COURT FILE NO.: FC-20-355 DATE: 2021-06-15
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Sheila Spagnola, Applicant AND: Tony Romanelli, Respondent
BEFORE: Justice C. Boswell
COUNSEL: Michael H. Tweyman and Ashley Waye for the Applicant Gary J. Beaulne for the Respondent
HEARD: June 10, 2021
ENDORSEMENT
INTRODUCTION
[1] The applicant is 58 years old. She is not well and cannot work. She has no income and needs financial assistance. The respondent has a legal obligation to support her and he has the means to do so. The applicant seeks a temporary order that he pay spousal support. The respondent resists.
[2] The parties lived together as common law spouses for about 17 years. During that time they acquired three properties. One was located in Innisfil, Ontario. It was registered solely in the name of the applicant. Though it has been sold, the net proceeds of sale are being held in trust because the respondent asserts a 50% ownership interest in them. They will presumably be held until the final disposition of this litigation, unless the parties reach an agreement sooner.
[3] The other two properties are located in the Province of Quebec. They abut one another. The applicant is presently residing in one. The other is available to rent out. Title to these two properties is held in common between the parties. The respondent seeks an order that both be immediately listed for sale. The applicant resists.
[4] As the preceding paragraphs foretold, this motion is about how much, if any, temporary spousal support the respondent should be compelled to pay and about whether the court should compel the sale of the Quebec properties. Although these may sound like relatively discrete and straightforward issues, they are not. In fact, the court is called up to make determinations about the following:
(a) Whether the applicant has an entitlement to spousal support;
(b) What income should be attributed to the respondent, given that he is a self-employed building contractor, who conducts his business through one or more corporations;
(c) Whether any income should be imputed to the applicant for rental income she could, or perhaps should, be able to earn;
(d) The appropriate level of temporary support, if any;
(e) Whether any support order should be made retroactive;
(f) Whether the court has jurisdiction to order the sale of extra-provincial properties; and,
(g) If the court has the jurisdiction to order a sale, whether such a sale is justified and appropriate at this stage of the proceedings.
[5] I will address each of the live issues in turn in a moment. I will first take a moment to make some preliminary observations about process.
THE PROCESS
[6] The family court system is under tremendous, and arguably unprecedented, pressure. For several months after the Covid-19 pandemic took hold, the court was able to address only the most urgent of matters. Even as restrictions eased and the court's ability to hear matters remotely improved, dockets have been shortened, by necessity, to account for the limitations inherent in virtual hearings.
[7] The result has been a backlog of cases and a lengthening of time-outs to events such as case conferences, settlement conferences and motions. Time is precious, to both the court and to the litigants. When parties are able to get a hearing date, they want to pack as much into it as they can. And the court wants to be able to do as much for them at any given hearing as possible.
[8] Sometimes parties try to do too much in the context of a particular hearing. Each week the family court in Barrie has a regular motions list. These lists are for short motions – matters that will not take more than an hour to argue. They should also not involve lengthy materials and, ideally, should, in most cases, be able to be disposed of in a brief endorsement.
[9] To counsel's credit in this case, they managed to argue the motions before the court in just under an hour. They were efficient and got straight to the points they wanted to make. They let their written materials speak for themselves and they supplemented them with oral submissions.
[10] The written materials were, however, substantial and the issues complex. The motion probably should have been scheduled as a long motion. This comment is not meant as a criticism of counsel, but as an observation that serves to inform the brevity of this endorsement. On short motions, the parties cannot expect the same detailed reasons explaining the court's rulings as they might expect after a trial, or even a long motion.
[11] Short motions come before the court in waves. The resources simply do not exist to support the provision of lengthy and detailed reasons on short argued matters.
[12] Interlocutory motions in the family court, particularly short motions seeking substantive, as opposed to procedural, relief inevitably result in orders that are imperfect. They are based on an imperfect record and are typically meant only to provide a temporary solution to a pressing issue pending trial.
[13] The evidentiary record in this case consists of one affidavit filed by the applicant and two by the respondent. They are as densely packed as the current practice direction permits. Yet they still provide only an imperfect record for the court to go on. I do not, for instance, have all of the financial records relating to the respondent's corporation that might provide me with more confidence about his actual income.
[14] In the reasons that follow, I will do my best to briefly explain the undoubtedly imperfect orders I make today, on the basis of the record before the court.
THE ISSUES
1. The applicant's entitlement to spousal support
[15] It is not disputed that the applicant has a legal entitlement to spousal support.
[16] Each of the parties has an obligation to support the other. Section 30 of the Family Law Act, R.S.O. 1990 c. F.3 provides:
Every spouse has an obligation to provide support for himself or herself and for the other spouse, in accordance with need, to the extent that he or she is capable of doing so.
[17] A "spouse" is defined by s. 29 of the Family Law Act as including either of two persons who are not married but who have cohabited in a conjugal relationship continuously for a period of not less than three years. The parties cohabited in a conjugal relationship for a period of roughly 17 years. The live questions are means and needs.
