Nersisian v. Hyde, 2021 ONSC 3428

Carolyn Nersisian v. John Edward Hyde, 2021 ONSC 3428

COURT FILE NO.: FS-16-413737

DATE: 20210510

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Carolyn Nersisian

Applicant

– and –

John Edward Hyde

Respondent

Amanda Taerk, for the Applicant

Avra Rosen/Kelly Eckert, for the Respondent

HEARD: December 11, 14, 15, 16, 17, and 18, 2020

E.l. Nakonechny, J.

REASONS FOR JUDGMENT

1Carolyn Nersisian and John Hyde were married on August 25, 1990. Carolyn is 57 years old and John is 58 years old. They have two children, Christopher aged 29 and Cassandra aged 25. Cassandra is financially independent. Christopher has returned to school and resides with Carolyn. He does not contribute financially to the household expenses.

2The parties do not agree on their date of separation. John says that the parties physically separated in January 2009. Carolyn says that the parties separated on July 3, 2016.

3In June 2019, John agreed to accept Carolyn’s date of separation as a concession to resolve the issue and avoid a bifurcated trial. The concession was made notwithstanding his belief that it was not the actual date of separation. Any reference herein to the date of separation is to the compromise date, July 3, 2016.

The Applicant’s Motion to Amend Pleadings

4Just prior to the trial, Carolyn brought a motion to amend her Application to claim an unequal division of net family property relating to a joint line of credit and that John owns 100 percent of a Florida condominium by way of resulting trust. At the commencement of trial, Carolyn withdrew her claim for an unequal division of net family property and sought only the amendment to claim a resulting trust.

5The condo is owned by a limited liability Florida corporation, Chriscassa LLC. The corporation is owned 34 percent by John and 33 percent by each of Christopher and Cassandra. Carolyn asks the Court to find that John is 100 percent owner of the company and that 100 percent of the value of the condominium should be included in his net family property for equalization purposes.

6Carolyn alleges that John forged the children’s signatures on the documents creating the LLC. Ms. Rosen produced the documents to Ms. Taerk in about January 2020. Ms. Taerk sent the documents to her client to review in October 2020.

7Carolyn states that the issue of the alleged forgery and the resulting trust claim was raised in discussions between the parties and conferences beginning in October 2020. John was aware of the claim and Carolyn’s position that the children did not sign the corporate documents. She argues she should be permitted to pursue this claim at trial and that there is no prejudice to John to the amendment to the pleadings.

8John opposed the motion and argued that he would be prejudiced if an amendment to pleadings was granted. He states that the issue was first raised when the parties were before Gilmore J. in November 2019. John had already conceded the valuation date to avoid a bifurcated trial. Gilmore J. scheduled a long motion in February 2020 for Carolyn to seek an amendment of pleadings with specific timelines for filing materials. Carolyn did not proceed with the long motion.

9Carolyn completed a Trial Scheduling Endorsement dated November 2, 2020 for the attendance with Kiteley J. In her issues for trial, Carolyn lists unequal division of property with respect to a line of credit but not a resulting trust claim. Carolyn lists Christopher Hyde in her list of witnesses to give evidence on the fraudulent conveyance relating to the Florida condo. Carolyn’s TSEF indicated that no amendment to pleadings was required.

10The parties had a number of attendances before Kiteley J. in November and December 2020. They agreed to a limit of six days for trial on the basis of the claims and witnesses listed by each of them. John says that it was only after the six day time limit was confirmed that Carolyn filed an amended TSEF stating she required an amendment to pleadings to claim a resulting trust.

11John states it is highly prejudicial to him to permit Carolyn to amend her pleadings now. John will have to lead evidence regarding the 2009 date of separation. He would not have agreed to the 2016 date of separation if he knew Carolyn intended to make this claim. Ms. Rosen would not have reduced her list of witnesses and curtailed her trial time to fit within the six day limit if she had known of this claim.

12Carolyn could have brought her motion to amend pleadings in February 2020 but did not. She could have raised the issue in the conferences with Kiteley J. before the six day trial limit was agreed to but she did not. John argues that this prejudice cannot be compensated by an adjournment or costs.

13I read affidavit evidence and heard oral argument on the motion. After consideration, I granted Carolyn’s motion to amend her pleadings. I advised the parties I would provide my reasons for decision on the motion in the reasons for judgment.

14In granting the motion I ordered that the time for the argument of the motion would be deducted from Carolyn’s three days of trial time and reserved John’s claim for costs of the motion to the costs submissions following the trial.

15The following are my reasons on the motion.

16Rule 11(3) of the Family Law Rules, O. Reg. 114/09 provides that the court shall allow a party to amend their pleadings unless an amendment would disadvantage another party in a way for which costs or an adjournment could not compensate. Most case law related to this rule has held it is mandatory. Parties should rarely be denied the opportunity amend their pleadings and advance their claims: Stefureak v. Chambers (No. 3), 2005 16090 (ON SC), [2005] O.J. No. 1949 (S.C.J.).

17Ms. Rosen referred the court to Greenglass v. Greenglass, 2010 ONCA 675, [2010] O.J. No. 4409. In that case the husband sought to amend his pleadings at trial to claim an unequal division of net family property under the FLA.

18In Greenglass the trial judge held that because the proceeding had already been prolonged by other related litigation, a further delay would cause prejudice to the wife that could not be compensated by an adjournment or costs. The litigation commenced in 2002 and did not reach trial until 2009. The trial judge found that the husband gave no reason for not advancing his claim earlier. The wife did not have sufficient resources to weather further delay and continued financial insecurity.

19The Ontario Court of Appeal upheld the trial judge’s decision. Justice Epstein held that judges have inherent authority to control their own proceedings and the discretion to make orders to ensure fairness to the parties. The Court of Appeal found that the adjournment would prejudice the wife and that the trial judge properly exercised her discretion after identifying the relevant factors and applying the proper principles.

20I agree with Ms. Rosen that Carolyn did not move at the earliest opportunity to expressly plead her claim for a resulting trust. In deciding whether to allow this late request to amend pleadings, I must consider the mandatory nature of r. 11(3) and the overall circumstances of this litigation.

21John made concessions and expended costs to respond to this motion on the eve of trial. This, to some degree, results in disadvantage to him. However, the trial will proceed now and there will be no further delay. There will be no additional witnesses or documents John was not expecting. John will have his full trial time as scheduled to present his case. I find that any disadvantage to John arising from the amendment can be compensated for by costs.

22For these reasons, I granted Carolyn’s motion to amend her pleadings.

Issues for Trial

23The issues to be determined at trial are as follows:

1. The amount of equalization owing by John to Carolyn;

Within this issue, the parties disagree on the value of John’s property known municipally as 78 Summerhill Gardens, the value and ownership of vehicles owned by of John’s professional corporation Hyde Legal PC, the value of John’s interest in Chriscassa LLC, each party’s responsibility for a Royal Bank joint line of credit, and Hyde Legal PC’s liabilities to CRA.

2. Quantum of spousal support owing from John to Carolyn from July 2016 to December 1, 2020;

Within this issue, the parties disagree on the calculation of John’s income for the years 2016 to 2020 and whether Carolyn’s claim to support is needs based or compensatory or both.

