Superior Court of Justice
NEWMARKET COURT FILE NO.: FC-20-1941-00
DATE: 20210928
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Sherry Lee Christodoulou (Nee Misener) AKA Sherry Eleni Christodoulou
Applicant
– AND –
Steven Christodoulou
Respondent
Counsel:
Richard Niman and Patricia Gordon, Counsel for the Applicant
Karen Dosanjh, Counsel for the Respondent
HEARD: September 1, 2021
Ruling on Motion
BRUHN J.
[1] The Applicant has brought a motion seeking orders for temporary uncharacterized support, payment of matrimonial home expenses, payment of the children’s s. 7 expenses, interim disbursements, disclosure, and costs.
[2] The motion was originally returnable on March 3, 2021. The Respondent’s Income Report was provided to the Applicant the day before her motion materials were due. In addition, the Respondent had not provided the Applicant with the scope of review documents, despite her requests for same. The motion was adjourned to September 1, 2021 to allow the Applicant’s expert an opportunity to review and critique the Income Report of the Respondent’s expert. On the March 3, 2021 return date, this Court made various temporary, without prejudice Orders including the following:
a. the Respondent shall make uncharacterized payments to the Applicant of $17,277 per month commencing March 1, 2021 to and including September 1, 2021;
b. the Respondent shall continue to pay the vehicle loan/lease expenses for the Applicant’s vehicle in the amount of approximately $1,923 per month;
c. the Applicant shall pay the carrying costs of the matrimonial home; and,
d. the Respondent shall pay the Applicant an interim disbursement of $50,000 by April 2, 2021.
[3] For purposes of the motion on September 1, 2021, the Applicant advised that there were two issues to be addressed, that is spousal support and interim disbursements.
[4] The Applicant was seeking a temporary spousal support award of $55,551 per month, and a further interim disbursement of $100,000.
[5] In the course of submissions, the Respondent’s counsel argued that the motion should be adjourned and that the temporary Order should continue in the meantime. The Respondent’s counsel submitted that the Applicant had delayed in providing her income determination report and that as a result the Respondent’s expert had not had an opportunity to review and critique it and the Respondent was thereby prejudiced. This Court declined to adjourn the motion for the following reasons. The motion had already been adjourned from March 3, 2021 as a result of the Respondent’s delay in providing his income determination report and the scope of review documents. That adjournment was prejudicial to the Applicant as it delayed the determination of the temporary spousal support issue. The Respondent had already filed two Income Reports (an interim report and a final report), and he had put his position on the income determination issue before the Court. The Respondent does not have a right of sur-reply, which is effectively what he was arguing. This is an interim motion, meant to stabilize the situation. In order for that to happen, the motion needed to proceed. Finally, the Respondent had filed a Form 17F: Confirmation after receiving the Applicant’s expert income determination report indicating that the motion was proceeding.
[6] The Respondent sought to deal with the child support issue during this motion. However, the Respondent had not served and filed a Notice of Motion and he had not provided the Court with the evidence necessary to determine the issue, such as proof of the children’s s. 7 expenses. In addition, this matter was set for a one-hour motion and that time, and more, was fully used on the spousal support and interim disbursement issues. Consequently, this Court declined to deal with the child support issue; however, this Court will grant leave for the Respondent to bring a motion regarding child support.
[7] Both parties alleged the other had failed to provide certain items of disclosure. This Court will also grant leave for the parties to bring motion(s) for disclosure.
[8] In the parties’ Affidavit material they included numerous allegations of bad behaviour by the other party which were not relevant to the issues before the Court (such as infidelity, poor parenting, etc.). Presumably this was intended to garner the sympathy of the Court for the affiant and/or antipathy towards the opposing party, in the hopes of a more favourable result. This was neither appropriate nor helpful. The parties are cautioned to focus their pleadings on only the information relevant to the issues before the Court. This should also assist the parties in their difficulties with the page limits, which they both exceeded, without leave to do so.
Brief Background
[9] The parties were involved in a relationship of approximately 23 years in duration. They began cohabiting in October 1997 and were married on September 27, 1998. The parties separated on November 1, 2020. They lived separate and apart in the same home for a few weeks after separation.
[10] There are three children of the parties’ relationship, namely ALC, born August 31, 2000, ANC, born February 12, 2003, and NC, born February 16, 2005.
[11] ALC moved out of the matrimonial home in about September 2020.
[12] In about mid-December 2020, the Respondent, ANC and NC moved out of the matrimonial home located at 26 James Stokes Court, King City, Ontario (“the matrimonial home”). The Applicant continues to reside in the matrimonial home.