[18] I find that the applicant has a need for support. She is 58 years old. She earns no income and suffers from multiple health conditions – both physical and psychological – that effectively prevent her from gainful employment. Whether she may have some residual earning capacity over the long term is not the focus of this motion. At this point, in the prevailing circumstances, she has no income and no reasonable ability to earn income. She has a need for support.
2. The respondent's income
[19] The respondent has the ability to provide support. He is a home builder. He operates through a corporation known as Tri-Rom Homes Inc., which appears to build homes in the Pembroke, Ontario area.
[20] According to the applicant, the respondent supported her throughout their relationship. I accept that evidence. And I find that the parties enjoyed a good standard of living throughout their relationship.
[21] The parties acquired a property in Innisfil that the respondent appears to have extensively renovated. They also acquired two abutting properties in Quebec, both of which have been renovated by the respondent. The parties' lived experience, while together, supports the inference that the respondent is a person of some means.
[22] It is always difficult to come to a confident conclusion about a payor's income when he earns that income through a corporation that he controls. The difficulty arises because there are benefits to operating through a corporation that are not always easy to track.
[23] The respondent appears to take an annual salary from the company. He also appears to have a practice of paying himself dividends on an annual basis over and above his paid salary. There may also be net income left in the company, which may be available to him. Finally, there may be expenses that get paid as business expenses, but which have a personal component to them.
[24] I do not have the benefit of any of the respondent's corporate financial disclosure. He provided a copy of his 2020 tax return as an exhibit to one of his affidavits. His line 150 income in 2020 was $105,145, comprised of $100,000 in salary and the balance in CPP benefits.
[25] The applicant has additional financial disclosure from the respondent and was able to provide a chart outlining the respondent's income over the past several years. In 2019, his line 150 income was $163,250, comprised of $100,000 in salary and the balance in dividends. In 2018 his line 150 income was $146,399, comprised of $100,000 in salary and the balance in dividends.
[26] The applicant also indicated Tri-Rom recorded net profit in 2018 of $43,385, a net loss of $111,240 in 2019 and net profit in 2020 of $34,298. These figures reflect corporate year ends of January 31, so the profit in 2020 would be for the year ending January 31, 2020. There is no more up-to-date information than that.
[27] The respondent argues that the pandemic has had a negative impact on his earning capacity, but I lack a sufficient evidentiary basis upon which to make conclusions about how his earnings have been impacted or why.
[28] The Spousal Support Guidelines import the process of determining income established in the Federal Child Support Guidelines. One available means of assessing income, where it has fluctuated over time, is to determine the average income over the past three years. See s. 17 of the Child Support Guidelines.
[29] Given the limited information I have about the respondent's income, combined with the obvious fluctuation in his income over the past several years, my view is that the fairest way to determine his income, for temporary spousal support purposes, is to average out his last three reported years. I intend to ignore Tri-Rom's net profit before tax for the purposes of this calculation because it has varied between profit and loss over the past three years.
[30] The three year average of the respondent's line 150 income is $138,265. I intend to utilize this figure as his income for temporary spousal support purposes. Again, this figure is admittedly imperfect. But any over- or under-payment can be adjusted for on a final basis when further and better evidence is available as to his actual income.
3. The rental income
[31] The parties co-own two properties in Chichester, Quebec. They are municipally known as 1452 and 1456 Chemin Chapeau-Sheenboro. I will refer to them simply as 1452 and 1456.
[32] The applicant presently resides in 1456. My impression is that it is the nicer of the two properties. The other, 1452, has been rented out in the past. At present there is no tenant. The respondent blames the applicant for the lack of a tenant. He deposed that she harassed the last tenant to the point where the tenant got fed up and moved out. For the purposes of this motion I need not address his allegations further.
[33] The previous tenant was paying $700 per month in rent. Though it is not clear from the evidentiary record whether the tenant was to pay for his or her utilities on top of that amount, I think it highly probable that he or she was. In other words, the $700 per month was net rent.
[34] The applicant's counsel conceded that if the Quebec properties are not sold, the applicant should be imputed with the collection of rental income from 1452 commencing July 1, 2021, at the rate of $700 per month.
4. Temporary Spousal Support
[35] On an income of $138,265, the Spousal Support Advisory Guidelines suggest a range of support from $2,938 on the low end to $3,918 on the high end, assuming the applicant has no income.
[36] It is necessary, in the circumstances here, however, to take into account the fact that the respondent is providing some measure of support already. A significant component of the SSAGs reflects housing costs. As I outline below, I am not prepared to order the sale of the Quebec properties at this time. In the result, the applicant will have the benefit of $700 per month in rental income from 1452 and she is also enjoying exclusive occupation of a mortgage-free property at 1456. I have no expert evidence on the rental value of 1456, but there is some suggestion in the record that it would rent in the range of $1,400 per month.
[37] The applicant is a half-owner of both of the Quebec properties and thereby entitled to half their rental values. But since she is presently enjoying the entirety of the possessory value of both residences, she is receiving a benefit from the respondent equal to roughly $1,050 per month. In other words, she is receiving the respondent's benefit of half of the rental value of each of the two properties. Taking those benefits into account, I would fix support in the lower end of the range at $3,000 per month. That amount will commence June 1, 2021 and be payable, on a temporary basis, on the first of each month thereafter.