3. Quantum and duration of ongoing spousal support.

Background

24The parties met in Guelph where they both attended university. They first cohabited in a rental home and later purchased a home in Guelph.

25Carolyn has a Bachelor of Applied Science in Consumer Studies. When John was accepted to law school in Windsor, the parties rented out their home in Guelph and moved to Windsor. Carolyn worked in a retail position while John attended school.

26The parties moved to Toronto for John’s articling year. Carolyn held a marketing position at Hudson’s Bay Company.

27Christopher was born in 1992. Carolyn’s parents assisted her with childcare while she continued to work full time.

28After completing his articling, John wanted to move back to Guelph to practice because the hours of work would be less demanding. Carolyn wanted to stay in Toronto because there were more opportunities for her career development. The parties moved to Guelph.

29Cassandra was born in 1995. Carolyn stopped working and became the primary caregiver to the children and a homemaker for the family.

30When both children were in school full time, Carolyn did some part-time work as a bookkeeper for family members. She earned minimal income.

31In about 1999, the family moved to Burlington. The parties purchased the current matrimonial home, 4324 Rosemead Court, in Carolyn’s name alone. Carolyn does not dispute that John has a one-half interest in Rosemead. John commuted to his law practice in Toronto.

32In 2003, John purchased a sailboat for $120,000 using funds from a Royal Bank line of credit secured against Rosemead. Carolyn agreed to encumber the home as security for the purchase. John made all of the payments on the line of credit.

33The family belonged to the Royal Canadian Yacht Club. Carolyn says that John primarily used the boat because she and Cassie were not sailors. The family attended dinners and events at the RCYC together, but less so after Christopher moved to Kingston for university.

34The boat was sold in 2019. The net proceeds of sale, about $54,994, were not used to pay down the line of credit. John continues to make the monthly line of credit payments. About $120,000 is still owing on the line of credit today. John says this is a joint debt. Carolyn says the debt should be John’s sole responsibility.

35John purchased a property on Sherbourne Avenue in Toronto in January 2009. John argues that this was the time of separation. He lived in Sherbourne and conducted his life as if the parties were separated. Carolyn says that Sherbourne was purchased as an investment property and, although John did stay in the city when he was working late, he came home to reside in Rosemead many evenings and weekends. That property was renovated and sold.

36In 2012, John purchased the Florida condominium in his name alone. In 2013, title to the condo was transferred to Chriscassa LLC. Carolyn has never been to the condo. John’s professional corporation, Hyde Law PC advanced $118,000 to Chriscassa LLC to purchase the property.

37In December 2015, John purchased the property known municipally as 78 Summerhill Gardens, Toronto, for $1.249 million. John continues to reside in that property. John’s expert, Randi Atlin, appraised the value of the property at $1.2 million on the date of separation. Carolyn’s expert, Demitry Omrin, appraised the value of Summerhill at $1.4 million on the date of separation.

38Carolyn continued to reside in Rosemead after separation. John made all of the mortgage payments on Rosemead. Carolyn paid utilities and the property taxes for Rosemead.

39John paid Carolyn $4,000 per month on a tax-free basis for her expenses, until the order of Gilmore J. dated November 2019. John purchased cars for each of the children when they started driving. He supported the children directly while they were in university and continued to assist them financially after they completed their education.

40Carolyn returned to work full time after separation as a salesperson at Hudson’s Bay Company. She earns an hourly wage plus commission. In 2019 she earned $69,643. She projects her 2020 income (due to COVID-19) to be about $52,000.

41John worked at a few law firms through his career. He is a certified specialist in labour law, representing management in labour disputes. He earned income through his professional corporation, Hyde Law PC. In January 2019, John began operating his own law firm, Hyde HR Law. Hyde Law PC has not operated since 2018 but still owes income taxes to the Canada Revenue Agency. These taxes must be paid before the corporation can be wound up.

42Both parties called experts who produced reports and gave opinions on John’s income from 2016 to 2019. John’s expert, Vivian Alterman of ap Valuations did not provide an income valuation for 2020 as the company had not completed the fiscal year. Carolyn’s expert, Scott Schnurr of Kalex Valuations calculated a projected income for 2020 based on the Hyde HR August 2020 income statement.

Credibility

43Carolyn argues that where there is conflicting evidence, I should prefer her evidence to John’s because she was sincere and frank in her testimony and made reasonable concessions where John did not. She says that John intentionally pre-arranged his finances to thwart her claims to equalization and spousal support and not pay her what she is entitled to. She accuses John of forging his children’s signatures, taking improper deductions for personal expenses through his business, failing to pay his personal and corporate taxes and blaming his lawyers for failing to fulfil his tax obligations relating to the Florida LLC. On this basis, she states that his evidence should be found to be insincere and, thus, less credible: White v. R., 1947 1 (SCC), [1947] S.C.R. 268, at para. 10; van Staveren v. Coachlite Roller Gardens Inc., 2012 ONSC 5941, at para. 13.

44As the trier of fact, I am charged with determining the truth. On occasion, that task can be rendered unenviably difficult when both sides of a dispute are motivated to offer evidence designed to “fit” within a specific theory of the case. In Prodigy Graphics Group Inc. v. Fitz-Andrews, [2000] O.J. No. 1203 (S.C.J.), at para. 46, Justice Cameron offered a non-exhaustive list of traditional criteria by which the evidence of each witness, and, where appropriate, the exhibits presented at trial, ought to be assessed including: the demeanor of the witnesses; bias and interest in the outcome; relationship or hostility to a party; internal and external consistency with the witnesses own evidence and that of other credible witnesses and documents; and the “air of reality.”

45I carefully listened to and observed the testimony of all the witnesses called by both parties at trial. I also reviewed the exhibits tendered relied upon by the parties including the expert reports.

46For the most part, each party’s evidence focussed on the issues that had to be addressed. Neither party exaggerated nor overstated their case. Both parties made concessions on issues where it was reasonable to do so.

47If anything, some of Carolyn’s evidence showed a bias when she attacked John’s personal and professional integrity. She portrayed John’s actions as not just untoward but bordering on illegal and maliciously intended to harm her. Carolyn blames John’s infidelity for the breakdown of the marriage. While I understand she does not trust John, I find her view of his actions was coloured by suspicion which may not be warranted.

48For the foregoing reasons, I do not have serious concerns about either party’s credibility. Where I do prefer the evidence of one party over the other, I will address it below

Issue 1: Equalization

i. The value of 78 Summerhill Gardens

49Carolyn retained Demitry Omrin of The Real Estate Consulting Group of Canada to give an expert opinion as to the value of 78 Summerhill. Mr. Omrin has been an appraiser since 1991. He has given expert evidence in family law court cases and arbitrations about 15 times.

50The appraisal was conducted by Jim Acquanno who inspected the exterior of the property and did all of the research on the comparables referenced in the report. He did not access the interior of the property. Mr Omrin reviewed Mr. Aquanno’s work and is responsible for the report.

