COURT FILE NO.: 14-527
DATE: 2020603
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Natalie Burke
Applicant
– and –
Shawn Poitras
Respondent
Judith Wilcox, counsel for the Applicant
Self-Represented
HEARD:
September 16, 18 and 19 , 2019
WRITTEN SUBMISSIONS:
March 30, 2020
April 28, 2020
Lacelle, j.
Amended REASONS FOR JUDGMENT
Introduction
[1] The parties were married for over 13 years and share three children. They have been litigating the issues surrounding their separation for almost six years.
[2] This judgment relates to the financial issues between them. Those issues, for reasons that will be explained below, were addressed in an uncontested trial.
[3] The issues addressed in this judgment are:
Child support;
s. 7 expenses;
Spousal support;
Exclusive possession of matrimonial home;
Occupation rent;
Equalization of Net Family Property;
The return of the Applicant’s property;
Post-separation expenses;
Pre-judgment interest;
Life insurance;
An order for the preservation of the Respondent’s property;
Divorce.
Background
[4] Natalie Burke and Shawn Poitras were married on July 22, 2000. They have three children, who are all teen-agers now.
[5] The parties separated on February 23, 2014, in circumstances that led to the Respondent being charged with a number of criminal offences. At that time the Applicant was 34 years old, while the Respondent was 37.
[6] As I have said, this matter has been before the court for some time. The Applicant filed her Application on June 18, 2014. The Respondent filed his Answer and other responding documents on July 30, 2014. Amended Applications and Answers followed in 2015. Since that time, the Respondent has had multiple changes of counsel and his financial disclosure has remained an issue. Ultimately, the parties agreed to a consent order whereby the Respondent’s Answer would be struck if he failed to make certain disclosure within a given timeline.
[7] On May 17, 2018, the Respondent’s Answer was struck pursuant to the terms of the consent order since he had failed to make the required disclosure. On appeal, that order was amended to provide that the Respondent’s Answer was struck out except in relation to the issues of custody and access (Burke v. Poitras, 2018 ONCA 1025, 22 R.F.L. (8th) 266 at para. 22). The parenting issues are not being addressed in this proceeding.
[8] The dispute as to all other issues has proceeded by way of uncontested trial. In a separate endorsement, I confirmed that the Respondent would have no participation rights during the trial. While he was given an opportunity to make submissions on that issue and was present when the date was set for a hearing on that issue, the Respondent failed to file a motion or attend the scheduled hearing date.
[9] The Respondent did, however, attend the trial. While he has not participated in the proceedings, he has been an observer. While his conduct was frequently disruptive (for instance, interjecting while counsel made submissions, or during the evidence of a witness), he was permitted to remain throughout the proceedings.
[10] The court record for this trial consists primarily of evidence presented by way of affidavit. I have also heard viva voce evidence from two witnesses who were qualified as experts and permitted to give opinions on certain issues. The court record also includes documents filed by the Respondent apart from his answer, particularly a Financial Statement dated August 22, 2014 and a subsequent Financial Statement dated May 10, 2018. I am mindful that only the Respondent’s Answer was struck.
[11] I ruled on one issue in the trial on September 25, 2019. At that time, I ordered that the Applicant would have exclusive possession of the matrimonial home effective December 1, 2019. The Respondent was ordered to vacate the property no later than November 30, 2019.
[12] Prior to the release of this judgment, in early December 2019, I was advised by the trial co-ordinator that the Applicant intended to request that the court re-open proceedings and admit fresh evidence as a result of damage done to the matrimonial home. Dates were offered to the Applicant in December to address the matter. Those dates were declined since the documentary evidence necessary to quantify the damages was not yet available to the Applicant.
[13] Over the subsequent months, I presided over a lengthy criminal trial and directed that the Applicant file written submissions addressing the issues she wished to advance. Following further requests by the trial co-ordinator as to the status of those submissions, a Notice of Motion and affidavit from Ms. Burke were provided to me on March 30, 2020. Subsequently, I requested written submissions on the law from counsel. Those submissions were received electronically by me on April 28, 2020. All of these documents are to be filed in the continuing record by the Applicant whenever the easing of pandemic-related restrictions permits this to occur.
[14] Before continuing with the substance of my reasons, I pause to say that while the Respondent has not been permitted to participate in the trial, this does not mean that the Applicant’s claims for relief are granted as of right. As I explained to the parties during the course of the trial, the court must nevertheless carefully assess and weigh the evidence and fairly apply the law that applies on any given issue. As a result of the court’s questioning during the proceedings, the Applicant’s position on certain issues has been modified. The record has also been amplified (e.g. in respect of the relevant DivorceMate calculations) to ensure the court is proceeding on the most appropriate record, notwithstanding that the Respondent has not been permitted to test the Applicant’s case.
Issue #1: Child support
[15] The parties have been able to agree on the parenting time each will have with the children. This is to their considerable credit in the circumstances of this case. Their eldest child has lived primarily with the Respondent while the two younger children have had shared parenting time between their parents’ households. The evidence before me establishes that this parenting arrangement was confirmed in an interim court order dated August 11, 2014.
[16] No child support has been paid since the date of separation.
[17] The Applicant has provided evidence with respect to her income for the relevant time frame. For the most part, the Respondent has failed to produce disclosure in respect of his income. He has provided limited disclosure (such as certain personal and corporate tax returns) which permits certain inferences and conclusions.
[18] The Applicant argues that income for the Respondent should be imputed in accordance with the conclusions of an expert witness, Dave Clarke, who has reviewed the disclosure that is available from the Respondent and his corporation to determine the income available to the Respondent for Child and Spousal Support Purposes from 2013 to 2017. Should the court accept the conclusions of Mr. Clarke, the Applicant says this would result in a child support obligation on the part of the Respondent of $107, 338.00 (which figure is based on arrears payable from June 1st, 2014) and an ongoing monthly child support payment of $2, 001.00. The Applicant has provided a spreadsheet setting out her calculation of the amount of monthly support owing and totals for the arrears payable since 2014 (Exhibit 2).
[19] The issues for the court to determine are 1) whether income should be imputed to the Respondent; 2) if so, what quantum of income should be imputed; and 3) if that income exceeds $150, 000 per year, what is the appropriate child support order given s. 4 of the Federal Child Support Guidelines?
Should the court impute income to the Respondent?
The legal principles
[20] The law governing the court’s approach on this issue is set out in the Federal Child Support Guidelines [“Guidelines”].
[21] Pursuant to s. 15 of the Guidelines, a spouse’s annual income must be determined by the court in accordance with sections 16 to 20. Section 16, which is subject to the circumstances set out in sections 17-20, directs the court to assess “annual income” based on certain income tax information. Income for support purposes is thus presumptively the payor’s income as it appears on line 150 of his or her tax return: Bak v. Dobell, 2007 ONCA 304, 86 O.R. (3d) 196 at para. 30.
[22] The Guidelines provide in s. 18 that where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the payor’s annual income, as determined under section 16 does not fairly reflect all money available to the spouse for the payment of child support, the court may consider the situations described in section 17 (which considers the pattern of income for the last three years) and determine the spouse’s annual income to include all or part of the pre-tax income of the company for the most recent taxation year (s. 18(1)(a)).
[23] Section 18(2) further provides that in determining the pre-tax income of a corporation for the purposes of subsection (1), all amounts paid by the corporation as salaries, wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arm’s length must be added to the pre-tax income, unless the spouse establishes that the payments were reasonable in the circumstances. Case law holds that the onus is on the corporate shareholder to provide the necessary evidence that the corporation’s pre-tax income is not available for support purposes. This onus is not met when insufficient documentary evidence has been provided to show that deductions are legitimate corporate expenses: Abdiwahab v. Mohamuud, 2013 ONSC 6194 at para. 27. See also Goett v. Goett, 2013 ABCA 216, 85 Alta. L.R. (5th) 190 at para. 21.
[24] Section 19 of the Guidelines directs that the court may impute such amount of income to a spouse as it considers appropriate in the circumstances. The section references a non-exhaustive list of such circumstances the court may consider, including a spouse’s failure to provide income information when under a legal obligation to do so (s. 19(f)).
[25] Case law holds that circumstances apart from those listed in the section may also be relevant. In Bak, after discussing section 19 generally at paras. 30-37, the court held at paras. 41-42 that a payor’s lifestyle often will be relevant to whether a court may impute income under s. 19(1) of the Guidelines, though it is not a “standalone ground for imputing income”. The court stated at para. 41:
For example, it may be apparent from lifestyle that a payor is receiving undeclared income because he or she has historically worked, lives comfortably with the usual trappings, and yet declares minimal income for tax or child support purposes. In such a case, the recipient who calls evidence of the payor’s lifestyle will ask the court to draw the reasonable inference that the payor must have a greater income than he or she has disclosed.
[26] Sections 23 and 24 of the Guidelines are also relevant in these proceedings given the Respondent’s failure to make the required disclosure and abide by the court orders directing him to do so. Section 23 permits the court to draw an adverse inference against a spouse who fails to comply with his or her disclosure obligations under section 21. Section 24 further directs that where a spouse fails to comply with an order issued on the basis of an application under paragraph 22(1)(b), the court may proceed to a hearing, in the course of which it may draw an adverse inference against the spouse and impute income to that spouse in such amount as it considers appropriate.
Analysis
The Respondent’s corporation
[27] The Respondent owns a corporation that operates under the name Woodsman Construction & Tree Service [“Woodsman”]. According to the Respondent (as indicated in the report of expert witness Dave Clarke), 95% of the business’s revenues are obtained through contracts with local municipalities. Smaller residential-type jobs represent only a small portion of its annual revenues.
[28] According to corporate tax returns, the Respondent owns all the common shares in his corporation.
[29] Based on the limited disclosure provided by the Respondent, it is clear that his corporation has a pattern of exceeding $1 million in annual revenues (with the exception of the year of separation). The net profit generated by his company has exceeded $130, 000 annually, with the exception of the year of separation.
The Respondent’s declarations as to his income
[30] The Respondent claims various amounts as income in his financial documents.
[31] His Financial Statement of August 22, 2014 claims an employment income of $30, 253.92. This is inconsistent with his income tax return for 2014 which claims only $25, 000 in rental income. Rental income in this amount is also claimed in his tax returns for 2014, 2015 and 2016.
[32] The Respondent declares an income of $31, 400.04 in his Financial Statement of May 10, 2018, consisting of draws and cash. There is no further documentation to support these figures.
[33] The Respondent’s Financial Statements provide for minimal or no expenses. Notwithstanding this, the Applicant asserts, and I accept, that the Respondent has paid some of the property taxes for the matrimonial home, provided extravagant gifts to their children, travelled at least twice per year to places like Turks and Caicos and Las Vegas, and been supporting his father, who never contributed financially to the household during the period he lived in the house prior to separation (that the Respondent’s father is living with him is confirmed in his Financial Statement dated May 10, 2018). The Financial Statements indicate that the Respondent has no bank accounts and no debt. I find that he is not incurring debt to pay for expenses he is clearly incurring. I accept the Applicant’s submission that the money to pay for these expenses “comes from somewhere” and that “the logical source would be from income”.
Other evidence relevant to determining the Respondent’s income
[34] The evidentiary record compels the conclusion that the Respondent has had significant funds available to him since separation. In a sworn Affidavit dated January 14th, 2019, that was prepared for another legal proceeding against his father’s estate, the Respondent claimed a resulting trust in real property titled to his father. He claimed to have advanced $22, 000 to his father in July of 2015 to purchase the property. Further, he claimed that in 2018 he provided funds in the amount of $230, 000 for improvements and upgrades to the house.
[35] There is also evidence from the Applicant to support a finding that the Respondent generates significant income from his business. Based on her experience of living with the Respondent and their children in the matrimonial home, and the expenses incurred during their married life, the Applicant’s view is that the income generated from his business was at least $350, 000 annually. This is also based on her knowledge, which I accept, that the Respondent dealt in a lot of cash business transactions which were not recorded in the company’s books.
[36] When I consider the totality of the evidence, including the expert evidence of Dave Clarke, which I will address momentarily, I find the Respondent is neither credible nor reliable in his disclosures regarding his income and expenses. The Respondent has failed to make all the financial disclosure that he was obliged to make in these proceedings. Adverse inferences may be made on that basis alone. However, the evidence which has been presented further supports the conclusion that he has grossly underreported his income in these proceedings. I find that pursuant to section 19 of the Guidelines, income should be imputed to the Respondent.
What quantum of income should be imputed?
