Court File and Parties
COURT FILE NO.: FS-20-18507-0000 DATE: 20210223 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MIRELA CELA NANI, Applicant AND: ALTIN NANI, Respondent
BEFORE: Kimmel J.
COUNSEL: David Tobin, for the Applicant Harold Niman and Chloe van Wirdum, for the Respondent
HEARD: January 21, 2021 and February 9, 2021
Endorsement Interim support and mortgages motions
1Two motions came before me on January 21, 2021 in this matter, as follows:
a) The applicant’s motion seeking temporary spousal support in the amount of $15,000.00 per month, based on annual income to be allocated to the respondent of $653,000.00, retroactive to the date of separation of March 1, 2020 and security for the past and ongoing support payments (the “interim support motion”); and
b) The respondent’s motion relating to the renewal of an existing first mortgage and the registration of a proposed second mortgage on the matrimonial home and for declarations regarding the characterization of the past and ongoing mortgage payments and other carrying costs associated with the matrimonial home paid by the respondent (the “mortgages motion”).
2At the request of the applicant, I adjourned the respondent’s mortgages motion to an urgent hearing date before me on February 9, 2021 so it could be heard and decided prior to the expiry of the existing first mortgage registered against the matrimonial home that is the subject of that motion. I heard the applicant’s interim support motion on January 21, 2021 and took my decision under reserve based on submissions by the respondent that there was some overlap between the issues on the two motions and they should be decided together, even if heard separately.
3By the time the parties appeared on February 9, 2021 they were in the process of documenting the renewal of the first mortgage based on an agreement they had reached in the interim. However, the parties continue to disagree about the characterization of past and ongoing mortgage payments and other carrying costs associated with the matrimonial home, as well as about the registration of the respondent’s proposed second mortgage and the characterization of any payments that might be made to service that mortgage.
Background
4The parties were married in Albania in 1997, immigrated to Canada in 1999 and separated on March 1, 2020. Their marriage lasted for approximately 23 years.
5They came to Canada with very little. Since then, the respondent has built a successful business in property management, property management consulting, real estate ownership and energy investments.
6The applicant worked primarily in the home, although she did work outside the home when the parties first came to Canada and between 2002 and 2008. Since 2008, she has not worked or earned income aside from through her husband’s businesses. Before they separated, the applicant’s salary from the respondent’s business had been $81,000.00 per annum.
7The parties have two children: Albi is 21 years old and attends the Ivey School of Business at the University of Western Ontario in London, Ontario. He lives with the respondent when not living in London. Alex is 16 years old and lives with the respondent while attending a private school in Toronto.
8The parties lived a luxurious lifestyle before they separated. They took expensive vacations, drove expensive cars, and purchased expensive furnishings, clothes and jewellery. They lived in a luxurious home, which was undergoing a major renovation at the time of their separation. The expenses associated with this lifestyle were paid for by the respondent.
9Since their separation, the respondent has funded the full cost of servicing the existing first mortgage and other monthly carrying costs of their matrimonial home, even though neither of them are able to live there because of the ongoing renovation (which has been stalled as a result of a legal dispute with the general contractor). The respondent has also funded all of the living, education and extracurricular expenses of the children.
10Since their separation, the respondent has kept the applicant on the payroll of his main operating company, Duka Property Management (“Duka”), and paid her a salary of $65,000.00 per year ($5,416.66 per month gross, less CPP and income tax deducted at source). The applicant received a total of $55,620.00 before deductions between March 1 and December 31, 2020. Duka also pays for the applicant’s health and car insurance. The applicant is prepared to give up this salary and associated benefits in exchange for monthly periodic support payments at a level that she claims will allow her to live a lifestyle that is closer to how the parties were living pre-separation and that will give her financial autonomy. She is asking for $15,000.00 per month in spousal support.
11The respondent does not dispute the applicant’s entitlement to temporary spousal support. The dispute is about how much she is entitled to in the circumstances. This depends not only upon the determination of the respondent’s income for support purposes, but also upon the characterization and prioritization of other expenses that he has been, and will continue to be, funding for the children and in respect of the matrimonial home.
12The characterization of the monthly carrying costs for the matrimonial home that the respondent has been paying 100% of, including mortgage payments, and the available sources of funding for these expenses are considerations that arise in both the applicant’s motion for interim support and the respondent’s mortgages motion.
The Applicant’s Interim Support Motion
13By her January 11, 2021 Notice of Motion, the applicant seeks:
a. An order that the respondent shall pay temporary spousal support to the applicant in the amount of $15,000 a month based on an imputed annual income of $653,000 a year for the respondent and no income attributed to the applicant and based on her assertion that she should receive at least 32% of the family’s net disposable income (“NDI”);
b. An order that periodic spousal support shall commence retroactive to the date of separation, being March 1, 2020;
c. An order that within 30 days, the respondent shall pay to the applicant $110,000 for spousal support arrears for the period from March 1, 2020 until January 1, 2021.
d. An order that this level of support shall be without prejudice to the applicant's right to claim that $15,000 a month in periodic support is an underpayment of spousal support;
e. An order that the respondent shall secure his spousal support obligation by a share pledge of his shares of Duka Property Management (“Duka”) or other security sufficient to secure his spousal support obligation; and
f. Costs of this motion.
14At the hearing, instead of seeking a pledge of the respondent’s shares as security for the respondent’s temporary support payments, the applicant asked for an order requiring the respondent to designate her as the irrevocable beneficiary of his RBC life insurance policy N424263.
15The applicant’s entitlement to spousal support under s. 15.2 of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) is not disputed, having regard to the period of time that the parties were married and the functions performed by each during their marriage.
16The applicant’s request is dependent upon the attribution of annual income to the respondent at the level she suggests of $653,000.00 and upon the court accepting that no income should be attributed to her for temporary support purposes. [1] The applicant’s request is also dependent upon the court accepting her position that the respondent should not be permitted to claim the full cost that he has indicated for the extraordinary education and post-secondary expenses of the children (the “s. 7 expenses”). The applicant also argues that the respondent’s funding of the monthly carrying costs associated with the matrimonial home should not be considered for spousal support purposes and should be considered only in the context of the equalization of net family property and/or in connection with a disposition (actual or notional) of the matrimonial home.
17The respondent’s position is that the applicant is effectively receiving more than she is entitled to for spousal support, based on the level of annual income that he says should be attributed to him ($440,000.00) and taking into account the salary and benefits that the applicant is receiving, the amounts that he is paying for the children and the costs of the jointly owned matrimonial home that he alone is carrying.
