.	$668	$543	$823	$510	$734	$1368	$1230	$1240
- Legal and accounting	$473	$678	$622	$622	$622	$735	$283
- Professional development	$8640	$9701	$5628	$1552	$1370	$701	$141
- travel	$4470	$3302	$901	$287
Total income for support purposes	$67,513	$56,784	$63,344	$59,880	$72,212	$66,819	$75,123	$73,177

For an average of $66,856 for the years 2010 to 2017.

a) Spousal support

186Under s. 15.2 of the Divorce Act, R.S.C.1985, c. 3 (2nd Supp.), a court of competent jurisdiction may make an order requiring a spouse to secure or pay such lump sum or periodic sums as the court thinks is reasonable for the support of the other spouse. Pursuant to s. 15.2(4), the court must take into consideration the conditions, means and other circumstances of each spouse, including the length of time the spouses cohabited and the functions performed by each of them. An award of spousal support should:

(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.

187Entitlement is a threshold question: Bracklow v. Bracklow, [1999] 1 S.C.R. 420 (S.C.C.), at para. 49. It can be compensatory, non-compensatory or some combination thereof. Compensatory claims are based either on the recipient’s economic loss or disadvantage as a result of the roles adopted during the marriage or on the recipient’s conferral of an economic benefit on the payor without adequate compensation.

188In my view, Ms. Lumsden has no entitlement to compensatory support. This was a second marriage for both parties which lasted less than 6 years. The parties were completely financially separate and there was no merger of the parties’ economic lives. Ms. Lumsden was self-supporting before she moved in with Mr. Nixon, and she continued to be self-supporting throughout this brief marriage, although her financial means were significantly less than Mr. Nixon’s. There is no evidence before me that Ms. Lumsden put her career aside to promote or support Mr. Nixon’s career or business development. Each party had their own children for whom they were exclusively responsible for. There is no suggestion that Ms. Lumsden’s career was compromised as a result of the needs of Mr. Nixon’s children, or as a result of a requirement on her part to prioritize the needs of this family.

189Ms. Lumsden alleged that Mr. Nixon was very jealous and controlling, and that he insisted on her maintaining a part-time work schedule so that she could accompany him on his boat, at the cottage or at Mont-Tremblant. Ms. Lumsden also alleged that on two occasions, Mr. Nixon was physically abusive towards her. Much evidence adduced during this trial focused on Ms. Lumsden’s allegations of abuse with a view to establish the veracity of these allegations or to challenge them. Without trying to minimize the seriousness of Ms. Lumsden’s allegations, ultimately nothing turns on whether such abuse occurred or not, and I decline making a finding in that regard.

190It is not disputed that this relationship was highly conflictual from the very beginning, and that the parties were frequently at odds on financial and other issues, which led to frequent heated arguments as well as (at least) one physical separation which lasted about three months. I do accept that Mr. Nixon was controlling of Ms. Lumsden, and that at times, he tried to limit her ability to spend time with family members and friends. I also accept that at times, he reacted impulsively and in anger. However, I do not accept that Ms. Lumsden’s choice to work part-time hours throughout the relationship (until the beginning of 2010) was solely due to alleged pressures from Mr. Nixon. In my view, there was simply no need for Ms. Lumsden to work longer hours or to earn more income. Further, I am of the view that she welcomed the opportunity to enjoy the extra leisure and vacation time that her husband’s financial means provided the blended family.

191When the parties met, Ms. Lumsden had been back in Canada for a few years, and she was trying to rebuild her practice as a psychotherapist. In 2004, the year after the parties moved in together, she was earning gross professional income of approximately $46,000, working three days a week. In addition, she was receiving approximately $1,700 US a month (tax-free) from her ex-husband in child support for her two children (once converted to Canadian dollars and grossed-up, this pretty much doubled her self-employment income). She was living in her own home and was able to live comfortably with her two children. She had no debt, other than her mortgage.

192When she moved in with Mr. Nixon, it was agreed that her contribution to the household expenses would be limited to $1,450 per month, which was the same amount she was paying while living on her own before. It is not disputed that, other than paying her fair share of the family’s groceries, the extent of Ms. Lumsden’s contribution to the family’s living expenses throughout the years of the parties’ relationship was limited to $1,450 per month. In addition, Ms. Lumsden continued to cover her own personal expenses as well as those of her children. Her yearly expenses did not change as a result of her moving in with Mr. Nixon, they remained the same for close to eight years.