51Based on the direct comparison approach, Mr. Omrin’s appraisal report estimates the value of the property in July 2016 at $1,425,000.

52After his appraisal was completed, Mr. Omrin received Ms. Atlin’s appraisal which contained information about the open building permits registered on title to the property and a discrepancy in the square footage. Based on the square footage change and other minor unknowns, Mr. Omrin opined that he would adjust the estimate in his report to $1.4 million.

53Mr. Omrin reviewed an earlier appraisal performed in October 2016 by Metrowide Appraisal Services, about three-and-a-half months after the date of separation. Metrowide estimates the value of Summerhill at $1.34 million on that date. That report contained interior photographs taken at the time of the appraisal.

54Mr. Omrin states that property values went up in spring 2016 due to foreign buyers and other market factors. He believes that the hindsight comparables used in his report were the most appropriate for a retrospective valuation. After doing the direct comparison, Mr. Omrin followed up with a costs approach comparison to corroborate the findings in the direct comparison. In choosing comparables and equalizing each sale to 78 Summerhill, Mr. Omrin used the assumption that 78 Summerhill has an effective age of ten years.

55Mr. Omrin conceded that the assumptions in his appraisal did not consider the five open permits. He agreed that if he had the opportunity to inspect the interior of the property, he might have asked John questions about the open permits and the deficiencies. Mr. Omrin did not ask to speak to John to clarify any of these issues.

56In his analysis of fair market value of 78 Summerhill as of July 2016, Mr. Omrin made an increasing adjustment of $75,000 for four comparable properties to reflect the fact that they backed onto a cemetery and other houses and 78 Summerhill backed onto a ravine. However, 78 Summerhill backs immediately onto an active railway trestle which does not appear to be accounted for. Mr. Omrin made other adjustments relative to the liveable floor spaces, the condition of the basements, parking facilities, and other factors specified in his report.

57Two of Mr. Omrin’s comparables, 68 Heath Street and 20 Ottawa Street were significantly larger properties with bigger lots, larger living area, parking, better finishes and more bathrooms. Mr. Omrin made a decreasing adjustment of $275,000 and $150,000 respectively. However, in the comparison to 76 Summerhill which was smaller, of inferior condition and sold in November 2015, Mr. Omrin made an increasing adjustment of $550,000.

58Mr. Omrin made clear that, in his opinion, the five open permits were not a serious issue which would impact the value of the home to a motivated purchaser. A purchaser might take them into account in making an offer but, based on the market conditions at the time, would be more likely to buy title insurance.

59John retained Ms. Randi Atlin to give an expert opinion as to the value of 78 Summerhill. Ms. Atlin has worked as a real estate appraiser for 31 years. She has given evidence as an expert in court 10 to 15 times.

60Ms. Atlin viewed the exterior of the property and the neighbourhood. She looked at comparable homes sold in the area at the relevant time. She spoke to John about work done and renovations to the home. Ms. Atlin did not inspect the interior of the home. She was told by John that the interior had been substantially changed since July 2016.

61Based on her analysis, Ms. Atlin appraisal report estimates the value of the property in July 2016 at $1.2 million.

62Ms. Atlin disagrees with Mr. Omrin about the effective age of Summerhill. She states that the foundation and the adjoining walls of the townhouses are part of the original construction of the home and are much older than ten years.

63Ms. Atlin also disagrees with Mr. Omrin about the relevance of the open permits and their impact on the value of the home. The permits on Summerhill were not closed until 2018. In Ms. Atlin’s view, an open permit is a red flag to a purchaser. Even a motivated purchaser is not looking for a problem. They do not want the risk of additional time, money, inspections and work required to complete and close the permits.

64Ms. Atlin stated that title insurance does not protect a purchaser against the possible costs of addressing an open permit. It only protects the purchaser for the costs relating to correcting a problem on title. In her opinion, work permits are not title issues for which title insurance typically reimburses the purchaser.

65Ms. Atlin analyzed sales of five similar properties within the immediate area of 78 Summerhill. She adjusted the values considering the time of the sale, building and lot size, parking, renovation, basement walkout and ravine location. Ms. Atlin did not attribute dollar values to the variances. Instead, she opined on whether the adjustment should be an increase or decrease and the reasons for it.

66In Ms. Atlin’s opinion, 68 Summerhill and 80 Summerhill are the two most comparable properties to determine the value of 78 Summerhill. The other properties she considered set the high and low end of the range of value. The home at 68 has the benefits of a larger lot and being the last unit in the townhouse row, but this is offset by older renovations and smaller building size. The home at 80 was sold in November 2015 and requires a time adjustment to reflect the rise in the market to July 2016. Ms. Atlin appraised the value of these two properties at about $1.3 million. Ms. Atlin then lowered her appraisal of 78 Summerhill to $1.2 million to adjust for the five open permits.

67Ms. Atlin conceded on cross examination that the $100,000 adjustment she chose to address the permits is an arbitrary number. However, in her opinion the permits would be a concern to a purchaser because of the risk of time and money involved to close them. A prudent purchaser would seek an abatement in the purchase price to take that risk. Based on her experience, Ms. Atlin quantified that risk at $100,000.

68In her evidence Ms. Atlin did not agree that the Metrowide appraisal, which was done for a mortgage company, should be taken as a more conservative appraisal. She stated that an appraisal should always reflect the market value regardless of its purpose.

Valuation Analysis

69Neither of the appraisers viewed the interior of 78 Summerhill due to COVID-19 restrictions. Both appraisers used a larger square footage calculation (1284) which included an addition completed in 2018 rather than the actual square footage of the home in July 2016 (1114). Mr. Omrin saw the 2016 interior photographs of the home in the Metrowide appraisal. Ms. Atlin did not see that appraisal.

70Both appraisers used a different methodology in their appraisals. This may, to some degree, account for the difference in their valuations. Our courts have recognized that the determination of fair market value is not an exact science: Budd v. Budd, 2015 ONSC 346, at para. 42. I found both appraisers to be fair and accurate in giving their opinion of the value of 78 Summerhill. The analysis of both appraisers was of assistance to the court.

71I find that the comparable sales used by Ms. Atlin were more appropriate in determining the fair market value of 78 Summerhill. Ms. Atlin used properties of more similar size and construction and generally of the same design and location.

72I agree with Ms. Atlin’s opinion that the existence of five open building permits would be of concern even to a motivated purchaser. The risk of the unknown cost and work required to close the permits would not be attractive to some buyers. I also agree with her view that the problem of completing the repairs is a negative factor which should be taken into consideration in valuing the property.

73John was not aware of the open permits on Summerhill until just before the closing of his purchase on December 3, 2015. His lawyer received a letter from the City of Toronto on December 2, 2015 setting out the existing permits. John decided to proceed with the closing. He was not fully aware of what the cost of closing the permits would be until the necessary work began. John stated that if he had known the time cost and trouble the permits would present, he would either have not purchased the property or would have sought a $50,000 reduction in price.