General Principles for Temporary Support Orders
18In determining the amount of temporary spousal support to award to the applicant, I must consider the four financial objectives that a support order should strive to achieve, as set out in s. 15.2(6) of the Divorce Act, namely to:
a. recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
b. apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
c. relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
d. insofar as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
19However, it has been recognized that it can be difficult to meet all of these Divorce Act objectives on a motion for interim or temporary support. The onus is on the party claiming temporary spousal support to make out a triable or arguable case, leaving the detailed inquiry for the trial judge. See Damaschin-Zamfirescu v. Damaschin-Zamfirescu, 2012 ONSC 6689, at para. 24.
20On a motion at this stage, greater significance is placed on the parties' respective means and needs, taking into account the other Divorce Act objectives and factors only so far as is practicable and leaving the full analysis for trial where a full review of the evidence can be made, and determinations of property divisions reached: Chaudhry v. Meh, 2019 ONSC 7065, at para. 33. It has been said that "the primary goal of interim spousal support is to provide income for dependent spouses from the time the proceedings are commenced until the trial. Interim support is meant to be in the nature of a 'holding order' to, insomuch as possible, maintain the accustomed lifestyle pending trial ... [and is] to be based primarily on the motion judge's assessment of the parties' means and needs": Damaschin-Zamfirescu, at para. 24.
21On a motion for interim support it is appropriate to make an order that will allow the support recipient to continue to live at the standard of living enjoyed during cohabitation, but only if the payor's ability to pay permits: Webster v. Juniper, 2019 ONSC 4901, at para. 14.
22In this case, the main issues that the parties have identified for the court’s determination on the means and needs analysis are:
a. The respondent’s means, having regard to what income should be attributed to him, what expenses he is paying for the children and what carrying costs he is funding in connection with the matrimonial home and how they should be accounted for; and
b. The applicant’s needs, having regard to the impracticality of her re-entering the work force at this time, her monthly expenses and the lifestyle and standard of living that the parties enjoyed during their marriage and the Spousal Support Advisory Guidelines (“SSAGs”).
What is the Respondent’s Income for Purposes of Calculating his Temporary Support Obligations?
23Relevant provisions of the Federal Child Support Guidelines, S.O.R./97-175 (“Support Guidelines”), have been held to apply in the determination of a spouse’s income for purposes of not only child support, but for spousal support as well. Section 16 of the Support Guidelines directs the court to determine total income based on income tax filings, taking into account certain adjustments. When dealing with spouses whose income is dependent, in whole or in part, upon amounts received from an affiliated corporation, s. 18 of the Support Guidelines provides a discretionary framework within which the court may determine whether to include in a spouse’s income for support purposes all or part of the most recent year’s pre-tax corporate income of a corporation that the spouse is a shareholder, director or officer of.
24Section 18 of the Support Guidelines provides that:
18(1) Where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the spouse’s annual income as determined under section 16 does not fairly reflect all the money available to the spouse for the payment of child support, the court may consider the situations described in section 17 and determine the spouse’s annual income to include
(a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year;
18(2) 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.
25The respondent acknowledges that some income, beyond what is reported on line 150 of his personal income tax returns, should be attributed to him from the companies through which his businesses are operated for purposes of calculating his spousal support obligations. The respondent engaged an expert who has prepared an income valuation report dated July 27, 2020. This report provides information about the pre-tax corporate income of the respondent’s companies over the period from 2017-2020, among other things.
26The respondent relies on this report to support his position that his adjusted income in 2019 (the most recent year end at the time of separation) for support purposes should be $440,000.00 (or $471,000.00 if the three year average from 2017-2019 is used instead of the most recent year). This income figure is calculated by adding related party salaries and discretionary expenses and benefits to the respondent’s reported salary, and deducting a dividend gross up. This income figure does not include pre-tax corporate income.
27The expert valuation report has also calculated what the adjusted income attributed to the respondent would be if it included the pre-tax corporate income of Duka at 51% and the other three companies at 100%. These calculations indicate that the respondent’s adjusted income for 2019 would be $653,000.00 (or, if the three year-average from 2017-2019 is used instead of the most recent year, the adjusted income figure would be $588,000.00). [2]
28The applicant says she is in the process of retaining her own expert. The unchallenged analysis of the respondent’s expert is the best evidence that the court has about the inputs to consider for determining the respondent’s income for temporary spousal support purposes.
29For purposes of the temporary support order that the applicant seeks, she relies on the respondent’s expert’s calculations that include pre-tax corporate income of Duka at 51% and pre-tax corporate income of the other three companies at 100%. [3] On this basis, the applicant asks the court to attribute annual income to the respondent of $653,000.00.
30Under s. 18 of the Support Guidelines, for purposes of this motion I will use the 2019 income figures (most recent year end prior to separation). I must decide whether the income to be attributed to the respondent for support purposes should be $440,000.00 or $653,000.00, or something in between. The difference in the expert’s calculations of these two income amounts depends on the extent to which the pre-tax corporate earnings of the respondent’s companies are included in the respondent’s income under s. 18(1)(a).
31Reliance was placed by both parties on the case of Thompson v. Thompson, 2013 ONSC 5500, regarding the approach to be taken by the court when exercising its discretion in the determination of total income for support purposes. In that case, Chappel J. observed that:
a. Retained earnings are the cumulative net earnings of the corporation since the inception of the company less dividends paid out to shareholders since that time. They are the shareholders' equity in the company, and do not necessarily represent cash in the bank that shareholders can take out as income. [at para. 89]
b. The purpose of section 18 is "to enable the courts to conduct a fair accounting of the money available for the payment of child support" and is "designed to address the unfairness which would result if a spouse was to artificially manipulate his income through a corporate structure for the purpose of avoiding child support obligations." [at para. 88, citing Wildman v. Wildman (2006), 82 O.R. (3d) 401; Koester v. Koester (2003), 50 R.F.L. (5th) 78]
c. The party proposing that corporate pre-tax income be attributed to the other party has the onus of demonstrating some basis upon which section 18 should be engaged. The fact that retained earnings remain in the corporation does not in and of itself require the party with the interest in the company to justify the business reasons for not withdrawing corporate pre-tax income or retained earnings. Once the party advancing the section 18 argument has met this onus, the party who has the interest in the corporation has the onus of explaining why the decision to add the corporate pre-tax income to the company's retained earnings rather than withdrawing a portion of the earnings was reasonable from a business perspective. The rationale for this is that the shareowner will in all likelihood have a much greater appreciation of the workings and needs of the company, or will be best able to identify individuals who can be called as witnesses to address the issue. [at para. 91]
d. There are a variety of factors that the court can take into consideration in its determination of whether all or a portion of a corporation’s pre-tax income should be included in a spouse’s income, including the historical pattern for retained earnings, the nature of the industry that the corporation is operating in, business plans, level of debts, debt or other restrictions, whether salaries are on par with market, and whether there are legitimate business reasons for retaining earnings in the company, and the payor’s proportionate ownership interest in the company. [at paras. 92-93]
e. The court must carefully consider "where and how additional money can be found from a corporation's pre-tax income so as to increase a party's income for the purpose of support calculations. ... [F]ailure to properly understand this issue ‘can lead to an incorrect result and ultimately, if the parent cannot find the expected additional money, may undermine the operation of the corporation and eventually kill the goose that lays the golden egg.’" [at para. 90, citing Bembridge v. Bembridge, 2009 NSSC 158, 73 R.F.L. (6th) 147, at para. 37]
32The applicant clearly has the initial onus to demonstrate that s. 18 should be engaged. She maintains that she has met her onus by the respondent’s concession that some income must be attributed to him from the companies, even to come to the $440,000.00 adjusted income number that he propounds by virtue of inclusions for non-arm’s length salaries and benefits (as s. 18(2) provides for). The fact that he chooses to attribute only income associated with income splitting and benefits does not, according to the applicant, nullify the threshold that has been crossed into the s. 18 Support Guidelines considerations.