[13] On January 5, 2021, an urgent Case Conference was heard by Kaufman J. who ordered, among other things, that on a temporary, without prejudice basis:
a. the Applicant shall have exclusive possession of the matrimonial home;
b. the Respondent shall make uncharacterized payments to the Applicant in the amount of $12,000 per month in each of January and February 2021;
c. the Applicant shall have use of the Porsche and the Respondent shall make the loan payments for that vehicle;
d. both parties shall provide certain items of disclosure to the other;
e. the Respondent shall provide an Income Report, a Business Valuation, and an Affidavit detailing any cash he has received in the last three years; and,
f. the matter is adjourned to March 3, 2021 for a motion on the issues of support and interim disbursements.
[14] The Respondent had an Income Report completed by Ashok Bhatt of AB Valuations Inc. determining his income for 2018 and 2019 and estimating his income for 2020. The Respondent’s Income Report is dated February 3, 2021 and was provided to opposing counsel on February 4, 2021.
[15] The Applicant had an Income Report completed by Timothy Martin and Jason Silver of Duff & Phelps. This is described as a preliminary Report. The Applicant’s Report is dated August 23, 2021 and was provided to opposing counsel on August 24, 2021.
[16] The Respondent had a revised/updated Income Report completed by Ashok Bhatt of AB Valuations Inc. The Respondent describes this as a final Report. The revised/updated Report is dated August 20, 2021 and was provided to opposing counsel on August 26, 2021.
Summary of Applicant’s Position
Spousal Support
[17] The parties were involved in a long-term traditional relationship. The Applicant has not worked outside of the home in over twenty years, apart from a period of a few months in about 2008 when she tried to start a small business which was unsuccessful. The Respondent owns and operates three very successful companies. His income is over $2,000,000 per year. The parties and their children lived a lavish lifestyle and wanted for nothing. The Applicant is entitled to spousal support on both a compensatory and a means and needs basis and the Respondent has the ability to pay support.
[18] The Applicant is seeking spousal support in the amount of $55,551 per month commencing March 1, 2021 based on the Applicant’s income of $0 and the Respondent’s income of over $2,000,000. This is the mid-range amount of the Spousal Support Advisory Guidelines (“SSAG”). This amount is reasonable given the lifestyle of the parties prior to separation.
Interim Disbursements
[19] The Applicant has a good claim to both spousal support and an equalization payment. The Respondent’s financial circumstances are complex and he has not been forthright as to his assets and income. The Applicant will require counsel and experts to pursue her claims. The expert and legal fees will be significant. The Applicant is unable to fund these fees because she has no income and limited savings. The Respondent has the resources to pay a significant interim disbursement to the Applicant.
[20] The Applicant is seeking a further interim disbursement of $100,000 (in addition to the disbursement of $50,000 provided for in the March 3, 2021 Order) without prejudice to her claim to further interim disbursements.
Summary of Respondent’s Position
Spousal Support
[21] The parties shared the care of the children during their relationship and they also had a full-time, live-in nanny to assist with childcare and household responsibilities. Historically, the Applicant earned $40,000 per year. The Applicant has the ability to work and earn an ample income. The family did not live a lavish lifestyle. The parties have no savings and no significant investments or assets. The parties have significant debt. The Respondent’s income is closer to about $772,000 per year. The Applicant is entitled to support because she isn’t earning an income, however the support needs to be reasonable.
[22] The Respondent is proposing that he pay the Applicant spousal support in the amount of $12,000 per month without prejudice to either party’s claims regarding the Respondent’s income for support purposes. This amount is more than sufficient to maintain the Applicant’s current lifestyle and it is reasonable considering that the Respondent is solely responsible for the support of the parties’ three children.
Interim Disbursements
[23] The Applicant’s expert fees and legal fees are excessive. The Applicant has the resources to fund her expert and legal fees. The Respondent does not have the ability to pay any further interim disbursements to the Applicant.
[24] Each party has the ability to pay for their own expert fees and legal fees.
Issues & Analysis
[25] The issues for this motion are as follows:
a. entitlement to spousal support;
b. the incomes of the parties for support purposes;
c. the quantum of support;
d. the commencement date of support; and,
e. interim disbursements.
[26] The principles applicable to motions for interim spousal support are well established. In addition to the factors and objectives set out in s. 15.2 of the Divorce Act, the following principles have been established by the relevant jurisprudence[^1]:
a. On applications for interim support the Court does not engage in a comprehensive review and analysis of the parties’ circumstances, which is better left for trial. The Court achieves “rough justice” at best;
b. the purpose of interim relief is to provide the parties with reasonable arrangements to meet the needs and means of the parties until trial. Therefore on applications for interim support, the Applicant’s needs and the Respondent’s ability to pay assume greater significance; and,
c. an interim support order should be sufficient to allow the applicant to continue living at the same standard of living enjoyed prior to separation if the payor’s ability warrants it.
[27] The principles for determining income for support purposes are also well established. The starting point in determining income for support purposes is a party’s line 150 of their Income Tax Return. However, if that income does not fairly reflect all of the money available to the spouse, it is open to the Court to impute income to the spouse. The test for imputing income for child support purposes applies equally for spousal support purposes.[^2] When determining income for support purposes, the Court may consider a range of factors as set out in s. 17 to 20 of the Child Support Guidelines, including the spouse’s pattern of income over the last three years, any non-recurring losses, pre-tax corporate income, and the unreasonable deduction of expenses from income.