The expert evidence of Dave Clarke
[37] Expert evidence has been called on this issue and the expert, Mr. Clarke, has testified before me. His report and viva voce evidence fully set out his ample qualifications and his methodology, which references the legal framework for assessing income set out in the Guidelines.
[38] Mr. Clarke acknowledges that the scope of his review was severely restricted. He did not have access to the corporate accounts, supporting documentation or the company’s external accountant. Accordingly, he made certain assumptions regarding normal expenses that a company of this kind might incur.
[39] It must be noted, however, that efforts were made to obtain further information from the Respondent. These efforts were outlined at paragraphs 18-19 of Mr. Clarke’s report. Mr. Clarke spoke with the Respondent and requested clarifying details and information. The Respondent did not authorize the corporations’ accountant to speak with Mr. Clark. He advised a court order would be required to obtain access to the accountant.
[40] Mr. Clarke concludes that the income available for support purposes (in this case as determined under ss. 16, 18 and 19 of the Guidelines), including a tax gross-up representing the tax benefit to the Respondent of deducting expenses through the company, as follows:
i. For the year 2013, $404, 500;
ii. For the year 2014, $348, 200;
iii. For the year 2015, $213, 800;
iv. For the year 2016, $271, 600;
v. For the year 2017, $234, 000.
[41] Mr. Clarke was unable to come to a conclusion about the Respondent’s income for 2018 because the Respondent did not provide sufficient disclosure. The average income for the years 2013-2017, however, is $294, 420.
[42] Mr. Clarke explained that in his opinion, it is appropriate to gross-up where amounts are deemed to be personal expenses. In this instance, in his tax gross-up calculation, Mr. Clarke assumed the Respondent’s income tax rate would be approximately 40%. This seems a fair assessment in the circumstances and I have no reason not to accept his opinion on this issue. It is also consistent with the law: Ludmer v. Ludmer, 2013 ONSC 784, 33 R.F.L. (7th) 331 at para. 154, citing Riel v. Holland (2003), 2003 CanLII 3433 (ON CA), 67 O.R. (3d) 417 (Ont. C.A.) at paras. 35-36.
[43] Mr. Clarke also explained why he attributed certain income personally given the potential uses of those funds by the corporation. Where he could, Mr. Clarke has documented what information was available to him about how the corporation operated. For instance, he found no evidence of significant investment in capital during the years 2013 to 2016, which led him to conclude there is no need for significant capital investment in the company. He explained that he always tries to connect with a business owner to find out why income might not be distributable. In this case, he received no feedback from the Respondent, and he was given no authorization to speak to the corporation’s accountant. Mr. Clarke proceeded on the basis that until he had a valid business rationale for saying the income could not be distributed, he considered it to be available as personal income. It is difficult to fault that methodology in the circumstances of this case.
[44] I arrive at this conclusion mindful that it is “incumbent on the court to have regard to the status of the corporation as a distinct legal personality as well as to the legitimate corporate interests in retaining pre-tax corporate income and the degree of the payor’s involvement in the corporation”: Mason v. Mason, 2016 ONCA 725, 132 O.R. (3d) 641 at para. 169. I have considered that a corporation’s retained earnings are not necessarily money that the shareholder can take out as income, and that corporations have legitimate business reasons to accumulate retained earnings: see Halliwell v. Halliwell, 2017 ONCA 349, 138 O.R. (3d) 671 at para. 44. However, in this case, there is an absence of evidence as to what bona fide corporate interests require the retention of pre-tax corporate income in the corporation. The Respondent had every opportunity to provide that evidence for the purposes of Mr. Clarke’s assessment, but he did not.
[45] As for whether it could be assumed that the Respondent’s income would be similar going forward, Mr. Clarke testified that it was difficult to speculate on the income of a person in the Respondent’s industry and that his income would depend on the number, size, and quality of the contracts the corporation was able to obtain going forward. In his view the Respondent’s income would fluctuate based on these factors. This answer was quite fair to the Respondent and demonstrates Mr. Clarke’s impartiality in the matter.
[46] I accept Mr. Clarke’s conclusions in their entirety, despite the qualifications on their accuracy he has properly made given the information that was not available to him. In all of the circumstances, I find that the methods and presumptions employed by Mr. Clark to assess the Respondent’s income were entirely reasonable.
[47] Certain aspects of Mr. Clarke’s findings are worth noting as they particularly inform my acceptance of his conclusions. For instance, statements from the corporate Visa card and a corporate bank account between January 2015 and December 2017 were available for review (see paragraphs 42-46 of Mr. Clarke’s report). Some of the personal expenses on those statements included country music festivals, hotel rooms, airfare, clothing stores, jewelry, “court services and infractions”, dentist costs, cash advances, and concert/show tickets. Some of the most notable entries included $6, 305 for Beaches Turks and Caicos (dated 01/22/2017), a Las Vegas trip totalling $12, 010 (dated April 2017), $24, 743 for “Unique Vacations” (dated 12/07/2016) and $4, 117 at a local casino (between November 2016 and March 2017). As noted by Mr. Clarke, these expenses in the corporate statements are consistent with the representations of the Applicant about the Respondent’s use of corporate funds for personal expenses.
[48] Further, Mr. Clarke noted many withdrawals from two corporate bank accounts in the form of issued cheques. Since he was not provided access to the supporting documentation, he was unable to analyze these disbursements further.
[49] Mr. Clarke’s conclusion that significant funds were available to the Respondent as personal income from his corporation is amply supported by this evidence which, on a balance of probabilities, leads to the general conclusion that the Respondent used the corporation’s funds as his own regularly. This is further supported by the fact that the Respondent has declared no personal bank or credit card accounts. As for the quantum of the funds available to the Respondent for his personal use, I see no basis to find that Mr. Clarke’s assessment is wrong in any respect, or unreasonable given the information that was made available to him by the Respondent. I accept Mr. Clarke’s conclusions as to the income that was available to the Respondent to pay support for the years 2014–2017.
[50] As for the income that is available from 2018 onward, I find that it is appropriate to use the average income from the years 2013 to 2017. The 2013 year’s figures are particularly relevant in arriving at a complete picture of the income available to the Respondent from his corporation. This is because the parties separated in early 2014 and the corporate gross profit dropped by almost half of the profit realized in 2013 (see schedule D-1 of Mr. Clarke’s report). On this record, there is no business-related reason for that drop. So, while I am mindful of section 17 of the Guidelines, in determining to use a five-year average income, I rely on section 19 of the Guidelines.
[51] Section 19 of the Guidelines gives the court a broad discretion to impute income and is not subject to the restrictions set out in ss. 16, 17 and 18: Ouellette v. Ouellette, 2012 BCCA 145, 32 B.C.L.R. (5th) 67 at para. 66. I find the five-year average more accurately reflects the Respondent’s potential earning capacity: Ouellette at para. 67. Use of a five-year average also addresses any unfairness which may have resulted from any manipulation by the Respondent to minimize the funds available to him for support purposes in the period post-separation: Ouellette at para. 67.
[52] Accordingly, for the years 2018 and 2019, the Respondent’s imputed annual income for the purposes of determining support is fixed at $294, 420.00.
[53] The Applicant requests that the Respondent’s imputed income of $294, 420.00 be used as his income for ongoing support, until he Respondent seeks to vary this figure. While it may be that the Respondent’s future income will deviate from this figure (I am alive to Mr. Clarke’s conclusions about this), I agree with the Applicant that given the Respondent’s conduct in this matter, his income should be fixed going forward, subject to any motion to vary he might bring. I arrive at this conclusion because I have no confidence that the Respondent will comply with an annual disclosure obligation to ensure that child support is appropriately adjusted in the future. Fixing the Respondent’s income for support purposes, subject to any motion to vary he might bring, is fair and just in these circumstances.
[54] Before leaving this issue, I note that this case is like Manchanda v. Thethi, 2019 ONSC 1749, insofar as the Applicant in this uncontested trial has been “hampered in her ability to provide complete and/or precise information with respect to the [Respondent’s] financial affairs due to the limited disclosure that he ha[s] provided”. As noted in that case, where there is an absence of financial disclosure, there is broad discretion for a court to draw reasonable inferences for the purpose of resolving property issues or imputing income.
[55] In Meade v. Meade (2002), 2002 CanLII 2806 (ON SC), 31 R.F.L. (5th) 88 (Ont. S.C.) at para. 81 the court explained that
[w]here disclosure is inadequate and inferences are to be drawn, they should be favourable to the spouse who is confronted with the challenge of making sense out of financial disclosure, and against the spouse whose records are so inadequate or whose response to the obligation to produce is so unhelpful that cumbersome calculations and intensive and costly investigations or examinations are necessary.
[56] As occurred in Manchanda, the Applicant here, “along with the various valuators or experts retained, [was] forced to make certain assumptions or estimates regarding his assets and income.… These calculations were extremely challenging given the lack of cooperation and involvement of [the Respondent]” (para. 26).
[57] The Applicant alleges that the Respondent’s conduct in failing to make the disclosure obligated by the law and ordered by the court was a deliberate strategy to frustrate a fair assessment of his income. That is a fair inference to draw on the record before me. I infer that the Respondent has behaved as he has because it benefits him in some way. It is worth noting that had an assessment been possible based on full and complete disclosure, the assessment of the Respondent’s income may very well have been even higher.
[58] Considering both the law and the evidence available to me, I find that imputing an annual income to the Respondent of $294, 420.00 is fair and reasonable.
The Applicant’s income between 2014 and 2019
[59] Having regard to the parenting arrangement which has been in place, the Applicant’s annual income is also relevant to the determination of child support. Since the date of separation, her line 150 income on her Income Tax Returns and Notices of Assessment has been as follows: 2014 - $89, 247.35; 2015 - $90, 748.61; 2016 - $91, 388.58; 2017 - $101, 493.41; 2018 - $94, 077.91 (Income Tax Return only). In her Affidavit of June 21, 2019, the Applicant indicates that she currently earns approximately $103, 000 annually. This is the best evidence available to me as regards the Applicant’s income for 2019. Accordingly, this is the figure which will be used as her income in the various calculations that require it to determine ongoing support.
Child support where income exceeds $150, 000
[60] Section 4 of the Guidelines provides that where it is established that the income of the spouse who would be paying the amount of child support is greater than $150, 000, the amount of a child support order is either the amount determined by reference to the tables (s. 4(a)), or, if the court considers that amount to be inappropriate, by reference to the following:
(i) In respect of the first $150, 000 of the spouse’s income, the amount set out in the applicable table for the number of children under the age of majority to whom the order relates;
(ii) In respect of the balance of the spouse’s income, the amount that the court considers appropriate, having regard to the condition, means, needs and other circumstances of the children who are entitled to support and the financial ability of each spouse to contribute to the support of the children; and
(iii) The amount, if any, determined under section 7.
[61] The court has received no submissions on the issue of the appropriateness of table support for any income in excess of $150, 000.
[62] On this issue, I am governed by the law as set out in Francis v. Baker, 1999 CanLII 659 (SCC), [1999] 3 S.C.R. 250. In that case, the Supreme Court confirmed that the term “inappropriate” in the Guidelines must be interpreted broadly to mean “unsuitable” rather than “inadequate”. Further, it held that in all cases Parliament intended that there be a presumption in favour of the Table amounts. Guidelines figures therefore can only be increased or reduced under s. 4 if the party seeking such a deviation has rebutted the presumption that the applicable Table amount is appropriate. However that is done (e.g. by leading evidence or questioning the evidence of the opposing party), the court must find that the evidence in its entirety is sufficient to raise a concern that the applicable Table amount is inappropriate. There must be clear and compelling evidence for departing from the Guideline figures: see paragraphs 42-43.
[63] Given that this is an uncontested trial where the party who might seek to reduce the child support payment has not been permitted to adduce evidence or otherwise participate in the trial, the court has received no argument that the amount of child support payable should be reduced from the Table amount. In any case, the evidentiary record before me does not justify a departure from the presumption that Table support is appropriate.
[64] Consequently, the Respondent’s child support payments shall be calculated in accordance with the Table amounts set out in the Guidelines.
Conclusions on child support
[65] The evidence before me establishes that the parenting arrangement was first confirmed in an interim court order dated August 11, 2014 (see paragraph 57 of the Applicant’s Affidavit of June 21, 2019). Pursuant to that order, the eldest child has lived primarily with the Respondent while the two younger children have had shared parenting time between their parents’ households. I have no evidence as to what parenting arrangement was in place prior to that date and cannot determine what child support was payable in the circumstances. Accordingly, the start date for the child support obligation for 2014 will commence on August 1st, 2014.