33The adjusted annual income figure of $440,000.00 calculated by the respondent’s expert does not include pre-tax corporate income. However, the income valuation report clearly recognizes that there is undistributed pre-tax corporate income in the companies. The applicant’s initial onus is low and I find it has been met in this case. Thus, it falls on the respondent to justify why some or all of the pre-tax corporate income should not be attributed to him.
34As the court concluded in Thompson, at para. 91: “Once the party advancing the section 18 argument has met this onus, the party who has the interest in the corporation has the onus of explaining why the decision to add the corporate pre-tax income to the company's retained earnings rather than withdrawing a portion of the earnings was reasonable from a business perspective.”
35The applicant says that the respondent has always controlled the withdrawal of funds from the companies, as they were the source of funding for the family’s lifestyle pre-separation. This would be the same whether the respondent holds 100% or 51% of the Duka shares, as he would, in either instance, have control over decision making regarding the distribution of retained earnings as the controlling shareholder and a director and officer. That said, there may be good business reasons for not having distributed all of the pre-tax corporate income in the past. The historical practice is a relevant consideration.
36The respondent and his income valuation expert have provided some evidence about the retained earnings in the companies and the historic practices. Historically, some dividends have been paid (consistent with the dividends paid out in 2019) but retained earnings have been kept in the companies. The respondent’s income and dividend distributions over the preceding three year period have remained constant or gone up (in other words, the respondent’s 2019 earnings have not been artificially suppressed for purposes of determining his income for support purposes). The retained earnings have increased year over year since 2017 and have not historically been depleted.
37The respondent and his income valuation expert both identify various future potential cash flow risks as justifications for the continued retention of pre-tax corporate income in the primary operating company. These include the prospect of contract terminations or breaches and collection issues with customers due to the COVID-19 pandemic and payroll and operating expenses that would need to be covered irrespective of whether customers pay, as well as potential liability for the repayment of management fees previously received.
38On interim support applications, the court does not embark on an in-depth analysis of the parties' circumstances which is better left to trial. The court achieves "rough justice at best": Van Haren v. Stewart, 2017 ONSC 4238, at para. 24. Where there is no evidence that post-separation the applicant has artificially reduced his income or dividends, or that his business or companies have taken steps to do so, it may be premature on a motion for temporary support to determine whether significant amounts of the pre-tax corporate income should be included as income for support purposes: Van Haren, at paras. 25, 26.
39There is a historic practice and there are demonstrated business reasons in this case for keeping some pre-tax corporate income in the companies. The attribution of pre-tax corporate income from corporate fiscal earnings has to be done at a level that will not place the companies at fiscal risk or affect their obligations to third parties. While an order made will not bind the companies, as a practical matter I recognize that they are the respondent’s primary source of income from which to satisfy his support obligations.
40The attribution of all of the 2019 pre-tax corporate income that the applicant seeks (based on the respondent’s 51% ownership of Duka and 100% ownership of the other three companies) would not be consistent with the historic or prudent business practices that must be considered. The court must proceed with caution at this stage and not put the respondent into the position of having to deplete available cash in the companies to enable spousal support payments at a level that, by the applicant’s own admission, is intended to increase her standard of living to one that was previously extravagant and may not be sustainable in the current environment.
41That said, it is also unlikely that the parties were able to sustain the lifestyle and expenditures that have been described by both of them based on the level of adjusted income of $440,000.00 that the respondent suggests. The respondent could and probably did find ways to access funds from the companies for extraordinary items and it is reasonable to infer that he could do so now as well.
42The applicant also suggests that the respondent should be using corporate funds (pre-tax corporate income and retained earnings) to fund the resolution of the litigation that is encumbering the matrimonial home and preventing the completion of the renovations. That would be another drain on corporate resources, which is discussed in more detail in my endorsement regarding the respondent’s mortgages motion.
43I find that it is appropriate in this case to attribute some pre-tax corporate income to the respondent. It remains to be determined whether the applicant owns 51% (as he says) or 100% of Duka (as the applicant contends), but at this stage and for purposes of calculating temporary without prejudice support, the appropriate starting point is to use the calculations based on 51% ownership. Working from that pre-tax corporate income, justifications have been provided for retaining some of the pre-tax income in the companies. In the exercise of my discretion and having regard to the rough justice that is the objective of this exercise of determining temporary without prejudice support, I have determined the respondent’s adjusted income in 2019 to be $550,000.00, attributing to him approximately half of the $212,000.00 in pre-tax corporate income from his share of the businesses in 2019 (calculated at 51% of Duka and 100% of the other companies).
How Should the Expenses of the Children be Treated for Purposes of Calculating the Respondent’s Temporary Support Obligations?
44The respondent has continued paying for all of the children's special and extraordinary expenses associated with their education and related activities (which he says are proper s. 7 expenses). His sworn testimony calculates these expenses to be $121,900.00 annually, as follows:
a. Alex - Appleby College $55,000
b. Alex - Tutoring $5,200
c. Albi - Western University Expenses $61,700 (including tuition $28,500; Books etc. $6,000; Programs and Extras $8,000; Apartment $13,200; and food, clothing and misc. expenses $6,000).
45The respondent’s sworn evidence is the only evidence that is before the court regarding the amount of these expenses. It is conceded by the respondent that Albi is not contributing his RESP towards his tuition, but rather that is being saved for post-undergraduate studies. According to the respondent’s financial statement, Albi’s RESP is valued at just under $17,000.00.
46In the applicant’s DivorceMate SSAG calculations, she allows for special or extraordinary expenses for the children of $75,000. She argues that their eldest child should be contributing towards his expenses (for example, from his RESP) and that the amount being paid for the children is disproportionate to what she is receiving and is therefore not reasonable.