Entitlement to Spousal Support
[28] Although the Respondent disputed the Applicant’s claims with respect to the functions performed by each party during their relationship and the parties’ contributions to the relationship, he also acknowledged in his Affidavit material that the Applicant is entitled to support.[^3]
[29] Had this issue been contested, this Court would have found that, for the purposes of this motion, the Applicant is entitled to spousal support for the following reasons. The parties were involved in a largely traditional relationship of 23 years in duration during which the Respondent, on his own evidence, “paid for everything”. During that relationship the parties had three children and, on the Respondent’s evidence, the Applicant was in charge of running the household by virtue of being solely in charge of the payment of all household and child related expenses. At the end of that relationship, the Applicant had an income of $0 and the Respondent has an income of anywhere from $772,000 to $2,200,000. The Applicant is in need of spousal support and the Respondent has the ability to pay spousal support.
[30] For these reasons, this Court finds that, on an interim and without prejudice basis, the Applicant is entitled to spousal support.
Applicant’s Income for Support Purposes
[31] Although the Respondent took the position that the Applicant could and should be working and earning an income, he acknowledged that she isn’t earning an income and he based his calculations of support on an income of $0 for the Applicant.
Had this issue been seriously contested, this Court would have found that, for the purposes of this motion, the Applicant’s income is $0.00 for support purposes for the following reasons. The Applicant stated that she has not worked outside of the home in approximately 20 years, apart from a brief period of self-employment in 2008. Although the Respondent stated that he is uncertain as to whether the Applicant continues to earn an income from her self-employment venture, he provided no evidence to suggest that she does. Although the Respondent stated that the Applicant worked as a property manager earning $40,000, he provided no evidence as to when she worked in this capacity. The Respondent’s allegation that the Applicant had or may have had self-employment or employment income over the last twenty years lacked any details and was therefore not convincing. Although the parties were splitting income from the Respondent’s corporations, at least in the last few years, there is no evidence that the Applicant was working for the Respondent’s corporations, or that she was an employee of the Respondent’s corporations. In addition, it was the Respondent’s evidence that he has been paying for “everything” for the past 22 years of the parties’ marriage, which is consistent with the Applicant having no income.
[32] For these reasons, this Court finds that, on an interim and without prejudice basis, the Applicant’s income is $0.00 for support purposes.
Respondent’s Income for Support Purposes
[33] The Respondent owns and operates a group of related property management/maintenance corporations, collectively referred to as “ICC”.
[34] The Respondent owns 100% of ICC Properties Inc. (“ICC Properties”), a real estate holding company. ICC Properties owns an office building in Markham from which it operates, as well as a 100% interest in ICC Property Management Ltd. (“ICC Property Management”) and a 60% interest in ICC Property Maintenance Inc. (“ICC Property Maintenance”). The remaining 40% interest in ICC Property Maintenance is owned by two unrelated individuals (20% each).
[35] ICC Property Management provides management services to condo corporations in the Toronto area.
[36] ICC Property Maintenance provides maintenance services to the clients of ICC Property Management.
[37] Both parties have had Income Reports prepared for the Respondent for the years 2018, 2019 and 2020. The Respondent has had two Reports prepared, an Initial Report dated February 3, 2021 and a Revised/Updated or Final Report dated August 20, 2021 (the “AB Reports”). The Applicant has had a Preliminary Report prepared by Duff & Phelps (the “Duff & Phelps Report”). The Applicant’s Report is dated August 23, 2021.
[38] The experts disagree on the Respondent’s income. The expert’s conclusions are summarized below:
| Year | 2018 | 2019 | 2020 | 3 yr avg |
|---|---|---|---|---|
| Applicant’s Expert | ||||
| Scenario 1 | $1,222,000 | $2,392,000 | $2,293,000 | $1,969,000[^4] |
| Scenario 2 | $1,150,000 | $1,482,000 | $2,218,000 | $1,616,666 |
| Respondent’s Expert | ||||
| Initial Report | $527,000 | $950,000 | $553,000 | $676,667[^5] |
| Final Report | $619,000 | $984,000 | $714,000 | $772,000 |
[39] The Respondent argued that the Applicant’s Income Report was unreliable or less reliable because it was preliminary and not final. However, this Court notes that the Applicant’s Income Report is preliminary because her expert is awaiting further disclosure from the Respondent, and that there is evidence to suggest that the Respondent’s income may in fact be higher than her expert has determined (on account of cash income and/or services by third parties, the value of which has not been captured or fully captured in the preliminary Report). In the circumstances and for the purposes of this motion, this Court is not convinced that the Applicant’s report is unreliable or less reliable because it is a preliminary rather than a final report.
