Court File and Parties
Court File No.: FS-20-15517 Date: 2020-04-15 Superior Court of Justice - Ontario
Re: L. B-M., Applicant And: M.M., Respondent
Before: Kiteley J.
Counsel: Ella L.J. Bernhard, for the Applicant Roslyn Tsao, for the Respondent
Heard: April 8, 2020
Endorsement
[1] In an endorsement dated March 27, 2020, the Family Law Team Leaders made an order delegating this matter to me. On March 30, 2020, I held a conference call with counsel and their clients and I made an endorsement L. B-M. v. M.M., 2020 ONSC 1958 in which I held that, based on the evidence of the Applicant and the urgent motion served by the Applicant and the anticipated cross-motion by the Respondent the matter was “urgent” within the meaning of the March 15, 2020 Notice to the Profession, the Public and the Media on the issues of parenting and temporary child and spousal support. I established a schedule for the parties for file further material.
[2] On April 8, 2020, by telephone conference call, I heard submissions on behalf of both parties arising out of the Applicant’s motion and the Respondent’s cross-motion. I reserved decision with respect to parenting and support issues.
[3] In this endorsement, I address only the Applicant’s motion for temporary child and spousal support. The parenting issues require more reflection and will be the subject of a separate endorsement.
Is the support motion urgent?
[4] The Applicant again took the position that her financial circumstances were “dire” and therefore fit within the category of cases to which the Chief Justice made reference in the March 15 Notice to the Profession, the Public and the Media. On the other hand, the Respondent repeated the submission made prior to the March 30 endorsement that the support motion was not urgent and ought not to be heard before a case conference was held. The Respondent argued that, in view of the questions raised in his responding material filed after the March 30 endorsement about the Applicant’s bank account, there was no concern her financial needs were not being met. Counsel observed however that, in view of the March 30 endorsement, she acquiesced on the issue.
[5] As indicated above, I made a ruling in the March 30 endorsement that the support issues were urgent. I have not changed my view. The Applicant has had temporary accommodation since the separation in January. Her current accommodation is available only until the end of April. The Respondent has made a capital payment but, for purposes of obtaining longer term accommodation, the Applicant will need to demonstrate income. An order for temporary support is required. The Respondent concedes that the Applicant is entitled to spousal support and that he has an obligation to pay spousal support and child support for the child currently living with the Applicant. In the March 15, 2020 Notice to the Profession, the following appeared:
Only urgent family law events as determined by the presiding justice, . . . will be heard during this emergency period, including:
c. dire issues regarding the parties’ financial circumstances including for example the need for a non-depletion order. . .
[6] In the April 2, 2020 Notice to the Profession, the Public and the Media, the Chief Justice expanded the categories of urgent matters as follows:
Effective April 6, 2020, the family matters to be heard have been expanded to include the following:
Urgent family law events as determined by and at the discretion of the presiding judge, . . including but not limited to:
c. issues regarding the financial stability of the family unit, including for example support or the need for a non-depletion order. . .
[7] In other words, the moving party need not establish that the financial circumstances are “dire” but, in the absence of a case conference, Rosen v. Rosen must still establish urgency. The notice of motion was launched when the March 15 Notice applied and was heard when the April 2 Notice applied. In the absence of a written agreement between the parties, in the circumstances of this case, in my view it is urgent that the financial stability of the family unit consisting of the Applicant and the child be resolved.
Background
[8] The parties married in June 2008. They separated on January 12, 2020. The children were born in 2011 and 2009. The younger child (R) is living with the Respondent and the older child (B.) is living with the Applicant. The Respondent has remained in the matrimonial home while the Applicant and the older child are in their second or third temporary accommodation. The Applicant must relocate by April 30.
[9] In her Application issued February 13, 2020, she claims to be entitled to compensatory and non-compensatory support. The Applicant has not been employed since the first child was born. The parties differ as to how that came about and whether it was a matter of consensus but the difference does not matter in the context of this motion for temporary spousal support. Furthermore, while the Respondent raises the issue that income should be imputed to the Applicant, that is not an issue to be decided at this time. As indicated above, the Respondent concedes that the Applicant is entitled to spousal support and that he has an obligation to pay spousal and child support. The key issue is the income of the Respondent.
[10] Before turning to that analysis, I am mindful that I am releasing this endorsement in advance of the endorsement on parenting issues. For purposes of this aspect of the motion, I assume each parent has one child. If as a result of the endorsement on parenting issues that changes, I will revisit this endorsement. Given the urgent financial circumstances of the Applicant in needing to find accommodation, this endorsement takes priority.
Income of the Respondent
[11] The Respondent is a Managing Director, Research in a national securities institution. The Applicant relies on his Notices of Assessment or Re-assessment as follows:
2018 Notice of Assessment Line 150 $2,256,040 2017 Notice of Assessment Line 150 $2,182,937 2016 Notice of Re-assessment Line 150 $4,118,882
[12] For purposes of this motion, the Applicant asserts that the court should rely on the most recent 2018 Line 150 income of $2,256,040.