193Ms. Lumsden’s gross professional income during the years of her relationship to Mr. Nixon remained steady within the range of $38,500 to $59,500, working three days a week. Ms. Lumsden testified that her ex-husband’s obligation to pay child support came to an end once each child turned 18 (in 2010 and 2012, respectively). Ms. Lumsden stated that, as a result, on or about 2010, she was required to work more to compensate for the loss of her child support. In 2010, the year of the parties’ separation, her professional earnings increased to $70,824 and they remained within the $70,000-$80,000 range until 2018, when they reached a high point of $105,513.

194I find it more likely than not that, prior to 2010, there was simply no need, on the part of Ms. Lumsden, to work more hours or to increase her income. She was receiving significant tax-free child support which, combined to her professional income (significantly reduced by the deduction of important business expenses as stated above), was more than enough to cover her and her children’s day-to-day expenses. While I accept that Mr. Nixon might have expressed his preference (and even perhaps put some pressure) for Ms. Lumsden to work only three days per week, thus allowing her to spend more time with him and to enjoy the lavish lifestyle he provided, I do not accept that Ms. Lumsden’s career was negatively impacted as a result of any role she took on in her relationship with Mr. Nixon. In fact, she decided to work more hours in 2010 while the parties were still together, in addition to writing her first book, which immediately resulted in an important increase in her income.

195However, I find that Ms. Lumsden has some entitlement to spousal support based on her needs. The word “need” is not limited to one’s basic needs. It can also be interpreted to cover a situation where a spouse suffers a significant decline in the standard of living he or she enjoyed during the marriage. While there was no merger of the parties’ financial affairs during their relationship, it is clear that Mr. Nixon, with the wealth built by him before the parties’ marriage, was able to provide this family with a luxurious standard of living which included a million dollar family home, summer vacation at the cottage on the St-Lawrence River, weekend getaways in Mont-Tremblant, the use of a yacht, and more. As a result, a certain level of economic inter-dependency developed between the parties.

196After the parties’ separation, Ms. Lumsden moved into an apartment with her younger daughter and eventually into a home that she still rents to this day. In the years following the parties’ separation she earned an annual income in the range of $60,000, which gradually increased to the level it is today, approaching the $100,000 mark (after true business expenses). She had no debt at the time of the parties’ separation (except for contingent tax liability related to her RRSP), and although she currently has debts exceeding $123,000, all of that debt relates to legal fees incurred by her in the context of these proceedings. She was able to double her investments during the years that followed the parties’ separation, which currently stand at approximately $230,000.

197Nonetheless, Ms. Lumsden’s standard of living does not compare to Mr. Nixon’s who, in addition to earning more income, continues to live in a home that he owns, drive a luxurious car and receives rental and other income from two investment properties which he retained post-separation. It is clear based on the evidence before me that Mr. Nixon’s ability to earn income and increase his overall wealth in the foreseeable future is far greater than Ms. Lumsden’s.

198Nonetheless, this was a relatively short relationship during which both parties’ net worth decreased significantly. Ms. Lumsden lost the net proceeds from the sale of her home which she invested in the parties’ matrimonial home. Mr. Nixon invested significant sums of his own money in that home as well, money that he will likely never recover. However, he was able to yield important rental revenues from that property (in addition to the income generated from the Homestead Program) and to a certain extent he will be able to recover some of his loss. There is an important disparity in the conditions, means and other circumstances of the parties, as well as in their respective incomes. Neither party has re-partnered.

199In my view, this is a perfect case for the imposition of a short transitional support award to “cushion” the significant drop in Ms. Lumsden’s standard of living post-separation. Based on an income of $123,929 for Mr. Nixon and an income of $66,856 for Ms. Lumsden, the SSAGs suggest monthly spousal support in the amount of $535 (low range), $624 (mid-range) and $713 (high range), for a duration of 3.75 to 7.5 years. Using the mid-range of 5 years and 8 months for duration, the SSAGs come to a lump sum ranging from $22,563 (low range), $26,318 (mid-range) and $29,674 (high range), as the mid-point between Mr. Nixon’s after-tax costs and Ms. Lumsden’s after-tax benefit.

200In light of all the above circumstances, I am of the view that a lump sum award in the amount of $26,500 is appropriate in this case, and I so order.

Damages for Loss of Ability to Leverage the Benson Property for Investment Purposes

201Mr. Nixon seeks $10,000 in damages to compensate him for the economic loss suffered as a result of Ms. Lumsden’s registration of a matrimonial home designation on the title of the Benson property.

202It is not disputed that on June 29, 2011, Ms. Lumsden caused to be registered against the title of the Cowichan and Benson properties a matrimonial home designation. In these proceedings, Ms. Lumsden has not sought a declaration that the Benson Park property was also a matrimonial home. Until the parties were divorced in 2016, the matrimonial home designation registered against the Benson property precluded Mr. Nixon from leveraging his equity in that property for the purpose of investing in the stock market, as he has done in the past with the use of the Northwood property. He claims $10,000 in damages against Ms. Lumsden to compensate him for his loss of opportunity to do so.