74It is difficult for the court to place a value on what might be in the mind of a purchaser when determining the fair market value of a home. In Ms. Atlin’s opinion 78 Summerhill would have a value of $1.3 million in July 2016, but for the existence of the permits. The Metrowide appraisal values the property at $1,340,000 three-and-a-half months after the date of separation. Based on all of the evidence, including the escalating spring market in 2016 and the existence of the open permits, I find that the appropriate fair market value of 78 Summerhill, as at July 2016, is $1,250,000.

75In her net family property statement, Carolyn does not include notional disposition costs for Summerhill. However, in the request to admit, Carolyn admits that both Rosemead and Summerhill have notional disposition costs of five percent. Those amounts shall form part of each party’s net family property calculation.

ii. The value of John’s interest in Chriscassa LLC

76John believed that the parties separated in 2009. He refers the court to emails he received from Carolyn in August 2009 through to September 2010 where she directs him to move out of the house, says that she wants a divorce, that he should prepare the divorce documents, that “ it [the marriage] is never going to work” and that the she will be selling the house.

77It was about this time that John purchased and moved into Sherbourne. John says he began to order his life and finances as a separated person. He purchased a policy of life insurance in 2011 naming only the children as beneficiaries. He purchased a condominium in Florida in 2012. Hyde Legal loaned $118,000 for the purchase. John intended that he and the children would spend holiday time there.

78In 2013, Christopher was attending Queen’s University in Kingston and Cassie was attending high school in Burlington. John decided to transfer the condo into a Florida LLC. John holds 34 percent of the shares of the LLC. Christopher and Cassie each hold 33 percent of the shares.

79John states that he incorporated the LLC to gift a share in the condo to the children and to provide some tax savings. The children take the value of their shares at the adjusted tax base. John believes that on his death, the children would each get one half of his shares and only pay estate tax on those shares. If the property is sold, the children would only pay tax on the gain in the value of their shares.

80The condo is used only by John and the children. It is not rented and earns no income.

81John denies the allegation that he “forged” the children’s signatures on the corporate documents. Cassie was a minor at the time of the incorporation. John acknowledges signing the documents on her behalf. Christopher was living in Kingston. John says he had conversations with Christopher about the incorporation and the gift of the shares. He says Christopher was fully aware of and agreed to John signing documents on his behalf.

82On cross-examination, John acknowledged that the corporation has never filed a U.S. tax return. He did not know that it was required since the LLC earns no income. He also was not aware that the transfer of real estate to an LLC is a deemed disposition in Canada which would attract capital gains tax.

83Christopher Hyde gave evidence in support of Carolyn’s claim that he holds his 33 percent share of Chriscassa as a trustee for John. Cassie Hyde was not called as a witness.

84Christopher lives with Carolyn. He says he had a close relationship with his father until about June 2020. Now they are estranged.

85Christopher confirmed that he did not sign the incorporation documents for the LLC. He states that it does not appear that his sister signed the documents either as the signature on the documents doesn’t look like hers. Christopher acknowledges that he was aware of the corporate documents and may have seen them before this proceeding. Christopher did not pay his father any money for his interest in Chriscassa.

86Christopher stated that he has been to the condo about five times, sometimes with his father and sometimes with friends. He would ask his father in advance if the condo was available on the dates he wanted to travel there.

87Christopher acknowledged the text correspondence between himself and his father during a hurricane in September 2017. They texted about flood insurance and the safety of the boat. He says he expressed concern because he knew the condo was in the path of extreme weather.

88Carolyn has never been to the condo. She testified that she knew about the condo for some time and was aware that the children had an ownership interest. Carolyn confirmed that Christopher wanted to know if he could sell his shares and receive the proceeds.

89Carolyn believes that John transferred shares to the children’s names to avoid his obligations to pay her equalization.

Analysis

90In Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, the Supreme Court of Canada held that a gratuitous transfer from a parent to adult child will raise the presumption that the adult child holds the funds in trust for the benefit of the transferor (or the transferor’s estate). In that case, the asset transferred to the adult child was money in a bank account.

91If a presumption of resulting trust applies, the evidentiary burden is on the transferee to prove, on a balance of probabilities, that the transfer was intended to be a gift (thereby defeating the presumption of resulting trust). The evidence required to rebut the presumption is evidence of the transferor’s contrary intention, at the time of the transfer, on a balance of probabilities: Pecore, at para. 43. Evidence of events subsequent to the transfer may be admitted if it was relevant to the transferor’s intention at the time of the transfer: Pecore, at para. 59.

92Where the transfer is from a parent to a minor child, the presumption of advancement may apply and the party challenging the transfer must rebut the presumption of a gift. The appropriate standard of proof is the balance of probabilities. The presumption only determines the result where there is insufficient evidence to rebut it: Waters’ Law of Trusts, at p. 378.

93In this case, at the time of the transfer, Cassie was a minor child. The presumption of advancement applies to the transfer of shares to her. Carolyn must prove on a balance of probabilities that John did not intend to gift Cassie her shares.

94Christopher was an adult at the time of the transfer. The presumption of resulting trust applies to the transfer of shares to him. In this case, Carolyn is claiming that the transferee (Christopher) does not want to rebut the presumption and says the legal and beneficial ownership of his shares revert to John.

95John says that he intended the transfer of shares to both children to be a gift.

96A presumption of resulting trust is not a substantive rule of law. Not every gratuitous transfer leads to a finding of resulting trust. Rather, a presumption is a rule of evidence that deals with who bears the evidentiary onus. The Court does not need to rely on the presumption where there is actual evidence of intention: Pecore v. Pecore, 2005 31576 (ON CA), [2005] O.J. No. 3712 (Ont. C.A.), at para. 9, per Lang J.A.:

Since both presumptions can be rebutted by evidence of actual intention, in my view, the presumptions become relevant only if, after considering all the evidence and the circumstances surrounding the transfer, a court is unable to draw a conclusion about the transferor’s actual intention. Only in such a case, would a court resort to the presumptions to determine the issue.

97By 2013, John had not lived consistently in the matrimonial home for a few years. The emails from Carolyn to John in 2009 and 2010 clearly show that he was not welcome at the home and that there was hostility between the parties involving the children when he went to Rosemead.

98In my view, the evidence of John’s actual intention in this case is clear. John intended to gift shares in Chriscassa to the children at the time of the incorporation of the company. The evidence and circumstances surrounding the creation of the LLC demonstrates that John incorporated the LLC and transferred 33 percent of the shares to each of the children to connect them to a home where they could spend time together as a family then and in the future. This is what happened until Christopher and his father became estranged.

99There is no evidence that John transferred shares in the condo to the children to avoid his equalization obligations to Carolyn. He believed (and still believes) that the parties separated in 2009 or 2010. Chriscassa was not incorporated until three years later. Based on my finding of John’s intention at the time of the transfer of the shares to the children, neither the presumption of advancement nor the presumption of resulting trust are relevant.

100Christopher has aligned with his mother in the dispute between his parents. He gave evidence to support his mother’s claims regarding Chriscassa. However, Christopher’s evidence to some degree confirmed John’s evidence that he gifted the shares to the children outright. Christopher believed he had an interest in Chriscassa that could be sold and asked Carolyn to seek advice on how he could do that.

101I find that John owns a 34 percent interest in Chriscassa.