[13] The Respondent’s evidence is that, in 2020, his income from employment comprises base salary, a bonus (which has been received in 2020) and RSU payout. Although he receives the RSU income in December, he is prepared to use his actual base and bonus and an estimate of the RSU payout in an aggregate amount of $1.3 million. In Exhibit R, he has provided year end salary statements for 2017 and 2018, his T4 for 2019, a pay stub for the period ending March 22, 2020 and a table reflecting his calculation of income 2017 to 2021 actual and estimated. In addition, he is prepared to include an estimate of $100,000 of gross investment income such that interim support be based on an income of $1.4 million.
[14] The Respondent relies on Coghill v. Coghill and Punzo v. Punzo, 2016 ONCA 957 as the basis upon which this court should accept his evidence as to his current income and not rely on historic Line 150 income that is significantly greater. The Respondent takes the position that his calculation at Exhibit R should be relied on as “ the most current information ”.
[15] Pursuant to s. 15 of the Federal Child Support Guidelines, a spouse’s annual income is determined in accordance with sections 16 to 20. Pursuant to s. 16, subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form. Pursuant to s. 17, if the court is of the opinion that the determination of a spouse’s annual income under section 16 would not be the fairest determination of that income, the court may have regard to the spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years. Pursuant to s. 2(3), where, for the purposes of the Guidelines, any amount is determined on the basis of specified information, “ the most current information” must be used.
[16] At paragraph 19 of her April 6 affidavit, the Applicant asserts that, “based on the limited disclosure delivered late in the day April 2/20” there are many aspects of the existing disclosure that suggest that the calculation made by the Respondent for 2020 ignores sources of income, including personal, corporate and trust income.
[17] I accept the proposition that the court should rely on “ the most current information ” but I am not persuaded that $1.4 million for 2020 is reasonable for these reasons.
[18] First, the Respondent has provided his estimate of “current income” but with little explanation as to why it is so different. His evidence is that the sources of his income are base salary, an incentive payment, and RSU payout. In Exhibit R, he calculated the actual amount for 2019 and the estimated amount for 2020 as follows:
| 2019 actual | 2020 estimate | |
|---|---|---|
| Total salary | 202,887 | 200,000 |
| Cash incentive | 767,000 | 622,000 |
| RSU | 724,364 | 498,497 |
| Total according to final pay slip | 1,694,251 | |
| Employment income T4 | 1,691,044 | 1,320,497 |
[19] He does not explain the reductions in cash incentive and RSU payout. In Exhibit R, he also provided a calculation of the reduced RSU payout in 2020 and 2021 but with no explanation for the share price he uses to calculate the payout. Nor does he provide an explanation for a reduction in the cash incentive of $145,000. Accepting that he is a professional financial advisor, he owed the court an explanation, not simply a calculation, for the significant reduction.
[20] Second, he could have provided an explanation for his suggested additional investment income of $100,000. His remark in paragraph 54 “given the current economy” is insufficient. The Respondent could have provided the 2019 actual investment income (with the associated tax implications) but he did not do so. Given his profession, I accept the Applicant’s description that the Respondent is a well-organized and meticulous record-keeper. He is not obliged to file a tax return until April 30th and, indeed, that deadline has been extended this year. However, in this case, where his form 13.1 shows significant investment assets, I have no explanation why he could not have provided at least a preliminary calculation instead of a low ballpark estimate.
[21] Third, the Application was issued February 13 and was served shortly thereafter. By March 30, the Respondent had not served and filed a form 13.1 financial statement nor had he provided disclosure that had been requested. He did comply with the timetable in the March 30 endorsement which meant that, on Thursday, April 2nd, the Applicant received a certificate of financial disclosure and documentation, a form 13.1 financial statement, an Answer and an affidavit in response to her urgent notice of motion and in support of his urgent notice of motion. By Monday April 6, the Applicant filed her reply affidavit.
[22] Having asked for financial disclosure on prior occasions, the Applicant received the first tranche just days before her motion was scheduled. As a result, the Applicant did not have the opportunity to thoroughly review his financial disclosure and arrive at informed conclusions as to his income. Based on her evidence at paragraph 19 of her April 6 affidavit, I observe that the Respondent’s financial circumstances and therefore the income relevant to child and spousal support warrants more attention to detail than his 2020 estimate of $1.4 million entailed.
[23] In my view, the Applicant was disadvantaged by the Respondent’s belated disclosure. He ought not to reap the benefit of creating circumstances in which she could not thoroughly review his financial disclosure and arrive at informed conclusions as to his income. The Respondent has known since mid-February (if not before), that the Applicant asserted a claim for spousal and child support. On that basis, I infer that he knew that his income is the critical starting point for calculating the amount he is obligated to pay. I also infer that he did not properly disclose because the information would not have been to his advantage. The consequences of his failure to provide the timely financial disclosure required of a separating spouse ought not to fall on the payee but on the payor.
[24] For those reasons, I do not accept that the Respondent’s estimate of employment-based income and investment-based income is “ fair and reasonable ”.