47The respondent’s monthly expenses reflected in the respondent’s financial statement include amounts for food, clothing, and incidentals when the children are at home with him. There does appear to be some overlap between the monthly expenses on the respondent’s financial statement for Albi and amounts that might be covered by the s. 7 expenses. There also appears to be a fairly significant buffer in the s.7 expenses of $14,000.00 for extras and miscellaneous expenses.
48For purposes of determining the temporary support payments, it is reasonable to reduce the amount that the respondent has claimed by something to reflect that some of Albi’s RESP could be used to defray some of his extraordinary educational and post-secondary expenses and to account for some of the extra and miscellaneous expenses that are claimed but not particularized. I would allow for the full $60,000.00 of extraordinary educational expenses claimed for Alex and $35,000.00 in extraordinary educational and post-secondary expenses for Albi, for a total of $95,000.00 of special and extraordinary expenses to be input into the DivorceMate calculations to determine the spousal support ranges and NDI amounts to be considered.
49Even though I have reduced the s. 7 amounts for purposes of the support calculation, I do not question that the amounts indicated are being paid by the respondent.
Should Income be Attributed to the Applicant for Support Purposes?
50The applicant has not worked outside of the home or the family business for many years. The respondent observes that she was trained as a science and physics teacher, has experience as a teacher and office administrator since they moved to Canada and is capable of some gainful employment.
51There is no basis at this time upon which I am prepared to impute or attribute income to the applicant, but this is without prejudice to the respondent’s right to ask the court to do so at some future point, in the fullness of time and once the record has been more fully developed.
The Applicant’s Needs, Expenses and Standard of Living
52The applicant’s position is that she needs $15,000.00 per month in support to meet the expenses that will allow her to enjoy the luxurious lifestyle that the parties enjoyed during their marriage, and that this is justified even though it exceeds the top end of the SSAG range if income is attributed to the respondent at $653,000.00.
53The applicant’s sworn financial statement indicates monthly expenses of $8,396.45. Some of this is for income tax and other source deductions from the salary that she is currently receiving from the applicant’s business. This also includes expenses for the children (that she has not been contributing to) and for vacations, entertainment and other matters that may be temporarily suspended due to the COVID-19 pandemic. Ultimately, her position is that she needs almost double the amount of her currently monthly budgeted expenses. The applicant claims that her lifestyle is suffering, that she is having to cook and eat at home and is not driving.
54The applicant claims to be entitled to support on both a compensatory basis as well as a needs or non-compensatory basis. The applicant seeks to increase her spousal support to a level that will bring her to a lifestyle more commensurate with how she was living before the parties separated. She is prepared to pay for 50% of the monthly first mortgage obligations ($2,603.00) out of the higher monthly support and she would be responsible for her income taxes. She is prepared to forego her salary and benefits from Duka.
55The respondent challenges the applicant’s stated needs and suggested entitlements. He contends that they are excessive and disproportionate, pointing out that he and the children are living in his sister’s basement while the applicant lives in a penthouse condominium in downtown Toronto. I agree with the respondent that the applicant’s indicated needs are inflated and not proportionate to the present circumstances of the parties.
What are the Ranges of Spousal Support Under the SSAGs?
56The respondent payor spouse has income that is above the $350,000.00 ceiling under the SSAGs. While the SSAGs are not presumptive, where a payor’s income is over $350,000.00 the ranges are often still used where the payor’s income is somewhere between $500,000.000 and $700,000.00. As was indicated by Kurz J. in Zapfe v. Zapfe, 2019 ONSC 4065, at para. 33: "Interim outcomes are more likely to fall within the formula range, as the goal in the interim period is to maintain the financial status quo."
57If I had attributed income to the respondent of $653,000.00 (including all of the pre-tax corporate income that the applicant suggested), the spousal support range under the SSAGs, based on the custodial payor formula and according to the applicant’s calculations with reduced allowances for the claimed s. 7 expenses, would be: $10,097 at the low-end, $11,780 at the mid-range and $13,462, at the high-end, with corresponding NDI ranges to the applicant of between 24.6% to 30.2%. The applicant is asking for monthly spousal support of $15,000.00 which, based on her calculations, would have resulted in the applicant receiving NDI of 32.6%.
58The applicant’s request for 32.6% of the NDI was based, in part, on the reasoning in the case of Toscano v. Toscano, 2015 ONSC 487, 57 R.F.L. (7th) 234, at paras. 136-145. In that case, the court used the SSAG calculations for a high earner payor (with imputed pre-tax corporate income) who had the children living with him and was paying all of their s. 7 expenses to award spousal support at the mid-range, with resulted in an amount between 35%- and 40% of the parties’ NDI (the recipient spouse in that case had some income imputed to her).
59Using the Toscano case of 35-40% of NDI as her benchmark, the applicant seeks support above the high end of the SSAG range to achieve a sharing of the parties’ NDI for herself of more than 32%, which she also says is justified because of the dispute over the respondent’s ownership interest in Duka and her eventual argument which will be that his income should be calculated based on him having access to 100% of the retained earnings of that company, not just 51%.
60There are a number of false premises in the applicant’s position, both in terms of the calculation of the SSAG range and her request to receive support in excess of it:
a. I have attributed a lower income of $550,000.00 to the respondent for reasons previously indicated, which would result in lower SSAG ranges for monthly support using the custodial payor formula, even if the applicant’s other inputs are accepted (which they are not).
b. Part of my reasoning for attributing lower income is that I did not accept the applicant’s assertion that all of the available pre-tax corporate income should be attributed to the respondent for purposes of calculating temporary support at this stage of the proceedings, in part due to the business rationale offered for keeping some of that income in the company, consistent with historical practice (and unrelated to the question of whether the respondent owns 51% vs. 100% of the shares of that company);
c. While the percentage of the NDI number may be an informative data point extracted from the SSAG calculations, the applicant’s suggestion that the Toscano case justifies awarding her an amount of support that is higher then the SSAG range generated by her suggested income number is misguided. In that case, the NDI figures of 35-40% were a product of the application of the formula and fell within the SSAG range;
d. At the income level that I have determined is appropriate to attribute to the respondent, spousal support of $15,000.00 per month to the applicant would result in her receiving more than 50% of their NDI, while the children continue to reside with the respondent;
e. The applicant’s needs can be considered in relation to the standard of living that the parties enjoyed during the marriage, but also must be considered having regard to a comparative reduction in their pre-separation luxurious lifestyle and the high expenses of maintaining the jointly owned matrimonial home; and
f. Some of the items on the applicant’s budget, for personal trainers, gifts and travel, as well as her desire to eat out rather than at home, are incongruent with the current restrictions in place as a result of the COVID-19 pandemic. Her budget also includes expenses for the children that the respondent is paying for entirely.