203This claim was not seriously pursued at trial, although it was brought to my attention and pled. Mr. Nixon did not bring to my attention the legal basis upon which I would be allowed to award such damages, nor did he refer me to any caselaw that would support such a claim. There was no evidence led to support the amount of damages sought by Mr. Nixon.

204As a result, this claim is dismissed.

Costs

205If the parties are unable to agree on costs, I will accept written submissions not exceeding 15 pages (exclusive of Offers to Settle and Bills of Costs) in accordance with the following timelines:

Mr. Nixon to provide his submissions by February 7, 2020;
Ms. Lumsden to provide her submissions by February 28, 2020;
Mr. Nixon to provide his reply, if needed, by March 10, 2020.

Madam Justice Julie Audet

Released: January 8, 2020

Background

The Parties’ Employment and Business Interests

Mr. Nixon’s employment and business interests

Ms. Lumsden’s employment and business interests

The Equalization of Net Family Property

1- Matrimonial home located at 7 Cowichan Way, Nepean, Ontario, and related issues

a) Alleged loan in the amount of $78,960 by Ms. Lumsden to Mr. Nixon

b) Date of separation value of the matrimonial home

c) Current value of the matrimonial home

d) Disposition Costs related to the sale of the matrimonial home

2- Property located at 95 Benson Park Road, Lansdowne, Ontario

a) Date of separation value

b) Current value

c) Disposition Costs

3- Mont-Tremblant Condominium Units

a) Renovation loan related to the two units

b) Disposition costs

4- Vernon Systems Inc.

a) Loan payable by Mr. Nixon to Vernon at the date of the parties’ separation

b) Account receivable by Mr. Nixon from Vernon (DOS)

5- Telnexia Networks and Telecom

a) Date of marriage value of Mr. Nixon’s interest in Telecom and Networks

b) National Bank receivable

6- Mr. Nixon’s Vehicles

a) 2003 Lincoln Navigator

b) Porsche 911 Coupe

7- Ms. Lumsden’s Engagement Ring

8- December 1, 2010 Rent Cheque

9- Conclusions on Equalization

Spousal Support

1- Mr. Nixon’s Income for Support Purposes

a) Quintero Escapes

b) Pre-tax corporate income in Telecom

c) Benefit from shareholder loan received from Telecom

d) Gross up value of the personal use of a cell phone from Telecom

Conclusions with respect to Mr. Nixon’s income

2- Ms. Lumsden’s Income for Support Purposes

a) Spousal support

Damages for Loss of Ability to Leverage the Benson Property for Investment Purposes

Costs

Background

The Parties’ Employment and Business Interests

Mr. Nixon’s employment and business interests

Ms. Lumsden’s employment and business interests

The Equalization of Net Family Property

1- Matrimonial home located at 7 Cowichan Way, Nepean, Ontario, and related issues

a) Alleged loan in the amount of $78,960 by Ms. Lumsden to Mr. Nixon

b) Date of separation value of the matrimonial home

c) Current value of the matrimonial home

d) Disposition Costs related to the sale of the matrimonial home

2- Property located at 95 Benson Park Road, Lansdowne, Ontario

a) Date of separation value

b) Current value

c) Disposition Costs

3- Mont-Tremblant Condominium Units

a) Renovation loan related to the two units

b) Disposition costs

4- Vernon Systems Inc.

a) Loan payable by Mr. Nixon to Vernon at the date of the parties’ separation

b) Account receivable by Mr. Nixon from Vernon (DOS)

5- Telnexia Networks and Telecom

a) Date of marriage value of Mr. Nixon’s interest in Telecom and Networks

b) National Bank receivable

6- Mr. Nixon’s Vehicles

a) 2003 Lincoln Navigator

b) Porsche 911 Coupe

7- Ms. Lumsden’s Engagement Ring

8- December 1, 2010 Rent Cheque

9- Conclusions on Equalization

Spousal Support

1- Mr. Nixon’s Income for Support Purposes

a) Quintero Escapes

b) Pre-tax corporate income in Telecom

c) Benefit from shareholder loan received from Telecom

d) Gross up value of the personal use of a cell phone from Telecom

Conclusions with respect to Mr. Nixon’s income

2- Ms. Lumsden’s Income for Support Purposes

a) Spousal support

Damages for Loss of Ability to Leverage the Benson Property for Investment Purposes

Costs