102John seeks a deduction for capital gains taxes and real estate commissions relating to the future sale of the condo. As a general rule, it is appropriate to deduct disposition costs from net family property “if there is satisfactory evidence of a likely disposition date and if it is clear that such costs will be inevitable when the owner disposes of the assets or is deemed to have disposed of them”: Sengmueller v. Sengmueller (1994), 1994 8711 (ON CA), 17 O.R. (3d) 208 (C.A.), at pp. 216-217;Buttar v. Buttar, 2013 ONCA 517, 116 O.R. (3d) 481, at para. 20.

103John’s evidence was that the condo is in an area with rising water levels which is a concern. He stated it may be prudent to sell the condo and buy something larger in a different area. He also stated that the children may wish to sell their interest in the condo and purchase their own properties. Christopher has already raised this possibility.

104In my view it is likely that the property will be sold at some point in the future. At that point disposition costs will be incurred. On this basis, it is appropriate to deduct disposition costs for John’s share of the condo from John’s net family property.

iii. The Joint Line of Credit

105The parties took out a joint line of credit with the Royal Bank on April 8, 2003. The line was secured by a collateral mortgage on Rosemead. Carolyn agreed to the funds being used to purchase the sailboat. She says she did not think it was a good financial decision at the time. She acknowledges that John has made all of the payments on the joint line of credit since separation.

106It is not disputed that John sold the boat in 2019. Carolyn says she was surprised that the boat sold for so little ($54,994 net). She says that John spent a lot of time and money maintaining and restoring the boat. Because it was sold, she was not able to obtain an appraisal to confirm if the boat was sold for fair market value.

107Carolyn argues that John should be solely responsible for the outstanding balance on the line of credit which is still about $120,000. He did not use the proceeds of sale of the boat to pay down the principal amount owing on the line.

108Carolyn states that John had the primary use and benefit of the boat and the proceeds. She asks the court to find that John used funds from the joint line of credit to pay his personal expenses and should reimburse her for her one half of the funds owing: Armstrong v. Armstrong, 2019 ONSC 3227, at paras. 26-27.

109John sold the boat in October 2019. He was starting his new practice and did not have time to use the boat. It was too expensive to maintain.

110John says he used the net proceeds of the sale of the boat to pay higher interest credit card debt, amounts owing to CRA and his bills for this litigation. John argues that Carolyn chose not to pursue a claim for unequal division of net family property so she cannot claim that responsibility for a joint debt should be attributed other than equally between the parties. The parties have agreed the encumbered asset (Rosemead) is owned equally. The parties and the children used the boat as a family during the marriage.

Analysis

111The parties purchased the boat for their family’s use. John may have used it more often, but that does not change the original purpose.

112The line of credit is joint debt owing by the parties on the date of separation. In accordance with s. 4(1) of the FLA, one half of the debt must be listed on each party’s side of the equalization equation. Any adjustment or credit should be treated as a post-equalization adjustment.

113Carolyn says that John did not consult her on financial decisions during the marriage. He did not consult Carolyn before selling the boat in 2019. However, if he had consulted Carolyn, I doubt she would have agreed to John using all of the proceeds of sale to pay his personal debt rather than the joint debt incurred to purchase it.

114John paid all of the interest payments on the line of credit, $24,159. Half of these payments were made on Carolyn’s behalf, $12,079. John received all of the proceeds of sale of an asset purchased with joint funds and used the proceeds to retire his personal debt. He must reimburse Carolyn for one half of the net proceeds, $27,497, less her half of the interest payments he made, $12,079, for a total owing of $15,418 payable from John to Carolyn. This amount shall be an adjustment made after the equalization payment is calculated.

iv. The vehicles and taxes owing by Hyde Legal

115John purchased cars for each of the children when they began driving. John bought a Nissan 350 for Christopher. Christopher agreed that he drove the car and his father did not.

116The Nissan was sold for $10,000. Those proceeds were used to purchase a BMW in Christopher’s name. When that car was damaged in an accident, Christopher received the insurance proceeds. Christopher now drives a car in his own name.

117John purchased a Mercedes C300 through Hyde Legal for Cassie. John has not driven the car except to take it for service. Cassie has sole use and possession of the car. Carolyn lists the value of the Mercedes in John’s net family property.

118Hyde Legal also owned a 2007 Ford Explorer which John drove. John says the value of the vehicle was about $1,000 on the date of separation. The mileage was 213,000 kms. The vehicle required extensive repairs including bodywork, transmission and brakes. John testified that the Explorer was recently sold for $4,000.

119Carolyn lists a value of $10,825 for the Explorer in John’s net family property based on a Black Book value.

120John also owned a Mercedes 500 which was sold prior to the date of separation but transferred to the purchaser after the date of separation. John estimated the value at $15,000. Carolyn used the Black Book value of $20,475.

Analysis

121Vivian Alterman prepared a valuation of Hyde Legal as at July 3, 2016. Carolyn does not dispute Ms. Alterman’s valuation of $177,000. It does not appear that Ms. Alterman included the Mercedes driven by Cassie or the Explorer in the valuation of Hyde Legal.

122John is the sole shareholder of Hyde Legal. In my view, John’s purchase of a car for Cassie is no different than his purchase of a car for Christopher. His intent was that the car belonged to each child for their own use. The value of Cassie’s car should not form part of John’s net family property.

123John owned the Explorer on the date of separation. The value should be included in his net family property. John has estimated a value on date of separation which is less than the recent sale price of $4000. I understand that substantial work was required before the car could be sold for that price. However, the best evidence I have of the value of the Explorer at the date of separation is the Black Book value of $10,825.

124John’s Mercedes 500 was sold prior to the date of separation. He has used a value of $15,000 in his net family property statement which I take to be the sale price. John still had the car in his possession. Its value is the amount paid by the third party purchaser.

125John argues that Hyde Legal had outstanding corporate taxes in July 2016. In September 2018, the CRA garnished John’s bank account for payment of Hyde Legal’s income tax debts.

126Ms. Alterman’s valuation of Hyde Legal takes into account the 2015 taxes owing of $15,281. It does not list the 2014 taxes owing. The 2014 Notice of Assessment for Hyde Legal confirms taxes owing of $14,481. Those taxes were still outstanding on July 3, 2016. The 2014 taxes owing must be included as a date of separation debt in calculating John’s net family property.

Conclusion of equalization/property issues

127Using my findings above, I calculate that John owes an equalization payment to Carolyn in the amount of $81,230. In addition to the equalization payment he must reimburse her $15,418 (one half of the net proceeds of sale of the boat less one half of the debt payments made on her behalf) plus $22,333 (one half of the property taxes paid by Carolyn on John’s behalf). John owes Carolyn $118,981.

128Carolyn owes John $30,564 for her share of the mortgage payments John made on her behalf.

129Pursuant to the order of Goodman, J. dated June 8, 2018, John is entitled to a credit of $10,000 for interim disbursements paid.

130Based on the above, John shall pay Carolyn $78,417 in final satisfaction of the equalization/property issues.

131Carolyn would like to purchase John’s interest in Rosemead. John does not oppose this if Carolyn can arrange the financing to purchase his one half share for the agreed upon value.