61I do not accept the SSAG ranges that the applicant has presented, nor her justifications for receiving monthly support in excess of the high end of the range.
62The respondent calculated a SSAG range of $2,012.00, $2,348.00 and $2,683.00 (with corresponding NDI to the applicant of 11%, 13.3% and 14.6%) based on payor income of $440,000.00. The SSAG ranges need to be recalculated based on my determination that, for temporary without prejudice spousal support purposes, the attributed annual income of the respondent (payor) is $550,000.00 and my allowance for $95,000.000 in s.7 expenses.
63According to my DivorceMate calculations, this produces a SSAG range of custodial payor spousal support of: $6,076 (low), $7,089 (med) and $8,102 (high) with the high end of the range being approximately 32.6% of NDI. These calculations may not be exact, but they are sufficient for the rough justice that is intended to be dispensed by the court on a motion such as this. I have adjusted the calculations to show that there is no child support currently being paid and the respondent is paying 100% of the children’s s. 7 expenses, without contribution by the applicant.
64Given the length of the marriage and the compensatory and non-compensatory bases for spousal support, I would award the applicant support at the high end of the range, in the amount of $8,100.00 per month. It is merely a coincidence that this happens to produce an NDI of 32.6% which is what the applicant asked for (albeit she sought that NDI percentage on the basis of the higher income to the respondent and lower s. 7 expenses that she was suggesting).
65While this amount is much lower than what the applicant is asking for and what she claims to need to maintain her pre-separation lifestyle, it reflects the current circumstances of the two households and the significant s. 7 expenses of the children which, at the reduced levels that I have allowed for, should take priority over the applicant’s spousal support.
Should the Respondent Pay Periodic Temporary Support to the Applicant, and, if so, How Much?
66The applicant wants an order for periodic (monthly) spousal support, retroactive to the parties’ separation in March 2020. She is prepared to give up the monthly salary and benefits that she has been receiving from Duka (and credit what has been paid to date). She acknowledges receiving $55,620.00 in salary from and after March 2020. The applicant does not account for the cost of the health and car insurance that has been paid on her behalf.
67The applicant also does not allow for any credit on account of her share of any carrying costs associated with the matrimonial home that the respondent has been paying for. She says she is prepared, going forward, to pay her share of the now renewed first mortgage, which will be $5,206.00 per month (half of which would be $2,603.00). The applicant maintains that the respondent should be solely responsible for paying the remaining carrying costs for the matrimonial home, and any additional amounts that are required to finance the completion of the renovation of the matrimonial home, which she says can all be accounted for in the ultimate resolution of the property and other issues associated with the matrimonial home but should not be accounted for as part of the spousal support. She argues that she cannot afford to pay those additional amounts even if she receives the monthly support of $15,000.00 that she is asking for.
68The respondent argues that third party payments that are being made for the benefit of the applicant should be accounted for in the spousal support analysis. The respondent points to the following areas of financial support that he has been providing to the applicant:
a. a salary from Duka in the amount of $65,000/year or $5,416.66/month;
b. car insurance and extended health benefits in the amount of $481.50/month;
c. her 50% share of the expense of carrying the jointly owned matrimonial home. Since August 2020 this monthly amount was $9,121.44 (including the first mortgage, property taxes, property insurance, and construction insurance) [4]. These monthly carrying costs will be reduced going forward by $596.44 which represents the lower monthly payments on the now renewed first mortgage; and
d. her share of the children's special and extraordinary expenses for things such as tuition, books, which are in excess of $120,000.00 per year (although for support purposes this amount will be reduced).
69The respondent contends that he is already effectively paying the applicant more than $10,000.000 per month through these payments, which exceeds his spousal support obligations under the SSAGs. He asks the court to dismiss the applicant’s motion on that basis.
70The respondent is willing to continue to pay the applicant a salary of $5,416.66 plus health and car insurance premiums of $481.50 per month and the monthly carrying costs for the jointly owned matrimonial home. Based on the applicant’s financial statement, the monthly deductions from her salary for CPP and income taxes total $1,241.50, which leaves her with net disposable income of $4,175.17 per month. If, however, an order is made for him to pay temporary spousal support, he seeks a direction that he may cause Duka to stop paying the applicant's salary and health and car insurance. If a temporary spousal support order is made, the respondent also seeks a direction that any third party payments that he makes in respect of the applicant’s 50% share of the carrying costs for the matrimonial home be characterized as spousal support, over and above any monthly amount he is directed to pay directly to the applicant for support. This will mean that she is taxed on the higher total amount.
71Although the applicant was prepared to add to her monthly expenses her 50% share of the first mortgage on the matrimonial home if she was awarded spousal support of $15,000.00 per month, that is not the amount that I am awarding her. If she receives the high end SSAG support of $8,100.00, her net disposable monthly income will be approximately $6,200.00. I find that it would be unfair on a temporary basis to order the respondent to pay full spousal support and ignore the significant expenses being paid by the respondent to maintain the jointly owned matrimonial home. There needs to be a balance so that both parties are able to meet their own basic expenses. I find that if the applicant receives spousal support, at a minimum she should be contributing 50% of the monthly mortgage payments. It can certainly be argued that she should also be paying her 50% share of the other capital expenses, including insurance and property taxes. After deducting half of the monthly cost to service the first mortgage of $5,206.00 ($2,603.00), she will be left with $3,600.00 net per month under this scenario.
72Without getting into all of the combinations and permutations, the applicant will be no better off, and may be worse off, with this level of periodic spousal support than she is under the current arrangements. The current arrangements leave her with net disposable income of approximately $4,175.00 per month, whereas the spousal support scenario leaves her with net disposable income of $3,600.00 per month.
73Further, her position will be worse if the other monthly carrying costs that the respondent has been funding in respect of the matrimonial home (over and above the cost of the first mortgage) are characterized as third party payments for spousal support purposes, as submitted by the respondent. As a practical matter, if I awarded the applicant spousal support at the high end of the SSAG range in the amount of $8,100.00 per month, she could not afford to pay her half of the first mortgage or even the income tax on her half share of the other monthly carrying costs for the matrimonial home being paid by the respondent, if characterized on a temporary basis as third party payments.