[66] In arriving at my conclusions, I also consider s. 9 of the Child Support Guidelines and the principles set out in Contino v. Leonelli-Contino, 2005 SCC 63. I find that a straight set-off is fair and reasonable in determining child support for the benefit of the children who are in the shared custody of the parties.
[67] I find that the incomes for each of the Applicant and Respondent for the year 2014 were $89, 247.35 and $348, 200, respectively. The table amount owing by the Respondent is $4, 271 monthly while the amount owed by the Applicant is $1, 660. After applying the set-off, this results in a monthly child support obligation payable by the Respondent to the Applicant of $2, 611.00. As no child support was paid by the Respondent, this results in arrears of $13, 055.00 for 2014.
[68] For the year 2015, I find that the Applicant’s income was $90, 748.61 while the Respondent’s income was $213, 800.00. The table amount owing by the Respondent is $2, 739 monthly while the amount owed by the Applicant is $1, 687. After applying the set-off, this results in a monthly child support obligation payable by the Respondent to the Applicant of $1, 052.00. As no child support was paid by the Respondent, this results in arrears of $12, 624.00 for 2015.
[69] For the year 2016, I find that the Applicant’s income was $91, 388.58 while the Respondent’s income was $271, 600.00. The table amount owing by the Respondent is $3, 398 monthly while the amount owed by the Applicant is $1, 690. After applying the set-off, this results in a monthly child support obligation payable by the Respondent to the Applicant of $1, 708.00. As no child support was paid by the Respondent, this results in arrears of $20, 496.00 for 2016.
[70] For the year 2017, I find that the Applicant’s income was $101, 493.41 while the Respondent’s income was $234, 000.00. The table amount owing by the Respondent is $3, 085 monthly while the amount owed by the Applicant is $1, 925. After applying the set-off, this results in a monthly child support obligation payable by the Respondent to the Applicant of $1, 160.00. As no child support was paid by the Respondent, this results in arrears of $13, 920.00 for 2017.
[71] For the year 2018, I find that the Applicant’s income was $94, 077.91 while the Respondent’s imputed income is $294, 420.00. The table amount owing by the Respondent is $3, 810 monthly while the amount owed by the Applicant is $1, 809. After applying the set-off, this results in a monthly child support obligation payable by the Respondent to the Applicant of $2, 001.00. As no child support was paid by the Respondent, this results in arrears of $24, 012.00 for 2018.
[72] For the year 2019, the Applicant has approximated her income as $103, 000 annually. I use this figure for the purposes of determining the child support payable for 2019. I also deduct from that sum $1, 144 in tax deductions for tuition, professional, or like dues, as this figure has represented the total for those deductions between 2015-2018 (the sums used above reference the Applicant’s employment income without these deductions, however they are reflected in the DivorceMate calculations in Exhibit 2 which I have accepted in the above calculations of arrears). This results in an annual guidelines income for the Applicant of $101, 856. The Respondent’s imputed income is $294, 420.00. The table amount owing by the Respondent is $3, 810 monthly while the amount owed by the Applicant is $1, 950. After applying the set-off, this results in a monthly child support obligation payable by the Respondent to the Applicant of $1, 860.00. As no child support has been paid by the Respondent, this results in arrears of $22, 320.00.
[73] Subject to the final determination of the custody and access matters, the court orders on an interim basis that the Respondent shall pay child support to the Applicant in the amount of $1, 860.00 per month based on the Respondent’s income of $294, 420.00 and the Applicant’s income of $101, 856.00. For the year 2020, this results in arrears of $9, 300 for the period of January 1 to May 31, 2020.
[74] In summary, the total amount of arrears payable by the Respondent to the Applicant for child support between August 1, 2014 to May 31, 2020 is $115, 727.
Issue #2: Section 7 expenses
[75] The Applicant seeks an order requiring the Respondent to contribute towards the s. 7 expenses for the children. She requests, via her draft order, that the court order that the children’s extraordinary expenses shall be shared by the parties in proportion to their respective incomes.
[76] I find that the apportionment of s. 7 expenses in accordance with the parties’ respective incomes is fair.
[77] For 2019, the Applicant’s line 150 income is not available. However, as I have indicated, the Applicant has provided evidence that her approximate annual income is $103, 000.
[78] The Applicant requests (via her draft order) an order that the Applicant shall be responsible for 47% of the s. 7 expenses and the Respondent’s shall be responsible for paying 53%. I infer that this is based on the DivorceMate calculations which determine the apportionment based on the percentage of Net Disposable Income available to the parties after consideration of a mid-level spousal support payment to the Applicant. This proportion is fair and is consistent with my revised calculations of the income available to the Applicant for 2019 and going forward, as well as the spousal support order to which I find the Applicant is entitled (addressed below).
[79] Accordingly, I order that the Respondent shall be responsible for paying 53% of the children’s s. 7 expenses, while the Applicant shall be responsible for paying 47%.
Issue #3: Spousal Support
[80] The Applicant seeks an order that the Respondent pay spousal support arrears to her for the period of June 1, 2014 to September 30, 2019 in the amount of $550, 302.00. Subject to a determination of the final parenting order, she seeks ongoing spousal support in the amount of $9, 248.00 commencing October 1st, 2019. This is based on income imputed to the Respondent in the amount of $294, 420.00 annually and the mid-range support figure suggested by the Spousal Support Advisory Guidelines [“SSAGs”].
[81] This matter has been complicated by the fact that the trial on the property issues before me has proceeded notwithstanding that the final parenting order is not in place.
[82] However, given the lengthy history of the matter, and the importance of giving finality to the issues that may be resolved at this time, adjudication on the facts relating to the spousal support issue is appropriate.
[83] The Applicant argues that she is entitled to spousal support on a compensatory basis because of the role she played in the marriage and because of the differentials in the parties’ incomes. She argues that the parties currently have a significant disparity in their income and the compensatory model emphasizes this as a marker that compensatory support is appropriate. She submits that while she was employed throughout the marriage, she also provided valuable services to the Respondent’s company without compensation and assumed most of the childcare responsibilities. Due to these demands, she says she failed courses and was unable to complete a university degree, whereas the Respondent now has a successful company from which he obtains an income almost three times as much as hers. She seeks a spousal support award in the mid-range suggested by the SSAGs from the time she filed her application. She submits the order should continue until she is 65.
The legal principles
The statutory framework
[84] Section 15.2 of the Divorce Act governs spousal support. The court may make a final or interim order for a definite or indefinite period or until a specified event occurs, and may impose terms, conditions or restrictions in connection with the order as it thinks fit and just (s. 15.2(3)).
[85] In making a spousal support order, section 15.2(4) directs the court to consider the condition, means, needs and other circumstances of each spouse, including a) the length of time they cohabited; b) the function each performed during their cohabitation, and c) any order, agreement or arrangement relating to support of either spouse. Spousal misconduct shall not be considered (s. 15.2(5)).
[86] Importantly, s. 15.2(6) of the Divorce Act lists the objectives of a spousal support order. A spousal support order should:
• Recognize any economic advantage or disadvantages to the spouses arising from the marriage or its breakdown;
• 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;
• Relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
• In so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
[87] The Supreme Court of Canada has given further guidance as to how to apply this legislation. For instance, in Bracklow v. Bracklow, 1999 CanLII 715 (SCC), [1999] 1 S.C.R. 420, the court confirmed at para. 35 that the objectives set out in the Divorce Act must all be considered by a court and no single objective is paramount. However, the weight that should be placed on each must be based on the particular circumstances of the parties and is discretionary.
[88] Further, it is against the background of these objectives that the court must consider the factors set out in s. 15.2(4) of the Divorce Act. The judge must look at all the factors in light of the objectives of support, and exercise her discretion in a way that equitably alleviates the adverse consequences of the marriage breakdown: Bracklow at para. 36.
[89] As indicated in Moge v. Moge, 1992 CanLII 25 (SCC), [1992] 3 S.C.R. 813 at pp. 848-849,
[T]he purpose of spousal support is to relieve economic hardship that results from “marriage or its breakdown”. Whatever the respective advantages to the parties of a marriage in other areas, the focus of the inquiry when assessing spousal support after the marriage has ended must be the effect of the marriage in either impairing or improving each party’s economic prospects. [emphasis in original]
Entitlement to spousal support
[90] A threshold issue in considering a claim for spousal support is whether the claimant is entitled to such support: Halliwell.
[91] The compensatory basis for spousal support was recognized by the Supreme Court of Canada in Moge. The focus of the inquiry must be “the effect of the marriage in either impairing or improving each party’s economic prospects”: Moge at p. 849, emphasis added. A claim may be based on one of the common compensable advantages and recognized disadvantages discussed in Moge at paras. 79-84 (e.g. economic disadvantage arising from child-care or missed career opportunities, or contributions made to the operation of a business which have not been compensated for pursuant to the division of assets), or based on other circumstances, since the scenarios discussed in Moge are not exhaustive. The conceptual basis for this type of support was succinctly explained in this way in Ludmer at para. 215:
This is in recognition that upon marriage breakdown, there should be an equitable distribution between the parties of the economic consequences of the marriage. Specifically, compensatory support is intended to compensate a spouse upon relationship breakdown for contributions made to the relationship and to recognize sacrifices made and the advantages to one spouse and disadvantages to the other, both during and after the breakdown of that relationship. It is to compensate for foregone careers and missed opportunities during the marriage, and to serve as reimbursement for hardships accrued as a result of the marriage breakdown.
[92] The standard of living enjoyed during the marriage may be relevant to the consideration of entitlement on this basis. Moge confirms that while spousal support does not guarantee to either party the standard of living during the marriage, “great disparities in the standard of living that would be experienced by spouses in the absence of support are often a revealing indication of the economic disadvantages inherent in the role assumed by one party”: p. 870. Further, “As marriage should be regarded as a joint endeavour, the longer the relationship endures, the closer the economic union, the greater will be the presumptive claim to equal standards of living upon its dissolution”: Moge at p. 870.
[93] Ultimately, courts must be “alert to a wide variety of factors and decisions made in the family interest during the marriage which have the effect of disadvantaging one spouse or benefitting the other upon its dissolution”: Moge at para. 86 [emphasis added]. As explained by McLachlin J. (as she then was) in her concurring reasons in Moge, “in determining whether economic hardship of a spouse arises from the breakdown of the marriage, the starting point should be a comparison of the spouse’s actual situation before and after marriage breakdown. If the economic hardship arose shortly after the marriage breakdown, that may be a strong indication that it is caused by the family breakdown”: at para. 120.
[94] The law also provides for spousal support to be made on a non-compensatory, or needs- based, basis. As stated in Bracklow at para. 37, “where compensation is not indicated and self-sufficiency is not possible, a support obligation may nonetheless arise from the marriage relationship itself”. Where spouses have the capacity to pay, need alone may be enough to establish entitlement to spousal support – “absent negating factors, it is available, in appropriate circumstances, to provide just support”: Bracklow at paras. 43 and 49.
[95] As stated in the Spousal support Advisory Guidelines: The Revised Users Guide, Rogerson and Thomspon, 2016 at p. 10:
Non-compensatory claims involve claims based on need. “Need” can mean an inability to meet basic needs, but it has also generally been interpreted to cover a significant decline in standard of living from the marital standard. Non-compensatory support reflects the economic interdependency that develops as a results of a shared life, including significant elements of reliance and expectation, summed up in the phase “merger over time”.
Common Markers of non-compensatory claims include: the length of the relationship, the drop in standard of living for the claimant after separation, and economic hardship experienced by the claimant.
[96] Insofar as the Divorce Act objective of “self-sufficiency” is concerned, the case law confirms that this is a relative concept. As indicated in Fisher v. Fisher, 2008 ONCA 11, 88 O.R. (3d) 241 it is not achieved where a former spouse can meet basic expenses on a particular amount of income. Rather, it “relates to the ability to support a reasonable standard of living. It is to be assessed in relation to the economic partnership the parties enjoyed and could sustain during cohabitation, and that they can reasonably anticipate after separation”: at para. 53. The Divorce Act promotes this objective where it is “practicable” to do so and where it can be realized “within a reasonable period of time”. In practice, as discussed in Fisher, this may be more attainable in short-term marriages. In longer term marriages, the spousal support analysis may not give priority to this objective because it simply cannot be attained: Fisher at para. 55.
Determining the quantum of a spousal support award
[97] Quantum refers to both the amount of support payments and their duration: Bracklow at para. 51.