132John has requested the return of some personal items from the home. Carolyn does not object to returning them. The parties shall make arrangements for that between them.

Issue 2: Spousal Support

133John does not dispute Carolyn’s entitlement to needs-based spousal support. He acknowledges her caregiving role during the marriage, the length of the marriage and the discrepancy in their respective incomes. John disputes Carolyn’s claim to compensatory support. He asks the court to order monthly support based on the low end of the Spousal Support Advisory Guideline range.

134Carolyn argues that she is entitled to both needs-based and compensatory support. Her compensatory claim is based on the role she played during the marriage: putting her career aside to be a full-time mother and homemaker so John could further his legal career. Her needs claim is based on her age, time out of the workforce, and her lack of current skills, training and work experience which makes her less competitive with younger people in her field.

135Carolyn testified that retail work is physically taxing. When retail stores closed due to the pandemic, she began to work virtually with clients in customer service. Carolyn did not provide any specific evidence relating to her health that would prevent her from continuing to work full-time or returning to work in person when retail restrictions are removed. Carolyn acknowledged that John also has a stressful job and that he works long hours under pressure.

136Carolyn’s 2019 income from employment was $69,643. She estimated her 2020 income will be about $52,000 due to the COVID-19 lockdowns and a drop in retail sales.

137Carolyn seeks retroactive and indefinite prospective spousal support at the midpoint of the SSAG range. She needs to plan for her future retirement. She has only a small RRSP and will not receive a substantial equalization payment.

i. John’s income from 2016 - 2019

138Both experts, Mr. Schnurr and Ms. Alterman, provided reports setting out their valuation of John’s income in the relevant years to calculate retroactive support owing from John to Carolyn. During the course of the trial, the two experts spoke to one another to narrow issues and provide the court with figures they both agreed to. This was of great assistance.

139In 2016, 2017 and 2018 John worked for Levitt LLP and Brauti Thorning Ziobarras. The law firms paid fees to Hyde Legal. John was not a T4 employee. John claimed personal expenses through Hyde Legal which reduced the pre-tax income of the corporation.

140In 2019 John started a new firm, Hyde HR Law. John withdrew $103,604 from his RRSP in that year to pay for expenses and start up costs of the business. The value of the RRSP in July 2016 is included in John’s net family property for equalization. Ms. Alterman did not include this amount in her calculation of John’s 2019 income at $289,886.

141The RRSP income is included in John’s Line 150 income for 2019. Mr. Schnurr initially included this amount in his calculation of John’s 2019 income. Carolyn subsequently agreed to remove the RRSP income as double dipping.

142It is not disputed that Hyde Legal owes corporate taxes. In calculating John’s income for support purposes, Mr. Schnurr provided two scenarios: one which calculated the failure to pay taxes as a benefit to John with corresponding gross up and one which presumes that John will pay the taxes owing.

143Carolyn argues that John incorporated Hyde HR Law as an attempt to avoid Hyde Legal’s tax obligations. As with her argument on Chriscassa, Carolyn asks the court to presume the worst of John’s motives. She points out that Hyde HR had significant retained cash in 2020 which could have been used to pay the taxes owing but was not. Mr. Schnurr’s scenario two calculations for John’s income assume the taxes will never be paid.

144John argues that he has always intended to pay Hyde Legal’s taxes, but he has not been in a financial position to do so. The company cannot be dissolved until the taxes are paid. John states that he will pay the taxes from his share of the net proceeds of the sale of Rosemead.

145The amount of income tax owing by Hyde Legal for the relevant years is about $54,000. If the taxes are paid, the valuators agree on John’s income to calculate retroactive support.

146Both experts agree that John deducted a significant amount of personal expenses through Hyde Legal in the years 2016 to 2018. Both included a tax gross up for these discretionary expense claims. In their agreed upon figures, the valuators used compromise figures.

147John deducted fewer personal expenses through Hyde HR in 2019 and 2020. In calculating John’s income for prospective purposes, the valuators agree that the gross up for personal expenses from prior years should be backed out if they do not continue in historical levels.

148Mr. Schnurr calculated John’s income for 2020 at $581,000. He based this calculation on his analysis of Hyde HR’s interim Financial Statement from January 1 to August 31, 2020 and assumed similar operating results for the balance of the year.

149Ms. Alterman did not prepare a report for John’s 2020 income.

150John’s evidence is that 2020 was an unusual year. At the beginning of the pandemic (March 2020), his income increased because business escalated quickly. Employers didn’t know how to react to the onset of COVID-19 restrictions and protocols. Regulations and financial circumstances were changing constantly. As 2020 progressed, clients had a better understanding of their obligations and the firm’s business levelled off.

151The monthly expenses of Hyde HR changed in 2020. John hired a senior associate and another assistant and leased additional office space. His current monthly expenses average about $46,000.

152John disagrees with Mr. Schnurr’s calculation of his 2020 income. Mr. Schnurr extrapolated 25 percent of John’s discretionary expenses from 2019 and grossed up that amount in the income calculation. John argues that this approach is not correct because it presumes a non-business portion of home office and start-up expenses which are not recurring.

Analysis

153In making a spousal support order under s. 15.2(4) of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp) the court shall take into consideration the condition, means, needs, and other circumstances of each spouse, including

1. The length of time the spouses cohabited;

2. The functions performed by each spouse during cohabitation; and

3. Any order, agreement or arrangement relating to support of either spouse.

154The objectives of a spousal support order under s. 15.2(6) of the Divorce Act are as follows:

a. recognize any economic advantages and disadvantages to the spouses arising from the marriage or its breakdown;

b. apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;

c. relieve any economic hardships of the spouses arising from the breakdown of the marriage; and

d. in so far as is practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

155There are three conceptual bases for entitlement to spousal support, as outlined in Bracklow v. Bracklow, 1999 715 (SCC), [1999] 1 S.C.R. 420:

1. Compensatory: this is grounded in the factors and the objectives in s. 15.2(6)(a) and (b) of the Divorce Act. In considering the means, needs, and circumstances of the spouses, the court must recognize that a spouse’s inability to support him or herself may relate to foregoing career opportunities during the marriage to care for home and family;

2. Contractual: this is grounded in s. 15.2(4)(c) of the Divorce Act whereby the parties may have made an agreement before or during the relationship, which creates or negates a support obligation; and,

3. Non-compensatory: this is a needs-based claim, which is grounded in the objectives in s. 15.2(6)(c) and (d) of the Divorce Act.

156Both parties have university degrees and were on career paths early in the marriage. Once the children were born, John continued to progress in his career and Carolyn took on the primary role of child and home care.

157John achieved success in his career and now operates his own firm. Carolyn returned to the workforce recently when she was about 53 years old.

158I am satisfied that Carolyn has established a prima facie entitlement to spousal support, both needs-based and compensatory. The parties had a long marriage during which Carolyn was substantially a stay-at-home parent. While she was able to return to work at the same company where she was employed previously, her opportunities for advancement are limited by her age, training and time out of the workforce.