74While the applicant is entitled to spousal support, for so long as the respondent continues to cause Duka to pay the applicant her current (or a higher) salary and pay her car and health insurance premiums, and he continues to pay 100% of the carrying costs of the matrimonial home, I find that no temporary spousal support is payable. If, however, her salary and benefits are terminated (or materially reduced and therefore for support purposes deemed terminated), then she will be entitled to gross monthly temporary without prejudice spousal support of $8,100.00 in lieu of receiving those salary and benefits. Unless the termination of the applicant’s salary and benefits is due to a material change in the respondent’s financial circumstances, the applicant will not be required to contribute 50% of the first mortgage or other carrying costs of the matrimonial home. If the respondent changes the status quo regarding the payment of salary and benefits then he should continue to pay those monthly carrying costs in accordance with my directions herein so that the applicant is not put into the temporary support scenario with less net monthly disposable income.
75Under either scenario, there is no question that the respondent must eventually be credited for paying 100% of the monthly carrying costs associated with the jointly owned matrimonial home which are now estimated to be $8,525.00 (first mortgage, property tax and house and construction insurance). This may be reconciled when the matrimonial home is sold and/or at the time of equalization of the parties’ net family property. Insofar as the arrangements to date have not treated these third party payments as spousal support, the respondent will also have his right preserved to argue at trial that these third party payments for the first mortgage, property taxes and insurance for the matrimonial home should be re-characterized as spousal support with the corollary tax consequences.
76The applicant seeks a retroactive temporary support order to the date of separation. This does not arise since I have not granted her request for periodic spousal support. However, even if she had been awarded periodic spousal support at the level that I calculated, I agree with the respondent that this is a question for trial and not an interim order. All the more so in this case where the monthly benefits received by the applicant are not materially different from the spousal support that she would have been awarded.
77Furthermore, there are tax considerations that go beyond the scope of this motion that would need to be canvassed before anything that was paid in the past is adjusted. If the monthly payments are to be restructured as support rather than salary, even if the gross amounts are not materially different, the tax treatment could be. I did not receive submissions and argument on this point and it should be thoroughly canvassed on a proper record before any order for retroactivity is made: Lewis v. Lewis (2008), 55 R.F.L. (6th) 454 (Ont. S.C.), at para. 26.
Is the Applicant Entitled to Security for the Respondent’s Temporary Spousal Support Obligations?
78The applicant relies on s. 15.2(2) of the Divorce Act in support of her request for security for the respondent’s support obligations. It provides that:
Where an application is made under subsection (1), the court may, on application by either or both spouses, make an interim order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse, pending the determination of the application under subsection (1).
79Originally, the applicant was asking the respondent to post his shares in Duka as security. Now she wants to be designated as an irrevocable beneficiary of the respondent’s RBC life insurance policy (that is said by counsel to have a face value of $1.5 million) in an amount sufficient to secure the respondent’s spousal support obligation arising from this motion. While no order is made for periodic spousal support at this time, the applicant’s entitlement to it is not disputed. That entitlement is simply being satisfied through other means that are more beneficial to her at this time.
80This point was not argued at the hearing and the written submissions are sparse. It appears that the respondent’s estate is the designated beneficiary of this policy based on the limited evidence submitted by the applicant. Unless there is some impediment to so doing that was not drawn to my attention, I am inclined to grant the request of the applicant to be designated as the beneficiary of this life insurance policy based on my understanding that such orders are routinely made where an entitlement to some level of spousal support not disputed, as is the case here. I have set out a process for this to be addressed at the end of this endorsement.
The Respondent’s Mortgages Motion
81The respondent seeks the following orders on this motion:
a. An Order dispensing with the applicant's consent to register a second mortgage in favour of 8044015 Canada Inc. in the amount of $1M against the matrimonial home municipally known as 2470 Mississauga Road, Mississauga, ON, L5H 2L5 and directing the applicant to execute any documentation necessary to complete the registration;
b. An Order that the respondent shall pay 100% of the interest only payments of the second mortgage in the amount of $6,666.67 per month and that 50% of the payment ($3,333.33) shall be credited to him as spousal support for the applicant.
c. An Order dispensing with the applicant's consent to renew the Scotiabank mortgage number 371526-0 registered against the matrimonial home on or before February 28, 2021 and directing the applicant to execute any documentation necessary to complete the renewal.
d. Costs on a full recovery basis.
82The respondent also seeks an order on a retroactive and go-forward basis that 50% of all amounts he has paid and will continue to pay in respect of the matrimonial home be paid on behalf of the applicant as third-party payments, taxable to the applicant and tax deductible to the respondent. Alternatively, he seeks an order that 50% of these payments be deemed a credit to him for any payment owing by him to the applicant by way of equalization, her 50% interest in the matrimonial home or spousal support. Although not part of the relief sought in the respondent’s notice of motion, this was raised in the context of the applicant’s support motion and is appropriately addressed in that context.
83I have already ruled on this point as it relates to the monthly carrying costs for the first mortgage, property taxes and home and construction insurance.
The Renewal of the First Mortgage
84The parties are jointly responsible for an existing first mortgage on the matrimonial home. The applicant refused to renew the existing mortgage on the matrimonial home when it came due in August 2020. It automatically renewed into a 6-month fixed rate closed term with higher monthly payments. Previously, the parties were paying $6,199.96 per month for the mortgage and property taxes. Since the first mortgage automatically renewed in August 2020 the respondent has been paying $7,546.44 per month. This mortgage had to be refinanced or renewed on or before February 28, 2021.
85The applicant agreed, after the respondent’s motion was filed, to the renewal of the first mortgage. At the February 9, 2021 hearing, the court was advised that the mortgage renewal had been negotiated and was being signed, and that the monthly payments going forward will be $6,950.00 ($5,206 for the mortgage payments and $1,744 for property taxes). No order is required from the court to dispense with the applicant’s consent to the renewal of this mortgage since she has now signed the documentation. The motion was nonetheless justified given the applicant’s initial unwillingness to co-operate, even though her subsequent position rendered an order unnecessary.
The Proposed Second Mortgage and the Parties’ Positions
86The respondent’s motion also asked the court to dispense with the applicant’s consent to register a second mortgage against the matrimonial home in the amount of $1M.
87The matrimonial home was purchased in 2015 for just over $2.1 million and the renovation, which had been planned since 2018 and began in 2019, is estimated to cost over $2 million. The home was taken down to the studs and, by the time the parties separated in March of 2020, it was uninhabitable.
88CT Restore Inc., the general contractor performing the renovations, has now registered a construction lien against the matrimonial home and issued a Statement of Claim on November 10, 2020 for outstanding payments in the amount $2,097,000.00.
89The respondent has applied and been approved for a second mortgage in the amount of $1 million. The mortgage financing is from an institutional lender and the rate for this second mortgage is 8%. The purpose of the second mortgage is to try to negotiate a settlement with CT Restore Inc. so that the renovations that commenced in 2019 prior to the parties’ separation can be completed. The respondent is prepared to agree that the proceeds from this mortgage can only be used to fund the completion of the renovations and that it will not be registered or drawn down unless there is a commitment from CT Restore Inc. to complete the renovations with the available financing and a resolution of the construction lien litigation.