[98] The SSAGs are a useful tool for setting the amount and duration of a spousal support award, but they are not binding on the court. Nor do they assist with determining entitlement. They assist because they suggest a range of both amount and duration of support that reflects the current law.
[99] In all cases, the reasonableness of an award produced by the SSAGs must be balanced in light of the circumstances of the individual case, including the particular financial history of the parties during the marriage and their likely future circumstances. Nevertheless, when counsel fully address the SSAGs in argument, and a trial judge decides to award a quantum of support outside the suggested range, appellate review will be assisted by the inclusion of reasons explaining why the SSAGs do not provide an appropriate result: Fisher.
[100] The issue of entitlement is also important in determining the quantum of a spousal support order. This is because “the same factors that go to entitlement have an impact on quantum”: Bracklow at para. 50. Entitlement will be a relevant consideration to determining the location within the SSAGs formula ranges that is appropriate, or to justify departure from the ranges: Halliwell at para. 110.
[101] In determining the quantum of a spousal support award, a court must consider the nature and strength of the entitlement, as well as other factors. Many of these factors, such as the recipient’s need, property division and debts, and the payor’s needs and ability to pay, are set out in the SSAGs: Mason at para. 199. As explained in Bracklow at para. 53,
While some factors may be more important than others in particular cases, the judge cannot proceed at the outset by fixing on only one variable. The quantum awarded, in the sense of both amount and duration, will vary with the circumstances and the practical and policy considerations affecting particular cases. Limited means of the supporting spouse may dictate a reduction. So may obligations arising from new relationships in so far as they have an impact on means. Factors within the marriage itself may affect the quantum of a non-compensatory support obligation. For example, it may be difficult to make a case for a full obligation and expectation of mutual support in a very short marriage. … As stated in Moge, “At the end of the day …, courts have an overriding discretion and the exercise of such discretion will depend on the particular facts of each case, having regard to the factors and objectives designated in the Act” (p. 866).
[102] In certain instances, the effects of an equalization payment will need to inform a judge’s approach to the quantum of an award, particularly where the equalization payment goes some distance to satisfying the bases for the spousal support award: Halliwell at paras. 116 and 122. As stated in Mason, “If the recipient receives a large amount of property, the low end of the range might be more appropriate”: at para. 202. In that case, the wife had received an equalization payment of $1, 636, 130.00.
[103] The recommended duration of a support award will be set out in the SSAGs. Where it is indicated that the award should be “indefinite”, this does not mean permanent support or even support that will continue indefinitely at the level set by the formula. It means “support that is subject to the normal process of variation and review”: Reisman v Reisman, 2014 ONCA 109, 118 O.R. (3d) 721 at para. 30. In other words, as explained in Cassidy v. McNeil, 2010 ONCA 218, 99 O.R. (3d) 81 at para. 75, “‘indefinitely’ only means that no termination date will be set at this juncture”.
[104] Insofar as assessing a payor’s income is concerned, the starting point for determining income under the SSAGs is the definition of income under the Federal Child Support Guidelines (SSAGs, s. 3.3.2), which are identical to the provincial Child Support Guidelines: Halliwell, at para. 90. Further, “Where a spouse’s income fluctuates significantly due to the inherent unpredictability of income from business interests, the averaging approach can certainly be appropriate”: Halliwell at para. 128. This does not mean that averaging should be adopted as the default methodology, however: Mason, at para. 138.
[105] Support recipients who proceed reasonably to a disposition of the claim are presumptively entitled to prospective support from the time they have given notice of their intention to seek support: MacKinnon v. MacKinnon (2005), 2005 CanLII 13191 (ON CA), 256 D.L.R (4th) 385 (Ont. C.A.) at para. 22.
Reviews
[106] As discussed in Fisher at para. 63, a review allows an application for support without the need to prove a material change in circumstances (as is required in a variation application). Fisher cautioned about the unnecessary and significant expenses for the parties, both emotional and financial, that a review may cause. That is because unless it is restricted to a specific issue, a review is “generally equivalent to an initial application for support and necessitates a complete rehearing of every issue from entitlement to quantum”. The Fisher court held at para. 64 that “it is hard to justify such an expense unless it is strongly indicated on the unusual facts of a particular case”. Review orders are generally discouraged: para. 64. Where a trial court does determine that a review is necessary, a court should provide a “tight delimitation of the facts that will be subject to review, so that the proceeding does not become a re-argument of the case”: para. 65.
[107] In effect, review orders turn an initial order into a long-term interim order made after trial: Fisher at para. 70. Therefore, as directed in Fisher at para. 70, a review will be appropriate “when a specified uncertainty about a party’s circumstances at the time of trial will become certain within an identifiable timeframe. When one is granted, it should include specifics regarding the issue about which there is uncertainty and when and how the trial judge anticipates that uncertainty will be resolved.”
[108] However, in “any other case, a trial judge should issue a final order based on a preponderance of the evidence called by the parties”: para. 71. A variation application is sufficient to “protect against future events”: para. 71. The flexibility inherent in variation applications is in contrast with a review order, “which invariably places the burden on the applicant”: para. 71.
[109] Importantly, Fisher confirmed that trial judges may be properly concerned with the burden or proof on the respective parties in structuring a support order. A trial judge may structure the order to “either to place the burden on the payor or on the recipient as may be appropriate. This may be achieved by terminating support, so that the recipient spouse bears the burden of establishing a material change justifying ongoing support, or by ordering indefinite support, so that the payor spouse bears the burden of establishing a material change justifying the termination of support”: at para. 72.
Analysis
[110] The Applicant’s evidence is not contested, and I have no reason not to accept it. For the purposes of determining spousal support, on a balance of probabilities, in addition to other facts which I have outlined in these reasons, I accept her evidence with respect to the following facts.
[111] The Applicant is now 39 years old and is employed in a supervisory role as a nurse. She and the Respondent met in high school and started dating. After dating for 6 years they were married on July 22, 2000. Their separation came 13.5 years later on February 23, 2014.
[112] Throughout the marriage the Applicant worked as a registered nurse except for time she took off for maternity leave. She also worked during the marriage doing bookkeeping for the Respondent’s business, including during her maternity leaves from her nursing job.
[113] When the children were young, in 2005, the Applicant quit her full time position in a hospital in Ottawa as it was too much to work full time with two young sons and another child on the way. She returned to work in 2006. She has been working with her current employer since 2007 and has held various positions. She is now a full-time Manager in the hospital where she works.
[114] Insofar as the Respondent’s work history is concerned, he worked for his father’s construction company until 2002 when that company went bankrupt. Thereafter he set up a partnership with his brother doing the same type of work. This partnership dissolved in 2009. At this point, the Respondent started his own business, known as “Woodsman Construction & Tree Service.” It was incorporated in January of 2010.
[115] The Applicant worked in this company, without compensation, from when it started in 2009 until about August of 2013 when the Respondent hired someone for office work. I accept her evidence as to the various duties she performed during this time. While the Applicant primarily performed administrative work, when workers were short on the job site, she assisted there too. She learned how to use accounting software and managed the finances and payroll for the business. She was also the designated health and safety officer. She developed a web page for the company and advertising. The Applicant performed this work while balancing her full-time job and acting as the primary caregiver to their three children. She was also responsible for the household and cooked for the family, including the Respondent’s father, who lived with them.
[116] The Applicant had hoped to obtain a university degree in nursing after having obtained her college diploma. During the marriage, she enrolled with Athabasca University to complete the program at a distance. She did not complete this program during the marriage as she could not manage to complete the required homework assignments given all her other responsibilities and her work in the Respondent’s business. Since separation she has continued her studies and is now two courses away from obtaining a bachelor’s degree in nursing.
[117] In the early days of the Respondent’s business, the Applicant provided funds ($80, 000) to pay debts the Respondent’s partnership owed to its suppliers so that they could deal directly with the Respondent’s new company. She was never repaid these funds. Later, one month prior to separation, she provided further funds ($60, 282.09) from her personal line of credit to pay HST arrears for the Respondent’s partnership because the Canada Revenue Agency was threatening to put a lien on the former matrimonial home. She was not repaid these funds.
[118] At the date of separation, in the Applicant’s assessment, the Respondent’s business was thriving. During the course of the marriage, it was very successful. This provided the family with a very comfortable lifestyle. One marker of that comfortable lifestyle was the fact that they lived in a large, well-furnished, mortgage-free home which had a value of at least $650, 000 at the time of separation.
[119] The Applicant now lives with her mother. Her monthly expenses are modest. Her debt level has increased significantly since the date of separation. She has made payments post-separation for various items that reflect prior arrangements made during the marriage (e.g. her payment of disability insurance premiums for the Respondent), or which are related to matrimonial property (e.g. her payment of property taxes and insurance for the matrimonial home). I infer that these items account for some of the increase in her debt. The spreadsheet prepared by the Applicant approximating the Respondent’s post-separation expenses (Exhibit 22) is based, at least in part, on her knowledge of the family’s expenses during the marriage. It is further evidence that supports the conclusion that the Applicant no longer enjoys the lifestyle she did prior to marriage breakdown.
[120] On the totality of the evidence I conclude that, post-separation, the Applicant has not had the lifestyle she enjoyed during the marriage. The parties’ children, two of whom are in her care on a half-time basis, no longer enjoy that lifestyle while in her care.
[121] In contrast, the Respondent continues to live in the matrimonial home and has had the exclusive use of its contents. His corporation’s credit card accounts show entries for expensive vacations, which I have accepted were personal expenses. I further accept the Applicant’s evidence that the Respondent has provided extravagant gifts to the children. There is no evidence that his personal debt level has increased. On the evidence available to me, and on the balance of probabilities, I find that the Respondent’s standard of living has not diminished since the marriage breakdown. His business continues to be very lucrative.
The SSAGs calculations provided to the court
[122] The Applicant has provided the court with calculations made in accordance with the SSAGs (Exhibit 2). The DivorceMate calculations reflect the Respondent’s income as determined by Mr. Clarke for the years 2014-2017, and the imputed income of $294, 420 for the years 2018 and 2019. The Applicant’s income is as indicated on line 150 of her tax returns. For 2019, the Applicant’s calculation uses her 2018 line 150 income. The Formula used considers the child support award that accords with the CSG. Given the 13.5 years of cohabitation, and the recipient’s age at separation of 34, the SSAGs indicate a range of spousal support “for an indefinite (unspecified) duration, subject to variation and possibly review, with a minimum duration of 6.75 years and a maximum duration of 13.5 years from the date of separation”.
Entitlement
[123] While I have considered that the Applicant was employed in her chosen field for most of the marriage, as stated in Ludmer at para. 219, “this does not necessarily lead to the conclusion that no sacrifices were made or that a disproportionate childcare burden did not fall on her shoulders”. I find that the Applicant took time off from her career to care for the children and she shouldered a disproportionate share of the responsibilities for child care. She further assumed significant responsibilities in running the family’s household and made significant contributions to the Respondent’s business. I accept that the Applicant was unable to complete further study in her chosen field because of these collective responsibilities and the role she assumed in the marriage.
[124] The totality of the evidence before me satisfies me that the parties both benefitted from the success of the Respondent’s company during the course of the marriage and that it provided them with a very comfortable lifestyle. This standard of living is something that the Applicant no longer enjoys. I conclude that the Applicant has suffered economic disadvantage as a result of the breakdown of the marriage.
[125] In contrast, I am satisfied on a balance of probabilities that the Respondent has benefitted financially from the roles the parties assumed during the marriage. Further, I find that he continues to reap those financial rewards.
[126] The Applicant has framed her claim as compensatory only. Her focus on the differential in incomes could be said to give rise to consideration of needs-based entitlement. Regardless, according to Moge, the differential in post-separation and marital standards of living is properly considered as a marker of her compensatory claim.
[127] In the result, I am satisfied that the Applicant has established that she has a compensatory claim to spousal support.
Quantum and duration
[128] As for the quantum of support, the Applicant argues it should reflect the mid-range of the SSAGs figures and that it should continue until she is 65.
[129] I am mindful that fixing quantum includes consideration of the duration for any award that is made.
[130] Insofar as the nature and strength of the claim for entitlement to support are concerned, I consider the Applicant’s advancement in her chosen career despite the limitations she faced because of the role she played in the marriage. The Applicant is close to completing her university degree now. Even without it, her income has continued to rise. She now earns $103, 000 annually and has a supervisory position.