[40] The Respondent also argued that he had somehow been disadvantaged because the Applicant’s experts had not done a critique of his Income Report but rather had done an independent Income Report. However, a review of the Applicant’s Income Report clearly shows that her experts have reviewed and critiqued the Respondent’s Income Report and in doing so have also prepared their own calculations of the Respondent’s income. This is entirely appropriate and the Respondent’s argument that he has somehow been disadvantaged is without any merit.
[41] The Applicant argued that the Respondent’s expert is not an impartial valuator because he is employed by the Respondent’s corporate accountants. It is unclear when this issue was initially raised. For the purposes of this motion this Court has not placed any weight on this argument, however, this Court cautions both parties to address this issue well before the next Court return date to ensure that it does not create any delays in the resolution of this matter.
[42] With regards to the Duff & Phelps Report, this Court finds that Scenario 2 is more appropriate than Scenario 1 for the purposes of determining the Respondent’s income at this stage for the following reasons. Scenario 2 excludes non-recurring amounts such as a capital gain realized in 2019 on a building that has now been sold, and income tax gross ups on remuneration historically paid by ICC to the Applicant, which remuneration is not expected to continue to be paid. For these reasons, Scenario 2 better reflects the income available to the Respondent for the purpose of establishing an appropriate quantum of spousal support.
[43] With regards to the AB Reports, this Court has considered both the Initial Report and the Final Report for the reasons that follow. The Applicant’s expert only had the Initial AB Report when they were preparing their Report, including their comments on the AB Report. Therefore, this Court needed to consider the Initial AB Report when reviewing the comments in the Duff & Phelps Report. This Court also considered the Revised/Updated Report as the Respondent relied on this as his Final Report.
[44] This Court finds that the AB Reports significantly understate the quantum of personal expenses to be included in the Respondent’s income for support purposes, including auto racing expenses for the parties’ son, life insurance premiums paid on behalf of both parties, and expenses paid on behalf of the Applicant.
[45] Although the Respondent’s expert included more personal expenses in the Final Report (including expenses for home renovations and vehicle allowances that were absent from the Initial Report), he did not include other personal expenses which, in this Court’s view, ought to be included in the Respondent’s income for support purposes.
[46] The most significant expense in issue is the auto racing expenses for the parties’ 15 year old son, NC. NC is an international race car driver and has been racing for a number of years. It is undisputed that these expenses have always been paid for by ICC Management. The Respondent claims that the Applicant is well aware of these arrangements and has been agreeable to them. The Applicant claims that she was not fully informed of these arrangements, including the full amount of the expenses.
[47] The racing expenses were approximately $166,393 in 2018, $233,390 in 2019, and $491,785 in 2020[^6]. If they are included in the Respondent’s income for support purposes, there would also be an income tax gross up on these figures of $191,672 in 2018, $268,848 in 2019 and $566,500 in 2020. The total impact of these expenses being included in the Respondent’s income for support purposes would therefore be an additional $358,065 in 2018, $502,238 in 2019, and $1,058,285 in 2020.
[48] According to the Respondent, the company has advertising displays on NC’s race car. The Initial AB Report excludes the racing expenses from the Respondent’s income stating as follows:
We have considered this income is not available personally to Mr. Christodoulou as the benefit is predominantly his son’s and the company will continue to fund this expense post-separation and claim it as advertising and promotion expenses.”[^7]
[49] However, in AB’s Business Valuation Reports, the Respondent’s expert notes that the racing expenses are discretionary and that,
…a potential purchaser of the shares of the company would engage in more cost-effective advertising that more directly targets Toronto area condo board members.[^8]
[50] In the Final AB Report, one of the assumptions is as follows:
Mr. and Mrs. Christodoulou intend the funding of the future racing sponsorship expenses for their son’s racing career to continue and to be 100% the responsibility of ICC Management and acknowledge that Mr. Christodoulou receives no personal benefit from these expenses[^9].
[51] With respect to business deduction claims, a review of the case-law reveals a general theme that in determining whether expenses should be added back into a party’s income for support purposes, an important consideration is whether there is a benefit derived from the business expenses that employed people would have to cover from their personal income.[^10]
[52] In this Court’s view, the argument that this income is not available personally to the Respondent as the benefit is predominantly his son’s is disingenuous and contrary to the legislation and case law. Further, the assumption that the parties have agreed that NC’s racing expenses will continue to be paid for by ICC and that the Respondent receives no personal benefit from these expenses is simply incorrect.
[53] This Court finds that NC’s racing expenses are personal in nature, and therefore ought to be added back to the Respondent’s income for support purposes. The fact that these expense have been paid for through the corporation historically, that the Applicant knew, at least to some extent, of this arrangement, and that the arrangement was advantageous, from a tax perspective, for the corporation and the parties, does not change the fact that these are discretionary non-business expenses paid for the benefit of a related party, and therefore ought to be added back to the Respondent’s income for support purposes.