5. Retroactivity
[38] The respondent paid what might arguably be characterized as spousal support to the applicant for roughly four years after they separated in 2016 to May 2020, when he unilaterally stopped paying. He paid her $2,600 per month, which he characterizes as his contribution to the carrying costs of the Innisfil property. That property sold on April 30, 2020, which informs the timing of the termination of his monthly contribution.
[39] The applicant seeks an order that the support ordered today be retroactive to May 1, 2020. In my view, given the limited and conflicting record presently before the court, retroactivity is an issue best left to a final determination, following trial or consensual resolution.
6. Jurisdiction
[40] The respondent is a resident of Ontario. The applicant is presently a resident of Quebec but has attorned to this jurisdiction.
[41] The respondent seeks an order that the two properties co-owned by the parties in Quebec be sold under the provisions of the Partition Act, R.S.O. 1990 c. P.4. He also seeks orders that he be granted exclusive possession of both 1452 and 1456 and that he be able to dispose of the properties without the applicant's consent or signature.
[42] The court's jurisdiction to do what the respondent seeks is not immediately apparent.
[43] For starters, the Partition Act is Ontario legislation which does not apply to lands outside of the province.
[44] Moreover, the requests for exclusive possession and an order dispensing with the applicant's consent to the disposition of the properties appear to be grounded in ss. 23 and 24 of the Family Law Act. Those provisions, however, apply only to matrimonial homes (which 1452 and 1456 are not) and then, only to properties within Ontario.
[45] The respondent asserts that what he is seeking is an in personam order to enforce a personal obligation between the parties. In support of that assertion, he relies on the ruling of the Court of Appeal for Ontario in Catania v. Giannattasio (1999), 174 D.L.R. (4th) 170, 1999 1930. In Catania, Laskin J.A. re-affirmed a long-standing rule that Canadian courts have no jurisdiction to determine title to or an interest in foreign lands. By extension, this rule would prevent Ontario courts from ruling on the rights of parties to properties located in another province.
[46] Justice Laskin observed that there is an exception to the general rule. Specifically, the court will exercise an in personam jurisdiction to determine rights to foreign lands where the following four criteria are met:
(a) The court must have in personam jurisdiction over the defendant;
(b) There must be a personal obligation running between the parties;
(c) The jurisdiction cannot be exercised if the local court cannot supervise the execution of the judgment; and
(d) The court will not exercise jurisdiction if the order would be of no effect in the situs.
[47] In the circumstances of this case, I accept that the first of the four Catania criteria is met. Both parties have attorned to the jurisdiction of this court. The second of the four Catania criteria is likely met as well, though the respondent did not specifically articulate what personal obligations run between co-owners of real property.
[48] I am not satisfied, however, that the third and fourth of the Catania criteria are met. I have a number of concerns, principally:
(a) The judgment being sought is for a sale of the Quebec properties. I do not know what my jurisdiction is to make such an order, when the Partition Act does not apply to those lands. The respondent did not provide me with any common law authority for such jurisidiction. The court cannot supervise the execution of a judgment it does not have the jurisdiction to make; and,
(b) Even if I have the jurisdiction to make an order that the properties be sold, I do not see any means by which I could supervise or enforce the order, apart from perhaps the general contempt powers of the court. The respondent asks that the court grant him exclusive possession of the properties and the sole authority to sign whatever documents are necessary to dispose of them. Again, as I have noted, I have no statutory authority to grant orders of that nature. And again, I have not been provided with any common law authority to make such orders. I certainly have no means of compelling the local authorities in Quebec to enforce a possessory order.
[49] In the result, I am not satisfied, on the record before me, that I have the jurisdiction to make an interlocutory order for the sale of the Quebec lands.
7. The Request to the Sell the Quebec Lands
[50] Even if I have the jurisdiction to order the Quebec properties sold, I would not do so at this stage of the proceedings.
[51] The parties both agree that the support and property issues between them are inextricably intertwined. Support has only been addressed today on a temporary basis and, as I have noted, on an imperfect and incomplete record. The support ordered today is based, in part, on the fact that the applicant is able to occupy 1456 and to receive rental income from 1452.
[52] Obviously, the monetary component of the support order can be adjusted if and when the Quebec properties sell, but in my view it is not appropriate to force their sale until the property disputes between the parties are resolved.
[53] The applicant will need to acquire alternative accommodation. She will not be able to do so if the only equity at her disposal is her half of the value of the Quebec lands. She will need her equity from the Innisfil property as well. It will be some time before the issues associated with the Innisfil property are resolved.
[54] In short, it is, in my view, premature to order the sale of the Quebec lands. In the result, the respondent's motion is dismissed.
Costs
[55] The parties are encouraged to reach an agreement on the costs of the motion. If they are unable to agree, they may make submissions in writing, not to exceed two pages in length. Their submissions are to be served and filed on a fourteen-day turnaround. The applicant's submissions are to be served and filed by June 28, 2021 and the respondent's by July 12, 2021.
C. Boswell J.
Date: June 15, 2021