90Any increase in value from the renovations would ordinarily be expected to be jointly shared between the parties since they are joint owners of the matrimonial home. Therefore, the respondent contends that the costs should also be jointly shared. The monthly interest payments under the proposed second mortgage would be $6,666.66.
91The respondent proposes that each party be responsible for half of the interest costs of the new mortgage and that he will pay the applicant’s half on a temporary and without prejudice basis, to be characterized as a third-party payment for support purposes, like the other carrying costs for the matrimonial home. This would result in a further taxable benefit of $3,333.00/month being attributed to the applicant for support purposes. The applicant will not agree to this and will not agree to the registration of the second mortgage or to having any responsibility for it.
92Despite evidence of her involvement in the renovations, dealing with the architects, designers, sub-contractors and insurers and participating in the selection and purchase of fixtures, appliances and finishes, the applicant has asserted that she did not agree to the renovations in excess of $2 million. She says the budget that was discussed was in the $500,000.000 range (despite signing an insurance certificate for a cost of between $500,000.00 and $1,500,000.00). At this time, she is not offering to contribute to, or have attributed to her, the benefit of any of the costs associated with completing the renovations.
93The applicant argues that the court does not have jurisdiction to dispense with her consent or authorize the registration of this second mortgage and suggests that the respondent should fund the cost of settling with the contractor and completing the renovations from his businesses or other sources.
94There are certain practical realities that the parties must contend with:
a. The matrimonial home cannot be sold with the existing construction lien registered against it;
b. Funds are required to finish the renovations; and
c. A finished home will be more marketable and more valuable than an unfinished home.
The Court’s Jurisdiction
a) Section 23 of the Family Law Act
95Section 23 of the Family Law Act, R.S.O. 1990, c. F.3, sets out the powers of court respecting alienation, as follows:
The court may, on the application of a spouse or person having an interest in property, by order,
a) determine whether or not the property is a matrimonial home and, if so, its extent;
(b) authorize the disposition or encumbrance of the matrimonial home if the court finds that the spouse whose consent is required,
(i) cannot be found or is not available,
(ii) is not capable of giving or withholding consent, or
(iii) is unreasonably withholding consent,
subject to any conditions, including provision of other comparable accommodation or payment in place of it, that the court considers appropriate;
(c) dispense with a notice required to be given under section 22;
(d) direct the setting aside of a transaction disposing of or encumbering an interest in the matrimonial home contrary to subsection 21(1) and the revesting of the interest or any part of it on the conditions that the court considers appropriate; and
(e) cancel a designation made under section 20 if the property is not a matrimonial home.
96The respondent’s position is that s. 23(b)(iii) of the Family Law Act gives this court jurisdiction to dispense with a joint owner's consent to sell or encumber a matrimonial home where a joint owner is “unreasonably withholding their consent." The applicant maintains that she is not unreasonably withholding her consent. Rather, she says her refusal to consent is reasonable because she cannot afford to carry another mortgage. Furthermore, she disputes the entitlement of CT Restore Inc. to any funds at this point. She also argues that s. 23(b)(iii) of the Family Law Act does not confer the court with the authority to dispense with the consent of a joint owning spouse. The applicability of s. 23 is limited to situations where the non-consenting spouse is a non-owner.
97There is a line of cases that supports the applicant’s position, that s. 23 of the Family Law Act only applies to situations where the non-consenting spouse is also a non-titled spouse. These cases suggest that the purpose of s. 23 is to protect the possessory and other rights of the non-titled spouse. There are some very clear and direct statements to this effect in cases such as: Ohanessian v. Kalisz, 2012 ONSC 7123, at paras. 41-42; Flores v. Flores, 2020 ONSC 5809, at para. 49; and Henry v. Cymbalisty, 1986 ONSC 2790, at para. 8, in which Steinberg J. states:
In my view sections 23 and 21(1)(c) can only be invoked so as to limit or cancel the right of possession of a non consenting spouse in a matrimonial home. They cannot be interpreted so as to defeat a spouse's legal or equitable estate in a matrimonial home, no matter how unjustly or irrational he or she may be behaving in regards to the administration of the property.
98When it comes to spouses who jointly own the matrimonial home, the Partition Act, R.S.O. 1990, c. P.4, gives the court jurisdiction to deal with a proposed sale by one spouse where the other objects. I was not directed to any statutory provision that deals directly with the court’s jurisdiction to authorize an encumbrance on a matrimonial home over the objection of a joint owner, unless s. 23 of the Family Law Act can be read as such.
99The applicant points out that the cases that the respondent relies upon under s. 23 (such as Norris v. Norris, 2016 ONSC 7077, at para. 37, and El Feky v. Tohamy, 2012 ONSC 2749, at paras. 14, 16, and 19) are not dealing with the court’s jurisdiction to order the sale or encumbrance over the objection of a titled spouse, but with the implementation or mechanic for implementing an existing order or agreement for the sale or encumbrance. I agree that the cases that the respondent relies on do not address directly the jurisdictional issue that the applicant has raised and that the cases she cites squarely do address.
100There appears to be a void in the legislation, in that no one has been able to direct me to any statutory provision that grants the court jurisdiction to permit a mortgage to be registered on title to the matrimonial home (or any property) over one of the joint owner’s objection. I will say that, if there was such a provision, and if the reasonableness of the objection is a relevant consideration, I do not consider the applicant’s withholding of consent to be reasonable where she has refused to consider or propose any alternatives that might address her concerns while also solving the problem that the parties face with respect to the matrimonial home renovation and litigation.
101While it is true that the applicant cannot afford to service the additional cost of this mortgage, or even to pay the income tax that would be associated with the respondent funding the monthly payments and those being characterized as third-party payments for support purposes, I would have been prepared to consider ordering that the payments be made by the respondent for this new mortgage on the basis that they will be either credited to him as part of the reconciliation of sale proceeds or an equalization payment, or possibly re-characterized later. In any event they would not have to be characterized now in a manner that would impact the applicant’s monthly cash flow.
102There can be little doubt that a mortgage that could resolve the construction lien litigation and allow the renovation of the matrimonial home to be finished is in both parties’ interests. If such arrangements could be negotiated, there would be ways to structure them so that they would not prejudice the parties’ positions at trial, including positions about who is responsible for the renovations and who is responsible to CT Restore Inc.
b) Section 12 of the Family Law Act
103In lieu of s. 23, the respondent also suggested that the court could find the jurisdiction to make the order sought using its broad powers to order the preservation of property under s. 12 of the Family Law Act, which is principally directed to the preservation of property to ensure an equalization payment can be paid:
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.