[54] Similarly, expenses paid by ICC for the benefit of the parties and/or the children and that were not required for business purposes are personal in nature, and ought to be added back to the Respondent’s income for support purposes. These include life insurance premiums for policies held by the Applicant and the Respondent, as well as the Applicant’s vehicle lease/loan payments, 407 ETR payments, a portion of sporting event tickets, and the Applicant’s cell phone charges.
[55] The AB Reports also failed to include the amount of the gross up on discretionary amounts of remuneration paid to the Applicant and the Respondent’s father (although the gross up for amounts paid to the Applicant were deducted under Scenario 2). There is a tax benefit to the corporation and therefore to the Respondent in having these expenses paid by the Corporation. This Court finds that it is appropriate to account for that benefit by including in the Respondent’s income for support purposes a gross up on discretionary amounts of remuneration paid to the Respondent’s father, to better reflect the income available to the Respondent for support purposes.
[56] The other area of significant disagreement between the experts is the amount of pre-tax corporate income that was available to the Respondent for the payment of support.
[57] The Applicant’s expert attributed a total of $106,290 in 2018, $1,091,917 in 2019 and $418,493 in 2020 to the Respondent on account of pre-tax corporate income. The Respondent’s expert attributed a total of $62,000 in 2018, $319,000 in 2019 and $68,689 in 2020[^11] to the Respondent on account of pre-tax corporate income. The difference in the expert’s positions is $44,290 in 2018, $772,917 in 2019, and $349,804 in 2020.
[58] In L.M.P. v. M.D.P, 2021 ONSC 3577 (Ont. Sup. Ct.) at para. 58, MacPherson J. reviewed the case law and concluded that the considerations and questions to take into account by the Court when determining whether to exercise its discretion to attribute pre-tax corporate income can be condensed as follows:
a. does the Respondent have control over dividend declarations?
b. is there a business reason for retaining the earnings?
c. should the court exercise its discretion and attribute pre-tax corporate income?
[59] In this case, both parties’ experts included in the Respondent’s income pre-tax corporate income from all three of the corporations in at least one of the years under review. Therefore, there was no issue as to whether the Respondent had control over dividend declarations, or whether the Court should exercise its discretion to attribute pre-tax corporate income, the only issue was how much to attribute, which related to the business reasons for retaining the earnings.
[60] The Respondent’s expert stated that they had added a portion of the Respondent’s share of the companies’ pre-tax income while leaving a normalized/economic level of working capital as illustrated by the industry average current ratio/quick ratio. With respect to ICC Maintenance, the Respondent’s expert also relied on a letter to ICC Maintenance from the Bank of Nova Scotia dated January 8, 2021 stating that the company was required to keep a minimum of $475,000 in working capital.[^12]
[61] The Applicant’s experts stated that the Respondent’s expert had understated the amount of pre-tax corporate income available to the Respondent for the payment of support during the period under review. With respect to ICC Properties, the Applicant’s experts pointed to the fact that the Respondent’s expert had included no pre-tax corporate income in 2018 and 2020 and only $49,000 in 2019[^13], despite the fact that that the company made real estate investments (excluding the operating premises), had cash on hand, and advanced amounts to related parties during the period under review. The Applicant’s experts also stated that “in our view, such uses of corporate funds are indicative of the availability of pre-tax corporate income to a shareholder of a business”[^14]
[62] With respect to ICC Management and ICC Maintenance, the Applicant’s experts stated that the Respondent’s expert has relied on industry benchmarks that in their view were not applicable and exceeded those which were applicable to the business.
[63] This Court is mindful that this is a motion for temporary relief. The experts have not had an opportunity, or a fulsome opportunity, to meet to discuss their respective Reports in an effort to identify and narrow the areas of dispute. None of the experts have been questioned.
[64] It is noteworthy that there were significant retained earnings in ICC in each of the three years under review and that there have been marked increases in retained as follows:
2018 $1,213,024
2019 $2,756,561
2020 $3,024,566
[65] For the purposes of this motion, and on a temporary and without prejudice basis, this Court will attribute an amount of pre-tax corporate income that is half-way between that proposed by the Applicant and the Respondent, in order to minimize the negative impact on either party of an attribution closer to that proposed by the other party in the final determination of the matter. This results in an attribution of pre-tax corporate income to the Respondent for support purposes of $84,145 in 2018, $705,459 in 2019 and $243,591 in 2020.
[66] Based on all of the above noted adjustments, this Court finds that for the purposes of this motion, the Respondent’s income for support purposes is $1,128,149 for 2018, $1,095,008 for 2019, and $2,042,353 for 2020.[^15]
[67] The Respondent’s income for support purposes was relatively stable in 2018 and 2019, however it doubled in 2020. This can be explained, at least in part, by the significant increase in NC’s racing expenses, which this Court has included in the Respondent’s income for support purposes. The Respondent has proposed that his income be averaged over the last three years for purposes of determining his current support obligations. However, the Applicant has provided compelling evidence with respect to the parties’ lifestyle and large cash transactions by the Respondent for family and household expenses as well as large cash reserves that lead the Court to find that the Respondent had access to significant cash resources during the parties’ relationship which have not been captured, or fully captured in the Income Reports to date. Therefore, this Court declines to average the Respondent’s income for support purposes but rather will use his 2020 income of $2,042,353 for purposes of calculating temporary spousal support.