[131] Regardless, the roles assumed by the parties during the course of the marriage resulted in significant benefits and advantages to the Respondent. Further, he continues to reap the financial benefits of the roles the parties assumed during the marriage. The disparity in the incomes of the parties is a marker of the advantages the Respondent now uniquely enjoys.
[132] I also consider that the children are in secondary school and that the Applicant was relatively young at the time of separation. The duration of the parties’ marriage and cohabitation (13.5 years) may be characterized as of medium length: see for instance N.H. v. J.H., 2017 ONSC 6607 at para. 86.
[133] Given the length of the marriage, and the advantages and disadvantages during the marriage and post-separation that have accrued to the parties given the roles they assumed during the marriage, I find that the Applicant’s entitlement to spousal support may be characterized as moderate to strong.
[134] In considering the monthly amount of support, I consider the factors discussed above, as well as the condition, means, needs and other circumstances of each spouse, the result of the equalization calculation and the distribution of property between the spouses (including the award for occupation rent), and the roles of the parties in the marriage. I consider the ages of the children (the youngest will finish high school 10 years from the date of separation), the parenting arrangement that sees two of the three spending equal amounts of time with each parent, and the support payable to the Applicant for their benefit. I consider the economic disadvantages to the Applicant resulting from the marriage breakdown and the Respondent’s ability to pay both child support and spousal support. I conclude that an amount consistent with the mid-range of the SSAGs is appropriate given the myriad factors at play here.
[135] I find that the SSAGs achieve a fair result in this case and that there are no variables (as set out in the SSAGs) that persuade me to deviate from them. In particular, I do not find that the equalization payment and award for occupation rent have gone sufficiently far to meet the objectives of spousal support in this case such that an amount outside of the SSAGs recommendations is more appropriate. I consider that an award at the mid-range will provide the Applicant with roughly 46-47% of the family’s net disposable income for the years since separation and going forward. I find this is fair and just in these circumstances.
[136] The SSAGs provide that duration should not be specified with the initial order and that time limits will only apply after a review or variation hearing. Accordingly, I will not fix a time limit for spousal support at this time. As I have explained, this does not mean that this award is payable forever, or even until the Applicant is 65. The order may be varied at a future date.
[137] I have considered whether a review of the order is appropriate. Given the directions in Fisher, I conclude that it is not. In arriving at this conclusion, I have considered in particular that there is no final parenting order and the parenting regime, which has been in place for years now, could change. If the parenting structure changes sufficiently in the future such that child support payments need to be adjusted, it will be open to the Respondent to argue that this is a material change in circumstances that requires re-consideration of the spousal support order. Given the Respondent’s conduct to date in this litigation, I find it is appropriate that he bear the burden of establishing the merits of a variation application. This will require him to make the disclosure provided for by the Rules on such applications.
Conclusion on the issue of spousal support
[138] Accordingly, the spousal support payable by the Respondent to the Applicant is as follows. All figures are based on my income findings in relation to the issue of child support.
[139] For the year 2014, commencing on June 1st, 2014 (based on the date the Application was issued), when the Respondent’s income was $348, 200 and the Applicant’s was $89, 247, spousal support is fixed at $10, 445 per month. As no spousal support was paid, this results in arrears owed by the Respondent to the Applicant of $73, 115 for 2014.
[140] For the year 2015, when the Respondent’s income was $213, 800 and the Applicant’s was $90, 749, spousal support is fixed at $5, 238 per month. As no spousal support was paid, this results in arrears owed by the Respondent to the Applicant of $62, 856 for 2015.
[141] For the year 2016, when the Respondent’s income was $271, 600 and the Applicant’s was $91, 389, spousal support is fixed at $7, 523 per month. As no spousal support was paid, this results in arrears owed by the Respondent to the Applicant of $90, 276.
[142] For the year 2017, when the Respondent’s income was $234, 000 and the Applicant’s was $101, 493, spousal support is fixed at $5, 882 per month. As no spousal support was paid, this results in arrears owed by the Respondent to the Applicant of $70, 584.
[143] For the year 2018, when the Respondent’s income was imputed to be $294, 420 and the Applicant’s income was $94, 078, spousal support is fixed at $8, 376 per month. As no spousal support was paid, this results in arrears owed by the Respondent to the Applicant of $100, 512.
[144] For the year 2019, when the Respondent’s income was imputed to be $294, 420 and the Applicant’s approximate annual income is $103, 000, spousal support is fixed at $8, 890 per month. As no spousal support was paid, this results in arrears owed by the Respondent to the Applicant of $106, 680.
[145] Ongoing spousal support shall be fixed at $8, 890 per month.
[146] For the year 2020, spousal support arrears for the period of January 1 through May 31, 2020, are fixed at $44, 450.
[147] In summary, the total for the arrears owing for spousal support is $548, 473.
Issue #4: Exclusive Possession of the Matrimonial Home
[148] The Respondent has been living in the matrimonial home since the date of separation. The Applicant seeks exclusive possession of the home. She seeks an order requiring the Respondent to vacate the premises, including the commercial structures on the property, no later than thirty days after the order is made.
[149] On September 25, 2019, I ordered the Respondent to vacate the matrimonial home no later than November 30th, 2019 and awarded exclusive possession of the matrimonial home to the Applicant starting on December 1, 2019. These are the reasons for that order.
The relevant facts
[150] I accept the Applicant’s evidence in respect of the facts that pertain to this issue.
[151] The Respondent’s evidence is that she fled the home after abusive conduct by the Respondent, including an alleged sexual assault. She fled to her mother’s residence and has lived there ever since.
[152] After the Applicant fled the matrimonial home, the Respondent was charged with several criminal offences, including criminal harassment, uttering threats, sexual assault and failure to comply with a probation order. He entered into a recognizance. A year and a half later, on September 23, 2015, he pleaded guilty to the offence of criminal harassment and was sentenced to 6 months imprisonment in the community and a further period of probation.
[153] The Applicant is the sole owner of the home.
[154] During his possession of the home, the Respondent has not permitted the Applicant to attend. She has required court orders to do so.
[155] Recently, following one of those orders, the Respondent was able to attend the home. By this point in the proceedings, she had served the Respondent with a Notice to Quit in respect of his business. Both during the marriage and after, the Respondent has operated his business from the property surrounding the matrimonial home. This property is also owned by the Applicant.
[156] In her affidavit of June 21st, the Applicant stated that she believed the Respondent was vacating the former matrimonial home since she observed moving vans at the house being loaded with boxes.
[157] When she attended on June 26th, 2019, the Applicant found the home to be largely empty. She took photos which confirm those observations. The only significant items which remained were the children’s bedroom sets, a mattress in the master bedroom, the kitchen table and chairs as well as the built-in appliances and refrigerator.
[158] While I have no evidence from the Respondent to consider, at the close of the trial proceedings, the Respondent was asked to confirm whether he continues to reside in the matrimonial home. He indicated that he did, as did the children while in his care. Given the observations of the Applicant on June 26th that bedroom and kitchen furnishings remain in the home, I accept that the Respondent does continue to reside there with the children.
[159] At the conclusion of the trial proceedings on September 19th, 2019, the Respondent told the court that he would need at least 90 days notice to vacate the property. The Respondent was advised of the strong possibility that the court would rule on this issue in favour of the Applicant and that he should immediately start canvassing alternative accommodations and preparing himself to vacate the premises.
The legal principles
[160] Section 19 of the FLA states that both spouses have an equal right to possession of the matrimonial home.
[161] Section 24(1) FLA provides that:
24 (1) Regardless of the ownership of a matrimonial home and its contents, and despite section 19 (spouse’s right of possession), the court may on application, by order,
(a) provide for the delivering up, safekeeping and preservation of the matrimonial home and its contents;
(b) direct that one spouse be given exclusive possession of the matrimonial home or part of it for the period that the court directs and release other property that is a matrimonial home from the application of this Part;
(c) direct a spouse to whom exclusive possession of the matrimonial home is given to make periodic payments to the other spouse;
(d) direct that the contents of the matrimonial home, or any part of them,
(i) remain in the home for the use of the spouse given possession, or
(ii) be removed from the home for the use of a spouse or child;
(e) order a spouse to pay for all or part of the repair and maintenance of the matrimonial home and of other liabilities arising in respect of it, or to make periodic payments to the other spouse for those purposes;
(f) authorize the disposition or encumbrance of a spouse’s interest in the matrimonial home, subject to the other spouse’s right of exclusive possession as ordered; and
(g) where a false statement is made under subsection 21(3), direct,
(i) the person who made the false statement, or
(ii) a person who knew at the time he or she acquired an interest in the property that the statement was false and afterwards conveyed the interest,
to substitute other real property for the matrimonial home, or direct the person to set aside money or security to stand in place of it, subject to any conditions that the court considers appropriate. R.S.O. 1990, c. F.3, s. 24 (1).
[162] The relevant factors for the court to consider in determining whether to make an order for exclusive possession are found at section 24(3) of the FLA:
24 (3) In determining whether to make an order for exclusive possession, the court shall consider,
(a) the best interests of the children affected;
(b) any existing orders under Part I (Family Property) and any existing support orders or other enforceable support obligations;
(c) the financial position of both spouses;
(d) any written agreement between the parties;
(e) the availability of other suitable and affordable accommodation; and
(f) any violence committed by a spouse against the other spouse or the children. R.S.O. 1990, c. F.3, s. 24 (3); 2014, c. 7, Sched. 9, s. 4.
Analysis
[163] Chief among the court’s concerns in this case is the best interests of the children. I have no evidence as to their views and preferences as they relate to this issue and they cannot be reasonably ascertained on this record. However, I consider that, currently, the children spend their parenting time while with their father in the matrimonial home. Should the order requested by the Applicant be made, two of the children would continue to spend half of their time there while in the care of their mother. However, the order would impact the children insofar as their father presently has no alternative accommodations. It is in their best interests that any order made provide him with sufficient time to make appropriate alternative arrangements.
[164] Insofar as the financial position of both spouses is concerned, I find that the resources available to the Respondent are significant, whereas those of the Applicant are more limited. While the Applicant has a healthy employment income, she has not had the benefit of either spousal or child support payments since the date of separation. Financially, I find that the Respondent is in a much better position to find alternative accommodations. While the orders made following this trial will improve the Applicant’s financial position, given the Respondent’s conduct to date, it is not clear when the Applicant’s financial position will materially improve.
[165] With respect to the availability of other suitable and affordable accommodation, there is no reason on this record to conclude that the father will not be able to obtain suitable living accommodations for himself and the children if given a sufficient period of time to do so. I also consider that the Applicant is presently living with her mother and that orders made following this trial would, in theory, provide her with additional funds to find accommodations better suited to her and the children on a go-forward basis.
[166] Finally, I consider that the Respondent acted violently toward the Applicant. This violence on the part of the Respondent, confirmed by his guilty plea to the offence of criminal harassment, is what ultimately led to the Applicant leaving the matrimonial home over five years ago. The Respondent has had exclusive possession of the matrimonial home for the past five years not because of any agreement between the spouses, or any reasoned consideration of what was best for the children, but because the Respondent fled his abusive conduct. I am satisfied that this conduct was such that the continuation of joint cohabitation in the dwelling was not an option (see Menchella v. Menchalla, 2012 ONSC 1861 at para. 16, and Gore v. Gore, 2016 ONSC 6831 at para. 18).
[167] Given these considerations, the Applicant has satisfied me that an order giving her exclusive possession of the matrimonial home is appropriate.
Issue #5: Is the Applicant entitled to occupation rent?
[168] The Applicant claims occupation rent because she was forced by the Respondent’s criminal conduct to vacate the matrimonial home and the Respondent has had exclusive use of the property ever since. She argues that this is one of the exceptional cases that warrants an award for occupation rent and that fairness requires this award to do justice between the parties.
[169] The Applicant submits that the appropriate award is monthly occupation rent in the amount of $2, 500 per month since separation (e.g. from March 1, 2014).
[170] Alternatively, the Applicant submits that she should be compensated for her payment of the property taxes and fire insurance for the property while the Respondent was in the home.
The legal principles
[171] Occupation rent may be awarded based on the authority of s. 24(1) of the Family Law Act or as a common law remedy where the order is reasonable and equitable: Griffiths v. Zambosco, 2001 CanLII 24097 (ON CA), [2001] O.J. No. 2096 (C.A.) at para. 49.