[25] Having rejected his estimate, I am left with the submission of the Applicant that I should rely on his Line 150 income for 2018. I accept that his Line 150 income uses the sources of income set out under the heading “Total income” in the T1 General form and I conclude that, for purposes of this motion, it is “ the fairest determination of his income” for purposes of calculating the Respondent’s spousal and child support obligations and the Applicant’s entitlement in 2020.
DivorceMate Calculations
[26] In her DivorceMate calculation at Exhibit C to her March 26 affidavit, the Applicant’s inputs are his income of $2,256,040, s. 7 expenses for B. including counselling in the amount of $11,452, tuition in the amount of $22,000 and soccer in the amount of $3600. In his DivorceMate calculation at Exhibit S his inputs are employment income of $1.3 million, interest and other investment income of $100,000, B.’s uninsured counselling, tuition for both children at $42,000 and club-recreational expense of $13,409. Both parents included a dependant credit for a child which apparently is inappropriate because income is attributed to each child and as a result, the dependant credit is not available.
[27] According to the Applicant’s calculations, the range for spousal support is $43,437 to $47,264 to $51,102. The Applicant asks that the court order the high end of the range. In reference to his own DivorceMate calculation, the Respondent had taken the position that the low end of the range was appropriate.
[28] It is often the case that, in motions for temporary support, the court accepts the middle of the range. In this case, I adopt the low end of the range. While I have not accepted the Respondent’s estimate of 2020 employment and investment income, the financial consequences of the pandemic are such that both may be affected. Accepting that possibility but not accepting his estimate, I consider it reasonable that the low end of the range apply. Furthermore, I will not order that the Respondent pay all uninsured counselling costs for the Applicant.
[29] According to her DivorceMate calculation, the child support for one child is $16,663 per month. In addition, there are s. 7 expenses. For purposes of this motion for temporary support and subject to the qualification in paragraph 10 above, each parent is responsible for the day-to-day expenses of one child. That gives rise to calculations of set off but the record does not give me sufficient information to make an order. As a result, I will not make an order requiring the Respondent to pay for B.’s uninsured health costs.
[30] Counsel did not make submissions on the issue as to the Respondent’s income exceeding $150,000 and the impact on the Child Support Guidelines or on his income exceeding $350,000 and the impact on the Spousal Support Advisory Guidelines.
[31] In view of the Applicant’s immediate need for funds to secure accommodation and the Respondent’s ability to provide the funds as indicated in his form 13.1, I am ordering the Respondent to make the April payments forthwith. As indicated below, the court is required to issue a Support Deduction Order. I anticipate that the Applicant will withdraw from the Family Responsibility Office enforcement. If so, I encourage the parties to agree on automatic transfers on the day on which the temporary support payments are due.
[32] Although it was in the Applicant’s draft order, counsel made no submissions on the issue of life insurance. Based on his form 13.1 and his pay slip, the Respondent has term life insurance through employment in the amount of two times his salary and the Applicant is the beneficiary. It is reasonable to continue that at least on a temporary basis.
[33] As indicated below, I intend to provide for a case conference. I will include those provisions in the endorsement on parenting issues. Because of social distancing, the s. 7 expenses of tuition and club-recreational are not being incurred. I am assuming that they will be addressed in the case conference.
Credits
[34] The parties agree that the Respondent has made a significant payment and agree that he is entitled to a credit against spousal support or equalization payment. I leave that for future discussion and decision.
Costs
[35] In the endorsement dated March 30, I indicated that I would give further directions as to costs. In the separate endorsement on the parenting issues, I will provide those directions for submissions as to costs of both the parenting and support issues.
Order
[36] Commencing April 1, 2020, the Respondent shall pay to the Applicant temporary spousal support in the amount of $43,437 per month.
[37] Commencing April 1, 2020, the Respondent shall pay to the Applicant temporary child support for B. [full name and date of birth to be inserted in signed and entered order] in the amount of $16,663 per month.
[38] By April 17, 2020 at noon ET, the Respondent shall make the April payments required by paragraph 36 and 37 to the Applicant.
[39] For purposes of this temporary order only, the income of the Respondent is $2,256,043.
[40] The payments in paragraphs 36 and 37 are without prejudice to the Applicant claiming retroactive temporary spousal support and temporary child support for B. effective January 12, 2020.
[41] The payments in paragraphs 36 and 37 are without prejudice to the Respondent bringing a motion to review those payments (a) after the conclusion of the case conference referred to in the parenting endorsement, and (b) on giving written notice to the Applicant of no less than 15 business days. That motion will be a “long” motion and must be scheduled accordingly.
[42] Support Deduction Order to issue.
[43] The Respondent shall maintain the Applicant and the children as beneficiaries of his extended health and dental care coverage pending further court order.
[44] Until further order or written agreement, the Respondent shall maintain the life insurance policy reflected in his form 13.1 financial statement and any other life insurance policy he owned as of January 1, 2020 insuring the life of the Applicant or the life of the Respondent, and shall maintain the beneficiaries of those policies as they were on January 1, 2020 and he shall provide proof in writing of same by April 22, 2020.
[45] This order takes effect without a formal order being signed and entered.
Kiteley J. Date: April 15, 2020