Quantum of Support
[68] This Court is mindful that because the Respondent’s income is in excess of $350,000, the Spousal Support Advisory Guidelines amount may not be appropriate. However, this Court will consider the Guidelines as a starting point.
[69] This Court is also mindful that all three of the parties’ children are currently in the Respondent’s care, although two of the three children are, according to the Respondent, in post-secondary school.
[70] This Court has reviewed the Financial Statements of the parties, including the Statements filed for the March 3, 2021 return date as well as the Statements more recently filed, and the parties’ actual and proposed budgets on those Statements.
[71] This Court notes that the Respondent has been making a net payment of $19,200 per month to the Applicant since March 1, 2021. This payment does not appear to have impacted the Respondent’s financial circumstances. According to the Respondent’s August 27, 2021 Financial Statement, there has been only a very modest reduction of about $2,500 in his savings since the parties’ separation and there has been a reduction in his debt of about $53,000 over that time, resulting in a net increase of $50,500.[^16] A review of the Applicant’s recent Financial Statements reveals that she saved about $10,000 since December 2020, however she has increased her debts by about $18,000, resulting in a net reduction in $8,000.[^17]
[72] Based on the evidence before this Court and considering the factors and objectives set out in s. 15.2 of the Divorce Act as well as the relevant case law, this Court finds that it is fair and reasonable that on a temporary basis the Respondent pay to the Applicant spousal support in the amount of $45,000 per month. This amount of support results in around a 70/30 split of NDI as between the Respondent and the Applicant. This is appropriate on a temporary and without prejudice basis given that the Respondent is currently solely responsible for the support of the parties’ three children (apart from vehicle loan payments the Applicant has made and is making for vehicle(s) used by the children, which arguably may be considered to be a form of child support, however, this Court makes no findings in this regard).
[73] These spousal support payments are without prejudice to either party’s claims as to the quantum of support, and are subject to a retroactive adjustment in the final determination of the support issues.
[74] These spousal support payments shall be tax deductible to the Respondent and taxable in the hands of the Applicant.
[75] As part of the support arrangement, this Court will order that the Applicant continue to be responsible for all of the carrying costs of the matrimonial home, including the payments on the secured line of credit (interest only), as well as the property taxes, property insurance, and utilities, on a temporary basis given that the Applicant is residing in the matrimonial home and she is not currently paying any base child support. This is without prejudice to the Applicant’s right to pursue a contribution to these expenses from the Respondent in the final determination of the support and property division issues.
[76] This Court notes that the expenses paid by ICC for the Applicant’s vehicle have been included in the Respondent’s income for support purposes. Therefore, this Court will order that the Applicant pay the vehicle lease/loan payments for the vehicle she is using (the Porsche), or if she does not wish to do so, she shall make arrangements for the vehicle to be returned to the Respondent and she can make her own arrangements to obtain a vehicle. The Applicant shall be obliged to start making the vehicle lease/loan payments for the Porsche as of November 1, 2021, to allow her an opportunity to return the vehicle to the Respondent and obtain her own vehicle, should she wish to do so. The Respondent shall continue to make the vehicle lease/loan payments until November 1, 2021. This is without prejudice to either party’s right to pursue a contribution from the other party to these expenses in the final determination of the support and property issues.
Commencement Date of Support
[77] The motion for support was to have proceeded on March 3, 2021. But for the Respondent’s delay in providing his Income Report, the support would have started as of March 1, 2021. For this reason, this Court finds that it is fair and appropriate that the temporary support award commence on March 1, 2021, with credit to the Respondent for the uncharacterized payments he has made since that date (which were to have been $19,200 per month in total, $17,277 to the Applicant and $1,923 for the vehicle lease/loan payments for the Applicant’s vehicle, from March 1, 2021 to September 1, 2021).
[78] This commencement date is without prejudice to either party’s claim to an earlier or later commencement date in the final determination of the spousal support issue.
Interim Disbursements
[79] As noted above, this Court made an Order for an interim disbursement of $50,000 payable by the Respondent to the Applicant when this matter was last in Court on March 3, 2021.
[80] The jurisdiction to make an order for an interim disbursement is found at Rule 24(18) of the Family Law Rules.