[172] The tenor of the case law suggests that orders of this kind will be made cautiously and in exceptional circumstances: see for instance Ward v. Ward, 2011 ONSC 570, 5 R.F.L. (7th) 215 and Casey v. Casey, 2013 SKCA 58, 417 Sask. R. 34 at para. 48. The case of Higgins v. Higgins (2001), 2001 CanLII 28223 (ON SC), 19 R.F.L. 300 (Ont. S.C.) and others suggest that in determining whether to make such an order, a court will consider a number of factors, including:
The conduct of the non-occupying spouse, including the failure to pay support;
The conduct of the occupying spouse, including the failure to pay support;
Delay in making the claim (or as phrased in Casey, if and when a demand for occupational rent was made);
The extent to which the non-occupying spouse has been prevented from having access to his or her equity in the home;
Whether the non-occupying spouse moved for the sale of the home and if not, why not;
Whether the occupying spouse paid the mortgage and other carrying charges of the home;
Whether children resided with the occupying spouse and, if so, whether the non-occupying spouse paid, or was able to pay, child support;
Whether the occupying spouse has increased the selling value of the property;
Any other competing claims in the litigation that may offset an award for occupational rent (see Griffiths at para. 49).
Analysis
[173] In considering these factors, I make the following findings:
• The Applicant left the home on February 23, 2014, following abusive conduct by the Respondent. Unlike in some cases (see for instance N.H at para. 97), the Applicant’s concession of occupancy to the Respondent was not the product of a reasoned assessment by the parties as to what was in the best interests of the children, nor was it based on other compelling reasons.
• The occupancy by the Respondent commenced on the date of separation and continues to date. He has had mortgage free accommodation throughout.
• While the children did reside with the Respondent in the matrimonial home, this was in accordance with the circumstances of the separation and the eventual agreement for shared parenting of two of their three children. Given the shared parenting arrangement, this is not a case where the Respondent’s continued occupancy of the matrimonial home was necessary for the stability of the children – the children would have had the benefit of being in the home for the same amount of time, and the stability this provided, regardless of which parent resided there with them. Nor did the Respondent’s continued occupancy of the home allow the parties to better support the children given limited finances, such that the financial benefit to the Respondent of remaining in the home is necessarily bound up with the children’s best interests. In other words, an award for occupation rent is not unfair having regard to what was best for the children.
• No motion for sale was brought during the litigation. The Applicant’s decision to not move for a sale during the litigation makes good sense. The Respondent failed to fulfil an agreement to complete work on the home that was necessary to obtain an occupancy permit and this has frustrated the sale of the property I agree with the Applicant’s submission that the Respondent’s uncooperative and disruptive conduct during this litigation leads to the conclusion that he was unlikely to cooperate in the sale process, or to have worked toward maximizing the value of the asset.
• The Respondent has not paid any child or spousal support, or made any payments towards an equalization payment, although those orders will be made now.
• The Applicant did not have access to her equity in the home. She has been living with her mother at a significantly reduced standard of living since the date of separation. Access to her equity in the home would have given her significantly better options in obtaining accommodation suitable for her and the children, who are in her care half of the time. The conduct of the Respondent in this matter has frustrated these proceedings and limited the options available to the Applicant.
• The Applicant has paid for a variety of expenses related to the matrimonial home throughout the Respondent’s post-separation occupancy of the home, including payments on the line of credit for the property, the fire insurance (at a cost of $31, 887.00), and property taxes for 2018 and 2019.
• Given his lack of disclosure, the court cannot determine what adjustments may be appropriate to offset any amount of occupation rent awarded. The evidence indicates that some of the property taxes have remained unpaid by the Respondent and the Applicant will have to pay $24, 672.81 plus the interest and penalties that accumulate to the date of payment. There is no basis to find that any amount of occupation awarded should be reduced due to financial contributions made by the Respondent towards the upkeep or maintenance of the property. In fact, the affidavit of the Applicant dated March 27, 2020 (addressed elsewhere in these reasons) establishes that the property was damaged and/or not maintained while it was within the Respondent’s control.
• There is no evidence the Respondent has done anything to increase the value of the property.
• The claim for occupation rent was first made in the Applicant’s Notice of Application which was issued on May 26, 2014. In the circumstances of this case, I find that the claim was made within a reasonable period of time after separation and any delay in making the claim cannot be said to have prejudiced the Respondent in any significant way. I find that occupation rent from the time of separation is fairly claimed.
[174] Given these considerations, I find that it is both reasonable and equitable to award the Applicant occupation rent since the date of separation.
[175] As for the quantum of the award, I accept the Applicant’s evidence as to the monthly rent that the matrimonial home might garner That evidence is supported by a letter from a realtor. While I am mindful that this is neither sworn nor expert evidence, I consider that at least some courts have found that while expert evidence is preferable, it is not required to establish an appropriate rental rate (see for instance Casey at para. 55).
[176] Importantly, the Applicant’s position that the property properly commands $2,500 in monthly rent is supported by other evidence in this case. I find that it is a reasonable inference on the evidence before me that the rental income of $25, 000 per year (e.g. $2,083.00 per month) claimed by the Respondent in his post-separation tax returns was paid to him by his corporation. This is also the conclusion of the business valuator who provided expert evidence in these proceedings (see the report of Dave Clarke at paragraphs 22-23). The evidence clearly establishes that the Respondent’s company operated from structures on the parcel of land where the matrimonial home was located, and there is no evidence that he was in possession of any other property capable of producing rental income. Further, in his financial statement of 2018, the Respondent states that he is residing at the matrimonial home with his three children, his father, and his sister. I find it is more than reasonable to attribute a further $417 in rental income from the 6-bedroom, 6-bath matrimonial home which was capable of comfortably housing three children and three adults. The total benefit to the Respondent was at least $2, 500.
[177] Accordingly, the occupation rent award will be assessed based on a monthly rent of $2, 500. Given that the Applicant owns the property, this is not a case where the occupation rent will be reduced by 50% to reflect the Respondent’s joint ownership interest: see Griffiths at para. 54.
[178] In determining the total sum the Respondent owes the Applicant for occupation rent, I fix the start date to correspond with the issuance of the Application. This reflects the evidence before me as to when the demand for occupation rent was first made. Consequently, given rent payable at $2, 500 per the 66-month period between June 1st, 2014 and November 30th, 2019, the total occupation rent owed by the Respondent to the Applicant is $165, 000.
Issue #6: Does the Respondent owe the Applicant an equalization payment?
[179] The Applicant seeks an equalization payment of $221, 884.37 from the Respondent. Her Affidavit of June 21, 2019, explains the evidentiary basis for the figures she includes in her Net Family Property statement [“NFP”].
[180] The Respondent did not file a NFP. He did file two financial statements. The most recent is dated May 10, 2018. Some of the values in the Applicant’s NFP are reflected in those documents.
[181] For the most part, I accept the values provided in the Applicant’s NFP. I address some of those values and my reasons for accepting or rejecting them below.
The value of the matrimonial home
[182] I have reviewed the appraisal reports prepared by Stephen Maloney, who was qualified as an expert witness and who provided further viva voce evidence explaining his methodology and conclusions. I accept his conclusion that the estimated market value of the matrimonial home on June 20, 2014 was $650, 000.00.
[183] Pursuant to a court order made on consent on January 17, 2018, the Respondent was to provide a copy of his appraisal of the former matrimonial home. No appraisal report was provided by him.
[184] Consequently, the only evidence available to the court in respect of the value of the home comes from Mr. Maloney’s assessment in 2014. I accept this value as the value of the home on the valuation date.
The value of household goods and furniture
[185] The Applicant indicates in her NFP that she has $10, 955.00 worth of household contents which remain in the matrimonial home, while the Respondent has property which she values at $113, 800.00. The Respondent included no value for household contents in his most recent Financial Statement.
[186] The Respondent has retained possession of the matrimonial home and its contents since the time of separation. The Applicant, in contrast, has only select items in her possession.
[187] I do not have the benefit of any kind of appraisal of the items or any evidence as to their worth apart from what is suggested by the Applicant in her affidavit (as per Exhibit 38).
[188] Given the circumstances of the parties’ separation and the Respondent’s conduct since, it is hardly surprising that the Applicant is unable to provide further or better evidence on this issue. I am also not assisted in any great measure by case law in how to assess this value, particularly when, as here, the evidence is not contested. The values the Applicant places on various items in Exhibit 38 are not unreasonable given the quality of the furniture she describes in her Affidavit. I have no principled basis upon which to re-assess the value the Applicant places upon this property.
[189] While it is not strictly relevant to the valuation of the property, except insofar as its fundamental fairness is concerned, I note that the Respondent has remained in control of this property throughout the proceedings, including after having received notice of the value placed upon the household contents by the Applicant for the purposes of this litigation. There is no evidence before me that he has offered to provide her with any of the household contents which remain in the matrimonial home. To the contrary, on the balance of probabilities, I find that the Respondent has moved significant portions of those contents out of the matrimonial home and has not provided any accounting of their whereabouts.
[190] In the result, and considering that the burden of proof is on the balance of probabilities, I accept the value of the household goods and furniture that the Applicant ascribes to herself and the Respondent on the valuation date.
Cash attributed to the Respondent
[191] The Applicant’s NFP indicates that at the valuation date, the Respondent had $50, 000.00 in cash. She bases this position on the Respondent’s statements during court proceedings which resulted in Minutes of Settlement dated August 11th, 2014 requiring the Respondent to provide a police report relating to his claim about this amount having been taken from the matrimonial home.
[192] The trial record contains the related court order which requires the Respondent to provide to the Applicant “a police report in respect of the complaint made by the Respondent relating to the sum of $50, 000.00 taken from the residence at 17502 Cameron Road [the matrimonial home]”.
[193] This is an unusual record for the determination of property value to be ascribed to one of the parties. This is another instance where the Respondent’s compliance with a disclosure order (to which he consented) might have clarified the issues. However, it appears that the Respondent never produced the police report.
[194] In any case, the evidence does not establish when the Respondent had $50, 000 relative to the date of separation. The Applicant’s affidavit references a date post-separation. It is not clear whether she is referring to when the police report was made or if it relates to when the Respondent had cash in this amount. I am not satisfied on a balance of probabilities that he had this cash prior to or on separation.
[195] This conclusion is reinforced by the only other reference to cash in this amount in this trial. Bank records from the Respondent’s business show he withdrew $50, 000 from one of his accounts a few days following the separation. If this is the same $50, 000 that was the subject of the court order, it appears that its value was included in the value of the business bank account (#00394) on the date of valuation (see Exhibit 44).
[196] Consequently, the $50, 000 cash attributed to the Respondent is disallowed.
Exclusions
[197] The Applicant seeks to exclude the value of land gifted to her by her mother as well as other gifted items from her NFP.
The gifted land
[198] The Applicant seeks to exclude from her property valuation the value ($27, 000) of a vacant and unimproved parcel of land which is associated with the matrimonial home.
[199] I accept the evidence before me from the Applicant and her mother, Janie Burke, that Ms. Burke gifted to the Applicant the land at 17502 Cameron Road with the intention that it remain the Applicant’s asset. I further accept that this was property that Ms. Burke had inherited from her father and that she gifted an adjoining parcel from that inheritance to the Applicant’s brother.
[200] I also accept the Applicant’s evidence that she permitted the matrimonial home to be constructed on one acre of the parcel of land gifted to her by her mother, and that this parcel also includes an outbuilding which was used by the Respondent’s business. I accept that the balance of the parcel of land remains vacant and unimproved.
[201] Further, I accept the valuation of that portion of the parcel of land as given by the appraiser, Stephen Maloney. The site sketch in his report confirms that this value excludes the one-acre portion of the parcel upon which the matrimonial home and the associated outbuilding is built.
[202] Subsection 4(2)(1) of the Family Law Act provides that property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of marriage does not form part of the spouse’s net family property.
[203] Under s. 4(2)(5) of the FLA, otherwise excluded property that is invested in the matrimonial home loses its status as an excluded asset. However, where the matrimonial home is found not to extend to the entire property, a gift or inheritance that can be clearly traced into a part of the property that is not the matrimonial home would allow that portion of the property to be excluded from the net family property. The onus for proving the exclusion falls on the person claiming it: Martin v. Sansome, 2014 ONCA 14, 118 O.R. (3d) 522 at paras. 69-71.
[204] Subsection 18(1) defines “matrimonial home” as follows: every property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence.
[205] Subsection 18(3) further provides that if property that includes a matrimonial home is normally used for a purpose other than residential, the matrimonial home is only the part of the property that may reasonably be regarded as necessary to the use and enjoyment of the residence.