John’s Income 2016 to 2019

159I found Mr. Schnurr’s and Ms. Alterman’s evidence on the calculation of John’s income for the years 2016 to 2019 to be helpful and clear. They have agreed on the values for John’s income if I find that he will pay the outstanding tax owing by Hyde Legal.

160John acknowledges that Hyde Legal owes income tax to CRA. On September 7, 2018, CRA sent a Demand to Pay to Hyde Legal requiring immediate payment of $28,901.21.

161Because John did not make the payment, on September 28, 2018, the CRA seized that amount plus $4,732.31 owing for HST (total $33,633.52) from John’s TD Business bank account. This caused problems for the firm’s financial obligations and John’s personal cash flow.

162John’s evidence is that he has not had the ability to pay the taxes owing. He paid expenses for the children, the mortgage on Rosemead, support to Carolyn, started a new business, and completed required renovations on his home. He says that when Rosemead is sold, he will pay the amount from his share of the proceeds of sale.

163Mr. Schnurr’s report states that Hyde HR had positive retained earnings of $117,000 on December 31, 2019, and $374,000 on August 31, 2020. In those years it also had cash on hand in term deposits and GICs of $124,000 and $392,000 respectively. Carolyn argues that John’s failure to use these available funds to pay the tax debt proves that he has no intention of paying it. It should be attributed to him as pre tax corporate income.

164I accept John’s evidence that, despite the surge in business that came at the beginning of the pandemic, COVID-19 has created financial uncertainty that requires Hyde HR to maintain retained earnings available for possible contractual and other obligations. His firm is still a new venture and John does not have the cushion of working within a firm and receiving referrals.

165John acknowledges his debt to the CRA. His firm accounts were previously garnished. John has professional licencing regulations which govern him and the operation of his firm. For these reasons I am satisfied that John will pay the taxes owing by Hyde PC.

166Based on the above, I find John’s income for support purposes is the following:

2016 – $526,046

2017 – $493,053

2018 – $601,534

2019 – $289,886

167Both parties have prepared Divorcemate calculations setting out their position for the amount of retroactive after-tax spousal support owing based on their proposed income. Carolyn asks that support be paid at the mid rage of the SSAG. John argues that, based on Carolyn’s budgets in her sworn Financial Statements, payment of support at the mid-range would result in a surplus.

168In Mason v. Mason, 2016 ONCA 625, 132 O.R. (3d) 641, the Ontario Court of Appeal cautioned against courts defaulting to the middle range of the SSAG in a spousal support determination. Quoting a Department of Justice user’s guide to the SSAG, the court determines that each case requires a contextual analysis: “For too many, using the Guidelines means just plugging the income figures into the software program, getting the range and choosing the mid-point. There is more to the advisory guidelines than this and using them in this way can lead to inappropriate results,” at para. 122.

169In Phillips-Curwin v. Curwin, 2008 NSSC 198, [2008] N.S.J. No. 267, Justice Dellapinna, noted as follows, at para. 47:

Whatever method one might use to determine the appropriate level of spousal support, from a practical point of view the figure chosen should be a reflection of the recipient’s reasonable needs and should not exceed the payor’s means. This is not an exercise in maximizing the spousal support simply because the payor may have the ability to pay it. Rather, the Court must look at all of the factors listed in the Act in light of the stipulated objectives of support and exercise its discretion in a manner that equitably alleviates the adverse consequences of the marriage breakdown between the parties (see Bracklow v. Bracklow, 1999 715 (SCC), [1999] 1 S.C.R. 420 at paragraph 36). That requires a support order that is fair to both parties. [Emphasis in original]

170Carolyn’s Financial Statements filed show that her monthly budget has increased from $5,863 in 2016 to $14,818 in 2020. The latter figure is a proposed budget which includes about $3,700 of housing expenses which Carolyn is not paying now and $3,000 of debt repayment, including credit cards.

171Carolyn’s debt has not increased significantly since separation. In 2016, her Financial Statement showed debt of $104,179 which included the entire outstanding amount of the mortgage on Rosemead, $81,000. In 2020, her debt is about $134,000. Carolyn’s current debt consists of family loans of $7,000 and credit card/line of credit debt of $20,000. These debts could be paid from either the equalization payment or proceeds of sale of the home. This would reduce Carolyn’s monthly budget to about $11,800.

172The parties agreed that they lived a relatively modest lifestyle during the marriage. Carolyn has continued to live within her means: her own employment income and the tax-free and then taxable support she received from John.

173After 2016, Carolyn took reasonable steps to obtain employment and contribute to her own support. For part of the time, one or both of the children were residing with her at Rosemead and she assisted them financially.

174In determining the appropriate quantum of spousal support to be paid retroactively, I have considered the following factors: the strength of Carolyn’s compensatory claim; her annual need based on the budgets in her Financial Statements, filed; John’s ability to pay; and Carolyn’s debts.

175The SSAG mid-range of the Divorcemate calculations for the retroactive years results in a 55/45 split of net disposable income between John and Carolyn. Based on the factors and my findings above, this is an appropriate amount.

176John shall pay Carolyn net monthly spousal support for the years below based on the mid-range midpoint of after-tax cost and benefit as follows:

2016 – $10,226

2017 – $8,159

2018 – $9,620

2019 – $4,228

Conclusion of spousal support 2016-2019

177Using my findings above, I calculate that John should have paid net spousal support to Carolyn from July 2016 to December, 2019 of $325,440. The parties agree that John paid the net amount of $146,050.

178John shall pay Carolyn $179,390 in final satisfaction of Carolyn’s claims to retroactive spousal support. This amount shall be paid from John’s share of the net proceeds of sale of Rosemead or calculated in the buyout of his interest by Carolyn.

John’s 2020 Income

179Mr. Schnurr values John’s 2020 income at $581,000. Mr. Schnurr used the interim financial statement of Hyde HR for January 1 to August 31, 2020. He determined the adjusted pre-tax corporate income to be $426,000 for an eight-month period and extrapolated that amount for an 11 1/2-month period to $611,000.

180Mr. Schnurr states that Hyde HR had positive retained earnings and a monthly cash balance of at least $124,000 as of August 31, 2020. The only external debt owing was $40,000 for the CEBA which, if repaid by December 31, 2022 will be reduced to $30,000. The company’s working capital and capital asset requirements were minimal.

181Mr. Schnurr opined that it is reasonable for Hyde HR to retain $50,000 cash on hand to cover operational expenses or unexpected issues. He stated that there was no other business reason, debts, or other outstanding financial restrictions requiring retained earnings and accumulated cash to be kept in the company. The majority of the funds were available for John’s use as sole shareholder and available to him to pay spousal support.

182Mr. Schnurr stated that the January to November 2020 Profit and Loss Statement in evidence at trial was not sufficient for him to update his 2020 income valuation. He would require additional documents including bank and credit card statements, balance sheets and a general ledger to do a proper forensic accounting.

183John argues that Mr. Schnurr’s calculation is flawed. It assumes that 25 percent of the expenses reimbursed to him in 2019 were personal. This assumption is, in part, because John was not able to produce receipts for all of the costs he incurred starting Hyde HR. This assumption results in an inflated pre-tax corporate income.