[81] The case law has established that for an order for interim disbursement to be made, the moving party must satisfy the Court that:
a. their claim is meritorious on its face;
b. they are unable to fund the litigation;
c. the other party has the resources to pay; and
d. the fees and disbursements are necessary and reasonable to pursue their claims.[^18]
[82] This Court is satisfied that the Applicant’s claims for spousal support and property division are meritorious on their face. The parties were involved in a long-term traditional relationship. The Applicant currently has no income. The Respondent has a substantial income. The Applicant is entitled to and is in need of spousal support, and the Respondent has the ability to pay spousal support. With respect to the Applicant’s claim to property division, there are substantial real estate holdings and business interests to be accounted for and equalized between the parties. While the amount of the equalization payment cannot be determined at this point, this Court is satisfied that the Applicant has a prima facie claim to an equalization payment.
[83] The Applicant currently has no income. While this Court will be making an order for temporary spousal support and the Applicant will be expected to use some of those funds to meet her legal and expert fees, she will not be able to substantially fund the litigation in this way given the complexity of the Respondent’s financial circumstances, the questions around cash income, and the Respondent’s approach to the resolution of this matter. For example, his delay in providing his initial Income Report, his refusal to provide the scope of review documents until ordered to do so, and his initial failure to include certain personal expenses in his income and then adding them in later. This approach drives up the Applicant’s expert and legal fees and delays the resolution of the proceedings. The Applicant will incur substantial expert and legal fees to resolve this matter. The Applicant has some savings but these will not be sufficient to get her to trial and her debt level is increasing. This Court finds that the Applicant will be unable to fund the litigation without a further interim disbursement.
[84] The Respondent has significant income and while this Court will be making an order for interim spousal support which will impact his financial circumstances, this Court notes that, according to Business Valuation Report of the Respondent’s expert dated August 20, 2021, the Respondent’s business interests at the date of separation were valued at $4,472,000. This Court is satisfied that the Respondent has the resources to pay a further interim disbursement.
[85] The Applicant indicates that she has already incurred approximately $115,000 in expert fees to date. The Respondent states that his two Reports have cost him a total of $30,000, including the Revised/Updated Report. It is unclear whether he is referring to the Income Reports alone or the Income Reports and the Business Valuation Report. The Respondent also takes issue with the fact that the Respondent changed experts after the last Court Order. The argument that the Applicant is spending excessive amounts on her experts (and legal fees) may have some merit but for the fact that part of the reason the Applicant has incurred these expenses is because of the Respondent’s approach to this matter, as noted above. While this Court recognizes that there would have been some duplication of work and therefore increase in costs due to the Applicant changing experts, this Court also recognizes that the Applicant’s legal fees are likely to exceed the balance of the interim disbursement requested (ie. the balance, not otherwise used for expert fees). Consequently, this Court finds that the fees and disbursements claimed by the Applicant are necessary and reasonable to pursue her claims.
[86] In the circumstances, this Court finds that a further interim disbursement of $100,000 is reasonable and appropriate and an Order shall go for the Respondent to pay this amount to the Applicant within 90 days of the date of this Order, which payment shall be credited to the Respondent in the final resolution of the support and property issues.
Other
[87] Both parties have stated an interest in participating in mediation and/or mediation-arbitration. This Court would strongly encourage the parties to consider participating in alternative dispute resolution to resolve this matter in a more timely and cost-effective manner.
Order, on a temporary and without prejudice basis
The Respondent shall pay to the Applicant spousal support in the amount of $45,000 per month commencing March 1, 2021. These payments are without prejudice to either party’s claims as to the quantum or commencement date of spousal support, and are subject to a retroactive adjustment in the final determination of the spousal support issues.
These payments shall be tax deductible to the Respondent and taxable to the Applicant.
The Respondent shall be credited with the payments made by him to the Applicant or for her benefit pursuant to the March 3, 2021 endorsement of this Court, which payments ought to have been $19,200 per month commencing March 1, 2021 ($17,277 to the Applicant and $1,923 for the vehicle lease/loan payments for the vehicle used by the Applicant).
The Applicant shall continue to pay the carrying costs of the matrimonial home, including the payments on the secured line of credit (interest only), as well as the property taxes, property insurance and utilities, without prejudice to the Applicant’s right to pursue a contribution to these expenses from the Respondent in the final determination of the support and property division issues.
Commencing November 1, 2021, the Applicant shall pay the vehicle lease/loan payments for the vehicle she is using (the Porsche), or if she does not wish to do so, she shall make arrangements for the vehicle to be returned to the Respondent. This is without prejudice to either party’s right to pursue a contribution from the other to these expenses in the final determination of the support and property issues. The Respondent shall continue to make the vehicle lease/loan payments until November 1, 2021.
The Respondent has leave to bring a motion for child support.
Both parties have leave to bring a motion for disclosure.
Any motion is to be served and filed 30 days prior to the scheduled date. The responding materials (and any cross-motion which has been properly booked through the Trial Co-ordinator) are required to be served and filed 14 days prior to the motion date. The response to the cross-motion or reply, if any, shall be served and filed 7 days before the motion date. The reply to the cross-motion, if any, shall be served and filed 4 days before the motion date. In the event the motion materials are not served and filed 30 days before the event, the Trial Coordinator is authorized to vacate the date.