[206] I find that in this case, the entire parcel of land gifted to the Applicant does not constitute a matrimonial home. I am satisfied that the land surrounding the matrimonial home is vacant and unimproved. I find that it has not been used for residential purposes. It is not necessary to the use and enjoyment of the residence: see Martin v. Sansome at paras. 73-76. Further, I find that the Applicant’s mother intended the value in the land to pass to and remain with the Applicant.
[207] Consequently, the value of $27, 000 will be excluded from the Applicant’s property pursuant to s. 4(2) of the FLA.
Gifts of household contents
[208] The Applicant claims gifts of household contents of $5, 800.00. She itemizes them and approximates their value in Exhibit 38. This evidence satisfies me on a balance of probabilities that this is a fair value for items received by the Applicant as gifts from family members over the course of the marriage. The value of $5, 800 will therefore be excluded pursuant to s. 4(2) of the Family Law Act.
The valuation of Business Interests
[209] I accept the values included by the Applicant in respect of the Respondent’s business. They are supported by her Affidavit and accompanying exhibits.
Debts and Other Liabilities (Costs of Disposition)
[210] I am satisfied that in determining the value of the parties’ respective debts and liabilities, it is not appropriate to include a deduction to the Respondent for costs of disposition.
[211] There is no evidence or any basis for inferring that the Respondent will dispose of his interest in the business in order to pay for an equalization payment. As stated in McPherson v. McPherson (1993), 1988 CanLII 4732 (ON CA), 48 D.L.R. (4th) 577 (Ont. C.A.) at p. 583: “[I]t is not clear when, if ever, a sale or transfer of property will be made and thus the tax consequences of such an occurrence are so speculative that they can safely be ignored”. See also Bortnikov v. Rakitova, 2016 ONCA 427, 83 R.F.L. (7th) 289 at paras. 11-13.
Conclusion on equalization
[212] The Applicant has claimed that the Respondent owes her an equalization payment of $221, 884.73. Since I have disallowed the $50, 000 in cash attributed to the Respondent, I find that the Respondent owes the Applicant an equalization payment of $196, 884.37.
[213] I confirm that I have considered the values indicated in the Respondent’s Financial Statement of May 10, 2018 in arriving at this conclusion. Where those values correspond with the Applicant’s evidence and/or other documentary evidence, I accept them. For instance, that the Respondent was owed $164, 441.00 by his corporation is indicated in his Financial Statement, which value is reflected in the Balance Sheet for 2014 attached as Exhibit 15 of the Applicant’s Affidavit of June 21st, 2019. Otherwise, I prefer the Applicant’s evidence as to the property each had on date of marriage and on the valuation date.
[214] For the most part, the values indicated in the Respondent’s financial statement are not agreed to by the Applicant nor supported by any further documentary evidence. Given the Respondent’s significant credibility problems in this matter, without supporting evidence, I do not accept that on the date of marriage he had $225, 000.00 in business equipment and tools that had been inherited or gifted to him. Further, the value he puts on the property taxes owed for 2380 South Branch is not supported by documentary evidence, whereas the Applicant’s assessment of that value is. I have already addressed that disposition of his corporate shares is not properly considered a liability for the Respondent in the circumstances of this case.
Issue #7: Return of the Applicant’s property
[215] The household contents that have been assessed as the Applicant’s in her NFP (many of which were identified as gifts from family) were left in the matrimonial home and have been in the Respondent’s possession. The Applicant seeks an order for the return of that property. The order shall issue as requested. It should reflect the property that was left in the home upon the Applicant taking possession, as described in her affidavit of March 27, 2020.
Issue #8: Post-separation expenses
[216] The Applicant seeks to recover various sums of money paid by her (or which will have to be paid by her) post-separation. The sums relating to the property insurance and property taxes for the matrimonial home have been addressed by my decision to order occupation rent since the Applicant sought to recover those sums only if that claim was denied.
[217] The Applicant seeks an order requiring the Respondent compensate her for the following additional expenses:
• $3, 927.30 for NAL Insurance Inc. premiums paid by the Applicant (this insurance policy was for disability insurance for the Respondent);
• $9, 000 for the Respondent’s share of repairs required to the former matrimonial home;
• $10, 000 for the Respondent’s share of the work required in the former matrimonial home in support of obtaining an occupancy certificate and closure of all outstanding permits relating to the property;
• $28, 684.79 as reimbursement for legal fees relating to legal proceedings against the former matrimonial home.
[218] As I indicated in the summary of the background for this case, following the conclusion of the uncontested trial, but prior to the release of the court’s judgment on all issues in that trial other than exclusive possession of the matrimonial home, I was advised that the Applicant wished to file additional evidence. The evidence relates to damage done to the matrimonial home before she took possession of it on December 1, 2019.
[219] The Applicant now seeks to be reimbursed for an additional $25, 629.87. Her affidavit of March 27, 2020 sets out the particulars in support of that sum. It reflects, amongst other things, the costs associate with: damage done to the home after the Respondent permitted the parties’ children to host a party there in the hours prior to the Applicant obtaining exclusive possession; damage to mechanical systems in the home (such as the furnace); the repair or replacement of items in the home, including fixtures in the home removed by the Respondent (such as a clawfoot tub); and electricity and phone bills associated for the period the Respondent had exclusive possession of the matrimonial home.
[220] The Applicant submits that all of these post-separation expenses should result in an unequal division of the net-family property. Her factum sets out the basis for those submissions and should be filed in the continuing record so that the full substance of her argument, and the facts in support of it, will be available in the event of any review of this judgment. In summary, the Applicant pleads that her amended application included a claim for the unequal division of property, and her affidavit for the uncontested trial particularized that she requested that the court make a final order in respect of equalization of net family property only after she was permitted to enter the property and make a final inspection, so that she might make further submissions as to any failure by the Respondent to preserve the property during his possession. Since the evidence in support of this claim was provided to the court prior to the release of its judgment, she argues that it is unnecessary to rule that the trial be re-opened to permit consideration of the evidence: see N.H. v. J.H., 2017 ONSC 4414 at paras. 20-21. Alternatively, she submits that the interests of justice overwhelmingly favour reopening the trial to admit the proposed new evidence, which was not discoverable by her until she obtained exclusive possession of the matrimonial home: Hughes v. Roy, 2016 ONCJ 65 at para. 9.
Analysis
[221] As regards the claims made in her Notice of Motion dated March 27, 2020, I accept the evidence set out in the Applicant’s accompanying affidavit.
[222] I am also persuaded by the Applicant’s submissions on this issue. I find that since judgment had not yet been rendered, and the Respondent had received fair notice of this potential issue by way of the claims for an unequal division of net family property in the Amended Application (insofar as it was possible to particularize it at that time), there is nothing unfair or prejudicial to the Respondent in granting the relief requested by the Applicant.
[223] Moreover, were it necessary to rule that a re-opening of the trial was necessary, I would. I agree entirely with the summary of the reasons argued by the Applicant at paragraph 40 of her Factum on this issue. The factors from Hugues overwhelmingly favour this result. In particular, I agree that admitting the evidence fosters the fairness of the trial process, whereas to exclude it would affect its integrity by permitting the Respondent, in effect, to profit from his exclusion of the Applicant from the matrimonial home.
[224] Insofar as the remaining expenses claimed are concerned, I am satisfied that there is evidence to support the claims for a total of $19, 000 for work required in the matrimonial home prior to the uncontested trial. I am satisfied that these expenses, as well as the $25, 629.87 claimed on March 27, 2020, may properly be considered in a claim for unequal division of net family property pursuant to s. 5(6) of the Family Law Act. Subsections 5(6)(h) permits the court to consider “any other circumstances relating to the acquisition, disposition, preservation, maintenance or improvement of property” apart from the additional factors listed in the section. I am satisfied that the Respondent is uniquely responsible for costs associated with damage and lack of preservation to the matrimonial home. I am also satisfied that before this damage was discovered, the Respondent had not performed the work required to address other issues in the home (particularly those necessary to obtain an occupancy permit). In the circumstances of this case, I find that this amounts to “other circumstances” within the meaning of s. 5(6) of the Family Law Act. Consequently, I am satisfied that it is appropriate to award an unequal division of net family property.
[225] The sum of $44, 629.87 shall therefore be further credited to the Applicant in the total award for the equalization of net family property. Based on the determination of equalization I have accepted above, the Respondent owed the Applicant a sum of $196, 884.37. As such, as set out in the disposition section below, the total amount owing for equalization from the Respondent to the Applicant is $241, 514.24.
[226] As regards the remaining expenses claimed by the Applicant, I am not persuaded that they are captured by the factors set out in s. 5(6) of the Family Law Act. Accordingly, those claims will be denied. I am particularly reluctant to award any costs associated with a legal proceeding, even one relating in some way to the matrimonial home, since the substance of that litigation is not before me and the factors for determining costs from another proceeding may not be properly considered in this litigation.
Issue #9: Prejudgment interest
[227] The Applicant seeks prejudgment interest on the awards relating to child support, spousal support, and equalization. Where the prejudgment interest relates to support orders, she submits that these sums should be enforceable as support pursuant to section 1(1)(g) of the Family Responsibility and Support Enforcement Act.
[228] The Applicant submits that the court should follow the approach taken by the court in Vanasse v. Seguin, 2009 CarswellOnt 606 (S.C.). In that case, prejudgment interest was ordered payable on retroactive child and spousal support as well as on a lump sum monetary award for unjust enrichment. With respect to the spousal and child support awards, since those sums accumulated on a monthly basis, the total amounts ultimately due had not accumulated on the date the action was commenced. In respect of the total sums ordered at trial, the court determined that it was fair to use its discretion under s. 130 of the Courts of Justice Act. Ultimately, the court ordered that interest be paid based on an interest rate that was half of the interest rate outlined in s. 127 of the Courts of Justice Act: Vanasse v. Seguin at paras. 39-41.
The legal principles
[229] Subject to certain exclusions, section 128(1) of the Courts of Justice Act provides that:
A person who is entitled to an order for the payment of money is entitled to claim and have included in the order an award of interest thereon at the prejudgment interest rate, calculated from the date the cause of action arose to the date of the order.
[230] However, by virtue of section 130 of the CJA, the court retains a discretion to disallow or limit prejudgment interest where it is just to do so. This discretion is to be exercised in consideration of the factors listed in s. 130(2). These factors include the changes in market interest rates (a), the circumstances of the case (b), any advance payment that was made (c), the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceedings (f), and any other relevant consideration (g).
[231] Section 127 defines “prejudgment interest rate” as follows: “the bank rate at the end of the first day of the last month of the quarter preceding the quarter in which the proceeding was commenced, rounded to the nearest tenth of a percentage point”. A table published by the Attorney General sets out those rates for various time periods.
[232] The Court of Appeal for Ontario confirmed in Burgess v. Burgess, 1995 CanLII 8950 (ON CA), [1995] O.J. No. 2242 at para. 18 that awarding prejudgment interest is within the trial judge’s discretion. It recognized that “as a general rule, the payor spouse is required to pay prejudgment interest on an equalization payment owing to the payee spouse”: para. 23. This encourages timely settlement of equalization claims: Ibid. It also alleviates the financial pressure on the payee spouse when the equalization payment is withheld: Vanasse v. Seguin at para. 12.
[233] The court should exercise its discretion under s. 130 of the CJA where, “for various reasons, the payor spouse cannot realize on the asset giving rise to the equalization payment until after the trial, does not have the use of it prior to trial, the asset generates no income, and the payor spouse has not delayed the case being brought to trial”: Burgess at para 26. The court noted that many of those instances will involve the matrimonial home or a pension.
Analysis
[234] This case has taken more than five years to be tried. The delay is overwhelmingly attributable to the Respondent’s conduct. During that time, he has had exclusive use of funds to which the Applicant was entitled.
[235] In considering whether an award for prejudgment interest is just, it is also relevant that the Respondent has completely defaulted on his support obligations. He has paid no support since this litigation commenced. He has also had the exclusive use of the matrimonial home and its contents. In other words, the Applicant’s claim for prejudgment interest is not mitigated by her exclusive use of an asset that might have been sold to resolve the equalization issue between the parties.
[236] I am not satisfied that this case meets the criteria for an exception to an award of prejudgment interest on the equalization payment. The Respondent owned property that might have been used or leveraged to satisfy at least part of the equalization payment, but he made no efforts to do so. This is not a case where the practical implications of satisfying the equalization award on a timely basis make it unfair to award prejudgment interest to the Applicant.