104The respondent argues that the second mortgage is for the purpose of preserving the matrimonial home and its value. In this case, it is reasonable to assume that the respondent will be making, not receiving, an equalization payment.
105The applicant argues that this section is intended to preserve property that the respondent would be expected to use to make his equalization payment and that the matrimonial home is not ear marked for that. She also argues that only the party who would be receiving the equalization payment can have resort to this section: Syed v. Syed, 2017 ONSC 2588, at paras. 106-108, citing Bronfman v. Bronfman (2000), 51 O.R. (3d) 336, at paras. 18-19, and Taus v. Harry, 2016 ONSC 219, at paras. 28-40.
106While I do not consider this outcome to be pragmatic, I am unable to find the jurisdiction that I need to grant the relief that the respondent seeks with respect to the proposed second mortgage in s. 12 of the Family Law Act. The authorities that discuss this section indicate that its purpose is to protect the spouse who is expected to be a recipient of an equalization payment, not the payor.
107Thus, I find I am without jurisdiction to make the order that the respondent seeks with respect to the second mortgage.
The Applicant’s Position and Implications for Support
108The applicant’s position is, in certain respects, inconsistent with the spousal support she seeks. She suggests that the solution to this catch-22 in the face of her unwillingness to co-operate is to require the respondent to look for other sources to finance the completion of the renovations to the matrimonial home, including from the same pre-tax corporate income from his business that she seeks to attribute to him as income to enhance his means for paying her spousal support. However, the pre-tax corporate income attributed to the respondent is now subject to this enhanced expense that the respondent is being asked to bear the entire responsibility for in order to preserve a jointly owned asset, thereby reducing his means to pay spousal support.
109The applicant’s alternative suggestion that this be funded by way of a loan from the business leads back to the same considerations of what funding is available from the companies, and may also be impractical because of income tax considerations.
110All of that said, I am reinforced in my earlier determination not to attribute the higher level of pre-tax corporate income to the respondent from his businesses, since the applicant is suggesting that the respondent go to that same well for the financing or security to fund the completion of the renovations to the matrimonial home that will benefit her as well.
Orders, Costs and Implementation
111The following orders are made on these motions:
a. the respondent’s adjusted income is determined to be $550,000.00 for temporary spousal support purposes;
b. the s.7 expenses are deemed to be $95,000.00 for temporary spousal support purposes;
c. there shall be no income imputed to the applicant for temporary spousal support purposes;
d. insofar as the respondent continues to cause Duka to pay the applicant her current level of salary ($65,000.00) and benefits and maintains the expenses on the matrimonial home, no order for temporary without prejudice spousal support is made;
e. if the applicant ceases to receive her current salary and benefits from Duka (if they are terminated or deemed terminated by any material reduction) she will be entitled to receive temporary without prejudice spousal support of $8,100.00 per month (gross) going forward, taxable to the applicant and tax deductible to the respondent (and, unless the respondent can establish that this termination is due to a material change in the respondent’s financial circumstances, the applicant will not be required to pay 50% of the first mortgage and it will continue to be paid by the respondent along with the other monthly carrying costs of the matrimonial home in accordance with sub-paragraph (h) below);
f. no order for retroactive support is made at this time but this may be revisited at trial;
g. no order is made for security for the respondent’s support obligations but the applicant may seek an order to be designated as the beneficiary of the respondent’s existing life insurance policy upon further evidence and submissions being made if the parties are unable to reach agreement on this. This may proceed by a 14B motion returnable to me, to be followed by oral submissions if I ask for them after receiving the in-writing motion;
h. the monthly carrying costs for the first mortgage, property taxes and home and construction insurance shall be paid by the respondent and shall be credited to the respondent in the reconciliation of the parties property claims and/or the respondent’s right to seek to have them characterized as support at trial is preserved;
i. the respondent’s motion requesting an order dispensing with the applicant's consent to register a second mortgage in favour of 8044015 Canada Inc. in the amount of $1M against the matrimonial home is dismissed;
j. if the respondent finances the settlement of the litigation with CT Restore Inc. and/or the completion of the renovation of the matrimonial home through means other than the equity in the home, he may ask to be credited for those expenses in the reconciliation of the property claim and/or the respondent’s right to seek to have them characterized as support at trial is preserved, and his right is also preserved to argue at trial that the applicant should not participate in any increase in the value of the matrimonial home that is attributable to the completion of the renovation; and
k. if the respondent does not finance the settlement of the litigation with CT Restore Inc. and/or the completion of the renovation of the matrimonial home through means other than the equity in the home, his right is preserved to argue at trial that the applicant’s refusal to co-operate in the proposed second mortgage arrangements diminished the value of the matrimonial home and to claim damages as a result.
112The parties are both seeking costs of their respective motions. They agreed to provide each other with updated cost outlines at the end of the hearing.
113Now that the outcome of both motions is known, the parties are encouraged to try to settle the costs issues. If they are able to do so, they are asked to advise the court that they have settled the issue of costs on or before March 5, 2021.
114If they are unable to do so, any party who is seeking costs may deliver to the other a brief written submission on costs (not to exceed three pages double-spaced) with attached cost outlines in respect of any step in the proceeding for which costs are sought and any relevant settlement offer(s) by March 12, 2021. Responding cost submissions of no more than 1.5 pages double-spaced may be delivered by March 19, 2021. All such submissions shall be provided to me by email to my assistant, linda.bunoza@ontario.ca and uploaded onto Caselines.
115This endorsement is an order of the court, enforceable by law from the moment it is released without the necessity of formal issuance and entry.
Kimmel J. Date: February 23, 2021
1The imputation of zero income to the applicant for temporary support purposes is not disputed by the respondent, although that may be revisited at trial.
2Although there may eventually be some challenge by the applicant to the adjustments for corporate losses accounted for in the income expert’s analysis, these were not the focus of the applicant’s arguments at this stage.
3The applicant challenges the respondent’s position that he only owns 51% of the shares of Duka, suggesting that the transfer of 49% of the shares in this company to his brother in December 2018 was a sham that was undertaken when the parties were already experiencing marital difficulties. She points to the existence of public filings that identify the respondent as the sole shareholder of this company. The applicant will argue that the transfer documents were created after the fact and that there is no contemporary proof of payment or substantiation of the value paid for these shares at the time. However, it was not suggested that the court needs to make any ruling on this now for purposes of the temporary support order she seeks.
4This monthly total does not include the cost of a second mortgage that the respondent wishes to register so that mortgage proceeds can be used to try to settle the construction lien litigation with the contractor and allow the renovation to be completed so that the renovated home can be sold for the benefit of both parties. If the respondent succeeds on his mortgages motion, he argues that a further $3,300.00 should be added to the third party payments that the applicant is receiving the benefits of.