All motion materials are to comply with the Notice to the Profession. Currently the parties are restricted to 12 pages of narrative contained in their primary affidavit and 10 pages of exhibits. If a party also intends to rely on an affidavit that has been previously filed with the Court, the length of that affidavit is included in the 12 page limit. This limit does not include third party and reply affidavits, where required, which shall not exceed 5 pages each, or affidavits relating to a party’s financial statement in accordance with Rule 13(12)(b). All pages must be single sided and double spaced with a 12 point font.
If a party wishes to exceed the above noted page limits, they must file a 14B motion requesting an extension to the filing page limits. The 14B requests must be filed 14 days prior to the filing deadline for the affidavit in order to account for the significant time lag between filing and disposition. Any 14B request shall include the approximate number of added affidavit and / or exhibit pages and the necessity of same.
The Respondent shall pay to the Applicant a further interim disbursement of $100,000 within 90 days of today’s date. This disbursement shall be credited to the Respondent in the final determination of the support and property issues.
After the finalization of the Applicant’s Income Report and preparation of her Business Valuation Report, the parties shall have their experts meet to discuss their respective Income Reports and Business Valuation Reports in an effort to identify and narrow any areas of dispute.
Matter adjourned to a Settlement Conference on a date to be set by the parties through the Trial Coordinator after the completion of the exchange of any outstanding disclosure and interim motions for disclosure and/or child support.
The January 5, 2021 Order of Justice Kaufman shall continue except as changed by this Order.
The parties are encouraged to try to settle the issue of costs between themselves; however, if they are unable to do so, the parties may make submissions on costs in writing to me. The submissions are not to exceed two pages in length, excluding their Bill of Costs and any Offers to Settle. The Applicant shall serve and file her submissions within 21 days of today’s date and the Respondent shall serve and file his submissions within 14 days thereafter. There is no right of reply. If no submissions are received within the time period set out herein, there shall be no award of costs for the motion.
The Honourable Justice J. Bruhn
Released: September 28, 2021
[^1]: Driscoll v. Driscoll, 2009 CanLII 66373 (ON SC), [2009] O.J. No. 5056; Damaschin-Zamfirescu v. Damaschin-Zamfirescu, 2012 ONSC 6689.
[^2]: Rilli v. Rilli, 2006 CanLII 34451 (ON SC), [2006] O.J. No. 4142, (Ont. Fam. Ct.); Perino v. Perino, O.J. No. 4298 (Ont. S.C.)
[^3]: Paragraph 98 of the Respondent’s February 10, 2021 Affidavit.
[^4]: The Applicant’s expert did not provide a three-year average income in either Scenario 1 or Scenario 2. The Respondent’s expert provided a three-year average income in the Final Report. I have calculated the average for both Scenario 1 and Scenario 2 of the Applicant’s Report simply for comparison purposes.
[^5]: The Respondent’s expert did not provide a three-year average income in their Initial Report; however, I have calculated one for comparison purposes to that provided by the Respondent’s expert in their Final Report.
[^6]: Duff & Phelps Report, page 4.
[^7]: Initial AB Report, Schedule 1, Note 4.
[^8]: AB Business Valuation Report dated February 2, 2021, Schedule 5, Note 5, pg. 31, and AB Business Valuation Report dated August 20, 2021, Schedule 5, Note 7, pg. 30.
[^9]: Final AB Report, page 7.
[^10]: Izyuk v. Langley, 2015 ONSC 2409.
[^11]: Based on the Final AB Report.
[^12]: Final AB Report, Schedule 9, Note 1, page 24.
[^13]: Based on the Initial AB Report. The amount in the Final AB Report was $63,000.
[^14]: Duff & Phelps Report, page 4.
[^15]: These figures were calculated by using the Respondent’s income as calculated in the Initial AB Report (as these were the calculations that Duff & Phelps used in their Report for comparison and adjustment purposes), adding the average pre-tax corporate income as set out above, and adding the other adjustments for personal expenses, gross up thereon, and gross up on non-arm’s length remuneration, and subtracting the capital gains in 2019 and the remuneration paid to the Applicant in each year).
[^16]: According to the Respondent’s August 23, 2021 Financial Statement, his total savings at the date of separation were $408,391 and his total savings at the date of the Statement were $405,799, and his total debts at the date of separation were $683,218 and his total debts at the date of the Statement were $630,611.
[^17]: Increase in line of credit and credit card debt minus decrease in vehicle loan debts, and not including the notional disposition costs and the home renovations debts that were not previously reflected on her Financial Statement.
[^18]: Stuart v. Stuart, 2001 CanLII 28261 (ON SC), [2001] O.J. No. 5172 (Ont. Sup. Ct. Jus); Ludmer v. Ludmer, 2012 ONSC 4478