[237] As regards unpaid spousal and child support, there is no question that the order requiring their payment involves a payment of money and that this brings these sums within the scope of s. 128(1) of the CJA: Vanasse v. Seguin at paras. 27-32. There is also no reason in respect of these orders to exercise my discretion under s. 130 in favour of the Respondent, except as it relates to the interest rate that is appropriate for these amounts.
[238] I find that the Applicant is entitled to prejudgment interest on the equalization payment owed to her by the Respondent, as well as on the child and spousal support owing to date.
The appropriate interest rate
[239] The originating application in this matter was filed on June 18, 2014. According to the relevant tables, the prejudgment interest rate for that time period is 3%.
[240] I consider that this rate remained unchanged throughout the time the matter was litigated until it dropped to 2% the second quarter of 2015. The rate remained at 2% up to the time of the trial. Having regard to the case law, I find that the rate from the time this matter commenced to the date of trial has been relatively consistent.
[241] In respect of the equalization payment, then, the prejudgment interest rate is 3%.
[242] In respect of the spousal and child support amounts owing to date, I adopt the approach taken in Vanasse v. Seguin and I exercise my discretion under s. 130 of the CJA to limit the interest rate. Accordingly, the interest rate for those sums shall be half of the table prejudgment interest rate of 3%, or 1.5%.
[243] Finally, since the litigation commenced June 18, 2014, and this decision includes arrears payable through May of 2020, for the purposes of applying the Vanasse formula, I assess the period of time for which prejudgment interest is owed as 6 years.
Conclusion
[244] In the result, the Respondent shall pay to the Applicant prejudgment interest as follows:
[245] On the equalization payment: SUM x 0.03 (interest rate) x 6 (*time [in years])=
• $241, 514.24 x 3% x 6 = $43, 472.57
[246] On the child support owing to date: SUM x 0.015 (interest rate) x 6 (*time)=
• $115, 727 x 1.5% x 6 = $10, 415.43
[247] On the spousal support owing to date: SUM x 0.015 (interest rate) x. 6 (*time)=
• $548, 473 x 1.5% x 6 = $49, 362.57
[248] Accordingly, the total prejudgment interest payable by the Respondent to the Applicant is $103, 250.57.
[249] I further order that the interest that is payable on the support orders shall be enforceable by the Family Responsibility Office: Family Responsibility and Support Arrears Enforcement Act, 1996, SO 1996, c 31, s. 1(1)(g).
Issue #10: Life insurance
The Legal Principles
[250] Both the Family Law Act (s. 15.2) and the Divorce Act (s. 15.1) provide mechanisms for securing payment of support orders in the event of the death of a payor. The Federal Child Support Guidelines (s. 12) also provide for the provision of security for child support.
[251] In Katz v. Katz, 2014 ONCA 606, 50 R.F.L. (7th) 1 at paras. 65-70 the court confirmed that s. 34(1)(k) of the Family Law Act is broad enough to permit a court to order a spouse to obtain an insurance policy to secure payment of a support order following the payor’s spouse’s death. Further, “the same power that exists under the Family Law Act to order a spouse to obtain insurance to secure payment of support payments that are binding on the payors’ estate also exists under the Divorce Act”: para. 73.
[252] The court confirmed, however, that where there is no existing policy in place, a court should proceed carefully in requiring a payor spouse to obtain insurance. It is desirable to have evidence of the payor’s insurability and of the amount and cost of the available insurance. Further, at para. 74, the court directed that:
Careful consideration should be given to the amount of insurance that is appropriate. It should not exceed the total amount of support likely to be payable over the duration of the support award. Moreover, the required insurance should generally be somewhat less than the total support anticipated where the court determines that the recipient will be able to invest the proceeds of an insurance payout. Further, the amount of insurance to be maintained should decline over time as the total amount of support payable over the duration of the award diminishes. The obligation to maintain insurance should end when the support obligation ceases – and provision should be made to allow the payor spouse to deal with the policy at that time. Finally, when proceeding under the Divorce Act, the court should first order that the support obligation is binding on the payor’s estate.
Evidence and Analysis
[253] The Applicant submits that there is no evidence before the court that the Respondent has a life insurance policy. There is also no evidence that suggests he is incapable of obtaining one, or that its cost would be prohibitive. The evidence of the Applicant is that she is unaware of any reason why the Respondent could not obtain a policy. She argues that given the Respondent’s conduct to date, it would be reasonable for the Court to infer that he is unlikely to plan his estate in such a way as to secure his support obligations. Accordingly, he should be ordered to take steps to obtain a life insurance policy to secure his obligation.
[254] As for the amount of the policy, DivorceMate calculations indicate that $1, 538, 722 is required to secure the child support and spousal support orders I have made.
[255] The record available for the analysis of this issue is limited, in part because this trial has proceeded on an uncontested basis. I am mindful that I have no evidence as to the costs of an insurance policy in the amount requested by the Applicant.
[256] I accept the Applicant’s assertion that she is not aware of any reason why the Respondent might not be able to obtain a life insurance policy. Further, I consider that the support ordered in this case is substantial. I agree with the Applicant’s submission that the Respondent is unlikely to organize his estate to satisfy this obligation.
[257] The Divorce Act permits the court to impose “terms, conditions or restrictions” in connection with support orders as it thinks fit and just. Notwithstanding the limited record here, I am satisfied that it is fit and just that the support orders in this case be secured by a term requiring the Respondent to obtain a life insurance policy. It is also just to bind the Respondent’s estate to secure his support obligations.
[258] The Applicant requests that the Respondent provide proof of the policy to the court, as well as to her, within 30 days. After the expiry of 30 days, the Applicant asks that she be permitted to “write to the presiding justice seeking further direction, and the presiding judge may make such order on motion of the Applicant as may be just in the circumstances”.
[259] I decline to make that order. In the event that the Respondent does not comply with this order, the Applicant may rely on the remedies available to her under the Family Law Rules. On the other hand, if the Respondent is genuinely unable to fulfill this obligation, he may serve and file a motion to change under rule 15 of the Family Law Rules, as was suggested by the Court of Appeal in Katz at para. 75.
[260] Accordingly, I make the following order:
• The Respondent’s support obligations pursuant to this judgment are binding upon the Respondent’s estate;
• The Respondent shall obtain a life insurance policy paying $1, 537, 722 upon death and designating the Applicant as beneficiary;
• The Respondent shall provide the Applicant a copy of the policy within sixty (60) days of the release of these reasons for judgment;
• The Respondent may decrease the amount of the policy on an annual basis in accordance with the amount by which his support obligation has been paid to that date. If he makes these changes to the policy, he must provide a copy of the amended policy to the Applicant within thirty (30) days of such a change;
• When the Respondent’s obligation to pay child support and spousal support ends, he will be free to deal with the policy as he deems fit, and the Applicant shall sign whatever documents are necessary in order to effect this intention;
• In the event the Respondent is genuinely unable to comply with this order, he may seek leave of the court to file a motion to vary the terms relating to his obligation to obtain life insurance prior to the expiration of 6 months from the date of the issuance of this order. Leave will not be granted unless the Respondent files evidence to show he has attempted to obtain insurance but does not qualify for medical reasons, or evidence to show that the cost of such insurance is prohibitive. An affidavit from the Respondent will not suffice for these purposes. Documentation from an insurer will be required.
Issue #11: Should there be a final preservation order?
[261] Prior to the commencement of this trial, the Applicant obtained an interim preservation order pursuant to s. 12 of the Family Law Act on the basis that any equalization payment she was awarded at trial might not be satisfied otherwise.
[262] The Applicant now seeks a final order in respect of the equalization payment and lump sum spousal support she is owed. She asks that the final order be made for a period of 6 months. By way of her draft order, she seeks the court’s leave to bring a motion, without notice, to extend that period, “or for any other matter relating to the non-depletion order”.
The legal principles
[263] Section 12 of the Family Law Act provides that
In an application under section 7 or 10, if the court considers it necessary for the protection of the other spouse’s interests under this Part, the court may make an interim or final order,
a) Restraining the depletion of a spouse’s property; and
b) For the possession, delivering up, safekeeping and preservation of the property.
[264] Section 40 of the Family Law Act further permits a court, on application, to make an interim or final order restraining the depletion of a spouse’s property that would impair or defeat a claim under the same Part.
[265] The case law confirms that a party seeking a preservation order is in a stronger position if equalization has been determined and ordered: Taus v. Harry, 2016 ONSC 219 at para. 32; LeVan v. LeVan, 2006 CanLII 63733 (Ont. S.C.) at para. 20. The question to be asked is whether there is a real risk that the applicant’s equalization award and award for retroactive support could be defeated if the preservation/non-depletion order is not made: Taus v. Harry at para. 35.
Analysis
[266] I am amply satisfied that there is a risk that the equalization and lump sum spousal support order could be defeated if a preservation/non-depletion order is not made.
[267] I agree with the Applicant that the evidence supports the conclusion that during the course of the litigation, the Respondent has concealed assets and income and disposed of jointly-owned property unilaterally.
[268] In particular, I find that: a) the Respondent has failed to make financial disclosure as required by the Family Law Rules, his own agreement, and orders of this court – moreover, this conduct has gone on for years; b) on a balance of probabilities, I am satisfied that the Respondent’s conduct was intended to frustrate the Applicant’s claims; c) the Respondent has removed most of the household furnishings and items from the matrimonial home without providing an accounting for those items to the Applicant; and d) the Respondent has engaged in deliberate under-reporting of his income, which conclusion may be based solely on the evidence of the Respondent’s use of his corporation’s revenues to pay for personal expenses such as vacations. While other reasons are advanced by the Applicant, given the hearsay involved in the evidence in support of those reasons, I prefer to rely solely on the findings I have listed above.
[269] I agree with the conclusion of the court in LeVan at para. 20 that until the equalization payment and lump sum support orders have been satisfied, the husband should not be free to encumber or sell assets without the Applicant’s consent or further court order.
[270] The Applicant is owed significant sums of money by the Respondent. As in Smith v. Smith, 2016 ONSC 1157 at para. 241, I am persuaded that a non-depletion order should be granted for the six-month period requested. I agree with the reasoning in that case that this will allow the Applicant to take whatever steps are necessary to secure the payments owing to her without unduly restricting the Respondent’s use of his finances to address his obligations under this Judgment and otherwise.
[271] I am not inclined, however, to make the order in the terms requested by the Applicant in her draft order. I prefer the wording of the order employed by Backhouse J. in LeVan at para. 41.
[272] Accordingly, an order will issue as follows:
[273] For a period of 6 months from the release of these Reasons, or until the equalization and lump sum spousal support orders have been satisfied, the Respondent is restrained from transferring or disposing of any assets, including those of his corporation (2229636 Ontario Inc. o/a Woodsman Construction and Tree Service) to third parties, except by court order or with the Applicant’s consent.
[274] The Applicant shall further be permitted to seek an extension of this order without notice. Since these reasons will be available, there is no need for me to be seized of the matter. Any Superior Court judge may consider an application for an extension of this order filed by the Applicant.
Issue #12: Divorce
[275] The parties have been separated since February 23, 2014 and there is no prospect of reconciliation. A divorce order shall issue upon the filing of the required paperwork and payment of the requisite fees.
Leave of the court to proceed with future motions
[276] As indicated above, it may be that if certain circumstances change, the Respondent may wish to proceed with a motion to change the terms of the order to be issued based on this judgment. Given the Respondent’s conduct over the course of this litigation, and his repeated failure to make the financial disclosure that was required by the rules and orders of this court, I find it is just and appropriate to make an order that ensures that the Applicant shall not be required to respond to any future motion filed by the Respondent until such time as the Respondent’s materials are complete. This will include, where relevant, financial disclosure.
[277] Consequently, the Respondent shall not be permitted to proceed with any future motions pertaining to the issues in this litigation without first obtaining leave of the court. The Respondent may find it useful to consult with counsel in advance of any motion he might contemplate to ensure his compliance with the requirements of the Family Law Rules before he seeks leave to bring any future motion(s).
Issuance of the order
[278] The Applicant may submit a draft order for review by the Court prior to it being issued and entered. The Respondent need not approve the form and content of the order.
Costs
[279] I will receive written submissions of no more than three pages in length, with attachments, from the Applicant within four weeks of the release of this decision.
The Honourable Justice Laurie Lacelle
Released: June 3, 2020
COURT FILE NO.: 14-527
DATE: 2020603
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Natalie Burke
-and-
Shawn Poitras
amended REASONS FOR JUDGMENT
The Honourable Justice Laurie Lacelle
Released: June 3, 2020