184John argues his 2020 income will be about $400,000. He calculates this based on the profit and loss statement of Hyde HR for January to November 2020. The statement shows net profit of $116,830 and payments to John to date of $330,615. John states that, due to the trial, there will not be much billings in December and not much more profit for the year.

185To this amount, $447,445, John adds adjusted corporate pre-tax income of $10,000 taken from the monthly expenses of the Profit and Loss Statement. This results in a total available income of $457,445. Deducting $50,000 for retained earnings as proposed by Mr. Schnurr leaves a total income attributable to John of $407,445.

Analysis

186Section 18 of the Federal Child Support Guidelines, SOR/97-175 (“Guidelines”) provides that the court has discretion to include all or part of the pre-tax income of a corporation where it determines that the amount of the payor’s annual income, as determined under s. 16 of the Guidelines, does not “fairly reflect all the money available to the spouse for the payment of child support”.

187In Koester v. Koester, 2003 2150 (ON SC), [2003] O.J. No. 5406 (S.C.J.), Stayshyn J. stated, at para. 35:

As I see it s. 18 of the Federal Child Support Guidelines is designed to address the unfairness which would result if a spouse was to artificially manipulate his income through a corporate structure for the purpose of avoiding child support obligations. The use of the word “may” makes it clear that this is a discretionary tool. The use of the word “fairly” denotes recognition that corporations and businesses must operate in the real world and that there may be valid and legitimate business reasons for maintaining retained earnings in a corporation and not making them available to shareholder owners, either by way of salary or dividend. [Emphasis in original]

188I acknowledge that John had only operated his new firm for about one year before the pandemic began. Most businesses have suffered some financial difficulties as a result of the changes to the economy.

189That said, Hyde HR accumulated retained earnings in its year of start up, 2019. The amount of retained earnings and cash balances increased in 2020. By November 2020, John had received dividends from the company of $330,615. The business has been successful and has grown to the point where he is expanding his office space and hiring new employees.

190Both valuators agree that John did not run significant non-business expenses through Hyde HR in 2019 and 2020.

191In reaching my conclusion on whether to attribute pre-tax corporate income to John to determine his income for 2020, I have considered the level of cash in the business, the need for capital expenditures, the evidence of the impact of COVID-19 on the firm’s business, the increased expenses of additional staff and office space, and the fact that John started the firm in 2019.Based on this, I find that it is reasonable to attribute some additional pre-tax corporate income to John but not the amount calculated by Mr. Schnurr.

192For these reasons, I find that John’s 2020 income for the purposes of spousal support is $480,000. The SSAG range for John’s income of $480,000 and the Carolyn’s income of $52,000 is $13,375 at the low end, $15,604 at the mid range, and $17,813 at the high end. The amounts in this range contemplate both needs-based and compensatory support.

193In determining the amount of support to be paid by John, I have considered the SSAG ranges and the partially compensatory nature of Carolyn’s entitlement. I have also considered that Carolyn can deduct a portion of her legal fees and John cannot.

194In my view, Carolyn has not yet been fully compensated for her economic loss, so the support is not only needs-based. However, since I have found that John shall pay retroactive support based on the mid-range for the four years immediately after separation to compensate Carolyn and assist her while she reintegrated back into the workforce, it is appropriate for the range to be reduced now that Carolyn is more established in her career.

195Based on all of the factors referred to above, I have decided that commencing January 1, 2020, John shall pay spousal support to Carolyn in the amount of $13,375 per month based on the low range of the SSAGs for his income of $480,000 and Carolyn’s income of $52,000. This support, combined with Carolyn’s own income, will provide her with after tax income of about $11,100 which will substantially cover her budgeted expenses.

196John shall receive a credit for all spousal support payments made since January 1, 2020 pursuant to the order of Gilmore, J. Any shortfall owing by John shall be paid from his share of the net proceeds of sale of Rosemead or calculated in the buyout of his interest by Carolyn. This payment shall be deemed to have been received in 2020 for income tax purposes.

197Carolyn seeks security for support through a policy of life insurance. John proposes an insurance trust naming Ms. Rosen as the trustee of his life insurance policy with CBIA having a face value of $1,350,000. Carolyn does not strenuously oppose this arrangement.

Order

198Order to go as follows:

1. The Respondent, John Edward Hyde, shall pay the Applicant, Carolyn Nersisian the sum of $78,417 in final satisfaction of the equalization/property issues including reimbursement for one half of the net proceeds of sale of the boat less one half of the debt payments made on her behalf, one half of the property taxes paid by the Applicant on the Respondent’s behalf, credit for mortgage payments made by the Respondent on the Applicant’s behalf and credit for the interim disbursement paid by the Respondent pursuant to the Order of Goodman, J. dated June 8, 2018.

2. The Respondent shall pay the Applicant a lump sum of $179,390 in final satisfaction of retroactive spousal support owing from July 2016 to and including December, 2019. This amount shall be paid from the Respondent’s share of the net proceeds of sale of the matrimonial home known municipally as 4324 Rosemead Court, Burlington, or calculated in the buyout of the Respondent’s interest by the Applicant.

3. Commencing on January 1, 2020 and continuing on the first day of each month thereafter, the Respondent shall pay spousal support to the Applicant in the amount of $13,375 per month based on the low range of the SSAGs for the Respondent’s income of $480,000 and the Applicant’s income of $52,000.

4. The Respondent shall receive a credit for all spousal support payments made since January 1, 2020 pursuant to the order of Gilmore, J. Any shortfall owing by the Respondent shall be paid from his share of the net proceeds of sale of Rosemead or calculated in the buyout of his interest by the Applicant. This payment shall be deemed to have been received in 2020 for income tax purposes.

5. Spousal support may be reviewed at the request of either party based on a material change in either party’s circumstances.

6. The Respondent shall enter into an Insurance Trust naming Avra Rosen as the trustee of the proceeds of his life insurance policy with CBIA having a face value of $1,350,000.00to secure his spousal support obligations upon his death, and which obligation shall be reviewed concurrently with any review of spousal support.

7. The Applicant shall provide the Respondent with the following items within 21 days: the respondent’s silver birth mug; silver mugs belonging to the Respondent, Jeffrey Francis Hyde and/or Edward Hyde; all family heirlooms related to Edward Hyde or the Hyde family not already gifted to Christopher Hyde; pictures of antique automobiles (possibly 8 in number); large air compressor; antique sideboard restored by Diane Hyde; antique window frame with mirrored panes.

8. The Applicant shall file an Affidavit for Divorce to my attention with this draft Order and the divorce shall be granted as part of this Order.

199If the parties cannot agree on costs, the Applicant shall serve and file submissions on costs within 14 days from the release of these Reasons. The Respondent shall serve and file costs submissions 14 days thereafter. The submissions shall be no more than three pages, exclusive of any costs outline, case law, and offers to settle. The Applicant may serve and file Reply submissions of two pages seven days after the Respondent’s submissions have been served. Submissions shall deal with all costs issues outstanding and shall be sent to Patrizia.Generali@ontario.ca

E.L. Nakonechny, J.